Bolivia - Fourth Power Project

FILE Te Y Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-1787-BO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE EMPRESA NACIONAL DE ELECTRICIDAD, S. A. (ENDE) FOR A FOURTH POWER PROJECT March 18, 1976 This document has a restricted distribution and may be msed by recipients only In the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (As of March 4, 1976) Currency Unit = Bolivian Peso ($b) US$1 = $b20 $bl .= US$0.05 $bl,000 = US$50 $bl, 000, 000 =US$50, 000  FOR OFFICIAL USE ONLY REPORT AND RECOCMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE EMPRESA NACIONAL DE ELECTRICIDAD, S.A. (ENDE) FOR A FOURTH POWER PROJECT 1. I submit the following report and recommendation on a proposed loan to the ampresa Nacional de Electricidad, S.A. (ENDE) with the Guarantee of the Republic of Bolivia for the equivalent of US$25 million to help finance a program for the expansion of electric power generation and transmission. The loan would have a term of 25 years, including four years of grace, with interest at 8-1/2% per annum. PART I - THE ECONOMY lntroduction 2. An economic report entitled "Current Economic Position and Prospects of Bolivia" (786a-BO) dated July 28, 1975, was distributed to the Executive Directors. Country data sheets are attac,hed as Annex I. Background 3. Despite the increasing importance of petroleum and natural gas exports, as well as significant mineral deposits, Bolivia remains one of the poorest countries in South America. The majority of the population is engaged in traditional agriculture. Only a small part of the labor force is employed in the mocLern sectors. The infrastructure is primitive and the road and rail networks: cover only a fraction of the country. The combination of strong traditional ties within the Indian communities and geographic, health and educational obstacles to population mobility has perpetuated the demographic concentration on the barren, windswept and dry 10-15 thousand foot plateau, the Altiplano. About half of Bolivia's population lives a physically, culturally and economically isolated subsistence existence in this inhospitable region which is rich in mineral deposits but limited in agricultural potential. 4. The 1952 revolution sought to put an end to the dual structure which had characterized Bolivia's economy since colonial times and to deprive the landowning and mining oligarchy of its economic base. This objective was only partially achieved. Progress was made in eradicating feudal relations, distributing the land and eliminating obstacles to social mobility. The agrarian reform and the nationalization of large mines, however, were followed by falling production. GDP declined in the 1950s and did not recover to its pre-1952 level until 1961. During the subsequent decade, output increased steadily at an average annual rate of around 5%, providing for average annual per capita income increases of 2.5%. As a result, GNP per capita which had fallen by 24% in the 1952-60 period had recovered by 1970, to the 1952 level and was more equally distributed. However, the momentum of economic growth was again lost in 1970/71 because of political This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its conlents may not otherwise be disclosed without World Bank authorization.  - 2 - instability associated with declining private investment and deteriorating public finances. The deterioration of public finances reflected a structural flaw in the economy. Bolivia's public sector is proportionately one of the largest in South America and a source of livelihood for a sizeable segment of the population. With the scarcity of employment opportunities in the private sector, pressures to expand the ranks of public servants proved difficult to resist. Increased expenditures on wages and salaries, combined with a weak tax system, left few resources for investment. Moreover, the inability of the public sector to generate adequate savings limited its capacity to utilize external assistance. 5. On coming to power in 1971, President Banzer faced the need to provide jobs for the unemployed and to revitalize investment and output growth. This need was initially faced in the context of a sharp deterioration in Bolivia's terms of trade which produced a weakening in the balance-of- payments and a further deterioration in public finances and eventually resulted in a substantial devaluation in 1972. At the same time, however, more rational economic policies were put into effect. To establish a more favorable climate for private investment, new laws offering guarantees and incentives to private investors were promulgated and claims arising from earlier nationalizations were settled. The Government also improved public administration and the pricing policies of some public undertakings. These policies were successful in increasing private investment and in bolstering the rate of growth. Recent Economic Developments and Prospects 6. The most important events affecting recent economic performance have been the substantial improvement in the terms of trade in 1974 and the subsequent deterioration last year. The sharp increases in petroleum and mineral prices in 1974 allowed a simultaneous and large expansion of both consumption and investment and brought about an unprece- dented improvement in public finances and the balance-of-payments. After current deficits in 1970-73 the Central Government achieved savings equivalent to one-third of its capital expenditure in 1974. For the public sector as a whole, savings in 1974 exceeded 10% of GDP and covered nearly 90% of capital expenditure. On the balance of payments side, the terms of trade gain in 1974 was equivalent to about 11% of GDP and the trade surplus exceeded US$150 million. There was a current account surplus of some US$50 million and net capital inflows approached US$90 million, nearly four times their 1973 level, as a result of substantially higher loan disbursements to the public sector and increased foreign investment associated with hydro- carbon exploration. The net foreign reserve gain in 1974--US$125 million-- brought total reserves to US$156 million, equivalent to 3.7 months of imports, a high point in Bolivia's recent economic history. 7. After the terms-of-trade related financial improvement in 1974, a deterioration took place in 1975 - caused by a worsening of the terms-of-trade and the impact of the world wide economic recession. Mineral exports fell by well over 20%. There was a decline of mineral prices approximating 13%, on weighted average, and the volume of sales of most minerals fell as a direct  - 3 - result of the recession and unloading of speculative stocks accumulated during the commodity boom of 1973/74. Efforts by the International Tin Council to sustain prices by imposing export quotas did not produce the expected results. Exportable surpluses of crude petroleum were significantly reduced foi "he second year in a row due to falling production and rapidly rising domestic consumption of hydrocarbon derivatives. A significant price increase for natural gas was obtained from Argentina, but this could not compensate for the overall decline in export earnings. Based on preliminary estimates, merchandise exports in 1975 declined by 20%, while imports rose by nearly one-third in the wake of the start-up of new public investment projects and the liberalization of imports for consumer durables and motor cars earlier in the year. The current account deficit approached US$220 million and despite substantially increased disbursements of medium term loans to the public sector, there was a loss of net foreign exchange reserves of some US$60 million. Reserves declined to US$100 million, or about two months of imports. 8. Bolivia's terms of trade are expected to again improve in 1976 and beyond. Mineral prices appear to have bottomed out in 1975 and hydrocarbon prices have resumed their rising trend. Furthermore, with gradual econamic recovery in industrialized countries mineral export volumes should increase. Recent Government measures to increase prices of domestically consumed petroleum products, especially of gasoline, should improve exportable surpluses. The outlook for 1976, therefore, is for somewhat accelerated growth and an improved fiscal and balance-of-payments position. 9. Economic growth prospects over the medium- to longer-term depend on the Government's ability to increase savings and stimulate investments, particularly those for developing the country's hydrocarbon, mineral and agricultural resources. Government measures designed to broaden the revenue base have begun to shIow results. The firm wage policies that have been applied since 1974 have resulted in a reduction of inflation to an annual rate of about 8%. Investment in mining and hydrocarbons is accelerating. Intensified exploration for hydrocarbons by the state owned petroleum company and private foreign companies is underway and may lead to significantly increased production and export of crude petroleum and natural gas which would stimulate an acceleration of economic growth towards the end of the decade. Debt Service and Creelitworthiness 10. Service on external public debt in 1974 amounted to 13.6% of exports of goods and non-factor services net of investment income abroad. This represents a considerable reduction from the debt burden of previous years which frequently absorbed 15-20% of net export receipts. Average terms of the externa]. debt outstanding have remained soft, reflecting the high proportion of concessionary aid channeled to Bolivia. Average interest in 1973 was 3.5% and average maturity about 22 years.  11. This position is bound to change, however, as it can be expected that lending terms will become harder and the share of loans on conventional terms will increase. Of new loans attracted during 1974 and 1975, over 40% were financial and suppliers' credits. With substantial disbursements envisaged during the next six years, the service on external public debt will move well above its historical average by 1977/78. However, as a result of growing exports, the debt service ratio should decline in subsequent years. In view of the nature and growing size of Bolivia's debt, prudence in selecting and utilizing external capital will have to become an essential element of debt management. 12. Bolivia enjoys a substantial resource base in agriculture, minerals and hydrocarbons which has to be developed to sustain rapid economic growth and, in particular, rapid expansion of export earnings in the foreseeable future. If production in the export sectors can be increased as planned and prices for the country's major export products (oil, gas, minerals) are adequate, Bolivia can be considered creditworthy for substantially increased amounts of external lending on conventional terms. Nevertheless, some additional lending on soft terms is justified by Bolivia's poverty and its large and continuing external capital requirements. The country will require substantial external financing of investment to supplement the domestic savings effort at least until the early 1980s. While the Government is making a serious effort to mobilize domestic resources and prepare a develop- ment program, implementation of this program will require external assistance well in excess of the foreign exchange component of suitable projects presently available for international financing. Although substantiallg increased suppliers' and financial credits will probably become available, they should prudently cover not more than 35% of the public capital inflows required during 1975-80 for meeting a GDP growth target of 6-7% annually. The remainder should be obtained on softer terms, preferably from inter- national development financing, including an expanded Bank lending program. PART II - THE BANK GROUP OPERATIONS IN BOLIVIA 13. Bolivia is an original member of the Bank but it did not obtain Bank Group resources until 1964. Bank Group assistance to Bolivia has been limited by the country's tight budget and restricted capacity to service external debt. Until 1975, lending to Bolivia was in the form of IDA credits, except for a Bank loan to help finance an "enclave" project. Because of the narrow scope for private investment, the first IFC investment, amounting to US$400,000 in a cable and plastic products enterprise, was not made until 1973. Annex II contains a summary statement of the status of Bank Group operations in Bolivia as of January 31, 1976 and notes on the status of ongoing projects.  14. The proposed 'Loan would be the Bank's fourth and the fifteenth Bank Group operation in Bolivia. Net of undisbursed balances, Bolivia's debt to the Bank and IDA in 1974/75 represented 8.3% of its external public indebtedness and the share of the Bank Group in total debt service is now about 4%. Both figures are expected to increase marginally by 1980. Although the Bank Group has ranked below the US Government and the IDB as a source of financial ass:istance to Bolivia, its role has been expanding. 15. Future Bank lending will give emphasis to supporting Government efforts to expand production while simultaneously improving the distribution of the benefits of economic growth. Many Bank activities will focus on helping the less developed regions of the Altiplano and the intermediate Valleys which contain the majority of Bolivia's rural and urban poor. 16. The Appraisal Reports for three projects are now under preparation. One of the projects wil:L be in the water supply and sanitation sector for small urban and rural areas. Another will provide credits for established private and predominant'Ly Bolivian owned medium-sized mining enterprises and private industry. It will operate through a private development bank and will be the Bank's second operation with that institution. The third will be with a state-owned mining bank and will provide credits to smaller private mining enterprises that have thus far had little capital investment. Both mining projects will result in increased mineral production for export. 17. In the social sectors, project preparation has also begun for agricultural projects wiich will be designed to meet the needs of the poorer farmer and an education project which will seek to improve rural and vocational education. The financing of further economic infrastructure is also contemplated in the transportation and power sectors. In transportation, project preparation is underway for a project to provide access to remote areas of the country through a program of airport development and continued support for the railway rehabilitation program is planned as well. In the more distant future, further Bank programs in agriculture, industry and mining will be under consideration. PART I7I - THE POWER SECTOR IN BOLIVIA Organization 18. For about forty years, beginning in the mid-twenties, the Bolivian Power Company, Ltd., (BIC), a subsidiary of the US-controlled Canadian International Power Compiany, was the sole public service supplier of electricity in Bolivia, supplying the city of La Paz, the mines around Oruro and the municipal distribution company at Oruro. A modem power sector came into being only in the mid-sixties, when the Bolivian Government established ENDE as an autonomous public utility to build and operate generation and transmission facilities outside La Paz, and set up the Direccion Nacional de Electricidad (DINE) to regulate the electricity  - 6 - industry, including electricity tariffs, throughout the country. In 1968 the Government enacted an Electricity Code, thus laying a uniform basis for the operation, regulation and expansion of the electricity industry. 19. ENDE currently accounts for 34% of installed capacity, BPC for 41%, the state-owned mining company (COMIBOL) for 11% and independent producers for the remaining 14%. In addition to its responsibilities for the generation and transmission of electricity, ENDE is responsible for the integration of the various electrical systems and interconnections with neighboring countries. It is also endowed with the power to form associated utilities for the distribution of electricity. Energy Sources 20. Bolivia is fortunate in having sufficiently ample low cost energy sources to meet its own current and prospective needs for the foreseeable future. Natural gas is currently exported to Argentina and a project for the export of gas to Brazil is under consideration. Bolivia's petroleum exports also make a major contribution to the balance of payments. 21. Hydroelectric power meets all of BPC's energy requirements and 64% of ENDE's energy requirements. Natural gas accounts for 90% of the power sector's total consumption of thermal energy. Consumption 22. During the 1969-1974 period electricity consumption grew at 6.1% annually. In 1974, per capita consumption was 160 kWh, one of the lowest consumption figures in South America. The mining industry consumed 44% of total electric production, the largest consumption of any sector. Residential consumers accounted for 24% of electric consumption. More than two-thirds of the general population and about 95% of the agricultural population have no access to electricity. The Government is, however, with the financial assistance of the Spanish and United States Governments, carrying out an extensive rural electrification program designed to increase the number of rural inhabitants served by electricity, from 5% to 15% by 1978. Additional programs are planned through the middle of the coming decade to service the needs of the rural population. The implementation of these programs will result in the furnishing of needed power for irrigation pumping systems and machine operation, thus stimulating the economic development of rural areas. Tariffs 23. Electricity tariffs are regulated by DINE in accordance with the Electricity Code. The Code provides that utilities shall earn a return averaging 9% on net fixed assets over a three to five year period and that there should be an annual review of electric rates by DINE. If the return expected for the three to five year period falls below 8.5% or exceeds 9.5%, they are required to be adjusted. Although the Code permits the revaluation of assets to reflect changes in domestic prices, it does not require their  - 7 - periodic revaluation based on changes in the exchange rate and external inflation. ENDE has agreed, however, to revalue assets at least once a year to reflect current values in accordance with methods of revaluation accep- table to the Bank (Loan Agreement Section 5.04b). 24. Despite the provisions of the Code, rate increases have in the past been delayed so that the rate of return has fallen below 9%. La Paz tariffs, in particular, have been a sensitive political issue and rate increases have sometimes been inadequate. As a result, needed investments in the BPC system have had, at times, to be postponed. After extended negotiations to purchase BPC's assets in 1975, the Government decided that it would not proceed with the purchase and that it would permit EPC to continue under private ownership. Shortly after reaching this decision the Government granted BPC a 70% average rate increase which enabled BPC to earn 4.7% on its net assets in 1975. BPC has requested additional rate increases of 30% in 1976 which, if granted, would bring BPC's rate of return to 9! and permit it to finance with internally generated funds, a large portion of its needed distribution expansion for the period 1976-1980. 25. Over the 1972-1974 period ENDE's average rate of return on partially revalued assets was 8.:L%. Tariffs were increased,in mid-1975, but the rate of return on fully revalued assets for 1975 was 6%. Prior to loan negotiations, ENDE fully revalued its assets effective January 1, 1976 and announced a two stage rate increase of approximately 23%, effective February 1 and May 1 of this year, which wi:Ll bring ENDE's rate of return for 1976 on such net revalued assets to 9%. 26. In connection with the third ENDE project (Credit 433-BO), studies are to be carried out wihich would recommend a tariff structure for Bolivia's main utilities designed to discourage power consumption during peak hours and make other suggestions for improving tariff structures. Section 3.03 of the proposed Guarantee Agreement provides that DINE will review the results of these studies and discuss their implementation with the Bank. In addition, the proposed Loan (Section 5.05) and Guarantee (Section 3.02) Agreements provide that the Borrowrer and the Government will take all steps necessary to cause ENDE to charge its bulk consumers electricity rates based on demand and energy charges and thereby discourage wasteful energy consumption during peak hours. Future Developments 27. The UNDP has financed a study now in process which is making an inventory of national hydroelectric resources and preparing a plan for power development for the coming decade. Near-term future development contemplates an expansion of the distribution system in La Paz and its surrounding areas; additional generation for the La Paz area; inter- connection between the Northern and Central Systems; and additional thermal generation in Santa Cruz and Sucre. Parallel with the Bank project, the  - 8 - Inter-American Development Bank (IDB) will lend US$24.5 million to ENDE to finance generation and transmission works in the Central and Southern Systems costing about US$30 million. Feasibility studies are also underway for several large multiple sector projects, which will combine hydroelectric production, irrigation, agricultural development and water supply. PART IV - THE PROJECT 28. The Government of Bolivia has requested a Bank loan to help finance the expansion of ENDE's generation and transmission facilities. The project was appraised by a Bank mission which visited Bolivia in September and October 1975. A report, entitled "Appraisal of a Fourth Power Project",, No. 981b-BO, dated March 14, 1976 is being circulated separately to the Executive Directors. Negotiations took place in Washington on March 2 and 3. The Government of Bolivia was represented by the Sub-Secretary of the Ministry of Energy and Hydrocarbons, Mr. Jorge Zamora. ENDE was represented by its General Manager, Mr. Oscar Morales. ENDE Investment Program 29. The proposed project is a part of ENDE's overall five year expansion program for the years 1976-1981. The overall program consists of a series of investments to expand electric power generation and trans- mission in the ENDE operating area. 'Mien completely implemented, it will cost US$141.0 million equivalent, including a foreign exchange component of US$91.0 million. A portion of the program is underway and is being financed, in part, through IDA Credit 433-BO. It is anticipated that the project financed by the IDA credit will be completed early in 1977. The proposed project, the parallel IDB project referred to above and other projects costing about US$72.0 million and scheduled for the latter years of ENDE's investment program, constitute the balance of ENDE's proposed five year program. The completion of ENDE's five year investment program is dependent on securing additional external financing of approximately US$ 44 million in the latter three years of the program. 30. The proposed project consists of the following elements: (a) expansion of the Santa Isabel hydroelectric power station, including a third unit (18 MW) and the installation of a secon3 penstock; (b) construction of a compensating pond with a capacity of 100l,O0Om, to be located at the Santa Isabel power station intake and to store water from the Corani power station; (c) collection of water from the two arms of the Vinto River at a maximum discharge rate of 3m3/second for diversion to the Santa Isabel tunnel; (d) installation of a gas turbine with a capacity of approximately 22 MW at the Santa Cruz power station; (e) construction of a single circuit 115KV transmission line, 150 km long, between the Sacaba and Vinto substations;  - 9 - and (f) construction of tlhe Vinto substation, expansion of the Cochabamba and Sacaba substations and installation of shunt capacitors at the Oruro substations. A loan and project summary is attached as Annex III. Project Execution 31. The project would be executed by ENDE. ENDE was established in 1965 as a limited liabil:ity company. Its capital stock is mainly held by the Corporacion Boliviana de Fomento (CBF), a Government-owned development corporation. Ex officio, the Minister of Energy and Hydrocarbons chairs ENDE's six-man Board, which, in addition to the Minister, consists of three CBF Directors and one Director each for COMIBOL and YPFB, the Government-owned mining and petroleum enterprises. The Board appoints the General Manager. The present General Manager who was appointed in 1972 is an experienced engineer and competent executive. ENDE's staff of 235, includes 105 pro- fessionals. The present staff is, in general, competent. 32. Significant management improvements have been made by ENDE over the last several years iri establishing financial controls and improving internal communications amd coordination, as a result, in part, of the previous DA Credits. The proposed Loan Agreement provides for the following measures which are designed to encoarage the further improvement of ENDE's operations: a. A private consutlting firm is preparing recommendations which will inter alia assist ENDE in installing a company-wide budgetary system and improving its fixed asset accounting. Section 3.07 oi the proposed Loan Agreement provides that ENDE will prepare a Plan of Action based on the consultant's recommendation.s and, after consulting with the Bank, carry out the Plan. b. ENDE will prepare a training program and present it to the Bank for discussion by the end of 1976 (Section 3.06 of the proposed Loan ALgreement). 33. ENDE's generating plant is well run and properly maintained. The quality of service has been generally acceptable, although voltage regulation in the Central $ystem shcould be improved. This problem, should, however, be corrected as a result of the proposed project. Project Cost and Financing Plan 34. The cost of the proposed project is estimated to be US$28.8 million equivalent, with a foreign exchange component of US$20.7 million, or 72% of total cost. The breakdown of the cost estimate is as. follows:  - 10 - ------Thousands of US$------- Foreign Local Total a) Generating Facilities 9,298 2,771 12,069 b) Transmission Facilities 5,444 1,653 7,097 c) Engineering & Acdministration 1,005 908 1,913 Base Cost Estimate 15,747 5,332 21,079 Physical Contingencies 1,219 509X7 Provision for Price Increases 3,770 2,239 6,009 Total Project Cost 20,736 8,080 28, 816 Interest During Construction 4,264 Total Financing Required 25,000 35. The Bank would finance the entire foreign exchange cost of the project, plus interest during construction on the Bank loan. ENDE would cover the local costs, principally from internal cash generation. ENDE's Finances 36. ENDE's finances have generally been well managed. At the end of 1974, its total capital and reserves amounted to the equivalent of US$22.3 million, long term debt to the equivalent of US$22.1 million and net current assets to the equivalent of US$5.7 million. Practically all of ENDEts long term indebtedness is from IDA, the IDB and USAID and bears interest between 1% and 7-1/4% per annum. 37. As indicated in paragraph 25 above, ENDE's rate of return in recent years has been below that provided in the Electricity Code and the proposed Loan Agreement (Section 5.04) requires ENDE to earn 9% on net revalued assets in future years. ENDE's improved earnings will enable it to decrease its dependence on external borrowings to finance its investment program. 38. An unfavorable aspect of ENDE's finances has been the accumulation of accounts receivable in payment for electricity supplied to the Government public entities and the distribution companies. At the end of 1974 accounts receivable averaged four months of billings. The proposed Loan and Guarantee Agreements provide in Section 5.09 and Section 3.02, respectively, that ENDE and the Government will seek to reduce receivables to three months of billings in 1976 and two months of billings in 1977. Procurement and Disbursement 39. All equipment for the project would be procured, and the contracts for erection of equipment awarded, through international competitive bidding in accordance with Bank guidelines. For the purpose of bid comparision,  - 11 - Bolivian suppliers would be accorded a 15% margin of preference or the actual customs duty, whichever is lower. The estimated rate of disbursement is shown in Annex III. ILbout US$300,000 in retroactive financing would be required to finance the cost of a contract for the design, bid evaluation and supervision of the Sacaba-Vinto transmission line. Consulting Services 40. The project conitains an estimated 255 man-months of consulting services to assist in procurement matters, the preparation of engineering drawings and specifications and project supervision. The estimated cost of these services is $1.3 million, or an average cost per man-month of $5,100. The employment of consultants would be a condition of effectiveness of the proposed loan. Economic Evaluation 41. The proposed expansion of generation and transmission facilities which would be financed by the project is justified by the increases in demand for energy and the growth of economic activity in the three areas served by ENDE - the Central, Southern and Oriental Sgstems. (See attached Map.) ENDE's energy sales grew at an annual average rate of 17% between 1967 and 197h. The Central System, with significant mining and moderately expanding industrial activity, experienced an annual rate of growth in energy sales in the 1967-1974 period of 13%. The Oriental Systen, an area experiencing rapid population expansion and dynamic growth in the agricul- tural, industrial and hydrocarbon sectors had an average annual growth in energy sales of 29% durin1g the same period. The Southern System, where ENDE's operations in the city of Sucre did not begin until 1974, had an increase in energy sales between 1974 and 1975 of 51%. ENDE's sales for the period 1975-1981 are forecast to increase at an average annual rate of 17.5%. By operating Systems, the forecast average annual increases for the same period are as follows: Central 13%; Southern 36.5%; and Oriental 17%. 42. The projections for rapid growth in the ENDE system results, in part, from the anticipated substitution by commercial and industrial consumers of ENDE-furnished power for the power that has been previously supplied by less efficient captive plants. Although the future power needs of commercial and industrial consumers could be met through captive generation, rather than by the ENDE system, such a system of development would be wasteful of the country's resources, since it would result in duplication of investment, loss of the economy of scale inherent in large-scale generation facilities and the uneconomic use of fuel. It would also have an adverse impact on the development of medium and small scale enterprises, for whom captive generation would be excessively costly. The relatively low cost ENDE-furnished power should therefore facilitate the development of such enterprises. 43. An analysis was made comparing the cost of maintaining separate Central and Southern Systems with the cost of interconnecting the two systems. It was concluded that the least cost solution for any discount rate was an interconnection of the two systems. The proposed transmission  - 12 - lines in the areas to be served would improve the continuity of service, eliminate supply losses caused by transmission failures and improve voltage control. 44. To cover the increase in demand in the Santa Cruz System, the installation of a third 22MW turbine is the least cost solution. The existing diesel units in the Santa Cruz plant would be transferred to Sucre in 1976 when the installation of the second gas turbine in Santa Cruz is completed later this year. This is a lower cost solution than installation of a smaller gas turbine in Santa Cruz and providing alternate generation for the Southern Systems. 45. The rate of return on the proposed project is estimated to be 19%, taking expected revenues as a proxy for benefits and assuming that ENDE maintains a 9% rate of return on revalued assets. A sensitivity analysis shows that even assuming a combination of a 10% increase in capital costs and a drop of 10% in revenue, the rate of return would be 15%. PART V - LEGAL INSTRUMENTS AND AUTHORITY 46. The draft Loan Agreement between the Bank and ENDE, the draft Guarantee Agreement between the Republic of Bolivia and the Bank and the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement and the text of a draft resolution approving the proposed loan are being distributed to the Executive Directors separately. 47. Features of the draft Loan and Guarantee Agreements of special interest are referred to in paragraphs 23, 26, 32, 37, and 38. An additional condition of loan effectiveness requiring the employment of engineering consultants is contained in Section 7.01 of the draft Loan Agreement. In other respects, the draft Loan and Guarantee Agreements generally conform to the usual pattern in loans for electric power projects. 48. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 49. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments March 18, 1976  ANNIE I Page 1 of S pages TABLE3 IA BOLIVIA - SO CIAL INDICATORS DATA SHEET LAND AREA (THOU Kan-------------------------- ------------- -, - 80 ~~~BLI V IA RE FERE NCE CO0UN IRAI ES ( 1910) TOTAL 10 98. 6 MOST RECENT ARABLE ..196 0 1 9 70 ESTIMATE CAMEROON HONDURAS P ER U* GNP PER CAPITA (USA) 10.0 R. 23C.0 2 1 0.0 270.1. POPULATION AND VITAL STATISTICS POPULATION (MID-TR. MILLION) 3.8 4.9 5.3 5.8 2.9 13.3 POPULATION DENSITY PEA SQUARE KM. 3 .0 4 .0 5 .8 17. 0 22.0 1 1. 0 PER SQUARE KM. ARABLE LANDn . 88.0 .. Noa.o VITAL STATISTICS CRUDE BIRTH RATE PER THOUSANU, 4 5.0 4 4.0 44 .0 4 3 .0 4 9.0 4 2.0 CRUDE DEATH RATE PER THCUSANI 2 3 .0 1 9 .0 1 8.0 2 3 .0 11.0 11. 0 INFANT MORTALITY RATE c/THOU: . 154.0 . .. 65.0 LIFE EXPECTANCY AT PIRTF (993~) .. 45.0 4 7. 0 41. 13'.0' 58.0 GROSS REPRUOUCTION PATE .. .R 2 .8 2 .7 3.1L 2 .9 POPULATION GROWTH RATE IX) TOTAL 2. 4 2 .6 2.A6 2.0 312 .9 URBAN 6.....40 7.9 5. 0 URBAN POPULATION (0 OF TOTAL) .....2 0 .0 32.0 5 3. 0 AGLA STRUCTURE (PERCENT) 0TO IA4 YL ARS 4 2.0 41 .9 .4 3 .0 4~6.7 4 5 0 /a 15 TO 64 TLARS 54.0 5 4 .6 5 4. 0 50.9 5 2.-0 Na 65 YEARS 640 OVER 4.0 1. .. 3.0 2.L 3.0 VGE DEPENDENCT RATIO 0. 9 0.8 I.09 . 0 .9 ECONORIC DEPENDENCY RATIO 1. o/a I. D /a 12915L 15 FAMILY PLUNNING- ACCEPTORS (CUMULATIVE, THOU) .. .. 14 .6 USL RS (0X OF M ARR IED WOVEN).... EMPLOTMENT TOTAL LAA09 FORCE (THOUSAND) 2J00. 0 lb 2000. 0 . . 2 80 0. 0 8 00 .0 4300.0 /a LABOR FRUPE IN AGRICULTURE (0) 67. 7 66.0. 8 2.0 65.0 UNEMPLOTED 10 OF LABOR 706Cr) 14.0 16. .. El P.O s INCOAME DISTRIBUTION IOF0 PRORATE INCOME REC'D AYT HIGHEST ox Or POPULATION 3.34. 0 . 32.9/ 31.4 HIuHEST 20% OF POPULATICN . 5 9 . 0.. 65.3 k 62.6 c LOWEST 2 0% OF POPULATION 4 . 40 .6. .. L3wEST 4 00 OF POPU LA TI AT) 1 3.0 ...6.b Lk OIST&IOUT)ON OF LAND OWNERSI-I' O OWNIED VT TOP 10% 0F OANERS 9.. . . .3.O O OWNED ATY SM ALL EST 1 0% 045N95 ......... .1I HEA LT H AND NU TR I TION. POPULATIONi PER PHYSICIAN 37 00.0 Lc 2300.0 . 259 6 0.0 3 710 .0 La 192C.0 POPULATIONq PER NURSING PERSON .. 2 730.0 . . 2 470.0 . .0 320C. 0 POPULATION PER HOSPITAL VED 5980 .0 490.0 . 4 8 0 . 0 5 70 . 47 0. 0 PEP CAPITA SLPPLY OF- CALORIES (0 OF REOUIFEMENTS) 6 9 .0 77.0 7 9 .0 9N6.O0 9 6.0 98.0 PROTEITN (GR AMS PEP OAT) 43.0 46.0 46.0 59.0 59.0 62.0 -OF WAIC, ANIMAL AND PULSE . 14.0 /b . 3.0 /a 2 5 .0 2 4. 0 DEATAi RATE 1/THOU) AGES 1-4 . .. E. DUCATPION ADJUJSTED ENROLLMENT RATIO PRIMAR) SCHOOL 67. 0 9 6.0 .. 7.0 91 .0 I115. 0 SECONDARY SCHOOL 11.0 13.0C. 9.0 10.0 41.0 REARS OF SCHOOLING PROVIDED (FIRST 440 SECOND LEVEL) 1 3 .0 1 2.0 1 2 .0 14 .0 Lb 1 2.0 12. 0 VOCATIONAL ENROLLMENT C% OF SECONDARY) 04 .0 13. 0 1 0 .0 2 2 .0 18 .0 1 7 .0 Ld ADULT LITERACY RATE (03 . 3 8.0... HOUSING PRESONS PET ROOM (AVREAGE)..... OCCUPIED OWE-LINGS AITHTUI P IPED WAkTER (0) 89.0 La ... ACCESS TO ELECTRICITY 1% OF ALL DWELLINGS) 22. 0 La/ .. AURAL DWELLINGS CONNECTED TO ELECTRICITY EXT 8.0 La ... CON SO PT ION VADIO RECEIVERS (PEP THOU POP) 7 3. 0 2 88 .0 .3 6 .0 51.0 13 4 .0 PASSENGER CARS (PER THODE POP) 3. 0 4.0C. 6.0 5.0 1 7.0 ELECTRICITYR (RWH/KR PER CAPT 18 .0 1 6 0.0 168.0 2 0 0.0 1 2 0.0 407. 0 NEWSPRINT (KG/YR PEA, CAP) 1.0 i.E 0.9 . 1.0 3.6 SEE NOTES AN DOEFINITIONS ON REVIERSE  ANNEX I Page 2 of 5 pages NOT'ES Unless otherwise noted, data foe 1960 refer to any year between 1959 and 1961, for 1970 between 1969 and 1970, and for Moat Recent Estimate between 1971 and 1973. " Peru has been s.elcted as as objective country because of similar natural conditions and Comparable humn and res ource endownents. BOLIVIA 1960 /a Ratio of population under 15 and 65 and over to total labor force; /b 1965, /c 1963. 1970 /a gatio of population under 15 and 65 and over 10 total labor force; /b 1964-66. CAMEROON 1970 / 1964-66; /b 13 years for East Carseroon. NOMODURAS 1970 / R atio of population under 15 and 65 and 00cr to total labor force, /b 1967-69, households; /c Registered, not all practicing in the country. PERU 1970 /a Escludes Indian Jungle population; /b Urban areas only; /c EconmicaLly active population; _/d Including evening schools. g3, Marctb 16, 1976 DEFINITIONS OF SOCIAL INDICATORS land Area (thou kns2) Population per nursing person - Population divided by number of practicing Total- Total. surface area comprising land ares and inland waters. mle and female gradaaie nurses, "trained"' or "'certified"' nurses, and Arable Most recent estimate of land area used temporarily or pormanently atuxiliary personnel with training or experienco. for cultivation, pastures, market sod k-itchen gardons or to lie fallow. Population per hospital bed - Population divided by number of hospital bode available in public and pr-ivate gereral. and specialized hospital and GN? per capita (US$) - ON? per capita eotimstes at market prices, calcu- rehabilitation conters; excludes nursing boomes and ostablishments for lated by same conversion mothod as World Bank Atlas (1972-74 basis), custodial and preventive care. Per capita suppl off caoresi(% of reonuirements) - Computed from enorgy Pouato and vital statistics equxivalent ofne oo uples avaiabl inCountry per capita per day; Popultion (mdyr io)- As of July first; if not available, average available oupplies comprise domestic production, imports loss exports, of two end-year estimates, and changes in stock; net supplies exclude anLimal feed, seeds, quantities used in food processing and losses in distribution; requirements wore Population denity - p or square s Mid-year population per square kilo- estimated by FAO based on physiological neods for normal. activity meter (lOhctares of tota aea. and health considering environmental tomperatweo, body weights, ago and Popuation d- sity - per square kms of arable lard - Comrputed as above for sex distributions of population, and allowing 10% for waste at household arbeln nly, level. Per capita supply of protein (grams per d~ay) - Protein cOntent of per Vital statistics capita not sup1ply of food Per day; net suipplY of food is defined as Crud brhrtper thousand - Annual live births per thousand of mid- above; requirements for all countries established by USDA Economic year populAtion; usually five-year averages ending in 1960, 1970 and Research Services provide for a minimumr allowance of 60 grams of total 1975 for developing coustries. protein per day, and 20 grams of animal and pulse protein, of which 10 Crude death rate per thousand - Annual deaths par thousand of mid-year grams should be animal protein, these standards are lower than those of pouaio;uually five-ya vrgs ending in 1960, 1970 and 1975 75 grams of total protein and 23 grams of animal protein as an average f or developinig countries, for the world, proposed by FAO in tho Third World Food Survey. Infpantg ortal4tyyprate 2thou) - Annual deaths of infants under one year Per_capitaFprtein suppl from ania anI d puls e - Protein supply of food %TikW~eTtEusandliveibirths. drvdfo anmladpussigam ar day. Life expetancy at birth (v-re) - Average number of years of li-fe remain- Det 1 F g 1i - Annual deaths per thousand in ago group 1-4 ing at birth; usually five-year averages ending in 1960, 1970 and to 'en in ths age group; suggested as an indicator of wl- 1975 for developing Countries, nutrition. Gross reproduction rate - Average number of live daughters a woman wi-ll bear in her normal reproductivo period if she experiences present age- Education specific fertility rates; usually five-year averages ending in 1960, Aduted enrollment ratio primaryschool - Enrollment of all ages as 1970 acd 1975 for developing countries. per~entag ofpimar sho-g popu-lation; includes ohildren aged Poplulation growh rate ()-total - Compound annual growth rates of mid- 6-11 years but adjusted for different lengths of primary education; yerppltion for 1950-60, 1960-70, and 1960 to most recent year. for countries with universal education, enrollment may exceed 100% Population growth ratoe% urban - Computed like growth rate of total since some pupils ase below or above the official school age. popultion diferent dlefinitions of urban areas may affect compare- Adjusted enollsn ai eodr col-Cmue saoe eod bility of data among countries. ary educatio reuires at lEasfu years of approved primary instruc- Urban population 0% of total) - Ratio of urban to total population; dif- tion; provides general, vocational or teac.her training instructions for ferent definitions of urban areas may affect comparability of data pupils of 12 to 17 years of age; correspondence courses are generally among coutries, excluded. _g9fel7tructue pgrcent) - Children (0-1kh years), working-ago (15-6k years), Year of scool'i-ng provided, (first and second levels) - Total years of years and over) as percentages of mid-year population, scholng tseodry lvl oainlisrcinmyb atal dopeden atio- Ratio of population under 15 and 65 and over to or completely excluded. thos ofage 15througn 6k. vocational enrollmet 0% of secondary) - Vocational institutions include Economic dependen,cy ratio -Rtoo ouainudr1 n 5adoe techaical, inutrial or ot her programs which operate independently or toth labor force in ag goup of 15-64 years.uu as departments of secondary institutions. Family plannin - aCcetr cuuaie, thou) -ly inCumulgalvative camber of Adult literacy rate (% idterate adults (able to read and write) as Par- acceptors of birth-control devices uinder auspices of national family contage of total adult population aged 15 years and over. planning program since inception. Family plannin - usero (% of married women) - Percentages of married Housing women of Mchilid-bearing age (15-hi years) who use birth-control do- Persons per room (average) - Average number of persons per room in occupied vices to all married women in same age group, conventional dwellings in urban areas; dwellings exclude non-permanent structures and unoccupied parts. Emop oyment Occupied dwellings without piped water %)-Occupied conventional dwell- l5tal abroforce (housand) - Economically active persons, including iginubnadralres without inside or outside piped water armed7forces and unemploy/ed but excluding housewives, students, etc.; facilities as percentage of all occupied dwol-lings. definitions in various countries are not comparable. Access to electricity (% of all dwellings) - Conventional dwellings with lao fre nagriculture (%) - Agricultural labor force (in farming, el1ectricity in living quarters as percent of total dwellings in urban fqorresotry, hunting and fishing) as percentage of total labor for ce, and rural areas. U)e(aplzped(%,of labor force) - Unemployed are usually defined as persons Rura dwligs ozroonnected to electricity (%) - Computed as above for rural who aWbldwii52lllg to take ajob,out of ajob onmagiven day, TT~Th remained out of a job, and seeking work for a specified minimum period not exceeding one week; may not be comparable between noun- Consumptionou tries due to different definitions of unemployed and source of data, Rai_eevrs(e hupp) - All types of receivers for radio broad- e.g., omployment office statistics, sample surveys, compulsory =moo- casts to general public per thousand of popu-lation; oxcludes unliconsed ployment insurance * receivers in countries and in years when registration of radio sets was in effect; data for recent years may not be comparable since most coon- Income distribution - Percentage of private income (both in cash anid tries abolished licensing. kind) received by richest 5%, richest 20%, poorest 20%, and poorest Pi.gecarsgor.rthou pop) - Passenger cars comprise motor cars seating k0% of population. les than eight pesns; excludes ambulances, hearses and military vehicles. Distribution of land ownershi'p - Percentages of land owned by wealthiest olcrct th/ Er ca ) - Annual consumption of industrial, comeer- 10% and poorest 10% of land owners. cialI, public ad private electricity in kilowatt hours per capita; gen- erally based on production data, without allowance for losses in grids Health and Nutrition but allowi-ng for impots and exports of electricity. ~~~~~~-Populatinprption divided by number of practicing Newaprint (kg/yr pe a) - Per capita annual consumption in kilogram phyicians quiiih ro medical school at university level, estimated from domestic production plus net imports of newsprint.  ANNKEX I Page 3 of BOLIVIA ECONOMIC DEIVELOPMEZNT DATA (Amouts in 1973 US$ Millions) Actual Estinated Projected _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 1968 1-97-1 1-913 1975 1977 1980 1968-71 1971-73 1974-77 1978-80 1968 1971 1977 NATIONAL ACCOUNTS -3-Year Averas at 1973 Prices & Exchange Rate Average Annual Groth Rates As Percen.t of 1DY Dross Doxestic Product 826.3 921.6 L,035.3 1,138.1 1,296.7 1,617.9 3.7 6.0 7.8 11.7 98.7 98.0 96.3 Term of Trade Effect 10.1 19.0 50.7 25.8 49.5 78.6. ... 1.3 2.0 3.7 Cross Do..entic Incoe 836.4 940.6 1,086.0 1,163.9 1,346.2 1,696.5 4.0 7.4 7.4 12.3 100.0 100.0 100 0 Inports (ioel. NFS) 301.4 303.8 347.7 502.7 549.8 676.4 0.3 7.0 16.5 10.9 36.0 32.3 40.0 Exports " (import capacity) 265.2 276.2 351.4 346.4 441.1 593.9 1.4 12.8- 16.0 31.7 29 4 32.8 Resou.rce Balsoce (-Sarplus) 36.2 27.6 -18.2 1T56.3 -82.5 -- - - - - 4.3 2.9 9.1 Conn-ption Espenditures 688.2 776.9 896.4 1,041.8 1,063.4 1,291.8 4.1 7.4 5.8 10.2 82.3 82.6 79.0 Investment lied,-1 stocks) 184.3 191.3 185.9 278.4 391.6 487.3 1.2 negative 28.0 11.6 22.0 20.3 29.1 D-netic Savings 148.1 163.1 I89.h 266.6 282.8 404.8 3.4 7.6 14.3 19.7 17.7 17.4 21.0 National Savings 128.1 146.5 177.9 250.1 258.9 339.5 4.6 10.1 13.3 14.5 15.3 15.6 19.2 MERCRANDSIE TRADE Annunl Oats at Current Prices As Percet of Total Imports Capital Goods 71.8 71.1 119.0 270.0 414.2 680.9 negative 29.0 52.0 29.0 47 0 42.3 58.8 Raw Materials and Intermediate Goods 47.3 52.2 67.1 113.7 169.4 276.6 3.3 13.4 36.0 28.0 31.0 31.0 24 0 Poets and Lubricantn 1.6 1.2 2.2 10.3 12.7 17.9 negative 35.0 78.0 18.7 1.0 0.8 1.9 Consumption Goods 32.1 435 67.2 120.0 108.3 141.1 10.7 24.0 17.3 14.1 21.0 25.9 15.4 Others Total Merchandine cnports (CIF) 132.8 168.0 250.5 514.0 704.6 1,116.5 3.2 23.3 40.0 26.0 190.0 100.0 100.0 Exports Primaray Products 145.8 191.4 268.3 277.7 386.1 588.1 9.6 18.4 17.1 16.8 85.5 88.7 65.4 Puol 24.3 23.9 67.0 163.4 198.5 503,6 negative 67.0 62.0 50.0 14.3) 11.1) 33.6 n/CGrde Petroleum (24.3) (23.9) (48.9) (114.6) (140.0) (367.0) negtive 43.0 61.0 57.0 (4.3) (1 1 (23.7) Manufactured Goods 0.4 0.6 3.0 3.9 5.4 8.3 23.0 - 22.0 24.0 .2 .2 1.0 Total Merch. Enports (fob) 170.5 215.9 338.3 445.0 590.0 1,8100.0 8.2 25.0 29.0 3. 0. 0. 0. Merchandise Trade Indices Export Price Index 66.7 76.4 100.0 158.6 194.0 249.0 4.6 14.4 24.8 13.3 21.6 22.7 32.4 Inport Price Iodea 66.0 75.9 100.0 138.0 173.0 214.9 4.8 14.8 20.0 11.5 21.3 22.6 28.8 TerMs of Trade Index 101.1 100.6 100.0 114.9 113.0 119.3 negative negative 4.2 2.8 32.7 30 0 18.0 Eaports Voluxe Index 75.4 83.5 100.0 83.0 119.7 166.9 3.5 9.4 6.0 18.1 24.4 24 7 20.0 VALUE ADDED BY SECTOR Annual Data st 1973 Prices and Exchange Rates Average Annsal Grswth Rates As Perc-st cf Total Agriculture 186.8 201.6 222.6 248.2 273.0 320.0 2.5 5.1 7.1 8.3 22.3 21.9 21 2 Indsstry and Mining 279.7 303.4 338.6 351.8 412.6 534.4 2.7 5.6 6.8 13.8 33.6 33.0 32.0 Service 365.1 414.0 477.7 538.1 604.7 757.2 4.3 7.4 8.2 11.9 43.9 45.1 46 8 Total (=GDP) 831.6 919.0 1,038.9 1,138.1 1,290.3 1,-611.6 -3.4 -6.3 -7.5 -f11.8 100o.0 -1700.0 100.0 POYBLIC PINANCE (Central Governmet) Corrent Receipts 107.6 112.2 109.2 109.5 140.3 188.0 4.3 -2.4 6.5 10.2 11.9 11.5 10.8 Current ExpenditcERn 103.9 134.4 145.3 168.5 190.1 239.9 7.9 6.3 6.9 8.1 11.5 13.8 14.7 Bsdgerary Savings 3.7 -22.2 -36.1 -59.0 -49.8 -351.9 . ... 0.4 -2.3 -3.9 Other Pbhlic Sector Savings 29.3 54.4 98.2 90.0 134.1 219.2. ... 3.2 5.6 6.5 Public Sector Capital Expenditure 108.2 112.6 98.8 147.5 267.7 301.4 9.5 -5.8 28.2 4.0 12.0 11.6 20.7 CURRENT EXPENlDITURE DETAILS Actsal (As 7. Total Carrent Expend.) 1968-70 1971-72 DETAIL ON PUBLIC NECTOR INVESTMENT PROCRI As Pettedt of Total (1968-74 1975-80) Central Administration 28.7 20.9 Agricultur and Irrigation 3.0 3.8 D.f.n.e 13.5 12.8 Mining end Hydrocarhonn 39.8 61.1 Education 27.3 26.3 Industry and Powe.r 14.9 9.0 Other 1octa1 & Convuity Scrv- 9.3 13.5 Trans.port and Connsnicsti... 24.0 17.4 Agriculture 3.5 3.0 Puhlic Serv. and Social Services 18.3 8.7 Other 17.7 18.5 Othar SELECTED INDICATO3RS Estimated (Ca1calated fo 5-rAeanDt)1968-70 1971-74 1970-77 1978-80 FINANCING 1968-73 1974 1975-80 Average ICOR 6.45 300 367 4.06 Public Sector Savings 39.8 91.0 44 4 Import Elasticity 0.91 1.06 1.13 1.03 DometIc Borroing (set) 16.6 -44.0 16.9 Marginal D-netic Savings Rate 64.9% 24.2% 3.6% 37.4% Poreign Borroing (net) 46.4 29.1 38.6 Marginal National Savings Rate 20.5% 28.4% negative 22.0% Other -2.9 23.1 - IABOR PURGE AND OUTPUT PER WORKER Enployed Labor, Force Value Added Per Worker (1873 Pricea & Exchange Rate) In Thousands 7. af Total 1970-1974 In U.S. Dollars Percent of Average Change p.o. 1970 1974 1970 1974 Growth Rate 1960 1970 1960 1970 1970-74 Agriculture 1,271.0 1,283.1 65.4 64.4 2.1 15.14 170.0 33.8 33.4 2.9 Industry 264.2 300.6 13.6 14.0 3.3 1,067.8 1,147.6 238.4 225.8 2.0 Service 407.1 463.0 21.0 2.16 3.3 938.9 1,068j.4 209.6 210.2 3.3 Total 1,942.3 2,146.7 100.0 100.0 2.3 447.9 508.2 100.0 100.0o 3.2 1/ Excluding tames from export enterprises 3/75 Not applicable - Nil or negligible  ANNEX I Page 4 or 5 BOLIVIA SUMMARY: BALANCE OF PAYMENTS (Current U.S. $ millions) 1972 1973 1974 1975 1976 1977 1978 1979 1980 1985 1. Imports (Cif) 261 332 504 664 700 817 980 1,150 1,240 2,521 2. Exports (Cif) 225 310 614 490 550 650 780 960 1,160 2,880 3. Balance of Goods & NFS -36 -22 94 -195 -190 -215 -255 -245 -140 359 4. Factor Services -22 -25 -31 -35 -37 -44 -53 -102 -133 -197 Profits (-6) (-6) (-7) (-9) (-11) (-12) (-14) (-50) (-69) (-106) Other (Net) (-16) (-19) (-24) (-26) (-26) (-32) (-39) (-52) (-64) (-92) 5. Current Transfers 13 15 12 12 12 12 5 3 3 6. Current Account Balance -44 -32 50 -218 -215 -247 -303 -344 -29o 162 7. Direct Foreign Investment -13 5 10 18 35 58 75 89 90 30 8. Official Capital Grants 8 10 9 20 25 27 28 26 20 2 9. Public M & LT Loans (Net) 93 5 41 118 130 142 182 219 141 -23 Disbursements (125) (38) (95) (178) (192) (216) (266) (329) (28M) (199) Repayments (32) (33) (54) (-48) (-62) (-74) (-84) (-110) (-139) (-222) 10. Other M & LT Loans (Net) 15 17 21 23 25 39 42 48 60 10 11. IMF Drawings 1 12 __ __ __ __ __ __ __ __ 12. Other Short {7rmj Errors -42 -20 -15 -16 -10 -5 __ __ & Omissions - 13. Change in Net Reserves -17 15 -123 55 10 -14 -24 -38 -41 -181 (-Increase) 14. Total Net Reserves 47 31 154 99 89 103 127 165 206 720 (End of Period) 15. Debt Service Ratio 20.9 16,8 12.9 11.4 14.5 16.4 16.5 17.4 17.8 12.2 16. External Public Debt OS 2 681 698 723 o/w IBRD (23) (23) (21) IDA (26) (30) (39) 17. IBRD-IDA Debt Service 3.1 4.8 4.0 as % of Public Debt Service 18. Debt Service as % of GDP 4.6 4.9 4.5 1/ Includes SDR allocation equivalent to US$4.3 million in 1972.  ANNEX I Page5 of 5 1/ CONTRACTED PUBLIC AND PUBLICLY GUARANTEE EERNAL DEBT, 1969-74 (US$ millions) 1969 1970 1971 1972 1973 1974 INTERNATIONAL ORGANIZATIONS 30.7 1.4 26.8 11.2 7.2 54.4 CAF - - 0.1 2.0 1.2 7.2 IBRD 23.3 - - - - - IDA 7.4 1.4 6.8 8.0 6.0 6.2 IDB - - 19.9 1.2 - 41.0 GOVERNMENTS 30.1 17.2 34.7 65.7 29.9 112.2 Argentina 3.2 14.3 4.3 4.2 3.4 0.2 Czechoslovakia - - 3.3 - - - Germany F.R. 1.8 1.4 - - _ 30.2 United Kingdom 1.4 - - 7.1 - - U.S.A. 22.7 1.5 25.3 40.0 26.5 40.6 U.S.S.R. - - - 11.2 - 1.2 Others 1.0 - 1.7 3.2 - 40.0 SUPPLIERS' CREDITS 11.7 1.6 3.9 36.4 20.2 16.9 Argentina - - 1.6 5.1 5;7 11.0 Belgium _- - 5.5 - Canada - - - - 3.7 _ Denmark 0.7 1.3 - 0.8 - - Germany F.R. 4.2 0.3 - - - _ Italy 2.1 - - 16.6 - - Japan - - 2.0 6.4 - 0.2 Poland - - - 0.3 4.2 - Spain 3.3 - - U.S.A. - - - 1.1 0.9 - U.S.S.R. - - - 4.7 - - Others 1.4 - 0.3 1.4 0.1 5.7 PRIVATE BANKS 1.3 - 23.3 23.1 9.7 93.4 Brazil - - 12.0 7.9 4.7 13.5 U.S.A. 1.3 - 10.0 12.8 1.5 27.0 Others - - 1.3 2.4 3.5 52.9 OTHER 14.2 4.1 - 22.8 0.1 - Nationalization (USA) _ 78.6 - - 0.7 - 2/ TOTAL 88.0 102.9 88.7 159.2 67.8 276.9 1/ Repayable in foreign currency only. 7/ Net of adjustments and cancellations.  ANNEX II Page 1 of 3 THE STATUS OF BANK GROUP OPERATIONS IN BOLIVIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (as of January 31, 1976) US$ million Amount (less cancellations) Loan or Credit No. Year Borrower Purpose Bank IDA Undisbursed Fully disbursed loans and credits 23.3 30.6 - 261 1971 Bolivia Livestock - 6.8 1.5 346 1972 Bolivia Railways - 8.0 .5 433 1973 Bolivia Power - 6.0 .4 455 1974 Bolivia Mining - 6.2 4.6 561 1975 Bolivia Agriculture - 7.5 7.5 I121 1975 ENFE Railway 28.7 - 27.6 TOTAL 52.0 65.1 42.1 Of which has been repaid 3.8 0.3 Total held by Bank and mA 48.2 64.8 Total undisbursed 42.1 B. STATMENT OF IFC INVESTMENTS (as of January 31, 1976) Amount in US$ million Year Obligor Type of Business Loan Equity Total 1/ 1973 Plasmar, S.A. Cables and Plastic Products 0.3 - 0.1 0.4 1/ of which, US$0.1 million is a standby loan.  ANNEX II Page 2 of 3 C. PROJECTS IN EXECUTION Credit 261-BO - Third Livestock Development Project. US$6.8 million, June 25, 1971; Effective Date: September 15, 1971; Closing Date: June 30, 1977. After implementation slowed down in 1974, the project is now proceeding as scheduled and the credit should be fully disbursed by the closing date of June 30, 1977. Credit 346-BO - Railway Project, US$8 million, December 1, 1972; Effective Date: February 21, 1973; Closing Date: June 30, 1976 All of the funds under the project have been committed. Due to inflation, however, the funds available under the credit have been insufficient to procure all of the items included in the project. About 50% of the items planned for procurement for the first project, have been deferred for purchasing under the second railway project. Materials and equipment ordered under the project did not begin to arrive in Bolivia until the last quarter of 1974. Improvements have been made in the management operations, financial condition and tariff structure of the railway. Credit 433-BO Third ENDE Power Project, US$6 million, October 17, 1973; Effective Date: December 11, 1973; Closing Date: December 31, 1976 The project. was initially delayed due to unexpectedly long delivery time for the gas turbines originally planned to be installed at Santa Cruz. Project progress is now satisfactory. Cost overruns are currently at about 34% over the original estimates of project cost. ENDE will finance the overruns with its own funds. Credit 455-B0 - Mining Credit Project, Us$6.2 million, January 18, 1974; Effective Date: June 18, 1974; Closing Date: June 30, 1978 The project is proceeding as scheduled. Credit 561-BO - Agricultural Credit I, US$7.5 million, June 20, 1975; Effective Date: December 15, 1975; Closing Date: June 30, 1979 The project, is proceeding as scheduled.  ANNEX II Page 3 of 3 Loan 1121-BO - Second Railway Project, US$32 million, June 5, 1975; Effective Date: August 6, 1975; Closing Date: December 31, 197T The Borrower has arranged bilateral financing for locomotives in the project and has, in accordance with understanding reached with the Bank, requested the cancellation of US$3.3 million of loan funds reserved for the purchase of locomotives. The project is proceeding as scheduled.  ANNEX III Page 1 of 2 BOLIVIA - ENDE FOURTH POWiER PROJECT LOAN AND PROJECT S1tMARY Borrower: Empresa Nacional de Electricidad (ENDE). Guarantor: The Republic of Bolivia. Amount: US$25 million equivalent. Terms: 25 years, including a grace period of four years, with interest at 8L% per annum. Project Description: Expansion of generation and transmission facilities of ENDE. Estimated Cost: ------ Thousands of US$----- Foreipn Local Total a) Generating facilities 9,298 2,771 12,069 b) Transmission facilities 5,444 1,653 7,097 c) Engineering & Administration 1 005 908 1.913 Base Cost Estimate 17W 5332 21 079 Physical contingen]cies 1,2 9 53 09 T7 Provision for Price Increases 3,770 2,239 6,009 Total Project Cost, 20,736 8,080 28,816 Interest during construction 4,264 Total Financing Required 25,000 Financing Plan: Foreign exchange costs to be met by loan and local currency costs by ENDE. Procurenent: All equipment and contracts for the erection of equipment to be awarded through international competitive bidding. Bolivian suppliers to be accorded a 15% margin of preference or the actual custms duty, whichever is lower. Estimated Disbursements: (US$ million) Fiscal Year Annual. Cumulative 1977 3,425 3,425 1978 9,351 12,776 1979 7,599 20,375 1980 4,625 25,000  ANNEX III Page 2 of 2 Consulting Services: The project contains an estimated 255 man-months of consulting services to assist in procurement matters, the preparation of engineering drawings and specifications and project supervision. The estimated cost of these services is $1.3 million, or an average cost per man-month of $5,100. Rate of Return: 19%. Appraisal Report: Report No. 981b-BD dated March 14, 1976.  ; s- ~~~~~~~~~~~~~~~~~~~~~N ! :------ - v ~ ~ ~ ~ '-- ,r - E . - .- _ - /S S . - r . * - , I , . . n , . . ,. j~- in