multinational 225 kv guinea-mali electricity ... · v project summary 1. general project overview...
TRANSCRIPT
AFRICAN DEVELOPMENT FUND
MULTINATIONAL
225 KV GUINEA-MALI ELECTRICITY INTERCONNECTION
PROJECT
RDGW DEPARTMENT
November 2017
Translated Document
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TABLE OF CONTENTS
Currency equivalents, Weights and Measures, Acronyms and Abbreviations i Project Information Sheet iii
Project Summary v
Results-based Logical Framework vii
Project Implementation Schedule viii
1. STRATEGIC THRUST AND RATIONALE 1 1.1. Project Linkages to Country Strategies and Objectives 1 1.2. Rationale for Bank’s Involvement 2 1.3. Aid Coordination 2
2. PROJECT DESCRIPTION 3
2.1. Project Description and Components 3
2.2. Technical Solution Adopted and Alternatives Considered 4
2.3. Project Type 5 2.4. Project Cost and Financing Arrangements 5 2.5. Project Area and Beneficiaries 7 2.6. Participatory Approach to Project Identification, Design and Implementation 7
2.7. Bank Group Experience and Lessons Reflected in Project Design 8 2.8. Key Performance Indicators 8
3. PROJECT FEASIBILITY 9 3.1. Economic and Financial Performance 9 3.2. Environmental and Social Impact 9
4. PROJECT IMPLEMENTATION 12 4.1. Implementation Arrangements 12
4.2. Monitoring 15 4.3. Governance 16
4.4. Sustainability 16 4.5. Risk Management 17 4.6. Knowledge Development 17
5. LEGAL FRAMEWORK 18 5.1. Legal Framework 18
5.2. Conditions Associated with the Bank’s Intervention 18 5.3. Compliance with Bank Policies 19
6. RECOMMENDATION 19
Annex I: Situation of the Electricity Sub-sectors in Guinea and Mali
Annex II: Comparative Socio-economic Indicators of Guinea and Mali
Annex III: Portfolio of Current Bank Operations in Guinea and Mali Annex IV: Major Related Ongoing Projects Financed by the Bank and Other
Development Partners Annex V: Map of the Project Area
Annex VI: Rationale of request for waiver for the project to be financed over
90% by the Bank and other donors
i
Currency Equivalents July 2017
UA 1 = 799.76245 XOF
UA 1 = 1.21923 EUR
UA 1 = 1.39139 USD
UA 1 = 12481.18 GNF
Fiscal Year 1 January – 31 December
Weights and Measures
1 kilometre (km) = 1,000 m
1 km² = 1,000,000 m²
1 kilovolt (kV) = 1,000 Volt (V)
1 kilovolt-Ampere (kVA) = 1,000 Volt – Ampere (VA)
1 kilowatt (kW) = 1,000 Watt
1 megawatt (MW) = 1,000,000 W = 1 000 kW
1 Gigawatt (GW) = 1,000,000 W = 1 000 kW
1 kilowatt-hour (kWh) = 1,000 Watt/hour = 3,600,000 Joules (J)
1 megawatt-hour (MWh) = 1,000,000 Wh = 1,000 kWh
1 gigawatt-hour (GWh) = 1,000,000 kWh = 1,000 MWh
1 tonne of oil equivalent (TOE) = 41,868 Joules = 11,630 kWh
1 million tonne of oil equivalent (MTOE) = 1,000,000 TOE
Acronyms and Abbreviations
ADF African Development Fund
AFIF/EU Africa Investment Facility/European Union
BD Bidding documents
CE Consultant Engineer
CNS National Monitoring Committee
CO2 Carbon Dioxide
CREDD Strategic Framework for Economic Recovery and Sustainable Development DEPI Directorate for Studies, Planning and Infrastructure
DNE National Directorate for Energy
DPD Detailed Preliminary Design
ECOWAS Economic Community of West African States
EDG Electricité de Guinée (Electricity Corporation of Guinea)
EDM-SA Energie du Mali - Ltd
ERR Economic Rate of Return
ESIA Environmental and Social Impact Assessment
ESMP Environmental and Social Management Plan
EUR Euro
FIRR Financial Internal Rate of Return
GDP Gross Domestic Product
GHG Greenhouse Gas
HDI Human Development Index
HV High Voltage
ICB International Competitive Bidding
IDA International Development Agency
IEC Information, Education and Communication
IMF International Monetary Fund
IsDB Islamic Development Bank
ii
IUCN International Union for the Conservation of Nature
KFAED Kuwait Fund for Arab Economic Development LV Low Voltage
MDGs Millennium Development Goals
MV Medium Voltage
NCB National Competitive Bidding
NPV Net Present Value
OMVG Gambia River Basin Development Organisation
OMVS Senegal River Basin Development Organisation
PNDES Economic and Social Development Plan PRSP Poverty Reduction Strategy Paper
RBCSP Results-based Country Strategy Paper
RP Resettlement Plan
SL Short List
SME Small and Medium-sized Enterprises
SMI Small and Medium-sized Industries
SNE National Electricity Corporation
SOFRO Strategic and Operational Framework for Regional Operations
TO Turnover
TORs Terms of Reference
UA Unit of Account
WAPP West African Power Pool
iii
PROJECT INFORMATION SHEET
BORROWERS : REPUBLIC OF GUINEA AND THE REPUBLIC OF MALI
DONEES : REPUBLIC OF GUINEA AND THE REPUBLIC OF MALI
EXECUTING AGENCIES : ELECTRICITE DE GUINEE ET ENERGIE DU MALI SA
Financing Plan
SOURCES AMOUNTS IN UA MILLION
INSTRUMENT GUINEA MALI TOTAL
ADF (PBA) 6.64 6.44 13.08 Loan
5.36 5.56 10.92 Grant
ADF (RO) 9.96 9.66 19.62 Loan
8.04 8.34 16.38 Grant
Total LOANS 16.60 16.10 32.70 Loan
Total GRANTS 13.40 13.90 27.30 Grant
TOTAL ADF 30.00 30.00 60.00
AFIF/EUROPEAN UNION 22.71 1.89 24.61 Grant
WORLD BANK 52.90 11.04
63.93 Loan
EBID 29.47 0.00
29.47 Loan
EIB 31.61 0.00
31.61 Loan
WADB 0.00 21.93
21.93 Loan
IsDB 57.71 0.00
57.71 Loan
REPUBLIC OF GUINEA 9.16 -
9.16
National
Development
Budget
REPUBLIC OF MALI - 1.22
1.22 National budget
TOTAL 233.55 66.09 299.63
Key Financial Information on the Bank Loan and Grant
ADF loans to Guinea and Mali ADF grants to Guinea and Mali
Loan/Grant currency Unit of Account (UA) Unit of Account (UA)
Interest Type Not applicable Not applicable
Interest rate margin Not applicable Not applicable
Service Charge 0.75% per year of the disbursed loan
amount not reimbursed Not applicable
Commitment fee
0.5% of the loan amount not disbursed
120 days after signature of the Loan
Agreement
Not applicable
Maturity 40 years Not applicable
Grace period and ADF loan repayment 10 years Not applicable
iv
Timeframe – Main Milestones (expected)
Concept note approval July 2017
Project approval December 2017
Effectiveness of ADF grants December 2017
Effectiveness of ADF loans February 2018
Last disbursement of ADF resources December 2021
Completion June 2022
Final Repayment November 2061
v
Project Summary
1. General Project Overview
1.1. The 225 kV Guinea-Mali Electricity Interconnection Project identified in 2011 during
an AfDB project supervision mission to Guinea, involves the construction of a double-circuit
transmission line over 714 km and associated transformer substations between the town of
N'zérékoré in Guinea and Sanankoroba (Bamako) in Mali, passing through the localities of
Beyla, Kerouane, Kankan, Fomi and Siguiri in Guinea. This transmission line is part of the
West African Power Pool (WAPP) investment programme and will be connected to other 225
kV lines being constructed in the sub-region (namely the OMVG, CLSG and OMVS lines).
Hence, it will interconnect Zone A countries (Benin, Burkina Faso, Côte d'Ivoire, Ghana,
Nigeria, Niger and Togo) to Zone B countries (The Gambia, Guinea, Guinea-Bissau, Mali,
Liberia, Senegal and Sierra Leone) of the WAPP. The project will contribute to the socio-
economic development of Mali and Guinea through community access to better quality and
affordable electricity. Costing a total of UA 200.63 million, the project will be implemented
over a five-year period (2018-2021).
1.2. The project’s direct beneficiaries are future customers of Energie du Mali (EDM-SA)
and Electricité de Guinée (EDG) in localities where the line passes in Haute Guinée, Guinée
Forestière and the Manding area in Mali as well as all current customers of EDM-SA who will
have more reliable and affordable electricity supply through the interconnected power grid.
With electricity in these areas of Guinea and Mali, it would be easy to set up new mining
companies and create sustainable jobs for the local communities whose living conditions would
improve as a result. Better energy supply to businesses (including agricultural undertakings)
would cut production costs, stimulate small-scale processing of agricultural produce and boost
agro-industry. Women and the youth in the project area would be able to develop agricultural,
trade, craft and semi-industrial and income-generating activities. The project will have a
positive impact on the schooling in the communities that will be electrified, as children would
be able to study late into the evening because their schools and homes are lit. It will contribute
to the creation of the regional electricity market and enable EDM-SA and EDG to cut their
production costs. The use of hydroelectricity will also lead to reduced consumption of
hydrocarbon products and, consequently, reduced greenhouse gas emissions, thus having an
overall positive impact on the environment. Beneficiaries will also help to strengthen project
impact through awareness campaigns to encourage good behaviour by collaborating with EDG
and EDM-SA to combat fraud and vandalism on transmission lines.
2. Needs Assessment: The inadequacies of the electricity sub-sector in both Guinea and
Mali are well known. These include: (i) a relatively low electricity access rate (18% in Guinea
and 41% in Mali) with an inordinately wide disparity between urban and rural areas; (ii) limited
production capacity relative to supply needs in Mali and limited transmission and distribution
networks in Guinea; (iii) low technical and financial capacities of national electricity companies
(EDG and EDM-SA); (iv) production costs that exceed the selling price, etc. The objective of
this project is to eliminate these constraints by focusing on building stakeholder capacity,
providing Mali with good quality and affordable energy and helping Guinea to cut its operating
costs, increase its electricity export revenue and expand its local customer base.
3. Bank’s Value-added: Fully cognizant of the relevance of the project in terms of
connectivity and integration, the Bank-financed studies in 2011 that yielded reports which were
finalised in 2017 and informed project preparation. The Bank’s involvement in the project’s
financing as lead donor designated by the recipient States, and its experience in structuring and
financing similar projects, facilitated the mobilisation of six other donors who have agreed to
participate in the funding.
vi
4. Knowledge Management: As lead donor, the Bank will continue to facilitate
consultations among the technical and financial partners during project implementation;
encourage information and data sharing among donors; and organise periodic joint reviews and
project supervision missions. The success achieved and any difficulties jointly addressed by the
donor community will be used to supplement the data from the monitoring and evaluation
mechanism set up within the project management units and the monthly control and supervision
reports of the engineering consultant. The Bank will use all these data to prepare and develop
similar operations in future.
vii
RESULTS-BASED LOGICAL FRAMEWORK
MULTINATIONAL - 225 kV GUINEA-MALI ELECTRICITY INTERCONNECTION PROJECT
Project Goal: To enable power-sharing between Guinea and Mali in order to improve community access to affordable electricity.
RESULTS CHAIN
PERFORMANCE INDICATORS
MEANS OF VERIFICATION RISKS/
MITIGATING MEASURES Indicator (including ISCs)
Baseline
situation
(2016)
2022 Target
IMP
AC
T The living conditions of project area communities are
improved through greater access to quality and
affordable electricity.
Electricity access rate in Guinea
Electricity access rate in Mali.
18%
41%
50%
54%
- Energy ministry statistics in
Guinea and Mali;
- Activity reports of EDM-SA and
EDG and monitoring/evaluation
reports of project management
units in each of the countries.
OU
TC
OM
ES
1. Energy is effectively transmitted from Guinea to
Mali through the 225 kV line.
2. The quantity of greenhouse gases emitted in the
project area is reduced.
3. Human potential and employability in the project
area are strengthened.
4. The socio-economic conditions of women are
improved.
1 1 Quantity of electricity traded (GWh/year)
1.2 Average production cost of one kWh in Mali
(CFAF/kWh)
1.3 Number of households connected by the project
2 Quantity of CO2 avoided (t/year)
3.1 Number of jobs created
3.2 Number of young interns (M/F) trained
4.1 Number of women trained per income-generating activity
0
127
0
0
0
0
0
800 to 1500
90
18,000
including 30%
headed by
women
12,150,000 T
875 (including
15% for
women)
75 (including
50% for
women)
3000
Risks
1 Weak financial capacity of national electricity companies to ensure
the sustainability of constructed infrastructure.
2 Under-utilization of the 225 kV line due to unavailability of energy
in Guinea.
Mitigating Measures:
1 Improvement of the management of electricity companies through
reforms. The EDG currently has a management contract with an
international firm. In Mali, major reforms are envisaged for EDM-SA
in the short term.
2 The Souapiti power plant (450 MW) is under construction and the
first generator should be operational in 2020 and the entire system in
2021; the Linsan-Fomi line will also be available in 2020. Furthermore,
even with a two-year delay in Souapiti, the power generation facilities
in Guinea would produce a surplus that should satisfy all or most of the
demand in Mali during this period and the rest through the CLSG line
from other countries, including the Côte d'Ivoire.
OU
TP
UT
S
1 The interconnection line is constructed
2 HV/MV substations are constructed or reinforced
3 The institutional capacity of electricity sub-sector
stakeholders is strengthened
4 Localities situated along the 225 kV line are electrified
5 Project audit and progress reports are prepared
6 Studies for new operations are conducted.
1. 225 kV line constructed (km)
2. Number of HV/MV substations constructed
3. Number of male/female employees trained
4. Number of project area localities electrified
5. 1 Number of progress reports produced
5.2. Number of audit reports approved
6. Reports of feasibility studies and ESIAs available
0
0
0
0
0
0
0
714 km
7
60 (including
30% for
women)
201
32
10
2
Quarterly project progress reports
Monthly reports of the consulting
engineer
Project completion report, audit
reports.
Risks
Limited experience of EDM-SA and EDG in the implementation of
projects of such a scale with several TFPs
Mitigating Measures
Training of the staff of the PMUs, support of PMUs by international
experts who will be recruited. Also, a consulting engineer will be
recruited to support both PMUs. The joint funding of donors on certain
lots to reduce calls to tender is envisaged.
KE
Y A
CT
IVIT
IES
COMPONENTS
Component 1: Construction of the electricity infrastructure (225 kV line, seven MV/MV substations, electrification of localities along the 225 kV line)
Component 2: Institutional support: various training courses, logistical support, conduct of feasibility studies for priority projects.
Component 3: Project management (operation of PMUs, works control and supervision, audit, IEC-ME campaigns)
Resources: UA 299.63 million Expenditure UA 299.63 million
ADF loans and grants UA 60 million Component 1: UA 263.63 million Other Donors: UA 229.25 million Component 2: UA 8.75 million States: Guinea-UA 9.16 million/ Mali-UA 1.22 million Component 3: UA 27.25 million
viii
Project Implementation Schedule
ITEM
2017 2018 2019 2020 2021
7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6
Recruitment of the key staff of the PMU
Project approval by Board
Signature of loan agreement and grant protocol
Effectiveness of grant protocol
Effectiveness of loan agreement
Lifting of the conditions precedent to first disbursement of ADF resources
First disbursement of ADF resources
A. Electricity Infrastructure
Recruitment of the consulting engineer for the line and signature of contract
Recruitment of the companies for the line works and signature of the contracts
Compensation of persons affected by the project (PAPs)
Construction of the 225 kV interconnection lines and associated stations
Monitoring and supervision of construction works on the 225 kV line
Recruitment of companies to build the grids in localities situated along the line
Construction of distribution networks in the neighbouring localities
Recruitment of the consulting engineer for the distribution networks/signature of the contract
Control and supervision of the construction of distribution networks
B. Institutional support
Miscellaneous training
Recruitment of consultants and conduct of various studies
C. Project Management
Monitoring, control and evaluation by the PMU
Audit of project accounts
1
REPORT AND RECOMMENDATIONS OF MANAGEMENT TO THE BOARD OF
DIRECTORS CONCERNING FINANCING OF THE 225 KV GUINEA-MALI
ELECTRICITY INTERCONNECTION PROJECT
Management submits this report and recommendations on: (i) proposals to award ADF loans
of UA 16.6 million and UA 16.1 million to the Republic of Guinea and the Republic of Mali
respectively; (ii) proposals to award ADF grants of UA 13.4 million and UA 13.9 million to the
Republic of Guinea and the Republic of Mali respectively, to finance the 225kV Guinea-Mali
Electricity Interconnection Project.
1. STRATEGIC THRUST AND RATIONALE
1.1. Project Linkages to the Strategies and Objectives of both Countries
1.1.1. The objectives of the Guinea-Mali electricity interconnection project reflect the visions
of the governments of both countries. These visions as set out in their sector policy letters are
aimed at supplying quality and affordable electricity to the largest number of people. The
project will help to eliminate major electricity sub-sector development constraints in Mali and
Guinea, including: (i) an electricity production deficit relative to demand; (ii) the high
predominance of thermal power in the energy mix; and (iii) the low electricity access rate in
communities located along the line.
1.1.2. The project is fully consistent with the priorities of both countries as expressed in their
respective strategy documents. In Guinea, the main target of the National Economic and Social
Development Plan (PNDES 2016-2020) under its Pillar 2 (Sustainable and Inclusive Economic
Transformation) is universal, community, regular, modern and affordable energy by 2030. In
Mali, the first strategic pillar (Inclusive and Sustainable Economic Growth) of the Economic
Recovery and Sustainable Development (CREDD2016-2018) focuses on energy infrastructure
development as a priority.
1.1.3. The objectives of this project are fully consistent with the Bank’s country strategy
papers for Guinea and Mali. Indeed, Pillar 2 (Development Support Infrastructure) of Guinea's
CSP (2012-2017) is aimed at reducing the energy production deficit by developing electricity
production and interconnection infrastructure between the countries of the sub-region
consistent with the two pillars of the Bank's CSP for Mali (2015-2019) namely: "Enhancing
Governance for Inclusive Growth" and "Infrastructure Development to Support Economic
Recovery". Moreover, the project is consistent with the Bank’s Regional Integration Strategy
Paper (RISP 2011-2015 extended to 31 December 2017) for West Africa whose Pillar I focuses
on the development of regional electricity production and transmission infrastructure.
1.1.4. At the sub-regional level, the project is an integral part of the West African Power Pool
(WAPP) project which stems from the energy development strategy of the Economic
Community of West Africa States (ECOWAS).
1.2. Rationale for Bank Involvement
1.2.1 The project was identified in 2011 by the Bank, as a key link in the electricity
interconnection of the countries in the sub-region. The technical and environmental feasibility
issues of the project were financed in the same year by the Bank and the reports, finalised in
2017, were used to prepare and evaluate it.
1.2.2 Given their low national electricity access rates (41% for Mali and 18% for Guinea),
both countries have financially unprofitable electricity sub-sectors. This situation stems from
several factors, namely: (i) the lack of backbone investments in electricity infrastructure
2
(production, transmission and distribution); (ii) the quality of governance; and (iii) the
applicable pricing policies. The Guinea-Mali electricity interconnection project, with its
transmission capacity of 500MW, will enable Mali to import approximately 800 GWh of
hydroelectricity annually, at an average cost of CFAF 92/kWh relative to the current production
cost of CFAF 130/kWh; cover its energy deficit (estimated at 150 MW in 2017) during at least
the first five years of operation and thus increase the national electricity access rate. The project
will help Guinea, not only to improve its export earnings but also to increase its national
electricity access rate by electrifying a significant part of the national territory (the East region
which is composed of Haute Guinée and Guinée Forestrière) which currently has irregular
power supply from generators that are costly to operate. It will also help to build backbone
electricity infrastructure at the regional level and a major regional electricity market through
the progressive interconnection of national grids into a single regional interconnected system.
Indeed, at N’Zérékoré, the project transmission line will be connected to the CLSG (Côte
d'Ivoire, Liberia, Sierra Leone and Guinea) interconnection line, and at Linsan it will be
connected to the interconnection line of OMVG countries through the Linsan-Fomi segment
(whose studies are being finalised with Bank funding and financing for the works has already
been raised from Guinea’s other technical and financial partners).
1.2.3 Several other reasons underpin the Bank’s intervention in the financing of the project,
including:
i) the consistency of certain project objectives (grid interconnection between the
two countries, raising of electricity access rates and improvement of living
conditions) with at least three of the Bank’s five key priorities (High-5s) namely:
to light up and power Africa; to integrate Africa; and to improve living
conditions for the people of Africa;
ii) the project's consistency with the Bank's energy policy which seeks to support
regional member countries in their efforts to improve access to modern, reliable
and affordable energy;
iii) the project's alignment with the 2014-2018 gender strategy, especially its
women’s empowerment pillar (multipurpose platforms will be constructed for
women’s groups in the project area); and
iv) the project's alignment with the Bank's youth employment policy (apart from
direct employment for women and the youth, during the works and operational
phases, the project will offer the first professional internship to at least 75 young
graduates) as well as its consistency with the objectives of the Bank's Ten-Year
Strategy (2013-2022) whose two strategic objectives are inclusive growth and
transition to green growth.
The Bank's intervention will help to raise project funding from resources of the EU's Africa
Investment Facility (AFIF/EU) and those of other donors.
1.3. Aid Coordination
1.3.1 The table below summarizes funding volumes to the electricity sub-sector over the
past five years in both countries. Annex 3 presents the technical and financial partners and their
respective funding volumes to the beneficiary countries of this project. These interventions are
coordinated within thematic working groups of which the Bank is an active member in each of
the countries. Furthermore, the preparation and appraisal of this project were jointly conducted
by the various donors concerned under the coordination of the WAPP Secretariat General. As
3
the project’s main donor, the Bank organises a monthly conference call between donors and
WAPP to harmonise viewpoints and plan the project’s next steps.
Table 1.3:
Donor funding volume in the electricity sub-sector in Guinea and Mali
Electricity sub-sector
Volume
GDP Exports Labour
Guinea 0.58% 0% 1.0 %
Mali 0.3 % 0% 1%
Stakeholders – Annual public expenditure (2012-2016)*
Government Donors
GUINEA-UA 217 million (32%) UA 462 million (68%) ADF (6.01%), IDA (5.74%), Eximbank China (65.58%), other donors (22.67%)
MALI - UA 300.8 million (42%)
UA 415.74 million
(58%) WADB (7.5%), IsDB (4.8%), Eximbank China (14.7%), other donors (31.0%)
Aid coordination level
GUINEA MALI
Existence of thematic working groups in the sub-sector Yes Yes
Existence of a global sectoral programme Yes No
AfDB role in aid coordination Member Member
2. PROJECT DESCRIPTION
2.1. Project Description and Components
2.1.1. The main development objective of the project is to consolidate the electricity trade
between Guinea and Mali in particular, and among West African countries in general; and to
ensure the socio-economic development of both countries through greater community access to
regular and affordable electricity. More specifically, the project seeks to: (i) establish grid
interconnection between Guinea and Mali, (ii) strengthen ongoing grid interconnection works
under the CLSG, OMVS, and OMVG projects in the sub-region; and (iii) promote the
connection of households to the electricity network in both countries.
2.1.2. The project entails building a 225-kV double-circuit alternating-current transmission
line over a distance of approximately 714 km, between the town of Sanankoroba in Mali and
that of N'zérékoré in Guinea (passing through Fomi in Guinea) and the construction of
transformer substations in Siguiri, Fomi, Kankan, Kerouane, Beyla and N'Zérékoré (Guinea),
and in Sanankoroba (Mali). It comprises three main components detailed in the table below.
4
Table 2.1
Project components (amounts in UA million)
No. Name of components Cost
estimate Description of components
A
Construction of
electricity infrastructure
263.63
(i) Construction of a 225 kV (alternating current) double-circuit
transmission line of 714 km between the two countries; (ii)
construction of five HV/MV transformer substations and the
extension of two other 225kV/30kV stations; (iii) electrification
of 201 localities (121 in Guinea and 80 in Mali) located near the
transmission line; and (iv) management of the environmental
and social impacts of the project.
B Institutional support
8.75
(i) Capacity building for electricity sub-sector stakeholders in
both countries (various training courses and logistical support to
national electricity corporations and national directorates for
energy) and the Secretariat of the West African Power Pool
(WAPP); (ii) conduct of feasibility studies and environmental
and social impact assessments for certain priority projects
featured in the investment plan to prepare for future donor
interventions in both countries.
C Project management 27.25
(i) Operation of the project management units (PMUs) and the
Supranational Steering Committee; (ii) works control and
supervision (225 kV line and distribution network); (iii) project
audit; (iv) energy and women's empowerment; (v) recruitment
and training of 75 interns, young graduates, comprising 30 in
Mali and 45 in Guinea.
Total project cost 299.63
2.2 Technical Solution Adopted and Alternatives Considered
2.2.1 The construction of a 225 kV (alternating current) double-circuit interconnection line was
adopted for the national electricity interconnection of Guinea and Mali. The operating voltage
of the line (225 kV) has been retained in the production and transmission master plan adopted
by ECOWAS Heads of State and Government to take account of the fact that this segment of
line will be integrated with other lines of the same voltage being constructed in the sub-region
(CLSG and OMVG interconnection lines and the OMVS network in particular) and electricity
transmission needs, not only between Guinea and Mali, but also between the other countries of
West Africa.
2.2.2 Alternatives to the abovementioned solution were studied but abandoned for the reasons
outlined in the table below:
Table 2.2
Alternative Solutions Considered and Reasons for Rejection
Alternative Solution Brief Description Reason for Rejection
Continuation of the
development of national
systems
Each of the two countries will
continue to face the challenge of
satisfying growing demand using
its own generally costly power
generation facilities
Regular supply is not guaranteed
Average production cost per kWh is higher
Higher pollution because electricity would be
generated mainly through thermal power
plants fired with petroleum products.
Cross-border medium-
voltage electrification in
Haute-Guinée, Guinée
Forestière and Koulikoro
(Mali).
Electrifying the regions through
the medium-voltage networks in
neighbouring countries,
especially Côte d'Ivoire
The electrification coverage will be very
limited because the voltage cannot cover long
distances;
The available capacity in Côte d'Ivoire will not
be able to cover the needs of all regions
concerned.
5
2.3 Project Type
2.3.1 The 225 kV Guinea-Mali electricity interconnection project is an autonomous
multinational operation for the construction of an electricity transmission network linking the
two countries. The financing mechanisms proposed are ADF loans and grants that would be
awarded to Guinea and Mali in accordance with the ADF XIV lending policy and the Strategic
Framework for Regional Operations.
2.4 Project Cost and Financing Arrangements
2.4.1 The total project cost, net of taxes and customs duties, is evaluated at UA 299.63
million. This cost includes a 5% provision for physical and technical contingencies and a 5%
provision for price escalation, and will be financed up to 20% by the Bank. Project costs by
component, financing source and expenditure category are presented in Tables 2.3, 2.4 and 2.5
below:
Table 2.3
Estimated costs by component
Amount (in UA million) % Foreign
exchange Components F.E. Local
currency Total
Construction of electricity infrastructure 207.63 32.03 239.66 87%
Institutional support 5.57 2.39 7.96 70%
Project management 17.34 7.43 24.78 70%
Base Cost 230.54 41.85 272.39 85%
Physical contingencies 11.53 2.09 13.62 85%
Provision for price escalation 11.53 2.09 13.62 85%
Total project cost 253.60 46.04 299.63 85%
2.4.2 The project will be co-financed by the World Bank (WB), the European Union, IsDB,
EBID, EIB, WADB, ADF and the Governments of Guinea and Mali. The WADB approved
the project in 2016 and the EBID approved it in October 2017. The other donors intend to
submit it to their respective Boards within the first semester of 2018.
Table 2.4
Project Financing Sources
Financing Sources
Amount (in UA million)
% Total F.E.
Local
currency Total
ADF 51.26 8.74 60.00 20.0%
IsDB 51.94 5.77 57.71 19.3%
EBID 26.52 2.95 29.47 9.8%
EIB 28.45 3.16 31.61 10.5%
WADB 19.62 2.31 21.93 7.3%
EU/AFIF 20.34 4.26 24.61 8.2%
World Bank 55.10 8.83 63.93 21.3%
Government of Guinea 0.21 8.94 9.16 3.1%
Government of Mali 0.15 1.07 1.22 0.4%
Total project cost 253.60 46.04 299.63 100%
2.4.3 The ADF resources are grants and loans awarded under the conditions indicated in the
project information sheet on Page iii, which were negotiated and accepted by the two
governments (the exchange rates adopted are those that feature on Page i).
6
2.4.4 Evidence of the low participation of Guinea and Mali in the project’s financing is
presented in Annex VI of this report.
2.4.5 Project cost by expenditure category is presented as follows:
Table 2.5
Project costs by expenditure category
Expenditure categories
Amount (in UA million) % Foreign
exchange F.E. Local
currency Total
Works 228.39 35.24 263.63 87%
Goods 1.62 0.69 2.31 70%
Services 13.69 5.87 19.56 70%
Operation and miscellaneous 9.90 4.24 14.14 70%
Total project cost 253.60 46.04 299.63 85%
2.4.6 The expenditure schedule by project component is as follows:
Table 2.6
Expenditure schedule by component
Components Amount (in UA million)
2,018 2,019 2,020 2,021 Total
Construction of electricity infrastructure 52.73 79.09 92.27 39.54 263.63
Institutional support 2.19 2.63 3.06 0.88 8.75
Project management 5.45 8.18 9.54 4.09 27.25
TOTAL 60.36 89.89 104.87 44.51 299.63
% Total 20.1% 30.0% 35.0% 14.9% 100.0%
2.4.7 In Guinea, ADF resources will be used to finance the total cost of the 225kV/30kV
station in Fomi, the Fomi-Kankan segment of the line (43.3 km) and part of the construction
works for the distribution networks in localities situated near the 225 kV line, institutional
support and project management. In Mali, the ADF resources will fund part of the cost of the
Sanankoroba (Mali)-Guinea/Mali border segment (125.6 km), construction works on the
distribution networks in localities along the 225 kV line, institutional support and project
management.
Table 2.7
ADF resources by expenditure category
Expenditure categories
Amount (in UA million) % Foreign
exchange F.E. Local
currency Total
Works 41.69 4.63 46.32 90%
Goods 1.62 0.69 2.31 70%
Services 5.70 2.44 8.14 70%
Operation 2.26 0.97 3.23 70%
Total 51.26 8.74 60.00 85%
2.4.8 The EU/AFIF grant resources managed by the Bank under the PAGODA agreement
will be used to finance consultancy studies for works supervision on the line and part of the
construction works in localities situated along the project line in each country. Since these
resources are grants exclusively, they will supplement the loans granted to the project by the
other donors.
7
Table 2.8
AFIF/EU resources by expenditure category
Expenditure categories
Amount (in UA million) % Foreign
exchange F.E. Local
currency Total
Works 14.03 1.56 15.59 90%
Services 6.31 2.71 9.02 70%
Total 20.34 4.26 24.61 83%
2.5 Project Area and Beneficiaries
2.5.1 The project area covers two administrative regions in Guinea and one in Mali. The two
regions of Guinea are: (I) Haute Guinée with a surface area of 103,235 km² and an estimated
population of 2,645,453 inhabitants and (ii) Guinée Forestière with a surface area of 122,600
km² and a population of 1,947,191 inhabitants. These two regions comprise 7 prefectures, 21
rural council areas and 4 urban council areas. In Mali, it is the Koulikoro region, which is the
second administrative region of Mali, comprising 07 cercles and extending over 90,120 km²,
with 2 418,305 inhabitants, of which 50.4% are women.
2.5.2 The project will directly benefit, not only the two national electricity companies (EDG
and EDM-SA) which will reduce their electricity production costs, but also the 201 localities
(comprising 121 in Guinea and 80 in Mali) and their inhabitants who will have access to
electricity and thus improve their living conditions. It will improve the quality of electricity
supplied to all EDM customers though the interconnected national network and lead to the
connection of at least 18,000 households. The works phase will employ approximately 825
people, including 15% of women/girls who will hold over 50 permanent jobs during the
operational phase. As regards socio-professional integration, at least 75 young graduates, 50%
being girls, will be able to perform their first internships, thus enhancing their employability.
The project will also enable industries and businesses, especially in the mining and agricultural
sectors, to boost their activities and thus have a clear impact on employment in the sub-region.
2.6 Participatory Approach to Project Identification, Design and
Implementation
2.6.1 In accordance with AfDB and national policies, the Governments of Guinea and Mali
adopted a participatory and inclusive approach. Hence, the project was designed based on a
feasibility study conducted in collaboration with all the stakeholders (electricity companies,
energy ministries, communities located along the project line, local administrative authorities,
youth and women’s organisations, artisans’ groups, etc.). During preparation of the ESIA and
the full resettlement plan (FRP), public consultations were held in Mali and Guinea, with the
national, regional and municipal authorities and village chiefdoms to hear their expectations
on the development of the various project facilities. Furthermore, the communities and
women's groups in project area localities were consulted to determine their fears, expectations
and wishes about the project. Lastly, a survey was conducted targeting persons affected by the
project to inform them, make an inventory of their damaged property and define compensation
conditions.
2.6.2 This participatory approach will be maintained and reinforced during project
implementation in Guinea and Mali through a regional stakeholders commitment plan (SCP).
The SCP will be implemented by the PMU in close collaboration with the communities
affected by the project, local authorities and the heads of decentralised institutions. The Bank
8
posted a summary of the ESIA and FRP on its website on 8 August 2017, that is, 120 days
prior to submission of the project to its Board of Directors.
2.7 Bank Group Experience and Lessons Reflected in Project Design
2.7.1 To date, the Bank’s portfolio in Guinea has had no problematic projects; it comprises
four projects for which first disbursements have not been made, although the contracts have
been awarded and disbursements will soon be made. In Mali, the portfolio has no problematic
project; one project is classified as potentially problematic and three have not yet been the
subject of any disbursements although the contracts have been signed and the first
disbursements will be made soon. However, the Bank's portfolio reviews conducted in 2016
as well as its project supervision and completion reports for these two countries have revealed
three types of recurrent project implementation problems. These are: (i) the late
commencement of projects due to insufficient ownership by the national counterpart; (ii)
procurement delays especially in the signing of contracts by national authorities; and (iii)
limited human capacity for project implementation.
2.7.2 Furthermore, the Bank's diverse experience in financing and monitoring the
implementation of multinational infrastructure projects, as evident in various supervision and
completion reports, reveals several challenges that need to be addressed to improve project
performance. These difficulties essentially stem from: (i) the multiplicity of stakeholders with
different technical and operational capabilities; (ii) poor coordination and harmonisation of
project activities in the various countries; (iii) the shortcomings of national electricity
companies (NECs) including their financial situation, no technical monitoring of the activities,
and procurement difficulties; (iv) delays in lifting fund disbursement conditions; and (v) delays
in raising government counterpart funds, which retard the compensation of project affected
persons and consequently, project commencement. Actually, the Bank has financed several
multinational and multi-donor projects in the electricity sub-sector, the most recent being the
Manantali Project of the Senegal River Basin Development Organisation (OMVS), the
NELSAP Interconnection Project, the CLSG interconnection project and the grid
interconnection project of OMVG countries.
2.7.3 The project design took into account all the elements listed above. To address noted
shortcomings, provision is made for: (a) a supranational steering committee supported by the
WAPP Secretariat General to coordinate the activities of the project management unit in each
country; (b) capacity building for national stakeholders and WAPP (training and logistical
support); (c) appointment of the key PMU staff members prior to project approval (they are
already in place and are working to prepare the relevant documents with a view to fulfilling
the conditions precedent to the first disbursement of ADF resources); (d) the use of advance
procurement action to gain time and (e) sensitisation of both governments on the need to
schedule national counterpart funds in their 2018 budgets.
2.8 Key Performance Indicators
2.8.1 Project performance will be measured through performance indicators detailed in the
results-based logical framework. The project’s main performance indicators are: (i) the
quantity of energy exchanged through the interconnected network; (ii) the decline in the
average production cost per kWh in Mali; (iii) the electricity access rate in the project area;
(iv) the volume of greenhouse gases avoided per year; and (iv) the number of direct and
indirect jobs by gender created. The project outputs are: (i) the operation of a 225-kV
transmission line; (iii) the construction of 5 new substations; and (iv) the reinforcement of two
transformer stations.
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2.8.2 The data on these performance indicators will be provided through quarterly project
progress reports produced by the PMUs and monthly reports of the engineering consultant, the
reports of the joint supervision missions of donors, including the Bank, and project completion
reports (of the Borrowers and the Bank).
3 PROJECT FEASIBILITY
3.1 Economic and Financial Performance
Table 3.1
Key Economic and Financial Data of the Project
Baseline Scenario ERR 21.28% % ENPV EUR 312 million
3.1.1 Economic Performance of the Project: The project’s economic performance was
analysed based on the economic rate of return (ERR) generated from a comparison of updated
costs (investment and operation of the electricity systems) in both countries in the “no project”
(two separate and autonomous grids) and “project” situations. The economic costs used to
calculate the economic rate of return (ERR) and the economic net present value (ENPV) are
project costs net of taxes and the provision for price escalation, adjusted with the appropriate
conversion factor for equipment, works, services and labour. Maintenance costs and the other
operating costs were processed in the same manner. This comparative analysis showed that the
project generates a substantial economic rate of return compared to the "no project" situation
and therefore constitutes the most advantageous situation (see technical annex in Table B.7).
3.1.2 Financial Performance of the Project: The project impact analysis was limited to
economic impacts. Indeed, financial analysis of the project based on the rates currently
applicable in Guinea and Mali could lead to the conclusion that the project is not financially
profitable for both companies. Indeed, the current average rates charged to customers by EDM-
SA and EDG do not cover the average production cost per kWh and it is a well-known fact that
an increase in rates is necessary to ensure that both companies are in a comfortable financial
situation. The argument for building an interconnection line despite the lack of immediate
financial profitability at current rates is that, apart from its obvious economic profitability, the
project will greatly improve electricity supply in the regions concerned at an affordable cost
and thus facilitate the subsequent application of rate increase measures. Besides, future use of
the line by neighbouring countries that will be interconnected subsequently, will increase transit
income for EDG and EDM-SA and improve their respective financial situations.
3.1.3 Sensitivity Analysis of Project Performance The project was analysed in terms of: (i)
a 10% increase in investment costs; (ii) a 10% increase in operating expenses; and (iii) a two-
year delay in the operation of the line. The analysis revealed that the economic rate of return,
though highly sensitive to late implementation of the project, remained higher than the
economic cost of capital estimated at 10% in both countries, thus confirming the economic
viability of the project.
3.2 Environmental and Social Impact
3.2.1 Environment
The 225 kV Guinea-Mali Electricity Interconnection Project is classified in category 1, from
the environmental and social standpoints. Hence, its design included a complete environmental
and social impact assessment (ESIA), an Environmental and Social Management Plan (ESMP)
and a full resettlement plan (FRP) for persons affected by the project. The ESIA, ESMP and
the FRP were validated in each country and by the Bank and the relevant summaries were
10
posted on the Bank’s website on 8 August 2017 in accordance with the applicable requirements.
An environmental and social analysis of the project is presented in Technical Annex B8.
3.2.1.1 Negative Impact
The most significant negative impacts expected during construction of the line relate to the loss
of land, vegetation and wildlife habitat. The project will have a negative impact on: (i) the
diversity of plant ecology and local flora; (ii) the bird life, primate population and other fauna
as well as the fragmentation of their environments; (iii) the ecosystem services of the wetlands
and alluvial valleys of the Tinkisso, Niger and Milo rivers; (iv) the ecosystem services of the
humid agro-forests in Guinea Forestière; and (v) the crossing of RAMSAR sites. It will also
lead to deforestation owing to the clearing of an eight-metre-wide strip (included in the 40-
metre corridor), free of any crops and trees and sometimes skirting classified forests, to build
the interconnection line. Its impact is also evident in: (vi) the clearing of 2,842 ha of forest land,
comprising 598 ha of wooded savannah in Mali, and 1,119 ha of wooded savannah, 916 ha of
woodlands and 209 ha of rain forest in Guinea. It will also affect (vii) 2,022 people, including
1,686 in Guinea and 336 in Mali.
In the operational phase, the main impacts on air quality will relate to transport and traffic,
periodic clearing of the right-of-way and access to the 225 kV lines. Maintenance work on the
rights of way is likely to: (i) disrupt or destroy wildlife and their habitats by opening up easy
access through the right-of-way. Impacts related to the presence of equipment, include: (i) risk
of electrical accidents for the local population, (no exploitation of the farmland beneath the
lines, near the transformer substations and in the permanent access areas.
3.2.1.2 Positive Impact
During the construction phase, the project will create a number of economic opportunities (jobs,
boosting of local production) that may not, however, equitably benefit the poor. The human
development impacts are: (i) improvement of the socio-economic conditions of the local
communities through the monetary benefits earned from construction workers paying for
sundry services; (ii) collection of felled trees by the local population for other uses (wood fuel,
charcoal, carpentry, etc.); (iii) creation of direct temporary jobs and indirect jobs during
construction; (iv) development of new access roads; and (v) the fact that the 40-metre cleared
corridor would serve as a barrier against bush fires.
The most significant positive impact is the electrification of the villages along the transmission
line. This will (i) improve quality of life for almost 1,220,000 inhabitants; (ii) boost the
productivity of enterprises, create new income-generating activities and extend the working day
thanks to street lighting (opening of new services, sale of frozen products, opening of
workshops, etc.); (iii) improve the quality of public services, including health and education
and expand access to information and entertainment technologies; (iv) offer periodic
employment opportunities to project area youth through maintenance works (cleaning of the
line corridor) and (v) boost the productivity and competitiveness of women entrepreneurs in the
electrified localities who operate in the services sector where they are often better represented
than men.
3.2.1.3 Mitigation and Land Improvement Programme
Mitigation of the negative effects identified during the implementation phase will mainly
depend on the organisation of work, as recommended in the terms of reference for companies.
This organisation is based on binding clauses for companies and the Consultant Engineer, the
11
obligation to have a Health, Safety and Environmental Plan that includes emergency provisions,
as well as an environmental protection plan for sensitive environments.
In all, the specific and mitigating measures are: (i) a reforestation programme (based on the
principle of planting 2 units for 1 unit deforested; it will involve NGOs, regional and local
relays of the Guinean and Malian Ministries for women's empowerment, and the local water
and forestry services; (ii) a specific wildlife management plan, with biodiversity/fragmentation
monitoring and wildlife protection components; (iii) a communication plan; (iv) a conservation
and cultural heritage conservation plan; and (v) an employment plan.
Organisational responsibilities will be exercised by: the Project Management Units (PMUs) in
each country, together with the consulting engineer (same firm for the whole project), and in
case of complaints, the Conciliation and Monitoring Committees (CCS). These structures will
be supported by the steering committee which will play an advisory role and interact primarily
with the WAPP Secretariat General. The ESMP will be regularly monitored to ensure that any
negative effects are mitigated. It has defined the objectives to be attained and outlined the
prevention and intervention plans for project implementation and operation. These plans take
into account the environmental situation (soil, water, key site, etc.) and its interaction with
project activities. The ESMP will be updated in cases where certain unidentified impacts were
either not taken into account or were under-estimated. Its total budget, net of taxes, is EUR
10,674,987, representing 3% of the total project budget.
3.2.2 Climate Change
3.2.2.1. The risk of natural disasters is high in Guinea. Floods, landslides and earthquakes have
become a concern. The sites particularly exposed are: (i) the banks of the Niger and Milo rivers.
(ii) rugged terrain, especially between the Simandou and Going mountains. In Mali, the rivers
are prone to seasonal flash floods and, consequently, bank erosion and river-bed sedimentation.
3.2.2.2. Erodible and rugged areas, as well as erosion of the banks of watercourses located
within the right-of-way were taken into account such that construction of the line was designed
to incorporate preventive measures for adapting to these risks. As a result, less than 30% of the
line alignment passes through such areas. The related costs are included. Implementation
studies will fine-tune the construction arrangements and set out the final design, which will
include: (i) installing and building pylon base structures outside floodplains; (ii) installing
substations outside flood-prone/erodible areas, and with backfilling; (iii) sizing pylon
foundations taking into account the average speeds of dominant winds.
3.2.2.3. Regarding mitigation, provision has been made for a compensatory reforestation plan
to ensure a positive net gain relative to the vegetation cover destroyed. This surplus will
contribute to carbon sequestration. Furthermore, with respect to GHG emissions, the following
parameters were considered: (i) the manufacture of construction materials; (ii) transportation of
such materials; (iii) deforestation of the 40-metre corridor in preparation for the various sites;
(iv) clearing of the corridor; (v) operation of the facilities with a life expectancy of 40 years,
calculated based on the projected export of 800 to 1120 GWh of hydroelectricity per year from
Guinea to Mali by 2030. This will make it possible to avoid emissions equivalent to 12,150,450
metric tonnes of CO2, which is a substantial positive impact.
3.2.3 Gender
3.2.3.1. The population that has no access to energy includes a large number of women. Yet,
women are primarily responsible for providing energy to households through the collection and
use of traditional fuels. Furthermore, in the absence of modern energy, women are expected to
12
execute all manual production and processing activities; which further increases their workload.
They are also the first victims of health impacts linked to the use of inappropriate energies and
fuels. A detailed gender analysis per country is presented in the technical annexes (B. 10) of
the project.
3.2.3.2. To remedy the situation, it was agreed that the following activities be implemented by
the Ministry in charge of gender in each country: (i) organising awareness campaigns on
rational energy use, prevention of electricity accidents, gender-based violence (GBV),
HIV/AIDS and rational access to basic social services (Guinea and Mali); (ii) supporting
women operating income-generating activities through training and guidance in various trades
(Guinea); (iii) supporting the operationalization of four GBV counselling centres in the
prefectures of Siguiri, Kankan, Kerouane and N'Zérékoré (in Guinea); and (iv) getting women’s
and youth groups in the project area to carry out reforestation actions that will improve the
environment and boost the incomes of women in such areas (in Mali). It has also been agreed
that a gender and socio-economic expert will be recruited into the project team. The total
estimated budget for the implementation of these activities is USD 413,000 for Guinea and
USD 205,000 for Mali.
3.2.4 Employment
3.2.4.1. During construction of the electrical infrastructure, the project will create over 825
direct, skilled and unskilled jobs, including at least 15% for women to the extent possible.
During the operational phase, approximately 50 permanent jobs will be created.
3.2.4.2. To promote employability, the project will recruit and train 45 young graduates in
Guinea and 30 in Mali, with at least 50% of them being women. The recruitment will be done
in three stages during project implementation for a period of 6 months, renewable once.
3.2.4.3. The social mitigation measures to be developed in the ESMP and FRP will facilitate
the promotion of income-generating activities for at least 3,000 women and girls/boys.
Furthermore, the project will stimulate the development of additional income-generating
activities by supplying energy for small businesses operated by women, girls and the youth
(mills, improved woodstoves, shops, hairdressing salons, welding workshops, etc.). Finally, the
construction of this electricity network and rural electrification will benefit small and medium-
sized enterprises and businesses.
3.2.5 Forced Resettlement
The project will affect 1,686 people in Guinea and 336 in Mali, located within its right-of-way,
with the expropriation of agricultural or residential land, the loss of miscellaneous property and
socio-economic damage. Accordingly, and in keeping with the Bank's requirements, an
approved and published full resettlement plan (FRP) has been submitted by each country,
setting out the appropriate measures to be taken in favour of persons affected by the project.
Women's groups will be consulted in decision-making on the distribution of compensation to
affected persons.
4 PROJECT IMPLEMENTATION
4.1 Implementation Arrangements
4.1.1 Project Implementation: The Ministries in charge of energy, through their respective
National Directorates for Energy in each country, shall be responsible for project control and
supervision. The latter will be delegated to the national electricity companies (Electricité de
13
Guinée (EDG) and Energie du Mali (EDM-SA) to which the ADF resources will be transferred
by the two governments. Within each company, a Project Management Unit (PMU) will be set
up to ensure the technical, administrative, accounting and financial management of the project
segment on each national territory for all financing provided by the various project donors. The
key PMU staff is composed of: one project manager, three electrical engineers, one
administrative and accounting officer, one procurement expert, one monitoring and evaluation
expert and one environmentalist. The complete staff list of each PMU is presented in the Annex.
4.1.2 For the PMU in Guinea, three international experts will be recruited (one procurement
expert, one sub-station electrical engineer and one transmission line electrical engineer) to
manage all project procurements, lend their expertise to the PMU and train national staff in
their respective specialties. The other PMU staff members shall be appointed by the Guinean
Government and their CVs shall be submitted to the Bank for prior approval. The project
manager must be freed from all other activities and be assigned exclusively to the project. An
international procurement expert will be recruited for the PMU in Mali to manage the
procurements of this project and of another mini hydroelectricity power station project also
financed by the Bank. Since Mali has extensive experience in the operation and maintenance
of 225 kV lines, EDM-SA has qualified engineers to monitor the construction of 225 kV lines
and substations. In each country, the Project Manager will ensure the implementation and
regular monitoring of project activities as well as the management of individual contracts. He
shall be provided with all the technical and managerial resources needed to supply all the
services required for the technical, administrative and financial management of the project.
Each country has already appointed its Project Manager following the Bank's formal approval
of their CVs. Apart from the staff to be recruited, Mali has already provided the Bank with the
CVs of the other PMU staff members. Guinea should do same before the project is submitted
to the Board of Directors.
4.1.3 A consultancy firm (CF) will also be recruited to monitor and supervise all
construction works on the 225 kV line, as well as the ESMP on both territories and two
consulting engineers will also be recruited to supervise construction work on the distribution
networks in project area localities. Recruitment of the CF responsible for works control on the
225 kV line will be entrusted to the WAPP Secretariat General. Furthermore, a Supranational
Steering Committee (SSC) will be set up to provide strategic guidelines on the coordination and
alignment of the activities of both PMUs. The SSC will be composed of 11 officials from both
countries (five per country) and from the WAPP Secretariat General. The Guinean members of
the SSC are: the National Director for Energy, the National Director for Public Investments,
the General Manager of EDG, the General Manager of the Guinean Bureau of Studies and
Environmental Assessments (BGEEE) and the General Manager of the Major Projects and
Public Procurement Administration and Control Authority (ACGPMP). On the Malian side, the
members of the SSC are: the National Director for Energy, the National Director for Sanitation
and Pollution Control (DNACPN), the National Director for Development Planning, the
Director General for Public Debt and the General Manager of EDM-SA. WAPP will be
represented by its Secretary General.
4.1.4 The facilities constructed shall be operated and maintained by EDG and EDM-SA, on
their respective national territories.
4.1.5 Procurement Arrangements: In Guinea, Bank-financed goods under the project
(including services other than those of consultants) shall be procured in accordance with the
Procurement Framework for Bank Group-funded Operations, October 2015 edition, and in
accordance with the provisions set out in the Financing Agreement. More specifically,
procurements will be done according to the Bank's Procurement Methods and Procedures
(BPM) based on the standard bidding documents (SBD) for goods, works and consultancy
14
services for which the BPM is deemed to be best adapted. Indeed, an analysis of the
procurement system in Guinea, as presented in Technical Annex B5, has resulted in
classification of the procurement risk as substantial. Accordingly, during project
implementation, the Bank's procurement procedures and methods will be used with the
understanding that a capacity development action plan will be discussed with Guinean
authorities to enable the rapid use of the national procurement system after implementation of
the necessary reforms.
4.1.6 In Mali, works on the 225 kV line are jointly financed by the Bank and WADB which
agreed that that the Bank’s procurement rules and procedures should be applied. Since EDM-
SA which controls the project is not subject to national procurement procedures, it was agreed
that Bank-financed goods, works and consultancy services be procured in accordance with the
“Procurement Policy and Methodology for Bank Group-Funded Operations” dated October
2015. They will also comply with the provisions that will be set out in the financing agreement,
using the Bank's procurement methods and procedures (BPM) and the relevant standard
bidding documents (SBDs). Procurements will be effected by the PMU to be established
within the Directorate for Studies and Strategic Planning of EDM-SA and staffed with an
international procurement expert. The expert will be responsible for all planned project
procurements and will be supported in his tasks by a procurement assistant, the competent
technical services and partners involved in the project as well as the Procurement Directorate
of EDM-SA.
4.1.7 Risk and procurement capacity assessment (RPCA): Risks at the country, sector and
project levels as well as the procurement capacity of the executing agency (EA) were assessed
and the results were used to determine the Bank’s procurement methods and procedures needed
for all scheduled project activities. The appropriate risk mitigation measures have been included
in the PERCA action plan presented in Annex B5. The detailed procurement arrangements and
project procurement plans in each country are also presented in Technical Annex B5.
4.1.8 Given the urgent need to implement the project for both countries and to mitigate
procurement delay risks, the Governments have sought the Bank's agreement in principle to use
advance procurement actions (APA) for the construction of the 225 kV line and the recruitment
of the engineering consultancy firm that will conduct works control and supervision. This
authorisation was sought pursuant to Article 11.2 of the Procurement Policy for Bank Group-
Funded Operations.
4.1.9 Financial Arrangements: In Guinea, the assessment of the financial management
components and the other project implementation units hosted by EDG is satisfactory,
although some adjustments need to be made. Project counterpart funds, essentially composed
of compensation for affected persons and PMU office rental costs, must be included in the
State budget for FY2018. With regard to internal control, since the project is funded by several
donors, a procedures manual will be prepared based on the provisions of the procedures
manuals existing in the Implementation Unit for Bank-funded Projects; the Internal Audit Unit
of the EDG shall periodically audit the operations of the PMU. Accounting software will also
be procured for project management. The PMU will produce quarterly financial monitoring
reports for the Bank and annual financial statements for submission to an annual financial and
accounting audit. Lastly, training on the financial management requirements of Bank-financed
projects will be provided to PMU staff when the project is launched. Implementation of the
action plan agreed upon and detailed in the annex should lead to proper project commencement
and ensure the effective operation of financial management components.
15
4.1.10 In Mali, EDM-SA is responsible for the administrative, financial and accounting
management of the project through the Directorate of Studies and Strategic Planning within
which the project management unit (PMU) will be established. The capacity assessment of
EDM-SA has highlighted its strengths and weaknesses detailed in Technical Annex B6 of the
appraisal report. EDM-SA already has: (i) staff capable of managing a project; and (ii)
experience in managing projects financed by multilateral partners. However, it does not have
integrated accounting and financial management software adapted to development projects.
Indeed, the company's accounts are managed with Oracle software whose “project
management” module was not procured. Furthermore, EDM-SA does not have an
administrative, accounting and financial procedures manual. Consequently, multi-project,
multi-user, multi-donor and multi-site integrated accounting and financial management
software adapted to development projects will have to be procured under the project as well as
a manual of administrative, accounting and financial procedures. Financial management staff
will have to be trained to use the software and the procedures manual. Moreover, guidance
(assistance) should be provided by the software supplier until the first comprehensive annual
financial statements to be audited are produced.
4.1.11 In both countries, project accounts will be kept using private sector accounting
standards and the abovementioned integrated software. The accounting plan will be developed
based on the accounting law standards of the Uniform Act of the Organisation for the
Harmonisation of Business Law in Africa (OHADA), applicable in both countries. Moreover,
a work plan and annual budget (WPAB) will be prepared in each country, as well as quarterly
financial management reports in which a clear analysis must be made between budget
estimates and actual expenditure for the quarter. Any discrepancies should be analysed and
explained. Whenever necessary, the internal auditors of EDM-SA and EDG must be involved
in the development of the work plan, the analysis and explanation of discrepancies and the
various transactions executed under the project in each country must be reviewed periodically.
The financial management details of the project can be found in Technical Annex B4.
4.1.12 Disbursement Arrangements: The ADF funds will be disbursed through: (i) the
special account method; (ii) the direct payment method; and (iii) the reimbursement method.
A special account in local currency will be opened in each country to receive ADF resources.
These methods are detailed in the technical annexes of this appraisal report.
4.1.13 External Audit Arrangements: The financial statements of the project in each country
will be audited annually by independent audit firms. The audit terms of reference shall be
approved by the Bank in advance and the audit firms shall be recruited within six months
following the commencement of project activities. The audit contract will be concluded for a
non-renewable period of three years. Continuation of the contract for another two years shall
be predicated on the Bank's approval of the audit report of the first year. The audit reports must
reach the Bank no later than six months following the end of the fiscal year.
4.2 Monitoring
4.2.1 The monitoring and evaluation experts in the PMUs shall each submit periodic reports
on the progress of project indicators. The reports of joint periodic supervision missions of
donors, the engineering consultant responsible for works control and supervision as well as
project audit will be used to monitor implementation and the attainment of set objectives.
Project progress reports, prepared by each PMU on a quarterly basis, shall be submitted to the
Bank. All of the abovementioned reports will make it possible to identify constraints or delays,
where appropriate, and to take suitable actions that ensure implementation of the project within
the prescribed timeframe and the achievement of its overall objectives.
16
4.2.2 The Bank’s project monitoring activities are summed up in the table below. They will
be conducted following the project implementation schedule found in page (vi). At least two
joint project supervision missions by donors will be conducted per year. At the end of the
project, both PMUs shall prepare and submit a completion report to the Bank. The Bank will
also prepare its own completion report and a project performance evaluation report.
Table 4.2
Monitoring of project activities / Feedback loop
Period Stages Monitoring activities/Feedback loop
December 2017-
February 2018
Project approval and
effectiveness of ADF loans and
grants
- Board approval
- Notification to Governments
- Signing of ADF loan and grant agreements
- Effectiveness of the grants and loans
- Lifting of conditions precedent to effectiveness and first
disbursement of ADF loans and launch of the project
August 2017 to
February 2018
Recruitment of international
experts, consulting engineers
and construction contractors
- Notice for expressions of interest, consultancy files
- Approval of the file and bid evaluation
- Recruitment of consultants and works contractors
March 2018 to
December 2018
Recruitment of the external
auditor and other consultants
- Notice for expressions of interest, consultancy files
- Approval of the file and bid evaluation
- Recruitment of the audit firm and other consultants
March 2018 to
December 2018
Electricity infrastructure
construction works
- Supply and installation of equipment
- Control and supervision (consulting engineer)
- Joint project supervision missions/ESMP monitoring
June 2019 Joint mid-term review by
donors
- Joint mid-term review mission by all donors and the Bank
December 2020
to June 2021 Project completion
- Project completion report by Borrowers
- The Bank’s project completion report
4.3 Governance
4.3.1 In such a large-scale project funded by several donors, governance issues, including
fraud and corruption may arise during the procurement. Since the evaluation of national
procurement systems was inconclusive, it was decided to use AfDB procurement rules and
procedures which require the prior approval of the Bank at each stage of the procurement
process. With regard to administrative and financial management, there are plans to develop
administrative, accounting and financial procedures manuals, keep a separate accounting for
the project, and use the appropriate management software and independent external auditors
who will perform financial and operational audits of the project. All these provisions will ensure
that project resources are used efficiently and for their intended purpose.
4.4 Sustainability
4.4.1 The project's sustainability is underpinned by the stated willingness of the Malian and
Guinean Governments to develop electricity trade between the two countries. Indeed, a
Memorandum of Understanding on electricity between the two countries was signed on
21/06/2017. The physical sustainability of the project and its outcomes are also predicated on
good governance in the electricity sub-sector in each country and a better financial situation for
the national electricity companies (EDG and EDM-SA) to ensure proper maintenance of the
structures. In Guinea, the Government has initiated reforms, since 2011, which have placed
EDG under a management contract in order to ensure its good governance and improve its
technical, commercial and financial performance. However, it has been proven that all efforts
would go in vain if the applicable rates remain below the production cost per kWh. The
government has, therefore, requested the Bank (which has accepted) to finance a pricing study
17
and a physical/financial equilibrium model; these are being prepared by a consultant expected
to submit the first reports in the first quarter of 2018. The Government will undertake, within
the framework of this financing, to implement the relevant recommendations of these studies.
Similarly, a pricing study is underway in Mali and reforms are being considered which could
lead to the splitting of EDM-SA into two separate entities, namely: an asset management
company and an operating company. Pending the recommendations of the pricing study, the
Malian Government has since 2015 pledged to raise the rates annually by 3% until 2018 to
reduce or even eliminate the operating subsidies.
4.4.2 Furthermore, this project will increase the export revenue and domestic sales of EDG
and significantly reduce the kWh cost of electricity sold by EDM-SA by replacing highly
expensive thermal energy with affordable hydroelectricity. In short, the project should help to
improve the financial situation of the two electricity companies, putting them in an ideal
situation for appropriate monitoring and adequate maintenance of the facilities, everything else
being equal.
4.5 Risk Management
4.5.1 The potential risks identified for the project are:(i) the non-availability of energy in
Guinea leading to under-utilization of the 225 kV line; (ii) the low financial capacity of the
national electricity companies (EDG and EDM-SA) to honour their commitments and maintain
the facilities; and (iii) the limited experience of national electricity companies to execute large-
scale projects funded by several donors.
4.5.2 The mitigating measures for these risks are: (i) the energy in Guinea should come mainly
from the hydroelectric power plants of Kaléta (240 MW) and Souapiti (450 MW) during the
first years of operation of the line. The Kaléta power plant has been operational since 2015
and the Souapiti plant is already under construction, and its first generators are expected to
go operational by the end of 2020 and the entire plant by 2021. Furthermore, the portion of
the 225 kV Linsan-Fomi line which will transmit this energy from the western to the eastern
part of Guinea, and subsequently to Mali will be available in 2021 at the latest, because the
Government has already secured the funding from Chinese cooperation and work is expected
to start during the first quarter 2018. Moreover, even with a pessimistic hypothesis of a 2-
year delay in the availability of the Souapiti plant, the power generation facilities envisaged
by Guinea (ongoing rehabilitation of the current hydroelectric plants, planned construction of
other small hydropower plants, etc.) would generate a surplus that will satisfy all or most of
Malian demand until 2024 and the rest could be imported from Côte d’Ivoire through the
CLSG line; (ii) reorganisation of the management and improvement of the financial situation
of the electricity companies through ongoing reforms in both countries and the application of
rates that accurately reflect production costs; and (iii) capacity building for stakeholders
involved in the sub-sector, including the national electricity companies, the national
directorates for energy departments and the project management units (PMU) through specific
training for their staff, and the hiring international experts in key positions to support the
PMUs.
4.6 Knowledge Building
4.6.1 Apart from the knowledge on best practices that will be shared among donors during
the supervision missions and joint project reviews, the Bank could also deepen its knowledge
through the results of three types of specific activities identified during project
implementation. These are: (i) training during project implementation for young
inexperienced employees of the national electricity companies serving as assistants, by
experienced professionals recruited to serve within the project management units; such
18
trained young employees will constitute the group of experts capable of successfully
managing the PMUs of future operations in the sub-sector and in the country; (ii)
implementation of the “Energy and women’s empowerment, information, education and
communication” component by women's groups specialized in this kind of communication
and having experience in the project area, under the supervision of the ministry in charge of
women's and children's affairs in each country; and (iii) internships for 75 young graduates
(50% being girls) who, thanks to the project, will have their first professional experience for
a duration of six months, renewable once.
4.6.2 The monitoring and evaluation system instituted in each PMU; the project's half-yearly
financial reports, interim financial reports and annual external audit reports; and the
supervision missions following which lessons will be learnt, will all constitute information
sources on the project. The publication of project completion and performance appraisal
reports will help to disseminate knowledge to Bank staff and the public. The lessons learnt
will enhance the design of similar future Bank operations.
5. LEGAL FRAMEWORK
5.1 Legal Instrument
5.1.1 The ADF will award grants and loans from its routine resources to the Republics of
Guinea and Mali as its funding quota for the project, as well as grants from the resources of
the Africa Investment Facility of the European Union (AFIF/EU) which it administers under
this project.
5.2 Conditions Associated with the Bank’s Involvement
A. Conditions Precedent to Effectiveness of the Grants and Loans
(i) The effectiveness of ADF grants shall be subject to signature by the parties
concerned of the relevant grant agreement protocols;
(ii) The effectiveness of ADF loans shall be subject to the Borrowers’ fulfilment of
the conditions provided for in Section 12.01 of the Fund’s General Conditions
for Loan Agreements and Guarantee Agreements.
B. Conditions Precedent to First Disbursement of ADF Resources
5.2.1 Apart from effectiveness of the grant agreement protocols, first disbursement of ADF
resources shall be subject to fulfilment by the Donee/Borrower to the satisfaction of the
Fund of the following conditions:
5.2.1.1 Conditions precedent to first disbursement of ADF grants and loans awarded to the
national electricity companies (EDG and EDM-SA)
(i) Each State must provide the Bank/Fund with proof of signature of an agreement
transferring the received funds to its national electricity company under terms
acceptable to the Bank/Fund;
(ii) Provide the Bank/Fund with proof of appointment of the key staff members of
the Project Management Unit including the project manager, the administrative
and accounting officer, the monitoring and evaluation expert, and the
environmentalist.
19
5.2.1.2 Conditions precedent to first disbursement of the resources of the Africa Investment
Facility of the European Union (AFIF/EU) transferred to WAPP for the recruitment
of a Consulting Engineer for project works control and supervision
The Republic of Guinea and the Republic of Mali will have to provide the Bank/Fund with
proof of signature of an agreement transferring the funds received from AFIF/EU for project
works control and supervision to the WAPP General Secretariat, under terms acceptable to the
Bank/Fund.
C. Other Conditions
Each State shall:
(i) Provide the Bank/Fund with proof of approval by the other donors of their share
of project financing, prior to commencement;
(ii) Provide the Bank/Fund with proof of the opening of a special account by the
national electricity company in a bank acceptable to the Bank/Fund, to receive
AfDB/ADF funds;
(iii) Forward to the Fund, at the latest before the beginning of works in the area
concerned: (a) proof of the procurement of land or of compensation of project
affected persons (PAPs), in accordance with the Bank's rules and procedures,
especially its involuntary population resettlement policy, its integrated
safeguards system, the Environmental and Social Management Plan (ESMP), the
full resettlement plan (FRP) and the applicable national regulations; or (b),
where such acquisition or compensation of certain PAPs is impossible, proof of
deposit into an escrow account satisfactory to the Fund, of financial resources to
be used for the procurement of land or compensation of such persons; in
accordance with the abovementioned rules and procedures.
(iv) Establish, no later than 6 (six) months after the first disbursement, a performance
contract between the national electricity company and its technical supervisory
Ministry.
D. Commitments
5.2.2 The Government of Guinea, as Borrower/Donee, undertakes to:
(i) finalise the drafting and ensure the adoption of the new electricity law no later
than the end of 2018;
(ii) implement the recommendations of the pricing study with a view to achieving
the financial equilibrium of the sub-sector over the next five years;
(iii) implement the project, the Environmental and Social Management Plan (ESMP)
and the full resettlement plan (FRP) and have them implemented by its
contractors in accordance with national laws, recommendations, prescriptions
and procedures contained in the ESMP and the FRP, and with the applicable
rules and procedures of the Bank/Fund; and
(iv) provide the Fund with quarterly reports on the implementation of the project,
ESMP and FRP, and with any document that is reasonably necessary for
monitoring project implementation.
20
5.2.3 The Government of Mali, as Borrower/Donee, undertakes to:
(v) implement the recommendations of the pricing study with a view to achieving
the financial equilibrium of the electricity sub-sector over the next five years;
(vi) continue electricity sub-sector reforms with a view to improving its technical
and financial performance;
(vii) implement the project, the Environmental and Social Management Plan (ESMP)
and the full resettlement plan (FRP) and have them implemented by its
contractors in accordance with national laws, recommendations, prescriptions
and procedures contained in the ESMP and the FRP, and with the applicable
rules and procedures of the Bank/Fund;
(viii) provide the Fund with quarterly reports on the implementation of the project,
ESMP and FRP, and with any document that is reasonably necessary for
monitoring project implementation.
5.3 Compliance with Bank policies
5.3.1 The project is in compliance with all the Bank’s applicable policies.
6. RECOMMENDATION
Management recommends that the Board of Directors approves the proposal to award a loan of
UA 16.6 million and a grant of UA 13.4 million to the Republic of Guinea as well as the
proposal to award a loan of UA 16.1 million and a grant of UA 13.9 million to the Republic of
Mali, to finance the 225kV Guinea-Mali Electricity Interconnection Project, under the
conditions set out in this report.
I
Annex I.1- Situation of the Electricity Sub-sector in Guinea
Annex I.2- Situation of the Electricity Sub-Sector in Mali
The electricity sub-sector situation in Guinea, detailed in Technical Annex A, can be summarized as follows:
Guinea is a country in West Africa with an estimated population of 12.9 million inhabitants (2016), of which 36.8%
live in urban areas. It has one of the lowest human development indices in the world, with 73% of the population
earning less than two US dollars a day.
The electricity sub-sector remains poorly developed. Only 29% of the population has access to electricity and only
18% are formally and legally connected to the grid. In rural areas, only 2% have formal access to electricity.
The installed production capacity as of end-September 2017 was 629.97 MW, of which one third was the own facilities
of the State-owned Electricité de Guinée (EDG). The installed capacity is dominated by hydroelectricity
(approximately 59% or 367.37 MW), thanks to commissioning of the Kaléta dam in 2015 (240 MW), which has helped
to resolve the capacity deficit on the interconnected network during the rainy season. The Souapiti hydropower plant
(450 MW) is under construction and its first generator will be commissioned in 2021. The country's total hydro-
electricity potential is estimated at 6,000 MW. A hydroelectricity mapping is being prepared with funding from one
of Guinea’s technical and financial partners to facilitate the identification of potential useable sites. Moreover, Guinea
is located at the centre of the West African Power Pool (WAPP) and will therefore be crisscrossed by transmission
lines interconnecting the countries of the Economic Community of West Africa States (ECOWAS) by 2025. Indeed,
the interconnection line of the networks of OMVG and CLSG countries, which are being built with financing from
TFPs of Guinea including the Bank, will reach the localities of Linsan and Nzérékoré in Guinea. The Guinea-Mali
interconnection line targeted by this project will join the other two lines to connect Guinea to at least 11 countries of
the sub-region.
One of the Government's main development objectives, as set out in the National Economic and Social Development
Plan (PNDES) is to increase access to electricity. Indeed, a vast electricity sub-sector investment programme (which
includes this project) is being developed to achieve universal access by 2030. This objective is consistent with the
commitments of the SE4ALL initiative which the Government joined in 2012 and entails reaching 1.7 million
connections. In addition to the benefits that it brings to households, the programme will substantially improve the
quality of public services through the electrification of schools as well as administrative and health centres.
At the institutional level, EDG which is a public corporation, has a monopoly on electricity transmission and
distribution nationwide; while production is left to private independent producers. The electricity law is being
reviewed by a Bank-funded consultant to adapt it to current realities. Since 2015, the EDG has been under a four-year
performance contract managed by the VEOLIA-SEURECA Group in order to streamline its technical, financial and
commercial performance. The financial situation of the EDG over the last five years is characterized by a growing
deficit and a severe financial imbalance. The company's solvency is weakened, although it continues to honor its
medium and long-term financial commitments.
The current interconnection project with Mali will enable the EDG to sell electricity to EDM-SA at a substantial profit,
and to supply electricity to a region of the country that has hitherto had virtually no supply or been powered by small
costly generators (which will no longer be used). These actions are expected to improve nation-wide electricity supply
and the financial situation of the company. However, such improvement of the financial situation of EDG remains
contingent on the application of realistic rates. Actually, the average electricity rate at end-2016 was GNF 778 while
the production cost was GNF 1,571, excluding energy supply from Kaléta; and GNF 890 for energy from the Kaléta
plant whose output is currently supplied free of charge to EDG. A pricing study was launched in the first half of 2017
with Bank funding. The study results expected in the first half of 2018, will determine the rates needed to ensure the
sector’s financial balance and the Government will take appropriate decisions, either by adjusting the rates or
committing to pay adequate operating subsidies.
II
The electricity sub-sector situation in Mali, detailed in Technical Annex A, can be summarized as follows:
Mali is a country in West Africa with an estimated population of 18.1 million inhabitants (2016), of which 37.6% live
in urban areas. It has one of the lowest human development indices in the world (41.9% at end-2014), with 91% of
the population earning less than two US dollars per day.
The electricity sub-sector is relatively less developed with a national electricity access rate of 41%. In rural areas, only
17% of the people have formal access to electricity, relative to 66.8% in urban areas. The total installed production
capacity in end-September 2017 was 556.2 MW, of which 486.2 MW came from the interconnected network. The
composition of the production facilities on the interconnected network are 37.7% for hydropower and 62.3% for
thermal power. Owing to the obsolescence and unavailability of certain power plants, EDM-SA is unable to satisfy
the needs of all its customers and continues to engage in load shedding despite imports from Côte d'Ivoire
(approximately 50 MW) and the purchase of energy from independent producers (approximately 98 MW in 2016).
Furthermore, the predominance of thermal energy in the energy mix is detrimental to EDM-SA which regularly
records a deficit because of the very high energy production costs. This makes the sub-sector highly dependent on
hydrocarbons products whose import volume is rising steadily to meet the demands of a rapidly growing population
(doubling every 20 years) and economic growth. Consequently, the Malian economy as a whole is vulnerable to oil
price volatility. Yet, the opportunities to develop renewable energy sources (hydro, solar, and wind) are not fully
tapped. For instance, only 250 MW of hydroelectric power potential of 1000 MW in the Niger and Senegal rivers is
currently tapped. The country could become a major producer of solar energy since it receives 7 to 10 hours of
sunshine per day throughout the year (with average irradiation of 5 to 7 kWh/m2/day, relative to an estimated global
average of 4-5 kWh/m2/day).
Accordingly, the Malian Government, through the first strategic pillar of its Strategic Framework for Economic
Recovery and Sustainable Development (CREDD 2016-2018) entitled “inclusive and sustainable economic growth”
which has prioritised energy infrastructure development, decided that production facilities had to be diversified, which
implies developing the country's hydroelectricity potential; exploring the options offered by solar, biofuel and wind
energies; and increasing the interconnection rate to the sub-regional power pool.
From the institutional standpoint, EMD-SA, which is a semi-public company in which the State of Mali has a 66%
stake, with the remaining capital (34%) held by IPS WA (Industrial Promotion Services West Africa), is the main
concessionaire for electricity supply in Mali. It is responsible for the generation, transmission and distribution of
electricity in the country on the interconnected network and in major cities. Power generation is open to private entities
and the monopoly on wholesale purchase of electricity enjoyed by EDM-SA since 2000, ended on 31 December 2010,
thus opening up the possibility for third parties to gain access to the network.
Moreover, although the price of electricity is relatively high (CFAF 97/kWh on average at end-2016), it is still
insufficient to cover the production costs of the electricity distributed (CFAF 130/kWh). The current regulatory
framework is not conducive enough to private investment in the energy sector, despite the strong private sector
involvement in rural electrification over the last five years. In recent years, EDM-SA has recorded accumulating losses
that have undermined its financial position. The company's solvency is affected and if timely action is not taken, it
may not be able to keep honouring its medium and long-term financial commitments. The 225 kV Guinea-Mali
Electricity Interconnection Project which will enable EDM-SA to import electricity at a price significantly lower than
the current production cost per kWh, offers some hope for the improvement of its financial situation. However, this
remains predicated on the application of realistic rates or payment by the State of sufficient subsidies to ensure the
financial balance of the sub-sector.
III
Annex II. Comparative Socio-economic Indicators
Year Guinea Africa
Develo-
ping
Countries
Develo-
ped
Countries
Basic Indicators
Area ( '000 Km²) 2016 246 30 067 97 418 36 907Total Population (millions) 2016 12,9 1 214,4 6 159,6 1 187,1Urban Population (% of Total) 2016 36,8 40,1 48,7 81,1Population Density (per Km²) 2016 52,7 41,3 65,1 33,8GNI per Capita (US $) 2015 470 2 153 4 509 41 932Labor Force Participation *- Total (%) 2016 82,3 65,7 63,5 60,0Labor Force Participation **- Female (%) 2016 79,4 55,7 48,9 52,1Sex Ratio (per 100 female) 2016 100,6 100,1 106,0 105,0Human Dev elop. Index (Rank among 187 countries) 2015 183 ... ... ...Popul. Liv ing Below $ 1.90 a Day (% of Population) 2012 35,3 ... 14,6 ...
Demographic Indicators
Population Grow th Rate - Total (%) 2016 2,7 2,5 1,3 0,6Population Grow th Rate - Urban (%) 2016 3,8 3,6 2,4 0,8Population < 15 y ears (%) 2016 42,4 40,9 27,9 16,8Population 15-24 y ears (%) 2016 19,9 19,3 16,9 12,1Population >= 65 y ears (%) 2016 3,1 3,5 6,6 17,2Dependency Ratio (%) 2016 83,4 79,9 54,3 52,0Female Population 15-49 y ears (% of total population) 2016 23,3 24,0 25,7 22,8Life Ex pectancy at Birth - Total (y ears) 2016 59,6 61,5 69,9 80,8Life Ex pectancy at Birth - Female (y ears) 2016 60,1 63,0 72,0 83,5Crude Birth Rate (per 1,000) 2016 35,9 34,4 20,7 10,9Crude Death Rate (per 1,000) 2016 9,4 9,1 7,6 8,6Infant Mortality Rate (per 1,000) 2015 61,0 52,2 34,6 4,6Child Mortality Rate (per 1,000) 2015 93,7 75,5 46,4 5,5Total Fertility Rate (per w oman) 2016 4,9 4,5 2,6 1,7Maternal Mortality Rate (per 100,000) 2015 679,0 476,0 237,0 10,0Women Using Contraception (%) 2016 7,8 31,0 62,2 ...
Health & Nutrition Indicators
Phy sicians (per 100,000 people) 2005-2015 9,7 41,6 125,7 292,2Nurses and midw iv es (per 100,000 people) 2005-2015 ... 120,9 220,0 859,4Births attended by Trained Health Personnel (%) 2010-2015 39,3 53,2 69,1 ...Access to Safe Water (% of Population) 2015 76,8 71,6 89,4 99,5Access to Sanitation (% of Population) 2015 20,1 39,4 61,5 99,4Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2015 1,6 3,4 ... ...Incidence of Tuberculosis (per 100,000) 2015 177,0 240,6 166,0 12,0Child Immunization Against Tuberculosis (%) 2015 72,0 81,8 ... ...Child Immunization Against Measles (%) 2015 52,0 75,7 83,9 93,9Underw eight Children (% of children under 5 y ears) 2010-2015 16,3 18,1 15,3 0,9Prev alence of stunding 2010-2014 35,8 33,3 25,0 2,5Prev alence of undernourishment (% of pop.) 2015-2016 16,4 16,2 12,7 ...Public Ex penditure on Health (as % of GDP) 2014 2,7 2,6 3,0 7,7
Education Indicators
Gross Enrolment Ratio (%)
Primary School - Total 2010-2016 91,3 101,2 104,9 102,4 Primary School - Female 2010-2016 83,8 98,4 104,4 102,2 Secondary School - Total 2010-2016 38,8 52,6 71,1 106,3 Secondary School - Female 2010-2016 30,7 50,2 70,5 106,1Primary School Female Teaching Staff (% of Total) 2010-2016 30,0 47,1 59,8 81,0Adult literacy Rate - Total (%) 2010-2015 30,5 66,8 82,3 ...Adult literacy Rate - Male (%) 2010-2015 38,1 74,3 87,1 ...Adult literacy Rate - Female (%) 2010-2015 22,9 59,4 77,6 ...Percentage of GDP Spent on Education 2010-2015 3,2 5,0 4,0 5,0
Environmental Indicators
Land Use (Arable Land as % of Total Land Area) 2014 12,6 8,7 11,2 10,3Agricultural Land (as % of land area) 2014 59,0 41,7 37,9 36,4Forest (As % of Land Area) 2014 26,0 23,2 31,4 28,8Per Capita CO2 Emissions (metric tons) 2014 0,2 1,1 3,5 11,0
Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update :
UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports.
Note : n.a. : Not Applicable ; … : Data Not Available. * Labor force participation rate, total (% of total population ages 15+)
** Labor force participation rate, female (% of female population ages 15+)
COMPARATIVE SOCIO-ECONOMIC INDICATORS
Guinea
June 2017
0
20
40
60
80
100
120
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Infant Mortality Rate( Per 1000 )
Guinea Africa
0
500
1000
1500
2000
2500
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
GNI Per Capita US $
Guinea Africa
0,0
0,5
1,0
1,5
2,0
2,5
3,0
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Population Growth Rate (%)
Guinea Africa
01020304050607080
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Life Expectancy at Birth (years)
Guinea Africa
IV
Year Mali Africa
Develo-
ping
Countries
Develo-
ped
Countries
Basic Indicators
Area ( '000 Km²) 2016 1 240 30 067 97 418 36 907Total Population (millions) 2016 18,1 1 214,4 6 159,6 1 187,1Urban Population (% of Total) 2016 37,6 40,1 48,7 81,1Population Density (per Km²) 2016 14,9 41,3 65,1 33,8GNI per Capita (US $) 2015 790 2 153 4 509 41 932Labor Force Participation *- Total (%) 2016 66,3 65,7 63,5 60,0Labor Force Participation **- Female (%) 2016 50,3 55,7 48,9 52,1Sex Ratio (per 100 female) 2016 102,0 100,1 106,000 105,000Human Dev elop. Index (Rank among 187 countries) 2015 175 ... ... ...Popul. Liv ing Below $ 1.90 a Day (% of Population) 2009 49,3 ... ... ...
Demographic Indicators
Population Grow th Rate - Total (%) 2016 3,0 2,5 1,3 0,6Population Grow th Rate - Urban (%) 2016 5,2 3,6 2,4 0,8Population < 15 y ears (%) 2016 47,4 40,9 27,9 16,8Population 15-24 y ears (%) 2016 19,3 19,3 16,9 12,1Population >= 65 y ears (%) 2016 2,5 3,5 6,6 17,2Dependency Ratio (%) 2016 99,8 79,9 54,3 52,0Female Population 15-49 y ears (% of total population) 2016 21,9 24,0 25,7 22,8Life Ex pectancy at Birth - Total (y ears) 2016 59,0 61,5 69,9 80,8Life Ex pectancy at Birth - Female (y ears) 2016 58,8 63,0 72,0 83,5Crude Birth Rate (per 1,000) 2016 42,3 34,4 20,7 10,9Crude Death Rate (per 1,000) 2016 9,8 9,1 7,6 8,6Infant Mortality Rate (per 1,000) 2015 74,5 52,2 34,6 4,6Child Mortality Rate (per 1,000) 2015 114,7 75,5 46,4 5,5Total Fertility Rate (per w oman) 2016 6,1 4,5 2,6 1,7Maternal Mortality Rate (per 100,000) 2015 587,0 476,0 237,0 10,0Women Using Contraception (%) 2016 12,0 31,0 62,2 ...
Health & Nutrition Indicators
Phy sicians (per 100,000 people) 2005-2015 8,5 41,6 125,7 292,2Nurses and midw iv es (per 100,000 people) 2005-2015 44,3 120,9 220,0 859,4Births attended by Trained Health Personnel (%) 2010-2015 58,6 53,2 69,1 ...Access to Safe Water (% of Population) 2015 77,0 71,6 89,4 99,5Access to Sanitation (% of Population) 2015 24,7 39,4 61,5 99,4Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2015 1,3 3,4 ... ...Incidence of Tuberculosis (per 100,000) 2015 57,0 240,6 166,0 12,0Child Immunization Against Tuberculosis (%) 2015 79,0 81,8 ... ...Child Immunization Against Measles (%) 2015 76,0 75,7 83,9 93,9Underw eight Children (% of children under 5 y ears) 2010-2015 ... 18,1 15,3 0,9Prev alence of stunding 2010-2014 ... 33,3 25,0 2,5Prev alence of undernourishment (% of pop.) 2015-2016 5,0 16,2 12,7 ...Public Ex penditure on Health (as % of GDP) 2014 1,6 2,6 3,0 7,7
Education Indicators
Gross Enrolment Ratio (%)
Primary School - Total 2010-2016 75,8 101,2 104,9 102,4 Primary School - Female 2010-2016 72,1 98,4 104,4 102,2 Secondary School - Total 2010-2016 41,3 52,6 71,1 106,3 Secondary School - Female 2010-2016 36,8 50,2 70,5 106,1Primary School Female Teaching Staff (% of Total) 2010-2016 30,0 47,1 59,8 81,0Adult literacy Rate - Total (%) 2010-2015 33,1 66,8 82,3 ...Adult literacy Rate - Male (%) 2010-2015 45,1 74,3 87,1 ...Adult literacy Rate - Female (%) 2010-2015 22,2 59,4 77,6 ...Percentage of GDP Spent on Education 2010-2015 3,6 5,0 4,0 5,0
Environmental Indicators
Land Use (Arable Land as % of Total Land Area) 2014 5,3 8,7 11,2 10,3Agricultural Land (as % of land area) 2014 33,8 41,7 37,9 36,4Forest (As % of Land Area) 2014 3,9 23,2 31,4 28,8Per Capita CO2 Emissions (metric tons) 2014 0,1 1,1 3,5 11,0
Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update :
UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports.
Note : n.a. : Not Applicable ; … : Data Not Available. * Labor force participation rate, total (% of total population ages 15+)
** Labor force participation rate, female (% of female population ages 15+)
COMPARATIVE SOCIO-ECONOMIC INDICATORS
Mali
June 2017
0
20
40
60
80
100
120
140
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Infant Mortality Rate( Per 1000 )
Mali Africa
0
500
1000
1500
2000
2500
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
GNI Per Capita US $
Mali Africa
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Population Growth Rate (%)
Mali Africa
01020304050607080
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Life Expectancy at Birth (years)
Mali Africa
V
Annex III.1 Portfolio of Current Bank Operations in Guinea as of 31/07/17
Projects Status Approval
date
Closing
date
Disb.
Rate
Amount
approved Balance Sector
1 PPF - Support for the
transformation of Guinean
agriculture - youth
entrepreneurship component
OnGo 03/08/2016 30 June
2018
7.59% 990,000 914,859 Agriculture
2 Rural Electrification Project OnGo 21/01/2011 30/11/2017 69.92% 14,960,000 4,499,968 Energy
3 Second Electricity Network
Rehabilitation and Extension
Project
OnGo 11/09/2013 31/12/2017 46.91% 11,000,000 5,839,803 Energy
4 CLSG Interconnection Project OnGo 06/11/2013 31/12/2018 0.00% 28,910,000 28,910,000 Energy
5 Energy Project - OMVG
GUINEA
OnGo 30/09/2015 31
December
2020
0.00% 46,250,000 46,250,000 Energy
6 Financial Sector
Modernization Support Project
APVD 15/03/2017 31/12/2017 0.00% 2,400,000 2,400,000 Financial
7 Economic Planning and
Governance Support Project
OnGo 10/07/2013 30
September
2017
82.88% 11,380,000 1,948,256 Governance
8 Administrative Capacity
Building Support Project
APVD 15/07/2016 30/06/2020 6.09% 6,000,000 5,634,600 Governance
9 Economic and Financial
Reform Support Programme
APVD 13/07/2016 31/12/2017 100.00% 10,520,000 0 Governance
10 Road Development and
Facilitation Programme
APVD 18/12/2014 30/06/2020 0.00% 33,173,000 33,173,000 Transport
21.75% 165,583,000 129,570,486
VI
Appendix III.2 Portfolio of Current Bank Operations in Mali as of 31/07/2017
Sector
Project Approval date Date of Ist
actual disbursement
Closing date
Approved amount
(UA million)
Disbursement rate
1
Agriculture
Bani Basin and Sélingué Irrigation Development Programme
27/05/2009 21/01/2010 31/12/2018 44 49.3%
2 Project for Food Security Consolidation through Development of Irrigation Farming
03/12/2013 20/04/2015 31/12/2019 36 22%
3 Mali – Food and Nutrition Security Support Project in Koulikoro
17/09/2014 05/03/2015 31/12/2019 36 17.0%
4 Programme to Build Resilience to Food and Nutrition Insecurity in the Sahel
15/10/2014 23/10/2015 30/06/2020 36.4 1.0%
5 Agro-industry Project for Diversification of the Activities of “Moulin Moderne de Mali” - M3 (private sector)
17/09/2014 03/06/2015 10/11/2020 13.3 9.1%
6 Water and sanitation
Bamako Drinking Water Supply Project
09/10/2013 15 December
2014 31/12/2018 50 13.0%
7 Bamako City Sanitation Project 11/01/2017 Not yet 31 December
2020 30 0.0%
8 Transport Mali-Côte d'Ivoire Transport Development and Facilitation Project
26/11/2015 Not yet 31/12/2019 70.8 12.9%
Sector Project Approval date Date of Ist
actual disbursement
Closing date Approved amount
(UA)
Disbursement Rate
9
Governance
Economic Governance Support Project 01/07/2013 08/05/2015 31/12/2017 10 39.0%
10 Economic Governance Reform Support Programme II - Budget Support
14/12/2016 Not yet 31/12/2017 23.15 0.0%
11 Land-use Management Master Plan 28/02/2017 Not yet 30/06/2018 1 0.0%
12 Finance Line of Credit to Banque Malienne de Solidarité
06/07/2011 05/03/2015 30/09/2018 4.4 100%
13
Energy
Ségou Solar Power Plant Project 31 October
2016 Not yet 30/06/2020 24.9 0.0%
14 Study on the Development of Mini and Micro Hydropower Plants
19/04/2013 11/02/2016 30/06/2017 1.8 16.9%
15 Renewable Energy Promotion Support Project
22/10/2014 22/09/2015 31/01/2019 1.5 6.0%
16 Climate Change Accelerating the construction of a green economy resilient to climate change
17/08/2015 Not yet 31/12/2017 0.3 0.0%
17
Social
Capacity building for the National Centre for Documentation and Information on Women and Children (CNDIFE)
15/03/2016 15/02/2017 30/06/2017 0.08 50.0%
18 Socio-economic Reintegration Support Project for Communities in Northern Mali
30/11/2016 Not yet 31
December 2020
10.5 0.0%
19 Youth Forum on Employment and Peace by GYIN- Global Youth Innovation Network
15/02/2017 Not yet 30
September 2017
0.06 0.0%
Total/Average 394.2 19%
VII
Annex IV. 1
Major Related Ongoing Projects Financed by the Bank and Other Development Partners in Guinea
Donors Amount
Million F.E. Projects Status
World Bank 37.30 USD Improvement of energy sector efficiency - 2006
Implemented up to
70%
4.10 USD Decentralised rural electrification - 2002 Fully executed
African Development
Fund
12.00 UA
Conakry Electricity Network Rehabilitation and
Extension Project (PREREC 1) - 2008 completed
14.96 UA Rural Electrification Project – 2011 Ongoing
1.66 UA Guinea - Mali Interconnection Line Study - 2011 completed
11 million
Second Conakry Electricity Network Rehabilitation and
Extension Project (PREREC 2) - 2013 In process
40.80 UA CLSG interconnection line - 2013 Ongoing
46.25 million Interconnection of OMVG Networks - 2015 Ongoing
Islamic Development
Bank 11.50 USD
Conakry Electricity Network Rehabilitation and
Extension Project (PREREC 1) - 2008
Implemented up to
80%
17.45 USD Rehabilitation of the Kombo power plants - 2012 Starting-up
ECOWAS Bank for
Investment and
Development
30.0 USD Rehabilitation of the networks of four regional capitals -
2008 Ongoing
ECOWAS Commission 10.0 USD Rehabilitation of power plants -2011 Ongoing
ECOWAS Commission 20.0 USD Procurement of fuel oils and spare parts-2011 Ongoing
French Development
Fund 1.0 EUR Energy Sector Studies and Capacity Building Fund - 2012 Ongoing
Eximbank China 334.5 USD Kaléta Hydropower Plant Development - 2012 Ongoing
Annex IV. 2
Major Related Projects Financed by the Bank and Other Development Partners of Mali
Projects
Donors Cost Period
Construction of the National Control Centre of
Bamako and Doubling of the Capacity of the
Sotuba II Hydroelectric Power Station
WADB and gov't Mali 22494 MXOF 2010-2018
Construction of the Ségou-Markala-Niono HV 63
kV line
WADB and gov't Mali 12000 MXOF
Energy Sector Support Project (PASE) World Bank USD 120
million
2009-2014
Extension of the IsDB Balingué Power Plant
(additional 23 MW)
IsDB 197000 MXOF 2013-2015
Construction of the Sikasso and Bamako 225 kV
line
BIMC-EXIM Bank and Gov't
of Mali
USD 100
million
2012-2016
Hydroelectricity dam in Taoussa Kuwaiti Fund; IsDB;
WADB; Saudi Fund; OPEC;
ABEDA; EBID; Abu Dhabi
Fund and Gov't of Mali
XOF 130000
million
VIII
Annex V Map of the Programme Area
The staff of the African Development Bank Group (AfDB) have provided this map for the exclusive use of
readers of this report to which it is appended. The appellations and the demarcations on this map do not imply
any judgment on the part of the ADB Group and its members concerning either the legal status of a territory or
the approval or acceptance of its boundaries.
IX
Annex VI
Rationale for Requesting a Waiver for the Project to be financed over 90% by the Bank
and other Donors
The purpose of this note is to justify a waiver for financing of the 225kV Guinea-Mali Electricity
Interconnection Project with ADF resources in accordance with the policy governing expenditure
eligible for Bank Group funding (ADB/BD/WP/2007/106/Rev.2- ADF/BD/wp/207/72/Rev.2 of 2 May
2008).
I. GUINEA
The Guinean Government requested a waiver to be exempted from providing the maximum
counterpart contribution to the project’s financing. The Government hopes that its counterpart
contribution will be limited to a maximum of UA 9.16 million, representing 3.1% of the total
project cost, which is below the 10% required by the Policy on Expenditure Eligible for Bank
Group Financing under the ADF window. The justification of the request is based on the
following three criteria.
1.1 The Country’s Commitment to implement its General Development Programme
In recent years, although the margin of progress has remained significant, road infrastructure
remains inadequate and deficient even though the country has spent over 10% of its budget on
such infrastructure. This has enabled it, under a five-year road plan (2012-2016), to: (i) build
450.2 km of prefectural roads; (ii) rehabilitate 612.8 km of prefectural and community roads;
(iii) build 176.6 km of road network; (iv) rehabilitate 15 km of road network; (v) pave 522 km
of national roads; and (vi) build 352 linear metres of major facilities. During implementation
of PNDES 2016-20, which has a pillar on infrastructure, Guinea plans to take up this major
challenge in an environment constrained by a shortage of concessional resources to address its
significant infrastructure funding needs. In this regard, discussions with development partners
revolve around boosting domestic revenue collection by speeding up reforms stalled by the
Ebola epidemic, and engaging in greater and deeper financial engineering to finance this costly
infrastructure while maintaining sustainable debt levels.
1.2 Financing Allocated by the Country to Sectors Targeted by Bank Assistance
In this context, the Government, which is already focusing on road infrastructure in its strategic
guidelines and budget, intends to increase allocations to this sector even above the statutory
10%.
1.3 Budget Situation and Debt Level of the Country
The advent of the Ebola virus disease (EVD) from 2014 to 2016 undermined the macro-budget
fundamentals of the country. The EVD slowed down the reforms that had been underway up to early
2013 (Mining Code, Investment Code, Petroleum Code, new public finance organic law, public
governance instrument, new public procurement code, electricity management, etc.). The initiation of
these reforms had enabled the country to reach the completion point of the Heavily-Indebted Poor
Countries Initiative (HIPCI) in 2012. Indeed, growth was 1.1% in 2014 and 0.1% in 2015, and the budget
deficit rose to 7% of GDP in 2015, compared to 3% in the previous years. The decline in economic and
financial activities, revenue and international reserves, as well as significant capital investment from the
2015 presidential elections, impacted on macroeconomic management. The country proposed a major
budget adjustment (reduce the deficit from 7% of GDP in 2015 to 0.4% of GDP in 2016) which enabled
it to conclude, for the 1st time in its history, a full programme with the IMF. This adjustment has helped
to freeze over 90% of infrastructure costs, including for roads. This highly severe budget adjustment
helped to contain the budget deficit to below 3% in 2016, and the government intends to maintain this
level. The outlook remains optimistic, with growth recovery estimated at 6.7% in 2016 and projected at
6% in 2017, driven by an increase in production and investment in the mining sector, robust agricultural
performance, and partial data update in the national accounts. Debt levels remained sustainable at 26%
of GDP in 2016. However, although this economic recovery and the more pronounced resumption of
fiscal reforms are significant, their impact on the expansion of fiscal space will only be felt within the
X
next two to three years. In the interim, the Government is seeking budget support from its development
partners, including the Bank.
In light of the foregoing, it is clear that the Government of Guinea is determined to implement its
development agenda and to give priority to the transport sector, even though with difficulties in raising
domestic revenue as capital. On that basis, and at the request of the Government, it is proposed that the
counterpart contribution be reduced for the ADF window.
II. MALI
Preparation of the project and its future implementation are characterized by the fact that Mali has been
hard hit by impact of the security, political, economic and social crises that have rocked the country.
The pressure on State resources is enormous: the Agreement for Peace and Reconciliation in Mali signed
between the Government and the armed movements in May and June 2015 is in the implementation
phase with increased expenditure on security, the social sectors, poverty reduction, rehabilitation and
reconstruction.
The total cost of the 225kV Guinea-Mali Electricity Interconnection Project is UA 299.63 million. It
will be financed with a grant of UA 13.90 million and a loan of UA 16.10 million from the African
Development Fund (ADF); grants and loans from other donors amounting to UA 229.25 million; a
Guinean Government contribution of UA 9.16 million; and a Malian Government contribution of UA
1.22 million. Thus, over 90% of the project cost will be financed with donor resources, including those
of the ADF, given the fragile economic and financial situation in Guinea and Mali.
Mali is committed to the implementation of its development programme. The Strategic Framework
for Economic Recovery and Sustainable Development (CREDD) 2016-2018 is in its second year of
implementation. It is built on two preliminary pillars, three strategic pillars and thirteen priority areas.
The preliminary pillars are: (i) peace and security; and (ii) macroeconomic stability; and the three
strategic pillars are: (i) inclusive and sustainable economic growth; (ii) social development and access
to basic social services; and (iii) institutional development and governance.
There is still a sustained effort to allocate substantial resources to the project's focus area. In the
appropriation directions for CREDD 2016, the amount of own resources allocated to the specific
objective “Developing renewable energies and increase access to low-cost electricity for rural and urban
communities” was CFAF 9.9 billion, whereas external assistance is estimated at CFAF 67.9 billion, or
82.9% of the total resources earmarked for the energy sector. Energy sector needs remain significant in
light of the effects of the crisis, and the resumption of economic growth. However, the energy needs in
the context of economic recovery and implementation of the Agreement for Peace and Reconciliation
in Mali are significant.
In 2016, the Government implemented a cautious fiscal policy geared towards economic recovery. The overall budget deficit (cash basis, including grants) was 4.3% of GDP. It is expected to drop to
approximately 4% of GDP in 2017. In the supplementary budget of 2017, the increased expenditure
stems from additional expenses generated by the programming law for internal security for the 2017-
2021 period; regional, local and communal elections and the referendum; the provision for new projects
and the allocation (through a special Treasury account) of 0.4% of GDP to start the Sustainable
Development Fund (SDF) set up in 2017 under the peace agreement to finance the special development
strategy for the regions in North Mali. The last debt sustainability analysis indicated a moderate
debt distress risk for Mali. However, debt sustainability is threatened by shocks resulting from the
concentration of exports on gold, the decrease in remittances and foreign direct investment as well as
the hardening of financial conditions. Therefore, the Government must continue its efforts to control the
external debt by resorting mainly to grants and concessional loans with a minimum grant element of
35%. Mali’s public debt stock represents 36.6% of GDP and while its external debt accounts for
24.1% of GDP. As of 31 December 2016, Mali had no external public debt servicing arrears.