AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPENT FUND MULTINATIONAL ZAMBIA AND ZIMBABWE KARIBA DAM REHABILITATION PROJECT COUNTRY: REGIONAL (ZAMBIA AND ZIMBABWE) PROJECT APPRAISAL REPORT ONEC December 2014
TABLE OF CONTENTS Currency Equivalents i Fiscal Year...i Weights and Measures. i acronyms And Abbreviations..ii Financial Information...iii Project Summary.iv PROJECT IMPLEMENTATION SCHEDULE... viii 1. STRATEGIC THRUST AND RATIONALE... 2 1.1 Project Linkages with Country Strategy and Objectives... 2 1.2 Rationale for Bank Group Involvement... 2 1.3 Aid Coordination... 3 2. PROJECT DESCRIPTION... 4 2.1 Project Objectives... 4 2.2 Technical Solutions Adopted and Alternatives Considered... 4 2.3 Project Type... 5 2.4 Project Cost and Financing Arrangements... 6 2.5 Project Target Area and Population... 10 2.6 Participatory process for project identification, design... 10 2.7 Bank Group Experience and Lessons Reflected in Project Design... 10 2.8 Key performance indicators... 11 3. PROJECT FEASIBILITY... 11 3.1 Financial and Economic Performance... 11 3.2 Environmental and Social Impact... 13 4. IMPLEMENTATION... 16 4.1 Implementation Arrangements... 16 4.2 Monitoring and Evaluation... 19 4.3 Governance... 19 4.4 Sustainability... 20 4.5 Risk Management... 20 4.6 Knowledge Building... 21 5. LEGAL INSTRUMENTS AND AUTHORITY... 21 5.1 Legal instrument... 21 5.2 Compliance with the Bank Group policy... 23 6. RECOMMENDATIONS... 24 Appendix I: Zimbabwe Macro-Economic Indicators Appendix II: Zambia Macro-Economic Indicators Appendix III: Zambia Comparative Socio-Economic Indicators Appendix IV: Zimbabwe Comparative Socio-Economic Indicator Appendix V: Map Of Project Area Appendix VI: Project Management Organogram Appendix VII: Afdb Portfolio Zimbabwe Appendix VIII: Disbursements By Financiers & Instrument Appendix IX: Options for Funding Zimbabwe Appendix X: Status of AfDB Portfolio Zambia Appendix XI: Procurement Arrangements
CURRENCY EQUIVALENTS AUGUST 2014 1 UA = 1.5474 US$ 1 UA = 6.5 ZMK FISCAL YEAR 1 JULY 30 JUNE WEIGHTS AND MEASURES 1 metric tonne = 2204 pounds (lbs) 1 kilogramme (kg) = 2.200 lbs 1 metre (m) = 3.28 feet (ft) 1 millimetre (mm) = 0.03937 inch ( ) 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 acres m Metre KOE kilogram of oil equivalent cm centimetre = 0.01 metre kv kilovolt = 1,000 volts mm millimetre = 0.001 metre KVa kilovolt ampere (1,000 Va) km kilometre = 1,000 metres KW kilowatt = 1,000 Watts m² square meter GW gigawatt (1,000,000 kw or 1,000 MW) cm² square centimetre MW megawatt (1,000,000 W or 1,000 kw km² square kilometre = 1,000,000 m² KWh kilowatt hour (1,000 Wh) ha hectare = 10,000 m² MWh megawatt hour (1,000 KWh) t (t) metric tonne (1,000 kg) GWh gigawatt hour (1,000,000 KWh) i
ACRONYMS AND ABBREVIATIONS ADF AfDB CSP DFIs EDF EU EPC EPP ESAP ESIA ESMP GDP GRZ GoZ ICB IDA ICEP KDRP MEM MEPD PBA PMU POC PSC RMC SADC SAPP TSF TS&SC UA US$ WB ZESCO ZPC ZMFO ZWFO ZRA ZVDF African Development Fund African Development Bank Group Country Strategy Paper Development Finance Institutions European Development Fund European Union Engineering, Procurement and Construction Emergency Preparedness Plan Environmental and Social Assessment Procedures Environmental and Social Impact Assessment Environmental and Social Management Plan Gross Domestic Product Government of the Republic of Zambia Government of the Republic Of Zimbabwe International Competitive Bidding International Development Association Improved Community Emergency Preparedness Kariba Dam Rehabilitation Project Ministry of Energy and Mines Ministry of Energy and Power Development Performance Based Allocation Project Management Unit Project Oversight Committee Project Steering Committee Resource Mobilization Committee Southern African Development Community Southern Africa Power Pool Transition Support Facility Technical Service and Supervision Consultant Unit of Account United States Dollars World Bank Zambia Electricity Supply Company Zimbabwe Power Company Zambia Field Office Zimbabwe Field Office Zambezi River Authority Zambezi Valley Development Fund ii
FINANCIAL INFORMATION Countries Recipient Implementing Agency Executing Agency CLIENT S INFORMATION Zambia and Zimbabwe Republic of Zambia and the Republic of Zimbabwe Ministry of Energy and Mines Zambia; and Ministry of Energy and Power Development Zimbabwe Zambezi River Authority (ZRA) FINANCING PLAN Amount (UA million) Instrument Sources Zambia Zimbabwe Total Zambia Zimbabwe African Development Fund 25.20 15.51 40.71 Loan Grant Performance-Based Allocation (PBA) Regional Operations (RO) envelop 10.34 14.86 0.00 15.51 10.34 30.37 Transition Support Facility Pillar I 0.00 7.75 7.75 N/A Grant IDA 48.47 0.00 48.47 Loan N/A European Development Fund 64.63 0.00 64.62 Grant N/A Sweden 16.16 0.00 16.16 Grant N/A Zambezi River Authority 6.21 6.21 12.43 Counterpart financing Counterpart financing Total 160.67 29.47 190.15 ADF S KEY FINANCING INFORMATION FOR ZAMBIA LOAN Interest type N/A Interest rate spread N/A Commitment fee 0.5% Service Charge 0.75% Interest Rate 1.00% Tenor 30 years Grace period 5 years PROJECT KEY FINANCIAL AND ECONOMIC OUTCOMES FIRR FNPV @ 1% (US$ EIRR ENPV@ 10% (US$ million) billion) 2.8% 70.25 27.3% 1.317 TIME FRAME MAIN MILESTONES Concept note approval August 2014 Project Appraisal Report September 2014 Board approval December 2014 Loan and Grant signing January 2015 Launching May- June 2015 Effectiveness April 2015 Project Completion Report December 2025 Last disbursement June 2026 iii
PROJECT SUMMARY Project Overview The project involves the rehabilitation of the Kariba Dam infrastructure by reshaping the plunge pool and rehabilitating the spillway. The Plunge Pool will be reshaped in order to dissipate energy from the spilled water thereby reducing the energy on impact and hence bedrock erosion which could undermine the dam foundations, leading to dam failure. The project will rehabilitate the spillway gates to avoid possible jamming in the open or closed positions both of which would result in dam failure and catastrophic regional loss of lives, livelihoods, assets and power. Needs Assessment ZRA has continuously undertaken dam safety monitoring, periodic inspections, required rehabilitation works, routine preventive maintenance and required inspections in line with standing dam safety operation procedures for Kariba Dam and according to international best practice, guided by the ICOLD (International Commission on Large Dams) dam safety guidelines. ZRA has also retained the design stage consultants to provide supervision services, inspections and advice on dam maintenance and appurtenant works. However, due to the aging of the hydro-mechanical equipment over the 50 years of continuous operations, natural deterioration has set in, a natural occurrence in hydro dam infrastructure. The spillway gates and the built-in parts have reached a condition where they can jam in either open position for flood discharge or in a closed position preventing flood discharge. In the former case, the reservoir could empty leading to total stoppage of power production. In the latter situation, the dam could be over-topped with possible damage to the dam foundations, and severe flooding and destruction downstream. The natural scour of the plunge pool behind the dam has reached a depth and expansion that poses potential danger to the dam foundations if the scour continues. The regular 5-yearly inspection, last conducted in 2010, highlighted the critical need for urgent rehabilitation of the plunge pool and upstream spillway gates and classified the risk situation as Category I, which describes these developments as severe deficiencies for urgent/immediate responsive action. In response, the ZRA commissioned a series of detailed diagnostic and design studies, a detailed hydraulic model, geotechnical investigations for the plunge pool and similar studies for the hydro-mechanical facility of the spillway. These reports and investigations were reviewed by an independent firm in 2012 which confirmed the proposed approach to the rehabilitation works. It is against this background that these urgent works are being proposed to avert a potential calamity. Bank Group s Added Value The value-added of the Bank Group in this project is the catalytic role it has played in bringing other donors into the financing of the project, as well as helping in the design of additional technical and social investigations to assure the technical, social integrity and economic soundness of the rehabilitation approach. Specifically, the Bank Group has been able to leverage internal resources under the Transition Support Facility to fund the Zimbabwe s contribution to the project costs when no other financier was in a position to assist, demonstrating strong commitment to being a development partner to countries in situations of fragility and transition, contribute to mitigation of the risk to fragility, ensuring human safety to both Zambia and Zimbabwe and the region as well as support the regional integration agenda. The Bank is also contributing to the creation of work synergy between the Southern African Power Pool and the Zambezi River Authority to enhance regional integration. iv
Knowledge Management The project will include a capacity-building component which includes training for technical staff of the ZRA and skills transfer through the supervision engineer and panel of experts. The programme will strengthen ZRA s Emergency Preparedness Plan and also includes a programme for improved community emergency preparedness. v
Anticipated Results Based Logical Framework Country and project name: Multinational: Zambia and Zimbabwe Kariba Dam Rehabilitation Project Purpose of the project: To secure the long-term safety and reliability of the Kariba Dam Hydro-Electric Scheme and enhance regional integration IMPACT OUTCOMES OUTPUTS RESULTS CHAIN Impact Safeguarded lives and livelihoods through the long term safety and reliability of the dam complex Outcome Improved safety of dam operations, extended asset life span and sustained power output on the regional power grid Component A Plunge pool stabilized Component B Spillway Structure Rehabilitated Component C Institutional Project Support Implemented Supervision Engineer Panel of Experts recruited Indicator (including CSI) Number of people potentially affected Expanded activities of ZVDF PERFORMANCE INDICATORS Baseline 3 million (est) Utilities contribution of 1% (2011) None Target Utilities contribution increased to 3% by 2015 10% by 2025 MEANS OF VERIFICATION - Dam safety, community emergency preparedness framework; ZRA inspection reports; ZVDF annual reports. Impact of water spilled 25kW/m 3 7.5kW/m 3 - ZRA & Dam safety reports Risk Lifespan of dam structure (years) 50 100 ZRA, Dam safety reports Ministries of Energy reports Annual generation sustained 6,400 GWh 10,000 GWh in 2020 onwards Percentage completion Progress Blasting No. of sluice gates repaired & fully functional Gantry Emergency gates Contract signed Quarterly progress reports Contract Signed Bi-annual Reports 0% 0% nil nil 0% 0% 0 0 0 0 100% 100% Dec 2016 3 gates Dec 2023 6 gates Dec 2020 100% Sept 2020 100% Sept 2020 1 32 7 20 ZPC and ZESCO reports Completion and inspection reports Progress Reports Completion and Commissioning reports ZRA annual reports ZRA annual report Dam Break Analysis conducted Dam Break Analysis Report 0 1 ZRA Reports RISKS/MITIGATION MEASURES Construction/completion risk and cost overruns and risk of blasting near the dam wall Mitigation Strong contractor monitoring systems and Government commitment and use of experienced blasting firms Risk Delayed procurement and disbursement Mitigation Timely Approvals from all co-financiers and advance contracting Risk Delayed commencement of works. Mitigation Cofferdam and beams manufactured in advance Risk Low Capacity in ZRA Mitigation Provision of Supervision engineer, Dam safety expects and advisor Risk Delayed Budgetary allocation for timely implementation Mitigation - Governments and ZRA to include budgets for this vi
Dispute Adjudication Board established ESMP prepared and successfully implemented Communities prepared to respond to an emergency Contract signed Annual & Dispute resolution reports -ESMP -EPP -Number of districts trained about HIV/AIDS and Gender mainstreaming Number of districts trained in ICEP (participants disaggregated by gender) 0 0 NA 1 0 1 At least 1 1 1 10 ZRA reports - ESIA report Emergency preparedness committees in Zambia, Zimbabwe Mozambique Malawi and ZRA 0 10 Improved Community Emergency Preparedness committees in Zambia, Zimbabwe and ZRA ACTIVITIES Visibility & Communications (V &C) Strategy produced & Implemented Technical Advisor TORs extended to cover Project Project Management Unit Constituted Enhancing regional trade and the sustainability of regional energy supply V&C Strategy 0 1 ZRA Reports TORs 0 1 Technical Advisors revised contract/addendum PMU Organogram 0 1 ZRA files - Report and guideline on dam sustainability and energy security on SAPP network - Joint ZRA/SAPP Committee on integrated water and energy dam risk prevention 1. Component A: Construction Activities to Reshape the Plunge Pool 2. Component B: Rehabilitating the Spillway Gates 3. Component C: Institutional Project Support - Technical Services and Supervision Consultant - Deployment of Panel of Dam Safety Experts - Undertaking Dam Break Analysis - Engaging Dispute Adjudication Board - Implementation of ESMP & Improvement of Emergency Preparedness - Visibility and Communications - Technical Advisor to ZRA - Project Management Unity & Capacity Building - Enhancing regional trade and sustainability of regional energy supply 0 1 Report and establishment agreement between SAPP and ZRA members for Joint ZARA/SAPP committee US$ 96.08 million US$ 124.62 million US$ 73.53 million Total Cost : US$ 294.23 million - vii
PROJECT IMPLEMENTATION SCHEDULE KARIBA DAM REHABILITATION PROJECT KARIBA DAM REHABILITATION PROJECT - SPILLWAY REFURBISHMENT WORKS PLAN ESIA ACTIVITY PoE Procurement 35 days Start of PoE Work Supervisor Procurement 110 days Procurement Process 110 days Supervisor hired Supervisor Activities 2920 days Review of the detailed design 160 days Other activites 2920 days Emergency Gate and New Gantry designs, fabrication and Installation Spillway Tender Process PreQualification Contract Award Construction, fabrication and installation Studies, supply, fabrication, transport Floating Cofferdam Sluice n 2 specific cofferdam Emergency gate Gantry Runway Gantry Sluice 6 Sluice 5 Sluice4 Sluice3 Sluice2 Sluice1 Gantry installation Emergency gate installation 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 30/09/ 2015 viii
REPORT AND RECOMMENDATION OF MANAGEMENT TO THE BOARDS OF DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF ZAMBIA AND A GRANT TO THE REPUBLIC OF ZIMBABWE Management submits the following Report and Recommendations on a proposed ADF loan of UA 25.20 million to the Republic of Zambia, and a grant of UA 7.75 million from the Transition Support Facility (TSF) Pillar I and a grant of UA 15.51 million from the ADF Regional Operations (RO) envelope to the Republic of Zimbabwe for the Kariba Dam Rehabilitation Project. Introduction The Kariba Dam and Hydro-Electric Scheme was constructed across the Zambezi River between 1956 and 1959 and has been central to energy security and supporting economic development in Zambia and Zimbabwe. The dam supports an installed capacity of 1,480MW of power to the two countries and generates about 6,400GWh per annum, which would increase to about 10,000GWh after the current expansion programme. It hosts the second largest hydro-electric scheme in the Zambezi River Basin after the Cahora Bassa complex situated downstream in Mozambique (which has an installed capacity of 2,075MW and annual generation of 17,000GWh). The Kariba Dam is also key to the stability of the Southern Africa Power Pool s (SAPP) interconnected network covering nine countries in the southern region. In addition to supplying power to Zambia and Zimbabwe, the dam regulates the water flows of the Zambezi River downstream and hence reduces the possibility of heavy flooding and erosion along the river banks, and reduces sudden water surges, thereby lowering threats to lives, livelihoods and assets. Furthermore it also stabilizes the flow of the Zambezi River into the Cahora Bassa Dam which supplies energy to Mozambique and South Africa. The Kariba Complex supplies 34 percent and 37 percent of Zimbabwe and Zambia s power generation, respectively. Concurrent works in progress on both the North and South Bank power stations (which fall outside the purview of this project) will increase installed capacity to 2,130MW. The Kariba Dam reservoir, extends for 280 km with a storage capacity of 185 billion cubic meters and a catchment area of 663,880 square km. After 50 years of operation, the Kariba Dam now requires a series of major rehabilitation works for its continued safe operation. The dam has had a very strict maintenance regime which has been guided by the 5-yearly dam safety inspections, conducted by a Panel of Experts, and follow-up maintenance by the Zambezi River Authority (ZRA) over the years, costing over US$ 29 million. This routine maintenance can no longer sustain the required safety levels due to the age and wear and tear on the dam structure. The urgent need for enhancing the dam safety for Kariba Dam to avoid catastrophic failure was highlighted by a five-year dam safety inspection in 2010.These assessments have been supplemented by specific detailed investigations and studies as required to ensure appropriate compliance with international dam safety standards. The proposed project will help circumvent a catastrophe which could occur should rehabilitation not be undertaken urgently. Considering Kariba s large reservoir capacity (185km 3 ), a dam failure would result in a catastrophic flooding downstream in the Zambezi River Basin. An incident of that nature would cut-off generation at both Kariba Dam and Cahora Bassa Dam, causing loss of 4,555 MW of power generation capacity (40 percent of the SAPP generation capacity excluding South Africa) with negative effects on supply to almost of the members of the SAPP interconnected network. A failure of the Kariba Dam would likely result in a flood four times larger than the largest flood on record in the Zambezi Basin which was estimated at 61km 3 over 90 days in the year 1958/59. The combined storage of the Kariba (185km 3 ) and Cahora Bassa reservoirs (52km 3 ) can cause devastating flooding of low lying 1
areas in Zimbabwe, Zambia, Mozambique and Malawi and loss of lives and billions of dollars worth of assets as well as unprecedented regional impacts. I. STRATEGIC THRUST AND RATIONALE 1.1. Project Linkages with Country Strategy and Objectives 1.1.1 In line with Zambia s Revised Sixth National Development Plan (R-SNDP), the Bank s Country Strategy Paper (CSP) for Zambia (2011-2015) has two pillars: (i) Support to Economic Diversification through Infrastructure Development; and, (ii) Support for Economic and Financial Governance. The Project is aligned to Pillar I of the SNDP. The project is also aligned to the infrastructure pillar of the Bank s Ten Year Strategy 2013-2022 (TYS) which promotes sustainable infrastructure and supports regional integration, as well as the Bank Group Strategy for Addressing Fragility and Building Resilience in Africa (2014-2019). The project is also in line with the Bank s new Energy Policy whose objectives include support to RMCs in their efforts to provide their populations and productive sectors with access to modern, affordable and reliable energy services which this project will support through sustained clean energy provision. 1.1.2 In conformity with the energy sector goal for Zimbabwe, which focuses on provision of affordable and reliable electricity to sustain economic growth, alleviate poverty, and create employment, the project will support the continued safe operation of the country s major source of generation. This goal is an integral part of Zimbabwe s strategic framework to transform the economy as outlined in the 2011 2015 Medium Term Plan (MTP) and the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIM-Asset) 2013-2018. The project also aligns with the Bank s Zimbabwe Country Brief for 2013 2015 which highlights support for infrastructure rehabilitation in the country as a tool for economic recovery. 1.1.3 This project is strongly aligned with prioritized activities outlined in the Zambezi River Authority (ZRA) s Integrated Water Resources Management Strategy and Implementation Plan for the Zambezi River Basin (2008) adopted by Zambia and Zimbabwe. The strategic plan acknowledges the need to implement critical dam maintenance programs in order to minimize the risk of catastrophic failure of the dam. It also recognizes that a secure and reliable supply of electricity is essential for accelerating and diversifying growth in member countries. The activities have been advanced through ZRA s own resources with the completion of several technical studies and an independent expert review. The project is also aligned to pillar I of the Bank s Southern Africa Regional Integration Strategy Paper (RISP) for 2011-2015 which aims to support development of regional infrastructure with a focus on energy and transport. 1.2. Rationale for Bank Involvement This intervention is targeted at safeguarding lives and livelihoods, assets and economies through ensuring the long term safety and reliability of the dam complex. Given its focus on preventive measures, the project will help in mitigating the risk of economic, social and environmental fragility (both at national and regional levels) that could result from delayed action. Kariba Dam is critical for the development of the Southern African region. It plays a critical role in energy supply and stabilising the flows of the Zambezi River thereby reducing flooding, erosion and the related impacts on the downstream activities. 2
A dam failure at Kariba would take out generation from both Kariba and Cahora Bassa complexes with catastrophic impacts on the regional economies. The project is in line with the Bank s overarching focus on sustainable infrastructure development, thus is aligned with key policies such as the Climate Change Action Plan (CCAP) for 2011-2015. The project is also consistent with key Bank frameworks such as Clean Energy Investment Framework (CEIF) and the Climate Risk Management and Adaptation Strategy (CRMA) which articulate the Bank s response to Africa s climate change challenges. The KDR project also fits into the Bank's Integrated Water Resources Management (IWRM) Policy, whose aim is to promote efficient, equitable, and sustainable development through integrated water resources management. In view of the Bank s agenda to strengthen regional integration, sustainable development and improve resilience of RMC economies it is important that the Bank participates in this project which will ensure the continued operational safety of the dam and associated infrastructure and minimum interruptions to power generation. Furthermore the bank can leverage on its experience in delivering large infrastructure projects, fostering and coordinating implementation of regional projects, capacity development and project monitoring. 1.3. Aid Coordination 1.3.1 A donor coordination framework exists that operates at national and sector levels. At national level, the coordination process is articulated in the Joint Assistance Strategy for Zambia (JASZ). A Memorandum of Understanding (MOU) signed by the Government and Cooperating Partners (CPs) provides a platform for harmonization of cooperation by CPs and alignment to Government procedures and processes. The Bank collaborates with other development partners through the Cooperating Partners Group (CPG), as well as about 20 other diverse macro and thematic sector advisory groups. Management of the development assistance is facilitated through joint programming, joint analytical work and dialogue, and joint reviews of program implementation. 1.3.2 Donor coordination in Zimbabwe is under a coordinated framework and geared towards the implementation of the Zim-Asset priority areas which include infrastructure rehabilitation. Through dialogue and donor coordination, the Bank leverages resources and supports the development partner collective agenda in Zimbabwe. Within this context and in line with the Country Brief 2013-15, the Bank will continue to deepen its collaboration in infrastructure rehabilitation, strengthening institutional capacity and governance, and enhancing private sector development to arrest fragility and build resilience. The coordination and collaboration by the Bank involves all relevant bilateral and multilateral actors, including the Zim-Fund donors. In June this year, Government set up a committee on aid coordination to oversee all aid that comes into the country and how it is utilized, for the effective implementation of the Zim-Asset. This committee aims to enhance aid predictability, mutual accountability and transparency, in the utilization of funds. The Bank administered ZimFund to which Australia, Denmark, Germany, Norway, Sweden, Switzerland and the United Kingdom are donors has played a significant role in infrastructure rehabilitation. 1.3.3 For Kariba a Resource Mobilization Committee has been established which initiated dialogue with WB and EU and the discussion then centred on Zambia borrowing and accessing all the resources on behalf of ZRA due to Zimbabwe s inability to borrow. However the option was suboptimal as it meant that Zambia carried the financing burden of a regional good which benefited both countries. The advent of the AfDB with resources that could be accessed by Zimbabwe brought a balance to the funding arrangements. The financiers have and will jointly undertake all missions and will continue to share project documents and have continuous dialogue during project implementation. 3
II. PROJECT DESCRIPTION 2.1 Project Objectives 2.1.1 The project will assist the Zambezi River Authority secure the long-term safety and reliability of the Kariba Dam complex and to forestall a potential dam failure that could disrupt commerce and livelihoods in nine southern African countries (Zambia, Zimbabwe, Malawi, Mozambique, South Africa, Botswana, Namibia, Lesotho and Swaziland) should the dam fail. 2.1.2 The objective of the proposed project is therefore to secure the technical integrity of the Kariba Dam complex for its safe operation to enable continued delivery of water for sustained power generation by the Kariba North and South power stations. At the same time, the project will forestall the potential of the dam failure that could occur if no action is taken to urgently reshape the plunge pool and stop its encroachment on the dam foundations, and to rehabilitate and modernize the spillway infrastructure. Table 2.1 : Project Cost Estimates by Components (Amounts in UA million equivalent) Component Name Estimated Cost Component Description A. Plunge Pool Rehabilitation 62.09 Reshaping of the plunge pool to limit erosion and wearing away of the pool B. Spillway Refurbishment 80.54 Design, fabrication and installation of an emergency gate, a new gantry and built in parts (BIP) and new stop beams. C. Institutional Project Support 47.52 Technical Services and Supervision Consultancy for design review, and optimization of the option and preparation of bidding documents Technical Advisors Establishment of a Panel of Dam Safety Experts Dispute Adjudication Board ESIA Dam Break Analysis Plunge Pool Additional Engineering Studies Monitoring / Technical Audit EDF Financial Audit and Evaluations Visibility and Communications Project Management Unit and Capacity Building ESMP & Emergency Preparedness Enhancing regional trade and the sustainability of regional energy supply Total 190.15 2.2. Technical Solutions Adopted and Alternatives Considered 2.2.1 The Kariba Dam complex was constructed primarily for power generation. Without the proposed rehabilitation project the infrastructure will continue degrading through age and natural deterioration to the extent that the current Dam Safety Category 1 classification will deteriorate to Category 3, which means the dam will be unsafe to operate, and power generation from the two stations will cease. The current design was confirmed after several technical studies commissioned by the ZRA. Economic cost 4
comparison of the alternative feasible options to the proposed rehabilitation project confirmed the proposed project as the least-cost. Details of the assumptions and analysis are provided in Technical Annex B7. The alternative technical solutions considered for the design of the components of the proposed project and the reasons for selection or rejection are as follows: 2.2.2 Plunge Pool Reshaping Some of the possible approaches to the plunge pool problem that were considered at earlier stages but were discarded are: Construction of a partial tail pond dam to increase tail water level by at least 5m, instead of plunge pool reshaping: the solution is more costly than the proposed plunge pool excavation, and there is limited space for a tail pond dam; Refill the existing plunge pool hole with concrete: not considered a permanent solution; Separation of adjacent jets by modification of the spillway to a bucket lip shape, for alternative sluices/ jet: this alternative is considered technically too complex and costly. The works implementation schedule could be accelerated if the selection of the retain-period for the protection flood during works would be optimized. This is to be studied as part of the detail design review to be carried out by the Technical and Supervision Services Consultant. 2.2.3 Spillway Refurbishment A system to lower the nine stop beams as a whole was perceived at detailed design stage in 1956 but was not fully designed or supplied. The alternative of stop beams assembled as a stack was studied but discarded. The Spillway Feasibility Study (2011) considered various alternatives for the temporary cofferdam, for the emergency gate, the stop beams and the gantry. The main features of the project have been defined as follows: A new emergency gate that is able to close under flow conditions. One single gate in several blocks for 6 sluices was chosen. An associated gantry was designed to lower the emergency gate as a whole and move gate s blocks from one sluice to the other. Refurbishment of grooves, sills and lintels was recommended with new built-in parts and new geometry adapted to the emergency gate. A temporary floating cofferdam is to be assembled on a spillway and floated to the spillway for standard sluices. A specific cofferdam was designed for sluice n 2. 2.2.4 The alternative of technically less complex horizontal stop beams cofferdams versus the preferred solution of a floating cofferdam has been discarded on cost grounds. Confirmation of the costs will be part of the Technical Services and Supervision consultant s Terms of reference. 2.3. Project Type The proposed intervention is a co-financed investment project for rehabilitation of critical components of the Kariba Dam complex. The economic benefits are derived from sustainability of required water for power generation from the Kariba North and South power stations, and of continued 5
economic activity in the downstream riparian areas in Zambia and Zimbabwe and the other riparian countries. Both governments are committed to this project and the other riparian states are equally supportive of the project. Furthermore benefits arise from averting the regional disaster which could result in loss of millions of lives, billions of dollars worth of assets, loss of 40% of SAPP s generation capacity (excluding South Africa) and floods of unprecedented levels. This project will be implemented in 10years a period above the normal threshold for bank projects. There are several technical reasons for this length. ZRA has chosen an implementation strategy which enables full power production, keeping three gates available throughout the works, working on one sluice at a time and only in the dry season. This results in a total of six years to rehabilitate the sluices. The fabrication of the temporary coffer dam requires 2 years after engagement of the contractors and prior to commencement of any works on the spillway. Procurement of the contractors and finalization of the works takes the remaining two years. However the supervision engineer will assess the possibility of reducing the implementation period. 2.4 Project Cost and Financing Arrangements 2.4.1. The current estimates are based on a series of feasibility and design studies commissioned by the Zambezi River Authority. The Design Reports for Plunge Pool Reshaping and Emergency Gate and New Gantry were prepared by the consulting firm that conducted the 2010, 5-year dam safety inspection and were submitted in July 2012. These reports were reviewed by a separate firm in November, 2012, which confirmed the rehabilitation design. The cost estimates were escalated to account for possible advanced infrastructure, tendering, supervision and engineering costs from 2012, along with the owner s own costs and provisional sums. The cost estimates and construction schedule have been prepared based on overall conservative hydrological conditions. 6
Table 2.4.1 : Project costs by Components Project Cost by Component Source US$ million UA million FC LC Total FC LC Total A: Plunge-Pool Rehabilitation Civil Works Contract: EDF 77.03 4.05 81.08 49.78 2.62 52.40 Contingencies / Unallocated EDF 15.00-15.00 9.69-9.69 Component 1 Subtotal: 92.03 4.05 96.08 59.47 2.62 62.09 B: Spillway Refurbishment Civil Works ADF/IDA 53.88 2.84 56.72 34.82 1.83 36.66 Hydro mechanical & Sweden 55.31-55.31 35.74-35.74 Physical Contingencies ADF/IDA 8.44-8.44 5.45-5.45 Price Contingencies ADF/IDA 4.15-4.15 2.68-2.68 Component 2 Subtotal: 121.78 2.84 124.62 78.70 1.83 80.54 C: Institutional Project Support Technical Services & Sup. Const. TSF/IDA 20.00-20.00 12.92-12.92 Technical Advisors ZRA 9.60-9.60 6.20-6.20 Panel of Experts TSF/ADF/IDA 10.00-10.00 6.46-6.46 Dispute Adjudication Board ADF/IDA 3.00-3.00 1.94-1.94 ESIA IDA 0.60-0.60 0.39-0.39 Dam Break Analysis Sweden 10.00-10.00 6.46-6.46 Additional Engineering Studies EDF 1.62-1.62 1.05-1.05 Monitoring / Technical Audit EDF 1.01-1.01 0.66-0.66 Audit and Evaluations EDF 0.61-0.61 0.39-0.39 Visibility and Communication EDF - 0.68 0.68-0.44 0.44 PMU and Capacity Building ZRA - 6.40 6.40-4.14 4.14 Emergency Preparedness Support ADF - 0.50 0.50-0.32 0.32 Contingencies ADF/IDA 9.50-9.50 6.14-6.14 Component 3 Subtotal: 65.95 7.58 73.53 42.62 4.90 47.52 TOTAL 279.76 14.47 294.23 180.79 9.35 190.15 2.4.2. The total project cost, including contingency, but excluding customs taxes, duties and interest during construction, is estimated at UA 190.14 million (approximately equivalent to US$ 294,23 million). Under the Institutional Project Support Component, contingencies have been applied for the long term contracts that will run for 10 years (Technical Services and Supervision Consultant, Technical Advisors, Panel of Experts and Dispute Adjudication Board and Project Management Unit and Capacity Building) at a rate of approximately 20% of current estimates (2% per annum). The Plunge Pool Rehabilitation has a contingency allowance of approximately 19% which includes both physical (13%) and price considerations (6%) whilst the Spillway Refurbishment component has an 8% physical and 4% price contingency. The contingency provision is considered adequate. 7
Table 2.4.2: Project Costs by Category US$ million UA million Category FC LC Total FC LC Total Works 213.81 6.89 220.70 138.18 4.45 142.63 Services 65.95 7.58 73.53 42.62 4.90 47.52 Total Cost 279.76 14.47 294.23 180.80 9.35 190.15 Table 2.4.4 :Project Costs by Sources of Financing US$ million UA million Zambia Zimbabwe Total Zambia Zimbabwe Total EDF 100.00 0 100.00 64.62-64.62 Sweden 25.00 0 25.00 16.16-16.16 ADF 39.00 36.00 75.00 25.20 23.27 48.47 IDA 75.00 0 75.00 48.27-48.47 ZRA 9.62 9.62 19.23 6.21 6.21 12.43 Total 248.62 45.62 294.23 160.67 29.48 190.15 2.4.3 The project will be financed by the AfDB Group, World Bank, (WB), European Development Fund (EDF) and Sweden. The beneficiaries, Republics of Zambia and Zimbabwe, will provide US$19.2 million towards the project costs (6.5% of total cost) through the ZRA contribution. This includes the existing contractual commitments with the Technical Advisors until May 2018, along with provisions for a continuation of these services subject to satisfactory performance, the incorporation of Project Management and Capacity Building components under the ZRA budget, and a provision of contingencies to account for potential time extensions of up to two years. The contributions are considered sufficient to meet the co-financing requirements of the African Development Bank Group. Table 2.4.5: ADF Allocation from PBA and Regional Operations Window US$ million UA million Country PBA RO TSF Total PBA RO TSF Total Zambia 16.00 23.00-39.00 10.34 14.86-25.20 Zimbabwe - 24.00 12.00 36.00-15.51 7.75 23.26 Total 16.00 47.00 12.00 75.00 10.34 30.37 7.75 48.47 2.4.4 Bank Group financing, representing 27% of the total project cost estimates, will be sourced from UA 25.20 million ADF loan to Zambia (of which UA 10.34 million will come from Performance Based Allocation (PBA) and UA 14.86 million from the Regional Operations envelope) and UA 23.26 million grant to Zimbabwe comprising of UA 7.75 million from the Transition Support Facility (TSF) 1 and UA 15.51 million from the ADF RO envelope. The RO resources will be accessed on the basis of the regional nature of the benefits from the Kariba Dam and the role of the Kariba complex in the SAPP. 2.4.5 With regard to Zimbabwe s access to the RO envelope, under Section 4.13 of the Strategic and Operational Framework for Regional Operations, ADF/BD/WP/2008/16, countries in arrears such as Zimbabwe can access RO resources if the project is structured in such a way that the financial and implementation responsibilities for the project are not with the sanctioned country, but are undertaken by 1 Under ADF-13 negotiations Participants agreed that the participation of fragile states in regional operations could be further strengthened by leveraging resources from the TSF, with a TSF/RO ratio of 2:1 (instead of 1.5:1.00 that is applied to PBA/RO leverage ratio). See Report on the Thirteenth General Replenishment of the African Development Fund (ADF-13 Report). 25 October 2013. ADF/BD/WP/2013/122. NB Furthermore Pillar 1 Resources can now leverage regional resources. 8
another participating country or a regional organization. The KDR project has been designed to comply with this provision, whereby the ZRA will be the Executing Agency. ZRA will therefore undertake the implementation and financial responsibilities of the Project on behalf of Zimbabwe and no resources from the Bank Group will go directly to Zimbabwe as demonstrated in Fig 1 below. Two tripartite protocols of agreement (one for the TSF grant and another for the ADF RO grant) will be entered into among (a) Zimbabwe, (b) ZRA and (c) the Bank and the Fund, on behalf of the TSF, in the case of the TSF grant and the ADF in the case of the ADF RO grant. In addition to the standard language relating to the grants, the tripartite protocols of agreement will spell out the implementation and financial management arrangements. A financial management assessment of ZRA has been carried out which concluded that ZRA satisfies the Bank Group s minimum financial management requirements. Three options were considered for possible channelling of funds accessed by Zimbabwe as discussed in Appendix IX. Figure 1 2.4.6 With the Kariba complex being jointly owned, and the Government of Zambia contributing to the rehabilitation works a total of US$ 248 million from a combination of grants (US$ 125 million) and loans (US$ 114 million) compared to the Zimbabwe grant contribution of (US$ 36 million), the two Governments agreed to share the burden of the loan repayment obligation of Zambia 2. Accordingly the loan component of the Zambia contribution of US$114 million will be on lent to ZRA. ZRA will in turn get a water tariff award that will enable it to meet the loan repayments through water sales to the two national utilities. Refer to paragraph 3.1.2. The EDF and Sweden are providing grant resources (US$125 million) to the Government of Zambia which will be passed on to ZRA. 2 The two governments have agreed to share the repayment burden independent of the arrangements put in place by the financiers. 9
2.5. Project Target Area and Population 2.5.1 Zambia and Zimbabwe will be the direct beneficiaries of the rehabilitation. The jointly owned ZRA will benefit from securing the Kariba Dam and the national power utilities (Zambia Electricity Supply Company (ZESCO) and Zimbabwe Power Company (ZPC) will benefit from improved security associated with continued operation of the dam. 2.5.2 Benefits will accrue directly within the regional context of the Zambezi River basin, particularly to the downstream riparian states of Mozambique and Malawi. The Zambezi River basin is shared among eight riparian states, including Zambia and Zimbabwe. The Kariba Dam is part of an integrated infrastructure platform within the basin, which includes the Cahora Bassa Dam operated by Hidro-de Cahora Bassa (HCB) in Mozambique. The benefits through avoided disaster are therefore substantial. Estimates of the exact number of people and the economic value will be available as part of the Dam Break Analysis. The Kariba dam has a combined power generation capacity of 1,480MW. Operations of the Kariba dam and its influence on water flows downstream have an impact on the operations of the Cahora Bassa which has a capacity of 2,075 MW. 2.5.3 Regional benefits will be substantial. These will be realized through avoided catastrophe in the Zambezi River basin and continued power production. The contribution of the Kariba Dam Hydro-Electric Scheme to the Southern African Power Pool, both in terms of generation capacity and stability of the system, will be assured through the rehabilitation works and continued safe operation of the dam. 2.6. Participatory process for project identification, design Identification, design, preparation of the project and its safeguards instruments benefited from extensive public consultation carried out during the preparation and appraisal missions as well as from the ESIA currently under preparation, Resettlement Policy Framework and ESMP to be prepared as part of the ESIA. Consultations involved local and national government authorities, members of cooperatives and communities supported by the Zambezi Valley Development Fund (ZVDF) associations, youth, church members, representatives of service, health and education sectors, traders NGOs, lodge owners and other stakeholders of the project. The major outcome was the need for emergency preparedness at community level. 2.7. Bank Group Experience and Lessons Reflected in Project Design 2.7.1 In Zambia, the Bank started operations in 1971. Since then it has financed 37 operations in the country for a total amount of over UA1 billion. The projects include energy projects such as Itezhi Tezhi Hydro Power Generation and Transmission project (UA 59 million) and the Katima-Mulilo interconnector (UA 4.85 million) between Zambia and Namibia. In the water sector, the Bank is also supporting Phase I of the Rural Water Supply and Sanitation project (UA 15 million) and the Nkana Water Supply and Sanitation Project (UA 35 million). The Bank is also supporting the Kazungula road and rail bridge also crossing the Zambezi River with portions on both Zambia and Zimbabwe. 2.7.2 In Zimbabwe, Bank operations started in 1982. Since then it has financed 35 operations in the energy and water sectors totalling UA 484.4 million. Currently the Bank s involvement in the power and 10
water sector is through the operations of the Zimbabwe Multi-Donor Trust Fund (ZimFund). In the power sector, the Emergency Power Infrastructure Rehabilitation Project Phase I (US$ 35million) and II (US$32.94 million) under ZimFund aim to enhance utilization of existing capacity by supplying power in an environmentally sound manner. In the water sector, intervention is through the Urgent Water Supply and Sanitation Rehabilitation Project Phase I (US$ 30 million) and Phase II (US$ 34 million). The project will ensure clean and reliable supply of water to prevent the reoccurrence of waterborne diseases. 2.7.3 The KDR project design has drawn on lessons from these projects, including other ongoing and completed regional and national Bank-financed hydropower generation and rehabilitation projects. The following lessons have been incorporated in the design of the project: (i) Large infrastructure appraisals should ensure comprehensive assessment of risks and assumptions and the inclusion of adequate mitigation measures at feasibility stage; (ii) Feasibility and other design studies should be thoroughly analysed for project optimization and efficiency during preparatory missions before undertaking appraisal missions. To that end techno-economic studies will be done at design review stage; (iii) Project management capacity constraints affect timely implementation of complex infrastructure projects. Since this is ZRA s first major project since establishment, the project design and implementation arrangements include significant technical assistance and resources for capacity building for ZRA to which all the Pillar1 resources will be applied and. (iv) Donor coordination has been strengthened through joint missions and sharing project documents and progress in project processing to avoid potential delays in project implementation; and (v) The Bank has taken cognizance of the Kariba Dam construction legacy issues in order to avoid delays to project implementation due to historical resettlement problems being brought into the rehabilitation project. The project will carry out a detailed analysis of the activities of the Zambezi Valley Development Fund (ZDVF) which has been established by the ZRA to address some of inequalities arising from the Kariba Dam Construction project. 2.8. Key performance indicators The following indicators have been discussed with the implementing agencies and shall be applied to measure the impact of the project. The list of proposed indicators is: - Sustained power supply and increased reliability of the Dam complex (MWh); - Plunge Pool Energy dissipation levels (kw/m 3 ) - Annual Electricity produced (MWh); - Number of beneficiaries to corporate social services (ZVDF) (disaggregated by gender) - Number of districts undertaking Emergency Preparedness training (participants gender disaggregated) - Number of HIV/AIDS and gender awareness sessions; - Report and guideline on dam sustainability and energy security on SAPP network Joint ZRA/SAPP Committee on integrated water and energy dam risk prevention III. PROJECT FEASIBILITY 3.1. Financial and Economic Performance 3.1.1 The financial analysis of the rehabilitation was conducted on the basis of the incremental approach, i.e. on the basis of the differences in costs and benefits between the, with and without project scenarios. The project is considered financially viable with a net present value of US$70.25 million; and 11
internal rate of return of 2.8%, compared to the weighted average cost of capital to the project of about 1% 3. Capital cost overruns is the greatest risk to the viability of the project and is exacerbated by the long (10 years) implementation period. Table 3.1:Main Financial and Economic Indicators PARAMETERS VALUES FIRR 2.8% FNPV (@1%) 70.25million EIRR 27.3% ENPV (@10%) 1.317 billion 3.1.2 The ZRA is a financially autonomous not-for-profit organization that generates operating revenue through water tariffs charged to the power utilities for water consumed in the generation of electricity. The formula used is intended to provide the ZRA with sufficient revenues to carry out the mandated functions, including operation and general maintenance but not to generate profits or finance major rehabilitation works. The current tariff structure consists of two-parts: (i) a fixed monthly charge on a take-or-pay basis; and (ii) a volumetric charge per cubic meter (m 3 ) billed monthly. The formula is reviewed every three years with annual inflation adjustment. The ZRA has experienced a steady water supply from 2007 to 2011, averaging around 35,000 million cubic metres in the past 10 years. Tariffs have increased roughly 10% per annum from 2008 to 2011. Income in 2013 stood at US$18.3 million against operating expenditure of US$13,4 million.. Under the Base Case Scenario, which takes into account the approved water tariffs till 2016 and annual inflation adjustments thereafter, ZRA will be in a position to repay its loan obligations related to the rehabilitation. The ZRA charges constitute between 2 and 3 percent of total revenue requirements of the electricity utilities in the two countries and therefore has insignificant impact on end-user tariffs in practical terms. 3.1.3 The project is also economically viable with a high level of economic internal rate of return (EIRR), and present value of net benefits (Table 3.1). The analysis was carried out on incremental basis of with and without project scenarios and by comparing quantifiable economic project costs to economic benefits attributable to the project, and discounted over a conservative 40 years compared to the expected 50-year life of the rehabilitated assets and the new plunge pool. Costs comprise: (i) project capital cost; (ii) fixed operation and maintenance costs of the rehabilitated assets and the plunge pool; and (iii) economic cost of generated power made possible by the incremental quantities of water attributable to the project, based on system-wide economic cost of generation (US$ 0.12/kWh). Benefits are taken as the incremental power generated from the water made available by the project valued at the estimated willingness-to-pay of US$ 0.27/kWh at the bulk supply level. The complete analysis and assumptions are detailed in the Technical Annex B.7. 3 It is expected that only the loan component of the total financing, US$ 114 million, will be on-lent by Zambia to ZRA at a rate of 2%. ZRA will benefit from the full grant amount, US$161 million, which is being provided to both countries. The tariff award to ZRA is meant to cover only operating and maintenance costs with no return to equity. Therefore, for this analysis the project Weighted Average Cost of Capital (WACC) has been rounded up to 2%. 12
3.2. Environmental and Social Impact 3.2.1 Environment 3.2.1.1 This project is being processed as an emergency due to the nature of the potential impacts from non-action. It is not expected that the rehabilitation works will result in additional operational impacts, over and above those that have occurred over the past 50 years. Baseline studies will be undertaken to determine the Direct Area of Influence based on the footprint of the proposed rehabilitation works. This Direct Area of Influence will include the access road for the plunge pool rehabilitation, the rock disposal site selected, Contractor Camp site, and Spillway rehabilitation; ecological characteristics in close proximity to the Dam wall and broader downstream sensitive environment that may be impacted. 3.2.1.2 The project development objective is to improve the safety and operational performance of the existing dam. The configuration of the dam will not change, nor any significant change in spillway or the overall structure. Land acquisition and resettlement is not anticipated by the project interventions. No change is anticipated in the reservoir volume. No significant impact is anticipated on livelihood systems as a result of the project interventions. The Project overall should have beneficial effects on the environment through more reliable and efficient provision of electrical power from a renewable resource and improved environmental and social management within the Kariba Dam Complex. 3.2.1.3 The ESIA 4 is still under preparation and will not be ready in time for posting for the mandatory 120 days for Category 1 public sector operations before Board consideration. A waiver is therefore being sought to present the project to the Board with the following documents in lieu of the ESIA: (i) Dam Safety & Emergency Preparedness plan; (ii) TORs for the Panel of experts and composition; and (iii) An assessment of the potential environmental and social impacts/risks associated with this operation and type of impact/risk mitigation plan and related costing required for this project, and provision has been made for the implementation of the ESMP and Emergency Preparedness. The ESIA and ESMP will however be produced and disclosed before commencement of works. The ESIA exercise is underway by ZRA Consultants and will be completed by February 2015. The ESIA shall comply with the legal and regulatory requirements of both Zambia and Zimbabwe Environmental Acts as well as the WB and AfDB environmental and social safeguards policies. Once the Final ESIA and ESMP Reports are released, AfDB shall disclose the reports on their respective websites for 120 days prior to first disbursement. It must be noted that this operation is being treated as an emergency by the co-financiers and to that effect has been exempted from normal ESAP procedures. The WB is invoking its Emergency Procedures which allow for the ESIA to be produced and disclosed after Board approval but before disbursement. The EU is processing on the basis of an Environmental Prospectus with the ESIA being required as an undertaking. Therefore delays from the Bank will compromise financial closure. 3.2.1.4 The Technical Services and Supervision Consultant (TS&SC) shall review the ESIA, ESMP and proposed Bill of Quantities for impact management, mitigation and monitoring to ensure that the relevant Environmental Clauses and Bill of Quantities are included in the Tender Documents. The contractors upon award of contracts will be expected to prepare Construction ESMP based on the ESIA and ESMP reports during the pre-construction phase. 4 In view of the co-financing arrangement between AfDB and WB, one ESIA will be produced and will be used by all the four financiers participating in this project. The ESIA is currently being undertaken by a single sourced consultant, originally engaged to undertake the ESIA for the Batoka Gorge Hydropower Project and is being financed by the WB. 13
3.2.1.5 However, in the context of dam failure, the focus in the emergency preparedness plan is saving lives. Moreover, the legacy issue of the Tonga people shall continue to receive support from the ZVDF. It is recognized also that in the context of the new Batoka dam, the ESMP shall include plans and actions for enhancing the benefits of local communities, through the ZVDF. Climate change 3.2.1.6 The Intergovernmental Panel on Climate Change (IPCC) has categorized the Zambezi as the river basin exhibiting the worst potential effects of climate change among 11 major African basins, due to the resonating effect of increase in temperature and decrease in rainfall. The Zambezi runoff is highly sensitive to variations in climate, as small changes in rainfall produce large changes in runoff. Over the next century, climate change is expected to increase this variability, and the vulnerability of the basin and its hydropower dams to these changes. 3.2.1.7 The future picture for Southern Africa s climate is increasingly clear, based on observed trends over the past century and increasing confidence in the range of climate change scenarios developed. Overall, the Zambezi will experience drier and more prolonged drought periods, and more extreme floods. As a result, ZRA shall prepare a Climate Change Action Plan during the course of project implementation. 3.2.2 Gender 3.2.2.1 The project will rehabilitate an existing dam whose power supply has been available to the citizens of the two countries for almost half a century. While the project activities shall not directly impact on any particular gender group, it suffices to mention that the energy supplied by the dam represents a significant source of energy available in the two countries. Hence any development programs dependent on reliable and sustainable energy supply will be impacted upon in the event of interruption. The two countries have been embarking on rural electrification programs which are expected to provide crosscutting influences on both social and economic development, thereby influencing a nation s ability to achieve sustainable development as well as meet the United Nations Millennium Development Goals (MDGs). In Zambia, for example, an estimated 97% of rural people currently have no access to electricity and yet electrification or availability of clean cooking fuels could reduce poverty, improve health conditions, and increase standards of living. 3.2.2.2 Access to electricity brings along a number of subsidiary activities and benefits which are more advantageous to women, i.e. longer working hours which could lead to improved household incomes, backyard industries like hammer mills, metal work, improved service delivery e.g. health and education. Therefore, when a community is electrified, their livelihoods are likely to improve. 3.2.2.3 While there is continued supply of electricity to the two countries from the Kariba dam among other sources, the involvement of women in the planning and design is crucial if the benefits are to accrue to all the citizen. The Gender and Energy Network of Zimbabwe (GENEZ) and the Zambia Gender and Energy Network (ZGEN) are hard at work to put the gender agenda in why gender matters in energy. This is because of the realization that women and men have different energy roles and needs; women bear the main burden of biomass; women s invisible human energy crisis needs modern energy sources; and women and men experience energy poverty differently. It is in this context that GENEZ and ZGEN will 14
ensure that the benefits from sustained power supply in the two countries and with the Kariba Dam s contribution include women as key beneficiaries. 3.2.2.4 Among the complementary initiatives of the project shall be the implementation of the improved community emergency preparedness of populations living in the lower reaches of the Zambezi River which shall look at special needs of the vulnerable people including women and the elderly (see paragraph 3.2.3.5). In addition, the project will ensure that both men and women who are able and willing to work get jobs at the construction site during implementation of the rehabilitation works. While it is not expected that a lot of jobs shall be created both during construction and operation due to the nature of works 5, efforts shall be made to consider local people (men and women) for the unskilled and administrative roles. Furthermore, the HIV/AIDS and Sexual Transmitted Infections awareness and prevention campaigns will have a special focus of women and girls who need to be reached with timely and accurate information. 3.2.3 Social 3.2.3.1 This is a rehabilitation project which will not generate significant impacts on the societies living in the project area. The outcomes of the project, however, will have far reaching benefits to communities from both the point of view of power supply, and the security and safety of the people living in the riparian areas downstream of the dam if there were to be a catastrophic failure of the dam. The economic effects of dam failure and subsequent loss of power would be enormous and so would lives and properties lost and destroyed. 3.2.3.2 The successful rehabilitation of the project will ascertain sustainable economic growth and increasing prosperity over the coming period within the SADC region. The electricity sector is seen as central to catalyzing infrastructure projects that drive both regional integration and economic growth, and energy security will continue to be increasingly important for sustained development across southern Africa. The long-term growth prospects and security of the SAPP are heavily dependent upon availability of the hydropower resources of the Zambezi River basin. Hydropower remains an important but underrepresented contributor to the SAPP, accounting for 17% (9,474 MW) of the overall generation capacity. The Zambezi River basin accounts for roughly 50% of this, with close to 5,000 MW of installed capacity and a similar amount planned for further development. 3.2.3.3 Furthermore bringing the condition of the dam to a sound operational status would mean avoiding a catastrophic release of water from such a large reservoir with a capacity of 185 km 3 to the downstream areas including effects of the Cahora Bassa dam. The project would hence prevent devastating flooding of low lying areas of Zambia and Zimbabwe, Mozambique and Malawi, potentially affecting more than 3 million people. 3.2.3.4 The initial development of the Kariba Dam between 1954 and 1959 involved the resettlement of 57,000 Tonga peoples with 34,000 resettled in Zambia. The associated impacts have been well documented and subsequent efforts have been implemented to improve the lives of affected people through the ZVDF. Furthermore, the on-going Batoka Gorge Hydro Electric System (HES) ESIA will 5 NB These are very specialised works with very limited potential for engaging locals. Unskilled labor may be required for removal of rubble from blasting and removed secondary concrete. This is rehabilitation the chances of bringing new people for operations are very low as ZRA already has experts who are already on the job. 15
provide a detailed assessment of the efficacy of the ZVDF to inform any Government response to associated historical issues. 3.2.3.5 Of significance is the benefit to communities as regards emergency preparedness both during rehabilitation and during operation. The ZRA has updated and revamped the Emergency Preparedness Plan which lays out the roles and responsibilities of various entities, and stakeholders who would be involved in case of an emergency. It further classifies the types of emergencies and likely causes with guidelines for responses to be followed by the responsible entities and officials operating the dam. The project has included an additional element of preparedness which is community based. While the ZRA Emergency Preparedness Plan (EPP) dwells more on identification of emergency and communication with various entities, there is need to ensure that the affected communities will be able to react accordingly and be able to interpret the messages in a timely and correct manner. Based on the DMMU (Disaster Management and Mitigation Unit) in Zambia and CPU (Civil Protection Unit) in Zimbabwe plans, the project shall develop a framework which would be applicable to all four potentially affected countries (Zambia, Zimbabwe, Malawi and Mozambique) synchronized with the EPP prepared by ZRA. This activity will be implemented in collaboration with other identified stakeholders namely UN-OCHA (Office for Coordination of Humanitarian Assistance, Zimbabwe and regional office in Pretoria) and Red Cross Office (Zambia). 3.2.3.6 As part of the capacity building and training for the emergency preparedness at district level there will be messages of gender mainstreaming and roles and responsibilities of men and women in this context. In addition, as part of their out-reach to communities, the trainers will be requested to deliver other messages on prevention and awareness about communicable diseases such as HIV/AIDS, STI and malaria. 3.2.4 Involuntary resettlement The proposed project includes two rehabilitation components both of which require works in situ on existing infrastructure to avoid potential catastrophic failure of the dam and secure operations in accordance with international dam safety standards, hence it is not expected that there will be physical relocations. During implementation, however, there could be, though limited, potential for land acquisition linked to material sourcing leading to involuntary resettlement and/or restrictions of access to resources or livelihoods. As a result, a Resettlement Policy Framework guided by WB Policy and consistent with AfDB s Involuntary Resettlement Policy is being prepared which will ensure prior agreement on a transparent mechanism in the event that any land acquisition is required for waste dumps, access routes or construction sites, etc. IV. IMPLEMENTATION 4.1. Implementation Arrangements 4.1.1 Institutional Arrangements: the ZRA is responsible for implementation of the Project. The ZRA was established bilaterally by Zambia and Zimbabwe as an organization with responsibility for development and management of the shared sections of the Zambezi River between the two countries. Four main strategic functions are outlined in the schedule to the Zambezi River Authority Acts Nos. 17 and 19 of 1987 of Zambia and Zimbabwe, respectively. Included among these responsibilities is operation, 16
monitoring and maintaining dams on the Zambezi River and submitting development plans and programmes to the ZRA Council of Ministers for approval. 4.1.2. The Council of Ministers is the governing body. It consists of four members, two Ministers each from the Governments of the Republic of Zambia and Zimbabwe. A Board oversees operations and is comprised of the Permanent Secretaries of the ministries of Energy and Finance, along with two independent Board members from each of the contracting states. 4.1.3. The ZRA Board which reports to the Council of Ministers will serve as the Project Steering Committee with responsibility for overall approval of project plans and budgets, along with communication with both Governments. A Resource Mobilization Committee has been constituted to raise funds for the project and a Project Coordinating Committee has been constituted to coordinate all intergovernmental matters. A Project Manager has been designated and is supported by the Projects and Dam Safety section of ZRA who are responsible for all project management and coordination. 4.1.4. The ZRA has contracted its own Technical Advisors, Tractebel Engineering, an international engineering firm with specialists in large dam projects to support it in implementation of the Project. The firm was the designer of record for the dam and has continued to provide technical advice on operations and maintenance. Implementation will benefit from an independent Panel of Experts that will provide review and advisory functions during implementation as well as a Dispute Adjudication Board which will address all disputes during project implementation. 4.1.5. A Technical Services and Supervision Consultant (TS&SC) will be responsible for confirming the design criteria, reviewing the design reports and drawings, assisting the ZRA in the preparation and implementation of the tendering processes, and supervision of the works, including final commissioning after the defects liability period. The TS&SC will be responsible for ensuring integration of the plunge pool and spillway works contracts. The project organogram is provided in APPENDIX IV. Procurement Arrangements: 4.1.6 In light of the fact that financing will come from multiple sources and certain components will be jointly-financed, the Executing Agency has requested for an integrated approach to procurement management. In this regard, the Executing Agency has submitted a request that the Bank Group waive the application of the Bank Group s procurement rules and procedures for jointly-financed contracts and allow the use of the WB s procurement guidelines and bidding documents with regard to such contracts. Section 1.17(b) of the Bank Group Rules and Procedures for Procurement of Goods and Works allows Board of Directors to grant such waiver in cases involving joint financing arrangements. Management supports the request because (i) technically, the nature of the works is such that it cannot be split into separate contracts and the estimated contract amount for these works can only be sourced under joint financing considering the resources available; (ii) the WB has comparable and acceptable fiduciary standards with those of the African Development Bank; and (iii) the World Bank has been in the lead on the project. 4.1.7 Bank Management accordingly requests a waiver from the Board of Directors, which will apply to jointly-financed components and activities and permit: (a) the use of the World Bank s procurement guidelines and bidding documents in place of Bank Group Rules and Procedures for Procurement of 17
Goods and Works.. The applicable rules for co-financed contracts will be World Bank s Guidelines for Procurement of Goods, Works and Non-consulting Services under IBRD Loans and International Development Association (IDA) Credits & Grants by World Bank Borrowers (January 2011, revised July 2014 edition) and Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers (January 2011, revised July 2014 edition). The procurement of works, goods and acquisition of consulting services solely financed by the Bank will be in accordance with the Bank's Rules and Procedures for Procurement of Goods and Works or, as appropriate, Rules and Procedures for the Use of Consultants, using the relevant Bank Standard Bidding Documents. Activities financed by the European Union EU will be procured in accordance with the EDF procurement rules. 4.1.8 The responsibility for the management of the procurement processes and accountability for implementation of all components will rest with the ZRA. 4.1.9 For both the Plunge Pool reshaping and the Spillway rehabilitation works, the procurement method will be ICB with prequalification. The Technical Services consultant will be recruited using the Quality and Cost Based Selection (QCBS) while the recruitment of the Panel of Dam Experts and the Dispute Adjudication Board members will be undertaken following the selection procedure for individual consultants. The two Governments have requested that advance contracting be allowed for acquisition of consultancy services for Technical Services and Panel of Experts. The request has already been approved by the Bank and ZRA is in the process of acquiring these services. This will facilitate and support accelerated project implementation and optimization of the technical solutions. Further details of various procurement packages under different expenditure categories, contracts and estimated costs, procurement methods, prior-review requirements and the procurement plan are provided in Appendix XII and Section B5 under Technical Annexes. Financial Management Arrangements 4.1.10 Financial Reporting and External Audit: A Financial Management assessment (FM) for ZRA was carried out jointly by a team of financial management specialists from the Bank and the World Bank (WB) to determine whether ZRA has adequate FM arrangements systems that meet the minimum requirements of the respective cooperating partners, to effectively handle project finances as required. The overall conclusion of the assessment is that ZRA, which will be in charge of administering the funds from both the Bank and the WB, has adequate FM systems which satisfy the minimum financial management requirements of both financiers. The overall risk rating for ZRAs FM systems has been assessed as Moderate. To this end, the project s financial management will be managed by ZRA within their existing system. 4.1.11 In accordance with the respective donors requirements and as agreed between the Bank and the WB, a single quarterly progress report will be prepared by ZRA for the project (that will show all cofinanciers funding and expenditures) and submitted to the donors forty five (45) days after the end of each quarter. In addition to the quarterly progress report, annual audit report will be prepared for the project (that will include all co-financiers funding and expenditures) and submitted to the Bank within six (6) months after the end of the respective fiscal years. The audit will be carried out by the ZRA s existing independent auditors in accordance with an audit Terms of Reference that has been approved by the Bank to ensure adequate coverage of the project, and the audit fees will be borne by ZRA. 18
4.1.12 Disbursement Arrangement: All payments for activities to be financed by the Bank under the Project will be made using the Direct Payment method in accordance with the Bank Group s Disbursement Handbook and disbursement policies. Detailed financial management, disbursement and auditing arrangements are included in the Appraisal Report Volume II (Technical Annex B.4). 4.2. Monitoring and Evaluation 4.2.1 The project will be implemented over 10 years: 5years for the plunge pool and 8-10 years for the spillway from contract commencement, with an overlap in the works for the plunge pool and the spillway. The Project will be launched in May-June 2015 and will be field supervised jointly with WB and EU mainly from the Southern Africa Regional Resource Centre, ZMFO and ZWFO at least twice a year from 2015 through to 2025. The coordination of the missions will be done by the Ministries of Finance of both countries in collaboration with ZRA. 4.2.2 The monitoring and evaluation of the performance will also be realized through observation of the project s output and outcome key indicators. In addition the project will be monitored through the environmental and social indicators. 4.2.3 The ZRA, in liaison with the project Technical Services and Supervision Consultant, the Panel of Experts, Technical Advisor and Dispute Adjudication Board will prepare and submit to the Bank the project quarterly progress reports which will also report on the agreed indicators as per the Log-frame. The audit report will be submitted to the Bank six months after the end of every financial year 4.3. Governance 4.3.1 A Board oversees ZRA operations and is comprised of the Permanent Secretaries of the Ministries of Energy and Finance of Zambia and Zimbabwe, along with two independent Board members from each of the contracting states. ZRA is structured into various departments, including the Projects and Dam Safety, Water Resources and Environment, Finance and Human Resources. ZRA management operates under the overall oversight of the Board. The AfDB and the World Bank will support governance enhancement in ZRA through the institutional project support component particularly through the presence of the Panel of Experts and the Adjudication Board. 4.3.2 While ZRA has adequate governance structures, a risk of weak internal control procedures was identified during the project identification phase and was addressed through the engagement of critical personnel such a procurement manager. Although ZRA lacks qualified technicians at the lower levels, this risk is adequately mitigated through the presence of highly qualified and experienced personnel at senior level; directly responsible for dam safety as well as the Technical Advisor retained since commissioning of the dam. The ZRA has not managed a project of this magnitude before and lacks experience with implementing Donor assisted projects, however, it has handled large consultancies (US$4 million) fairly well. The identified weaknesses will be addressed by (i) Strengthening and ensuring full compliance of internal control regulations, (ii) Training of ZRA staff in financial management and disbursement arrangements, including financial reporting, (iii) Close supervision by WB and AfDB teams on the use of funds through the quarterly and annual financial reports, and (iv) development and implementation of a plan to upgrade the accounting skills of its technician staff. 19
4.4. Sustainability The Anticipated Results- based Logical Framework states the main outcome of the project as improved safety of dam operations, extended asset life span and sustained power output. In order to achieve this outcome, a number of measures have been instituted under the project that would sustain the output of the project over the medium to long-term. The key measures are: (i) transfer of know-how and expansions and upgrades on the complex. ZRA has had a long record of working and sharing expertise with internationally acclaimed experts and institutions on all the major aspects of safety of large dams. The 5-yearly inspections by the International Panel of Experts of the Kariba Dam complex instituted since the commissioning of the dam has been a major source of learning and improvement of expertise of the staff of ZRA. This arrangement will be further strengthened by the establishment of the Panel of Experts under the project to help monitor implementation progress, and to ensure that the works are being carried out to sustain the long-term safety of the dam. This Panel is in addition to the transfer of know-how that the Technical Services Consultant would bring through the close collaboration between the Consultant and the ZRA staff on issues of dam safety; (ii) In operations and maintenance, ZRA has had a long and good track record of operation and maintaining the assets of the Kariba Dam and the associated infrastructure. ZRA will continue to be financially sound with adequate funds to maintain the assets in line with accepted international practice; (iii) Moreover, the Governments of Zambia and Zimbabwe 6, as in the past have committed to continue financial support as required to ensure that ZRA would continue to meet its obligations at the highest required standards of safety of operations of the Kariba Dam; and (iv) The Kariba North and South Power Stations that depend on the dam for water for power generation, have also recently undergone major refurbishment to extended the operating life of the power generating assets for the next 50 years. Under the circumstances, sustainability is assured, and project outcome is achievable. 4.5. Risk Management The project involves some degree of risks. The major risks and mitigation measures are discussed in Table below. Overall, the project risk is rated as moderate. Risk Description Rating Mitigation Construction/ M completion risk Hydrological risks Risk associated with project duration rock-blasting near the foundations of the dam and the variation of pore-water pressures during lowering of the water level in the plunge pool. High flows during project implementation could delay the project progress. M Supervision engineer will optimise project during design review and contractors will strictly monitor to ensure timely delivery. Blasting will be undertaken according to carefully specified procedures that will not impact the dam foundations. The drawdown of the plunge pool will be controlled to comply with pore-water pressure stability requirements. To ensure that the works would not undermine the safety of the workers and the dam, measures will be implemented to ensure protective structures are in place, which with monitoring and forecasting will provide sufficient lead time to allow for interventions in the face of changing hydrological conditions. 6 ZRA has always received the tariff increases it required. ZESCO and ZPC both government owned utilities consistently paid their dues to ZRA ensuring that it stays afloat and its operations are adequately supported. This track record therefore gives comfort that both Zambia and Zimbabwe will meet their financial obligations. 20
Delayed procurement and disbursement Delayed commencement of works Low capacity in ZRA Delayed budgetary allocation Unrest from the Tonga people L: Low M: Moderate Delayed procurement and disbursement would extend the completion period increasing project overall risk. Startup delays of the major works will affect overall project as they are on the critical path. ZRA has not implemented large projects of this magnitude before Unavailability of budget will affect timely implementation Construction of the dam displaced Tonga people who may find this an opportunity to air their complaints L M L L Timely approvals from all co-financiers and advance contracting. Cofferdam and stop beams will be manufactured in advance and geological survey for plunge pool coffer dam will be done in advance Provision of supervision engineer, dam safety experts and advisor as well as new procurement manager ZRA and governments commits to timely allocations. The governments have been consistent in their financial support to ZRA. The ESIA will detail the Tonga story and provide recommendations on improvements to the operations of the ZVDF 4.6. Knowledge Building ZRA has retained their technical advisor Tractebel the designer of record for the dam who has been supporting them in the 5 yearly inspections and the planning and design of the works that need to be done. The documentation from all this work is resident within ZRA and will be useful for future reference. ZRA will be supported by a Panel of Experts and an Adjudication Board which will bring a wealth of experience which will be passed on and documented within ZRA and useful for its engineers. ZRA does not have a social and environment expert in their team and recommendations have been made to engage one. Specific efforts will be made to improve ZRA s Emergency Preparedness through refining their Improved Emergency Preparedness Plan as well as a inclusion of a specific training program in the contractors responsible for the rehabilitation work to train communities to improve their ability and capability to respond to any impacts of emergencies as a result of the works or should there be a dam failure. V. LEGAL INSTRUMENTS AND AUTHORITY 5.1. Legal instrument 5.1.1 The legal instruments to be used for the Project are: A Loan Agreement between the ADF and the Republic of Zambia for an ADF loan; A tripartite Protocol of Agreement among the ADF, the Republic of Zimbabwe and the Zambezi River Authority for an ADF grant from the regional operations envelope; and A tripartite Protocol of Agreement between the ADB and ADF, on behalf of the Transition Support Facility, the Republic of Zimbabwe and the Zambezi River Authority for a grant from the Transition Support Facility. 21
A) Entry into Force Conditions i) The entry into force of the Loan Agreement between the ADF and the Republic of Zambia shall be subject to the fulfilment by the Republic of Zambia of the provisions of Section 12.01 of the General Conditions Applicable to the African Development Fund Loan and Guarantee Agreements; ii) iii) The ADF Protocol of Agreement between the ADF and the Republic of Zimbabwe and the Zambezi River Authority shall enter into force upon its signature by ADF and the Republic of Zimbabwe and the Zambezi River Authority; and The TSF Protocol of Agreement between the ADF and ADB, on behalf of the Transition Support Facility, and the Republic of Zimbabwe and the Zambezi River Authority shall enter into force upon its signature by ADF and the Republic of Zimbabwe and the Zambezi River Authority B) Conditions Precedent to First Disbursements and Other Conditions The obligation of the Bank Group to make the first disbursement of the Loan and the Grants shall be conditional upon entry into force of the respective Agreement in accordance with (A) above and the fulfilment of the following conditions, in form and substance acceptable to the Bank Group: i) Provision to the Bank of satisfactory evidence that co-financing arrangements have been duly concluded with other co-financiers; ii) iii) An on-lending agreement between the Republic of Zambia and the Executing Agency, in form and substance acceptable to the Fund, has been duly executed; The Executing Agency has adopted an Implementation Manual, in form and substance acceptable to the Fund; iv) Submission of an Environmental and Social Management Plan (ESMP) and an Environmental and Social Impact Assessment (ESIA), each in form and substance satisfactory to the Bank Group; v) For the Bank, should land acquisition arise, an Abbreviated Resettlement Plan (ARAP) or a Resettlement Action Plan commensurate with the issues to be dealt with shall be prepared as part of the ESIA and ESMP Report C) Undertakings i) The Borrower and the Recipient shall submit quarterly reports in a format acceptable to the Fund indicating the implementation status of: (A) physical and financial progress of the works and other project activities; and (B) the Environment and Social Management Plan. ii) The Borrower and the Recipient shall submit, no later than six (6) months after the end of each financial year an annual audit report, carried out in accordance with Terms of Reference (TOR) approved by the Fund. iii) The Borrower and the Recipient shall implement the Project in accordance with (A) national legislation, (B) provisions and conditions of any environmental licenses issued in relation to the Project, (C) recommendations and procedures described in the ESMP, 22
iv) The Borrower and the Recipient shall maintain the existence of the Project Steering Committee and the Project Management Unit, each with composition and terms of reference acceptable to the Bank Group. v) The Borrower and the Recipient shall establish an independent Panel of Experts and a Dispute Adjudication Board, each with composition and terms of reference acceptable to the Bank Group. vi) vii) viii) ix) The Executing Agency shall engage a Technical Services and Supervision Consultant (TS&SC) with qualifications and experience acceptable to the Bank Group. The Borrower and the Recipient shall perform all of its respective obligations under the Protocol Regarding the Kariba Dam Rehabilitation Project between the Minister of Energy and Power Development of the Republic of Zimbabwe, the Minister of Finance and Economic Development of the Republic of Zimbabwe, the Minister of Mines, Energy and Water Development of the Republic of Zambia and the Minister of Finance of the Republic of Zambia. The Borrower and the Recipient shall ensure the financial sustainability of the Executing Agency; The Borrower and the Recipient shall ensure that the legislation relating to the Executing Agency is not amended, suspended, abrogated, repealed or waived in a manner that could affect materially and adversely the ability of the Executing Agency to perform any of its obligations relating to the Project. x) Neither the Borrower nor the Recipient shall take or permit to be taken any action which would prevent or interfere with the performance by the Executing Agency of its obligations with respect to the Project. xi) ZRA shall prepare and implement a Climate Change Action Plan during the project implementation (in view of the heightened vulnerability of the project to the potential adverse impacts of climate change 5.2 Compliance with the Bank s policy This Project complies with all applicable Bank policies with the exception of the Integrated Safeguards System Policy 2013 which requires posting of Executive Summary of the ESIA for Category 1 Project for 120 days prior to presentation of the Project to the Board. In this regard, a waiver is being sought from the Board of Directors to approve the project with the condition that the final ESIA shall be completed and approved for disclosure for 120 days by the Bank s Safeguards and Compliance Division prior to the First Disbursement. 23
6. RECOMMENDATIONS Management recommends that the Boards of Directors approve: i) The proposed ADF (PBA and Regional Operations) loan of UA25.20 million to the Republic Zambia, and a proposed ADF (Regional Operations) grant of UA15.51 million and TSF grant of UA7.75 million to the Republic of Zimbabwe for the Kariba Dam Rehabilitation Project; and ii) Waiver from application of the Bank s Rules and Procedures for Procurement of Goods and Works in accordance with Section 1.17(b) in connection with the contracts that are subject to joint financing arrangements instead allowing use of the World Bank procurement rules and guidelines. iii) The waiver of the requirement for the ESIA to be available and to be posted for at least 120 days prior to Board consideration of the Project. 24
% Selected Macroeconomic Indicators APPENDIX I : ZIMBABWE MACRO ECONOMIC INDICATORS Indicators Unit 2000 2008 2009 2010 2011 2012 2013 (e) National Accounts GNI at Current Prices Million US $ 6,127 4,091 4,898 6,146 7,882 8,921... GNI per Capita US$ 490 320 380 470 590 650... GDP at Current Prices Million US $ 6,065 5,221 8,157 9,445 10,956 12,472 10,363 GDP at 2000 Constant prices Million US $ 6,065 3,269 3,475 3,808 4,212 4,397 4,559 Real GDP Growth Rate % -44.4-17.7 6.3 9.6 10.6 4.4 3.7 Real per Capita GDP Growth Rate % -45.0-18.0 5.4 8.0 8.3 1.7 0.6 Gross Domestic Investment % GDP 13.1 8.2 15.1 23.9 22.4 13.5 13.4 Public Investment % GDP 0.6 2.0 1.4 2.7 2.7 1.7 1.7 Private Investment % GDP 12.5 6.2 13.7 21.2 19.7 11.8 11.7 Gross National Savings % GDP..................... Prices and Money Inflation (CPI) % 55.9 7.3 6.5 3.0 3.5 3.7 4.1 Exchange Rate (Annual Average) local currency/us$ 0.0 ##########............... Monetary Growth (M2) % 65.1 ##########............... Money and Quasi Money as % of GDP % 28.8 143078.0............... Government Finance Total Revenue and Grants % GDP... 2.5 11.9 23.3 26.7 28.0 27.4 Total Expenditure and Net Lending % GDP... 4.9 14.0 24.5 29.1 29.3 29.3 Overall Deficit (-) / Surplus (+) % GDP... -2.4-2.1-1.2-2.4-1.3-1.9 External Sector Exports Volume Growth (Goods) %..................... Imports Volume Growth (Goods) %..................... T erms of T rade Growth %..................... Current Account Balance Million US $ -20-888 -1,224-1,998-3,216-2,502-1,919 Current Account Balance % GDP -0.3-17.0-15.0-21.2-29.3-20.1-18.5 External Reserves months of imports 1.1 0.3 2.7 1.5 0.9 0.9 1.0 Debt and Financial Flows Debt Service % exports... 33.6 40.7 14.4 12.2 17.9 17.3 External Debt % GDP 57.0 122.3 97.2 84.4 77.8 70.3 87.5 Net Total Financial Flows Million US $ 213 623 642 761 725...... Net Official Development Assistance Million US $ 176 612 736 732 718...... Net Foreign Direct Investment Million US $ 23 52 105 166 387 400... 20.0 10.0 0.0-10.0-20.0-30.0-40.0-50.0 2000 Real GDP Growth Rate, 2000-2013 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2011 2012 2013 140 120 100 80 60 40 20 0-20 -40-60 20 00 20 01 20 02 20 03 20 04 Inflation (CPI), 2000-2013 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 0.0-5.0-10.0-15.0-20.0-25.0-30.0-35.0 Current Account Balance as % of GDP, 2000-2013 2,0 00 2,0 01 2,0 02 2,0 03 2,0 04 2,0 05 2,0 06 2,0 07 2,0 08 2,0 09 2,0 10 2,0 11 2,0 12 2,0 13 Source : AfDB Statistics Department; IMF: World Economic Outlook, October 2013 and International Financial Statistics, October 2013; AfDB Statistics Department: Development Data Portal Database, March 2014. United Nations: OECD, Reporting System Division. Notes: Data Not Available ( e ) Estimations Last Update: April 2014 I
% APPENDIX II : ZAMBIA MACROECONOMIC INDICATORS Indicators Unit 2000 2008 2009 2010 2011 2012 2013 (e) National Accounts Selected Macroeconomic Indicators GNI at Current Prices Million US $ 3,131 12,083 13,595 14,274 16,088 19,001... GNI per Capita US$ 310 970 1,060 1,080 1,180 1,350... GDP at Current Prices Million US $ 3,238 14,641 12,810 16,191 19,203 20,613 25,628 GDP at 2000 Constant prices Million US $ 3,238 4,883 5,195 5,591 5,971 6,401 6,815 Real GDP Growth Rate % 3.1 5.7 6.4 7.6 6.8 7.2 6.5 Real per Capita GDP Growth Rate % 0.4 2.8 3.4 4.5 3.6 3.9 3.1 Gross Domestic Investment % GDP 17.4 20.9 21.0 22.6 25.0 26.4 27.3 Public Investment % GDP 7.9 3.6 4.3 2.9 3.2 3.4 3.7 Private Investment % GDP 9.6 17.3 16.7 19.7 21.8 23.1 23.6 Gross National Savings % GDP -0.9 20.9 21.0 22.6 25.0 26.3 24.7 Prices and Money Inflation (CPI) % 26.1 12.4 13.4 8.5 8.7 6.6 7.1 Exchange Rate (Annual Average) local currency/us$ 3,110.8 3.7 5.0 4.8 4.9 5.1 5.4 Monetary Growth (M2) %... 25.3 7.9 27.4 24.3 20.0 19.0 Money and Quasi Money as % of GDP %... 31.3 28.6 30.3 31.4 33.1 30.2 Government Finance Total Revenue and Grants % GDP 28.8 22.4 18.9 19.6 21.6 21.8 21.7 Total Expenditure and Net Lending % GDP 29.3 24.7 21.4 22.6 24.0 24.7 29.0 Overall Deficit (-) / Surplus (+) % GDP -0.5-2.3-2.6-3.1-2.4-2.8-7.3 External Sector Exports Volume Growth (Goods) % -6.2 10.1 19.5 19.8 3.1 26.4 15.6 Imports Volume Growth (Goods) % 2.5 10.7-14.3 31.0 25.8 25.8 16.9 Terms of Trade Growth % -4.6-12.3-16.7 36.0 4.1-12.3-5.2 Current Account Balance Million US $ -597-1,039 583 1,206 705 432 47 Current Account Balance % GDP -18.3-7.1 4.6 7.4 3.7 2.1 0.2 External Reserves months of imports 2.2 2.4 5.5 4.4 3.7 4.0 3.0 Debt and Financial Flows Debt Service % exports 15.7 5.0 13.8 3.9 2.1 5.6 3.7 External Debt % GDP 224.8 38.7 50.0 37.9 34.2 40.9 34.4 Net Total Financial Flows Million US $ 701 1,598 1,166 863 923...... Net Official Development Assistance Million US $ 795 1,116 1,267 914 1,073...... Net Foreign Direct Investment Million US $ 122 939 695 1,729 1,108 1,066... 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2000 Real GDP Growth Rate, 2000-2013 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2011 2012 2013 50 40 30 20 10 0-10 20 00 20 01 20 02 20 03 20 04 Inflation (CPI), 2000-2013 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 10.0 5.0 0.0-5.0-10.0-15.0-20.0-25.0 Current Account Balance as % of GDP, 2000-2013 2,0 00 2,0 01 2,0 02 2,0 03 2,0 04 2,0 05 2,0 06 2,0 07 2,0 08 2,0 09 2,0 10 2,0 11 2,0 12 2,0 13 Source : AfDB Statistics Department; IMF: World Economic Outlook, October 2013 and International Financial Statistics, October 2013; AfDB Statistics Department: Development Data Portal Database, March 2014. United Nations: OECD, Reporting System Division. Notes: Data Not Available ( e ) Estimations Last Update: April 2014 II
APPENDIX III: ZAMBIA COUNTRIES COMPARATIVE SOCIO-ECONOMIC INDICATORS Year Zambia Africa Developing Countries Developed Countries Basic Indicators Area ( '000 Km²) 2011 753 30,323 98,458 35,811 Total Population (millions) 2013 14.5 1,109.0 5,909.3 1,252.8 Urban Population (% of Total) 2013 40.0 40.2 47.7 78.3 Population Density (per Km²) 2013 17.7 46.9 70.7 23.5 GNI per Capita (US $) 2012 1 350 1 719 3 815 38 412 Labor Force Participation - Total (%) 2012-2013 39.2 37.4 67.9 72.1 Labor Force Participation - Female (%) 2012-2013 45.6 42.5 38.6 44.6 Gender -Related Dev elopment Index Value 2007-2011 0.473 0.502 0.694 0.911 Human Develop. Index (Rank among 187 countries 2012 163......... Popul. Liv ing Below $ 1.25 a Day (% of Population 2008-2011 74.5 40.0 20.6... Demographic Indicators Population Growth Rate - Total (%) 2013 3.2 2.5 1.3 0.3 Population Growth Rate - Urban (%) 2013 4.3 3.4 2.5 0.6 Population < 15 y ears (%) 2013 46.6 40.9 28.3 16.4 Population >= 65 y ears (%) 2013 2.6 3.5 6.1 16.8 Dependency Ratio (%) 2013 99.6 77.9 52.4 49.9 Sex Ratio (per 100 female) 2013 99.5 100.0 103.3 94.4 Female Population 15-49 y ears (% of total populatio 2013 22.9 24.0 53.1 45.2 Life Ex pectancy at Birth - Total (y ears) 2013 58.1 59.2 68.4 77.8 Life Ex pectancy at Birth - Female (y ears) 2013 60.0 60.3 70.3 81.2 Crude Birth Rate (per 1,000) 2013 42.8 34.8 21.2 11.2 Crude Death Rate (per 1,000) 2013 10.2 10.4 7.6 10.4 Infant Mortality Rate (per 1,000) 2013 64.4 61.9 39.8 5.5 Child Mortality Rate (per 1,000) 2013 99.8 97.4 56.3 6.6 Total Fertility Rate (per woman) 2013 5.7 4.6 2.6 1.7 Maternal Mortality Rate (per 100,000) 2010 440.0 415.3 240.0 16.0 Women Using Contraception (%) 2013 47.1 34.9 62.6 71.3 1800 1600 1400 1200 1000 800 600 400 200 0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2004 GNI Per Capita US $ 2005 2006 Zambia 2007 2008 2009 Africa 2010 2011 2012 Population Growth Rate (%) 2005 2006 2007 Zambia 2008 2009 2010 2011 Africa 2012 2013 Health & Nutrition Indicators Phy sicians (per 100,000 people) 2004-2011 6.6 47.1 117.8 297.8 Nurses (per 100,000 people)* 2004-2011 78.4 132.6 202.7 842.7 Births attended by Trained Health Personnel (%) 2006-2011 46.5 52.6 66.3... Access to Safe Water (% of Population) 2012 63.3 68.8 87.2 99.2 Access to Health Serv ices (% of Population) 2004 90.2 65.2 80.0 100.0 Access to Sanitation (% of Population) 2012 42.8 39.4 56.9 96.2 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AID 2012 12.7 3.9 1.2... Incidence of Tuberculosis (per 100,000) 2012 427.0 223.6 144.0 23.0 Child Immunization Against Tuberculosis (%) 2012 83.0 83.0 81.5 96.1 Child Immunization Against Measles (%) 2012 83.0 74.0 83.0 94.3 Underw eight Children (% of children under 5 y ears 2005-2012 14.9 19.7 17.0 1.4 Daily Calorie Supply per Capita 2009 1 879 2 481 2 675 3 285 Public Ex penditure on Health (as % of GDP) 2011-2012 3.7 2.9 3.0 7.5 Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2012 113.6 101.9 109.4 100.9 Primary School - Female 2012 113.3 97.9 107.6 100.6 Secondary School - Total 2012 20.5 47.4 69.1 100.2 Secondary School - Female 2012 15.2 44.0 67.8 99.7 Primary School Female Teaching Staff (% of Total) 2012 53.1 46.6 58.0 84.3 Adult literacy Rate - Total (%) 2012... 62.0 80.3 99.2 Adult literacy Rate - Male (%) 2012... 70.7 85.9 99.3 Adult literacy Rate - Female (%) 2012... 53.7 74.9 99.0 Percentage of GDP Spent on Education 2008-2012 1.3 5.3 4.3 5.5 Environmental Indicators Land Use (Arable Land as % of Total Land Area) 2011 4.6 7.6 10.7 10.8 Annual Rate of Deforestation (%) 2000-2009 2.4 0.6 0.4-0.2 Forest (As % of Land Area) 2011 66.3 23.0 28.2 35.0 Per Capita CO2 Emissions (metric tons) 2010 0.2 1.2 3.0 11.6 71 61 51 41 31 21 11 1 90 80 70 60 50 40 30 20 10 0 Life Expectancy at Birth (years) 2005 2005 2006 Infant Mortality Rate ( Per 1000 ) 2006 2007 Zambia 2007 2008 2008 Zambia 2009 2009 2010 Africa 2010 2011 2011 Africa 2012 2012 2013 2013 Sources: AfDB Statistics Department Databases; last update : United Nations Population Division, World Population Prospects: The 2012 Revision; World Bank: World Development Indicators; UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports. For any given interval, the value refers to the most recent year available during the period Note : n.a. : Not Applicable ; : Data Not Available. May 2014 III
APPENDIX IV: ZIMBABWE COUNTRIES COMPARATIVE SOCIO-ECONOMIC INDICATORS Year Zimbabwe Africa Develo- ping Develo- ped Countries Countries Basic Indicators Area ( '000 Km²) 2011 391 30,323 98,458 35,811 Total Population (millions) 2013 14.1 1,109.0 5,909.3 1,252.8 Urban Population (% of Total) 2013 39.6 40.2 47.7 78.3 Population Density (per Km²) 2013 36.3 46.9 70.7 23.5 GNI per Capita (US $) 2012 650 1 719 3 815 38 412 Labor Force Participation - Total (%) 2012-2013 48.6 37.4 67.9 72.1 Labor Force Participation - Female (%) 2012-2013 48.8 42.5 38.6 44.6 Gender -Related Dev elopment Index Value 2007-2011 0.505 0.502 0.694 0.911 Human Develop. Index (Rank among 187 countries 2012 172......... Popul. Liv ing Below $ 1.25 a Day (% of Population 2008-2011... 40.0 20.6... Demographic Indicators Population Growth Rate - Total (%) 2013 3.1 2.5 1.3 0.3 Population Growth Rate - Urban (%) 2013 4.3 3.4 2.5 0.6 Population < 15 y ears (%) 2013 39.5 40.9 28.3 16.4 Population >= 65 y ears (%) 2013 3.9 3.5 6.1 16.8 Dependency Ratio (%) 2013 69.9 77.9 52.4 49.9 Sex Ratio (per 100 female) 2013 97.5 100.0 103.3 94.4 Female Population 15-49 y ears (% of total populatio 2013 25.4 24.0 53.1 45.2 Life Ex pectancy at Birth - Total (y ears) 2013 59.9 59.2 68.4 77.8 Life Ex pectancy at Birth - Female (y ears) 2013 60.8 60.3 70.3 81.2 Crude Birth Rate (per 1,000) 2013 31.3 34.8 21.2 11.2 Crude Death Rate (per 1,000) 2013 9.0 10.4 7.6 10.4 Infant Mortality Rate (per 1,000) 2013 36.9 61.9 39.8 5.5 Child Mortality Rate (per 1,000) 2013 52.0 97.4 56.3 6.6 Total Fertility Rate (per woman) 2013 3.5 4.6 2.6 1.7 Maternal Mortality Rate (per 100,000) 2010 570.0 415.3 240.0 16.0 Women Using Contraception (%) 2013 60.6 34.9 62.6 71.3 1800 1600 1400 1200 1000 800 600 400 200 0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2004 GNI Per Capita US $ 2005 2006 Zimbabwe 2007 2008 2009 Africa 2010 2011 2012 Population Growth Rate (%) 2005 2006 2007 2008 Zimbabwe 2009 2010 2011 2012 Africa 2013 Health & Nutrition Indicators Phy sicians (per 100,000 people) 2004-2011 6.2 47.1 117.8 297.8 Nurses (per 100,000 people)* 2004-2011 125.1 132.6 202.7 842.7 Births attended by Trained Health Personnel (%) 2006-2011 66.2 52.6 66.3... Access to Safe Water (% of Population) 2012 79.9 68.8 87.2 99.2 Access to Health Serv ices (% of Population) 2000 85.0 65.2 80.0 100.0 Access to Sanitation (% of Population) 2012 39.9 39.4 56.9 96.2 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AID 2012 14.7 3.9 1.2... Incidence of Tuberculosis (per 100,000) 2012 562.0 223.6 144.0 23.0 Child Immunization Against Tuberculosis (%) 2012 99.0 83.0 81.5 96.1 Child Immunization Against Measles (%) 2012 90.0 74.0 83.0 94.3 Underw eight Children (% of children under 5 y ears 2005-2012 10.1 19.7 17.0 1.4 Daily Calorie Supply per Capita 2009 2 219 2 481 2 675 3 285 Public Ex penditure on Health (as % of GDP) 2011-2012 0.3 2.9 3.0 7.5 71 61 51 41 31 21 11 1 Life Expectancy at Birth (years) 2005 2006 2007 Zimbabwe 2008 2009 2010 2011 Africa 2012 2013 Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2003-2012 97.1 101.9 109.4 100.9 Primary School - Female 2003-2012 96.4 97.9 107.6 100.6 Secondary School - Total 2003-2012 38.0 47.4 69.1 100.2 Secondary School - Female 2003-2012 36.1 44.0 67.8 99.7 Primary School Female Teaching Staff (% of Total) 2003-2012 50.6 46.6 58.0 84.3 Adult literacy Rate - Total (%) 2011-2012 83.6 62.0 80.3 99.2 Adult literacy Rate - Male (%) 2011-2012 87.8 70.7 85.9 99.3 Adult literacy Rate - Female (%) 2011-2012 80.1 53.7 74.9 99.0 Percentage of GDP Spent on Education 2010-2012 2.5 5.3 4.3 5.5 Environmental Indicators Land Use (Arable Land as % of Total Land Area) 2011 10.6 7.6 10.7 10.8 Annual Rate of Deforestation (%) 2000-2009 1.5 0.6 0.4-0.2 Forest (As % of Land Area) 2011 39.5 23.0 28.2 35.0 Per Capita CO2 Emissions (metric tons) 2010 0.7 1.2 3.0 11.6 90 80 70 60 50 40 30 20 10 0 2005 Infant Mortality Rate ( Per 1000 ) 2006 2007 2008 Zimbabwe 2009 2010 2011 Africa 2012 2013 Sources: AfDB Statistics Department Databases; last update : United Nations Population Division, World Population Prospects: The 2012 Revision; World Bank: World Development Indicators; UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports. For any given interval, the value refers to the most recent year available during the period Note : n.a. : Not Applicable ; : Data Not Available. May 2014 IV
APPENDIX V: MAP OF PROJECT AREA V
APPENDIX VI : PROJECT MANAGEMENT ORGANOGRAM VI
APPENDIX VII : STATUS OF BANK GROUP ACTIVITIES IN ZIMBABWE AUG 2014 Sector/O perations S=Satisfactory, HS Highly Satisfactory STATUS OF BANK GROUP ACTIVITIES IN ZIMBABWE AS AT OCTOBER 2014 Approval date Completion date Funding Window Amount App. (UA) Amount Dis. (UA) AGRICULTURE SECTOR 5,203,962 5,203,962 100.0 Disb Rate Age IP DO LAKE HARVEST PROJECT 10/26/2011 11/26/2020 ADB Loan 5,203,962 5,203,962 100.0 3.0 1.56 1.5 MULTI_SECTO R 22,581,053 6,320,478 28.0 ZIM-FUND PROCURMENT AGENT 6/24/2011 3/30/2015 ADF Grant 1,000,000 747,400 74.7 3.3 TECHNICAL ASSISTANCE IN ZADMO 8/9/2011 6/30/2016 ADF Grant 192,811 98,488 51.1 3.2 T.A FOR HIPC ELIGIBILITY ASSESSMENT 7/30/2013 12/28/2014 ADF Grant 68,242 27,352 40.1 1.2 CAPACITY BUILD. PROJECT FOR PFDEM 12/5/2012 6/30/2016 ADF Grant 16,120,000 4,616,203.0 28.6 1.9 S S GOVERNANCE AND INSTITUTIONAL PROJECT 12/12/2013 12/30/2016 ADF Grant 5,200,000 831,035.0 16.0 0.9 S S POWER SECTOR 36,823,157 17,801,798 48.3 POWER INFRASTRUCTURE REHAB PROJECT PHASE I 6/30/2011 12/31/2014 ZIMFUND 23,420,144.0 17,595,032.0 75.1 3.3 S S EMERGENCY POWER INFRASTRUCTURE REHAB Phase II 12/18/2013 12/31/2017 ZIMFUND 10,318,246.0 0.0 0.0 0.8 EPIRP PHASE I SUPPLEMENTARY GRANT ** 12/18/2013 12/31/2014 ZIMFUND 3,084,767.0 206,766.0 6.7 0.8 SO CIAL SECTO R 2,700,000 303,210 11.2 YOUTH AND TOURISM ENHANCEMENT PROJECT 12/18/2013 6/30/2017 ADF Grant 2,700,000 303,210.0 11.2 0.8 S S TRNASPORT SECTOR 880,000-0.0 TRANSPORT SECTOR MASTER PLAN STUDY *** 12/18/2013 12/31/2018 ADF Grant 880,000-0.0 0.8 WATER SUPPL/SANIT 42,455,366 20,804,107 49.0 URGENT WATER SUP. & SAN. REHABILITATION PHASE I 4/7/2011 12/31/2014 ZIMFUND 19,840,876.0 16,619,154.0 83.8 3.5 HS S URGENT WATER SUPPLY AND SANITATION REHAB PHAS 10/7/2013 12/31/2017 ZIMFUND 13,275,875.0 97,559.0 0.7 1.0 SUPPLEMENTARY FINANCING TO UWSSRP PHASE I 7/17/2013 6/30/2015 ZIMFUND 9,338,615.0 4,087,394.0 43.8 1.3 HS S GRAND TOTAL 110,643,538 50,433,555 45.6 VII
APPENDIX VIII : DISBURSEMENT SCHEDULES BY FINANCIER AND BY ADF INSTRUMENT Annual Disbursements per Financier Source 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total AfDB 1.99 7.28 10.57 14.95 7.28 5.09 5.09 5.09 6.18 3.99 7.50 75.00 a) AfDB Grant 1.67 3.41 4.56 6.09 3.41 2.65 2.65 2.65 3.03 2.27 3.60 36.00 b) AfDB Loan 0.31 3.87 6.00 8.86 3.87 2.44 2.44 2.44 3.15 1.73 3.90 39.00 EU Grant 10.00 25.00 30.00 25.00 10.00 100.00 Swedish Grant 9.00 7.00 3.00 3.00 3.00 25.00 ZRA Own Funds 1.92 1.71 1.71 1.71 1.71 1.71 1.71 1.71 1.71 1.71 1.92 19.22 IDA Credit 2.56 7.22 10.51 14.90 7.22 5.03 5.03 5.03 6.13 3.93 7.44 75.00 AfDB Disbursements per Instrument and Contract 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 Total % Zimbabwe - Transition Support Facility Component 3 Institutional Project Support TS&S Consultant 1.00 0.89 0.89 0.89 0.89 0.89 0.89 0.89 0.89 0.89 1.00 10.00 100% Panel of Experts 0.20 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.20 2.00 40% Subtotal 1.20 1.07.07 1.07 1.07 1.07 1.07 1.07 1.07 1.07 1.20 12.00 Zimbabwe Regional Operations Envelope Component 3 Institutional Project Support Panel of Experts 0.30 0.27 0.27 0.27 0.27 0.27 0.27 0.27 0.27 0.27 0.30 3.00 60% Dispute Adjudication Board 0.15 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.15 1.50 100% Emergency Preparedness Support 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.25 100% Component 2 Spillway Refurbishment Civil Works 0.88 1.40 2.10 0.88 0.53 0.53 0.53 0.71 0.36 0.88 8.82 35% Hydro mechanical 0.85 1.36 2.04 0.85 0.51 0.51 0.51 0.68 0.34 0.85 8.50 35% Physical Contingencies 0.13 0.21 0.31 0.13 0.08 0.08 0.08 0.10 0.05 0.13 1.30 35% Price Contingencies 0.06 0.10 0.15 0.06 0.04 0.04 0.04 0.05 0.03 0.06 0.64 35% Subtotal 0.47 2.35 3.50 5.03 2.35 1.58 1.58 1.58 1.96 1.20 2.40 24.00 VIII
Zambia - Regional Operations Envelope Component 3 Institutional Project Support Contingencies on Inst. Support 0.31 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.31 3.14 100% Component 2 Spillway Refurbishment Civil Works 0.82 1.31 1.96 0.82 0.50 0.50 0.50 0.66 0.33 0.82 8.21 33% Hydro mechanical 0.79 1.27 1.90 0.79 0.47 0.47 0.47 0.63 0.32 0.79 7.91 33% Physical Contingencies 0.24 0.39 0.58 0.24 0.14 0.14 0.14 0.19 0.10 0.24 2.42 65% Price Contingencies 0.12 0.19 0.29 0.12 0.07 0.07 0.07 0.10 0.05 0.12 1.19 65% Subtotal 0.31 2.25 3.43 5.00 2.25 1.47 1.47 1.47 1.86 1.07 2.29 22.87 Zambia Performance Based Allocation Component 2 Spillway Refurbishment Civil Works 0.82 1.31 1.96 0.82 0.50 0.50 0.50 0.66 0.33 0.82 8.21 33% Hydro mechanical 0.79 1.27 1.90 0.79 0.47 0.47 0.47 0.63 0.32 0.79 7.91 33% Physical Contingencies 0% Price Contingencies 0% Subtotal 1.61 2.57 3.86 1.61 0.97 0.97 0.97 1.29 0.65 1.61 16.13 ADB Loan 1.99 7.28 10.57 14.95 7.28 5.09 5.09 5.09 6.18 3.99 7.50 75.00 IX
APPENDIX IX : OPTIONS FOR FINANCING ZIMBABWE Option Description Implications Pros and Cons 1 Zambia borrows all the money for the project (ADF +ADB) This was the initial option considered when the World Bank and the EU had initial meetings with the Resource Mobilization Committee and the AfDB was not yet part of the financing group. This option would have avoided any funds going to Zimbabwe however internal repayment arrangements would be made between the two countries. Zambia would have to use ADB funds because ADF PBA does not have enough resources to fund the project. Furthermore even if there were enough ADF, PBA resources, they would not be eligible for leveraging regional resources as the regional nature of the project would be lost since Zambia would be undertaking the project alone. ADB resources would be expensive and ZRA applies very small margins for water sales, presenting a challenge in them meeting the repayment requirements. To enable ZRA to meet repayment requirements electricity tariffs would have to be substantially raised, impacting negatively on electricity consumers in both countries and the region. NB Although the other co-financiers had considered this option, there was a concern that Zambia would be bearing all the burden while Zimbabwe was benefiting. The advent of the AfDB with support for Zimbabwe has brought some balance in the financing arrangements, which the other financiers are very appreciative of 2 Follow the way the WB has approached the financing arrangements 3 Zimbabwe s TSF Allocation under Pillar 1 is used to Leverage ADF RO and all funds are managed by ZRA The WB is providing a straight loan to Zambia the same way the Bank Group is providing a loan to Zambia for its portion from ADF. The WB and the EU are not providing any resources to Zimbabwe. The resources provided by WB will be on-lend to ZRA at 1%, and EU is providing a grant to the government of Zambia. The AfDB has a mechanism for support countries in Zimbabwe s situation and is proposing to use that mechanism as described in detail in the PAR and (3) below. This project given its focus on preventive measures, it will help in mitigating the risk of economic, social and environmental fragility (both at national and regional levels) that could result from delayed action. Due to its current status Zimbabwe is eligible to access TSF resources and bank policy is very clear on Zimbabwe s eligibility as explained in the PAR. The TSF policy allows that countries such as Zimbabwe can access regional resources through Pillar 1 resources through a third party, in this case Zambia or ZRA. Therefore the resources allocated to Zimbabwe could be channelled through Zambia or ZRA and Zimbabwe gives over the financial management and implementation responsibility to either of the two. None of the resources goes directly to Zimbabwe (See Funds Flow Diagram Appendix VIII), under the RO envelope Zimbabwe should still be the recipient of the funds to enable the project to access RO and in both instances it still remains the signatory to the financing agreement. Therefore whether the funds are accessed through ZRA or the government of Zambia, Zimbabwe still has to sign the financing agreements. This is the option that the team has proposed, and is in line with Bank s policies and procedures for utilizing TSF and RO resources. It must also be noted that Zimbabwe expressed strong views over their allocation being channeled through Zambia. They preferred it to go through the ZRA. Both governments are very comfortable with this arrangement. The principles guiding this options are provided in the PAR. NB While such financing arrangement has not been used in the past, it is fully in line with Bank policies and procedures for accessing TSF and RO resources by sanctioned countries hence it is not contravening the Sanctions Policy. X
APPENDIX X : STATUS OF BANK GROUP OPERATIONS IN ZAMBIA (SEPT 2014 XI