Completion Report
Project Number: 37041-013
Loan Number: 2261
April 2016
Cambodia: Second Power Transmission and
Distribution Project
This document is being disclosed to the public in accordance with ADB’s Public Communications
Policy 2011.
CURRENCY EQUIVALENTS
Currency Unit
At Appraisal
(2 August 2006)
KR1.00
=
=
$1.00
–
riel/s (KR)
At Project Completion
(30 November 2014)
$0.00025
KR4,063
$0.00024
KR4,133
ABBREVIATIONS
ADB
EDC
EIRR
FIRR
GMS
JICA
–
–
–
–
–
–
MEF
SDR
VAT
–
–
–
Asian Development Bank
Electricité du Cambodge
economic internal rate of return
financial internal rate of return
Greater Mekong Subregion
Japan International Cooperation
Agency
Ministry of Economy and Finance
special drawing right
value-added tax
WEIGHTS AND MEASURES
km
kV
kWh
m2
–
–
–
–
kilometer
kilovolt
kilowatt-hour
square meter
NOTES
(i)
The fiscal year (FY) of the government ends on 31 December. FY before a
calendar year denotes the year in which the fiscal year ends, e.g., FY2009 ends
on 31 December 2009.
(ii)
In this report, “$” refers to US dollars.
Vice President
Director General
Director
S. Groff, Operations 2
J. Nugent, Southeast Asia Department (SERD)
S. Tukuafu, SERD/Cambodia Resident Mission (CARM)
Team leader
Team members
N. Ouk, Senior Project Officer, SERD/CARM
S. Hel, Associate Project Analyst, SERD/CARM
M. Ouk, Associate Operations Coordinator, SERD/CARM
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
I.
PROJECT DESCRIPTION
1
II.
EVALUATION OF DESIGN AND IMPLEMENTATION
A.
Relevance of Design and Formulation
B.
Project Outputs
C.
Project Costs
D.
Disbursements
E.
Project Schedule
F.
Implementation Arrangements
G.
Conditions and Covenants
H.
Consultant Recruitment and Procurement
I.
Performance of Consultants, Contractors, and Suppliers
J.
Performance of the Borrower and the Executing Agency
K.
Performance of the Asian Development Bank
2
2
3
4
5
5
5
6
7
8
9
9
III.
EVALUATION OF PERFORMANCE
A.
Relevance
B.
Effectiveness in Achieving Outcome
C.
Efficiency in Achieving Outcome and Outputs
D.
Preliminary Assessment of Sustainability
E.
Impact
9
9
10
11
11
12
IV.
OVERALL ASSESSMENT AND RECOMMENDATIONS
A.
Overall Assessment
B.
Lessons
C.
Recommendations
13
13
14
14
APPENDIXES
1.
Design and Monitoring Framework
2.
Appraisal and Actual Project Costs
3.
Currency Equivalents
4.
Projected and Actual Disbursements
5.
Project Implementation Schedule
6.
Project Organization Chart
7.
Status of Compliance with Loan Covenants
8.
Financial and Economic Reevaluation
9.
Resettlement Activities
16
20
21
22
23
24
25
34
37
BASIC DATA
A.
B.
Loan Identification
1.
2.
3.
Country
Loan Number
Project Title
4.
5.
6.
7.
Borrower
Executing Agency
Amount of Loan
Project Completion Report Number
Loan Data
1.
Appraisal
– Date Started
– Date Completed
2.
Kingdom of Cambodia
2261-CAM(SF)
Second Power Transmission and Distribution
Project
Kingdom of Cambodia
Electricité du Cambodge
SDR13.519 million ($20.0 million equivalent)
CAM 1556
25 April 2006
28 April 2006
Loan Negotiations
– Date Started
– Date Completed
11 July 2006
13 July 2006
3.
Date of Board Approval
4 October 2006
4.
Date of Loan Agreement
1 December 2006
5.
Date of Loan Effectiveness
– In Loan Agreement
– Actual
– Number of extensions
1 March 2007
29 January 2008
3
Closing Date
– In Loan Agreement
– Actual
– Number of Extensions
31 December 2010
10 March 2015
2
Terms of Loan
– Interest Rate
– Maturity
– Grace Period
1.0% during grace period, 1.5% thereafter
32 years
8 years
Terms of Relending
– Interest Rate
– Maturity
– Grace Period
– Second-Step Borrower
4.2%
20 years
5 years
Electricité du Cambodge
6.
7.
8.
9.
Disbursements
a.
Dates
Initial Disbursement
10 March 2009
Effective Date
29 January 2008
Final Disbursement
10 March 2015
Original Closing Date
31 December 2010
Time Interval
72 months
Time Interval
35 months
ii
b.
Amount (SDR million)
Category or
Original
Subloan
Allocation
Category
Number
1
2
Civil Works-Substations
Consulting Services for
Project Implementation
Environmental Management
and Monitoring
Improvement of EDC Data
System
Social, Resettlement and
Environment Training
Interest Charge
Unallocated
3
4
5
6
7
Total (SDR)
Total ($)
C.
Amount
Disbursed
Undisbursed
a
Balance
8.861
1.555
11.242
1.677
11.247
1.675
(0.005)
0.002
0.338
0
0
0
0.338
0.335
0.335
0
0.203
0.071
0.068
0.003
0.223
2.001
0.193
0
0.194
0
0
0
a
13.519
0
20.000
20.618
0
13.519
20.000
( ) = negative.
a
Numbers may not sum precisely because of rounding.
10.
Last Revised
Allocation
13.519
Local costs (Financed)
- Amount ($ million)
- Percent of Local Costs
- Percent of Total Cost
4.15
27.88%
6.27%
Project Data
1.
Project Cost ($ million)
Cost
Appraisal Estimate
Foreign Exchange Cost
Local Currency Cost
Total
2.
31.27
20.76
52.03
Actual
50.55
14.88
65.43
Financing Plan ($ million)
Cost
Appraisal Estimate
Implementation Costs
Borrower Financed
ADB Financed
Other External Financing
JICA
Subtotal
IDC Costs
Borrower financed
ADB Financed
Other External Financing
JICA
Subtotal
Total
Actual
10.06
19.68
16.84
20.32
22.28
52.03
28.27
65.43
0.00
0.33
0.00
0.29
0.00
0.33
0.47
0.76
52.36
66.19
ADB = Asian Development Bank, IDC = interest during construction, JICA = Japan International Cooperation Agency.
iii
3.
Cost Breakdown by Project Component ($ million)
Component
1
2
3
4
5
6
7
6
7
8
9
10
11
12
13
Appraisal Estimate
230 kV Line Bay, Kampot Substation
230 kV Line, Kampot to Sihanoukville (Stung Hav)
230 kV Substation, Veal Renh
230 kV Substation, Stung Hav
MLV Distribution System
115 kV Substation, Sihanoukville and 115kV
extension (Stung Hav)
115kV Line, Stung Hav to Sihanoukville
Consulting Services
Project Management and Monitoring
Land Acquisition
Strengthening of EDC Provincial Branches
Improvement of EDC Information System
EDC Training in High-Voltage Systems
EDC Training in Social, Resettlement, and
Environmental Management
Interest During Construction
2.67
22.12
12.68
5.20
3.36
3.53
26.35
0
7.61
3.21
0
12.50
0
2.66
1.50
0.34
0.13
0.54
0.50
2.31
2.59
2.41
3.64
0.15
0.57
0.46
0.32
0.10
0.33
0.76
Total
52.36
EDC = Electricité du Cambodge, kV = kilovolt, MLV = medium and low voltage.
4.
66.19
Project Schedule
Item
Date of Contract with Consultants
Completion of Engineering Designs
Civil Works Contracts
Date of Award (Transmission and Distribution Lines)
Completion of Work (Transmission and Distribution
Lines)
Date of Award (Substations)
Completion of Work (Substations)
Dates
First Procurement
Last Procurement
Completion of Equipment Installation
Start of Operations
Completion of Tests and Commissioning
Beginning of start-up
a
Other Milestones
a
Actual
Appraisal
Estimate
Actual
March 2007
June 2007
December 2008
February 2009
June 2008
December 2009
February 2011
February 2014
June 2008
December 2009
30 December 2010
25 August 2014
July 2007
June 2009
December 2009
30 December 2010
3 May 2012
31 May 2014
September 2010
January 2010
25 August 2014
March 2013
The first extension of the loan closing date (from 30 December 2010 to 31 December 2013) was approved on 8
October 2010. The second extension of the loan closing date (from 31 December 2013 to 30 November 2014) was
approved on 13 January 2014 (including reallocation of loan proceeds).
iv
5.
Project Performance Report Ratings
a
Ratings
Development
Objectives
Implementation Period
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
a
January 2008 to June 2011
July–September 2011
October– December 2011
January–March 2012
April–June 2012
July-September 2012
October–December 2012
January–March 2013
April–June 2013
July–September 2013
October–December 2013
January–March 2014
April–June 2014
July–September 2014
October–December 2014
January–March 2015
Potential Problem
Potential Problem
Potential Problem
Actual Problem
Potential Problem
On Track
On Track
On Track
On Track
On Track
On Track
On Track
On Track
On Track
On Track
On Track
Implementation
Progress
Potential Problem
Potential Problem
Potential Problem
Actual Problem
Potential Problem
On Track
On Track
On Track
On Track
On Track
On Track
On Track
On Track
On Track
On Track
On Track
Effective 1 January 2011, the Lotus Notes-based Project Performance Reporting system was replaced with an
Oracle-based eOperations Projects database. The new system does not rate development objectives and
implementation progress separately, but provides overall project ratings such as “On Track”, “Potential Problem”, and
“Actual Problem”.
D.
Data on Asian Development Bank Missions
Name of Mission
Fact-finding
Consultation
Appraisal
Project inception
Special review
Review 1
Review 2
Review 3
Review 4
Midterm review
Review 5
Special administration
Review 6
Review 7
Review 8
Review 9
Review 10
Project completion review
a
Date
22 Nov–1 Dec 2005
6–9 Feb 2006
25–28 Apr 2006
28–30 Apr 2008
27 May–3 Jun 2008
8–10 Dec 2008
25–29 May 2009
8–12 Feb 2010
10–13 Aug 2010
14–16 Feb 2011
16–18 Aug 2011
3–10 July 2012
14–22 Nov 2012
2–10 May 2013
26 Sep–8 Oct 2013
19–26 Mar 2014
11–18 Nov 2014
12–13 Nov 2015
No. of
Persons
No. of
Person-Days
Specialization
a
of Members
4
2
5
3
4
4
4
5
4
5
3
5
6
3
3
3
3
3
40
8
20
9
32
12
20
25
16
15
9
20
18
12
9
9
9
12
c,d,g,h
a,d
a,b,d,g,h
d,f,j
d,f,j
d,f,i,j
a,d,g,i
a,d,f,i
d,f,g,i
d,e,f,g,i
d,i
f,g,i,k
f,g,I,k
f,g,i
f,j,i
f,j,i
f,j,i
f,j,i
a = financial analysis specialist, b = counsel, c = project economist, d = senior energy specialist, e = environment
specialist, f = senior project officer, g = project analyst, h = senior social development specialist, i = social
safeguard officer, j = operations officer, k = senior procurement officer.
I.
PROJECT DESCRIPTION
1.
Until 2012, Cambodia’s power sector was fragmented, with only 10 of 24 provinces
connected to the national grid and the remaining 14 operated as isolated power systems
centered in various provincial cities. The lack of an integrated high-voltage transmission system,
coupled with the high cost of imported diesel fuel, had made electricity in Cambodia among the
costliest in the world1. The government recognizes that the high cost and inadequate supply of
electricity significantly limits economic growth and poses a hindrance in attracting investment
and stimulating economic activity. To address this issue, the Asian Development Bank (ADB),
the Nordic Development Fund and the World Bank provided assistance to Cambodia in building
230-kilovolt (kV) backbone transmission lines2 in the southern part of the country, originating at
a substation on the border with Viet Nam and passing through Takeo to Kampot in the south
before heading north to Phnom Penh. These facilities have allowed Electricité du Cambodge
(EDC), a state-owned utility, to import lower-cost electricity from Viet Nam to meet the power
demand in Phnom Penh, Takeo, and Kampot.3
2.
Sihanoukville is a fast-growing city with major developments to expand its port facilities,
upgrade the existing airport, and set up a special economic zone, thus making it an import
gateway to Cambodia’s southern economic corridor. Prior to the Second Power Transmission
and Distribution Project,4 there were no power transmission facilities connecting Sihanoukville to
the national grid; the city obtained its power from a small, isolated power system based on
diesel generators. This mode of power generation is expensive and inefficient, and was
incapable of meeting the rapidly growing demand for electricity in the city. The main objective of
the project was therefore to complement previous investments in power transmission and
distribution facilities, in particular the extension of the national grid from Kampot to Sihanoukville
to meet growing demand and to provide distribution capacity for the proposed bulk electricity
generating facilities in Sihanoukville and adjacent areas along the transmission corridor.
3.
The project, which was appraised during 25–28 April 2006, had two major components:
(i) infrastructure, and (ii) institutional strengthening and capacity building. The project comprised
four outputs: (i) construction of a 230 kV transmission line from Kampot to Sihanoukville, (ii)
construction of 230kV substations and expansion of an existing 230 kV substation, (iii)
construction of a medium- and low-voltage distribution system, and (iv) capacity building
programs to improve EDC’s performance. The project had a regional cooperation focus, with its
outputs forming part of the transmission backbone between Cambodia and Viet Nam. The
project has enabled EDC to provide the southern provinces with reliable and affordable
electricity from the lowest-cost source of power. The project has also contributed to the
economic development of the Greater Mekong Subregion (GMS) Southern Economic Corridor
by providing basic economic infrastructure. The provision of firm and reliable supply of electricity
to Sihanoukville has therefore replaced the low-efficiency and high-cost diesel generating plants.
1
Commercial and industrial users were charged $0.21/kWh, and residential users $0.10/kWh. In comparison, the
average retail tariffs in the Lao People’s Democratic Republic, Thailand, and Viet Nam were around $0.04/kWh,
$0.07/ kWh, and $0.06/ kWh, respectively.
2
ADB. 2003. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Kingdom
of Cambodia for the Second Power Transmission and Distribution Project. Manila (Loan 2052-CAM).
3
The cost, which was originally as low as $0.05 per kilowatt-hour (kWh), is currently $0.09 per kWh.
4
ADB. 2006. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Kingdom
of Cambodia for the Second Power Transmission and Distribution Project. Manila (Loan 2261-CAM).
2
II.
A.
EVALUATION OF DESIGN AND IMPLEMENTATION
Relevance of Design and Formulation
4.
The project was formulated to address the power sector issues identified during
appraisal while meeting the government’s development objectives. In its National Strategic
Development Plan, 2006–2010, the government recognized the importance of developing the
energy sector and electricity network to promote socioeconomic development and reduce
poverty.5 One of the most important aspects of the government’s economic policy as outlined in
the development plan was developing the energy sector to respond effectively to the increasing
needs for low-cost electricity. Energy sector development remains an important component of
the Rectangular Strategy for Growth, Employment, Equity and Efficiency: Phase III, 2013–2018,
the government’s current development strategy. 6 In particular, the government prioritizes
increasing electricity supply capacity, reducing tariffs to an appropriate level, and expanding the
national grid electricity infrastructure into rural areas while strengthening institutional
mechanisms and management capability. The government’s power sector development strategy
aims to provide adequate, reliable, and stable power supply at affordable prices throughout the
country, and it sets two goals for rural electrification: (i) all villages have access to electricity of
some type by 2020, and (ii) at least 70% of all households have access to grid-quality electricity
by 2030.7
5.
At the time of appraisal, the project was in line with ADB’s country strategy and program
for Cambodia, 2005–2009, which indicated that adequate supply of reliable and affordable
power is a prerequisite for private sector-led economic growth.8 ADB assistance during 2005–
2009 focused on expanding power generation and transmission and distribution systems as well
as improving sector performance and operational efficiency through institutional strengthening
and capacity building. The project was included in ADB’s lending pipeline for 2006. The country
partnership strategy, 2014–2018 supports the government’s economic reform priorities and
embeds Strategy 2020’s three strategic agendas of inclusive economic growth, environmentally
sustainable growth, and regional integration into ADB operations in Cambodia.9
6.
ADB approved a project preparatory technical assistance in 2003 to assist the
government in preparing a feasibility study for the expansion of Cambodia’s power transmission
network in the southern part of the country, including constructing a new 230 kV transmission
line linking Cambodia and Viet Nam to allow Cambodia to import reliable low-cost power.10 The
first component of this technical assistance entailed a feasibility study of the GMS Transmission
Project,11 and the second component was a feasibility study of the Second Power Transmission
and Distribution Project. 12 The technical assistance was rated satisfactory. In 2010, the
5
Government of Cambodia, Ministry of Planning. 2005. National Strategic Development Plan, 2006–2010. Phnom
Penh.
6
Government of Cambodia, Ministry of Planning. 2013. Rectangular Strategy for Growth, Employment, Equity and
Efficiency: Phase III, 2013–2018. Phnom Penh.
7
Government of Cambodia. 2011. Strategy and Plan for Development of Rural Electrification in the Kingdom of
Cambodia. Phnom Penh.
8
ADB. 2005. Country Strategy and Program: Cambodia, 2005–2009. Manila.
9
ADB. 2014. Country Partnership Strategy: Cambodia, 2014–2018. Manila; ADB. 2008. Strategy 2020: The LongTerm Strategic Framework of the Asian Development Bank, 2008–2020. Manila.
10
ADB. 2003. Technical Assistance to Cambodia for Preparing the Power Distribution and Greater Mekong
Subregion Transmission Project. Manila (TA 4078-CAM).
11
ADB. 2003. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the
Kingdom of Cambodia for the Greater Mekong Subregion Transmission Project. Manila (Loan 2052-CAM).
12
ADB. 2006. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the
Kingdom of Cambodia for the Second Power Transmission and Distribution Project. Manila (Loan 2261-CAM).
3
electrical load in Sihanoukville was growing fast due to several economic development projects
such as an industrial zone, a special economic zone, and increased activities related to the
expansion of Sihanoukville port. A feasibility study conducted in 2010 by EDC found that a
voltage level of 115 kV was more economical than 22 kV for bulk supply to Sihanoukville to
meet power demand; ADB subsequently approved a change in scope to the project to reflect
this.
B.
Project Outputs
Transmission line. At appraisal, it was envisaged that the Japan International
7.
Cooperation Agency (JICA) would finance the 88-kilometer (km), 230 kV double-circuit
transmission line from Kampot to the proposed 230 kV substations at Veal Renh and
Sihanoukville (Stung Hav commune). Two changes were made to this transmission line
subsequent to appraisal: (i) the proposed 230 kV Veal Renh substation was dropped, as
forecasted demand growth in Veal Renh area did not warrant construction of 230 kV of capacity;
and (ii) the transmission line route was modified in some locations due to difficulties in acquiring
the necessary land. As built, the total length of the 230 kV transmission line is about 82 km.
8.
At appraisal, it was assumed that 22 kV distribution lines would be constructed from the
proposed 230 kV Stung Hav substation to Sihanoukville city and beyond. Subsequent analysis
by EDC indicated that forecasted demand growth in and around the city and the port supported
construction of a 115 kV substation close to the center of demand growth. A feasibility study
was commissioned in 2010 under the loan (conducted by the project implementation
consultants), and a decision was made to use 115 kV as a sub-transmission voltage level at a
new substation in Sihanoukville. JICA agreed to finance the 12 km double-circuit 115 kV line
from the Stung Hav 230 kV substation to this new 115 kV substation.
9.
Substations. At appraisal, it was planned to (i) extend the Kampot 230 kV substation
(by adding two 230 kV line bays to cater for the new transmission line to Sihanoukville), (ii)
construct a new 230 kV substation at Veal Renh, and (iii) construct a new 230 kV substation at
Stung Hav. However, as earlier mentioned, two modifications were subsequently made to this
investment program: (i) the proposed Veal Renh substation was dropped (para. 7); and (ii) the
revised projection of demand growth in Sihanoukville supported the introduction of 115 kV as a
sub-transmission voltage, with the concomitant requirement to build a 115 kV substation close
to the load center in Sihanoukville (para. 8).
10.
Medium-voltage distribution system. At appraisal, only broad conceptual designs for
medium- and low-voltage distribution systems were prepared. At that time, it was envisaged that
all areas along the corridor of the 230 kV transmission line would be supplied at 22 kV and that
connections would be made to the existing 22 kV networks in the area. Approximately 40 km of
22 kV transmission lines were constructed under the contract. EDC used its own funds to
connect all people living along the transmission line route to the grid.
11.
Consultants. Consulting services covered detailed design; implementation supervision
costs; project management and monitoring, land acquisition, resettlement, environmental
mitigation, monitoring, training for EDC staff in environmental management, and resettlement
implementation.
12.
Capacity building programs. Four distinct capacity building programs were included at
appraisal: (i) strengthening of EDC’s provisional operational capability (primarily to improve the
technical skill base so that more autonomy from EDC’s head office would be possible); (ii)
4
training in maintenance and operation of high-voltage transmission systems; (iii) improvement in
EDC’s data management system through the procurement of hardware and software to
establish a consolidated data platform, including reliable backup systems and improved
communication systems between headquarters and branches; and (iv) training of EDC staff in
the management of social, resettlement, and environmental issues by financing higher-level
education for two social and environmental specialists from existing EDC staff.
13.
These four capacity building programs were all delivered. Staff members at EDC’s
Kampot and Sihanoukville branches attended routine training programs on operation and
maintenance at EDC’s training center as part of its annual cycle of professional development.
Two EDC staff members completed master’s degrees in social and environmental fields at the
Asian Institute of Technology in Thailand. JICA loan financed training programs in operations
and maintenance of high-voltage systems for about 70 EDC staff. A consolidated data platform
including reliable backup systems was established to improve communication systems between
EDC headquarters and branches.
C.
Project Costs
14.
At appraisal, the project was estimated to cost $52.36 million. Foreign exchange cost
accounted for $31.59 million (approximately 60% of the estimated total), including $0.33 million
for interest during construction. Local currency cost was estimated at $20.77 million (40% of the
estimated cost). ADB was to provide a loan for the equivalent of $20.0 million from its Special
Funds resources to finance 38% of the project cost. A loan from the Japan Bank for
International Cooperation (JBIC), which was called Japan International Cooperation Agency
(JICA) loan after JBIC and JICA merged to form JICA, was planned to cofinance the equivalent
of $22.3 million (43% of the project cost). The government and EDC were to fund the balance of
$10.06 million of domestic currency costs (representing 19% of total project costs).
15.
At project completion, the project cost totaled $66.2 million, of which ADB financed $20.6
million (31%), JICA $28.8 million (43%), and EDC and the government the balance of $16.8
million (26%). The government’s contribution was for taxes and duties, and EDC funded land
acquisition. The major differences between appraisal cost estimates and actual costs were (i)
the dropping of the Veal Renh 230 kV substation (with an estimated cost at appraisal of $12.7
million); (ii) the addition of a 115 kV sub-transmission in Sihanoukville (with an actual additional
cost of approximately $14.9 million, including the substation and line works); and (iii) a
significant increase in land acquisition costs ($3.3 million), which was due to the high land cost
for the new 115 kV substation in Sihanoukville city.
16.
Comparisons of contract costs at appraisal versus actual costs were made difficult due
to significant variations that were made to the scope of work. For example, at appraisal it was
envisaged that separate turnkey contracts would be awarded for the 230 kV lines and for the 22
kV and 0.4 kV lines. Appraisal cost estimates also considered that the 230 kV line would loop
into and out of the substation to be constructed at Veal Renh, but this substation was dropped
(after appraisal but prior to a contract being signed for the 230 kV lines). A single contract was
ultimately awarded to cover both the 230 kV lines and 22 kV lines. When the decision was made
to introduce 115 kV as a sub-transmission voltage in Sihanoukville, construction of a 12 km,
115 kV line was added to the contractor’s scope of work. The total cost of line construction for
the 230 kV, 115 kV, and 22 kV transmission lines was $31.9 million, against $25.5 million
estimated at appraisal. However, it can be estimated that implementation delays increased the
cost of the transmission and distribution lines by approximately $4 million, and of the 230 kV
substation by approximately $3 million.
5
D.
Disbursements
Loan proceeds were disbursed in accordance with ADB’s Loan Disbursement Handbook
17.
(2015, as amended from time to time). However, loan proceeds were disbursed more slowly
than envisaged at appraisal, when it had been assumed that disbursements would be
completed in 2010.13 In practice, due to delays brought about by delayed loan effectiveness,
late recruitment of project implementation consultants, and delayed engagement of main
contractors and execution of works, no disbursement was made until March 2009, and none
until 2011 for civil works. An imprest fund was not used. ADB canceled the loan balance of
SDR0.33 on the closing date of 10 March 2015, reducing the size of the loan to
SDR13,518,999.67.
E.
Project Schedule
18.
The ADB loan was approved by the Board on 4 October 2006. The loan agreement was
signed on 1 December 2006. However, the loan did not become effective until 29 January 2008
after two extensions (a 13-month delay from the original schedule) due to noncompliance with
two conditions of loan effectiveness (para. 23). Based on reasonable progress toward achieving
these conditions, the Board approved on a no-objection basis the request for waiver of these
loan effectiveness conditions on 14 January 2008. The original loan closing date of 31
December 2010 was also extended two times, finally closing on 30 November 2014.
19.
At appraisal, the project was estimated to be implemented over 4 years from the date of
loan effectiveness (which was expected to be the first quarter of 2007). Advance recruitment of
project implementation consultants was anticipated in the schedule, which planned for the
consultants to be ready to commence preparation of detailed designs and bidding documents by
the start of the second quarter of 2007. Procurement was expected to commence in mid-2007,
with construction starting in the second quarter of 2008 and concluding at the end of 2009.
Testing and commissioning was scheduled for the first half of 2010, with all project assets in
service by the middle of that year.
20.
The actual project schedule differed materially. Advance action for procurement and
recruitment of consultants was not implemented to the extent envisaged at appraisal; project
implementation consultant proposals were not submitted to ADB until December 2007, and the
technical evaluation report was not submitted until June 2008. A contract was finally signed with
the project implementation consultants in December 2008, 21 months later than anticipated at
appraisal. Procurement of turnkey contracts was also delayed by the need to acquire additional
supporting documents on bidders’ qualifications and experiences, as well as the processing of
numerous representations from bidders.14 The completion of construction of transmission lines
was delayed due to the additional works related to the 115 kV line, and the construction of
substations was delayed by slow land acquisition for the 115 kV substation at Sihanoukville.
F.
Implementation Arrangements
21.
As envisaged at appraisal, the project was implemented by EDC, the project’s executing
agency. Project management capacity and permanent institutional arrangements established
13
14
The projected and actual disbursements are shown in Appendix 4.
The contract award for the transmission and distribution lines took 30 months, and the contract award for
substations took 30 months.
6
during the GMS Transmission Project loan (footnote 10) were adopted and worked well. The
director of EDC’s Corporate Planning and Projects Department headed EDC’s two permanent
project management offices. The first project management office undertook daily project
management activities with the support of the project implementation consultants, while the
second managed other projects financed by bilateral development partners. The first project
management office, which was headed by a senior engineer and supported by a number of
experienced engineers and construction site supervisors, was responsible for coordinating
implementation activities with relevant departments and offices within EDC. EDC’s Social,
Environment and Public Relations Office was responsible for implementing environmental and
social safeguards aspects. Financial management arrangements were implemented as planned,
and the minor change in project scope did not cause any change in implementation
arrangements.
G.
Conditions and Covenants
In addition to the usual loan effectiveness conditions,15 there were two other conditions:
22.
(i) the government should allocate additional funds from the budget to the Ministry of Economy
and Finance (MEF) to enable it to offset the past-due input value-added tax (VAT) owed by EDC
to the government’s Customs and Tax Department; and (ii) the government should allocate
additional funds from the budget to the MEF to offset accounts receivable from government
institutions and agencies, and local authorities. The MEF confirmed that these two budget items
would be submitted by the government to the National Assembly in early 2008. Based on this
rationale, the Board approved on a no-objection basis the request for waiver of loan
effectiveness conditions on 14 January 2008.
23.
Major loan covenants were generally complied with, and the following key financial
covenants were complied with: (i) minimum debt service coverage ratio, (ii) debt–equity ratio, (iii)
revenue breakeven, and (iv) accounts receivable. Submission of the (i) audited financial
statements for the project account, (ii) auditor’s opinion on compliance with financial covenants,
(iii) management letter, and (iv) audited financial statements for EDC operations was also
complied with. However, one financial covenant (offset of the input VAT owed by EDC to the
government) and one sector covenant (annual submission of power development plans) were
only partially complied with. The MEF had offset all past-due input VAT owed by EDC to the
government against EDC’s liability on VAT, but EDC was unable to pass on the newly imposed
VAT to its customers. However, this partial compliance did not affect EDC’s financial
performance. Similarly, the partial compliance with a sector covenant did not affect power sector
planning, as EDC submitted power development plans when updates were required, although
not annually. For consistency with financial loan covenants as required in the loan and project
agreements for the other two ongoing projects,16 the MEF, EDC, and ADB agreed to amend
several financial covenants in the loan and project agreements for the Second Power
Transmission and Distribution Project loan.17 The amendments, which were effective from 26
November 2014, did not affect EDC’s financial performance until the project completion date.
Details of compliance with the key loan covenants are in Appendix 7.
15
Conditions covering the cofinancing arrangement, subsidiary loan agreement, and legal opinions.
ADB. 2012. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the
Kingdom of Cambodia for the Medium-Voltage Sub-Transmission Expansion Sector Project. Manila (Loan 2979CAM); ADB. 2013. Report and Recommendation of the President to the Board of Directors: Proposed
Administration of Grant to the Kingdom of Cambodia: Rural Energy Project. Manila (Grant 0336-CAM).
17
These financial covenants includes those related to EDC’s net revenues, EDC’s funds from internal sources, EDC’s
debt–equity ratio, and EDC’s accounts receivable.
16
7
H.
Consultant Recruitment and Procurement
1.
Consultant Recruitment
24.
Project implementation consultants were financed under the ADB loan and were
recruited in accordance with ADB’s Guidelines on the Use of Consultants (2013, as amended
from time to time) to assist EDC with the engineering design, procurement, construction
supervision, final testing, and commissioning of the works. The quality- and cost-based
selection method with full technical proposal was used and found to be appropriate for this
consulting services contract. At appraisal, the consultants were expected to be fielded by March
2007. Although advance procurement action was approved by ADB, the contract was not signed
with a consultant until December 2008. This was mainly due to a delay in submission of an
evaluation report to ADB, which had resulted from the executing agency’s unfamiliarity with
ADB’s consultant recruitment procedures and the process of preparing an evaluation report. At
appraisal, approximately 40 person-months of international and 45 person-months of national
consultant inputs were envisaged. Actual project implementation consultant inputs totaled 69
person-months of international and 64 person-months of domestic consultant inputs. The
increase in project implementation consultants’ inputs was mainly due to additional design
works and implementation delays.
2.
Procurement
25.
The procurement of goods and services under the ADB-funded project components was
carried out in accordance with ADB’s Procurement Guidelines (2015, as amended from time to
time), while procurement of goods and services under the JICA-funded components was carried
out in accordance with JICA’s own procurement procedures. At appraisal, procurement of works
under the ADB-funded project components was planned to be covered by a single turnkey
contract for new 230 kV substations at Veal Renh and Stung Hav and extension of the existing
230 kV Kampot substation. As requested by EDC, the Veal Renh substation was dropped
during the preliminary design stage and was not included in the turnkey contract. ADB loan
proceeds were also used to procure hardware and software for EDC’s data management
system.
26.
Turnkey contract for ADB-funded 230-kilovolt substations. Preparation of bidding
documents started later than expected at appraisal as a consequence of delayed recruitment of
the implementation consultants. The pre-bid meeting was held for this contract in late November
2009, and the deadline for submission of bids was set for 9 February 2009 (after one extension).
While 10 bids were received, four bidders failed to submit the proper bid security and had their
bids rejected. Only six technical bids were therefore opened. Bid evaluation for this turnkey
contract package was time-consuming due to a need to seek bidders’ clarifications and
additional supporting documents on bidders’ qualifications and experience, resulting in only one
bid being deemed responsive. The financial proposal for the only responsive bid was opened on
22 October 2010, and a contract was awarded on 30 December 2010, 30 months later than the
time envisaged at appraisal.
27.
Turnkey contract for Japan International Cooperation Agency-funded 230-kilovolt
transmission line and 22-kilovolt distribution lines (later amended to include 115-kilovolt
transmission line). The bidding process for this package also started late due to the late
engagement of the implementation consultants. A pre-bid meeting was held in January 2010
and was attended by 13 firms, of which 12 firms submitted bids. The bid evaluation committee
ultimately deemed that only two bids were substantially responsive, and the financial proposals
8
of the two responsive bidders were opened. A letter of acceptance was issued to the selected
bidder on 11 February 2011 and a contract was signed soon thereafter, some 32 months later
than envisaged at appraisal.
28.
The need to provide 115 kV transmission facilities into Sihanoukville from Stung Hav
substation was discussed and agreed with ADB in August 2011. The preference to contract
directly with the contractor for the 230 kV transmission and distribution lines was also agreed,
and the contractor was requested to submit a price proposal in December 2011. The
contractor’s price was accepted and a contract amendment to cover 115 kV line works was
signed on 4 June 2012.
29.
Turkey contract for ADB-funded 115-kilovolt substations. The addition of 115 kV
facilities was agreed with ADB in August 2011 (para. 29). Funds previously earmarked for the
canceled Veal Renh 230 kV substation were made available for a new 115 kV substation in
Sihanoukville and for a 115 kV extension at the Stung Hav 230 kV substation. A pre-bid meeting
was held on 15 November 2011 and bids were received and opened on 16 December 2011. Six
bids were received, but ultimately only two bids were deemed substantially responsive. A bid
evaluation report was submitted to ADB on 13 March 2012 and a contract was signed with the
successful bidder on 3 May 2012.
30.
Electricité du Cambodge’s data management system. A contract for the delivery and
installment of EDC’s data management system was signed on 21 March 2012. Due to the delay
in the construction of EDC's branch in the Russey Keo district—the location for data recovery as
defined in the contract—installment of the equipment was also delayed and only completed in
March 2014.
I.
Performance of Consultants, Contractors, and Suppliers
Consultants. Consulting services covered engineering design, preparation and
31.
evaluation of bidding documents, supervision of project implementation, and technical support
and training of EDC staff. The project implementation consultants followed their terms of
reference and provided all staff inputs as required in their contract. EDC used the services of
the consultants judiciously (particularly for works supervision, which EDC felt that it had the
capacity and competency to handle), which reserved consultants’ resources for tasks that
required expertise outside of EDC’s skill set. EDC was satisfied with the consultants’
performance.
32.
Contractors. JICA-funded transmission and distribution lines constructed under the
project were in service by April 2013 (230 kV and 22 kV) and August 2014 (115 kV). EDC and
the implementation consultants considered the contractors’ work and performance to be good.
The major delay in contract implementation was caused by the need to alter the 230 kV line
route, a process that added almost 12 months to the implementation time frame but was outside
of the contractor’s control. The delays in paying compensation to the affected persons also
caused delays in construction of the transmission and distribution lines. The transmission and
bulk distribution lines are of an acceptable quality and meet the technical specifications. Overall,
the performance of the contractors was rated satisfactory.
33.
The overall performance of both the 230 kV substation contractor and the 115 kV
contractor was also rated satisfactory. EDC noted good cooperation and responsiveness from
both contractors, and no major design issues were encountered. Again, delays were largely
outside of the contractors’ control; in the case of the 115 kV Sihanoukville substation, the need
9
to change the location after the original site proved to have poor soil conditions delayed the start
of construction by more than 6 months while the new site was acquired. Otherwise, work
programs were generally on schedule and issues were resolved in a timely manner with
adequate resourcing from both contractors.
34.
Suppliers. Supply and installation of a data recovery system was straightforward and
was rated satisfactory.
J.
Performance of the Borrower and the Executing Agency
35.
EDC successfully implemented the project with support and advisory services from the
implementation consultants. EDC acted as both employer and as project manager of the three
main turnkey contracts and mobilized its own engineers to monitor work progress at the project
sites on a daily basis. Project implementation consultants’ inputs were used only when critical
engineering supervising works were required. This highlighted a marked increase in EDC’s
confidence to supervise construction works, which is a positive indicator of EDC’s improved
technical capacity compared to EDC’s works on previous ADB-financed projects. Government
and EDC counterpart funds were made available on a timely basis and resettlement activities
were carried out in accordance with the resettlement plan. The performance of the borrower and
executing agency is rated satisfactory.
K.
Performance of the Asian Development Bank
36.
The project was originally administered from ADB headquarters, but administration was
transferred to the Cambodia Resident Mission in April 2012 to allow for closer monitoring and
timely follow-up actions and necessary assistance. ADB had four project officers involved during
project implementation and conducted 13 review missions and special loan administration
missions. The missions included site visits and meetings in Phnom Penh, Kampot, and
Sihanoukville with project stakeholders. The government and EDC recognized the positive role
that the ADB missions played in providing (i) advice on technical issues; (ii) assistance with the
preparation and evaluation of bid documents; and (iii) close monitoring by ADB, including
participation in a number of monthly progress meetings after the project administration was
delegated to the resident mission. Overall, the performance of ADB is rated satisfactory.
III.
A.
EVALUATION OF PERFORMANCE
Relevance
As appraised, the project was consistent with the government’s development goals for
37.
the energy sector, in particular the desire to (i) provide access to electricity to all villages by
2020, and (ii) provide at least 70% of all households with access to grid-quality electricity by
2030. As Cambodia’s only deepwater port, Sihanoukville is significant to the country’s economy,
and provision of high-voltage transmission capacity to the city should catalyze further
investment and economic growth in Sihanoukville. Demand for electricity in the city has already
increased sharply over the last ten years, even though a few large electricity consumers still
choose to generate their own power rather than take supply from EDC. Once EDC
demonstrates that it is able to continue to provide high-quality and secure supply to the city,
there will likely be further rapid growth in electricity demand.
38.
The primary function of the transmission facilities built under the project is now materially
different to that envisaged at appraisal. Instead of delivering grid electricity to Sihanoukville,
10
which was the main project rationale articulated at appraisal, the 230 kV transmission line and
substation are now mainly used to export coal-fired electricity to Phnom Penh via Kampot.
Arguably, this is even more relevant to the government’s development goals for the energy
sector, particularly the desire to provide an adequate supply of energy throughout the country.
To date, 360 megawatts of privately owned base-load plant have been commissioned in
Sihanoukville, representing around 20% of the country’s available generating capacity. Almost
500 megawatts are expected to be in service by the end of 2017. This capacity will underpin
EDC’s and the government’s plans for grid expansion. It will also allow the country to reduce its
dependence on importation of electricity from Viet Nam during the dry season and to replace old
and inefficient diesel and fuel-oil plants. The project is therefore rated relevant.
B.
Effectiveness in Achieving Outcome
39.
The project substantially achieved the outcome18 envisaged at appraisal. However, the
performance indicators for the project’s outcome and purpose set low performance targets. The
first outcome indicator was that there would be an increase in 230 kV transmission lines,
substations, and distribution facilities in Sihanoukville. However, this outcome indicator lacked a
quantitative baseline and the desired increase was not realized, making a meaningful and
objective assessment impossible. The second outcome indicator was that there would be a
125% increase in EDC’s energy sales in the project area from project appraisal (2006) to project
completion (2010). The project was not completed until 2014, by which time EDC’s annual
electricity sales were 600% higher than in 2006. Assessing this performance on the basis of
annual demand growth indicates that the target was easily surpassed. The third outcome
indicator referred to the number of customer connections, but no baseline was provided and the
target was rather ambiguous, with reference only given to the number of customers served by
the “power grid.” The fourth indicator referred to EDC’s performance against covenanted
financial ratios and against a distribution loss cap of 16%. However, because the financial ratios
and distribution losses relate to EDC as a whole, there is no apparent link between the outcome
and the fourth outcome indicator. Therefore, even though the performance targets were met, no
inference of project effectiveness can be drawn.
40.
Given that the desired outcome was strengthening of the power grid and distribution
facilities and improved operational efficiency, peak demand served and a measure of network
reliability performance for Sihanoukville would have provided more meaningful performance
targets. In light of the substantially different primary function of the transmission facilities than
that identified at appraisal (para. 39), indicators related to transmission capacity, availability,
stability, and losses are more relevant to effectiveness of the new transmission assets. The
project are effectively delivering desired outcome by increasing the energy consumption in
Sihanoukville from 20 GWh in 2005 to 141 GWh in 2014. Since 2009, there has been
continuous improvement in all of EDC’s operational and financial performance indicators.
Currently, EDC readily exceeds the requirements of the financial covenants and distribution loss
is kept at less than 16%. EDC’s ongoing training program has continually improved the mediumand low-voltage operation and maintenance capacity of branch staff. The project is therefore
rated effective.
18
The national backbone 230 kV power grid and associated distribution facilities in the southern region are expanded
and strengthened, and EDC’s operation efficiency and performance are improved.
11
C.
Efficiency in Achieving Outcome and Outputs
41.
The project was assessed as providing adequate financial returns to EDC, with a
financial internal rate of return (FIRR) of 13.2% at appraisal. The change in primary function of
the transmission assets constructed by the project, from importation of electricity to
Sihanoukville to export of electricity to Phnom Penh, has materially increased the project’s
returns. At appraisal, the project’s financial benefits were taken to be an increase in electricity
sales due to load growth in Sihanoukville and savings due to electricity loss reduction in the
project area. However, the commissioning of new base-load generation in Sihanoukville has
meant that the new transmission facilities have enabled EDC to increase electricity sales in
Phnom Penh in addition to increasing sales in Sihanoukville. On this basis, the project’s FIRR at
project completion is estimated to be 25.9%, which is well above the project’s weighted average
cost of capital (estimated at appraisal to be 4.3%).
42.
At appraisal, an investment time-slice approach was used to estimate the economic
return for the project, with an assumption that a small-scale diesel plant would be constructed in
Sihanoukville to meet demand in the “without project” case. This approach is invalid for two
reasons: (i) the development of base-load generation in Sihanoukville appears not to have been
considered, even though this is identified as likely in the power sector assessment that was
prepared during appraisal; and (ii) the use of an alternative “next best” scenario in the “without
project” case means that an equalizing discount rate rather than an internal rate of return was
calculated. Therefore, the project’s economic performance has been reevaluated using a
simplified approach and recognizing the following benefits: (i) displacement of electricity
importation from Viet Nam (a resource cost saving), (ii) displacement of output from inefficient
diesel and heavy fuel oil generating stations in Sihanoukville and Phnom Penh and a fuel oil
plant in Phnom Penh (a resource cost saving), and (iii) induced consumption from newly
connected and existing customers in Phnom Penh and Sihanoukville (incremental output). A
high economic internal rate of return (EIRR) of 61% has been estimated, because connecting
Sihanoukville to the national grid allows for the dispatch of relatively cheap base-load coal-fired
electricity to the Phnom Penh load center.
43.
The project’s FIRR and EIRR are substantially higher than hurdle rates, and the project
had achieved its outcome and outputs. This is despite actual capital costs being 26% higher
than estimated at appraisal (an increase partially attributable to a change in project scope and
partially attributable to a material increase in land acquisition costs). Appendix 8 provides details
of the methodology and assumptions underlying the FIRR and EIRR calculations. The project is
therefore rated efficient.
D.
Preliminary Assessment of Sustainability
44.
At the asset level, during and after the project, EDC’s ability to maintain its transmission
and distribution assets and to operate them efficiently has improved significantly, and many new
head office and regional staff have gained invaluable experience in this area. The construction
of three base-load power stations in Sihanoukville means that the transmission facilities have a
somewhat diversified customer base. Rapid demand growth in Sihanoukville over the last ten
years, far outstripping demand forecasts prepared at appraisal, indicates that the transmission
and distribution capacity provided will be fully utilized.
45.
At the system level, the project forms an important network link that materially improves
system stability and operational flexibility. EDC’s financial performance and position are
relatively strong, and the increase in profitable electricity sales enabled by the project is
12
expected to provide further improvements. At the country level, the connection of the new baseload generation in Sihanoukville has relieved Cambodia’s dependence of electricity imports from
Viet Nam, particularly during the dry season. Although the primary fuel for the new generation
(coal) is imported, a degree of increased energy independence has been achieved as a
consequence of the new transmission capacity. The import of electricity from Viet Nam is
expected to continue to be required, particularly during the dry season, when the output from
Cambodia’s run-of-river hydropower stations is reduced. At a regional level, ongoing
transmission projects will further strengthen the national grid across the country, thereby
enhancing prospects for meaningful GMS power trade and further underpinning the
sustainability of the project. EDC staff members who received training under this project have
contributed to enhancing EDC’s operations and maintenance capabilities. The ongoing MediumVoltage Sub-Transmission Expansion Sector Project (footnote 15) will support the operational
integration of the Department of Rural Electrification Fund, which was established in 2012, and
strengthen the institutional capacity of EDC’s provincial branches. The project is rated likely
sustainable.
E.
Impact
46.
The project impacts identified at appraisal were (i) extension of the national power grid;
(ii) provision of reliable, adequate, and affordable electricity; and (iii) improvement in quality of
power supply in the southern region. The indicators for these impacts were (i) an increase in the
household electrification ratio from 17% in 2005 to 30% in 2010, (ii) a decrease in the average
tariff in the Sihanoukville from $0.13/kWh–$0.20/kWh in 2005 to $0.08/kWh by 2010; and (iii) all
towns and villages along the transmission line have access to electricity from the national power
grid. The first indicator was achieved by 2010 even though the project was not completed until
2014, suggesting that this was not a suitable indicator for the project’s impact. The second
indicator has not been and is very unlikely to be achieved; the basis for such a low tariff
expectation was not provided at appraisal and appears to reflect an aspirational tariff target
rather than one reflective of costs of supply and the need to provide for EDC’s ongoing financial
viability. The third indicator has been achieved, but given that provision of medium- and lowvoltage circuits along the transmission line route was part of the project design, this appears to
be a poor choice as an indicator of the project’s impact.
47.
The impacts identified at appraisal have been achieved. Connection to the national grid
has meant that consumers in and around Sihanoukville now have access to electricity procured
and dispatched on a least-cost basis, resulting in a significant decline in end-use tariffs by as
much as $0.05/kWh. Supply is more reliable and of a higher quality as well, benefiting from grid
generation reserves and abundant transmission capacity. Confidence in EDC’s ability to
maintain supply is expected to encourage a number of large commercial and industrial
electricity consumers to cease self-generating and instead connect to EDC’s network, which will
enhance EDC’s revenues to the ultimate benefit of all customers. Operational efficiency has
increased across EDC’s network as a consequence of the new base-load generation in
Sihanoukville, and the cost of supply in Sihanoukville has decreased significantly now that
inefficient diesel generators have been taken out of service.
48.
The project was classified as category B for environmental impacts. ADB’s Environment
Policy (2002) was applied and an adequate summary initial environmental examination was
disclosed at the time of approval. The initial environmental assessment noted that special
attention was given to the assessment of the project alignment, which was expected to traverse
the buffer zone of Bokor National Park. Detailed planning of the 230 kV route along the narrow
coastal strip between the steep mountain slopes in Bokor National Park and the Gulf of Thailand
13
resulted in the selection of a low-impact transmission line route with minimal biophysical and
social impacts, despite a 20.3 km section crossing the edge of the Bokor National Park buffer
zone. The route through the national park was selected over alternatives across the coastal
plain because it would (i) create the least visual impact, (ii) cross fewer tidal areas, (iii) involve
the resettlement of the fewest households, and (iv) provide greater line reliability due to lower
salt pollution of the line. To minimize adverse environmental impacts, the transmission line route
was actually constructed to traverse across orchard land and paddy fields, instead of traversing
across the degraded and regrowth forest in the park buffer zone as planned at appraisal. Visual
impact was minimized by locating the route close to the change of slope at the rear of the
coastal plains and by avoiding ridgelines whenever possible.
49.
Although the transmission line route was selected to minimize resettlement impacts,
445 households were affected along the route, with 12 requiring resettlement. A comprehensive
resettlement plan that fulfilled government requirements to finalize resettlement and
compensation arrangements prior to project implementation was prepared and updated during
project implementation when detailed design was completed. EDC’s ongoing recognition of and
commitment to its resettlement activities under this and other projects are reflected in the
strengthening of its internal resources to manage the process. A total of 887,000 square meters
of land was acquired for the project, and approximately 1,658 square meters of structures and
around 53,000 trees were affected. All affected persons were compensated according to the
entitlements provided for in the resettlement plan, and adequate consultations took place during
preparation of the resettlement plan and throughout implementation. The resettlement and
compensation process was independently monitored by an external monitoring agency. There
were some complaints raised during implementation of the resettlement plan as reported by the
external monitoring agency, but the complaints were satisfactorily addressed in accordance with
the grievance redress mechanism. The resettlement cost increased sharply mainly because
EDC used its counterpart budget to purchase land for the 115 kV substation in Sihanoukville
since the government land originally reserved for this substation was not technically suitable.
The project did not affect any indigenous peoples or ethnic minorities.
IV.
A.
OVERALL ASSESSMENT AND RECOMMENDATIONS
Overall Assessment
50.
The project was generally implemented in accordance with arrangements identified
during appraisal and, with the exception of initial implementation delays, has generally
performed beyond expectations identified at appraisal. Visits to project sites during the project
completion review noted that the project facilities are of high quality, are being well maintained,
and are functioning without interruption. The adequacy of project design, implementation
arrangements, and the performance of the borrower and ADB were also assessed and
discussed with EDC, the MEF, the Ministry of Mines and Energy, the Electricity Authority of
Cambodia, and JICA. The addition of a 115 kV transmission line and substation late in project
implementation was a minor change in scope, yet the project’s design was sufficiently flexible to
accommodate this change.
51.
Although forming only one link in Cambodia’s national grid, the impact of the project on
the country’s economy is expected to be very significant. Provision of a reliable and cheaper
electricity supply in Sihanoukville stands to catalyze much needed investment in Sihanoukville,
including the special economic zone. The city has great importance as the country’s only
deepwater port, and further development of the port is very likely now that the prerequisite
reliable power supply is in place. The extent to which electricity sales have already increased in
14
Sihanoukville provides an indication of the suppressed demand for electricity in the city, and
demand growth rates will possibly further accelerate as EDC demonstrates that the improved
electricity supply is permanent. In Phnom Penh, the project’s impact is also evident in the sharp
increase in electricity sales seen subsequent to the project’s commissioning in 2014. Given that
this demand was either not being met or was being met from expensive alternative fuel sources,
the economic impact of this increase in electricity consumption is significant, with the estimated
EIRR providing evidence of this economic impact (para. 42). Based on the review of its
relevance, effectiveness, efficiency, and sustainability, the project is rated successful.
B.
Lessons
52.
There were implementation delays during the initial period of the project, especially in
achieving loan effectiveness, recruiting implementation consultants, and awarding contracts.
These delays occurred even though advance procurement action had been approved. To
minimize delays in achieving loan effectiveness, it is recommended that the practicalities of
achieving all proposed loan effectiveness conditions are reviewed and discussed with the
borrower and the executing agency during appraisal. To address start-up issues, ADB should
assist the executing agency with the implementation of project start-up tasks such as consultant
recruitment and the preparation of comprehensive feasibility studies and detailed engineering
designs.
53.
The delegation of project administration responsibilities to the resident mission during
the project helped facilitate close working relationships between ADB staff and key government
and EDC officials. The experience EDC gained from this project and the relationships that have
developed between the resident mission and government counterparts should greatly benefit
any future project.
C.
Recommendations
1.
Project Related
54.
Context of investment. There was an apparent disconnect between the sector
assessment undertaken during appraisal, which identifies the likely development of base-load
generation in Sihanoukville, and the project rationale and design (and in the appraisal
documents), which do not reflect this (para. 42). It is recommended that for future electricity
transmission investments, the short- and long-term planning contexts of the project are fully
articulated, and realistic alternatives to the project are explored.
55.
Project financial reports. The audited project accounts that are part of the financial
reporting requirements disclose sources of funds (ADB, JICA, and counterpart) and
expenditures by disbursement category (civil works, consultants, etc.). The project accounts are
prepared in US dollars, but they do not account for such relevant MEF transactions as interest
charges and debt service. They also do not include information on cofunded project
expenditures. Rather, the expenditure details mirror ADB’s own internal disbursement record
rather than detailing investments made by asset or type of asset. This complicates calculation of
actual expenditures on a component-by-component basis. It is recommended that EDC detail all
project transactions and reconcile them against the asset values in local currency in EDC’s
asset register. This would provide ADB with a more complete financial report on the project and
show what assets and expenses have been funded by the disbursements. The requirements of
ADB should have been explained to EDC during project preparation to clarify the scope of the
audited project financial statements.
15
56.
Prequalification of bidders. Evaluation of bids took far longer than expected and
delayed subsequent activities. To reduce the likelihood of delays, it is recommended that
prequalification activities include strict verification of the certificates such as the completion and
operational acceptance certificates submitted by the bidders, authentication of the references
submitted by the bidders, and evaluation of the complete list of key personnel.
57.
Bid evaluation. To reduce the bid evaluation time frame, it is recommended that
substantial technical documents such as technical data sheets, drawings, process descriptions,
and manuals be scrutinized in parallel to the formal checks regarding bid completeness.
58.
Design process. The lengthy detailed engineering design process was the source of
significant implementation delays. To reduce delays, the following measures are recommended:
(i) establish a regular meeting cycle between the employer, the contractor, and the
implementation consultant; (ii) agree and fix dates for the submission of comments from the
employer and the consultant, and the resubmission of designs from the contractor; and (iii) insist
that the contractor's designers are present for technical discussions with the employer to avoid
miscommunication and a fragmented approval process.
2.
General
59.
Evaluation of capacity building. The project succeeded in improving EDC’s ability to
design and implement a major project. EDC’s judicious use of the project implementation
consultants is also worthy of recognition (para. 31). Capacity building of the executing agency is
often identified as a desired outcome from investment projects, but objective targets and
indicators to measure the extent of capacity building are seldom adopted. It is therefore
recommended that capacity building impacts and outcomes are given greater consideration in
project design and monitoring frameworks, particularly following project implementation and in
follow-on projects.
60.
Design and monitoring framework. A number of indicators were not measurable, as
data were either not available or not regularly updated by relevant government agencies. In
addition, some targets were either too high or too low and used absolute dates rather than
relative time frames, making objective evaluation of project performance difficult. It is therefore
suggested that during appraisal missions, a group of key stakeholders—particularly technical
specialists and those whose performance will be measured by the design and monitoring
framework—be convened to arrive at a consensus on the appropriate indicators, realistic targets,
and data sources. Project delays should be taken into account so they do not invalidate
indicators and targets, and project performance and the selected indicators and targets should
be correlated.
16
Appendix 1
DESIGN AND MONITORING FRAMEWORK
Design
Summary
Impact
The national power
grid in the region is
extended, and
provides reliable,
adequate, and
affordable electricity
The quality of
power supply in the
southern region
improves
Outcome
The national
backbone 230 kV
power grid and
associated
distribution facilities
in the southern
region are
expanded and
strengthened, and
EDC’s operation
efficiency and
performance are
improved
Performance
Indicators/
Targets
5 years after
project completion
• Electrification
ratio by
population
increases from
17% in 2005 to
30% in 2010
• The average tariff
in Sihanoukville
is reduced from
the current
$0.13/kWh–
$0.20/kWh to
$0.08/kWh by
2010
• All towns and
villages along the
transmission line
have access to
the national
power grid
After project
completion
• There is an
increase in 230
kV transmission
lines,
substations, and
distribution
facilities in project
area
• EDC energy
sales and
consumption in
the project area
increase from 20
GWh to 45 GWh
• About 25,000
people are
served by the
power grid
• EDC’s financial
ratios targets are
fully met, and
Data
Sources/Reporti
ng Mechanisms
Assumptions
and Risks
Achievements
Assumptions
• Country
economic and
power sector
analysis reports
• Socioeconomic
statistics of
provinces and
districts
• Project inception,
progress, and
completion
reports
• Consultants’
survey reports
• The government
will implement
other committed
infrastructure
projects as
planned.
• Electricity supply
is available from
Viet Nam and
large generation
sources.
• Tariff set for
electricity is
affordable and
financially and
economically
viable.
• Electrification
ratio
(households) was
31.1% by the end
of 2010 and
51.0% by the end
of 2013.
• Tariffs for gridconnected
customers in
Sihanoukville are
currently
$0.18/kWh–
$0.26/kWh. An
average tariff of
$0.08/kWh is not
credible and has
no stated basis.
• All towns and
villages along the
transmission line
route have
access to grid
electricity.
Assumptions
• EDC annual
report, financial
statements, and
project accounts
• Project inception
and completion
reports
• Project
performance
monitoring and
evaluation
system
• Consumers are
willing to connect
to the power grid
and pay the grid
connection
charges.
• Adequate power
supply is
available from
associated
generation
sources.
• EDC has
adequate
institutional
capacity.
• The government
comprehensively
implements the
EDC financial
action plan. The
• 82 km of 230 kV
transmission line
were constructed
along with a new
230 kV
substation at
Stung Hav and
an extension to
the 230 kV
substation at
Kampot.
• In 2014, EDC
sold 141 GWh of
electricity to
14,000
customers in
Sihanoukville.
The number of
customers had
increased to
15,500 by
Appendix 1
Design
Summary
Performance
Indicators/
Targets
Data
Sources/Reporti
ng Mechanisms
distribution loss is
kept at less than
16%
Outputs
1. 230 kV
transmission lines
from Kampot to
Sihanoukville are
fully operational
2. Three new
substations are fully
functional
3. Associated
medium- and lowvoltage distributions
system are
established along
the 230 kV
transmission
corridor
4. Capacity building
to improve EDC’s
performance is fully
implemented
• 230 kV doublecircuit
transmission
lines are
extended by 78
km.
• New 230 kV
substations are
erected at Veal
Renh and
Sihanoukville,
and the Kampot
substation is
expanded.
• Medium- and
low-voltage
distribution
facilities are
erected in vicinity
of the
transmission
corridor
• All affected
households have
been
compensated,
resettled, and
rehabilitated
according to
approved
resettlement
plans
• Recommended
environmental
mitigation
Assumptions
and Risks
cumulative
arrears from
government
agencies are fully
paid by the
government, and
other sector
improvement
measures are
implemented as
committed.
• EDC annual
report, financial
statements, and
project accounts
• Project inception
and completion
reports
• Project
administration
memorandum
• Project progress
reports
• Project review
missions
• Training manuals
• Audited financial
reports of EDC
Assumption
• Counterpart funds
are available on
time.
Risks
• There are delays
in the approval of
loan documents
and procurement.
• Implementation
of social and
environmental
mitigation
measures is
delayed.
17
Achievements
October 2015.
• All loan financial
ratio covenants
have been met.
EDC has
consistently
lowered
distribution
losses and
achieved overall
losses of less
than 15% at
project
completion.
• 82 km of 230 kV
transmission line
were constructed.
• A 230 kV
substation was
erected at
Sihanoukville and
the Kampot 230
kV substation
was extended,
but the Veal
Renh substation
was dropped
from the
investment due to
insufficient
electricity
demand in the
Veal Renh area.
• Medium-voltage
lines (40 km)
were erected
areas along the
transmission
corridor using
loan proceeds.
EDC constructed
low-voltage
circuits using
proceeds from
other projects
and its own
funds. Rural
electricity
enterprises also
constructed some
18
Appendix 1
Design
Summary
Performance
Indicators/
Targets
Data
Sources/Reporti
ng Mechanisms
Assumptions
and Risks
measures are
well implemented
• The operation
and maintenance
capacity of EDC’s
branches at
Kampot and
Sihanoukville is
strengthened
• Training
programs for
EDC staff are
fully implemented
Activities with Milestones
• Consulting services for project implementation: commenced from January 2007
• Detailed design and bidding documents: completed by September 2007
• Resettlement implementation: completed by June 2008
• Civil works on 230 kV transmission line and substations: contract awarded by March
2008 and works completed by December 2009
• Civil works on distribution system: contract awarded by January 2009 and works
completed by December 2009
• EDC capacity-building activities and training: completed by December 2009
• Capacity-building training to improve awareness of social, resettlement, and
environmental safeguards: completed by 2007
• Awareness training in sexually transmitted diseases and/or HIV/AIDS and trafficking
among contractors and local communities: before contractors are mobilized
Achievements
low-voltage lines.
• 445 households
were affected by
the project and a
total of $1.85
million was paid
out in
compensation.
• Environmental
mitigation
measures were
well
implemented.
• EDC’s ongoing
training program
has continually
improved the
medium- and
low-voltage
operation and
maintenance
capacity of
branch staff.
• Project
implementation
consultant
commenced
services in
January 2009.
• Bidding
documents for
230 kV works
were completed
in late 2009.
Bidding
documents for
115 kV works
(which replaced
the canceled 230
kV Veal Renh
substation) were
completed in late
2011.
• Resettlement
implementation
was completed
by the end of
2011 for the 230
kV line and by
the end of 2013
Appendix 1
Design
Summary
Performance
Indicators/
Targets
Data
Sources/Reporti
ng Mechanisms
Assumptions
and Risks
19
Achievements
for the 115 kV
line.
• A turnkey
contract for 230
kV substations
was awarded in
late December
2010, and the
turnkey contract
for the 230 kV
and 22 kV lines
(later extended to
include the 115
kV line) was
awarded in early
February 2011.
230 kV line works
were completed
by February
2013, 115 kV line
works by
February 2014,
and 230 kV
substation works
by January 2013.
A contract for 115
kV substations
was awarded in
mid-2012 and
works were
completed by
December 2013.
• Training and
capacity-building
activities were
completed
satisfactorily by
the end of 2013.
Inputs
• ADB loan of $20 million
• Government counterpart funds of $10.06 million
• JICA loan of $22.3 million
• ADB loan amount
was $20.61
million.
• Government and
EDC counterpart
funding was
$16.84 million.
• JICA loan
amount was
$28.74 million.
ADB = Asian Development Bank, EDC = Electricité du Cambodge, GWh = gigawatt-hour, JICA = Japan International
Cooperation Agency, km = kilometer, kV = kilovolt, kWh = kilowatt-hour.
Source: ADB.
20
Appendix 2
APPRAISAL AND ACTUAL PROJECT COSTS
($ million)
Item
Appraisal Estimate
Actual
Foreign
Exchange
Local
Currency
Total
Foreign
Exchange
Local
Currency
Total
2.27
0.40
2.67
3.12
0.41
3.53
14.81
7.31
22.12
22.95
3.40
26.35
3. Substation at Veal Renh
6.91
5.77
12.68
0
0
0
4. Terminal substation (Stung Hav)
2.83
2.37
5.20
6.08
1.53
7.61
5. MLV distribution system
0.63
2.73
3.36
2.77
0.44
3.21
6. Consulting services
2.32
0.34
2.66
2.56
0.03
2.59
a. Resettlement
0
0.65
0.65
0
1.85
1.85
A. Infrastructure Components
1. Line bay (Kampot substation)
2. 220 kV line, Kampot to Sihanoukville
7. Project management and monitoring
b. Land acquisition
0
0.34
0.34
0
3.64
3.64
c. Environmental management and
monitoring
0
0.56
0.56
0
0.56
0.56
d. Other monitoring activities
0
0.28
0.28
0
0
0
8. 115 kV Sihanoukville substation and
extension at Stung Hav
0
0
0
9.78
2.73
12.51
9. 115k V line (terminal substation–
Sihanoukville 115 kV Substation)
0
0
0
2.02
0.29
2.31
29.77
20.76
50.53
49.28
14.88
64.16
1. Strengthening of EDC provincial branches
0.13
0
0.13
0.25
0
0.25
2. Improvement of EDC information system
0.54
0
0.54
0.57
0
0.57
3. EDC training in high-voltage systems
0.50
0
0.50
0.46
0
0.46
4. EDC training in social, resettlement, and
environmental management issues
0.32
0
0.32
0
0
0
1.49
0
1.49
1.27
0.00
1.27
31.26
20.76
52.02
50.55
14.88
65.43
0.33
0
0.33
0.76
0
0.76
31.59
20.76
52.36
EDC = Electricité du Cambodge, kV = kilovolt, MLV = medium and low voltage.
Note: Numbers may not sum precisely because of rounding.
Source: EDC and Asian Development Bank.
51.31
14.88
66.19
Additional Infrastructure Components (Not
Included at Appraisal)
Subtotal (A)
B. Capacity-Building Components
Subtotal (B)
Total Project Costs
Interest during construction
Total Costs to be Financed
Appendix 3
CURRENCY EQUIVALENTS
(Annual averages)
Year
2008
2009
2010
2011
2012
2013
2014
2015
Source: Asian Development Bank.
KRs = $1.00
4,081.00
4,169.00
4,056.00
4,036.83
3,995.00
3,995.00
4,068.00
4,053.95
21
22
Appendix 4
PROJECTED AND ACTUAL DISBURSEMENTS
($ million)
Year
Projected
Actual
2006
0.000
0.000
2007
0.370
0.000
2008
2.058
0.000
2009
6.507
0.280
2010
7.533
0.671
2011
2.230
1.108
2012
0.000
5.838
2013
0.000
4.887
2014
0.000
7.042
2015
0.000
0.792
Total
18.698
20.618
Source: Asian Development Bank.
Appendix 5
PROJECT IMPLEMENTATION SCHEDULE
ID
Task
2006
2007
2008
2009
2010
2011
2012
2013
2014
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
A.
Loan Approval
O
A
B.
Loan Effectiveness
O
A
C.
Advance Procurement of Consultants
O
A
D.
Appoint Implementation Consultants
O
A
E.
Detailed Design
O
A
F.
Prepare and Approve Bid Documents
O
A
G.
Resettlement Implementation and Monitoring O
A
H.
Civil Works
1. Transmission line bidding
and contract award
O
A
a. RP updated and approval
O
A
b. Construction
O
A
2. Substations
Bidding and contract award
O
A
a. RP updated and approval
O
b. Construction
O
A
O
A
O
A
O
A
O
A
O
A
3. 22 kV distribution system
4. Tests/commissioning
5. Completion of installation
I.
Capacity-Building Activities
J.
Loan Closing Date
A = actual, O = original, kV = kilovolt, RP = resettlement plan.
Sources: Asian Development Bank and Electricité du Cambodge.
23
24
Appendix 6
PROJECT ORGANIZATION CHART
Government of Cambodia Delegate in
Charge of Managing Electricité du Cambodge
Deputy Managing Director
of Finance and Business
Deputy Managing
Director of
Planning and Technique
In-House Adviser
Executive Director,
Corporate Planning and
Projects Department
Executive Director,
Finance and Accounting
Department
Financial Controller
Deputy Managing
Director of
Administration
Project Implementation
Consultants
Head,
Project Management Unit 1 and
Project Manager
Accounting Office
Deputy Project Manager
General
Management Unit
Administration Unit
Procurement Unit
Head,
Environmental and Public
Relations Office
Resettlement and
Environmental Unit
Transmission
Line and Substation
Unit
Supervisor,
Resettlement
Project
Engineering Unit
Supervisor,
Environment
Supervisor,
Medium-voltage
Line
Site Supervisor,
Transmission Line
Site Supervisor,
Transmission Line
Site Supervisor,
Transmission Line
Appendix 7
25
STATUS OF COMPLIANCE WITH LOAN COVENANTS
Covenant
Sector
No later than three (3) months prior to the
commencement of each fiscal year, beginning
with FY 2007, the Borrower shall cause EDC to
furnish to ADB a draft Power Development Plan
setting forth EDC’s power development plans
and investment requirements for the subsequent
ten (10) years, and which plan(s) demonstrate to
the reasonable satisfaction of ADB, inter alia,
that (i) investments are economically and
technically justified and constitute a part of the
least-cost power expansion program; (ii) EDC
has adequate financial and managerial capacity
to undertake each investment without adversely
affecting its current work program, including
timely implementation of the Project; and (iii)
EDC is carrying out the Project in a timely
manner.
Reference in
Loan/
Project
Agreements
Loan
Agreement
(LA),
Schedule 5,
Para. 10
Status of Compliance
Party complied with. Power
development
plans
were
updated
regularly
when
required, but not annually.
Financial
The Borrower shall promptly notify ADB of any LA, Schedule Complied with.
proposal to amend, suspend or repeal any 5, Para. 4
provision of the Governing Laws that would have
a material effect on the operations of EDC and
EDC's ability to comply with the provisions under
this Loan Agreement and the Project
Agreement, and shall afford ADB an adequate
opportunity to comment on such proposal prior
to taking any action thereon.
A minimum debt service coverage ratio of 1.3 is LA, Schedule Complied with. The lowest
achieved in FY 2007 and maintained thereafter.
5, Para. 5(a)
debt service ratio during the
entire
2007-2014
project
implementation period was
2.46 (in FY2008).
A maximum debt to equity ratio (as those terms LA, Schedule Complied with. The highest
are defined in the Project Agreement) of 70:30 5, Para. 5(b)
debt–equity ratio during the
shall be maintained through fiscal year 2010.
entire
2007-2014
project
implementation period was
48:52 (in FY2012).
EDC shall produce a revenue breakeven for FY LA, Schedule Complied with. EDC made
2007, and maintain the revenue breakeven 5, Para. 5(c)
operational benefits during
26
Appendix 7
Covenant
Reference in
Loan/
Project
Agreements
thereafter, such that total operating revenues
are equivalent to or not less than the sum of
total operating expenses less depreciation costs.
Status of Compliance
the entire 2007-2014 project
implementation period.
Total accounts receivable shall be maintained at LA, Schedule Complied with. The highest
a level that does not exceed the equivalent of 5, Para. 5(d)
accounts receivable during
three (3) months' average sales revenue.
the entire 2007-2014 project
implementation period was
2.53 months (in FY2013).
Beginning with the proposed Budget Law for LA, Schedule
2007, and for every fiscal year thereafter, unless 5, Para. 6
otherwise agreed by the Borrower and ADB, the
Borrower
shall
earmark
an
estimated
expenditure, in the contingency line items
(Chapter 40) of the draft Budget Law, equivalent
to input VAT chargeable to EDC as recorded by
the Custom Department against an estimated
amount that the Customs Department would
record as revenue in from VAT. Pursuant to
such budget allocation, the Borrower shall
annually offset against the input VAT owed by
EDC to Customs Department.
Complied with late. The
borrower started earmarking
funds from the budget to
offset the VAT in 2008.
Beginning with the proposed Budget Law for LA, Schedule
2007, and for every fiscal year thereafter, unless 5, Para. 7
otherwise agreed by the Borrower and ADB, the
Borrower
shall
earmark
an
estimated
expenditure, in the contingency line items
(Chapter 40) of the draft Budget Law, equivalent
to the amount levied by Taxation Department for
input VAT against EDC’s liability on interest and
principal payments due the Borrower under
subsidiary loans to EDC using funds provided by
ADB and the World Bank. Pursuant to such
budget allocation, the Borrower shall annually
offset against the input VAT owed by EDC to
Taxation Department.
Partly complied with. The
MEF had offset all past-due
input VAT owed by EDC to
the
government
against
EDC’s liability on VAT, but
EDC was unable to pass on
the newly imposed VAT to its
customers.
Beginning with the proposed Budget Law for LA, Schedule Complied with.
2007, and every fiscal year thereafter, unless 5, Para. 8
otherwise agreed by the Borrower and ADB, the
Borrower shall make a budget estimate for each
fiscal year of the electricity consumption of the
Borrower’s agencies, institutions and local
authorities, taking into account their respective
actual electricity consumption of the previous
Appendix 7
Covenant
Reference in
Loan/
Project
Agreements
27
Status of Compliance
year as calculated by EDC. Using this
calculation, the Borrower shall, three months
prior to the end of the fiscal year, earmark from
a total budget for each agency, institution and
local authority a sufficient amount to meet
expected electricity consumption, and shall
deduct such amount from the respective
budgets for direct payment or credit to EDC. By
30 June 2007 the Borrower shall have used a
similar procedure to pay or credit in full to EDC
the past due arrears of the Borrower’s agencies,
institutions and local authorities for the fiscal
year 2006.
Operational
The Borrower shall ensure that EDC takes all LA, Schedule
necessary action to maintain transmission and 6, Para. 9
distribution losses at a level not exceeding 16%
in FY 2006 and in each subsequent fiscal year.
Complied with. The overall
transmission and distribution
losses during the entire 20072014 project implementation
period were less than 15%.
Social
The Government should ensure that land LA, Schedule Complied with.
acquisition,
compensation,
relocation, 5, Para. 15
resettlement and rehabilitation is carried out in
accordance with the Resettlement Plan (as
updated upon completion of the detailed
measurement survey and a sugar palm/income
restoration study with the study's findings
incorporated into the Resettlement Plan) agreed
upon between the Borrower and the Bank, the
Borrower's laws, regulations, and procedures
and the Bank's requirements as defined in the
Bank's Policy on Involuntary Resettlement and
the Handbook on Resettlement.
Prior to commencement of any resettlement LA, Schedule Complied with.
activities, including the detailed measurement 5, Para. 16
survey, EDC shall engage and mobilize (a)
resettlement specialist consultants (as part of
the Project implementation consultants) to assist
in preparing and implementing the RPs, and (b)
an independent monitoring organization (IMO).
EDC shall appoint at least one full-time
resettlement staff who is a recent social science
graduate (as described in para. 2 of this
28
Appendix 7
Covenant
Reference in
Loan/
Project
Agreements
Status of Compliance
Schedule) and ensure, through its PMU, that
provincial and district resettlement committee
authorities are appointed.
The Borrower shall ensure that EDC has taken LA, Schedule Complied with.
all needed actions to ensure that (a) the 5, Para. 17
resettlement planning and implementation is
carried out promptly and efficiently in
accordance with all Government laws and
regulations, ADB’s Policy on Involuntary
Resettlement, and the approved RPs and RF,
specifically including those special measures
specified in the RP and RF for complementary
mitigation and enhancement activities to assist
socially and economically vulnerable groups,
such as women-headed families, children and
elderly people without support structures, people
living in extreme poverty, and indigenous and
ethnic minorities; (b) all affected people are
given adequate opportunity to participate in
resettlement planning and implementation; (c) all
affected people are compensated and assisted
prior to displacement from their houses, land,
and assets such that they will be at least as well
off as they would have been in the absence of
the Project and the poorest and vulnerable are
assisted to improve their socio-economic status;
(d) implementation of the RPs is monitored by
EDC and provincial resettlement committees,
and by the IMO, and related reports are
submitted to ADB and EDC through the
quarterly monitoring reports as stipulated in the
RP and RF; (e) the RP for the distribution
system is prepared in accordance with the RF,
and disclosed to the affected people before
being submitted to ADB for review and approval;
and (f) each final and updated RP, including
compensation rates, is translated into Khmer
and placed in commune and district offices, and
summaries, in the form of information booklets,
including compensation rates, are distributed to
all affected people.
The Borrower shall ensure that EDC: (a) LA, Schedule Complied with.
allocates and disburses funds needed for land 5, Para. 18
acquisition and resettlement in a timely manner;
(b) the RP is updated and submitted to ADB
Appendix 7
Covenant
Reference in
Loan/
Project
Agreements
29
Status of Compliance
after completing the detailed measurement
surveys and detailed design, and approved by
ADB before it is implemented; and (c) ADB is
promptly advised of any changes in the
resettlement impacts, and if necessary, a
revised RP is submitted to ADB for concurrence.
The Borrower shall ensure timely provision of LA, Schedule Complied with.
counterpart funds to EDC for land acquisition, 5, Para. 19
resettlement and monitoring activities specified
in the RPs, and will meet any unforeseen
obligations in excess of the RP budget estimate
in order to satisfy resettlement objectives. The
Borrower shall ensure that counterpart funds for
compensation and entitlements under the RPs
are fully provided directly to affected people prior
to their displacement from housing and prior to
loss of land, livelihood, income or other assets
or both.
No construction civil works shall commence in a LA, Schedule Complied with.
specified geographic area prior to EDC having 5, Para. 20
satisfactorily completed in that area, and in
accordance
with
the
approved
RP,
compensation payment and relocation, if any,
and having ensured that all rehabilitation
assistance to Project affected persons is in
place and that the specified geographic area
required for civil works is free of all
encumbrances.
The Borrower shall provide to the IMO, at no LA, Schedule Complied with.
cost, all documents required to monitor the 5, Para. 21
resettlement process, specifically including the
RPs, RF, Detailed Measurement Survey
documents, signed agreements with affected
people, and all associated documents which
may be requested by the IMO.
The Borrower shall ensure that EDC includes LA, Schedule Complied with.
the following conditions in the civil works 5, Para. 21
contract documents: (i) mandatory provisions on
health, sanitation and appropriate working
conditions, including accommodation, for
construction workers at campsites during the
construction period; (ii) requirements that the
contractor comply with all applicable labor laws,
30
Appendix 7
Covenant
Reference in
Loan/
Project
Agreements
Status of Compliance
including elimination of gender differentiated
employment conditions, wages or food rations,
and that it will not employ child labor in
construction activities; (iii) employment targets
for women; (iv) appropriate child care facilities in
campsites with women employees will be
provided; and (v) requirements that the
contractor will carry out, through a budgeted line
item for a qualified NGO or other appropriate
body, a dissemination campaign or campaigns
on the risks of sexually transmitted diseases
(including HIV/AIDS), and on the risks of
trafficking women and children, to (a) those
employed during Project implementation and (b)
communities in the Project area.
Environmental
The Borrower shall ensure that its laws and LA, Schedule Complied with.
regulations governing environmental impact 5, Para. 11
assessments, as well as ADB's Environment
Policy (2002), are followed. If there is any
discrepancy between the Borrower’s laws and
regulations, and ADB's Environment Policy, then
the ADB Policy requirements shall apply.
The Borrower shall ensure that the contract LA, Schedule Complied with.
documents for all civil works under the Project 5, Para. 12
include specific measures in accordance with
ADB's Environment Policy to mitigate negative
environmental
impacts
caused
by
the
construction and to give due consideration to
prevention of damage to the natural environment
in the design, construction, operation and
maintenance of Project facilities.
The Borrower shall ensure that EDC implements LA, Schedule Complied with.
the Environmental Management Plan (EMP) for 5, Para. 12
the Project, based on the IEE, ensuring that
there are adequate budget and staff resources.
The Borrower shall ensure that the Project
complies with best environmental practices and
meets
the
mitigation
and
monitoring
requirements in a timely manner as described in
the IEE and prevents damage to the natural
environment as a result of the design,
construction, operation and maintenance of
Project facilities. The Borrower and EDC shall
Appendix 7
Covenant
Reference in
Loan/
Project
Agreements
Status of Compliance
cause (i) the contractors engaged under the civil
works contracts to comply strictly with all
environmental impact mitigation and monitoring
requirements set out in the contract documents,
and (ii) the consultants engaged for construction
supervision to monitor closely the compliance by
the contractors with the environmental impact
mitigation and monitoring requirements.
Monitoring
The Borrower shall ensure that EDC conducts LA, Schedule Complied with.
performance monitoring using agreed upon and 5, Para. 23
measurable performance targets utilizing EDC’s
customer database, with a separate category for
poor consumers (defined as those utilizing 50
kilowatt hours of electricity per month or less).
Efficiencies in utilities operations shall be
measured by data on distribution losses, energy
sales, employee-customer ratio, and average
cost of service. Monitoring of EDC’s
Sihanoukville
branch
shall
include
an
assessment of the effectiveness of demand
management and consumer services.
Project Implementation
EDC shall ensure that throughout Project LA, Schedule Complied with.
implementation the PMU shall be headed by a 5, Para. 1
senior staff member with experience and
qualifications acceptable to ADB as Project
Manager, and shall further include an adequate
number of suitably qualified and experienced
administrative and technical staff assigned on a
full-time basis who are experienced in previous
ADB-financed transmission line projects. EDC
will assign at least three experienced and
qualified engineers on a full-time basis to liaise
and
work
with
Project
implementation
consultants.
By 30 June 2007 EDC shall have appointed two LA, Schedule Complied with.
recent graduates in environmental and social 5, Para. 2
science (or other disciplinary area as agreed by
ADB) assigned to the EDC social and
environment unit.
The PMU shall manage and supervise the
31
LA, Schedule Complied with.
32
Appendix 7
Reference in
Loan/
Covenant
Project
Agreements
Project and shall assign appropriate qualified 5, Para. 3
resettlement staff for the periods necessary and
with responsibilities for social issues, including
(i) resettlement planning and management, (ii)
HIV/AIDS awareness program, (iii) poverty and
social impact assessments, and (iv) labor
practices.
Status of Compliance
EDC simultaneously submits within six (6) LA, Schedule Complied with.
months after the end of the fiscal year: (i) 5, Para. 29(a)
audited annual Project accounts (APA) which
provide a detailed description of source of funds
and expenditures made; and (ii) audited
corporate financial statements (CFS) which
include statements of income and expenditures,
assets and liabilities with notes to the accounts
and cash flows.
The auditors shall be required to provide an LA, Schedule Complied with.
opinion on EDC's compliance with the financial 5, Para. 29(d)
covenants in [the] Loan Agreement and the
Project Agreement.
The Borrower shall ensure that EDC prepares LA, Schedule Complied with.
regular progress reports for submission to ADB 5, Para. 30
on a quarterly basis.
The Borrower shall establish committees on LA, Schedule Complied with.
procurement in accordance with the Borrower’s 5, Para. 26
Procurement Manual (2005), which shall
supervise the entire procurement process. The
Major Committee on Procurement, as defined by
the Procurement Manual, shall be established
by 31 March 2007 and chaired by a
representative from EDC.
Particular
In the carrying out of the Project and operation
of the Project facilities, the Borrower shall
perform, or cause to be performed, all
obligations set forth in Schedule 5 to this Loan
Agreement.
The Borrower shall enable ADB’s
representatives to inspect the Project, the
Goods or Works financed out of the proceeds of
the Loan, and any relevant records and
LA, Article IV, Complied with.
Section 4.01
LA, Article IV, Complied with.
Section 4.02
Appendix 7
Covenant
Reference in
Loan/
Project
Agreements
33
Status of Compliance
documents.
The Borrower shall take all action which shall be
necessary on its part to enable EDC 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.
LA, Article IV, Complied with.
Section 4.03
The Borrower shall exercise its rights
under the Subsidiary Loan Agreement in such a
manner as to protect the interests of the
Borrower and ADB and to accomplish the
purposes of the Loan.
LA, Article IV, Complied with.
Section 4.04.
(a)
No rights or obligations under the Subsidiary
Loan Agreement shall be assigned, amended, or
waived without the prior concurrence of ADB.
LA, Article IV, Complied with.
Section 4.04.
(b)
EDC = Electricité du Cambodge, MEF = Ministry of Economy and Finance, VAT = value-added tax.
Source: EDC and MEF.
34
Appendix 8
FINANCIAL AND ECONOMIC REEVALUATION
A.
General
1.
This financial and economic reevaluation considers the total project investment as a
whole. The reevaluation is based on estimated cost and benefit streams expressed in constant
2014 dollars. Figures from the appraisal, which were expressed in 2006 values, have been
adjusted to 2014 values for the purpose of comparison. Financial and economic evaluation
models from appraisal were not available in a useable form, requiring new models to be created
for this reevaluation.
2.
All investment funded by the project has been completed and the facilities have been in
operation since mid-2014. The bulk of the investment (68%) is in electricity transmission
facilities connecting Sihanoukville to the national grid via existing 230-kilovolt (kV) facilities at
Kampot. The balance of the investment (32%) relates to enhancing sub-transmission capacity
into Sihanoukville and building new medium-voltage lines along the transmission line route.
3.
The most significant component of the investment from a financial and economic
viewpoint is the connection of Sihanoukville to Cambodia’s national grid. At appraisal, it was
considered that electricity would be imported into Sihanoukville through the new transmission
facilities, and analysis was undertaken on that basis. In practice, the construction of new largescale coal-fired generation facilities in Sihanoukville (to date, 360 megawatts of privately owned
base-load plant have been commissioned in Sihanoukville, increasing to around 500 megawatts
by mid-2017) means that electricity is being exported from Sihanoukville to the national grid,
necessitating a substantially different approach to conducting financial and economic analysis.
B.
Financial Evaluation
4.
At appraisal, the project’s benefits were taken to be an increase in electricity sales due
to load growth in Sihanoukville and savings due to electricity loss reduction in the project area.
However, because of the development of large-scale generation in Sihnoukville that was not
envisaged at appraisal (para. 3), actual financial benefits from the investment vary significantly
from those estimated at appraisal. In particular, the investment in transmission facilities means
that Electricité du Cambodge (EDC) can increase its electricity sales in Phnom Penh in addition
to increasing sales in Sihanoukville.1 These increases in sales were quantified on the basis of a
revised demand forecast, derived from existing demand and the growth rates estimate at
appraisal, and valued at the prevailing tariffs for Sihanoukville and Phnom Penh. The basis on
which loss reduction was quantified and valued at appraisal is unclear; because this benefit is
expected to be small relative to other benefits, it was excluded from this reevaluation. The
project also allows for substitution of expensive diesel and heavy fuel oil generation with
cheaper generation from Sihanoukville coal plant. However, because end-use tariffs are
adjusted to reflect EDC’s cost of supply, limited financial benefit will accrue to EDC from this
reduction in generation cost and it has therefore been excluded from the financial reevaluation.
5.
As at appraisal, financial costs were taken to be capital and operating costs of the
project facilities, the costs of electricity purchases, and allowance for the capital cost of the
distribution system in Sihanoukville required to meet the forecast demand.
1
It is not required that the transmission capacity constructed under the project be devoted to allowing EDC to
increase sales in Sihanoukville. In practice, however, if not for EDC committing to construct the Kampot–
Sihanoukville transmission connection under the project, the new coal-fired generating plant in Sihanoukville would
not have been financially viable and would therefore have not been built.
Appendix 8
35
6.
The reevaluated financial internal rate of return increased from 13.2% at appraisal to
25.9% at project completion (Table A8.1). The increase is unsurprising given the fundamental
change in the use of the project transmission facilities (from import of electricity into
Sihanoukville to export of electricity from Sihanoukville) between appraisal and project
completion. The increase in financial internal rate of return occurred even though the project
capital cost increased from an estimate of $52.4 million at appraisal to $66.2 million at
completion (a 26% increase due to changes in scope, delays, and higher than expected
resettlement and land acquisition costs).
Table A8.1: Project Financial Performance
Item
At Appraisal
Project financial internal rate of return (%)
Project financial net present value ($ million,
2014)
13.2
96.3
At Project
Completion
25.9
1,102
Source: Asian Development Bank estimates.
C.
Project Economic Evaluation
7.
At appraisal, an investment time-slice approach was used to estimate the economic
return for the project, with an assumption that a small-scale diesel plant would be constructed in
Sihanoukville to meet demand in the “without project” case. This approach has not been
repeated for the purpose of this reevaluation because (i) insufficient detail was available in
appraisal documentation to allow replication; (ii) the use of the alternative (small-scale diesels)
case to represent the “without project” scenario means that the economic internal rate of return
reported at appraisal is actually an equalizing discount rate; and (iii) given the material change
in use of the project facilities between appraisal and completion, a simpler and more transparent
approach to economic analysis is justified.
8.
For this reevaluation, the project’s benefits are (i) displacement of electricity importation
from Viet Nam (a resource cost saving), (ii) displacement of output from inefficient diesel and
heavy fuel oil generating stations in Sihanoukville and Phnom Penh and a fuel oil plant in
Phnom Penh (a resource cost saving), and (iii) induced consumption from newly connected and
existing customers in Phnom Penh and Sihanoukville (incremental output). These benefits were
quantified by developing a simple generation dispatch model for the national grid based on
estimated generation costs. Demand forecasts for Phnom Penh and Sihanoukville were
updated using growth rates assessed at appraisal and actual demand in 2010-2014 (demand
forecasts for Phnom Penh used at appraisal significantly underestimated present day demand).
Induced demand was valued at prevailing tariffs (an average of around $0.15 per kilowatt-hour),
which is a minimum estimate of willingness to pay. Costs include (i) the full project investment of
$54.96 million (expressed in economic terms using the world price numeraire and adopting the
shadow exchange rate factor of 1.1 used at appraisal), (ii) operation and maintenance costs at
2% of capital costs, (iii) the incremental cost of generation (at the estimated economic unit cost
of supply from the Sihanoukville coal-fired plant), and (iv) other costs incurred in serving the
increased sales volume. The project’s economic performance is presented in Table A8.2.
36
Appendix 8
Table A8.2: Project Economic Performance
Item
Project economic internal rate of return (%)
Project economic net present value ($ million,
2014)
At Appraisal
20.9a
At Project
Completion
61.0
740
a
Although not correctly identified at appraisal, this was an equalizing discount rate (between two alternative
development scenarios) rather than an economic internal rate of return. As such, it is not directly comparable with the
economic internal rate of return calculated at project completion.
Source: Asian Development Bank estimates.
9.
The project’s robust economic return of 61% derives from the fact that connection of
Sihanoukville to the national grid allows for the dispatch of relatively cheap base-load coal-fired
electricity to the Phnom Penh load center (as opposed to simply delivering electricity to
Sihanoukville, as was assumed at appraisal). Other investments that have previously been
made in transmission and distribution networks have facilitated this dispatch, even though they
have been treated as sunk costs for the purpose of this analysis. A comprehensive time-slice
analysis of network development over the past 10 years, which is beyond the scope of this
report, would present a more complete and accurate picture of the overall economic
performance of investments in the sector. However, it is clear that the decision to construct the
project facilities was correct from a financial and economic perspective, and will be a critical
component in the development of the national grid over the next 10 years.
Appendix 9
37
RESETTLEMENT ACTIVITIES
A.
Resettlement Plan
1.
Analysis undertaken as part at project appraisal indicated the need for a short resettlement
plan for the 230-kilovolt (kV) transmission line and substations because fewer than 200 persons
were then expected to experience major impacts. According to the resettlement plan prepared in
2006, 731 households are expected to experience either minor or major impacts as result of land
acquisition for right-of-way (ROW). Of these, it was anticipated that only 12 households would
need to move out of the line’s 30-meter right-of-way, of which seven households could move back
on their remaining land outside the right-of-way and five could relocate within their own villages. It
was anticipated that 14 households would also have to relocate their temporary field huts on their
remaining land outside the right-of-way. Only two households were expected to lose land to the
two new substations. Of the rest of the 703 households, 220 were expected to be marginally
affected by a loss of 100 square meters (m2) of land for the transmission line towers. A total of 3.92
hectares of land was anticipated to be permanently acquired. It was also estimated that 3,000 trees
would have to be removed to allow for sufficient vertical clearance for the 230 kV line. For the
medium- and low-voltage facilities, a resettlement framework was prepared at appraisal to guide
the preparation of a short resettlement plan during loan implementation. The project did not affect
any indigenous peoples, ethnic minorities, or cultural sites.
2.
As required under loan covenants, the updated resettlement plan for the Kampot–
Sihanoukville 230 kV transmission line and Sihanoukville (Stung Hav) 230 kV substation was
prepared by Electricité du Cambodge (EDC) and submitted to the Asian Development Bank (ADB)
in July 2012 during project implementation. This updated resettlement plan reflected the
modification of the transmission line route from Kampot to the Stung Hav substation agreed by
EDC in November 2011, which was necessitated due to difficulties in acquiring land and agreeing
on compensation along the original line route. The updated resettlement plan was based on a
detailed technical design and detailed measurement survey (DMS) of losses by the affected
households. Prior to DMS assessment, extensive consultation was carried out by the EDC
resettlement plan working group dedicated to this project. The consultation meetings, which
included question and answer sessions, were attended by affected persons, commune and village
leaders. Key questions raised included replacement costs of affected land or structures, relocation
along the right-of-way, and options for resettlement. Following the public meetings, EDC staff
carried out house-to-house measurements of assets to be lost and updated the DMS database.
Members of EDC’s Provincial Resettlement Sub-Committee actively participated in the DMS and
consultation meetings. EDC assured the affected persons that they would be paid at replacement
or market value and as per the entitlement matrix, which was disclosed to the affected persons.
There were no grievances lodged during the DMS. EDC has established its Provincial
Resettlement Sub-Committees and Grievance Redress Committee in all project provinces. EDC
also conducted short orientation training for field staff at the provincial level to facilitate the
implementation of resettlement work. The EDC working group conducted regular monitoring of all
resettlement implementation work. The DMS resulted in a database that formed the basis for
monitoring of resettlement work. As constructed, the 230 kV transmission line cuts across 2
provinces, 4 districts, 13 communes, and 34 villages. Land acquired for each of the 240
transmission line towers was 225 m2. Land acquired for the Stung Hav 230 kV substation was
62,236 m2. Ultimately, 415 households were affected by the transmission line.
3.
The short resettlement plan for the 115 kV line from Stung Hav substation to the new
115 kV substation in Sihanoukville was prepared by EDC and submitted to ADB in July 2013, and
a revised and final resettlement plan was submitted in March 2014. The total constructed length of
the 115 kV transmission line was 12 kilometers, cutting across one district and one municipality of
38
Appendix 9
Sihanoukville province, two communes, and two villages. Land acquired for each of 32
transmission line towers was 144 m2. Land acquired for the Stung Hav 230 kV substation was
14,500 m2. Ultimately, 30 households were affected by the line and substation. Of the acquired
land, 41% is public and the remaining 59% is private and mainly used for farming (12.5%), village
activities (34.0%), and forest (12.5%).
4.
The project entitlement matrix was designed to comply with ADB’s Policy on Involuntary
Resettlement (1995) and relevant laws and regulations of Cambodia. Resettlement plans detailed
processes and procedures for assessing eligibility and entitlements, consultation, grievance
redress and participation, relocation and rehabilitation, income restoration strategies, and the
institutional framework for implementation. In response to notification from the Prime Minister’s
Office, from December 2010, responsibility for implementation of resettlement activities was
passed from the Inter-Ministerial Resettlement Committee led by the Ministry of Economy and
Finance to EDC. The resettlement process has been independently monitored by an independent
monitoring agency.
B.
Resettlement Impacts
5.
Upon completion of the project, total resettlement impacts were as follows:
Table A9: Resettlement Impacts
Item
Affected households
(number)
Area of land acquisition
(m2)
- for towers and poles
- in right-of-way
- at substation site
Area of affected structures
(m2)
- Type 1a
- Type 2b
Affected trees (number)
2
Transmission
Lines
230 kV
115 kV
415
30
53,920
426,079
4,608
325,323
Substations
230 kV
Total
115 kV
0
0
445
62,236
14,500
58,528
751,402
76,736
75
1,393
0
190
0
0
0
0
75
1,583
52,209
1,155
0
0
53,364
kV = kilovolt, m = square meter.
a
Type 1 structure has thatched, leaf, and/or plastic roof.
b
Type 2 structure has metal and/or fiber cement roof.
c
Type 3 structure has tile roof.
Source: Project implementation consultant’s final report.