The World Bank KE Electricity Modernization Project (P120014) REPORT NO.: RES38143 INTERNATIONAL DEVELOPMENT ASSOCIATION RESTRUCTURING PAPER ON A CREDIT IN THE AMOUNT OF SDR 172.6 MILLION (US$250 MILLION EQUIVALENT) AND STRATEGIC CLIMATE FUND- SCALING-UP RENEWABLE ENERGY PROGRAM GRANT IN THE AMOUNT OF US$7.5 MILLION AND A GUARANTEE IN AN AMOUNT EQUIVALENT TO US$200 MILLION TO THE REPUBLIC OF KENYA FOR AN ELECTRICITY MODERNIZATION PROJECT APPROVED ON MARCH 5, 2015 ENERGY & EXTRACTIVES AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Carlos Felipe Jaramillo Regional Director: Riccardo Puliti Practice Manager/Manager: Sudeshna Ghosh Banerjee Task Team Leader: Laurencia Karimi Njagi, Zubair K.M. Sadeque
Transcript
The World BankKE Electricity Modernization Project (P120014)
REPORT NO.: RES38143
INTERNATIONAL DEVELOPMENT ASSOCIATION
RESTRUCTURING PAPER
ON A CREDIT
IN THE AMOUNT OF SDR 172.6 MILLION
(US$250 MILLION EQUIVALENT)
AND
STRATEGIC CLIMATE FUND- SCALING-UP RENEWABLE ENERGYPROGRAM GRANT IN THE AMOUNT OF US$7.5 MILLION
AND
A GUARANTEEIN AN AMOUNT EQUIVALENT TO US$200 MILLION
TO THE
REPUBLIC OF KENYA
FOR AN
ELECTRICITY MODERNIZATION PROJECT
APPROVED ON
MARCH 5, 2015
ENERGY & EXTRACTIVES
AFRICA
Regional Vice President: Hafez M. H. Ghanem Country Director: Carlos Felipe Jaramillo
Task Team Leader: Laurencia Karimi Njagi, Zubair K.M. Sadeque
The World BankKE Electricity Modernization Project (P120014)
ABBREVIATIONS AND ACRONYMS
AMI Advanced Metering InfrastructureERC Energy Regulatory CommissionEPRA Energy and Petroleum Regulatory Authority ESIA Environmental and Social Impact Assessment
GDC Geothermal Development Company LimitedGoK Government of KenyaGWh Gigawatt hour
KenGen Kenya Electricity Generating Company LimitedKEMP Kenya Electricity Modernization ProjectKETRACO Kenya Electricity Transmission Company LimitedKPLC The Kenya Power & Lighting Company Limited (“Kenya Power”)KShs Kenyan ShillingskWh Kilowatt HoursLV Low VoltageLLM Live-Line MaintenanceMCC Metering Control CentersMDM Meter Data Management
MoE Ministry of Energy MV Medium VoltageMW Megawatt NT National Treasury of the Republic of KenyaO&M Operations and MaintenancePDO Project Development Objective
REA Rural Electrification Authority (now REREC)REREC Rural Electrification and Renewable Energy CorporationRPP Revenue Protection ProgramRTU Remote Terminal UnitSAIDI System Average Interruption Duration IndexSCADA Supervisory Control and Data Acquisition SCF-SREP Strategic Climate Fund-Scaling-Up Renewable Energy ProgramUS$ United States Dollar
WB World Bank
The World BankKE Electricity Modernization Project (P120014)
BASIC DATA
Product Information
Project ID Financing Instrument
P120014 Investment Project Financing
Original EA Category Current EA Category
Partial Assessment (B) Partial Assessment (B)
Approval Date Current Closing Date
31-Mar-2015 30-Jun-2020
Organizations
Borrower Responsible Agency
The National Treasury Rural Electrification Authority,Kenya Power and Lighting Company (KPLC),Ministry of Energy and Petroleum
Project Development Objective (PDO)
Original PDOThe proposed project development objectives (PDOs) are: (a) to increase access to electricity; (b) to improve reliability of electricity service; and (c) to strengthen KPLC's financial situation.
OPS_TABLE_PDO_CURRENTPDOSummary Status of Financing
Does this restructuring trigger the need for any policy waiver(s)?No
The World BankKE Electricity Modernization Project (P120014)
I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING
1. The Kenya Electricity Modernization Project (KEMP) (P120014) was approved by the Board of Directors on March 31, 2015. The project became effective on September 17, 2015. The current closing date is June 30, 2020. The Project Development Objectives (PDOs) are: (a) to increase access to electricity; (b) to improve reliability of electricity service; and (c) to strengthen KPLC's financial situation. The PDOs remain relevant and aligned with the Government’s target of achieving universal access by 2022 and providing reliable supply to support the country’s Big Four1 development agenda. The implementing agencies are Kenya Power (KPLC - responsible for 96 percent of the value of the project) and Rural Electrification and Renewable Energy Corporation (REREC) (previously REA).
2. The achievement of PDOs and implementation progress are rated Moderately Satisfactory. The PDOs are likely to be achieved but will require additional time beyond the current closing date of June 30, 2020.
3. The Project has four components: (i) Component A: Improvement in Service Delivery and Reliability (US$50 million IDA); (ii) Component B: Revenue Protection Program (US$40 million IDA); (iii) Component C1: Peri-urban Electrification (US$150 million IDA and KPLC US$3.5 million), and Component C2: Off grid electrification (US$2.5 million IDA, US$7.5 million grant from Scaling up Renewable Energy Program, and REA US$1 million); and (iv) Component D: Technical Assistance and Capacity Building (US$7.5 million IDA). Components A, B, C1 and D.1(d)2 are implemented by Kenya Power & Lighting Company (KPLC); Component C2 is implemented by Rural Electrification and Renewable Energy Corporation (REREC) (previously REA); and Components D.1(a), D.1(b), D.1(c), and D.1(e)3 are implemented by the Ministry of Energy (MOE). The project also includes an IDA guarantee of $200 million in support of refinancing short-term commercial debt obligations of KPLC with longer tenor and lower-cost debt with the objective of strengthening KPLC financial position.
4. The project implementation has been delayed for a multitude of reasons. First, due to inadequate budgetary allocation by National Treasury (NT) to KPLC between July 2017 to December 2018, project activities experienced significant slowdown. Kenya is going through a period of significant cuts in development budget as part of measures to reduce public debt, which has been affecting almost all the Bank-financed projects. The project was finally allocated reasonable budget in December 2018. The
1 These are the four pillars of the Medium-term Plan 2018-2022 of Kenya’s Vision 2030- universal health care, affordable housing, food security and manufacturing, all of which are dependent on provision of adequate, affordable and reliable electricity supply. 2 Preparation of feasibility studies for new investments, as required, and training, and other activities to support the implementation and monitoring and evaluation of the Project and to carry out feasibility studies and other activities to support sector development
3 (a) preparation of a national electrification strategy to achieve universal access to electricity services meeting applicable standards on quality on a sustainable manner in the shortest possible time and optimizing allocation of resources; (b) development of detailed national technical specifications and standardization, including technical and economic optimization of the design and construction of electricity networks needed to supply new users located in unserved areas, meeting applicable standards on service quality; (c) drafting of regulations for enforcing quality on electricity service delivery, including assistance to ERC to implement a regime on service quality, based on systematic monitoring of key parameters through direct access of the records of the information systems used by KPLC and (e) carrying out of a series of training and capacity building programs for MOEP, KPLC, REA and ERC.
The World BankKE Electricity Modernization Project (P120014)
Project now has a reasonable allocation of US$ 62 million for FY20 and NT has expressed its commitment in its request for extension of the closing date to provide adequate budget to the project to ensure completion of project activities within the extended closing period4. The error which was in the approved budget in the split of the budgetary allocation between “Appropriation in Aid” (direct payments) and “Revenue” (project account payments) has been corrected in the 2019/2020 Supplementary Estimates I which was approved in December 2019. The Task team recognizes that allocation of adequate and timely budget by NT poses a risk to timely completion of the Project and will continue to closely follow up with KPLC and Ministry of Energy on allocations during the budget preparation period. The team will also continue to seek the CMU support as necessary in discussing budget related challenges with NT. Second, implementation of the Revenue Protection Program Component (Component B) was delayed from March 2018 until February 2019 by litigation instituted by one of the bidders at the national Public Procurement Administrative Review Board (PPARB) and subsequent appeal lodged by KPLC at the High Court against the ruling of PPARB. PPARB had nullified KPLC’s award of the advanced metering infrastructure (AMI) contract to the lowest evaluated bidder, but the High court quashed the PPARB’s ruling and upheld the contract award and, consequently, the implementation of the Component has now started.
5. The proposed restructuring consists of the following: (i) a proposed project closing date extension of 18 months, from June 30, 2020 to Dec 31, 2021, to complete the remaining project activities, which are required for achievement of the PDOs5; and (ii) revision of the results framework to reflect changes in some of the baseline and targets, as well as changes in some of the indicators related to the guarantee instrument, to better reflect realities on the ground and accurately measure achievement of the PDOs. The request for project closing date extension was received from the National Treasury through a letter dated July 17, 2019.
6. Disbursement stands at 49.49% as at October 20, 2019 and is expected to reach 70% by June 30, 2020 once the amount of US$62 million allowed in the budget is utilized. The IDA loan is expected to be fully disbursed by the new proposed project closing date of December 31, 2021. Due to the delay in implementation, most of the project results indicators are yet to be achieved, but they remain relevant and achievable within the extended closing period. There is however need to revise some of the project indicators for the reasons outlined below. KPLC maintains data to enable the monitoring of the existing and proposed results indicators.
7. Changes in PDO Indicators.
(a) KPLC commercial losses: Reduction of commercial losses by 3% was expected from the implementation of the Revenue Protection Program (RPP) component from an estimated baseline of 6.7% in FY2013/14 (out of a combined technical and commercial losses of 18.1%). Due to inadequate grid metering, it is not possible to accurately segregate technical losses and commercial losses based on energy measurements. The segregation was estimated based on studies carried out by Tata Power for KPLC in 2013, which assessed commercial losses as constituting 37% of combined technical and commercial losses. The combined technical and commercial losses have been on an increasing
4 Letter from NT dated July 17, 2019 seeking extension of the project closing date 5 The extension is proposed for the IDA credit (Cr.55870), Scaling-up Renewable Energy Grant (TFA0579) as well as the Guarantee (P145104) included in the project.
The World BankKE Electricity Modernization Project (P120014)
trajectory and were 23.7% in 2018/19, out of which 9.1% are estimated commercial losses. Considering the current estimated commercial losses of 9.1% and the targeted loss reduction of 3% from the project, the end-project target is proposed to be revised from 3.7% to 6.1%.
(b) Average outage duration for customers served (hours) measured by (System Average Interruption Duration Index, SAIDI) reported by KPLC has reduced from 21 in FY15/16 to 8 hours in FY18/19 which is significantly lower than the baseline value assumed in the results indicator of 12 hours. This reduction is due to substantial maintenance activities of distribution network carried out by KPLC in FY14-17. These activities were not financed under the project and the reduction in SAIDI cannot therefore be attributed to project activities since implementation of Component A (improvements in service delivery and reliability) has started only recently. Considering this, the end-project target is proposed to be changed from 6 hours to 5 to reflect a realistic target to be achieved under the project.
(c) Changes in targets for some of the intermediate results indicators related to components A, B and C to reflect changes in scope based on the engineering design of works.
(i) Automatic load break switches installed in the Nairobi distribution network: Following site surveys of the Nairobi area distribution network and engineering design, the number of automatic load break switches that need to be installed has reduced. As a result, the intermediate indictor is proposed to be changed from 1000 to 650.
(ii) Substations added to the SCADA/EMS: During project preparation, KPLC had a total of 161 distribution substations out of which 86 were connected to the supervisory control and data acquisition/ energy measurement system (SCADA/EMS). The project was to finance connection of 60 additional distribution substations to the SCADA/EMS bringing the total number of distribution substations connected to the SCADA/EMS to 146, which was the target for this intermediate indicator. However, since then, 64 new substations have been constructed and integrated to the SCADA/EMS while and additional 24 substations are under construction and expected to be connected to SCADA/EMS by June 2020. The intermediate indicator of 146 distribution substations failed to take into account the system expansion and the design philosophy by the sector that all new substations should be connected to the SCADA/EMS. Given that the additional 88 substations connected to the SCADA since the project approval have not been financed under the project, and taking into account the continuing expansion of the distribution substations, it is proposed to change the baseline number of substations connected to the SCADA/EMS from 86 substations to zero and the end target from 146 substations to 60 substations whose integration to the SCADA/EMS is being financed under the Project.
(iii) Installation of AMI meters: At the time of Project design in 2014, there were 4,300 advanced meter reading infrastructure (AMI) meters installed in the KPLC system. Some 40,000 AMI were to be installed under the Project, increasing the total number of AMI installed to 44,300 by project closing. KPLC has however, since then increased the number of AMIs to 16,000 using own resources. Given that that these meters have not been financed under the project, it is proposed to change the baseline number of AMI from 4,300 to zero.
The World BankKE Electricity Modernization Project (P120014)
(iv) Distribution lines constructed or rehabilitated under the Project: The intermediate target on the length of distribution lines (3,500km) had assumed minimal extension of the low voltage distribution network. The engineering design for the electrification however has revealed the need to construct 7,000km of distribution lines to maximize connections closer to the grid, and this revised target is supported under the project. It is therefore proposed to change the target for indicator “length of distribution lines constructed or rehabilitated under the Project” from 3,500km to 7,000km.
(d) Introduction of a new intermediate indicator on the total number of new residential connections
made under the Project: This is necessary to capture the new household connections made under the project, which is used to calculate the PDO target of “people provided with access to electricity under the project by household connections”. As per the Project Appraisal Document, the project was designed to connect 120,000 households, which, using an average household size then being used by the sector of 5.16, translated to 618,750 people provided with electricity access. It is proposed that 120,000 be introduced as an intermediate indicator.
(e) Changes in indicators related to the guarantee instrument to better align the indicators and targets in the Facilities Agreement. Specific changes proposed are: (i) replacement of the outcome indicator “return on assets to equity” ratio (calculated by dividing KPLC’s equity by its assets) by the gearing ratio from the Facilities Agreement (defined as the ratio of debt to equity); (ii) measurement of the “reduction in interest rate of commercial loans” indicator not as the level of the interest rate on commercial loans but as the difference between the interest rate on debt refinanced through the operation before and after refinancing to better reflect the outcome achieved from the refinancing; (iii) replacement of the debt-to-EBITDA and EBITDA-to-interest indicator with the debt service coverage ratio (DSCR) from the Facilities Agreement; (iv) removal of the “cash from operation to debt” indicator as it is repetitive to the other indicator “free operational cash flow to debt” ratio; and (v) addition of the debtors receivable days indicator from the Facilities Agreement (defined as days of electricity revenue outstanding). Target values for the revised indicators are drawn from the covenants listed in the Facilities Agreement.
8. The status of the components is summarized below:
9. Component A: Improvements in service delivery and reliability (estimated cost US$50 million) - This component has five activities: (i) construction of a laboratory for testing live line equipment; (ii) purchase of truck mounted insulated platforms for live line maintenance (24 nos. 46kV and 4 nos. 138kV); (iii) procurement of tools and accessories for live line maintenance and related training; (iv) construction of an advanced distribution management system; and (v) extension of SCADA equipment to cover additional distribution substations. The 46kV trucks mounted aerial platforms and tools and accessories for live line maintenance have been delivered, related training conducted, and live line maintenance has been formally launched. Construction of the laboratory and workshop for live line equipment testing is quite advanced and is expected to be completed by June 2020. The remaining activities under the component- installation of load break switches, auto-re-closures, remote terminal units for advanced distribution management system and extension of SCADA were delayed because of budgetary challenges and are expected to be completed by December 2020.
The World BankKE Electricity Modernization Project (P120014)
10. Component B: Revenue Protection Program (estimated cost US$40 million)- The component entails design, supply and installation of advance metering infrastructure (AMI) to cover KPLC’s high value consumers for revenue protection against theft or wrong billing. Implementation of the component suffered setback after one of the losing bidders complained against the process followed by KPLC at the national Public Procurement Administrative Review Board (PPARB). In May 2018, the PPARB ruled in favor of the complainant and annulled the tender award and directed KPLC to issue a fresh tender. KPLC appealed to the High Court against the ruling of PPARB, and the High Court ruled in favor of KPLC in February 2019 paving the way for signing of the contract and the contract was finally signed on June 7, 2019. Implementation of this component has started and is expected to be completed by September 2021.
11. Component C1: Peri-urban Electrification (estimated cost US$153.5 million -IDA US$150 million, KPLC US$ 3.5 million) - The component has two main subcomponents- electrification materials supplies and electrification construction works. Delivery of transformers, meters, conductors and cables is largely completed. Delivery of poles is ongoing, and KPLC is closely monitoring wooden poles deliveries which are behind schedule with a view to taking remedial action on defaulting suppliers. The electrification works are being implemented in six lots by five contractors. Electrification works were initially expected to be completed by July- October 2019, however, due to delays caused by the opening of the Letters of Credit, are now expected to be completed by December 2020. Following opening of the LCs in February 2019, work started in earnest and the overall progress is assessed at an average of 36%.
12. Component C2: Off grid electrification. (estimated cost US$ 11 million- IDA US$2.5 million, Scaling up Renewable Energy Program Grant US$ 7.5 million and REA US$ 1 million). The feasibility study and Environmental and Social Assessment (ESSA) studies for the mini-grid sites took longer than expected. After completion of the site-specific feasibility studies, the bidding for the mini-grids has been successfully concluded and the contractor has now been selected for construction and operation of the mini-grids. The land for all the eight mini grid sites has been allocated to REREC by the respective county governments after consultation with the community. The process to enable issuance of land titles to REREC (survey and subdivision) is going on. The county governments have however, allowed REREC to proceed with works implementation as the titling process continues. REREC and the contractor have scheduled a kick off meeting on the roll out of the subcomponent implementation on December 19, 2019. The mini-grids are expected to be operational by June 2021.
13. Component D: Technical Assistance (TA) and Capacity Building (estimated cost US$ 7.5 million): A number of important technical assistance activities, studies and training have been carried out and completed under the Project- a National Electrification Strategy was finalized in December 2018, a cost of service study was completed in FY17/18 to guide the regulatory tariffs setting process and review of regulations needed for enhancing service quality of service. A total of 163 staff of MOE, ERC, KenGen, GDC, KETRACO, KPLC, and REREC have attended training provided by national and international training institutions. Procurement of three TA activities and studies under the second phase has been launched.
14. Guarantee component: The Project also included a US$200 million IDA Guarantee support to enhance KPLC’s credit quality that enabled the Company to raise US$450 million of new commercial debt in 2016 with lower interest rates and longer tenors. While this has helped in substantial savings in its
The World BankKE Electricity Modernization Project (P120014)
financing costs, the financial situation of KPLC has recently deteriorated due to a number of factors, including the aggressive connection campaign in recent years in the rural areas (doubling its consumer base to over 7 million since 2014) with very little consumption growth. KPLC is in breach of the current ratio covenant. KPLC has now prepared a financial recovery plan with measures including efficiency improvements, timely decision by the regulator on tariff adjustments etc. Implementation of the plan is expected to commence soon, which will be monitored closely by the task team.
II. DESCRIPTION OF PROPOSED CHANGES
15. The restructuring will comprise of the following specific changes to the project:
(a) Extension of the Project Closing Date: It is proposed to extend the Project closing date by 18 months from the current closing date of June 30, 2020 to December 31, 2021, to provide time for the completion of the remaining activities. This extension is proposed for the IDA credit (Cr.55870), Scaling-up Renewable Energy Grant (TFA0579), and the Guarantee (P145104) included in the Project. A request from the National Treasury (NT) of project closing date extension was received on July 17, 2019. The borrower has expressed commitment to provide adequate and timely budgetary resources to the Project to enable timely payments under the Project. This is critical for the timely completion of the remaining project activities and will be closely monitored by the task team.
(b) Changes to Results Framework as follows:
(i) Change the end target value of the PDO indicator on KPLC commercial losses from 3.7% to 6.1% and the baseline number from 6.7% to 9.1% considering the overall increase in combined system losses since project preparation, out of which commercial losses are estimated to have increased from 6.7% in 2013/14 to 9.1% in 2018/19 and the fact that implementation of revenue protection program activities have only started in the current financial year.
(ii) Change the end target value for the PDO indicator “Average outage duration for customers served” measured by System Average Interruption Duration Index (SAIDI) from 6 hours to 5 hours given the improvement in SAIDI already achieved by KPLC since 2016/17 without the contribution from the Project.
(iii) Change the end target value for the intermediate indicator “Automatic load break switches installed in Nairobi distribution network under the Project” from 1000 to 650 in line with the quantities established following the survey and engineering design of the scope of the activity.
(iv) Change the baseline number of the intermediate indicator of the number of substations added to the SCADA/EMS from 86 to zero and the end target value from 146 to 60. The change is necessary as the number of the substations connected to the SCADA/EMS (which are not financed by the Project) has continued to increase substantially and only 60 were designed to be financed under the Project.
The World BankKE Electricity Modernization Project (P120014)
(v) Change the baseline number of the intermediate indicator of number of AMI installed from 4,300 to zero.
(vi) Introduce a new intermediate indicator on “total number of new residential connections made under the Project” as the number of metered connections made is used to compute the PDO target of “people provided with access to electricity under the project by household connections”.
(vii) Change the intermediate indicator of the “distribution lines constructed or rehabilitated under the Project” from 3,500km to 7,000km to take into account the significant increase in distribution lines to be supported under the project.
(viii) Replace the outcome indicator “return on assets to equity” ratio (calculated by dividing KPLC’s equity by its assets) by the gearing ratio from the Facilities Agreement (defined as the ratio of debt to equity) to better align the results framework with the Facilities Agreement;
(ix) Change the measurement of the “reduction in interest rate of commercial loans” indicator not as the level of the interest rate on commercial loans but as the difference between the interest rate on debt refinanced through the operation before and after refinancing to better reflect the outcome achieved from the refinancing;
(x) Replace the debt-to-EBITDA and EBITDA-to-interest ratios with the debt service coverage ratio (DSCR) from the Facilities Agreement to better align the results framework with the Facilities Agreement;
(xi) Drop the “cash from operation to debt” indicator, as the pertinent elements of this indicator are already adequately captured in the “free operational cash flow to debt” indicator;
(xii) Add a new intermediate results indicator ‘debtors receivable days’ that is already included in the Facilities Agreement (defined as days of electricity revenue outstanding) to better align the results framework with the Facilities Agreement.
16. Other Changes: The disbursement estimates are proposed to be changed to reflect the extended implementation period. In terms of risk ratings, the macroeconomic risk is proposed to be changed to Substantial from Moderate to reflect the debt situation of the country that is impacting timely availability of budgetary allocation for project activities.
III. SUMMARY OF CHANGES
Changed Not Changed
Results Framework ✔
Loan Closing Date(s) ✔
The World BankKE Electricity Modernization Project (P120014)
The proposed project development objectives (PDOs) are: (a) to increase access to electricity; (b) to improve reliability of electricity service; and (c) to strengthen KPLC's financial situation.
Project Development Objective Indicators by Objectives/ OutcomesRESULT_FRAME_TBL_PDO
Indicator Name DLI Baseline Intermediate Targets End Target
1 2 3 4 5 6 7 8
Increase electricity access, improve service reliability and strengthen KPLC's financial position
People provided with access to electricity by household connections (CRI, Number)
The methodology for calculating this indicator has been changed as grid metering is not adequate to report commercial and technical losses separately. Instead, commercial losses will be calculated as a ratio of total losses based on studies carried out in 2013.
Average outage duration for customers served (Number)
Substantial network maintenance in FY14-17 not related to the project led to substantial reductions in this indicator to levels well below the baseline value assumed. Considering this, the end-project target is changed from 6 hours to 5 to reflect a realistic target to be achieved under the project.
KPLC's Current Ratio (Text) ≥1 ≥1 ≥1 ≥1 ≥ 1 ≥1 ≥ 1 ≥ 1
The World BankKE Electricity Modernization Project (P120014)
RESULT_FRAME_TBL_PDO
Indicator Name DLI Baseline Intermediate Targets End Target
1 2 3 4 5 6 7 8
Action: This indicator has been Revised
Rationale:
Rationale for revision: The previous Return on Assets to Equity indicator (defined as equity divided by assets) is closely related to the more conventional Gearing Ratio (defined as debt divided by equity), which is also a covenant in the Facilities Agreement. Replacement of this ratio will therefore align the the results framework with the more conventional ratio in the Facilities Agreement.
PDO Table SPACE
Intermediate Results Indicators by ComponentsRESULT_FRAME_TBL_IO
Indicator Name DLI Baseline Intermediate Targets End Target
1 2 3 4 5 6 7
Component A: Improvement in Service Delivery and Reliability.
Automatic load break switches installed in the Nairobi distribution network in the project areas. (Number)
0.00 0.00 0.00 0.00 0.00 0.00 200.00 650.00
Action: This indicator has been Revised
Rationale:
Following site surveys of the Nairobi area distribution network and engineering design, the number of automatic load break switches that need to be installed has reduced. As a result, the intermediate indictor is proposed to be changed from 1000 to 650.
Substations added to the SCADA/EMS (Number)
0.00 0.00 0.00 0.00 0.00 0.00 30.00 50.00 60.00
Action: This indicator has been Revised
Rationale:
The intermediate indicator of 146 distribution substations failed to take into account the system expansion and the design philosophy by the sector that all new substations should be connected to the SCADA/EMS. Given that an additional 88 substations connected to the SCADA since the project approval have not been
The World BankKE Electricity Modernization Project (P120014)
RESULT_FRAME_TBL_IO
Indicator Name DLI Baseline Intermediate Targets End Target
1 2 3 4 5 6 7
financed under the project, and taking into account the continuing expansion of the distribution substations, it is proposed to change the baseline number of substations connected to the SCADA/EMS from 86 substations to zero and the end target from 146 substations to 60 substations whose integration to the SCADA/EMS is being financed under the Project.
Component B: Revenue Protection Program (RPP)
Establishment of a modern meter control center with satellites. (Yes/No)
At the time of Project design in 2014, there were 4,300 advanced meter reading infrastructure (AMI) meters installed in the KPLC system. Some 40,000 AMI were to be installed under the Project, increasing the total number of AMI installed to 44,300 by project closing. KPLC has however, since then increased the number of AMIs to 16,000 using own resources. Given that that these meters have not been financed under the project, it is proposed to change the baseline number of AMI from 4,300 to zero.
Component C: Electrification Program
Distribution lines constructed or rehabilitated under the project (Kilometers)
The intermediate target on the length of distribution lines (3,500km) had assumed minimal extension of the low voltage distribution network. The engineering design for the electrification however has revealed the need to construct 7,000km of distribution lines to maximize connections closer to the grid, and this revised target is supported under the project. It is therefore proposed to change the target for indicator “length of distribution lines constructed or rehabilitated under the Project” from 3,500km to 7,000km.
The World BankKE Electricity Modernization Project (P120014)
RESULT_FRAME_TBL_IO
Indicator Name DLI Baseline Intermediate Targets End Target
1 2 3 4 5 6 7
Distribution lines constructed under the project (Kilometers)
Total number of residential connections made under the Project (Number)
0.00 120,000.00
Action: This indicator is New
Rationale:
This indicator captures the number of new residential connections made and metered under the Project, which, using the average household size being used by the energy sector at the time of Project preparation of 5.16 is used to calculate the PDO indicator of "people provided with access to electricity under the project by household connections” .
The World BankKE Electricity Modernization Project (P120014)
RESULT_FRAME_TBL_IO
Indicator Name DLI Baseline Intermediate Targets End Target
1 2 3 4 5 6 7
Component D: Technical Assistance and Capacity Building.
National Electrification Strategy adopted. (Yes/No)
No No Yes Yes Yes Yes Yes Yes
Implementation by ERC of a regime on service quality. (Yes/No)
No No Yes Yes Yes Yes Yes Yes
IDA Guarantee
Debt Service Coverage Ratio (Text) 1.10 ≥ 1.2 ≥ 1.2 ≥ 1.2 ≥ 1.2 ≥ 1.2 ≥ 1.2 ≥ 1.2
Action: This indicator has been Revised
Rationale:
Rationale for revision: The Debt to EBITDA indicator and the EBITDA to Interest indicator are jointly replaced by the single Debt Service Coverage Ratio from the Facilities Agreement. Replacement of these ratios aligns the the results framework with the more concise indicators in the Facilities Agreement.
Action: This indicator has been Marked for Deletion
Rationale:
Rationale for deletion: The EBITDA to Interest indicator and the Debt to EBITDA indicator are jointly replaced by the single Debt Service Coverage Ratio from the Facilities Agreement. Replacement of these ratios aligns the the results framework with the more concise indicators in the Facilities Agreement.
Cash from operation to debt (Percentage) 26.00 12.00 12.00 13.00 15.00 20.00 20.00 20.00
Action: This indicator has been Marked for Deletion
Rationale:
Rationale for deletion: the pertinent elements of this indicator are already adequately captured in the “free operational cash flow to debt” indicator.
The World BankKE Electricity Modernization Project (P120014)
RESULT_FRAME_TBL_IO
Indicator Name DLI Baseline Intermediate Targets End Target
1 2 3 4 5 6 7
Free operational cash flow to debt (Percentage)
-10.00 -4.00 -5.00 0.00 5.00 6.00 6.00 6.00
Reduction in interest rate of refinanced USD-denominated commercial loans (Percentage)
0.00 1.50
Action: This indicator has been Revised
Rationale:
Rationale for revision: this indicator is amended to measure the difference between the interest rate on debt refinanced through the operation before and after refinancing, instead of the level of the interest rate after refinancing.
The indicator will include only commercial loans raised in USD, since only USD loans were covered by the Guarantee.
Rationale for addition: this indicator is a covenant in the Facilities Agreement. It measures improvements in KPLC's collections and is therefore relevant to the overall financial health of the company.
IO Table SPACE
The World BankKE Electricity Modernization Project (P120014)
The World BankKE Electricity Modernization Project (P120014)
