India - Farakka Thermal Power Project

Docur..ent of The World Bank FOR OFFICIAL USE ONLY Report No. 9168 PROJECT COMPLETION REPORT INDIA FARAKKA THERMAL POWER PROJECT (CREDIT 1053-IN AND LOAN 1887-IN) NOVEMBER 30, 1990 Transport and Energy Operations Division Country Department IV Asia Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Country Exchange Rates (Yearly Averages) Currency and (Abbreviation) Rupee (Rp) Year Rupees/US$ 1978 (Project Preparation Starts) 8.19 1979 (Project Appraisal) 8.13 1980 (Project Approved and Becomes Effective) 7.86 1981 8.66 1982 9.45 1983 10.10 1984 11.36 1985 12.37 1986 12.61 1987 12.96 1988 14.60 1989 (Project Completed) 15.00 Government of India Fiscal Year April 1 - March 31 Abbreviations CEA - Central Electricity Authority CMD - Chairman and Managing Director DVC - Damador Valley C)rporation GOI - Government of India IERR - Internal Economic Rate of Return MGR - Merry-Go-Round NHPC - National Hydro Power Corporation NTPC - National Thermal Power Corporation PCR - Project Completion Report PMI - Power Management Institute SAR - Staff Appraisal Report SEB - State Electricity Board T04 Worto swK FOR OFFICIAL USE ONLY WASM1gtom OC 20433 USA Office of Director-General Operatioa 2waluation November 30, 1990 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on India Farakka Thermal Power Project (Credi: 1053-IN and Loan 1887-IN) Attached, for information, is a copy of a report entitled "Project Completion Report on India - Farakka Thermal Power Project (Credit 1053-IN and Loan 1887-IN)" prepared by the Asia Regional Office with Part II contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment Tns occumen, fta a tratWd databuuon ano may be uSe by reMsprts only to the purfmanc Of thel OfbcW GIuLet Its contents may not otherwas be acgae without Worid UnAi suthernan FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT INDIA FARAKKA THERMAL POWER PROJECT (CREDIT 1053-IN AND LOAN 1887-IN) Table of Contents Page No. PREFACE................................................................i EVALUATION SUMMARY.....................................................1i PART I PROJECT REVIEW FROM BANK'S PERSPECTIVE .........................1 Project Identity................................................1 Background......................................................1 Project Objectives .............................................1 Project Description..............................................1 Project Design and Organization.................................2 Project Implementation...........................................3 Project Results.................................................4 Project Sustainability...........................................5 IDA/Bank Performance.............................................6 Borrower Performance.............................................6 Project Relationship............................................7 Consulting Services.............................................7 Procurement.....................................................7 Project Documentation and Data..................................7 PART II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE....................9 Adequacy and Accuracy of Factual Information in Part III........9 Comments on the Analysis in Part I..............................9 Procurement ....................................................9 Financial Issues..............................................10 Receivables.................................................10 Adequacy of Revenue Covenant................................10 Rehabilitation of Land Oustees................................11 Evaluation of the Bank's Performance............................11 Evaluation of the Borrower's Own Performance....................11 PART III STATISTICAL SUMMARY..........................................13 ANNEXES .............................................................26 1. Ex-Post Internal Economic Rate of Return 2. Consolidated Income Statements 3. Sources and Application of Funds 4. Balance Sheet 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 PROJECT COMPLETION REPORT INDIA FARAKKA THERMAL POWER PROJECT (CREDIT 1053-IN AND LOAN 1887-IN) Preface This is the Project Completion Report (PCR) for the Farakka Thermal Power Project in India, for which Credit 1053-IN and Loan 1887-IN in the amounts of US$225 million and US$25 million, respectively, were approved on June 26, 1980. The credit was closed on December 31, 1988 and the loan on June 30, 1989, 2 years 3 months behind schedule. The credit was fully disbursed. However, the loan could not be fully disbursed. An undisbursed balance of US$12,216,283.43 was cancelled from the loan effective February 1, 1990. The PCR was jointly prepared by the Transport and Energy Operations Division, Country Department IV (India) and the Energy Division, Technical Department, both of the Asia Regional Office (Preface, Evaluation Summary, PaLts I and III), and the Borrower (Part II). Prepazation of this PCR was started by the Borrower during the Bank Group's Supervision Mission in October, 1989. However, subsequently based on the revised guidelines for PCRs, a fresi draft was begun on arrival of the Bank Group's final Supervision Mission in February 1990, and is based, inter alia, on the Staff Appraisal Report (No. 2976a - IN), the Development Credit, Loan and Project Agreements, correspondence between the Bank Group and the Borrower and internal Bank Group memoranda. - ii - PROJECT COMPLETION REPORT INDIA FARAKKA THERMAL POWER PROJECT (CREDIT 1053-IN AND LOAN 1887-IN) Evaluation Summary Objectives The two main objectives of the project were: (i) to provide NTPC assistance to alleviate power shortages in the Eastern Region Interconnected System of India by installing three 200 MW each of coal fired units as the first stage of NTPC's Farakka Thermal Power Project; and (ii) to assist GOI in achieving its objective of further advancing the regional and national integration of the power subsector. (Part I, para. 2 and 3). Implementation Experience NTPC successfully implemented the project. However, there were certain delays in the implementation on account of the contractors' industrial relations problems including law and order situation in nearabout areas. No. 1 unit was commissioned eight months behind the revised schedule and No. 2 and No. 3 units were commissioned thirteen and fifteen months, respectively, behind the revised schedule. Timely corrective actions taken by NTPC arrested the possibility of further delays. (Part I, para. 9-12). Results The project fully achieved its main objectives through successful completion of three 200 MW units of the first stage of Farakka station and associated 400 kV transmission lines. NTPC's financial rate of return on historically valued net fixed assets for the last four years was between 142 and 172 against the covenanted rate of return of 9.5Z for the period FY89 and beyond. The economic rate of return of the project was about 19Z against the estimated figure of about 132. (Part I, para. 15 to 19). Sustainability Operati)nal efficiency of NTPC, in this power station as well as in other NTPC plants is good in spite of the continuous high growth rate of the utility and thus contributes to keeping up benefits from the projects NTPC carries out. (Part I, paras. 20 to 23) Findings and Lessons Learned Major findings were as follows: (a) Design and engineering work for the project were successfully carried out in-house by NTPC, based on its experience with earlier projects, with very limited support from outside. '"--t I, para. 4); and -iii- (b) The project site being situated in a low lying area prune to flash floods with extremely difficult soil condition and high ground water level, posed difficult civil engineering challenges, which were successfully overcome by the NTPC. This experience has been effectively utilized in the implementation of the second stage Farakka project. (Part I, para. 27). Lessons to be learned from this project are summarized as follows: (a) To improve implementation performance and consequently to accelerate disbursements, key actions should be taken up-front. In the case of this project, the procurement action should have been proceeded more quickly (Part I. para. 10); (b) The Bank Group could have been more forceful in seeking NTPC's compliance with the receivables covenan', a critical element to ensure NTPC's liquidity. (Pa-_ I, para. 29). (c) Similarly, the Bank could have be.n more convincing in its efforts to improve the revenue covenant. (Part I, para. 29); and (d) The Bank Group should have acted earlier in encouraging NTPC to enhance its ability to address environmental and resettlement matters. In this context, the implementation of the Environmental Action Plan agreed within the proposed NTPC-Regional Puwer System Project should be monitored by the Bank very closely (Part I, paras. 13, 14 and 25). - 1 - PROJECT COMPL'TION REPORT INDIA FARAKKA THERMAL POWER PROJECT (CREDIT 1053-IN AND LOAN 1887-IN) PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE Project Identity Name: Farakka Thermal Power Project Credit/Loan No: Ccedit 1053-IN and Loan 1887-IN RVP Unit: Asia Region Country: India Sector: Energy Subsector: Power Background 1. Power shortages of the 1970's and the adverse effect these were having on the productive sectors of the economy prompted the Government of India (GOI) to intensify its efforts to balance the demand and supply of electricity. The strategy of the GOI was to supplement efforts of State Electricity Boards (SEBs) in increasing installed capacity and the establishment of high voltage transmission lines. Emphasis was laid in the power subsector to: (i) accelerating the development of the hydro power potential and large coal fired power plants at both pithead locations and the proximity of load centers; (ii) improving the efficiency of thermal power plants and reducing losses in transmission and distribution networks; (iii) expanding the rural electrification program; and (iv) strengthening the organizational and management capabilities of the SEBs. In 1974 GOI decided to proceed with the construction of first stage of four large thermal power stations of 600 MW each at Singrauli, Korba, Ramagundam and Farakka, located near coal fields and supplying bulk power to the beneficiaries through interconnected 400 kv transmission systems. GOI established in 1975 two power generating companies, the National Thermal Power Corporation (NTPC) and the National Hydro Power Corporation (NHPC) to construct and operate large thermal ana hydro power stations and associated transmission systems. The feasibility study of the Farakka project was prepared by NTPC in 1978 and the project appraisal was made by the Bank group in 1979. Project Objectives 2. The primary objectives of the project were to: (a) provide NTPC with assistance needed to assure its envisaged role, including t..e alleviation of power shortages in the Eastern Power Region of the country and (b) assist GOI in achieving its objectives of further advancing the regional and ultimately the national integration of the power subsector. Project Description 3. The Farakka Thermal Power Project (Credit 1053-IN/Loan 1887-IN) formed first stage of NTPC's Farakka Thermal Power Development program of 2,100 MW (3x200 MW + 2x500 MW + 1x500 MW) ultimate capacity located in the - 2 - Hurshidabad District of the State of West Bengal and consisted of the installation of the three units of 200 MW each and associated transmission facilities, including the following components: (a) acquisition of land, civil works comprising of roads, culverts and other miscellaneous preliminary works, power station and residential buildings, plant foundations, railways, canals, ducts and other works associated with the *circulating water systems; (b) three 680 tonnes/hour boilers and three 200 MW turbo-generating units complete with all auxiliaries and ancillary electrical and mechanical equipment including the switchyard; (c) the 400 kV transmission lines, comprising one 165 km single circuit line from Farakka to Durgapur and one 245 km single circuit line from Farakka to Jeerhat; and (d) a training simulator. Acquisition of steel for structural works under NTPC's ongoing projects was subsequently included under the scope of the project. Project Design and _anization 4. Based on the experience gained by NTPC in executing similar projects at Singrauli, Korba and Ramagundam, for the first time complete design and engineering work for the Farakka Project was carried out in-house by NTPC with very limited support from Indian consultants in a few areas. However the Project Design Memorandum was reviewed by a foreign cons,ilting firm. 5. At the time of appraisal, NTPC had adopted a two-tier organizational structure--one at the central/corporate level and the other at the project sites. Technical services, contract and procurement services and quality assurance, etc. were centralized. For each of four power plants, a project organization group under the control of a General Manager was organized to manage the implementation of the particular project. 6. NTPC was reorganized, subsequently, after the appraisal to have three-tier organizational structure: (a) corporate level; (b) regional level; and (c) project level. 7. The Corporation is headed by a Chairman and Managing Director (CMD). who is assisted by five full-time functional Directors, namely, Director (Projects), Director (Operation), Director (Technical), Director (Finance) and Director (Personnel). At the Corporate Office, corporate planning, central procurement and vigilance functions are headed by Executive Directors reporting to the CMD. For the purpose of the administration and execution of work at the sites, the Corporation is divided into five regions (North, West, East, South and National Capital Regions) whose headquarters are at present located at Allahabad, Nagpur, Patna, Hyderabad and Delhi respectively. These regions are under the control of Regional Executive Directors who are responsible for the implementation and operation and maintenance of power plants and transmission systems in respective regions. Every power plant and regional transmission unit is headed by a General Manager. 8. The new structure has the advantage of reducing and optimizing che span of control of the CMD. The structure provides for decentralization of line responsibility while retaining centralized systems in areas such as long- term planning, basic engineering, procurement of critical equipment and spares, quality assurance, co-ordination with the World Bank and other financing agencies, inspertion etc. Project Implementation 9. The implementation of the project consisting of three 200 MW units and associated 400 kV transmission lines have been completed with about one year delay from the revised implementation schedule. The first unit was commissioned in January, 1986 and subsequent units in December, 1986 and August, 1987 respectively. 10. At the time of appraisal. the last 200 MW unit (third unit) of the project was scheduled to be commi&sioned in August, 1985 based on the award of the main plant equipment contract (i.e., boiler and turbo-generator) in November, 1980 (zero date). The notice inviting tenders for the main plant equipment was issued in September, 1979. Bids were opened in May, 1980 dfter the negotiations for financing were held. However the award was made in May 1981, one year after receiving the tenders. The revised schedule for commissioning of the last 200 MW unit, based on this zero date, was May 1986, considering four years for commissioning of the first 200 MW unit from the date of award for the main plant equipment and six months for eac' ubsequenL 200 MW units thereafter. 11. Although NTPC implemented the project ia a similar manner to other projects and awarded the other critical contracts to experienced contractors in accordance with the revised schedule, delays as explained in para. 9 above were experienced. The major reasons uare mainly due to the contractors' industrial relations problems including the law and order situation in near- about areas. 12. In spite of all timely efforts towards corrective actions taken by NTPC, these constraints adversely affected the progress of the project. In order to arrest further delay, contingency arrangements were made for transportation of coal by rail-cum-road instead of Merry-Go-Round (MGR) systeml/ and also a coal crushing plant was installed because of delay in readiness of main coal handling plant. 13. The implementa.tion of the Project, including the subsequent expansion phases of another 1500 MW,2/ required the acquisition of 1,683 hectares (4,207 acres) resulting in compensation of 10,550 families affecting 12 villages. Part of the required area was needed for dumping the ash. A limited number of shops were also allotted to oustees in the NTPC complex. There was no need to construct a dedicated colony as no homesteads were lost. NTPC has also 1/ There were delays in implementation of the MCR system and the coal loading infrastructure at the mine. Both of them were completed and began operation in 1988. 2/ Farakka II (Ln. 2442-IN) for two 500 MW units and the proposed NTPC- Regional Power Systems Project, includes Farakka III (one 500 MW unit). provided civil amenities in the relocation coloni.es, including medical facilities, periodic visits by medicsl officers and preventive check up, public health is increasingly deteriorating in the colonies, partly as a result of a larger squatter settlement which has grown around the area. Limited numbers of oustees were given employment ar.d on-the-job training by NTPC, and employed through various contractors working for the project. However, no employment opportunities have been provided to a majority of the oustees, because of their low level of skills. However, it has to be recognized that there are limits to NTPC's ability to resolve all the environmental issues associated with a powez development project and that the local government authoritics should be responsible for the public infcastructure needed in the context (if a large project development. NTPC has also taken appropriate measures with regard to stack emissions and water effluents. They regularly monitor these aspects of environmental protection and so far comply fully with environmental quality standards prescribed by the Government. Therefore no ecologi,al problems are envisaged. In addition, NTPC has begun a continuous afforestation program. 34. As a result of problems encountered and experience gained, particularly in Singrauli, as well as in other projects, including the Bank- financed Kotba, Ramagundam and Farakka thermal-,.ower plants, the Bank encouraged NTPC to become more aware of the particular complexities associated with environmental and especially with resettlement iRsucs. In recent projects -- e.g. the Talcher Thermal Power Project (Ln. 2845-IN) and the proposed NTPC-Regional Power Systems Project -- the approach has been from the beginning more cor,rehensive. In the Talcher project a detailed environmental impact assessment .as prepared prior to beginning the construction works. In the case of the proposed NTPC-Regional Power Systems Project, NTPC first recruited staff specialized in social and environmental sciences and then undertook a review of the environmental aspects at the four abovementioned Bank-financed power stations in order to implement corrective measures to adequately rehabilitate and preserve the physical and social environment in those areas affected by these projects. To achieve this, NTPC has prepared an Environmental Action Plan (EAP) addressing aspects related to: (i) preparation of Environment Impact Assessments for existing and future projects; (ii) resettlement and improvement of living conditions of the displaced population; and (iii) development of afforestation plans. In Farakka, an element of the EAP is the Environmental Impact Assessment (ETA), which wa- carried out by NTPC staff. The implementation of the EAP will be monitor-! by the Bank very closely. Project Results 15. The project fully achieved its main objectives through successful complecion of 600 MW additional power generation capacity and associated 400 kV transmission lines. The generation from the project after commercial oppration was 4,972 GWh as of the closing date (December, 1989). The unitwise details are given in Part III. 16. The astimatel cost of the project at appraisal was US$527.1 million. The final cost is about US$627.79 million as shown in Part III. The increase in total cost of about 19Z is mainly due to physical changes based on the detailed engineering and due to price escalation. 17. The estimated disbursements at appraisal and actual disbursements are given in Part III. The original closing date of loan/credit was March 1987. Actually the crcdit was closed on December 31, 1988 and loan on June 30, 1989, - 5 - after two extensions. Disbursements against commitments were made till June 30, 1989 for credit and till December 31, 1989 for loan ard outstanding balance of USS12,216,283.43 was cancelled from the loan effect -e February 1, 1990. 18. The allocation of the loan into various categories and actual disbursement catcgorywise are shown in Part III. The original allocation was revised in December 19e6 to reflect changes in financing for the erection and structural steel works. 19. In the SAR, the ex-ante internal economic rate of return (IERR) for the project was estimated at about 13 percent, based on measurable economic costs and benefits associated with a 1,100 M4 development. The ex-post IERR for the 600 MW development is about 19 percent as shown in Annex 1. Project Sustainability 20. As in wost power projects, the economic evaluation of the project in both, the SAR and the PCR, uses revenues from sales as a proxy from economic benefits and therefore fails to give the full picture. Further, sustainability of benefits from power projects is closely linked to that of the soctor and of the utility. Therefore, in the present context, it has to be asceLtrined in a rather qualitative way, through the factors that affect it. 21. The political and economic environment has been stable and is expected to continue to be so. For many years there have been shortages in the supply of electricity. These are likely to persist, because, although GOI is strongly committed to the development of the power sector as one of the bases for both industrial and rural development, the Government is not in a position to allocate the full amount of funds the sector would require to meet the demand. The unresolved discrepancies between the states' and GOI's positions concerning the organization and the roles of the various entities of the sector may tend to lead to economically sub-optimal solutions, but not to an extent that they would endanger sustainability of benefits from existing faciiities, in general, and from the Farakka power plant, in particular. 22. The institutional setup of the sector is progressing, albeit slowly, towards a structure combining as much as possible regionalization of operations with country-oide optimization of the use of resources. There is still a long way to such optimization. 23. The project was su-cessful in that all the three units were completed satisfactorily and are ge-ierating the much-needed electricity for the Eastern Region. NTPC's capacity in designing and implementing 200 MW units was successfully tested when the Corporation designed and supervised the complete project. Operational efficiency of Farakka and NTPC's ither power plants and transmission systems is good in spite of the continuous high growth rate of the utility and thus contributes to keeping up benefits from the projects NTPC carries out. Strengthening of NTPC's project design, implementation, operation and maintenance capabilities together with the realization of successfully operating 600 KW additional operating capacity are indicators that show that benefits from the project would be sustained over the long- term. -6- IDA/Bank Performance 24. The performance of the Bank Group from the project preparation through project completion was satisfactory. The Bank Group maintained good relations with the beneficiary throughout the execution of the project and fostered an environment conducive to increased Bank Group involvement with NTPC. To date the Bank Group has assisted NTPC in implementing a total of 13 projects. With a total assistance of about 4 billion dollars. Through these operations the Bank Group has been strengthening the institutional and financial viability of the corporation. It is important to highlight that, during this initial decade of development, NTPC and the Bank Group developed a close relationship, during which the Bank Group has endeavored to support NTPC in each step of its development, in a manner that goes much beyond the substantial financial assistance extended to its expansion plan. 25. The Bank Group has also continued addressing a number of shortcomings of broader sectoral concern. Major items are: (a) During the preparation of the recent projects, a more comprehensive and up-front approach towards environmental protection, resettlement and rehabilitation issues has been adopted and an Environmental Action Plan, aimed to complement earlier efforts has already been drawn up for Singrauli, Korba, Ramagundam and Farakka projects, under the recently negotiated NTPC-Regional Power Systems Project; (b) Implementation of an Action Plan to liquidate accumulation of arrears receivdbles from SEBd. (c) Development of the Power Management Institute (PMI) to provide specialized training in management and other aspects of the power sector. Borrower Performance 26. The performance of NTPC was generally commendable and met most of the expectations of the appraisal report. 27. For the first time complete design and engineering work for the project were successfully carried out by the NTPC in-house based on its experience with earlier projects, with very limited support from outside. Further, the project site being situated in a low lying area prone to flash flood with extremely difficult soil condition and high ground water table level, posed difficult civil engineering challenges, which were successfully overcome by the NTPC. This experience has been effectively utilized in the implementation of the second stage Farakka project. The quality assurance and inspoition system which include manufacturing quality plans, field quality plans, quality audit and surveillance was good. 28. The project management system, successfully implemented at the earlier project, was also successfully utilized. However, there were certain delays in the implementation because of the reasons as explained earlier. Despite all timely cor:-ective actions by the NTPC, various constraints affected the project progress. 29. The financial performance of NTPC during this period of implementation and initial years of operation were satisfactory. In particular. 'PC has been able to expand and diversify its sources of project financing. Recently, NTPC has flcaled bonds in the domestic market in three public issues, as well as two private placements, for a total of about Rs 16.83 billion (US$990 million at the exchange rate at the time of these financial operations). Further data on NTPC's finances are given in Part III. The covenanted rate of return from April 1, 1988 on historically valued fixed assets in operation was 9-1/2 percent. Against this, the rates of return achieved by NTPC from FY84 to FY89 are given below: Fiscal year FY84 FY85 FY86 FY87 FY88 FY89 Financial rate of return 11.2 12.7 16.8 17.0 16.4 14.8 These high level of rates of return did not translate in adequate self- financing ratios (the average for the last six years was 6.7Z), partially because of NTPC's ambitious expansion program and partially because the actual cash flow generated by operations was affected by poor collections, which during the last four years have increased to levels equivalent to up to five months of sales, above the covenanted two months ceiling. This highlights a shortcoming of the rate of return covenant which does not differentiate between income accrued and income actually received. Suggestions to modify the revenue covenant were not agreed to by GOI and NTPC. To correct the collections problem, an action plan has been drawn up in consultation with the Bank Group. Project Relationship 30. Good relationships were maintained by the Bank Group with GOI, NTPC, and other participants in the project. Consulting Services 31. As explained under para. 4, complete design and engineering work fo. the project were carried out, in-house by NTPC with very limited support from Indian consultants in a few areas. However, the Project Design Memorandum was reviewed by a foreign consulting firm. The performance of the consultants was satisfactory. Procurement 32. Bank guidelines were strictly adhered to by NTPC. The average procurement time per contract -- from the .ssuance of bid documents to contract award -- was nearly one year, consisting of around 3 months for bidding and about 7-9 months for bid evaluation. This latter time is certainly too long and constitutes a major source of implementation delay. However, some progress in this regard has been made so far in subsequent projects undertaken by NTPC (e.g. Farakka II). NTPC is in the process of finalizing with the Bank a standard bidding document which is expected to cut down the time lag substantially. Several contracts were amended to include either supply or spare parts for equipment or additional quantity of material. No significant claims were raised by bidders. Project Documentation and Data 33. The project's legal agreements adequately reflected the Bank Group's interests in a satisfactory execution of the project. The staff appraisal report was comprehensive, well prepared and provided a useful framework for the Bank Group and NTPC during the project implementation. The Borrower regularly submitted Quarterly Progress Reports for the project. This has been I -8- used for review of physical and financial performance and it was generally used for planning the visits of the supervision missions to India, which often included site visits, in addition to review meetings at NTPC Corporate Office in New Delhi. -9- PROJECT COMPLETION REPORT INDIA FARAKKA THERMAL POWER PROJECT (CREDIT 1053-IN AND LOAN 1887-IN) PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE A. Adequacy and Accuracy of Factual Information in Part III 1. Part III of the PCR prepared by the Bank includes statistical data covering all aspects of the operation and implementation of the project. The factual information relating to NTPC, contained in this section, have been found to be based on the Staff Appraisal Report (SAR) prepared by the Bank for the project, discussions between Bank and NTPC during various supervision missions and quarterly project progress reporting by NTPC. The information included is adequate and correct. B. Comments on the Analysis in Part I 2. The analysis made by the Bank under Part I is quite comprehensive and has covered all important aspects. However, although this analysis is generally based on factually correct information, there are certain issues which need to be examined keeping in view the background of developments as they took place to better appreciate the events. Some of these are as follows: i. Procurement (reference para 10 and 32 of Part I) 3. Since commissioning of the NTPC Power Plant units is reckoned (as 4 years for 200 MW units) from the date of award of main plant equipment (i.e. zero date), overall delay in prcject implementation (as compared to SAR estimates) on account of procurement delay can be largely attributed to the delay, if any, in the award of main plant equipment. 4. Notice Inviting Tenders (NIT) for the main plant equipment package for this project was issued in the second week of September, 1979. However, bids could be opened only in May, 1980 (after a period of 8 months after NIT and 14 months after Government of India (GOI) approval for the project), after negotiations for the financing were held. The negotiations for the project could be held only in May 1980 on account of the requirement of obtaining undertakings from the beneficiaries in the Eastern Region regarding their willingness to take power in accordance with agreed allocations. Thus, even though advance action for procurement was taken by issuing tenders, further action could not be taken until the completion of negotiations. 5. The award for main plant equipment was made in May 1981, a year after bid opening. Nine months were taken for evaluation, longer than normal, due to delays in receipt of certain clarifications from evaluated bidders. The award was made after the Bank's concurrence to the award recommendations, which took three months. - 10 - 6. In the context of average time taken for procurement consideration of all packages, as mentioned in Part I of the PCR. it may be noted that the time taken has shown a declining trend in the subsequent projects. For Farakka II project. 53 out of 60 packages took less than 3 months from bid invitation to opening. 39 of these packages were finally awarded in less than 8 months from bid opening. In case of the National Capital Thermal Power Project (NCTPP), 16 out of 24 packages took less than 3 months from bid invitation to opening and 17 of these packages were finally awarded in less than 8 months from bid opening. NTPC is in the process of finalizing with the Bank a standard bidding document, which is expected to cut down the time lag further. ii. Financial Issues a. Receivables (reference -para 29 of Part I) 7. Regarding NTPC's outstanding dues against the sale of power, it may be noted that with a view to limit the accounts receivables to a reasonable level, a covenant was provided first in the Loan Agreement for the Rihand Power Transmission Project and was repeated in subsequent projects vis. the Combined Cycle Power Project, Talcher Thermal Power Project and National Capital Thermal Power Project (NCTPP) requiring NTPC to maintain its accounts receivables at a level not exceeding billing for the two preceding months. The Bank is aware of NTPC's continuous efforts to bring down the receivables. This issue was also discussed in detail during negotiations held with the Bank in December 1989 for financing of NTPC's Regional Power System Project. Based on these discussions, NTPC, in consultation with GOI and the beneficiaries, has drawn up a time bound Action Plan for liquidation of arrears and bringing down the receivables to covenanted levels. The outstandings by end March 1990 stood at 4.6 months of average sales. NTPC and GOI are making intensive efforts to persuade the beneficiaries to comply with the provisions of the Action Plan. Some of the recent developments indicate that NTPC's and GOI's efforts in this regard are beginning to bear fruit. b. Adequacy of Revenue Covenant (reference para 29 of Part I) 8. For sometime now the Bank as been of the view that the revenue covenant (requiring 9.5Z of ROR in the fiscal year beginning April 1, 1988 and thereafter agreed under this project, and subsequently modified to 7Z in FY84/85 through FY89/90 and 9.5Z from FY90/91 to FY94/95, and a satisfactory level thereafter) has its shortcomings. The reasons stated are: i) It does not cover NTPC's present cost of capital; and ii) It assumes that all income is actually rece -ed (whereas there have been outstanding dues against the benei4ciaries of NTPC power). 9. At the time the loan agreement for the Farakka project -as signed, the marginal cost of funds to NTPC was 10.125Z (10Z return on equity and 10.25Z interest on a loan with equity and a loan provided by GOI in the ratio of 1:1). This was generally matching with the covenanted rate, especially considering that equity was to be provided first before the loan component for financing NTPC projects. As shown in Part I. NTPC's financial rate of return had averaged 16.251 during the last four years. - 11 - 10. During the recent negotiations for the Regional Power System Project, the Bank had suggested modifications in the rate of return covenant, considering the present increased cost of borrowing. GOI and NTPC had affirmed that they would endeavor to take the necessary steps to enable NTPC to continue to earn an 11Z rate of return commencing in 1990-91. iii. Rehabilitation of Land Oustees (reference para 13 of Part I) 12. Regarding rehabilitation of the land oustees/affected persons due to acquisition of land for the Farakka project, NTPC had complied with all relevant rules/norms prevalent at that point in time. This includes payment of mandatory compensations to the land oustees. There was no need for constructing a dedicated colony as no homesteads were lost. Since then, in recent years, there has been a continuously growing concern about the rehabilitation aspects, especially of large projects. Conscious of its responsibilities in this regard, under the Regional Power System Project, which has recently been negotiated. NTPC has prepared an Env.ronmental Action Plan comprising a review of environmental and rehabilitation aspects of NTPC's Singrauli, Korba, Ramagundam and Farakka projects. For Farakka, a socio- economic study has been undertaken under the Action Plan to identify the need for additional infrastructure in settlement areas. It has been agreed under the Action Plan to identify the need for additional infrastructure in settlement areas. It has been agreed that the intent of the Environmental Action Plan is not to reopen or reconsider individual/family rehabilitation/resettlement packages already provided to the project-affected persons in the past. The purpose of the assessment is to determine the need for community development assistance for the affected people. C. Evaluation of the Bank's Performance 13. Farakka Thermal Power Project was the fourth in the series of large thermal power projects (Singrauli, Korba and Ramagundam being the other three projects) and the first in the Eastern Power Region of the country taken up by NTPC for implementation during its first phase of development. The assistance extended by the Bank contributed substantially in bringing the project to fruition. The project was supervised closely and an adequate number of site visits under supervision missions were made. Excellent cooperation existed between the Bank staff and NTPC during the implementation of the project. In fact, this relationship continued to grow and to date the Bank group has extended financial assistance to NTPC to the extent of nearly US$4 billion for the implementation of 13 projects. This includes the assistance provided by the Bank for the 2x500 MW expansion program of the Farakka project under the Second Farakka Thermal Power Project. NTPC's Regional Power System Project, which includes the Farakka Stage III (1x500 KW) expansion program has been negotiated. With the approval of assistance for this project, the Bank Group would be involved in the total Farakka Project up to its ultimate capacity. D. Evaluation of the Borrower's Own Performance 14. At the time the Farakka Thermal Power Project was envisaged, it was expected that the Project, on completion, would contribute significantly to the easing of power shortages in the region. With the satisfactory completion of the project, albeit with some delays, NTPC has been able to achieve this main objective as the generating performance of the units at this station has been satisfactory and the power station is supplying much needed electricity to the Eastern Region, which continues to suffer from peaking as well as energy shortages. The project has also contributed to the overall development of the area. - 12 - 15. Right from inception, NTPC.had adopted as an organizational objective achievement of self sufficiency in the design and engineering of large thermal power stations and high voltage transmission lines. With the experience gained in the earlier Singrauli, Korba and Ramagundam projects, NTPC neared this goal in the Farakka project. For the first time, entire design and engineering for this project were successfully done by NTPC in-house with very limited support from consultants. 16. It has been recognized that NTPC has set for itself a tight time schedule of commissioning 200 MW units within 4 years from the date of order of the main plant equipment. -To achieve this objective, NTPC had also developed and applied its Integrated Project Management and Control System (IPMCS) in its projects. While the use of the project management system and close monitoring had assisted NTPC in commissioning its units in other projects either on time or, in some cases, even ahead of schedule, in the case of the Farakka power project, even though the proven project management system was adopted and critical contracts w?re awarded to experienced contractors who had carried out similar jobs in other projects, there were delays in commissioning of the units due to reasons beyond the control of NTPC. The delay was caused by contractors' industrial relations problems, including the law and order situation in nearby areas and frequent interruptions in the power supply. NTPC had taken every effort at all levels to contain this situation. In spite of all the timely efforts taken by NTPC. the progress of the project was adversely affected. On the technical side, NTPC had taken care to provide for contingency arrangements, keeping in view the possible delay in the readiness of the main coal handling plant. 17. With the completion of the project and with NTPC staff operating the commissioned units now, it has been possible for the organization to bring about a change for the better in the industrial relations climate in the area. Having gained experience in the handling of such industrial relations situations (through the contractors' problems), it has been possible for NTPC to avoid such major adverse situations in the implementation of the ongoing Farakka expansion stage project. 18. NTPC has recognized training, both managerial and technical training, as one of the most important aspects of organizational development. it is significant that the Farakka power project assisted by the Bank includes procurement of a full scope 500 MW thermal power plant training simulator. There already exists at NTPC's Korba site a 200 MW training simulator. This equipment simulates actual operating conditions and is very useful for training power plant operators and technicians. - 13 - PROJECT COMPLETION REPORT INDIA FARAKKA THERMAL POWER PROJECT (CREDIT 1053-IN AND LOAN 1887-IN) PART III: STATISTICAL SUMMARY Related Bank Loans Loan No. Year of Title Purpose Approval Status Comments Loan 2442-IN To help (a) solve rationing in June 1984 On-going (Closing The two 5o w Second Farakka the Eastern Regions by provid- date December, units are Thermal Power ing additional two 500 MW 1991) scheduled to put generating units; (b) develop in commercial organization and policies for operation in the operation of regional and December 1991 national power systems; and and December (c) develop long-range national 1992 respective- power planning. ly, both behind one year seven months behind the original schedule, May, 1990 Negotiations were Loan........ (a) NTPC-related objectives: (expected) held in December, Regional Power 1989. Systems Project (i) To provide additional 500 (Proposed) MW generating unit at Farakka and transmission facilities to help meet the unsatisfied demand of the Eastern ard Western regions; (ii) To improve the quality of the electricity supply; (iii) To enhance NTPC's ability to address environmental and resettlement matters; and (iv) To strengthen NTPC's managerial capability; (b) Sectoral objectives: (i) To strengthen managerial skills of NTPC and the SEBs; and (ii) To improve the opera- tional environment in the Eastern Region. - 14 - Project Timetable Date Date Date Item Planned Revised Actual - Appraisal mission 06/79 - Loan/Credit Negotiation 05/80 - Board Approval 06/26/80 - Loan/Credit Signature 07/11/80 - Loan/Credit Effectiveness 12/10/80 - Loan/Credit Closing 03/87 12/88 Credit 12/31i88 Loan 06/30/89 - Loan/Credit Completion Credit 08/08/89 Loan 02/01/90 /1 /1 The last disbursement was made on February 1, 1990, with authorization on an exceptional basis by the Regional Vice President. - 15 - Credit/Loan Disbursements ($ milli,)n) IDA/Bank Fiscal Year Estimated Actual Actual Z of and Semester Cumulative Cumulative /1 Estimate 1981 1 - - 2 20 23.84 119.20 1982 1 35 24.37 69.63 2 85 30.76 36.19 1983 1 140 30.77 21.98 2 170 49.18 28.93 1984 1 180 67.21 37.34 2 185 108.53 58.66 1985 1 190 116.51 61.32 2 210 151.93 72.35 1986 1 220 159.95 72.70 2 235 189.17 80.50 19E7 1 240 192.66 80.28 2 250 213.86 85.54 1988 1 214.18 85.67 2 215.76 86.30 1989 1 215.82 86.33 2 218.13 87.25 1990 1 227.56 91.02 2 237.78 95.11 /1 An undisbursed balance of USD 12,216,283.43 was cancelled from the Loan on February 1, 1990. - 18 - Project Implementation Appraisal Revised Indicators Estimate Estimate Actual (1) Installation of three 200 MW units with associated civil work: To be commissioned by be commissioned by Commissioned in /1 First unit August 1984 May 1985 January 1988 Second unit February 1986 November 1985 December 1986 Third unit August 1986 May 1988 August 1987 (2) Installation of about 410 Km of 400 KV transmission lines along with associated substations: To be completed by To be completed by Completed in (i) Farakka-Durgapur January 1984 matching with units February 1987 single circuit (ii) Farakka-Jeerhat January 198A July 1985 single circuit (3) Installation of a 500 MW To be completed by Operator training December, 1991. simulator 1 Dates of commercial operation were as follows: No. 1 Unit November 1, 1986 No. 2 Unit October 1, 1987 No. 3 Unit September 1, 1988 - 17 - Project Costs and Financing A. Comparison of Estimated and Actual Project Costs SAR Actual SAR Actual ----Rs Million--- --US$ Million-- Preliminary Works 98.0 304.7 11.6 25.6 Civil Works 518.5 1,749.8 61.7 147.0 Electrical & Mechanical Plant 1,626.8 2,827.1 193.7 237.6 Coal Handling & Transporta- tion 216.2 1,310.4 25.8 110.1 Transmission (400 KV) 251.6 563.1 30.0 47.3 Training Simulator 25.2 150.0 3.0 12.6 Engineering & Administration 253.3 364.0 30.2 30.6 Physical Contingencies 160.4 23.4 19.1 2.0 Price Contingencies 969.3 30.0 115.4 2.5 Taxes and Duties 75.0 /1 8.9 /1 Total Project Cost 4,194.3 7,322.5 499.4 615.3 Interest During Construction 233.0 148.5 27.7 12.5 Total Financing Required 4,427.3 7,471.0 527.1 627.8 /1 Included in the individual category cost. Comments: The cost overrun by 19.1% was caused mainly by physical changes, based on detailed engineering and due to price escalation. - 18 - Project Financing (USX '000) Planned (Loan/Credit - urce Agreement) Revised Final 1/ (U3 '000) x (US$ '000) r (UST '0 1. IA/IBRO Cat.ori Turbo generator sets, boiler 137,000 136,484 and Auxiliaries and Associated erection works Elect. Eqpt. and Associated 7,000 8,988 erection works Other power staton eqpt. 16,000 15,963 and Associated erection works Coal handling and 51,000 47,808 Transportation eqpt. and Associated erection works Transmission eqpt. and 17,000 16,023 Associated erection works Simulator 5,000 425 Consultants' Services 100 93 Structural Steel and 16,900 15,031 Associated erection works Sub-total '50,000 47.43 237,783 37.88 2. Domestic 277,100 62.57 3i0,007 82.12 Total 527,100 100 627,790 100 Comments: Because of cost overrun, loan disbursements contributed only 37.9% of the total project cost as against 47.4% estimated at appraisal. At the borrower's request, the Bank loan was re-allocated using the unallocated funds and transfers between different categories to finance, erections and structural sto*l. 1/ As per category in which claims were lodged. - 19 - Proiect r'esults A. Direct Benefits Indiratur Appraisal Estimated at closing estimate date/full development (As of December, 1989) 1. Energy Generation (GWh) Unit I 2,245.3 (Since Commercial Unit II 1,571.2 operation) Unit III 1,155.4 Total 4,971.9 2. Power Transmission To the Beneficiaries To the Beneficiaries in the Eastern Region in the Eastern Region B. Economic Impact (1) In the appraisal report, the return on investment was calculated for the full Farakka program at the time of appraisal of 1,110 MW generating capacity to demonstrate the relationship between tariffs and the economic cost of the development. It was defined as the discount rate at which the present worth of the economic cost associated with the development equals the present worth of the economic benefits over the life cycle of the development. The measurable costs included: (a) capital and labor costs involved in the development of generation and trai.-.iission facilities. (b) the annual operation and maintenance costs; and (c) fuel costs. The benefits were measured in terms of the revenues to be derived from the sale of electricity. (2) Based on measurable economic costs and benefits associated with the 1,100 MW development, the ex-ante internal economic rate of return (IERR) was estimated at about 13?. Actual tariffs have been higher than those envisaged and this has more than compensated for a higher project cost and longer construction period. The same approach results in an ex-post IERR of about 19Z for the 600 MW development (Annex 1) which compares favorably with opportunity cost of capital, implying the NTPC's bulk supply tariffs for the Eastern Region continue to adequately reflect the economic cost of supply. - 20 - C. Financial Impact (1) As per the agreement, NTPC was to sell power from the projec to SEBs in the Eastern Region 1/ under bulk supply contracts satisfactory to the Bank Group and GOI was to ensure that all necessary steps were taken to obtain an undertaking from respective State Governments to purchase, in the aggregate. not less than 85Z 2/ of the output of power from the Project. GOI and NTPC have complied with their commitment despite an initial delay in the signing of the bulk supply contracts. NTPC's operating and financial performance, however, was not adversely affected by this delay. (2) NTPC's actual and project financial statements for the period FY83-FY89 are presented in Annexes 2 to 4. The most salient feature of NTPC's operations during the period FY84-FY88 is the spectacular growth the corporation experienced. While net fixed assets in operation has increased 4.62 times, sales of electricity increased by more than 6 times. Even more striking is the high level of investment in projects under construction. Work-in-progress at the end of the period was almost 1.37 times that of assets in operation. This reflects the continuation of a highly accelerated expansion program which, in turn, explains why the self-financing ratio remained modest during the period, representing only 6.7% of the total financing requirements, despite the reasonable rates of return achieved (around 16% in the last three years, well in excess of those projected in the appraisal reports, and much higher than the 9.5% requizal under the loan as a target for FY89). Debt service coverage was very comf3;table during the period because repayment of debt started only in FYeg. 'urrent ratio. which was below one during the earlier part of the period red to 1.8 by FY89. However, a closer look at th: working capital positior o f NTPC reveals, starting in FY83, a very unsatisfactory collection ' )'.mance. Under recent loans, a covenant was introduced that requires that NTI '. receivables should not exceed the equivalent of two mithb of sales. Howe%.r, despite its best efforts, NTPC has not teen able t: achieve this covenan , target. The GOI, Bank and NTPC have agreed on a set of actions that are f iected to correct the situation. Satisfactory first steps of this action plar. .a condition for the presentation to the Board of thL nroposed Regional P r Systems Project, which would cover NTPC's further investments. The follow. ',, table represents the key operational results forecast in the appraisal rep rt compared with actuals: 1/ Power from the Project was to be sold in bulk to the State Electricity Boards of Bihar, West Bengal and Orissa and the Damodar Valley Corporation. 2/ The remaining 151 was to be sold in accordance with priorities to be determined by CEA. - 21 - FY86 FY87 FY88 FY89 Forecast Actual Forecast Actual Forecast Actual Forecast Actual Sales of Energy (Wh) 10,349 12,839 14,380 14,408 19,340 17,533 25,304 24,875 Average Revenue (p/kWh) 29 41.23 29 44.79 29 49.18 29 51.25 Operating Revenue (Re million) 3,386 5,294 4,732 6,453 6,442 8,622 8,539 12,748 Operating Expenses (Re million) 2,023 2,943 2,802 3,522 3,696 4,712 5,047 7,559 Operating Income (before Interest) 1,341 2,360 1,930 2,931 2,746 3,910 3,492 6,189 Net Income (Rs miI lion) 517 1,830 741 2,118 1,199 3,024 1,678 3,308 Rates of Return (%) / 6.7 16.8 7.7 17.0 9.1 16.4 9.5 14.8 Operating Ratio (%) 61 68 59 55 57 55 69 59 Oebt as % of Debt and Equity 45 36 48 42 46 43 42 47 Debt Service Coverage 2.3 4.9 1.7 4.0 1.5 3.9 1.3 2.4 Ll On average historical fixed assets in operation. (3) The Appraisal Reports' financial forecasts anticipated that NTPC would eventually achieve and maintain from FY89 onwards (the first year in which the 2,000 MW Singrauli power station was expected to be in full commercial operation) a rate of return of not less than 9.5% on the original cost of its average net fixed assets in service. As shown above, actual rates of return were considerably higher than forecast. This was partly because of the introduction of higher than forecast tariffs (see table below), and partly due to better operation performance including higher than expected plant load factor achieved at NTPC stations than the targets set in the appraisal report. NTPC's average plant load factor increased from 58% in FY85 to about 74% in FY86, to 79.6% in FY87 and 75.6Z in FY88 at the Ramagundam, Korba, Farakka and Singrauli power stations. The early stabilization of the Ramagundam 200 MW units, increased availability of the Singrauli units (both 200 and 500 MW) and a sustained high level of performance of Korba units (both 200 and 500 MW), were the main reasons for this performance, - 22 - Financial Average Tariffs Percentage increase Year Forecast Actual over forecast (2) (P/KWh) (P/KWh) FY86 32.52 41.23 26.8 FY87 32.91 44.79 36.1 FY88 33.31 49.18 47.6 FY89 33.75 51.25 51.9 (4) During the FY85-FY89 period, NTPC financed 572 of its rapid growth by borrowing. GOI financed about 53Z of NTPC's total requirements, two-thirds of it through equity contributions and the balance as loans. This denotes a heavy reliance on GOI support, which during NTPC's initial period of growth was a sound policy. The Bank Group has financed approximately Rs 18.37 billion, or nearly one-fifth of NTPC's total financial requirements over the past five years. GOI's loans have a total maturity of 20 years, including 5 years of grace and an interest rate which has changed over time and currently is 152 p.a. It is worth noting that NTPC has floated bonds in the domestic market in three public issues, as well as two private placements, for a total of about Rs 16.83 billion (US$990 million at the current exchange rate), which helped to finance about 212 of NTPC's total investment in the past five years. The latest issue included two types of bonds: one carries a 132 p.a. rate of interest and a maturity of 7 years; the other pays 9Z p.a., tax free, and is redeemable in 10 years. In addition, NTPC has raised funds in Japan through a syndicate of banks and financial institutions. Finally, NTPC has received financing directly or through GOI, from the OPEC Fund, the Saudi Fund, the Governments of the Federal Republic of Germany, the United Kingdom, the Soviet Union, Sweden, France, Norway, Italy and most recently, untied funds from Japan. In FY88, NTPC completed two interest rate swaps from fixed to floating interest rates. GOI's policy requires a return of not less than 102 on NTPC's equity. However, this return on equity has thus far not been translated into dividend payments and the totality of NTPC's profits has been retained in the Corporation to help finance its large expansion program. This policy will be maintained in the foreseeable future. - 23 - Status of Covenants COVENANT -SUBJECT STATUS Project Agreement Dated July 11, 1980 PA 2.02 NPTC shall engage consultants to assist in the Complied with design and engineering of the Project. PA 2.04 NTPC shall take out insurance on goods imported Complied with for the Project. PA 2.05 NTPC shall maintain appropriate records on the Complied with Project and furnish regular progress reports to the Bank. PA 2.05 NTPC shall furnish a completion report within six Complied with 1} months after the closing date of the Project. PA 2.08 NTPC shall properly acquire all necessary land Complied with for the Project. PA 2.09 NTPC shall enter into bulk supply contracts with Complied with SEB customers allocated a share of electricity supply from the Project. PA 2.10 NTPC shall ensure compliance with appropriate Complied with environmental standards in execution and operation of the Project. PA 3.03 NTPC shall inform the Bank in advance, of any Complied with proposal to change NTPC's limitation to borrow funds. PA 3.04 NTPC shall take out insurance against risk in Complied with such amounts as will be consistent with appropriate practice. PA 4.02 NTPC shall submit audited financial statements Complied with and auditors report within 7 months of FY end. PA 4.03 NTPC shall achieve an annual rate of return of Superseded by not less than 9-1/2 from FY88/89 onwards. covenants under subsequent NTPC Projects requiring 7% ROR in FY84/86 through FY89/90 and 9-1/2% ROR from FY90/91 to FY94/95 and a satisfactory level thereafter - being comolied with 2/. 1/ Based on the revised guideline dated June, 1989. 2/ Rate of return means operating income (before interest after taxes) as a percentage of the average of the net fixed assets in operation at the beginning and at the end of the fiscal year. - 24 - Development Credit and Loan Agreement Dated July 11, 1980 CA 2.02 (b) GOI shall maintain a special Account in Dollars Complied As amended 3/18/86) (Opened 3/86 114.0 M) CA 3.01 (b) COI shall enter into a subsidiary Complied with LA 3.01 (b) loan agreement with NTPC under terms satisfactory to the Bank. CA 3.03 GO shall grant import permission Complied with for goods financed under the Project and make available foreign exchange funds required therefore. CA 3.04 G0I shall ensure adequate coal Complied with supplies for the Project. CA 3.06 GO shall take steps to ensure Complied with that not less than 865 of the power generated will be purchased by SEBs and DVC. CA 3.06 GO! to furnish IDA not later than 86/88 complied 6 months after the end of the FY 86/87 complied the auditor's report in respect 87/88 complied of the special account. 88/89 complied (Amended 4/16/87) CA 4.02 b(ii) GOI to submit the Bank/IDA not Complied with LA 4.02 b(ii) later than 6 months after end of FY auditor's opinion in regards to the statements of expenditure submitted during the year. (Amended 3/16/87) - 25 - Use of Bank Resources A. Staff Inputs Staff inputs in carrying out the various tasks through the project cycle from preparation in FY79 to completion in FY89 were as follows: Task Input (Staff-weeks) Project Preparation 5.0 Project Appraisal 33.8 Loan Negotiations 7.4 Loan Processing 9.8 Project Supervision 52.5 Project Completion Report 2.4 Project Administration 2.0 Total 112.8 B. Missions Project Cycle Month/ Number of Days Speciali- Performance Type of Year Persons in Field zation /1 Rating /2 Proolems /3 Through Appraisal Identification /4 Preparation /4 Preappraisal /4 Appraisal 05/79 4 25 Supevision Supervision 1 06/82 4 19 E,LO,FA 1 Supervision 2 06/83 2 20 E,FA 1 Supervision 3 06/85 1 14 E 2 I, PR Supervision 4 09/86 4 18 E, 1 Supervision 5 09/87 3 10 E,FA 1 Supervision 6 01/88 3 20 E,FA 1 PR Supervision 7 09/88 3 29 E,FA 1 I Supervision 8 07/89 1 11 E 1 Project Completion Report 1 9 E 02/90 /1 E: Engineer, LO: Loan Officer, FA: Financial Analyst. /2 1 = No or minor problem, 2 = moderate problem, 3 = major problem. i3 I: Implementation delays, PR: Procurement problems and delays. /4 Identification was made by GOI in 1974. Preparation and preappraisal were made by NTPC in 1978. с� с� г� � о � � л о л •- •- • . .. .. .. .. .. .. .. .. .. 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R.....*: Bulk 5.991y (PjkWh 29.08 29 06 29.08 29 06 29 06 29 08 29 09 F-1 s.,ýharga plzwhý 0.55 0 71 1 12 1 40 1.77 2 la 2 62 C~ *1 lhcia* {pikw% 2.00 2 00 2 00 2 00 2.00 2 00 2 00 A-~9. T.taj Tariff (Pjhwh) - 41 92 - 39 45 - 41.34 - 41.23 - 44 79 - 49.18 - 51 25 Cenuf.." 292 959 1.943 3,009 4.182 5.524 ?_&% F.el " harg* 3 24 75 145 255 421 662 C..t-§ F-ci- 20 de 137 213 295 397 519 Total Ope,et~@ Revenue 305 397 1,050 1.505 2.155 3,438.0 3.368 5.294 4,732 6.453 6.*42 6,622 8.539 12.748 Qgtýat,ag FjetpM Fu, 1 5 In e 52 14 263 3449 501 545 745 K-Eft" a 7,7 162 234 318 471 692 Reaugundum 7 94 213 31 4 484 705 F ... kka - 12 se 171 243 379 sub..w F..1 el 145 210 506 527.1 1,252 M2 1.952 1.304 2.360 1.774 3.165 2.522 5. 2w GAM Singraull 84 93 107 117 175 219 219 Ko,b. 14 70 84 64 lit 167 232 R-9..du. - 1 90 90 132 1&5 Fa,akhe 1: 97 97 97 167 la 25 29 32 32 ~ ., om el 114 190 177 294 404 398 483 502 818 547 907 e35 1.175 43 99 132 132 223 305 305 - u 105 105 105 109 275 zm-D:Undu. 82 112 112 112 199 Fa,ekk9 11 - - 72 139 119 228 T,enomiaoion - 27 65 111 142 153 161 SubLotaj 74 2 194 414 344 265 525 377 701 448 878 579 1,171 912 Elactric.ty Outy 20 la 88 89 137 112 212 121 295 87 397 93 519 179 Othe,@ - 9 14 - 10 - 21 - 11 - 59 - 8 TOTAL OPERATING EXPENSES 235 287 671 LM 1,323 2.042 2.023 2.943 2.802 3.522 3.695 4.712 5.047 7,559 Op.rating Inc~ @efor* Intorcat 70 109 379 871 &W 1.398 1.341 2.350 1,950 2.931 2.746 3.910 3.492 6,189 L.ma: Intaramt Chareabbla t0 RGvenu* 14 85 174 221 471 492 824 570 1,11a9 114115 1.547 1.248 1.913 1.791 L@~: W,ita-off D*for,od Eperimen L.ca: P-Imion %, Ta. Add: Prior Period Incomc (mat) - 2 - 10 - (28) - 60 60 53 - 362 - 90 Not Inco~ 40 46 200 449 341 876 517 1.8m 741 2,118 1,199 3.024 1.579 3.308 &-*@* N.L Fi..d Aaa.t. (Hinto,ic) 4,406 1. 804 9.188 5. 997 14,715 10.957 19.997 14,016 25,124 17.209 30,058 23. 854 38.753 35,078 Reta of RcLurn on Hiatoric Aoecta J,11i 1.8 8.1 4.1 11.2 5.7 12.7 6 7 16 b 77 17 0 9.1 16.4 9.5 14 8 R.&. of R~~ - R-lý.äl Åäö.La 10.3 11,4 14 a 13 a 12.8 og.rating Ratio (111) 77.0 72.4 63.9 55.4 61.4 59 5 50-7 55.8 W2 54 6 57 4 54-7 69 l 59 3 norroaor'å Fi«al y**-. (D x rlj kID CREDIT 1053-IN AMO LOAN 1667-IN FARAKKA THERMAL POW fROJECT PFROJECT COMLETION REPORT Sources and Application of Fund. (i.n illion of Rupes) FY83 FY84 FY85L FYN FY§7 FYdf FY89 Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Sources of Funds Intrnol Cash Generaien Operating Income (before interest) 70 110 SI, 379 681 632 1.36L 1,341 2.4001 1,930 2,98411 2.746 4.272LI 3.491 6.099L] Deprecietion 74 2 194 68 364 265 632 377 701 444 878 579 1.171 912 Total Cash Con.ration 144 113 573 749 1.196 1.32 1,873 2,777 2,631 3.432 3.625 4,851 4,625 6.011 Loans 2.106 2.114 6.198 2,753 6.493 4.416 4,513 7.365 2.521 10.165 1.026 9,230 - 13.471 001 Equity .6576 3.959 2,471 4.203 - 4,659 - 6,000 - 3909 - 6.879 - 3.682 Capital Receipt - - 2 - 26 - - - 114 - 24 - 87 TOTAL SURtCES OF RND 7.927 6,164 8,242 7.706 7,689 10.933 6.365 16,950 5.152 19.620 4.653 20.984 4,63 23.251 00 Aamlication of Funda Capital Empenditure (including IDC) 7,645 6,179 7,962 7.133 7,095 10.011 5,434 14.048 3.427 17.806 1,591 17.630 657 19,064 Interest. Charged to Operations 24 65 174 221 471 492 824 570 1,189 066 1,547 1.248 1.913 1,791 Amortiaston of Loan - - - - - - - - 400 - 8 - 1.698 747 TOTAL DEBT SERVICE 24 65 174 221 471 492 824 670 1.69 s66 2.405 1.248 3.511 2,6W Deferred Revenue Empenditure - - - - - - - - - - - - Short-Ter. D*posit SO - 286 Working Capital Incresso/(Decr*ae) 5e (59) 106 343 123 430 127 2,332 136 947 157 2.106 207 1.649 Provision for Te - - - 11 - - - I - I - - - TOTAL APPLICATIOE 7.927 4.16 8.242 7,706 7.689 10,933 6.306 16.950 5.152 19,620 4,653 20,964 4.663 23.261 Debt Ser-ice Coerage 6.0 1.7 3.3 3.4 2.5 3.3 2.3 4.9 1.7 4.0 1.5 3-9 1.3 2.4 Ll Includes prior period income. (D IPIA CREDIT 1053-IN AMD LOAN 187-IN FARMMA THE~¶AL PW PROJECT PROJEWT CPLET ION REPORT Delance Shee* (in ailion of Rp~es) FYS3 FY84 FY85 -FY"6 FY87 FYN6 FY89 Forecat Actua. Forecast Actu.l For*camt Actmal For.caat Actual Forocat Act§al For.caat Actuel For-cant Act.al A99914 0roa Fi.ed As~ete 6,433 3,038 12.267 9,197 18.044 13.383 23,749 16.047 29.530 20,6u9 35.197 30.50M 44.968 44,784 Lea D.prcasion 75 68 269 170 633 476 1.165 903 1.66 1.416 2.744 2,069 3.915 3.068 Nt F...d A~mt, in Op.ration 6.358 2.968 12.018 9.027 17,411 12.87 22.584 15,144 27.664 19.273 32.453 26.439 41.053 41.716 Work in Progems 15.464 12,750 17.582 13.767 19.900 19.666 18.629 31.069 16.275 44,302 12.199 52.167 3.065 57.062 TOTAL rIXED ASETS 21.12 15.726 29.580 22.794 36.311 32.543 41,213 46.213 43.939 63.575 44.652 60,626 44,138 98.776 Curren Amm@t Cb (including bank balance) 3 13 6 176 9 84 2 448 15 134 18 5.973 23 2 Short T.r- DPoäitu - 77 - 103 - 395 - 637 - 1,053 - 737 - 4.544 R.cc-lb.e* 25 219 68 642 180 1.626 281 2.264 394 2.828 537 4,058 712 5.981 In,entoi. 64 155 123 424 160 704 238 940 295 1.322 352 1.742 450 2.639 Other 0.btore 1 276 2 238 2 343 2 1.905 3 3,790 3 981 4 2.718 Total Curnt Am.te. 94 740 219 1.762 371 3.151 532 6.293 707 9.127 909 13.469 1.180 15.884 D.f-rd EUpanan 5 26 - 22 -- 19 - 19 - 16 - 17 - 1 TOTAL ASSETS 21.911 16.491 29,799 24,598 38.682 35.713 41.745 52,526 44,646 72.716 46,061 94.112 46,112 114.680 Epufit, and Liabilittaa Share Capital laauad and Depo.ita 19,46 11.s05 21.959 16,009 21.959 20,68 21.959 27.675 21.959 33.585 21.959 40.464 21.959 44,146 R.tainod Earninga 47 60 247 500 0 1,402 1.125 3.231 1,866 5.463 3.065 6.511 4.644 11.90 TOTAL EQUITY 19.635 11,855 22.206 16,509 22,587 22.269 23.064 30,906 23.825 39.047 25.024 46,974 26.603 56.062 Liakiioi Loana 2,38 3,195 7,566 6,948 14.059 10.384 18.571 17.729 20.693 27.894 20.883 37.124 19.265 49.848 Currnt Lighititia 6 1.442 26 2.142 568 3,061 69 3,691 129 5,776 173 6.014 244 6.760 TOTAL DEOT 2.376 4,636 7.592 8,090 14.115 13,445 16.681 21.620 20.821 33,672 21.036 45.138 19,508 68.626 TOTAL EJITY AND LIABILITIES 21,911 :6,491 29.799 24.598 3.6682 35.713 41.745 52.526 44.646 72.718 46.061 94.112 46.112 114.660 Debtaalof Dbt and Eqity 11 21 25 26 38 32 45 36 46 42 46 43 42 47 (D