Implementation Status & Results Montenegro Energy Community of South East Europe APL 3 - Montenegro Project (P106899)

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1 Public Disclosure Authorized Public Disclosure Authorized Implementation Status & Results Montenegro Energy Community of South East Europe APL 3 - Montenegro Project (P106899) Operation Name: Energy Community of South East Europe APL 3 - Project Stage: Implementation Seq.No: 11 Status: ARCHIVED Archive : 22-Dec-2012 Montenegro Project (P106899) Country: Montenegro Approval FY: 2008 Product Line: IBRD/IDA Region: EUROPE AND CENTRAL ASIA Lending Instrument: Adaptable Program Loan Implementing Agency(ies): Key s Board Approval 06-Jul-2007 Original Closing 31-Mar-2012 Planned Mid Term Review 15-Jun-2009 Last Archived ISR 09-Sep-2012 Effectiveness 28-Jan-2008 Revised Closing 31-Mar-2013 Actual Mid Term Review 15-Jul-2009 Project Development Objectives Project Development Objective (from Project Appraisal Document) The objective of the ECSEE APL3-Montenegro project is to improve the efficiency and reliability of the power system in Montenegro, through better supply security and closer integration into the regional markets. The ECSEE APL 3 - Montenegro Project consists of the following components: I. Telecommunications System Development II. Transmission Network Reinforcement III. Improvement of Operational Reliability of Perucica HPP. Has the Project Development Objective been changed since Board Approval of the Project? Yes No losure Authorized Public Disclosure Authorized Component(s) Component Name Component Cost Development of a modern telecommunications network, including links with regional utilities Construction of transmission line circuits from the transmission network to the Andrijevica substation 3.40 and to the Mojkovac substatio n Installation of a new trash rack and trash rack cleaning equipment, and supply of spare turbine 2.10 runners for Perucica Hydro Power Pla nt Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Moderately Unsatisfactory Moderately Unsatisfactory Overall Implementation Progress (IP) Moderately Unsatisfactory Moderately Unsatisfactory Overall Risk Rating Low Implementation Status Overview The project is progressing well; there are some delays with implementation of components I and II of the project, however it is likely that the development objectives will be achieved. Page 1 of 6

2 The two remaining activities, namely, the extension of the Mojokovac substation and telecommunication extension subproject, will become fully operational in August 2013, i.e. beyond the current closing date of March 31, The Government was informed of the need for a closing date extension. The project needs a 6-month extension until September 30, Locations Country First Administrative Division Location Planned Actual Montenegro Not Entered Trebinje Montenegro Not Entered Pozega Montenegro Not Entered Opstina Mojkovac Montenegro Not Entered Mojkovac Montenegro Not Entered Andrijevica Montenegro Not Entered Hidroelektrana Perucica Montenegro Not Entered Opstina Andrijevica Results Project Development Objective Indicators Page 2 of 6

3 Indicator Name Core Unit of Measure Baseline Current End Target ECSEE APL INDICATOR: Market Liberalization in the regional market The integration of Montenegro into the regional power sector is improved as a result of the improved telecommunications system The substations of component 2 have fewer blackouts Text Value ECSEE Treaty signed in October Oct-2005 Text Value Existing EPCG telecommunications system is outdated and does not meet UCTE requirements 31-Dec-2006 Tendering for Installation Contractors is underway (not financed by the Credit. Text Value 2006 Interruptions (baseline document to be provided by EPCG) (1) 381 MWh for Andrijevica Substation (2). 369 MWh for Mojkova Substation. Fully liberalized power market and competitive market structure. A document outlining Montenegro's energy policy until 2030 was adopted by the GoM in March 2011; little progress has been made in the area of security of supply and in the field of the internal energy market. Legislation for implementation the energy law remain to be adopted. The national energy strategy action plan for was adopted by the Government. Establishment of South East Europe Coordination Auction Office on June 13, 2012 in Becici Montenegro comprising ten electricity network operators. The aim of the SEE CAO is to harmonize and manage congestions and optimize cross border capacity allocation. Montenegro system fully integrated with regional market. Reduce interruptions by 50% Page 3 of 6

4 Operational reliability of Perucica HPP is improved by: (1) reducing O&M cost for the turbine runners (2) reduce outage time for turbine runners 31-Dec-2006 Text Value (1) Increase in O& M of runners due to runners problems and failures is Euro 20,000. (2) Loss of production in 2006 due to runner outage: 40 GWH (baseline data provided by EPCG) 31-Dec-2006 Land expropriation issue resolved for Mojkovac SS. Construction permit obtained in May Work started on the SS in mid-july. (1) O&M cost of runner is reduced by 210% (2) Outage time for runners(or loss of production) is reduced by 5%. The new Turbine Runner has been in operation since September 2011, and will be examined in detail during 2012 plant general overhaul and the testing report will be provided to the Bank. 31-Dec-2012 Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Progress in implementation of the telecommunications component Progress in implementation of the transmission component Text Value Nil Component is 100% implemented 31-Dec-2006 Contract implementation for (i) OPGW cable and related services and (ii) remote system monitoring. The tendering process for telecommunication equipment is underway. Text Value Extension of Andrijevica completed and the SS is operational. Issue on land expropriation for the Mojkovac Component is 100% implemented Page 4 of 6

5 Progress in implementation of the HPP Perucica generation component SS has been resolved andwork started on the SS in mid-july. Text Value Nil Component is 100% implemented 31-Dec-2006 The new trash rack with trash rack cleaning machine and turbine runner have been in operation since December 2009 and September 2011, respectively. The electricity generation in Perucica HPP reached the record value of 1435 GWh in 2010, which is well above the annual average 957 GWh. In 2011 the generation was 630 GWh well below the average and for the first half of 2012 the electricity generation of 410 GWh is reported. Data on Financial Performance (as of 16-Nov-2012) Financial Agreement(s) Key s Project Ln/Cr/Tf Status Approval Signing Effectiveness Original Closing Revised Closing P IDA Effective 06-Jul Aug Jan Mar Mar-2013 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P IDA Effective XDR Disbursement Graph Page 5 of 6

6 Key Decisions Regarding Implementation The project is progressing well but there are some delays with implementation of components I and II; however the procurement is almost completed. On the Telecommunications System Development component, tendering is almost completed (OPGW and telecommunication equipment). The local contractor for OPGW installation is contracted and currently the installation works are underway. On the Transmission Network Reinforcement component, the extension of one substation (Andrijevica) has been completed and it is in operation. For Mojkovac substation, the construction permit was issued and the contract for civil works and installation was reactivated and the works started on July 15, The progress during last three months (July15-October18) was significant. The third component of the project (Perucica Hydro Power Plant) has been completed. The two remaining activities, namely, the extension of the Mojokovac substation and telecommunication extension subproject, will become fully operational in August 2013, i.e. beyond the current closing date of March 31, The project needs a 6-month extension until September 30, Restructuring History Level two Approved on 07-Apr-2011 Related Projects There are no related projects. Page 6 of 6