Nicaragua - Seventh Power Project

RESTRICTED Report No. TO-6Z1a 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 The report may not be published nor may it be quoted as representing their views.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 EMPRESA NACIONAL DE LUZ Y FUERZA SEVENTH POWER PROJECT NICARAGUA April 9, 1968 Projects Department  CURRENCY EQUIVALENTS U.S. $1 = 7 Cordobas (C$ 7) C$ 1 = U.S. 14 cents C$ 1 million = U.S. $142, 857 ENALUF's Fiscal Year ends December 31 (e. g. FY 1966: January 1, 1966 to December 31, 1966) MEASURES EQUIVALENTS One kilometer (km) = 0. 6214 miles One meter (m) = 3. 281 feet One cubic meter (m ) = 35. 313 cubic feet One megawatt (MW) = 1, 000 kilowatts One gigawatt hour (GwH) = 1 million kilowatt hours One pound per square = 0. 07031 kilograms per inch (psi) square centimeter Degrees fahrenheit ( F) = 9/5 x degrees centigrade plus 32  EMPRESA NACIONAL DE LUZ Y FUERZA SEVENTH POWER PROJECT NICAIiAGUA TABLE OF CONTENTS Page No. SUMMARY i I. INTRODUCTION 1 II. THE BORROWER 1 Organization 1 Existing Facilities 2 III. THE POWER MARKET 2 IV. THE PROJECT 4 Background 4 Economic Considerations 4 Description of the Project 5 Cost Estimate 6 Procurement and Disbursement Policy 7 Engineering and Supervision of Construction 7 Construction Schedule 7 V. FINANCIAL ASPECTS 8 Accounts and Audit 8 Power Rates 8 Present Financial Position 9 Past Earnings Record 11 Accounts Receivable 11 Proposed Financing Plan 11 Estimated Future Financial Position 13 VI. CONCLUSIONS 14 This report was prepared by Messrs. KUpper and Knothe assisted by Mr. E.B. Arnold.- It is based on discussions held in Managua in September 1967 and in Washington in March 1968.  LIST OF AiNEXES 1. Energy and Peak Demand Forecast 2. Capacity Forecast 3. Discounted Cash Flow Comparison of Thermal and Combined Hydro/ Thermal Development 4. Construction Cost Estimate 5. Construction Schedule 6. Balance Sheets 1964-1967 7. Income Statements 1964-1967 8. Forecast Income Statements 1968-1972 9. Balance Sheets 1967-1972 10. Sources and Applications of Funds 1968-1972 MAP  EMPRESA NACIONIAL DE LUZ Y FUERZA SEVENTH POWER PROJECT NICARAGUA SUMAMRY i. The Bank has been asked to consider a loan of US$15.25 million to the Empresa Nacional de Luz y Fuerza (ENALUF) to cover the expected foreign exchange costs of a project consisting of hydro and thermal power generating additions and transmission line facilities. The total cost of the project including engineering and contingencies but excluding interest during construction would amount to the equivalent of US$22.96 million. ii. The project is needed to meet reasonable estimates of load growth and the generating additions planned are suitable for the system. The project has been soundly planned by ENALUF and its consultants. iii. Procurement has been and would be made after international bidding in accordance with the Bank's guidelines. Loan disbursements would be for the foreign exchange cost of materials, equipment and engi- neering services and the foreign exchange cost component of civil works construction contracts. iv. ENALUF's present and forecast financial position and its per- formance during recent years are satisfactory although a problem persists concerning late collections from certain customers. v. The project would be suitable for a loan equivalent to US$15.25 million, for a term of 20 years including a 5 year grace period.  EMPRESA NACIONAL DE LUZ Y FUERZA SEVENTH POWER PROJECT NiCX'?AGUA I. INTRODUCTION 1.01 This report covers the appraisal of a project forming about 60 percent of the capital investment program of the Empresa Nacional de Luz y Fue