The World Bank Rural Electrification Project (P150908) REPORT NO.: RES37038 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF RURAL ELECTRIFICATION PROJECT APPROVED ON NOVEMBER 7, 2014 TO REPUBLIC OF VANUATU ENERGY & EXTRACTIVES EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Country Director: Michel Kerf Senior Global Practice Director: Riccardo Puliti Practice Manager/Manager: Jie Tang Task Team Leader: Kamleshwar Prasad Khelawan The World Bank Rural Electrification Project (P150908) ABBREVIATIONS AND ACRONYMS DOE Department of Energy PDO Project Development Objective RSF Risk Sharing Fund SEFP Sustainable Energy Financing Program VREP I & II Vanuatu Rural Electrification Project Stage I (P150908) and Stage II (P160658) POM Project Operations Manual SIM Subsidy Implementation Manual The World Bank Rural Electrification Project (P150908) BASIC DATA Product Information Project ID Financing Instrument P150908 Investment Project Financing Original EA Category Current EA Category Approval Date Current Closing Date 07-Nov-2014 31-Dec-2019 Organizations Borrower Responsible Agency Department of Energy, Ministry of Climate Change and Republic of Vanuatu Adaptation Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 0 Total Financing 0 Financing Gap 0 DETAILS -NewFin3 Project Development Objective (PDO) Original PDO The project development objective (PDO) is to scale up access to electricity services for rural households, aid posts and communityhalls located in dispersed off-grid areas. OPS_TABLE_PDO_CURRENTPDO The World Bank Rural Electrification Project (P150908) Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-18003 04-Dec-2014 04-Dec-2014 04-Dec-2014 31-Dec-2019 4.70 3.61 1.09 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. Progress towards achievement of the Project Development Objective is rated as Moderately Satisfactory and the Overall implementation progress has been rated as Satisfactory. 2. The Vanuatu Rural Electrification Project Stage I (VREP I) set out to provide access to electricity for 17,500 households, 230 aid posts and 2,000 community halls by the close of the project on 31 December 2019. The project is well on the way to achieving to household access targets by the project closing date. Results against targets as of May 2019 are shown in Table 1 below. Disbursements as of May 2019 and reallocation by categories are provided in Table 2. With payments against the subsidy claims in hand for verification (estimated USD436,000), the funds available under category 2 will be fully exhausted. Funds (over USD1,000,000) will remain unused under category 1 (project management and other operating costs). 3. This project was restructured in November 2018 to allow for the extension of the Sustainable Energy Financing Project - SEFP (P098423), a risk-sharing facility (RSF), to support VREP I & II. The restructuring involved the inclusion of “failure to perform obligations under the Project Agreement” supporting the extension of SEFP to Vanuatu as an additional event of suspension referred to in the Standard Conditions. There have been no extensions to the closing date of the project. 4. The implementing agency responsible for this project is also implementing two other projects, the Vanuatu Rural Electrification Project Stage II (P160658) and the Improved Electricity Access Project (P133701). The audits for these two projects have been received and are being reviewed by the Bank’s Financial Management team. The audit for this project is overdue because the external auditor has requested more time to complete the audit. We are processing this restructuring with an approval to proceed from WFACS and GGOEP, as an exception. Table 1: Results achieved against PDO and intermediate indicators. The World Bank Rural Electrification Project (P150908) Actual Original (As of Indicator Revised Explanation Target March 2019) PDO Indicators Peoples Additional 3000 households (@4.9 person [People provided with new per HH) equals to additional 14,700 85750 48275 100,450 or improved electricity people to the original target. Refer to service] households below. Community [Community electricity 2230 411 2230 No change connections constructed under the project] Households [Number of households Additional 3000 households will benefit provided access to electricity 17500 9852 20500 from reallocation of $1,120,000 from under the Project by category 1 to category 2. household systems] Intermediate Indicators Female-headed Households [Number of female-headed Female headed-households are 13 % of households provided access total households or original target. The 2275 1826 2665 to electricity under the revised target includes 13 % of the Project by household additional households. systems] Kilowatts households Average consumption under original [Number of kilowatts target was assumed to be 15W per HH for installed through the plug and play systems. Average installation of household 263 168.63 363 household consumption for additional systems] households is estimate at around 30W resulting an upward increase of around 100kW. Kilowatts community [Number of kilowatts 67 5.17 67 No change installed through community facility connections] The World Bank Rural Electrification Project (P150908) Number of private vendors in Vanuatu registered under 10 4 10 No change the Project’s vendor registration program Number of registered products available in the 25 19 25 No change product catalogue Communication campaigns; number of rural village awareness programs 200 177 200 No change undertaken by province, island and village Consultations with women’s groups, including 8 5 8 No change on project design and reviews Institutions providing microfinance products to households in rural areas for 4 2 4 No change the purchase of solar systems under the Project Table 2: Disbursements and reallocation by category Original Disbursed Undisbursed Reallocation Proposed Category 1 USD 1,600,000 USD 460,716 USD 1,139,284 USD-1,120,000 USD 480,000 Category 2 USD 3,100,000 USD 2,490,943 USD 609,057 USD+1,120,000 USD 4,220,000 DA* USD 330,438 USD -330,438 Total USD 4,700,000 USD 3,282,097 USD 1,417,903 USD 4,700,000 Percent of total 70% 30% 100% *DA refers to the amount disbursed into the Designated Account (DA) with the Recipient but is yet to be expensed. B. Rationale for Restructuring 5. On 21 May 2019, the Government of Vanuatu (GoV) requested the following changes to the project (VREP I): (i) extension of the project by six months to June 2020, to allow full utilization of the grant funds, (ii) a partial reallocation of funds from category 1 to 2 to support the scaling up of results, (iii) the extension of the program to include rural businesses, consistent with the project development objective of VREP II (P160658), to also benefit rural businesses; and (iv) extending the project to include larger component-based systems to meet demand for larger systems that are not available under Lighting Global approved "plug and play" systems. Following further discussions with the Client, it was agreed that this restructuring would focus on items (i) and (ii) of the GoV’s request only because all funds available under the project is likely to be deployed under existing design. The World Bank Rural Electrification Project (P150908) 6. The rationale for reallocating funds (USD1,120,000) from category 1 to category 2 is to support the financing of products under category 2 and to scale up the results. The six-month extension to the closing date is to support the scale up and to allow for an orderly transition to VREP II. II. DESCRIPTION OF PROPOSED CHANGES 7. The project closing date is proposed to be extended from 31 December 2019 to 30 June 2020. 8. USD1,120,000 is proposed to be reallocated from Category 1 to Category 2 of the project. The reallocation of the funds from the project management category of VREP I will not be affected because the resources are shared and financed by both VREP I and VREP II. 9. The results framework is proposed to be amended to include additional 3000 households which will be electrified with additional funds. The additional number of households has been determined based on the funds reallocated (US$1,120,000) typical subsidies expected to be paid (US$364) for products included in the current Product Catalogue. Recent trends indicate a preference by households for the larger “plug and play” systems now available under Lighting Global verified products. 10. The implementation schedule is proposed to be extended by six months to reflect the revised closing date. The Project Operational Manual (POM) and Subsidy Implementation Manual (SIM) is proposed to be amended to reflect the extension of the project closing date and the revised Results Framework. The Subsidy Implementation Agreements (SIA) between the Recipient and the registered vendors are proposed to be amended to reflect the extension of the project closing date. 11. There are no other changes proposed. I. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ Project's Development Objectives ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ The World Bank Rural Electrification Project (P150908) Disbursements Arrangements ✔ Change in Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK Project Development Objective Indicators PDO_IND_TABLE People provided with new or improved electricity service Unit of Measure: Number Indicator Type: Corporate Baseline Actual (Current) End Target Action Value 0.00 48275.00 100450.00 Revised Date 22-Oct-2014 27-Mar-2019 30-Jun-2020 Ppl provided wth elec. by hhold conn.–Offgrid/minigrid–Only renewable sources Unit of Measure: Number Indicator Type: Custom Breakdown Baseline Actual (Current) End Target Action Value 0.00 48275.00 100450.00 Revised Date 22-Oct-2014 27-Mar-2019 30-Jun-2020 Community electricity connections constructed under the project Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action The World Bank Rural Electrification Project (P150908) Value 0.00 411.00 2230.00 No Change Date 22-Oct-2014 27-Mar-2019 31-Dec-2019 Community elec. connections constructed–Offgrid/minigrid–Only renewable sources Unit of Measure: Number Indicator Type: Custom Breakdown Baseline Actual (Current) End Target Action Value 0.00 411.00 2230.00 No Change Date 22-Oct-2014 27-Mar-2019 31-Dec-2019 Intermediate Indicators IO_IND_TABLE Number of households provided access to electricity under the Project by household systems Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 9852.00 20500.00 Revised Date 22-Oct-2014 27-Mar-2019 30-Jun-2020 Number of female-headed households provided access to electricity under the Project by household systems Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 1826.00 2665.00 Revised Date 22-Oct-2014 27-Mar-2019 30-Jun-2020 Number of kilowatts installed through the installation of household systems Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 168.63 363.00 Revised Date 22-Oct-2014 27-Mar-2019 30-Jun-2020 Number of kilowatts installed through community facility connections Unit of Measure: Number Indicator Type: Custom The World Bank Rural Electrification Project (P150908) Baseline Actual (Current) End Target Action Value 0.00 5.17 67.00 No Change Date 22-Oct-2014 27-Mar-2019 31-Dec-2019 Number of private vendors in Vanuatu registered under the Project’s vendor registration program Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 4.00 10.00 No Change Date 22-Oct-2014 27-Mar-2019 31-Dec-2019 Number of registered products available in the product catalogue Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 19.00 25.00 No Change Date 22-Oct-2014 27-Mar-2019 31-Dec-2019 Communication campaigns; number of rural village awareness programs undertaken by province, island and village Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 177.00 200.00 No Change Date 22-Oct-2014 27-Mar-2019 31-Dec-2019 Consultations with women’s groups, including on project design and reviews Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 5.00 8.00 No Change Date 22-Oct-2014 27-Mar-2019 31-Dec-2019 Institutions providing microfinance products to households in rural areas for the purchase of solar systems under the Project Unit of Measure: Number Indicator Type: Custom The World Bank Rural Electrification Project (P150908) Baseline Actual (Current) End Target Action Value 0.00 2.00 4.00 No Change Date 22-Oct-2014 27-Mar-2019 31-Dec-2019 OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) TOTAL 0.00 0.00 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications TF-18003 Effective 31-Dec-2019 30-Jun-2020 30-Oct-2020 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed TF-18003-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: TF 18003 GO CS TRNG/WS IOC 1,600,000.00 460,716.21 480,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: TF 18003 SUBSIDY PAYMENT PT1 3,100,000.00 2,817,718.12 4,220,000.00 100.00 100.00 Total 4,700,000.00 3,278,434.33 4,700,000.00 The World Bank Rural Electrification Project (P150908) OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2015 500,000.00 300,000.00 2016 1,000,000.00 300,000.00 2017 1,000,000.00 400,000.00 2018 1,000,000.00 1,000,000.00 2019 1,000,000.00 1,000,000.00 2020 200,000.00 1,700,000.00 Note to Task Teams: End of system generated content, document is editable from here.