R E S T R I C T E D I RETURNTO DESK' CU 4PY R e p o r t N o. T.O. 72-b RELPORTS DES y \V IT N j APPENDIX 4 to PRESIDENT'S REPORT Thisdocument was prepared for internal use in theBank. In making it available to others, theBank assumes no responsibility to them for the accuracy or completeness of the information contained herein. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TECHNICAL REPORT on the CHDRAL EXPANSIONPROJECT COLOMBIA March 17, 1955 Department of Technical Operations Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
R E S T R I C T E D
I RETURNTO DESK' CU 4PY R e p o r t N o. T.O. 72-b
RELPORTS DES y\V IT N j APPENDIX 4 to
PRESIDENT'S REPORT
This document was prepared for internal use in the Bank. In makingit available to others, the Bank assumes no responsibility to them forthe accuracy or completeness of the information contained herein.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
TECHNICAL REPORT
on the
CHDRAL EXPANSION PROJECT
COLOMBIA
March 17, 1955
Department of Technical Operations
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TABLE OF EQUIVALENTS
U.S. $1.00 a Colombian Pesos Z.51
Colonmbian Peso 1.00 a U.S. cents 40
Colombian Peso 1,000,000 a U.S. $400,000
TABLE OF CONTEFTTS
Page
I. BackgroundDevelopment to Date 1Organization and Management 2Pinancial History 2
UI. Request fto a Second Loan 3
III. The Power Market 4
IV. Description of the Project 5Water Availability 6Status of Engineering for Project 6Construction Schedule 6Estimted Cost of the Project 7
V. Financial Results 7Financing During the OonstructionPeriod 8
General Prospects of the CompanyEstimated Earnings 9Depreciation Policy 10Cash Position inPro-forma Balance Sheet 10Debt Service inFuture Borrowings and
Debt/Equity Ratio 10
VI. Conclusions and Recommendations 11
Anne"es I, II, III and IV
SUCMARY
The Bank made a loan of $3.53 million to CHIDRAL in November,1950 for the first strge of the Anchicaya hydroelectric development con-sisting of two units having a total capacity of 24,000 kw. Meny delayshave been encountered in the execution of this project but it is nowscheduled for oneration in the middle of 1955.
CHIDRAL, a corporation owned by the Government of Colombia,Department of Valle del Cauca and 1lunicipality of Cali rtill be the ex-clusive producer of all the electric power necessary for distributionby the ;.qunicipality of Cali after completion of the first stage ofAnchicaya.
The corporation has requested a Bank Loan to assist in installinga third unit at ".nchicaya having a eapacity of 20,000 kw and a 12,500 kwthermal plant at Yumbo with the necessary additions to substation capacityin the vicinity of Cali. This progran is estimated to cost ebout 17.1million pesos ($6.8 million U.S.), of which about the equivalent of $&4.5million U.S. would be required as foreign exchange.
There has been a great shortage of power in the Cali area andsevere restrictions have been applied. Industrial expansion has beenlimited and new industries have had to install their own generatinE facil-ities.
A power market survey has been made by Gai Pan American Corpora-tion (GAIPAN), a subsidiary of Gilbert Associates of New! York, and by theColombian Technical !Mlission, a combin-tion of Gibbs and Hill of Ner Yorkand Electricite de France. Their forecasts show! the need for the immediateexpansion of the gener-,ting facilities of the CHIDRAL system by at least32,500 kw in addition to Stage I of Anchicaya if the requirements of thearea are to be satisfied.
Syndibel, a Belgian engineering groun has been engaged to supplycomplete engineering services including the training of personnel. Ordershave been placed for the Atichica-ya unit, and eniineering for Yumbo and theexpansion of the high voltage substations is wpiell advanced. The equipmentfor the expansion program is being obtained on the basis of internationalcompetitive bidding. The cost estimates and construction schedules arereasonable. The Anchicaya third unit and substations should be in opera-tion by November 1956 and the Yumbo plant before the end of 1958.
The nresent financing plan for the completion of the first stageand proposed expansion apnears to be adequate for the company's needs. Thefuture financial position of CHIDRAL appears to be good.
ii
It is recomiended that a loan of the equivalent of $4.5 millionU.S. be considered for this project. The useful life of the eouipment andthe length of the construction period suggests a loan for a period of 20years with a period of grace of 4 years as reasonable.
I, BACKGROUN
Develonment to Date
1. A loan of U.S. $3.53 million was made on November 2, 1950 tothe Central Hidroelectrica del Rio Anchicaya Limitada (CHIDRAL), aColombian corporation organized for the purpose of constructing, owningand operating electric power generating and transmission facilities,primarily to serve Cali, a fast growing city in southwest Colombia. Theloan was for the foreign exchange costs of the construction of a hydro-electric project of 24,000 kw capacity on the Anchicaya River about30 miles northwest of Cali; a 110 kv double circuit transmission line andstep-down facilities in Cali.
2. At the time the Bank loan was made, the Anchicaya project was anold undertaking on which work had been carried on during the period 1944to 1948. In 1948, work was suspended, partially because of a lack of fundsand also because the dam had been designed with insufficient foundationexploration. The project was revised by Charles T. Main, Inc., a well-known firm of U.S. consulting engineers, after extensive field surveys anddesign calculations. The dam was changed from a concrete arch type to acurved gravity type, which is nor being constructed.
3. After the Bank loan was obtained in 1950, a contract was awardedto Christiani and Nielsen Ltda. y Jaramallo y Forero Ltda. to complete thedetailed design and to construct the hydroelectric project. After a periodof unsatisfactory construction progress by the contractor, CHIDRAL inJuly 1953 cancelled the contract and new contractors were engaged. The damis being completed by Campenon Bernard de Colombia, Ltda., the powerhouseby Ingenieria y Construccionnes, Ltda., and the tunnel by Arango y Moreno,all reputable concerns. The transmission system is complete except forfinal connections. Since the beginning of 1954, work progress has beensatisfactory; however, some difficulty has been experienced in the con-struction of the surge tank, which has resulted in a delay in the completionof the project. The project is nov nearing completion and will be placedin service about the middle of 1955.
4. CHIDRAL has taken the initial steps to staff and train an operat-ing organization for the facilities novr nearing completion. The staff isbeing recruited from personnel now engaged in the construction of theproject. These men vwere obtained from other Colombian power plants.
5. The CHIDRAL system now includes two diesel and three small hydro-electric plants having an aggregate generating capability of 11,800 kw.In addition, a private electric company (HIVA) serving the city of Palmirasupnlies a block of 4,500 kw to the system under a contract that was due toexpire December 31, 1954. The plants are now operated by the i'unicipalityof Call but will be turned over to CHIDRAL when the present stage of
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Anchicaya is put into operation. The total generating capability of theCHIDRAL system after the completion of the present stage of Anchieayawill be 35,000 kv.
6. The Municipality of Cali is increasing its distributionfacilities to take care of the entire output of the CHIDRAL system(35,000 kw). The work, costing about 14.3 million pesos, is welladvanced and will be completed by the end of 1955.
7, The existing loan of $3,530,000 has been fully disbursed. Thelatest revised estimate of cost of the present stage of the project isabout 43 million pesos ($17.1 million equivalent).
Organization and Management
8. The present CHIDIiAL corporation was incorporated in October 1950by the Instituto Nacional de Aprovechamiento de Aguas y Fomento Electrico(an agency of the Colombian Government), the Departamento del Valle delCauca (the provincial government) and the Municiplo de Cali. The Board ofDirectors of CHIDRAL is composed of five active members and five personalsubstitutes designated by the yearly assembly of shareholders. Threedirectors and three substitutes are designated by the Government, onedirector and one substitute by the Departamento del Valle and one directorand one substitute by the Municipality of Cali. Members of the Board serveone year terms from March 1.
9. The principal executive of the company is the general manager.R.enorting directly to him, and under his administrative direction are thevarious departments performing engineering work, inspections, accounting,general administration, and operation of the works. The management isconsidered competent.
Financial History
10. When the comi,any was first organized in 1944, the ColombianGovernment, the Department of Valle and the Municipality of Cali held theoriginal capital of 1.5 million pesos, in the proportions 51%, 23% and 26%respectively. By 1950 the share capital had been increased in the sameproportions to 21.2 million pesos. Since about 3.7 million pesos of thisrepresented the value of the Cali plants bought in 1950 from the munici-pality, only about 17.5 million pesos had been provided for the local costsof the Anchicaya plant.
11. As work progressed, the company again found itself short of fundsand in May 1953 borrowed, with the Bankts consent, 4 million pesos from therondo de Establizacion, an agency of the National Government, on an unse-cured basis. The interest rate is 6% per annum and repayment of principalis to be by 40 monthly instalments of 10i,000 pesos each. Originally the
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first instalment was to be paid on July 1, 1954, but because of delays inthie completion of' the plant, the dates of all payments have now been post-poned by 12 months so that the first payment is to be in July 1955. Thecompany is contemplating asking for a further postponement of six totwrelve months.
12, In the autumn of 1953 the company made a new revision of costestimates w;ihich showed the need for at least 6.5 million pesos of addi-tional money, and sought to obtain it from the Instituto de FomentoElectrico as an increase in share capital*
13. In December 1953 the company. wThich had not been able to obtainthe money in the form of capital, but wrhich could get a loan from theFondo de 'stablizacion, asked the Bank to approve a loan of 6.5 millionpesos from the Fondo. The Banc refused its consent as it considered thatthe resultant debt service Fould be more than could be considered prudentin the circumstances. Subsequently the Irstituto de Fomento Electricoagreed to provide the 6,5 million pesos, 3.5 million as share capitaland 3 million as a loan. The Bank agreed to this, but repeated its viewthat the best interests of the company would be served by the provisionof the whole amount in the form of share capital.
14. In order that -woric should not have to be suspended for lack offunds, the Bank, while these negotiations were 0oing on, authorized temporaryborrowings of 3 million pesos to be repaid out of the 6.5 million pesos whenthey became available.
15, The 6.5 million pesos were mac'e available in the summer of 1954and the temporary loan was paid off. All except 315,000 pesos of this amountw^as treated as an increase in capital, and in addition by the end of December1954 the Department of Valle had paid in 2,500,000 pesos of new capital andthe I,unicipality of Cali had transferred to the ow'nership of CH.MRAL the lastof its diesel plants in exchange for shares to the value of 1,538,836 pesos.The position of the company at the end of December 1954 is shown in a con-densed form in Annex II*
1I. REQUEST FOR A SECOND WAN
16. The BanI was requested in April 1954 to finance the foreign exchangecosts of an expansion of the CHDDRAL system. This report appraises theprogram proposed by CHIIRAL, calling for the immediate construction of athird unit at Anchlicaya having a capacity of 20,000 kw, the building of a12,500 kg thermal planit at Yumbo, an industrial suburb of Cali, and thenecessary expansion of high voltage substation facilities, which includes theinstallation of spare transformer capacity to insure full plant availabilityat all times in the event of equipment outages. The total cost of theprogram is equivalent to $6.S million U.S. and the company has applied fora loan of $4.5 million to cover the foreign exchange costs. The Bank has
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recently been informed that the Municipality of Cali, taking advantageof a favorable option offered by the equipment manufacturers, has decidedto purchase an additional 20,000 kw generating unit for installation inAnchicaya identical to the third unit. This unit represents spare genera-ting capacity. This is a desirable feature. The cost of this equipmentis estimated as equivalent to $510,000 and it will be contributed by theMunicipality as an increase in its equity in CHIDRAL.
17. This report is based on information obtained from the Bank'sColombian Survey M3ission, CHIDRAL and from reports prepared by Gai PanAmerican Corporation (GAIPAN) a subsidiary of Gilbert Associates of NewYork, and by the Colombian Technical Tlission, composed of an associationof Electricite de France and Gibbs and Hill of New York, which has recentlycompleted a survey of Colombia's electric power requirements on behalf ofthe Government. The data obtained are sufficient to serve as a basis foran appraisal.
III. THE PGW HART
18. Calil, the major commercial and governmental center of the richand fertile Cauca Valley, is the fastest growing city in Colombia. Thelatest census indicates that the population has grown from 101,OfO in1938 to 250,000 in 1951, and according to latest estimates it now ap,roaches360,000. The Cauca Valley is one of the principal food producing areas ofColombia with a great potential for further agricultural development. Duringthe last several years the Cali area has been the scene of an ever increasingindustrial expansion. Many North American and European firms are establishingsubsidiary manufacturing plants in the area,
19. The peak power lo'd on the system has been equal to the availablecapacity since 1949 and there has been an increasing backlog of demanddeveloping during the intervening period. Nevr industries have been forcedto put in their own generating equipment and new commercial snd residentialloads have been refused.
20. The forecast of the CHIDRAL system load and available capacityprepared by the Bank is shown in Annex I. This indicates that there willbe an increase in demand from 16,509 kw in early 1955 to 64,000 kw at theend of 1959. This will result in a corresponding increase in energy genera-tion from 113 million krh in 1955 to 369 million kwh in 1959. These esti-mates include about 15,000 kw of power to be supplied to industries that arenow generating their own electrical needs with relatively high cost dieselengines. The area covered by the system is shown in Annex IV.
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212 By the encl of 1958, the total capability of the CHIDRAL system-.ill total 67,500 kv made up as followvs:
Diesel Plants I and II 9,500 Ica in serviceSmall Hydroelectric Plant 1,500 kw in serviceAnchicaya Units I and II 24,000 kvr July 1, 1955Anchicaya Unit III 20s000 kw Nov. IL 1956Yumbo Thermal Plant 12,500 kl Dec. 1, 1958
Total 67,500 kw
IV. DESCRIPTION OF THE PROJECT
22. The project includes the following facilities:
(a) An extension of the original An¢}icaya project, by theinstallation of a third generating unit. The equipment to be installedwill consist of a hydraulic turbine of 32,000 horsepover to operate at ahead of 235 feet, a generating unit of 20000 kvr, all necessary mechanicaland electrical auxiliaries including an overhead crane, penstocks, valvesand a 110 kv step-up substation.
(b) A thermnal powier plant of 12,500 Ic to be constructed nearYumbo at Puerto Isaacs just north of the city of Cali and its industrialsuburbs. The site, ;ith ample room for expansion, has been acquired andthe necessary transportation facilities laid out. The plant sill be of themodern seri "outdoor typell having an outdoor type boiler supplying steamto a conventionally housed steaml turbine at 600 # PSI and 8250 F. Allnecessary auxiliary poc.er plant equipment, such as controls, etc. wrill beinstalled. Cooling water will be obtained from the Cauca River and coalfrom the existing coal mines in the area. Tlhe coal handling and ash removalequipment wJill be designed for two units. A complete 34.5 lcv step-up sub-station will be installed at the Yumbo Power Plant and tied directly intothe Cali 1iunioipal system.
(c) The receiving substations in the outskirts of Cali, SanAntonio and Chipichape will each-be expanded by the adcition of svEtoh_gear and transformers so that 20,000 kwr additional capacity can be madeavailable for distribution in the Cali system from each substation.
23, The Cali distribution system vrill be expanded by the I.;iunicipalitybetwreen 1955 and 1960 to a capacity of about 100,000 Iow at a cost of approx-i-.ately 14.3 mil'Lion pesos ($5.7 million U.S.). This w,ill be done wfith the,lunicipalityts own funds. CHIDRAL has stated that it will obtain an assur-ance satisfactory to the Bank that tihe extension program wrill be carriedout, Also, as pointed out in paragraph 16, a fourth generating unit identicalto the third and to be paid for with the L1unicipality' s oln funds will beinstalled in the IAnchicayna station.
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:ater Availability
24. The watershed of the Anchicaya River upstream from the dam com-prises about 300 square miles of tropical jungle Arith an average annualrainfall of about 186 inches. The periods of loawst rainfall occur inJanuary,s 7ebruary and iliarch and in June, July and August.
25. Charles T. 'ain, Inc. in 1950 made a thorough analysis of wateravailability from the stream flow and rainfall records available for theyears 1942 through 1949 inclusive. Detailed records have subsequentlybeen kept rhich provide a m.ore adequate basis for appraisal of .rrateravailability. These records substantiate the conclusions arrived at byCharles T. M:ain that it is feasible to install an ultimate total generatingcapacity in the Anchicaya plant of as rnuch as 72,000 10:. The load condci-tions justify the installation of 44/,000 kcv at this tiriew
Status of 3ngineering for the Project
26.. Syndibel, a group of Belgian en,;ineering firms, coi-aposed ofElectrobel, Electrorail, Sofina and the Societe de Traction et dt3lectricite,has been employed to perform en-ineering services for the power plants,including detail desian, preparation of specifications, supervision ofconstruction and training of additional operating personnel. The generalengineering of the first stage of the Anchicaya development included provisionfor the third generating unit* Preliminary engineering has been completedon the Yumbo steam. plant and specifications are being prepared.
Construction Schedule
27. The housing and the foundations for the third Anchicaya unit arebeing constructed as a part of 5tage I and orders for generating equipuentwere placed before November 1954.. Unider th6se conditions the unit shouldbe in commercial operation by IVovember 1956.
28. The engineering for the Yumbo steam plant is progressing satis-factorily so that the plant should be ready for commercial operation inlate 1958. In fact, there is a possibility that the plant might be com.-pleted in three years if proper cooranation can be achieved. Howrever,because of the location and the scarcity of experienced mechanics a con-servative construction period of four years has been used for calculations.
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Estimatedl Cost of the Project
29. The table below,, summarizes the estimated cost of the project:
(in millions)Foreign Exchange Local Cost Total Cost
expressed in: expressedPesos Pesos in Pesos
Third hydro unit hnchicaya 1.41 3.54 2.30 5.84Substation expansion ,66 1.66 .10 1.76Yurabo Thermal Unit 2.13 5.35 2.,76 8.11Interest curing Construction .30 .75 .66 1.41
Totals 4.50 11.30 5.82 17.12
totals as U.S. .50 4.50 2.32 6.82
(Rate of 2-change ',"l * 2.51 Pesos)
The esti1mates are considered realistic. They include freight, insurance,engineering and supervision and, a contin,ency alloviance of 10%.
30. Interest during construction has been included both on foreignand local expenditures,
31. The proportion of foreign exchange to total cost is relativelyhi-h due to t'ne 'Ihig,h proportion of' imported equipment. It is not possibleat this time to supply a breakdown by currencies of the foreQin exchangerequired. Orders have been placed, on the basis of international bidding,in France for the turbine costing the ecquivalent of ;'202,000- and inSwitzerland for the generator costing the equivalent of $320000. The balanceof the orders Aitll also be placed on the basis of internatlonal bidding.
32. Tlhe cost per installed kilowatt for the third unit at Anchicayais very locr - approximately $120 - since only the installation of the turbo-generator, its accessory equipments and an expansion of the step-up substa-tion are involved. Its installation Adll have the effect of reducing theoverall cost per installed kilowiatt of approximately $700 for the first twxounits at Anchlcaya to about $440 per kilowatt for all three units. Thecost per kilowatt installed at Yumbo Aill be approximately $260. Thesecosts are considered reasonable.
V. FINANCIAL RESULTS
33 . The financial information supplied by the company and the ColombianTechnical .lIssion, modified wrhere necessary to reflect more recent estimatesof load grov'th and changes in construction schedules, has served as a basison w!hich to prepare the statement of the companyt s estimated financial posi-tion from January 1955 onwards w,hich is attached as Annex III* The proposed
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Bank loan has, for purpose of calculation only, been assumed to have a termof 20 years writh a period of grace of about 4 years and an interest rate of4-3/4%. (Amortization payments to be-in in January 1959 and end in January1975.) No provision for income tax has been rnade since the company isexempt, The projection is carried to the end of 1960, by which time, orbefore, the estimates indicate that the system wvould be fully loaded. There-fore it is likely that additional construction will be started by 1960 orearlier but the cost and timing of this construction cannot at present beestimated and for this reason no consideration has been given to this factorin the projection, nor is it realistic to make a forecast of financialdevelopments beyond 1960. Hovrever, any new investment shouild be self-liquidating, ancd it is expected that after 1960 the company will continuein a sound financial position, particularly in view of the financial provi-sions to be inserted in the Loan Agreement for that purposes
Financing During the Construction Period
34. In addition to the proposed Bank loan and application of fundsgenerated internally, the company proposes to finance the balance of itsfinancial requirements by raising additional equity and by local borrowings,
35. The estinates slhor that 5 million pesos of neSi money will be neededin 1955 and 1956; the company expects to raise the waount as follows:
New Capital: Pesos
1955 Instituto de Fomento Electrico 700,0001955 Department of Valle 1/ 1l00 000
- >05700000
Loans:
1955 Instituto de Fomento Electrico 1,000,0001955 Banco de Bogota 1,000,0001955 and 1956 Source not yet known 1/ 1 300,000
3,300,000
Total 5,000,000
36. Dart of the I million pesos of new capital has already been paidin by the Department. A draft contract for the loan of 1 million pesos fromthe Banco de Bogota has been prepared and is on the point of being signed.This loan w.-ould carry an interest rate of el per annum and after one yearof grace w.-ould be repayable in equal instalments over 4 years. The loanfrom the Instituto de Fomento 2lectrico amounting to 1 million pesos wsillcarry an interest rate of 6,' and have a term of 5 years rith a one-yearperiod of grace.
1/ Since Annex III was drafted, the companyi has informed the Bank that theDepartment of Valle may in addition to the 1 million pesos shown abovesubscribe an additional 615,000 pesos. In this event the amount ofborrowing still to be arranged may be reduced.
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37. As mentioned in paragraph 11, the company has postponed all thematurities of its present loan from the Fondo de Estabilizacion by 12 monthsso that the first repayment of principal is to be made in July 1955 insteadof July 1954, and according to the estimates may wish to postpone the begin.ning of repayments to July 1956*
38. As is showin in Section IV of Annex III, the company, taking thispostponement into account, is estimated to have a liquidity margin of about800,000 pesos and 600,000 pesos at the end of 1955 and 1956, the criticalyears, whihich by the end of the construction period should have risen to over5 million pesos.
39. Because CHIDRL has not yet completed its negotiations for thenecessary financing, it is recommended that arrangements satisfactory tothe Bank shall have been made for the provision of the local currencyneeded for 1955 and 1956 before the I5RD loan is made effective.
General Prospects of the Company
Estimated Earnings
40. In Section I of Annex III the average selling price of power perkwh in each year reflects the application of the rate schedules at presentagreed between the Lunicipality of Cali and CHIDRAL. The company's totalcosts per kah, including interest (not shown in Annex III) and averageselling prices are estiaated ats
It should be noted that the tariff rates used in Annex III were agreed someyears ago and do not reflect the present day higher estimates of operatingcost which have been used in this report, nor the increased cost of theAnchicaya plant, The company is about to start negotiations, in which itexpects to be successful, for higher rates. q
41. Based on present tariff rates the net profits in 1956, the firstfull year of operation of the first two units of Anchicaya, should be about2.2 million pesos and in the four subsequent years should average about3.9 million pesos, giving returns on share caoital of about 6.4% and 11.4%respectively. Interest on borrowed funds wrould be covered by earnings morethan five tirmes in all of these years,
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Depreciation Policy
42. The company's estimates show the depreciation charge at a farlower figure than is normal* In preparing Section I of Annex III, higherdepreciation figures have been used. For the sake of financial prudence,the company should be required to adopt adequate rates of depreciation.
Cash Position
43. Retained earnings by the end of 1960 could amount to over 13million pesos, but wrhether the additional assets thus built up were inliquid form would depend on the amounts spent on replacements or newconstruction.
44. The company should agree to restrict its payments of dividendsto the extent necessary to maintaiin its net current assets at a reasonablelevel.
Pro-forma Balance Sheet
45. A pro-forma Balance Sheet as at the end of December 1958 showrsthat total loans, including loans from IBRD. would be covered by totalassets about 3.3 times; the ratio of long and medium term debt to equitywould be about 31/69. (See Annex II)
Debt Service
46. As sholm in Section V of Annex III total debt service should becovered by net operating revenue (before charging depreciation) about 1.2times in 1955 and this coverage should increase steadily to 3.3 times in1960.
Future Borrowings and Debt/Equity Ratio
47. The present Loan Agreement establishes a formula vwhich relatesthe maximum debt the company can incur (except vwith the Bankts consent) torevenue, It is suggested that in the proposed Loan Agreement the companyshould be permitted to incur long-term debt up to, but not in excess of, itsequity. This -wiould remove any possibility of the companyts borrowing powersbeing unduly restricted or expanded as a result of fluctuating profits, pro-vide a considerable margin for further borroiing, and at the same time preventdebt from rising to an unduly high level.
48. The estimates show. the financial position and prospects of thecompany to be ge)odo
VI. CONCLUSIONS AND RECOMENDATIONS
49. The demands for powrer in the Cali area already exceed thesupply and new power requirements are increasing rapidly. Under theexisting contract between CHIDRAL and the Municipality of Cali, allpaver production is the responsibility of CHIDRAL and all distributionis the responsibility of the Municipality. The proposed expansion ofCHIDRAL's generating and receiving substation capacity and Cali'sdistribution facilities is consistent vith the forecast of powTerrequirements of the area.
50. The expected load growth in the Cali area justifies-an ex-pansion of the CHIDRAL system by at least 32,500 kw in new capabilityduring the next four.years. The installation of a third unit of 20,000kw at Anchicaya and a 12,500 kw coal burning thermal unit at Yumbopresent the most economical solution to the problem,
51. The project is sound and the cost estimates are reasonable.Financial forecasts show that CHIDRAL could service the proposed addi-tional loan. The project is considered suitable for a Bank loan of$4.5 million for a term of twenty years, vTith a period of grace of fouryears. This amount includes commitment charges and interest duringconstruction.
MW ANNEX I
60
50~~~~~~~~~~~~~~~~~~~~~~~~~~~~~z_- | 55 Mw_N,=':::...V during eveng peak hours
LOAD FORECAST40
30 - COLOMBIA-CH I DRAL SYSTEM
LOAD a AVAILABLE CAPACITY FORECAST
AVAIL.ABLE CAPACI. TYlF__
10 W<<
O 0 _JU YJJULY JULY JULY JULY JULY JULY JULY JULY
A^flt II
Central Hidro,electrica del Rio Anchicaya Ltda.
Condensed and Rounded Balance Shegt as of December 1954and Pro-Forma Balance Sheet as of December 1958
194 958Pesos Pesos
Assets
Fixed assets at depreciated value 5,122,000 61,466,oooWork in progress 37,397,000Construction inventories, etc. 3,507,000Net current assets 1/ 5,244,ooo
46,026,000 66,71o,000
1_a'bilities
Share capital 2/ 31,424,000 34,404.000Loans from IBRD 8,465,000 18,150,000Other loans 5,315.000 2,597,000Reserves and surplus 822,000 11%559.000
46,026oq00 66a:to.ooo
Debt/Equity Ratio 30/70 31/69
1/ YSet current assets at December 31, 1954 were negligible andhave been ignored.
2/ Sh're capital is made up:1954 1958
Institiuto de Fomento Electrico 16,997,000 17,697,000Departamento del Valle 7.376,000 8,376,000Municipio de Cali 7,051,000 * 8,331,000
il,424.obo 34,40_.000
* The increase of 1,280,000 nesos represents the cost of the4th unit at Anchicaya contributed by the Municii,ality as asubscription of capital,
CIERAL IiaOXLrCCRICA DMM RIO ANCEICAYA I/DA.
STATT tW ISTIDAED AVME S AD APPLICATION 0 FUNDS, AVAILABL FDIIDS. AND u5V COMa FQB DM SERVICE(xpressed in thousandn of Pesos except where otherwise stated)
Years endine December 31: 19SS 1956 19S 19S8 1S 1960
I SRaenna Account
Millions of sol ol 63 202 304 329 354 383Average price per DIE in centavos 3.30 2.82 2.56 2.56 2.56 2.56
Revenue from sales of power etc. 2,221 5,696 7.782 8,422 9,062 9,805
Surplus for year 795 - 172 2,051 2.570 2,883 5.053Available at beginning of year - 795 623 2,674 5,244 8,127Available at end of year 795 623 2.674 5244 8.127 lS.180
V Relation of Reverme to Debt Service.
Net operating revenue before provision for depreciation 1,528 4,174 6,204 6,489 6.657 7,113Total debt service 1,266 2,902 3.796 3,863 3.874 2,160
Number of times debt servies covered 1.2 1.4 1.6 1.7 1.7 3.3
]/ Assuming that the company starts to operate Anchicaya and the Cali plants on July 1, 1955.
2/ In and from 1957 the agreed minimu,-rate would apply.
1/ Exclusive of interest during the construction period which is charged to the project.
j/ Assuming that the first maturity of the Fondo de Bstabilisacion loan is postponed until July 1, 1956
