Burundi - Power Transmission and Distribution Project

Document of The World Bank FOR OFMFCIAL USE ONLY CF. /6-93 3- Od6 Report No. P-4035-BU 'S REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE D-RECTORS ON A PROPOSED CREDIT OF SDR 12.9 MILLION TO THE REPUBLIC OF BURUNDI FOR A POWER TRANSMISSION AND DISTRIBUTION PROJECT S April 18, 1985 Thdisdocument s a restricted distribution ad may be used by recipients ony In the performance of their offidal dudes. Its contents may no othrwise be disclosed without Wodd Bak autbhorizaion.  Currency Equivalents Burundi Franc (BuF) BuF I - US$0.01 US$1 - BuF 117. US$1 - 1.04 SDR I.* Measurements GWh gigawatt hour - 1,000,000 kilowatt hours kcal kilocalorie - 3.97 British thermal units kV Kilovolt ' 1,000 volts kVA kilovolt ar!ipere - 1,000 volt amperes kW kilowatt - 1000 watts kWh kilowatt hour " 1,000 watt hours MVA megavolt ampere 1,000,000 volt amperes MW megawatt - 1,000 kilowatts mWh megawatt hour 1,000 kilowatt hours toe ton of oil equivalent - 10,500,000 kilocalories ton metric ton 1.1 US tons Abbreviations and Acronyms AfDB African Development Bank AfDF African Development Fund C.CCE French Central Agency of Economic Cooperation CEPGL . Economic Community of the Great Lakes EdF Power Company of France ESMAP Energy Sector Management Assistance Program FAC French Aid and Cooperation Fund FED European Development Fund GOB Government of Burundi GTZ Bilateral Aid of the Federal Republic of Germany IDC Interests during Construction MPWEM Ministry of Public Works, Energy and Mines REGIDESO Electricity and Power Company of Burundi SNEL Zaire Power Company  FOR OFFICIAL USE ONLY BURUNDI POWER TRANSMISSION AND DISTRIBUTION PROJECT Credit and ProJect Summary 'Borrower: The Republic of Burundi Amount: IDA Credit SDR 12.9 million (US$12.3 million equivalent)- Beneficiary: REgie de distribution d'eau et d'electricite (Regideso) Terms; Standard Relending Terms: The Government will relend US$12.0 million equivalent to Regideso at an interest rate of 9.29 percent, with a 20 years repayment period, including five years' grace. Regideso will bear the foreign exchange risk. Project Description: The main objectives of the project would be to assist the Government in (a) extending Burundi's transmission and distribution network (i) to improve the reliability and supply of electricity to Bujumbura and its environs, and Cii) to extend the availability of electricity to yet unserved markets; and (b) strengthening the financial performance, management and power planning functions in Regideso. The project would allow Burundi to make optimal use of the power from the Ruzizi II regional plant. Components: The project would include: (a) a 110 kV transmis- sion line (83 km) from Ruzizi II to Bubanza; (b) construction of 110/30 kV substations in Bubanza and Cibitoke, two 30 kV subtransmission lines (42 km) to supply four regional towns, a 15 or 30 kV feeder to Katumba and distribution networks in these towns; (c) construction of distribution networks to consumers in six low-income districts of Bujumbura; (d) rehabilitation of the Bujumbura substation and Bujumbura - Ruzizi I transmission line; (e) consulting engineering services, management assistance to Regideso, establishment of a training center and technical assistance for the training of Regideso staff; and (f) continuation of the dissemination program of improved charcoal stoves in Bujumbuza, and the services of an advisor to assist the Government in devising strategies to 'mport petroleum products at least cost. This document has a restricted distribution and may be used by recipients only in the performance of their ofricial duties. Its contents may not otherwise be disclosed without World Bank authorization-  - ii - Estimated Cost: 1/ Local Foreign Total Project Components US$ million equivalent Transmission an Distribution 110 kV Transmission Line 0.90 3.70 4.60 Bubanza Substation 0.65 1.10 1.75 Cibitoke Substation 0.35 0.60 0.95 30 kV subtransmission Lines 0.31 1.00. 1.30 Distribution Networks for 7 Regional Towns 0.15 0.55 0.70 Distribution Networks for 6 Bujumbura Districts 0.78 3.10 3.88 Training 0.23 1.40 1.63 Engineering, Technical Assistance Engineering Services 0.16 0.90 1.06 Management Assistance 0.18 1.00 1.18 Studies 0.02 0.20 0.22 Petroleum Adviser 0.01 0.10 0.11 Cooking Stoves Program 0.07 0.10 0.28 Base Costs 3.80 13.75 17.55 Contingencies: Physical 0.38 1.33 1.71 Price 0.57 1.97 2.54 Total Project Cost 4.75 17.05 21.80 Interest During Construction 2.70 - 2.70 Total Financing Required 7.45 17.05 24.50 Financing Plan: Local Foreign Total --USA million equivalent-- IDA 1.85 10.45 12.30 Other donors 2/ 0.70 6.60 7.30 Regideso 2.10 - 2.10 Government 0.10 - 0.10 Government (IDC) 2.70 - 2.70 Total 7.45 17.05 24.50 1/ Duties and taxes would not be levied on the project. 2/ CCCE, the Federal Republic of Germany (GTZ), and Belgium.  - $ii - Estimated Disbursements: IDA FY FY8b FY87 FY88 FY89 FY90 Annual 2.0 6.0 2.3 1.6 0.4 Cumulative 2.0 8.0 10.3 11.9 12.3 Staff Appraisal Report: Burundi Power Transmission and Distribution Project, April 18, 1985 (Report No. 5312-BU). Economic Rate of Return: Regional investment program: 8%. Benefits and Risks: The principal benefits of the proposed project would be Burundi's access to the least-cost source of electricity and extension of the electricity supply to hitherto unserved population groups. The project faces no special risk. Maps: IBRD 18516 Bujumbura Areas to be Electrified IBRD 18517 Burundi Power Transmission and Distribution Project.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF BURUNDI FOR A POWER TRANSMISSION AND DISTRIBUTION PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Burundi for the equivalent of SDR 12.9 million (US$12.3 million) on standard IDA terms to help finance a Power Transmission and Distribution Project. PART I - THE ECONOMY 1/ 2. The Last Country Economic Memorandum on Burundi (Report 4784BU) is dated December 26, 1984. The following section incorporates its findings and conclusions. Country data are provided in Annex I. Background 3. Burundi is a small, land-locked country in East-Central Africa. It covers a territory of 27,865 square kilometers (including its share in Lake Tanganyika), and has a population of 4.4 million inhabitants. With an estimated Gross National Product of US$240 per capita it is one of the world's least developed countries. The overall literacy rate was about 25% in 1982, morbidity is high, and basic social infrastructures are still lacking. Limited natural resources, population pressure, scarcity of qualified and experienced manpower, and isolation from main trade routes, characterize this extremely poor country. 4. Nearly 95% qf Burundi's population is rural, living on scattered homesteads. Bujumbura, the capital city, had about 165,000 inhabitants in 1982. Agriculture, mostly smallholders who grow subsistence crops and coffee, contributes 60% of GDP at factor cost and 90Z of merchandise exports. A few large farms grow sugarcane, tea and quinine. Other natural resources are scarce. Identified minerals include nickel, phosphate, petroleum, vanadium, some fluvial gold and calcium, but the economic justificatioa for their exploitation is still uncertain. Burundi's manufacturing sector is small, its growth being limited by the small size of the domestic market, the country's isolation from trade routes, vulnerability to disruptions in the external transport corridors, high transport costs, and the lack of skilled manpower. 1/ This part is substantially the same as that in the President's Report P-3526 BU on a Third Education Project, considered by the Executive Diretctors on April 23, 1985.  - 2 - 5. The country is the second most densely populated country in Africa, with a density of 155 per km2. Population pressure has led to declining soil fertility, soil erosion and deforestation. Although agricultural statistics are poor, there are indications that, in recent years, foodcrop production may have declined in per capita terms. Net population growth is projected at 2.7% p.a. during the current decade. (In the absence of migration, however, this growth would be higher; population could triple in thirty years). The implications of this rapid growth for health facilities, schools, employment and land availability are worrisome. IDA has emphasized the urgent need to initiate family planning programs. Although progress has been slow, the Government has recently acknowledged the problem, and a first family health project is being considered (para. 28). b. The country has an extensive road network. Main roads are passable all year. There is an international airport at Bujumbura. Burundi, however, remains dependent for most of its imports and exports upon two transport routes to the Indian Ocean through neighboring countries. The Northern Route, by highway from Bujumbura to Mombasa, Kenya, via Rwanda and Uganda is 2,020 km. in length. This route suffers from poor road conditions, and cumbersome administrative border procedures. The Southern Route, by barge down Lake Tanganyika, then by railway to Dar-es-Salaam, is 1,425 km. It tends to be inefficient because of long delays in clearing Bujumbura port, antiquated barges and disruptions on the Tanzanian railway. 7. Transport charges on these routes add significantly to the landed cost of imports. The passage of goods through neighboring countries is hindered by factors which are out of Burundi's control. Interruption of crucial supplies hinders project implementation and forces firms to hold large stocks of inputs and spare parts. In 1980, the Bank prepared a study of the external transport connections of Burundi and Rwanda. A more extensive study covering Burundi, Rwanda, Uganda and Eastern Zaire was carried out by UNCTAD. The findings and recommendations of these studies have assisted the countries and donor agencies to agree on action and priority investments. Several bilateral and multilateral meetings led, inter alia, to the Northern Corridor Transit Agreement which was concluded in Kampala in September 1984. The agreement will result in significant simplification of customs procedures at border crossings. On the Southern Route, a number of external donors have been financing improvements in physical facilities at the ports of Kigoma and Dar-es-Salaam. IDA is now preparing a report which will update and review the actions taken so far and will help to define priority policies and investments in regard to the international transport. Economic Developments: Goals and Performance 8. In the mid-1970s, Burundi's economic situation benefitted from several favorable factors: (i) a new Government, headed by President Bagaza, took power in 1976, ending a period of political instability; (ii) the prices of coffee in the international market tripled, resulting in substantial windfall profits and accumulation of public savings; and (iii) the level of foreign aid to Burundi increased considerably, in support of the new regime's stated commitment to economic development. These  - 3 - circumstances appeared to be a good omen for the Third Development Plan (1978-82), and expectations for an improvement in living conditions were therefore high. 6 9. The Third Development Plan (1978-82) included broad objectives such as the transformation of the economic structure; the mobilization of resources for production; the reduction of poverty, together with improved income distribution; and increased access to education and health services. Performance during the Plan period was relatively good especially in comparison with most of the Sub-Saharan countries. On the average, real GDP at market prices rose by 3.1% per year, with gross domestic investment averaging about 13.5% of GDP, far above the 8.0% share of the previous five years. The public sector took the lead in the investment effort, accounting for 90% of the total. Foreign donors financed about 60% of the expenditures. The growth in total value added was mainly due to the growth in the modern sector stimulated by public investment spending. The output of the subsistence sector which accounts for 85% r,f the population, grew more slowly than the population, widening the income gap between rural and urban dwellers. The investment program favored mostly the modern sector, and the effects of this investment on income and foreign exchange earnings were limited. Most of the projects were capital intensive and created few jobs; moreover, the protection extended to the new ventures made them inefficient and heavily dependent on imported materials, adding little to the country's foreign exchange earning capacity. 10. The financial situation, which was kept under control during the 1970's, deteriorated rapidly at the turn of the decade. This was due to two main factors: (i) deterioration in the terms of trade -- by 75% bet- ween 1977 and 1982 -- reflecting a decline in coffee prices and a doubling in import prices, notably of oil products, which pushed the current account deficit to about 12% of GDP; and (ii) insufficient and delayed response of the Government to the changing economic environment. To support the balance of payments, the Government relied mostly on a run-down of its reserves; it also increased restrictions on imports and on remittances of foreign exchange abroad. The Burundi Franc appreciated with respect to the curren- cies of the major trade partners, reflecting the appreciation of the US dollar to which it was pegged. 11. These unfavorable developments had serious consequences for the budget. The terms-of-trade deterioration reduced import capacity and led to budgetary problems, as the Government's receipts from coffee exports fell dramatically, necessitating cutbacks in imports and public spending. These factors as well as the poor agricultural conditions of 1982 led to a decline in income, which spread into 1983 and affected economic activity. The overall result was a widening of the resource gap, depletion of reserves, and an accumulation of payment arrears in the Government accounts. 12. During the 1978-82 period, Burundi was able to receive external financing on very soft terms. Grant assistance was substantial. In addition, external public borrowing during the period carried an average interest rate of only 2.4% and an average maturity of 31 years including  eight years of grace, implying a grant element of about 60%. Debt servicing remained, therefore, low -- at about 5% of exports of goods and nonfactor services in 1978-82. Bank projections indicate, however, a rapid increase to about 20-25% in the next few years due to the composition and terms of past borrowing. 13. The lesson of the Third Plan period is that Burundi must establish development priorities and select investment projects with great care. The linkage between macroeconomic planning and the selection of programs and projects needs to be improved. The private sector, nongovernmental organizations, and cooperatives must be enlisted to the maximum extent feasible to participate in the development effort. Sustained technical assistance will be needed for several years in order to strengthen the country's ability to identify, prepare, and carry out well-conceived plans and projects. 14. The year 1983 was the first year of the Fourth Development Plan (1983-87), which , as explained further below, incorporates an ambitious investment program of USS230 million per year (US100 million more than what was achieved in the Third Plan Period). The Government tried to raise its revenues in order to be able to carry out this ambitious program. New tax measures were introduced, notably increases of 50 to 100% in the rates of the most important taxes -- transaction tax, income tax and tax on beer consumption, which in the last years replaced coffee as the single main source of government fiscal revenue. By mid-1983, however, there were signs of increasing financial stress. The Government tried to cope with the situation by attempting to reduce the investment budget by 45%, but this proved difficult. While 80% of the investment planned for 1983 was actually implemented, this was obtained at a great cost: the public domestic debt increased substantially; unpaid obligations accumulated, representing (at end-1983) 30X of Government spending; and the overall budget deficit reached 5% of GDP. Economic growth, which had been negligible in 1982, remained marginal in 1983, with non-agricultural sectors registering an absolute decline. 15. In response to this difficult situation, the Government took a number of important actions. First, in November 1983, the FBu was delinked from the US dollar tto which it had been linked since 1976) and pegged to the SUR, with an implicit devaluation of about 30%. Second, in early 1984, the producer prices of the main export crops were raised to provide stronger incentives to producers. The coffee price was increased by 6%, the tea price by 3b%, and the cotton price by 17%. Third, in an attempt to balance the current budget, the Government increased the rates of the most important taxes (para. 13), froze public wages and salaries, improved the system of tax collection, and cut the recurrent subsidies to the parastatals. 16. According to preliminary and partial information, the year 1984 was another difficult year. Agriculture was adversely affected by the drought and foodcrop production may have fallen by as much as 5-6%. Cash crop production did not fare better: coffee production fell from a high of  3b,000 tons in 1983 to 27,000 tons, offsetting the increase in the output of other cash crops, notably tea. The modern sector has registered some real growth (owing to the partial liquidation of government arrears), but the poor performance of the primary sector caused total GDP to stagnate. On the financial side, both external and internal imbalances seemed to have improved. Partially, as a result of the last year devaluation, Burundi's trade balance improved. However, because of increased factor services payments and debt servicing charges, the current account deficit remained above 12% of GDP. The public finance situation has also improved. Revenues are estimated to be 20X higher than in 1983, reflecting (a) the impact of the devaluation on revenues from taxes on international trade; (b) reinforcement of tax collection procedures; and (c) improvement in the economic activity of the modern sector. Current expenditures were maintained at about the same level, in nominal terms, and capital outlays were reduced to their lowest level since 1979. As a result, the budgetary deficit was reduced from FBu6.5 billion to FBu3.4 billion (or from 5X of GDP to 3%). Sectoral Developments and Issues 17. The very rapid population growth in a country which is already overpopulated represents the most threatening constraint on economic development which Burundi has to face (para. 5). The Government of Burundi recently announced its intention to adopt a program to reduce population growth and to establish, as a first step, an Interministerial Family Planning Commission. One of the first tasks of this Commission will be to plan and develop a population program. Fertility reduction will require a strengthening in the management and planning capacity of the Ministry of Health, an improvement in the delivery of basic health services, as well as an increase in public spending on health, which declined in real terms in the last five years. 18. In Agriculture, the most important issues for future development relate to productivity increases, to soil protection, and erosion control. Food crop promotion is essential in order to assure sufficient supplies for a fast growing population. Better utilization of the country's traditional export crop potential and diversification into new export crops appears crucial because of limited possibilities for new export revenue earning activities. Priority actions to be undertaken in agriculture are therefore: promotion of applied research, in particular on food crops; strengthening and improvement of extension services; adequate and regular provision of inputs; initiation of immediate and longer-term measures to protect the country's agricultural potential; and amelioration of organization and operations of the three main export crop subsectors (coffee, tea, and cotton), principally through improvement in the management of agricultural public enterprises and through adequate pricing and stabilization policies. On the institutional side, further strengthening of agricultural planning, and project preparation and monitoring capacity appears crucial in order to assure effective design and implementation of projects. The concept of Regional Development Companies, which the Government established to promote integrated rural development,  needs to be carefully reviewed in order to adapt their design to the country's needs and possibilities, in particular in terms of finances and human resources. 19. Manufacturing Industry. Industrialization is constrained by the limited natural resources, low productivity of the industrial labor force and the acute shortage of managers, as well as by the country's small market, the low purchasing power of its population, the country's land-locked position, and difficult transport conditions which increase costs. Burundi does offer, however, certain advantages for industrial development: basic infrastructure is available in the major urban center at reasonable costs; the country's land-locked situation constitutes a natural protection for import substitution projects; and domestic finance is readily available to manufacturers. During the 1978-82 period, protectionist measures created a favorable climate for manufacturing expansion. Modern manufacturing value added grew at an average annual rate of nearly 10% in real terms, reaching about 5X of GDP in 1982. Most of this expansion has been oriented to the domestic market. Production remains typical of the first generation of import substitution, based on imported raw materials with exports limited to processed coffee, tea, cotton and a few other items. Capacity utilization is low because of the small size of the domestic market, high tariffs in neighboring countries, and high production costs. However, due to the monopolistic situation enjoyed by most firms and the *"cost-plus" system of price control, the sector is profitable. Since the mid-1970s, the Government has participated in a number of joint ventures with foreign interests and established public enterprises to manage large industrial operations that the private sector had avoided because of their complex management and large financial requirements. Most of these public enterprises have been created without an adequate financial structure and/or sufficient qualified personnel and are now a drain on the budget. The Government has recognized these problems and has taken some measures to deal with them. It created a Public Enterprises Commission (CGEP) to improve the efficiency of public enterprises, sell off enterprises to private investors when possible, and phase out those unlikely to become viable. Burundi faces a range of problems in the energy sector, which are reviewed in para. 30. 20. The Government has made a considerable effort to develop basic educatic and increase primary enrollments. Average percentages of capital and recurrent budgetary expenditures allocated to education are comparable to those of other African countries. However, they are high considering that the primary enrollment rate in public schools is only about 30% and cannot be increased given present budgetary constraints. Measures are therefore being taken to increase the share of resources which are devoted to basic education, through the adoption of cost saving measures at the secondary and university level, and to use these resources more effectively, in particular through the introduction of double shifting, and upgrading of teacher training. The Ministry of Education is also providing assistance to improve the quality and scope of education given in private schools and adult social centers.  -7- The 1983-87 Fourth Plan 21. The ?ourth Plan was presented at a Round Table meeting organized by the UNDP in February 1984. The Plan envisages real GDP (factor cost) growth of 3.7% per year between 1982 and 1987 and total investment of FBu1O7.2 billion (in constant 1981 prices), equivalent to about US$1,200 million. Barring an unforeseen and substantial improvement in coffee prices and a major inflow of fresh 'inancial aid, achievement of the Fourth Plan objectives does not seem likely. Given the prospective resource availabilities, perhaps not more than 60% of the intended investment would be feasible. Even with such a shortfall, external donors would have to provide 80 of total financing. 22. The Fourth Plan anticipates that 30% of the investment financing will come from domestic sources (20Z from the budget, 1OZ from bank credit and the private sector) and 70% from foreign aid. In fact, the Fourth Plan anticipates an annual average of US$160 million in foreign aid for project financing, which is almost twice what was received during the Third Plan period. A doubling of net external assistance, while not impossible, does not appear very probable; a more conservative figure would be between US$100-130 million per year. The Government may therefore have to cut the investment program. 23. Regional development in Central Africa will also be important to Burundi's economy. In September 1976, Burundi, Rwanda and Zaire signed a convention establishing the Economic Community of the Countries of the Great Lakes (CEPGL). The Community, which has its seat in Gisenyi, Rwanda, aims inter alia at stimulating and intensifying intra-regional trade and cooperation in a wide range of activities. A major objective of the Community is the electrification of the Great Lakes region. A first step is the Ruzizi Project, cofinanced by t'.-e European Development Fund, the regional Development Bank (BDEGL - see below), Italy, and IDA, which is about to start. A glass container project, which is the first major regional industry to be implemented under the aegis of the CEPGL, is underway. The three countries have set up a joint development bank (BDEGL) to finance regional development projects, in particular exploitation of methane deposits in Lake Kivu and development of a fishing industry around Lake Tanganyika. PART II - BANK GROUP OPERATIONS AND STRATEGY 24. The history of Bank Group operations in Burundi closely follows the three phases of the country's political and economic development since Independence in 1962. To the political turmoil of the 1962-1976 period corresponds a phase of limited operations (coffee production, highway engineering and maintenance and water supply). With the period of increased political stability came a rapid acceleration of IDA lending for  -8- agriculture and highways as well as an extension of assistance to new sectors: fisheries, education, industry and rural development. Financing was also provided to improve the telecommunications network, explore the feasibility of exploiting nickel deposits, and strengthen the capacity of the Ministry of Planning, and the management of urban services in Bujumbura. As of September 30, 1984, Burundi has received 23 credits totalling US$196 million; 10 credits, totalling about US$46 million had been totally disbursed. IDA is now one of the main sources of financial assistance to Burundi. 25. Project Implementation. Projtct performance has, on the whole, been satisfactory. The disbursement rate of 27X in FY82-84 is above the average for countries of the Eastern and Southern Africa Region. Physical implementation ef infrastructure projects or components (roads, schools, coffee stations, telecommunications) has been satisfactory. The nickel exploration project showed that the ore content of the mineral was lower than expected, and that exploitation of the deposit would not be economic in the near future. Implementation of the pilot local construction industry project has been hampered by the economic recession. In the productive sectors the record is mixed. While agricultural projects had some success in increasing the production and quality of coffee, and in increasing forest areas, they have had no apparent impact on developing food crop production because of the absence of technical packages which could be readily adopted by farmers and the lack of a coherent policy on agricultural inputs and services. The DFC Project failed to develop a pipeline of small enterprise projects in the industrial sector: the weak management of the Development Bank compounded the structural constraints of the country which cannot be overcome in the framework and time span of one project alone. Operations of the glass container company financed by IFC are affected by poor market conditions due to lagging beverage consumption, competition from cheaper imports in neighboring export markets and the lack of progress in the negotiations of preferential tariffs with Rwanda and Zaire. The fisheries project failed largely because it was too complex in relatioa to the institutional and management capacity of the implementing agency. The impact of the projects on Institutional Development has been mixed. In some projects (Highway, Coffee), the presence of an effective technical assistance team led to a successful project implementation but did not result in the strengthening of the capacity of local institutions. In the education and telecommunications projects, on the other hand, efforts in institution building and training have had good results, and the assistance provided under the Second and Third Technical Assistance Projects has strenghtened the capacity of the Ministries of Planning and Agriculture to identify and address key policy issues; select, prepare and mouitor projects; and improve coordination between them. Similarly, the urban project was successful in strengthening the Bujumbura municipality. IDA-financed projects have also provided a framework for policy discussions and decisions. Discussions under the Education projects led, inter alia, to the adoption of cost savings and cost-recovery schemes, a more equitable distribution of school facilities, reorganization of secondary education, and development of non-formal education for adults. The urban project has accomplished major changes in urban programs over the past several years including rhe lifting of rent ceilings and the adoption of cost-recovery schemes.  -9- 26. Economic and Sector Work and Evolution of Dialogue. In order to assist the Burundian authorities in defining the necessary adjustment policies, economic and sector work was intensified in the past two years. In the agricultural sector, the dialogue is focusing on the need to deemphasize rellance on complex, rural development projects and to improve research and extension services, diversify foodcrop production and export crops, design input policies, and promote the private sector. In the energy sector, our dialogue has contributed to focus Government attention and actions on key issues. The recent discussion of the manufacturing sector report has established the basis of a dialogue on industrial policy. In the transport sector our dialogue with Burundi and neighboring countries has contributed to the removal of some of the administrative bottlenecks on the northern route. The population issue has been the object of repeated discussions with the Government and is one of the main themes of our policy dialogue with Burundi. 27. Strategy. IDA's strategy places short-term stabilization efforts in the context of medium-term adjustment policies and long-term development programs designed to address the country's structural constraints. We plan to focus our assistance to the Government on the design and implementation of medium-term economic policies and actions so as to improve the efficiency of resource allocation through the strengthening of public sector management (investment selection, monitoring and aid coordination, parastatal management, reorientation in the management of the agricultural sector). While some recent adjustment measures show that Burundian authorities appreciate the need for demand management, there is only limited awareness of the options available and possible impact of measures aimed at increasing output and productive capacity. Our assistance in this area could have a critical impact. At the same time, IDA will continue to support long-term efforts to develop humar. resources, strengthen Institutions, and develop and maintain infrastructure which will have an indirect and long-term impact on production, as well as policies and specific project choices which would improve the equity of income distribution. Priority will be given to the design of an action program to control population growth. We believe that given the broad development needs of Burundi, and the need to strengthen the management capacity of the Burundian administration, it is important that the Bank remain active in the main sectors of the economy; only then will we be able to provide prudent and coherent advise to the Government on the overall management of the economy as well as sectoral issues and policies. No other donor or institution (with the partial exception of the IMF) is in a position to play this vital role. 28. In order to implement this strategy, our Economic work will include the review and monitoring of the investment program, studies to identify ways of increasing the efficiency of the public sector and a CEM (FY86-87). We shall work closely with the IMF to prevent duplication of efforts. As to Sector work, the emphasis will be on (i) increasing agricultural production including studies on land use issues, erosion control and agroforestry, export crops promotion and financial aspects of agricultural projects; (ii) raising industrial output, including a tariff study and a study on long term potential for industrial diversification and  - 10 - regional cooperation. In other sectors, such as transport, human resources, energy and mining, our sector work will be limited to updating and consolidating the results of previous studies. The lending program includes proposed projects in agriculture (agricultural services; foodcrops; forestry; export crops), human resources (education; health/ population); transport and communications; and energy. PART III: THE ENERGY SECTOR Background 29. Burundi's principal energy resource is its forest, half of which is natural, which covers about 6Z of the country. Peat is available in relative abundance but is not traditionally used. The potential for development of hydroelectric power exists but development is costly because sites are widely scattered and have low capacity. Recent reconnaissance work suggests the presence of oil under Lake Tanganyika and the Ruzizi plain. In the renewable energy subsector, the potential is limited. Biomass fuels (fuelwood, charcoal and animal residues) account for about 95Z of the total energy consumption, petroleum products about 4%, and electricity 1%. The possible substitutes for charcoal and firewood are electricity, kerosene and peat. Electricity for cooking at present tariff levels costs roughly the same as charcoal at present market prices, but the high cost of electric stoves and the connections are beyond the reach of most of the urban population. The cost Or imported petroleum products prohibits using kerosene for cooking except for the few affluent. Efforts have been made to supply peat as a cooking fuel, but to date it has no advantages over charcoal in cost or acceptability. Sector Issues 30. A UNDP/World Bank Energy Assessment mission 2/ identified Burundi's most pressing energy issues to be: (i) the rapid depletion of forestry resources and the fact that reforestation efforts compete for land with food and export crop production; (ii) the high cost of oil imports; and (iii) institutional weakness in the electricity subsector. The Government, with assistance from the UNDP/Bank energy management program and other donors has started to implement a program (i) to improve forestry sector management and policy; (ii) to reduce fuelwood demand by introducing more efficient firewood and charcoal cookstoves and kilns; (iii) to develop the use of peat as a substitute for wood, charcoal and petroleum products; (iv) to investigate alternative and contingency supply arrangements for oil imports; (v) to improve the transmission network and establish a strong unit for power planning; and (vi) to contract with an international company for petroleum exploration. 2/ Burundi: Issues and Options in the Energy Sector", June, 1982.  - 11 - Traditional Energy 31. Woodfuel and Charcoal. The Forestry Department of the Ministry of Agriculture and Livestock has launched a long te=m program aimed at: (a) developing plantations and rural nurseries to provide plants to farmers; (b) reinforcing forestry services; and (c) setting-up long-term pricing and marketing policies. This program is assisted under the IDA Forestry Project and by other donors, including Belgium, the Federal Republic of Germany, France, the African Development Bank, the European Development Fund and UNDP. More efficient charcoal production methods have been tested and promoted under the IDA First Forestry Project (CR-918-BU). Under the IDA Urban Development Project (CR-1049-BU) an improved charcoal stove was designed which provides fuel savings of 30Z compared to the traditional stove. A promotion program is to be launched to encourage the use of this stove. Efforts under the Forestry Project to design an improved woodstove have, however, been unsuccessful because the rural population is not accustomed to using stoves and has no monetary incentive to save fuelwood which it gathers at no monetary cost. Studies on present cooking practices and incentives to use improved cookstoves, as well as to design an economically acceptable cookstove and test its acceptance, would be needed before a promotion program could be launched. There are no immediate plans to proceed with such studies, however, pending discussions with Government of experience to uate, and the potential for achieving further progress in these efforts at reasonable cost. In the meantime, as noted above, efforts are being concentrated on improved efficiency in charcoal production and utilization, especially in urban areas. When a program has been agreed with Government for woodfuel stoves, the Association would be prepared to support its promotion. 32. Peat. Production problems keep the greater part of Burundi's abundant peat resources unavailable or prohibitively expensive. Questions remain about the technical feasibility of extracting peat in large quantities, the market and the environmental effects of large-scale exploitation of these peat resources. Production of peat is assumed to have reached 15,000 tons in 19F4. Consumption is very limited. The Burundi army purchases about 80% of all peat sold, and the remainder is sold to brickmaking operations, tea plantations, bakeries, hospitals, and to missions located near the bog sites. Peat is not used as a household fuel (pare 29). A report on peat utilization prospects completed in early 1985 under the ESMAP concluded that peat could substitute for oil for some industrial uses and recommended a demonstration project to test this approach. Commercial Energy 33. Petroleum. Petroleum exploration is underway (para. 29), but for the present, Burundi is entirely dependent on foreign sources for its supply of petroleum products. The major issues are related to the very high cost of imported oil and the vulnerability of the supply routes to interruption. In 1982 and 1983, the costs of petroleum imports accounted for about 16% of total merchandise imports and 37% of merchandise exports.  - 12 - The price established by the Ministry of Commerce and Industry in May 1983 of about US$85 per barrel is based on the price of products from the Mombasa refinery (i.e. including freight but exclusive of taxes). Price levels were last adjusted in December 1983. A consultant funded by ESMAP has established that the least-cost alternative would be to purchase finished products on the Middle East open market and transport them thcough the Dar es Salaam/Kigoma route provided that the reliability of this route was improved. This could yield savings of about 12 percent of the import bill. The Government has built additional storage tanks at Gitega. However, these tanks are empty as problems remain regarding the financing and the management of the stocks. The MPWEM is preparing contingency supply arrangements. 34. The Power Sector. Electricity currently provides about 23% percent of the commercial energy in Burundi. Only about two percent of Burundi's population has access to electricity. At present, Burundi's total installed capacity is 19.8 MW, of which 60% is hydro, ana the remainder is diesel. Electricity is supplied mainly from the Mugere hydro plant (8 Mw), from Zaire's Ruzizi hydro station (28 Mw) which supplies power to the interconnected system cf Kivu-Rwanda-Burundi, and frc.a -n old diesel station (5.5 Mw) in Bujumbura which is used as a standby. The output of the Mugere station may be reduced to 2 Mv in summer because of the lack of a storage reservoir. There are also many small hydro and diesel plants installed at isolated missions, farms, hospitals, and tea estates. Electric power from the Ruzizi I station in Zaire is supplied to Bujumbura via a 70 kV transmission line 115 km long, and a substation in Bujumbura owned and operated by the Zairian power company SNEL and from the Mugere generating station via a 35 kV transmission line (25 km). The capacity of the Ruzizi I-Bujumbura line is about 9.5 MW and was reached in 1981. The substation needs to be rehabilitated. Regideso's 30 kV transmission lines total only about 36 km. A 15 kV transmission line, owned by SNEL, supplies power to Uvira in Zaire from the Bujumbura substation. The total length of the transmission and distribution network is about 420 kms. The inadequaote coverage and unreliability of the network are at present among the main constraints on the development of the power sector. 35. Power Demand. Since 1979, the average annual growth in demand has been about 13%. The greatest increase has been in demand from industry, which reached 17% annuallv in 1980 and 1981, and 43% in 1983. Growth in the domestic sector has averaged about 11% annually since 1979. Total consumption rose from 35,828 MWh in 1979 to 57,815 MWh in 1983, while the peak demand increased from 7.1 MW to 12.0 MW during the same period. Total sales of Regicaso are projected to increase from 74 GWh in 1985 to 116 GWh in 1969 at an average annual rate of 11%. Regideso 36. Regideso is a parastatal company which is responsible for the generation, transmission and distribution of electricity; and for the pumping, treating and distributing of water in urban areas. Regideso has a monopoly on che distribution of electricity the country, but in fact it only operates in the urban centers of Bujumbura, Gitega, Muramvya, and  - 13 - Bururi for electricity and in these and six other towns for water. The electricity and water operations were organized jointly originally, because of the scarcity of qualified management personnel. Electricity and water accounts have, however, been separated. Now that the organization has grown, the advisability of separating electricity and water operations should be reviewed. Regideso operates under the supervision of the MPWEM through a Board of Directors. The Board is carrying out its responsibilities in a satisfactory manner without excessive Government interference. Rowever, major investment decisions are made by the MPWEM and tariffs are decided by the Government. The present general manager was appointed to his position in March, 1985. He had previously been technical manager for eleven years, in which capacity he proved to be competent and efficient. In general, the responsibilities of the senior staff members are carried out in a satisfactory manner but their support staff lack appropriate skills in marketing, accounting, budgeting and forecasting. Currently four expatriates, two senior advisors and two technicians, financed by the Federal Republic of Germany, work for the electricity and water divisions. Regideso employs a total staff of 636 which is about average for its size as an electricity and water utility in Africa; but the ratio of staff to consumers, now 1:18, needs to be reduced. The financial situation of Regideso is weak. In 1983, the financial rates of return on revalued assets for electricity and water operations were 2.1% and 5.8%, respectively, resulting in an overall low financial rate of return of 2.8%, reflecting inadequate electricity tariffs and high operating expenses for both electricity and water. The current ratio of 2.6 reflects the excessive level of receivables for consumption of electricity and water, which were equivalent to eleven months of billing as of December 31, 1983. The debt/equity ratio in 1983 was 61:39, which is high. In July 1984, Regideso retained the services of a consulting firm to carry out a management diagnosis and define methods to improve Regideso's accounting, finance and investment planning, financed under the Project Preparation Facility. The report was completed in March, 1985. Rural Electrification 37. Rural electrification is the responsibility of the Rural Hydraulics and Electrification Department (DHER) of the Ministry of Rural Development, which was created in 1979. Since then, it has successfully brought into operation 5 mini-hydro generating stations (0.05 to 0.24 MW), two diesel generating stations (both 0.09 MW), and about 27 km of subtrans- mission and distribution lines. Two new generating stations are under construction as well as about 16 km of transmission lines. There is little coordination between. DHER and Regideso. The selection of projects 's generally determined according to the lending agency's preference. Upon completion of works, the operation, maintenance, and financial obligations are left to the recipient, i.e., hospital, school, or local government agency, with the result that the maintenance is sometimes inadequate, and funds for replacement parts are not available. One of the tasks of the management assistance to Regideso under the Project, would be to make proposals regarding control of project selection and operation.  - 14 - The Government's Strategy in the Power Sector 38. The strategy of the Government in the power sector has been to reduce its dependency on foreign sources for the supply of electrical energy, which it regards as being vital to the economy and the security of Burundi. Thus it has given top priority to the development of the Rwegura hydroelectric project which in IDA's opinion was not the least cost solution but is located within Burundi's borders. Burundi also decided to participate in the Ruzizi II regional project which will be needed to meet projected demand in Burundi from 1990 on. IDA Strategy in the Power Sector 39. The Association's objectives in the power sector are: (i) to help create a sound and efficient power supply organization through training and substantial upgrading of its managerial, financial and technical performance; and (ii) to support the least-cost expansion, in particular through regional cooperation, of electric generating capacity and the supply of electricity to unserved areas of the country. In support of these objectives, in 1983 IDA participated in the financing of the regional Ruzizi II Hydroelectric Project (Credits 1419-BU, 1420-RW, 1421-ZR). Funds for comnlementary works for the rehabilitation and expansion of the Rwandese dlectricity network were approved in June 1984 (CR 1495-RW), and Zaire has requested funds for similar works in the Kivu province; the proposed project would allow Burundi to make optimal use of power from the Ruzizi II regional plant. PART IV - THE PROJECT 40. The proposed project was prepared by Regideso with the assistance of consultants (Electricite de France International, France) and the Association. It was identified in October 1982, prepared in July 1983 and appraised in June/July 1984. A report entitled 'Burundi Power Transmission and Distribution Project" (No. 5312-BU, dated April 18, 1985), is being distributed separately to the Executive Directors. Negotiations were held in Washington from March 27 to April 1st, 1984. The Burundese delegation was led by Mr. Simbarakiye, General Manager of Regideso. The main features of the credit and project are given in the summary at the beginning of this report and in Annex Ill. 41. The proposed project would assist the Government in: (a) extending Burundi's transmission and distribution network by (i) improving the reliability and supply of electricity to Bujumbura and its environs, and (ii) extending the availability of electricity to yet unserved markets; (b) strengthening the financial performance, management and power planning functions in Regideso; (c) providing technical assistance services to obtain the most reliable and least cost arrangements for oil imports; and (d) continuing the stove dissemination program started under the Urban Development Project (CR 1049-BU). Feasibility studies, tariff and management studies, and assistance to Regideso for the bidding and analysis of tenders were financed under an advance from the Project Preparation  - 15 - Facility. Regideso would be responsible for the Laplementation of the power transmission and distribution component. The stove component and the petroleum import component would be under the responsibility of the MPWEM. Project Description 42. The project would include: (a) Extension of the Transmission and Distribution System - construction of a 110 kV transmission line connecting the Ruzizi II hydro plant to the Burundian network, and of 110/30 kV substations in Bubanza and Cibitoke, two 30 kV subtransmis- sion lines (42km) to supply the regional towns of Rugombo, Mparambo, Mpanda and Muzinda, a 15 or 30 kV feeder to Katumba and distribution networks in these towns; - extension of the low voltage distribution network to low- income districts of Bujumbura. - rehabilitation of the Bujumbura substation and Bujumbura-Ruzizi I transmission line. (b) Technical Assistance and Training to Regideso - consulting engineering services for construction works; - management assistance; - establishment of a training center and technical assistance for the training of staff; (c) Technical Assistance to the MinistrU of Public Works Energy aud Mines - continuation of dissemination program for improved charcoal stoves in Bujumbura; and - assistance to the Government in devising strategies to import petroleum products at least cost. Transmission and Subtransmission Lines 43. Feasibility studies concluded that the proposed route from Ruzizi II to Bubanza and Bujumbura (see map 18517) for the transmission line was the least-cost solution. The line would cross the Zairian and Rwandese territories. It would be a coadition of effectiveness of the credit that Burundi has obtained from Rwanda and Zaire rights sufficient to allow free access to their respective territories as necessary for the construction, operation and maintenance of the transmission line (Section 6.01(e) of the draft Development Credit Agreement). The 30 kV subtransmission lines would supply Rugumbo and Mparambo from Cibitoke (21km), and Mpanda ana Muzinda from Bubanza (21km).  - 16 - Cibitoke and Bubanza Substations 44. Additional switching and control equipment would be provided at Ruzizi II to permit power to be transmitted directly to Burundi. An intermediate substation at Cibitoke would contain a 110/30 kV transformer with the necessary switching and protective equipment with provision for a 30 kV line towards Mparambo and Rugombo in tne north. The major switching station at Bubanza would provide for the incoming 110 kV lines from Rwegura and Ruzizi II and one outgoing line to Bujumbura. Space would be provided for a second line to Bujumbura, for extension of a 110 kV line to Matongo, a potential mining center, and to Gitega. Two 110/30 kV transformers would be provided, one for local supply and the other as a stand-by. Distribution Extensions 45. About 13 km of 10 kV, and 100 km of 400 kV distribution lines, and 30 transformers would be installed to connect 3,300 new consumers in six low income districts of Bujumbura. To develop the distribution networks in the regional towns north of Bujumbura. about 20 km of 400 kV lines and 21 transformers of various capacities would be installed to connect about 360 consumers. The town of Katumba, about 15 km from Bujumbura would be provided with electricity from the Bujumbura-Uvira line, owned by SNEL, by a short feeder line. Bujumbura Substation and Bujumbura-Ruzizi I Transmission Line 46. Rehabilitation needs of the Bujumbura substation and the Bujumbura Ruzizi I transmission line, now owned by SNEL, would also be financed from the proposed project. The transfer from SNEL to Regideso of legal rights adequate to protect the interests of Regideso and the Association would be a condition of disbursement for this component (Schedule 1, 4(b) of the draft Development Credit Agreement). Consulting Engineering Services 47. Regideso would employ engineering consultants satisfactory to IDA ;(a total of about 110 staff-months) for the preparation of bid documents, evaluation of bids and construction supervision for the power transmission - and distribution components (Section 2.06 of the draft Project Agreement). Management Assistance to Regideso 48. On the basis of the conclusion of the management study, Regideso is preparing an action plan to strengthen its management performance and to improve its administra..ive and financial operations. It would be a condition of effectiveness of the credit that Regideso and the Association have agreed on this plan of action (Section 6.01 (b) of the draft Development Credit Agreement). The action program would be implemented with the assistance of a management team, to be employed by December 31, 1985 (Section 2.07 of the draft Project Agreement).  - 17 - Invastment Program and Studies 49. With the assistance of the management team, and of an engineering consultant, a ten year least-cost development plan for investments in the electricity sector, would be prepared. This plan would take into account potential regional projects and demand, would be prepared by June 30, 1986 taking into account the views of the Association, and thereafter would be reviewed with the Association annually (Section 4.03 (a) of the draft Project Agreement). Regideso would not, without prior consultation of the Association, commit itself to any single capital investment in excess of USO5 million and would ensure that every Investment in the electricity sector would be economically and financially justified (Section 4.03 (b) of the draft Project Agreement). A study for defining optimal standards and charges for electricity connections would be prepared by June 30, 1986, reviewed with the Association within three months, and its recommendations implemented promptly after completion of such exchange of views (Section 2.09 of the draft Project Agreement). The project would also finance a tariff study in 1987/1988, a revaluation of Regideso's assets at the end of 1984, and the audit and revision of Regideso's account for 1984. Audits for 1985 and beyond will be financed from Regideso's own resources. Training 50. Regideso does not presently have a training program. The project would finance the building and equipment of a training center and technical assistance to train the staff of the Technical and of the Administrative and Financial Departments. A Manager of Training and three training specialists and their counterparts satisfactory to the Association would be appointed by October 1st 1985.5 and would initiate prior to September 1, 1986, a training program satisfactory to the Association for the electricity department and the financial and administrative services of Regideso (Section 2.08 of the draft Project Agreement). Technical Assistance to the MPWEM 51. Charcoal Stoves. This component would continue in 1987 and 1988 the stove dissemination program which is to be launched under the ongoing Urban Development Project (para. 31). 52. Petroleum Imports. The project would finance the services of an advisor to MPWEM, to be employed by December 31, 1985, who would assist in formulating strategies to obtain imported petroleum products at least cost, develop pricing policies for the sale of these products within Burundi, and train staff of the Ministry (Section 4.02 of the draft Development Credit Agreement). Cost Estimates 53. The total project cost is estimated at about US$21.8 million equivalent, excluding interest during construction, of which US$17.0 million (78%) are foreign costs and US$4.8 million (22%), local. Interest during construction would amount to US$2.7 million. Physical contingencies of 10 were added to each component to provide an allowance for unforeseen  - 18 - increases in the volume of work. Price contingencies were added on local costs as follows: 1985:18%; 1986:12%; and 1987-1988:10%; and on foreign costs as follows: 1985:5%; 1986:7.5%; 1987:8%; 1987-1988:8%. In addition, the eftect of the estimated difference in the domestic and international in-'lation rates on the exchange rate of the BuF to the US$ over the construction period of the project, was computed and added to the foreign cost in the BuF tabulation. The cost of engineering services is estimated to be US$1.0 million of which US$0.8 million would be in foreign exchange. The cost of the services of the management team would be about US $0.8 million. A summary cost table appears in the Project and Credit Summary. Financing Plan 54. External financing, totalling US$19.6 million, would cover 9O0 of the estimated project cost, representing 100% of the foreign exchange cost and 53% of the local cost equivalent. Base costs are in January 1985 prices. The IDA credit of US$12.9 million would finance 56% of the estimated project costs and about 72% of the estimated foreign exchange component. The IDA credit would finance the construction of the transmission line and substations, engineering service, management assistance, part of the training component, the services of the petroleum advisor, the cookstove program, and studies. It is expected that cofinanciers would provide US$7.3 million equivalent. The CCCE would finance distribution extensions in Bujumbura and the construction of distribution extensions to the regional towns. Belgium is considering the financing of the 30 KV subtransmission lines. The Federal Republic of Germany (GTZ) would provide technical assistance services and equipment for training. Interest during construction amounting to US $2.7 million, would be financed by the Government. The Government would lend to Regideso short-term funds necessary to meet the local costs of construction under the project. These funds are estimated at US$2.1 million equivalent, to be repaid by Regideso in four years (Section 4.01 of the draft Development Credit Agreement). The fulfillment of all conditions precedent to disbursement of cofinancier's funds would be a condition of effectiveness of the credit (Section 6.01 (d) of the draft Development Credit Agreement). 55. The proceeds of the IDA credit allocated to the revenue-generating power component (US$12.0 million) would be relent by the Government to Regideso for 20 years, including a five year grace period, at an interest rate of 9.29 percent. Regideso would bear the foreign exchange risk. Signature of the Subsidiary Loan Agreement between the Government a/d Regideso would be a condition of effectiveness of the Credit (Section 6.Vi (a) of the draft Development Credit Agreement). Procurement and Disbursement 56. The materials and equipment including construction services, to be financed by the proposed Credit would be procured in accordance with the Association's guidelines. The planned procurement procedures are summarized in Annex 4. The selection of experts and consultants would be in accordance with the Association's guidelines. The proceeds of the Credit would be disbursed over five years on the following basis: 90% of the total cost of the contracts for the 110KV transmission line, and the  - 19 - Bubanza and Cibitoke sub-stations; 902 of the cost of construction and equipment of the training center; and 1002 of the foreign cost of the services of the petroleum adviser, of the cooking stove program, and of the engineering services, management assistance and studies. In order to ensure that funds would be made available when needed, a Special Account, operated by Regideso and financed by the project, would be established in the Bank of Burundi. An initial deposit of US$500,000 would be made from the Credit at the time of effectiveness; the account would be replenished on the basis of documentary and other evidence, to be provided to the Aesociation by Regideso, of payments made from the account for goods and services required for the project (Section 2.02 Cc) and Schedule 3 of the draft Development Credit Agreement). Regideso's Finances 57. Tariffs. Electricity tariffs were last increased by 20 percent in January 193 This increase is adequate to meet project and investment requirements and yield a rate of return on net fixed assets of 3.82 in 1985, which would be an improvement over the 1984 performance. Regideso and the Government are now reviewing the tariff structure for electricity, one of the objectives being that the average tariff would progressively increase and approach the long run marginal cost of power by the mid 1990's. On the basis of this review, a new tariff structure, acceptable to the Association, would be established and become fully effective by January 1, 1986 (Section 4.04 of the draft Project Credit Agreement). Thereafter, Regideso and Government would review the tariff structure annually, and modify tariffs as necessary to produce revenues sufficient to earn the agreed rates of return on net fixed assets of not less than 4.0% in 1986 and 1987; 4.5% in 1988; 6.5% in 1989; 8% in 1990 and thereafter (Section 4.05 of the drafE Project Agreement). Water tariffs would be revised each year to levels necessary to ensure that revenues from water supply operations would cover operating expenses and debt service and provide a reasonable contribution to the water supply investment program, representing no less than a percentage of overall capital expenditures over a three year period as determined in the tariff study being carried out under the Bujumbura Water Supply Project, financed by AfDB, and agreed with the Association (Section 4.06 of the draft Project Agreement). 58. Arrears. As of December 31, 1983 total receivables for consumption of electricity and water were equivalent to eleven months of billing. The amounts of receivables for electricity and water consumption would be reduced to six months of billings by the end of 1986, and four months of billings by the end of 1987, for Government and municipalities, and would be reduced to four months of billings by the end of 1985, and three months of billings for clients billed each month and four months of billings for clients billed every two months by the end of 1986 (Section 4.08 of the draft Project Agreement). Agreement with the Association on an action plan to reduce Government's and municipalities arrears would be a condition of effectiveness of the Credit (Section 6.01 (c) of the draft Development Credit Agreement).  - 20 - 59. During the period 1985 to 1989, total sales of Regideso are projected to increase from 75 GWh to 116 GWh at an average annual rate of 11%. Electricity tariffs are expected to increase in real terms at an average annual rate of 10.5X. The operating ratio would decrease during the period from 77X to 57Z, because of the tariff adjustments and better control of costs. Based on its recent performance, Regideso may have difficulty for the next two or three years in generating adequate funds to meet its cash requirements and finance its investment program, and may have to undertake short-term borrowings from the Government or other sources to ensure coverage of all operating and capital investment needs. As Regideso's present debt coverage performonce is only marginally acceptable (para. 36), Regideso's total indebtness would be monitored carefully and Regideso would not incur debt unless internal cash generated for the twelve months preceding incurrence of the debt is at least 1.5 times the maximum debt service requirements for any succeeding year (section 4.07 of the draft Project Agreement). Accounting and Auditing bO. Regideso would have its accounts audited annually by an independent auditor acceptable to the Association, and would submit to the Association the audited financial statements and auditor's report as soon as possible, and beginning in 1986 no later than six months after the end of the fiscal year (Section 4.01 (b) of the draft Project Agreement). Regideso would continue to maintain separate accounts for its electricity and water operations and would incorporate therein an annual revaluation of its fixed assets in operatioa (Section 4.02 of the draft Project Agreement). Economic Benefits 61. Construction of the transmission line is part of the regional development program started with the construction of the Ruzizi project. Therefore the economic rate of return for the project has been recalculated for the overall regional power development program, on the basis of the cost of the hydro facilities and the transmission distribution networks planned for Rwanda, Burundi and Zaire, and is estimated to be about 8X, based on an average regional increase of 10% in the demand for electricity. This is however, a very conservative estimate of the true economic rate of return since there are consumer benefits which are not captured in this estimate and which derive from the availability of hydropower rather than higher-cost, diesel-generated power that some consumers would be ready to buy. Feasibility studies have concluded that the proposed route for the 110 kV transmission line represents the least cost solution. For the substations and subtransmission lines and distribution in regional towns, economic analysis was carried out separately for three project groups, and the following rates of return were estimated; Cibitoke: 17X, Bubanza 11%, and Katumba 11%. The rates of return of the proposed distribution extensions for low income districts of Bujunbura were found to be as follows: Cibitoke, 1OZ; Bwiza, 20%; Buyenzi, 14%; Kinama, 10; Musaga, 13%; Kamenge, 15%.  - 21 - Risks and environmental considerations 62. The physical risk associated with this project would be small because the construction of the transmission and distribution facilities would use commonly known and well-tried practices. The main risk would be institutional, as Regideso Is a weak organization and may have difficulty in managing the proposed project. However, this risk would be minimized by the use of competent consultants to assist Regideso and by the recruitment of a management assistance team. The training component is expected to increase staff skills, particularly during the later stages of the project. The effects on the environment would be minimal. PART V - LEGAL INSTRUMENTS AND AUTHORITY 63. The draft Development Credit Agreement between the Republic of Burundi and the Association, the draft Project Agreement between REGIDESO and the Association, and the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement of the Association are being distributed to the Executive Directors separately. 64. Special conditions of the project are listed in section III of Annex III of this Report. Special conditions of effectiveness would be: (a) agreement between the Association and Regideso on an action plan to strengthen Regideso's management; (b) agreement between the Association, the Government and Regideso on an action plan to reduce the Government's and municipalities arrears; (c) assurance that Burundi has obtained rights necessary for the construction, operation and maintenance of the transmission line. A special condition of disbursement against the rehabilitation of the Bujumbura substations and Bujumbura-Ruzizi I transmission line, would be the transfer of legal rights from SNEL to Regideso. 65. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 66. I recommend that the Executive Directors approve the proposed Credit. A. W. Clausen President Attachments Washington, DC April 18, 1985  22 - AIGAnnex I T A L e 3 Page 1 of 5 URNIDI - SOCAL INDICATORS DATA SHECT mUIDI RBMSESCS =FOUPS (tBbfhlT"D AV ) La OIITS (MST aNCUT ESTDIrAC ) lb RCNTi LOW INCOM11 AFPRICA MIDDLE T m 196bt i97aLe ESTWATLb SOUTM or SAHARA ARxCA *. or SAHARA A L (TuSm Q-. u) TOSAL 27.8 27.9 27.8 ACRICULTWUAL 15.6 19.8 22.3 C1rn CAPW u (cum 60.0 110.0 280.0 l/ 249.1 1112.9 mcT aumumwiou MR CPITA (KILOS A W OP OIL EQUIVALENT) 6.0 7.0 15.0 62.6 59.0 FOPILATIOEAD AVITA STATICS POPULATION.NID-TYR (THOUDS) 2927.0 3350.0 4346 0 URDA POPULATION (2 o0 TOTAL) 2.2 2.2 2:4 1/ 19.2 29.7 POPULATION PRO3ECTIONS POPULATION IN TA 200 (HILL) 7.4 STATIONARI P')PULATION (HILL) 26.7 POPULATION YOM 1.9 POPULATION DENSITY PER SQ. It. 105.2 120.4 1-2.0 3/ 32.5 55.9 PER SQ. Wt. ASh. LAND 188.2 179.2 190.0 119.2 111.5 POPULATION ACE STRUCTURE (XC 0-14 RltS 42.6 43.8 44.2 45.6 45.4 15-64 YRS 54.6 53.2 52.7 51.5 51.7 61 AND AOVE 2.9 3.0 3.1 2.9 2.9 POPULATION GROTH RATE (2) TOtAL 1.6 1.3 2.2 2.8 2.a URAN 1.8 1.3 2.8 6.2 5.2 CRUDE BIRTH RAE (PER TNCUS) 45.2 46.3 46.5 49.6 47.0 CRUDE DEATH KATE (PER THOUS) 25.2 24.3 19.2 17.7 15.2 GROSS REPRODUCTION RATE 2.7 2.9 2.9 3.2 3.2 FAMILY PLUWNG ACCEPTORS, NUL (TOUS) USERS (Z OF HARED WCN) .. . FOOD AM N7rIe=N INDEX OF FOOD PROD. PER CAPITA (1969-71-1Wo) 103.0 100.0 96.0 85.6 91.6 PER CAPITA SUPPLY OF CALORIES (I OF REQUIRENrS) 95.0 102.0 95.0 86.4 98.2 PRTINS (GAMS PER DAT) 59.0 63.0 60.0 49.9 56.7 OF 1IUCH ANMAL AND PULSE 29.0 31.0 31.0 /e 18.3 17.0 CHILD (ACES 1-4) DEATH RATE 31.0 29.4 23.5 23.8 1J.7 HEALTH LIFE EXPECT. AT BIRTH (YEMS) 38.6 41.5 46.5 48.4 51.7 INFANT HORT. RATE (PER TOUS) 143.0 136.0 123.0 117.5 102.7 ACCESS TO SAFE WATER (ZPOP) TOTAL .. .. .. 21.8 35.6 URIUN .. 77.0 94.0 1d 61.5 54.1 RURAL .. .. .. 14.2 27.3 ACCESS TO EXCITA DISPOSAL CZ OF POPULATION) TOTAL .. .. .. 32.0 URBAN .. 96.0 95.0 Jd 69.2 RURAL .. .. .. 24.8 POPULATION PER PHISICIAM 989D0.0 5530.0 45020.0 la 27477.6 11948.3 POP. PER NURSING PRS0N 4640.0 7490.0 6180.0 77 3396.2 2248.9 POP. PER HOSPITAL BED TOTAL 900.0 740.0 .. 1019.0 986.9 URMAN 30.0 110.0 .. 395.2 368.7 RURAL 3810.0 1070.0 .. 3094.0 4012.1 A#MtSSIONS PCR HOSPITAL BED .. .. AVERAGE SIZE OF HOUSEHOLD TOTAL .. .. 4.3 /d URBAN .. .. 5.57d RURAL .. .. 4.3 7 AVERAGE NO. OF PERSONS/RO0H T0TAL .. .. UBrN .. .. . .. RURAL .. .. ACCESS TO ELECT. (Z oF DOELLINGS) TOTAL .. .. 0.6 Id URBN .. .. 22.5 7. ; ~~~~RURAL .. .. . ..  - 23 - Annex I TAIL! 3I Page 2 of 5 JWUIIDS ~~~- SOCL'L 7 1 . mi ~ MeWJT t"D t xusm AlAos]L ADJUUSD HLRLh RATIOS PIAY TAL. 16.0 29.0 32.0 69.2 91.0 HALE 27.0 31.0 40.0 71.6 90.3 L 9.0 19.0 25.0 37.6 73.6 *ICOUDARYa TOTAL 1.0 2.0 3.0 13.1 17.4 KALA 1.0 3.0 4.0 17.6 23.7 DOULI 1.0 1.0 2.0 8.3 14.5 VOCATIONAL (Z OP SZCONDT) 35.0 13.6 15.7 7.2 5.3 PUflLX-TAOIE PtATLO PRIMARY 36.0 37.0 39S0 46.1 36.6 *SCGNUtAY 15.0 11.0 2160 /c Z5.9 24.3 ADULL LITERACT RATE (Z) 13.9 Lf .. 25.0 44.3 35.6 PASSCBENR CARS/TROUSAND POP 1.0 I.I 1.3 I 3.6 20.7 RADIO RECEIVERS/TNOUEAND POP .. 19.4 36.5 41.9 100.8 TV ECEIVERBTOUSAND POP .. .. .. 2.0 1. NEWSPAPER (SDAILT GENEAL INTEREST-) CIRCUTION PE THOUSAND PONILA1TON .. 0.1 0.4 | 5.4 17.2 CINDI AUIAL ATTZNDANJCZCAPITA 0.1 /f 0.0 0.0 1.4 0.3 TOTAL LA FORCE (THOUS) 1534.0 1676.0 2032.0 FDIALE (PERCENT) 45.9 45.3 44.6 36.5 33.6 AGRICULTURE (PERCENT) 90.0 67.0 64.0 77.4 57.1 INDUSTRY (PERCENT) 3.0 4.0 5.0 9.8 17.4 PARTICIPATION RATE (PZRCEZT) TOTAL 52.4 50.0 46.8 41.0 36.3 HALE 56.3 56.0 53.2 52.1 47.6 FPUKLE 46.9 44.4 40.6 30.2 25.1 ECNOMIC DEPENDENCY RATIO 0.9 0.9 1.0 1.2 1.4 PERCENT OF PRIVATE IlCaU RECEIVCED F HICHST 52 OF ROUSEWLOS .. HICGEST ZO OF HOUSEHOLDS .. LowEST ZOS OF SOUSEIS .. .. LOWEST 40S OF HOUSEHOLDS .. ESTIMATED ARSOLUTE POVRY INCOME LEVEL (US$ PER CAPITA) URSAN .. .. 213.0 /b 16S.3 525.3 RURAL .. .. 136.0 90.8 249.0 ES1I1MTED REIATIVE POVERTIY INCOME LEVEL (Uss PER CAPITA) URBAN .. .. .. 107.7 477.4 RURAL .. . 37.0 lb 65.0 186.0 ESTIMATED POP. ILW ABSOLUTE POVERTY INCOME LEVEL (2) URBAN .. .. 55.0 /h 34.7 RURAL .. .. S5.0 7E 65.4 .. NOT AVAILABLE NOT APPLICABLE N O T E S /a The group averages fo; each indIcator .re pnpulation-vagbhted arithtmtic mamn. Coverage of countrIes mog the IndIcators deped' on avsilabilicy of data and la not unlform. lb Unlearn otherwise noted, -Dots for 1960- refer to any year betwee 1959 and 1961; 'Data for 1970" between 1969 and 1971; and data for "Mot Decant Estimte" between 1980 and 1982. /c 1977; Id 1979; /s 1975; /f 1962; I, 1976; l 1978. The following figures reflect the mat recent ailable *asmteat JUNE. 1964 11 240; 2/ 5; 3/ 155.  - 24- Annwx I mmcci cliatic at. es sec at, Its .aet ~eatewMenvee V Ic-Mgeccca a, * a-ge=. of 5 me...4&1"& IISAI....4M fl-Plro"0..Miv I.ol.t ec caebce4lmle icdI ntilb.. it cale"' m'sc em aced tUa hat I is.- ef.tmt.wadiaccmlo. aancptlc es.aa ci le cwl aiadeeled altal leaad mcapt.acadby dl-.ianasci-ac a. sllVetmu em d... l atams Ie.caaahalsa. marae decit.sedn a cgladi meIc. caicad. tad itpecieecc earltsi calc deticracts. Iecac a.c- ec. lb. nea.- d n sac NItL at. e- -atipY NOcW.. atM-1a. a -ia .'Vc -d Ill sicacets ceast tickcaat heat.. ceae.e L.csi thea th -clay cdow ci lb- ecbsa itchy maccpa far Nio la-cat I lcpn.ra aesap Moec 'IldcTasttcvc m et o seaaba.. lscI Icc.clac atetmilat. Cc- chapcleaeasea jar. eta Poorn. N . si Ppclels CeWtm I sLeaosli Sm.-d fat catb 6 i lets, Nl sd ac. -dci. mic laltec, S at.l .eaea.ea "I rag t. dee. .e etc easeealar isa th aeci, ciW. aThee.acea at.- . lilac dINaad aI. c-ccl take Il t .1 dc.tOlic aie.ci.t cc ha eatecd e aset sand spI.Ia- ew-ee - salSLAM. ooe. ssci act, n i'i.I Icapaateaac F- ads... MaCace-s-at Iii tsalkpda laeala dccco.-klwSua ,I.fi. .. fmaltlmc cm J- ata1l,;Ptai aamcl tea wcaht. esa slateCI%I c- seleten WI e tecreareM m-- sesci mr-Sate ca las. arciacs. psetat. sceleas se- paei eSeca. ca eat.. w l ors mice 'as.. kwal.1 IAcjfisttiL.a IM~ a..I... ...ced icE-t peas NIcci elct 0 stm ea-rcreu eeal.a wea aee ics aett eam S meta Not1mg.maac tadW ' pe WetPadS leisttll tad 1.. P.1.1- NNSW a VaSal kt"...ace..emm"mat Laslrsc tal. iaplIet.. beer.- ealed --PSIth ad. s.d -aalaasIaateeae maLmeecaO.. oe all sqtsac Aptem JaIM. p-eaei S emeiaad eases `N1 -Iat-I e tamlmla.. writ. tad ltam a. 2" M1 97t 0ate eU k di Nc. aws."c ta.. MOI M s p M _RR a .) Ac c I.m mc maca. maac. cci ma ma lwb. ;.qtt. .11 MN t. t.:,R.p4q.3 sqataalatt.d caaaa r ectts.- ssasar..Ia ema &icaadctteea i ck.- -v cNeO mpeailcm dii sa eamesit maltNPI. A 1esedir-mda me--a a aiddI eciceefitc lice man, u ad Vides. t.-mv atldrcaclimel-a .rpcI tnisle!Nlafllaa. isseact~~~~~~~1 mes. ersca. t ce e. ccess Mata aMah miSiUeia,aif5all -allct Peadtett peatieca" eta keamd -tlowm pnam tr em mctchs. adne I. stptdccaal "WRIU MMuth- sa -aII a that, --smm, cad lang LA., doatlmsara. nMeamaamit. balca asee a-aiamee .aaea o Inice. Pacjeall pNNNN-ten Par maeNI.tlp Nesit-s & c ct. thin oaccipitd0 peesa. -aSt..9 lpL-L.et C-a.iact LI t, siteoPa te11A ae.9. t .1.m me -ta-d, atIat aeseam dctie : scactlate.N Io esl cias isll r. op l if=lt1"i leach ice P-J-ilma Pp"eaa. ace 1callte ftee i ItJaginsa C a I Su as- at m-apaccite maeet 1w_jlStmmadatsateCa ea et.mt. a acacl iii IeiesMaccd- an INEa PIced. NtA. ta-apeteis accee setaatimaae ali aette last a.pres f 51recct.I ,ccce hea aNI-altsa-SLr iaalaad Mtepltasa laat fa-lts peemafotoaaal'-as pPdIematI acate maccads e4edn_ nd c-am rwapeabit, ease-mi. it cast c papalotts. cha tIck peta Is -ma.t- pac. It ldfar dmiin"ctl meNact. at Po=ea chettlta fe ad sceat cm ci. decO sea.. Its9 adcirceta Lc st-a P-sal. ad it. C-a'llrso meat mamlcec edcetcc a 4cllsrl as. aaacd it.psa t-eIkel I"i.i.cStse aeslacmasslcse t l a pWpets eva hals- Wtea tea aticeisl aa.tI as. hata r Lch Pcajac,d11 It- sticielc ta c I paasacs It ct.-t -sc iccd..ccI- cd em a set am o taiaacd Was, af Wat.re.ad daatiaarcitaemmc eaac clcem a edarlec mpclic - saa Cci pn 51antIprcte 'IN-I all Pasames L"n sacte - it It. M"."si fe pNW.mcse death I. ceaem P_:a.ad. 2-smt eaelat emttpatca em Coi.e marane Saaaea1 heam aacctdasnt Nlsme. tsstpItm acalaca imet. , anet4- mscmm ctras t'aa Scaeaels eta Carl II. easas satetrasII maa etc e*t ttaeadetem ccrsc ea.Pmdaltla.ca .cmmc. tht ea.eesm.eahaa.ti tSor. c.Sra-el. .etattaataIe Novit .tece. tcaavadarae- aa ma.aeN me e-.amc h as. e. I`144.pd I eiai.cma .at citatiea i5heetc aaeetpshd l5aIm-..c-.. IapII ha. crstwi a --C tda htIc dcrmtmttet ta S ptaWct 'L..siad pvlaeItt Seed 1%it . Wa asi s. sit Wm. ear NaImU des.. vamittamis iticeaa meecl f- CIlidea il-1t yat). macmrma-a ti- UapI taalsc,minc. lmc,. a' mS dtee. eae Lccta teat ta ame aem:.atdi-hesea eea. cad icaittlc Cecat tea. (ettssL -Ng Iat. si eatmi ...s1a add- sfltacy7 tatesla.o pac pala Sa.c dao. tii-dm le ma zc) ad. le-eese Cas- mt tlia 5 a am _I_f .4 .ceacie se Palotact Cial teVi esa ra -jaee ac n.cc cet.e~;- - ha.set 5 ae! I pe t- S. i h p.ali.-gamaisads Cadscle t e tar eniUd) - a It-lc tInt. ar eha-a .i SON- s- ma t. acastt ac.e. No i-ts panN; ma, alt he etpsi I-es mat Pam picacaalsl lta 5~~a ad iii)d-. asa-elac ske1Icd eLsecata, Ceada ttt les iccesteccede I a -i ac. per tIsa-d cI sdl--pa %-tatsaal t.Wa ct-LICsI- TV -&-toce fa icdn "actlctfci Wt etestdiaMAsM! Acis tav tasen ccctLc aI tM mteadp crcc Wr= eaeat.hs en matNI.a If dattlan " nsit MaSt en S-isne a . sapat a.6 ragtte-I=La ra a ai l taNco!cpflta &-Mis sea.i.ccpa-aecatl ma.c tcija crtadaaiala - Use aC taa itlteelis-it taec ecemc lg ito IWeO, life, sa lestt tdti asl aee cmpa`d-la peac P,M t lmmc-isaaa c ebae cs -a eteat haNNU daW NINNCI I.I eaSt ce leasd adMt in. csccslsew 44trksattdnt.st ntpia at actees PIRY PIi.pSaai.c ita.te.)Atrd. Cielce - Vei.- len m- t d -i e Peale pleama - tan Ic=.c ofspId e a-RN L- lweactse io ctltta -Liot tal.. sal-ce cai -hais a L.5 te atea r- arso tacead anY .Ib tksd-ttrtda-- acvat- W (NAI- mt-si.L c-tetcat "-.P..IamMllI t No.-c. -issa -ett s as -esa me-lada NW ca marla m SaCpttese 'NA M a-nd1 " e ash." ac-rn. Mr i F aL.eden 9 tws.ai. ctmcalt. s.c0.8 -ari ise ca ascatna. sarsntlsl lace. mall ad till des.~~~~~~~~~~~~~~~~~~~~~~~~~~~,.It.-1f_ lto 170-d'a eels d em an a-Ltat). Mivsac. piotastla SC -No Cao-tv it -dtisIp ct aSi ca reae -4Ie Lake feast mIe. sac. taaa - -stIts sea aciae el -stse. tics-e1.ta N. aof AMa a mmcm dec ft. -c II 1Q _df....clemit I terai-mc.sI.am at rctterat c ase c isit Ci asMZcels A'iaki INS sey as aIa e poesNWc PC tNu5. act. a Cast. WcacllM of sIt asaW ecpa"ttyi. da.loasitla cppulc ails da-a.ie eaadsaln. t-llol I=t.a W Its.i. 1mm. se_tat ddt. TM-c ca I=sa - ffla tcclsmCI- -_aI .aPNNNIa. sad I J. it.sA. Mel -maptlac c-A."d ealsi m -o.ms.dgm ealsls a-a.raccts.. PC ate aacic d Leoc Ita te-d.A itNs-lets - ta icead salamcaac.. adl Inn Ia dlmsflt.ml-. iclc.'Pa cct.s e fin atlas se acs.ano at.d e PS lad ac aaaistnacl a s. -l trSSJ rA- 1.0 - tell. SC pepsimea -tsr mIS sad C ted sect. as - Nad ccc ItmIbeca PC P".elsla "1151ll le peoact. ic- -sit t taSPsId! -l.t act1-cs. If"c ad mm cc. Pa. amaia asIc c cvc.e.t Care - ee - e'st". sc-st ci Ipoe -apita.eaa Pltciesit 1w eat sad elsE) sllcd we lcma I am tmpply cC fan a dee m ni c ad it deltald - bcc. Ni- aes- reha Nccee. allacma so P-..ap madNaaaS 50 P.-sm PC itm.C Car cit maeaes t.eSm!esed by ssw Pa pvod Ca Cam.k-i sli i NIF man J siF act.! posecta pc dej ted 10 dieee PC seal sd tisadah an ar cb Ibam or 71 cam cC Ist! pecoel ad it er-s Sk aiancseo n a aet tc Ca c - vc eaI-I. . .C -WAca p.c`"l --,sa Cc lb~ acri. leWam-d by re amc. citeid haW aepac Lft made aa-cis- IbLS chaSe Psd sliyg iic-cici a8 tWO ds-e rstated allah Panice ama lst1m areseleM -ae. nei ChtWid St=s 1.41 eso tie(9 testlima) - a-si death pea Itset .d Iaisiated Ilelatia P-aM .c Icea lama (gm .crtd-mk dna as g.s a-A p S.tntlem t c.a cn s APjos it = etcgta ae A-astop lameNN &its tc-anc weaa s flec dte detacd eta U1c teh-Is tan. R70 ado il dss ancI .t ci t. Sntw- let. -Las l* d.etd iCM It. -ae P-,W Mh- .9 WI- of lif.~ ~ ~ ~~~~~ata mikejasa c ua ma. ci1.ccI.ch as .4*UF t-teren all USr. (castes) - mart at. ScE poalct. lad Mt.ae ttrt-eea Cpeelanmc desDa.amcalm I-r - - 1Imacil its.Jad tacadlcc- ollaseacIt -al maolt" W tat ilpama -M aria oed efis cpisa ma J m asia. mat)- p7 aesslidaao _1 shalt &VApati toacaeiss_l. its. masm it -ta ItSM asamtt s-a -Id eppir ifet. Noocai. - MONta 51 Ike ft-said de adI has o c. cNr dttpsocactisss aoll PC S. deja is roasting a. Cadipa ems aide. Acrc- a cec. tooqlt l(ae. cC t-Iccice) ateoc ac ..a ac perS.ama .1 ".aI, eaafsoaecldefs.d ESe-as dllcsci o &tamE. d. sIhasiem cad 411.ersce. mitt W- cLfa SC- cItNc ees adsat we Nalla-bce ipate - SuNo ma PIC5 pWcfles ad  - 25 - Annex I Page 4 of 5 unT COUNTRY DATA 27,865 kj2 4.3 zUin l l (uId 1982) 155 12 of zta ama . Agrial.te 17,20D h2 R of w8nth 2AZ (1977-2) PaMM= UNATIOE 1980 IAUHE (17) Crude BL8th Rate (per 1,000) 45 Pqxzatin per lIWicmi 45,02O Cn.e Daath Rxte (per 1,000) 22 8,pulatio per hmspttl bd 744 (1970) YS MD PMED MM A ID MEECIrY Urm pqiuiatias. 2 94 2 of paplai - toa 2Z - rui MK N nW N (1974-78) WLU= (1978-) CalorLe izzalre - Z of zwquremms 99 Ault lteny rate Z 25.0 Per capita protein a (gm/day) 61 Pdmq aduol S-rolmit Z 30.0 a/ ! lV CPM l IN 1983w MSM240 QCE DIISC E2= AIUL RNM OF COMM (Z, LLtr prECe) 1983 Val uSs EJnim _ 1970-77 1978-63 a1P at N)rket pdc 1,110.3 100.0 3.1 2.5 Orms ltic 3iretmIt 141.1 12.7 28.3 8.4 Q 1ss 9tiotu Savhv 12.6 1.1 17.7 3.1 Qwvit Acoat efird -130.8 -11.8 27.5 Ecporta of Gods, GES 107.8 9.7 -1.9 5.5 ]qrts of Gads, GCS 261.0 23.5 7.7 6.0 Umrr. Lm icv AMl wiv Y WI Z98 Val* added r FM= V.A. per vorirer $ XLIe 1 '00 w X 4gdcultue 5a5.2 58.8 1,762 S2.3 337.8 71.5 ITuskty 164.2 16.2 270 12.6 608.1 128.6 * SewIce 252.7 25.0 109 5.1 2,318.3 490.4 Toth(ateruq 1,012.1 100.0 I4 100.0 7 ICO.O (lik 1ff11 Per eiit ofGD 1983 1983 1978-2 oirre wu Revm 12,858 12.5 14.6 Qxet Emw um 13,470 13.1 12.0 Otmit 9urpl -612 -0.6 2.6 Capil lxMitue b/ 16,6% 16.2 11.6 ExterLh A sta (12,424) 12.1 (7.4) a/ At1 Imtdolaw. h Trim iMb1 epterprise, fip f po s, adet rqe*c . * . ~~lI2t applicale Not avalable. Nte: AU ereiow toa In this tblde are at de avege FMO per US$ ohage zie pmaliig dmring tbo pedlal aoen,l.  - 26 - Annex I Page 5 of 5 MU, = and ES 1978 1979 1980 1981 1982 1983 ?bu am! Quindib 9,696 11,034 12,681 15,698 15,378 19,452 ik cdreit bt Cutal Goveriul 1,5t8 3,860 4,496 7,178 9,344 12,355 Rank credit to Private Sector 5,835 8,367 9,793 12,760 12,976 14,570 4 (Parwite or Inded N&bers) Nbay and (uasi-4bya Z of QP 17.7 15.7 14.7 17.6 16.8 18.9 hla I PFn e di is ln: General Price idex 27.3 25.5 12.3 12.0 5.7 8.3 Blk credit to Public Sectr 715.1 156.0 16.5 59.7 30.2 32.2 Book cmeit to Private Sector 115.0 43.7 17.6 29.6 0.3 12.3 BALANC OF PAf1 !SNE E 5E ((AVRAGE 1978-83) 1979 1980 1981 1982 1983 U3S tl1LiU % (Mi [US Dollas) Exports (gWnfs) 112 74 89 108 100 CoFfee 70.5 87.8 Torts (ghlfs) 193 205 20B 261 257 Cotton 2.4 2.9 RPeource gq (deficlx r ) Te -a - =if = i3T 7 2.2 2.8 All otbar camt ditiL 5.2 6.5 LTerest paynms (net) 4 9 7 3 4 Iabor inaan -14 -16 -24 -31 -29 MM aL 803 Ii0.o Ne trsfexs 34 47 48 50 45 galare curent a:at -57 1 88 -131 -3 Direct fDreiga investmezs - 1 1 2 1 EMEIL Mr, m 31, 1983 Capital gR1s 25 3, 39 37 40 Net NX Drst a/ 39 41 29 51 94 Disbursements 42 45 32 54 98 US"n Aaization 3 4 3 3 4 UbUc Debt, incl. gerantei 284.0 Otber caoptal (net) - -10 -6 -3 16 rurad Private Debt Otber ItPne NE: -11 7 -5 11 -17. Ibtal outstalin & Dlsb. ITrreae in net xmerves (-) 4 6 32 34 -16 Sr siz RAno ap. 1983 b/ X Gross reserves (end year) 86 90 72 42 54 PihUc DEbt, Enl. garsteed 10.0 Noa kirantaed Private Debt T9orts of pecroleun produs 13 25 32 30 29 Tbta outstdimng and disb. IDA EMD, Septemiber 30, 1984 (MLIiii0 US Dollars) RAIE (F EMAMM- IDA Chtsaemlizig & DOsbursed 125.4 US$1 - FBu 90 1976-November 23, 1983 ilsb 70.9 DiztstafiInluing SER- Fail3 aNrber 23, 193-prelent unLisbursd 196.3 a/ IBM Debt Reporting Systm. b/ Patio of Debt Seice to EBports E ods sfD d factor Servil. Not available.  - 27 - Annex II (Page 1 of 2) STATUS OF BANK GROUP OPERATIONS IN BURUNDI A. STATEMENT OF BANK LOANS AND IDA CREDITS EXPRESSED IN US DOLLARS (as of September 30, 1954) Amount A Loan or US$million Credit (less cancellations) Number Year Borrower Purpose Bank IDA 2/ Undisbursed One loan 1/ and ten credits fully disbursed 4.8 45.53 731 BU 1978 Burundi Development Bank - 3.40 0.12 918 BU 3/ 1979 Burundi Forestry - 4.30 0.47 976 BU 1980 Burundi Second Education - 15.00 0.84 1049 BU 1980 Burundi Urban Development - 15.00 7.54 1058 BU 1980 Burundi Telecommunications - 7.70 2.74 1132 BU 1981 Burundi Third Highway - 25.00 3.23 1154 BU 1981 Burundi Nickel Exploration - 4.00 0.71 1165 BU 4/ 1981 Burundi Kirimiro Rural Development - 19.30 11.28 1192 BU 1982 Burundi Integrated Rural Dev.lNgozi III - 16.00 11.48 1230 BU 1982 Burundi Local Construction Industry - 5.20 3.51 1358 BU 3/ 1983 Burundi Third Education - 15.80 10.09 1419 BU 1983 Burundi Ruzizi II Regional 15.00 13.79 1456 BU 5/ 1984 Burundi Third Technical Assistance 5.10 5.10 Total 4.8 196.33 70.90 Of which has been paid 4.8 0.32 Total now outstanding 0.0 194.46 Amount sold 1.55 of which has been repaid 1.55 Total now held by Bank and IDA 0.00 194.46 Total undisbursed 70.90  - 28 - Annex II (Page 2 of 2) B. Statement of IFC Investments (as of September 30, 1984) Type of Amount In USS Million Year Obligor Business Loan Equity Total 1981 Verreries du Glass container 4.8 0.8 5.6 Burundi Total gross commitments less cancellations, terminations, repayments and sales 4.8 0.8 5.6 Total comitmeDts now beld by IFC 4.8 0.8 5.6 Total undisbursed 1.1 0.1 1.2 1/ Extended in 1957 to the Belgian Trust Territory of Ruanda-Urundi for the improvement of the Bujumbura-Muramvya road and the expansion of the lake port of Bujumbura. The loan which was guaranteed by the Kingdom of Belgium has been fully repaid. 2/ Prior to exchange adjustments. 31 The IDA credit was complemented by an EEC Special Action Credit of US$1.2 million. 41 Including a NORAD Grant participation of US$5.8 million. 5M Not yet effective.  - 29 - Annex III (Page 1 of 2) SUPPLEMENTARY PROJECT DATA SHEET BURUNDI POWER TRANSMISSION AND DISTRIBUTION PROJECT Section I: Timetable of Key Events (a) Identification : October 1982 (b) Project Preparation July 1983 (c) Appraisal Mission July 1984 (d) Negotiations : MarchlApril 1985 (e) Planned Date for Credit Effectiveness: December 1985 Section II: Special Project Implementation Actions - Engineering services to be provided for the preparation of bid documents (para. 45) - Management assistance team to assist in implementation of action program to strengthen Regideso's management and improve its administrative and financial operations (para. 48). Section III: Special Conditions - investment program to be reviewed annually with the Association (para. 49) - Regideso would not, without prior consultation of the Association, commit itself to any capital investment in excess of UF$5 million and would ensure that every investment in the electricity sector is economically and financially justified (para. 49) - annual review of tariff levels (para. 57) - reduction of arrears on receivables (para. 58) - unless otherwise agreed with IDA, Regideso would not incur any new debt which would result in debt service coverage ratio of less than 1.5 (para. 59) - the Government would lend to Regideso funds necessary to meet its share of the local construction costs (para. 54)  - 30 - Annex III (Page 2 of 2) recruitment of management assistance team (para. 48), consulting engineers (para. 47), trainers (para. 50), and an adviser for petroleum imports (para. 52) Section IV: Special Conditions of Effectiveness (a) agreement between the Association and Regideso on an action plan to strengthen Regideso's management (para. 48); and (b) agreement between the Association, the Government and Regideso on an action plan to reduce arrears (para. 58). (e) Burundi to obtain from Rwanda and Zaire, the rights necessary for the construction, operation and mainterance of the Transmission line (para. 43). Section V: Special Conditions of Disbursement - For the rehabilitation of the Bujumbura eubstation and the Bujumbura-Ruzizi I transmission line: tne transfer of adequate legal rights from SNEL to Regideso (para. 46)  - 31 - Airmex I Procurement Arag 8et / Ba* uildelines for Other Disbursuet Project Items b/ ICB Ibnultants LCB MethDds Total from IDACredit 1. llOkV trani ssion Line 5.7 (5.25) - - - 90% of toLal cost 2. Bub=na substatimo 2.2 (2.0) - - - 90% of total cost 3. Fzgineering Services - 1.2 (1.0) - - 100l of foreign currency cost 4. Mnnlgem ssistanme - 1.5 (1.3) - - 100% of foreign currenqy ccst 5. Studies - 0.25t0.2) - - 100% of foreign currency cost 6. Trainirg 1.3 (1.3) - - 0.8 90% of total cost of castruction anxl edpnt 7. Cibitoke substatinn 1.1 (1.0) - - - 90% of total cost 8. Distribution in 6 distris of Bujumbura - - - 4.9 9. 30 kV lines - i - 1.6 10. Distxibutimu in regioal towrs - - - 0.9 11. PetrolJe,n adviser - 0.15(0.1) - - 100% of foreigp carrency cost 12. Rbllow up of disseination - 0.2(0.15) - - Z100 of foreign cirrency cost Total 1D.3(9.55) 3.3(2.75) - 8.2 21.8 a/ FiYgres in parentheses are the annmits proposed to be financed by DM b Estimates of costs inclidirm cotingencies.  _ UlD uIl:IA BURUNDI POWER PROJECT Bujumburo Arms to be Electrified RwV Hydro Staison V~Pragci Areas WIti/kUbanize Areas Eaii.Iing Pawer Lines _ a70kV lb ~ ~ ~ ~ ~ ~ - 35 kV Faw, , Li_es Unde Canstruc C110 W intenatl aund'ries ' / / K I'~~~~~~~~FimRrz ~~~~n~~ 7 ~ ~ ~ A~~ J,~~~~~~~~~~~~~~~~~iI /f// 3~~~ KLW.WiISS WA'S.~~~~~~~~~~~~~~SITX b__ _ _ _ _ _ _ _ _ _ _ I~~~~~~~~~~~~~~~~~~~~~~Itl 2r ~ ~ ~ , Hv//ISlot 'I-rIsc,-..~~~~~~~~~~~16  IBRD 1851 BURUNDI 3%,UGANDA