Romania - Second Turceni Thermal Power Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 2243-RO ROMANIA SECOND TURCENI THERMAL POWER PROJECT STAFF APPRAISAL REPORT December 19, 1978 Projects Department Europe, Middle East and North Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ROMANIA CURRENCY EQUIVALENTS Currency Unit leu, lei (plural) lei 18 US$1.00 = leu 1 US$0.0556 lei 1,000,000 US$55,556 US$l lei valuta 4.47 in convertible currency terms WEIGHTS AND MEASURES m meter = 3.28 feet km = kilometer 0.62 mile m3 = cubic meter 1.31 cubic yards kWh = kilowatt hour = 3,414 British thermal units GWh = Gigawatt hour = 1 million kWh kW = kilowatt = 1 thousand watts MW = Megawatt 1 thousand kW kV = kilovolt = 1 thousand volts ton = metric ton (tonne) = 1.1 US tons = 2,204.6 pounds 1,000 kg kg/cm2 kilogram per square centimeter m3/s cubic meter per second hr = hour toe ton oil equivalent a/ = per annum GLOSSARY OF ABBREVIATIONS MEE - Minislaubii Energiei Electrice (Ministry of Electrical Energy). CIPEET Centrala Industriala de Producere a Energiei Electrice Si Termice (Industrial Central for Production of Electric Power and Heat). CIRE Centrala Industriala de Retele Electrice (Industrial Central for Transmission and Distribution of Power). ISPE Institutul de Studii si Proiectari Energetice (Design Institute for Thermal Studies). ROMENERGO Foreign Trade Procurement Enterprise. GOVERNMENT OF ROMANIA Fiscal Year January 1 to December 31  ROMANIA FOR OFFICIAL USE ONLY SECOND TURCENI THERMAL POWER PROJECT Table of Contents Page No. I. THE POWER AND ENERGY SECTOR ... I A. Romania's Energy Sector .. Energy Resources ..1 Organization of the Energy Sector 2 Past Growth of Energy Consumption. 2 National Energy Policy .. 2 Forecast Energy Supply and Demand . . 2 B. Romania's Power Subsector. 3 Organization... 3 Tariffs ....................................... 3 Planning ....................................... 4 Existing System and Development Program . . . 4 Role of the Bank ........................ 5 The Borrower .. .6 The Project Entity . . 6 Table 1.1 - Composition of Primary Energy Supply, 1965 and 1975 ....... 7 Table 1.2 - 1976-80 Plan Production Targets for Primary Energy. 8 Table 1.3 - MEE Interconnected System, Installed Generation Capacity (MW), 1977 9 Table 1.4 - Sector Generation and Sales, 1970-1977 .10 Table 1.5 - Forecast Sector Generation and Sales, 1978-1985 ............................. 11 Table 1.6 - MEE Interconnected System, Generation Reserve Planning, 1978-1985 ........... . 12 Table 1.7 - Sector Investment Program 1978-1985 13 Table 1.8 - MEE Interconnected System Planned Capacity Additions, 1978-1985 ... ...... 14 Figure 1.1 - MEE Organization Chart ............... . 15 Figure 1.2 - CIPEET Organization Chart ............. 16 Figure 1.3 - CIRE Organization Chart .............. . 17 II. THE PROJECT ............................................. 18 Description of the Project .............................. 18 Fuel Supply ............................................. 18 This report was prepared by Messrs. A. Roa (Engineer), P.A. Cordukes (Financial Analyst), I.I. Elwan (Economist). This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Table of Contents (Continued) Page No. Estimated Project Cost .................................. 18 Project Financing Plan .................................. 20 Environmental Considerations ...................... 20 Implementation .......................................... 21 Procurement ............................................. 21 Disbursement ............................................ 22 Risks .............................................. 22 Table 2.1 - Estimated Disbursement Schedule ....... 23 Annex 2.1 - Summary of Lignite Mining Consultant's Report ................................ 24 Annex 2.2 - Development of Project Cost Estimate 26 Annex 2.3 - Technical and Economic Indicators for the Project ........................... 30 Annex 2.4 - Supply Contracts Expected to be Awarded to Foreign Bidders .... ................ 32 Figure 2.1 - Estimated Project Implementation Schedule ...... ..... ....... 33 III. FINANCE ................................................. 34 Past Performance and Present Position of the Sector ..... 34 Financing Plan .......................................... 36 Future Financial Position ............................... 38 Accounts and Audit ...................................... 38 Table 3.1 - Income Statements (1975-85) .... ....... 39 Table 3.2 - Balance Sheets (1975-85) .... .......... 40 Table 3.3 - Sources and Applications of Funds (1975-85) ............................. 41 Annex 3.1 - Notes and Assumptions for Financial Forecasts ............................. 42 Annex 3.2 - Financial Plan Indicators for Power Sector ................................ 46 IV. ECONOMIC JUSTIFICATION .................................. 47 Least-Cost Alternative .................................. 47 Economic Rate of Return ................................. 47 Table 4.1 - Calculation of Return on Investment ... 48 Table 4.2 - Forecast Economic Dispatch and Fuel Savings ............................... 49 Annex 4.1 - Assumptions Used for Calculation of Economic Rate of Return .... ........... 50 V. AGREEMENTS REACHED AND RECOMMENDATIONS .... .............. 52 Annex - Selected Documents and Data Available in the Project File .... ............... 53 Map IBRD 10830R Map IBRD 10831R  CHAPTER I THE POWER AND ENERGY SECTOR A. Romania's Energy Sector Energy Resources 1.01 Romania was one of the world's first oil producers and still meets more than 80% of its energy needs from indigenous oil and gas resources; however, production is declining despite intensive secondary and tertiary recovery efforts. By 1985, 50% of Romania's commercial energy needs may have to be imported, mostly in the form of oil. This situation has led to inten- sive efforts to develop all other indigenous energy resources, including hydropower, coal, lignite, and bituminous shales. 1.02 The published guidelines for the preparation of the 1981-85 Plan dictate continued enforcement and improvement of conservation and efficiency measures in the energy-consumptive sectors. These were initiated in 1973 and are implemented through a highly-structured program consisting of reviews of all industrial and chemical processes and production plans by special commit- tees seeking conservation opportunities, in accordance with the directive by the State Planning Commission to reduce oil imports and use imported oil only for petro-chemicals (see Economic Report, No. 1601-RO, March 31, 1978). 1.03 The guidelines indicate also large investments in resource explora- tion development e.g. "drilling to great depths", but details are lacking. Although expensive, this is not to imply that these developments are neces- sarily uneconomic--the studies for the proposed bituminous shale based power plant at Anina, for instance, indicate that the cost is competitive with other power resources being developed in Romania, which themselves are competitive with generation based on imported oil. 1.04 Wood is still quite widely used in Romania as a domestic fuel for cooking purposes. It is assumed that the availability of wood as fuel is limited and that it will stabilize at somewhat over 3 million tons annually on a sustainable yield basis. Other materials such as maize stalks and corncobs are used for domestic fuel in rural areas but no estimate of the quantities involved is available. Romania does possess some peat deposits but these are apparently not considered to be economically exploitable. 1.05 More detailed information on the power/energy sector is given in previous appraisal reports (Turceni Thermal, Loan 1028-RO; Riul Mare-Retezat Hydro, Loan 1242-RO), and an energy sector survey undertaken in connection with the basic economic mission in October/November 1976. Organization of the Energy Sector 1.06 No single entity is responsible for energy in Romania. Responsi- bility for the sector rests with the Ministries of (i) Mines, Petroleum and Geology; (ii) Electrical Energy; (iii) Chemical Industries; (iv) Metallurgical Industries; and (v) Forestry Economy and Construction Materials. The State  Planning Committee is responsible for coordinating energy planning in addition to arbitrating differences between Government Ministries. Past Growth of Energy Consumption 1.07 Energy demand including wood and other "non-commercial" fuels in Romania has risen dramatically over the last three decades as a result of the policy of rapid industrialization; from about 6.8 million tons oil equivalent (toe) 1/ in 1950 to about 52.1 million toe in 1975. (No statistics are avail- ab:Le for 1976 and 1977, but best estimates are 56 million toe and 61 million toe respectively.) 1.08 Prior to 1950, oil and oil products supplied most energy needs. The development of heavy metallurgical industries, primarily iron and steel increased consumption of coke and coking coal and prompted rising imports of the!se fuels starting in 1955. Natural gas from the Transylvanian Basin became increasingly important starting in 1960 and by 1965 became the largest single source of energy in the Romanian economy. Current consumption of natural gas is about 36 billion cubic meters/a. The changing structure in the primary energy supply is brought out in Table 1.1. National Energy Policy 1.09 The national energy policy contained in 1976-1980 Plan can be summarized as follows: (a) maximum reliance on domestic production of primary energy resources; (b) priority in the development of coal, hydroelectric and nuclear power, while utilizing hydrocarbons preferably as raw materials for the chemical industry; and (c) greatly increased utilization of indigenous solid fuels having low calorific value (lignite and bituminous shales). Forecast Energy Supply and Demand 1.10 The 1976-1980 Plan specific production targets for the four prin- cipal forms of energy show that electricity and coal are the fastest growing during the five years (Table 1.2). 1.11 Energy consumption is expected to increase to 78 million toe by 1980. Plans for massive expansion of metallurgical and petrochemicals indus- tries will increase consumption substantially. Consumption estimates are conservative as they include planned savings through higher efficiencies in the industrial sector (about 8 million toe) and increased waste heat recovery (about 5 million toe). 1/ One ton oil equivalent, toe = 10.6 million kilocalories.  B. Romania's Power Subsector Organization 1.12 Romania's power subsector is effectively managed by the Ministry of Electrical Energy (MEE) through a board comprising the Minister, three Deputy Ministers and the various directors of subordinated organizations. Up to October 1, 1977, all MEE generation, transmission, and distribution facili- ties were the responsibility of a single entity, the Industrial Central for Electric Power and Heat (CIEET). Under the present organization, CIEET has been replaced by two entities; Industrial Central for Production of Power & Heat (CIPEET) in charge of power generation and district heating stations, and Industrial Central for Transmission and Distribution of Power (CIRE), in charge of bulk transmission and distribution. Figure 1.1 shows MEE's latest organization chart and Figures 1.2 and 1.3 CIPEET's and CIRE's respectively. 1.13 Another recent development, also affecting the power subsector, is the general restructuring of Romania's economic and financial system announced by the President of Romania in February 1978. Among other reforms, enter- prises would have a greater responsibility for their own financial and operat- ing performance, production planning, and marketing at home and abroad. State funds would still be available to the enterprises. These changes will be put into effect beginning January 1, 1979. At the moment, it is unclear how much decentralization will actually take place and because of the uncertainties this appraisal does not take the proposed changes into account. Tariffs 1.14 Tariffs are approved by the Council of Ministers and are uniform throughout the country. Until January 1, 1977 they had been virtually unchanged since 1963 except for some restructuring in 1974 to introduce dif- ferential tariffs for low, medium and high voltage consumers. However, from January 1977, electricity prices were reduced 28-30% and thermal energy rates about 7% (para. 3.02). This reduction was part of a general restructuring of the prices to the manufacturing sector of inputs from the basic industries (e.g. power, mining, petroleum, metallurgy, chemicals, etc.). The purpose of this restructuring was to increase the profitability of end users, i.e., manu- facturers. The effect of this change has been to reduce average revenue per kWh sold from about 0.321 lei or US 1.6 cents equivalent to 0.237 lei or US 1.3 cents equivalent. This price restructuring has not significantly altered the electricity consumption pattern. Large industrial consumers increased their usage slightly from 70% of total consumption to 71% between 1976 and 1977. On the other hand domestic consumers increased their proportion from about 9% to 10% in the same period, even though the domestic price of electricity was not changed. 1.15 In recent years, rates have adequately covered operating and admin- istration costs and provided a reasonable portion of future investment needs. The tariff structure includes time-of-day rates, differential peak and off- peak demand and energy charges and other elements of marginal cost pricing  - 4 - conducive to efficient allocation of resources but it has not been possible to confirm positively that the rate structure reflects the marginal costs of supply in the absence of a comprehensive study of actual and planned system costs in Romania. However, the elements of the tariffs and penalties imposed for excessive use (para. 3.05) give the tariffs a strong marginal-cost based flavor. Illustrative of the span of tariffs, the average cost of electricity to domestic consumers is about 80% above that paid by large industrial con- sumers who utilize about 50% of electricity sold in Romania and who benefit from the most favorable tariff rates. No future increases in rates are planned but they are likely to be necessary during the 1981-85 Five-Year Plan because of the higher cost and newer technology of the plant planned for construction in this period. Planning 1.16 Mathematical models to evaluate and compare alternative power sys- tem development patterns have been used by MEE for more than 10 years. A paper describing the Romanian planning models was presented at the June 1969 Power System Computation Conference in Rome, under the title "Models for the Study of Power System Development by Means of Digital Computers". The paper described a linear program to determine the least-cost development plan. The plan is updated from time to time to supply current information to the overall national planning process conducted by the State Planning Committee. A least- cost development study was received by the Bank in July 1977. Subsequent review revealed the study was highly constrained by resource availability and technical alternatives. All solutions selected lignite capacity up to the maximum available and kept nuclear capacity to a reasonable minimum. The net effect of the study was, then, to make only marginal determinations, in this case the division between hydro and nuclear 1/ capacity. However the deficien- cies pointed out by the Bank were clarified after detailed discussions with the Romanians and the resulting development program has been recognized by the Bank as the least-cost option within the context of Romanian economic policy. Nevertheless, further work is being done to improve planning by (i) incorporat- ing in the model benefits other than power, and (ii) reviewing carefully cost estimates and technical proposals for the marginal hydro projects. Existing System and Development Program 1.17 In 1977, Romania's interconnected generating capacity 2/ was 13,184 MW; 2,951 MW consisted of hydro and 9,487 MW of thermal plants belonging to MEE. The rest, 746 MW, were mostly thermal captive plants operated by auto- prcducers (Table 1.3). System peak was 9,360 MW and total gross generation 1/ Romania is actively negotiating for a nuclear plant based on Canadian technology, but the construction schedule has not yet been determined. However, given the growing energy deficit it is likely that nuclear power will figure prominently in Romania's long-range energy program. 2/ 97% of Romania's total installed capacity is interconnected.  and purchases 61,595 GWh. MEE plants generated 56,551 GWh, auto-producers 3,306 GWh and imports amounted to 1,738 GWh. Exports were 1,882 GWh. 1.18 Sales in 1977 were 49,690 GWh, an increase of only 4.4% over 1976, compared to an average annual growth of sales of 10.0%/a for 1970-1976 (Table 1.4). This marked drop in the rate of load growth was probably caused mostly by the simultaneous occurrence of (i) a slowdown in construction activities as a consequence of the March 1977 earthquake; (ii) reduced consumption in irrigation pumping due to favorable rainfall; and (iii) impact of strong con- servation efforts (para 1.02). Table 1.4 also shows the marked reduction in transmission and distribution losses obtained through energy conservation measures since 1973. 1.19 The projected consumption figures prepared by the mission are based on national planning targets and imply average annual load growth of 6.1%/a for 1978-85 (Table 1.5). The estimate reflects slower industrial load growth (5.3%/a in 1978-1985 against 11.3%/a in 1970-1977) in line with an expected slowdown in the industrial production growth rate and planned strong conser- vation measures by Government throughout the economy. 1.20 Power system expansion plans follow a least-cost development program within national energy policy objectives (para. 1.09) and take into account adequate system reserve planning and performance criteria (para. 1.16). Table 1.6 shows MEE's generation expansion plan for 1978-1985. Total estimated subsector investment for 1978-1985 shown in Table 1.7 is 141,424 million lei (US$7,857 million), not including investment in distribution facilities at the local level in municipalities--total distribution investment could be esti- mated at about twice the figure shown for distribution in the table. Distribu- tion construction in the municipalities is carried out by construction units within each distribution enterprise. These units are self-accounting and financed from local funds. Of the invesment shown, 36%, 51,483 million lei (US$2,860 million), would be for 8,490 MW of thermal plants (Table 1.8); 42%, 59,483 million lei (US$3,305 million), would for 4,066 MW of hydro plants and the other 21%, 30,200 million lei (US$1,678 million), would be for bulk trans- mission and distribution, dispatching and other sector investments under MEE. 1.21 The large amounts shown for generation expansion reflect the current emphasis being given to accelerated construction of high cost, multipurpose hydro installations under the development program entrusted to MEE. Role of the Bank 1.22 The Bank has made two loans for power in Romania. Loan 1028-RO ($60 million) in 1974 for the first stage of the Turceni Thermal Power Project (1,320 MW) and associated transmission, and Loan 1242-RO ($50 million) in 1976 for the Riul Mare-Retezat Hydro Power Project (355 MW at Retezat plus 14 MW at Clopotiva, downstream). In addition to providing needed base load generation to the system, the first loan contributed to the transfer of up-to-date indus- trial technology. Manufacture of the boilers, turbines and generators is taking place in Romania using modern, proven designs acquired through licensing agreements with foreign manufacturers. The second loan helped finance a key  - 6 - component of a cascade development designed to supply hydro peaking power to the system. 1.23 Progress on the first Turceni stage can be considered good in spite of an overall nine months' delay to date. Construction problems are well under control. No major additional delays are foreseen and the last of the four units is expected to start up in December 1979. 1.24 The Riul Mare-Retezat Hydro-Power Project, on the other hand, has been plagued by recurrent shortages of tunneling manpower. Start-up of the first unit in the Retezat station is likely to be 10-12 months late. To prevent further slippage manpower deficiencies are expected to be offset by introduction of a tunnel boring machine starting in early 1979. The Borrower 1.25 The Borrower for the proposed loan would be the Investment Bank, which is the specialized agency, under the Ministry of Finance, for investment projects in all sectors of the economy except agriculture (including water resources) and food processing. It has a large technical and economic staff with branch offices in all districts of the country. The Investment Bank's involvement in investment projects commences in the preparation phase of a project; its staff appraises all major investment projects technically and financially and recommends approval or otherwise of their financing to the Council of Ministers. When a particular project and its financial plan has been approved by the Council of Ministers, all major funds are channeled through the Investment Bank in accordance with the approved financial plan. All payments for the execution of a project have to be authorized by the Investment Bank which keeps separate accounts for each category in the finan- cial plan for every enterprise. It is the Investment Bank's obligation to ensure that a project is executed according to the financial and technical data included in the final technical and economic study approved by the Council of Ministers. Its inspectors check whether the project is proceeding according to the schedule approved in the Plan. The Project Entity 1.26 Turceni enterprise, one of the generating enterprises reporting to CIPEET (para. 1.12) will be responsible for Project implementation. This enterprise was established in 1973 by decree of the Council of Ministers specifically for the Turceni Thermal Power Plant Project and is currently carrying out the first stage of construction (4x330 MW) under Bank financing (para. 1.22). 1.27 The manager of the Turceni enterprise is responsible for the admin- istration, recruitment and training of future plant operating personnel. Training is arranged with the aid of technical schools, universities, on-the- job training at existing power stations and by association with the erection staff during the final stages of the Project through start-up and commercial operation.  7 Table 1.1 ROMANIA SECOND TURCENT THERMAL POWER PROJECT Composition of Primary Energy Supply, 1965 and 1975 (Thousand Tonnes Oil Equivalent) Percentage of Total Percentage of Total Energy Source 1965 Primary Energy Supply 1975 Primary Energy Sup-ly Solid Fuels (a) Domestic Production Coal and Anthracite 2,363 7.4 3,449 5.8 7,ignite 920 2.9 3,354 5.7 Brown Ccal 101 0.3 111 0.2 Bituminous Shale wood 604 1.9 740 1.3 Subtotal Domestic Production 3,988 12.5 7,654 13.0 (b) Imports Metallurgical Coke 658 2.0 1,795 3.0 Washed Coal and Anthracite 533 1.7 1,826 3.1 Subtotal TIports 1,191 3.7 3,621 6 Total Solid Fuels (Net Domestic Consumption) 5,179 16.2 11,275 19.1 Hydrocarbons (a) Domestic Production Crude Oil 12,571 39.2 14,590 24.,7 Natural Gas Liquids 410 1.3 452 0.8 Natural las 13,605 42.4 25,608 43.3 Subtotal Domestic Production 26,586 89.9 40,650 68.8 (b) Imports Crude Oil _ _ 5,085 8.6 Natural Gas Subtotal Imports _ _ 5,085 8.6 (c) Exports Crude Oil Natural Cl-s 154 0.5 -149 0.2 Petrole,im Products 5,849 18.2 6,182 20-5 Subtotal Exports 6,oo3 18.7 6,331 10.7 Total Hydrocarbons Supply 26,586 82.9 45,735 77.4 Electrical Energy Domestic Production (Hydropower) 226 o.7 ,956 5.3 Imrorts 59 0.2 113 2 Txports (126) .(.4) (655) (1.1) Net Electrical Energy Supply 159 0.5 i,414 2.4 30,800 96.1 50.260 8e. _ Total Domestic Energy Production 1,250 3.9 8,819 14.9 Total Energy Imports Tctal Primary En-rgy Supply 32,050 100.0 59,079 100.0 Total Energy Exports 6,129 19.1 6,936 11.6 TOTAL. DOMESTIC NERCY CCNSUM?TION 25,921 80.9 52,093 88.2 SOURCE: Economic Report on Romania. World Bank Report No. 1601-RO, March 31, 1978 December 1978  -8- Table 1.2 ROMANIA SECOND TURCENI THERMAL POWER PROJECT 1976-1980 Plan Production Targets for Primary Energy ---1976------ 1977 1978 1979 1980 Ilan Actual -------------Plan--------------- Electric Energy (TWh)./ 57.5 58.3 63.1 65-67.7 70-73.4 75-78.8 Coal tnet) (Million tons) 29.6 28.1 33.5 38-40,7 45.5-48.2 53-56.6 Petroleum Extracted (million tons) 14.7 14.7 14,8 15.1 15.3 15.5 Methane Gas Extracted (billion m3) 26.8 36.5 27.8 26,8 26.8 26.8 -~~~~~~~~~~~~~~~~~~~~~~~~~~ 1/ No complete statistics available beyond 1976. 21 Gross generation figures. SOURCE: Economic Report on Romania, World Bank Report No. 1601-RO, March 31, 1978. December 1978  - 9 - Table 1.3 ROMANIA SECOND TURCENI THERMAL POWER PROJECT MEE Interconnected System, Installed Generating Capacity, 1977 1977 (M) Total installed capacity in interconnected system 13,184 Total MEE, 12,438 of which: A) hydro 2,951 B) thermal 9,487 of which: i) coal fired, 4,184 of which: - straight condensing 3,731 - heat and power 453 ii) gas and oil fired, 5,194 of which: - straight condensing 2,575 - heat and power 2,619 iii) combustion turbine plants 109 (GWh) Gross Generation, 59,857 of which: MEE Thermal 46,751 MEE Hydro 9,800 Autoproducers 3,306 SOURCE: MEE December 1978  ROMANIA SECOND TURCENI THERMAL POWER PROJECT Sector Generation and Sales, 1970 - 1977 (GWh) 1970 1971 1972 1973 1974 1975 1976 1977 1) Net generation by auto-producers 2,874 2,944 2,971 2,958 2,742 2,930 3,104 3,306 2) Consumption by auto-producers 2.869 2,937 2,963 2,948 2,735 2,922 3,093 3,306 3) Balance, sold to NEE 5 7 8 10 7 8 11 - 4) Net generation, MEE stations 29,713 33,810 37,735 40,962 43,373 47,594 51,593 52,853 5) Imports 28 64 411 251 785 502 684 1,738 6) Total delivered to NEE system 29.746 33.881 38.154 41223 44165 48104 5228 54591 7) Station use, district heating plants 816 821 1,048 1,095 1,143 610 588 926 8) System (T&D) losses, 1! 3,316 3,611 4,238 4,627 4,281 4,059 4,111 3,975 as % of 6 11.1 10.6 11.1 11.2 9.7 8.4 7.9 73 9) MEE sales, 25,614 29,449 32,868 35,501 38,741 43,435 47,589 49,690 of which: - industrial 16,727 18,966 21,034 23,068 26,304 30,363 33,287 35,472 - transport & telecommunications 659 778 813 984 1,116 1,321 1,487 1,626 - construction 662 707 718 852 890 978 1,016 1,199 - agriculture 710 835 992 1,334 2,027 2,014 2,521 2,481 - municipal services 2,204 2,431 2,688 2,281 2,007 2,035 2,883 2,229 0 - residential 2,239 2,513 2,887 3,183 3,257 3,717 4,255 4,801 - exports 2,413 3,219 3,736 3,799 3,140 3,007 2,140 1,882 1/ Progressive T&D loss reduction reflects strong conservation efforts after 1973. SOURCE: MEE data December 1978  ROMAN IA SECOND TURCENI THERMAL POWER PROJECT Forecast Sector Generation and Sales, 1978 - 1985 (GWh) --------------_------------F o r e c a s t------------------------------ 1978 1979 1980 1981 1982 1983 1984 1985 1) Net Generation by auto-producers 3,760 3,900 4,100 4,250 4,400 4,600 4,800 5,000 2) Consumption by auto-producers 3,530 3,630 3,820 4,000 4,150 4,370 4,520 4,740 3) Balance, sold to NEE 230 270 280 250 250 230 280 260 4) Net Generation, MEE Stations 57,054 60,817 65,411 69,279 73,878 78,466 81,132 86,340 5) Imports 250 250 250 250 - - - - H 6) Total Delivered to MEE System 57,534 61.337 65,941 69,779 74,128 78,696 81.412 86,600 7) Station use, district heating plants 1,002 1,070 1,186 1,223 1,299 1,379 1,427 1,518 8) System (T & D) losses, 3,832 3,867 4,055 4,184 4,445 4,719 4,882 5,193 as % of 6 6.7 6.3 6.1 6.0 6.0 6.0 6.0 6.0 9) MEE Sales, of which: 52,700 56,400 60,700 64,372 68,384 72,598 75,103 79,889 - industrial 37,019 39,382 41,987 44,086 46,291 48,605 51,035 53,587 - transport & telecommunications 1,757 1,944 2,243 2,467 2,714 2,985 3,284 3,612 - construction 1,317 1,475 1,664 1,968 2,226 2,423 2,636 2,860 - agriculture 2,887 3,151 3,545 3,856 4,280 4,660 5,070 5,500 - municipal services 2,448 2,615 2,822 2,912 3,082 3,355 3,651 3,960 - residential 5,272 5,833 6,439 7,083 7,791 8,570 9,427 10,370 - exports 2,000 2,000 2,000 2,000 2,000 2,000 - - 5 SOURCE: Mission estimates based on MEE data. 7Le ember l97b  ROMANIA SECOND TURCENI THERMAL POWER PROJECT MEE Interconnected System, Generation Reserve Planning, 1978-1985 1978 1979 1980 1981 1982 1983 1984 1985 Installed capacity as of Dec. 31, MW 14,674 15,660 17,101 18,748 20,211 21,803 22,721 25,218 Available capacity 1 at maximum peak load - MW 14,144 15,384 16,501 18,300 19,698 20,850 22,380 24,069 Maximum peak load MW 10,025 10,750 11,660 12,740 13,974 15,235 16,300 17,740 Reserve fDr unavailable power & station deratings MW 930 950 1,050 1,100 1,150 1,200 1,250 1,310 Effectively available power MW 13,214 14,434 15,451 17,200 18,548 19,650 21,130 22,759 Load reserve MW 225 233 242 253 265 277 207 299 Reserve for planned MW 1,524 1,999 2,013 2,415 2,580 2,609 2,573 2,768 repairs at peak load Reserve for new units breaking-in periods MW 725 600 609 770 620 300 790 680 Reserve for unplanned MW 715 852 927 1,022 1,109 1,149 1,100 1,272 repairs Total reserve at peak MW 4,119 4,634 4,841 5,560 5,724 5,615 6,080 6,329 load % 29.1 30.1 29.3 30.3 29.0 27.0 27.2 26.3 Total reserve on MW 4,649 4,910 5,441 6,008 6,237 6,148 6,421 7,478 Dec. 31 x 31.4 31.3 31.8 32.0 30.8 28.8 28.3 29.7 X 1/ Based on expected annual maintenance cycle. H SOURCE: MEE December 1978 S .  ROMANIA SECOND TURCENI THERMAL POWER PROJECT MEE Investment Program 1978-1985 (Million Lei) 1978 1979 1980 1981 1982 1983 1984 1985 1978-1985 TOTAL 10,570 10,893 11,711 14,200 17,300 21,200 25,900 29,650 141,424 of which: - thermal plants 4,393 4,070 4,620 5,100 6,100 7,370 9,500 10,330 51,483 - hydro plants 3,176 3,765 4,100 5,900 7,650 9,680 11,600 13,870 59,741 - transmission 1,965 1,879 1,765 1,900 2,100 2,400 2,650 2,800 17,459 w - distribution 1,000 1,150 1,200 1,250 1,400 1,700 2,100 2,600 12,400 - dispatching and other -- 36 29 26 50 50 50 50 50 341 December 1978 / H~  ROMANIA SECOND TURCENI THERMAL POWER PROJECT MEE Interconnected System Planned Capacity Additions, 1978-1985 (MW) 1978 1979 1980 1981 1982 1983 1984 1985 1978-1985 TOTAL 1,558 999 1,477 1,789 1,502 1,219 1,457 2,555 12,556 of which: A) hydro 148 289 357 349 472 379 757 1,315 4,066 B) thermal, 1,410 710 1,120 1,440 1,030 840 700 1,240 8,490 of which: a) coal-fired 860 660 920 1,290 930 720 340 340 6,060 b) oil/gas-fired 550 50 200 150 100 120 360 900 2,430 SOURCE: MEE December 1978 0'  ROMANIA MINISTRY OF ELECTRICAL ENERGY ORGANIZATION CHART MANAGING COUNCIL OF THE MINISTRY EXECUTIVE BOARD] MINISTER OF~~~~~~~~~~~~~~~~~~~~~~ ELECTRICAL ENERGY z DEPUT TEMLUDIESIPUTY DEPUTY FEETRCDSACHDSRBUINO PWR e MIIS - MINIITE MINISTERE POE0ET(IET)CNE CR)i OPERA~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ INVESTMENTO OPRTO ANDEPLANNING/ ORGANIZATION F RENMNT A N T T CO ATRUCTIONUTOMEVELOPMENT PERSONNEL AND FOR OURELNTINS E DPRMNSDEPARTMENTS MECHAIA EATET RIIGDEPARTMENTS DEPARTMENTS SERTRA AND ECTI CLTRI EOUiPMENT DEPARTMENTS _- TINDUSTRIAL CENTRAL - 'DESION INSTITUTE INDUSTRIAL CENTRAL FOR NATIONAL FOR TRANSMISSION AND w FOR THERMAL)STUDIES IISPE PRODUCTION OF ELECTRIC DISPATCO DISTRIBUTION OF POWER z POWER & HEAT ECIPEETN CENTER _CIRERIC -DESIGN INSTITUTE FOR HYDRO STUDIES IISPHI CENTER POR TRAINING TRANISSIONTE z PROFESSIONAL STAFF SUBS-TATION TRUST ITEMI -HYDRO CONTRUCT ION "'ROMENERGO' FOREIGN 0 TRUST STCHR - INSTITUTE FOR ELECTRICAL AT 'THERMAL CONSTRUCTION AND THERMAL ENERGY RESEARCH - ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~SUPPLY ENTERPRISE POR zz TRUST (TELl POWER SYSTEMS RECORDS CENTER CENTRAL & ELECTRIAL GRID o 'ELECTRIO-MECHANICAL -INSTITUTE FOR MODERNIZATION ENTERPRISE FOR METAL F-~ TRUST ITENMI OF ELECTRICAL EGUIPMENT CONSTRUCTION & to HEAVY EQUIPMENT -NUCLEAR POWER PREFABRICATION0 CUNSi1HUCTION ENI ERPHISE, ENTERPRtISES RETRAINING CENTER U0 JOINT SECRETARIAT FOR TECHNICAL MUSEUM POWER PLANTS ON THE DANUBE U.ts D-rectly Con-erned With The Toreeni P.1oecr World Bnk - 19139  ROMANIA INDUSTRIAL CENTRAL FOR PRODUCTION OF ELECTRIC POWER AND HEAT (CIPEET) ORGANIZATION CHART | ASSEMBLI F THE WORKING PEOPLE WORKING PEOPLES' COUNCIL I EXECUTIVE BOARD |GENFRAL MANArLtHll |PLA-INNILPOLND DIRECTOR OF OPERAT IONS AND DIRECTOR! OF COMMERCIAL CH IEF GENERA7ION MAINTENANCE INVESTMENTS DIRECTOR ACCOUNTANT ENTERPRISES TEHIA DIVISION lCMMRIA 2GNEAIO -TE CHNICAL DIVISION _INVESTMENT AND SUPPLY SERVICES FINANCE, ECONOMIC FOR OPERATION AND CONSTRUCTION ANALYSIS AND FINANCIAL MANUFACTURING RELIABIITYOF POWER SERVICES FUELANDTRANSPORT CONTROL DEPARTMENT < AND RTPAIR P~ANTS FULNTASOTENTERPR ISES ELECTRICALAND POWER PLANT ACCOUNTING MECHANICAL EDUIP- EOUIPMENT DEPARTMENT MENT MAINTENANCE SERVICES E, POWER STA rON __ RESEARCH COMPUTERS DESIGN OF NEW TECHNOLOGY 1 G--reaI Manager is a Deputy Minister pf the Miristry ol Electrical Energy World Bank 19138 V -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~  ROMAN IA INDUSTRIAL CENTRAL FOR TRANSMISSION AND DISTRIBUTION OF POWER (CIRE) ORGANIZATION CHART ASSEMBLY OF THE WORKING PEOPLE WORKING PEOPLES' COUNCIL EXECUTIVE | BOARD l | MANi GERt/ | ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~NERRIE PLANNING ANDM DEVELOPMENT_ |PERSONNEL L _PO_LICYr DIRECTOR ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~ ~ ~~~~~~~~~~~~~~~~~~~~ADRPI OF L | l l ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ETERPRSISESIO LMAINTENANCE |LIVESTMENTS |LDIRECTOR LACCOUNTANT | DISTRIBUTION| TECHNICAL DIVISION INVESTMENT ELECTRIC POWER AND FINANCE, ECONOMIC Er . FOR AUTOMATION SERVICES HEAT SUPPLY ANALYSIS AND FINANCIAL AND QUALITY CONTROL DEPARTMENT CONTROL DEPARTMENT i ELECTRIC NETWORK -TECHNICAL DIVISION PLANNING & DESIGN EXPORT-IMPORT, ACCOUNTING FOR OPERATION AND SUPPLY DEPARTMENT DEPARTMENT RELIABILITY OF NETWORK E SUPPLY AND TRANSPORT - NETWORK EQUIPMENT SERVICES MAINTENANCE NETWORK RESEARCH EDESIGN OF NEW TECHNOLOGY 11 General Manager is a Deputy Minmnter of the MlnistrV of Electrical Energy. World BanE - 19137 CI. rF In I-  - 18 - CHAPTER II THE PROJECT Description 2.01 The Second Turceni (Turceni II) Thermal Power Project comprises: (a) a thermal power station with four 330-MW lignite-fired units delivering 7,920 GWh/a to the interconnected sys- tem at a plant factor of 74%, as an extension to the first 4x330-MW Turceni stage (Turceni I) under construction in southwestern Romania with Bank financing (Loan 1028-RO). (b) about 288 km of 400-kV transmission lines connecting Turceni with Cluj via Rovinari (Map IBRD 10830R). 2.02 Fuel supply and site facilities (railroad, river diversion, ash handling, etc.) will be as provided for in Turceni I (Map IBRD 10831R), but will involve opening of additional new mines both open cast and underground (para. 2.03). Fuel Supply 2.03 In addition to lignite, the basic fuel, Turceni plant will also burn fuel oil for start-up and stabilization of lignite burning at partial load. Tuarceni II will require about 11 million tons/a of lignite and 0.8 million tons/a of fuel oil. Adequacy of lignite supplies for the life of the station was ascertained as detailed in the report from Mr. P.W. Rickes, lignite con- sultant to the appraisal mission. A summary of the report is included as Aninex 2.1. 2.04 Total annual lignite consumption is estimated at 55 million tons/a starting in 1984/1985 for all existing and presently planned lignite-fired stations--Turceni I and II (8x330 MW), Rovinari (1,770 MW), Craiova (1,035 MW)--and a number of small industrial plants and other minor consumers. Lignite production from existing known deposits would be capable of supplying the total estimated consumption for at least 60 years. The Government and the Borrower confirmed that they will provide semi-annually lignite production figures for the preceeding 6 months and estimated production for the 6 months iimmediately following. The first of these statements would be expected by August 31, 1979. Estimated Project Cost 2.05 The following is a summary of the Project cost estimate:  -19 - -----Million Lei------ US$ Million equivalent Local Foreign Total Local Foreign Total (a) Thermal Power Station (4x330 MW), base cost /_ 5,450.2 1,540.5 6,990.7 302.8 85.6 388.4 Contingencies Physical 545.0 154.0 699.0 30.3 8.5 38.8 Price - 224.5 224.5 - 12.5 12.5 Subtotal 5,995.2 1,919.0 7,914.2 333.1 106.6 439.7 (b) Transmission Lines & Substations (288 km, double circuit, 400 kV), base cost /1 533.8 155.2 689.0 29.6 8.6 38.2 Contingencies Physical 53.4 15.6 69.0 3.0 0.9 3.9 Price - 16.7 16.7 - 0.9 0.9 Subtotal 587.2 187.5 774.7 32.6 10.4 43.0 TOTAL ESTIMATED /2 PROJECT COST 6,582.4 2,106.5 8,688.9 365.7 117.0 482.7 /1 At late 1978 prices. /2 For construction period 1977-1984. The estimated foreign exchange requirement, US$117 million, 1/ covers the cost of direct imports and foreign exchange costs of local supplies. The proposed loan (US$70 million) would finance about 60% of this cost. Local costs are based on existing contract prices which are not subject to escalation. There- fore, no local cost price contingency is included. Escalation of foreign cur- rency costs was taken as 9% for 1977, 7% for 1978, 6.5% for 1979 and 6.0% for 1980 through 1984 and applied to direct import items and imported materials and components for locally supplied goods. A 10% physical contingency was applied to both local and for ign currency costs in line with experience in the first stage of Turceni. Details of the development of the Project cost estimate are given in Annex 2.2. At negotiations, the Government clarified 1/ The foreign exchange Project cost estimate is made up of direct import assemblies (10.0% of total foreign exchange cost), imported components for incorporating into Romanian-made equipment (63.9%), indirect foreign exchange expenditure for depreciation of manufacturing and construction equipment (2.6%), imported automotive fuel and lubricants (2.3%), and reinforcing and structural steel (21.2%).  - 20 - that import duties have been imposed on equipment and machinery imports since 19)74. Accordingly, taxes and duties are included in the local currency portion of the Project cost estimate based on the approved ceiling for direct imports (US$8.9 million, para. 2.15) and applicable import taxes and duties 1/. On the other hand, local turnover taxes are not applicable to transactions between state-ow ied enterprises and are therefore omitted. 2.06 The generating component of the Project is estimated to cost 7,914.2 million lei (about (US$440 million) or about 5,996 lei/kW (US$333/kW). Given the circumstances in Romania, this cost is reasonable. Piroject Financing Plan 2.07 The Project represents about 8% of the MEE's investment program which is expected to cost about 112 billion lei (US$6.2 billion equivalent) during the construction period of the Project through 1984. It will be financed principally from State Budget allocations. The MEE expects that the Turceni enterprise will also provide part of the financing for this Project from its internal funds (i.e. benefits and depreciation). These internal sources are planned to become available beginning late in 1978 or earlier in 1979 after commissioning of the first unit of Turceni I but no specific amounts have been provided in Romania's current 5-Year Plan 1976-80. The decision of the Council of State (Decree No. 239 dated July 26, 1977), which inicludes the technical and economic indicators for the Project (Annex 2.3), constitutes the Government's authorization for the Project's construction and the expenditures to be incurred. Submission of an official copy of this decision to the Bank is a condition of loan effectiveness. 2.08 The proposed Bank loan of US$70 million is expected to finance about 14% of the estimated cost of the Project. The loan would be made to the Inivestment Bank which would make the proceeds available to the Turceni enter- prise on the same terms. It has been assumed that the Bank loan would be for 15 years including a 3-year period of grace. As was the case under the first two power loans, the Investment Bank would meet the debt service up to the time the project enterprise begins producing revenues and has further agreed that the sum of the annual benefits and provisions for depreciation of the Turceni enterprise would, after 1981, be sufficient to cover the debt service payments on both Bank loans for Turceni. 2.09 No cost overrun is expected. However, should additional funds be required, they would be provided in the first instance from resources of the MEE or, if they proved to be insufficient, from the State Budget. Any foreign exchange risk related to the Bank loan would be borne by the Invest- ment Bank. 1/ An average of 15% ad valorem. Import duties range from zero to 35% for thermal power plant components, with most values falling between 11% and 17%.  - 21 - Environmental Considerations 2.10 Remedial measures to minimize undesirable consequences of large scale mining and lignite-fired power generation are being undertaken. Follow- ing established practices, mine overburden is to be dumped in worked-out areas and the land leveled and replanted. Station design includes high stacks equipped with electrostatic precipitators to comply with Romanian clean air standards. These standards prescribe a maximum daily average concentration of sulphur dioxide of 0.25 mg/m3, the maximum momentary SO2 concentration is not to exceed 0.75 mg/m3, non-toxic suspended powder should not exceed 0.15 mg/m3 and surface deposition of ash emitted with flue gases should not exceed 200 tons/km2/a. Slag and ash will be pumped in fluid suspension to the nearby, barren Ceplea Valley (about 5 km away) capable of accepting dumpings from the 2,640 MW station for about 30 years. Implementation 2.11 Design engineering is complete and construction of the second Turceni stage is proceeding immediately following the first stage. Building extension and foundations for the second stage are approximately 25% complete. Work is progressing satisfactorily and the first unit (No. 5 unit not financed by the Bank) is expected to start up in June 1980. Civil works and instal- lation and erection are under the Thermal Construction Trust and Electro- Mechanical Construction Trust respectively. Project management is under the Turceni enterprise assisted by the Design Institute for Thermal Studies (ISPE) acting as consultants; and the Investment Bank also monitors performance during construction. In addition, ISPE provides overall project supervision and start-up engineering. Figure 2.1 shows the estimated Project construction schedule. 2.12 Romania's construction industry is highly efficient and no delays are foreseen. Development of new mines should present no problems (para. 2.03). Open-cast mining employs large, electric powered bucket-wheel exca- vators manufactured in Romania to German designs. No problems in meeting delivery dates for these key items are foreseen. The above implementation arrangements are the same as were made for Turceni I. In view of the rela- tively good progress of Turceni I (para 1.23) they are considered to be satisfactory for this Project. Procurement 2.13 Contracts for civil works--not being financed by the Bank--have been negotiated with the Thermal Construction Trust as an extension of ;he work in progress for Turceni I. Installation and erection will be carried out by the Electro-Mechanical Construction Trust under similar conditions. Both trusts are specialized contractors with a wealth of experience in similar work in Romania. These arrangements have been proven effective in the past and are considered satisfactory for the Project.  - 22 - 2.14 Contracts for three (3) complete turbine-generator sets and minor electrical and mechanical equipment (valves, instrumentation and controls, hydraulic couplings etc.) to be financed from the proposed loan would be awarded through international competitive bidding (i.c.b.) under the Bank's Guidelines for Procurement. Due to the competitiveness of the Romanian thermal power equipment manufacturers, it is expected that the contract to supply the turbine-generator sets will be awarded to Romanian suppiiers. On the other hand, the contracts for the balance of i.c.b. items totalling about $8.9 million (Annex 2.4) are expected to go to foreign manufacturers. Fcir bid evaluation, a domestic preference of 15% or the applicable customs duty, whichever is the lesser, would be granted to participating Romanian manufacturers. Bidding documents for all items were reviewed by the mission before being issued. Bid openings were scheduled between September 18 and October 3 for the minor items, and October 4 for the turbine-generators. Turbine-generator bids were opened on schedule. Three bidders participated. Bid evaluation is expected to take 3-4 months and contract award made about mid-February 1979. To help maintain the proposed implementation schedule (para. 2.11) advance contracting of the minor items (not to exceed US$8.9 million) has been allowed. Delivery schedule for the three (3) turbine- generator sets is not as critical (para 2.11), however, and no advance con- tracting would be required in their case. 2.15 Decree No. 239 of the Council of State approving the Project (para. 2.07) sets the limit on the amount of foreign exchange to be expended by MEE on direct imports of goods from convertible currency countries at US$8.9 mil- lion. This limit may be exceeded should the cost of imported equipment prove to be higher than estimated for the minor components and also in the event that a foreign supplier wins the contract for the three turbine-generators. Under such circumstances, MEE is expected to apply promptly to the higher authorities for removal of the US$8.9 million limit as required to ensure Project implementation within the conditions set out in the Loan Agreement specifying the eligibility of funds for disbursements. The Investment Bank has undertaken to take measures for increasing the US$8.9 million limit if it becomes necessary. Disbursement 2.16 Disbursement of the proceeds of the loan would be for (a) 72% of for- eign expenditures and 72% of ex-factory cost of locally manufactured items in the case of the three turbine-generators, and (b) 100% of foreign expendi- tures in the case of other equipment for the thermal power station. The expected disbursement schedule is shown in Table 2.1. Unused portions of the proposed loan, if any, due to project cost savings would be cancelled. The closing date would be December 31, 1982. Risks 2.17 No special risks are foreseen. The borrower (Investment Bank) and executing agencies (Turceni Enterprise and ROMENERGO) have performed well under the previous loan for the first stage of Turceni (Loan 1028-RO). No difficulties are expected in fuel supply or other operation aspects.  - 23 - Table 2.1 ROMANIA SECOND TURCENI THERMAL POWER PROJECT Estimated Disbursement Schedule US$ Million Bank Fiscal Year Cumulative Disbursements and Quarter Ending at the End of the Quarter 1979 June 30, 1979 6.2 1980 September 30, 1979 13.1 December 31, 1979 17.2 March 31, 1980 33.2 June 30, 1980 39.2 1981 September 30, 1980 52.1 December 31, 1980 59.2 March 31, 1980 63.1 June 30, 1980 67.6 1982 September 30, 1981 68.5 December 31, 1981 70.0 December 1978  - 24 - ANNEX 2.1 Page 1 of 2 ROMANIA SECOND TURCENI THERMAL POWER PROJECT Summary of Lignite Mining Consultant's Report The following summarizes the situation of lignite supply for Turceni thermal power plant: (a) lignite deposits comprise sufficient, economically and tech- nically mineable reserves for the supply of all power plants in Oltenia region in operation or planned, for their total expected useful life; (b) the coal demand of all consumers will amount to approximately 55 million tons/a from 1984/1985 onwards; (c) the planning and development of the number of mines correspond to an annual output of 55 million tons coal/a; (d) installation and erection work in progress as well as the planned date of completion of the equipment correspond to the required capacity increase; (e) construction of mining equipment is mainly effected under the management of Krupp (Federal Republic of Germany) and similar firms from the German Democratic Republic. Adequate instruc- tion and training of Romanian engineering personnel is being carried out by Krupp and future production on their own seems feasible; (f) the solution of problems still existing in the open-cast mines could lead to cost reductions. Special attention should be directed to the mixture of coal rich in ash or coal poor in ash, in order to supply the boilers with a fuel having a calorific value as constant as possible; (g) mining techniques both for the open-cast operation and for the deep mining are in line with the latest technical developments; (h) additional investment to supply the second stage of Turceni power plant amounting to approximately 11 billion lei, seems to be very high. Nevertheless, provision for these funds is included in the national budget; (i) production costs will rise from approximately 84 lei/ton in 1978 to approximately 126 lei/ton in 1980, and later decrease to approximately 92 lei/ton with increasing production. These figures are relatively low;  - 25 - ANNEX 2.1 Page 2 of 2 (j) the sale price is determined by the State and remains unchanged at 107 lei/ton; and (k) freight costs amount to 12 lei/ton between the Jilt basin and the power plant Turceni by railway. They are paid by the power plant. In sum, it can be concluded that the fuel supply for the Turceni power plant, both for the first and second extension stages, can be regarded as secured. No special risks on account of fuel supply are acknowledged.  ROMANIA SECOND TURCENI THERMAL POWER PROJECT Development of Project Cost Estimate - Million Lei ------ Million US$ Equivalent Local Foreign Total Local Foreign Total Base Prices, late 1978 A) Thermal Power Station - civil works 829.8 212.5 1,042.3 46.1 11.8 57.9 1 - boilers 1,168.4 717.0 1,885.4 64.9 39.8 104.7 N - turbine-generators 1,901.5 566.7 2,468.2 105.6 31.5 137.1 - miscellaneous electrical and mechanical equipment 567,5 11.4 578.9 31.5 0.6 32.1 - automation 276.6 15.2 291.8 15.4 0.8 16.2 - fuel handling 416.5 9.4 425.9 23.1 0.6 23.7 - water treatment (reduced size) 18.2 - 18.2 1.0 - 1.0 - ash disposal 132.3 8.3 140.6 7.4 0.5 7.9 - commissioning and supervision 70.0 - 70.0 3.9 - 3.9 - training 29.9 - 29.9 1.7 - 1.7 - engineering 39.5 - 39.5 2.2 - 2.2 Subtotal 5,450.2 1,540.5 6,990.7 302.8 85.6 388.4 B) Transmission Lines & Substations 288 km, double circuit, 400 kV 533.8 133.2 667.0 29.6 7.4 37.0 Turceni-Rovinari-Cluj Total Base Cost 5,984.0 1,673.7 7,657.7 332.4 93.0 425.Li Q H > 0~ SOURCE: MEE December 1978  ROMANIA SECOND TJRCENI THERMAL POWER PROJECT Development of Project Cost Estimates, Local Currency, Firm Prices Not Subject to Escalation Work in Progress as of 12/31/78 1979 1980 1981 1982 1983 1984 1978 -1984 A) Thermal Power Station (4x330 MW) 430.6 861.1 1,351.7 1,351.7 937.4 490.4 27.3 5,450.2 Physical Contingency, 10% 43.1 86.1 135.2 135.2 93.7 49.0 2.7 545.0 Total Thermal Power Station 473.7 947.2 1,486.9 1,486.9 1,031.1 539.4 30.0 5,995.2 B) Transmission Lines and Substations (288 km, double circuit, 400 kV) - 160.1 213.5 160.2 - - 533.8 physical contingency, 10% - 16.0 21.4 16.0 - - - 53.4 Total Transmission Lines and Substations - 176.1 234.9 176.2 - - - 587.2 Total Local Currency Project Cost 473.7 1,123.3 1,721.8 1,663.1 1,031.1 539.4 30.0 6,582.4 SOURCE: MEE December 1978 N) n X 0 N)h  ROMANIA SECOND TURCENI THERMAL POWER. PROJECT Development of Project Cost Estimates. Foreign Currency, Including Escalation (Million Lei) Work in Progress as of 12/31/78 1979 1980 1981 1982 1983 1984 1278 -1984 A) Thermal Power Station (4x330 MW) 1. Not subject to escalation 1/ 12.5 25.0 39.2 39.2 27.2 14.2 0.9 158.2 Physical contingency, 10% 1.3 2.5 3.9 3.9 2.7 1.4 .1 15.8 Subtotal 13.8 27.5 43.1 43.1 29.9 15.6 1.0 174.0 2. Subject to escalation 2/ 94.7 220.9 346.7 346.7 240.5 125.8 7.0 1,382.3 Physical contingency, 107 9.4 22.0 34.7 34.7 24.1 12.6 0.7 138.2 Subtotal 104.1 242.9 381.4 381.4 264.6 138.4 7.7 1,520.5 Escalation factor 3/ - 0.0325 0.09695 0.1628 0.2325 0.3065 0.3849 - Price contingency 10.9 7.9 36.8 62.0 61.4 42.5 3.0 224.5 Total Thermal Power Station 128.8 278.3 461.3 486.5 355.9 196.5 11.7 1,919.0 R) Transmission Lines and Substations (288 km, double circuit, 400 kV) - 46.6 60.2 46.6 - - - 155.2 Physical contingency, 107 - 4.7 6.0 __- 15.6 Subtotal _ I __Aa~~____ .7-- 1. Subtotal - 51.3 6'o.2 51.3 - - - 170.8 escalation factor 3/ 0,0325 0.09695 0.1628 price contingency - 0.7= 6,69 8.4 Total Transmission Lines and Substations - 53.0 74.8 59.7 - _ - 187.5 Total Foreign Currency Project Cost 128.8 331.3 536.1 546.2- . 355,9 196.5 11.7 2,106.5 11 Jncludes manufacturing license fees and depreciation of imported manufacturing plant and construction equipment. 2/ Direct imports (151 million lei) and materials and components for locally produced items (1,047.8 million lei), total 1,198.8 million lei valued as of January 1, 1977. 31 For 9% price contingency in 1977, 7%/ in 1978, 6.5% in 1979 and 6% in 1980-1982, according to best available information. SOURCE: MEE r l December 1978  ROMANIA SECOND TURCENI THERMAL POWER PROJECT Summary of Project Cost Estimates (Million Lei) Work in Progress as of 12/31/78 1979 1980 1981 1982 1983 1984 1g7*8 1984 A) Thermal Power Station (4x330 MW) LC 473.7 947.2 1,486.9 1,486.9 1,031.1 539.4 30.0 5,995.2 FC 128.8 278.3 461.3 486.5 355.9 196.5 11.7 1.919.0 T 602.5 1,225.5 1,948.2 1,973.4 1,387.0 735.9 41.7 7,914.2 '0 B) Transmission Lines and Substations (288 km, doubt circuit, 400 kV) LC - 176.1 234.9 176.2 - - - 587.2 FC - 53.0 74.8 59.7 - - _ 187.5 T 229.1 309.7 235.9 - - - 774.7 Total Estimated Project Cost LC 1,123.3 1,721.8 1,663.1 1,031.1 539.4 30.0 6,582.4 FC __ 331.3 536.1 546.2 355.9 196.5 11.7 2,106.5 T 602.5 1,454.6 2,257.9 2,209.3 1,387.0 735.9 41,7 8,688.9 SOURCE: MEE December 1978 M 0c  -30 - ANNEX 2.3 Page 1 of 2 ROMANIA SECOND TURCENI THERMAL POWER PROJECT Technical and Economic Indicators for the Project The main technical and economic indicators for the Project contained in Decree No. 239 dated July 26, 1977 approved by the Council of State of the Socialist Republic of Romania are: 1. Total value of the investment 6,386 million lei of which construction 2,743 million lei equipment 3,277 million lei other expenses 1/ 366 million lei 2. Total installed capacity 1,320 MW 3. Annual production of electric power 8,580 GWh/a 4. Electric power to be delivered to the system 7,920 GWh/a 5. Electric power cost 0.210 lei/kWh 6. Plant investment cost 4,838 lei/kW 7. Total value of imports 198 million lei from convertible currencies 160.2 million lei (US$8.9 million) from socialist currencies 41.4 million lei 2/ 8. Specific fuel consumption for power delivered 364 gr cc-/kWh 9. Total personnel to be employed for operation = 1,100 of which workers = 1,015 10. Specific index of personnel 0.83 men/MW installed 11. Commissioning dates for the units Unit 5 - June 1980 Unit 6 - June 1981 Unit 7 - December 1981 Unit 8 - June 1982 1/ Includes 211 million lei physical contingency. 2/ cc = Conventional coal, 7,000 kcal/kg  - 31 - ANNEX 2.3 Page 2 of 2 12. Time to implement project - 50 months 13. Period to reach full capacity - 3 months 14. Period to achieve other indicators - 12 months  - 32 - ANNEX 2.4 ROMANIA SECOND TURCENI THERMAL POWER PROJECT Supply Contracts Expected to be Awarded to Foreign Bidders US$8.9 Million Estimated Total 1. Lot -- forged parts and connecting pieces for high-pressure piping 2. Lot -- steel pipe and elbows with basalt lining 3. Lot - gate and stop valves 4. Lot -- safety valves 5. Lot -- check valves 6. Lot -- control valves 7. Lot -- hydraulic couplings 8. Lot -- ash and slag handling equipment 9. Lot -- asbestos compensators 1O. Lot - electric drives for motor operated valves II. Lot -- control and measuring instruments 12. Lot -- electric hoists  ROMAN IA SECOND TURCENI THERMAL POWER PROJECT Estimated Project Implementation Schedule ACTIVITY\YEAR 1977 1978 1979 1980 1981 1982 1983 1984 Engineering & Supervision Site Preparation, Civil Works, Equipment Installation and L Erection and other Field W Actinities Delivery of Romanian Equipment Dehvery of rmported Equipment Testing & Commissioning Unit #5 Unit #6 Unit t7 Unit