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Projects and Loans in Africa (page 2)
>> Summary >> MDB Assistance Proposals >> Africa (page 2)
Summary
MDB Assistance Proposals - By Region & Country
Africa
> Africa (page 2)
Asia & Pacific
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53
4-g. Chad—Power/Electric Power Generation
SUBPROJECT DATA
Appraisal is scheduled for August 2000. Environmental assessment category A. US$20 million (IDA). Consulting services to be determined. Implementing agency to be determined.
DESCRIPTION OF SUBPROJECT
The project would assist in the expansion of power generators to increase capacity. It will also support the rehabilitation and expansion of transmission and distribution facilities.
USAID'S COMMENTS
Two questions: To what extent can electric power be derived from natural gas discharged from oilfields that would otherwise be flared off? And, to what extent will safer solar, wind or other renewables be developed over time so that oil and gas might be devoted to other uses?
5. Ethiopia: IDA—Power
PROJECT DATA
Project preparation is under way. Environmental assessment category A. US$200 million (IDA). Consulting services to be determined. Ministry of Mines and Energy, PO Box 486, Addis Ababa, Ethiopia, tel: (251-1) 150-465, fax: (251-1) 517-874.
DESCRIPTION OF PROJECT
Power Distribution: The project will rehabilitate electricity and expand the distribution system in Addis Ababa and four major towns.
USAID'S COMMENTS
Given the Agency's review of bank-endorsed assessments for similar projects, USAID is concerned that the electric utility EA will probably not include an adequate analysis of alternative power-demand management measures such as rate designs—and as such is not adequate, given that extended lines will probably lead to increased demand. It is USAID's view that the Banks should discuss in Environmental Assessments and related documents the extent to which conservation and efficiency can be encouraged, for example, by providing relatively affordable power in small amounts but charging higher rates as the customer uses more, or by charging rates that may vary with the time delivery. Given rapid advances in cost-effective renewable and high-efficiency energy, there should also be an analysis showing why renewables are not feasible in whole or in part over new fossil fuel plants considering fossil fuel pollution.
6. Madagascar: IDA—Social Sector
PROJECT DATA
Community Development Fund: Project preparation is under way. Environmental assessment category B. US$63 million (IDA). Consulting services to be determined. Fonds d'intervention pour le développement, Lot II J 164, Villa ALMA, Ambodivoanjo, Antananarivo 101, Madagascar. Contact: Mr. Armand Randriamamonjy, general manager, tel: (261-20) 22-423-77, 22-420-74, fax: (261-20) 22-426-89, e-mail: fid@dts.mg (Altered and expanded loan of $110M approved April 2001.)
DESCRIPTION OF PROJECT
The project will build on the success of the ongoing community development project. Subprojects will include primary schools, health posts, feeder roads, community water-supply projects, irrigation projects, and income-generating activities.
USAID'S COMMENTS - 2000
In response to USAID's questions about the possible use of DDT in health activities in the context of a related community health loan in 1999, the World Bank reported that it did not rule out the relatively safe use of DDT use in homes. USAID makes the point again in regard to potential use of DDT in the above loan, that while indoor use of DDT in health programs can be an appropriate and effective means of insect control, the Agency believes it still warrants treating the social sector loan as category A to ensure that there are no viable and safer alternatives and that the use is limited to this purpose. Also, the irrigation activities can present a risk of snail-borne disease, invasive species, and long-term soil degradation unless carefully designed and maintained.
The 12/99 EA posted with the project summary notes, highlighting other issues of concern:
Implementation of the Regional Social Fund Project is expected to adversely impact the environment, due to the construction of reservoirs, bridges, and, effluent management, particularly as it relates to soil erosion, flooding, deforestation, and potential adversity on historical, and archaeological sites. This environmental assessment reviews the legal environmental context in Madagascar, suggesting institutional measures to integrate the National Environmental Office with the works of the Regional Consultative Committee, in order to achieve consensus on agreed recommendations. Mitigation measures regarding technical aspects include the following: Construction of terraces on slopes, should stabilize the terrain, and prevent flooding, to be further enhanced by re-vegetative practices, which should contain soil erosion. In addition, taking advantage of steep inclines, will ensure appropriate drainage, by segmenting lateral masonry, or wood ditches, a practice which will not only reduce resurfacing costs, but prevent water contamination. National forestry ecosystems are protected areas, encompassing natural reserves, parks, and re-forestation zones; moreover, forestry projects, both multilaterally, and bilaterally financed, support forestry conservation.
7. Mali: IDA—Rural Development
PROJECT DATA
(R) Rural Infrastructure: Negotiations completed. Board presentation was tentatively scheduled for late June 2000. Environmental assessment category B. PID: MLPE41723. US$115.6 million (IDA). Consulting services to be determined. Ministry of Rural Development, c/o Banque mondiale, BP 1864, Bamako, Mali. Tel: (223) 22-87-85, fax: (223) 22-02-95. Contact: Paul Coulibaly, conseiller technique.
DESCRIPTION OF PROJECT
The objective of the project is to provide basic rural infrastructure on a sustainable basis to help increase agricultural production, reduce poverty, and improve the livelihood of the beneficiaries. Specifically, the project will a) strengthen local capacity in infrastructure planning, design, construction, operation and maintenance; b) support the rehabilitation and construction of large irrigation perimeters; c) support rehabilitation and construction of main rural roads; and d) provide water to rural communities.
USAID'S COMMENTS
USAID is concerned that this project has been inappropriately classified for EA purposes. A project that includes new road construction and major upgrading of existing roads should have a full environmental assessment. This project also includes large irrigation and drinking water facilities and increasing agricultural production. All of these can have substantial impacts on the human environment. Depending on how each is done, irrigation can raise the threat of waterborne diseases, and expanding agricultural production may depend on intensive use of pesticides, energy-intensive fertilizers, and other inputs as well as side effect of cash crops crowding out food crops.
8. Mauritius: IBRD—Water Supply and Sanitation
PROJECT DATA
Solid Waste Management: Appraisal was scheduled for November 2000. Environmental assessment category A. PID: MUPE57775. US$20 million (IBRD). Consulting services to be determined. Ministry of Environment, Ken Lee Tower, Barracks St., Port Louis, Mauritius. Tel: (230) 212-6080, fax: (230) 212-6671.
DESCRIPTION OF PROJECT
The project will address a) the most appropriate institutional and legal framework, to be set up at the national level, to allow gradual introduction of the private sector through operations and capital investment; and b) the financial sustainability of the sector as a whole.
USAID'S COMMENTS
When considering a national approach to both solid-waste management and water supply it is important not only to prepare a full EA but also to review a broad array of alternatives. For example, the bank should not assume that chlorination should be the final treatment method of choice without first considering the alternatives. Though it may be the most commonly used method in some countries such as the United States, other methods are used widely and successfully. Nor should the bank assume that collection and landfilling are the solid-waste-handling methods of choice when recycling may be a better or at least partial choice, given the right incentives and appropriate technologies.
9. Rwanda: IDA—Private Sector Development
PROJECT DATA
Rwanda-Regional Trade Facilitation (LIFT): Appraisal was scheduled for October 2000. Environmental assessment category B. PID: RWPE65788. US$5 million (IDA). Consulting services to be determined. African Insurance Agency. Approved at $7.5 04/03/2001 with an assessment category F. The website noted that no documents were available as of early November 2001.
DESCRIPTION OF PROJECT
The objective of the project is to jump-start private sector activity. The project will consist of a political risk insurance facility in support of commercial financing for productive transactions involving enterprises in participating countries and their foreign partners.
USAID'S COMMENTS
Rwanda is the home of some of the most fragile and rare ecosystems and species in the world. It has also been in serious conflicts in recent years. Therefore such a project, though small, can do considerable good or harm depending on which activities it supports. This project was categorized as a B, which does provide a certain degree of public notice and an opportunity to consider the environmental impact of certain kinds of activities that may be insured and thus subsidized by the facility. This category was changed to an F, reducing the required level of advance and public analysis.
10. Tanzania: IDA—Water Supply and Sanitation
PROJECT DATA
(R) Dar es Salaam Water Supply and Sanitation: Appraisal mission was scheduled for May 2001. Environmental assessment category B. PID: TZPE59073. US$35.0 million (IDA). Consulting services to be determined. Implementing agency to be determined.
DESCRIPTION OF PROJECT
The project would support technical, commercial and financial rehabilitation of the water supply and sanitation service in Dar es Salaam. This would be achieved by privatizing Dar es Salaam Water and Sewerage Authority's operations and implementing a program of rehabilitating all water supply and sanitation facilities and extending piped water in poorly served neighborhoods.
USAID'S COMMENTS
Given the potential for significant environmental concerns in water supply and sanitation projects, USAID believes this should be classified as a category A project and have a full Environmental Assessment undertaken.
11. Uganda: IFC/IDA—Hydropower
This project is a series of loans for interrelated dams and additions to existing dams. The extensive description here reflects the fact that this program has been on the informal watch list of the Tuesday Group for some time. USAID's concern is the need for an adequate environmental assessment that includes not only consideration of environmental issues of both individual dams and the collective impact of the series of them, but also includes consideration of the impact on the affected communities, including the indigenous peoples who believe this particular site is a sacred home of certain spirits who will be disturbed by the development. This project calls for a careful application of the World Bank/IFC standards concerning cultural properties and physical cultural resources.
The EA summary of the Uganda Phase IV loan noted a number of recommendations, including financing unfinished mitigation that was to have been implemented under the previous (Power III) phase, staffing and capacity-building concerning enforcement of the Environmental Management Plan. As is often the case, during review of the final EA it was necessary to forward questions to the bank to determine whether these had been accepted and adopted.
Credit is due the bank for the direct acknowledgement in this context of the need to consider the findings of the World Commission on Dams; however, the bank seems slow to do so in any public or disciplined way, both for this project and in general.
A related project was approved in January 2001. However, as of 22 February no project documents were available despite a rating of A, which requires EA availability 120 days before board action.
11-a. Uganda—Electric Power
PROJECT DATA
Major sector: electric power and energy. Subsector: hydro. Environmental category A. Project I.D.: P069840. Board approval date: 20 January 2000. Closing date: N/A. Total commitment at board: $33 million. Lending Instrument: specific invest loan. Borrower: government of Uganda. Implementing agency: Uganda Electricity Board, MOF, MEMD.
11-b. Uganda—Uganda-Bujagali Hydropower Project
PROJECT DATA
IFC. Sector: electric power and other energy adjustment. Project I.D.: UGPE63834 (IFC code 8943). Borrower: government of Uganda. Implementing agency: AES Corporation (Nile Power Limited). Environmental category A. Date PID prepared: January 2000. Appraisal date (est.): ongoing (IFC); September 2000 (IDA). Board date (est.): mid-2001.
Access to electricity: About 5 percent of the population has access to grid-supplied electricity. Moreover, Uganda has one of the lowest per capita electricity consumption rates (44 kWh/year) in the world (44 kWh/year, versus India's 300, China's 580, and the United States' 11,000 in 1996). Seventy-two percent of the total grid-supplied electricity is consumed by 12 percent of the domestic population, concentrated in the Kampala metropolitan area and in the nearby towns of Entebbe and Jinja. Total domestic consumption of electricity in 1999 was about 900 GWh. In 1999 the main categories of domestic consumption of electricity were residences (50 percent), industries (26 percent), commercial end-users (14 percent) and government services (10 percent). Uganda is experiencing daily power shortages during peak demand of around 80 MW.
Uganda Electricity Board. UEB was established in 1948 with a mandate to generate, transmit, distribute, and supply electricity within Uganda and other countries in the region. UEB is wholly owned by the government and operates under the legal arm of the Electricity Act, reenacted in 1964. Its policies are determined by the board of directors, who are appointed by the minister of energy and mineral development. The day-to-day running of UEB is executed by the managing director (the chief executive officer) together with a management team appointed by the board of directors. UEB currently has a monopoly over generation, transmission, and distribution activities in the country. These include the 180-MW Owen Falls Power Station and the 1-MW Maziba hydropower station, some isolated diesels, an interconnected 132-kV and 66-kV transmission network, a 33-kV subtransmission network, and a distribution network at voltages of 11 kV and below.
UEB suffers from poor financial performance, operating inefficiencies, low productivity, and inadequate funds for required investments. System losses, both technical and nontechnical, are currently estimated at around 34 percent. Poor collection has also been a concern in the past, though revenues collected improved to about 94 percent of electricity billed in 1999. Thus UEB realized only around 60 percent of the value of all electricity generated in the system in 1999. Though being addressed by the new management team, nontechnical (or commercial) losses attributable to illegal connections and nonpayment of utility bills continue to remain serious problems.
While the proposed Bujagali PPA presently contemplates UEB as the power off-taker, a fully privatized sector in which ideally multiple distribution companies will act as off-takers is crucial to the sustainability of the project.
Power exports to neighboring countries. UEB currently exports 30 MW to Kenya, 7 MW to Tanzania, and 1 MW to Rwanda—or about 300 GWh with total annual export earnings of about $20 million. The governments of Kenya, Tanzania, and Uganda envisage a partnership within the context of East African Cooperation for the development of electricity generation and transmission projects. This is likely to further increase exports from Uganda. The government is presently discussing export sales to neighboring countries for a portion of the power to be produced from the proposed Bujagali project. Existing transmission lines would permit up to 80MW of power exports to Kenya. Moreover, the provision of power to the mining area in northwest Tanzania is being explored.
Power Sector Reform Program. The government has embarked on a reform program for the sector that includes a) establishing new electricity legislation and an independent regulatory regime to promote a commercially oriented private sector-operated industry structure, b) unbundling generation, transmission, and distribution activities, and c) creating incentives for competition and private sector investment. The reform program has been motivated by the need to improve the performance of the power sector and attract investment. In June 1999, the cabinet approved a power sector reform strategy, and revised electricity legislation was passed in October 1999. The recruitment of transactions advisers to assist the government with implementation of the reform program is under way.
Power sector reform is essential to the financial viability of the Bujagali project. A critical indicator of progress on execution of the reform program will be the award of concessioning of UEB's distribution assets; this is perceived as a "point of no return" in the reform process and a clear signal of the beginning of a financial turnaround of the sector. For this reason, the government has placed importance on completing distribution concessioning as soon as feasible (target date April 2001), in advance of commencement of construction for the proposed project.
Project objectives. The proposed project would promote increased growth through the provision of adequate, reliable, and affordable power in line with Uganda's comparative advantage. The project would help catalyze private investment to develop the country's significant hydroelectric potential and potentially increase export of electricity to neighboring countries.
Rationale for IDA involvement. The principal country assistance strategy objective is to reduce poverty in Uganda through rapid economic growth, led by broad-based foreign and domestic private investment. Recent surveys indicate that the quality and adequacy of power supply is the most binding impediment to private investment. (Ugandan private firms surveyed in 1998 reported that they incurred on average 89 days of power outages per year. In addition, 43 percent of the firms surveyed said they had their own backup generation—equivalent to about 60 percent of the installed capacity of the Ugandan interconnected public system, or up to 100 MW.) This is also the case in rural areas hampered by a lack of access to electricity. Current electricity shortages are estimated to cost Uganda annual economic losses on the order of $100 million.
The use of a range of bank group complementary financial instruments is expected by the bank to help attract international commercial finance in support of the project. A partial-risk IDA guarantee would facilitate mobilizing commercial finance, which would provide for risk sharing with the commercial lenders. The lenders and sponsors would assume commercial risks (e.g., construction and operations risks), whereas IDA and the government (by virtue of its counterguarantee under the Indemnity Agreement with IDA) would assume only the risks related to government performance as provided for in the project agreements.
IDA's ongoing lending program involves financial support for the power sector reform program under the Power III Project (Credit 2268-UG). The main component of this project is the civil works construction of the Owen Falls Extension dam and the installation of 80 MW (out of 200 MW) of generation plant. During the interim period until the power sector is restructured, the government and IDA have developed short-term targets for improved UEB operational and financial performance. It is to be implemented under UEB's new management team, which has been in place since April 1999. A proposed Power IV project is currently being prepared with the potential support of the bank group and donors. Nordic aid has been secured for the third of five 40-MW units of generation at OFE. The Power IV project would involve installation of the fourth 40 MW of generation at OFE.
DESCRIPTION OF PROJECTS
The project includes the construction of a) a 200-MW (1700 GWh) run-of-the-river power plant on a falls, and b) about 100 km of 220-kV and 132-kV transmission lines and associated substations. The project sponsors are AES Corporation, Arlington, Virginia; and AES Sirocco, Limited, a wholly owned subsidiary of AES. Nile Independent Power, the privately owned and operated project company, will sell electricity to UEB or its successors under a 30-year Power Purchase Agreement (PPA).
Project costs financing:Total project costs are estimated at $530 million. A tentative financing plan is described below.
Financing Plan US$ Million AES (equity) 110 OPIC (debt) 100 Export credit agencies 125 IFC A loan 60 IFC C loan 25 AfDB (project finance) 40 Commercial loans IFC B loan
and IDA partial-risk guarantee70 Total 530 The IDA partial-risk guarantee would provide coverage only for loan default on scheduled debt service payments of both principal and interest resulting from the government's failure to meet its payment obligations under the project agreements for certain defined risks. These possibly include a) government breach of contract under the terms of the IA and the PPA, b) political force majeure events, including war and expropriation, c) convertibility and transferability of foreign exchange, d) discriminatory changes in law, and e) uninsurable natural force majeure. The precise scope of the guarantee coverage will be formulated through negotiations with the government and the lender banks and would be limited to the minimum required to make the transaction bankable.
Implementation period. 44 months.
Executing agencies. AES and AES Sirocco Limited (London) are jointly the private sponsor responsible for constructing and operating the Bujagali hydropower plant. Founded in 1981, AES Corporation is a public corporation whose stock is traded in the United States on the New York Stock Exchange. AES is the largest independent power producer in the world, with assets of $11 billion and approximately 40,000 MW of electricity-generating plant. Its net income in 1998 was US$311 million. AES has a reputation for long-term sustainable investments that are both financially and socially acceptable to stakeholders. Its primary business is to develop, own, and operate electric generation facilities in 17 countries around the world.
Sustainability. The generation investment will be sustainable only if the performance of the power sector improves. The government is tackling this issue through a comprehensive sector reform program that will place the management and operations of generation, transmission, and distribution facilities with the private sector, and which envisages an appropriate legislative and regulatory framework. The award of concession(s) for UEB's distribution facilities was targeted for April 2001—seen as a point of no return in terms of a financial turnaround of the power sector. This date coincides with the presentation of the proposed project to the bank group's board of executive directors. (Emphasis added.) Additionally, sustainability of the project will be underpinned through the structure of the project, which places the sponsor's equity at risk for poor performance.
Lessons learned. IDA assistance for the development of Uganda's energy sector began in 1961. To date, IDA has financed three power projects, with credits totaling about US$195 million. While the power sector assistance has improved physical facilities, it has been only partially successful in improving the efficiency and performance of the power sector. IDA also financed a petroleum exploration promotion project of $5.1 million.
The design of the proposed project draws on the following lessons learned from Uganda and other countries:
- The importance of fundamental sector reform as a basis to ensure the financial sustainability of the power sector. The government of Uganda has recognized that restructuring the power sector involving private sector participation is required to achieve sustainable efficiency improvements, to meet the growing demand for electricity, and to increase service coverage. The first phase of it restructuring plan will involve the unbundling of UEB's generation, transmission, and distribution assets and the concessioning of UEB's distribution facilities (this is the most management-intensive activity of utility operations where productivity gains will have the biggest impact).
- The importance of commercializing energy sector operations and promoting private sector participation. The proposed project has been designed to maximize sector efficiency through private sector ownership and private sector management, technical, and operational expertise. The structure of the proposed project will place the investor's equity and returns at risk for poor performance.
- The importance of making investment decisions on the basis of their technical, financial, and economic merits, consistent with macroeconomic and sector development objectives—including minimizing costs and maximizing benefits to stakeholders.This has been taken into account in the design of the proposed project: it is proposed that new investments and entrants to the sector would be contingent on the maintenance of adequate sector cash flows and certain financial ratios for the sector.
Program of targeted intervention. None.
Environmental aspects. This is a category A project, according to the World Bank Group's environmental and social review procedure. To date, considerable progress has been made relating to the environmental and social aspects of the project. An alternative analysis of electricity-generating options for Uganda concluded that hydroelectricity—from a cost, technology, engineering, and social perspective—was the best option for Uganda and that the Bujagali project was one of several hydro options available to Uganda. Additionally, a study is assessing the cumulative effects of several hydropower projects on the Victoria Nile as part of a strategic environmental impact assessment. The preliminary findings of the strategic EIA are that the cumulative effects of future hydropower projects on the Nile must maximize the objectives of regional economic development and access to electricity, health services, education services, land compensation, and employment—all poverty alleviation objectives. Also reflected in the preliminary findings of the strategic EIA is the need to adequately consider significant safeguard policy issues such as cultural properties, natural habitat, and international waterways. (Emphasis added.)
The sponsors have prepared an EIA for the project, approved 1 November 1999 by the National Environment Management Authority (NEMA) of Uganda. An EIA for the transmission line to Kampala is currently available in draft form. Should the transmission line to Tanzania materialize, an EIA for this project component will also be prepared. The sponsors have retained a panel of experts to advise them on both EIAs.
The EIA approved by NEMA is undergoing an extensive revision to comply with the World Bank Group's safeguard policies and environmental and social guidelines, in particular the following: Projects on International Waterways (OP 7.50), Involuntary Resettlement (OP 4.12), Cultural Property (Bujagali spirits and aesthetics) (OP 4.11), Safety of Dams (OP 4.37), Natural Habitats (PO 4.04), Forestry (OP 4.36), and Environmental Assessment (OP 4.01). The important areas being revised are alternative configurations of the project (for example, the dam versus diversion channel option), land compensation, analysis of fisheries, the spiritual significance of Bujagali Falls (which will be flooded by the configuration currently envisaged by the sponsor), and the cumulative effects of the project in the context of the upstream Owen Falls and Owen Falls Extension projects and at least one downstream hydroelectric power project (Karuma, Kalagala, etc.). The project has recently engaged a resettlement expert to assist with preparation of a resettlement plan for the dam site and transmission lines fully compliant with World Bank Group guidelines. The sponsors have also obtained the services of a specialist on traditional religions and cosmology to ascertain the spiritual significance of the water (and of Bujagali Falls in particular) to local communities and the possibilities of providing mitigatory measures consistent with the way of life of the local communities. The revised EIA is expected to be available in May 2000. The bank group has requested that Uganda formally notify the riparian states about its intention to proceed with the Bujagali project. (Emphasis added.)
The sponsors have engaged in extensive public consultations since the preparation of the Public Consultation and Public Disclosure Plan in 1997. The project, in the context of the parliamentary debate on the electricity bill, has had wide national exposure. Consultations have been and will continue to be extensive with affected communities, government stakeholders, and the international NGO community. Such consultations have taken place during the preparation of the EIA for NEMA. The revisions to the EIA, to the alternative analysis of electricity-generating options, and to the cumulative effects study have been communicated to the sponsors with regard to meeting the World Bank Group's environmental and social requirements. Public debate has centered on the potential impact of the project and on the national issue of electricity supply and the use of the Victoria Nile watershed in meeting this supply requirement. The sponsors are preparing documentation on the consultation process with the local communities to establish that there were informed and meaningful consultations. (Emphasis added.)
Given that the dam will be more than 15 meters high (about 30 meters), it is classified as a "large dam" consistent with OP 4.37 Safety of Dams. A panel of independent experts, acceptable to the bank group, will be appointed to form a dam safety panel. Discussions have been initiated with the sponsor and the bank group concerning the appropriateness of the existing panel of experts presently involved in the Power III Project (Credit 2268-UG, which is financing the Owen Falls Extension). The bank group has been in contact with the World Commission on Dams concerning the juxtaposition of its final report to decisions on this project. Informal discussions have taken place to ensure that our analysis will be consistent with the commission's approach and recommendations. (Emphasis added.)
Note: This is information on an evolving project. Certain components may not be necessarily included in the final project.
USAID'S COMMENTS
USAID has visited the area of Bujagali and Owens Falls and found that some additional generating capacity seems possible without a major impact on the environment. The plan described above, however, combines a restructuring of the electric market with the building of the Bujagali dam in anticipation of building additional hydroelectric dams in Uganda in part to export electricity for mining and other activities with substantial environmental impact. While dam design can reduce environmental costs, dams in Africa can, if not well designed, increase malaria and other diseases by increasing insects that thrive in the lakes behind the dam. Dams also can change the fish populations both above and below the dams to the detriment of fish, wildlife, and the people who depend on them. These problems tend to occur in rough proportion to the size and stillness of the lakes behind the dam and the degree of change in water flow as impoundment changes natural patterns. Thus they are less problematic when natural waterfalls provide more of the power to drive the turbines.
While it is clear that the IFC has identified many of the key issues, among those highlighted above (including the need for an assessment of the cumulative impact) we expect to review with care the EA for the Bujagali dam and any related developments. The Agency will also consider the cumulative effects of the various dams envisioned in this electricity restructuring and the activities they will make possible (such as mines and competing demands for water). Environmental assessments for such development should be broad enough in scope to consider cumulative impacts of the overall project or program and alternatives.
12. Zambia: IDA—Urban Development
PROJECT DATA
(R) Mining Township Services: Board presentation was scheduled for late June 2000. Environmental assessment category B. PID: ZMPE64064. US$37.7 million (IDA). Consulting services will be required. Implementing agency to be determined.
DESCRIPTION OF PROJECT
The project will support provision of efficient and sustainable water supply services, wastewater services, and solid waste management in five mine townships, particularly during the privatization of Zambia Consolidated Copper Mines Ltd. The project will introduce a new management mechanism that promotes private sector participation and commercialization in the sector. Most likely through the use of a management contract, the project will help develop and put in operation a longer term strategy to integrate the management of water, wastewater, and solid waste in the five mine township with the responsible municipal institutions.
USAID'S COMMENTS
Any project that combines water, wastewater, solid waste, and mining-dependent communities should probably be a category A requiring a full EA. Policy issues within the project include taking care to ensure that the externalities of mining are internalized in the price and future operations of privatized mining.
The Agency looks forward to reviewing in any case the noted "longer term strategy to integrate" these elements.
13. Zimbabwe: IDA -Population, Health, and Nutrition; Transport Structural Adjustment; Railways Restructuring; Public Sector Management
Most discussion of the following Zimbabwe loans will be reserved until the end of the Zimbabwe section in light of concerns affecting all of the projects, including the government's capacity to conduct environmental assessments.
13-a. Zimbabwe: IDA—Road Maintenance and Reform
PROJECT DATA
Negotiations are currently on hold. Environmental assessment category B. US$100 million (IDA). Consulting services will be required. Ministry of Transport and Energy, Department of Roads, PO Box CY595 Causeway, Harare, Zimbabwe. Tel: (263-4) 700-991, ext. 229; fax: (263-4) 700-817.
DESCRIPTION OF PROJECT
The project will help strengthen the government's ability to rehabilitate and maintain its roads through coordinated sector development plans, policy and institutional reforms, improved programming of rehabilitation and maintenance, private sector participation, and human resource development.
13-b. Zimbabwe: IDA—Fiscal Restructuring
LOAN DATA
Board presentation is tentatively scheduled for July 2001. Environmental assessment category C. PID: ZWPE50320. US$140 million (IDA). Consultants will be required. Ministry of Finance, Munhumutapa Bldg., Samora Machel Ave., Private Bag 7705, Causeway, Harare, Zimbabwe. Tel: (263-4) 722-101, fax: (263-4) 796-563.
DESCRIPTION OF LOAN
The credit will support the government's reform program to restructure public expenditures, reduce domestic debt, privatize state enterprises and initiate land reform.
UPDATE
By November 2001 this had been recast as a Structural Adjustment Loan:
Structural Adjustment
Fiscal Restructuring: The credit will support the government's reform program to restructure public expenditures, reduce domestic debt, privatize state enterprises and initiate land reform. Board presentation is tentatively scheduled for July 2002. Environmental Assessment Category C. PID: ZWPE50320. US$ 140.0 (IDA). Consultants will be required. Ministry of Finance, Munhumutapa Bldg., Samora Machel Ave.,Private Bag 7705, Causeway, Harare, Zimbabwe, Tel: (263-4) 722-101, Fax: (263-4) 796-563, Contact: Mr. C.T. Kuwaza, Senior Secretary13—c. Zimbabwe: IDA-Railways Restructuring
PROJECT DATA
Environmental assessment category B. PID: ZWPE57096. US$60 million (IDA). Consultants will be required. National Railways of Zimbabwe, PO Box 596, Bulawayo, Zimbabwe. Tel: (263-4) 363-838, fax: (263-4) 363-502.
DESCRIPTION OF PROJECT
The project will include staff retrenchment and rationalization, infrastructure rehabilitation, studies and technical assistance, training and counseling and assistance to retrenched staff. Project preparation is under way.
UPDATE
A version of this project was approved in November 2000 for $27million, largely for downsizing railways.
13-d. Zimbabwe—Public Sector Management
PROJECT DATA
(R) Local Government and Development: Environmental assessment category B. PID: ZMPE3306. US$50 million (IDA). Consulting services will be required. Ministry of Local Government and National Housing, Private Bag 7706, Causeway, Harare, Zimbabwe. Tel: (263-4) 790-601, fax: (263-4) 708-943. Contact: Mr. S. Chakaipa, deputy secretary.
Further detail from USAID 1999 Report: Projected IDA Funding: ($30 million 1999, raised to $50 million by mid-2000). Projected total cost: $60 million. Tentative board date: unknown. Stage: project preparation is under way. World Bank EA category B. Project I.D.: ZMPE3306. Project first entered: May 1998.
DESCRIPTION OF PROJECT
The project will provide infrastructure financing and capacity-building support for local governments, including urban and rural district councils. Negotiations completed. Board presentation is on hold because of country situation.
UPDATE
As of November 2001, negotiations on this project are scheduled for February 2002.USAID'S COMMENTS -- 1999
The Agency believes that the project should include strengthening of environmental units of local governments. In Zimbabwe, environmental reviews are restricted to the Department of Natural Resources in the Ministry of Mines, Environment, and Tourism. USAID is not aware of any local governments in Zimbabwe that require environmental review for projects. Zimbabwe's present EIA policy placed this function within the Department of Natural Resources, which has capacity constraints. It might be necessary for the project to set up a mechanism for environmental reviews for its subprojects.
Status. Bank staff responded that USAID is correct that information is limited as they are at the initial stage of agreement with the government on project design. The bank and USAID have agreed in principle that this should be a "programmatic" operation under which infrastructure would be financed with proceeds of the IDA credit only if local authorities meet strict eligibility criteria.
Two types of local authorities (representing all local government in Zimbabwe) would be potentially eligible. First, Rural District Councils (RDCs) would be eligible for District Development Grants (DDGs) as continuation of the current Rural District Council Pilot Capital Development Project. DDGs are small, about US$100,000 equivalent per RDC per year, and these are approved against meeting all the criteria and procedures laid out in the agreed Operational Manual. Infrastructure projects (e.g., boreholes, small bridges) are approved as part of the annual investment plan that is approved only if the evaluation presented in the manual is satisfied. This evaluation includes environmental screening (environmental assessment category B). The main objective of this project is RDC capacity-building.
Second, any local authority (22 Urban Councils and 57 RDCs) potentially would be eligible to receive matching grants for financing of investments that are a) creditworthy and attract financing from Zimbabwe's capital market and b) meet all the evaluation criteria to be determined in a prospectus provided to potential investors. These criteria will include screening of environment impact (again category B). Exact investments will be demand driven by the local authorities and evaluated by the capital market. Some investments may be for social infrastructure such as school and health building rehabilitation or construction, for which a full EA may not be required. Other investments may be for economic infrastructure, such as water supply and sanitation or roads that, depending on their condition may require a full EA (category A). In the latter case, an EA would be done, summarized in the prospectus, and placed in the public domain.
In summary, current dialog with Zimbabwe indicates that investments partially financed by IDA will be demand driven, subject to strict eligibility and evaluation criteria, and diverse, ranging from small rural projects to social infrastructure to large economic infrastructure projects. Most or all of these should have a full environmental assessment. Thus, the proposed operation would be classified as category B as an overall operation, but some major infrastructure projects to be financed would be classified as category A.
ISSUES: UPDATE MID-2000
Some loans in this series are on hold pending resolution of a volatile situation in Zimbabwe and questions of governance in general. The bank could demonstrate before making further loans to Zimbabwe that it has put firmly in place each of the corruption-control mechanisms recommended by the GAO in its April 2000 report to Congress (GAO/NSAID-00-73). Absent these steps, the loans are likely to be neither economically nor environmentally sound. Questions remain, however, about Zimbabwe's general governance conditions and concerning the above loans. The first of the three contains land reform support that could have a related environmental impact. Land reform is at the core of the recent racial tensions and tensions between the government and donors. Therefore, the direction of support by MDBs will have an impact on various ethnic groups, with resettlement, land use, and related environmental and natural resource questions that should be aired carefully and probably more publicly than a category B would require, yet this has been rated as category C.
The EA capacity of local governments in Zimbabwe was described as an overriding issue in the 1999 report to Congress. Zimbabwe has also been a leader of an informal caucus of nations acting to limit the application of CITES and the CBD, or restrictions that may arise under them, in regard to the trade in elephant ivory. This course of action has caused African neighbors who share resources, such as migrating elephants, to raise objections about the effect on that joint stewardship. This should be considered in MDB loans to the extent that the combination of land reform and public expenditures may affect the stewardship of the natural resources of Zimbabwe and its neighbors.
Another issue is the combination of railway retrenchment and highway improvement, which is not unique to this country. It raises the question whether the bank is helping to move Zimbabwe away from rail and toward motor transport. Rail is far more fuel efficient, though less flexible. Conversions should be done with caution.
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Last Updated on: March 20, 2002 |
