Bangladesh Rural Electricity Transmission and Distribution (T&D) Project (IDA Cr BD) Implementation Review Mission March 15-25, 2015

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Bangladesh Rural Electricity Transmission and Distribution (T&D) Project (IDA Cr BD) Implementation Review Mission March 15-25, 2015 I. Introduction and Acknowledgements Aide Memoire 1. The second implementation review mission for the Rural Electricity Transmission and Distribution (T&D) was carried out from March 15-25, 2015 to review progress of implementation of the project. 1 The mission met with the officials of the Power Division and Power Cell of the Ministry of Power, Energy and Mineral Resources (MPEMR), Bangladesh Rural Electrification Board (BREB), and Power Grid Company of Bangladesh (PGCB). A list of officials met during the mission appears in Annex 1. The team wishes to express its deep appreciation to the Power Division, Power Cell, BREB and PGCB and others for the productive discussions, access to information and excellent cooperation during the mission. The findings of the aide memoire were agreed during a wrap-up meeting on March 25, This Aide Memoire is classified as a public document under World Bank s Access to Information Policy. II. Key Project Data Key s (IDA Cr BD) Project Performance Ratings Previous Current Board Approval February 27, 2014 Achievement of PDO Satisfactory Moderately Satisfactory Signing June 19, 2014 Implementation Progress Satisfactory Moderately Satisfactory Effectiveness September 16, 2014 Financial Management Satisfactory Satisfactory Closing June 30, 2020 Procurement Satisfactory Moderately Satisfactory Allocation US$ 600 million eq. Environment and Social Satisfactory Satisfactory Disbursement 0 Project Management Satisfactory Satisfactory III. Achievement of Development Objectives 2. The project development objectives (PDO) are to reduce systems losses and enhance capacity in the rural distribution network of primarily the eastern part of Bangladesh. The project is expected to support: i) Rural grid augmentation and rehabilitation component that includes 33/11kV line rehabilitation and line construction, 33/11 kv substations, river crossing towers and switching stations by BREB; ii) Transmission enhancement component that includes kV line construction and 132/33 kv substations by PGCB; and iii) technical assistance support for BREB and PGCB. The Project faced an initial delay of 3 months due to the time taken by the Price Rationalization Committee before approval of the Development Project Proposal (DPP) for the BREB component. Despite concerted efforts by the implementing agencies, the initial delays could not be overcome. The first year implementation targets were not met (444 km of distribution lines constructed/rehabilitated by BREB). Given the delays, the achievement of PDO is downgraded to Moderately Satisfactory. Annex 2 provides the results framework of the project. IV. Current Implementation Status 3. Several critical activities have been initiated- procurement of line materials by BREB, purchase of land for 33/11kV substations by BREB, environment and social screening completed for the PGCB component. Given the delays, the implementation status is downgraded to Moderately Satisfactory. The mission highlighted the need to award the line materials contracts (5 packages) of BREB by June 2014 at the latest in order to bring 1 The mission members were: Messrs. Zubair K M Sadeque (Sr. Energy Finance Specialist and Task Team Leader), Hung Tan Tran (Power Engineer), Md. Iqbal (Sr. Energy Specialist), Surbhi Goyal (Energy Specialist), Ishtiak Siddique (Procurement Specialist), Iqbal Ahmed (Environment Specialist), Sabah Moyeen (Social Development Specialist), Mohammed Atikuzzaman (Financial Management Specialist), Ferdous Jahan (M&E and Gender Specialist), and Md. Tafazzal Hossain (Program Assistant). 1

2 the project back on track in terms of implementation progress. PGCB will need to initiate bidding of the turnkey contracts by June 2015 as well. 4. Disbursement target for FY15 is US$24 million, which is likely to be met from the initial advances. Authorized signatory letters for BREB and PGCB were received on December 1, 2014 and February 17, 2015 respectively. Necessary client connection accounts have already been established by BREB and an application for initial advance of US$19 million is under process by. PGCB will need to set-up the client connection account and apply for the initial advance (US$5 million) by April 15, Project Monitoring and Progress Reports. The templates for the quarterly progress reports by BREB and PGCB have been agreed. With the implementation starting recently, the first progress report will be due by August 15, 2015 for the April-June 2015 quarter. Both BREB and PGCB will need to nominate a Monitoring and Evaluation (M&E) focal person in the respective Project Management Units (PMUs) who would be responsible for compiling data from the field (when work commences) and preparing progress reports to capture progress on achieving the project results framework. BREB supervision consultant, when on board, will have M&E specialist in the team who would work closely with the M&E focal person at the BREB PMU. The mission reiterated the need to: i) have adequate consultations with project affected persons (be it in the context of the safeguards issue or any other project implementation activities that directly affect the communities); ii) ensure project design adapt to suggestions from those consultations; iii) properly document those consultations; and iv) report on such consultation in the quarterly progress reports as appropriate. 6. GAAP Implementation. The major activities under the matrix of actions outlined in the Governance and Accountability Action Plan (GAAP) have been initiated (Annex 3). Separate PMU with dedicated Project Directors have already been established at BREB and PGCB. Selection of the firm supervision consultant for the BREB component is at the final stage with contract negotiation on-going with the selected firm. Individual international consultants (procurement and technical for BREB and procurement for PGCB) are on-board. Component-wise Implementation Status 7. The following section summarizes the component-wise implementation issues. Component A: Rural Grid Augmentation and Rehabilitation (US$671 million, IDA US$485 million) 8. Procurement of Goods. The mission expressed its concerns in delays in awarding the first goods package by BREB (line hardware and insulator (Package G-01). After the bids were closed on October 20, 2014, BREB completed the bid evaluation expeditiously and submitted the bid evaluation report (BER) to the Bank on November 23, Bank provided no objection on November 30, BREB sent the BER to Power Division for approval on December 17, Power Division however had repeated queries and it was only sent to the Cabinet Committee on Government Purchase (CCGP) in late February CCGP approval was obtained on March 4, 2015 and Power Division sent the approval to BREB on March 19, Accordingly, notification of award was issued by BREB on March 22, Altogether, it took more than 3 months after it was sent to Power Division for approval (almost 4 months between Bank s no-objection and the notification of award). The mission requested Power Division to expedite the approval process for the future bid packages in order to ensure timely implementation of the project. 9. Bid evaluation is currently underway for four line materials packages with an estimated cost of US$66 million, (G-02-conductor, G-03-conductor and guy accessories, G-04-SPC poles, and G-06-cross arm and anchor log). Bid invitations for two other packages for procurement of wooden pole (Package G-05 - estimated cost US$8.2 million) and distribution transformer (Package G-07 - estimated cost US$16.7 million) are expected to be published by March 31, 2015 and April 15, 2015 respectively. A detailed time bound action plan for the critical contracts was agreed and is given as Annex-4. 2

3 10. Consultancy Services. Procurement process management and supervision consultant (Package S-03) is on track, technical evaluation of the proposals received from the shortlisted firms is completed (Bank provided no objection to the technical evaluation report on March 15, 2015, a day after receiving the report). The consultant is expected to be on board by June 30, The works contracts for line construction will be invited (using GoB s e-gp portal) by early June 2015 so that the contractors can be on board by the time line materials start to arrive on site (environment requirements for the bid documents are explained in para 27). Regarding the pre-shipment inspection (PSI) agent, the mission reviewed the procurement process followed by BREB for selecting the PSI agent for some other donor-financed projects. Since, IDA procurement process was not followed for the selection of the PSI agent, a fresh selection process will need to be initiated for this project. The mission underscored the need to initiate selection at the earliest so that the PSI agent can be on-board before materials are ready for shipment. 12. Supply and Installation of 33/11kV substations. The mission noted that BREB has already identified locations and incoming power sources for 69 nos. of 33/11 Kv sub-stations, and preparation of indicative design and technical specifications to procure these sub-stations is underway. For the rest 41 substations, preparation of indicative design and specifications will be delayed for some time as the incoming power sources for these sub-stations are not yet finalized (power will be transmitted from PGCB s grid sub-stations which are yet to be built and locations are also not yet finalized). It was agreed that BREB will procure the 33/11 Kv sub-stations in two tranches. i.e., invite bids for five lots under package W-1 in two tranches, the first package (W-1A) will have three lots containing 69 substations and the second package (W-1B) will have two lots containing 41 susstations. The mission informed BREB that should there was any change in the number, capacity or location of the substations proposed by the rural cooperatives (PBSs) compared to appraisal estimates (to accommodate recent additional load that was not envisaged during appraisal), the revised proposal including calculations for losses and voltage drops would need to submitted to for review. 13. Land for Substations. The land purchase process continues with 37 lots (out of 110) for the 33/11 kv substations already purchased or obtained through voluntary donation. The remaining lands are expected to be purchased by June 30, The mission reviewed some of the documentations for the lands already purchased and/or received through donation. The documentations were found to be in order and in compliance with the Environment and Social Management Framework (ESMF) of the project. The mission reiterated the need to strictly follow the land purchase guideline with adequate documentation to ensure that the purchase process is completed transparently on a willing buyer-willing seller basis. 14. BREB Organogram. The mission reiterated the need to expedite approval of the revised organogram of BREB given the several parallel GOB financed projects that BREB has to manage and the on-going responsibilities of managing the rural electrification program that now has 72 PBSs (compared to the current organogram that was developed when there were only 36 PBSs). The revised organogram has the provision for additional 932 positions compared to the current approved positions of 1,200. There have been several queries and modifications suggested by the Ministry of Public Administration on the organogram. The last revision of the organogram was sent to the Ministry in February Component B: Transmission Enhancement (US$157 million, IDA US$106 million) 15. For the PGCB component, optimal line routes and substation locations have already been identified through the environment and social screening and technical line routing has been completed that allowed for developing the Billing Order Quantity (BOQ) for the bidding document. A social impact assessment needed to be initiated to identify the project affected persons (PIP) and the amount of compensation for the right of way for the line routes and resettlement for the substation locations. Power Cell had initiated the selection on a single source basis and Bank provided no-objection in December Since then however, the approval is pending at the Power Division. The mission reiterated the need to expedite approval of this critical activity. 3

4 16. Supply and Installation of Lines and Substations. PGCB has four supply and installation procurement packages (US$ 107 million) under the project. PGCB is lagging behind in preparing the bidding documents due to excess work load of the officials responsible for preparing the bidding documents. First drafts of two of the packages (line construction and GIS substation) were shared with IDA and IDA provided comments. PGCB has agreed to finalize the bidding documents for two of these packages by April 2015 and the rest two by May 2015 (environment requirements for the bid documents are explained in para 27). The mission underscored the need to initiate bidding by June A detailed time bound action plan for the critical contracts was agreed and is given as Annex-4. Component C: Institutional Strengthening (IDA US$9 million) 17. Two separate Technical Assistance Project Proposals (TAPPs) will be required for the BREB (US$6 million) and PGCB (US$3 million) components. The draft TAPP for the BREB component had the Proposal Evaluation Committee (PEC) review in February, 2015, which recommended for placing to ECNEC for approval subject to confirmation of the Finance Division on the additional manpower requirements. The mission requested the intervention of the Power Division for getting a meeting with the Finance Division on the manpower requirements. PGCB is yet to complete the draft TAPP and the mission requested to finalize the TAPP at the earliest. The mission also requested both BREB and PGCB to finalize the terms of reference for the critical consultancy items (computerization of accounting system for BREB, SAIDI/SAIFI for BREB, tariff study for BREB etc) so that the consultant selection can be initiated immediately after TAPP approval. V. Fiduciary Aspects 18. The overall fiduciary performance rating of the project is downgraded to Moderately Satisfactory due to delays in performing procurement activities compared to the agreed timelines during the last mission (September 2014). Fiduciary capacity 19. The mission noted that both BREB and PGCB have adequate capability to properly execute procurement related activities. PGCB, however, is lagging behind in preparing the bidding documents due to excess work load of the officials responsible for preparing the bidding documents. The position of Director Finance of PGCB is vacant for long. The mission was informed that the selection of a new Director is pending approval of the Board Affairs Committee of PGCB. The mission requested PGCB to convene the Committee meeting at the earliest. The contract for the financial management specialist (FMS) for BREB PMU was cancelled due to nonperformance. The next ranked candidate (from the earlier selection process) is being approached by BREB. The mission was informed that the provision for the FMS is included in the BREB TAPP, and the appointment can only be made after TAPP approval. The mission informed BREB that it can request Power Cell to appoint the FMS from RERED II (similar to the manner the earlier candidate was contracted). Once the TAPP is approved, a fresh contract can be drawn by BREB canceling the Power Cell contract so that the continuity of FMS service is ensured. Planning and budgeting 20. The procurement plans were discussed in length during the mission. Mission suggested updating the procurement plans by adjusting the projected dates with realistic estimates. BREB and PGCB agreed to share the revised procurement plan with using Bank s electronic procurement planning and management system (SEPA) by April 15, Fund flow, accounting and financial reporting 21. BREB has submitted the application for initial advance (US$19 million), which is under process at the Bank. PGCB will need to set-up the client connection account and apply for the initial advance (US$5 million) by April 15, The template for the interim unaudited financial reports (IFR) has already been agreed. The First IFR is 4

5 expected to be furnished as per the format once disbursement commences. The mission recommended that BREB initiates the procurement of tested off-the shelf accounting software for its Entity Computerized System with support from the institutional strengthening component of the Project. 23. The FY2014 entity audit reports for both BREB and PGCB were submitted to IDA by the due date of December The mission commended BREB for an unqualified audit report for the first time. Financial Analysis 24. The financial analysis for the 72 Palli biddyut Samities (PBSs) under BREB was updated with FY2014 actual numbers. Annex 5 summarizes the financial performance of the PBSs. With a 5.41% increase in retail tariff effective from March 2014, the profitability of the PBSs have improved with 14 PBSs achieving operating break-even compared to 9 in FY13. Overall, there seems to be an improving trend in the PBSs in terms of systems losses (though marginal) and collection efficiency. With the physical implementation of the project yet to commence, it will be a while before the systems losses of the project PBSs start to improve at a faster rate. VI. Environment and Social Safeguards 25. BREB has arranged for adequate training on the preparation of screening/assessment report for each subproject in accordance with the ESMF. The trainings have been arranged at different locations outside Dhaka on November 29, December 6, 2014 and February 7, 2015 for the rural cooperatives (PBS), BREB, and retainer consultants. About 173 participants attended the training. The mission requested for continuing with the training program in the implementation phase as well. The subproject specific environment and social screening/assessment are being carried out. It was agreed that the EA reports of 110 substations and all the 33 kv new line routes will be completed by April 15 and April 30, 2015 respectively. A full-fledged ESU unit is provisioned for in the revised organogram that is under review by the Ministry of Public Administration (para 14). 26. PGCB has created the Environment and Social Unit (ESU) in its regular organogram with the Superintending Engineer (Planning) as its head after approval from its Board was obtained on November 16, PGCB now needs to initiate recruitment for filling up vacancies in the new unit. It was agreed that the unit would be fully functional by June 30, The site specific environment assessment (EA) has been carried out for 16 subprojects by the individual environment consultant and duly submitted to the Department of Environment (DoE) for clearance. The first presentation of EA has been held at DoE on February 5, The mission was informed that the clearance would be obtained by April 30, The mission discussed about the training on environment issues and it was agreed that a training program would be arranged by the individual consultant for relevant key officials of the project by May 15, The social impact assessment work is delayed (para 15). 27. The mission reiterated the need to incorporate the subproject specific Environment Management Plan (EMP), standard Environmental Code of Practice (ECoP), Special Environmental Clauses and the budget for EMP implementation in the respective bid documents under PGCB and BREB. The mission also suggested to reflect the progress on environmental management in a half yearly report. It was agreed that both BREB and PGCB would submit separate the report on environment for the month of January-June 2015 by July 15, Gender Responsiveness. Following the recommendations of the project specific gender responsive social assessment, BREB has taken some steps to mainstream gender at the organizational level. To this end, in a number of the project PBSs, separate prayer rooms/lounges for women employees have been established. The other PBSs are also in the process of establishing such facilities for women. The women employees had grievance regarding the grading structure of PBS jobs as well as low salary. BREB has revised both the grading (November, 2014) and salary structure (effective from February, 2015). The mission recommends that BREB addresses the issue of day care for employees children as well as election of women members in PBS board. 5

6 VII. Agreed actions to address issues 29. Annex 6 has the list of agreed actions. VIII. Proposed timing of next mission 30. The next mission is planned for September

7 Annex 1 List of Officials Met Ministry of Power, Energy and Mineral resources (MPEMR) 1. Mr. Monowar Islam ndc, Secretary, Power Division 2. Dr. Ahmad Kaikaus, Additional Secretary, Power Division 3. Mr. Mokhlesur Rahman, Deputy Chief, Power Division 4. Mr. Zillur Rahman, Senior Assistant Secretary, Power Division Bangladesh Rural Electrification Board (BREB) 1. Brig. General Moin Uddin, Chairman 2. Mr. Sheikh Nurul Absar, Member (Engineering) 3. Mr. Md. Mizanur Rahman Khan, Project Director 4. Mr. Md. Mostafa Kamal, Deputy Project Director 5. Mr. Md. Omor Faruk Bhuiyan, Director (Administrative Management), PMU 6. Mr. Md. Luthfur Rahman, Director (Accounts & Financial Management), PMU 7. Mr. Debasish Chakrabortty, Deputy Director (Technical), PMU 8. Mr. A.K.M. Askender Ali, Deputy Director (Admin), PMU 9. Mr. Poritosh Sutradhar, Deputy Director (Technical), PMU 10. Mr. Md. Helalur Rahman Bhuiyan, Deputy Director (Technical), PMU 11. Mr. Md.Sakil Ibne Sayeed, Deputy Director (Technical), PMU 12. Mr. S.M. Masud Rana, Deputy Director (Admin), PMU 13. Mr. Saddam Hossain, Deputy Director (Accounts & Financial Management), PMU 14. Mr. Md. Mustafizur Rahman, Assistant Director (Accounts & Financial Management), PMU Power Grid Company of Bangladesh 1. Mr. Masum Al-Beruni, Managing Director 2. Mr. Chowdhury Alamgir Hossain, Executive Director (P&D) 3. Mr. Pranab Kumar Roy, Chief Engineer, System Operations 4. Mr. Nuruzzaman, Superintending Engineer (P&D) 5. Mr. A.K.M. Gaus Mohiuddin Ahmed, Superintending Engineer, SSD 6. Mr. Md. Abdur Rashid Khan, Superintending Engineer, TLD 7. Mr. Mohammad Shahid Hossain, Project Director (SE), ECGSTL Project 8. Mr. Md. Azizul Islam Sarkar, Executive Engineer, TLD-2 9. Mr. Noorzamal, Sub-Divisional Engineer, SSD Mr. Md. Zahid Hasan, Sub-Divisional Engineer, ECGSTL Project 11. Mr. Md. Shakowat Hossain Khan, Deputy Manager (Acc. & Admn.), ECGSTL Project 7

8 Annex 2 Results Framework Project Development Objectives The project development objectives are to reduce system losses and enhance capacity in the rural power distribution network of primarily the eastern part of Bangladesh. These results are at Project Level Project Development Objective Indicators Indicator Name Electricity losses per year in the project area Core Unit of Measure Baseline (2013) 2014 Cumulative Target Values for July-June Fiscal Years 2015 (Upto Dec 2014) Percentage 13.0% 13.0% 12.75% 12.5% 12.25% 11.5% 11.0% 10.5% Achievement 12.82% 12.06% MVA Capacity addition in the 33/11kV network of the Project PBSs Number ,220 1,800 Achievement 0 0 Direct project beneficiaries Number 25M 25M 25M 25M 25M 25M 25M 25M Achievement 0 0 Female beneficiaries Achievement Intermediate Results Indicators Distribution lines constructed or rehabilitated under the project Percentage Sub-Type Supplement al Component A: Rural Grid Augmentation and Rehabilitation Kilometers ,423 3,032 3,568 5,177 6,249 Achievement 0 0 Distribution lines constructed under the project Kilometers Sub-Type Breakdown Achievement ,145 2,681 4,290 5,362 Distribution lines rehabilitated under the project Kilometers Sub-Type Breakdown Achievement 0 0 8

9 Indicator Name Number of distribution substations constructed Core Unit of Measure Baseline (2013) 2014 Cumulative Target Values for July-June Fiscal Years 2015 (Upto Dec 2014) Number Achievement 0 0 Number of Grid substations constructed/upgrad ed Component B: Transmission Enhancement Number Achievement 0 0 Transmission lines constructed or rehabilitated under the project Kilometers Achievement 0 0 Transmission lines rehabilitated under the project Kilometers Sub-Type Breakdown Achievement Transmission lines constructed under the project Kilometers Sub-Type Breakdown Achievement 0 0 Environment and Social Unit operational at BREB Achievement Environment and Social Unit operational at PGCB Achievement Design for an appropriate Quality and Reliability Indicators at BREB Achievement Text Text Text Component C: Institutional Strengthening No Unit No Unit No tracking system in place Set-up approved for the PMU Set-up approved Unit set-up approved Not yet approved No tracking system in place No system in place PMU unit operational PMU operational Unit operational Unit approved Feasibility started Not yet started Full-fledged Set-up approved Unit operational Feasibility completed Full-fledged Unit Operational Unit operational Design work started Full-fledged Unit Operational Unit operational Design work completed Full-fledged Unit Operational Unit operational Indicators included in annual reports Full-fledged Unit Operational Unit operational Indicators included in annual reports 9

10 Cumulative Target Values for July-June Fiscal Years Indicator Name Core Unit of Measure Baseline (2013) (Upto Dec 2014) Computerization of Accounting System at BREB Text No system in place No system in place Project FMR from computerized system Needs assessment for BREB completed Implementation ongoing Implementation ongoing Implementa tion ongoing BREB financial statements from computerized system Achievement No system in place No system in place Financial sustainability of the PBSs ensured Text No regular financial analysis No regular financial analysis Tariff study initiated Tariff study completed Tariff application submitted to BERC if needed Tariff application submitted to BERC if needed Tariff application submitted to BERC if needed Tariff application submitted to BERC if needed Achievement No regular analysis Not yet started BREB capacity strengthened Text Staff (1200) inadequate for system expansion Proposed organogram submitted to relevant Ministries Final approval of organogram Recruitment for new positions start Phased recruitment (20%) Phased recruitment (40%) Phased recruitment (60%) Phased recruitment (80%) Achievement Under review by Ministry of Public Admin Under review by Ministry of Public Admin 10

11 Annex 3 Matrix of Actions Governance and Accountability Action Plan (GAAP) Issues/Risks/Objectives Actions/Features Timeline Responsibility (i) Implementation and Management Supervision Capacity Strengthen institutional A separate PMU with dedicated staff for capacity for effective project implementation including implementation procurement, financial management, and project monitoring. (ii) Procurement Capacity A separate PMU with dedicated Project Director Engagement of an independent supervision consultant to support the functions and activities of the PMU. Conduct training programs for staff on different managerial and technical areas including project implementation modalities, procurement, financial management, social safeguard and grievance management including use of technology. Carry out forensic audit on procurement, financial management, and safeguards management By credit effectiveness By credit effectiveness By credit effectiveness To start within first year of project implementation Within two years of project implementation and again within two years after the first review BREB PGCB BREB BREB/PGCB BREB/PGCB Early warning indicators to trigger additional action Delays in appointing staff Delays in appointing the Project Director Delays in appointing consultants Delays in preparing a training plan Delays in appointment of auditor Current Status PMU already established. Critical Staff appointed. A deputy Project Director has also been appointed. Project Director was changed as the previous PD got promoted. Firm Selected. Contract negotiation ongoing. Not yet due. Not yet due. 11

12 Issues/Risks/Objectives Actions/Features Timeline Responsibility Lack of adequate capacity on procurement Inclusion of an international procurement consultant and an international technical consultant in the bid evaluation committees for larger packages Inclusion of an international procurement consultant in the bid evaluation committees for larger packages Development of a systematic capacity building plan Usage of Bank s standard format for bid and/or proposal evaluation Update the procurement plan (iii) Financial Management Capacity and Systems By credit effectiveness By credit effectiveness Within two months of project effectiveness By credit effectiveness Six months after project effectiveness BREB PGCB BREB BREB/PGCB BREB/PGCB Early warning indicators to trigger additional action Delays in appointment of consultants Delays in appointment of consultant Delays in preparing Capacity Building Plan Delays in submission of quarterly procurement plan Current Status Consultant onboard. Consultant onboard. On-going Complied with. Complied with. Lack of adequate capacity on financial management Appointment of Financial Management Specialist to support BREB PMU By credit effectiveness BREB Delays in appointment of FM Staff An FM specialist was contracted but due to nonperformance, the contract was terminated. The third ranked candidate is being approached (the second ranked was unavailable). 12

13 Issues/Risks/Objectives Actions/Features Timeline Responsibility Computerization of accounting system of BREB PMU Submission of audit reports within stipulated timeframe and resolution of issues as specified by Within a year of project effectiveness BREB Early warning indicators to trigger additional action Delays in Selection of consultant for needs assessment Annual BREB/PGCB Delays in appointment of auditor Current Status Not yet due. FY14 entity audit reports were submitted within due time. Project audits are not yet due as disbursement has not started. 13

14 Annex 4 Agreed Timeline for Major Contracts 1. Procurement of Line hardware and Insulator (Contract Package: BREB/G-01 - US$ 7 million) Target Completion (Sep 2014) Revised Target Actual Completion Complete Specifications, Estimate, and N/A July 30, 2014 Done Bidding Documents Submit Bidding Documents to Done N/A July 31, 2014 Bank's No Objection to draft Bidding N/A August 07, 2014 Done Documents Publish Invitation for Bids Done N/A August 21, 2014 Deadline for Receipt of bids/bid N/A October 20, 2014 October 20, 2014 Opening Complete Bid Evaluation December 20, 2014 N/A November 23, 2014 Submit Bid Evaluation Report (BER) to N/A November 23, 2014 December 23, 2014 Bank's No Objection to BER January 06, 2015 N/A November 30, 2014 Approval of BER by the appropriate N/A March 4, 2015 March 05, 2015 authority (CCGP) Issue Notification of Award March 12, 2015 N/A March 22, 2015 Contract Signing April 11, 2015 April 30, Procurement of Conductor (Contract Package: BREB/G-02 - US$ million) Target Completion (Sep 2014) Revised Target Actual Completion Complete Specifications, Estimate, and October 15, 2014 N/A October 23, 2014 Bidding Documents Submit Revised Bidding Documents to October 15, 2014 N/A October 23, 2014 Bank's No Objection to draft Bidding October 31, 2014 N/A October 29, 2014 Documents Publish Invitation for Bids November 07, 2014 N/A December 04, 2014 Deadline for Receipt of bids/bid December 30, 2014 N/A January 19, 2015 Opening Complete Bid Evaluation February 15, 2015 March 31, 2015 Submit Bid Evaluation Report (BER) to February 18, 2015 April 03, 2015 Bank's No Objection to BER March 04, 2015 April 17, 2015 Approval of BER by the appropriate May 03, 2015 May 24, 2015 authority Issue Notification of Award May 10, 2015 June 07, 2015 Contract Signing June 09, 2015 July 07,

15 3. Procurement of Conductor and Guy Accessories (Contract Package: BREB/G-03 - US$ 4.5 million) Target Completion (Sep 2014) Revised Target Actual Completion Complete Specifications, Estimate, and November 07, 2014 November 06, 2014 Bidding Documents Submit Bidding Documents to November 15, 2014 November 06, 2014 Bank's No Objection to draft Bidding November 29, 2014 November 12, 2014 Documents Publish Invitation for Bids December 05, 2014 December 04, 2014 Deadline for Receipt of bids/bid Opening January 25, 2015 January 19, 2015 Complete Bid Evaluation March 11, 2015 April 07, 2015 Submit Bid Evaluation Report (BER) to March 18, 2015 April 10, 2015 Bank's No Objection to BER March 31, 2015 April 19, 2015 Approval of BER by the appropriate April 30, 2015 May 31, 2015 authority Issue Notification of Award May 07, 2015 June 14, 2015 Contract Signing June 06, 2015 July 14, Procurement of SPC Pole (Contract Package: BREB/G-04 - US$ 29 million) Target Completion (Sep 2014) Revised Target Actual Completion Complete Specifications, Estimate, and October 31, 2014 N/A November 03, 2014 Bidding Documents Submit Revised Bidding Documents to October 31, 2014 N/A November 03, 2014 Bank's No Objection to draft Bidding November 14, 2014 N/A November 20, 2014 Documents Publish Invitation for Bids November 17, 2014 N/A December 04, 2014 Deadline for Receipt of bids/bid December 31, 2014 N/A January 20, 2015 Opening Complete Bid Evaluation February 15, 2015 April 07, 2015 Submit Bid Evaluation Report (BER) to February 18, 2015 April 10, 2015 Bank's No Objection to BER March 04, 2015 April 24, 2015 Approval of BER by the appropriate May 03, 2015 May 31, 2015 authority Issue Notification of Award May 10, 2015 June 14, 2015 Contract Signing June 09, 2015 July 14,

16 5. Procurement of Wooden Pole (Contract Package: BREB/G-05 - US$ 8.2 million) Target Completion (Sep 2014) Revised Target Actual Completion Complete Specifications, Estimate, and November 07, 2014 February 16, 2015 Bidding Documents Submit Bidding Documents to November 15, 2014 February 16, 2015 Bank's No Objection to draft Bidding Documents November 29, 2014 March 02, 2015 Publish Invitation for Bids December 05, 2014 March 31, 2015 Deadline for Receipt of bids/bid January 25, 2015 May 22, 2015 Opening Complete Bid Evaluation March 11, 2015 July 10, 2015 Submit Bid Evaluation Report (BER) to March 18, 2015 July 13, 2015 Bank's No Objection to BER March 31, 2015 July 22, 2015 Approval of BER by the appropriate May 31, 2015 August 31, 2015 authority Issue Notification of Award June 07, 2015 September 14, 2015 Contract Signing July 07, 2015 October 14, Procurement of Cross arm and Anchor logs (Contract Package: BREB/G-06 - US$ 5.5 million) Target Completion (Sep 2014) Revised Target Actual Completion Complete Specifications, Estimate, and October 12, 2014 October 21, 2014 Bidding Documents Submit Bidding Documents to October 12, 2014 October 21, 2014 Bank's No Objection to draft Bidding October 26, 2014 October 26, 2014 Documents Publish Invitation for Bids November 07, 2014 December 04, 2014 Deadline for Receipt of bids/bid Opening December 22, 2014 January 19, 2015 Complete Bid Evaluation February 07, 2015 April 07, 2015 Submit Bid Evaluation Report (BER) to February 10, 2015 April 10, 2015 Bank's No Objection to BER February 24, 2015 April 19, 2015 Approval of BER by the appropriate March 26, 2015 May 31, 2015 authority Issue Notification of Award March 31, 2015 June 14, 2015 Contract Signing April 30, 2015 July 14,

17 7. Procurement of Distribution Transformer (Contract Package: BREB/G-08 - US$ 16.7 million) Target Completion Complete Specifications, Estimate, and Bidding March 24, 2015 Documents Submit Revised Bidding Documents to March 31, 2015 Bank's No Objection to draft Bidding Documents April 14, 2015 Publish Invitation for Bids April 15, 2015 Deadline for Receipt of bids/bid Opening May 22, 2015 Complete Bid Evaluation July 10, 2015 Submit Bid Evaluation Report (BER) to July 13, 2015 Bank's No Objection to BER July 22, 2015 Approval of BER by the appropriate authority August 31, 2015 Issue Notification of Award September 14, 2015 Contract Signing October 14, 2015 Actual Completion 8. Supervision and Management Consultant (Contract Package: BREB/S-03 - US$ 3 million) Target Completion (Sep 2014) Revised Target Actual Completion Prepare Shortlist and Draft RFP November 15, 2014 November 23, 2014 December 15, 2014 November 30, 2014 December 10, 2014 December 17, 2014 Bank's No Objection to Shortlist and Draft RFP Invite proposals from shortlisted firms December 07, 2014 December 23, 2014 Proposal submission deadline January 15, 2015 February 04, 2015 Complete Technical Evaluation February 15, 2015 March 14, 2015 Submit Technical Evaluation Report February 22, 2015 March 14, 2015 (TER) to Bank's No Objection to TER March 07, 2015 March 15, 2015 Open financial proposals March 21, 2015 Complete Combined Evaluation April 07, 2015 Negotiate contract April 30, 2015 Submit Draft Negotiated Contract May 07, 2015 (DNC) to Bank's No Objection to DNC May 14, 2015 Approval of contract by the appropriate July 14, 2015 authority Contract Signing July 31,

18 9. Supply, Installation, Testing & Commissioning of 33/11 KV Sub-stations (Contract Package: BREB/W-01A Lot-1, 2 and 5) Target Completion (Sep 2014) Revised Target Complete Specifications, Estimate, and March 26, 2015 June 26, 2015 Delayed Bidding Documents Submit Bidding Documents to March 31, 2015 June 30, 2015 Bank's No Objection to draft Bidding April 30, 2015 July 31, 2015 Documents Publish Invitation for Bids May 07, 2015 August 07, 2015 Deadline for Receipt of bids/bid July 07, 2015 October 07, 2015 Opening Complete Bid Evaluation September 07, 2015 December 07, 2015 Submit Bid Evaluation Report (BER) to September 15, 2015 December 15, 2015 Bank's No Objection to BER October 15, 2015 January 15, 2016 Approval of BER by the appropriate December 15, 2015 March 15, 2016 authority Issue Notification of Award December 22, 2015 March 31, 2016 Contract Signing January 22, 2016 April 30, 2016 Actual Completion 10. Supply, Installation, Testing & Commissioning of 33/11 KV Sub-stations (Contract Package: BREB/W-01B Lot-3 and 4) Target Completion (Sep 2014) Revised Target Complete Specifications, Estimate, and March 26, 2015 September 26, 2015 Delayed Bidding Documents Submit Bidding Documents to March 31, 2015 September 30, 2015 Bank's No Objection to draft Bidding April 30, 2015 October 31, 2015 Documents Publish Invitation for Bids May 07, 2015 November 07, 2015 Deadline for Receipt of bids/bid July 07, 2015 January 07, 2016 Opening Complete Bid Evaluation September 07, 2015 March 08, 2016 Submit Bid Evaluation Report (BER) to September 15, 2015 March 15, 2016 Bank's No Objection to BER October 15, 2015 April 15, 2016 Approval of BER by the appropriate December 15, 2015 June 15, 2016 authority Issue Notification of Award December 22, 2015 June 30, 2016 Contract Signing January 22, 2016 July 30, 2016 Actual Completion 18

19 11. Transmission Line (Contract Package: PGCB/W-01 - US$ 35 million) 12. Supply, installation and commissioning of 230/132/33 kv GIS Sub-stations (Contract Package: PGCB/W-03 - US$ 22 million) Target Completion (Sep 2014) Revised Target Complete Specifications, Estimate, and December 15, 2014 April 30, 2015 Delayed Bidding Documents Submit Bidding Documents to December 22, 2014 May 07, 2015 Bank's No Objection to draft Bidding January 22, 2015 May 31, 2015 Documents Publish Invitation for Bids January 31, 2015 June 07, 2015 Deadline for Receipt of bids/bid March 31, 2015 August 07, 2015 Opening Complete Bid Evaluation May 31, 2015 October 07, 2015 Submit Bid Evaluation Report (BER) to June 07, 2015 October 14, 2015 Bank's No Objection to BER June 21, 2015 October 28, 2015 Approval of BER by the appropriate July 21, 2015 November 27, 2015 authority Issue Notification of Award July 28, 2015 December 04, 2015 Contract Signing August 28, 2015 January 04, 2016 Actual Completion 13. Supply, installation and commissioning of 132/33 kv AIS Sub-stations (Contract Package: PGCB/W-02 - US$ 21 million) 14. Supply, installation and commissioning of 132/33 kv AIS Sub-stations (Contract Package: PGCB/W-04 - US$ 27 million) Target Completion (Sep 2014) Revised Target Complete Specifications, Estimate, and December 31, 2014 May 31, 2015 Delayed Bidding Documents Submit Bidding Documents to January 07, 2015 June 07, 2015 Bank's No Objection to draft Bidding February 07, 2015 June 30, 2015 Documents Publish Invitation for Bids February 15, 2015 July 07, 2015 Deadline for Receipt of bids/bid April 15, 2015 September 07, 2015 Opening Complete Bid Evaluation June 15, 2015 November 07, 2015 Submit Bid Evaluation Report (BER) to June 22, 2015 November 14, 2015 Bank's No Objection to BER July 06, 2015 November 28, 2015 Approval of BER by the appropriate August 06, 2015 December 27, 2015 authority Issue Notification of Award August 13, 2015 January 04, 2015 Contract Signing September 13, 2015 February 04, 2016 Actual Completion 19

20 Tk per kwh % of Cost Annex 5 Financial Analysis of BREB (FY14) 1. The financial analysis for the 72 Palli biddyut Samities (PBSs) under BREB was updated with FY2014 actual numbers. In FY14, the electricity sales for the 72PBSs combined were 16,081 GWh, which was about 44% of the total power consumption in the country. Project PBSs accounted for almost 70% of total electricity sales of the PBSs. 2. Profitability of the PBSs. Total revenue from electricity sales in FY14 for all 72 PBSs was US$1.12 billion, a 17% increase from the previous year (corresponding figures for the project PBSs were US$840 million and 18% respectively). This increase is partly attributed to an increase in retail tariff for the PBSs by an average of 5.41% in March 2014 (energy sales volume grew by about 13% during FY14). With the increase in tariff, the total operating deficit (operating revenue less operating costs) of all the PBSs combined came down from US$45 million in FY13 to US$30 million in FY14 (the corresponding figures for the project PBSs is US$22 million and US$5 million). The operating deficit in Tk/kWh for all the PBSs combined has come down from Tk0.25/kWh in FY13 to Tk0.15/kWh in FY14 (figure below). Gap between Revenue and Cost - (0.1) (0.2) (0.3) (0.4) - (0.0) (0.0) (0.1) (0.1) (0.1) (0.5) (0.1) Gap in Tk/kWh Gap as % of Costs 3. The number of profitable PBS amongst 72 PBS has increased from 9 last year to 14 till December 2014 (5 during appraisal in December 2012). The table below has further details on the number of profitable PBSs. ALL PBSs * Profitable % 25% 27% 23% 7% 26% 3% 7% 9% 6% 13% 13% 19% Unprofitable PBSs Participating in Project 82% 75% 73% 77% 93% 74% 97% 93% 91% 94% 87% 88% 81% Profitable % 35% 38% 30% 11% 32% 6% 14% 16% 11% 14% 23% 36% Unprofitable % 65% 62% 70% 89% 68% 94% 86% 84% 89% 86% 77% 64% * As of December

21 System Losses Collection Efficiency 4. Consumer mix plays a large role in determining the profitability of the PBSs. Because industrial and commercial consumers are charged higher than the residential consumers, PBSs with a higher share of industrial/commercial consumers have higher profitability than PBSs with a lower share. The profitable PBSs have an average industrial load of 44% followed by 40% by residential whereas the unprofitable PBSs have an average industrial load of only 20% with residential consumers constituting more than 60% of load (table below). Share of Consumption (2015) Domestic Commercial Irrigation Industrial Avg. of All PBSs 58% 9% 3% 25% Avg. of Profitable PBSs 41% 6% 1% 44% Avg. of Unprofitable PBSs 63% 9% 4% 20% 5. Distribution losses are hovering around 13% for the last three years. The distribution losses for all the PBSs combined were 13.6%, 13.5% and 13.3% for FY12, FY13 and FY14 respectively. Distribution losses of project PBSs however stand at 12.8% compared to 13% in FY13 and 13.2% in FY12. Across 72 PBSs, the highest distribution loss has come down from 31.5% in FY2014 for Bhola PBS 2 against 24.1% at end of December 2014 for Laxmipur PBS 3. Amongst Project PBSs, the highest distribution loss is observed for Laxmipur PBS that has gone down marginally from 24.8% in FY2014 to 24.1% till December Collection Efficiency has also seen improvements from 96% in FY13 to 100.7% in FY14 (corresponding figures for project PBSs were 97% and 100% respectively). The figure below shows the systems losses and collection efficiency of all the PBSs combined and the project PBSs. Distribution Losses and Collection Efficiency Rate 23.0% 21.0% 19.0% 17.0% 15.0% 13.0% 11.0% 9.0% % 100% 98% 96% 94% 92% System Loss of All PBSs "Collection Efficiency of All PBSs" 'Project PBS System Losses Collection Efficiency Project PBSs 7. Overall, there seems to be an improving trend in terms of systems losses (though marginal) and collection efficiency. With the physical implementation of the project yet to commence, it will be a while before the systems losses of the project PBSs start to improve at a faster rate. 2 Not part of the Project. Distribution loss stands at 21.8% in December 2014 for Bhola PBS. 3 Part of the Project. Distribution loss stood at 24.8% in FY2014 for Laxmipur PBS. 21

22 Annex 6 List of Agreed Actions Actions /Issues Responsibility Deadline 1. Application for initial advance of US$5 million PGCB April 15, First Quarterly Progress Report to be submitted to IDA BREB and PGCB August 15, Bid evaluation reports for 4 packages of line materials to be BREB April 15, 2015 submitted to IDA 4. Bids invited for wooden pole (G-05) and transformers (G- BREB April 15, ) 5. Bids invited for line construction (using e-gp portal) BREB June 1, Bid documents for 33/11 kv substations finalized BREB April 15, All remaining lands for 33/11 kv substations to be PBSs June 30, 2015 purchased 8. Decision on including BREB switching stations in PGCB BREB and PGCB April 15, 2015 packages for grid substations 9. Decision on BREB revised organogram GOB May 31, Social Impact Assessment consultant for PGCB Power Cell April 15, Bid documents for supply and installation contracts for PGCB May 15, 2015 PGCB component to be finalized 12. Draft Technical Assistance Project Proposals (TAPP) for Power Division May 31, 2015 BREB to be sent to ECNEC for approval 13. Draft TAPP for PGCB to be finalized PGCB April 15, A new Financial Management Specialist for BREB PMU to be BREB April 15, 2015 appointed 15. Procurement plan to be updated in SEPA BREB and PGCB April 15, Site specific environment/social screening for the first BREB April 30, 2015 year of implementation work of BREB component to be completed 17. Environment and Social Unit (ESU) of PGCB to be fully PGCB June 30, 2015 functional 18. DoE clearance on the Environment Assessment (EA) and DOE April 30, 2015 Environment Management Plan (EMP) for the PGCB component to be obtained by April 30, Half yearly report on environment. PGCB and BREB July 15,