India - Technical Assistance for Private Power Development Project

 Technical Assistance for Private Power Development Report No: ; Type: Report/Evaluation Memorandum ; Country: India; Region: South Asia; Sector: Electric Power & Other Energy Adjustment; Major Sector: Electric Power & Other Energy; ProjectID: P010422 INDIA: Technical Assistance Project for Private Power Development (Loan 3630-IN) The India Technical Assistance Project for Private Power Development, supported by Loan 3630-IN for US$20 million, was approved in FY91. The loan was closed on December 31, 1996, one year behind schedule. Disbursements were US$1.2 million, and the US$18.8 million undisbursed balance was canceled. The Implementation Completion Report (ICR) was prepared by the South Asia Regional Office. The Borrower, the Power Finance corporation (PFC)’s comments on the ICR are included as footnotes. The project’s objective, to facilitate the implementation of private power projects, was to be accomplished by financing foreign technical expertise to help State Electricity Boards (SEBs) (i) establish comprehensive administrative processes for soliciting and evaluating project proposals; and (ii) strengthen their effectiveness at negotiating Power Purchase Agreement (PPAs) with Independent Power Producers (IPPs) The project failed to meet its objectives because most SEBs were unwilling to borrow foreign exchange to pay for advice from foreign experts. Only four SEBs utilized the available loans. Other SEBs did not agree with the Government of India and the Bank that they needed assistance. In addition many had serious reservations about the desirability of IPPs, believing the costs to be too high, and that there was a low likelihood that such projects could come to fruition. The Operations Evaluation Department (OED) rates the project’s outcome as unsatisfactory, its sustainability as unlikely, and its institutional development impact as negligible. Bank performance is rated as unsatisfactory because the project design and preparation failed to adequately take account of the views of the SEBs, the agencies the project was supposed to assist. These ratings are consistent with those in the ICR. The main lesson from this project is to highlight the importance of securing beneficiary interest and ownership. The ICR is satisfactory. No audit is planned.