Completion Report

Project Number: 42001-013 Loan and Grant Numbers: 2507 and 0142 June 2015

Philippines: Philippine Energy Efficiency Project This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011

CURRENCY EQUIVALENTS

Currency unit – peso (P)

At Appraisal At Project Completion ( 9 Dec 2008) (30 June 2014)

P1.00 = $ 0.0206 $0.0236 $1.00 = P48.607 44.225

ABBREVIATIONS

ACEF

ADB – –

Asian Clean Energy Fund Asian Development Bank

CDM – Clean Development Mechanism CFL – compact fluorescent lamp DOE

EPC EPR

– – –

Department of Energy energy performance contract extended producer responsibility

ESCO – energy service company IIEC – International Institute of Energy Conservation LED – light-emitting diode LWMF – lamp-waste management facility PIS – project implementation support PMU – project management unit PNOC – Philippine National Oil Company

WEIGHTS AND MEASURES

1 GWh (gigawatt-hour) – 1,000 megawatt-hours 1 kg (kilogram) – 1,000 grams 1 kWh (kilowatt-hour) – 1,000 watt-hours 1 MW (megawatt) – 1,000 kilowatts 1 MWh (megawatt-hour) – 1,000 kilowatt-hours

NOTES

(i) In this report, "$" refers to US dollars.

Vice-President S. Groff, Operations 2 Director General J. Nugent, Southeast Asia Department (SERD) Director C. N. Chong, Energy Division, SERD Team leader R. Kausar, Unit Head, Project Administration, SERD Team members A. Fernando, Operations Officer, SERD C. Samaniego, Senior Operations Assistant, SERD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

BASIC DATA i

I. PROJECT DESCRIPTION 1

II. EVALUATION OF DESIGN AND IMPLEMENTATION 1

A. Relevance of Design and Formulation 1 B. Project Outputs 2 C. Project Costs 7 D. Disbursements 8 E. Project Schedule 8 F. Implementation Arrangements 8 G. Conditions and Covenants 9 H. Consultant Recruitment and Procurement 9 I. Performance of Consultants, Contractors, and Suppliers 10 J. Performance of the Borrower and the Executing Agency 10 K. Performance of the Asian Development Bank 10

III. EVALUATION OF PERFORMANCE 11

A. Relevance 11 B. Effectiveness in Achieving Outcome 11 C. Efficiency in Achieving Outcome and Outputs 11 D. Preliminary Assessment of Sustainability 12 E. Impact 12

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13

A. Overall Assessment 13 B. Lessons 13 C. Recommendations 14

APPENDIXES

1. Details of the Communication Campaign for Efficient Lighting 16 2. Design and Monitoring Framework–Summary of Project Achievements 18 3. Project Costs 21 4. Contracts 23 5. Actual Yearly Disbursements 25 6. Chronology of Events—Project Processing and Implementation 26 7. Actual Project Implementation 28 8. Status of Compliance with Loan and Grant Covenants 29 9. Financial Analysis 37 10. Economic Analysis 39 11. Details of the Overall Assessment Rating 41

BASIC DATA A. Loan and Grant Identification 1. Country 2. Loan and Grant Numbers 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan/Grant 7. Project Completion Report Number

Philippines 2507 and 0142 Philippine Energy Efficiency Project Government of the Philippines Department of Energy $31.1 million/ $1.5 million PCR: PHI 1509

B. Loan Data 1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual – Number of Extensions 6. Closing Date – In Loan and Grant Agreement – Actual – Number of Extensions 7. Terms of Loan – Interest Rate – Maturity (number of years) – Grace Period (number of years) 8. Terms of Relending (if any)

21 July 2008 25 July 2008 9 December 2008 10 December 2008 29 January 2009 2 March 2009 31 May 2009 28 May 2009 0 31 October 2011 8 May 2014 (Loan) and 11 October 2013 (Grant) 2 (Loan, 30 June 2013, 31 December 2013) and 1 (Grant, 30 June 2013) London interbank offered rate plus 0.60% less credit of 0.40% 25 years 5 years None

9. Disbursements a. Dates

Initial Disbursement

27 July 2009 (Loan) 28 Mar 2011 (Grant)

Final Disbursement

8 May 2014 7 Jun 2013

Time Interval

57.40 months 26.33 months

Effective Date

28 May 2009 Original Closing Date

31 October 2011 Time Interval 29.10 months

b. Amount ($ million)

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Category or Subloan

Original

Allocation Partial

Cancellation

Last Revised

Allocation Amount

Disbursed Undisbursed Balance

1. Equipment 1A 36 W fluorescent tube

lights, electric ballasts, and luminaires 2.660 0.000 11.600 10.733 0.867

1B Compact fluorescent lamp

5.160 0.000 2.220 2.217 0.003

1C Street and traffic lights 1.330 0.000 2.295 2.096 0.199 1D Residential and solar

lighting systems 0.000 0.000 0.160 0.149 0.011 2. Energy efficiency testing

and lamp-waste management

2A Lamp-waste management facility

1.300 0.000 1.500 1.370 0.130

2B Laboratory test facilities & equipment, laboratory accreditation, standards development, program management and capacity building 2.210 0.000 3.900 3.786 0.114

3. Super ESCO 7.500 0.000 0.000 0.000 0 4. Consulting services

4A Efficient building Initiative 0.500 0.000 0.600 0.483 0.117

4B Communication campaigns 1.000 0.000 1.100 1.005 0.095

4C Project implementation support 1.500 0.000 1.800 1.770 0.030

4D EPR development 0.000 0.000 0.560 0.474 0.086 4E Incandescent bulb

disposal service 0.000 0.000 0.200 0.167 0.033 5. Interest and commitment

charge 3.340 0.000 3.340 0.292 3.048 6. Unallocated 4.600 1.825

a 0.000 0.000 0.000

Total 31.100 1.825 29.275 24.542 4.733b

EPR = extended producer responsibility, ESCO = energy service company, W = watt. a

Partial cancellation of $1.825 million approved on 20 September 2013. b

Actual final cancellation amount of $4.833 million was approved on 8 May 2014.

10. Local costs (financed) - Amount ($) 14.846 (loan) and 1.04 (grant) - Percent of local costs 53% (loan) and 4% (grant) - Percent of total cost 39% (loan) and 3% (grant) C. Project Data

1. Project cost ($ million)

Cost Appraisal Estimate Actual

Foreign exchange cost 40.80 9.69 Local currency cost 5.70 28.12 Total 46.50 37.81

2. Financing plan ($ million)

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Cost Appraisal Estimate Actual

Implementation costs Borrower financed 13.90 12.22 ADB loan 31.10 24.54 ADB grant 1.50 1.04

Total 46.50 37.80

IDC costs Borrower financed 3.34 0.29 ADB loan 0.00 0.00 ADB grant 0.00 0.00

Total 3.34 0.29

ADB = Asian Development Bank, IDC = interest during construction.

3. Cost breakdown by project component ($ million)

Component Appraisal Estimate Actual

A. Base Cost 1. Efficient lighting initiative

1.1 Building retrofit 1.2 National residential lighting program 1.3 Public lighting retrofits 1.4 Energy efficiency testing and lamp waste

Management 2. Efficiency initiatives in buildings and industries

2.1 Super ESCO 2.2 Efficient building initiative

3. Communication and social mobilization 3.1 Communication (campaign) on

efficient lighting 3.2 Promoting efficiency in everyday life

4. Project implementation support 5. Taxes and duties

2.66

16.16 1.33

3.51

8.00 0.50

1.50 1.00 1.50 2.40

10.73 13.93 2.10

5.63

0.00 0.48

1.04 1.00 1.77 0.83

B. Contingencies C. Financial charges during construction

4.60 3.34

0.00 0.29

Total 46.50 37.80

4. Project schedule

Item Appraisal Estimate Actual

Date of Contract with Consultants Project implementation support (IIEC) 2Q 2009–2Q 2011 9 March 2010 Efficient building initiative (PhilGBC) 2Q 2009 12 October 2012 EPR Development - 28 May 2012 Incandescent bulb disposal service provider lot 1 - 5 February 2013 Incandescent bulb disposal service provider lot 2

- 4 April 2013

Procurement of Equipment and Services Building retrofitting Original scale (35 government buildings) 2Q 2009 13 July 2011 Expanded scale (115 government buildings) - 5 September 2012 National residential lighting program Lot 1 (5 million CFLs) 1Q 2009 19 July 2009 Lot 2 (3.6 million CFLs) 1Q 2009 4 June 2012

LED SHS in off-grid areas - 23 May 2012

Item Appraisal Estimate Actual

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Public lighting retrofitting program Original scale (Baguio park lights/streetlights in

Cagayan de Oro City/Retrofitting of traffic signals using incandescent bulbs with LED in 159 traffic intersections in Metro Manila) 2Q 2009 13 July 2011

Expanded scale (complete replacement with LED traffic lights in 102 traffic intersections and 1,484 LED streetlights in Metro Manila) -

20 November 2012

10 April 2013 Energy efficiency testing Lot 1 Refrigeration test facility 2Q 2009 4 May 2012 Lot 2 Television test facility 2Q 2009 4 May 2012 Lot 3 Washing machine test facility 4Q 2009 7 May 2012 Lot 4 Laboratory enhancement and supply of

various equipment 4Q 2009 30 May 2012 LWMF 2Q 2009 4 December 2012 Communication on efficient lighting 2Q 2009 3 September 2012 Promoting efficiency in everyday life 4Q 2009 17 May 2012 LWMF Start of Operations Completion of tests and commissioning 1Q 2011 December 2013 Other Milestones ADB approved change in scope and first loan closing extension - 22 October 2011 ADB approved second loan closing extension - 11 October 2013 ADB = Asian Development Bank, CFL = compact fluorescent lamp, EPR = extended producer responsibility, IIEC = International Institute for Energy Conservation, LED = light-emitting diode, LWMF = lamp-waste management facility, PhilGBC = Philippine Green Building Council, Q = quarter, SHS = solar home system.

5. Project performance report ratings

Implementation Period

Ratings

Development Objectives

Implementation Progress

From 28 May 2010 to 31 March 2011 Satisfactory Satisfactory From 1 April 2011 to 30 September 2012 Actual problem From 1 October 2012 to 31 December 2013 Potential problem From 1 January 2014 to 8 May 2014 On track

D. Data on Asian Development Bank Missions

Name of Mission Date No. of

Persons No. of

Person-Days Specialization of Members

a

Fact-finding 21–25 April 2008 1 5 a Appraisal 21–25 July 2008 1 5 a

Midterm project review 2–5 March 2008 3 15 a, b, f Project review 20–24 February 2012 2 5 a, b

Special project administration 11 December 2012–16 January 2013

b 5 17 a, b, c, d, e

Project review 13 December 2013 1 1 b Project completion review

Kick-off meeting 27 February 2015 3 3 a, b, e Site visits (Cebu, Davao) 11–12 March 2015 2 2 b, e

a a = project officer, b = analyst, c = energy specialist, d=financial control analyst, legal counsel, and e = economist (consultant), f = procurement (consultant)

b intermittent

I. PROJECT DESCRIPTION

1. The Philippine Energy Summit in February 2008 discussed options for mitigating the

impact of high energy prices on the public. The summit concluded that a stronger focus on increasing the use of indigenous renewable energy generation and promoting energy efficiency would be an effective solution to meet the challenges. With the assistance of the Asian Development Bank (ADB), the Philippine Department of Energy (DOE) carried out studies that demonstrated that by investing $46.5 million in energy efficiency, the government could defer $450 million of investments in new power plants and save about $100 million per year on fuel cost. To mitigate the energy security challenge, the government requested ADB to finance the

Philippine Energy Efficiency Project.1

2. The project’s purpose was to reduce the peak load power demand by implementing a program focused on energy-efficient lighting. The project components and subcomponents were:

Component 1: Efficient Lighting Initiative 1.1: Retrofitting of lighting systems in 40 government buildings 1.2: Nationwide distribution of 13 million compact fluorescent lamps (CFLs) 1.3: Retrofitting of public lighting systems 1.4: Installation of energy efficiency testing equipment and lamp-waste recycling facility

Component 2: Efficiency Initiatives in Buildings

2.1: Establishment of the Super Energy Service Company (Super ESCO) 2.2: Rating scheme for green buildings

Component 3: Communication and Social Mobilization 3.1 Communication on efficient lighting 3.2 Promotion of efficiency in everyday life

Component 4: Project Implementation Support

3. ADB approved a loan of $31.1 million from the ordinary capital resources for the project. ADB also administered a $1.5 million grant provided by the Asian Clean Energy Fund (ACEF) under the Clean Energy Financing Partnership Facility.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

4. At appraisal, the project was aligned with the country’s decision to launch energy efficiency projects and programs as one of the approaches to managing the impact of high energy prices. It was in line with ADB’s country strategy program, 2 and still is at project completion, because the strategy’s key objective is to provide support that will enable the country to achieve high, inclusive, and sustainable growth. 3 The project contributes to the country’s specific development objectives on energy efficiency and conservation.4

1 ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan and

Administration of Grant to the Republic of the Philippines for the Philippine Energy Efficiency Project. Manila. 2 ADB. 2005. Country Strategy and Program (2005–2007): Philippines. Manila (extended to 2010).

3 ADB. 2011. Country Partnership Strategy Philippines, 2011–2016. Manila.

4 National Economic and Development Authority. Philippine Development Plan, 2011–2016. Manila.

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5. In October 2004, then President Gloria M. Arroyo issued Administrative Order No. 110, Directing the Institutionalization of a Government Energy Management Program. The order aimed to reduce the government’s monthly cost for consumption of fuel, water, office supplies, electricity, and other utilities by at least 10%. The associated regulations required the mandatory replacement of all 20-watt and 40-watt fluorescent tubes with slim 18-watt and 36-watts lamps, and replacement of rapid start ballasts with electronic ballasts. In July 2007, the government issued Administrative Order No. 183, Directing the Use of Energy Efficient Lighting/Lighting Systems in Government Facilities (widely known as Palit-Ilaw Program). No. 183 mandates all government departments, bureaus, offices, and agencies as well as state universities and colleges, government-controlled corporations, government financial institutions, and other government entities to use energy-efficient lighting in all government buildings and facilities, as well as in all government-financed projects. 6. Although the Philippine Energy Efficiency Project was consistent with these government initiatives and the country’s overall development objectives, stakeholders’ participation in the project design was minimal. Design discussions were limited to the management tier of DOE, the executing agency. DOE staff tasked with the actual implementation of the project were not part of these discussions. Nevertheless, ownership increased during implementation thanks to regular weekly meetings of the project management unit (PMU) and those involved in project implementation support (PIS), which also included consultants and suppliers as needed. 7. At appraisal, DOE had committed to the creation of a Super Energy Service Company (Super ESCO) but was not able to consult extensively with the other government agencies to gain support. The concept was included in the project with the understanding that it would be developed. During implementation it became clear, however, that new government policies and more time were needed to create an enabling environment for the Super ESCO beyond project duration. The firm targeted to host and manage the Super ESCO, state-owned Philippine National Oil Company (PNOC), did not show the ownership needed for the component, so the component had to be cancelled. DOE nonetheless managed to promote the benefits of scaling up the other components, which showed signs of high relevance and impact early on. 8. The project design is rated highly relevant with regards to subcomponents 1.1, 1.3, 1.4 (energy efficiency testing), and 2.2. The other subcomponents—1.2, 1.4 (lamp-waste management), and 2.1—are rated relevant. B. Project Outputs

9. The project is deemed effective with regard to its outputs. The investment objectives of the project remained unchanged even though the project scope and timelines were revised after the midway point. The scope of building retrofitting was expanded from 40 government buildings in Metro Manila to 150 government buildings nationwide. The nationwide CFL distribution was scaled down from 13 million to 8.6 million. The plan to get Clean Development Mechanism (CDM) credits for the CFL program was not pursued. The project also directly handled the proper disposal of 4.4 million collected incandescent bulbs. As mentioned, the plan to develop the local ESCO industry through a Super ESCO was abandoned. The project implementation period was extended from 2 years to 4 years. 10. The implementation strategy for a subcomponent of component 1 (lamp-waste management facility) was revised after the change of government in 2010 (para. 21).

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11. An element was added to subcomponent 1.2 to ensure proper disposal of 4.4 million incandescent bulbs collected during the first lot of CFL distribution. 12. The rationale behind the changes in scope and the energy savings generated as a result of the project are discussed in the following sections.

1. Component 1: Efficient Lighting Initiative

13. Subcomponent 1.1: Retrofitting of government buildings. This aimed to reduce energy waste in government office buildings resulting from inefficient lighting equipment. It included lighting surveys, procurement and installation of new fluorescent lamps, CFLs, and electronic ballasts to replace older-style fluorescent lamps, incandescent bulbs, and inefficient magnetic ballasts. Thanks to the success of the initial retrofitting drive, the scope was expanded from 40 to 150 government buildings to include hospitals, schools, and universities nationwide. The subcomponent generated total energy savings of 11.19 gigawatt-hours (GWh) per year;5 its financial viability is discussed in para 65. 14. Subcomponent 1.2: National residential lighting program. This aimed to reduce peak demand by promoting efficient lighting in the residential sector. The activities included the free distribution of CFLs nationwide and the installation of light-emitting diode (LED) solar home systems in off-grid areas. In view of the significant number of incandescent bulbs collected, their disposal was incorporated in this subcomponent. 15. Compact fluorescent lamp distribution. The original program design was for the purchase and free distribution of 13 million CFLs in three lots. The CFLs would be of high quality with 13-, 14-, or 15-watt capacity. The distribution would follow the methodology under the CDM guidelines. An incandescent bulb was to be collected for every CFL distributed to serve as evidence for the government-led program and to claim CDM credits. The 5 million CFLs in the first lot were to be distributed in the franchise areas of power distribution utilities in the National Capital Region, and the cities of Cebu, Cagayan de Oro, and Davao. The distribution utilities would be the channels except for the Greater Metro Manila Area, where distribution was to take place in malls, schools, and community centers. The early feedback after distributing the first lot of CFLs raised the need for a reassessment of the CDM element, which DOE did from October 2010 to early 2011. Findings indicated that CFLs had already penetrated the lighting market in the residential sector thanks to the success of the Philippine Efficient Lighting Market Transformation Project, which DOE had completed a few months after this project began, and thanks to DOE’s previous campaigns on efficient lighting. The 13 million CFLs originally planned were scaled down to 8.6 million. The CDM methodology was no longer applied because it would have required complex implementation and monitoring procedures as well as transaction costs that DOE would have to shoulder throughout the CDM monitoring period, extending beyond the implementation of this project. Nonetheless, total energy savings generated by this subcomponent amount to 306.34 GWh per year (223.56 GWh per year is attributed to the first lot of CFLs and 82.78 GWh per year to the second lot). 16. Solar home systems based on light-emitting diodes in off-grid areas. The objective of this subcomponent was to showcase the use of light-emitting diodes (LEDs) in solar home

5 All energy savings presented in this report are based on the computations of the International Institute for Energy

Conservation (IIEC), a PIS provider for this project. IIEC used the International Performance Measurement & Verification Protocol for determining energy savings. The protocol is also used as a normative reference in International Organization for Standardization (ISO) standard ISO 500001. Details of the methodology used for computing the energy savings are shown in the individual case studies prepared by IIEC for each subcomponent.

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systems, and 223 households in off-grid areas of Aklan, Antique, Palawan, and Davao had LED-based solar home systems installed. This subcomponent is estimated to have avoided the use of 10,704 liters of kerosene per year. 17. Incandescent bulb disposal. The disposal of 4.4 million incandescent bulbs (2.6 million in Metro Manila and 1.8 million in Cebu and Mindanao), collected during the first CFL distribution, proved to be a challenge. In the project design document, the safe crushing and disposal of incandescent bulbs was understood to follow Republic Act 9003 (Ecological Solid Waste Management Act of 2003). However, due to the huge amount of bulbs collected, they were declared hazardous waste, whose disposal required compliance with Republic Act 6969 (Toxic Substances, and Hazardous, and Nuclear Waste Control Act of 1990) and which may be done only by waste treatment specialist accredited by the Department of Environment and Natural Resources. The waste materials were classified under D406 (waste with inorganic chemicals, e.g., lead-acid batteries and busted lamps). Thus, an incandescent bulb disposal contractor had to be added to the procurement list. The disposal was implemented in two lots, one for Mindanao and Cebu, and one for Metro Manila. 18. Subcomponent 1.3: Public lighting program. The objective was to demonstrate energy savings by adopting efficient technologies for public lighting (street lighting and traffic lights). The scope included various energy efficiency technologies in public lighting; the replacement of mercury-vapor lamps and fluorescent tube lights with high-pressure sodium-vapor lamps for street lighting; and the replacement of incandescent bulbs with LEDs in traffic lights. The original plan was to retrofit the park lights in Burnham and Wright Parks in Baguio City, and the streetlights of Cagayan De Oro City and two other sites. In lieu of two other sites, the project retrofitted traffic signals and pedestrian lights with LEDs at 159 traffic intersections in Metro Manila. This was further scaled up by retrofitting traffic signals and pedestrian lights at another 102 traffic intersections as well as 1,484 streetlights in Metro Manila. The latter caused some problems during implementation. The Road Board was the initial project partner, but difficulties in reaching an agreement on lamp specification and the failure of the Road Board (which is not within the control of DOE) to undertake the bidding for lampposts in time for the installation of the LED lights required the search for another partner. Finally, a partnership agreement was forged with the Metro Manila Development Authority, which managed streetlights in Metro Manila that were suitable for retrofitting. The retrofitting began in June 2013. The subcomponent generated total annual energy savings of 4,189 megawatt-hours (MWh). 19. Subcomponent 1.4: Energy efficiency testing and lamp-waste management. The aim was to expand the capacity of the appliance-testing laboratory of DOE to test the energy efficiency performance of a wider range of appliances (television sets, washing machines, large refrigerators, freezers, and various other consumer products); develop the standards for TVs and washing machines; and obtain lab accreditation. The other objective was the establishment of an LWMF for recovering mercury from used fluorescent lamps. 20. Energy efficiency testing. Implemented as designed, this involved setting up a TV test facility and a washing machine test facility at DOE’s laboratory, and enhancing the refrigerator test facility, calorimeter room, and other laboratory equipment. 21. Lamp-waste management facility. The original project design had named DoloMatrix Philippines (Dolomatrix), an environmental management service provider engaged in transport, and treatment and disposal of hazardous wastes, as the operator of the LWMF. Dolomatrix was to provide the site where the facility would be installed. A change of government led to a review of the proposal, and neither the operator nor the site location were pursued any further.

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22. Bidding for management and operation of the facility was conducted using national competitive bidding. However, DOE decided not to continue the procedure and instead considered partnering with a local government unit or a government-owned agency and find a site within Metro Manila. PNOC was initially identified as the facility management provider. It took a year to negotiate a memorandum of agreement. However, ADB could not finance the pilot test of the facility since the decision to have PNOC as the operator had sidestepped the bidding process. It was then decided that DOE would operate the facility. A private facility site was finalized on 29 May 2013. By 18 December 2013, the installation, commissioning, and test operation of the facility was completed. The approval of the second request for extension of the loan closing date, from 30 June 2013 to 31 December 2013, enabled DOE to complete the installation of the LWMF and still access the loan funding allocated for said component. DOE continues to operate the pilot facility. 23. Extended producer responsibility. The original scope of this subcomponent was to develop the framework, model, and regulatory instruments for an extended producer responsibility (EPR) regime. This was later expanded to include the actual establishment and operationalization of EPR and thereby ensure the viability of the LWMF. Recognizing the need to operationalize the EPR and anchoring it on the results of a study, DOE engaged an international and a local firm to lend consulting support to the further development and implementation of the EPR.

2. Component 2: Efficiency Initiatives in Buildings and Industries

24. Subcomponent 2.1: Super Energy Service Company. The goal was to establish a Super ESCO to overcome the hurdles facing energy efficiency projects in the public and private sectors. Lack of access to financing and lack of technical understanding by potential clients are two major barriers. The strategy was to develop a working model for a Super ESCO as a subsidiary of PNOC. It was intended to develop and implement ESCO projects in the public sector and provide financial and technical advisory support to other ESCOs to implement projects in the private sector. The Super ESCO was eventually abandoned when PNOC, after protracted consideration, withdraw its commitment to host it under its corporate structure. Other options such as a public–private partnership, setup of a financial Super ESCO, and establishment of an ESCO Super Fund were evaluated. However, the time for clearly needed preparatory action—e.g., formulating policies to create an enabling environment, establishing a trust account or a new legal entity to host the Super ESCO—was running out and would not fit the project timeline. The funds originally earmarked for the Super ESCO were reallocated to the retrofitting of an additional 115 public buildings. This resulted in additional annual electricity savings of 9,780 MWh, whereas the Super ESCO had been estimated to generate savings of 806 MWh per year. 25. Subcomponent 2.2: Efficient building initiative. The objective was to reduce energy consumption and greenhouse gas emissions from the building sector in the Philippines. Green building certification systems are one of the most successful efforts worldwide in this direction. The project was to accelerate the implementation of a building rating system. It engaged the Philippine Green Building Council, which had developed a rating system for new and existing buildings. But the system needed further improvement to boost its uptake by industry stakeholders. 26. The project was instrumental in developing and launching a new and better version of the rating system, which consists of several standards termed BERDE (Building for Ecologically Responsive Design Excellence):

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• BERDE for New Construction: Commercial buildings v 1.1.0 • BERDE for New Construction: Educational institutions v 1.1.0 • BERDE for New Construction: Clustered residential development v 1.1.0 • BERDE for New Construction: Vertical residential development v 1.1. • BERDE for Retrofits and Renovations: Commercial buildings v 1.1.0 • BERDE for Retrofits and Renovations: Educational institutions v 1.1.0 • BERDE for Retrofits and Renovations: Clustered residential development v 1.1.0 • BERDE for Retrofits and Renovations: Vertical residential development v 1.1 • BERDE for Operations v 1.1.0

27. Twelve building projects were registered to undergo the building rating assessment and accreditation process (the original target had been for 10 buildings). Of 35 government buildings retrofitted by the project and invited to undergo certification on the lighting energy efficiency criteria, 32 agreed and eventually were certified for lighting energy efficiency.

3. Component 3: Communication and Social Mobilization 28. Component 3 had two subcomponents: 3.1. Communication and campaign for energy-efficient lighting and 3.2. Promotion of efficiency in everyday life. 29. Subcomponent 3.1: Communication. This was financed by an ACEF grant under the Clean Energy Financing Partnership Facility. Its objective was to promote public awareness, generate interest in the project, and encourage institutional partners to participate in its implementation. It also aimed to promote energy practices focused on the use of efficient lighting systems. This was done through (i) a media campaign involving television, radio, and print; and (ii) promotional and educational events, such as launchings, caravan and roadshows, press conferences, seminars, and training (Appendix 1). 30. After distributing the first lot of CFLs, the subcomponent conducted an assessment of the project partners to determine how best to design the awareness-building program for the second CFL lot. It also developed an information and education campaign strategy and carried out a baseline study for the whole component.

31. Subcomponent 3.2: Everyday efficiency. This aimed to reinforce the interventions under components 1 and 2 by encouraging the public to adopt energy efficiency in everyday life. It involved design, development, and production of educational modules and metacharts and was done in consultation with the Department of Education since high-school students were the target audience.

4. Component 4: Project Implementation Support

32. A consulting firm was engaged in March 2010 to provide project implementation support (PIS). The firm supported DOE in its procurement activities, but also provided capacity building for the PMU. In step with the project extension, the PIS contract was extended to 30 June 2013. 33. The results of the review mission’s assessment of the project’s achieved objectives against appraisal targets are summarized in Appendix 2.

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C. Project Costs

34. At the time of appraisal, the total cost of the project, including physical and price contingencies and financial charges during implementation, was estimated at $46.5 million. This was covered by a $31.1 million loan and a $1.5 million grant from ADB, and $13.9 million from the government; the latter would finance the purchase and distribution of CFLs, and all the taxes and duties on the works, goods, and services to be procured. 35. The actual total cost of the project at the time of review was $37.81 million, 81% of the originally estimated cost. This is estimated to reach $43.65 million upon full payment of taxes. Appendix 3 shows the original and actual project costs. 36. During project implementation, loan proceeds were reallocated because of the changes in scope and scale. The original loan allocation for the ESCO component ($7.5 million) was reallocated to fund the retrofitting of additional government buildings (subcomponent 1.1) and additional public lighting (subcomponent 1.3). A portion of the original loan allocation for the national residential lighting program (subcomponent 1.2) was reallocated to subcomponent 1.4 as a result of DOE’s decision to scale down CFL distribution from 13 million units to 8.6 million (para. 15). The reallocation to subcomponent 1.4 was used to support the higher-than-expected costs of the LWMF as a result of the decision to get additional equipment that would allow the facility to process different types and sizes of mercury-containing lamps and to further upgrade the laboratory testing facilities at its new site. The unallocated portion was reallocated to support the procurement of solar home systems for 223 households, consultancy expenses for EPR development, and the service provider for the disposal of incandescent bulbs collected under the first CFL distribution. 37. The ACEF grant of $1.5 million was intended to fund communication on efficient lighting (subcomponent 3.1). Only 70% was utilized. The design of the first bidding was to engage the services of a nongovernment organization to handle social mobilization activities in support of the CFL distribution. But local organizations had difficulty complying with the bid requirements. The bid documents were revised to focus on communication for efficient lighting. But no company could provide the broad scope of goods and services needed. The bid documents were again revised by breaking the goods and services into different lots. But by October 2012, the nationwide second CFL distribution had been done, and the lots for promotional as well as training and educational materials to support CFL distribution were no longer awarded. Since the ACEF grant’s scope was closely related to the CFL distribution, DOE needed to either engage an additional consulting firm to implement its activities, or amend the grant agreement to access the funds and implement communication activities for other project components. Given the limited time left for additional activities, DOE decided to no longer utilize the grant. 38. The budget for the government’s counterpart funding had to be increased by about 35% because the tax requirements for the project were higher than estimated. The original estimate made no provision for a 30% final tax to be levied on foreign contractors and a 15% final tax on local contractors for consultancy services. DOE requested additional counterpart funding of P181.62 million from the Philippine Department of Budget and Management on 22 April 2013. 39. A significant shift occurred from foreign to local cost—at appraisal, the foreign cost was estimated to be 88%, but it turned out to be only 20%. Most of the suppliers chosen were local suppliers of goods and services (Appendix 4).

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D. Disbursements

40. The ADB loan and grant were to be fully disbursed by 31 October 2011. The actual yearly disbursements are in Appendix 5. 41. Crediting of the imprest fund from ADB to DOE’s account took more than 5 months. DOE submitted a withdrawal application to ADB on 29 July 2009, but the Philippine Department of Budget and Management issued the special allotment release order and corresponding notice of cash allocation only on 16 December 2009. The imprest fund was credited to Land Bank of the Philippines on 8 January 2010. 42. Another cause for the delay in disbursements was the insufficient provision of funding for taxes (para. 38). As a result, the accounting department of DOE did not want to issue a request for disbursements until an approved budget became available for the payment of taxes. Eventually, the government increased counterpart funding by about 35% to cover the additional tax requirement. 43. In some instances, payment was disbursed but liquidation of the imprest account was delayed since the government needs to confirm the reallocation of loan proceeds and the creation of additional project categories in the loan financial information system. The imprest account was not used for the disbursement of grant funds. E. Project Schedule

44. The project was planned for completion within 2 years (May 2009–April 2011). It took just over 4 years to complete, for a total loan extension of 26 months. The project encountered implementation delays, especially in 2010 and 2011. Several factors contributed: (i) crediting of the imprest fund from ADB to DOE’s account took longer than expected because of stricter banking rules; (ii) the PIS firm was engaged 10 months after loan effectiveness since DOE was not yet familiar with the procedures; (iii) frequent changes in DOE’s leadership—four secretaries took the helm during project implementation—required due diligence and project reviews upon each new official assuming the post since each had his own idea on how to proceed with the implementation of certain subcomponents; (iv) almost all the components of the project were of a pioneering nature and had to be implemented nationwide; (v) the technical complexities of equipment to be purchased, especially for energy-efficiency testing, were not taken into account when estimating the time it would take to evaluate the technical proposals; (vi) the specialized nature of some of the works or services being procured was not factored in when estimating the procurement period; (vii) in some instances, disbursements for payment to contractors had to be put on hold until the issue of taxes to be levied on the contracts was resolved; and (viii) the protracted decision making by project partners (paras. 22–24) also delayed implementation. 45. Appendixes 6 and 7 show the project’s chronology of events and compare the projected and actual implementation schedules. F. Implementation Arrangements

46. The Government of the Philippines was the borrower and DOE was the executing agency responsible for overall technical supervision and execution of the project. DOE was also the implementing agency for the subcomponents (i) retrofitting of the government building; (ii) retrofitting of public lighting; (iii) testing laboratory and lamp-waste management facility; and (iv) efficient building initiative.

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47. DOE established a PMU headed by a project director at the level of undersecretary. The implementation of each component was headed by a project manager at director level. 48. DOE had to liaise with different government agencies for the various project components, i.e., (i) Department of Trade and Industry for the appliance standards; (ii) Department of Environment and Natural Resources for the disposal of incandescent bulbs, which involved toxic materials; (iii) the Metro Manila Development Authority for the public lighting component; (iv) the Department of Education for the design of educational materials that would fit its curriculum on climate change and energy conservation and use; and (v) numerous government offices for the retrofitting activities. 49. DOE staff, including the PMU, faced the challenge of monitoring the different project components, especially during the initial stage of procurement. Since DOE does not usually handle big procurement packages, it had to familiarize itself with ADB procurement procedures and the different reporting requirements. G. Conditions and Covenants

50. Essentially, DOE implemented the project in accordance with the plans stipulated in the agreement, and submitted for ADB approval some material modifications to the original plans and work schedules. Some covenants were not met, however—use of loan proceeds amounting to $7,500,000 to fund the Super ESCO, and appointment of a chief executive officer, key technical staff, and seven board members that would form the ESCO management and financial management team. 51. The submission of audited project financial statements was late for fiscal year (FY) 2010 and FY2011, which affected the overall project rating. DOE was able to submit the FY2012 and FY2013 statements on time, which improved the project’s performance rating. After the review of the FY2012 statements and ADB’s strengthening of the project financial management monitoring guidelines, DOE proactively implemented the recommendations from the Commission on Audit and the time-bound action plans pertaining to the slow disbursement of loan proceeds and the CFL distribution to end-users. By the time the FY2013 statements were submitted and reviewed, all issues had generally been managed and resolved, reflecting the unqualified opinion from the auditors. Appendix 8 shows the status of compliance with loan covenants. H. Consultant Recruitment and Procurement

52. Advance procurement action took place for the procurement of CFLs, which led to the awarding of a contract 2 months after loan effectiveness. However, the PIS firm was engaged late, which—along with the frequent changes in DOE leadership (para. 44) and several changes in the composition of the bid-award committee—delayed the procurement of other contracts. 53. Since the implementation needs for subcomponent 2.2 (rating scheme for green buildings) had not been assessed and defined clearly at appraisal, it became apparent only during implementation that a national bidding process was needed to determine which entity in the respective industry sector could effectively undertake the subcomponent activities.

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I. Performance of Consultants, Contractors, and Suppliers

54. The performance of the suppliers of goods and services was generally satisfactory; they provided the quality required and delivered as specified in the terms of reference. Even though some contracts were not awarded until 2012 and 2013, the contractors and suppliers were able to meet the stiff deadline despite restrictions on the timing of installations.6 The performance of the PIS firm is rated satisfactory. It was able to meet DOE’s requirements despite several changes in project scope. J. Performance of the Borrower and the Executing Agency

55. A major institutional weakness of DOE is that its mandate as a government department does not include the establishment, operation, and management of entities of a corporate nature. Thus, DOE had to rely on PNOC to serve as the corporate vehicle for the establishment of the Super ESCO. PNOC, however, had no sense of ownership because of its minimal involvement during the development of the project. Although PNOC is “attached” to DOE, a separate board of directors governs it.

56. At appraisal, the inadequate number of qualified staff familiar with ADB procedures was identified as an institutional weakness. The plan to solve this issue by restructuring operations, redeploying staff, enhancing skills though in-house training, and hiring contractual staff proved inadequate since unfamiliarity with ADB procedures remained an issue during procurement. Each subcomponent required its own unique type of goods or services, which in turn required different procurement procedures. 57. Nonetheless, given the nationwide scope of the project and the pioneering nature of some of its components, the timing of the implementation (i.e., several changes in government administration), and the fact that this was the first loan-funded project implemented by DOE, the performance of the borrower and DOE was satisfactory. 58. Counterpart funding from the government for the national residential lighting program (subcomponent 1.2), which represented 79% of its total contribution, was timely and adequate. However, the original estimate of counterpart requirements for duties and taxes was insufficient. DOE requested additional funding from the Philippine Department of Budget and Management, which was approved on 22 April 2013 (para. 54). K. Performance of the Asian Development Bank

59. DOE sought ADB’s advisory services on the institutional arrangements for some subcomponents—e.g., subcomponent 1.3 (lamp-waste management), when the administration refused to consider the entity defined at appraisal as an implementing partner, and subcomponent 2.1 (Super ESCO), when the entity identified to host the Super ESCO decided not to commit to the project. It also needed advice on the method of procurement for some of the works, goods, and services not defined during appraisal but later on considered critical in implementing a particular component. ADB’s performance is rated satisfactory in this respect.

6 To retrofit government buildings, the suppliers needed to coordinate with the government agencies since they

could not replace the lights during office hours. In the public lighting component, the replacement installations needed to be coordinated with the Metropolitan Manila Development Authority.

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III. EVALUATION OF PERFORMANCE

A. Relevance

60. The project is rated relevant. At the time of appraisal, it fitted ADB’s operational strategy for the Philippines and continues to do so beyond completion. The project contributes to ADB’s strategy of providing support that will enable the country to achieve high, inclusive, and sustainable growth. 61. The project was able to respond to DOE’s request for an energy efficiency subcomponent and to support it during project design without project preparatory technical assistance. The risks of implementing a pioneering project were identified and discussed. However, the assessment of the detailed implementation arrangements was not adequate enough, which led to some changes in scope and arrangements during the midterm project review to make sure that it remained relevant and implementable within the project timeframe. Specifically, CFL distribution had to be scaled down because market conditions had changed (para. 15). Likewise, the Super ESCO component had to be cancelled because the institutional environment necessary for its implementation could not be created in time. B. Effectiveness in Achieving Outcome

62. The revisions made to the project’s scope improved its relevance and in fact boosted the intended outcome. The midterm review further helped increase the effectiveness of the overall outcome. Generally, the targeted outcomes have been achieved (Appendix 2) even if the overall achievement is rated partially effective. The Super ESCO component was cancelled, but the funds were reallocated to another component, which led to much higher savings in electricity consumption. C. Efficiency in Achieving Outcome and Outputs

63. The project is rated efficient since it resulted in actual energy savings, especially in the efficient lighting component. 64. Financial analysis. Appendix 9 details the findings of the financial analysis per component, and the financial benefits generated by each component are expected to yield direct savings. No additional operation and maintenance costs are foreseen; in fact, savings are expected because more energy-efficient lighting will result in longer lamp life and less frequent need for replacements.

65. At appraisal, the estimated payback period when retrofitting government buildings was 2 years; this compares with 4.62 years estimated upon completion. The difference is attributed to the fact that the appraisal foresaw a change from T12 (40 W) tubular lamps to T8 (36 W) lamps. During implementation, most changes were from T8 (36 W) to T5 (18 W). The need to replace not only the lamps but also the luminaires or fixtures also comes into play. If the cost of luminaires or fixtures is not included, the payback period is 2.3 years. At appraisal, public lighting was estimated to have a payback period of 4.1 years, compared with 1.45–3.19 years after retrofitting park, street, and traffic lights. At appraisal, the financial internal rate of return of the project was estimated to be 206% compared with 196% based on current scenario. 66. Economic analysis. The project is estimated to have achieved a very high economic internal rate of return, which is characteristic of efficient lighting projects. The approach used in

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the economic analysis is the same as used at appraisal. At appraisal, the economic internal rate of return was 99%. Upon completion, the rate is estimated to be 117% (Appendix 10). D. Preliminary Assessment of Sustainability

67. Except for the cancelled Super ESCO subcomponent, the project is assessed as likely sustainable. The efficient lighting component is very replicable. During the validation visits after project completion, DOE confirmed that it had received requests for further retrofitting of government buildings and public lighting systems from agencies and local government units that had not been part of the project. The advancement of efficient lighting technologies and a decrease in product costs will encourage the government to keep scaling up the project, and even consider internal financing sources. The government will also have baseline data with which to compare future projects. The project is financially sustainable given the financial internal rate of return of 196%, and during its life will not incur additional operation and maintenance costs and other recurrent costs, except for the LWMF. The estimated recurring costs of $122,000 per year can be funded from DOE’s regular operating budget. 68. Boosting energy efficiency testing of common appliances such as air-conditioners, television sets, and washing machines will raise the awareness of the public and encourage them to choose appliances with a good energy efficiency label. 69. The standards created for the green building rating system are being adopted not only by private companies but also by local government units through city ordinances. Multisector coordination between government agencies and private industries will ensure continuous development of this initiative. Both Congress and Senate have filed separate bills for the Green Building Act.7 70. A memorandum of understanding between DOE and the electric cooperatives stipulates the terms and conditions for the installation and maintenance of LED-based solar home systems, as well as long-term arrangements among stakeholders. Adherence to the memorandum will help sustain the continued operation and effectiveness of the systems installed by the project in off-grid areas. 71. The government’s initiative for energy efficiency has raised public awareness and the concept is mainstreamed further, especially by targeting public schools nationwide. The results of the 2004 Household Energy Consumption Survey (HECS) 8 showed that 54.7% of the respondents used incandescent bulbs and 37.8% used CFLs. The next survey in 2011 showed that 11.9% of the respondents used incandescent bulbs, 77.3% used CFLs, and 0.8% used LED lights. E. Impact

72. The project’s impact was a reduction in the cost of power generation. Since 2008, the average cost of production by electric cooperatives has fallen by 10%, and the load factor of electricity utilities and electric cooperatives has risen by 10%. However, given the presence of external factors, the project cannot be fully credited with the attainment of this impact.

7 The 16th Congress filed Bill 2962 (http://www.senate.gov.ph/lis/bill_res.aspx?congress=16&q=SBN-410) and the

Senate filed Bill 410 (http://www.congress.gov.ph/download/basic_15/HB02962.pdf) 8 The surveys were conducted by DOE in partnership with the Philippine Statistics Authority, the government agency

that regularly conducts a household census in the country.

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73. For instance, the project completion review asked government building administrators about the electricity saved thanks to the retrofitting. All things being equal, obvious savings are evident if the wattage comparison is taken in isolation. But other factors such as the addition of new rooms or an increase in appliances (e.g., air-conditioners) will affect the electricity costs. On a larger scale, economic growth can influence power generation costs. 74. The project’s impact on institutions, e.g., DOE’s efforts to be more relevant, especially in its energy efficiency program, was substantial and significant. The PMU staff had an opportunity to gain hands-on experience in project implementation and were able to establish actual baseline data and results that will support future policy-making initiatives.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

75. The project is considered successful overall since benefits foreseen have been realized and are generally sustainable. Appendix 11 presents the rating details. B. Lessons

76. Stakeholder analysis and detailed consultation are very important for pioneering projects like this one. Ownership by stakeholders is at risk if project implementation requirements are insufficiently analyzed, and if the institutional environment and human resource capacity is inadequate. This was the first ADB loan to be implemented by DOE, and it became apparent early on that it was not familiar with ADB procedures, especially on procurement matters and engagement of consultants, which led to project delays. 77. Projects implemented in a period when a change in government is foreseeable will undergo reevaluation and review by the new administration. If the core PMU team has a strong foundation and capacity to implement the project, and is seen to be politically impartial, the risk of changes to leadership and possibly even decisions can be mitigated. To have an efficient PMU, project monitoring needs to be programmed and reviewed regularly during implementation to ensure that the executing agency has sufficient staff and counterpart budget. 78. Project cost estimates need to factor in all duties and taxes, not only on machinery and equipment but also on service providers. Assessments of banking rules and the government’s budget implementation process are also needed. 79. Market development of efficient lighting was very fast. Midway through the distribution of CFLs (subcomponent 1.2) the scale had to be pared back because market penetration of the technology had greatly improved. 80. In projects of this kind, the technical complexities of the equipment and the specialized nature of the works or services to be procured need to be considered when estimating the procurement period. 81. The time provided to establish and operationalize the Super ESCO was not sufficient. The existing policy environment, particularly for government budgeting and accounting, does not support the ESCO concept of an energy performance contract (EPC). The environment needs to be adjusted first to enable implementation of ESCO projects in the public sector.

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C. Recommendations

1. Project Related

82. Future monitoring. Under the communication and mobilization component, to enhance sustainability, the school beneficiaries should submit a status report indicating how the metacharts are now being used and their current location. It is recommended that the school officials be reminded of the proper position, location, handling, and use of the metacharts. 83. The final (complete) disbursement of the government’s counterpart funds for the duties and taxes should be monitored since an additional funding of P181.62 million was requested by the Philippine Department of Budget and Management and was approved on 22 April 2013 (paras. 35 and 38). As of June 2014, tax payments had not yet been fully disbursed. 84. Further action or follow-up. Given the successful attainment of the project outputs—above all the retrofitting of government buildings, streetlights, and traffic lights—and the achievement of targeted benefits, it is recommended to conduct an assessment of the feasibility of scaling up the retrofitting of buildings and public lighting. 85. To further ensure the sustainability of the LED-based solar home systems installed in off-grid areas, it is recommended to reorient the communities and the electric cooperatives on their responsibilities, such as regular submission of status reports to DOE. Collection of the monthly fees needs to be resumed. It should also be checked whether the deed of donation on the transfer of ownership from the project (DOE) to the electric cooperatives was executed for a proper turnover. 86. Once the feasibility of scaling up the retrofitting of buildings and public lighting is assessed, ADB should continue providing financial assistance for that purpose. 87. It is recommended that ADB assist policy development in support of an ESCO. This would include government procurement laws, government accounting procedures, and a system of government budget allocations. One example concerns the policies and procedures of the Philippine Commission on Audit, to which all public accounting systems are subjected. The concept of off-balance-sheet accounts under which the EPC concept is defined does not figure in the commission’s bookkeeping guidelines. Budget allocations are valid for 1 year only. The commission’s standard accounting procedures will have to be modified to accommodate the EPC concept. ADB assistance to policy development could take up this issue.

2. General

88. For project (program) appraisal, we recommend the following: (i) Ensuring that the design and monitoring framework is complete and

comprehensive. During appraisal, it is important to consult the executing agency of a proposed project (program) to determine if the recommended indicators of performance targets can realistically be obtained.

(ii) Assessing executing agency’s capacity. In assessing an executing agency’s capacity at appraisal, any recommendations made to rectify an identified weakness should be checked for compliance during the project’s implementation. If it is the first time for an executing agency to implement an ADB-funded project that will involve large procurement packages with technical complexities, the

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project team should have an in-house ADB procurement expert to provide advisory assistance.

(iii) Estimating costs. Applicable taxes such as value-added tax and final duties should be thoroughly assessed when preparing cost estimates at appraisal, as well as during the procurement process for goods and services, to avoid disbursement delay.

(iv) Planning implementation. When designing projects dealing with fast-developing and evolving technology, the appraisal should consider the possible impact of other ongoing projects by other funders. Major stakeholders or institutional partners should have significant participation in project design to increase commitment and ownership of the project. Assessment of banking rules and regulations as well as the government’s budget implementation process must be taken into consideration.

(v) Project (program) scheduling. Additional allowance should be made for the time needed to procure works, goods, and services of a highly complex technical or otherwise specialized nature.

16 Appendix 1

DETAILS OF THE COMMUNICATION CAMPAIGN FOR EFFICIENT LIGHTING

Area

Type of Event

Date/Venue Promotional Educational Press

Conference

1. National Capital Region (NCR): Mandaluyong City

245 91 9 Jan 2013 (promotional): Bayanihan Center, Mandaluyong City

10 Jan 2013 (educational): Bayanihan Center, Mandaluyong City

2. NCR: Antipolo City and Makati City

294 118 21 Jan 2013 (promotional): First Pacific Leadership Academy, Antipolo City

22 Jan 2013 (educational): University of Makati, Makati City

3. NCR: Makati City and Quezon City

81 254 15 Jan 2013 (promotional): AIM Conference Center, Makati City

16 Jan 2013 (educational): Great Eastern Hotel, Quezon City

4. NCR: Taguig City 58 15 Feb 2013: F1 Hotel, Bonifacio Global City, Taguig City

5. Luzon: Baguio City 52 16 May 2013: Le Monet Hotel, Baguio City

6. North Luzon: Bauang, La Union

112 101 25 Jan 2013 (promotional): Hotel Anana, Paringao, Bauang, La Union

25 Jan 2013 (educational): Hotel Ariana, Paribgao, Bauang, La Union

7. South Luzon: Batangas

270 60 11 Feb 2013 (promotional): Green Cural Beach Resort, Batangas

12 Feb 2013 (educational): Days Hotel, Batangas

Type of Event General Objective Coverage

Total Number

of Events Participants/Event

1. Promotional event

To create awareness nationwide on the importance of the project, including its components and the objectives of promoting energy efficient lighting

16 regions including National Capital Region (NCR)

16 10 national & local government officials, partners; 6 Department of Energy officials; seminar participants (households, academe, students, etc.)

2. Educational event

Training sessions shall be held nationwide to involve energy efficiency and conservation practitioners in disseminating proper information on and use of energy efficient lighting.

16 regions including NCR

16 10 national & local government officials, partners; 6 Department of Energy officials; seminar participants (households, academe, students, etc.)

3. Press conference

Press conferences shall be held in conjunction with the launches to distribute information to the media. Interviews conducted by senior DOE official(s) to make an announcement and answer questions.

NCR, Luzon, Visayas, and Mindanao

4 10 national & local government officials, partners; 6 Department of Energy officials; 50 media representatives

Appendix 1 17

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Area

Type of Event

Date/Venue Promotional Educational Press

Conference

8. Central Luzon: Pangasinan

310 105 13 Feb 2013 (promotional): El Jardine Hotel, Lingayen, Pangasinan

14 Feb 2013 (educational): El Jardine Hotel, Lingayen, Pangasinan

9. Cagayan Valley: Tuguegarao

328 136 22 Feb 2013 (promotional): Hotel Ivory and Convention Center, Tuguegarao

23 Feb 2013 (educational): Hotel Ivory and Convention Center, Tuguegarao

10. Bicol Region: Naga City

283 161 28 Feb 2013 (promotional): The Avenue Plaza Hotel, Naga City

1 March 2013 (educational): The Avenue Plaza Hotel, Naga City

11. Visayas: Dumaguete 16 12 Mar 12, 2013: Siliman University, Dumaguete City

12. Eastern Visayas: Leyte

300 105 13 Mar 2013 (promotional): Visayas State University, Baybay, Leyte

14 Mar 2013 (educational): Visayas State University, Baybay, Leyte

13. Western Visayas: Bacolod City

260 105 20 Mar 2013 (promotional): L'Fisher Hotel, Bacolod City

21 Mar 2013 (educational): L' Fisher Hotel, Bacolod City

14. Western Visayas: Roxas City

302 97 3 Apr 2013 (promotional): Capiz Mansion, Roxas City

4 Apr 2013 (educational): Capiz Mansion, Roxas City

15. Mindanao: Davao City 34 10 Apr 2013: Royal Mandaya Hotel, Davao City

16. Western Mindanao: Zamboanga

228 82 11 Apr 2013 (promotional): Garden Orchid Hotel, Zamboanga City

12 Apr 2013 (educational): Garden Orchid Hotel, Zamboanga City

17. Eastern Visayas: Ormoc City

292 85 17 Apr 2013 (promotional): Sabin Resort Hotel, Ormoc City

18 Apr 2013 (educational): Sabin Resort Hotel, Ormoc city

18. Central Visayas: Cebu City

220 94 29 April 2013 (promotional): Cebu Grand Hotel, Cebu City

30 April 2013 (educational): Cebu Grand Hotel, Cebu City

19. Southern Mindanao: Davao City

257 108 29 Apr 2013 (promotional): Royal Mandaya Hotel, Davao City

30 Apr 2013 (educational): Royal Mandaya Hotel, Davao City

20. Northern Mindanao: Cagayan De Oro City

140 70 6 May 2013 (promotional): N Hotel, Cagayan de Oro City

7 May 2013 (educational): N Hotel, Cagayan de Oro City

Total Number of Participants

3922 1772 160

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DESIGN AND MONITORING FRAMEWORK Summary of Project Achievements

Design Summary

Performance Targets/ Indicators at Appraisal

Actual Outcome/ Outputs by Completion

Data Sources/ Reporting

Mechanisms Assumptions and Risks

Impact Cost of power generation reduced

By April 2015 Average cost of production by electric cooperatives reduced by 10% from 2008 Electric utility and electric cooperative load factor increased by 10% from 2008

Not yet evaluated Annual report of NEA and electric utilities Load factor data from the electric cooperatives and utilities Project monitoring data from consultants

Assumptions Consumer acceptance of energy efficiency during and beyond the project period ESCO market potential in the public and private sectors Risks Government not enforcing efficiency standards in future Failure of Super ESCO because of poor policy support

Outcome Consumers’ energy cost reduced by use of efficient lighting

By April 2011, Overall peak demand reduced by about 300 MW from 2008 Energy consumption for lighting in selected public buildings reduced by 20% from 2008 30% reduction of electricity use in selected hospitals (from 800,000 kWh per year) through Super ESCO projects from 2005

Partly achieved. Overall

peak demand reduced by about 240 MW.

Achieved but delayed.

Energy consumption for lighting in selected public buildings reduced by 25%

Not achieved. Not met

because Super ESCO subcomponent was cancelled

Progress reports from implementation consultants Program surveys, and monitoring and evaluation reports NEA and electricity utilities’ annual reports Super ESCO annual reports

Assumptions Continued commitment by electricity utilities and rural electric cooperatives to energy efficiency Super ESCO staff’s ability to identify, design, and efficiently implement public sector projects and to lend to viable private projects Risks Distributed CFLs may not replace working incandescent bulbs

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Design Summary

Performance Targets/ Indicators at Appraisal

Actual Outcome/ Outputs by Completion

Data Sources/ Reporting

Mechanisms Assumptions and Risks

Poor selection of public lighting projects Market acceptance of the super ESCO business model Consensus among four fragmented efficient-building groups will continue

Outputs 1. Lighting retrofitted

in selected government buildings

2. 13 million CFLs

distributed to consumers

3. Implementation of

energy-efficient public lighting programs

4. Expansion of

testing laboratory capacity and

Overall energy savings of 7,000 MWh in government buildings by 2010 Overall system peak in the evening reduced and consumption reduced by 534 GWh by April 2011 Peak demand reduction of 0.5 MW in the Cagayan Electric Power and Light Company system and annual saving of P13 million to the city of Cagayan de Oro (local government unit) Recycling plant and testing lab operating by 2010

Achieved but delayed. Overall annual energy savings of 11,190 MWh in government buildings by 2014 Partly achieved. Overall system peak in the evening reduced and consumption reduced by 236 GWh by January 2013 Partly achieved. Peak demand reduction of 0.2 MW in the Cagayan Electric Power and Light Company system and estimated annual saving of P6 million to the city of Cagayan de Oro (local government unit) Achieved but delayed. Lamp-waste plant operating by 2014 and testing lab

Program monitoring and evaluation reports on each retrofitted building NEA and utilities’ annual reports, Energy Regulatory Commission publications Monitoring reports from LGUs Procurement documentation; progress reports from operator Financial and accounting information from Super ESCO

Assumptions DOE will be able to monitor and evaluate benefits CFLs will be distributed to end-customers effectively Risks Inappropriate collection of incandescent bulbs Delay in procurement and leakage in CFL distribution Delay in developing the regulatory framework for lamp waste and energy labeling Delay in project registration by United Nations Framework Convention on Climate Change by March 2009

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Design Summary

Performance Targets/ Indicators at Appraisal

Actual Outcome/ Outputs by Completion

Data Sources/ Reporting

Mechanisms Assumptions and Risks

establishment of a lamp-waste management facility

5. Establishment of

the Super ESCO 6. Certification

system for energy-efficient buildings operating

7. Implementation of

a communication and social mobilization program

At least 6 public sector projects ($3 million) and 15 private projects ($1 million) completed by 2011 Complete system installed and 10 certificates issued by 2011 Population made aware of energy efficiency program by 2010

operating by 2013 Not achieved. ESCO cancelled but building retrofitting increased, which resulted in savings to government buildings of 11,190 MWh/year instead of 7,000 MWh/year by 2013 Achieved but delayed. Complete system installed and 12 certificates issued by 2013; 31 certificates on efficient lighting and beta software developed for the rating system Achieved but delayed. Population made aware of energy efficiency program by 2012

Progress report Program progress reports; outreach survey results

Insufficient number of ESCOs interested in the Super ESCO offers (financing and capacity building) End-consumers lack trust in a government-supported ESCO on grounds of perceived bureaucracy Lack of competent people to implement the Super ESCO business plan Legal and procedural complications slow the needed quick disbursement Program uses effective media and material, and targets the appropriate sections of the population (for example, poor and rural communities for the efficient lighting program)

CFL = compact fluorescent lamp, kWh = kilowatt-hour, MW = megawatt, MWh = megawatt-hour, NEA = National Electrification Administration. Sources: Asian Development Bank; Department of Energy, Government of the Philippines.

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PROJECT COSTS

Table A3.1: Actual Project Cost by Expenditure ($ million)

At Appraisal Actual

Item Foreign

Exchange Local

Currency Total Cost

Foreign Exchange

(%) Foreign

Exchange Local

Currency Total Cost

Foreign Exchange

(%)

A. Base Cost 1. Efficient Lighting Initiative

1.1 Building retrofitting 2.21 0.45 2.66 83 0.00 10.73 10.73 0 1.2 National residential lighting program 6.00 0.16 16.16 99 0.00 13.76 13.76 0 1.3 Public lighting retrofitting 1.12 0.21 1.33 84 0.00 2.10 2.10 0 1.4 EE testing and lamp-waste management 3.19 0.32 3.51 91 5.14 0.02 5.16 100

2. Efficiency Initiatives in Buildings and Industries

2.1 Super ESCO 8.00 - 8.00 100 - - 0.00 2.2 Efficient building initiative 0.16 0.34 0.50 32 0.00 0.48 0.48 0

3. Communication and Social Mobilization

3.1 Communication on efficient lighting 1.50 - 1.50 100 0.00 1.04 1.04 0 3.2 Promoting efficiency in everyday life 1.00 - 1.00 100 0.00 1.00 1.00 0

. 4. Project Implementation Support 1.01 0.50 1.50 67 2.05 0.36 2.41 85

. 5. Taxes and Duties

a - 2.40 2.40 0 - 0.83 0.83 0

. Subtotal 34.18 4.38 38.56

7.19 30.33 37.51

. B. Contingencies/Unallocated 3.17 1.43 4.60 69

C. Financial Charges During Implementation 3.34 - 3.34 100 0.29 0.00 0.29 100

Total (A+B+C)=D 40.69 5.81 46.50 88 7.48 30.33 37.81 20

EE = energy efficiency, ESCO = energy service company. a

Includes additional government counterpart funding to meet the tax requirements of the project, requested by the Department of Energy from the Philippine

Department of Budget and Management on 22 April 2013, amounting to P181,621,075.86. Sources: Asian Development Bank; Department of Energy, Government of the Philippines.

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Table 3.2 Actual Project Cost by Financing Source ($ million)

Item

Original Estimate Actual Project Cost

ADB ACEF GOP Total ADB ACEF GOP Total

A. Base Cost

1. Efficient Lighting Initiative

1.1 Building retrofitting 2.66 - - 2.66 10.73 - - 10.73

1.2 National residential lighting program 5.16 - 11.00 16.16 2.37 - 11.39 13.76

1.3 Public lighting retrofitting 1.33 - - 1.33 2.10 - - 2.10

1.4 Energy efficiency testing and lamp-waste management 3.51 - - 3.51 5.16 - - 5.16

2. Efficiency Initiatives in Buildings and Industries

2.1 Super ESCO 7.50 - 0.50 8.00 - - - 0.00

2.2 Efficient building initiative 0.50 - - 0.50 0.48 - - 0.48

3. Communication and Social Mobilization

3.1 Communication on efficient lighting - 1.50 - 1.50 - 1.04 - 1.04

3.2 Promoting efficiency in everyday life 1.00 - - 1.00 1.00 - - 1.00

4. Project Implementation Support 1.50 - - 1.50 2.41 - - 2.41

5. Taxes and Dutiesa - - 2.40 2.40 - - 0.83 0.83

Sub total 23.16 1.50 13.90 38.56 24.25 1.04 12.22 37.51

B. Contingencies/ Unallocated 4.60 - - 4.60

0.00

C. Financial Charges During Implementationb 3.34 - - 3.34 0.29 - - 0.29

Total (A+B+C)=D 31.10 1.50 13.90 46.50 24.54 1.04 12.22428 37.80

ACEF = Asian Clean Energy Fund, ADB = Asian Development Fund, ESCO = energy service company, GOP = Government of the Philippines. a Actual duties and taxes include additional government counterpart funds to cover the tax requirements of the project, requested by the Department of Energy

from the Philippine Department of Budget and Management on 22 April 2013, amounting to P181,621,075.86. b

Actual financial charges as of 30 June 2014. Sources: Asian Development Bank; Department of Energy, Government of the Philippines.

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CONTRACTS

Table A4.1: List of Contracts for Loan 2507

Contract Number

Name of Contractor

Nature of Contract

PCSS Date

Procurement Mode

Contract Amount

($)

2009 0001 CE Lighting Ltd. (PHI) Goods 16 July 09 ICB 2,212,150 2010 0002 International Institute for energy

Conservation (THA) Consulting 31 Mar 10 QCBS 1,626,151

2011 0003 Various Others 28 Apr 11 Others 1,638 0004 Various Others 28 Apr 11 Others 41,943 0005 Various Others 28 Apr 11 Others 33,029 0006 Fumaco,Inc. (PHI) Goods 31 Aug 11 ICB 1,833,316 0007 Fumaco, Inc. (PHI) Goods 31 Aug 11 ICB 449,636 0008 Dy Infotech (PHI) Goods 23 Dec 11 ICB 524,844 0009 Various (PHI) Others 10 Apr 11 Others 45,384 2012 0010 Centiforce Insrtuments Pte. Ltd. (SIN) Goods 12 May 12 ICB 1,837,838 0011 Electronic Scientific Engineering Ltd.

(HKG, China) Goods 12 May 12 ICB 1,043,406

0012 Rohde and Schwarz Asia Pte.Ltd. (SIN) Goods 12 May 12 ICB 605,727 0013 Alkem Company Private Ltd. EDCR

(SIN) Goods 18 Jun 12 NCB 1,004,745

0014 Electronic Scientific Engineering Ltd. (HKG, China)

Goods 18 Jun 12 ICB 280,758

0015 Trademaster Resources Corporation (PHI)

Goods 18 Jun 12 NCB 149,315

0016 Earnst & Young Specialist Advisory (PHI)

Consulting 5 Aug 12 ICS 300,395

0017 Innogy Solutions Inc. (PHI) Consulting 5 Aug 12 ICB 173,421 0018 Fumaco,Inc. JC Tridonic SEA Pte (PHI) Goods 5 Sep 12 ICB 4,946,741 0019 Fumaco,Inc. JC Tridonic SEA Pte (PHI) Goods 5 Sep 12 ICB 3,952,844 0020 Philippine Green Building Council (PHI) Consulting 27 Oct 12 CQS 482,680 0021 Department of Trade and Industry

(PHI/Govt) Consulting 27 Oct 12 SSS 18,512

0022 Dy Infotech Innovation Corp (PHI) Goods 27 Oct 12 ICB 555,169 0023 MRT System Internationa AB (SWE) Goods 12 Dec 12 ICB 1,370,000 2013 0024 Jorm Environmental Services Inc. (PHI) Others 22 May 13 Shopping 107,717 0025 Cleanway Technology Corporation

(PHI) Others 22 May 13 Shopping 59,108

0026 Philips Electronic & Lighting Inc. (PHI) Goods 4 Jun13 NCB 565,994 0027 FOD Corporation (PHI) Others 13 Sep 13 Direct

Contracting 8,253

0028 First United Travel (PHI) Others 28 Nov 13 Direct Contracting

4,878

0029 Canyon Cove Hotel (PHI) Others 21 Jan14 Direct Contracting

8,523

CQS = cost and quality selection, HKG = Hong Kong, ICB = international competitive bidding, NCB = national competitive bidding, PCSS = procurement contract summary sheet, PHI = Philippines, QCBS = quality-and-cost based selection, THA = Thailand, SIN = Singapore, SSS = single-source selection, SWE = Sweden. a

PCSS creation during payment processing Source: Asian Development Bank.

24 Appendix 4

Table 4.2: List of Contracts for Grant 0142

Contract Number Name of Contractor

Nature of Contract

PCSS Date

Procurement Mode

Contract Amount

($)

G04761 PHD Media Network (PHI) Consulting 21 Jul 10 LCB 209,377 G08890 JWT-WPP Marketing Communications Inc. Consulting 21 Dec 12 LCB 524,583 G08892 Alkem Company JV Edcrisch Consulting 21 Dec 12 LCB 305,121 LCB = local competitive bidding, PHI = Philippines. Source: Asian Development Bank.

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ACTUAL YEARLY DISBURSEMENTS

Table A5.1: Loans Disbursements ($) Category

or Subloan Component 2009 2010 2011 2012 2013 2014 Total

1A Retrofitting government buildings - - 184,659.52 2,298,377.22 8,249,863.28 - 10,732,900.02

1B National residential lighting program 1,995,435.00 221,715.00 - - - - 2,217,150.00

1C Public lighting retrofitting program - - - 815,100.18 714,548.08 565,993.90 2,095,642.16

1D Residential solar lighting systems - - - - - 149,314.94 149,314.94 2A Lamp-waste management facility - - - - 1,233,000.00 137,000.00 1,370,000.00 2B Energy efficiency testing laboratory - - - 56,476.88 3,729,728.06 41.28 3,786,246.22 3

4A Efficient building initiative - - - - 329,003.98 153,676.44 482,680.42

4B Communication campaigns - - - - 982,792.97 21,952.23 1,004,745.20 4C Project implementation support - 149,870.65 232,302.99 362,927.75 1,000,457.47 24,240.73 1,769,799.59 4D EPR development - - - - 78,282.03 395,534.00 473,816.03 4E IB disposal service provider - - - - 166,824.41 - 166,824.41 5 Interest and commitment charges 14,817.46 59,786.62 61,763.82 72,840.38 82,626.38 - 291,834.66

Total 2,010,252.46 431,372.27 478,726.33 3,605,722.41 16,567,126.66 1,447,753.52 24,540,953.65 EPR = extended producer responsibility, IB = incandescent bulb. Source: Asian Development Bank.

Table A5.2: Grant Disbursements ($)

Category or

Subloan Component 2009 2010 2011 2012 2013 2014 Total

4B Communication campaigns - - 209,377.20 - 829,704.44 - 1,039,081.64 Total 209,377.20 - 829,704.44 - 1.039,081.64

Source: Asian Development Bank.

26 Appendix 6

CHRONOLOGY OF EVENTS

Project Processing and Implementation Date Project Event

A. Project Processing

21–25 April 2008 Fact-finding

21–25 July 2008 Appraisal

9–10 Dec 2008 Technical discussions/loan negotiations

29 January 2009 Loan approval

2 March 2009 Loan signing

28 May 2009 Loan effectiveness B. Implementation

6 May 2011 ADB approved award of contract for supply, installation, testing, and commissioning of lighting fixtures with associated lamps, electronic ballasts, and luminaires, and other lighting accessories (retrofitting of 35 government buildings in Metro Manila).

6 May 2011 ADB approved award of contract for the supply, installation, testing, and commissioning of set of lighting fixtures complete with lamps, electronic ballasts, and luminaires, and other lighting accessories (retrofitting of park lights and streetlights in Baguio and Cagayan de Oro).

25 August 2011 ADB approved award of contract for supply, installation, testing, and commissioning of LED traffic, signal, pedestrian lights for traffic light retrofitting at 159 intersections in Metro Manila.

22 October 2011 ADB approved DOE’s request for the change in scope and extension of loan closing period from 31 October 2011 to 30 June 2013.

4 January 2012 ADB approved design, supply, installation, testing, and commissioning of a complete test chamber for energy performance and efficiency testing of refrigerating appliances.

4 January 2012 ADB approved design, supply, installation, testing, and commissioning of a complete power consumption test system for the audio–video test facility.

4 January 2012 ADB approved design, supply, installation, testing, and commissioning of a complete setup for the washing machine testing facility.

4 January 2012 ADB approved the enhancement of calorimeter and other laboratory installations, and supply and delivery of various laboratory equipment and instruments.

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Date Project Event

29 February 2012 ADB approved award of contract for supply, installation, and commissioning of LED solar home systems in off-grid households.

22 March 2012 ADB approved award of contract for the production and distribution of educational modules and metacharts.

17 May 2012 ADB approved award of contract for the supply and installation (production and distribution) of educational modules and metacharts.

25 June 2012 ADB approved awarding of contract for supply, installation, testing, and commissioning of lamp-waste management facility.

17 July 2012 ADB approved award of contract for creative design, production, and placements of television, radio, and print commercials or advertisement, including TV and radio interviews with guests.

24 July 2012 ADB approved award of contract for supply, installation, testing, and commissioning of lighting fixtures complete with lamps, electronic ballasts, and luminaires, and other lighting accessories (retrofitting of 100 government buildings in NCR and Mindanao).

25 July 2012 ADB approved award of contract for supply, installation, testing, and commissioning of LED lighting (retrofitting of 1,484 streetlights in Metro Manila).

18 September 2012 ADB approved award of contract for supply, installation, testing, and commissioning of LED traffic, signal, pedestrian lights (traffic light retrofitting at 88 intersections in Metro Manila).

29 November 2012 ADB approved award of contract for transport, storage, treatment, and disposal of collected incandescent bulbs (lot 2) in Metro Manila, CALABARZON, and Bulacan.

14 January 2013 ADB approved award of contract for retrofitting roadway lighting.

27 February 2013 ADB approved award of contract for transport, storage, treatment, and disposal of collected incandescent bulbs (lot 1) in Mindanao and Cebu City.

11 October 2013 ADB approved DOE’s request for a second extension of the loan closing date to December 2013.

28 November 2013 Date of loan reallocation

31 December 2013 Physical completion date

8 May 2014 Loan closing date

27 February–12 March 2015 Project completion review mission ADB = Asian Development Bank; CALABARZON = Cavity, Laguna, Batangas, Rizal, Quezon; DOE = Department of Energy; LED = light-emitting diode; NCR = National Capital Region. Source: Asian Development Bank.

28 Appendix 7

ACTUAL PROJECT IMPLEMENTATION

Component

Building Retrofit

Original: 35

Revised: 35

Expansion: 100

CFL Distribution Lot 1: 5 million

Original

Revised

CFL Distribution Lot 2: 5 million

Original

Revised

Public Lighting

Orignal

Revised

Expansion

Energy Efficiency Testing Facility

Original

Revised

Lamp Waste Management

Original

Revised

EPR Development and Implementation

Green Buidling Initiative

Original

Revised

Communication and Social Mobilization

Communication for Efficient Lighting

Promoting Efficiency in Everyday Life

2009 2010 2011 2012 2013

CFL = compact fluorescent lamp, EPR = extended producer responsibility

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STATUS OF COMPLIANCE WITH LOAN AND GRANT COVENANTS

Loan Covenants

Covenant Reference in Loan

Agreement Status of

Compliance

The Borrower shall relend under a Subsidiary Loan Agreement part of the proceeds of the Loan not exceeding $ 7,500,000 on the same terms and conditions as are applicable to the borrower plus additional charges required under the local laws and regulations, together with other funds that may be required, to the Super ESCO that shall be established by the Borrower in accordance with the relevant laws and regulations of the Borrower. The Borrower shall make available promptly as needed, the funds, facilities, services and other resources which are required, in addition to the proceeds of the Loan, for carrying out the Project and for the operation and maintenance of the Project facilities In carrying out the Project, the Borrower shall cause competent and qualified consultants contractors, acceptable to ADB, to be employed to an extent and upon terms and conditions satisfactory to the Borrower and ADB The Borrower shall cause the Project to be carried out in accordance with plans, design standards, specifications, work schedules and construction methods acceptable to ADB. The Borrower shall furnish, or cause to be furnished, to ADB, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request. The Borrower shall (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied by independent auditors whose qualifications, experiences and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than six (6) months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the

Article III Section 3.01 (b) Article IV 4.02 Article IV 4.03 (a) Article IV 4.03 (b) Article IV 4.05 (a)

Not complied with since Super ESCO component was cancelled. Generally complied with. It was noted that when the original provision for taxes was not enough, EA requested for additional budget of P181,621,075.86 from the Philippine Department of Budget and Management. Complied with based on documentation of the bidding procedures. Complied with based on documents submitted regarding revisions in Project Scope. Complied with based on copies of auditor’s report.

30 Appendix 8

Covenant

Reference in Loan Agreement

Status of Compliance

auditors’ opinion on the use of the Loan Proceeds and compliance with financial covenants of this Loan Agreement as well as on the use of the procedures for imprest account/ statement of expenditures), all in the English language; (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request. The Borrower shall enable ADB, upon ADB’s request, to discuss the Borrower’s financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by the Borrower pursuant to Section 4.05(a) hereabove, and shall make necessary arrangements for any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree. The Borrower shall enable ADB’s representative to inspect the Project, the Goods and Works financed out of the Proceeds of the Loan and any relevant records and documents The scope of the project comprises Part A: Efficient Lighting Initiative Part B: Efficiency Initiatives in Buildings and Industries Part C: Communication and Social Mobilization Part D: Project Implementation Support Except as ADB may otherwise agree, the items of the Categories and subcategories listed in the Table shall be financed out of the proceeds of the Loan on the basis of the percentages set forth in the Table ADB shall be entitled to withdraw from the Loan Account and pay to itself, on behalf of the Borrower, the amounts required to meet the payments when due of such interest and commitment charges. The Borrower shall establish immediately after the Effective Date two imprest accounts at Bangko Sentral ng Pilipinas

Article IV 4.05 (b) Article IV 4.06 Schedule 1 Schedule 3 Section 2 Schedule 3 Section 3 Schedule 3 Section 6a

Can be considered as complied with. There was no incident that Borrower did not enable ADB to discuss with the auditor upon ADB’s request. Complied with ADB was allowed to inspect the Goods and Works financed by the Loan and relevant records and documents. Data were provided upon request. Complied with, except for Part B on the establishment of the Super ESCO. Complied with. Revisions on the table were made but with approval from ADB. Complied with. One imprest fund was established. The 2

nd imprest

fund was not

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Covenant

Reference in Loan Agreement

Status of Compliance

Any individual payment to be reimbursed, replenished or liquidated under the SOE procedure shall not exceed the equivalent of $ 100,000 Withdrawals from the Loan Account maybe made for reimbursement of reasonable expenditures incurred under the Project before the Effective Date, but not earlier than 1 August 2008 in connection with the procurement of an initial supply for CFLs subject to a maximum amount equivalent to 10% of the Loan amount. All Goods, Works and consulting services to be financed out of the proceeds of the Loan and Grant shall be subject to and governed by the Procurement Guidelines and the Consulting Guidelines, respectively Except as ADB may otherwise agree, Goods and Works shall only be procured on the basis of the methods of procurement as set forth below: International Competitive Bidding National Competitive Bidding Shopping The Borrower shall ensure that all Goods and Works procured including without limitation all computer hardware, software and systems, whether separately procured or incorporated within other goods and services procured do not violate or infringe any industrial property or intellectual property right or claim of any third party. The Borrower shall ensure that all contracts for the procurement of Goods and Works contain appropriate representations, warranties and if appropriate indemnities from the contractor or supplier with respect to the matters referred to in subparagraph (a) of this paragraph

Schedule 3 Section 6b Schedule 3 Section 7 Schedule 4 Schedule 4 Section B3 Schedule 4 Section D 8 (a) and (b)

established since the Super ESCO was cancelled. Complied with. All payments above $ 100,000 were directly disbursed to the supplier/ contractor by ADB Complied with. Complied with. All procurement for goods, works and consulting services financed from the Loan and Grant were subjected to and governed by ADB Procurement Guidelines and Consulting Guidelines and used the ADB contract template Complied with based on bidding documents. Complied with. DOE had a technical sub- committee within its Bids and Awards

Committee that made sure this aspect was considered. Contracts for Goods and Works as well as contracts

32 Appendix 8

Covenant

Reference in Loan Agreement

Status of Compliance

The Borrower shall ensure that all ADB-financed contracts with consultants contain appropriate representations, warranties and if appropriate, indemnities form the consultants to ensure that the consulting services provided do not violate or infringe and industrial property or intellectual right or claim of any third party. Except as ADB shall otherwise agree all contracts shall be subject to prior review by ADB, regardless of contract value. As the Project Executing Agency, DOE shall be responsible for overall technical supervision and execution of the Project. The IA shall be responsible for implementation of the following Parts of the Project:

(a) DOE for Part A (i), (ii) as they relate to private utilities (iii) and (iv), Part B (ii), Part C, and Part D.

(b) NEA for Part A (ii) except in the franchise areas of the private utilities

(c) The Super ESCO, once established in accordance with the terms of this Loan Agreement, for Part B (i)

Within three (3) months after the Effective Date, the Borrower through the Project Executing Agency shall establish a PSC to be chaired by the Secretary of DOE or a designated DOE representative, which shall be responsible for the overall policy guidance. The PSC shall meet at least on a quarterly basis to ensure that the objectives of the Project are being achieved. The Borrower shall ensure that the PMU is headed by a Project Director acceptable to ADB and is appropriately staffed for day to day coordination throughout the Project Implementation period.

Schedule 4 Section E9 Schedule 4 Section E10 Schedule 5 para 1 Schedule 5 para 2 Schedule 5 para 3

with consultants were reviewed by PMU as a group, then by DOE legal group. All contracts were also submitted to ADB for approval prior to finalization. Complied with. DOE had a technical sub- committee within its Bids and Awards Committee that made sure this aspect was considered (a) Was complied with. (b) DOE served practically as the IA also but consultations with NEA were done as the need arises. (c) Was not complied with since the Super ESCO was cancelled. Project PMU held regular consultations with the Secretary of DOE for the overall policy guidelines PMU was headed by an Undersecretary who served as Project Director for PEEP. PMU members consisted of key officers and staff of DOE coming from the director and/ or assistant director

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Covenant

Reference in Loan Agreement

Status of Compliance

Counterpart Funding Without limiting the generality of Section 4.02 of the Loan Agreement, the Borrower shall ensure that adequate funds are made available to the Project, throughout the Project Implementation period, when required and in the amounts called for to enable the Project Executing Agency and the IA to discharge their responsibilities under the Project effectively, and to cover shortfall of funds to ensure timely compliance of the Project. Within 12 months after the Effective Date, the Borrower shall cause the Super ESCO to (a) appoint a chief executive officer under a performance based contract, key technical staff, and 7 Board members, at least 2 of which shall come from the energy industry, and (b) undergo a financial management system assessment in a manner satisfactory to ADB and obtain a satisfactory rating The Borrower shall, and shall cause the Project Executing Agency and the IAs to (a) undertake necessary measures to create and sustain a corruption free environment for activities under the Project; (b) comply with ADB’s Anticorruption Policy and (c) where appropriate, ensure that relevant provisions of ADB’s Anticorruption Policy (1998, as amended to date) are included in all bidding documents for the Project. Without limiting the generality of the preceding paragraph, the Borrower shall (a) ensure that the Project Executing Agency conducts periodic inspections on the suppliers’, contractors’ and consultants’ activities related to Loan and Grant proceeds, fund withdrawals and settlements; and (b) ensure, and cause the Project Executing Agency to ensure, that all contracts financed by ADB in connection with the Project include provisions specifying the right of ADB to audit and examine the records and accounts of the Project Executing Agency and all suppliers, contractors, consultants and other service providers as they relate to the Project In addition to the above requirements, to ensure transparency and good governance, the Borrower shall cause the Project Executing Agency to publicly disclose in its website and in the PhilGEPS, the information on the utilization of the Loan proceeds in particular: (a) the list of participating bidders; (b) name of the winning bidder. (c) basic details on bidding procedures adopted; (d) amount of the contract awarded; (e) list of goods and services purchased; and (f) intended and actual utilization of loan proceeds under each contract being awarded. The Borrower shall cause the Project Executing Agency to ensure all Project staff are fully aware of ADB’s procedures, including, but not limited to, procedures for (a) implementation; (b) procurement; (c) use of consultants; (d)

Schedule 5 Para 4 Schedule 5 Para 5 Schedule 5 Para 6 Schedule 5 Para 7 Schedule 5 Para 8

level. Complied with. Not complied with since Super ESCO component was cancelled. Complied with. Complied with. Complied with.

34 Appendix 8

Covenant

Reference in Loan Agreement

Status of Compliance

disbursement; (e) reporting; (f) monitoring; and (g) prevention of fraud and corruption Distribution of CFLs- The Borrower shall cause the Project Executing Agency and the NEA to closely monitor distribution of CFLS to the residential and small commercial customers under the NRLP. For that purpose, the Borrower shall cause (a) execution of implementation agreements between (i) the NEA and the ECs, with terms and conditions satisfactory to ADB, for effective implementation and monitoring of the CFL distribution, and (ii) the DOE and the private utilities, with terms and conditions satisfactory to ADB, for effective implementation and monitoring of the CFL Distribution, and (b) where possible, the execution of memorandum of agreements between the ECs and qualified non-governmental organizations that are acceptable to ADB, with terms and conditions that are similar to the implementation agreements mentioned in this paragraph The Borrower though DOE, shall ensure that the Project facilities, especially those to pertaining to Par A (iv) of the Project, are designed, constructed, operated and maintained in compliance with applicable environmental laws and regulations of the Borrower and ADB’s environmental permits and clearances for the lamp waste management facility Part A (iv) of the Project, prior to its operations. The Borrower shall ensure that progress monitoring, safeguard monitoring and benefit monitoring and evaluation shall be carried out during Project Implementation by the Project Executing Agency and the IAs in a manner acceptable to ADB. Post evaluation shall be carried out 3 years after Project Completion. A Project Performance Management System shall be developed on the basis of the Project design and monitoring framework to examine the Project’s technical performance, evaluate delivery of Project facilities, assess achievement of Project objectives and measure the Project’s social, economic, financial and institutional impacts. Baseline and periodic surveys shall be carried out to collect data disaggregated by income group, gender, types of vulnerability and other characteristics as appropriate. In addition, the Borrower shall cause the PMU to prepare quarterly progress reports and to submit to ADB within 20 days after the end of the applicable period. The reports shall be prepared in a format acceptable to ADB and shall include among others, the following: (a) Project progress report in each Project area; (b) the status of institutional development activities c) delays and problems encountered and actions taken to resolve them (d) compliance with this Loan Agreement; and (e) expected progress during the next 6

Schedule 5 Para 9 Schedule 5 Para 10 Schedule 5 Para 11 Schedule 5 Para 12

Complied with. Complied with. Complied with. For compliance by 2017. Partially complied with. Quarterly progress reports were regularly prepared by Project Implementation Support for submission to IA. IA prepared separate reports

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Covenant

Reference in Loan Agreement

Status of Compliance

months following the submission of the progress report. The Borrower shall, jointly with ADB, conduct reviews of the Project at least twice a year. The semi-annual reviews shall assess the implementation performance and achievement of Project outcomes and objectives, review the financial progress, identify issues and constraints affecting the Project, and work out a time bound action plan for their resolution

Schedule 5 Para 13

and submitted to ADB.

Grant Covenants

Covenant

Reference in Grant Agreement

Status of Compliance

The recipient shall (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied by independent auditors whose qualifications, experiences and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than six (6) months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors’ opinion on the use of the Loan Proceeds and compliance with financial covenants of this Loan Agreement as well as on the use of the procedures for imprest account/ statement of expenditures), all in the English language; (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request. The Recipient shall enable ADB, upon ADB’s request, to discuss the Recipient’s financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by the Recipient pursuant to Section 4.05(a) hereabove, and shall make necessary arrangements for any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Recipient unless the Recipient shall otherwise agree The Recipient shall enable ADB’s representative to inspect the Project, the Goods and Works financed out of the Proceeds of the Grant and any relevant records and documents

Article IV 4.02 (a) Article IV 4.02 (b) Article IV 4.03

Complied with based on copies of auditor’s report. Can be considered as complied with. There was no incident that Recipient did not enable ADB to discuss with the auditor upon ADB’s request. Complied with. ADB was allowed to inspect the .Goods and Works financed by the grant and relevant records and documents. Data were provided upon request.

36 Appendix 8

As the Project Executing Agency, DOE shall be responsible for overall technical supervision and execution of the Project. The IA shall be responsible for implementation of the following Parts of the Project: a) DOE for Part A (i), (ii) as they relate to private utilities (iii)

and (iv), Part B (ii), Part C, and Part D. b) NEA for Part A (ii) except in the franchise areas of the

private utilities c) The Super ESCO, once established in accordance with

the terms of this Grant Agreement, for Part B (i) Within three (3) months after the Effective Date, the Borrower through the Project Executing Agency shall establish a PSC to be chaired by the Secretary of DOE or a designated DOE representative, which shall be responsible for the overall policy guidance. The PSC shall meet at least on a quarterly basis to ensure that the objectives of the Project are being achieved

Schedule 4 para 1 Schedule 4 para 2

a) Was complied

with. As for b) DOE served

practically as the IA also but consultations with NEA were done as the need arises.

c) Was not complied with since the Super ESCO was cancelled.

Complied with. Project PMU held regular consultations with the Secretary of DOE for the overall policy guidelines Complied with. PMU was headed by an Undersecretary who served as Project Director for PEEP. PMU members consisted of key officers and staff of DOE coming from the director/ assistant director level. PMU meetings were held weekly on a regular basis. Additional special meetings were held on a case to case basis.

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FINANCIAL ANAYLYSIS

DETAILS OF THE FINANCIAL ANALYSIS PER COMPONENT WITH DIRECT SAVINGS EXPECTED

Item Unit

CFL Lot 1

(5 million)

CFL Lot 2

(3.6 million)

Total CFL

Lot 1 and Lot 2

(8.6 million)

Retrofitting of 35

Government

Buildingsª

Retrofitting of

100

Government

Buildings

Retrofitting of 15

Government

Buildings

Total

Retrofitting of

150

Government

Buildings Subtotal A

Project Cost P 291,255,682.65 297,468,000.00 588,723,682.65 87,318,838.24 386,001,764.96 43,622,408.48 516,943,011.68 1,105,666,694.33

Energy Savings kW 175,000.00 64,800.00 239,800.00 645.63 2487.65 234.10 3,367.38 243,167.38

kWh/day 612,500.00 226,800.00 839,300.00 5,868.78 30,472.11 2,611.63 38,952.52 878,252.52

kWh/year 223,562,500.00 82,782,000.00 306,344,500.00 1,408,506.41 9,034,411.48 747,633.59 11,190,551.48 317,535,051.48

MWh/year 223,562.50 82,782.00 306,344.50 1,408.51 9,034.41 747.63 11,190.55 317,535.05

GWh/year 223.56 82.78 306.34 1.41 9.03 0.75 11.19 317.53

P/year 2,235,625,000.00 827,820,000.00 3,063,445,000.00 14,085,064.08 90,344,114.85 7,476,335.92 111,905,514.85 3,175,350,514.85

Simple Payback year 0.13 0.36 0.19 6.20 4.27 5.83 4.62 0.35

GHG Reduction kgCO2/year 120,723,750.00 44,702,280.00 165,426,030.00 760,593.46 4,878,582.20 403,722.14 6,042,897.80 171,468,927.80

GHG Reduction tCO2/year 120,723.75 44,702.28 165,426.03 760.59 4,878.58 403.72 6,042.89 171,468.92 a

Completion report/case study submitted. CFL = compact fluorescent lamp, CO2 = carbon dioxide, GHG = greenhouse gas, GWh = gigawatt-hour, kg = kilogram, kWh = kilowatt, kWh = kilowatt-hour, MWh = megawatt-hour, P = Philippine peso, tCO2 = total carbon dioxide. Source: International Institute for Energy Conservation.

Item Unit

Public Lighting

Baguio Cityª

Public Lighting

and LED Traffic

Signal Lights in

Cagayan De Oro

Cityª

1,484 MMDA

Streetlight within

Metro Manila

Public Lighting

159 Intersectionsª

Public Lighting

88 Intersectionsª

Public Lighting

14 Intersectionsª

Total 261

Intersections

Total Public

Lighting

(Subtotal B)

Project Cost P 3,695,346.37 17,797,021.76 26,083,101.22 24,692,532.76 22,952,491.64 3,511,654.93 51,156,679.33 98,732,148.68

Energy Savings kW 61.94 182.26 192.92 171.76 88.40 14.95 275.11 712.23

kWh/day 696.26 2,115.67 2,239.42 4,016.30 2,066.48 342.99 6,425.77 11,477.12

kWh/year 254,134.90 772,219.55 817,386.61 1,465,949.50 754,265.17 125,192.63 2,345,407.30 4,189,148.36

MWh/year 254.13 772.22 817.39 1,465.95 754.27 125.19 2,345.41 4,189.15

GWh/year 0.25 0.77 0.82 1.47 0.75 0.13 2.35 4.19

P/year 2,541,349.00 6,154,151.97 8,173,866.06 14,659,495.00 7,542,651.71 1,251,926.35 23,454,073.06 40,323,440.09

Simple Payback year 1.45 2.89 3.19 1.68 3.04 2.81 2.18 2.45

GHG Reduction kgCO2/year 137,232.85 416,998.56 441,388.77 791,612.73 407,303.19 67,604.02 1,266,519.94 2,262,140.11

GHG Reduction tCO2/year 137.23 417.00 441.39 791.61 407.30 67.30 1,266.21 2,261.83 a

Completion report/case study submitted. CO2 = carbon dioxide, GHG = greenhouse gas, GWh = gigawatt-hour, kg = kilogram, kW = kilowatt, kWh = kilowatt-hour, LED = light-emitting diode, MMDA = Metropolitan Manila Development Authority, MWh = megawatt-hour, P = Philippine peso, tCO2 = total carbon dioxide. Source: International Institute for Energy Conservation.

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Item Unit Off-grid

Incandescent

Bulb Disposal Green Building Test Facilities

Lamp Waste

Facility EPR

CEEL and

PEEL IIEC Subtotal C

Grand Total

(A+B+C)

Project Cost P 6,846,816.65 8,256,398.00 25,197,073.00 191,934,944.00 61,650,000.00 18,003,348.00 116,449,250.00 67,441,793.00 495,779,622.65 1,700,178,465.66

Energy Savings kW - - - - - - - - 243,879.61

kWh/day 73.32 - - - - - - - 73.32 889,802.95

kWh/year 26,762.61 - - - - - - - 26,762.61 321,750,962.44

MWh/year 26.76 - - - - - - - 26.76 321,750.96

GWh/year 0.03 - - - - - - - 0.03 321.75

P/year 535,200.00 - - - - - - - 535,200.00 3,216,209,154.94

Simple Payback year 12.79 - - - - - - - - 0.53

GHG Reduction kgCO2/year 14,451.81 - - - - - - - 14,451.81 173,745,519.72

GHG Reduction tCO2/year 14.45 - - - - - - - 14.45 173,745.21 CEEL = communication on efficient lighting, CO2 = carbon dioxide, EPR = extended producer responsibility, GHG = greenhouse gas, GWh = gigawatt-hour, kg = kilogram, kW = kilowatt, kWh = kilowatt-hour, LED = light-emitting diode, MWh = megawatt-hour, P = Philippine peso, PEEL = promoting efficiency in everyday life, tCO2 = total carbon dioxide. Source: International Institute for Energy Conservation.

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ECONOMIC ANALYSIS

DETAILS OF THE PROJECT ECONOMIC ANALYSIS Economic Internal Rate of Return and Net Present Value Computation

Item 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Investment costs ($ million) (4.84) (1.78) (7.97) (4.55) (16.60) (1.77) - - - - - -

Energy savings from the project

(gigawatt-hour) - - 134.22 226.74 316.39 321.97 321.97 321.97 321.97 321.97 321.97 321.97

Energy costs (Peso/kilowatt-hour) - 2.37 2.37 2.37 2.37 2.37 2.37 2.37 2.37 2.37 2.37 2.37

Minimum energy cost savings - - 7.07 11.94 16.66 16.96 16.96 16.96 16.96 16.96 16.96 16.96

Minimum net benefit ($million) (4.84) (1.78) (0.90) 7.39 0.07 15.18 16.96 16.96 16.96 16.96 16.96 16.96

Energy costs (Peso/kilowatt-hour) - 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00

Average energy cost savings - - 14.91 25.19 35.15 35.77 35.77 35.77 35.77 35.77 35.77 35.77

Average net benefit ($million) (4.84) (1.78) 6.94 20.64 18.56 34.00 35.77 35.77 35.77 35.77 35.77 35.77

Energy costs (Peso/kilowatt-hour) - 7.06 7.06 7.06 7.06 7.06 7.06 7.06 7.06 7.06 7.06 7.06

Maximum energy cost savings - - 21.06 35.57 49.64 50.51 50.51 50.51 50.51 50.51 50.51 50.51

Maximum net benefit ($million) (4.84) (1.78) 13.09 31.02 33.04 48.74 50.51 50.51 50.51 50.51 50.51 50.51 Source: Asian Development Bank

Economic Internal Rate of Return

(%) Net Present Value

($ million)

Minimum 57 41.4

Average 117 114.6

Maximum 153 172.0

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ANNUAL SAVINGS GENERATED Item 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Savings from CFL Distribution (GWh)

From CFL Distribution

Savings from 3 million CFL - 134.14 134.14 134.14 134.14 134.14 134.14 134.14 134.14 134.14 134.14

Savings from 0.7 million CFL - - 31.30 31.30 31.30 31.30 31.30 31.30 31.30 31.30 31.30

Savings from 1.3 million CFL - - 58.13 58.13 58.13 58.13 58.13 58.13 58.13 58.13 58.13

Savings from 3.6 million CFL - - - 82.78 82.78 82.78 82.78 82.78 82.78 82.78 82.78

Total from CFL Distribution - 134.14 223.56 306.34 306.34 306.34 306.34 306.34 306.34 306.34 306.34

Savings from Building Retrofitting (GWh)

35 Government Buildings - - 1.17 1.41 1.41 1.41 1.41 1.41 1.41 1.41 1.41

115 Government Buildings - - 4.89 9.78 9.78 9.78 9.78 9.78 9.78 9.78

Total from Building Retrofitting - - 1.17 6.30 11.19 11.19 11.19 11.19 11.19 11.19 11.19

Savings from Energy Efficiency Public Lighting

Baguio City Public Lighting - 0.02 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25

Cagayan de Oro Public Lighting - 0.06 0.77 0.77 0.77 0.77 0.77 0.77 0.77 0.77 0.77

159 Traffic Intersections - - 0.98 1.47 1.47 1.47 1.47 1.47 1.47 1.47 1.47

102 Traffic Intersections - - - 0.85 1.13 1.13 1.13 1.13 1.13 1.13 1.13

1484 Street Lights in Metro Manila - - - 0.41 0.82 0.82 0.82 0.82 0.82 0.82 0.82

Total from Public Lighting Retrofit - 0.09 2.00 3.75 4.44 4.44 4.44 4.44 4.44 4.44 4.44

Total Savings (GWh/year) - 134.22 226.74 316.39 321.97 321.97 321.97 321.97 321.97 321.97 321.97 CFL = compact fluorescent lamp, GWh = gigawatt-hour. Source: Asian Development Bank.

Appendix 11 41

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DETAILS OF THE OVERALL ASSESSMENT RATING

Criterion*

Weight

(%) Definition

Rating

Description

Rating

Value

1. Relevance 16.67 Relevance is the consistency of a project’s impact and outcome with the government’s and Asian Development Bank’s strategies, at the time of approval and completion, as well as the adequacy of the project design.

Relevant

2

2. Effectiveness 16.67

Effectiveness describes the extent to

which the outcomes and outputs, as

specified in the design and monitoring

framework, either as agreed at approval

or as subsequently modified, have been

achieved.

Effective

2

3. Efficiency 16.67

Efficiency describes, ex post, how

economic resources have been

converted to results (outputs and

estimated benefits), primarily using

cost–benefit analysis such as economic

internal rate of return.

Efficient

2

4. Sustainability 16.67

Sustainability considers the likelihood

that human, institutional, financial, and

other resource and procedures are

sufficient to maintain the planned

outputs and outcomes over the project’s

economic life, taking into account likely

risks and mitigation arrangements.

Likely

2

5. Institutional

Development

16.67 Institutional development is rated

separately from impact (below) only for

programs. Rating encompasses

contribution of a program to

improvements in the governance of

public institutions, institutional ability to

produce better results (effectiveness),

and in organizational resource-use

efficiency.

Significant

2

6. Impact 16.67 Impact is rated for all projects and

programs. However, it is a part of the

core criteria

Significant

2

Overall Assessment

(weighted average of

above criteria)

Successful: Overall weighted average equals 2.0