El Salvador - Fourth Power Project

RESTRICTED Report No. TO-360a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF THE POWER EXPANSION PROGRAM COMISION EJECUTIVA HIDROELECTRICA DEL RIO LEMPA (CEL) EL SALVADOR June 3, 1963 Department of Technical Operations CURRENCY EQUIVALENTS US $1 = 2. 50 Colones ( ) a 1 = US $0. 40 US $1 million = G 2. 5 million 0 1 million = US $400, 000 TABLE OF CONTENTS Page SUMMARY i - ii I. INTRODUCTION 1 II. THE BORROWER 1 III. THE POWER MARKET 2 IV. THE PROJECT 3 Description 3 Consulting Engineers 3 Estimated Cost 4 Construction Schedule 5 V. FUTURE CONSTRUCTION PROGRAM 5 VI. ECONOMIC ASPECTS 6 Cost of Power 6 VII. FINANCIAL ASPECTS 7 Tariffs 7 Past Earnings Record 7 Present Financial Position 8 Proposed Financing Plan 10 Estimated Future Financial Position 11 Auditors 12 VIII. CONCLUSIONS AND RECOMIENDATIONS 13 ANEEXES 1. Utility Systems in El Salvador 2. Annual Load Growth and Sales, CEL Network 3. Forecast of Peak Load Growth and Capacity Requirements (Chart) 4. Detailed Description of the Project and Cost Estimates 5. Income Statements 1959-1972 5a. Assumptions for Forecast of Income Statements 6. Balance Sheets 1959-1962 7. Sources and Applications of Funds 1963-1972 8. Balance Sheets 1962-1972 Map of Project and CEL Transmission System APPRAISAL OF THE POWER EXPANSION PROGRAM COMISION EJECUTIVA HIDROELECTRICA DEL RIO LEMPA (CEL) EL SALVADOR SUMARY i. The Comision Ejecutiva Hidroelectrica del Rio Lempa (CEL) has asked the Bank to consider a loan of $6 million to finance the greater part of the foreign exchange required for the next step in its expansion program. The total cost of the proposed project is approximately $10 million. It would provide a fifth generating unit (15-18 MN) in the existing Guayabo hydroelectric project, a new thermal electric plant (25 N) at the port of Acajutla and a transmission line (36 kilometers in length) connecting the thermal plant with the CEL transmission network. ii. The Bank has made three previous loans to CEL, aggregating about $19 million, to assist in the construction of its utility system. CEL markets its energy wholesale to the private utilities responsible for distribution, and supplies them with most (82%) of their requirements. iii. The management and organization of CEL are experienced and are fully able, with the assistance of their consultants, to carry out the project, and to operate it afterwards, GEL's present system, when the Guajoyo project financed by the most recent Bank loan is completed in October 1963, will comprise 75 Md of generating capacity and 224 kilo- meters of high tension transmission lines. The proposed project would increase CEL's generating caDacity to 115 M1 and its transmission system to 287 kilometers. iv. The project proposed for Bank financing is required to be in service by 1965 to meet the estimated increase in power demand which is forecast to continue to grow at the rate of 12% per year. The project is technically sound and the estimated costs are reasonable. It would provide the peak canacity and energy required to make up the existing dry season deficit and to provide for requirements of the CEL system until about 1968. v. CEL's financial situation is sound, its level of earnings satisfactory. The 1962 year-end debt/equity ratio was 65/35. CEL had about 04 million in cash funds available and the rate of return on net fixed assets in operation for the year 1962 was almost 10%. This repre- sents a significant improvement over the situation when the last Bank loan was made in 1960, and is mainly due to a rate increase, in that same year, to CEL's largest customer, a satisfactory load growth in the years since, and to continued Government equity contributions. vi. The financing plan submitted by CEL for the proposed project is satisfactory and the estimated future financial results would show further improvements from the present level. Rates of return on net - ii - fixed assets in operation would remain above 10%, internal cash generation would cover total debt service requirements between 1.7 and 2.5 times and the debt/equity ratio would improve to 39/61 in 1972, No further Govern- ment contributions are contemplated starting in 1963. CEL would also meet all the requirements stipulated in the various covenants of the previous loan agreements. vii. Thus, the proposed project would be suitable for a Bank loan of $6 million for a term of 20 years including a period of grace of about three years. APPRAISAL OF THE POWER EXPANSION PROGRAM COMISION EJECUTIVA HIDROELECTRICA DEL RIO LEMPA (CEL) EL SALVADOR I. INTRODUCTION 1. The Comision Ejecutiva Hidroelectrica del Rio Lempa (CEL) has asked the Bank for a loan of $6 million to cover the larger part of the foreign exchange required in a further expansion of its power facilities. The proposed loan would include funds required for the addition of a fifth generating unit at the Guayabo hydroelectric plant on the Rio Lempa, a new thermal electric plant at the port of Acajutla and a transmission line connecting the thermal plant with the CEL transmission network (see map). 2. The Bank has made three previous loans to CEL to assist in the construction of its utility system, The first of these loans, in the amount of $12.5 million was made in 1949 for the construction of the first stage of the Guayabo plant and the associated transmission system. This work was comnleted in 1954. The second Bank loan of $3 million was made in 1959 to expand the Guayabo plant and this work was completed in early 1961. The Bank's third loan of $3.8 million was made in 1960 for the construction of the Guajoyo hydroelectric plant near the outlet of Lake Guija. This project is under construction and is scheduled to be completed by October 1963. When the Guajoyo plant is completed the CEL system will comprise 75,000 kw of generating capacity and a transmission system of 224 kilometers. 3. This appraisal report is based on information supplied by CEL, detailed reports by its consulting engineers and on field studies and dis- cussions by a Bank mission which visited the project in late February and early March 1963. II. THE BORROIJER 4. CEL is a government corporation created in 1945 to have responsi- bility for planning and providing electric power supplies to meet the country's requirements. It furnishes, through its interconnected transmission network, power to the principal distributors of electricity for the country. 5. CEL is governed by a seven member Board of Directors composed of persons of high standing and integrity. It includes four appointees of ministries of the Government, one member anpointed by the country's banks, one by the local bond holders of CEL and one member selected by the Minister of Economy from a commercial organization. Terms are for four years and staggered. The chairman has held office since 1950. 6. The Board appoints a general manager who has responsibility for all administrative functions. The present general manager is highly capable and has held office since early 1956. CEL's management staff includes a full time foreign adviser on utility operation; its operating staff comprises about 240 employees. CEL utilizes the services of consulting engineers for planning and - 2 - carrying out its major projects. On the basis of past experience CEL is fully capable of carrying out construction and operation of the proposed project. III. THE POUER MARKET 7. CEL markets its energy wholesale to thirteen customers; nine are private utilities which obtain about 82%2 of their total requirements from the CEL network. The distributors served by CEL account for about 97'o of the country's total public utility power sales. (A list of the country's utility systems showing their generating capacities, total sales and purchases from the CEL system is shown in Annex 1.) 8. El Salvador is the smallest (8,259 square miles) but the most densely populated (2.5 million inhabitants in 1961) of the Central American republics. It is essentially an agricultural country with coffee as its dominant crop and cotton second ranking. Principal manufacturing is con- fined mainly to processing of agricultural products and to production of light consumer goods. These include cotton gins, cotton seed oil, textiles, clothing and shoes. Industrial usage accounted for about 38% of the total power consumed in 1961. Almost all the urban population of El Salvador now receives electric service. The rural population has no electric service for home or farm consumption except for a pilot rural electrification project undertaken in 1962 by CEL to serve eleven rural communities and a few other rural electrification projects carried out by private distribution companies. 9. The peak demand on the CEL system increased at an average annual rate of 16.41 during the period 1954 through 1962. This average annual rate was influenced by the rapid transfer to the CEL system during the period 1954-58 of loads previously surplied by privately owned generating facilities. During the period 1959-62, after this transfer was accomplished, the peak demand has maintained a l2o average annual increase. CEL and its consultants have agreed that the peak demands on the CEL system can be expected to continue to grow at the rate of 12% per year through 1973. This forecast is reasonable and has been adopted in this report. 10, With the completion in 1965 of the thermal plant at Acajutla it is expected that a transfer to the CEL system of the industrial loads in that area will take place. In 1963 these loads, including the port facilities, an oil refinery, and the Fertica fertilizer plant, amount to about 4,230 kw. By 1965 this demand, including the expected load of the Yetapan cement plant, -ill have reached approximately 6,500 kw and the trans- fer of this demand to the CEL system has been included in the forecasts. Afte- this demand has been connected to the CEL system it is expected that the 124 annual growth will be resumed, 11. On the basis of the above forecasts it is expected that the CEL peak will increase from the 55.5 MW experienced in 1962 to 214.5 MI by 1973. Concurrently, energy generation is expected to increase from 240.5 million kwh generated in 1962 to 939.5 million kwh required to be generated in 1973. The resulting annual load growth and sales (after system losses) are shown in Annex 2. - 3 - IV. THE PROJECT Descri-tion 12. The project consists of the following works (a detailed description is given in Annex 4): (a) Addition of a 15-18,000 kw hydroelectric generating unit and substation facilities in the existing Guayabo plant on the Rio Lempa; (b) Construction of a 25,000 kw steam-electric generating plant with oil storage facilities and step-up substation at the port city of Acajutlal/; and (c) Construction of a 115 kv transmission line, 63 kilometers long, from Acajutla to Opico (the point of connection with the existing CEL system) and expansion of substation facilities to improve service in the eastern part of El Salvador. 13. Addition of the generating unit, the fifth at the Guayabo plant, will complete the power development at that site. At the time the fourth unit was installed in 1961 intake structures and a penstock were provided for the fifth unit. The four existing units are of 15 Mt! capacity but the consultants have concluded that a unit up to 18 MJ may be installed in the existing space with some economic advantages, and tenders will be invited on that basis. 14. The thermal plant at Acajutla will consist of a single unit steam-electric generating plant, a substation, and oil storage facilities. Space will be provided at the plant for future addition of three similar units. Water for the cooling towers and for boiler make-up will be obtained from deep wells on the site. The oil storage tanks and pipeline facilities will be adequate to handle a 125,000 barrel (20,000 short ton) tanker from the harbor at Acajutla. 15. The 115 kv transmission line, approximately 63 kilometers in length, will connect the Acajutla thermal plant to the existing 115 kv Santa Ana-San Salvador transmission line at Opico. The line will be single circuit on steel towers except for about two kilometers on the Acajutla end which will have double circuit towers. Consulting Engineers 16. Engineering for the fifth Guayabo unit and for the transmission line and substations is being performed by the Harza Engineering Company International. From the outset of its hydroelectric developments CEL has utilized the services of Harza in planning the long range development of the hydroelectric potential of the Rio Lempa. Engineering of the Acajutla thermal plant is being performed by Salzgitter Industriebau Gesellschaft mbh. I/ The oil storage facilities may be modified if an acceptable contract with the local refinery can be negotiated prior to the completion of the plant., In each case, CEL has contracted with the consultants to provide compre- hensive engineering services, which include planning, preparation of plans and snecifications, evaluation of bids, recommendation of awards and supervision of construction and of final tests. Estimated Cost 17. The estimated costs of the work, materials and services are summarized below (a detailed estimate is included in Annex 4): Estimated Cost of Project (in millions of dollars) Foreign Local Exchange Currency Total Fifth unit at Guayabo 0.75 0.39 1.14 Acajutla thermal plant 5.00 1.08 6.08 Transmission line and substations 0.48 0.22 0.70 Contingencies, approximately l0i 0.66 0.18 0.84 Engineering and supervision 0.55 0.32 0.87 Total construction costs 7.44 2.19 9.63 Interest and other charges during construction on Bank loan 0.49 - 0.49 Total project costs 7.93 2.19 10.12 Colones equivalent 19.83 5.47 25.30 Proposed Bank loan 6.00 - - (The rate of exchange of 02.50 to US$1, has been used.) 18. The cost estimates are reasonable and realistic. They have been carefully prepared by the consultants and were reviewed in detail by the appraisal mission in February-March 1963. Equipment estimates are based on informal quotations from manufacturers and on recent experience of the consultants on similar projects. Estimated costs include freight, insurance and erection costs. Civil work estimates reflect recent experience in El Salvador on CEL projects and other industrial construction. Labor costs have remained stable in El Salvador since the enactment of legislation on the subject in 1952, and are not expected to change materially during the period required for construction of the project. An over-all contingency of 10'> has been added to the calculated estimates of both foreign and local currency costs except that for the small amount of civil works at Guayabo and for the transmission line a contingency of 15O was added. International bidding procedures will be used in the procurement of all major equipment and for supply contracts. - 5 - 19. The unit costs per kilowatt of installed capacity for each of the generating facilities are reasonable. The cost of the fifth Guayabo unit of $67 per kw reflects the fact that only the installation of the unit in an already prepared bay in the powerhouse is required. The estimated cost of $280 per kw for the Acajutla thermal plant is reason- able for a plant of this size and nature, including, as it does, sub- station facilities necessary both to step up the station output for 115 kv transmission and to serve industrial customers in the port area, and also oil storage and site provision for later expansion of the station. Construction Schedule 20. The construction periods for the facilities included in the project are scheduled as follows: Begin Complete Fifth Guayabo unit June 1963 February 1965 Acajutla thermal plant November 1963 October 1965 AcajutlaOpico transmission line August 1964 February 1965 V. FUTURE CONSTRUCTION PROGRAM 21. Power and energy demands on the CEL system are very close to the predictions made by CEL's consultants in 1958 and which have been the basis of long range planning to provide facilities by the dates required to meet these demands. After completion of the Guajoyo project in the autumn of 1963, CEL's generating facilities will be adequate to meet peak demands until the latter part of the 1964-65 dry season. The construction schedule (see parazraph 20 above) contemplates that the present project will come into service during 1965. Beginning in 1968 some additional capacity will be needed. 22. To meet the forecast requirements of the CEL system additional projects have been tentatively selected, as a result of studies by CEL and its consultants, adequate to 1973, as follows: Total Approximate Capacity Cost (US$) Plant MIII Begin Complete millions Paso del Oso, 1st unit 15 Jan. 1965 Jan. 1968 10 Silencio, 1st & 2nd units 40 Jan. 1967 Jan. 1970 20 Zapotillo to El. 390 m & Jan. 1969) Jan. 1972) Paso del Oso, 2nd unit 15 Jan. 1970) Jan. 1972) 18 Silencio, 3rd unit 20 Jan. 1971 Jan. 1973 2 Totals 90 50 - 6 - VI. ECONOMIC ASPECTS 23. Beginning in 1948 CEL's consultants have planned the sequence of power developments that would most economically provide power capacity and energy to the CEL network. The most economical source of power, the Guayabo plant on the Rio Lempa, was developed first. Thereafter facilities were installed to take advantage of the natural storage available in Lake Guija. 24. The Rio Lempa flows can be divided into distinct dry and wet seasons, with the dry season generally lasting from the middle of November until the middle of May. An analysis of water supply during the dry season is particularly significant because the historical power and energy require- ments of the system served by CEL are maximum in the period of low water supply. Energy to firm up the hydroelectric system during the dry season would have to be supplied either by a thermal plant or by construction of large storage dams. 25. Extensive studies of various alternative programs involving construction of storage facilities and of various sizes and locations of a thermal plant, led to the conclusion that construction of a fifth unit at the Guayabo plant with a thermal plant of 25 Mi at the port city of Acajutla would provide the most economical increment of power presently required. The fifth unit at Guayabo will supply peaking capability and wet season energy at less than the cost of fuel at the thermal plant. A thermal plant of 25 MT would provide additional peaking capability and the energy during the dry season to firm uD the hydroelectric system. The coordinated operation of these facilities would thus provide the peak capacity and energy required to make up the existing dry season deficit and to provide for requirements of the GEL system until about 1968. The consultants have verified that, on the basis of a present worth calculation, the cost of the proposed size and type of the thermal plant would be less than the cost of any alternative. Cost of Power 26. The addition of the fifth unit at the Guayabo plant will not increase the amount of energy generated at that project during the dry season. On the other hand it will be able to generate about 9 million kwh of additional energy during the wet season. Operation of the Acajutla thermal plant has been projected on the basis of median monthly water supplies and forecasts of energy reqpirements on the CEL system. On this basis the average cost of power from this plant, over the period 1966-72 inclusive, is calculated to be 2.54 centavos per kwh. The addition of the project to the GEL system will have the effect of increasing its over-all generation costs from the present 1.17 centavos per kwh to 1.35 centavos per kwh. This results from first priority having been given to the development of the most economical hydro sites. New hydroelectric plants on the upper Rio Lempa, contemplated for development in future stages, are estimated to generate energy at a cost of 2.2 centavos per kwh. VII. FINANCIAL ASPECTS Tariffs 27. CEL has the power to set its own tariffs with the approval of the Ministry of the Economy. 28. Thirteen consumers purchased power from CEL in 1962, 10 of whom were engaged in retail distribution of power, including the pilot rural electrification scheme in the southeastern part of El Salvador. The rates charged by CEL consist of two parts: a demand charge of 50 colones per kw per year and an energy charge of 3 centavos per kwh. For the sales to the pilot rural electrification area CEL charges the current retail rates which average about 14 centavos per kwh. The pilot scheme absorbed a negligible amount (about 48,000 kwh) of CEL's sales in 1962. 29. CEL's largest customer is CAESS (a subsidiary of the International Power Company of Montreal, Canada) which took about 78, of CEL's sales in 1962. Up to the end of 1959 CEL supplied power to CAESS under a formal contract at a rate of 2.5 centavos per kwh and a demand charge of 50 colones per kw per year. As a result of this very low rate for purchased power CAESS showed excess profits which were turned over to CEL under the terms of the contract. This arrangement reflected the provisions of the Electric Services Law which establishes a ceiling return on investment for privately owned public utilities. The last such payment of excess profits was made by CAESS for the year 1959 (see also paragraph 32). After expiration of the contract in 1959 CEL agreed, in an exchange of letters, to continue the sunply of power to CAESS but at a higher energy charge of 3 centavos per kwh starting in 1960. 30. In the Loan Agreement for Loan 263-ES, CEL agreed to set its rates so that revenues would be sufficient (a) to cover operating and related expenses including depreciation and interest, (b) to meet repay- ments on long-term debt to the extent that they exceed provisions for depreciation, and (c) to leave a surplus for financing a reasonable portion of planned expansion. This covenant reflects closely the pro- visions of the law of 1948 establishing CEL. On the basis of present tariffs CEL is complying with these stipulations as shown below in para- graphs 32 and 46(b). Past Earnings Record 31. Income statements covering the period 1959-62 are shown in Annex 5. As mentioned in paragraph 29, the wholesale rates charged by CEL prior to 1960 were inadequate. Losses had been expected for the period of initial operation while the system load was being developed, however, these losses were greater in amount and longer in duration than would have been the case if initial rates had been set at a more satis- factory level. By 1959 the cumulative losses amounted to about 01.3 million. CEL had to anply to the Government for relief and obtained sub- sidies for debt service payments on its local bonds, and also non-interest - 8 - bearing loans. The return on net fixed assets in operation was 7.4v; in 1959 after crediting an additional payment by CAESS of 0589,000. Similar payments had been made by CAESS in 1957 and 1958 out of excess profits which on the basis of contractual agreement had to be turned over to CEL. 32. Due to the tariff increase to CAESS in 1960, the satisfactory load growth in recent years, and to continued Government contributions to equity, the situation has improved considerably. The rate of return on average net fixed assets in operation increased from 9.1% in 1960 to 9.7% in 1962. Thus CEL complied with the commitments given at the time of Loan 263-ES to maintain a rate of return on net fixed assets in operation of at least 9%. Cumulative net profits at the end of 1962 amounted to 011.3 million; no additional payments were made by CAESS after 1959. The level of rates allowed CEL to finance from internal cash generation after meeting all debt service payments about 94.3 million or 24% of total con- struction expenditures between 1960 and 1962. In addition CEL had accumu- lated by the end of 1962 a cash balance of about 04.2 million. These results indicate that CEL's present level of earnings is satisfactory. Present Financial Position 33. Summary balance sheets of CEL as of December 31, 1959 to 1962 are shown in Annex 6. CEL's capitalization as at the end of 1962 would be as follows: (in thousands of Colones) Equity Capital account 17,640 Surplus 11,289 Total equity 28,929 35 Long-term debt IBRD Loan 22-ES, 41-%, 1949-1975 23,158 IBRD Loan 221-ES, 5-3/4f%, 1959-1984 6,6o4 IBRD Loan 263-ES, 5-3/4f, 1960-1985 4,028 5%O local bonds due in 1964, 1969, 1975 16,170 Central Bank loan, 4-, 1959-1987 327 INSAFI loan, 6,o, 1961-1965 41 Sub-total 50,328 Non-interest bearing Government loan 4,500 Total long-term debt 54,828 65 Total capitalization 83,757 100 - 9 - 34. The previous three IBRD loans amounted at the end of 1962 to about 033.8 million or more than half of CEL' s long-term indebtedness. The original amounts of these loans were: (a) $12.5 million (031.4 million) for 22-ES; (b) $3 million (07.5 million) for 221-ES of which $250,000 (0625,000) were later cancelled; and (c) $3.8 million (09.6 million) for 263-ES of which about $2.2 million (05.6 million) were undisbursed as of December 31, 1962. 35. During 1950-55 CEL sold four local bond issues for the total amount of 024.6 million. The first issue of 03 million was repaid in 1960, the other three of 03.5 million, 5 million and 013.1 million will mature respectively in 1964, 1969 and 1975. The 1964 and 1969 issues are held by the Central Bank while the 1975 issue is widely held. The bonds bear interest at 51 and are guaranteed by the Government. The issues were made to provide funds for CEL's exoansion program (Guayabo plant and control works at Lake Guija) and for covering the entity's initial losses. In 1955 the Government agreed to subsidize CEL by making the debt service payments on the three bond issues maturing in 1960, 1964 and 1969. By the end of 1962 these Government contributions had reached an amount of about l0.6 million. Under present circumstances CEL considers these subsidies no longer necessary and will propose to the Government to discontinue them starting in 1963 (see paragraph 44 below). CEL =ld then resume debt service payments on these bond issues. 36. A loan from the Central Bank in the amount of 0562,500 was obtained in 1962 to finance the complete pilot scheme of rural electri- fication in southeast El Salvador; the remainder of this amount (0236,0o0) will be spent in 1963 This loan is a relending operation of funds which were made available to the Central Bank by the Inter-American Development Bank. The interest rate is 41 and a 17 year amortization period will start in 1970. The loan of the Salvadorean Industrial Development Institute (INSAFI) with a balance outstanding of 041,000 at the end of 1962 amounted originally to 0115,000 and was used to finance a specific transmission line. It is scheduled to be repaid by 1965. 37. The Government made a loan of 05 million for construction expendi- tures in connection with Loan 221-ES (fourth Guayabo unit) and for works at Lake Guija. This is a non-interest bearing loan repayable in annual install- ments of 0250,000 over 20 years. Amortization started in 1961. 38. CEL's capital account amounting to 017.6 million as of December 31, 1962 presented the total of contributions which were made by the Government at various times in the form of transfer of assets or cash. More than half of the amounts on CEL's capital account are subsidies for debt service payments on CEL's local bond issues (see paragraph 35). If the cumulative surplus of 011.3 million were added to the capital account, total equity would amount to 028.9 million, or about 35% of total capitalization. This is a considerable improvement over the 81/19 debt/equity ratio at the end of 1959 before Loan 263-ES was made. - 10 - Proposed Financing Plan 39. A forecast of sources and applications of funds for the 10 years through 1972 is given in Annex 7. It is based on the forecast operating results shown in Annex 5 and specific assumptions listed below. 40. The financial requirements (a) for the period of the proposed project (1963-65) and of the assumed next step of expansion, Paso del Oso (1965-67), and (b) for the remaining five-year period 1968-72, as well as the sources from which these requirements would be met, can be summarized as follows: (in thousands of Colones) 1963-65 1965-67 1968-72 Financial Requirements: Construction exoenditures 41,022 50,896 106,460 Debt service requirements 19,434 23,376 51,066 60,456 74,272 157,526 Sources of Funds: Internal cash generation 33,296 42,238 113,309 Borrowings 26,707 32,650 41,700 Decrease in cash balances 453 - 2,517 60,456 74,880 157,526 Internal cash generation net of debt service 13,862 18,862 62,243 In % of construction expenditures 33.8 37.1% 58.5% 41. The construction expenditures shown above for 1963-65 would include, in addition to the proposed project, the final expenditures on the Guajoyo expansion financed partly by Loan 263-ES and the initial expenditures for the Paso del Oso project in 1965. Throughout the period under review the construction periods for individual projects would overlap as CEL would have to continuously add to its capacity to meet the estimated system requirements. 42. The borrowings assumed for the period 1963-72 are as follows: (a) A Bank loan of $6 million (015 million) would be obtained in 1963 to finance a major portion (81%) of the foreign exchange require- ments for the proposed project, at an assumed interest rate of 5%j$ and for a term of 20 years including a period of grace of about three years. CEL deemed this amount sufficient to complete its financing plan and would meet the balance of the foreign ex.- change requirements for the project from its internal cash generation. - 11 - (b) Two further loans of $6.38 million (015.95 million) and $12.24 million (030.6 million) are assumed in 1965 and 1967 respectively, which would finance all the estimated foreign exchange require- ments for the next two projects, Paso del Oso No. 1 and Silencio No. 1 and No. 2. For calculation purposes an interest rate of 5-1o has been used and a term of 23 years including a three year grace period. (c) For the period 1969-72 a total of $8.96 million ( 22.4 million) in loans would be obtained to finance about 44%a of the foreign exchange expansion requirements, On the basis of present earnings forecasts this amount would be adequate to complete the assumed financing plan. 43. Year-end cash balances were assumed at higher levels than the ordinary working capital requirements of CEL to provide cash reserves for interest and amortization payments on long-term debt which are due early each year. 44. One basic difference from previous forecasts is the elimination of all Government subsidies (see paragraph 35) in the present financing plan. In the recent past the Government has had difficulty in providing these subsidies and CEL no longer considers them necessary. In turn, however, CEL would propose to the Government that it convert the non- interest bearing loan (04.5 million in 1962) into equity. This scheme would result in net annual savings to the Government of about 01 million over the next six years and it is expected that an agreement can easily be reached. It is assumed that all relevant legal actions can be completed in 1963. 45. The present forecast does not include any funds for construction of rural electrification facilities except in 1963 for the completion of the pilot electrification scheme (financed from Central Bank funds). At the time of Loan 263-ES CEL agreed to finance investments for rural electrification only from funds other than those available for or generated by its regular electric services. Detailed studies, in the meantime, have served to define the investment required and the cost to operate the rural electrification schemes. On this basis these restrictions seem no longer required especially so in view of CEL's commitments to maintain an adequate return on its total investment. Estimated Future Financial Position 46. Forecast income statements for the 10 years 1963 to 1972 are given in Annex 5. These are based on present tariffs and on the assumptions sum- marized in Annex 5a. Forecast balance sheets for the same period are shown in Annex 8. The resulting situation would be as follows: (a) Net income from operation would increase from 08 million in 1963 to 023.4 million in 1972. The rate of return on net fixed assets in operation would fluctuate between 10.6S in 1963 and 13.6' in 1969 (Annex 5). - 12 - (b) Internal cash generation would be about 09.7 million in 1963 and would increase to 028.5 million in 1972. This would cover total year-end debt service requirements between 1.7 times in 1963 and 2.5 times in 1972 (Annex 7). Internal cash generation net of debt service would contribute about 34% towards con- struction expenditures in 1963-65 when the proposed project is being built, and 37/ towards the next stage in CEL's expansion, Paso del Oso, over the period 1965-67 (paragraph 40). Pre- liminary estimates for the five-year period 1968-72 indicate that this contribution might almost reach 60%o in these years. Forecasts for these later years should, however, be considered rather as indications for trends and orders of magnitude than in absolute terms. (c) Year-end debt/equity ratios are estimated to range between 60/40 in 1963 and 39/61 in 1972 (Annex 8). These ratios and percentages are satisfactory. 47. CEL would also satisfy the stipulations of Section 5.08 (rate covenant) of the last Loan Agreement, 263-ES, requiring that CEL finance " a reasonable portion of planned exoansion" from internal cash generation net of debt service, and would furthermore easily meet the minimum require- ment of a 9% rate of return from net fixed assets in operation which was agreed regarding this section. The provisions of this covenant and side letter would remain anplicable throughout the life of the proposed loan which would be renaid by 1983, while Loan 263-ES will mature in 1985. No change in the existing provisions is therefore required. 48. The same would apply to Section 5.09 (debt limitation covenant) of the last loan, 263-ES, stipulating that CEL could not incur new debt unless its net revenues of the preceding fiscal year plus 75% of the esti- mated increase in net revenues after completion of the project to be financed from the new debt would cover 1.5 times the annual maximum future debt service on all existing debt including the debt to be incurred. The coverage for the proposed IBRD loan would be 1.55 times. For the assumed future borrowings CEL's net revenues would provide higher coverages. Auditors 49. CEL's accounts are audited annually by independent outside auditors appointed by the Government and approved by CEL's Board of Directors. This arrangement has been in operation for years and is acceDtable. - 13 - VIII. CONCLUSIONS AND RECOMMETUNDATIONS 50. The project pronosed for Bank financing is required to meet the estimated increases in power demand in the area served by CEL. It is technically sound and satisfactory arrangements are being made for its execution. 51. CEL's present financial situation is sound. Its tariffs are adequate to produce a satisfactory level of earnings. Without any further financial assistance from the Government CEL would be able to provide all necessary funds for the proposed project over and above the assumed Bank loan, which would cover only part (about 80o) of the estimated foreign exchange requirements of the project. Throughout the period reviewed (1963-72) CEL's estimated financial situation is expected to continue to be satisfactory. 52. During negotiations the Bank reached an understanding with CEL that the covenants of the previous Bank loans would be applicable to the proposed loan (paragraphs 47 and 48). 53. The project is considered suitable for a Bank loan of $6 million equivalent; a term of 20 years, including a grace period of about three years, would be appropriate. EL SALVADOR Utility Systems in El Salvador (1962 Statistics) Annual Energy (kwh) Generating Capacity of System (kw) Consumers Total Retail Sales Purchased from GEL I. CEL Customers, Distributors Compania de Alumbrado Electrico de San Salvador (CAESS) 10,910 55,020 178,245,700 179,315,760 Compania Electrica de Oriente (CEO) 1,090 9,849 21,170,556 22,414,809 Compania Electrica Cucumacayan (CECSA) 2,256 4 16,242,858 4,017,988 Compania de Lus Electrica de Santa Ana (CLESA) 3,060 15,342 18,628,497 10,039,200 Compania de Lus Electrica de Ahuachapan (CLEA) 375 2,753 1,778,600 802,691 Compania Oriental Salvadorena de Alumbrado Electrico (COSAE) 390 3,450 1,969,548 628,44 Distribuidora Electrica de Usulutan S.E.M. (DEUSEM) 0 1,874 8,263,016 9,533,480 Distribuidora Electrica de Sensuntepeque S.E.M. (DESSEM) 50 770 605,219 629,900 Pilot Plan Rural Electrification Zona 15 0 810 47,627 48,091 Distribuidora de San Sebastian (Sr. G. Duenas) 0 475 160,649 181,230 II. CEL Customers. Non-distributors Municipality of San Miguel 0 876,373 Municipality of Sab Rafael Cedros 0 108,353 Minas Montecristo 0 - - 955,056 Sub-totals 18,131 90,347 247,112,270 229,551,372 III. Utilities Distributing Energ Supplied by CECSA Compania de Lus Electrica de Sonsonate (CLES) Sub-total 890 5,953 5,629,317 IV. Miscellaneous Suppliers (Not inter- connected with GEL System Empresa Salvadorena de Servicios Electricos (ESSE) 708 700-2/ 700,000 Sociedad Hidroelectrica R. Matheu y Cia. 260 569 478,142 Minor Systems and Municipalities 245 3,110 230,960 Sub-total, Systems other than GEL 1,213 4,379 1,409,102 CEL System 60,000 864 64,324 &1 64,324 A/ Grand Total for Country 80,234 101,543 2542215,013 5/ 229,615,696 Includes rural electrification. Not including wholesale supply to CLES, estimated at 1,500,000 kwhrs. Only available data. Does not include rural electrification. In addition to this amount of power supplied by Utility Systems, private industrial generation was estimated at about 7 million k5hra in 1962. ANNEX 2 CEL POWER EXPANSION PROGRAM EL SALVADOR CEL Network - Annual Load Growth and Sales Installed Peak CEL Sales Percent Increase Canacity Load Millign in Sales over Year M4AT V 2 kwh Y Previous Year (Actual) 1954 30 16.4 28.2 1955 30 19.8 72 O (half year) 1956 30 24.2 94.6 31.4 1957 45 29.1 114.2 20.7 1958 45 34.9 142.3 24.6 1959 45 4o.o 169.4 19.0 1960 45 43.8 173.2 2.2 1961 60 48.8 203.0 17.2 1962 60 55.5 229.6 13.1 (Forecast) 1963 75 64.6 263 14.5 1964 75 72.4 291 10.6 5/ 1965 118 86.7 344 18.2 1966 i8 97.1 410 19.2 1967 118 108.8 460 12 1968 133 121.7 515 12 1969 153 136.3 576 12 1970 173 152.7 645 12 1971 175 171.0 723 12 1972 193 191.5 812 12 l/ A reserve of 5 Md15 of thermal capacity owned by CAESS is available to help meet the demand in the area served by CAESS in emergency. 2/ As of December 31. 3/ Calendar year. 4J CAESS generated 9,631,900 kwh to supply its market because of water shortage at the Guayabo plant. 5/ CAESS would generate 15,500,000 kwh to supply its market if near critical dry season inflows to CEL hydroelectric plants were experienced. 6/ Interconnection with Acajutla load expected by March 1965. EL SALVADOR CEL-NTEGRATED SYSTEM FORECAST OF PEAK LOAD GROWTH AND CAPAC-TY REQUIREMENTS !‘乎， CALENDAR YEARS《JJ MARCH 1963 ISRO一1136 ANNEX 4 Page 1 CEL P94ER EXPANSION PROGRAM EL SALVADOR Detailed Description and Cost Estimate The CEL power expansion program for the period 1963-65 includes the following works: a) Addition of a fifth unit and substation facilities at the Guayabo hydroelectric plant, b) Construction of a steam-electric generating plant with substation and oil storage facilities at Acajutla. c) Construction of a transmission line from Acajutla to Opico on the existing San Salvador-Santa Ana line and improvements to substation facilities in San Rafael Cedros and Usulutan. A detailed description of the various features of the power expansion program and the cost estimate follows: Fifth Unit at Guayabo A fifth generating unit will be installed in the existing under- ground power station. Yearly all of the civil works needed to accommodate this final unit were completed when the fourth unit was installed. The turbine will be of the horizontal shaft Francis type. Expected maximum output at 50 meters net head will be 24,500 horsepower (18,000 kilowatts) at 200 or at 225 r- " pm. The generator will be rated 20,000 kva at 0.9 power factor, 13.8 kv, 60 cycles, 3 phase. Control equipment and unit auxiliaries will be added in the power station. Civil works include completion of concreting a transition -from the intake to the existing penstock, installation of a radial intake gate, guides, and hoist, removal of a portion of the existing concrete floor in the generator hall to permit pouring foundations for the turbine and generator, removal of an existinr, rock plug to permit installation and embedment of the turbine draft tube liner, and installation of a draft tube gate and guides. After the unit is completed, existing stoplogs at the intake will be removed. Permanent residences for plant operating personnel will be built to replace existing temporary residences. No additional personnel need be employed. A transformer rated 16/20 TVA will be installed on a cut and fill extension to the existing switchyard. An oil circuit breaker, disconnect switches, protection devices, and steel structures will complete the switchyard. ANNEX 4 Page 2 Steam-Electric Plant at Acajutla The thermal plant at Acajutla will consist of an oil-fired steam-electric generating plant, substation, and oil storage facilities for one unit. Space will be provided at the plant for future addition of three similar units. The steam generator will have an outdoor drum-type boiler rated 265,000 pounds of steam per hour at 970 psig pressure and 9500F temperature. A furnace fired with Bunker C (number 6) oil, an economizer, piping, super- heater, induced draft (and if necessary forced draft) fans, and a chimney will be included. Feedwater at the boiler inlet will be at 1355 psig pressure and 374oF temperature after five regenerative preheating stages. The turbine-generator set will be housed in a steel structure. Reinforced concrete footings will carry the machinery loadings to an adequate rock foundation. The turbine-generator will be rated 25,000 kilowatts with l0, additional short time capability, 0.85 power factor, 60 cycles, 13.8 kv, 3600 rpm. Steam conditions at the turbine inlet will be 925 psig pressure and 9500F temperature. The condenser will be designed for a cooling water flow of 29,700 gpm at a temperature range of 840F at the inlet and 970F at the outlet. Total plant water requirements will be 31,700 gpm. The pumping rate from deep wells will be less than 705 gpm to supply boiler feedwater make-up and to replenish water evaporated at the surfaces of the cooling towers. All of the boiler feedwater make-up will be demineralized in cation-anion exchangers. Two transformers will be located in a substation adjacent to the steam plant. One 13.8/115 kv step-up transformer will convert from generator voltage to transmission voltage. Cables will connect the transformer to a 115 kv bus. Energy will be delivered from the bus either directly to the Acajutla-Opico transmission line or to the Acajutla area. To accomplish this, a 115/34.5 kv, 20 IVA, step-down transformer will be provided. The step-down transformer will be equipped with automatic under-load tap changers to compensate the voltage variations in the 115 kv line. This transformer will be connected to a 34.5 kv sub-transmission system serving the Acajutla area. Necessary circuit breakers, line disconnect switches, protection devices, hardware, and steel structures will be provided at the substation. Present plans call for construction of storage tanks and pipeline facilities adequate to handle a 125,000 barrel (20,000 short ton) tanker from the harbor at Acajutla. Possession of such facilities will enable CEL to obtain Bunker C fuel oil at world market prices.1/ Transmission Line and Substation Expansions A 115 kv transmission line, approximately 63 kilometers long, will be built to connect the Acajutla steam plant substation with the existing 115 kv Santa Ana-San Salvador transmission line at Opico. Single-circuit 1/ The oil storage facilities may be modified if an acceptable contract with the local refinery can be negotiated prior to the completion of the plant. ANNEX 4 Page 3 steel towers will be built except for about two kilometers, at the Acajutla end, which will have double-circuit towers. Line disconnect switches will be installed at Opico. Improvements to substations in the eastern part of El Salvador include installation of a 20 MVA secondary, 8 MIVA tertiary, 110/72/46 kv autotransformer to replace an existing 10 MVA transformer at San Rafael Cedros and a step voltage regulator at Usulutan. Construction Schedule It should be possible to add the fifth unit at the Guayabo plant within 20 months after opening bids for the major equipment. Construction of the steam plant at Acajutla should be possible within 24 months after awarding the contract for the major equipment. The transmission line and substations can easily be completed in the 20 months allowed for the fifth unit. ANNEX 4 Page 4 Cost Estimate (in millions) Foreign Local Total Cost Currency Equivalent Currency in Colones US$ Colones Cost, Equivalent Fifth Unit Addition Civil Works & Dwellings 0.02 0.063 0.717 0,780 Mechanical 0031 0.777 0m084 0.861 Electrical 0.,34 0,851 0.136 0.987 Switchyard 0.08 o,i96 0.035 0.231 Sub-total 0.75 1,,887 0,972 2,859 Equivalent Dollars - (0,755) (0.389) (1.144) Stezm Plant at Acajutla Land - - 0.100 01100 !'ec;hanical 3.46 8.640 0.6, 4 9.284 Electrical 0.41 1012 0.000 1.102 Civil 0,22 0.571 1,430 2.001 Substation 0.45 1,125 0.087 1.212 Oil Storage & Handling 0,46 1.!46 0,343 1.489 Sub-total 5.00 12,494 2.694 15.188 Equivalent Dollars - (4,,998) (1,077) (6.0?5) Transmission Line & Substations Transmission Line 0.33 0.835 0,463 1.298 Opico Substation 0,03 0.075 0,027 0.102 San Rafael Cedros 0.10 0.243 0.032 0.275 Usulutan 0M03 0,059 0,018 0.077 Sub-total 0.49 1.212 0.540 1.752 Equivalent Dollars - (0.485) (0.216) (0.701) Contingencies 0M65 1.627 0.464 2.091 Equivalent Dollars - (0,651) (0185) (0.836) Engineering & Supervision 0.55 1.380 0.798 2.178 Equivalent Dollars - (0-552) (0,319) (0.871) Total Construction ( ) 18,600 5,468 24.068 Equivalent Dollars (7.441) (2.186) (9.627) Interest during construction on Bank loan 0.49 1.230 - 1,230 Equivalent Dollars - (0,492) - (0.492) Total Investment $7.93 019,830 05.468 025.298 US Dollar Equivalent - (7.93) (2.19) (10.12) (Figures rounded) COMISION EJECUTIVA HIDROELECTRICA DEL RIO LEMPA Income Statements 1959-1972 (in thousands of Colones) Fiscal year ending December 31 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 SActual--------------- --------------- --------------------------- Forecast-------------------------------------- Sales in millions of kwh 169.4 173.2 203.0 229.6 263 / 291 2/ 34L 2/ 410 460 515 576 645 723 812 Average revenue per kwh in centavos 3.90 4.20 4.12 4.14 4.15 4.18 4.17 4.11 4.11 4.11 4.11 4.11 4.11 4.11 Operating revenues 6,6021/ 7,279 8,365 9,504 10,920 12,153 1,,335 16,851 18,906 21,166 23,673 26,509 29,715 33,373 Other revenues 60 55 44 105 100 100 100 100 100 100 100 100 100 100 Total revenues 6,662 7,334 8,409 9,609 11,020 12,253 1h,435 16,951 19,oo6 21,266 23,773 26,609 29,815 33,473 Operating cost Operation and maintenance expenses 1,129 881 918 1,139 1,292 1,h48 1,528 2,042 2,276 2,534 2,826 3,154 3,520 3,930 Fuel cost - - - - - - 144 95L 1,210 1,137 1,458 822 1,173 1,073 Depreciation 1,335 1,310 1,398 1,675 1,700 1,890 1,895 2,620 2,630 3,150 3,155 4,135 4,145 5,o4o Total operating cost 2,464 2,191 2,316 2,81j 2,992 3,338 3,567 5,616 6,116 6,821 7,439 8,111 8,838 10,043 Net income from operation 4,198 5,143 6,093 6,795 8,028 8,915 10,868 11,335 12,890 14,445 16,334 18,493 20,977 23,430 Interest payable - 2,329 2,426 2,427 2,555 3,004 3,354 3,544 4,073 4,347 4,801 4,979 4,900 5,073 Less: Interest capitalized - 199 349 195 524 440 960 500 1,240 855 1,560 290 480 390 Interest charged to operation 2,284 2,130 2,077 2,232 2,031 2,564 2,394 3,044 2,833 3,492 3,241 4,689 4,420 4,683 Net profit 1,914 3,013 4,016 4,563 5,997 6,351 8,474 8,291 10,057 10,953 13,093 13,809 16,557 18,747 Net fixed assets in operation r, (* average) in millions of 0 56.8 "56.3 '63.3 70.1 75.6 81.0 92.0 102.6 100.3 121.6 *120.1 163.6 *161.6 199.2 Return on net fixed assets in operation in % 7.4 9.1 9.6 9.7 10.6 11.0 11.8 11.0 12.9 11.9 13.6 11.3 13.0 11.8 Includes the payment of $589,000 made by CAESS to CEL early in 1960 representing excess profits of CALSS for the year 1959 (see pares. 29 and 31). In addition to these sales by CEL, CAESS is assumed to supply the following energy from its thermal capacity to meet the requirements of the system: 1963 kwh 10 million, 1964 kw1h 15.5 million, and 1965 kwh 18.1 million. The reduction in energy sales is however not accompanied by a proportionate reduction of revenues because the demand charge component of the average revenue per kwh remains unchanged. The assumed average revenue per kwh of 4.11 centavos would therefore increase, numerically, to 4.15 in 1963, 4.18 in 1964, 4.17 in 1965. After CEL's thermal plant at Acajutla is completed in 1965 no further energy supplies are assumed from CAESS. vt. ANNEX 5a COMISION EJECUTIVA HIDROELECTRICA DEL RIO LEMPA Assumptions for Forecast of Income Statements 1. Operating revenues are based on (a) sales projections discussed in Chapter III and shown in Annex 2, and (b) an average revenue per kwh of 4.11 centavos,as dis- cussed in paragraph 28, throughout the period under review. 2. Operating costs for CELts hydro system are based on past experience and are estimated to amount to 20 per kw annual peak demand, %6 of which would be for admini- strative and overhead expenses. The fixed operating cost of the thermal plant was forecast in detail by the con- sultants; annual costs (excluding fuel) are estimated to be about 06o,o000 for salaries, wages, cost of materials for operation and maintenance, and insurance. 3. Fuel costs were projected by the consultants according to the assumed operation of the steam plant within the system. Hydroelectric generation of the CEL system was projected on the basis of median annual water availability. The cost of Bunker C oil delivered at Acajutla was con- sidered at world market prices of about $2.10 per barrel, equivalent to 35.3 U.S. cents (0.881) per million BTU. 4. Depreciation was calculated on a straight-line basis at 20 per year for CEL's hydro installations and at 3% per year for thermal and new transmission facilities. ANNEx 6 COMISION EJECUTIVA HIDROELECTRICA DEL RIO LEHPA Summary Balance Sheets 1959-1962 (in thousands of Colones) Year ended December 31 1959 1960 1961 1962 Assets Fixed assets in operation 63,320 63,522 79,840 80,123 Less: Depreciation reserve 6 561 7 696 9,077 10,725 Net fixed assets in operation 7970,763 9,398 Work in progress 4,091 12 929 .528 6 067 Total net fixed assets 60,850 72,291 Current assets 5,713 3,764 5,197 8,288 Deferred charges 2,489 2,132 2,189 2,302 Total assets 69,052 74,651 79,677 86,055 Liabilities Capital account - Government contributions 14,365 14,849 16,265 17,640 Surplus (deficit) (1324) 2,773 6,873 11,289 Total equity 13,041 17,613 23,138 28,929 Long-term debt: IBRD 22-ES 27,063 25,860 24,537 23,158 IBRD 221-ES 670 4,419 6,475 6,604 IBRD 263-ES - - 860 4,028 Internal Bonds 20,801 19,299 17,746 16,170 Central Bank loan - - - 327 Loans from local institutions 377 76 62 41 Government loan 5,000 5 000 4 750 4 500 Total long-term debt 53,911 5 Current liabilities 1,288 1,599 1,414 1,512 Miscellaneous 812 785 794 786 Total liabilities 69,052 74,651 79,776 86,055 Debt/equity ratio 81/19 76/24 70/30 65/35 ANNEX 7 O0MISION EJEOTIVA HIDROIoTRIA DEL RIO LEMPA Sources and Applicatioas of Funds 1963-1972 (in thousands of oolones) Total Year ending Oecember 31 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 SOURGES OF F'JNDS Internal casn generation Net income from operation 8,028 9,915 1u,868 11,335 12,990 lå,155 16,335 18,498 20,977 23,430 145,720 Depreciation 1,700 1,890 109$ 2,620 2,630 3,150 3,130 !,135 L,1S 5,010 30 360 Total internal cash generation 9,728 10,05 12,763 13,955 15,520 17,595 19,489 22,633 25,122 2,70 176,08o Borrowings ID 1oan 263 ES 5,572 - - - - - - - - - 5,572 Irpoed I3RD loan h,200 5,400 5,400 - - - - - - - 15,000 Oe,tral Bank loan 235 - - - - - - - - - 235 Assued future loans: Paso del Oso No. 1 - - 5,900 4,150 5,900 - - - - - 15,950 Silenci No. 1 and No. 2 - - - - 11,300 8,00 11,300 - - - 30,600 ohro - - - - - - 3.000 3,000 5,650 11,750 22,500 Total borrowings 10,007 5,401 11,300 4,150 17,200 8,000 16,300 3,000 5,650 11,750 Total sources of funds 19,735 16,205 2,063 18,105 32,700 25,595 33,789 25,633 29,772 40,220 265,837 APPLIOATIONS OF FUNDS onstruction expenditures (excluding capitalized interest): Oompletion of Guajoyo 7,361 7,364 Proposed project: foreign exchange 5,048 6,377 7,175 18,60w local currency 1,557 1,80 2,71 2 068 Sub-total 6,65C2 9,2h6¯ Pao d-l Oso No. I: foreign exchange 5,900 4,150 5,900 15,950 local currency 2,9 2,070 2,9o7,9 Sub-total 8,810 6,220 8,8 0 23,900 Silencio No. 1 and No.2: foreign exchange 11,300 8,000 11,300 30,600 local currency 5,700 4,oo0 5,700 15,400 Sub-total 17,000 12,000 17,000 -6,PC0 Other generating ädditions: foreign exchange 9,000 9,120 14,040 18,530 50,690 local currency 1,500 3,852 5,760 1,390 2, 320 su-total 13500 1,020 19,800 29,9107 1 Other caita expcndiiores. 250 250 250 250 250 250 250 250 250 250 2,50 Total ocntruction exoenditureo 14,219 8,467 18,336 6.470 26,o9o 12,250 30,750 13,250 20,050 30,160 180,042 )1nt Servoc Interest --_! ios 22-ES, 221-00, 263-EW 1,623 1,818 1,731 1,639 1,52 1,442 1,336 1,226 1,111 990 14,458 Proposed I0D loan 105 n0 700 825 795 763 730 695 658 619 6,330 Asou-ed futtre !ean: Pas del on No. 1 - - 260 500 750 877 853 827 799 770 5,626 Silencio No. 1 ard No. 2 - - - - 300 855 1,415 1,683 1,636 1,586 7,675 Others - - - - - - 115 290 480 935 1,850 Existing local currency loans 827 746 663 580 496 410 322 258 216 173 , 691 Total interest 2,555 3,004 3,354 3,545 4,073 4,347 4,101 4,979 4,900 5,073 CC,63e Anortiation I00. loans 22-ES, 221-ES, 263-ES 1,709 1,599 1,991 2,072 2,172 2,273 2,377 2,493 2,6oo 2,725 22,311 Proposed 0BRD lon - - - 545 505 607 640 675 712 751 4,505 Asooned future loans: Paso del Oso No. 1 - - - - - 458 572 198 526 555 2,499 Silencio No. 1 and No. 2 - - - - - - - 860 907 957 2,724 Others - - - - - - - - - 278 278 Existing local currency loans 1,629 1,65 1,658 1,681 1,7n 1,712 1,273 830 865 902 13 926 Total anortization 3,328 3,544 3,619 4,298 6,158 5,070 4,762 5,356 5,810 6,168 Total debt service 5,883 6,548 7,003 7,842 8,531 9,417 9,563 10,335 10,510 11,251 86,873 Total applications of funds 20,102 15,015 25,339 15,312 35,521 21,667 10,313 23,585 30,560 51,401 266,915 Net cash acorual (deficit) (367) 1,190 (1,276) 3,793 (1,901) 3,928 (6,524) 2,018 (788) (1,181) (1,078) Cash at beginning of yar 4,229 3,862 5,052 3,776 7,569 5,668 9,596 3,072 5,120 4,332 Cash at end of year 3,862 5,052 3,776 7,569 5,668 9,596 3,072 5,120 1,332 3,151 Times debt service eovered by internal cash generation 1.7 1.7 1.8 1.8 1.8 1.9 2.0 2.2 2.4 2.5 1/ Including pamente on the Cer=rl Bank ion. COMISION EJEC1TIVA HIDROELECTRICA DEL RIO LEMPA Balance Sheets 1962-1972 (in thousands of Colones) Year ended December 31 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 (adjuted/) ASSETS Assets in operation 80,123 94,223 94,473 120,036 120,286 120,536 146,186 146,436 195,456 195,706 240,241 Less: Depreciation reserve 10 725 12,425 14,315 16,210 18,830 21,460 24,610 27,765 31,900 36,045 41,085 Net fixed assets in operation 9,39 81,798 80,158 103,b26 101,456 99,076 121,576 11,671 163,556 159,661 199,156 Work in progress 6,067 6,710 15,367 9,100 15,820 42,900 30,355 62,415 26,935 47,215 33,230 Total net fixed assets 75,465 88,508 95,525 112,926 117,276 141,976 151,931 181,086 190,491 206,876 232,386 Current and other assets (net) 7,792 7,425 8,615 7,339 11,132 9,231 13,159 6,635 8,683 7,895 6,714 Total Assets 83,257 95,933 104,140 120,265 128,408 151,207 165,090 187,721 199,174 214,771 239,100 LIBILITIES Equity Capital account - Government contributions 21,640 21,640 21,640 21,640 21,640 21,640 21,640 21,640 21,640 21,640 21,640 Earned surplus 11,289 17,286 23,637 32,111 10,02 50,1459 61,12 74,505 88,314 104,871 123,618 Total equity 32,929 35,926 45,27 53,751 62,042 72,099 53,052 96,1 5 109,95 126,511 10W5,25? Long-term debt IBR?D loans: 22-ES, 221-ES, 263-ES 33,790 37,653 35,754 33,763 31,691 29,519 27,246 21,869 22,376 19,776 17,051 Proposed IBRD loan - 4,200 9,600 15,000 14,455 13,880 13,273 12,633 11,958 11,246 10,495 Assumed future loans: Paso del 0so No. 1 - - - 5,900 10,050 15,950 15,502 15,030 11,532 h,oo6 13,451 Silencio No.1 and No.2 - - - - - 11,300 19,300 30,600 29,740 28,833 27,876 Others - - - - - - 3,000 6,000 10,650 22,122 Local currency loans 16 538 15,154 13,509 11,851 10,170 8,d_9 6,717 5,1441 14,614 3,719 2,8647 Total long-term debt ,327,007 b,63 7b,51 66,366 79,10 52,035 91,5th b9,220 od,260 93,662 Total liabilities 83,257 95,933 104,140 120,265 128,408 151,207 165,090 187,721 199,17 214,771 239,100 Debt/equity ratio 60/40 59/41 57/43 55/45 52/48 52/48 So/5o 49/51 45/55 41/59 39/61 1/ The year-end figures for 1962 are given in more detail in Annex 7.. For purposes of this forecast these figures were adjusted to reflect: a) the transfer of the non-interest bearing Government loan (04,500,000) to equity, and b) the reduction of current assets by 0500,000 representing a claim against the Government for unpaid subsidies in 1962. These changes are assumed to take place in 1963. EL SALVADOR COMISION EJECUTIVA HIDROELECTRICA DEL RIO LEMPA (CEL) EXISTING TRANSMISSION LINES C.____ II SKy Metop-n 69KV 0 - - - - - - 44KV 0 SUBSTATIONS iUnder cons. GUA Jo YO POWER PLANTS c-a DAMSIT ES El Zopoti/lo 0 PCJI 10N~ .Ln El~~M K0Oil PROJE,-,1 SHOWNý G OLOR 1'0 20 30 40 5OKM Poso del Oso Cholaitenongo O 1 SANTA ANAD åth UNITR A .1 ASacSop6nGUA YA BO Ahuachopa,n Si/enCi/0AL9 0:,co SENSUNTEPEQUE tCoaepeqeepeque Sonsonate SAN SALVADOR Cojueeue SAN RAFAEL CEDROS SnFacsoGtr SantaSon Francisco Goter SAN VICENTEI ACA JUTL A EL TRIUNFO H E R M A L P L A N TL a L ib e r fa d Z a c a te c o lu c a i o . 17 c SAN MIGUEL USULUTAN La Union MARCH 1963 IBRD-137