India - Karnataka Power Project

Document of The World Bank FOR OFFICIAL USE ONLY 2X/. 2 ' 7X/y Report No. 6695-IN STAFF APPRAISAL REPORT INDIA KARNATUA POWER PROJECT May 13, 1987 Energy Divis.on South Asia Projects Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit Rupees (Rs) Rs 1.00 = Paisa 100 US$1.00 Rs 13.00 Rs 1.00 US$0.077 Rs 1,000,000 US$76,923 MEASURES AND EQUIVALENTS 1 Kilometer (km) 1,000 meters (m) - 0.6214 miles (mi) 1 Meter (m) - 39.37 inches (in) 1 Cubic Meter (m3) - 1.31 cubic yard (cu yd) = 35.35 cubic feet (cu ft) 1 Hectare (ha) - 10,000 m = 2.471 acres (ac) 1 Kilogram (kg) - 2.2046 pounds (lb) 1 Ton (t) I 1 metric ton = 2,200 lbs 1 Kilocalorie (kcal) = 3.97 British Thermal units (BTU) 1 Kilovolt (kV) = 1,000 volts (V) 1 Kilovolt ampere (kVA) 1,000 volt-amperes (VA) 1 Megawatt (MW) - 1,000 kilowatts (kW) = 1 million watts 1 Gigawatt-hour (GWh) 1,000,000 kilowatt-hours 1 Horse Power (HP) = 0.75 k.louatts (kW) ABBREVIATIONS AND ACRONYMS AG - Accountant General of Karnataka CAS - Commercial Accounting System CEA - Central Electricity Authority CIF - Cost Ir,surance Freight CWC - Central Water Commission DOFW - Department of Forests and Wildlife cOI - Government of India COK - Government of Karnataka GOKDF - Government of Karnataka Department of Furests IBRD - International Bank for Reconstruction and Development ICB - International Competitive Bidding IDA - International Development AsF )ciation KEB - Karnataka Electricity Board KPC - Karnataka Power Corporation LCB - Local Competitive Bidding LIB - Limited International Bidding LRMC - Long Run Marginal Cost MIS - Management Information System NHPC - National Hydro Electric Power Corporation NPP - National Power Plan NTPC - National Thermal Power Corporation O&M - Operation and Maintenance POE - Panel of Experts REB - Regional Electricity Board REC - Rural Electrification Corporation SCADA - System Control and Data Acquisition SEB - State Electricity Board SOE - Statemfnt of Expenditures SREB - Southern Regional Electricity Board Beneficiaries' financial years end March 31  FOR OFFIAL UK ONLY INDIA KARNATAKA POWER PROJECT LOAN AND PROJECT SUNAY Borrower: India$ acting by its President. Beneficiaries: Karnataka Power Corporation (KPC) Karrntaka Electricity Board (KEB) Government of India (Central Electricity Authority) Amount: US$330 million equivalent. Terms: Repayment over 20 years, including 5 years' grace, at the applicable rate of interest. Onlending Terms: Government of India (COI) to Government of Karnataka (GOK)M As part of Central assistance to Karnataka for development projects on terms and conditions applicable at the time. GOK to KPC: About US$197 million. Repayment over 25 yearsp including 5 years' grace at GOK's interest rate applicable at the time for its lending to KPC, but not less than 10.75X per annum. GOK to KEB: About US$132 million. Repayment over 25 years, including 5 years grace at GOK's interest rate applicable at the time for its lending to KEB, but not 8sss than 10.75X per annum. GOI would bear the foreign exchange and interest rate risks. Project Description: The project's main objectives are: (i) to ass-st in meeting electricity demand in the State of Kar. utaka and the Southern Region of India through (a) the addition of 270 NW of hydro capacity on the Kalinadi River; (b) rehabilitation of the Sharavathi Power Station; and (c) reinforcement of the State's transmission system; and (ii) to effect institutional, operational and financial improvements in relation to both KPC and KEB through the provision of consulting services, computer hardware, software and training. There are no extraordinary technical risks associated with the Project. Geological investigations have confirmed generally good rock formation in the area of the hydro schemes. KPC and REB have staff familiar with works similar to those included in the proposed Project and consulting support will be provided in those areas in which the beneficiaries lack experience. This document has a restricted distribution and may be used by recipients only in the performance | of their ocW duties. Its contents may not otherwise be disclosed without World Bank authorization.  Estimated Cost: 1/ Item Local Foreign Total -------(Us$ Millions)------ Land, Resettlement, Rehabilitation 9.4 - 9.4 Afforestation 5.7 0.1 5.8 Civil Works 78.8 13.6 92.4 Power House Equipment 38.9 79.0 117.9 Generation Management System 2.3 6.1 8.4 Sharavathi Rehabilitation 7.3 20.9 28.2 Transmission Lines 67.8 7.4 75.2 Substations 49.6 4.5 54.1 Engineering and Administration 44.7 0.5 45.2 Institutional Development 3.1 4.9 8.0 Total Base Costs 307.6 137.0 444.6 Physical Contingencies 17.2 7.6 24.8 Price Contingencies 93.1 46.7 139.8 Total Project Cost 417.9 191.3 609.2 Interest during Construction: Bank 180.9 180.9 Other 157.1 - 157.1 Total Financing Requirements 575.0 372.2 947.2 _ Z== = 1/ Including about US$86 million in taxes and duties.  -iii- Financing Plan: (US$ millions) Source Local Foreign Total IBRD 70.4 259.6 330.0 KFAED - 27.0 27.0 GOK 363.7 85.6 449.3 KPC 85.0 - 85.0 KEB 55.9 - 55.9 575.0 372.2 947.2 Estimated Disbursements: (US$ millions) Bank FY FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 Annual 4.7 31.7 53.3 62.0 63.5 49.6 39.2 18.5 7.5 Cumulative Disb. 4.7 36.4 89.7 151.7 215.2 264.8 304.0 322.5 330.0 Rate of Return: About 12%.  -iv- INDIA KARNATAKA POWER PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. Loan and Project Summary .,..eo..,..................o... i-iii I. SECTORAL CONTEXT ........................................... 1 Commercial Energy Resources ...............e................. 1 Electricity Supply and Demand ...........e......o........ 2 Organization of the Power Subsector ................. eo 2 Finance and Pricing ....,.....,..,..e...,....e........ 3 Power Subsector Planning .....0..........oo 4 Management and Operations . 5 0OI's Strategy in the Power Subsector.,..................... 6 Bank Group Strategy in the Power Subsector 8 Bank Group Participation a. e0e@*@OO... ...... ........ 0 9 II. THE BENEFICIARIES * *...................,.e.......... 10 Introduction ........... 10 KARNATAKA POWER CORPORATION ....10 Backgrountd ............. * ............... .o.*. 10 Organization ......... .eoo.. o. 00000 *o*******e