Morocco - Power Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4028 PRDJECT PERFORMANCE AUDIT REPORT MOROCCO: FIRST POWER PROJECT (Loan 936-MOR) June 30, 1982 Operations Evaluation Department 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.  FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT MOROCCO: FIRST POWER PROJECT (Loan 936-MOR) TABLE OF CONTENTS Page No. Preface ........... * ........ ......... .. ..... ... . . ........ ...... j Project Performance Audit Basic Data Sheet.............................. ii Highlights .............................................................. iv Appendix (Comments from the Borrower) .... ........... vi PROJECT COMPLETION REPORT I. Background .......... . . . . . . . . . * ....... ......... 1 II. Project Identification, Preparation and Appraisal.............. 2 III. Project Implementation, Operation and Costs.................... 3 IV. Financial Performance........ ............ .... ... ..... * ....... 9 V. Justification of Project................................. 12 VI. Institutional Performance and Development...................... 14 VII. Conclusions and Lessons to be Learned.......................... 16 Annexes: 1. Bank Lending for Power to Morocco 2. Growth of Sales and Peak Demand - Actual vs Appraisal Estimate 3. Tariff Actions and Increases 4. Main Covenants of Loan Documents 5. ONE's Investment Program 1973-1977 6. Project Cost Comparison - Appraisal Estimate vs Actual 7. Cumulative Disbursements - Actual vs Estimated 8. Actual and Forecast Key Ratios of Financial Performance 9. Actual and Forecast Income Statements 1971-80 10. Actual and Forecast Funds Statements 1973-80 11. Actual and Forecast Balance Sheets 1971-80 12. Price Deflators Used for Economic Justification 13. Return on Investment MAP IBRD 10152 (PCR) 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.  - 1 - PROJECT PERFORMANCE AUDIT REPORT MOROCCO: FIRST POWER PROJECT (LOAN 936-MOR) PREFACE This report presents the results of a performance audit of the Morocco First Power Project, for which Loan 936-MOR of US$25.0 million was made in October 1973 to the Office National de l'Electricite (ONE). The loan became effective in January 1974, and was closed, fully disbursed, in December 1979. The report consists of Highlights prepared by the Operations Evaluation Department (OED) and a Project Completion Report (PCR) prepared by the Europe, Middle East and North Africa Regional Office. The PCR takes into account the findings of a completion mission which visited Morocco in March 1981, and the information provided in a completion report submitted by ONE. In accordance with OED's abbreviated procedure, OED staff have reviewed the Appraisal and President's Reports, the loan documents, the Minutes of the Board discussions and the PCR; the project experience was also discussed with Bank staff. On the basis of this limited review, the audit finds that the PCR has discussed adequately the significant aspects of the project's experience, particularly the factors which contributed to the poor financial performance of ONE, and to the shortcomings in the sector's institutional development;. the satisfactory performance of the gas turbine units (which were among the first of their kind in the world to operate on the heavier type of fuel oil); and the highly satisfactory technical and managerial development of the borrower. Furthermore, the audit finds no reason to disagree with the general conclusions of the PCR. Following normal OED procedures, a draft copy of the audit report was sent to the Government and the Borrower for comments. Those comments which were received have been taken into account in finalizing this report and have also been reproduced as an Appendix to the Highlights.  - ii - PROJECT PERFORMANCE AUDIT BASIC DATA SHEET MOROCCO FIRST POWER PROJECT (LOAN 936-MOR) KEY PROJECT DATA Appraisal Actual or Expectation Current Estimate Total Project Cost (US$ million) 39.4 38.0 Underrun (%) - 3.6 Loan Amount (US$ million) - 25.0 Disbursed - 25.0 Cancelled - - Outstanding /a - 5.0 Date for Completion of Physical Components- 06/75 09/75 Proportion Completed by Appraisal - - Target Date (%) - 85 Proportion of Time Overrun (%) 15 Incremental Financial Rate of Return (%) ( Gas turbines: 11 Negativ./b (Transmission lines: 13 Financial Performance - Worse Institutional Performance-- Good Cumulative Estimated and Actual Disbursements (US$ million) December 31 1973 1974 1975 1976 1977 1978 1979 i. Appraisal Estimate 1.0 19.6 24.4 25.0 25.0 25.0 25.0 ii. Actual 0.0 11.0 18.7 19.5 20.3 21.1 25.0 (ii) as % of (i) 0 56.1 76.6 78.0 81.2 84.4 100.0 OTHER PROJECT DATA Original Actual or Plan Estimated Actual First Mention in Files 05/65 Government Application - /65 Negotiations 11/15/72 04/02/73 Board Approval - 09/11/73 Loan Agreement Date - 10/05/73 Effectiveness Date 01/14/74 01/23/74 Closing Date 12/31/76 12/31/79 Borrower Office National de l'Electricite (ONE) Executing Agency Fiscal Year of Borrower January 1 - December 31 Follow-on Project Name Sidi Cheho - Al Massira Hydroelectric Project Loan No. 1299-MOR Amount (US$ million) 49.0 Loan Agreement Date July 2, 1976 Borrower Office National de 'Electricite (ONE) /a Completion date for most of the project components. /b On the project as a whole; however, this rate of return is not comparable with the appraisal estimate in view of the enlarged scope of the project (PCR, paras. 5.3.1-5.3.3; Appendix). /c The institutional performance of the sector (as opposed to the Borrower) showed little improvement (PCR, paras. 3.3.4, 3.6.2, 6.1.1 and 7.1.3).  - iii - MISSION DATA Month/ No. of No. of Man- Date of Mission Year Weeks Persons Weeks Report Identification 10/68 10/68 Preparation Preappraisal 03/70 3 1 3 05/70 " 11/70 2 1 2 12/70 " 01/71 1 1 1 02/71 03/71 1 2 2 04/71 11/71 1 2 2 11/71 Appraisal I 07/72 3 3 9 08/73 Prenegotiation/Updating 03/73 1 2 2 N.A. Total 21 Supervision I 06/74 1 2 2 06/74 Supervision II 04/75 2 3 6 06/75 Supervision III 11/75 4 2 8 12/75 Supervision IV 12/76 1 2 2 02/77 Supervision V 06/77 2 2 4 06/77 Supervision VI 12/77 1 1 1 12/77 Supervision VII 03/78 1 1 1 03/78 Supervision VIII 05/78 1 2 2 06/78 Supervision IX 11/79 2 3 6 12/79 Supervision X 09/80 2 1 3 10/80 Total 35 CURRENCY EXCHANGE RATES Name of Currency (Abbreviation) Dirham (DH) Year: Appraisal Year Average Exchange Rate: US$1 = DH 4.20 Intervening Years Average US$1 = DH 4.27 Completion Year Average US$1 = DH 3.82  - iv - PROJECT PERFORMANCE AUDIT REPORT MOROCCO: FIRST POWER PROJECT (LOAN 936-MOR) HIGHLIGHTS The project achieved its major physical objective of improving the reliability and increasing the security of power supply in Morocco (PCR, para. 3.5.1). It comprised the installation of two 20 MW gas turbine units, construction and upgrading of several hundred kilometers of transmission lines, extension of substation facilities, and also studies on future thermal generation projects. The borrower was the Office National de l'Electricite (ONE), the national power utility responsible for generation, transmission and some of the distribution, and the project was a part of its development program. The main project components were implemented only a few months behind schedule and the gas turbine units have been operating satisfactorily, after overcoming some inilial problems with their fuel preparation facilities. These units were among the first of their kind in the world to operate on heavy fuel oil compared to the conventional gas turbine units which generally operate on the more expensive lighter fuels. Since the cost of the project, as appraised, was lower than estimated, the cost savings were applied towards additional studies of future power projects, including hydroelectric projects. These additional studies took much longer than expected and were completed about three years after the original project completion date (PCR, paras. 3.2.1, 3.2.2, 3.4.2 and 3.4.3). The need for the project has been confirmed in view of the fact that the actual growth rate in energy sales (9.5% p.a. during the project implemen- tation period 1973-1980) exceeded the appraisal forecast (9% p.a. for the period 1973-1977). The project was the least cost solution. While the gas turbines were intended to provide peaking capability for ONE's system, they were in the event required to operate for much longer periods than envisaged at the time of appraisal, partly because of poor hydrological conditions which reduced the energy availability from hydroelectric stations; as a result, they -contributed to fuel cost savings compared to energy from conventional gas turbine units (PCR, para. 3.5.2). Success in meeting the project's institutional and financial ob- jectives was mixed. Prior to the project, ONE had already developed rea- sonably well as an institution, having carried out a number of reforms to improve its managerial effectiveness. Further improvements took place during the project implementation period and presently ONE is one of the best-managed public enterprises in the country (PCR, paras. 2.1.5, 6.1.2-6.1.4). It has good staff training programs which have contributed to its high level of technical and managerial performance and to a reduction of nearly 70% in the number of expatriates (i.e. foreigners but recruited and trained in Morocco)  - v - between 1974 and 1980 (PCR, para. 3.7.1). ONE's financial performance, on the other hand, was generally unsatisfactory during the project period 1974-1980. Its rate of return on assets through 1976 was well below that stipulated in the loan covenant mainly because the government did not allow ONE adequate tariff increases in order to meet the large increase in its fuel bill (PCR, para. 4.2.1). Under the loan agreement for the second power project, the rate of return covenant was replaced by a cash contribution covenant. ONE has more or less met the cash contribution covenant since 1976, largely because it scaled down its envisaged investment program (PCR, paras. 4.2.2 and 4.2.3). ONE was, nevertheless, beset with liquidity problems, mainly because its funds, amounting to about half of its annual operating revenues, have been tied up in accounts receivable since 1976. The delinquent customers continued to be largely the Government agencies (including the distribution utilities) despite the Government's undertaking under the first and second power loans to rectify the situation (PCR, paras. 4.3.1 and 4.3.2). The current estimate of the incremental financial rate of return on the project as a whole, based on the tariffs prevelant during the project period, is negative. However, in view of the enlarged scope of the project, this rate of return is not comparable with the appraisal estimate of 11% on transmission lines and over 13% on gas turbines (PCR, paras. 5.3.1-5.3.3; see also Appendix). Loan 936-MOR also fell short of achieving its wider sector ob- jectives, i.e., a more rational administration of the power sector as a whole, more equitable tariff structures and stronger institutions. The Government is aware of the structural problems in the sector. For example, while ONE is under the jurisdiction of the Ministry of Energy and Mines, the retail dis- tributors of electricity are under the Ministry of Interior and the Government has attempted to find solutions to specific problems as they arise on an 'ad hoc' basis, through the appointment of Interministerial Committees (PCR, paras. 3.3.4, 6.1.1 and 7.1.3). The study on sector organization, carried out by the consultants despite an apparent lack of cooperation from the retail distributors, is still under review by the Interministerial Committee (PCR, paras. 3.6.2, 6.1.1 and 7.1.3). The Bank has been informed repeatedly that interministerial discussions were continuing on the matter of allowing ONE to pass on automatically the changes in its fuel costs to its customers (PCR, para. 4.2.4). The main lessons from this project experience are: (i) measures to strengthen the sector could be more difficult to implement where they are not compatible with the overall philosophy of public administration and the political organization in the country; (ii) political and socio- economic pressures may restrain the Government from granting adequate or automatic tariff increases to a utility despite the increase in the latter's fuel bill; and (iii) high technical competence combined with project appraisal at an advanced stage of the project preparation allows project implementation essentially on time and within appraisal estimates.  - vi - APPENDIX COMMENTS FROM THE BORROWER Translation of incoming telex Casablanca, July 2, 1982 The World Bank Washington, D.C. Attn.: Mr. Kapur Ref: Your letter of March 19, 1982 Subject: Loan 936-MOR Project Performance Audit Report Project Completion Report In response to your referenced letter, we give you below our comments on the reports listed: - Project Performance Audit Report A number of points should be rephrased, particularly as regards the incremental financial rate of return (page ii), which is shown as negative, while the Project Completion Report does not say anything definite on this point in view of the problems involved in separating out the project from the system as a whole. Moreover, the data are incorrect in view of the delay in introducing rate changes to offset rises in fuel costs. The computations made with isolated data are not representative. Furthermore, the definition of ONE given on page iv, where it is described as "the national power utility responsible mainly for bulk power supply," is incorrect, as ONE is responsible not only for electricity generation and transmission but also for electricity distribution. It should be noted that the staff referred to on page v as "expatriates" are in fact staff recruited and trained in Morocco. - Project Completion Report Contrary to what is stated on page 6 regarding the installation of the gas turbines, the two turbines at Agadir were installed indoors because of site conditions (right on the edge of the sea). The first turbine was installed in an extension to the existing building, while the second was set up in the space within the existing building freed by removal of the diesel sets. - vii - APPENDIX As for the gas turbines at Tangier, the first was installed outdoors as the site was far enough away from the sea. For the sake of convenience, the second turbine was installed inside the building that had become available after removal of the diesel sets. A further comment is called for with regard to calculation of the penalties for late completion (page 7). The supplier had to pay the full contractual penalty, which had been set at 5% of the total contract price, i.e. half of the amount of the performance guarantee of 10%. Regards /s/ Ahmed Tazi ATTACHMENT MOROCCO FIRST POWER PROJECT (LOAN 936-MOR) PROJECT COMPLETION REPORT I. BACKGROUND 1.1 Bank Involvement in Sector 1.1.1 To help expand Morocco's power sector the Bank has made three loans totalling US$116.0 million equivalent (Annex l)- (i) the first (936-MOR) in October 1973 for US$25.0 million equivalent to the Office National de l'Electricite (ONE), an autonomous Government-owned entity, to finance the subject Project which was part of ONE's 1973-1977 capital expenditure program for generation and transmission; (ii) the second (1299-MOR) in July 1976 for US$49.0 million equivalent to the Government for the Al Massira Multipurpose Hydro Project near Sidi Cheho; and (iii) the third (1695-MOR) in May 1979 for US$42.0 million equivalent, again to the Government, for the first stage of a Village Electrification Program, ONE being charged with the physical implementation. The second project has been essentially completed and is supplying water and electricity since about mid-1979 and mid-1980, respectively. 1.2 Sector Organization 1.2.1 The organization of Morocco's power sector remains complex. Overall, it is controlled by the Government with the Ministry of Energy and Mines (MEM) - formerly Ministry of Public works and Communications - having oversight of ONE. ONE is charged with producing and transporting elecricity and distributing it in areas covered by its interconnected system but which is not part of an urban municipal area with an established Regie (Government-regulated autonomous distributor) for distribution of electricity and water. 1.2.2 ONE, created in 1963, when the power supply industry was nationalized, produces practically all electricity for the country, of which it sells about 60% in bulk to the Regies and 40% directly to final consumers. - 2 - ONE also maintains the small isolated plants of remote communities. These communities and the Regies are under the supervision of the Ministry of Interior (MOI). The growth of public electricity supply by ONE is shown in Annex 2, with the Regies distributing about half of it. About 2% of electricity consumption is supplied by auto-producers and the small isolated plants. 1.2.3 The power sector remains fragmented as a result of historical developments and the policy of decentralization of services pursued by the Government through MOI. Until 1976, the Regies, distributing water and electricity, had been able to finance their power system expansion from retained earnings. More recently, tariff action has lagged events (e.g., the rapid inflation and the large increases in oil prices) due to Government reluctance to raise tariffs for electricity adequately and in time (made necessary by Morocco's heavy dependence of electricity production on oil products) for socio-political reasons. As a result, the Regies now require outside funds for the addition of facilities. The latest Five-Year Plan (FYP) of the Government for 1981-1985 consequently provides that the Fonds d'Equipement Communal (FEC) will eventually become a major vehicle to channel funds for expansion of distribution facilities. FEC, together with budgetary allocations channeled through MOI, would finance also the installation of smaller distribution systems in the areas of the provinces not yet served from the systems of ONE or nearby Regies. MOI is proposing to increase the role of the Regies by creating new ones, including the intercommunal type, a policy not favored by ONE. If implemented, it would lead to a gradual change of ONE into solely a generation and transmission enterprise. 1.2.4 Regulatory functions are being carried out, mainly ad hoc, by intermin- isterial commissions. Changes in tariffs are proposed by ONE and set by decree by the Prime Minister's Office after consultation with MEM. After the large 1973/74 oil price rise, a special Interministerial Committee recommended late in 1974: (i) a full revision of energy policy; (ii) acceleration of hydropower construction; and (iii) a number of steps for energy savings. The first action proposed was to align energy prices to their imported costs. In connection with ONE's needs its tariffs have been increased over the Project period as shown in Annex 3. II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL 2.1 Project Origin, Preparation, Appraisal, Negotiations and Effectiveness 2.1.1 Based on the findings of a Bank mission to Morocco in 1964, the Bank found that there was no justification for Morocco to start work on bydro projects until the end of the 1960s. However, since the Moroccan Government had decided to schedule the construction of the Sidi Cheho project and requested the Bank (in 1965) to help finance the project engineering, the Bank took an interest in ONE's projects. The 1965 request had been turned down because no comparative power sector expansion studies had been made. But in - 3 - early 1967 the Bank asked for relevant information on ONE's history, operations, statistics and financial data. In October 1967, when the feasibility studies for the hydro projects under consideration (all of them with an irrigation component) were not expected to be ready for some time, the Bank concluded that any shortage of power should be met by additional thermal plant. The Bank also focussed, from the start, on financial and organizational aspects to be reviewed in a power sector study. In 1969, such a study was proposed to be carried out by USAID; it was actually prepared by an expatriate consultant. With a view to inducing Government contributions for the tariff study, the Bank advised the Minister of Finance in January 1970 of the importance it attached to the introduction of electricity tariffs that would enable ONE to finance an appropriate part of its expansion program from its internal cash generation. 2.1.2 Thereafter, the Bank confirmed by letter in late July 1970 to the Government its willingness to finance part of the expansion of Morocco's transmission system. Following a Bank identification mission in January 1971, a project was prepared entirely by ONE's staff. Subsequently the Project content was substantially changed, the major change being the deletion of a hydroelectric component, which had to be further studied. The final project, as described in paragraph 2.2.1, was then capably prepared for appraisal by ONE's own staff without outside consultants. At that time ONE had several highly qualified expatriates on its staff; they had remained from the predecessor organization (Energie Electrique du Maroc) after ONE was created in 1963. The project was appraised initially in July 1972 and followed up by a pre-negotiations/post-appraisal mission in March 1973. 2.1.3 The Back-to-OffLce Report of August 9, 1972 after appraisal (equivalent to an issues paper) assumed that the proposed loan, in addition to financing the project elements, would provide a vehicle to build a working relationship of the Bank with the Moroccans and give the Bank leverage to help formulate a rational power sector policy. At that time, the rights and obligations of the entities involved in the sector were not precisely defined and the system of taxes, duties, Government contributions and tariffs was ambiguous. The report recommended (i) promulgation of regulations to govern ONE (Cahier des Charges), and (ii) completion of a study by EdF on cost of supply of electricity and on tariffs. The completion of a study on the strengthening of the organization of the power sector was later added to this. 2.1.4 The January 25, 1973 memorandum transmitting the document package to the loan committee focussed on the issues of the "unification of the power sector", calling attention to poor experience on projects with Office National de 1'Eau Potable (ONEP) as a result of the competing interests of the Ministry of Public Works, then supervising ONEP, and MOI supervising the Regies and the lack of coordination between them, leading to non-observance of major Loan and Guarantee Agreement Covenants. The memorandum noted the difficulties in obtaining agreement on a sector organization study by an outside consultant and under the supervision of experts and officials having no connection with the ministries supervising any part of the power sector and answering to a higher level, and recognized that the splitting of responsibilities in the water and power sectors was rooted historically in tradition, and that improvements would only be possible over some time. Other findings related to the need for ONE's Cahier des Charges and a tariff study, and also highlighted the low level of tariffs. (The concerns of the Bank in this context were communicated to the Government in a comprehensive letter of April 26, 1973; it included a'detailed expose of the Bank's views on these matters, in particular the unification of the power sector.) Because the Government had different views on these matters, negotiations were delayed and a pre-negotiation/updating mission team (different from the appraisal mission because of the Bank's reorganization) visited Morocco in March 1973. This mission recommended raising the amount of the loan by US$4.0 million to US$25.0 million and increasing the retroactive financing from US$0.5 to US$1.2 million (later raised to US$2.2 million in the Loan Agreement and finally to US$2.8 million because of delay in loan approval). 2.1.5 During negotiations (April 1973), the major issues were (a) the appointment of a financial manager, (b) the public opening of bids , and (c) carrying out the sector organization study on the unification of the power sector. Making the sector study preparation a covenant under the loan was not acceptable to the Moroccans as it could possibly be interpreted as a criticism of their Government. The matter of the study was raised by the Moroccans with the Bank, and an exchange of letters between the Bank (April 26 1973 - para. 2.1.7), the Prime Minister's Office (June 27, 1973), and ONE (August 10, 1973 - the latter containing terms of reference for the consultant accepted by the Bank to carry out the study) eventually solved the impasse. But reaching agreement on this and other issues led to a delay in Board presentation to September 13, 1973. At presentation, the future institution- building aspects of the Project were stressed, expressing the hope that Bank participation would lead to a more rational administration of the sector, more equitable water and electricity tariffs and stronger institutions with a greater capacity for making financial contributions towards their own expansion. Eight years of reforms of ONE since then, largely at the behest of the Bank, have turned the power utility into one of the best run public enterprises in Morocco. 2.2 Project Description 2.2.1 The Project consisted of (A) two 20-MW gas turbines, one each at the Agadir and Tangier existing diesel plants; (B) construction of about 563 km of lines comprising a 225-kV second line with routing Jerada - Oujda (via Fez area) - Toulal (near Meknes), a 225-kV line Toulal - Fouarat (near Khenitra), a 225-kV tie line at Khenitra from the existing Rabat - Tangier line, two parallel 225-kV lines (for initial operation at 63 kV) between Tit Mellil and Roches Noires (both in Casablanca area), and upgrading to 225 kV of the 339 km existing 150 kV line Tit Mellil (Casablanca) - Zaer (Rabat) - Tangier; (C) construction of a new substation at Fouarat (Khenitra) and the upgrading to 225 kV and extension of substations at Oujda, El Ouali (Fez), Toulal (Meknes), Khenitra, Tit Mellil (Casablanca), Roches Noires (Casablanca), Zaer (Rabat) and Tangier; (D) consulting services for studies of tariffs, future thermal stations at Khenitra and Mohammedia (near Casablanca), and other studies to be agreed later, which are summarized in paragraph 3.1.1. - 5 - 2.3 Maior Covenants in Loan and Guarantee Agreements 2.3.1 A list of major covenants is given in Annex 4 together with the extent of compliance with them. III. PROJECT IMPLEMENTATION, OPERATION AND COSTS 3.1 Changes in the Froject and Program for 1973-1977 3.1.1 Physically, the Project was executed essentially on time. Because the amounts for physical and price contingencies required were substantially lower (about US$3.5 million equivalent) than estimated at appraisal (para. 3.4.1), the scope of studies by consultants to prepare future power projects was greatly expanded by adding the hydro power projects at Oued El Makhazine, Al Massira (Sidi Cheho), Dchar El Oued, M'Dez, El Menzel, and Matmata to those of the thermal power stations at Khenitra and Mohammedia. The addition of these studies required later the extension of the closing date by three years to December 31, 1979, doubling the time to loan closing compared with appraisal. Though requestd by the Bank as early as February 1976, copies of interim or final consultant's reports on these studies were not sent to the Bank. However, ONE showed the studies to Bank missions in the field. 3.1.2 When it was being decided as to how to use the funds that had been saved on the physical project components, ONE had proposed also items other than the above studies. It had submitted for the Bank's consideration the financing of a second gas turbine unit for Tangier. This was not accepted by the Bank since no justification had been supplied and its addition would have required a major change in the project description. Instead, Bank missions suggested financing of the study and equipment for ONE's expansion of its load dispatch system. ONE, however, has carried out later this phase of its system expansion with financing and support from sources other than the Bank. 3.1.3 ONE's actual system investment program in 1973-1977 of DH 1,701 million (Annex 5) was about 74% above the appraisal estimate of DR 975 million. The major percentage increases were in the investments for hydro power plants (about 500%), thermal plants (about 100%) - resulting in a total for generation of about 130% - and distribution facilities (134%). Compared with the appraisal report, the hydro plant program was advanced, in view of the soaring fuel oil costs, resulting in the commissioning of additional hydro capacity of 200 MW by 1980 (Idris Premier - 40 MW, Makhazine - 34 MW and Al Massira/Sidi Cheho - 126 MW) over the appraisal estimate of 34 MW. The main increase in the thermal program consisted of the addition of a total of 4x20 MW gas turbines (at Agadir, Tangier and Tetuan) over and above the 2x20 MW planned at appraisal and the acceleration of construction under the turnkey, supplier-financed, steam-electric plants at Khenitra and Mohammedia. In addition, ONE ordered 4x75 MW units (instead of 2x60 MW) for Khenitra, and 4x150 MW (instead of 2xt25 MW) for Mohammedia. - 6 - 3.1.4 Originally, the projected growth rate for sales was 9% annually for the 1973-1977 period; it was revised upward to 11.5% at the time of the appraisal of the second project in early 1976. With the actual rate turning out to be only 9.5%, the revised rate proved to have been optimistic. The acceleration of the program and the slower growth in sales have contributed to ONE's problems of being unable to meet the loan covenants on cost recovery (initial rate of return later changed to specified percentages of internal contribution to construction) 3.2 Project Execution 3.2.1 The loan became effective on Jaruary 23, 1974 - one week after the original date. The physical components were commissioned with only very minor delays due to late delivery of equipment; the Tangier gas turbine started commercial operation in January 1975 and the one at Agadir in February 1975, late by about two months and four months respectively. The bulk of the transmission facilities were in operation by July 1975. Only the upgrading of the line to Tangier was late, but all lines and substations were in operation by mid-1976. However, several of the hydropower project studies took much longer to complete than originally expected and payments for some of them were still pending at the time of loan closing. 3.2.2 The gas turbines together with the extensive and complex fuel handling and preparation facilities at each of the plants were purchased and installed under turnkey contracts. With an admixture of distillate, these turbines burn mainly heavy fuel oil which is purified and provided with inhibitors and other additives just before use. At the time of appraisal, the two gas turbines (one at Agadir and the other at Tangier) were designed as outdoor packages. However, the gas turbine at Agadir was installed indoors, in an extension to a building which housed diesel sets, because the site was located on the edge of the sea. The second gas turbine supplied by the same supplier for each of these plants with a second (improved) fuel handling and preparation facilities, but which was not a part of the subject Project, was installed indoors at Agadir as well as at Tangier (see Appendix). Problems with the gas turbines were minor (they were some of the first ones in the world burning fuel oil). However, there were some problems with the fuel handling and purification system, mainly with the fuel pumps feeding the combustion chamber. ONE, therefore, did not return the full performance guarantee amount, which was 10% of the total contract price. However, the relations with the contractor remained good as manifested by the repeat order mentioned above. 3.3 Procurement 3.3.1 All contracts (except for consulting services), totaling 38 in all, were awarded with Bank approval. ONE did not use public bid opening prior to negotiations. This was accepted by the Bank since ONE's procedures, although not fully according to Bank's Procurement Guidelines, had adequate safeguards against post-bid opening changes. Most of the bids were received prior to loan negotiations. Only one issue arose in connection with procurement; but this too was resolved quickly, the Moroccans agreeing with the Bank on the determination of the lowest evaluated bidder. - 7 - 3.3.2 The supplier of the turnkey gas turbine plants was penalized by ONE for late completion of contract. He had to pay the full contractual penalty which had been set at 5% of the total contract price (Appendix). 3.3.4 Except as noted above, the performance of the contractors and consultants (for the studies) was satisfactory. As yet no judgement can be made concerning the results of the sector organization study by consultants which is still under review by the Interministerial Committee; the Bank continues to await the Committee's report and recommendations. 3.4 Cost of the Project and Disbursements 3.4.1 The actual cost of the Project was US$44.63 million equivalent as against the appraisal estimate of US$39.4 million. A comparison of costs by project component is shown in Annex 6. The actual foreign cost of the physical components amounted to US$22.51 million equivalent compared with US$21.1 million at appraisal. The increase was mainly in the substation component (22.3%) on account of additions during 1976-1977 to the existing substations by amendments of contracts. For the reasons given in paragraph 3.1.1, the component for studies was greatly expanded; a total of US$8.63 million (with US$5.34 million in foreign costs) was spent on these studies, with the Bank financing US$2.74 million equivalent of this amount. 3.4.2 Because the physical and price contingencies were only partially needed for physical components, the reallocation of the proceeds of available amounts from the unallocated category was made mainly to the category of studies for a final allocation of proceeds as shown below: Original Actual Amount Allocated Amount Disbursed --------US$ Million Equivalent------- I-A Gas turbines and related equipment 6.0 5.3 B Civil works required therefor 0.6 0.5 2-A Transmission equipment and materials 5.5 5.4 B Civil works and erection therefor 1.5 1.4 3-A Substation equipment and materials 5.3 7.7 B Civil works required thereof 2.2 2.0 4 Consultants' services 0.5 2.7 5 Unallocated 3.4 Not applicable TOTAL 25.0 25.0 3.4.3 The addition of the consultants' studies of additional hydro projects required 3 extensions of the loan closing date. The loan was fully disbursed about mid-1979 and was closed on December 31, 1979. 3.4.4 Annex 7 compares actual disbursements with appraisal estimates. Actual figures consistently lagged behind estimated disbursements, but this can only partially be attributed to delay in physical project execution (see para. 3.4.3). By late 1976, however, they had reached appraisal estimates for the physical components. This confirms that physical project execution lagged behind appraisal schedules by some six to nine months overall. 3.5 Operations and Environment 3.5.1 The physical project components have performed their functions in the interconnected system of ONE as expected, substantially increasing the reliability and security of power supply. The substations and lines are of a high quality and provide continous service, which is the result of an exceptionally well organized and executed preventive maintenance program. 3.5.2 The gas turbine plants are giving very satisfactory service for the purpose intended. When emergencies have arisen in system power supply, these turbines have been operated for much longer than normal periods. This again is the case during the current extremely dry year (1981), one of the driest on record. ONE is able to benefit from the effectiveness of the preparation and handling facility permitting the use of heavy fuel oil, which allovs substantial savings compared with the use of distillate. 3.5.3 During the maturing period of the gas turbines, and particularly in their initial operation, fuel preparation was not up to specifications. However, the manufacturer made good on the preparation facilities by some redesigns and modifications. He later supplied much improved facilities for the fuel preparation for the second units at Tangier and Agadir and also the additional gas turbines at Tetuan, mainly by sizing these facilities somewhat larger. 3.5.4 Because the gas turbines of the project are installed inside the original diesel plant buildings and are equipped with adequate silencers, they have no adverse impact on the environment. As expected at appraisal, the lines and substations under the project have been located away from populated areas, minimizing their visual impact. 3.6 Performance of Consultants, Contractors and Suppliers 3.6.1 The expatriate consultants appointed for the purpose had completed a first tariff study in 1973, but the Government did not make it available to the Bank arguing that the study was not in a form suitable for discussion, and that the rapid changes in the development program and escalation of prices of equipment required a revision of the study, However, in due course Bank missions were shown the study results in the field and a dialogue on tariff issues has continued. - 9 - 3.6.2 The study of the Moroccan power sector organization by expatriate consultants was apparently severely handicapped by lack of cooperation by the Regies 1/ (supervised by MOI) in providirg data and other information such as on organization, cooperation, coordination of activities, and coordinated regulations (Cahier des Charges - Cde Ch). Only during 1980 did the Regies decide to draft jointly regulations and, as of February 1981, the Regie for Rabat (R.E.D.) had prepared a first draft of the Cde Ch for the electrical departments of the Regies and the Regie of Casablanca (R.A.D.) for the water departments. This activity suggests that, at last, the first steps seem to have been undertaken to establish a rational way for the Regies to function in the future. 3.6.3 As mentioned in paragraph 3.3.4, the performance of contractors and suppliers was generally very satisfactory. 3.7 Staffing and Training 3.7.1 Some 8,000 people are employed now in the power sector with about 5,600 of them in ONE. The number of expatriates, i.e., foreigners but recruited and trained in Morocco (Appendix),in ONE has been reduced from about 60 in 1974 to 20 in 1980. Training programs and facilities for technical and operating staff are very good. Training in other areas, particularly of ONE staff active in data processing and computer use, which was previously weak has improved subs- tantially, raising ONE's capabilities in the areas of financial and management information systems. IV. FINANCIAL PERFORMANCE 4.1 Revenue Covenant 4.1.1 Under the Loan Agreement, ONE agreed to take all necessary measures including tariff adjustments to enable it to earn an annual rate of return of not less than 3% for 197L and progressively higher rates so as to raise it to 7% by 1981, subject to a possible change of the rate of return covenant to an internal cash generation covenant to cover a reasonable portion of the expansion requirements after an ongoing study had been concluded (see Annex 8). Under Loan 1299-MOR of July 1976, the Bank agreed to replace the rate of return covenant under Loan 936-MOR with a cash contribution covenant. Such a covenant was more attuned to Moroccan financing objectives in general and ONE's capital expansion requirements in particular. Under this covenant ONE agreed to take all necessary measures to achieve in each fiscal year, starting with 1977, a contribution of at least 18%, rising to 20% in 1980 and thereafter. However, in order to help the Government to fight inflation, the Bank agreed only for 1977 that the tariff increase, over and above any requirements to cover increases in fuel prices above the January 1, 1976 level, would not exceed 10%. The Government further undertook to cause ONE to pass on in full to its customers through automatic tariff adjustments any changes in its costs of f uel from the level of January 1, 1976. 1/ This lack of cooperation has also been a frustrating experience for the missions which have visited Morocco in connection with power sector work. - 10 - 4.2 Performance Under the Revenue Covenant 4.2.1 From 1974 to 1976 ONE was unable to achieve the required returns. Tariff increases, limited by Government to 5% in 1973 and in 1974 in an effort to curb inflation, were sufficient for ONE to achieve a rate of return of only 2.5% for 1974 and 0.3% for 1975 (see Annex 9). In 1975, a dry year with mounting operating expenses, ONE's operating income was not sufficient to cover even the interest on debt. An 18% tariff increase at the beginning of 1976 was largely offset by increases in the Government-controlled prices of fuel-oil and gas-oil, increases which were the first step towards eliminating the substantial subsidies for these products since the 1973 oil price rise. Therefore, even in 1976 ONE's rate of return was low, being only 1.9%. 4.2.2 On January 1, 1977, ONE was allowed to raise its tariffs by 22.3% on average; 9.2% of it to cover a simultaneous increase in the prices of oil and coal and 13.1% to improve its cash generation. With this tariff increase, ONE's cash contribution to construction in 1977 was 15.3% (see Annex 10). Although this fell somewhat short of the required 18% cash generation it should be considered as substantially meeting the covenant, considering the constraints. Helped by a scaled-down investment program replacing the 1978-82 five-year development plan by the less ambitious 1978-80 stabilization plan, ONE also complied with the agreed contribution requirements in 1978 and 1979, when fuel increases of about 15% in January 1978, 25% in January 1979 and 19% in June 1979 were more than offset by average tariff increases of 14% on January 1, 1978 (4% for fuel and 10% for cash contribution), and 22% on January 1, 1979 (12% for fuel and 10% for cash contribution). The 22% was later reduced to 16% on April 1, 1979. In the circumstances, ONE reached self-financing levels of 24% in 1978 and 22% in 1979. 4.2.3 After Loan 936-MOR was closed, ONE's financial situation deteriorated rapidly during 1980 and thereafter. The prices of fuel-oil and gas-oil increased by 8% and 20% respectively in January 1980, and again by 50% and 32% respectively in June 1980. This raised ONE's total fuel bill by 54% in 1979 and 1980 but this increase was only partially compensated by a 26.2% average tariff increase allowed as of September 1, 1980 because the Government was reluctant to adopt measures which might lead to social unrest. Including changes in non-cash working capital owing to substantial increases in account receivable from Government departments, ONE's internal contribution to construction dropped to about 9%; however, excluding such changes in non-cash working capital it was 24%. 4.2.4 For mainly political reasons, the Government has resisted complying with the automatic tariff adjustment clause which would allow the changes in ONE's fuel costs to be passed on to its customers. Consequently, the automatic tariffs adjustment clause has not been incorporated into ONE's tariff structure and the Bank was told repeatedly that interministerial discussions were still continuing on the matter. - 11 - 4.3 Collection of Receivables 4.3.1 Another financial problem which has beset ONE for the past few years is the lack of liquidity caused by rapidly accumulating receivables from Government agencies. The Government did not meet its undertaking under Loan 936-MOR to ensure that all bills payable by its agencies for sales of electricity and connection services would be settled within 90 days. By March 1976, bills from Government agencies outstanding for more than 90 days amounted to about DH 45 million, equivalent to 70 days of ONE's sales (see Annex 11). While making Loan 1299-MOR, the receivables situation was reviewed with the Government and the 90-day limit on the payment of arrears under Loan 936-MOR was replaced by an undertaking by Government that payments due to ONE by Government agencies (including the Regies) on account of electricity sales and connection charges would be kept below one-sixth of ONE's total sales to them during its previous fiscal year. 4.3.2 However, the goal of limiting receivables to one-sixth of ONE's total sales in the previous year apparently did not take into account the fact that billings are made monthly for high-voltage customers and quarterly for medium- and low-voltage customers. Also, no distinction was made between power sales and works, for which the collection procedures are vastly different. Furthermore, an administrative circular from the Prime Minister's Office dated May 17, 1976 (still unrescinded) directly contradicts the requirements set in the Loan Agreement (dated July 2, 1976) and in practice allows Government agencies to pay their electricity bills within nineteen months on average. At the end of 1980, ONE's total receivables had, therefore, increased to about DH 659 million (DH 405 million for energy and DH 254 million for other obligations, including works), as compared with 1979 sales of DH 862 million for energy and DH 86 million for works which ONE undertook for its customers. The covenant under Loan 1299-MOR was also, therefore, not met. 4.4 External Audit 4.4.1 Prior to 1973, ONE's accounts were not subject to an annual external audit but some control aimed at securing conformity with Government regulations was exercised by the Ministry of Finance through a "controleur financier" based in Rabat and an "agent comptable" working in ONE's office. Under the subject loan, ONE agreed to have, in addition, its financial statements audited by independent auditors acceptable to the Bank. External auditing was performed satisfactorily by an internationally known expatriate firm of auditors for the years from 1973 to 1978. For 1979, because of Government regulations requiring that all auditing be performed by Moroccan firms, ONE's accounts were audited by a partnership of two Moroccan firms. The audit of the 1980 accounts has also been completed by the same firm. As seen from its audit of the 1979 and 1980 accounts, the work of the firm is satisfactory. Except for the reports for 1973 and for 1979, the audit reports were received by the Bank on time. - 12 - V. JUSTIFICATION OF PROJECT 5.1 Growth of Electricity Demand 5.1.1 The main objective of the First Project was to provide ONE with additional generating and transmission capacity, in line with the least cost feasible alternative, in order to help meet the growth of demand on a system-wide basis after 1974. This capacity would also provide for an improvement of reliability of supply for the whole interconnected ONE system and specifically for the Agadir and Tangier areas by the Project's gas turbine component. This main objective has been met. 5.1.2 Based on ONE's load forecast, the appraisal report showed ONE's sales during the period 1975-1977 of 8,420 GWh vs. actual sales of 8,521.9 GWh which was 1.2% more than the appraisal estimate (Annex 12). 5.1.3 The operating results of the Agadir and Tangier gas turbines are given below. They confirm that their actual utilization has been substantially higher than the estimated maximum of about 1,000 hours of annual operation. Agadir Tangier Total Max. Annual Total Max. Annual GWh Power Load Use GWh Power Load Use Produced MW /1 Factor Hours Produced MW /1 Factor Hours 1974 1.9 n.a. n.a - - - - - 1975 35.2 20 20.1 1761 33.5 20 19.1 1676 1976 31.0 20 17.8 1556 30.0 20 16.6 1453 1977 75.6 40 21.6 1891 57.7 40 16.5 1443 1978 110.1 40 31.4/2 2752 113.9 40 32.5/2 2849/2 1979/3 45.5 40 13.0 1137 33.6 40 9.6 840 /1 Maximum rating for 15 hours of operation. /2 Relatively large usage of gas turbines (using fuel oil No. 2 mainly) was due to a relatively dry year and only very small increase in hydro energy output. /3 Substantial reduction is due to commissioning of 300 MW at Khenitra steam electric station which provided 1,012 GWh compared with 865 GWh at Jerada. 5.2 Least Cost Solution 5.2.1 The actual costs of the gas turbines and of the transmission component were 85% and 95% respectively of the appraisal estimate. Gas turbine or diesel plant was the only type of plant that could be installed in time to meet the 1975 peak demand and that of the following years. Diesel plant, burning the same type of fuel, would have cost not 20% more (or - 13 - US$40/kW) as assumed in the appraisal but likely about 75% more (for a total diesel cost of about US$350/kW). On this basis, the gas turbines remain to be the least cost alternative. The system operating conditions used in the appraisal for the justification of the transmission component correspond very much to the actual operations of ONE's system. Since this component was built at a lower cost than esi:imated, and in the time frame of the appraisal, the reinforcement of the 225-kV system and the conversion of the 150-kV lines and substations to 225 kV, as appraised and actually built, remains the least cost solution for this part of the project. 5.3 Rate of Return 5.3.1 The appraisal report estimated an economic rate of return separately for the gas turbines of 11% and for the transmission facilities (lines and substations) of 13% for the Jerada-Khenitra line and of 20% for the Tit Mellil-Roches Noires line using as quantifiable benefits the savings calculated by comparing the total system costs (capital plus operating) of meeting the proiected growth in demand with and without the gas turbines and the transmission facilities. For quantifying these perceived benefits it was assumed that (a) captive diesel plants (of industries) could be activated to provide part of the shortfall without the gas turbines; (b) a shortfall without the gas turbines during "dry" years would result in loss of revenue from foregone sales to low voltage (to 50%) and industrial (to 50%) customers (such revenue was considered to be the additional benefits); and (c) the use of gas turbines, restricted to peak hour operation, would allow maximum use of available water for producing hydro power and energy during "wet" years. Without the gas turbines during such years, the Jerada coal-fired units (designed for base-load operation) would have to be operated on a continuous basis during the whole year and at a minimum load of 60% of rating during system light load periods. During such periods, water available (in plants with full reservoirs during certain parts of the year) could not be turbined; this would force use of coal and lead to increased fuel costs for the production of electricity which (in the alternative with gas turbines) could have been produced at no cost by these hydro plants. The savings in costs of this coal was considered as a benefit. However, the values calculated in the appraisal report cannot be reconstructed from the available information. An ex-post comparison of a recalculated rate of return with that in the appraisal is therefore not possible. Moreover, in view of the fact that the actual costs were lower and the implementation timetable followed closely the appraisal values, the recalculated rate of return on the components would likely be higher than that estimated at appraisal. 5.3.2 In the context of this Project Completion Report, keeping in mind the much expanded component for studies, it is considered that a comparison of the rate of return on ONE's total investment program, implemented during the 1973-1977 time-slice, would be more appropriate than on individual major components (gas turbines and selected lines). Using 1973 as the base year, the calculation of this comparison is summarized in Annex 13 and its Attachments. The rate of return on the above basis would have been 6.4% based on Appraisal Report projections for 1973-1977 and extension of these projections through to 1981 and estimated costs and benefits to the end of life of the Project elements (year 2011). The rate of return on the basis of actual results - 14 - achieved through 1980/81 would be negative.!/ This is the result of inadequate tariff adjustments and not applying fuel cost adjustments to them in at least a periodic fashion. On the assumption that automatic fuel cost adjustments were made from 1980 on, the rate of return was estimated to rise to 17.4%. 5.3.3 A still respectable rate of return of 12.1% could be achieved if tariffs were to be raised to compensate for half of the fuel cost increase in 1981, followed by full automatic adjustments thereafter on an annual basis. This would mean a tariff increase of 11.5%, about equal to ONE's request to the Government on April 1, 1981 on which the Government has not acted. VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT 6.1 Performance of the Government and the Borrower 6.1.1 Retention of the power sector organization as it has developed historically in regard to distribution of electricity (by the Regies, ONE and local municipalities) without a set of unifying standards and regulations (technical and adminstrative) and an efficient tariff setting mechanism has not been conducive to efficient and rational planning, expansion and operation of the overall sector. One of the reasons for this is the division of jurisdiction between two ministries (MEM and MOI) which sometimes have conflicting interests resulting from the differing thrust of their mandates. The Government is aware of the structural problem and continues to try to find solutions to the specific problems as they arise by assigning, on an ad hoc basis, tasks to interministerial committees on specific problems that develop. Such committees have been especially charged with the supervision of the sector organization and tariff studies by expatriate consultants. But progress on these studies continues to be very slow and their quality is likely to reflect the lack of cooperation by the Regies to supply information. An example of the ill effects of the dichotomy in the control of the power sector is the present action of MOI in pressing for the creation of additional "inter-communales" Regies and the acceleration of the Village Electrification Program even before the completion of the studies of the economics of the second stage of the program. 6.1.2 ONE's management, particularly in the technical areas of generation and transport of electricity, continues to improve steadily beyond the high level it already had at the start of the project. Its organizational structure has remained unchanged except for the creation of a financial directorate. After a term as Minister of Public Works while continuing at the same time to direct ONE, the Director General is now in the process of introducing many technological advances in ONE's expansion program such as large steam electric plant at Mohammedia based on residual fuel oil and coal, direct combustion of bituminous shale in a large scale pilot plant of 250 MW, and initiation of a nuclear program. 6.1.3 ONE has also made substantial progress in the organization of its financial functions. From its inception, under a structure inherited from the predecessor French corporation, ONE's administrative, financial and accounting 1/ OED Note: The Borrower has stated that the data used in the computation of the incremental financial rate of return is incorrect but has not provided more valid data or an alternative computation (Appendix). - 15 - functions (personnel, accounting, legal, financial and accounting) were dispersed among various directorates, under the supervision of an expatriate chief engineer. The Director General had direct control of the work relating to budget and contracts. Under the Project, ONE started to consolidate the above functions into two departments (administrative and financial). The Director of Finance who also held the charge of the administrative department was charged with improving financial control and planning in line with a Bank outline of proposed responsibilities concerning treasury and accounting functions, financial control and advice, and internal audit. He had undergone training for two years alongside the expatriate chief engineer. The Director of Finance is now in charge of the accounting, treasury, and computing activities divisions and also the financial control function. 6.1.4 ONE has responded quickly to the Bank's suggestions in financial matters. Under the strong guidance of the capable Director of Finance and his competent staff, ONE has improved the quality of its accounts, developed its financial analysis techniques and provided the Bank increasingly with timely, methodical, and detailed financial projections. At the same time, it has insisted with the Government on needed tariff adjustments, supporting its case by careful analysis of present and future financial conditions and consistently pursuing coLlection of Government receivables through interventions with the various ministries involved. ONE has thus complied, although with some delay, with its obligations under Loan 936-MOR. 6.1.5 ONE's Project Completion Report was submitted to the Bank in draft only. It was prepared by rather low level staff based on a review of the files of correspondence ,ith the Bank. ONE's management staff has not provided any input of substance for the report as the concept and purpose of project evaluation have apparently not been fully appreciated by ONE. This is not surprising considering that the subject report is for the Bank's first lending operation for power in the country. 6.2 Performance of the Bank 6.2.1 Bank staff have been able to maintain a very good working relationship with ONE and has shown considerable flexibility in dealing with the recurring issues (tariffs, receivables, sector organization study etc.). During 1973-1980 the Bank has carefully monitored ONE's earnings position and repeatedly urged appropriate action on tariffs and receivables. During the period of physical .implementation of the Project (1973-1977), appropriate action followed urging by the Bank, albeit with some delay. Thereafter, however, after the Loan 1299-MOR was made for the Second Power Project (Sidi Cheho), the Bank has been less successful in persuading the Government to take corrective action to relieve ONE's financial problems. But this has to be viewed in the context of Government's concerns about social unrest and increasing inflation in the country. - 16 - VII. CONCLUSIONS AND LESSONS TO BE LEARNED 7.1 Overall Achievements 7.1.1 By loan closing date, the physical components of the project had been completed as appraised, with only minor delays. The project scope was substantially widened by increasing the component of studies which required the doubling of project implementation time. The prime purpose of the physical component has been achieved by the increase in reliability of supply provided by the back-up of supply to the areas remote from ONE's main network - Tangier and Agadir - and improvement of the security of system operation by providing large.additional transmission capacity through new 225-kV lines and upgrading of parts of the 150-kV system to 225-kV. The utilization of gas turbines, so far, has been much higher than originally expected and their performance has been very good considering the novel use of fuel oil No. 2 for their operation. 7.1.2 In the area of institution-building, the Bank has been instrumental in helping ONE to become a more autonomous and commercially-oriented organization, an achievement which was the result of building up a framework and procedures for an efficient financial operation. 7.1.3 In the area of improving power sector organization and finances (tariff action and ONE receivables), success has been only partial. Interministerial Commission discussions on the recommendations contained in the consultants' report for rationalizing the power sector organization are still continuing; the dialogue on this matter with the Bank has been meagre. In connection with future Bank lending to the Moroccan power sector, the Bank will need to intensify the dialogue in order to help advance the rationalization in an optimal fashion compatible with the current Moroccan policies emphasizing allocation of the responsibility for public services to the local community or municipality. 7.1.4 As a result of the Government decision to expand the power sector investment program and simultaneously to hold down tariff increases, the autonomy and financial strength of the sector have been weakened. 7.2 Lessons To Be Learned 7.2.1 There are three main lessons to be drawn .from this lending operation: (i) Efforts to streamline and rationalize the organization and functioning of a sector such as the power sector in a country would meet with resistance unless the proposed reorganization is compatible with the overall public administrative philosophy and the political organization in the country. The theoretically optimal solution, which may be recommended by an outside consultant, may not be compatible with the locally-perceived objectives for the power sector and may, therefore, not be accepted by the authorities. - 17 - (ii) In the context of unpredictable socio-economic development and a strained Government budget, there can be a strong reluctance to raise tariffs automatically to recover increases in fuel costs. (iii) High technical competence, as exists in ONE, combined with project appraisal at an advanced stage of project preparation - with bidding for most physical items completed - allows project implementation essentially on time and within appraisal estimates. October 1981 (85P) MOROCCO FIRST POWER PROJECT - LOAN 936-MOR Bank Lending For Power to Morocco Project Amount Loan Implementing Loan Number Borrower (In US$ Million) Signing Date Project Agency 936-MOR Office National de 25.0 October 5, 1973 First Power Project ONE 1'Electricite (ONE) 1299-MOR Kingdom of Morocco 49.0 July 2, 1976 Al Massira (Sidi Cheho) ONE Hydro Project 1695-MOR Kingdom of Morocco 42.0 May 22, 1979 Village Electrification ONE Total 116.0 on I MORrcO FIRST POWER PROJECT (LO4 936-MOR) 1/ Growth of Sales and Peak Demand7 - Actual vs Appraisal Estimate Total Sales Instantaneous Peak Hourly Peak M! f GrOWtiia r4 of %Growth w_____ %of ~ Growth Year Actual Estimate Estimate Actul Esmte Actual Estimate Estimate Actual Estimate Actual Estimate Estimate Actual Estimate 1970 1679.0 - - 8.7 - 384 - - 10.0 - 37 - - 2.9 - 1971 1795.9 - - 7.0 - 418 - - 8.8 - 407.0 - - 14.0 - 1972 1983.7 - - 10.5 - 470 - - 12.4 - 457.3 - - 12.4 - 1973 2227.4 2160.0 103.1 12.3 9.0 498 510 97.6 6.0 9.0 492.3 500.0 98.5 7.7 9.0 1974 2372.1 2360.0 100.5 6.5 9.0 550 560 98.2 10.4 9.0 531.7 54o.o 98.5 8.0 8.0 1975 2561.6 2570.0 99.7 8.0 9.0 595 610 97.5 8.2 9.0 586.1 590.0 99.3 10.2 9.0 1976 2835.5 2800.0 101.3 10.7 9.0 629 660 95.3 5.7 9.0 584.6 640.0 91.3 0.3 8.0 1977 3124.8 3050.0 102.5 10.2 9.0 701 720 97.4 11.4 9.0 694.1 700.0 99.2 18.7 9.0 1978 3398.4 n.a. n.a. 8.8 n.a. n.a. n.a. n.a. n.a. n.a. 74o.4 n.a. 6.7 n.a. 1979 3748.5 n.a. n.a. 10.3 n.a. n.a. n.a. n.a. n.a. n.a. 801.4 n.a. 8.2 n.a. 1980 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 861.8 n.a. 7.5 n.a. 1972 vs 1977 9.0 9.0 9.0 1/ In ONE's Interconnected System - 20 - ANNEX 3 MOROCCO FIRST POWER PROJECT - LOAN 936 MOR T4riff Actions and Increases Average Tariffs by Customers Category 1973-80 (In Current DH$) Customers Date of Implementation Regies 'HV MV LV Average ONE Customers ONE System Before August 8, 1973 10.83 8.29 11.81 33.16 11.66 August 15, 1973 11.35 8.29 11.81 33.16 12.08 April 30, 1974 11.87 8.67 12.36 34.76 12.63 January 1, 1976 13.92 10.17 14.40 40.22 14.77 January 1, 1977 17.21 12.07 17.12 46.91 17.87 February 2, 1978 20.20 14.23 21.47 48.67 20.63 January 1, 1979 24.70 18.13 25.79 53.17 25.11 April 1, 1979 22.62 18.13 25.79 48.67 23.86 September 1, 1980 29.00 24.69 32.49 51.67 30.42 NB: The rebates were eliminated from September 1, 1980. - 21 - ANNEX 4 MOROCCO FIRST POWER PROJECT (Loan 936-MOR) Major Covenants of Loan Documents Document Section Substence of Covenant Extent of Compliance G.A. 3.02 Guarantor shall pay ONE all amounts Not complied with up to 1976. Froni 1977, past due for electricity sold and works this covenant was superseded by Section 4.06 performed to Cuarantor, its agencies/ of L.A. 1299-MOR which requires that amounts instrumentalities by December 31, L974 due to ONE by agencies and administrative and shall ensure that beginning with date subdivisions of the Government on account of of G.A. all charges for such sales and works sales to them of electricity and related ser- will be paid to ONE within 90 days of billing. vices shall not at any time exceed an amount equal to one-sixth of the total of ONE's sales to them during its previous fiscal year. This covenant was not complied with either. L.A. 3.02 (b) In carrying out the studies regarding tariffs, ONE has complied with employment of consul- future projects including thermal plants at tants under terms of reference acceptable Khenitra and Fohammedia and such other assistance to the Bank. Scope of consultants' services as may be agreed between the Bank and ONE, (Part and other assistance was carried out also D of Project) ONE shall employ consultants under with agreement of the Bank. terms of refeience, both acceptable to Bank. L.A. 5.02 (i) ONE shall have its accounts and financial (i) Complied with. statementi audited for each FY by independent auditors acceptable to Bank, (ii) supply to Bank audited statements and (ii) Complied with (except for 1973 and 1979 auditor's report by August 1st of year follow- when the auditors having been appointed ing FY, and late, their reports were submitted with a slight delay). (iii) furnish to Bank other financial information (iii) This situation has improved over the as Bank may from time to time reasonably years, with the strengthening of the request. Finance Department. At present, the covenant is being complied with. L.A. 5.04 (a) ONE to take annually all measures needed, in- Not complied with up to 1976. From 1977, cluding tariff adjustments, to enable it to earn this covenant was superseded by Section 4.03 of a rate of return of at least 37 p.a. for 1974, P.A. under Loan 1299-MOR which requires increasing progressively in subsequent years to ONE to take from time to time all such attain 7% p.a. by 1981, provided, however, that measures as shall be required to produce in after a study to be completed during 1973, the each of its fiscal years, beginning in Guarantor, Bank and ONE may agree on such other 1977, an average level of funds from annual rates as shall be needed to enable ONE internal sources in the year in question to finance from internal cash generation a taken together with the preceding year equal reasonable po:rtion of its needs for expansion, to at least 18 percent of the average capital expenditures during such two years taken together with the next following year and provided, however, that (i) any increase in tariffs applicable in 1977, other than any such increase adopted to cover increased fuel prices shall not exceed an average of 10 percent and (ii) in the year 1980 and subsequent years, the percentage of funds from internal resources to be generated shall be at least 20 percent. This covenant was complied with from 1977 to 1979, but not in 1980 if changes in non-cash working capital were in- cluded. In addition, Section 4.07 of L.A. 1299- MOR provided that Government shall cause ONE to pass on in full to its customers through auto- matic tariff adjustments any changes in the prices of fuel used to generate electricity, from their levels of January 1, 1976. This covenant has not been complied with. Supplemental Letter With reference to Section 4.01 of L.A. ONE Complied with. A Finance Department was on Sr. Financial agreed to appoint a senior financial officer created in December 1979, headed by a Officer of senior management rank to be responsible Finance Director who reports directly to for all financial and accounting matters, ONE's General Manager. reporting directly to ONE's Directeur General. MOHECa r 1OT PME? PROJXT flos 936-01! rE's Investoent Program 1973-77 Tn I" 9Ilions 1973/77 Estimte to Aotual Total Result. Coplete Progra Expenditure Tetal at Cnpletion 1973 197 1975 196 1977 1973/77 a % of Atter 1977 Prir to 1973 -,o AppraIsal Actual Apraisal Actual ct a raisal Actual Apprasal Actual Appraisal Actual Apprasal. Actual Appratsal Appraial Actual Appraifl Actaal ApprW--a Aetual 1. lenration M E 2 1973 2.0 1.5 - 0.30 - 0.11 - 0.57 - 08 2.0 2.51 126 - - 28.0 38.30 0.0 30.81 Mulay Youssef 2 o 12 197, 13.2 10.90 9 0 9.71 - 0.97 - 0.53 - - 22.2 22.11 100 - - 27.8 22.34 50.0 44145 drts Preer 2 x 20 1978 - - - - 13.75 - 24.20 - 39.32 - 77.27 e.a. - 27.73 - - - 105.00 Cued Elakhaeine 1 x 34 1979 - - - - - 2.04 - 6.71 - 7.97 - 16.54 0.8. - 123.45 - - - 139.99 Al ssira (SIdi Cheh) 2 x63 1980 - - - C.04 - 3.35 - 19.67 - 25.32 - 48.38 n.a. - 229.62 - - - 278.00 Lalla Takerkoust V/ 2 x6 1982 - - - - - - - 0.72 - 1.22 - 1.94 - 48.06 _ - 50.00 Subtotal Hydro 15.2 12.35 9.0 10.05 - 20.22 - 52.40 - 73.73 24.2 168.75 697 - 428.86 55.8 50.64 80.0 648.25 Thermal P-wer Plant. Jersda 2 3 x 55 1975' 15.0 7 89 - 12.24 - 5.49 - 0.42 - - 15.0 26.04 174 - - 280.0 294.55 295.0 320.59 R-bces Nores III 1 x 6o 1976 17.3 5.48 W6.5 48.99 30.5 31.88 - 1.66 - 2.88 96.3 40.9 94 - - 3.7 3.50 100.0 94.39 as Turbines I (Agadir, Tangler) 2 . 20 1975 3.0 3.23 33 0 27.13 1.0 3.12 - 0.29 - 3.23 40.0 37.00 93 - - - - hO.o 37.00 gas T-rbines II (Agadir, Tangier, Ttuan) 4 x 20 3/ 1377 - - - - - 24.31 - 43.84 - 62.47 - 130.62 .a. - 0.21 - - - 130.83 shenitra 4 x 75 / 1980 2.0 0.89 18.0 2.63 40.0 30.99 55.0 58.93 50.0 278.24 165.0 369.68 224 20.0 270.33 - - 185.0 60.01 rohsedia 4 x 150 ~/ 1)80 0.2 0.08 0 2-58 3 1.96 10.0 2.69 _ 60.11 50.0 65.42 131 270.0 1,314.58 - - 320.0 1.38A.0 Subtotal "he~al 37.5 17.57 100.0 39.57 75.8 97.75 65.o 107.83 88.o 4o6.93 366.3 719.65 196 290.0 1.585.12 283.7 298.05 g6o.o 2,602.82 Total Generation 52.7 29.92 109.0 99.62 5.8 117.97 65 160.23 80 80.66 390. 888.40 228 290.0 2.013.98 339.5 348.69 1,020.0 3..251.0 2. Transmission 225/150 kV System 39.3 41.37 70.6 55.37 45.0 38.99 23.1 36.60 28.9 39.95 206.9 212.28 103 23.0 n.a. 5.5 n-a. 235.4 a.. 60 kV System 25.7 7.69 U.6 37.88 1_6 28.83 31.0 28.75 23.1 24.09 135.0 1 91 - rna. 5.0 a.. 1140.0 a.a. Total Tranmis.ion 65.0 49.05 104.2 93.25 66.6 67.82 54.1 65.35 52.0 64.04 341.9 339.51 99 23.0 691.99 10.5 12.35 375.4 1,043.85 3. Dsrribution 6/ Nomal Expsion and Rural Electrlfication 8.5 3.64 11.5 9.48 13.0 6.69 15.0 10.28 17.0 1.00 65.o 41.09 63 - 120.60 - - 100.0 161.49 Work for Othere (Customrs) 7/ 17.2 21.94 18.2 27.16 19.2 4 _20 4 .9 2_ _6 l1. 6 6 33747 19 332.77 -6 670.24 Total Distribution 25.7 3?.18 29.7 36.64 2.2 56.54 35.4 107.27 33.6 145.53 161.6 378.56 234 - 453.17 - - i61.6 831.73 4. 'liscellaneos Project Studie. - - 2.1 - 0.5 0.40 - 5.05 - 6.82 2.6 12.27 472 - 79.33 - - 12.27 g.6o Other (general Plant, etc.) 15.0 10.45 1. 10.49 15.5 16.27 17.0 24.10 18_7 2 5 74.4 82.26 111 - 213.28 - - 82.26 295.56 Total MiIsellaneos 15.0 10.45 15.0 10.49 16.0 1i.67 17.0 29.15 18.0 27.77 81.0 94.53 117 - 292.61 - - 94.53 387.14 Total Inveetoent Progra l8 1 0 2 40 6 2 1 1 l p 00 3 0 0 6 11 lalla Takerkoust works consi t of raising carest of dem and turbine capacity frnm original 2 x 4.4 t to 2 x -WI. 2/ Works at Jerada conaist min1 of additions for gas firing of bollers. l/ Agadir IT - 1 r 20 W; Tangier II - 1 x 20 V, Tetuan - 2 x 2) 1. 4/ Appraisal Peport shows 2 x 60 k for Khenitra. V Appraaal Report shos 2 x 125 NU forbha di. / Distribution in "ost hent include, nsk do by -EF fo cust-er. ad ocid the /Exclude. .ork for ".thers" (custaaecrs) after 1980. MOROCCO FIRST POWER PROJECT - LOAN 936-MOR Project Cost Comparison - Appraisal Estimate vs. Actual (In US Million) Local Foreign Total Z of Total Cost Actual as % of Actual Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Appraisal Gas Turbines 2=7R 1.9 5.82 6.6 8.60 8.5 19 22 101.2 Transmission Lines 5.15 5.3 6.96 7.0 12.11 12.3 28 31 98.5 Substations 5.56 5.0 9.73 7.5 15.29 12.5 34 32 122.3 Subtotal 13.49 12.2 22.51 21.1 36.00 33.3 81 85 108.1 Consultant Services 3.33 0.1 5.34 0.5 8.63 0.6 19 1 1,438.3 Contingencies: Physical - 1.5 - 2.4 - 3.9 - 10 - Price - 0.6 - 1.0 - 1.6 - 4 - Total Project Cost 16.82 14.4 27.85 25.0 44.63 39.4 100 100 113.3 Total Financed by Bank - - 25.0 25.0 25.0 25.0 56 63 Average Rate of Exchange by Year (DH/$) 1972 - 4.5959 1973 - 4.1069 1974 - 4.3698 1975 - 4.0525 1976 - 4.4193 1977 - 4.5034 1978 - 4.1667 1979 - 3.8991 1980 - 3.8900 - 24 - ANNEX 6 MOROCCO aie2of 2 FIRST POWER PROJECT (LWLN 936-MOR) PROJECT COST COMPARISON Appraisal Estimate vs Actual Estimate Actual Local Foreign Total Foreign Local Total --------- 1,000 DH ---------- ---------- 1,000 DH --------- 1. Gas Turbines Turbines and auxiliary equipment - 25,000 25,000 4,618 23,699 28,317 Custom duties 3,800 - 3,800 4,119 - 4,119 Transportation, installation civil works 2,500 2,700 5,200 1,015 1,015 2,030 Studies, supervision 1,000 - 1,000 1,961 - 1,961 Taxes 700 - 700 9 _ go 8,000 27,700 35,700 11,803 24,714 36,517 Contingencies: Physical 4% 300 1,100 1,400 - - - Price 5% 400 1,400 1.800 - - - Subtotal Gas Turbines 8,700 30,200 38,900 11,803 24,714 36,517 2. Transmission Lines Equipment and material 100 23,400 23,500 3,357 19,026 22,383 Custom duties and taxes 7,140 - 7,140 3,585 - 3,585 Civil works and erection 13,850 6,300 20,150 10,490 10,490 20,980 Engineering and supervision 1,010 - 1,01 4,443 77 4,520 22,100 29,700 51,800 21,875 29,593 51,468 Contingencies: Physical 14% 3,100 4,200 7,300 - - - Price 5% 1,100 1,500 - - - Subtotal Transmission Lines 26,303 35,400 61,700 21,875 29,593 51,468 3. Substations Equipment rnd material 537 22,142 22,679 4,268 32,301 36,569 Custom duties and taxes 7,856 - 7,856 5,152 - 5,152 Civil work and erection 9,204 9,203 28,407 8,769 8,769 17,538 Engineering and supervision 3,403 3,403 5,457 262 5,719 21,000 31,345 52,345 23,646 41,332 64,978 Contingencies: Physical 14% 2,900 4,555 7,455 - - - Price 5% 1,200 1400 2,600 - - - Subtotal Substations 25,100 37,300 62,400 23,646 41,332 64,978 4. Consultant Services (Studies) 500 2,100 2,600 14,153 22,519 36,672 Total Project Cost 60,600 105 000 165 600 71 477 1182158 189,635 - 25 - ANNEX 7 MOROCCO FIRST POWER PROJECT - LOAN 936-MOR Cumulative Disbursements - Actual vs. Estimated (In US$ Million) Actual As Actual Appraisal % of Appraisal Disbursements Estimate Estimate 1974 September 30, 1973 - December 31, 1973 - 1.0 0.0 March 31, 1974 2.7 10.0 27.0 June 30, 1974 3.9 14.4 27.1 1975 September 30, 1974 6.3 17.8 35.4 December 31, 1974 11.0 19.6 56.1 March 31, 1975 14.9 21.2 70.3 June 30, 1875 16.8 22.8 73.7 1976 September 30, 1975 16.8 23.8 70.6 December 31, 1975 18.7 24.4 76.6 March 31, 1976 18.7 25.0 74.8 June 30, 1976 18.9 25.0 75.6 1977 September 30, 1976 19.5 25.0 78.0 December 31, 1976 19.5 25.0 78.0 March 31, 1977 19.7 25.0 78.8 June 30, 1977 20.0 25.0 80.0 1978 September 30, 1977 20.1 25.0 80.4 December 31, 1977 20.3 25.0 81.2 March 31, 1978 20.6 25.0 82.4 June 30, 1978 21.1 25.0 84.4 1979 September 30, 1978 21.1 25.0 84.4 December 31, 1978 21.1 25.0 84.4 March 31, 1979 21.4 25.0 85.6 June 30, 1979 24.6 25.0 98.4 1980 September 30, 1979 25.0 25.0 100.0 December 31, 1979 25.0 25.0 100.0 - 26 - ANNEX 8 MOROCCO FIRST POWER PROJECT - LOAN 936-MOR Actual and Forecast Key Ratios of Financial Performance 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 Return on Average Net Fixed Assets In Operation (%) 1/ Actual 4.1 2.5 2.3 2.5 0.3 1.9 4.3 5.7 5.1 3.1 Forecast 3.8 3.3 2.5 3.0 3.2 3.0 3.5 3.9 4.9 6.8 Operating Ratio (%) 2/ Actual 81 88 90 90 99 93 89 86 88 94 Forecast 82 84 88 87 86 86 84 81 76 66 Interest Coverage Ratio 3/ Actual 1.96 1.81 1.93 1.78 0.24 1.15 1.89 1.47 1.36 0.65 Forecast 2.22 2.29 1.48 1.63 1.63 1.75 1.97 2.35 2.57 3.74 Debt - Service Coverage 4/ Actual - - 1.48 1.92 1.62 2.02 2.72 2.08 2.13 1.78 Forecast - - 1.85 1.79 1.87 2.06 2.11 2.92 2.69 2.92 Program Coverage (%) 5/ Actual - - - - 18.6 8.9 15.3 24.0 22.0 9.0 Forecast - - - - 13.0 13.8 17.7 17.9 18.0 20.4 Debt - Equity Ratio (%) 6/ Actual 26/74 24/76 22/78 23/77 23/77 25/75 30/70 34/66 39/61 39/61 Forecast 25/75 25/75 25/75 27/73 26/74 25/75 25/75 26/74 28/78 29/71 Depreciation Ratio (%) 7/ Actual - 4.4 3.6 3.6 3.4 3.5 4.9 4.3 5.9 6.4 Forecast - 3.6 3.6 3.3 3.2 3.2 3.1 3.6 3.6 3.7 Average Revenue (USC/kWh) 8/ Actual 2.33 2.55 2.85 2.86 3.16 3.39 4.07 5.04 6.28 6.94 Forecast 2.88 2.85 2.85 2.85 2.85 2.85 2.85 4.34 5.16 5.97 1/ Net income before interest/net average assets. 2/ Operating expenses/operating revenue. 3/ Net income before interest/interest payable. G/ Gross internal cash generation/debt service. 5/ As defined in Section 4.03 of Project Agreement 1299-MOR. 6/ Long-term debt/equity. 7/ Depreciation expenses/average gross fixed assets. 8/ Converted at the average DH rate for the year. KOROCCO OFFICE NATIONAL DE L'ELECTRICITE (ONE) Actual and Fonecu*t ZncQ,« SCateent 1971-1980 (1n DR Mllons) 1971, 1972 1973 1974 1975 . Varince Varince triance Variance V.rtne Yenr endlog Deoaber 31, Actual A39raisal Actual- Actual Appraisal Actual-- Actual A -r a Aca- Actual AppraIal Actual- Aotuel A aaSal Apråi.al Actual- 9 -MGR8 93640 93649 936-MR 9 MOR 936-MOR 936-09 936-MOR 936-MOR 1299-MOR 936-MOR salen (GWh) 1,796 1,796 - 1.984 1,983 1 2,227 2.160 67 31 2,36, 1z 2,562 Z,570 2,570 (8) Aveage Revenue PrIce' ~ k.ar ce- O> OWn" 11.7 12.1 (0.4) 11.7 12.0 (0.3) 11-7 12.0 (0 3) 12.5 12.0 0, 12.8 12.0 12.6 0,8 US¢/kW 2.33 2.88 (0.55) 2.55 2.85 (0.30) 2.85 2.85 - 2.86 2.85 0.01 3.16 2.85 3.11 0.31 Excluding Tax: CTM (M)/kW 11.0 11.3 (0.3) 11.0 11.3 (0.3) 11.0 11.3 (03) 1,7 11.3 0.4 12.1 11.3 11.7 0.8 .OperatingReu Electricity Sales 197 204 (7) 217 224 (7) 244 244 - 278 267 11 309 290 3e4 19 Ta (6.38% of Sle) 13 13 - 14 14 - 16 15 1 18 16 2 20 18 20 2 Gros ElectricIty SaleS 210 217 (7f) 231 2 7) 259 1 27 283 13 3 30 3 2T Other Operating Reeue 15 7 8 17 5 12 is 5 1 20 5 15 25 5 22 20 Total Operating Revenue 225 4 13 243 5 270 2 14 __ 5 2 31 346 . 2 Operating Expenaes labor 62 64 (2) 65 67 (2) 69 69 - 66 71 15 91 72 19 Fuel 23 31 (8) 2's 34 () 55 42 13 67 50 17 106 61 (1) 45 Taxe 19 19 - 19 20 (1) 22 22 - 25 28 (3) 29 32 (3) Uther 15 7 8 19 9 10 22 20 2 21 21 - 34 19 15 Depreciation 63 6 - 91 74 17 S1 80 1 S5 79 6 89 85 89 4 Total Operating Expen.es 1s2 184 (2) 219 ~27 13 249 233 16 284 24 35 34 26 341 '0d Net Operating Surplus 43 40 3 29 39 T7)( 29 31 "2) 32 39 (7) 5 5 -39) Interest Payable 22 18 4 16 17 (1) 15 21 (6) 18 24 (6) 21 27 20 (6) less Intereat during Construction - - -- - - 2 1 323 4 5 (1) 3 8 5 (5) Net IntereSt 1" 4 16 17 (1) 13 17 3) 1 11() 16 19 15 (1) t Surplus r 22 71) 13 2(6 14 -2 13 20 2) (13) 25 (10) 3) Allocation to Retieent Fund 2 1 1 2 2 - 2 1 1 4 1 3 5 1 - 4 Allonation to <pec1i Pund for Rurl- lectriflcation 13 16 (3) 10 9 1 131 10 1 13 11 2 - 12 14 (12) Ijne Ta - - - - · - - - - - - - - - - Retaied Surplus for Year 6 5 1 1 11 ~~10 3 - 1 d (7) 3 32 3 Average Ret Fixed A.aets lo 8>erat,on 1,054 1,054 · 1,163 1,158 5 1,239 1,248 (9) 1.301 1,322 (21) 1,432 1,493 1,414 (61) Rat of Return on Average Bet Fixe Asats n Operation (2) 4.1 3.8 0.3 2. 3.3 )o.8) 2.3 2 5 (0.2) 2.5 3.0 (0.5) 0-3 3.2 (2.9) 1/ The distributlon of OE's operating expenses Including charge~ tranferred to capital io not available. MOROCCO OFFICE NATIONAL DE 1.'ELECTRICITE (ONE) Actual and FOrecast ~ncom SaEant 1971- 1980 (En Dl Million) 1976 1977 1,70 1979 1980 /ariance Varlance 7ar-ance Variance Varian Or udin I- DN.ybr 31, Actual Arisa i ppriisal Actual- Actual Oraisal Appraisal Actual- Actal Aprisal Actual Actul A3raisal Actual Provisional MAProv isia 2- -MOD - 3-MR 29-M 29-MOR 1 M 1299-MOR 9 1299-MOR R 12 al's '.) 2,836 2,800 2,910 36 3,125 3,050 3,265 (1401 3,399 3,705 (3061 3,749 4,070 (121) 4,047 6,430 (383) A,cra,e P('enue ice tro 'rico CT' (9)/kl 15.0 12.0 15 1 3.0 18.3 12.0 16.8 1.5 21.0 18.1 2.9 24.5 20.1 4.4 27.3 23.5 3-8 . I¢/k:fh 3.39 2.85 3.42 0.54 4.07 2.85 3.73 0.34 5.04 4.34 0.70 6.28 5.16 1.12 6.9 5.97 0.97 nilIcn T- CT-3 (r)/Wh 14.1 11.3 14.2 0.8 17.2 11.3 15.8 1.4 19.7 17.1 2.6 23.0 18.8 4.2 25.7 22.1 3.6 ' t. -tylales 400 316 413 34 539 345 517 22 671 632 39 862 766 9A 1,939 979 60 %ar)x3% o -) 26 20 26 6 34 21 33 1 43 40o 55 96 6 62 4 -na Il.rcity S,1 42 33F 9 90 573 36 550 23 714 65 1,105, 6 - prn nge,rnue 3N 5 22 25 35 5 23 12 40 26 10 51 27 24 55 26 Wtol Operating P-ene 406 341 461 115 -60 371 573 35 754 ¯6 9 67 B2 126 r.130 '..ordin (pense. Laor 103 73 30 124 75 134 154 170 <el 151 67 (1) 84 171 79 (11 224 (1) 305 (1) 470 (1) Taxea 31 36 - (5) 42 38 52 65 76 ither 43 25 18 53 25 86 81 89 .trrciation 98 937 148 95 147 1 148 164 (16) 243 189.54 280 216 64 T -4,rtnå -poge 42-29 249 F3 3 1 0 7 64 5460 ~1B 63291°8¯77¯7 loet C;enting Su;plus ¯¯. 30O 49 1 19) 70 59 72 (2) 110 19 -75) 120 203 (W3) 75 ¯9I 188) inter t Payable 26 28 28 (2) 37 30 37 - 75 57 18 88 79 9 115 97 18 s- iteret during Construction 3 3 9 - 5 6 15 (10) 13 25 (12) 14 35 (21) 16 45( et Iteret 23 " 19 (2) 32 2 2 10 62 32 30 74 4 r Surplus 7 24 (7) (17) 30 35 50 (12) 48 102 54 4 179B 3) 1'eoe ~t~.t FRorrntFnd 5 1 - 1 6 1 - 6 6 - 6 6 - 6 7 - 7 lcaOton to Spcl F1 Iun for l-al Electrif,cation 13 19 (13) 2 3415 23 1 31 29 2 39 30 5 - b6 (64) uTw e Ora - - 0 - - - 12 (12) - 3- 126 126 letnined Surplus for Year 2 19 (2( To) B 19 I15 (7) 11 39 T28) 1 63 reroge 'et 'ixed Acaatu ln woeratio 1,541 1,634 2,101 (93) 1,617 1,696 2,244 (627) 1,907 2,565 (638) 2,359 2,994 (6351 2.09 3,.79 (1,070) ute af 4urn 0n A~re Ret 71xed 4sata .n Creralim () 1.9 3.0 0.6 (1.1) 4.3 3.5 2.7 1.6 5.7 3.9 1.8 5.1 4.9 0.2 3.1 6.8 (3.7) NOROCCO OFFICE NATIONAL DE L'ELECTRICITE (ONE) Actual and Forecaet Sourcea and ApplIcatina of ponda - 1973_1980 (in DN Millions) 1973 1974 1975 1976 iariance j'artanoe ariance Varince Actoal Apgranal Actual- Actual Ap,raisal Actual- Actual Apraisal AIprainal Actua]- Actual Apprainal AppraiaI Actu.1- 93-MCR 93:-O 939-00R 936-901 936-M0R 1299-M0F 936-n0R 936-MOR 1299-M3R 936-MD0R Souran of Fund Internal Cash Generation 1/ 1/ i/ i/ Ret Uperating Surplus 27 31 (41 2P6 39 (11) - ¯ 84 9 86) 25 ¯ 49 12 (24) Depreiation 81 O 1 85 79 6 89 85 89 4 98 91 137 7 Internal Cash Generation 15 i- ) 5 1 E 1T1 7) ~79 129 -9 T4) U3 1I5r 17) Contribution. for Conctruction Govem ent Grants 22 53 (31) 92 88 4 86 64 93 22 153 58 152 95 Conm~er. Contribution. 18 7 11 18 7 il 49 7 17 42 82 7 18 75 Total Contributions ~E ~6 (20) 110 95 15 135 71 110 ~6 235 ~6 170 172 (Inrase)/Der.ease in Het Current Assetn (8) (i) (7) (13) 7 (20 17 Å3) 5) 20 50) (3) (9) (47) Increa,e long-Tem Liabilitien . 5 - -5 - 9 9 - 11 9 12 - 77 12 Borrowing 108D Lon.: 936-MOR - 26 (26) 27 /29) 23 81 27 8 3 22 5 - - - - - - - - - - 17- USSR Credits: Jerada - 8 (4) - 3 (3) - Other 4 - 8 3 - 8 2 - 2 - - Germany (KfW): Roches-Moires - - - 35 24 11 14 - 14 1 - Other - - - - - - - African evelopment Bank 13 15 (2) 6 - 6 5 - 5 3 - 3 For Kenitra and Meonedia - - - - - - - 16 (16) 35 29 5 [ocal 15 and 12 Year Bondo 15 24 (9) 22 (22) - 19 (19) 34 13 21 France Credits - - - - - - - 49 - Other - - - - Interet on Raetireent Fnd 2 2 - 2 2 3 2 1 3 2 1 Total Borroving 37) )17 171 57 Ö7 79 1-3 -7 203 -n 179T2al3souro367 453 269 Applications of Fund. Construction Project 40 92 31 3 Others 118 166 160 168 Total Contrtion Program 1 ) roi) 937 9 m 29 f9 Debt ServIce Amortization IBRD In 936-MOR - - - - - - - - - - - Lon 1299-MOR - - - - -- - - - - - - Other 58 39 19 4l 12 (1) 34 42 36 (8) 35 4o 34 Subtotal Amortization. 3U 39 19 3 36 f) ~3 9 ¯3 5) Intere.t iBRD Ln 936-MOR - 1 (1) 2 4 (2) 6 7 5 Y1) 7 8 (1) Lan 1299-MOR - - - - - - - - - - - - Other 15 20 (5) 16 20 (4) 15 20 15 (5) 19 20 (1) Subtotal Interest 1 21 ~1) ~9 3 ¯1) 1 7 Y 7 71) 26 -n ~F 7) Total Debt Service 73 7 13 59 ¯1 77) 7 ¯1 TIE) ~6 79 ~69 ~() Amoiztion Reserve - - - ~) 7- - -7- - - Inocne Tax - - - - - - - - - - - - Increa/Decreaae im Cash (16) 23 (39) (1) 3 (4) 6 (6) (3) 12 30 10 21 20 1:I.gI22 7-9 w,I TU2) 297 327 330) 32 5 7 7 953 9 327 95 Cash at Start of Period 20 36 (16) 4 59 (5) 3 62 3 (59) 9 56 0 (47) tonh at End of Period 8 59 (55) 3 62 (59) 9 56 0 (47) 39 66 21 (27) Debt service Coveage 1.5 1.9 (0.4) 1.9 1.8 0.1 1.6 1.8 1.7 (0.2) 2.0 1.8 2.4 0.2 Not Available Surplus Tor the Year of Period 59 38 20 87 - Average Available Surplus (Prevdous and Current Year) 54 41 41 63 Average Constroti-on Program (Previou, Current, Nent Year) 290 315 450 455 Pr C rage Ratio 18.6 13.0 a.9 13.8 1; 1 alloation for retirement fond. 7/ Includes allocatimn for staff retirement and custmers depoits b-ut excdies interest on retirement fund 3/ Excluding Interest on construction. OFFICE NATI~NAL DE L'ELECTRICITE (OME) Actual and Poreast Souces and A iflans nf unda - 197~9RR 197 int 1979 19 Vartance Varianc Varlance ari e Actual Ral r I At - Actual A Atual- Actual Atal- Provisioal s l Ac~- 93- M 9MOR 12__m .- 2 mn 19 Sourme of Fonda Inernl Cash Generation 1 Net Operating Surplua 64 59 72 (8) 104 134 (30) 11i 203 (89) 363 (295) Depreciation 148 95 147 1 148 164 ) 243 1 54 280 216 66 Internal Canh Generation M -10 9j _17)) 2_ )E JE5) ) Contributions for Construction Goler~nt Grant 69 67 241 (172) 113 328 (215) 186 367 (181) 298 443 (145) Conuera Contribtions 1 7 21 112 78 86 25 61 2 27 85 Total Contributions 2 7 ) ( ) (2 o ) m (Increase)/Decrease in Not Curront Anseta 19 _L) 1 18 65 ) 101 (160) Inorease Iong-Term Libilitis ¯TI - *7)) 3) 1 (-) Porrowing IBRD Loans. 936-MOR 4 - - 4 3 - 3 15 - 15 - 1299-MOR 13 - 34 f21) 19 70 (51) 116 63 53 27 7 20 USSR Credit. Jerada - - - Other - Gcr~any (Kfw). Rochen-Moire - - . Other - - 6,5 1 African Development Bank 14 - 1 -18 For Kenitra and Mohannedia 218 '9 161 328 215 Inal 15 and 12 Yer Bods - 30 79 - Frnce Credit. 60 - 1 - Other - - 15 24 29 Intere-t n Retirement fund 3 2 5 Total Borrodng 312 7) im Total Sources 35 )6 Ar"licationä of Fad. CoIrution Total Constructim Program 7 2 ( )I) w9 T; w Debt Servin Amortlation IBRD: ian936-MOR 2 4 2 - 4 .. 6 - Lon 1299-MOR - 1 76 63 7 RObtotal Aortination __3 Intemst 0220 tgan 936-MR 8 8 9 6 7 an1299MOR 1 - 3 8 15 Other 28 22 26 2 621 74 15 _23 Subtotal Inteme.t -3 ¯6 - 75 37 7 8m 15 Total Dbt Service Porzatlon Resere- IncoeTax - 12 (121) 34 (34) -59 (59) im (2 126) Inorease/Decrease in 2ast 0) 26 (19) ) 1 1) ) t8 4) 12 Total Aplioations75 _ _ 3 f 3 )1 Cash at Start oft eriod 39 66 21 18 9 2 7 10 6 b 21 3 18 Cah at Ed of Period 9 92 2 7 10 6 b 21 3 18 29 (1) 30 Daht Slrvie Coenge 2.7 1.8 2.8 (0.1) 2.1 2.9 (0.8) 2.1 2.7 (.6) 1.8 2.9 (1.0) Nt Available Surplun for 6 131 211 (0) 15 279 the Year of Period 164 145 19 215 151 64 11 2l (6 529 (26> Average AvIlable Surpls (Previouo 190 18 42 173 1 (8) 73 245 (172) ond Current Year) 92 116 (24) _Aernge Contruction Program 791 9 '38) 78 1,005 (217) 209 1, (391) (Pre-ious, CUrrent, Next Year) 6o1 79 279 654 22. 18.0 ( . 9.0 20.b (11.) Program Conerage Ratln (%) 15.3 17.7 (2.4) 24.0 17.9 .1 2.0 18.0 tf Ia-. allocatn fr retre nt fn d. 2/ Includes allocation for staff netire n ad nuatomré deposits bua exlude interest ss retirnt fud. If Excluding Interest an onnstrction. MDROCCO OFFICE NATIONAL DE L'ELECTRICITE (0XE) Actual and Forecact BVlance Sheet 1971.1980 (in DH Million&) 1971 1972 1973 1974 1975 Variance Variance Varaance Varance Variance Year ending 1ecember 31, Actual APP-1..1 Adtual- A. Ap l t~l- Aotual Appralsl Actual- Actual A"raial Actual- Actual. Aaisa Appraisal Actual- 9 936-MOR 93-MOR 936-MOR 9N-MOR 9 936-MOR 936-MOR 930 R 12 -MOR R ASSETS Fixed AssetB 1,972 1,972 - 2,181 2,154 27 2,295 2,306 (111 2,472 2,461 11 2,730 2,812 2,689 (2) Les, Depreciation 868 868 - 959 942 17 1,0 1022 18 1125 1 101 24 1,211 1 186 1,208 28 iet Fixed Assets in Operation 1,104 1,104 - 1,222 1,212 10 1,255 1,24 (29) 1,347 T13) 1 ,516 1,8 7TTöl W-rk. in Prorres 18s 18V - IAN ni ti 1, 1o4 io! ,0, , , ,o, on3 n6t 22 Total ret FIxed Asset 89 1,2 1, t. =) 1,9 1,1 4ä5 1,513 1,z9t(g) Tw 1,7 1T r) Intangible Asset. 5 5 - 2 5 L3) 1 5 (4) 1 5 (4) 4 5 3 Total Non-Current Asset. 1,294 129 - 1,327 1,333 (6) 1-37 1.1.5 (75) 1r529 2 (70) 7 . 713~ Net Current Aseta Cash 2 2 - 20 36 (16) 4 59 (55) 3 62 (59) 9 56 0 (47) Receivables: - Electricity 42 38 4 46 44 2 61 47 14 76 40 36 87 44 87 43 -Other. 27 31 (4) 25 31 (6) 29 31 (2) 40 31 9 57 31 55 26 Inventories 34 1 - 3 - 35 36 (1) 41 38 3 47 40 48 7 Subtotal Current Assets 105 105 - 125 145 ¯(2) 129 17 (44) 160 1TI (11) ~ž 171 ~~I~*1 Current Liabillties Account. Payable (49) (9) 52) (17) (81) (56) (25) (100) (58) (62) <151) (61) rNt current Asseta 56 5_ - 56 3 ) (5 6) ) 0 23 ) (5 ( 1 ) TOTAL NET ASSETS 1.350 1350 1,383 1 426 (43) 1.418 1.532 1,589 1.712 (123) 1.751 1.823 1»751 _72) LIABILITTIES Equity Governmnet-ed capital 868 867 1 868 867 1 868 867 1 868 867 1 868 867 867 1 Anortization Peserve (fomer oeera) 3 3 - - - 1 - 1 - - -- Revaluation Feserve - - - - - - - - - - Non-Repayable Capital: Contributions Govt. Grant. 81 85 (4) 105 121 (16) 127 174 (47) 219 262 (43) 305 326 319 (21) Othe, (Custo-.t 17 20 (3) 30 27 3 48 34 14 67 41 26 114 48 58 66 Speial Fund for Rural Electr. 29 22 7 39 31 8 50 41 9 62 52 10 64 64 95 - Retained Surplue - 9 (9) 6 14 (8) 7 25 (18) 10 28 (18) 11 36 11 (25) Unallocated Surpluz for Year 6 5 1 1 11 (10) 3 3 - 1 8 (7) (18) 12 8) Total Equity 104 , () 1,___ .04.9 _071 _ ___-1 103 1,21,1 (41) ,22 1,258 (30) ,335 _5_3 ) long-Tem Liabilltie. 1/ 38 38 - 43 41 2 50 44 6 61 47 14 73 50 74 23 RDS Ian 936-MR - - - -- - - - 26 (26) 27 82 (55) 7 102 78 (28) IBRD loan 1299-MOR - - - - - - - - - - - - Other 308 301 7 291 31 ( <23) 265 1 (53) 273 32) 260 318 267 ) Total Long-Tem Borroing 'SM 301 7 291 31 (23) 25 300 407 (107) _p -20 ~) Total Long-Tem Debt 34 339 7 3 355 (21) 315 . (7) 361 454 ) 407 W 4 TOTAL NET LIABILITIES 1,350 1.350 - 1383 1,426 (43) 1.418 1.532 (1_14) 1,589 1.712 (123) 1.751 1.823 1.751 72) Debt/Equity Ratio 26/74 25/75 - 24/76 25/75 - 22/78 25/75 - 23/77 27/73 - 23/77 26/74 20/80 - 1/ Includes staff retire-ent fund and coneer deposits. ? ? 1i 21 q I ia1 31 I i5ý 531 t -5i ms 1 up Fini Ii Al l 1 r,, - 1 0 i t1? % i Tl i i 4 4e 9 .#o fl ...a 05 0.1 MOROCCO FIRST POWER PROJECT - LOAN 936-MOR Economic Rate of Return Indexes and Rates Items Indexes and Rates 1973 1974 1975 1976 1977 1978 1979 1980 1981 Construction implicit Deflator for Gross Investment in GNP 100 105.9 112.7 120.8 129.3 Labor Average No. of Employees 4,153 4,284 4,400 4,581 4,752 4,973 5,269 5,476 5,714 Other Manufacturing Index (Prices) 100 132.0 140.9 152.6 164.5 181.0 196.0 Fuel-Oil and International Price Gas-Oil Index (IPI) 100 144.4 156.8 185.5 212.6 237.5 267.2 Revenues -Coal GDP Deflator 100 130.0 141.1 152.7 163.6 180.0 199.8 Average Exchange Rate for Year (DH/US$) 4.1069 4.3698 4,0525 4.4193 4.5034 4.1667 3.8991 3.9367 5,3986 - 34 - ANNEX 13 MOROCCO FIRST POWER PROJECT - LOAN 936-MOR Economic Rate of Return 1. The ex-ante rate of return was found to be equal to 6.4% (see Attachment 1). The figures were taken from the appraisal report and are in 1973 prices. 2. The rate of return based on actual results was computed in 1973 prices under three assumptions: (a) No automatic fuel adjustment (see Attachment 2), with the result that no rate of return was found to exist. (b) Implementation of a fully automatic adjustment clause from 1980 onward (see Attachment 3): The rate of return was found to be 17.4%. (c) Tariff increases compensating for half of the increase in fuel costs in 1981 and application of full automatic adjustments thereafter (see Attachment 4): The rate of return was found to 12.1%. 3. The assumption (c) corresponds to a tariff action almost identical to that which was requested by ONE from the Government, i.e., about 11.5% as of April 1, 1981. (85P) - 35 - ANNEX 13 Attachment 1 MOROCCO FIRST POWER PROJECT - LOAN 936-MOR Ex-Ante Rate of Return LIST OF STREAM DATA PERIODS Revenues Construci:ion Labor Other Fuel Net Benefits 1 (1973) 0.00 121.50 0100 0.00 0.00 -121.50 2 0.00 206.20 0.00 0.00 0.00 -206.20 3 0.00 121,00 0.00 0.00 0.00 -121.00 4 0.00 81.70 0.00 0.00 0.00 -81.70 5 29.00 78,30 2.00 0.00 14.50 -65.80 6 61.00 0.00 4.00 1.00 30.90 25.10 7 95.00 0.00 5.00 3.00 50.10 36.90 8 133.00 0.00 7.00 4.00 78.60 43.40 9-39 (2011) 174.00 0.00 9.00 5.00 105.90 54.10 INTERNAL RATES OF RETURN FOR NET STREAMS 6.376 - 36 - ANNEX 13 MOROCCO Attachment 2 FIRST POWER PROJECT - LOAN 936-MOR Actual Rate of Return No Automatic Fuel Adjustment Clause LIST OF STREAM DATA PERIODS Revenues Construction Labor Other Fuel Net Benefits 1 (1973) 0.00 85.10 0.00 0.00 0.00 -85.10 2 0.00 184.60 0.00 0.00 0.00 -184.60 3 0.00 140.20 0.00 0.00 0.00 -140.20 4 0.00 137.30 0.00 0.00 0.00 -137.30 5 76.80 143.30 2.90 5.00 0.50 -74.90 6 134.80 0.00 5.50 23.80 10.10 95.40 7 227.30 0.00 11.40 13.60 27.80 174.50 8 277.00 0.00 14.90 13.60 70.70 177.80 9 325.40 0.00 18.80 17.40 238.00 51.20 10 325.40 0.00 18.80 17.40 249.60 39.60 11 325.40 0.00 18.80 17.40 261.50 27.70 12 325.40 0.00 18.80 17.40 273.80 15.40 13 325.40 0.00 18.80 17.40 286.60 2.60 14 325.40 0.00 18.80 17.40 299.70 -10.50 15 325.40 0.00 18.80 17.40 313.20 -24.00 16 325.40 0.00 18.80 17.40 327.20 -38.00 17 325.40 0.00 18.80 17.40 341.60 -52.40 18 325.40 0.00 18.80 17.40 354.60 -65.40 19 325.40 0.00 18.80 17.40 368.00 -78.80 20 325.40 0.00 18.80 17.40 381.80 -92.60 21 325.40 0.00 18.80 17.40 396.00 -106.80 22 325.40 0.00 18.80 17.40 410.50 -121.30 23-39 (2011) 325.40 0.00 18.80 17.40 425.50 -136.30 INTERNAL RATES OF RETURN FOR NET STREAMS NO RATE OF RETURN EXISTS - 37 - MOROCCO ANNEX 13 Attachment 3 FIRST POWER PROJECT - LOAN 936-MOR Actual Rate of Return Full Automatic Adjustment Clause From 1980 Onwards LIST OF STREAM DATA PER 10 S Labor Other Fuel Net Benefits - - --- - -Revenues- Cn sqt rctickn -- - - - - - - -- -- - - - - - - - - -- - 1 (1973) 0.00 85.10 0.00 0.00 0.00 -85.10 2 0.00 184.60 0.00 0.00 0.00 -184.60 3 0.00 140.20 0.00 0.00 0.00 -140.20 4 0.00 137.30 0.00 0.00 0.00 -137.30 5 76.80 143.30 2.90 5.00 0.50 -74.90 6 134.80 0.00 5.50 23.80 10.10 95.40 7 227.30 0.00 11.40 13.60 27.80 174.50 8 270.20 0.00 14.90 13.60 70.70 171.00 9 437.50 0.00 18.80 17.40 238.00 163.30 10 449.10 0.00 18.80 17.40 249.60 163.30 11 461.00 0.00 18.80 17.40 261.50 163.30 12 473.30 0.00 18.80 17.40 273.80 163.30 13 486.10 0.00 18.80 17.40 286.60 163.30 14 499.20 0.00 18.80 17.40 299.70 163.30 15 512.70 0.00 18.80 17.40 313.20 163.30 16 526.70 0.00 18.80 17.40 327.20 163.30 17 541.10 0.00 18.80 17.40 341.60 163.30 18 554.10 0.00 18.80 17.40 354.60 163.30 19 567.50 0.00 18.80 17.40 368.00 163.30 20 581.30 0.00 18.80 17.40 381.80 163.30 21 595.50 0.00 16.80 17.40 396.00 163.30 22 610.00 0.00 18.80 17.40 410.50 163.30 23-39 (2011) 625.00 0.00 18.80 17.40 425.50 163.30 INTERNAL RATES OF RETURN FOR NET STREAMS 17.398 - 38 - ANNEX 13 Attachment 4 MOROCCO FIRST POWER PROJECT - LOAN 936-MOR Actual Rat 'of Return With Incorporation of Ralf df the Indteas in Fuel C6ts in 1981 and Full Automatic Adjuetment Clause Thereafter LIST OF STREAM DATA PERIODS Revenues Construction Labor Other Pu9i 1tB.DX.Lt 1 (1973) 0.00 85.10 0.00 0.00 0.00 -85.10 2 0.00 184,60 0.00 0.00 0.00 -184.60 3 0.00 140.20 0.00 0.00 0.00 -140.20 4 0.00 137.30 0.00 0.00 0.00 -137.30 5 76.80 143.30 2.90 5.00 0.50 -74.90 6 134.80 0.00 5.50 23.80 10.10 95.40 7 227.30 0.00 11.40 13.60 27.80 174.50 8 270.20 0.00 14.90 13.60 70.70 171.00 9 353.90 0.00 18.80 17.40 238.00 79.70 10 365.50 0.00 18.80 17.40 249.60 79.70 11 377.40 0.00 18.80 17.40 261.50 79.70 12 389.70 0.00 18.80 17.40 273.80 79.70 13 402.50 0.00 18.80 17.40 286.60 79,70 14 415.60 0.00 18.80 17.40 299.70 79.70 15 429.10 0.00 18.80 17.40 313.20 79.70 16 443.10 0.00 18.80 17.40 327.20 79.70 17 457.50 0.00 18.80 17.40 341.60 79.70 18 470.50 0.00 18.80 17.40 354.60 79.70 19 483.90 0.00 18.80 17.40 368.00 79.70 20 497.70 0.00 18.80 17.40 381.80 79.70 21 511.90 0.00 18.80 17.40 396.00 79.70 22 526.40 0.00 18.80 17.40 410.50 79.70 23-39 (2011) 541.40 0.00 18.80 17.40 425.50 79.70 INTERNAL RATES OF RETURN FOR NET STREAMS 12.099 MOROCCO MEDCTT ERRAERN S ELECTRIC POWER SYSTEM (ONE) AL HOCýEMA 'ý GENERATING PLANTS BOUAREG. A HYDRO EXISTING OUJDA å SI EAM EXISTING 0 * GAS TURBINE. EXISING K 0 DIESEL. EXISTING MKENITRA * GAS TURBINE PR®~J1T S A HYDRG RI.RE PROJEGT RAB EL KAN ERAA MEKNES .GUERCIF 0 DEBDOU & STE AM FMI,TIlRE P.R®JECT , MOHAMMEDIA OUALI ROCHES NOIRES T)UL T v i iiSEFROU 2 K2K E X ISTNG ' 225KV RROJEC:7 150K K 'E XISTNG ODURA FUTZNFRAMISSOURTENRA 5 225KV(PROJECT) IM ÅDECHR A ERL OU ------- -150K- IS OR,UPGR ADIGR @225KV(NOT INCLUDED BOU ARFA INk,RROVECT SIDI CHEHO ---- - éGK ý EXISTING.DESIG NIED ,FOR I5OKV AFGUiGF SUBSTA1?.INSá(225IY 5K V) x-FiGUIG EJ) S EXIST, ING 2 K , \B INE EL OUIDANE - . 9 EXITINC-MARRAKIECH * REINFORCEDBYPROJECT RRAKEC - INTERNATIONAL BOCNDARIES YOUSSEF ERFOUD INDIGATES THE4TERRITORY OF THE -- RME SPANISHISAHARA (WESTERN TAKERKOUST SAHAR) QUARZAZATE Note: This map is based on-IBRD 10152, A November 1972, boundary changes AGADIR to reflect the current situation are the only changes made. ZAGORA 0 100 200 300 PPROX KILOMETERS SIDI IFNI GOULIMINE A L G E R I A Thns map han been prepared by the World Bank s stafl excl-ely for the conven,ence of the readers of the report to wh,ch tt is attached The denonations used and the boundaries showon o thos map do not rmpi, on the part of the -- Wvrd Bank and to alf!ateo any -dgrent on the legal sttus of m -·-... . any tertory or any endors ent (. or acceptance of such bondanes