CERTIFICATION AND FINANCING PROPOSAL

Transcription

1 STREET LIGHTING REPLACEMENT PLAYAS DE ROSARITO, BAJA CALIFORNIA Revised: November 5, 2012

2 STREET LIGHTING REPLACEMENT PLAYAS DE ROSARITO, BAJA CALIFORNIA INDEX EXECUTIVE SUMMARY 2 1. ELIGIBILITY 3 2. CERTIFICATION CRITERIA 2.1 Technical Criteria Project Description Technical Feasibility Land Acquisition and Right of way Requirements Management and Operations Environmental Criteria Compliance with Applicable Environmental Laws and Regulations Environmental Effects/Impacts Financial Criteria PUBLIC ACCESS TO INFORMATION 3.1 Public Consultation Outreach Activities 12 1

3 EXECUTIVE SUMMARY STREET LIGHTING REPLACEMENT PLAYAS DE ROSARITO, BAJA CALIFORNIA Project: Project Objective: Expected Project Outcomes: Population Benefitted: Sponsor: Borrower: The proposed project consists of purchasing and installing energy efficient luminaires to replace the current street lighting system in the municipality of Playas de Rosarito, Baja California (the Project ). The purpose of the Project is to improve the energy efficiency of the public lighting system, thereby reducing the demand on traditional fossil fuel based energy production and contributing to the displacement of greenhouse gas emissions and other pollutants from power generation by fossil fuels. The Project s anticipated environmental and human health outcomes include a reduction in electricity consumption of nearly 1,795 MWh/year, resulting in an estimated displacement of 903 metric tons/year of carbon dioxide (CO 2 ), 3.3 metric tons/year of sulfur dioxide (SO 2 ), and 2.4 metric tons/year of nitrogen oxides (NOx). 1 90,668 residents of Playas de Rosarito, Baja California. Municipality of Playas de Rosarito, Baja California. Municipality of Playas de Rosarito, Baja California. Project Cost: $52.9 million pesos (US$4.01 million). 2 Loan Amount: Uses & Sources: (Millions of pesos) Up to $45.0 million pesos (US$ 3.41 million). Uses Amount* % Equipment and installation $ Sources Amount % NADB Loan $ Municipal funds $ TOTAL $ Estimations based on the rates and emission factors of the National Emissions Inventory for Mexico, 2005, developed by the Ministry of Environment and Natural Resources (SEMARNAT). 2 Unless otherwise noted, all U.S. dollar figures are quoted at an average exchange rate of $13.19 pesos to the dollar for the month of August 2012 according to Bloomberg.com. 2

4 STREET LIGHTING REPLACEMENT PLAYAS DE ROSARITO, BAJA CALIFORNIA Project Type 1. ELIGIBILITY The Project falls in the category of clean and efficient energy. Project Location The Project is located 20 km south of the U.S. Mexico border in the municipality of Playas de Rosarito in the state of Baja California, Mexico. Project Sponsor and Legal Authority The municipality of Playas de Rosarito (the Municipality or Project Sponsor ) has full authority to manage public resources and to promote actions and projects aimed at optimizing municipal services. The legal powers and authority granted to the Municipality with respect to public services are set out in Article 115, Section III b), of the Mexican Constitution, which states that municipalities will be responsible for the operation of street lighting services. In addition, Article 85 of the Baja California State Constitution states that municipalities shall freely manage their own financial resources. On April 17, 2012, the 20 th Constitutional Legislature of Baja California authorized the Municipality to contract a loan for the Project. 2.1 TECHNICAL CRITERIA Project Description Geographic Location 2. CERTIFICATION CRITERIA The Project will be implemented in the municipality of Playas de Rosarito, which is located on the Pacific coast in the northwestern region of the Baja California peninsula. Playas de Rosarito is bordered by Tijuana to the north, east and southeast and by Ensenada to the southwest. The municipality spans an area of km² (198.2 square miles), representing 0.72% of the state s total territory. Figure 1 shows the geographic location of Playas de Rosarito. 3

5 CERTIFICATION & FINANCING PROPOSAL Figure 1 PROJECT VICINITY MAP General Community Profile According to the 2010 census in Mexico, Playas de Rosarito had a population of 90,866, representing 2.87% of the state of Baja California. 3 The city has shown positive economic development in recent years, with new tourist areas emerging along the coast. In addition, the city has experienced sharp growth in the manufacturing industry, influenced by the installation of a thermal power plant and PEMEX fuel facilities. The industrial sector reported accelerated growth with maquiladoras as the primary economic activity, followed by tourism and commercial services. Although the real estate sector was affected by the recent financial crisis, current indicators show signs of recovery and the outlook for the coming years looks positive. The Project will directly benefit the residents of the municipality of Playas de Rosarito by reducing the use and cost of electricity. The Project will reduce street lighting costs by up to 30% per year, nearly 1,795 MWh/year, equivalent to the annual energy consumption of approximately 175 households. 4 Additionally, the Project will provide better lighting quality and illumination contributing to improved transportation and public safety conditions in the community. 3 Source: Censo de población y vivienda 2010 (2010 general population and housing census), the Mexican national statistics institute, Instituto Nacional de Estadística, Geografía e Informática (INEGI). 4 Estimations based on per capita power consumption data from the Department of Urban Studies and Environment of the academic research institute Colegio de la Frontera Norte (COLEF),

6 Local Energy Profile Rapid economic and demographic growth has intensified the city s need to meet its energy requirements. As a result, the federal government made funds available for the construction of two projects: a fuel storage tank for the national gas and oil company, PEMEX, and thermal power plant for the Federal Electricity Commission (CFE) to provide electricity to the city. Both of these projects provide state wide coverage for fuel distribution and electric service. To date, according to information provided by CFE, Baja California has 10 power plants in operation, with two located in the municipality of Playas de Rosarito. Table 1 provides basic information about these facilities. Table 1 POWER PLANTS IN BAJA CALIFORNIA, 2012 Name Location Facility Type Installed Capacity (MW) Cerro Prieto I Mexicali Geothermal power plant 30 Cerro Prieto II Mexicali Geothermal power plant 220 Cerro Prieto III Mexicali Geothermal power plant 220 Cerro Prieto IV Mexicali Geothermal power plant 100 Ciprés Ensenada Turbo gas La Rumorosa I Tecate Wind power plant 10 Mexicali Mexicali Turbo gas 62 Combined cycle 489 P. Móvil T Ensenada Turbo gas 17 Presidente Juárez Rosarito Thermal power plant 320 Combined cycle 773 Tijuana Rosarito Turbo gas 210 Source: About 50% of installed capacity in the state of Baja California is located in the municipality of Playas de Rosarito, which has become the main location for power generation in the region. To support better energy management practices, the federal government enacted the Law for Sustainable Energy Use in November 2008, aimed at promoting the sustainable use of energy through its optimal application in all processes and activities, including generation and consumption. The law states that all actions leading to a reduction in the amount of energy required to meet a community s needs must be considered for implementation. Moreover, a high level of quality must be ensured to reduce negative environmental impacts resulting from the production, distribution, and use of energy. The National Program for the Sustainable Use of Energy identifies seven areas that represent cost effective opportunities to increase energy efficiency in the medium and long term. The goals of this Program in the area of lighting include: Increasing the efficiency of light bulbs. Implementing efficient lighting in public areas; and 5

7 CERTIFICATION & FINANCING PROPOSAL Increasing energy efficiency for lighting purposes, by replacing street lamps with fixtures that meet high standards. In this context, the Playas de Rosarito Municipal Development Plan states that the Municipality has the authority to promote light fixture rehabilitation programs by implementing sustainable energy projects for the city s street lighting system. The City conducted an internal study to assess the feasibility of implementing a project that included the installation of more efficient luminaires to reduce street lighting expenditures. The estimated energy consumption of the Municipality s lighting system for 2012 is approximately 5,000 MWh, equivalent to $14.7 million pesos, a portion of which is covered by revenues from the Street Lighting Tax (SLT). The remaining cost is funded by the Municipality s general budget. In 2013, it is estimated that the Municipality will achieve savings of 10% to 30% in public lighting expenses as a result of the Project, which would translate into budget savings of approximately $3 million pesos. Project Scope and Design The scope of the Project includes the purchase and installation of efficient street lighting technology to replace 100% of the luminaires used in the current street lighting system. 5 The Project will use the existing infrastructure, such as the power system, transformers, wiring, bases and poles. The sponsor has indicated their plan to store the replaced luminaires until an option for reuse, recycling or disposal is defined. Based on the lamp inventory conducted by the Municipality, as of June 2012, Playas de Rosarito had 5,884 High Pressure Sodium (HPS) luminaires ranging from 70 to 400 W. These luminaires are located throughout the city based on the characteristics of each area and street lighting needs, whether residential or industrial. 6 The installation of all the luminaires is expected to be completed over a period of 12 weeks. Table 2 shows the Project implementation milestones. Table 2 PROJECT MILESTONES Action Status Congress approval Completed City Council approval Completed Procurement Pending, after loan closing Project completion May The luminaire includes the carcass, the lamp and the electronics. 6 Source: Public Works and Services Department, Municipality of Playas de Rosarito, Baja California. 6

8 Technical Feasibility Selected Technology A preliminary assessment was carried out to analyze the different types of street lighting technologies available in the market. The assessment included high efficiency equipment with a light output equal or similar to the current system, which would ensure an enhancement of overall system quality, and was based on technology recommendations and ratings issued by the National Commission for Efficient Energy Use (CONUEE). 7 The different technologies reviewed in the assessment include: Metal Halides. Metal halide based technologies provide adequate luminous efficiency. These lamps are small in size, the light beam is easy to control, their color rendering index is high and the light they produce is white. Conversely, they have rapid lumen downgrading, a short life span, and a slow ignition time, as they may take up to 10 minutes to start and restart. This technology also requires ballast, which takes up to 25% of the lamp s power. Ceramic Metal Halides. The ceramic metal halide technology has better luminous efficiency than the conventional metal halide technology, lumen depreciation occurs slowly, the lamps are small so the light beam is easy to control, their color rendering index is high and they produce white light. Conversely, their ignition time is slow, as they may take up to five minutes to start and restart. Their availability in the market is also low and they require an electronic ballast for optimal performance. Magnetic Induction. This technology has a life span of approximately 100,000 hours, with good color rendering and lumen maintenance. Its ignition process is instantaneous, and the light produced is in the range of whites, which favors the accurate appreciation of color. A high frequency generator is required for its operation, which may consume up to 10% of the lamp s power. LED. In general, LED based lamps have a longer life span than other technologies. The color rendering index is high, the light they produce is white, ignition is instantaneous, and this technology does not use mercury. Most of the models require a device to convert incoming AC voltage to DC voltage, which uses about 10% of the lamp s power. The life of this technology is reduced if operated at high temperatures. Table 3 shows the parameters considered for the comparative assessment of available lighting technologies. The table includes sodium vapor lamps, which is the technology currently used in the city s lighting system. 7 Comisión Nacional para el Uso Eficiente de la Energía (CONUEE). 7

9 CERTIFICATION & FINANCING PROPOSAL Feature Average life span (hours) 1 Luminous efficiency (lm/w) 2 Lumen keeping rate (%) 3 Color rendering index Color temperature ( K) Table 3 COMPARATIVE REVIEW OF LIGHTING TECHNOLOGIES High-pressure Sodium Vapor Ceramic Highpressure Sodium Vapor 24,000 22,000-36,000 Metal Halides 10,000-15,000 Ceramic Metal Halides 18,000-30,000 Magnetic Induction 100,000 LED 50, , ,900-2,200 2,000 2,500-5,000 2,720-2,860 3,500-4,100 2,700-5,700 Operating cost Low Low Low to Moderate Low Low Low Start (min) < 1 < 1 Restart (min) < 1 < 1 Auxiliary equipment losses (%) LED lamps reach their half-life when their luminous flux is less than 70% of the initial luminous flux. The half-life of other technologies is calculated based on when 50% of the light fixtures go out in testing. 2. Efficiency of the luminous source, without considering ballast or source losses, or optical efficiency. 3. Lumen maintenance is the ability of the luminous source to maintain its initial luminous flux throughout its life span. It is based on the luminous flux at the end of the half-life of the lamp, divided by the initial luminous flux, and expressed as a percentage. Source: CONUEE. Equipment will be purchased through a public bidding process, and the Municipality will be responsible for reviewing proposals. The Municipality will oversee the installation, monitoring, and operation of the lighting system. NADB's procurement policies require that borrowers use appropriate procurement methods to ensure a sound selection of goods and services, at fair market prices and that their capital investments are made in a cost effective manner. As part of its due diligence process, NADB will verify compliance with this policy Land Acquisition and Right-of-Way Requirements Due to the nature of the Project, which focuses on the purchase and replacement of luminaires for the existing street lighting system, no rights of way are required Management and Operations The Municipality has the legal authority, infrastructure and operational staff required to manage the street lighting system. As Project Sponsor, the Municipality will be responsible for 8

10 conducting the procurement activities, as well as the installation, supervision, operation and maintenance of the street lighting system, through its Department of Public Works and Services. The tasks for replacement and maintenance of luminaires are included in the Municipality s Lighting the City work program. The Sponsor anticipates assigning four crews and up to six vehicles to be distributed in different areas throughout the city to complete the installation. 2.2 ENVIRONMENTAL CRITERIA Compliance with Applicable Environmental Laws and Regulations Applicable Laws and Regulations The Project proposal is based primarily on the optimization of municipal resources. There are no environmental laws applicable to the purchase of lighting equipment; however, the selection of lighting technologies through the Municipality s procurement process will consider the following official Mexican standards: Mexican Official Standard NOM 001 SEDE 2005, Article 930, Street Lighting.The purpose of this provision is to define the specifications, features, lighting values and general parameters for street lighting systems and equipment. Mexican Official Standard NOM 013 ENER 2004, Energy Efficiency for Lighting Systems in Roads and Public Outdoor Areas. This standard establishes the calculation method and the maximum wattage density that street and public parking lighting systems must meet, in addition to promoting energy efficiency to help conserve the country s nonrenewable natural resources. Environmental Studies and Compliance Activities Due to the nature of the Project, which focuses on the purchase and replacement of luminaires for the existing street lighting system, no environmental studies are required. Pending Environmental Tasks and Authorizations There are no pending environmental tasks or authorizations. Compliance Documentation No environmental authorizations are necessary for the Project Environmental Effects / Impacts By reducing energy consumption for street lighting purposes, the Municipality will reduce the demand for electricity produced by fossil fuel based power plants. As a result, the Project will help to displace greenhouse gases (GHGs) and other harmful pollutants. 9

11 CERTIFICATION & FINANCING PROPOSAL Existing Conditions and Project Impact Environment The conventional electricity production process can affect the natural environment due to the associated harmful emissions, including the release of GHG, as well as other pollutants, such as sulfur dioxide (SO 2 ) and nitrogen oxides (NOx). By replacing 100% of the luminaires with more energy efficient equipment, the Project will help reduce the demand for electricity produced by fossil fuel based power plants. Playas de Rosarito currently uses an average of 5,000 MWh/year for street lighting purposes. Once implemented, the project is expected to reduce energy consumption by up to 30% (1,795 MWh/year). The reduction in power demand is equivalent to the displacement of 903 metric tons/year of carbon dioxide, 3.3 tons of sulfur dioxide, and 2.4 metric tons/year of nitrogen oxides. Mitigation of Risks Due to the nature of the Project, minimal mitigation measures will be required. The only risks considered for the Project are related to the handling of luminaires after replacement. In this case, the replaced luminaires will be stored in a warehouse of the Municipality s Department of Public Works and Services. According to HPS lamp manufacturers, lamps that are intact do not pose any hazard. In the case of broken lamps, there are no known adverse effects from occasional exposure, except the possibility of sustaining glass cuts. The procedures for disposal of broken lamps include: Ventilation of area where breakage occurred. Collection of broken glass. Use of appropriate face mask, gloves and apron when disposing glass residues. Although some manufacturers describe the HPS lamps as mercury free, other sources have noted HPS lamps should be handled as special waste. The Sponsor has indicated that intact lamps will be properly handled and stored. Broken or unusable lamps will be disposed of according to the applicable laws and federal recommendations for this type of waste. Natural Resource Conservation The Project will support natural resource conservation by improving air quality and reducing the demand on fossil fuels for energy production. The use of energy efficient technology is anticipated to reduce electricity consumption by an estimated 1,795 MWh/year, equivalent to the annual energy consumption of approximately 175 households. Additionally, by reducing the maintenance required by the lighting system, the Project will reduce the use of fossil fuels for vehicles intended for these tasks. No Action Alternative The No Action Alternative would result in continued use of inefficient lighting technologies that demand more electricity from conventional fossil fuel based power plants. Additionally, the Municipality would lose an opportunity to improve the lighting system and obtain associated benefits, such as increasing public safety conditions, real color visualization, improved pedestrian visualization, and less frequent maintenance cycles. The No Action Alternative would 10

12 also represent a lost opportunity to allocate financial resources resulting from energy savings to other municipal programs. Existing Conditions and Project Impact Human Health Epidemiological research has shown that both acute and chronic exposure to harmful emissions associated with fossil fuel based electricity production can create serious respiratory problems. It has been estimated that long term exposure to high levels of pollutants may, at a minimum, impair respiratory function in humans and contributes significantly to the increased incidence of cardiopulmonary diseases, such as asthma, heart disease and lung cancer. As a result of implementing measures to help reduce fossil fuel based power generation, the Project will have a positive impact on the region by reducing pollutants, which will help to limit the severity of respiratory and other diseases caused or aggravated by air pollution. Additionally, by reducing the amount of greenhouse gases, the Project is expected to mitigate climatic effects that increase human health vulnerability. Transboundary Effects No negative transboundary impacts are anticipated as a result of the development of the Project; on the contrary, a beneficial effect is anticipated on air quality due to the decreased demand for fossil fuel fired electrical plants. Furthermore, the Project will aid in addressing and solving the larger environmental concerns related to greenhouse gases and global warming targeted by international agendas. Other Local Project Benefits Additional benefits of an energy efficient street lighting system include: better visualization of real colors, improved pedestrian visualization, reduced maintenance requirements, and increased levels of security by covering areas that lacked adequate illumination. 2.3 FINANCIAL CRITERIA The total cost of the Project is $52.9 million pesos, which includes the purchase and installation of equipment and other related costs. The municipality of Playas de Rosarito has requested a loan for up to $45.0 million pesos from NADB to complete the financing of the Project. The sources of funds are presented in the following table. Table 4 PROJECT COST AND SOURCES (Millions of pesos) Uses Amount % Equipment and installation $ Sources Amount % NADB Loan $ Municipal funds $ TOTAL $

13 CERTIFICATION & FINANCING PROPOSAL The repayment source for the NADB loan will be the Municipality s federal tax revenue ( participaciones ). The Municipality will pledge part of its current and future participaciones as the direct source of payment for the proposed loan. The pledge instruction would be irrevocable, and an irrevocable Municipal Trust would repay the proposed loan automatically, thus ensuring that payments are made in full and in a timely manner. The loan will be contracted in accordance with the Federal Fiscal Coordination Law (Ley de Coordinación Fiscal); the Baja California State Public Debt Law (Ley de Deuda Pública del Estado de Baja California); and Decree No. 191 published in the Baja California State Official Gazette (Periódico Oficial del Estado de Baja California) on April 20, NADB performed a financial analysis of the Municipality, and the cash flow projections indicate it can undertake this financial obligation. However, the analysis reveals that the Municipality needs to improve its local revenue collections or reduce operating costs, or a combination of both, in order to have reasonable levels of cash to cover municipal infrastructure requirements. Considering the Project s characteristics and based on the financial and risk analyses, NADB concludes that the proposed Project is financially feasible and presents an acceptable level of risk. Therefore, NADB proposes providing a market rate loan of up to $45.0 million pesos to the municipality of Playas de Rosarito PUBLIC CONSULTATION 3. PUBLIC ACCESS TO INFORMATION BECC published the draft Certification and Financing Proposal for a 30 day public comment period beginning on October 5, The following Project documents were made available for public access: Approval from the Playas de Rosarito City Council. Authorization from the 20 th Constitutional Legislature of the State of Baja California. During the 30 day public comment period for the Project, which ended on November 4, 2012, BECC received a request for information and subsequent expression of support for the Project by the same individual. No other comments were received OUTREACH ACTIVITIES The following activities conducted by the Sponsor demonstrate the efforts made to provide access to Project information for the communities affected by the Project. The Project was presented to the Playas de Rosarito City Council and was unanimously approved on September 30, The resolution was ratified by the City and published in the state registry on October 14,

14 Upon obtaining approval for the Project, the City submitted a request for debt authorization for consideration of the Baja California State Congress, which issued its approval on April 17, The approval was published in the state registry on April 20, The Project also received attention from the local newspaper, Frontera. The information highlighted the savings that would be achieved by installing energy efficient luminaires in the street lighting system. The media search did not identify any concerns for the proposed Project. 13