Project Data Sheet

Project Data Sheets (PDS) contain summary information on the project or program: Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

PDS Creation Date
PDS Updated as of 24 Jul 2014

Project Name Pohnpei Power Sector Development Project
Country Micronesia, Federated States of
Project/Program Number 45112-001
Status Proposed
Geographical Location
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.
Sector Energy
Subsector Energy
Strategic Agendas Environmentally sustainable growth (ESG)
Inclusive economic growth (IEG)
Drivers of Change Partnerships (PAR)
Private sector development (PSD)
Gender Equity and Mainstreaming Categories

Financing

Type/Modality of Assistance Approval Number Source of Funding Approved Amount (thousand)
Loan-Ordinary capital resources9,800
Loan-Asian Development Fund4,350
Counterpart 800
TOTAL US$ 14,950

Safeguard Categories

For more information about the safeguard categories, please see http://www.adb.org/site/safeguards/safeguard-categories

Environment B
Involuntary Resettlement B
Indigenous Peoples C

Summary of Environmental and Social Issues

Environmental Aspects
Involuntary Resettlement
Indigenous Peoples

Stakeholder Communication, Participation and Consultation

During Project Design
Potential stakeholders are national and state Government officials, PUC (including Board), FSM Department of Resources and Development, Pohnpei State legislature, civil society organizations, business groups and community groups (including women groups). The PPTA will undertake a social analysis including stakeholder analysis and strategies to enhance benefits to the poor. Consultation through workshops will be undertaken during the implementation of the project preparation TA and project processing. The PPTA will identify stakeholders, undertake consultations during project preparation and identify consultation and communication activities for the project.
During Project Implementation
Consultation and participation plan is not required since a series of consultation workshops are planned during the implementation of the project preparation TA and project processing stage. While a separate consultation and participation plan is not required, necessary consultation and participation measures will be embedded in the safeguard planning documents and PAM, as needed.

Description

The proposed Pohnpei Power Sector Development Project (Project) will support development of the power system of Pohnpei State in order to reduce dependency on imported diesel and improve the quality of power supply. This will be achieved through expansion of renewable power generation and improving the supply side energy efficiency of power generation and distribution.

Project Rationale and Linkage to Country/Regional Strategy

The proposed Pohnpei Power Sector Development Project (Project) will support development of the power system of Pohnpei State in order to reduce dependency on imported diesel and improve the quality of power supply. This will be achieved through expansion of renewable power generation and improving the supply side energy efficiency of power generation and distribution. Pohnpei State (population 36,000) is one of four states located within FSM (population 107,000). Pohnpei State has a single main power grid on the main island of Pohnpei with an installed capacity of 7.6MW of diesel generation (peak load 6.9MW). Approximately 96% of the population of Pohnpei State live on the main island. Access to electricity on the main island is estimated to be over 95%, while access rates in the outer islands are lower and serviced mainly by mini-diesel grids and household solar systems. The power system on the main island of Pohnpei is 100% dependent on imported diesel for power generation. Power is supplied by Pohnpei Utility Corporation (PUC), which is a 100% state own corporatized utility. The power supply in Pohnpei is relatively poor. Poor generator maintenance has resulted in regular power outages, and low diesel generator efficiencies, which has resulted in upward pressure on tariffs. A number of the generators require urgent overhaul and there is insufficient generation capacity to cover unscheduled generator shutdown. The Pohnpei distribution grid (120km, 13.8kV) has relatively high technical losses (estimated 16%). Consumer energy efficiency, particularly in Government buildings is relatively low . The power tariff in Pohnpei consists of (i) base tariff to cover all operating and maintenance expenditure, and (ii) automatically adjusted fuel surcharge which covers fuel expenditure. The base tariff is insufficient to cover routine maintenance costs and has not been increased since 1994. Due to high diesel transportation costs, power tariffs are high and the Pohnpei State economy is highly vulnerable to fuel price shocks. In 2009, Pohnpei State average power tariff was $0.40/kWh (generation cost $0.43/kWh). Pohnpei has the only terrain and climatic conditions suitable for hydropower in the Federated States of Micronesia (FSM). The Nanpil Hydropower Plant (2.08MW) was constructed in the 1990 s, however is currently non-operational and requires rehabilitation. It is estimated that Nanpil Hydropower Plant has the potential to replace up to 7% of Pohnpei s diesel generated power. The Pohnpei Government has indicated that the preferred management structure for the Nanpil Hydropower Plant is under an Independent Power Producer (IPP). Various reports dating back to the 1980 s indicate a potential for 5-6MW additional hydropower on Pohnpei. The Project is proposing to (i) provide technical support for rehabilitation of existing hydropower, (ii) provide technical support for construction of new hydropower, (iii) improve efficiency of diesel generation, (iv) improve supply side efficiencies through distribution upgrades, and (v) support tariff reform. Through improved energy efficiency and conversion to renewable energy, it is estimated that Pohnpei will reduce diesel consumption for power generation by up to 20%. The proposed project is in line with the (i) ADB country operations business plan (COBP) 2011-2013 for FSM, which prioritizes energy as a key area of support, and (ii) draft FSM National Energy Policy, 2011 , which includes the draft Pohnpei State Energy Action Plan. The draft National Energy Policy sets a national renewable energy generation target of 30% by 2020. All components are priority activities listed in the draft Pohnpei State Energy Action Plan.

Development Impact

Energy security of Pohnpei has improved

Project Outcome

Description of Outcome
Pohnpei Utility Corporation has increased supply of reliable, cleaner power
Progress Towards Outcome

Outputs and Implementation Progress

Description of Project Outputs
1. PUC expands hydropower generation 2. PUC improves efficiencies of diesel power generation 3. PUC improve efficiencies of power distribution systems 4. Pohnpei State implements tariff reform 5. Efficient project management services
Status of Implementation Progress (Outputs, Activities, and Issues)
Status of Development Objectives
Material Changes

Business Opportunities

Date of First Listing
Consulting Services
Procurement
Procurement and Consulting Notices
http://www.adb.org/projects/45112-001/business-opportunities

Timetable

Concept Clearance 13 May 2011
Fact-finding 07 May 2012 to 16 May 2012
Management Review Meeting 16 Jun 2014
Approval
Last Review Mission

Milestones

Approval No. Approval Signing Effectivity Closing
Original Revised Actual

Utilization

Date Approval Number ADB (US$ thousand) Others (US$ thousand) Net Percentage
Cumulative Contract Awards
Cumulative Disbursements

Status of Covenants

Covenants are categorized under the following categories—audited accounts, safeguards, social, sector, financial, economic, and others. Covenant compliance is rated by category by applying the following criteria: (i) Satisfactory—all covenants in the category are being complied with, with a maximum of one exception allowed, (ii) Partly Satisfactory—a maximum of two covenants in the category are not being complied with, (iii) Unsatisfactory—three or more covenants in the category are not being complied with. As per the 2011 Public Communications Policy, covenant compliance ratings for Project Financial Statements apply only to projects whose invitation for negotiation falls after 2 April 2012.

Approval No. Category
Sector Social Financial Economic Others Safeguards Project Financial Statements
Loan -

Contacts and Update Details

Responsible ADB Officer Woo Lee (wylee@adb.org)
Responsible ADB Department Pacific Department
Responsible ADB Divisions Transport, Energy and Natural Resources Division, PARD
Executing Agencies

Links

Project Website http://www.adb.org/projects/45112-001/main
List of Project Documents http://www.adb.org/projects/45112-001/documents