afghanistan reconstruction trust fund kabul-aybak-mazar-e...

Afghanistan Reconstruction Trust FundKabul-Aybak-Mazar-e Sharif Power Project Proposal

(September 26, 2007)

Applicant: Ministry of Energy and Water (MEW)Brief Description: The project would support investments to:

i) strengthen the low voltage (LV) distribution network through rehabilitation/upgrading of old and dilapidated infrastructure in parts of the capital city of Kabul with the aim of improving the reliability and quality of electricity supply and services in the target areas, as well as accountability of power utility;

ii) construct a 220/20 kV substation and associated 20 kV lines at Aybak to provide quality, reliable and clean grid power to the residents of Aybak town; and

iii) rehabilitate and augment the transmission facilities, medium and low voltage distribution network in Mazar-e-Sharif.

In addition, the project would support institutional capacity building for operation and maintenance of the distribution systems; the establishment, operation and hand-over to DABM (S) of a customer care center in the target area, project management support for Aybak power system investments, etc.

Project Development Objective:

The development objective of the project is to help provide reliable and quality power to the consumers in the target areas of the cities of Kabul, Aybak, and Mazar-e-Sharif. The project would also support investments to build metering infrastructure to improve the utility’s accountability and commercial management practices in these areas.

Performance Indicators

a) Increase in power supply to project areas in Kabul (in MWh).b) Grid power access to consumers in Aybak (% of electrified

consumers).c) Increase power supply to customers in Mazar-e-Sharif (in MWh)

Sector: Infrastructure and Natural Resources, Power Sector Location: Kabul City, Aybak town, and Mazar-e-Sharif city.Total Project Cost: The funds requirement for the complete rehabilitation of the distribution

system and provision of power to all the potential consumers in the city of Kabul and Aybak is very large. The estimated cost to cover complete power distribution system of the Kabul City is estimated to be about US$ 275 million; for Aybak City US$ 15 million, including the 220 kV substation; and for Mazar-e-Sharif about US$ 35 million.

Amount Requested for ARTF MC Approval

The proposed ARTF project estimated to cost $ 57 million would target only part of the population in each city and would be treated as the first phase of a larger distribution project.

Implementing AgencyMinistry of Energy and Water (MEW)

ARTF Proposal: Kabul-Aybak-Mazar-e-Sharif Power System

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Implementing Period:

The project duration is estimated to be 35 months (by June, 2010). The actual project duration would be longer to complete the support activities for operation, maintenance and training after completion of investments. The implementation period of the project would be extended, when the ARTF closing date is extended, to include completion of these activities.

Implementation Arrangements

The project will be implemented by the Ministry of Energy and Water. Existing implementation arrangements which have been satisfactory to IDA will be used. More detail can be found in the document.

Contact for further information

Eng. Mir Sediq, Deputy Minister of Energy, Ministry of Energy and Water, [email protected]; Eng. Zia Gul Saljuki, Director General Planning, Ministry of Energy and Water, [email protected] Kumar Khosla, Senior Energy Specialist, The World Bank, [email protected]

Reviewed and Cleared by the Administrator

Loan Department; Legal Department; Country Management and Sector Management Units

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mailto:[email protected]






Table of Contents

I. STRATEGIC CONTEXT AND RATIONALE.............................................. 4

A. ............................................................................Key Development Issues 4

B. ................................................................Rationale for ARTF Involvement 5

II. PROJECT DESCRIPTION ............................................................................ 6

A. ..................................................................Project Development Objectives 6

B. .....................................................................................Project Components 7

C. ........................................................................Project Cost by Components 8

D. ..................................................................Relationship to Other Programs 8

III.IMPLEMENTATION ............................................................................................. 9

A. ...........................................................................Institutional Arrangements 9

B. .................................................................................................Procurement 9

C. Financial Management............................................................................... 10

D. ..........................................................................Monitoring and Reporting 11

E. .............................................................................Sustainability and Risks 12

F. ...........................................SOCIAL AND ENVIRONMENTAL ISSUES 14

IV. Annex 1 ............................................................................Sector Background 16

V. Annex 2 ............................................................Detailed Project Description 18

VI. Annex 3 .............Project Cost by Component for ARTF Proposed Funding 23

VII. Annex 4 .........................................................Implementation Arrangements 24

VIII. Annex 5 ............................................................................Procurement Plan 27

IX. Annex 6 Summary of the Donor Engagement in the Power Sector

................................................................................in Afghanistan 30

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I. STRATEGIC CONTEXT AND RATIONALE

A. Key Development Issues

1. The poor condition of Afghanistan’s power sector is severely constraining the development of the country. The prevailing service consists of only a few hours of supply a day to a small percentage of population which has access to the power grid. The situation worsens in winter, when the generation from hydropower resources drops due to reduced inflow of water. There is a huge demand-supply gap in several areas1 in Afghanistan, especially in larger towns and cities, including the capital city of Kabul which has grown to be a mega city with rapid growth in population- currently over 3 million people. Mazar-e Sharif is the second largest city in terms of population, and its power distribution networks are in poor condition. Lack of power supply is a major impediment to private sector development and has a negative impact on the credibility of the Government’s infrastructure delivery program. Providing reliable and better quality power is critical for the country’s development goals of poverty alleviation and economic growth.

2.While several projects to rehabilitate and expand the country’s generation resources and transmission facilities are in progress, commensurate investments for distribution systems have not been forthcoming. This is likely to result in a continuation of sub-standard electricity supply, even for areas where investments in generation and transmission have been ongoing. This is particularly important for poor households that may not get access to grid power supply and remain with more expensive alternatives. Large proportion of existing consumers have switched fully or partially to electricity from stand-alone diesel generators which, in addition to being substantially more expensive (and therefore undermine Afghanistan’s competitiveness, investment climate, economic growth and job creation), are a source of local and global pollution.

3. Improvement of distribution systems in major cities/towns of Afghanistan requires large investments. The proposed project is the first phase of a program to roll-out improved services across the entire cities of Kabul and Mazar -e- Sharif and to other urban areas in Afghanistan. Subsequent phases will benefit from the experience of the first phase and would start once additional funding becomes available and more bulk power supply is secured.

4. Consumers, even those ready to pay fair prices for electricity, find the electricity utility (DABM) difficult to deal with in solving their power supply problems. The power supply hours/ load shedding timings are uncertain, quality of power is poor, and there are no consumer care centres. The consumers would like the electricity utility to be more responsive to their needs and the Government would like DABM to become more commercially oriented.

5. The need for investments in the power sector is very large. While only limited Donor funds are available for the sector, the Government of Afghanistan needs to place a very high priority on improving the availability and quality of power supply, with taking into account regional dimensions. It will be critical that the investments are packaged to complete the supply link from generation source to the ultimate consumers, for the benefits of these investments to be fully realized.

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1 Situation is slightly better in the boarder towns like Herat and Kunduz, which receive imported power from the neighboring countries (Turkmenistan, Iran and Tajikistan),

6. The distribution and sub-transmission loss levels are very high, above 30%; billing and metering system is inadequate and the current collection levels are low. The problem is more significant for Kabul, which caters to one third of the total consumer base of DABM has very high cost of generation and lowest tariffs in Afghanistan. The governance and commercial management aspects of the utility DABM (S) would also need to be strengthened for the sustainability of these investments as well as building a sound commercial relation between the consumers and the Utility. Financial sustainability of DABM is high on the agenda of Donors and Government of Afghanistan, but would need some more concerted efforts to bring results sooner on the ground. The situation will become more critical, once commercial agreements for import of power are in place and part of future investments are required to be refinanced by the utility.

B. Rationale for ARTF Involvement

7. The Government has requested the ARTF support for the proposed project because of the critical need to rehabilitate electricity distribution systems of large urban centers, in particular those which are close to the North East Power System (NEPS), a new transmission system under construction linking the Central Asian countries to Kabul and in future extending to southern parts of Afghanistan. IDA and several donors (i.e. USAID, ADB, KfW, the Government of India, etc.) are actively supporting the power development program of the Government of Afghanistan. Some of the key areas where progress has been achieved are:

• Rehabilitation of major generating stations at Naghlu (100MW), Mahipar (44 MW), and Sorobi (22 MW) hydropower plants, and at the thermal Kabul North West power plant (45 MW) is progressing on schedule and is expected to be completed by 2008/09

• Distributed generation through small diesel, mini hydro plants at several locations; and rural access to electricity is under implementation through micro hydel and solar systems for more than 2,000 communities.

• The development of 220 kV NEPS (North East Power System) to provide a trunk transmission system to facilitate import of power from Central Asian neighbors (Uzbekistan, Tajikistan and Turkmenistan). Along the route of this line several substations have been planned to provide power to the towns and surrounding areas. Funding has been secured for new substations at Mazar-e-Sharif2 and Pul-e-Khumri (KfW), Chimtalah-Kabul and Doshi (Government of India), and Kunduz and Baghlan (Islamic Development Bank).

• Up to 100 MW of new thermal generation for Kabul (expected progressively by end 2008/mid 2009)

• The interconnection of Kabul 110 kV substations with 220 kV Chimtalah substation, rehabilitation of 110 kV substations (Kabul North and Kabul Northwest), and medium voltage system rehabilitation of Kabul City.

• Rehabilitation of part of the Aybak power distribution system.

For these investments to have their full development impact, the Government of Afghanistan and/or its development partners would like to have the matching investments in the missing pieces, such as distribution in Kabul, substation and associated medium voltage lines in Aybak, augmentation of

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2 The 220 kV substation at Mazar-e-Sharif would require augmentation to meet the increased power requirement of the rehabilitated distribution system and also provide adequate reactive compensation equipment, established under a separate study.

transmission facilities and medium and low voltage distribution in Mazar-e- Sharif. While there are several priority investments to which indicative support has been expressed by other donors (e.g. Charikhar and Doshi substation by Government of India, reactive power compensation and load dispatch centre by USAID), the Government of Afghanistan has requested the ARTF support for the Kabul and Mazar-e-Sharif distribution and Aybak substation. The proposed investments would be considered as phase-I of the large investment projects as well as would accelerate accrual of benefits to the consumers in Kabul, Aybak, and Mazar-e Sharif. More details on the power sector in Afghanistan are provided at Annex 1.

II. PROJECT DESCRIPTION

A. Project Development Objectives

8.The development objectives of the project are to help provide reliable and quality power to the consumers in the target areas of the cities of Kabul, Aybak, and Mazar-e-Sharif. This will be achieved through (i) the rehabilitation of the low voltage network down to the consumer service point for the identified areas in Kabul; (ii) providing grid connectivity to Aybak consumers, currently receiving power supply for a few hours a day hours through off-grid diesel generators; and (iii) rehabilitating and augmenting the transmission facilities, medium and low voltage distribution network in Mazar-e-Sharif. The priority areas in Kabul have been selected by DABM and MEW, based on the critical needs of the low voltage network and where upward linkages from the medium voltage system have been covered under ongoing rehabilitation works.

9.The project would also support the capacity building of the distribution utility (DABM) for planning, operation and maintenance of the distribution network, by hands-on on-site training to be included in the project design; provide support for implementation of measures to improve the accountability of energy flows (through system and end-user metering) to facilitate the implementation of commercial improvement measures planned as part of the ongoing support for commercialization of the distribution utility DABM.

10.For measurement of the outcome, following key indicators have been identified:

a) Increase in power supply to project areas in Kabul in million units of electricity provided.

The base line would be the energy supplied in megawatt hours (MWh) to the project areas for the SY1387 (ending March 2008)

b) Provision of grid power access to consumers in Aybak (share of total existing consumers with access to grid electricity).

Currently, no consumers in Aybak have access to grid supplied electricity and hence the baseline is zero.

c) Increase in power supply to consumers in Mazar-e-Sharif in megawatt hours (MWh) of electricity provided.

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The base line would be the energy supplied in megawatt hour (MWh) for the year 1387 (ending March 2008)

11.The base line for these indicators and adequate monitoring arrangement to measure these indicators would be agreed during project implementation and progress would be monitored on regular basis.

B. Project Components

12.The Project would cover rehabilitation of the distribution network for the identified areas in Kabul, establishment of a grid source (220/20 kV substation and associated medium voltage lines for Aybak, and rehabilitation and augmentation of the transmission facilities, medium and low voltage distribution network in Mazar-e-Sharif. MEW and DABM have prioritized the target areas in Kabul based on the “needs assessment” work being carried out by the USAID-funded consultants.

13.The project will have four components:

Component A - Distribution System Rehabilitation of Kabul: This component will support investments for installation of missing parts of the low and medium voltage distribution system connecting medium voltage trunk lines/ cables to customers (e.g., distribution transformers, underground cables, overhead line materials, aerial bunched cables, protection and distribution equipment, meters and associated equipment, etc.) The existing system would also be reorganized to optimize loading to reduce losses and provide satisfactory power supply voltage to the customers. In this phase one of the important commercial and residential area of Kabul city would be covered.

Component B - 220 kV Substation at Aybak and interconnection with medium voltage system: This component will support investments for establishment of a new 220/20 kV, 16 MVA substation at Aybak and 20 kV interconnection with the existing distribution system of the town. Part of the distribution system has been rehabilitated with the USAID support and is currently being fed through diesel generators for a few hours a day.

Component C - Power System Rehabilitation for Mazar-e-Sharif: This component will support investments for providing reliable grid electricity supply to about 50,000 existing customers by upgrading the existing MV distribution network from 6kV to 20 kV, connecting it with the new 220/20 kV substation under construction, and rehabilitating /replacing the low voltage distribution network. In addition, it would also cover any required augmentation of the transmission facilities, to meet the requirement of distribution system.

Component D - Institutional capacity building / support: This component will cover support for operation and maintenance of the distribution system; implementation of the infrastructure for metering and accounting of the energy supplied to these areas; establishment, operation and handover to the utility of suitable customer care center in the target areas; expenses for communication of the contractors plan to the consumers in the planned area of work; project management support for Aybak power system investments, and other activities.

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14.The training will be provided to DABM personnel on site by the suppliers/ contractors and specialized trainers on the regular operation and maintenance of the facilities, detection and repair of faults to ensure reliable and quality power supply to the consumers. The details are provided at Annex 2.

C. Project Costs by Components

USD million*Component A - Distribution System Rehabilitation for Kabul City areas

17.0

Component B - 220 kV Substation at Aybak and interconnection with medium voltage system

6.0

Component C – Power System Rehabilitation for Mazar-e-Sharif 25.0Component D - Institutional capacity building and project management support

4.0

Physical and Price Contingencies 6.5Total Cost 58.5

Requested ARTF Financing 57.0Co financing from IDA credit (Cr. 3933-AF) 1.5Total Funding 58.5

* Taxes are included in the respective component cost.

Further details are provided at Annex 3.

D. Relationship to Other Programs

15.This project is closely aligned with other donor-funded projects in the power sector. As described earlier, investments in generation and transmission have not been matched by the necessary investments in distribution required to improve service to end consumers. In particular, significant investment by the major donors in the sector (ADB, Government of India, KfW, USAID and the World Bank) has focused on the North East Power System and the construction of a 220 kV transmission line and associated substations to bring lower cost imported power from Afghanistan’s northern neighbors to Kabul. This project will complement ongoing investments by the World Bank - upgrading the medium voltage distribution network in Kabul, the USAID - financing additional thermal generation capacity in the capital city; KfW - constructing a new 220/20 kV substation in Mazar; and the ADB - constructing a new 220 kV line from the border of Uzbekistan to Pul-e-Khumri via Aybak.

16.The details of past and ongoing engagements of the Donors in the power sector are provided at Annex 6.

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III. IMPLEMENTATION

A.Institutional Arrangements

17.The institutional arrangement for this project would follow the systems established for the ongoing IDA Emergency Power Rehabilitation Project (EPRP) project 3 being implemented by the Ministry of Energy and Water. More specifically, the procurement and financial management system established and being used for the ongoing IDA project would be followed for this ARTF project as well. Discussions are being held with MoF and MEW to continue use of the streamlined procurement procedures, which have been documented in a MoU signed between MEW and MOF for the ongoing IDA project. The technical and implementation will be coordinated with DABM, who will nominate a core team for each investment project. A team is already in place for Kabul distribution, which coordinated preparation of the proposal, discussing design issues and identifying priority works.

18.For continuity, the services of the project management consultant, SMEC International (selected through international competitive bidding), are being used for the Kabul distribution project, to best utilize the synergies with the ongoing projects in Kabul, in particular the medium voltage project, which has direct interface with the proposed project. The extension of SMEC contract is being funded under the ongoing EPRP project and hence the preparatory work has already begun for this project.

19.For Aybak, MEW is planning to use the services of POWERGRID to complete the design, engineering, bid documentation and procurement support on behalf of MEW. POWERGRID has done similar work for the 220 kV substation at Chimtallah and would be doing similar work for Doshi and Charikar substations being funded by Govt. of India. This will ensure design consistency and ease of operation of the system. The project management arrangement for Aybak is under discussion and would be finalized before the contracts are awarded for the Aybak project.

20.Bidding documents for Mazar-e-Sharif distribution rehabilitation were prepared by SMEC International in April 2006 under the ongoing IDA project. These will be updated to reflect the latest status. Transmission facilities augmentation will be included in the scope of engineering and procurement consultant for Aybak substation work. It is anticipated that the SMEC contract will be amended to include the supervision of the contractor(s) as this role as Engineer was included in the original scope of work for which SMEC bid, but was subsequently dropped due to lack of funds for the distribution investment.

21.Monitoring and reporting of the project would be carried out by SMEC as part of their overall monitoring of the IDA/ARTF funded projects. Annex 4 provides further details on the implementation and institutional arrangements for the project.

B. Procurement

22.Procurement for the proposed project is carried out in accordance with the World Bank’s Guidelines: Procurement under IBRD Loans and IDA Credits May 2004, Revised October 1, 2006, Guidelines: Selection and Employment of Consultants by World Bank Borrowers May 2004

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3 Ministry of Energy and Water is implementing the Afghanistan EPRP (Cr 3933 and TF054718) project under which several systems and procedures have been set for implementation of the investments and technical assistance support.

Revised October 1, 2006, and the provisions stipulated in the Legal Agreement. For contracts to be financed by the Grant, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Recipient and the Bank team and reflected in the Procurement Plan. The Procurement Plan is updated at least every six months or based on actual project implementation needs and improvements in institutional capacity. IDA-led procurement team has found that procurement capacity in the MEW, supported by their consultants, has improved with satisfactory use of technical assistance.

23.In anticipation of additional funds available for the similar work through ARTF or other donor sources like IDA, it is also proposed to use suitable procurement process with the flexibility to expand the scope of facilities for similar works based on the initially agreed prices, subject to the good performance of the existing contractors. This would save considerable time and resources required to follow a procurement process for such expansions of similar works. The detailed procurement plan is attached as Annex 5.

C. Financial Management

24.Financial Management, Disbursement and Audit Arrangements. A PFM performance rating system has been recently developed for Afghanistan by the Public Expenditure and Financial Accountability (PEFA) multi-agency partnership program, which includes the World Bank, IMF, EC, and other agencies. Afghanistan’s ratings against the PFM performance indicators portray a public sector where financial resources are, by and large, being used for their intended purposes as authorized by a budget that is processed with transparency and has contributed to aggregate fiscal discipline.

25.Financial management and audit functions for proposed project will be undertaken through the agents contracted under the Public Administration Capacity Building project. This is the primary instrument for continuing to strengthen the fiduciary measures put in place for ensuring transparency and accountability of funds provided by the Bank and other donors. Under these contracts, two advisers—Financial Management and Audit—are responsible for working with the government and line ministries to carry out these core functions. The Financial Management Adviser (FMA) is responsible for helping the MOF maintain the accounts for all public expenditures, including IDA-financed projects and for building capacity within the government offices for these functions.

26.At the project level, the Ministry of Energy and Water will utilize the services of the Project Management Consultant, SMEC International, currently working for the Emergency Power Rehabilitation Project for the financial management. SMEC FM staff will work with the MEW Finance Department staff to ensure that all FM requirements are met as and when due.

27.The Financial Management Specialist assigned by SMEC with responsibility for financial management activities of the IDA project will also cover this project. The specialist’s responsibility will also include processing of consultants and contractors invoices for payments i.e. preparation of M-16 forms (payment orders), maintaining relevant accounting records, preparation of required monthly, quarterly and annual reports, liaising with SDU to ensure that the Designated Account is replenished as at when due and be responsible for responding to project audits.

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28.Quarterly Financial Monitoring Reports will be prepared by the project (SMEC) FM unit. Consolidated project reports will be prepared, reviewed, and approved by the MOF, supported by the FMA.29.A Designated Account (DA) will be opened at Da Afghanistan Bank (DAB, Central Bank) or at an agreed commercial Bank in Kabul. The DA will be maintained by the MOF. Withdrawal applications for replenishment will be submitted monthly.

30.Funds Flow. Fund management for the Project will follow existing procedures. As with all public expenditure, all payments under the project will be routed through MOF. The FM Adviser will assist the MOF in executing and recording project payments. In keeping with current practices for other projects in Afghanistan, the DA will be operated by the Special Disbursement Unit (SDU) in the Treasury Department MOF. Requests for payments from DA (in an amount of US$ 10 million) funds will be made to the SDU by the project. In addition to payments from DA funds, the project can also request the SDU to make direct payments to consultants or consulting firms, and special commitments for contracts covered by letters of credit. Such requests will follow World Bank procedures. All withdrawal applications to IDA, including replenishment, reimbursement, and direct payment applications, will be prepared and submitted by MOF. . If agreed by MEW and MoF, based on the Bank’s new flexibility regarding designated accounts, ARTF funds may be advanced from the DA into an account managed by SMEC or other implementing partner/oversight consultant. Such a ‘float account’ (similar to those used now being used on the National Solidarity Project and to be used on the National Emergency Rural Access Project) may facilitate better monitoring and timing of payment and reduce reliance on the main DA to more of a pass-through account, as opposed to the main transaction account. 31.Accounting and Reporting. The project will establish a project financial management system in accordance with standard Afghan government policies and procedures. This will include use of the Chart of Accounts developed by the Treasury to record project expenditure. Project accounts will be consolidated centrally in MOF, through the SDU and supported by the FMA. Consolidated Project Financial Statements will be prepared for all sources and uses of project expenditures.

32.Disbursement Method. Disbursements from the ARTF grant will make use of advances, reimbursement, direct payment, and payments under Special Commitments including full documentation for expenditures on contracts exceeding $20,000 or against statements of expenditures for expenditures on contracts less than $20,000 (and for all operating costs; training)

33.A provision for retroactive funding for the eligible expenditures incurred after October 1, 2007 up to a maximum amount of up to US$ 15 million will be available for the project.

34.Audit of Project Funds. The Auditor General, supported by the Audit Agent, is responsible for auditing the accounts of all ARTF-financed projects. Annual audited project financial statements will be submitted within six months of the close of GOA’s fiscal year.

D. Monitoring and Reporting

35.The Project Management Unit of the Ministry of Energy and Water, supported by the consultants, consolidates the financial and physical progress reports for the different projects, and is responsible for overall monitoring and reporting to ARTF. The World Bank task team conducts regular supervision missions, and the project status reports are submitted to ARTF every six months. As appropriate and as required, an independent monitoring and evaluation of specific component activities may be carried out to assess the implementation progress and outcome of some components of the project.

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E. Sustainability and Risks

36.The project covers investments, which are similar to the one being implemented in Afghanistan by several donors and by Ministry of Energy and Water. The project design includes mitigation measures, wherever possible, to reduce the anticipated risk.

37.Anticipated risks and proposed measures to reduce them are shown in the table below.

Risks and Risk-mitigation Measures

Risks Mitigation measures Risk Rating with

MitigationSecurity concerns: The political and security situations in Afghanistan remain volatile, which might interfere with reconstruction and development efforts. These constraints may limit the speed of implementation.

This risk is outside the control of the ARTF. However, enough time and flexibility are built into the program design to adjust to changing realities.

High

InstitutionalWeak Institutional Capacity of the implementing agencies

The capacity gap would be bridged with the use of experienced international/national consultants to support DABM/MEW counterpart for design, procurement and project management. Lessons learned and new procedures on procurement instituted from the ongoing IDA project will help ensure that similar bottlenecks can be avoided in the next project.

Substantial

Appropriate budget provision for the project

To meet the requirement of MoF for opening of Letter of Credits, discussion will also be held with MoF and MEW to provide adequate budget for opening of Letter of Credits for this project.

Low

Technical/DesignAppropriateness of the Project Design for Afghanistan

The project would broadly follow the design standardized by the previous studies. A core team comprising of personnel from MEW/DABM/ consultants working on the power projects for Kabul City has been constituted and functioning, to finalize the project design by incorporating lessons from previous projects. Similar counterpart core team has been constituted for Aybak project.

Low

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Interruptions in power supply to consumers during construction period

Considering poor conditions of current power supply situation, the impact would not be significant, however, the consultants under guidance of the core group would prepare construction sequence to minimise interruptions to the existing consumers. A suitable communication system to the consumers of the work plan shall be incorporated in the project implementation plan.

Low

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Risks Mitigation measures Risk Rating with

MitigationSustainabilityNon realization of complimentary investments

The contracts for complimentary investments have already been in place and the progress on ground is quite good. The current schedule for these investments is earlier than the proposed project. In a worst case scenario, some of the complimentary investments could get delayed beyond completion of the proposed facilities. In such a case, it would only delay the realization of full benefits of proposed investments under the project. However, these delays are not expected to be significant.

Similarly, the discussions with Uzbekistan for increased power imports are also progressing well. The Bank through the ongoing IDA project has financed technical and legal support for these discussions.

Moderate

Inappropriate operation and maintenance of the facilities post commissioning

The project design includes hands on training by the contractors in operation and maintenance of the facilities for sustained operation. It is also envisaged that the contractor will provides hands on support for maintenance and fault repair for the first six months of the project after completion.

Moderate/Substantial

Financial Sustainability- in view of high distribution losses, poor billing and metering arrangements, low collection levels and low tariffs in Kabul

Several initiatives have been taken under ongoing IDA project to lead DABM ( the power utility) on the path of financial sustainability- it includes, setting up of loss reduction unit, computerisation of billing, Corporatization, etc. These initiatives would be further supported under this project, by installing metering at various levels, convergence with latest technologies for metering, billing and collection, etc. Govt. of Afghanistan is fully committed and supporting this change process in DABM and other donors are collaborating on this area. The project would support evaluating modern methods for metering, billing and collection process to improve financial revenues of the Utility.

Moderate/Substantial

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Risks Mitigation measures Risk Rating with Mitigation

Social and Environment Safeguards

Land acquisition or relocation of squatters in the right-of-way may cause delay in project implementation

Social & Environmental impacts of the projects are expected to be small and overall positive. An environmental and social safeguard framework already exists for similar works, which is under implementation. The same would be extended to this project.

A Social Assessment will be conducted to identify if any land acquisition or resettlement will be necessary and to plan any social impact mitigation.

It is proposed to test the oil in a sample of old transformers for presence/ absence of Polychlorinated biphenyls (PCB) through sample tests of PCB material. If found present, appropriate handling strategy would be prepared as part of the project, suitable to Afghanistan environment.

With completion of proposed works, significant positive environmental impact would be achieved through replacement of several small inefficient polluting and noisy generators with the environmentally more benign grid supply.

Low

Procurement and Financial Management

The consultants and MEW team working on previous power project funded through Afghanistan EPRP (Cr 3933 and TF054718) are familiar with the requirements in these areas. The team as part of interaction for other project will work on completing any further gaps identified in these areas.

Moderate

F. SOCIAL AND ENVIRONMENTAL ISSUES

38.The project is expected to cover mainly replacement of the old and dilapidated equipment in the distribution system of Kabul and strengthen the low voltage distribution system to reduce bottlenecks in the power supply system of the part of city covered under the project. Some new locations for the distribution transformers will be identified by DABM in consultation with the municipality of Kabul. The low voltage links would be mostly through underground cables or insulated overhead cables, which shall be erected as per the appropriate international standards following the safety practices. For Aybak, the new substation will be constructed at the land of the old 34/6 kV substation, which is completely destroyed. The medium voltage line would be for a short distance on the poles by the side of the main road.

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39.Overall, the project would reduce losses, thus dependency on thermal fuels; significantly reduce the use of inefficient and polluting small local diesel generators of the consumers. The project is expected to have limited adverse environmental impacts, and has been rated as environmental category “B.” The Environmental and Social Safeguard Framework developed and agreed upon with Ministry of Energy and Water, and in use for similar projects in the sector, would be applied. Overall impact of the project is expected to be significantly positive to the environment.

40.No or only limited land acquisition is expected to take place, since the project manly comprises distribution system rehabilitation (Kabul and Mazar-e-Sharif), substation and interconnection with existing distribution system (Aybak) and augmentation of existing transmission facilities at Mazar-e-Sharif at the existing sites,. However, in view of experiences from ongoing projects in this sector and the explosive and unplanned growth of urban centers in Afghanistan over recent years, a Social Impact Assessment will be carried out including social impact mitigation plan if necessary to avoid land acquisition or relocation of informal settlements along the right-of-way (ROW) disrupting or delaying implementation,

41.It has not been established whether the old transformers in use in Afghanistan have any Polychlorinated biphenyls, considered to be a serious health hazard, if not handled carefully. It is proposed to purchase a portable testing kit to ascertain the presence/absence of the PCBs in the transformer oil and depending upon the test results, an appropriate handling scheme shall be prepared in consultation with the experts.

42.Much of the older transformers and equipment under the Project are expected to be from the Soviet occupation period, some possibly pre-Soviet era (40 years old). Studies have not been done on the extent, if any, of PCB contamination of this equipment. It is planned to carry out testing of oil samples from the transformers in the project area to explore the level of PCB contamination. If any PCB contamination is discovered suitable mitigation measures will be enacted.

43.The construction standards would meet the environment and social framework prepared and agreed for such works with Ministry of Energy and Water. Every endeavor will be taken to co-ordinate the underground cable installation work under the project with those of the Kabul Medium Voltage Project with a view to minimize disruption of road and pedestrian traffic and to customers. Necessary precautions will be taken to prevent soil erosion and pollution of water bodies due to the activities of the project.

44.Supply interruptions required for the construction works will be planned in a rotational manner so that the inconvenience to the consumers would be minimized. Public awareness campaigns will be organized to facilitate better interaction with the local communities so that any adverse effects to the residents avoided or minimized.

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Annex 1

Sector Background

1. Ravaged by chronic conflict and political instability for almost two decades and coupled with no maintenance, insufficient investment and outright theft of the material, Afghanistan was left with a severely destroyed power system. The recent years have seen the beginning of the rehabilitation of the power sector, but it is clear that many more years will be required before the power sector will be able to function adequately and meet the economy’s demand for electricity.

2. Government. of Afghanistan recognizes that the power sector is severely constraining the development of the country. The data from the National Risk and Vulnerability Assessment, based on a major national household-level survey carried out in 2005, indicates that only about 16% of the population has access to electricity through the power utility. The other provinces have even less access, with rural areas being hardly served. According to DABM statistics, the utility caters to only about 517,000 consumers all over the Afghanistan.

3. The power sector operations are managed by the country-wide power utility, Da Afghanistan Breshna Moassese (DABM), which does not have economic or adequately skilled human resources to handle this difficult situation. DABM works under the administrative control of Ministry of Energy and Water. The financial situation of DABM is quite poor, with expensive power generation from thermal units, lack of commercial skills, high losses and poor collections. The tariffs for most of the Kabul consumers, which constitute about one third of the total consumer base of DABM, do not cover the cost of power supply. The situation is better in other areas, where the people are paying tariffs based on recovery of the operating cost.

4. Government of Afghanistan’s initial strategy, supported by the Donors had been to focus on projects which would provide quicker results on the ground. These investments included providing small diesel generators to areas, where the distribution network still existed; urgent rehabilitation of the existing generation plants; emergency spares for operation of the plants; and technical support for overseeing these works, etc.

5. In the last three years, Government of Afghanistan has started looking at a medium term view. A large transmission system has been planned to bring surplus power from the neighboring Central Asian countries, Uzbekistan, Tajikistan and Turkmenistan. MRRD (Ministry of Rehabilitation and Rural Development) has been supporting rural electrification of about 600 villages with micro hydro based power projects, supported by National solidarity program and another 100 villages through solar panels.

6. In parallel, efforts are on way to corporatize and commercialize the power utility DABM, which is planned to be brought under a new and visionary management structure with efficient human resources and salaries commensurate to the markets. The staff would be provided training and adequate skills to commercially and effectively manage the corporatized utility, which will be known as Da Afghanistan Breshna Shirkat (DABS).

7. However, the sector, like in several other countries, faces several challenges, some of which are listed below.

8. The priorities for the development of the power sector include the inter-related issues of (i) distribution, (ii) financial sustainability, and (iii) utility restructuring. The distribution system is the weak link in the chain leading from power generation to the consumer and will compromise

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achievements in the areas of generation and transmission unless urgent efforts are made to address this problem. The capital requirements of distribution rehabilitation and expansion are significant—estimated at $300 million for the medium voltage network in Kabul alone—and the country’s future capacity to marshal the required level of investments will depend, in part, on its success in restoring financial viability to the sector and in restructuring the national utility, DABM.

9. The utility’s commercial performance needs to improve and be more accountable, the consumer orientation needs to be brought into the mindset of Utility employees. At present, power tariffs are considerably below costs in many locations (most notably, in Kabul). Without movement towards cost-recovery, the present efforts to rehabilitate and expand the system will not be sustainable, and the high level of preferential treatment that is implicitly given to Kabul’s power consumers raises equity concerns as well as the usual concerns about the distorting effect of subsidies, which encourage waste and tend to favor the better-off, who are more likely to be connected to the power grid and to consume more than poorer consumers. The metering, billing and collection system needs much to fix, to bring at par with good utility practices. It is important to view the utility’s own funds as a source of future investments in distribution and consequently to instill in DABM or future DABS a solid commercial orientation.

10. The metering and billing system need to be redesigned to minimize human interface in convergence with the latest technologies and provide flexible options like pre-payment to the consumers. Some best practices, successful in other countries would need to be tested and introduced in Afghanistan to improve the metering, billing and collection system, including outsourcing to ensure the Utility is financially sustainable in the medium to longer term, covering its all operating costs and majority of investments from its own revenue.

11. In all cases of power imports, there is a need to bring the power purchase agreements to international standards, analyze the commercial impacts of power purchase agreement, the capacity of the network to handle contracted power in case of contingencies. The power transmission and dispatch system need to be modernized and prepared for all operational contingencies. The maintenance should be carried out to ensure high availability of the power transmission system, at par with the international utilities.

12. The Bank engagement in the sector will work closely with the Govt. of Afghanistan and the utility to help them move towards the above objectives. It is also recognized that any plans and recommendations put forward to GOA for the country’s medium-term development must be grounded in a realistic appreciation of the considerable financial and capacity constraints that the Government and its development partners are likely to face for the foreseeable future.

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Annex 2Detailed Project Description

The project comprises four components:

Component A- Distribution System Rehabilitation of Kabul City areas: This component will support investments for installation of the missing parts of the distribution system connecting medium voltage trunk lines/ cables to customers (e.g. distribution transformers, under ground cables, over head line materials, aerial bunched cables, protection and distribution equipment, meters and associated equipment, etc.) The existing system would also be reorganized to optimize loading to reduce losses and provide satisfactory voltage to the customers.

The situation in the capital Kabul city, which is growing rapidly at an average of more than 11 % in last four decades, is not so good. Only one third of the population has access to electricity from the grid, with poor quality and reliability. Many consumers have switched to diesel generation, which is expensive, noisy and polluting.

Power is supplied to Kabul City through 110/15 (20) kV Grid Substations which feed the medium voltage distribution network. These Grid Substations supply a number of medium voltage Junction Stations which in turn supply power through feeders to distribution transformers and thence to the Low Voltage network for delivery to end consumers. The Kabul distribution network had been supplied via 12 Junction Stations of which two have been out of service for a long time. Junction Station 3, 4, 6 and 8 were rehabilitated few years before and Junctions 2,7 and 12 along with the medium voltage system being fed by these junctions is being rehabilitated under the ongoing IDA project. Other Junction Stations are in dilapidated condition and would require additional funds to rehabilitate them.

The funding requirement for covering the complete city of Kabul, including medium voltage network and new consumers, who are not yet covered with the grid, would require about US$ 200 million. As such, the current project envisages covering the area covered by one medium voltage junction Stations, i.e. Junction No. 2 , which is considered most importantas it feeds the distribution network in the most developed commercial, administrative and residential area of the city. The medium voltage and the transmission system feeding this Junction would be completely rehabilitated under the ongoing IDA and other projects and would be completed in advance of the KDRP-I project implementation schedule.

The main focus of rehabilitation and reinforcement of the Kabul Distribution Rehabilitation Project-I (KDRP-I) is to rehabilitate and strengthen the most developed commercial and administrative areas of the City. The project scope involves replacing existing old and dilapidated 15kV distribution transformers with 15(20)/0.4kV transformers of capacities from 160 to 630kVA, adding new transformers to the system, MV underground cable and overhead line connections to the new transformer locations, full replacement of the LV overhead and underground network including feeder pillars and transformer LV distribution boards, replacement/refurbishment of all meter boxes, replacing all/defective energy meters and rehabilitation of all consumer connections. The project will also prepare a substantial amount of this inner city area toward conversion to 20kV operation

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Rehabilitation of a part of the distribution network will be undertaken within the KDRP-I, and it is expected that additional customers awaiting electricity connections within this central city area would also benefit from the project. Also recovered transformers may be used temporarily in other parts of the city to bring power to further increase access to mains electricity, provided they are found to be free from PCB presence.

A Customer Service Centre will also be provided under this project. This will allow customer complaints to be received, acted on, recorded and analyzed. The Customer Service Centre will underpin a longer term drive to improvement of service delivery.

The proposed KDRP-I project will upgrade and rehabilitate the existing distribution system by replacing damaged and dilapidated overhead distribution lines; install new distribution transformers to support the upgrade of the medium voltage system to 20kVand install new overhead and underground insulated cables to provide safe and reliable power supply to the consumers.

The project includes installation of about:• 138 numbers distribution transformers with total capacity of about 57 MVA.• 300 km of Low and Medium Voltage links

One feature of the proposed KDRP-I is to prepare a strategy for using modern consumer metering system to establish accountability within the Utility staff for the energy sold to consumers covered in the areas under scope of the project. There are no meters at the sending end of feeders or the distribution transformers. Some consumers have faulty meters and the other existing meters are electro-mechanical and many are at or near the end of their economic life. Also many of these meters are no longer accurate resulting in significant revenue losses to DABM. The proposed metering system should facilitate introduction of complete commercial accounting of the area covered by the project or later innovative metering and collection facilities like, remote meter reading, time of day metering, interruptible or uninterruptible tariff and /or facility for pre-payment or through mobile networks. The feasibility and the best option to introduce these technologies would be studied separately through a study to be carried out along with the investment project time frame and suitable metering scheme initiated. The aim would be to have convergence with available communication technologies like GSM mobile networks, etc. Feasibility to introduce remote disconnection for non –payment and prepayment metering would also be studied and implemented. The feeder and distribution transformer metering is being ordered as part of the main package and consumer metering procurement would be initiated based on the recommendation on the most feasible and economical technology for the Kabul. The consumer metering procurement would be taken up separately, under this or future projects depending upon the assessed funding requirement to implement the recommended option.

Component B- 220 kV Substation at Aybak and interconnection with medium voltage system: This component would support investments for a new 1 x 16 MVA, 220/20 kV substation at Aybak and 20 kV interconnection with the existing distribution system of the town. The existing distribution system, which is at 20 kV and 6 kV has been rehabilitated under a program funded by USAID. The project would cover interconnection to 20 kV system under this phase. It is proposed to expand the distribution system to cover areas fed by 6 kV network as well as unserved areas through future phases, when more power will be available in the NEPS system as well as funding to complete the remaining work, estimated to cost additional 8-10 million USD.

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The substation will be designed to be later expanded, when load grows into a large capacity substation, though the initial design would be simple to cater the demand through one 16 MVA transformer and 3-4 20 kV panels at the low voltage side.

Aybak is the seventh largest town of Afghanistan and the capital of Samangan province located in northern part of Afghanistan. The town, with a population of 91,000 is located on the transmission system route linking Kabul with Uzbekistan (NEPS) and would subsequently link with power imports from Tajikistan, Turkmenistan and Sheberghan gas based power, when those come on line. Currently, the power supply is through diesel plants for few hours a day and is very expensive, besides the adverse environmental impacts. Due to the limited capacity, supply can not be extended to new consumers who would be willing to pay for the quality and reliable power. Without the linkage to the transmission grid, the supply for consumers of Aybak town would remain limited and expensive and access will be limited to the already connected consumers and that to for limited period.

The protection and communication system for the substation would be connected with the NEPS transmission system through OPGW wire, to allow control as part of the whole system through future load dispatch arrangements. For better coordination and ease of future maintenance, the OPGW equipment would be ordered as extension on ongoing supplies for Pul-e- Khumari- Chimtallah 220 kV link, covered under ongoing IDA project.

Component C- Power System Rehabilitation for Mazar-e-Sharif: This component will support investments for providing reliable grid electricity supply to the about 50,000 existing customers by upgrading the existing MV distribution network from 6kV to 20 kV, connecting it with the new 220/20 kV substation under construction, and rehabilitating /replacing the low voltage distribution network. In addition, it would also cover augmenting transmission facilities to meet the increased demand of the distribution system at the newly adopted medium voltage of 20 kV.

The population of Mazar is estimated to be close to 1 million and is said to be one of the fastest growing cities in Afghanistan at present, in terms of population. The number of houses in the city almost doubled after 2001. There are about 50,000 existing consumers connected to the existing networks. This figure includes about 42,500 domestic consumers, 6,826 small and medium commercial consumers, 114 small and medium industrial consumers, and around 487 Government/public establishments. There are also 5 medium/large-scale industries in the city.

Currently, Mazar-e-Sharif is supplied from power imported from Uzbekistan via 110 kV transmission link. This is the only source of supply presently available for city supply which is restricted to 27 MW of power. Out of the supply, about 2-2.4 MW is sent to Bulk and Dadadi towns via 35 kV power line, thus only about 25 MW is available for consumption in the city. The power consumption is maintained at this limit by load shedding. The load shedding during peak time is estimated to be about 30% of the actual demand. Once the 220/20 kV substation is completed, Mazar-e Sharif will be part of the NEPS and it will get non-constraint power supply from neighboring countries.

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The key features of the proposed design are as follows:

Transmission Facilities Augmentation: The 220/110/20 kV being established with KfW funding may need augmentation of transformation capacity at 220/20 kV level. The capacity planned under KfW funded project at 220/20 kV level is currently 16 MVA, which is not adequate to meet even the existing demand of 40 MW in Mazar-e-Sharif. It is planned to add additional 50 MVA transformer at 220/20 kV to augment this capacity.

Medium voltage backbone system: The core MV distribution system consists of the new grid substation, new 20 kV junction station (Junction A) at the existing 6 kV junction no. 2 location, one 20 kV overhead switching stations (overhead gantry no. 11) at the existing 6 kV junction station 1 location and two 20 kV overhead switching stations at the existing 35/6 kV Shahidan Primary Substation location. The grid substation and the switching stations would be interconnected via 20 overhead lines and one Cu/XLPE cable link. The existing feeders would be used to construct the overhead express lines, which will be rehabilitated, upgraded and reconductored before being used as the express lines. This arrangement would provide a strong 20 kV backbone ring to ensure adequate capacity and reliability of supply to meet the demand levels up to 2015.

MV Feeder Arrangements – Underground Distribution Network. It is proposed to construct a 20 kV underground cable network covering about 4 km2 area of the city in the central downtown area. The proposed area covers one km towards each side from the Mazar-e-Sharif shrine. This area is the most congested part of the city and is not recommended for MV and LV overhead distribution networks. The existing 6 kV and LV distribution networks in this area are also mostly underground.

The proposed MV underground network would be connected to 31 distribution transformers of various capacities totaling to 10 MVA. These distribution transformers will be replaced with 20/0.4 KV indoor transformers with RMUs. Two 20 kV cable feeders have been proposed for this network to be connected in a ring arrangement. About 7500 existing consumers will be connected to these two feeders. These consumers include domestic consumers, shops, commercial buildings & offices, Government buildings, schools, hotels, religious places etc. located in the demarcated area.

Although there are few other areas in the city with existing underground cable networks, all future MV and LV distribution networks in the balance part of the city would be on overhead lines. There are no major problems in continuing to use overhead lines in these parts at present. If required, the UG cable network can be expanded to other areas in future via satellite feeders from the existing 20 kV ring or via new feeders from the Junction Station A.

Majority of the existing 6 kV feeders are proposed to be rehabilitated and upgraded to be operated at 20 kV and reconductoring of these feeders with higher sizes during rehabilitation. Majority of the existing 6/0.4 kV distribution transforms will be replaced with 20/0.4 kV distribution transformers. It is noted that the feeder currents of all existing feeders will be reduced to one third after converting from 6 kV to 20 kV. This will relieve the overloading of the existing feeders and allow the existing MV feeder configuration to continue without additional feeders. It will also allow combining of some of the lightly loaded feeders feeding same geographical areas. The existing configuration therefore can be continued up to 2015 at reasonable reliability and efficiency levels.

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Low Voltage Distribution. The low voltage distribution networks in Mazar-e-Sharif need to be rehabilitated / replaced to ensure reliability of supply and efficient operation (reduced losses). New underground LV distribution system is proposed for the downtown area that has been identified for underground MV network. For other parts of the city, existing overhead distribution networks are proposed to be rehabilitated and reconductored using Arial Bundled Conductors (Insulated Cables).

Component D - Institutional capacity building / support: This component will support operation and maintenance of the distribution system; commercial accounting of the energy supplied and the establishment, operation and hand-over to the utility of modern/suitable customer care centers in the target areas, expenses for communication of the contractors plan to the consumers in the planned area of work; project management support for Aybak power system investments, metering system technology and feasibility studies, etc.The training would be provided to DABM personnel on site by the suppliers/ contractors and specialized trainers on the regular operation and maintenance of the facilities, detection and repair of faults to ensure reliable and quality power supply to the consumers.

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Annex 3

Table A.1: Project Cost by Component for ARTF Proposed Funding

Project Costs by Components

USD million*Component A- Distributions system rehabilitation for Kabul City areas 17.0Component B- 220 kV Substation at Aybak and interconnection with medium voltage system

6.0

Component C – Power System Rehabilitation for Mazar-e-Sharif 25.0Component D- Institutional capacity building and project management support

4.0

Physical and Price Contingencies 6.5Total Cost 58.5

Requested ARTF Financing 57.0Co financing from IDA credit (Cr. 3933-AF) 1.5Total Funding 58.5

* Taxes are included in the respective component cost.

Table A.2: Estimated Costs by Category of Expenditure (US$ million)

Expenditure CategoryAmount of the Grant

Allocations (US$ )Goods, Works, Incremental operating costs and Technical Assistance 57

Total 57

The IDA project will co-financing the cost of engineering and project management consultants for Distributions system rehabilitation for Kabul City areas; Supply of OPGW cable and termination equipment, Engineering and procurement consultants for Aybak substation and associated work.

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Annex 4

Implementation Arrangements

The project is estimated to require 45 months for completion, including the estimated 6 months needed for closing the contracts. In view of the current closing date of the ARTF – June, 2010, the activities to be covered under the ARTF are limited till January, 2010, six months before closing date.

It is understood that the extension of closing date for the ARTF is under consideration. In the event, the date is extended, the activities spilling beyond January, 2010 would be considered for funding from ARTF. The activities, which are contingent on ARTF extension, are marked with (*)

Key milestones are expected to be completed as per the following schedule:

Component A - Distributions system rehabilitation for Kabul City areas

Completion of main Project Design Sep 2007 (already completed)Beginning of Procurement Process 3 months (October 2007)Receipt of bids for Supply & Install contract 5 months (December 2007)Effectiveness of Contract 10 months (May 2008)Detailed engineering work (progressively) 11-17 months (June 2008 –Nov. 2008)Completion (progressively) 18-28 months (Dec.2009- Nov. 2009)Operation & Maintenance Support/Training 1 month (December 2009)*Closing of contracts 36 months (June 2010). (Time period calculated from the MoF revised request date, i.e. July 21, 2007)

* The Operation & Maintenance Support period would be extended to 6 months, when the ARTF closing date is extended.

The engineering and project management services would be provided by consultants M/s SMEC, who are already assisting MEW with design, procurement and project implementation of several projects in Kabul, some of them would have direct interface with the proposed project. These consultants selected through international competitive bidding process, have the advantage of an early start and achieving economies of the scale with the large part of their team already in place. The amendment to their contract would be co-financed by the ongoing IDA project.

The contractor would be selected following ICB procurement and will execute the project on Supply & Install basis.

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Component B- 220 kV Substation at Aybak and interconnection with the Medium Voltage System

Completion of Project Design 4 months (November 2007)Beginning of Procurement Process 5 months (December 2007)Receipt of bids for Supply & Install contract 7 months (February 2008)Effectiveness of Contract 12 months (July 2008)Completion 29 months (December 2009)*Closing of contracts 36 months (June 2010) (Time period calculated from the MoF revised request date, i.e. July 21, 2007)

* Completion period is expected to be longer, considering the long deliveries quoted by the manufacturers. This activity would need to be extended to accommodate realistic schedule. Operation & Maintenance Support/Training for six months would be considered, when ARTF closing date is extended.

For Aybak, MEW is planning to use the services of POWERGRID to complete the design, engineering, bid documentation and procurement support on behalf of MEW. POWERGRID has done similar work for the 220 kV substation at Chimtallah and would be doing similar work for Doshi and Charikar substations being funded by Govt. of India. This will ensure design consistency and ease of operation of the system.

The project management arrangement for Aybak is under discussion and would be finalized before the contracts are awarded for the Aybak project.


Component C – Power System Rehabilitation for Mazar-e-Sharif

Review and updation of the main Project Design 1 month (October 2007)Beginning of Procurement Process for distributionWorks 2 months (November 2007)Receipt of bids for Supply & Install contract 4 months (January 2008)Effectiveness of Contract 9 months (June 2008)Detailed engineering work (progressively) 10-16 months (July 2008- Jan. 2009)Completion (progressively) - distribution system 17-27 months (Feb. 2009- Dec. 2009)

For transmission facilities augmentation:Completion 27 months (December 2009)*Closing of contracts 33 months (June 2010)

(Time period calculated from the MoF request date, i.e. September24, 2007)

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* Completion period is expected to be longer, considering the long deliveries quoted by the manufacturers. This activity would need to be extended to accommodate realistic schedule. Operation & Maintenance Support/Training for six months would be considered, when ARTF closing date is extended.

The engineering and project management services would be provided by consultants M/s SMEC, who assisted MEW in the design and preparation of bidding documents. These consultants selected through international competitive bidding process, have the advantage of an early start and achieving economies of the scale with the large part of their team already in place. For transmission facilities, engineering and procurement support would be provided by POWERGRID, who will also be doing similar work for Aybak.


Component D - Institutional capacity building / support

This component will be implemented over the time frame of the complete project, i.e. 42 months- which includes 4 months time for closure of all contracts. The requirement of institutional capacity building and support for the implementation of the investments has been broadly identified and would be fine tuned during implementation.

Major component of the support is build as part of the design of contracts, where the initial maintenance and operational support is envisaged for six months period after completion of the facilities. The project management contract envisages increased role from the local skills available with DABM/MEW to leave trained staff after completion of the project.

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Annex 5Procurement Plan

I. General

1. Project information: Country: AfghanistanProject Name: Kabul-Aybak-Mazar Power Project Grant No: Project Implementing Agency (PIA): MEW supported by M/s SMEC, Australia

2. Bank’s approval Date of the procurement Plan [Original September 22, 2007]

3. Date of General Procurement Notice: September 28, 2007 (expected)4. Period covered by this procurement plan: six months

II. Goods and Works and non-consulting services.

1. Prior Review Threshold: Procurement Decisions subject to Prior Review by the Bank as stated in Appendix 1 to the Guidelines for Procurement:

Procurement Activity Prior Review Threshold Comments1. Works 500,0002. Goods 200,0003. Directing Contracting All

2. Prequalification. Bidders for Nil contracts will be prequalified in accordance with the provisions of paragraphs 2.9 and 2.10 of the Guidelines.

3. Proposed Procedures for CDD Components (as per paragraph. 3.17 of the Guidelines: Not Applicable

Reference to (if any) Project Operational/Procurement Manual:

Any Other Special Procurement Arrangements: Provision has been made to reimburse the Government of Afghanistan (GoA) for payments it makes for project expenditures up to US$ 15 million between October 1, 2007 and the date of the signing of the grant.

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Procurement Packages with Methods and Time Schedule A. Goods

1 2 3 4 5 6 7 8 9R e f . No.

Description of Assignment

Estimated Cost

Procur. Method

Pre -qualification

Domestic Prefer.

Reviewby Bank( P r i o r / Post)

Expected B i d Opening Date

Comments

M E W 300/3

Kabul Distribution Rehabilitation Project – Phase-I

17,000,000 I C B (S&I)

No No Prior Jan 2008

M E W (tbd)

i) Aybak 220 kV substation and associated MV worksii) Augmentation of Mazar-e-Sharif 220 kV substation

9,000,000 I C B (S&I)

No No Prior Mar 2008

M E W (tbd)

Mazar Distribution Rehabilitation and Expansion

22,000,000 I C B (S&I)

No No Prior Feb 2008

B. Works:

1 2 3 4 5 6 7 8 9R e f . No.


Estimated Cost

Procur. Method

Pre –qualification

Domestic Prefer.

Reviewby Bank( P r i o r / Post)

Expected B i d Opening Date

Comments

NIL

III. Selection of Consultants

1. Prior Review Threshold: Selection decisions subject to Prior Review by Bank as stated in Appendix 1 to the Guidelines Selection and Employment of Consultants:

Selection Method Prior Review Threshold

Comments

1. Competitive Methods (Firms) 100,0002. Individual Consultants 50,0003. Single Source (Firms/

Individual)All

2. Short list comprising entirely of national consultants: Short list of consultants for services, estimated to cost less than $ 50,000 equivalent per contract, may comprise entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.

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3. Consultancy Assignments with Selection Methods and Time Schedule

1 2 3 4 5 6 7 8R e f . No.


Estimated

Cost

Select. Meth.

Reviewby Bank(Prior/Post)

Expected P r o p o s a l s Submission Date

Comp. Comments

1. To be identified d u r i n g implementation.

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Annex 6Summary of the Donor Engagement in the Power Sector in Afghanistan

Donor Generation Transmission DistributionDistribution Technical Assistance

ARTF • Rehabilitation of Mahipar Hydropower station, 2 x 22 MW (Grant $7.435 million; Co-financing with KfW) – Ongoing;

• Rehabilitation of Naghlu Hydropower station, 4 x 25 MW (Grant $20 million; Co-financing with WB) ) – Ongoing;

• Feasibility study for 280 MW Baghdara Hydropower Project on Panshir River ($3.1 million)– Ongoing

• Programme Implementaion Support Unit in Minsitry of Energy and Water ($3 million, cofinanced with WB- Completed)

Asian Development Bank

(Islamic Development Bank Co-financing for Baghlan and Kunduz is included here)

Loan 1997-AFG(SF): Emergency Infrastructure Rehabilitation and Reconstruction Project - Power Infrastructure Component ($41 million) – CompletedConstruction of double circuit (DC) 220 kV line from Hairatan to Naibabad to Mazar, from Naibabad to Pul-e-Khumru, Naibabad switching station

• Capacity building on basic financial management, procurement, energy policy and regulatory mgmt, transmission system operation and load dispatch, study tours ($750,000)

Asian Development Bank

(Islamic Development Bank Co-financing for Baghlan and Kunduz is included here)

Loan 2165-AFG(SF)/Grant 0004-AFG: Power Transmission and Distribution Project ($50 million)-OngoingNorthern Area: 20 km 110 kV transmission lines from Shekanbandar to Imam Sahib; substation at Imam Sahib, Sarepul, Taluqan, and Shekanbandar (switching station); distribution network in Khan Abad, Imam Sahib and Taluqan;Central and Eastern Area: 75 km single circuit 110 kV from Naghlu to Jalalabad, and 17 km DC 110 kV from Mehtarlam to Jalalabad; substations at Jalalabad, Mehtarlam, Qarghayi and Surobi; distribution networks in Jalalabad and Mehtarlam.



Donor Generation TransmissionTransmission Distribution Technical Assistance

Regional Power Transmission Interconnection Project ($55 million for AFG part of which ADB loan is $35 million)- OngoingRegional Power Transmission Interconnection Project ($55 million for AFG part of which ADB loan is $35 million)- OngoingRegional Power Transmission Interconnection Project ($55 million for AFG part of which ADB loan is $35 million)- OngoingRegional Power Transmission Interconnection Project ($55 million for AFG part of which ADB loan is $35 million)- Ongoing

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(i) 157 km of new double circuit 220 kV transmission line from Sherkhan Bandar river border crossing to Pul-e-Khumri via Kunduz and Baghlan substations + Connection of the new 220 kV transmission line to the 220 kV Pul-e-Khumri s/s ($35 million ADB)(ii) Construction of new 220 kV switchyards at Kunduz and Baghlan s/s; supply of export/import metering equipment in Kunduz s/s ($16.5 million – IsDB cofinancing)

(i) 157 km of new double circuit 220 kV transmission line from Sherkhan Bandar river border crossing to Pul-e-Khumri via Kunduz and Baghlan substations + Connection of the new 220 kV transmission line to the 220 kV Pul-e-Khumri s/s ($35 million ADB)(ii) Construction of new 220 kV switchyards at Kunduz and Baghlan s/s; supply of export/import metering equipment in Kunduz s/s ($16.5 million – IsDB cofinancing)

Technical Assistance for Improving Capacity of DABM - $1.3 million- Training courses on mgmt, accounting and financial mgmt, planning & budgeting; tariff collection, and billing and metering management.- Training courses on expanding technical capacity including transmission network O&M, generation mgmt, and distribution

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Donor Generation Transmission Distribution Technical Assistance

Germany – KfW

• Rehabilitation of Mahipar HPP, 2x22 MW and Sarobi, 2x11 MW, EUR 17.5 million; cofinancing from ARTF USD 4 million) – Ongoing

• Rehabilitation of 110 kV transmission line from Sarobi to Breshna Kot substation and rehabilitation of s/s, street lighting Kabul (EUR 8.7 million, with cofinancing from the EU) – Completed.

• Rehabilitation and upgrade of substations in Mazar and Pul-e-Khumri as co-financing to the ADB transmission project from Heiratan to Pul-eKhumri (EUR 17 million) – Ongoing

• Rehabilitation of 15 kV and low voltage network (lines and transformers) in Kabul, special vehicles and tools (EUR 2.6 million)– Completed

Germany – GTZ – con’t(GTZ provides technical assistance and does not provide investment financing)

• Preparative analyses and measures for the rehabilitation of Chak-e-Wardak hydropower plant, 3 x 1.1 MW; (Eur 3 million)

Capacity building for DABM on basic financial management, billing and collection. Preparatory training courses in English and computer (MS-Office, Databases) in Kabul and Herat

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Donor Generation Transmission Distribution Technical AssistanceGermany – GTZ – con’t

• Capacity building for the MEW on renewable energy (RE) and energy efficiency (EE)

• Implementation of provincial demonstration and information centers for RE and EE

• Capacity building on RE and energy efficiency on provincial level to support RE supply

• Implementation of RE-pilot projects to demonstrate rural development by a sound basic energy supply

India • Reconstruction and completion of Salma Dam in Herat – Hari Rud River, 42 MW (Grant $80 million) –Ongoing

• Rehabilitation of Microhydel project in Bamiyan (Ayangaran), 3 x 250 kW (Grant $6.2 million on 50:50 basis with AKDN) – Ongoing

• Solar electricity and rain harvesting for 100 villages– Ongoing

•Double circuit 220 kV transmission line from Pul-e-Khumri to Kabul, plus new 220/110/20 kV substation in Chimtallah (Grant $100 million) – Ongoing •Faryab project involves construction of 110kV transmission line from Andhkoy to Maimana (134 km); 110/20 kV s/s at Maimana, Faizabad, Jumabajar and Andkhoi; 20/0.4 kV indoor s/s (32 nos) and pole mounted s/s (32 nos); and 20 kV transmission line. – Ongoing•New 220 kV substations at Chrikhar and Doshi

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DonorGeneration Transmission Distribution Technical Assistance

Iran •2 x132 kV, 212 km transmission line connecting Iran to Herat, 65 MVA (Grant IRR 122.2 billion; ~$13.4 million) -Completed•2 x 20 kV, 120 km transmission line connecting Iran to Herat, 6 MVA (Grant IRR 18.5 billion, ~$2 million) - Completed•20 kV transmission line from Iran to Zaranj, 33 distribution stations (Grant IRR 11.5 billion, ~$1.3 million) - Completed

Billing system in Herat ($1.4 million)

Korea • Rehabilitation of Istalif mini HPP, 200-300 kW ($2.7 million)

USAID • Provision of fuel, spare parts and technical assistance to operate the Kabul NW Power Plant (about $80 million per year) – Ongoing

• Financing of Program Manager for the North East Transmission System

• Transborder Team of 3 persons for negotiations, power purchase agreements, and commercial/technical coordination for NETS.

• Regional isolated distribution networks in Aibak, Tirin Kot and Qalat ($ 15 million)

• Rural Electrification Associations (REA) establishment for model towns, starting with Aybak.

• Billing and collection study in Kabul; creation of customer database – Terms of Reference for the computerized billing system complete.

• Training journalists in accurate energy reporting (IRD)

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Donor Generation Transmission Distribution Technical AssistanceUSAID con’t

• Provision of fuel, spare parts and technical assistance to operate the Kabul NW Power Plant (about $80 million per year) – Ongoing, but about to be transitioned to GOA.

• Operation and maintenance of diesel gen sets and fuel in Kandahar, Lashkargah, and Qalat (about $20 million in fuel plus the purchase of the units in Kandahar) – Ongoing, but about to be transitioned to GOA.

• Rehabilitation of the 110 kV transmission line from Kajakai to Kandahar and Lashkar Gah, for $35 million. (SETS)

• Construction of new 220 kV transmission line from Kajakai to Kandahar for $35 million. (SETS)

• Creation of financial model for NETS and SETS

• Vocational Training Center for MEW, under study with possible construction 2007.

• Maintain and expand the Energy Information Center, for electronic access to all power and energy data.

World Bank

Emergency Infrastructure Reconstruction Project – power component ($17 million grant, approved in June 2002) – Completed

World Bank

• Re-commissioning of the 45 MW Kabul NW Thermal Power plant + fuel for first winter ($5.5 million) – Completed January 2003

• Spare parts for Naghlu Hydropower station ($1.5 million) – Completed

• Supply of diesel gensets to provincial towns without alternate means of supply, including Faizabad, Baghdis, Bamiyan, Samanghan, and Uruzgan ($1.3 million)

• Supply of tools and distribution materials to several provincial distribution departments – Completed.

• New connections in the east part of Kabul city – Completed.

• Power Sector Master Plan – Completed in October 2004

World Bank

Emergency Power Rehabilitation Project ($105 million credit + $20 million ARTF co-financing, approved in June 2004) – Restructured 2006

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Generation Transmission Distribution Technical Assistance• Rehabilitation of 4 x 25

MW Naghlu Hydropower plant ($32 million; of which $25 million co-financed by ARTF) – contract awarded to TPE; completion time 4 years (Mar 2010)

• Upgrade of Kabul City MV Distribution Network

• Design of distribution systems in 10 provincial cities - Completed

• Restructuring of the power utility (DABM) – 3 yr contract with MVV-C;

• Advisor for MEW/ Inter-ministerial Energy Commission

• Legal Advisor for power purchase agreements.

Emergency National Solidarity Program ( Rural access component) - Ongoing

• 938 communities covered (as of now) for access to electricity under micro hydro power (MHP) sub-project – Ongoing

• 1011 communities covered (as of now) for access to electricity through solar power sub-projects – Ongoing

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afghanistan reconstruction trust fund kabul-aybak-mazar-e...

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