Madagascar - Energy Sector Development Project (fy96)

 ICRR 12547 Report Number : ICRR12547 IEG ICR Review Independent Evaluation Group 1. Project Data: Date Posted : 12/11/2006 PROJ ID :P001533 Appraisal Actual Project Name :Energy Sector Development Project Costs 132.5 102.6 Project (fy96) US$M ) (US$M) Country :Madagascar Loan/ Loan US$M ) /Credit (US$M) 46.00 44.20 Sector (s):Board: ): US$M ) EMT - Power (75%), Cofinancing (US$M) 59.60 31.70 Renewable energy (17%), District heating and energy efficiency services (8%) L/C Number :C2844 FY ) Board Approval (FY) 96 Partners involved : French Development Closing Date 12/31/2005 Agency (AFD), Arab Bank for Economic Development in Africa (BADEA), European Investment Bank (EIB) Evaluator : Panel Reviewer : Division Manager : Division : Elaine Wee-Ling Ooi Fernando Manibog Alain A. Barbu IEGSG 2. Project Objectives and Components a. Objectives The project aimed at (a) enhancing Madagascar’s prospects for economic recovery and growth by ensuring an adequate supply of electricity in the medium term, both for businesses and households, including increased access of peri -urban and rural populations to the service; (b) increasing economic and management efficiency in the power subsector, and attracting private capital for investment, through institutional reform; and (c) promoting greater efficiency in the production and consumption of energy, which, in the case of woodfuels, will at the same time, help mitigate adverse environmental impacts . b. Components (or Key Conditions in the case of Adjustment Loans ): There were 4 components. i) Jirama’s investment program – ($118.10 million appraisal; $92.10 million actual) Rehabilitation/extension of generation, transmission and distribution facilities, including 4 hydroplants, 30 diesel generation units, and construction of transmission lines linking ports with the network . Connection of 30,000 new customers over project life, a loss reduction program, human resources management and training, and feasibility studies for 2 small hydroprojects. ii) Electrification program ($7.80 million appraisal; $1.50 million actual) Preparation/implementation of a rural electrification master plan, studies and surveys to support the plan, adoption of low cost appropriate technology, connection of 15,000 new customers, and a credit scheme to finance house connections iii) Institutional reform of the power subsector ($3.20 million appraisal; $6.00 million actual) Establishment of new regulatory framework, setting up an independent regulatory agency to set tariffs and monitor performance of the subsector, restructuring and institutional building of JIRAMA into a profitable joint stock company. iv) Energy efficiency program ($3.40 million appraisal; $3.00 million actual) A national program to be initiated in 16 cities, promoting improved charcoal stoves, and energy conservation in the industry and transport sectors; and the piloting of a sustainable woodfuels development program in one region (Mahajanga). The latter entails the preparation and implementation of a Master Plan for improved forest resources management. c. Comments on Project Cost, Financing, Borrower Contribution, and Dates At appraisal project costs were estimated to be $133 million (Annex 2, ICR) of which IDA and GOM committed $46 million and $27 million respectively . AFD, EIB and BADEA were expected to provide cofinancing of $28 million, $25 million and $7 million respectively . Actual project costs amounted to $103 million, with IDA providing $44 million, and the cofinanciers $32 million combined. The project became effective on 8/28/1996. It experienced significant implementation problems aggravated by changes in GOM’s political leadership and wavering commitment levels . The project was extended 4 times, and closed 4 years late on 12/31/2005. 3. Relevance of Objectives & Design : The project objectives vis-a-vis the efficacious and sustainable generation and distribution of energy for Madagascar’s economic development are highly relevant . However the ambitious and complex project design was inconsistent with the country’s history (very public sector oriented) and institutional capacity. The project attempted far reaching sector reforms including the privatization of the state owned Utility for Water and Electricity (JIRAMA), without having secured the firm commitment of GOM. Donor coordination was poor and cofinanciers had not committed their contributions (46% total project costs) when the IDA credit was signed. Eventually AFD funding was severely reduced negatively impacting IDA ’s investments and the project outcome. The project, as designed, lacked sufficient energy production capacity – a fact recognized in the second year of implementation. This was not rectified, even after the midterm review, and IDA persisted with supporting transmission reinforcements and distribution extensions in the face of this production “bottleneck