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CSV
Lesson
Mobilizing local project management expertise can be beneficial. The modification of the project management consulting contract to increase the inputs of national staff proved beneficial. Local and national staff who work closely with experienced international consultants as part of a team of a competitively selected consulting firm have the opportunity to acquire skills and hone them. This is good and in line with ADB's capacity development objectives in developing member countries.

Project Number: 42401-014
Project Name: Power Distribution Enhancement Investment Program (Multitranche Financing Facility)
Report Date:
Lesson
A rational tariff policy is essential for improving the financial viability of a distribution utility. Two tariff revisions (in 2016 and 2021) helped improve the financial viability of Azerishiq's distribution-strengthening projects. Although the upgrade of distribution systems is still not fully financially viable, an improving financial internal rate of return (into positive territory) illustrates the benefits of lifting tariffs toward full cost recovery.

Project Number: 42401-014
Project Name: Power Distribution Enhancement Investment Program (Multitranche Financing Facility)
Report Date:
Lesson
The partial credit guarantee (PCG) modality was a good choice for this transaction. It enabled ADB sovereign operations to come as close as possible to enabling the IA to obtain commercial financing for a commercially viable project in a country with a below-investment-grade rating. With a One ADB approach, it showed the way to achieve close and collaborative work between ADB’s sovereign and nonsovereign departments. Its 95% cover was important because it facilitated the raising of commercial finance.

Project Number: 49451-002
Project Name: Shah Deniz Gas Field Expansion Project
Report Date:
Lesson
ADB played an important role in country risk mitigation. ADB’s partial credit guarantee (PCG) to the Southern Gas Corridor Closed Joint-Stock Company (SGC) made possible SGC’s access to necessary private sector refinancing to meet its financial commitments to Shah Deniz Stage II (SD2) and the midstream pipelines. This reduced government dependence on the country’s dwindling oil and gas revenues held by the State Oil Fund of the Republic of Azerbaijan (SOFAZ) to meet expenditure obligations.

Project Number: 49451-002
Project Name: Shah Deniz Gas Field Expansion Project
Report Date:
Lesson
The Shah Deniz Gas Field Expansion Project is transformational. It has expanded the development of one of the largest gas fields in the world, which will help (i) more than double gas production from the field; and (ii) increase the country’s gas production by 67% during the same period. This will help strengthen the Azerbaijani economy and create more fiscal space for economic diversification.

Project Number: 49451-002
Project Name: Shah Deniz Gas Field Expansion Project
Report Date:
Lesson
In MFFs, subsequent tranches should be processed and implemented to overlap with tranche 1 to maintain implementation momentum and achieve maximum benefits. The program’s tranches 2 and 3 were supposed to be approved in November 2017 and March 2018, respectively.

Project Number: 42401-015
Project Name: Power Distribution Enhancement Investment Program - Tranche 1
Report Date:
Lesson
The project management units for subsequent tranches should be more proactive in using the project management and supervision consultant for the capacity development of the operational staff on new technology and standards.

Project Number: 42401-015
Project Name: Power Distribution Enhancement Investment Program - Tranche 1
Report Date:
Lesson
In addition, contractors are encouraged to improvise where possible and introduce new technology standards. Subsequent tranches should also build upon lessons learnt and issues identified in the technical specifications for the initial tranche.

Project Number: 42401-015
Project Name: Power Distribution Enhancement Investment Program - Tranche 1
Report Date:
Lesson
To achieve higher quality and improved technology, it is crucial that the design, technical specifications, and construction standards are based on national and international best practice.

Project Number: 42401-015
Project Name: Power Distribution Enhancement Investment Program - Tranche 1
Report Date:
Lesson
The restricted stance on public external borrowing led to deferral of MFF’s tranches 2 and 3 that was not present at the time of appraisal. If possible, the locations and routes of the project components for these tranches should be identified upfront and thoroughly analyzed for potential construction and safeguard impacts.

Project Number: 42401-015
Project Name: Power Distribution Enhancement Investment Program - Tranche 1
Report Date:
Lesson
The project was fortunate that some of the required information (i.e., reduction of system losses) were available. Otherwise, it would have been difficult to quantify the project’s direct and indirect incremental effects. These could have also been recognized and addressed during the early review missions.

Project Number: 42085-013
Project Name: Power Transmission Enhancement Project
Report Date:
Lesson
This validation notes some shortcomings in the formulation of covenants. First, the basis for reducing CO2 emission levels was not clearly defined, and the target emission levels could have been more modest. Second, the medium-term tariff policy is more of a sector issue rather than a project issue. The increase in tariff was critical to the borrower’s compliance with the loan covenants and achievement of some of the impact indicators. However, the implementation of the medium-term tariff policy is beyond the control of the borrower.

Project Number: 42085-013
Project Name: Power Transmission Enhancement Project
Report Date:
Lesson
Some environmental issues surfaced during implementation, which were not considered as risks at appraisal. These include the unanticipated decrease in hydropower output due to continued drought conditions, and the unexpected geological structures and underground water during the construction of the Agdash substation. The drought conditions rendered one impact indicator to be only partly achieved. A more thorough assessment of the environmental risks during the feasibility study stage could have avoided some if not all of these issues.

Project Number: 42085-013
Project Name: Power Transmission Enhancement Project
Report Date:
Lesson
There was some confusion in Azerenergy about the correct approach to use in calculating the debt - equity ratio and the DSCR (debt service coverage ratio). Financial ratios should be defined in loan covenants, particularly if they form part of the financial covenants of the loan. Moreover, ADB should more closely review these covenants during review missions to evaluate - and if needed initiate measures to ensure - compliance.

Project Number: 42085-013
Project Name: Power Transmission Enhancement Project
Report Date:
Lesson
The project demonstrated that Azerenergy is a capable implementing agency for power projects and that there is private sector capacity to undertake major construction projects related to augmentation and rehabilitation of power transmission and distribution networks. With proper planning, effective project monitoring mechanisms, and motivated and well-trained personnel, such projects can be successfully and expeditiously implemented.

Project Number: 42085-013
Project Name: Power Transmission Enhancement Project
Report Date:
CSV