Maldives: Preparing Outer Islands for Sustainable Energy Development Project

Sovereign Project | 46122-003

Summary

The proposed Outer Islands for Sustainable Energy Development Project is part of the Scaling Up Renewable Energy Program (SREP) to reduce diesel dependence in the Maldives, improve the electricity sector, and address key macroeconomic issues through tapping into indigenous and cheaper sources of electricity.

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Procurement Documents


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Project Name Preparing Outer Islands for Sustainable Energy Development Project
Project Number 46122-003
Country Maldives
Project Status Approved
Project Type / Modality of Assistance Grant
Loan
Source of Funding / Amount
Grant 0409-MLD: Preparing Outer Islands for Sustainable Energy Development Project
Asian Development Fund US$ 38.00 million
Grant 0410-MLD: Preparing Outer Islands for Sustainable Energy Development Project
Strategic Climate Fund US$ 12.00 million
Loan: Preparing Outer Islands for Sustainable Electricity Development
European Investment Bank US$ 50.00 million
Islamic Development Bank US$ 10.00 million
Grant 0429-MLD: Preparing Outer Islands for Sustainable Energy Development Project
Japan Fund for Joint Crediting Mechanism US$ 5.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector Energy - Conventional energy generation - Energy efficiency and conservation - Renewable energy generation - solar
Gender Equity and Mainstreaming Effective gender mainstreaming
Description The proposed Outer Islands for Sustainable Energy Development Project is part of the Scaling Up Renewable Energy Program (SREP) to reduce diesel dependence in the Maldives, improve the electricity sector, and address key macroeconomic issues through tapping into indigenous and cheaper sources of electricity.
Project Rationale and Linkage to Country/Regional Strategy

The Maldives, located 750 km south west of Sri Lanka, consists of 26 atolls with a total land area of about 300 sq. km. Nearly half the country's population live on the outer islands. The Maldives has about 100 MW of installed diesel generation capacity on the inhabited islands and another 100 MW on the tourism islands. Each outer island is electrified with its own diesel powered mini grid system and while there is 100% access to electricity, supply is not reliable and expensive. The cost of diesel power is unaffordable at 30-70 cents/kWh and requires government subsidies of about $25 million annually. In 2011, Maldives spent $261 million to import 316 thousand tons of oil equivalent (toe) of diesel or nearly 7% of GDP on fuel imports for electricity generation. Electricity sector subsidies are one of four identified areas for government expenditure management. The 100% diesel dependence of Maldives also makes its carbon emissions per unit of electricity among the highest in the region.

The solution to the above problem is to develop renewable energy based generation, the cost of which is expected to be significantly lower than existing diesel based power generation. The transition to renewable energy based systems has sound economic rationale. The Government's effort to increase electricity production from indigenous sources, including solar and wind power, to enhance energy security will reduce the pressure on the balance of payments and improve the fiscal position. The development of renewable energy projects is in line with the Government's goal of going carbon neutral by 2020. To support the Government's goal, the SREP Investment Plan over 2013-2017 was endorsed by the SREP sub-committee on 31 October 2012 to initiate the transformation of the energy sector. Based on the priority requirements identified during the SREP investment planning process, the government developed an investment plan to initiate the transformation from 100% diesel based power systems to renewable energy systems by focusing on about 40 outer islands between 2013-2017 through a public-private partnership approach. SREP funds would be channeled through multi-lateral development banks and would be leveraged with financing from other sources including the private sector.

Private sector development in the renewable energy in the Maldives is constrained by investment perception, nascent regulatory structure and inadequate public sector infrastructure to suitably integrate private sector renewable energy. The electricity sector is regulated by the Maldives Energy Authority that has received support on the energy sector regulatory framework from World Bank and capacity building on technical codes and tariff mechanisms under ADB CDTA. Future areas of support include coordination on model power purchase agreements, identification of sites for private investment, structuring of business models including bundling of outer islands for scale benefits and coordinating on the private sector risk guarantees.

The Project is aligned to ADB's Strategy 2020 of supporting sustainable energy growth, Energy Policy 2009 and is included in the Maldives COBP for 2013-2015. Based on the government's investment plan for the outer islands and the characteristics of the electricity systems, a sector lending approach is proposed to be adopted. Review of policies, institutions, and coordination with other donors would be undertaken during the preparation phase including appraisal for representative sub-projects.

Impact More sustainable energy sector based on renewable resources.
Project Outcome
Description of Outcome Shift towards clean and cost-effective energy sources
Progress Toward Outcome Project is declared effective on 19 January 2015 and implementation is on-going.
Implementation Progress
Description of Project Outputs

1. Renewable-energy-ready grid systems developed for outer islands and greater Male region

2. Enhanced capacity of MEE, STELCO, and FENAKA to implement renewable energy grid interventions

Status of Implementation Progress (Outputs, Activities, and Issues) IFBs have been posted for 2 packages (Lot 1 and Lot 2) and will expire on 20 April 2015.
Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The project is classified environment category B and the initial environment examinations for the sample projects were prepared following ADB s Safeguard Policy Statement (2009), the government s environmental impact assessment guidelines, and related national policies and legislation. Public consultation and information disclosure requirements have been met.
Involuntary Resettlement The project is classified as category B for both involuntary resettlement and C for indigenous peoples. Due diligence conducted on sample subprojects brought out no resettlement impacts and no adverse impacts on indigenous groups. A resettlement framework has been prepared for the project. .
Indigenous Peoples For all the subsequent subprojects that have resettlement impacts, resettlement plans will be prepared in accordance with the safeguard provisions in the resettlement framework. If any changes or additional land requirements or involuntary resettlement impacts are identified during implementation, a resettlement plan will be prepared or modified according to the applicable laws referred to in the resettlement framework. ADB s prior approval will be obtained before further implementation of the relevant subproject
Stakeholder Communication, Participation, and Consultation
During Project Design

Stakeholders including utilities, investors, government, the regulator, financiers and consumers have been periodically consulted during the preparation of the SREP Investment Plan in 2010-2012 and the project preparation phase. MEE will prepare a stakeholder communication strategy and submit to ADB for review in 2015 after effectiveness. Communication will be in language suitable for the specific audience and will follow the ADB Public Communication Policy. The stakeholder strategy will incorporate the following components:

(i) Compilation of stakeholder communication activities already undertaken;

(ii) Public communication plan for disseminating information regarding project development to the public who may be impacted by the proposed projects

(iii) Consultations and disclosure during preparation of future sub project IEE.

During Project Implementation TBD
Business Opportunities
Consulting Services The PMU will be supported by external experts. ADB will recruit the external experts using Quality and Cost based selection (QCBS) with a 90:10 selection criteria. Consultancy services will be procured in accordance with ADB's Guidelines on the Use of Consultants (April 2013, as amended from time to time).
Procurement The government has requested ADB to assist in procuring all project goods, works and services, and to recruit related project management consultancy services. Procurement of goods, works and related services under the project will be processed through a Project Management Unit with review by ADB. The procurement will be carried out in accordance with ADB's Procurement Guidelines (April 2013, as amended from time to time).
Responsible ADB Officer Len V. George
Responsible ADB Department South Asia Department
Responsible ADB Division Energy Division, SARD
Executing Agencies
Ministry of Finance and TreasuryAmeenee Magu
Male'
Republic of the Maldives
Timetable
Concept Clearance 10 Dec 2012
Fact Finding 03 Apr 2014 to 11 Apr 2014
MRM 19 May 2014
Approval 29 Sep 2014
Last Review Mission -
Last PDS Update 27 Mar 2015

Grant 0409-MLD

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Sep 2014 09 Dec 2014 19 Jan 2015 30 Jun 2020 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 52.00 Cumulative Contract Awards
ADB 38.00 29 Sep 2014 0.00 0.00 0%
Counterpart 14.00 Cumulative Disbursements
Cofinancing 0.00 29 Sep 2014 0.00 0.00 0%

Grant 0410-MLD

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Sep 2014 09 Dec 2014 19 Jan 2015 30 Jun 2020 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 12.00 Cumulative Contract Awards
ADB 0.00 29 Sep 2014 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 12.00 29 Sep 2014 0.00 0.00 0%

Grant 0429-MLD

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
19 Mar 2015 - - 31 Dec 2019 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 5.00 Cumulative Contract Awards
ADB 0.00 19 Mar 2015 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 5.00 19 Mar 2015 0.00 0.00 0%

Loan

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 60.00 Cumulative Contract Awards
ADB 0.00 - 0.00 0.00 %
Counterpart 0.00 Cumulative Disbursements
Cofinancing 60.00 - 0.00 0.00 %

Safeguard Documents

See also: Safeguards
Title Document Type Document Date
Preparing Outer Islands for Sustainable Energy Development Environmental Assessment and Review Framework May 2014
Preparing Outer Islands for Sustainable Energy Development Initial Environmental Examination May 2014
Preparing Outer Islands for Sustainable Energy Development Resettlement Frameworks May 2014
Preparing Outer Islands for Sustainable Energy Development: Due Diligence on Resettlement Safeguards Due Diligence Reports May 2014

Evaluation Documents

See also: Independent Evaluation

No documents found.


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