According to the WB, the objective is to enable renewable energy development and enhance the efficiency of public power utilities in the Republic of Guatemala.

The proposed project consists of the following three components:Component 1: Support feasibility of Geothermal and Transmission Infrastructure. This component will focus on financing works and technical assistance to enable geothermal resources for renewable energy generation as well as the expansion of the transmission system. This component comprises two subcomponents as follows:* Subcomponent 1.1: Exploration drilling to confirm geothermal resources. This subcomponent will finance surface level exploration studies and well drilling in Tecuamburro and Moyuta fields and related complementary works and analysis to confirm geothermal resources and complete the feasibility stage for both geothermal fields. Drilling will be performed through campaigns for reduced diameter wells, for production-sized wells and for reinjection wells. Activities will also include - inter alia - financing of civil works to access the wells, related environmental assessments, works supervision, complete feasibility studies of geothermal power plants in the selected fields, development of all relevant technical specifications and terms of reference, and transaction advisory support for the structuring of these geothermal power plants projects, as well as the preparation of the Environmental and Social Impact Assessments (ESIAs) if the feasibility of the two geothermal projects has been confirmed and resources are available.* Subcomponent 1.2: Technical Assistance for Transmission Infrastructure Development. This subcomponent will finance technical assessments to support the development of Guatemala's transmission network, in particular the expansion of the 400kV transmission line (TL) that currently connects the Mexican border and the Brillantes substation, and which aims to connect the latter with Escuintla and Guatemala City and then with Tactic. The subcomponent will finance the preparation of detailed technical studies, bidding documents and related technical specifications, including climate resilient considerations such as designing grid infrastructure that can withstand extreme weather events and changing climate condition, utilizing materials with improved durability and flexibility to enhance resilience to climate-related hazards; ESIAs as well as other required Environmental and Social instruments to ensure readiness to procure the works contract to expand the 400kV line and respective substations.Component 2: Operational and Technical Efficiency Improvements for Electricity Municipal Companies (EEMs) and Managerial and Governance Improvement of the National Electrification Institute (INDE). This component aims to enhance the performance of EEMs and INDE. It includes two subcomponents:* Subcomponent 2.1: Performance and Distribution Infrastructure Enhancement for EEMs. This subcomponent seeks to improve the operational performance and reduction of electricity losses of participating EEMs through the financing of the following activities: (i) rehabilitation, expansion and reinforcement of distribution networks; (ii) mass deployment of enhanced metering technologies; and (iii) modernization of management and commercial systems. The subcomponent will also finance supervision of the works in all EEMs participating in the Project.* Subcomponent 2.2: INDE Performance Improvement Implementation. This subcomponent aims to support the implementation of performance improvement measures within INDE on issues related to corporate governance, environmental and social management, operational performance and financial practices. Activities to be financed include inter alia, INDE's governance enhancements, reengineering and modernization of management processes, information technology systems, financial corporatization, creation of a comprehensive communication strategy, environmental and social management systems. Component 3: Capacity Building and Project Implementation Support. This component will support the capacity strengthening of project management across INDE's operational units to consolidate the strategic role of the institution in the sector. The Project will finance key planning activities, such as investment strategies, and the development of a master plan for hydropower generation. The Component will finance specialized personnel and expert consultants of the Project Implementation Unit (PIU), external audits, as well as capacity building activities for both INDE and the EEMs and other relevant entities - as needed -, and coordination activities among stakeholders to ensure effective project implementation and comply with all required regulations. Additionally, this component will also finance activities to strengthen INDE's framework for preventing and responding to sexual harassment.INDE will be the Project Implementation Agency. INDE will carry out all fiduciary duties, including financial management of the Project, procurement as well as environmental and social (E&S) management activities. A PIU at the Planning Directorate is being established with support from a Grant Facility for Project Preparation (GFPP) grant. The PIU will implement project-related activities and coordinate with INDE's subsidiaries responsible for defining the technical design and supporting implementation, namely the Electric Power Generation Company (EGEE), the Electric Power Transmission and Control Company (ETCEE) and the Power Commercialization Company (ECOE). The PIU will be comprised of INDE staff and consultants as well as by ad-hoc experts that will be hired to provide just-in-time support to facilitate the implementation of Project activities. The overall coordinator as well as the heads of procurement and financial management will be INDE staff. Additional fiduciary, environmental and social, monitoring and evaluation and technical specialists or experts will be financed with Project funding. The PIU will also monitor and report on project indicators and will oversee the Project's financial reporting.

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