Project Appraisal Document



Document ofThe World BankFOR OFFICIAL USE ONLYReport No: PAD550INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVLOPMENT ANDINTERNATIONAL DEVELOPMENT ASSOCIATIONPROJECT APPRAISAL DOCUMENTON APROPOSED Grant FROM THE MENA TRANSITION FUNDIN THE AMOUNT OF US$6.5 MILLION TO THEaRAB REPUBLIC OF EGYPTFOR AnENERGY/SOCIAL SAFETY NETS SECTOR REFORMS TECHNICAL ASSISTANCE PROJECTNovember 26, 2013Energy and Environment UnitSustainable Development DepartmentThis document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.CURRENCY EQUIVALENTS(Exchange Rate Effective November 14, 2013)Currency Unit=Egyptian Pound (LE)[LE6.887]=US$1FISCAL YEARJuly 1–June 30Abbreviations and AcronymsAfDBAfrican Development Bankbbl/dBarrels per daybcmBillion Cubic MeterCAPMASCentral Agency for Public Mobilization StatisticsCCGTCombined Cycle Gas TurbineCGEComputed General EquilibriumCOACentral Organization AuditCSOCivil Society OrganizationCSPConcentrated Solar PowerCTPCash Transfer ProgramDADesignated AccountEAAPEU-Egypt Association Agreement ProgramEEEnergy EfficiencyEEHCEgyptian Electricity Holding CompanyEETCEgyptian Electricity Transmission CompanyEGPCEgyptian General Petroleum CorporationEgyptERAEgyptian Electric Utility and Consumer Protection Regulatory AgencyESPSPEnergy Sector Policy Support ProgramEUEuropean UnionFCSFamily Smart Card SystemFMFinancial ManagementFYFiscal YearGDPGross Domestic ProductGFMINSGovernment Financial Management Information SystemGHGGreen House GasHIECSHousehold Income Expenditure and Consumption SurveyIPPIndependent Power ProducerISAImplementing Support AgencyISNInterim Strategy NoteIT Information SystemsJICAJapanese International Corporation AgencyKfWKreditanstalt für WiederaufbauLNGLiquefied Natural GasLPGLiquefied Petroleum GasMENAMiddle East And North AfricaMMBTUMillion British Thermal UnitsMOEEMinistry of Energy and ElectricityMSADMinistry of State for Administrative DevelopmentmtoeMillion Tonnes of Oil EquivalentNEEAPNational Energy Efficiency Action PlanNGONon-Governmental OrganizationNIDNational IdentificationOMOperational ManualORAFOperational Risk Assessment FrameworkPCProject CoordinatorPDO Project Development ObjectivesPFMPublic Financial ManagementPMTProject Management TeamPPAPower Purchase AgreementPSCProject Steering CommitteePVPhotovoltaicsSCAFSupreme Council of Armed ForcesSOEState Owned EnterpriseSSNSocial Safety NetTATechnical AssistanceTWUTechnical Working UnitRegional Vice President:Inger AndersenCountry Director:Hartwig SchaferSector Director:Junaid Kamal AhmadSector Manager:Charles Joseph CormierTask Team Leader:Husam Mohamed BeidesCo-Task Team Leader:Mohab Awad Mokhtar HalloudaEGYPT, aRAB rEPUBLIC OFEnergy/Social Safety Nets Sector Reforms Technical Assistance ProjectTABLE OF ContentsPage TOC \t "PDS Heading 2,2,PDS Heading 1,1,PDS Annex Heading,1" I.STRATEGIC CONTEXT PAGEREF _Toc373142647 \h 1A.Country Context PAGEREF _Toc373142648 \h 1B.Sectoral and Institutional Context PAGEREF _Toc373142649 \h 2C.Higher Level Objectives to which the Project Contributes PAGEREF _Toc373142650 \h 9II.PROJECT DEVELOPMENT OBJECTIVES (PDO) PAGEREF _Toc373142651 \h 9A.PDO PAGEREF _Toc373142652 \h 9Project Beneficiaries PAGEREF _Toc373142653 \h 9PDO Level Results Indicators PAGEREF _Toc373142654 \h 9III.PROJECT DESCRIPTION PAGEREF _Toc373142655 \h 10A.Project Components PAGEREF _Toc373142656 \h 10B.Project Financing PAGEREF _Toc373142657 \h 13Project Cost and Financing PAGEREF _Toc373142658 \h 14IV.IMPLEMENTATION PAGEREF _Toc373142659 \h 15A.Institutional and Implementation Arrangements PAGEREF _Toc373142660 \h 15B.Results Monitoring and Evaluation PAGEREF _Toc373142661 \h 16C.Sustainability PAGEREF _Toc373142662 \h 16V.KEY RISKS AND MITIGATION MEASURES PAGEREF _Toc373142663 \h 17A.Risk Ratings Summary PAGEREF _Toc373142664 \h 17B.Overall Risk Rating Explanation PAGEREF _Toc373142665 \h 17VI.APPRAISAL SUMMARY PAGEREF _Toc373142666 \h 18A.Economic and Financial Analyses PAGEREF _Toc373142667 \h 18B.Technical PAGEREF _Toc373142668 \h 19C.Financial Management PAGEREF _Toc373142669 \h 19D.Procurement PAGEREF _Toc373142670 \h 20E.Social (including Safeguards) PAGEREF _Toc373142671 \h 21F.Environment (including Safeguards) PAGEREF _Toc373142672 \h 21Annex 1: Results Framework and Monitoring PAGEREF _Toc373142673 \h 22Annex 2: Detailed Project Description PAGEREF _Toc373142674 \h 25Annex 3: Implementation Arrangements PAGEREF _Toc373142675 \h 31Annex 4: Operational Risk Assessment Framework (ORAF) PAGEREF _Toc373142676 \h 40Annex 5: Implementation Support Plan PAGEREF _Toc373142677 \h 43PAD DATA SHEETEgypt, Arab Republic ofEGYPT Energy/Social Safety Nets Sector Reforms Technical Assistance (P144305)PROJECT APPRAISAL DOCUMENTMIDDLE EAST AND NORTH AFRICAMNSEEReport No.: PAD550.Basic Information Project IDEA CategoryTeam LeaderP144305C - Not RequiredHusam Mohamed BeidesMohab Awad Mokhtar Hallouda, Co-TTLFowzia Hassan, Co-TTLLending InstrumentFragile and/or Capacity Constraints [ ]Investment Project FinancingFinancial Intermediaries [ ]Series of Projects [ ]Project Implementation Start DateProject Implementation End Date25-November-201330-Jun-2016Expected Effectiveness DateExpected Closing Date02-Dec-201330-Dec-2016Joint IFCNoSector ManagerSector DirectorCountry DirectorRegional Vice PresidentCharles Joseph CormierJunaid Kamal AhmadHartwig SchaferInger Andersen.Borrower: Arab Republic of EgyptResponsible Agency: Ministry of Electricity and Energy Contact:Eng. Mohammed Omran Title:Undersecretary for Research Planning Telephone No.:(202) 2261-6523 Email:omranson@.Approval AuthorityApproval AuthorityRVP Decisionplease explainMiddle East and North Africa Transition Fund operations are approved by Regional Vice President..Project Financing Data(in USD Million)[ ]Loan[ X ]Grant[ ]Guarantee[ ]Credit[ ]IDA Grant[ ]OtherTotal Project Cost:6.50Total Bank Financing:0.00Financing Gap:0.00.Financing SourceAmountBorrower0.00MNA VPU Free-standing Trust Funds6.50Total6.50.Expected Disbursements (in USD Million)Fiscal Year201420152016201700000000000000000000Annual0.253.002.500.750.000.000.000.000.00Cumulative0.253.255.756.500.000.000.000.000.00.Proposed Development Objective(s)The proposed project will strengthen the Government of Egypt's capacity to (i) design a comprehensive fuel subsidy reform strategy; (ii) establish concrete measures for improved financial viability of key energy sector actors; and (iii) identify households that would be most vulnerable to the impacts of the fuel subsidy reform..ComponentsComponent NameCost (USD Millions)Power Sector Institutional Development and Financial Viability2.70Energy Pricing and Fuel Switching Reform Technical Assistance1.80Strengthening Social Safety Nets (SSN) Technical Assistance2.00.Institutional DataSector BoardEnergy and Mining.Sectors / Climate ChangeSector (Maximum 5 and total % must equal 100)Major SectorSector%Adaptation Co-benefits %Mitigation Co-benefits %Health and other social servicesOther social services35Energy and miningGeneral energy sector65Total100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project..ThemesTheme (Maximum 5 and total % must equal 100)Major themeTheme%Public sector governanceOther public sector governance35Financial and private sector developmentInfrastructure services for private sector development35Social protection and risk managementSocial safety pliance PolicyDoes the project depart from the CAS in content or in other significant respects?Yes[ ]No[ X ].Does the project require any waivers of Bank policies?Yes[ ]No[ X ]Have these been approved by Bank management?Yes[ ]No[ ]Is approval for any policy waiver sought from the Board?Yes[ ]No[ X ]Does the project meet the Regional criteria for readiness for implementation?Yes[ X ]No[ ].Safeguard Policies Triggered by the ProjectYesNoEnvironmental Assessment OP/BP 4.01XNatural Habitats OP/BP 4.04XForests OP/BP 4.36XPest Management OP 4.09XPhysical Cultural Resources OP/BP 4.11XIndigenous Peoples OP/BP 4.10XInvoluntary Resettlement OP/BP 4.12XSafety of Dams OP/BP 4.37XProjects on International Waterways OP/BP 7.50XProjects in Disputed Areas OP/BP 7.60X.Legal CovenantsNameRecurrentDue DateFrequencyDescription of Covenant.ConditionsNameTypeExecution and delivery of Grant Agreement on behalf of the RecipientEffectivenessDescription of ConditionThe execution and delivery of this Agreement on behalf of the Recipient have been duly authorized or ratified by all necessary governmental actions.NameTypeSubmission of Legal OpinionEffectivenessDescription of ConditionThe Agreement will become effective when the World Bank receives from the Recipient a formal notification satisfactory to the World Bank that the Recipient has duly entered into this Agreement and its terms and conditions are fully valid and binding and all the necessary internal procedures have been completed by the Recipient.Team CompositionBank StaffNameTitleSpecializationUnitBanu SetlurEnvironmental SpecialistEnvironmental SpecialistMNSEEBadr KamelSenior Procurement SpecialistSenior Procurement SpecialistMNAPCNina BhattLead Social Development SpecialistLead Social Development SpecialistMNSSUFowzia HassanEnergy SpecialistCo-Task Team LeaderMNSEEGustavo C. DemarcoLead EconomistLead EconomistMNSSPChaogang WangSenior Social Development SpecialistSenior Social Development SpecialistMNSSUHayat Taleb Al-HaraziProgram OfficerProgram OfficerMNARSLire ErsadoSenior EconomistSenior EconomistAFTP2Maria VagliasindiLead EconomistLead EconomistSEGENMark M. NjoreProgram AssistantProgram AssistantMNSEEHusam Mohamed BeidesLead Energy SpecialistTask Team LeaderMNSEEMohab Awad Mokhtar HalloudaSenior Energy SpecialistCo-Task Team LeaderMNSEEEman Fouad WahbyCommunications OfficerCommunications OfficerMNAEXWael Ahmed ElshabrawyFinancial Management AnalystFinancial Management AnalystMNAFMAmr S. MoubarakE T ConsultantE T ConsultantMNSSPNorhan Mohamed SadikTemporaryTemporaryMNCEGNon Bank StaffNameTitleOffice PhoneCity.LocationsCountryFirst Administrative DivisionLocationPlannedActualCommentsSTRATEGIC CONTEXTCountry ContextMore than two and a half years after the January 2011 Revolution, Egypt is embarking on a new transition following the ousting of President Morsi in July 2013. A new political road map is in place with a timeline of nine to twelve months that includes amending the suspended 2012 Constitution, holding a referendum to approve the amended constitution, and conducting parliamentary elections followed by presidential elections. An interim Government was appointed on July 16, 2013. The Gulf States have pledged a large amount of exceptional financial assistance during this transition period. In early July 2013, Saudi Arabia, the United Arab Emirates (UAE), and Kuwait pledged an aid package totaling US$12 billion to support Egypt. The Gulf aid package has helped boost dwindling reserves and stabilize markets. Reserves recovered to almost US$19 billion at end-July 2013 (equivalent to about three months of FY14 projected merchandise imports) from a US$14 billion at end-June, which was the lowest point despite the US$10 billion in aid received in FY13 from Qatar, Turkey, and Libya. The exchange rate is now stabilized following the strong depreciation (nearly 15 per cent) during the first half of 2013 while the parallel market premium has been largely eliminated. Also, Treasury Bill rates have moved lower in response to improved liquidity conditions. However, growth remains weak, inflationary pressures are increasing, and the fiscal position is becoming increasingly unsustainable. Economic activity was dampened throughout FY13 by political rivalry, disrupted business activities, frequent power cuts, inadequate fuel and foreign exchange supplies, and lack of policy certainty. Output growth remained subdued during the first nine months of FY13 at just over two per cent, similar to the year before. This pushed the unemployment rate higher, reaching over 13 per cent in June 2013. Headline inflation has reached double digits, with food inflation at 14 per cent in July 2013, the highest rate in almost two years. The fiscal stance weakened sharply in FY13, with preliminary estimates indicating an increase in the budget to nearly 14 per cent of Gross Domestic Product (GDP) from under eleven per cent of GDP the year before. Gross public debt (domestic and external) is estimated to have reached almost 100 per cent of GDP at end-June 2013.Subsidies for fuel consumption remain a major budget burden and have accounted for 18–20 per cent of budget expenditures in recent years, amounting to 5–7 per cent of GDP. Egypt had developed a two phase fuel subsidy reform program and fully implemented in 2012 its first phase including a wide range of targeted fuel price increases reducing subsidies for mainly energy-intensive industries. However, a broader rationalization of fuel subsidies to other producers and consumers remains work in progress.The Government has been working on containing the economic and fiscal crisis engulfing the country and the deteriorating public services including nationwide power cuts, chronic fuel and water shortages, suffocating traffic and accumulating trash in the streets. Under the pressure of increasing macroeconomic imbalances and the need to seek exceptional balance of payments and budget financing, the Government continues to consider programs to tackle the legacy of huge energy subsidies that have distorted the economy and led to an unsustainable fiscal situation.Sectoral and Institutional ContextEgypt’s total primary energy demand has grown at an average annual rate of 4.6 per cent during the last two decades. This high growth is due to the country’s economic expansion, industrialization, population growth and change life style. Although all energy forms have been subject to high growth, electricity consumption in particular has increased substantially causing serious concerns about the power sector’s fuel requirements and imposed an excessive burden on the Government budget. Oil and Gas Sector. Egypt had a significant level of oil export through the 1980s and 1990s. Total oil production has declined since the country’s 1996 peak of about 935,000 barrels per day (bbl/d) to current levels of about 685,000 bbl/d. In the meantime, domestic oil consumption has increased steadily absorbing almost all of the oil production since 2006. As a result, Egypt has become a net importer of petroleum products. In 1976, the Egyptian General Petroleum Corporation (EGPC) was established as a holding corporation. It owns twelve public sector companies and shares in 58 petroleum companies with foreign partners. Over the last three years, EGPC faced many challenges in covering Egypt’s needs in the Oil and Gas sector. These were compounded by the growing energy subsidies associated with the increasing market needs. This resulted in financial deficits for EGPC, limiting its capability to import required amounts of oil for the market. In 2002, EGPC’s total debt stood at half a billion Egyptian pounds (LE). In 2012, that debt exceeded LE 100 billion. Natural gas has substituted oil both in domestic use and in export of energy. During the 1990s, Egypt made substantial new gas discoveries tripling its proven gas reserves. Gas production tripled from 21 bcm in 2000 to 61.3 bcm in 2010. The rise in gas reserves had led the Government to promote the domestic use of gas (representing about 70 per cent of production) and to seek export options in the form of liquefied natural gas (LNG) and piped gas (representing about 30 per cent of production). It successfully created a domestic market for gas with an estimated demand of about 50 bcm/year, built three LNG trains with a capacity of 17 bcm/year, and implemented the Arab Gas Pipeline system with an approximate capacity of 10 bcm/year. Although domestic gas prices were low, the Government offered international oil companies substantially higher prices in order to create the incentives necessary for upstream producers to develop existing reserves and explore for new gas reserves. Foreign oil companies were obliged to sell up to two-thirds of their share of gas to the Egyptian gas company for which they received a price of US$2.65/MMBtu. This price has been adjusted upwards several times in recent years and is currently reportedly in the range of US$3.7US$6 per MMBtu.The power sector is a major user of gas, domestically accounting for about 60 per cent of total demand. The industrial sector consumes about 30 per cent, while the fertilizer and cement industries account for 10 per cent and 8 per cent, respectively. Natural gas is also delivered to the residential sector through low pressure pipeline distribution systems and LPG cylinders supplied by retailers. Combined, they account for 2 per cent of total gas demand but are expected to grow at a fast pace (about 15 per cent per annum). Finally, the use of Compressed Natural Gas (CNG) in vehicles accounts for about 2 per cent of total gas consumption The gas sector, which was until a few years ago considered a primary source of Egypt’s wealth, is in a financially unviable situation while being unable to meet the domestic gas demand. Presently, the gas sector is experiencing a supply gap of about ten bcm/year. The Government is considering importing gas in the form of LNG which would cost in excess of US$10/MMBtu. While the economic cost of insufficient gas supply is well understood, the financial viability of a gas import proposition is questionable, as long as gas is sold at the negligible price of US$1/MMMBtu to the electricity sector.Power Sector. The power sector’s financial performance is poor. Over the years, the Government has invested heavily in expansion of the supply capacity. Consequently, generation capacity doubled during 2000 to 2010, reaching 24,000 MW, however, this is still insufficient to meet peak load demand which is growing at seven to eight per cent per annum (p.a.) The investment requirement for this period was about LE 46.5 billion (US$8.4 billion). A small portion (US$ 350 million) of the investment was undertaken by the private sector, but the bulk of the requirements was funded by the public sector and implemented by Egyptian Electricity Holding Company (EEHC). The Government is the sole owner of EEHC and also the National Renewable Energy Agency (NREA) that is currently implementing a number of wind and solar power projects.Power generation capacity includes twelve per cent hydropower while the remaining 88 per cent is based on subsidized natural gas and fuel oil. Reliance on fuel oil increases when there is a shortage of gas supply. The country’s energy strategy aims at increasing the share of renewable energy from 12 per cent in 2010 to 20 per cent by 2020. The share of wind power is expected to reach twelve per cent, while the remaining eight per cent would come from hydro and solar. This translates into a wind power capacity of about 7,200 MW by 2020. The solar component at this stage remains limited to plans for development of a 100MW of Concentrated Solar Power (CSP ) project and 200 MW of Photovoltaic (PV) power projects. It is expected that 40 per cent of wind energy will be developed by the public sector and 60 per cent by the private sector.The Government recognized the need for reforming the power sector and in the early 2000s, the reorganization and corporatization of the power sector into an Egyptian joint stock (holding) company under the name of Egyptian Electricity Holding Company (EEHC) was undertaken. As a result of this reform, the unbundling of generation, transmission and distribution assets took place (six generation companies, nine distribution companies and the Egyptian Electricity Transmission Company (EETC) were created, all of which are affiliated and controlled by EEHC). The EETC operates the transmission system and is the single buyer of power from all generation companies and the seller of electricity to distribution companies and large consumers. The Electric Utility and Consumer Protection Regulatory Agency (EgyptERA) was established in 2001 and began operation in early 2002, however, its authority falls short of an independent regulatory agency and it does not have the authority to set tariffs. Private sector investment in generation of power is limited to three Independent Power Producers (IPPs) developed in the 1990s. Despite these initial reform steps, the reform process significantly slowed down as it approached the financial, governance, management and operations performance of the power sector and its utilities.A new electricity law was drafted in 2008 and approved by the Cabinet of Ministers, but was not presented for Parliamentary ratification. The draft law is expected to be presented for approval when the new Parliament is elected. The draft electricity law was designed to allow significant changes in the electricity sector market structure, governance and operations and in how the sector is financed and electricity is supplied to consumers, including emphasis on the development of renewable resources and energy efficiency. Key elements of the law include: A mandate to the Regulatory Agency to promote private investment in generation and distribution activities within the context of a competitive market and with due regard to consumer interests.A mandate of the Regulatory Agency as the entity responsible for tariff setting.Creation, in stages, of a two-tiered electricity market, with a competitive market for eligible customers (extra high voltage and high voltage customers free to choose among electricity suppliers on a bilateral contract basis) and a regulated market for ineligible customers (low voltage customers who are not free to choose among suppliers).Separation of EETC into a Transmission System Operator that grants third party access to the network and while also acting as the single buyer and seller of wholesale electricity.Establishment of a feed-in tariff for renewable energy to encourage private sector participation.The Need for Subsidy Reform. Energy subsidy reform is essential for Egypt because the country is no longer the plentiful oil and gas producer it was, while also facing an unsustainable fiscal deficit. Energy subsidies are known to: (a) result in inefficient use of energy resources and distortion in related technologies; (b) benefit the rich who consume the major share of the subsidized energy; and (c) impose a heavy burden on the Government budget and jeopardize fiscal sustainability. Although all these issues are of serious concern, the immediate issue is fiscal unaffordability of energy subsidies, and hence the need for immediate reform. Since the 2005-2006 fiscal year, the first time in which subsidies for petroleum (oil and gas) fuels started to be accounted for in the budget, subsidies in Egypt have increased from about LE 45 billion (equivalent to about US$ 7.2 billion) in 2005-2006 fiscal year to LE 66 billion (equivalent to US$ 11.8 billion) in the 2009-2010 fiscal year and to LE 95.5 billion (equivalent to about US$ 16 billion) in 2012.Figure 1 Energy subsidies represent a significant fiscal drainSource: World Bank Staff calculations based on Egypt Arab Republic’s Ministry of Finance dataThe high budget burden of energy subsidies is indicated by the fact that these subsidies accounted for about 7 per cent of GDP in 2012, while also exceeding the combined expenditures on health and education (Figure 2). Figure 2 Fuel Energy Subsidies crowd out social expendituresSource: World Bank Staff calculations based on Egypt Arab Republic’s Ministry of Finance dataRecognizing the budget burden of fuel subsidies, the Government developed in 2012 a program aimed at reforming electricity tariffs and fuel subsidies. This program will be implemented in two phases of which the first phase is fully implemented.Phase 1, that started in November 2012 involved a broad range of reforms for petroleum products and electricity tariff: Increase in heavy fuel oil price from LE 1,000 to LE 2,300 including for the electricity sector.Increase in natural gas price for households, keeping the first block (up to 30 cubic meters per month) unchanged and increasing the price of the second block by about 50 per cent, and 25 to 44 piasters for the electricity sector. Increase in electricity tariffs by 15.6 per cent on average, and a budgetary transfer to compensate the electricity sector for the increase in input costs (heavy fuel oil and natural gas). For households, the first tariff block (up to 50kwh) remained unchanged, while the price for the second block (50-200kwh per month) increased by 9.1 per cent. The highest block (over 1000kwh) saw a price increase of 39.6 per cent. Prices for commercial users rose 15 per cent. Elimination of the subsidy for Octane 95 gasoline, by bringing its price from LE 2.75 to LE 5.85.New distribution system for LPG cylinders was developed and piloted in a few governorates. An increase of LPG prices became effective April 2013 – the new retail price for a 12.5 kg cylinder has increased to LE 8 and for 25 kg cylinders to LE 16.Phase 2 is under development and would tackle the sale of gasoline and diesel to the transport sector through deployment of smart card schemes initially intended for fuel management and distribution which in later stages could be used for rationing subsidized gasoline and diesel quantities. Further to these measures, the Government of Egypt is very keen to develop a comprehensive energy pricing strategy that ensures price levels are reflective of the economic costs of different fuels and explicitly considers carefully and effectively manages the potential negative impacts of subsidy reform on the economy as a whole and on vulnerable customers, in particular.Social Safety Nets. Reforming energy subsidies should go hand-in-hand with reforming Egypt’s social safety nets, whose consolidation is needed both for providing better protection to the existing poor and vulnerable families as well as \ mitigating adverse impacts of energy subsidy reform. Subsidies reforms pose formidable challenges as the proportional adverse impact of energy subsidy removal is expected to be the greatest for the poor, even though the rich receive the highest share of the subsidy. According to the results of the recent household surveys, energy subsidies represented over twelve per cent of household expenditure for the bottom quintile, while the corresponding percentage for the top quintile is less than nine per cent. Studies have shown that female-led households use a higher average percentage of their income for purchasing energy than male-led households because of their lower income. Therefore, reforming safety nets will have important gender dimensions to consider.Egypt lacks a well-designed social safety net (SSN) that can provide a mechanism for mitigation against adverse impacts of fuel subsidy reform programs that would be developed and implemented by the Government. The current social safety net programs, including the main cash transfer program called Social Solidarity Pension, have a number of weaknesses, including fragmentation and poor coordination; low coverage of the poor and vulnerable including consideration of gender dimensions; weak links to promotion of human capital; low poverty impact; and social and economic inefficiency. Beyond the economic rationale, there is also political and social pressure for the new Government to deliver on the promises of the 2011 revolution. A recent opinion survey shows that Egyptians’ satisfaction with their government efforts to help the poor are among the lowest in the region, while the need for Government services is among the highest.Reforming and strengthening the fragmented SSN system is key. This requires improving targeting of SSNs, and consolidation of existing SSN programs into a more efficient one that would allow the Government to provide a larger and more meaningful benefit to the poor. A well designed cash transfer program (CTP) that could provide an effective mitigation mechanism against any adverse social impact of any fuel subsidy reform strategy developed under this technical assistance. International experience shows that having one comprehensive program, designed to reach different segments of the poor and vulnerable, can address current vulnerabilities and social protection gaps, by increasing coverage, improving targeting, increasing benefit size and reducing duplications. Currently, there is a decree pending with the Office of the Prime Minister to establish a cash transfer program (CTP) that targets the poor and vulnerable. The decree will pave the way to reform and consolidate the existing fragmented SSN programs.The first step in the reform process is to develop a database of the poor and vulnerable. This would start by combining existing databases, such as the ration cards database that is managed by the Ministry of State for Administrative Development (MSAD). Other databases, like the traffic office, and the electricity bills, can be used to eliminate non-poor and ineligible households from the ration card database. The MSAD, which currently manages the database of the food ration/smart cards with about 17 million families, is in the best position to perform this task. By combining this data with other databases, a large number of the poor can be identified. Therefore the proposed technical assistance would support MSAD in establishing such database which could target vulnerable consumers to mitigate impact of fuel subsidy reform. The database would be used to roll out a long term and poverty targeted CTP, ensuring a sustainable safety net for the poorest and most vulnerable families.Rationale for Support from the Transition Fund and Bank Involvement. The availability of reliable energy supply is not only considered a pre-requisite for economic growth but also for attracting private sector investments in the country. Although Egypt was earlier considered an important exporter of oil and gas, it is now struggling to meet its own energy needs. The unreliability of energy supply threatens the already fragile prospects for economic expansion, job creation and social prosperity, with severe, frequent and wide-spread electricity shortages having been experienced in the last three years. The shortage of electricity supply is in turn caused by the lack of sufficient availability of natural gas to fuel the country’s power plants.Subsidy reform can have a significant impact on the fragile socio-political situation in Egypt today, and formulating policies and programs to develop social safety nets to soften the blow of subsidy reforms on the poorest, is of high priority and relevance.The above complex picture of gas and electricity financial unviability has led the Government to consider preparation of a transformation plan that comprises three interrelated tracks: (i) reforming energy subsidies through a coordinated program of price adjustments; (ii) moving away from a subsidized public supply of electricity and gas to a public-private supply that would operate on a commercial basis with transparent and targeted subsidy when and where needed; and (iii) putting in place a social protection scheme that would protect the vulnerable groups of the Egyptian population. The transformational work required to underpin each of these tracks will need to be prepared and implemented in a well-designed and consistent manner.The technical assistance proposed by the Government of Egypt for financing by the MENA Transition Fund will focus on pursuing the above three tracks of transformation through three components:Component 1: Power Sector Institutional Development and Financial ViabilityComponent 2: Energy Pricing and Fuel Switching Reform Technical AssistanceComponent 3: Social Safety Nets (SSN) Strengthening Technical AssistanceTo ensure that activities under the program are well coordinated, the Government of Egypt has formed a high level multi-sectorial steering committee under the chairmanship of the Ministry and Energy represented by its first undersecretary to lead the program and with participation of senior representatives nominated by stakeholder ministries. In each of these components the proposed program takes account of the work supported by other donors and identifies the required assistance for formulating policy and implementation plans. It is particularly noted that the European Union (EU) is funding a series of partnerships with Egypt to strengthen the reform mechanism. A main program is the EU Energy Sector Policy Support Program (EU ESPSP) that aims at improving the policy and regulatory framework in the gas sector, promote energy efficiency, mitigate greenhouse gas (GHG) emissions, and update Egypt’s long term energy strategy. A parallel technical assistance will be provided by the EU to EgyptERA to strengthen its institutional capacity for implementation of the electricity law. The EU in partnership with the German, Kreditanstalt für Wiederaufbau (KfW) is also supporting the preparation of the Egypt Renewable Energy Master Plan.The proposed technical assistance also builds on the energy program supported by the World Bank in the power and gas sectors, which is contributing to the security and reliability of electricity supply, development of renewable energy, and scaling up natural gas connection to households. The World Bank has furthermore provided technical assistance including studies on energy pricing, generation planning, energy efficiency as well as sector governance and transparency. This technical assistance draws upon the range of previous activities, while focusing on formulating implementable action plans to move the energy sector towards long-term sustainability.The rationale for the World Bank support for this technical assistance, by acting as its Implementation Support Agency (ISA) as requested by the Government of Egypt, is to continue the Bank’s partnership in developing the energy sector in Egypt by utilizing the extensive experience that the Bank has in implementing sector reform in difficult transitional stages. Furthermore, the proposed component under this technical assistance for strengthening the social safety nets in Egypt by consolidating databases of the poor and vulnerable will complement the ongoing dialogue related to governance and social safety nets. One of the areas of focus of the Bank support is protection of the poor and vulnerable from the impact of ongoing economic reforms and strengthening the social safety net in Egypt. Among the policy actions to be supported is the introduction of a CTP targeting the poor and vulnerable, given the fragmented nature of existing social safety net programs and their poor targeting, coverage, and the adequacy of benefits, thereby laying the foundations for mitigation against the adverse impacts of the fuel subsidy reform measures through future CTPs.Higher Level Objectives to which the Project ContributesThe proposed project is consistent with the World Bank Group’s Interim Strategy Note (ISN) FY13- FY14 (Report 66443-EG) for Egypt discussed by the Board of Executive Directors in June 2012 and supports its three pillars of: (i) economic management (ii) jobs; and (iii) inclusion. The proposed project supports mainly the objectives of the first and third pillars by identifying barriers to, and setting strategic plans for, energy sector reforms in order to ensure a sustainable growth of the energy sector and hence the economy; promote an enabling environment for private sector participation in energy sector development; and reduce the fiscal burden of fuel subsidy on the Government deficit while mitigating its social impact on vulnerable and poor households. The proposed project also supports the objectives of the MNA Regional Update presented to the Board of Executive Directors in February 2013 and in particular its pillars of governance strengthening and economic and social inclusion.The proposed project with its three tracks of transformation aiming to reform the fuel subsidy in Egypt while improving the financial viability of the energy sector institutions and strengthening the social safety nets, conforms with eligible activities supported by the MENA Transition Fund. It is also consistent with the Fund objective of supporting country-led policy and institutional reforms for strengthening governance and public institutions and fostering sustainable and economic growth.PROJECT DEVELOPMENT OBJECTIVES (PDO)PDOThe objective of the project is to strengthen the Government of Egypt’s capacity to (i) design a comprehensive fuel subsidy reform strategy, (ii) establish concrete measures for improved financial viability of key energy sector actors; and (iii) identify households that would be most vulnerable to the impacts of the fuel subsidy reform.Project BeneficiariesThe ultimate beneficiaries of the development and successful implementation of these reforms will be the people of Egypt. Sustainable development of the energy sector is a key driver of economic growth and a reduced fiscal burden of fuel subsidy system would allow the Government to achieve greater fiscal sustainability and the space to invest more in pro-poor programs and in productive economic sectors to improve the standard of living of the population. A more targeted SSN system will benefit the most vulnerable groups of the population including women.Primary beneficiaries will be the Ministry of Electricity, EEHC, Ministry of Petroleum, Ministry of State for Administrative Development, Ministry of Finance and the Prime Minister’s Office who will benefit from the capacity building and implementation support activities provided under the proposed technical assistance. The proposed activities would help improve the overall performance and productivity of their organization and staff in developing and implementing sector reform and efficiency improvement strategies.PDO Level Results IndicatorsThe project development objective will be measured using the following indicators:Reform options analyzed to improve the financial viability and governance of EEHC is prepared; The long term strategy for the fuel supply to power generation is prepared;An action plan is prepared for (1) the establishment of an Energy Efficiency Unit at the Ministry of Electricity and (2) for at least two of the energy efficiency projects in NEEAP A comprehensive energy pricing and fuel switching strategy for Egypt including detailed action plans for compensatory measures to mitigate the impact of subsidy removal is developed;A communication strategy for fuel subsidy reform including public consultation is prepared; A database of the poor and vulnerable is developed with 10 million of households registered in the new poverty database; andDirect project beneficiaries (number), of which female (per cent) PROJECT DESCRIPTIONProject ComponentsThe Project will include the following three components:Component 1: Power Sector Institutional Development and Financial Viability (US$ 2.7 million): Provision of technical assistance to: (i) support the analysis of reform options by developing a concrete action plan to improve the financial viability and management of the electricity utilities in Egypt and their governance structure; (ii) develop effective strategies including implementation plans for fuel to power generation entities; (iii) develop an action plan to establish an energy efficiency unit housed at Ministry of Electricity and Energy (MOEE) to implement the National Energy Efficiency Action Plan (NEEAP) for the electricity sector; and (iv) support the Project Management Team to carry out its functions. The following subcomponents will be financed under this component:Subcomponent 1.1: Electricity Utilities Financial Management and Governance (US$ 1.25 million). This subcomponent will include a comprehensive analysis and assessment of the current structure of the public sector power utilities (EEHC and affiliated companies) including organizational, governance, financial and accounting management, and performance monitoring and evaluation. The assessment will propose options for the power utilities to improve their organization and corporate structure, financial management and governance structure. The capacity building and training programs should be designed and detailed by the main consultancy assignment developing the required assessment and action plans. Capacity building and training programs can be initiated in part by the main consultancy assignment, as well as by follow up consultancy services. Subcomponent 1.2: Fuel to Power Strategy (US$ 0.75 million). This subcomponent will support the development of a long term strategy to inform the Government in formulating and undertaking reforms related to efficient, sustainable fuel and gas supply for power generation. The subcomponent will support the Government to analyze options to upgrade fuel transmission infrastructure, taking into consideration environmental aspects, to cope with increasing local demand, as well as reviewing the electricity sector generation and investment plan in view of fuel allocation, availability and impact of renewable energy, as well as energy efficiency considerations. The analytical support under this component will inform Government efforts to formulate draft policies required for gas allocation to power generation, and other industrial sectors, as well as gas pricing and contracting mechanisms to both public and private generation. The Ministry of Petroleum is planning to establish a regulatory agency for the gas sector and restructuring the gas market to enable private sector participation in the supply of gas (including imports) to satisfy increasing local demand. Subcomponent 1.3: Action Plan for the Establishment of an Energy Efficiency Unit at the Ministry of Electricity and Energy (MOEE) (US$ 0.5 million). This subcomponent will support the development of an action plan to establish an energy efficiency unit that could be housed at MOEE which would have as its primary objective the implementation of the National Energy Efficiency Action Plan (NEEAP) for the electricity sector. The responsibilities of the proposed unit will include, among others, (a) administering energy efficiency funds allocated to NEEAP; (b) monitoring and evaluating implementation of NEEAP activities;, (c) aggregating the electricity sector energy efficiency data at the national level and developing and monitoring sectorial energy efficiency indicators and targets; (d) designing and implementing policies and programs to meet the energy efficiency targets; and (e) developing organizational plans and long-term capacity building programs for scaling up implementation of Energy Efficiency (EE) activities in the electricity sector. This subcomponent will support engaging local and, as needed, international consultants in support of the establishment of the energy efficiency unit at the MOEE and the preparation its various activities. The subcomponent will also support supply of Information Technology (IT) equipment and databases for the operations of the energy efficiency unit. Subcomponent 1.4: Implementation Support to the PMT (US$ 0.2 million). This subcomponent will provide support to the Project Management Team (PMT) in implementation of the proposed technical assistance. The support will be limited to consultancy services to build the capacity of the PMT in undertaking its responsibilities and for the preparation of the required project annual audit ponent 2. Energy Pricing and Fuel Switching Reform Technical Assistance (US$ 1.8 million). Provision of technical assistance to: (i) developing a comprehensive strategy for energy subsidy reform, and measures to mitigate impact of reforming energy subsidy; and (ii) developing a communication strategy for energy subsidy reform. The following subcomponents will be financed under this component:Subcomponent 2.1: Energy Pricing and Fuel Switching Reform Strategy (US$ 1.5 million). This subcomponent will develop a comprehensive strategy to phase out energy subsidy including assessment of the effects of such strategy on the economy, specifically on GDP, inflation, employment, including any gender considerations, as appropriate as well as impact on various economic sectors.The analytical work under this subcomponent will simulate the direct and indirect impacts of energy subsidy removal throughout the economy, through backward and forward linkages in order to identify the sectors that are expected to be most affected from high amount of subsidized fuel used production processes, and the appropriate mitigation and compensatory measures needed. The analytical work will also assess the differential impacts of energy subsidies across categories of users/vulnerable groups, particularly related to gender to ensure the effectiveness of the proposed mitigation measures. The analysis will be translated in a detailed action plan for each relevant stakeholder group. This subcomponent will finance consultancy services to undertake the above assessment and to develop a road map and detailed plan for the subsidy reform. Subcomponent 2.2: Development of a Communication Strategy for Fuel Reform (US$ 0.3 million). The Government needs to ensure stakeholder and public awareness and engagement with the reform agenda through broad strategic communication that mitigates or reduces the risks for the implementation of reform. This subcomponent is expected to deliver a communication strategy and communication road-map. The strategic communication component will also offer consolidated internal arrangements for communication of reforms. In the earlier stages of the subcomponent’s implementation, areas for coalition building and collaborative engagement among the different stakeholder groups will be identified. Coalition building efforts will include defining and undertaking general consultation processes as well as targeted consultations and message testing. The strategy will also include assisting in launching the communication and awareness campaign to inform public opinion about the need for change and the compensating measures that will be undertaken. Given the inter-linkages in the objectives and scope, the communication strategy will be developed in close coordination with the pricing strategy (component 2.1) and the safety nets mitigation measures (Component 3) in order to offer strategic communication and sequencing options (from a political economy perspective). Component 3. Strengthening Social Safety Nets (SSN) Technical Assistance (US$ 2 million). Provision of technical assistance to: (i) develop database of the poor and vulnerable; (ii) undertake baseline survey of beneficiary families; and (iii) establish Technical Working Unit (TWU) to support social safety net reform. This component supports strengthening social safety net systems in Egypt through measures aimed at improving targeting and consolidation of existing fragmented SSN programs and development of a database of the poor and vulnerable with attention to gender aspects as appropriate. The proposed activities under this subcomponent include analysis of the distribution of family smart cards to assess card coverage and access, the carrying out of baseline surveys and consolidation of household databases. The Ministry of State for Administrative Development (MSAD) will be the main counterpart and lead of this component. This component and in particular sub-component 3.3 envisages the issuance by the Prime Minister’s (PM) Office of a decree to establish a new CTP that targets the poor and vulnerable. The decree would establish a ministerial level committee to oversee the preparation and introduction of the CTP and to develop a vision and strategy for the social protection system over the medium term. The following subcomponents will be financed under this component:Subcomponent 3.1: Support the Establishment of the Database of the Poor and Vulnerable (US$ 1.1 million). The activities under this subcomponent will support the development of a database of the poor and vulnerable. The Ministry of State for Administrative Development (MSAD) has designed, implemented, and operated, an electronic system, referred to as the Family Smart Card System (FCS) database. The FCS is being used to provide citizens with different support services, such as food ration subsidies, pensions, and LPG subsidies using smart cards. The FCS database has close to 18 million families receiving various benefits. However, the FCS needs to be refined in order to make it useful for targeted social assistance programs, such as a CTP. As the FCS database contains nearly 80 per cent of the population of Egypt, the information in the other databases will be used to filter out from the FCS database families that are ineligible for SSN programs targeted to the poor through characteristics that show, by proxy, their likelihood of ineligibility for enrollment. The purpose of this assignment is to support MSAD’s efforts to develop database of the poor drawing on the FCS database. Subcomponent 3.2: Baseline Survey of Beneficiary Families (US$ 0.4 million). Under this sub-component, the design and collection of nationally representative baseline data will be undertaken to gauge the efficiency in social service delivery as well as the impact on the beneficiaries of the ongoing and planned reform programs. The survey will establish a baseline for monitoring and evaluating the medium-term and long-term impacts of these reform initiatives. Subcomponent 3.3: Establishment of Technical Working Unit (TWU) to Support SSN Reform (US$ 0.5 million). This sub-component will support the Government in establishing and financing a technical working unit of three to four professionals under the auspices of the Office of the Prime Minister. The TWU will support the committee in charge of overseeing the preparation and introduction of the CTP and developing a medium term social protection strategy and vision. Draft Terms of References (ToRs) for all the Project subcomponents have been prepared in consultation with the Bank.Project FinancingThis technical assistance project will be financed by an Investment Project Financing grant from the MENA Transition Fund in the amount of US$ 6.5 million. The grant will be recipient executed in accordance with applicable World Bank and the MENA Transition Fund policies and procedures.Project Cost and FinancingIndicative project costs and financing per components are summarized in Table 1:Table 1: Indicative Project Cost and FinancingProject ComponentsProject costMENA Transition Fund Financing% Financing(including taxes)Power Sector Institutional Development and Financial Viability2.72.7100%Electricity Utilities Financial Management and Governance1.251.25100%Fuel to Power Strategy0.750.75100%Action Plan for the Establishment of an Energy Efficiency Unit at the Ministry of Electricity and Energy0.50.5100%(iv) Implementation support to the PMT0.20.2100%Energy Pricing and Fuel Switching Reform Technical Assistance1.81.8100%Energy Pricing and Fuel Switching Reform Strategy1.51.5100%Development of a Communication Strategy for Fuel Reform0.30.3100%Strengthening Social Safety Nets (SSN) Technical Assistance2.02.0100%Support the Establishment of the Database of the Poor and Vulnerable1.11.1100%Baseline Survey on Beneficiary Families0.40.4100%Establishment of Technical Working Unit to Support SSN Reform 0.50.5100%Total Project Costs6.56.5100%Total Financing Required6.56.5100%The project will mainly finance local and international consultancy services, training, seminars, study tours and goods limited to IT equipment and software. The MENA Transition Fund financing of the proposed project is complemented by in- kind financing provided by the Government of Egypt in terms of staff and financing for additional IT systems necessary for required for capacity building and institutional development under this technical assistance and which will not be financed by the Transition Fund. In parallel, the EU is supporting energy sector reform programs through a technical assistance in the amount of 6 million Euros.IMPLEMENTATIONInstitutional and Implementation ArrangementsThe proposed technical assistance was submitted by the Ministry of International Cooperation for financing to the MENA Transition Fund and was approved by the Transition Fund Steering Committee on May 15, 2013. The Implementing Agency of the technical assistance Grant will be the Ministry of Electricity and Energy. The envisaged implementation arrangements for the Project are shown in Figure 3.Figure 3: Implementation ArrangementsA multi-sectoral Project Steering Committee (PSC) has been established to provide strategic direction for the technical assistance and support, coordinate, and make resources available for implementation of its components with various line ministries, government authorities and national programs. The PSC will monitor the implementation progress according to semi-annual progress reports prepared by the Project Coordinator, approved by the PSC, and submitted to the World Bank. The PSC will also recommend to the line ministries and government authorities implementation plans and sector strategies that would be developed by the technical assistance.To ensure timely and efficient project implementation, the Ministry of Electricity and Energy has also appointed a Project Management Team (PMT) headed by a Project Coordinator (PC) who will be the key interlocutor for the Word Bank team and for coordinating the implementation of Technical Assistance (TA) activities with the PSC, line ministries and government authorities. The PMT comprises a legal advisor, the technical leads of the technical assistance subcomponents, a Procurement Officer, and a Financial Officer who will be responsible for handling in accordance of World Bank procedures and guidelines all aspects of the financial and procurement issues related to the technical assistance project.The PC will coordinate the Project implementation with the subcomponent leads appointed for each of the subcomponents. The subcomponent leads will be responsible for the design and preparation of the Terms of Reference of the activities included under their subcomponents, participation in the consultant selection process with the Procurement Officer, facilitation and supervision on a day to day basis the consultant activities, recommending for PC approval, the release of payments of the consultants’ deliverables according to the signed contract as well as the receipt/inspection and acceptance of goods that could be financed by the technical assistance project.The Procurement Plan, dated November 13, 2013 has been agreed upon and an Operational Manual (OM) approved by the Bank. The OM describes the Project implementation, arrangements for inter-ministerial coordination, organization, roles, responsibilities, and the financial management, procurement and disbursement arrangements.Results Monitoring and EvaluationThe agreed Results Framework and monitoring arrangements are described in Annex 1. The PMT in coordination with the technical leads of the Project subcomponents will be responsible for monitoring the progress against the agreed performance indicators included in Annex 1 and accordingly report to the World Bank. Semi-annual reports on the Project implementation will be prepared and submitted by the PMT to the PSC and World Bank as agreed during Negotiations and indicated in the Grant Agreement. Based on the Bank’s review of the semi-annual reports and outcomes of the supervision missions, measures will be taken by the PSC and PMT to ensure the Project’s subcomponents are completed without delay and achieve their planned results. The gender impact of the proposed technical assistance will also be closely assessed and monitored by ensuring that the terms of reference and outputs of the analytical activities incorporate as necessary gender dimensions. Sustainability The Government has shown strong interest in dealing with the fiscal impact of fuel subsidies and started implementing a two phase program aimed at reducing energy subsidies to select sectors and consumers. The Government is keen on developing a more comprehensive strategy for phasing out fuel subsidy over a transitional period and strengthening of the social protection system. Faced with emerging shortages of fuel and electricity supply, the Government would like to develop and implement programs for improving the energy sector performance and maintaining the reliability of electricity services to consumers.The participating ministries have shown strong ownership of their perspective subcomponents and have been involved from inception in the design of the technical assistance and implementation arrangements. The World Bank will maintain close coordination among the participating ministries to for successful implementation of the technical assistance and to ensure sustainability.KEY RISKS AND MITIGATION MEASURESRisk Ratings SummaryTable 2: Risk Ratings SummaryStakeholder RiskHighImplementing Agency RiskCapacitySubstantialGovernanceSubstantialProject RiskDesignModerateSocial and EnvironmentalModerateProgram and DonorLowDelivery Monitoring and SustainabilityHighOverall Implementation RiskHighOverall Risk Rating ExplanationThe overall implementation risk is assessed as high. Implementation of the technical assistance will require close coordination between the participating ministries including sustained ownership and commitment of the Government to support policies and reform programs, especially related to fuel subsidy, that would be developed under this technical assistance and therefore the implementation risk is rated high. The main risks to this technical assistance are: a) the Project seeks to build capacity in a wide-ranging and sensitive reform program in a fluid economic and political environment (b) a weakening in the Government support for implementation of policy, regulatory, governance, and fuel subsidy reform measures that would be recommended and produced as outcomes of this technical assistance; b) the Project will be implemented by a new and inexperienced Project Management Team (PMT) that has limited exposure to the World Bank’s procedures, with limited experience with fiduciary implementation; c) the implementation will require very close coordination and cooperation between several sector ministries especially in undertaking the subcomponents related to fuel subsidy reform and fuel to power strategy and d) Procurement Capacity Assessment of the MOEE concluded that MOEE over the past decade did not perform any selection of consultant activities and procurement activities was limited to office supplies and stationary.These risks are mitigated by the fact that the scope of this technical assistance has been proposed and fully owned by participating ministries and that the implementation arrangements include establishment of a multi-ministerial Project Steering Committee. The committee will play an important role in keeping ownership and commitment of key stakeholders throughout the design and implementation of the technical assistance and will ensure that the PMT will be provided the sufficient resources and coordination mechanisms to implement the technical assistance.Furthermore, the PMT team including Procurement and Financial Management Officers have already been designated and will receive extensive training on Bank procurement and financial management procedures. The risk to the Project related to the capacity of the counterpart will be mitigated by proper Bank implementation support and regular training provided to the PMT on Bank procedures. Finally, there is a reputational risk in the event that the envisaged recommendations relating especially to fuel subsidy reform are not implemented effectively and efficiently. While the risk is partly mitigated by the fact that the Bank is providing policy options for consideration by the Government based on best international practices, and the Government is ultimately in the driver’s seat regarding the choice of policy, the risk cannot be mitigated in its entirety. Furthermore, the design of the technical assistance which includes development of a public outreach and communication strategy will ensure full participation of relevant stakeholders including consultation with and information dissemination to the public. The Bank team preparing and supervising the technical assistance will include a Bank communications specialist to advise the team and counterparts on public awareness and consultation and monitor and mitigate the likelihood of a reputation risk to arise.APPRAISAL SUMMARYEconomic and Financial AnalysesThe rationale for public provision: Egypt is at a critical juncture with some fundamental and profound socio-political and economic transformation underway, and with many underlying challenges that await resolution. Popular unrest continues to simmer and is only exacerbated by the country’s existing economic fragility. A sharp deterioration in the fiscal position, a rapidly growing budget deficit (projected to reach 12 per cent of GDP in FY13), serious deterioration in public service delivery, national power cuts and chronic fuel and water shortages, present an urgent case for rapid intervention. The proposed project seeks to support Government of Egypt's efforts at socio-economic transformation via an ambitious agenda including measures aimed at reform of the fuel subsidy in Egypt while improving the financial viability of the energy sector institutions and strengthening social safety net system for mitigating the impacts on the poor and vulnerable.The value-added of the World Bank: The World Bank, a long-standing development partner with substantial international experience of assisting in the reform of energy subsidies accompanied by appropriate social protection measures, is well-placed to provide a program of timely and targeted support that will assist the Government in identifying options to reform energy subsidies through a coordinated program of price adjustments; supporting a transition from state-subsidized energy provision to a more transparent public-private model; putting in place social safety net protections to address the poorest and most vulnerable, including women who would otherwise be disproportionately affected by any reduction in energy subsidies.The World Bank support for this proposed technical assistance will continue the Bank’s partnership in developing Egypt’s energy and social protection sector. The proposed technical assistance builds on the Bank’s energy program in the country and draws upon lessons learned from the previous wide range of activities supported by the Bank, while focusing on formulating options to move the energy sector towards long-term sustainability. Furthermore, the proposed component under this technical assistance for strengthening the social safety nets in Egypt by consolidating databases of the poor and vulnerable will complement the ongoing dialogue related to governance and social safety nets.The impact of the Project: There is a strong case to be made for the proposed project, principally that the evolving fiscal situation is unsustainable and that, if left unresolved, the impact would be significant and severe, particularly on the poor. Viewed in the context of the guidance and assistance being provided by Egypt’s other development partners, the proposed technical assistance program has the potential to contribute to greater fiscal stability while also supporting the Government's commitment to address the country's most pressing economic and social needs.Improving the economic and financial viability of the electricity sector through reforming fuel subsidy is expected to bring significant benefits in terms of improved service delivery. When fully implemented, such a reform makes the electricity subsidy explicit, transparent and accounted for in the budget rather than leaving it as contingent liability. Therefore, improving the electricity sector transparency and public management and the financial sustainability of EEHC. Additional benefits for the economy are expected to derive from the reduction of the fiscal burden of subsidies, the expected reduction in consumption and the related environmental benefits. In addition strengthening social safety net (SSN) will provide a mechanism for mitigation against adverse impacts of fuel subsidy reform programs developed and implemented by the Government.TechnicalThe Project components were identified by the beneficiary ministries and from detailed reviews carried out by the Bank. The Project design and selection of components also assume a holistic approach to improving the financial viability of the electricity sector while reforming fuel subsidy and strengthening social safety nets for the poor. Under each of the Project components, the proposed program takes account of the work supported by other donors and identifies the required assistance for formulating policy and implementation plans. Draft terms of reference for the Project components have also been prepared and will further be revised to ensure completeness before the request of proposals are issued.Financial ManagementAn assessment of the Financial Management (FM) arrangements for the envisaged Project was undertaken in March 2013 to assess the capacity of the proposed implementing entity of the Project and assist in determining the required FM arrangements for the implementation of the Project. The proposed implementing entity for this project is the Egyptian Ministry of Electricity & Energy (MOEE).The Project’s implementation arrangements were discussed at length with the evaluation of all FM options to be applied during implementation and their impact on the various stakeholders under the Project. The Project activities will be implemented by a PMT within MOEE which has the overall responsibility for Project oversight, coordination, and implementation. At the country level, FM risk is considered as substantial due to the stagnant Public Financial Management (PFM) reform agenda for several years. The main challenges affecting the FM risk at the country level, as assessed by the 2009 PEFA report and the 2008 CFAA, are a) weak intricate internal control system; b) absence of Government Financial Management Information System (GFMIS); c) lack of transparency; and d) weak regulatory framework and capacity of the Egyptian Supreme Audit Institute. The current political and post revolution changes in the country represent an opportunity for tackling the PFM reform agenda provided that the Government becomes more engaged in the PFM reform. At the Project level, FM risk is considered substantial before mitigating measures due to the lack of previous experience within the implementing entity.To mitigate the FM risks, the following mitigating measures have been agreed upon:A PMT within the MOEE is assigned to assume the FM responsibility of the envisaged project. It includes a Financial Management Specialist and a Financial Officer, both of adequate expertise and appropriate capacity to carry on the required tasks.The PMT has developed an FM manual for the new project. The manual elaborates on the cycles pertaining to reporting, recording, reviewing and approving the Project’s transactions.The PMT will be using spreadsheet applications to report on the Project activities and generate the semiannual Interim Financial Reports (IFRs). The Project reports will reflect the financial status of the grant as at the issuance date. All original supporting documentation of disbursements under the umbrella of the Project will be in the custody of the envisaged project PMT.A US Dollars Designated Accounts (DA) will be opened and operated by the PMT at a bank acceptable to the Bank for the sole purpose of executing the Project activities. Deposits into and payments from the DA will be made in accordance with the disbursement letter.The PMT will contract an independent external auditor based on Terms of Reference (ToR) acceptable to the Bank, for the purpose of carrying out an external audit of the Project’s Financial Statements and review of the semiannual IFRs.ProcurementA Procurement Capacity Assessment of the MOEE Procurement Department was undertaken. The assessment concluded that the Implementing Agency experience is limited to purchase of office supplies and stationary only. Also, the assessment indicated that the Implementing Agency did not have any experience in selection of consultants during the past decade nor is it exposed to international / multi-national donor procedures.The assessment identified such limited experience as constituting a “Substantial” overall Project Risk for Procurement. This Risk will be mitigated by providing (a) targeted capacity building training on World Bank Guidelines and Procedures; and (b) close monitoring and implementation support to the PMT during Project ImplementationProcurement for this Project will be carried out in accordance with the World Bank’s Guidelines: Procurement of Goods and Works and Non-Consulting Services Under IBRD Loans and IDA Credits & Grants by World bank Borrowers published by the World Bank in January 2011 and Guidelines: Selection and Employment of Consultants under IBRD Loans & IDA Credits & Grants by World Bank Borrowers published by the World Bank in January 2011. Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and updated January 2011, shall apply to the Project.A Project Procurement Plan dated November 13, 2013 to cover the first 18 months procurement and consultants’ selection activities has been approved.Social (including Safeguards)The technical assistance does not present significant social issues and will not trigger any World Bank social safeguards policy. The technical assistance includes activities that will aim at strengthening social safety nets in Egypt to mitigate social impact of subsidy reforms and will also develop a communications strategy for consultation, participation, and dissemination of information with the civil societies and the public at large. All appropriate gender considerations will be attended to appropriately in the context of this project. Environment (including Safeguards) In accordance with the World Bank Safeguard Policy OP 4.01 on Environmental Assessment, the Project is classified as environment category C indicating that the Project will not result any adverse environmental impact. This is based upon the Project design which is primarily technical assistance and does not include any physical construction activities. World Bank safeguard policies are not triggered as a result of project activities. Annex 1: Results Framework and MonitoringCountry: Egypt, Arab RepProject Name: EGYPT Energy/Social Safety Nets Sector Reforms Technical Assistance (P144305)Results Framework.Project Development Objectives.PDO StatementThe proposed project will strengthen the Government of Egypt's capacity to (i) design a comprehensive fuel subsidy reform strategy, (ii) establish concrete measures for improved financial viability of key energy sector actors and (iii) identify households that would be most vulnerable to the impacts of the fuel subsidy reform.These results are atProject Level.Project Development Objective IndicatorsCumulative Target ValuesData Source/Responsibility forIndicator NameCoreUnit of MeasureBaselineYR1YR2YR3YR4End TargetFrequencyMethodologyData CollectionDirect project beneficiariesNumber0.0050.00250.00350.00500.00500.00Semi-AnnuallyProgress Reports, Implementation Support ReportsPMT and World Bank TeamFemale beneficiariesPercentageSub-TypeSupplemental0.0035.0035.0035.0035.0035.00Semi-annuallyProgress Reports, Implementation Support ReportsPMT and World Bank TeamReform options analyzed to improve the financial viability and governance of EEHC is prepared.Yes/NoNoNoNoYesYesYesSemi-AnnuallyProgress Reports, Implementation Support ReportsPMT, and World Bank TeamA long term strategy for the fuel supply to power generation is prepared.Yes/NoNoNoNoYesYesYesSemi-AnnuallyProgress Reports, Implementation Support ReportsPMT, and World Bank TeamAn action plan is prepared for the 1) establishment of an Energy Efficiency Unit at the Ministry of Electricity and 2) for at least two of the energy efficiency projects in NEEAP.Yes/NoNoNoNoNoYesYesSemi-AnnuallyProgress Reports, Implementation Support ReportsPMT, and World Bank TeamA comprehensive energy pricing and fuel switching strategy for Egypt including detailed action plans for compensatory measures to mitigate the impact of subsidy removal is developed.Yes/NoNoNoNoNoYesYesSemi- AnnuallyProgress Reports, Implementation Support ReportsPMT, World Bank TeamA communication strategy for fuel subsidy reform including public consultation is prepared.Yes/NoNoNoNoYesYesYesSemi-AnnuallyProgress Reports, Implementation Support ReportsPMT, and World Bank TeamA database of the poor and vulnerable is developed with 10 million households registered in the new poverty database.Yes/NoNoNoNoNoYesYesSemi-AnnuallyProgress Reports and Implementation Support ReportsPMT, and World Bank Team.Intermediate Results IndicatorsCumulative Target ValuesData Source/Responsibility forIndicator NameCoreUnit of MeasureBaselineYR1YR2YR3YR4End TargetFrequencyMethodologyData CollectionEEHC Capacity building program in financial and governance is developed and number of training workshops/events for EEHC.Yes/NoNoNoYesYesYesYesSemi-AnnuallyProgress Reports, Implementation Support ReportsPMT, and World Bank TeamMinistry of Petroleum and Ministry of Energy established coordinating committee to develop and implement fuel to power.Yes/NoNoNoYesYesYesYesSemi- AnnuallyProgress Reports, Implementation Support ReportsPMT, and World Bank TeamInter-ministerial coordination is established and maintained to facilitate and implement energy subsidy and communication strategies and social safety nets program.Yes/NoNoNoYesYesYesYesSemi-AnnuallyProgress Reports, Implementation Support ReportsPMT, and World Bank Team..Annex 2: Detailed Project DescriptionEGYPT: EGYPT Energy/Social Safety Nets Sector Reforms Technical Assistance (P144305)Energy/Social Safety Nets Sector Reforms Technical Assistance ProjectThe Project will include the following three components: Component 1: Power Sector Institutional Development and Financial Viability (US$ 2.7 million): Provision of technical assistance to: (i) support the analysis of reform options by developing a concrete action plan to improve the financial viability and management of the electricity utilities in Egypt and their governance structure; (ii) develop effective strategies including implementation plans for fuel to power generation entities; (iii) develop an action plan to establish an energy efficiency unit housed at Ministry of Electricity and Energy to implement the National Energy Efficiency Action Plan (NEEAP) for the electricity sector; and (iv) support the Project Management Team to carry out its functions. The following subcomponents will be financed under this component:Subcomponent 1.1: Electricity Utilities Financial Management and Governance (US$1.25 million): This subcomponent will include a comprehensive analysis and assessment of the current structure of the public sector power utilities (EEHC and affiliated companies) including organizational, governance, financial and accounting management, and performance monitoring and evaluation. The assessment will propose options for the power utilities to improve their organization and corporate structure, financial management and governance structure. The capacity building and training programs should be designed and detailed by the main consultancy assignment developing the required assessment and action plans. Capacity building and training programs can be initiated in part by the main consultancy assignment as well as by follow up consultancy services.The Power sector’s financial viability would depend, among others, on the price at which electricity is sold, the price at which fuel is bought, and the amount of government subsidy that would be provided to the sector. Aside from these parameters, the financial flows throughout the sector and the decision making process will have significant impact on the financial performance of the power sector. A further complexity that should be embedded in the decision making and institutional arrangements is the need to create a balanced financial standing for the public and private suppliers of electricity. This is particularly important for Egypt as it moves towards a two-tiered electricity market in which the public and private suppliers would need to sell to the same wholesale market and therefore be able to compete with each other.Subcomponent 1.2: Fuel to Power Strategy (US$ 0.75 million). This subcomponent will support the development of a long term strategy to inform the Government in formulating and undertaking reforms related to efficient, sustainable fuel and gas supply for power generation. The subcomponent will also support the Government to analyze options to upgrade fuel transmission infrastructure, taking into consideration environmental aspects, to cope with increasing local demand as well as reviewing the electricity sector generation and investment plan in view of fuel allocation and availability and impact of renewable energy and energy efficiency development. Draft policies required for gas allocation to power generation, and other industrial sectors, and gas pricing and contracting mechanisms to both public and private generation will be developed under this subcomponent. The Ministry of Petroleum is planning to establish a regulatory agency for gas and restructuring the gas market to enable private sector participation in the supply of gas including imports to satisfy increasing local demand. This subcomponent will support the development of a long term strategy to inform the Government in formulating and undertaking reforms related to efficient, sustainable fuel and gas supply for power generation. This subcomponent will be led by the Ministry of Petroleum with close coordination with the MOEE and EgyptERA and will include cooperation in preparation of its terms of reference, providing input data to the activity assessment, supervising the quality of the consultant analyses and reviewing and approving the consultant reports and recommendations. The analytical work undertaken by this subcomponent will also provide input to the energy subsidy technical assistance included under Component 2.Subcomponent 1.3: Action Plan for establishment of an Energy Efficiency Unit at the Ministry of Electricity and Energy (US$0.5 million). This subcomponent will support development of an action plan to establish an energy efficiency unit that would be housed at MOEE which would have as its primary objective the implementation of the National Energy Efficiency Action Plan (NEEAP) for the electricity sector. The responsibilities of the proposed unit will include, among others, (a) administering energy efficiency funds allocated to NEEAP, (b) monitoring and evaluating implementation of NEEAP activities, (c) aggregating the electricity sector energy efficiency data at the national level and developing and monitoring sectorial energy efficiency indicators and targets, (d) designing and implementing policies and programs to meet the energy efficiency targets, and (e) developing organizational plans and long-term capacity building programs for scaling up implementation of EE activities in the electricity sector. This subcomponent will support engaging local and, as needed, international consultants in support the establishment of the energy efficiency unit at the MOEE and the preparation of its various activities. The subcomponent will also support supply of IT equipment and databases for the operations of the energy efficiency unit.Subcomponent 1.4: Implementation Support to the PMT (US$ 0.2 million). This subcomponent will provide support to the PMT in implementation of the proposed technical assistance. The support will be limited to consultancy services to build the capacity of the PMT in undertaking its responsibilities and for the preparation of the required project annual audit ponent 2. Energy Pricing and Fuel Switching Reform Technical Assistance (US$ 1.8 million). Provision of technical assistance to: (i) developing a comprehensive strategy for energy subsidy reform, and measures to mitigate impact of reforming energy subsidy; and (ii) developing a communication strategy for energy subsidy reform. The following subcomponents will be financed under this component. The technical assistance included under this component will support development and implementation of a comprehensive strategy for energy subsidy reform in Egypt and implementation of measures to mitigate impact of reforming energy subsidy and to provide protection to the poor and vulnerable in the long-run through social safety nets. The following subcomponents will be financed under this component:Subcomponent 2.1: Energy Pricing and Fuel Switching Reform Strategy (US$ 1.5 million). This subcomponent will develop a comprehensive strategy to phase out energy subsidy including assessment of the effects of such strategy on the economy, specifically on GDP, inflation, employment, as well as impact on various economic sectors including any gender considerations, as appropriate. The proposed short term and medium term price increases will provide input to both the Computed General Equilibrium (CGE) model and the household analysis in order to determine the economy-wide and household distributional impacts, respectively. Important inputs to the household analysis, other than the energy price increases, will be the consumption data derived from the most recent (2009 and 2011) Household Income Expenditure and Consumption Survey (HIECS) undertaken by the Central Agency for Public Mobilization and Statistics (CAPMAS), and the prices for non-energy products derived from the CGE model. The analysis will also simulate the direct and indirect impacts of energy subsidy removal throughout the economy, through backward and forward linkages in order to identify the sectors that are expected to be hit hardest as they utilize a relatively high amount of subsidized fuel in their respective production processes, and the appropriate migratory and compensatory measures needed. The analytical work will also assess differential impact of energy subsidies across categories of users/vulnerable groups, particular related to gender to ensure the effectiveness of the proposed mitigation measures. The analysis will be translated in a detailed action plans for each relevant stakeholder group. This subcomponent will finance consultancy services to undertake the above assessment and to develop a road map and detail plan for the subsidy reform. Subcomponent 2.2: Development of a Communication Strategy for Fuel Reform (US$ 0.3 million). The Government needs to ensure stakeholder and public awareness and engagement with the reform agenda through broad strategic communication that mitigates or reduces the risks for the implementation of reform. This subcomponent is expected to deliver a communication strategy and communication road-map. The strategic communication component will also offer consolidated internal arrangements for communication of reforms. In the earlier stages of the subcomponents’ implementation, areas for coalition building and collaborative engagement among the different stakeholder groups will be identified. Coalition building efforts will include defining and undertaking general consultation processes as well as targeted consultations and message testing. The strategy will also include assisting in launching the communication and awareness campaign to inform public opinion about the need for change and the compensating measures that will be undertaken. Given the inter-linkages in the objectives and scope, the communication strategy will be developed in close coordination with the pricing strategy (component 2.1) and the safety nets mitigation measures (component 3) in order to offer strategic communication and sequencing options (from a political economy perspective). Component 3. Strengthening Social Safety Nets Technical Assistance (US$ 2 million). Provision of technical assistance to: (i) develop database of the poor and vulnerable; (ii) undertake baseline survey of beneficiary families; and (iii) establish Technical Working Unit (TWU) to support social safety net reform. This component supports strengthening social safety net systems in Egypt through measures aimed at improving targeting and consolidation of existing fragmented SSN programs and development of a database of the poor and vulnerable with attention to gender aspects as appropriate. The proposed activities under this subcomponent include analysis of the distribution of family smart cards to assess card coverage and access, the carrying out of baseline surveys and consolidation of household databases. The Ministry of State for Administrative Development (MSAD) will be the main counterpart and lead of this component.This component supports strengthening social safety net systems in Egypt through measures aimed at improving targeting and consolidation of existing fragmented SSN programs and development of a database of the poor and vulnerable with attention to gender aspects as appropriate. The proposed activities under this subcomponent include analysis of the distribution of family smart cards to assess card coverage and access, the carrying out of baseline surveys and consolidation of household databases. The Ministry of State for Administrative Development (MSAD) will be the main counterpart and lead of this subcomponent.This component and in particular its sub-component 3.3 envisages the issuance by the PM’s Office of a decree to establish a new CTP that targets the poor and vulnerable. This decree would assign the responsibility of developing the database for the program to MSAD. The decree would establish a ministerial level committee to oversee the preparation and introduction of the CTP and to develop a vision and strategy for the social protection system over the medium term. The following subcomponents will be financed under this component:Subcomponent 3.1: Support the Establishment of the Database of the Poor and Vulnerable (US$ 1.1 million). The consolidation of the existing and fragmented cash and in-kind benefit programs and improvement of coordination among different agencies would allow the Government to achieve better coverage of the poor and pave the way for transitioning away from the costly and ineffective subsidy system, thereby transforming Egypt’s SSN into a more efficient system that would allow the Government to provide a larger and more meaningful benefit to the poor. The activities under this subcomponent will support the development of a database of the poor and vulnerable. The Ministry of State for Administrative Development (MSAD) has designed, implemented, and operated, an electronic system, referred to as the Family Smart Card System (FCS) database. The FCS is being used to provide citizens with different support services, such as food ration subsidies, pensions, and LPG subsidies using smart cards. The FCS database has close to 18 million families receiving various benefits. However, the FCS needs to be refined in order to make it useful for targeted social assistance programs, such as a CTP. As the FCS database contains nearly 80 per cent of the population of Egypt, the information in the other databases will be used to filter out from the FCS database families that are ineligible for SSN programs targeted to the poor through characteristics that show, by proxy, their likelihood of ineligibility for enrollment. The purpose of this assignment is to support MSAD’s efforts to develop database of the poor drawing on the FCS database. The process involves integrating existing databases, such as the FCS database, with other databases, including that of the traffic office, pension fund, electricity bills, phone bills and car ownership records. This requires the availability of a unique and common identifier variable in the various databases of interest. In order to achieve this, it is important to ensure that such a common variable, such as the National Identification ( NID) number, exists in the various databases scattered throughout many ministries and agencies of GOE. The Project under this sub-component will finance collection of NID for various databases, data entry, data matching, determination of eligibility criteria, targeting mechanisms, and ultimately the establishment of the database of the poor and vulnerable. It will also finance a technical workshop highlighting the potential use of the database of the poor in particular and the FCS database in general. The event will bring together various ministries and agencies and international leading practitioners to share the experience in building poverty and smart card databases and their use. The database of the poor and vulnerable, once established, can be used to identify future avenues for delivery of services by line ministries, as well as a more integrated way of record keeping, enrollment of qualified beneficiaries, monitoring implementation, and enhancing program efficiency. Subcomponent 3.2: Baseline Survey of Beneficiary Families (US$ 0.4 million). This sub-component’s objective is to undertake the design and collection of a nationally representative baseline data to gauge the impact on efficiency in social service delivery and on the beneficiaries of the ongoing and planned reform programs, including the introduction of the smart card system, the planned cash transfer scheme, re-targeting of fuel subsidies, re-targeting of the bread subsidy, social health insurance for the poor and so son. The proposed survey will establish a baseline for monitoring and evaluating the medium-term and long-term impacts of these reform initiatives. Given that the timing, pool of beneficiaries and geographic context may differ, baseline collection process may differ across initiatives. The baseline survey will allow for comparison groups. The baseline survey will include 1 per cent of the total pool of card holders. The Project under this sub-component will finance: (i) design of the questionnaire for the baseline survey; (ii) designing of the sampling strategy, taking into account various policy reforms and implementation modalities; (iii) identifying and working with a survey firm with extensive large-scale survey experience in the administration of fieldwork and collection of the data; and (iv) data entry, data validation, analysis of the pre-reform conditions of service delivery, and beneficiary living conditions and their level of satisfaction.Subcomponent 3.3: Establishment of Technical Working Unit (TWU) to Support SSN Reform (US$ 0.5 million). This sub-component will support Government in establishing and financing a technical working unit to support SSN reform. The proposed sub-component is contingent on the PM’s Office issuing a decree to establish a new CTP that targets the poor and vulnerable. The decree would establish a ministerial level committee to oversee the preparation and introduction of the CTP and to develop a vision and strategy for the social protection system over the medium term. This high level committee would be assisted by a small dedicated and competent TWU of three to four professionals to be placed in the PM’s office. The TWU would work closely with a technical advisory team drawn from each of the ministries and agencies in the Inter-Ministerial Committee and a representative each from the private and non-government sectors. The TWU would a) at the immediate term, develop a program document for the CTP that determines the main features of the program to be discussed and approved by the Government and later reflected in a Prime Minister’s decree; b) oversee the development of the registry of beneficiaries; and c) at the medium term, develop a broader vision for social protection in Egypt including guidelines for partnering with NGOs and other stakeholders. The Project under this sub-component will help in the establishment of the TWU and finance its staff and activities for one year. In order to ensure sustainability, the TWU expected to be financed by the Government budget or other more medium to long-term funding sources at the end of the first year of its establishment. Annex 3: Implementation ArrangementsEGYPT, ARAB REPUBLIC OFEnergy/Social Safety Nets Sector Reform Technical Assistance Project (P144305)Project Institutional and Implementation Arrangements1. The proposed technical assistance will be submitted by the Ministry of International Cooperation for financing to the MENA Transition Fund. The Implementing agency of the technical assistance Grant will be the Ministry of Electricity and Energy. The envisaged implementation arrangements for the Project are shown in Figure 3-1.Figure 3.1 : Implementation Arrangements A multi-sectoral Project Steering Committee (PSC) has been established to provide strategic direction for the technical assistance and support, coordinate and make resources available for implementation of its components with various line ministries, government authorities and national programs. The PSC will monitor the implementation progress according to semi-annual progress reports prepared by the Project Coordinator, approved by the PSC, and submitted to the Bank. The PSC will also recommend to the line ministries and government authorities implementation plans and sector strategies that would be developed by the TA.To ensure timely and efficient project implementation, the MOEE has also appointed a PMT headed by a Project Coordinator (PC) who will be the key interlocutor for the Bank team and for coordinating the implementation of TA activities with the PSC, line ministries and government authorities. The PMT comprises the technical leads of the technical assistance subcomponents, a Procurement Officer, and a Financial Officer who will be responsible for handling in accordance of Bank procedures and guidelines all aspects of the financial and procurement issues related to the technical assistance project.The PC will coordinate the Project implementation with the subcomponent leads appointed for each of the subcomponents. The subcomponent leads will be responsible for the design and preparation of the Terms of Reference of the activities included under their subcomponents, participate in the consultant selection process with the Procurement Officer, facilitation and supervision on a day to day basis the consultant activities, and recommending for PC approval, the release of payments, of the consultants’ deliverables according to the signed contract as well as of the receipt/inspection and acceptance of goods that could be financed by the technical assistance project.The Procurement Plan dated November 13, 2013 has been agreed upon and an Operational Manual (OM) approved by the Bank. The OM describes the Project implementation, arrangements for inter-ministerial coordination, organization, roles, responsibilities; and the financial management, procurement and disbursement arrangements.Financial Management, Disbursements and ProcurementFinancial ManagementSummaryAn assessment for the Financial Management arrangements (FM) for the envisaged project was undertaken in March, 2013 to assess the capacity of the proposed implementing entity of the Project and assist in determining the required FM arrangements for the implementation of the Project. The proposed implementing entity for this project is the Egyptian Ministry of Electricity & Energy (MOEE).The Project’s implementation arrangements were discussed at length with the evaluation of all FM options to be applied during implementation and their impact on the various stakeholders under the Project. The Project activities will be implemented by a PMT within MOEE which has the overall responsibility for Project oversight, coordination, and implementation. At the country level, FM risk is considered as substantial due to the stagnant PFM reform agenda for several years. The main challenges affecting the FM risk at the country level, as assessed by the 2009 PEFA report and the 2008 CFAA, are a) weak intricate internal control system, b) absence of GFMIS and c) lack of transparency; d) and weak regulatory framework and capacity of the Egyptian Supreme Audit Institute. The current political and post revolution changes in the country represent an opportunity for tackling the PFM reform agenda provided that the GOE’s becomes more engaged in the PFM reform. At the Project level, FM risk is considered substantial before mitigating measures due to the lack of previous experience within the implementing entity.To mitigate the FM risks, the following mitigating measures have been agreed upon:A PMT within the MOEE is formally assigned to assume the FM responsibility of the envisaged project. It includes a Financial Management Specialist and a Financial Officer, both of adequate expertise and appropriate capacity to carry on the required tasks.The PMT has developed an FM manual for the project. The manual elaborates on the cycles pertaining to reporting, recording, reviewing and approving the Project’s transactions.The PMT will be using spreadsheet applications to report on the Project activities and generate the semiannual IFRs. The Project reports will reflect the financial status of the grant as at the issuance date. All original supporting documentation of disbursements under the umbrella of the Project will be in the custody of the envisaged project PMT.A US Dollars Designated Accounts (DA) will be opened and operated by the PMT at a bank acceptable to the Bank for the sole purpose of executing the Project activities. Deposits into and payments from the DA will be made in accordance with the disbursement letter.The PMT will contract an independent external auditor based on Terms of Reference (ToR) acceptable to the Bank, for the purpose of carrying out an external audit of the Project’s Financial Statements and review of the semiannual IFRs.Project Financial Management Risk.Table 3-1: General Risks:RiskBefore MMMitigating Measures (MM)After MMThe Observance of Standards and Codes (ROSC) report (2007), Country Financial Accountability Assessment (CFAA) report (2007), identified weaknesses in the Egyptian financial accountability, in both the public and the private sector. Another issue that affects inherent risk is the level of corruption within Egypt, according to the 2012 Corruption Perception Index Egypt is at 32 and at rank 118. SubstantialHire an independent qualified private audit firm.Ring-fence the Project implementation and funds.ModerateOverall Inherent Risk Before MMSubstantialOverall Inherent Risk after MMModerateSpecific RisksRiskBefore MMMitigating Measures (MM)After MMStaffing: Lack of experienced staff with WB-financed projectsHighThe PMT within the MOEE will be formally assigned to assume the FM responsibility of the envisaged project. It includes a Financial Management Specialist and one Financial Officer, both of adequate expertise and appropriate capacity to carry on the required tasks.The Bank FM team will arrange for an in-house training for the Project’s FM staff on Bank’s requirements and guidelines.SignificantAccounting, Reporting and Budgeting: Accounting system may not provide comprehensive information on all sources and uses of fundsSubstantialThe PMT will be using spreadsheet applications to report on the Project activities and generate the semiannual IFRs. The Project reports will reflect the financial status of the grant as at the issuance date. All original supporting documentation of disbursements under the umbrella of the Project will be in the custody of the envisaged project PMT.ModerateFlow of Funds: Delays in flow of fundsSubstantialThe Project will open a DA which is to be operated by the MOEE through the PMT. The DA is to be reconciled on a monthly basis and will be replenished periodically. The PMT will prepare cash forecast taking into consideration the budget year through which the Project counterpart funds will be allocatedThe flow of funds process is to be included in the FM manual to be developed by the PMT. ModerateInternal Controls: Inconsistent application and adherence to unified and documented policies and procedures SubstantialThe PMT is to develop an FM manual (before negotiations) for the new project. The manual is to depict the cycles pertaining to reporting, recording, reviewing and approving the Project’s transactions.ModerateAuditing: Lack of timely audit/review reports on Project FS/IFRsSubstantialAn independent and a qualified private auditor is to be hired in accordance with ToR acceptable to the Bank.ModerateOverall Control Risk before MMSubstantialOverall Control Risk after MMModerateProject Arrangements Institutional Arrangements: It was agreed that a Project Management Team (PMT) will be established in the MOEE. The Project will be implemented by the MOEE in collaboration with Ministry of Petroleum and the Ministry of Administrative Development. The PMT will be responsible of carrying out all the Project FM arrangements.Staffing: The MOEE has no previous experience in managing World Bank projects accordingly, it was agreed to appoint, from the MOEE, a Financial Management Specialist and one Financial Officer, both of adequate expertise and appropriate capacity to carry on the required tasks under the umbrella of the Project. Adequate segregation will be established according to which, the Financial Management Specialist will be responsible for the review of the recording of journal entries, coordination in regard to financial matters with Central Department for Financial and Administration Affairs, in MOEE, in addition to reporting on the financial performance of the Project to the World Bank. The Financial Officer will be responsible for the day to day transactions including recording the journal entries in addition to preparing the monthly bank reconciliation.Accounting, Record Keeping, Reporting and Budgeting: The PMT FM personnel will be responsible for recording their relevant component’s transactions and reporting on semiannual basis, through Interim Financial Reports (IFRs), to the Bank. The report will include i) Sources and Uses of Funds; ii) Disbursements by component; iii) Cash Forecast and to be accompanied by the iv) Designated Account (DA) reconciliation. The IFR package will include reporting on the commitments established by the PMT (i.e. i) Commitments Value, ii) Disbursed Amount and iii) Committed not yet Paid Amount). All original supporting documentation of disbursements under the umbrella of the Project will be in the custody of the envisaged project PMT. As part of the semiannual project IFRs, the PMT will prepare a forecast of the Project expected disbursements for the next six months for proper cash management with a deviation analysis of differences between actual and planned figures of previous periods.Internal Controls: The PMT will ensure that proper segregation of duties is maintained and formally documented through an FM manual for the new proposed project. The manual should illustrate the documentation of all the various types of financial transactions, approval and authorization steps, the flow of documents within and between the PMT and the Financial Department of the MOEE, along with the retention of original documents and copies and a job description of each staff. It was explained to the Financial Management Specialist that the manual should put, in writing, all the financial aspects of the Project at hand including but not limited to i) The Project and its Context (i.e. project purpose ,deliverables, donors...etc.); ii) Internal Controls (i.e. Roles and Responsibilities) ; iii) Disbursing Arrangements ( i.e. method(s) adopted by the Project for disbursing the donated funds); iv) Bookkeeping and Reporting, v) Reporting (i.e. Reports Periodicity and Contents); and vi) Audit (i.e. Project Audit Arrangements). Technical Approval: represented in the involved implementing entity’s approval on the rendered service or goods received, who approves and signs the contractors’ suppliers’ certificates, in the respective ministry before sending the request for payment to the PMT. Contractual Review: The payment package is reviewed by the “Procurement and Contracts” officer (in the PMT) to ensure that the requested payments are as per the established contract with the contractor and calculates the due amount given into consideration the contractors’ down payment and previous payments. The Head of the “Procurement and Contracts” Department reviews and signs the certificate before forwarding the entire package for further processingFinancial Review: The FM officer is responsible for preparing the journal entries to record the financial transactions under the umbrella of the Project also for preparing the monthly bank reconciliation of the DA. Bookkeeping is done at this stage. The FM specialist reviews the prepared journal entries, prepared by the financial officer, and signs them to evidence the review exercise also reviews the monthly bank reconciliation. The FM specialist signs the request for payment after the review and recording processes this is followed by the Project Director Approval and signature.MoF Representative: Another review is performed by the MoF representative who signs the issued check along with the Project director.Flow of Funds: To ensure that funds are readily available for Project implementation, a US Dollars Designated Accounts (DA) will be opened and operated by the PMT at a bank acceptable to the Bank for the sole purpose of executing the Project activities. The ceiling of the DA will be set to US$ 500,000. Deposits into and payments from the DA will be made in accordance with the disbursement letter. Upon effectiveness, the PMT will submit an application to withdraw the initial advance (up to the ceiling of the DA) to the DA. Subsequent advances will be made upon submission of withdrawal applications supporting with supporting documentation (e.g. Records or Statements of Expenditures) which reports on the use of the initial/previous advance for eligible project expenditures. Withdrawals from the DA must be authorized by at least two authorized signatories and replenishment requests of the account will also be signed dually. The PMT will have access to the client connection website and on a monthly basis the Financial Management Specialist within the PMT will perform reconciliation between the Project records and the Bank’s records as shown on the "Client Connection" website in addition to the monthly DA bank reconciliation. The PMT will also submit applications by electronic means using the Client Connection website.The flow of funds starts by providing the supplier/consultant invoice to the PMT for payment after gaining the approval of the team head in each respective implementing entity.The payment package is delivered to the PMT and the “Procurement and Contracts” officer (in the PMT) ensures that the requested payments are as per the Project approved plan, gained the Bank’s No Objection and the established contract with the supplier/consultant.The package is forwarded to the Project FM officer to be reviewed for mathematical accuracy and Bookkeeping. The Project FMS reviews the package and forwards it to the Project director. The Project Director approves payment and issues the corresponding check.The issued Check is then signed by the Project director and the Ministry of Finance (MoF) representative.External Audit: The PMT will be responsible for appointing an independent external auditor, acceptable to the Bank, to audit the entire project according to the ToR agreed with the Bank. The auditor will assess the need of technical audit, which will be in addition to the financial audit. The due date of the external auditor report will be six months after the end of each fiscal year. The external auditor will be granted access to all project’s original supporting documentations and relevant agreements. The external auditor will review the Project’s semiannual IFRs before submission to the Bank and provide negative assurance on the IFR contents of the Project. This will require timely preparation and submission of the IFRs from the PMT in order to comply with the grace period of 45 days after each semester for the submission of the report to the Bank. The External auditor will be hired within two months of effectiveness.Below is the agreed-upon action plan that needs to be implemented by the PMT at MOEE:Table 3-2: Agreed FM Action PlanActionWhenResponsibilityOpen a Designated Accounts (DA) for the sole purpose of executing the Project activities. 6 weeks from effectivenessMOEE/PMTEstablish a Project Financial pleted before negotiationsMOEE/PMTHire an Independent External Auditor.Two months from effectiveness.MOEE/PMTProcurementA Procurement Capacity Assessment of the MOEE Procurement Department was undertaken. The assessment concluded that the Implementing Agency experience is limited to purchase of office supplies and stationary only. Also, the assessment indicated that the Implementing Agency did not have any experience in selection of consultants during the past decade nor is it exposed to international / multi-national Donors procedures. The assessment identified such limited experience as constituting a “Substantial” overall Project Risk for Procurement. This Risk will be mitigated by World Bank Procurement Specialists providing (a) targeted capacity building training on World Bank Guidelines and Procedures, and (b) close monitoring and supervision to the PMT during Project Implementation. A positive action by MOEE to mitigate Risk is to have the PMT members already seconded from MOEE International Cooperation and Agreement Department who have previously some exposure to International / Multi National Donors and have relatively better language skills than MOEE Procurement Department members.Also as another risk mitigation factor is to have the PMT receive intensive hand-on training on World Bank Guidelines and procedures for the selection of Consultants as well as procurement of IT equipment and software.The PMT will be responsible for all activities related to the selection of consultants and procurement of goods under this Project. Ministry of Petroleum and Ministry of Administrative Development teams will provide Technical and Administrative support to the PMT activities. Procurement for this Project will be carried out in accordance with the World Bank’s Guidelines: Procurement of Goods and Works and Non-Consulting Services Under IBRD Loans and IDA Credits & Grants by World bank Borrowers published by the World Bank in January 2011 and Guidelines: Selection and Employment of Consultants under IBRD Loans & IDA Credits & Grants by World Bank Borrowers published by the World Bank in January 2011. Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and updated January 2011, shall apply to the Project.Advance Procurement will be exercised and preparation and issuance of Expressions of Interest and preparation of Consultant Services Terms of Reference and Requests for Proposals documents will be in place prior to Grant Agreement signature in order to jump-start project implementation.A Procurement Plan (PP) dated November 13, 2013 to cover the first 18 months of procurement and consultant’s selection activities has been approved. The PP indicates, against each activity (as a minimum) Cost Estimate, Consultants Selection Method, Procurement of Goods Method, World Bank Procurement Prior / Post Reviews requirements and time frame for the activity. The Plan will be updated on a semi-annual basis prior to World Bank Implementation Support Missions or as required.Environmental and Social (including safeguards)In accordance with the World Bank Safeguard Policy OP 4.01 on Environmental Assessment, the Project is classified as environment category C indicating that the Project will not result in any adverse environmental impact. This is based upon the Project design which is primarily technical assistance and does not include any physical construction activities. World Bank safeguard policies are not triggered as a result of project activities. The technical assistance itself does not present significant social issues and will not trigger any World Bank social related safeguards policy. The technical assistance includes activities that will aim at strengthening social safety nets in Egypt to mitigate social impact of subsidy reforms and will also develop a communication strategy for consultation, participation, and dissemination of information with the civil societies and the public in large. Monitoring & Evaluation The PMT will submit semi-annual project reports on the progress of all project components in a format to be agreed with the Bank. The Project report will also include details on the key indicators most of which will be monitored on a semi-annual basis. These are presented in Annex 1 which includes baseline data and agreed targets for each of the future years. The subcomponent focal leads will be responsible for providing the PMT with periodic updates on the implementation progress of the execution and implementation of the consultancy contracts for their subcomponent. The semi-annual project reports will be submitted no later than 45 days of the reporting period. Role of Partners To improve energy security and sustainable development in Egypt, the EU has embarked on a series of partnerships with Egypt to strengthen reform mechanisms in the energy sector. Two such programs include 1) The Energy Sector Policy Support Program (ESPSP), with a sub component on a TA to improve fiscal transparency and 2) support to the EU-Egypt Association Agreement Program (EAAP). The specific objectives of the proposed ESPSP are to: (i) Improve the energy policy and regulatory framework; (ii) Improve the energy sector financial transparency and performance; (iii) Promote development of renewable energy sources; and (iv) Promote energy efficiency. The EAAP supports a TA component with the overall objective of strengthening the institutional capacity of EgyptERA on implementing the regulatory framework necessary to create the bases for transparency and nondiscriminatory market operations and assist in the development and implementation of international best practices of regulations in the energy sector consistent with development of an internal electricity market.While the EU funded technical assistance activities are focusing on development of energy market policy and regulations, and capacity building of EgyptERA, this technical assistance proposed for financing by the MENA Transition Fund is aimed at transformation of electricity and gas sector to financial viability while protecting the most vulnerable sectors and the poor from undesirable impacts of energy subsidy reform.Annex 4: Operational Risk Assessment Framework (ORAF)Egypt, Arab Rep: EGYPT Energy/Social Safety Nets Sector Reforms Technical Assistance (P144305).Project Stakeholder RisksStakeholder RiskRating HighRisk Description:Risk Management:A weakening in the Government support for implementation of policy, regulatory, governance, and fuel subsidy reform measures that would be recommended and produced as outcomes of this technical assistance.This risk is mitigated by the fact that the scope of this technical assistance has been proposed and fully owned by participating ministries and that the implementation arrangements require establishment of a multi-ministerial Project Steering Committee (PSC). The committee will play an important role in keeping ownership and commitment of key stakeholders throughout the design and implementation of the technical assistance including recommendations to the Government authorities for implementation of policies and reform program that would be developed under this technical assistance. The Bank will also ensure during supervision that the PSC will continue to exist and function, empowered and maintain oversight and engagement.Resp:Status:Stage:Recurrent:Due Date:Frequency:BothIn ProgressImplementation30-Dec-2016Implementing Agency (IA) Risks (including Fiduciary Risks)CapacityRating SubstantialRisk Description:Risk Management:The Project will be implemented by a new Project Management Team (PMT) that has limited knowledge of the World Bank’s guidelines and procedures and limited initial capacity to meet the Bank procurement and financial management requirements.Procurement and Financial Management Officers members of the PMT have already been already been designated and will receive extensive training on World Bank procurement and disbursement arrangements. Furthermore, the procurement and financial management activities under this technical assistance will be limited by the small number of consultancy contracts and supply of IT equipment and software and the World Bank will also provide guidance to the PMT in undertaking effective selection process of the consultants and monitoring the quality of the consultant’s work and deliverables.Resp:Status:Stage:Recurrent:Due Date:Frequency:BothIn ProgressBoth30-Dec-2016GovernanceRating SubstantialRisk Description:Risk Management:The implementation will require close coordination and cooperation between several sector ministries especially in undertaking the subcomponents related to fuel subsidy reform and fuel to power strategy.A multi-sectoral Project Steering Committee (PSC) has been established to provide strategic direction for the technical assistance and support, coordinate and make resources available for implementation of its components with various line ministries, government authorities and national programs. The PSC will monitor the implementation progress according to semi-annual work plans prepared by the Project Coordinator, approved by the PSC, and submitted to the World Bank. The PSC will also recommend to the line ministries and government authorities implementation of recommendations and sector strategies that would be developed by the technical assistance.Resp:Status:Stage:Recurrent:Due Date:Frequency:BothIn ProgressBoth30-Dec-2016Risk Management:Assessment of fiduciary risks (procurement and financial management) has been made during the Project preparation including procurement and financial management capacity assessments of the PMT and action plans for mitigation were developed. The Bank will put in place adequate controls to ensure the Project is appropriately monitored through procurement and financial management reviews.Resp:Status:Stage:Recurrent:Due Date:Frequency:ClientIn ProgressImplementation30-Dec-2016Project RisksDesignRating ModerateRisk Description:Risk Management:Project design is fairly simple and straight forward and therefore is not risky. It will include limited number of consultancy assignments and probably supply of IT systems for capacity building.The participating ministries have already initiated preparing the draft terms of reference for the subcomponents financed by the technical assistance. The Bank team will assist in preparing high quality terms of reference and will ensure that the consultant’s deliverables are of high quality as well.Resp:Status:Stage:Recurrent:Due Date:Frequency:BothIn ProgressBoth30-Dec-2016Social and EnvironmentalRating ModerateRisk Description:Risk Management:The technical assistance itself does not present significant safeguards issues and will not trigger any World Bank safeguards policy. However, the technical assistance will deal with preparation of subsidy reform strategies and that will have future social impacts.The technical assistance includes activities that will aim at strengthening social safety nets in Egypt to mitigate social impact of subsidy reforms and will also develop a communication strategy for consultation, participation, and dissemination of information with the civil societies and the public in large.Resp:Status:Stage:Recurrent:Due Date:Frequency:BothIn ProgressBoth30-Dec-2016Program and DonorRating LowRisk Description:Risk Management:There is minimal risk of overlap between this technical assistance and donor financed technical assistance to the energy sector.The Bank, EU and participating ministries are closely coordinating donor funded technical assistance activities.Resp:Status:Stage:Recurrent:Due Date:Frequency:BothIn ProgressBoth30-Dec-2016Delivery Monitoring and SustainabilityRating HighRisk Description:Risk Management:Project sustainability may be impacted by the fact that Project seeks to build capacity in a wide-ranging and sensitive reform program in a fluid economic and political environment and (b) a weakening in the Government support for implementation of policy, regulatory, governance, and fuel subsidy reform measures that would be recommended and produced as outcomes of this technical assistance;These risks are mitigated by the fact that the scope of this technical assistance has been proposed and fully owned by participating ministries and that the implementation arrangements include establishment of a multi-ministerial Project Steering Committee. The committee will play an important role in keeping ownership and commitment of key stakeholders throughout the design and implementation of the technical assistance and will ensure that the PMT will be provided the sufficient resources and coordination mechanisms to implement the technical assistance.Resp:Status:Stage:Recurrent:Due Date:Frequency:BothIn ProgressBoth30-Dec-2016Overall RiskOverall Implementation Risk:Rating HighRisk Description:The ORAF assesses the overall risk rating as high during implementation. Implementation of the technical assistance will require very close coordination between the participating ministries including sustained ownership and commitment of the Government of Egypt to support policies and reform programs, especially related to fuel subsidy, that would be developed under this technical assistance and therefore the implementation risk is rated high.Annex 5: Implementation Support PlanEGYPT, ARAB REPUBLIC OFEnergy/Social Safety Net Sector Reforms Technical Assistance Project (P144305)Strategy and Approach for Implementation SupportThe strategy for implementation support has been developed based on the nature of the Project which is financing cross sectoral technical assistance for development of strategic policies, action plans and institutional capacity building for improving the financial viability of the electricity sector and reforming fuel subsidy in Egypt while strengthening the social safety nets to mitigate impact of future fuel subsidy on the poor. Also the implementation plan takes into account the limited knowledge of the PMT on Bank procedures.Therefore, during the first year of the Project, the Bank will conduct intensive implementation support missions to ensure that major consultancy services for the Project subcomponents are mobilized and contract execution commence without delays. Draft ToRs for of the Project components have been prepared and will be finalized before issuing the Request of Proposals (RFPs). Four Requests for Expression of Interest are prepared and will be issued immediately after the TA approval. During this period, the Bank will provide training to build the capacity of the PMT on the Bank procurement, contract and financial management procedures.The Bank will not be involved directly in formulating policies developed under this technical assistance which should be fully owned and supported by the Government of Egypt. However, the Bank implementation support of the technical assistance will also focus on ensuring its effective implementation and the quality of the consultant’s deliverables. The Bank team supervising the technical assistance will include Bank staff and consultants experts in various analytical activities undertaken under the technical assistance.Implementation Support PlanThe main focus of the implementation support is summarized below and will be further reviewed and finalized during fiscal year budget planning. A mid-term review mission is also tentatively planned for November 2015. Table 5-1: Implementation Support PlanTimeFocusResource EstimateSWTripYear 1Implementation SupportProject Task Management/Power Experts 42ProcurementProcurement Specialist 40Financial ManagementFinancial Management Specialist40Gas and Fuel SectorEnergy subsidy Specialist 32Social Safety Nets Database and Targeting Expert32CommunicationCommunication strategy experts20Year 2Implementation SupportProject Task Management/Power Experts 42ProcurementProcurement Specialist 30Financial ManagementFinancial Management Specialist30Gas and Fuel SectorEnergy subsidy Specialist 43Social Safety Nets Database and Targeting Expert42CommunicationCommunication strategy experts31Year 3Implementation SupportProject Task Management/Power Experts 42ProcurementProcurement Specialist 30Financial ManagementFinancial Management Specialist30Gas and Fuel SectorEnergy subsidy Specialist 43Social Safety Nets Database and Targeting Expert42The Co-task team leader, procurement and financial management specialist and communication specialists members of the team are based in the Bank’s Cairo office and other members of the team will be from country offices in the region or headquarters staff.The World Bank and the EU will also seek to carry out joint missions to coordinate the implementation of this proposed technical assistance and the EU technical assistance to the energy section. ................
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