Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: RES14735
RESTRUCTURING PAPER
ON A
PROPOSED PROJECT RESTRUCTURING
OF THE
ENERGY SECTOR STRENGTHENING PROJECT
LOAN 7994-PY
OCTOBER 25, 2010
TO THE
REPUBLIC OF PARAGUAY
November 6, 2015
ENERGY AND EXTRACTIVES GLOBAL PRACTICE
LATIN AMERICA AND THE CARIBBEAN REGION
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties. Its contents may not otherwise be disclosed without World Bank authorization.
1
ABBREVIATIONS AND ACRONYMS
ANDE
DMS
EMS
OMS
PDO
PIU
SCADA
SGIDE
Administración Nacional de Electricidad
Demand Management System
Energy Management System
Operations Management System
Project Development Objective
Project Implementación Unit
Supervisory Control And Data Acquisition
Sistema de Gestión Integral de Distribución Eléctrica (Integrated Electrical
Distribution Management System)
Regional Vice President:
Country Director:
Senior Global Practice Director:
Practice Manager/Manager:
Task Team Leader:
Jorge Familiar
Jesko Hentschel
Anita Marangoly George
Antonio Alexandre Rodriques Barbalho
Sergio Gonzalez Coltrinari
2
PARAGUAY
Sustainable Agriculture and Rural Development Project
CONTENTS
A.
B.
C.
SUMMARY
PROJECT STATUS
PROPOSED CHANGES
5
6
6
3
DATA SHEET
Paraguay
PY Energy Sector Strengthening Project (P114971)
LATIN AMERICA AND CARIBBEAN
Energy & Extractives
.
Report No:
RES14735
.
Basic Information
Project ID:
P114971
Lending Instrument:
Specific Investment Loan
Regional Vice President:
Jorge Familiar
Calderon
Original EA Category:
Partial Assessment (B)
Country Director:
Jesko S. Hentschel
Current EA Category:
Partial Assessment (B)
Senior Global Practice
Director:
Anita Marangoly
George
Original Approval Date:
30-Nov-2010
Practice
Manager/Manager:
Antonio Alexandre
Rodrigues Barbalho
Current Closing Date:
31-Dec-2015
Team Leader(s):
Sergio Augusto
Gonzalez Coltrinari
.
Borrower:
Ministerio de Hacienda
Responsible
Agency:
ANDE
.
Restructuring Type
Form Type:
Full Restructuring Paper
Restructuring
Level:
Level 2
Decision Authority:
Country Director Approval
.
Financing ( as of 24-Aug-2015 )
Key Dates
Project
Ln/Cr/TF
P114971 IBRD-79940
Status
Approval
Date
Effective 30-Nov-2010
Signing Date
Effectiveness Original
Revised
Date
Closing Date Closing Date
23-Feb-2011
09-Feb-2012
31-Dec-2015
31 Oct 2017
Disbursements (in Millions)
Project
Ln/Cr/TF
P114971 IBRD-79940
Status
Currency
Effective USD
Origin
Revised
al
100.00
100.00
.
Policy Waivers
4
%
Cancelle Disburse Undisbur
Disburse
d
d
sed
d
0.00
42.85
57.15
43
Does the project depart from the CAS/CPF in content or in other significant
respects?
Yes [ ]
No [ X ]
Does the project require any policy waiver(s)?
Yes [ ]
No [ X ]
.
A. Summary of Proposed Changes
The main proposed changes are: (i) a 22-month extension (first extension) of the closing date of the project
from December 31, 2015 to October 31, 2017, to enable timely completion of all ongoing activities and
achievement of PDO; (ii) changes in investments in all three components and approval and completion of
new proposed investments; (iii) reallocation of loan proceeds; and (iv) changes of some indicators in the
results framework.
Change in Implementing Agency
Yes [ ]
No [ X ]
Change in Project's Development Objectives
Yes [ ]
No [ X ]
Change in Results Framework
Yes [ X ] No [ ]
Change in Safeguard Policies Triggered
Yes [ ]
No [ X ]
Change of EA category
Yes [ ]
No [ X ]
Other Changes to Safeguards
Yes [ ]
No [ X ]
Change in Legal Covenants
Yes [ ]
No [ X ]
Change in Loan Closing Date(s)
Yes [ X ] No [ ]
Cancellations Proposed
Yes [ ]
No [ X ]
Change to Financing Plan
Yes [ ]
No [ X ]
Change in Disbursement Arrangements
Yes [ ]
No [ X ]
Reallocation between Disbursement Categories
Yes [ X ] No [ ]
Change in Disbursement Estimates
Yes [ X ] No [ ]
Change to Components and Cost
Yes [ X ] No [ ]
Change in Institutional Arrangements
Yes [ ]
No [ X ]
Change in Financial Management
Yes [ ]
No [ X ]
Change in Procurement
Yes [ ]
No [ X ]
Change in Implementation Schedule
Yes [ X ] No [ ]
Other Change(s)
Yes [ ]
No [ X ]
Appraisal Summary Change in Economic and Financial Analysis
Yes [ ]
No [ X ]
Appraisal Summary Change in Technical Analysis
Yes [ ]
No [ X ]
Appraisal Summary Change in Social Analysis
Yes [ ]
No [ X ]
Appraisal Summary Change in Environmental Analysis
Yes [ ]
No [ X ]
Appraisal Summary Change in Risk Assessment
Yes [ ]
No [ X ]
.
B. Project Status
The Loan was approved by the Bank on November 30, 2010, but only became effective on February 9, 2012
(15 months later). This is the first World Bank operation for the Client in 20 years. The Project consists of
5
3 Components, with 11 investment packages under Components 1 and 2 and TA to strengthen the sector
under Component 3.
At Mid-term review of the project (December 2013) disbursement was around 3%. ANDE sent a letter to
the Bank, through the Ministry of Hacienda in February 2014, requesting a 12-months extension of the
Closing Date but the extension was not granted.
In March 2014, disbursement increased to US$ 17.8 million (17.8% of total loan amount). However,
disbursement continued to be low at 17.8 %, with only one package under implementation (Guarambaré
Substation) for approximately one year.
Disbursement to date from the US$100 million Loan is US$42.8 million (or 42.8% of the total Loan amount).
This amount represents 65% of actual commitment for ongoing contracts including the allocated amount in
the Designated Account. Two packages estimated at approximately US$40 million: (i) SCADA/SGIDE with
an estimated budget of US $30 million and (ii) the construction of two new substation with an estimated
budget of US $9.8 million) do not have contracts yet.. With the completion of one package by the end of the
year (design and installation of a Reactive Power compensator at the Guarambaré Substation), disbursement
is likely to increase by another US$12 million.
Results to date are: Out of ten (10) feasible investment packages under the Loan, nine (9) are currently under
implementation and the Bidding Document for the last package (construction of two transmission substations
at Barrio San Pedro and Minga Pora) was published on August 5 and the Bid submission deadline is
November 2015. This package is key to meeting the PDO. As for other packages, which are mainly (goods)
equipment, factory testing has been done for most of them and delivery is scheduled for the end of the
calendar year. The remaining equipment will be factory tested and delivered in 2016. In addition, 24
transformers for 10 substations are scheduled for delivery in March 2016, of which eight will be delivered
ahead of schedule by the end of the calendar year. Furthermore, significant efforts have been made by ANDE
to improve the project environmental management, as witnessed during the last mission and the rating was
upgraded to 'S.' In addition, ANDE took actions on restructuring to strengthen implementation of the project
by replacing the PIU and Technical Department Directors to the satisfaction of the Bank.
The supervision mission of July 2015, noted significant progress made by ANDE in implementation which
allowed to upgrade the Project Development Objective (PDO) and Implementation Progress (IP) ratings to
‘Moderately Satisfactory,’ from the previous mission of January 2015.. This is mainly due to the fact that
while progress has been achieved and ANDE has established a sustainable strategy by signing several
contracts, and consequently committing up to 65 percent of the Loan funds, the issue of completion of all
activities within the remaining time to the Closing Date is still not possible, especially on the package (i.e.
construction of two (2) new substations) which is crucial to meeting the PDO. All other ratings are ‘S’.
.
C. Proposed Changes
.
Development Objectives/Results
Project Development Objectives
Original PDO
The development objective of the Project is to increase the quantity and quality of the provision of electricity
services by the Borrower, while improving the Borrower’s performance.
Change in Project's Development Objectives
Change in Results Framework
6
Explanation:
The current indicators are difficult to track and measure because they measure overall system parameters
(losses, service interruptions, energy transferred, etc.) in the country instead of the project related
investments. Therefore, a revision of the indicators is also proposed, to better reflect the expected outcomes
of the project, (as well as the new proposed investments, if approved) and actual progress made towards the
PDO. Out of the five (5) indicators for the PDO, three (3) are being replaced and two (2) are being dropped.
The ones being dropped are: increased quality of service (improved voltage profile) and Direct Project
Beneficiaries. Out of five (5) Intermediate Indicators, four (4) are being replaced and one (1) is being
dropped. The updated indicators will be included in the Project Operations Manual to comply with the
provisions of Section 5.08 of the General Conditions of the Loan Agreement.
.
Financing
Change in Loan Closing Date(s)
Explanation:
The extension of the Closing Date from December 31, 2015 to October 31, 2017, will allow for the project
to be completed successfully and the PDO to be achieved through the implementation of all the ongoing nine
(9) investment packages. The extension will also enable additional time needed to complete:
(i)
(ii)
the construction of two substations at the Minga Pora and Santo Domingo (the 10th investment
package), which will require installation and construction work. The Bidding Document was
published on August 5, 2015 with Bid submission deadline of November, 2015;
the installation of 24 transformers at ten (10) sub-stations in various parts of the country. The
equipment (already ordered) will need to be installed, tested, and operational readiness will have
to be confirmed.
These two investments are key to meeting the overall project targets for strengthening of the sector and, if
not implemented, could affect the reliable and secure operation of the Paraguayan interconnected electrical
system.
Furthermore, the extension of the current Closing Date will make possible to undertake some activities under
Component 1 given that it will not be possible to implement the full SCADA/EMS/DMS/OMS/SGIDE
system even within the anticipated extension but it will be possible to use the funds for SCADA/EMS and
communications equipment. In addition, savings incurred from the purchase of transformers under
Component 2 (bids came in lower than budgeted. Estimate was US$22.1 and the contract was awarded for
US$11.5m) will be used to purchase 11 additional transformers for 7 more substations
Ln/Cr/T
Status
F
IBRD79940
Original Closing
Date
Effective 31-Dec-2015
Current Closing
Date
Proposed Closing
Date
Previous Closing
Date(s)
31-Dec-2015
31-Oct-2017
31-Dec-2015
Reallocations
Explanation:
i.
It will not be possible to complete the full SCADA/EMS/DMS/OMS/SGIDE under Component 1,
as there will not be time to do so even within the proposed extension. It is, therefore, proposed to
reduce the scope of the full system to only SCADA/EMS and use the funds for much needed
communications equipment (some not contemplated originally) for connecting Remote Terminal
Units to the existing SCADA system and the update of the obsolete SCADA/EMS system at 48
critical transmission substations to improve the system’s operational responsiveness. . To this effect,
7
ii.
iii.
No Objection has already been given to Bidding Documents for three (3) new proposed investments
out of five (5): (i) SCADA/EMS; (ii) Mobile transformer; and (iii) Mobile substation, truck and
trailer.
Savings occurred from the purchase of 24 transformers for 10 substations under Component 2. The
estimated budged for the purchase of 24 transformers was US$22.1m but due to the low metal prices
on the market, the lowest bid was around US$11.5m and the contract was awarded for that price. It
is proposed to use the savings for the purchase of additional 11 transformers for another 7 substations and a mobile substation with accessory equipment and some of the funds for the
SCADA/EMS under Component 1.
Some costs are reduced under Component 3 as well. A new TA ‘The analysis of ANDE's
organizational structure and human resources needs’ is being undertaken.
As can be seen in the table below, funds are being reallocated from Components 2 and 3 to Component 1
given that additional communications equipment not envisaged under that component are being purchased..
The full list of new investments for all three (3) component is in the section below ‘change to components
and costs.’
Ln/Cr/TF
Currency
Current Category of
Expenditure
Current
IBRD-79940 USD
Disbursement %
(Type Total)
Allocation
Proposed
Current Proposed
GO, CW, CS, Non-CS,
TR for PART 1
20,000,000.00
25,631,000.00
100.00
100.00
GO, CW, CS, Non-CS,
TR for PART 2
77,000,000.00
71,769,000.00
100.00
100.00
GO, CS, Non-CS, TR
for PART 3
2,750,000.00
2,350,000.00
100.00
100.00
Premia for
CAPS/COLLARS
0.00
0.00
0.00
0.00
Designated Account
0.00
0.00
0.00
0.00
250,000.00
250,000.00
0.00
0.00
FRONT END FEE
Total: 100,000,000.00 100,000,000.00
Disbursement Estimates
Change in Disbursement Estimates
Explanation:
A realignment of actual and estimates till the current Closing Date is needed and estimates for the
anticipated extension are to be provided.
Fiscal Year
Current (USD)
Proposed (USD)
2011
0.00
0.00
2012
0.00
0.00
2013
0.00
0.00
2014
0.00
17.00
8
2015
31.50
33.00
2016
68.50
50.00
100.00
100.00
Total
.
Components
Change to Components and Cost
Explanation:
Component 1 – Modernizing the Borrower’s Distribution Management System and Installing an /advanced
Metering System for Large Consumers. (IBRD US$20m). Sub-Component 1.1: Installation of a state-of-the
art integrated distribution management system. Sub-Component 1.2:Installation of a 66kV advanced
metering system. It will not be possible to complete the full SCADA/EMS/DMS/OMS/SGIDE system even
within an extension of 22 months. Therefore, new investments proposed instead are:
(i)
Supply and installation of SCADA/EMS for transmission
US$ 4,942,153
(ii)
Supply and installation of fiber optic network
US$ 7,690,000
(iii)
Supply and installation of active communication equipment US$ 6,235,000
(iv)
Supply and installation of wireless meshed network
US$ 3,700,000
(v)
Supply and installation of digital carrier equipment
US$ 928,000
Component 2-Improving the Performance of the Transmission Network (IBRD US$77m). Sub-Component
2.1: Construction of two (2) new substations (Bidding underway). Sub-Component 2.2: Extension of about
10 existing substations (transformers purchases and savings incurred as bid was lower than estimated
budget). Sub-Component 2.3: Installation of Reactive Compensator at Guarambare Substation. (underway
and completion by end year). Additional equipment is being purchased resulting from savings in purchase
of transformers from package under 2.2. . New investments proposed are:
(i)
Supply of 11 three-phase power transformers for additional
US$13,230,000
7 substations (3 lots)
(ii)
Supply of mobile substation 66/23kV-30MVA
US$ 2,500,000
(iii)
Purchase of 8x6 truck with modular trailer to transport power transformers US$ 1,900,000
(iv)
Purchase of mobile 23kv distribution center compact 23kv cells and SSAA US$ 1,600,740
Component 3-Strengthening Paraguay’s Electricity Sector and the Borrower’s
Institutional Capacity (IBRD US$2.75m).
Sub-component 3.1: Improvement of the performance of the electricity sector
Sub-component 3.2: Institutions strengthening of the Borrower’s capacity in
Investment and project planning and implementation
New proposed TA is: Technical assistance for the analysis of ANDE's
organizational structure and human resources
US$800,000
On Components 1 and 2, there is no 66kV as part of the restructuring. Some items have been combined, e.g.
telecom fiber and network mobile substation and trailer, because they constitute components of one whole
item and are broken down into procurement packages.
A technical mission took place in May 2015, to carry out a technical assessment and feasibility of the
proposed investments by ANDE, after which, critical investments needed that could be implemented under
this Loan were identified. During the mission of July 2015, the technical team worked closely with ANDE
and carried out an assessment of the identified proposed new investments and the feasible implementation
schedule within the anticipated 22 months extension.
9
The proposed new investments will be financed from reallocation of funds between the components in the
project and there will be no change in the current total Loan amount. The list of new proposed investments
was agreed upon during the mission of July 2015, and were assessed by FM and Procurement and were
included in the revised Procurement Plan.
An assessment was carried out and this project does not trigger the Bank's social safeguard policies
(OP 4.12 Involuntary Resettlement or P 4.10 Indigenous Peoples).There will be one Environment
Management Plan (EMP) for additional seven (7) substations where 11 transformers will be installed. (that's
my understanding from the Environmental Specialist). Consultations will be carried out prior to work
starting. There will be no land acquisition.
Current Component
Name
Proposed Component
Name
Current Cost
(US$M)
Component 1 Modernizing ANDE's
Distribution Management
System and Installing an
Advanced Metering
System for Large
Customers
Component 2 Improving the
Performance of the
Transmission Network
Component 3 Strengthening Paraguay's
electricity Sector and the
Borrower's Institutional
Capacity
Front end Fee
.25
Action
20.0
25.63 Revised
77.
71.77 Revised
2.75.
2.35 Revised
,25
100
Totals
Proposed
Cost (US$M)
100
.
Other Change(s)
Change in Implementation Schedule
Explanation:
Additional time is needed to complete ongoing activities and to complete new activities. A new proposed
implementation schedule, including ongoing and new activities has been prepared, discussed, and agreed
upon with the Bank during the mission of July 2015.
10