PROGRAM FOR SCALING UP RENEWABLE ENERGY IN MALI (SREP-MALI) AIDE MEMOIRE OF THE JOINT MISSION

Transcription

1 PROGRAM FOR SCALING UP RENEWABLE ENERGY IN MALI (SREP-MALI) AIDE MEMOIRE OF THE JOINT MISSION Bamako April

2 Aide Mémoire of the Joint Mission SREP Mali April 2011 I. INTRODUCTION 1. The objective of the Scaling-up Renewable Energy in Low Income Countries Program (SREP) - one of the three programs under the Strategic Climate Fund (SCF) - is to test and implement low carbon strategies in the energy sector to address climate change. SREP is aimed at demonstrating the social, economic, and environmental viability of low carbon development pathways in the energy sector. It seeks to create new economic opportunities and increase energy access through the production and use of renewable energy. The SREP program will enable Mali to initiate the process to achieve a transformational change, that will lead the country towards a low GHG emission development. This will be made possible by harnessing the renewable energy potential of the country instead of developing the economy based on expensive and polluting fossil fuels, and on inefficient use of biomass. 2. In July 2010, Mali was selected as one of the pilot countries under the SREP. The Government of Mali (GoM) has confirmed its interest in participating in the program and sent a letter to that effect to the SREP Sub-Committee in August It is within this context that the African Development Bank (AfDB) has been designated to take leadership of the Multilateral Development Banks (MDBs) to support the GoM in consultation with all stakeholders - UN agencies, bilateral partners, private sector and civil society organizations - to define and implement the SREP Investment Plan. 3. In February 2011, the MDBs made a first mission (scoping mission) led by the GoM to discuss the aim of the SREP program, its benefits, the modalities of its implementation in the country and the early results of the stocktaking report Following the first mission, the GoM invited the MDBs to participate in a second mission (joint mission) from 18 to 29 April The main objectives of the missionwere: (i) discuss the strategic axes for the investments proposed by the SREP National Commission; (ii) assist the said Commission in finalizing and validating the investment priorities; (iii) support the design of the concept notes of the projects that will be implemented during Phase 2; and (iv) initiate an environmental and social assessment of the investment plan and start developing the M&E framework. 5. The joint mission was led by the SREP national focal point, Mr. Sinalou Diawara, Director of the Direction Nationale de l Energie (DNE). From the MDBs side, under the leadership of the AfDB, the team was led by Mr. Nigambaye N Doundo, Power Engineer; the World Bank (WB) team led by Mrs. Peggy Mischke, Renewable energy Specialist; and the International Finance Corporation (IFC) team led by Mr. Paterne Koffi, Infrastructure Specialist, jointly supported the Government. The UN System (UNDP and UNEP) fully participated in the joint mission. The full list of participants to the mission (GoM, MDBs and UN) is presented in Annex The mission expresses its deep appreciation to the GoM and all parties involved (national institutions, civil society organizations, private sector representatives, Technical and Financial 1 See Aide Memoire of the scoping mission for more information. The executive summary of the stocktaking report was finalized in April 2011 and was presented in the context of the technical workshop of the joint mission. 2

3 Partners (TFPs)) for their interest in the program and the quality and transparency of the discussions. II. PROGRESS OF THE JOINT MISSION 7. According to the Terms of Reference of the joint mission (see Annex 2), the main activities undertaken during the mission were the following: Organization, between 19 and 21 of April 2011, of a national consultative workshop for the validation of strategic investment axes. The organization of the workshop was justified by the need for the GoM to develop its SREP Investment Plan through broad consultation and dialogue with key stakeholders. The opening ceremony was chaired by the Minister of Energy and Water, SEM Habib OUANE, who emphasized the importance of renewable energy in the development path of Mali. The Minister was accompanied by his Secretary General, the SREP National Focal Point (DNE s Director), and representatives from the AfDB and the WB. The speeches focused on: (i) the need to diversify energy sources to ensure energy security in Mali through environmental friendly and sustainable economic growth; (ii) the need to anticipate future developments and improve predictability and efficiency of public policies in the energy sector; and (iii) the need to further promote the development of renewable energy in Mali for the benefit of the poor. The workshop brought together 85 participants representing national institutions, the Malian private sector, NGOs, TFPs, etc. 2 Five working groups were organized to address the following topics (see the results of group work in the next section): Group 1: Institutional, legislative and regulatory framework in the field of renewable energy; Group 2: Information, training and strengthening of the institutional, organizational and technical capacities of the players involved in the renewable energy sector; Group 3: Studies, research, as well as information and knowledge sharing; Group 4: Investments in technologies and regions with high potential for the social and economic development of the country; Group 5: Environmental and Social Assessment of the Investment Plan. In the context of the joint mission, the workshop was valuable to obtain comments and inputs from relevant stakeholders involved in the renewable energy sector, to fine tune and validate the main strategic investment axes. This workshop has contributed to the development of the Investment Plan and to the definition and prioritization of project ideas. It has been a key element of the consultative process as all relevant players in the Malian energy sector were involved. The Terms of Reference of the workshop are available in Annex 3. The minutes of the workshop are available in Annex 4. Consultation meetings with key stakeholders. The consultationsheld during the second week of the mission with the main stakeholders, were key to deepen the work done as part of the workshop (including definition of project ideas, and identification of potential co-financing opportunities) and 2 See annex 4. 3

4 ensuring proper consideration of the contributions of each stakeholders group in the drafting of the Investment Plan. Four consultations have been held with representatives of various institutions in Mali regarding the Energy Policy, particularly with: (i) national institutions; (ii) civil society; (iii) private sector; and (iv) TFPs. Terms of reference for the consultations are available in Annex 5. The minutes of the meetings are available in Annex 6. Mini-workshop between MDBs / UN and the SREP National Commission. The goal of the miniworkshop was to deepen the thinking on the investment projects based on the priorities and suggestions that emerged from the various consultations. 8. In addition to the aforementioned events, the joint mission also conducted the following activities: Visit of the Hybrid Power Plant of Ouéléssébougou. On 22 April, the joint mission visited the hybrid power plant (diesel / solar photovoltaic) installed in an isolated center managed by Energie du Mali S.A. (EDM) in the City of Ouéléssébougou, located 80 km away from Bamako. The participants included representatives of the MDBs, the SREP National Commission (DNE, Agence Malienne pour le Développement de l Énergie Domestique et de l Electrification Rurale (AMADER) and CNESOLER), the Ministry of Energy and Water, and the Ministry of Environment. The visit allowed all the participants to inquire about the use of integrated technologies, namely diesel and solar photovoltaic, in isolated centers managed by EDM as well as to understand the strengths and weaknesses of such systems. For more information, see Annex 8. Meeting with the management of Energie du Mali S.A 3. The MDB s team held a meeting with EDM, Mali s national utility. The management stated that it had been mandated by the Board of Directors to pursue opportunities in the sector of renewable energy with a view to diversify the sources of generation and to be less exposed to the rise of fossil fuel prices. Even though the key strategic decisions are made at the Ministry of Energy and Water level, EDM confirmed that they are willing to sign long-term Power Purchase Agreements and thereby sell electricity generated by Independent Power Producers, depending on the affordability of tariffs proposed. EDM sees solar and hydro energy as technologies with the highest potential to be implemented in the country. For this purpose, EDM has identified a number of locations alongside the existing grid that gather all the requirements to make a project economically viable. Meeting with TFPs to deepen the discussion on synergies with existing projects / initiatives. In addition to the consultations held with the TFPs on the 26 th of May (paragraph 30), the MDB s team a working session with Agence Française de Développement (AFD). AFD gave an update on their involvement in the field of renewable energy in Mali, primarily biofuels. AFD has also indicated its interest in the SREP and noted that resources would be available to the renewable energy sector in Mali from 2013 onwards. 3 See Annex 7. 4

5 In addition, a team member of the WB, working on the program "Lighting Africa" 4, took part in the mission to explore synergies between the SREP and the Lighting Africa program. As part of the mission, the WB discussed the program activities with AMADER, which is the implementing agency and is also involved in development of the SREP Investment Plan. A discussion was held about the opportunity to leverage extra funding from Nordic Funds allocated to Mali. A proposal has been prepared to receive funds from the Global Environment Fund as well. These represent opportunities and synergies to be explored with the SREP, particularly for rural electrification activities to be carried out in solar photovoltaic. The Lighting Africa activities are expected to begin shortly. 9. The mission took place in a positive atmosphere, with a dynamic and significant commitment of the GoM, which is keen to successfully implement the SREP, and with a commitment from the development partners in supporting the GoM in developing and implementing the SREP-Mali. 10. The Minister of Energy and Water, SEM. Habib OUANE, granted on 28 April, a hearing to the delegation of the MDBs and the UN, with the SREP National Commission. The delegation presented to the Minister the progress and interim results of the work jointly carried out by the mission. It was reported that guidance provided by the Minister during the workshop opening speech guided the work done by the workshop and consultants participants. The main points raised during the meeting are as follows: Submission of the Investment Plan: Given the state of completion, the submission of the investment plan is postponed until the second half of 2011 in order to ensure the quality of the document delivered. However, it was decided that the SREP National Commission will make a presentation on the status of the investment plan activities during the SREP Sub-Committee meeting in Cape Town in June. Investment Projects: A first draft of the Investment Plan has been developed, giving priority to (i) two solar PV projects (including a solar PV project to be structured as an IPP with EDM as the off taker and a second solar PV for rural electrification carried by the national agencies), (ii) a bioenergy project, (iii) a mini-hydro project, and finally the strategic coordination of the SREP program. Funds mobilization: The delegation noted the financial difficulties faced by the SREP National Commission pending the approval and disbursement of the Investment Plan Preparation Grant. The consultations made in the different regions of the country during the preparatory phase of the SREP program remain to be done. The join mission delegation informed the Minister that the mobilization of various sources of funding for the priority projects identified will continue in the coming weeks. In response to the presentation, the Minister thanked the MDBs and the UN for the quality of the work and for their support to the SREP National Commission. He reiterated the commitment of the Ministry of Energy and Water in particular and the GoM in general in strengthening the pioneering role of Mali in the development of renewable energies in the region, hoping that the development of such technologies will act as a gateway to improve the energy mix of the country, while providing opportunities for job creation for Malian youth, which represents nearly 50% of the population. 4 The "Lighting Africa" program was launched in Mali in October 2010 as an initiative from the World Bank, which aims to allow access by the population to modern off-grid lighting products in Sub-Saharan Africa. The major objective of this program is to mobilize but also to support the private sector in the sustainable supply of modern off-grid lighting to about 2.5 million people. In October 2010, following a workshop with stakeholders, the team of "Lighting Africa" has signed a Memorandum of Understanding with AMADER. Further information is available on 5

6 Finally, the Minister stressed that a quick execution of the Investment Plan and reduction of associated transaction costs, in accordance with the Paris and Accra Declaration, must be integrated into the implementation of the SREP. III. MAIN OUTCOMES OF THE MISSION III.1 Workshop 11. Overall, the workshop advanced well and the objectives set have been met. The presence of participants from various structures, have led to interesting and fruitful discussions in the working groups. Each group identified the strengths, weaknesses and opportunities related to the various themes under discussion. The five priority axes proposed by the SREP National Commission have been validated. These are: (i) Review the legislative, regulatory and institutional and financial framework in the energy sector; (ii) Complete diagnostics, impact studies, surveys and research on renewable energy technologies; (iii) Raise awareness and disseminate information on renewable energy, and ensure the strengthening of all stakeholders; (iv) make priority investments in renewable energy equipments/ infrastructure and; (v) develop an efficient system of information sharing and knowledge management as well as monitoring-evaluation of all program activities under SREP. 12. Suggestions of activities within the context of each working group were very rich and have subsequently been analyzed by the SREP National Commission, the MDBs and the UN. These suggestions have helped fuel the preparation of projects ideas to feed into the Investment Plan. The following should be highlighted: the need to strengthen the legislative, regulatory and institutional framework to establish an environment more conducive to the development of renewable energy, including investment from the private sector; the need to strengthen the capacities of different players on RE technologies but also on other aspects related to the implementation of renewable energy projects, as well as the need to support investment projects through proper analytical work and specific research; the interest of the Malian and international private sector for the SREP and their desire to participate in the development of renewable energy projects; the willingness of the stakeholders to focus on the following investment projects and technologies: (i) solar PV; (ii) mini / micro hydro; and (iii) biofuels / biomass. Proposals for several projects and investment initiatives have been submitted. During the second week of the mission, a number of working groups composed of the SREP National Commission and MDBs were created to discuss and analyze the proposed projects ideas in order to ensure their eligibility under the SREP, on the basis of technical and quality criteria and with an adequate institutional set up. 6

7 13. Group 1: Institutional, legislative and regulatory framework in the renewable energy sector. Group 1 was composed of about ten people from national institutions. Discussions in Group 1 focused on the key strengths and weaknesses/constraints identified in the stocktaking report. Members of the group have validated the results and have worked on both a prioritization of key strengths and constraints, as well as activities to be implemented under the SREP to address these constraints. The example of development of renewable energy in Germany was discussed, including the mechanism of "feed-in tariff" and its effect on electricity prices for end users. The legal process for rereading the existing texts in force was also discussed. Regarding the activity "establishment of a banking facility", the example of the Rural Electrification Fund (FER) which provides three types of instruments (grants, lines of credit, guarantees) was discussed with a view to maximize synergies within the context of rural electrification. Following these discussions, the group then tried to determine the budget needed for these activities and came up with a global investment amount of USD 8.8 million. See Annex 4 for more information. 14. Group 2: Information, training and reinforcement of the institutional, organizational and technical capacities of the stakeholders involved in the renewable energy sector. The group consisted of about twenty participants from different areas: (i) GoM; (ii) private sector; (iii) NGOs; (iv) producers and sellers of electricity; (v) research structures; (vi) regional bodies; (vii) and financial and technical partners. Discussions in Group 2 focused on better informing, raising awareness and strengthening the capacity of main players involved in the renewable energy sector in Mali. The great variety of stakeholders in the group has enriched the discussions and the proposals that emerged consequently benefited from it. The group first identified the key players in the renewables sector and grouped them into seven categories: (1) central and local GoM institutions; (2) Educational Institutions; (3) private operators; (4) NGOs; (5) Commercial Banks and Microfinance Institutions; (6) Energy Consumers; and (7) business enterprises involved in the generation and supply of electricity. The participants then identified the strengths, limitations and needs of each category. Following these discussions, the group estimated a total investment amount of USD 10 million for this component. See Annex 4 for more information. 15. On the basis of identified needs, the group proposed activities that could be included within the SREP Investment Projects - as a component / sub-project component or activity - to strengthen the stakeholders capacities. Examples of proposed activities are: Information: (i) revamping of the DNE s website to serve as an official source of relevant information regarding renewable energies in Mali; (ii) capitalize and disseminate lessons learned within projects, studies and research on renewable energies; and (iii) inform consumers of standards, quality and costs of renewable energy solutions/products available; Awareness raising: (i) sensitizing local authorities about the benefits of renewable energy technologies and the need to assist private developers in their promotion activities; (ii) collaboration with the Industry National Directorate to establish standards for renewable energy equipments; and (iii) raising awareness among the GoM institutions on the need to develop appropriate financing mechanisms (guarantees) with commercial banks in order to stimulate the development of renewable energy projects; Training: (i) strengthening the capacity of the CREE and EDM to develop a feed-in tariff system by type of technology; (ii) look into experiences from other countries; (iii) provide support for the preparation of renewable energy projects that may benefit from carbon credits; and (iv) 7

8 train analysts in commercial banks and micro finance institutions for them to be able to better assess and support renewable energy projects. 16. Group 3: Studies, research, lessons sharing and knowledge management. The group consisted of about ten national players and experts from technical and financial partners of Mali. Discussions on Group 3 focused on conducting a research program upstream and downstream of main investments, to generate and share the technological knowledge acquired. The group relied on findings from the stocktaking study to identify opportunities and bottlenecks of the current arrangements for research and knowledge sharing in the field of renewable energies. The discussion highlighted the following points: The availability of studies on (i) overcoming the identified barriers in order to lead to the adoption of renewable energy and (ii) renewable energy potential and resources in Mali. The major barrier identified by participants regarding RE research is the lack of financial resources and human capacity to conduct further studies for the development of projects. Regarding scientific research on RE, the country has taken actions that will lead to the creation of research laboratories, which main purpose is to create and use knowledge for biofuels, and to complete the mapping of RE resources in the country. The lack of financial resources allocated to applied research and qualified research staff are important obstacles to the development of RE in Mali. A number of players currently publish reviews and magazines in the field of renewable energies. However, these publications are irregular and are not sufficiently disseminated to really inform the public and generate interest in the adoption of renewable energies on a large scale. Among the limitations that hinder the development of renewable energy knowledge, it was stressed that renewable energies are not considered as a priority in the Strategic Framework for Growth and Poverty Reduction in Mali To consolidate the corpus of resources and data on renewable energies, improve the existing arrangements and develop new and more efficient systems to stimulate knowledge management, the following activities are proposed: Support the completion of the mapping and inventory of renewable energy assets in the country; Create a network SREP / Renewable Energies for supporting the existing information systems (EIS, ENR newsletter, ELCOM, GIZ...); Enhance the dissemination of renewable energy facilities/equipments through outreach and increase in communication; Provide training to relevant players involved in the maintenance of renewable energy technologies and ensure that applied research is done in the context of the use of renewable energy equipments by the Malians; Provide equipment to existing laboratories or create new laboratories if needed; Strengthen the development of quality standards / create a technical and methodological standard for the production of Jatropha (study on seed quality, standard oils, etc.) 5 It is important to note that renewable energies should be incorporated in the forthcoming Strategic Framework for Growth and Poverty Reduction, currently under development. 8

9 Following these discussions, the group tried to work on an estimated budget for the proposed activities and they suggested about USD 10 million. See Annex 4 for more information. 18. Group 4: Investments in technologies and regions with high potential for the social and economic development of the country. The group consisted of twenty five participants from different sectors: (i) national agencies; (ii) commercial banks; (iii) NGOs; (iv) local private sector companies in the field of renewable energy; and (v) MDBs. The objective of Group 4 was to discuss and identify sustainable investments opportunities in the renewable energy sector, and to identify the technologies and regions with the highest potential. The group first discussed the principles and mechanics of SREP and how the amounts allocated to Mali could be leveraged to a target that meets the SREP request. 19. The Malian private sector companies identified the expensive financing provided by local commercial banks as a huge constraint in the development of the sector, stating that without public support, their impact on the transformation of the sector would be insignificant. MDBs stated that the agency/partner in charge of implementing SREP resources, allocated under the Investment Plan, may be either a private sector company or a national agency (e.g. AMADER, CNESOLER). It was highlighted that the SREP Sub-Committee that allocates the funds expects the Investment Plan to show a strong mobilization of the private sector. The national agencies have a strong desire to directly execute the funds. This explains why most of the projects presented initially under Group 4 were to be executed by national agencies. Following the discussions, the group estimated a total investment amount of USD 152 million for a pipeline of 20 projects. See Annex 4 for more information. 20. In the end, the group divided the projects proposed initially in two categories. The first category, with a total cost estimated at USD million, included ten projects considered as a priority by the GoM. The second category included a number of projects considered as an alternative to those mentioned previously. It is important to note that these projects were part of the national agencies pipelines, even before Mali has been chosen as SREP pilot country and were linked to the National Strategy for the Development of Renewable Energies. Therefore, after the workshop, these projects were discussed in more detail by the SREP National Commission and the MDBs to identify projects that had the potential to remove the identified barriers and to meet the criteria of SREP design principles. The work continued throughout the mission to improve the projects ideas and will continue for a few weeks after the joint mission. 21. Group 5: Environmental and Social Assessment. The group was composed of representatives from the SREP National Commission (DNACPN, DNE), MDBs (AfDB) and NGOs. The group's objective was to initiate work on the environmental and social analysis 6. This initial work provided some interesting results and contributed to the identification and selection of priority investments. The group's activities have helped to: analyze the SREP objectives and the proposed investments priorities with regards to environmental and social concerns; prioritize proposed investments, from a sustainable development perspective; for instance address the impacts of greenhouse gas emissions from biomass to convert it into clean 6 See annex 10. 9

10 biomass (i.e. recycling GHG emissions through biogas for example). In addition to the electricity sector, SREP could have an incremental positive impact on agriculture that would benefit fully from the SREP transformational impacts; To do this, an innovative and programmatic financing could be proposed: a fund that would finance mitigation measures arising from the environmental and social impact studies of the investment projects, as well as mitigation projects presented by NGOs and communities. The capital of this fund could amount to USD 10 million. The preliminary results of the environmental and social analysis will confirm whether such fund is relevant and what could be its modalities. 22. The discussions of the working group led to the identification of ideas for community projects including some related to jatropha, sweet sorghum, biogas, mini hydro, landfill structured promoting biogas and compost, and renewable energy laboratories in the UNESCO Associated Schools in Mali. In brief, the logic of the environmental and social analysis has served as a first filter in the investment decision process, from the perspective of maximizing SREP positive impacts. See Annex 4 for more information. III.2 CONSULTATIONS 23. As part of the workshop, consultations were made according to specific themes. During the second week of the mission, additional consultations were held with different types of stakeholders, this time to better take into consideration the contributions of the various stakeholder groups. See Annex 6 for full reports of the consultation meetings. National Institutions 24. The consultations with the national institutions involved in the sector of renewable energy were held on April 26 th. A dozen of representatives from diverse ministries were represented - Ministry of Territorial Administration and Local Governments, Ministry of Water and Sanitation a number of National Directorates - National Directorate of Energy Management, National Directorate of Industry, National Directorate of Water and Forests, and other national institutions such as AMADER, ANADEB and CNESOLER. The consultations focused on the coordination mechanisms of sectoral policies, the strategic outcomes of the SREP and risks related to the formulation and implementation of the SREP. 25. In terms of coordination mechanisms, participants stressed the need to review the institutional and legal texts to refine the roles and functions of relevant institutions and to establish a mechanism to coordinate their activities. Afterwards, participants cited a number of strategic outcomes that SREP should attain: (i) the existence of a legal, regulatory and institutional framework to better promote renewable energy, and (ii) reduction on fossil fuels dependence through the increase of installed capacity from renewable energy sources. 26. In terms of risks associated with the formulation and implementation of the SREP, the participants highlighted the volatility of renewable energy technologies cost, and the fact that this could increase project costs between the design and implementation phase. Furthermore, it has been mentioned that private sector involvement would be put at risk in case of an unsuccessful international tender process linked to the lack of capacity by the government bodies in implementing and overseeing a proper, competitive and efficient procurement process for the 10

11 choice of a Project Developer. Still, both IFC and AfDB Private Sector Department will be open to different procurement modalities, including Direct and Competitive Procurement, whichever the most appropriate and bearing in mind each MDB s rules and guidelines. It should be noted that participants did not identify any comparative advantages in having their institutions implementing SREP projects since these are not yet designed. Finally, the participants did not identify any critical assumption worth being mentioned for SREP implementation. Private Sector 27. The meeting with private sector organization took place in the National Directorate of Energy. It was chaired by the Associate National Director of Energy. Participants to the meeting were: (i) national agencies, (ii) local private sector companies in the field of renewable energy, and (v) MDBs (including the AfDB and IFC). 28. Discussions evolved around a number of issues which, according to the Malian private sector, are obstacles to their greater involvement in the renewable energy sector. Among other things, private sector representatives indicated that: (i) supporting mechanisms for small operators should be developed, particularly for those operating in rural areas; (ii) it is essential to define and establish a sustainable funding mechanism for renewable energy (access to bank financing, implementation of a guarantee fund and promotion of equity between rural and urban areas); (iii) rural producers of electricity should enjoy benefits similar to those received by EDM; (iv) a broader discussion on the development of legislation affecting the private sector in Mali in the field of renewable energies is vital; (v) it should be developed new forms of partnership between public and private sectors to stimulate new investments; (vi) it is essential to develop a good policy of cooperation / communication / information between different players; (vii) the legislation must evolve to facilitate access to land for the implementation of renewable energy projects in general, and solar energy projects in particular; and (viii) an information sharing mechanism should be established to showcase the private sector initiatives in the field of renewable energies. 29. Given the strong momentum of the Malian private sector and the large number of projects proposed by them, the SREP National Commission recommended that any project proposal should be submitted to them in the format defined by the SREP guidelines and should meet the SREP criteria. In addition, it was explained to the national private sector that many opportunities would emerge during the implementation of SREP projects, according to the defined projects. Civil Society 30. The consultative meeting with civil society took place at the National Directorate of Energy. It was chaired by Mr. Alhousseini - CNESOLER. The participants were: (i) representatives of NGOs working in the energy sector; (ii) a few consumers associations, (iii) CNESOLER, (iv) MDBs and (v) the UN. 31. The discussions evolved around issues such as the adequacy and relevance of current arrangements in the energy sector in general and in the field of renewable energies in particular. In this regard, participants agreed on: (i) the need to review the laws and regulations in the energy sector and especially in the sub-sector of renewable energies in order to make the sector more attractive to different players; and (ii) the need to define criteria for sustainable production of biofuels, focusing primarily on local channels (small farms run by small producers). According to participants, the most important activities that SREP should primarily engage in Mali are: (i) the promotion and use of solar energy in simple systems or hybrid systems, together with other sources of energy to improve the overall performance of decentralized solutions; (ii) the promotion and use of other renewable energy sources available in Mali that stimulate the creation of new jobs and generate revenues such 11

12 as using agricultural residues for cogeneration, biofuel and its derivatives for power generation; (iii) the creation of incubation centers to facilitate the creation of new private companies; (iv) the creation of alternative domestic energy sources; (v) the establishment of appropriate financing mechanisms for renewable energy in order to facilitate its acquisition and widespread use; and (vi) the development of private forests dedicated to meet the needs of fuelwood. Finally, the civil society has expressed interest in being involved in the implementation and monitoring of SREP activities to maximize a natural comparative advantage given their proximity with the populations. Technical and Financial Partners 32. The MDBs involved in the implementation of SREP-Mali held a consultation meeting on the April 26 th with the TFPs involved in the sectors of energy and environment. The objective of this consultation was to strengthen the understanding of the TFPs on the SREP objectives and the progress achieved in the development of the Investment Plan, as well as to discuss possible synergies between current and proposed initiatives with a view to attract the interest of the TFPs via co-financing opportunities. The TFPs attending the meeting were the GIZ, Norway Embassy, the Delegation of the European Union, UNDP, UNEP and the Embassy of Denmark. 33. A debate was initiated with the participants after a series of presentations was made by the AfDB. It appears that the contribution of TFPs is subject to a better definition of the SREP projects, prior to the identification of synergies between the SREP and projects / initiatives already being implemented or in the pipeline. Thus, specific discussions will occur over the coming weeks with donors involved in the renewable energy field. The participants noted the necessity to move towards proven technologies (solar PV, mini-hydro and biomass / biofuels) and to call for cofinancing (private sector included) for leveraging additional resources, taking into account the limited SREP contribution. On projects / initiatives underway or planned, a detailed table is available in Annex 10. It is clear from the discussion that there are a significant number of projects and initiatives underway or planned in the RE area and that those projects / initiatives will strengthen the framework within which the SREP is developed. 34. At the end of the meeting, it was noted that: The join mission team was at the disposal of the TFPs to engage in bilateral meetings to further explore synergies between the SREP and their projects/initiatives; The TFPs would be invited to participate in the development of investment projects where synergies have been identified regarding their current and future projects; The TFPs would be invited to comment on the draft Investment Plan when it is ready for consultation. III.3 MINI-WORKSHOP BETWEEN MDBs/UN AND THE SREP NATIONAL COMMISSION 35. Initially, two mini-workshops were planned, one focusing on project proposals and the other one on the M&E framework and the environmental and social analysis. Given the status of projects development, the joint mission decided to focus on further defining projects ideas on the basis of what was jointly identified during the joint mission. 36. Investment Projects under SREP Mali: The diagram below was the result of the first day of this mini workshop on proposed projects; it was based on the stocktaking report, the results of the mission workshop, the working groups and the various consultations and discussions held during the mission. The diagram should be considered as a draft proposal to be refined and submitted for review to the MDBs. The diagram includes: (i) a solar PV project implemented by the private sector - 12

13 SREP amount would be about USD 12 million [30% of the SREP envelop] (ii) a second solar PV project for rural electrification executed by national agencies and local private sector companies - SREP amount would be about USD 12 million [30% of the SREP envelop] (iii) a bioenergy project implemented by national institutions - SREP amount would be about USD 6 million [15% of the SREP envelop], (iv) a mini / micro hydropower project implemented by national agencies - SREP amount would be about USD 6 million [15% of the SREP envelop], and finally (v) the strategic coordination of the SREP program - SREP amount would be about USD 4 million [10% of the SREP envelop]. The initial allocation of funds for these projects is not final. It is expected that the amounts and instruments will be refined and proposed in due time, depending on the identification and validation of appropriate partnerships and co-financing opportunities. 37. The proposed projects were presented and discussed during the last meeting of the mission. Initial summaries of proposed projects are available in the next paragraphs. Concept notes for investment projects through which the activities of SREP Mali will be implemented need to be developed further in the coming weeks (see calendar) and incorporated in the investment plan. 38. The strategic coordination of the program aims to ensure that monitoring and evaluation of the program, cross-sectoral capacity building of the key stakeholders, knowledge management, and revision of the legislative, regulatory and institutional frameworks are well managed. All of this must be done in coordination with the four identified projects in order to improve their overall implementation. In addition to the activities proposed for this strategic coordination, it was 13

14 suggested that an activity identified as "fundraising" be added to ensure that further co-financing can be raised for the benefit of the program. A proposal was also made to explore the idea of establishing lines of credit in commercial banks with a view to support local private sector development and potential buyers of renewable energy equipment. Finally, it was proposed that, based on identified needs, the coordination unit would conduct some cross-sectoral analytical studies that support the four projects. 39. Project 1 is a Solar PV to be implemented by the private sector as an IPP. The objective is to contribute to social and economic development and to fight against poverty in Mali, demonstrating the feasibility of an integrated energy model. Through the use of solar PV technology, the project would produce nearly 20 MW (to be determined) of additional electricity. Further to the increase in generation capacity, the project aims at preparing the path for future development of private sector initiatives and public-private partnerships, while doting the responsible national agencies with the capacities needed and ensuring that the procedures and legal agreements (e.g. Concessions and Power Purchase Agreements) are conducted according to international standards and taking into account MDBs guidelines. It was stressed that the SREP contribution would be paid directly to the project company and that the MDBs would provide the minimum concessionality to catalyze investment as per SREP Guidelines. In addition, the national ministries will be part of discussions to establish proper sovereign guarantee mechanisms to improve the credit risk profile of a transaction of this type. During the meeting, the discussions focused particularly on the timing of the project and the modalities for selecting the private developer. Other questions were raised, particularly in terms of carbon credits and how the project could benefit of such credits. For the time being, it is difficult to estimate the amount of revenue associated with these credits but it is important that these funds be used to stimulate overall viability of the project. 40. Project 2 is a Solar PV for Rural Electrification: Energy issues have forced Mali to develop adequate tools to provide people, especially in rural areas, with access to modern energy solutions. In addition to regulatory texts, rural electrification is governed in Mali by the reference framework for the development of rural electrification. The main objective of the proposed project is to contribute to the social and economic development and fight against poverty in Mali through the integration of renewable energies in production and distribution systems of electricity in rural areas. This will allow: (i) enhancing the implementation of Solar PV solutions in a number of locations currently using diesel generators; and (ii) providing Solar PV kits to villages not electrified in a number of regions in Mali. A pre-feasibility study was conducted on the identification of several localities. The proposed project will also include activities to promote income-generating activities in rural areas, the productive use of energy and job creation. Furthermore, technical assistance, training, reinforcement of partnerships, and monitoring and evaluation at project level will be ensured, while incorporating synergies with partners, and other development initiatives in Mali. The project beneficiaries are the rural areas populations identified throughout the territory. It was proposed that the execution of the project is assigned to AMADER in partnership with CNESOLER, and with the active participation of the Malian private sector in implementing the needed infrastructures (including operators of rural electrification services). 41. Regarding Project 3, a Mini-Hydro, it is important to mention that Mali has a remarkable hydro potential which is being underused. The potential lies mainly in the regions of Sikasso, Kayes and Mopti. Pre-feasibility studies exist for some locations and successful implementation would greatly contribute to the energy mix of the country while reducing its dependence on fossil fuels and achieving an electrification program that would improve the access of populations to modern and clean energy solution. The project will use part of SREP resources to showcase the improvement in the living conditions of populations through the development of mini/micro hydro projects. The project will address the sectoral constraints and weaknesses related to: i) lack of access to electricity 14

15 by rural populations at affordable prices and with a view to save forestry/wood resources; (ii) the enhancement and streamlining of the use of renewable energy resources in the country; and iii) the weak involvement of private investors in the development of renewable energy solutions. The project components identified are: (i) hard investments, (ii) establishment of an institutional and capacity building / monitoring / evaluation and knowledge sharing framework. The project will be implemented by the DNE with support from the MDBs. 42. Regarding project 4 bio-energy and considering the increasing needs in electricity and energy for cooking, and considering the increasing prices of fossil fuels and the deforestation issues, it was suggested to design a SREP project dedicated to bioenergy. The main goal of the project is to increase electricity access and the production of clean cooking fuels for households, small and medium enterprises and local communities through greater generation of electricity and biofuels derived from biomass. The project will finance investments, improve the legal and regulatory framework and strengthen the capacities of key stakeholders in the biofuel, biogas and woodfuel sub-sectors. The proposed investments include amongst others, the purchase and installation of biofuel production units, and multifunctional platforms. Measures will be put in place to encourage the creation of small and medium enterprises (SMEs) to enable the development of improved stoves at a large-scale. It was proposed that activities in the biofuel sub-sector will be implemented by the Agence Nationale de Développement des Biocarburants (ANADEB) while those related to biogas and woodfuel will be implemented by AMADER). III.4 ADDITIONAL ACTIVITES THAT CONTRIBUTE TO THE DEVELOPMENT OF THE INVESTMENT PLAN 43. The joint mission also discussed the status of some preparatory activities, including the environmental and social analysis of the program, the approval schedule of the Investment Plan Preparation Grant by the responsible MDB and the status of development of the public website on which the Investment Plan will be consulted. 44. Framework for monitoring and evaluation SREP Mali: Preparatory work was undertaken by the SREP National Commission and MDBs ahead of the Joint Mission, to support the process of developing the framework for measuring SREP results at program level. The national consultant hired to support the development of the Investment Plan is currently completing the matrix of indicators with baseline data. The development of the M&E framework will be intensified in the coming weeks, as the investment projects will be developed. 45. The Environmental and Social Analysis of the SREP Program: The environmental and social analysis, undertaken by the international expert, began just before the joint mission and was further developed during the mission through specific meetings. The work is conducted in two phases: (i) an environmental and social analysis and (ii) the development of a framework for environmental and social management (ESMF). The analytical work was started and discussed during the joint mission. It has yielded analytical elements supporting the definition of the investment projects. The framework for environmental and social management will be developed in the coming weeks. See Annex 9 for more information. 46. The SREP Mali website is being developed as part of a broader participatory approach. The objective is to make available elements that will ensure an effective participation by all involved stakeholders. The website of the DNE is currently being revamped and therefore a temporary website was established. The website is The information contained will be made available on the DNE s website as soon as it becomes operational. 15

16 47. Investment Plan Preparation Grant: The SREP National Commission in cooperation with the MDBs has prepared an application to benefit from an Investment Plan Preparation Grant. It has been approved by the CIF Administrative Unit in March The preparatory activities included the support for the technical workshops and meetings, the support for regional consultations, the support for the development of the investment plan and the environmental and social assessment for the SREP Program. The grant resources will be transferred to a special account opened by AMADER, acting as the executing agency. The use of these funds shall be done in accordance with the responsible MDB procedures and guidelines (AfDB). The approval process to channel the funds is ongoing at AfDB. III.5 INVESTMENT PLAN 48. As mentioned earlier, it was acknowledged that the Investment Plan was not ready to be submitted for approval to the Sub-Committee in June Consequently, it has been agreed that work would continue in the weeks following the joint mission, to refine and consolidate the project briefs and the Investment Plan. 49. During the joint mission, it appeared that the proposed priority and strategic areas of intervention were confirmed by the majority of stakeholders and the SREP National Commission (see paragraph 11). The diagram below shows the priority areas of intervention, transversal measures and the main strategic intervention axes 7. From these strategic axes are extracted the project ideas presented in the previous section. 7 The five priority intervention axes mentioned in paragraph 11 have been revised following discussions which main outcome was to keep three priority areas of intervention and two transversal measures of support (see green part of the diagram). 16

17 50. In terms of institutional set up, it was proposed that the strategic coordination of the program is delegated to the DNE. Discussions on the institutional framework of the program should be refined in the upcoming weeks but a first draft is presented in the diagram below. 17

18 51. A draft version of the Investment Plan was outlined during the mission and will be improved in the coming weeks (see road map below). Meetings are planned between the SREP National Commission and the MDBs to work on the Investment Plan. IV. FINDINGS AND RECOMMENDATIONS 52. Under the leadership of the GoM and more specifically the SREP National Focal Point, the mission worked in good cohesion and roles were well shared among members of the MDBs and the UN System. The SREP National Commission benefited from the expertise of the MDB and UN teams to support the various consultations, prepare the Investment Plan and project ideas, and conduct discussions on the environmental and social analysis. The joint mission conveyed a meaningful dialogue between the key players in the renewable energy sector. A roadmap for the next steps has been established to continue the work on projects and finalize the Investment Plan for submission to the SREP Sub-Committee in the second half of Based on the evidence presented in the previous pages, the joint mission recommends: developing and harmonizing the five project briefs in accordance with SREP guidelines. Pre-finalizing the Investment Plan for presentation at the CIF Forum in June 2011 in Cape Town, Republic of South Africa. Organizing the regional consultative meetings post joint mission. Engaging (the SREP National Commission) in bilateral consultations with TFPs to identify cofinancing opportunities within the context of SREP. V. NEXT STEPS 54. Given that the formal submission of the Investment Plan to the Sub-Committee has been postponed to a later date (second half of 2011), and considering the willingness of the GoM to make a 18

19 presentation of the progress of its activities at the next CIF Forum, the following roadmap has been put in place: ACTIVITIES DEADLINE RESPONSABILITIES Discussion/validation meeting for the first report of the environmental and social analysis Finalization of the Aide-Mémoire / translation in English / submission to CIF Admin Unit National Commission and MDB/UN Pre-finalization of the PI and meeting to discuss the content with the National Commission 5th May 27th May 27th May DNE/DNACPN/consultants DNE / AfDB SREP National Commission/ AfDB/Consultants Preparation of the Poster for Cape Town 3rd June DNE/AfDB Preparation of the presentation for Cape Town 10th June DNE/AfDB/Consultants Finalization of the environmental and social analysis National Commission 17th June DNACPN/AEDD/DNEF/ Consultants Continuation of the technical work to define the projects and availability of the concepts in the guidelines format 17th June All parties with the support of the consultants Discussion with the TFP and other partners to ensure cofinancing of the projects 17th June National Agencies proposed to implement projects Translation of the first sections of the PI to ensure quality End June AfDB review by MDBs Meetings in Cape Town End June Two members of GoM/MDBs Regional consultations to refine/validate the projects + July DNE/CNESOLER consultations with other stakeholders according to the needs Finalization of the IP for validation by MDBs and the July BMD/DNE/Consultants Government Independent evaluation of the IP + consultations on the DNE website August Evaluator/CIF Admin Unit/ DNE Revision of the IP including recommendations from GoM August/ DNE/AfDB/Consultants + external reviewer + MDBs + public consultations September Finalization and Submission to SREP Sub-Committee September DNE/AfDB Procedures Processing and Approval of the Preparation Grant 27 May AfDB Special Account opened by AMADER 27 May AMADER 19

20 ANNEXES Note: Annexes are available in French only (except annex 7) Annex 1 List of Joint Mission participants Annex 2 Terms of Reference of the Joint Mission Annex 3 Terms of Reference of the Workshop Annex 4 Workshop Report and list of participants Annex 5 Terms of Reference of the technical consultations Annex 6 Minutes of the technical consultations Annex 7 Meeting with EDM management Annex 8 Visit of the Ouelessebougou solar plant Annex 9 Environmental and social analysis Annex 10 Table of the RE projects supported by development partners 20