Scaling Up Demand Side Energy Efficiency Investment Project (RRP IND 52196-001)

Project Number: 52196-001 October 2019

India: Scaling Up Demand-Side Energy Efficiency

Sector Project

ABBREVIATIONS

ADB – Asian Development Bank APFS – audited project financial statements EESL ESCO EMP

– – –

Energy Efficiency Services Limited energy service company environmental management plan

GAP – gender action plan IEE – initial environmental examination LIBOR MSME MW PAM PMU

– – – – –

London Interbank Offered Rate micro, small, medium enterprise megawatt project administration manual project management unit

RRP SOE

– –

report and recommendation of the President to the Board statement of expenditure

SPS – Safeguard Policy Statement

CONTENTS

I. PROJECT DESCRIPTION 1

II. IMPLEMENTATION PLANS 2

A. Project Readiness Activities 2 B. Overall Project Implementation Plan 3 C. Subprojects selection criteria and approval procedures 4

III. PROJECT MANAGEMENT ARRANGEMENTS 5

A. Project Implementation Organizations: Roles and Responsibilities 5 B. Key Persons Involved in Implementation 5 C. Project Organization Structure 5

IV. COSTS AND FINANCING 6

A. Cost Estimates Preparation and Revisions 7 B. Key Assumptions 7 C. Detailed Cost Estimates by Expenditure Category 9 D. Allocation and Withdrawal of Loan Proceeds 10 E. Detailed Cost Estimates by Financier 11 F. Detailed Cost Estimates by Outputs and/or Components 12 G. Detailed Cost Estimates by Year 13 H. Contract and Disbursement S-Curve 14 I. Fund Flow Diagram 16

V. FINANCIAL MANAGEMENT 16

A. Financial Management Assessment 16 B. Disbursement 24 C. Accounting 25 D. Auditing and Public Disclosure 25

VI. PROCUREMENT AND CONSULTING SERVICES 27

A. Advance Contracting and Retroactive Financing 27 B. Procurement of Goods, Works, and Consulting Services 27 C. Procurement Plan 28 D. Consultant's Terms of Reference 32

VII. SAFEGUARDS 32

VIII. GENDER AND SOCIAL DIMENSIONS 33

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION 37

A. Project Design and Monitoring Framework 37 B. Monitoring 40 C. Evaluation 43 D. Reporting 44 E. Stakeholder Communication Strategy 44

X. ANTICORRUPTION POLICY 45

XI. ACCOUNTABILITY MECHANISM 46

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 46

Project Administration Manual Purpose and Process

1. The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with the policies and procedures of the government and Asian Development Bank (ADB). The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.

2. The Energy Efficiency Services Limited (EESL) will be responsible for the implementation of the project. ADB staff is responsible for supporting implementation including compliance by EESL of its obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. At loan negotiations the borrower and ADB have agreed to the PAM and ensure consistency with the loan agreement. Such agreement is reflected in the minutes of the loan negotiations. In the event of any discrepancy or contradiction between the PAM and the loan agreement, the provisions of the loan agreement shall prevail.

3. After ADB Board approval of the project's report and recommendations of the President (RRP), changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval, they will be subsequently incorporated in the PAM.

I. PROJECT DESCRIPTION

1. The project will finance high-priority areas under Energy Efficiency Services Limited (EESL’s) Energy Service Company (ESCO) business: (i) smart metering; (ii) electric vehicles (e-vehicles) and charging systems; (iii) distributed solar photovoltaic systems at distribution sub-stations; and (iv) increased awareness of energy efficiency. The project is aligned with the following impact(s): emissions intensity of economy reduced.1 The project will have the following outcome: electricity end-use efficiency increased.2 2. Outputs. The project outputs include: (i) Output 1: Energy efficient technologies in utility service areas in eligible states

(including Andhra Pradesh, Assam, Bihar, Delhi, Gujarat, Jharkhand, Maharashtra, Manipur, Meghalaya, Odisha, Rajasthan, Sikkim, Telangana, Tamil Nadu, Tripura, and Uttar Pradesh) promoted and deployed. EESL has created a “new normal” for more efficient lighting, pumping, and buildings. EESL is now expanding its market scope to include “upstream” efficiency opportunities that have not been targeted by traditional ESCO investments including smart meters, distributed solar photovoltaic systems, and e-vehicles. Installation of distributed solar photovoltaic systems will reduce network losses, improve power quality in the low-voltage network and reduce the need for new centralized electricity generation plants. Deployment of e-vehicles and charging stations will increase overall energy efficiency in transport services while reducing consumption of petroleum fuels and improving energy security.

(ii) Output 2: End-user energy efficiency awareness and capacity increased. The aim of

this output is to create awareness of the benefits of using energy-efficient appliances and persuade people to adopt and other key stakeholders such as distribution companies to promote energy-efficient measures. EESL’s business is concentrated on the retail end of the energy supply chain, and as such is dependent on consumer acceptance of efficiency interventions. Awareness campaigns under this output will engage local organizations in knowledge-sharing and training activities, with a focus on women electricity consumers. Capacity building for electricity distribution companies, electricity regulatory agencies, and other government agencies is another component of this output.

1 Government of India, Ministry of Environment, Forest and Climate Change. 2015. India’s Intended Nationally

Determined Contribution: Working Towards Climate Justice. 2 The design and monitoring framework is in Appendix 1.

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II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Table 1: Project Readiness Activities Indicative Activities 2019 2020 Responsibility

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Advance contracting actions

x x x x x x x EESL

Retroactive financing actions

x ADB

Establish project implementation arrangements

x EESL

Loan negotiation x ADB, EESL, DEA

ADB Board approval

x ADB

Loan signing x

GOI, EESL & ADB

Loan effectiveness x

GOI, EESL, ADB

ADB = Asian Development Bank, GOI = Government of India, EESL = Energy Efficiency Services Limited. Source: Asian Development Bank and Energy Efficiency Services Limited.

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B. Overall Project Implementation Plan

Table 2: Implementation Schedule

Project Formulation

Loan Preparation and Signing

Loan Effectiveness

Implementation

Output 1A: Smart meters and other smart grid elements installed

in eligible states

EESL signs MOUs with distribution companies

EESL develops and validates DPRs and conducts pilot tests

EESL enters into contractual agreements with distribution companies

EESL procures equipment and implements the subprojects

EESL undertakes capacity building, monitoring and verification activities

Output 1B: Distributed solar photovoltaic installed in eligible

states

EESL signs MOUs with distribution companies

EESL develops and validates DPRs and conducts pilot tests

EESL enters into contractual agreements with distribution companies

EESL procures equipment and implements the subprojects

EESL undertakes capacity building, monitoring and verification activities

Output 1C: E-vehicles and charging stations deployed in eligible

states

EESL signs MOUs with government agencies EESL develops and validates DPRs and conducts pilot tests EESL enters into contractual agreements with government agencies

EESL procures equipment and implements the subprojects

EESL undertakes monitoring and verification activities

Output 1D: Training of women as commercial drivers

EESL signs MOU with training institute

EESL finalizes the training program and selection of participants

Conduct of the training program and evaluation

Output 2: End-user energy efficiency awareness increased

Development of the end-user energy efficiency awareness program

Implementation of the awareness programs

Management Activities

Procurement Plan Activities

Gender Action Plan implementation and monitoring

Reviews

Project Completion Report

DPR = Detailed Project Report, MoU = Memorandum of Understanding

Loan Effectiveness

Effectivity for the Entire Component

Effectivity for the Specific Activity

Source: Asian Development Bank.

Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2022 2023 2024 2025

Q1 Q2 Q3 Q4 Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3Description

2018 2019 2020 2021

Q1 Q2 Q3 Q4 Q4

4

C. Subprojects selection criteria and approval procedures 3. EESL will ensure that all subprojects are appraised, selected and approved in compliance with the requirements given below, to the satisfaction of the Asian Development Bank (ADB). As applicable, EESL, without limiting to these requirements, will ensure that each subproject:

(i) will not involve overlapping of funding from other agencies, though other agencies such as bilateral development agencies and nongovernment organizations (NGOs) may be involved in co-financing, as well as in delivering specific additional support such as monitoring, capacity building and poverty alleviation, in which case these will clearly be defined beforehand;

(ii) seeks participation of stakeholders and affected people, NGOs, and community, including in particular women and vulnerable groups of the society, in the selection, design, implementation and monitoring of the rehabilitation and reconstruction of project facilities3;

(iii) that the equipment, materials and other resources required can be acquired in or carried to the subproject location without undue delays and as feasible provide access to services and opportunities to local labor, both men and women4;

(iv) will be required to yield a financial internal rate of return (FIRR) exceeding their weighted average cost of capital (WACC) (with FIRR and WACC calculated in accordance with the ADB’s guidelines). This selection criterion was achieved for sample subprojects, to assess that they are financially viable. EESL will also need to demonstrate that it has undertaken reasonable checks of the credit worthiness of subproject (counterparties);

(v) will be selected on an economic least cost basis and yields an economic internal rate of return (EIRR) of at least 9%. This selection criterion was achieved for the sample subprojects analyzed, reflecting the robust economic returns expected of energy efficiency investments;

(vi) meets Category “C” of ADB’s Safeguards Policy Statement (SPS) 2009 for environment, indigenous people, and involuntary resettlement; any subproject with category other than “C” as stated herein will not be eligible for financing under the project;

(vii) has Detailed Project Report completed in format and level of details acceptable to ADB; and

(viii) has all necessary arrangements for implementation and payback arrangement with the counterparties agreed upon and is scheduled to be completed no later than March 2025.

4. The project management unit (PMU) set up within EESL will reconfirm that the subprojects meet above criteria, among others, and submit to ADB for prior approval of each subproject unless otherwise agreed upon by EESL and ADB. EESL should develop a system for retention for any documentation that formed the basis for selection and approval of subprojects for the entire project implementation period for any further review by ADB.

3 This can be assessed and ensured during the preparation of the detailed project report, pilot testing and validation

and signing of memorandum of understanding with relevant authorities. 4 This can be assessed and ensured during the preparation of the detailed project report and pilot testing and validation.

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations: Roles and Responsibilities

Table 3: Project Implementation Organizations: Roles and Responsibilities

Project Implementation Organizations

Management Roles and Responsibilities

Energy Efficiency Services Limited Overall responsibility for implementation of the project.

Coordination Committee Meeting To report progress of the project, in consultation with the Ministry of Power.

Project Management Unit Responsible for coordination, implementation, and administration of the project. Headed by Chief General Manager at EESL headquarters.

Asian Development Bank Will undertake regular project review and facilitate project implementation.

Sources: Asian Development Bank, Energy Efficiency Services Limited.

B. Key Persons Involved in Implementation

Executing Agency Energy Efficiency Services Limited

Mr. Bhawanjeet Singh Chief General Manager Telephone: +91-11-4580-1262 Email address: bsingh1@eesl.co.in

Office address: 5th and 6th Floor, CORE-III, SCOPE Complex Lodhi Road, New Delhi-110003 Fax: +91-11-4580-1265

Asian Development Bank Energy Division South Asia Department

Priyantha Wijayatunga Director Telephone: +63 632 6198 Email address: pwijayatunga@adb.org

Mission Leader

Jiwan Acharya Principal Energy Specialist Telephone: +63 632 4444 Email address: jacharya@adb.org

C. Project Organization Structure

5. EESL will be the executing and implementing agency for the project.

6

Figure 1: Program Implementation Structure

IV. COSTS AND FINANCING

6. The project is estimated to cost $592 million. ADB will finance (a) from its ordinary capital resources $250 million, which is 42.2% of the total project cost and (b) from Clean Technology Fund $46 million, which is 7.8% of the total project cost while EESL will finance $296 million, which is 50% of the total project cost. ADB’s financing will be related to the following components: (i) smart meters; (ii) distributed solar photovoltaic systems; and (iii) e-vehicles and charging infrastructure. EESL will finance taxes, equipment installation charges, contingencies, financing charges during implementation and cost of awareness campaigns. Detailed component-wise tabulations are given in subsequent tables.

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Table 4: Summary Cost Estimates ($ million)

Item Amounta

A. Base Costb 1. Output 1: Energy Efficient Technology Deployment 532.4 2. Output 2: End-user Energy Efficiency Awareness 5.0 Subtotal (A) 537.4 B. Contingenciesc 39.1 C. Financial Charges During Implementationd 15.5 Total (A+B+C) 592.0 a Includes taxes and duties of $54.8 million to be financed by EESL. b In third quarter 2019 prices as of 30 July 2019. c Physical contingencies computed at 2.0% of all equipment costs. Price contingencies computed at an average of

5.0% on local currency costs and 1.5% on foreign currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate.

d Includes interest, commitment charges and guarantee commission. Interest during construction (assumed to be one year as each of the subprojects are expected to be completed within one year) for ADB loan(s) has been computed at the 5-year fixed swap rate plus a spread of 0.5%. Commitment charges for an ADB loan is 0.15% per year to be charged on the undisbursed loan amount. Interest on Domestic borrowing is computed at 8% pa. A service charge (interest) of 0.25% pa is levied on the disbursed CTF Loan and an administrative fee of 0.18% pa is also levied on the undisbursed CTF loan. Guarantee commission to Government of India on ADB and CTF loans has been computed at 1.2% pa on outstanding ADB loan.

Source: Asian Development Bank staff estimates based on discussions with EESL

Table 5: Summary Financing Plan

Source Amount ($ million)

Share of Total (%)

Asian Development Bank Ordinary capital resources (regular loan) 250.0 42.2

Clean Technology Fund (loan)a 46.0 7.8

Energy Efficiency Services Limited 296.0 50.0

TOTAL 592.0 100.0 a Administered by the Asian Development Bank. Sources: Asian Development Bank staff estimates based on discussions with EESL

A. Cost Estimates Preparation and Revisions

7. The cost estimates were prepared jointly by the EA and ADB. The sources and basis for cost estimates were reviewed during the project preparation and had been confirmed by related parties. B. Key Assumptions

8. The following key assumptions underpin the cost estimates and financing plan:

(i) Exchange rate: INR 69 = $1.00 (as of 30 July 2019). (ii) Price contingencies based on expected cumulative inflation over the

implementation period are in Table 6.

Table 6: Escalation Rates for Price Contingency Calculation

Item 2019 2020 2021 2022 2023 2024 Average

Domestic inflation 4.30% 4.60% 5.00% 5.00% 5.00% 5.00% 5.00%

International inflation 1.50% 1.50% 1.60% 1.60% 1.60% 1.60% 1.58% Source: Asian Development Bank estimates

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9. The OCR loan will have a 20‒year term, including a grace period of 5 years, a 15‒year straight line repayment method, an annual interest rate determined in accordance with ADB’s London Interbank Offered Rate-based (LIBOR) lending facility, a commitment charge of 0.15% per year, and such other terms and conditions set forth in the loan and guarantee agreements. Based on the straight-line method, the average maturity is 12.75 years and the maturity premium payable is Nil. 10. The Clean Technology Fund loan will have a 40‒year term including a grace period of 10 years, and annual service charge of 0.25%. The Clean Technology Fund (CTF) Loan will also have a Multilateral Development Bank fee of 0.18% pa of the undisbursed balance of the loan, in which case the fee payments will accrue semi-annually after loan signing.

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C. Detailed Cost Estimates by Expenditure Category

Table 7: Detailed Cost Estimates by Expenditure Category ($ million)

Item

Foreign Exchange

Local Currency

Total Gross Cost

% of Base Cost

Taxes

Total Net

Cost

A. Investment Costs

1. Equipment supply a. Smart meters 0.0 185.3 185.3 28.3 157.0 34.5%

b. Electric Vehicles and associated infrastructure 0.0 160.9 160.9 7.7 153.2 29.9% c. Distributed Solar 0.0 134.0 134.0 6.4 127.6 24.9% 2. Equipment installation 0.0 52.2 52.2 8.0 44.3 9.7% 3. End User Energy Efficiency Awareness 0.0 5.0 5.0 0.8 4.2 0.9% Total Base Cost 0.0 537.4 537.4 51.0 486.4 100.0%

B. Contingencies

1. Physical 0.0 9.1 9.1 0.9 8.2 1.7% 2. Price 0.0 30.1 30.1 2.9 27.2 5.6%

Subtotal (B) 0.0 39.1 39.1 3.7 35.4 7.3%

C. Financing Charges During Implementation

1. Interest during implementation 3.0 11.2 14.2 0.0 14.2 2.6% 2. Commitment and other charges 1.3 0.0 1.3 0.0 1.3 0.2%

Subtotal (C) 4.2 11.2 15.5 0.0 15.5 2.9%

Total Cost (A+B+C) 4.2 587.8 592.0 54.8 537.3 110.2% Notes: Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.

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D. Allocation and Withdrawal of Loan Proceeds

Table 8A: Allocation and Withdrawal of ADB Loan Proceeds ($ million)

S. No. Item ADB Financing % ADB Financing Basis*

Base Cost

1 Equipment – Non - Distributed Solar 188.8 100% of total expenditure claimed*

2 Equipment - Distributed Solar 61.2 100% of total expenditure claimed**

Total 250.0 ADB = Asian Development Bank.

* Exclusive of taxes and duties in the country of the Borrower. ** The Borrower shall withdraw the CTF Loan before withdrawing the Ordinary Operations Loan

Source: Asian Development Bank estimates.

Table 8B: Allocation and Withdrawal of CTF Loan Proceeds ($ million) S. No. Item CTF

Financing % CTF Financing Basis*

Base Cost

1 Equipment - Distributed Solar 46.0 100% of total expenditure

claimed**

Total 46.0 CTF = Climate Technology Fund. * Exclusive of taxes and duties in the country of the Borrower.

** Shall be withdrawn by Borrower first before withdrawing the Ordinary Operations Loan. Source: Asian Development Bank estimates.

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E. Detailed Cost Estimates by Financier

Table 9: Detailed Cost Estimates by Financier ($ million)

Item ADB CTFa EESL Total

Amount % of Cost Category

Amount

% of Cost Category

Tax \f Non-Tax

Amount % of Cost Category

Cost

A. Investment Costs

1. Equipment supply

Smart meters

157.0 85%

28.3 -

28.3 15%

185.3

Electric Vehicles and associated infrastructure

31.8 20%

7.7

121.4

129.1 80%

160.9

Distributed Solar

61.2 46%

46.0 34%

6.4

20.4

26.8 20%

134.0

2. Equipment installation

8.0

44.3

52.2

52.2

3. End User Energy Efficiency Awareness

0.8

4.2

5.0

5.0

Total Base Cost

250.0 47%

46.0 9%

51.0

190.4

241.4 53%

537.4

B. Contingencies

1. Physical - 0%

0.9

8.2

9.1 100%

9.1

2. Price

- 0%

2.9

27.2

30.1 100%

30.1

Subtotal (B)

- 0%

-

3.7

35.4

39.1 100%

39.1

C. Financing Charges During Implementation

1. Interest during implementation - 0%

-

14.2

14.2 100%

14.2

2. Commitment and other charges

- 0%

-

1.3

1.3 100%

1.3

Subtotal (C)

- 0%

-

15.5

15.5 100%

15.5

Total Cost (A+B+C)

250.0 42%

46.0 8%

54.8

241.3

296.0 50%

592.0

Note: Numbers may not sum precisely because of rounding. a CTF loan will be front-loaded first before using the ADB loan. Potential risk has been assessed and found to be negligible.

Source: Asian Development Bank estimates.

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F. Detailed Cost Estimates by Outputs and/or Components

Table 10: Detailed Cost Estimates by Components ($ million)

Item Total

Output 1 - Energy Efficient Technology Deployment

Output 2 - End User Energy Efficiency Awareness

Amount % Amount %

A. Investment Costs

1. Equipment supply 480.1 480.1 100%

Smart Meters 185.3 185.3 100% Electric Vehicles 160.9 160.9 100%

Distributed Solar 134.0 134.0 100%

2. Equipment installation 52.2 52.2

3. End User Energy Efficiency Awareness 5.0 5.0 100% Total Base Cost 537.4 532.4 99% 5.0 1%

B. Contingencies

1. Physical

9.1 9.0 99% 0.1 1%

2. Price

30.1 29.8 99% 0.3 1%

Subtotal (B) 39.1 38.8 99% 0.4 1%

C. Financing Charges During Implementation

1. Interest during implementation 14.2 14.1 99% 0.1 1%

2. Commitment and other charges 1.3 1.2 99% 0.0 1%

Subtotal (C) 15.5 15.3 99% 0.1 1%

Total Cost (A+B+C) 592.0 586.5 99% 5.5 1%

Note: Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.

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G. Detailed Cost Estimates by Year

Table 11: Detailed Cost Estimates by Year ($ million)

Item Total 2020 2021 2022 2023 2024 2025

A. Investment Costs

1. Equipment supply 480.1 72.0

96.0

96.0

96.0

96.0

24.0

2. Equipment installation 52.2 7.8

10.4

10.4

10.4

10.4

2.6

3. End User Energy Efficiency Awareness 5.0 0.8

1.0

1.0

1.0

1.0

0.3

Total Base Cost

537.4 80.6

107.5

107.5

107.5

107.5

26.9

B. Contingencies

1. Physical 9.1 1.4

1.8

1.8

1.8

1.8

0.5

2. Price 30.1 1.3

3.7

5.6

7.4

9.3

2.8

Subtotal (B) 39.1 2.7

5.5

7.4

9.2

11.1

3.2

C. Financing Charges During Implementation

1. Interest during implementation 14.2 2.1

2.8

2.8

2.8

2.8

0.7

2. Commitment and other charges 1.3 0.4

0.3

0.3

0.2

0.1

0.0

Subtotal (C) 15.5 2.6

3.2

3.1

3.0

2.9

0.7

Total Cost (A+B+C) 592.0 85.9

116.2

117.9

119.7

121.5

30.8

% of Total Cost 100% 14% 20% 20% 20% 21% 5% Note: Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.

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H. Contract and Disbursement S-Curve

11. Figure 2A and 2B below show contract award and loan disbursements over the life of the project.

Table 12: Contract Award and Disbursement Projection of ADB Loan (in USD million)

Contract Awards Disbursements

Year Q1 Q2 Q3 Q4 Total Cumulative Q1 Q2 Q3 Q4 Total Cumulative

2020 125 62 63 - 250 250 0 0 0 7 7 7

2021 - - - - - 250 7 27 31 33 98 105

2022 - - - - - 250 25 15 15 15 70 175

2023 - - - - - 250 15 15 15 15 60 235

2024 - - - - - 250 3 - - 3 6 241

2025 - - - - - 250 3 - 6 - 9 250

Figure 2A: Contract and Disbursement S-Curve for ADB Loan ($ million)

0

50

100

150

200

250

300

2020 2021 2022 2023 2024 2025

S Curve

Cumulative Contract Award Cumulative Disbursement

15

Table 13: Contract Award and Disbursement Projection of CTF Loan (in USD million)

Contract Awards Disbursements

YEAR Q1 Q2 Q3 Q4 Total Cumulative Q1 Q2 Q3 Q4 Total Cumulative

2020 46 - - - 46 46 0.0 0 18 18 36 36

2021 - - - - - 46 10 0 0 10 46

2022 - - - - - 46

0.0 0.0 0.0 0.0 0.0

46.0

2023 - - - - - 46

0.0 0.0 0.0 0.0 0.0

46.0

2024 - - - - - 46

0.0 0.0 0.0 0.0 0.0

46.0

2025 - - - - - 46 0.0 - - - 0.0 46.0

Figure 2B: Contract and Disbursement S-Curve for CTF Loan

($ million)

-

5

10

15

20

25

30

35

40

45

50

2020 2021 2022 2023 2024 2025

S Curve

Cumulative Contract Award Cumulative Disbursement

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I. Fund Flow Diagram

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

12. The financial management assessment (FMA) was conducted in July 2019 in accordance with ADB Guidelines for the Financial Management and Analysis of Projects (2005) and Financial Due Diligence a Methodology Note (2009). The FMA considered the capacity of EESL, including funds-flow arrangements, staffing, accounting and financial reporting systems, financial information systems and internal and external auditing arrangements. Based on the assessment, the key financial management risks identified are (a) counterparty risk resulting from EESL’s strategy to focus on the private sector as also new geographical markets; and (b) liquidity risk due to delayed collections. It is concluded that the overall pre-mitigation financial management risk of EESL is moderate. EESL has agreed to implement an action plan as key measures to address the deficiencies. The financial management action plan is provided in Table 14. EESL has also complied with the financial management action plan agreed to in the Demand Side Energy Efficiency Sector Project and the status of the same is provided in Table 15. EESL would also continue to meet its obligations relating to financial covenants agreed to in the earlier loan.

Figure 3: Fund Flow Diagram

EA = executing agency, EESL = Energy Efficiency Services Limited. Source: Asian Development Bank.

Government of India as Guarantor

(through Ministry of Finance)

Asian Development

Bank

EESL as Borrower

and EA

Loan Agreement

Reimbursement/ Replenishment Application

Invoices

EESL Advance Account (US$)

Contractors

Payments

Reimbursements Payments

Replenishment

Funds flow

Document flow

Reporting

Guarantee agreement

EESL Sub account (INR)

Payments

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Table 14: Financial Management Action Plan

Risk Description Mitigation Actions Responsibility Timeframe

1. Increase in trade receivables Trade receivables have increased substantially over the years, resulting in reduction of planned project return as also Equity IRR

Reduce trade receivables by focusing on collections

EESL Reduce average trade receivables to: 1. Less than 250 days billable revenue for the year – by March 2020 2. Less than 200 days billable revenue for the year – by March 2021 3. Less than 150 days billable revenue for the year – by March 2022

2. Inadequate provisioning for bad and doubtful debts Even though trade receivables have increased substantially, as per the statutory auditors, EESL has not been able to demonstrate proper assessment of receivables and subsequently, the basis for providing for bad and doubtful debts.

A. Conduct credit assessment of customers, their track record of payment and formulate a revised bad and doubtful debt policy. B. Implement the bad and doubtful debt policy

EESL A. Formulate a revised bad and doubtful debt policy September 2020 B. Implement policy March 2021

3. Strategic shift in business from ULBs to Discoms and private sector and also increased investment in overseas businesses Realignment of business with increasing focus on smart meters, distributed solar, energy efficient motors, etc. is likely to lead to increased exposure to Discoms and private sector. Doing business with private sector also needs appropriate financial risk appraisal mechanisms. EESL has also made substantial investments in ESCO business in the United Kingdom. This could also lead to increased financial risks.

A. Appoint a Chief Risk Officer (who will be supported by qualified staff) for formulating and implementing a Risk Policy by evaluating various risks and advising EESL on mitigating measures including pricing of products, payment security mechanisms, etc. B. Formulate an Integrated Risk Management Policy for financial risk rating based on industry/business segment, customer profile and financial performance, etc. which will guide EESL in the areas of pricing, payment security mechanism, exposure amounts, etc.

EESL A. Appoint Chief Risk Officer March 2020 B. Formulate Integrated Risk Management Policy December 2020

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Risk Description Mitigation Actions Responsibility Timeframe

4. Inadequate Management Information System (MIS) for monitoring of projects Currently, EESL does not have MIS manual for enabling a standardized methodology for monitoring project performance. This has led to issues like increasing receivables, inadequate monitoring of payment security, etc.

Prepare a manual for MIS which will enable management to monitor performance of various activities of the company including projects, timely realization of payments, periodic reconciliations of receivables/payables balances, status of creation and maintenance of payment security commitments by customers, etc. and take timely corrective measures.

EESL MIS Manual developed - September 2020

5. Organization structure and human resources to keep pace with changes in business strategy EESL’s growth plans involve entering new business segments as also enlarging its geographical presence. This will require structural changes in the organization, increased human resources requirement, need for capacity building, etc. to meet its growth requirements.

Preparation and implementation of an action plan with focus on organization structure and human resources management to meet the dynamic business strategy of EESL

EESL Preparation of action plan – September 2020 Implementation – Continuous (as per the plan)

ADB = Asian Development Bank, EESL = Energy Efficiency Services Limited.

Table 15: Current Status of Financial Management Action Plan for the Demand-Side Energy Efficiency Sector Project

Action

Responsibility/ Resources

Current Status

Establish a foreign exchange risk management framework with specific policies relating to hedging of both foreign currency and interest rates.

EESL Complied (approved by the Board of Directors at its meeting on 2 July 2019)

Undertake a legal and commercial audit of its existing and pro forma agreements with urban local bodies (ULBs) and discoms in areas relating to liabilities in the event of termination and force majeure events

EESL Complied (Opinion obtained from legal counsel on July 24, 2018)

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Action

Responsibility/ Resources

Current Status

Establish a framework for protection of project assets (insurance) in the event of fire, theft, insurable force majeure events, etc post project commissioning.

EESL Complied (framework approved by the Managing Director in January 2019)

Capacity building for adhering to ADB’s disbursement, procurement and financial management policies and procedures including managing imprest/advance account.

ADB Completed – EESL staff attended training programs conducted by ADB

Establish a framework for escrow account (and other securities) monitoring including establishment of escrow accounts, deposit of funds, enforcement of payment terms in event of default, etc. The framework would also monitor government guarantees and letters of credit

EESL Complied (confirmed by Statutory Auditor vide letter dated 29 September 2018)

Establish a policy on provision for doubtful debt and writing off of irrecoverable debt in accordance with appropriate industry/regulatory standards and guidelines

EESL Complied

Obtain clarification regarding applicability of International Accounting Standards (IAS) 17 (lease accounting) on EESL’s financial assets.

EESL Complied

Implement a comprehensive enterprise resource planning (ERP) system including fixed assets management modules

EESL Complied (implemented since April 2018)

13. Risk Assessment. Table 16 summarizes the financial management risk assessment and proposes risk mitigation measures.

Table 16: Financial Management Internal Control and Risk Assessment Risk Type Risk Rating Risk Description Mitigation Measures

A. Inherent Risks

1. Country specific risks

Low There is no significant weakness in the budgetary process or in the public sector accounting and reporting system that are expected to directly impact on EESL (to the extent that entity and project financial management are at risk). Public and private sector auditing standards and capacity are generally adequate.

None required

2. Entity specific risks

Moderate Business Risk. Strategic shift in business from ULBs to Discoms and private sector

1.EESL to appoint a Chief Risk Officer (who

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Risk Type Risk Rating Risk Description Mitigation Measures

and also increased investment in overseas businesses is being implemented by EESL. Realignment of business with increasing focus on smart meters, distributed solar, energy efficient motors, etc. is likely to lead to increased exposure to Discoms and private sector. Doing business with private sector also needs appropriate financial risk appraisal mechanisms. EESL has also made substantial investments in ESCO business in the UK.

will be supported by qualified staff) for formulating and implementing a Risk Policy – by March 2020.

2.EESL to formulate an Integrated Risk Management Policy for financial risk rating by December 2020.

Moderate Operational Risk. EESL’s growth plans involve entering new business segments as also enlarging its geographical presence. This will require structural changes in the organisation, increased human resources requirement, need for capacity building, etc. to meet its growth requirements. Organisation structure and Human resources need to keep pace with changes in business strategy. There is an urgent need for the preparation and implementation of an action plan with focus on organisation structure and human resources management to meet the dynamic business strategy of EESL

EESL to prepare of action plan for restructuring organization structure to meet EESL’s business strategy – September 2020

Implementation - Continuous

Overall Inherent Risk

Moderate

B. Control Risk

1. Executing agency

Low Compliance Risk: EESL has adequate experience in implementing ADB projects and is familiar with ADB’s financial management and disbursement requirements

None required

Substantial Counterparty Risk: Most of EESL’s project payments come from urban local bodies and distribution companies, which are known to have uncertain cash flows, leading to delayed payments to EESL. The accounts receivables outstanding has been increasing over the years resulting in reduced project returns. With a view to give focused attention to improve collections, EESL has setup a Commercial department headed by Director (Commercial) to continuously monitor and collect payment from its customers. This has resulted in increased collection of older outstandings during FY2019. Also, as committed to ADB,

EESL to focus on collections and reduce average trade receivables per year to

a. 250 days billable revenue for the year – by March 2020

b. 200 days billable revenue for the year – by March 2021

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Risk Type Risk Rating Risk Description Mitigation Measures

EESL has established a framework for monitoring the various payment securities created in its favor by its customers.

c. 150 days billable revenue for the year – by March 2022

2. Funds flow Low

Timely release of counterpart fund to the project. EESL has been meeting its counterparty funds contribution in a timely manner. It will continue to comply with ADB’s requirements regarding the release of funds

None required

3. Staffing Low

EESL has a well-organized finance and accounts department headed by Director Commercial and Chief Financial Officer (CFO) which is staffed adequately with the senior positions headed by qualified professionals. EESL has successfully managed the ADB requirements for the existing loan. EESL has been able to complete the audit of its standalone accounts within the statutory time limit of 6 months from the close of the financial year during the past few years.

None required

4. Accounting Policies and Procedures

Moderate EESL’s auditors have qualified the financial statements and have pointed out certain issues relating to incomplete data regarding capitalization and physical verification of assets, receivables/payables, etc. The auditors have also stated that they are unable to comment on adequacy of EESL’s provision for bad and doubtful debts due to inadequate data.

1.EESL’s management has stated that it is in the process of reconciling the various details and has confirmed that on completion of this exercise, any difference would be accounted for.

2. With regard to provision of bad and doubtful debt, EESL has agreed that it will revise its provisioning policy for bad and doubtful debts based on the credit assessment of its customers and their repayment record. The revised provisioning policy would be formulated by September 2020 and would be implemented by March 2021.

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Risk Type Risk Rating Risk Description Mitigation Measures

5. Internal Audit Low Internal audit is undertaken by an external chartered accountant appointed by the board of directors. Internal audit report and the action taken report are submitted to the Audit Committee once a year. The internal audit program is considered adequate for now.

None required

6. External Audit Low EESL has a comprehensive audit system with four types of audit (Statutory audit, government audit, secretarial audit and internal audit). The CAG appoints EESL’s external auditor and also conducts supplementary audits. Audits are annual and must be concluded within six months of the end of the fiscal year. The audits are done in accordance with the current Indian auditing standards. Immediately after statutory audit, supplementary audit is conducted by CAG. According to the Companies Act, 2013, secretarial audit is also conducted. A practicing Company Secretary appointed as secretarial auditor reviewed the statutory compliance of EESL. EESL has been found to be in compliance with all statutory regulations.

None required

7. Financial reporting

Substantial EESL has an integrated ERP system which enables it to generate the required information from the system. As the system is fully integrated, the same information is available for all financial reporting. A detailed budget including a capital expenditure plan is prepared annually and is used for monthly variance analysis. A 5-year business plan has also been prepared and approved. However, there is no formalized reporting formats have been developed for meeting the specific requirement of individual departments. EESL needs to prepare a manual for MIS which will enable management to monitor performance of various activities of the company including projects, timely realization of payments, periodic reconciliations of receivables/payables balances, status of creation and maintenance of payment security commitments by customers, etc. and take timely corrective measures.

The external auditors have been raising concerns on the internal controls over financial reporting in relation to financial

EESL to prepare a manual for MIS by September 2020

EESL to also provide information regarding fund utilisation and compliance of covenants (as part of Quarterly Progress Report to be submitted to ADB)

ADB has been continuously engaged

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Risk Type Risk Rating Risk Description Mitigation Measures

statements and have issued qualified audit opinion. Key audit qualifications include potential accounting adjustments due to ongoing reconciliations of receivable/payable balances, CWIP, assets & inventories; significant receivable balances; provisioning for doubtful trade receivables; and some accounting policies not entirely in line with accounting standards.

The first APFS (audited project financial statements) was submitted by EESL for previous ADB financed project for FY2018. APFS was submitted after significant delays and needed improvement in order to fully comply with ADB financial management requirements.

with EESL in evaluating and improving its internal governance, receivables monitoring and financial reporting. Further support will be provided to EESL by a financial management expert, to be engaged under attached TA, for improvements in financial management of EESL. Significant decline in trade receivable balances, implementation of revised bad and doubtful debt policy and development of MIS manual are agreed mitigation measures with EESL.

ADB FM expert held detailed session with EESL to explain ADB financial management requirements, following which revised APFS was submitted by EESL, which substantially addressed the quality concerns. For this project, a financial management expert, through the attached TA, will support EESL in overall improvement in financial management and ensuring compliance with ADB FM requirements.

8. Information System

Low EESL has implemented an integrated ERP system consisting of various modules of Finance and Control, Materials Management, Sales & Distribution, Project and Human Capital Management. The ERP package went live in April 2018. EESL has also developed various dashboards for its various businesses.

None required

Overall Control Risk

Moderate

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Risk Type Risk Rating Risk Description Mitigation Measures

Overall Combined Risk

Moderate

ADB = Asian Development Bank, BoD = Board of Directors, EESL = Energy Efficiency Services Limited, ERP = enterprise resource planning, ESCO = Energy Service Company, CAG = Comptroller & Auditor General, India.

B. Disbursement

1. Disbursement Arrangements for ADB and ADB-administered cofinanced Funds

14. The loan proceeds (including ADB-administered CTF funds) will be disbursed in accordance with the ADB’s Loan Disbursement Handbook (2017, as amended from time to time), and detailed arrangements agreed upon between EESL and the ADB.5 Online training for project staff on disbursement policies and procedures is available.6 Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control. 15. The EA will be responsible for: (i) preparing annual contract awards and disbursement projections; (ii) collecting supporting documents; and (iii) preparing and sending withdrawal applications to ADB.

16. Advance fund procedure. Advance accounts should be established by the EA for the ADB loan and for the ADB-administered CTF loan. The EA will be responsible for the preparation of liquidation/replenishment of the advance funds. Separate advance accounts should be established and maintained by EESL for each funding source. The currency of the advance account is the US dollar. The advance accounts are to be used exclusively for ADB’s and ADB-administered CTF’s share of eligible expenditures. The EA who established the advance accounts in its name, is accountable and responsible for proper use of advances to the advance account (including advances to the sub-accounts).

17. The total outstanding advance to the advance accounts should not exceed the estimate of ADB’s share of expenditures to be paid through the advance accounts for the forthcoming 6 months. EESL may request for initial and additional advances to the advance accounts based on an Estimate of Expenditure Sheet7 setting out the estimated expenditures to be financed through the accounts for the forthcoming 6 months. Supporting documents should be submitted to ADB or retained by EESL in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time) when liquidating or replenishing the advance account.

18. Separate sub-accounts in Indian rupees may be established and maintained by EESL for each funding source. The sub-accounts are to be used exclusively for ADBs and ADB-administered CTF’s share of eligible expenditures. EESL should ensure that every liquidation and replenishment of each sub-account is supported by sufficient documentation in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time).

5 The handbook is available electronically from the ADB website (http://www.adb.org/documents/ loan-disbursement

handbook 6 Disbursement eLearning. http://wpqr4.adb.org/disbursement_elearning 7 Estimate of Expenditure sheet is available in Appendix 8A of ADB’s Loan Disbursement Handbook (2017, as

amended from time to time).

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19. Statement of expenditure procedure.8 The SOE procedure may be used for reimbursement of eligible expenditures or liquidation of advances to the advance accounts with no ceiling. Supporting documents and records for the expenditures claimed under the SOE should be maintained and made readily available for review by ADB's disbursement and review missions, upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit.

20. Before the submission of the first withdrawal application, the borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of EESL, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application will be as indicated in the Loan Disbursement Handbook, 2017. Individual payments below this amount should be paid (i) by the EESL and subsequently claimed to ADB through reimbursement, or (ii) through the advance accounts, unless otherwise accepted by ADB. The borrower should ensure sufficient category and contract balances before requesting disbursements. Use of ADB’s Client Portal for Disbursements (CPD)9 system is mandatory for submission of withdrawal applications to ADB.

2. Disbursement Arrangements for Counterpart Fund

21. Counterpart funds from EESL will be used for equipment costs, installation costs, awareness campaigns, taxes and duties, financing contingencies, and for financing charges during implementation. C. Accounting

22. EESL will maintain, or cause to be maintained, separate books and records by funding source for all expenditures incurred on the project following relevant standards. Project financial statements will follow accounting principles and practices prescribed under the Companies Act, 2013, and any other applicable law or regulation prevailing in India, which are consistent with international accounting principles and practices and acceptable to ADB. Project financial statements should be prepared on an accrual basis of accounting consistent with EESL’s own accounting framework. Template financial statements provided in the Standardized Terms of Reference for audit of ADB assisted projects, agreed with the Comptroller and Auditor General of India, the DEA and ADB can be referred to as a guide for preparing financial statements, as relevant. D. Auditing and Public Disclosure

23. EESL will cause the detailed project financial statements to be audited following the Standards on Auditing (SA) (as formulated by the Institute of Chartered Accountants of India (ICAI)) by an independent auditor acceptable to ADB. The audited project financial statements together with the auditor’s opinion will be presented in the English language to ADB within 6 months from the end of the fiscal year by the EESL. 24. The audited entity financial statements of EESL, together with the auditor’s report and management letter, will be submitted in English to ADB within 1 month after their approval by relevant authorities.

8 SOE forms are available in Appendix 7B and 7D of ADB’s Loan Disbursement Handbook (2017, as amended from

time to time). 9 The CPD facilitates online submission of WA to ADB, resulting in faster disbursement. The forms to be completed

by the Borrower are available online at https://www.adb.org/documents/client-portal-disbursements-guide.

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25. EESL shall prepare the computations demonstrating compliance with the financial ratios as defined in the legal agreements, every year, as part of its entity financial reporting. The Statutory auditors will provide an additional opinion on achievement of the financial ratios under ISAE 3000 (as applicable in India).

26. The audit report for the project financial statements will include a management letter and auditor’s opinions, which cover (i) whether the project financial statements present an accurate and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting standards; and (ii) whether the proceeds of the loan were used only for the purpose(s) of the project.

27. The annual project financial statements should include withdrawal application wise reconciliation between amounts reported in the project financial statements and disbursements amount appearing in the Loan Financial Information System (LFIS) of ADB. LFIS can be accessed online and ADB will provide LFIS access to project staff on request. A statement of uses of funds with detail of the subprojects approved and amount disbursed should also be provided by EESL and annexed to the APFSs.

28. Compliance with financial reporting and auditing requirements will be monitored by review missions and during normal program supervision, and followed up regularly with all concerned, including the external auditor.

29. EESL has been made aware of ADB’s approach to delayed submission, and the requirements for satisfactory and acceptable quality of the audited project financial statements.10 ADB reserves the right to require a change in the auditor (in a manner consistent with the constitution of the borrower), or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB, or if the audits are substantially delayed. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. 30. Public disclosure of the audited project financial statements, including the auditor’s opinion on the project financial statements, will be guided by ADB’s Public Communications Policy 2011.11 After the review, ADB will disclose the audited project financial statements and the opinion of the auditors on the project financial statements no later than 14 days of ADB’s confirmation of their acceptability by posting them on ADB’s website. The management letter, additional auditor’s opinions, and audited entity financial statements will not be disclosed.12

10 ADB’s approach and procedures regarding delayed submission of audited project financial statements:

(i) When audited project financial statements are not received by the due date, ADB will write to the executing agency advising that (a) the audit documents are overdue; and (b) if they are not received within the next 6 months, requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters will not be processed.

(ii) When audited project financial statements are not received within 6 months after the due date, ADB will withhold processing of requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters. ADB will (a) inform the executing agency of ADB’s actions; and (b) advise that the loan may be suspended if the audit documents are not received within the next 6 months.

(iii) When audited project financial statements are not received within 12 months after the due date, ADB may suspend the loan.

11 Access to Information Policy: http://www.adb.org/documents/pcp-2011?ref=site/disclosure/publications 12 This type of information would generally fall under public communications policy exceptions to disclosure. ADB. 2011.

Access to Information Policy. Paragraph 97(iv) and/or 97(v).

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VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting and Retroactive Financing

31. All advance contracting and retroactive financing will be undertaken in conformity with the ADB Procurement Policy (2017, as amended from time to time) and the Procurement Regulations for ADB Borrowers (2017, as amended from time to time). The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB approval. EESL has been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the project. 32. Advance contracting. In order to expedite project implementation, EESL has requested approval for advance contracting for the procurement of the equipment, goods and works. The steps to be concluded in advance include preparation of bidding documents, bidding, and bid evaluation for all the eligible contract packages to be agreed between ADB and EESL. 33. Retroactive financing. Withdrawals from the ADB loan and CTF loan account may be made for reimbursement of eligible expenditures incurred under the project before the loan effective date, but not earlier than 12 months before the date of signing the loan agreement, subject to a maximum amount equivalent to 20% of the loan amount.

B. Procurement of Goods, Works, and Consulting Services

34. All procurement of goods and works will be undertaken in accordance with the ADB Procurement Policy (2017, as amended from time to time) and the Procurement Regulations for ADB Borrowers (2017, as amended from time to time). 35. For the procurement of works and goods, international open competitive bidding procedures will be used estimated to cost $1 million or more. The procurement scope under the project will be limited to procurement of goods and works for the distributed solar, smart meters and electric vehicles and charging stations. The procurement of services and consultants will be undertaken by EESL using its own funds and following its own procedures. EESL has sufficient capacity to design and implement Energy Efficiency interventions in distributed solar energy, smart meters and electric vehicles and charging stations. EESL has also demonstrated good performance and track record with procurement of goods and works for DSM program and has sufficient knowledge of international competitive procedures. EESL uses procurement system which is robust and has been using for ADB’s ongoing project and will follow the same for this project as well. 36. Government-owned enterprises in India shall be eligible to participate as bidders only if they can establish that they are legally and financially autonomous, operate under commercial law, and are not a dependent agency of the contracting authority. Furthermore, they will be subject to the same bid and performance security requirements as other bidders. However, no reservations shall be made for the Micro, Small and Medium Enterprise (MSME) Sector for ADB financed procurement of goods and works. No matching of prices shall be done by EESL and the entire tendered quantity shall be awarded to the lowest evaluated bidder. The Department of Information & Technology (DeitY), GOI has stipulated that procurement of 30% of the total electronic procurement of goods shall be from domestically manufactured companies. This stipulation shall not be applicable to ADB funded procurements.

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Achievement of Value for Money (VFM) through Strategic Procurement Planning. The EA has developed a procurement plan for describing how the procurement activities support the development objectives of the project and deliver value for money under a risk-managed approach. The procurement is proposed to be done entirely using the EAs eProcurement site and no physical bidding at all is envisaged for the project thereby leading to substantial reduction in procurement costs. Further, multiple packages have been proposed with a view to maximize competition and achieve value for money. 37. An 18-month procurement plan and review procedures, goods, works, and consulting service contract packages following Open Competitive Bidding is in Section C.

C. Procurement Plan

Basic Data

Project Name: Scaling-Up Demand-Side Energy Efficiency (Sector) Project

Project Number: 52196-001 Approval Number: TBD

Country: India Executing Agency: Energy Efficiency Services Ltd

Project Procurement Classification: B Implementing Agency: Energy Efficiency Services Ltd Procurement Risk: Medium

Project Financing Amount: $ 592 million

ADB Financing: $250 million

CTF (ADB Administered): $ 46 million

Non-ADB Financing: $ 296 million

Project Closing Date: September 2025

Date of First Procurement Plan: 31/07/2018 Date of this Procurement Plan: 07/09/2019

Procurement Plan Duration: 18 months Advance contracting: Yes e-GP: Yes

A. Methods, Review and Procurement Plan

Except as the Asian Development Bank (ADB) may otherwise agree, the following methods shall apply to procurement of goods, works, nonconsulting services, and consulting services.

Procurement of Goods, Works and Nonconsulting Services Method Comments

Open Competitive Bidding-International Advertisement EA has agreed to follow the method

Consulting Services Method Comments

B. List of Active Procurement Packages (Contracts) The following table lists goods, works, non-consulting, and consulting services contracts for which the procurement activity is either ongoing or expected to commence within the procurement plan’s duration.

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Goods, Works, and Nonconsulting Services

Package Number

General Description Estimated Value

($) Procurement

Method Review

Bidding Procedur

e

Advertisement Date

Comments

P 01 Distributed Solar Plants Design, Engineering, Supply, Construction, Erection, Testing, Commissioning and O&M of 40 MW of Solar Power Generating System (SPGS) ranging from 250 kW to 2 MW at various sub-stations/locations in: Lot 1: 8 Districts of Amravati, Nagpur, Wardha, Yavatmal, Wahim, Gondia, Chandrapur & Bhandara Lot 2: 8 Districts of Nashik, Dhule, Pune, Nandurbar, Jalgaon, Ratnagiri, Ahmednagar & Thane Lot 3: 8 Districts of Beed, Solapur, Osmanabad, Sangli, Kolhapur, Stara, Sindhudurg & Raigad Lot 4: 7 Districts of Buldana, Jalna, Parbhani, Hingoli, Nanded, Latur & Akola

134,000,000

OCB Prior 1S2E Q4-2018

Advertisement Method: International Prequalification of Bidders: N Domestic Preference Applicable: Y Advance Contracting: Y Bidding Document: SBD for Plant (current edition) Prior Review: Yes e-GP: Yes URL: https://eesl.eproc.in/ProductEESL/publicDash

P 03 Electric Vehicles with Charging Infrastructure

160,900,000 OCB Prior 1S 2E Q1-2020 Advertisement Method: International Prequalification of Bidders: N Domestic Preference Applicable: Y Advance

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Goods, Works, and Nonconsulting Services

Package Number

General Description Estimated Value

($) Procurement

Method Review

Bidding Procedur

e

Advertisement Date

Comments

Contracting: Y Bidding Document: SBD for Goods (current edition) Prior Review : Yes e-GP : Yes URL: https://eesl.eproc.in/ProductEESL/publicDash

G 04 Smart Meters Lot 1: Bihar (Purnia, Katihar, Saran) Lot 2: Bihar (Patna Bhagalpur Dharbanga) Lot 3: Odisha (Bhubaneswar Cuttack Behrampur) Lot 4: Telangana (Medak, Nagarkumool, Nalgonda) Lot 5: Telangana (Adilabad Hyderabad Janagaon) Lot 6: Andhra Pradesh (Vishakhapatnam, Anantpura, Chittoor, Guntur, Srikakulam) Lot 7: Tamil Nadu (Chennai, Trichy, Erode, Madurai, Thiruvarur) Lot 8: Jharkhand (Ranchi, Jamshedpur,

164,250,000

18,200,000

18,150,000

18,200,000

18,200,000

18,500,000

18,200,000

18,500,000

17,800,000

OCB

Prior 1S2E Q3-2019 Advertisement Method: International Prequalification of Bidders: N Domestic Preference Applicable: Y Advance Contracting: Y Bidding Document: SBD for Goods (current edition) Prior Review: Yes e-GP: Yes URL: https://eesl.eproc.in/ProductEESL/publicDash

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Goods, Works, and Nonconsulting Services

Package Number

General Description Estimated Value

($) Procurement

Method Review

Bidding Procedur

e

Advertisement Date

Comments

Palamu, Godda, Bokaro, Dhanbad Lot 9: North East (Guwhati, Dibrugarh, Shillong, Imphal, Gangtok, Agartala)

18,500,000

Consulting Services

Package Number

General Description Estimated Value

($) Selection Method

Review Type of

Proposal Advertisement

Date Comments8

The project does not envisage any consulting package under ADB financing.

C. List of Indicative Packages (Contracts) Required under the Project The following table lists goods, works, non-consulting, and consulting services contracts for which the procurement activity is expected to commence beyond the procurement plan duration and over the life of the project (i.e. those expected beyond the current procurement plan’s duration).

Goods, Works and Nonconsulting Services

Package Number

General Description Estimated Value ($)

Procurement Method

Review Bidding

Procedure Comments

NIL

Consulting Services

Package Number

General Description Estimated Value ($)

Selection Method

Review Type of

Proposal Comments

NIL

D. List of Awarded and Completed Contracts The following table lists the awarded contracts and completed contracts for goods, works, nonconsulting, and consulting services.

Goods, Works and Nonconsulting Services Package Number

General Description Contract Value9

Date of ADB Approval of Contract Award

Date of Completion

Comments

NIL

Consulting Services Package Number

General Description Contract Value9

Date of ADB Approval of Contract Award

Date of Completion

Comments

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E. Non-ADB Financing The following table lists goods, works, nonconsulting, and consulting services contracts over the life of the project, financed by non-ADB sources.

Goods, Works and Nonconsulting Services

General Description Estimated Value (cumulative, $)

Estimated Number of Contracts

Procurement Method

Comments

Energy Efficient Technologies TBD TBD OCB TBD

Consulting Services

General Description Estimated Value (cumulative, $)

Estimated Number of Contracts

Recruitment Method

Comments

NIL

D. Consultant's Terms of Reference

38. Use of loan proceeds for consultants is not envisioned but instead consultants will be engaged and supported through the TA. Appendix 1 has the outline terms of reference for the TA consultants.

VII. SAFEGUARDS

39. EESL will ensure that all subprojects are appraised, selected and approved in compliance with the requirements given in EARF and RF. The EESL will ensure that each subproject meets Category “C” of ADB’s safeguard policy statement 2009 for environment, involuntary resettlement and indigenous people. Any subprojects which do not meet the criteria will not be eligible for financing under the Project. 40. Environment (category C). As required by ADB’s Safeguard Policy Statement (2009) for a sector loan, an environmental assessment and review framework (EARF) is prepared to guide EESL in subproject selection, screening and categorization, environmental assessment, and institutional arrangements. The EARF specifies that only category C subprojects according to the Safeguard Policy Statement (2009) will be considered for funding. The project will add energy savings and increase use of renewable sources of energy. The subprojects will reduce carbon dioxide emissions by providing improved energy efficient management and technology systems to minimize energy loss. These interventions will generate some waste, which will be collected, stored, transported, and disposed following the requirements and regulations of the Ministry of Environment, Forest and Climate Change. EESL and its contractors will adhere to the ADB’s Safeguard Policy Statement (2009) and other environmental, health and safety regulations in managing the waste that the project may generate. EESL will keep a record of the disposed waste following the requirements of the Ministry of Environment, Forest and Climate Change; Central Pollution Control Board; and State Pollution Control Boards, including the relevant permits and/or waste destruction certificates. A grievance redress mechanism consistent with the Safeguard Policy Statement (2009) will be established to for contractors. EESL will assign staff to the project management unit to (i) manage potential environmental issues and compliance with the EARF,

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and (ii) monitor the compliance of contractors and implementing partners with environmental requirements. 41. Involuntary resettlement (category C). The project is classified category C for involuntary resettlement. The project activities are not expected to cause any physical or economic displacement as there will not be any private land acquisition. The project will not have negative impacts on titled or non-titled holders, and their livelihood. A resettlement framework (RF) has been prepared for subproject selection and implementation. The framework includes involuntary resettlement checklists, and due diligence reports for the sample project sites to ensure that the project will not have any negative impact in terms of involuntary resettlement. Stakeholder consultations were conducted and documented in due diligence reports in accordance with the ADB’s Safeguard Policy Statement (2009). The loan agreement will include assurances related to social safeguards, core labor standards for contractors (including equal pay for equal types of work), and HIV/AIDS and sexually transmitted disease prevention.

42. Indigenous peoples (category C). The project is classified category C for indigenous peoples. The project activities will not have negative impacts on indigenous peoples and their livelihood. A resettlement framework has been prepared for subproject selection and implementation which includes indigenous people’s checklists, and due diligence reports for the three sample project outputs to ensure that the project will not have any negative impact on indigenous peoples. Stakeholder consultations were held following the Safeguard Policy Statement and documented in due diligence reports.

43. Prohibited investment activities. Pursuant to ADB’s Safeguard Policy Statement (2009), ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the Safeguard Policy Statement (2009).

VIII. GENDER AND SOCIAL DIMENSIONS 44. Gender. The project is categorized as ‘effective gender mainstreaming’. The project includes affirmative gender actions that will maximize benefits to women. Extensive consultations were conducted by the team with a range of stakeholders in to prepare a gender action plan (GAP) [Table 17] with well-defined activities, indicators, targets, and timeframes. The stakeholders include state government entities, DISCOMs, EESL staff in corporate and regional offices, EESL women staff; and community women. 45. The GAP provides activities integrated within the project design. These include (i) training women as commercial drivers; (ii) training rural women in energy-efficient technologies to expand their existing businesses or start new businesses; (iii) end-user energy-efficiency awareness programs with at least 30% women participation; (iv) a document on good practices for gender in energy efficiency investments in EESL; and (v) orientation for EESL project staff on gender issues in the sector and practices in mainstreaming gender elements in energy programs. In addition, there is an awareness training to EESL staff and contractors on gender-based violence and sexual exploitation, abuse and harassment. Sex-disaggregated project data will be collected, monitored and reported. Towards project completion, EESL will conduct a study with 50% women participation/ respondents to assess benefits of using energy efficient technologies and appliances in the households. During the study, EEAL will ensure adequate representation of women in related consultation activities and reflect their view and insights. 46. The GAP will be financed through the attached technical assistance and implemented by the EESL. A gender specialist will be recruited for overall implementation, coordination, and

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reporting progress of the GAP action plan, while a national organization will support the EESL in the timely and effective implementation of the GAP. The head of the sustainable development unit (SDU) will be designated as gender focal point for monitoring of the GAP. In addition, gender focal points will also be designated in regional offices to oversee the implementation, monitoring and reporting of the GAP.

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Table 17: Gender Action Plan Activities Indicator and Targets Responsibility Timeline

Output 1: Energy efficient technologies promoted and deployed in eligible states

1.1 Train women as commercial drivers

1. Women trained as

commercial drivers with

women from poor and

socially backward

groups13 prioritized

(Baseline: 0; Target: 200

women, and 30% of the

demonstrated improved

driving skills in the

survey)

EESL Year 1-5

1.2 Conduct a preliminary assessment with gender analysis and prepare a business plan for creation of female-only electric mobility services

2. A business plan for

creation of female-only

electric mobility services

prepared

EESL Year 1-5

1.3 Train rural women in energy-efficient (EE) technologies to expand their existing businesses or start new businesses

3. Rural women trained in energy-efficient technologies to expand their existing businesses or start new businesses (Baseline: 0; Target: 100 women)

EESL Year 1-5

Output 2: End-user energy efficiency awareness increased

2.1 Conduct end-user energy efficiency awareness programs including workshops and events

4. End user energy

efficiency awareness

programs conducted

(Baseline: 0; Target: 500

end-users with at least

40% women participation,

and 30% of the

participants reported

increased awareness in

the survey)

EESL Year 1-5

2.2 Conduct a qualitative study to assess benefits of using energy efficient technologies and appliances in households

5. A study conducted to

assess benefits of using

energy efficient

technologies and

appliances in the

households including

recommendations for

improvement of executing

agency (EA) in

EESL Year 5

13 Below poverty line (BPL) households, scheduled caste (SC), scheduled tribe (ST) and other backward classes (OBC)

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Activities Indicator and Targets Responsibility Timeline

subsequent related

activities.

(Baseline: 0; Target: A study conducted with at least 50% women respondents living in the eligible states)

2.3 Build capacity for EESL project

staff on gender

6. Project staff identified and

gender focal points

designated in EESL head

quarter and regional

offices to oversee

implementation,

monitoring and reporting

of the gender action plan.

(Baseline: 0; Target: 1

gender focal point in

EESL and 1 gender focal

point in each regional

office14 of the eligible

states)

7. Orientation provided to

EESL project staff15 on

gender issues; practices

for gender

mainstreaming;

implementing, monitoring

and reporting gender

action plan in energy

sector (Baseline: 0;

Target: At least 85% of

project staff including all

gender focal points)

EESL Year 1-5

2.4 Monitor and report on project

gender action plan

implementation

8. A gender specialist

mobilized for

implementation of project

gender action plan.

9. Collect, collate and

maintain sex-

disaggregated project

data including data on

EESL Year 1-5

14 EESL has 12 regional offices. Any regional offices covered under the projects will have one gender focal. 15 One of the trainings will be provided as Training of Trainers (ToT) to optimize the activity to create a pool of trainers.

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Activities Indicator and Targets Responsibility Timeline

staff and participants in

orientations/trainings.

10. Progress on gender

actions monitored

regularly and reported

every quarter with the

project QPRs.

11. Combined gender action

plan completion report

highlighting lessons

learned submitted upon

project completion.

12. A document prepared on

good practices for gender

mainstreaming in EE

investments in EESL

ADB = Asian Development Bank, EA=executive energy, EE=energy efficient, EESL= Energy Efficiency Services Limited, GAP=gender action plan, QPRs=quarterly progress reports. Source: ADB staff.

47. HIV/AIDS. Based on the poverty and social assessment, there is no risk that the project will increase HIV/AIDS incidence. However, contractors will carry out HIV/AIDS awareness for their laborers at work sites, which will be monitored by the construction supervision consultants.

48. Health. EESL will ensure that contractors adequately provide health and safety measures for the construction workers and further ensure that bidding documents include clauses on how contractors will address this, including an information and awareness raising campaign for construction workers on sexually transmitted diseases, including HIV/AIDS and human trafficking. 49. Labor. EESL will ensure that civil works contractors comply with all applicable labor laws and regulations do not employ child labor for construction and maintenance activities. Provide appropriate facilities for women and children in construction campsites; and do not differentiate wages between men and women for work of equal value. EESL will ensure that specific clauses ensuring these will be included in bidding documents.

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND

COMMUNICATION

A. Project Design and Monitoring Framework

Impact the Project is Aligned with Emissions intensity of economy reduced (India’s Intended Nationally Determined Contribution: Working

Towards Climate Justice)a

Results Chain Performance Indicators

with Targets and Baselines

Data Sources and Reporting

Mechanisms Risks

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Outcome End-use energy efficiency in the project areas increased

By 2026: a. Annual energy savings of 266 gigawatt-hours achieved (2018 baseline: 0)

a. Distribution utility and project reports

Rebound effect is substantial whereby consumers offset energy savings from efficiency measures with increased usage or other behaviors.

b. Additional aggregate greenhouse gas emissions avoided by 245,000 tCO2eq per year (2018 baseline: 0)

b. Project reports

Outputs

By 2025:

EESL’s growth plans involving entering new business segments and enlarging its geographic presence could strain the company’s financial and human resources, resulting in delayed release and deployment of EESL’s counterpart contribution.

1. Energy-efficient technologies in utility service areas in eligible states (including Andhra Pradesh, Assam, Bihar, Delhi, Gujarat, Jharkhand, Maharashtra, Manipur, Meghalaya, Odisha, Rajasthan, Sikkim, Telangana, Tamil Nadu, Tripura, and Uttar Pradesh) promoted and deployedb

1a. 5 million smart meters and other intelligent energy management elements installed in eligible states (2018 baseline: 0) 1b. 160 megawatts distributed solar photovoltaic installed in eligible states (2018 baseline: 0) 1c. 10,000 e-vehicles and charging stations commissioned in eligible states (2018 baseline: 0) 1d. 200 women demonstrated skills as commercial driversc with women from poor and socially backward groupsd

prioritized (2018 baseline: 0)

1a.–1c. Monitoring and verification reports on an annual basis 1d. Pre- and post-training assessment

2. End-user energy-efficiency awareness and capacity increasedd

2a. At least 500 end-users participated in energy-efficiency awareness workshops or other events, with at least 40% women participants (2018 baseline: 0) 2b. At least 100 staff of electricity distribution companies, regulatory agencies and other government agencies reported knowledge on energy efficient technologies and business models (2018 baseline: 0)

2. Monitoring and verification reports

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Key Activities with Milestones

1. Energy-efficient technologies in utility service areas in eligible states (including Andhra Pradesh, Assam, Bihar, Delhi, Gujarat, Jharkhand, Maharashtra, Manipur, Meghalaya, Odisha, Rajasthan, Sikkim, Telangana, Tamil Nadu, Tripura, and Uttar Pradesh) promoted and deployed 1a. Smart meters and other intelligent energy management elements (smart grid) installed in eligible states 1a.1 EESL signs MOUs with distribution companies (Q2 2020). 1a.2 EESL develops and validates DPRs and conducts pilot tests to demonstrate technology and savings

(Q4 2020). 1a.3 EESL enters into contractual agreements with distribution companies and ensures a secure payment

mechanism (Q4 2020). 1a.4 EESL procures equipment and implements the subprojects (Q4 2024). 1a.5 EESL undertakes capacity building, monitoring, and verification activities (Q4 2024).

1b. Distributed solar photovoltaic installed in eligible states 1b.1 EESL signs MOUs with distribution companies (Q4 2020). 1b.2 EESL develops and validates DPRs and conducts pilot tests to demonstrate technology and savings

(Q4 2020). 1b.3 EESL enters into contractual agreements with distribution companies and ensures a secure payment

mechanism (Q4 2020). 1b.4 EESL procures equipment and implements the subprojects (Q4 2022). 1b.5 EESL undertakes capacity building, monitoring, and verification activities (Q1 2025). 1c. E-vehicles and charging stations deployed in eligible states 1c.1 EESL signs MOUs with government agencies (Q2 2020). 1c.2 EESL develops and validates DPRs and conducts pilot tests to demonstrate technology and savings

(Q4 2020). 1c.3 EESL enters into contractual agreements with government agencies and ensures a secure payment

mechanism (Q4 2023). 1c.4 EESL procures equipment and implements the subprojects (Q4 2024). 1c.5 EESL undertakes monitoring and verification activities (Q1 2025). 1d. Training of women as commercial drivers 1d.1 EESL signs MOU with training institute (Q4 2020) 1d.2 EESL finalizes the training program and selection of women participants (Q2 2021) 1d.3 Conduct of the training program and evaluation (Q4 2023)

2. End-user energy-efficiency awareness and capacity increased 2.1 Develop end-user energy-efficiency awareness program (Q2 2020). 2.2 Implement awareness programs (Q4 2024).

Project Management Activities Project monitoring and evaluation; capacity building of EESL staff on Asian Development Bank policies and procedures; gender mainstreaming (ongoing).

Inputs Asian Development Bank: $250 million (loan) Clean Technology Fund: $46 million (loan) Energy Efficiency Services Limited: $296 million

Assumptions for Partner Financing None

DPR = detailed project report, EESL = Energy Efficiency Services Limited, MOU = memorandum of understanding, Q = quarter, RFI = results framework indicator, tCO2eq = ton of carbon dioxide equivalent. a Government of India, Ministry of Environment, Forest and Climate Change. 2015. India’s Intended Nationally

Determined Contribution: Working Towards Climate Justice. New Delhi. b Eligibility criteria and selection process are mentioned in the Project Administration Manual (accessible from the list

of linked documents in Appendix 2) c Below poverty line households, scheduled caste, scheduled tribe, and other backward classes.

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d To be financed by the attached TA and EESL counterpart contribution Contribution to ADB Results Framework: To be determined Source: Asian Development Bank.

B. Monitoring

50. Project performance monitoring. Overall monitoring of the project in terms of progress and performance will be undertaken in a timely manner by EESL. The PMU, headed by the Chief General Manager, has been set up at EESL’s headquarters. The unit, through the related functional departments of EESL, will be responsible for monitoring the implementation of the project, including outcomes, outputs and activities in relation to the targets and milestones set for the project.

51. EESL has 11 regional offices headed by a regional manager to implement the projects under their respective jurisdictions. The additional general manager or deputy general managers in the region responsible for the implementation of the projects will report to their respective heads in the headquarters, who in turn will facilitate submission of the implementation progress reports. The management of EESL will receive monthly progress reports and review each project in quarterly review meetings.

52. EESL will prepare monitoring reports in the format covering all essential aspects of the Project and submits them to ADB at the agreed frequency for each type of report. Staff designated by PMU-EESL to deal with environmental issues will prepare a waste management monitoring summary consistent with the requirements of the EARF. The waste management monitoring summary will be an integral part of the project progress report.

53. Compliance monitoring. Compliance with covenants in the loan agreement will be monitored through ADB’s project administration missions, including project inception mission, to discuss and confirm the timetable for compliance with the loan covenants; project review missions to review the borrower’s compliance with particular loan covenants and, where there is any noncompliance or delay, discuss proposed remedial measures with the government; and midterm review mission if necessary to review covenants to assess whether they are still relevant or need to be changed, or waived due to changing circumstances. 54. Safeguards monitoring. EESL must adhere to the RF and EARF during contract implementation as prepared in accordance with ADB Safeguard Policy Statement 2009 and as agreed and/or endorsed by the government. EESL will provide safeguards implementation status as part of quarterly progress reports to ADB. The safeguards section of the quarterly progress reports will describe implementation progress of environment and social safeguards activities, compliance status as per the monitoring requirements presented in RF and EARF and include a waste management summary report in accordance with the EARF. In the event of any unanticipated environmental or social safeguards impacts during implementation, or if monitoring identifies a breach of performance standards that should be complied with by EESL, and/or their contractors, EESL will submit to ADB a time-bound corrective action plan. 55. Gender and social dimensions monitoring. The GAP will be routinely monitored by the PMU. A study to assess benefits of using energy efficient technologies and appliances in the households will be conducted with 50% women participation/respondents towards the project completion. EESL will be responsible for oversight to ensure timely implementation and the head of the sustainable development unit (SDU) will be designated as GAP focal point for monitoring of the gender action plan. In addition, gender focal points will also be designated in regional offices to oversee the implementation, monitoring and reporting of the gender action plan. EESL project

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staff will be trained on gender issues in the sector; practices in gender mainstreaming in energy programs; gender action plan implementation, monitoring and reporting requirements; and to collect, collate and report sex-disaggregated project data. EESL will prepare and update the progress report in accordance with the gender action plan and submit this to ADB as part of the quarterly progress reports. The mid-term review of the project will include review of gender actions. GAP monitoring and reporting format is in the table below:

Table 18: GAP Monitoring and Reporting Format Activities, Indicators and Targets, Timeframe

and Responsibility Progress for the

Quarter (MM/YY to MM/YY)

(This should include information on progress for the current quarter–

qualitative and quantitative updates with sex-disaggregated data)

Cumulative Progress

(This should include information on progress–

qualitative and quantitative updates with sex-

disaggregated data- from the start of implementation

of GAP to the previous quarter’s progress report.)

Issues and Challenges

(Please include reasons why an activity was not

fully implemented, or if targets fall

short, or reasons for delay, etc.)

Output 1: Energy Efficient Technologies promoted and deployed in eligible states

1.1 Train women as commercial drivers Indicator/Target: Women trained as commercial drivers (Target: 200 women) (baseline: 0) Timeline: Year 1-5

1.2 Conduct a preliminary assessment and prepare a business plan for creation of females-only electric mobility services Indicator/Target: A business plan for creation of females-only electric mobility services prepared Timeline: Year 1-5

1.3 Train rural women in energy-efficient (EE) technologies to expand their existing businesses or start new businesses Indicator/Target: Rural women trained in energy-efficient technologies to expand their existing businesses or start new businesses (Target: 100 women) (baseline: 0) Timeline: Year 1-5

Output 2: End-user energy efficiency awareness increased

2.5 Conduct end-user energy efficiency awareness programs including workshops and events

Indicator/Target: End user energy efficiency awareness programs conducted (Target: 500 end-users with at least 30% women participation) (baseline: 0) Timeline: Year 1-5

2.6 Conduct a qualitative study to assess benefits of using energy efficient technologies and appliances in households

Indicator/Target: A study conducted to assess benefits of using energy efficient technologies and appliances in the households (Target: A study

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Activities, Indicators and Targets, Timeframe and Responsibility

Progress for the Quarter

(MM/YY to MM/YY) (This should include

information on progress for the current quarter–

qualitative and quantitative updates with sex-disaggregated data)

Cumulative Progress

(This should include information on progress–

qualitative and quantitative updates with sex-

disaggregated data- from the start of implementation

of GAP to the previous quarter’s progress report.)

Issues and Challenges

(Please include reasons why an activity was not

fully implemented, or if targets fall

short, or reasons for delay, etc.)

conducted with at least 50% women respondents from eligible states) Timeline: Year 5

2.7 Document good practices for gender mainstreaming in energy efficiency investments in EESL

Indicator/Target: A document prepared on good practices for gender mainstreaming in EE investments in EESL (baseline: 0) Timeline: Year 2

2.8 Collect, collate and maintain sex-disaggregated data.

Indicator/Target: Collect, collate and maintain sex-disaggregated project data including data on staff and participants in orientations/training Timeline: Year 1 onwards

2.9 Orient EESL project staff on gender issues in the sector; practices in gender mainstreaming in energy programs and projects, and project gender action plan implementation, monitoring and reporting

Indicator/Target: EESL project staff oriented on gender issues in the sector; practices in gender mainstreaming in energy programs and projects, project gender action plan implementation, monitoring and reporting (Target: At least 85% of eligible project staff including all eligible women oriented) (baseline: 0) EESL to identify the eligible staff in Year 1 Timeline: Year 1-5

2.10 Monitor and Report on project gender action plan implementation Indicator/Target: Gender focal points designated in EESL and regional offices to oversee the implementation, monitoring and reporting of the gender action plan. (Target: 1 gender focal point in EESL and 1 gender focal point in each regional office of participating states) Progress on gender actions monitored regularly and reported every quarter with the project QPRs.

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Activities, Indicators and Targets, Timeframe and Responsibility

Progress for the Quarter

(MM/YY to MM/YY) (This should include

information on progress for the current quarter–

qualitative and quantitative updates with sex-disaggregated data)

Cumulative Progress

(This should include information on progress–

qualitative and quantitative updates with sex-

disaggregated data- from the start of implementation

of GAP to the previous quarter’s progress report.)

Issues and Challenges

(Please include reasons why an activity was not

fully implemented, or if targets fall

short, or reasons for delay, etc.)

Combined gender action plan completion report highlighting lessons learned submitted upon project completion. Timeline: Year 1-5

ADB = Asian Development Bank, EA=executive energy, GAP=gender action plan, IA=implementing agency, EE=energy efficient, EESL= Energy Efficiency Services Limited, QPRs=quarterly progress reports.

C. Evaluation

56. ADB will field regular review missions every six months at the minimum to review status of contract awards, disbursements, physical progress and implementation of the RF, EARF and GAP including environmental management plan. There may be a mid-term review of project implementation in 2022 to determine if any corrective measures need to be taken in consultation with EESL. Within six months of physical completion of the project, EESL will submit a project completion report to ADB.16 Subsequently, ADB will field a mission to finalize the project completion report.

Table 19: Evaluation Methodology

Evaluation Activity

Purpose Methodology Who responsible and involved

Review Mission Review the progress of the project and provide guidance to facilitate implementation

Site visits and meetings with EESL officials, contractors, consultants at least twice a year

ADB/EESL

Mid Term Review

Comprehensive review of the project

2 years after the loan effectiveness, focusing on the implementation status, safeguards, gender, and reviewing the financial status of EESL.

ADB/EESL

Project completion report

Evaluate the overall output of the project and its relevance and suitability

Evaluation of project relevance, effectiveness, efficiency, sustainability and impact

ADB/EESL

ADB = Asian Development Bank, EESL = Energy Efficiency Services Limited.

16 Project completion report format is available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-

Sector-Landscape.rar

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D. Reporting

57. EESL will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system, no later than 45 days after end of each quarter. The quarterly progress reports should include financial and disbursement report, variance analysis of physical and financial progress, details of utilization of funds and reconciliation with ADB loan financial information system (LFIS) and a statement of uses of funds with detail of the subprojects approved and amount disbursed should also be provided by EESL; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions, (c) updated procurement plan, and (d) updated implementation plan for the next 12 months; and (iii) a project completion report within 6 months of physical completion of the project. To ensure that projects will continue to be both viable and sustainable, project accounts and the executing agency audited financial statement together with the associated auditor's report, should be adequately reviewed.

E. Stakeholder Communication Strategy

58. EESL will post all relevant information on its website. The website will include at minimum information regarding the bidding process, bidders, contract awards, use of funds disbursed under the project and physical progress. The Stakeholder Communications Strategy is described in the following table.

Table 20: Stakeholder Communication Strategy

Project information to be communicated

Means of Communication

Responsibility Audience Frequency

ADB’s RRP with linked documents (including safeguards plans)

ADB website ADB All stakeholders including the general public

Once

Project information while planning/ designing

Discussions and stakeholder

consultations

EESL Project beneficiaries Regular intervals during planning and design

Status of implementation during construction

Information boards at site

EESL/ Contractors

Project beneficiaries All the time at construction sites

Project Performance Reports and Project Information Documents

ADB website

ADB All stakeholders including the general public

Quarterly

Waste management monitoring summary

ADB PMU-EESL ADB (part of project progress report)

Quarterly

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Project information to be communicated

Means of Communication

Responsibility Audience Frequency

Awareness raising on e-waste management

Workshops, town hall

meetings, print media

Communications Consultant of

EESL

Project stakeholders including the general public

Semi-annually or as needed

Quarterly progress reports

ADB website EESL All stakeholders including the general public

Quarterly

Project completion report

ADB website ADB All stakeholders including the general public

Once

ADB = Asian Development Bank, EESL = Energy Efficiency Services Limited, GoI = Government of India, PMU = Project Management Unit; RRP = Report and Recommendation of the President to the Board.

X. ANTICORRUPTION POLICY

59. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project.17 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all project contractors, suppliers, consultants, and other service providers. Individuals and/or entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the project.18 In this regard, investigation of government officials would be requested by ADB to be undertaken by the government. 60. To support these efforts, relevant provisions are included in the Loan Agreement/Regulations and the bidding documents for the project. In particular, all contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of EESL, and all contractors, suppliers, consultants, and other service providers as they relate to the project. Individuals and entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activities and may not be awarded any contract under the project.19 61. ADB's Anticorruption Policy designates the Office of Anticorruption and Integrity as the point of contact to report allegations of fraud or corruption among ADB financed projects or its staff. Office of Anticorruption and Integrity is responsible for all matters related to allegations of fraud and corruption. For a more detailed explanation refer to the Anticorruption Policy and Procedures. Anyone coming across evidence of corruption associated with the project may contact the Anticorruption Unit by telephone, facsimile, mail, or email at the following numbers/addresses:

17 Anticorruption Policy:

https://www.adb.org/sites/default/files/institutional- document/32026/anticorruption.pdf 18 ADB's Office of Anticorruption and Integrity web site: https://www.adb.org/site/integrity/main. 19 ADB's Office of Anticorruption and Integrity at: https://www.adb.org/site/integrity/main.

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▪ by email integrity@adb.org or anticorruption@adb.org

▪ by phone +63 2 632 5004 ▪ by fax +6326362152

▪ by mail at the following address (Please mark correspondence Strictly Confidential):

Office of Anticorruption and Integrity, Asian Development Bank

6 ADB Avenue Mandaluyong City 1550

Metro Manila, Philippines

XI. ACCOUNTABILITY MECHANISM

62. People who are, or may in the future be, adversely affected by the project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make an effort in good faith to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL

63. All revisions and/or updates during the course of implementation should be retained in this section to provide a chronological history of changes to implemented arrangements recorded in the PAM, including revision to contract awards and disbursement s-curves.