Co-financing for GEF India Projects Challenges

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Co-financing for GEF India ProjectsChallenges
Opportunities (GEF Sub-regional Workshop for
Focal Points from Asia) (Bangkok April 7 - 9,
2009)
Mr HEM PANDE Joint Secretary, Ministry of
Environment Forests GEF Operational Focal
Point India
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Role of Co-financing in GEF projects

• Ensures integration and linkage of GEF projects
  with national/ state level priorities and
  programs/ projects
• A tool for building partnerships (financial
  technical)
• Expands resources available to finance
  environmental objectives
• Ensures sustainability and replicability of GEF
  funded interventions after the project is
  complete

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GEF India

• Grant accessed (since 1991) USD 300 m
• Co-financing leveraged USD 1,881 m
• RAF for India USD 76 m (CC) and USD 30 m (BD)
• GEF 4 grant accessed USD 124 m
• Co-financing leveraged USD 932.14 m

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Climate Change Focal Area

• Grant accessed (since 1991) USD 197.4 m
• Co-financing leveraged USD 1,404.3 m
• RAF for India USD 76 m
• GEF 4 grant accessed USD 69 m
• Co-financing leveraged USD 573 m
• Co-financing sources GoI State Govt budgets,
  WB loan, Bilateral donors, Private sector and
  Community contributions
• Under programming USD 7 m

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Biodiversity Focal Area

• Grant accessed (since 1991) USD 63 m
• Co-financing leveraged USD 123.4 m
• RAF for India USD 30 m
• GEF 4 grant accessed USD 5.714 m (Plus, USD 10 m
  as part of SLEM programmatic approach, this
  amount and its corresponding co-financing is
  indicated in the next slide)
• Co-financing leveraged USD 6.2 m (not
  including, amount leveraged against USD 10 m
  allocated under SLEM programmatic approach)
• Co-financing sources GoI State Govt budgets
  and Community contributions
• Under submission for GEF approval USD 14.286 m
  (USD 42.05 m of co-financing)

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Land Degradation Focal Area

• Grant accessed USD 30 m (includes, USD 10 m
  from Biodiversity focal area)
• Co-financing leveraged USD 316.7 m
• Co-financing sources GoI State Govt budgets,
  WB IDA loan and Community contributions

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POPs Focal Area

• Grant accessed USD 19.418 m
• Co-financing leveraged USD 36.7 m
• Co-financing sources GoI State Govt budgets,
  private sector and Community contributions

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National Consultation Process

• Priority Identification -
• Country driveness and ownership
• by GEF Empowered Committee chaired by Secretary
  (EF) and members from Thematic Divisions, MoEF
  Department of Economic Affairs, Ministry of
  External Affairs, Planning Commission, Central
  Government Line Ministries and Experts.
• Identify national priorities with incremental
  value to be funded under GEF.
• Identify possible co-financing at national level
• Identify National Executing Agency
• Identify Lead GEF Agency on the basis of their
  comparative advantage (UNDP, WB, UNEP, UNIDO,
  FAO, ADB, IFAD)
• Identify focal points / contact persons

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Contd./-

• Stakeholder Consultation
• by National Executing Agency along with GEF
  agencies
• CC MoP, BEE, MNRE, Ministry of Petroleum and
  Natural gas, MSME, MoUD
• BD MoEF, MoA (Dept. of Fisheries and Animal
  Husbandry), DST, DBT, ICAR, NBPGR
• To discuss national priority (s) and gap areas,
  which GEF could fund
• Discuss project idea and its components
• Identify key multi-stakeholders and partners
  (including state governments, NGOs, Academic and
  Research Institutions and possible Private
  Sector)
• Co-financing potential and sources
• (Concerned GEF agencies working in India invited
  for a consultation. GoI priorities and gaps in
  funding were shared and the agencies were asked
  to prepare project proposals as per their
  priorities and comparative advantage within a
  timeline)

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Contd./-

• PIF Preparation Endorsement
• by GEF Agency (s) in consultation with National
  Executing Agency, concerned central and state
  governments and other stakeholders
• Develop baseline on the basis of situational gap
  analysis
• Identify project outputs and outcomes and the
  tentative GEF funding and co-financing on the
  incremental reasoning
• Identify institutional mechanism for effective
  implementation and monitoring
• Co-financing commitments from Central/ State
  Governments (and, other donors/ partners)
• Draft submission to National Executing Agency

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Case Study

• Coal Fired Generation Rehabilitation Project
• WB/ GEF/ FSP (submitted this week for CEO
  endorsement)
• Approved by GEF Council in June 2006
• GEF grant USD 45.4 m
• Co-financing USD 258 m (IBRD loan USD 180 m
  West Bengal Power Development Corporation Ltd.
  equity USD 25.6 m Maharashtra State Power
  Generation Company Ltd. equity USD 25.6 m
  Haryana Power Generation Company Ltd. equity USD
  26.8 m)
• Project aims to improve energy efficiency of
  selected coal-fired power generation units
  through renovation and modernization (RM) and
  improved operations and maintenance (OM), and a
  significant co-benefit of the project is the
  reduction of greenhouse gas emissions per
  kilowatt hour of electricity generated.

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Contd./-

• Baseline Scenario-
• India depends on 76,000 MW of Coal-fired power
  plants ( 53 of installed capacity) for energy
  needs
• These plants are in poor shape -with an average
  PLF of about 70 with some plants having PLFs
  lower than 55 and SHR of about 3,000 kcal/kWh
  and above.
• As a result, R M requirements are soaring and
  targets of about 8000 MW was not meet in the last
  plan and spilled over into the 11th Plan, which
  now has an RM requirement of nearly 27,000 MW
  (about a third of the total installed coal-fired
  generation capacity in the country).
• The Bank and GOI have agreed to focus on 110 MW
  and 210 MW units which are in urgent need for RM
  in India and constitute about 68 of the 27,000
  MW identified for RM. But to make this
  investment feasible following barriers needs to
  be addressed-
• (a) Securing long plant shutdown needed for
  RM
• (b) Building institutional capacity to take up
  RM projects
• (c) Utilities tend to accord a higher priority
  to green-field capacity addition over RM
  projects, since the latter are perceived to be
  more risky, require much greater preparatory
  effort and the utilitys institutional capacity
  to implement projects is limited
• (d) Energy efficiency orientation
• (e) Time and cost overruns and contract
  management a challenge
• (f) Poor OM practices
• (g) Regulatory aspects pertaining to
  inadequate weightage to RM implementation risks
  in tariff determination process.

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Contd./-

• GEF intervention sought to REVIVE R M efforts
• To identify and address barriers to EE R M
  efforts through pilot demonstrations in 3 Indian
  States
• Pilots will focus on not only life extension and
  increased plant availability (the typical goal of
  RM schemes in the past) but also on getting the
  highest fuel efficiency that is cost-effectively
  achievable.
• The proposed GEF project will have the following
  components
• (a) Financing for rehabilitation of 640 MW of
  old coal-fired generation capacity units
• (b) Technical assistance to design implement
  EE RM projects including, measures to address
  barriers to replication of EE RM projects in
  India and,
• (c) Strengthening of overall institutional
  capacities of the generation utilities and other
  relevant sector entities.
• GoI has designated these pilots as Phase-I of the
  National RM Program.

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Challenges.

• With an increasing focus on climate change
  issues, finding co-financing for pure
  biodiversity related projects is a challenge
• Involving private sector with GEF projects
• In certain cases, faced difficulty in convincing
  GEF agencies to adhere to Indias rule of written
  co-financing commitments at the PIF approval
  itself
• Due to delays in transition from GEF 3 to 4
  resulting in delayed approval of some projects
  resulted in drying of the co-financing
  commitment, which took lot of time and effort to
  revive
• There is still no concrete GEF paper on
  co-financing and,
• Accounting for the exact utilization of
  co-financing amounts during the project
  implementation phase

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Opportunities.

• Programming under GEF 4 is country driven instead
  of being agency driven
• Indicative RAF amount made it easy to program and
  also, leverage upfront committed co-financing for
  all focal areas and,
• Opportunity to enhance the stakeholders base and
  bringing many new players within GEF India fold.

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GEF SGP India Program

• Grant accessed USD 5.2 million
• Co-financing leveraged USD 6.2 million
• RAF for SGP India USD 2.4 million
• GEF 4 grant accessed USD 1.6 million
• Co-financing leveraged USD 2.2 million
• Sources Community contributions and others
• Sustaining lives livelihoods
• at grassroot level

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• Thank you