Nile Basin Initiative
Shared Vision
Program
NILE BASIN
REGIONAL POWER
TRADE
PROJECT DOCUMENT
March 2001
Council of Ministers of Water Affairs
of the Nile Basin States

---

---

Nile Basin Regional Power Trade i
TABLE OF CONTENTS
ABBREVIATIONS AND ACRONYMS................................................................................................iii
PREFACE......................................................................................................................................... v
1.
SUMMARY................................................................................................................................ 1
2.
PROJECT DEVELOPMENT OBJECTIVES................................................................................ 1
2.1.
Long-term Goal and Development Objective .................................................................. 1
2.2.
Key Performance Indicators ........................................................................................... 2
2.3.
Project Links to Poverty Reduction, Gender Issues, and Regional Integration................. 2
2.4.
Project's Contribution to Regional Economic Development ............................................. 3
2.5.
Project's Impacts on Poverty and Gender Issues............................................................ 3
3.
STRATEGIC CONTEXT ............................................................................................................ 3
3.1.
The Nile Basin Initiative (NBI)......................................................................................... 3
3.2.
NBI Guidelines and Project Goals .................................................................................. 6
3.3.
Power Sector Context .................................................................................................... 7
4.
PROJECT DESCRIPTION....................................................................................................... 11
4.1.
Component 1: Nile Basin Power Forum ........................................................................ 12
4.2.
Component 2: Comprehensive Basin-Wide Power Study.............................................. 16
5.
PROJECT RATIONALE........................................................................................................... 17
5.1.
The Merits of Power Trade ........................................................................................... 17
5.2.
Reasons for Developing a Regional Power Market ....................................................... 17
5.3.
From Loose Cooperative to Tight Competitive Power Pools.......................................... 18
5.4.
Restructuring and Reform and the Impact on Power Trade........................................... 18
5.5.
Concerns for Self-Sufficiency or Cost of Compliance .................................................... 18
5.6.
Fair and Realistic Charges for Wheeling of Electrical Energy........................................ 18
5.7.
Cooperative Planning and Operation of an Interconnected System............................... 19
5.8.
Impact of Disturbances on Neighboring Interconnected Networks................................. 19
5.9.
Dealing with the Impact of Drought on Hydro Generation.............................................. 19
5.10.
Lessons Learned and Reflected in Proposed Project Design ........................................ 19
5.11.
Value Added of Donor Support in this Project............................................................... 19
6.
ISSUES REQUIRING ATTENTION.......................................................................................... 20
6.1.
Policy Issues................................................................................................................ 20
6.2.
Economic and Commercial Issues................................................................................ 20
6.3.
Financial Issues ........................................................................................................... 21
6.4.
Technical Issues .......................................................................................................... 21
6.5.
Institutional and Capacity-Building Issues..................................................................... 22
6.6.
Environmental and Social Issues.................................................................................. 23
6.7.
Telecommunications Issues ......................................................................................... 23
7.
SUSTAINABILITY AND RISKS................................................................................................ 23
7.1.
Sustainability of the Nile Basin Power Forum Component............................................. 23
7.2.
Critical Risks in the Nile Basin Power Forum Component.............................................. 24
7.3.
Sustainability of the Basin-Wide Study Component....................................................... 25
7.4.
Critical Risks in the Basin-Wide Study Component ....................................................... 25
8.
PROJECT PREPARATION AND PROCESSING ..................................................................... 26
8.1.
Evolution of the Shared Vision Program: A Coordinated Basin-Wide Program .............. 26
8.2.
Detailed Project Preparation: A Multi-Country, Participatory Process ............................ 26
NILE-SEC

---

ii
Nile Basin Regional Power Trade
FIGURES AND TABLES
Figure 1. An Illustration of Possible Levels of Nile Cooperation......................................................... 5
Figure 2. Organizational Structure of the Regional Power Trade Project ­ Formative Phase............ 14
Table 1. Status of Power Sector Reform in the Nile Basin Countries................................................ 10
Table 2. Summary Of Project Components...................................................................................... 17
Table 3. Preparation of the Shared Vision Program ......................................................................... 28
ANNEXES
ANNEX A. NBI REGIONAL POWER TRADE PROJECT DESIGN SUMMARY: LOGICAL
FRAMEWORK............................................................................................................... 29
ANNEX B. PROPOSED ORGANIZATIONAL FRAMEWORK FOR PROJECT MANAGEMENT
UNIT: DRAFT TERMS OF REFERENCE ....................................................................... 31
ANNEX C. NBI REGIONAL POWER TRADE: THREE YEAR BUDGET........................................... 37
ANNEX D. REVIEW OF INTERNATIONAL REGIONAL POWER MARKETS .................................. 39
MAP OF THE NILE RIVER BASIN................................................................................................... 45
NILE-SEC

---

Nile Basin Regional Power Trade iii
ABBREVIATIONS AND ACRONYMS
AC
alternating current
CEO(s)
chief executive officer(s)
CIDA
Canadian International Development Agency
DC
direct current
DRC
Democratic Republic of Congo
DSS
decision support system
GEF
Global Environmental Facility
IMS
information management system
EAC
East African Community
EEA
Egyptian Electricity Authority
EELPA
Ethopian Electric Light and Power Authority
EEPCo
Ethopian Electric Power Company
Public Utility for Production, Transport and distribution of
ELECTROGAZ
Electricity, Water, and Gas (Rwanda)
ENR
Eastern Nile Region
ENSAP
Eastern Nile Subsidiary Action Programs
GW
Gigawatt
ICCON
International Consortium for Cooperation on the Nile
IGMOU
intergovernmental memorandum of understanding
IPPs
independent power producers
ITC
interim technical committee
ITOs
independent transmission operators
IUMOU
interutility memorandum of understanding
KPC
Kenya Power Company
KPLC
Kenya Power and Lighting Company
Market
regional power market
MW
megawatt
NBI
Nile Basin Initiative
NELR
Nile Equatorial Lakes Region
NELSAP
Nile Equatorial Lakes Region Subsidiary Action Programs
Nile-COM
Council of Ministers of Water Affairs of the Nile Basin States
Nile-SEC
Secretariat
Nile-TAC
Technical Advisory Committee
PTWG
power trade working group
PMU
project management unit
Power Forum
Nile Basin Power Forum
Régie de Production et de Distribution d'Eau et Electricité
REGIDESO
(Burundi)
SAP
Subsidiary Action Programs
SAPP
Southern African Power Pool
SEA
strategic environmental and social assessments
SINELAC
Société Internationale d'Electricité des Pays des Grand Lacs
SNEL
Société Nationale d'Electricité du Congo (DRC)
SVP
Shared Vision Program
TANESCO
Tanzania Electric Supply Company, Ltd.
TWh
terrawatt hour
UEB
Uganda Electricity Board
UNDP
United Nations Development Programme
Water Resources Project
SVP Water Resources Planning and Management Project
Please note that all dollar figures are current U.S. dollars unless indicated otherwise
NILE-SEC

---

iv
Nile Basin Regional Power Trade
NILE-SEC

---

Nile Basin Regional Power Trade v
PREFACE
In an historic effort, the ten countries of the Nile have come together within the Nile Basin Initiative to
realize a shared vision `to achieve sustainable socio-economic development through the equitable
utilization of, and benefit from, the common Nile Basin water resources.' Recognizing the
tremendous benefits that can be reaped from cooperation, yet fully aware of the challenges ahead,
the Nile countries have embarked on a remarkable journey to translate their shared vision into
concrete activities and projects that will build confidence and capacity across the basin (the Shared
Vision Program), as well as initiate concrete investments and action on the ground at local levels
(Subsidiary Action Programs).
Presented herein is one of the projects within the Shared Vision Program. The full project portfolio
includes:
Ø Nile Transboundary Environmental Action
Ø Nile Basin Regional Power Trade
Ø Efficient Water Use for Agricultural Production
Ø Water Resources Planning and Management
Ø Confidence-Building and Stakeholder Involvement (Communications)
Ø Applied Training
Ø Socio-Economic Development and Benefit-Sharing
As a whole, the Shared Vision Program aims to create an enabling environment for cooperative
development and management. Though each project is different in focus and scope, all contribute to
building a strong foundation for regional cooperation by supporting basin-wide engagement and
dialogue, developing common strategic and analytical frameworks, building practical tools and
demonstrations, and strengthening human and institutional capacity.
The seven projects of the Shared Vision Program build upon each other to form a coordinated
program. They address the major water-related sectors and cross-cutting themes deemed critical by
the Nile riparians to ensure an integrated and comprehensive approach to water resources
development and management, and that this development serves as a catalyst for broader socio-
economic development and regional cooperation. Together, the projects of the Shared Vision
Program seek to forge a common vision for ­ as well as build the capacity to achieve - the
sustainable development the River Nile for the benefit of all. They pave the way for the realization of
investments on the ground through the Subsidiary Action Programs.
The detailed preparation of the Shared Vision Program was accomplished through a unique, multi-
country, multi-sectoral and highly participatory process led by the Nile Council of Ministers and
Technical Advisory Committee and executed by the Nile Secretariat. More than 70 national experts,
including 8 technical specialists from nine countries, were involved in detailed project preparation.
For many, it was the first time that they were able to discuss common concerns with their colleagues
from neighboring and co-riparian countries. The energy and hope for the future engendered by this
preparation process were a visible demonstration of the power of cooperation, strong riparian
ownership, and the commitment of the Nile countries to jointly pursue their common goal.
But the preparation of the Shared Vision Program is just a beginning. Implementing these projects
and ensuring that tangible benefits are realized is the next challenge. It is a challenge which requires
deepening partnerships with the international development community. Promoting cooperation
among the countries of the Nile will inherently be a complex process. However, such cooperation is
essential if sustainable development and management of the Nile is to be achieved.
NILE-SEC

---

vi
Nile Basin Regional Power Trade
NILE-SEC

---

Nile Basin Regional Power Trade 1
1. SUMMARY
This proposal for a Nile Basin Regional Power Trade Project has been developed under the Shared
Vision Program (SVP) of the Nile Basin Initiative (NBI). The project aims to establish the institutional
means to coordinate the development of regional power markets among the Nile Basin countries and
build analytical capacity and provide technical infrastructure to manage Nile Basin resources in
keeping with the vision articulated by the Nile riparians "to achieve sustainable socio-economic
development through equitable utilization of, and benefit from, the common Nile Basin water
resources."
The institutional arrangement will foster an enabling environment conducive to increasing power trade
in the Nile Basin. The associated infrastructure will further Nile cooperation by enhancing mutual
confidence and providing a critical building block to managing Nile water resources from a regional
perspective.
The project has two main components:
Ø The establishment of a power forum to support continued discourse and promote power trade among
Nile Basin countries
Ø Comprehensive basin-wide analysis of long-term power supply, demand, and trade opportunities in
order to inform the planning of multi-purpose river basin management in the Subsidiary Action
Programs (SAPs)1 of the NBI.
Both the components are primarily of a capacity-building and knowledge-sharing nature and will be
strengthened within the context of an institution referred to as the Nile Basin Power Forum. The
project components, therefore, are expected to not only enhance individual and institutional capacity
to manage and develop basin-wide hydropower resources, but also to derive large but immeasurable
benefits in building intra-riparian cooperation through coordinated power system operations.
Furthermore, by developing and incorporating a common culture of good practices through the
collaborative development of hydropower and transmission interconnection projects, the Nile Basin
riparians seek to formalize and cement the participatory process for sharing the mutual benefits that
will result from regional power trade. The estimated cost of the two components of this project, over a
period of three years, is about $12 million.
This project was developed by the Nile Basin Power Trade Working Group (PTWG) through a
collaborative, multi-country participatory process. National power experts from each of the Nile Basin
countries worked with members of the Technical Advisory Committee of the Initiative (Nile-TAC) in
the preparation of the project document. This project document reflects riparian perspective on
national and regional needs, project components which are deemed to be implementable and confer
real benefits, and a project design based on lessons learned from other international regional power
trading development arrangements. The participatory project preparation process demonstrates
riparian ownership and commitment to successful project implementation.
2. PROJECT DEVELOPMENT OBJECTIVES
2.1. Long-term Goal and Development Objective
Long-term Goal. The long-term goal of this project is to improve access to reliable and low-cost
power in the Nile Basin in an environmentally sustainable manner. An important element in achieving

1 Within the overall framework of the NBI, the SAP will comprise investment projects which provide mutual
benefits to two or more countries. The Nile riparians have formed two major sub-regional groupings: The
Eastern Nile (EN-SAP) including Egypt, Ethiopia and Sudan; and the Nile Equatorial Lakes Region (NEL-SAP),
including Burundi, DR Congo, Egypt, Kenya, Rwanda, Sudan, Tanzania, and Uganda.
NILE-SEC

---

2
Nile Basin Regional Power Trade
this goal is to create an effective institutional mechanism to promote and develop power trade
opportunities among the countries participating in the NBI. The creation of a regional electricity
market can play a key role in furthering cooperation among the Nile Basin states and in ensuring that
the hydropower resources of the Nile Basin are developed and managed in an integrated and
sustainable manner.
Development Objective. The specific development objective of this project is to establish the
institutional means to coordinate the development of regional power markets among the Nile Basin
countries. This project will focus on the preparatory activities related to the establishment of such an
institution, referred to as the Power Forum. The countries participating in the NBI understand the
importance of interconnecting their electric power systems for the development of a regional power
market. The establishment of the market is expected to have positive effects on systems reliability
and economies of scale in planning, construction, and operation of the generation and transmission
facilities in the region. Furthermore, the market is expected to make a significant contribution to the
competitiveness of the Nile Basin economies by directly, and indirectly, creating new jobs and
economic opportunities, and will thus provide a significant impetus towards achieving the regional
aims of economic growth, prosperity, and stability in the Nile Basin region.
2.2. Key Performance Indicators
High-level performance indicators are:
Ø Effective dialogue and cooperation among Nile Basin power utilities are established
Ø Strategic framework for advancing power trade in the region is developed
Ø Common understanding of the institutional and regulatory frameworks required to support power
trade is enhanced
Ø Investment needs to facilitate power trade are identified.
2.3. Project Links to Poverty Reduction, Gender Issues, and Regional
Integration
Energy Essential to Societal Endeavor. No modern society has developed without access to
modern, clean, and affordable energy services such as electricity. However, today over 500 million
people in sub-Saharan Africa (about 85%), do not have access to modern energy services. In the
case of electricity, the population is growing at a faster pace than the ability of most state-owned
electric power utilities to provide connections and meet demand.
Poor do not Live Lives in Individual Sectors. Just like no one sector can be singly instrumental in
addressing the poverty alleviation challenge, no single SVP project can singly reduce poverty. Yet the
poverty reduction strategy acquires added value and momentum when it is buttressed by investments
in regional energy projects as well as other sectors such as health, education, and transport that
guarantee the integration of disenfranchised communities in a growing economy and developing
society.
Regional Energy Integration: Key Role in Poverty Reduction. The income growth potential that
energy services bring to the poor is considerable. It empowers them to take better advantage of the
social services that are offered. Affordable and efficient energy enables communities to light their
homes and schools, refrigerate their supplies, power their telephones and TVs, avoid polluting fuels,
and support productive businesses. Electricity is essential for electronic communications and together
with roads connect people and their businesses to national and regional markets and beyond, and
open up new job and education opportunities. In energizing productive uses, regional energy
integration fuels the economic engine for value creation, growth, and connecting goods to markets.
Gender Dimension of Energy. Women disproportionately bear the negative impacts of inadequate
modern energy access and poor reliability. For example, cooking is women's most important energy
need in terms of time and effort. Biomass is the primary fuel used for cooking by poor households.
Women (and also children) expend the most effort in collecting these biomass fuels and using them.
NILE-SEC

---

Nile Basin Regional Power Trade 3
The negative health effects of biomass use on poor women and children are well established. Also,
women's micro-enterprises (an important factor in household income as well as in women's welfare
and empowerment) tend to be either heat-intensive (food processing) or light-intensive (sewing and
crafts with potential for extended evening work hours). Lack of adequate electricity supplies affects
women's ability to operate these micro-enterprises profitably and safely.
2.4. Project's Contribution to Regional Economic Development
In the Nile Basin, expanding the provision of electricity to productive purposes and income generation
business opportunities will catalyze regional economic development. One way to increase access to
electricity is through the cooperative development of hydropower and transmission interconnection
investment projects. For such projects to be effective, improved regional power planning and
coordinated power system operation and management are needed across the Basin. Based on
reliable information and aided by planning and analytical tools, a coordinated effort will enable the
identification and evaluation of regional power projects, and implementation of such projects will
confer mutual benefits to the participating trading countries.
The Power Forum provides the institutional mechanism for informed decisionmaking and provides an
essential input to the wider process of integration across sectors, such as power, environment, and
water resources management, and to the sharing of the benefits from "win-win" development
projects. The SVP Regional Power Trade Project is thus expected to benefit other SVP projects, as
well as to help identify Subsidiary Action Projects that will support sustainable regional economic
growth and improved social conditions, in the long term benefiting the people of the Nile Basin.
2.5. Project's Impacts on Poverty and Gender Issues
Access to reliable electricity services will directly enhance the income, capability, and security of the
poor by:
Ø Reducing the time and effort spent gathering biomass fuels to cook daily meals
Ø Boosting labor productivity through irrigation, crop processing, and mechanization
Ø Improving illumination that directly impacts educational attainment and income producing activity
(crafts, small businesses)
Ø Reducing health risks through the use of cleaner burning fuels
Ø Improving access to information (through radio, television, and telecommunication)
Ø Increasing sense of security through reliable access to fuels for daily living and expanded fuel
choice.
3. STRATEGIC CONTEXT
3.1. The Nile Basin Initiative (NBI)
The Nile Basin. The Nile River, the longest river in the world, traverses more than 6,700 kilometers
from its farthest point at the headwaters of the Kagera River in Rwanda to its delta in Egypt on the
Mediterranean Sea. Ten countries share the Nile: Burundi, Democratic Republic of Congo (DRC),
Egypt, Eritrea, Ethiopia, Kenya, Rwanda, Sudan, Tanzania, and Uganda. The Nile River Basin covers
3 million km2--one tenth of Africa's total land mass. It serves as home to world-class environmental
assets, such as Lake Victoria (the second largest fresh water body by area in the world) and the vast
wetlands of the Sudd. It also serves as home to an estimated 160 million people within the
boundaries of the Basin; while nearly twice that number--roughly 300 million--live within the ten
countries that share the Nile waters.
Challenges and Opportunities. Despite the extraordinary natural endowments and rich cultural
history of the Nile Basin, its people face considerable challenges. Today, the Basin is characterized
by poverty, instability, rapid population growth, and environmental degradation. Half the Nile riparian
countries are among the world's ten poorest. Population is expected to double within the next 25
years, placing additional strain on the scarce water and other natural resources. Yet the Nile holds
NILE-SEC

---

4
Nile Basin Regional Power Trade
significant opportunities for win-win development that could enhance energy availability, food
production, transportation, industrial development, environmental conservation, and other related
development activities in the region. Cooperative water resources management might also serve as a
catalyst for greater regional integration, both economic and political, with benefits far exceeding those
derived from the river itself.
Towards a Long-Term Legal and Institutional Framework. Aware that forward movement on Nile
cooperation requires a development focus, a permanent institution, and agreement on core legal
principles, the Nile riparians established a forum to facilitate a process of legal and institutional
dialogue in 1997. In early 2000 a panel of experts, including senior government lawyers and water
resources specialists from each country, produced a draft text of a "Cooperative Framework." This
draft Framework has moved the riparians a long way and important compromises have been reach.
However, some key issues remain to be resolved, and the Council of Ministers agreed in August
2000 to extend the process to further dialogue on outstanding issues. The United Nations
Development Programme (UNDP) has pledged its continued support to the process--a process
which by its very nature requires time and effort.
The Nile Basin Initiative. Recognizing the need to take concrete steps to realize the development
potential of the Nile while the dialogue on a permanent legal and institutional framework continues,
the Nile riparians took an historic step towards cooperation in the establishment of the Nile Basin
Initiative (NBI). Formally launched in February 1999, the NBI is a transitional institutional mechanism
that includes all riparians and provides an agreed basin-wide framework to fight poverty and promote
economic development in the region. The Initiative is guided by a shared vision "to achieve the
sustainable socio-economic development through the equitable utilization of, and benefit from, the
common Nile Basin water resources"2 and a set of policy guidelines which provide a basin-wide
framework for cooperative action. The NBI is comprised of a Council of Ministers of Water Affairs of
the Nile Basin (Nile-COM), a Technical Advisory Committee (Nile-TAC), and a Secretariat (Nile-SEC)
located in Entebbe, Uganda.
A Strategic Action Program. To translate the NBI's shared vision into action, a strategic action
program has been launched to identify and prepare cooperative projects in the Basin. The Program
consists of two complementary sub-programs, a SVP of technical assistance and capacity-building-
type projects to be implemented basin-wide to create an enabling environment for cooperative
development and SAPs carried out by smaller groups of Nile riparians, comprising physical
investments at the sub-basin level.
The basin-wide Shared Vision Program currently includes seven projects. Four of these are thematic
in nature, addressing issues related to environmental management, power trade, efficient water use
for agriculture, and water resources planning and management. The remaining three are facilitative,
supporting efforts to strengthen confidence-building and stakeholder involvement, applied training,
and socio-economic development and benefit-sharing.
Two Subsidiary Action Programs have formed. The Eastern Nile (EN-SAP) currently includes Egypt,
Sudan and Ethiopia, while the Nile Equatorial Lakes Region (NEL-SAP) includes the six countries in
the southern portion of the Basin, as well as the downstream riparians Sudan and Egypt. These
subsidiary groups have identified joint investment projects which warrant further investigation and
preparation.
Riparian Consultative Process. The Nile-COM is the main policy and guidance forum for Nile Basin
cooperation. Important roles of the Nile-TAC are to coordinate joint activities and establish working
groups as needed to accomplish specific tasks. The Nile-TAC is responsible to the Nile-COM for the
preparation of the Shared Vision Program, which will be coordinated and implemented at the basin-
wide level. While the Nile-TAC is to promote the establishment of working groups of concerned

2 Council of Ministers of Water Affairs of the Nile Basin States, Policy Guidelines for the Nile River Basin
Strategic Action Program, February 1999.
NILE-SEC

---

Nile Basin Regional Power Trade 5
countries to identify Subsidiary Action Program projects at the sub-basin level, the responsibility for
Subsidiary Action Programs will rest with the involved riparians. Throughout the process, high priority
will continue to be placed on strengthening the process of consultation in order to build trust and
confidence. Figure 1 below illustrates how country activities will take place within sub-basin
frameworks, which will occur within the broader context of the basin-wide framework. The basin-wide
framework also includes an "international discourse" to promote international support for the
sustainable development and management of Nile waters.
International Consortium for Cooperation on the Nile (ICCON). An International Consortium for
Cooperation on the Nile (ICCON) is being established to support the NBI's Strategic Action Program.
Its first meeting is scheduled for June 2001. The ICCON will be a unique forum, organized by the
World Bank at the riparians' request, and envisioned as a long-term partnership of the riparian states
and the international community. The first meeting of the ICCON will seek to raise funding for a
portfolio of basin-wide Shared Vision Projects and the preparation of projects identified under the
Subsidiary Action Programs. The first ICCON meeting will also celebrate cooperation and
demonstrate international solidarity for cooperative development in the Nile Basin.
Partnerships. Support for the Nile Basin Initiative has been characterized by partnership since it
began. The initial partners comprised the World Bank, the United National Development Programme
(UNDP), and the Canadian International Development Agency (CIDA). These initial `cooperating
partners' played the role of concerned facilitators, assisting the process of dialogue. As the NBI
moved into the preparation of the Strategic Action Program, the governments of Denmark, Finland,
Germany, Italy, the Netherlands, Norway, Sweden, the United Kingdom, and the United States,
together with the Food and Agriculture Organization (FAO) and the Global Environmental Facility
(GEF), actively supported the Initiative, directly or through World Bank trust funds. With the first
ICCON, the circle of partners will widen as the international development community commits further
support for Shared Vision Projects and for preparation of Subsidiary Action Projects.
International Nile Discourse
Burundi
Rwanda
Ethiopia
Sudan
Tanzania
Eastern Nile
Southern Nile
Egypt
Kenya
Eritrea
DRC
Uganda
Nile Basin
Figure 1. An Illustration of Possible Levels of Nile Cooperation
Summary. The NBI provides a transitional institutional mechanism, an agreed vision and basin-wide
framework, and a process to facilitate substantial investment in the Nile Basin to realize regional
socio-economic development. The NBI represents deep commitment by the Nile riparian countries to
foster cooperation and sustainable development of the River Nile for the benefit of all.
NILE-SEC

---

6
Nile Basin Regional Power Trade
3.2. NBI Guidelines and Project Goals
The policy guidelines3 adopted by Nile-COM in February 1999 define the primary objectives of the
NBI as follows:
Ø To develop the water resources of the Nile Basin in a sustainable and equitable way to ensure
prosperity, security, and peace for all its peoples
Ø To ensure efficient water management and the optimal use of the resources
Ø To ensure cooperation and joint action between the riparian countries, seeking win-win gains
Ø To target poverty eradication and promote economic integration
Ø To ensure that the program results in a move from planning to action.
Adequate and reliable power supply is critical to meeting the social and economic development
objectives of the Nile Basin countries. Yet, in a large majority of the Nile Basin countries, only around
10% of the population has access to electricity. This situation exists despite the presence of vast and
as yet untapped hydroelectric and other energy resources in the Nile Basin. The present limited
development of national power systems in the Basin imposes a constraint on the exploitation of these
resources at affordable costs at the national level. The cost of hydropower in the Nile Basin is also
increased by the large seasonal variations in hydropower output, whilst the costs of meeting peak
loads on national power systems can be high in countries where these loads are supplied from
expensive thermal plants. These constraints on supplying affordable power could be overcome by
expanding the market for these resources by developing power trade among Nile Basin countries.
Countries in the Nile Basin are aware of the potential benefits from trading power. Therefore, while
current levels of power trade among Basin countries are low, many of them are considering ways to
increase the levels of this trade and are looking for suitable investments to realise this objective. A
recently prepared scoping study4 --Opportunities for Power Trade in the Nile Basin-- that was
reviewed and revised by the PTWG of the SVP identifies several options for increasing power trade in
the region. In the short term, many of these opportunities exist at the sub-regional level. It also
appears that it is important to evaluate power trade opportunities in the context of a broader
multipurpose approach to Nile Basin water resources development and management.
The scoping study further found that a more focused and coordinated process for discussing ways to
expand power trade in the Nile Basin would advance the development of power supply facilities. The
study recommended that this objective be realised through the creation of a basin-wide "forum" of
national power experts to facilitate continued dialogue in the region. Power forums are proving
effective in developing power trade among other regional groups of countries, notably in the Southern
African Power Pool (SAPP), the Mekong Regional Power Market, and the Central American Regional
Electricity Market in the Mercosur region. The establishment of regional power markets have
generally improved systems reliability and economies of scale in planning, construction, and
operation of the generation and transmission facilities, thereby contributing to the development and
integration of regional economies.
To recognizie the potential benefits of power trade, it is proposed that a Power Forum be established
within the context of the NBI to support; (a) formation of an institutional infrastructure for Market
development, (b) a learning environment for understanding the nuances of legal, regulatory, and
pricing regime required for regional power trade, and (c) identification of power generation and
transmission projects that will benefit power trade among the Nile Basin countries.

3 Policy Guidelines for the Nile River Basin Strategic Action Program, Council of Ministers of Water Affairs of the
Nile Basin States, February 1999.
4 Opportunities for Power Trade in the Nile Basin - Final Scoping Study, Norconsult/Statnett, September 2000.
NILE-SEC

---

Nile Basin Regional Power Trade 7
3.3. Power Sector Context
Characteristics and Features of the National Power Systems
The region's current electricity requirements are 18GW and are forecast to grow to 30GW in 2005,
39GW in 2010, and 65GW in 2020. Consumption in the Basin is dominated by Egypt which accounts
for more than 80% of the demand.
The forecasted electricity requirements translate to a need for about 12,000 MW of new capacity to
be installed every five years---a formidable task. Although many potential hydropower sites exist,
major load centers are far apart and located at considerable distance from the sources of supply.
Existing or Contemplated Cross-Border Electricity Trade
At present there is very limited cross border electricity trading between the countries of the Basin. In
those cases where network extensions have been made to accommodate trading, such extensions
have usually been on the extremities of the power network--often aimed at supplying a remote load
or providing grid power to an isolated network in a neighboring country. The Nile Basin can be
considered in two sub-regions, i.e., the Eastern Nile Region (ENR) and the Nile Equatorial Lakes
Region (NELR). The former consists of Egypt, Ethiopia, Eritrea, and Sudan while the latter includes
the eastern part of the DRC, Burundi, Rwanda, Tanzania, Uganda, and Kenya. At present there is no
international power trade in the ENR, and there are also no interconnections in place between the
ENR countries. In the NELR there is some (bilateral) trade of power at a rather modest level (about
174 GWh in 1999).
The power system in Uganda is interconnected with that in Kenya, Rwanda, and Tanzania. Uganda
has been exporting power to Kenya since 1958 when the Owen Falls Power Station and the Tororo-
Nairobi 132 kV transmission line was completed and commissioned. This power export is under the
Kenya-Uganda Electricity Agreement, signed in 1955, according to which Uganda Electricity Board
(UEB) is supposed to supply 30 MW of electrical power to Kenya Power Company (KPC) for fifty
years.5 The average power export from Uganda to Kenya, Tanzania, and Rwanda during the period
1997­1999 was 167 GWh per year.
In 1993, UEB entered into an agreement with Tanzania Electric Supply Company, Ltd. (TANESCO)
that is called the "UEB-TANESCO Electricity Agreement, 1993." Under this Agreement, UEB shall
supply 9 MW of electrical power to the Bukoba region of Northern Tanzania for 30 years. Power is
also imported from Nakonde in Zambia through a 33 kV line to supply Tunduma, Mobozi, and Ileje in
Tanzania. Tanzania plans to upgrade its interconnection with Zambia to 330 kV, giving it access to
the SAPP.
An agreement between UEB and Electrogaz of Rwanda was entered into in 1995. Under this
agreement, UEB shall supply 5 MW of electrical power to Rwanda, delivered at the Rwanda-Uganda
border.
DRC, Rwanda, and Burundi have jointly developed two hydropower plants located in DRC. These are
the Ruzizi I and Ruzizi II power plants that have a total aggregate installed capacity of 55 MW and a
mean annual production of about 289 GWh, comprised of 148 GWh from Ruzizi I and 141 GWh from
Ruzizi II. The Ruzizi I power plant is operated by SNEL (Société Nationale d'Electricité du Congo),
the power company in DRC. According to an agreement with DRC, Rwanda is at present able to
import 3.5 MW from this power plant. Burundi imports power from Ruzizi I based on payment of
SNEL's debts to Burundi with a background in the joint financing of the power plant. The remaining
credit at the end of 1999 was about 180 GWh. The Ruzizi II power plant is jointly operated and the
countries are each entitled to one third of the production. Rwanda also exports power to the Kisoro

5 Four supplemental agreements to this one have since been signed to determine the tariff at different times.
This export has, however, been below the agreed level for long periods due to capacity constraints in the power
system in Uganda.
NILE-SEC

---

8
Nile Basin Regional Power Trade
border region in Uganda. Egypt is interconnected to multiple regions outside the Nile Basin such as
Libya and the Mahgreb, Jordan, and the Eastern Mediterranean.6
In the future, cross border connections could be expanded for remote limited power applications, but
could also include high voltage large power interconnections justified for the import of power as a
cheaper alternative to local power generation or for the purpose of wheeling power across the country
to a neighboring country. Potential examples of such developments include stronger interconnections
between Uganda, Kenya, and Tanzania., transmission interconnections between Ethiopia and Sudan
and Ethiopia and Eritrea, and possible DC interconnections between Egypt and Ethiopia and/or
Sudan. Ethiopia could also be linked to Kenya and Uganda, while Tanzania could be more firmly
linked to the existing DRC east/Burundi/Rwanda system.
Generation Potential
Excluding the DRC (with its huge generation potential on the Congo River), the power generation
potential of the Nile Basin countries for the next 50 years is probably in the order of 550 TWh per
year. This is compared to the present level generation of about 80 TWh. The region is endowed with
both thermal and hydro resources for the production of electricity. Countries such as Uganda,
Tanzania, and Ethiopia have considerable hydropower resources that are well above the domestic
needs of these countries, even in a long-term perspective. Other major resources are found in Egypt,
Eritrea, Ethiopia, and Sudan in the form of hydrocarbons, particularly natural gas that can be used for
large scale power generation. Other countries have complementary resources, mainly in terms of
hydropower, but also a potential for geothermal energy--particularly in Ethiopia and Kenya.
In all Basin countries except Egypt, development of the power system is limited, as is access to
electricity. However, there are good untapped sources for power generation, coupled with a desire to
improve access to electricity for both domestic and industrial/commercial consumers to improve the
quality of life and increase economic growth. Because domestic markets are small (except for Egypt),
an important mechanism to realize benefits from these resources in the near-to-medium term is to sell
power to neighboring markets. The prevailing policy regarding sector development is to maintain a
high level of national self-sufficiency as a first priority, and to investigate scope for power trade with
neighboring systems as a secondary priority.
The area covered by the Nile Basin is enormous so that a future interconnected transmission network
from Dodoma in Tanzania would reach 5,000 kilometers north to Cairo in Egypt with a breadth
between Sudan and Eritrea of 2,000 kilometers. Within this area is a multitude of land surfaces from
mountains to plains and forest to desert. The nature of such a variety of geographical characteristics
will have considerable influence on the siting of future generation and the routing and design of
transmission lines.
One advantage of developing a framework and mechanism for regional electricity trade is that site
selection is not necessarily limited to meeting the power generation needs of an individual country.
Sites previously not considered economically viable, as they would entail production in excess of
national requirements, could be reconsidered with the plant being sized to realize the benefits of
economies of scale. Such optimal site selection would then, of necessity, need to address cross
border transmission strengthening to dispatch the generation throughout the region.
Nile Basin Power Cooperation and Electricity Market Reform
The existing Nile Basin national power utilities are traditional vertically integrated utilities. This
facilitates dialogue between utility management and government in discussing electricity sector

6 The 220 kV interconnection between Egypt and Libya commenced operation in December 1998. The Egypt-
Jordan interconnection (500 kV and 400 kV through the Sinai and Aqaba Gulf) was commissioned in September
1998. The Eastern Mediterranean Interconnection is planned to link with, and supply power to, the European
grid.
NILE-SEC

---

Nile Basin Regional Power Trade 9
developments. However, most of the state-owned power companies require improvements in their
commercial and financial operations, not only to support power trade but also to improve reliability
and accessibility of supply. The countries of the region are addressing these issues under ongoing
reform programs, and several of the utilities are presently being exposed to unprecedented change
as a consequence of decisions around power sector reform. The governance nature and structure of
each country's power sector needs to be well understood in developing frameworks aimed at
promoting and enhancing regional electricity trade.
The restructuring and unbundling of state-owned vertically-integrated national power utilities is
already underway in most of the Basin countries. Reform is generally driven by a need to mobilize
capital for new investments from private and international sources, encourage more cost-reflective
tariffs and prices, and introduce competition in generation and supply (for example through
introduction of independent power producers--IPPs). This also introduces the need for independent
regulation of the electricity supply industry. Uneven regulatory reforms in the region may create
greater differences in sector governance between countries, but need not inhibit the introduction of
regional electricity trading.
NILE-SEC

---

10
Nile Basin Regional Power Trade
Table 1. Status of Power Sector Reform in the Nile Basin Countries7
STATUS OF POWER SECTOR REFORM IN NILE BASIN COUNTRIES
Country
Maturity of Reform Process
Regulator
IPPs Permitted
Transmission
Market Characteristic
Established
Access
Burundi
The text of the laws ruling
Not yet.
Yes, very
Not yet
Power is still exclusively sold
the power and drinking water
soon, after
by REGIDESO and DGHER
sector is to be studied by
passing of the
These institutions distribute
Parliament in April 2000.
laws
power right to the consumer's
The government has already
home
expressed its willingness to
open the power sector to
privatization
DRC
There is still no institutional
reform. Production,
transmission, distribution,
and sales of energy is
handled by the state owned
company SNEL
Egypt
In progress since 1984
Under
Yes (1996)
The power sector operates like
several laws of deregulation
consideration
a vertically integrated state
introduced
(1997)
company, but unbundling is in
progress both in generation
and distribution
Eritrea
Only policy statements of will
Corporatization and
to deregulate
privatization of the Department
of Energy being discussed
Ethiopia
In progress since 1997, and
Yes,
Yes
Yes, by
The state power utility EELPA
proclamation, and regulation
operational
proclamation
has been corporatized and
has been issued Directives
since October
called EEPCo.
are under preparation
1998
Foreign and local private
investors are allowed to invest
in hydropower generation
without capacity limit
The reform process in Kenya
The Electricity
Operation of
There is no
Previous monopolies in the
Kenya
is now completed. The final
Regulatory
IPPs
access as yet,
public sector have been
step was the transfer of all
Board was
commenced
although the
reorganised into generation,
public sector owned power
established
with two PPAs
governing
transmission, and distribution
generating assets to
through the
signed in
legislation
companies. Two IPP plants
KenGen and all the
Electric Power
1996. Two IPP
mentions that
have been in operation since
transmission and distribution
Act 1997 and
plants started
contracts for the
1997, two PPAs were signed
assets to KPLC.
started
operating in
transmission
in 1998 and another PPA is
operating in
1997. Two
network services
currently being negotiated
1998
more PPAs
are to be
have since
approved by the
been signed
regulator
Rwanda
Preparation of information
required to support the
process for the selection of
private sector operators for
the sectors
Assistance during the
negotiations and signing of
the agreements
The preliminary report is
available

7 Chapter 4--Framework for Developing Power Trade, Opportunities for Power Trade in the Nile Basin - Final
Scoping Study, Norconsult/Statnett, September 2000
NILE-SEC

---

Nile Basin Regional Power Trade 11
Table 1. Status of Power Sector Reform in the Nile Basin Countries (cont'd.)
STATUS OF POWER SECTOR REFORM IN NILE BASIN COUNTRIES
Country
Maturity of Reform
Regulator
IPPs
Transmission
Market Characteristic
Process
Established
Permitted
Access
Sudan
Reform under process since
No, awaiting
Yes, since
No
The Power Sector still
late 1998. The "Electricity
"Electricity
1996
operated as State Corporation
Act" has been prepared for
Act" approval
with unbundling in distribution,
government approval
which is in progress. IPPs in
generation are developing,
even before the legal frame is
approved
Tanzania
The government has already
Legal and
Yes
Open access
A move toward more
made a decision to
Regulatory
under an
competitive markets in the
restructure power sector to
Framework is
independent
electricity sector is in its
allow for private participation
in process
Transmission
infancy with some competition
Systems
established in generation.
Operator is
expected.
Uganda
A new Electricity law was
Yes
Yes
Yes
Ring fenced business unit
enacted in November 1999
within the transmission
company will be responsible
for bulk purchase and supply
of electric power. In the long
term, distribution companies
and large consumers will
contract generation capacity
directly with generators.
Introduction of limited retail
competition will be in the mid-
term
In addition, three regional institutions have mandates for power trade. SINELAC (Société
Internationale d'Electricité des Pays des Grand Lacs) is associated with power trade in the Great
Lakes region and in particular the tri-national Ruzizi project. CEPGL and the east African community
are regional economic organizations whose charters include cooperation in energy and electricity.
Sector regulations are currently being drafted with only national markets in mind. Most of the Basin
countries permit IPPs, but, as yet, only a few are operating. However, as countries have been
restructuring their power sectors and revising their investment laws, several IPPs are at advanced
stages of development. For example, financing for the SDI Krill in Egypt has closed, Bujagali in
Uganda, and Songo-Songo in Tanzania are in the final stages of financial closure. However,
harmonization of regulatory practices should be given attention to further stimulate regional trade,
particularly regarding access to transmission networks and transmission pricing issues, including the
wheeling of power over third party networks.
4. PROJECT DESCRIPTION
The NBI Shared Vision Program Regional Power Trade Project has two components:
Ø Establishment of the Power Forum
Ø Comprehensive basin-wide analysis of long-term power supply, demand, and trading
opportunities.
The description of each of the project components is given below and the logical framework
("logframe") is presented in Annex A.
NILE-SEC

---

12
Nile Basin Regional Power Trade
4.1. Component 1: Nile Basin Power Forum
This component will establish an institutional forum to promote and support power trade amongst the
Nile Basin countries. This forum will foster an enabling environment conducive to increasing power
trade in the Nile Basin. The Power Forum will create a culture of implementing best practices,
practical analytical tools, and enhanced regional power operational planning and coordination skills.
The Power Forum will also coordinate their analytical activities with the Water Resources
Management component for understanding river system behavior, assessing impacts of multi-
purpose hydroelectric power projects, developing and evaluating operational schemes for coordinated
river system management, and supporting informed decisionmaking from a regional perspective. The
preliminary contours of the Power Forum, as set forth by the Nile Basin PTWG, are described below.
Objectives of the Power Forum
The overall objective of the Power Forum is the creation and support of a regional power market
through:
Ø Building necessary institutional and human capacity and establishing the necessary information
support systems and tools
Ø Facilitating the creation of the institutional and physical infrastructure for power trade
Ø Assisting in the development of power markets
Ø Identifying projects to be considered for implementation at the subsidiary level.
Functions of the Power Forum
The primary functions of the Power Forum, particularly during its formative period, will be to:
Ø Facilitate dialogue and cooperation among power utilities in the region, including (a) collecting
and exchanging information and experience, (b) preparing a consistent framework for power data
reporting for the Nile Basin countries, (c) increasing awareness through web-based newsletters,
(d) scheduling and supporting management and technical meetings, and (e) reviewing and
analyzing issues of common interest.
Ø Commissioning special studies, including but not limited to (a) identification of investment projects
related to production and transmission systems in order to facilitate power trade, and (b)
development of institutional and regulatory frameworks to support regional power trade.
Ø Coordinate the analytical activities with the Water Resources Project, such as (a) understanding
river system behavior, (b) assessing impacts of multi-purpose hydroelectric power projects, (c)
developing and evaluating operational schemes for coordinated river system management, and
(d) supporting informed decisionmaking from a regional perspective.
Ø Assisting in developing the strategic framework and agreements for advancing power trade in the
region
Ø Preparing a consistent framework for power demand forecasting for the Nile Basin countries
Ø Facilitating training programs in all facets of power sector operations
Ø Mobilizing resources for carrying out these functions.
Additional functions of the Forum may develop as power trade matures, including developing
consistent rules and standards for power market operations.
Institutional and Management Framework
The NBI transitional institutional structure, comprised of the Nile-COM and Nile-TAC and supported
by the Nile-SEC, will provide overall policy guidance to the project.
NILE-SEC

---

Nile Basin Regional Power Trade 13
It is proposed to commence the establishment of the Power Forum during its formative phase through
a simple institutional arrangement followed by more permanent structures.
4.1.1. Organizational Structure: Formative Phase (March 2001­February 2003)
It is proposed, that during the formative phase of the Power Forum, the Nile-TAC, in consultation with
appropriate officials in the ministries responsible for electricity, authorize the current NBI PTWG to
form an interim technical committee (ITC) that will be responsible for operationalizing the Power
Forum.
The ITC's program for the Regional Power Trade Project will be implemented by a Project
Management Unit (PMU). The PMU will be staffed by a project director, a finance manager,
professional support staff, seconded specialists as needed, and a small administrative unit. Special
working groups, including water experts, will be formed as needed during the formative period. The
PMU, on behalf of the ITC, will retain consultants as needed to support the work program. Annex B
provides suggested terms of reference for the project director and finance manager, as well as a
suggested framework for the administrative, financial, and procurement functions of the PMU during
its formative stage.
The management of the Power Forum and comprehensive basin-wide study components are
conceptualized to proceed in parallel. The implementation of the Power Forum component, and the
comprehensive basin-wide study will be directed by the ITC with assistance of the PMU. The basin-
wide study will be supported by a small interdisciplinary team of project staff and by specialists, who
will be sourced through technical assistance contracts from the region, the rest of Africa, and
internationally as appropriate.
Important component activities include the compilation of a compendium of best practices and case
studies on multipurpose hydropower coordination regimes, review of regulatory frameworks for
regional power trade, a "blue chip" study on public-private partnership models for financing
hydropower projects, review of regulatory regimes in the Nile Basin countries for environmental
impact assessments, and the dissemination of this information through national workshops. In
addition, a "drawdown"8 support facility fund will be established for financing special studies as well as
specific support that will be made available based on demonstrated national need that contributes to
regional power trade issues. Specific country to country experience exchange and advisory support
will be provided through the drawdown facility to encourage "learning by doing" and can also provide
seed money to initiate institutional efforts, such as private sector participation models, if desired (i.e.,
for preparation of proposals for mobilizing technical assistance and financial resources).

8 A "drawdown" facility is one which would enable Basin countries to gain access to resources (in this case
technical support, advice, and assistance) which are provided out of an established fund through mechanisms
which minimize administration and bureaucratic procedures.
NILE-SEC

---

14
Nile Basin Regional Power Trade
Policy Level
Nile-COM
Nile-TAC
Nile-SEC
Interim Technical Committee
(Power Trade Working Group)
Regional Coord. &
Management
Project Management Unit
Administration
Special Working Groups
(ad hoc)
National Level
National Focal Point Institutions
Figure 2. Organizational Structure of the Regional Power Trade Project: Formative Phase
4.1.2. Long Term (from March 2003)
The permanent institutional set-up of the Power Forum will be finalized by the ITC. It is likely to
comprise a management committee and a technical committee.9
The management committee could serve as the apex body responsible for the overall management
and policy direction of the Power Forum. The chairperson of the management committee could be the
official spokesperson for the Power Forum. The members of the management committee could
initially be appointed by the ministers responsible for electricity from each of the NBI countries. Two
members would ideally be nominated from each country--one senior ministry official with primary
responsibility for electricity matters and the second member could be the chief executive officer of the
national power utility. Procedures for election of members of the management committee may be
revised at a later stage.
It is anticipated that the technical committee would support the management committee and guide
and supervise the technical work of the Power Forum. Each member of the Power Forum could be
invited to nominate one senior technical staff to the technical committee.
The technical committee could be supplemented by special sub-committees or project working
groups to examine specific issues or manage studies and investigations. All members in charge of
transmission networks and system operation could be represented on technical sub-committees to be
established for system operation, generation-transmission planning, and environmental monitoring.
The latter sub-committee would interact with the Water Resources Project.

9 The organizational structure may evolve further to accommodate changing conditions and requirements.
NILE-SEC

---

Nile Basin Regional Power Trade 15
As power trade develops, a Power Forum trading team may be established to further identify and
define trading options available to members, including contracts, bidding procedures, and settlement
arrangements. Further, as power trading increases, a central monitoring activity for energy trading
could be established, to assume the functions and responsibilities that in an initial phase can be
handled through communication between national control centers.
Power Forum Activities and Time Frame
The Regional Power Trade Project will be presented via the appropriate channels to the ICCON
meeting in June 2001. The ITC will thereafter commence the establishment of the Power Forum and
initiate its first activities subject to the normal approval procedures of the NBI. These activities will
take into account other NBI initiatives and will effect coordination and liaison where appropriate.
The activities can be grouped as follows:
Institutional and Management Framework
Ø Establish PMU, appoint project director and finance manager
Ø Establish administrative unit and select necessary specialist/consultant support
Ø Investigate and review options for establishing the Power Forum as a legal entity
Ø Initiate dialogue with EAC, SAPP, and Kagera River Basin Organization
Ø Draft a proposed Interutility Memorandum of Understanding (IUMOU) or its equivalent, undertake
necessary consultations according to established procedures, and facilitate the approval and
ratification of the IUMOU.
Planning and Analytical Tools
Ø Develop information exchange protocols
Ø Establish and launch a Power Forum website on the Internet linked to the established Nile Basin
website to facilitate dialogue between Forum members and well as external promotion of the
Power Forum and its activities. This activity will be coordinated with the Nile Basin Decision
Support System (DSS) component of the Water Resources Project
Ø Establish liaison and coordination with other Nile Basin initiatives, organizations, and stakeholder
groups, for example in terms of training initiatives
Ø Initiate coordination with environmental initiatives under the NBI
Ø Establish Power Forum member reporting processes and requirements
Ø Create a regional power sector databank
Ø Initiate development of a long-term strategy for the Power Forum, with particular focus on how the
forum can contribute to harmonization of power sector reform in the Nile Basin and the
coordinated development and implementation of regulatory frameworks, particularly related to
power trade
Ø Establish working group(s) for demand/supply studies and methodologies
Ø Convene workshops and meetings, focusing on planning and operation of power systems,
regulation of power markets, and power trade.
Training and Skills Enhancement
Ø Initiate training and development needs assessment among the Power Forum members,
regulatory agencies, and government ministries responsible for electricity matters
Ø Decide power sector specific training requirements
Ø Define program for assistance to government ministries responsible for electricity matters and
regulators, taking into account other training initiatives under the NBI
Ø Define program for assistance to member utilities, taking into account other training initiatives
under the NBI
Ø Initiate training of government, regulator, and utility officials in key areas of power trade, including
demand forecasting, analysis of power generation options, transmission pricing, and regulatory
aspects.
NILE-SEC

---

16
Nile Basin Regional Power Trade
Financial Resource Mobilization
Ø Liaise with donors through ICCON meetings, in accordance with established NBI procedures
Ø Develop Power Forum documentation for investment promotion in cooperation with SAPs,
including detailed project profiles
Ø Organize investment seminars for private investors and financiers in cooperation with SAPs.
Special Studies. Commission special studies important for the establishment of the Power Forum
and to progress work aimed at stimulating power cooperation and trade. Such studies could include,
but should not be limited to:
Ø Review of best practices in multi-purpose hydropower coordination regimes
Ø Review of institutional and regulatory frameworks to support regional power trade
Ø A "blue chip" study on review of public-private partnership models for financing and implementing
hydropower projects
Ø Review of frameworks and procedures for environmental impact assessment of power projects in
the various Nile Basin countries
Ø Other specialized studies, advisory services, and workshops/seminars.
4.2. Component 2: Comprehensive Basin-Wide Power Study
As an initial priority task of the Power Forum, a participatory process will be designed to advance the
Scoping Study of the Opportunities for Power Trade in the Nile Basin into a comprehensive basin-
wide study that will analyze power supply, demand, and trade opportunities in the context of
multipurpose water resources development. Specific studies and projects resulting from the scoping
study can be presented to the Eastern Nile and the Nile Equatorial Lakes SAPs for consideration for
implementation.
The detailed basin-wide analysis will be used to inform the planning of multi-purpose river basin
management in the SAPs. In conducting this study, special working groups of non-power experts
(water resources managers, environmental specialists, etc.) will be formed to ensure that hydropower
development issues are addressed in the broader context of integrated and multipurpose water
resources development and management. The study will seek to follow best practices in options
analysis, including extensive stakeholder investment and multi-criteria options assessments.
Given the complexity of the comprehensive basin-wide power study that has to integrate both power
development and multipurpose projects analysis, this activity will be launched pursuant to a scoping
study carried out under the supervision of the ITC of the Power Forum and in close collaboration with
Nile Basin water resource specialists (for example, the Nile-TAC or the coordinating committee of the
Water Resources Project). This scoping study will investigate, from a multi-objective perspective, data
availability and data harmonization issues, and prepare a detailed terms of reference. Upon
completion of a joint review by the PTWG and other appropriate SVP projects, such as the Water
Resources and Environment projects, the comprehensive basin-wide study will be launched.
The activities involved under component 2 include:
Ø Conduct a scoping study to assess past national-level power and water resource management
studies, investigate the availability of pertinent data and data harmonization requirements for a
multi-objective study, and prepare a detailed terms of reference for conducting a comprehensive
basin-wide study
Ø Invite proposals for the basin-wide study, award and launch the study, and manage and monitor
study implementation
Ø Using the results of the basin-wide study, detail the vision and strategic focus of the Power Forum
to more precisely define how the forum can assist the Nile Basin countries moving towards
development of a regional power market.
NILE-SEC

---

Nile Basin Regional Power Trade 17
Table 2. Summary Of Project Components
COMPONENT AND OUTPUT
COMPONENT LEVEL OUTPUTS
INDICATIVE BUDGET,
MILLION US$
Nile Basin Power Forum
Power forum established including the
$6,847,800
Output: The establishment of a power forum
project office
including 10% contingency
to support continued discourse and promote
Administrative arrangements formulated and
power trade among Nile Basin countries
put in place
Drawdown support facility to provide
advisory services established and operating
Power forum website and activities launched
Comprehensive Basin-Wide Study
Detailed terms of reference for the basin-
$5,085,000
Output: Basin-wide analysis of long-term
wide study drafted and reviewed by the ITC
including 5% contingency
power supply, demand, and trade
and appropriate SVP projects (ie, Water
opportunities in order to inform the planning
Resources Project)
of multi-purpose river basin management in
A working group is defined and established
the SAPs of the NBI.
to launch and manage the study
Project management of basin-wide study
Total Estimated Project Budget
$11,932,800
A detailed project budget for the first three-years is presented in Annex C.
5. PROJECT RATIONALE
5.1. The Merits of Power Trade
Power sector experts in the Nile Basin are aware that regional power trade can be a useful part of a
strategy to increase and improve reliability of supply at a cost lower than that for isolated system
operation. Power trade, albeit at modest levels, is already taking place between and among several
Basin countries. Many Basin countries are either discussing power trade at increased levels or
considering developing power trade in the near future, and are looking for suitable investments to
realize this objective.
The potential benefits of power trade are related to cost saving in the supply of power from
cooperation relative to the cost of independent expansion of national power systems. Such cost
savings may arise from a reduction in the following:
Ø Operation costs due to economic power exchange
Ø Investment costs in additional supply due to least cost development of energy resources from a
regional as opposed to a national perspective
Ø Spinning reserve requirements as a proportion of peak load
Ø Coincident peak load relative to average load.
Furthermore, significant environmental benefits could arise if regional power trade is developed on a
least-cost basis. Such benefits could result from water conservation and land protection effects, and
from a reduction in greenhouse gas and other pollutant emissions caused by a shift from thermal to
hydropower based generation.
5.2. Reasons for Developing a Regional Power Market
Development of a regional power market requires establishment of a power pool concept. All power
pools have common objectives but each may be considered unique in having to meet the specific
requirements and characteristics of the participating countries electrical power networks and
generation facilities and demand profiles. The objective is to be able to realize the potential benefits
within individual country networks to the mutual economic advantage of all the interconnected
NILE-SEC

---

18
Nile Basin Regional Power Trade
countries. Interconnection of countries with different daily and seasonal load profiles introduces
diversity, which reduces the cost of expensive peak power generation. Furthermore the total amount
of spinning reserve can be reduced, resulting in a reduction in generation plant requirements and
overall system costs.
Power pools can be designed as "loose" cooperative or "tight" competitive pools--the latter requiring
stricter adherence by pool participants to mandatory rules and requirements in return for greater
economic benefits. Often, pooling arrangements are initially of the loose type, such as the SAPP.
Over time, moves towards a tighter pool can then be realized.
5.3. From Loose Cooperative to Tight Competitive Power Pools
A loose power pool can offer many advantages without the need for continuous control. Such an
arrangement provides opportunities for bilateral power purchase agreements and permits wheeling of
power across the interconnected networks. Experience shows that, when interconnections are
established as part of the creation of a power pool, other bidders and buyers enter the market and
thereby introduce (or enhance) competition. Due to the fact that power systems are non-linear, the
cost of generation, amount of transmission losses, and level of required ancillary services vary
continuously with the electrical loading on the network. To achieve the maximum cost efficiencies,
tight power pools are established with tele-control continuously monitoring all generators and
identified network nodes. This creates a market where the real price of electricity is known for
different times of the day and allows buyers to control their loads accordingly. Competition brings in
independent power producers and ancillary service providers which, combined, result in an overall
reduction in the delivered price of electricity.
5.4. Restructuring and Reform and the Impact on Power Trade
The restructuring of electricity supply industries is characterized by the unbundling10 of vertically
integrated power utilities to stimulate efficiency, competition, and new investment. After restructuring,
the transmission system retains the role of a national electricity transmitter and system operator, with
open access to the network being provided to both generators and consumers. In a regional context,
this means that any generator can supply power through an open-access regional grid to end-users in
other countries. Consequently, the choice of supplier for consumers becomes greater. This requires
national transmission tariffs to be harmonized and regional wheeling charges developed for use of
third-party networks.
5.5. Concerns for Self-Sufficiency or Cost of Compliance
Self-sufficiency is a normal concern for any country that has traditionally met all of the electrical
energy requirements of its consumers, and had full control over the capital invested and the returns
realized from generation and transmission assets. Entering into any cross-border agreement for the
purchase of electricity, to either replace or defer investment in local generation, raises many
concerns. Apart from political issues, such concerns normally relate to reliability of supply,
fluctuations in various currencies, and the deleterious impacts that could arise from faulting of
adjacent networks. With correctly negotiated cross-border purchases of electricity and adequate
planning and design for the transmission interconnection, these concerns can be resolved and the
benefits of electricity trading realized. In return for this, the normal agreements and requirements of a
power pool do place certain obligations and performance requirements on its members, for example
the need to contribute to overall regional system reserve capacity and assist in emergency situations.
5.6. Fair and Realistic Charges for Wheeling of Electrical Energy
There are numerous methods applied in the calculation of charges for the wheeling of energy from a
seller to a buyer through an intermediary network. These vary from a very simplistic fixed rate charge
to sophisticated charges calculated from dynamic pricing for the cost of electricity at identified nodes
on the network. When introducing wheeling charges in a power pool, the simplistic approach is
generally adopted initially. This can be as simple as a percentage of the value of the transported

10
The separation of generation, transmission, and distribution (and supply).
NILE-SEC

---

Nile Basin Regional Power Trade 19
energy. Thereafter, to achieve more cost reflective charges, considerable debate may ensue on the
actual value of the assets being utilized, the proportional use of these assets and the increase, or
reduction, of the transmission losses within the wheeling network.
5.7. Cooperative Planning and Operation of an Interconnected System
Any interconnection between previously isolated country networks will bring about both advantages
and potential operational disturbances. However, interconnected networks need to be studied,
planned, and operated as a single network. In order to achieve this objective, it is necessary for the
technical planners and operators of the interconnected countries networks to be able to work
together. In the generation planning of such interconnected networks, it is possible to consider
options for new plants with increased economies of scale.
5.8. Impact of Disturbances on Neighboring Interconnected Networks
Spinning reserve margins for generation can be reduced within interconnected systems. During a
disturbance on a neighboring interconnected network, either partial or considerable support can be
provided by the interconnection. System studies should be undertaken to identify the level of this
potential benefit. Another benefit that can be derived due to a partial loss of generation is the supply
of emergency power over the interconnection.
A negative effect from an interconnection can be the influence of a fault on a network affecting the
adjacent interconnected network. Another effect can be the dynamic oscillation between two
countries generation pools interconnected through a long, high impedance interconnection. This may
be resolved through increased control on generators.
5.9. Dealing with the Impact of Drought on Hydrogeneration
Most hydrogeneration systems are subject to seasonal performance, which is acknowledged in the
design of the installation. In Africa, however, hydrosystems are often adversely affected by
unpredictable drought. Where affordable, shortfall in hydrogeneration due to drought conditions is
supplemented by higher cost, thermal generation. An interconnection with another country containing
a different generation plant mixture, or whose rivers are supplied from a different catchment area that
would not be similarly subjected to the drought, could be in a position to supplement the
hydrogeneration shortfall.
5.10. Lessons Learned and Reflected in Proposed Project Design
There is abundant international experience in the design and development of regional forums, and
evidence shows that the formation of the forum reflects the prevailing regional circumstances and the
parties objectives for this type of regional institution. A review of about nine such regional
organizations shows that they can be broadly categorized into two groups; (a) a forum that provides
for information exchange, special studies, and training events in support of eventually forming
regional energy markets--the forum is essentially a regional "market promoter," and (b) a forum that
supports explicitly the formation of regional electricity markets or power pools through information
exchange, special studies, and specialized training-- the forum itself becomes the regional "market
maker." While this distinction is indeed subtle, this categorization helps in understanding the
motivation for the formation of regional forums. In our review of nine regional institutions, three fall
into the "market promoter" category and six fall in the "market maker" category. A brief description of
each of these institutions is presented in Annex D.
5.11. Value Added of Donor Support in this Project
For the integrated development of regional electricity markets in the Basin it is important to assure
that all countries have effective power sector policies and regional cooperation to foster a regional
dialogue and common understanding of good practices. In recent years there has been much
heightened activity in investigating power trading opportunities in the region. Efforts to improve
regional cooperation and coordination of power systems is seen as an essential step in ensuring
effective power project planning capability at the national, sub-regional, and basin-wide level.
NILE-SEC

---

20
Nile Basin Regional Power Trade
Donor support to the Nile Basin Regional Power Trade Project will bring a number of advantages to
the riparian countries and thus add significant value by supporting the regional dimension that
individual national activities cannot provide. The advantages include:
Ø Leveling the playing field. Providing means to countries to achieve similar quality level in terms of
load forecasting and load research, through examples of good practice, and provision of advisory
services when requested.
Ø Project and program support. Increasing capacity for project planning and support, through
examples of good practice and methodologies, provision of training, and advisory services and
development of technical guidelines when needed.
Ø Knowledge transfer. A power trade project-specific website will improve communication and
establish a basin-wide knowledge base both at a regional unit and within national focal point
institutions. This will also provide links across sectors, through other SVP projects.
Ø Communication and transparency. The power trade project website will provide information
about the regional activities to a wider range of stakeholders in the Basin and thus is likely to
increase transparency and confidence. The website will also directly aid in coordination of the
SVP, the effective transfer of lessons learned to emerging SAPs, and other initiatives in the
Basin.
Ø Basin-wide integrated planning. The comprehensive basin-wide study will be based on agreed
formulations and input data, providing a common framework for analysis, informed dialogue, and
rational decisionmaking from a regional perspective. The basin-wide hydropower model, together
with a "tool box" of hydropower analysis tools at the national level, provide the tools to enhance
hydropower planning at regional, sub-regional, and national levels. These tools will also benefit
the identification and evaluation of cooperative projects within SAPs.
Ø Ownership. This is the first basin-wide effort to develop a regional power trading architecture that
will be developed in the Basin and through active participation of and collaboration among all
countries.
Ø Training and long-term education of staff will strengthen technical capacity and facilitate self-
sufficiency in the planning and development of hydropower and transmission interconnection
projects.
6. ISSUES REQUIRING ATTENTION
In developing regional power trade and in establishing a power forum, a variety of policy, economic
and commercial, financial, technical, institutional, social, and environmental issues will need to be
considered. It is also important to emphasize that many of the issues presented here will be
addressed over the long term as the institutional framework for regional trade progressively evolves.
6.1. Policy Issues
Key policy issues that need consideration include:
Ø Harmonization of national policies on self-sufficiency in electricity supply with the regional
objectives and scope of the Power Forum
Ø Harmonization of power sector reforms, most notably issues pertaining to power trade and
access to and use of national transmission systems.
6.2. Economic and Commercial Issues
Economic and commercial issues requiring attention include:
NILE-SEC

---

Nile Basin Regional Power Trade 21
Ø Policies and principles for pricing of transmission services
Ø Access to relevant economic and cost information to determine and compare the cost of supply
for various power generation and transmission options with regional implications
Ø Creation of national power markets with active participation by demand-side participants to
compliment and enhance the performance of regional power trade
Ø Principles, instruments, and procedures for political risk mitigation in developing regional power
projects (to facilitate investment and financing)
Ø Development of an investment climate conducive to realization of power sector developments
with a regional focus, for example appropriate energy laws and regulations and currency
convertibility.
6.3. Financial Issues
Financial Parameters and Valuation of Existing Assets for Calculation of Wheeling Charges. In
addition to calculating the portion of the transfer capability of assets used for wheeling, it is also
necessary to agree on the financial value of these assets (to estimate a basis for calculation of a "use
of network charge"). This can often pose a problem, particularly if the assets are more than 25 years
old--the normal period for amortization for power system assets. Consensus can, however, be
reached using a reasonable approach, such as a depreciated value of present-day replacement cost
with a minimum percentage residual value.
Producing an Investment Plan of Financially Justifiable Projects. The high capital cost
associated with new generation plants optimally sized beyond the needs of the host country, as well
as the transmission interconnections to export the surplus capacity, are often beyond the financial
capability of the host country. Hence, such investments need to be funded by private investment or
through joint ventures. A well-prepared optimal power pool plan, accepted by all the interconnected
countries,11 provides the best foundation for a bankable document for funding of such investments.
6.4. Technical Issues
Technical Issues to be Considered for the Realization of Regional Power Trade
Operating Procedures for an Interconnected System. The control staff in the national control
centers of the individual countries, coupled with a transmission interconnection, should be able to
comply with all contractual requirements and identified technical considerations. For this purpose, it is
necessary to reach consensus on the operating procedures to be applied to the interconnected
system.
Appropriate Criteria for Generation and Transmission Planning. It is normal for each country to
have established planning and operating criteria for both generation plant and the transmission grid.
Such criteria are applicable to the nature of the plant as well as the configuration and economics of
operating the national grid. When such isolated country networks are interconnected, it is necessary
to reach consensus on the criteria and process to be adopted for the planning and operating of such
an interconnected system.
Identifying What Trading Could Take Place Through Existing Networks. The imposition caused
by wheeling of power through an existing network, following interconnection with adjacent countries
networks, must be limited to a level that does not impose any reduction in quality of supply or service
to consumers already supplied from the network. Similarly, when any contingency arises that makes
the system incapable of supporting both the national consumers and the power being wheeled, the
national consumers shall be given preference for continuity of supply.
Negotiation of Bilateral or Wheeling Short-Term Contracts to Test Assumptions and
Procedures. Electricity trading contracts should not be long term in order that the contracting parties

11This implies agreement on the sizing and location of the next generation station, together with the associated
transmission strengthening.
NILE-SEC

---

22
Nile Basin Regional Power Trade
are able to gain experience with such an arrangement. However, regional trading often requires
capital expenditure on an interconnection. This tends to result in the signing of bilateral trading
agreements in terms of power purchase agreements. Such agreements are normally required for long
periods for the investment to be viable and the risks to investors and financiers acceptable. However,
there should be some flexibility to renegotiate the conditions of these contracts. Wheeling contracts,
on the other hand, normally utilize spare capacity in existing networks and do not require any (or
limited) capital investment to be made.12
Compilation of a Regional Demand Forecast to Identify Generation Shortages and Surpluses.
Following the establishment of an interconnected system between countries, the joint planning activity
would need to merge the individual national demand forecasts into a regional demand forecast and
compare it with the generation shortages and surpluses in the interconnected countries. This analysis
would also need to take account of transmission constraints inhibiting the free flow between all
generators and loads.
Development of a Pool Plan Without Transmission Constraints to Prioritize Options and the
Potential Location of New Generation. Based on the regional demand load forecast and existing
generation plant output capability, it is possible to develop a generation pool plan that will identify the
need, available options, and potential locations of future generation. This plan should be based upon
a participatory approach and multicriteria options assessment which addresses social and
environmental aspects, as well as technical, economic, and financial issues. An integrated approach
to energy and water planning and management is also critical.
Development of an Optimal Pool Plan Including Transmission Requirements, Minimized
Losses, and Ancillary Services. The generation pool plan, which has identified options, as well as
the ideal order for siting and sizing of new generation plants, needs to be refined by adding the
transmission costs necessary to integrate these new points of generation with the forecasted loads.
This analysis must also include the cost of transmission losses and ancillary services for the various
combined generation and transmission scenarios. Environmental and social issues, as well as
stakeholder involvement should be integrated into the planning process.
Consideration of the Possible Influence of any Adjacent Power Pools on the Optimal Pool
Plan. Where there is a possibility in the development of a power pool that it could be connected to an
established power pool in an adjacent geographical area, then any planning and operating
investigations would need to be done in conjunction with the technical planners and operators of the
established power pool. Only thereafter should consideration be given to interconnection of the new
power pool to an existing power pool.
Performing Stability Studies on the Optimal Plan to Establish its Dynamic Behavior.
Transmission networks in Africa are characterized by limited power transfer levels over extremely
long distances. Such high impedance interconnections give rise to the potential for dynamic instability
within interconnected networks. It is, therefore, imperative that not only power transfer studies are
undertaken, but that all proposals are checked for their stability capability.
6.5. Institutional and Capacity-Building Issues
Institutional and capacity-building issues of importance to the realization of the Power Forum include:
Ø Recognition and incorporation (where possible) of practices and experiences of other regional
organization involved in power sector cooperation and trade, for example CEPLG and SINELAC
in DRC east, Burundi and Rwanda, the EAC and the SAPP (of which Tanzania is a member)

12The exception would be where wheeling across a country is required beyond the established planning criteria
capabilities of the existing network and new transmission strengthening is required. Under these circumstances,
a wheeling agreement would be required to cover this capital expenditure.
NILE-SEC

---

Nile Basin Regional Power Trade 23
Ø Building of appropriate institutional capacity and capabilities at both national and regional level to
successfully handle increasing power trade, including assessment of training needs and
development of appropriate training programs
Ø Formalization of necessary agreements and preparation of appropriate documentation to control
and guide the involvement of both governments, public utilities, and other future members of the
Power Forum.
6.6. Environmental and Social Issues
Regional power trade in the Nile Basin carries with it a number of environmental and social aspects
and implications. In line with best practice, it is important that environmental, social, and other
safeguard issues are effectively integrated into the planning and design process in an "upstream"
manner. Approaches to ensure this include:
Ø Use of strategic environmental and social assessments (SEA) as a tool for evaluation of options
at the river basin or regional/sub-regional level
Ø Effective integration of environmental and social assessments into the project design process
Ø Promotion of broad-based consultation and transparency as part of the planning and
implementation process
Ø Increased emphasis on evaluation and managing risks and sharing of benefits
Ø Provision of specialized training on environmental and social issues as related to energy and
water planning management.
6.7. Telecommunications Issues
Efficient "real time" operation of regional power trade requires access to broadband
telecommunication networks. Specific issues that need to be addressed include:
Ø Identifying the scope and potential for installation of fiber optic cables when installing
transmission interconnections
Ø Developing the appropriate telecommunication and informatics infrastructure to facilitate power
trading in "real time"
Ø Designing and developing data recording and communications architecture.
7. SUSTAINABILITY AND RISKS
Sustainability is understood here as the possibility for the riparian countries to continue the long-term
project activities for establishing and operationalizing an organization responsible for regional power
trade. The sustainability aspects are different for each of the two project components: the Power
Forum component and the basin-wide study component.
7.1. Sustainability of the Nile Basin Power Forum Component
The Power Forum component will have an indefinite life span, and if the proposed approach is
successful, additional resources will need to be mobilized at a later stage. The drawdown facility is a
pilot scheme, and there may be a demonstrated need and demand to continue it beyond the life span
of this project, assuming that the need and its effectiveness are demonstrated. Nevertheless, the
work is only likely to be externally funded for a finite period. In the long term, as the "power pool"
operation takes hold, and institutional capacity in the basin grows, a "pool user fee"13 may be required
for the sustainable operation of the project component.
The sustainability of the benefits of the Power Forum therefore depends on three factors:

13 The administration of a power pool is usually performed by an independent entity, for example an independent
systems operator. The administrative costs are recovered through a "pool users" fee levied on members of the
power pool. The pool users fee is usually linked to a member's pool usage, annual turnover, system size, etc.
NILE-SEC

---

24
Nile Basin Regional Power Trade
Ø The quality of the implementation of the project components
Ø The political commitment of governments to implement policy conducive to regional power trade
and undertake necessary sector reforms
Ø The ability of governments to retain the services of the officials trained through the process,
although the skills and knowledge attained will contribute to the common wealth of riparian
countries, whether the individuals involved remain in public service or not.
A measure of the success of the project will be sustainable benefits resulting from it. It is envisaged
that, with improved water resources management and coordinated power pool operation, the Nile
resource management as a whole will be more sustainable. The sustainability of the Power Forum
has three separate aspects:
Ø Institutional sustainability at the regional and national level
Ø Technical sustainability
Ø Access to information within national and between riparians.
Institutional sustainability at the regional level concerns the ability to continue the forum's functions
beyond the project period. There is a financial need for investments in hardware and software as well
as maintenance and support staff. Further, secondment of technical staff to the forum from the
countries is needed. These staff will be responsible for the technical activities of the Power Forum. In
cases where secondment is not appropriate, employment of regional experts will be needed. At the
national level, and in the long term, the national power experts will have to provide timely information
and their participation in developing the institutional infrastructure as in-kind contributions.
The technical sustainability of the Power Forum will be a function of the ability of their staff to respond
to the needs of the Nile basin countries. National power experts need to collect and process data and
information that will be used as inputs to the basin-wide study as well as other studies at the regional
or sub-regional level. At the regional level there will be a need for the exchange of specific data so
that basin-wide power planning and operations scenarios can be studied for ascertaining regional
benefits.
In order to create the basis for the sustainability along the above lines, it is essential to create a
momentum of Power Forum ownership, interest, and usefulness among the riparians during the
project period. This momentum would best continue if financial requirements and dependence on
assistance from outside the basin are minimized over the long term.
7.2. Critical Risks in the Nile Basin Power Forum Component
The most critical risks related to the Power Forum component are:
Ø Lack of riparian government commitment to the Power Forum development process resulting in
reluctance to second qualified staff to the forum
Ø Lack of understanding within national water related institutions of the potential use of regional
power trade in national water resource management and within related sectors for studies of
development scenarios (that could result in inadequate support at the national level including a
lack of collaboration on data inputs)
Ø Insufficient availability of the data and information needed to make regional benefits studies
Ø Lack of continued services of trained staff due to rotation or pursuance of other careers
In order to counteract the risks during the design and implementation of the Power Forum component
the following actions and precautions should be included as far as possible:
Ø Match levels of ambition in the Power Forum as closely as possible with present and projected
support capabilities of the riparian governments and develop the Power Forum in clear response
to expressed needs
NILE-SEC

---

Nile Basin Regional Power Trade 25
Ø Design the Power Forum component to include awareness raising, training, and mutual benefits
sufficient to motivate the participants in the national NBI networks to provide input and in return
have access to the benefits of Power Forum analytical tools
Ø Build up confidence and collaborative attitudes among the respective riparian institutions through
openness and transparency in Power Forum operations and participatory development of the
systems
Ø Provide training of trainers to maintain expertise within the region
Ø Include Nile Basin universities early on, so that an understanding of the regional power trade and
the power forum forms part of the standard knowledge base of energy and engineering
professionals in the region.
7.3. Sustainability of the Basin-Wide Study Component
The basin-wide study component is planned to provide a useful regional multi-purpose project
analysis that will have a long-term perspective, thus sustainability is crucial.
7.4. Critical Risks in the Basin-Wide Study Component
Risks to the successful completion of the basin-wide study project component include:
Ø Lack of commitment to the process on the part of riparian governments
Ø Documents and outputs not being relevant to the needs of the riparian countries
Ø The development of dependencies on the services provided and the lack of adequate skills and
abilities being developed within the riparian countries
Ø Selection of consultants that may claim but not have demonstrated relevant expertise.
These risk factors would be mitigated by the following actions and precautions:
Ø The objectives of the project need to be clearly understood and accepted by all the riparian
countries. The fact that it is not the objective of the project to predetermine national policy must
be stressed and rigorously observed.
Ø The processes, products, training, and skills building activities, as well as support provided by the
project, must be in direct response to discernible, verifiable, and expressed demand from riparian
countries.
Ø Consultation at all levels, both between the project and senior government officials in riparian
countries, and between officials and the wide range of stakeholders and parties affected by policy
development and implementation, is essential for success.
Ø It will be essential for governments to afford the proper priority to the development and
implementation of SAP cross-border hydroelectric power and transmission interconnections
projects, ensuring that appropriate senior staff are set the task of coordinating project
identification and that the project development and implementation process are endorsed at the
highest political level.
Ø Although this is essentially a capacity-building exercise, it does assume that competent personnel
are appointed by the governments of the Basin and that the NBI activities enjoy the highest
priority of the respective governments.
Ø Rigorous consultant selection criteria will be developed and implemented to ensure selection of
consultants with demonstrated expertise and skills.
NILE-SEC

---

26
Nile Basin Regional Power Trade
8. PROJECT PREPARATION AND PROCESSING
8.1. Evolution of the Shared Vision Program: A Coordinated Basin-Wide
Program
The SVP evolved from four thematic areas, or pillars, as described in the NBI policy guidelines to a
coordinated program of seven basin-wide projects between February 1999 and December 2000. The
process, as summarized in Table 3, was executed and coordinated by the Nile-SEC, involved active
participation of and guidance from the Nile-TAC, and received formal endorsement by the Nile-COM
at critical milestones.
The final portfolio of SVP projects includes:
Ø Nile Transboundary Environmental Action
Ø Nile Basin Regional Power Trade
Ø Efficient Water Use for Agricultural Production
Ø Water Resources Planning and Management
Ø Confidence-Building and Stakeholder Involvement (Communications)
Ø Applied Training
Ø Socio-Economic Development and Benefit-Sharing.
Four of these are thematic projects, focusing on environment, power, agriculture, and water
resources management, and three are facilitative projects related to confidence building and
stakeholder involvement, training, and macro-economics. The thematic projects aim to provide a
technical foundation, including common analytical frameworks, practical tools and demonstrations,
and human capacity to support regional cooperation while the facilitative projects serve to forge a
common vision and ensure long-term sustainability. The projects build on each other, and together
will serve to provide an enabling environment for cooperative development and management.
The SVP projects are linked to each other and to the SAPs in important ways. For example, the
information management system of the DSS component of the Water Resources Project will provide
a common communication platform and information management system for all SVP projects. The
regional river basin planning model of the DSS component will provide a tool for interacting with other
sectors, such as environment and power, and integrating these issues in the identification and
evaluation of potential SAP projects. At the same time, the Benefit-Sharing Project will develop and
evaluate socio-economic development scenarios, which will provide the context for potential river
development alternatives. The Environmental Project can provide information and a strategic
framework to support power related analyses. The Regional Power Trade Project will also coordinate
with the Applied Training and Stakeholder Involvement projects to share knowledge and expertise as
relevant.
8.2. Detailed Project Preparation: A Multi-Country, Participatory Process
As noted above, detailed preparation of the individual projects in the SVP was driven by Nile-TAC,
coordinated by Nile-SEC, and involved significant substantive input by Nile-TAC members. Detailed
project preparation was a complex and highly participatory process, which involved national experts
from each country, representing expertise in environment, power trade (ministry and utility
perspectives), agriculture, water resources (technical guidelines and DSS experts), training, and
communications. The project preparation process created a forum for interaction among the
technical experts from different water-related sectors across the Basin. As such, the project
preparation process has laid the foundation for broad-based support for project implementation. It is
also worthwhile to note, that for many it was the first time that they were able to discuss common
concerns with their colleagues from their neighboring and co-riparian countries.
For the Regional Power Trade Project, a Nile Basin PTWG was established. Two national experts--
one from the respective national power utility and the other from the respective ministry responsible
NILE-SEC

---

Nile Basin Regional Power Trade 27
for electric power--were appointed from each country to the PTWG. A consulting firm was employed
to conduct a scoping study to assess the opportunities for power trade among the Nile Basin
countries. The national power experts played a critical role in study review, data provision, and
qualitative analysis. A power sector specialist from the World Bank's Africa Energy Unit facilitated the
conduct of the scoping study and functioned as a liaison and power trade cluster anchor within the
World Bank/UNDP/CIDA Nile Team. Over the past year, PTWG met on three different occasions.
At the inaugural meeting of the PTWG held in Entebbe in December 1999, power sector experts from
the Basin countries met to discuss the scope and potential for regional power trade. Power sector
experts are aware that regional power trade can be a useful part of a strategy to increase and
improve reliability of supply at a cost lower than that for isolated system operation. Power trade, albeit
at modest levels, is already taking place between and among several Basin countries. Also, many
Basin countries are either discussing power trade at increased levels or considering developing
power trade in the near future, and are looking for suitable investments to realize this objective. The
Basin power sector experts recognized that there is a critical need for an institutional mechanism that
would enable Basin countries to discuss and find ways to expand power trade in the Nile Basin.
There was general consensus among the power sector experts for the establishment of a Power
Forum to:
Ø Facilitate continued dialogue and cooperation among power utilities
Ø Collect and exchange information
Ø Share experience
Ø Increase awareness
Ø Support technical meetings
Ø Review and analyze common issues of interest
Ø Commission special studies relating to power trade
Ø Assist in developing the strategic framework and agreements for advancing power trade in the
region.
At the second PTWG meeting in Addis Ababa in July 2000, the national power experts reviewed
lessons of international experience in the role of regional power for fostering regional power trading
arrangements. Power forums elsewhere in the world are proving to be an effective institutional
mechanism to promote and develop power trade opportunities among regional groups of countries,
such as those in southern Africa, the Mekong Region, Central and South America, the Black Sea
region, the Baltic States, and the Middle East (their key features are summarized in Annex D). The
PTWG members reviewed the evidence that establishment of a "regional forum" catalyzes the scope
for power trade, and they consequently refined the contours of a preliminary outline of a power forum
proposal, with the objectives of:
Ø Exploring and articulating the region's approach to developing power trade and the Forum's role
providing assistance in that development
Ø Developing the Forum's detailed rules of organization and operation
Ø Facilitating the creation of the physical and institutional infrastructure for sub-regional and
regional trade
Ø Assisting in development of sub-regional markets in the near-to-medium term.
At the third PTWG meeting in Harare in October 2000, following a study tour of the SAPP, the
national experts provided critical input regarding project formulation as well as reviewed and revised
project documents. This project document reflects riparian perspective on national and regional
needs, project components which are deemed to be implementable and confer real benefits, and a
project design based on lessons learned from other related projects in the region.
NILE-SEC

---

28
Nile Basin Regional Power Trade
Table 3. Preparation of the Shared Vision Program
DATE
MEETING
LOCATION
KEY OUTCOMES
TYPE
July 1998
Nile-TAC
Dar es Salam,
Drafting of policy guidelines that define the SVP and four major
Tanzania
thematic areas of the program
Feb 1999
Nile-COM and
Dar es Salam,
Adoption of the NBI Policy Guidelines and instruction by Nile-COM
Nile-TAC
Tanzania
to prepare a portfolio of priority SVP projects for ICCON
May 1999
SVP Planning
Sodere, Ethiopia
Preliminary list of priority projects, including project goals and
Meeting
objectives, based on consultation and brainstorming by Nile-TAC
members and two additional sectoral experts from each country
May 1999
Nile-COM and
Addis Ababa, Ethiopia
Approval of list of priority projects and project preparation process
Nile-TAC
Sept 1999
Nile-TAC
Entebbe, Uganda
Based on output from Sodere planning meeting, development of
project concept notes for seven priority projects and approval of a
detailed project preparation process and schedule for each project
Dec 1999
Project
Entebbe, Uganda
Review and further development of draft project concept
Preparation 1
notes/documents by working groups (WGs). For each project, the
WGs included a Nile-TAC member and national expert(s) from
each country. A total of eight national experts were involved from
each country. Each project was assisted by a lead consultant
Dec 1999 ­
National
Nile Basin countries
Lead consultants together with national experts prepare draft
Nov 2000
Analysis and
project documents. Depending on the project and country, national
Consultations
experts provided inputs through preparation of national reports,
country consultations, and/or country visits by lead consultants
Jan 2000
Nile-TAC
Entebbe, Uganda
Review of progress in project preparation and further refinement of
project concepts as warranted
Mar 2000
Nile-TAC
Delft, the Netherlands
Review of progress in project preparation and further refinement of
project concepts/design as warranted
July 2000
Project
Addis Ababa, Ethiopia
Review and further development of detailed draft project
Preparation 2
documents by working group members for each project and Nile-
TAC members
Aug 2000
Nile-COM and
Khartoum, Sudan
Approval of SVP project portfolio and updated project summaries
Nile-TAC
Oct 2000
Nile-TAC
Via electronic mail
Review of draft final project documents
Dec 2000
Distribution of
Via express mail and
Distribution of all English draft final project documents to all Nile-
draft final
electronic mail
TAC members (French versions sent February 2001)
project
documents
Mar 2001
Nile-COM
Khartoum, Sudan
Final approval of SVP project portfolio and project documents
NILE-SEC

---

Nile Basin Regional Power Trade Annex A 29
ANNEX A.
NBI REGIONAL POWER TRADE PROJECT DESIGN SUMMARY
LOGICAL FRAMEWORK
HIERARCHY OF OBJECTIVES
KEY PERFORMANCE
MONITORING AND EVALUATION
CRITICAL ASSUMPTIONS
INDICATORS
Goal
Sector Indicators
Sector /Country Reports
(from Goal to Shared
Ensure development of a regional
Nile riparian countries develop the
Vision)
market for power trade in the Nile
institutional framework for regional
Continued willingness of
Basin through cooperative power
power trade cooperatively
riparian countries to pursue
system planning and coordinated
cooperative development of
power system management to
the Nile
support the achievement of
Political and economic
sustainable socio-economic
stability of riparian countries
development in the region
Project Development Objective
Outcome/Impact Indicators
Program/Project Reports
(from Objective to Goal)
Establish the institutional means to
Effective dialogue and cooperation
Reports to Nile-COM and Nile-TAC
High political support for the
coordinate the development of
among Nile Basin power utilities is
Nile-SEC annual reports and
NBI continues with
regional power markets among the
established
newsletters
coordinated actions at the
Nile Basin countries
Strategic framework for advancing
Donor supervision reports
national level
power trade in the region is
Reports to ICCON
Overall NBI cooperation
developed
continues
Common understanding of the
Successful ICCON process
institutional and regulatory
and continued donor support
frameworks required to support
power trade is enhanced (or
achieved)
Investment needs to facilitate
power trade are identified
Output from Each Component
Output Indicators*
Project Reports
(from Outputs to
Support for regional power trade
Power Forum operational
ITC quarterly reports
Objective)
development and national
arrangements accepted by Interim
Comparative evaluation of change
NBI regional cooperation
capacities strengthened
Technical Committee
of national-level, legal, and
continues, backed by strong
Capacity for successful preparation
Number of people trained and
regulatory frameworks
commitment at national
and management of joint projects
knowledge improved; specific
Midterm and project completion
levels
enhanced
project management skills
evaluations
Adequate regional level
Comprehensive basin-wide study
strengthened
Training evaluation (assessment of
implementation and
facilitating an interdisciplinary team
Drawdown facility operating with
actual knowledge transferred)
management capacity to
of power and water resources
agreed criteria
ITC ongoing progress evaluations
ensure basin-wide
planners is completed
Specialized advisory and
and project management reports
coordination
consultancy services undertaken
External review and evaluation
Adequate national level
and successfully completed
reports at critical milestones and at
institutional capacity and
through drawdown facility
project completion
cooperation to implement
Communication links established
and sustain project
and website functioning as
Qualified staff available and
knowledge base and information
retained to effectively
management system for Regional
implement and sustain
Power Trade Project
project
Regional and national local focal
Riparians willing to reach
points nominated for study team.
consensus and share
Regional river basin planning and
information
hydropower system planning
Sufficient donor interest and
models developed and agreed,
funding available
calibrated, and used to analyze real
cases
NILE-SEC

---

30
Nile Basin Regional Power Trade Annex A
NBI REGIONAL POWER TRADE PROJECT DESIGN SUMMARY
LOGICAL FRAMEWORK (CONT'D.)
HIERARCHY OF OBJECTIVES
KEY PERFORMANCE
MONITORING AND EVALUATION
CRITICAL ASSUMPTIONS
INDICATORS
Project Components/Sub-
Inputs (budget for each
Project Reports
From Components to
components *
component) and Indicative
Outputs
Budgets
Power Forum Established
Project manual addressing
Work program meets needs
Project management team in place
$4.18 million
administrative, work plan, budget,
of the countries
Office administration set-up
staffing, QA, and M&E issues
Sufficient trained staff
Monitoring and evaluation system
Financial audits
available and retained
in place
Needs assessments
nationally to participate
Drawdown support facility
Basic guidelines and compendium
efficiently
established
of good practice for policy
Consensus reached on
formulation and implementation
criteria for drawdown facility
Training course materials
Project component
Criteria for drawdown facility
appropriately funded,
Institutional Arrangements and
particularly drawdown facility
Power Forum Operations
$2.66 million
Power Forum operations manual
Support
addressing administrative, work
Quality consultants retained
ITC quarterly meetings
plan, budget, staffing, QA, and
expeditiously
Website development
M&E issues
Sufficient trained staff
Draft interutility memorandum
Needs assessments
available and retained
Drawdown operational
Practical guidelines and knowledge
nationally to participate
Capacity-building needs
base for project planning and
efficiently
assessment
management
Timely completion of
Training courses
Training course materials
capacity-building needs
Criteria for drawdown facility
assessments
Comprehensive Basin-Wide
$5.10 million
Quality training professionals
Study
retained expeditiously
Guidelines for collection,
Technical reports, needs
processing, analysis, and exchange
assessments, user manuals, QA
Qualified, motivated staff,
of information
reports, and training materials
availability of other
Technical integrated hydropower
Guideline documents for
resources, and collaborative
and water management systems
information exchange, QA
networks established and
development and application
manuals, and inspection of
functioning
Inform the planning of multi-
information being exchanged
Data availability and model
purpose river basin management in
Multipurpose modeling, analysis,
requirements compatible and
the SAPs
and training program assessments
yielding results within
acceptable limits of accuracy
Regional consensus on
extent of data exchange
reached
Model inputs are credible
and accurate and
information exchange
following agreed procedures
Note:
*Gender targets for training and capacity building activities will be applied
NILE-SEC

---

Nile Basin Regional Power Trade Annex B 31
ANNEX B.
PROPOSED ORGANIZATIONAL FRAMEWORK FOR PROJECT MANAGEMENT
UNIT DRAFT TERMS OF REFERENCE14
A. Background
Under the Nile Basin Initiative SVP, a Regional Power Trade Project is expected to be implemented
over a period of three years. The Regional Power Trade Project has two main components, a Nile
Basin Power Forum and a comprehensive basin-wide study. The Power Forum component will entail
the establishment of an institutional mechanism to launch and conduct several specialized studies as
well as preparing the groundwork for an eventual regional power trading arrangement.
To facilitate and monitor the overall implementation of the Power Forum, the Nile riparians intend to
establish a project management unit (PMU) of the Power Forum component of the project. The
project director, finance manager, and other professional support staff (such as a project accountant)
will form the PMU. The PMU will be responsible for administration of consultant contracts, collecting
and maintaining a projects database and filing system of all records and information on all contractual
documentation pertaining to the Power Forum and comprehensive basin-wide study components of
the project. The PMU will also establish a monitoring, evaluation, and reporting system satisfactory to
the World Bank and/or relevant donor agencies. The project director will liase with other regional
entities as well as other relevant SVP projects.
B. Scope of Work
The project director will be accountable for implementing the different activities under the project
components. This includes oversight and reporting on the progress made on the various work
program activities. As a matter of priority, the project director will prepare an operations manual
within the first eight weeks of the inauguration of the PMU. The proposed project components will be
implemented over a maximum period of 36 months. During this time, the project director will be
responsible:

Ø To procure goods and services in accordance with procurement procedures of World Bank and/or
relevant donor agencies, and to monitor the procurement process (delivery of equipment as per
the specifications and the recruitment of consultants, the preparation of reports in accordance
with the terms of reference, etc.). The consultant should set up electronic spreadsheets and
document files so that information on the status of each activity is available on a monthly basis
Ø To prepare withdrawal requests and monitor the budget for each activity to ensure that activity
budgets and timetables are adhered to
Ø To follow up on the status of consultancy studies, including the agreed work plans of individual
consultancy assignments, the status of and progress on training programs, etc. to ensure that
schedules are met and the quality of consultancy outputs is satisfactory
Ø To prepare quarterly progress reports to the World Bank and/or relevant donor agencies covering
procurement, disbursement, and completion of assignments for each activity, and to submit the
consolidated report to the Nile-TAC, World Bank, and/or relevant donor agencies in a timely
manner and as per the agreed progress reporting format
Ø To ensure that the financial reporting and accounting systems adhere to the accounting
requirements under World Bank and/or relevant donor agency guidelines, including the annual
audit of project accounts

14 Subject to change pursuant to Nile-COM meeting in December 2000 discussions on SVP implementation
arrangements.
NILE-SEC

---

32
Nile Basin Regional Power Trade Annex B
Ø At the completion of each activity, to prepare a brief write-up on the outcome of each activity
(whether procurement went smoothly, the budget was met, the accomplishments and/or shortfalls
of the particular activity, etc.) that could serve as a basis for preparation of an annual report on
the project.
The finance manager, with the assistance of professional staff, will perform the following duties:
Ø Set-up the necessary accounting books and codes and prepare an accounting and recording
system in accordance with World Bank and/or relevant donor agencies' accounting guidelines
Ø Assist the project director in the preparation of an annual budget
Ø Verify payments approved by the project director to ensure that they are in accordance with the
already approved budgets and disbursement categories and properly supported by relevant
documents
Ø Prepare payment vouchers and disbursement applications in accordance with World Bank and/or
relevant donor agencies' accounting guidelines
Ø Prepare check payments
Ø Record all transactions in appropriate accounts and categories, including maintenance of a fixed
asset register
Ø Prepare monthly bank reconciliation statements for the special account and other bank accounts
Ø Prepare monthly financial statements to reflect project status
Ø Prepare replenishment applications for the Drawdown Facility for approval by the project director
Ø Prepare actual expenditure versus budgets on monthly basis
Ø Prepare project financial expenditures and commitments to be included in the summary quarterly
project progress reports
Ø Prepare annual project financial statements for audit as required by World Bank auditing
procedures
Ø Attend to external auditors' matters
Ø Prepare any other reports as may be directed by the project director from time to time.
C. Reporting Requirements
The project director will set-up an office in _______________at a premise provided by the
Government of _________'s Ministry responsible for power sector. A budget for office set-up
(furniture, computers, faxes, etc.) and a vehicle for the project director is provided for under the
project. As noted, the project director, with the assistance of the finance manager, will be responsible
for preparing quarterly progress reports to the Nile-COM/Nile-TAC/relevant donor agencies in
sufficient detail, and liaising with World Bank staff on a regular basis electronically, as well as through
periodic supervision missions. In addition, the project director will establish specialized working
groups to oversee the implementation of all activities of the project. On a quarterly basis, the project
director will report to the ITC of the Power Forum. In addition, the project director will be required to
provide necessary and requested reports on the project components to the ITC, the World Bank,
and/or relevant donor agencies.
Budget
The project director's assignment will run for a maximum of 36 months. The monthly salary will be
$_______ gross (i.e., including taxes). The total estimated budget envelope will be
$_____________.
The finance manager's assignment will run for a maximum of 36 months. The monthly salary will be
$_______ gross (i.e., including taxes). The total estimated budget envelope will be
$_____________.
Specialized professional consultants such as project accountants will also be retained for a maximum
of 36 months. The monthly salary will be $_______ gross (i.e., including taxes). The total estimated
budget envelope will be $_____________.
NILE-SEC

---

Nile Basin Regional Power Trade Annex B 33
Component 1: Power Forum Activities and Time Frame
The Regional Power Trade Project will be presented via the appropriate channels to the ICCON
meeting in June 2001. The ITC will thereafter commence the establishment of the Power Forum and
initiate its first activities subject to the normal approval procedures of the NBI. These activities will
take into cognizance other NBI initiatives and will effect coordination and liaison where appropriate.
The activities can be grouped as follows:
Institutional and Management Framework
Ø Establish PMU; appoint project director and project manager
Ø Establish administrative unit and select necessary specialist/consultant support
Ø Investigate and review options for establishing the Power Forum as a legal entity
Ø Initiate dialogue with EAC, SAPP, and Kagera River Basin Organization
Ø Draft a proposed Interutility Memorandum of Understanding (IUMOU) or its equivalent, undertake
necessary consultations according to established procedures, and facilitate the approval and
ratification of the IUMOU.
Planning and Analytical Tools
Ø Develop information exchange protocols
Ø Establish and launch a Power Forum web-site on the Internet linked to the established Nile Basin
web-site to facilitate dialogue between forum members as well as external promotion of the
Power Forum and its activities--this activity will be coordinated with the Nile Basin DSS
component of the Water Resources Project
Ø Establish liaison and coordination with other Nile Basin initiatives, organizations, and stakeholder
groups, e.g., in terms of training initiatives
Ø Initiate coordination with environmental initiatives under the NBI
Ø Establish power forum member reporting processes and requirements
Ø Create a regional power sector databank
Ø Initiate development of a long-term strategy for the Power Forum with particular focus on how the
Forum can contribute to harmonization of power sector reform in the Nile Basin and the
coordinated development and implementation of regulatory frameworks, particularly related to
power
Ø Establish working group(s) for demand/supply studies and methodologies
Ø Convene workshops and meetings focusing on planning and operation of power systems,
regulation of power markets, and power trade.
Training and Skills Enhancement
Ø Initiate training and development needs assessment among the Power Forum members,
regulatory agencies, and government ministries responsible for electricity matters
Ø Decide power sector specific training
Ø Define program for assistance to government ministries responsible for electricity matters and
regulators, taking into account other training initiatives under the NBI
Ø Define program for assistance to member utilities, taking into account other training initiatives
under the NBI
Ø Initiate training of government, regulator, and utility officials in key areas of power trade, including
demand forecasting, analysis of power generation options, transmission pricing, and regulatory.
Financial Resource Mobilization
Ø Liaise with donors through ICCON meetings in accordance with established NBI procedures
Ø Develop Power Forum documentation for investment promotion in coordination with SAPs,
including detailed project profiles
Ø Organize investment seminars for private investors and financiers in coordination with SAPs.
NILE-SEC

---

34
Nile Basin Regional Power Trade Annex B
Special Studies. Commission special studies important for the establishment of the Power Forum
and to progress work aimed at stimulating power cooperation and trade. Such studies could include,
but should not be limited to:
Ø Review of best practices in multi-purpose hydropower coordination regimes
Ø Review of institutional and regulatory frameworks to support regional power trade
Ø A "blue chip" study on review of public-private partnership models for financing and implementing
hydropower projects
Ø Review of frameworks and procedures for environmental impact assessment of power projects in
the various Nile Basin countries
Ø Other specialized studies, advisory services, and workshops/seminars.
Component 2: Comprehensive Basin-Wide Analysis of Long-Term Power Supply, Demand,
and Trade Opportunities
As an initial priority task of the Power Forum, a participatory process will be designed to advance the
Scoping Study of the Opportunities for Power Trade in the Nile Basin into a comprehensive basin-
wide analysis of long-term power supply, demand, and trade opportunities. Specific studies and
projects resulting from the Scoping Study can be recommended for implementation as part of the
Eastern Nile and the Nile Equatorial Lakes SAPs.
The detailed basin-wide analysis will be used to inform the planning of multi-purpose river basin
management in the SAPs. In conducting this study, special working groups of non-power experts
(water resources managers, environmental specialists, etc.) will be formed to ensure that hydropower
development issues are addressed in the broader context of integrated and multipurpose water
resources development and management. The study will seek to incorporate best practice in options
analysis, including the use of stakeholder consultation.
Given the complexity of the comprehensive basin-wide study that has to integrate both power
development and multipurpose projects analysis, this activity will be launched pursuant to a scoping
study carried out under the joint supervision of the PTWG and the Water Resources Project. This
scoping study will investigate, from a multi-objective perspective, data availability and data
harmonization issues and prepare a detailed terms of reference. Upon completion of a joint review by
the PTWG and the appropriate SVP Project (ie, Water Resources and Environment projects), the
comprehensive basin-wide study will be launched.
The activities involved under Component 2 include:
Ø Conduct a scoping study to assess past national-level power and water resource management
studies, investigate the availability of pertinent data and data harmonization requirements for a
multi-objective study, and prepare a detailed terms of reference for conducting a comprehensive
basin-wide study
Ø Invite proposals for the basin-wide study, award and launch the study, and manage and monitor
study implementation.
Using the results of the basin-wide study to detail the vision and strategic focus of the Power Forum
will more precisely define how the Forum can assist the Nile Basin countries to move towards
development of a regional power market.
D. Qualifications and Recruitment Procedure
Qualifications
The project director and the finance manager must show competence in discharging his/her duties,
in carrying out pre-defined activities, and should posses the following experience and qualities:
NILE-SEC

---

Nile Basin Regional Power Trade Annex B 35
Ø A holder of at least a first degree from a recognized university; for the project director, first degree
must be in Engineering followed by graduate work in Management; for the finance manager, first
degree must be in Accounting or Commerce, and must possess accreditation from a professional
accounting organization
Ø Relevant work experience of not less than ten years for the project director and not less than five
years for the finance manager, with particular experience in the management and oversight of
donor-funded projects, preferably from their commencement to their completion in all phases--
management, procurement, monitoring, and report writing required by the government and
donors
Ø A minimum of five years in the procurement of goods and services following donor/international
procurement regulations, including procurement management and oversight of sizeable
international projects
Ø Excellent communication skills both oral and written in English (and preferably French),
demonstrated ability to work in MS Office software products, and ability to effectively work in
teams.
Special Requirements
Conflict of Interest. Please refer to the Para 1.9 (b) of the World Bank's consultancy guidelines
which states: consultants or any of their affiliates shall not be hired for any assignment that, by its
nature, may be in conflict with another assignment of the consultants. As an example, consultants
hired to prepare engineering design for an infrastructure project shall not be engaged to prepare an
independent environmental assessment for the same project, and consultants assisting a client in the
privatization of public assets shall not purchase, nor advise purchasers of, such assets.
Eligibility. Please refer to para 1.10 (b) of the World Bank's consultancy guidelines which states:
government owned enterprises in the borrower's country may participate only if they can establish
that they are legally and financially autonomous and operate under commercial law. No dependent
agency of the Borrower or Sub-Borrower of the project or their employees shall be permitted to
submit or participate in a proposal for the provision of consulting services under the project.
E. Selection and Evaluation Procedure
The selection and evaluation procedures will follow the World Bank and/or relevant donor agencies
guidelines for the recruitment of consultants, and will abide by NBI guidelines.
NILE-SEC

---

36
Nile Basin Regional Power Trade Annex B
NILE-SEC

---

Nile Basin Regional Power Trade Annex C
37
ANNEX C.
NBI REGIONAL POWER TRADE: THREE YEAR BUDGET
INDICATIVE
PROJECT COMPONENT DESCRIPTION
COSTS,
US$MILLION
Component 1. Nile Basin Power Forum
Sub-component 1: Power Forum set-up and operational costs
Project director, project manager, professional staff, and administration
$1,300,000
Office furniture
$100,000
Office hardware and software including proprietary models
$300,000
SVP Coordination
$75,000
Monitoring and evaluation system
$75,000
Drawdown facility
Review of best practices in multi-purpose hydropower coordination regimes
$300,000
Review of institutional and regulatory frameworks to support regional power trade
$250,000
A "blue chip" study on review of public-private partnership models for financing hydropower projects
$500,000
Review of frameworks and procedures for environmental impact assessment of power projects
$350,000
Other specialized studies, advisory services, and international workshops/seminars
$450,000
Total
$3,700,000
Contingencies at 10%
$370,000
SVP Coordination and Quality Assurance at 3%
$111,000
Total for sub-component 1: Power Forum set-up and operational costs
$4,181,000
Sub-component 2: Institutional functions including training and financial resource mobilization
ITC quarterly meetings
$300,000
Web-site development, maintenance, newsletters
$200,000
Telecommunications set-up and maintenance
$180,000
Development of power sector database
$150,000
Power Forum strategy development
$150,000
Development of Interutility MoU
$180,000
Training needs assessment, definition of specific training requirements and program development
$150,000
Training delivery (2 courses per year ­ policy/regulatory and technical)
$300,000
Organize study tours ­ 2 tours ­ Scandinavia, United States
$300,000
Marketing (production and distribution of materials + visits)
$150,000
Development of detailed investment profiles for Subsidiary Action Programs
$150,000
Business Roundtables and Investor Seminars
$150,000
Total
$2,360,000
Contingencies at 10%
$236,000
SVP Coordination and Quality Assurance at 3%
$70,800
Total for sub-component 2: Power Forum Institutional Functions
$2,666,800
Total for Component 1. Nile Basin Power Forum
$6,847,800
Component 2. Comprehensive Basin-Wide Power Study
Conduct Stage I ­ Project Preparation
$500,000
Conduct Stage II ­ Project Implementation
$4,000,000
Total
$4,500,000
Contingencies at 10%
$450,000
SVP Coordination and Quality Assurance at 3%
$135,000
Total Component 2. Comprehensive Basin-Wide Power Study
$5,085,000
Total Estimated Three Year Budget for Regional Power Trade Project
$11,932,800
NILE-SEC

---

38
Nile Basin Regional Power Trade Annex C
NILE-SEC

---

Nile Basin Regional Power Trade Annex D
39
ANNEX D.
REVIEW OF INTERNATIONAL REGIONAL POWER MARKETS
The establishment of a power forum as part of the NBI will provide great benefits because such a
forum will facilitate exchange of information about best practices and experiences in power trade
matters. Such an exchange of information and know-how will help develop the enabling environment
for promoting regional power trade and investment.
There is abundant international experience in the design and development of regional forums, and
evidence shows that the formation of the forum reflects the prevailing regional circumstances and the
parties' objectives for this type of regional institution. A review of about nine such regional
organizations shows that they can be broadly categorized into two groups; (a) a forum that provides
for information exchange, special studies, and training events in support of eventually forming
regional energy markets--the forum is essentially a regional "market promoter" and (b) a forum that
supports explicitly the formation of regional electricity markets or power pools through information
exchange, special studies, and specialized training--the forum itself becomes the regional "market
maker." In our review of nine regional institutions, three fall into the "market promoter" category and
six fall in the "market maker" category. A brief description of each of these institutions is presented
below.
Regional "Market Promoters"
The Commission de Integracion Electrica Regional (CIER). CIER was established in 1964 on the
basis of a proposition approved during the First Regional Electrical Integration Congress, an initiative
of the Uruguayan Electric Sector Authorities. CIER's main objective is to promote and encourage the
integration of electricity markets in South America. Current CIER members include 198 electricity
companies from 10 South American countries: Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador,
Paraguay, Peru, Uruguay, and Venezuela. In addition, CIER has six associate members that are
utilities from countries outside the region (UK, France, Spain (2), Mexico, Portugal).
Asia Pacific Economic Cooperation's (APEC): Energy Working Group and the Regulators'
Forum. The Energy Working Group and the Regulators' Forum began as the Electricity Working
Group and the Electricity Regulators' Forum in 1990. Their mandate expanded to include other forms
of energy and the name was changed accordingly. The participants are from the following APEC
countries: Australia, Canada, PRC, Indonesia, Japan, Republic of Korea, Mexico, Papua New
Guinea, Philippines, Singapore, Chinese Taipei, Thailand, and USA. The Working Group contributes
to decision-making through open and frank discussion. The Regulators' Forum facilitates information
sharing on power sector regulation and responds to requests from APEC Ministers. The Working
Group and the Regulators' Forum have established business networks to provide the views of the
business sector, and supports events such as seminars, training, and technology demonstrations. A
business sector/ministerial dialogue is held in conjunction with each Energy Ministers' meeting.
The Association of South East Asian Nations (ASEAN) Energy Cooperation Agreement and
ASEAN Centre for Energy (ACE). ACE was established in 1999, replacing the ASEAN-EU Forum.
The ten member countries are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines,
Singapore, Thailand and Vietnam. ACE's mandate is to catalyze the growth and development of
ASEAN through energy cooperation. ACE coordinates, manages, and monitors the implementation
of the ASEAN Plan of Action. The current ASEAN Action Plan includes the ASEAN Power Grid.
ACE's working group on electricity and the ASEAN Heads of Power Utilities and Authorities provide
input and work with ACE to implement plans in the electricity sector. ASEAN countries are
considering forming a joint venture to invest in and operate regional transmission lines.
NILE-SEC

---

40 Nile Basin Regional Power Trade Annex D
Table D1. International Regional Power Forum Experience:
Comparison of the "Market Promoter" Model
ORGANIZATION
APEC
APEC
ASEAN
CIER
ENERGY WORKING
REGULATORS'
CENTRE FOR ENERGY
GROUP
FORUM
AUSPICES
APEC Regional
APEC Regional
ASEAN Regional
None
Organization
Organization
Organization
SCOPE
Energy, power,
Energy, power,
Energy, power, domestic,
Electricity trade
domestic, and regional
domestic, and
and regional
regional
PRIMARY
Maximize the energy
Contribute to
Serve as a catalyst for
Promote and
OBJECTIVE
sector's contribution to
development of
economic growth and
encourage the
the region's economic
an efficient sector
development of ASEAN
integration of the
and social well being
and regulatory
through national and joint
electric markets in
while mitigating the
arrangements that
activities on energy
South America
environmental effects of
are conducive to
energy supply and use;
business sector
contribute to
development
decisionmaking
PRIMARY
Mobilizing
Contribute to
Manage and facilitate the
Forum for exchange of
OBJECTIVE-
environmentally
development of
ASEAN goals for the
information,
ELECTRICITY
responsible investment
an efficient
electricity sector ­ to
knowledge, and
in power infrastructure
electricity sector
Develop the Trans-ASEAN
experience; promote
and regulatory
power grid, to promote
investment and
arrangements that
private investment, and
business relations
are conducive to
implementing organization-
business sector
Heads of ASEAN Power
development
Utilities/Authorities
TASKS/ACTIVITIES
Seminars, training
Facilitates
Coordinates manages, and
Studies on specific
courses, and
information
monitors ASEAN Action
problems, special
information exchange
sharing on all
Plan; provides technical
seminars, training,
activities; publish
aspects of power
coordination and facilitates
publications, and data
energy statistics;
sector regulation;
the task of the
bank
manuals on "best
responds to
implementing organizations
practices;" web-site to
requests from
facilitate power
ministers
infrastructure
development
INTERNAL
[TBD]
Government
Governing Council,
Central committee and
ORGANIZATION
regulators and
Executive Director, and
national committees,
key advisors; ad
Secretariat
technical committees,
hoc forum for
and support by
cooperation in
Secretariat (Exec. Dir.
power
and four Sr. staff)
infrastructure
FORMAL
Yes, Business Network
Yes
No
Yes
BUSINESS
with two reps from each
NETWORK
country
EXTERNAL
APEC Leaders and
APEC Leaders
Consultative committee of
None
REPORTING
Energy Ministers
and Energy
senior officials of ASEAN
Ministers
economic ministries
FINANCING
Members and business
Members and
Donors and member
Member contributions
partners
business partners
contributions
of constant quota plus
proportional amount
(MW-based)
NILE-SEC

---

Nile Basin Regional Power Trade Annex D
41
Regional "Market Makers"
Baltic Ring Electricity Cooperation (BALTREL). BALTREL was formed in 1998 on the
recommendation of the Baltic Ring Interconnection study. The regional electricity market is under
formation. BALTREL's initial activities include studies to develop common rules for the Baltic
electricity market and to develop methods to implement joint activities. BALTREL's mandate recently
expanded to include gas interconnections. Participating organizations are the 18 utilities and
companies that participated in the study from the countries of Belarus, Denmark, Estonia, Finland,
Latvia, Lithuania, Norway, Poland, and Sweden.
Greater Mekong Sub-Region. The formal organization and regional market are under formation.
An exploratory, informal organization --the Greater Mekong Sub-Region Electric Policy Forum
(EPF)--was formed in 1995, and its Experts Working Group (EWG) was formed in 1998. The
Mekong ministers responsible for power endorsed the EPF's draft policy statement on power trade in
January 2000, allowing the regional market to proceed, including the formation of market-managing
institutions. The EWG is now drafting a memorandum of understanding for the establishment of a
regional electricity market. Participating organizations are the national utilities and relevant
government departments of Cambodia, Laos, Myanmar, Thailand, Vietnam, and the Yunnan Province
of China.
Mid-Continent Area Power Pool (MAPP). MAPP was formed in 1963 as the Mid-Continent Area
Power Planners. At formation, MAPPs members consisted of 21 utilities of various sizes (American
and Canadian), with a range of ownership and operating structures, each of which had its own
regulatory requirements and economic agenda. In 1972, MAPP began operations as a "loose pool,"
at which time it changed its name to the Mid-Continent Area Power Pool. MAPP has always stressed
the benefits it can bring to its members through a public awareness campaign. MAPP is now
reorganizing as a regional transmission organization (RTO) in compliance with US regulatory
requirements.
Nordel. Nordel was formed in 1963. Nordel was a technical cooperation and advisory body with
representatives from the five Nordic countries--Denmark, Finland, Iceland, Norway, Sweden--
without government participation. The objective of Nordel was to; (a) monitor the development of
power supply in the Nordic countries and (b) promote the best technical, economical, and
environmental development through discussions and recommendations. Nordel now operates in
conjunction with Nord Pool, the power market formed in 1993.15
Southern African Power Pool (SAPP). SAPP was established in 1995 after five years of
preparation. Trade in the pool is beginning to build and should accelerate with the completion of the
coordination centre for SAPP in 2001. SAPP continues to evolve from its bilateral trade origins to
include pool-brokered energy sales, as well as changes in membership rules, from vertically
integrated utilities to transmission-owning entities. Initial members were the utilities of Angola,
Botswana, DRC, Lesotho, Malawi, Mozambique, Namibia, Republic of South Africa, Swaziland,
Tanzania, Zambia, and Zimbabwe.
South Eastern Europe Regional Electricity Market. The formal organization and market are under
formation. In 1999, the ministers responsible for energy in six Balkan countries signed the
Declaration of Intent to Establish a Regional Electricity Market in southeastern Europe. The
declaration follows three years of study and preparation by the Balkan Interconnection Task Force.
The declaration named the power group task force as the first interim market management
committee. Due to the differences between the national systems, the regional market will develop in
a phased manner. Participants are the utilities and relevant government departments of Albania,
Bosnia and Herzegovina, Bulgaria, Greece, Romania, Russia, and the former Yugoslav Republic of
Macedonia.

15 Information on Nordel and Nord Pool was provided by NVE.
NILE-SEC

---

42 Nile Basin Regional Power Trade Annex D
Table D2. International Experience of Regional Power Forum:
Comparison of "Market Maker" Model
ORGANIZATION
BALTREL
GREATER
MAPP
NORDEL
SAPP
SOUTH-EAST
MEKONG
EUROPE
SUB-
REGIONAL
REGION
ELECTRICITY
MARKET (REM)
AUSPICES
Stand alone
Stand alone
Stand alone
Stand alone
Stand alone
Part of Black Sea
within Baltic
within GMS
within SADC
Regional Energy
and Nordic
regional
regional
Center (BSREC)
States regional
framework
framework
framework
SCOPE
Electricity
Electricity
Electricity
Electricity
Electricity
Electricity Trade
Trade, now
Trade
Trade
Trade
Trade
includes gas
STUDY
Yes.
Yes.
Yes.
No
Yes.
Yes.
ORGANIZATION
Baltic
GMS Power
Policy (Utility
Policy
Balkan
PRIOR TO
Interconnection
Policy
CEOs) and
Committee
Interconnection
FORMING
Task Force
Forum and
Engineering
and
Task Force
IMPLEMENTATION
Experts
Committee
Technical
ORGANIZATION
Steering and
advisory
Working
Committee
committees
Group
under SADC
Electricity
Project
Sub-Comm.
management
team
Three working
groups
PRIMARY
Development of
Explore
Explore basis
No
Explore
Development of a
OBJECTIVE OF
a competitive
basis for
for power
basis for
competitive Balkan
STUDY
Baltic electricity
power
trade, identify
power trade
electricity market
ORGANIZATION
market, identify
trade,
obstacles,
Identify
Identify and
priority
identify
and
investments
prioritize
investments
obstacles,
recommend
investments
Social,
and
solutions
macroeconics,
recommend
and demand
solution
PRIMARY
Promote
Not
Develop a
Technical
Implementin
Clarify fundamental
OBJECTIVE OF
development of
applicable
detailed
and advisory
g body to
characteristics of
INITIAL
integrated gas
agreement
body to
realize
REM and
IMPLEMENTATION
and electricity
Appoint
promote
benefits from
determine first
ORGANIZATION
market
planning
optimal use
increased
steps to achieving
committee
of Nordic
levels of
and overseeing
trans. system
power trade
design of REM
TASKS/ACTIVITIES
Discussion of
Not
See above
Monitoring
Make trade
Identify obstacles
INITIAL
pre-conditions
applicable
and
under the
to market
IMPLEMENTATION
for trade
promoting
pool
Address and
ORGANIZATION
Study and
best
operational
identify short, med.,
elaboration of
technical and
and long-term
common rules
economic
objectives to
development
achieve REM
INTERNAL
BALTREL
Mekong
Temporary
Advisory
Exec.
Ministers named
ORGANIZATION,
committee with
energy
management
body, reps
management
Task Force as
INITIAL
working groups
ministers
committee
from five
committees,
interim REM
IMPLEMENTATION
and sub-groups
endorsed
and planning
Nordic
3 sub-
management
(see Annex A
policy
committee
countries
committees,
committee
for diagram)
statement
and sub-
and technical
Technical working
on power
committees
working
groups
trade where
Rotating
groups
EPF and
chair,
EWG will
responsible
become
for
part of the
secretariat
governance
structure of
the market
NILE-SEC

---

Nile Basin Regional Power Trade Annex D
43
Table D2. International Experience of Regional Power Forum:
Comparison of "Market Maker" Model (cont'd.)
ORGANIZATION
BALTREL
GREATER
MAPP
NORDEL
SAPP
SOUTH-EAST
MEKONG
EUROPE
SUB-REGION
REGIONAL
ELECTRICITY
MARKET (REM)
EXTERNAL
Council of
GMS ministers
Complies
None
SADC energy
Balkan ministers of
REPORTING,
Baltic States
with Nat'l
ministers
energy and BSREC
INITIAL
Nordic
and state
IMPLEMENTATION
Council of
regulations
Ministers
FINANCING,
Donors and
Donors,
Members
Members
Donors
Donors
INITIAL
members
government
IMPLEMENTATION
departments,
and/or utilities
NILE-SEC

---

44 Nile Basin Regional Power Trade Annex D
NILE-SEC

---