Project Concept Document
Country: Brazil
Page 1
Energy Efficiency Project
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
INTERNATIONAL DEVELOPMENT ASSOCIATION
Latin America and the Caribbean Region
Country Department I
Project Concept Document
BRAZIL
ENERGY EFFICIENCY PROJECT
Draft
Final
Country Director: Gobind Nankani Division Chief: Asif Faiz
POC: EA
Focal Area: Climate Change
Sector: Energy
PTI:
Yes
No
Date: May 30, 1997
Task Manager: Luis M. Vaca-Soto
Project ID: BR-PA-37048/BR-GE-6211
Lending Instruments: WB Investment Loan and GEF Grant
Project Financing Data
Loan
Credit
Guarantee
Other GEF Grant
For Loans/Credits/Others:
Amount (US$m/SDRm): WB Loan US$80 m; GEF Grant US$20 m.
Proposed Terms:
Multicurrency
To be defined
Grace period (years):
Standard Variable
Years to maturity:
Commitment fee:
%
Service charge:
%
Financing plan (US$m):
To be defined
Source
Local
IBRD
50
GEF Grant
15
ELETROBRAS and other participants in the project
80
Borrower: ELETROBRAS
Guarantor: Government of Brazil (GOB)
Responsible agency: ELETROBRAS 1
For Guarantees:
Partial Credit
Proposed coverage:
Project sponsor:
Nature of underlying financing:
Terms of financing:
Principal amount
(US$m)
Final maturity
Amortization profile
Financing available without guarantee:
If yes, estimated cost or maturity:
Estimated financing cost or maturity with guarantee:
1
Yes
Single currency
Fixed
Foreign
30
5
20
LIBOR-based
Total
80
20
100
Partial risk
No
ELETROBRAS is a mixed economy corporation and holding of electric utilities, operating under the jurisdiction of the Ministry of Mines and
Energy, designated as the project implementing agency by the GOB
Project Concept Document
Country: Brazil
Page 2
Energy Efficiency Project
Block 1: Project Description
1. Project development and global objectives (see Annex 1 for key performance indicators):
Project development objective is to improve efficiency in the supply and use of energy in Brazil, with a focus on electric energy. The key project
concept is the creation a market-based energy efficiency industry by removing market barriers, enhancing institutional delivery mechanisms, and
encouraging the development of Energy Service Companies (ESCOs).
Global GEF objectives are to (i) remove market barriers to application, implementation, and dissemination of energy-efficient technologies, and (ii)
reduce global warming through lessening GHG emissions that would be produced by thermal generation using hydrocarbons.
(a) Main Barriers to Energy Efficiency in Brazil
Falling barriers. The major historical barriers to Brazilian energy efficiency (EE) investments have been an unstable economy and subsidized
energy (especially electricity) prices. The recent stabilization of the Brazilian economy has provided the essential foundation for cost reduction
investments such as EE projects. The movement of energy prices toward cost based pricing and electricity tariffs reflecting peak and off-peak
costs provides a growing incentive for EE investments. The GOB is now promoting the efficient use of energy, especially electricity, at a time of
increasing risks of supply shortages. This factor, and the combination of a stable economy, rising energy prices, and a pro-energy efficiency set
of Government policies provides the basis for pursuing overcoming remaining barriers to increase EE.
Remaining Barriers. The decision to make an EE investment to reduce costs usually is based upon creditable information from relevant real
projects in similar circumstances. Brazilian EE development suffers from both the lack of creditable case studies documenting the financial
benefits of an investment and the means to disseminate such information to industrial and commercial decision makers. While many energy
efficiency investments are being made in Brazil, the system to verify and disseminate the results has to be substantially enhanced and expanded.
Brazilian customers purchasing energy using equipment do not know the annual energy cost of such equipment relative to the average of such
equipment or the most efficient models available. While some energy efficiency testing, certification and labeling of electric equipment does
exist, in many cases it has to be included in a comprehensive customer-focused dealer accepted program. In other cases, tariff level and/or
structure and/or bill collection by distribution companies does not provide the proper price signal to customers to make energy investments.
The energy efficiency industry, especially energy service companies (ESCOs), is very undeveloped in Brazil. ESCO development has been
retarded by skeptical customers and third party financiers; inexperienced providers, customers or financial institutions in energy efficiency
performance contracting; a lack of venture capital for ESCO development; no successful performance contracts to use as models for replication;
no means to judge the quality of individual ESCOs; and the lack of incentives for utilities to use ESCOs.
(b) Reduction and/or elimination of remaining barriers.
Establishment of Best Practices Information and Dissemination Program. Pilot and Demonstration Projects. The GEF funds would
provide assistance to PROCEL to more effectively overcome the information barriers to cost-effective energy measures, and to generally improve
energy management information at the customer level. Specifically, the project would support: a) the effective dissemination of "best practices"
derived from pilot and demonstration projects and programs, focusing particularly on the provision of financial information to business
management, business financial planners, and the financial community in general; b) the enhancement of analytical capacity in existing state
energy efficiency agencies to properly assess the environmental and financial benefits of EE projects; c) the assistance to the Government in
developing effective policies, regulation and standards for promoting EE in an expanding market system; and d) the development of technical
and operational guidelines for EE measures with wide applicability, using the result of case studies from EE projects. ESMAP is assisting local
financial institutions and industrial trade associations in the State of Bahia to demonstrate monitoring and targeting techniques to manage
effluents and improve energy use. Pilot projects based on monitoring and targeting to be developed in host industries will contribute to the best
practice program.
Enhancement of Testing, Certification and Labeling of Energy Efficiency of Equipment. Brazil has various efforts underway to test and
certify the efficiency of various technologies. An enhanced comprehensive program, targeted at influencing customer choice, would support: (a)
enhancement/establishment of testing, certification, and demonstration centers; and (b) development and implementation of "customer friendly"
equipment labeling programs with participation of equipment dealers.
Provision of proper price signal and service options. A series of demonstrations would be performed, including innovative demand charge and
time-of-day tariffs; demand limiters; and improvements in bill collection. These programs are expected to improve commercial relationship,
provide correct price signals, and stimulate the interest of customers in customer-based energy efficiency investments.
Performance contracting. The proposed project supports marketing EE through ESCOs using performance contracting. Commercial and
industrial customers will be made aware of the potential of performance contracting to finance EE investments from savings in operating costs.
Financial institutions and engineering services companies will be made aware of how to create, operate and expand an ESCO business. This
marketing activity will focus on the following groups: industrial customers via their state associations, public institutions via state energy
officials, financial institutions via both their national and state associates, and engineering service companies via their state and national
associations. To demonstrate the concept of EE through ESCOs using performance contracting, a series of demonstration projects will be
designed, implemented, evaluated and the results widely disseminated. Three sectors are targeted for the initial demonstration projects:
Project Concept Document
Country: Brazil
Page 3
Energy Efficiency Project
commercial customers, large industrial customers; and public facilities, including offices, schools and hospitals. The demonstrations will be
competitively chosen using selection criteria based upon likely project success, replication potential, and diversity of project mix.
Creation of a Financial Facility to Stimulate ESCO Development and Use of Performance Contracting. An EE financial facility will be
designed based upon a detailed review of feasible options provided by international experts. The proposed facility would be capitalized by funds
from commercial and/or development banks. It would focus on encouraging the development of private sector third party financing of ESCO
projects. The cost of designing the facility, as well as the incremental operational cost during the launching period are proposed to be supported
by the GEF Grant.
2. Project Concept. Main concepts and features of the proposed project are indicated in in the following chart.
Proposed Energy Efficiency Project
Market Transformation Strategy
Baseline
Current level of EE
activities, including
incipient ESCO’s
participation
Delivery Mechanism
National Coordinator and
executor of special programs:
PROCEL.
Executing agents: Utilities,
States, Municipalities
Project Outputs
Trained ESCOs
Demonstrated energy savings
on the supply and the demand
side
Best Practice Cases
Market intermediaries: ESCOs, documented and marketed
Enhanced Label, Standard,
Banking System, Trade
and Certification System
Associations
Financial facilities
Incentive regulations
Public awareness
Incremental Energy/CO2 Savings:
New EE Market
Full ESCO’s participation
Market barriers removed
Improved level of services
and EE activities
Savings during Project Implementation
Expanded Market-Based Savings
(a) Project components.
The main components of the proposed project, to be implemented in four years and a half, are:
A. Pilot and demonstration (PD) EE projects providing proper price signals and service options. Implementation of PD projects in targeted
electric energy markets to test and demonstrate innovative tariffs, load demand limiters, and improvements in bill collection through metering,
improving service conditions and other commercial actions.
B. Pilot and demonstration EE projects of emerging technologies. Implementation of PD projects to test and disseminate the use of more
efficient appliances and energy equipment in the following markets: urban residential, poor urban and rural residential, commercial,
institutional, industrial, and municipal.
C. Market-based market transformation programs. Implementation of market transformation programs to prepare, and market best practice
experiences and other EE measures, including a demonstration center of EE technologies and programs; implementation and initialization of an
EE financial facility to finance ESCOs; and marketing the concept of performance contracts through ESCOs.
D. Regulatory-based market transformation programs. (a) Implementation of market transformation programs for preparing standards and
testing, labeling, and certification of efficiency of equipment and appliances, including motors, speed controls, refrigerators, freezers, and solar
and heat pump water heaters; and (b) Preparation of incentive EE regulations.
E. Capacity building (CB) programs. Implementation of institutional enhancement and training programs for the staff of PROCEL, energy
agencies, utilities, trade allies, end users, ESCOs, and regulators; and provision of core support to PROCEL, Federal regulators and energy
agencies and regulators of three States for design, management, supervision, monitoring, and evaluation of project components.
Project Concept Document
Country: Brazil
Page 4
Energy Efficiency Project
F. Others. Contingencies and financial costs during construction
(b) Project Cost and Financing.
Total project costs are estimated at US$200 million. A cost breakdown by component is presented below. A more detailed table is attached at
the end of this brief (page 11) showing costs by detailed activities and financing requirements from each source.
Component
Category
Indicative Costs
(US$M)
% of Total
A. Pilot and demonstration EE projects providing proper price
signals and service options
Physical, institution building
54
27
B. Pilot and demonstration EE projects of emerging
technologies
Physical, institution building
103
52
C. Market-based market transformation programs
Institution building
9
4
D. Regulatory-based market transformation programs
Policy, institution building
4
2
E. Capacity building programs
Institution building, project
management
12
6
F. Contingencies and interest during construction
Other
18
9
Total
200
100
(c) Incremental Cost. Incremental costs are estimated at US$20 million (see Annex 2). GEF funds would be allocated as follows:
(1) US$9 million to support pilots and demonstration programs aimed to disseminate/demonstrate DSM programs involving the installation of
emerging technologies in the Brazilian market. This includes compact fluorescent lamps, solar heaters, efficient refrigerators, power control
systems, reflecting roofs, high efficiency motors, and street lighting. GEF funds would support transitory subsidies and learning activities,
i.e., monitoring and evaluation and preparation of best practice manuals. Future sustainability would be based on the activity of market
intermediaries, including ESCOs, and the dissemination and marketing activities of PROCEL.
(2) US$4 million to support the implementation of market-based market transformation programs, consisting of (i) an information,
dissemination, and marketing program, including the “Best Practice” programs, aimed to market the experiences learned during the
implementation of pilot and demonstration projects; a “Green Lights” program, aimed primarily at commercial and public sector consumers;
a public awareness campaign; and support to energy agencies in the areas of EE promotion and marketing; and (ii) the design and launching
of an EE financial facility, consisting of a revolving loan and loan guarantee facility for ESCOs, to be funded by development and/or
commercial banks. GEF funds would support the information, dissemination and marketing program, the design of the financial facility, and
its incremental operational cost during the launching period. The facility would be operated by a commercial or development bank.
(3) US$2 million to support the implementation of regulatory-based market transformation programs, including: (i) testing, certification, labeling,
and standards of domestic appliances, lighting, motors, solar water heaters, etc.; and (ii) study and preparation of EE regulations, including
tariff designs and building codes. GEF funds would support expanding and operating testing facilities over a four year period and study and
preparation of regulations. Testing facilities will start to charge fees gradually to be able to operate independently after implementing the EE
project;
(4) US$5 million to support capacity building programs, including (i) core support to PROCEL, Federal and State Energy Agencies and
Regulatory Bodies to assist in the design, implementation, and monitoring of EE policies, regulations and programs; (ii) training to power
utilities on modern techniques to reduce supply-side electric power losses, integrated use of supply-side and demand side management
measures, and other utility-based EE programs; (iii) training to ESCOs. GEF funds would support hiring EE consultants and part of the
training program during 1998 to 2001, after this period, PROCEL expects to charge fees and enter into cooperative agreements with major
training and industry organizations in Brazil to make this activity sustainable.
3. Benefits and target population:
The proposed project, together with other complementary initiatives, is expected to contribute to provide energy services in a more efficient and
sustainable way by reducing emissions and their environmental impacts, postponing large investments in supply facilities, improving the
competitiveness of the electric sector, reducing cost to consumers, and enhancing economic conditions through the creation of jobs in ESCOs.
Complementary initiatives being supported by international and national energy efficiency organizations and agencies, mainly in the area of technical
assistance to PROCEL, utilities, energy agencies, and regulators will contribute to expand the benefits of the proposed projects. Target population, in
the short term, is the population in the areas of the pilot and demonstration projects and the special programs. This includes poor urban and rural
population. In the long term, the Brazilian population is to be benefit from the replication of energy efficiency measures. Replication of similar
Project Concept Document
Country: Brazil
Page 5
Energy Efficiency Project
programs in Brazil and other development countries could further expand project benefits.
4. Institutional and implementation arrangements:
The recipient of the proposed GEF grant and Bank loan will be ELETROBRAS. ELETROBRAS-PROCEL will be in charge of the general
coordination and implementation of the proposed project and the implementation of market transformation programs through a project management
unit based in PROCEL. The project implementation unit will be supported by the technical and financial areas of ELETROBRAS. PD projects will
be implemented by selected participants and would include public utilities, water utilities, states, municipalities, and industrial and commercial users
with the participation of ESCOs. Bank and GEF resources would be transferred from ELETROBRAS to the executing agencies through subsidiary
loans and grants. A first group of PD projects and executing agencies have been selected already. A second group of PD projects and implementing
agencies will be selected based on criteria and procedures to be agreed with the Bank during project preparation. Given the innovative nature of this
operation, close Bank supervision and monitoring during project implementation will be arranged.
Block 2: Project Rationale
5. CAS objective(s) supported by the project:
(CAS Report No. 14569-BR of June 6, 1995)
CAS objective is to support the GOB’s strategy of balancing its environmental agenda with its economic development goals. In the energy sector
these goals are to enhance competition, encourage private sector participation, support programs and technologies aimed at the efficient supply and
use of energy, diversify fuel sources, and protect the environment. The implementation of the EE measures, to be demonstrated by the project, and
their future replication with growing private sector participation (ESCOs) will support the GOB’s strategy. Project component A, which includes
price signals and service options, would help to advance the power sector reform by improving the commercial relationship between distribution
utilities and their customers.
GEF Operational Strategy/Program Objective Addressed by the Project:
The proposed project is fully consistent with GEF Operational Program No. 5 because its goal is to remove barriers to large scale application,
implementation, and dissemination of least-economic cost energy-efficient technologies by promoting more efficient energy production and use. The
GOB’s support of the EE Project is consistent with its strategy of improving efficiency of energy supply and use and enhancing private sector
participation. Specific barriers targeted for removal through GEF cofinancing are insufficient information and perceived risks by potential investors
on EE measures. GEF support would help to train and promote ESCOs, disseminate EE commercial instruments (verification protocols and
performance contracting), create best practice information, and implement EE financial facilities to create the conditions for the development of an
EE industry on a sustainable basis.
6. Main sector issues and Government strategy:
Main sector issues are: (i) high investment needs to expand power supply in already served areas and to serve new areas inhabited by poor rural
population; and (ii) the limited financial capacity of the sector under its current structure and federal and state ownership. GOB strategy to meet
increasing energy needs in a sustainable manner is to reform the power sector through the introduction of increased competition and private
participation; to reduce energy waste by supporting efficient supply and use of energy; and to support the development of new renewable
technologies. To ensure sustainable and efficient energy supply, the GOB’s strategy is to improve efficiency of energy supply and use by
establishing a new regulatory framework and a new institutional organization of the energy sector, therefore enhancing private participation, and
promoting the development of new sustainable energy sources. To support sector reform, the Bank has assigned US$15 million from the
Hydrocarbon Transport and Processing loan (LO 3376-BR). Overall, the reforms will provide greater choices for suppliers and consumers with
enhanced participation of the private sector. By the end of the project implementation period, it is expected that the ongoing reforms and
privatization plans will be completed. The proposed project components seek to balance supply geared generation policies and investments, with
consumer oriented efficiency measures while creating a more competitive energy service market, thus providing a level playing field for ESCOs and
load management measures in a liberalized power market. It is expected that the combination of a more liberalized power market and stable
economy will provide the right conditions to introduce a new energy services market.
To advance in the implementation of the Framework Convention on Climate Change, the GOB appointed an Inter-Ministerial Commission for
Sustainable Development on June 21, 1994. At GOB’s request, the expanded use of solar and wind energy, now in pilot phase, is being studied with
ESMAP/Bank support. Along the same lines, the GOB is supporting implementation of a Biomass Power Pilot Project, as an option to expand the
sustainable use of biomass and expand available energy supply sources.
On the energy efficiency front, the GOB is supporting the national program (PROCEL) to promote the efficient supply and use of electricity and
reduce energy waste and asked for GEF/Bank support to implement the proposed EE Project.
7. Sector issues to be addressed by the project and strategic choices:
Project Concept Document
Country: Brazil
Page 6
Energy Efficiency Project
The proposed project aims to save electric energy on the supply and demand side, thereby contributing to the reduction of the rate of expansion of
energy production and consumption; cost to customers; investment needs on electricity supply facilities; and negative impacts on the environment,
e.g., reducing CO2 emissions.
The ongoing reform of the Brazilian energy sector, supported by the Bank, is providing a favorable climate for the implementation of EE measures
with its strategy of enhancing private participation, competition, and market-based prices and tariffs. Currently, no sector issues appear to adversely
affect the economy of the project in the markets chosen for the PD projects and market transformation programs. During project preparation, the
proposed implementation structure will be reviewed and any project-related conditionalities will be discussed.
Because of the nature of the proposed project, sector-related conditionalities would not be included in the Bank/GEF loan/grant agreements. Sector
reform issues are being discussed in the context of other energy projects and the technical assistance being provided through the existing
Hydrocarbon Transport and Processing loan (LO 3376-BR) to reform the energy sector.
8. Project alternatives considered and reasons for rejection:
To be defined
The alternative to the project is to continue meeting energy needs only through the enlargement of the energy supply system. Investment needs in the
power sector for this alternative are estimated at about $4 billion to $ 7 billion per year. Further, under expanding private privatization ownership,
energy suppliers would focus on maximizing revenues by increasing kWh sales. The proposed EE project would balance supply and end-use options
and support the Brazilian strategy to postpone a significant part of supply side investments through EE measures.
An alternative to the proposed project that has been considered is the creation of a credit line to support EE investments in the industrial sector. This
alternative has been discarded because similar initiatives in Brazil and the Bank were not successful due to lack of disbursements because they did
not address the removal of existing market barriers. Instead, the proposed project focuses on the removal of these barriers.
9. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned).
Sector issue
Project
Latest Form 590 Ratings
(Bank-financed projects
only)
IP
DO
Bank-financed
Energy Sector Reform. Private participation.
Brazil - Hydrocarbon Transport and Processing Project
S
S
Sustainable energy supply.
Energy Efficiency
Thailand - Electricity Energy Efficiency Project (*)
S
S
Energy Efficiency
Jamaica - Demand Side Management Project (*)
S
S
Energy Efficiency
Mexico - High Efficiency Light Project (*)
S
S
Energy Efficiency
China - Energy Conservation (in preparation) (*)
Sustainable Power Generation. Private participation.
Brazil - Biomass Power Pilot Project (in preparation) (*)
Electrification of Rural Areas with Private Participation.
Brazil - Renewable Energy - Rural Electrification Project
(in preparation)
Industrial Energy Conservation
Hungary - Industrial Energy Diversification and
Conservation (PCR, 1993)
Hungary - Second Industrial Energy and Conservation
(PCR, 1994)
Bangladesh - Industrial Energy Efficiency Project (PCR,
1992)
Indonesia - Industrial Energy Conservation Project (PCR,
1994)
Other development agencies
UNDP/GEF
Brazil - Phase II of the Biomass Power Pilot Project
CIDA - ALURE
Brazil - Cooperative agreements for technology transfer
(*) Supported by GEF.
10. Lessons learned and reflected in proposed project design:
No similar EE projects have been financed in Brazil. Lessons derived from the Project Completion Reports of other recent energy projects in Brazil,
are: (i) the linkage of the effectiveness of loans and loan disbursements to the adoption of macroeconomic or sectoral measures, e.g., financial
rehabilitation, was not effective in past operations in Brazil and undermined the credibility of the financial covenants. The current approach is to
work in parallel, but separately, on macroeconomic/sectoral and project issues. To this end, the Bank is financing technical assistance activities for
power sector restructuring; (ii) the electric tariff levels have been the main issue in the implementation of power sector projects in Brazil. Current
tariffs, together with ongoing privatization and restructuring of the energy sector and the recent creation of a new independent regulatory body in the
power sector, would provide an acceptable environment for the market transformation programs and PD projects; (iii) the standard disbursement
profiles should be relied on in connection with the preparation of future distribution projects, and sales forecasts should be carefully scrutinized
during appraisal; and (iv) there is a trade-off between good implementation by the stronger companies in the well developed regions and the greater
needs on the part of the poorer companies in other regions. The proposed project includes the participation of leading utilities, energy agencies,
Project Concept Document
Country: Brazil
Page 7
Energy Efficiency Project
states, and municipalities in various geographical areas, including some of the poorest rural areas of the country.
Lessons learned from ongoing Demand Side Management projects in Mexico, and Jamaica are that (a) pricing and regulatory reform are necessary,
but not sufficient, to maximize and capture energy efficiency potential; and (b) key market barriers must be addressed in a sustainable way to expand
EE investments. In the Thailand Electricity Energy Efficiency Project, key lessons learned are that (a) technical assistance targetted towards implementation of pilot demonstration programs is effective in building institutional capability, and (b) “learning by doing” through pilot programs is key
to establishing a foundation for future expansion after the project implementation period.
Lessons learned from the application of energy efficiency measures in Brazil and developed countries, e.g., USA, Canada, and the European Union,
will be incorporated into the project design through the participation of experienced specialists under cooperative technical assistance agreements
between PROCEL and development agencies. ESMAP and the Bank have supported the organization of international seminars and workshops in
Brazil with the participation of local and foreign specialists, and technical visits to developed countries. These activities have contributed to the
preparation of the national strategy and action plan for EE in Brazil, and the proposed project.
11. Indications of borrower commitment and ownership:
The GOB and ELETROBRAS, as well as the other participants in the proposed project, support EE activities. ELETROBRAS-PROCEL and the
other participants are active in EE activities and are participating in the project preparation. Current strain in the power supply system due to recent
blackouts and brownouts, is putting additional pressure to accelerate the adoption of EE measures. SEAIN, the Secretary of International Affairs of
the Ministry of Planning and GEF focal point, requested Bank support on September 15, 1996 (US$150 million), and GEF support on May 23, 1997
(US$20 million) (Annex 3).
12. Value added of Bank and GEF support:
Bank and GEF support would be instrumental in (a) allowing the demonstration of a significant number of emerging energy efficient technologies
and delivery mechanisms; (b) carrying out the energy market transformation, with a focus on electric power; and (c) building capacity on
implementation and regulation of energy efficiency measures on the supply side and the demand sides.
In addition, the proposed project will play a catalytic role in providing a framework for the organized participation of the main stakeholders in the
energy efficiency effort in Brazil, in particular energy agencies, energy regulators, power utilities, ESCOs, consumers, and international energy and
development agencies. Supervision, guidance, and support by the Bank in implementing this comprehensive program is critical to its success.
Block 3: Project Preparation
13. Has a project preparation plan been agreed with the borrower?
Yes Date: 11/30/96
No Date Expected:
The project preparation plan has been agreed upon with the borrower.
14. Has borrower drafted a project implementation plan?
Yes Date Submitted: MM/DD/YY
No Date Expected: 09/15/97
Main project components have been agreed upon with ELETROBRAS and a preliminary project implementation plan has been received by the
Bank. The final plan is being completed with the final selection of projects, programs, and participants and the refinement of implementation plans
for all project components.
15. Advice/consultation outside country department
Within the Bank: ENVGC; ESMAP;
Other development agencies: USAID, CIDA, ALURE, Academia; NGOs
The STAP reviewers’ comments are attached as Annex 4.
16. Issues Requiring Special Attention
a. Economic
(list issues below, e.g., fiscal impact, pricing distortions, etc.)
Economic evaluation methodology:
Cost benefit
To be defined
Cost effectiveness
None
Other [specify]:
The costs of pilot and demonstration projects would include the incremental cost of monitoring, verification, and dissemination activities. A GEF
grant is being proposed to support these incremental project costs. All proposed PD projects, net of these incremental costs, would have a rate of
return above 15%. The incremental cost analysis and justification for the proposed GEF grant are attached as Annex 2.
Project Concept Document
Country: Brazil
Page 8
Energy Efficiency Project
b. Financial
(list issues below, e.g., cost recovery, tariff policies, financial
controls and accountability, etc.)
To be defined
None
Full project cost recovery is not feasible due to the cost of the incremental features in PD projects and special programs. Preliminary calculations
show that all pilot and demonstration projects has a positive net present value (NPV) based on their investment cost (excluding cost of incremental
features) and the benefits derived from sales of electricity and the postponement of investment in supply facilities. From the perspective of the
utilities, states, municipalities, and other participants, preliminary calculations show that the estimated NPV will be positive if the proposed GEF
grant is accounted as a benefit. As financial results may vary, depending on the final implementation and financial arrangements between PROCEL,
executing utilities and agencies, and end users, these estimations will be reviewed during project preparation.
c. Technical
(list issues below, e.g., appropriate technology, costing, etc.)
To be defined
None
Potential technological risks have been assessed by PROCEL and fully discussed with international consultants. The cost of introducing
technological innovations into the Brazilian markets is included as part of the incremental cost of PD projects and market transformation programs.
The risk of failure of PE projects and special programs is being addressed by carefully designed implementation plans, including monitoring,
verification, and dissemination activities.
d. Institutional
(list issues below, e.g., project management, M&E capacity,
administrative regulations, etc.)
To be defined
None
The proposed organization for national project implementation is ELETROBRAS-PROCEL, which would be in charge of implementing the market
transformation programs and capacity building activities. PD projects would be implemented by selected participants, including utilities, states, and
municipalities. It is considered that this arrangement is appropriate for the project and would provide an adequate balance of flexibility and
accountability. The detailed project management and implementation structure will be reviewed and agreed upon during project preparation.
e. Social
(list issues below, e.g., gender, protection of indigenous
and other vulnerable groups, etc.)
To be defined
None
Due to the characteristic of the proposed project, no social issues are anticipated. Further, the project would have a positive social impact because
will provide energy consumers, including low income consumers, with greater choices of efficient services and appliances in an era when electricity
tariffs may tend to increase. In the case of low income consumers, lifeline tariffs will most likely remain in place. Consequently, the proposed
project and its components would diversify the pool of options for consumers facing increase energy prices.
f. Resettlement
(list issues below, e.g., resettlement planning, compensation payments.)
To be defined
None
No resettlement issues are anticipated.
g. Environmental
i. Environmental issues:
Major:
To be defined
None
Other:
Brazil’s power sector has a comprehensive and operational Environmental Master Plan approved by the GOB, endorsed by the Bank, and
enforced whenever a power supply facility is planned or constructed. No adverse environmental effects are expected to result from the project
because it would involve modest interventions in the case of the PD projects when electric equipment will be enhanced, modified, or installed,
e.g., modification of illumination systems in streets, industries, commerce, and homes. On the contrary, savings in power generation would
reduce global warming by reducing CO2 production, since the Brazilian hydro-thermal system would reduce the use of hydrocarbons at the
margin. This will happen because the economic dispatching of the generation system will reduce the production of electricity by thermal units
due to their high marginal cost in the short term, compared with other generation options.
ii. Environmental category:
A
B
C
(To be proposed)
iii. Justification/Rationale for proposed category rating:
The project would finance only small-scale PD projects, market transformation programs, and capacity building activities with no significant
effect on the environment.
Project Concept Document
Country: Brazil
iv. Status of Category A assessment::
NA
Page 9
Energy Efficiency Project
EA start-up date:
Date of first EA draft:
Current status:
v. Proposed actions:
N.A.
vi. Status of any other environmental studies: NA
vii. Local groups and NGOs consulted: (List names):
Extensive consultations have been carried out at EE national seminars, workshops, and project preparation activities. Local groups and NGOs
consulted include INEE (National Institute of Energy Efficiency), Academia (Universities of Sao Paulo, Rio de Janeiro and Campinas), trade
associations (FIB, FIBA, FIESP), energy agencies (States of Bahia and Sao Paulo), ESCOs, and banks (BNDES, FINEP, and private banks).
viii. Borrower permission to release EA:
ix. Other remarks:
h. Participatory Approach
Beneficiaries/community groups
Intermediary NGOs
Academic institutions
Yes
No
Preparation
Implementation
(CON)
(CON)
INEE (COL)
INEE (COL)
Universities of Rio de Janeiro, Sao Paulo,
Universities of Rio de Janeiro, Sao Paulo,
Campinas, etc. (CON)
Campinas, etc. (CON)
Local government
Ministry of Mines and Energy of Brazil,
Ministry of Mines and Energy of Brazil,
Secretariats of Energy of States, State Energy
Secretariats of Energy of States, State Energy
Agencies (COL)
Agencies (COL)
Other donors
CIDA, USAID (COL)
CIDA, USAID (COL)
Other
Power Smart (Can), ALURE, EPRI, power
Power Smart, ALURE, Commercial and
utilities and EE specialist of developed countries.
development banks (COL)
Commercial and development banks (CON)
[Note: Identify each of the stakeholders above, and describe their form of planned involvement as : information sharing (IS); consultation (CON);
and collaboration (COL).]
i. Sustainability
The detailed implementation plans and incremental components of pilot and demonstration projects and special programs are designed to ensure
their proper implementation, verification of savings, and documentation of best practices to be replicated. In the long-term, it is expected that the
measures demonstrated through the best practice program, the increased activity of the ESCO industry, and the reduction of perceived risks by EE
investors, would facilitate the replication of EE projects, ensuring the sustainability of the EE activities. Sensitivity analysis will be carried out
during project preparation to verify this assumption under different scenarios of investment and operational costs, market penetration, and life of the
proposed measures.
j. Critical Risks (see fourth column of Annex 1):
Risk
Risk Rating
Risk Minimization Measure
Project outputs to development  Continuity of PROCEL
L
 GEF/Bank technical and financial support to
objectives
reinforce EE activities
L
 Continued dissemination
 Continuity of PROCEL, State Energy Agencies,
of EE projects and
and ESCOs
programs
M
 Energy sector reform
 Bank technical support.
 Wide social and political
 Continued activity of PROCEL, energy agencies
support to EE measures at
and ESCOs. Educational programs.
national and state level
M
 Successful development of
 Marketing of commercial EE instruments
ESCOs
(verification protocols and performance
contracts), dissemination of best practice
experiences
M
 Critical mass of EE
 Activity of ESCOs in the market
activities
Project Concept Document
Country: Brazil
Project components to outputs
Page 10
Energy Efficiency Project
 Appropriate counterpart
funding
L
 Appropriate institutional
arrangements and
managerial and technical
capacity
 Commitment of other
participants and partners
M
 Design of project
components
M
 Less than expected
financial rate of return
M
Overall Risk Rating
k. Possible Controversial Aspects
 Satisfactory financial arrangements among the
participants as part of project preparation and
implementation
 RGR resources for EE
 Creation of a project management unit.
Implementation of capacity building
components, including core support to
PROCEL, agencies, and regulators
 Subsidiary Loan Agreements signed according
to schedule to be agreed during project
preparation.
 Stress in the electric system is pressing for EE
measures.
 Current activity of participants, and variety of
markets, technologies, and delivery mechanisms
to be piloted and demonstrated contribute to
reduce global risk.
 Participation of experienced national and
international consultants under cooperative
agreements with energy agencies and bilateral
agencies
 Detailed review of financial estimations by
international consultants
L
M
No controversial aspects are foreseen at this time of project preparation.
Block 4: Conditionality Framework
17.
[Identify the critical policy and institutional reforms sought, and where appropriate, the likely areas of
conditionality.]
To be defined
Policy and institutional reforms are being discussed under the frame of the current TA under Loan 3376-BR. It is expected that any conditionality
would be project-related.
Block 5: Checklist of Bank Policies
18. This project involves (check applicable items):
Indigenous peoples
Cultural property
Significant environmental impacts
Natural habitats
Gender issues
Involuntary resettlement
Significant consultation
Significant participation
Riparian water rights
Financial management
Financing of recurrent costs
Local cost sharing
Cost-sharing above country three-year average
Retroactive financing above normal limit
Disputed territory
Other
19. Describe issue(s) involved: No relevant issues have been identified yet
.
_____________________________
Task Manager: Luis M. Vaca-Soto
LMVS
L:\aa\EE\pcd
May 30, 1997
______________________________
Country Director: Gobind Nankani
Project Concept Document
Country: Brazil
Page 11
Energy Efficiency Project
Project Cost and Financing
Total project cost, incremental cost, and financing requirements from each source.
Main Components
Markets
Projects and Programs (1)
GEF
World
Bank
US$m
Local
Counterpart
(2) US$m
TOTAL
0
22
32
54
9
50
44
103
4
0
5
9
2
0
2
4
5
0
7
12
8
10
18
80
100
200
US$m
A. Pilot and demonstration
EE projects providing
proper price signals and
service options in:
B. Pilot and demonstration
EE projects of emerging
technologies
C. Market-based market
transformation programs
 Residential
Customers
 Poor Rural
Customers
 Commercial and
Institutional
Customers
 Residential markets
 Poor rural markets
 Commercial and
Institutional
Customers (public
buildings, hotels,
hospitals, and
schools)
 Industrial
customers
 Municipal services
 Energy users
 Time-of-Use Yellow Tariff
 Demand Load Limiters
 Metering to support user-based EE
investments
 Reduction of commercial losses in
commercial markets














D. Regulatory-based
market transformation
programs
E. Capacity building
programs
 Energy users

 Energy users




Compact fluorescent lamps (2.5)
Solar heaters (1.4)
Efficient refrigerators (2.0)
Efficient popular housing
Efficient irrigation systems
Air conditioning
Control systems (0.4)
Power factor improvement
Reflecting roofs (0.5)
High efficient motors, speed drivers,
and motor optimization program
(2.0)
Street lighting (0.2)
Water pumping
Information dissemination and EE
marketing , including Best Practice
and Green Lights programs (3.5)
Creation of an EE Financial Facility
(to be funded by development and
commercial banks) (0.5)
Testing, certification, labeling, and
standards (1.5)
Incentive EE regulations (0.5)
Core support for PROCEL and key
Federal and State energy agencies
and regulators (2.5)
Training and education (technical
schools, universities) (0.5)
Management, evaluation, and
information systems (2.0)
F. Contingencies and
financial costs during
construction
TOTAL
(1) In parenthesis, GEF support in US$ million.
(2) Local Counterpart includes CIDA (US$2 million) and EU-ALURE (US$1 million)
20
US$m
Project Concept Document
Country: Brazil
Page 12
Energy Efficiency Project
Annex 1
Energy Efficiency Project
Project Design Summary
Narrative Summary
GOAL:
CAS Objective
 Increase the efficiency of the
electric energy sector to help
balance Brazil’s environmental
agenda with its economic
development goals
GEF Objective
 Reduce GHG
Program Objectives:
 Remove barriers to the
sustainable capture of “win-win”
energy efficiency opportunities
in the Brazilian energy market
Key Performance Indicators
Monitoring and Supervision
 Energy saved
 Investment postponement in
power supply facilities
 Independent assessment
 Market studies
 PROCEL reports
 CO2 Avoided
 CO2 Savings Baseline
 Energy Consumption statistics
per user group
 Listing of ESCOs
 Listing of financial institutions
involved in EE projects
 Market barriers
 High transaction cost
 Lack of credible best practices
 Low financial significance
 Replications of EE
programs/measures
 Number of active ESCOs
 Viability of ESCOs
 Viability of loss reduction
measures
 Ex-post evaluation of EE market
development
 Increased sales of efficient
electric equipment and
appliances
 ESCO industry development and
wide use of verification protocol
and performance contracts to
replicate EE best practice
projects
(Development Objectives to CAS
Objective)
 Percentage of average electric
energy losses on the supply-side
reduced from 15% in 1996 to 12
% in 2001
 Adoption of efficient
technologies: (a) Installation of
500,000 efficient street lamps by
the end of 2001; (b) 100 public
buildings retrofitted by 2001;
(c) 5% increase in market share
of efficient refrigerators, air
conditioning systems, lamps,
etc.;
 Electricity loss statistics
 50 contracts signed by Electric
Service Companies (ESCOs)
with utilities and public,
commercial, and industrial
consumers
 Contract Supervision
 PROCEL reports
 Market studies
 Independent evaluations
 Market Transformation
Programs
 Capacity Building Programs
 Best Practice Cases
 Reduction of energy supply
investment and operational costs
compared with the baseline
 Electric power and other
energies priced at economic
costs
 Adequate regulatory
environment for EE measures
(Outputs to Development
Objectives)
Project Outputs (the deliverables
of the project)
 Pilot and Demonstration
Projects
 Market-based replications of EE
measures in other developing
countries (Mission:
environmental protection)
 ESCOs sales/contracts growth
Project Development Objectives
(effect or impact of the project)
 Reduced power supply
commercial and technical losses
Critical Assumptions and Risks
(CAS and GEF Objectives to
Bank/GEF Missions)
 30% of PD projects and market
transformation programs started
by December 1998
 30% of PD projects and market
transformation programs
completed by December 1999
 10 Best Practice Cases
 Borrower’s quarterly progress
reports, and final report on
investments and performance of
projects and programs
 Mid term review and final report
by independent evaluators
 Continuity of PROCEL
 Continued dissemination of EEC
best practices by PROCEL
 Energy sector reform
 Wide social and political support
to EE measures at national and
state level
Project Concept Document
Country: Brazil
 Revolving Fund for financing
EE activities by power utilities
and public sector implemented
and operating
 Design and implementation of
Financial Facility for EE
activities by ESCOs
 New building codes for energy
efficient buildings
 Infrastructure for dissemination
activities
 Planning of Phase II
Project Components (main
activities that must be
undertaken
in order to accomplish the
outputs)
 Investments in goods and
services
 Consulting services for
preparation of Best Practice
projects, project management
and supervision, developing
internal procedures, and
planning of Phase II
 Preparation of training program
Page 13
Energy Efficiency Project
 Critical mass of EE activities
completed and disseminated by
December 1999, 20 by
December 2000, and 30 by
December 2001
 Existing fund adapted and
operating before project starting
 Financial Facility completed and
implemented by December 1999
 Codes designed and
disseminated by December 2000
 Infrastructure in place by
December 1999
 Planning completed by
December 2000
Inputs (resources provided for
project activities)
 By end 1999, 30% of Bank Loan
and GEF Grant committed, and
20% disbursed
 By end 2000, 60% of Bank Loan
and GEF Grant committed and
50% disbursed
 By end 2001, 90% of Bank Loan
and GEF Grant committed and
80% disbursed
 Schedule for use of consulting
services TBA
(Components to Outputs)
 Borrower’s quarterly progress
report
 Procurement records
 Bank’s disbursement data
 Audit reports
 Borrower’s annual financial
statements
 Appropriate counterpart funding
 Appropriate institutional
arrangements and managerial
and technical capacity
 Commitment of other
participants and partners
 Design of project components
 Less than expected financial rate
of return
Project Concept Document
Country: Brazil
Page 14
Energy Efficiency Project
Annex 2
Incremental Cost Calculations
1. Broad Development Goals and the Baseline
After many years of fluctuations, Brazil’s economy has stabilized and inflation rates have achieved single
digit levels. Simultaneously, economic growth has resumed and energy use has increased. Electric energy use is
growing at a rate of 6 %, per year. For the future, natural gas, coal, and hydro resources will meet that growing
electric energy demand.
To meet power demand while avoiding pollution related impacts, the Government of Brazil is following a
three-prong approach: a) introducing wide power sector reforms, including pricing and regulations, to enhance
competition and private sector participation; b) encouraging electric energy conservation measures through
PROCEL, the Government sponsored energy conservation program; and c) encouraging the demonstration and
deployment of renewable resources.
Baseline case. In the absence of an alternative, Brazil’s energy efficiency efforts will probably remain in its
current state or, given the current ongoing reforms in the sector, it may lose focus and its funding may start to
decline as the deregulation of the energy sector advances. Under the baseline case, it would probably take longer to
advance the demonstration of emerging technologies and market driven energy efficiency delivery mechanisms.
Investments in energy efficiency would most likely remain in Government hands, through the use of subsidized
loans to state governments and qualifying enterprises.
Emerging technologies and their application would not be part of the mainstream as the industrial sector
modernizes its infrastructure to compete in the MERCOSUR area and world-wide. Information dissemination on
energy efficiency financing and practices would remain hampered if no structured demonstration of best practices
and monitoring of savings is achieved. Institutional capacity to implement innovative energy efficiency measures
would remain fragmented and, most likely, at a central level. Participation of private investors and Energy Service
Companies (ESCOs) would be retarded if commercial instruments, like performance contracting, are not introduced
in the EE market.
PROCEL was launched in 1985, historically its level of activity has averaged investments in EE of US$4
million per year until 1994. The new focus on the role of energy efficiency to reduce energy waste, postpone
supply side investments, the risk of energy shortages, and the support from multilateral and bilateral agencies is
helping to increase the annual budget for EE activities. This has opened a window of opportunity to substantially
enhance and expand current EE activities by reducing or eliminating remaining market barriers. However, this
effort could be derailed in the absence of credible demonstration of market driven energy efficiency mechanisms
that would mirror the market transformation of the economy and the sector. For these reasons, a conservative
baseline option should have to consider the level of activity existing until 1994, before the new EE strategy started
to be designed as an integrated approach expecting future support from the Bank, GEF, and other donors. However,
to take into account the current budget for EE activities, including the proposed financial support from the Bank,
the amount of US$177 million corresponding to the estimated cost of the proposed project is considered in the table
included in para. 5 of this Annex, even though its sustainability could be questionable in the absence of GEF, Bank
and other donors’ intervention. This baseline option include incipient activity of ESCOs and current investments in
high efficiency lamps and appliances by private users, as well as the current level of local technical assistance and
institutional support to energy efficiency activities, estimated at US$4 million, based on the operational budget of
PROCEL and EE agencies. The alternative is defined as the baseline plus the participation of GEF and other
donors in the proposed project, to support removal of existing barriers.
Project Concept Document
Country: Brazil
Page 15
Energy Efficiency Project
2. Global Environmental Benefits
The purpose of the proposed Energy Efficiency (EE) project is to achieve substantial and sustained
increases in energy efficiency--and associated carbon dioxide emissions reductions--over time, by removing market
barriers.
Preliminary targeted savings by implementation of pilot and demonstration activities and market
transformation and capacity building programs for an estimated period of ten years is estimated at 22 million tons
(mt) of CO2 at a cost of US$ 1.05 per ton of CO2. If a period of seven years were considered, savings would be 13
mt of CO2 at a cost of US$ 1.77 per ton of CO2. As the activities proposed to be financed by GEF are an integral
part of the EE project it is assumed that the cost to GEF would be, at least, on this range. These savings will be
reviewed and confirmed during pre-appraisal and appraisal.
3. Alternative
The proposed alternative will demonstrate the viability of delivering energy efficiency projects through
traditional and alternative service providers, including electricity utilities, ESCOs, appliance retailers,
manufacturers, and energy state agencies, using performance contracting, pricing and regulatory instruments, and
new financing tools. Further, the project will introduce a country wide energy efficiency information system
designed to provide plant and financial managers, and energy consumers with credible best practices for various
technologies and contractual arrangements. Finally, the project will also focus on reinforcing regulatory and
normative tools to catalyze energy efficiency projects. These activities are aimed at overcoming the major barriers
to energy efficiency investments in Brazil.
The alternative will demonstrate and market the concept of doing energy efficiency projects through ESCOs
using performance contracting. A series of energy efficiency investments involving ESCOs, preferably through
performance contracting, will be designed, implemented, and evaluated and the results widely disseminated. Three
sectors are targeted for initial demonstration projects: commercial customers, large industrial customers; and public
facilities including offices, schools, and hospitals. The demonstrations will be competitively chosen using selection
criteria based upon likely project success, replication potential, capacity of implementing participant, and diversity
of project mix. The incremental costs of demonstrating and marketing ESCOs are the costs associated with
introducing the concept of performance contracting in Brazil and showing, in particular, that they are attractive to
the private sector. To support ESCO’s development, a financial facility is proposed to be designed and launched,
with the participation of development or commercial banks. While GEF and other donors will cover the incremental
cost of pilot and demonstration projects and special programs, the Bank, PROCEL, and the other participants will
finance the core cost of the projects and the replication of selected pilot and demonstration projects to be
implemented in other areas or markets.
The proposed project includes the establishment of a Best Practices information and dissemination program,
that will disseminate energy efficiency solutions to enterprise managers, financial/banking managers, and energy
consumers. The proposed program will: (a) prepare brief best practice guides summarizing energy efficiency
projects, including the pilot and demonstration projects partially financed by the Bank; (b) prepare technical guides
on emerging technologies to carry out energy efficiency measures; (c) establish a dissemination system including
industrial trade allies and banking associations, as well as targeted training and workshops for PROCEL’s staff,
contract consultants and host industries in the preparation, dissemination and monitoring of case studies; and (d)
evaluate and monitor the program to assess its effectiveness.
The normative/regulatory program includes setting standards, testing, and certificating the efficiency of
emerging technologies. The GEF component would support: (a) the expansion of testing and certification centers;
(b) the development of customer friendly equipment labeling programs; and (c) the initial implementation of the
labeling program. The incremental costs associated with this component are: (a) training state regulators on energy
efficiency related regulations; (b) expanding testing facilities; and (c) monitoring of implementation and
effectiveness.
4. Scope Of The Analysis
The analysis consists of the comparison between (i) the baseline cost of implementing EE projects without
dissemination and capacity building components, and (ii) the cost of implementing these projects including the
incremental features associated with the dissemination and capacity building programs included in the alternative.
The scope is essentially the national electricity sector, including electric power suppliers, energy efficiency service
providers, and consumers.
Project Concept Document
Country: Brazil
Page 16
Energy Efficiency Project
5. Cost
Total cost of the proposed project without the incremental features included in the Alternative, i.e., the
market transformation and capacity building components is estimated at US$ 177 million. Total cost, including
these incremental features is estimated at US$ 200 millions. Benefits of the proposed alternative are the emission
savings resulting from project implementation and replication of EE measures expected to be caused by the market
transformation and capacity building activities.
In summary, benefits, costs, and increments of the proposed project compared with the baseline option are:
Baseline
Alternative
Increment
 Current level of CO2
emissions
 Barriers reduced or
eliminated
 Reduced CO2
emissions, as a result of
the implementation of
the EE project, and
 Increase in the number
of viable EE measures
able to be replicated in
other developing
counties
 Reduced or
eliminated barriers
 Reduced CO2
emissions (22
million tons)
Improved level of
service in areas with
bottlenecks, and
 Improvements in
energy price signals
and service options, EE
technological level,
information
dissemination, EE
regulations, and EE
institutional capacity
 Improved level of
services and 29.6
TWh saved
 EE barriers removed
US$ million
US$ million
US$ million
On going EE investments, plus:
(*)
(*)
-
A. Prices and service options
B. Emerging technologies
C. Marked- based programs
D. Regulatory based programs
E. Capacity building programs
F. Others
54
92
4
2
7
18
54
103
9
4
12
18
11
5
2
5
-
TOTAL
177
200
23
Global Environmental Benefit
Domestic Benefit
Costs
Current level of
electric services, and
energy savings
 Current level of
energy price signals
and service options,
EE technological
level, information
dissemination, EE
regulations, and
institutional capacity
for EE
 Additional EE
measures applicable
to other developing
countries
(*) EE investments in the baseline option include counterpart funds of PROCEL and participating utilities and
other partners mobilized by PROCEL, as well as current customer contribution to energy efficiency investments.
US$ million
CIDA/EC contributions
GEF Incremental Costs
US$ million
US$ million
3
3
20
Project Concept Document
Country: Brazil
Page 17
Energy Efficiency Project
6. Final Calculation of Incremental Cost. Process of Agreement
The incremental cost of the proposed project proposed to be financed by GEF amounts to US$20 million,
based on information presented by ELETROBRAS-PROCEL and other participants. This cost will be reviewed by
the Bank/GEF project team during project appraisal, based on the final basic project design that will be completed
in June 1997, and the final cost estimates.
The GEF grant would compensate for the incremental costs for the preparation and implementation of pilot
and demonstration projects, and market transformation and capacity building programs aimed to expand and make
sustainable the EE efforts in Brazil. Based in this criteria, incremental costs will be reviewed during project
appraisal to define the amount of the GEF grant to be proposed and negotiated.
Maria Nikolov
M:\COUNCIL\JULY97\PCD-BRA.DOC
July 3, 1997 4:12 PM