Sri Lanka - Ninth Power Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 14724 IMPLEMENTATION COMPLETION REPORT SRI LANKA NINTH POWER PROJECT (CREDIT 1736-CE) JUNE 20, 1995 Energy and Project Finance Division Country Department I South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EOUIVALENTS Currency Unit = Rupees (Rs) Appraisal year 1985 = US$27.4 Intervening year 1990 = US$40.1 Completion year 1995 = US$50.4 MEASURES AND EOUIVALENTS 1 kilometer (km) = 0.6214 miles (mi) 1 meter (m) = 39.37 inches (in) I kilovolt (kV) 1,000 volts (v) 1 megawatt (MW) = 1,000 kilowatts (kW) = 1,000,000 watts 1 gigawatt hour (GWh) = 1,000,000 kilowatt hours (kWh) I MVA = 1,000 kilovolt amperes I MVAR = 1,000 kilovolt amperes reactive ABBREVIATIONS AND ACRONYMS CEB - Ceylon Electricity Board EIRR - Economic Internal Rate of Return ESMAP - Energy Sector Management Assistance Program GOSL - Government of Sri Lanka ICR - Implementation Completion Report IDA - International Development Association LECO - Lanka Electricity Company Limited ODA - Overseas Development Administration, U.K. ROR - Rate of Return SAR - Staff Appraisal Report U. K. - United Kingdom UNDP - United Nations Development Programme FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT SRI LANKA NINTH POWER PROJECT (Credit 1736-CE) Table of Contents Page No. PREFACE EVALUATION SUMMARY ......................................... i PART I PROJECT IMPLEMENTATION ASSESSMENT. I Project Identity and Background. I A. Statement/Evaluation of Objectives ........... ........................ 2 Project Objectives ......................................... 2 Project Description ......................................... 2 B. Achievement of Objectives ......................................... 2 Macroeconomic Policies . .................................... 2 Sectoral Policies . ........................................ 2 Financial Objectives . ...................................... 3 Institutional Development Objectives ............................ 3 Physical Objectives . ...................................... 3 Economic Analysis ........................................ 4 C. Major Factors Affecting the Project .... .......... ................... 4 Factors not generally subject to Government Control .................. 4 Factors generally subject to Government Control ..................... 5 Factors generally subject to Implementing Agency Control ............... 5 Project Costs and Financing ................................. 5 Project Implementation ..................................... 6 Environm ent ............................................ 6 D. Project Sustainability . ......................................... 6 E. IDA's Performance . ........................................... 6 Project Identification . ....................................... 6 Project Preparation . ....................................... 6 Project Appraisal . ......................................... 7 Project Supervision . ....................................... 7 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.  F. Performance of Borrower and Beneficiary ......... ..................... 7 Project Identification, Preparation and Appraisal ........ . . . . . . . . . . . . . 7 Project Implementation ............................ ...... .. . 8 G. Assessment of Outcome .......................................... 8 H. Future Operation ............... I. Key Lessons Learned. ......................................... 8 Part II STATISTICAL ANNEXES .10 Table 1: Summary of Assessments ............... ... ... ... ... ... . . 10 Table 2: Related Bank Loan and Credits ........... .. .. .. . .. .. .. . .. . 11 Table 3: Project Timetable ............................ ...... .. . 12 Table 4: Credit Disbursements: Cumulative Estimated and Actual .... ........ 12 Table 5: Key Indicators for Project Implementation ..................... 13 Table 6: Key Indicators for Project Operation ......................... 14 Table 7: Studies Included in Project .......... ..................... 14 Table 8A: Project Costs .15 Table 8B: Project Financing .15 Table 9: Economic Costs and Benefits . ............................. 16 Table 10: Status of Legal Covenants ................................ 17 Table 11: Compliance with Operational Manual Statements ....... . . . . . . . . . . 20 Table 12: Bank Resources: Staff Inputs .................. .... ... ... . 20 Table 13 Bank Resources: Missions ........................ ..... . . 21 Appendices: A. Missions's Aide Memoire (July 25 - August 6, 1994) with Operational Plan .22 B. Borrower's Evaluation ....................... . 30 C. CEB's Financial Statements .42 D. Economic Analysis .45 Map IBRD No. 26394  IMPLEMENTATION COMPLETION REPORT SRI LANKA NINTH POWER PROJECT (Credit 1736-CE) Preface This is the Implementation Completion Report (ICR) for the Ninth Power Project in Sri Lanka for which Cr. 1736-CE in the amount of SDR 43.2 million (US$52.0 million equivalent) was approved on October 14, 1986. The Credit was closed on June 30, 1994, two years behind schedule. Final disbursement took place on March 27, 1995, at which time a balance of SDR 9.4 million (US$14.7 million equivalent) was canceled. Cofinancing was provided by the Overseas Development Administration of the United Kingdom. The ICR was prepared by Messrs. Mohinder P. Manrai, Senior Power Engineer, Energy and Project Finance Division, Country Department I of the South Asia Regional Office and Mr. Nurul Alam, Senior Program Officer, Bangladesh, Resident Mission. It has been reviewed by Messrs. Per Ljung, Chief, Energy and Project Finance Division and Mr. Fakhruddin Ahmed, Project Adviser, Country Department 1. The Borrower provided comments that are included as Appendix B to the ICR. Preparation of this ICR began during IDA's final supervision/completion mission (July 25 to August 6, 1994. It is based on material in the Project file. The Borrower contributed to preparation of the ICR by its own evaluation of the Project's execution. Although invited to do so, the cofinancier did not submit a separate evaluation.  I  IMPLEMENTATION COMPLETION REPORT SRI LANKA NINTH POWER PROJECT (Credit 1736-CE) Evaluation Summary Introduction The Bank Group's involvement with Sri Lanka's power sub-sector began in 1954 when a loan (Ln. 101-CE) was made to the Government of Sri Lanka (GOSL) for the expansion of a hydroelectric scheme. Since then the Bank Group, through 10 additional loans/credits, has been actively involved in providing resources needed for the development of the sub-sector in terms of capacity to meet demand at least cost and to encourage institutional reforms. In 1983, GOSL and the Ceylon Electricity Board (CEB) initiated a study with assistance from IDA and the United Nations Development Programme under the Energy Sector Management Assistance Program (ESMAP) to identify measures to reduce system losses. Based on the recommendations of the study, CEB prepared an investment plan for the period 1985-1995 to rehabilitate, reinforce and expand CEB's distribution system. The Ninth Power Project covered a four-year time slice of the investment plan (paras. 1 and 2). Objectives The principal objectives of the Project were to: improve the reliability and quality of power supply, reduce losses to economic levels, and expand the distribution system to meet the forecast demand for electricity. The Project consisted of a four-year time slice of CEB's distribution rehabilitation and expansion program. The Project comprised the erection of about 950 km of 33-kV lines, extension and rehabilitation of low voltage distribution networks in Colombo city and elsewhere in Sri Lanka, and technical assistance to CEB. The objectives were clear, realistic and consistent with IDA's and GOSL's strategy for the power sub-sector (para. 3.) Implementation Experience and Results The Project substantially achieved its institutional objectives and, on its completion, will substantially achieve its physical objectives as described in the Project scope. However, the power sector in general is not performing satisfactorily due to a power generation crisis by poor management and therefore the sectoral objectives were achieved only partially. The financial objective was to ensure CEB's continued financial viability through attainment of a satisfactory rate of return (ROR). Although during Project implementation, CEB increased the tariffs, these were inadequate to meet the agreed ROR (para 8). The achievement of financial objectives is therefore partial. Inspite of IDA's repeated requests, GOSL/CEB did not show enough commitment to meet the covenants. As a consequence, IDA decided to close one of the ongoing credits, Cr. 1933-CE (paras. 8 to 12). The distribution system has been extended and reinforced; there has been improvement in the level of operating voltage; and the level of technical losses and reliability of power supply have improved. The original Project completion period of four years was optimistic. Due to implementation problems, the completion was delayed by four years (para 27). On completion, the Project will be a part of CEB's integrated distribution system and the major objectives achieved will be sustained.  ii The Project's estimated cost at appraisal was US$108.1 million, including foreign exchange cost of US$65.0 million. Foreign cost was to be financed by IDA (US$52.0 million) and Overseas Development Administration (ODA) of the United Kingdom (US$13.0 million). Local costs were to be funded by CEB. The Project will be completed by December 31, 1995 compared with the appraisal target of June 30, 1991. On completion, the Project is now estimated to cost US$103.1 million with financing of the foreign costs by IDA of US$46.1 million and by ODA of US$15.6 million. The key factors that affected the achievement of physical objectives were: (a) civil unrest in the Northern and Eastern provinces of Sri Lanka which hampered Project implementation and the scope of the Project had to be modified; (b) sanctions imposed by the United Nations on some of the constituents of the former Yugoslavia caused IDA and CEB to stop payments to one of the turn-key contractors and consequently, the contractor had to abandon its contract; (c) due to security conditions in the country, the scope of the work had to be reduced (para. 14); and (d) changes in the routes of the sub-transmission lines, revision of scope of works, protracted procurement procedures, inadequate work force, and priority given by CEB to expansion and rural electrification rather than rehabilitation also caused delays in the implementation of the Project (paras. 17-19). Also, due to reluctance of GOSL/CEB to set appropriate levels and structures of tariffs, CEB did not meet the financial objectives since 1988 (para. 9). IDA and CEB jointly prepared the Project which was a part of CEB's least cost expansion and rehabilitation program and their performance during the identification and preparation stages were highly satisfactory (paras. 25, 26 and 29). During appraisal, IDA did not fully assess the security risks in the Northern and Eastern provinces and the adequacy of CEB's force account to implement the expansion and the rehabilitation of medium and low voltage lines. Only four years was provided for Project implementation which was optimistic, and the Closing Date had to be extended. Other factors and risks were fully assessed and mitigating steps were included in the Project design. Overall, appraisal of the Project was satisfactory (para. 27). Satisfactory supervision of the Project was also carried out by IDA on a regular basis. CEB's procurement procedures were protracted causing delays. CEB could not add any new generating unit for last three years causing load shedding. CEB's financial performance was poor and it could not meet the financial covenants. Its performance during implementation was therefore deficient (para 30). The Project substantially achieved its major objectives. The economic internal rate of return is estimated at 10%, which is slightly higher than the appraisal estimate of 9%. The overall assessment of the Project is satisfactory (para. 31). Proiect Sustainability On completion the Project will be a part of CEB's integrated distribution system. CEB has drawn a detailed Operational Plan (Appendix A) indicating how the Project will be sustained.  iii Summary of Findings. Future Operations, and Key Lessons Learned In the type of Project where extensive lines and substations are involved, detailed design and advance procurement actions should be undertaken during the preparation stage of a Project. The implementation period should not be too optimistic; it should be realistic and based on country and regional experience. For supply and erect type of contracts, there should be a quick mechanism for resolution of disputes (e.g., Dispute Resolution Committee of United Kingdom) and the mechanism should be incorporated in the bidding documents. The present arbitration procedure is formal and cumbersome. Presently the Bank is attempting to introduce a "Dispute Resolution Board" for such types of contracts and this is a step in the right direction. The Bank's long experience with CEB shows that CEB's financial operations are inefficient and, therefore, the Bank has decided that further assistance in the short term for the sector should be provided through the private sector instead of the public sector (para. 34). A monitorable Operational Plan has been agreed with GOSL/CEB and it will be reviewed by subsequent IDA missions supervising the remaining ongoing Project with CEB (Second Power Distribution and Transmission Project Cr. 2297-CE). Any impact evaluation of the Project should be carried out by the Operations Evaluation Department around end-1996, when the Project would have completed one year of operation (para. 32).  I  IMPLEMENTATION COMPLETION REPORT SRI LANKA NINTH POWER PROJECT (Credit 1736-CE) PART I - PROJECT IMPLEMENTATION ASSESSMENT Project Identity Name Ninth Power Project Credit 1736-CE RVP Unit South Asia Region Country Sri Lanka Sector Energy Sub-sector Power Background 1. Ceylon Electricity Board (CEB), a statutory organization established in 1969, is the principal entity in Sri Lanka's power sub-sector and is responsible for generation and transmission throughout the country and for distribution in areas that are not served by the Lanka Electric Company Limited (LECO) and local authorities (licensees). During the period 1977-1985, electricity sales in Sri Lanka had increased at an average annual rate of 7.8%. Although this increase was matched by adequate expansion of CEB's generation and transmission facilities, investments for sub-transmission and distribution facilities were inadequate. Consequently, system development was not balanced and led to high system losses (17% of gross generation in 1985). To improve the quality and reliability of electricity supply and the operating efficiency of the power system, the Government of Sri Lanka (GOSL) and CEB, with assistance of IDA and the United Nations Development Programme (UNDP), initiated a study in 1983 under the Energy Sector Management Assistance Program (ESMAP) to identify measures to reduce system losses. Based on the recommendations of the study, CEB prepared an investment plan for the period 1985-1995 to rehabilitate, reinforce and expand CEB's distribution system in coordination with planned expansion of the generation capacity. 2. The Ninth Power Project (Cr. 1736-CE) covered a four-year time slice of the investment plan. It was appraised in October 1985 and the Credit was approved by the IDA's Board on October 14, 1986. The Credit and Project Agreements were signed on November 7, 1986 and declared effective on March 2, 1987. The Project was originally scheduled to be completed by June 30, 1991, which was optimistic (para. 27). It is now expected to be completed by December 1995. The Credit closed on June 30, 1994, two years behind schedule, and requiring two formal extensions. Cofinancing of US$13 million was expected to be provided by the Overseas Development Administration (ODA) of the United Kingdom.  -2 - A. Statement/Evaluation of Objectives 3. Project Objectives: The principal objectives of the Project were to: improve the reliability and quality of power supply; reduce technical losses; extend and reinforce the distribution system; improve CEB's capability to construct and maintain its distribution system; and enhance its operational efficiency. The Project also aimed to assist CEB in developing a more appropriate balance between generation, transmission and distribution facilities in order to meet the forecast demand at least cost. These objectives were clear, realistic and consistent with the IDA's strategy for Sri Lanka's power sub- sector. Further, they were consistent with GOSL's energy strategy, which has as one of its principal objectives the improvement of the quality and reliability of electricity supply and efficiency in the operation of the power system. The Project was well designed to meet these objectives and was a part of CEB's investment program; as such it was not complex or demanding for CEB. However, the Project coverage extended to the Northern and Eastern provinces of the country which were facing civil unrest, and, therefore, was risky. Due to an increase in civil unrest, extension of sub-transmission and distribution lines in the Northern province had to be abandoned and in the Eastern province reduced. 4. Project Description: In order to achieve the above objectives, the following components were included under the Project: (a) Backbone Lines and Gantries outside Colombo: construction of about 250 km of double circuit, and 550 km of single circuit 33-kV main distribution lines, and of about 50 33-kV switching stations (gantries); (b) Medium Voltage (MV) and Low Voltage (LV) Systems outside Colombo: construction of about 150 km of single circuit 33-kV lines, about 50 km of single circuit 11-kV lines, and installation of about 50 MVAR capacity of capacitors; strengthening and upgrading of about 500 km of 1 l-kV lines; installation of about 1,200 33-kV/LV and about 300 1 1-kV/LV distribution transformer stations and transformers, and the conversion of about 200 km of LV lines to three phase; and line materials, vehicles, tools and instruments for the rehabilitation of the low-voltage network; (c) Distribution System within Colombo: construction of two 33-kV/11-kV and 125 11- kV/LV substations, the installation of about 15 km of 33-kV, 120 km of 1 I-kV and 125 km of low voltage cables for the underground network in the city of Colombo; and (d) Technical Assistance: consulting services for detailed engineering, Project management, Project accounting, training CEB staff in modern methods for the construction and maintenance of the distribution systems, and preparation of a distribution master plan. B. Achievement of Obiectives 5. Macroeconomic Policies: Macroeconomic policies were not included in the design of the Project. However, sectoral policies for efficient financial operations of CEB and satisfactory mobilization of resources were covered and are discussed below. 6. Sectoral Policies: This Project addressed limited sectoral policy issues. At the time of appraisal of the Project, the distribution in most of the country was being handled and managed by about 200 licensees. It was realized that this arrangement was not satisfactory and needed to be rationalized.  Therefore, as a part of the Project, a distribution master plan was prepared by CEB, with assistance of consultants, and recommendations emanating from this report have been implemented under subsequent IDA Credits (Cr. 1933-CE and Cr. 2297-CE). 7. Because this was primarily a distribution Project, the distribution system has been extended and reinforced, and there has been improvement in the level of operating voltages, especially of heavily loaded feeders. The level of technical losses in the Project distribution system and the reliability and quality of power supply have improved. The number and duration of breakdowns in the distribution system have also been reduced. However, the overall system losses have deteriorated and, based on information provided by CEB, these were 16.4% in FY85 and 17.8% in FY93. In reality, the system losses were slightly higher because CEB regularly adjusts its accounts receivable on the basis of representations from its consumers, without corresponding adjustments of its energy sales. Regarding the power generation, the picture is bleak. Due to poor management, there has been no addition to the generation facilities for the last three years and no new Project is nearing completion. All this will result in heavy load shedding in the near future. Thus overall the sectoral achievement was partial. 8. Financial Objectives: The financial objective was to ensure CEB's continued financial viability through attainment of a satisfactory rate of return (ROR). Although during Project implementation (1986-1994), tariffs were increased at an annual average rate of about 15% (from Rs 1.48/kWh to Rs 3.75/kWh during 1986 - 1994), since 1988, these increases have been inadequate to meet the covenanted rate of return target of 8 %. The major reasons for CEB's non-compliance with the ROR covenant are as follows: (a) inadequate tariff increases; (b) increasing system losses; (c) GOSL's decision in May 1994 to roll back tariffs to the pre-February 1994 levels for the first 0-lOOkWh domestic consumption block (about 17% of the overall sales). With this adjustment, the tariff for the above block is only Rs 1.62/kWh (US$0.03/kWh) and is about 43% of the average revenue rate; and (d) abolition of fuel surcharge with effect from February 1994. Lack of commitment on GOSL/CEB's part to comply with agreed covenants led to the closing of one of the ongoing Credits (Cr. 1933-CE) without further consideration of an extension which had been approved conditionally. More recently however, CEB's latest estimates for FY94 indicate that its ROR attained at the end of 1994 was around 8% (this will be verified after receipt of the FY94 audited accounts). A comparison of CEB's financial statements between appraisal estimates and actuals is provided in Appendix C. 9. As of end December 1994, CEB's total receivables were satisfactory and at Rs 2979 million or at a level of 2.6 months of annual electricity sales. However, the receivables from the low voltage private and government consumers were at a level of 4.5 months and were unsatisfactory. Overall the financial objectives were only partially achieved (para 16). 10. Institutional Development Obiectives: CEB's capability to plan, design, construct and maintain its distribution system improved under this Project which, together with the preparation and recommendation of the distribution master plan, helped CEB to take over the operations of about 200 licensees under subsequent Projects. The achievement of institutional development objectives was substantial. 11. Physical Obiectives: For implementation of the Project as described in para 4, the scope of work was sub-divided into several packages. The expansion of the backbone lines and gantries outside the Colombo area was covered under Contract 1 [sub-para 4(a) above], the developments within Colombo City were covered under Contract 2 ([sub-para 4(c)], while procurement of equipment, vehicles, tools and materials required for the improvement, development and expansion of the existing 33-kV, 1 1-kV  and LV systems [sub-paras 4(b)] were covered under Contracts 3, 4, 5, 6 and 7. Contracts 1 and 2 were awarded on supply-erect basis (the later work being financed by ODA, U.K.), while the materials procured under Contracts 3 through 7 were erected by CEB with its own staff. 12. Detailed design for the Project was carried out by CEB with assistance of consultants. A computer aided design package was used to identify the reinforcement and expansion requirements of the system. Based on the detailed designs, the quantity of works of the various components were modified and, due to security considerations (para. 14), the physical objectives of the Project had to be revised. Because the location, size, voltage, type and switching arrangements of the capacitors could not be finalized by CEB, the procurement and installation of the capacitors were deleted from the Project scope. The appraisal estimates, the design estimates and the expected achievement on completion of the Project are shown in Part 11, Table 5. The design of the Project was appropriate for achieving the Project objectives and the criteria for monitoring the achievements were quantified in the SAR. Overall, the Project on its completion will substantially achieve its physical objectives. 13. Economic Analysis: The Project was a part of CEB's least cost expansion program, and during appraisal the economic internal rate of return (EIRR) on CEB's investment program for generation, transmission and distribution for the period 1986-2000 was estimated at 9%. Based on actual data for the period 1986-1993 and reliable estimates for 1994, the revised EIRR is estimated at 10%, which is slightly higher than the appraisal estimate. The assumptions used for calculating the EIRR are shown in Part II, Table 9 and the calculations in Appendix D. C. Major Factors Affecting the Proiect 14. Factors not generally subiect to Government control: Contract 1 was awarded to a contractor from Yugoslavia at the end of September 1988 with a completion target of June 30, 1991. The contractual completion date was initially extended to June 30, 1992, then to December 31, 1992 and finally to May 31, 1993. Even with these extensions, the works could not be completed. Two major factors which were generally outside the control of the Government and the contractor affected the Project. First, due to security considerations in the Northern and Eastern provinces of the country, the scope of the contract had to be reduced in these provinces. Second, because sanctions were imposed by the United Nations against some of the constituents of the previous Republic of Yugoslavia, payments to the contractor for the development of MV main networks were stopped with effect from May 1992. As a result, there were delays in the implementation and further the contractor had to abandon some works; the contract was modified and the remaining works are now being completed by CEB. In addition to the factors cited above, other factors under the control of the contractor that adversely affected this contract were: (a) late finalization by the contractor of the profile survey, soil investigation and line design, and hence deternination of quantities for procurement; and (b) inadequate equipment for erection works. These factors substantially affected the physical implementation of the Project. 15. Contract 2 was awarded to a U.K. contractor in March 1988. The original contractual completion date, February 4, 1991, was extended to October 28, 1991. While, overall, the contract was executed in a satisfactory manner, there were design and installation problems with a number of joints for the 33-kV cable between Kelanitissa Power Station and Kotahena sub-station. This resulted in a dispute between CEB and the contractor, which was resolved in 1994 through the Central Dispute Resolution Committee of the U.K. Whereas other works were taken over and commissioned, the Kotahena sub-station remained unutilized for about 30 months pending the resolution of the dispute. If provision of such a quick dispute resolution mechanism had been incorporated in the bidding documents,  - 5 - the resolution of the dispute could have been expedited. This factor affected the physical implementation of the Project partially. 16. Factors generallv subject to Government control: CEB is not in compliance with two major covenants, both of which are subject to Government control. Due to inadequate tariffs (para. 8), CEB has not been meeting its ROR covenant since 1988. CEB has consistently failed to submit its audited financial statements in a timely manner (audits are carried out by the Governments's Auditor General's office). These factors substantially affected the financial objectives of the Project. 17. Factors generally subiect to implementing agencv control: In addition to the factors mentioned above (para. 14), Contract 1 faced additional problems which were subject to the control of CEB. The original routes of the lines were designed to follow the existing transmission lines which would have required cutting of valuable trees, causing possible litigation by the land owners. In order to avoid this litigation, CEB decided to route the lines through paddy fields and abandoned marshes. This decision was taken without detailed soil investigation of the new routes. As a result, during erection of the towers and gantries, the contractor encountered soils for which special foundations were required. Since these foundations were not included in the original contract, there were disputes between CEB and the contractor over the rates for these foundations. CEB also selected single bus-bar gantries in preference to double bus-bar gantries to economize the cost. However, with hindsight, at selected places where rapid load development was expected, double bus-bar arrangements should have been made. 18. While Contract 2 faced very few problems during execution, there were problems with the joints of the 33-kV cables in one section (para. 15). It took CEB and the contractor a long time to resolve the dispute during which period one sub-station remained unutilized. CEB could have played a more pro-active role to resolve the dispute in a timely manner. 19. Under Contracts 3 through 7, CEB procured distribution materials for expansion and rehabilitation of lines and sub-stations in areas that were not covered under Contracts 1 & 2. Whereas the appraisal was based on preliminary estimate, the detailed design and bill of quantities were prepared during appraisal. The erection of the materials procured was done by CEB's force account. Implementation of this component was poor due to: (a) protracted procurement procedures of GOSL/CEB; (b) revision in the scope of the work by CEB; (c) CEB's poor inventory control; (d) the limited number of CEB's construction force (efforts were made to engage local contractors for the erection works but only a few were capable of constructing power lines and sub-stations); (e) priority given by CEB to expansion and construction works under the rural electrification program rather than to rehabilitation of the existing networks; and (f) resistance from the consumers to the shut-downs needed to reconstruct and rehabilitate the lines and sub-stations. 20. The factors mentioned above substantially affected the implementation progress of the Project. 21. Project Cost and Financing: The Project's estimated cost at appraisal was US$108.1 million (based on mid-1986 prices), including contingencies, duties and taxes. The foreign exchange cost of the Project was estimated at US$65.0 million, with financing from IDA (US$52.0 million) and ODA (US$13.0 million). Local costs were to be financed by CEB from internal resources. On completion, the total cost of the Project is now estimated to be US$103.1 million, with the foreign exchange cost being US$61.7 million. The revised Project costs are very close to the appraisal estimates. The original and final Project costs and financing plan are shown in Part II, Tables 8A and 8B.  - 6 - 22. Project Implementation: During appraisal it was estimated that the Project would be completed by June 30, 1991. However, due to the reasons cited above (paras. 14-19), the Project has been substantially delayed and it is now expected that the Project will be completed by December 31, 1995. The estimated and actual disbursements are shown in Part II, Table 4. The Credit Closing Date, originally June 30, 1992 was extended twice, by one year each time, to June 30, 1994. Disbursements of SDR 33.8 million (US$46.1 million equivalent) were made till March 27, 1995 and an outstanding balance of SDR 9.4 million (US$14.7 million equivalent) was canceled. The main reasons for these cancellations were: (a) appreciation of SDR against US$ (about US$9.1 million); and (b) outstanding payments to the Yugoslav contractor on account of United Nations sanctions (US$ 1.8 million - para. 14). 23. Environment: The Project's direct adverse impact was limited to construction of new lines and sub-stations. The ecological impact of the distribution lines was regulated by Sri Lanka's existing laws, including the Electricity Act, the Flora and Fauna Act, and the Forestry Ordinance. These laws adequately regulate any adverse ecological impact from the Project. On the other hand, the Project has had a positive impact by providing a higher quality of life by replacing kerosene lamps with electricity, which is efficient, clean and relatively safe compared to kerosene lamps. D. Proiect Sustainability 24. On completion, the Project will be a part of CEB's integrated distribution system. Two follow-up Projects' have been approved by IDA to strengthen transmission and distribution system of CEB even further. In addition, other donors are also providing assistance to CEB. Under all these Projects, substantial funds for training in all spheres of CEB's operations have been provided. Because of continuing expansion of the transmission and distribution network and training of CEB's staff, the major overall objectives achieved under the Project will be sustained. Further, CEB has prepared a detailed Operational Plan to ensure future maintenance and sustainability of the Project (Appendix A). In order to ensure CEB's continued financial viability, GOSL has decided to carry out a comprehensive tariff study to review the adequacy of tariff levels and structures. The recommendations of the study are expected by about December 1995. E. IDA's Performance 25. Project Identification: This Project was identified as a result of the ESMAP study (para. 1) initiated in 1983 to reduce system losses and to expand and rehabilitate the sub-transmission and distribution system. It is consistent with the Bank's and GOSL's strategy for the power sub-sector. IDA's role in this regard was highly satisfactory. 26. Project Preparation: IDA assisted CEB in the preparation of the Project and identified distinct components keeping in view the importance of load centers. One component was exclusively designed for the Colombo distribution system which serves important industrial and commercial loads mainly through underground cables. The second was designed for medium voltage sub-transmission lines outside the Colombo area, while the third component covered the expansion and rehabilitation of the remaining distribution system. Other technical, financial, economic, institutional and environmental aspects were reviewed carefully and included in the Project scope wherever necessary. The performance of IDA in the preparation was satisfactory. 1/ Cr. 1933-CE and Cr. 2297-CE. Reference Table 2, Part II.  - 7 - 27. Project Appraisal: Appraisal of the Project was carried out in October 1985 by an economist, a financial analyst and three power engineers. The time spent on appraisal was appropriate and adequate. In addition to the aspects mentioned above (para. 26), IDA also reviewed the cornmitment of GOSL and CEB towards the Project's objectives during appraisal. The Project was a part of CEB's least cost development program and both GOSL and CEB were fully committed to it. The capacity and capability of CEB for implementing the Project was also reviewed and found to be adequate because in 1984 CEB had started to decentralize its management structure in order to be more responsive to its ever increasing work load. This restructuring was done on the basis of the recommendations of management consultants engaged under IDA's Sixth Power Project (Cr. 1048-CE). However, the appraisal mission also concluded that CEB would require technical assistance for preparing detailed design and for training of CEB staff in certain critical areas which were considered necessary to sustain the Project. Necessary provisions were made in the Project for financing the technical assistance and training. The lending instrument, financial package and the cofinancing arrangements (with ODA) were also appropriate. Based on experience in Sri Lanka and in the region, the implementation schedule of four years for the Project was optimistic, especially since advance procurement actions were not taken. Except for the security situation in the Northern and Eastern Provinces, and for the performance of the supply and erect contractors and the adequacy of CEB's force account, all other risks were identified during appraisal. Overall, the appraisal of the Project by IDA was satisfactory. 28. Project Supervision: The Project was regularly supervised by IDA staff with 1 missions fielded during the life of the Project. The skill mix and duration of the missions were appropriate and adequate and recommendations of the missions were reflected in the country implementation reviews. The Bank's resident mission in Sri Lanka also played a role during the missions. The supervision missions identified the implementation problems and also recommended appropriate remedial measures. To enforce the compliance with financial covenants (para. 8), remedies were sought by IDA through threatening of closure of the Credit after one extension. As a result, two tariff increases of 30% each were effected (para 8). IDA supervision missions assisted CEB in resolving a number of problems. For example, IDA helped CEB to resolve its dispute with the contractor for Contract 2 through its dialogue with ODA (Bangkok). IDA missions also assisted in the execution of the Contract by meeting with CEB management, consultants and contractors and suggesting constructive steps (finalizing the disputed foundation costs, procuring balance materials for the Contract directly by CEB instead of through the turnkey contractor, etc.). IDA showed flexibility in the execution of the Project by agreeing to modifications in the details of the Project components based on detailed designs. No significant deviations were made in the Bank's policies and procedures. Overall, the supervision was carried out in a satisfactory manner. F. Performance of the Borrower and Beneficiary 29. Proiect Identification, Preparation, and Appraisal: During the Project identification stage, CEB recognized the importance of planning and design of a power distribution system. It had established a "Loss Reduction Cell" which in August 1984 was later converted to a full-fledged "Distribution Development and Rehabilitation Branch." It also acquired a distribution study software package and prepared a Project Document in April 1985. This document formed the basis for IDA to prepare and appraise the Project to which CEB was fully committed. CEB's performance during the identification and preparation was highly satisfactory, and during appraisal satisfactory.  - 8 - 30. Project Implementation: During implementation, counterpart funds were provided by CEB in a timely manner. The training component was also properly utilized. CEB appointed competent staff to supervise and monitor the Project. However, there were frequent changes of key Project staff. Progress reports were prepared in a timely manner and were adequate for IDA to monitor the performance of the Project. CEB fully cooperated with IDA supervision missions. The sectoral policy issues (except in the generation area) were addressed by GOSL/CEB (paras. 6-7). Institutional development objectives were met substantially, the physical objectives will be met substantially on completion (paras. 10, 11 and 12). There were protracted delays in the evaluation of bids and award of contracts. These issues were raised by IDA supervision missions and GOSL/CEB were responsive partially and modified the thresholds for procurement approval. CEB's overall performance in the implementation of the Project was deficient. Due to mismanagement, there is a looming power generation crisis (para 7). CEB is not in compliance with three major financial covenants (para 16). G. Assessment of Outcome 31. The Project substantially achieved its sectoral and institutional objectives. The physical objectives will also be substantially be achieved on completion, but the financial objectives could not be achieved. The Project is sustainable (para. 24). Both the Project cost and its foreign portion are close to the SAR estimated values. The EIRR is slightly higher than the appraisal estimate (para. 13). Overall assessment of the Project is satisfactory. H. Future Operation 32. Although during appraisal an operational plan was not agreed with GOSL/CEB, such a monitorable plan was agreed during the final supervision/implementation completion mission. The plan provides for technical inputs from CEB at agreed intervals. It also addresses issues required for satisfactory future financial operation of the Project. Implementation of the plan will be monitored by IDA as a part of its supervision of the ongoing Project (Cr. 2297-CE). An impact evaluation of the Project should be carried out by the Operations Evaluation Department around end-1996, when one year of operation after full completion of the Project will have been completed. 1. Key Lessons Learned 33. Implementation of the Project suffered due to: (a) revisions in Project scope and design; (b) changes in the routes of the sub-transmission lines; (c) poor inventory control of materials; (d) protracted procurement procedures; (e) opposition from consumers against frequent shut-downs; (f) civil unrest initially in the whole country and later in the Northern and Eastern provinces; (g) protests from the landowners for constructing the lines across their land; and (h) delay by the contractors. The following are the key lessons learned: (i) detailed designs for the main components should be carried out during the preparation stage of the Project. If there are large networks, detailed design of typical sample sections should be prepared and extrapolated for the design of the complete system. This can be done either through an existing operation, through Trust Funds, or through stand- alone technical assistance; (ii) advance procurement actions should be initiated prior to negotiations for any future investment operation;  -9 - (iii) for supply and erect type of contracts, there should be a quick mechanism for the resolution of disputes (e.g., the Dispute Resolution Committee of UK) and the mechanism should be incorporated in the bidding documents; (iv) survey of medium voltage line (33kV) routes should be completed during Project preparation and land should be acquired and/or right of way obtained before Credit approval; (v) intensive training should be given to Project staff on material management and inventory control; (vi) live line construction and maintenance methods should be introduced; (vii) security risks should be properly evaluated and works in security prone areas should not be included in the scope of a future project; (viii) efforts should be made by CEB to develop local contractors for the erection of power lines and sub-stations, (ix) procurement procedures should be streamlined; and (x) land acquisition and compensation procedures should be simplified. 34. Although, Bank/IDA have supported GOSL/CEB through 11 power sector operations (of which ten have been closed), CEB system losses and accounts receivable continues to be high. While during the earlier operations tariffs were adjusted periodically, (1988, 1990, 1993 and 1994), there is now reluctance on the part of GOSL/CEB to set the level and structure of tariffs appropriately. In view of the poor financial performance and a looming power crisis, in large measure due to poor power sector management performance, GOSL is now rethinking its power sector development strategy, and is seeking private sector investments for establishing new generation plants. IDA's strategy for the sector for further assistance in the short term will be targetted to the private sector.  - 10 - PART II - STATISTICAL ANNEXES Table 1: Summary of Assessments A. Achievement of Obiectives Substantial Partial Neplizible Not Applicable Macroeconomic Policies O Ol Ol (/) Sector Policies l (/) O O Financial Objectives l (/) Ol Institutional Development (/) O l El Physical Objectives (/) El l Poverty Reduction El l (/) Gender Concerns l Ol (/) Other Social Objectives El O El (/) Environmental Objectives (/) O Ol Public Sector Management El l (/) Private Sector Development l El E (/) Other (specify) E El El (1) B. Proiect Sustainabilitv Likely Unlikely Uncertain (') El El Highl C. Bank Performance Satistactorv Satisfactory Deficient Identification (/) El Preparation Assistance (/) l l Appraisal El (/) Supervision El (/) El Hi hl D. Borrower Performance Satistactory Satisfactory Deficient Preparation (/) l E Implementation l () El Covenant Compliance El (/) Operation El (/) (system losses/accounts receivable) Highl Hi hlv E. Assessment of Outcome Satactory Satisfactory Unsatisfactory UnsatisFactorv l (/) E E  - 11 - Table 2: Related Bank Loan and Credits Credit Title Purpose Year of Approval Status Preceding Operations Sixth Power Project, Credit Reinforcement and 1980 Closed, 3/88 1048-CE improvement of power transmission and distribution system Seventh Power Project, Credit To strengthen the 220-kV and 1982 Closed, 3/88 1210-CE 132-kV power transmission system Eighth Power Project, Loan To construct an 80 MW diesel 1982 Closed, 3/86 2187-CE power station Following Operations Distribution and Transmission To strengthen and rehabilitate 1988 Closed, 12/94 Project, Credit 1933-CE the sub-transmission system around Colombo and the island Second Power Distribution and To complete take over of 1991 Closing date Transmission Project, Credit distribution system from 56 scheduled 6/98 2297-CE licensees and strengthen the high voltage system .  - 12 - Table 3: Project Timetable Steps in Project Cycle Date Planned | Date Actual/Latest Estimate Identification/Preparation September 1994 Pre-appraisal July 1985 Appraisal October 1985 October 1985 Negotiations March 10, 1986 August 25 to 29, 1986 Board Presentation June 24, 1986 October 14, 1986 Signing November 7, 1986 Effectiveness February 5, 1987 March 2, 1987 Project Completion June 30, 1991 December 1995 Credit Closing June 30, 1992 June 30, 1994 Table 4: Credit Disbursements: Cumulative Estimated and Actual (US$ Million) FY87 [ FY88 I FY89 I FY90 I FY91 1 FY92 FY93 FY94 FY95 Appraisal 1.00 13.00 28.00 41.00 48.00 52.00 Estimate Actual 0.13 5.57 7.53 14.11 21.26 33.05 39.20 41.26 46.13 Actual as % 13.0 42.8 26.9 34.4 44.3 63.6 75.4 79.3 88.7 of Estimate Date of Final March 27, 1995 Disbursement Cancellation: SDR 9.4 million cancelled (US$14.7 million equivalent)  - 13 - Table 5: Key Indicators for Project Implementation Indicators Appraisal Design Status as Expected Status Estimates Estimates of December on Project 1994 Completion June 1995 A. Development of MV Main Networks Construction of Double Circuit 33-kV Main 250 km 224 km 160 km 224 km Distribution Lines Construction of Single Circuit 33-kV Main 550 km 328 km 309 km 328 km Distribution Lines Construction of 33-kV Switching Stations 50 Nos. 38 Nos. 32 Nos. 33 Nos. B. Development of Other MV Networks Construction of Single Circuit 33-kV Lines 150 km 1596 km 1125 km 1444 km' Construction of Single Circuit I I-kV Lines 50 km 284 km 162 km 162 km' Installation of Capacitors 50 MVAR 30 MVAR Nil Nil Reconductoring of 33-kV and 11 -kV Lines 600 km 340 km 534 km' Rehabilitation of 33-kV and I 1-kV Lines 320 km 300 km 320 km Construction of 33-kV/1I-kV Primary 6 Nos. Nil 6 Nos' Substations Strengthening and Upgrading of 11 -kV Lines to 500 km 275 km 275 km 328 km' 33-kV Lines C. Rationalization of LV Systems Installation of 33-kV/LV Distribution 1200 Nos. 900 Nos. 645 Nos. 780 Nos.' Transformer Stations Installation of I I-kV/LV Transformers 300 Nos. 100 Nos. 81 Nos. 223 Nos.' Construction of New LV Lines 700 km 22i km 227 km Rehabilitation of LV Lines 180 km 158 km 180 km' Conversion to Three-Phase Capacity of LV 200 km 1200 km 1183 km 2067 km' Lines D. Augmentation of Colombo City Network Construction of 33-kV/ 1I-kV Substations 2 Nos. 2 Nos. 2 Nos 2 Nos Construction oft 1-kV/LV Substations 125 Nos. 123 Nos. 115 Nos. 115 Nos. Installation of 33-kV Cables 15 km 15 km 15 km 15 km Installation of I 1-kV Cables 120 km 120 km 103 km 103 km Installation of LV Cables 125 km 125 km 17 km 17 km I/ CEB now estimates to complete these works by end December 1995. Source: CEB  - 14 - Table 6: Key Indicators in Project Operation' Performance Indicators Timing 1. The Plant & Equipment Register is updated regularly. Regularly 2. The Depot System Maintenance Register is updated each quarter. Regularly 3. Regular maintenance work of substations and transformers, including Regularly scheduled replacement of transformers are carried out. 4. LV and HV breakdowns in the provinces are monitored. Monthly 5. Training of technical staff are carried out in accordance with the Training Regularly Plan agreed with IDA. 6. Procurement and installation of 70 33-kV and 3 1 l-kV import-export meters. June 30, 19952 7. Monitoring of distribution system losses at province level. Monthly 8. Monitoring of voltage levels of heavily loaded typical feeders in selected 40 Quarterly distribution sub-stations. 9. Reduce system losses by at least 1% in 1994 and 1995. Annually 10. Reduce the operations and maintenance cost, expressed as a % of distribution Annually capital cost. 11. Replacing of defective meters of bulk supply consumers. June 30, 19953 12. Sealing of metering equipment of bulk supply consumers by copper seals. June 30, 19952 I/ The Staff Appraisal Report did not have any Project Operation Indicators. These indicators were agreed with CEB during the Implementation Completion Mission. 2/ CEB now expects to complete these works by end December 1995. 3/ CEB now expects to complete these works by end September 1995. Table 7: Studies Included in Project Study Purpose Status Impact Distribution system Preparation of a master Report was submitted Investment program master plan. plan for the development of in February 1989. recommended by the plan is distribution systems in Sri being implemented with Lanka. assistance of IDA and ADB.  - 15 - Table 8A: Project Costs Appraisal Estimate (US$M) Latest Estimate (US$M) Item T Local Foreign | Total Local | Foreign | Total Costs Costs Costs j Costs 1. Main 33-kV Lines 11.7 18.3 30.0 19.5 15.7 35.2 2. Other MV Lines 5.0 9.5 14.5 3. Rationalization of LV Networks 3.7 3.8 7.5 10.3 24.9 35.2 4. Network Rehabilitation 2.7 4.8 7.5 5. Colombo City Networks 7.9 9.9 17.8 10.3 15.6 25.9 6. Consultancy, Project 1.4 4.3 5.7 1.3 5.5 6.8 Management & Training l Total Baseline Cost 32.4 50.6 83.0 41.4 61.7 103.1 Physical Contingency 3.2 5.1 8.3 Price Contingency 7.5 9.3 16.8 Total Project Cost 43.1 65.0 108.1 41.4 61.7 103.1 Table 8B: Project Financing Appraisal Estimate (US$M) Latest Estimate (US$M) Source _ I l Local Foreign Total Local Foreign Total Costs Costs Costs Costs l IDA 0.0 52.0 52.0 0.0 46.1 46.1 ODA (UK) 0.0 13.0 13.0 0.0 15.6 15.6 CEB 43.1 0.0 43.1 41.4 0.0 41.4 Total 43.1 65.0 108.1 41.4 61.7 103.1  - 16 - Table 9: Economic Costs and Benefits Assumptions Costs Benefits The Project is a part of 1. Capital investment costs for 1. Incremental revenue from CEB's least cost generation, transmission and sale of electricity. Actual development program and distribution of CEB's overall benefits from 1986 to 1993, the economic rate of return investment program. reliable estimate for 1994, was calculated on the entire which was frozen to 2024. investment program of CEB 2. Incremental operational and for the period 1986-1994. maintenance costs of CEB's system. Actual costs from 2. The benefit period of the 1986 to 1993, reliable program extend from 1986 estimate for 1994, which was to 2024, when the equipment frozen to 2024. provided under the Project is expected to have substantially completed its useful life. 3. All cost and benefit streams have been expressed in 1986 prices using IMF deflation factors. Foreign costs have been measured using border prices. Local costs for materials and equipment have been expressed in terms of equivalent border prices using the standard conversion factor of 0.75. 4. No residual value of fixed assets are taken into account. Economic Internal Rate of Return: Appraisal Estimate: 9% Actual: 10%  Table 10: Status of Lemal Covenants Original Revised Covenant Present Fulfillment Fulfillment Agreement Section Type Status Date Date Description of Covenant Comments Credit 3.02 5 C 10/31/88 The Borrower shall formulate and, no later In 1988 GOSL launched a major than October 31, 1988 initiate a program institutional reform program to satisfactory to IDA to rationaLize the transfer the distribution institutional arrangements for systems to CEB and LECO. distribution of electricity in Sri Lanka. Credit 3.03 2 NC 09/01/87 The Borrower shall take measures so that As of March 31, 1994 accounts on and after September 1, 1987 the total receivable from Low voltage dues from local authorities, Government supplies to Government departments and agencies (other than Departments/agencies, and corporations) for electricity supplied by private consumners were equaL to the Board shall not exceed three months 4.5 months of sales. billing. Credit 4.01 1 C The Borrower shall furnish to IDA not In compliance. Later than six months after the end of each fiscal year ti) an audit report on the SpeciaL Account, and (ii) a separate opinion by auditors as to whether the statements of expenditure subeitted during each fiscaL year can be reLied upon to support the related withdrawals. Project 4.01(b)(ii) 1 CP The Board shall submit to IDA not later Unaudited statements for FY94, than: (a) four months after the end of due at end-April 95 are expected each year, the unaudited financial by May 1995. FY93 audited statements for such year; and (b) ten statements, due at end-October months after the end of each year, 1994 are now expected by June certified copies of its financial 1995, implying a delay of eight statements. months. The FY94 audited accounts are expected on time, i.e., by October 1995. Project 4-02 2 C The Board shall maintain a debt service Based on CEB's latest coverage of not less than 1.5. calculations, these are estimated at 2.2 for FY94 and is projected to be at 2.4 for FY95.  Original Revised Covenant Present Fulfillment Fulfillment Agreement Section Type Status Date Date Description of Covenant Comments Project 4.03 2 C If necessary, the Board shalL, before the Based on CEB's latest end of each fiscal year, adjust the calculations, the FY94 ROR tariffs to provide sufficient revenue to attained is now estimated at cover operating expenses including taxes, about 8%. This wilt be verified if any, and straight-line depreciation, upon receipt and analysis of the and to provide an annual return on current FY94 audited statement. value of its net fixed assets in service _____________ of not Less than eight percent. Project Schedule 2 5 c The Board shall complete the restructuring In compliance. Implementation of its organization as approved by its of the new organizational Board of Directors in September 1982 and structure was compLeted in early shall complete and distribute aLl related 1987. operational and functional manuals. Project Schedule 2 5 C The Board shalL furnish to the In compliance. Association, for its comments, any proposal for major changes in the Board's organization structure before giving effect to any such proposal. o_ Project Schedule 2 5 C 12/31/87 To assist in the retention of experienced Necessary policies regarding and competent personnel, the Board shall incentives and promotions put into effect, not later than December already existed and CEB 31, 1987, a scheme of incentives and a continued to review and follow promotional policy, based on merit and them. other appropriate factors. Project Schedule 2 1 C 03/31/87 The Board shalt furnish the results and In compliance. The report was recommendations of the fixed asset submitted to IDA on March 26, accounting and depreciation study to the 1987 and the recommendations of Association for its comments not later the study are being implemented. than March 31, 1987, and shall implement such recommendations as the Board shall adopt in accordance with a timetable acceptable to the Association. Project Schedule 2 5 CD 07/31/88 The Board shall prepare, and not later Consultant's report on than July 31, 1988 furnish to the Distribution Master Plan was Association for its review, master plan submitted in February 1989. The for the development of distribution findings and recommendations systems in Sri Lanka. were reviewed in a joint meeting on March 9, 1989. The program is being implemented with ______ _____ ____ _____ __ __ _____ __ __ _____ _____ ______ ________ ___ ____ _____ __ assistance from IDA and ADB.  Original Revised Covenant Present Fulfillment Fulfillment Agreement Section Type Status Date Date Description of Covenant Comments Project Schedule 2 5 NC 12/31/87 The Board shall, commencing December 31, CEB prepares a long-term least- 1987 and by each December 31 thereafter, cost power expansion plan in furnish through the Borrower to the August/September every year. Association for its review an updated However, GOSL/CEB are now trying version of the long-term power development to implement some schemes plan and shall implement said plan as through Private Sector which are agreed among the Borrower, the Board and outside the plan. There is the Association. disagreement between CEB and IDA on the current plan. Project Schedule 2 5 C 03/31/87 The Board shall, by March 31, 1987, Information supplied to IDA on furnish to IDA for its comments, the March 19, 1987. planned staffing levels and numbers for the next three year period. Project Schedule 2 5 C For the purposes of self-insurance of its In compliance. One-tenth of 1% assets, the Board shall, on/or before each of CEB's revalued fixed assets December 31, deposit its annual provision are being deposited in the to the insurance reserve in an insurance escrow account. escrow account with an independent financial institution. Covenant Types: 1 = Accounts/audits 8 = Indigenous people 2 = Financial performance/revenue generation from beneficiaries 9 = Monitoring, review, and reporting 3 = Flow and utilization of project funds 10 = Project implementation not covered by categories 1-9 4 = Counterpart funding 11 = Sectoral or cross-sectoral budgetary or other resource allocation 5 = Management aspects of the project or executing agency 12 = Sectoral or cross-sectoral policy/regulatory/institutional action 6 = Envirornmental covenants 13 = Other 7 = InvoLuntary resettlement Present Status: C = covenant complied with CP = complied with partially NC = not complied with CD = complied with after delay  - 20 - Table 11: Compliance with Operational Manual Statements There has not been any significant lack of compliance with Bank's Operational Manual statements under this project. Table 12: Bank Resources: Staff Inputs Stage of Project cycle Planned Revised Actual Weeksd US$ rWeeksT1 US$ TWeeks |US$ | Preparation to appraisal N/A N/A N/A N/A 60.3 N/A Appraisal N/A N/A N/A N/A 34.7 N/A Negotiations through N/A N/A N/A N/A 5.6 N/A Board approval Supervision N/A N/A N/A N/A 54.5 N/A Completion N/A N/A N/A N/A 4.0 N/A TOTAL N/A N/A N/A N/A 159.2 N/A N/A - Not Available  - 21 - Table 13: Bank Resources: Missions Stage of Monihiyear Number Days in Specialized Perlorniance rainig Project cycle of field staff skills Types of personis represented tmplemen- Develop- problems tal ion meni status inipact Through appraisal Jul 1985 3 12 ECN/EGR/FNA Appraisal through Oct 1985 6 22 ECN/EGR/FNA Board approval Supervision Sep-Oct 1987 6 13 EGR/FNA 2I PR/PM Mar 1989 2 17 EGR/FNA 2 1 LCIFP/PRPPM Sep 1989 2 1I ECN/FNA 2 2 LC/FP/PR/PM Mar-Apr 1990 3 30 EGR/FNAiECN 2 2 LC,FP,PR/PM Oct-Nov 1990 3 21 EGR/FNA 2 2 I.C/FP/PR/PM Jul-Aug 1991 2 15 EGR/FNA 2 2 LC/FP/PR/PM Oct-Nov 1991 2 15 EGR.FNA 2 2 LC/FP/PR/PM May 1992 2 14 EGR/FNA 2 2 LC/FP/PRIPM Dec 1992 1 7 EGR 2 2 LC/FP/PR/PM Oct 1993 2 17 EGR/FNA 2 2 LC/FP Jul-Aug 1994V 2 17 EGR/OPN S S LC/FP Completion Jul-Aug 1994 2 17 EGR/OPN S S LC/FP Key: EGR : Power Engineer FNA : Financial Analyst ECN : Economist OPN : Operations Officer LC Compliance wiih Legal Covenants FP : Financial Performance PR : Procurement Progress PM Project Management Performance 3 Combined with Implementation Completion Mission  -22- Implementation Completion Report Mission July 25 - August 6, 1994 Aide Memoire4 Introduction 1. An IDA mission comprising of Messrs. M. P. Manrai, Senior Power Engineer and Nurul Alam, Senior Program Officer, visited Sri Lanka from July 25 to August 6, 1994 to supervise and initiate the preparation of the Implementation Completion Report (ICR) for the Power IX - Distribution Expansion and Distribution Project (Credit 1736-CE). 2. The mission would like to thank the officials of the Ministry of Power and Energy, the Ministry of Finance and the Ceylon Electricity Board (CEB) for all the courtesies and assistance extended to the mission. The aide memoire summarizes the mission's findings regarding the status of the Project and the agreements reached with the Government of Sri Lanka (GOSL) and CEB regarding further activities required to complete the Project and prepare the ICR. Background 3. A Credit of SDR 43.2 million (US$ 52.0 million equivalent) was approved by IDA Board on October 14, 1986 for financing the implementation of the Project and was declared effective on March 2, 1987. Due to appreciation of SDR against US$, the Credit amount is now equivalent to US$ 59.7 million equivalent. The Closing Date of the Credit, originally June 30, 1992, had been extended twice and finally closed on June 30, 1994. However, a grace period of four months, i.e., up to October 31, 1994, has been provided for submission of withdrawal applications against eligible expenditures incurred before the Closing Date. The Overseas Development Administration (ODA) of UK cofinanced the Project and provided a grant of