PROJECT Development Facility
REQUEST FOR PDF-B FUNDING
Financing Plan (M US$)GEF Allocation 1.970
Project (estimated) / 13.320
Project Co-financing (estimated) / 11.350
PDF A*
PDF B** / 569,400
PDF C
Sub-Total GEF PDF
/ 569,400PDF Co-financing (details provided in Part II, Section E – Budget)
GEF Agency
National Contribution
Others / 248,100
Sub-Total PDF Co-financing: / 248,100
Total PDF Project Financing: / 817,500
* Indicate approval date of PDFA
** If supplemental, indicate amount and date of originally approved PDF
Agency’s Project ID:
GEFSEC Project ID: 2683 UNEP
Countries: Burundi, Kenya, Malawi, Mozambique, Rwanda, Tanzania, Uganda, Zambia.
Project Title: Greening the Tea Industry in East Africa
GEF Agency: UNEP
Other Executing Agency: EATTA
(East African Tea Trade Association)
Duration: 4 years
GEF Focal Area: Climate Change
GEF Operational Program:
OP6: Promoting the Adoption of Renewable Energy by removing barriers and reducing implementation costs.
GEF Strategic Priority:
SP-3: Power Sector Policy Framework Supporting of Renewable Energy and Energy Efficiency with relevance to SP-1: Transformation of Markets for High Value Products and Processes.
Estimated Starting Date: PDF-B September 2005;
Estimated WP Entry Date: June. 2006
Pipeline Entry Date: Feb. 2005
Record of endorsement on behalf of the Government: (EATTA is in the process of Securing GEF Focal Points Endorsements)
BurundiEtienne Kayengayenge
Director General of Environment and Land Management
Ministry of Land Management, Environment and Tourism
B.P. 631, Bujumbura, Burundi
TEL: 257 21 3257 / 24 1203
Fax: 257 24 1205 / 22 8902
E-mail: ’ / Date: (Month, day, year)
06/30/05
Kenya
Ratemo W. Michieka
Director General
National Environment Management Authority
PO Box 67839, Nairobi - Kenya
TEL: 254 2 609013
Fax: 254 2 608997
E-mail: / 06/24/05
Malawi
Raphael Kabwaza
Director of Environmental Affairs
Ministry of Natural Resources and Environmental Affairs
Lingadzi House, Private Bag 394
Lilongwe 3, Malawi
TEL: (265) 1 771 111
Cell: 265 862373
Fax: (265) 783 379
E-mail:
,mw / 05/27/05
Mozambique
Luciano de Castro
National director of Environmental Management
Ministry for Coordination of Environmental Affairs (MICOA)
Av. Acordos de Lusaka 2115, C.P. 2020
Maputo, Mozambique
Tel: 258-1-465843
Fax: 258-1-465849 / 07/25/05
Rwanda
Ms. Patricia Hajabakiga
Ministry of State in charge of Land and Environment
BP 3502, Kigali, Rwanda
Tel: 250 82628
Fax: 250 82629 / 07/15/05
Tanzania
Raphael Mollel
Senior Permanent Secretary
Vice President's Office
P.O. Box 5380
Dar es Salaam, Tanzania
PHONE: (255-22) 2116995
FAX: (255-22) 2113856
Email: / 06/27/05
Uganda
Keith Muhakanazi
Deputy Secretary to the Treasury
Ministry of Finance, Planning and Economic Development
Finance Headquarters Building
Plot 2-12 Appollo Kaggwa Road
PO Box 8147
Kampala, Uganda
Tel: 255 1 230290 / 05/31/05
Zambia
Nkowani K.
Acting Permanent Secretary
Ministry of Tourism, Environment and Natural Resources
Kwacha House
Cairo Road
PO Box 34011
Lusaka, Zambia
TEL: 260 1 229417
FAX: 260 1 223930 / 05/25/05
This proposal has been prepared in accordance with GEF policies and procedures and meets the standards of the GEF Project Review Criteria for pipeline approval.
Ahmed Djoghlaf
Assistant Executive Director
UNEP/DGEF
Fax: 254 20 4165 / Peerke De Bakker
Programme Officer
UNEP – DGEF
Tel: ++254-20-623967
Date: August 5, 2005 / Email:
TABLE OF CONTENTS
PART I: PROJECT CONCEPT 6
A: SUMMARY 6
B: COUNTRY OWNERSHIP 7
B.1 Country Eligibility 7
B.2 Country Drivenness 7
C: PROGRAMME AND POLICY CONFORMITY 12
C.1 Program Designation and Conformity 12
C.2 Project Design 13
C.2.A Background and context 13
C.2.b Problem Statement 13
C.2.c What Would Happen Without GEF? Baseline Scenario 19
C.2.d What would happen with GEF? – Alternative Scenario 21
C.3 Sustainability (Including Financial Sustainability) 24
C.4 Replicability 24
C.5 Stakeholder Involvement / Intended Beneficiaries 24
D: FINANCING 25
D.1 Financing Plan 25
D.2 Co- Financing 27
D.3 Implementation / Execution Arrangements 27
E: INSTITUTIONAL COORDINATION AND SUPPORT 29
E.1 Core commitment and Linkages 29
E.2 Consultation, Coordination and Collaboration Between and Among Implementing Agencies 31
PART II: PROJECT DEVELOPMENT PREPARATION 33
A Description of Proposed PDF B Activities 34
B PDF Block B Outputs 34
C Justification 35
D Timetable 35
E PDF-B Budget 35
APPENDICES 38
Appendix A a global indication of development costs of micro hydro power plants 39
Appendix B typical project development cycle in small hydro project development 40
Appendix C mission report 41
Appendix D management committee meeting 43
appendix E preliminary results survey for tea factories 47
appendix f summary hydro mission ktda / ademe, northern aberdares, kenya 50
Appendix G eatta status, management structure and small hydro programme implementation 52
appendix h confirmation of interest 54
Acronyms and Abbreviations:
ADEME French Agency for Energy and Environment
AFREPREN African Energy Policy Research Network
AREED African Renewable Energy Enterprise Development
CC Climate Change
CDCF Community Development Carbon Fund
EATTA East African Tea Trade Association
ERB Energy Regulatory Board
ERT Energy for Rural Transformation
ESCO Energy Service Company
EUEI European Union Energy Initiative for Poverty Reduction and
Sustainable Development
GEF Global Environment Facility
GEF-KAM Global Environment Facility – Kenya Association of Manufacturers
GHG Greenhouse Gas
GWh Giga Watt Hour
GTZ German Agency for Technical Cooperation
IBRD International Bank for Reconstruction and Development
IPP Independent Power Producers
KPLC Kenya Power & Lighting Company
KTDA Kenya Tea Development Authority
kW Kilo Watt
MHP Mini Hydro Project
UNFCC United Nations Framework Convention on Climate Change
UNEP United Nations Environment Programme
MOU Memorandum Of Understanding
MW Mega Watt
MWH Mega Watt Hour
NEPAD New Partnership for Africa’s New Development
O.P Operational Programme
PMO Project Management Office
PV Photovoltaics
REEEP Renewable Energy and Energy Efficiency Partnership
SADC South African Development Community
SC Steering Committee
STAP Scientific &Technical Advisory Pannel
TANESCO Tanzania Electrical Servic4e Company
UNDP United Nations Development Programme
UNIDO United Nations Industry development Organisation
ZESCO Zambia Electric Service Company
PART 1 – PROJECT CONCEPT
A SUMMARY
Many Eastern and Southern African countries (Ethiopia, Burundi, Kenya, Malawi, Mozambique, Rwanda, Tanzania, Uganda, Zambia, and Zimbabwe) produce tea in bulk for export, generating crucial foreign earnings. Foreign earnings are the ultimate productive use of energy allowing tea communities to become economically strong. The basic processing of tealeaves undertaken at the tea factories requires significant amounts of electrical energy. Currently, in most factories the electrical energy is sourced from, often unreliable, national grids or inefficient and highly polluting and greenhouse gas emitting diesel gensets. Since the tea areas are often remote areas and voltage on the grid may drop causing damage to equipment and preventing the use of some voltage sensitive equipment like compact fluorescent lights. Drought prone countries including most of these have had drought induced power rationing in recent years. Most of these countries have inefficient transmission and distribution systems, high demand and low generation capacities resulting in frequent load shedding. All tea factories have generator sets that are on average in operation for up to 5 % of (factory operation) time. The fuel budgets of tea factories are dependent on increasing international oil prices with negative implications on the competitiveness of the tea produce at the world market.
It appears that whenever tea is grown, the rainfall and hilly terrain guarantee that there will be a hydro potential somewhere near the tea processing plant. In some cases this potential is already used, but in most cases the tea manufacturers rely on the grid and some diesel gen-sets for back up purposes. Since few tea factories have taken up small hydro, a project is proposed to systematically remove barriers regionally (see discussion on barriers in subsequent section).
The umbrella organization engaging in the entire Tea Sector in all countries mentioned is the East African Tea Trade Association (EATTA). EATTA is the proponent of the proposal, as well as the initiator and facilitator of the project. Through its network, it shall be instrumental in liaison with national tea agencies and individual tea factories, support overall data collection, and provide support to consultative workshops and training sessions in various countries.
Through a number of (pre) feasibility studies, some six pilot mini-hydro projects are to be developed, preferably with a rural community electrification component piggy-backed to the mini-hydro project development. All stages of such a project development (pre-feasibility, feasibility including detailed design, tendering, actual construction and commissioning, operation and maintenance) will form a solid training ground for tea sector engineers as well as civil engineers from national consulting/engineering firms. Hands-on training should build sufficient technical capacity that will enable the realization of future mini-hydro systems tapping local expertise. Socioeconomic impacts and environmental assessments would be included at feasibility and completion stages.
In addition the project aims to accelerate the shift from grid and diesel gensets to hydro through the creation of special financing window for tea manufacturers with conducive terms and conditions offered to all EATTA member countries, in order to provide a long lasting incentive for such a shift.
This initiative aims to improve both energy supply security and lower tea production costs by reducing dependency on fossil fuels, consumed by generator sets, and shifting from grid power to hydropower generated in close proximity to the tea factories. The project will have the global environmental benefit of reducing Greenhouse Gas (GHG) emissions and contribute to poverty alleviation through employment and local productive uses. The specific objectives are to: facilitate generation of electricity from decentralized hydropower; improve the reliability and quality of energy service to the tea factories and hence lower factory production costs; while providing access of electricity to households and public and community facilities within close proximity to the tea factories. The benefit to the utilities will be grid reinforcement and reduce any fossil fuel generated electricity in the main grid. The concept is to blend a commercial activity (tea processing) and its energy requirements with the social and developmental dimension of rural electrification in a sustainable manner.
B COUNTRY OWNERSHIP
B.1 COUNTRY ELIGIBILITY
As per requisite all of the participating countries (EATTA members) have to be a signatory to the United Nations Framework Convention on Climate Change (UNFCCC). All countries considered have signed and ratified the convention. A summary is provided in Table 01.
Table 01: UNFCCC Ratifications
Country / Date Of Signature / Date Of RatificationKenya / 12 June 1992 / 30/August 1994
Tanzania / 12 June 1992 / 17 April 1996
Uganda / 13 June 1992 / 08 September 1993
Malawi / 10 June 1992 / 21 April 1994
Rwanda / 10 June 1992 / 18 August 1995
Zambia / 11 June 1992 / 28 May 1993
Mozambique / 12 June 1992 / 25 August 1995
Burundi / 11 June 1992 / 06 January 1997
B.2 COUNTRY DRIVEN-NESS
During the conceptual stage of project formulation, a discussion was held between UNEP and the Board of the EATTA (see Appendix C – mission report and Appendix D – minutes EATTA Board). The Board expressed keen interest and decided to support and facilitate data collection during the stage of project formulation.
Over the last 10 years, structural power sector reforms were implemented in the region. Independent power producers are now able to officially generate power (see Table 02). However, it appears that in general the tariffs offered for electric power by third parties does not provide much of an incentive. A more conducive climate for power development starts with a tariff structure.
Today, tariff related issues form an obstacle for Independent Power Producers (IPP) to supply (excess) electric power to the grid. Rates for the transfer of electric power, acceptable to both the utility and the (third party) power generator are a pre-requisite for future development of IPPs. An alternative would be that individual companies (tea factories or IPPs) in cooperation with local community organisations both generate and distribute power to nearby residents and communities. This last approach would entail concession licensing, different tariffication and revenue collection by the IPP.
Table 02: Status of Power Sector Reform
Status of Power Reform SectorReform Policy / New/Amended Electricity Act / Regulation Agency / Licenses Issued / Access to Grid Granted / Private Sector Participation
Kenya / Implemented / Implemented / Implemented / Implemented / Implemented / Implemented
Malawi / Implemented / Implemented / Implemented / Implemented / Implemented / Pending
Mozambique / Implemented / Implemented / Pending / Pending / Implemented / Pending
Tanzania / Implemented / Pending / Pending / Implemented / No / Implemented
Uganda / Implemented / Implemented / Implemented / Pending / Pending / Implemented
Zambia / Implemented / Implemented / Implemented / Implemented / Implemented / Implemented
Burundi / No / No / No / No / No / No
Rwanda / Implemented / Pending / Implemented / Pending / Pending / Pending
Energy policies in all EATTA member states were reviewed for their commitment to the development of mini hydro and private sector involvement:
Burundi:
In the national communication for UNFCCC, Burundi states it has decided to take 3 potential options to reduce GHG:
1) Increase access rate to modern energy such as hydro electricity and renewable energy;
2) Supply of energy of sufficient quality and quantity for industry and cottage industry while improving the supply security for both electricity and petrol products;
3) Meeting domestic requirements while safeguarding the environment.
To attain these objectives, the government will rehabilitate and extend the existing electricity network, plan hydropower plants and promote technologies that save wood fuel as well as promote renewable energy. The biggest constraint is the lack of finance for the sector’s program. The government will adopt measures to reduce the cost of certain equipment to provide greater access to industries and households.
Furthermore the national communications talk about increasing energy efficiency in the manufacturing industry and energy efficiency (thermal power) in breweries and tea processing plants in order to reduce consumption of fossil fuel and biomass.
For decentralized electrification of public infrastructure both solar PV and small (“pico”) hydropower plants are envisioned, as this will contribute to a reduction in GHG emissions.
Kenya:
The Draft National Energy Policy of 2004 is clear on encouraging mini hydro and private sector involvement:
6.4 Rural Energy: The government will encourage and promote private sector initiatives in entering the renewable energy market. The government recognizes the side of development partners in finding specific programs and will continue to seek their support especially in areas less attractive to the private sector. Furthermore the government will allocate resources to complement self-help groups and private sector efforts in rural energy supplies.