|Project Rationale and Linkage to Country/Regional Strategy
With variable international fuel prices, the development of renewable energy in Samoa has become more critical. Fuel imports for FY2008 are estimated to be 27% of total imports, up from 21% in FY2007. Fuel consumption is estimated at 12% of gross domestic product, up from 9% in FY2007. With increased demand in Samoa and projected demand growth in the world market, Samoa's vulnerability to international fuel prices is not expected to be reversed in the near and medium terms. The Government of Samoa (the Government) has requested technical assistance (TA) to help address Samoa's growing exposure to fuel price increases through development of renewable resources for power generation. A major constraint to development of renewable resources in Samoa is social and environmental issues that can be derived to impacts on communities from degrading water quality from the reservoir of the Afulilo Hydropower Project. These impacts and social concerns go beyond the Afulilo Hydropower Project, and have impacted on the ability to develop other hydropower potential.
The Afulilo Hydropower Project was first initiated in the early 1980's when consultations were undertaken with affected people. Asian Development Bank (ADB) approved a $5.3 million loan to the Government of Samoa in December 1986 as co-financing for the project. Other cofinanciers were the World Bank, the European Investment Bank, the European Union and Australian Agency for International Development. Construction of the project commenced in 1990. Continuous production of electricity commenced in August 1993. In 2001, ADB approved the Power Sector Improvement Project aimed at augmenting the Afulilo Hydropower Project. The loan was cancelled in 2005 due to significant costs increases associated with implementation delays, technical issues, and risks related to procurement. The project completion report (PCR) noted the environmental and social concerns introduced during the construction of the original Afulilo Hydropower Project. But the PCR also noted that augmentation of the Afulilo Hydropower Project, being the country's only storage hydro, remains highly relevant for reducing Samoa's dependence on fuel imports. The Afulilo Hydropower Project, and a possible augmentation of its capacity, is also important for reducing Electric Power Corporation's (EPC) dependence on fuel and for improving its financial management and performance. But addressing the existing social and environmental concerns will be necessary for sustaining and augmenting the Afulilo Hydropower Project.
The proposed TA is included in the (draft) Country Partnership Strategy (CPS) 2008-2012 and supports the Government in implementing the Samoa National Energy Policy (2007). The CPS and the Strategy for the Development of Samoa (2007) emphasizes Samoa's need to develop indigenous and renewable resources to reduce the country's exposure to foreign exchange fluctuations and fuel price increases. Development of renewable energy to help replace diesel generation will help reduce the EPC's and ultimately, consumers' exposure to fuel price increases. The CPS and the power sector roadmap also note the increasing importance of climate change adaptation of key infrastructure assets in Samoa. The proposed TA will investigate the integrity of the dam structure and compliance with the International Committee on Large Dams (ICOLD), and conduct a dam break analysis. The TA places strong emphasis on community consultations, environmental concerns and social impacts, and supplements ADB's ongoing support under the Power Sector Expansion Project.