Project assistance completion report : micro/mini hydroelectric project

The project fell behind schedule during its first 2 years due to the following: a flawed model for site selection; delays in negotiating TA contracts and documents for tendering electro-mechanical (E-M) equipment; E-M bid cancellations; and NEA administrative problems. With a 2-year extension, however, the project managed to construct 8 mini-hydro facilities (4 funded by A.I.D. and 4 by the Royal Thai Government). These units have directly benefited several thousand families, especially those in newly developed rural areas. Indirect benefits will be in the form of employment generation, reduction of migration rates, and improved security in the project areas. The NEA received on-the-job training in engineering, contracting, and environmental and socioeconomic impact analysis. The agency now has the analytical capacity and methodology to select sites and supervise construction of micro/mini hydroelectric generating systems. The environmental impact of the project was minimal. All of the sites are located in remote areas having little direct environmental impact on villagers and wildlife in the immediate vicinity. Seven of the units utilize the run-of-the-river method whereby no dam or river impoundment occurs to create a reservoir. The eighth unit utilizes the power of an older existing dam. The most significant environmental impact occurred during the construction phase when wide swaths of land were cleared to build the weirs, headrace, penstock, powerhouse, and access roads. However, soil erosion was later controlled through improved construction techniques. A.I.D./W insisted that the project use the fixed amount reimbursement (FAR) procedure even though FAR is totally inappropriate for a complex hydroelectricity project with diverse subprojects. While intended to limit the administrative burden, the FAR approach also limited the Mission's ability to monitor NEA actions and processes. Several lessons were learned. (1) Project design must take into account existing government regulations and procedures. (2) TA should complement existing institutional capabilities and be coordinated with other donor activities. (3) As economic, financial, and natural resource constraints change, energy project implementors should have some flexibility to change project goals. (4) The basic economics of and evaluation methods for micro- and mini-hydro as applied to rural electrification should be established. (5) Evaluations of energy projects should more closely examine the viability as a function of changes in energy costs, capital costs, and discount rates. (6) A more effective approach needs to be developed for TA contracting and monitoring.