Somalia - Power Rehabilitation and Energy Project

Document of The World Bank FOR OMCUIL USE ONLY Report No. 12467 PROJECT COMPLETION REPORT SOMALIA POWER REHABILITATION AND ENERGY PROJECT (CREDIT 1850-SO) NOVEMBER 9, 1993 MICROGRAPHICS Report No: 12467 Type: PCR Public and Private Enterprise Division Country Department II Africa Regional Office This document has a rest.icted distribution and may be used by recipients only in the performance of their ofricial duties. Its contents may not otherwise be disclosed without World Bank authorization.  WE-IGHTS AND MEASURES I kilometer (km) = 0.621 miles 1 square kilometer Ocm) = 0.386 square miles I kilovoi! (kV) = 1,000 volts 1 megawatt (MW) = 1,000 kilovolts 1 megavolt ampere (MVA) = 1,000 kilovot amperes 1 gigawatt hour (GWh) = 1 million kilowatt hours 1 ton of oil equivalent (toe) = 10,500,000 kilocalories bbl = barrell MJ = megajoule cm = centimeter Mm3 = million cubic meters GW = gigawatt e3 - cubic meter ha = hectare MIWh = megawatt hour ktoe = kilotonnes of oil equiv. od = oven dry kW = kilowatt kWh = kilowatt hour LPG = liquified petroleum gas sv = solid volume M = million t = tonne mcwb = moisture content wet basis TCF = trillion cubic feet tpa/tpy = tonnes per annum/per year twe = tonnes of wood equivalent ABBBREVIATIONS AND ACRONYMS USED ADB African Development Bank DANIDA Danish International Development Agency ECU European Currency Unit EIB European Investment Bank ENEE Somalia National Electricity Corporation ENEL Italian Electric Utility EPD Energy Planning Department EPU Energy Planning Unit FINNIDA Finnish International Development Agency FUA Fund Unit of Account GOS Goverment of Somalia IRAQSOMA National Refinery ISKIASH National Cooperative MNP Ministry of National Planning MJVD Ministry of Juba Valley Development NPA National Petroleum Agency NRA National Range Agency NWP National Woodstove Project ODA Overseas Development Administration RIP Reference Investment Program USAID United States Agency for International Development UNDP United Nations Development Program GOVERNMENT OF SOMALIA FISCAL YEAR = CALENDAR YEAR  FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation November 9, 1993 NEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion on Somalia Plwer Rehabilitation and Energy Prolect (Credit 1850-SO) Attached is the "Project Completion Report on Somalia - Power Rehabilitation and Energy Project (Credit 1850-SO)" prepared by the Africa Regional Office. No Part II was provided by the Borrower. The project aimed at rehabilitating and expanding the country's power system, and at improving the Government's policy-making and implementation capability in the energy sector. Although project implementation was generally satisfactory through early-1991, it Was interrupted by the onset of civil war. Any benefits that could have been derived from the project have most probably been lost as a result. Due to exceptional country conditions and to the lack of actual data on project results, the project is not rated. The Project Completion Report is thorough and informative given the circumstances but comments were not requested from co-financiers. No audit is planned. Attachment Thfs document has a restricted distribution and may be used by recfpfents onty in the performance of thefr officiat duties. Its contents may not otherwise be disctosed without Wortd Bank authorization.  FOR OFCML USE ONLY SOMAUA POWER REHABIITATION AND ENERGY PROJECT CREDIT 1850SO PROJEAC COMPLETION REPORT Table of Contents Page No. PREFACE i EVALUATION SUMM.ARY ii PART k PROJECT REVIEW FROM BANK'S PERSPECTIVE Project Identity 1 Background 1 Project Objectives and Description 2 Project Design and Organization 4 Project Implementation 5 Project Results 8 Project Sustainability 9 IDA Performance 10 Borrower Performance 10 Project Relationships 11 Consulting Services 11 Project Documentation and Data 12 Conclusion, Follow-Up Action & Lessons Learned 13 PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 15 PART mI: PROJECT PROFILE Related IDA Loans and Credits 16 Project Timetable 17 Credit Disbursements 17 Project Implementation 18 Project Costs & Financing 19 Project Results 21 Studies 22 Status of Covenants 23 Use of IDA Resources 24 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - i - SOMALIA POWER REHABILITATION AND ENERGY PROJECT CREDIT 1850-S PROJECT COMPLETION REPORT PREFACE 1. This is the Project Completion Report (PCR) for the Power Rehabilitation and Energy Project in Somalia for which Credit 1850-SO in the amount of SDR 9.7 million (US$ 12.5 million equivalent) was approved on November 3, 1987. The last disbursement was on January 16, 1991. SDR 586,074.31 remains undisbursed. The credit was scheduled to close on June 30, 1992. Because of the civil war in the country, IDA suspended, effective March 19, 1991, Somalia's witharawal rights. 2. Parts I and m of the report were prepared by the World Bank. Due to the security situation in Somalia, field visits did not take place. The report was based on information available in the project files of the World Bank and the files and recollections of the European engineering consultants to the beneficiary. 3. Parts I and III cannot be sent to the Borrower for comment because of the civil war.  - liI- EVALUATION SUMMARY Project Objectives and Description 4. The specific objectves of the project were: (a) to improve the efficiency and reliability of power supply and distribution and to meet some of the unserved demand in Mogadishu, Somalia's main economic area; (b) to sustain physical rehabilitation improvements; (c) to assist Somalia National Electric Corporation (ENEE) in strengthening its performance in key technical, financial and managerial areas; (d) to help (lOS to develop its capabilities for sound energy planning and nolicy formulation particularly in the identification of least cost supply and distribution options for petroleum products, and (e) to promote conservation of woodfuels through disseminatioli of improved cooking stoves for higher cooking efficiency. 5. The project was designed to: (i) rehabilitate, replace, and extend ENLE's generating, transmission, and distribution facilities in Mogadishu; (ii) provide comprehensive advisory services, operational support including line managers, and training to ENEE for three years in all key corporate areas; (iii) provide technical assistance and logistical back-up resources to the Mini3try of National Planning (MNP) to strengthen energy planning, carry out subsector investment analyses and a least cost petroleum procurement and distribution study, and to develop household energy supply and demand management policies; and (iv) provide technical assistance and logistical back-up resources to the National Woodstove Project (NWP) to promote cooking efficiency improvements. Exverience and Results 6. The project was originally scheduled to be completed by June 30, 1992 but Somalia's withdrawal rights were suspended on March 19, 1991 due to the civil war. 7. The estimated project cost was US$94.0 million of which SDR 9.7 nmllion equivalent to US$ 12.5 million (13 percent of total costs) would be provided by IDA and about US$81.5 million equivalent would be provided by Government, ENEE, African Development Bank (ADB), European Investment Bank (EIB) and Italian Goverment. Details of these financing arrangements are shown in Table S.B. The last IDA disbursement was made on January 16, 1991. The toti amount disbursed from the Credit as of March 16, 1991 was equivalent to about SDR 9.1 million. 8. Major rehabilitation works of power station generators, plant and auxiliaries were completed and as a result, considerable improvement in generating capacity was achieved. Other works, including the planned commissioning of new diesel generators, however, were suspended due to the civil unrest. Other components, including the training and technical assistance programs were close to being completed prior to the suspension of disbursement in March 1991. Conclusions and Findings 9. While the project execution abruptly ceased due to the civil unrest, it is worthwhile to note that prior to this unforseen event, implementation of the works was carried out  - iii - satisfactorily by ENEE with the assistance of the supervising consultants, Kennedy & Donkin (K & D)). The training program was in its final phase of implementation and consultants (ESB of Ireland) were in the midst of carrying out improvements in ENEE's management, financial and engineering function. Within the energy components of the project, consultants (Louis Berger International of USA) were also providing technical assistance to the Energy Planning Department (EPD). 10. It should be noted that, in addition, many improvements had been achieved in areas such as billing and reduction of consumer payment arrears. A recovery plan intended to improve ENEE's engineering and technical functions was also being undertaken. It was unfortunate that none of these programs could be adequately completed due to the political crlsis in Somalia.  SOMALIA POWER REHABILITATION AND ENERGY PRO.ECT (CREDIT 18SO-SM PROJECT COMPLETION REPORT PART I: PROlECT REVIEW FROM THE BANK'S PERSPECIE 1. Project Identity Project Name: Power Rehabilitation and Energy Project Credit No.: 1850-SO RVP Unit: Africa Country Department U, Public and Private Enterprise Division Country: Somalia Sector: Energy Subsector: Power 2. Backerund 2.01 Somalia has limited energy resources. The country's indigenous energy resources consist of a fragile forest cover, other biomass, wind and solar energy. Geothermal and lignite resources in the north are too small and remote from energy consumption centers to be of economic value. The hydropower sources are concentrated in the upper Juba Valley near Baardhere with potential average energy availability of 500 GWhlyear. At appraisal in 1987, however, the Baardhere Project was only being designed and the earliest feasible completion date was in 1994. In 1987 per capita energy consumption in Somalia was about 200 kilograms of oil equivalent and 82% of this consumption was from woodfuels for household use. Almost all petroleum products were imported at premium prices. 2.02 The country's power sector was very weak, with obsolescent and poorly maintained generating plant and distribution systems. Several ministries had responsibilities for energy sector development. Due to lack of interaction and inadequate institutional and policy framework, the operation was inefficient. ENEE, a parastatal corporation under the Ministry of Public Works, was responsible for power operation in Mogadishu and six regional centers. Power facilities were in poor condition owing to shortage of funds for spare parts, lack of skilled manpower and inadequate operating and management systems. At project appraisal, ENEE was able to operate only 20% of its installed generating capacity, meet less than 35% of connected demand (30 MW) on the Mogadishu system and had not been able to connect a further 10 MW of unserved demand. Power system losses were as high as 24% due to an overloaded distribution network and umletered consumption. Unreliable power supply in Mogadishu was frequently disrupting productive economic activities and fostering the build-up of costly substitutes. 2.03 IDA's Energy Assessment Report 1985 recommended the strengthening of the energy sector in Somalia as a priority. In response, GOS increased electricity rates by 97%, created a national energy planning department, and liberated petroleum procurement regulations to allow  -2- more private sector participation. A power master plan study was also completed. The project was part of the country's priority investment program. IDA's support was intended to bring about satisfaction of en:rgy demand at least economic cost. Furthermore, the project was aimed to enable IDA to mobilize and focus donor mssistance on an urgently required and comprehensive program of rehabilitation, institutional strengthening policy reform, and commercial orientation in the power sector, thus supporting efforts to stimulate agricultural and industrial production. 3. Project Objectives and Description 3.01 The Power Rehabilitatior Project (Credit 1850-SO) for which this is the completion report, X us the third IDA operation in the energy sector in Somalia. The first energy sector prolect was the Petroleum Exploration Promotion Project in 1980 and the second project was the Afgoy Gas Delineation Project in 1984. nhe Power Rehabilitation Project was designed to improve the efficiency and reliability of power supply and distribut.on and to meet some of the unserved demand in Mogadishu, Somalia's main economic area. ElecWlzity was being supplied from the 15 MW oil-fired steam unit at Gezira and from diesel engine gene.tors at Gezira and Centrale. The Gezira 15 MW oil-fired steam unit had been financed by the Kuwait Fund and Arab Fund and commissioned in January 1985. Tbe adjacent Gezira diesel station had a nameplate capacity of 27.5 MW consisting of five similar 5.5 MW diesel generators, of which two were commissioned in 1978, two in 1979 and the fifth in 1984. The Centrale station contained four 1.2 MW diesel units which were all more than 25 years old, and four 2.7 MW units which were commissioned between 1968 and 1977. Among other things, the project was designed to rehabilitate these diesel units which were not being properly maintained due to lack of maintenance expertise and lack of funds for spares and replacement parts. 3.02 The project was identified during the visit of an IDA mission to Somalia in March 1986. Subsequently, an appraisal mission visited Somalia in March 1987 at which time an IDA finacing plan including co-financing by ADB, EIB and the Italian Government was proposed. An IDA credit for SDR 9.7 million was negotiated in September 1987, approved in November 1987, signed on December 17, 1987 and became effective on June 30, 1988. The delay between approval and effectiveness was due to delays in full compliance with conditions of effectiveness including: (a) finalization of ENEE's insurance coverage; (b) obtaining cleaance from the Ministry of Defense for right of way for the transmission line into North Power Station; (c) completion of lending a r- ments between ENEE and EIB and ADB; and (d) finalization of a management contract bt.ween ENEE and consultants (K&D). 3.03 Project lbjectives: Ihe project's primary focus was to: (a) improve the reliability of electricity availability in the Mogadishu area through carefully planned and competently executed programs of generation, transmission and distribution rehabilitation and expansion; (b) rebuild ENEE's financial performance to restore and maintain viability through a well defined set of reform measures and performance parameters; and  (c) strengthen ENEE's managerial, operational and planning capacities to sustain physical improvements through assistance, training, and system improvements. Additional objectives were to prepare ENEE for taking on the additional tasks and responsibilities that the Baardhere Project would generate; strengthen national energy planning and policy formulation capability; identify least cost supply and distribution options for petroleum products; and promote conservation of woodfuels through dissemination of improved cooking stoves and development of efficient charcoal production and marketing. 3.04 Moect Description: The project consisted of three major components: 3.05 Pwer Coampments (a) Generation Rehabilitation. (i) at Gezira diesel power station, maintenance and rehabilitation by contrietors of units and station auxiliaries, rewinding of spare stator, provision of new engine for unit No. 2; provision of fire detation and prevention scheme and new high intensity lighting scheme, provision of three years diesel generator and auxiliaries spares; (ii) under the Italian components at Centrale diesel power station, rehabilitation of unit auxiliaries and fuel treatment plan, repair/rewind of three alternator stators, provision of fire detection and preventi,n equipment, provision of diesel generator and auxiliary spares; (b) Generation Expansion. (i) at the proposed 33 kV North sub-station, the installation of about 10 MW of heavy residual fuel oil-burning diesel generation; (ii) under the Italian component, at Gezira site the installation of a 15 MW heavy fuel-oil fired steam unit; (c) Transmission and Distribution Rehabilitation and Expansion. (i) procurement of materials, for installation by ENEE, for the construction of 33 kV overhead and underground feeders in Mogadishu and 33 kV transmission lines to the towns of Afgoy and Balad; (ii) turn-key contract for provision and installation of new 33 kV switching and 33/15 kV substations and extensions to existing 33 kV switchyards; (iii) under the Italian component, rehabilitation of existing 15 kV network, and replacement with new 15 kV reticulation of 3 kV network, together with 20,000 new and 5,000 replacement consumer services; and (d) Genarl P-lant. (i) provision of about 20 vehicles of various types, spares for existing vehicles, automotive repair tools and plant for vehicle maintenance workshop; (ii) provision of radio communications system; (iii) computers, accounting and billing machinery, and equipment; and under the Italian component, (iv) vehicles for use of distribution staff; and (v) expansion of existing pole factory.  -4- 3.06 Ihtutional Ccmpoents (a) Cnultan seim (i) for project management to assist ENEE in the procurement, engineering design, construction supervision and commissioning of the various project components; and (ii) provide for three years, seven staff to occupy the five line positions of Assistant Directors of Projects, Finan.e, Generation Operations, Generation Rehabilitation and Mainte'sance, and Transmission and Distribution, and the two posts of Training Manager and Planning Adviser; these staff each to have Somali counterparts to be trained as replacements; and (b) Technical Assistance to recruit 11 engineers and technicians to be financed under the credit and employed by ENEiE for three years in various positions to belp improve ENEE's operations and procedures in generation, transmission and distribution, construction, operation and maintenance. 3.07 EnergM Coong (a) Energy Planning Sunort. One full-time resident energy advisor for a period of three years with administrative and logistical back-up resources to be provided to strengthen energy planning and administration of EPD. Twenty-one staff-month of short-term technical assistance and consulting services provided to support petroleum procurement, refining, marketing and pricing studies, the development of household supply and demand management strategies, and subsector investment analyses. Twenty to thirty staff-months of overseas short-term training to be provided as well as in-country training in various fields of energy planning. Q) Cooking Efficiency Improvements. Three staff-months of technical assistance and logistical back-up resources provided to improve soapstone marketing and distribution, to advance improved metal stove technology, and to further promotion, dissemination, and extension of improved ceramic stoves. 4. Project Design and Organization 4.01 The project was adequately prepared and in line with the investment priorities stipulated in the Priority Investment Program. Under a Project Preparation Facility (PPF) advance, consultants prepared the power rehabilitation program which eventually was to be financed by ADB, EIB and IDA, and technical specifications and bidding documents. ENEL, the Italian Electric Utility, prepared the Italian components of the project which would be financed by Italy. The energy planning and cooking efficiency components were prepared joindy by Bank mission staff and Energy Planning Department (EPD)/National Woodstove Project (NWP). 4.02 The project was designed to alleviate some of Somalia's problems in and around Mogadishu in the energy sector such as limited energy resources, inefficiencies in the utilization  - 5 - of physical supply facilities, and inadequate institutional and policy framework. These objectives were clearly understood by all parties involved in the project. The scope and scale of the project focused on immediate priorities in the power and energy subsectors. The project was proposed at a time when the government was trying to sustain implemeatation of existing policy reforms and undertaking new policy measures necessary for exploiting production growth possibilities. In this regard, therefore, the timing of the project was very appropriate. 4.03 Several Government institutions were responsible for the energy sector. The Ministry of National Planning (MNP) organized information on public investment projects and created the Energy Planning Department (EPD) for undertaking planning and policy coordination activities in the energy sector. Execution of the energy components of the project was assumed by EPD with assistance of IDA through provision of technical assistance aimed at improving the standards of energy investment planning and strengthening EPD's capability for policy- making and coordination. Power components were executed by Ente Nazionale Energia Elattrica (ENEE). ENEE, which was Somalia's national power utility under the supervision of the Ministry of Public Works, was responsible for electricity supply in Mogadishu and the main regional centers in Hargeisa, Berbera, Burao, Baidoa and Kismayo. Prior to project execution, IDA ensured that the roles and responsibilities of the institutions and agencies were clearly defined. 5. Project Implementation 5.01 Implementation. Project implementation was generally satisfactory. There were, however, several major variances between what was planned and actual project implementation. 5.02 Only four of the five 5MW diesels at Gezira Power station were programmed for rehabilitation. This was due to the cost of rehabilitation being considerably higher than estimated in the budget prepared by the consultants employed under the PPF (para. 4.01). The increase in cost was primarily due to unforseen increases in the scope of work. Although ODA provided additional funds for the increased scope of work, there were not enough funds from the IDA credit to cover the overrun and only three of the remaining four machines were fully rehabilitated. 5.03 The Italian Government pledged about US$ 50 million for the reinforcement and rehabilitation of the distribution system and the provision of a second 15 MW heavy fuel-oil fired steam unit at Gezira. The Italian Government also pledged to supply two black start generators of 2.5 MW each which were badly needed due to the adverse power supply situation in Somalia. By the outbreak of hostilities some of these comnmitments had not been fulfilled. The component which was fmanced by the Italian Govermnent was the emergency reinforcement of the transmission system in the Medina area (near the airport), and a successful linesmen's training course. It would have been better if these commitments had not been made by the Italian Goverment because a reduced but balanced scope of work in these areas could have been initially programmed and funds sought elsewhere. In view of the foregoing events and given the state of the distribution system in Mogadishu and the high level of losses, the project was unable to reinforce and rehabilitate one of the areas which could have offerred a high rate of return.  - 6 - 5.04 The project was designed to rehabilitate the diesel power stations at Gezira to revive the generating capacity of these units for increased reliability of electric supply in Mogadishu. However, during project execution, the consultants noted that the in3fficient operation of the existing 15 MW steam station at Gezira was resulting in a severe loss in capacity. According to the consultants, the problem was mainly caused by the encrustation of the Economiser and heat exchanger because of the use of unsuitable fuels, poor operation and lack of adequate maintenance. The rehabilitation of this station was not part of the project and as a result, it was not possible to rehabilitate the unit irmnediately. 5.05 There was also a delay in completion of the communication compor.ent, the last of the contracts financed by African Development Bank (ADB). The communication component included provision for 2-channel radio communication system with sets installed in each vehicle, substation and power station. The delay occurred because ADB withheld full payment of the contract and was unable to fund the full cost of the contract immediately. ADB advised ENEE that it would have to wait another year before it could release all the needed funds. This was due to ADB's policy to hold a portion of its funds to cover possible currency fluctuations. In order to avoid extended delays in completion of this component, ENEE and its consultancy management team proposed to ADB a revision in the scope of work which would reduce the cost of the contract but would enable completion of some parts of the communication system. However, ADB considered it prudent not to allow the use of funds for the reason mentioned above, and as a result execution of this component was delayed about a year. 5.06 Consultants hired by ENEE made good progress in assisting ENEE in its recovery plan to improve the utilty's financial functions (para. 6.03). There was significant increase In bill production capacity from 52% of target in June 1990 to almost 80% in August and September 1990. This was achieved as a result of the introduction of additional equipment and staff and daiy monitoring of billing progress. Meter reading arrears were also completely eliminated although the quality of meter reading remained poor due to difficulty encountered by readers in gaining access to houses of domestic consumers. Monthly average collections increased from SoSH 229 million in June 1990 to about SoSh 406 million in September 1990. During the later part of the project period, ENEE continued to introduce remedial measures for further enbancing its billing and collection operations through: (a) restructuring of the billing service; (b) intensive program of cash collections and disconnections; (c) computerization, including recruitment of staff and training; and (d) introduction of a meter security program. 5.07 fnerie Components. Implementation of the energy components consisting of technical assistance to the Energy Planning Departnent (EPD) and cooking efficiency program was relatively problem free. Consultants were mobilized in early 1989. The consultants provided assistance to EPD in the following areas: (a) continous formulation and replanning of a comprehensive energy policy; (b) provision of reliable data on energy demand throughout the national economy; (c) provision of an Energy Advisor for a period of three years to assist in the preparation of policy guidelines and statements, assist in the preparation of an energy master plan and execute a staff training and development program; (d) provision of short term consultants to undertake studies in household energy utilization, commercial wood fuel utilization and petroleum products and refinery operation; (e) in-service and external training progr.ims in energy policy planning and management, biomass production and supply, renewal energy technologies, economics and finance, and computer literacy training programs; and (t)  -.7- dissemination of information regarding energy resources, energy saving methods and the use of energy-efficient equipment. 5.08 Project Risks. There were no major risks Identified during appraisal. The project was intended to improve physical and institutional operation of ENEE and the proposed program improvements were almost fully completed prior to the civil war. Despite the unforseen closure of the project, it can be considered a success in view of the tlmely execution and completion of most of the physical components of the ptoject. 5.09 Several unforseen factors, however, affected project implementation. The major one was of course the outbreak of the civil war which in a very short period of time totally invalidated the physical progress that had been made. Towards the end, project implementation was also affected by the frequent theft of conductors which caused service maintenance difficulties in many areas. The theft incidents, however, were reduced drastically when the Government introduced the death penalty for this offense. Power supply reliability was also affected by the lack of heavy fuel oil. This was caused by the National Petroleum Agency's (NPA) insistence to be paid cash in advance prior to delivery of fuel. IDA, and other donors, assisted to resolve this problem when it recommended the formation of a committee responsible for making decisions on fuel supply related issues. The committee membership included staff from ENEE, the Ministry of Planning and NPA. A problem also occurred in the provision of make up water for the steam turbine at Gezira while the rehabilitation of the diesel units was underway. The steam station's distillers went out of action for several months which led to periods of curtailment of steam generation while supplies of make up water were being produced instead. The problem was resolved when additioral desalination facilities were purchased financed by ENEE's self-generated funds. 5.10 Project Cos. The total cost of the project was estimated at about US$ 94 million. The foreign components of the project were financed as follows: US$ 12.5 million from IDA, of which US$ 10.3 million was onlent to ENEE to finance technical assistance and purchase of equipment, capital spares, and vehicles; US$ 1.3 million for operating spares made available to ENEE by the government against payment of a matching amount in local currency; US$ 9.5 million and US$ 14.7 million equivalent from ADB and EIB respectively; and US$ 50 million equivalent of grant finds from the Italian Government as parallel financing for the project. As implementation of the Italian component needed to be in-step and parallel to those components funded by other donors to ensure balanced and economically viable rehabilitation results, ADB, EIB and IDA at appraisal confirmed with the Italian Government the content, schedule, and disbursement pattern of its funding. 5.11 Allocation of Credit Proceeds. The original allocation of funds and final disbursements for the credit are shown in Table 5, Part III. The total credit amount was SDR 9.7 million of which about SDR 9.1 million or about 94% was disbursed. The credit was expected to close on June 30, 1992 but due to the civil war in Somalia, the credit was suspended on March 19, 1991. The last disbursement against the credit was made on January 16, 1991 and as of that date approximately SDR 586,074.31 remains undisbursed.  -8- 6. Uroject Results 6.01 Despite the unstable security situation in Somalia during project implementation, the rehabilitation program of three of the five Gezira units was completed in June 1990. This helped improve the generation capacity at ENEE from 9MW at appraisal to 27MW about 3 years later. The transmission and distribution components of the project, however, were not fully accomplished mainly due to the worsening security situation in Somalia during the latter part of the project period. As a result, most of the project activities were confined to the central Mogadishu area. The security problem in Somalia also forced DANIDA (although not a co-financier of this project) which was also operating in the sector to cancel the overhead transmission lines from the new 3 X 600 Diesel Power Station at Shalambod to Merca and the project to install wind turbines at Merca and Brava. Furthermore, the Italian Government's contribution to supply and install a second steam set at Gezira and for the upgrading of the transmission and distribution in Mogadishu did not materialize. 6.02 The technical assistance program under the energy components of the project (para. 5.07) was also in its final stage of implementation just prior to the war. The technical assistance program was expected to lay the groundwork for: (a) establishment of adequate energy policies and strategies consistent with the economic activities and priorities of the country; (b) identification and subsequent promotion of alternative sources of energy; (c) development, production, pricing, marketing and distribution of woodfuels; and (d) development of efficient industrial energy use and options for potential conservation and substitution. 6.03 Institutional and Financial Performance. ENEE carried out the following activities which helped improved its financial and operational performance: (a) increased tariffs to, a satisfactory level and kept the rates at and at times above LRMC in real terms; (b) kept more up-to-date financial accounts which enabled the external auditors to examine and audit ENEE's books within six months of the close of the financial year; (c) implemented an improved main ledger system and revised the fixed assets register in August 1990 and thereafter kept up-to-date data on a monthly basis; (d) substantially increased staff salaries to a nationally competitive level as a condition of credit effectiveness and introduced a bonus scheme for its staff aimed at increasing morale and improving productivity; (e) carried out programs to improve billing and collections including a meter security program which involved visits to consumers to identify faulty metering, illegal connections and irregular meter reading and acquisition of additional equipment, recruitment of staff and increased computerization;  -9- (t) established a severe disconnection policy for domestic consumers in Mogadishu area and reduced receivables from 240 days prior to negotiations to 90 days prior to credit effectivness. This was an important linkage because ENEE's staff realized during the project preparation cycle that improvements in the level of ENEE's receivables would lead (if the credit were to become effective) in automatic large salary and wage increases just prior to effectiveness. Government's full support helped achieve positive results in the scheme; 6.04 Following the employment of its consultancy team, ENEE: (a) carried out a comprehensive audit of all branches to determine consumer arrears, identify accounts to be disconnected, dispose of bad debts, investigage discrepancies and improve control; (b) undertook a reorganization program and restructured ENEE as an independent public utility; (c) carried out a comprehensive training and fellowship programs for both financial and operational staff within and outside the country; began, under Italian funding, an apprenticeship scheme which included training for 50 linesmen and other technicians; and (d) strengthened ENEE's corporate planning functions through adoption of properly defined functional objectives within the imposed constraints and priorities. 6.05 Rate f Return. The economic rate of return at appraisal was determined as the net incremental benefits of the Mogadishu power development program to 1994 which was equivalent to about 25% at the time of appraisal. It is difficult to estimate the economic rate of return due to reasons stated earlier. One of the incremental benefits derived from the project, however, was thb increased generation output, from 9 MW as of September 1987 to 29 MW as of December 21, 1989 or about a 45% increase, after the rehabilitation of the diesel units. The increased power generation to meet otherwise unserved demand was greatly beneficial. 7. Project Sustainability. 7.01 The implementation of the project was carried out by ENEE and the IDA-financed consultants in a relatively smooth manner. The various project management, technical assistance, management and financial management support and training undertaken by ENEE with the assistance of consultants were successful. The positive attitude of ENEE in adopting most of the institutional and operational reforms and its active dialogue with IDA implied that ENEE could sustain the level of efficiency it had achieved. It should also be noted that GOS and ENEE were preparing the next power project to be proposed to IDA for financing just before the unexpected closure of the project. In an unusual initiative, even after civil war broke out, representatives of GOS and ENEE travelled to IDA headquarters to propose the details of this next operation. Such enthusiasm indicated that implementation of the  - 10 - improvement action programs and activities to promote the reinforcement and strengthening of ENEE's absorptive capacity would have continued. 8. IDA Performance. 8.01 IDA's involvement in this project formally commenced when an identification mission visited Somalia in March 1986. From that period and throughout the project, IDA was able to make positive contributions to the development of the sector at a time when the country's energy sector was very weak due to lack of adequate institutional and policy framework. IDA also correctly identified and prioritized rehabilitation of key power generating stations which were unable to operate at rated capacity due to lack of needed replacement and spare parts. IDA provided sufficient funds to support a comprehensive technical assistance program for ENEE and the government. IDA's insistence for improvements of ENEE's compensation package and allocation of resources for project management and operational support with training as an integral part minimized the difficulties in implementing the various institutional and operational reforms under the technical assistance program. Close monitoring and assistance by IDA during initial stages of project execution also helped minimize delays in appointments of consultants. 8.02 Table 8-B gives details of the supervision missions which were at the pace of two visits each year between 1987-1989. The last supervision mission was carried out by IDA in November 1989 at which time all project contracts had been finalized and discussions were held to identify the components of the next energy project in Somalia. 8.03 Although there were difficulties in telephone and in communications in general and the economic and political situation was more uncertain than experienced under other similar projects, the frequency and timing of the missions was reasonable. Vigilant supervision by telex to and from Washington enabled IDA to adequately assess the progress of implementation and provide the needed recommendations to facilitate project execution. 8.04 SDR 11.9 million out of the total IDA credit of SDR 12.5 million was disbursed which suggests that execution of major contracts financed under the credit was undertaken almost within the proposed schedule and with minimum delays. 9. Borrower Performance 9.01 The amount of SDR 12.5 million was borrowed by the Somali Democratic Republic from IDA and an amount not exceeding the equivalent of US$10.3 million was on-lent to ENEE, the executing agency for the power components of the project. The remaining funds were used to carry out the technical assistance program for the Energy Planning Department (para. 5.06). Table 7 in Part 111 contains a review of the performance of the borrower and ENEE in complying with the covenants of the development credit and project agreements. During project preparation, appraisal and supervisions, government and ENEE demonstrated their commitment to the project, and cooperated well with the members of the IDA mission. Govemment and ENEE's overall performance during project execution was generally satisfactory.  - 11 - 10. Project Relationship 10.1 The relationship between IDA and Government and ENEE was good. The difficulty in communications between the borrower and IDA, caused mainly by a poor telephone system in Mogadishu and lack of international telecommunications facilities was overcome through bi- annual supervision missions which were always well received by the government and ENEE. IDA also maintained adequate contact with the donors and contributing agencies. ENEE and IDA, however, met some difficulties when they were unable to secure the remaining undisbursed contribution to the project pledged by the Italian Government (para. 5.03). Up to the time that IDA disbursement was suspended, the expected remaining funds from the Italian Government did not materialize and GOS was not formally advised why these commitments were not forthcoming. 11. Consulting Services 11.01 Power Components. The project provided for IDA-financed technical consultancy services to assist ENEE in overall project management, detailed planning and supervision of execution of most of the works. Consultants provided expert assistance in the following areas: (a) procurement, engineering design, construction supervision and commissioning of the various project components; (b) recruitment of competent personnel to help improve ENEE's operations and procedures in generation, transmission and distribution, construction, operation and maintenance; and (c) formulation and implementation of a set of insdtutional, operational and investment measures to strengthen the reliability and efficiency of ENEE's financial management, particularly in the areas of customer billing, collections and record keeping; plant accounting; inventory management and control; financial accounting and financial statement preparation; and financial planning and forecasting. The consultancy team members, resident in Mogadishu, held fully responsible, in-line executive posidons in ENEE's structure at the management and technical levels. The services provided by the consultants were satisfactory. 11.02 Energy Components. One full-time resident energy advisor with administrative and logistical back-up resources was hired for a period of three years to help strengthen energy planning and administration of EPD. Twenty-one staffmonths of short-term technical assistance and consuldng services were also programmed to support petroleum procurement, refining, marketing and pricing studies, the development of household supply and demand management strategies, and subsector investment analyses. 11.03 Three staffmonths of technical assistance and logistical back-up resources were undertaken to improve soapstone stove marketing and distribution, to advance improved metal stove technology. An evaluation was made that the future of soapstone stoves was limited because of natural resource constraints. A recommendation was, therefore, made by the consultants to further promote, disseminate, and extend utilization of ceramic and scrap metal stoves. 11.04 There were several studies and programs completed or started during the course of project implementation and the status of these activities as of December 1990 was as follows: (a) Petroleum Supply and Pricing Study. This study was carried out to identify problems in oil importation, refining, and distribution in  - 12 - Somalia. The study concluded that the continued operation of the refinery in any scenario would be at an economic loss to the country, and direct import of finished products from the surplus areas of the Middle-East would be the least cost option for Somalia. The report also recommended that the facilities for product import, storage and distribution should be rehabilitated and modernized to improve efficiency of operation and reduce the cost of products delivered. (b) National Energy Balance. This was carried out in-house, under the technical direction of the Energy Adviser. A detailed methodology was prepared and the energy balances for the period 1980-1990 was completed. The results of the study were prepared for publication; (c) Commercial Woodfiels and Household Energy Studies. Monthly energy price surveys were conducted in Mogadishu's 29 main markets to determine actual prices of commercial woodfuels. Terms of Reference of the commercial energy consumption phase of the study was prepared including a proposal to engage one expatriate and some local consultants to assist in the study. One of the main conclusions of the study was that kerosene was the only viable alterative to charcoal in the urban areas and that the massive introduction of this fuel was the only way to mitigate environmental degradation in the immediate future.; (d) Agricultural Energy Reguirements. This study was recommended because it was determined that agriculture was one of the main energy-deficit sectors in Somalia. Data collection from large farms including Juba Sugar and Somalifruit was completed. A further proposal was made to hire one expatriate and one local consultant, as well as a small team to collect additional data for analysis and preparation of un assessment of future agricultural energy requirements in the country; (e) Household Energy Requirements. This study was completed with the assistance of the EEC, in collaboration with Fursade, a private organization. The study, however, was carried out without coordination with either EPD or NWP although data from both institutions were utilized; and (f) Energy Information System and Data Bank. A provisional information classification system was established with the assistance of the Energy Adviser, and with the help of a locally-recruited expatriate. 12. Project Documentation and Data 12.01 The staff appraisal report identified key areas for strengthening the physical and institutional aspects of the Borrower's operations. This enabled both IDA and the borrower to  - 13 - carryout project implementation in a relatively smooth manner. The development credit and project agreements were also adequate for achieving desired project objectives. Consultants issued quarterly reports on the progress and status of various activities and operations which were used in the preparation of this project completion report. 12.02 Part III of the PCR could not be adequately completed because of the lack of sufficient detailed recent data from the project files and consultants quarterly reports. It was difficult to establish a comprehensive project profile because up-to-date data were not regularly attached to the supervision or back-to-office reports. In future, it would facilitate the preparation of PCR's if project costs and financing, project implementation indicators, status of covenants, etc. were- updated after the completion of each supervision mission. 13. Conclusion. Follow-up Action and Lessons Learned 13.01 Despite the events in Somalia which completely eradicated the resu!ts which had been achieved by the project, its overall execution was relatively problem-free. Furthermore, the project Included a large amount of urgently required technical assistance which was needed to sustain in the longer term the objectives set out in this project. Although the results of these institutional objectives could not be adequately assessed due to the unforseen closure of the project, the prospects were good that ENEE would attain an improved level of efficiency because it actively implemented many of the improvement programs recommended by IDA and the consultants during the course of the project. 13.02 As to the future, once the situation in Somalia improves and a more stable political structure is established, and IDA resumes its lending activities, the energy sector should be included as one of the top priorities for development assistance. 13.02 The following are some of the lessons learned from the project: (a) The cost of the rehabilitation of the four 5 MW diesels at Gezira Power Station was more thar. the amount originally programmed in the budget due to unforseen increases in its scope of work. It is difficult to estimate the scope of work for rehabilitation until the work is in progress. Large, 35-40%, physical contingencies should perhaps be included when costing rehabilitation woi& on complex items of equipment such as large diesel generators; (b) The IDA/ADB/EEC financed portion of the project concentrated mainly on rehabilitating the diesel units and transmission network. During project execution, however, it was noted that the existing 15 MW steam station was contributing to the loss in generating capacity due to poor operating procedures at this station. A larger contingency should perhaps have been included in the IDA credit to be used in the event that the bilateral funding expected 'or this steam plant rehabilitation failed to materialize;  - 14 - (c) Probably the most useful lesson learned from this project is the positive institutional and financial impact that can be achieved of firmly linking upfront progress with the various steps in the preparation/effectiveness of requiring tariffs, billing, and reduction of receivables to project approval and effectiveness - with the latter triggering salary increases for the staff of the assisted entity; and (d) An ailing utility can be quickly brought back to reasonable health with the infusion of outside assistance in line executive positions widt the Government's full backing.  - 15 - PART IT: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE (We are unable to provide this part of the PCR because of the civil war in Somalia)  - 16 - SOMALIA POWER REHABILITATION AND ENERGY PROJECT (CREDIT 1850-SO) PROJECT COMPLETION REPORT PART 111 STATISTICAL INFORMATION Table 1. Related Bank Loans and I or Credit Credit Title ! Prw Y f Approval Stat Afgoy Gas Delineate sufficient 1984 The project was Delineation Project gas reserves for the technically closed on (Cr.1464-SO; production of the June 30, 1991. SDR 17.5 Million). Afgoy gas resource, thereby developing a domestic energy source close to Mogadishu. Petroleum Attract oil 1980 Completed and closed Exploration companies to in 1984. Promotion Project explore for (Cr. 1043-SO; US$ petroleum in 6 Million). Somalia.  - 17 - Table 2. Project Timetable IJm. _._ _._ _,1~ _AI Tim _ Date Ptlnfl D:ate Revised Pa Actual Identification Mar. 1986 Preparation May, 1986 Preappraisal , Dec. 1986 Appraisal Mission Mar. 1987 Mar. 1987 Post-Appraisal Nov. 1987 Mission _ Credit Negotiation - Sep. 1987 Board Approval Nov.3, 1987 Nov. 3, 1987 Credit Signature __Dec. 17, 1987 Credit Effectiveness Mar. 17, 1988 Jun. 17, 1988 Jun. 30, 1988 Credit Closing Jun. 30, 1992 * Credit Completion Jun. 30, 1992 A * * Because of the civil war in Somalia, the credit account could not be formally closed. The project came to a complete standstill on March 19, 1991. Table 3. Credit Disbursement (US$ million) IDA Fiscal Year Appraisal Estimated Actual as % l______________ Annual Cumulative Annual Cumulative Etimatd 1988 2.7 2.7 4.1 4.1 -152% 1989 3.7 6.4 4.7 8.8 138% 1990 3.4 9.8 3.1 11.9 121% 1991 2.0 11.8 0.03 11.9 101% 1992 0.7 12.5 0 11.9 95%  - 18 - Table 4. Project Implementatign Indicators Appraisal Estimate A (for the year of 1990) (1990) Technical Installed Capacity (MW) 80.3 * Installed Dependable Capacity (MW) 46.0 * Pe.;k Demand (MW) 39.0 * Capacity Surplus (MW) 7.0 * Available Generation (MWhSO) 383 * Total Requirement for sent-out energy (MWhSO) 244 * Deficit/Surplus in energy sent out S * Energy Generated (MWh) 241 * Non-technical Losses (MWh) 10 * Technical Losses (MWh) 30 * Total Losses (% of generation) 17 * Sales (MWh) 201 * Diesels (Gezira)(KWh/Liter) 3.7 * Steam (Gezira) (KWh/Liter) 3.0 * Institutional New Salary Structure 1988 1988 Organizational Review/Adjustment 1989 1989 No.of Consumers 63,000 * Sales/Consumer per year (KWh) 3,190 * No. of Employees 1,086 * No. of Consumers per Employee 58 * Financial Independent Audit in place 1987 1987 Adequate Insurance Coverage 1988 1988 Consolidated Financial Statements 1987 1987 New Billing and Collection System 1988 1988 New Accounting System 1988 1988 Inventory Control System 1988 1989 Asset Registry and Revaluation 1989 1989 Financial MIS 1989 not met 1/ * No information available. 1/ According to the Eighth Quarterly Report (September 1990) from the Project Management, decision had been taken on a supplier for the hardware and software, but the implementation was apparently far behind schedule.  - 19 - Table 5. Project Cost and Financing A. Project Cost (US$ Million) UroJect Componeng Appraisal Estimate ctual* Local Egtcign Tota) LocI Foreign - .tAW Generation Rehabilitation 0.47 11.73 12.00 Expansion 3.35 25.11 28.46 Transmission & Distribution Rehabilitation 0.95 9.55 10.50 Expansion 1.40 15.07 16.47 General Plant 0.26 4.12 4.38 Project Management, Technical Asst. & Training 1.22 5.82 7.04 .. Energy Sector Planning and Studies 0.10 0.70 0.80 Househe1d Energy Demand Management 0.24 0.08 0.33 ENEE System Deve. Study 0.09 0.28 0.37 Project Preparation Facility 1.50 1.50 Base Costs 8.08 73.76 81.85 Physical Contingencies 0.81 7.23 8.03 _ . ... Price Contingencies 0.46 3.69 4.15 IQI 9.35 84.67 24 02 * No information available.  - 20 - B. Project Financing -SS Million) Sou- . APane9 Commerts l LoaQi EQregn 1T l Po Eign l _ _ _ IDA Categ-oryl 1. Spare Parts 1.2 1.7 On March 19, 1991, 2. Power Station Auxiliaries 1.6 2.3 IDA suspended 3. Vehicle, Computers and Somalia's withdrawal Other Office Equipment 0.5 0.1 rights for the project 4. Consultant Service & due to the civil war Studies 5.9 5.9 in the country. 5. Training 0.9 0 6. Refunding of Project Preparation Advance 1.5 1.5 7. Unallocated 0.9 0.4 Total 12.5 12.5 11.9 11.9 No_information No information available for actual GOS 0.4 - 0.4 financing. No information available for actual ENEE 6.9 - 6.9 financing. 2.0 2.0 Actual as of June ADB - 9.5 9.5 1990. 9.6 9.6 Actual as of June EIB - 14.7 14.7 1990. No information available for actual Italian Government 1.9 48.1 50.0 financing. No information available for total Total 9.2 84.8 2_ _ _ _ actual financing.  - 21 - Table 6. Proect Results A. Direct Benefits Indicator Appraisal Estimate Actu Estimated at Full (for the year of (1990) Development i ________________ 1990) Installed dependable capacity (MW) 46 * 61 (1992) Energy generated (WVh) 241 305 (1992) Ratio of demand to sent out energy 0.99 * 1.00 (1994) Benefit of incremental served demand from thermal (US$ 000) 29839 46488(2002) Net economic benefit (US$ 000) 3405 30684 (2002) * No information available. B. Economic Impact Appraisal Estimate actual (1990) Economic rate of return(%) 25.3 (1994) * Average tariff increase(%) 35 (1990) 61 * No information available.  - 22 - C. Financial Impact on ENEE Indicator AppraisalEEstimate A di (for the year of (1990) 1990) (US$ million) Electricity sales 33.28 Internal contribution to investment 8.83 * Investment program 54.78 * Contribution to investment(%) 16.00 * Debt service coverage (times) 2.40 Projected average tariff increase (%) 35.00 61 Rate of return (%) 6.10 * No information available. D. Studies Studies PuposeSaus Impac Petroleum During appraisal, IDA Completed Recommendations Supply ard requested Government to in July, provided in the study Pricing Study undertake this study in order to 1990. might bring about strengthen the procurement, institutional reform. marketing, and distribution systems for petroleum products and to evaluate the economic viability of continuing refining operations. Commercial The study was recommended The studies Woodfuels and because of the importance of were not Household household energy in Somalia completed Energy Studies which was likely to grow faster than the growth of industry and intensive agriculture.  - 23 - Table 7. Status of Covenants Credit Agreement Status of Compliance 3.01(a) The Borrower shall cary out the project Compliance. Three organizations were through MNP, NWP and ENEE respectively. competent in project implementation. 3.01(b) The Botrower shall relent, out of the Compliance. proceeds of the Credit, an amount not exceeding the $10.3 million to ENEE under a Subsidiary Loan Agreement. 3.01(c) The Borrower shall exercise its rights Compliance. under the Subsidiary Loan Agreement in such manner as to protect the interest of the Borrower and IDA and to accomplish the purpose of the Credit. 3.01(d) The Borrower shall enter into a Foreign Compliance. Exchange Purchasing Agreement with ENEE. 3.02(b) The Borrower shall employ consultants Compliance. under the Bank's Guidelines. 3.04 The Borrower shall, not later than April 1, Compliance with delay. 1988, submit to IDA proposals for the energy sector Inception Report on Somali Energy institutional reforn. Planning project was submitted in October 1989. 3.06 The Borrower shall, not later than June 30, Not compliance. 1989, submit to IDA the Household Energy Survey, Final report on Petroleum Supply and the Petroleum Procurement and Distribution Study Pricing was submitted in July 1990. The and the Commercial Woodfuel Study. other two were not done. 4.01(a) The Borrower shall maintain project A major error occurred in recording records and accounts adequate to reflect the project component budget. US$ 300,000 operations, resources and expenditures of the under W/Appl 18 should have been Project. recorded as belonging to category 4-a, but was recorded as belonging to category 4-b. As a result, the withdrawal applications under category 4-b could not be processed until after the Budget Reconciliation Meeting held in Oct. 1990. 4.01(b) The Borrower shall fumish to IDA the Audit reports for 87 and 88 were received. annual audit report. No record available for 89 and 90 reports. _________________________I____ I-  - 24 - Table 8. Use of IDA Resources A. Staff Inputs A186 1987 1988 M92 1990 1991 1992 Total Preappraisal 1.5 25.6 Appraisal 34.1 2.7 Negotiation 10.9 Supervision 11.6 10.1 12.9 2.3 Total 1.5 59.7 25.2 10.1 12.9 2.3 0 _L7J B. Missions Stage of Proj. MonthYear No.of Persons Specializations PerfQrmaa'fl QCycle_ a/ Rating Statusb/ Preparation May 1986 1 TS Preappraisal Aug. 1986 1 FA Appraisal Mar. 1987 3 FA,ECO, ENG Supervision Nov. 1987 2 FA,ENG 1 Supervision Apr. 1988 2 ECO,ENG 1 Supervision Nov. 1988 2 ENG, FA 1 Supervision May, 1989 1 ENG I Supervision Nov. 1989 1 ENG I a/ ECO=Economist, ENG=Engineer, FA=Financial Analyst, TS=Training Specialist b/ 1 =Problem free or no significant problems.