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Mr HEM PANDE Joint Secretary, Ministry of Environment & Forests

Co-financing for GEF India Projects Challenges & 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. Role of Co-financing in GEF projects.

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Mr HEM PANDE Joint Secretary, Ministry of Environment & Forests

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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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