The World Bank Report No: ISR10178 Implementation Status & Results India Fifth Power System Development Project (P115566) Public Disclosure Copy Operation Name: Fifth Power System Development Project (P115566) Project Stage: Implementation Seq.No: 8 Status: ARCHIVED Archive Date: 18-Jun-2013 Country: India Approval FY: 2010 Product Line: IBRD/IDA Region: SOUTH ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): Key Dates Board Approval Date 22-Sep-2009 Original Closing Date 30-Jun-2015 Planned Mid Term Review Date 30-Jun-2013 Last Archived ISR Date 20-Nov-2012 Effectiveness Date 08-Jan-2010 Revised Closing Date 30-Jun-2015 Actual Mid Term Review Date Project Development Objectives Project Development Objective (from Project Appraisal Document) The project development objective is to strengthen India's electricity transmission system in order to increase reliable power exchange between regions and states. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Transmission System Stregthening Schemes 1000.00 Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Moderate Moderate Public Disclosure Copy Overall Risk Rating Implementation Status Overview Overall, the progress towards achievement of development objective continues to be 'satisfactory'. All the Key performance indicators (KPI) either outperformed or met their targets in FY 2013. Outcome indicator (growth in inter-regional power exchange) outperformed its target by 17% (actual-66 Billion Unit (BU) (provisional) against target - 56 BU). While this is encouraging, loan disbursement remains a source of concern. Over the past 9 months, the project attracted a lot of attention (from the Ministry of Finance and the Country Management Unit) because of the lingering slow disbursement. The Bank team held several meetings with POWERGRID in June and September 2012 and February 2013 to follow-up on agreed actions to improve project implementation and disbursement ratio. As of end March 2013, US$764 mln worth of contracts have already been awarded. Procurement activities are well advanced for packages of about US$141 mln, which means that at least US$905mln of the US$ 1 billion loan amount are expected to be utilized by the loan closing date of end July 2015. On disbursement, POWERGRID has met its Page 1 of 5 The World Bank Report No: ISR10178 disbursement target (even slightly exceeded) of US$140 million for its FY (ending March 2013), bringing the total loan disbursement to US$320 million. Powergrid expects to further disburse US$40.8 mln against existing contracts by the end of June 2013. If things go as planned, the overall disbursement ratio will increase from 32.0 % at the end of March 2013 to 36.0% at the end of June 2013. However, this disbursement level would still be below the PAD estimates of 49.5% by end FY12. As a consequence, the rating on the implementation progress remains 'moderately satisfactory'. Based on Powergrid's estimates, disbursement for FY14 would be in the order of US$200 million. Public Disclosure Copy Owing to cost savings under the project as well as availability of funds resulting from the cancellation of one of the schemes on technical considerations, POWERGRID has proposed a set of new schemes to utilize the remaining loan proceeds. Department of Economic Affairs (DEA) has also sent the restructuring request to the Bank, to include the new schemes as well as to explore in parallel options for leveraging finance from international loan markets. Hence, in parallel to the execution of contracts mentioned above, the World Bank and Powergrid are working on a finance-plus initiative. In October 2012, a joint World Bank-POWERGRID team conducted preliminary market soundings about the use of part of the loan proceeds for a Partial Credit Guarantee (PCG) to backstop a US$500 million syndicated 15-year commercial loan facility to POWERGRID. Since then POWERGRID has sought and received the endorsement of the PCG proposal by Ministry of Power, which in turn has forwarded the same to Department of Economic Affairs (DEA), Ministry of Finance for their consent. DEA is likely to issue its decision on the same by end May 2013. Thereafter, according to the current processing timetable of the proposed PCG transaction, the request for proposal (RFP) to hire a lead bank arranger will be issued to the already identified banks. The completion of the selection process will have a bearing on the timing of the project mid term review and its outcome (whether an offer would have been selected by Powergrid for further negotiation) will determine the extent of project restructuring. Locations Country First Administrative Division Location Planned Actual India State of Maharashtra Wardha India Uttar Pradesh State of Uttar Pradesh India Rajasthan Sikar India State of Madhya Pradesh Sidhi India State of Maharashtra Solapur India State of Madhya Pradesh Seoni India State of Madhya Pradesh Satna India State of Bihar Sasaram India Rajasthan Ratangarh Public Disclosure Copy India Rajasthan State of Rajasthan India State of Karnataka Raichur India State of Maharashtra Pune India State of Gujarat Mundra India Bengal Maithon India State of Maharashtra State of Maharashtra Page 2 of 5 The World Bank Report No: ISR10178 Country First Administrative Division Location Planned Actual India State of Arunachal Pradesh Lower Subansiri Public Disclosure Copy India State of Andhra Pradesh Kurnool India State of Andhra Pradesh Krishnapatnam India State of Maharashtra Kolhapur India State of Karnataka State of Karnataka India State of Gujarat Jetpur India Rajasthan Jaipur India State of Madhya Pradesh Indore India State of Madhya Pradesh Gwalior India State of Gujarat State of Gujarat India State of Andhra Pradesh Gooty India State of Madhya Pradesh Fatehpur India State of Arunachal Pradesh East Kameng India State of Bihar State of Bihar India State of Maharashtra Aurangabad India State of Andhra Pradesh State of Andhra Pradesh India Uttar Pradesh Allahabad India State of Madhya Pradesh Agra Public Disclosure Copy India Haryana Abdullapur India Haryana Panchkula Gurukul India State of Madhya Pradesh Bina India Rajasthan Barh India State of Himachal Pradesh Nathpa Jhakri India Bengal Karanpura India State of Bihar Kahalgaon Page 3 of 5 The World Bank Report No: ISR10178 Results Project Development Objective Indicators Public Disclosure Copy Indicator Name Core Unit of Measure Baseline Current End Target Growth in power exchange between and Text Value 46,027 Gwh 66,000 GwH 60,000 Gwh across regions (Millions kWh) Date 31-Mar-2009 31-Mar-2013 30-Jun-2015 Comments Outperformed its target of 56 Already met BU (TwH). Actual is a provisional figure and shall be updated once the data is available Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Growth in transmission capacity (circuit km) Text Value 71,447 ckt-km 100,107 ckm 100,000 ckt-km Date 31-Mar-2009 31-Mar-2013 30-Jun-2015 Comments Already exceeded the end Already met year target of 91,000 ckm Growth in transformation capacity (MVA) Text Value 79,522 MVA 164,763 MVA 95,000 MVA Date 31-Mar-2009 31-Mar-2013 30-Jun-2015 Comments Already exceeded the target Already met. Will be of 90,000 MVA reassessed at MTR Implementation of ESPP - Social (percent of Text Value 0% 100% 100% PAPs rehabilitated) Date 31-Mar-2009 31-Mar-2013 30-Jun-2015 Comments Met Met Implementation of ESPP - Environment - Text Value 18.6 MW/metre 20.51 21.5 MW/metre Cumulative transmission capacity (MW) per Date 31-Mar-2009 31-Mar-2012 30-Jun-2015 meter width of right-of-way within forest area Comments Current data not available and Likely to be met Public Disclosure Copy shall be updated once received. Data on Financial Performance (as of 16-Apr-2013) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P115566 IBRD-77870 Effective 22-Sep-2009 13-Oct-2009 08-Jan-2010 30-Jun-2015 30-Jun-2015 Disbursements (in Millions) Page 4 of 5 The World Bank Report No: ISR10178 Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P115566 IBRD-77870 Effective USD 1,000.00 1,000.00 0.00 321.25 678.75 32.00 Public Disclosure Copy Disbursement Graph Key Decisions Regarding Implementation The progress towards achievement of project development objective continues to be 'satisfactory'. Around 32% of the funds have been disbursed. Since this is slower than the level anticipated at the time of project appraisal, the overall implementation progress rating is maintained as 'moderately satisfactory'. The rating will be upgraded once the disbursement profile improves. There have been some surplus funds under PSDP V (due to cost savings and cancellation of one of the schemes on technical considerations), which POWERGRID intends to use to finance a set of new schemes. Department of Economic Affairs (DEA) has sent the request for restructuring along with a request to explore options for leveraging finance from international loan markets. The market sounding for the same has been completed in October 2012 and the proposal to use part of the loan proceeds to provide a partial credit guarantee (PCG) to backstop a long term commercial loan to POWERGRID has elicited strong interest from reputed commercial banks. It is expected that DEA will provide by the end of May 2013 greater clarity on the way forward for the proposed PCG, for which POWERGRID has already secured the approval of Ministry of Power. The mid-term review Public Disclosure Copy and restructuring of the project will then be carried out accordingly. Restructuring History There has been no restructuring to date. Related Projects There are no related projects. Page 5 of 5