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Co-financing for GEF India Projects: Challenges & Opportunities

This presentation discusses the role of co-financing in GEF projects in India, including its integration with national priorities, building of partnerships, and expansion of resources for environmental objectives. It also provides an overview of the co-financing sources and amounts leveraged in various GEF focal areas such as climate change, biodiversity, land degradation, and POPs. The national consultation process for identifying priorities, stakeholders, and executing agencies is highlighted, as well as a case study on a coal-fired generation rehabilitation project funded by GEF and co-financed by the World Bank.

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Co-financing for GEF India Projects: Challenges & Opportunities

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  1. 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

  2. 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

  3. 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

  4. 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

  5. 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)

  6. 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

  7. 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

  8. National Consultation Process… Priority Identification - Country driveness and ownership by GEF Empowered Committee chaired by Secretary (E&F) 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

  9. 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)

  10. 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

  11. 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 (R&M) and improved operations and maintenance (O&M), and a significant co-benefit of the project is the reduction of greenhouse gas emissions per kilowatt hour of electricity generated.

  12. 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 R&M 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 R&M in India and constitute about 68% of the 27,000 MW identified for R&M. But to make this investment feasible following barriers needs to be addressed:- (a) Securing long plant shutdown needed for R&M; (b) Building institutional capacity to take up R&M projects; (c) Utilities tend to accord a higher priority to green-field capacity addition over R&M projects, since the latter are perceived to be more risky, require much greater preparatory effort and the utility’s institutional capacity to implement projects is limited; (d) Energy efficiency orientation (e) Time and cost overruns and contract management a challenge (f) Poor O&M practices (g) Regulatory aspects pertaining to inadequate weightage to R&M implementation risks in tariff determination process.

  13. 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 R&M 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 R&M projects including, measures to address barriers to replication of EE R&M 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 R&M Program.

  14. 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 India’s 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;

  15. 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 stakeholder’s base and bringing many new players within GEF India fold.

  16. 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

  17. Thank you

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