38183-013: Power Sector Expansion Project - Asian ...

Completion Report

Project Number: 38183-013 Loan Numbers: 2368 and 8232 Grant Numbers: 0087 and 0101 November 2019

Samoa: Power Sector Expansion Project

This document is being disclosed to the public in accordance to ADB’s Access to Information Policy.

CURRENCY EQUIVALENTS

Currency unit – tala (ST)

At Appraisal At Project Completion (9 October 2007) (31 August 2018)

ST1.00 = $0.391 $0.387 $1.00 = ST2.558 ST2.585 $1.00 = A$1.119 A$1.377

$1.00 = ¥117.41 ¥110.99

A$1.00 = $0.893 $0.726 ¥1.00 = $0.009 $0.009

ABBREVIATIONS

ADB – Asian Development Bank ADF – Asian Development Fund APFS − audited project financial statement

CDM – clean development mechanism CEF – Clean Energy Fund DMF – design and monitoring framework DNA – designated national authority DSM – demand-side management EARF – environmental assessment and review framework ENPV – economic net present value EIRR – economic internal rate of return EMMP – environmental monitoring and management plan EPC – Electric Power Corporation ESU – environment and social unit FIRR – financial internal rate of return FNPV – financial net present value GDP – gross domestic product IEE – initial environmental examination IMF – International Monetary Fund JBIC – Japan Bank for International Cooperation JICA – Japan International Cooperation Agency LARF – land acquisition and resettlement framework LARP – land acquisition and resettlement plan LBD − loan buy-down

MOF – Ministry of Finance OAI – Office of Anticorruption and Integrity OOTR – Office of the Regulator PEAR – preliminary environmental assessment report PMU – project management unit PPRR – project procurement-related review PSEP – Power Sector Expansion Project REDPSRP – Renewable Energy Development and Power Sector Rehabilitation

Project RFMA – resident financial management advisor RRP − report and recommendation to the President

SAIDI – System Average Interruption Duration Index SAIFI – System Average Interruption Frequency Index SCADA – supervisory control and data acquisition TA – technical assistance US − United States

WACC – weighted average cost of capital

WEIGHTS AND MEASURES

GWh – gigawatt-hour (one million kWh) kV – kilovolt (one thousand volts) kW – kilowatt (unit of electrical power; one thousand wats) kWh – kilowatt-hour (unit of electrical energy; one thousand watt-hours) kWh/mo – kilowatt-hour per month MW – megawatt (electric power; one million watts)

NOTES

(i) The fiscal year (FY) of the Government of Samoa and the Electric Power Corporation ends on 30 June. “FY” before a calendar year denotes the year in which the fiscal year ends, e.g., FY2018 ends on 30 June 2018.

(ii) In this report, “$” refers to United States unless otherwise stated.

Vice-President Ahmed M. Saeed, Operations 2 Director General Ma. Carmela A. Locsin, Pacific Department (PARD) Regional Director Masayuki Tachiiri, Pacific Subregional Office, PARD Team leader Grace King, Senior Project Officer (Financial Management), PARD Team members Taniela Faletau, Safeguards Specialist, PARD

David Fay, Unit Head (Project Administration), PARD Faga Kotoitubou, Senior Operations Assistant, PARD Mairi MacRae, Social Development Specialist (Gender and Development), PARD Anthony Maxwell, Senior Energy Specialist, PARD Maria Melei, Senior Country Coordination Officer, PARD Lavenia Uruvaru, Associate Project Analyst, PARD

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

CONTENTS

Page BASIC DATA

I. PROJECT DESCRIPTION 1

II. DESIGN AND IMPLEMENTATION 1

A. Project Design and Formulation 1 B. Project Outputs 2 C. Project Costs and Financing 4 D. Disbursements 5 E. Project Schedule 6 F. Implementation Arrangements 6 G. Technical Assistance 7 H. Consultant Recruitment and Procurement 7 I. Gender Equity 9 J. Safeguards 9 K. Monitoring and Reporting 10

III. EVALUATION OF PERFORMANCE 10

A. Relevance 10 B. Effectiveness 11 C. Efficiency 11 D. Sustainability 12 E. Development Impact 13 F. Performance of the Borrower and the Executing Agency 14 G. Performance of Cofinanciers 14 H. Performance of the Asian Development Bank 14 I. Overall Assessment 14

IV. ISSUES, LESSONS, AND RECOMMENDATIONS 15

A. Issues and Lessons 15 B. Recommendations 15

APPENDIXES

1. Design and Monitoring Framework 16

2. Project Cost at Appraisal and Actual 20

3. Project Cost by Financier 21

4. Disbursement of ADB Loan, ADB Grant, JICA Loan and GOA Grant Proceeds 23

5. Contract Awards of ADB Loan, ADB Grant, JICA Loan and GOA Grant Proceeds 24

6. Summary of Contracts Funded by the Project 25

7. Chronology of Main Events 31

8. Status of Compliance with Project Covenants 33

9. Technical Assistance Completion Report 45

10. Safeguards Compliance Review 47

11. Economic Analysis 52

12. Financial Analysis 58

13. Rapid Gender Review Article 70

i

BASIC DATA

A. Loan and Grant Identification

1. Country Independent State of Samoa 2. Loan and Grant number and

financing source L2368, Concessional OCR L8232, Japan International Cooperation Agency G0087, Asian Development Fund G0101, Government of Australia

3. Project title Power Sector Expansion Project 4. Borrower Independent State of Samoa 5. Executing agency Ministry of Finance 6. Amount of loan and grant SDR17.151 million (L2368)

$38.00 million (L8232) $15.39 million (G0087) $8.00 million (G0101)

7. Financing modality Sector Project

B. Loan and Grant Data

1. Appraisal – Date started – Date completed

23 April 2007 (L2368, L8232, G0087, G0101) 11 May 2007 (L2369, L8232, G0087, G0101)

2. Loan and grant negotiations – Date started – Date completed

9 October 2007 (L2368, G0087, G0101) Not available (L8232) 9 October 2007 (L2368, G0087, G0101) Not available (L8232)

3. Date of Board approval 21 November 2007 (L2368, G0087, G0101) 4 October 2007 (L8232)

4. Date of loan and grant agreement

11 December 2007(L2368, G0087) 10 December 2007 (L8232) 18 December 2007 (G0101)

5. Date of loan and grant Effectiveness

– In loan and grant agreement – Actual – Number of extensions

10 March 2008 (L2368, G0087, G0101) Not available (L8232) 19 June 2008 (L2368, G0087, G0101) 14 May 2008 (L8232) 1 (L2368, G0087, G0101) None (L8232)

6. Project completion date – Appraisal – Actual

31 July 2016 (L2368, G0087, G0101) 14 June 2016 (L8232) 28 February 2018 (L2368, G0087, G0101) 14 Jun 2017 (L8232)

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7. Loan and grant closing date – In loan and grant agreement – Actual – Number of extensions

31 December 2016 (L2368, G0087, G1010) 14 November 2017 (L8232) 31 August 2018 (L2368, G0087, G0101) 14 November 2017 (L8232) 2 (L2368, G0087, G0101) None (L8232)

8. Financial closing date – Actual

28 December 2018 (L2368, G0087, G0101) 14 November 2017 (L8232)

9. Terms of loan – Interest rate – Maturity (number of years) – Grace period

(number of years)

1% per annum during the grace period and 1.5% thereafter (L2368) 0.45% (L8232) 32 years (L2368) 30 years (L8232) 8 years (L2368) 10 years (L8232)

10. Terms of relending – Interest rate

Amended from 6.5% to 2.0% (L2368) Not applicable (L8232)

– Maturity (number of years) 25 years for the first tranche and 28 years for the second tranche (L2368) Not applicable (L8232)

– Grace period (number of years)

5 years for the first tranche and 8 years for the second tranche (L2368) Not applicable (L8232)

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11. Disbursements

a. Dates

L2368 L8232 G0087 G0101

Initial Disbursement 15 January 2009 26 February 2009

6 August 2008 15 January 2009

Final Disbursement 24 December 2018 10 November 2017 15 October 2018 15 October 2018

Time Interval 119.29 months 104.75 months 122.48 months

117 months

L2368 L8232 G0087 G0101

Effective Date 19 June 2008 14 May 2008 19 June 2008 19 June 2008

Actual Closing Date 31 August 2018

14 November 2017 31 August 2018 31 August 2018

Time Interval 122.37 months 114.02 months 122.37 months 122.37 months

b. Amount

Category Original

Allocation

Increased during

Implementation

Cancelled during

Implementation

Last Revised

Allocation

Amount Disbursed

Undisbursed Balance

L2368 (SDR) 01 Works 2.24 (1.78) 0 0.46 0.46 0 02 Equipment

Supply and Installation

12.24 3.77 0 16.01 16.01 0

02a Equipment Supply and Installation

0.69 0 0.69 0.27 0.42

03 Unallocated 2.68 (2.68) 0 Total 17.16 0 0 17.16 16.73 0.42a

L8232 (¥)

01 Works 374 (297) 0 77 55 22 02 Equipment


3,507 3 0 3,510 3,232 278


1,011 0 1,011 796 215

03 Unallocated 717 (717) 0

Total 4,598 0 0 4,598 4,083 515a a An undisbursed loan amount of SDR419,126.52 (equivalent $581,483.57) cancelled on 28 December 2018 (L2368). a An undisbursed loan amount of ¥515,389,129 (equivalent $4,826,644.77) was cancelled on 14 November 2017 (L8232).

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c. Amount ($ million)

Category Original

Allocation

Increased during

Implementation

Cancelled during

Implementation

Last Revised

Allocation

Amount Disbursed

Undisbursed Balance

L2368

01 Works 3.47 (2.76) 0 0.71 0.71 0

02 Equipment Supply and Installation

18.99 5.62 0 24.61 24.61 0


0.95 0 0.95 0.37 0.58

04 Unallocated 4.15 (4.15) 0

Total 26.61 (0.34) 0 26.27 25.69 0.58a

L8232

01 Civil Works 3.09 (2.26) 0 0.83 0.62 0.21


28.98 10.80 0 39.78 37.18 2.60


8.97 0 8.97 6.95 2.02

03 Unallocated 5.93 (5.93) 0 0

Total 38.00 11.58 0 49.58 44.75 4.83a G0087 1 Equipment


8.42 (4.80) 0 3.62 3.62 0


6.02 0 6.02 6.02 0


0.24 0 0.24 0.24 0


1.78 0 1.78 1.78 0

5 Consultant Services

4.57 (0.84) 0 3.73 3.73 0

6 Unallocated 2.40 (2.40) 0 0 Total 15.39 0 0 15.39 15.39 0a

G0101

1 Land Acquisition and Resettlement

1.53 (1.53) 0 0 0 0


5.22 2.53 0 7.75 7.75 0


0.02 0 0.02 0.02 0

3 Miscellaneous Grant Admin and Support Costs (ADB)

0.23 0 0.23 0 0.23

4 Unallocated 1.25 (1.25) 0 0 0 0 Total 8.00 0 0 8.00 7.77 0.23a

Total 88.00 11.24 0 99.24 93.60 5.64 a An undisbursed loan amount of SDR419,126.52 (equivalent $581,483.57) cancelled on 28 December 2018 (L2368). a An undisbursed loan amount of ¥515,389,129 (equivalent $4,826,644.77) was cancelled on 14 November 2017 (L8232). a An undisbursed grant amount of $993.29 was cancelled on 28 December 2018 (G0087). a An undisbursed grant amount of $229,479.48 was cancelled on 28 December 2018 (G0101).

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C. Project Data

1. Project cost ($ million)

Cost Appraisal Estimate Actual

Foreign exchange cost 100.00 118.93 Local currency cost Not applicable Not applicable Total 100.00 118.93

2. Financing plan ($ million)

Cost Appraisal Estimate Actual

Implementation cost Borrower-financed 12.00 25.33 ADB-financed 42.00 41.08 Other external financing 46.00 52.52 Total implementation cost 100.00 118.93

Interest during construction costs Borrower-financed 5.21 6.08 ADB-financed 0 0 Other external financing 0 0 Total interest during construction cost 5.21 6.08

3. Cost breakdown by project component ($ million)

Component Appraisal Estimate Actual

A. Investment Costs 1. Land Acquisition and Resettlement

4.38

(….)

2. Civil Works 7.31 2.01 3. Equipment Supply and Installation 61.61 94.77 4. Consultant Services 4.82 3.96 5. Taxes and Duties 1.89 12.12 B. Contingencies 14.79 0 C. Financing Charges During Implementation 5.21 6.08 Total 100.00 118.93

Note: numbers may not sum precisely because of rounding. (….) = not available

4. Project schedule

Item Appraisal Estimate Actual

Core Subprojects 1 Upgrading of hospital feeder: Stage 1

Date of award Q1 2007 Q4 2009

Completion of work Q4 2008 Q4 2011

2 Single and three-phase prepayment metering



3 Consulting services

3.1 Project manager


Completion of contract Q4 2014 Q4 2018

3.2 Project implementation consultants


Completion of contract Q4 2014 Q2 2012

Candidate Subprojects

Upolu and Savaii Generation 4 Refurbishment of Tanugamanono Generators-5A and 9B

Date of award NA Q1 2010 Completion of work NA Q2 2013

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Item Appraisal Estimate Actual 5 Fiaga new diesel power station inclusive of plant and

control equipment

Date of award Q3 2009 Q3 2010 Completion of work Q4 2014 Q2 2015

6 Refurbishment of Alaoa hydropower station

Date of award Q3 2008 Q1 2010 Completion of work Q3 2010 Q2 2914

7 Refurbishment of Taelefaga, Lalomauga, Samasoni, and Tanugamanono power station switchgears

Date of award NA Q1 2010

Completion of work NA Q2 2012

8 Refurbishment of Taelefaga hydropower station governors



9 Construction of Fuluasou 22 kV substation inclusive of equipment



10 Refurbishment of Salelologa 22 kV substation



Upolu and Savaii Transmission

11 33 kV and 22 kV overhead and underground transmission line from Fiaga diesel power station to Tanugamanono power station via Fuluasou substation


Completion of work Q4 2010 Q2 2014 12 Upgrading of Hospital Feeder: Stage 2



13 Fuluasou Substation to Apia wharf area 22 kV underground cable



14 33 kV Fiaga power station transmission line, 22 kV conductor upgrade, and Puapua-Asau (Savaii) 22 kV transmission line conductor



15 Installation of electrical conduits and concrete vaults for 33 kV and 22 kV underground network for Vaitele road widening



16 Construction of pillar boxes, vaults, and underground conduits for underground power lines from Lepea to Vailoa



17 Upgrade of 33 kV Tieline for Taelefaga 3rd generator



Equipment

18 High-voltage measurement equipment



19 Stream flow gauging and test equipment

vii

Item Appraisal Estimate Actual Date of award Q1 2008 Q4 2008


20 Power system planning software



21 Low-voltage network improvement program



22 Supervisory control and data acquisition



23 CCTV system



24 Supply and delivery of fiber cables, PABX equipment and cable accessories for EPC, Vaitele



25 Current transformers for smart meters



26 Battery energy storage systems



EPC = electric power corporation, kV = kilovolt, NA = not available, PABX = private automatic branch exchange.

Other Milestones

1 Minor change in project implementation arrangements to submit withdrawal applications below the minimum value per withdrawal application set at $100,000 for equipment supply and installation and civil works and $30,000 for consultant services approved on 16 October 2012.

2 Reallocation of ADB loan proceeds approved on 27 November 2012.

3 First extension of project closing date from 31 December 2016 to 14 November 2017, approved 4 October 2016.

4 Second extension of project closing date 14 November 2017 to 31 August 2018, approved on 18 July 2017.

5 Minor change in implementation for a reallocation of loan and grant proceeds and a change in disbursements arrangements approved on 29 August 2017

6 Minor change in implementation for change in disbursements arrangements approved on 26 December 2017

7 Reallocation of loan and grant proceeds approved on 21 August 2018

8 Final reallocation of grant proceeds approved on 5 October 2018

ADB = Asian development bank, NA = not available.

5. Project performance report ratings

Implementation Period

Ratings

Development Objectives

Implementation Progress

From 1 January to 31 December 2009 Satisfactory Satisfactory From 1 January to 31 December 2010 Satisfactory Satisfactory From 1 January to 31 December 2011 Satisfactory Satisfactory From 1 January to 31 December 2012 On track From 1 January to 31 December 2013 On track From 1 January to 31 December 2014 On track From 1 January to 31 December 2015 On track From 1 January to 31 December 2016 On track From 1 January to 31 December 2017 On track From 1 January to 31 December 2018 On track

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D. Data on Asian Development Bank Missions

Name of Mission Date No. of

Persons No. of

Person-Days Specialization of

Membersb

Fact-finding missiona 23 April–11 May 2007 11 209 a, b, c, d, e, f, g, h, i, j, k, l

Loan negotiations 1–6 October 2007 1 6 a Inception mission 24 June–4 July 2008 1 11 a Review mission 6–10 October 2008 1 5 a Review mission 11–19 March 2009 2 18 a, m Review mission 26 August–3 September 2009 1 9 a Review mission 14–20 February 2010 1 7 a Review mission 14–18 February 2011 2 10 a, m PPRR planning mission 6–14 June 2011 2 22 n, n PPRR (fieldwork) mission 21 August–1 September 2011 2 24 n, n Review mission 21–25 May 2012 4 20 a, o, p, q Review mission 4–7 December 2012 2 8 o, q Review mission 10–12 April 2013 2 6 o, q Review mission 19–21 August 2013 3 9 q, r Midterm review mission 28 October–1 November 2013 3 15 o, q, r Review mission 10–14 February 2014 3 15 o, r, s Review mission 30 June–4 July 2014 3 15 o, p, t PPRR follow-up review mission

10–21 November 2014 4 41 o, u, v, w

Review mission 2–6 March 2015 4 20 o, p, q, s Review mission 26 October–4 November 2015 2 20 q, s Review mission 13–17 June 2016 3 15 p, q, s Rapid gender review mission

6–8 September 2016 2 6 s, x

Review mission 14–18 November 2016 2 10 q, s Review mission 3–6 July 2017 2 8 q, s Review mission 16–20 October 2017 2 10 q, s Review missiona 27 February–6 March 2018 2 12 q, s Review missiona 17–24 July 2018 2 12 q, s Project completion review 8–16 April 2019 5 40 p, q, s, y, z

PPRR = project procurement-related review. a Fielded concurrently with other missions. b a = energy specialist, b = senior counsel, c = senior safeguards specialist, d = senior energy specialist, e = water and sanitation specialist, f = director, g = hydropower engineer, h = environment specialist, i = regulatory specialist, j = institutional expert, k = infrastructure advisor, l = ADB staff consultant (financial management specialist), m = operations officer, n = audit officer, o = infrastructure specialist, p = safeguards officer, q = project analyst, r = ADB staff consultant (project administration), s = senior project officer, t = audit specialist, u = integrity specialist, v = integrity officer, w = ADB consultant (integrity), x = senior social development specialist, y = ADB staff consultant (energy specialist), z = ADB staff consultant (economist) Source: Asian Development Bank.

I. PROJECT DESCRIPTION 1. Reliable power supply is essential for enhancing the quality of life and good performance of the power sector and reliable electricity services are vital for promoting private sector investments to diversify the economy and achieve sustainable economic growth. In Samoa, the performance of the power sector was increasingly becoming a hindrance to economic growth and high system losses and voltage drops, resulting in poor reliability and quality of electricity supply.

Medium-term peak demand was growing at 3% annually and the 2008−2015 investment plan of Samoa’s Electric Power Corporation (EPC) was driven by (i) the need to improve collection performance, (ii) the need to remove transmission bottlenecks to improve reliability and quality of supply, and (iii) capacity requirements to meet growing peak demands. In the longer term, the objective was to reduce Samoa's reliance on imported fuels through clean, indigenous, and renewable energy resources. 2. In November 2007, the Asian Development Bank (ADB) approved the Power Sector Expansion Project,0F

1 which was developed to assist the Government of Samoa achieve its power sector development plan. The impact of the project was to provide sustainable, reliable, and affordable electricity services and the outcome was improved quality, reliability, and cost-effectiveness of power supply. To achieve this objective, the project was to help EPC by (i) supporting EPC’s investment plan to meet growing demand, (ii) improving the operational efficiency of EPC, (iii) improving the financial performance of EPC, (iv) establishing effective regulation of the power sector, (v) developing a demand-side management strategy to promote energy efficiency and conservation, and (vi) developing clean energy resources through the establishment of the Clean Energy Fund (CEF), a clean development mechanism (CDM) subfund, and a designated national authority (DNA).

II. DESIGN AND IMPLEMENTATION A. Project Design and Formulation

3. The project was consistent with ADB’s country partnership strategy, 2008−2012 for Samoa,1F

2 which included support for power sector investments, reduced transmission losses, improved EPC financial performance, and a regulatory framework. It was also consistent with the

governments’ 2007 energy policy,2F

3 the 2005−2007 national development strategy,3F

4 and the

2008−2012 development strategy.4F

5 4. At project preparation, ADB carried out a thorough assessment of Samoa’s power sector growth and needs; EPC’s capacity and weaknesses; land; gender and environmental issues; power sector investment plan; and justification for specific planned investments, including preparing feasibility studies for each subproject to confirm their viability. ADB also assessed the power sector regulation, as well as the ability of the government and EPC to service loans. ADB conducted extensive consultations during project preparation with EPC; the government; the public and private sector organizations (regulation, disconnection policies and land issues; and

1 ADB. 2007. Report and Recommendation of the President to the Board of Directors: Proposed Loan, Asian

Development Fund Grant, and Technical Assistance Grant to Samoa for the Power Sector Expansion Project. Manila. 2 ADB. 2008. Country Partnership Strategy: Samoa, 2008−2012. Manila. 3 Government of Samoa, MOF. 2007. Samoan National Energy Policy 2007. Apia. 4 Government of Samoa, MOF. 2005. Strategy for the Development of Samoa 2005−2007. Apia. 5 Government of Samoa, MOF. 2008. Strategy for the Development of Samoa 2008−2012. Apia. The strategy

specifically endorsed efficient, reliable, affordable, and sustainable electricity services through the project.

https://www.adb.org/sites/default/files/project-document/65700/38183-sam-rrp.pdf

https://www.adb.org/sites/default/files/project-document/65700/38183-sam-rrp.pdf

https://www.adb.org/documents/samoa-country-partnership-strategy-2008-2012

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communities (especially regarding hydropower development)5F

6 and donors, including the Government of Australia, Global Environment Facility,6F

7 and the Japan International Cooperation Agency (JICA).7F

8 EPC held focus-group consultations with village representatives and women through the Ministry of Women Affairs and Community Social Developments and carried out the initial poverty reduction and social assessment and social surveys. 8F

9 5. The project was the largest development partner-supported energy sector project in the Pacific. The Government of Australia and JICA cofinanced the project and it was the largest cofinancing project in ADB’s Pacific Department. EPC implemented the project using a sector loan modality, which assisted in the development of the energy sector by financing a part of the investment in the sector, planned by the Government of Samoa. Under the sector project, EPC selected subprojects based on pre-agreed criteria. The project consisted of three EPC investment components, a project management component, and an energy policy technical assistance (TA).

The three investment components were (i) component A⎯stage 1 upgrade, expansion, and underground cabling of a section of the hospital feeder (part of underground transmission cabling for protection from cyclones) and transferring of the load from this feeder to others to avoid

overloading; (ii) component B⎯single- and three-phase prepayment metering and upgrade of the vending system to improve revenue collection and a demand-side management foundation; and

(iii) component C⎯candidate subprojects including four generation, 11 transmission, system control and data acquisition, and portable equipment for measuring voltage and current and stream-flow gauging. The project management component was for the recruitment of a project manager and implementation consultants, to assist EPC’s project management unit (PMU) build capacity and help implement EPC’s investment plan. The design and formulation of the project was highly relevant at appraisal and remained so at project completion. The design and monitoring framework (DMF) at appraisal, compared with the project achievements, is shown in Appendix 1 (footnote 1). B. Project Outputs 6. The project had six outputs: (i) EPC’s investment plan meets demand requirements; (ii) operational efficiency of EPC improves; (iii) financial performance of EPC improves; (iv) effective regulation of power sector is established; (v) demand-side management; and (vi) clean energy is developed. Outputs (i) to (v) were broadly achieved and (vi) was partly achieved. EPC implemented outputs (i) to (iii) under the project and Ministry of Finance (MOF) implemented outputs (iv) to (vi), under a separate TA (para. 25). 7. Electric Power Corporation’s investment plan meets demand requirements. At appraisal, the project team envisaged that the power system capacity for energy and power meets demand requirements on Savai’i and Upolu, and this target was achieved satisfactorily. EPC comfortably met the demand on the main island of Upolu, after the 23 MW Fiaga diesel power station became operational in 2014 and after the refurbishment of the 1.05 MW Alaoa hydropower plant. The Savai’i generation capacity also meets demand. EPC revises its investment plan annually or as required for new candidate subprojects and continues to meet expected demand.

6 ADB. 2007. Vaiata Hydropower Project Feasibility Report. Consultant’s report. Manila (TA 4791-SAM). 7 The Global Environment Facility consultations were primarily regarding designing the CEF, the DNA for the CDM,

and a CDM subfund for financing clean energy projects. 8 Consultations were initially held with the Japan Bank of International Cooperation (JBIC) and in 2008, the overseas

economic cooperation operations of the Japan Bank of International Cooperation was merged with the cooperation agency into one agency, the Japanese International Cooperation Agency (JICA).

9 ADB. 2006. Technical Assistance to Samoa for Preparing the Power Sector Expansion Program. Manila. Appendix 2 contains the initial poverty and social analysis and social safeguards analysis.

https://www.adb.org/projects/documents/preparing-power-sector-expansion-program-1

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8. Operational efficiency of Electric Power Corporation improves. There were two indicators (technical system losses and nontechnical system losses) with 2008 baselines to be established, and targets and dates for reducing them were provided. In 2008, EPC and a JICA engineer studied, took measurements, and calculated technical losses of transmission and distribution systems as 13.5% but this did not include loss in generation power stations. EPC used these results and line losses in generation, to establish the 2008 baseline total system losses at 15.9%, which was substantial. By early 2018, it had significantly reduced to 9.9%, confirming the improvement in operational efficiency. This was achieved through the upgrade of all three 6.6V distribution feeders to all be 22 kilovolts (kV), replacing the high voltage conductors to larger ones, increasing the number of distribution feeders, upgrading low voltage network by adding more transformers to reduce long low voltage line, extensive 33kV underground transmission cabling, dedicated 22kV transmission line from hydropower stations to the main substation, 22kV conductor upgrading, and others on both islands. Technical and nontechnical losses supplemented by the overall increase in fuel efficiency of diesel generations from 3.0 kilowatt-hour (kWh) to 4.2 kWh per liter of diesel fuel usage or 40% improvement with the commissioning of the new diesel power station at Fiaga. 9. The financial performance of Electric Power Corporation improves. Of the eight targets, four were achieved and four were partially achieved. The four targets that were achieved were the following: (i) consistent application of disconnection policy which was implemented from 2009; (ii) fuel audits introduced on 1 May 2008 and conducted monthly; (iii) EPC monthly energy charge rate calculated and submitted to the Office of the Regulator (OOTR) for approval before it is applied to the tariff for consumers;9F

10 and (iv) the share of prepayment meters passed the 75% target by December 2012, reaching more than 81% by June 2013 and more than 90% by October 2016. The four targets that were partially achieved were (i) the reduction in government share of accounts receivable, due to the Government of Samoa ministries and departments not using prepayment metering and are not disconnected for social reasons (e.g., hospitals); (ii) the minimum self-financing ratio target was not met in 4 years; (iii) the accounts receivable ratio was not met in 2 years; and (iv) the minimum debt service ratio target was not met in 1 year. 10. Effective regulation of power sector is established. Of the three targets, two were

achieved satisfactorily⎯the Electricity Act was passed into law in 2010 and the OOTR of the telecommunication sector, which was established in 2006, was also appointed as the power sector regulator in 2010. The third target, amendments to the EPC Act consistent with the Electricity Act, remains ongoing with EPC who is incorporating recommendations made by the Office of the Attorney General. The targets and indicators were suitable for assessing results.

11. Energy demand-side management. Although the only target⎯ energy conservation and

demand-side management (DSM) public awareness campaign implemented⎯was achieved, it was not indicative of the goal of DSM improvement. Through the TA (para. 25), the project team prepared (i) energy forecasts under various efficiency assumptions, (ii) demand-side energy efficiency strategies for cost-effective reduction of electricity consumption and fuel imports; (iii) a study on taxation and excise duty impacts on DSM; and (iv) a DSM action plan, but there was limited follow-up as the Government of Samoa felt some elements were not appropriate for the country.

10 For an adjustment to the debt and usage changes, OOTR requires submission of the proposed new tariff and full

financial justification 3 months before the end of the financial year and the new tariff is implemented, 3 months after the start of the new year

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12. Clean energy is developed. The three targets⎯number of energy subsector projects financed by the CEF, number of energy subsector projects eligible for CDM, and electricity

produced by clean energy resources from a 2006 baseline of 45 GWh⎯were satisfactory, although partly achieved. MOF established a CEF within MOF and was to be funded by part of the interest payments from EPC to the Government of Samoa on the ADB grant portion and with only ST0.4 million in the CEF fund, it did not achieve the amounts as envisaged at appraisal. With the further reduction in the interest rate of the relent ADB loan by the Government of Samoa to EPC, the CEF was not a successful model (para. 13). By 2009, EPC developed at least 18 indicative project outlines for possible CDM support, but no projects have been supported. Although not directly through the project, EPC reported clean renewable energy production of 77 GWh or 48% of gross annual generation of 160 GWh in 2018. Clean energy growth averaged 4.6% in GWh annually since the 2006 base year, with most growth from 2015 onwards. C. Project Costs and Financing 13. At appraisal, the project cost was estimated at $100.00 million, comprising (i) ADB loan of $26.61 million (equivalent SDR17.171 million) from the Asian Development Fund; (ii) ADB grant of $15.39 million from the Asian Development Fund; (iii) JICA loan of $38.00 million (equivalent to ¥4,598 million); (iv) Government of Australia grant of $8.00 million; and (v) EPC contribution of $12.00 million. The ADB loan and grant were to be relent by the Government of Samoa to EPC.10F

11 The interest payment from EPC to the Government of Samoa on the ADB grant was to provide ongoing financing for a CEF and a CDM subfund to be established under the CEF (para. 12). The actual costs for each expenditure category compared with the estimates at appraisal and actual are detailed in Appendix 2. The costs by financier at appraisal and completion are detailed in Appendix 3. 14. In February 2008, ADB signed a loan buy-down (LBD) agreement with the Government of Australia, under which the latter would transfer a grant of A$4.0 million to ADB, to be used by the Government of Samoa to repay a portion of the ADB loan. The LBD funds were to be held by ADB, in an interest-bearing account until released to the Government of Samoa, upon satisfactory compliance with three reform measures: (i) appointment of an independent technical and price regulator for the power sector; (ii) improvement of EPC’s debt collection performance such that accounts receivable shall not have exceeded 2 months of electricity sales for a minimum of 2 years, up to 31 December 2012; and (iii) usage of prepaid metering by 75% of all EPC’s electricity consumers. The Government of Samoa and EPC satisfactorily achieved the three reform measures within the specified timeline. The first draw down of the LBD mechanism was for the first ADB loan repayment in May 2016 and the last draw down was in November 2018. 15. Subprojects funded under the project included (i) a new diesel power station at Fiaga in Upolu (31.2% of total funds invested), (ii) transmission and distribution works in Upolu (8.5%), (iii) battery storage in Upolu (7.4%), (iv) refurbishment of run-of-river power stations and of the

11 The relending was to be based on terms and conditions as set forth in the subsidiary financing agreement between

the Government of Samoa and EPC. Such terms and conditions were to include the relending to be released in two tranches, an interest rate of 6.5%, and such conditions set forth in the financing agreement. The first tranche, which will finance the subprojects completed by 30 June 2012, will have a 25-year term, including a grace of period of 5 years. The second tranche, which will finance the remaining subprojects, will have a 25-year term, including a grace period of 8 years. In February 2016, ADB approved MOF’s request to amend the subsidiary financing Agreement to (i) reduce the relent interest rate from 6.5% to 2.0%, back-dated to the effective date of the ADB loan; and (ii) remove the timely and to budget implementation of subprojects requirement in paragraph 8(c) of the subsidiary financing agreement. MOF requested the changes after assessing EPC’s ability to repay the loan and the impact it will have on the tariff being charged to consumers.

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Tanugamanono diesel power station in Upolu (11.1%), (v) the hospital feeder in Apia (6.2%), (vi) prepayment and smart metering in Upolu and Savai’i (4.6%), (vii) a supervisory control and data acquisition (SCADA) system in Upolu (3.3%), (viii) tariff and regulatory consultancy services and power system planning software for EPC (3.1%), (ix) distribution and other upgrade works in Savai’i (3.3%), and (x) minor other works. 16. During the bidding process of the core hospital feeder subproject, the lowest bids that were received significantly exceeded cost estimates. The PMU was able to eliminate cost overruns by repackaging into various bid lots and rebidding this subproject, the Fiaga power station, and other subprojects. During implementation, the JICA loan, which was denominated in Japanese yen, increased in value against the United States (US) dollar. The highest foreign exchange gain was $18.96 million in May 2012 and discussions were held with Government of Samoa and EPC on using the funds on additional candidate subprojects that EPC needed to implement. This included a new power station at Vaiaata on Savaii to replace the Salelologa power station but following months of discussions and consultations, Government of Samoa and EPC agreed to drop the subproject in 2015. The funds would then be used for new battery energy storage systems and micro-grid controller system. 17. JICA made the final disbursement for the JICA loan on 10 November 2017 and cancelled an undisbursed amount of ¥515,389,129.00 (equivalent $4,826,644.77) on 14 November 2017. On 15 October 2018, ADB made the final disbursements under the ADB grant, leaving an undisbursed amount of $993.29 and the Government of Australia grant, leaving an undisbursed amount of $229,479.48, which were cancelled on 28 December 2018. For the ADB loan, ADB made the final disbursement on 24 December 2018, and cancelled an undisbursed amount of SDR419,126.52 (equivalent $581,483.57) on 28 December 2018. Appendix 4 shows the actual disbursements, Appendix 5 shows the contracts awarded, and Appendix 6 shows the summary of contracts funded by the project. 18. The actual project completion cost was $118.93 million, of which the ADB loan accounted for 21.6%, the JICA loan for 37.6%, the ADB grant for 12.9%, the Government of Australia grant for 6.5%, and EPC’s counterpart funding for 21.3%. The JICA loan funded the largest shares of the metering subproject, the Fiaga power station, the refurbishments of the Upolu power stations and the transmission and distribution system upgrades in Upolu. The ADB loan and grant also funded large shares of these, as well as the tariff and regulatory consultancy services and power system planning software procurement and installation. The Government of Australia grant largely funded the Fiaga power station, the hospital feeder upgrades, and the refurbishment of the Alaoa run-of-river hydropower station in Upolu. EPC’s counterpart funding also funded the prepayment metering, the Fiaga power station, and refurbishment of the Tanugamanono and Savai’i upgrades. 19. During implementation, the project team reallocated project proceeds to transfer the amounts from the unallocated categories to the actual expenditure categories, to utilize the JICA loan funds on specific candidate subprojects first, to utilize funds on the remaining candidate subprojects, and to fund the last withdrawal applications. D. Disbursements 20. Project proceeds were disbursed in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time) by direct payment and reimbursement procedures for civil works, equipment supply and installation, and consulting services. JICA managed their own disbursements, and EPC prepared separate hard copy withdrawal applications, signed by EPC

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and MOF management, submitted to ADB for review, and then to JICA for processing. In July 2016, ADB rolled out its new online Client Portal for Disbursements system in Samoa. With this, the PMU in EPC prepared withdrawal applications for the ADB loan and grant as well as those for the Government of Australia grant online, for online approval by EPC and MOF management and processing by ADB. E. Project Schedule 21. ADB approved a loan of $26.61 million (equivalent to SDR17.151 million) and a grant of $15.39 million, and the Government of Australia approved a grant of $8.00 million on 21 November 2007; while JICA approved a loan of $38.00 million equivalent on 4 October 2007. JICA signed the loan agreement on 10 December 2007, ADB signed the loan and grant agreements on 11 December 2007, and the Government of Australia signed the grant agreement on 18 December 2007. The ADB loan and grant, as well as the Government of Australia grant, became effective on 19 June 2008, while the JICA loan became effective on 14 May 2008. The original project closing date was 31 December 2016 and disbursements for the JICA loan closed on 14 November 2017. 22. Project implementation was slow during the first 2 years (from 2008 to 2010) and there were concerns with the PMU staffing and its sustainability (para. 28). EPC carried out a review and changed the recruitment process for PMU staff, where staff were no longer required to resign from EPC and be rehired as PMU contract staff but were hired as EPC staff, assigned to the PMU. The PMU restructure addressed local staff shortages, responsibilities, and contractual concerns and from then on, the PMU effectively managed the project. JICA assisted by providing significant professional volunteer support to the PMU from 2008 to 2011.11F

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23. In October 2016, ADB approved a request from the Government of Samoa to extend the project closing date of the ADB loan, ADB grant, and the Government of Australia grant by 10.5 months (with the new project closing date of 14 November 2017). The extension was to align the closing date with the JICA loan disbursements closing date and to allow for the completion of the new candidate subprojects, which were to be funded by the foreign exchange rate gains on the JICA loan (para. 16). In July 2017, ADB approved a second request from the Government of Samoa to extend the project closing date of the ADB loan, ADB grant, and the Government of

Australia grant by another 8.5 months ⎯ to 31 August 2018. This extension was to allow for the completion of the three remaining subprojects. A chronology of main events is provided in Appendix 7. F. Implementation Arrangements 24. The implementation arrangements were as envisaged at appraisal. The borrower was the Government of Samoa, MOF was the executing agency, and EPC was the implementing agency. A project steering committee, chaired by the chief executive officer, MOF and the general manager of EPC served as the deputy chair, provided project oversight and was in charge of inter-ministerial coordination and overall project direction. EPC established a PMU, which was led by a project manager to handle day-to-day management and implementation of the project and supported by implementation consultants. The implementation arrangements continued throughout the project and effectively achieved the project outputs, for which EPC was responsible.

12 In 2008, JICA provided an engineer to assess system losses, a civil engineer for 2 years from early 2009 and four

other engineers (hydro, electrical, civil, and SCADA) from 2010 to 2011 for a series of short-term assignments.

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G. Technical Assistance 25. ADB approved a TA grant together with the project, to implement the Samoan National Energy Plan of 2007.12F

13 The MOF served as the executing agency. The TA included (i) component 1: preparing operational guidelines of the CEF and a CDM subfund, identifying a project pipeline, and increasing public awareness; (ii) component 2: establishing the DNA operational structure; developing working guidelines and procedures for the DNA, providing capacity building and hands-on training for stakeholders and DNA staff, and raising public awareness; (iii) component 3: regulatory and policy reform in the power sector, including preparing a demand-side management and energy conservation strategy, preparing the draft Electricity Act and Regulations, and establishing a power sector regulator; and (iv) component 4: resident financial management advisors (RFMAs) to EPC including engaging two RFMAs to assist EPC in improving internal budgeting and expenditure controls; consolidating accounts and financial reporting and forecasts to the EPC board, the Government of Samoa, and ADB; and developing peak and off-peak tariffs and bulk purchase agreements with EPC’s major consumers.

26. ADB and Government of Samoa recruited separate consulting firms for components 1−3 and two individual consultants for component 4 and their work were deemed satisfactory. When the TA closed: (i) the CEF had been established, although the CDM was not, due to lack of carbon credit generation; (ii) the cabinet had approved the DNA, which was based in the MOF; (iii) the Government of Samoa concluded that an energy conservation strategy for Samoa was unsuitable but was implementing elements of the DSM strategy; the cabinet approved the Electricity Act in December 2010; and the Government of Samoa appointed a multisector regulator for the power sector in February 2012; and (iv) the RFMAs provided financial management assistance to EPC from February 2009 to December 2010, improving internal budgeting and expenditure control; financial reporting; and support for tariff reform, including the introduction of a fuel surcharge. 27. To allow for cabinet approval of the draft Electricity Act, the TA completion date needed to be extended and was completed in June 2011. The TA’s intended objectives were generally achieved. Disbursements for the TA totaled $1,425,002.77, which was 77% of the TA grant of $1,850,000. The TA was rated successful and Appendix 9 contains the TA completion report.13F

14 H. Consultant Recruitment and Procurement 28. At appraisal, consulting services were required for project management and for project implementation. A individual project manager consultant was to be recruited internationally for an initial period of 36 months, and a project implementation consultant firm was to be engaged to provide 69 person-months of international consulting services over a 36-month period. The project manager signed the contract in October 2007 and commenced work in January 2008 but resigned in August 2008. An experienced local EPC staff, who was confirmed in June 2009, replaced him but this staff resigned in December 2011 to become EPC’s general manager from January 2012. EPC signed the contract for the project implementation consultant firm in May 2008 and their team leader was joined by other specialist consultants from July to August 2008, as well as other individual experts, who were recruited for specific assignments. In September 2008, the team leader resigned and was replaced by an experienced local engineering consultant. Despite the recruitment delays, staffing changes, and some international consultants working primarily from overseas, the implementation consulting firm adequately fulfilled its tasks under the contract until

13 ADB. 2007. Technical Assistance to the Independent State of Samoa for Implementing the Samoa National Energy

Policy. Manila 14 ADB. 2011. Technical Assistance Completion Report: Implementing the Samoa National Energy Policy. Manila.

https://www.adb.org/projects/documents/implementing-samoa-national-energy-policy-tcr

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the end of their contract in 2011. EPC hired three international individual engineers on 1-year contract but one resigned after 4 months and was replaced by an experienced local engineer. In January 2012, the international consultant team leader and generation engineer took over as project manager, was confirmed in October 2012 and remained, until the project closed in August 2018. 29. As envisaged at appraisal, EPC carried out the procurement in accordance with ADB’s Procurement Guidelines (2007, as amended from time to time). The originally approved procurement plan was designed to be flexible with core subprojects and various candidate subprojects, which could be changed or modified if they were included in EPC’s evolving investment plan and if they were approved by ADB based on agreed criteria.14F

15 As required, EPC also kept the procurement plan updated. 30. Considering the complexity of the project and limited effectiveness of the earlier Power Sector Improvement Project, which closed in 2006,15F

16 the original contract award projections were

optimistic. Over the 2008−2018 implementation period, with ADB’s approval, EPC changed candidate subprojects, with some subprojects (i) modified (e.g., new location and unanticipated road access costs for a new diesel power station at Fiaga, away from residential areas, as well as a backup water system including water pump stations and a pipeline connected to the Samoa Water Authority system); (ii) subdivided to improve bidding (lower costs) and implementation (e.g., Fiaga power station into separate sub-activities); (iii) cancelled (e.g., Vaiaata, Savai’i diesel power plant); (iv) removed from the project (e.g., refurbishment of existing hydropower plants damaged by Cyclone Evan in 2012) and moved to ADB's Renewable Energy Development and Power Sector Rehabilitation Project (REDPSRP);16F

17 or (v) added as additional new investments (e.g., two battery energy storage systems with micro-grid controller; and current transformers for three-phase smart metering). Apart from the PMU manager and implementation consultants’ contracts, ADB and EPC identified two core and 17 candidate subprojects at appraisal.17F

18 (para. 5). At project completion, the two core subprojects and 22 candidate subprojects had been completed. Gaps between the projection and the actual contract awards were largely due to staffing delays; complexity; changes to project details; and Cyclone Evan in 2012, which resulted in considerable infrastructure damage and flooding. 31. EPC awarded a contract totaling $6.21 million in July 2008 for the supply of 21,000 single- and three-phase prepayment metering. EPC awarded another contract totaling $0.91 million to the same supplier for a vending machine for the prepayment metering. After installation, EPC found 10% of the prepayment metering to be defective and following discussions with the supplier, EPC stopped purchasing those prepayment metering. EPC funded new metering under a new supply contract, which worked well. 32. A new power station was to be built at Fiaga on Upolu and in November 2010, EPC awarded a contract totaling $26.68 million, to design, manufacture, supply, construct, install, and commission the power station. In December 2010, EPC and MOF proposed to ADB to partially

15 Footnote 1 Appendix 7: Eligibility Criteria and Procedures for Candidate Subprojects, as revised during the ADB

inception mission, to comply with Samoa’s tenders board and the Government of Samoa’s approvals process. 16 ADB. 2007. Completion Report: Samoa: Power Sector Improvement Project. Manila. 17 ADB. 2013. Report and Recommendation of the President to Board of Directors: Proposed Grants and Administration

of Grant to Samoa for the Renewable Energy Development and Power Sector Rehabilitation Project. Manila. 18 The two core subprojects were the: (i) hospital feeder upgrading subproject; and (ii) single- and three-phase

prepayment metering subproject. The 17 candidate subprojects were the: (i) four generation subprojects; (ii) 11 transmission subprojects; (iii) SCADA (system control and data acquisition) subproject; (iv) voltage and current, and stream flow gauging measurement equipment subproject.

https://www.adb.org/sites/default/files/project-document/79519/46044-002-rrp.pdf

https://www.adb.org/sites/default/files/project-document/79519/46044-002-rrp.pdf

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change the currency of payment from US dollars only to US dollars and Japanese yen, given that the generators were to be purchased from Japan but ADB’s procurement guidelines state that payment of the contract price shall be made in the currencies in which the bid price is expressed. In January 2011, the contractor, EPC, and MOF resolved the currency issue and the contract was successfully completed in 2012.

33. ADB’s OAI conducted a project procurement related review in 2012 to confirm compliance with applicable ADB policies, guidelines and loan and grant agreements. OAI conducted a follow up in November 2014 and found that the quality of infrastructure equipment, civil works, and maintenance were generally satisfactory and project supervision and contract management had generally improved. There were 18 recommendations left to be implemented with 3 no longer being relevant or applicable, 8 already addressed and 7, not yet addressed. At project completion, 6 of the 7 recommendations had already been addressed and the remaining recommendation was addressed after the final audited project financial statement (APFS) was submitted to ADB. I. Gender Equity 34. At appraisal, no specific adverse impacts to women were foreseen so the project was classified some gender elements. The development of subprojects were to involve community consultations, and EPC was to actively encourage representation by women at all public meetings, to ensure that the women (i) fully understood the subproject and its benefits, (ii) became involved in collective decision-making, and (iii) raised issues and concerns that affect them in respect to the subproject and identify suitable mitigation measures to address concerns. The women, including those who own land adjacent to where the new power lines were to be built, attended all consultations conducted by EPC. During consultations on tariff increases, the women raised the impact it will have on their households as they have other financial commitments to meet. The women also raised issues they faced with faulty prepayment metering and were advised by EPC on how to handle such issues. At the request of the Government of Australia, ADB carried out a rapid gender review mission in 2016 to assess the gender equality results, with a focus on whether the women have benefited from the project, particularly the women in small business. While there were no proactive gender design features, the project did have an impact on women and the review found that the project resulted in practical gender benefits for women, including a reduction in women’s time poverty and increased economic empowerment. The improved reliability and continuous electricity supply reduced the time spent on housework and increased the women’s waking hours, which contributed to relieving time poverty and creating additional or new income by expanding an existing business or opening a new one. It also enabled them to assist the children with school homework and added more rest and leisure hours, which overburdened women badly needed. In some cases, the women benefited from working closer to home and had a more balanced life, overall. An article from the rapid gender review is attached as Appendix 13. J. Safeguards 35. The report and recommendation of the President assessed social safeguards and other social risks as not significant (resettlement, affordability and labor) or none (indigenous peoples), with no action plans required. EPC prepared an environmental assessment and review framework (EARF) and five initial environmental examinations, including one preliminary environmental assessment report and one resettlement plan, which were approved by ADB. As the project was approved in 2007 and closed in 2018, there was a transition period for adjusting from the 2007

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requirements to those in place by 2009. 18F

19 The PMU included an environment and social unit (ESU) to plan, implement, and coordinate land acquisition, resettlement, and environmental activities during the initial design phase. By the end of 2010, the ESU was not performing its functions properly. The 2012 midterm review recommended recruiting a PMU environmental officer and establishing a grievance redress mechanism. In 2013, EPC complied with these recommendations and the ESU was re-established. At project completion, there were no remaining or unresolved safeguard-related issues and the safeguards compliance review is attached as Appendix 10. K. Monitoring and Reporting 36. The project complied with 53 covenants, partly complied with four covenants, and did not comply with one covenant. The four partly complied covenants were: (i) EPC did not submit a project completion report, despite this being agreed to and follow-ups by ADB; (ii) the self-financing ratios, which was complied with for 5 years and not complied with for another 4 years; (iii) debt service ratios, which was complied with for 8 years and not complied with for 1 year; and (iv) accounts receivable ratios, which were complied with for 7 years and not complied with for another 2 years. The covenant that was not complied with is the Government of Samoa arrears (para. 9). Details of compliance with project covenants are attached as Appendix 8. ADB and EPC carried out initial poverty reduction and social assessments and a social survey. For significant changes to subproject designs or settlement impacts, a detailed measurement survey was mandatory but not needed. EPC submitted quarterly progress reports to ADB and updated review missions on compliance with project covenants and achievements of the project outputs. 37. MOF has extensive experience with executing ADB and other multilateral and bilateral externally funded projects. EPC also has experience with implementing externally funded projects, including the ADB-funded Afulilo Hydroelectric Project. During the life of the project, there were four project accountants who were based in the EPC’s PMU and were responsible for handling the disbursements and financial management work, including preparing the project financial statements and arranging for their annual audits. EPC submitted five APFS to ADB on time and submitted seven APFS late, with the longest delay of 6 months in the first year of the project. Issues raised during the annual audits included the calculation of the interest amount that EPC was to repay to the Government of Samoa, weaknesses with the documentation, and general ledger postings. These issues were eventually resolved, and no audit management letters were prepared for the last two APFSs. For the EPC’s audited entity financial statements, EPC submitted four to ADB on time and submitted seven statements late, with the longest delay being 9 months.

III. EVALUATION OF PERFORMANCE A. Relevance 38. The project is rated highly relevant. At appraisal, the project was consistent with the government’s overall national development plan, the national energy policy, the power utility’s investment plan, and ADB’s country partnership strategy (para. 3). The project addressed pressing needs for power expansion affordability and improved reliability. The design was sufficiently flexible to accommodate changes in priority investments and resulted in considerable expansion of generation and improvements in transmission and utility management. At

19 The Environment Policy of the Asian Development Bank 2002, Involuntary Resettlement Policy 1995, and Policy on

Indigenous Peoples 1998 were replaced by the Safeguard Policy Statement (2009).

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completion, the project remained highly relevant, adjusting to new technologies (e.g., battery

storage and micro-grids) and opportunities (Japanese yen−US dollar exchange rate gains). Considering the gaps in experience and skills within EPC at inception, the modality of implementation through a PMU was relevant and ultimately led to EPC skills enhancement. The DMF was appropriate for the project’s desired impact, outcome, and outputs, which were generally achieved. An innovative feature was a Government of Australia LBD mechanism that allowed the Government of Samoa to repay a portion of the ADB loan, triggered by specific reform measures (para. 14), which were achieved. B. Effectiveness 39. The project is rated effective. The expected outcome of improved quality, reliability, and cost-effectiveness of power supply at appraisal was achieved and all targets of the three indicators were partially achieved. Five of six outputs were achieved satisfactorily as measured by available indicators (para. 6). The remaining output of demand-side management was achieved as its only target was to implement public awareness campaigns, although that target alone is not an adequate measure of demand-side management (para 11). A key output (improved operational efficiency) was achieved but its indicators and targets (technical and nontechnical losses) were insufficient and not adequately quantified (para 8). The clean energy output was achieved but largely through actions and activities external to the project. 19F

20 However, constraints on growth in clean energy generation through project-specific investments were due to severe damages to small hydro infrastructure caused by Cyclone Evan in 2012, 20F

21 with most planned ADB-supported hydropower development, moved to the ADB-funded REDPSRP (para. 30). C. Efficiency 40. The project is rated efficient. ADB recalculated the economic internal rate of return (EIRR) for the core subprojects and candidate subprojects using actual costs and a revised demand forecast based on growth trends since 2008.21F

22 As shown in Appendix 11, ADB re-estimated the EIRR as 16.5% for the EPC system, compared to the report and recommendation to the President (RRP) estimate of 13.6% for Upolu and 10.7% for Savai’i. The RRP’s envisaged investment for Savai’i largely consisted of a new run-of-river hydropower station, which was cancelled during the implementation period. A project economic net present value was not reported in the RRP analysis but in the updated analysis, the economic net present value is ST198 million. 41. Appendix 12 of the RRP contains the overview economic and financial analyses conducted during project preparation but did not describe the methodology employed in detail or specifically how the economic costs and benefits were quantified. However, it is evident that the RRP economic analysis for Upolu was based primarily on avoided loss of load, due to the then-emerging EPC capacity shortfall, plus reduced technical losses from improvements to the transmission and distribution system; Savai’i was based on replacement of diesel generation with hydro and reduction in distribution losses. The current (updated) economic analysis for Upolu is similarly based on avoided loss of load and reduction in losses, but also includes a quantified benefit of higher reliability, in the form of reduced System Average Interruption Duration Index

20 Clean energy growth was primarily achieved through independent power producers (solar) and investments of ADB’s

REDPSRP. 21 The IMF 2018 Article IV report estimated total damage as 29% of GDP, this following 22% by a tsunami in 2009. 22 ADB corrected the EIRR to adjust for the fall in demand that occurred in the wake of Cyclone Evan in 2012, which

affected growth for several subsequent years.

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and System Average Interruption Frequency Index measurements. In Upolu, the updated analysis incorporates the improved diesel fuel conversion efficiency obtained from the highly efficient diesel generators in the new Fiaga power station in comparison with the old diesel plant in the Tanugamanono power station22F

23. For Savai’i, the updated analysis includes only a benefit for improved reliability and a much lower level of investment in Savai’i than envisaged in the RRP. ADB surmised that the somewhat higher EIRR estimate in the updated analysis in comparison with the RRP analysis is due to these factors. There were no cost overruns or project delays that will affect the analysis. D. Sustainability 42. Financial sustainability. The project is financially sustainable. As shown in Appendix 12, ADB re-estimated the financial internal rate of return as 14.1% for the EPC system compared to the RRP estimates of 7.0% for Upolu and 12.1% for Savai’i. In view of the reduction in the re-lending interest rate facing the EPC from 6.5% to 2.0% (para. 13) and the full provision of an $8.0 million grant from the Government of Australia to offset part of EPC’s counterpart funding obligation, ADB re-evaluated the weighted average cost of capital (WACC) as 2.07%, in comparison with the RRP’s 4.48%. The financial net present value of the project in the updated analysis is ST914.3 million, compared to the RRP estimate of ST72.0 million (for Upolu and Savai’i investments combined). The re-evaluated financial internal rate of return substantially exceeds the re-evaluated WACC. 43. The load growth and tariff projections used in the RRP financial analysis were not

available. However, it is likely that the actual load growth during 2008−2018 has exceeded the RRP analysis’ projections. Moreover, it is not evident that the RRP’s financial analysis took into account the financial value of fuel savings made possible by the more efficient diesel plant provided by the project. These factors, in combination with the reduced WACC evaluation, are likely to be the main reasons that the updated analysis exceeds the RRP analysis. 44. Between 2008 and 2018, the consumption of electricity on both islands grew at an average annual rate of 3.89%, with most of the growth occurring in the 5 years since the bulk of the

subprojects were commissioned (2014−2018). Since 2012, when OOTR assumed responsibility for oversight of the electricity sector, the structure of the tariff changed several times and to a substantial degree affecting, for example, the size of the residential lifeline block, discounts for consumers on prepayment metering, and the introduction of energy and debt charges (EPC designed the energy and debt charges to recover EPC’s variable fuel costs and interest charges on long-term debt). Despite these changes, there has been a significant reduction in the average real tariff over the period. For example, whereas a residential customer on a conventional (post-pay) meter using 200 kWh/month would have paid ST146/month in 2009, they would be paying approximately ST135/month in real terms (2009 tala) in 2019 if on a post-pay meter and about ST123/month if on prepayment metering. That the tariff has fallen in real terms, despite the very large project investments and their financial costs testifies to the efficacy and sustainability of the project and the regulatory framework that it helped to bring about. The current tariff is more transparent to consumers and to EPC management than the pre-2012 tariff was (i.e., it is easier to understand how much is being charged for what costs and, for consumers on prepayment metering, it is easier to monitor and control daily consumption) and is fairly straightforward for EPC to administer. The transparency of the tariff and the regulatory oversight that is now in place,

23 The Fiaga power station is estimated to yield 4.2 kWh/liter of fuel, whereas the Tanugamanono power station was

estimated to yield only 3.7 kWh/liter.

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combined with the increased capacity and reliability of EPC’s power system, strengthens the financial sustainability of the EPC. 45. The project has been instrumental in fostering growth in financial management capacity within EPC, both because such capacity was necessary to carry out structured project management and reporting functions over a lengthy period and because regulatory oversight has helped to instill corporate vigilance on tariff issues and financial management. Every year from 2015, EPC has earned a substantial annual operating surplus that greatly exceeds the average

of the 2008−2014 period. This ensures that additional funds will be available to sustain necessary plant maintenance and renewal. Cost recovery is better assured now than in the past, as a result of the restructure tariff, efficiency improvements, reduced losses, system reliability, and improved collection through the use of prepayment metering. This positive development has been and will likely continue to be assisted by a gradual transformation of the electricity sales mix, wherein the domestic sector has declined in relative importance while the non-domestic sector (commercial, government, and social institutions) has grown proportionally. In line with Samoa’s future economic prospects (para. 47), it is likely that electricity demand growth will remain strong (albeit

abate somewhat from the high rates of the 2014−2018 period). 46. Institutional sustainability. Project outputs and outcomes are technically and institutionally sustainable. Technically, project designs were robust and are being well-maintained. Institutionally, the skills of EPC staff have improved as has staff retention. Through the project, there are a range of improved tools (e.g., power planning software, a national control center, and optic cable-based communications between generation plants) that should enhance sustainability. 47. Environmental and social sustainability. The project is environmentally and socially sustainable. Environmental and social impacts during implementation were minimal and no adverse impacts are anticipated in the long run. EPC designed the subprojects to be resilient to flooding, water needs, and anticipated impacts of climate change. By completion, some stakeholders who were initially unreceptive to elements of the project, 23F

24 were broadly supportive. DMF indicators, supplemented by interviews, suggest steady improvements overall to EPC’s quality and reliability of service. E. Development Impact 48. The project is rated satisfactory regarding its development impact. Adequate, affordable, and reliable power supply is an essential prerequisite for Samoa’s socioeconomic development. The International Monetary Fund (IMF) notes that ADB has been the lead partner in the energy sector, financing almost two-thirds of the national generation capacity. 24F

25 From 3.4% in 2019, the IMF expects economic growth to be 4.4% in 2020 and normalize to 2.2% in forecast years thereafter, with growth driven by infrastructure investment, tourism, and new business, all of which require reliable energy. However, in ADB’s assessment, Samoa’s debt is sustainable but remains at high-risk of distress, given the country’s high vulnerability to natural disasters. Public debt slightly exceeded the authorities’ ceiling of 50% to gross domestic product in 2017/18, on account of a depreciating tala, continuous disbursements of external loans, and low growth. 25F

26 Samoa is

24 Initially, prepayment metering was unpopular among domestic consumers but as they have helped reduce electricity costs, they are now accepted. Larger business consumers and large government ministries are less willing to adopt prepayment metering.

25 IMF. 2018. 2018 Article IV consultation and staff report (IMF Country Report No. 18/145). Washington, DC. 26 IMF. 2019. Samoa: Staff Concluding Statement of the 2019 Article IV Mission. Washington, DC.

14

making strong progress toward achieving its key development priorities. Poverty has fallen in urban centers, child mortality has been reduced, and greater emphasis has been placed on environmental sustainability26F

27 but it is not possible to attribute the extent to which the project has contributed to this. However, the project has provided more than 50% of Samoa’s currently installed generation capacity and introduced the prepayment system that helps consumers better manage electricity consumption. The project’s contribution can be considered significant. F. Performance of the Borrower and the Executing Agency 49. The performance of the Government of Samoa, MOF, and EPC in implementing the project was satisfactory. They have been cooperative and supportive, taking strong ownership of the project from appraisal to completion. The Government of Samoa, MOF, and EPC ensured compliance with the loan covenants, safeguard requirements, counterpart funding, and implementation of ADB’s Office of Anticorruption and Integrity (OAI) project procurement-related review (PPRR) recommendations (para. 56). The cofinanciers were satisfied with the performance of the Government of Samoa, MOF, and EPC. Unfortunately, EPC did not submit its project completion report to ADB. G. Performance of Cofinanciers 50. The cofinanciers, the Government of Australia and JICA, have performed satisfactorily. Both cofinanciers have been active participants, cooperative, and supportive from the appraisal stage through implementation and completion. They provided adequate and timely support as needed and participated in project design and review missions, including the midterm review and project completion mission. The Government of Australia improved the initial design by suggesting and supporting the innovative and successful LBD mechanism (para. 14) and ensured further consideration of gender elements. In addition to its project commitments, JICA provided SCADA, civil, and hydro-engineering staff to the PMU during the implementation period (para. 22). H. Performance of the Asian Development Bank 51. The ADB has performed satisfactorily. The Government of Samoa and EPC commended ADB’s performance during project preparation and implementation, noting good working relationships with them and the cofinanciers. The Transport Division of the Pacific Department in the ADB headquarters initially administered and supervised the project and it was handed over to the Pacific Subregional Office in Suva, Fiji in July 2012. ADB had a total of five project officers managing the project from 2007 through its completion in 2018. During a transition of ADB project officers in 2008, there was some delayed support from ADB to help address the initial PMU problems. Overall, the transitions were smooth and did not materially affect the project. ADB conducted 1 inception mission, 19 review missions, 1 midterm review mission, 3 PPRR missions, 1 gender review mission, and 1 project completion review mission. The missions included visits to the project sites. I. Overall Assessment 52. Ratings for each indicator are summarized in the table. The project was highly relevant to Samoa’s needs at appraisal, as the economy was hampered by expensive, insufficient, and unreliable electric power with poor resilience to natural disasters. The project remained highly

27 ADB. 2019. Samoa: Fact Sheet 2018. Manila.

15

relevant throughout. The project was effective in delivering its anticipated outcome and achieving at least five of the six outputs, which were largely due to a proactive, well-managed, and competent PMU, supporting EPC. The project was efficient in terms of a satisfactory EIRR compared to expectations at appraisal. The project is likely sustainable financially (as tariffs are independently adjusted to cover costs), institutionally (EPC’s capacity has improved), environmentally (investments were designed for resiliency and are being well-maintained), and socially (there were no significant resettlement issues and there have been steady improvements to the quality of service without tariff increases in real terms).

Overall Ratings

Criteria Rating

Relevance Highly relevant Effectiveness Effective Efficiency Efficient Sustainability Likely sustainable Overall Assessment Successful Development impact Satisfactory Borrower and executing agency Satisfactory Performance of ADB Satisfactory

ADB = Asian Development Bank. Source: Asian Development Bank.

IV. ISSUES, LESSONS, AND RECOMMENDATIONS

A. Issues and Lessons 53. Establishing a PMU within EPC to manage the project and help enhance EPC skills was effective in implementing this large and complex project. 54. The TA for energy policy, regulatory components, and DSM implemented by MOF was effective for two of the three components, and only partly for DSM. The TA completion report stated that a major lesson is that policy development in Pacific countries is best supported by provision of assistance for policy implementation, not merely through support for policy development. The CEF established under the project was inadequately financed, with resources far below those indicated in the RRP and was not used for clean energy projects, whether small-scale generation or DSM.

B. Recommendations 55. Sector loan. The project was a successful example of the modality, particularly as it provided centralized funding, including cofinancing for an entire sector within a country over a 10- year period. This could be replicated in other Pacific countries (para. 5). 56. Loan buy-down mechanism. ADB first used the mechanism in an infrastructure loan and the Government of Samoa strongly endorsed it, as it was an effective incentive to carry out the three reform measures. Based on this experience, it is recommended that such an innovative, incentive-generating use of available grant funding be replicated as relevant in future loans to Samoa and other countries. 57. Timing of the project performance evaluation report. The project was completed in August 2018 and it is recommended that the project performance evaluation review be carried out by August 2020 to determine if the project is still meeting its objectives.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary Appraisal Performance Target/Indicators

Project Achievements Details and Issues

Impact Access to sustainable and reliable electricity services at affordable prices

Consumer satisfaction ratings of EPC’s services.

A Consumer Confidence Survey (CCS) planned for 2011, was delayed but completed and published in Q2 2014. Consumer satisfaction (improvements from 2008-2012) were judged through informal interviews.

Baseline not established.

Complaints to EPC’s consumer service division.

A service order tracking in EPC’s Information and Financial System (Daffron) was to be used from FY 2009 for all customer services. It was briefly used, discontinued and reactivated in Q1 2013.

Information on consumer complaints or trends over time was not available.

Change tariff structure and rates.

A cost of service and tariff study was completed in 2013. Following a 6 months consultation process, OOTR approved a 12 month tariff, effective 1 May 2014. The structure has changed substantially over time, including an annual base tariff change from 2015, with monthly adjustments to fuel charge. In real (constant dollar) terms, the cost of electricity declined during the project, with lower charges for prepayment consumers.

New indicator included in Q4 2013

Outcome Improved quality, reliability, and cost effectiveness of power supply

System average interruption duration index (SAIDI) baseline established and verified by 4th quarter 2008 and reduced by 20% by 2015. System average interruption frequency index (SAIFI) baseline established and verified by 4th quarter 2008 and reduced by 20% by 2015.

SAIDI & SAIFI baselines (minutes/year and quarterly) were established in 2008 based on 2006-2008 data. The 2015 targets were exceeded despite extensive damage caused by Cyclone Evan in 2012. Improvements by 2017 were far beyond the targets

2008 min/yr

2017 min/yr

2017/08 ratio

SAIDI Upolu 1515 887 0.58

Savai’i 2622 266 0.10 SAIFI Upolu

26

15

0.58

Savai’i 44 20 0.54

Appendix 1 17



Cost of generation established and published by 1st quarter 2009.

Although a review of monthly data on SAIDI and SAIFI showed considerable fluctuation, the project targets were achieved. Cost of generation was established and initially reported to EPC Board as part of the FY 2008 budget process.

Outputs 1. EPC’s investment plan meets demand requirements

Power system capacity for energy and power meets demand requirements on Savai’i and Upolu.

EPC has comfortably met the demand on Upolu after the 23MW Fiaga diesel power station became operational in 2014 and after the refurbishment of the 1MW Alaoa hydropower system. Savai’i generation capacity also meets demands. EPC’s investment plan revised annually or for new subprojects and continues to meet expected demand.

2. Operational efficiency of EPC improves

Baselines for technical system losses are established and verified by 4th quarter 2008 and are reduced by 10% by 4th quarter 2010 and 20% by 4th quarter 2012.

In Q4 2018, total system losses were calculated at 15.9%, based on a 12 month moving average. Total system losses were reported monthly to the ECP board and in Q1 2018, it had reduced to 9.9%. In Q4 2008, EPC and a JICA engineer calculated technical losses at 13.5%.

Subsequent to 2008, EPC were unable to use the JICA results to estimate both technical and non-technical losses.

Baseline for nontechnical system losses established and verified by 4th quarter 2008 and reduced by10% by 2010.

In the absence of time series data on technical losses, the EPC did not estimate non-technical losses but noted a number of activities underway to allow measuring these losses. Nonetheless, the bulk of loss reductions can be attributed to non-technical loss improvements as technical loss improvements were relatively minor.

3. The financial performance of EPC improves

Consistent application of disconnection policy.

Procedures were reviewed in August 2008, revised and implemented from 2009.

Fuel audits conducted on all EPC’s diesel power stations.

Fuel audits at all generation stations were introduced 1 May 2008 and conducted monthly. Results were used to calculate energy charge portion of tariff each month, submitted to the OOTR for approval, then advertised and implemented.

18 Appendix 1



Timeliness of tariff adjustments in response to costs.

EPC calculates energy charge and submits it to OOTR for approval before it is applied to tariff for consumers. For annual adjustments (incorporating debt and usage charges), OOTR requires submission of full financial justification 3 months before end of financial year, with new tariff implementation 3 month after start of new year.

EPC’s collection performance improves such that accounts receivables are below 2 months of sales.

Achieved FY 2009: 0.91 months Achieved FY 2010: 0.94 months Achieved FY 2011: 0.82 months Achieved FY 2012: 0.87 months Achieved FY 2013: 0.89 months Achieved FY 2014: 1.44 months Achieved FY 2015: 1.22 months Achieved FY 2016: 1.51 months Not achieved FY 2017: 3.09 months Not achieved FY 2018: 3.34 months

Government consumers’ share of EPC’s accounts receivables (AR) reduced from 55% in 2007 to less than their share of total sales by 31 December 2009.

By December 2009 the AR was 47%, dropping to 38% in Q1 2017.

Large Government of Samoa consumers have been exempted from shifting to prepayment metering and not disconnected for social reasons when in arrears (e.g. hospital).

Share of electricity consumers on prepayment metering increases from 5% in 2007 to 75% by 31 December 2012.

The share of prepayment meters passed the 75% target by December 2012, reaching over 81% by June 2013 and over 90% by 31 October 2016.

Self-financing ratio is minimum 12% for 2008-2015; Self-financing ratio is minimum 20% commencing 2016.

Not achieved FY 2009, 6.1% Achieved FY 2010, 24.9% Not achieved FY 2011, 11.1% Not achieved FY 2012, 9.6% Not achieved FY 2013, 11.6% Not achieved FY 2014, 7.5% Achieved FY 2015, 17.5% Achieved FY 2016, 156.4% Achieved FY 2017, 43.8% Achieved FY 2018, 49.4%

Debt-service ratio is minimum 1.3.

Not achieved FY 2009, 0.82 Achieved FY 2010, 2.78 Achieved FY 2011, 1.8 Achieved FY 2012, 2.41 Achieved FY 2013, 2.25 Achieved FY 2014, 1.33 Not achieved FY 2015, 1.21 Achieved FY 2016, 2.30 Achieved FY 2017, 1.58 Achieved FY 2018, 1.72

Appendix 1 19



4. Effective regulation of the power sector is established

Electricity Act to govern the power sector established by 31 December 2009.

Electricity Act was passed into law in 2010.

Amendments of the EPC Act consistent with the Electricity Act by 31 December 2009.

A review of EPC Act commenced in September 2015 but was put on hold, pending a decision as to whether EPC is to be registered under the Companies Act. The review resumed in May 2016 and EPC received OAG’s report in June 2017. EPC will seek Cabinet’s advice before they can start the process to register as Company, after which the EPC Act can be finalized and submitted for Cabinet and Parliament consideration.

The project had no legal authority to enact legislation.

Regulatory agency established by 31 December 2010.

The Office of the Regulator of the telecommunication sector, which was established in 2006, was also appointed as the Power Sector Regulator in 2010. OOTR has managed power regulation including tariffs from FY 2012.

5. Energy demand-side management

Energy conservation and demand-side management public awareness campaign implemented.

Public awareness campaign and other activities ongoing since December 2010. EPC and Ministry of Natural Resources and Environment jointly implemented a low energy streetlight DSM program.

Indicator is considered a poor measure of DSM actions.

6. Development of clean energy

Number of projects by energy subsector financed by the clean energy fund (CEF).

A CEF was established within MOF but the amount in the fund of SAT0.4 million was smaller than planned and remains unused.

Number of projects by energy subsector eligible for clean development mechanism (CDM).

At least 18 indicative project outlines were developed by 2009 (including 7 by EPC) with an estimated cost of $4.4m. CDM was not implemented in Samoa.

Electricity produced by clean energy resources (baseline of 45 GWh in 2006).

FY 2018, EPC reported clean renewable energy production of 77 GWh or 48% of gross generation of 160 GWh. Since the 2006 base year, clean energy grew at approximately 4.6% annually with the most growth, from 2015.

20

Ap

pe

ndix

2

PROJECT COST AT APPRAISAL AND ACTUAL ($ million)

Appraisal Estimate Actual

Foreign Local Foreign Local

Currency Currency Currency Currency*

A. Investment Cost 1 Land Acquisition and Resettlement 4.38 11.16 0 0 2 Civil Works 7.31 18.64 2.01 4.94 3 Equipment Supply and Installation 61.61 157.11 94.77 232.79 4 Consultant Services 4.82 12.28 3.96 9.72 5 Taxes and Duties 1.88 4.81 12.12 29.77

Subtotal (A) 80.00 204.00 112.85 277.22

B. Contingencies 1 Physicalc 4.67 11.9 0 0 2 Priced 10.12 25.81 0 0

Subtotal (B) 14.79 37.71 0 0 C.

Financing Charges During Implementation

1 Interest During Construction 5.21 13.29 6.08 14.93

Subtotal (C) 5.21 13.29 6.08 14.93 Total Project Costs (A+B+C) 100.00 255.00 118.93 292.15

Source: Final Costs (EPC, MOF); others Asian Development Bank estimates Note: * Final cost in $ calculated from ST figures using average conversion rate 2007 - 2018 at ST1.00 = $0.407

PROJECT COST BY FINANCIER ($ million)

Table A3.1 Project Cost at Appraisal by Financier

ADF Loan ADF Grant JICA Loan GOA EPC Cost

$ % $ % $ % $ % $ %

A. Investment Cost 1 Land Acquisition and

Resettlement 0 0 0 0 0 0 1.53 34.9 2.84 64.8 4.38

2 Civil Works 3.47 47.5 0 0 3.09 42.2 0 0.0 0.75 10.3 7.31 3 Equipment Supply and

Installation 18.99 30.8 8.42 13.7 28.98 47.0 5.22 8.5 0 0.0 61.61

4 Consultant Services 0 0 4.57 94.9 0 0 0 0.0 0.25 5.1 4.82 5 Taxes and Duties 0 0 0 0 0 0 0 0.0 1.89 100.0 1.89

Subtotal (A)b 22.46

12.99

32.07

6.76

5.73

80.00

B. Contingencies

1 Physicalc 1.31 28.1 0.76 16.3 1.87 40.0 0.39 8.4 0.33 7.1 4.67

2 Priced 2.84 28.1 1.64 16.2 4.06 40.1 0.85 8.4 0.72 7.1 10.12

Subtotal (B) 4.15

2.40

5.93

1.25

1.06

14.79

C. Financing Charges During Implementation

1 Interest During

Construction 0 0 0 0 0 0 0 0 5.21 100.0 5.21

Subtotal (C) 0

0.00

0

0

5.21

5.21

Total Project Costs (A+B+C) 26.61

15.39

38.0

8.0

12.0

100.00

% Total Project Costs 26.6 15.4 38.0 8.0 12.0

ADF = Asian Development Fund, EPC = Electric Power Corporation, JICA = Japan International Cooperation Agency, GOA = Government of Australia. Source: Asian Development Bank.

Ap

pe

ndix

3

21

PROJECT COST BY FINANCIER ($ million)

Table A3.2 Project Cost at Completion by Financier

ADF Loan ADF Grant JICA Loan GOA EPC Cost $ % $ % $ % $ % $ %

A. Investment Cost 1 Land Acquisition and

Resettlement 0 0 0 0 0 0 0 0 0 0 0

2 Civil Works 0.71 35.5 0 0 0.62 31.1 0 0 0.67 33.4 2.00 3 Equipment Supply and

Installation 24.98 26.4 11.66 12.3 44.13 46.6 7.77 8.2 6.23 6.6 94.77

4 Consultant Services 0 0 3.73 94.2 0 0 0 0 0.23 5.8 3.96 5 Taxes and Duties 0 0 0 0 0 0 0 0 12.12 100.0 12.12 a

Subtotal (A)b 25.69 15.39

44.75

7.77

19.25

112.85 B. Contingencies 0

0

0

0

0

0

C.

Financing Charges During Implementation

1 Interest During

Construction 0

0 0 0

0

6.08 100.0 6.08

Subtotal (C) 0

0.00

0 0

6.08

6.08

Total Project Costs (A+B+C) 25.69

15.39

44.75 7.77

25.33

118.93

% Total Project Costs

21.6

12.9

37.6

6.5

21.3 100

ADF = Asian Development Fund, EPC = Electric Power Corporation, JICA = Japan International Cooperation Agency, GOA = Government of Australia. a MOF data captured only from FY 2011/2012 until FY 2018/2019 of taxes and duties of ST32.40 million paid by Government. Source: Asian Development Bank.

22

A

pp

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dix

3

Appendix 4 23

DISBURSEMENT OF ADB LOAN, ADB GRANT, JICA LOAN AND GOA GRANT PROCEEDS

Table A4.1: Annual and Cumulative Disbursement of ADB Loan, ADB Grant, JICA Loan and GOA Grant Proceeds

Annual Disbursements Cumulative Disbursements

Year Amount ($ million) % of Total

Amount ($ million) % of Total

2007 0 0 0 0

2008 0.307 0.33 0.307 0.33

2009 3.999 4.27 4.306 4.60

2010 13.353 14.27 17.659 18.87

2011 27.701 29.59 45.36 48.46

2012 20.917 22.35 66.277 70.81

2013 7.855 8.39 74.132 79.20

2014 5.650 6.04 79.782 85.23

2015 3.532 3.77 83.314 89.01

2016 0.310 0.00 83.624 89.34

2017 7.375 7.88 90.999 97.22

2018 2.605 2.78 93.604 100.00

ADB = Asian Development Bank, GOA = Government of Australia, JICA = Japan International Cooperation Agency Source: Asian Development Bank.

Figure A4.1: Projection and Cumulative Disbursement of ADB Loan, ADB Grant, JICA

Loan and GOA Grant Proceeds

0

5

10

15

20

25

30

35

40

45

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ m

illio

n

Projections Actual Disbursements

24 Appendix 5

CONTRACT AWARDS OF ADB LOAN, ADB GRANT, JICA LOAN AND GOA GRANT PROCEEDS

Table A5.1: Annual and Cumulative Contract Awards of ADB Loan,

ADB Grant, JICA Loan and GOA Grant Proceeds

Annual Contract Awards Cumulative Contract Awards

Year Amount ($ million) % of Total

Amount ($ million) % of Total

2007 0 0 0 0

2008 0 0 0 0

2009 0 0 0 0

2010 57.608 61.54 57.608 61.54

2011 11.600 12.39 69.208 73.94

2012 9.125 9.75 78.333 83.69

2013 5.126 5.48 83.459 89.16

2014 0.261 0.28 83.720 89.44

2015 0.122 0.13 83.842 89.57

2016 0 0.00 83.842 89.57

2017 7.459 7.97 91.301 97.54

2018 2.303 2.46 93.604 100.00

ADB = Asian Development Bank, GOA = Government of Australia, JICA = Japan International Cooperation Agency

Figure A5.1: Projection and Cumulative Contract Awards of ADB Loan, ADB Grant, JICA

Loan and GOA Grant Proceeds

0

10

20

30

40

50

60

70

200720082009201020112012201320142015201620172018

$ m

illio

n

Projections Actual Contract Awards

Appendix 6 25

SUMMARY OF CONTRACTS FUNDED BY THE PROJECT

ADB

PCSS Nos.

Contractor Description Amount

Financed $ million

A. CORE SUBPROJECTS

1. Hospital Feeder Upgrading Project – Stage 1 1,193,229.97

0011 G03928 G03929

Various Retroactive Financing - Materials for 22KV Conductor Upgrading

406,032.59

0007 0007 G03580 G03581

Olex Australia Pty Ltd Supply of Cables and Conductors for Upgrading Hospital Feeder 1, Alaoa 6.6 KV Distribution Line and Puapua-Asau 22KV Reconductoring

257,149.06

0010 0010 G03708 G03709

Etel Ltd

Lot No.1: Supply of Transformers for Hospital Feeder Stage 1, Upgrade of Alaoa 6.6 KV Dist Line and Puapua-Asau Trans Line 22KV Reconductoring

204,364.30

0008 G03582 G03583

Bluebird/AHLal Pty Ltd Lot 2: Supply of Power Poles & Cross Arms & Lot 5: Supply of Locally Produced Materials

33,389.93

0009 G03705 G03706

South Astral Pty Ltd Lot 3: Supply of Goods & Related Services 58,062.54

0012 0012 G04769 G04770

Bluebird/AHLal Joint Venture

Works and Related Services for Hospital Feeder Upgrading Stage 1 and Upgrade of Alaoa 6.6KV Trans Line to 22KV

234,231.55

Single- and Three-Phase Prepayment Metering Project 5,407,932.46

0001 0001 G01822 G01823

Arthur Riley Single and Three-Phase Pre-payment Meters 5,316,107.46

0006 0006 G03338 G03337

Arthur D. Riley Co. Ltd Suprima Upgrade - Vending Machines for Pre-payment Meters

91,825.00

B. CANDIDATE SUBPROJECTS

(i) Generation

1 Refurbishment of Tanugamanono Diesel Generators 2,029,561.69

0014 0014 G04318 G04319

Man Diesel Refurbishment of Tanugamanono Diesel Generators Nos. 5A and 9B

2,029,561.69

2 New Diesel Power Plant at Fiaga 38,342,506.57

0021 0021 G05235 G05237

Silva Transport Company

Lot A – Construction of Access Road to Fiaga Diesel Power Plant, Lot C - Construction of Fence Around 97 Acres of Designated Land for Fiaga Power Station

1,072,827.27

0022 0022

PPG Engineering Ltd Procurement of Works for Fiaga Power Plant Access Rd Lot B: Site Preparation

57,062.60

0050 0050 G09211

Intracor Procurement of Earth Grid System of Fiaga Power Station

97,953.03

26 Appendix 6

ADB

PCSS Nos.


Financed $ million

0025 0025 G05362 G05363

Bluebird/AHLal JV Fiaga New Diesel Power Station Design, Manufacture, Supply, Construct, Install and Commission

30,613,221.12

0028 0028 G05528 G05529

North Power Ltd Fiaga Diesel Power Station Lot B: Electrical Switchgears

4,593,788.24

0042 0042 G06893

Fuelquip NZ Ltd & GMA Construction Ltd

Fiaga Power Plant Fuel and Oil Tanks: Design, Manufacture, Supply, Construct and Install

1,366,417.99

0056 0056 G10394 G18568

Silva Transport Company Design and Construction of Fiaga Water Booster Pumping System

272,436.32

0053 0053 G09642

Island Lubricant & Clipper Oil JV

Supply of Lubricant Oil for Commission (4 months Commission Period of 1-Year)

268,800.00

3 Refurbishment of Alaoa Hydro Power Station 1,818,990.86

0020 0020 G05208 G05209

Silva Transport Company Construction Works for the Refurbishment of Alaoa Hydro Power Station

437,911.39

0015 0015 G04415 G04416

Tenix Alliance Refurbishment of Alaoa Hydro Power Station Part B: Mechanical and Electrical Works

1,381,079.47

4 Refurbishment of Taelefaga, Lalomauga, Samasoni and Tanugamanono Switchgears

2,695,045.82

0013 0013 G04315 G04316

North Power Ltd Refurbishment of Taelefaga, Lalomauga, Samasoni and Tanugamanono Switch Gears

2,695,045.82

5 Refurbishment of Taelefaga Hydro Power Station Governors 962,031.35

0054 0054 G09754

North Power Ltd Procurement of Plant-Design, Supply, Install and Commission for Refurbishment of Taelefaga Hydropower Station Governors

962,031.35

6 Construction of Salelologa 22 kV Sub Station 2,165,901.36

0055 0055 G10230

North Power Ltd Design, Manufacture, Supply, Construct, Install, Test and Commissioning of Salelologa 22KV Substation

2,165,901.36

7 Fuluasou 22 kV Sub Station 5,690,500.36

0041 0041 G06892

North Power Ltd Fulausou 22KV Substation: Design, Manufacture, Supply, Construction, Installation, Test and Commission

5,690,500.36

(ii) Transmission

1 Overhead and Underground Transmission Line from Fiaga Diesel Power Station to Tanugamanono via Fuluasou Sub Station

689,170.46

0051 0051 G09402

Intracor

Procurement of Tools and Equipment for Construction of 33KV and 22KV, Overhead and Underground Transmission Line from Fiaga Power Plant to Fuluasou and Tanugamanono

112,100.04

0059 0059 G11560

South Astral Pty Ltd Procurement of 22KV/33KV Underground materials to connect Fiaga to Fuluasou and Tanugamanono

96,862.25

Appendix 6 27

ADB

PCSS Nos.


Financed $ million

0032 0032 G06451

Intracor Commodity Exports

Lot 2: Conduits & Magslab for 33KV Underground Transmission Cable from Fiaga to Tanugamanono via Fuluasou Substation

192,172.32

0036 0036 G0645

Etel Limited

Lot 3: Pole Mounted and Pad Mounted Transformers for 33KV Underground Transmission Cable from Fiaga Station to Tanugamanono via Fuluasou Substation

17,100.00

0038 0038 G06457

South Astral Pty Ltd

Lot 4: Wooden Poles & Crossarms for 33KV Underground Transmission Cable from Fiaga Power Station to Tanugamanono via Fuluasou Substation

61,555.00

0039 0039 G06458


Lot 5: Galvanized Line Hardware, Insulators, etc. for 33KV Underground Transmission Cable from Fiaga Power Station to Tanugamanono via Fuluasou Substation

16,984.19

0040 0040 G06473

South Astral

Lot 6: Overhead Line Conductors for 33KV Underground Transmission Cable from Fiaga Power Station to Tanugamanono Power Station via Fuluasou Substation

14,397.40

0037 0037 G06456

Alrite International Ltd

Lot 7: Sand and Rock, Concrete Stay Blocks for 33KV Underground Transmission Cable from Fiaga Power Station to Tanugamanono via Fuluasou Substation

177,999.26

2 Hospital Feeder Upgrading Project – Stage 2 6,205,728.36

0016 0016 G04424 G04425

Etel Transformers Hospital Feeder Upgrade Stage 2 and Upolu 22KV Overhead Conductor Upgrading Lot 1 – Transformers

359,196.00

0019 0019 G04659 G04660

South Astral Hospital Feeder Upgrade Stage 2 and Upolu 22KV Overhead Conductor Upgrading Lot 2, Lot 3 and Lot 4

1,739,135.20

0029 0029 G06406 G06405

Bluebird AHLal JV Hospital Feeder Upgrading Stage 2 and 22KV Overhead Conductor Upgrading Program

947,358.51

0024 0024 G05352 G05353

GMA Construction Ltd

Hospital Feeder 2 and Upolu 22KV Overhead Conductor Upgrading Lot B: Lalomauga 33KV and East Coast, Lot C: South Coast and Lot D: West Coast Feeder

2,260,509.27

0031 0031 G05796 G05797


Procurement of Power Line Materials and Related Equipment for the Hospital Feeder Stage 2 and 22KV Overhead Conductor Upgrading

899,529.38

3 Fuluasou to Apia wharf 22 kV Underground Cable 2,163,467.36

0033 0033 G06449


Lot 1: Pillar Boxes and Fittings: Power Line Materials for Fuluasou to Apia Wharf 22KV Underground Cable

966,104.68

0035 0035 G06453

Etel Limited Lot 3: Transformers - Power Line Materials and Equipment for Fuluasou to Apia Wharf 22KV Underground Cable

120,975.00

0034 0034 G06450


Lot 4: Construction Equipment, Vehicles, Tools and Test Equipment

1,076,387.68

4 33 kV Fiaga Power Station Transmission Line, 22 kV Conductor Upgrade and Puapua-Asau 22 kV Transmission Line Reconductor

5,909,921.91

28 Appendix 6

ADB

PCSS Nos.


Financed $ million

0017 / G04926 / G04925

Tenix Alliance NZL Services Ltd

Puapua 22KV Transmission Line Reconductoring Works Contract

561,464.62

0049 0049

Ah Liki Construction Ltd Excavation of Trench of Construction of 33KV Underground Cables from Fiaga Power Station to Fuluasou Substation

406,335.18

0043 0043 G07849

Intracor Commodity Exports Ltd

Lot 1: Wood Poles and Cross Arms - Materials for 33KV Fiaga Power Pole Trans Line, Upolu 22KV Conductor Upgrade and Puapua-Asau 22KV Transline Reconductoring

231,996.70

0046 0046 G08283


Lot 2: Overhead Line and Hardware Insulators - Materials for 33Kv Fiaga Power Pole Trans Line, Upolu 22KV Conductor Upgrade and Puapua-Asau 22KV Trans Line Reconductor

383,103.79

0044 0044 G07850


Lot 3: Cables and Conductors, Materials for 33KV Fiaga Power Pole Trans Line, Upolu 22KV Conductor Upgrade and Puapua-Asau Transline Reconductoring

3,325,128.60

0047 0047 G08289


Lot 4 Underground Hardware and Fittings: Materials for 33KV Fiaga Power Pole Trans Line, Upolu 22KV Conductor Upgrade Puapua-Asau 22KV Trans Line Reconductor

443,771.31

0045 0045 G07852


Lot 5: Prestressed Concrete Poles, Materials for 33KV Fiaga Power Pole Trans Line, Upolu 22KV Conductor Upgrade and Puapua-Asau 22KV Trans Line Reconductoring

558,121.71

5 Upgrade 33 kV Tieline from Taelefaga Hydro Power Station 596,603.28

0065 0065 G16901 G16902

North Power Ltd Upgrade 33kv Tieline from Taelefaga Hydropower Station

596,603.28

6 Low Voltage Network Improvement Program 248,133,41

0030 0030 G05714 G05715

Bluebird AHLal Joint Venture

Power Line Materials for Upolu Low Voltage Network Improvement Program Lot 1: Power Poles and Cross Arms

86,174.80

0023 0023 G05344 G05345

Olex Cable Australia Pty Ltd

Procurement of Power Line Materials for Upolu Low Voltage Network Improvement Program Lot 3: Bare and Insulated Conductors, Other Materials

161,958.61

7 Installation of Electrical Conduits and Concrete Vaults for 33 kV Underground Network for Vaitele Road Widening

410,574.71

0018 0018 G05314 G05315

Ott Transport Company

Installation of High Voltage Electrical Conduits and Concrete Vaults for 33KV and 22KV Underground Power Trans Network Vaitele Road Widening

259,539.44

0060 0060 G12485 G12486


22KV Fuluasou Underground (for Low Voltage Underground Materials for Vaitele Road Widening)

55,567.18

0026 0026 G05400 G05401

All Electrical Ltd

Supply and Installation of Electrical Feed to Streetlights of Vaitele Road Widening Project (22KV Upgrading from Fuluasou Substation to Apia Wharf)

95,468.09

8 Construction of Pillar Boxes, Vaults and Underground Conduits for Underground and Power Lines from Lepea to Vailoa

50,601.12

Appendix 6 29

ADB

PCSS Nos.


Financed $ million

0052 0052 G09486

Ott Transport Company

Constructions of Pillar Boxes, Vaults and Underground Conduits for the Employer's Underground of Power Lines from Lepea to Vailoa

50,601.12

(iii) Others

1 Supply of Extra Equipment and Materials 93,157.52

0062 0062 G13970 G13969

TCB Security Services Samoa Ltd

Lot 1 and Lot 2 - Supply of Extra Equipment and Materials

49,900.52

0063 0063 G13971 G13972


Lot 3 - Supply of Extra Equipment & Materials 43,257.00

2 Supply and Delivery of Fiber Cables, PABX Equipment and Cable Accessories to EPC Store, Vaitele

43,046.76

0061 0061 G13495


Supply and Delivery of Fiber Cables, PABX Equipment and Cable Accessories to EPC Store at Vaitele

43,046.76

3 CCTV 68,882.00

0057 0057 G11323 G11322

TCB Security Services Samoa Ltd

CCTV Surveillance System 68,882.00

4 Supply of Current Transformers 230,126.74

0064 0064 G16797 G16798 G17815


Supply of Current Transformers 230,126.74

5 Battery Energy Storage Systems 8,844,817.83

0066 0066

Solar City Corporation Battery energy storage systems 8,844,817.83

6 Vaiaata Power Station 57,420.85

0058 0058

Apia Lua Ltd Vaiaata Site Clearing 22,681.44

G11071 Aurecon New Zealand Ltd

Consultancy Services to Undertake Geotechnical Study for Proposed Vaiaata Power Station

34,739.41

7 Training 4,952.21

G10808 Various Reimbursement of EPC - Training on Power Purchase Agreement in Malaysia

4,952.21

(iv) Measurement Equipment 131,314.33

0002 0002 G02255 G02256

Digsilent Pacific Pty Ltd Power System Planning Software 39,266.07

0003 0003 G02408 G02409

National Institute of Water and Atmospheric Research Ltd

Stream Flow Gauging Measurement Equipment 42,075.88

0004 0004 G02510 G02511

Electrotest Ltd High Voltage Measurement Equipment 8,181.18

30 Appendix 6

ADB

PCSS Nos.


Financed $ million

0005 0005 G02639 G02640

South Pacific Exports High Voltage Measurement Equipment (2nd Part)

41,791.20

(v) Supervisory Control and Data Acquisition System (SCADA) 3,864,025.29

0048 0048 G08548

Schneider Electric (Australia) Pty Ltd

Design, Manufacture, Construct, Install, Test and Commission of the Supervisory Control & Data Acquisition (SCADA) System

3,864,025.29

(vi) Project Management and Consulting Services 3,686,897.05

G01762 David Jarvie Consultancy - Project Manager 52,937.14

G01770 Egis Bceom International Project Implementation Assistance Consultants 2,275,470.88

G07006 John Cook Transmission and Distribution Engineer 62,456.43

G07383 Fonoti Perelini S. Perelini Generation Engineer, Fonoti Perelini S. Perelini 166,010.09

G07400 Robert Pamintuan Civil Engineer 153,045.76

G09459 Mr. Fonoti Perelini Project Manager 617,092.34

G17143 Mr. Fonoti Perelini Consultancy - Project Manager 106,086.88

G18709 Mr. Fonoti Perelini Perelini

Consultancy - Project Manager 90,504.17

G09620 Transfield Worley Consultancy services for a commissioning engineer

49,792.11

G09629 Economist.com Procurement of Cost of Service and Tariff Study 113,501.25

Total $93,604,541.63

Appendix 7 31

CHRONOLOGY OF MAIN EVENTS ADB Loan, JICA Loan, ADB Grant and GOA Grant

Date Event 2007 23 April – 11 May 2007 Fact-finding mission fielded 4 October JICA Loan approved 21 November ADB Loan/Grant and GOA grant approved 10 December JICA Loan signed 11 December ADB Loan and Grants signed 2008 19 February Loan Buydown Grant Agreement signed 19 March ADB Loan/Grant and GOA Grant declared effective 14 May JICA Loan declared effective 24 June – 4 July 2008 Inception mission fielded 6 – 10 October Review mission fielded 2009 11 – 19 March Review mission fielded 26 August – 3 September Review mission fielded 2010 14 – 20 February Review mission fielded 2011 14 – 18 February Review mission fielded May - September Project procurement-related review mission fielded 2012 21 – 25 May Review mission fielded 6-14 June OAI PPRR Review mission fielded 1 July Delegation of project administration from ADB Manila to ADB Suva Office 4 – 7 December Review mission fielded 16 October Minor change in project implementation arrangements approved to submit

withdrawal applications below the minimum value per withdrawal application set at $100,000 for equipment supply and installation and civil works and $30,000 for consultant services

27 November Minor change in project implementation to reallocate L2368 proceeds approved

2013 10 – 12 April Review mission fielded 31 May GOA approved to effect LBD 19 – 21 August Review mission fielded 28 October – 1 November Mid-Term review mission fielded 2014 10 – 14 February Review mission fielded 30 June – 4 July Review mission fielded 10 – 21 November OAI PPRR Follow-up Review mission fielded 2015 2 – 6 March Review mission fielded 26 October – 4 November Review mission fielded 2016 15 May First draw down from the Loan Buy Down Mechanism 8 June ADB declared Loan Buy Down Grant available for draw down 13 – 17 June Review mission fielded

32 Appendix 7

Date Event 31 July Project completion at appraisal 6 – 8 September Rapid Gender review mission fielded 4 October First Extension of project closing date approved from 31 December 2016 to

14 November 2017 14 – 18 November Review mission fielded 15 November Second draw down from the Loan Buy Down Mechanism

2017 15 May 14 June

Third draw down from the Loan Buy Down Mechanism JICA Loan project completion

3 – 6 July Review mission fielded 16 – 20 October Review mission fielded 18 July Second extension of project closing date approved from 14 November 2017

to 31 August 2018 29 August Minor change in project implementation approved to reallocate loan/grant

proceeds and a change in disbursements arrangements 14 November JICA loan financial closing 15 November 26 December

Fourth draw down from the Loan Buy Down Mechanism Minor change in project implementation approved for a change in disbursements arrangements

2018 27 February – 6 March Review mission fielded 28 February Project completion for ADB loan/grant and GOA grant 15 May Fifth draw down from the Loan Buy Down Mechanism 17 – 24 July Review mission fielded 21 August Minor change in project implementation arrangements approved to reallocate

loan/grant proceeds 5 October Minor change in project implementation arrangements approved for a final

reallocation of grant proceeds 15 November Sixth and final draw down from the Loan Buy Down Mechanism 28 December ADB Loan/Grant and GOA grant financially closed 2019 8 – 16 April Project completion review mission fielded ADB = Asian development bank, GOA = Government of Australia, JICA = Japan International Cooperation Agency Source: Asian Development Bank.

Appendix 8 33

STATUS OF COMPLIANCE WITH PROJECT COVENANTS

Covenant Reference in Financing Agreement

Status of Compliance

Particular Covenants

(a) The Beneficiary shall carry out the Project with due diligence and efficiency and in conforming with sound administrative, financial, engineering, environmental and public utilities practices.

L2368 and G0087, Article IV, Section

4.01

Complied.

(b) In the carrying out of the Project and operation of the Project facilities, the Beneficiary shall perform, or cause to be performed, all obligations set forth in Schedule 5 of the Financing Agreement.

Complied.

The Beneficiary shall make available promptly, as needed, the funds, facilities, services, land and other resources which are required, in addition to the proceeds of the Loan and the Grant, and the JBIC Loan and the Government of Australia Grant, for the carrying out of the Project and for the operation and maintenance of the Project facilities.


4.02

Complied.

The Beneficiary shall enable ADB’s representatives to inspect the Project, the goods financed out of the proceeds of the Loan and the Grant, and the JBIC Loan and the Government of Australia Grant, and any relevant records and documents.


4.03

Complied.

The Beneficiary shall take all action which shall be necessary on its part to enable the EPC to perform its obligations under the Project Agreement and shall not take or permit any action which would interfere with the performance of such obligations.


4.04

Complied.

(a) The Beneficiary shall exercise its rights under the Subsidiary Financing Agreement in such a manner as to protect the interest of the Beneficiary and ADB and to accomplish the purposes of the Loan and the Grant, and the JBIC Loan and the Government of Australia Grant


4.05

Complied.

(b) No rights or obligations under the Subsidiary Financing Agreement shall be assigned, amended, or waived without the prior concurrence of ADB.

Complied.

Project Execution and Implementation Arrangements

The MOF shall, as the Project Executing Agency, establish the PSC to provide overall direction for the Project. The Chief Executive Officer of the MOF shall chair the PSC. Other PSC members are the Chief Executive Officer of the Ministry of Commerce, Industry and Labour, the Chief Executive Officer of the Ministry of Natural Resources and Environment, the Chief Executive Officer of the Ministry of Women, Community and Social Development, the Chief Executive Officer of Samoa Water Authority, the Attorney General and the General Manager of the EPC. The PSC shall be convened at least on a quarterly basis, commencing within 3 months from the Effective Date, until Project completion.

L2368 and G0087, Schedule 5. Para.1

Complied.

The EPC shall, as the Project Implementing Agency, establish:


Complied.

(a) the PMC to provide coordination between the Project and non-Project activities within the EPC. The General Manager of EPC shall chair the

34 Appendix 8



PMC. Other PMC members are the managers of each of the departments of the EPC and the project manager for the Project. The PMC shall be convened on a weekly basis, commencing the Effective Date, until 31 December 2009 and thereafter on a bimonthly basis until completion of the Project

(b) the PMU for the day-to-day management and implementation of the Project. The PMU shall be responsible for project planning, monitoring and reporting, and the cost and quality control, including: (i) project management and administration; (ii) planning and implementing cost-effective and sustainable infrastructure investments to meet consumer demand; (iii) maintaining Project accounts; (iv) overseeing procurement procedures to ensure compliance with the Beneficiary’s and ADB’s policies and procedures; (v) liaising with ADB for quarterly Project updates and other reporting; and (vi) preparing the Project completion report of the Beneficiary and

Complied (i)-(v) Not complied (vi) – despite being agreed to and follow-ups by ADB, IA did not submit a project completion report.

(c) the ESU in the PMU to be responsible for all environmental and social matters relating to the Project. This includes preparation of the IEE, the PEAR, the EIA and EMMP, the EARF and the LARP, in each case, as required for any Subproject. The ESU shall be staffed with an environment officer and a land acquisition and resettlement officer, in each case, with qualifications and experience acceptable to ADB.


Complied.

The Beneficiary shall, and shall cause the EPC to, ensure that the PMU is adequately staffed and resourced throughout the Project Implementation period for the timely and effective implementation of the Project, including the appointment of a project manager for the PMU for the duration of the Project.


Complied.

Subproject Selection and Implementation

(a) The Beneficiary shall, and shall cause the EPC to, ensure that all candidate Subprojects are selected and approved in accordance with the eligibility criteria and procedures agreed between the Beneficiary and ADB and as set out below:


(i) the Subproject contributes to the objectives of the power sector development plan of the Government, is identified as a high priority project in EPC’s annual business plan and is included in the EPC’s investment plan;

Complied.

(ii) the Subproject is technically feasible and meets the Government’s technical standards and requirements;

Complied.

(iii) the Subproject is justified as the most feasible Subproject to achieve the stated objectives and is shown to be least cost among feasible alternatives;

Complied.

(iv) the LARP shall have been prepared for the Subproject in accordance with the LARF, if required, and EPC shall have submitted written confirmation to ADB that the

Complied.

Appendix 8 35



landowner and/or lessee in the case of freehold and state-owned land, or in the case customary land, the matai, acting on behalf of Affected Persons under the Subproject, is agreeable to the land acquisition and resettlement plan terms and conditions;

(v) an environmental screening shall have been conducted for the Subproject and the IEE, the PEAR, and the EMMP shall have been prepared for the Subproject, in each case, in accordance with the provisions of the EARF. No category A projects shall be financed under the Project.

Complied.

(vi) ADB determines that the EPC has the necessary staffing, implementation, and financial management capacity to implement the Subproject or, in the alternative, the EPC can provide specific assurances that assessed shortcomings can be rectified, such as by adding qualified staff or providing timely in-service training;

Complied.

(vii) the Subproject’s implementation timeframe is reasonable, and surveys and design can be prepared, reviewed, safeguard process and procedures followed, and implemented within the Project implementation period;

Complied.

(viii) the financing plan clearly identifies confirmed sources of financing, including counterpart financing, and includes the provision of budgetary resources to meet counterpart funding requirements for capital expenditures during the construction phase, resettlement costs, as applicable, environmental management costs, loan repayment requirements and routine operations and maintenance costs;

Complied.

(ix) the Subproject will not adversely impact on the EPC’s ability to meet its financing covenants under the loan; and

Complied.

(x) all required Governmental approvals shall have been obtained.


Complied.

(b) The Beneficiary shall, and shall cause the EPC to, ensure that the Subproject selected in accordance with the criteria referred to above are approved and processed in accordance with the arrangements set out below:

(i) the PMU will identify candidate Subprojects meeting the criteria set forth in paragraph 4 above and will obtain approval from the EPC board to assess the feasibility of the candidate Subprojects and inform the PSC of the pending Subprojects feasibility study;

Complied.

(ii) the PMU will then prepare a feasibility study for each candidate Subprojects. The candidate Subproject feasibility report will, among others, provide technical analysis and description, Subproject rationale, scope and components, cost estimates and

Complied.

36 Appendix 8



financing plan, implementation arrangements, an environmental assessment, and a land acquisition and resettlement assessment. The feasibility report will also contain an update of the EPC’s investment plan and an analysis of the candidate Subproject’s impacts on the EPC’s 5-year financial projections, key financial ratios, and compliance with this Financing Agreement;

(iii) each feasibility report will be submitted to ADB for review and approval and shall contain sufficient evidence of the candidate Subproject’s eligibility under the agreed criteria and shall be prepared in accordance with the detail and quality required to enable ADB to assess the viability and sustainability of the candidate Subproject. The feasibility reports will include a set of relevant benchmark and performance indicators for the Subproject which will be monitored through progress reports; and

Complied.

(iv) after ADB has endorsed the feasibility study, the PMU will submit the feasibility study to the EPC board and the PSC for review and approval. Implementation of a candidate Subproject may only proceed following the endorsement of the candidate Subproject feasibility report by the PSC, the EPC board and ADB.

Complied.

(c) The Beneficiary shall, and shall cause the EPC to, ensure that all documentation relating to the Subprojects are kept for a minimum of five years from the date of the project completion report for each such Subproject and made available to ADB upon report

Complied.

4. The Beneficiary shall establish an incentive scheme for canceling repayment by the EPC of the Grant relent by the Beneficiary, through treating such portion of the relent Grant as a grant from the Beneficiary to the EPC (up to 7% of the Project costs or a ceiling of $10 million) on the timely and to-budget implementation of the Subprojects by the EPC, in accordance with the provisions of the Subsidiary Financing Agreement referred to in Section 6.01 of this Financing Agreement.


Complied.

5. Counterpart Financing

6. Without limiting the generality of Section 4.02 of this Financing Agreement, the Beneficiary shall, and shall cause the EPC to, take all necessary measures to ensure that sufficient counterpart funds are made available for and provided to the Project in a timely manner to support effective Project implementation. In this regard, the Beneficiary shall, and shall cause EPC to, make adequate budgetary allocations for each Fiscal Year as required to:


Complied.

(a) Implement the mitigation measures and monitoring requirements of each IEE and EMMP for the Project, in each case, in compliance with the LARF, including providing requisite counterpart funds for land acquisition, resettlement and monitoring activities under any

Complied.

Appendix 8 37



such LARP. The Beneficiary shall, and shall cause the EPC to, meet any unforeseen obligations in excess of the LARP budget in order to satisfy land acquisition and resettlement objectives.

Regulatory Reform and Measures

7. The Beneficiary shall establish a regulatory framework for the power sector under its reform program for the sector. This includes:


(a) the Government submitting a draft Electricity Act and draft amendments to the Electric Power Corporation Act 1980 for Cabinet and Parliamentary consideration by 31 December 2009

Complied. Cabinet approved the Electricity Act in 2010.

(b) following approval by Cabinet and Parliament for the draft legislation, approving provision of resource allocations for a power sector regulator for the relevant Fiscal Year

Complied. Office of the Regulator established in 2006 and was appointed as the power sector regulator in 2010.

(c) appointing the power sector regulator for the power sector by 31 December 2010.

The Beneficiary shall have settled all electricity Arrears of Government agencies and Government-owned entities as of 30 April 2008 by 31 July 2008.


Not complied. Government arrears continues as there has been some resistance to installing prepayment metering for critical consumers (e.g. hospitals).

The Beneficiary shall, and shall cause the EPC to, ensure that pre-payment meters are installed on:


(a) all new electricity connections by 30 June 2008; Complied. As of 31 December 2012, 80% of total active meters were prepayment. As at 31 October 2016, 90% or 33,000 prepayment meters have been installed, a total 36,000 electricity customers. As of 30 June 2018, there are 40,088 customers and 37,150 are using prepayment meters and 2,938 are using readable meters.

(b) a minimum of 75% of all electricity connections by 31 December 2012. Where the Beneficiary has determined that pre-payment meters shall not be installed on certain Government agencies and Governed-owned entities providing basic government services, the Beneficiary shall make a budgetary allocation in each Fiscal Year for the cost of providing power for these services and pay such cost directly to the EPC.

8. The Beneficiary shall, and shall cause the EPC to, implement the Disconnection Policy, the Prepayment Policy and the Write-Off Policy in accordance with their terms.


Complied. Procedures reviewed in August 2008, revised and implemented from 2009.

9. Financial Ratios, Audits and Financial Projections

(a) The Beneficiary shall, and shall cause the EPC to, produce:


(i) for each of its fiscal years from Fiscal Year 2008 to Fiscal Year 2015, cash from internal sources equivalent to not less than 12% of the annual average of the EPC’s capital expenditures incurred, or expected to be incurred, for that Fiscal year, the previous Fiscal Year and the next following Fiscal Year

Partly Complied. Achieved FY 2010, 24.9% Not achieved FY 2011, 11.1% Not achieved FY 2012, 9.6% Not achieved FY 2013, 11.6% Not achieved FY 2014, 7.5% Achieved FY 2015, 17.5% Achieved FY 2016, 156.4% Achieved FY 2017, 43.8% Achieved FY 2018, 49.4%

(ii) for each Fiscal Year after Fiscal Year 2015, cash from internal sources equivalent to not less than 20% of the annual average of the EPC’s capital expenditures incurred, or expected to be incurred, for that Fiscal Year, the previous Fiscal Year, and the next following Fiscal Year.

38 Appendix 8



(b) Before 28 February in each of EPC’s Fiscal Years, the Beneficiary shall, and shall cause the EPC to, on the basis of forecasts prepared by the EPC and satisfactory to ADB:

Complied. EPC prepared forecasts as of February 2009 and subsequently for each financial year with copies to ADB.

(i) review whether it will meet the requirements set forth in subparagraph (a) above in respect of such Fiscal Year and the next following Fiscal Year;

(ii) provide ADB a copy of such review upon its completion.

(c) If any such review pursuant to subparagraph (b) above shows that the EPC could not meet the requirements set forth in subparagraph (a) for those EPC’s Fiscal Years covered by such review, the Beneficiary shall promptly take or cause the EPC to take all necessary measures (including without limitation, adjustments of the structure or levels of the EPC’s electricity tariffs and other charges) in order to meet such requirements.


Complied. Beneficiary approved tariff increase of 8.5% in February 2010 and regular adjustments were made.

(d) The Beneficiary shall cause the EPC not to incur any debt unless a reasonable forecast of the revenues and expenditures of the EPC shows that the estimated free cash flows of the EPC for each Fiscal Year during the term of the debt to be incurred shall be at least 1.3 times the estimated debt service requirements of the EPC in such Fiscal Year on all debts of the EPC, including the debt to be incurred, and no event has occurred since the date of the forecast that has, or may reasonably be expected in the future to have, a material adverse effect on the financial condition of future operating results of the EPC.

Partly Complied. Achieved FY 2010, 2.78 Achieved FY 2011, 1.8 Achieved FY 2012, 2.41 Achieved FY 2013, 2.25 Achieved FY 2014, 1.33 Not achieved FY 2015, 1.21 Achieved FY 2016, 2.30 Achieved FY 2017, 1.58 Achieved FY 2018, 1.72

(e) For the purposes of this paragraph:

(i) the term ‘capital expenditures’ means all expenditures incurred on account of fixed assets, including interest charged to construction financed under any contract, but excludes (i) interest charged to construction subject to cash settlement in the Fiscal Year in which such interest is charged; and (ii) capital expenditures funded entirely by the Government under a community service obligation

(ii) the term “cash from internal sources” means the difference between:

(A) the sum of cash flows from all sources related to operations, plus cash generated from consumer deposits and consumer advances of any kind, sale of assets, cash yield of interest on investments, payments received by the EPC from the Beneficiary for the refund of all or part of the EPC’s Value Added Goods and Services Tax (VAGST) expense, and net non-operating income;

(B) the sum of all expenses related to operations, including administration, adequate maintenance, selling expense, and taxes and payments in lieu of taxes (excluding provision of depreciation and

Appendix 8 39



other non-cash operating charges), debt service requirements, all cash dividends paid and other cash distributions of surplus, and other cash outflows other than capital expenditures

(iii) the term “community service obligation” means an obligation under Section 9 of the Public Bodies (Performance and Accountability) Act 2001 of the Beneficiary;


(iv) the term “debt” means any indebtedness of the EPC maturing by its terms more than one year after the date on which it is originally incurred, and debt shall be deemed to be incurred:

(a) under a contract or agreement of other instrument providing for such debt or for the modification of its terms of payment on the date of such contact, agreement or instrument;

(b) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into

(v) the term “debt service requirements” means the aggregate amount of repayments (including sinking fund payments, if any) of, and interest and other charges on, debt, excluding interest charged to construction and financed from loans;

(vi) the term “free cash flows” means the difference between; (A) the sum of cash flows from all sources related to operations, plus cash generated from consumer deposits and consumer advances of any king, sale of assets, cash yield of interest on investments, and net non-operating income; and (B) the sum of all expenses related to operations, including administration, adequate maintenance, selling expense, and taxes and payments in lieu of taxes (excluding provision for depreciation and other non-cash operating charges), but excluding interest and other charges on debt; and

(vii) the term “net non-operating income” means the difference between: (A) revenues from all sources other than those related to operations after making adequate provisions for uncollectible debts, and excluding payments made to the EPC by the Beneficiary under its community service obligation for the acquisition of fixed assets; and (B) expenses, including taxes and payments in lieu of taxes, incurred in the generation of revenues in (A) above; and

(viii) the term “reasonable forecast” means of a forecast prepared by the EPC not earlier than earlier than nine months prior to the incurrence of the debt in question, which ADB, the Beneficiary and the EPC accept as

40 Appendix 8



reasonable, and to which ADB has notified the Borrower of its acceptability.

10. The Beneficiary shall, and shall cause the EPC to, maintain, from the Effective Date, accounts receivables equivalent to not more than two months equivalent of annual billing for power generation and supply and for all other services provided by EPC.


Partly Complied. Achieved FY 2010: 0.94 months Achieved FY 2011: 0.82 months Achieved FY 2012: 0.87 months Achieved FY 2013: 0.89 months Achieved FY 2014: 1.44 months Achieved FY 2015: 1.22 months Achieved FY 2016: 1.51 months Not achieved FY 2017: 3.09 months Not achieved FY 2018: 3.34 months

11. The Beneficiary shall, and shall cause the EPC to, engage independent auditors acceptable to ADB to audit its annual financial statements and annual Project accounts (the EPC shall maintain separate accounts for the Project), including assessing EPC’s compliance during the previous Fiscal Year with the financial covenants set forth in paragraph 11 above. The terms of reference for the independent auditors shall be provided to ADB for review prior to their engagement. Annual financial statements shall be prepared, and audits shall be conducted, based on international standards. Audited financial statements of EPC and audited Project accounts shall be submitted to ADB within six months of the end of a Fiscal Year. The annual financial statements of EPC shall be consolidated for all of EPC’s operations.

12.


Complied.

13. Change in Ownership/Operation and Maintenance

14. In the event that the Beneficiary wishes to change the ownership structure of the EPC or its business, or the control of the operation and maintenance of the Project facilities, where such change may have an adverse effect on the EPC’s ability to perform its obligations in respect of the Project, the Financing Agreement or the Project Agreement, the Beneficiary shall obtain the prior written consent of ADB. Where any such change is approved by ADB, the Beneficiary shall ensure that the change is carried out in a transparent manner and does not affect repayment of the Loan. Depending on the nature of the change, ADB shall have the right to modify the repayment terms of the Loan

15.


Complied. No change in ownership during the implementation period.

16. Land Acquisition and Resettlement

17. The Beneficiary shall, prior to the commencement of civil works for any Project facility, acquire all land and property, together with all rights, easements, privileges and approvals pertaining to such land and property at any Subproject sites as shall be necessary or appropriate to implement the Project and in accordance with the LARP, the LARF, all applicable laws and regulations in Samoa (including the Taking of Land Act (1964)), and ADB’s Policy on Involuntary Resettlement (1995). In case of discrepancies between the applicable laws and regulations and ADB’s Policy on Involuntary Resettlement, ADB’s Policy on Involuntary Resettlement shall apply to the Subprojects financed by ADB, the Government of Australia and/or JBIC.


Complied.

Appendix 8 41



18.

19. The Beneficiary shall, and shall cause the EPC to, ensure that, prior to the commencement of any civil works for any Project facility: (a) all land acquisition, compensation, resettlement and rehabilitation activities, in each case, as specified in the relevant LARP have been completed; and (b) the Subproject site is free and clear of all obstructions; and (c) ADB shall have issued its “no-objection” prior to the award of civil works contracts.

20.


Complied.

21. The Beneficiary shall, and shall cause the EPC to, ensure that any land acquisition, compensation, relocation, resettlement and rehabilitation, as applicable, with respect to the Project is carried out in accordance with the LARP, the LARF, all applicable laws and regulations in Samoa (including the Taking of Land Act (1964)), and ADB’s Policy on Involuntary Resettlement; and (b) be responsible for the compensation of Affected People. In case of discrepancies between the applicable laws and regulations and ADB’s Policy of Involuntary Resettlement and shall apply to the Subprojects financed by ADB, the Government of Australia and/or JBIC.

22.


Complied.

23. The Beneficiary shall, and shall cause the EPC to, ensure that: (a) in the event there is any significant change in the design of any Subproject covered by a LARP or any substantial changes in resettlement impacts, the relevant LARP is: (i) updated based on a detailed measurement survey, (ii) disclosed to Affected People, and (iii) subsequently provided to ADB for its approval prior to commencement of related civil works; (b) there are requirements in the civil works contractors’ contracts with the EPC for the contractors to comply with each LARP, as applicable; and (c) the ESU supervises and monitors closely civil works contractors to ensure compliance with the requirements of each LARP and their respective terms. Upon the completion of resettlement activities for any LARP, the EPC shall prepare and provide to ADB a resettlement completion report for each such Subproject covered by LARP.

24.


Complied.

25. The Beneficiary shall, and shall cause the EPC to, through the ESU: (a) establish a register to record and monitor land acquired for the Project on both a temporary and permanent basis; and (b) keep complete records on consultations and grievances relating to land acquisition and resettlement. The EPC shall make the register and records available to ADB upon request.

26.


Complied.

27. Environment

28. The Beneficiary shall, and shall cause the EPC to: (a) design, construct, operate, maintain and monitor the Project facilities in accordance with: (i) all applicable laws and regulations in Samoa (including the Planning and Urban Management Act (2004)), (ii) ADB’s Environment Policy (2002), and (iii) the EARF and each EMMP; (b) minimize any adverse environmental impacts arising from the Project by implementing the mitigation measures prescribed in each IEE, PEAR and EIA, as applicable; and

L2368 and G0087, Schedule 5. Para. 20

Complied.

42 Appendix 8



(c) ensure that the EMMP prepared for any Subproject is; (i) incorporated into the design of each Subproject, (ii) implemented in accordance with its terms during the construction, operation and maintenance of each Subproject, and (iii) updated at such time when the detailed engineering design becomes available. The EPC shall also make available to the public and other interested parties any IEE and/or LARP for a Subproject. In case of discrepancies between the applicable laws and regulations and ADB’s Environment Policy, ADB’s Environment Policy shall apply to the Subprojects financed by ADB, the Government of Australia and/or JBIC.

29.

30. The Beneficiary shall, and shall cause the EPC to, ensure that: (a) civil works contractors: (i) comply with all environmental impact mitigation requirements set out in each EMMP, and (ii) prepare, on a quarterly basis, mitigation progress and monitoring checklists showing the progress made on mitigation measures contained in the relevant EMMP; and (b) the ESU monitors closely civil works contractors to ensure compliance with the environmental impact mitigation requirements identified in the IEE and EMMP, as applicable.

31.


Complied.

32. The Beneficiary shall, and shall cause the EPC to, ensure that, prior to the commencement of civil works for any Subproject facility: (a) the Planning and Urban Management Agency of the Ministry of Natural Resources and Environment shall have approved the application for development consent of the PEAR for any such Subproject facility: and (b) ADB shall have approved the IEE for any such Subproject facility.

33.


Complied.

34. Employment, Gender and Health

35. The Beneficiary shall, and shall cause the EPC to, advise the contractors to maximize their employment of local persons who meet the job requirements for the construction of the Project facilities. The contractors shall be required to give due consideration to the manner in which women in the communities of the Project area can contribute to the construction, operation and maintenance of the Project facilities.

36.


Complied.

37. The Beneficiary shall, and shall cause the EPC to, ensure that: (a) there is no differential payment between men and women for work of equal value; and (b) civil works contractors do not employ child labor in Project construction activities.

38.


Complied.

39. The Beneficiary shall, and shall cause the EPC to, ensure that the civil works contracts include mandatory provisions on health, sanitation and appropriate working conditions, including provisions on health and safety and accommodation for construction workers at campsites during the construction period. This includes ensuring that: (a) the contractors disseminate information to its employees on the risks of socially and sexually transmitted diseases, including HIV/AIDS; and (b) the


Complied.

Appendix 8 43



appropriate entities disseminate information and education to members of the local community, particularly women, living in the areas surrounding the Project facilities during the Project implementation and operation the Project facilities.

40.

41. Anti-Corruption

42. The Beneficiary shall, and shall cause the EPC to, comply with ADB’s Anticorruption Policy (1998). The Beneficiary and the EPC agree: (a) that ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Project; and (b) to cooperate fully with any such investigation and extend all necessary assistance, including providing access to all relevant information and records, for the satisfactory completion of any such investigation. The EPC shall also: (a) conduct periodic inspections on the contractors’ activities relating to fund withdrawals and settlements; and (b) to cooperate fully with any such investigation and extend all necessary assistance, including providing access to all relevant information and records, for the satisfactory completion of any such investigation. The EPC shall also: (a) conduct periodic inspections on the contractors’ activities relating to fund withdrawals and settlements; and (b) ensure that all contracts financed by ADB in connection with the Project include provisions specifying the right of ADB to audit and examine the records and accounts of all contractors, suppliers, consultants and other service providers of the Project.

43.


Complied.

44. Project Review; Monitoring and Reporting

45. Within one month of the later of: (a) the Effective Date; or (b) the fielding of Project implementation consultants, the Beneficiary, the EPC and ADB shall jointly undertake a Project inception mission for the purpose of identifying potential Project-related risks and determining compliance with environmental and social requirements for the Project.

46.


Complied.

47. Within six months of the Project inception mission and for the initial three years of the Project implementation period, the Beneficiary, the EPC and ADB shall jointly undertake a semi-annual review of the Project. Each semi-annual review shall assess the Project’s achievements and progress in implementing the Project in order to identify any difficulties or constraints encountered in implementing the Project and to make adjustments, if necessary, for the remaining Project implementation period. Specifically, the semi-annual reviews shall: (a) evaluate the Project scope and costs, implementation arrangements, resettlement matters, and status of achieving scheduled targets; (b) identify additional Project-related risks; and (c) review progress in implementing the EMMP or core Subprojects and the EARF. The Beneficiary, the EPC and ADB shall also discuss the EPC’s progress in achieving operational efficiencies as well as EPC’s financial performance. Within four years of the Effective Date, the Beneficiary, EPC and


Complied.

44 Appendix 8



ADB shall jointly undertake a mid-term review for reviewing the Project implementation progress.

48.

49. Within six months of the Effective Date, the Beneficiary shall, and shall cause the EPC to, establish a PPMs, acceptable to ADB. The PPMS shall include for the Project and as applicable for each Subproject indicators as set forth in the design and monitoring framework for the Project and other indicators as required for monitoring compliance with each of the EARF (including each EMMP), the LARF, and the operational efficiency, financial position and financial projections of the EPC. The EPC shall monitor the PPMS indicators on a quarterly basis to determine the efficiency and effectiveness of the Project and its impacts.

50.


Complied.

51. The Beneficiary shall, and shall cause the EPC to, provide to ADB quarterly reports, which shall indicate, among other things, progress made and problems encountered during the quarter under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following quarter. The quarterly reports shall also provide: (a) on individual Subprojects, in form and substance satisfactory to ADB, a detailed description of: (i) the progress of the Subproject, (ii) any difficulties encountered and/or anticipated, together with proposed corrective actions, (iii) the progress in implementing the LARP, if applicable, and the EMMP for the core Subproject and the EARF, and (iv) a summary of financial accounts, including Subproject expenditures during the previous quarter, year to date, and total Subproject expenditures to date: (b) the key indicators set forth in the PPMs; (c) updates to the Procurement Plan, as appropriate; and (d) the amounts of the interest on the proceeds of the Grant to be transferred to the Clean Energy Fund (and of which the Clean Development Mechanism Sub-Fund is part of the Clean Energy Fund). Within three months of completing any Subproject, EPC shall submit to ADB a Subproject completion report, together with an assessment of the execution and operation of the Subproject, status of compliance with loan covenants and the results of project outcomes and performance. The Beneficiary shall, and shall cause the MOF to, provide to ADB annual statements on the amounts that have been transferred to the Clean Energy Fund pursuant to (d) above.

52.


Complied.

ADB = Asian Development Bank, EARF = environmental assessment and review framework, EIA = environmental impact assessment, EMMP = environmental monitoring and management plan, EPC = electric power corporation, ESU = environment and social unit, IEE = initial environmental examination, JBIC = Japan Bank for International Cooperation, MOF = ministry of finance, PEAR = preliminary environmental assessment report, PMC = project management committee, PMU = project management unit, PSC = project steering committee.

Appendix 9 45

TECHNICAL ASSISTANCE COMPLETION REPORT TA no., Country and Name

TA 4994-SAM: Implementing the Samoa National Energy Policy

Amount Approved: $1,850,000

Revised Amount: -

Executing Agency

Ministry of Finance

Source of Funding: Government of Australia, Government of Finland, Japan Special Fund

Amount Undisbursed: $424,997.23

Amount Utilized: $1,425,002.77

TA Approval TA Signing Fielding of First Date: Date: Consultants:

TA Completion Date: Original: 14 Feb 2010 Actual: 30 June 2011

21 November 2007 5 December 2007 22 April 2008 Account Closing Date: Original: 14 Feb 2010 Actual: 31 October 2011

Description Broadening of economic activity and private sector development are key strategies for Samoa to sustain economic growth and reduce poverty 27F

1. Ensuring that sufficient electricity is available to meet growing demand is essential to achieve a broader economic base and reduce the country’s vulnerability to external shocks. Developing renewable energy resources and promoting energy conservation is a high development priority for Samoa as articulated in the Samoa National Energy Policy, June 2007. The Energy Unit of the Ministry of Finance (MOF) is mandated with responsibility for energy sector policy and strategic planning. In order to support key recommendations in the Samoa National Energy Policy, 2007, the Government requested ADB support to (i) develop a Clean Energy Fund to promote renewable energy and energy efficiency, (ii) establish the national procedures to access international carbon financing, (iii) prepare an energy conservation strategy, and (iv) draft Electricity Act and Regulations. The electricity act would establish a regulatory body to (i) remove existing regulatory functions from EPC, (ii) propose arrangements for tariff setting, and (iii) enable private sector participation to reduce public sector investment requirements and promote least cost generation. The Electric Power Corporation (EPC) is a government owned corporation vested with operating responsibilities for the power sector. EPC is a public trading body under the Public Bodies Act (2001). In recognition of the vital role of a commercially viable EPC in sustainable development of the energy sector, the Government also requested that ADB support ongoing financial management advisors to EPC. Expected Impact, Outcome and Outputs TA 4994-SAM was approved in conjunction with Loans 2368/8232 and Grants 0087/0101 Power Sector Expansion Project. The expected impact of the TA is improved access to sustainable and reliable electricity services at affordable prices. The expected outcome is improved quality, reliability, and cost effectiveness of power supply. The TA included: • Component 1. Clean Energy Fund (CEF), including (i) preparing operational guidelines of the CEF and Clean

Development Mechanism subfund, (ii) identification of a project pipeline, and (iii) increasing public awareness. • Component 2: Designated National Authority (DNA), including (i) establishing the DNA operational structure; (ii)

developing working guidelines and procedures for the DNA, (iii) providing capacity building and hands-on training for stakeholders and DNA staff; and (iv) raising public awareness.

• Component 3: Regulatory and Policy Reform in the Power Sector, including (i) preparing a demand-side management and energy conservation strategy, (ii) preparing the draft Electricity Act and Regulations, and (iii) establishing a power sector regulator.

• Component 4: Resident Financial Management Advisors (RFMA) to the Electric Power Corporation, including engaging two RFMA’s to assist EPC in (i) improving internal budgeting and expenditure controls; (ii) consolidating accounts and financial reporting and forecasts to the EPC board, the Government, and ADB; and (iii) developing peak and off-peak tariffs and bulk purchase agreements with EPC’s major customers.

Delivery of Inputs and Conduct of Activities Separate consulting companies were engaged for implementation of (i) Components 1 and 2, and (iii) Component 3. Two individual consultants were recruited for Component 4. Consultants for Components 1 and 2 were fielded on 15 September 2008, consultants for Component 3 on 22 April 2008, and consultants for Component 4 on 16 February 2009. The Consultants reports were received on time. Component 1 and 2 Interim Report was received in December 2008 and Final Report in August 2009. Component 3 Inception Report was received on 15 May 2008, the Interim Report on 2 December 2008, and the Final Report on 27 June 2011. Component 4 consultants submitted quarterly progress reports and a Final Report in December 2010. The TA completion date was extended to allow additional time for Cabinet approval of the draft Electricity Act.

1 As articulated in the Strategy for the Development of Samoa 2005–2007, and confirmed in the Strategy for the

Development of Samoa (SDS) 2008-2012

46 Appendix 9

The Terms of Reference were generally suitable to the intended outputs. The quality of the Consultants’ work was satisfactory, and the Executing Agency expressed its satisfaction with the performance of the Consultants. The performance of the Consulting companies and individual consultants was satisfactory. The EA showed strong ownership of the TA, through hosting workshops and consultation meetings, providing office space for the Consultants and providing feedback on Consultants reports. The ADB Team Leader changed in August 2008, however the changeover was relatively smooth due, in part, to strong Government ownership. ADB has fielded 7 review missions during TA implementation. The Government expressed appreciation for ADB support for the TA. Overall, ADB and the EA’s performance were satisfactory. Evaluation of Outputs and Achievement of Outcome Component 1 established the Clean Energy Fund, including fund flow mechanism and operational guidelines. The TA originally included a Clean Development Mechanism (CDM) sub-fund which was proposed to manage a levy from the sale of carbon credits, however due to the lack of carbon credit generation the sub-fund was not established. Component 2 assisted to establish the operational structure and procedures for the Designated National Authority (DNA). The DNA has been approved by Cabinet and sits within Ministry of Finance. To date there have been no successful applications for carbon financing, although the Government is working with a number of potential developers. Component 3 prepared an energy conservation strategy for Samoa, however the Government concluded that it was unsuitable to be implemented in its entirety in Samoa. However, key recommendations in the strategy have been adopted by Government and are currently being implemented. The Consultants undertook extensive stakeholder consultations and prepared the draft Electricity Act and Regulations. The Electricity Act was approved by Cabinet in December 2010 and provides the regulatory framework for private sector engagement in the sector. The TA drafted the operational guidelines for the sector regulator. Based on these, the Government appointed a multi-sector regulator for the power sector in February 2012. Component 4 funded two Resident Financial Management Advisors who provided financial management assistance to EPC between February 2009 and December 2010. The assistance improved internal budgeting and expenditure control, improved financial reporting and provided support for tariff reform, including introduction of a fuel surcharge. The outputs of the TA are satisfactory. The TA successfully promoted renewable energy (established regulator, developed Electricity Act and Regulations, developed Clean Energy Fund and improved access to carbon financing). Conversion to renewable energy will improve cost-effectiveness of power supply. The impact of the TA in establishing the regulatory framework and improved awareness is demonstrated by current proposals for three private sector power producers who are proposing to invest in renewable energy generation. The TA provided financial management assistance to EPC (Component 4) which assisted EPC’s work to provide improved power supply. The outcome of the TA has therefore been achieved. Overall Assessment and Rating The TA is rated as successful. The TA achieved a majority of the targeted outcome and outputs envisaged in the TA design. The revised Electricity Act has been approved by Cabinet, the multi-sector regulator has been established (including the power sector) and the Clean Energy Fund has been established. The TA has assisted to successfully implement a number of key recommendations of the Samoa National Energy Policy. Major Lessons A major lesson is that policy development in Pacific countries is best supported by provision of assistance for policy implementation, not merely through support for policy development. The Samoa National Energy Policy was developed in 2007 and TA 4994-SAM successfully supported implementation of a number of key policy initiatives, including revised Electricity Act and Regulations, establishment of a power sector regulator, development of a Clean Energy Fund and improved access to international carbon financing markets. The second major lesson is that conversion of power generation infrastructure in the Pacific from diesel to renewable energy is a long term structural adjustment which requires an effective policy and regulatory environment supported by investments in policy implementation and infrastructure development. The TA has demonstrated the importance of adequately resourcing policy implementation.

Recommendations and Follow-Up Actions Ongoing support is recommended to ensure sufficient resourcing for development of renewable energy. Consideration is proposed, during development of the pipelined Renewable Energy Development Project, whether additional technical assistance is required for policy implementation, particularly related to renewable energy planning and bidding procedures to encourage maximum private sector independent power producer interest.

Prepared by: Anthony Maxwell Designation: Senior Energy Specialist

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a

particular territory or geographic area in this document, the Asian Development Bank does not intend to make any

judgments as to the legal or other status of any territory or area.

Appendix 10 47

SAFEGUARDS COMPLIANCE REVIEW I. Project Brief 1. The Power Sector Expansion Project (PSEP) was approved by the ADB Board on 21 November 2007, signed on 11 December 2007, became effective on 19 June 2008, and was completed on 31 August 2018. PSEP was integral to the Government’s power sector development plan targeted at improving capacity to meet growing electricity demands and improve the quality, reliability, and cost-effectiveness of power supply. This was to be achieved through implementing priority infrastructure investments alongside operational, financial and other key policy and reform interventions. 2. During this period the nature of ADB’s business was changing in response to shifts in development, aid, and the financial landscape in the Asia and Pacific region. For safeguards, it was recognized that ADB’s safeguard policies at the time needed to cater to the evolving range of ADB’s lending products and financing modalities, which often were not well-served by the traditional project-level safeguard approach, which comprised 3 separate policies 28F

1 based on which PSEP was prepared and approved. Because of this change in approach, the ADB Safeguard Policy Statement (SPS, 2009) was officially published combining the 3 policies together whilst providing additional guiding safeguard principles to all ADB financed and/or administered sovereign and non-sovereign projects. 3. PSEP, approved in 2007 under the old system, thus had to be administered for most of its lifespan under the new SPS. This was not uncommon as all ADB projects administered at this time went through a similar transitioning phase in achieving safeguards compliance. PSEP however was one of the largest investments in the Pacific region and ADB in recognition, improved its safeguards implementing capacity in the Pacific, recruiting a safeguards officer in 2011 to be based out of its sub regional office in Fiji. This safeguard review for the PCR is an update of the mid-term safeguards review carried out for the project in 2012. II. Safeguards Classification and Conditions 4. Project Management. For PSEP to manage social, land acquisition, resettlement, and environmental impacts, EPC was tasked to establish an environment and social unit (ESU) to plan, implement, and coordinate land acquisition, resettlement, and environmental activities. The ESU was to comprise of both international and national consultants in environment and involuntary resettlement. By the mid-term review in 2012 all international safeguard consultants in the ESU had completed their inputs which were mainly limited to design phase due diligence. No provision was made in the project for international expertise for additional due diligence and further monitoring. The ESU as such ceased to exist with only one national safeguards officer remaining in the project management unit (PMU) to look after involuntary resettlement safeguards. The mid-term review also identified that the lack of an established register to record and monitor temporary and permanent land acquisition, and record consultations and grievances relating to both environment and land acquisition and resettlement. The mid-term review thus recommended that EPC recruit an environmental officer for the PMU as well as set up the grievance redress mechanism and register. In 2013 both these requests were met by EPC to the satisfaction of ADB. 5. Involuntary Resettlement. A Land Acquisition and Resettlement Framework (LARF) was prepared for the project in accordance with ADB’s Involuntary Resettlement Policy (1995) guiding the preparation and procedures for land acquisition and resettlement plans (RPs). Subprojects with a category B rating would therefore require a RP in full consultation with affected people. Compensation and entitlements in this context were to be consistent with the entitlement matrix outlined in the LARF. With most works confined to existing footprints in EPC substations and restricted to legal road easements, only one RP was ever required29F

2 for the project for building the Fiaga diesel power station and 33kV underground cable to the central Fuluasou substation. The mid-term review noted that under the new SPS guidelines,

1 Environment Policy 2002; Involuntary Resettlement Policy 1995; and Policy on Indigenous Peoples 1998. 2 A second resettlement plan was prepared for the proposed refurbishment of the Salelologa power station and construction of a new

power station in Vaiaata but this subproject was eventually dropped.

48 Appendix 10

subsequent subprojects would require a due diligence report (DDR) to confirm that no acquisition or economic displacement would result from the subproject. The PMU and EPC in this context ensured that due diligence reporting was included in the feasibility studies for subsequent subprojects. A summary is provided in Table A10.1 below.

Table A10.1: Land Acquisition and Resettlement

Subproject Land

acquisition required

Category Safeguard Comments

53. Fiaga Diesel Power Station Yes RP Official transfer of land to EPC 54. Fiaga Diesel Power Station

to Fuluasou Substation 33kV Underground Cable

30% of road from Fiaga to Fuluasou is outside the designated legal boundary employed by the project.

55. Hospital Feeder Upgrade Stage 2

No NA Underground cable is built inside road reserve with families encroaching on this legal reserve. Issue resolved.

56. 22kV Fuluasou Substation Yes NA Employs old EPC hydropower station land with Cabinet approving an extra 500sq meters of registered land.

57. Fuluasou Substation to Apia Wharf area 22kV Underground Cable

No NA Underground cable is inside legal road easement.

58. Supply Installation and Operation of SCADA System

No NA NCC included in Fuluasou Substation at old Fuluasou. Mini NCC in Salelologa Depot.

59. Refurbishment of Salelologa Power Station

Yes RP Old power plant to be replaced with new power station at Vaiaata. Project was dropped.

EPC = Electric Power Corporation, kV = kilo volts, NA = not applicable, RP = resettlement plans, SCADA = supervisory control and data acquisition.

Note: Only subprojects with RP requirements are incorporated.

6. Environment. An Environmental Assessment and Review Framework (EARF) was prepared in accordance with ADB’s Environment Policy (2002) and Environmental Assessment Guidelines (2003). The EARF guided the preparation and approval procedures of environmental assessments of subprojects. Initial Environmental Examinations (IEEs) accompanied the feasibility studies which were submitted to ADB with an Environmental Monitoring and Management Plan (EMMP) to accompany subprojects classified as category B or B sensitive. Overall 5 IEEs, including one Preliminary Environmental Assessment Report (PEAR), were submitted and approved by ADB as illustrated in Table A8.2.

Table A10.2: Environment Compliance

Subproject Category Safeguard Comments

60. Tanugamanono Power Station Noise and Emission Control

IEE/EMMP Feasibility study conducted and project completed. The construction and operation of Fiaga power station has

61. Fiaga Diesel Power Station IEE/EMMP Access road and underground powerlines to save Aoa trees. Unstabilized area behind the main building vulnerable to erosion also addressed.

62. 22kV Overhead Conductor Upgrade Program

IEE/EMMP Complete with powerline along East Coast Rd requiring easements for affected trees.

63. Low Voltage Improvement Program

N/A Rapid Environmental Assessment prepared and submitted to ADB for approval. No IEE required.

64. Supply, Installation and Operation of SCADA System

IEE Complete

65. Refurbishment of Vaiaata Power Plant

IEE Various issues identified in feasibility study led to the project being dropped.

66. Refurbishment of Taelefaga Hydro Governor System

PEAR Complete

EMMP = environmental monitoring and management plan, IEE = initial environmental examination, N/A = not applicable, PEAR = preliminary environmental assessment report, SCADA = supervisory control and data acquisition.

Appendix 10 49

Note: Only subprojects with EA requirements are incorporated.

7. Specific Assurances. In addition to standard assurances, the Government and EPC were also reminded to adhere to the ‘specific assurances’ of Section VI of the 2007 ‘report and recommendations of the president’ (RRP; Assurances and Conditions)30F

3 pertaining to Land Resettlement and the Environment. These are listed below as bullet points. By the mid-term review of in 2012, most had either not yet been met by EPC or had been met initially but subsequently failed when safeguard implementation capacity was lacking. This review, however, notes that post-2012 until project closure, the PMU and EPC improved significantly in meeting these assurances and conditions to the extent that safeguard compliance was no longer an impediment to project implementation.

• the Government shall, prior to the commencement of civil works for any project facility: (a) following obtaining the requisite approvals, acquire all land and property for implementing the project; (b) ensure that all land acquisition, compensation, resettlement and rehabilitation activities are specified in the relevant LARP have been completed; (c) ensure that the subproject site is free and clear of all obstructions; and (d) ADB shall have issued its ‘no-objection’ prior to the award of civil works contract.

• the Government and EPC shall: (a) ensure that any land acquisition, compensation, relocation, resettlement and rehabilitation, as applicable, with respect to the Project is carried out in accordance with the RP, all applicable laws and regulations in Samoa and ADB’s Policy on Involuntary Resettlement (1995). Where discrepancies occur in ADB/GOA/JICA financed subprojects, ADB’s policies shall apply.

• EPC shall ensure that: (a) where there is any significant change in the design of any subproject covered by a RP or any substantial changes in resettlement impacts, the relevant RP is updated: (i) updated based on a detailed measurement survey (ii) disclosed to affected persons, and (iii) subsequently provided to ADB for approval prior to commencement of civil works; (b) there are requirements in civil works contractors contracts with EPC to comply with each RP; and (c) the ESU supervises and monitors closely civil works contractors to ensure compliance with the requirements of each LARP and their respective terms.

• EPC through the ESU shall (a) establish and maintain a register to record and monitor land acquired for the Project on both a temporary and permanent basis; and (b) keep complete records on consultations and grievances relating to land acquisition and resettlement.

• EPC shall (a) design, construct, operate, maintain and monitor the project facilities in accordance with all applicable laws and regulations in Samoa, and ADB’s Environment Policy (2002); (b) minimize any adverse environmental impacts arising from the Project by implementing the mitigation measures prescribed in each IEE and PEAR; and (c) ensure that the EMMP prepared for any subproject is incorporated into the design of each subproject implemented, and updated when the detailed engineering design becomes available.

• EPC shall ensure that (a) the civil works contractors comply with all environmental impact mitigation requirements in each EMMP and prepare, on a quarterly basis, mitigation progress and monitoring checklists; and (b) the ESU monitors closely civil works contractors to ensure compliance with the environmental impact mitigation requirements identified in the IEE and EMMP.

• EPC shall ensure that prior to the commencement of civil works for any subproject facility: (a) the Planning and Urban Management Agency shall have approved the application for development consent for any subproject; and (b) ADB shall have approved the IEE for any subproject.

III. Review Findings 8. The project had two significant periods regarding safeguards compliance. In 2008 with the establishment of the PMU ESU, sufficient safeguards capacity was in place for initial due diligence of the proposed subprojects. The intermittent and limited nature of expert inputs however was not sustainable for a project lifespan that was envisaged for the next 9 years. By the time the project conducted its safeguards

3 These assurances were reiterated and stressed in the Project Environmental and Social Safeguards Compliance

Review (Appendix 5 of PSEP Back-to-office Report for Mission of 20-26 May 2012).

50 Appendix 10

mid-term review in 2012, ESU resources for ongoing implementation were lacking. The safeguards mid-term review thus raised the following issues for EPC to address:

• To adapt project environmental assessment monitoring and design when new variations arose to avoid unnecessary follow on environmental effects.

• To recruit an environmental officer to the ESU for vigilant supervision of contractors for environmental assessment compliance and to fully implement mitigation measures prescribed in IEEs and PEARs.

• To timely update relevant resettlement plans (RPs) when necessary with full disclosure of project documents to the public.

• To establish and maintain a register for grievances and formulation of a redress mechanism.

• To improve internal communication within PMU management and ESU officers on subproject procedures and ongoing progresses.

9. For environmental safeguards, because of the scale and multitude of subprojects executed, changes to the scope of civil works and their anticipated impacts on people and the environment were always expected. Unanticipated impacts that arose during implementation, however, were susceptible to being overlooked when adapting the safeguard measures from the initial project design. The PMU, lacking environmental personnel, thus only had the capacity to address such issues in a reactive manner, but this was at the expense of the opportunity provided to prevent it in the first place proactively. 10. For involuntary resettlement safeguards, the ESU had initially failed in its obligation to fully: (a) establish and maintain a register to record and monitor land acquired for the Project on both a temporary and permanent basis; and (b) keep complete records on consultations and grievances relating to land acquisition and resettlement. The latter was significant in light of changing ADB procedural and approval requirements under the SPS 2009. 11. These findings prompted the EPC to put in place a corrective action plan. This review acknowledges that since the re-establishment of the PMU ESU in 2013, the project has progressively met the requirements of the LARF and EARF. The project essentially recovered the necessary capacity to carry out the necessary safeguard compliance requirements of the loan covenants and the specific assurances assigned in the RRP under the old safeguard’s modality. More importantly, after a difficult transition period, the PMU ESU managed to administer the project under the new SPS requirements of monitoring and reporting, disclosure and meaningful consultation with relevant stakeholders. A full list of the subprojects and their complete safeguards status is provided in Table A10.3.

Table A10.3: Sub-project Feasibility Studies and Safeguards Status

Subproject IR category

LARP prepared

LARP cleared

Env category

IEE prepared

FS prepared

FS endorsed

EMP in bid No Name

1 Hospital feeder upgrading stage 1 C NR NR B Y Jul-08 22.10.08 YES

2 Single & three phase pre-pay meters C NR NR C NR YES YES YES

3 Tanugamanono PS noise & emission control C NR NR C NR NO

NA NA

Not implemented

4 Refurbishment of Alaoa hydropower station C NR NR B Y YES 22.10.08 YES

5 Fiaga power station B YES NR B Y Sep-09 01.10.09 YES

6 Upgrade Alaoa 6.6kV transmission line to 22kV C NR NR B Y YES YES YES

7 Fiaga PS to Fuluasou substation UG cable C NR NR B Y Feb-10 13.05.10 YES

Appendix 10 51

Subproject IR category

LARP prepared

LARP cleared

Env category

IEE prepared

FS prepared

FS endorsed

EMP in bid No Name

8 Hospital feeder upgrading stage 2 C NR NR B Y Apr-09 12.05.09 YES

9 Fuluasou 22kV substation B CNL NR B Y Mar-10 25.05.10 YES

10 LV network improvement C NR NR C NA YES YES YES

11 Fuluasou substation to Apia wharf UG cable C NR NR B Y Mar-10 29.04.10 YES

12 Fuluasou substation to Leulumoega UG cable C NR NR B Y Mar-10 29.04.11 YES

13 22kV overhead conductor upgrading C NR NR C NR YES 05.10.08 NR

14 Hydro scheme2-Sili Savaii Removed from investment plan: not implemented YES NR NR

15 Puapua-Asau 22kV line reconductoring C NR NR C NR YES 12.11.08 NR

16 PF improvement Savaii C NR NR C NR NR NR NR

17 Low voltage network improvement C NR NR C NR NR NR NR

18 Stream flow gauging equipment C NR NR C NR NR NR NR

19 High and low voltage testing equipment C NR NR C NR NR NR NR

20 SCADA Supply, installation & operation C NR NR C NR NR NR NR

21 Public dissemination C NR NR C NR NA NA NR

22 Vending system expansion C NR NR C NR NA NA NR

23 Power system planning software C NR NR C NR NA NA NR

24 Refurbish Salelologa PS (Vaiaata) B YES YES B YES Apr-12 31.07.12 YES

25 Refurbish Taelefaga switchgear C NR NR C NR NR NR NR

26 Refurbish Samasoni switchgear C NR NR C NR NR NR NR

27 Refurbish Tanugamanono generators C NR NR B YES YES 06.05.09 YES

CNL = cannot locate in HQ files, NA = not applicable, NL = not located, NR = not required. Note: 1 Or due diligence report (DDR) or other suitable documentation

52 Appendix 11

ECONOMIC ANALYSIS

This Appendix updates the economic analysis that was included as a linked document in the RRP for the PSEP (Appendix 12 of the RRP). Economic Context 1. The leading sectors of the economy of Samoa have been services (66% of GDP), industry (mainly agricultural processing, 24%), and agriculture and fishing (10%). Foreign exchange earnings consist of development aid, remittances, and export earnings. Tourism continues to expand and accounts for about 25% of GDP; some 57,000 foreign tourists visited Samoa in 2016 31F

1. Nominal GDP in the current year is 2,354 million tala (about $915 million) yielding a per capita GDP of $4,500 32F

2. The labor force of about 51,000 is engaged in agriculture (65%), industry (6%), and services (29%). 2. In the RRP analysis (2007) Samoa’s long-term real GDP growth rate was expected to average around 3.5% per annum. However actual growth between 2007 and 2014 averaged only about 0.01% due to severe downturns in 2009-2010 and in 2012-2013 in the wake of the natural disasters of the earthquake/tsunami and Cyclone Evan respectively33F

3. Economic growth rebounded to 1.7% in 2015, 7.2% in 2016, and 2.7% in 2017, but in 2018 fell to 0.9% due to the closure of the Yazaki manufacturing plant (which had employed 700 people) in August 2017 and Cyclone Gita in February 2018. According to the IMF, growth of 3.4 percent is expected in 2018/19, driven by commerce and infrastructure spending, and to peak at 4.4 percent in 2019/20 as Samoa hosts the Pacific Games in July 2019. In the medium term, growth will settle at just above 2 percent. Inflation is expected to be below 3 percent in 2018/19. Benefits and Costs of the Updated Economic Analysis 3. Because the RRP analysis assumed that substantial investments in generation would occur on Savai’i under the PSEP, resulting in a major shift in the power generation mix away from diesel in favor of hydro generation, the RRP analysis evaluated the Upolu and Savai’i systems separately. In the event, the planned hydro project on Savai’i was cancelled and the actual Savai’i investments under PSEP were relatively minor, consisting of t/d efficiency improvements. The updated analysis therefore considers the two systems together. 4. Between 2007 and 2018, growth in consumption of electricity (GWh/year) on both islands averaged about 3.9%, while annual peak demand (MW) grew at about 4.1% (comprising a negative rate until 2011, then 5.7% per annum for the years 2015-2018). There are no data for peak demand in 2012-2014 (the years of Cyclone Evan and its aftermath). The RRP analysis projected that, on Upolu, peak demand would grow by 7%/annum to 2009 and by 4% thereafter and, on Savai’i, by 4%/annum to 2009 and 3% thereafter. A projection of electricity consumption growth for either island was not included in the RRP analysis. The peak demand projections are reasonably close to the actual growth experienced to 2018, but the distribution of growth across the years of implementation is significantly different. 5. To quantify an emerging power generation capacity shortfall for Upolu, the RRP analysis included the data shown below as Table A9.1.

1 Samoa Tourism Authority and CIA World Factbook. Tourists account for more than a third of all foreign visitors to

Samoa. 2 IMF 2019 Article IV Consultation Staff Report, May 2019. 3 In September 2009, an earthquake and tsunami disrupted transportation and power generation, and resulted in about

200 deaths. In December 2012, extensive flooding and wind damage from Cyclone Evan killed four people, displaced over 6,000, and damaged or destroyed an estimated 1,500 homes on Upolu.

Appendix 11 53

Table A11.1: RRP Analysis Power Balance – Upolu System (without-project)

Year Peak Demand

(MW)

Total Firm Generation

Capacity (MW)

Firm Capacity at N-1 Reserve

(MW)

Power Balance at N-1 (MW)

Reserve Firm Generation Capacity

(MW)

2002 15.80 24.60 20.50 4.70 8.80

2003 15.90 24.60 20.50 4.60 8.70

2004 16.20 24.60 20.50 4.30 8.40

2005 17.00 24.60 20.50 3.50 7.60

2006 17.60 24.60 20.50 2.90 7.00

2007 19.70 24.60 20.50 0.80 4.90

2008 20.80 24.60 20.50 (0.30) 3.80

2009 21.70 24.60 20.30 (1.40) 2.90

2010 22.60 22.80 18.50 (4.10) 0.20

2011 23.50 22.80 18.50 (5.00) (0.70)

6. The RRP analysis quantified the economic benefits of the Project (for Upolu) as avoidance of unserved demand that without-project would result from (i) the capacity shortfall and (ii) increasing t/d losses. It is not clear in the available RRP documentation specifically how these were quantified. The RRP’s economic analysis of the Savai’i system was a comparison of the existing all-diesel system vs a hydro scenario. The hydro scenario did not eventuate during the implementation period. 7. The RRP analysis predicted that energy deficits would commence in 2013. But the actual peak demand in Upolu in 2011 was less than indicated in the above table (bottom of 2nd column from left) – 17.27 MW vs 23.50 MW - so the energy deficit would not have commenced until 2015 under the without-project scenario. 8. In the updated analysis, the planning horizon was extended to 2043, allowing for an 11-year construction period (2008-2018) and a 25-year operating period (2019-2043). It is assumed that under the without-project scenario firm generation capacity on Upolu remained at 24.6 MW (17.9 MW in the Tanugamanono diesel power station and 6.7 MW of firm hydro capacity) until 2009, then reduced to 22.8 MW in 2010 (with retirement of 1.8 MW of diesel capacity), and would remain at that level for the balance of the planning period. In Upolu, demand growth begins to outstrip capacity to meet it in 2015. The firm capacity available in Savai’i (100% diesel) is assumed to remain constant at 5.2 MW throughout the project period, a capacity sufficient to meet projected demand growth in the without-project scenario.

9. By regression analysis on electricity generation data available from EPC for Upolu and Savai’i34F

4 from 2001 to 2018, it is estimated that the long-term growth rate in electricity generation and consumption is 2.87%35F

5. Unserved energy demand each year to 2043 is estimated based on the difference between the delivered energy from the fixed output in GWh per year that the Upolu system without-project could produce once fully utilized36F

6, and projected electricity demand. Under the with-project scenario, the unserved energy demand is delivered to consumers and is valued at the willingness to pay (WtP) applied in the RRP analysis (ST.99/kWh37F

7). Capacity to serve unserved energy demand is the most significant economic benefit of the

4 190218 MASTER PLAN1 Upolu r11.xlsx 5 In the Master Plan spreadsheet (ref above footnote), EPC planners have assumed a long term 4.5% electricity

consumption growth rate, but it is not clear what this is based on. 6 Assuming an average long-term load factor of 0.68. Technical losses, including t/d losses and station use, are

assumed to be 13% of gross generation (in both islands) throughout the planning period. 7 For comparability, the updated analysis applies the same WtP value as used in the RRP analysis. However, the RRP

analysis used an early-2000s WtP valuation methodology (EARD Technical Note No 3, Measuring Willingness to Pay for Electricity), that today is obsolete because it doesn’t require a detailed survey of a sample of consumers in

54 Appendix 11

PSEP. A gradually increasing portion of power generation in Upolu has been supplied by diesel generation over the implementation period, since 2014 almost entirely from the new Fiaga diesel power station, as shown in Figure A11.1.38F

8

Figure A11.1

10. The commissioning of the Fiaga power station provided a second major economic benefit of the PSEP, in the form of reduced fuel input per kWh generated in comparison with the old diesel plant at Tanugamanono. It is estimated that the old diesel plant produced approximately 3.7 kWh per litre of diesel fuel, whereas the new plant at Fiaga produces 4.2 kWh/litre. The current financial cost of diesel fuel in Samoa is approximately ST2.69/litre39F

9, inclusive of tax of ST.8415/litre. The economic (CIF landed cost) cost is therefore ST1.85/litre, a cost that has remained approximately constant in real terms over the implementation period. At this cost, the fuel-related economic savings resulting from the higher efficiency of Fiaga reduce operating costs with-project by an estimated average of nearly ST12 million per annum between 2014 and 2023 in comparison with the same quantity of generation supplied from Tanugamanono. (Reductions in transmission/distribution losses could not be quantified for this analysis.) 11. Incremental operating cost savings fall to zero once the postulated without-project firm capacity from 2010 onwards (22.8 MW) is outstripped by demand, beginning in about 2032. In the updated analysis, fuel savings are reflected in reduced incremental economic operating costs of the Project.

the project area. Current ADB guidelines for WtP estimation do require a statistically-sound survey and application of either a contingent valuation or CHOICES model approach to quantify the results.

8 The introduction of grid-connected solar power in Upolu since 2015 (the red wedge in the middle of the graph on the right side) has come about through direct EPC investments and by IPPs, but these developments are not related to the PSEP. They have nonetheless helped to reduce reliance on diesel generation in the past 4 years.

9 Ministry of Finance, https://www.mof.gov.ws/Services/Energy/PetroleumPrices/tabid/5914/Default.aspx

-

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

GW

h p

er

annum

Upolu Generation Mix, 2001-2018

Hydro Wind Solar Diesel

Appendix 11 55

12. A third small but significant economic benefit of the Project is the increase in reliability of power delivery in Upolu and Savai’i, as reflected in the System Average Interruption Duration Index (SAIDI) and the System Average Interruption Frequency Index (SAIFI) discussed elsewhere in the PCR report. It is assumed that the SAIDI and SAIFA measures would remain unchanged from their 2008 values through the planning period without the Project. 13. The EPC have reported the SAIDI and SAIFI records for each year of the implementation period. With the project, the average duration of an interruption in Upolu has fallen by 628 minutes (comparing 2017 to 2008) and in Savai’i by 2,356 minutes. By 2017, the average number of interruption incidents fell in Upolu by 11 annually and in Savai’i by 24 annually. These quantities are equivalent to a reduction by 435 hours of interruptions per annum in Upolu and a reduction by 1,834 hours in Savai’i. It is assumed that, on average, 10% of consumers and of on-going consumption is affected by a given interruption. The reduction in interruptions translates into increased electricity consumed, which in the updated economic analysis is valued at the willingness to pay (ST.99/kWh). 14. The shadow exchange rate factor (SERF) and the shadow wage rate factor (SWRF) used in the original economic analysis are not reported in the available RRP documentation. However, the economic analysis of similar ADB projects in Samoa including the Renewable Energy Development and Power Sector Rehabilitation Project40F

10 appear to apply a Standard Conversion Factor (SCF) of 0.9, which is equivalent to a SERF value of 1.11 when the domestic price numeraire is used, as in this case. The SWRF applied in the renewable energy project analysis is 0.8. 15. The financial investment costs of the PSEP as reported in the Audited Project Financial Statements (APFS, 2008-2019) were converted to economic costs by excluding duty on imported goods and VAGST on all traded goods and applying the above shadow rates to appropriate cost categories. Information on duties and tax collected in respect of PSEP for each year of implementation was obtained from a spreadsheet provided by the Ministry of Finance. 41F

11 The actual rate of disbursement of investment funds over the implementation period was derived from the APFS.

Calculation of the Project EIRR and the ENPV 16. Applying the above parameters, the economic internal rate of return (EIRR) of the PSEP is 15.8%, and the economic net present value (ENPV) is ST187.2 million applying a discount rate of 9.0%. The calculation table is shown in Table A11.2.

10 RRP SAM 46044 11 Duty Import Ledger (PSEP Project).xlsx

56 Appendix 11

Table A11.2: Calculation of EIRR and ENPV of the PSEP

17. The project EIRRs in the RRP analysis were 13.6% for Upolu and 10.7% for Savai’i. The investment envisaged for Savai’i largely consisted of a new r-o-r hydro power station, which was cancelled during the implementation period. A project ENPV was not reported in the RRP analysis.

18. As mentioned previously, the RRP Appendix 12 contains the overview economic and financial analyses conducted during project preparation but does not describe in detail the methodology employed

or specifically how the economic costs and benefits were quantified42F

12. The RRP economic analysis for

12 The RRP Appendix 12 refers to a “Supplementary Appendix I” describing the detailed economic analysis, but this

document was not available for review for the PCR.

Appendix 11 57

Upolu was based primarily on avoided loss of load due to the then-emerging EPC capacity shortfall, plus reduced technical losses from improvements to the transmission/ distribution system; and for Savai’i was based on replacement of diesel generation with hydro and reduction in distribution losses. The updated economic analysis for Upolu and Savai’i combined is similarly based on avoided loss of load and reduction in losses, but also includes a quantified benefit of higher reliability and incorporates the improved diesel fuel conversion efficiency obtained from the highly efficient diesel generators in the new Fiaga power station. For Savai’i, the updated analysis includes only a benefit for improved reliability and a much lower level of investment in Savai’i than envisaged in the RRP. It is surmised that the somewhat higher EIRR estimate in the updated analysis in comparison with the RRP analysis is due to these factors 43F

13. There were no cost overruns or project delays that would affect the analysis.

13 Also, between the RRP analysis in 2007 and the current updated analysis, the ADB’s guideline for the discount rate

required for the analysis of infrastructure projects has reduced from 12% to 9% which, all things equal, will increase the project ENPV.

58 Appendix 12

FINANCIAL ANALYSIS 1. This Appendix updates the financial analysis that was included as a linked document in the RRP for the PSEP (Appendix 12 of the RRP).

2. The updated financial analysis is based on the same load growth projections and incremental energy served as the economic analysis (Appendix 9). Incremental financial investment costs are derived from the Audited Project Financial Statements (APFSs) for the years 2008-2019 and are inclusive of taxes and duties and full local labor costs. Incremental O&M costs are the same as applied in the economic analysis, since incremental energy supplied is the same and EPC are exempt from paying the Samoa fuel tax. O&M costs do not include depreciation.

Weighted Average Cost of Capital (WACC) 3. The RRP analysis estimated the WACC at 4.48 percent, based on the original on-lending arrangements of the PSEP which included a 6.5% interest rate applied to funds on-lent from the Government of Samoa to the EPC. The on-lent funds were to total $80 million, comprising the ADB ADF loan ($26.61 million), the ADB ADF grant ($15.39 million) and the JICA loan ($38.00 million). The interest payments on the ADF grant portion of the on-lent funds were to be paid into a Clean Energy Fund maintained by the MOF, to support investment in clean energy projects.

4. However, in 2016 (before the bulk of repayments from EPC became due), the re-lending agreement was cancelled and the interest due from EPC was reduced to 2%, and payable only on the loans portions of the funds that were on-lent by the Government of Samoa. The WACC is therefore re-estimated in the updated analysis as 2.07 percent, calculated as shown in Table A10.1. In comparison with the RRP’s WACC estimate, the nominal interest rate facing the EPC has been reduced from 6.5% to 2.0%, the local inflation rate estimates have been updated to the actual local inflation rate, and grants-to-EPC have been removed from the calculation.

Table A12.1: Re-estimation of the WACC

EPC Financial Performance 5. An overview of key elements of EPC financial performance from 2008 to 2018 is derived from the EPC’s Audited Financial Statements (AFSs) and is presented in Table A10.2 overleaf.

Table A12.2: Overview of EPC Financial Performance 2008-2018

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60 Appendix 12

6. Over the period, nominal revenues from electricity sales grew by an average annual rate of 3.94%. From a low installed base of prepayment meters in 2008, 97% of all customers are on prepayment meters as of March 2019, with only 2,664 post-pay meters still in use 44F

45, almost exclusively by large government and commercial customers. Revenue collected from customers on prepayment meters grew from ST3.45 million in 2008 to ST38.51 million in 2018, but the revenue collected from customers on post-pay meters barely changed (ST73.44 million in 2008 compared to ST75.51 million in 2018). Despite the near-total replacement of post-pay meters by prepayment meters over the period, about two-thirds of total revenue from electricity sales was still collected from post-pay customers in 2018, because most such customers are large users. This situation explains much of EPC’s remaining difficulties in reducing overall arrears to the levels required in the PSEP project agreements.

7. Though expenditures on diesel fuel and lubrication (POL) did not change significantly in nominal terms in 2018 in comparison with 2008, the proportion of POL in total annual expenses fell from 55% to 42%. Major increases in expenditure over the implementation period were in depreciation and insurance (due to increased investment in power assets), operating expenses including purchases of energy from solar-power IPPs (not related to PSEP), and in selling & distribution costs. Net finance costs also increased significantly. EPC’s operating surpluses after net finance costs averaged about ST1.1 million per annum from 2008–2014 but averaged about ST10.6 million per year over the subsequent period 2015-2018, when the bulk of PSEP investments were under full operation.

8. The share of domestic (residential) customers in total electricity revenues declined from 28% in 2008 to 24% in 2018, and commercial sales declined from 48% to 34%. Sales revenue from Government customers, in contrast, increased from 9% to 23%.

9. Another significant change over the period is the number of personnel employed by EPC, falling from 505 in 2008 to 280 in 2018. Overall nominal personnel costs, however, remained relatively unchanged (ST11.71 million in 2008 and ST10.56 million in 2018). In real terms, this represents a significant fall in personnel costs (as well as in proportion of overall operating costs: 14% in 2008 vs 9% in 2018).

Tariffs and Typical Bills to Consumers 10. The EPC electricity tariff has undergone substantial changes in structure over the implementation period, especially since the Office of the Regulator (OOTR) assumed responsibility of technical and price regulation of the power sector in 2012. This was a key change in the power sector in Samoa, directly related to the PSEP. The history of tariff changes 2009-2019 is presented in table form in the Annex, detailed to the extent possible with available data45F

46. Changes in tariff structure included (i) differentiating customers into Domestic and Non-domestic categories and introducing a fuel surcharge (2011), (ii) introducing prepayment meters and a discounted rate applied to them (2012), (iii) adding a middle lifeline block for Domestic consumers, introducing usage and fixed debt charges, and replacing the fuel surcharge with an energy charge which incorporates fuel costs plus solar IPP costs (2014), and (iv) deleting the middle lifeline block for Domestic consumers and reducing the fixed debt charge (2017). Despite the extensive structural changes, shifts in the nominal tariff levels across the customer categories were relatively modest, resulting in a significant fall in the real tariff levels to all customers over the implementation period. Typical bills for Domestic and Non-domestic customers are shown in nominal tala in Table A10.3 and in real (2009) tala in Table A10.4. That the tariff has fallen in real terms despite the very large PSEP investments and their financial costs testifies to the efficacy and sustainability of the PSEP and the regulatory framework that it helped to bring about. The current tariff is more transparent both to consumers and to EPC management than the pre-2012 tariff was (i.e., it is easier to understand how much is being charged for what costs and, for consumers on prepayment meters, it is easier to monitor and control daily consumption) and is fairly straightforward for EPC to administer. The transparency of the tariff and the regulatory oversight that is now in place combined with the increased capacity and reliability of EPC’s power system greatly strengthens the financial sustainability of the EPC.

45 Data obtained from PMU. 46 From 2012, the principal data source was the record of OOTR tariff orders, available on the OORT website.

Appendix 12 61

Table A12.3: Typical Bills for Electricity Consumers (nominal tala)

Table A12.4: Typical Bills for Electricity Consumers (constant 2009 tala)

Calculation of the Project FIRR and the FNPV 11. Based on the costs and revenues discussed above, the updated calculation of the project financial internal rate of return (FIRR) is 14.0% and of the project financial net present value is ST910.8 million (with the net revenue stream discounted at the WACC of 2.07%). In the RRP financial analysis, the FIRR for the Upolu system was 7.0% and 12.1% for the Savai’i system. The FNPVs (discounted at the WACC of 4.48%) were ST44.1 million and ST27.9 million respectively.

12. The load growth and tariff projections used in the RRP financial analysis are not available for review for the PCR. However, it is likely that actual load growth 2008–2018 has exceeded the RRP analysis’s projections, due to the notably rapid growth that has occurred since 2015. Moreover, it is not evident that the RRP’s financial analysis took into account the financial value of fuel savings made possible by the more efficient diesel plant made available by the project. These factors, in combination with the reduced WACC faced by EPC, are likely to be the main reasons that the updated analysis exceeds the RRP analysis. There were no cost overruns or project delays that would affect the analysis. The calculation of FIRR and FNPV in the updated analysis is shown in Table A10.5.

62 Appendix 12

Table A12.5: Calculation of FIRR and FNPV of the PSEP

ANNEX: Detailed Tariff History by Year, 2009-2019

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70 Appendix 13

RAPID GENDER REVIEW ARTICLE

Appendix 13 71

72 Appendix 13

Appendix 13 73

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