AFRICAN DEVELOPMENT BANK GROUP MULTINATIONAL CAMEROON AND CHAD POWER INTERCONNECTION PROJECT

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized AFRICAN DEVELOPMENT BANK GROUP MULTINATIONAL CAMEROON AND CHAD POWER INTERCONNECTION PROJECT RDGC DEPARTMENT November 2017 Translated Document

2 TABLE OF CONTENTS 1. STRATEGIC THRUST AND RATIONALE PROJECT LINKAGES WITH COUNTRY STRATEGY AND OBJECTIVES RATIONALE FOR BANK S INVOLVEMENT AID COORDINATION PROJECT DESCRIPTION PROJECT OBJECTIVES AND COMPONENTS TECHNICAL SOLUTIONS ADOPTED AND ALTERNATIVES EXPLORED PROJECT TYPE PROJECT COST AND FINANCING ARRANGEMENTS PROJECT TARGET AREA AND BENEFICIARIES PARTICIPATORY APPROACH BANK GROUP EXPERIENCE AND LESSONS REFLECTED IN PROJECT DESIGN KEY PERFORMANCE INDICATORS PROJECT FEASIBILITY FINANCIAL AND ECONOMIC PERFORMANCE ENVIRONMENTAL AND SOCIAL IMPACT PROJECT IMPLEMENTATION IMPLEMENTATION ARRANGEMENTS PROJECT MONITORING AND EVALUATION GOVERNANCE SUSTAINABILITY KNOWLEDGE BUILDING LEGAL FRAMEWORK LEGAL INSTRUMENT CONDITIONS FOR BANK INTERVENTION COMPLIANCE WITH BANK POLICIES RECOMMENDATION ANNEXES Annex I: Cameroon/Rationale for the Level of Government s Counterpart Contribution to AfDB Financing Annex II.1: Cameroon s Comparative Socio-economic Indicator Annex II.2: Chad s Comparative Socio-economic Indicators Annex III.1: Table of AfDB Portfolio in Cameroon as at 30 June 2017 Annex III.2: Table of AfDB Portfolio in Chad as at 30 June 2017 Annex IV.1: Similar Projects Financed by the Bank and other Development Partners of Cameroon Annex IV.2: Similar Projects Financed by the Bank and other Development Partners of Chad Annex V: Map of Project Area

3 CURRENCY EQUIVALENTS [October 2017] UA 1 = CFAF UA 1 = USD UA 1 = EUR FISCAL YEAR 1 January 31 December WEIGHTS AND MEASURES m metre Koe kilo of oil equivalent cm centimetre = 0.01 metre Ktoe kilo toe = toe mm millimetre = metre kv kilovolt = volts km kilometre = metres kva kilovolt ampere (1 000 va) m² square metre kw kilowatt = watts cm² square centimetre GW gigawatt ( kw or 1 MW) km² square kilometre = square metres MW megawatt ( w or kw ha hectare = square metres kwh kilowatt hour (1 000 wh) t (t) tonne (1 000 kilogrammes) MWh megawatt hour (1 000 kwh) toe Tonne of oil equivalent GWh gigawatt hour ( kwh) i

4 ACRONYMS AND ABBREVIATIONS ADF AER AFD AfDB ARSEL CAA CAPP CFAF CSP ECCAS ESIA ESMP EU FIRR GESP HV IDP IsDB LV MV PND NEPAD PIU RAP PDER RISP SCP SNE SONATREL TFP TSF WB African Development Fund Rural Electrification Agency French Development Agency African Development Bank Electricity Sector Regulatory Agency (Cameroon) Caisse autonome d amortissement Central Africa Power Pool Franc of the African Financial Community Country Strategy Paper Economic Community of Central African States Environmental and Social Impact Assessment Environmental and Social Management Plan European Union Financial internal rate of return Growth and Employment Strategy Paper High Voltage Internally Displaced Person Islamic Development Bank Low Voltage Medium Voltage National Development Plan New Partnership for Africa s Development Project Implementation Unit Resettlement Action Plan Rural Electrification Masterplan Regional Integration Strategy Paper Stakeholders Commitment Plan National Electricity Corporation (Chad) National Electricity Transmission Corporation (Cameroon) Technical and Financial Partner Transition Support Facility World Bank ii

5 PROJECT INFORMATION SHEET Borrower/Donee Executing Agencies Client Information Republic of Cameroun / Republic of Chad Cameroon: National Electricity Transmission Corporation (SONATREL) Chad: National Electricity Corporation (SNE) Financing Plan Source of Cameroon (million) Chad (million) Total (million) Instrument Financing CFAF CFAF CFAF EUR UA EUR UA EUR UA x x x ADB Loan ADF Loan TSF Grant IsDB Loan EU Grant Gvt. of Cameroon Gvt. of Chad Total Key AfDB Financing Information Loan Currency: Loan Type: Tenor: Grace Period: Weighted Average Maturity**: Repayment: Interest Rate: Counterpart contribution Euro (EUR) Fully Flexible Loan 25 years 8 years Sixteen (16) years and nine (9) months Half-yearly instalments after expiry of the grace period (thirty-four [34] equal and consecutive half-yearly payments) Base Rate + Financing Margin + Loan Margin + Maturity Bonus Base Rate: Floating (six-month EURIBOR, reset on 1 February and 1 August). Floating base rate with a free fixing option. Financing Margin: Loan Margin: 80 basis points (0.8%) Maturity Bonus: 0.20% Front-end Fee: Commitment Fee: Bank financing margin, reset on 1 January and 1 July and applied on 1 February and 1 August with the base rate. 0.25% of the loan amount payable on or before the date of signature of the Loan Agreement 0.25% per annum on the undisbursed loan amount, commencing 60 days following the date of signature of the Loan Agreement and payable on each interest payment date. *Conversion options and related transaction costs shall be governed by the Bank s Conversion Guidelines available on the Bank s website. **A weighted average maturity calculator is available on the Bank s website. iii

6 Key ADF Financing Information Mixed Country Lending Conditions Loan/Grant Currency Unit of Account (UA) Interest Rate 1% Interest Rate Margin Not applicable Service Charge 0.75% per annum on the disbursed and outstanding loan amount Commitment Fee 0.5% on the undisbursed loan amount, commencing 120 days after signature of Loan Agreement Other Charges Not applicable Tenor 25 years Grace Period 5 years Timeframe - Main Milestones (expected) Activities (Month/Year) Concept Note Approval October 2017 Project Approval December 2017 Signing of Loan/Grant Agreements March 2018 Effectiveness May 2018 Last Disbursement June 2022 Project Closure December 2022 iv

7 PROJECT SUMMARY 1. Project Overview The Cameroon-Chad Power Interconnection Project stems from the desire of both countries to optimize the use of their energy resources by integrating their power generation, transmission and distribution infrastructure. It will involve the construction of: (i) a 225 kv high-voltage (HV) main transmission line between Ngaoundéré and Maroua (Cameroon) and N Djamena (Chad); (ii) a 225 kv high-voltage link between Maroua (Cameroon), Bongor, Guelendeng and N Djamena (Chad); (iii) related high-voltage (HV)/medium-voltage (MV) transformer stations; and (iv) rural electrification distribution networks along transmission line corridors. In total, about kilometres of HV transmission lines (786 kilometres in Cameroon and 238 kilometres in Chad) will be constructed and 478 localities along these lines (409 of them in Cameroun and 69 in Chad) electrified. It is one of Central Africa s priority integration projects. The overall project objective is to improve the economic and social development framework of Member States of the Economic Community of Central African States (ECCAS) through the supply of adequate quantity and quality of electricity at low cost. The sector objective is to increase the rate of access to electricity by the population of both countries, and strengthen cooperation and regional integration in the sub-region through energy trade between the countries. The total project cost, net of taxes, is estimated at UA million (EUR million). It will be implemented over a five-year (60-month) period, from 2018 to The direct project beneficiaries are the National Electricity Corporation (Société Nationale de l Électricité, SNE) in Chad, the National Electricity Transmission Corporation (Société Nationale de Transport d Électricité, SONATREL), the Rural Electrification Agency (AER) and the Cameroon Electricity Corporation (ENEO) in Cameroon, which will operate the electricity transmission and distribution infrastructure constructed, as well as the population of the localities along the interconnection lines built. The project will directly affect about 8.9 million people, 6.5 million of them in Cameroon and 2.4 million in Chad. Besides interconnecting the power generation and transmission infrastructure of Cameroon and Chad, thus significantly reducing the production costs of national electricity corporations, the project will, through the electrification of the localities along the interconnection lines, help to increase the electricity access rate in both countries, thus contributing to improving the living conditions of the population and reducing poverty. The execution of works will create jobs, of which at least 15% will be for women/girls. Lastly, it will enable industries in the countries concerned, in particular, and the sub-region, in general, to develop and expand their commercial and production activities. It will also promote the regional integration and economic development of Central Africa. 2. Needs Assessment Cameroon and Chad face major economic and social development difficulties resulting from various constraints, including structural deficits and exorbitant energy costs. The electricity access is about 67% in Cameroon and 3.9% in Chad. The project seeks to: (i) improve the supply, reliability and accessibility of electricity in both countries through cross-border trade in cheap and cleaner power; (ii) promote electricity trade and regional integration; and thus (iii) contribute to Central Africa s socio-economic transformation. v

8 3. Bank s Value Added In July 2003, the Bank approved an ADF grant to finance the Study on the Interconnection of Power Networks of Member Countries of the Economic Community of Central African States (EIRE-ECCAS). In October 2013, it also approved a UA 2.5 million ADF grant to finance further studies on the Cameroon-Chad Section, which is the subject of this project. The Bank then supported ECCAS and the Central Africa Power Pool (CAPP) to structure the project and organize the Central Africa Power Sector Donors Round Table held on 17 June 2016 in Brussels. During this round table, the Bank was designated as the leader of the technical and financial partners (TFPs) of the Central Africa Power Sector and its intervention has helped to mobilize other donors to finance the project. Thus, the Bank s involvement in this investment project will enable it to give effect to the development outcomes targeted by the study that it pioneered. 4. Knowledge Management To draw useful lessons from the project, a monitoring and evaluation system will be established to document its outcomes and outputs. The lessons will be built on through: (i) project socioeconomic impact monitoring and evaluation reports; (ii) the evaluation of project socioeconomic impact by beneficiaries on project completion; and (iii) the progress reports of project executing agencies in both countries. These project socio-economic impact monitoring and evaluation reports will be posted on the Bank s website and used to improve the formulation of development policies and the design of similar future projects. vi

9 RESULTS-BASED LOGICAL FRAMEWORK Country and Project Name: Multinational Cameroon Chad: Cameroon-Chad Power Interconnection Project Project Goal: Improve the economic and social development framework of the countries by increasing the electricity access rate through cross-border trade in cheap and cleaner power. IMPACT OUTCOMES RESULTS CHAIN Sustainable economic growth and improvement of the living conditions of the population of both countries 1. Improvement in the supply of and trade in electricity between both countries 2. Improvement of access to electricity by households in rural areas 3. Reduction of greenhouse gas emissions Indicator (including CSI) 1. GDP growth rate 2. Improved electricity access rate 3. Drop in the average price of electricity 1. Quantity of power traded in GWh 2. Number of households connected 3. CO2 emissions avoided (t/yr) PERFORMANCE INDICATORS Baseline Situation (2017) Target (2022) 1. Cameroon: 3.7%; Chad: 0.6% 2. Cameroon: 67%; Chad: 3.9% 3. Cameroon: CFAF 84.60/ kwh; Chad: CFAF 100/ kwh (0) - Chad: Cameroon: (0) 1. Cameroon: 5.6%; Chad: 9% 2. Cameroon 75%; Chad: 8 % 3. Cameroon CFAF 79/ kwh; Chad: CFAF 90/ kwh Chad: , that is additional households connected; - Cameroon: , that is additional households connected [Total number of additional households connected: ] Sources: MEANS OF VERIFICATION Chad s PND ( ); GESP ; Cameroon: PDER; Bank s CSP; IMF reports ECCAS and CEMAC statistics; CAPP reports; SNE, SONATREL and AER progress reports. Sources: SNE, SONATREL and AER progress reports; Quarterly project reports; Bank supervision reports; Reports of the ministries in charge of women s and youth empowerment Risk: RISKS/MITIGATION MEASURES 1. The main risk relates to the security situation in Cameroon s Far-North Region, facing an influx of refugees fleeing terrorist attacks. Chad is also grappling with terrorist incursions and attacks in the same zone. This security situation may stretch the capacity to implement the project to the limit. In addition, the influx of refugees may increase social conflicts due to weak social service delivery capacity. 2. Another risk facing the project is the current weak capacity of the two national entities that will be responsible, each in its own sphere, for the various aspects of project implementation. Mitigation Measures: 1. Concerted and coordinated actions in the region against terrorist groups will help to mitigate the security risk. In addition, the project will contribute to enhancing the delivery of social services to the population. 2. The mitigation measures envisaged concern: (i) the institutional support that the project will provide to the executing agencies of both countries; and (ii) the monitoring of the process of recruiting experts for the agencies to guarantee the optimal performance by the experts. vii

10 COMPONENT A 1. Construction of transmission lines and implementation of the Environmental and Social Management Plan (ESMP) 2. Construction of HV/MV substations 3. Electrification of localities in rural areas 1. Number of kilometres of HV transmission lines constructed 2. Number of HV/MV substations constructed 3. Number of localities electrified Idem 3. Idem Sources: SNE and SONATREL progress reports; Consulting Engineer s reports; Bank supervision reports OUTPUTS COMPONENT B 4. Project supervision 5. Support for women s and youth empowerment (training, sensitization and provision of production kits) 6. Integration of young graduates 7. Creation of permanent jobs 4. Number of project implementation and supervision reports 5. Number of women s and youth groups supported in Cameroon and in Chad 6. Number of youths who have benefitted from preemployment internships 7. Number of jobs created 4. Idem 5. Idem 6. Idem 7. Idem 4. 8 Bank supervision reports; 12 quarterly reports of the Consulting Engineer; 1 completion report women s groups (1 500 women) and 50 youth groups (1 500 youths aged between 15 to 35 years) in each country young graduates on internship, at least 50% of them girls, in Chad and 100 young graduates on internship, at least 50% of them girls, in Cameroon direct temporary jobs, at least 15% of them for women/girls; and 250 direct and indirect permanent jobs, at least 40 of them for women/girls. KEY ACTIVITIES COMPONENTS Component A: Infrastructure Development: (1) Construction of HV/MV networks; (2) Rural electrification works; and (3) Implementation of the Environmental and Social Management Plan (ESMP). Component B: Project Management: (1) Studies, works control and supervision; (2) Support in the form of office equipment and field technical equipment; (3) Training of women s and youth groups; (4) Recruitment of young graduates; and (5) Project management activities. Resources: UA million TSF Grant : UA 27.5 million ADF Loan : UA 6 million ADB Loan : UA million IsDB : UA million EU : UA million Government of Cameroon: UA million Government of Chad : UA 0.00 million Application of funds: UA million Component A : UA million Component B : UA million Contingencies : UA million viii

11 Project approval ACTIVITIES Approval/Effectiveness PROJECT IMPLEMENTATION SCHEDULE Signature of financing agreements (grant and loans) Effectiveness of financing agreements Fulfilment of disbursement conditions Contract award (ToR, consultation, contract signature) Consulting engineer HV lines and substations - Cameroon HV lines and substations - Chad Rural electrification Miscellaneous goods Project Implementation Implementation of the RAP (Resettlement/Expropriation) Rural electrification supplementary studies Construction of HV lines and substations - Cameroon Construction of HV lines and substations - Chad Rural electrification Training of SNE and SONATREL staff Women's and Youth Socio-economic Empowerment Programme Borrowers' Report Project Supervision Supervision missions Project Audit Recruitment of the auditor Services of the auditor Completion Report ADB/ADF/TAF Report ix

12 REPORT AND RECOMMENDATION OF MANAGEMENT TO THE BOARDS OF DIRECTORS CONCERNING THE FINANCING OF THE CAMEROON-CHAD POWER INTERCONNECTION PROJECT (PIRECT) Management hereby submits the following report and recommendation concerning proposals to grant (i) a EURO million ADB loan and a UA 6 million ADF loan to the Republic of Cameroon; and (ii) award a UA 27.5 million TSF grant to the Republic of Chad, to finance the Cameroon-Chad Power Interconnection Project (PIRECT). 1. STRATEGIC THRUST AND RATIONALE 1.1. Project Linkages with Country Strategy and Objectives The project is in line with energy sector policy and national programme orientations of Cameroon and Chad, set forth in the letters of sector policies and development strategies of the electricity sub-sector which place emphasis on the development and strengthening of energy infrastructure in view of its contribution to improving access to basic social services, reducing poverty, and promoting economic growth and regional integration In Chad, the project is in keeping with the National Development Plan (PND ) and is consistent with the priorities defined in the Country Strategy Paper (CSP ) through Pillar 1: Develop Infrastructure for Strong and More Diversified Economic Growth In Cameroon, the project is consistent with the orientations of the CSP through Pillar 1: Strengthen Infrastructure for Inclusive and Sustainable Growth and with the priorities of the Growth and Employment Strategy Paper (GESP ) The project design is in line with the Bank s Central Africa Regional Integration Strategy Paper (RISP ) through Pillar 1 on Infrastructure Development. The project is also consistent with the overall framework of the Priority Integration Projects (PIPs) envisaged by the Central Africa Power Pool (CAPP), which seek to interconnect the power grids of ECCAS member countries. It will enable the countries of the sub-region to optimize the use of their energy resources by integrating power infrastructure Rationale for Bank s Involvement The Bank s involvement in this strategic project that has a regional structuring character is justified by the fact that its implementation will contribute to achieving the objectives of its Ten-Year Strategy ( ) which aims, among other things, to strengthen infrastructure financing in its regional member countries (RMCs) and to promote regional integration. The project is a continuation of actions by the Bank, which approved a UA 2.5 million ADF grant in October 2013 to finance comprehensive studies on this project. The Bank s involvement in the investment project ensuing from the studies gives it value added The project is in line with four of the Bank s High 5s, namely Light up and Power Africa, Industrialize Africa, Integrate Africa, and Improve the quality of life for the people of Africa. It is also in harmony with the Bank s Strategy, which aims to address fragility and build resilience in Africa. The Bank considers that improving equitable access to basic infrastructure services such as electricity helps to enhance the capacity of States to provide basic services to the population, thus boosting confidence and social cohesion. Cameroon and Chad are experiencing fragile situations due to their weak capacity to provide basic services. 1

13 The project is in keeping with the priorities of the CSPs of both countries, Cameroon s Growth and Employment Strategy Paper (GESP) and Chad s National Development Plan (PND) , whose main pillars are infrastructure development and strengthening. The Bank also took part in the Donors Round Table on Chad held in Paris last September, which mobilized pledges of substantial financing from major TFPs, including the Bank, for the implementation of the PND. In addition, the Bank is considered in the sub-region as a strategic partner in the energy sector, thanks to previous and current operations in the sector. Besides supporting the implementation of energy projects at the national level, the Bank plays a key role in financing multinational projects in Central Africa. For example, during the Central Africa Energy Sector Donors Round Table (held on 17 June 2016 in Brussels), the Bank was selected as the leader of the technical and financial partners (TFPs) of the Central Africa Energy Sector. This project will help to sustainably strengthen the achievements of previous projects. 1.3 Aid Coordination In Cameroon, the Ministry of Economy, Planning and Regional Development (MINEPAT) is in charge of aid coordination and cooperation with donors at the national level. Its Directorate of Regional Integration (DIR) is the Bank s focal point for aid coordination. The technical and financial partners have set up the Multi-Partner Committee (MPC) for GESP Monitoring, which is a platform for dialogue and discussions on all key development issues in Cameroon. Technical and thematic sub-committees for the alignment and harmonization agenda have been set up to support this entity. The Energy Sector Sub-committee is steered by the World Bank, with AfDB support In Chad, the Ministry of Economy and Development Planning (MEPD) is charged with coordinating donor interventions, in concert with the Technical and Financial Partners Committee (TFPC). This Committee comprises the Bank, the International Monetary Fund (IMF, the current chair), the European Union (EU), the World Bank (WB), the Development Bank of Central African States (BDEAC), the United Nations system organizations, the French Development Agency (AFD), the Islamic Development Bank (IsDB), Chinese Cooperation, Swiss Cooperation, and Arab Funds At the regional level, the Economic Community of Central African States (ECCAS) and the Central Africa Energy Pool (CAPP) coordinate donor actions, the mobilization of financing and the implementation of multinational projects in the energy sector. It is also important to mention the Bank s role as leader of the Technical and Financial Partners (TFPs) of the Energy Sector in Central Africa During project identification, preparation and appraisal missions, the Bank team held discussions with these key TFPs, notably the IsDB and the EU both of which will participate in project financing. This coordination will be continued during project implementation: (i) through the coordination of meetings of TFPs operating in the energy sector by the Cameroon and Chad Country Offices; and (ii) during various project supervision missions. 2

14 2. PROJECT DESCRIPTION 2.1. Project Objectives and Components The project objective is to improve the supply, reliability and accessibility of electricity in Cameroon and Chad. Specifically, it seeks to: (i) enable cross-border trade in cheap and cleaner electricity; (ii) promote electricity trade and regional integration; and (iii) contribute to Central Africa s socio-economic transformation. The table below presents the project components and costs. No. Component Name Table 2.1: Project Components and Estimated Cost Estimated Cost (UA million) Component Description A. Power Infrastructure A.1 HV Lines and Substations Construction of HV interconnection lines, including environmental and social costs (Cameroon: kilometres and Chad: kilometres) Construction and extension HV/MV substations (Cameroon: 4 substations and Chad: 3 substations) A.2 Rural Electrification Rural electrification (Cameroon: 409 localities; kilometres of MV networks and 368 MV/LV substations and Chad: 69 localities; 470 kilometres of MV networks and 58 MV/LV substations) B. Project Management B. 1 Project technical and financial audit B.2 Environmental and social audit B. 3 Procedures manual B. 4 Procurement and installation of management software (accounting and project management) and training B. 5 Monitoring of project activities - Study monitoring and supervision, manufacturing and construction of infrastructure (Consulting Engineer) - Implementation of the ESMP (HV lines) - Implementation of the RAP (HV lines) - Implementation of the ESMP (Rural Electrification) - Logistic support to national institutions B. 7 Integration of young graduates B. 8 Institutional support CHAD (particularly MPE and the SNE) B. 9 Institutional support CAMEROON (particularly MINEE, ARSEL, SONATREL and AER) B. 10 Youth and Women s Empowerment Programme B. 11 Support for the operation of PIUs TOTAL BASE COST Contingencies (10%) TOTAL PROJECT COST Technical Solutions Adopted and Alternatives Explored The Cameroon-Chad Power Interconnection Project falls within the general framework for interconnection of the power grids of ECCAS member countries. A 2010 Bank-funded study conducted by ECCAS identified the Cameroon-Chad power interconnection (via a 225 kv high-voltage transmission line from Maroua to N Djamena) as one of the priority regional interconnection projects. However, to enhance project impacts, additional studies, also still financed by the Bank, were carried out in 2016 to strengthen the consistency of the Cameroon-Chad Power Interconnection Project by including a 225 kv Maroua (Cameroon)-Bongor-Guelendeng-N Djamena (Chad) link, as well as a rural electrification component along transmission line corridors. The selection of the 225 kv line option is justified by the need to transport power between Central African countries over long distances. 3

15 In the short term, hydropower for the grid interconnection will be generated by the new Bini à Warak hydropower plant (75 MW) under construction and the existing Lagdo hydropower plant (72 MW) in Cameroon. In the medium term, the interconnection line will have access to a greater hydropower capacity, in view of the envisaged link between the Northern Interconnected Grid (RIS) and the Southern Unconnected Grid (RIN) in Cameroon given that the southern part of Cameroon has a considerable hydropower potential. For its part, the Chadian Government is pursuing the development of power generation through: (i) the exploitation of oil resources, which will provide opportunities for the use of fuel oil (heavy and light) for power generation in the medium term; and (ii) the development of renewable energy such as the construction of the Djermaya solar power plant for which Bank financing is solicited. Table 2.2: Alternatives Explored and Reasons for their Rejection Alternative Brief Description Reason for Rejection Each country will, using its own energy Very high average per kwh cost generation facilities, continue to address the Inadequate security of energy supply ever-growing national energy demand using thermal generation sources (costly) particularly in Chad and in the northern part of Cameroon. Continue to develop national power systems (with low voltages using thermal generation) High pollution as power will be largely (for Chad) and partly (for Cameroon) generated from petroleum products Project Type This project is an investment operation in the form of loans and grants awarded to the two countries concerned Project Cost and Financing Arrangements The total project cost, net of taxes and customs duties, is UA million, of which UA million in foreign exchange and UA million in local currency. It comprises a 5% provision for physical contingencies and a 5% provision for price escalation for costs in foreign exchange and in local currency. The project cost by component and by currency type is presented in Table 2.3 below. Table 2.3: Estimated Project Cost by Component (UA million) Components Foreign Exchange Local Currency Total % Foreign Exchange 1. Works % 2. Project Management % Base Cost % Provision for Physical Contingencies % Provision for Price Escalation % Total Project Cost % The Bank Group s overall contribution will be made through the public (ADB, ADF and TSF) windows as follows: a UA 27.5 million TSF grant [UA 11 million (country allocation) and UA 16.5 million (regional allocation)] to Chad, and a EUR million ADB loan (UA million) and a UA 6 million ADF loan [UA 3 million (country allocation) and UA 3 million (regional allocation)] to Cameroon. The Islamic Development Bank (IsDB) will provide a total financing of USD 120 million (approximately UA million) shared equitably between Cameroon and Chad. For its part, the European Union (EU) will provide EUR 20 million, or about UA million to Chad. The project cost by source of financing and by expenditure category is presented in Tables 2.4, and below. The detailed component cost by source of financing and by procurement method is presented in Technical Annexes B2 and B5. 4

16 Table 2.4: Sources of Financing (UA million) CAMEROON CHAD CAMEROON + CHAD Sources of Financing % % % F.E. L.C Total F.E. L.C Total F.E. L.C Total Total Total Total ADB loan % 0 0% % ADF Loan % 0 0% % TSF Grant 0 0% IsDB % % % % % European Union 0 0% % % Government of Cameroon % 0% % Government of Chad 2 0 0% 0% % TOTAL % % % Table 2.5.1: Project Cost by Expenditure Category (UA million) Expenditure Category F.E. L.C. Total % F.E. Works % Goods % Services % Sundry % Total Base Cost % Provision for Physical Contingencies % Provision for Price Escalation % Total Project Cost % Expenditure Table 2.5.2: Project Cost by Expenditure Category and by Source of Financing (UA million) Gvt. of AfDB ADF TSF IsDB EU Cameroon Gvt. Chad Category F.E. L.C Total F.E. L.C Total F.E. L.C Total F.E. L.C Total F.E. L.C Total F.E. L.C Total F.E. L.C Total Works Goods Services Sundry Total Base Cost Provision for Physical Contingencies Provision for Price Escalation Total Project Cost Total Table 2.5.3: Project Cost by Component and by Source of Financing TOTAL AfDB Group Financing PROJECT COMPONENT COST AfDB/CAM ADF/CAM TSF/CHAD IsDB EU CAM CHAD (UAM) (EURM) (UAM) (UAM) (UAM) (UAM) (UAM) (UAM) (UAM) A. POWER INFRASTRUCTURE Construction of HV Interconnection Lines Construction and Extension of HV/MV Substations Rural Electrification B. PROJECT MANAGEMENT Project Technical and Financial Audit Environmental and Social Audit Procedures Manual The rationale for the level of counterpart contribution is given in Annex 1. 2 The constraints related to Chad s budgetary situation owing to the exogenous shock caused by fluctuating oil prices and the heavy dependence of its economy on this resource have led to the inability of this Category 1 fragile country to pay its counterpart contribution to the project implementation cost. The analysis of the mainstreaming of fragility aspects into the project is presented in the technical annexes (Annex B. 9). 5

17 Procurement and Installation of Management Software (accounting and project management) and Training Study Monitoring and Supervision, Manufacturing and Construction of Infrastructure (Consulting Engineer) ESMP Implementation (HV Network) ESMP Implementation (Rural Electrification) RAP Implementation (Resettlement/Expropriation) Trainees (young graduates) Institutional Support CHAD Institutional Support CAMEROON Support to PIUs: SNE (Chad) and SONATREL (Cameroon) Support to CAPP Youth and Women s Socioeconomic Empowerment Programme BASE COST Provision for Physical Contingencies (5%) Provision for Price Escalation (5%) TOTAL COST Table 2.6: Expenditure Schedule by Component (UA million) Components Total 1. Works Project Management Total Project Target Area and Beneficiaries Project Impact Area In Chad, the project impact area comprises 9 cantons in 4 divisions ( départements ) and 3 regions, namely: (i) Mayo-Kebbi Est, which had a population of about in 2009 (representing 7% of the total population of Chad), (ii) Chari-Baguirmi, which had about inhabitants in 2009 (that is 5% of the country s total population), and (iii) N Djamena, which had a population of close to 1 million in 2009 (or 9 % of Chad s population), representing a total population of At the country level, the incidence of poverty is relatively low in N Djamena and Mayo-Kebbi East Regions, and moderate in the Chari-Baguirmi Region In Cameroon, the project impact area covers 30 counties ( communes ) in 8 divisions ( départements ) and 3 regions, namely: (i) the Adamaoua Region, which had a population of more than 1 million in 2010 (or 5% of the total population of Cameroon); (ii) the North Region, which had more than 2 million people in 2010 (representing 11% of the country s total population); and (iii) the Far-North Region, which had close to 3.5 million inhabitants in 2010 (that is 18% of Cameroon s population), bringing the total to 6.5 million. The project area is characterized by extreme poverty, particularly in rural areas. 6

18 Project Beneficiaries The power transmission and distribution infrastructure will directly benefit the SNE in Chad, and SONATREL, AER and ENEO in Cameroon, which will operate it. In Chad, the project will significantly contribute to improving the financial and economic viability of the SNE. The replacement of thermal power with hydropower will lead to a substantial drop in production cost, which currently stands at CFAF 240/kWh against an average tariff of CFAF 100/kWh. Therefore, the project could contribute to reducing State subsidies to the SNE and cutting tariffs by about 10%. These benefits will be strengthened as the development plans of the SNE, SONATREL, AER and ENEO are implemented, but also as the projects to reinforce and extend the N Djamena power network being prepared together with the French Development Agency (AFD), Banque Sahelo-Saharienne pour l Industrie et le Commerce [Sahel-Saharan Bank for Industry and Commerce (BSIC)] and Chinese Cooperation are implemented The project will allow for the electrification of 478 villages, 409 of them in Cameroon and 69 in Chad, and will benefit households that will have access to electricity and thus improve their living conditions. The execution of works will create no fewer than 350 temporary jobs, at least 15% of them for women/girls and about 250 permanent direct and indirect jobs, at least 15% of them for women/girls. Regarding socio-professional integration, about 150 young graduates, at least 50% of them girls (50 in Chad and 100 in Cameroon) will be able to undertake pre-employment internships to enhance their employability. Regionally, in each country, the project will enable the industries of the respective regions to develop and increase their production and commercial activities, in addition to improving their competitiveness. It will also promote regional integration and the economic development of Central Africa. 2.6 Participatory Approach Consultations were conducted as part of project design and the preparation of ESIAs and FRPs in Cameroon and in Chad, in compliance with domestic legislation and the requirements of AfDB s Operational Safeguards 1 and 2. Consultations were conducted publicly (in the regions crossed by the project) and individually with PAPs. Overall, the population expressed concern about the following main aspects: (i) the right-of-way of the new line; (ii) the project implementation period; (iii) the identification of persons likely to be affected and the time when compensation will be paid to them; (iv) the terms and conditions for compensating for affected property (buildings, crops, land, etc.); (v) project benefits for villages not electrified; and (vi) the specific needs of women. The main fears expressed by the PAPs consulted individually concerned the terms and conditions for compensation and resettlement. The expectations expressed during public consultations and by the PAPs consulted individually are quite similar. All the people consulted expect positive impacts from rural electrification In Chad and in Cameroon, this participatory approach will be maintained and reinforced during the project implementation phase through a regional Stakeholder Engagement Plan (SEP). This SEP will be implemented by the Project Implementation Unit (PIU) in close collaboration with project-impacted communities, local authorities and authorities of decentralized and external institutions. It will help to establish a social peace and transparency drive and will consist in: (i) operationalizing the system for recording and processing complaints and grievances as well as a mechanism for managing grievances by providing all stakeholders or citizens with the possibility of making their comments, voicing their concerns, acceding to information and, where necessary, lodging an appeal and seeking 7

19 redress under the redress mechanism. The Bank posted the summary of the ESIA and FRP on its website on 11 August Bank Group Experience and Lessons Reflected in Project Design The recent review of the Bank s portfolio performance in the two countries concerned and the Bank s portfolio in the Central African Region revealed the following main weaknesses in project implementation: (a) poor quality at entry due to lack of technical studies and poor cost estimates; (b) relatively long timeframes for effectiveness and fulfilment of conditions precedent to first disbursement; (c) weak capacity of executing agencies; and (d) project startup delays The proposed project takes into account lessons drawn during the implementation of national and multinational projects, particularly: (i) the coordination of regional operations (with regard to the Study on the Cameroon-Chad Power Interconnection Project); (ii) quality at entry (particularly in relation to the Lom Pangar Hydropower Project PAHLP in Cameroon); and (iii) delays in the launching of works, the financing of compensation, the mobilization of counterpart contributions, and procurement and financial management provisions (in relation to the Lom Pangar Hydropower Project and the Project to Strengthen and Extend Electricity Transmission and Distribution Networks PRERETD in Cameroon) To overcome these weaknesses and reflect the lessons learned, this project will: (i) establish a decentralized management entity to ensure better project ownership by beneficiaries and stakeholders; (ii) build the capacity of PIUs; (iii) use advance contracting to reduce procurement timeframes; and (iv) simplify conditions of compensation payment. Furthermore, the project is underpinned by recent comprehensive studies (preliminary design study, ESIA, RAP, ESMP and BDs) Key Performance Indicators Project performance will be measured using the performance indicators outlined in the resultsbased logical framework. The key project performance indicators are: (i) the quantity of power traded through the power interconnection; (ii) the electricity access rate in the rural areas covered; (iii) the CO2 emissions avoided; and (iv) the number of direct and indirect jobs created. The main project outputs in 2022 will be: (i) the construction of kilometres of 225 kv power transmission lines; (ii) the construction of 7 HV/MV substations; and (iii) the electrification of 478 localities along the power transmission lines. The project performance indicators will be included in the periodic project progress reports to be prepared by PIUs. As the project is implemented, these indicators will be analysed and compared with the project target values, and regional and international standards. 3. PROJECT FEASIBILITY 3.1. Financial and Economic Performance Key Financial and Economic Performance Indicators Table 3.1: Key Project Financial and Economic Performance Indicators Baseline scenario FIRR: 23.6 % FNPV: CFAF 184 million ERR: 43 % ENPV: CFAF 448 million NB: The detailed assumptions and calculations are presented in Technical Annex B.6 8

20 Financial performance: the financial internal rate of return (FIRR) and the net present value (NPV) were calculated based on the cost-benefit method for the construction and operation of the power interconnection infrastructure. The financial benefits taken into account are revenue from the transmission of power through the transmission line and the share of earnings from the sale of power imported by Chad from Cameroon, thus replacing thermal power with hydropower, attributable to the line. The project cost includes investments in infrastructure and operation and maintenance costs estimated at 2% of the investment cost. The analysis covers a 30-year period corresponding to a 4-year project implementation period and a 26-year project infrastructure operation period Economic performance: the economic costs used to calculate the economic rate of return (ERR) and the economic net present value (ENPV) are project investment costs net of taxes and provision for price escalation, deflated by appropriate conversion factors for equipment, works, services and labour. Maintenance and operating costs were also estimated at 2% of the investment cost. Other economic benefits are presented in the technical annexes (see B.6) Sensitivity analysis: the analysis of results of sensitivity tests shows that the project can resist: (i) a 10% increase in project costs; (ii) a 10% increase in operating costs; and (iii) a 10% drop in electricity rates. The FIRR are 22%, 24% and 19%, respectively. Therefore, the project is more sensitive to a decrease in sales that could result from: (a) a drop in electricity rates; or (b) a decline in household consumption. Regarding the latter assumption, it is necessary to adopt a shrewd connection policy, particularly for the rural electrification component Environmental and Social Impact Environment The project has been classified under Category 1 in accordance with the Bank s Environmental and Social Assessment Procedures (ESAP) for the following reasons: (i) its scope (1 024 kilometres of 225 kv transmission lines); and (ii) the major impacts and risks it will generate, particularly regarding sensitive ecosystems and a large number of project affected persons (more than 200). Environmental and Social Impact Assessment (ESIA) reports, including Environmental and Social Management Plans (ESMPs) and Full Resettlement Plans (FRPs) were prepared in February 2017 in Chad and in May 2017 in Cameroon, in accordance with national regulations and the requirements of the Bank s Integrated Safeguards System (ISS). These reports were validated at the national level and compliance certificates issued for Chad on 30 August Issuance of the certificates for Cameroon is ongoing. ESIA and FRP summaries were posted on the Bank s website on 11 August Although the choice of the transmission line layout is ideal from the environmental and social standpoints compared with the alternative analysed, the chosen layout will generate the following major positive and negative impacts and risks during the construction and operation phases: - Negative impacts during the pre-construction, construction and operation phases will include: (i) the felling of trees along the transmission line right-of-way covering a total hectares in Cameroon and hectares in Chad; (ii) the loss, modification and fragmentation of wildlife habitats and the degradation of ecosystem services, particularly around the Benue National Park in Cameroon and the Mandélia National Park and Toupouri lowlands (RAMSAR site) in Chad; (iii) health and safety risks for workers and neighbouring populations; (iv) loss 9

21 of assets and income by project affected persons (see section on resettlement for details); and (v) various forms of water and soil pollution. The main cumulative negative impacts will be the reduction of natural habitats and the disruption of ecosystem-based services. - Positive impacts: the main positive project impacts on the environment will be: (i) contribution to the reduction of greenhouse gas (GHG) emissions by the Chadian network, which mainly depends on thermal sources; and (ii) benefits associated with increased access to cleaner energy in contrast to fuel wood used by the households in the project area. Measures will be implemented to mitigate all the negative impacts and risks identified. The mitigation of the negative impacts identified during the implementation phase will mainly concern the organization of work, as recommended in specifications for contractors. Such organization will be based on binding clauses for contractors and the consulting engineer, the obligation to implement a Health, Safety and Environmental Plan including emergency provisions, as well as an environmental protection plan for sensitive environments. The total cost of the ESMP (excluding the FRP) is estimated at EUR 4.8 million, of which: (a) EUR 2.7 million for Cameroon; and (b) EUR million for Chad ESMP implementation monitoring and supervision: the Project Implementation Unit (SNE in Chad and SONATREL in Cameroon) will include an environmentalist responsible for monitoring the implementation of the ESMP. He/she will be assisted by a young environmentalist on internship during project implementation phase. The SNE and SONATREL will benefit from the technical assistance provided by the consulting engineer on environmental and social safeguards and the monitoring of ESMP implementation. The ministries in charge of the environment of both countries will monitor and control compliance with environmental and social standards during ESMP implementation. This will be the subject of a protocol agreement concluded between each PIU and the ministry. The protocol agreement will define actions to be undertaken and the logistical and financial arrangements. Climate Change As regards the climate, the project has been classified under Category 2 (average risk) in accordance with the Bank s Climate Safeguards System. The crossing of erodible zones and rugged terrain, as well as the erosion of the banks of rivers crossed were considered under layout alternatives. The design and determination of the layout retained took into account erosion and flood risk prevention and adjustment measures. Hence, less than 30% of the layout is situated in erodible terrain and a few flood-prone zones. The working designs will fine-tune the construction details and secure the final routes The project technical design takes into account: (i) the installation and erection of pylon supports outside flood-prone zones; (ii) the installation of substations outside floodprone/erodible areas and backfills; and (iii) the sizing of pylon foundations taking into account the appropriate prevailing wind speeds. Concerning mitigation, a compensatory reforestation plan will be implemented to mitigate deforestation and ensure a positive net gain in relation to what will be destroyed. This surplus will contribute to carbon sequestration. In addition, the energy to be generated in the short and medium term will be exclusively of water origin, thus contributing to reducing the carbon footprint of the power grid, particularly in Chad. 10

22 Gender Issues Although women represent about 52% of the total population in Chad, their education level, which is often lower than that of men, their day-to-day household chores (which are time consuming) and their low mobility constitute obstacles or impediments to their participation in consultations and dealing with the changes that may be induced by the project. Women and youths experience a very fragile socio-economic existence or none at all In Cameroon, women represent 51% of the total population in the project area. Although they constitute an undeniable development force, about 75% of women are still far from having access to the same rights, the same economic benefits and the same resources as men In view of the socio-economic realities of the PIA in Chad and Cameroon, the project will support the socio-economic empowerment of women and youths (girls and boys). Thus, in each of the two countries, the main aim will be to support: (i) at least 50 women economic interest groups/associations comprising about women in the development of incomegenerating activities; and (ii) 50 youth groups/associations comprising about youths aged between 15 and 35 years in the development of productive entrepreneurial projects. Specifically, the project will help these groups to better organize themselves (technical training, association management, financial management, and support), to equip themselves with production materials and to generate income, thus enabling members to improve their living conditions by satisfying their family needs. The project will procure production equipment and materials based on the list of requirements of associations and deliver them once the operational capacity of the groups/associations would have been built In addition, the project will seek to contribute to efforts to improve access to basic social services in Chad and Cameroon by: (i) supporting the decentralized services of the ministries in charge of youth affairs and women s empowerment (women s empowerment centres and multipurpose youth empowerment centres) in the project area; (ii) building the civic and moral capacity of youths and women; (iii) providing literacy education for women and youths with no schooling; and (iv) organizing awareness-raising and mobilization campaigns on the rational use of energy, the fight against electrical accidents, gender-based violence (VBG), HIV and AIDS and rational access to basic social services The Ministry of Youth Affairs and Civic Education (Directorate of Youth Socioeconomic Empowerment) and the Ministry of Women s Empowerment and Family (Directorate of Women s Socio-economic Empowerment) will be involved in implementing the project in Cameroon. In Chad, the Ministry of Youth Affairs, Sports and Leisure (Directorate of Youth Affairs) and the Ministry of Women s Affairs, Protection of Early Childhood and National Solidarity (Directorate of Women s Socio-economic Empowerment and Directorate of Social Action) will be involved. In each country, a protocol agreement will be concluded between these ministries and the respective PIUs. Employment During the high-voltage transmission line, substation and rural electrification infrastructure construction phase, no fewer than 350 temporary direct jobs will be created, at least 15% of them for women/girls, and 250 permanent direct and indirect jobs, at least 40 of them for women/girls. It will be necessary to identify and mobilize skilled and unskilled local workforce to fill these job vacancies within the prescribed timelines. The National Employment 3 BUCREP, National Population Status Report, 2014 Edition. 11

23 Promotion Authority (ONAPE) in Chad and the Ministry of Youth Affairs and Civic Education (MINJEC) in Cameroon will provide assistance to the respective PIUs in recruiting and supporting this local workforce. A protocol agreement for assistance will be concluded between these bodies and the PIUs To foster the employability of young graduates hunting for jobs, the project will recruit 50 young graduates for internship, at least 50% of them girls, in Chad and 100 young graduates for internship, at least 50% of them girls, in Cameroon. The recruitment will be done in two streams of 25 trainees for a six-month period renewable once in Chad, and three streams of trainees in Cameroon for a six-month period renewable once. These pre-employment trainees will serve as expert assistants in the Project Management Unit, the Consulting Engineering Firm, the electricity companies of both countries, and the enterprise recruited. The National Employment Promotion Authority (ONAPE) in Chad and the Ministry of Youth Affairs and Civic Education (MINJE) and the Ministry of Employment and Vocational Training (MINEFOP) in Cameroon will support the PIUs under an assistance agreement. Involuntary Resettlement The project will affect 990 persons in Chad and in Cameroon. The affected property will be mainly buildings, dwellings, trees, community property (wells and boreholes) and graves. Each country prepared and submitted a full resettlement plan (FRP) to the Bank. The summary of the full resettlement plans was posted on the AfDB website on 11 August In Chad, the Resettlement Plan valued at EUR (CFAF ) will be financed by the Bank, considering the country s economic and financial situation. In Cameroon, the Resettlement Plan worth EUR (CFAF ) will be financed by the Government of Cameroon. 4. PROJECT IMPLEMENTATION 4.1. Implementation Arrangements Institutional Arrangements Both countries will be responsible for project implementation on their territory through their respective national entities, notably SONATREL for Cameroon and SNE for Chad. The project will finance the support needed by the national entities to enable them to effectively play their respective roles The National Electricity Corporation (SNE) will be Chad s Project Executing Agency. The SNE s duties include the management of the rural electrification sub-sector. It will set up a Project Implementation Unit (PIU) under the direct responsibility of the Director General, which will coordinate all project activities. The PIU will be headed by a Coordinator who will be a Power Engineer with a rich experience in project management. The composition of the Unit is provided in Annex B.3. Considering the inadequate number of skilled SNE staff, the PIU will be strengthened by experts who will be recruited through an open call for candidature. The PIU will be assisted by the other SNE directorates in handling legal, technical, economic and financial issues as well as those relating to communication and public relations. Special emphasis will be laid on the capacity building of the SNE whose staff will work in collaboration with experts for the transfer of skills through apprenticeship. The Government will provide functional premises for the PIU and supply water and electricity. 12

24 4.1.3 The National Electricity Transmission Corporation (Société Nationale de Transport de l Electricité, SONATREL) will be the Project Executing Agency for Cameroon s component. It will set up a Project Implementation Unit (PIU) within the Corporation. A distribution expert from the Rural Electrification Agency (AER) will join the PIU team to monitor rural electrification activities. He/she will be AER s project implementation focal point. The composition of the Unit is provided in Annex B.3. The AER expert, as well as the rest of the PIU s senior officers will come from SONATREL, which already has highly qualified staff from ENEO. Their CVs will be approved beforehand by the Bank. The PIU will be assisted by the other SONATREL directorates in handling legal, technical, economic and financial issues as well as those relating to communication and public relations. The AER focal point will be assisted in the implementation of the project s rural electrification component by one (1) engineer and two (2) topographers and graphic designers who will also be designated from among AER staff after approval of their CVs by the Bank. The focal point will be supported by the other AER directorates from time to time. The Government, through SONATREL, will provide functional premises for the PIU. The project will provide SONATREL and AER with logistic support for efficient project implementation Proper project coordination at the multinational level will be ensured by the Inter- State Steering Committee for the Cameroon-Chad Power Interconnection Project and the Project for the Electrification of Border Towns and Localities in both Countries established on 10 February The Committee is a forum for consultation on operations in charge of organizing necessary consultations between project stakeholders. It will be responsible for taking strategic decisions at the supranational level. The Central Africa Power Pool (CAPP) will provide secretarial services for the Committee and facilitate strategic discussions requiring arbitration by the two countries. It will also recruit and monitor the Consulting Engineer and the project accounts Auditor, both of whom will work exclusively for the project A National Steering Committee will be established in each country. The National Steering Committees will be responsible for taking strategic decisions at the national level, monitoring effective project implementation and ensuring the achievement of set objectives. They will ensure: (i) the review and approval of the annual budgets of PIUs; (ii) synergy between project actions and the other national sector policies; (iii) the reinforcement of the participatory approach; and (iv) coordination between all national stakeholders for effective project implementation, especially with regard to cross-cutting issues Chad s National Steering Committee will comprise the representatives of the ministries in charge of energy, planning, finance, regional development, public security, women s empowerment and social affairs, youth affairs, education, health, environment and public service, as well as the SNE that will provide secretarial services for the Committee. Cameroon s National Steering Committee will comprise the representatives of the ministries in charge of energy, planning, finance, regional development, public security, women s empowerment, social affairs, youth affairs, education, health, environment and public service, the Electricity Regulatory Agency, ENEO, AER and SONATREL, which will provide secretarial services for the Committee. Procurement Arrangements Applicable procurement policy and framework: the procurement of goods, works and consultancy services financed by the Bank under the project will be in accordance with the Methodology for Implementation of the Procurement Policy of the African Development Bank approved in October 2015, and the provisions set forth in the Financing Agreement. Pursuant to this policy and after reviewing the available assessments of the procurement systems in the countries and the sector, all procurements under the project will be in accordance with the Bank s procurement methods and procedures (BPMPs), using appropriate Bank standard bidding documents (SBDs). 13

25 4.1.8 Organization of procurements: project procurements will be carried out by three different entities, depending on the type of procurement. Procurements in Cameroon will be carried out by SONATREL s Project Implementation Unit. Procurements in Chad will be the responsibility of SNE s PIU. Procurements common to the two countries (mostly the selection of consulting firms) will be the responsibility of CAPP. A procurement specialist will be recruited for the SONATREL and SNE PIUs, and will provide support to CAPP as appropriate Procurement capacity and risk assessment (PCRA): to take project specificities into account, the Bank assessed the country, sector and project risks as well as the capacity of SONATREL (Cameroon), SNE (Chad) and CAPP. The outcomes of these assessments showed a substantial risk level for procurement 4 and were used to guide the choice of a procurement system (Borrower, Bank or Third Party) for specific activities, and to determine the appropriate mitigation measures proposed in the PERCA Action Plan shown in Paragraph B.5.9 of Annex B5. The resources required to implement these measures will be derived from the Bank grant and loan. Financial Management, Disbursements and External Audit Fiduciary risk assessment and proposed mitigation measures: through its executing agency, each country will be responsible for establishing a satisfactory budget, financial and accounting management system and preparing financial reports. However, the external audit of PIRECT will be the responsibility of the Central Africa Power Pool (CAPP). At the end of the assessment mission, the PIRECT implementation fiduciary risk was deemed substantial, given the inexperience of SNE (Chad) and SONATREL (Cameroon) in implementing Bank Group operations and little knowledge of the management procedures of development institutions. The technical capacity of SNE s fiduciary team was assessed and deemed low owing to the lack of appropriate management tools that meet the Bank s requirements. SONATREL, which was established in October 2015, is still having its management manuals validated and the level of implementation of activities transferred to it is very low. CAPP s performance in the recruitment of auditors and submission of audit reports within the prescribed timeframes is quite poor. The major risks identified, as well as the mitigation measures, are summarized in the fiduciary risk assessment table in Annex B.4 (Technical Annexes) Disbursement arrangements: the disbursement of Bank Group (ADB/ADF/TSF) resources under this project will be in accordance with the provisions of the disbursement manual in force at the Bank. The disbursement methods proposed for the project are: (a) the special account method for operating expenditure, management of partnership agreements and capacity building activities; (b) the direct payment method for services, works and goods contracts; and (c) the reimbursement method in case of pre-financing with counterpart contributions of expenditure to be borne by the Bank Group (such pre-financing shall be authorized beforehand by the Bank). Cameroon s counterpart contributions will be disbursed annually in a single tranche. In Cameroon, the Caisse Autonome d Amortissement (CAA) will be responsible for opening special accounts. It will open the following local currency (XAF) special accounts in the name of PIRECT in a commercial bank acceptable to the Bank: (i) a special account to receive ADF resources; and (ii) a special account to receive the counterpart contributions of the Government of Cameroon for project activities. In Chad, the special account will be opened by the PIU/SNE and its operation will require double signature jointly with the Ministry of Economy and Development Planning (MEPD) External audit: pursuant to Bank rules, project accounts will be audited annually by an external audit firm recruited on a competitive basis and in accordance with Bank standard terms of reference (ToR). The external audit will be adapted to the specific project risks and the audit 4 For further details, consult the Technical Annexes. 14

26 terms of reference agreed with the Bank. The audit reports of each financial year will be submitted to the Bank latest six months following the closure of the financial year to which they relate. CAPP will be responsible for recruiting and supervising the external auditor Project Monitoring and Evaluation The main project phases are presented in Table 4.2 below. Project activities will be carried out based on the project implementation schedule. Each of the two PIUs has a monitoring/evaluation expert whose main duty will be to define measurable outcomes (including those contained in the results-based logical framework) as well as the methodologies and resources to be used to achieve such outcomes. He/she will have a monitoring and evaluation module incorporated into the project management software. The monitoring/evaluation expert will contribute to improving performance and accountability based on clearly defined principles. Table 4.2: Main Project Implementation Phases Period Phases Monitoring Activities/Feedback Loop Grant and loan approval December 2017 General Briefing Note Approval and effectiveness May 2018 Signature of financing agreements and effectiveness AfDB launching mission December 2017 November 2018 May 2019 May days spread over 5 financial year closures January 2022 May 2022 Contract award Physical project implementation Audit of project accounts Project completion Preparation of bidding documents Bidding and contract award Signature of consulting firm contracts Signature of works contracts Execution of contracts Preparation of periodic project progress reports Bank supervision missions Project environmental and social monitoring Bank mid-term review Recruitment of the auditor to conduct annual audits Conduct of annual audits Borrower s project completion report Preparation of the Bank s project completion report 4.3. Governance The governance risk under this project is moderate and could arise during the establishment of implementation units, particularly the selection of staff and their position within the institutional mechanism of the entities hosting them. However, it will be mitigated by the fact that the Bank will be involved in the competitive recruitment of the SNE/SONATREL PIUs staff. In addition, under its new procurement policy, the Bank still has the means to ensure precontract signature control Sustainability The project is technically, economically and financially sustainable. Its technical sustainability is guaranteed by the use of a simple technology that has been extensively tested in the two countries. Chad runs a 90 kv transmission network around N Djamena, maintained by the SNE. Project implementation will build SNE s capacity to maintain power transmission infrastructure. The new facilities will be given special attention, considering the important role that they will play in power supply in Chad. In Cameroon, project facilities will contribute to consolidating the national power transmission network. This major infrastructure will be maintained by SONATREL, which is responsible for the development, management and maintenance of power transmission networks. Rural electrification is managed in both 15

27 countries by dedicated entities. Thus, the development of facilities will comply with relevant national policies Project economic and financial sustainability will be based on increasing demand for electricity in the two countries and the region. Interconnection provides an opportunity, especially for Chad, to import hydropower from Cameroon at a more competitive price compared to thermal generation, which is currently the main source of power. The project s impact on SNE s service delivery and financial sustainability is indisputable (see technical annexes) Project sustainability will also be impacted by the quality of the agreements that will be signed for the operationalization of facilities set up under the project. A purchase contract will be signed between the Supplier and the customer for the sale of power by the Supplier and purchase of same by the customer that is the supply of power by one party to the other party. The contract will also cover, as appropriate, the delivery of the following associated services: power storage, mutual assistance, sharing of opportunities and power transfer Lastly, an interconnection operators agreement shall be signed between the SNE, SONATREL and ENEO aimed at ensuring the reliability and operability of interconnection facilities through their coordinated programming. This agreement shall also cover pricing, accounting management and procedures for emergency services and unintended exchanges between interconnection networks. The signing of these two agreements, to the satisfaction of the Bank and the Fund latest 31 December 2020, will be another loan/grant condition Risk Management The major risk faced by the project is the security situation in Cameroon s Far North due to terrorist incursions and threats, as well as the ensuing influx of refugees. Chad is also facing terrorist incursions and attacks in the same area. This situation may stretch project implementation capacity to the limit. Moreover, the influx of refugees poses the risk of increased social conflicts resulting from the low capacity to deliver social services. Concerted and coordinated actions against terrorists in the region will help to mitigate the security risk. Furthermore, investments under the project should largely contribute to enhancing the delivery of social services through greater access to power, which could contribute to mitigating social conflicts Another risk facing the project is the current weak capacity of the two national entities that will be responsible, each in its own sphere, for various aspects of implementation. The planned mitigation measures are: (i) the institutional support that the project will provide to the executing agencies of the two countries; and (ii) the monitoring of the process of recruiting experts for both entities to ensure optimal performance by the experts Knowledge Building The project is an opportunity to disseminate new knowledge for the Bank and the Governments of Cameroon and Chad. For the Bank, it is an example of support to a State in transition, namely Chad, in implementing an anchor project in a complex sector. This project will help to start the establishment of a power transmission network in Chad by providing experience in the operation of this type of infrastructure. For Cameroon, which is already involved in many interconnection projects under review, this project will be the first experiment in the management of energy trade with a neighbouring country. It will also contribute to operationalizing SONATREL through the management of a major project. Furthermore, it is an experiment in collaboration between technical and financial partners. Lastly, the contracts 16

28 for construction works and consultancy services will include specific provisions to ensure the training of SNE, SONATREL, ENEO and AER staff The Bank will play a key role in implementing the project and, through regular consultation with other partners and beneficiaries, learn lessons from this experience for similar future projects. The documentation from these meetings and supervision missions, periodic progress reports and reports from various controls will constitute a basis for knowledge building. 5. LEGAL FRAMEWORK 5.1. Legal Instrument To finance this project, the Bank will: (i) grant a UA million ADB loan and a UA 6 million ADF loan to the Republic of Cameroon; and (ii) award a UA 27.5 million TSF grant to the Republic of Chad Conditions for Bank Intervention Conditions precedent to effectiveness of the ADB and ADF Loan Agreements Effectiveness of ADB and ADF Loan Agreements shall be subject to their signature by the Bank and the Borrower, and fulfilment by the Borrower of the conditions set forth in Section of the General Conditions Applicable to Loan Agreements and Guarantee Agreements of the African Development Fund Conditions precedent to effectiveness of the TSF Grant Protocol Agreement Effectiveness of the TSF Grant Protocol Agreement shall be subject to its signature by the Donee and the Bank Conditions precedent to first disbursement of loan and grant resources In addition to entry into force of the Loan/Grant Agreements, the first disbursement of each loan/grant shall be subject to fulfilment by the Borrower/Donee of the following conditions to the full satisfaction of the Bank: (i) Other conditions: Provide evidence of establishing the National Steering Committee and designating its members. In addition, the Borrower/Donee shall: (i) (i) (ii) Provide to the Bank, latest six (6) months before works start-up, evidence of project financing closure, by presenting proof of approval of financing by other donors, notably the Islamic Development Bank (IsDB) and the European Union (EU); Provide to the Bank before or with the first request for disbursement from the special account, evidence of opening a special account in a bank deemed acceptable to AfDB, into which the loan/grant resources allocated for to the operation of the project management units will be lodged; Provide, as the works progress and, at any event, prior to any commencement of works in a given area, evidence of compensating project-affected persons in the area, in accordance with the Resettlement Action Plan (RAP) and the Bank s relevant rules and procedures, especially its Involuntary Resettlement Policy 17

29 and Integrated Safeguards System; or evidence of replenishing an escrow account for compensation of PAPs; (iii) Provide, latest six months following first disbursement, evidence of establishing a satisfactory accounting and financial management mechanism within the PIU, especially with: (a) the recruitment of its accounting and financial staff; (b) the establishment of its computerized financial management and financial information production system; and (c) the preparation of draft project progress reports and quarterly financial reports acceptable to the Bank; and (iv) Provide evidence of signing: (a) a power purchase and exchange contract; and (b) an interconnection operators agreement, to the satisfaction of the Bank and the Fund, latest 31 December Commitments The Borrower/Donee undertakes, to the satisfaction of the Bank, to: (i) (ii) Provide the Bank with any document reasonably required to monitor project implementation; Have the PIU prepare project implementation and administrative and financial management procedures manuals; (iii) Have the PIU and its contractors implement the project, the RAP and the ESMP, in accordance with national laws, environmental and social safeguard recommendations, requirements and procedures, as well as relevant Bank rules and procedures; and (iv) Provide the Bank with quarterly ESMP implementation reports, including, as appropriate, the weaknesses noted and corrective actions taken or to be taken Compliance with Bank Policies The Chad-Cameroon Power Interconnection Project is consistent with all Bank policies in force. 6. RECOMMENDATION Management recommends that the Boards of Directors approve (i) an ADB loan of EUR million and an ADF loan of UA 6 million to the Republic of Cameroon; (ii) a TSF grant of UA 27.5 million to the Republic of Chad. 18

30 ANNEXES AnnexI: CAMEROON/Rationale for the Level of Government s Counterpart Contribution to AfDB Financing 1. The project will be financed by the Bank Group through a EUR million ADB loan and a UA 6 million ADF loan to Cameroon. The counterpart contribution is estimated at UA million, representing 6.54% of the total project cost (Cameroon s share, that is UA million). This amount of counterpart financing represents the current level of contribution affordable by the country. 2. The level of counterpart contribution to AfDB financing is below the minimum rate of 50% of total project cost, as stipulated by Section of the Policy on Expenditure Eligible for Bank Group Financing. Thus, in accordance with the provisions of Section of the above Policy (revised version of 19 March 2008), the level of counterpart financing for AfDB Window was determined based on the following four criteria: (i) the country s commitment to implement its overall development programme;(ii) the financing allocated by the country to the sector targeted by Bank assistance;(iii) the country s fiscal situation and debt level; and (iv) the upper cost-sharing limit and guidelines laid down in the country financing parameters. The country s commitment to implement its overall development programme 3. Drawing lessons from implementation of its Poverty Reduction Strategy following the achievement of the HIPCI completion point in 2006, the Government, in 2010, formulated a vision for its development by This long-term vision seeks to transform Cameroon into an emerging and democratic country united in its diversity. Specifically, Vision 2035 is a benchmark for: (i) substantially reducing the poverty level; (ii) achieving middle-income country status; (iii) becoming a newly industrialized country; and (iv) consolidating the democratic process and national unity. 4. These objectives have guided the orientations of the Growth and Employment Strategy Paper (GESP) for the period , covering the first ten years of Vision The main issue concerning the implementation of GESP will be to focus on growth acceleration, formal job creation and poverty reduction. Therefore, there are plans to: (i) increase growth to an annual average of 5.5% over the period ; (ii) reduce under-employment from 75.8% to below 50% in 2020; and (iii) reduce the poverty rate from 39.9% in 2007 to 28.7% in To achieve these objectives, the Government has opted to implement a three-pronged strategy in a coherent and integrated manner, with the support of Technical and Financial Partners (TFPs), including the Bank. The strategy comprises: (a) a growth strategy; (b) a governance and strategic State management strategy; and (c) an employment strategy. 6. The presentation of this operation to the Board is taking place in a special context marked by Cameroon s graduation to ADB-window Blend Country status. Based on its recent macro-economic performance, Cameroon graduated in 2014 to the nonconcessional windows of the World Bank and the AfDB Group. This dual graduation reflects the confidence of multilateral institutions and enables the country to benefit from the resources of both the concessional and non-concessional windows of the I

31 AfDB Group. It should allow the country to finance its development, especially its ambitious infrastructure programme, in a more cost-effective manner. The country s new ambition is to graduate from a "Blend Country" to ADB Country status. Financing allocated by the country to the sector targeted by Bank assistance 7. The current public portfolio in Cameroon comprises two investment projects and one energy sector project study for a total UA million, representing 8.5% of the portfolio. The operations are: (i) the Project for the Rehabilitation and Extension of Power Transmission and Distribution Networks (PRERETD) approved in September 2010; (ii) the Lom Pangar Hydropower Project (PAHLP) approved in November 2011; and (iii) the Cameroon-Chad Power Interconnection Project Study approved in October The first project seeks to construct and extend power networks, and increase the number of power connections. The second project aims at increasing the country s power generation. The third project financed engineering studies for the preparation of this investment project. 8. With this new operation, the Bank will consolidate the achievements of previous projects in order to achieve the objectives set in the country s infrastructure development strategy. 9. Based on the foregoing, and at the request of the Government, it is proposed that the AfDB Window limit the counterpart funding to 6.54% of the total project cost, net of taxes, for the partial financing of works, and the full payment of expropriation costs and the operating expenses of the implementation unit as well as programme-related tax expenditure resulting from exemptions from custom duties and other taxes. The country s fiscal situation and debt level 10. Fiscal policy over the past three years has been moderately expansionary to bridge the infrastructure gap, especially in the energy and transport sectors. These anchor projects have been financed with external borrowing and oil revenue. 11. The signature of a three-year programme backed by an Extended Credit Facility (ECF 5 ) with the IMF is expected to contribute to stabilizing the macroeconomic framework in the medium term. For 2016, growth was scaled down slightly from 4.7 % to 4.5 %. For 2017, it should reach 3.7%, while inflation is expected to remain low (0.5 %). The fiscal deficit should stand at 3.1% of GDP in 2017 and 2.3 % in Public investment expenditure should stabilize progressively, dropping from about 8.8% of GDP in 2016 to 7.3% in 2017, then to 6.7% in 2019 at the end of the programme. Revenue (including grants) will increase moderately from 16.3% of GDP in 2016 to 16.7% in 2017 and 17.6% in A more prudent and rigorous debt management is required considering the deterioration of debt ratios. According to the last debt sustainability analysis carried out by the International Monetary Fund (IMF) and the World Bank in 2015 and 2016, the country s risk of debt distress has moved from "moderate to high". The sharp drop in crude oil prices, which is the country s main export product, has since 2015 led to the deterioration of the ratio of net present value of debt to exports of goods and 5 The Extended Credit Facility (ECF) concluded on 26 June 2017 with the IMF over a three-year period ( ), more than ten years after the previous one which led to the achievement of the HIPCI completion point in 2006, shows a financing need estimated at CFAF 1302 billion. This financing gap should be bridged by budget support operations implemented by TFPs, including the IMF, AfDB, the World Bank, the EU and AFD. II

32 services. Despite a debt ratio below the community ceiling of 70% of GDP, the financing of anchor infrastructure projects with commercial loans has led to a sharp increase in public debt, which reached 34.1% of GDP in 2016, against 15.6% in These findings call for a more prudent and rigorous debt management. To mitigate the risk of debt distress, the debt management institutional mechanism has been reinforced. The opinion of the National Public Debt Committee (CNDP), which had an advisory capacity at its inception, became compulsory in 2016 and is a pre-requisite for any loan decision. The measures to be taken by the Government will help to stabilize public debt at the 2017 baseline (36.1%) over the period , while avoiding the accumulation of arrears, especially internal debt arrears. Upper cost-sharing limit and guidelines laid down in the country financing parameters 13. The country s financing parameters (CFPs) on cost sharing highlight the country s commitment and ownership with respect to activities financed by the Bank under the project. These parameters also allow for some flexibility in determining the percentage of counterpart contribution. The Bank reviewed the level of commitment and ownership using the criteria, which include: (i) the contribution of project activities to achieving the country s development goals as outlined in the Growth and Employment Strategy Paper (GESP) covering the period ; and (ii) the alignment and linkage with the strategic pillars of the Bank s Country Strategy Paper (CSP) for Cameroon approved in July 2015 for the period , as well as the inclusion of the project financed by the Bank and the other technical and financial partners in the State budget. 14. The CFPs specify that the percentage of the total cost financed by the Bank will be estimated on a case-by-case basis according to project context and considerations, the expression of Government s commitment and ownership of project implementation, the level of co-financing with the other TFPs and the country s fiscal situation. It should be noted that the parameters are consistent with the World Bank s CFPs in Cameroon prepared in 2005 while the country was still eligible for concessional resources only. These CFPs showed that World Bank financing could reach 100% of the total project cost (tax inclusive), despite the fact that co-financing could be obtained for some projects, notably in the transport sector. These parameters have not changed despite Cameroon s graduation to the status of IBRD/IDA Blend Country in April 2014 at the World Bank and ADB/ADF Blend Country in July In light of the foregoing, and at the request of the Government, it is proposed that the counterpart contribution be set at 6.54%of the total project cost, net of taxes. This level of counterpart contribution also takes into account the size of cofinancing mobilized by the Bank and the Government from the other TFPs. Therefore, Cameroon s counterpart contribution to the project (UA million) will mainly be used to finance expropriation costs and project-related tax expenditure resulting from exemptions from customs duties and other taxes. III

33 C am er o on C am er oon C am er o on C am er o on A fr i ca A fr i ca A fr ic a A fr i ca Annex II.1: Cameroon s Comparative Socio-economic Indicator Cameroon COMPARATIVE SOCIO-ECONOMIC INDICATORS Year Cameroon Africa Develo- Developing ped Countries Countries Basic Indicators Area ( '000 Km²) Total Population (millions) , , , ,1 Urban Population (% of Total) ,1 40,1 48,7 81,1 Population Density (per Km²) ,6 41,3 65,1 33,8 GNI per Capita (US $) Labor Force Participation *- Total (%) ,1 65,7 63,5 60,0 Labor Force Participation **- Female (%) ,1 55,7 48,9 52,1 Sex Ratio (per 100 female) ,0 100,1 106,0 105,0 Human Develop. Index (Rank among 187 countries) Popul. Liv ing Below $ 1.90 a Day (% of Population) , GNI Per Capita US $ Demographic Indicators Population Growth Rate - Total (%) ,5 2,5 1,3 0,6 Population Growth Rate - Urban (%) ,5 3,6 2,4 0,8 Population < 15 y ears (%) ,3 40,9 27,9 16,8 Population years (%) ,2 19,3 16,9 12,1 Population >= 65 y ears (%) ,2 3,5 6,6 17,2 Dependency Ratio (%) ,6 79,9 54,3 52,0 Female Population y ears (% of total population) ,0 24,0 25,7 22,8 Life Ex pectancy at Birth - Total (y ears) ,4 61,5 69,9 80,8 Life Ex pectancy at Birth - Female (y ears) ,6 63,0 72,0 83,5 Crude Birth Rate (per 1,000) ,7 34,4 20,7 10,9 Crude Death Rate (per 1,000) ,9 9,1 7,6 8,6 Infant Mortality Rate (per 1,000) ,1 52,2 34,6 4,6 Child Mortality Rate (per 1,000) ,9 75,5 46,4 5,5 Total Fertility Rate (per woman) ,6 4,5 2,6 1,7 Maternal Mortality Rate (per 100,000) ,0 476,0 237,0 10,0 Women Using Contraception (%) ,1 31,0 62,2... 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Population Growth Rate (%) Health & Nutrition Indicators Phy sicians (per 100,000 people) ,3 41,6 125,7 292,2 Nurses and midwiv es (per 100,000 people) ,0 120,9 220,0 859,4 Births attended by Trained Health Personnel (%) ,7 53,2 69,1... Access to Safe Water (% of Population) ,6 71,6 89,4 99,5 Access to Sanitation (% of Population) ,8 39,4 61,5 99,4 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS ,5 3, Incidence of Tuberculosis (per 100,000) ,0 240,6 166,0 12,0 Child Immunization Against Tuberculosis (%) ,0 81, Child Immunization Against Measles (%) ,0 75,7 83,9 93,9 Underw eight Children (% of children under 5 y ears) ,8 18,1 15,3 0,9 Prev alence of stunding ,7 33,3 25,0 2,5 Prev alence of undernourishment (% of pop.) ,9 16,2 12,7... Public Ex penditure on Health (as % of GDP) ,9 2,6 3,0 7, Life Expectancy at Birth (years) Education Indicators Gross Enrolment Ratio (%) Primary School - Total ,1 101,2 104,9 102,4 Primary School - Female ,7 98,4 104,4 102,2 Secondary School - Total ,1 52,6 71,1 106,3 Secondary School - Female ,5 50,2 70,5 106,1 Primary School Female Teaching Staff (% of Total) ,2 47,1 59,8 81,0 Adult literacy Rate - Total (%) ,0 66,8 82,3... Adult literacy Rate - Male (%) ,2 74,3 87,1... Adult literacy Rate - Female (%) ,9 59,4 77,6... Percentage of GDP Spent on Education ,0 5,0 4,0 5,0 Environmental Indicators Land Use (Arable Land as % of Total Land Area) ,1 8,7 11,2 10,3 Agricultural Land (as % of land area) ,6 41,7 37,9 36,4 Forest (As % of Land Area) ,3 23,2 31,4 28,8 Per Capita CO2 Emissions (metric tons) ,6 1,1 3,5 11, Infant Mortality Rate ( Per 1000 ) Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports. Note : n.a. : Not Applicable ; : Data Not Available. * Labor force participation rate, total (% of total population ages 15+) ** Labor force participation rate, female (% of female population ages 15+) June 2017 IV

34 Annex II.2 : Chad s Comparative Socio-economic Indicators Chad COMPARATIVE SOCIO-ECONOMIC INDICATORS Year Chad Africa Develo- Developing ped Countries Countries Basic Indicators Area ( '000 Km²) Total Population (millions) , , , ,1 Urban Population (% of Total) ,9 40,1 48,7 81,1 Population Density (per Km²) ,51 41,3 65,1 33,8 GNI per Capita (US $) Labor Force Participation *- Total (%) ,6 65,7 63,5 60,0 Labor Force Participation **- Female (%) ,0 55,7 48,9 52,1 Sex Ratio (per 100 female) ,3 100,1 106,0 105,0 Human Develop. Index (Rank among 187 countries) Popul. Liv ing Below $ 1.90 a Day (% of Population) , , GNI Per Capita US $ Chad Africa Demographic Indicators Population Growth Rate - Total (%) ,3 2,5 1,3 0,6 Population Growth Rate - Urban (%) ,6 3,6 2,4 0,8 Population < 15 y ears (%) ,6 40,9 27,9 16,8 Population years (%) ,3 19,3 16,9 12,1 Population >= 65 y ears (%) ,5 3,5 6,6 17,2 Dependency Ratio (%) ,1 79,9 54,3 52,0 Female Population y ears (% of total population) ,1 24,0 25,7 22,8 Life Ex pectancy at Birth - Total (y ears) ,2 61,5 69,9 80,8 Life Ex pectancy at Birth - Female (y ears) ,3 63,0 72,0 83,5 Crude Birth Rate (per 1,000) ,3 34,4 20,7 10,9 Crude Death Rate (per 1,000) ,6 9,1 7,6 8,6 Infant Mortality Rate (per 1,000) ,0 52,2 34,6 4,6 Child Mortality Rate (per 1,000) ,7 75,5 46,4 5,5 Total Fertility Rate (per woman) ,9 4,5 2,6 1,7 Maternal Mortality Rate (per 100,000) ,0 476,0 237,0 10,0 Women Using Contraception (%) ,9 31,0 62,2... 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Population Growth Rate (%) Chad Africa Health & Nutrition Indicators Phy sicians (per 100,000 people) ,4 41,6 125,7 292,2 Nurses and midwiv es (per 100,000 people) ,9 120,9 220,0 859,4 Births attended by Trained Health Personnel (%) ,3 53,2 69,1... Access to Safe Water (% of Population) ,8 71,6 89,4 99,5 Access to Sanitation (% of Population) ,1 39,4 61,5 99,4 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS ,0 3, Incidence of Tuberculosis (per 100,000) ,0 240,6 166,0 12,0 Child Immunization Against Tuberculosis (%) ,0 81, Child Immunization Against Measles (%) ,0 75,7 83,9 93,9 Underw eight Children (% of children under 5 y ears) ,8 18,1 15,3 0,9 Prev alence of stunding ,7 33,3 25,0 2,5 Prev alence of undernourishment (% of pop.) ,4 16,2 12,7... Public Ex penditure on Health (as % of GDP) ,0 2,6 3,0 7, Life Expectancy at Birth (years) Chad Africa Education Indicators Gross Enrolment Ratio (%) Primary School - Total ,4 101,2 104,9 102,4 Primary School - Female ,0 98,4 104,4 102,2 Secondary School - Total ,4 52,6 71,1 106,3 Secondary School - Female ,0 50,2 70,5 106,1 Primary School Female Teaching Staff (% of Total) ,4 47,1 59,8 81,0 Adult literacy Rate - Total (%) ,0 66,8 82,3... Adult literacy Rate - Male (%) ,4 74,3 87,1... Adult literacy Rate - Female (%) ,8 59,4 77,6... Percentage of GDP Spent on Education ,9 5,0 4,0 5, Infant Mortality Rate ( Per 1000 ) Environmental Indicators Land Use (Arable Land as % of Total Land Area) ,9 8,7 11,2 10,3 Agricultural Land (as % of land area) ,7 41,7 37,9 36,4 Forest (As % of Land Area) ,0 23,2 31,4 28,8 Per Capita CO2 Emissions (metric tons) ,0 1,1 3,5 11, Chad Africa Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports. Note : n.a. : Not Applicable ; : Data Not Available. * Labor force participation rate, total (% of total population ages 15+) ** Labor force participation rate, female (% of female population ages 15+) June 2017 V

35 Annex III.1: Table of AfDB Portfolio in Cameroon as at 30 June 2017 SECTOR Governance Transport PROJECTS Support Project for the Modernization of the Land Registration System and Business Climate (PAMOCCA 1). Support Project for the Modernization of the Land Registration System and Business Climate (PAMOCCA 2). ADB loan ADF/ NTF Loan Kumba-Mamfe Road Project Road Programme 1: Batchenga-Léna Road Programme 2: Yaounde-Bafoussam ADF Grant Info-Com Tech Central African Backbone ,24 Water and Yaounde Sanitation Project (PADY 2) ,89 Semi-urban DWSS Project Sanitation Storm water Harnessing Studies PEMVEP 1,06 Project for the Rehabilitation and Energy Extension of Power Transmission and Distribution Networks (PREREDT) Lom Pangar Hydroelectric Project Agriculture Rural Infrastructure Support - Grassfield ,19 Agricultural Value Chain Development Project (AVC DP) Total Public National Operations Cameroon Shipyard and Industrial Private Sector Engineering Company (CNIC) AES-SONEL Investment Programme Dibamba Thermal Power Plant Kribi Thermal Power Plant Total Private National Operations Regional Environment Central Africa Biodiversity Conservation Programme -Protecting Central Africa s Elephants Programme to Rehabilitate and Strengthen the Resilience of Lake Chad Basin Systems (PRESIBALT) Regional Study on the Chad Cameroon 225 kv Energy Power Interconnection Project 1.25 Transport Facilitation on the Bamenda Enugu Corridor Regional Transport Facilitation on the Brazzaville - Transport Yaounde Corridor (Ketta Djoum 1) Transport Facilitation on the Brazzaville - Yaounde Corridor (Ketta Djoum 2) Total Public Multinational Operations TOTAL OVERALL PORTFOLIO (UA billion = USD 1.43 billion) VI

36 Annex III.2: Table of AfDB Portfolio in Chad as at 30 June 2017 SECTOR PROJECTS ADF Commitment (UA) Business Climate Improvement and Economic Diversification Support Project (PACADET) - LOAN Business Climate Improvement and Economic Diversification Support Project (PACADET) - Governance GRANT Round Table Budget Support Programme - ADF GRANT Budget Support Programme II - ADF LOAN Budget Support Programme II TSF GRANT Achievement of HIPCI Completion Point - Grant Total Governance (Institutional Support and Capacity Building) Social Project to Promote the Education of Girls and Literacy Total Social Algeria/Niger/Chad Road Project - Multinational Transport (LOAN) Algeria/Niger/Chad Road Project - Multinational (GRANT) Kyabe-Singako Road Tarring Project (GRANT) Total Transport DWSS Programme for 15 Secondary Centres (GRANT) Water and DWSS Programme for 15 Secondary Centres Sanitation (RWSSI GRANT) DWSS Programme for 15 Secondary Centres (LOAN) Total Water and Sanitation Energy Study on the Chad-Cameroon 225 kv Power Interconnection Project (GRANT) Total Energy Lake Chad Basin Sustainable Development Programme/ MULTINATIONAL (GRANT) Rural Infrastructure Support Project (LOAN) Rural Infrastructure Support Project (GRANT) Agriculture Programme to Build Resilience to Recurrent Food and Nutritional Insecurity in the Sahel (P2RS) Programme to Rehabilitate and Strengthen the Resilience of Socio-ecological Systems (PRESIBALT) (GRANT) Biodiversity Conservation Programme in Central Africa (GRANT) Total Agriculture TOTAL OVERALL PORTFOLIO (Loans: UA million & Grants: UA million) VII

37 Annex IV.1: Similar Projects Financed by the Bank and other Development Partners of Cameroon Donor Project Name Approval Date IBRD Upgrading the Transmission Grid and Reform of the Sector June 2017 VIII Amount of Financing USD 116 million IsDB Strengthening Grids USD million Société Générale- Coface / BOUYGUES Deutsche Bank + Bank Spain/ ELECNOR EXIMBANK India EU/ Cameroon ADF of the Kingdom of Spain Strengthening Networks in Douala Access Roads and Loops in Yaoundé Decree of the President of the Republic pending USD million Implementation Status Financing process finalized. Final design studies ongoing Identification mission fielded by IsDB in November 2015 and confirmation of financing subject to PDSs/FDSs and ESIA. Financing of PDSs/FDSs and ESIA by IBRD under PMDRTERS Financing under review Cameroon August 2017 EUR 45 million Financing agreement signed. Studies finalized. Start of works in 2018 Reinforcement of RIS In 2017 USD million ERD RUMPI Project (Studies and construction of a mini-hydro-electric plant and related power networks, and rural electrification of 59 rural localities) PUROIL Project Studies and construction of kilometres of three-phase mediumvoltage grids, kilometres of single-phase medium-voltage grids 5.26 kilometres of three-phase low-voltage grids, kilometres of single-phase low-voltage grids, electrification of 29 rural localities and establishment of 650 connections IsDB IsDB Project Phase 1 Studies and construction of kilometres of threephase medium-voltage grids, kilometres of single-phase lowvoltage grids, kilometres of three-phase low-voltage grids, kilometres of single-phase low-voltage grids, 2011 CFAF million 2005 CFAF million 2011 CFAF million Authorization decree signed and financing agreement signed 70% 100% 100%

38 Donor Project Name Approval Date electrification of 62 rural localities and establishment of connections World Bank (IDA) PDSEN Project Studies and construction of kilometres of three-phase mediumvoltage grids, kilometres of single-phase medium-voltage grids, three-phase lowvoltage grids, kilometres of single-phase low-voltage grids, electrification of 80 rural localities and establishment of connections IsDB IsDB Project PHASE 2 Electrification of 102 rural localities BADEA BADEA Projects Electrification of 50 rural European Union / Cameroon localities PLAN VER Projects Construction of two minihydroelectric plants in Ngoro and Batié Amount of Financing 2011 CFAF million CFAF million CFAF million CFAF million Implementation Status 100% Project ongoing Project ongoing Project ongoing Annex IV.2: Similar Projects Financed by the Bank and other Development Partners of Chad Donor Project Name Approval Date Amount of Financing AfDB Study on the Chad- 7/10/2013 UA Cameroon Power (share of Chad) Interconnection Project IsDB Solar Energy Project for Financing request USD Rural Development being negotiated million (3MW photovoltaic solar with the IsDB plant & medium-voltage and low-voltage distribution network) TBEA Construction of a crude Commercial USD 146 Exim Bank of oil-fired power plant (90 contract signed million China MW) Implementation Status Studies completed in May 2017 Pre-feasibility ongoing Pre-feasibility ongoing study study IX

39 Annex V: Map of Project Area X