1. BASIC INFORMATION a. Basic project data Project title: SERE WIND FARM PROJECT Project code: P-ZA-F00-002

Instrument number(s): P-ZA-F00-002 CTF Loan 5560130000302

Project type: Investment Loan

Sector: Energy /Power sub-sector

Country: Republic of South Africa

Environmental categorization (1-3) : 1

Processing Milestones Key Events Disbursement and Closingdate

Date approved: 30/05/2011

Cancelled amount: n/a Original disbursement deadline: 31/12/2018

Date signed: 25/09/2011

Supplementary financing: n/a Original closing date: 31/12/2018

Date of entry into force : 18/07/2012

Restructuring: n/a Revised disbursement deadline: n/a

Date effective for 1stdisbursement: 05/03/2012

Extensions (specify dates): n/a Revised closing date: n/a

Date of actual 1st : 05/03/2012

b. Financing sourcesFinancing source/instrument (MUA)

Approved amount(MUA) :

Disbursed amount(MUA) :

Percentage disbursed(%):

Loan: 32.14 6.51 20 Grant CTF: 35.77 25.47 71 Government: 6.2 26.41 284 Other (ex. Co-financiers):

175 129.43 74

TOTAL : 252.14 187.82 74.5 Co-financiers and other external partners:

Execution and implementation agencies:c. Responsible Bank staff

Position At approval At completion Regional Director E. Faal Kennedy Mbekeani (IOC)

Sector Director H. Cheikhrouhou Alex Rugamba

Sector Manager E. Nzabanita Negash Engedasew

Task Manager B. Ram Farai Kanonda

Alternate Task Manager Elizabeth Muguti

PCR Team Leader PCR Team Members

PCR EVALUATION NOTE FOR PUBLIC SECTOR OPERATIONS

d. Report data PCR Date : 15 December 2017 PCR Mission Date: From: To: PCR-EN Date: January 2018 Evaluator/consultant : Ananda Covindassamy

Peer Reviewer/Task Manager:

2. PROJECT DESCRIPTIONSummary from Appraisal Report including addendum/corrigendum or loan agreement, and taking into account any modification that occurred during the implementation phase.

a. Rationale and expected impacts:Provide a brief and precise description on the project/programme rationale (concerns/questions raised), expected impacts and the intended beneficiaries (directly or indirectly impacted by the project/programme). Highlight any change that occurred during the execution phase. In 2010, the government launched the New Growth Path Framework, to respond to the severe economic downturn of the late 2008 and sought to accelerate technological change for a jobs-creationoriented economy with a target of 5 million jobs economy-wide. The Framework counted on investments being made through the policy-adjusted Integrated Resource Plan (2010-2030) for electricity, which foresaw near doubling of generation capacity by 2030 with 42% coming from renewable energy sources, and 23% from nuclear power, and thus reduce the contribution of coal in the power generation mix, and in consistency with the green growth strategy. Eskom also recognized the imperative to diversify its existing generation fleet to reduce the impact on the environment and ensure a low-carbon future. The DO was equally relevant to the Bank’s updated Country Strategy Paper 2008-12 for South Africa, which was underpinned by the country’s Medium-Term Strategic Framework.

The Sere facility, together with new transmission capacity to export its power, would act as a flagshipto the sector. In addition, Eskom investments in transmission capacity expansion to the key regions of potential wind power development would catalyze substantial private sector investment. The project was approved together with the 100MW Upington concentrating solar project to also benefit from funds provided by the Clean Technology Fund which would buy down the additional costs and risks typical for renewable energy projects and allow the government through Eskom to undertake the project implementation but without passing on the full cost of the investment through increased tariffs to the economy.

The project beneficiaries are: All ESKOM customers who will benefit from the addition of 100 MW of generation capacity 400 jobs created by contractors

6 permanent jobs created for operation

b. Objectives/Expected Outcomes:Provide a clear and concise description of the project objectives, expected outcomes, and intended beneficiaries. In so doing,highlight any revision/amendment.

GHG emissions avoided

100 MW of capacity installed 252 million USD of direct finance leveraged through CTF funding.

Intended beneficiaries are: All ESKOM customers who will benefit from the addition of 100 MW of generation capacity 400 jobs created by contractors

6 permanent jobs created for operation

c. Outputs and intended beneficiaries:Provide a clear and concise description the expected outputs and intended beneficiaries. In so doing, highlight any revision/amendment.

The project expected outputs are: Output 1: 100 MW Wind Power Plant installed to generate 219 GWh per annum achievedOutput 2:Report on planning and design of plant achievedOutput 3: Number of Towers & other equipment installed achievedOutput 4:Number of Wind Turbines installed achieved Output 5: Number of power generators installed achievedOutput 6: Number of substations constructed achievedOutput 7: km of 132-kV transmission line constructed achieved Output 8: Percentage of buildings and civil works completed achievedOutput 9:Number of 33-KV switchgears achievedOutput 10: Number of jobs created by the project (i) Construction (ii) Operation achieved

Intended beneficiaries are: All ESKOM customers who will benefit from the addition of 100 MW of generation capacity 400 jobs created by contractors

6 permanent jobs created for operation

d. Principal activities/Components:Provide a clear and concise description of the principal activities/components. In so doing, highlight any revision/amendment.

The project components are: Design, manufacture, supply, transport, erection, and commissioning of the wind turbine

generator (WTG) units, including WTG foundations, interlinking roads, crane pads design and construction, and the collection system for WTG to the substation, including trenches and cables.

Construction of the main access road, substation building, visitors’ centre, and workshop building, with installation of HVAC and fire protection and detection systems.

Supply and installation of the Sere substation and 132 kV distribution line to Juno substation,including 30 kV feeder bays.

3. PROJECT PERFORMANCE ASSESSMENT

RELEVANCE

a. Relevance of the project development objective: Evaluation of the relevance ex-ante and ex-post (including during the implementation phase). The relevance of the project objective (during the evaluation ex-ante and the post-evaluation) in terms of alignment with country’s development priorities and strategies, the beneficiary needs (including any changes that may have occurred during the implementation), applicable Bank sector strategies, the Bank country/ regional strategy, and general strategic priorities of the Bank. This criterion equally assesses the extent to which the project’s development objective was clearly stated and focused on outcomes and the realism of the intended outcomes in the project setting.

The DO were fully aligned with Government and Bank objective and remain so. The project is therefore rated Highly Satisfactory. The PCR rating is “Satisfactory”, but the full alignment of the project with Government and Bank development objective to increase the share of renewable energyjustifies a higher rating.

The Development Objective (DO) as stated in the RFL at appraisal/approval was to facilitate accelerated development of large scale renewable energy capacity in support of the long-term carbonmitigation strategy of South Africa. The DO was formulated to be relevant and consistent with the Government of South Africa’s strategic thrust of migrating to a low carbon growth economy as outlined in its long-term mitigation strategy. In 2010, the government launched the New Growth Path Framework, to respond to the severe economic downturn of the late 2008 and sought to accelerate technological change for a jobs-creation oriented economy with a target of 5 million jobs economy-wide. The Framework counted on investments being made through the policy-adjusted Integrated Resource Plan (2010-2030) for electricity, which foresaw near doubling of generation capacity by 2030 with 42% coming from renewable energy sources, and 23% from nuclear power, and thus reduce the contribution of coal in the power generation mix, and in consistency with the green growth strategy. Eskom also recognized the imperative to diversify its existing generation fleet to reduce the impact on the environment and ensure a low-carbon future. The DO was equally relevant to the Bank’s updated Country Strategy Paper 2008-12 for South Africa, which was underpinned by the country’s Medium-Term Strategic Framework. The DO is relevant to Pillar 1 of the three pillars of the CSP, which focused on (i) support for improved infrastructure service provision; and (ii) financial intermediation for private sector development. Since appraisal/ approval of the Sere Wind Farm Project, significant progress has been accomplished by Governmentand Eskom in expanding the role of renewable energy resource in the power generation mix through the implementation of the Renewable Energy Independent Power Producer Procurement Programme (REIPPP). This project resulted in the creation of 400 temporary and 9 permanent jobs, highlighting the difficulty to reconcile the job creation objective with the renewable energy objective in South Africa.. Project Sere was developed to support Eskom’s objectives of reducing its environmental footprint and being a sustainable business. The project’s DO are aligned with the Government and ESKOM objectives.

The DO remain relevant and consistent with the Bank’s Clean Energy Investment Framework and its Climate Risk Management and Adaptation Strategy. There was no change in the DO during implementation of the project.

b. Relevance of project design (from approval to completion):The evaluator should provide an assessment of the relevance of the project design regardless of the one provided in the

PCR. The evaluator will also comment on the PCR conclusion for this section, and will provide an evaluation of the relevance of the project design. The latter assesses the soundness and the timing of eventual adjustments, or technical solutions to ensure the achievement of the intended results (outcomes and outputs), the adequacy of the risk assessment, environmental and social protection measures, as well as the implementation arrangements. For Programme Based Operations (PBO), an assessment will be made on the relevance of the prior actions, the policy dialogue and the extent to which the operation could have been more pro-poor in its design.

The project design of installing 100 MW of wind turbines was fully aligned with objective of increasing the share of renewable energy in the power generation mix, while exploring next generation technology. However, the choice of a site where wind quality is medium to low raises questions. Therefore, the rating of the relevance of the project is Satisfactory.

The project entailed design and procurement of wind turbine power units, with a combined minimum output of 100 MW of generating capacity. The following key indicators were envisaged during the development and implementation stages of the project.

The project design was made relevant to achieving the DO in expanding the role of renewable energyin the power generation mix, and using the latest up-to-date technology to also enhance transfer of know–how. The project was designed in consideration of the following outcomes: (i) increased renewable energy supply; (ii) avoidance of direct greenhouse gas emissions; and (iii) job creation. The Sere Wind Farm Project was designed to have an installed capacity of 100 MW, and associated power evacuation infrastructure. The site layout, the site boundary reconfiguration and hub height were optimized through computational fluid dynamics modelling. The resulting Sere site capacity factor ranged from 26% to 32% at hub heights modelled between 80 to 100 meters. Environmental authorization was secured for hub heights of up to 120 meters, based on wind data measured at the Sere site and 40-year long-term atmospheric modelled wind resource data procured from three-tier analysis.

Sere’s wind regime was ranked Class III (moderate to low wind), based on 15 months of wind measurements at 60 meters met mast and 5-year data correlation with a met mast 10 km away. The unit installed capacity of the wind turbine generators was proposed to be between 1.5 MW and 3 MW. Efforts were made by Eskom and its Owner’s Engineer to ensure that the project design incorporated the latest up-to-date wind turbine technology. At appraisal/approval commercially proven available turbines had maximum height of up to 90 metres. At the time of bidding, in 2012, Siemen’s new 115 meter high turbines had just passed the threshold for being commercially proven. Because of the larger turbines which generate more power, the site was optimized to make the plant even more efficient. As a result, the completed power plant achieved a capacity factor of approximately 34%. The project design was, therefore tailored to be relevant to achieving the DO, despite the less than optimum geographical location.

EFFECTIVENESS

c. Effectiveness in delivering outputs :Evaluation of the extent to which the project achieved its stated results (obtained from the logical framework) based on the last Implementation Progress and Results Report (IPR) and by considering accurate reporting of direct or indirect evidenceon intended and unanticipated outputs. In the absence of sufficient data (as direct evidence), indirect evidence (such as project outcomes and other pertinent processes/elements of the causal chain) should be used particularly in the evaluation of the extent to which the project is expected to achieve its stated results/ objectives. The absence of sufficient data to assess the effectiveness should be indicated (and clearly detailed in the PCR quality evaluation section). The PCR score should equally be indicated in this section.

The project was successfully completed below budget; the opportunity of technological progress was integrated yielding additional benefits. The project effectiveness in delivering outputs is rated Highly

Satisfactory.

The project delivered the stated results of erection of 46 wind turbines below budget and delivered alloutputs (see PCR). The integration of state of the art technology yielded additional benefits with a higher efficiency. The measured availability is 94% compared to a target of 92%. Little additional data on operation are provided in the available documentation.

d. Effectiveness in delivering outcomes:Evaluation of the extent to which the project achieved its intended set of outcomes (including for Program Based Operations (PBOs) where complementary measures are necessary for their implementation, namely public awareness, policy dialogue and institutional arrangements for instance). The evaluator should make an assessment based on the results of the last project Implementation Progress and Results (IPR). The evaluator shall indicate the degree to which project outcomes (intended and unanticipated) as well as reasons for any eventual gap were discussed in the PCR.

The project is delivering the expected outcomes, but with a 16 month delay. It is therefore rated “Satisfactory”.

Despite a delay of 16 months in commissioning, the effectiveness in delivering outcomes is “Satisfactory” as the project outcomes (GHG emissions avoided; 100 MW of capacity installed; 252 million USD of direct finance leveraged through CTF funding) were delivered.

e. Project development outcome: The ratings derived for outcomes and output are combined to assess the progress the project has made towards realizing its development objectives, based on the rating methodology recommended in the Staff Guidance Note on project completion reporting and rating (see IPR Guidance Note for further instruction on development objective rating).

Although project completion was late, hence the delivery of outcomes and achievement of Dos were equally late, the project had been successfully implemented and is delivering the expected benefits. The project outcome is therefore rated Highly Satisfactory.

Project development outcomes of reducing GHG emissions, installing 100 MW of wind turbines and mobilizing cofinancing have been fully achieved, although the first two were 16 months behind schedule.

f. Beneficiaries:Using evidence, the evaluator should provide an assessment of the relevance of the total number of beneficiaries by categories and disaggregated by sex.

The Beneficiaries are the holders of up to 400 jobs created by contractors during construction of which 7% women, and 9 permanent jobs created for operation of the plant with 0% women. The low percentage of women in construction staffing is the result of the small proportion of women in technical construction and operation activities and reflects the difficulty to recruit women for construction jobs in relatively isolated areas.

g. Unanticipated additional outcomes (positive or negative, not taken into consideration in the projectlogical framework) : This includes gender, climate change, as well as social and socio-economic- related issues. Provide an assessment of the extent to which intended or unanticipated additional and important outcomes have been taken into consideration by the PCR. The assessment should also look at the manner the PCR accounted for these outcomes.

No major and unanticipated additional outcomes

EFFICIENCY

h. Timeliness:The timeliness of project implementation is based on a comparison between the planned and actual period of implementation from the date of effectiveness for first disbursement. For Programme Based Operations (PBOs), the timely release of the tranche(s) are assessed through this same criterion. The project closing date ha not been achieved yet and, as the plant is already in operation, it is unlikel to be extended. The timeliness ratio is therefore estimated as 1, resulting in a Highly Satisfactory rating.

The project implementation schedule from Loan Effectiveness to start of commercial operation of the completed project stated at appraisal/approval was highly optimistic. It failed to take into account the appropriate time required for the two-stage bidding process, as well as the lead time required for manufacture and delivery of the key components of the project comprising the turbine generators and blades. The latter resulted in nearly 12 months delay. Consequently, the Funders accepted Eskom’s request for extension of the Siemen’s Contract. There were a few other delays on the execution of the other contracts, which cumulatively added up about three months. Project implementation was well and tightly managed. In total, the plant was commissioned 16 months behind schedule. However, the project original closing date of 31 December 2018 (not reached yet) isunlikely to be extended, as the plant is already in operation and the project is completed.i. Resource use efficiency:Provide and assessment of physical implementation (based on outputs delivered) against resources used (based on cumulative commitments) at completion for all contributors to the project (the Bank, Government, and others). This criterion would normally not apply to PBOs, as there is often no direct link between the outputs and the amount of contribution (in which case the rater would indicate N/A).

The project was fully implemented below estimated cost. Underestimation of costs is generally a negative point, but in the wind technology, prices are still unstable and tend to decrease in an unpredictable manner. The performance of the project in terms of efficiency in use of resources is therefore still rates Highly Satisfactory.

As a result of the international competitive tendering, the bid prices came in much lower than the appraisal estimates. At appraisal, the project cost was estimated at US$ 353 million, including 10% contingency allowance and estimated interest during construction (IDC). Based on the lowest responsive bids selected through the international competitive tendering process combined with the effect of the depreciation of the ZAR relative to the US$ at that time, the total project cost at projectcompletion was US$ 243 million including actual IDC incurred of US$ 16 million. The savings in cost was US$ 110 million or 31%. Variation Orders that occurred were all within the estimated contingency provision. Resources from the loans and Eskom counterpart contribution to the financing were efficiently managed. The high initial cost estimate is also due to a poor estimate of project cost. In general, over-budgeting is to be avoided, but the present project was dealing with a relatively new technology with still unstable prices.

j. Cost-benefit analysis:Provide an assessment of the timeliness of the development outputs, and the extent to which costs of the costs have been effective and have been provided in the most efficient manner. The PCR rating should be discussed. The evaluator should verify whether the benefits of the project (achieved or expected) exceed its actual costs. To achieve this, evidences will mainly be based on a comparison between Economic Rates of Return (ERR) calculated at appraisal, the mid-term review and completion. When commenting PCR ratings, the degree of utilization of valid sources for evidence justifying the rating assigned should be taken into consideration. The evaluator should ensure of the validity of assumptions and that the same model was used for the calculation of others ERRs. For PBOs for which this calculation model does not apply, an assessment could be done with regards to the contribution of policy reforms to economic growth. In the absence of sufficient

evidence, an appropriate rating should be assigned. The lack of supporting figures does not permit to conclude whether the analysis was properly conducted and if the results are valid. The performance of the project in this respect is therefore rated “Unsatisfactory”. The rating of the PCR is “Highly Satisfactory”, although the methodologicalflaws do not permit to draw solid conclusions concerning the economic justification of the project.

The methodology for the economic cost benefit analysis is not clearly stated in the PCR. The hints in the document suggest that the methodology adopted in the PAD (not available) was not adequate. Forexample, the PCR states that “The economic analysis, therefore considered the REFIT on renewable energy technologies to represent economic value that South Africa placed on the technologies. The output of the Sere Wind Project was valued at the REFIT tariff of ZAR 0.76/kWh”, which is clearly erroneous, as the value of the production should not be based on an administratively set FIT tariff, but on the benefits to consumers, based on their willingness to pay. The FIT tariff may be used only for the project financial analysis from the stand point of ESKOM. The handling of project tied subsidies was also not adequate.

k. Implementation progress:The assessment of the Implementation Progress (IP) on the PCR is derived from the updated IPR and takes into account the all applicable IP criteria assessed under the three categories : i) Compliance with covenants (project covenants, environmental and social safeguards and audit compliance), ii) project systems and procedures (procurement, financial management and monitoring and evaluation), and iii) project execution and financing (disbursement, budget commitments,counterpart funding and co-financing).

The borrower complied with covenants, manages funds satisfactorily and implemented the project efficiently. The project rating is therefore Highly Satisfactory.

The latest IPR rated overall implementation progress as Highly Satisfactory because compliance with project and financing covenants, project systems and procedures put in place, and project execution and financing were found to be consistently satisfactory throughout the implementation ofthe project. The assessment at completion confirms that no IP items were found to be unsatisfactory.In addition, project procedures were complied with and financial management was satisfactory, as well as project execution, despite the commissioning delay.

SUSTAINABILITY

l. Financial sustainability:Provide an assessment of the extent to which funding mechanisms and modalities (eg. Tariffs, user fees, maintenance fees, budgetary allocations, other stakeholder contributions, aid flows, etc.) have been put in place to ensure the continued flow of benefits after completion, with particular emphasis on financial sustainability. For PBOs, the assessment should focus on financial sustainability of reforms, as well as the Bank’s policy dialogue to promote financial sustainability of the reforms.

The financial sustainability of he project depends upon the financial sustainability of ESKOM. Despite some financial strain, ESKOM is financially viable. The financial sustainability is therefore rated “Satisfactory”.

Eskom, through its annual budgeting process makes adequate provisions for operation and maintenance of existing power supply infrastructure. The operation and maintenance (O&M) requirements of Eskom are included in the periodic tariff adjustments made by the National Energy Regulator of South Africa (NERSA). For O&M of the Sere Power Plant, the utility makes annual adequate budget provision to cover the requirements, including the salaries of the 9 Eskom operating

staff. In addition, Eskom has entered into an O&M Contract with Siemens Denmark, the main contractor for the Supply and installation of the power plant for a period of 5 years to train the Eskom operating staff. Eskom has also made budgetary provision for the Endangered Wildlife Trust for the conduct of environmental impact studies, including bird and bat monitoring. The operation of the project is financially sustainable, but the project funding was based on concessional financing from IFIs, which is not a replicable approach, as it cannot be repeated based on market terms and conditions. The project itself is financially sustainable, even though unlikely to be replicable.

m. Institutional sustainability and strengthening of capacities:Provide an assessment of the extent to which the project has contributed to the strengthening of institutional capacities – including for instance through the use of country systems – that will continue to facilitate the continued flow of benefits associated with the project. An appreciation should be made with regards to whether or not improved governance practices or improved skills, procedures, incentives, structures, or institutional mechanisms came into effect as a result of the operation. For PBOs, this should include an assessment on the contributions made to building the capacity to lead and manage the policy reform process; the extent to which the political economy of decision making was conducive to reform; the Government’s commitment to reform; and how the design reinforced national ownership.

Arrangements have been made to ensure transfer of know-how for O&M and suitable institutional administrative arrangements have been put in place for O&M. The project’s institutional sustainability is therefore rated “Satisfactory”.

Eskom has established a dedicated O&M team for the power station. In addition, Eskom has enteredinto a 5-year O&M Contract with Siemens to train the Eskom staff to take over after the conclusion of the O&M Contract. The complementary administrative support staff has been provided by Eskom in line with its standard practices. Institutional capacity and capability is adequate to assure continuous technical and safe operation and maintenance of the power station for sustained delivery of the output of the power station.

n. Ownership and sustainability of partnerships:Provide an assessment of whether the project has effectively involved relevant stakeholders, promoted a sense of ownershipamongst the beneficiaries (both men and women) and put in place effective partnerships with relevant stakeholders (eg. local authorities, civil society organizations, private sector, donors) as required for the continued maintenance of the projectoutputs. For PBOs, the assessment should measure the extent to which the Government’s capacity to conduct consultations during policy dialogue and the extent to which the Bank supported the Government in deepening the consultation processes.

The project made special effort to connect with local communities. These efforts, however, need to becarefully managed in order not to excessively raise expectations and create precedents which may be difficult to manage in the future. The performance of the project is rated “Satisfactory”.

At the outset, to build a sense of ownership and partnership with the community, the contractors were encouraged to recruit, to the extent possible, personnel from the local communities as construction labor, and to offer training to build skills that would enhance future employment and entrepreneurship. Bursaries were awarded to deserving and qualified students to study engineering and management at local colleges in the Municipality of the project area. This was intended to createpartnership with the communities in the project area. In addition, Eskom demonstrated the leadership as the owner of the project, and the resulting power station.

o. Environmental and social sustainability:Provide an assessment of the objectivity of the PCR rating on the project’s implementation of environmental and social mitigation/enhancement measures with regard to the Environmental and Social Management Plan (ESMP), the capacity of

country institutions and systems, as well as the availability of funding to ensure the environmental and social sustainability of the operation. This criterion would normally only apply to Environmental Category I and II projects.

The PCR rated the project Satisfactory. The review confirms this rating.

Organizations and outstanding individuals active in the 50-kilometre radius of the project site and the socio-economic field were contacted. Such organisations included non-governmental and community-based organisations, churches, small projects, government departments of social development, and municipalities. Within the project area municipality of Matzikama, their socio-economic concerns focused on local employment opportunities, affordable school transport, and lackof access to information about tertiary education, and opportunities for the youth, cultural activities,business and work, faith, health services, education and training, leadership development, community facilities and infrastructure and social services. These needs were funded and implanted by Eskom Development Foundation and developers (contractors) at an estimated cost of ZAR 362,000.

The Environmental Management Inspectorate of the Department of Environmental Affairs conducted inspection to determine the level of compliance with the requirements of the environmental authorization. No significant issues were raised. Health and Safety were managed jointly by Eskom and the contractors in line with Eskom H&S requirements developed for the Sere Project. All Eskom and Contractor personnel were provided with a general project induction that addresses SHE aspects of the project which includes Eskom’s requirements and an overview of the EMP. Contractors were also required to conduct an internal induction with their employees. The Contractor also conducted regular toolbox talks prior to the day’s activities as well as for any issues that may have arisen. The performance of the project is rated “Satisfactory”.

4. PERFORMANCE OF STAKEHOLDERS

a. Bank performance:(Preparation/approval, ensure of Quality at Entry (QAE) : quality of the supervision, completion) : Provide observations onthe objectivity of the PCR ratings and feedback provided by the Borrower, and if necessary, re-assess the Bank’s performance throughout the project cycle (design, implementation, completion) by focusing on evidence from the PCR in relation to 7 criteria defined in the PCR Guidance Note.

Overall, Bank performance is rated Satisfactory, same as the PCR.

The appraisal process through to approval were conducted expeditiously to meet the time table of the Borrower, and in consideration of the processes of the other project financiers. The Bank team, together with the other lenders to the project, conducted the bi-annual supervision missions with the full complement of staff of the requisite skills-mix depending on the issues at hand to be addressed atthe supervision missions. The joint implementation progress review missions with the other co-financiers provided the complementarity of skills to address issues on the ground during such missions. The Bank team also acted expeditiously to respond to contract amendment requests of Eskom.

b. Borrower performance: Provide observations on the objectivity of the PCR ratings, and if necessary, re-assess the Borrower’s performance throughout the project cycle (design, implementation, completion) by focusing on evidence from the PCR in relation to questions defined in the PCR Guidance Note.

The performance of ESKOM is rated “Satisfactory”. The PCR rater ESKOM’s performance as Highly Satisfactory, but considering the project completion delay, a Satisfactory rating is more appropriate.

Eskom was committed to making the Sere Wind Farm Project its flagship project to spearhead the thrust for renewable energy development in conformity with its goal to increase the role of renewable energy, mainly wind and solar in the power generation mix, and to reduce its carbon footprint, while supporting the Government’s strategic green growth agenda. As such Eskom attached a great deal of importance to achieving the success of the project. At the outset Eskom established the institutional arrangements for the development, procurement and management of implementation. The Project Development Department within the Group Capital Department was charged with project development, the Group Commercial Department was responsible for all procurement, and Group Capital Execution Department was responsible for management execution following the award of all the contracts. Eskom carried out all the necessary steps diligently.

c. Performance of other stakeholders: Provide observations on the objectivity of the PCR ratings, and if necessary, re-assess the other shareholders’ performance throughout the project cycle (design, implementation, completion) by focusing on evidence from the PCR in relation to relevant questions specific to each stakeholder (co-financiers, NGO, contractors and service providers).

In view of the successful execution and completion of the project, and meeting all the technical performance criteria, and no major events of poor work quality reported, performance was “Satisfactory”.The Borrower, in its Project Closing Report, did not provide assessments of the performance of the other project co-financiers, namely the World Bank, and AFD nor of the Contractors performance. The Borrower, however, provided an assessment of the performance of GNFe, the Owner’s Engineeras Satisfactory on the whole. An internal audit initiated by the Engineering Design work Lead at Eskom was conducted to determine GNFe’s adherence to selected engineering processes listed in the professional services contract between GNFe and Eskom Holding. Four non-conformances were identified, and were closed, followed by six suggestions for improvement that were adopted and addressed by GNFe.

5. SUMMARY OF OVERALL PROJECT PERFORMANCE

a. Overall assessment: Provide a summary of the project/programme’s overall performance based on the PCR 4 key components (Relevance, Effectiveness, Efficiency and Sustainability). Any difference with the PCR and the reasons that have resulted in them should be mentioned. For cases with insufficient evidence (from the PCR and other documents) available, the evaluator should assign a partly satisfactory rating (to be revised) until a post project performance evaluation (e.g. PPER, PER or PRA) is complete.

The project was highly relevant; it was completed successfully, albeit with some delay. It is therefore rated Highly Satisfactory.

Relevance: The project was highly relevant to the objectives of the Government and ESKOM to increase power generation from renewable energy sources in accordance with the sector medium term development plan.

Effectiveness: The project scope and technology were consistent with the retained targets and DO, although the quality of the wind resources is rated medium to low, all project outputs were produced,and the stated outcomes of reduced GHG emissions, erection of a 100 MW wind farm and mobilization of cofinancing are achieved.

Efficiency: The overall project cost was significantly below estimate, although the outputs and outcomes are at or above target. The project efficiency is therefore satisfactory.

Sustainability: Sustainability of operation of the project is satisfactory, even though its replicability is uncertain. Institutional sustainability is good, as extensive training and transfer of know-how took place.

b. Design, implementation and utilization of the M&E (appreciation of the evaluator):Provide an assessment of planned and actual cost of the design, implementation and utilization of the M&E system. Design :To which extent the project M&E system was explicit, adequate and realistic to generate and analyse relevant data ; Implementation : To which extent relevant data was collected – Elements of M&E implementation and effectiveness in the PCR ; Utilization : degree of utilization of data generated for decision-making and resource allocation – elements of M&E utilization in the PCR.

The reporting system ut in place by ESKOM was well designed and functioned satisfactorily. Quality progress and management reports were produced. The performance of the project is therefore rated Satisfactory.

Project progress reports were prepared on a weekly and quarterly basis. The former were distributed to the project team members and stakeholders and the latter to the funders. These reports served as monitoring and evaluation (M&E) tools that helped to assess development effectiveness of the Sere Wind Farm Project and to demonstrate results that had been achieved at a certain point in time during the implementation. The following parameters of the project were monitored during implementation: • Compliance with project covenants • Implementation of procurement plan • Procurement plan • Funds • Disbursement arrangement • Terms of the loan • Packages funded by Eskom • Project cost management • Work breakdown structure • Trending/forecasting/EAC • Travel costs control • Monthly reporting • Schedule • Evaluation of project milestones • Overall project extension of time • Quality • Risks • Contract management • Contract management audit • Stakeholder management • Land consolidation and acquisition • Environmental management • Regulatory • Health and safety .

Consultant appointment and performance Monitoring and evaluation formed a key part of making and implementing management decisions during the implementation of the Sere Wind Farm Project. Project information was regularly collected and analysed for that purpose. This allowed for better, evidence-based decisions and enabled the project management team and stakeholders to learn from the results.

6. EVALUATION OF KEY LESSONS LEARNED AND RECOMMENDATIONS

Key issues Key lessons learned Comment1. Building local skills Development and training of local staff to the

skill required level before construction starts are key.

Agree

2. Community Development and localization

Setting of clear objectives and targets for localization as part of the bidding documents is necessary

Agree, within reasonable limits to avoid escalation

3. Retention of local community involvement

Pipelining is an integral part of the organizationalstructure and recruitment plan.

Agree

4. Operational Planning Strategy

Succession planning needs to be part of the operational strategy

Agree, to be supported by legally binding contracts

5. Other stakeholder participation

Involvement of all stakeholders, including HR and Training, in the planning phase is important

Agree

6. Transportation logistic arrangements

Complex transportation arrangements for large equipment should be out-sourced to a knowledgeable outside contractor for efficiency and cost-effectiveness

Agree

7. Post completion environmental monitoring costs

Should be made part of the initial project cost, with adequate provision made, so as not to over-burden the O&M budget.

Agree, but difficult to implement

8. Combined O&M and Supply and Installation Contract

Issuing such combined tender has been a successfor future replication

Agree

9. On the job training Close collaboration between Eskom PIU and GNFe has proved successful in enhancing capacity of Eskom staff to provide such service on future Eskom wind power projects

Agree

Each rKey issue Key recommendation Comment

1. Commitment to results for success The development and implementation of the project exemplifies the manner in which projects should be developed and managed through all the necessary steps to achieve success. The example should be replicated for future projects.

Agree

ecommendation

7. COMMENTS ON PCR QUALITY AND TIMELINESSThe overall PCR rating is based on all or part of the criteria presented in the annexe and other: The quality of the PCR is rated as highly satisfactory (4), satisfactory (3), unsatisfactory (2), and highly unsatisfactory (1). The timeliness of the PCR is rated as on time (4) or late (1). The participation of the Borrower, co-financier, and the bank’s external office(s) are rated as follows: Very Good (4), Good (3), Fair (2), Poor (1).

The quality of the PCR is rated Unsatisfactory. The good quality of the project should not overshadow the assessment of the quality of the PCR. The PCR provides qualitative assessments, butfalls short of quantitative elements and demonstration of conclusions. The economic and financial aspects are superficially covered. The document does not provide a clear description of the project technical content, performance at completion, terms of financing, cost of production, and assessment of replicability of the project. In terms of timeliness, the PCR was issued after completion of the work and testing of the plant but before loan closing date. Its timeliness is therefore “Very good”.

8. SUMMARY OF THE EVALUATIONThis is a summary of both the PCR and IDEV ratings with justification for deviations/comments. Appropriate section of thePCR Evaluation should be indicated in the last column in order to avoid detailed comments. The evaluator must provide a reasonable explanation for each criterion the PCR rating is not validated by IDEV. Consequently, the overall rating of the project could be “equally satisfactory”.

Criteria PCR PCREN Reason for disagreement/ Comments

RELEVANCE 3.5 4

Relevance of project development objective 3 4 The development of renewable energy is a high priority both for the Government and the Bank. The project was a major contributor to achieving this priority

Relevance of project design 4 3 The technical design is good, but the construction of a wind farm in a site where the quality of the wind is medium to low is questionable.

EFFECTIVENESS 4 3 The project was completed and delivers the expected outcomes, but incurred substantial delay

Development objective (DO) 4 4

EFFICIENCY 2.8 4 All efficiency indicators are highly positive. The poor quality of the economic evaluationrelated to the project documentation, not to the project itself, and does not impact the effectiveness of the project in delivering outputs and outcomes.

Timeliness 3 4 The project closing date is unlikely to be extended as the plant is already in operation.Closing date is unlikely to be extended, as the project is completed.

Resource use efficiency 2 4 The project was completed satisfactorily below budget

Cost-benefit analysis 3 2 The methodology is unclear and probably faulty

Implementation progress (IP) 3 4 Compliance with covenants is satisfactory, fiduciary aspects are well manage and implementation has been efficient

SUSTAINABILITY 3 3

Financial sustainability 3 3

Institutional sustainability and strengthening of capacities

3 3

Environmental and social sustainability 3 3

OVERALL PROJECT COMPLETION RATING

3.33 3

Bank performance: 3 3

Borrower performance: 4 3 There is no clear reason to rae the performance of ESKOM higher than satisfactory, as the project did not encounter extraordinary circumstances requiring extraordinary action by ESKOM

Performance of other shareholders: 3 3

Overall PCR quality: 2

9. PRIORITY FOR FUTURE EVALUATIVE WORK: PROJECT FOR PERFORMANCE EVALUTION REPORT, IMPACT EVALUTION, COUNTRY/SECTOR REVIEWS OR THEMATIC EVALUATION STUDIES:

- Project is part of a series and suitable for cluster evaluation

- Project is a success story

- High priority for impact evaluation

- Performance evaluation is required to sector/country review

- High priority for thematic or special evaluation studies (Country)

- PPER is required because of incomplete validation rating

Major areas of focus for future evaluation work:

a) Performance evaluation is required for sector/ country review

b) Cluster evaluation (institutional support)

c) Sector evaluation (budgetary support or public finance management reforms)

Follow up action by IDEV: Identify same cluster or sector operations; organize appropriate work or consultation mission to facilitate a), b) and/or c).

Division Manager clearance Director signing off

Data source for validation: Task Manager/ Responsible bank staff interviewed/contacted (in person, by telephone or

email) Documents/ Database reports

Attachment:

PCR evaluation note validation sheet of performance ratings

List of references

Appendice 1

PROJECT COMPLETION REPORT EVALUATION NOTE Validation of PCR performance ratings

PCR rating scale:

Score Description4 Very Good – Fully achieved with no shortcomings3 Good – Mostly achieved despite a few shortcomings2 Fair – Partially achieved. Shortcomings and achievements are roughly balanced1 Poor – very limited achievement with extensive shortcomings

UTS Unable to score/rateNA Non Applicable

The table below should be completely filled with specific outcomes, outputs, DO, beneficiaries and explanation of rating

Criteria Sub-criteriaPCRworkscore

IDEVreview

Reasons for deviation/comments

RELEVANCE Relevance of the projectdevelopment objective (DO) during implementation

3 4 Project DO fully aligned with Bank and Governmentpriorities

Relevance of project design (from approval tocompletion)

4 3 The technical design is good, but the construction of a wind farm in a site where the quality of the wind is medium to low is questionable.

OVERALL RELEVANCE SCORE 3.3 3

EFFECTIVENESS* Effectiveness in delivering outcomes

Outcome 1Reduced GHG emissions

4

Outcome 2 100 MW wind farm erected

4

Outcome 3 Cofinancing mobilized

4

Effectiveness in delivering output

Output1 46 wind turbines erected

4

Output2

Development objective (DO)

Development objective rating

4 4

Beneficiaries

Criteria Sub-criteriaPCRworkscore

IDEVreview

Reasons for deviation/comments

Beneficiary1 400 workers for construction

4

Beneficiary2 6 workes for operation

4

Unanticipated outcomes (positive or negative not considered in the project logical framework) and their level of impact on the project (high, moderate, low)Institutional development

Gender

Environment & climate change

Poverty reduction

Private sector development

Regional integration

Other (specify)

EFFECTIVENESS OVERALL SCORE 4 3 The project was completed below budgeted cost, but incurred substantial delay

EFFICIENCY Timeliness (based on theinitial closing date)

3 4 Closing date unlikely to be extended

Resource used efficiency

2 4 The project was completed satisfactorily below budget

Cost-benefit analysis 3 2 Methodology unclear and lack of details

Implementation progress (from the IPR)

3 4 Compliance with covenants is satisfactory, fiduciary aspects are well manage and implementation has been efficient

Other (specify)

OVERALL EFFICIENCY SCORE 2.8 4 All efficiency indicators are highly positive. The poor quality of the economic evaluation related to the project documentation, not to the project itself, and does not impact the effectiveness of the project in delivering outputs and outcomes.

SUSTAINABILITYFinancial sustainability

3 3

Institutional sustainability and strengthening of capacities

3 3

Ownership and sustainability of partnershipsEnvironmental and social sustainability

3 3

*The rating of the effectiveness component is obtained from the development objective (DO) rating in the latest IPR of the project (see Guidance Note on the IPR).

Criteria Sub-criteriaPCRworkscore

IDEVreview

Reasons for deviation/comments

The ratings for outputs and outcomes are determined based on the project’s progress towards realizing its targets, and the overall development objective of the project (DO) is obtained by combining the ratings obtained for outputs and outcomes following the method defined in the IPR Guidance Note. The following method is applied: Highly satisfactory (4), Satisfactory (3), Unsatisfactory (2) and Highly unsatisfactory (1).

Criteria Sub-criteriaPCRWorkscore

IDEVreview

Reasons for deviation/comments

BANK PERFORMANCE

Proactive identification and resolution of problems at differentstage of the project cycle

3

Use of previous lessons learned from previous operations during design and implementation

3

Promotion of stakeholder participation to strengthen ownership

3

Enforcement of safeguard and fiduciary requirements

3

Design and implementation of Monitoring & Evaluation system

3

Quality of Bank supervision (mixof skills in supervisory teams, etc)

4

Timeliness of responses to requests

3

OVERALL BANK PERFORMANCE SCORE 3 3

BORROWER PERFORMANCE

Quality of preparation and implementation

3

Compliance with covenants, agreements and safeguards

3

Provision of timely counterpart funding

3

Responsiveness to supervision recommendations

3

Measures taken to establish basis for project sustainability

3

Timeliness of preparing requests 3

OVERALL BORROWER PERFORMANCE SCORE 4 3 There is no clear reason to rate the performance of ESKOM higher than satisfactory, as the project did not encounter extraordinary circumstances requiring extraordinary action by ESKOM

PERFORMANCE OF OTHER STAKEHOLDERS

Timeliness of disbursements by co-financiers

3

Functioning of collaborative agreements

3

Quality of policy dialogue with co-financiers (for PBOs only)

3

Quality of work by service providers

3

Responsiveness to client demands 3

OVERALL PERFORMANCE OF OTHER STAKEHOLDERS

3 3

The overall rating is given: Very Good, Good, Fair and Poor.

(i) Very Good (HS) : 4(ii) Good (H) : 3(iii) Fair (US) : 2(iv) Poor (HUS): 1

DESIGN, IMPLEMENTAION AND UTILIZATION OF MONITIRING ANDEVALUATION (M&E)

Criteria Sub-criteriaIDEVScore

Comments

M&E DESIGN M&E system is in place, clear, appropriate and realistic

3

Monitoring indicators and monitoring plan were duly approved

3

Existence of disaggregated gender indicator

3 Only for construction workers

Baseline data were available or collected during the design

3

Other, specify

OVERALL M&E DESIGN SCORE 3M&E IMPLEMENTA-TION

The M&E function is adequately equipped and staffed

3

OVERALL M&E IMPLEMENTATION SCORE 3M&E UTILIZATION

The borrower used the tracking information for decision

3

OVERALL M&E UTILIZATION SCORE 3OVERALL M&E PERFORMANCE SCORE

3

PCR QUALITY EVALUATION

CriteriaPCR-EVN

(1-4)Comments

QUALITY OF PCR

1. Extent of quality and completeness of the PCR evidence and analysis to substantiate the ratings of the various sections

2 Justification of rating often qualitative rather than fact based

2. Extent of objectivity of PCR assessment score 2 Perceived tendency to over-rate the project because it is renewable energy nature

3. Extent of internal consistency of PCR assessment ratings; inaccuracies; inconsistencies; (in various sections; between text and ratings; consistency of overall rating with individual component ratings)

3

4. Extent of identification and assessment of key factors (internal and exogenous) and unintended effects (positive or negative) affecting design and implementation

3

5. Adequacy of treatment of safeguards, fiduciary issues, and alignment and harmonization

3

6. Extent of soundness of data generating and analysis process (including rates of returns) in support of PCR assessment

2 PCR is weak on data on performance and operations. Data on wind quality not detailed

7. Overall adequacy of the accessible evidence (fromPCR including annexure and other data provided)

2 Few facts and data provided except on outputs

8. Extent to which lessons learned (and recommendations) are clear and based on the PCR assessment (evidence & analysis)

3

9. Extent of overall clarity and completeness of the PCR

2 Assessment of performance and quality often rather qualitative

Other (specify)

PCR QUALITY SCORE 2

PCR compliance with guidelines (PCR/OM ; IDEV)

1. PCR Timeliness (On time = 4; Late= 1) 4 PCR issues after physical completion but before closing date.

2. Extent of participation of borrower, Co-financiers & field offices in PCR preparation

3

3. Other aspect(s) (specify)

PCR COMPLIANCE SCORE 3

*** rated as Very Good (4), or Good (3), or Fair (2), or Poor (1)

References

20140115_Sere WEF Quarterly Environmental Report_Rev0.

20140130_Eskom Renewable Energy Investment Project Progress Report - Sere Project DRAFT (Yvon

Gombele MB).

20140725_Eskom Renewable Energy Investment Project Progress Report - Sere Project (YC and MB)v2.

20150212_Notification of operational phase of the Sere Wind Energy Facility Associated Infrastructure.

20151110_Eskom Renewable Energy Investment Project Annexures - Sere Project (MB)v1.

9.2 Appendix Q - Sere Close Out Compliance Audit Report (May 2015).

9.2 APPENDIX R - LESSONS LEARNED.

AfDB CTF Mission Aide Memoire July 2010[1].

Aide Memoire - SA Eskom Energy Projects - December 2012.

Aide-mem- Feb2014 Eskom mission.

All signed off p2 of document.

Draft_Project_Close_Out_Report.

EN_PR10792.

ESIA_Summary_Eskom Renewable Energy Investment Project_ FINAL_ July 2010.

Eskom Renewable Energy Investment Project Progress Report 20130424.

Eskom Renewbles Project Aide Memoire - February 2011.

Eskom REP Supervision Mission Aide Memoire - Jan 2014.

Eskom REP Supervision Mission Aide Memoire Annexes - Jan 2014.

Eskom Superviosn Mission Aide Memoire Annexes - November 2013.

Eskom Supervision Aide Memoire - June 2012.

Eskom Supervision Mission Aide Memoire (Medupi and RE) November 2013.

Eskom Supervision Mission Aide Memoire Annexes - June 2013.

Final_Project_Close_Out_Report_SERE_Wind_Farm_19 12 16.

Sere Wind Farm Draft PCR.

Sere Wind Farm PCR - ver 1.

Sere Wind Farm PCR - ver 1_FR.

South Africa Eskom ERSP Aide Memoire September 2015 V4.

South Africa_Eskom Renewable Energy Project_Signed ADB CTF Loan Agmt and Guarantee Agmt.

South Africa_Eskom Renewable Energy Project_Signed ADB Loan Agmt and Guarantee Agmt.

YBG20150130_Eskom Renewable Energy Investment Project Progress Report - Sere Project (MB)v1.

YBG20150331_Eskom Renewable Energy Investment Project Progress Report - Sere Project (MB)v3.