CEO Endorsement Template for African Rift Geothermal Development Project

CEO Endorsement Template-December-08.doc 05/29/2012
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Submission Date: 05/22/2012
PART I: PROJECT INFORMATION
GEFSEC PROJECT ID: 2119
GEF AGENCY PROJECT ID: 00233
COUNTRY (IES): Eritrea, Ethiopia, Kenya, Rwanda, Tanzania
and Uganda
PROJECT TITLE: African Rift Geothermal Development Facility
GEF AGENCY (IES):UNEP,(select), (select)
OTHER EXECUTING PARTNER(S): UNEP/ROA, AUC-KfW,
Eritrea Ministry of Mines and Energy, Ethiopia Ministry of Mines,
Kenya Ministry of Energy, Rwanda Ministry of Infrastructure,
Tanzania Ministry of Energy and Minerals; Uganda Ministry of Energy and Mineral Development
GEF FOCAL AREA(s): Climate Change
GEF-4 STRATEGIC PROGRAM(s): CC-SP3-RE (see preparation guidelines section on exactly what to write)
NAME OF PARENT PROGRAM/UMBRELLA PROJECT:
A. PROJECT FRAMEWORK (Expand table as necessary)
Project Objective: The Project’s development objective is to accelerate the development and utilization of geothermal
resources in the Rift Valley as a pathway to low carbon development in the region. The Project’s global objective is to
facilitate reduction of the growth rate of GHG emissions in the region through geothermal energy development to produce
electricity.
Project
Components
Indicate
whether
Investme
nt, TA,
or STA2
Expected
Outcomes
Expected
Outputs
GEF Financing1
Co-Financing1
Total ($)
c=a+ b($) a % ($) b %
1. Regional
Networking,
information
systems and
capacity
building
TA Strengthened
technical and
institutional
capacity and
information
base
through a
regional
network that
will
support and
coordinate the
implementatio
n of
the activities
Increase the
information
base and
technical
capacity in the
region, raise
awareness
about
appropriate
policies and
regulatory and
legal
frameworks for
geothermal
development
Establishment
of the East
African
Geothermal
Association and
national
information
network hubs
1,000,000 21 3,304,660 4 4,304,660
REQUEST FOR CEO ENDORSEMENT/APPROVAL
PROJECT TYPE: Full-sized Project
THE GEF TRUST FUND
Expected Calendar (mm/dd/yy)
Milestones Dates
Work Program (for FSPs only) 24/09/2009
Agency Approval date 10/30/2009
Implementation Start 06/01/2010
Mid-term Evaluation (if planned) 12/01/2014
Project Closing Date 06/01/2016

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2. Technical
Assistance
TA Support to
surface
exploration to
priority
geothermal
prospects (at
least four
priority
geothermal
prospect areas)
Adjustment to
a
favorable
direction to
geothermal
energy
development
of the
mining
legislations
of the different
States
Economically
viable and
scientifically
sound
proposals for
submission to
GRMF with
minimized
drilling risks
Confirmation
of priority
prospects,
prefeasibility
studies and
bankable
feasibility
studies
3,372,334 71 5,726,992 8 9,099,326
3. AUC-
KfW
Geothermal
Risk
Mitigation
Facility
Grant Mitigate the
geological risk
element in
exploration
and
drilling
activities
so that
geothermal
energy
technologies
become
financially
attractive in
the East
African Rift
System
At least Four
geothermal
fields with
confirmed
energy resource
proven
0 0 63,000,000 85 63,000,000

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4. TAF
(Feasibility
Study)
TA Mitigate the
capacity of
ARGeo
member
countries as
well as project
developers to
proceed to
Geothermal
Power
development
during post
drilling stage
Facilitate
financial close
of exploration
drilling
operations by
providing
postdrilling
TA
On the job
training
program for
regional GtE
staff to use
regional
expertise in the
execution of
exploration and
drilling
programmes
0 0 2,000,000* 3 2,000,000
5. Project management 377,666 8 230,000 0,3 607,666
Total Project Costs 4,750,000 100 74,261,652 100 79,011,652
1
List the $ by project components. The percentage is the share of GEF and Co-financing respectively of the total amount for the component.
2
TA = Technical Assistance; STA = Scientific & Technical Analysis.
*:This is an estimated amount for the AUC-KfW TAF (Feasibility study Component). The final financial distribution across the AUC/KfW components
will be agreed in the 3rd
quarter of 2012.
B. SOURCES OF CONFIRMED CO-FINANCING FOR THE PROJECT (expand the table line items as necessary)
Name of Co-financier
(source)
Classification Type Project %*
Participating countries Bilat. Agency In-kind 6,850,000* 9.2
ICEIDA Bilat. Agency In Cash 249,052 0.3
BGR Bilat. Agency In Kind 1,600,000 2.1
AUC-KfW GRMF Multilat. Agency In Cash 65,000,000 87.5
IAEA Multilat. Agency In Kind 312,600 0,4
UNEP Impl. Agency In Kind 250,000 0,3
(select) (select)
(select) (select)
(select) (select)
Total Co-financing 74,261,652 100%
* Percentage of each co-financier’s contribution at CEO endorsement to total co-financing.
C. FINANCING PLAN SUMMARY FOR THE PROJECT ($)
Project
Preparation
a
Project
b
Total
c = a + b
Agency Fee
For comparison:
GEF and Co-
financing at PIF
GEF financing 880,000 4,750,000 5,630,000 506,700
Co-financing 399,052 74,261,652 74,660,704
Total 1,279,052 79,011,652 80,290,704 506,700
* THIS AMOUNT REFLECTS CO-FINANCING FROM ARGEO MEMBER COUNTRIES INCLUDING ERITREA-USD 250,000; ETHIOPIA-USD
1,650,000; KENYA-2,500,000; TANZANIA-USD 12,000; UGANDA-1,000,000 AND FOR RWANDA THE INITIAL ESTIMATE IS USD 1,440,000.

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D. GEF RESOURCES REQUESTED BY AGENCY(IES), FOCAL AREA(S) AND COUNTRY(IES)1
GEF Agency Focal Area
Country Name/
Global
(in $)
Project (a) Agency Fee (
b)2
Total c=a+b
UNEP Climate Change Regional 4,750,000 506,700 5,256,700
(select) (select)
(select) (select)
(select) (select)
(select) (select)
(select) (select)
(select) (select)
(select) (select)
Total GEF Resources
1
No need to provide information for this table if it is a single focal area, single country and single GEF Agency project.
2
Relates to the project and any previous project preparation funding that have been provided and for which no Agency fee has been requested from Trustee.
E. CONSULTANTS WORKING FOR TECHNICAL ASSISTANCE COMPONENTS:
Component
Estimated
person
weeks
GEF
amount($)
Co-
financing
($)
Project total
($)
Local consultants* 258 322,500 237,500 560,000
International consultants* 347 1,038,920 237,500 1,276,420
Total 605 1,361,420 475,000 1,836,420
* Details to be provided in Annex C.
F. PROJECT MANAGEMENT BUDGET/COST
Cost Items
Total
Estimated
person
weeks/months
GEF
amount
($)
Co-financing
($)
Project total
($)
Local consultants* 103 77,500 200,000 398,480
International consultants* 66 198,480 - 77,500
Office facilities, equipment,
vehicles and
communications*
40,140 30,000 70,140
Travel* 61,546 - 61,546
Others** - - -
Total 377,666 230,000 607,666
* Details to be provided in Annex C. ** For others, it has to clearly specify what type of expenses here in a footnote.
G. DOES THE PROJECT INCLUDE A “NON-GRANT” INSTRUMENT? yes no
(If non-grant instruments are used, provide in Annex E an indicative calendar of expected
reflows to your agency and to the GEF Trust Fund).
H. DESCRIBE THE BUDGETED M &E PLAN:
UNEP will follow the organization's standard monitoring, reporting and evaluation processes and procedures.
Substantive and financial project reporting requirements are summarized in Appendix 8 of the project document.
Reporting requirements and templates are an integral part of the UNEP legal instrument signed by the executing

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agency and UNEP. The project M&E plan is consistent with the GEF Monitoring and Evaluation policy. The Project
Results Framework presented in Appendix 4 of the project document includes expected outcome as well as mid-term
and end-of-project targets. These indicators along with the key deliverables and benchmarks included in Appendix 6
will be the main tools for assessing project implementation progress and whether project results are being achieved. The
means of verification and the costs associated with obtaining the information to track the indicators are summarized in
Appendix 7 of the project document. Other M&E related costs are also presented in the Costed M&E Plan and are fully
integrated in the overall project budget.
The M&E plan will be reviewed and revised as necessary during ARGeo Steering Committee Meetings to ensure
project stakeholders understand their roles and responsibilities vis-à-vis project monitoring and evaluation. Indicators
and their means of verification may also be fine-tuned at steering committee meetings. Day-to-day project monitoring is
the responsibility of the Project Manager inside the Project Management Unit but other project partners will have
responsibilities to collect specific information to track the indicators. It is the responsibility of the Project Manager to
inform UNEP of any delays or difficulties faced during implementation so that the appropriate support or corrective
measures can be adopted in a timely fashion.
The Project Manager (PM) in the Project management Unit (PMU) is responsible for ensuring that the project meets
UNEP and GEF policies and procedures. The ARGeo Project will also be monitored and evaluated by the ARGeo
Steering Committee (ASC). This Committee is composed of representatives from participating ARGeo countries,
implementing and executing agents, partners and cofinanciers. The ASC defines the purpose of the project, its strategic
intent, objectives, and its values. ASC ensures that procedures and practices in place protect the Project’s assets and
reputation. The role of the ASC is described in detail in section 4 of the project document.
The ASC will receive periodic reports from the PM on progress and will make recommendations to UNEP concerning
the need to revise any aspects of the Results Framework or the M&E plan. The Task Manager of the implementing
agent will also review the quality of draft project outputs, provide feedback to the project partners, and establish peer
review procedures to ensure adequate quality of scientific and technical outputs and publications. Project supervision
will take an adaptive management approach. The Task Manager will develop a project supervision plan at the inception
of the project. The emphasis of the Task Manager supervision will be on outcome monitoring but without neglecting
project financial management and implementation monitoring.
An ARGeo Technical Advisory Team (ATAT) will also be established to review and evaluate technical and scientific
content of proposals and results of surface exploration studies. The terms of reference for the ATAT is enclosed in
Appendix 9 of the project document.
Project risks and assumptions will be regularly monitored both by project partners and UNEP. Risk assessment and
rating is an integral part of the Project Implementation Review (PIR). The quality of project monitoring and evaluation
will also be reviewed and rated as part of the PIR. Key financial parameters will be monitored quarterly to ensure cost
effective use of financial resources.
An annual management review or evaluation will take place before December 31 as indicated in the project milestones.
The review will include all parameters recommended by the GEF Evaluation Office for terminal evaluations and will
verify information gathered through the GEF tracking tools, as relevant. The review will be carried out using a
participatory approach whereby parties that may benefit or be affected by the project will be consulted. Such parties
were identified during the stakeholder analysis. It is the responsibility of the UNEP Task Manager to monitor whether
the agreed recommendations are being implemented.
An independent terminal evaluation will take place at the end of project implementation. The Evaluation and Oversight
Unit (EOU) of UNEP will manage the terminal evaluation process. A review of the quality of the evaluation report will
be done by EOU and submitted along with the report to the GEF Evaluation Office not later than 6 months after the
completion of the evaluation.

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The GEF tracking tools are attached in Appendix 14 of the project document. These will be updated at mid-term and at
the end of the project and will be made available to the GEF Secretariat along with the project PIR report. As mentioned
above the mid-term and terminal evaluation will verify the information of the tracking tool.
For the detailed monitoring and evaluation plan see Appendix 7 of the UNEP project document.
PART II: PROJECT JUSTIFICATION: In addition to the following questions, please ensure that the project design
incorporates key GEF operational principles, including sustainability of global environmental benefits, institutional
continuity and replicability, keeping in mind that these principles will be monitored rigorously in the annual Project
Implementation Review and other Review stages.
A. STATE THE ISSUE, HOW THE PROJECT SEEKS TO ADDRESS IT, AND THE EXPECTED GLOBAL ENVIRONMENTAL
BENEFITS TO BE DELIVERED:
The proposed ARGeo Program will assist the countries in accelerating the pace of geothermal resource development in
the region. Geothermal energy is a key energy resource for East Africa. Scientific work conducted to date confirms that
the East African Rift System (EARS) has abundant geothermal resources suited to electricity development, as well as to
uses in the industry, agriculture, health, tourism and recreation sectors. The available information shows that the natural
conditions of the few developed geothermal fields in Kenya and Ethiopia are representative of the variety of most of the
resource prospect areas and the success achieved to date in geothermal exploration and development in these countries
is widely replicable in the region. High physical and chemical qualities of geothermal resources are expected to prevail
among the numerous known resource prospect areas, availing the opportunity for the utilization of proven technologies.
The estimated resource potential of 15,000 MW for electricity generation in EARS relates to the resources which are
found in shallow subsurface areas (about 3 km depth). Despite these abundant geothermal resources in the region, the
total installed capacity of geothermal energy in the East Africa Region to date is only about 220 MWe. Five geothermal
power plants are operating in the region with an availability of more than 90%: four in Kenya (Olkaria I-IV) and a pilot
plant in Ethiopia (Aluto- Langano). In addition, well head installation units in Kenya (Olkaria and Eburru) are
generating about 8 MWe.
Geothermal energy (GtE) clearly stands out as one of the most promising and sustainable alternatives for low cost
electricity production to complement hydropower and reduce growth of petroleum based thermal generation in the
region. However, countries in the region still face a number of barriers to the development and utilization of geothermal
resources. These barriers include:
(i) Incomplete and often inadequate geo-scientific information and analysis on most of the potential geothermal
sites identified by the countries,
(ii) Insufficient capabilities, in terms of human resources, institutional setups and technical infrastructure, to
carry out surveys for discovering and characterizing geothermal resources, as well as for installing, operating
and maintaining the geothermal resource development infrastructure and power plants.
(iii) Insufficient investment in geothermal energy development.
In response to these barriers, ARGeo will:
(i) Provide technical and financial support to enable Governments to take the lead in generating the scientific,
technical and economic information for selected priority geothermal energy prospect areas and develop
scientifically sound geothermal development project proposals.
(ii) Support regional networking and information sharing, and strengthen human, infrastructural and
institutional capacities for geothermal energy development.
(iii) Contribute to the development of the needed national policies and legislations as well as institutional and
regulatory frameworks to attract private developers and investors.
(iv) Promote financial instruments to reduce investment risks and facilitate public and private investments in
geothermal energy development (i.e. Geothermal Risk Mitigation Funds).

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ARGeo covers Eritrea, Ethiopia, Kenya, Rwanda, Tanzania, and Uganda. While there are many differences between
these countries, all of them have considerable potential for Geothermal energy development and need significant
additional power generation capacity in order to meet growing demand and expand access to electricity services.
In this project, UNEP will partner with the African Union Commission (AUC) - German Development Bank (KfW)
Geothermal Risk Mitigation Facility (GRMF) which will mitigate the investment risks associated with geothermal
exploration and drilling, paving the way for both private and public sector funded power plant developments.
Except for Kenya, targeted countries are at the very early stages of geothermal exploration. The technical support
provided by UNEP under ARGeo will permit countries to generate high quality information on the potential geothermal
reservoirs, which is critical for decision-making on whether exploration drilling would be warranted or not. UNEP’s
support will enable ARGeo countries to develop a pipeline of projects for submission to the AUC-KfW Geothermal
Risk Mitigation Facility (GRMF) with assurance that drilling risk is minimized.
The ARGeo project will accelerate the systematic development of geothermal energy in the region. ARGeo is designed
to increase geothermal energy investments from both public and private sectors. This will displace diesel-based
production, diversify energy resources and increase access to modern energy services. Its global objective is to facilitate
reduction of the growth rate of GHG emissions in the region through geothermal energy development to produce
electricity. Under the GEF alternative the project expects to realise 500MW of additional geoethermal energy resulting
in 46.2 MTCO2 over 20 years, or 2.3 MTCO2 per year in post project direct impacts.
B. DESCRIBE THE CONSISTENCY OF THE PROJECT WITH NATIONAL AND/OR REGIONAL PRIORITIES/PLANS:
Many countries in the region are suffering from power shortage due to a combination of volatile oil prices, effects of
periodic droughts linked to climate change on hydropower generation, and increasing energy demand linked to rapid
population increase and healthy economic growth rates. In this context, the governments of the ARGeo countries are
strongly committed to develop geothermal energy with a view to supplement and diversify their energy sources.
This geothermal energy based power generation is sought with the specific objectives of:
(i) Increasing the power generation mix, providing base load power to the national (and regional) power supply
systems (currently based mainly on hydropower generation), and mitigate the instability of power supply due
primarily to draughts or water use conflicts;
(ii) Contributing to low carbon development through greening the energy production and mitigating the
excessive use of traditional biomass and imported petroleum products (this will indirectly support the
preservation forests, agricultural land fertility, domestic health and generate foreign exchange savings); and
(iii) Increasing electricity generation from indigenous energy resources and therefore reduce dependence oil
based power generation.
This opportunity has been recognized by the countries in their individual energy policies and poverty reduction
strategies (for details refer to the project document). As a result, most of the ARGeo member countries are in the
process of incorporating geothermal energy in their National Power Development Master Plan. This is also reflected in
the Regional Power System Master Plan of the Eastern Africa Power Pool (EAPP) which envisages regional power
interconnections using various renewable energy resources including geothermal energy.
Since 2011, AUC in partnerhip with other geothermal partners (including UNEP) is supporting regional policy
development and harmonization with a view to establish harmonized national policies, legislations, regulations and
institutional frameworks for geothermal energy development in the region. This work will lead to the development of
regional geothermal energy policy guidelines. These guidelines will include guidance, lessons and best practices for the
creation of appropriate institutions to lead exploration and development of geothermal energy; for developing
concession agreements for geothermal exploration; and for establishing tax incentives, Feed in Tariffs, and Power
purchase agreements. By adopting and implementing these guidelines, countries will allow more rapid geothermal
resource development and utilization in the region and foster related public and private investments.
The situation in terms of geothermal development in the ARGeo member countries is as follows:

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(1) Kenya:
In 2011, Kenya has developed a draft for a new energy policy covering all forms of energy. This new policy aims to
attract increased investments for renewable energy development. The policy focusses on one. This draft policy is
currently under review by various stakeholders and partners.
Kenya’s Least Cost Power Development plan indicates a measurable shift from the reliance on hydropower resources to
the development of geothermal sites. The regulatory framework in Kenya is well developed and supports geothermal
development. A "Geothermal Act" was enacted in 1982 and concessions are available for exploration, drilling and
operation. The Ministry of Energy gives authority to explore for geothermal resources in the country.
A "Feed in Tariff" (FiT) policy was enacted in 2008 that provides support for geothermal power and there are a number
of Independent Power Producers (IPPs) in the Electricity market. This FiT policy is intended to apply for 20 years and
for geothermal plants upto 70 MWe with a rate of 0.85$US/KWh. This is expected to apply to the first 500 MWe of
geothermal power capacity developed in Kenya. In addition to the FiT, the Government of Kenya has established a
Green Energy Fund to encourage investments in renewable energy and manufacture of energy efficient equipments and
appliances. This Fund offers loans to projects at concessional rates which could finance a proportion of the risks
associated with geothermal exploration.
A number of IPPs are currently active in Kenya. Power Purchase Agreements (PPAs) are negotiated with the Kenyan
Power and Lighting Company (KPLC). To date, OrPower is the only IPP that supplies electricity to the grid from
geothermal energy. The country has relevant experience with IPPs which form a key part of the Kenyan energy policy.
In addition to the Kenyan Power Generating Company (KENGEN), the government established a new state owned
Geothermal Development Company (GDC) in 2008 to accelerate development of geothermal energy in the country. In
order to meet the anticipated growth in demand, the Kenya Government through the newly formed GDC has embarked
on an ambitious generation expansion plan aiming to install an additional 1000 MW electric power generation from
geothermal sources by the year 2018 and 4000 MW by 2030. The country is also considering interconnection schemes
with Ethiopia, Tanzania, Zambia and importing from Uganda.
In the framework of the Energy Sector Reform and Power Development Project, the World Bank (WB), the European
Investment Bank (EIB) and the German Development bank (KfW) co-financed the Olkaria II geothermal power plant,
which is operational since October 2003. A number of investment and development banks are actively engaged in
supporting geothermal development in Kenya. KenGen, WB, Japanese International Cooperation Agency (JICA), KfW,
EIB and French Development Agency (AfD) are funding the expansion of 280 MW of Olkaria I and Olkaria IV
(Domes) power station planned for 2013-2014; and since 2007, the Government of Kenya, China Exim Bank and KfW
are funding appraisal drillings. Exploratory drilling in Menengai is executed by GDC.
Kenya has submitted a request for support to UNEP for completing surface exploration studies on the Silai geothermal
prospect area (for details see Appendix 15C of the project document).
(2) Eritrea:
Eritrea's energy policy aims at:
(i) Promoting economically and environmentally sound energy sector development through appropriate energy
production technologies, energy conservation and usage optimisation, and introducing appropriate pricing
structures that avoid the use of subsidies;
(ii) Diversifying energy resources to reduce dependence on biomass and imported oil;
(iii) Promoting private participation in hydrocarbon exploration and development of renewable energy;
(iv) Modernising of existing infrastructure; and
(vi) Building capacity through training and establishing appropriate legal and institutional frameworks for the
energy sector.
The WB supported national power distribution and rural electrification programmes. Swedish bilateral aid from 1998-
2002 analysed wind and solar resources with 25 measurement stations throughout the country and also provided
technical training and assistance in the legal and regulatory framework for the energy sector. The Eritrean Renewable

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Energy Training Centre, part of the Department of Energy, has carried out several studies on renewable energy
applications, including solar and wind assessments, and conducted pilot activities to promote improved cooking stoves
and solar photovoltaic installations for water pumps and hospitals in decentralized villages.
The Department of Mines (DOM) of the Eritrean Ministry of Energy and Mines, submitted a request to UNEP for
completeing surface exploration studies in the Alid geothermal prospect area with a view to locate 30 MW of electric
power from the geothermal sites of Alid (for details see Appendix 15A of the project document).
(3) Ethiopia:
Institutionally, Ethiopia has moved from a vertically integrated electricity monopoly system towards an autonomous
entity that manages electricity transport and distribution and allows for private generation. In its Energy development
plan, the country seeks to diversify and increase production, and to promote the extension of the network and rural
electrification. While interconnection schemes with Djibouti are currently in place; interconnection schemes with Kenya
and Sudan are at the discussion stage.
The WB's Second Energy Project for Ethiopia supports institutional reforms for the national electricity utility EEPCo
and a number of rural electrification initiatives. The Ethiopian Electric Power Corporation (EEPCo) is mandated to
encourage private sector investments in the energy sector and related proclamations were enacted in 2005 and 2007.
Private sector power purchase agreements (PPAs) are negotiated with EEPCo. Independent Power Producers (IPPs) are
encouraged to enter the market through the Electricity Operations Regulations (49/1999), the letter of power sector
policy (2003) and the Investment proclamation (280/2004). The regulatory framework in Ethiopia provides a
reasonable level of support for geothermal power project developers who can buy geothermal exploration licenses and
concessions from the government.
The Ethiopian Energy Agency (EEA) has drafted a feed-in Tariff (FiT) proclamation for a variety of renewable energy
resources including geothermal. The FiT proclamation seeks to diversify the energy mix and encourage more medium
scale generation. Geothermal tariffs for "FIRM" energy generation range from 0.08-0.10 $US/KWh, up to a maximum
of 50 MWe capacity. Tariffs will be valid for up to 20 years.
Five geothermal exploration permits were recently sold to a Canadian Mining Company that continues to have interests
in Potash exploration in Northern Afar. These concessions are located in the Main Ethiopian Rift Valley namely:
Corbetti, Abaya and Tulu Moye - geothermal prospect areas which are considered to be easily utilizable geothermal
systems. At present, a number of private sector actors (e.g. Reykjavik Geothermal) are involved in geothermal
exploration and development in Ethiopia. WB and AfDB are currently supporting the expansion of the Aluto-Langano
geothermal field, and AfD is supporting development of the Tendaho geothermal field in Afar.
The government of Ethiopia has submitted a request for support to UNEP for completing surface exploration studies of
the Tendaho geothermal field (see Appendix 15B of the project document).
(4) Rwanda:
The regulatory framework in Rwanda is not well established for geothermal power production. Currently there is no
geothermal law or FIT for geothermal energy. Private sector participation is encouraged in the electricity market
although existing IPP’s are restricted to small emergency diesel generation. However the National Energy Policy
recognizes a weakness in the governance framework and states that a regulatory framework for energy efficiency,
renewable energy and an Electricity and Gas law will be established. GoR is developing a clear policy of giving out
concessions and establishing modalities of joint ventures (JV), sustainable utilization of geothermal resources and where
applicable the cost of steam supplied to an IPP by a public utility. The effort to develop geothermal resources is
supported by the policy. It is believed that geothermal energy can support economic activity in remote areas while
providing positive environmental and social impacts. The cost of the geothermal power in the Electricity Master Plan is
estimated to be less than 50 RwF/kwh (US cents 5-6/kwh).
The existing installed (generating) capacity of Rwanda is 85 MWe, with approximately 60% being provided from hydro
generation and about 40% from thermal. The rest is comprised of emergency diesel generation and micro schemes.
Approximately 40% of Rwanda’s electricity demand cannot be served at present and severe load shedding has been
required. Demand is anticipated to grow at around 10% per annum.

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National Energy Policy expects that in the future one of the largest inputs into the electricity grid will come from power
generated from methane gas extracted from the bottom of Lake Kivu at Kibuye. Geothermal is also highlighted in the
energy policy as one of the possible future sources of power. Private sector participation is welcomed at all levels of the
electricity supply industry including geothermal exploration. Energy projects are to be prioritised for support by
government and/or development partners according to current sector priorities. For electricity projects the priority list is
to be determined by the cost effectiveness of competing projects in facilitating increased access to electricity, reducing
the average cost of electricity supply and enhancing security of supply.
There is no legal and regulatory framework in place for geothermal energy production. National Energy Policy sets an
outline strategy for geothermal development going forward including further resource assessment and exploration. Draft
regulatory and legal documentation relating to the geothermal sector is anticipated to be developed shortly. A range of
investment incentives exist in Rwanda including flexible work permits, exemption from withholding taxes and taxes on
dividends, investment allowances, zero sales tax and zero import tax for plant and machinery. The Rwandan
Development Board provides information and assistance for investors.
The Rwanda Utility Regulatory Agency (RURA) is responsible for regulation of the energy market. It does this through
issuing of IPP and system operator licences along with setting energy tariffs to the end consumer. It is responsible for
ensuring fair competition for the protection of both consumers and operators and thus facilitates private sector
involvement in the Rwandan energy sector. There is no renewable energy tariff at present. However, the updated
National Energy Policy 2008-12 sets out a number of key issues to address. This includes policy to provide
economically justified FiTs (based on avoided costs of production to the utility) or other mechanisms to give incentives
and reduce risks for electricity production from renewable sources.
(5) Tanzania:
Tanzania aims to triple its electricity production over the next 20 years and rural electrification is high on the country's
development agenda for environmental and socio-economic reasons. The National Energy Policy of 2003 indicates that
government of Tanzania is aware that renewable energy resources so far have remained under utilized while electricity
needs to be made available for economic activities in rural areas, rural townships and commercial centres. Rural
electrification is therefore a case of long-term national interest and a pre-requisite for a balanced socio-economic growth
for all in Tanzania. Several parts of this policy refer to the development of renewable energy sources, including the
introduction of norms, best practices, environmental considerations in energy planning, increasing research, the
promotion of entrepreneurship, and increasing energy services in grid and non-grid areas. An important strategic
objective in the national policy is to reduce fossil fuel dependency through increased use of renewables and improving
energy efficiency.
Under the power sector-restructuring program, IPPs can generate power and sell to TANESCO. But to date, IPPs
operate in the electricity market, solely providing thermal generation. Renewable energy tariffs exist for small power
producers, but these are technology neutral. The regulatory framework in Tanzania is not focussed on supporting large
geothermal development. No geothermal law has been developed, but concessions can be negotiated under the mining
law.
The Swedish International Development Agency (SIDA) financed several geothermal reconnaissance and exploratory
initiatives in Tanzania, yielding a draft geothermal plan. A subsequent UNDP mission and further geothermal studies by
the Federal German Institute of Geosciences and Natural Resources (BGR) confirmed the potential for geothermal
production and suggested further studies.
In 2012, the Ministry of Energy and Mineral Development (MEMD) established a National Task force on geothermal
energy development. This Task force is expected to: (i) develop a clear and coherent regulatory and institutional
framework for geothermal exploration and development, (ii) advise the government on the related capacity building
needs, and (iii) develop a startegic geothermal development plan in line with National Power Development Master Plan.
The government of Tanzania is currently developing their request for completing surface exploration studies on the

11:21:13 AM
11
Mbeya geothermal prospect area under UNEP guidance. Once finalized, the proposal will be submitted to UNEP for
technical and financial assistance.
(6) Uganda:
Uganda's Energy Policy (2002) indicates that despite the endowment of renewable energy sources, “only a meagre
fraction of the country’s renewable energy potential being utilized, Uganda aims to develop the use of renewable energy
resources for both single and large scale applications". This policy confirms the Government’s commitment to the
development and utilisation of renewable energy resources and technologies. And therefore, the Government has spelled
out a number of strategies ranging from dissemination of renewable energy technologies and introducing renewable
energies in the school curricula to setting renewable energy standards and facilitating renewable energy financing
schemes.
In 2007, Uganda developed a “Renewable Energy Policy”. This policy established standard PPAs and FiTs, and set a
target of developing 25 MWe of geothermal by 2012. However FiTs are currently only available for hydro and biomass
projects. No IPPs do currently operate on the market, but private sector participation is enclouraged. The
implementation of the Renewable Energy Policy objectives will positively respond to the various policy instruments and
programmes, which address poverty, catalyze industrialization and protect the environment. These include: the Uganda
Constitution 1995, the Poverty Eradication and Action Plan (PEAP), the Millennium Development Goals (MDGs), the
Electricity Act 1999, the National Environment Act 1995, the Programme for the Modernisation of Agriculture and the
Kyoto Protocol. The overall objective of the Renewable Energy Policy is to diversify the energy supply sources and
technologies in the country. In particular, the policy goal is to increase the use of modern renewable energy from the
current 4% to 61% of the total energy consumption by the year 2017.
The country is in the process of establishing the available potential and demand of various energy resources with the
view to allow increased access to affordable energy services for poverty eradication. An important focus is on
improving energy governance and administration in order to stimulate economic growth. The Electricity Act 1999 has
been passed for the sector to perform without subsidies, improve efficiency, satisfy electricity demand and increase
coverage, improve reliability and quality, attract private capital, and take advantage of export opportunities.
The World Bank is financing a 10 year rural electrification programme in Uganda to increase access to clean and
affordable energy through a mix of renewable and traditional fuels. The International Finance Corporation (IFC) is
providing financing for mini-hydro schemes in Bushenyi and Mbarara. With regards to geothermal production, the
Government with support from the UNDP, the OPEC fund, the government of Iceland, and BGR identified potential
geothermal prospects in the country along the western branch of the Eastern Africa Rift. A number of local and
international private developers are interested to invest in development of geothermal for power generation in the
country. The country aims to develop geothermal energy to complement hydro and other sources of power to meet the
rising energy demand.
The government of Uganda submitted a request for support to UNEP for completing surface exploration studies on the
Kibiro Geothermal prospect area (for details see Appendix 15D of the project document).
C. DESCRIBE THE CONSISTENCY OF THE PROJECT WITH GEF STRATEGIES AND STRATEGIC PROGRAMS:
ARGeo was developed under GEF-3 set of priorities and OPs 6. Although this was the starting point, the project is in
line with the GEF-4 overarching goal to reduce GHG emissions through transforming markets. It is aligned with the
GEF-4 Strategic Objectives in the Climate Change Focal Area. In particular, it addresses strategic objective 4 (To
promote market approaches for renewable energy). Consistency with the strategic priorities is broadly categorized as
follows: (a) promotion of renewable energy-based on on-grid electricity supplies (b) technical assistance and capacity
building in the Governments, utilities, and private sector for promotion of renewable (geothermal) energy utilization
with on-grid renewable policies. The ARGeo Program will promote market approaches for the supply of and demand
for geothermal electricity. The expected outcome will be the growth in the investment and market for geothermal power
in participating ARGeo countries.
The results of surface exploration studies will be used by countries (with UNEP's support) to develop scientifically
sound proposals for the AUC-KfW GRMF which will provide grants for exploration drilling and as a result facilitate
geothermal power production and electricity generation. All ARGeo countries have a significant geothermal energy
generation potential and made the development of a geothermal energy program a high priority. ARGeo will include a

11:21:13 AM
12
combination of (i) regional networking, capacity building and information systems; and (ii) technical assistance for
surface exploration studies with a view to minimize drilling risks and develop project pipelines for the AUC-KfW
GRMF. This would support the AUC-KfW GRMF to enhance the geothermal investment in the region with a view to
generate electricity from geothermal energy therefore reducing the use of fossil fuels for power generation (for
additional information see project document).
D. JUSTIFY THE TYPE OF FINANCING SUPPORT PROVIDED WITH THE GEF RESOURCES.
GEF funding will be used for providing technical and financial assistance to ARGeo member countries in order to
remove the barriers to geothermal energy development. This technical and financial assistance will : (i) strengthen
regional networking, infrastructural and institutional capacities and information base; and (ii) develop a pipeline of
priority geothermal projects for the AUC-KfW GRMF and geothermal investors through completing surface exploration
studies.
The main challenges for geothermal energy development in the region are:
(i) Inadequate policy and regulatory frameworks to attract private developers;
(ii) Important upfront costs of Geothermal Resource Exploration and Development;
(iii) Lack of appropriate institutional frameworks to carry out a continous and integrated exploration and
development of geothermal resources in the region;
(iv) Lack regional coordination/collaboration/networking and uncoordinated technical assistance;
(v) Risks associated with resource exploration and power development; and
(vi) Lack of adequate investments in power development projects.
The GEF resources allocated to the ARGeo project will help to address these barriers and enhance investments through:
(i) The establishment of a regional network to substantially improve coordination and collaboration; increase
the information base; strengthen technical capacities in the region and maximize the use of regional expertise;
and increase the awareness of policy makers and promote appropriate institutional, regulatory and legal
frameworks for geothermal energy development in the participating countries.
(ii) The provision of technical assistance activities with a view to confirm national priority prospects through
surface exploration studies as well as the preparation of pre-feasibilty studies and bankable feasibility studies.
Results of these studies will be used by member countries to develop (with UNEP's support) proposals
responding to the requirements and criteria for accession to the AUC-KfW GRMF. This will enhance and
thereby increase investment in geothermal energy development in the region.
E. OUTLINE THE COORDINATION WITH OTHER RELATED INITIATIVES:
Since the idea of a regional geothermal facility was first discussed at the 2003 Nairobi conference, there has been
renewed interest from the part of the countries and potential geothermal investors in East Africa. This interest is
evidenced by a number of new initiatives such as AUC's Regional Geothermal Programme and the AUC-KfW GRMF
with which UNEP established a direct partnership for the implementation of ARGeo; or the Scaling up Renewable
Energy Programme (SREP).
SREP seeks to scale up and diversify the renewable energy mix in beneficiary countries. Multi-lateral Agencies such as
AfDB, WB and donors from various countries finance the programme managed by WB's Climate Investment Finance.
SREP aims to promote both private and public interventions with high replication potential. In its pilot phase, SREP is
supporting geothermal energy development in Kenya and Ethiopia: SREP allocated about 50 M $USD for Kenya for the
Menengai Geothermal Exploration Drilling and prioritized and selected the following programmes for funding in
Ethiopia: (i) Clean Energy Capacity Building and investment Facility (about 4M $USD); (ii) Aluto-Langano geothermal
Field Development, and design of a long term Geothermal sector strategy that leverages private sector participation
(about 26M$USD), and (iii) Assela Wind farm project (10M$USD).
With the support from the ARGeo member countries, UNEP will synergize and collaborate with SREP's geothermal
activities in the region to take the advantage of complementarities for supporting the development of geothermal energy
and related investments. ARGeo will seek to support countries in the development of a pipeline of projects for SREP.

11:21:13 AM
13
Through ARGeo, UNEP has already established links and coordination with all main geothermal actors in the region,
including a number of private developers that seek to invest in the development of geothermal energy in the East Africa
Region.
Finally it should be noted that ARGeo established tight cooperation with the UNEP implemented "Yemen Geothermal
Development Project", financed by the GEF Trust Fund up to 47%, whose main objective is to accelerate the
exploration and the development of geothermal power use in Yemen. The above coordination and partnership is
implemented through the ARGeo PMU set up in Nairobi.
F. DISCUSS THE VALUE-ADDED OF GEF INVOLVEMENT IN THE PROJECT DEMONSTRATED THROUGH
INCREMENTAL REASONING :
To date, energy production and consumption in the ARGeo member countries are low and structurally the least
developed in respect of both the energy forms consumed, where traditional biomass use dominates, and the low share of
energy use in economic production. More than 90% of electricity supply is based on fossil fuels in the East African
Region. Imported petroleum use dominates for emergency electricty production management in many ARGeo member
countries. Because national economies in the region are small, the required periodic additions to power generating
capacity are also small and entail high unit capacity costs. Therefore, the price of electricity is generally too high to be
affordable to most of the region’s population. Electricity supply is thus limited to the few large urban centers, which
nevertheless experience frequent load shading entailing appreciable losses to the GDPs. Rural populations rely on
traditional biomass fuel use with the attendant deterioration of the natural and social environment: deforestation, decline
of agricultural soil fertility, prevalence of poor domestic health arising from particulate pollutants from biomass
burning. This is leading to serious environmental degradation and deforestation.
The East African Power Pool (EAPP) seeks to interconnect the national electric power supply systems of the countries
in Eastern and Northeastern Africa with a view to create a unified power supply system. This is intended to increase
access to electricity by the population of the region and to promote its increased use in economic production. By the
early 2020s, the EAPP plan envisages the powering of the regional interconnections by the use of renewable energy
resources, incuding geothermal energy based generation (with a potential of >15 GW), in the process of displacing
petroleum use in power generation.
This is the energy resource development and utilization context in which the ARGeo project intends to support the
development of the large geothermal energy potential of the EARS region for improving the energy mix and for
providing base load power. The ARGeo project in coordination with AUC-KfW GRMF and other regional geothermal
initiatives will assist the region in overcoming the barriers and enhance development of the resource through active
participation of private investors. GEF’s role is crucial in spear-heading the activities that will help facilitate and
accelerate geothermal development in the ARGeo region. A detailed incremental analysis is provided in section 3.7. and
Appendix 3 of the project document.

CEOEndorsementTemplate-December-08.doc05/29/201211:21:13AM
14
G.INDICATERISKS,INCLUDINGCLIMATECHANGERISKS,THATMIGHTPREVENTTHEPROJECTOBJECTIVE(S)FROMBEINGACHIEVEDANDOUTLINE
RISKMANAGEMENTMEASURES:
RiskfactorsDescriptionofriskRatinga
ofriskMitigationmeasuresRatinga
of
residualrisk
SectorSpecific
Risks(Renewable
energy)
Slowerthanexpectedprojectportfolio
build-upofprojectcandidatesfor
Explorationdrilling.Therearealargenumberof
potentialsitesintheriftvalleyregion.Lackof
financingandin-countrycapacityandexperience
hasslowedthegeothermalassessmentofthese
sitesnecessarytomobilizefundingandmoveto
theexplorationdrillingphase.
SubstantialAthoroughindependentexpertreviewoftheexisting
projectpipelineconfirmsthereadinessofseveral
projectsalreadyatappraisalstage.TheUNEPTA
componentandco-financingfrombilateraldonors
andtheAUC-KfWinvestmentprogramswillassist
inthepreparationofacontinuousstreamofhigh
qualitydrillingproposals.
Moderate
TechnicalCapacityGeothermalenergyisamaturetechnologythathas
beenusedthroughouttheworld,andintheregion.
Technologicalriskcanbeattributedtotwophases
intheresourcedevelopment,thedrillingof
geothermalwellsandthedesignandoperationof
thegeothermalpowerplant.Akeyfocusofthe
proposedprogramisgeothermalexplorationand
drilling.Theseactivitiesrequirehighlyspecialized
expertisetoensureoptimaldesignofthedrilling
planandproperexecutionbyateamof
experienceddrillingexperts.Atechnicalfailure
(duetonon-geologicalreasons)duringthedrilling
processmayprohibitanextractionoffullpotential
ofthegeothermalenergyofthedrilledwelland
canpossiblyleadtoprojectabandonment.
ModerateEachprojectwillbeassessedbyateamof
internationallyrecognizedgeothermalexperts
(ATAT)toascertainitstechnicalsoundness,thefit
withinthenationalandregionalgeneration
expansionplan,thelocationofeachexplorationwell
inrelationtotheexpectedresource.
Low
PeaceandorderriskSometerritorialstrifeexistsbetweensomeofthe
participatingcountries.
ModeratePlanningofeventsandactivitiesshouldbeexecuted
withpropercares.Allprecautionswillbetakenso
thatnoone,implicatedintheProject,could
interveneinzonespotentiallyrisky.
Moderate
Lackofprivate
sectorinterest
GeothermalinvestmentwillbeslowsubstantialThisriskismitigatedthroughthecombined
interventionsinthetwoprojectcomponents,andin
coordinationwithAUC-KfWgeothermalprogram.
Continuousmonitoringandfeedbackfromthe
independentevaluations.
Moderate
TechnologyInadequatedrillingrigsintheregionprevent
furtherexploration.
SubstantialGovernmentsanddevelopersseekalternativeroutes
tomakedrillingrigavailablee.g.adrilling
consortium
Moderate
SocialImpactsonlocallandownersunabletobe
resolved.Projectsdonotobtainbuyinoflocal
community
ModerateResourceownershipshouldbedefinedin
Geothermallegislation.Ensuredevelopersidentify
andaddresssocialaspects.
Moderate

11:21:13 AM
15
H. EXPLAIN HOW COST-EFFECTIVENESS IS REFLECTED IN THE PROJECT DESIGN:
The project is designed to encourage private and public investors to accelerate the geothermal resource development for
power generation. This is mainly done by mitigating the risks associated with resource exploration activities. The
ARGeo project implemented in partnership with the AUC-KfW GRMF benefits from better co-ordination and a range
of shared resources for implementing project activities. UNEP and AUC will avoid the duplication of efforts, take
advantage of complementarities and exploit synergies by optimizing skills, expertise and resources notably for capacity
building, regional networking and geothermal surface exploration studies and subsequent preparatory work to ensure
country readiness for submission of proposals for AUC-KfW GRMF. This will reduce the costs and improve efficiency
and quality of the work that both organizations are doing to accelerate geothermal energy development in the region.
The ARGeo project will generate and facilitate access to critical information for private and public geothermal
developers, strengthen national institutional capacities and minimize driling risks to support commercial development
of geothermal resources on a regional scale. Given not only the potential snow-ball effect that will lead to other projects
being developed in the region, the direct post-project benefits include the development of cost competitive and
renewable energy resources, and the increased access to energy services in a underserved region.
PART III: INSTITUTIONAL COORDINATION AND SUPPORT
A. INSTITUTIONAL ARRANGEMENT:
UNEP will be the GEF Implementing Agency for this project. The Division of Technology Industry and Economics
(DTIE) will act as the implementing agent. The UNEP Regional Office for Africa (ROA) based in Nairobi, Kenya, will
host the PMU and execute the project. The AUC hosts and executes the AUC-KfW GRMF based in Addis Ababa,
Ethiopia through their own sources of cofinancing. UNEP will create a regional network promoting geothermal energy
development and develop a comprehensive technical assistance programme to help ARGeo member countries and other
project stakeholders. These Regional Network and Technical Assistance activities aim at establishing a long-term and
sustainable basis of expertise and local competencies in the region, including by making available the necessary
technical means for all the ARGeo countries. This will ensure that geothermal investigations, surface explorations,
exploratory drillings and related investments continue after completion of the project. The Regional Network is
expected to continue activities beyond the project with the establishment of the East Africa Regional Geothermal
Association.
B. PROJECT IMPLEMENTATION ARRANGEMENT:
UNEP will be the GEF Implementing Agency for the project and will have overall, but independent responsibility for
the project implementation. The UNEP tasks consist of two, inter related components:
(i) A regional network to support the development of a regional geothermal energy information database and
capacity building activities through training and exchanges of technical information and equipment pooling;
(ii) A comprehensive Technical Assistance programme focussing on the realisation scientific and technical
investigations in the ARGeo countries to confirm the presence of utilizable geothermal resources with a view to
minimize the drilling risk for potential investors and the Geothermal Risk Mitigation Facility.
The TA programme includes support for the feasibility studies needed to present bankable proposals and access local
and international sources of financing; and for the establishment of the enabling conditions addressing the barriers to
geothermal energy development in the ARGeo countries (through policy advice, promotion of dedicated institutional
structures, development of adequate legal and regulatory frameworks and transaction advice). This will be coordinated
with the AUC Regional Geothermal Programme which has a strong focus on encouraging the involvement of private
sector developers and envisages hiring transaction advisors for the local governments, in order to help them during the
negotiation processes of the establishments of PPPs and IPPs.

11:21:13 AM
16
An ARGeo Steering Committee (ASC) will be maintained at the international level as a forum for project direction,
coordination and information exchange on project progress and performance. The ASC will meet once a year and will
include nominated representatives of the six ARGeo countries, UNEP, AUC, KfW, and other ARGeo donors and
partners. It will be chaired on a rotational basis by the designated representative of one of the member countries.
Following GEF endorsement of the project in 2009, the ARGeo Project management unit (PMU) was established in
UNEP's Regional Office for Africa in Nairobi. The PMU is operational and is responsible for overall management and
administration of ARGeo activities implemented by UNEP, and to coordinate with the different stakeholders
(beneficiary countries, technical partners and donors).
An ARGeo Technical Advisory Team (ATAT) will be established to provide neutral expertise, guide and review
surface assessments and pre-feasibility studies.
UNEP and AUC agreed to work in direct partnership linking ARGeo and AUC-KfW GRMF to accelerate the
development of geothermal energy and related investments in the East African Rift System. In July 2011, UNEP and
AUC-KfW identified the following areas of collaboration:
(1) Regional Networking, Information Systems and Awareness Creation through developing the Eastern Africa
Geothermal Database; joint outreach and communication material and the organization of regional geothermal
forums;
(2) Policy Development and harmonization; and Capacity Building (institution and infrastructure); and
(3) Technical Assistance: UNEP Technical Assistance component does the “up-stream” surface geo-scientific
investigation work aiming to target the best sites for drilling and to minimize “drilling failure risk” and
therefore support the development of a pipeline of projects for submission to AUC-KfW GRMF.
Furthermore, UNEP and GRMF will coordinate their surface exploration work, by sharing requests for surface
exploration and make every effort to coordinate on this matter so as to optimize surface exploration to maximize the
number of proposals promoted for investment. It was proposed that UNEP and AUC-KfW GRMF shall develop a joint
Technical Advisory Team to review geothermal proposals and surface exploration studies for quality feasibility and
selection. Both organizations agreed to share the costs of retaining the services of this high level group, and both parties
will participate in the deliberations of this high level group. AUC-KfW in its GRMF programme incorporates a
feasibility study (TAF) that combines exploration drilling results reservoir engineering together with market, regulatory
and technical considerations with the aim of securing finance for the next stage of resource development.
UNEP will implement ARGeo in coordination and with the support of the Governments of Eritrea, Ethiopia, Kenya,
Rwanda, Tanzania and Uganda by establishing National Project Management Unit in each ARGeo member country.
This requires close coordination with the Department of Mines in the Ministry of Energy of Eritrea, the Geological
Survey of Ethiopia, the Ministry of Mines and the Ministry of Energy and Water of Ethiopia, the Ministry of Energy
and KenGen/GDC in Kenya, the Ministry of Infrastructure, Energy, Water and Sanitation Authority of Rwanda, the
Ministry of Energy and Mineral Development of the Department of Geological Survey and Mines of Uganda, and the
Ministry of Energy and Minerals in Tanzania. These agencies will participate in the ARGeo Project and coordinate with
relevant national government agencies, institutes, universities, as well as national power utilities.
The ARGeo project also draws upon the geothermal experience and knowledge in Kenya (KENGEN/GDC) in terms of
sharing their best practices, experience and knowledge with other ARGeo member countries. Close collaboration is also
established with KENGEN/GDC/UNU-GTP for capacity building including for their short training course on
geothermal surface exploration studies in Kenya. UNEP in partnership with Iceland/KenGen/GDC is also involved in
the development of a regional geothermal training center in Kenya. UNEP also partners with BGR's and ICEIDA's
geothermal technical assistance programmes in East Africa. The above coordination and partnerships are implemented
through the ARGeo PMU based in Nairobi.
PART IV: EXPLAIN THE ALIGNMENT OF PROJECT DESIGN WITH THE ORIGINAL PIF:

11:21:13 AM
17
The project design has a different design from the project design approved at work program entry in 2003. Overall the
project’s immediate objective “to facilitate investments in geothermal power production by addressing the existing
barriers (knowledge and information, technical, institutional, financial) to the increased use of geothermal energy in the
ARGeo countries and reduce implementation costs” has refined to : "accelerate the development and utilization of
geothermal resources in the Rift Valley as a pathway to low carbon development in the region". In the short term, the
project’s aim is to catalyze private sector and public investments in selected geothermal sites in the six ARGeo
countries. In the long-term, the aim is to create an enabling environment for geothermal investments by establishing
geothermal energy as a strategic option in the national power expansion plans of the region and thus facilitate the
systematic utilization of geothermal energy throughout the East Africa Rift region for grid connection and rural
electrification. This objective still remains the same with this project design.
Following the official GEF endorsement on September 24th 2009 and assuming the World Bank would submit the
project to its Board for approval as was agreed, UNEP established the conditions for the execution of the project as
described in the project document and officially started implementation in May 2010. However, two years after GEF
endorsement of the project, the World Bank had still not been able to present and secure approval of the project from its
Board. The World Bank officially notified GEF of the cancellation of the World Bank portion of the project early
December 2011.
In response to the World Bank withdrawal, UNEP proposed to pursue the project in partnership with the AUC-KfW
GRMF. In this amended ARGeo project the AUC-KfW GRMF takes over the mission initially fulfilled by the World
Bank. The original member countries of ARGeo is also changed as Djibouti is replaced by Rwanda. The countries
supported by UNEP will submit their georthermal project development proposals to the already approved and funded
AUC-KfW Geothermal Risk Mitigation Facility (GRMF) which has established a Euro 50 Million grant Fund (or USD
65 million) that partially finances geothermal drilling and feasibility study (TAF) for ARGeo member countries and
beyond.
UNEP's Technical Assistance activities focus on the “up-stream” geo-scientific surface investigation work aiming to
target the best sites for drilling and therefore minimize “drilling failure risk”. Thus UNEP would fully support the
development of a pipeline of projects for submission to AUC-KfW GRMF. In this case, the GEF Funding that was
originally designed to support both the WB and UNEP components will be reduced by 13 million USD (11 million USD
corresponding to the initial funding allocated to WB for the ARGeo RMF + 2 million USD corresponding to the WB
TAF) and be limited to the originally approved 4.75 Million USD allocated to UNEP.
Due to withdrawal of the WB, the content of the project and its implementation arrangements have been revised.
Originally, the ARGeo Project was started by UNEP, the German Development Bank (KfW) and the GEF. Support for
the design of the regional geothermal program has been provided by the GEF through a PDF B activity, KfW and the
Ministry of Environment of the Government of Italy. Due to Council decision the World Bank was brought on board to
manage the RMF. Two years after GEF endorsement of the project, WB decisded to withdraw from the project.
Therefore, the current project design reflects a 'Stand Alone GEF Funded UNEP ARGeo Component'.
PART V: AGENCY (IES) CERTIFICATION
This request has been prepared in accordance with GEF policies and procedures and meets the GEF criteria for
CEO Endorsement.

11:21:13 AM
18
Agency
Coordinator,
Agency name
Signature
Date
.
(Month, day,
year)
Project
Contact
Person
Telephone Email Address
Maryam
Niamir-Fuller,
Director, GEF
Coordination
Office, UNEP
05/24/2012 Geordie
Colville,
Task
Manager
254-762-
3257
geordie.colville@unep.org

11:21:13 AM
19
ANNEX A: PROJECT RESULTS FRAMEWORK
Please see Appendix 4 of the Project Document.

11:21:13 AM
20
ANNEX B: RESPONSES TO PROJECT REVIEWS (from GEF Secretariat and GEF Agencies, and Responses to
Comments from Council at work program inclusion and the Convention Secretariat and STAP at PIF).
Most of the comments were directed at the WB portion of the project.
GEFSEC comments on the ARGeo Project (draft)
IA: WB/UNEP, PMIS: 2119
Region: African Rift Valley (Djibouti, Ethiopia, Eritrea, Tanzania, Kenya, Unganda)
Summary:
x The project concept is very good, the design is sound and based on experience with similar GEF projects
(GeoFund).
x The catalytic role of GEF is good. GEF Funding of $ 17 million leveraging $ 75.56 million (ratio of 1:4.26)
direct and potentially over $ 1 billion further investments through APLs for 180 MW renewable energy
capacity. Regional geothermal potential is 6000+MW.
x GEF-Funding for TA components is considered high ($ 6.75 million) but strongly co-financed by beneficiary
countries ($ ~12 million) and other donor countries ($ ~3 million).
x Project preparation is overdue and unsatisfactory.
x The draft documentation provided is incomplete, inconsistent and lacking important parts (UNEP ProDoc,
confirmation of co-financing and other).

11:21:13 AM
21
ANNEX C: CONSULTANTS TO BE HIRED FOR THE PROJECT USING GEF RESOURCES
$/ Estimated
person
weeks**
Position Titles person week* Tasks to be performed
For project management
Local
Programme Assistant $ 750 103 Support to the effective and
efficient management of the
ARGeo project through a
range of actions
contributing to the design,
planning, management and
monitoring of project
activities
International
Project Manager $ 3 000 66 Coordinate and manage
project activities with
national project
participants; Follow up on
project expenses, in relation
to project outputs and
reporting; Identify
additional potential partners
and new financing sources;
Alert on critical issues
related to financial
management and cost
efficiency of the project
Justification for Travel, if any: the project manager will have to travel to the six ARGeo countries and strategic
regional and international events
For technical assistance
Local
Junior expert $ 1 250 62 Organize international and
regional meetings and
conferences in
collaboration with national
executing agencies;
Coordinate training
programmes to trengthen
capacities of the experts
Institutional Capacities Framework Expert $ 1 250 20 Assess and strengthen
national institutional
capacities for geothermal
assessments, explorations
and geothermal energy
development

11:21:13 AM
22
Geothermal project and PPP review Expert $ 1 250 76 Support countries in
developing geothermal
exploration projects for
submission to GRMF and
related PPP arrangements
Webdesigner $ 1 250 10 Design the ARGeo website
and online platform
Geothermal exploration proposal development Expert $ 1 250 16 Guide and support the
development of high
standard tenders for
selected surface
assessment/pre-feasibility
activities in ARGeo
countries
Geothermal Experts (Technical Advisory Body) $ 1 250 32 Scientific review and
validation of national
surface exploration
proposals and their results
Geothermal Experts (Implementation readiness building) $ 1 250 42 Support national partners to
ensure readiness for surface
assessments
Total local 258
International
Senior Geothermal Expert $ 3 000 265 Guide and support the
provision of technical and
scientific studies for the
planning and execution of
nationally requested
geothermal surface
exploration activities in
coordination with the
respective partners; provide
technical assistance to
develop an appropriate
institutional setup and
technical capacity; Support
the evaluation of
institutional capacities for
the regulation of
geothermal resource mining
and utilization; Review and
contribute to improving
existing project conditions
for private sector
participation in geothermal
development.

11:21:13 AM
23
Institutional Capacities Framework Expert $ 3 000 8 Assess and strengthen
national institutional
capacities for geothermal
assessments, explorations
and geothermal energy
development
Geothermal project and PPP review Expert $ 3 000 32 Support countries in
developing geothermal
exploration projects for
submission to GRMF and
related PPP arrangements
Geothermal exploration proposal development Expert $ 3 000 7 Guide and support the
development of high
standard tenders for
selected surface
assessment/pre-feasibility
activities in ARGeo
countries
Geothermal Experts (Technical Advisory Body) $ 3 000 13 Scientific review and
validation of national
surface exploration
proposals and their results
Webdesigner $ 3 000 4 Design the ARGeo website
and online platform
Geothermal Experts (Implementation readiness building) $ 3 000 18 Support national partners to
ensure readiness for surface
assessments
Total international 346
Justification for Travel, if any: International experts will in some cases be required to travle to the ARGeo member
countries and ARGeo workshops/ trainings/events
* Provide dollar rate per person week. ** Total person weeks needed to carry out the tasks.

11:21:13 AM
24
ANNEX D: STATUS OF IMPLEMENTATION OF PROJECT PREPARATION ACTIVITIES AND THE USE OF FUNDS
A. EXPLAIN IF THE PPG OBJECTIVE HAS BEEN ACHIEVED THROUGH THE PPG ACTIVITIES UNDERTAKEN.
Originally, the ARGeo project was started by UNEP, KfW, and the GEF. Support for the design of
the regional geothermal programme has been provided by the GEF through a PDF B activity, KfW and
the Ministry of Environment of the Government of Italy. The participating countries during project
preparation are: Iceland for PDF C through Icelandic International Development Agency (ICEIDA)
for $ 249,052 (Project preparatory activities, Resource exploration, Pre-feasibility studies etc.) Italy
for PDF B for $120,388 (Project preparatory activities and for consideration with the Italian scientific
council) and Germany for PDF C through BGR and KfW for 2,940,000 (participation to project
preparation in the frame of Geotherm 1: Training, ARGeo Biennial Conferences, Meetings, Project
appraisals, Exploration, Policy advice, Geoscientific assessments in Tanzania, Ethiopia, Uganda and
Eritrea).
A systematic barrier removal approach was launched, the Joint Geophysical Imaging (JGI) medium
sized project, in collaboration with KENGEN and Duke University. The objective of the JGI project
was to transfer and adapt JGI methods for assessing geothermal reservoirs to Kenya with potential
impacts for the East African Rift System. The over goal is to expand the opportunity for geothermal
development in the region through the increased probability of finding large, productive steam
reservoirs in highly permeable formations due to higher resolution and more accurate assessments. As
part of project activities UNEP developed a plan for a replication through technical assistance, policy
development and financial instruments in East African Rift Valley region, which resulted in a
geothermal resolution supported by the participants of the Eastern Africa Market Acceleration
conference held from 9 to 11 April 2003, in Nairobi, Kenya, and which provided substantial input to
the ARGeo PDF-B.
ARGeo explicitly builds on the results and experience gained from the JGI project. During the PDF-B
phase, a pipeline of 17 pilots geothermal of cost effective investments power plant has been identified
in the ARGeo’s participating countries. During works of PDF B and PDF C, an important volume of
co financing has been negotiated (years 2004 and 2005). That reflects the strong support to the project
provided by various international donors as well as the commitment of the member countries
themselves.
B. DESCRIBE FINDINGS THAT MIGHT AFFECT THE PROJECT DESIGN OR ANY CONCERNS ON PROJECT
IMPLEMENTATION, IF ANY: NONE.
C. PROVIDE DETAILED FUNDING AMOUNT OF THE PPG ACTIVITIES AND THEIR IMPLEMENTATION STATUS
IN THE TABLE BELOW:
Project Preparation
Activities Approved
Implementation
Status
GEF Amount ($)
Co-
financing
($)
Amount
Approved
Amount
Spent
Todate
Amount
Committed
Uncommitted
Amount*
UNEP PDF Activities (Select)
PDF-B Completed 700,000 586,745 0 113,254 150,000
PDF-C Completed 180,000 125,460 0 54,539 249,052
(Select)
(Select)
(Select)
(Select)
(Select)
Total 880,000 712,205 0 167,793 399,052
* Any uncommitted amounts should be returned to the GEF Trust Fund. This is not a physical transfer of money, but achieved through
reporting and netting out from disbursement request to Trustee. Please indicate expected date of refund transaction to Trustee.

11:21:13 AM
25
ARGeo UNEP expenditure
PDFͲ B budget 700,000.00
GFL 4740 2328 5070 Total
2004 135,138.00 0 135,138.00
2005 116,711.00 0 116,711.00
2006 53,233.18 0 53,233.18
SubͲ total 305,082.18 0.00 305,082.18
GFL/4721 2328 5070 Total
2004 207,411.76 207,411.76
2005 Ͳ3,812.75 Ͳ3,812.75
2006 17,369.48 0 17,369.48
2007 20,290.40 Ͳ1 20,289.40
2008 Ͳ4,594.26 45,000.00 40,405.74
2009 70,000.00 70,000.00
2010 Ͳ7,500.00 Ͳ7,500.00
0.00
SubͲTotal 306,664.63 37,499.00 344,163.63
PDF B total 649,245.81
BDF B Balance 50,754.19
PDF ͲC Budget 180,000.00
GFLͲ4964 2328 5070 Total
2007 17,398.83 38,182.86 55,581.69
2008 Ͳ1,831.33 789.13 Ͳ1,042.20
2009 0.00
2010 Ͳ25.24 Ͳ25.24
Total 15,567.50 38,946.75 54,514.25
PDF C Balance 125,485.75
QGL/4965 budget 249,051.61
QGL/4965 2328 5070 Total
2007 117,787.28 117,787.28
2008 33,670.02 33,670.02
2009 74,365.60 Ͳ188.81 74,176.79
2010 1,028.29 1,028.29
Total 75,393.89 151,268.49 226,662.38
PDF C CoͲ Finance balance 22,389.23

11:21:13 AM
26
ANNEX E: CALENDAR OF EXPECTED REFLOWS
Provide a calendar of expected reflows to the GEF Trust Fund or to your Agency (and/or revolving fund that
will be set up)
No reflows is expected to the project.

i
PROJECT DOCUMENT
SECTION 1: PROJECT IDENTIFICATION
1.1 Project title: African Rift Geothermal Development Facility
1.2 Project number: GFL/
PMS:
1.3 Project type: FSP
1.4 Sub-programme title:
GEF strategic long-term objective: BD1
Strategic programme for GEF IV: N° 3: Promoting Market Approaches for Renewable
Energies
1.5 UNEP priority: Climate Change
1.6 Geographical scope: Regional
1.7 Mode of execution: Internal
1.8 Project executing organization: UNEP/ROA
1.9 Duration of project: 72 months
Commencing: June 2010
Completion: June 2016
UNEP GEF financing
Project preparation 880,000
Project 4,750,000
Sub-total 5,630,000
Co-financing UNEP
Project preparation 399,052
Participating countries 6,850,000
Bilateral and multilateral supports 67,411,652
Sub-total 74,660,704
Total without preparation 79,011,652
Total incl. preparation 80,290,704

ii
1.10 Project summary
In order to produce the systematic development of geothermal energy in the region, the African
Rift Geothermal Development Facility (ARGeo) was initiated in 2003 under the direction of the
United Nations Environment Programme (UNEP) with the participation of six east African
countries: Eritrea, Ethiopia, Kenya, Rwanda, Tanzania and Uganda. ARGeo aims to accelerate
geothermal energy investments by both public and private sectors. This will displace diesel-based
production, diversify energy resources and lead to the reduction of greenhouse gas emissions. This
initiative shall provide working examples for other private sector investments in the region.
Furthermore, the implementation of the project will respect high level rules of social and
environmental safeguard.
UNEP will be the GEF Implementing Agency for this project implementation. The overall GEF
budget is $4.75 million and will be managed by UNEP/DTIE.
The ARGeo project consists of:
1. The creation of a regional network, information systems and capacity building for
geothermal energy development. The project will support activities related to the development
of a geothermal energy information database, capacity building activities through training and
exchanges of ideas and experiences, and equipment pooling and awareness creation.
2. A comprehensive Technical Assistance Programme. This programme will focus on the
implementation of technical surface exploration studies to confirm the presence of utilizable
geothermal resources with the aim of minimizing the drilling failure risk for the Geothermal
Risk Mitigation Facility.
3. A direct partnership with the AUC-KfW Geothermal Risk Mitigation Facility. Results of
the studies conducted under the Technical Assistance programme will be used by member
countries to develop (with UNEP support) and submit proposals responding to the requirements
and criteria for accession to the AUC-KfW GRMF.
4. Technical Assistance support from AUC-KfW (included in the GRMF programme) to support
feasibility studies that combines exploration drilling results and reservoir engineering together with
market, regulatory and technical considerations with the aim of securing finance for the next stage of
resource development
When implemented, the UNEP ARGeo project in partnership with the AUC-KfW GRMF will have
developed pilot geothermal power production plants in the ARGeo member countries with a total
power rating of about 500 MWe. In this context, initial estimates could lead to 2,393,656 tons of
CO2 emission savings per year and up to 46.2 million tons of CO2 emission savings over 20 years1
.
Given the demonstration and “snow-ball” effect of the ARGeo project, it is expected that these pilot
projects will generate more interest in geothermal technologies and that further projects will be
leveraged in the six targeted countries as well as in the future, in other countries of the Rift Valley
(Djibouti, Sudan, , Burundi, the Democratic Republic of Congo, Malawi, Mozambique, and
Madagascar as well as Yemen, on the Arabian side of the Rift). In some cases (Yemen), specific
budgets for increasing exchange of know-how, are already established. The ARGeo project will
also take advantage of an opportunity to benefit from results coming from the Joint Geophysical
1
This is a conservative estimate for the operational life of geothermal production facilities.

iii
Image (JGI) project financed by the GEF. The project will notably benefit from the use of
integrated geophysical equipment bought and technicians trained as part of the JGI project.

iv
TABLE OF CONTENTS
SECTION 1: PROJECT IDENTIFICATION ...................................................................................... .I
SECTION 2: BACKGROUND AND SITUATION ANALYSIS (BASELINE COURSE OF ACTION) ......... 1
2.1. Background and Context............................................................................................................... 1
2.2. Global Significance ........................................................................................................................ 7
2.3. Threats, Root Causes and Barrier Analysis................................................................................. 8
2.4. Institutional, sectoral and policy context ..................................................................................... 9
2.5. Stakeholder mapping and analysis..............................................................................................19
2.6 . Baseline Analysis and Gaps........................................................................................................23
2.7. Linkages with other GEF and non-GEF interventions..............................................................28
SECTION 3: INTERVENTION STRATEGY (ALTERNATIVE) .......................................................... 29
3.1. Project rationale, policy conformity and expected global environmental benefits .................29
3.2. Project Goal and Objective ......................................................................................................3332
3.3. Project components and expected results ...................................................................................33
3.4. Intervention Logic and key assumptions ....................................................................................38
3.5. Risk analysis and risk management measures ...........................................................................38
3.6. Consistency with national priorities or plans .............................................................................41
3.7. Incremental cost reasoning...........................................................................................................46
3.8. Sustainability.................................................................................................................................47
3.9. Replication .....................................................................................................................................47
3.10. Public Awareness, Communications and Mainstreaming Strategy .........................................48
SECTION 4: INSTITUTIONAL FRAMEWORK AND IMPLEMENTATION ARRANGEMENTS....... …48
4.1 Institutions and General Organization .......................................................................................48
4.2 Relationship with other Projects (GEF and others)..........................................................................54
SECTION 5: STAKEHOLDER PARTICIPATION .............................................................................. 55
SECTION 6: MONITORING AND EVALUATION PLAN................................................................... 56
SECTION 7: PROJECT FINANCING AND BUDGET ........................................................................ 58
7.1. Overall project budget..................................................................................................................58
7.2. Project Co-financing.....................................................................................................................59
Appendix 1: Budget by project components and UNEP budget lines...............................................62
Appendix 2: Co-financing table............................................................................................................64
Appendix 3: Incremental cost analysis.................................................................................................67
Appendix 4: Results Framework..........................................................................................................76
Appendix 5: Work Plan and Timetable ...............................................................................................77
Appendix 6: Key deliverables and benchmarks..................................................................................79
Appendix 7: M&E plan Work plan and corresponding budget........................................................85
Appendix 8: Reporting requirements ..............................................................................................8586
Appendix 9: Decision-making and organizational flowchart.............................................................87
Appendix 10: Standard TORs for Terminal Evaluation .................................................................92
Appendix 11: Co-financing commitment letters from project partners.........................................93
Appendix 12: Endorsement letters of GtEF National Focal Points ........................................112106
Appendix 14: Tracking Tools .....................................................................................................122116
Appendix 15: Project Proposals received from Four ARGeo member Countries.................124118
Appendix 16: Geothermal Risk Mitigation Facility for Eastern Africa........................................124118
(Kindly refer to PDF attachment) ........................................................................................................124118
Enclosed. .............................................................................................................................................124118

v
ILLUSTRATIONS
FIGURE 1: THE EAST AFRICAN RIFT SYSTEM ………………………………………………………………………… 2
FIGURE 2. ORGANOGRAM................................................................................................................................................ 21
FIGURE 3: ARGEO PROJECT STRUCTURE ..............................................................................................................................50
FIGURE 4: ARGEO GEF BUDGET FUND FLOW ...................................................................................................................... 59
TABLE 1: ARGEO COUNTRIES ECONOMIC AND ENERGY INDICATORS................................................................................... 9
TABLE 2: ARGEO COUNTRIES TOTAL PRIMARY ENERGY SUPPLY 2009 (KTOE) ................................................................. 12
TABLE 3: ARGEO COUNTRIES TOTAL FINAL ENERGY CONSUMPTION 2009 (KTOE) ........................................................... 13
TABLE 4: ARGEO COUNTRIES ELECTRICITY PROFILES (2009) ............................................................................................ 13
TABLE 5: EFFECTIVE ELECTRICITY PRODUCTION (GWH) .................................................................................................... 14
TABLE 6: STAKEHOLDERS IDENTIFIED.................................................................................................................................. 20
TABLE 7: BASELINE ESTIMATE OF GHG EMISSIONS IN ARGEO COUNTRIES WITH CURRENT INSTALLED CAPACITY.......... 28
TABLE 8: GHG BENEFITS OF ARGEO PROJECTS.................................................................................................................. 31
TABLE 9: ESTIMATED ANNUAL GHG SAVINGS FROM PILOT GEOTHERMAL POWER PLANTS FOR 20 YEARS....................... 31
TABLE 10: EMISSIONS REDUCTION OF CO2 FOR 500 MW OF GEOTHERMAL POWER ........................................................... 32
TABLE 11: IDENTIFIED GEOTHERMAL SITES AND STATUS..................................................................................................... 37
TABLE 12: NATIONAL EXECUTING AGENCIES...................................................................................................................... 49
TABLE 13: GEF BUDGET IN US$M........................................................................................................................................ 58
TABLE 14. OVERVIEW OF CO-FINANCING .............................................................................................................................60

vi
ACRONYMS AND ABBREVIATIONS
AERDP Alternative Energy Resources Development Programme
AFD French Agency for Development
AfDB African Development Bank
ARGeo African Rift Geothermal Development Facility
ASC AFGeo Steering Committee
ATAT ARGeo Technical Advisory Team
AUC African Union Commission
BGR German Federal Institute for Geosciences and Natural
Resources
CAS Country Assistance Strategy
EARS East African Rift System
ECA Europe and Central Asia
EEA Eritrea Electric Authority
EEC Eritrea Electric Corporation
EEPCO Ethiopian Electric Power Company
EIB European Investment Bank
EMPs Environmental Management Plans
EOU Evaluation and Oversight Unit
ERB Electricity Regulation Body
ESMF Environmental and Social Management Framework
FiT Feed in Tariff
GDC Geothermal Development Company
GDP Gross Domestic Product
GEF Global Environmental Facility
GHG Green-House Gas
GoR Government of Rwanda
GRMF Geothermal Risk Mitigation Facility
GtE Geothermal Energy
GtPP Geothermal Power Plant
HFO Heavy Fuel Oil
IAEA International Atomic Energy Agency
ICEIDA Icelandic International Development Agency
ICS Interconnected System
IFC International Finance Corporation
IP-ERS Economic Recovery Strategy for Wealth and Employment
Creation
IPP Independent Power Producer
IPPs Independent Power Producers
IPTL Independent Power Tanzania Ltd.
ISOR Iceland GeoSurvey
KENGEN Kenya Electricity Generating Company Ltd.
KERB Kenya Electricity Regulatory Board
KfW German Development Bank
KPLC Kenya Power and Lighting Company
LCPDP Least Cost Power Development Plan for Electricity
Production
M&E Monitoring and Evaluation
MoE Ministry of Energy
NEAs National Executing Agencies

vii
ACRONYMS AND ABBREVIATIONS
NPAG National Project Advisory Group
NPC National Project Committee
NPCU National Project Coordination Unit
NPMG National Project Management Group
OFE Owen Falls Extension
OPEC Organization of Petroleum Exporting Countries
PDF Project Development Fund
PIR Project Implementation Review
PMU Project Management Unit
PPA Power Purchase Agreement
PPAs Power Purchase Agreements
PPP Public Private Partnership
PRSP Poverty Reduction Strategy Paper
PSC Project Steering Committee
RCD Resource Confirmation Drilling
RECO Rwanda Electricity Corporation
REG Reykjavik Geothermal
RMF Risk Mitigation Facility
RURA Rwanda Utilities Regulatory Agency
SCS Self-Contained System
SEFI Sustainable Energy Finance Initiative
SREP Scaling Up Renewable Energy Programme
TA Technical Assistance
TANESCO Tanzania Electric Supply Company
TPES Total Primary Energy Supply
UEB Uganda Electricity Board
UNDP United Nations Development Programme
UNEP United Nations Environment Programme
UNEP DTIE UNEP Division of Technology, Industry, and Economics
UNOPS United Nations Office for Project Services
USDOE US Department of Energy
USTDA US Trade and Development Agency

1
SECTION 2: BACKGROUND AND SITUATION ANALYSIS (BASELINE COURSE OF ACTION)
2.1 Background and Context
The East African Rift System (EARS) is one of the major tectonic structures of the earth where the
heat energy of the interior of the earth escapes to the surface. This energy flow takes place in the
form of volcanic eruptions, earthquakes and the upward transport of heat by hot springs and natural
vapor emissions. The EARS extends for about 6500 km from the Middle East (Dead Sea-Jordan
Valley) in the North to Mozambique in the South. The EARS passes through Eritrea, Djibouti,
Ethiopia, Kenya, Tanzania, Uganda, Rwanda, the Democratic Republic of Congo (DRC), Zambia,
Malawi, Mozambique and Madagascar (Figure 1). Estimated Geothermal energy resource potential
in the EARS is more than 15,000 MWe.
The proposed ARGeo program will assist the countries in the EARS to accelerate the pace of
geothermal resource development in the region. ARGeo covers countries in the EARS namely:
Eritrea, Ethiopia, Kenya, Rwanda, Tanzania and Uganda.
Geothermal energy is a key energy resource for East Africa. Scientific work conducted to date
confirms that the EARS has abundant geothermal resources suited to electricity development, as
well as to uses in industry, agriculture, health, tourism and recreation. The available information
shows that the natural conditions of the few developed geothermal fields in Kenya and Ethiopia are
representative of most of the resource prospect areas and the success achieved to date in geothermal
exploration and development in these countries is widely replicable in the region. High physical
and chemical qualities of geothermal resources are expected to prevail among the numerous known
resource prospect areas, availing the opportunity for the utilization of proven technologies.
Despite the abundant geothermal resources in the EARS (>15 GW), the total installed capacity of
geothermal energy in the East Africa region to date is only about 220MWe. Five geothermal power
plants are operating in the region with more than 90% availability: four in Kenya (Olkaria I-IV) and
a pilot power plant in Ethiopia (Aluto-Langano). In addition, a Well Head Installing Unit in Kenya
(Olkaria and Eburru) are generating about 8 MWe.
Geothermal Energy clearly stands out as one of the most promising and sustainable alternatives for
low cost electricity production to complement hydropower and reduce growth of petroleum based
thermal generation in the region. However, countries in the region still face a number of barriers to
the development and utilization of geothermal resources. These barriers include: (i) Incomplete
and often inadequate geoscientific information and analysis in most of the potential geothermal sites
identified by the countries, (ii) Insufficient capabilities, in terms of human resources, institutional
setups and technical infrastructure, to carry out surveys for discovering and characterizing
geothermal systems, as well as, for installing, operating and maintaining the geothermal resource
development infrastructure and power plants; (iii) Insufficient investment for geothermal energy
development.
In response to these barriers, the UNEP ARGeo project will: (i) provide technical and financial
support to enable governments to take the lead in generating the scientific, technical, and economic
information for selected priority geothermal energy prospect areas and develop scientifically sound
geothermal development project proposals (ii) Support regional networking and information
sharing, and strengthen human, infrastructural and institutional capacities for geothermal energy
development (iii) Contribute to the development of the needed national policies and legislations as
well as institutional and regulatory frameworks to attract private developers

2
While there are many differences between the ARGeo member countries, all of them have
considerable geothermal potential for geothermal energy development and need significant
additional power generation capacity in order to meet growing demand and expand access to
electricity services.
Figure 1. The East African Rift System
Except for Kenya, targeted countries are at very early stages of geothermal exploration. The
technical support provided by UNEP ARGeo project will permit countries to generate high quality
information on the geothermal reservoirs, which is critical for decision making on whether
exploration drilling would be warranted or not. In this project, UNEP will partner with the African
Union Commission (AUC)-German Development Bank (KfW) Geothermal Risk Mitigation Facility
(GRMF) which will mitigate the investment risks associated with geothermal exploration and
drilling, paving the way for both public and private sector funded power plant developments.
UNEP’s support will enable ARGeo countries to develop a pipeline of projects for submission to
the AUC-KfW GRMF with assurance that drilling risk is minimized. AUC-KfW in its GRMF
programme incorporates a feasibility study that combines exploration drilling results, reservoir
engineering together with market, regulatory and technical consideration with the aim of securing
finance for the next stage of resource development.
The ARGeo project will accelerate the systematic development of geothermal energy in the region.
ARGeo is designed to increase geothermal energy investments for both public and private sectors.
This will displace diesel-based production, diversify energy resources and increase access to
modern energy services. Its global objective is to facilitate reduction of the growth rate of GHG
emissions in the region through geothermal energy development to produce electricity.
Given the above, the situation in terms of geothermal development in the ARGeo member countries
is as follows:
Eritrea: In 1973, the United Nations Development Programme (UNDP) identified potentially
significant exploitable geothermal resources in Eritrea. In 1995, with help of United States
Geological Survey (USGS), Eritrea identified the Alid geothermal prospect area for follow up
detailed investigations. This area is located about 120km south of Massawa.

3
The eastern lowlands of the country are of potential geothermal interest. First priority was given to
the Alid Volcanic center for exploration as it has numerous manifestations in the form of hot
springs and fumaroles. Detailed geoscientific investigations revealed a reservoir temperature of
about 250°C. There are also other sites (e.g. Nabbro Dubbi) suitable for discovery of a high
temperature resource. A recent volcanic eruption (2011) took place in Nabbro Dubbi area.
Eritrea has embarked on an institutional power sector reform and a power distribution and rural
electrification programme to increase access to electricity. Lacking significant hydro power
potential, the country relies entirely on thermal generation for power production with elevated
electricity costs. Utilization of fossil fuel for power generation leads to draining the country’s
foreign exchange reserves, and affects the environment by GHG emissions. The country has thus to
develop alternative energy sources such as geothermal, wind and solar that are indigenous and
environmentally friendly energy resources. Unfortunately, its ability to diversify its sources of
energy is hampered by the lack of knowledge of the potential of indigenous renewable energy
resources like geothermal. The development of geothermal energy will enable Eritrea to provide an
affordable and sustainable supply of electricity to the habitants who live in the adjacent coastal and
island communities. Expert’s estimation indicates that the geothermal facility when developed may
cost only $USD 0.06-0.07/kWh compared to the current average sales price of $USD 0.16/kWH for
domestic consumption category. The recent price hikes in oil increased the cost by about
$USD0.05/kWh.
At present, the Government of Eritrea submitted a request for surface exploration studies (project
proposal) to the United Nations Environment Programme for acquiring technical and financial
assistance to carry out surface investigations in Alid geothermal prospect area with a view to
confirm the resource potential and minimize the drilling failure risk (See Appendix 15).
Ethiopia: Ethiopia started a long-term geothermal exploration undertaking in 1969. Over the years,
a good inventory of the possible resource areas has been built up and a number of the more
important sites have been explored in the Ethiopian Rift Valley. Of these areas, about sixteen are
judged to have potential for high temperature steam suitable for electricity generation . A much
larger number are capable of being developed for direct utilization of geothermal heat in
agriculture, agro-industry etc.
In Ethiopia, estimated geothermal resource potential for power generation is about 5,000 MWe. So
far, exploratory drilling has taken place in Aluto-Langano (1982 to 1985) and Tendaho-Dubti (1993
to 1998) geothermal fields. Detailed surface exploration has been completed in four other
geothermal prospect areas (Corbetti, Abaya, Dofan Fantale and Tulu Moye).
A 7.3 MWe geothermal pilot power plant has been installed at Aluto. This pilot plant is currently
generating about 4 MWe. Feasibility study for the expansion of the Aluto Langano Geothermal
power has been recently completed with the Japanese Overseas Development Assistance. On the
basis of this study, drilling of four deep appraisal wells is planned for 2012 with the technical
assistance of government of Japan and loan from the World Bank. The government is now working
on expansion of the Aluto-Langano geothermal field to 70 MWe. The WB, AfDB and JICA are
involved in financing expansion of this geothermal field. Other geothermal prospect areas in the
Ethiopian Rift Valley that are at reconnaissance stage of exploration are: Teo, Danab, Kone and
others.
Five geothermal exploration permits were recently sold to a Canadian Mining Company that
continues to have interests in potash exploration in northern afar. These concessions are located in
the main Ethiopian Rift Valley namely: Corbetti, Abaya and Tulu Moye geothermal prospect areas

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