Belize - Power Development Project

Donmwt of The World Bank FOR OFFICIAL USE ONLY Report No. P-4358-BEL REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO BELIZE FOR A POWER DEVELOPMENT PROJECT July 17, 1986 This document has a restricted distribution and may be used by recipients only in the performance or their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit = Belize Dollar (Bz ) Bz$ = US4U.51 BZ41,U00,U00 US510,0U US$1.00 = Bz$1.98 U"51,O00,U00 BZ41,980,OUO ABBREVIATIONS AND ACRONYMS BEB = Belize Electricity Board CDB = Caribbean Development bank CDC = Commonwealth Development Corporation GOB = Government of Belize IESC = International Executive Service Corporation ILU = International Labor Organization USAID = United States Agency for International Development UNITS AND MEASURES 1 kilovolt (kV) = 1,000 volts (V) 1 kilowatt (KW) = 1,000 watts (W) 1 megawatt (HW) = 1,000 kilowatts (KW) 1 kilowatt hour (kWh) = 1,000 watt hours (Wh) 1 gigawatt hour (GWh) = 1,000,000 kilowatt hours (kWh) 1 megawatt hour (MWh) = 1,000 kilowatt hours (kWh) 1 megavolt ampere (MVA) = 1,000 kilovolt ampere (KVA) 1 kilometer (km) = 0.6214 mile (mi) 1 square kilometer (km2) = 0.386 square mile (sq. mi.) I barrel (bbl) = 42 US gallons = 159 liters GOVERNMLNT OF BELIZE AND BELIZE ELECTRICITY BUARD FISCAL YEAR April 1 - March 31 FOR OFFICIAL USE ONLY BELIZE POWER PROJECT LOAN AND PROJECT SUMMARY Borrower: Belize Beneficiary: Belize Electricity Board (BEB) Amount: US$7.5 million equivalent Terms: 17 years, including 4 years of grace at the Bank's standard variable interest rate. Relending Terms: 17 years, including 4 years of grace at the Bank's standard variable interest rate; BEB would bear the foreign exchange risk. Project Description: The proposed project would cover part of BEB's 1987-93 investment program. The project would finance generating units, expansion and improvements to distribution lines, equipment, tools and vehicles, training and technical assistance, engineering services for project implementation and studies of alternative sources for future energy development. Benefits: The proposed project is expected to: (a) improve the reliability of BES's distribution system, reduce power losses and provide fuel savings; (b) permit BEB to meet the growth in electricity demand over the medium term; (c) strengthen BEB's organization and management; (d) improve BEB's finances; and (e) assist in planning BEB's long-term investment needs. Risks: The principal risk facing the proposed project lies in BEB's institutional deficiencies. To minimize this risk BEB would be required to appoint a Project Manager before loan effectiveness and to retain a Management and Financial Advisor. The project also includes financing for a comprehensive training program to strengthen BEB's management and technical capabilities. This document has a restricted distribution and may be used by recipients only in the performance of their omcial duties. Its contents may not otherwise be disclosed without World Bank authoriastion. - it - Estimated Costs a/ Local Foreign Total ----(US* million)- (a) Generating sets, spare parts, 0.31 2.20 2.51 and power house construction (b) Distribution expansion and 0.84 1.87 2.71 improvements (c) Acquisition of equipment, tools 0.02 U.65 0.67 and vehicles (d) Training and technical 0.21 1.02 1.23 assistance (e) Construction management and 0.17 0.95 1.12 engineering (f) Studies for future energy 0.10 0.56 0.66 sources development Total Base Costs 1.65 7.25 8.90 Physical Contingency 0.25 0.91 1.16 Price Contingencies 0.59 2.54 3.13 Total Project Costs 2.49 10.70 13.19 Interest during Construction - 1.02 1.02 Total financing requirements 2.49 11.72 14.21 a/ Goods imported for the project are free of duties. Financing Plan: Local Foreign Total -(US$ million)--- IBRD - 7.50 7.50 CDB - 3.20 3.20 CDC 1.26 0.26 1.52 BEB 0.97 1.02 b/ 1.99 Total 2.49 11.72 14.21 b/ Interest during construction. Estimated Disbursements: US$ Millions BRD FY 1987 1988 1989 1990 1991 1992 1993 Annual 0.15 0.90 1.57 1.87 1.42 U.97 0.60 Cumulative 0.15 1.05 2.62 4.50 5.92 6.90 7.50 Rate of Return: 12Z MAP: IBRD 18929 INTERNATIONAL BANK FUK &ECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESLUENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO BELIZE FOR A POWER DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed loan to Belize for the equivalent of US47.5 million to help finance a Power Development Project. The loan would have a term of 17 years, including 4 years of grace, at the Bank's standard variable interest rate. The proposed project would be cofinanced by the Caribbean Development Bank (CDB) in an amount of about US3.U million and the Commonwealth Develnpment Corporation (CDC) in an amount of around US$1.5 million. Both the CDB and CDC loans are expected to be on the same terms and conditions as the Bank loan. PART I - THE ECONOMY 2. An economic report entitled "Economic Memorandum on Belize," Report No. 5244-BEL, dated October 29, 1984 was, distributed to the Executive Directors in October 1984. Annex I contains the basic country data. Background 3. Belize, located in Central America, attained independence from the United Kingdom in September, 1981. With a total population of around 150,000 people occupying an area of about 23,000 kmZ, the population density of Belize is extremely low, about 6 persons per km2. 4. Belize is endowed with abundant natural resources. The economy is largely dominated by the production of export-oriented sugar, bananas, citrus, fishing and some light manufacturing industries as well as tourism, while there is considerable reliance on imports to satisfy the demands of domestic consumption and practically all investment requirements. There is a fairly even distribution of income, with the private sector being the dominant sector of the economy. Recent Economic Trends 5. The economy of Belize expanded steadily during the 19bUs and most of the 1970s, with real GDP growth of 4.5 to 5.0% per annum, or about 2.5% in per capita terms. This development resulted from the expansion of the sugar industry, the re-establishment of the banana industry, the implementation of several infrastructural works, the establishment of a number of new industries such as an export-oriented garment factory, and several import-substitution industries (cigarettes, flour mill, beer and a fertilizer mixing plant). Since 1980, however, economic growth has not been as robust with an annual average growth of GDP of 0.7% per annum. The reasons for this are diverse. There has been a steady deterioration in the terms of trade tacing the country as a result of lower sugar prices. Furthermore, an outbreak of smut diseases in 19U and 1981, necessitated substantial replanting of sugar cane. Re-export trade with Mexico has been an important part of the service sector; however, the Mexican debt crisis and devaluation in 19b2, severely truncated this trade. Another significant factor accounting for the recent economic slowdown, has been the lack of adequate port, road, communications and electricity facilities. In particular, this has impeded the development of export-oriented production activities. 6. Over the past five years, adjustment to the lower level of national income took place mainly in the form of reduced real private consumption and public investment. meal private consumption at the end of 1983 was at the same level recorded in 1979 and the level of unemployment remained unchanged at about 14%. The public sector on the other hand did not reduce its consumption in line with the stagnation in national income and current expenditure grew by 2b% over the same period. As a result, the financial situation of both the Central Government and the public enterprises has deteriorated with public sector savings becoming negative in 1982, reaching about Z% of UVP in FY63/84. Faced with this deteriorating fiscal pertormance a policy of restraint on expenditures, particularly in the Central Government, has been enforced since early 1983. Furthermore, in June 1984, a comprehensive range of additional revenue measures were introduced. These included an increase of 10% in the revenue replacement duty on gasoline and aviation fuel; a 2% increase on stamp duty on imports; an increase of excise duty on beer of 30% per pint and the introduction of an excise duty of 10 cents per pint on soft drinks. With respect to the public enterprises, tariffs for electricity services were increased by 13% in June 1984. These measures yielded additional Central Government revenues in an amount equivalent to 4.2% of GDP in FY84/85. In conjunction with these measures, the Government requested access to IMF resources totalling around SDK 7.125 million, which is 75% of Belize's quota, within the framework of a stand-by arrangement. The stand-by arrangement was approved on December 3, 1984, and expired on March 31, 1986. The program was aimed at reducing the overall public sector deficit to a level that can be financed entirely from bilateral and multilateral external sources. To a large extent this adjustment program has been successful, with the result that the public sector savings performance has dramatically improved to a positive 3.9% of GDP in FY1985/bb, and the international reserve position has strengthened. The deficit on the current account of the balance of payments narrowed in 1984 and 1985, as import demand remained stagnant and sugar and citrus exports expanded. This improved performance is expected to continue in 1986 as a result of growing exports of agricultural products. Development Planning and Policy Issues 7. A new government was elected to office in early 1985. It is expected that the public sector reforms will be accelerated and that increased encouragement will be given to external foreign investments to further develop the country's natural resources. Given the limited size of the domestic market, Belize's development is based mostly on an export- oriented strategy, utilizing its potential in agriculture, livestock, fishing and agro-processing industry. This strategy is expected to continue, with additional efforts being made to expand the country's tourist potential. In this regard, the Government will need to address the two main bottlenecks to the realization of its adequate objectives. First, the lack of adequate infrastructure, particularly roads, deepwater port and electricity which, while being accorded priority under the ongoing public - 3 - sector investment program, the implementation of which is being constrained by the present financial and organizational weaknesses. Second, the current shortage of skilled manpower. In this regard, the Government's current policy is designed to actively encourage migration from neighboring countries, while also relying on an active technical assistance program. The Government is also seeking to expand the Belize College of Arts, Sciences and Technology. 8. Belize's substantive agricultural potential has remained largely underutilized. The Government is cognizant of this potential and attaches priority to the sector. There is also recognition of the crucial role that the private sector must play in this growth and a policy environment conducive for this has been created. Land tenure policies are sound and the land tax system is designed to discourage the holding of unutilized private land for speculative purposes. The Government owns about ZUZ of the total land resources, which is available for sale to farmers and investors, at relatively low prices, provided that the land will be developed with a coherent program. The uncertainty of the country's export earnings as a result of the past fluctuations in sugar prices, has led the Government to embark on programs to diversify its agricultural exports. Livestock and citrus production are being promoted and encouraging initiatives have already taken place with respect to cocoa and pineapple. These efforts have brought some success, with increasing agricultural exports to non-traditional markets (citrus to Trinidad and Tobago and livestock to other Caribbean countries). 9. In the past, the Government's policy of import substitution in the industrial sector has led to the establishment of several small industries in the 197Us.- This policy which is reflected in the pattern of import license allocation and the granting of development concessions has protected local manufacturers, many of whom are inefficient both in terms of the price and quality of their products. Investment incentives offered are based upon the CARICUM Treaty's harmonization of incentives for firms locating within the common market, and have often been reinforced by the granting of effective local monopoly rights by outright prohibition of competing imports. Previous World Bank economic reports have suggested that review of industrial policies, based upon a pragmatic appraisal of the country's present comparative advantage, is necessary. 10. Belize is endowed with considerable tourist potential. In the past, this sector had been neglected by the Government; however, in 19b4, policy statements indicated that higher priority was to be attached to the development of the sector. Improvements in the transport infrastructure currently underway should facilitate this development, and more extensive promotion and advertising efforts were undertaken in 1983 and 1984. Preliminary indications suggest visitor arrivals increased by 7% in 1984, and further efforts are being made to expand upon this growth. A major constraint to this effort has been the lack of financial resources made available to the Tourist Board as a result of the Government's fiscal difficulties. It is expected, however, that the flow of resources to the Tourist Board will increase following improvements in the Government's fiscal situation in view of the increasing importance which the Government is attaching to the sector. Economic Prospects 11. Government policies are conducive to economic development and investment by both domestic and foreign investors. In the medium term, however, the economy will still be highly vulnerable to events in international markets, and little relief from this vulnerability can be expected until export activities have become more diversified. The Government is making a concerted effort to increase the operating efficiency of the public enterprises, and steps have already been taken to improve the management of most public enterprises. The Banana Central Board, and its holdings, are being divested and the Marketing Board is undergoing major improvements in its management structure. With the improvements envisaged in public finances, the investment program should be able to expand to about 1UZ of GDP, which is considered necessary given the country's infrastructural needs. 12. After 19b5, the economy is expected to grow at just under 4% per annum over the longer term as a result of a broad based recovery in the major sectors. The agricultural sector is projected to grow as a result of an expansion of non-sugar activities, implying a gradual diversification of the economy, with sugar nevertheless continuing to play a major role. The balance of payments is projected to improve over the next ten years, based upon an improvement in the terms of trade and a steady expansion of non-sugar exports. The current account balance of payments deficit should decline from the 3.5% of GDP in 1984 to about Z% at the end of the 198Us. Given planned infrastructural developments in the early 1990s, this deficit will increase marginally; however, it is projected to remain below 5% of GDP. These levels are consistent with projected net official capital inflows, the majority of which will continue to be on highly concessional terms due to the country's strong bilateral relations with the United Kingdom and the United States. 13. The tiscal difficulties and the worsening balance of payments performance from 1980 to 1983 contributed to a rapid increase in publicly guaranteed external debt rising from US*45 million in 1980 to US*b9.4 million at the end of 1984. In addition, there is US47 million of short- and medium-term debt denominated in US dollars, that the Government contracted with local branches of foreign banks in 1982 and 1983. Debt service however remains low as the bulk of the debt, about 70%, is still on highly concessionary terms. At the end of 1964, external debt represented 38.5% of GUP and service payments 4.9% of exports of goods and non-factor services. In order to achieve needed levels of infrastructural investment, Belize will continue to need to rely on external financing from official sources. As a result, the stock of public sector external debt is projected to increase from 3b.5% of GDP in 1984 to about 57% of GDP in 1995. Furthermore, it is to be expected that the composition of this debt will gradually change as grants are reduced and more loans are contracted on conventional terms. As a result of these events, the debt service ratio is expected to increase to about 11.5% by the early 199Us. These ratios are within manageable limits, particularly given the steady improvements in - 5 - public sector finances over the past two years, and as a result, the country is considered creditworthy for limited borrowing on conventional terms. PAKT II - BANK GROUP UPERATIONS iN BELIZE 14. Belize became a member of the Bank and 1DA in March 19b2. The first Bank loan to Belize Loan 2273-BEL (Road Maintenance and Rehabilitation Project) was approved on May 3, 1983. 15. Prior to its attainment of independence and membership of the Bank and IDA, Belize benefitted from the proceeds of Bank Group lending operations made available to the Caribbean Development Bank (W)b) (US*3UU,0O0 for an agro-industry credit project). 16. In addition to the proposed project, the Bank has also financed under loan 2273-BEL (Road Maintenance and Rehabilitation Project) a study for possible improvements in the country's port tacilities. Future lending operations are likely to include an agricultural credit project, a possible second highway development project, and a possible second power project. PART III - THE ENERGY SECTUR Energy Resources 17. The principal source of energy in Belize is petroleum. Belize is completely dependent on imported oil tor its energy requirements. In 1983, imports of petroleum products amounted to US023 million and accounted for 22Z (second largest item after food) of total imports for domestic consumption. The cost of petroleum imports equalled about one third of total export earnings. In 1983, the use of petroleum for power generation accounted for 23% of Belize's total petroleum consumption, transportation 55%, industry 11%, domestic 9Z and agriculture 2%. 18. Geological studies indicate a good possibility that Belize has deposits of oil and gas both onshore and offshore. In 1955, Gulf drilled the first well. Since then, 40 wells totalling 250,000 ft have been drilled in Belize and about b,UUO line miles ot seismic surveys have been conducted by several companies. Presently there are nine companies carrying out oil exploration in the country. Various findings have been reported, but so far there have been no reports of discoveries of either oil or gas in commercial quantities. 19. The laws governing oil and gas exploration licenses are regarded as among the most liberal in the world. Exploration licenses are awarded for a renewable 3 to 5 year period. If oil is tound, a mining lease would be awarded for 20 years. The agreements with the oil companies are based on an old -contract-model" that may need to be updated to take into account changes in the world situation experienced in the last decade. UNDP is providing technical assistance in this area by financing an expatriate petroleum geologist working at the Ministry of Natural Resources. The long-run success of this assistance will depend on the ability of both the -6- Government of Belize (GOB) and UNDP to build up the local expertise to take care of these responsibilities in the near future. GOB needs an overall strategy and a contingent plan for dealing with the development problems that exploring and finding oil and/or gas in commercial quantities would create. 20. Hydropower is potentially an important indigenous source of energy in Belize. To reduce its dependence on petroleum imports for electricity generation, the Government wishes to explore the possibility of developing hydro power generation. In 1975, a UNDP-financed preliminary survey of hydro-electric resources identified several alternatives for development. The study concluded that the most justifiable sites are located on the balize river and recommended considering construction of a 45 MW power planAt at an estimated cost of US$55 million. The UNDP study concluded tha the following supplementary studies are needed: (i) study of energy demand covering a 20 year program; and (ii) further study conceraing development on the Belize river (topographical survey, hydraulic study of the river, geological study of the envisaged project sites). Since 1975 no additional studies were performed on the subject. The proposed project includes the financing of a feasibility study for future hydro-gener-ion or utilization of other renewable energy source such as wood, sugar ane and bagasse. Energy Sector Organization 21. The Ministry of Energy and Communications has overall responsibi- lity for the formulation of energy policy in Belize. However, at no point within GOB's structure is there any systematic collection and appraisal of the country's total energy supply and demand needs. A joint UNDP/World Bank mission to Belize to conduct an energy sector assessment will be considered for FY87. The mission, among other things, would look into the merits of establishing an energy unit within the Government and also assist in identifying funding for establishing and staffing such a unit. Power Sector 22. The Belize Electricity Board (BEB) is the sole authority to generate, distribute, supply and sell energy for public and private purposes. Initially, BEB was primarily responsible for supplying electri- city to Belize City only, while supply to the districts towns was provided by the respective town Councils. Later, this was amended to place all the districts in the country under BEB's responsibility. 23. Public-service electricity supply in Belize needs improvement. The present price to the consumer averages about 0.21 US*/kWh; of that high cost, fuel costs represent more than 50% of operating costs. Electric power is generated by isolated diesel sets, which depend on imported fuel. Load centers are not interconnected, except for a 13 mile 22 kV transmission line between Ladyville and Belize City and a 15 mile 22 kV line between Belmopan and San Ignacio (see Map). The primary and secondary distribution networks are weak and the quality of the service is poor. - 7 - BB's management estimate that the capacity of small privately-owned generator sets and the sugar industries that generate their own require- ments is about 8.0 MW. 24. The country's short-term strategy is to improve reliability of electricity supply by strengthening the distribution system and adding diesel generating capacity to meet the requirements of energy supply for the next 7 years and to study the possibility of developing tuture projects as soon as possible, using indigenous resources when economically feasible. Over the long-term, the country's strategy is aimed at developing its hydroelectric potential as well as the utilization of its domestic renewable energy resources, thus reducing its dependence on imported fuel for power generation. Tariffs 25. The Belize Electricity Board Ordinance empowers BEB to set electricity rates with the approval of the Minister responsible for Energy and Communications. 26. Up to June 1984 BEB's tariff consisted of separate declining block tariffs for domestic and for commercial and industrial consumers together with a fuel surcharge which was introduced on May 1, 1979. In June 1984 the fuel surcharge was abolished and a fixed rate of 43 bz cents (USSU.215) per Kilowatt hour was introduced for all consumers together with a monthly minimum charge of Bz$4. The June 1984 tariff revisions were estimated to increase average revenues by 13%. In April 1986 electricity rates were reduced by about 2 Bz cents, partially reflecting the recent reductions in fuel costs caused by the decline in world oil prices. At present BEB's tariff levels are already high and it is not expected that any real increases will be necessary in the near term unless to compensate for possible increases in oil prices. 27. A 1980 CUB loan required BEB to appoint consultants to review BEB's tariff structure. A study, which included tariff structure recommendations and financial forecasts, was completed in September 1982 by consultants, Stone and Webster. The main recommendations of the study were that tariffs for large industrial and commercial consumers should consist, inter alia, of a demand charge, and an energy charge. These recommenda- tions have not yet been implemented. However, the new Management and Financial Advisor is now expected to examine the feasibility of introducing a maximum demand and energy charge for large consumers. Constraints on Sector Development 28. The principal development constraint faced by the power sector is the lack of sufficient skilled and experienced personnel in BEB to permit an orderly and adequate development of the sector. Particularly, BEB lacks experienced personnel in management, planning, accounting and engineering. The proposed project includes technical assistance and training components which should result in strengthening BEB and thus help alleviate this constraint. 29. A second constraint relates to the ability of BEB to generate sufficient financial resources internally to cover operating expenses and service its debt and to make a reasonable contribution to its investment needs. The proposed project would help to improve BEB finances by: (i) reducing distribution losses and operating expenses; (ii) improving operation and maintenance of the system; (iii) improving and upgrading the distribution system and thus increasing system reliability; (iv) establish- ing appropriate financial objectives; and (v) securing funding commitments from Government. 30. Finally, as indicated above, 1OOZ of electricity is generated by the use of imported petroleum. The recent drop in world oil prices has contributed to a significant improvement of BEB's finances but serious constraints could arise if future oil prices should substantially increase. The proposed project includes financing of studies for utilization of renewable energy resources. PART IV - THE PROJECT Background 31. The proposed project was identified in August 1984, after consideration of an earlier alternative project did not appear to be feasible. Field appraisal took place between November 1984 and February 1985. Negotiations were held in Washington from April 28 to May 2, 1986. The Belize delegation was led by the Honourable Dean Barrow, Minister of Foreign Affairs and Economic Planning. Special conditions of the project are included in Annex III. The Project 32. The proposed Project, which represents part of BEA's 1987-1993 investment program, comprises five major components: (i) distribution program for expansion and improvements; (ii) diesel generating sets; (iii) technical assistance and training; (iv) pre-investment studies; and (v) consultant services for engineering and construction management. Project Objectives 33. The main project objectives are: (a) to meet the 1987-1993 energy requirements by providing small generating sets in the isolated parts of the electric system, as well as portable generating units and spare parts to improve reliability and maintenance and operating efficiency; (b) to expand and improve BEB's primary and secondary distribution systems to meet the 1987-1993 forecasted power and energy requirements, improve distribution reliability, and reduce losses in the distribution systems; (c) to help BEB achieve financial viability through greater emphasis on proper pricing, improved operating efficiency through a reduction of distribution losses and also through better maintenance of SEB's facilities; (d) to strengthen BEB by improving its organizational structure, and management, financial and technical capability and to develop an efficient and capable organization to handle future increasing needs of power supply; (e) to ensure that investments to be made are carried out on a rational and cost-effective basis; and (f) to prepare feasibility studies for long-term energy requirements which are expected to be provided by hydro generation or the utilization of other renewable energy sources in Belize. Project Description 34.. The proposed project would be spread over several districts of Be-ize (see map, No. IBRD 18929) and would include the following components: (a) Generation (i) Installation of one 500 kW unit, one 650 kW unit and one 3,200 kw unit in San Pedro, Belmopan and Belize respectively, construction of a small power station in Punta Gorda (approximately 4,000 sq. ft.), and rellocation of one 260 kW unit and one 300 kW unit in Punta Gorda (presently installed in San Pedro and Belmopan). (ii) Spare parts for the existing diesel generating sets. (b) Distribution Installation and reconductoring of 22 kV and 6.6 kV three phase (approximately 22 kms) and 110-220 volts three phase (approximately 14 kas) distribution lines. Installation of static capacitors (about 2,500 kVAR); distribution transformers (about 3,000 kVA) complete with sectionalizing and protective equipment; step-up station power transformers (3,750 kVA); customers meters (11,500 custoiaers), service drops and street lighting. This component includes 3b ground mounted metal clad switchgears, 3 circuit breaker reclosers: and 32 pole mounted isolating switches. (c) Substations kellocation of two 3 MVA 22/6.6 kV existing power transformers from the Western and Northern substation to a new substation to be built close to the Belize power station, including the associated 22 kV lines, switchgears, switchboard, and accessories. (d) Vehicles and Equipment Acquisition of equipment and tools for operation and maintenance of the generating and distribution facilities, including 10 vehicles for construction of the project. - 10 - (e) Training and Technical Assistance Training and technical assistance, including the identification of detailed training needs and implementation of a training program, and a study on BEB's organization. (f) Engineering and Consultant Services (1) Consultant services for management, engineering and supervision of the construction of the distribution and generation component of the proposed project. (ii) Consultant services for studies related to future energy sources development. Project Cost Estimate 35. The total project cost, including physical and price contingencies, is estimated at about US*13.2 million, of which about US$10.7 million would be in foreign exchange. Total financing requirements including US$1.0 million interest during construction would be US$14.2 million. 36. The project base costs were estimated at December 1985 price levels. Cost estimates for the distribution component for the Belize- Ladyville system were based on a January 198b report prepared by the consultants Merz and McLellan. Cost estimates for the generation component of the proposed project as well as ior equipment, tools and vehicles were estimated by BEB and the Bank mission, based on recent quotations received from manufacturers. The cost estimate for consultant services were based on average staff-month costs using Bank experience for similar services. These costs include salary, overhead costs, fees, international travel and subsistence. Physical contingencies were calculated by the Bank at IOZ of the base cost for all components except distribution. For this component 20% was used. Price contingencies, for both foreign and local components, were applied to the base cost plus physical contingencies, using the following annual escalation factors: 7.2% for 1986, 6.8% for 1987-bb, 7% for 1989, 7.1% for 1990 and 4% for 1991-93. Import taxes and other duties are not included in the above estimates because 1$EB is exempt from these charges. Project Financing Plan 37. The project financing plan is shown in the Table below: Financing Source -US$ x million- - Z of Foreign Local Total Total I8D7.5U - T3iY- CDB 3.20 - 3.20 22 CDC 0.26 1.26 1.52 11 Bh 1.U2 0.97 1.99 14 Total 11.72 2.49 14.21 100 - 11 - Project Execution 38. Implementation Agency. The proposed project would be implemented by the Belize Electricity Board (BEBS). BEE, a government owned corporation, was first established by Ordinance in 1950 and its legal status is now governed by a revised Ordinance, which came into force in September 1958. BEB has sole authority for public power generation and supply throughout Belize. The Board consists of seven members, namely: (1) GOB's Financial Secretary; (ii) a uember of the Belize City Council; and (iii) five other persons appointed by the Minister of Energy and Communications. The Chairman of the Board is elected by the Board, subject to the Minister's approval. Following the election of a new Government in December 1984 new Board members were appointed. A local businessman was elected as the new Chairman of the Board. 39. BEB's institutional performance has generally been weak and characterized by inadequate planning and direction, diffusion of authority, between GOB, BEB's Board and its management and insufficient delegation of authority to BEB's management. 40. Assurances were obtained during negotiations that consultants, whose qualifications, teras of reference and terms and conditions of employment are satisfactory to the Bank, would be employed by December 31, 1986, to carry out a study of BEB's organization and that, after consultation with the Bank, BEB would promptly implement such recommendations as are agreed upon. 41. In addition to organization studies the proposed project would seek to strengthen BEB through training for managerial and technical staff. Because of BEB's management weaknesses, to ensure satisfactory project implementation, it will be necessary to employ an experienced and qualified engineer as project coordinator. The appointment of such a person, whose qualifications and terms and conditions of employment arL satisfactory to the Bank, would be a condition of loan effectiveness. 42. BEB's present General Manager, a Belizean national appointed in 1983, has worked for DEB for many years. The General Manager's office needs support to help improve management, planning and staff coordination. For that purpose, a Management and Financial Advisor, funded by USAID was appointed in September 1985 under a two-year contract. Assurances were obtained during negotiations that the position of Management and Financial Advisor will be retained until the Bank and DEB agree that it is no longer necessary, and that such position will continue to be filled by a person whose qualifications and terms and conditions of employment are satisfactory to the Bank. To further help ensure the maintenance of an adequate management capability, assurances also were obtained during negotiations that BEB would maintain in the positions of General Manager and of Financial Controller persons having qualifications and experience satisfactory to the Bank and that BEB would appoint by December 31, 1986, an Assistant Financial Controller with qualifications and experience, satisfactory to the Bank. Manpower Development and Training 43. Apart from some isolated efforts, training has largely been neglected in the past. Training administration has been handled by the personnel officer as a secondary duty. In addition to providing management and financial advisors the proposed project would seek to develop BEB's manpower capability through a comprehensive tive-year training program aimed at improving the on-the-job pertormance of about 27U management, technical and accounting staff, at all levels. The program has been worked out in preliminary form with Bank assistance and would include (a) the training of instructors as well as teaching materials and equipment for specific courses to be arranged for BEB personnel at local training institutions and BEB's own facilities; (b) short-term expert services for local training in specific technical areas; and (c) short-term overseas visits for employees to attend courses, seminars and visit other power companies. During negotiations assurances were obtained that, not later than December 31, 1986 BEB would appoint a Training Advisor, whose qualifications and terms and conditions of employment are satisfactory to the Bank, to organize a training unit within BEB and develop and organize a detailed training program. By March 31, 1987, BEB would submit to the Bank for review a detailed training program; such program would promptly be implemented thereafter. 44. An important objective of the project training component will be to create a permanent train ag capability within BEb. For that purpose BEB has already appointed a Training Officer directly responsible to the General Manager. After an initial period of training, the Training Officer is expected to take over full responsibility for the training function. The Training Officer recently attended a six week Bank/lLO I/ training seminar in Italy in May 198b. The cost of his participation in the above seminar (about USS7,000) would be financed, retroactively under the proposed Loan. Auditing 45. BEB's audits have been satisfactorily carried out for some years by the public accounting firm oi Pannell Kerr Foster. However, the issuance of audit reports has been late in recent years, varying from 9 to 14 months after BEB's financial year end, mainly because BEB's records have not been ready for audit. The BEB Ordinance requires audit reports to be issued within four months of the end of BEB's fiscal year. With the strengthening of BEB's accounting department it is expected that BEB'S accounts could be gradually made available for audit in a more timely manner. Assurances were obtained during negotiations that BEB would continue to engage independent auditors, satisfactory to the Bank and that BEB's audited accounts would be submitted to the Bank not later than six months after the end of FY87 and FYb8 and not later than four months after the fiscal year end, thereafter. 1/ International Centre for Advanced Technical and Vocational Training (Italy). - 13 - Finances 46. Through FY84 BEB's financial performance was extremely weak. Despite high rates for the sale of electricity (which increased from US$0.12/kWh in FY79 to US$0.18/kWh in FY84) the company consistently ran into operating losses. BEB had to obtain assistance from the Government, which funded, through loans, (of which Bz$7.5 million were converted into equity in FY81), BEB's debt service and investments throughout the period. This inability to achieve a positive internal cash generation, coupled with the excessive reliance on borrowings has progressively weakened BEB's finances to the point that by March 31, 1984 the utility had no equity base and current assets amounted to only 77% of current liabilities. 47. Following discussions with Bank staff, the Government has already taken three important measures to strengthen BEB's present and future finances: (a) it increased electricity rates even further to US40.21/kWh (including the fuel charge, which was consolidated with the basic rate when fuel prices started to decline in recent months; this decision resulted in a significant increase in net revenues); (b) it offset debts of BEB to the Government against receivables accrued from the sale of electricity, which had built-up to a significant amount, and capitalized the net balance of BEB's debts to the Government, thereby creating a positive equity base and significantly improving the utility's financial structure; and (c) it undertook to service BEB's non-Government existing debts, treating as an equity contribution the difference between these payments and the value of electricity sales by BEB to the Government. BEB is expected to add to the above efficiency improvements and improve its financial performance further during project implementation as a consequence of (a) its loss reduction program which would reduce distribution losses from 17% in 1986 to about 11% in 1990 and around 9% in 1993; (b) operating expenses reduction program including projected savings in fuel oil costs resulting from reduction of the distribution losses; (c) the increased system reliability which would occur by improving and upgrading the distribution system; (d) the establishment of appropriate financial objectives; and (e) the postponement of additional generation investments. Taken together, these measures should enable BEB to become financially independent from the Government shortly and, to the extent that it improves its efficiency, eventually allow it to start paying cash dividends. 48. About 57% of BEB's medium- and long-term debt outstanding at March 31, 1986 is due for repayment in FY87 and FY88. Assurances were obtained during negotiations that, unless the Bank should otherwise agree, the Government will make all debt payments on BEB's outstanding debt at March 31, 1986. Where the debt payments made by the Government on behalf of BEB exceed the value of electricity sales by BEB to the Government, then the amount paid by the Government in excess of such sales will be treated as a long-term consolidated debt to BEB. Where the value of electricity sales exceeds such debt payments, the Government, its agencies, and its municipalities would pay to BEB, within 60 days, the amounts owing for such electricity sales. - 14 - Financing of BEB's Investment Program 49. BEB's capital spending requirements and financing plan during the FY87-93 project implementation period are as follows: US$ BZ$ Equivalent z REQUIREMENTS thousands Capital Expenditures: Proposed project 26,119 13,191 45 Interest during construction 2,039 1,023 3 Total project financing requirements 28,158 14,214 48 Other a/ 20,716 10,467 36 Workin Capital 9,117 4,608 16 Total requirements 57,991 29,289 100 SOURCES Gross Internal cash generation 55,685 28,124 96 Less: debt service 25 912 13 087 45 Net internal cash generation 9,13 7 3T Government 3,989 2,015 7 Project Borrowings: IBRD 14,850 7,500 26 CDC 3,024 1,527 7 CDB 6,355 39210 9 Total project borrowings 24,229 12,237 42_ Total sources 57,991 29,289 100 a/ Estimated non-project spending in FY92 and FY93. 50. The proposed Bank loan of US$7.5 million (Bz$14.85 million) would be passed on by the Government to BEB, on the same term and conditions under a subsidiary loan agreement, satisfactory to the Bank and the execution of which would be a condition of loan effectiveness. The foreign exchange and interest risk would be borne by BEB. The CDC and CDB loans are expected to be made available by the Government to BEI on the same terms as the Bank loan. 51. CDC have indicated that they are not likely to undertake a field appraisal of the project and that they expect to use the Bank appraisal report as the principal document for their evaluation of the project. A copy of the Bank's Staff Appraisal Report has been made available to CDC for such purposes and the CDC loan is expected to be approved shortly. 52. CDB is expected to complete processing of their loan for approval by their Board by September 1986. The completion of all conditions precedent to the effectiveness of both the CDB and CDC loans would be a condition of effectiveness of the proposed Bank loan. - 15 - 53. To ensure that BEE's finances remain sound and that the proposed project is executed in time, assurances were obtained during negotiations that BEB would ensure that BEE earns rates of return on average net tixed assets in operation (revalued from time to time in a manner satisfactory to the bank) of not less than 4.5% in FYB7, 6% in FY88, and 7% thereafter. Assurances also were obtained during negotiations that before Uctober 1 of each year BEB would make a preliminary estimate of its rate or return for the ongoing fiscal year and a forecast for the next tiscal year and that if the forecast should indicate that bEb would not meet the rate of return requirements it would promptly take all necessary measures to ensure that the rate of return target for the fiscal year would be achieved. 54. BEB's financial projections are based on the assumption that BEB would increase its electricity rates on April 1 each year, as required to meet the rate-of-return objectives referred to in para. 53 above. This is estimated to require modest nominal rate increases: FY88 1.5%; FY89 3.UZ; FY90 2.8%; FY91 2.5%; FY92 b.3%; FY93 7.4%; FY94 7.b%. These rate increases are based on conservative assumptions; to the extent that BEh is able to achieve larger than forecasted efficiency improvements, or if oil prices remain at their present level, it is conceivable that no rate increases would be required. If the forecast rates of return are met, BED is expected to achieve a strong level of tinancial viability. BEE's financial projections assume a prudent use of borrowings, which will be reflected in low indebtedness ratios. BEB's cash position is expected to be significantly strengthened, allowing BEE to increase its revenues through interest income from short term placements. Thus, once the proposed project is completed, BEB should be in a position to self-tinance a significant proportion of its future investments. Debt service coverage would be not less than 1.5% from FY88 onwards. 55. To protect BEB's financial viability assurances were obtained during negotiations that (a) BED would not incur any new debts (other than those envisaged in the financing plan for the project) or pay cash dividends, without the prior approval of the Bank, unless its debt service coverage ratio is 1.5 or higher; and (b) BEE would not undertake any investments in excess of 4250,UUU (other than those included under the project) until project completion, unless it has furnished the Bank with satisfactory evidence that such investments are technically, tinancially and economically justified and that BEB will have adequate financial resources to carry out the investments. Assurances also were obtained during negotiations that the Government would not undertake any power sector investments during the same period without prior consultation with the Bank. Procurement and Disbursements 5b. Contracts for the supply of equipment and materials for the generation component of the project, tools, equipment and vehicles (to be financed by the Bank) as well as equipment and materials for the distribution component of the project (to be financed by CUB) will be procured through International Competitive Bidding (1CE) in accordance with the Bank and CDB procurement guidelines respectively. Goods and services - 16 - to be financed by BEB would be procured under local competitive procedures, which have been examined and found to be satisfactory to the Bank. Contracts for tools and other small miscellaneous equipment valued at less than US$100,000 will be purchased through Local Competitive bidding (LCB) in which foreign suppliers are eligible to participate. 57. Consultant's services (engineering, supervision of construction and studies) will be secured, following Bank guidelines. Training equipment and materials, which are part of the training and technical assistance program, will be procured through limited international bidding (LIB). 5a. The erection of the two small generating sets (500 kW and 650 kW) for San Pedro and Belmopan and the rehabilitation of the 2.2 MW unit in Belize station as well as the small related civil works to be financed by BEH will be implemented through BEB's force account with the assistance of the manufacturer. This is acceptable to the BanK since BES has sufficient and capable personnel to perform this work and has proven experiences in similar works recently completed. Construction of civil works for the Punta Gorda power station (USSU.33 million, to be financed by BEB) are not likely to interest foreign bidders. These works will be provided by local contractors through LCB. Machinery and equipment will be grouped whenever possible into contracts valued at US41UO,000 or more. Preference for bid evaluation purposes for local manufacturers and contractors has not been requested by the Government. 59. The proceeds of the Bank loan are expected to be disbursed over seven years. The disbursement schedule reflects IBAD standard disbursement profiles which are based on the Bank's experience in similar projects. Proceeds of the proposed Bank loan would be used to finance: (W) 100% of foreign expenditures and 90% of local expenditures for training, studies, and engineering services; (ii) 100% of foreign expenditures and 90% of local expenditures for equipment and materials for the generation component of the proposed project; (iii) 100% of foreign expenditures and 90% of local expenditures (up to US0.4 million) for the purchase of vehicles; and (iv) 100% of foreign expenditures and 90% of local expenditures (up to USSO.1 million) for the purchase of tooia. Disbursement requests would be fully documented except for imported goods whose value is less than USS20,000 equivalent. Claims for expenditures of these lesser amounts would be subject to presentation of a statement of expenditures for which the supporting documentation would not be sent to the bank but would be retained by BEB for periodic inspection by the Bank. A special account would be established in the Central Bank of Belize with a deposit of US$0.5 million. Periodic replenishment would be made to this special account against withdrawal applications received from BEB and - 17 - supported by such documents as the Bank would require. The Borrower would be required to have anuual audits for the project accounts, special accounts and withdrawals based on statement of expenditures. Retroactive financing for up to US*350,00 is proposed for payment of training of linemen and training officer (US$250,000) and of the purchase of special tools (up to US4100,000) incurred by the Borrower after March 30, 198b. The closing date would be December 31, 1993, six months after the estimated completion of the project. Environmental Effects 60. The proposed project would not have a detrimental impact on the environment, as it comprises only: (i) extensions and conversions or upgrading of low and medium voltage distribution lines and will, in most cases, follow established rights-of-way with land clearing and visual impact kept to a minimum; and (ii) diesel generating sets that will be installed in the existing power generation facilities where presently no environmental effect exist. Benefits and Risks 61. The size and characteristics of the new generating units to be installed in Belmopan (650 kW) and San Pedro (500 kW) have been selected taking into consideration space limitations in the existing power stations where the new units will be installed, as well as taking into account the need to increase the firm capacity in order to meet the power requirements through 1993. The new unit in Belmopan will be installed to replace an old 300 kW unit and the new unit in San Pedro will replace two 250 kW units. Therefore, the investment of US$ 1.0 million (including physical and price contingencies) is the least-cost solution and no other alternative exists. In the case of the Belize-Ladyville system, the rehabilitation of one 2.2 MW unit (purchase of prime mover and accessories: US$ 1.3 million) is the least-cost solution to meet load requirements through 1993. 62. The economic benefits to be obtained from the proposed 1987-1993 investment program include: (i) allowing BEB to meet its incremental sales for the period; and (ii) fuel savings resulting from reducti6n of the distribution losses. 63. The rate of return has been calculated on the basis of BEB's entire 1987-1993 investment program. The rare of return of the corresponding investment was estimated as the discount rate which equalizes the present values of the economic net cost and benefit streams associated with the investment program. The rate of return obtained for the base case was about 12%, which compares favourably with the economic cost of capital estimated to be between 10% and 12% in Belize, and which suggests that the average electricity rate levels are close to the average incremental cost. The rate of return probably understates the real economic rate of return of the proposed project, as revenues from the sales of electricity may not fully measure some of the benefits to society, such as the social benefits of residential and public uses, or the indirect benefits to industry and commerce, whose production and employment depend on reliable electricity supply. Furthermore, the social impact of the proposed project is - 18 - difficult to measure because of inadequate data. The inclusion of social benefits, would probably result in higher internal rates of return. Shadow pricing for local currency labor costs and foreign exchange were not considered necessary because market values in Belize can be considered reasonably close to the opportunity cost of labor and the rate of exchange appears to be realistic and does not need adjustment. b4. The project faces no major physical risks. The distribution works and installation of small diesel sets are standard and the implementation schedule assumed for the project is reasonable and takes into consideration normal engineering administrative and construction procedures. Possible hurricane damage presents a risk to projects in Belize. To minimize the associated technical risks, the new distribution lines will be designed in accordance with economic and technical considerations taking into account that winds of about 130 miles per hour are relatively common in the region. Delays in project execution could arise due to BEB's lack of experience with large projects as well as with Bank loans and procedures. To minimize this risk, provision has been made to engage engineering consultants (para. 34(f)) to assist BEB in the implementation of the proposed project. BEB's technical staff will also be assisted by Bank's staff in matters related to Bank procedures. PART V - RECOMMENDATION 65. I am satisfied that the proposed Loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed Loan. Barber 5. Conable President Attachments July 17, 1986 - 19 - ANNEX I Page 1 of 7 Aifa äfu a m. n TOTAL 23.0 23.0 23.0 AGRICUL2MAL 0.7 0.8 1.0 mi "ana (<m)m .. .. 4110.0 173.9 2144.3 m Avl P(mC)ET (EILOGAMI Op 0L QUIVALT) 167.0 3»4.0 .72.0 993.6 1119.8 PDOULATtO.MID-EAR (TUfBfAIlh) 91.0 120.0 133.0 LtAv POPULATION (3 o TOTAL) 33.. 30.9 32.0 k 67:7 47.3 Por*LATION AlJECTION P0PULAT. IN tAa 2000 (NILLI 0.2 STaTIOIAT POPIATION (ILL) POPILATION Met POPULATION DENSITT pt 50. EN. ..0 3.2 6.7 46.0 g4.7 PEä W0. CM. Aci. LADI 123.0 146.3 150.0 91.1 166.9 POPULATION AGE STlUCTUuE (M) 2-14 115 .. 49.3 66.9 31.3 31.2 5a4 53 .. 46.6 61.7 37.8 61.3 6IIAND Aa0f .. .3 6.3 '.2 7.2 POPULATION GOuN mA ( TOTAL 3.1 2.9 id 1.9 Id 2.4 1.6 URBAN 2.3 2.2 1.6 3.6 3.7 ca=D lim RATE (na TiHIUS) .. 37.0 30.7 30.9 23.4 ctDE EATN man (PR Tm> .. 10.4 7.6 8.0 1.9 GlaSS ERODUCTION ATn 3.3 3.2 2.3 2.0 1.5 FANILY PLA~ING ACePTMa ~A.Na (Tms>. usESu (o F AIED uusi) .. .. .. 45.3 vm - fflnm INDE ar FOoD PEOD. PER CAPITA (1969-71-100) .. 100.0 120.0 109.6 109.1 PER CAPITA SUPPLT OF CALOtIES ( aP ZQUIENUTS) 05.0 115.0 135.0 113.2 131.1 PROTEIS (GAMS PER DAT) 64.0 6.0 17.0 69.4 92.4 at ihick aNDnL AD ~LS 31.0 32.0 '0.0 . 34.2 34.3 C»ILD (AfEl 1-4) DnM a 4.9 3.0 .. 4.8 4.7 LIFE EnPCT. AT 8151 (YEaRS) 53.2 19.9 65.5 64.8 67.2 INFAKT MRT. RTa (PER TROUS) 64.3 51.2 30.2 59.7 33.3 ACCESS TO SAfE &Tu (iPOP) TOTAL 3.6 1f 60.0 -f .. 65.3 70.2 1B6AN 3.2 7 .. 62.0 :c 76.5 89.6 WU. 6.0 .. .. 44.2 57.0 ACCESS TO EXCUETA DISPOSAL (2 0? P0PCLaX0N> TOTAL .. .. .. 56.3 31.e Uas .. .. 62.0 /e 73.4 65.9 aut&L .. .. .. 25.5 7.6 POP~LATION n PNYSICIAN 4030.0 2930.0 2220.0 1909.7 1070.6 POP. PEa NUSING NMN 1280 .0 1 8760.0 530.0 808.2 769.5 Pr. Pra KOSPITAL l9D TOTAL 210.0 190.0 250.0 362.0 328.3 URAÅN 840.0 /h 190.0 170.0 le 422.0 201.9 RunAL .. 620.0 610.0 71 2716.7 4319.7 aNISSIONS PEa MSPITAL liD .. .. .. 27. a0.0 ångsm AVuRAG SiZE OF BOUSEOLD TOTAL ..7 A15 6.8 . riRAL 4.7 AlERArE NO. OP PERSOLSmRoD TOTAL ....... URMAN 1.8 IURAL 2.1 ~MCETAE OF DELLINCS lTN ELECT. TOTAL 29.3 URBAN 51.3 .. 16.5 RUAL 4.4 .. 29.1 -20 - TA a L 1 PaRe 2.of 7 MUE - SOCIAL INDWICATOM DATA SKRET SBLIUE NIM9 C ~UPS (%1~IITED AnnA~8) L OST (OST RECENT ISTIKATK) j RECENt MIDOL INCIM MDLZ i~ 196db 1970& TDA.TdL LAT. AIRICA å CAR EUnupE ADJUSTED BNROL~NT KATIOS PKDANi TOTAL 113.0 10.0 83.0 106.7 101.9 MALU .. .. .. 108.5 106.2 PEMALE .. .. .. 114.6 97.5 SECONDAIm TOTAL 17.0 22.0 .. 44.2 57.5 HALE .• .. .. 42.7 64.9 VEALU .. .. .. 44.9 50.0 VOCATIONAL (E or 59NnOM) 5.4 3.0 0.1 å 13.3 21.0 MUPIL-TtACIE RAMTIO P R 46.0 26.0 28.0 29.9 25.1 SRCDMART 18.0 16.0 16.0 /L 16.7 19.1 PABSENER CARS/MTOUSAND ror 7.7 36.2 4.7 fe 46.0 54.2 ~ADO MRECEtIBS/MOUSAND POP 24.2 475.0 513.3 328.3 170.7 TV RME US/TOUSAND PoP .. .- .. 1IL4 149.3 NEUSPAPER ("DAXLT ENSRAL INTEhhSr") CIRM1ATItN PER THUSAD POPULATIOI 44.0 33.3 49.3 fJ B8.1 97.0 ciuM ANUAm ATENm|/CAPIT4 .. 4.2 .. 2.4 2.7 TOTAL LAMIL POfCi (TbMMU) 27.0 33.0 47.0 e PMALE (PRE~T) 18.1 1G.7 .. 23.6 34.3 AGRIMLTUE (PERCENT 39.0 32.0 37.1 /e 31.4 40.0 INDUSTET (PERCN) 22.0 25.0 16.5 E 24.3 23.3 PARTICIPATION RATE (FRCENT) TOTAL 30.0 27.6 32.0 l 33.3 43.1 NALK 4.5 44.6 .. 31.3 33.1 PENLE 10.7 10.3 .. 13.9 31.4 COOMC DEMIEhCT RATIO .. 1.8 1.7 e 1.3 0.9 Isn DITM0N PERCEll or PRIVAZE INC~htE f ECEED mt RIGmEST 5a 0 OUSEIIOLDS .. .. KLOET 20 0P 10UuE.US .. .. ... LOEST 20 0F OUELDS .. ..S.M.N. LOnST 40 OF SEOLDS ...... Pan=E TAME Ga~UP ESTINATD A ~SOLUTE POVETY INOM LEL (US$ EI CAPITA) Ut~AN .. .. .. 288.3 V~RAL .. .. .. 185.3 EST~IATED ES~ATIVE POMERT I WnCE LEEL. (USm PER CAPITA) URBAN .. .. .. 519.8 RURAL .. .. .. 339.7 ESTDMATED PP. BELL ABSOLUTE 90TERMT iNCrE LEU. (M) UKBAM .. .. URAL. .. .. . .. ..MOT AVm LamE. N. T APPLICAL NOT'ES La The gramp averegs for each idteator are populatl~ aided arttEtic ~am. Cvera of oemtrle mg hE~ indlatore deped@ an ewiUbiltUy of data a~d i ~ot uniform. L UaUls otbermige ~otod, "Data for 1960" rfaer to ay yøar beam« 1959 a~d 1961; 'Data for 197Cr bebamen 1M9 and 1971; a~d data for "~ast Oemt BEti~e" bmen 1981 and 1983. /c 180; /d Dm to ~dLrstiom population grrth rate t* Ilmer thm rate of natural Imerase.; / 1977; LL Percentngm of bouaig umisA witb piod mter; A1964; N 1962; & 1976; . 1979. JU, 1905 - 21- ANNEX I Page 3 of 7 oarnrro or soca masson Nosm Ahboh thedmdassd1@efm s mioallyjudgi hmeal auMuoiaaalda, it should also hn moed that shey am t o mstamalnp comparabalm of fts bak andadlW dlems and camps mud by diAmal oemaum a olng t data. TM da a nmo lmthele uu to des. 'I s of implda, idinse taad, al charwandsemam me diftm es hween comuan. no refnm W - (II a m ntry poup of tha shec camry ea (2) a coaty poup sth Fs t hWgher Sweag m sha bm do nmry pop of th us saes(sept fer "RI lam Oil EapoCms peep whom "Midd imn Nonh Mnm and Mdd im" as chom bate or sor -idul1-mal @eM1nitie ft Ina a pep dat a sOeepags e popuation e- arilhaic omm for ac mbaor and shma only when mgny ofthen.o in a MaW Nm ds for that iuoner. s the neverap of counts amo weaitordepsoh on a awall y ofdea. sad s noum cuts mam be maimed i abs sas eo laso r to amo Thsm awa s u only msa o mpenag te valm of an indamor as at mog da coimas and Ihm AREA (thousend sq.km.) Crue Ar Ra (po, eamo.k--Number of live birth. in the year Tad-Total surface ane comprising land area and inland waters; per thousand of mi-year popultion: 1960.1970. and 193 data. 1960. 1970 and 1983 data. Crab DOa Rae (ler aodp-Number of deaths in the year Agrard-Estimate of agricultural area used temporarily or per thousand of mid-year population; 19M.1970. and 1983 data. pemanmnlly for crops, pastures. market and kitchen gardens or to Grm Repew v -Avenge number of daughters a woman lie fallow. 10, 1970 and 1982 data. will hear in her manual reproductive period if she expi present age-specie featility, rates; usually five-year averages ending GNP PER CAPITA (USII)-GNP per capita estimates at current in 1960.1970. and 1913. market prices. calculated by same conversion method a W M o m Atquwi. Aam Ssub-Annul mum. Bmnk Aste (198143 basis); 1913 data. her ofaccepters ofbinhcontrol devices under auspice of national ENERGY CONSUMPTION PER CAPITA-Annual apparent fmwly planning program. consumption of commercial primary energy (coal and lignite , F P -Isrs (pe anokd nar-The pren- petroleum. natural gas and hydro-, nuclesa and geothermal elec- sage of married women of child-bearing age whom practicing or tricity) in kilogramis of oil equivalent per capita; InO 1970. and whom husband an practicing any form ofcontraption. women 1982 data. of child-bearing -Lo are generally women aged 1549. although for some countries contraceptive usage is measured for other age POPULATION AND VITAL STATISTICS 11oVps. Trefh Mpeuls MA-VYe (rhoamndr)-As of July 1; 1960.1970. FOOD AND NUTION and 1983 data. ur&mPopmdas percw ofawd-psto, o urbn totota IWz fFWPhibicalan Pr Cepit (IMP-7l - 10)-Index of per m alae (perea )-Ratio of rba to total capita annual production of all food commodties. Production population; different definitions of urban areas may affect compar- excludes animal fed and seed for agriculture. Food commodities ability of data among countries; 1960. 1970. and 1913 data. include primary commodities (e.g. sugane instead of sugar) hAok" Fbejeedes which are edible and contain nutrients (e.g. coffee and tea are Popshrmin a year 20-The projection of population for 2000. excluded) they comprise cereals, root crops, pulses. oil seeds. made for each economy separately. Starting with information on vegetables, fruits, nuts, sugarcane and sugar beets, livestock, and total population by age and sex. fertility rates, mortality rates, and livestock products. Agregate production of each country is based international migration in the base year 1980, these parameters on national average producer p weights; 1965. 1970. and were projected at live-year intervals on the basis of peeralized 1912 data. assumptions until the population became stationary. hrCq*.S4W&dfCdbF&'(PWr 1r68e -Couput- Stationry ppuar -s one in which age- and se-specific mor- ed from calorie equivalent of net food supplies available in country tality rates have not changed over a long period, while age-specific per capita per day. Avalable supplies=p domestic produc fertility rates have simultaneously remained at replacement level tion, imports less export and changes in stock. Net supplies (net reproduction rate - 1). In such a population, the birth rate is exclude animal feed, seeds for - in agriculture, quantities used in constant and equal to the death rate. the age structure is also Food processing. and loses in distribution. Requr-nents were constant. and the growth rate is acro. The stationary population estimated by FAO based on physiological needs for normal activity sian was estimated on the basis of the projected characteristics of and health considering environmental temperature, body weights. the population in the year 2000. and the rate of decline of fertility age and sex distributon of population. and allowing 10 percent for rate to replacement level. waste at household level: 1961, 1970 and 1912 data. Apuarion Atomearm-Is the tendency for population growth to Pr Capila Skpply of P-seia (gramr per bay-Promin content of continue beyond the time that replacement-level fertility has been per capita net supply of food per day. Net supply offood is defined achieved; that is. even after the net reproduction rate has reached as above. Requirements for all countries established by USDA unity. The momentum of a population in the year r is measured as provide for minimum allowances of 60 gans of total protein per a ratio of the ultimate stationary population to the population in day and 20 gram of animal and pulse protein, of which 10 grams the year t. given the assumption that fertility remains at replace- should be animal protein. These standards.are lower than those of ment level from year t onward. 1985 data. 75 grams of total protein and 23 gram of animal proton as an &W111111do be* average for the world, proposed by FAO in the Third World Food hr sq.A.-Mid-year population per square kilometer (100 Supply: MI.1970 and 192 data. tares) of total area; 1960. 1970. and 1913 data. hr CWia Palie Skpl frem AdsdPhW-Pmdn supply hr sq.kar. 4gricadrural hd--Computed as above for agricultural offood derived from animals and pulses in grans per day: 1965. land only. 1960, 1970. and 1982 data. 1970 and 1977 data. opoewaes Age Sbmcew (percur()-0Childreu 10-14 years). work- CAM (ag 1-4) Dea es (rhoasand)-Number of deaths or ing age (15-64 years). and retired (65 years and over) as percentage childr aged 1-4 years per thousand children in the - age of mid-year population; 1960, 1970. and 1913 data. groip an a given year For most developing countnes data derived pahdea GreOM R (perner-e l-Annual growth rates of from life tables; 190.197 and 1983 data. total mid-year population for 1950-60. 1960-70. and 19706X3. HAL apme Grew Re (pera )-aaw-Annual growth rates Lif Expmney - Mri (pes-Number of years a newborn of urban population for 195060.1960-70. and 1970-13 datp. infant would live if prevailing patterns of mortalitY for a People - 22 - Annex I Page 4 of 7 at the time of of its birth were to eay the same throughoul its life. PU&Meher Ratio - proviry. ad sevondat t-Total students en. 1960. 1970 and 1983 data. roled in prmary end secondary levels divided by numbers or Alfer Msialray aer (per Amsnv)--Number of infants who die tahers in the corresponding levels before reaching one year of age per thousand live births in a given year 1910. 1970 and 1913 dat. CONSUMPTION Acess s Sr WOse (pAr of p - t ass, ad Pasme Cars fpr ead peliow- Pssenger cars core- wreW--Number of people (toal, arban, and nrual) with reasonable Prim motor cars seting less than eight persons excludes ambul- acs to safe water supply (iacludes teaed surface waters or ances. hearses and military vehicles. untreated but unoontaminted water sucb a that from protected f Awalrors fper thmened popel-All types of receivers bormboles. spring; and sanitary wells) as percentages of their respec- for radio broadcasts to general public per thousand of populion; tive populations. In an urban arm a public fountain or standpost ecudes un-licensed receivers in countries and in years when located not more than 200 mters from a hoi'e may be considered r of radio sets was in efect; data for recent years may as being within reasonable soces of thai house. In rural area not be comparable since most countries abolished licensing. reasonable accea would imply that the housewife or members of the houseLbold do not have o spend a disproportionate pat of the day TVAwiolms(porthmadp I.d)--TV receivers for broadcast into general public per thousand population excludes unedsn.sd TV inccecn the Excroft s hwnatper ofnd paslas)-oa aro eevr csnre and in years when registratico of TV sets was wAccs to Eswure Ddspeet (pwear efjpesed)--alt wa6m, nec and rarl-Number of people (total. urban, and rural) served by excrete disposal as percentages of their respective populations. Cicaleribn (prr thisasdjepolsi-Shows the aver- Excreta disposal may include the collection and disposal. with or age circulation of day general interest newspaper. deined as a without treatment, of human excrete and waste-water by water- periodical publication devoted prinarily to recording general news. borne systems or the use of pit privies and similar installations. It is considered to be dy if it appers at least four times a week Ipedrlsom per Physicalse-1pulation divided by number of prac- Ca Aul Asdwe per Calswe pf Yea-lased on the tising physicians qualified from a medical school at university level. nber or tickets sold during the year including admissions to Iapsileries per Atersfi ePrsei-Ppulation divided by number of drive-in cinemas and mobile units. practicing male and female graduate nurses, assistant nurses. practical nurses and nursing auxiliaries. Aplmeslw per losple d--asal, arbm, and mwal-lPpulaton TWW L Fr (Shossau)-lconomicaly active persons, in- (total. urban. and rural) divided by their respective number of cluding armed forces and unemployed but excluding housewives. hosptalbed avilale i pulicandpriate.genraland h I students. etc... covering population of all ages. Definitions in hospital beds availabie m public and prnvate,gtaeralcandrspecals au various countries are not comparable 1960. 1970 and 193 data. hospitals and rehabilitation centers. Hospitals are establisluments permanently staffed by at least one physician. Establishments prov- F (percenu--emalc labor force as percentage of total labor iding principally custodial care are not included. Rural hospitals. forc. however, include health and medical centers not penanently stafted 4pinkm (pervew)-Labor force in fartung. forestry, hunting by a physician (but by a medical assistant. nurse, midwife. etc.) and fishing as perentage of total labor force: 190. 1970 and 1980 which oiler in-patient accommodation and provide a limited range data. of medical facilities. Ja6esry (poicentJ-Labor force in mining. construction. manu- Admissians per aspial J1d-Total number of admissions to or facturing and electricity, water and gas as percentage of total labor discharges from hospitals divided by the number of beds. force; 1960.1970 and 1980 data. PW.itk&,* RAw (porceir--oaa. ae aiftalp-Participation HOUSING or activity rates are computed as totaL male, and female labor force Aow.re Sre of H.eaMs (pes.. per Ase-keeal, arda. as percentages of totaL male and female population of all ages minrs&l-A household consists ofa group of individuals who share respectively. 1960. 1970. and 1983 data. These ar based on [Las living quarters and their main meals. A boarder or lodger may or particpation rates relectinl agsex structure of the population. and may not be included in the household for statistical purposes long time trend. A few estimates am from national sources. Aweage Nmber of Prseas per Riwe-i., w6m, asd raral- Earaank Depoaky Rutio-Ratio of population under I. and Average number of persons per room in all urban. and rural 65 and over, to the working age population tthose aged 15-6. occupied conventional dwellings. respectively. Dwellings exclude non-permanent structures and unoccupied parts. INCOME DISTRIBLTON Perceage of Derags wir Vekriciy-ral, arim. and nwa- re of Tonal D ilr lamer (both iv cask oad kmd)-- Conventional dwellings with electricity in living quarters as percen- Accruing to percentile groups of households ranked by total house- tage ofPtotal urbana and rural dwellings respectively, hold income. EDUCATION POVERTY TARGET GROUPS A4hwted Ewoffisour alias The following estimates are very approximate measures of poverty Prna. scho - tota. ma and fem~ak-Cross total, male and levels. and should be interpreted with considerable caution. female enrollment of all agos at the primary level as pe rcentages of Eaeroled A h m yerty coaery Level Id per e -umerian respecIve primary school-age populationse While many countries a r ha-Absolute poverty income level is that income Level consider primary school age to be 6-1l yea. others do not. The below which a minimal nutritionally adequate diet plus essential differences in country practices in the ages and duaation of school non-food requirements is not affordable. are reflected in the ratios given. For some countries with universal E wRieredrase berm lmd Level S$A per svitfrec)-e education, gross enrollment may exceed 100 perceint since some af rail-rural relative poverty income level is one-third of pupils are below or above the country's standard priary-schoolc average per capita personal income of the country. Urban level is age derived from the rural level with adjustment for higher cost of Swevldorv, school - totaln male bcmd feprs-Coiputed as abovec living in urbai n areas. secondary education requires at least four years of approved pni- Emimised Ppsimt(e t elm r A*5 --TV eecee Lad ct(P- mary instruction: provides general vocational, or teacher traiming cewt-=4o al d rpl- trcent of population (urban and rural instructions for pupils usually of 12 to 17 years of age: correspond- who are -absolute poor.- crtr courses as w generally excluded. Vocational Eroffimm (percent offtondawy-Vocaboanal gstitu- Comparative Analysis and Data Dine ision tions include technical, industrial. or other program which operate C E onomic Analysis and Projections Department independently or as departments of secondary institutions. June 19a5 - 23 - Annex I Page 5 of 7 BELIZEs ECONOMIC INDICATORS Actual Prel. 1980 1981 1982 1983 1984 1985 PRICES O Deflator (Bzs 1960*100) - 105.5 101.6 105.2 108.9 11.1 Exchange Rate CBzs per USS) 2.00 2.00 2.00 2.00 2.00 2.00 Amount Share of GDP at Market Price. (S) Average Annual Increases (5) imillion USS at Cat current prices) (at constant 1980 prices) current prices) 1984 1979 1a 1986 1990 1979-80 1981-84 1985-90 NATIONAL ACCOUNTS a/ Gross Domestic Product 182.4 100.0 100.0 100.0 100.0 4.4 0.9 4.0 Agriculture 48.5 24.7 25.2 27.7 27.6 1.0 4.9 3.8 Industry 38.3 21.5 21.4 18.3 18.0 11.0 3.6 3.8 Services 95.6 53.8 53.4 54.0 54.4 3.2 0.4 3.5 Consumption 171.7 72.4 79.9 77.8 74.2 8.1 -2.1 2.3 Gross Domestic Investment 29.3 27.6 20.1 18.7 21.4 -7.2 -6.1 8.7 Exports GNFS hl 101.6 53.7 49.1 76.7 76.8 -4.2 4.7 3.9 Imports GNFS W 120.2 -68.2 -62.0 -73.2 -72.4 2.7 -1.1 3.4 Gross National Savings 22.9 27.7 17.4 25.8 26.2 -10.9 4.3 3.2 As Z of GOP Preliminary 1979/80 1980/81 1981/82 1982/33 1983/84 1964/85 PUBLIC FINANCE c/ Current Revenue 27.8 23.4 24.2 24.9 23.9 26.1 Current Expenditure 18.7 19.0 21.8 25.3 26.0 24.5 Surplus (+) or Deficit C-) 4.1 4.4 2.4 -0.4 -2.1 3.6 Capital Expenditure 18.2 12.1 12.3 13.7 10.5 9.6 Foreign Finance (net) 8.0 2.5 .3.6 5.5 1.3 3.4 a/ At market prices. b/ Based on balance of payments drta. c/ Fiscal year - April/March 31. Figures refer to consolidated Pubitc Sector operations. March 1986 24-Annex Pago 6 of 7 ELIZEs ECONOMIC INDICATORS 1979-80 1981-84 1985-90 OTHER INDICATORS SMP Growth Rate (S) 5.8 0.7 4.0 GNP per Capita Growth Rate CS) 1.6 -3.6 1.1 10R 2.7 ** 5.8 Marginal Savinge Rate .. .. 0.33 Import Elasticity 0.5 .. 0.9 Annual Growth Rate (W) Amount (at coustant 1980 prices) (million USS at current prices) Actual Projected Indicator 1984 1979 1980 1981 1982 1983 1364 1985 1990 EXTERNAL TRADE Merchandise Exports (f.o.b.) 68.6 2.7 4.6 -5.0 5.0 9.9 -0.1 2.3 2.6 Sugar 32.5 3.0 6.2 -6.9 8.6 11.2 -3.7 0.0 0.0 Citrus 9.8 1.8 4.2 2.8 1.8 -26.8 5.6 6.7 5.9 Other 26.3 2.1 -1.7 -15.8 -16.0 40.0 5.1 5.0 4.9 1 Merchandise Imports Cc.i.f.) 106.8 2.4 2.7 -7.2 6.9 -6.8 3.1 2.8 4.5 Food 22.2 3.1 0.5 2.2 3.1 -12.6 -0.6 2.0 3.0 Petrolum 18.3 2.6 6.8 -3.1 -0.7 12.9 1.7 3.7 4.2 Other 66.3 1.4 0.9 -2.5 3.1 -11.3 6.3 2.8 4.6 PRICES Export Price ladex (1980-100) - .. 100.0 95.2 93.1 72.4 82.5 89.5 140.4 Import Price Index C1980100) - .. 100.0 86.4 73.1 99.8 103.4 112.5 167.9 Terms of Trade Index (19800100) - .. 100.0 91.2 76.5 72.5 79.8 81.1 83.6 Composition of Merchandise Trade (W) Average Annual increases C5) at current prices (at constant 1980 prices) 1979 1981 1986 1990 1979-80 1981-84 1985-90 Exports 100.0 100.0 100.0 100.0 3.7 1.2 2.9 Sugar 51.6 57.0 52.3 49.1 4.6 2.3 0.5 Citrus 7.4 8.7 10.5 10.4 3.0 -4.2 6.1 Other 41.0 34.3 37.2 40.5 0.2 3.3 5.0 Imports 100.0 100.0 100.0 100.0 2.6 -1.0 3.5 Food 26.6 30.7 23.9 23.2 1.8 -2.0 3.0 Petroleum 14.7 19.7 18.8 20.2 4.7 2.7 3.5 Other 56.7 49.6 57.3 56.6 -1.2 -1.2 4.0 - 25 - Annex I Page 7 of 7 BELIZE - BALANCE OF PAYMENTS, EXTERNAL CAPITAL AND DEBT (millions of US$ at currant prices) Actual Projected 1980 198 1982 1983 3184 1985 1986 1990 BALANCE OF PAYMENTS Exports of ONFS 109.7 103.2 87.4 94.3 82.8 77.5 57.8 139.0 Imports of ONFS 133.6 130.2 123.1 125.0 120.6 111.7 118.6 159.2 Not Factor Services -1.9 -1.9 -4.0 -5.8 2.6 0.6 0.0 -22.5 Net Transfers 16.5 18.5 18.3 16.1 23.5 30.0 29.0 29.1 Current Account Balance -9.3 -10.4 -17.4 -12.5 -11.7 -3.4 -IA -15.3 Private Direct Investment 8/ 0.7 -5.4 6.1 -4.4 -10.0 -3.1 -3.6 2.4 ILT Loans (Wet) 10.4 13.5 8.7 7.2 2.4 15.5 6.9 14.0 Change In Reserves 1.8 -2.3 -0.5 -4.6 -7.2 6.3 1.5 1.1 International Reserves et) 13.5 11.2 10.7 6.4 -0.8 5.5 7.0 11.1 EXTERNAL CAP ITAL AND DEBT Official Debt Outstanding 44.6 51.1 63.1 68.4 69.4 87.9 94.7 142.9 Debt Service: Total Service Paymunts 1.5 2.6 5.9 4.0 5.1 15.0 10.8 13.3 Interest 1.0 1.4 1.2 1.6 2.9 5.7 4.2 6.3 Payaents as 5 of Exports 1.4 2.5 6.9 4.3 4.9 15.2 9.9 8.7 a/ Includes errors and amissions. -26- ANNEX II STATUS OF BANK GROUP OPERATIONS IN BELIZE A. Statement of Bank Loans as of March 31, 1986 1/ US million (Amount less cancellation) Loan Year Borrower Purpose Bank IDA Undisbursed 2273-BEL 1983 Belize Road Maintenance 5.3 - .4 and Rehabilitation B. Statement of IFC Investments as of March 31, 1986 None. 1/ The status of the projects listed in Part A is described in a separate report on all Bank/IDA-financed projects in execution, which is updated twice yearly and circulated to the Executive Directors on April 30 and October 31. - 27 - ANNEX III BELIZE POWER DEVELOPMENT PROJECT SUPPLEMENTARY PROJECT DATA SHEET SECTION I: TIMETABLE OF KEY EVENTS (a) Time taken by country to prepare project: 18 months. (b) Project prepared by: Belize Electricity Board with Bank assistance. (c) Identification mission: June 1982. (d) Appraisal mission: November 1984. (e) Negotiations: April 28, 198b. (f) Planned date of effectiveness: September 30, 198b. SECTION II: SPECIAL BANK IMPLEMENTATION ACTIONS None. SECTION III: SPECIAL CONDITIONS (a) Government would make all debt payments on AES's outstanding debt at March 31, 198b, and in those fiscal years where such payments exceed the amount due from Government to 8E", for electricity sales, the excess will be treated as a long-term consolidated loan to BEB (paragraph 48). (b) GOB would ensure that all public sector agencies pay their electricity bills within bO days of billing (paragraph 48). (c) BEB would not later than March 31, 1987, prepare a detailed training program for SEB's staff and, after taking into account the Bank's comments, promptly implement such program. (d) BEB would ensure that, based on its revalued assets, determined in accordance with a methodology satisfactory to the Bank, BES earns an annual rate of return of not less than 4.5% in FYB7, b in FYb8, and 7% for each fiscal year thereafter (paragraph 53). (e) BEB would before Uctober 1 of each fiscal year review its financial forecasts and, where necessary, promptly take all necessary measures to ensure that the rate of return target for the fiscal year would be achieved (paragraph 53). (f) SEB would not undertake any investments in excess of USsZ50,UUU until project completion without turnishing the Bank with satistactory evidence that they are justified (paragraph 55). IBRD 18929 ta-m . helmalM E X l C 0 it.i- MEXIOhan j Pelvhacan M E X IC 0 Logienall Facuco SFnV r Doughn Sananaro COROZAL rnge Ik DISTRICT f0A c.nd.a AMBERGRIS mD 0- Pu.ts CAY Expan~at «feIWQ powur (Ri S n P d station 1x50 Kw Neustadt San Fökpe B ELklZa Nututadis..~FtID SananuBELIZE CS,,,ac RRST POWER PROJECT ORANGE WALK Cruk BEUZE ELECTRICITY BOARD (BEB) DISTRICT Burrell Hl L..om Ladyville Rohabilitaofn x g RIran - 7rao 22 Mw undl°'" EIEAi c -_1Belize Ci1y C<.O DISTRICT -4 Walk Gpo Rerg e nt Benquec Vmjgo del Cannm MiddlemmA PmeietxEm Arla Vo '"na"" and improv~mnt CAYO DISTRICT :b'.V -rg Proposöd Generation Expansio Expansion of existmg power STANN Existing Diesel Power Stations so 1 x650Kw Main Roada CREE Othe, Ro.d, DSTRICT National Captal eDistrict Capitals Ridalew and Vig e ----- Diuriot Boundaries Co-- - International Boundaries cwOPSmnnfig ie-t Medena Bank KILOMETERS0 10 20 30 40 50 MILES 0 TOLEDO Heligalo DISTRICT - -ILES_ä_8_30_i_2_. Town Son Antonio Bug Fall SOPOLA CAYS Rice slt,i Installation of 2 old units from WMAca San te and Blopu ffuC ~&~öaOf DONGca 1San26 Kw. 1 x 300w lälo o BEIZ E01 Gult alHoau GUATEMALA Pu~t CofP Nsaa 9 7 0 1 O N D U R A S I co w mM 1