Rapò Konpletman ak Rezilta - Pwojè Rediksyon Pèt Elektrisite

Document of The World Bank Report No: ICR00003076 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H2510 / IDA-H5100) ON A GRANT IN THE AMOUNT OF SDR 4.1 MILLION (US$ 6.0 MILLION EQUIVALENT) AND AN ADDITIONAL FINANCING GRANT IN THE AMOUNT OF SDR 3.3 MILLION (US$ 5.0 MILLION EQUIVALENT) TO THE REPUBLIC OF HAITI FOR AN ELECTRICITY LOSS REDUCTION PROJECT April 30, 2014 Energy Unit Sustainable Development Department Caribbean Country Management Unit Latin America and Caribbean Region Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective August 31, 2013) Currency Unit = Haitian Gourdes HT Gourdes 1.00 = US$ 0.0238 US$ 1.00 = HT Gourdes 42 FISCAL YEAR October 1 to September 30 ABBREVIATIONS AND ACRONYMS AF Additional Financing AFD French Development Agency CIDA Canadian International Development Agency CMS Customer Management System CRI Cash Recovery Index CQ Consultant Qualification DA Designated Account EDH Electricité d’Haïti EGRO Economic Governance Reform Operation ECTAG Economic Technical Assistance Grant EU European Union FBS Fixed Budget Selection FMR Financial Management Report GOH Government of Haiti ICB International Competitive Bidding IDA International Development Association IADB Inter-American Development Bank LAC MEF Latin America and Caribbean region Ministry of Finance MTPTC Ministry of Public Works, Transport and Communication ( Ministère des Travaux Publics, Transport et Communication ) M&E Monitoring and Evaluation MOU Memorandum of Understanding NCB National Competitive Bidding O&M Operation and Maintenance PCU/UCP Project Coordination Unit / Unité de Coordination du Projet PEMFAR Public Expenditure and Financial Accountability Review PPIAF Public Private Infrastructure Advisory Facility PREPSEL Electricity Loss Reduction Project ( Projet de Réduction des Pertes du Secteur de l’Electricité, this project) PRSP Poverty Reduction Strategy Paper QCBS Quality Cost Based Selection RMS Resource Management System SBD Standard Bidding Document SDR Special Drawing Rights TA Technical Assistance TOR Terms of Reference TSMS Technical Service Management System Vice President: Jorge Familiar Calderon Country Director: Mary Barton-Dock Sector Manager: Malcolm Cosgrove-Davies Project Team Leader: Frederic Verdol ICR Team Leader: Frederic Verdol HAITI Electricity Loss Reduction Project CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 7 3. Assessment of Outcomes .......................................................................................... 15 4. Assessment of Risk to Development Outcome......................................................... 17 5. Assessment of Bank and Borrower Performance ..................................................... 17 6. Lessons Learned ....................................................................................................... 19 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 20 Annex 1. Project Costs and Financing .......................................................................... 21 Annex 2. Outputs by component .................................................................................. 22 Annex 3. Economic and Financial Analysis ................................................................ 28 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 35 Annex 5. Beneficiary Survey Results ........................................................................... 37 Annex 6. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 39 Annex 7. Comments of Cofinanciers and Other Partners/Stakeholders ……………...40 Annex 8. Overview of the Haiti Energy and Electricity Sectors………………….......46 Annex 9: List of Supporting Documents .................................................................... ..48 MAP A. Basic Information Country: Haiti Project Name: HT Electricity Project Project ID: P098531 L/C/TF Number(s): IDA-H2510, IDA-H5100 ICR Date: 02/02/2014 ICR Type: Core ICR Lending Instrument: SIL Borrower: GOVERNMENT OF HAITI (MIN. ECON & FINANCE) Original Total Commitment: XDR 4.10M Disbursed Amount: XDR 6.66M Revised Amount: XDR 7.4M Environmental Category: C Implementing Agencies: DIRECTION GENERALE EDH Co-financiers and Other External Partners: B. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 01/19/2006 Effectiveness: 07/31/2007 07/31/2007 Appraisal: 04/05/2006 Restructuring(s): 06/25/2010 02/28/2012 02/28/2013 Approval: 08/03/2006 Mid-term Review: 07/08/2011 09/27/2011 Closing: 02/28/2010 08/31/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: High Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Unsatisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Unsatisfactory Government: Moderately Satisfactory Quality of Supervision: Moderately Satisfactory Implementing Agency/Agencies: Moderately Unsatisfactory Overall Bank Performance: Moderately Satisfactory Overall Borrower Performance: Moderately Unsatisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation Performance Indicators QAG Assessments (if any) Rating Potential Problem Project at any time (Yes/No): Yes Quality at Entry (QEA): None Problem Project at any time (Yes/No): Yes Quality of Supervision (QSA): None DO rating before Closing/Inactive status: Moderately Satisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Transmission and Distribution of Electricity 100 100 Theme Code (as % of total Bank financing) Infrastructure services for private sector development 67 65 Other accountability/anti-corruption 5 Regulation and competition policy 33 30 E. Bank Staff Positions At ICR At Approval Vice President: Jorge Familiar Calderon Pamela Cox Country Director: Mary A. Barton-Dock Caroline D. Anstey Sector Manager: Malcolm Cosgrove-Davies Susan G. Goldmark Project Team Leader: Frederic Verdol Clemencia Torres De Mastle ICR Team Leader: Frederic Verdol ICR Primary Author: Fernando Lecaros F. Results Framework Analysis Project Development Objectives ( from Project Appraisal Document 1 ) The objectives of the Project were to contribute to the sustainable improvement in the quality of electricity services to customers and to the strengthening of the financial and operational performance of the electricity public utility (EDH). 1 Formulation of the PDO in the PAD and in the Legal Agreement are slightly different: the PDO stated in the PAD has been selected here because it is the one approved by the Board, used in the results frameworks and monitored throughout project implementation. Revised Project Development Objectives (as approved by original approving authority) The PDO was not revised but Performance and Intermediate Indicators’ baseline and values were revised with the Additional Financing (AF) in July 29, 2009 and the Restructuring in June 25, 2010. (a) PDO Indicator(s) Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Indicator 1 : Cash Recovery Index Value (percentage) 11.51 50 40 26.7 Date achieved 03/01/2011 07/29/2009 03/01/2011 07/01/2013 Comments (incl. % achievement) Baseline and revised target values reset subsequently to January 2010 earthquake: 2011 baseline three times lower than 2006 value (31%). Value increased by 130% between baseline and final, but only 87% of expected progress was achieved. Indicator 2 : Percentage of Customers served at least 6 hours per day in the zones served by EDH Value (percentage) 20 50 100 Date achieved 03/01/2011 07/29/2009 07/01/2013 Comments (incl. % achievement) Target achieved and surpassed by 100%: all of power distribution circuits served by EDH had more than 6 hours of daily service by completion. (b) Intermediate Outcome Indicator(s) Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Indicator 1 : Number of Customers in the CMS Database Value (quantitative or Qualitative) 0 185,315 224,052 Date achieved 12/12/2005 03/01/2011 07/01/2013 Comments (incl. % achievement) Customer Management System (CMS) software activity added at the additional financing level. Target revised after the 2010 earthquake. 100% achievement. End value higher than target because of the increased number of customers. Indicator 2 : Number of Customers in the TSMS Database Value (quantitative or Qualitative) 0 185,315 224,052 Date achieved 12/12/2005 03/01/2011 07/01/2013 Comments (incl. % achievement) Technical Service Management System (TSMS) software activity added at the additional financing level. Target revised after the 2010 earthquake. 100% achievement. End value higher than target because of the increased number of customers. Indicator 3 : Number of EDH staff trained to use CMS and TSMS (not cumulative) Value (quantitative or Qualitative) 0 435 296 Date achieved 12/12/2005 03/01/2011 07/01/2013 Comments (incl. % achievement) Target achieved at 47%. All EDH staff located where the systems have been installed were trained; systems have yet not been installed in the provinces. Indicator 4 : Active Customers per Employee Ratio Value (quantitative or Qualitative) 80 100 98 Date achieved 12/12/2005 03/01/2011 07/01/2013 Comments (incl. % achievement) 90% achievement of the expected improvement. Indicator 5 : Technical Assistance to EDH Management Value (quantitative or Qualitative) Sub-standard procedures Implementatio n of new procedures for financial management, internal control, human resources, technical management Gap analysis conducted. New procedures for Commercial and IT management recommended. Individual experts funded under the project to support EDH management progressively diffused professionalism and commercial culture among management and staff. Date achieved 12/18/2009 03/01/2011 07/01/2013 Comments (incl. % achievement) Support to EDH management was timely after the 2010 earthquake, and seemed to have provided positive cultural change amongst EDH staff, albeit not sustainably. Indicator 6 : Financial Management Plan for EDH Value (quantitative or Qualitative) No financial management plan in place. Implementatio n of (i) an accounting system, (ii) definition of manual of Financial tool provided to EDH, funded under the project procedures, and (iii) inventory of assets Date achieved 12/18/2009 03/01/2011 07/01/2013 Comments (incl. % achievement) Accounting assistance under progress since May 2013, funded under a World Bank project implemented by Haiti Ministry of Finance. Delivery expected for first Quarter of 2014. Indicator 7 : Number of satisfied customers (large customers) Value (quantitative or Qualitative) No baseline. Survey to be done once the information systems operation is judged satisfactory to EDH. Survey conducted in March 2014 Date achieved 12/18/2009 03/01/2011 03/31/2014 Comments (incl. % achievement) The Beneficiary Survey conducted on 122 beneficiaries showed that: (i) 62% of large customers noticed improvement of the quality of service, (ii) 65% are satisfied by the new infrastructure (meters) or service provided, (iii) 31% have experienced issues with their electricity bill since the CMS is in place, and (iv) 23% have already called the EDH hotline put in place under the project (CSMS sub-component). Indicator 8 : Employees satisfied with new system Value (quantitative or Qualitative) No system in place. First wave of implementation of the system took place in mid-2012 with 5,000 clients, via TSMS system. Survey conducted in March 2014 Date achieved 12/18/2009 04/01/2012 03/31/2014 Comments (incl. % achievement) The Beneficiary Survey conducted within a sample of 38 EDH staff showed that if 76% of the staff considers information systems as critical elements for EDH to improve its performance, only 37% believe that the current systems are functioning correctly. Overall, 39% of staff thinks that the PREPSEL has contributed to improve EDH performance. G. Ratings of Project Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (USD millions) 1 10/26/2006 Satisfactory Satisfactory 0.00 2 06/06/2007 Satisfactory Moderately Unsatisfactory 0.00 3 11/12/2007 Satisfactory Satisfactory 0.17 4 06/06/2008 Satisfactory Satisfactory 0.26 5 12/16/2008 Satisfactory Satisfactory 0.37 6 05/15/2009 Moderately Satisfactory Moderately Satisfactory 0.51 7 11/15/2009 Moderately Satisfactory Moderately Satisfactory 1.32 8 06/06/2010 Moderately Satisfactory Moderately Satisfactory 2.83 9 02/20/2011 Moderately Satisfactory Moderately Unsatisfactory 4.63 10 08/13/2011 Moderately Satisfactory Moderately Unsatisfactory 5.93 11 05/21/2012 Moderately Satisfactory Moderately Unsatisfactory 7.47 12 03/25/2013 Moderately Satisfactory Moderately Unsatisfactory 8.91 13 09/12/2013 Moderately Satisfactory Moderately Unsatisfactory 10.11 H. Restructuring (if any) Restructuring Date(s) Board Approved PDO Change ISR Ratings at Restructuring Amount Disbursed at Restructuring in USD millions Reason for Restructuring & Key Changes Made DO IP 09/08/2009 N MS MS 0.54 Additional Financing (AF) supported costs overruns for the customer management systems and remote meters, and provided technical assistance to EDH Management and Minister of Public Works (MTPTC). Changes: added US$ 5.0 million; extended closing date by two years, to February 28, 2012; added Component 4 ‘Technical Assistance to EDH Management’. 06/25/2010 N MS MS 3.05 Extension of closing date by one year (new date: February 28, 2013) and revision of the project indicators’ baseline, subsequently to January 2010 earthquake. 02/28/2013 N MS MU 8.85 Extension of closing date deadline until August 31, 2013, to allow completion of remote metering activities. I. Disbursement Profile 1 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal Political context at the project preparation period was very fragile. By 2003, Haiti’s political situation had become very uncertain. External aid dried up, the World Bank closed its office in Haiti and many other donor agencies withdrew their support. Armed opposition forces entered from the Dominican Republic to remove President Aristide from power. He left the country on February 29, 2004 and a transitional government took office. The Bank renewed its official relations with Haiti in 2004. Regarding the Economic context, Haiti already had its singular status of poorest country in the LAC region and in the Western Hemisphere . About 78 percent of its 8.6 million population lived below the poverty line (54 percent in extreme poverty). The country’s economic situation and public institutions were then structurally weakened during the previous two decades by political instability and a series of conflicts, exacerbating poor governance practices and increasing Haiti’s dependency on external assistance. Haiti’s Electricity sector was institutionally weak, technically inefficient and financially in deficit. Despite the low level of electricity service to the 25% Haitian population having access to electricity (10 hours of service per day on average, and a 90MW unmet demand at the evening peak, see Annex 8), the high level of losses (above 50%) and the high electricity generation cost resulted in a heavy public expenditure burden 2 . The increasing rate of electricity theft – nurtured by a culture of non payment - and use of inefficient back-up generators were the main reasons leading to the development of the multi-donor support strategy to the Electricity sector 3 in 2004. The IDA funded Haiti Electricity Loss Reduction Project (or PREPSEL) was designed and approved in line with this multi-donor support, consistent with the Bank’s IDA Transitional Support Strategy (January 2005) and in parallel with other Bank Group assistance to the Government of Haiti in the Energy sector 4 . The PREPSEL initially aimed to improve living standards of a representative sample of EDH customers, through power distribution loss reduction. The project design was aimed at putting EDH on a virtuous path of operational and service 2 In 2005, national budget transfers to the vertically integrated state power utility EDH were US$ 47 million, representing 7 percent of the national budget. 3 The multi-donor strategy has been jointly adopted in July 2004 by the international community, the GOH and EDH, under the Interim Cooperation Framework (ICF). Donors involved (CIDA, USAID, AFD, World Bank, EU and IADB) signed on October 21, 2005 a MoU with the GOH, providing almost US$ 15 million to improve the transparency of the sector and increase the efficiency of investments realized. 4 ESMAP assistance on wood fuels alleviation, PPIAF assistance for various analytical studies on the electricity sector, and IFC’s assistance to CIDA for the accounting assistance and financial audit in EDH. 2 improvement, in support of government’s higher goal of enhancing quality of life and economic development. It was recognized that the scale of the problem at EDH would require more resources to resolve than PREPSEL had to offer. Hence PREPSEL was aimed at specific discreet issues which, if successful could help to put EDH on the path to recovery, in concert with other efforts, also underway. 1.2 Original Project Development Objectives (PDO) and Key Indicators ( as approved ) The objectives of the Project are “to contribute to the sustainable improvement in the quality of electricity services to customers and to the strengthening of the financial and operational performance of the electricity public utility (EDH)”. The PDO formulation in the PAD and in the Legal Agreement 5 are slightly different: the PDO stated in the PAD has been selected here because it is the one approved by the Board, used in the results frameworks and monitored throughout project implementation. Original key performance indicators for the project (to be achieved within 36 months, as per PAD results framework) were as follow: Project outcome indicators: - Number of electricity service interruptions decreasing from 126 to 15 per month in the project area, and from 257 to 220 per month for the large customers; - Improvement of the Cash Recovery Index from 31% to 69% in the project area, and from 50% to 78% for the industrial customers; - Endorsement by EDH and the Government of a final proposal on how to replicate the pilot project to reduce losses in the other areas supplied by EDH. Component 1 indicators: - Number of consumers in the whole country incorporated into the CMS and TSMS database amounting 220,758. -Number of EDH employees successfully trained in the use of the new CMS and TSMS amounting 405 staff; - Increase of Active customers / employee ratio from 79 to 114. Component 2 indicators: - Increase in the revenues billed to large customers by EDH in the project zone by Gourdes 31 million monthly, and respective increase of the revenues collected by Gourdes 62 million monthly; -Number of interruptions per month in the project zone - also known as SAIFI index – decreasing from 126 to 15. 5 PDO formulation in the Legal Agreement is “to assist the Recipient in achieving sustainable improvement in the quality of electricity services to customers and strengthening the financial and operational performance of its power utility”. 3 - Monthly cumulative duration of interruptions - also known as SAIDI index – decreasing from 250 minutes to 180 minutes; -Number of consumers regularized in the project zone increasing from 9,183 to 9,474; -Number of EDH employees trained to perform commercial activities in the project area. - Daily level of service in the project zone increasing from 18 hours per day to 24 hours per day; Component 3 indicators: -Number of satisfied customers in the project area as measured by periodic surveys and focus groups, amounting 7,769 (and 1,874 large customers) ; -Number of EDH employees satisfied with the new information system amounting at least 625; - Number of EDH employees satisfied with the evolution of the project amounting 1,938 staff. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The Additional Financing (AF) approved by the Board on July 29, 2009 (Grant A-H5100, for $5 million) did not include any change in the PDO formulation; the additional resources were oriented towards: (i) providing management support to EDH as a new project component (new Component 4); (ii) covering cost overruns under Component 1 (implementation of a new commercial approach for EDH) and Component 2 (Improvement in quality of service and increase in revenue collection of EDH through selected groups of customers); and (iii) making additional funds available for Component 3 (Participatory approach, project management, monitoring and impact evaluation, and replication strategy). The institutional framework, procurement and disbursement arrangements remained also unchanged. Key changes regarding the indicators were linked to the enhanced scope of the project (original plus AF), now supporting EDH at the national level: key indicators had to be measured at the utility’s level, and not only on the pilot zone of the original project. At this time, the IADB funded project was carrying out the replication of the original pilot, which led to removal of the now successfully achieved outcome of ‘Endorsement by EDH and the Government of a final proposal on how to replicate the pilot project to reduce losses in the other areas served by EDH’. The revised indicators are detailed in Table 1 below. The indicators measuring EDH revenues billed and collected in the pilot zone and for the large customers (component 2) were merged into the Cash Recovery Index (CRI), which measures collections for energy consumption over energy delivered. Although the AF extended the project closing date by two years – from February 28, 2010 to February 28, 2012, the AF maintained the 2005 baseline, and kept also the original project target values (with two additional years to reach these values). Hence, 4 the PDO indicator “CRI” was to improve from 27% to 50% by end February 2012, and the PDO indicator “SAIFI” was to improve from 400 to 127 average monthly interruptions experienced by EDH clients. The AF modified the key indicators as follows: Table 1: 2009 Outcome Indicators PDO Original Project Outcome Indicators New Project Outcome Indicators Contribute to the sustainable improvement in the quality of electricity services delivered to customers in Port-au-Prince and to the strengthening of the financial and operational performance of the public utility in charge of providing these services (EDH).
Improved quality of service provided by EDH in the project zone
Improved quality of service provided to large customers
Increase in the revenues billed by EDH in the project zone
Increase in the revenues collected by EDH in the project zone
Endorsement by EDH and the Government of a final proposal on how to replicate the project pilot to reduce losses in the other areas deserved by EDH
Improvement in the Cash Recovery Index
Improvement in the quality of service provided by EDH
Indicators related to pilot zone and large customers are included in components 2.
This indicator is being removed as the Project is already being replicated by the IADB, with the approval of EDH and the Government Intermediate Outcomes Original Intermediate Outcome Indicators New Intermediate Outcome Indicators Component 1 Adopt and implement modern commercial and service management systems for EDH as the basis for a more customer-oriented approach to providing electricity services.
Number of consumers in the whole country incorporated into the new CMS database
Number of consumers located in the whole country incorporated into the new customer-installations link database and attended through TSMS
Number of EDH employees successfully trained in the use of the new CMS and TSMS Same Same Same Component 2 Improving service to clients and increasing revenues billed and collected for EDH: a) In the project zone
Number of interruptions per month suffered by each customer
Duration of interruptions
Number of consumers regularized in the selection zone
Amount billed in project zone
Amount collected in project zone
Number of EDH employees trained to perform commercial activities in the selection zone.
Same
Same
Same
Same
Increase in the Cash Recovery Index in the project zone (recoups improvement in amounts billed and collected) 5 PDO Original Project Outcome Indicators New Project Outcome Indicators b) Among large consumers
Number of interruptions suffered by each large customer
Duration of interruption suffered by each large customer
Number of large consumers regularized
Amount billed to large customers
Amount collected from large customers
Number of EDH employees trained to attend and follow up on large Consumers
Number of satisfied customers in the project area as measured by periodic surveys and focus groups
Number of large customers satisfied
Increase in Cash Recovery Index of the large customers (recoups improvement in amounts billed and collected)
Same
Same Component 3 Execution, evaluation and replication of project through strategic participation
Number of satisfied EDH employees
Percentage of disbursement of the Project funds in relation to the Project implementation schedule
Number and frequency of project progress reports presented to and approved by the Bank in relation to what was agreed upon in the Manual of Operations
Same
Same
Same
Successful training of MTPTC energy staff to supervise performance indicators (new indicator) Component 4 Technical Assistance to EDH management N/A – New component
Adoption and implementation by EDH of new, sound procedures in: o Financial management o Internal control o Human Resources (HR) o Commercial management o Technical management
Implementation of the Financial Management Action Plan 1.4 Main Beneficiaries, The main beneficiaries of the PREPSEL were EDH management and staff, directly benefiting from the modern infrastructure installed and the associated training / capacity building. The expected improvement in quality of electricity service directly benefited EDH customers, 92 percent of whom were residential customers, with a large majority of poor or low income customers. More generally, the whole Haiti population would benefit from the PREPSEL’s success, through an improved performance of EDH translating to lower budget transfers and thus more public funds from the national budget for social services to the poorest. 6 In the original project, the direct beneficiaries were those located in the zone of influence of the project (around 9,000, of which about 8,000 were residential), and most large customers. The project was also expected to improve quality of service in 9 slums with a population of around 19,000. The PAD conceived the project as a pilot project to be replicated. If successful and replicated, the project would ultimately improve the living standards for Haitians, and, by improving economic conditions, it was expected to have a large impact on the economic activity of the country. 1.5 Original Components ( as approved ) Component 1 : Improvement in EDH management systems and practices (US$ 2,640,000). The objective of this component was to improve the operational (technical and commercial) performance of EDH in a sustainable manner, by giving the company the information tools for a modern and efficient customer management and the services. The component financed the purchase and installation of two systems (the commercial management and technical management systems, CMS and TSMS) for EDH, which will help improve billing and quality of customer relation service. Component 2 : Improvement in quality and reliability of services and increased revenue collection of EDH for selected groups of customers (US$ 3,245,000). In addition to ensuring the adequate implementation of CMS and TSMS in a specific zone of the metropolitan area and for the large customers, this component financed the purchase and installation of remote meters for large customers, as well as the purchase and installation of remote meters to accurately measure the production of the Independent Power Producers (IPPs) Component 3 : Participatory approach, project management, monitoring and impact evaluation, and replication strategy (US$ 1,579,760). This component financed the communication and coordination costs of the project, also the monitoring of the project’s indicators as well as a technical assistance to the MTPTC to oversee EDH’s performance and advise the Minister on Energy-related topics. 1.6 Revised Components The AF broadened the scope of activities under the Project, by adding a new component: Component 4 : Management support to EDH (US$ 2,570,000). This component financed a program of technical assistance to support EDH management, consisting of the introduction of four international experts in EDH’s management structure to enhance the performance of the Commercial, Technical, Finance/Administration and Planning Divisions and transfer capacity for improved management policies and practices to EDH. The AF covered cost overruns under Component 1 (Total amount after AF was US$ 3.68 million) and Component 2 (total amount after AF was US$ 3.51 million). The AF also made additional funds available for Component 3 to finance the costs of the Project Coordination Unit and provide support to the Ministry of Energy during the two-year 7 extension (Total amount after AF was US$ 1.08 million) during the two-year extension of the Project. The costs overruns involved are related to the overall slower implementation of all EDH activities after the 2008 hurricanes that mobilized most of EDH staff, engendering immobilization of suppliers and thus costly implementation delays. 1.7 Other significant changes The AF of 2009 extended the original closing date of February 28, 2010 to February 28, 2012. The AF was signed on November 2, 2009. Two months later, in January 2010, the Port au Prince area was struck by a devastating earthquake which, with other natural disasters, significantly affected the project . In June 2010 the Government requested a reallocation of funds among the disbursement categories, an extension for submitting the project’s audited financial statements, and an extension of the closing date. The Bank accepted these requests and the closing date was extended to February 28, 2013. A restructuring took place in February 2013, which extended the closing date to August 31, 2013 and reallocated the funds of different components. In August, 2012 the Bank approved a grant for US$90 million (the Rebuilding Energy Infrastructure and Access Project, P127203), which complements the PREPSEL project by strengthening energy policy and planning capacities, improving the sustainability and resilience of the power sector, as well as restoring and expanding access to reliable electricity services, and providing financial assistance in the event of an Energy Sector Emergency. The second component of this project allocated $77.8 million to enhancing EDH’s infrastructure and management performance. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry Background analysis. The project was prepared in a period of five months. While coordinating closely with the other donors, the preparation team focused on the institutional arrangements and the operational project implementation mechanisms included in the project manual. The modernization of EDH’s information systems and improved management of key clients were seen as the most valuable investments for the utility’s performance improvement at the time of the preparation. The project did not activate any of the Bank’s social or environmental safeguard policies, as its components were basically of a managerial and financial nature, requiring the purchase of mostly information systems (CMS & TSMS) and inert equipment (meters). Project preparation. The project was prepared by building upon several previous studies which analyzed EDH’s issues and possible ways of addressing them. One of these studies, on EDH management reform 6 , concluded that PREPSEL was not the timely 6 In 2006, US$ 700 thousand study funded by PPIAF tried to address EDH management weakness through a management contract. 8 operation to address an ambitious management restructuring inside EDH (despite the recognized risks associated with a fragile management capacity at the time of the project preparation); the project scope was then narrowed to the improvement of EDH information and metering systems. Among the “high” risks identified during project preparation, the lack of Government’s political willingness to support PREPSEL’s loss- reduction measures was the most substantial. However, efforts to mitigate this risk within Haiti’s chaotic political economy ultimately were insufficient for the project’s technical solutions to reach their full potential during the project period. Additional financing (AF) preparation. The AF was prepared when it became evident that the allocated budget was insufficient to complete some of the project’s components; these cost overrun issues 7 also revealed an important need for assistance to the utility’s management and led to the creation of a new component to address this gap. The AF preparation (in early 2009) recognized that resources for implementing management strengthening measures at the time of the original project preparation (2006) were not available (some of the expected external resources to complement the PREPSEL on the loss reduction theme did not materialize). Project Objectives and Indicators. The PDO was ambitious, and various external factors were able to increase or mitigate the impact of the project activities (generally the case for all projects aiming to improve power systems). Whereas the indicators related to the pilot zone were more realistic and reachable. These PDOs were important for the country’s economic development as they would directly improve the level of electricity service for the population and industries, and furthered the joint donors’ strategy on Energy and the Bank’s IDA Transitional Support Strategy (TSS). The objectives were representative of the country’s circumstances and development priorities at that time. However, with the AF, realism of the project objectives and indicators became less certain: the AF scaled-up the project’s impact area from the targeted pilot area in the original project (9,000 customers) to the whole EDH customer base (185,000 customers), for an increased project budget of only 83%. Adequacy of Government commitment . GOH authorities had little involvement in project preparation, which was mainly a Bank effort. The MTPTC was positive towards the project but did not have the resources to participate in preparation. This had downstream repercussions, on project monitoring and governance. Quality at Entry and Project Design. No Quality at Entry evaluation was carried out. The original PREPSEL design focused on technical aspects giving relatively less emphasis on, change management to accompany the installation of information systems. The original design lacked support to the EDH management to ensure their empowerment. These choices were understandable as the broader energy dialog included a donors MOU on Energy which strongly emphasized these aspects, as well as IADB’s support for EDH providing increased resources and pressure to perform. But the overall donor engagement of which PREPSEL was a part underestimated the tenacity of poor 7 The cost overrun issues were related to unexpected cost escalation consecutive to implementation delays after the 2008 hurricanes that hit the country (no hurricane costs, but an implementation capacity issue at EDH impeding to implement the project activities as scheduled). 9 governance at the ministry and utility levels, and set targets that could not be reached by a utility evolving in such a fragile environment. Even if the donor support had managed to modernize the utility and eradicate technical losses, the lack of transparency on fuel supply and private power generation, along with the low willingness to address the electricity theft, may still have led to the same ambivalent results (sustainable infrastructure in place but low progress due to poor governance). 2.2 Implementation The PREPSEL had two very distinct implementation phases, before and after the earthquake that hit the metropolitan area on January 12, 2010. Where appropriate, the following sections differentiate these phases, in order to clarify the analysis and assessment. The three restructurings involved in this operation also had an effect on the implementation, to a lesser extent: the 2009 AF allowed to accelerate implementation of Components 1 and 2, the 2010 restructuring allowed to adapt the project to the post- earthquake implementation environment and the 2013 restructuring allowed to achieve the implementation of component 2. F actors that influenced project implementation: 2.2.1 External factors: Public sector weakness, lack of political will to conduct the Energy sector reform, the 2008 hurricanes and the 2010 earthquake in and around Port-au-Prince were important external impacts on the project. • Public sector weakness: Haiti has a structurally weak public sector management capacity 8 . Many public sector institutions depend on external assistance to carry out their functions. Institutional capacity is increasingly concentrated in the NGO service sector attracting more qualified staff and paying higher salaries 9 . • The lack of political will to eradicate electricity theft and improve sector transparency: This negatively affected the implementation and sustainability of the PREPSEL, as the lack of implementation of easy actions and measures by EDH staff was rarely addressed by senior officials. The most emblematic example of this in the project was the installation of remote meters for the verification of energy generated by the IPPs. These meters were installed by EDH only in March 2013, after six years of unsuccessful attempts and the use of two World Bank budget support operations as leverage. • The four hurricanes of 2008 : This rare climate event – four major tropical hurricanes hitting Haiti in a period of two months - diverted the focus of GOH, EDH and MTPTC to short-term disaster solutions in project areas. The project 8 85 percent of the Haitians holding a University diploma live outside Haiti, the number of Haitian civil servant mapped in the Energy sector decreased from 80 to 3 between 1990 and 2006. In addition, part of EDH’s most promising young professionals has left the utility in the early 2000s, to work in the private sector and abroad. 9 As a result, the Project PIU had to align the consultants’ salaries to the market value. 10 implementation was delayed by several months during the hurricane season as almost all EDH capacity was mobilized on post-emergency repairs, engendering additional unexpected costs as EDH suppliers were mobilized and could not implement the work (installation of information systems). • The 2010 earthquake: GOH physical and institutional infrastructure were devastated, as well as MTPTC’s headquarters (the Ministry was relocated in the laboratory of Public Works, from 2010 to the end of the project.) EDH’s dispatch center, some of the power distribution infrastructure as well as many of its commercial agencies and some of its administrative buildings (including the anti- fraud unit) were destroyed. The Peligre hydropower plant – largest and cheapest power generation plant supplying the metropolitan area – was damaged (dam structure) and had to stop production for a complete inspection. As of March 2010, the utility could only collect about 30 percent of the revenue it collected prior to the earthquake. But most importantly, this natural disaster profoundly altered the morale of each staff and consultants 10 . Project implementation returned gradually to the pre-earthquake path only nine month later, with the arrival of the four international experts hired under the project to assist EDH Directors. 2.2.2 Internal factors . Organizational and management issues in EDH were the most apparent internal factors impeding implementation of the project activities. Passive resistance was noted for activities aimed at improving sector transparency, suggesting internal fraud and corruption as a possible impediment to implementation. • Organizational and Management issues in EDH: six different Managing Directors (MD) headed EDH during the project period, and project execution temporarily slowed as each new arrival came up to speed. Main management issues that affected the implementation were: (i) lack of accountability of the different sub- project leaders, managers and Directors at EDH; and (ii) the very irregular meetings of EDH Board 11 to endorse important decisions linked to the project. • EDH’s limited technical experience with the new systems and remote meters: this issue was linked to the more general issue of change management. EDH technical and commercial staff were resistant to the implementation of the information systems and the remote metering components, partly because these technologies were new to them or represented a giant step in the modernization of their work environment / habits. This internal resistance has not been addressed properly, which affected implementation and utilization of these systems. 10 32 EDH staff and two PREPSEL team members (one member of the PIU and one international consultant) died during the 2010 earthquake, and virtually every Haitian lost family members. EDH management set up a refugee camp on one of their sites where more than 500 staff families lived for 7 months. 11 EDH Board is chaired by MTPTC’s Minister, with Ministries of Finance, Justice and Planning having a representation. 11 • Other technical issues: There were other paramount technical issues affecting project implementation; first, all the equipment funded under the project relied extensively on functional Communications systems (Internet, mobile phone network, radio frequency), which was far from obvious in Haiti. Second, this equipment relied on a constant and reliable electricity supply, which implied that EDH headquarters had to purchase backup power generation to ensure the continuity of commercial communication with its agencies in the field. Project implementation during August 2007-End 2009. The original project was effective on July 31, 2007, one year after its Approval by the Bank. This delay in obtaining Parliamentary approval impeded the project to start implementation – and disbursement - for the first year. Similarly to other infrastructure investment projects, the initial activities focused on the preparation bidding documents for the CMS and the TSMS 12 . On June 23, 2009, EDH signed the contract for the supply and installation of the CMS and the TSMS; the cost of these systems, including the training and licensing, amounted to around US$3.5 million (60 percent of the initial project budget, and 132% of the initial budget for this component). This cost overrun originated the request for an AF, which was approved on September 08, 2009 for US$5 million. These funds were allocated to achieve the purchase and installation of the CMS and TSMS (for an additional US$1.5 million) and to finance the support to EDH through four delegate directors 13 (around $2.6 million) for improving the company’s performance through experienced private sector managers. The project’s first phase has also implemented the procurement process of the remote metering system for EDH’s 2,100 industrial and commercial clients. Two successive unsuccessful tendering processes for this remote metering system also contributed to slower-than-expected implementation and highlighted the risk premium that potential suppliers attached to EDH. Project implementation during January 2010-August 2013. The earthquake on January 12, 2010 marked a complete stop of PREPSEL implementation for a six month period. The power sector’s physical infrastructure and human resources were affected, and the GOH and donor and plans for EDH’s performance improvement had to be completely rethought. In March 2010, the Post-Disaster Needs Assessment (PDNA) estimated long term needs for the sustainable rebuilding and expansion of the power sector at $300 million. While preparing a project restructuring to extend the PREPSEL deadline, the Bank also prepared a specific post-emergency operation, the Haiti Emergency Solar Lanterns Project (P120914). This US$ 3 million grant to the GOH provided 55,000 solar lanterns to beneficiaries in the refugee camps. EDH management 12 this preparation has started before the Board approval, but took several months before being ready for tendering, as some of the technicalities were new to EDH staff and engineers. 13 These four international experts were advisors to EDH Directors. EDH managing director insisted to use the function “Delegate Director”, to facilitate the integration of these advisors within EDH teams. This strategy turned out to be successful, if we compare the more difficult interaction between EDH staff and other external advisors (Tetra Tech teams, other individual consultants hired under the PREPSEL). These consultants promoted gradually and consistently the diffusion of commercial and performance culture within EDH staff. 12 and staff actively participated in the operation, by providing the storage and transport capacity and by participating in the lantern distribution to the beneficiaries (mostly EDH customers). Subsequent to the earthquake, EDH saw its revenues plunge as its already frail commercial operations became weaker, and as its customers’ capacity to pay plummeted. The information systems contractor continued to install its equipment through 2011. Hardware installation proceeded normally, but feeding the software was extremely difficult, as the earthquake rendered the customer database obsolete (1.5 million people were in refugee camps or moved to the provinces). In end 2011, the project conducted an extensive field survey to update the customer database. This resulted in an increase in volume of revenues collected. This delayed commissioning of the CMS and TSMS until 2012, but allowed the project to provide an important volume of supervision to promote the expected impact of these information systems. The delegate directors contracted with the AF were recruited and they functioned within EDH from August 2010 until June 2013, which constituted the longest external support ever realized inside the utility. The tragic consequences of the earthquake focused attention on Haiti’s infrastructure, and enormous resources were pledged for reconstruction and rehabilitation. This included three coordinated projects for EDH: (i) a US$ 78 million joint donor 14 effort to rehabilitate and upgrade the EDH Peligre hydropower plant; (ii) a management contract for EDH financed by USAID and executed by the firm Tetra Tech (which ultimately became a technical assistance contract); and (iii) t a US$90 million grant (the Rebuilding Energy Infrastructure and Access Project) which was approved by the World Bank on September 26, 2012. With an allocated amount of US$78 million to enhance EDH’s performance, this unprecedented effort became the largest Bank operation in Haiti and the largest project in the Haiti Energy sector. PREPSEL played a major role in the preparation phase of this new project, whose components and activities include the completion, scale up and sustainable improvement of the PREPSEL activities. PREPSEL also played a critical role in paving the ground for the Tetra Tech team inside EDH, thanks to the important preparatory work done by the delegate directors (while pursuing their respective support role to support EDH management). 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization The monitorin