Implementation Status & Results Philippines Rural Power Project (P066397)

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1 Public Disclosure Authorized Public Disclosure Authorized The World Bank Implementation Status & Results Philippines Rural Power Project (P066397) Operation Name: Rural Power Project (P066397) Project Stage: Implementation Seq.No: 14 Status: ARCHIVED Archive : 11-Dec-2012 Country: Philippines Approval FY: 2004 Product Line: IBRD/IDA Region: EAST ASIA AND PACIFIC Lending Instrument: Adaptable Program Loan Implementing Agency(ies): Department of Energy Key s Board Approval 04-Dec-2003 Original Closing 31-Dec-2009 Planned Mid Term Review Last Archived ISR 21-Mar-2012 Effectiveness 06-May-2004 Revised Closing 31-Dec-2012 Actual Mid Term Review 17-Mar-2008 Project Development Objectives Rural Power Project (P066397) Project Development Objective (from Project Appraisal Document) The objective of the project is to assist in the implementation of the first phase of the Rural Power Development Program aimed at supporting reforms and priority investments to achieve the aforementioned objectives of the sector. Specifically, under APL1, the project would (a) test and demonstrate viable business models that maximize leveraging of public resources with private investment fordecentralized electrification; (b) support transformation of ECs through institutional and operational improvements; and (c) avoid C02 emission through wider use of renewable energy. Has the Project Development Objective been changed since Board Approval of the Program? Yes No losure Authorized Public Disclosure Authorized PH-GEF-Rural Power Project (P072096) Global Environmental Objective (from Project Appraisal Document) Mitigate global climate change caused by greenhouse gas (GHG) emissions through wider user of clean energy technologies Has the Global Environmental Objective been changed since Board Approval of the Program? Yes Component(s) No Component Name Component Cost 1. RURAL ELECTRIFICATION SUBPROJECTS CAPACITY BUILDING 9.00 Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Moderately Unsatisfactory Moderately Unsatisfactory Page 1 of 5

2 Previous Rating Current Rating Progress towards achievement of GEO Moderately Unsatisfactory Moderately Unsatisfactory Overall Implementation Progress (IP) Moderately Unsatisfactory Moderately Unsatisfactory Overall Risk Rating Implementation Status Overview The project has achieved some of its development objectives. Over 21,000 rural electricity connections, mostly solar home systems, have been made, exceeding the target of 20,000. But achievement of the carbon avoidance targets will undershoot, because the credit line supported by the project has been unable to meeting its lending targets. As a consequence, about half of the $40-million of the Additional Financing will not be committed, and instead will be canceled upon closure of the project at the end of December, Estimated annual carbon avoided amounts now to over 10,000 tons of CO2, which will more than double when a small hydro under construction is completed, but only a little more than half the avoided annual carbon target of 40,000 tons of CO2 will have been achieved. The credit line, managed by DBP, has been negatively affected by both supply and demand factors in the credit markets. While the Additional Financing was agreed at a time of global financial tightness, in 2009, since then the Philippines market has been characterized by high liquidity, lengthening tenors, declining interest rates, and increased risk tolerance among the commercial banks. But the demand for credit from renewable energy projects has been less than anticipated, primarily because the feed-in tariff mechanism is still not operational, four years after passage of the Renewable Energy Act Electric cooperatives continue to be enthusiastic borrowers for investments in supply-side energy efficiency, but commercial lenders that can be accessed through the electric cooperative partial credit guarantee (EC PCG) program have become more attractive sources of debt than the Development Bank of the Philippines, which manages the RPPfinanced credit line. Changes in the credit market have been, overall, very good news for the economy generally and for the energy sector specifically, but those positive changes have effectively eliminated the rationale for public financing of lines of credit for energy sector investments. Locations Country First Administrative Division Location Planned Actual Philippines Mimaropa Province of Romblon Philippines Not Entered Puerto Princesa City Philippines Bicol Claveria Philippines Eastern Visayas Catbalogan Philippines Caraga Butuan Philippines Central Visayas Province of Bohol Philippines Cagayan Valley Province of Batanes Philippines Central Luzon Province of Bataan Results Project Development Objective Indicators Page 2 of 5

3 ECs supported are financially viable Text Value 0 10 of 11 participating EC's are financially viable new customers in rural areas provided with mini-grid electrical connection or individual RET services Global Environmental Objective Indicators at least 85% of participating ECs 06-May Nov Dec-2012 Text Value zero 21,775 (component has been at least 20,000 closed since December 2011) 04-Dec Nov Dec-2012 RET companies accredited and doing business Text Value zero 6 active participating at least 4 in rural areas companies 04-Dec Nov Dec % completed CO2 emission avoided per year Text Value 25,000 tons (includes RE at least 40,000 tons capacity under construction, projected to account for about 14,000 tons) 04-Dec Nov-2012 Target before the additional financing was agreed was 20,000 tons 31-Dec-2012 Intermediate Results Indicators rules and regulations for subsidy allocation and tariff setting issued staff of public and private entities participated in RET TA and training activities Text Value zero completed rules and regulations for subsidy allocation and tariff setting issued 04-Dec Nov Dec-2012 Text Value zero more than 500 at least Dec Nov Dec-2009 Page 3 of 5

4 rules and regulations for subsidy allocation and tariff setting issued staff of public and private entities participated in RET TA and training activities Text Value zero completed rules and regulations for subsidy allocation and tariff setting issued 04-Dec Nov Dec-2012 Text Value zero at least Dec Feb Dec-2009 Extensive training was provided to local authorities when the handover of SHS installed in public facilities was done in Data on Financial Performance (as of 07-Nov-2012) Financial Agreement(s) Key s Project Ln/Cr/Tf Status Approval Signing Effectiveness Original Closing Revised Closing P IBRD Closed 04-Dec Dec May Dec Dec-2009 P IBRD Effective 14-Apr May Sep Dec Dec-2012 P TF Closed 08-Dec Dec May Dec Dec-2011 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P IBRD Closed USD P IBRD Effective USD P TF Closed USD Disbursement Graph Page 4 of 5

5 Key Decisions Regarding Implementation As mentioned above, the project will be closed and undisbursed funds will be canceled. Restructuring History Board Approved on 25-May-2009 Related Projects P PH-GEF-Rural Power Project, P Additional Financing for Rural Power Page 5 of 5