Facility Administration Manual

1 MFF Number: 0031 Project Numbers: Loans 2552/2553(SF)/8246(AFD) (Tranche 1) June 2014 Pakistan: Energy Efficiency Investment Program Facility Administration Manual CONTENTS Page Main Text .. 2 A. Introduction .. 2 B. Purpose of the FAM .. 2 C. Key Persons Involved .. 2 D. Processing History (MFF and Tranche 1) .. 3 Annex 1: MFF and Project Description .. 4 A. MFF .. 4 B. Tranche 1 .. 6 Annex 2: MFF Program and Project management .. 8 A. Sponsors, Stakeholders and External Agencies .. 8 B. Organization Structures .. 10 C. Roles and Responsibilities .. 13 Annex 3: Procurement Plan .. 15 A.

2 Advance Contracting and Retroactive Financing .. 15 B. Procurement 15 C. National Competitive Bidding .. 15 Annex 4: Safeguards Plan .. 20 A. MFF .. 20 B. Tranche 1 .. 21 Annex 5: Financing Plan .. 22 A. MFF .. 22 B. Tranche 1 .. 23 Annex 6: Investment (Cost) Plan .. 25 A. Detailed Cost Estimate ($'000) .. 25 B. Forecast of Cost to Complete .. 26 Annex 7: Execution Plan .. 28 Annex 8: Performance Monitoring and Evaluation .. 29 A. Deliverables and Performance Indicators .. 29 B. Progress Reports .. 29 Annex 9: Major Covenants .. 31 A. MFF .. 31 B. Tranche 1 (Loan 2552/2553) .. 33 Annex 10: References and Formats .. 36 A.

3 References .. 36 B. Format of Environmental Monitoring Report .. 37 C. Format of Quarterly Progress 38 D. Suggested Format of Project Completion Report .. 42 Annex 11: Record of Major FAM Changes .. 44 2 Main Text ) A. Introduction 1. The Government of Pakistan (Government) entered into a Framework Financing Agreement (FFA) with the Asian Development Bank (ADB) for up to $780 million to finance the Energy Efficiency Investment Program on 13 August 2009. ADB's Board of Directors approved a multitranche financing Facility (MFF 0031) to finance the Investment Program on 17 September 2009, and the President approved Tranche 1 on 22 September 2.

4 Tranche 1 includes loans of (i) $40 million from ADB's ordinary capital resources (Loan 2552), and 20 million ($25 million equivalent) from Agence Fran aise de D veloppment (AFD, Loan 8246) for the National Compact Flourescent Lamp (CFL) Project; and (ii) $20 million from ADB's Special Funds (Loan 2553) for the Investment Program management Support Project. The Government will contribute $20 million and $5 million to each project, respectively. B. Purpose of the FAM 3. Following the FFA between the Government and ADB, this multitranche financing Facility Administration memorandum (FAM) was developed to help the executing and implementing agencies and ADB monitor MFF implementation, including the individual tranches, and evaluate its performance.

5 4. Procurement, safeguards, and financing plans are summarized in the Annexes. References to the relevant ADB policies and procedures and FFA and tranche covenants are in Annex 10 Appendix A. The FAM is an active document, progressively updated and revised as necessary, particularly following any changes in project or program costs, scope, or implementation arrangements. This document may not reflect the latest project or program changes. C. Key Persons Involved MFF Tranche 1 1. Executing Agency Minister, MOWP Minister, MOWP 2. Implementing Agencies National CFL Project (Loan 2552/8246): CEO, KESC CEOs, DISCOs Investment management Support Project (Loan 2553): Minister, MOWP 1 ADB.

6 2009. Report and Recommendation of the President to the Board of Directors: Proposed Multitranche Financing Facility to the Islamic Republic of Pakistan and Administration of Cofinancing for the Energy Efficiency Investment Program. Manila. An additional 150,000 in loans from the Agence Fran aise de D veloppment is being administered by ADB (para 2). 3 MFF Tranche 1 3. ADB K. Gerhaeusser, Director General, CWRD R. Stroem, Director, CWEN W. Liepach, Country Director, PRM F. Cleo Kawawaki, Principal Energy Specialist, CWEN (Investment management Support Project)J. Hwang, Senior Project management Specialist, CWEN (National CFL Project) MOWP = Ministry of Water and power ; PEPCO = Pakistan Electric power Company; KESC = Karachi Electric Supply Corporation (KESC); DISCO = distribution company, CWRD = Central and West Asia Department; CWEN = Energy and Natural Resources Division, CWRD; PRM = Pakistan Resident Mission D.

7 Processing History (MFF and Tranche 1) Approval of program concept paper 20 April 2009 Fact-finding mission 28 April-15 May 2009 management review meeting (MRM) - 1st 8 June 2009 Appraisal mission 29 June-7 July 2009 Staff Review Committee (SRC) meeting 17 July 2009 Loan negotiations/FFA signing 12-13 August 2009 Board circulation 27 August 2009 Board approval of MFF 17 September 2009 management approval of Tranche 1 22 September 2009 Loan agreement signing 29 April 2010 (L2552/L2553), 9 July 2010 (L8246) Loan effectiveness, including conditions 30 August 2010 (L2552/2553), 9 July 2010 (L8246) Annex 1: MFF and Project Description A.

8 MFF Design Summary Performance Targets/ Indicators Data Sources/ Reporting Mechanisms Assumptions and Risks Impact Pakistan's energy security achieved, and demand and supply balanced in an environmentally sustainable manner Electricity and gas rationing terminated by 2012 MTOE (188,406 TJ) of energy saved annually starting 2013 GHG emissions reduced by 30% from 2009 levels by 2018 from less fossil fuel use through clean technology and practice applications Industrial production grows by 10% annually from 2012 Annual national statistics and economic publications Energy sector yearbook Energy utility reports Industry reports Assumptions Stable macroeconomic conditions Additions in supply capacity (indigenous and import)

9 Come online Sector financial and operating performance improves GOP follows through with policy actions Outcome Energy efficient and energy productive Pakistan Clean technology market transformed Energy efficiency and climate change mainstreamed in national development strategy Households energy bill cut by 25% from 2010 Clean technology investments increase by 20% per year starting 2010 Energy bills lowered by 30% for businesses from 2011 Improved financial and operating performance of sector utilities from 2011 Commercial ESCO businesses established and operating by 2011 Customers receive uninterrupted, reliable and quality energy services from 2013 Oil imports reduced by 22% from 2014 MTDF National Energy Efficiency Roadmap Implementation Progress Reports National budget reports Energy utility reports Industrial association survey and reports Assumptions Rational energy pricing achieved Industries have continued access to financing and invest in clean energy Efficient equipment and appliances are available in the retail market Outputs A dynamic and integrated policy, institutional.

10 Legal and regulatory framework achieved for energy efficiency National energy efficiency policy coordination and roadmap management function established in the Planning Commission by 2009 GOP policy decisions GOP Public Procurement Rules and Public Procurement Regulatory Authority Ordinance Assumptions Projects implemented on time GOP onlends at favorable rates Risks Delays in reforms 5 Design Summary Performance Targets/ Indicators Data Sources/ Reporting Mechanisms Assumptions and Risks Gender mainstreamed in energy planning and policies A national energy efficiency standards, testing, certification, and labeling regime established DSM mainstreamed in energy utility operations Obsolete technology and equipment phased out from energy supply and demand side Ten-year National Energy Efficiency Action Plan adopted by 2010 MEPS for equipment and appliances established and harmonized with international standards from 2010 to 2014 Public procurement guidelines revised to mandate energy efficiency by 2011 Energy efficiency tariffs rationalized to reflect cost of service by 2010 Electricity peak demand reduced by 1,094 MW, and 2.