AFRICAN DEVELOPMENT FUND
CENTRAL AFRICAN REPUBLIC COMPLETION REPORT ON THE MBALI HYDRO-ELECTRIC DAM PROJECT
(ELECTRICITY II1
DEPARTMENT OF INFRASTRUCTURE AND INDUSTRY,
SOUTH REGION
1258r
NOVEMBER 1994
EQUIVALENCIES. A-C- RONYMS AN-D ABBREVIATION-S CURRENCY EQUIVM ENTS
(3rd Quarter, 1994) currency Unit UA l UA l UA l
CFA Franc CFAF 792.476
US$ 1.44837
FF 7.92476 At appraisal
(3rd Quarter, 1988) FUA 1 UA l UA l UA l
= =
370.71 402.48
US$ 1.31061 8 .04971
WEIGHTS AND MEASURES
l Kilowatt (KW) l Megawatt (MW) l Kilowatt-hour (KWh) l Megawatt-hour (MWh) 1 Gigawatt-hour (GWh) 1 Kilovolt-ampere (KVA) l Megavolt-ampere (MVA) l Kilovolt (kV) 1 Tonne (t) l Kilocalorie 1 Hertare
= = = = = = = = = = = .
1000 watts 1000 kilowatts 1000 watt-hours 1000 kilowatt-hours 1000 megawattihours 1000 volt-amperes 1000 kilovolt-amperes 1000 volts l00Q kilogrnmmes 1000 calories 10.000 square metres
ABBREVIATIONS IDA M B EIB LV CFD ENERCA FAC ADF KF
=
KgOE NA ESMAP PCR CAR TOE
=
International Development Agency African Development Bank European Investment Bank Low Voltage Caisse Française de Dgveloppement Energie de Centrafrique Fonds deaide et de coopiration African Developement Fund Kuwaiti Fund High Voltage Kilogrnmme oi1 Equivalent Medium Voltage Not Available ' Energy Sector Management Assistance Progrnmme
Project completion Report Central African Republic Tonne Oil Equivalent Fiscal Year l January - 31 December
TABLE OF CONTENTS Paqe
BASIC DATA
i-ii
INTRODUCTION
l.l l.2 l.3 l.4 2.
4.
6.
The Energy Sector CAR Energy Policy The Electricity Subsector Sources of Information
l 4 3 7
PROJECT PREPARATION AND APPRAISAE
7
2.1
Project Genesis
2.2
Preparation, Appraisal, Negotiation and Approval
2.3 2.4
Long-term Project Role Project Description
2 .5
Contracts
7 7 8 8 9
PROJECT IMPLEMENTATION, OPERATION AND COST
10
3.l
Loan effectiveness and Project Start-up
3.2 3.3 3.4 3.5 3.6 3.7
Revisions ' Implementation Schedule Procurement of Goods and Services Costs and Disbursements Operations Performance of Consultants, Contractors and the Executing Agency
10 10 11 11 15 15 15
OPERATING PERFORMANCE
16
4.l
The Market
4.2
The Role of the Project
4.3 4.4 4.5
Other Factors Impact on Women Environmental Impact
16 16 17 17 17
FINANCIAL PERFORMANCE
18
5.l 5.2 5.3 5.4
l8 18 19 19
Operating Analysis Analysis of the Financial Structure Financial Rate of Return Economic Rate of Return
STRUCTURAL PERFORMANCE
20
6.l 6.2 6.3 6.4 6.5 6.6
20 20 21 22 22 23
Legal and Institutiùnal Framework Organisation and Management Stqff and Training Accounting and Auditing Tariffing Billing and Collection
a'>
PROJECT JUSTIFICATION
8.
7.l
Project Implementation
7.2
Least Cost Solution
23 24
PERFORMANCES OF THE BANK AND BORROWER
25
8.l 8.2
Overall and Specific Performance Supervision ?
8.3
Working Relations
25 25 25
CONCLUSIONS
26
9.l
Results
9.2
Lessons Drawn from the Project and Recommendations
26 26
This report was prepared by Messrs. M. DOUMBIA (Electrical Engineer) and K. BA (Consultant Financial Analyst) following their mission to CAR in October 1994. Further information may be obtained from Messrs. S.C.. DESAI, SISI.2, Ext . 4120.
N
LIST OF ANNEXES
Title ENERCA Electricity System Energy Balance, 1990 Bangui Interconnected Supply System 4.
Principal Featûres of Remote Centres
5.
Operating Statistics
6.
Single Line Diagram of the Bangui Supply Network Comparative Costs Table Comparative Statement of ENERCA 'S Operating Accounts Summary of ENERCA Balance Sheets
l0.
Assumptions of Financial Projections
1l.
FIRR Calculation Table
l2 .
EIRR Calculation Table
l3 .
Present Organization Chart of ENERCA
l4 .
Status of Implementation of the Other Components of
l6.
the Energy Project
2
ADF Loan Conditions
2
Estimated Operating Accounts M 'Bali Dam Site
PROJECT BASTC DATA
4.
COUNTRY
Central African Republic
PROJECT
Mbali Hydro-electrie Dam - Electricity 11
LOAN No.
F/CEF/ELC/88/26
BORROWER
Government Republic
EXECUTING AGENCY
Energie Centrafrieaine - ENERCA
A . LOAN
1. 2. 3. 4. 5. 6. 7. 8. 9.
of
the
Central
APPRAISAL
LOAN APPLICATION Amount Interest rate
UA 11.05 million
African.
ACTUAL
11.05 million
o.7pi/year
Repayment Period Grace Period Date of Loan Negotiation Date of Approval Date of Signature Date of Effeetiveness
40 years 10 yeaHs
19/11/1988 23/11/1988 28/05/1989 16/06/1989
B. PROJECT DATA
Total Cost (UA millions)
28.7
32.5
Financing Plan
(in millions of UA)
F .E . ADF IDA
Kuwaiti Fund CFD Government
Total
8.52 8.73 5.24 1.93
APPRAISAL L .C . Total
24 .42
2 .58 0 .34 1.39 4.31
11.10 8.73 5.24 2 .27 1.39 28' .73
=====
= ===
== ===
-
APPRAISAL
3. 4. 5.
Deadline for first disbursement Effective Date of First Disbursement Effective Date of Last Disbursement
6.
Start of Project Implementation
7.
Works completion
F.E.
4.42 2.36 2.08 2 .03
ACTUAL L.C.
Total
10.89
6.63 7.49 3.02 0.22 1.51 18.87
11.05 9.85 5.10 2.25 1.51 29.76
= ====
=====
=====
ACT-U- A - L
31/05/1990 05/09/1989 08/01/1992 14/11/1988 31/03/1991
C . PERFORMANCE INDICATORS
APPRAISAL
Cost reduction Delays Delay on estimated date of Delay on estimated date of Delay on estimated date of Number of extensions of last Delay on completion date
ACTUAL
No cost reduction effectiveness lst disbursement last disbursement disbursement
01 2 months
Current status of project implementation Project start-up date 30/09/1988 Project completion date 31/01/1991 4. 5. 6. 7. 8.
14/11/1988 31/03/1991
Institutional Performance Performance of enterprises Performance of consultants
inadequate good good 11.69% 27.71
FIRR EIRR D . MISSIONS -
-
Sept . 1987 Aug . 1988
-
Launching/Monitoring
-
Supervision PcR
-
MAN/WEEKS
DATE NA
Identification Preparation Appraisal
NA May Oct .
'
. 1991 1994
NA NA
4h/w NA
2h/w 4h/w
E . DISBURSEMENTS (ADF LOAN I
(in thousands of UA) -
-
Total disbursed Amount cancelled Balance
11.05
11.05
Annual Disbursements
(in millions of UA) 1989 2.22
1990 5.75
1991 1.70
1992 1.38
Total 11 .05
F . CONTRACTOR fS I/SUPPLIERS Dam Name
CHINA INTERNATIONAL WATER AND ELECTRIC
CORPORATION (CWE) Responsibility Date of signature Date of contract completion contract value
Construction of dam 13 October, 1988 31 March, 1991 CFAF 7,356,209.635
Strenctheninq of Boali-lanqui 60 kv transmission line Name
SPIE-ENERTRANS
Date of signature Date of completion Contract value
30 April 1994
June 1995 (estimated) : FF 7 m illion
;
*' '
CONSULTANT Name
COYNE ET BELLIER
Date of signature of contract Date of contract completion Contract value H.
1988 : :
TECHNICAL ASSISTANCE Name
September 1992 FF 17,735,651
CANADIAN IMTERNATIONAL POWER SERVICES (CIPS)
Responsibility Duration of contract
:
Assistance to Project Unit
:
2 years
Amoùnt
:
US$ 420,300
INTRODUCTION
1.0 .1 The Central African Republic is a landlocked country , with an area of 623,000 km2 and a population of 2 . 7 million inhabitants. It 'is bordered to the north by chad, to the east by Sudan, the south by congo and Zaire and finally to the west by Cameroon .
1.0.2 CAR is a country with substantial agricultural and forest potential which is little or insufficiently developed; its mineral resources are limited and the industrial sector is embryonic. The country has a good energy base particularly ip wood fuels and hydro-electricity. No exhaustive inventory of these resources has, however, been carried out and the energy potential consequently remains very underestimated. Efforts have, therefore, been made '
by the Government to better assess the resources identified and promoie the discovery of new resources.
1.0.3 Although no exchaustive evaluation has been carried out , CAR 's hydro-electric potential is however considered substantial and undertapped . At present total installed hydro-electric power is below 20 MW and is entirely
generated by the Boali l (8.75 MW) and Boali 2 (9.90 MW) power plants located on the river M 'bali and the usable energy potential of which is around 56 MW . Moreover, during the dry season, the flow rate of the M 'bali was barely sufficient to provide these two plants with output equivalent to 20% of the total installed power; this led to a substantial shortage of power for the consumers, and increased thermal power generation for ENERCA with, as a result, oi1 bills which became increasingly unbearable for the financial
stabiiity of the company. 1.0.4
The Government of the Central African Republic, therefore, decided to
build the storage dam to regulate the river course with the dual aim df increasing the annual output of the Boali l and 2 power plants to make up the shortfall in power, and maximizing the exploitation of the M 'bali
hydro-electric potential. The dam project thus conceived constituted the principal component of the first energy sector project defined in 1988 by the Government and the World Bank, and cofinanced by EIB, CFD, ADF, the 'Kuwaiti Fund and CAR .
1.0.5
The M'bali dam project was implemented between 1989 and 1991 under
the responsibility of the national ekectricity company Energie Centrafricaine
(ENERCA) which was the executing agency. COYNE and BELLIER, the engineering consultants firm , provided design, engineering, and works control and supervision services. The foundation stone was laid on 21 December, 1988 and
the inauguration ceremony took place on l September, 1991. This Project Completion Report (PCé) was prepared on the basis of documents prepared by ENERCA and the consulting engineer and the results of the related mission to the executing agency . However, it only concerns the RDam H component financed by ADF, since other components of the Energy Sector Programme are not yet
completed (see paragraph 2.4.2).
The Enerqv Sectorl/ Orqanization of the Sector 1.1.1 The organization of the energy sector is a general reflection of the basic differences among the different sub-sectors and the resulting specific ' requirements. The design, application and control of energy devplopment policy in cAR is assigned to the Ministry of M ines and Energy which is also responsible for legislation for the sector 'and the political and technical supervision of public and parastatal enterprises in the sector. ' 'This
supervision
is principally the responsibility of the Energy Gené.' ra1 .' ?
Directorate.
1/
Source: UNDP, World'' Eank, PAGSE, Report, 1992.
1.1.2 Two other State bodies are active in the operation of the energy sector, namely the Ministry of Forests, Hunting, Fisheries and Tourism which is responsible for natural resource management and protection. Through the Forestry Directorate, it is responsible for administering the country 's forest
resources and regulates and controls their use (timber, but also firewood and charcoal). However, the activity, from the gathering of fuelwood to the end product for the consumer, is governed by saleability and market mechanisms. Supply and distribution are carried out by private ôperations or family firms. The second body is a service attached to the office of the Prime . Minister which plays a supervisory , advisory and coordination role in public enterprise management . 1.1.3 The' supply , conveyance and distribution of so-called commercial or modern energies is ensured by two enterprises the first of which is parastatal
and the other state-owned. The Centrafricaine des Petroles (PETROCA) thus has the monopoly for the supply and distribution of petroleum products; while in the electricity sub-sector ENERCA, Energie Centrafricaine has the mgnopoly for the generation, transmission and distribution of electric power through the country 's territory . Analvsis of enerqv supplv and demand Enercv suoolv
l l 4 The principal energy resources of CAR are in the form of woöd and hydro-electric powey. Table 1.1 below gives a summary of the 1990 energy
balance (total su/ply and final consumption). It reveals that natibnal energy production was TOE 595,700 the bulk of which , 961, consists of fuelwood .
The
remainder is divided between hydro-electric power (3.1%) and the biomass (0.9*). Table l.l also shows that total primary energy supply was TOE 687,900 in 1990 including, in addition to local production, hydrocarbon imports of TOE 81,800 and fuelwood of TOE 10w4Q0. Details of this balance are set out in Annex 2. Table 1.l Enercv Balance, 1990
(in TOE 1,000) Output
Fuelwood Biomass Oil Products Hydro-electricity Total
572.3 5.l
Supplv Imports
Consumption 576.9
87.7
18.3 595.7
10.4 81.8 92.2
71.8 9 .3 658 .0
10.9 l.4 100,0
= = == =
====
==== =
=====
-
1.1.5 Fuelwood: Most of CAR is covered with fairly thick, savannah vegetation and in the south by moist closed forest over an area of around 3 .5
million hectares i.e. 5% of the territory. Firewood (and to a minor extent charcoal) is the fuel used by virtually every household in CAR for cooking food. Current fuelwood requirements are estimated at l.6 million tonnes of firewood and 3,700 tonnes of charcoal. Nation-wide, these figures are insignificant in view of the output of the forest stands of the Central African Republic. Tn fact, the rate of cover of wood energy requirements
(natural productivity/fuelwood requirement) is around 60%. Population growth and
the
associated
increase
in
requirements
could
result
in
localized
shortages from 2050 (the Bangui region and the north-west of the country).
1.1.6 Hvdro-electricitv: The hydroelectric potential of the CAR has not yet been assessed in detail. It is, however , considered substantial and undertapped . The sites already identified, studied and partially developed provide a total power capacity of around l40 MW for an estimated annual production of over 1000 Gwh. Of this, only 18.6 MW have been developed in the Boali l and 2 power plant in the River M 'bali. Compared with total electric
power supply which was 98.75 gwh in 1992 (the highest level of the last five years), total identified potential corresponds to 10 times this figure, which shows that the constraints in the development of hydro-electricity are not
related to resource availability, but rather to economic reasons (availability of capital) and planning capacity for the extension of the system.
1.1.7
Hvdrocarbons:
Since the 19d0s, the prospects for discovering
hydrocarbons in the South chad Basin, to the north of CAR are considered attractive . The geophysical work and the different oil prospection works undertaken in the 1980s pointed to the existence of hydrocarbons but the discovery was not considered to be of commercial interest and the prospection licences were not renewed . A progrmmme to promote prospection in that area has been initiated by the Government, with the financial assistance of the
Internqtional Development Agency (IDA) under this energy project. 1.1.8 Other sources of enercv : A lignite deposit of 2 .9 million m3 as well as a 20,000 tonne uranium deposit have been discovered in the Bakouma region . These deposits have been insufficiently evaluated and the economic viability of tapping them not yet proven. Pinally, very little is known of solar and wind potential; thèir contributipn, at present insignificant, towards meeting the energy requirements of CAR, should remain minimal in the medium and long-terms. They could , however, provide a back-up supply for some very
specific uses (water pumping, telecommunications, minor requirements on remote sites, etc...).
electric
power
Enercv consumption
1.1.9 Due to the energy supply described in the proceding paragraphs, the principal feature of final energy consumption in CAR is the great use of fuelwood which , in comparison reduces the use of modern fuels on sale to virtually zero. Firewood and charcoal alone now meet 97% of household energy
requirements and around 88% of %he countryes final energy consumption as shown in Table 1.1. Oi1 products represent around ll% and hydro-electric power which in 1988, represented up to around 86% of the energy sector public investment progrAmme only covers 1% of energy requirements. 1.1.10
Final energy consumption whiéh, in 1990, represented 658,000 tonnes
oil equivalent (TOE), i.e. approximately 244 KgOE per inhabitant is low as is, at 30 KgOE per inhabitant, that of modern fuels. This is due to: i). the low level of incomes; ii) the relatively high cost of oil product and the high cost of connections in the case of electricity; iii) the 'predominance of subsistance agriculture in the economy; and iv) the narrowness of the industrial sector. 1.2 1.2.1
CAR Enerqv Policv
The assessment of the energy sector in cAR
conducted under the
UNDP/World Bank Energy Sector Management Assistance Programme identified the principal problems and constrainte which development of the sector . They are summarized as follows:
a)
final
consumption
is
fairly
low ,
in
the
could
(ESMAG), face
region
of
the
240
KgoE/inhabitant; it is dominated by wood (ref. 1.1.9) apdv ') the
so-called modern energies have a considerable implkùlz'ôh public investment (eïectricity)# and on the balàheè' ''of
Payment (oil products), despite a limited developmènf 'of infrastructm r4;
/:
$'
j' , .
'
,# '
'
b) there is virtually no sectoral planning which has resulted in little coordination of development and the non-optimal use of available resources; the prices of the so-called modern energies are high and oil taxation which , although not exceséive, is considerable and higher than in neighbouring countries; and t
d) the State's regulatory and control capacities are very limited
and its relations with the public enterprises and partiiularly ,
with PETROCA , are not clearly defined and lack transparehcy . 1.2 .2 Faced with these problems and constraints, the Govprnpent 's reflection on a national energy policy, initiatëd by this global a4sessment of the energy sector, focussed on the followihg principal points :
a) the resources required 50th from the economic as well as the institutional and regulatory standpoints, to channel eonéuiers towards more rational energy options and avôid wastage, while encouraging access to modern forms of energy by an inereasingly large section of the population; '
b) the search for least-cost supply options to reduce the impact of .
investment as well as imports of equipment and energy products on the principal macroeconomic balances;
c) the mobilization of new means of
financing to ensure the
development of the energy sector by associating the private sector where possible, and the communities concerned by the extension of energy facilities;
d) consideration of environmental problems at all stages of project implementation completion; and
e) strengthening
from
of
studies
the
and
economic
institutional
system
appraisals
to
ensure
to
the
coordination, control and managemept of actions in the energy sector which are the responsibility of the State . l.3 The Electricitv Sector Backqround
1.3 .1
The electricity subsector in cAR is the responsibility of the Energie
centrafricaine (ENERCA) for the generation, transmission and distribution of electric power throughout the national territory . Since ENERCA 'S activities do not cover the entire country and since, moreover, its electrical facilities are insufficient to meet the total electric power demand of the different social and economic sectors, independent producers, the most important of which are industrial units in the interior of the country , as well as private entrepreneurs in some districts and small centres also generate electricity . Electricitv ceneration
1 .3.2
In
terms
of
installed
power,
ENERCA 'S
electricity
generating
equipment, with a total power of 36.9 MW (refer to annexes 3 and 4) comprises diesel thermat plants (18.2 MW) and hydro-electric plants in Bangùi, whose electricity grid, with 33.5 MW, represents 9l% of the country 's generating
capacity
and
includeà: moreover,
the
totality
of
the
hydro-elecçric
production. Total installed power of privately operated plants, originally entirely thermal, was estimated at around 30 MW in 1992, half of which was considered as privately generated back-up supply in Bangui. The total annual production of these privately operated plants is in the region of 20 to 23 Gwh.
-
1.3.3
5
Table 1.2 below provides a summary of the trend of electric power
generation and consumption on the ENERCA network over the last five (5) years; a detailed breakdown is given in Annex 5 . It reveals that from 19. 8 9-1993, electric power generation was dominated by hydro-electricity which represented up to 99% of total energy pyoduced 'in 1993. The lowest rate was 7l% in 1991. Net generation of electricity was 92.57 gwh in 1993 while energy delivered to the distribution network was 85.14 Gwh, i.e. transmission losses of over 8%.
Such losses mpst be considered as very high in view of the length (80 km) and the operating voltage (60 kv) of the transmission network. On the other hand
the load factor (coefficient of utilization of installed power) ma# be consi'dered satisfactory with a value of between 61 and 65*. Electricitv consumption 1.3.4 In 1993 electricity consumption in CAR was around 61 Gwh ; which represents average consumption per inhabitant of around 22 Kwh, one of the lowest in the world . But only about 1.71 of the country 's population uses electricity and virtually 99% of total consumption on the ENERCA network is concentrated in Bangui. The structure of electricity consumption in Bangui reveals fairly high MV consumption , representing 54.4+ of total demand. LV consumption, 45 .6%, is broken down as follows: 15A for private consumers
(households and craftsmen), 4.4+ for Embassies 4.7% for Government and 20.8% for State corporations. 1.3.5 ENERCA 'S different means of generation in Bangui are interconnected by two high voltage lines, 81 and 83 km long and w ith a 60 kv operating voltage , linking respectively the Boali l and 2 hydro-electric power stations located on the River M 'bali, to the Bangui diesel thermal plant . These lines
supply the towns distribution networks through two HV/MV stations with a total transformer capacity of 25 MVA . The single-line diagram of the Bangui supply is presented in Annex 6. Distribution is though a 15 kv MV network and a
220/380 M, LV network. Distribution losses which were calculated at 28.38* as of the end of December, 1993, remain very high even if this figure reflects an improvement in the network yield compared w ith previous years. Combined with transmission losses, they give a rate of total losses of 34 .13% which remains
below the projections of the 1994 aetion plan which had a target of 30%. Table l.2 Generation and consumption of electr icitv - -
Installed power (MW) Gross output (GWh) Thermal (GWh) A total
Hydro (GWh) % total
Net output (GWh) Consumption (GWh) Overall losses (%) Peak power (MW) Load factor (%)
1989
1990
1991
1992
30.49 92.09 11.94 12.97 80.15 87.03 91.28 60.07 34.19 17.20 61.12
36.89 99 .38 26 .30 26 .46 73 .08 73 .54 97.92 64 .33 34.30 17.35 65.39
36.89 92.12 26.30 28.55 65.82 71.45 90.64 55.28 39.01 16.60 63.35
36.89 99.93 1.71
1.7$ 98.22 98.29 98 .75 61.59 37 .63 18 .60 61.33
36.89 93.64 0 .84 .0 .90 92.80 99.10 92.57 60.98 34.13 17.45 61.26
-
6
Sub-sector Development Plan
1.3.6 The development of the electricity sub-sector was planned through an ''Electric Power Generation and Transmission Master Plan'' study over a 15 year
period
(1992-2007).
This
master
plan
principally
interconnected network limited to the town of Bangui.
concerns
the
CAR
One of the twelve
secondary centres, that of M'Baiki close to Bangui (lQ7 km), was also considered; its connection to the interconnected network was, in fact: planned under the study . The principal focus of the master plan was the short and medium-term expansion progrnmme of the Bangui generating system in order to
meet at least cost, the future electric power requirement of that reèion which represents almost 99% of ENERCA 'S total electric power consumption. 1.3 .7 On the basis of an average demand growth forecast of around 4% per year , the expansion plan adopted is a totally hydro scenario , the principal elements of which are the Boali 3 and Palnmho plant. 1% focuses on the implementation, in two phases, of the Palnmho multi-purpose hydro-electric
scheme . The principal objective of this (Energy + Transmission) structure to regulate the River Oubangui is to open up the country by means of the river; in addition it will permit the installation of a hydro-electric plant with 30 MW of installed power and a guaranteed annual output of 3l4 GWh. The first
phase of the project (l5 MW and l60 Gwh) is expected to come on stream in the year 2,000 and the second phase in the year 2006.
In addition to the Palxmh'o
project, 'the output expansion programme will begin in 1995 with the construction of the third Boali hydro-electric power station (9 MW, 40 Gwh), the civil works on which were completed with the M 'bali dam .
The total cost
of the progrnmme as it is defined is estimated at US$ 74.73 million.
It
constitutes the least cost scenario.
contribution of the probect to the sub-sector
1.3.8
The M'bali hydro-electr/c dam project is the Bank's second commitment
in the energy sector and more specifically in the electricity sub-sector . Previously , in January 1984, ADF had financed, on the Technical Assistance Account, studies on the Bangui electricity network for a total amount of UA 320,000 . These studies led to the implementation, in progress, under this
energy project and on EIB financing, of the component concerning the ''Rehabilitation and extension of the Bangui electricity distribution networks''
(see Annex 14). This component is particularly important for the economic and financial viability of the M ebali dam . 1.3.9 Two of the principal themes of energy policy in CAR are to ecourage access by an increasing section of the population to modern form s of energy , and seek least-cost supply solutions to reduce the impact of imports of energy products on the principal macroeconomic balances. Their implementation should make it possible to address the principal problems and constraints facing the development of the sector . The contribution of the M 'bali hydro-electric dam
to the development of the sub-sector and the resolution of the country's major energy problems should be considered against this background . In fact, due to the regulation of the M 'bali river course , the first phase of this structure
has made it possible to increase by around 43% (from 73 GWh to over l04 gwh) the annual guaranteed output of the two existing plants of Boali l and 2. The second phase will permit the construction of the future Boali 3 hydro-electric plant with an installed capacity of 9.6 MW and a guaranteed annual output of 40 GWh . A key component of the CAR Electric Power Genepation and Transmission
Master Plan, the M'bali hydro-electric dam thus encourages àccess by a greater number of consumers, at least cost , to electric power.
-
l.4
7 -
Sources of Information
This report was prepared on the basis of information .taken from (i)
the appraisal report on the electricity project (M 'bali Dam); ii) the quarterly works' proqress reports; iii) the consulting engineet's final report on the implementation of the dam construction work; iv) the ADB archives; and v) the outcome of discussions and the field visit with the different officials
of the ENERCA services concerned by the ppoject. PROJECT PREPARATION AND APPRAISAL
2.l Proqect Genesis
2.1.1
The M'bali dam
construction
project
originated
in the
study
conducted, on CFD financing, with a view to reducing cAR 's dependency on oil products for electricity generation. In fact , the construction of the storage dam upstream from the Boali l and 2 hydro-electric power plant makes it possible to regulate the flow of the M'bali by constituting reserves during the rainy season which during the dry season, provide the plants with a
guaranteed power level close to their peak power. The project's geographical location is presented in Annex 17.
2.1.2
The
above-mentioned
study
coniained
a . ''technical
feasibility''
component which made it possible to select the most suitable site for the construction of the dam. The sedond ''economic feasibilityu ' component determined the size of the dam and specified the need to incorporate in it , in time, a hydro-electric power plant to meet the energy requirements of the town of Bangui. Finally, the detailed preliminary design made it possible to
accurately define the structures with a view to pre/aring the bidding documents. 2.1.3
At the request
of the Central African government , the original
project for the construction of the storage dam on the M'bali has become a real development programme affecting a '11 the energy sub-sectors. The World Bank played the role of principal donor. On that basis, the African Development Bank undertook a preparation m ission on the M 'bali hydro-electric
dam, the principal component of the first ENERGY progrnmme. The project was appraised in August 1988 and approved by the Board of Directors in November, 1988. In the meantime, at the end of-August 1988, a meeting of the different
donors was held at the Bank's Headquarters in Abidjan to award the contracts for the dam construction and define the financing terms. The ADF loan agreement for an amount not exceeding UA 11,052 million w as signed in May, 1989. Preparation, Appraisal, Neqot iations and Approval
2.2.1 As mentioned in paragraph 2.1.1,* the project was prepared in the context of the cFD-finaùced study concerning a reduction in CAR's dependency in oil products. The detailed preliminary designs and the bidding documents were prepared by the consulting firm , COYNE and BELLIER . 2 .2.2 The different studies, in particular the feasibility studies and detailed preliminary designs were satisfactorily prepared. The Borrower's and executing agency 's engineers were closely involved in the conduct of the different studies.
u e -
8 -
j
6.
2.2.3
%
ADB 'S intervention in the preparation process was at the level of the
w ' .. ...
# w-..
donors meeting organized by it and during which major decisions were taken on issues concerning financing, procurement procedures and works scheduring .
... ))c i 4.
.
In
addition, the Bank permitted a rapid start-up of the project by allowing the
early issue of invitations to bid for the dam construction contract. Finaîly, in its concern to ensure the financial viability of the project, the Bank, duèing its appraisal, recommended the modification of the tariff structure as well as on increase in electricity rates. 2 .3
Lonc-term Role of the Pron'ect
Despite the existance of substantial hydro-electric potehtial, the generation of hydro-electric power in the Central African Republic has always been hampered by the sharp fall in the flow-rate of the River M 'bali during the dry season. During that period which lasts, on average, för 6 months every year , the two run-of-river hydro-eleetric power plants are operating at 20% of their peak capacity , thus resulting in a very costly use of thermally
generated electricity. The M'bali dam construction project is intended to ensure constant hydro-electric power generation by regulating the flow rate of the M 'bali throughout the year. It thus contributes, on the one hand to meeting the electric power requirements of Bangui and on the other, to reducing the country es dependence on hydrocarbons for the generation of electricity . It also provides a larger section of the population of the Central African Republic with access . t o electricity.
2.4 Proqect Description
2.4.1 As defined and appraised by ADF the HElectricity II* project comprises the following components: i) construction of a regulating dam on the M'bali; ii) the rehabilitation of the town of Bangui's distribution network; iii) porcurement of a 5 MW diesel generator for the Bangui thermal plant; iv) the rehabilitation of the Boali l and 2 hydro-electric plants; v) institution building; and vi) preliminary reconnaibsance work prior to oil prospection.
This project, as described, has not been fully completed. Only components i), iii) and iv) have been completed. 2 .4.2
As it appears from the preceding paragraph, the ''Electricity 11''
project is more of a sectoral progrnmme with different components which could be implemented independently, b0th .physically , in the case of some and functionally in the case of others. The ADF financing exclusively concerned the component relating to the construction of the M 'bali dam . In view of the status of implementation of the other components prèsented in Annex l4, the
project completion mission principally focussed on the ADF component which will, therefore, constitute the ''project'. which is the subject of this report.
2.4.3
The work carried out under the M'bàli hydro-electric dam project
concerned the following principal structures and services: ''
.
a)
the mixed dam comprising a central concrete section and wings comprising rock dikes against the concrete structure and even earth on the banks. The height of the dam is 29 m and its total length and top width respectively 780 m and 6.l m . The concrete structure is of the gravity dam type with a lO4 m long hydro-electric plant incorporated, performing in addition the following functions: spillway, bottom outlet, and water intake ; the spillway is of the uncontrolled type with two 30 m long
sections each capable of discharging 960 m3/sec; the bottom outlet comprising a reinforced rectangular pipe located in the
axis of the concrete structure, 30.5 m long with a',4 x 5 m cyosp:
section and eqùipped upstream with a 4 x 5 m fixed wheel FuM4d tk è . and downstream by a 4 x 4.radial qate; the maximum fl6w zv ékqtéb x b Lik'wb.q, e. '
295 m3/s;
b)
the transfer and rehousing of the population comprising: i) compensation and the rehousing of 685 inhabitants in four (4) village groups; ii) the establishment of three wate: points equipped w ith pumps, a 3-classroom primary school with a house
for the headmaster and a health centre (dispensary and maternity unit) with two (2) houses for the two administrators; c)
the diversion, for around RNI, including two bridges;
d)
the reafforestation of the reservoir banks over :round 16.41 ha;
e)
the deforestation of the reservoir over around 1,800 ha;
f)
the construction of 8 km of 30 kv line from the Boali 2 plant to
km of the tarred national highway an area of
the M 'bali dam through the town of Boali - an intersection where around 4 km of the LV network have been completed;
g)
the building of 2.8 km of feeder roads;
h)
engineering, wprks inspection and supervision;
technical assistance to the executing agency's project unit;
j)
the strengthening (rehabilitation) of the 60 kv Boali-Bangui line which essentially comprises work to replace various item s such as insulators, conductors, etc...
2.4 .4 The completion of this work has helped to improve electric power supply security of the town of Bangui while perm itting a substantial reduction in the country's dependency on oil products for the generation of
electricity. The project has, moreover, ensured an improvement in the housing of the resettled population and the establishment of basic health and education facilities due to the implementation of the environmental action
programme related to the project. 2 .5
Contracts
2.5.1 The above-described ''Dam '' component was implemented through several contracts depending on the type of work and, especially , on the basis of the sources of financing. Thus the actual dam construction works, cofinanced by ADF , IDA and the Kuwaiti Fund were implemented under a single contract including the feeder road, and awarded subsequent to international competitive bidding in accordance with the Bank rules of procedure. The successful bidder was the Chinese company, CHINA INTERNATIONAL WATER AND ELECTRIC CORPORATION (CWE).
2.5.2
All the other parts of this component were the subject of separate
and independent contracts, awarded in accordance with the particular rules of procedure of the donors concerned . The contract concerning the deforestation, reafforestation, population rehousing and construction of the 30 kv line were awarded following local competitive bidding . The engineering consulting ' services for the engineering works and works inspection and supervision financed by CFD and only concerning the dam construction works were the
subject of a contract awarded to the French company, COYNE and BELLIER. This firm had previously conducted the feasibility studies and prepared the detailed prelim inary de4igns as well as the bidding documênts. It also
evaluated the bids of pnterprises submitting bids for works contracts. ' The contract for the rehabiliEation work on the 60 kv Boali-Bangui line, alsô. financed by CFD, was awarded to SPIE-ENERTRANS (France). Finally, a contkaçt
for technical assistance to the #roject implementation unit of the exedut. kvhg agency, financed by IDA, wav awarded to the Canadian consulting firm, CANADIAN INTERNATIONAL POWER SERVICES INC. (CIPS).
-
10 -
PROJECT IMPLEMEN - -TATION, OPERATION AND COST
Loan Effectiveness and Proqect Start-up 3.
5 ! : 1.1 The loan agreement for this proj ect was signed on 28 May, 1989 i.e. around six (6) months following the approval of the loan by the ADF Board of
Directors on 23 November, '1988 (The condition of loan effectiveness are given in Annex 15). These conditions were very quickly fulfilled since the daie of loan effectiveness was 16 June 1989 i.e. scarcely three (3) weeks aftër the signing of the loan agreement.
3.1.2
The start-up of copstruction work on the M'bali dam was, in no way,
behind the forecast schedule in so far as, when the project was appraised in August, 1988 , the enterprise selection process was already completed and the provisional successful bidder for the works contract knowh. The contract was signed on 13 October of the same year and works implementation was, therefore,
able to commence as planned in November 1988.
The official foundation stone
laying ceremony took place on 21 December, 1988.
3.1.3
For a hydro-electric scheme project on the scale of M'bali, the
contract award procedures for which are long and complex , the effective start-up of works within the deadlines should be considered as a very good performance especially in view of the fact that CAR is a landlocked country . However, such a performance was only possible because the actions concerning the procurement of goods and services were implemented and fully completed
prior to the appraisal of the project by ADF as mentioned above in paragraph 3.1.2.
3.2
3.2.1
Revisions
There were very few modifications to the M'bali dam project during
construction and the final structures are very similar to those drawn in the detailed preliminary designs. However , as is the case on all large sites, some minor modifications were necessary due to actual site conditions and implementation difficulties encountered. There were , more specifically ,
modifications to the initial project, the most important of which were: deflectors were attached to the spillway on thp lower third of the
spillway chute to imp/ove.the dissipation of energy in the event of exceptionally high water; the alignment of the plant penstocks was altered to make them parallel)
the placing of protective rockfill (2 tonne blocks) at the
downstream foot of the rockfill dikes and near those areas subject to erosion in the event of discharge; and the extension, to the dam, of the 30 kv power line from the town of Boali an intersection, to supply the site with electricity as well as the dam equipment instead of the thermal plant planned for that purpose.
3.2.2
considered overall, these modifications had no significant impact in
the original bills of quantities and did not lead to any increase in the value of the contract . Even the extension of the 30 kv line, completed by ENERCA employees with IDA-financed equipment, was completed w ithout ahy negative financial impact .
- 1l ...
j, ' : : P .. .,
.. .
.
3.3
.zy. y.
.. .
.
Imolementation Schedule
>'
.. .
. x:yN. .
?.' .:;'. . .
3.3.1 In relation to the schedule proposed in the appraisal report , the effective works start-up did , in fact, take place in the 4th quarter of 1988 more exactly on the 16 November, 1998 with the site installation, the opening of the feeder roads, the installation of the thermal plant and the crushing station, etc. The dam was filled on 3 November, 1990 and provisional acceptance of the civil works was on 31 March, 1991 and of the hydro-mechanical equipment on 31 May, 1991. The latter was delayed in relation to the civil works, due to transport problems from the port of Douala subsequent to the social unrest in Cameroon at the time .
3.3.2
Overall then, the M'bali dam construction works were about four (4)
months behind the estimates of the appraisal report dn the basis of the provisional date of acceptance of the civil works. On the basis of the contractual provisions on the other hand, this delay was only two months. Finally on the basis of the dam filling date scheduled for 1 November 1990,
the delay was reduced to only two (2) days. Moreover, if it is considered that there was a work stoppage for the entire month of June, 1989 due to the non-payment, on the basis of the contractual schedule, of startiup advances as a result of difficulties encountered regarding the effectiveness of the different loans, it may be conceded that the delay incurred is negligeable in
so far as it had no negative impact either on the project cost, or the targetted production goal. 3.3.3 While the dam construction works and other sections of this component were implemented within satisfactory times in relation to forecast, the same could not be said of the e'rehabilitation of the 60 kv line.', work on which has hardly begun . The estimated implementation period is 12 months and works
completion is expected by June, 19é5.
3.3.4
Throughout the entire project
implementation period, quarterly
activity reports prepared by the engineering consultant, were regularly sent
to all the donors. In all: ten (10) reports were thus addressed to ADF, which is in compliance with the ' e ffective duration of the dam works.
When the
project was provisionally accepted, the engineering consultant also prepared a wrap-up report followed by a provisional acceptance report one year later. All these documents have been used as sources of information for the
preparation of this project completion report. Finally, ADF received six (6) reports from the committee of three experts commissioned by the Government for
the specific technical monitoring of the different major phases of the dam construction.
3 .3.5 The engineering consultant 's quarterly reports were generally well-prepared, and the donors . never had to call into question the quality of the information and analyses provided, b0th in relation to the physical and
financial implementation of the project and regarding the problems encountered and the solutions proposed or adopted, and, .in general, confirmqd by the committee of experts. The reports thus provided all the information and data on works status, the billing situation, the necessary technical modifications, implemented or to be scheduled, and finally the claims made by the enterprise and, where necessary, the appropriate action to be taken . 3.4
Procurement of Goods and Services
The procurement of goods and services for the construction of the dam , financed by ADF, IDA and the Kuwaiti fund was done through international competitive bidding in accordance with the Bank 's rules of procedure. The successful contractor was selected after bids had been submitted by tw:qty
(20) bidders which had
previously been
retained
on the
basis of
a
prequalification procedure . The selection of the engineering consultant and the enterprise responsible för the 60 kv line rehabilitation work was made by the Government in accordance 'With the rules of procedure of CFD which financed thqse services.
ozw
-
3.5
12
Cost and Disbursements
A . Proqect Costs
3.5.1
For purposes of comparison, the real project cost was expressed in
UAs and determined on the basis of amounts expressed in CFA francs.
Since
payments to enterprises were made in different currencies (US$ and FF) the real exchange rates of these currencies were used to establish the real
project financial situation. The calculation of the final total project cost was made by the engineering consultant on the basis of September 1990 exchange rates. The dollar was then the equivalent of CFA .F 291.65 and the rate of the UA against the dollar was 1.38631. The UA in relation to the French franc was the equivalent of 8.0820. Table 3.l below presents the comparative estimated
cost, market cost and real costs of the project on works completion. Table 3.l Dam Component comparative Table of the Dam component Cost
(in thousands of UA) Cost at Market Appraisal Cost
Sections A. B. C. D.
E. F. G. H.
Dam and feeder roads RNl Diversion Rehousing of population Deforestation & reforestat. Rehabilitation of 60 kV(*) line Construction of Boali II, Boali intersection line Assistance to M 'bali mission Works inspection and superv. Total
24,548 276 683 82l
18,202 3,841 52 955 2,046
l39 545 1.718 28,730
297 302 1,714 27,409
======
===== =
-
D ifference as % -
26
8l +68 +149 -
+113 - 33
Real Difference Cost as % l0
22,164 3,841 71 1,502 2,046
- 74 +164 +149
297 302 2,254 32,477
+113 33 +31 +13
===== =
= ===
-
(*) The power line rehabilitation work has not yet been completed. 3.5.2
An analysis of the above table leads to the following observations
and conclusions:
overall, the real project cost is significantly higher than the estimated cost at appraisal and the market value. This difference is maihly due to the fact that, at appraisal the
construction of the 7 km diversion on tùe national highway had not been taken into consideration.
This new item was entirely
financed by the World Bank under the Transport Sector Project and effectively represents 13% of the total cost of the dam component at the time of appraisal. Apart from this component, the actual
project cost is 0.3% below the estimated project cost which is more than satisfactory and rare for such a project;
ii) items ''D, E, F, and to a lesser extente item H'' were the subject of major overruns on the amounts projected at the time of appraisal. While, in the case of the Boali z-Boali intersection 30 kv line this difference was primarily due to the extension of the line to the M 'bali dam site, the increase in the consulting engineer 's cost is due to unexpected additional services requiring 3 amendments. The cost overrun on ''Deforestàtion .ReforestationTI is due to the fact that , at the time of ptpjkèt :' ('' ' . iy? . appraisal only a roûqh cost estimate was available sin:' é 1.thë investigation studies were only conducted later . The overrun on ...
the ''rehabilitation of the 60 kv linee is due to the delay in its
completion which'is now five (5) years; and
-
l3
finally, it is important to note that there is an undrawn
balance on the dam works, the object of the ADF loan, of about CFA.F lO0 million. For a project of this type and complexity this is an outstanding performance which should be underlined. B.
3.5.3
Disbursements
The different donors contributed to the financing of the project as
indicated in Table 3.2 below : Table 3.2 Financinc Planw
(in thousands of UA) Sources
F.E .
ADF IDA K.F . CFD Gov,
8,518 8,735 5,241 1,926 24,420
340 1,386 4,310
38 31 18 8 5 100
===== =
= = = ==
======
===
Percentage
85%
2,584
%
11,102 8,735 5,241 2,266 1.386 28,730
-
Total
At aporaisal L .C. Total
l5%
100%
F.E .
At works completion L .C. Total
4,420 2 ,364 2,082 2:029
%
10 ,895
6,630 7,488 3,015 225 1,508 18,866
11,050 9,852 5,097 2,254 1.508 29,761
37 33 17 8 5 l00
=== ===
======
======
===
37%
63%
100*
-
This plan only considers the completed subcomponents (including the rehabilitation of the 60 kv line). ' 3 .5.4
The above table first of all shows a difference of UA 0.67 million
between the actual project cost, without the rehabilitation of the 60 kv line subcomponent (UA 30,431 million), and the total amount of financings (UA 29,761 million).
This difference is due to the fact that the amounts
disbursed by the sources of financing were converted into UA taking into consideration the trend of the exchange rates of the different currencies of payment against the UA while the actual cost was calculated on the basis of the value of the works converted into UAs at the rates effective as on 30 September, 1990. 3 .5.5 An analysis of the table shows that , in comparison with the financing percentages, the financial contributions of the different sources have remained virtually unchanged . The ADF and Kuwaiti Fund had participation percentages 1% lower than at appraisal while that of the World Bank increased by 2%. These differences are .. related to the real contract costs, in particular that for the dam works and in no w ay reflect changes in the financial packages prepared by the donors. 3 .5.6
In comparison with the loan amounts granted by donors, the main
feature of the financial situation on completion of the project is the non-existence of balances on the loans of the different donors. ADF loan is there an undrawn balance of UA 755.
Only on the
-
l4 -
3.5.7 Local currency expenditure which was estimated at l5% of the project cost at the time of appraisal, finally represented 63A of the real project cost .
This was primarily due to the fact that the dam component which
represents 73% of the project cost: comprises a major civil works subcomponent the implementation of which did not require substantial foreign exchange expenditure. 3.5.8
Table
3.3 below
presents the
expenditure
schedule
by
source of
financing for the entire dam projeets. This document had been prepared at the time of appraisal but concerned the ENERGY programme. expenditure schedule statement cannot, therefore , be prepared.
A
comparative
Table 3 .3 Dam Component . Expenditure Schedule bv Source of Financinq
(in thousands of UA)
Source
zràz 2,029 1,330 894 487
M F IDA K.F. CFD Government Total
3.5.9
1,755 1,573 52 332 42 3,754
1,361 664 309 46 2,380
-
4,740
5,905 5,779 2,406 1,126 1,420 16,636
372
1,879
=====
======
=====
=====
= ==
=====
l2%
8%
l6+
Percentage
1994
56%
372 -
Total llyoso 9,852 5,097 a ,2s4 l.so8 29,761
-
l34 1,745 -
-
1%
.
.
71
== ====
100*
An analysis of this table shows that the bulk of the civil works were
implemented in 1990 which constituted the project's critical path. Between 1989 and 1991 expenditure already represented 84A of the project cost. Expenditure indicated for 1994 represents in particular an unpaid amount of UA 1,745 from the Kuwaiti Fund following the suspension of disbursements on loans to CAR . It should be underlined that , throughout the implementation of the
project the World Bank took over from the Kuwaiti Fund. During the Gulf crisis, the Kuwaiti Fund 's disbursements were fully covered by the World
Bank. This prevenied many obstacles to the implementation of the project. 3.5.10
Table 3.4 below shows the expenditure schedule for the Day and feeder
road component, the object of the ADB financing. Table 3.4 Dam Construction and Feeder Road Component Expenditure Schedule bv Source of Financinq
(in thousands of UA) Sour ce
M F K .F . IDA Total
Percentage
1989
1990
1991
1992
2,029 894 1,307 4,230
5,905 2,406 2,086 10,397
1,755 52 1,475 3,282
1,361
556 1,917
== ===
======
=====
l9%
47%
15A
1993
1994
Total
+
372 372
1,745 134 1,879
11,050 5,097 5,930 22,077
50+ 23% 27% 100%
=====
== =
=====
==== ==
= ===
9%
21
8%
-
100*
-
3.5.11
The ADF
l5 -
financing thus represented
50A of the
cost of the dam
component of the project compared with 27% for the World Bank and 23% for the Kuwaiti Fund. The project critical path analysis in paragraph 3.5.9 is confirmed by this table . 3.6
3.6.1
Operations
From an operations standpoint, the M 'bali hydro-electric dam has more
than achieved al1 its targetted technical and financial objectives, if it is considered that the performance shortcomings noted are rather due to the economic environment which was unfavourable to increased electric power consumption on the one hand , and, on the other the delay in the implementation
of some bf the components of the Energy project, in particular that relating to the rehabilitation and extension of the Bangui electric power distribution networks. Despite this unfavourable background, the dam has been able to
significantly increase the proportioh of hydro-electric #ower output which accounted for 99.1% of the total output of the Bangui electricity ' grid in 1993, while it had not exceeded 87% prior to 1991 when the dam was commissioned .
3.6.2 At an operations level, ENERCA has established, in a professional and responsible manner, the necessary line and technical structures to enàure sound technical management of the dam and its supervision . This,. rigorous management of the reservoir in coordination with the operation of the Boali l and 2 plants is guaranteed throughout the dry season , and the dam monitoring operations and its routine supervision are carried out regularly . These duties are performed by three employees under the responsibility of a technical officer of the general studies ' service of the ENERCA General Directorate . A1l this staff was part of the engineering consultant 's on-site team and received appropriate training. Performance of Consultants, Contractors and the Executinc Acencv
3.7.1
The final project design, the detailed sketches and preparation of
bidding documents as well as engineering and works inspection and supervision services were all assigned to the consulting firm , COYNE ET BELLIER . From every standpoint the services provided by the Engineering Consultant were excellent . On all technical and financial issues, he was a competent and loyal adviser of ENERCA using his know-how , and showing appropriate care and
diligence to the project manager. The number and quality of his experts were constantly adapted to real requirements and the different site development stages. Furthermore, the engineering consultant was responsible for on-site staff training. By encouraging the timely solution of specific technical problems and difficulties which arose during implementation of this work the committee of experts also made a substantial contribution to the success of
the project.
'
3.7.2 CWE, which was awarded the dam construction contract: particularly distinguished itself by the excellent quality of its work , xts k complianc? . w ith deadlines and good site management . It always maintained very good relations with the engineering consultant and the executing agency . In view of its compliance with the high quality of the structures completed and the achievement of al1 the financial and technical targets, it is undeniable that the performances of the Engineering consultant and the enterprise may be qualified as excellent. From an implementation standpoint, the M ebali hydro-electric scheme may be considered as a total success.
16
3.7.3
By performing promptly and correctly its many duties and obligations,
ENERCA the executing agency, also made a major contribution to the success of the project. It thus participated satisfactorily in the fulfilment of the loan conditions, the supervision of the project implementation work, and diligently and efficiently processed .all disbursement applications by assuming responsibility for following them through to the final payment of the enterprises concerned. Furthermore, the executing agency ensufed the maintenance of good relations of frank collaboration w ith the enterprise and the consultant with whom its relations were particularly close since they fell within the scope of on-going decision-making . Finally, it ensurede and participated in the periodie preparation of monthly and quarterly works progress reports on the basis of donors norms and specifications. OPERATING PERFORMANCE
The Market
4.1.1
One of the major objectives assigned to the dam construction project
was to meet Banguies electric power requirements up to 2005, by making the maximum use of the water resources provided by the M 'bali site. The construction of the storage dam upstream from the Boali l and Boali 11 plant made it possible to regulate the flow of the M 'bali throughout the year and thus increase output of hydro-generated power from 65 .8 GWh in 1991 to 98.2 GWh in 1992 and 92.8 GWh in 1993 . 4.1.2 However, annual power output was below appraisal as indicated in the following table.
forecast at the time of
Table 4 .l Comoarative Statement of Actual and Forecast Outputs of Hvdro-oenerated Power
(in KWh) Actual 1991 1992 1993
65.8 98.2 92.8
Estimated 99.8 114.9 120.3
Difference 34% 14% - 22* -
4.1.3 These poor performances are primarily related to the economic situation in the Central African Republic since 1991, characterized by a
series of strikes and the total or partial shutdown of major economic units. Secondly, the rehabilitation work on the Boali 11 plant increased the number of outages, thus contributing to a decline in output . Finally , the delay in implementing the work on the rehabilitation and extension of the Bangui distribution network prevented the achievement of the planned increase due to the connection of new customers.
4.2
The Proqect Role
4.2.1 The M'bali dam construction project is a key component of the first medium-term development project of the energy sector in CAR, entitled 'ENERGM 1:'. The other components of this programme concern: i) the rehabilitation of the Bangui network; ii) the procurement of a diesel generator; iii) the rehabilitation of the Boali I and 11 plants; iv) institution building; and v) oil prospection.
17 *
4 .2.2 At the same time as the increase in hydro-electric output, construction of the dam made it possible to significantly reduce ENERCA 'S oil bill. In fact , since the share of hydro-power in the total output of the electricity system rose from 80A in 1988 to 99% in 1993, ENERCA 'S oil bill was CFA .F 55 million in 1993 compared with 1150 m illion in 1988. Furthermore , outages due to low water power during the dry season have become rare. 4.2.3 Finally, the M 'bali dam constitutes the first part of a possible strategy to develop the means of energy generation through the establishment
of a plant with an installed power of 9.6 MW on the project site. other yu cko .rs --
4.3.1
The project made it possible for the works contractor to use a
substantial amount of local labour . The workers and labourers employed during
the construction period were recruited from the population of the project area. 4.3.2
The contribution of the project to the training of ENERCA staff was
substantial. In fact not only were the Central African Republic counterparts of the consultant able to acquire experience in the conduct of future similar
projects, but also some of the project works were implemented on force-account by ENERCA under the supervision of the contractor .
4.3.3 At a social level, the project made it poslible to improve the housing and living conditions of the rehoused population. The project helped to reduce water-borne diseases by establishing boreholes in the rehousing areas. The bùild ng of a school and heaïth centre are considerable project . i achievements. Moreover, it made it popsible to improve the population 's food supply through the consumption of fish, the establishment of small businesses and new artisanal activities such as the building of dug-out canoes and the manufacture of fishing nets. 4 .4
Impact on Women
4.4 .1 In the rehousing area, agricultural activities (cassava growing) and fisheries have increased. Thus women traders known as ''Ouali gala'' cross the length and breadth of the area from Bangui to buy cassava and fish for resale in the capital. 4.4 .2 The three waterpoints established in the resettlement arel have helped to ease the drudgery of women's chore of fetching water for household use . With regard to health, women now have a maternity in the health centre. 4 .5
4.5.1
Environmental Impact
Under the M'bali dam construction pr6ject, an environmental action
progrnmme was designed and fully implemented . The post-evaluation study conducted on completion of the implementation of this progrnmme concluded
that, despite the major change in the ecosystem and some modification of the natural conditions, the environment-related problems were, on the whole, correctly identified and satisfactorily resolved, particularly with regard to
the transfer and rehousing of the population
(paragraph 4.3.3) and the
positive impact on women . 4 .5.2 However, some of the weaknesses noted could constitute serious impediments. In fact, the deforestation of the reservoir was not comp leted due to start-up delays and insufficient equipment . Consequently, tree trunks are rotting in some parts of the lake thus creating a sure risk of water pollution. Similarly, the reafforestation of the lake banks is still not completed since the National Forestry Board which was . awarded the s#udie'p' contraet submitted its report wiEh considerab le delay .
-
l8 -
FINANCIAL PERFORMANCE
5.l
Operatinq Analvsis
5.1.1 This analysis was conducted on the basis of the table in Annex 8 representing a comparative statement of the estimated operating accounts prepared at the time of appraisal and those appearing on ENERCA'S financial statements'for the 1989 to 1993 period. 5.1.2 ENERCA 'S operating income was well below forecast at the time of appraisal. In fact, over the period under consideration, it only increased by 5% from CFA .F 3,680 million to CFA .F 3,864 million, for an estimated amount of CFA .F 6,398 million for the 1993 financial year, and a 5l% increase forecast between 1989 and 1993. In fact, the income trend was irregular. From 1990 to ' 1992 it fell steadily due to a fall in electricity output related to the rehabilitation work on the Boali I and 11 plants and the natiohal social and econom ic situation on the one hand and, on the other the high level of overall losses which attained 40% from 1991 agdinst forecasts of 20+ The fall in energy sales continued in 1993 but was offset by an increase in other operating revenues. The 1994 financial year will undoubtedly reveal some improvement with regard to energy sales with the reduction in losses which
currently stand at around 27% and the 15% tariff increase in May, 1994. 5.1.3 At the same time, ENERCA 'S operating costs increased by 49A from CFA .F 3,164 million in 1989 to CFA .F 4,732 million in 1993 due to the considerable increase in ''the wage costse, ofinancial costs. and
''Amortization'' items which, overall represented 105* oi the operating income in 1993.
Moreover, ENERCA suffered major non-operating losses (431 of
turnover in 1993) due to provisions for exchange rate losses on foreign exchange borrowings. 5.1.4 At any rate, contrary to the estimates at the time of appraisal, ENERCA 'S results have shown an underlying loss since 1990 and cumulative losses represent CFA .F 5,243 million, i.e . 109* of the enterprise 's equity capital. The operating ratio reached 122* in 1993 against a forecast of 80%
at appraisal and which was even below the working ratio (92* in 1993). ENERCA 'S operations were affected by: i) an inadequate tariff level to ensure the firm 's viability; ii) an incohesive wage policy resulting in an increase in costs while staff was decreasing; and iii) the delay in the rehabilitation of the Bangui network as well as that of the Boali-Bangui 60 kv line.
Proiected Operatina Analvsis
5.1.5
The assumptions used
in the preparation of ENERCA'S projected
operating accounts, presented in Annex l6, appear on page 2 of Annex l0.
5.1.6
It appears from a review of the projected operating accounts that
with an increase in hydro-electric power generation which requires no additional investment as a result of the construction of the M 'bali dam , a
reduction in the rate of overall losses to 20% and a 30% tariff readjustment, ENERCA should achieve an operating surplus from 1995, and cumulative profit in the region of CFA .F 26 billion between 1995 and 2000 . Moreover, the financial restructuring which will be implemented following the study on the financial
balance (see para. 5.2.3) is bound to have a positive impact on the financial and amortization costs of ENERCA .
5.2
Analvsis of the Financill Structure
5.2.1 The appraisàl report does not contain a forward analysis of EN;.RCA'S financial structure . The table in Annex 9 gives a summary of ENERCA'S b' !: lblu* wh.ce sheets for the 1989-1993 period .
75 -.
l9 -
5.2.2 The financial 'structure is considerably imbalanced . The enterprise 's equity capital has been fully absorbed by its operating losses to the extent that ENERCA is completely insolvent . The working capital trend is irregular . As at 31 December, 1993, it was -CFA .F 700 million. The long-term debt ratio was 34 in 1991, then reflecting the company 'à high level of long-term debts.
The debt ratio (1% in 1993) demonstrates the need to recapitalize the company . Since 1990, the rate of return on fixed assets has been negative. 5.2.3 The stabilization of ENERCA 'S financial situation requires a reduction of capital. Capital would be reduced through the absorption of losses and then increased by , inter alia, the incorporation of debts cancelled ' by various donors and on-lent to ENERCA as- well as a cash contribution . In addition, the enterprise could conduct a revaluation of its fixed assets financed by external borrowings. This operation would generate a capital gain which would reduce the exchange losses on unrepaid borrowings by the same amount . The study on ENERCA 'S financial balance to be initiated in early 1995, on World Bank Financing, will attempt to study al1 those aspects and will also include a tariff study componene which will make it possible to determine the tariff level guaranteeing the enterprise 's financial viability . 5.3
Financial Ratx of Return
5.3.1 The assumptions on which the calculation of the FIRR is calculated are not presented in the annexes of the appraisal report . Furthermore , it
would appear that a1l ENERCA'S sales are attributable to the project. We also have reservations regarding this calculation which gave a finapcial and economic rate of return of 23.2% .
5.3 .2
The assumptions for the calculation of the FIRR on completion of the
project are presented in Annex l0. This rate solely concerns the construction of the M 'baiki dam since the other components of the Energy progrnmme are not
all completed.. By assigning to the project the net additional output of hydro-electric power without taking into consideration the existing operating conditions of the transmission line and the electricity network , the IRR stands at 13.54* . By taking into consideration the real operating conditions which reveal a 30+ rate of overall losses till 1994 then 20% until 2000, the
project IRR stands at 11.69%. The FIRR calculation table is given in Annex 1l. 5.3.3 This rate cannot be compared with that determined at the time of appraisal which concerned the integrality of the ENERGY l progrnmme. In any event , compared with the average weighted cost of capital which is around 6.6+, this rate of return is correct . However, it assumes that the tariff study , which will be conducted in 1995, will recommend an increase in existing tariffs of at least 30% from 1996. 5 .4
Economic Rate of Return
5.4 .1 The assumptions underlying the investment and operating economic costs are the same as those of the financial study. With regard to electricity tariffs, we considered the actual production cost of a thermally
generated KWh the other project option.
5.4.2 The project economic rate of return stands at 27.7% (Annex 12). At the time of project appraisal, the economic rate of return for the entire progrnmme was estimated at 23.21 as was the financial rate of return , which
appears paradoxical in so far as the dam construction project was a less expensive alternative than an increase in thermally generated output.
-
20 -
PERFORMANCE OF STRUCTURES
6.l Leqal and Institutional Framework 6.1.1
The legal status of ENERCA has been substantially modified since the
appraisal of the project in 1988.
In fact, by decree No. 92208 of 22
September , 1992 concerning the application of law 91014 of 25 September, 1991 concerning the organization of the institutional and legal framework applicable to enterprises and public authorities, ENERCA was established as state enterprise as opposed to a public utility. It thus becomes a legal entity under public law but operating under the private legal system . Its social purpose remains the generation, distribution and marketing of electric power throughout the territory of the Central African Republic. 6.1.2 This modification which reflects the political w ill to increase the enterprise 's management autonomy , is reflected in the adaptation of the articles to the new legal setting. ENERCA thus acquires ap equity capital of CFA .F 4,804,948,024 entirely held by the State . In addition, the enterprise is supervised at three levels instead of two at appraisal. The Ministry of Energy and Mineral Resources is responsible for the technical supervision, the Ministry of Finance financial supervision , while management supervision is the responsibility of the Delegation to State and mixed enterprises, and Government Agencies . 6.1.3 A new inspection and supervisory organ has been established and called the Superivisory committee. This or'gan, comprising 4 members appointed by an order in council, is responsible for defending the State 's interests as a shareholder and thus plays a shareholders'. meeting role. It appoints
members of the Board of Directors and the auditors. Decisions related: i) the procurement or alienation of corporate assets; ii) the acquisition transfer of equity participations in other companies; iii) increases reductions in equity capital; and v) the liquidation or early winding-up
to or or of
state corporations are submitted for its approval. Thus, through its own prerogatives, the Supervisory Committee is helping to remove the red-tape from
most of the major management decisions. 6.1.4 As part of this process of reducing the State 's direct intervention in the management of state corporations, ENERCA and the Government of the Central African Republic signed a perfprmance contract on the 9 December, 1989 for the 1990 to 1994 period. This contract defines the commitments of the two contracting partners and determines the means and framework of intervention of ENERCA . The results of this initial contract are somewhat mixed. The
objectives set for ENERCA could not be attained, mainly due to the non-compliance of the State with its commitments, particularly with regard to tariff policy and non-interference in the management of the enterprise. A new
contract is under preparation for the 1995-199* period.
In its formulation,
this new performance contract really takes into consideration the need to carry out a financial restructuring of ENERCA'<' Y hiIe guaranteeing adequate electricity tariffing . 6.2
Orcanization and Manacement
6.2.1 ENERCA is still administered by a Board of Directors, the members of which fell from 9, at the time of appraisal, to a minimum of 3, and a max imum of 7 since January , 1994 . 'his Board is vested with the w idest powers to act on behalf of ENERCA and authorize al1 acts concerning its social purpose under the 1aw and its articles. The Board of Directors delegates its powers to a Director General, assisted by a deputy Director-General b0th appointed by an order in council.
21
6.2 .2 Since the appraisal, the ENERCA organization chart has been radically changed. It is presented in Annex l3. In addition to the General
Directorate, it comprises three Directorates (instead of four at the time of appraisal). While the ''GENERATION and TRANSMISSION'' and ''FINANCIAL ACCOUNTS SERVICES'' directorates have the time of appraisal have Directorate.u In addition, and directly attached to the
remained, the other two directorates existing at been merged into a DISTRIBUTION AND COMMERCIAL several services have been established or removed General Directorate.
6.2.3 The present organizational chart could be improved by being rebalanced since the General Directorate appears overloaded in relation to the technical directorates. Moreover, the areas of intervention of the different services were not clearly defined, resulting in frequent conflicts of competence and excessive slowness in the distribution of information and documents. However, improvements have been made to the weaknesses noted by the appraisal mission concerning customer management and recover'y activities and management of statistics and studies. Services hàve been created to remove these bottlenecks. 6.2.4 In any event, ENERCA should insist on the improvement management. The first measure will involve the implementation and functional organization chart with a precise redefinition activities of each service . In addition, some services should fully play their role in the enterprise . 6 .3
of of of be
its internal an adaptable the scope of beefed up to
Staff and Trainina
6.3.1 As at 30 September , 1994 ENERCA had a staff of 420 compared with S63 at the time of appraisal, i.e. a fall of 25+. The following table presents the comparative status of the breakdown by category of staff of the enterprise at appraisal and on preparation of the çompletion report.
Management staff Supervisory staff Line staff Total
6.3.2
Appraisal
PCR
44 l44 375 563
49 l96 l7S 420
===
===
It thus appears that the greatest changes have occurred with regard
to line staff which fell by 53* between the two periods under consideration. In fact, ENERCA abolished positions which no longer fitted within its
principal activities (painters, carpenters...). Moreover, deceased or retired staff members were not replaced . However, the principal feature of the present staff structure is an imbalahce 'in the category breakdown pyramid.
The pumber of supervisory staff is higher ' than that of line staff.
zn
addition if the fact that about thirty supervisory staff are occupying management functions with the relevant material benefits taken into consideration, the real sùpervision rate at ENERCA is currenEly around 23% compared with 9% at .appraisal. 6.3.3 The reduction in staff and the increase in the number of connections have made it possible to improve the rate of productivity which improved from l employee per 13 customers at appraisal to l employee per 23 customers at present . However, this ratio remains slightly below the performance contract
target (1 employee per 24 customers). The new connection policy adopted by the ENERCA directorate ensure that this ratio is improved .
,
-
22
6.3 .4 The training policy begun in 1989 and highlighted by the appraisal m ission was not pursued. In fact, since 1991 the contract of the three technical assistants financed by FAC have not been renewed and the activities of the training centre have been virtually suspended . They boil down to a few seminars conducted by ENERCA management staff. The bulk of the training involves retraining seminars outside the country and student training courses
at
ESIE
of Abidjan.
These
actions are
financed
under
the
''ENERCA
Institutional Support Component'' financed by the World Bank. . A staff training progrnmme was prepared in 1989 by a consulting firm . This plan, already reported by the appraisal mission, could thus be updated and implemented . 6,4 Accountinq and Auditinq 6.4 .1 Accounts management is one of ENERCA 'S weak points. Contrary to the observations made in the appraisal report, there are no accounting and financial procedures at ENERCA and the accounting computer software does not meet requirements. Moreover, cost accounting has never been introduced .
6.4.2
The rehabilitation of the accounts function has just been completed
due to World Bank financing . To this end a management contract for the Financial Directorate was awarded on the 11 June, 1994 to a firm of accountants for a period of one year renewable . This firm provides the financial director and carries out monthly m issions. It is responsible for:
i) the establishment of . administrative and accounting prbcedures; ii) the introduction of cost accounting; iii) the evaluation of existing acgounts staff and the search for additional staff including a Central African Republiç manager capable of assuming, in time, the functions of Financial Director . 6.4 .3 The Supervisory Committee appoints an external auditor for a three-year term from among the UDEAC registered auditors or chartered account units to audit the company 's procedures and accounts. At the time of appraisal, the company had two external auditors appointed by decree of the Ministry of Finance for a z-year period . Since 1991, ENERCA 'S accounts have been audited annually by an external firm on World Bank financing . However, the enterprise 's accounts have never been audited by the auditors and external auditors . In fact, recommendations are made by the auditors on the exact valuation of the company 's property, the rèliability of the e'customer'' portfolio and the exact level of reserves to be constituted by ENERCA . One of the tasks of the Financial Directorate management consultants will be to apply previous recommendations in order to permit auditing of the company es accounts for 1994. 6.5
Tariffinq
6.5.1 Electricity tariffs were readjusted on 6 February, 1989. The major feature of this readjustment, which was sùggested by the Bank's appraipal mission, is that not only does it result in an increase per Kwh in the ' second and third bands but it also reverses the structure of the tariff. Originally a tapering tariff, a real consumption bonus, it becomes an inverted tariff which penalizes excessive consumption. This tariff structure is in keeping with the current electricity output situation . 6.5.2 There have been two 15% increases 1994 respectively. Thus, the average tariff Bangui rose from CFA.F 40 in 1988 to CFA .F cents, which ié fairly high in comparison African countries. The tariff for thermally
in ENERCA 'S tariffs in 1989 and applied for energy distributed in 72 in 1994, ioe. around 13 U .S. with the qverage rates in other generated electricity distributed
in secondary centres (excluding Bangui and Boali) rose from CFA.F 105 to CFA .F 161 over the same period.
'
-
23
6.5.3 Despite the last tariff increase applied in May , 1994, current electricity tariffs cannot provide ENERCA with a profitable operation. In fact , the average Kwh production cost for Bangui stands at around CFA .F l00
for an average tariff of CFA.F 72/Kwh. In the secondary centres, the cost of production of one thermal Kwh is estimated at CFA.F l70/Kwh compared with a current tariff of CFA.F l6l/Kwh. Moreover, the change in the parity of the cFA franc which occurred in January, 1994 had adverse effect on ENERCA 'S
financial balance (operating budget, debt service, commercial liabilitiqs). The tariff study: financed by the World Bank, will make it possible to determine an appropriate tariff level. The terms of reference of this study are under preparation and start-up ' is scheduled for early 1995. 6.6
Billinc and Collection
6.6.1 ENERCA currently supplies electricity to 10,000 customers compared with 8,120 in 1988, i.e. an increase of 23% . This increase in the number of
subscribers is one of the consequences of the improvement in Yhe enterprise's commercial function with: i) customer inventory and assessment campaigns; ii) the establishment from 1990 of a computer line for the management of customer accounts and billing whereas this type of proceseing was previously handled by
the National Computer Board; and iii) a new connection policy featuring a .
reduction in connection costs and the spreading of connection estimates over 20 months. A ',2000 customers by December 1994'' operation was launched but was hampered by a shortage of connection materials at the ENERCA level. About a thousand connection applications are currently pending . 6.6.2 Billing has been monthly since May 1994 for all customers whereas it was bi-monthly for low voltage customers. For LV, it is done by a team of 7
meter readers.
For MV# a special untt was established in August 1993 to
manage 85 customers which represented 50% of ENERCA 'S billing . The computerization of customer management has made it possible to eliminate
billing delays which had reaehed four (4) months. The current billing rate is about 80% . 6 .6.3 Since appraisal the level of arrears due to ENERCA has remained virtually unchanged. It amounts to CFA .F 3.l billion. However: these arrears do not concern the State which carried o ut a debt trade-off with the ' company and now settles its bills in advance . It is to be feared that a large part of these debts are really compromised. , The breakdown of customers by zone as well as suspension or meter installation operations have made it possible to improve the collection rate , which for the 4th quarter of 1994, reached 110%. Furthermore , the forthcoming introduction of prepayment meters in Bangui will help to improve the recovery rate. PROJECT JUSTIFICATION Pron 'ect Output
At a technical level
7.1.1
The project concerned the construction ôf a regulating structure
which has permitted an increase in the output of the Boali l and 2 hydro-electric plants. These two plants are the backbone of Bangui's
electricity system. At the time of appraisal, the technical justifieation for the project was based on the need to maximize the return on the production equipment by enabling it to work at full capacity throughout the year .
7 .1.2 Now, the visit to the M 'bali hydro-electric scheme and an analysis of the technical result's of itg operation make it possible to confirm that this
objective has effectivei'# $een achieve ' d.
In fact, the regulation of the
M 'bali river course due to the construction of the dam combined with rigorous
-
24
reservoir management during the dry season, in coordination with the operation of the Boali l and 2 plants, has made it possible to substantially increase the proportion of hydro-generated electric power in the total output of the Bangui electricity system . This proportion was 99 .1+ in 1993 compared with a maximum of 871 prior to 1991 when the dam was commissioned . 7 l 3
Furthermore, as pointed ou' t in sub-chapters 4 .3, 4.4 and 4 .5, the
project had, on the whole, a positive environmental impact. Thus, despite a reservoir surface area estimated at 40 km 3 , the project required relatively little deforestation. Reafforestation was carried out in such a way as to form around the lake, with the primary forest, a belt to ensure erosion control of the slopes. Finally, the construction of improved homes. for the rehoused population, the establishment of a health centre and the sinking of pump-equipped drinking water wells, have made it possible to effectively reduce the health risks which could arise as a result of the dam . At the financial level
7.1.4
The financial objectives of the M'bali dam construction project have
not been achieved .
In fact , although the level of hydro-generated output has
increased as a result of the implementation of the project, the demand for energy in 1993 was virtually the same as in 1991, i.e. Gwh 85. This situation is primarily. due to the fact that since investments relating to the Bangui network were not completed within the deadlines, the loss rates were extremely
high attaining 36% in 1993.
In addition, the national sociai and economic
situation, marked by a serious recession and social unrest , was in no way
conducive to the success of the project.
Overall, ENERCA'S financial
situation has deteriorated due, on the one hand to the low level of its sales and on the other, its excessively low tariffing which prevents profitable
operation. However, despite ihat, the project financial rate of return is satisfactory.
At the social and economic level
7.1.5
At the social and economic level, the project achieved most of its
targets. Firstly the increase in output of hydro-generated electricity made it possible to substantially reduce ENERCA 'S oil bill which fell from an
average annual level of CFA.F 1,550 million prior to project implementation to CFA .F 55 million in 1993 i .e . a saving of CFA .F 1,500 m illion per year compared with the estimates at appraisal of CFA .F 1,200 m illion . In addition , the number of ENERCA 'S customers rose from 8,000 in 1988 to 10,000 in 1994 i .e . a 25% increase.
7 .1.6
At the social level, the construction. of thé dam helped to improve
the living conditions of the population in the projpct area by increasing their financial revenues, the construction of a health centre and the reduction of water-borne diseases with the drilling of boreholes. In addition, the construction of new houses in the resettlement area improved the housing conditions of the population. However , the delay in implementing
certain actions planned under the project environment sub-component (deforestation) may, in time, create problems of pollution. The project econom ic rate of return was estimated by the completion mission at 27.7*. Least-cost solution
The alternative to the M'bali dam construction project was the development
of
thermally-generated
output .
A
comparison
between
the
production cost of a hydro-power generated Kwh (CFA.F 100) and a thermal generated Kwh (CFA.F 170) shows that the construction of the dam is by far the
least cost solution. In addition, this project is a perfect example of ''' a political will to enhance the country 's natural resources.
-
25 -
PERFORMANCES OF THE - BANK AND BORROWER
8 .l Overall and Specific Performance The Bank
8.1.1
Overall, the Bank's contribution to t%e achievement of the project
was almost exclusively limited to monitoring activities which could have been
carried out from the Headquarters in Abidjan. These principally concerned a review of the technical files as well as all types of requests addressed to the Bank by the Borrower or the executing agency . '
8.1.2
In view of the project's financial results, which are well below
forecast, it would appear the Bank's performances at appraisal are fairly mixed. In fact, the Bank could have imposed conditions to ensure that there wpuld be no delay in the start-up of certain programme components which now reduces the impact of the dam construction. Furthermpre , the financial
analysis conducted at the time of the project appraisal is very questionable. Firstly, assumptions used in the calculat ion of the rate of return do not appear in the report. It also seems that the profits attributed to the
project were not evaluated only on the basis of additional energy output. In view of these elements, the project rate of return was overestimated at the time of appraisal. In addition, the absence of monitoring/supervision missions made it impossible 'to monitor the fulfilment of other conditions
which had deadlines (see Annex l5) and which guaranteed the financial viability of the company . The Borrower
8 .1.3
For its part, the Borrower has, on the whole, complied with its
commitments to the Bank. Throughout the implementation of the project, the Borrower ensured that the Bank was regularly informed of the project status b0th at a physical and financial level, through the quarterly reports of the Engineering consultant . 8.2
Supervision
Unfortunately only one supervision m ission was carried out on completion of the dam works. The reqsons for this shortcoming could not be clearly identified. This shortcoming should be underlined even if it has had
no negative impact on the implementation of the project due, on the one hand, to the competence and commendable performances of the engineering consultant and enterprises and on the other , regular World Bank supervision missions . It
should be noted that the latter institution carried out three project supervision missions per year, throughout the implementation of the project. 8.3
Workinc Relations
The working relations between the Bank , Borrower and the Execqting Agency were good. At an administrative level each partner played his role and exchanges of information, comments and suggestions on the different aspects of
project implementation were, on the whole, regular and steady. This made it possible to resolve the problems which arose and which related to the rapid effectiveness of the loan as well as consideration and payment of disbursement applications within reasonable deadlines.
-
26 -
CONCLUSIONS
9.l
9.1.1
Results
The M'bali dam construction project with its related sub-components
concerning the environment , was implemented under the best technical and
financial
conditions.
At
a
technical level, the
woris
implementation
deadlines were complied with and the structures completed comply in every way with the technical specification. In addition, the executing agency established the necessary line and technical structures to ensure sound management of the dam and the monitoring of its behaviour. However: the anticipated performances and yields were not fully attained due to the delay in the rehabilitation work öf the Bangui network. 9.1.2 With regard to the financial results the anticipated revenues were not achieved but the internal rate of return remains satisfactory in view of the average weighted cost of capital. From an economic standpoint, the
project more than attained its targets. It remains the least-costs solutioh. Its implementation has made it possible to develop the country 's water resources while reducing its energy dependency and encouraging access to electricity by a larger section of the population of the Central African Republic.
9.1.3
All the different project cycle phases, from the feasibility studies
till the commissioning of the structures were imp lemented in accordance with the estimated schedules w ithin the limits of the estimated financial packages and by a team of engineering consultants and enterprises who demonstrated outstanding competence and professional rigour. From this standpoint, the construction of the M 'bali hydro-electric dam may , in conclusion, be considered a total success. This success deserves to be underlined all the more since, in this case, it involved the completion of a functional set of 50th diverse and complex structures, requiring the use of the greatest skills in such varied fields as geology, geophysics, hydrology , topography , civil works, mechanics, electricity and the environment. 9.2
Lessons to be Drawn from the Proiect and Recommendations
Lessons
9.2.1
The implementation of the project could have been adversely affected
by the Bank's complete lack of supervision. It is necessary to return to this weakness which often constitutes the principal reason for the deficiencies
encountered in the implementation of projects. In the present case, the project has benefited b0th from regular monitoring by the World Bank, and the periodic missions of its Committee of expe/ts who ensured the timely resolution 6f all the specific technical problems and difficulties encountered during works implementation. However, in view of the fact that the speciàl conditions required by the Bank were limited to the presentation by the Borrower of written undertakings, supervision missions would have made it possible to monitor the effective implementation of these Government co%m itments, particularly with regard to tariff increases and the recovery of arrear s .
9.2.2 Another lesson concerns the authorization granted by ADF for the early issue of invitations to bid. This authorization ensured the submission
of bids well before the appraisal of the project which was thus conducted on the
basis
of the
prices
of the
financial
proposal of
the
provisional
successful bidder for the dam works. In view of the nature of the project and the complexity of the contract award procedure, ADF, by this action, made a very significant contribution towards ensuring increased hydro-electric pùWé. : generation at the planned time , thus avoiding serious shortages which
27
could have arisen from a delay in the implementation of the project. In fact, ''éV%.d:)
without the early competitive bidding , the dam could only have been btought on stream, under normal working conditions, 12 months later which would have increased ENERCA 'S oil bill due to increased thermal output and worsened its already serious financial situation.
9.2.3
The final lesson to be drawn from the implementation of this first
energy project concerns the approach adopted during its appraisal by 'the Bank. In fact, as pointed out in para. 2.4.1, the project considered and as defined in the appraisal report, is not yet completed. A project completion report should not, therefore, have been prepared prior to the total comple6ion of the on-going component.
The physical, and even functional ipdependence of
the project componeni enabled the Bank to consider the ' ldame component as in independent project aùd.appraise it as such. However, since its financial and economic viability were related to the implementation of three other components, conditions concerning their financing should have been imposed. Recommendations 9.2.4
The recommendations primarily concern the' lessons drawn from the
project. The first concerns the appraisal of the project on the basis of prices obtained following the early competitive bidding. The project's success following those of the NANGBETO (Benin/Togo), KYAMBERE (K@nya) and RWyGURA
(Burundi) hydro-electric
schemes
shows
that
this
approach
has
generally produced excellent results with regard to the physical apd financial
implementation of projects. It is thus recommended that in its on-going quest for project quality, the Bank systematically adopt it in the process of scheduling major infrastructure projects; in other words, that project appraisal m issions only be programmed following the issue of invitations to bid and the publication of the results.
9.2.5 The consolidation of the project achievements and the attainment of the objectives defined at appraisal requires the adoption of several measures which could ensure the financial and economic viability of ENERCA and how guarantee the sustainability of the structures and the rppayment of loans
contracted for the implementation of the project. These meàsures focus on: i) the financial restructuring of ENERCA; ii) the readjustment of electricity tariffs; iii) the implementation of network rehabilitation and extension investments; and iv) a reduction in the cost of customer connections to the network. Also, since the study on financial equilibrium should start-up during the first quarter of 1995, the Bank should approach the Central African Republic authorities to be kept informed of its conclusions and thus envisage its participation in any possible financing required .
1258r
..
:
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ANNEX 5 .,'> %2j z'l ''i
CAR: N'BALI DAM
OPERATING STATISTICS DESCRIPTION
Billed energy (GWH) Average price p!r KWH Annual varlat. ln the average price
1986
1987
1988
1989
1990
1991
1992
1993
71.84
66.14 38.54 9.. 74
57.25 44.77 16.16
60.07 52.77 17.88
64.33 52.36 -0.79
55.28 51.54 -1.56
61.59 51.16 -9.73
69.98 50.67 -0.95
-7.93
-13.44
4.93
7.09
-14.07
11.41
2549
2563
3170
3368
2849
3151
3090
3161
, 4151
2741
2464
3671
4052 85.12
3768 123.54
3620 122.86
35.12
Annual billing variation
Bllled energy (msllions of CFA.F)
2523
Cor H kbslled qllectlon (millions of CFA.F) O(l ncl.wqrks ! prev.fiqanq.yrs) utstandlng bllls at the f7nan. ,r.)
2633
(H$11. cf CFA-F) of whlch works end
'
776
Installed capacsty (HH)
31.87
31.87
30.49
30.49
36.89
36.89
36.89
36.89
Gross output (G9H)
88.82
90.95
85.31
92.09
99.38
92.12
99.93
93.64
Thermal (GHH)
11.51
17.05 - 16.86 18.. 75
19.76
11.94
26.3
26.3
1.7)
0.84
Hydre (GHH)
17.31
73.9
68.45
80.15
73.08
65.82
98.22
92.8
% of total output
87.04
81.25
80.24
87.03
73.54
71.45
98.29
99.10
0.88 . 9.86
.9.81
1.46
1.48
1.18
1.07
% of total output
Domestic consumption (GHH)
% cf gross output generated
Net output (GWH)
Energy supplied for dsstrib. (GHH)
% of net cutput
Losi of enirgy from the transmission network (GWH)
% of net output ' Losé of energy from the distribu-
tion network (GHH)
12.96
0.82
0.92
12.97
84.85
91.28
97.92
90.64
98.75
92.57
80.8
82.49
79.64
85.9
92.55
85.18
80.54
85.14
7.2
7.58
4.81
5.38
5.37
5.46
8.21
7.43
8.18
8/42
5.70
5.89
5.48
6.02
8.3)
8.03
94.30
94.11
94.52
93.98
1.18
0.90
99.0) 91.58
1.61
1.71
1.01
91.82
1.47
28.55
0.97
88
0.88
26.46
91.69
1.14
91.97
% of energy supplied for distrib. Peak output (MH) Annual sh' Aft in peak (%)
11.09 15.05
8.96
16.35
22.39
25.83
28.22
29.9
28.95
24.16
Load factor (%) Eonsumption ot diesel (tbousands
67.37
65.99
58.31
61.12
65.39
63.35
61.33
61.26
19.82 15.95 5.98
28.11 16.7 4.70
30.07 17.2 2.99
30.49 17.35 0.87
35.10 16.6 -4.32
31.97 18.6 12.05
28.38 17.45 -6.18
3392
Annual varsation (%) Consumptson of diesel (millions of CFA.F)
4959. 46.20
4873 -1.73
3628 -25.55
7088 95.37
6811 -3.91
520 -92.37
241.53 -53.55
969
1261
1178
854
1584
1532
81.79
54344
Staffsng - Hanagement Supervisory - tsne
561 44 144 373
5di
557
44 144 375
49 143 365
540 37 154 349
509 44 136 329
602 57 226 219
477 56 211 210
427 77 177 173
564.81 547.24 10.23 7.34
578.8 561.0.6 7.02 10.72
597.01 589.97 4.1 11.94
598.25 583.69 2.76 11.8
631.66 519.71 11.67 11.75 88.53
742:71 615 8.27 13.69 196.75
849.88 707.17 10.08 10.96 121.67
1033 852 28.39 11.13 141.44
8080 52 8028
6099 83 5926
6491 83 6498
7863 83 7780
8343 83 8260
7509 83 7426
9705 87 8417
16
47 1154 23
of litres
Hage Bi11 (Hillions cf CFA.F) -
-
Mages Training Socsal contrsbutions Wage costs
Number of delivery points - > -
(v
LV over CV Secondary centres No.hof customers per employee
7815 83 7732
-
ENERCA - General Studies. 1308r
14
12
14
17
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ANNEX' 7
CENTRAL AFRICAN REPUBLIC COMPLETION REPORT
ON THE M 'BALI HYDXO-ELECTRIC DAM PROJECT
COMPARATIVE COSYS TABLE cost at Appraisal
(in thousands of UA) Component A . Dam B. Feeder roads
C. D. E. F.
Rehousing of population Deforestatipn Rehabilitation of 60 KV line Constr . of Boali 2 and Boali intersection line G. Assistance to M 'Bali l mission H . Inspection and supervieion Total
Total
F.E .
L .c
19,241 1,625 235 58l 698
3,395 2:7 41 l02 l23
22,636 1,912 276 683 82l
1l7 463 1.460 24,420
22 82 258 4,310
139 545 1 .718 28,730
= =====
==== =
==== ==
375 757
14:878 2,420 71 1,127 1,289
22,164 3,841 71 1,502 2,046
l10 257 1,916 12,122
l87 45 338 20 355
297 302 2.254 32,477
== ====
= ==== =
===== =
Actual Proiect Cost
(in thousands of UA)* Component
A. B. C. D. E. F.
Dam and feeder 'road RNl diversion Rehousing of population Deforestation Rehabilitation of 60 KV line Constr . of Boali 2 and Boali intersection line G. Assistance to M 'bali mission
H. Inspection and supervision Total
7 ,286 l ,42l
Exchange rate as at 30 September, 1990
UA 1 US$ l
1308r
= US$ 1.38631 = CFA 291.65
.. N
q:.'pe
ANNEX 8
Yx$
.. , s.. . j' ' ' J . , . * ;. e ' *. :,
CENTRAL AFRICAN REPUBLIC COHPLETION REPORT
QN THE M'BALI HYDRO-ELECTRIC DAH PROJECT Cnmnarative Statement Qf EiERCA'S Operatinc Accounts 1989
1990
1991
Appraisal Actual E22/. Acfual Apmrx Actual
1992
1993
&zpm. Actual Apmr. Actual
;
Operating revenue operating costs Gross operatlng profit Non-cperating prcflt Surplus Net profit before tax Taxation prnfst Net prcfit
korklng ratio (%) Operatsng ratio (%) Financsal charges/reven.
1308r
4,226 4,078 +148
+148 49 99 57 97
3,680 5,000 3,164 4,754 +516 246 +442 959 49 919 71 86
3%
246 58 188 57 96
3,909 5,327 3,831 6,104 3,775 4,010 4.103 4,223 4,506 3,688 -101 +1.224 -392 1,598 87 +38 -934 -1,287 1 6 7 -62 +1,224 -1,320 1,598 -1,199 43 61 41 70 33 -105 +1,163 -1,361 +1,528 -1,232 84 32 91 30 73 102 78 110 75 98
2%
8%
20Z
6,398 3,864 5,070 4,732 1,328 -868 - -1,666 27 1,328 -2,507 74 38 +1,254 -2,545 30 92 80 122
2)Z
ANNEX 9 CENTRAL AFRICAN REPUBLIC COHPLETIO. REPORT ON TïE H'BALI 8YDRO-ELECTRIC DAM PROJECT
Summary of ENERCA'S Balance Sheets
1989
1990
1991
1992
1993
12,205 500 3.640 16,345
19,670 416 2.712 22,798
20.329 427 3.032 23,788
19,573 441 5.249 25,263
19,885 315 4.045 24,545
Equlty capltal LMTD STD Total
2,570 8,221 5.554 16,345
2,590 16,341 3,-867 22,798
536 18,236 5.016 23.788
1,251 18.699 5.313 25,263
131 19.315 5.061 24,545
Horklng capltal
-
1,414
, +1,851
-1,557
377
Flnanclal autonomy Long-term debt Llquldlty rate (CA/STD) Return on flxed asset Customer credlt
0.18 3.19 0.75 71 393 d
ASSETS Net flxed assets Operatlng assets
Qulck Asset Total LIABILITIES
1308r
0.13 6.30 0.81 0.75% 373 d
0.02 34.02 0.69 421 d
0.05 14.9 1.07 452 d
-
-
701
0.01 0.86
459 d
'
N@
x. '.D.'%P. zk
ANNEX 10
CENTRAL AFRICAN REPUBLIC COMPLETION REPORT OF THE M 'BALI HYDROrELECTRIC DAM PROJECT
Assumptions of Financial Proiections A.
FINANCIAL RATE OF RETURN Currencv :
The analysis was conducted using constant CFA francs.
Investments:
These are actually incurred investment expenditure.
Economic Life :
An econom ic life of 25 years was estimated , with . a residual value representing 50* of the civil works.
Maintenance Costs: They :re estimated at 1.5* of the amount of the investment . Tariff:
From 1989 io 1993, the average electricity tariff was CFA.F 52/Kwh. As from 1994, this average tariff increased to CFA.F (72/Kwh). This tariff is assumed to be constant till 1996, when an increase of 30%
will be applied (application of the results of the tariff studylk Output:
In order not to panalize the project, additional hydro-electric output was considered on the basis of the means of generation of the last five years
(72.286 Kwh). B.
EC-ONOMIC M TE OF RETURN -
Tariff :
The economic price of the Kwh considered is the cost of a Kwh generated from the thermal power plant
(other alternative) i.e. CFA.F l70/Kwh. ESTIMATED OPERANING AccouNTs REVENUES
1.
Estimate sales of energy are those established by ENERCA on the basis of demand forecasts.. The rate of overall losses will fall from 27* in 1994 to 20* from 1995 due to the on-going network
rehabilitation work and the measures adopted at a commercial ievel. 2.
The average Kwh tariff, çurrently CFA .F 72, w ill be increased by 3Q& from 1996, follow ing the findings of the tariff study . h 15% increase has already been accepted.
The other product average rate).
be estimated at l0+ of energy sales (past
Costs
Operating costs have been determined until 1996 on the basis of the 1994 draft budget prppared by the ENERCA studies service . From 1996, we have made an extrapolation in the basis of energy sales.
1308r
Y
,r
e
R .p
E
ANNEX 11
CENTRAL AFPICAN REPUBLIC COHPLETION REPORT 0N T8E M'BALI FYDRO-ELECTRIC DAM PROJECT FIRR Calculatlon Table (ln mllllons of CFA.F) Investment
Malntenance
(1949) (6723) (1517) (962) (149) (759)
Revenues
1348 1067 1866 1866 2425 2425 2901 2901 2901
2991 2901 2901 2901 2901 2901 2901 2901 2901 2901 2901 2901 2901
3415 FIRR = 0.1354
1308r
Beneflts (1949) (6723) (1648) 245 765 954 1713 2272 2272 2272 2272 2272 2272 2272 2272 2272 2272 2272 2272 2272 2272 2272 2272 2272 5687
ANN. EX 12
CENTRAL AFRICAN'REPUBLIC COHPLETION REPORT
0N T8E M'BALI HYDRO-ELECTRIC DAM FROJECT Calculatlon of the EIRR (ln mllllöhs of CFA.F)
Investment
Ma$ntenance
Revenues
Beneflts : . .
(1949) (6723) (1517) (962) (149) (759)
131 141 153 153 153 153 153 153 153 .yjg 153 153 1S3 153 153 153 153. 153
4403 3485 4403 4403 4403 4403 4403 4403 4403 4403 4403 4403 4403 4403 4403 4403 4403 4403 4403 4403 4403
157 3415
153' 153 153
EIFR 1308r
0.2772
(1949) (6723) (1648) 3300 3183 3291 4250 4250 4250 4250 4250 4250 4250 4250 4250 4250 4250 4250 4250 4250
4250 4250 4250 7665
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ANNEX 14 . -'' ?200 1 0f 2' 7k1 7 .
: Wjj '
CENTRAL AFRICAN REFUBLIC COMFLETION REPORT Q: T8E H'BALI CYDRO-ELECTRIC DAM PROJECT Status of Implementatlon of the other Components
of the flrst Enerqv Pro. qect Rehabllltatlon of the Bancul Network
The Implementatlon of the prolect began ln Harch 1993 and the completlon of the work ls planned for February
1995.
At
present. the lmplemenfatlon schedule appears to be complled w1th. There ls a substantlal delay of about 12 months ln the
prolect slnce at the tlme of the May 1991 monltorlng mlsslon, works start-up was planned for the 1st quarter of 1992.
11)
The contract was slgned on 26 February, 1993 w1th SPIE ENERTRANS and the flnanclng was ensured by the E1B (European Investment
Bank). The prolect cost was CFA.F 1,298,358,200 prlor to the devaluatlon of the CFA franc. The revlsed devaluatlon ls around CFA.F 2,505,000,000.
amount
after '
The consultlng englneer responslble for works lnspection and
supervlslon ls the Canaulan flrm TECSULT flnanced by CIDA for an amount of 829,000 Canatlan dollars. Thls flrm had also prepared, by means of an ADF loan of UA 320,000, a11 the feaslbllity studles and detalled sketches.
Rehabllltatlon of the Boall 1 and 2 Power Plants 1)
These Works were lmplemented on a CFD flnanclng for a total amount of FF 24.40 mllllon, l.e. CFA .F 1,200 mllllon. The rehabllltatlon of Boall 1 has been completed slnce 1989 and that of Boall 2 slnce 0ctobe( '1991. ,
At Boall 1. the rehabllltatlon only concerned electrlcal lnstallatlons. A second rehabllltatlon phase appears necessary and wl11 concern hydraullc englneerlng equlpment. The negotlatlons are underway wlth IDA to determine who shall bear the costs of thls phase. Bancul Thermal Power Plant
The Bangul Thermal Poker Plant has just recelved a new 6.4 HH unlt commlssloned ln Harch, 1990. , Thls diesel generator was flnanced by CFD
for a total amount of CFA.F 1,650 mllllon lncludlng the prolect management. 1308r
ANFEX 14 Page 2 of 2 4.
Instltutlon Bulldlng
Thls component prlnclpally comprlses: The Generatlon and Transmlsqlon Master Plan: thls study for a total
cost of CFA.F 105,532,650 (/F 2,110,653) was full/ completed ln May, 1992. It was flnanced by the IDA loan and lmplemented by the qnglneer consultant SOGREAH-ELECTROHATT; '
The tarlff study: lt ls expected to be flnanced by IDA &nd the TORS are belng prepared; ) :!
Tralnlng scholarshlps to ESIE: thls component ls also flnanced ln an 1DA loan. At present, flve (5) students are belng tralned at
ESIE Slnce the 1993/1994 academlc yeart Technlcal Asslstance: the bulk of It Is lntended for the Financlal Dlrectorate and ls flnanced by the IDA loan. The total amount Is
CFA.F 192,000m000. The rélated sirvltes are stlll ln progress and are provlded by ARTHUR ANDERSON. 5.
011 Prosnectlon Also flnanced by the IDA loan, thls component begAn ln 1990 w1th the work on o11 leglslatlon, the technlcal shortage of the sesslonal llnes
the preparatlon of promotlonal document and tralnlng geology and o1i technlques. The prolect ls stlll belng lmplemented and the total
flnanclal packpge ls SDR 2,150,000 I.e. CFA 874,333,330.
*1*'.7 ' '.' 'n.
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.
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j'
iA'#'X *l. . ANNEX 1S. '4.I 'V' ..! 4 Page l O f 2 ' .'.' . ç'42
*kj'
..
4' ck:.2u k. v,
';
CENTRKL AFRICAN REPUBLIC COMPLETION REPORT OF THE M 'BALI HYDRO-ELECTRIC DAM PROJECT ADF LOAN CONDITIONS A.
Condit ions Precedent to the First Disbursement The Borrower shall:.
undertake to regularly allocate his annual budget the necessary
amount to finance his share of the project cost in acco/dance with the financing plan;
ii)
undertake to find additional sources of financing in the event of
any overrun on the actual project cost; iii)
undertake not to use the proceeds of the loan for the payment of duties and taxes related to the goods and services required to
implement the project;
undertake to provide ADè for prior approval with the performance contract to be signed between the dovernment and ENERCA (para. 4.6.3); undertake to approve an electricity tariff increase of at least 15% in 1990 and permit ENERCA to revise its tariffs annually to ensure that the return on its revalued fixed asset is at least equal to 8% per annum .as from 1991;
vi)
on-lend the loan to ENERCA on terms acceptable to ADF. The draft on-lending agreement shall be submitted to ADF for prior approval;
vii)
provide ADF with evidence that the financing agreement with the other donors concerned by the ADF financed component (IBRD, KF, CCCE and FAC); have been signed or that the latter have undertaken in writihg to take part in the financig of the said component ;
viii) provide ADF with a progrnmme of peasures aimed at recovering arrears due to ENERCA; and
ix)
B.
provide evidence of the modification of the existing tariff structure in order to obtain progressive tariffing (para. 4.5.3 and 5.1.5)..
Other conditions The Borrower shall, moreover, communicate to ADF : The tariff study planned under the institutional strengthening;
ANNEX 15 Page 2 of 2
ii)
The ENERCA audit and project account report no later than six months after the end of the financial year end (para. 4.4.2)7
iii)
The performance contract between the Borrower and ENERCA no later than 31 December, 1989 (para. 4.6.3):
iv)
The measures taken to improve the level of the operating ratio which should not in any case exceed 50% per year no later than 31
December: 1989 (para. 5.3.4);
v)
A plan concerning environmental preservation and the rehousing of persons displaced
because
of
December, 1989 (para. 6.4.6).
the project no later than 31
AN. NEX 16
CENTRAL AFRICAN REPUBLIC COMPLETION REPORT 'QN THE M' BALI FYDRO-ELECTRIC DA8 PROJECT
Estlmated Operatlnn Accounts (ln mlllsbns of CFA.F) I
100.0 Output (GHh) Losses as a Z 20ï 80 Energy sales (GHh) 72 Average tarlff (CFA .F/KHh) 5760 Energy sales 576 Other revenues 5336 Total Revenues 4463 Qneratlng costs +1873 Net proflt
1308r
110.0
118.0
135.0
20Z
20* i
20ï
88 94 8272 827 9099 5060 +4039
94 94 8836 883 9719 5332 +4387 '
108 94 10152 1015 11167 6200 +4967
150.0
20% 12O 94 11280 1128 12408 7040 +5368
166.0
2î* L 132 94 12408 1240 13648 7780 +5868
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