ANNEX VI
INTERIM NARRATIVE REPORT
 This report must be completed and signed by the Contact person.
 The information provided below must correspond to the financial information that appears in the
financial report.
 Please complete the report using a typewriter or computer (you can find this form at the following
address<Specify>).
 Please expand the paragraphs as necessary.
 Please refer to the Special Conditions of your grant contract and send one copy of the report to
each address mentioned.
 The Contracting Authority will reject any incomplete or badly completed reports.
 The answer to all questions must cover the reporting period as specified in point 1.6.
1. Description
1.1. Name of beneficiary of grant contract: State Company AREA (State Company on
Alternative and Renewable Energy of Azerbaijan Republic)
1.2. Name and title of the Contact person: Rasul Efendiyev, Project Manager
1.3. Name of partners in the Action: Government of Norway/Government of
Azerbaijan/UNDP
1.4. Title of the Action: Promoting Development of Sustainable Energy in Azerbaijan
1.5. Contract number: DCI-ENV/2010/254-973
1.6. Start date and end date of the reporting period: 25.11.2011 – 24.11.2012
1.7. Target country(ies) or region(s): Azerbaijan
1.8. Final beneficiaries and/or target groups1 (if different) (including numbers of women
and men): State Company AREA , rural population of Azerbaijan
1.9.
Country(ies) in which the activities take place (if different from 1.7): N/A
2. Assessment of implementation of Action activities
2.1. Executive summary of the Action
The overall objective of the action is to promote the development of sustainable energy in
Azerbaijan. The specific objectives of the project are as follows:
(a) To undertake studies with the aim to identify a suitable site for a small hydro-power
station and to carry out its construction leading to successful commercial operation.
(b) Conduct a training program in sustainable energy across a large cross-section of
various interest groups viz. energy managers, students, media, community support
organizations, etc.
1
“Target groups” are the groups/entities who will be directly positively affected by the project at the Project
Purpose level, and “final beneficiaries” are those who will benefit from the project in the long term at the
level of the society or sector at large.
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(c) Assess the economic/financial aspects of installing renewable energy projects to
demonstrate their potential as a viable mode of delivering energy, especially to the small
towns and villages
(d) To develop new legislation for the promotion of renewable energy for approval by the
Cabinet of Ministers.
(e) Prepare detailed feasibility reports of three pilot projects, using wind, solar and
biomass/biogas technologies.
2.2 Activities and results
0. Project Management
Progress at beginning of reporting period
- Actual time elapsed since project start: 11 months
(37%)
- Project team deployed and functioning in the office
space provided by State Company AREA * since 9
months (30% of project duration).
- EUR 224,853 (US$ 290,061) (or 29%) out of the total
project amount was disbursed.
Expected result at the end of reporting period
- Indicator 1: All the activities on the project continue to
remain on track and agreed upon outputs are delivered
by external experts
- Indicator 2:
Budgeted expenditures continue to
disburse according to plan.
Achieved at end of reporting period
- Actual time elapsed since project start: 23
months (77%)
- Project team continued to perform its functions
effectively over the last 21 months (70% of
project duration) and has been successfully
managing all project activities.
- EUR 567,225 (US$ 737,393) (or 56.7%) out
of the total project amount has been disbursed.
Note: This relatively low financial delivery figure
does not reflect overall progress in the Project. Out
of total EUR 1 mln, EUR 300,000 (or 30% of
total) are allocated for the purchase of a turbine for
small hydropower. As soon as construction starts,
the financial delivery will increase fast. As it is
seen from the reports under each component
below, out of 5 project components 4 are close to
completion.
* State Agency for Alternate and Renewable Energy Sources (AREA) was renamed as State Company AREA
(Alternate and Renewable Energy Azerbaijan)
Two steering committee meetings took place during the reporting period on December 8 2011
and July 6 2012, which were attended by the management of the State Company AREA as
well as representatives of EU, Norway and UNDP. The decisions taken in these meetings
helped in the timely completion of most of the activities under the project.
2.2.1 The Project Manager (Rasul Efendiyev) and Project Assistant (Narmin Mirzayeva)
have been performing in their respective positions since 1st March 2011 (70% of the elapsed
time to date). However, the Hydropower Technical Expert (Ayten Poladova) left the project
in February2012 on her own accord and was replaced by a Project Consultant (Ilgar
Gurbanov). Besides coordinating the activities of external experts, the project team has been
monitoring the project budget, maintaining project accounts, processing the consultants’ Daily
Subsistence Allowances (DSAs) and Requests for Direct Payments (RDPs), etc.
2.2.2 The Lead Project Advisor (international expert) successfully completed all
assignments given to him and his contract was concluded in August 2012. However, he
continues to provide useful advice on the project from time to time on “as needed” basis.
More recently, in September-October 2012, he assisted the project team in the formulation of
an international training program on renewable energy for the AREA team members.
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2.2.3. During the period10-21September 2012, the Project has been monitored by the EU
monitor Mr. Evgeny Vodichev who submitted his report on 31 October 2012. All related
information was provided to him by the Project Team to facilitate his work. Mr. Vodichev
held meetings with the UNDP Deputy Resident Representative Mrs. Nato Alhazishvili, as
well as with the UNDP Project Coordinator, Mr. Chingiz Mammadov and the Project
Manager Mr. Rasul Efendiyev. In addition, he met with AREA officials including the Project
Director Mr. Jamil Melikov. The monitoring positively assessed the results of work with
grading “B” in all categories.
Results
2.2.4 Most of the tasks assigned to international and local consultants for the various project
components were completed and the hired experts were released from their assignments. As
mentioned above, the Lead Project Advisor successfully completed his assigned tasks, the
international hydropower expert completed his detailed feasibility report and the international
training expert also submitted her final report during the last 12 months.
Component 1: Support the building of one small hydro-power plant as a demonstration of its
viability in Azerbaijan.
Progress at beginning of reporting period
- The site selection for the hydropower station was
finalized.
- Preliminary feasibility report of the project was
completed.
Expected result at the end of reporting period
- The feasibility report including the preliminary
technical design to be completed by January 2012.
- Selection of a D&S (design and supervision) firm to
be finalized by July 2012.
- Tendering of the turbine and other equipment to be
completed and contract awarded in September 2012.
- Selection of a C&I (construction and investment) firm
to be finalized.
- 50% of the construction works to be completed and an
overall progress of 70% to be achieved.
Achieved at end of reporting period
- The feasibility report was completed in early
2012 and accepted by both UNDP and AREA
- The firm (M/s Khazar) was selected and D&S
contract was awarded in July 2012.
- Detailed design of the station and preliminary
budget for the construction works were
prepared
- Tendering of equipment has not been launched
yet.
- Preparatory works completed (100%) including
design of the station, and tendering documents
- The construction and investment arrangements
are still under discussion.
- As construction has not started the overall
progress on this component is estimated at
40%.
2.2.5 The team of international and local consultants (Hans Sandkuhler and Nazim Garayev)
completed the feasibility report of the small hydropower station in Sheki on Deyirmanarxi
River in the town of Sheki. A strong factor in favour of this site is that a new upstream
reservoir is currently being built on Kish River to meet the future water needs of Sheki’s
residents. After this facility is built, it is expected that the amount of water in Deyirmanarxi
River will double and, therefore, the output capacity of the planned SHPS can also be made
two-fold – from the presently planned 817 KW to an ultimate installed capacity of 1.634 MW.
2.2.6 It was expected that the detailed information and preliminary design of the project
included in the feasibility report will be sufficient to attract private investor(s) to the project.
However, AREA is still studying whether it should undertake the project construction itself or
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through a C&I firm to be selected for this purpose. This has delayed the actual construction
works as well as procurement of equipment for the station. It may be noted that the total
estimated cost of the power station is US$ 2.24 million, however more precise figures will be
available when tenders for turbine, generator and other equipment are conducted.
2.2.7 Due to the above reasons, the actual construction of the hydropower station has been
delayed by about 6 months. This may require respective no-cost extension.
2.2.8 The request for proposal for design and supervision (D&S) services was sent to all
three Azerbaijani firms that are registered and licensed by the State Committee on Urban
Planning and Architecture companies. In response to the request for proposals one company
refused to take part in the tender, and two other submitted their proposals. The firms are M/s
Khazar Scientific-Technical Creativity Center of Youth and M/s S&Q Mart Azeri LLC.
Based on the technical and financial evaluation of the two proposals, M/s Khazar was selected
and awarded the contract. As the feasibility report of the hydropower station at Sheki was
completed in the reporting period and the D&S firm’ selection and contract award process has
been finalized, the overall progress on this component during the reporting period is estimated
to stand at approximately 40% of the target that was planned at the start of the reporting
period.
Component 2: Acceptance of sustainable energy as a suitable energy option by energy
managers and municipal authorities
Progress at beginning of reporting period
- The main seminar in Baku (of 3 days duration) and 5
regional seminars on raising awareness were attended
by over 250 key persons, including trainers under
TOT program.
Expected results the end of reporting period
- Wide dissemination of information about the key
seminars and activities conducted under the project.
- Preparation of a manual to act as an “Educational
Roadmap” for the continued training in the field of
renewable energy and to raise awareness and
acceptability throughout Azerbaijan.
Achieved at end of reporting period
- Workshops for policy makers and stakeholders,
were conducted in five locations.
- The reports on the Project activities were
disseminated by 5 TV companies, 6
information agencies and 3 newspapers.
- The Educational Roadmap document has been
finalized.
- Three publications, the book on sustainable
energy, teacher’s manual and album for
children were prepared and will be published
before end of 2012.
- Current implementation could be assessed as
close to 100%; full implementation will be
achieved by December 2012.
2.2.9 Through the holding of seminars led by a local consultant (Ayten Aliyeva) and an
international expert (Svetlana Frenova, a Russian citizen who is currently working in the UK),
a large body of experts from media, industry, academia, etc. have been made aware of the
benefits of renewable energy. The events arranged under the project have attracted the
attention of journalists from the print and electronic media and they were widely reported.
2.2.10 A database of over 250 national level as well regional stakeholders has been developed
who will act as the opinion leaders for bringing about changes in public perception regarding
renewable energy throughout the country.
2.2.11 An Education Roadmap document has been developed which provides program-based
guidance on achieving a systemic development and implementation of 4 different types of
training packages targeted to the specific needs of: (a) policy-makers and energy-managers;
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(b) mixed audience, including businesses, government and public sector; (c) regional
population of Azerbaijan; and (d) students. Special attention was given in the Roadmap to
making education on renewable energy a more central part within the overall educational
system to help improve the knowledge and perception of Azerbaijan society on renewable
energy sources in the coming months and years.
2.2.12 The only remaining activity is the publication (preparation is already done) of a book, a
teacher’s manual and children album on sustainable energy, which will be finalized in 2012
Component 3: Evaluation of the economics of wind, solar and biomass sources of energy in
Azerbaijan
Progress at beginning of reporting period
- Draft economic and financial analysis report and
model submitted to AREA, which reviewed and
provided its comments to the team of experts.
Expected result at the end of reporting period
- To incorporate the comments of UNDP and AREA in
the economic/financial model and to provide any
needed clarifications asked by AREA experts.
- Provide a greater insight into the feed-in tariff (FIT)
setting process in other similar countries.
Achieved at end of reporting period
- The
final
narrative
report
and
economic/financial models were completed and
submitted.
- Clarifications were provided in response to the
questions relating to FIT setting process.
- Based on the Steering Committee’s request, the
lead project advisor submitted a proposal of a
study tour of AREA experts to UK or/and
Canada and/or Turkey to learn more about
regulations and FIT practices there.
- All activities under this component were
completed successfully. With the study tour to
U.K. (and Turkey) expected to be done before
the end of 2012, a progress of 100% will be
reached.
2.2.12 The team comprised of a local expert (Nazim Mamedov) and an international
consultant (Arvid Kruze) finalized their report on the economic and financial analysis of the 3
selected renewable energy (RE) technologies, namely, wind power, solar PV power and
biomass power from animal waste. Their report basically covers the following areas: (i)
International costs and benefits; (ii) Environmental, social and training costs of implementing
the selected RE technologies; (iii) Azerbaijan specific costs and benefits; (iv) Experience of
other countries similar to Azerbaijan in implementing RE technologies; (v) Economic
analyses of particular wind power, solar PV and biomass projects; and (vi) Financial analyses
of these projects.
2.2.13 At the request of AREA, the international expert was asked to submit a proposal for
arranging and conducting a study tour by a team of up to 2 AREA professionals with the
following objectives: (i) Learning in detail through practical models the methodology for
assessing the viability of renewable energy projects and comparing different models for the
design of Feed-in-Tariffs (FIT); (ii) Visit to a regulatory agency responsible for enacting the
legal framework for renewable energy to gain an understanding of the methodology used in
arriving at the FIT; (iii) Visit to a functioning solar PV facility; (iv) Visit to an operational
wind farm; and (v) Visit to a biomass-to-energy plant.
2.2.14 Arvid Kruze submitted a proposal of a study tour to Canada. A similar proposal was
requested from the international consultant on Component 5 (Rod Hacker) for a study tour of
U.K. Both the submitted proposals were accepted, however, due to visa constraints and time
consideration, it was decided not to undertake the Canadian part of the study tour during this
year. In addition, UNDP office discussed and agreed with UNDP-Turkey office to organize
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tour to Turkey to get acquainted with the regulation of renewable energy industry there. It’s
currently planned that this study tour will take place in December 2012.
Component 4: Enactment of a set of coherent regulatory and institutional documents for
wind, solar and biomass sources of energy
Progress at beginning of reporting period
- The various relevant laws, both Azerbaijani
legislation, as well as those of a select list of countries
were studied and useful lessons drawn from them for
incorporation in a new renewable energy law.
- A set of recommendations developed on the required
regulatory and institutional changes to facilitate
sustainable energy development and leveraging of
increased private sector financing for the sector.
Achieved at end of reporting period
Expected result at the end of reporting period
- To finalize the renewable energy law after its
clearance by the working group and submit it to the
Cabinet of Ministers for adoption.
- Prepare a detailed plan for the institutional
improvements necessary for the successful adoption of
renewable energy technologies based projects in
Azerbaijan.
- The final report which includes the
recommendations
on
institutional
improvements that are necessary for promotion
of renewable energy was submitted and
accepted by AREA.
- The laws of EU, South Korea and Kazakhstan
were reviewed and the gap analysis has been
concluded.
- Final version of the draft legislation was
cleared by the working group for its onward
submission to the Cabinet of Ministers.
- All activities under this component were
completed successfully thus attaining a
progress of 100%.
2.2.15 The draft law on renewable energy, which was prepared during the previous reporting
period, was further reviewed by the local lawyer (Asya Chalabova) with the help of a newly
hired international expert (Chad Laurent). The focus of the review was on how the draft law
interacts with related laws and legislation along with international best practices and lessons
learned. A gap analysis of Azerbaijan’s final draft law with that of South Korea was carried
out. In the result the draft of the more complete law “On the Use of Alternative and
Renewable Energy Sources” was prepared and submitted to the State Company AREA in
September 2012 both in English and in Azeri.
2.2.16 The international expert (Chad Laurent) prepared and submitted an institutional
roadmap for the continued promotion of renewable and alternate energies in Azerbaijan. His
report covered the role of AREA as a Regulator, balancing of the roles of AREA and MIE
(Ministry of Industry and Energy), grid management and interconnection regime, generation
and power supply management and recommendations on how to induct the private sector in
the development of renewable energy projects in Azerbaijan.
2.2.17 Since by the Decree of the President on June 1 2012 the State Agency has been
transformed into the State Company AREA, there is a need to evaluate the needs of the
newly-created Company and assist AREA in successful transition to the Company. Therefore,
the Project Team intends to provide necessary support to the State Company AREA in this
transition process.
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Component 5: Prepare a pilot project for wind, solar and biomass sources of energy
Progress at beginning of reporting period
- The site for the development of renewable energy
pilot projects was selected.
- Preliminary feasibility reports of the three pilot
projects – one each for wind, solar and biomass/biogas
technologies – were submitted.
Expected result at the end of reporting period
- To complete the detailed feasibility reports of the three
pilot projects.
Achieved at end of reporting period
- Data for the pilot plants preparations was
collected and the detailed feasibility reports of
all three projects have been finalized and
presented to UNDP and AREA.
- Based on the Steering Committee’s request, the
international expert for this component
submitted a proposal of a study tour of AREA
experts to U.K to gain insight to regulating the
industry and on FIT practices there.
- All activities under this component were
completed successfully. With the study tour
expected to be done before the end of 2012, a
progress of 100% will be reached.
-
2.2.17 After the selection of a single site (Siyezen broiler farm in Guba area) for all three
types of project, three separate detailed feasibility reports of wind, solar and biomass/biogas
projects were prepared by the international expert (Rod Hacker) with the assistance of local
consultant (Faig Mammadov). Subsequently, the 3 reports were integrated as a single
comprehensive report which is being translated into Azeri language.
2.2.18 As mentioned above, upon request, Rod Hacker has submitted a proposal of a study
tour for AREA staff to the United Kingdom. As the proposal has been accepted and details of
a combined study tour of U.K. and Turkey are under finalization, the study tours are expected
to take place in December 2012. As mentioned above, the Canada part of the study tour has
been postponed for the time being.
2.3 Please list activities that were planned and that you were not able to implement,
explaining the reasons for these.
2.3.1 For Component 1 (small hydropower project development and construction),
substantial delay in the start of construction of the power station has been encountered.
Unless the financing and implementation arrangements are finalized at the earliest, further
delays in the completion of this component appear to be highly likely. (Also see para 2.2.6
and 2.2.7 above.)
2.4 What is your assessment of the results of the Action so far? Include observations
on the performance and the achievement of outputs, outcomes and impact in relation
to specific and overall objectives, and whether the Action has had any unforeseen
positive or negative results (please quantify where possible; refer to Logframe
Indicators).
2.4.1 Most of the objectives of the project have been achieved while the remaining ones are
expected to be achieved by the completion date of the project – with the exception of
component 1, which will need additional 6 months for completion at a minimum.
2.3 Please list all contracts (works, supplies, services) above 10.000€ awarded for the
implementation of the action during the reporting period, giving for each contract
the amount, the award procedure followed and the name of the contractor.
a)
Khazar Scientific-Technical Youth Creativity Center (Design&Supervision Company) 75,954 EUR (98,740 USD)
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b)
c)
d)
e)
f)
g)
h)
Rasul Efendiyev, Project Manager – 17,469EUR (22,536 USD) gross
Farrukh Mahmood Mian, Lead Project Advisor (International Consultant) – 30,232 EUR
(39,000 USD) gross
Hans Sandkuhler, Hydropower Expert (International Consultant) -15,116 EUR (19,500
USD)gross
Chad Laurent , Legal & Regulatory Expert (International Consultant) -19,651
EUR(25,350 USD) gross
Rodney Hacker, Renewable Energy Expert (International Consultant) - 22,170 EUR
(28,600 USD) gross
Asya Chalabova, Legal & Regulatory Expert (Local Consultant) – 13,255 EUR (17,100
USD) gross
Faig Mammadov, Renewable Energy Expert (Local Consultant) – 13,255 EUR (17,100
USD) gross
As mentioned in section 2.2. Activities and Results, Project Management part, all positions
were filled through the open and competitive process in accordance to UNDP rules and
regulations.
3. Partners and other Co-operation
3.1. How do you assess the relationship between the formal partners of this Action (i.e.
those partners which have signed a partnership statement)? Please provide specific
information for each partner organisation.
Relationship between UNDP and EU
3.1.1
The UNDP and EU enjoy an outstanding working relationship as they carry out
regular consultations at key stages of the project implementation actions both formally and
on an informal basis. The EU representatives have been invited and participated in all
activities of the Project, including site visits, workshops, steering committee meetings, etc.
The EU Project Coordinator, Mr. Amaury Hoste, made a field trip to the small
hydropower construction site in September 2012.The EU monitors are provided all data
and information to facilitate their work in the highest spirit of intra-institutional
cooperation. This close collaboration is expected to continue during the remaining
duration of the project.
Relationship between UNDP and Norway Government
3.1.2
UNDP enjoys a close and good working relationship with the Government of
Norway through its Ministry of Foreign Relations and the Embassy in Azerbaijan.
Norway has funded in the past and currently funds two UNDP projects in the sphere of
Environment and Renewable energy including this Project. Norway has an expertise in the
setting up of small hydropower energy production, and the Government of Norway makes
its best to promote small hydropower in Azerbaijan as well.
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3.2. How would you assess the relationship between your organisation and State
authorities in the Action countries? How has this relationship affected the Action?
3.2.1 AREA provides organizational and administrative support to project team and
assists in the development of project activities. It is fully engaged in the project and is
given regular briefings about the progress of the project. The project team carries out
regular consultations with AREA, especially at key stages of the project. The leadership
of AREA is keen about receiving regular progress reports and all visiting international
consultants call upon its officials to provide updates on their respective components.
3.2.2 The relations with AREA are satisfactory, however, to speed-up the processes and
avoid delays, the Project Team is in need of a more substantial support from AREA. For
example, a timely identification and introduction to the prospective investors of the
hydropower project by AREA would have helped to avoid delays on Component 1.
3.2.3 The project associate is the Ministry of Industry and Energy which is the main
entity responsible for the energy policy in the country and, as part of this, for developing
new legislation and regulatory acts to support the development of local renewable energy
resources. With the creation of an independent State Company AREA, which previously
with the status of a state agency was under the Ministry of Industry and Energy, requires
clear delineation and separation of authority and responsibility between newly-created
State Company AREA and the Ministry of Industry and Energy, and other ministries as
well. To the extent possible, the Project Team intends providing necessary consultation to
the State Company AREA during remaining period on this transition.
3.3.Where applicable, describe your relationship with any other organisations involved in
implementing the Action:
 Associate(s) (if any) - NONE
 Sub-contractor(s) (if any) - NONE
 Final Beneficiaries and Target groups – State Company AREA and Ministry of
Industry and Energy
 Other third parties involved(including other donors, other government agencies or
local government units, NGOs, etc) – Government of Norway
3.4. Where applicable, outline any links and synergies you have developed with other
actions. – NOT APPLICABLE
3.5. If your organisation has received previous EU grants in view of strengthening the
same target group, in how far has this Action been able to build upon/complement
the previous one(s)? (List all previous relevant EU grants). – NOT APPLICABLE
4. Visibility
How is the visibility of the EU contribution being ensured in the Action?
4.1 The project team created a website for the project (http://www.greenazerbaijan.org/)
which carries the EU logo. The EU contribution to the project receives regular mention in
the media. It is planned to continuously inform the general public about the progress on
the project as it undergoes the various implementation steps. The books, manuals and
brochures for children being prepared under the project and planned to be published
before end of 2012 carry the EU logo, contain the EU disclaimer note and mention that the
project and publications became possible due to generous contribution of the EU.
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4.2 All the materials of the seminars carry EU logo.
The European Commission may wish to publicise the results of Actions. Do you have
any objection to this report being published on the EuropeAid website? If so, please
state your objections here. - NO OBJECTION
Name of the contact person for the Action: Rasul Efendiyev, Project Manager
Signature: ………………………………………
Location: Baku, Azerbaijan, Government House, 5th entrance, 3rd floor
Date report due: 25 November 2012
Date report sent: 23 November, 2012
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