Documet of T'he WorldBank FOR OFFICIAL USE ONLY ReportNo. 8376 PROJECT COMPLETION REPORT PANAMA FOURTHPOWERPROJECT (LOAN 1470-PAN) FEBRUARY6, 1990 Infrastructure and Energy Division .ountry Department II Latin Americaand the CaribbeanRegional Office This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may not otherwise be disclosedwithout World Bank authorization. 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
Documet of
T'he World Bank
FOR OFFICIAL USE ONLY
Report No. 8376
PROJECT COMPLETION REPORT
PANAMA
FOURTH POWER PROJECT(LOAN 1470-PAN)
FEBRUARY 6, 1990
Infrastructure and Energy Division.ountry Department IILatin America and the Caribbean Regional Office
This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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ICOUNTRY 2XCHANGE RATE
Name of Country's Currency - Balboa (B/.'
Exchange Rate: IAt appraisal - US$1 a B/.1Intervening - year average - US$1 - B/.1Completion date (October 1984) US$1 - B/.1
V,
THE W ORLD BANK FOR OWmCIAL USE ONLYWashington. DC 20433
U.S A
CJ.g a t DvS4.a.q
February 6, 1990
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on PanamaFourth Power Proiect (Loan 1470-PAN)
Attached, for information, is a copy of a report entitled "Project
Completion Report on Panama - Fourth Power Project (Loan 1470-PAN)" prepared by
the Latin America and the Caribbean Regional Office. No audit of this project
has been made by the Operations Evaluation Department at this time.
Attachment
l
This document hu a restricted distribution and may be used by recipients only in the performamneof their olfical duties Its contents may not otherwise be disclosed without World Bank authouization.
FOR I AL US OLYPROJECT COMPLETION REPORT
FOURTH POWER PROJECT (LOAN 1.470-PAN)
TABLE OF CONTENTS
Page No.
Preface ....... ..... * * ............................. 1Basic Data Sheet ......... ... ** **.*................................ **a*.. iHighlights .......................................................... v
CHAPTER Is Background
1.1 Bank Participation in the Power Sector . ................ 11.2 Power Sector Organization and Regulation ............... 1
CHAPTER IIs Project Preparation and Appraisal
2.1 Origin and Rationale for the Project .. ................. 22.2 Project Preparation and Appraisal ...................... 22.3 Negotiations, Board Presentation and Effectiveness ..... 42.4 Major Covenants of the Loan Agreement .................. 5
CHAPTER III: Project Execution and Cost
3.1 Timetable and Changes in the Project . .. 5 3.2 Studies ............ .......... .. 73.3 Project Costs .............. .*..* ................................... a3.4 Changes in Closing Date, Allocation of Loan Proceeds,
and Timing of Disbursements .. 93.5 Performance of Consultants, Contractors and Suppliers ...9
CHAPTER IV: Project Justification
4.1 Need to Supply Power Facilities . .......... .......... 104.2 Rate of Return . ............ ......... .10
CHAP'<>'^r V: Financial Performance
5.1 Comparison of Actual and Forecast Data ................ 115.2 Electricity Rate and Operating Expenses ............... 115.3 Accounts Receivable ....... 125.4 Energy Losses and Number of Employees ................. 125.5 Financial Rehabilitation .............................. 13
CHAPTER VI: Institutional Performance
6.1 IRHE .................................................. 136.2 The Government ........................................ 136.3 The Bank .............................................. 14
This document has a restricted distribution and may be used by recipients only In the performanceof their official duties. Its contents may not otherwise be disclosed without Worid Dank authotization.
TABLE OF CONTENTS (Cont.)
Page No.
CHAPTER VII Lessons to be Learned ............................... 14
ANNEXES
Annex 1.1 Summary of Bank Lending to IRHE ............ . .......... 152.1 Major Covenants of the Loan and Guarantee Agreements.. 163.1 Appraisal and Actual Timetable
of Project Implementation ...... ....................... 183.2 Appraisal and Actual Project Costs .................... 193.3 Appraisal and Actual Accumulated Disbursements ....... 203.4 Appraisal and Actual Loan Allocation . .21
4.1 Internal Rate of Return on Investment .225.1 Comparison of Appraisal and Actual
Income Statements (1976-1986) .235.2 Comparison of Appraisal and Actual Sources
and Applications of Funds (1976-1986) . .24
5.3 Comparison of Appraisal and ActualBalance Sheets (1976-1986) ......... . .......... 25
5.4 Financial and Efficiency MonitoringIndicators (1976-1986) ...... 26
PANAMA
PROJECT COMPLETION REPORT
FOURTH POWER PROJECT (LOAN 1470-PAN)
Preface
This is the Project Completion Report (PCR) for Panama's FourthPower Project. Bank loans to help fit,ance the project amounted to a totalof U~'$73.3 million, and included the initial loan for US$42 million and asupplementary loan for US$31.3 milliPn. The Borrower was the Instituto deRecursos Hidraulicos y Electrificacion (IRHE). The PCR was prepared by theInfrastructure -nd Enf:cgy Division, Country Department II, of Latin Americaand the Caribbe.n Regional Office, based on information in the Bank files,a final report prepared by the Borrower, and discussions with Bank staff.
This PCR was read by the Operations Evaluation Department (OED).The draft PCR was sent to the Borrower on November 17, 1989, for commentsby December 31, 1989, but none were received.
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PROJECT CCMPLETION REPORT BASIC DATA SHEUT
INSTITUTO DE RECURSOS HIDRAULICOS Y ELECTRIFICACION
FOURTH POWER PROJECT (LOAN 1470-PAN)
BASIC DATA SHEET
Key Proiect Data
Total Proiect Cost Appreisal Actual
(US$ million equivalent)(Including financial charges) 253.59 522.10Cost Overrun (or underrun) X 105.9
Loan Amount
(US$ million equivalent)Disbursed (as of February 29, 1988) 42.0 1/ 72.96 11Cancelled (as of February 29, 1988) None 0.34Repaid (as of February 29, 1988) 29.85 24.11Outstanding (as of February 29, 1988) 43.45 71.24
Date Physical Components Completed 5/83 10/84
Return on Investment (Z) 17.71 13.0S
Institutional Performance Good Deteriorating
11 The initial loan considered at appraisal was UE$42 million, and laterincreased with a supplementary loan of US$31.3 million.
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MISSION DATA
Month/ No. of No. of Staff Date ofType of Mission Year Weeks Persons Weeks Report
Protect Identification 10174 l 1 1 10/26/74Projert Preparation 12/74 2 1 2 12/31/74Project Preparation 6/75 2 2 4 8/25/75Project Preparation 12/75 2 2 4 1/9/76Project Preparation 4/76 1Appraisal 10/76 3 2 6 6/10177Supervision I 12/77 0.4 2 0.8 12127/77Supervision II 10/78 2 1 2 11/22/78Supervision III 5/79 1 1 1 6/25/79Supervision IV 5/80 2 1 2 6/9/80Supervison V 9/80 2 1 2 10/17/80Supervision VI 5/81 1 1 1 5/22/81Supervision VII 9/81 2 5 10 9/18/81Supervision VIII 8182 2 2 4 9/29/82Supervision IX 8/83 2 1 2 9/14/83Supervision X 1/85 1 1 1 2/20/85Supervision XI 1/86 2 2 4 2/21/86Supervision XII 9/86 1 1 1 10/7/86
Follow-on projects:Fifth Power Project (Loan 1778-PAN) Rehabilitation and Expansion
of the Distribution Systemacross the country. Completed.
Sixth Power Project (Loan 2313-PAN) Rehabilitation and Expansionof the Distribution System.Under implementation.
Seventh Power Project (Loan 2506-PAN) Second Stage of the FortunaHydroelectric Power Project.Under implementation.
v
PANAMA
PROJECT COMPLETION REPORT
FOURTH POWER PROJECT (LOAN 1470-PAN)
1. Loan 1470-PAN (USS73.3 million) 1 helped to finance theconstruction of the 300 MM Fortuna Hydroelectric Power Plant, 41 kme of a230 kV double circuit transmissinn line, expansion of the Panama Substationand IRHE's organizational improvement program and training. The Projectwas successful in meeting the objectives of: a) increasing the supply ofelectricity to meet the country's needs, b) reducing Panama's heavydependence on imported fuel by decreasing fuel-fired thermal generation,and c) implementing a large part of IRHE's organizational improvementprogram.
2. The Project was completed by the end of 1984, approximately oneand : half years later than the target completion date. The main cause ofthe delay was the adverse geological conditions encountered, which madenecessary a change of design for the powerhouse, reinforcement of thetunnels and radical changes in the method of construction. The technicalsolutions found for the problems were adequate and the Project is operatingsatisfactorily.
3. The financial performance of IRBE during the period of Projectconstruction was adequate, even though the institution experiencedfinancial difficulties due to lower electricity sales than expected atappraisal, significant cost overruns and delay in the construct'--< of theProject. IRHE's financial performance deteriorated significantly in recentyears due to rising operating costs, high level of accounts receivable andsystem losses, and overstaffing.
1/ An initial loan of $42.0 million and a supplementary loan of $31.3million.
PANAMA
INSTITUTO DE RECURSOS HIDRAULICOS Y ELECTRICOS
FOURTH POVER PROJECT (LOAN 1470-PAN)
I. BACKGROUND
1.1 Bank Participation in the Power Sector
1.1.1 Since 1962 the Bank made seven loans to IRHE totalling US$255.4million (Annex 1.1). The first four .oans helped to finance hydroelectricand thermal expansion (533 HW) and associated transmission. The Fourthloan, which is the subject of this report, helped to finance theconstruction of the first stage of the Fortuna Hydroelectric Power Plant.Bank participation sought to improve sector organization and planning andfoster tariff policies aimed at maintaining electricity prices in line withlong-run marginal costs, and at generating funds to finance the sectorinvestment requirements. It also facilitated the inflow of foreigncommercial and bilateral financing to the sector.
1.1.2. As detailed in the corresponding Project Completion and AuditReports, the first three power projects financed under Loans 322-PAN(1962), 661-PAN (1970) and 949-PAN (1973) were successfully completed,although with some delays and cost overruns- The Fifth Power Project, Loan1778-PAN (1979), was completed with a delay of three months and a costoverrun of about 55Z.
1.1.3 The Sixth loan is helping to finance the continuation of therehabilitation and expansion of the distribution system, and the Seventhloan is helping IRHE to finance raising the height of the Fortuna Dam,which would increase Fortunais average generating capacity by about 247 GWhper year. This loan will also help to finance the preparation of twofeasibil'y studies for new hydroelectric projects and an asset revaluationstudy. The implementation of the Sixth and Seventh Projects has progressedvery slowly and has come to a standstill since November 1987 when loandisbursements to Panama were suspended due to failure to service the debtto the Bank.
1.2 Power Sector Organization and Regulation
1.2.1 IRHE, an autonomous Government agency created in 1961, is solelyresponsible for public service electricity supply in Panama, except for thesupply to the Canal and adjacent areas, which have their own generatingplants and are interconnected to the IRHE system. IRHE acquired theCompania Panamena de Fuerza y Luz (FyL) in 1972, the Empresas Electricas deChiriqui in 1973, the Hidroelectrica de El Valle in 1976, and two smallpower utilities in 1978: La Chorrera, formerly a privately owned company inWest Panama 1rovince (about 3 HW), and Bocas del Toro, a municipal company(less than 1 hW).
1.2.2 IRHE's Board of Directors is in charge of power sector policies.There is no separate regulato&y body for the sector. Electricity tariffshave to be approved by the Cabinet, on the basis of a recommendation by
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IRHE's Board and by the Economic Cabinet.1 IRHE's annual budget is subjectto approval by the Economic Cabinet.
1.2.3 IRHE and the Instituto Costarricense de Electricidad (ICE) signedinarly in 1982 a system interconnection agreement setting forth the basisfor energy exchanges and pricing, and for the programing and financing ofthe interconnection facilities. The facilities for the interconnectionwere financed by the Bans under Loan 1778-PAN and by the InteramericanDevelorynent Bank 'IDB); the interconnection benefits both countries,permitting the exchange of up to 150 MW of emergency power and the use ofsecondary hydroelectric energy available in Costa Rica to replace thermalgeneration in Panama. The interconnection facilities were commissioned inMarch 1986 and are operating eatisfactorily.
II. PROJECT PREPARATION AND APPRAISAL
2.1 Origin and Rationale for the Proiect
2.1.1 The Fourth Power Project had its origin in discussions held inJanuary 1972, as a result of the dialogue between IRHE and the Bank staffduring the supervision of ongoing power projects. The main objectives ofthe project then outlined were to: a) provide energy to meet theincreasing demanud of electricity from 1983 onward by utilizinghydroelectric energy available in the province of Chiriqui, allowing IRHEto substitute large part of its thermal generation, 'us contributing to areduction in Panama's petroleum imports; b) improve the reliability of theelectric system with increased generation and transmission capacity inorder to support the National Development Plan, and c) assist IRHE toimprove its organization, planning, financing, staff development andoperation.
2.1.2 In addition, the proposed project would provide the Bank with anopportunity to continue the monitoring cf IRHE's e^ficiency through keyindicators such as the number of employees, energy losses, tariffs, rate ofreturn and level of accounts payable and receivable.
2.2 Project Preparation and Appraisal
2.2.1 Project preparation took place in the period 1974-1976, duringwhich the Bank carried out four missions. The delay in preparation of theproject was due to IRHE's insufficient in-house capability, and the time
1/ The Economic Cabinet (Gabinete Economico) created by executive Decreeof November 25, 1983 is chaired by the Minister of the Presidency ofthe Republic, and includes the Minister of Planning and EconomicPolicy, the Minister of Finance and Treasury, the Minister of Commerceand Industry, the Controller General of the Republic, the GeneralManager of the National Bank of Panama and the General Manager of theCaja de Ahorros (Government savings bank).
consumed in engaging external consultants to do the bulk of the engineeringand investment planning. Preparation time was also extended because of theBank conditionality related to IRHE's organizational, technical andfinancial improvements; more specifically, the Bank made the appraisal ofthe project contingent on agreement on electricity rates, settlement ofarrears of government-owned agencies, prompt payment to suppliers andcontractors, commitments on Government contributions to IRHE to cover cashdeficits and improvements in IREE's organization. Bank requirementsresulted in: a) an increase in Gc'ernment contributions to IRHE andcommittment to approve rate increases; b) enactment of legislation makingIRHE fully responsible for the power sector and allowing IRHE to transferto other entities activities related to telephone and gas; c) reduction inarrears to contractors and in the arrears of electricity bills bygovernment-owned agencies, and d) contracts with consultants to executestudies on IRHE's organization and asset revaluation.
2.2.2 Because of slow progress in project preparation and on the actionsdiscussed above, it was necessary for the Bank to postpone, on variousoccasions, its appraisal departure. Toward the middle of 1976, thissituation had created some friction between the Bank, IRHE's administrationand Government officials. During a visit to Washington in August 1976 by aPanamanian mission, an agreement was reached on required information and ona timetable for the pending actions, allowing appraisal in October 1976.
2.2.3 As a consequence of the delays in appraisal, projectcommissioning was delayed about two years. Because of this, the Governmentdecided to build the La Estrella a,.d Los Valles Hydroelectric Projects,which were originally scheduled to enter into operation after the LaFortuna Project.
2.2.4 The project was appraised in October 1976. The mission found nomajor unresolved issues and recommended that a loan amounting to US$42million be processed. It was agreed that before negotiations theGovernment and IRER would: a) present to the Bank a diagnostic study ofIRHEE's reorganization, terms of reference for the training andreJrganization studies; b) increase rates, effective January 1, 1977,through the application of the new tariff structure agreed with the Bank,plus 12 monthly rate increases starting February 1, 1977; c) send to theBank the legislation which authorized the above increases and allowed IRHEto increase rates to earn a rate of return on revalued assets of 82 in 1978and 8.75X thereafter; d) present to the Bank evidence that the assetrevaluation had been recorded on IRHE's books, and that IRHE's shott-termdebt outstanding had been cancelled; and e) send to the Bank the finalreport of the ecology study for La Fortuna Project and a copy of thecontract in force to supply electricity to the Panama Canal Company. Allthese conditions were fulfilled before negotiations.
2.2.5 The Fourth Power Project consisted of the following components:
i) La Fortuna Hydroelectric Power Plant with a capacity of 300MW, comprising:
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(a) a concrete faced, rockfill dam with a volume of 450,000m3, 60 meters high, 240 meters crest length, elevation1010 m above sea level, and ungated spillway, with astorage capacity of 13 million cubic meters; this wasknown as the Fortuna Dam First Stage;
(b) a power tunnel, 6 km long, a surge tank and a penstock1,400 m long;
(c) a tailrace tunnel, 8.3 km long; and
(d) access roads, camp and auxiliary works.
(ii) La Fortuna Transmission System, consisting of:
(a) a 230 kV switchyard at Fortuna;
(b) the 41 km of 230 kV double circuit transmission lineFortuna-David; and
(c) expansion of the Panama Substation with one 175 MVA230/115 kV transformer and switchgear.
(iii) IRHE's organizational improvement program and training.
2.2.6 The appraisal mission estimated the cost of the project atUS$253.6 million (including interest during construction of US$31.4million), with foreign and local costs estimated at US$72.3 and US$181.3million, respectively. The project was estimated to be financed asfollows:
Million US$
IBRD 42.0Inter-American Development Bank (IDB) 98.0Suppliers' Credits 21.6IRHE and Government 92.0
253.6
IBRD would finance the foreign currency requirements for the diversionworks, rockfill dam, the ancillary electromechanical equipment for thepowerhouse and the transmission system, the organizational improvementprogram and training and the associated engineering services. IDB wouldfinance the foreign requirements of the power tunnel, surge tank andpenstock, underground powerhouse (excluding equipment), tailrace tunnel,associated engineering services and interest during construction on the IDBloan. The suppliers' credits would finance 90Z of the main generatingequipment and power transformers for the powerhouse.
2.3 Negotiations, Board Presentation and Effectiveness
2.3.1 Negotiations were held May 16-20, 1977, without major problems,and the Board approved the Loan on June 28, 1977. Representatives of theBank, IRHE and the Government signed the Loan and Guarantee Agreements on
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July 1, 1977. The Loan amounted to US$ 42.0 million; the term was 17years, including 3.5 years of grace; the interest rate was 8.2X. May 30,1983 was set as project completion date and December 31, 1983 as the LoanClosing Date.
2.3.2 The Bank declared the loan effective on February 8, 1978, fourmonths later than originally forecast because two of the conditions ofeffectiveness, payment of overdue electricity bills by the Government andcofinancing arrangements for the project, were delayed. The reasons forthe delay were: (i) financial difficulties on the Government's side, whichresulted in a longer time than anticipated in settling overdue electricitybills, and (ii) the processing of the US$98 million loan from IDB, wasdelayed because it included cofinancing with commercial banks (US$28million), which was placed in the market later than expected. The reasonwas that Panama had recently borrowed on the Eurodollar market and IDB andthe Government considered advisable to postpone for a few months theadditional borrowings for the project.
2.4 Major Covenants of the Loan Agreement
2.4.1 Annex 2.1 includes the main covenants of the Loan and GuaranteeAgreements. The Panamanian Government and IRHE complied with theirrespective major covenants, except as regarded the rate of return andarrears in accounts receivable, as explained in detail in Chapter 5.
III. PROJECT EXECUTION AND COST
3.1 Timetable and Changes in the Project
3.1.1 Implementation of the Project started in December 1977 and endedin November 1984, or 17 months later than the original completion date.Annex 3.1 shows the detailed works components and a comparison between theactual and forecast completion dates. All the facilities have been workingsatisfactorily since completion.
3.1.2 The main reason for late project completion was the delay in civilworks caused by the measures taken to cope with the problem created by theadverse geological conditions encountered. The original design of theproject was based on detailed geological studies and test drilling programscarried out by IRHE with the assistance of consultants, which predictedgeological formations, faults, quantity and quality of rock and soil,construction methods, etc. Once construction started, however, conditionsfound in the cavern for the power house and inclined penstock area wereworse than predicted, specially because the amount of tuff was higher andthe tuff pockets more frequent than predicted. To solve the problem,important changes of design to the powerhouse were made, tunnels had to bereinforced and radical changes were introduced to the method ofconstruction; conditions found in the foundations for the right abutment ofthe dam and spillway also were worse than expected. As a result, theconstruction program was delayed 18 months. The extent of the geologicalstudies and test drilling performed by IRHE prior to the Bank appraisal forthe project were at that time considered adequate by the Bank and by IRHE'sindependent Board of Consultants, in accordance with international
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engineering practices. However, in the last 10 years there has been apattern of geological difficulties in what appears to be a problem relatedto the geographical area bordering in the north by Guatemala and in thesouth by Ecuador. In retrospect it now seems clear that more detailedgeological investigations are required for hydroelectric projects locatedin this area, that involve complex civil works such as dams, long tunnelsand deep powerhouse caverns; in addition, the Bank should engage theservices of specialists in geology and geomechanics to perform anindependent review of the geologicAl studies prepared by the Borrower.
3.1.3 At the beginning of project implementation there were procurementproblems because IRHE, due to cumbersome internal procedures, failed toobserve the Bank's guidelines and did not make the changes to the biddingdocuments recommended by the Bank. In order to improve the flow ofinformation within the utility, IRHE requested that all correspondence bein Spanish. The Bank complied with IRHE's request for a while, but due tothe changes in staff handling the project, the request was only partiallyfulfilled in subsequent years.
3.1.4 An important point to discuss is the implications of building theFortuna Dam in two stages: First Stage (elevation 1010 m) and Second Stage(elevation 1050 m). Although IRHE and the Bank agreed during appraisalthat the Second Stage would be completed after several years, as early asat the time of preparation of bidding documents for the First Stage, IRHErequested authorization from the Bank to ask from bidders, in addition tothe basic bid (Fortuna Dam First Stage), an alternative to build the dam toits final elevation. The reasons given by I'HE were based on economicconsiderations: as the price of oil was on the rise, the added storagecapacity of the higher dam would save substantial amounts of fuel fromthermal generation; in addition, the cost of the dam would be reduced astenders would be more responsive and less expensive because of the economyof scale. In order to consider IRHE's proposal, the Bank requestedadditional economic and financial studies to demonstrate the justificationof this change. An independent consultant prepared the economic analysiswhich concluded that both construction alternatives would be equivalent.There is voluminous correspondence on this subject; IRHE continuallycomplained about slow Bank procedures and response. Even after thecontract for the dam First Stage was awarded, IRHE insisted on changing thecontract to incorporate the Fortuna Second Stage. However, the Governme'nthesitated and did not fully support IRHE's decision; the Bank did not agreeand construction proceeded. During the execution of the project the Bankaccepted to consider another loan for construction of the Second Stage (theSeventh Power Project, Loan 2506-PAN). In retrospect, considering all theproblems and delays that IRHE experienced in starting the construction ofthe Second Stage of the dam, it seems that building the project to itshigher elevation would have been the best solution. It would have savedvaluable time as well as the cost of mobilizing a new contractor, and wouldhave avoided extra procedures and cost of a new bid; but especially, itwould have advanced the increase of storage capacity which would have beenextremely beneficial for the operation of IRHE's power system during dryyears -- such as those experienced by IRHE in the period 1985-1988 -- andwould have avoided power shortages and saved fuel from thermal generation.
3.1.5 As a result of IFYE's decision to initiate the Second Stage andwith the purpose of optimizing the use of resources, some modifications
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were introduced to the original design of Stage 1, including an increase inthe amount of excavation for the foundation of the dam, changes in theheight of the right abutment of the spillway, the development of part ofthe quarry for the Second Stage, and elimination of the bridge over thespillway canal. In addition, as the works related to the Second Stagewould take some time, IRHE decided to increase the spillway capacity byconstructing a parapet of 2.25 m over the dam to be able to handle amaximum flood of 5300 m3 /sec. This was an important recommendation made bythe Board of Consultants with the understanding that even with thisadditional capacity, the First Stage of the dam would not offer acompletely safe spillway operation and that the risk of the dam overtoppingand/or dam destruction existed with a probability of one in 100 years.
3.1.6 Poor geological conditions (para. 3.1.2) were the reason for thefollowing design changes: a) reduction in the size of the powerhouse andstrengthening the supporting system of the walls of the underground cavern;b) heavy reinforcement of the walls of the 433 m vertical cable shaftjoining the powerhouse with the substation, which caved in duringconstruction; c) increasing the reinforcement of the pressure, access anddischarge tunnels; and d) changes in the design of the right abutment ofthe spillway and dam.
3.1.7 fo tackle the serious problems faced during project constructionand, due to the failure of the main consultant to appoint, in thebeginning, the highly qualified staff required under the circumstances,IRHE increased its reliance on the Board of Consultants. The Board metfrequently to monitor the project construction, to discuss technicalsolutions proposed by IRHE, the consultant and the contractors, and torecommend new technical approaches to various problems. The Bank staff whosupervised the project agreed that the technical solutions recommended bythe Board were satisfactory. However, the Bank found IRHE slow inimplementing recommerded measures originally envisaged to strengthenproject management and improve decision-making at the project site. Afterdiscussions with the Bank, IRHE appointed a new Project Director, residentat the project site, and the Technical Director (residing at IRHE'sheadquarters) was given more resources, authority and responsibility toenable him to comply with the construction schedvle; in addition, a highlevel Claims Negotiating Commission was appointed to promptly settling theclaims of the contractors.
3.2 Studies
3.2.1 The project originally included a program of organizationalimprovements and training to be implemented with the help of a consultant.IRHE hired a foreign consultant to undertake this task and, as aconsequence of the studies, it made changes in its organization, issued amanual of administrative procedures, job descriptions, ---counting manual,etc. The consultanL also assisted in the training of 209 officials in theareas of business administration, project costs and control, projectadministration and efficiency indicators.
3.2.2 It is unclear whether the objectives originally pursued by theBank were achieved, as the record suggests that the Bank staff whichsupervised the project paid limited attention to following up on theimplementat.on of the 3tudies.
3.2.3 The Loan Agreement required IRHE to carry out, with the assistanceof consultants acceptable to the Bank, a tariff study based on marginalcost principles. The study was undertaken by a consultant. Based on therecommendations of this study, IRHE introduced satisfactory changes in thestructure as well as in the level of tariffs.
3.3 Project Costs
3.3.1 Annex 3.2 shows appraisal and actual costs. Including allcharges, the final project cost was about US$522.1 million2 (in currentprices) as compared with the appraisal forecast of US$253.59 million, or1062 of cost overrun, which is attributed mainly to:
(a) advance construction of some works of Fortuna Dam SecondStage (para. 3.1.5; (approximately 42 of the cost overrun);
(b) changes in the design of the powerhouse and tunnels due topoor 6eological conditions (para. 3.1.6); (approximately682);
(c) higher administration and engineering costs, due to longerconstruction period than originally estimated; (approximately102);
(d) higher financial charges caused by construction delays andtougher financial conditions of some short-term loans grantedto IRHE by commercial banks (approximately 182);
3.3.2 The cost overrun could not be financed by IRHE with internallygenerated funds, as electricity rates could not be raised further from thehigh levels already set in 1983; the '-overnnment could not raise additionalfunds either, as the world economic recession that began in 1982 affectedthe Panamanian economy and caused financial constraints that lasted forseveral years. Under these conditions, and considering that the costoverun was not caused by mismanagement but rather by substantive changes inthe conditions foreseen at appraisal, the Bank' accepted IRHE's applicationfor a supplementary loan of US$31.3 million. The complementary loan wasapproved by the Board on March 29, 1983, signed on May 3, 1983, anddeclared effective on June 29, 1983. IRHE also obtained additionalfinancing from IDB, commercial banks, contractors and suppliers. Thedetails of actual sources of financing of the Project are presented below:
2/ Project costs are not fully comparable, as final costs include somepreparatory work for the Second Stage (about 22 of the final cost)
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Financing (US$ million)
From OriginallyPlanned
Sources 2 Additional Total z
IBRD 42.0 17.0 31.3 73.3 14Inter-American Development
Bank (IDB) 98.0 39.0 62.0aI 160.0 31Supplier's Credits 21.0 8.0 76.6 97.7 19IRHE and Government 92.0 36.0 13.0 105.0 20Libra Bank 40.0 40.0 )Italian Commercial Banks 12.0 12.0 )Impregilo (Contractor) 27.0 27.0 ) 16Fondo de Inversiones de )Venezuela (FIV) 7.0 7.0 )
Total 253.1 100 268.9 522.0 100
a/ Excludes a br4 r e loan of US$28 million which was cancelled with partof the proceeds from the Libra Bank loan.
3.3.3 The bulk of the financing for the additional costs came fromsuppliers' credits and commercial banks, as IRHE was not able to raiseadditional funds (Section V) and the Government faced severe financialproblems due mainly to the ever increasing service of public debt.
3.4 Changes in Closing Date, Allocation of Loan Proceeds and Timing ofDisbursements
3.4.1 The closing date was postponed to April 30, 1986, and, upon therequest of IRHE, the Bank agreed that the final disbursement date would beOctober 30, 1986, in order to allow time to settle the pending claimsrelated to civil works for the construction of the dam. The lastdisbursement occurred on October 31, 1986. Annexes 3.3 and 3.4 compareactual and forecast data disbursements and allocation of loan proceeds bycategories.
3.5 Performance of Consultants, Contractors and Suppliers
3.5.1 IRHE carried out the project engineering design, construction andsupervision with the assistance of a foreign consulting firm. In addition,a Board of Consultants periodically revlewed the project construction andadvised IRHE on technical problems (para. 3.1.7). The Bank staff in chargeof supervising the project attended only two of the 24 meetings of thatBoard. In retrospect, it seems that the Bank would have been well advisedto allocate additional time for Bank staff to attend some of the Board ofConsultants' meetings where complex engineering matters related to a uniqueproject in the Region were presented. During the execution of the work,IRHE Lo!lained on the performance of some staff of the consultant, whowere replaced quickly; overall, IRHE was satisfied with the performance ofthe consultant, specially on the transfer of technology and training ofIRHE's staff. The performance of the Board of Consultants wassatisfactory.
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3.5.2 The principal contractors were an Italian firm for the powerhouseand tunnels and a Japanese firm for the dam and spillway. IRHE and theBank were generally satisfied with both firms. Due to problems faced bythe project (para. 3.1.2), IRHE pressed the Italian firm to appoint to theproject site more experienced staff, and the firm agreed to this requestwith some delay. IRHE was satisfied with the works of the contractor andtechnical suggestions made for solving unforeseen situations. However,IRHE was not always happy with the claims presented by both contractorsbecause the claims, according to IRHE, were excessive and not welldocumented, causing settlement to be a long and stressful process.
3.5.3 The performance of the suppliers was generally satisfactory. Thedelays were minor and did not affect commissioning of the project.However, it is noteworthy that there were some problems with a coolingpump, a battery charger and a step-up power transformer. The latter forcedIRHE to take generating Unit No. 2 out of service after three months ofoperation; the transformer was returned to the manufacturer for repair, andthis was done to IRHE's satisfaction. As the outage of Unit No. 2 occurredduring the dry season of 1984185 when, due to water limitations, the powerplant could not operate at full capacity, its impact on IRHE's system andfinances was minor.
IV - PROJECT JUSTIFICATION
4.1 Need to Supply Power Facilities
4.1.1 The main objective of the project was to provide IRHE withgqnerating and transmission facilities to supply electricity for thecountry's needs through the interconnected system beginning in mid-1983.The project would utilize hydroelectric energy available in the province ofChiriqui, allowing IRHE to substitute a large part of its thermalgeneration, contributing in this way to a reduction in petroleum imports.An additional objective of the project was to assist IRHE in improving itsorganization, planning, financing, staff development and operation.
4.1.2 The project was successful in meeting its main objectives byt a)allowing an adequate supply of electricity; b) reducing the heavydependence on imported fuel by reducing thermal generation from 90Z in 1976to 33Z in 1986; and c) implementing a large part of the organizationalimprovement and training program envisaged at appraisal. It was notsuccessful, however, in achieving a lasting improvement of IRHE's finances.
4.2 Rate of Return on Investment
4.2.1 The appraisal estimated the rate of return at 17.7Z; the coststream included the investments on the power plant and the associatedtransmission and distribution facilities. On the benefits side, all theincremental sales plus part of the fuel saved from thermal generationsubstituted were attributed to the project. Following the same methodologybut with actual data for the period 1977-86 and including the capital costsand the energy sales attributed to other projects constructed during thesame period (para. 2.2.3), the rate of return has been estimated at about12X (Annex 4.1), which is still adequate as compared to the cost of capitalestimated at 112.
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4.2.2 The reason why the new estimate of the rate of return is stillsatisfactory, even though the costs of the Project increased substantially.is because electricity rates also increased significantly during the periodsubject to analysis 3 and these rates have been used to value the benefits.It is also important to note that the costs of the Project used to estimatethe rate of return (Annex 4.1) are expressed in constant prices of mid-1977; therefore, inflation, one of the elements of cost overrun, iseliminated. The cost stream for the economic analysis also excludesfinancial charges as is customary. Deducting inflation and financialcharges, the total Project cost in mid-1977 prices amounted to B/250.6million, 662 higher than the B/150.7 million forecast at appraisal.
V. FINANCIAL PERFORMANCE
5.1 Comparison of Actual and Forecast Data
5.1.1 ALaexes 5.1 to 5.4 compare the actual and appraisal forecastincome statements, sources and applications of funds and balance sheets forthe period 1976-86. IRHE's financial performance during the period ofproject execution (1976-83) was adequate, even though IRHE experiencedfinancial difficulties due to lower electricity sales than expected atappraisal4 and the cost overrun and delays in the Fortuna Project. IRHE'sfinancial performance deteriorated significantly in recent years due tofailure of electricity rates to keep pace with costs, high level ofaccounts receivable and overstaffing. The financial indicators presentedin Annex 5.4 show that the rates of return covenanted were met in theperiod 1977-81, but not met in the subsequent years, decliningsignificantly comparpd to the above-mentioned period, reaching 6.6? in1986. By 1987 the situation had deteriorated to the point where the Bankrefused to extend the closing date on Loan 2313-PAN until a satisfactoryfinancial rehabilitation plan was received (para. 5.5.1). Disbursements onall loans to Panama have been suspended since November 30, 1987, due tofailure to pay debt service.
5.2 Electricity Rates and Operating Expenses
5.2.1 Average rates, in current prices, increased from US 5.6 centslkWhin 1976 to US 12.6 cents/kWh in 1984. In mid-1978 prices, this representsan average annual increase of about 4.7Z. Operating expenses grew atapproximately the same pace as rates, higher than envisioned at appraisaldue to high fuel expenses caused by project delay and dry seasons that
31 The electricity rate used to update the estimation of the rate ofreturn for 1986 and thereafter is the rate of 1986, expressed in mid-1977 prices, or B/0.0787. This rate is 57? higher than the one used inthe appraisal estimate.
rd4/ In the period 1976-83 actual electricity sales were 19? lower than
forecast at appraisal.
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caused higher thermal generation, and overstaffing. Due to lower sales andhigher operating expenses, IRHE was unable to meet the covenanted rate ofreturn of 8.752 in the period 1982-84 of project construction. The returnsfor these years were 7.7Z, 5.7? and 7.5?. Further deterioration in therate of return occurred in 1985 and 1986, 6.3Z and 6.6Z respectively.During project construction the Bank waived this requirement because of thegenerally satisfactory financial performance in this period, but as thedeterioration in the financial conditions deepened from 1985 onward, theBank pressed IRHE and the Government to implement an action program tosolve this situation (para. 5.5.1).
5.3 Accounts Receivable
5.3.1 The level of accounts receivable increased from 85 days in 1976 to118 days in 1986, compared to the 60 days level covenanted under Section5.06 of the Loan Agreement. The level of accounts receivable is higher formunicipalities, government departments and autonomous agencies,representing about 300 days in 1986. This situation, in turn, was one ofthe contributing factors for increasing the level of short-term borrowings,from US$ 13.3 million in 1976 to US$ 42.4 million in 1984 and to US$ 59.1million in 1986, figures that are well above the covenanted one-sixth ofthe cash operation and maintenance expenses. The Bank requested IRHE toreduce the level of accounts receivable to the agreed level, but IRHE wasnot able to follow strict collection policies such as the curtailment ofservice because, based on political grounds, the Government discouragedtough measures. Furtherraore, even though thu Government agreed toestablish a mechanism to deal with the arrears of the public sector, thesemeasures were not implemented due to the strained finances of that sector.
5.4 Energy Losses and Number of Employees
5.4.1 Two other factors negatively affected IRHE's finances: theincrease in the level of energy losses and the increase in the number ofemployees. Energy losses increased from 15.1X in 1976 to 16& in 1984 and19.7? in 1986, which is above the 12.2? agreed in the efficiency monitoringindicators; a large part of the losses are due to technical reasons(insufficicat transmission and distribution facilities) and the rest aredue to theft and fraud. Technical losses are expected to be reducedthrough the improvement of the transmission and distribution system underthe Sixth Power Project. Regarding non-technical losses, IRHE has proposed -
to the Government to enact legislation against fraud. IRHE is alsoundertaking a specific program to deal with this problem which is financedby IDB. The number of employees is another issue affecting IRHE'sfinances. The average number of permanent personnel grew from 3,528 in1976 to 5,334 in 1983, which is about 25? higher than the targetestablished in the agreed efficiency monitoring indicators. The increasewent further, to 5,643 in 1986. In 1986, the ratios of customers and ofKWh sold to employees were 51 and 36.1, respectively, which are lowcompared to similar power utilities in Latin America.
5.5 Financial Rehabilitation
5.5.1 As mentioned above, IRHE's financial performance has been steadilydeteriorating since 1984; efficiency and financial indicators presented in
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Annex 5.4 show this deteriorating trend. The main causes of this situationmay be attributed to the frequent changes of executive and senior positionsof IRHE and political considerations in the choice of these appointments,overstaffing and high employee benefits, frequent labor union disputes,slow process of government approvals of public bids and contracts, non-payment of electricity bills by public institutions, and slow action byIRHE and the Government to adopt measures to decrease energy losses. Inthe context of Loans 2313 and 2506-PAN, the Bank has been requesting IRHEand the Government to adopt a Financial Rehabilitation Agreement (FRA),which would define a viable plan to reestablish the sound technical andfinancial status th-t IRHE once had. The FRA would establish annualperformance goals to include production costs, energy losses, control offraud, payment or compensation for public sector arrears, and streamliningof purchase and contracts procedures. The agreement between IRHE and theGovernment has not yet been reached. In the nmeantime, another pressingissue has developed: because of arrears in payment of the Bank's loans,disbursements of all Bank loans to Panama were suspended. The situationhas been further complicated as a result of the political turmoil whichdeveloped in March 1988.
VI. INSTITUTIONAL PERFORMANCE
6.1 IRHE
6.1.1 Though the project suffered from financial and technical problemswhich delayed its commissioning by about 17 months, IRHE acted in a mannersatisfactory under the circumstances. To deal with the geological problemsfound in the tunnels and underground powerhouse, IRHE increased itsreliance on the Board of Consultants, which proved to be an adequateapproach. IRHE acted well, although often slowly, in the implementation ofthe recommendations of the Board; eventually IRHE had at the site of theproject an adequate number of qualified own staff, the project consultant,and the contractors charged with the civil works. IRHE acted swiftly toobtain the additional financing needed to bridge the gap created by thecost overrun.
6.1.2 The financial performance and technical efficiency havedeteriorated in recent years, particularly from 1985 onward. IRHE seems tobe overwhelmed with the present situation; their actions to overcome theproblems are being taken slowly or are not being taken at all. Majorchanges are needed to place the utility again on a sound footing.
6.2 The Government
6.2.1 Throughout project implementation, the Government actedsatisfactorily, except in recent years when accounts receivable ofgovernment departments, municipalities and autonomous agencies haveincreased, representing 300 days in 1986 as compared with 60 dayscovenanted. The Government is also acting slowly in enacting legislationaimed at counteracting energy losses due to fraud, and its involvement inprocurement matters generally results in very lengthy times until contractsare awarded.
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6.3 The Bank
6.3.1 The Bank's staff dedicated considerable time and energy toward theproject supervision and were generally flexible in responding to IRHE'srequests. However, the Bank seems to have been unduly rigid regardingIRHE's requested inclusion of the Fortuna Dam Second Stage. The Bank alsofailed to supea.:ise to the extent desirable IRHE's finances and theorganizational improvement program and training components. Financialsupervision missions were few during the first years of projectimplementation.
VII. LESSONS TO BE LEARNED
7.1.1 In retrospect, it seems that the Fortuna Project should have beenbuilt in one stage to its final elevation. It would have saved time aswell as construction costs and would have increased storage capacity andsaving of fuel. A more receptive attitude from the Bank might have servedto find a solution by assisting IRHE to take decisions on projectconception early in the implementation period.
7.1.2 For hydroelectric projects that involve complex civil works suchas dams, long tunnels and deep powerhouse caverns, specially in areas withpoor geological conditions, as a condition for project appraisal the Bankshould request that very detailed geological studies and a carefulydesigned drilling program be carried out, in order to minimize thepossibilities of cost overruns due to construction problems, change indesign, etc. The Bank should engage the services of specialists in geologyand geomechanics to perform an independent review of the studies preparedby the Borrowers.
7.1.3 Even with the complexity of technical and financial problems facedby the project, IRHE, under the circumstances, acted promptly by increasingits reliance on the Board of Consultants (which performed an outstandingjob), by hiring a consultant to help IREE in handling the claims ofcontractors, by demanding greater efficiency from the consultant andcontractors and by obtaining the financing to cover the gap created becauseof cost overrun. All this helped to achieve the main objective of theproject, for which IRHE has to be credited. However, toward the end ofthe Project implementation period the organization and finances of IRHEdeteriorated, situation that has been accentuated in recent years. Themain cause of this may be attributed to frequent changes of executive andsenior positions of IRHE and political considerations in the choice ofthese appointments, overstaffing, non-payment of electricity bills bypublic institutions and a slow action by IRPE and the Government to adoptmeasures to decrease energy losses. A lesson to be learned is that theDank should insist that Governments should support the running of publicinstitutions, in a business-like manner, without external interferences inthe organization and finances of the company.
- 15 - ANNE 1.1
PANAMA
INSTITUTO DE RECURSOS HIDRAULICOS Y ELECTRIFICACION (IREE)
FOURTH POWER PROJECT (LOAN 1470-PAN)
Summary of Lank Lending to iRHE
AmountLoan and Year Purpooe (US2 IIIIon)
822-PAN, 1962 Loan to IRNE tor the financing(First Power Project) of a Rural Electr#i'catlon
Progrm 4.0
661-PAN, 1970 Loan to LRIE to finance the Sayono(Second Poser Project) Kydroeloctrlc Project (160 MI),
oxpansion of Los Mines StemPlant (40 MW), related trans-oiselon, small dieel plants forrural ares and distrlbutlonSyst4m 42.0
94"-PAN, 1978 Loan te IRHE to financ, the San(Third Powr Project) Franclco Dlesel Plant (22 MW),
neu transmoilson line and sub-stations, load dispatch center,*spansion of the distributionsystems, tralning and Institu-tional Improvement 80.0
1470-PAN, 1977 Flrat Tranche: Loan to IRHE to(Fourth Power Project) finance the Fortune Hydroelectric
Project (800 MW) and relatedtransmission lines and sub-stations, training and Institu-tional lmprov_msr~.s 42.0
Second Trenches Additional loanto MRHE to finane part of theadditional costo related to theFortune HydroelectrIc Power 81.8
1776-PAN, 1980 Loan to IRHE to rhabil lItate and(Fifth Powr Project) expand the distribution systems
across the country 28.0
2818-PAN, 1S88 Loan to IRHE to complete the(Sixth Power Project) rhabIlltatton and expansion of
the distribution systems in thcountry, Initiated under theFifth Power Project 82.1
2560-PAN, 1965 Loan to IRNE to finance the(Seventh Poser Project) raising of the helght of the das
at the existing Fortuna Hlydro-eIletric Plant, complete feol-bility studies of two hydroelectricprojects and undertake an assetsrevaluation study 51.0
Total - 255.4
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ANNEX 2.1Page 1 of 2
PANAMA
INSTITUTO DE RECURSOS HIDRAULICOS Y ELECTRIFICATION (IRHE
FOURTH POWER PROJECT (LOAN 1470-PAN)
Maior Covenat.ts of the Loan and Guarantee Aareements
1. Performance of IRHE and the Government under the following majorcovenants of the Loan and Guarantee Agreements of the Fourth Power Projectwas generally satisfactory, except as noted.
2. Major covenants of the Loan Agreement:
Section 3.02 required IRHE to employ consultants for the project design,supervision of construction of civil works and transmission systems,preparation of bidding documents and procuring civil works and equipment,and an advisory Board of Consultants to seek advice with regard todifficult technical problems.
Section 3.05 required IRHE to acquire the land and rights of land requiredfor the construction of the fa-ilities included in the project.
Section 3.06 required IRHE to ensure that the complementary works werecompleted and placed into operation not later than June 1980.
Section 4.04 required IRHE to employ consultants to study its organization,training activities and accounting .nd financial policies and practices.Once the studies were finished, IRaE should agree with the Bank on aschedule for implementing the recommendations.
Section 4.05 required IRHE not tc undertake any major expansion project notir. T Jed in the Investment Program, which capital investment exceeded 12 ufI " 's revalued gross fixed assets in operation.
Section 5.01(b) required IRHE to revalue its fixed assets at least onceevery year and enter such revaluation in its accounting books.
Section 5.02 required IRHE to audit its accounts and financial statementsby independent auditors acceptable to the Bank and furnish to the Bankcertified copies of such statements not later than four months followingthe end of each fiscal year.
Section 5.03 required IRHE a) not to incur any short-term debt if thebalance of all short-term debts exceeded 1/6 of cash operating, maintenanceand administrative expenses; b) not to incur &ny long-term debt unlessIRHE's gross internal cash generation was equal or greater than 1.4 timesthe maximum future debt service requirements.
Section 5.05 required IRHE not to sell electricity to bulk consumers atprices lower than the actual marginal cost.
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ANNEX 2.1Page 2 of 2
Section 5.06 required IRHE to take all necessary steps on its part tomaintain no more than 60 days of electricity bills outstanding. Notcomplied with (para. 5.3.1).
Section 5.07 required IRHE to earn a rate of return on average net fixedassets in operation plus working capital amounting to three months ofrevenues, as follows: 71 in 1977, 8O in 1978 and 8.751 thereafter. Notcomplied with (para. 5.1.1).
3. Major covenants of the Guarantee Agreement:
Section 2.02 required the Government to provide IRHE a) equity -contributions as follows: US$15 million in 1977, US$9.5 million in 1978,US$12.8 million in 1979, US$10 million in 1980 and US$2.0 million in 1981;b) in case IRHE faced financial difficulties, to make arrangements toprovide IREE such funds as were needed to carry out the projectsatisfactorily.
Section 3.03 required the Government to take all reasonable actionnecessary or appropriate on its part to cause all its politicalsubdivisions aud agencies to settle their electricity bills within 60 daysof billings.
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PANAMA
INSTITUTO DE RECURS0S HIDRAUUCOS V ELECTRIfICACION (IRNN)
(FOURTH POWER PROJECT (LOAN 1470-PAN)
Appraisal and Actual Tlemtable of Project Implelontatton
I. Key Compltion Det. for the Bank-Financed Portlon of the Project
SAR Actual DifftrencEstimsot Completion (In Months)
1. Loan Effectlvenes 10/77 2/78 42. River diversion, dm and opililwy
2.1 Award of contract 10/79 12/79 22.1 Projoet Execution
Closure of diversion tunnel 9/62 .8/68 0
0Do 4/62 2/6 10S. Powrhous. Crane
8.1 Award of contract e/76 8/79 78.2 Installation 11/80 10/62 28
4. General Electromchanical Equipment4.1 Contract award 4/80 6/80 24.2 Installation 4/82 9/84 29
5. High Voltage Cables5.1 Contract award 6/80 2/80 -5.2 Installation 11/61 7/68 20
6. Transmission System6.1 Award of contract 10/806.2 Project execution
Total Part 8 4.62 8.92 18.64 4.1 7.8 11.4 -16.8PART C1. OrgenIxatlon lnprovem_nt A Training 2/ 0.66 1.0 2.46 0.7 8.2 3.9 59.2
Total Part C 0."6 1.8 2.45 0.7 8.2 8.9 59.2
TOTAL PROJECT COST 72.29 149.95 222.24 228.6 214.9 448.5 99.6
Interest During Construction 81.86 81.85 70.6 78.6 160.7TOTAL FIMANCIAL REQUREMENTS 72.29 181.8 268.69 229.6 298.5 622.1 106.9
I/ Includes the building for the dispatch center.2/ Includes prefessibility study for developmnt of Chiriqui and Chico Rivers.
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ANX 8. 8
PANAMAI
INSTIUTO DE RECURSOS IRAUCOS Y ELECTRIFICATION (INK)
FOURTH POWER PROJECT Wen 1470-PAIN
Appralial and Actual Accumulated Dlsbursement(in US9 Mliton)
X of ActualDisbursement
over
IRDB Flscal Year Appraisal Appra1sal
and Semestor Estimte Actual Estimat1978December 81, 1977 0.2 0 0
June B0, 1976 0.6 0.1 20
1979Deceber 81, 1978 1.9 0.8 17
June 80, 1979 8.2 1.0 81
190Decmber 81, 1979 7.4 1.7 28
June 80, 1900 11.6 4.1 85
1981December 81, 1960 17.1 6.7 89
June 80, 1961 22.7 11.0 48
193
Deemober 81, 1981 28.7 16.1 s6
Juno 80, 1982 84.8 25.9 74
i188December 81, 1962 8b.4 80.6 79
June 80, 1988 42.0 1/ 86.4 67
1984December 81, 1968 54.9 49.0 89
Juno 80, 1984 66.9 54.0 61
1985Deember 81, 1994 78.8 2/ 61.0 88
June 80, 1985 78.8 68.0 se
1966December 81, 1985 78.8 64.0 67
June 80, 1986 78.8 69.1 94
1987Deemober 81, 1986 78.8 78.0 99.6
June 80, 1987 78.8 78.0 !/ 99.6
1/ Original loan (first tranche)
RI Total loan (first plus second tranche)
UI USO.8 milion of the loan was canelled
- 21 -
ANNEX 3.4
PAKAHA
INSTITUTO DE RECURSOS HIDRAULICOS Y ELECTRIFICACION (IRKE)
FOURTH POWER PROJECT (LOAN 1470-PAN)
Appraisal and Actual Loan Allocation(in US$)
Category Forecast Actual
(1) Construction of River 32,487,000 35,895.649.51Diversion, Dam and Spillway
(2) Ancillary Electromechanical 17,564,000 14,404,712.16Equipment for GeneratingPlant; Erection and Installa-tion
(3) Equipment for La Fortuna 8,311,000 7,844,492.83Switchyard, La Fortuna-DavidTransmission Line andEnlargement of Panama Sub-station; Erection and Install-ation
(4) Engineering Services for items 2,952,000 2,301,739.18(a) and (b) of Part A and forPart B of the Project
(5) Consulting Services for Organ- 2,530,000 1,965,513.64izational Improvement Program
(6) Consulting Services, Overseas 300,000 257,090.30Fellowships, and Equipment forTraining
(7) Interest and other charges on 6,241,000 1,843,931.02the First Tranche of the Loanaccrued on or before February 14,1985 but after March 31, 1982
(8) Interest and other charges on 2,615,000 8,212,514.06the Second Tranche of the Loanaccrued on or before March 14,1985
(9) Fee 233,002 233,002.00
(10) Unallocated _ _66,998
73,300,000 72,958,644.70
- 22 -PAUM
DT1TUTO Di RO*8ICS DRAAUCOS Y BMOTFCACION ANNEX 4. 1PR0JBT CWLiE N RmeRT FC 1TIE F8lRTFi POER PROJ CLO U70-PAN
Internal Rate ot Return on Inveataent(mil Ian of Blboas so of ml d-1977)
-- !nvestent- Incre - Fuel Savings InPlant Genra- Tren". A TOTAL. Swiss tal S*leo Rave- Subatituted Subatitu- TOTAL PEr
Year Life tion c/ Dietrib. 0 A N COSTI Wb Wh c/ nue rn/(In QWh) tion b/ e881IT bSWIT
s/ Calculated with the average mid-1977 3E - tariff e f*ol low: 1964. .40.0845;1988; B./O.0601 end for 1986 and thereafter, B./o.0785.
b/ The coat of fuel at mid-1977 prices bah been etimated nl i./0.0185/kWh. Thi haa beenderived from the price IRtE as paying aet mid-1966 of 8/1/Rarel.
c/ Include. investinta in the Eatrelle and Los Vail. hydroelectric power plants.
PAN
It6TIfUTO DE lRSf MIURAVU= v Ec1MCAR (OM
FORAT P. FRJErT (CLOA 1470-P91)
Cosperlel of Appraisal ud Actul Income Statementa (19T7-1968)
(a;llona of current Sbibo )
-1976- --- 977 - 1978- -1979- ---- WO-- -1981- -- 192------198 - -194- -loss- -lw-SAR Actual SR Actual SAR us A I SR Actual SM Actual StR Actual SMR Actul SM Actual ActulI Actual Actual
I/ Actuai f,ourso inelude net non-operating Incomas.2/ Dat; l d act-al f; gure ar not goa a bl, at the tow of thia repora.8/ Actual figuwse is,clude tranefers, studies and other applicsaion.
PANAJ4
INSTrTo DE REtBtSCS HI 3COS Y B.ETRFXPCACTON CR8E)
FoatrH PER PROJECT (LOAN 1470-PAN)
Compseion of Appruieal and Actual Balance Shet. (1976-1988)
SAR ActaI SAR Actual SM Actuat SAR Actual SAP Actual SAR Actual SAR Actusl S Actua Actual ActU aI Actual09 ND. 88 --- -- ---- - - -- - --- -- --- -- -- --- --- ------ ---- ---- -
PF;rnclal and E&ficency tbtariing lnd3utora (1976-1966)
- -- ---- 1977-- --- 17-- -1 -190- -1961- -- 192--- -1968--- -1984- -196 -1966-SM Actual SA Actual SAR Actual SMAR Acul U*R ctual SM Atual SM Actu I SM Actual Actual Actual Actuat
