China - Hunan Power Development Project

 ICRR 12509 Report Number : ICRR12509 IEG ICR Review Independent Evaluation Group 1. Project Data: Date Posted : 09/28/2006 PROJ ID :P035698 Appraisal Actual Project Name :Hunan Power Development Project Costs 742.2 435.8 Project US$M ) (US$M) Country :China Loan/ Loan US$M ) /Credit (US$M) 300 137.3 Sector (s):Board: ): US$M ) EMT - Power (100%) Cofinancing (US$M) 447.2 298.5 L/C Number :L4350 FY ) Board Approval (FY) 98 Partners involved : Closing Date 12/31/2004 12/31/2005 Evaluator : Panel Reviewer : Division Manager : Division : Robert Mark Lacey Ridley Nelson Alain A. Barbu IEGSG 2. Project Objectives and Components a. Objectives a. Objectives The overall objective of the project was to alleviate power shortages in Hunan Province by providing efficient, reliable and environmentally sound power supply. As the Bank’s first involvement in the power sector in the Province, the intention was to bring international experience to bear on some of the technological, institutional and environmental challenges facing Hunan. Meeting these challenges would, in turn, help to address the issue of uneven development between China’s coastal Provinces and interior ones such as Hunan. The project was a complex exercise, involving the introduction of new technology and institutional reforms to an agency (the Hunan Electric Power Company, HEPC) which had never previously worked with the Bank, all in the context of a major sector reform. b. Components (or Key Conditions in the case of Adjustment Loans ): There were four components: i) Supply and installation of two additional 300 MW anthracite-powered generating units at the Leiyang Power Plant (LPP) (US$518.7 million at appraisal; US$297.1 million actual). This component aimed to alleviate the power shortage in the Province, improve the generational mix in a system dominated by seasonally affected hydropower, and facilitate the retirement of ten aging generation units in the Hunan power grid which were inefficient and environmentally hazardous. ii) Reinforcement of the existing 220V transmission line through planned installation of 789 kilometers of new lines together with expanded transformer substation capacity (US$228.5 million at appraisal; US$138 million actual). The original intention of this component, as well as reinforcing the transmission line, was to connect the LPP with a privately built and operated power plant at Changsha (under BOT arrangements). This, however, never materialized and the actual length of line built was 547 kilometers (see “Revisions