Jordan - Second Hussein Thermal Power Project

Report No. 733a-jO Appraisal of the FILE COPY Second Hussein Thermal Power Project Jordan May 23, 1975 Projects Department Europe, Middle East, and North Africa Regional Office Not for Public Use U Document of the International Bank for Reconstruction and Development International Development Association This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. CURRENCY EQUIVALENTS Currency unit = Jordan Dinars Fil 1 - JD 0.001 JD 0.32 = US$1.00 JD 1.00 = US$3.10 JD 1,000,000 = US$3,100,000 Financial year = Calendar Year WEIGHTS AND MEASURES 1 meter (m) 3.281 feet (ft) 1 kilometer 2 0.621 mile 1 hectare (has 10,000 7e) 1 square kilometer (km )2.381 are (a)es 1 cubic meter (m3) 35.315 cubic feet (ft 1 kilogram (kg) 2.205 pounds (lb) 1 ton (1,000 kg) 1.102 short ton (sh ton) 0.984 long ton (lg ton) 1 barrel (bbl; 0.159 m3) 42 US gallons (gal) 1 kilowatt (kw) 1,000 Watts (W) 1 Megawatt (MW) 1,000 kW 1 Gigawatt (GW) 1,000,000 kW = 1,000 MW (=10 kW) 1 kilowatt hour (kWh) 1,000 Watthours (Wh) 1 Gigawatt hour (GWh) 1,000,000 kWh = 1,000 MWh (=106kWh) 1 kilovolt (kV) 1,000 volts (V) 1 kilovolt ampere 1,000 volt amperes,(1 kVA) 1 Gigavolt ampere 1,000,000 kVA (=10-kVA) 1 kg force /cm (technical 14.224 pounds per square atmosphere inch (lb/in2) 1 kilocalorie (kcal) 3.969 British thermal units (Btu; 1 Btu = O.293xl0-3kWh) 1 Hertz (Hz) 1 cycle/second per annum - /a GLOSSARY OF ABBREVIATIONS JEA - Jordan Electricity Authority IDECO - Irbid District Electricity Company JEPCO - Jordanian Electric Power Company UK - United Kingdom NEEB - North Eastern Electricity Board of UK ODA - overseas Development Association of UK APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Table of Contents Page No. SUMMARY AND CONCLUSIONS ............ ............ i-i I. INTRODUCTION ......................... . .......... 1 II. THE POWER AND ENERGY SECTOR ........................ 2 A. Power and Energy Resources.................... 2 B. The Sector ... ...... .. ............... ....... 2 General ... ......... .... ............... ..... 2 Organization ................ .......... 3 Facilities ...... ..... ... .. . .. .. . ...... 4 Jordanian Electric Power Company .............. 4 Irbid District Electricity Company ............ 5 Statistical Data of JEPCO and IDECO ........... 5 Tariffs ............ ... ... . . ......... 6 C. The Development Program....................... 6 III. THE PROJECT ........................................ 8 A. Objectives .................. * ............ . . 8 B. Description ..................................... 8 C. Status of Engineering ......................... 9 D. Cost Estimate ....... . . . ............. 9 E. Financing ............. . ............ .... . .. .. . 10 F. Implementation ............... 6......o. .. ..... 10 G. Procurement ................ .. ................. .. .10 .-H. Disbursements .... &..... # *...... ... ... .. .. . 10 I. Environmental Impact ................................ 11 This report was prepared by Messrs. W. F. Kpper (Engineer) and C. P. Ranganathan (Engineer/Financial Analyst) from information obtained on an appraisal mission to Jordan in November/December 1974, where they were assisted by Mr. A. J. D. Hutchins (Financial Consultant). TABLE OF CONTENTS (Continued) Page No. IV. THE PROJECT ENTITY ................. s ............ . 11 A. Background ........ ... . .. .......... 11 B. Organization and Management ................... 12 Organization ....... . . . . . .. . ......... 12 Staffing .................................. 12 Training ...................................... 12 C. Operations ........ .. .. . ...... ... .. .. 13 Forecasts . ...... . ......................... 13 V. FINANCE ......... ........... .... *.* ..... 14 A. Past Performance and Present Position ......... 14 B. Tariffs ........ .. ........ ...... ..... 15 C. Future Operating Results ...................... 15 Rate Covenant .............. * ... .. .. . ..... 16 JEA's Financing Plan ......... ...o.... ........ 16 Financial Position Forecast ................. 18 D. Accounts and Audit ................ ..... 18 Accounting ..................... 18 Auditing ...................................... 19 E. Insurance .................................... 19 VI. BENEFITS AND JUSTIFICATION ......................... 19 A. Forecast of Sales and Demand ...........&...... 19 B. Comparison of Alternatives .................... 20 C. Economic Return on Project .................... 21 VII. AGREEMENTS REACHED ................................. 21 List of Annexes 1. Jordan: Existing Generating Plant, 1974 2. The Histories of JEPCO and IDECO, and Development Program for Jordan Valley 3. JEPCO: Historic and Forecast Number of Consumers; Generation 4. JEPCO: Historic and Forecast Sales (GWh) per Consumer Category 5. IDECO: Historic and Forecast Number of Consumers; GWh Generated, purchased and Sold: Capacities and Maximum Demand 6. IDECO: Historic and Forecast Sales (GWh) per Consumer Category 7. JEPCO: Plant Availability 8. Electric Power Rates and Tariff Studies 9. Development Program Costs 10. Outline of Terms of Reference for Southern Jordan Power Supply Development 11. Description of the Project 12. Project Cost Estimate 13. Estimated Schedule of Disbursements 14. Balances of Energies and Capacities 15. JEA and JEPCO Forecasts for Sales, Losses, Generation 16. Justification of the Proposed Project 17. Major Assumptions for Financial Forecasts 18. Development Program Costs Including Price Escalation 19. JEA: Income Statements 1971-1980 20. JEA: Balance Sheets 1971-1980 21. JEA: Sources and Applications of Funds 1973-1980 22. JEA: Debt Statements 1974-1980 23. JEA: Investments Statements 1974-1980 24. JEPCO's Financial Situation 25. Summary of Significant Financial Data Resulting from Case A and B, and Financial Statements for Case B MAP - IBRD 10290R1  APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN SUMMARY AND CONCLUSIONS i. This report covers the appraisal of the second stage of the Hussein Thermal Power Project of the Jordan Electricity Authority (JEA), the Govern- ment entity established in 1967 to provide for coordinated development of the power sector. JEA has requested assistance from the Association for financing part of the foreign cost of the project, and is continuing its efforts to ob- tain co-financing for the Project. The Government would provide any remaining funds required. ii. The first stage of the Hussein Thermal Power Station was jointly financed by the Association (US$10.2 million under Credit 386-JO) and the Kuwait Fund (US$10.2 million): The Power Station with two 33-MW steam elec- tric units and one 12-MW gas turbine unit under construction is located at Zarqa about 42 km northeast of Amman, the capital of Jordan. iii. The Project comprises addition of a third 33-MW steam electric unit, reconditioning of the diesel-electric power'station at Marqa presently owned and operated by the Jordanian Electric Power Company (JEPCO), a licensee for. electricity distribution in Amman area and JEA's future principal consumer, and the Southern Jordan Power Development Study. The Project is estimated to cost JD 7.1 million (US$22 million equivalent), with a foreign exchange com- ponent of JD 5.6 million (US$17.3 million). The Association is proposing to finance about 29% of the foreign component (US$5 million), suppliers credits would finance the reconditioning of the Marqa station, a possible co-finan- cier and the Government would finance the balance. The credit would be made to the Jordanian Government and relent to JEA on conventional terms commensurate with Bank (8-1/2%) practices. It has been assumed that the balance of the foreign cost will be made available to JEA at similar terms through co-financing and/or Government financing, except funds for consulting and engineering services, which will be made available as a grant. The local cost of the project and related works would be covered by a mix of funds from the Government in the form of equity participation and from JEA's internal cash generation. Retroactive financing of about US$100,000 is proposed for foreign exchange required before Credit signing for engineering and consul- tant services. iv. Contracts to be financed from the proposed Credit (except for con- sulting services) would be awarded on the basis of international competitive bidding, consistent with Bank Group Guidelines for Procurement. v. The Project forms part (11%) of JEA's large (US$192 million) 1974-80 development program which includes: (a) completion of Hussein Thermal Station Stage I and the 132-kV facilities around Amman (1976/77); (b) the Project (Hussein II) and some reinforcement of the 132-kV facilities in the Amman area (1977/78); (c) a fourth unit (66-14W) and 24-MW in gas turbine capacity together with 200 km of 132-kV lines linking Irbid to Amman and El Hasa in the south to the northern grid (1978/79); and (d) an additional 66-MW unit and further transmission expansion (1980/81). vi. The electricity sector of Jordan is divided between two major re- gional concessions (JEPCO, and Irbid District Electricity Company - IDECO) and many small local entities. Service is unreliable. An important objec- tive of the earlier Credit was to achieve an economical and reliable service by encouraging the Government to organize JEA as a truly autonomous Govern- ment entity responsible for all major generation and overall planning. It has doubled its staff in one year. Its organization is being designed by a Management Consultant from the U.K. By 1976 JEA would be competently equipped to lead the power sector in the country. Initially, JEA will supply power in bulk mainly to JEPCO. An extension of the bulk supply to IDECO would be made by 1979. vii. As required under Credit 386-JO, a tariff study covering the main supply areas and financed by the UK was substantially completed in 1974. The study will be updated before the end of 1975 and a revised tariff structure will replace the existing tariffs by April 1976. vifi. JEA's reassessment of the power requirements indicates that the annual increase in JEPCO's sales would be 17.8% and the overall forecast growth, including JEA's direct supply to large consumers, for JEA and JEPCO would average about 23%. ix. Power development in Jordan has been on the basis of diesel gen- eration since the country has no significant sources of hydropower or other energy sources that can be developed readily. The only feasible alternative to continued diesel development is therefore steam-electric capacity. For this reason, the Hussein Stage I, an all-steam development, was compared with continued diesel development up to 100 MW in new capacity followed by steam. It was shown that at the highest assumed growth rate, an all-steam development would be the least cost up to a discount rate of about 15%. Under the present assumptions for growth and early 1973 prices, the equalizing discount rate would be about 17%. Sensitivity analysis with capital costs doubled indicates that the equalizing discount rate would be about 13%, which is considered to be above the opportunity cost of capital (10-12%) in Jordan. x. On the basis of the agreements reached as set-forth in Section VII, the proposed project would constitute a suitable basis for an IDA Credit of US$5 million equivalent to be relent to JEA by the Government at 8-1/2% in- terest and repayed over a period of 25 years, including a grace period of 3-1/2 years. APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN I. INTRODUCTION 1.01 The Government of the Hashemite Kingdom of Jordan, on behalf of the Jordan Electricity Authority (JEA), has requested the International Develop- ment Association (IDA) to assist in financing a Project comprising the second 33-MW stage of the Hussein Thermal Power Project (Hussein II), reconditioning of the Marqa diesel generating station (owned and operated by the Jordanian Electric Power Company - JEPCO, of Amman), and a power development study for southern Jordan. The Project is estimated to cost JD 7.1 million (US$22 mil- lion), with a foreign exchange component of JD 5.6 million (US$17.3 million), of which the Association would finance US$5 million (about 29% of the foreign component). The balance of the foreign component would be financed by sup- pliers credits (Marqa reconditioning), a Government grant (consulting and engineering services), and by the Government if JEA does not succeed in finding a co-financier for the Project. The local currency content would be financed by internal cash generation and Government resources. 1.02 The first power project, which was financed jointly (50/50) by IDA Credit 386-JO (1973) and the Kuwait Fund, comprises two 33-MW steam electric units and one 12-MW gas turbine generator unit at the new Hussein Thermal Station at Zarqa (near Amman). Although there were some initial delays, the project is now progressing satisfactorily; the gas turbine is in operation and the steam unit is expected to be commissioned by mid-1976, nearly on schedule. Until the Hussein station is completed, supply conditions will remain difficult and unreliable. 1.03 JEA's 1974-80 program includes (a) completion of Hussein I and the 132-kV facilities around Amman (1976/77); (b) the Project and some reinforce- ment of the 132-kV facilities in the Amman area (1977/78); (c) the fourth unit (66 MW) at the Hussein station and 24 MW in gas turbine capacity, to- gether with 220 km of 132-kV lines linking Irbid to Amman, and El Hasa in the south to the northern grid (1978/79); and (d) a fifth unit (66-MW) and further transmission expansion (1980/81). 1.04 The Project has been prepared following a feasibility study by JEA's consultants, the Kuljian Corporation of USA, and an appraisal mission in November/December 1974 by Messrs. W.F. Kipper (Engineer), C.P. Ranganathan (Engineer/Financial Analyst), and A.J.D. Hutchins (Financial Consultant). -2- -II. THE POWER AND ENERGY SECTOR A. Power and Energy Resources 2.01 Jordan has few natural energy resources. There are no coal de- posits nor any known deposits of oil. The only indigenous energy resources are (a) a small hydro-power potential of about 5 NW on the Zarqa River, which is associated with an irrigation program for the Jordan Valley where a dam is being constructed (the execution of the power component has not yet been considered pending further study of its justification); and (b) development of about 50 MW of hydro-power potential on the Yarmuk River in north Jordan, also associated with Jordan Valley irrigation (para. 2.25). The Government is expected to engage consultants soon for the final feasibility study of the latter development. 2.02 Oil is the main source of commercial energy and is imported under an agreement with the Trans-Arabian Pipeline Company (Tapline) for the transit of oil from Saudi Arabia through Jordati to the Mediterranean. The oil is con- veyed by pipe from Tapline to the Jordan Refinery, located at Zarqa, in which the Government has majority shareholding. Presently Jordan's entire power. requirement is met by diesel stations operating on gas oil and residual oil. Both are supplied from the refinery in road tankers throughout the country at a fixed base price of 7.4 JD/t or USJ57.8/106 Btu for residual oil and 17.6 JD/t or USJ126.2/106 Btu for gas oil. On contracts for larger supplies a discount is allowed; for the power company in Amman this amounts to about 5% for residual oil and 6% for gas oil. B. The Sector General 2.03 The Jordan River divides the country into two main areas -- the agriculturally oriented West Bank and the more economically diversified East Bank. As the West Bank has been under Israeli occupation since June 1967, this report confines the study area to the East Bank, which comprises some 91,000 kmZ of the country's total land area of 97,000 km2. The population of the East Bank, now estimated to be 1.82 million, includes about 700,000 people who live in cities and towns of more than 2,000 inhabitants and over 500,000 displaced persons living in refugee camps. Development has been confined almost entirely to the northern part of the East Bank, apart from a small area around Aqaba in the south, Jordan's only .outlet to the sea. The government, however, has undertaken various development studies covering the Jordan Valley and a narrow area between the desert somewhat east of the Amman-Aqaba railroad,. the Dead Sea and Israel. -3- 2.05 The best agricultural area in the East Bank region is the floor of the Jordan Valley. East of this valley the terrain rises toward the desert. The Irbid area in the north produces wheat and other grain crops. Phosphate rock, quarried from one of the world's richest deposits, is the principal developed resource of the East Bank region and expected to be the base of development in the south. 2.06 Before the Arab-Israeli war in June 1967, buoyant growth took place in all sectors. The war interrupted these favorable trends but the Government took action to alleviate the difficulties from the war and its aftermath and growth returned rapidly to the pre-1967 trend. Civil disturbances in the second half of 1970, however, brought the economy virtually to a standstill and power service was interrupted in the Amman area for some time.- Since 1970 the Government's actions have helped substantially to restore a confi- dent investment climate. As a consequence, demand for power is increasing at a rate well above past trends. 3fresent generating capacity is inadequate to meet these requirements fully and will continue to be so until the first power project is completed. 2.07 Development in the power sector has been on a local basis by pri- vate and municipal organizations. Integration is in progress in the northern part of the country, where JEPCO and the Irbid District Electricity Company (IDECO) are rapidly expanding their networkd in the respective concession areas. JEA would meet all of JEPCO's requirements with the commissioning of the first stage of the Hussein power station. The expected interconnec- tion of the JEA and IDECO system by 1978/1979 would further centralize gen- eration. From 1976 onward JEPCO and IDECO will supply the future network in the Jordan Valley, which is being constructed by the Jordan Valley Au- thority. The IDA power projects will advance the integration trend. 2.08 JEA was established by law (No. 21) in 1967 to provide for a coor- dinated development of the power sector and the country's power resources. The law vests in it the authority to designate existing power stations to operate under its direction as "selected power stations", acquire such power stations, and cause uneconomic stations to cease operation (see 4.01). 2.09 JEA has not yet operated as an electricity supply undertaking; presently it channels Government loans for power development to JEPCO and IDECO, and supervises the expansion of generation facilities and the 33-kV distribution networks in the Amman and Irbid areas, the Jordan Valley and other major towns in the country. Organization 2.10 The sector is under the direction of the Ministry of Economy. A draft electricity law (parallel to the JEA law) was prepared in 1967 but never instituted. Although it comprises all basic elements for regulating the sec- tor, the Government wished to review the draft to reflect present conditions. Under Credit 386-JO, the Government undertook: (i) to initiate legislative action by September 30, 1974, for the enactment of a law adequately defining inter alia the principles and basic requirements for generation, transmission, and distribution of power (including licenses), tariffs, easements, inspection and testing, a unified accounting system, the collection of statistics and the preparation of technical information; and (ii) to formulate regulations or by-laws necessary to achieve the objectives of the law, including delega- tion to JEA of regulatory functions of a technical nature. Since JEA will now start commence full operation as a utility in mid-1976, and to permit incorporating the results of the ongoing tariff study (see 2.20), the Asso- ciation has agreed to postponing the date for initiating legislative action. Through JEA's management consultants, an expert from the UK's Central Elec- tricity Board has been engaged who has submitted his preliminary proposals concerning the legislation. During negotiations the Government agreed to present its proposals to the legislature not later than December 31, 1975. Facilities 2.11 Annex 1 gives data on power installations in the country. Except in Amman, most of the plants are small, catering to small communities and to private industries. The generating facilities are in most cases derated due to cooling problems and are badly maintained. Total installed capacity is of the order of 125 MW, including about 40 MW in captive plant (auto pro- ducers.) The rated distribution voltage is 220/380 V, three-phase four-wire, at 50 Hz. 2.12 The number of consumers served by JEPCO and IDECO as of September 1974 was about 113,300, of whom 86,400 or 76% were supplied by JEPCO and 26,900 or 24% by IDECO (Annexes 3 through 6). JEPCO supplies the area with the greatest growth potential, including the capital city of Amman and the Zarqa industrial area. The area supplied by IDECO is mainly agricultural. 2.13 In south Jordan, electricity supply is provided by isolated under- takings, the largest public one being the Aqaba Port Authority which supplies a peak demand of about 3 MW. The Jordan Phosphate Company, which has a load of 5 MW, generates its own requirements near its mine at Al Hasa. 2.14 The largest captive plants are those of the Jordan Cement Company (14 MW), which is about 20 km south-west of Amman, and the refinery at Zarqa (4.8 MW). There are a number of small private plants, some of which are used for emergency standby only. In the Jordan Valley there are thought to be about 200 small pumping stations, mostly operated by small individual diesel sets, aggregating at least 1,500 kW. Jordanian Electric Power Company 2.15 JEPCO, a private company, operates the following three diesel sta- tions in the Amman area (Annex 7): (a) the base loaded Marqa station near Amman with 11 units, ori- ginally aggregating about 54 MW now derated to 38 MW; -5- (b) the Abdali station at Zarqa with 4 units, originally aggre- gating 4.8 MW now derated to 4 MW; and (c) the Ras-al-Ain station in Amman, the oldest of the three stations, with 10 units, derated from 7.3 MW to 4 MW. The Abdali and Ras-al-Ain power stations would be retired when the first stage of the Hussein power station is commissioned. At that time the Marqa station will either be acquired by JEA or be operated by JEPCO on JEA's behalf as a "selected" power station (see 5.06). 2.16 Transmission and distribution follows the European pattern: power is transmitted at 33 kV and subtransmitted at 6.6 kV, except in Zarqa, where the intermediate voltage is 10 kV. JEPCO's supply network comprises about 110 km of 33-kV lines and cables and about 150 km of 10-kV and 6.6-kV lines and cables. Irbid District Electricity Company 2.17 IDECO, the other major private company, operates a diesel station in Irbid and some small diesel stations totalling some 670 kW (derated to 500 kW) in townships that.are connected to the 33-kV network. It also op- erates one small isolated undertaking (North Shunah) in the Jordan Valley and a second at El-Mashari. The Irbid power station has a total capacity of 5.5 MW, derated to 4.2 MW. IDECO is expected to be connected to JEA system by 1978/79. 2.18 IDECO transmits power at 33 kV and 6.6 kV, operating some 150 km of 33-kV lines and 42 km of 6.6-kV lines and underground cables. Statistical Data of JEPCO and IDECO 2.19 The following summarizes the 1970-73 statistics for JEPCO's and IDECO's electricity generation and supply as shown inter alia in Annexes 3 and 4 (JEPCO), and 5 and 6 (IDECO). -------- JEPCO--------- --------IDECO--------- 1970 1971 1972 1973 1970 1971 1972 1973 Installed capacity (MW) 47 47 47 60 3.3 4.7 4.7 4.9 Firm capacity (MW) 32 32 36 40 3.3 .4.7 4.7 4.9 Demand (MW) 30 31 35 39 2.9 4.0 4.6 , 4.9 System load factor (%) 46 49 52 53 35 34 36 38 Generation (GWh) 120 134 158 181 8.9 12.0 14.5 16.1 Sales (GWh) 101 113 135 154 6.9 8.8 11.4 13.0 Growth in sales (%) -1 12 19 14 3 28 30 14 Both in Amman and Irbid, demand is suppressed due to lack of capacity and regular programs of supply cuts, particularly during the peak hours, are in force. -6- Tariffs 2.20 A tariff study covering the main supply areas (Amman, Irbid and Kerak), financed by the UK and executed by the North Eastern Electricity Board (NEEB), was substantially completed in 1974 under terms of reference acceptable to the Association. The preliminary recommendations for tariff levels (see Annex 8) are based on 1973 accounts and reflect a 9% financial rate of return target. NEEB experts will visit Jordan in-September 1975 for final updating and completion of the study before the end of the year. The final recommendations will reflect (a) the analysis of marginal cost of gen- erating, transmitting and distributing electricity over the next few years, (b) a proposal for JEA's bulk sales tariffs, (c) a proposed system for setting up a system for monitoring price levels within the recommended structures to ensure that financial viability is maintained, and (d) a proposal for a fuel price adjustment clause. 2.21 Because all of Jordan's generation is thermal, the Government under- took, in connection with Credit 386-JO, to include by June 30, 1975, a provi- sion for a fuel price adjustment clause in JEA's tariffs. No action has yet been taken and, because of the significance of this requirement in protecting JEA's financial position, introduction of the fuel price adjustment clause would be a condition of effectiveness of the proposed Credit. 2.22 In view of the major improvement and changes in generating facilities expected in the three main areas of supply in 1975/76, the introduction of a new tariff structure at the time as enactment of the electricity law appears appropriate. During negotiations, the Government and JEA agreed: (a) to dis- cuss with IDA the final tariff recommendations; and (b) to introduce the new tariffs not later than March 31, 1976, and (c) to further review the tariffs not later than June 30, 1977, for implementition of the necessary changes, if any, by September 30, 1977. C. The Development Program 2.23 In the northern sector the development program is well defined. IDECO would complete the construction of a new power station with an installed capacity of about 9 MW by about mid 1975 and continue to expand its 33-kV net- works including the connection to the Jordan Valley in the north. JEA would complete its 132-kV transmission system, financed with UK development funds, linking Zarqa with the Amman ring, and JEPCO would further expand its 30-kV system including the connection to the Jordan Valley in the south. Demand is expected to exceed JEPCO's firm capacity in 1975 despite commissioning of a third 6-MW diesel unit in the Marqa station, and JEA would meet JEPCO's peaking requirements for 1975/76 with the gas turbine financed under Credit 386-JO. By mid-1976 JEA would meet all of JEPCO's requirements from the Hussein Thermal Station. In order to continue to meet this commitment the third 33-MW unit at this station, which would be partly financed by the pro- posed credit, should be completed in 1978. However, except for 1976, the -7- reserve position would be tight throughout the period in view of the unrelia- bility of the older Marqa diesel, and the time required for reconditioning of these units. Depending on actual load growth the Government may yet decide to advance procurement of a gas turbine unit now scheduled for 1978/79, to ensure reliable supply. JEA's 1974-1980 development program, together with its cost is shown in Annex 9. It amounts to JD 62 million (US$192 million), of which the first power prcject constitutes about 12% and the second project about 11%. 2.24 A summary of the Government's 3-year Rehabilitation and Development Plan for the Jordan Valley is included in Annex 2. The power would be supplied from IDECO's system in the north and from JEPCO's system in the.south. The estimated load would increase from 6.5 MW in 1975/76 to 16 MW by 1980/81. In view of the delays in implementing the plan it appears likely that initial demand and load growth will be lower than anticipated. 2.25 The Government intends to conduct a final study of the multipurpose project on the Yarmuk river on the border with Syria. A feasibility study was completed in the mid-sixties but further progress was impessible in the aftermath of the 1967 war. Because the countries are also studying the pos- sibility of interconnecting their respective power systems, which could have a major effect on Jordan's requirements for transmission lines (including the Yarmuk plant connecting line), the developments are in too early a stage to be included in the development program. In any event, the hydro station would not be completed before the end of this decade. 2.26 Rapid developments are expected in the south-western part of the country, comprising: (a) expansion of the El Hasa phosphate Mines requiring about 10 MW in additional capacity in 1978 and a further 20 MW in 1980; (b) construction of a potash plant (17 MW) at the southern end of the Dead Sea; (c) opening of a copper mine east of Shan (5 MW); (d) construction of a fertilizer plant (10 MW), a cement plant (20 MW) and a glass factory (0.6 MW) in the area of Ma'an; (e) development of tourist facilities throughout the area, in- cluding Aqaba, requiring about 1 MW; and (f) improvement of present power facilities in towns and a small rural development plan in the Karak area. - 8 - 2.27 In view of the relatively large industrial requirements which are expected to considerably improve Jordan's exports and foreign currency earn- ings, JEA has requested IDA to finance from the proposed credit a long-term power development study for southern Jordan (including alternative supply either from a power station in the south or from the northern system), and has invited proposals from consultants on the basis of terms of reference shown in Annex 10, for appointment before July 31, 1975. The study, which would be completed within 12 months, would require 42 expert man-months. JEA will discuss with IDA the recommendations resulting from the study and the actions it expects to take. III. THE PROJECT A. Objectives 3.01 Together with the first IDA project, the Project would as its main objective seek to prepare JEA for being an efficient public bulk supply utility, providing economic and reliable service, and removing capacity shortages. B. Description 3.02 The Project is described in detail in Annex 11. It consists of: (a) a third 33-MW steam-electric unit to be installed at the Hussein power station at Zarqa; (b) reconditioning of the 38-MW diesel-electric power station at Marqa presently owned by JEPCO; and (c) the Southern Jordan Power Development Study. 3.03 The third 33-MW unit would be similar to the first two units at the Hussein station. Most of the common facilities have been included in the supply for the first stage. The selection of the site for Hussein Stage I was based on the availability of water and proximity of .the fuel supply. The ultimate capacity of the station will be largely determined by the availabil- ity of water but, since a closed cooling system will be used, total proved production at the selected site is adequate to sustain a steam power station of several hundred MW. 3.04 The Project also includes reconditioning of diesel units at JEPCO's station at Marqa, and adding radiator cooling to them. By 1977 JEA would acquire the diesel generating station at Marqa, presently owned by JEPCO, or have JEPCO operate the station as a selected station (reserved to meet the requirements of JEA) on a cost reimbursable basis (see 5.06). - 9 - C. Status of Engineering 3.05 Kuljian of USA has been engaged, with the concurrence of the Asso- ciation, for the feasibility study of this Project and all aspects of bidding and supervision of both the first and second Projects. The bidding documents for the second stage are to be issued in June 1975. Engineering costs for the first stage are being financed jointly with the Kuwait Fund under Credit 386-JO. Those for the second stage would be financed by the proposed credit and a Government grant. D. Cost Estimate 3.06 The estimated cost of the Project excluding interest during con- struction is US$22 million equivalent, of which US$17.3 million would be in foreign exchange, based on the appropriate effective parity rate at the time of appraisal of JD 1 = US$3.1. Annex 12 shows the estimated cost of the project, which is summarized as follows: % of ------- JD '000-------- -------US$'000------- Project Local Foreign Total Local Foreign Total Cost 33-MW Steam Electric Plant 774.2 3,709.7 4,483.9 2,400 11,500 13,900 63 Engineering & Administration 80.6 332.6 403.2 250 1,000 1,250 6 Reconditioning Marqa 96.7 322.6 419.3 300 1,000 1,300 6 Southern Jordan Power Development Study 16.1 64.5 80.6 50 200 250 1 Base Cost Estimate 967.1 4,419.4 5,387.0 3,000 13,700 16,700 Contingencies: Physical (local 16%, foreign 5.8%) 154.9 258.0 412.9 480 800 1,280 6 Price (local 42%, foreign 20.4%) 406.5 900.0 1,306.5 1,260 2,790 4,050 18 Total 1,529.0 5,577.4 7,106.4 A,740 17,290 22,030 100 3.07 The estimate is based on the results of late 1974 bids received by the consultants for similar units to which a price contingency of about US$4 million (Local cost: 15% for 1975 and 12% for subsequent yearn; Foreign cost: 11% for 1975 and 7.5% for subsequent years) was added to allow for expected future cost increases. 3.08 On the basis of the above estimate, the third unit would cost about US$600/kW or about double the cost per kW of the first stage which was contracted in July 1972. Overall cost of the Hussein power station, however, would not be unreasonable at about US$37 million, or US$370/kW. - 10 - E. Financing 3.09 The proposed IDA credit would finance about 29% of the foreign ex- change cost of the Project, and suppliers credits (Marqa) and a Government grant (engineering and studies) about 6% each. The balance of the foreign cost (49%) would be financed by the Government to the extent JEA does not succeed in finding co-financing for the Project. Local costs would be fi- nanced by internally generated funds and by Government contributions. F. Implementation 3.10 Construction of the third unit at the Hussein Station is expected to commence early in 1977, for operation by mid-1978. 3.11 This report assumes that JEA would acquire the Marqa diesel station from JEPCO in January 1977 (see 5.06). Reconditioning of the older Marqa diesel sets would be executed by JEPCO on behalf of and under the guidance and supervision of JEA. G. Procurement 3.12 All contracts to be financed from the proposed Credit (except for consulting services) would be awarded on the basis of international competi- tive bidding, consistent with the Bank/IDA Guidelines for Procurement. JEA is exempt from paying import duties. Although little participation is ex- pected, a preference of 15% or actual customs duty, whichever is less, would be granted to Jordanian manufacturers. It is assumed that the procedures will also be acceptable to a possible co-financer. H. Disbursements 3.13 Disbursement would be against the c.i.f. costs of equipment and related services, and the foreign exchange cost of civil works, engineering and consulting services. The estimated disbursement schedules for the Credit are shown in Annex 13. The proposed credit would finance 30% of the foreign exchange costs of equipment for the Hussein thermal station and related serv- ices, 15% of the foreign cost of engineering services, and 25% of the foreign cost of the Southern Jordan Power Development Study. In the event a co-fi- nancer is identified, the Association would be prepared to adjust these per- centages to accommodate the available financing. Should the foreign exchange cost to complete the Project be less than estimated, any undisbursed amount of the proposed credit would be reallocated to allow full disbursement of the Credit or, in the event co-financing is obtained for the balance of the re- quired foreign cost, to consulting services for the next stage of development or, if not required for that purpose, the undisbursed amount would be cancelled. - 11 - The closing date would be December 31, 1979, to allow for final payment of retention moneys. 3.14 Retroactive financing is proposed for foreign expenditure required before credit signing for the Southern Jordan Power Development Study which is expected to be initiated as soon as possible, and for engineering services; the total is estimated not to exceed US$100,000. I. Environment Impact 3.15 The proposed oil-burning plant would be located several kilometers from the township of Zarqa, adjacent to the oil refinery. The surrounding countryside is largely desert. A 95% effective mechanical precipitator would be installed and no problems iith dust emissions or ash disposal are expected. Sufficient space would be provided to install additional exhaust gas cleaning facilities, if necessary in the future. The cooling system is of the air-cooled, closed radiator type. IV. THE PROJECT ENTITY A. Background 4.01 JEA was established in 1967 with the enactment of the Jordan Elec- tricity Authority Law No. 21. The objectives of the law are: (a) to estab- lish generation and transmission facilities to supply energy in bulk to other undertakings whose systems are connected to the JEA systems; (b) to manage and operate any undertaking transferred to or acquired by JEA and (c) to develop a supply of electricity in areas where there is an economic demand and which are not within the concession area of supply of other undertakings. Existing power stations may be designated by JEA as "selected power stations" and will then operate under JEA's direction. Subject to Cabinet approval these "selected power stations" may either be purchased by agreement with the owners or the energy produced may be bought by JEA at a cost sufficient to cover the owner's related operating costs. Electricity undertakings in Jordan can be purchased by JEA in agreement with the owners, subject to the Cabinet's consent. JEA may also require that power stations connected to the system but not designated as "selected power stations" and not consid- ered to be economically justified for continued generation, cease operation. 4.02 The non-current assets of JEA are at present: (a) a plant to manu- facture poles financed by a U.K. credit and constructed in 1967; (b) its con- struction loans to IDECO and JEPCO (see Annex 22) and (c) work in progress under Credit 386-JO and the Kuwait Fund loan for the Hussein station and a UK loan for the 132-kV transmission system around Amman. JEA is not yet an operating utility in the conventional sense. - 12 - B. Organization and Management Organization 4.03 An Implementation Committee managed JEA from 1967 to 1972 until its first Board of Directors was appointed in accordance with Law No. 21, with the Minister of National Economy as Chairman, a Vice-Chairman, and six other members who presently include the President of the Amman Chamber of Commerce, and the General Managers of JEA and JEPCO. Under Credit 386-JO, management consultants (Peat, Marwick and Mitchell, who initiated their work in September 1974) are advising on the appropriate organization for JEA, a satisfactory preliminary outline for which was presented to the Association. Staffing ,.04 With the agreement of the Association as required under Credit 386-JO with respect to the recruiting scheme and remuneration schedules, JEA had about doubled its staff, to 135. Of these, 34 are technicians of the pole manufacturing plant; 25 engineers, 19 technicians, 3 accountants, 1 statisti- cian, 2 draftsmen, 10 foremen and 41 clerical staff make up the remainder. An experienced chief mechanical engineer has been engaged for the Zarqa plant and technical staff is either following training courses (see 4.05) or in- volved in the various aspects of construction of the Zarqa plant. Similarly, clerical staff is being given on-the-job training with the help of the man- agement consultants. Total number of staff is expected to be 290 by mid-1976, when the Hussein power statign is expected to commence operations. Training 4.05 JEA's training activities are satisfactory. A U.K. expert of the NEEB recently completed a draft study of JEA's training requirements, the proposals of which are presently being discussed for implementation. In view of the urgency, however, the following actions or decisions have been taken with the assistance of the U.K. Overseas Development Association (ODA): - 4 transmission and distribution engineers and 1 mechanical engineer are being trained in England; - Several mechanical engineers will be trained in the U.K. in 1975; - 9 administrative staff are expected to follow, in 1975, a 4-month training course in the U.K. with ODA assistance. Additionally: - 6 mechanical engineers and 6 technicians will be trained in 1975 at Syrian generating stations; - 13 - - A similar arrangement is under discussion for training in Iraq; - 1 administrator is following a 9-month local course in statistics. 4.06 JEA has contracted with its consultants to provide experienced ex- patriate supervisory staff for the first 12 months of operation after the Hussein station is commissioned. No substantial difficulties are expected in recruiting operational skilled labor and junior staff, since JEPCO's Ras-Al- Ain and Zarqa diesel stations will be closed down, making available redundant staff. C. Operations 4.07 JEA's operations will start shortly, with the commissioning of the gas turbine financed by Credit 386-JO at the Zarqa power station site. Forecasts 4.08 JEA, assisted by its consultants, has reassessed power requirements and the resulting balances of energy and capacities for JEPCO and JEA are shown in Annex 14 (which are presented for both companies, in view of the fact that JEPCO is expected to be JEA's principal consumer for many years). The changes from the previous appraisal are considerable because several large additional consumers a're to be connected. The principal ones are: (i) the existing cement factory to be connected in 1977 (supply would be about 72 GWh by 1978, assuming that only the additional requirements of 12 MW due to the expansion would have to be met); and (ii) the existing refinery at Zarqa (2.4 MW about 12 GWh annually, similarly assuming that only the additional requirements would have to be met). The average annual increase in JEPCO sales would be 17.8% (see Annex 16), but overall forecast growth -- i.e., including JEA's direct supply to large consumers (and to Irbid by 1979) -- for the two companies would average about 23%. 4.09 Annex 15 provides information on the details of JEA's forecast sales to its 4 future customers: JEPCO, the Refinery, the Cement Factory, and Irbid. General information with respect to JEPCO's forecast operations are shown in Annex 3, and details of sales in Annex 4. Summarizing for the Amman area (i.e. aggregating the JEA and JEPCO data and excluding Irbid), the following table shows historic and forecast growth in sales for the various consumer categories, total generation and capacities: - 14 - 1963-1973 1973-1980 Average Average 1963 Growth 1973 Growth 1280 GWh % % GWh % % GWh % Domestic 11.6 23 16.6 53.9 35 16.1 153 27 Commercial and Government 7.7 15 13.2 26.6 17 14.8 70 12 Industry 23.5 47 5.0 38.1 25 29.7 257 45 Social /1 2.8 6 24.3 24.8 16 15.4 68 12 Broadcasting 3.4 7 3.5 4.8 3 3.2 6 1 Streetlighting 1.1 2 17.5 5.5 4 15.4 15 3 Total Retail Sales 50.1 100 11.9 153.7 100 19.9 569 100 Generation (GWh) 57.4 12.2 181.4/2 21.7 719 Demand (MW) 15.0 9.9 38.6/2 22.2 157 Installed capacity (MW) 18 60 251 Firm capacity (MW) 17.0 40 185 System load factor % 44 54 52 /1 Mosques, churches, hospitals, schools, etc. /2 Suppressed. The above table shows that principal growth would be in industry while other categories would increase in accordance with past growth rates. Nevertheless industry would, by 1980, still constitute only 45% of total sales (a lower proportion than in 1963). In part this is due to the continued operation of captive plant, although, looking further ahead, this is expected to be re- placed largely by public supply. V. FINANCE A. Past Performance and Present Position 5.01 JEA's only activities at present are the production of concrete poles, the supervision of projects financed by UK loans, relent by JEA to IDECO and JEPCO, and the supervision of Hussein I construction. In the past the pole plant production has been sold at cost since most customers were public agencies; however, in future it is assumed that prices would be ad- justed to yield a 9% rate of return on the pole-plant assets. - 15 - 5.02 JEA's income statements, balance sheets and fund statements cover- ing the years 1971 through 1973 are shown in Annexes 19, 20 and 21. JEA's net fixed assets as at December 31, 1973 mainly comprised the value of the pole plant and work in progress relative to the first stage of Hussein Thermal Power Project. Long term investments were the U.K. loans relent to JEPCO and to IDECO. About three quarters of JEA's long-term debt was in respect of loans relent to JEPCO and IDECO and the balance was in respect of loans/credits for Hussein I and 132-kV transmission lines projects. 5.03 The U.K. loans to the Government, which are interest-free, are re- lent to JEA on the same terms and again relent by JEA to IDECO and JEPCO on more exacting terms including interest at 4%-6%. The loans are for the con- struction of IDECO's generation and transmission development schemes and for JEPCO's expansion of generation. Relending profits are transferred to JEA's capital reserve in compliance with its agreement with the Government. Annex 17 gives the details of the lending and relending terms of all such loans. 5.04 The debt equity ratio at December 31, 1973 is shown as 80:20. This is distorted however, by the inclusion of loans relent to JEPCO and IDECO. If borrowings for relending are excluded, the ratio would be 42:58. B. Tariffs 5.05 JEA's average sales price has been assumed to be 9.9 fils/kWh (US13.1/kWh) for 1976, 10.1 fils/kWh (US43.1/kWh) for 1977, 12 fils/kWh (US43.7/kWh) for 1978 and 13.4 fils/kWh (US44.2/kWh) for 1979 and 16.2 fils/ kWh (US15.0/kWh) for 1980, ensuring a 9% rate of return as covenanted under Credit 386-JO and a cash generation to cover 1.5 times its debt service re- quirements. The final recommendations of the tariff study (see 2.20) are expected to result in tariff levels near these averages. C. Future Operating Results 5.06 Although JEA is expected to sell a small quantity of energy from the gas turbine in 1975, JEA's operations as a utility company will not really start until 1976 with the coming into service of the steam generat- ing units. During the forecast period through 1980, JEA's principal customer will be JEPCO (IDECO is expected to be connected to the JEA system in 1978- 79), and from 1977 JEA will require JEPCO's Marqa diesel station to generate power for standby or for peaking purposes in order to ensure the most economic overall generation for the system. In connection with Credit 386-JO, Govern- ment agreed with JEPCO that it would designate Marqa as a "selected station", and that by June 30, 1975, JEA would negotiate a contract with JEPCO covering the operation of Marqa. The general provisions of the proposed contract were agreed with the Association. However, the Government and JEA are now review- ing the matter further, but during negotiations have given assurances that - 16 - they will take a final decision on this before March 31, 1976. If they decide to operate Marqa as a "selected station" a contract acceptable to the Associa- tion would be executed between JEA and JEPCO before June 30, 1976. If they decide to acquire Marqa all necessary legal action would be completed by June 30, 1976 and the assets transferred by December 31, 1976. This report assumes that JEA will acquire Marqa in January 1977 on an equitable indemnif- ication of JEPCO against loss of its earning power. Rate Covenant 5.07 Assuming the above average selling prices to JEPCO and direct con- sumers (see 5.05), JEA is expected to achieve an annual rate of return in the order of 9% from 1976 onward (see Annex 19). The Government and JEA have agreed that JEA's tariffs will be maintained at a level high enough to pro- duce an annual rate of return of at least 9% on average net fixed assets in operation, appropriately valued and revalued from time to time. JEA's Financing Plan 5.08 The financial forecasts cover the period through 1980 in order to include the results of a few years' operation. The buildup of JEA's fixed assets will be financed by borrowing, except for the local costs of the Proj- ect with its associated transmission line which will be financed by JEA's internal cash generation and the Government's contribution to equity. In addition to the Project, which will be financed 29% by IDA and the remaining 71% by the Government (or a suitable co-financier, if one can be found), the associated Stage II of the 132-kV Zarqa/Amman line and connection to the cement factory will also be financed entirely by JEA and the Government. Local currency requirements of the latter expansion will be financed by Government grants and by JEA from internal cash generation. The Credit would be onlent to JEA under a subsidiary loan agreement satisfactory to the Association which would provide for terms of not less than 8-1/2% for 25 years with a 3-1/2-year grace period. 5.09 JEA's financial forecasts indicate that its electricity and pole- plant operations would start contributing to its internal cash generation from 1976 onwards, rising from JD 835,000 (US$2.6 million) in 1976 to JD 7,409,000 (US$23.0 million) in 1980. Its total 1974-1980 internal cash generation, including its surpluses from "banking" and pole manufacturing operations, would be JD 23,727,000 (US$73.6 million). 5.10 The report assumes that the Government grants comprising a portion of the local expenditures mentioned above for the Project and the second stage of the 132-kV transmission line and other miscellaneous additional expenditures, including the financing of the cement factory connection and the purchase price of Marqa, will be treated as Government equity. In view of the ambitious expansion program and the tight forecast cash position, assurances included in the 386-JO Guarantee Agreement would be repeated for the proposed Credit that no return on Government's equity will be declared or paid before 1980 unless in the opinion of the Association such a distribution - 17 - would not be prejudicial to JEA's requirements for its capital expansion. The Government's agreement to this was obtained. Assurances have also been obtained from the Government that it will make arrangements satisfactory to the Association for providing funds for carrying out the Project and the related Zarqa-Amman transmission line if the funds available to JEA should be inadequate to meet such expenditures. In summary, JEA's financing plan for 1974 through 1978 (the Project period), which is realistic, is as follows: JEA's Financing Plan for 1974-1978 /1 (JD 000) (US$ 000) Program % Sources of Funds Internal Cash Generation - From Operations 6,606 20,479 - Other 51 158 Change in Working Capital 674 2,089 Debt Service (5,915) (18,337) Net Internal Cash Generation 1,416 4,389 4 From Relending Operations 3,595 11,145 10 Government Equity 5,410 16,771 15 Long-Term Borrowing: For Relending to JEPCO & IDECO 3,522 10,918 10 Hussein I - IDA 3,021 9,365 9 - Kuwait Fund 3,018 9,356 9 Project - IDA 1,509 /2 4,678 4 - Co-financier/Government 3,286 7-2 10,187 9 Supplier's Credit for Marqa Reconditioning 355 1,100 1 Other Loans for Expansion 9,964 30,888 29 Total Long-Term Borrowing 24,675 76,492 71 Total Sources of Funds 35,096 108,797 100 Application of Funds Hussein I 8,128 25,197 23 The Project 7,107 22,032 20 Marqa Purchase 2,616 8,109 8 Other - Ongoing Works 5,750 17,825 16 - Future Projects 8,892 27,565 25 UK Loans Relent to JEPCO & IDECO 2,603 8,069 8 Total Applications 350096 108,797 100 Ll Based on "Case A" forecast. /2 A portion of the proposed IDA Credit and Co-financier/Government loan will be disbursed in 1979 for payment of retention amounts. - 18 - 5.11 As is shown, JEA's internal cash generation and its income from relending operations would be sufficient to meet the local fund requirements for the Project. However, a mix of internal cash generation and the Govern- ment's equity contribution would be used for financing the local cost of this and other projects. Financial Position-Forecast 5.12 Forecast financial statements for JEA for the period 1974 to 1980 are shown in Annexes 19 through 21. These reflect the start up and expansion of JEA as a major wholesale electricity supply organization. The statements have been prepared including appropriate adjustments for price escalation in operating expenses and development program costs and periodic revaluation of- assets. Annex 25 summarizes these statements (Case A) for comparison with a forecast at constant (1974) prices (Case B). This comparison shows that tariff increases aggregating about 65% would be required over the period to offset assumed inflationary trends (see 5.05, 5.07). Without price escala- tion, increases of 15% would be adequate. 5.13 JEA's debt/equity ratio would be 76/24 in 1976, reflecting the high level of borrowings for initial operations, but improves to 60/40 by 1980, a satisfactory level. Debt service coverage would be adequate over the period (1.5-2.7), but in order to assure that the Association would be informed if future incurrence of debt would jeopardize this position, the debt service covenant negotiated in connection with Credit 386-JO was extended to this Credit. This covenant requires that JEA seek the consent of the Association to incur debt if JEA's net cash earnings before depreciation and interest would be less than 1.5 times its debt service in any future year, including service on the amount to be borrowed. D. Accounts and Audit Accounting 5.14 JEA's accounting staff comprises a chief accountant and two junior accountants. This was adequate before the construction financed by Credit 386-JO was started but, with its present construction program and for its actual operation as a utility company it will not only need additional ac- counting staff but also, all the staff (including the present employees) will require training. The management consultants employed under the earlier credit have designed an appropriate accounting system and will provide on-the-job training to the accounting staff. JEA will arrange to send at least one senior accountant abroad for a period of training with an appropriate utility organization. The foreign exchange cost of this has already been provided for in the earlier credit. - 19 - Auditing 5.15 In accordance with Section 44 of the Jordan Electricity Authority Law, the books and accounts are audited annually by auditors appointed by the Minister. In the past the Minister has appointed the local auditing firm of Shair, Aweida, Shatara and Ayed. These auditing arrangements are satisfactory and independent auditors acceptable to the Association should continue to be appointed. E. Insurance 5.16 Insurance coverage is provided through private local insurance com- panies operating under Government regulations; in addition, the Government guarantees legitimate claims against these companies. JEA's purchases from abroad are usually covered by insurance provided by the supplier. VI. BENEFITS AND JUSTIFICATION A. Forecast of Sales an'd Demand 6.01 Forecasting industrial power requirements is difficult. JEA in con- junction with JEPCO and the Ministries have recently initiated a census and survey of all industrial plants under construction and planned. So far they have identified some 80 plants. It is not expected, however, that the full census, providing comprehensive data and forecast demand (taking into account possible construction delays, actual production pattern, etc.) can be com- pleted before the end of 1975. For this reason a clear distinction was made between non-industrial and industrial consumption. 6.02 For non-industrial consumers, historic trends (least squares method) have been used in forecasting power requirements, except for "social supply" (mosques, churches, hospitals, schools, etc., which have a 25% discount on the normal tariff) and street lighting. Growth in social supply has been ex- tremely high (30.9%/a) and it was assumed that the future growth rate would be about half the historic trend due to increased attention to the criteria for eligibility for this special tariff. Similarly, street lighting, which has shown a trend of 18.2%/a, was assumed to grow at a rate of 14%/a (see Annex 16). 6.03 In forecasting industrial consumption a distinction was made be- tween (i) general future consumers (some 70 smaller plants with connected loads of less than 500 kW) for which the available information ranged from fair to poor, and (ii) large consumers (11) which either are awaiting author- ization to increase their demand (including operation during the peak hours) or have construction schedules for which significant delays are unlikely. - 20 - 6.04 For the general industrial consumers the consultants indicated a growth rate of 18% over 1973 (suppressed). The assumption appears reasonable because (a) the addition of a total of some 25 smaller plant (of the 70 plants mentioned above) for which the information was reasonably fair, aggregating some 6.5 MW in capacity, would account for a growth rate of some 10-12% over and above the historic trend through 1977; and (b) the average 1973-1980 growth rate for the aggregate supply to non-industrial consumers and the general in- dustrial consumers would be about 15% (assuming that 3% of energy requirements was not met in 1973 due to lack of capacity) which compares favorably with the historic trend of 12.7%. 6.05 Major growth is caused by the connection of large consumers (see Annex 16), several of which, like the steel mills, the refinery, a ceramic factory, and a new Medical City are awaiting power supply authorization de- pending on the commissioning of JEA's gas turbine plant. These connections would aggregate 24 MW in 1976 and 36 MW in 1977. Energy supply would grow from 18 CWh in 1975 to 132 GWh by 1978. The major supply would be by JEPCO, JEA supplying directly to the cement factory (12 MW expansion), the refinery at Zarqa (upon commissioning of the gas turbine plant) and Irbid (1978-1979). Since the difficulties of estimating coincident demand and hours of operation of various plant may cause overestimation, it was deemed prudent not to include in the forecast either the supply to the Jordan Valley Development (6.5 MW initially, depending on work progress), or to assume specific replacement of captive plant generation by public supply. A summary of the forecast for the Amman area for 1980 in comparison with actual figures for 1963 and 1973 is given in para. 4.09. J B. Comparison of Alternatives 6.06 During appraisal of the first power project mixed diesel/steam de- velopments were compared with all steam developments assuming different unit sizes and different assumptions for growth rates. It was shown that at the high growth rate an all-steam development would be the least-cost up to a discount rate of about 15%. Under the present assumptions for growth, and early 1973 prices, the equalizing discount rate would be about 17%. Sen- sitivity considerations indicate that doubling of capital cost (which ap- pears to be the upper limit of 1974 prices compared with 1973 prices) would cause the equalizing discount rate to decrease to about 13%, which is above the opportunity cost of capital in Jordan, assumed to range from 10-12%. Sensitivity to a rise in fuel costs is small. Tripling of the present fuel price (JD 6.5/t), i.e. assuming a price of about US$10/bbl, would cause the equalizing discount rate to decrease to about 14.5% under the present assump- tions for growth. Thus, the 1972 Government decision to convert to steam plant generation is reaffirmed and JEA's least cost development program should comprise three 33-MW units (of which the Project constitutes the third unit) at the Zarqa station, followed by 66-MW units. It appears necessary, depending on actual load growth, that by mid-1976 JEA should investigate the economic justification of installing additional gas turbines before the fourth unit (66 MW) is commissioned at Zarqa. - 21 - C. Economic Return of Project 6.07 The internal economic rate of return (IER) of the Project is the discount rate which equates the present values of the time streams of the attributable costs and benefits over the Project's assumed life of 25 years. In the case of this Project, financial costs and benefits have been used in the analysis since no shadow pricing of inputs or adjustment for taxes was considered appropriate. The IER is therefore expressed as an internal fi- nancial rate of return (IFR). The costs are the capital cost of the third unit at the Hussein power station, the reconditioning of the older diesels at JEPCO's Marqa station, Stage 2 of the 132-kV transmission system, a por- tion of the 30-kV regular expansion, assumed at 200 km, a share in the cost of distribution expansion, assumed at 2 years, plus the cost of operating the additional facilities. Willingness to pay, measured mainly through the revenues, has been used as a first approximation of the attributable bene- fits. These revenues understate the benefits consumers receive from the Project because it is considered that a tariff increase of reasonable mag- nitude (say 20%) would not reduce demand significantly. This is further il- lustrated by the fact that large capacities in costly captive plant have been installed (and would continue to be installed were the Project not executed) to meet the electricity needs. 6.08 The IFR is about 15% on the basis of the present retail tariffs. Sensitivity considerations indicate the following changes in the IFR for variations of the basic perameters. IFR (%) Basic assumptions 15 Third Hussein Station Cost overestimated by 20% 16.7 Third Hussein Station Cost underestimated by 20% 13.3 Fuel cost increased by 50% 12 All costs underestimated by 10% 13.5 Attributed other facilities underestimated by 20% 12.7 Attributed other facilities overestimated by 20% 17 Benefits (i.e. revenue) overestimated 10% 11.8 Benefits (i.e. revenue) underestimated by 10% 18 VII. AGREEMENTS REACHED 7.01 The Government has agreed with the Association on December 31, 1975 as the date for initiating legislation of a General Electricity Law (2.10). 7.02 The Government and JEA have agreed to consult with the Association before implementing the NEEB's recommendations on Jordan's tariff structure revision and to introduce the new tariffs not later than March 31, 1976. The tariffs will be further reviewed not later than June 30, 1977 for im- plementation of the necessary changes, if any, by September 30, 1977,(2.22). - 22 - 7.03 Consultants for the Southern Jordan Power Development Study will be engaged before July 31, 1975 and JEA will discuss with the Association the recommendations resulting from this study and the actions it expects to take (2.27). 7.04 The Government and JEA have agreed (5.06) that: (i) A final decision will be taken not later than March 31, 1976, whether JEPCO's Marqa power station will be operated by JEPCO as a "selected station" for and on behalf of JEA, or whether Marqa will be acquired by JEA; (ii) Should Marqa be operated as a "selected station", a contract acceptable to IDA will be executed between JEA and JEPCO be- fore JEA and JEPCO before June 30, 1976; and (iii) Should Marqa be acquired by JEA, all necessary legal action will be completed by June 30, 1976, and actual transfer of all assets to JEA will be completed by December 31, 1976. 7.05 The Government and JEA have agreed that JEA's tariffs will be main- tained at a level high enough to produce an annual rate of return of at least 9% on net fixed assets,in operation valued and revalued from time to time in accordance with sound and consistently maintained methods acceptable to the Association (5.07). 7.06 Assurances included in the 386-JO Guarantee Agreement have been repeated for the proposed Credit that no return on Government's equity will be declared or paid before 1979 unless in the opinion of the Association, such a distribution would not be prejudicial to JEA's requirements for its capital expansion. Similarly, assurances have also been obtained from the Government that it will make arrangements satisfactory to the Association, for providing funds for carrying out the Project and associated transmission facilities (5.10). 7.07 JEA has agreed to extend the standard debt service covenant under Credit 386-JO (5.13). 7.08 The introduction of a fuel price adjustment clause would be a con- dition of effectiveness of the proposed Credit (2.21). 7.09 In view of the above agreements, the Project would provide a suit- able basis for an IDA Credit of US$5 million to be repaid over 50 years in cluding a grace period of 10 years to be relent to JEA under a subsidiary loan agreement acceptable to the Association (5.08). May 23, 1975 IWgÅAISAL OF HE SECIOND HU0SSEIN THERMAL.POWER PR2JECT JORDAN Elisting Generating Plant' 1974 Origlnal site Original Site Location Rating Manufacturer Location Rating Manufacturer kW _,,__kW Ansan/Untga Area Jordan Valley JEPC0l IDECO A-ma/Zarqa 66,000 Vorth Shunah 40 , Ruston Private (estiate) 25 Lister Standby Servic 12 Li.ter' Water pumping and Sewarage 1,950 (15 Unit ) ministry Of Comuications 670 (8 unite) 50 14WM TV ord Broadcasting 2,330 (5 units) El-Marshari 68 >m Airport 380 (5 unit) 56 mwm Governsnent Hospitals 360 (5 unite) Wadi El-Y.bi. 100 (3 unita) Refrigeration and Storage 270 (3 units) Deir Alla 50 (2 unit.> Army Ctpa 440 (6 unite) El-K.tanh 60 (2 nita) 6,400 Regular Service Municipal ceement Pactory 14,000 (7 utite) Water Ptaping 5,660 (20 unit or more) South Shumh 240 (2 nit.) Private Refinery 4,800 (2 unit) Arned Cmp. 3,600 (4 units ar more) Stweina Toarit Center 80 (3 units) p_umtn (eotimte) Grein Mill. -1,940 <9 ualte) 80,000 Northern Ar. 36400 Irrigation and 1.00 (175 tall.) Potable wter 2 281 160 Skada4 IDEC0 Irbid 400 (26 anita) Doran4 1,200 (2 unit.) Deutz Southern Jorda. Munical 500 SU Karak 816 (7 units) 2,080 (1 unit) Allen Rapp. 216 (3 tait) 1,900 (1 unit) Allen Al Qaer 50 (2 tnite) Ady 88 (2 nit.> Mafraq' 120 MAW411 MAart 96 (2 nt.) Tafiloh 560 (3 unit ) Wadi Msah 130 (3 nit ) Jarash11 100 M,,41 Kon 940 (6 units) 50 ,,41 Najil Shubak 48 (2 units) 4/ 50 Mercedes- Quelra 120 (1 unit) Private Jordan Phtsphate Comp. - Al Haea 5,735 (11 unit ) Kufer A 40 WM Aqab Port Authority 3,830 (7 nat.) Satt E-Rustran 40W 12.629 Puatping l7ational Reorae Authority). 3,200 (12 units) 7.920 NOTES 1/ The total estiasted Installed capacity in Eat-Bank Jordan as listed here a~ounts to about 125 M0; due to ltck of statistic thi. numbr rotitute. eagh estimate orLy. 2/ Far details of JEPO Plant see Anne 7 2/ Also rrceiving balk supply from IDEC0 4/ Ta be ratired ta 1975 April 1975 ANNEX 2 Page 1 of 3 APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN The Histories of JEPCO and IDECO, and Development Program for Jordan Valley 1. Electricity is distributed in Eastern North Jordan, the area which will be supplied by the Project, by JEPCO and IDECO in their respective Con- cession Areas. The composition, history and future developments of these companies are described below: The Jordanian Electric Power Company 2. Prior to 1947 several small electric power companies were operating independently in the Amman area. The Government decided at that time that the activities of these companies should be unified and on August 14, 1947 the Transjordan Electric Power Company Limited was established, with paid up capital of JD 121,900 to take over these small enterprises. At the same time the Government granted the company a concession to generate, transmit and dis- tribute electrical energy in the area.specified by the concession for a period of 60 years after which the concession could be reviewed or the assets could be purchased by the Government. The paid up capital was increased to JD 250,000 in 1955. 3. As of January 1, 1963, the Transjordan Electric Power Company Limited merged with the Jordan Central Electric Company which supplied the Zarqa con- cession area, and the new company was named the Jordanian Electricity Power Company Limited. The combined concession, covering the areas supplied by the previous two companies, was established by law as published in the Official Gazette No. 1651 dated November 22, 1962. The authorized capital of the new company was JD 2,500,000 of which JD 2,040,000 was paid up. Authorized capital was later increased in 1973 to JD 6,000,000 with JD 4,588,468 paid up. The nominal value of a share is one Jordan Dinar. The Company presently (December 1974) is owned by 9,000 shareholders and the distribution of shares is shown in the following table: Shareholders No. of Shares % a. Municipalities 406,750 8.9 b. Government 48,946 1.1 c. Company 102,864 2.2 d. Private Sector 4,029,953 87.8 Total 4,588,468 100.0 ANNEX 2 Page 2 of 3 4. The Board of Directors of JEPCO comprises eleven members, two of whom are representatives of the Government and the Municipality of Amman respectively. Total staff is about 1,000 employees. JEPCO's Expansion Program 5. JEPCO is presently executing a 5-year development plan (1971-1975) for the expansion of its own generation, transmission and distribution facil- ities, pending the commissioning of bulk supplies from JEA's Zarqa station. A UK loan of JD 3.1 million has been made, through JEA, towards the cost of this program, which includes 3 diesel units of 6-MW site rating which were installed and commissioned in early 1974. A fourth unit, financed from JEPCO's own funds is expected to be commissioned by mid-1975. JEPCO's trans- mission/distribution program provides for extending its 33-kV network and in- cludes a routine expenditure of some JD 500,000 annually to develop the com- pany's 220/380-kV network. The latter financial provisions appear adequate to meet the increases in power requirements during the period. JEPCO's demand exceeded its firm capacity in 1974. The fourth 6-MW diesel unit and the Hussein I gas turbine financed from the Credit 386-JO are expected to meet these requirements reasonably well except in the event of unscheduled outages. JEPCO intends to retire and sell the Ras-Al-Ain and Zarqa diesel stations so that the four newer diesels (24 MW) with the older (to be reconditioned) diesel units at the Marka station, together with the gas turbine (12 MW) will comprise the necessary reserve for the Zarqa station. By about 1978/79, in order to meet JEPCO's requirements as well as those for IDECO (see below), a further extension of the transmission system would also be required. A Irbid District Electricity Company 6. The company was established as a private company in Irbid in 1957 under the name of Ajlun District Power Company. Irbid power station was ac- quired in 1961 and the company was converted into a public company with an authorized capital of JD 1,000,000. The name was changed to the Irbid District Electricity Company. The Company was granted the present concession under Law No. 1 dated 23 of January 1961 (as published in the Official Gazette No. 1535 dated February 16, 1961). The concession is for a period of 50 years, after which it can be renewed or the assets may be purchased by the Government. 7. From 1962 onward IDECO has been acquiring smaller municipal under- takings, a process that has been accelerated since 1968 when the company ob- tained its first UK loan for expanding its transmission and distribution system (see 9 below). 8. The authorized capital of IDECO is still JD 1,000,000 of which JD 881,217 has been paid up. The nominal value of a share is one Jordan Dinar and the distribution of shares as of December 31, 1971, is shown in the following table: ANNEX 2 Page 3 of 3 Shareholders No. of Shares % a. Municipalities 430,134 48.8 - b. Government 178,852 20.3 c. Private Sector 272,231 30.9 881,217 100 IDECO's Expansion Program 9. IDECO, which recently completed its Stage I transmission and genera- tion program with the assistance of JD 360,000 (equivalent) UK financing, ob- tained two further UK loans through JEA of the equivalent of JD 300,000 and JD 750,000 respectively toward expansion. The first loan covered the install- ation of two 1-MW diesel units in the.existing station and the extension of the 33-kV system by about 120 km. The second loan covered further 33-kV extensions and the third construction of a new power station at Irbid with three 3.2-MW diesel units. These works are expected to be completed by the middle of 1975. Several large existing pumping stations will all be connected to the IDECO system for supply during off-peak hours, as soon as sufficient capacity is available. IDECO's major construction is supervised by JEA. Additionally, IDECO is budgeting an annual expenditure of some JD 120,000 for expansion of its 220/380-V facilities. IDECO plans to install two addi- tional 3-MW generating units prior to 1978. By that time, or early in 1979, the construction of a 70 km long 132-kV transmission line from Zarqa to Irbid may well be justified. Jordan Valley Rehabilitation and Development Plan 10. The Government announced in 1973 its 3-year Rehabilitation and Development Plan of the Jordan Valley. This plan envisages the migration of some 100,000 persons to the Jordan Valley by 1980 to participate in the plan- ned agricultural and environmental improvements of the valley. Towards the achievement of this aim, the Plan includes a power development project com- prising a 33-kV line along the valley (200 km including feeders and spurs) and distribution networks for the expansion of existing townships, for new settlements and for the pumping of irrigation and drinking water. The line would be supplied in the north from the IDECO system and in the south from the JEPCO system. Demand is expected to grow from about 6.5 MW in 1975/76 to 16 MW in 1980/81, including an off peak load for pumping of 2.3-3.6 MW. Foreign cost of the project (about JD 1.2 million) is expected to be financed by the German Kreditanstalt Bank. Lahmeyer, the Consultant for the project has submitted a draft report in October, 1974. The project is expected to be completed in 1977/78, which appears ambitious. The demand for power will be entirely subject to progress made in implementing the Plan and to the extent that the proposed influx of population is achieved and for this reason this estimated load has not yet been taken into account in JEPCO's or IDECO's load forecasts until firmer information is available on the execution of the Plan. April 1975 APPRAISAL OF THE SCOND HUSSEIN THERMAL POWER PROJECT JORDAN Hussein Thermal Station StUe II Historic and Forecast Number of ComumorsL Oeneration .eg aaes; Sales; Capacities and Maximum Demand Site Rated Derated Purchased Maximum Load Installed Available Reserve Firm Capacity Margin Number of Generation from JEA Sale Demand 74etor Capwcity Capacity (derated) Capacity year Consumers GWh) (GWh) (WO 1 ) (NWAI Historic6 1963 29,956 57.4 50.1 15.0 43.5 18 17 3 14 2.0 12 1964 33,695 66.0 57.4 14.6 51.5 18 17 3 14 2.4 14 1965 37,536 72.8 63,3 15.7 53.0 22 20 5 15 4.3 21 1966 41,564 81.7 70.9 17.9 52.0 27 22 5 17 4.1 19 1967 46,080 91.6 77.9 20.4 51.5 38 30 5.5 24.5 9.6 32 1968 50,662 104.4 88.1 22.9 52.0 47 37 5.5 31.5 14.1 38 1969 56,738 122.7 102.2 27.8 50.5 47 37 5.5 31.5 9.2 25 1970 61,161 119.9 101.1 29.8 46.0 47 32 5.5 26.5 2.2 7 1971 66,683 133.8 112.9 31.1 49.0 47 32 5.5 26.5 0.9 3 1972 73,883 157.9 134.7 34.9 51.6 44 36 4 32 1.1 3 1973 81,738 181.4 153.7 38.6 53.6 60 40 6 34 1.4 3 Sept. 1974 86,426 156.0 130.0 45.2 52.7 64 46 6 40 0.8 2 Forecast 1974 88,000 210 173 47 51 64 46 6 40 - - 1975 96,000 235 30 220 59 51 70 52 6 52 - - 1976 105,000 160 176 282 75 51 1138 1977 113,000 397 332 89 51 Q 1978 122,000 454 383 100 52 1979 132,000 512 432 110 53 1980 142,000 577 485 122 54 1/ Derated Available Capacity less Maximum Demand; 2 % of Derated Available Capacity 1/ Plus JEA gasturbine at Zarqe-12 MW 3/ Marqa 60/50 NW diemi station transferred to JEA 4/ Ras-Al-Ain an Zarqa diesel stations retired March 1975 APPRAIBAL 0F THE SECOND HUSSEIN TRERHML oæiB PROJECT Jdanian Electrie Poer con Hi.tori n.d Fouldre t 5ales (GM)i Dur Cosr Catoft. -------D stic--------- Corci.l& Goveret ------------------------------ Industry ------------- - spit--l SChol-,- ..... --- 4 t~n8.----- ------.-reet. L1gh. i, E.l.tinPlaces of vorship . % Total GWh Increaso % I.crease SMallAeddiio LS Aditi© Tax9 muInctts %h~rity lo~es !-11 es m6 I bnre 7 Imrøe Historic <mb) 1963 11.6 7.7 23.5 . 2.8 3.4 1.1 50.1 1964 15.0 29.3 8.9 15.5 25.6 8.9 3.2 14.2 L$ 2.9 1.2 9.0 57.4 14.6 1965 17.8 18.6 9.5 6.1 27.8 8.5 3.2 • 3.7 3.7 1.3 8.3 63.1 10.3 1966 21.1 18.5 10.2 .8,4 30.4 9.3 3.4 17.9 3.9 5.4 1.9 &6.1 70.9 11.9 1967 23.7 13.2 11.4 10.7 33.0 8.6 4.2 7.7 3.4 -12.8 2.3 21.0 78.0 10.0 1968 28.3 19.4 13.7 20.0 35.1 6.4 4.8 14.2 3.5 3.0 2.8 21.7 88.2 13.1 1969 33.9 19.9 16.7 22.0 39.4 . 12.2 5.7 18.7 3.2 -8.6 3.3 17.8 102.2 15.8 1970 34.0 0.3 17.0 1.8 34.6 -12.2 9.1 . 59.6 3.5 9.4 2.9 -12.1 101.1 -1.1 1971 40.2 18.2 19.9 17.0 31.9 7.8 13.2 46.1 3.9 11.4 3.8 31.0 112.9 11.7 1972 '47.4 17.9 24.2 21.6 33.3 4.4 20.1 52.3 * 4.9 25.6 4.5 18.4 134.7 19.3 1973 53.9 13.7 26.6 9.9 38.1 14.4 24.8 23.3 4.8 -2.0 5.3 22.2 153.7 14.1 Sept.1974 46.7 22.9 30.9 20.6 3.9 5.* Trend () 15.6 14.0 4.3 , 30.9 3.1 18.2 12.7 For.cast 1974 60 30 44 44. 27 S 7 173 1975 72 35 61 8 69 31 8 220 1976 86 41 75 28 103 38 5 9 282 1977 99 4r 86 41 127 44 3 10 332 1978 115 34 98 48 146 51 6 11 383 2979 132 61 111 50 161 59 6 13 432 1980 153 70 123 50 173 68 6 13 485 Average gro-th 1973-80 (2) 16.1. 14.8 21.6 27.9 15.5 3.2 13.4 17.8 March 1975 APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Irbid District Electricity Company Historic and Forecast Number of Consumers; GWh Generated' Purchased and Sold: Capacities and Maximum Demand Purchased Maximum Load Installed Reserve Firm Number of Generation from JEA Sales Demand Factor Capacity Capacity Capacity Year Consumers (GWh) (GWh) h) ( (MW) (MW) J Historic 1968 11,859 7.5 5.93 2.6 33 3.3 0.3 3.0 1969 13,153 8A 6.71 2.7 36 3.3 0.3 3.0 1070 15,184 8.9 6.93 2.9 35 3.3 0.3 3.0 1971 18,812 12.0 8.75 4.0 34 4.7 1.0 3.7 1972 22,800 14.5 11.4 4.6 35 4.7 1.0 3.7 1973 25,337 16.1 13.0 4.9 38 4.9 1.0 3.9 Sept. 1974 26,857 13.0 10.5 5.5 36 5.5 1.0 4.5 Forecast- 1973 27,000 16 14 4.9 37 4.9 1.0 3.9 1974 31,000 29 25 6.3 53 13.5 3.0 10.5 1975 35,000 37 29 7.8 54 13.5 3.0 10.5 1976 39,000 43 37 9.5 52 18.5 5.0 13.5 1977 43,000 48 41 11.0 50 18.0 5.0 13.0 1978 47,000 54 46 12.6 49 21.0 5.0 16.0 1979 51,000 62 4/ 4/ 52 14.4 49 21.0 5.0 16.0 1980 55,000 70 4/ 59 16.0 50 21.0 5.0 16.0 1/ From 1971 onward demand has been limited to available capacity. 2/ Forecast as of April 1973. No additional information was available to update these figures. 3/ Improvement due to additional off peak pumping loads. 4/ Because a 23% annual growth rate appears high a shift by one year was assumed in the attainment of sales on generation as forecast, i.e. 1979 1980 (Year of Connection) Sales (GWh) 46 52 see Annex 14 Generation (GWh) (Purchase from JEA) 54 62 see Annex 15 May 1975 APPRAISAL O THE SECOND HUSSEIN THERMAL POMR PROJECT JODA Irbid District Electricity Company Historic and Forecast Sales (GWh) per Consupar Category Commercial Hospitals and and Schools; Worship % Domestic % Increase Government % Increase Industry % Increase and Charities Increase Streetlighting % Increase Total % Increase Historic 1968 3.36 0.71 1.01 0.21 0.65 5.94 1969 3.73 10.9 0.87 22.5 1.21 19.7 0.24 13.4 0.67 3.9 6.72 13.1 1970 3.76 0.8 0.87 - 1.30 7.5 0.30 27.6 0.70 4.3 .93 3.1 191 4.89 30.2 0.96 10.3 1.45 11.5 0.35 16.7 1.10 57.0 8.75 26.3 1972 6.77 38.4 1.39 44.8 1.57 8.3 0.39 11.4 1.34 21.8 11.42 30.5 1973 8.10 19.6 1.50 7.9 1.60 1.9 0.40 2.6 1.40 4.5 13.00 13.8 Sept. 1974 6.70 1.20 1.20 0.30 1.10 10.50 1973 8.6 1.5 1.7 0.6 1.5 13.9 1974 11.7 1.8 8.7V 0.7 1.8 24.7 1975 12.0 2.1 12.0 0.9 2.1 29.1 1976 14.3 2.3 17.0 1.0 2.4 37.0 1977 16.7 2.7 17.9 1.1 2.6 41.0 1978 20.5 3.1 18.5 1.2 2.7 46.0 1979 25.9 3.6 19.5 1.3 2.8 53.1 1980 29.9 4.1 20.7 1.4 2.9 59.0 Average Forecast Growth Rate 20 14 38 17 10 23 1972-1980 1/ Forecast as of April 1973, no additional information was available to update these figures 2/ Off-Peak pumping loads added March 1975 APPRAISAL 0F TOE SECOND HUOSSEIS THERMAL6 POWER11 PROJECT JORDAN Jordanlian R1ee0gie lower apn P?&nt Availability site Stin8 Actlit atig Actu pacity Yar Site Rating Actual C acity Yer # 'mgt() C9omMss9ond RA-1A - (kW) (._ Comisinet2BpL)6A9 (kW) (kWÅA co-1i.soned al 1 Mirr1wes KVSS 12 2.1 1.2 1963 1 RUto 327 100 194 4 tfMN 1,200 1.000 1963 o/ 2 Mirrlces KVSS 16 2.9 1.7 1963 2 Ra.ton 327 100 1948 5 MAN 1,200 1,000 1958 b/ 3 Cro.ley Piet.tick 1BPCZV 5.0 3.7 1966 / 7 Cro.lay (327) - 1951 6 MAN 1,200 1,000 1958 b/ 4 Cro«sloy Pi.letick 18PC2V 5.0 4.0 39,8 8 C~ey 600 300 1951 7 MAN 1,200 1.000 1958 c/ 5 Chantier. Pi.latiok 18PC27 5.5 2.8 1968 9 National 1,220 700 1955 4,800 4,000 c/ 6 Cha.tiers Pielti.k 189C2V 5.5 - 4.0 1970 10 National 1,220 700 1956 d/ 7 Mirrloo. KVMayor 16 4.6 2.5 1969 5/11 mational 1,220 700 1958 / 8 Mirrlees KV Mayor 16 4.6 - 1970 12 Iatioal 1,220 700 1959 9 Crosley Pielstick'18PC2V 6.2 6.1 1973 ff13 Douts (1,220) - 1959 10 Crosvley Pielstick 18P02V 6.2 6.1 1973 14 D*utz L2 7 1962 11 Cro.ley Pielstick 18PC2V 6.2 6.1 1974 7,354 4.000 53.8 38.2 ./ Foundation block crched -, Al1 ~_g @ hav cooling prolm a/ All .ngines have co-ling problms b/ Cooling problems /l Un~1axbl. f Grouting pwobles a/ R*groutti require, e/ Crank.haft .eur. Total 1974 Availabl. Capacity ativemnt Additi~on Capacity (Mr) (M) (Mo) (W)f Y*gx 1974 See above table: 38,2 + 4.0 + 4.0 46.2 46.2 1974 1973 unit 5, improvm ts 1.2 - unit 7, return to full serVice 1.0 Lit 8. repaired 3.5 unit 12, N~r Cro.ly Pielati.k dded 61 +11.8 58.0 1975 1977 Ras-AI-ALn, Zaqa retired -8.0 Marq4 1, 2 retired -2.9 Rehabilitation Marqa Unit 3 0.8 Unit 4 0.5 Unt 3 0.8 unit 6 0.8 Unit 7 Unit 8-___ -10.9 +2.9 50.0 1977 at~ch 1975 ANNEX 8 Page 1 of 2 APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Electric Power Rates and Tariff Studies 1. JEA's laws require that the prices to be charged by undertakings shall be in accordance with such tariffs as they may fix from time to time, with the approval of the Cabinet on the recommendation of the Minister. No specific concepts or regulations are set forth for the definitions of costs, rate base, rate of return, etc. 2. In practice a single and simple uniform tariff structure prevails in the country, comprising block rates only. On a monthly basis they are the following for the two most important companies (in fils 0.31 USJ per kWh): JEPCO Fils/kWh USJ/kWh First 50 kWh 30 9.3 Next 2450 kWh 15 4.6 Over 2500 11 3.4 IDECO First 50 kWh 40 12.4 Next 50 kWh 25 7.7 Next 900 kWh 20 6.2 Over 1000 kWh 15 4.6 3. Special contracts are allowed at lower prices and normally this takes the form of a discount. In the case of JEPCO, employees have a 75% discount and institutions considered socially important (churches, hospitals, schools, charity) 25%. For street lighting under a special contract, the original discount was 30%. Each year, however, this increases by 5% and the present situation in Amman is that within 3 years street lighting supply and replacements will be fully subsidized by other consumers, the municipality financing the extensions. In 1970, about 12% of all of JEPCO's supply was at a discount, constituting about 6.3% of revenue. Similar discounts exists in Irbid where, however, the discount for street lighting increases 10% annually but is limited to a maximum of 60%. Some larger industrial consu- mers have a special contract setting the highest block rate at 12 fils/kWh. 4. As a condition for lending, JEA required JEPCO to have its tariffs studied by an acceptable consultant to investigate if they could be reduced. The company's costs were to be analyzed and recommendations were to be made for any promotional activities to be initiated, including setting up a com- mercial section. The study was completed by Kennedy and Donkin of the UK in May 1972. ANNEX 8 Page 2 of 2 5. A study of Jordan's electricity tariffs, financed by UK was sub- stantially completed in 1974 by the North Eastern Electricity Eard, UK. A summary of its recommendations is included in the Appendix. The final study which is expected to be completed in 1975, would take into account the most recent information on costs, the forecast development program, and the results of a tariff study being undertaken by JEPCO's tonsultants. April 1975 ANNEX 8 Appendix 1 Page 1 of 4 APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Recommended Tariff Structure Memorandum of the North Eastern Electricity Board (UK) on a tariff study for Jordan 1. The aims of cost recovery and cost reflection are accepted as suitable for Jordanian conditions. In particular the earning of proper rates of return on capital and the pricing philosophy represented by marginal cost pricing are both acceptable. 2. The present block tariff and.discount structure is recognized as unsatisfactory as it leads to the underpricing of some consumers and the over- pricing of others with consequent cross-subsidization. Also the giving of incentives to consumers to increase consumption economically is not defined well in the present structure. 3. Accordingly, the following tariff structure is agreed (see page 4) and recommended as suitable for Jordanian conditions (No meter rentals are charged in addition): A. Standard Tariff This is applicable to all Domestic and Small Commercial single phase consumers. The tariff is a two-block tariff consisting of a first higher priced block of units and a final lower priced unit rate. B. Public Buildings Tariff This is applicable to all places of worship, schools, hospitals and other public buildings supplied single phase where the sup- ply authority is satisfied that the use of electricity during peak periods (i.e., 16.00 hours to 22.00 hours) is limited and/or infrequent. The tariff is of similar structure to the Standard Tariff but at a reduced price level. C. Street Lighting Tariff This is applicable to all street lighting and similar loads. The tariff consists of a fixed charge per metering point and a single unit rate. ANNEX 8 Appendix 1 Page 2 of 4 D. Off-Peak Tariff This is applicable to all off-peak loads connected to an ap- proved time switch controlled circuit which only allows use of the supply during off-peak periods. The tariff consists of a fixed charge per metering point and a single unit rate. E. Three Phase Tariff This is ultimately applicable to three phase loads supplied from the medium voltage network only but will initially apply to all three phase loads (see F below). The tariff consists of a modified form of the Standard Tariff consisting of a larger first block of units at the first unit rate of the Standard Tariff, a second block of units at the final unit rate of the Standard Tariff, and a lower final unit rate. F. Subscribed Service Capacity This will apply to all consumers taking supply from an individual transforming point on the h.v. (or e.h.v.) network. The tariff consists of a fixed charge per kVa of agreed service capacity (Subscribed Service Capacity) and two unit blocks (this is a simplification of the original recommendation by omitting the final block of units). Special forms of charge based on the Subscribed Service Capacity Tariff will be negotiated for special large loads. An example (Broadcasting and T.V. Special Tariff) is discussed in the main report. 4. As the Subscribed Service Capacity Tariff requires the collection of load information from a trial installation of the special metering equip- ment required, it is recommended that initially the Three Phase Tariff E be applied to all three phase consumers. It is also recommended that the Subscribed Service Capacity Tariff (or its equivalent) be introduced into the concession area of JEPCO initially and extended to the few suitable consumers in the concession area of IDECO only after experience has been gained in JEPCO. It is recognized that JEPCO are awaiting technical advice from their consultants, Messrs. Kennedy & Donkin, on the recommended tariff form and the possible alternative of a maximum demand type tariff. However, it is accepted that a tariff is required for the larger consumer which contains an element of charge related to kW demand (be it measured directly or by means of KVA capacity required) in addition to blocks of units. ANNEX 8 Appendix 1 Page 3 of 4 5. It is recognized that the recommended tariff structure will lead to increase prices to some consumers (particularly street lighting and to a lesser extent the small domestic consumer) and to decrease prices to other consumers (particularly industrial consumers). This is not inconsistent with the assumed aims of the Government to encourage both the efficient use of scarce resources and the industrial and commercial development of the country. ANNEX 8 Arvendix 1 Page 4of 4 SUMMARY OF RECOMMENDED TARIFF FORMS IDECO JEPCO Kerak (Section 2) Section 3) (Section 4) Standard Tariff (for normal single phase supplies) First 50kWh/month 45 Fils/kWh 35 Fils/kWh 35 Fils/kWh All units in excess 15 Fils/kWh 11 Fils/kWh 23 Fils/kWh Public Buildings Tariff First 50kWh/month 25 Fils/)Uh 35 Fils/kWh 30 Fils/kWh All units in excess 15 Fils/kWh 9 Fils/kWh 18 Fils/kWh Street Lighting Tariff A fixed monthly charge per meter JD 10.400 JD 11.625 JD 7.700 All units 12 Fils/kWh 10 Fils/kWh 18 Fils/kWh Off-Peak Tariff A fixed monthly charge per meter 500 Fils 500 Fils 500 Fils All units 10 Fils/kWh 8 Fils/kWh 14 Fils/kWh Three Phase (Subscribed Service Capacity) Tariff (for all three phase supplies of 10KVA and above) A monthly fixed charge 640 Fils/kVA 400 Fils/kVA First l20kWh/kVA/month 12 Fils/kWh 11 Fils/kWh n.a. Next 240kWh/kVA/month 8 Fils/kWh 6 Fils/kWh All units in excess 7 Fils/kWh 5 Fils/kWh Three Phase (Block) Tariff First 75kWh/month 45 Fils/kWh 35 Fils/lWh Next 1500kWh/month- 15 Fils/kWh n.a. 23 Fils/kWh All units in excess 10 Fils/kWh 18 Fils/kWh Broadcasting and T.V. Special Tariff A monthly fixed charge n.a. JD l/kVA n.a. All units 9 Fils/kWh n.a. = not applicable or not recommended. April 1975 ri E Ii N l1 I TRå |-, i. äe äg i 1 :- lili :- a j-t- s an a a ¡ s E~~~~~0 ||kwsis6 % E l i ANNEX 10 Page 1 of 2 APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Outline of Terms of Reference for Southern Jordan Power Supply Development 1. Power developments shall be studied in a geographical area bordered by: in the north, the Wadi El-Mujib river north of the town of Karak; in the east, the desert; in the south, the Gulf of Aqaba; and in the west, the Dead Sea and the Wadi Araba depression. 2. The consultants shall: - survey all electricity systems throughout the area, including those under construction; - review and update previous reports on power supply for the area; - investigate existing development and future plans for industrial, agricultural, tourist, rural, and urban developments in the area, preparing forecasts of demand for the period 1976-85, taking into account realistic assumption for the actual progress expected in encountering the various plans, of which the most important are: - Expansion of the phosphate mine at El Hasa - The construction of a potash plant at Safi - Development of a copper mine at Fainan - Construction of a cement plant at Ma'an - Construction of a glass factory at Basta - Construction of a fertilizer plant at Aqaba - Workshops and housing at Aqaba and Ma'an for the Aqaba Railway Corporation - Development of various tourist centers by the Ministry of Tourism and Antiquities - Electrification of several villages in the study area - The Wadi Majib Irrigation Scheme - Socio-economic development of Ram Quweira, including irrigation. ANNEX 10 Page 2 of 2 3. On the basis of their findings, the consultants shall: - determine the most practical and economic means of generation, transmission, distribution of meeting the future power require- ments in the area, applying the method of discounted cash flow comparison of alternatives and using a suitable range of dis- count rates, appropriate shadow prices (e.g. foreign exchange and cost and unskilled labor); cost should be based on 1975 prices without escalation, excluding any taxes but including any subsidies, the economic cost of fuel and secondary benefits or penalties (environmental effects) to the extent possible and realistic; the result of the study shall be submitted to a sensitivity analysis with respect to the basic assumptions (e.g. load forecast, capital costs, fuel costs, assumed standards for reliabilities, etc.); - include in the basic alternatives, appropriate siting of power stations at the load center or the location of a new oil refinery that may be constructed in the area; this comparison should also consider the environmental aspects with respect to the use of water for cooling purposes; - prepare detailed cost estimate of the final scheme recommended, construction programs, preliminary design of the required facil- ities, and such information as may be required for final design and preparation of bid documents. 4. The consultants shall calculate the economic return on the least cost development scheme recommended by comparing the benefits,as measured by the projected revenues from electricity sales to consumers at the retail level plus any other identifiable benefits, with the actual costs of supply- ing them with electricity at that level. April 1975 ANNEX 11 Page 1 of 2 APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN JORDAN ELECTRICITY AUTHORITY Description of the Project 33-MW Steam-Electric Unit 1. The proposed additional third unit will be added to the two similar units being installed at Zarqa which is some 42 km northeast of Amman, located adjacent to and just east of the Jordan Refinery in an area which is presently unused for any purpose. This site has existing access facilities, an adequate supply of water, proximity to the source of fuel with consequent savings in cost, and remoteness from urban areas. The capacity of the power station will be 99 MW with the addition of this unit, but site facilities are adequate for the ultimate development of a power station of several hundred megawatts. 2. The generating plant will consist of a 33-MW turbo-alternator set and boiler, together with all anciiliary equipment, switchgear, etc. The turbine will be designed to operate with steam conditions of 850 psi and 900F. The generator will operate at 3,000 rpm, is hydrogen cooled and rated at 38,825 kVA; 33,000 kW at 0.85 power factor, 13,800 volts, 50 cycles, 3 phase. 3. The boiler will be of the outdoor multi-drum pressurized type with provision of combustion air by forced draft fans. It will be designed to burn local residual fuel oil and will be rated at 320,000 lbs per hour at 900*F with final feed water temperature of 395*F. The firing aisle of the boiler will be incorporated in the building housing the turbo generator and auxiliary equipment. This is an economically designed building (Hussein Stage I Construction) of steel frame construction with provision also for housing the low voltage switchgear, the water treatment plant, offices and other ancilliary facilities. 4. Fuel will be supplied by pipeline to daily service tanks from the adjacent oil refinery. Water for boiler make-up, cooling and other purposes will be available from wells on the site. Eight wells have been drilled of which five are productive with a total capacity of 1,800 gallons per minute. In order to conserve water a multi-cell mechanical draft, closed circuit, dry type radiator type heat exchanger will be installed on the roof of the building. ANNEX 11 Page 2 of 2 5. The generator will be connected to a 13.8/132-kV step-up transformer and the 132-kV substation will be an outdoor type structure with open buses. All the net power generated will be fed into JEPCO's distribution system net- work via a double ciruit 132-kV transmission line which is not part of the Project. 6. Although, except for a mechanical precipitator of 95% efficiency, no means of cleaning exhaust gases would be installed, sufficient space will be piovided to install such facilities if they are necessary in the future. Marga Reconditioning 7. The diesel-electric station at Marqa, presently.owned and operated by JEPCO, would form part of the standby reserve for the Hussein Thermal Station at Zarqa. JEPCO proposes to retire two older units of total capacity 2.9 MW. The remaining older units have cooling problems and have developed cracks in the concrete bases. These will be completely dismantled and re- conditioned adding radiator cooling to them. The machines having concrete base trouble may have to be provided with skid-bases. Southern Jordan Power Development Study 8. The Project includes a power development study for Southern Jordan (see Annex 10 for terms of reference). Engineering 9. Consultants services for the Project including the feasibility study would be treated as a part of the project. April 1975 AP?RAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Jordan Electricity Aithoci. Project Cost Estimate JDl = US$3.1 JD (Thousands) US$ (Thousands) Elemnt Lcal of Project Project Element Local Foreign Total Local Foreign Total Cost A Steam Electric Plant 1. Civil Works Building extension foundations and miscellaneous 438.7 229.0 667.7 1,360 710 2.070 9 2. Electro-Mechanical Works Boiler Plant and auxiliaries 222.6 1,383.9 1,606.5 690 4,290 4,980 23 Turbine-Generator plantI and auxilaries 45.2 848.4 893.6 140 2,630 2,770 13 Air-Cooled condensors 6.4 674.2 680.6 20 2,090 2,110 10 Electrical plant 61.3 471.0 532.3 190 1,460 1,650 7 Spares 103.2 103.2 - 320 320 1 Sub-total 774.2 3,709.7 4,483.9 2,400 11,500 13,900 63 B. Engineering and Administration 80.6 322.6 403.2 250 1,000 1,250 6 C. Reconditioning Marga 96.7 322.6 419.3 300 1,000 1,300 6 D. Sou ern Jordan Power Development 16.1 64.5 80.6 50 200 250 1 Stuy E. Contingencies 1, Physical 154.9 258.0 412.9 4806 2/ 406.5 900.0 1. 2,790 18 Price- 1,52.0 5 716 4,740 17,29 Note: Figures in the table have been rounded 1/ 20% on the local and 7% on the foreign costs of project element A. 2/ Local costs: 15% for 1975 and 12%/a for subsequent years. Foreign costsT 11% for 1975 and 7.5%/a for subsequent years. May 1975 ANNEX 13 APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Estimated Schedule of Disbursements Cumulative Disbursements at end of Quarter Government and/ or possible Total Goods and Services Co-Financer IDA Credit IDA Fiscal Year and Quarter ----------------------US $1,000 Equivalent---------------------- 1975/1976 December 31, 1975 1,340 950 390 March 31, 1976 2,160 1,540 620 June 30, 1976 2,980 2,130 850 1976/1977 September 30, 1976 3,810 2,710 1,100 December 31, 1976 4,640 3,300 1,340 March 31, 1977 * 6,160 4,380 1,780 June 30, 1977 7,680 5,460 2,220 1977/1978 September 30, 1977 9,200 6,540 2,660 December 31, 1977 10,730 7,630 3,100 March 31, 1978 12,040 8,560 3,480 June 30, 1978 13,350 9,490 3,860 1978/1979 September 30, 1978 14,670 10,430 4,240 Dbcember 31, 1978 15,990 11,370 4,620 March 31, 1979 16,640 11,830 4,810 June 30, 1979 17,290 12,290 5,000 Source: Mission estimates. March 1975 APPRAISAL OF THE SECOND HUSSEIN THETHAL POWER PROJECT ANNEX 14 JORDAN Tutercon,Woted.System Balances of Energies and Capacities 1974 1975 1976 1977 1978 1979 1980 Sales (GWh) JEPCO 173 220 282 332 383 432 485 IDECO 46 52 Interconnection 1979 JEA Direct Sales - 10 12 24 84 84 84 Total 173 230 294 356 467 562 621 Losses (GWh) (L) (17.6) 45 (16.4) 3 (17.6) 1 (22.1) l1 (20.6) 4 (20.5) 165 (21) Required Generation 210 275 357 457 584 707 786 of which: Diesel Marqa 170 195 135 97 129 167 86 Ras-AI-Ain 15 15 10 Zarqa 25 25 15 Irbid - - - - - - Interconnection 1979 Subtotal 210 235 160 97 129 167 86 Gas Turbine Unit 1 12M 40 27 10 5 5 Unit 2 4MW . - - 10 Subtotal 40 27 10 5 15 Steam Hussein 1,2 66 MW 170 350 350 350 350 Hussein 3 33 W 100 175 175 Hussein 4 66 MW - - - 175 Subtotal 170 350 450 525 700 Load Factor (%) 51 51 60 50 51 51 52 Maximum Demand (MW) 47 62 82 104 131 158 173 Plant Capacities (MW) Diesel Marqa 38 50 a 50 50 50 50 50 Ras-Al-Ain 4 4 4 Zarqa 4 4 4 Irbid - - - 15 15 6 W old plant retired Subtotal 46 58 58 50 50 65 65 Gas Turbine Unit 1 12 12 12 12 1z 12 Unit 2 - -- - 24 24 Subtotal 12 12 12 12 36 36 Steam Hussein 1,2 66 66 66 66 66 Hussein 3 33 33 33 Hussein 4 - - -66 Subtotal 66 66 99 99 165 Total available capacity (NW) 46 70 136 128 161 200 266 Reserve: largest unit(MW) 12 _3 (3 (33) 6) Firm Capacity (MW) 40 58 103 95 128 167 200 Capacity Margin (MW) - 7 -4 21 - 9 - 3 9 32 May 1975 APPRAISAL OF THE SECOND HUSSEIN THERkL POWER PROJECT JORDAN JEA and JECO's Forecasts for Sales, Losses, Generation ---- ----- ---------Sales (GWh)--------------------------- -------Losses------- Generation JEA JEPCO Refinery Cement Factory Irbid Total GWh % GWh 1974 -- - 1975 30 10 40 - - 40 1976 176 12 188 9 4.6 197 1977 397 12 12 421 36 8 457 1978 454 12 72 538 46 8 584 1979 512 12 72 54,1 650 57 8 707 1980 577 12 72 62 723 63 .8 786 ------------ Sales (GWh)------------ -----Losses------ -----Generation and Purchase--------- Excluding Own Purchased Large Large Total Generation from JEA JEPO Consumers Consumers Total GWh % 'GWh) (GWh)(GWh) 1974 173 - 173 37 17.6 210 210 1975 212 8 220 45 17.0 265 235 30 1976 254 28 282 54 .16.1 336 160 176 1977 291 41 332 65 15.4 397 397 1978 335 48 383 71 15.6 454 454 1979 382 50 432 80 15.6 512 512 1980 435 50 485 92 15.9 577 577 1 Losses (see Annex 14) 8 GWh in 1979 and 10 GWh in 1980, May 1975 ANNEX 16 Page 1 of 5 APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Justification of the Proposed Project A. Forecast of Sales and Demand 1. 1 JEPCO will be JEA's principal customer for several years after com- missioning of the Zarqa plant and would require 80% or more of JEA's output for the rest of the century. 2. As shown in Appendix 1 historic trends have been used in forecasting requirements for all categories except industries, subject to the following observations. (a) The historic data have been distorted due to the effects of the 1967 war and the 1970 civil disturbances, but no adjust- ments have been assumed in order to avoid over-optimistic forecasts. (b) The supply for "Social Purposes" (mosques, churches, hospitals, schools, etc.) having a discount of 25% on the normal tariff, has grown out of proportion, indicating the possibility of the designation "social" beyond normal limits. It has been assumed that the Government will take some action to reduce this desig- nation and that future average growth will be about half historic trend. Similarly, for street lighting, payment of which by mun- icipalities is expected to phase out (but would be billed directly to all consumers), it has been assumed that the Government will wish to restrict the extraordinary growth trend of 18.2%. A reduction to 14.3% annually is forecast. 3. For industry, JEA in conjunction with JEPCO and the Ministries, have recently initiated a census of all industrial plants under construction and planned. At the time of appraisal a total of some 80 plants already had been preliminarily identified. However, except for plant already committed and under construction, it is expected that at least up to a year would be re- quired to finalize the investigation and have available a list of plants and a forecast of their requirements taking into account possible delay and actual production pattern. For this reason it was assumed that industrial require- ments, except large plants, would grow an average of 17.7% through 1980. This assumption appears reasonable. A total of some 25 small factories (aggregat- ing some 6.5 MW in capacity) already account for a growth rate of some 10% through 1977, over and above the trend of 4.3%, for 1975-1977. ANNEX 16 Page 2 of 5 4. Large consumers to be connected (some of which have already been completed, like the steel-mill, and await authorization to use electricity, which depends on the commissioning of JEA's gas turbine) in 1975 and 1976 are shown in Appendix 1. The major part of supply would be by JEPCO, JEA supply- ing directly to the cement factory (which is executing an expansion program) and the refinery at Zarqa. It is assumed that Irbid will be connected to the Amman system in 1979, JEA supplying total requirements. 5. Not taken into account has been the supply to the Jordan Valley. The demand for power will be subject to progress made in implementing the Jordan Valley Development Plan, which has suffered delays. It is not expected that network construction will commence before 1976, and although initial demand would be in the order of 6.5 MW (growing to 18 MW in the course of the next 5 years), firm information, and realistic implementation schedules should be available before including the supply in the forecast. 6. Also not included are forecasts of possible supply to factories presently generating their own requirements, due to the uncertainties in this respect, thus once more using a prudent approach to avoid over-optimistic assumptions. 7. Annex 14 shows the Balances of Energy and Capacities, resulting from the study. Comparison of the previous appraisal estimates, the present esti- mate and the consultants estimates for the Project, shows the following: First Power Project Second Power Project Forecasts Consul- Forecasts Mission Estimates tants A Large Genera- Basic new Genera- Genera- (GWh) Sales Losses tion Sales Consumers Losses tion tion 1973/1 160 26 186 160 - 26 186 186 1974 178 32 210 173 - 37 210 248 1975 201 38 239 212 18 45 275 382 1976 224 50 274 254 30 63 357 423 1977 251 57 308 291 65 101 457 558 1978 282 64 347 335 132 117 584 603 1979 317 72 389 375 188 145 707 728 1980 356 80 436 425 196 165 786 799 Average increase (%) 12.1 - 12.9 15.0 - - 22.9 23.1 /1 Historic increased by 3% (assumed minimum suppression) 8. The differences ara considerable but the basic new forecast, i.e. excluding supplies to the large new consumers, is in general agreement with the previous forecast taking into account the smaller new industrial connec- tions already identified in part (see 3 above). This is because trend growth rates have been used for both projects, to which large consumers were added; the latter have increased considerably and largely account for the increase in the forecast. ANNEX 16 Page 3 of 5 9. The above table also shows considerable differences with the con- sultant's forecast in the earlier years, due mainly to conservative appraisal assumptions for demand of new consumers. By 1978, however, both forecasts are in general agreement. The appraisal forecast appears reasonable taking the large pending demand that could not be met in the last 4-5 years (of which the proliferation of captive plant is a direct indication). 10. Because the third unit at the Hussein Power Station cannot be com- pleted before 1978, it follows from the balance of capacities (see Annex 14) that a small capacity shortage would persist throughout the period and that further plant would be required by 1979, if not earlier. For this reason it has been assumed that gas turbine plant (24 MW) would be required by 1979, and a fourth unit (66 MW) by 1980. The third Hussein unit could only be postponed by one year if 1978 demand would not exceed 95 MW (installed capa- city 1977/78 128 MW less largest unit of 33 MW) compared with 131 MW as now forecast. This is considered highly unlikely (and practically impossible assuming no further difficulties in the region) because this.would negate the large additional consumers scheduled for connection constituting some 30-35 MW (most would be operating during the peak) and 100-130 GWh. B. Comparison of Alternatives 11. During appraisal of the first power project two basic alternatives were compared, one comprising an all steam development with 33-MW initial unit size, and the second comprising a diesel/stream development with 10-MW diesels and 33-MW initial steam units. As variations to these alternatives, different steam unit sizes were also considered and a high and low growth trends were assumed to test sensitivity of the results with respect to growth. It should be noted that the highest growth rate assumed (18.3% average for 1972-1980) is well below the present forecast - assumed 1980 generation was 638 GWh compared with the present forecast of 786 GWh (1973-1980 growth rate 23.1% p.a.). 12. The general conclusion of the comparison of alternatives reached at that time were the following: (a) at whatever time in the future it is decided to change from diesel generation to steam generation, steam capacity to be installed should be about equal to the diesel capacity avail- able at the time of conversion; (b) any such development can be expected to appear relatively marginal because this is inherent in a complete technological change; (c) delay in the changeover to steam will cause higher financial requirements and will make more diesel capacity obsolete at the time of the change; and therefore it is prudent to make the change to steam plant without further delay. ANNEX 16 Page 4 of 5 13. Actual development and expected increase in demand to be met has confirmed these viewpoints and the Government's decision to convert to steam- plant generation, particularly in view of the expected higher growth rate. The previous study concluded: (a) under the assumed high growth rate (of 18.3% p.a. see 11 above) the equalizing discount rate up to which an all steam develop- ment would be the least cost development, would be 15.3%. (Sensitivity considerations indicate that at a higher growth rate--of 23% as presently forecast--the equalizing discount rate would be in the order of 17%). (b) the results are insensitive to changes in operational cost. (c) the results are little sensitive to variation in capital cost. (Doubling of capital cost would decrease the equalizing dis- count rate for the high growth rate scheme to about 13%, which is above the opportunity cost of capital in Jordan, expected to range from 10-12%). (d) the results are relative insensitive to the cost of fuel. (Tripling fuel cost to about US$10/bbl would decrease the equalizing discount rate for the present growth rate to about 14.5%, i.e. above the assumed opportunity cost of capital in Jordan.) 14. Because for the previous project the alternative all-steam develop- ments (in which unit size and growth rate were assumed as variables) were compared with a common diesel/steam development (only the growth rate was varied) the conclusions are still applicable in comparing the all-steam de- velopments among each other (the alternative common to all of these steam developments would be eliminated by subtracting net present values of two streams), provided conditions 13(a) and 13(b) mentioned above are met. Be- cause these conditions are indeed being met, assuming doubling of capital cost since the previous appraisal in accordance with actual price increases observed since 1973, the basic development scheme outlined in the previous study is sustained: JEA should install a total of three 33-MW units in the Zarqa station (for both economic and technical reasons in view of reserve capacity requirements) followed by 66-MW units. It appears necessary, de- pending on actual load growth, that by mid-1976 JEA should investigate the economic justification of installing by 1978 or 1979 additional gas turbine capacity before the fourth unit (66 MW) is commissioned at Zarqa. C. Economic Return of Project 15. The internal economic rate of return (IER) of the Project is the discount rate which equates the present values of the time streams of the attributable costs and benefits over the Project's assumed life of 25 years. In the case of this Project financial costs and benefits have been used in ANNEX 16 Page 5 of 5 the analysis since no shadow pricing of inputs and adjustment for taxes was considered appropriate. The IER is therefore expressed as an internal fi- nancial rate of return (IFR). The costs are the capital cost of the third unit at the Hussein power station (JD 5.3 million), the reconditioning of the older diesels at JEPCO's Marqa station (JD 0.4 million), Stage 2 of the 132-kV transmission system (JD 2.0 million), a portion of the 30-kV regular expansion, assumed at 200 km (JD 1.2 million), a share in the cost of dis- tribution expansion, assumed at 2 years (JD 2.0 million), plus the cost of operating the additional facilities. Willingness to pay, measured mainly through the revenues, has been used as a first approximation of the attrib- utable benefits. These revenues understate the benefits consumers receive from the Project because it is considered that a tariff increase of reason- able magnitude (say 20%) would not reduce demand significantly. This is further illustrated by the fact that large capacities in costly captive plant have been installed (and would be installed were the Project not executed) to meet the electricity needs. 16. The IFR is about 15% on the basis of the present tariffs. Assum- ing that the cost of the third unit at the Hussein station has been 20% over- estimated, or underestimated, the IFR would respectively be 13.3% and 16.7%. An increase in fuel cost by 50% would decrease the IFR to 12%. Sensitivity tests further indicate that the IFR would be about 13.5% in the event that all costs would have been underestimated by 10%. On the other hand, in the event all operating costs (excluding fuel) have been overestimated by 20%, the IFR increases to 14.4%. Assuming that inaccuracies have been made in the attribution of transmission and distribution facilities to the Project, a 20% underestimate would decrease the IFR to 12.7%, and a 20% overestimate would increase the IFR to 17%. Sensitivity to average revenue per kWh is the following: underestimate of 10%, IFR increases to 18%; overestimate of 10%, IFR decreases to 11.8%. The range of the IFR is 12-18%, with most likely average of 15%. April 1975 APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN ' Historic (JEICO) and Forecast Total (JEA and JEPCO) Sales and Total Generation (GWh) ----------------------------------------------------- Sales ------------------------------------------------------------- Existing Social & Noranl Cement Commercial (Hospitals, Total Indus- Total large Refinery Total Losses and Churches, toad- Street- Columns trial Ex- Columns Consumers to Irbid Columns GWh Domestic Government etc.) ti li g 1-5 pension 6, 7 JEPO8-10 (%.) Generation istoric 11.6 7.7 2.8 3.4 1.1 26.6 23.5 50.1 50.1 7.3(12.7) 57.4 964 15.0 8.9. 3.2 3.3 1.2 31.8 25.6 57.4 57." 8.6(13.0) 66.0 965 17.8 9.5 3.2 3.7 1.3 35.5 27.8 63.3 63.3 9.5(13.0) 72.8 966 21.1 10.2 3.4 3.9 1.9 40.3 30.4 70.9 70.9 10.8(13.2) 81.7 967 23.7 11.4 4.2 3.4 2.3 45.0 33.0 78.0 78.0 13.6(14.8) q1.6 968 28.3 13.7 4.8 3.5 2.8 53.1 35.1 88.2 88.2 16.2(15.5) 104,4 969 33.9 16.7 5.7 3.2 3.3 6e.8 39.4 102.2 102.2 20.5(16.7) 122.7 970 . 34.0 17.0 9.1 3.5 2.9 66.5 34.6 101.1 101.1 13.8(12.0) 114.9 971 4o.2 19.9 13.2 3.9 3.8 81,o 31.9 112.9 112.9 20.9(15,6) 133.8 972 47.A 24.2 20.1 4.9 4.3 101.4 33.3 134.7 134.7 23.2(14.7) 157.9 973 53.9 26.6 24.8 4.8 5.5 117.1 38.1 155.2 155.2 26.2(14.4) 181.4 974 Januiry-September 46.7 22.9 20.6 3.9 5.0 99.2 30.9 130.1 130.1 25.9(16.6) 156.0 Trend 1963-1973 (%)(3% suppression 1972 assumed) 15.6 14.0 30.9 3.5 18.2 17.1 4.3 12.7 12.7 13.1 orecast 974 60 30 27 5 7 129 44 173 173 37 (17.6) 210 975 72 35 31 5 8 151 61 212 8 10 230 45 (16.3) 275 976 86 41 38 5 9 179 75 254 28 12 294 63 '17.6) 357 977 99 47 44 5 10 205 86 291 41 24 356 101 (22,1) 457 978 - 115 54 51 6 11 237 98 335 48 84 467 117 (20.0) 584 979 132 61 59 6 13 271 111 375 50 138 562 149 20.5) 707 980 153 70 68 6 13 312 123 425 50 146 621 165 ('210) 786 Assumed suppression 3% Trend of 15.6% used Trend of 14.0% used Used li# /a growth rate (i,e, about half the tred; recent years' growth considered abnormal) Slow growth asaumed Used 14.3% growth rate (i*ecent years' growth rate considered inflated) Based on consultants' forecast, average growth 18.2%/& See page 2 See page 2 Forecast supplies to refinery, cement factory and Irbid APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Forecast Supply to Large Industrial Connections 1975 1976 1977 1978 1979 1980 New Steel Mill 1.5 M 1975 600 1,200 1,800 2,200 2,200 2,200 (400 h) (800 h) (1,200 h) (1,600 h) (1,600 h) (1,600 h) .Extension Steel Mill 1.8 M 1975 700 2,100 2,900 4,300 5,800 5,800 1.8 MW 1975 (400 h) (600 h) (800 h) (1,200 h) (1,600 h) (1,600 h) Medical City 1.5 NW 1975 2,200 3,700 3,800 3,900 4,000 4,100 (1,500 h) (2,500 i)--------------slow increase---------------------------- Ceramics 2 m 1975 5,000 6,400 6,400 6,400 6,400 6,400 (2,500 h) (3,200 h) (3,200) (3,200) (3,200) (3,200) Army Workshop 5 nM 1976 5,000 10,000 12,000 12,000 12,000 (1,000 h) (2,000 h) (2,600 h) (2,600 h) (2,600 h) Arc Furnace 3 MW 1976 3,000 6,000 9,000 9,000 9,000 (1,000 b) (2,000 h) (3,000 h) (3,000 h) (3,000 h) Airport 5 w 1976 5,000 8,500 8,500 8,500 8,500 (1,000 h) (1,700 h) (1,700 h) (1,700 h) (1,700 h) Madaba Town 0.8 M 1976 1,300 1,600 1,800 1,900 2,000 (1,600 h) (2,000 b) (2,200 h) (2,400 h) (2,500 h) Refinery 2 Nw 1975 10,000 12,000 12,000 12,000 12,000 12,000 (5,000 h) (6,000 b) (6,000 h) (6,000 h) (6,000 h) (6,000 h) Cement 12 Nw 1977 12,000 72,000 72,000 72,000 (1,000 h) (6,000 h) (6,000 h) (6,000 h) Total GWh 18.5 39.7 65,0 132.1 133.8 134.0 Cap. MW 8.8 24.4 36.4 36.4 36.4 36.4 Plant Factor % 24.0 18.6 20.4 41.4 42.0 42.0 JEPCO Supply (Less Refinery and Cement:) 8.5 27.7 41.0 48.1 49.8 49.8 JEA Supply to Refinery and Cement 10 12 24 84 84 84 JEA Supply Irbid 54 62 Total JEA Supply 10 12 24 84 138 146 p M May 1975 THE sECOND iHUSSEIN THERbjkPtWRQRJEa Internal Financial yte -f PeIr on ProJt Costa and Benefits nd thett Present Values 10013 -- - - ------------------------ apital ----------- -------------- . ' --.---F.1 ------- -----------------Operation. and 1.Intmnnce --------------- Total Cost. a Kusaeln 2 Rconditioing 132 kW 30 kV ssn6 2 .Huss.n 2 Tora[ (Capital a! Ree Net 041t 1es.ls, TrasmlaiOn Tan~ stn Dstribution Total Uat Diese Dnst Disela trt,siaon Ditrlution Operations perations) (Be.gfit) Beneit 1975 450 70 520 520 - 520 1976 1,150 200 -1.000 21350 2,350 - 2,350 1977 1,600 200 430 2,230 120 50 170 2,400 592 · 1,808 1978 1,700 300 600 1,00 3,600 244 156 73 63 56 100 694 4,294 1,952 - 2,342 1979 400 200 600 1,000 2,202 427 204 128 83 56 100 h,oo 3,206 3,076 - 130 980 427 108 -128 45 56 130 864 864 2,603 1,739 199i 427 60 128 25 96 100 796 796 2.367 1,571 1982 427 60 128 25 56 100 796 796 2.367 1,571 1983 427 60 128 25 56 100 796 796 2,367 1,571 1984 427 60 128 25 56 100 796 796 2,36, 1,571 1985 427 . 60 128 23 56 100 796 796 .,311 1,571 1986 427 128 56 100 711 711 2,357 1,571 1987 427 128 56 100 711 711 2,367 1,571 1988 427 128 56 100 711 711 2,367 1,571 1989 427 128 56 100 711 711 2,367 1,571 1990 427 128 56 100 711 711 2,367 1,571 1991 427 128 56 100 711 711 2,367 1,571 1992 427 128 56 100 711 711 2,367 1,571 1993 427 128 '36 100 711 711 2,367 1,571 1994 627 128 56 100 711 711 2,367 1,571 1995 427 128 56 100 711 711 2,367 1,571 1996 427 128 56 100 711 711 2,367 1,571 1997 427 128 56 100 711 711 2,367 1,571 1998 427 128 56 100 711 711 2,367 1,571 1999 42 128 56 100 711 - 711 2,367 1,571 2000 427 128 56 100 711 711 2,367 1,571 2001 427 128 56 100 711 711 2,367 1,571 2002 427 128 56 100 711 711 2,367 1,571 2003 427 128 56 100 711 711 2,367 1,571 ursent Valen. Dliscount iata (5) 10 4,368 347 1,696 861 1,434 8,706 3,095 364 928 235 424 757 6,003 14,709 17,91 3,082 11 4,291 343 1,671 834 1,390 8,529 2,808 542 842 226 386 689 5,493 14,022 16,286 2,264 12 4,217 338 1,646 808 1,347 8,256 2.557 320 767 217 352 629 5,042 13,398 14,940 1,542 13 - 4,144 334 1,622 784 1.306 8,190 2.338 500 701 208 3 577 4,647 12,737 13,806 1,069 14 4,074 329 1,399 760 1.267 8,029 2,146 481 643 201 298 531 4,300 12,329 12,788 459 15 4,006 325 1,576 738 1,229 7,874 1.975 464 592 193 275 491 3.990 11,864 11,864 0 16 3,940 321 1,554 716 1.193 7,724 1,824 447 547 186 255 455 3,714 11,438 11,049 - 389 17 3,897 317 1,533 691 1,158 7,580 1,690 431 506 179 237 422 3,465 11,045 10,317 - 728 18 3,815 313 1,512 675 1.124 7,939 1,569 416 475 173 220 394 3,242 10,681 9,659 - 1,022 20 3,696 306 1,472 637 1,061 7,172 1,364 388 409 161 193 344 2,859 10,031 8,5n - 1,507 Internal rånanal ps,,of Fel~rn Basic 15.0 Sensitivittes Hu-seln 2 (third unit) underetimatd by 20-t 13.1 Hussein 2 (third nit) overestia.ted by 207 1. FErl costincrser d by 50% ' 1. Å11 nost ndreaated by 10% 13. 5 Operation cost (texl. fuel), overestimated by 20% 14.4 Alcation 20% underestimatad 12.7 April 1975 Allocation 20. overestimated 17% BeArfit7 underestimated by 10% 11.8% Benafti undetitsatd by 10% 18% ANNEX 16 Appendix 3 Page 1 of 2 APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Economic Rate of Return on Project Assumptions for Costs and Attribution of Costs to the Project Capital, end 1974 prices - Hussein Stage 2 Unit: 100% of capital cost (excluding price contingency; no import duties are levied); JD 5.3 million - Reconditioning of older JEPCO diesels; JD 0.4 million - 132-kV Transmission: Second stage, to be completed by 1978; JD 2.0 million - 30-kV Transmission: 200 km; JD 1.2 million - Distribution: 2 year program, assumed to increase to JD 1 m/a; JD 2.0 million Fuel Costs - Hussein Stage 2 Unit: Generation 100 GWh in 1978 and 175 GWh (load factor 60%) from 1979 onward; heat-rate average 3,270 kcal/kWh (13,000 Btu/kWh); fuel-oil price JD 6.5/t or JD 0.187/106 Btu (US$0.603/106 Btu), i.e. JD 2,440/GWh. - Diesels: Generation of the older, reconditioned, diesels 50 GWh in 1977, 65 GWh in 1978, 85 GWh in 1979, 45 GWh in 1980, and 25 GWh for another 5 years, before retirement; cost equal to the total 1973 and 1974 fuel cost of JD 2,400/GWh (including diesel- oil for starting and lubrication). Operation and Maintenance - Hussein Stage 2 Unit: 30% of fuel cost (previous assumption was 15% of fuel cost; this implies a doubling of all costs, including spares since 1972). - Diesel Plant: JEPCO's records for 1973 and 1974 for the Marqa station show about JD 800/GWh for maintenance and JD 500/GWh for operation, or a total of JD 1,300/GWh. After reconditioning the costs are assumed to decrease to JD 1,000/GWh. ANNEX 16 Appendix 3 Page 2 of 2 - Transmission 132-kV; 1%/a of investment, transmission 30 kV 3%/a of investment; total JD 56,000/a. - Distribution: 5%/a of investment; JD 100,000/a. Sales and Revenue - Sales in GWh: Total generation of Hussein Stage 2 and recon- ditioned diesels, less 20% losses. - Revenue at an average retail price level of JD 0.016 (JD 16,000/GWh) April 1975 APPRAISAL OF ANNEX 17 THE SECOND HUSSEIN THERMAL POWER PROJECT Page 1 of 3 JORDAN Major Assumptions for Financial Forecasts (JD Thousands) JEA Balance Sheet (JD Thousands) 1. Depreciation Rates - Steam Units 3-1/2% - 132 kV Transmission System 3-1/3% - Gas Trubine 5% - Studies 15% - Buildings 2% - Vehicles, etc. 15% - Diesel Generators 7% 2. Long-Term Investments - Disbursements of Government loans which are relent to IDECO & JEPCO on the following terms: IDECO Stage I - 1970 -h% - 10 years (excl. 3 years grace) 687 JEPCO - 12/1970 -6% - 15 years (incl. 3 years grace) 3,100 IDECO Stage II - 1971 -6% - 15 years (incl. 6 years grace) 393 IDECO Stage III - 1973 -6% - 15 years (incl. 3 years grace) _70 3. Capital - From 1974, Government advances for preliminary expenditure and for all local expenditures (including cost of Marqa acquisition) provided have been included directly as grant. - Foreign expenditures for Southern Jordan Power Development Study (75%) and for ngi neering services (85%) would be also provi2a by the Government directly as grant. b. Capital Reserve - Interest received from relending to JEPCO and IDECO amounts borrowed at Nil interest from the Government. 5. Asset Revaluation - For purposes of revaluation of assets GNP deflator for 1973, 10.5% was used. ANNEX 17 Page 2 of 3 6. Long-Term Borrowing Terms: Inter- Including Date From est j Years Grace a) Hussein I - 9/1973 IDA-386 JO 7-1/4 25 3-1/2 3,290 b) Hussein I - 4/1973 Kuwait Fund 6 15 3-1/2 3,290 c) 132 kV Stage I -12/1973 U.K.-O.D.A. 6 15 2 1,351 d) Relending: IDECO I - 1970 Ex UK-ODA Nil 18 3 641 e) Relending: JEPCO -12/1970 Ex UK-ODA Nil 15 6 3,100 f) IDECO II - 1971 Ex UK-ODA Nil 18 6 393 g) Relending: IDECO III - 1973 Ex UK-ODA Nil 18 3 750 h) Project (Hussein II) - 6/75 IDA 8 1/2 25 3 1/2 1,613 i) Project (Hussein II) - 6/75 Cofinancer/Govt 8 1/2 25 3 1/2 3,286 j) Marqa Reconditioning 6/1976 Supplier's Cr. 8 1/2 7 2 355 k) Future Foreign Loans: ( i) Miscellaneous (including transmission and cement factory con- nection) - 6/1975 8 1/2 25 3 1/2 2,160 (ii) Hussein III (66 mW Steam & 24 MW Gas Tur- bine Units and transmission, etc. - 1977 8 1/2 25 3 1/2 18,571 (iii) Future Foreign Loans for thermal gen- eration, etc.- 1978 8 /2 25 3 /2 9,556 Income Statement 7. Tariff - Assumed average:1975 7.2 fils/kWh (USe2.23) 1976 9.9 fils/kWh (US03.1) 1977 10.1 fils/kWh (USt,3.1) 1978 12 fils/kWh (US03.7) 1979 13.4 fils/kWh (US04.2) 1980 16.2 fils/kWh (US05) ANNEX 17 Page 3 of 3 a. luel - Delivered Zarqa JD 6.5 metric ton, 18,000 Btu/lb in 1274 (for later years the estimates include provision for escalation). 9. Other Expenses - Salaries & wages per JEA's Management Consultant's., PMM, forecast. 10. Cost Estimates - The estimates include provision for inflation. 11. Income & Social Tax - JEA is exempt from taxes and customs duties. JEPCO Balance Sheet 12. Depreciation Rates - Diesel generators 7% - LT networkc 5% - Vehicles 15% - Buildings 2% 13. Income and Social Tax - 38 of surplus 1)4. Dividends Payable - Maximum 10% of nominal stock value 15. Legal Reserve - 10% of surplus before tax included in "Reserve" 16. Consumer's Deposits - Returnable without interest. 14% of incremental electricity revenue 17. Long-Term Borrowing Terms 1969 - Municipality 51- 10 years 40 12/70 - UK-ODA (through JEA) 6% - 15 years (3 years grace) 3,100 Income Statement 18. Sales - Forecast sales at present tariff (average 16 fils/kWh) for 1974 and 1975 and thereafter reducing at 0.2 fils/year till 1980 due to increase in the industrial load. 19. Other Revenue - (1) Income from investments increases at 10% per annum. (2) From 1977 JEA -uld pay 6% interest on Marqa purchase credit May 1975 APPRAISAL OF ANNEX 18 THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN DeveloPent Program Cost$ Including Price Escalation JD Thousands 9714 1975 1976 1977 1978 199 L0 1974-1980 Escalation % - Local Costs Base 15.0 12.0 12.0 12.0 12.0 12.0 - Foreign Costs Base 11 7.5 7.5 7.5 7.5 7.5 Escalation Factor - Local Costs Base 1.075 1.219 1.365 1.529 1.713 1.919 - woreign Costs Base 1.055 1.152 1.238 1.331 1.430 1.537 A. Ero'j a in ecution1,0. 1. roj s n I ocal 310.0 483.8 577.8 136.5 1,508.1 - Toreign 1,100.0 2,321.0 2,h06.5 304.7 - Total 2804.8 2 941.2 Bj4o.3 2. Transmission qtage I - Local 30.0 467.6 73.1 142.0 712.7 - Foreign 37.0 1,119.4 126.7 173-3 1,456.4 - Total 67.0 1,587.0 12 315.3 2,6.1 B. 19s74 Projects 64.5 261.3 570.9 587.1 45.2 1,529.0 1. Hussein II - Foreign 4 1,o&.5 1,964.6 1,696.8 419.3 - Total 6496.7 6 2,535.5 2,283.9 464.5 7.io6.4 2. Transmission stage II - Local 10.8 243.8 320.8 267.6 119.9 962.9 - Foreign -- fi- 2. 247-6 20. 185.9 1,629.7 - Total 7h.1 1,L65.4 568. 473.9 30- 2,592.6 3. Connection to Cement Factory - local a - 32.3 92.6 124.9 - Foreign 18.0 10. 848 3 530-2 - Total 4.0 137.8 47- 355.1 4. Warselleneowu: Pol* Plant - Local - 20.4 56.1 75.1 91.7 119.9 143.9 507.1 Vehicles, etc. - Local 10.0 16.1 24.1b 13.7 22.9 34.3 48.0 169.4 arqa Acquisition - 2,6i6.0 2,616.0 - Total 10.0 365 S- 2,7014.8 1.14.6 154-2 '191.9 3,292.5 C. Assumed PutWr Prets 136.5 1192.6 2,158.4 2,686.6 6,174.1 1. Hussein III Loa-3. -Foreign 1,6314.2 4,924,7 5.431t.0 6,578.1. 18'"1.3 -Total 1,770.7 6,217.3 7,59W.4 9,0 21,745.4 2. Future Expansion of Thermal Generation - Local 138 77 1,247 2,156 - Foreign 94 1.931 3,612 6.W.8 - Total 3-8 2-702 4,5 86- 153 514 960 1,627 - - Foreign . 1001 153 __ Total Cost of 1974-190 Program - Local 350 1,95.5 k,01.5 4 3,762.7 5,085.5 18,00.2 - Foreign 1.4 4 .1 4,860.3 M .,9.2.. 1,727.1. 43,M5.2 - Total 1.8 0,764.7 2 16,812.9 62,09.4 Mlay 1975 APPRAISAL OF ANNEX 19 THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Jordan Electricity Authority (JEA) Income Statements 1971-1980 JD Thousands (Case A) Actual Forecast YEAR ENDING DECEMER 31 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 2380 OPERATING REVENUE 2400 ----------------- 2420 GWHS-GENERATED 0.0 0.0 0.0 0.0 40.0 197.0 457.0 584.0 707.0 786.0 2440 -SOLD 0.0 0.0 0.0 0.0 40.0 188.0 421.0 538.0 650.0 723.0 2460 SOLD AT-FILS/KWH 1 0.0 0.0 0.0 0.0' 7.2 9.9 10.1 12.0 13.4 16.2 2500 ELECTRICITY SALES 0 0 0 0 288 1861 4252 6456 8710 11713 2520 OTHER 0 0 6 0 0 0 0 0 0 0 2600 TOTAL OP REVENUE 0 0 6 0 288 1861 _4252 6456 8710 11713 2660 OPERATING EXPENSES 2680 ------------------ 2780 GENERATION-FUEL / 0 0 0 0 158 602 1409 1921 2512 2885 2800 -OTHER 2/ 0 0 0 33 90 288 493 709 795 1136 2820 TRANSMISSION / 0 0 0 0 35 81 87 119 127 209 2880 ADMINISTRATION 16 17 25 23 54 82 98 119 146 186 3140 DEPRECIATION 1/ 1 1 2 _ 40 246 852 1258 1 2480 3300 TOTAL OP EXPENSES 1 18 _ 5 377 1299 2939 4126 _ 311 6896 3360 INCOME 3380 ------ 3400 NET OP INCOME -17 J-18 -21 -59 -89 562 1313 2330 3339 4817 3420 POLE MFG -5 -11 0 0 9 12 17 23 30 38 3440 1 NT RECEIVABLE FR. RELENDING 1 120 73 19 2514 206 15. 139 120 101 3480 NET INOEBEF INT -21 91 52 135 174 70 k8 29 3500 INTEREST PAYABLE 0 0 8 103 292 583 949 1489 2122 2857 3520 LESS CHGD TO CONST 0 0 8 103 271 164 284 472 1011 1575 3540 INTEREST EXPENSE 0 0 0 0 21 419 665 1017 1111-- 12q2- 3600 NET INCOME -21 91 52 13 1 361 823 1475 2 3674 3660 APPROPRIATION OF 3680 SURPLUS 3700 ----------------- 3720 CAPITAL RESERVE 0 125 73 194 255 206 140 12 101 3740 BAL TO GEN RESERVE -21 -3 -21 -59 -10 155 1335 225 3573 3780 RATE OF RETURN 3800 -------------- 3820 AV ELEC OP ASSETS 4.0 4.5 3.5 6.5 636.0 6200.5 13927.5 24825.0 36703.0 53041.5 3900 RATE OF RETURN 0.0 0.0 0.0 0.0 0.0 9.1 9.4 9.4 9.1 9.1 The report assumes average tariff of 9.9 fils'kWh for 1976 which would be the minimum required to meet the rate covenant (i.e. 9% rate of return). Assumed tariff increases in the subsequent years are the minimum required to meet the rate covenant. 2/ For fuel and spares foreign escalation factors listed in Annex 18 are used. 3/ Local escalation factors used (See Aniex 18) APPRAISAL OF ANNEX 20 1HE SECOND HUSSEIN THERMAL POWER PROJECT JORDANS Jordan Electricity Authority (JEA) Balance Sheets 1971-1980 JD Thousands Actual Forecast 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 6620 ASSETS 6640 ---- 6660 FIXED ASSETS 6680 ------------ 6700 PLANT IN OPERATION 11 11 12 22 1315 11444 17905 35506 45105 73211 6720 LESS:DEPRECIATION 6 7 9 12 53 3 28 2572 4633 7600 6780 NET PLANT 5 4 3 10 1 11139 16716 32934 40472 65611 6840 WORK IN PROGRESS 26 1 620 2209 6453 4150 717 3231 7764 2676 6900 POLE MPG. PLANT 103 126 126 126 155 225 320 936 594 784 6920 LESS: DEPRECIATION 21 28 35 42 56 77 106 153 221 316 6980 NET POLE MFG PLANT 8 go 9 84 9 148 212 285 373 466 7040 TOTAL FIXED ASSETS 111 233 7 2 7814 15437 24085 36450 45629 6875- W LONG TERM 8INVETES 7140 -------- 7160 LOAN TO JEPCO 1 188 1050 1248 2842 2584 13a2 1214 1046 170 710 7180 IDEcO-STAGE I 0 687 670 603 536 469 402 335 268 201 7200 -STAGE II 0 86 254 393 393 393 371 327 283 239 7220 -STAGE III 0 112 138 750 750 687 624 561 496 435 7240 IoEC0 CONSTI I 0 0 0 0 0 0 0 0 0 7280 TOTAL LONG TERM4 7300 INVESTMENTS 7 310 9588 4263 2931 2611 2269 1927 1 7360 NET CURRENT ASSETS 7380 ------------------ 7400 CURRENT ASSETS 7120 7490 CASm 1' 483 517 753 707 603 1180 670 1121 1343 3086 7460 A/C REC ELEC 0 0 0 0 24k 152 340 490 661 856 7480 INVENTORIES-ELEC 0 0 0 6 41 149 317 439 552 667 7500 INVENTORIES-POLES 84 90 105 110 108 122 137 153 171 192 7520 ACCRUALS ETC 2 0 1 40 40 4 40 40 40 90 7580 ClA SUBTOTAL 484 19 899 863 816 1643 1504 2293 2767 9891 7640 CUR LIABILITIES 7660 -- - --- --- - 7680 AIC PAYABLE ETC 22 7 13 6 133 1090 317 2031 552 2850 7720 NET CURRENT ASSETS 5 640 ... 857 6 5 2287 212 22.5 9 7780 TOTAL ASSETS 144 20 _ 7 12760 18921 27883 38931 571 72329 7840 LIABILITIES 7860 -- 7860 EQUITY 7900 --- 8020 -CAPITAL 0 0 497 907 1907 2907 5907 5907 5907 5907 8140 -RETAINED EARNINGS -58 -92 -113 -172 -274 -119 547 1882 4140 7713 6260 -CAPITAL RESERVE 0 125 198 392 647 853 1010 1150 1270 1371 8280 EMPLOISES TERM. RIS 0 0 0 0 71 709 2153 *707 8478 13916 8300 EMP TER RES ETC 4 lie 169 210 220 230 240 8360 TOTAL - ___LU * 51 --- 4 9527 13866 20025 29147 8420 LONG TERM DEBT 8440 ------ 8460 L/T DEBT EXCL PROJ 1301 2*61 3159 641 9833 13098 15219 20829 28333 39012 8480 PROPOSED IDA CR 0 0 0 0 120 44% 1119 1434 1463 1386 8500 COPIcANCER-PiaigCT 0 0 0 0 266 829 1718 2802 2950 2782 8520 GRANT FOR OP EXP 159 0 0 0 0 0 0 0 0 8580 TOTAL LIT DEBT 1460 2 US9 6441 102 143T1r18056 25065 32746 93182 8640 EQUITY & L/T DEBT 14 2 7748 1276 18921 2 3 7 7232 8740 DEBT/EQUITY 95:5 81:9 83:17 80:20 76 24 65i35 65:35 62:38 60:40 i For 1971 eaalcded JD 87,000 JEPCO repayemat in trasit and Iactuded to cash. The folloulas loas have been icluded by JE& under Equity Capital Io 1973, Wetas s tohe Reaseis I appraisal their astieted equivalents we retaisd as loans until 1976: 1973 (JD m0)Ai rtlEsgg 1. us. Finance Operatang Subeidy 237 159 2. Neional anass Counsmaels (a) Accrued Project loca costs 173 141 (b) Acuned 132 kY Ias advances 30 cc) Pole plat extension costs _ Equity Capital 1973 I/ JD 49,000 of interest due trom IDECD has been transfetted directly to this Team and the corEespeAina loans Increased as follows. IIRCD I 3D 27,000. IDECO II JD 14,000, IIDBCO III JD 8,000. This will tors pest of the capital reserve over the years. 4/ For details see Debt Statements at Amnex 22. Nay 1975 APPIlSAL OF AN4Ex 21 THE StCOND ;iSSEIN THEIkMAL POWER PROJECT JORDrN Jordan ElectrcitY Authority (JEA) Sourcus and Application of Funds 1974-1980 JD Thousands Forecast 1973 1974 1975 1976 1977 1978 1979 1980 .y74-1980 TOTAL 4200 SOURCES 4220 ------- 4240 ELECTRICITY & POLE 4260 ------------------ 4280 NET OP SURPLUS -21 -59 -89 562 1313 2330 3339 4817 12213 u, 03 -LPRECIATION 2 .....,3 40 246 a5 24PO 66707j 23 4:40 14ET CASHI-CELEC) -19 ... =a * 25 ___ 3o0 NET INCOME-POLES 0 0 9 12 17 23 30 38 129 4420 UEP-POLES 7 _10 2 3 2 7 21 4440 NET CASH-POLES 7 7 1 ____ 40 5 7 112344 4520 CASH GENERATED 1 = - 0 8 2 3645 2 740) 19227 4560 FROM RELENDING:I 600 ---- --------- 4620 INTEREST INCOME 73- 194 254 206 158 139 120 101 1172 4640 AMORTIZATION 1 3 2 1332 3 342 342 342 332c 4700 NET CASH-RELENDING 9 519 579 1538 4 481 462 443 4500 4740 INTERNAL CASH 4760 GENERATION 78 - 470 549 2373 2681 4126 5674 7852 23727 4840 GOVERNMENT EQUITY 47 410 1000 1000 3000 0 0 0 5410 4900 LONG TERM DEBTS 4920 --------------- 4940 CONSTN FINANCING 541 1109 2755 4347 4422 8520 3972 11727 41852 4960. FOR RELENOING 045 201 1 110 140 0 0 3522 5020 TOTAL LIT DEBTS 1086 n 3816 4457 4 8520 972 11727 45374 5080 OTHER 5100- 5120 EMP TER RES CHANGE 2 11 10 10 10 10 10 10 71 514Q CHANGE IN WORKING 5160 CAPITAL(EXCL CASH) -10 1 70 707 -1144 1426 -178 1967 1228 5220 TOTAL SOURCES 151 4194 544,, 8 gill 14082 12875 21556 75810 5280 APPLICATIONS 5300 ------------ 5340 CONST EXCL ENT 5360 -------------- 5380 HUSSEIN 1 478 1410 2885 3833 0 0 0 0 8128 5400 CONNECTION TO 5420 CEMENT FACTORY 0 4 139. 477 36 0 0 0 656 5460 AMMAN/ZARQA LINE-1 3 67 1587 200 315 0 0 0 2169 5480 HUSSEIN II 0 0 497 1326 2536 2748 0 0 7107 5500 MISC ELECTRICITY 1 10 37 81 89 115 154 194 680 5520 HUSSEIN III 0 0 0 0 1634 5490 4869 8115 20108 5540 AMMAN/ZARQA LINE-2 0 5 74 1165 569 780 0 0 2593 5560 FUTURE EXTENSIONS 0 0 0 0 0 1768 4217 7356 13341 5580 MARQA PURCHASE 0. 0 0 0 2616 0 0 0 2616 5620 TOTAL JEA FIXED 5640 ASSETS EXTENSIONS 482 1496 5219 7082 7 10901 9240 15665 5 5680 INVESTMENT LOANS 5700 FOR CONSTNI/ 5720 --------------- 5740 JEPCO DEVELOPMENT 198 1852 0 0 0 0 0 0 1852 5760 IDECO STAGE II 168 139 0 0 0 0 0 0 139 5780 IDECO STAGE III 26 0 0 0 0 0 0 612 5840 TOTAL INVEST14ENTS ,9 2§Q3 0 0 0 0 0 0 203 5900 DEBT SERVICE 3/ 5920 -------------- 5940 AMORTIZATION 535 38 38 305 877 1241 1291 1291 5081 5960 INTEREST 8 183 949 1489 2122 2857 6020 TOTAL DEBT SERVICE 5 141 30 888 182 2730 3413 4148 13476 6080 SUB-TOTAL APPLNS 1417 4240 7970 92 13631 12653 19813 7 6160 CHANGE IN CASH 236 -46 -104 577 -510 451 222 1743 2333 6200 TOTAL APPLICATIONS 16ra 4194 5445 8547 9 14082 12875 21556 75810 6260 DETS SERVICE COVER 0.1 3.3 1.7 2.7 1.5 1.5 1.7 1.9 11 For details see Investment Statements at Annex 23 2/ Only JD 73,000 out of the interest receivables JD 122,000, was paid and the balance was included in the loan. 3! For details see Debt Statements at Annex 22. 4/ JD 49,000 of interest due fron IDECO has been transferred directly to this Reserve and the corresponding loans ince-ased as follows: IDECO I JD 27,000, IDECO II JD 14,000, IDECO III JD 8,000. This will form part of the capital reserve over the years, 5! 1973 Amortization includes JD 38,000 plus JD 57,000 - Pole plant extension (for IDECO Pole manufacture) transferred to Gover-nent Equity. May 1975 APPRAISAL OF ANNEX 22 THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Jordan Electricity Authority (JEA) Debt Statements 1971-1980 JD Thousands Forecast 1974 1975 1976 1977 9 199 17u 1974-1980 TOTAL 1000 IDA CREDIT 386-JO 1030 -BORROWINGS 551 1100 1045 325 0 0 0 3021 1040 -AMORTIZATION 0 0 0 153 153 153 153 612 1080 -BALANCE 820 1920 2965 3137 2984 2831 2678 1110 -INTEREST 39 99 177 221 222 211 200 1169 1160 -COMMITMENT CHGE 21 14 6 2 1 0 0 44 1500 KF LOAN-HUSSEIN I 1530 -BORROWINGS 549 1100 1044 325 0 0 0 3018 1540 -AMORTIZATION 0 0 0 286 286 286 286 1144 1580 -BALANCE 821 1921 2965 3004 2718 2432 2146 1610 -INTEREST 33 82 147 179 172 154 137 904 2000 LOANS-EXPANSIONS 2030 -BORROWINGS 9 169 1306 1918 6608 8552 11727 30289 2040 -AMORTIZATION 0 0 0 0 50 100 100 250 2080 -BALANCE 9 178 1484 3402 9960 18412 30039 2110 -INTEREST 0 8 71 208 568 1206 2059 4119 2160 -COMMITMENT CHGE 8 15 10 68 141 121 45 409 2500 IDA CREDIT-PROJECT 2530 -BORROWINGS 0 120 324 675 390 104 0 1613 2540 -AMORTIZATION 0 0 0 0 75 75 75 225 2580 -BALANCE 0 120 444 1119 1434 1463 1388 2610 -INTEREST 0 5 23 63 102 116 114 422 2660 -COMMITMENT CHGE 0 12 16 6 3 1 1 38 3000 COFINANCER-PROJECT 3030 -BORROWINGS 0 266 563 889 1252 316 0 3286 3040 -AMORTIZATION 0 0 0 0 168 168 168 504 3080 -BALANCE 0 266 829 1718 2802 2950 2782 3110 -INTEREST 0 11 44 102 181 230 229 796 3160 -COMMITMENT CHGE 0 11 21 15 8 3 3 61 3500 SUPPLIERS CR-MARQA 3530 -BORROWINGS 0 0 65 290 0 0 0 355 3540 -AMORTIZATION 0 0 0 0 71 71 71 213 3580 -BALANCE 0 0 65 355 284 213 142 3610 -INTEREST 0 0 3 18 27 21 15 84 4000 JEPCO DEV (EX UK) 4030 -BORROWINGS 1584 0 0 0 0 0 0 1584 4040 -AMORTIZATION 0 0 100 200 200 200 200 900 4080 -BALANCE 3100 3100 3000 2800 2600 2400 2200 4500 IDECO I (EX UK) 4530 -BORROWINGS 0 0 0 0 0 0 0 0 4540 -AMORTIZATION 38 38 38 38 38 38 38 266 4580 -BALANCE 508 470 432 394 356 318 280 5000 IDECO STAGES II&II 5030 -BORROWINGS 587 0 0 0 0 0 0 587 5040 -AMORTIZATION . 0 0 63 96 96 96 96 447 5080 -BALANCE 1143 1143 1080 984 888 792 696 5500 132KV STG I(EX UK) 5530 -BORROWlNGS 40 1061 110 140 0 - 0 0 1351 5540 -AMORTIZATION 0 0 104 .104 104 104 104 520 5580 -BALANCE 40 1101 1107 1143 1039 935 831 5610 -INTEREST 1 34 66 67 65 59 53 347 9500 DEBT SUMMARY 9510 -BORROWINGS 3320 3816 4457 4562 8250 8972 11727 45104 9520 -REPAYMENTS 3 38 305 877 1241 1291 1291 5081 9530 -BALANCE 6441 10219 14371 18056 25065 32746 43182 43182 9550 -COMMITMENT FEES 29 53 53 91 152 125 49 551 9560 -INTEREST 74 239 530 858 1337 1997 2808 7843 9570 -INTEREST & CF 103 292 583 949 1489 2122 2857 8395 9580 -DEBT SERVICE 141 330 888 1826 2730 3413 4148 13476 9595 TOTAL OPENING 0 0 0 0 0 0 0 0 9650 AVE MAT YRS 13.0 13.8 14.8 15.3 16.4 16.7 16.6 15.2 9660 AVE INT % 2.15 3.51 4.74 5.85 6.91 7.34 7.53 5.43 APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN Jordan Electricity Authority ( JEA) Investments Statements 1971-1980 JD Thousands Historic Forecast 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1974-19S0 TOTAL 1000 JEPCO DEVELOPMENT 1030 -BORROWINGS 188 862 198 1852 0 0 0 0 0 0 1852 1040 -AMORTIZATION 0 0 0 258 258 1202 168 168 168 168 2390 1080 -BALANCE 188 1050 . 1248 2842 2584 1382 1214 1046 878 710 1110 -INTEREST 6 37 69 123 163 119 78 68 58 48 655 1500 IDECO I 1530 -BORROWINGS 0 687 0 0 0 0 0 0 0 0 0 1540 -AMORTIZATION 0 0. 17 67 67 67 67 67 67 67 469 1580 -BALANCE 0 687 670 603 536 469 402 335 268 201 1610 -INTEREST 0 14 27 25 23 20 17 15 12 9 122 2000 IDECO II 2030 -BORROWINGS 0 86 168 139 0 0 0 0 0 0 139 2040 -AMORTIZATION 0 0 0 0 0 0 22 44 44 44 154 2080 -BALANCE 0 86 254 393 393 393 371 327 283 239 2110 -INTEREST 0 3 10 19 24 24 23 21 18 16 144 2500 IDECO III 2530 -BORROWINGS 0 112 26 612 0 0 0 0 0 0 612 2540 -AMORTIZATION 0 0 0 0 0 63 63 63 63 63 315 2580 -BALANCE 0 112 138 750 750 687 624 561 498 435 - 2610 -INTEREST 0 3 7 27 45 43 39 36 32 28 249 DEBT SUMMARY 9510 -BORROWINGS 188 1747 392 2603 0 0 0 0 0 0 2603 9520 -REPAYMENTS 0 0 17 325 325 1332 320 342 342 342 3328 9530 -BALANCE 188 1935 2310 4588 4263 2931 2611 2269 1927 1585 1585 9560 -INTEREST 6 57 114 194 254 206 158 139 120 101 1172 9570 -INTEREST & CF 6 57 114 194 254 206 153 139 120 101 1172 > 9580 -DEBT SERVICE 6 57 131 519 579 1538 478 481 462 443 4500 9650 AVE MAT YRS 12.0 10.1 9.3 7.6 6.7 5.5 4.7 3.9 3.1 2.4 4.8 9660 AVE INT % 6.38 5.37 5.37 5.62 5.74 5.73 5.70 5.70 5.72 5.75 5.71 March 1975 ANNEX 24 Page 1 of 5 APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT (JORDAN) JEPCO Financial Situation Fixed Assets and Long-Term Debt 1. JEPCO's actual financial situation at December 31, 1973, was sound as shown by its Balance Sheet on page 3 of this Annex. The JD 6.8 million in net fixed assets mainly represented the balance of the original cost of its three diesel electric generating stations at Ras-al-Ain (built 1948) Zarqa (built 1958) and Marqa (first unit 1962), plus its distribution networks in and around Amman, some 330 km of 44-kV and 6.6-kV transmission and asset revaluation. In 1971, JEPCO started on a 5-year construction program financed by a JD 3.1 million (E3.6 million) UK loan to the Government and relent (via JEA) to JEPCO at 6% over 15 years including a 3-year grace period. JD 1.1 million of this was for 3 x 6 MW diesel generating sets at Marqa and the remaining JD 2.0 million for 33-kV transmission. The report assumes that by 1977 Ras-al-Ain and Zarqa diesels would be retired and Marqa would be acquired by JEA. Equity 2. As of September 1974, JD 4.6 million was paid up out of JEPCO's authorized nominal capital of JD 6 million. Only 10% of its shares was held by the Government or municipalities, the remainder being private holdings. Total equity of JD 5.4 million in 1973 is expected to increase to JD 8 million by 1980 despite the annual distribution of reasonable amount of dividends. JEPCO's debt/equity ratio was 17:83 in 1973 and is only expected to reach 30:70 in 1974 before dropping to 14:86 in 1976 and declining thereafter at a uniform rate of 2% per annum in debt. Current Assets 3. In 1973 JEPCO's current assets were 1.26 times current liabilities. In 1971 its consumer accounts receivable was at an abnormally high level of JD 244,000 (equivalent to 66 days billings). JEPCO has since improved its procedures and has reduced consumer outstandings to about 15.7% of sales or the equivalent of 57 days billings, which is an acceptable level. ANNEX 24 Page 2 of 5 Income Statements 4. JEPCO's income statements (pages 3 through 5 of this Annex) show that the tariffs, 1/ would be adequate till 1978. With the advent of JEA's Zarqa power station JEPCO's rate of return is expected to drop to about 7.9% in 1979. It would drop to .a figure as low as 3.8% in 1980 unless tariffs are suitably revised as recommended by NEEB to permit JEPCO a minimum of 9% return. In estimating JEPCO's expenditure and income, it was assumed that due to the forecast increase in the industrial load at the average growth rate of 27.9% per year the average retail tariff will reduce from 16 fils/kWh in 1975 to 15 fils/kWh in 1980. Other major financial assumptions are shown in Annex 17. Sources ad'Applications of Funds 5. JEPCO's future construction program through 1980 is shown in its Sources and Applications (page 5 of this Annex) and comprises general exten- sions and reinforcements of its distribution network costing about JD 600,000 annually. This will be additional to the cost of the 4 diesel units and 33-kV lines mentioned in 1 above and to miscellaneous items such as vehicles and office equipment, etc. Debt service for the forecast period except 1976 is covered at least 2.5 times by net cash generation. In the year 1976 the ratio appears low due to the accelerated repayment of part of the UK devel- opment loan it received through JEA (see Annex,22),. 1/ JEPCO's forecast tariffs are based on JEA's forecast average selling prices at constant (1974) JD (see 'Case B' forecasts at Annex 25). Any change in JEA's tariffs to provide for inflation and on account of re- valuation of assets (see Case A at Annexes 19 thru 21) is expected to bp pasaed on to the consumers. APPRAISAL OF TE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN he Jordanian Electric Power Company (JEICO) Income Statemerts 1971-1980 JD Thousands JD1 US$3.1 Year Ended December 31st 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 ------------ Actual-------------- -----------------------------------------Estimated-------------------------------------------- Operating Revenue Units Generated - GWhs 134 158 181 210 235 160 -- - Units purchased from JEA - GWh - - - - 30 176 397 454 512 577 Total GWhs Generated/Purchased 134 158 181 210 265 336 397 452 Losses % . 16.o% 15.0% 15.0% 17.6% 17.0 16.1 15.4 15.6 15.6 15.9 Units sold - GWh 113 135 154 173 220 282 332 38.3 432 485 Purchase price (fils/kWh) - 8.0 8.1 8.1 8.4 8. 9.5 Average Sales Price (fils/kWh) 17.5 15,8 15.7 16.1 16 15.8 15.6 15.4 15.2 15.0 Sale of electricty 1,976 2,135 2,418 2,793 3,520 4,456 5,179 5,898 7,275 Meter rents 39 50 57 67 83 104 125 161 Other operating revenue 12 12 17 12 10 10 10 10 10 10 Total Operating Revenue 2,027 2,197 2,492 2,872 3,613 4,570 5,314 6,072 6,768 7,494 Operati Expenses CiNtions-afuel 317 381 477 574 600 243 - - - other 173 192 280 323 325 198 Purchased power - - - - 240 1,426 3,216 3,814 4, 06 5,482 Transmission & stribution 175 194 223 257 297 342 393 453 522 601 Administration 260 312 302 349 372 458 263 302 346 398 Depreciation 32? 351 398 523 608 587 394 439 489 Provision for income and social tax 30P 281 226 291 411 482 414 441 379 210 Total Operating Expenses 1,549 1,711 1 2,317 2,853 3,736 4,680 5,449 6,242 7,236 Net operati curplus 478 486 586 555 760 834 634 623 526 258 Other 1o fom Investments 9 9 15 46 51 56 101 149 138 127 Less other expenses 248 - - - - Net Income from Investments 9 9 (233) 46 51 56 197 149 138 127 Net Surplus before Interest 487 495 353 601 811 890 741 772 664 385 Interest payable 4 46 2 1932/ 164 120 79 68 58 48 Net Surplus 483 449 351 408 647 770 662 704 606 337 Appropriation of Surplus: Dividends declared 271 291 293 381 445 450 455 460 Legal reserve etc. 80 74 58 70 111 113 80 96 101 45 U1nappropriated surplus for year 132 T- 0 ,tW) _ _207 1 1 Average Net Fixed Assets in Operation 4,097 4,322 5,603 7,178 7,772 7,987 6,462/ 6,542 6,679 6,762 Rate of Return 11.7 11.2 10.5 7.7 9.9 10.4 9.8 9.5 7.9 1/ 1971 sales include the settlement of a dispute with the oil refinery. Excluding this the average would be 16.1 fils/kWh 2/ 75% of JEA's 1975 gas turbine generation is assumed to be sold to TEPCO's at about 8 fils/kWh and the balance is assumed to be sold , to the refinery at marginal cost per its agreement with the Government. 3j 50% of the administrative expenses relates to running the thtee generating station. Marqa to be sold to JEA in 1977 and the other two stations to be retired. 4/ Capital taxes due to revaluation @ 20% 3/ Includes JD68915 interest due in 1973 Marqa is expected to be transferred early in 1977 and therefore the average fixed assets in same as the fixed assets in operation at the end of the year 7/ Aver purchase prices ar the forecast vEA's selling prices of corstant (1974) JD (please see Case B forecasts at Annex 25). Any price increase by JEA to PrOv e for inflations ande on account revaluation of assets (see Case A at Annexes 19 thru 21) is expected to be passed on to consumsers. 16ay 1975 APPRAISAL OF ANNEX 24 TfHE SECOND HUSSEIN THERMAL POWER PROJFE'1, Iage 4 of 5 ( JORDA14) ,,nr,anian Ele.tri, Power Company (JEPCO) Balane Sheets 1971-1980 JD Thousand-' 1971 92 L973 1974 '975 197 1977 18 S ---- Actual --------- -----------------------------Estimated --------------- - . ---....- -- ASSETS 1/ 2/ Fixed Ar ets ir lperation 6,238 7,023 i,9- 11,094 11,868 12,7'I 02 10,342 L,442 12,042 .e- e'reprelatior. ,133 484 ,2 3,405 4 013 4,602 3,763/ 4,2;9 708 5,253 :* *!-e AŽzs ir. tr7.ion 4,105 r,53 ,c7 7,609 7,5 o,0 6,62To2O,746,8 n-- 'gress 4 564 38 954 841 336 7 7 8 8 To'at Net Tixed Assets 4,109 5 6,755 8,643 8. 6]96 55 6, 6,63 6,797 Long '~-m Investments Investments in Limited -mpnies 230 215 215 237 261 286 415 447 581 719 Poident Fund Investents 76 79 109 112 115 118 121 124 127 130 Provident Fund Enployees Housing Las 14 14 l 14 14 14 14 14 Credit to JEA on Marqa Sale - - - 1,500 1,200 900 600 Total Long Ter Investments 290 308 38 363 418 2,050 1,785 1,622 Net Crrent Asset; Cash . 244 337 L65 - 303 516 291 439 651 102 420 Accounts Pe'ivatic rumers 330 348 381 419 528 668 777 885 985 1,091 Accouni ece-vabse. ers 420 415 99 400 400 450 470 500 550 600 Inventories 423 746 874 777 831 890 717 759 8c1 843 Other debit balance. 32 23 89 40 40 40 40 40 40 Subtotal Current AsG-s 449 1,869 1,6o8 1939 2.315 2,339 2,443 2,835 ',073 3,253 rrent Lis.bilities A-cunt, IPayable (849) 3808) (665) (456) (505) (391) (100) -1 "103 (100 Accrued Io.,,e Tax and Social Tax (3371 '379) (325) <474) (291) '411) (462) (368) (423 3 Dividends Payable in Cash (1 91) (293) (381) (445) (450) (455) (460) (46 Sabtotal Current liabilitier (1,457) 1,478) (r,283) (1,311) (1,241) (1,252) (1,017) (928) (5)) 929 Total Net Current Assets (8) 39 325 628 1.074 1,087 1,453 ,968 2,142 2,109 TOTAL AW12Z2S4 391 5 082 764- 10 199960 972 10,38 17 06 13,69 5IT127 D LO1G TERM DEBT Capital.Stok 'inluing I stock dividends) 2,718 2,986 4,21½ 4,700 5,200 5,700 5,700 5,70 0 5,7 Accumulated Os-plus 142 226 226 183 274 481 608 756 .96 614 legal Reserve 501 585 643 713 824 937 1,017 1,113 1,214 1,259 Rehabilitation Grant 214 214 214 214 214 214 214 214 214 214 (remion lap I1tal Stok 15 56 70 70 - _- - TOTAL E.-ITY 3,590 4,o67 5,364 5,880 6 512 7,332 7,539 7,733 7,924 7,791 D1ereI Mabilities;1 ¯¯ -rener' rpoits 259 303 357 41o 512 643 744 84, 939 1,03e Ireerve 'r -ployees indemnity 80 80 80 -80 80 80 80 80 80 80 Fr e f, provident fund 242 275 3- 402 456 511 567 625 685 750 Total 'eferred Liabilities 5 81 58 782 892 1,048 1,234 1,391 1,550 1,701 1,868 Long Ters ebt Aan Mn,iTOIpality 32 28 24 20 16 12 8 4 - - JEA (Ex UK Funds) 188 049 1,248 2,842 2,584 1,382 1,214 1,046 278 710 Cota long Tern Debt 1,077 1,272 2,862 2,600 1,394 1,222 1,050 878 710 TOTAL EQUITY AND LONG TERM DEBT 4,391 5 82 7.418 9,634 60 9,96o 7 10 10506 10 3 tebt: E11ty Patio 5:95 19:81 17-83 30:70 26:74 14:86 12:88 11:8 9:91 7:93 Includes JD 1,211,000 adjustment'for revaluation of assets. Marqa assets sold to JEA. / Reduced by JD 1,214,00, the amount of accumulated depreciation for MArga. APPRAISAL OF THE SECOND HUSSEIN THERMAL POWER PROJECT JORDAN The Jordanian Electric Power Company (JEPCO) Sources and Applications of Funds 1973-1980 JD Thousands Actual Forecast 1973 1974 1975 1976 1977 1978 1979 1980 Internal Sources Net Surplus Before Interest 353 601 811 890 741 772 664 385 Depreciation 398 523 608 587 394 439 489 545 Marqa Sale 2,616 Amortization Receivable 300 300 300 Internal Cash Generation 751 1,124 1,419 1,477 3,751 1,511 1,453 1,230 Long-Term Borrowing 199 1,852 Other Sources Capital Stock Issue (Including Stock Dividends) 1,225 489 500 500 Capital Stock Premium 14 Consumer Deposits 54 53 102 131 101 101 94 99 Provident Fund 70 57 54 55 56 58 60 65 Total Sources 2,313 3,575 2,075 2,133 3,908 1,670 1,607 Operational Requirements & Investments Working Capital Change (66) 303 446 13 366 515 174 (33) Debt Service 6 455 426 1,326 251 24o 230 216 Dividends Paid 291 293 381 445 450 455 460 465 Investments (including Marqa Credit to JEA) 30 25 27 28 1,632 35 137 141 Total 261 1,076 1280 1812 2699 1, 001 789 Funds Available (Required) for Expension 2,082 2,499 795 321 1,209 425 606 605 Requirements for Construction, etc. Construction (Excluding interest) and other Capital requirements 1,315 1,545 774 851 622 600 600 600 Surplus (Deficit) of Funds for the Year 767 954 21 (530) 587 (175) 6 5 Times Debt Service Covered 125 2.5 3.3 1.1 14.9 6.3 6.3 5.7 March 1975 ANNEX 25 APPRAISAL OF THE SECOND HUSSEIN THERMAL PROJECT JORDAN Summary of Significant Financial Data Reflecting Various Assumptions for Cases A & B Case A Forecasts with Price Escalation Provision for the Development Program Costs and Operation Costs, - and assets revalued every year (Annexes 18 thru 23) 1976 1977 1978 1979 1980 Tariff fils/kWh 9.9 10.1 12.0 13.4 16.2 Rate of Return 9.1 9.4 9.4 9.1 9.1 Debt Service Coverage 2.7 1.5 1.5 1.7 1.9 Debt/Equity 76:24 65:35 65:35 62:38 60:40 Case B Forecasts at Constant 1974 Prices (Appendix (4 pages) to this Annex) 1976 1977 1978 1979 1980 Tariff fils/kWh 8.3 8.3 8.3 8.7 9.5 Rate of Return 9.2 11.7 9.4 9.2 9.2 Debt Service Coverage 2.6 1.3 1.1 1.2 1.3 Debt/Equity 79:21 72:28 70:30 69:31 68:32 APPRAISAL OF ANNEX 25 Appendix THE SECOND HUSSEIN THERMAL POWER PROJECT Page 1 of 4 JORDAN Financial Statement at Constant 1974 Prices Income Statements 1971-1980 JD Thousands Actual (Case B) Forecast 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 2380 OPERATING REVENUE 2400 ----------------- 2420 GWHS-GENERATED 0.0 0.0 0.0 0.0 40.0 197.0 457.0 584.0 707.0 786.0 2440 -SOLD 0.0 0.0 0.0 0.0 40.0 188.0 421.0 538.0 650.0 723.0 2460 SOLD AT-FILS/KWH 0.0 0.0 0.0 0.0 7.2 8.3 8.3 8.3 8.7 9.5 2500 ELECTRICITY SALES 0 0 0 0 288 1560 3494 4465 5655 6869 2520 OTHER 0 0 6 0 0 0 0 0 0 0 2600 TOTAL OP REVENUE 0 0 6 0 288 1560 349 4 4465 56 6869 2660 OPERATING EXPENSES 2680 ------------------ 2780 GENERATION-FUEL 0 0 0 0 150 523 1138 1443 1757 1877 2800 -OTHER 0 0 0 33 85 250 398 539 556 739 2820 TRANSMISSION 0 0 0 0 33 70 70 89 89 136 2880 ADMINISTRATION 16 17 25 23 50 67 72 70 85 97 3140 DEPRECIATION 1 1 2 3 _ 4 1_ E __ 0 __3 1067 1227 3300 TOTAL OP EXPENSES 1 16 27 _ 352 1108 2268 289C _ 554 4076 3360 INCOME 3380 ------ 3400 NET OP INCOME -17 -18 -21 -59 -64 452 1226 1565 2101 2793 3420 POLE MFG -5 -11 0 0 9 11 14 1c 22 26 344o INT REC RELENDING 1 120 7 j,91 254 206 158 1__ 120 101 3480 NET INCOME 3EF INT -21 91 52 135 199 66 7_ 1398 - 7223 _2926 3560 INTEREST PAYABLE 0 0 8 101 284 555 861 1275 1730 2210 320 LESS CHGD TO CONST 0 0 8 101 256 145 229 380 829 1356 3540 INTEREST EXPENSE 0 0 0 0 28 410 632 895 _0l 854 3000 NET INCOME -21 91 20 1 25 766 831 1342 2066 3000 APPROPRIATION OF 3u00 SURPLUS 3700 ----------------- 3720 CAPITAL RESERVE 0 125 73 194 255 206 157 140 120 101 3740 BAL TO GEN RESERVE -21 -34 -21 -59 -84 53 6c 691 1222 1965 3780 RATE OF RETURN 3800 -------------- 3820 AV ELEC OP ASSETS 4.0 4.5 3.5 6.5 548.5 4927.5 10442.5 16778.5 22799.0 30412.0 3500 RATE OF RETURN 0.0 0.0 0.0 0.0 0.0 9.2 11.7 9.4 9.2 9.2 APPRAISAL OF ANNEX 25 Appendix ThE SECOND HUSSEIN THERL POWER PRrITECT Page 2 of 4 JORDAN Financial Statements at Constant 1974 Prices (Cdse R Balance Sheets 1971-1980 JD Thousands Actual Forecast AS OF DECEMBER 31 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 6620 ASSETS 6640 ------ 6660 FIXED ASSETS 6680 ------------ 6700 PLANT IN OPERATION 11 11 12 22 1133 9012 12951 23027 26812 40547 6720 LESS:DEPRECIATION 6 7 _ 12 46 244 834 8 2654 3881 6780 NET PLANT 4 _ 10 1087 8768 12117 211440 24158 36666 6840 WORK IN PROGRESS 26 11 620 2207 6177 4437 7520 6669 11173 22 6900 POLE MFG. PLANT 103 126 125 126 145 191 246 306 376 451 6920 LESS: DEPRECIATION 21 28 _ 42 50 61 _ 76 95 120 151 6980 NET POLE MFG PLANT 82 9 9 84 _ 130 170 211 256 300 7040 TOTAL FIXED ASSETS 113 233 714 2 73 13 19807 28320 35 46965 7100 LONG TERM 7120 INVESTMENTS 7140 ----------- 7160 LOAN TO JEPCO 188 1050 1248 2842 2584 1382 1214 1046 878 710 7180 IDECO-STAGE I 0 .687 673 603 536 469 402 335 268 201 7200 -STAGE II 0 86 254 393 393 393 371 327 283 239 7220 -STAGE III 0 112 133 750 750 687 624 561 498 435 7240 IDECO CONST I& II .57 0 0 0 0 0 0 0 0 0 7280 TOTAL LONG TERM 7300 INVESTMENTS 761 1 2310 4 4263 2931 2 2 1927 1585 7360 NET CURRENT ASSETS 7380 ------------------- 7400 CURRENT ASSETS 7420 -------------- 7440 CASH 483 517 753 709 969 1894 506 817 782 503 7460 A/C REC ELEC 0 0 0 0 24 130 291 372 464 572 7480 INVENTORIES-ELEC 0 0 0 6 39 129 256 330 386 435 7500 INVENTORIES-POLES 84 90 105 110 100 100 100 100 100 100 7520 ACCRUALS ETC 28 40 41 40 40 40 40 40 40 40 7580 C/A SUBTOTAL 5 647 8 8 1172 2293 1193 1659 1772 1650 7640 CUR LIABILITIES 7660 --------------- 7680 A/C PAYABLE ETC 22 7 13 6 119 799 256 1290 386 1885 7720 NET CURRENT ASSETS 5 640 886 8 1053 1494 937 3 1386 -235 7780 TOTAL ASSETS 1447 2806 3910 7748 12675 17760 23355 3 38900 48315 7840 LIABILITIES 7860 ----------- 7880 EQUITY 7900 ------ 8020 -CAPITAL 0 0 497 907 1907 2907 4907 6907 8407 9407 8140 -RETAINED EARNINGS -58 -92 -113 -172 -256 -203 406 1097 2319 4284 8260 -CAPITAL RESERVE 0 125 19B 392 647 853 1010 1150 1270 1371 8280 EMP TER RES 0 7 93f 20 30 40 50 6o 70 80 8300 IDECO 1-15 YR INT 45 111 160- 160 160 160 160 160 160 160 8360 TOTAL __ 151 75 1 2488 3 6 937 12226 15302 8420 LONG TERM DEBT 8440 -------------- 8460 L/T DEBT EXCL PROJ 1301 2461 3159 6441 9824 12917 14637 18604 23536 30118 8480 PROPOSED IDA CR 0 0 0 0 120 444 1119 1434 1463 1388 6500 COFINANCER-PROJECT 0 0 0 0 243 642 1066 1546 1675 1507 8520 GRANT FOR OP EXP 1 _ 196 2 0 0 0 0 0 0 0 8580 TOTAL L/T DEBT 1460 2657 _ 5 61441 10187 11403 16822 21584 26614 33013 8640 EQUITY & L/T DEBT 1447 2808 3910 7 12675 17760 _3 10 38900 48315 8740 DEBT/EQUITY 95:5 80:20 83:17 80:20 79:21 72:28 70:30 69:31 68:32 APPRAISAL OF ANNEX 25 Appendix THE SECOND HUSSEIN THERMAL POWER PROJECT Page 3 of 4 J{RDAN Financial Statements at Constant 1974 Prices (Case _ Sources and Applications of Funds 1973-1980 JD Thousands Actual Forecast 1973 1974 1975 1976 1977 1978 1979 1980 1974-1980 TOTAL 4200 SOURCES 4220 ------- 4240 ELECTRICITY F POLE 4260 ------------------ 4280 NET OP SURPLUS -21 -59 -64 452 1226 1569 2101 2793 8018 4300 -DEPRECIATION 2 1 8 590 ~ 3~Q1 227 4340 NET CASH-(ELEC) -30 50 1dj I~~ 02 4380 NET INCOME-POLES 0 0 9 11 14 22 2 100 4400 DEP-POLES 7 8 11 1 31 116 4440 NET CASH-POLES 7 7 17 22 2 3 216 4520 CASH GENERATED -12 -4 1 672 1845 2359 3215 4077 12106 4580 FROM RELENDING: 4600 ---- --------- 4620 INTEREST INCOME 73 194 254 206 158 139 120 101 1172 4640 AMORTIZATION 17 3 1 1332 320 342 342 342 3328 4700 NET CASH-RELENDING 90 5 579 1538 478 481 462 443 4500 4740 INTERNAL CASH 4760 GENERATION 7 470 5 2210 2323 2840 367 4520 16606 4840 rOVERNMENT EQUITY 497 410 1000 1000 2000 2000 1500 1000 8910 4900 LONG TERM DEBTS 4920 --------------- 4940 CONSTN FINANCING 541 1109 2813 4011 3556 6003 6381 7630 31503 4960 FOR RELENDING 5 2211 1061 110. 140 0 0 0 3522 5020 TOTAL L/T DEBTS 1086 3320 3 4121 3696 6oo3 6381 7630 35025 5080 OTHER 5100 ---- 5120 EMP TER RES CHANGE 2 11 10 10 10 10 10 10 71 5140 CHANGE IN WORKING 5160 CAPITAL(EXCL CASH) -10 1 66 484 -831 79 -1052 1342 871 5220 TOTAL SOURCES 1653 19'7825 7198 11732 10516 14502 61483 5280 APPLICATIONS 5300 ------------- 5340 CONST EXCL INT 5360 -------------- 5380 HUSSEIN 1 478 1410 2730 3233 0 0 0 0 7373 5400 CONNECTION TO 5420 CEMENT FACTORY 0 4 130 410 29 0 0 0 573 5460 AMMAN/ZARQA LINE-1 3 67 1496 170 244 0 0 0 1977 5480 HUSSEIN II 0 0 474 1161 2039 2100 0 0 5774 5500 MISC ELECTRICITY 1 10 34 66 65 75 90 100 440 5520 HUSSEIN III 0 0 0 0 1420 4900 4640 6680 17640 5540 AMMAN/ZARQA LINE-2 0 5 70 1000 435 530 0 0 2040 5560 FUTURE EXTENSIONS 0 0 0 0 0 1300 2800 4500 8600 5580 MARQA PURCHASE 0 0 0 0 2616 0 0 0 2616 5620 TOTAL JEA FIXED 5640 ASSETS EXTENSIONS 482 1496 4 6040 6848 8905 73 11280 47033 5680 INVESTMENT LOANS 5700 FOR CONSTN 5720 ---------------- 5740 JEPCO DEVELOPMENT 198 1852 0 0 0 0 0 0 1852 5760 IDECO STAGE II 168 139 0 0 0 0 0 0 139 5780 IDECO STAGE III 26 612 0 0 0 0 0 0 612 5840 TOTAL INVESTMENTS 3 2603 0 0 0 0 0 0 2603 5900 DEBT SERVICE 5920 -------------- 5940 AMORTIZATION 535 38 38 305 877 1241 1291 1291 5081 5960 INTEREST 8 101 284 5 861 1275 1730 2210 7016 6020 TOTAL DEBT SERVICE 5 1 3 860 1738 2 3021 3501 12097 6080 SUB-TOTAL APPLNS 1417 4238 5 6900 8586 11421 10551 14781 6 6160 CHANGE IN CASH 236 -44 260 925 -1388 311 -35 -279 -250 6200 TOTAL APPLICATIONS 1653 4194 5 7825 7198 11732 10516 14502 61483 6260 DEBT SERVICE COVER 0.1 3.4 1.8 2.6 1.3 1.1 1.2 1.3 1.4 APPRAISAL OF ANNEX 25 Appendix THE SECOND HUSSEIN THERMAL POWER PROJECT Page 4 of 4 JORDAN Financial Statements at Constant 1974 Prices Debt Statements 1974-1980 JD Thousands Forecast 1974 1975 1976 1977 1978 1979 1980 1974-1980 TOTAL 1000 IDA CREDIT 386-JO 1030 -BORROWINGS 551 1100 1045 325 0 0 0 3021 1040 -AMORTIZATION 0 0 0 153 153 153 153 612 1080 -BALANCE 820 1920 2965 3137 2984 2831 2678 0 1110 -INTEREST 39 99 177 221 222 211 200 1169 1160 -COMMITMENT CHGE 21 14 6 2 1 0 0 44 1500 KF LOAN-HUSSEIN I 1530 -BORROWINGS 549 1100 1044 325 0 0 0 3018 1540 -AMORTIZATION 0 0 0 286 286 286 286 1144 1580 -BALANCE 821 1921 2965 3004 2718 2432 2146 0 1610 '-INTEREST 33 82 147 179 172 154 137 904 2000 LOANS-EXPANSIONS 2030 -BORROWINGS 9 160 1134 1549 4965 5980 7630 21427 2040 -AMORTIZATION 0 0 0 0 50 100 100 250 2080 -BALANCE 9 169 1303 2852 7767 13647 21177 0 2110 -INTEREST 0 8 63 177 451 910 1480 3089 2160 -COMMITMENT CHGE 7 13 8 52 125 128 78 411 2500 IDA CREDIT-PROJECT 2530 -BORROWINGS 0 120 324 675 390 104 0 1613 2540 -AMORTIZATION 0 0 0 - 0 75 75 75 225 2580 -BALANCE 0 120 444 1119 1434 1463 1388 0 2610 -INTEREST 0 5 23 63 102 116 114 422 2660 -COMMITMENT CHGE 0 12 16 6 3 1 1 38 3000 COFINANCER-PROJECT 3030 -BORROWINGS 0 243 399 424 648 297 0 2011 3040 -AMORTIZATION 0 0 0 0 168 168 168 504 3080 -BALANCE 0 243 642 1066 1546 1675 1507 0 3110 -INTEREST 0 10 35 68 104 129 127 474 3160 -COMMITMENT CHGE 0 7 12 9 5 3 8 43 3500 SUPPLIERS CR-MARQA 3530 -BORROWINGS 0 0 65 258 0 0 0 323 3540 -AMORTIZATION 0 0 0 0 71 71 71 213 3580 -BALANCE 0 0 65 323 252 181 110 0 3610 -INTEREST 0 0 3 16 24 18 12 74 4000 JEPCO DEV (EX UK) 4030 -BORROWINGS 1584 0 0 0 0 0 0 1584 4040 -AMORTIZATION 0 0 100 200 200 200 200 900 4080 -BALANCE 3100 3100 3000 2800 2600 2400 2200 0 4500 IDECO I (EX UK) 4530 -BORROWINGS 0 0 0 0 0 0 0 0 4540 -AMORTIZATION 38 38 38 38 38 38 38 266 4580 -BALANCE 508 470 432 394 356 318 280 0 5000 IDECO STAGES II11 5030 -BORROWINGS 587 0 0 0 0 0 0 587 5040 -AMORTIZATION 0 0 63 96 96 96 96 447 5080 -BALANCE 1143 1143 1080 984 888 792 696 0 5500 132KV STG ICEX UK) 5530 -BORROWINGS 40 1061 110 140 0 0 0 13511' 5540 -AMORTIZATION 0 0 104 104 104 104 104 520 5580 -BALANCE 40 1101 1107 1143 1039 935 831 0 5610 -INTEREST 1 34 66 67 65 59 53 347 9500 DEBT SUMMARY 9510 -BORROWINGS 3320 3784 4121 3696 6003 6381 7630 34935 9520 -REPAYMENTS 38 38 305 877 1241 1291 1291 5081 9530 -BALANCE 6441 10187 14003 16822 21584 26674 33013 33013 9550 -COMMITMENT FEES 27 46 42 69 134 132 86 536 9560 -INTEREST 74 238 513 792 1141 1598 2124 6480 9570 -INTEREST & CF 101 284 555 861 1275 1730 2210 7016 9580 -DEBT SERVICE 139 322 860 1738 2516 3021 3501 12097 9595 TOTAL OPENING 0 0 0 0 0 0 0 0 9650 AVE MAT YRS 13.0 13.8 14.6 14.8 15.8 16.1 16.0 14.9 9660 AVE INT 4 2.10 3.42 4.59 5.59 6.64 7.17 7.41 5.27 I/ It is assumed that cofinancer loan would be reduced to the extent of the Project cost reduction based on 1974 prices. May 1975  IBRD -10290R APRIL 1975 To Nazareth To Damascu -1 r, h Shuj ehlamt To Haifa Kufer -,i Ab. S.'i Eenea Mashar / Mafraq-- Tubas Nob usJarash NAIABlA To De,, Allah - Jaffa Salfit Zar a Salt P32e 33yaderrned Male El Bira R a 'rEl Azrq To Gaza ~Jerlh th une N'r lMwqa Jerusalem Mt. Nebo- Betlehrradaba Qas el Kharanaa To Ga--z------- Helbron.. SAUDI A R A BlI A T,, -•b JORDAN •MAIN POWER SYSTEMS K.ak EXISTING AND FUTURE POWER LINES AND STATIONS A,,0 C Hussein Thermal Power Station Stage l (Credit 386 JO) Maza- Hussern -l¯hermial Power Station Stage I(Project) } sa Diesel Power Station Tailh 33 kV Overhead Lines. --- Existing --- - - Under Construction Q . ls Jinz-- - Future Rashadlya El Hasa-- 32 kV Overhead Line to be Constructed for Project 32 kV Overhead Line - Future 0 Citles, Towns and Vilages Shaubak National Highways Second Class Roons - --- -Other Roods - RaIways (ý Wadi Musa El Jafr 0, -- Truce Line, 1948 - Interrationoi Boundcries -- Wadis j Mudflats and Wadi Beds 2 - . --~ Rvers -30 Ras en Naqb Ris300- \ A Quwe'ra 5 10 20 30 40 St 60 70 KiLOMETERS I ilo 20 30 40 MILESSUD ARA A E GYP T i v I B , ,, ,, ,J 1 0 ,