Nicaragua - Ninth Power Project

FILiE COPY Report No. 1254b-NI Appraisal of the Ninth Power Project Empresa Nacional de Luz y Fuerza (Enalufl Nicaragua March 30, 1977 Energy Division Latin America and the Caribbean Regional Office FOR OFFICIAL USE ONLY H Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency Equivalents Currency Unit = Cordoba (C$) C$1 = 100 centavos = USf1h.29 C$1 million = US$142,857 uS$1 = C$7.oo US41 = 7 cet&avove US mil 1 = 0.7 centavos Units and Measures kW = kilowatt MW = megawatt = 1,000 kW kWh = kilowatt hour GWh = gigawatt hour = 1,000,000 kWh kV = kilovolt = 1,000 volt kVA = kilo volt-ampere MVA = mega volt-ampere = 1,000 kilo volt-ampere m = meter = 3.28 feet km = kilometer = 0.621 miles km2 = square kilometer = 0.386 square mile kg = kilogram = 2.2046 pounds t = metric ton = 1,000 kg 1 US gallon = 3.785 liters 1 barrel = 42 US gallons = 158.97 liters 1 t petroleum = approximately 7 barrels Abbreviations and Acronyms ENALUF = Empresa Nacional de Luz y Fuerza ENEE = Empresa Nacional de Energia Electrica (Honduras) ICE = Instituto Costarricense de Electricidad (Costa Rica) CACM Central American Common Market CABEI = Central American Bank.for Economic Integration US-AID = United States Agency for International Development IDB = Inter-American Development Bank UNDP = United Nations Development Programme VI? = Venezuelan Investment Fund NIEE = National Institute for Electric Energy NIS = National Interconnected System (of ENALUF) NPC = National Planning Council NPD 5 National Planning Directorate CNASN Compafea Nacional de Seguros de Nicaragua AA Arthur Andersen and Company MOP Ministerio de Obras P6blicas INFONAC National Development Institute Fiscal Year ENALUF keeps its accounts on a calendar year basis.  FOR OFFICIAL USE ONLY APPRAISAL OF THE NINTH POWER PROJECT - NICARAGUA Power Transmission Project Empresa Nacional de Luz y Fuerza (ENALUF) Table of Contents Page No. SUMMARY AND CONCLUSIONS ....................................... i-iv 1. INTRODUCTION ............................................. 1 2. THE SECTOR ............................................... 3 Energy Resources and Uses ........................... 3 Sector Organization ................................. 3 Power Sector Organization Study ..................... 4 Energy Sector Development Strategy .................. 4 Electricity Supply and Consumption .................. 4 Rural Electrification ............................... 6 Electricity Tariffs ................................. 6 Power Sector Development ............................ 7 3. THE BORROWER ............................................. 8 General .............................................. 8 Organization and Management ......................... 8 Insurance ........................................... 10 Management Information Systems and Audit .... ........ 10 Performance Indicators .............................. 10 4. THE PROGRAM AND PROJECT .................................. 10 Investment Program 1976-1980 ........................ 10 Project Concept and Description ..................... 11 Project Cost ........................................ 13 Engineering ......................................... 15 Procurement and Disbursements ....................... 15 Environmental Effects ............................... 16 Project Risks ....................................... 16 5. JUSTIFICATION OF THE PROJECT ............................. 17 Project Objectives .................................. 17 Demand and Supply Forecast .......................... 17 Low-Income Area Electrification Component .... ....... 18 This report has been prepared by Messrs. Helmut Wieseman and Andrew Waldrop. This document has a restricted distribution and may be used by recipients only in the performance of their omcial duties. Its contents may not otherwise be disclosed without World lank authorization.  Table of Contents (Continued) Page No. Least-Cost Solution ....... ........... ............... 18 Return on Investment ...... .......................... 18 6. FINANCE .................................................. 19 Summary ........ .............. .. ..................... 19 Past Earnings and Financial Position ....... .. ....... 19 Financing Plan ...................................... 20 Future Earnings and Financial Position ...... .. ...... 22 7. AGREEMENTS REACHED AND RECOMMENDATIONS ................... 22  APPRAISAL OF THE NINTH POWER PROJECT - NICARAGUA Power Transmission Project Empresa Nacional de Luz y Fuerza (ENALUF) List of Annexes 1. Summary of Previous Bank Lending for Power 2. Organization of the Electric Power Sector and Supply of Electricity 3. Electrification Index and Consumption by Area - 1970 vs. 1974, for Nicaragua 4. Outline of Terms of Reference for a Power Sector Organization Study for Nicaragua 5. Actual and Forecast Generation for Interconnected System 1966-1987 6. Interconnections with Honduras and Costa Rica; Momotombo Geothermal Project; Hydropower Development of the Matagalpa River (COPALAR) 7. Organization Chart of ENALUF 8. ENALUF's Investment Program 1976-1981 9. Project Cost and Construction Schedule 10. Project Implementation Schedule 11. Estimated Schedule of Loan Disbursements 12. Method to be Employed for Contracting Consultant Services 13. Electricity Demand Forecast 14. Actual and Forecast Sales by Client Category 1966-1981 15. Summary of Current Tariffs in Nicaragua 16. Financial History and Projections: Attachment 1 - Key Financial Ratios 2 - Income Statements 3 - Sources and Applications of Funds Statements 4 - Balance Sheets 5 - Statement of Long-term Debt 6 - Forecast Disbursements and Amortization Schedule 1976-81 7 - Forecast Interest Charged to Construction 1976-81 8 - Forecast Interest Charged to Income 1976-81 9 - Actual and Proposed Terms Applicable to Long-term Debt, 1972-81 10 - Notes and Assumptions Used in Projections 17. Performance Indicators 18. Return on Investments 19. Low-Income Area Electrification 20. Least-Cost Analysis 21. Training of ENALUF Staff MAP IBRD 3697R - ENALUF's Main Power System   NICARAGUA APPRAISAL OF ThE NINTH POWER PROJECT Empresa Nacional de Luz y Fuerza (ENALUF) SUMMARY AND CONCLUSIONS i. This report appraises the ninth power project in Nicaragua, for which the Empresa Nacional de Luz y Fuerza (ENALUF) has requested financial assistance from the Bank. ii. Since 1953, the Bank Group has made eight loans and one credit, totalling US$71.3 million, to Nicaragua's electric power sector. ENALUF - an autonomous Government-owned corporation which is responsible for practi- cally all public electric generation and transmission - and its predecessor have been the beneficiaries of all but the third loan of US$0.4 million in 1955. The first seven projects have been completed successfully, although with some delays and cost overruns, which were particularly serious in the case of the seventh project. Through its participation in these projects the Bank has contributed to the financing of all of ENALUF's generating capacity. iii. The electric portion of the earthquake reconstruction project, financed in 1973 by Credit 389-NI (Part C) has had minor delays in procure- ment. Most of the damaged facilities have been rehabilitated and service restored. This part of the project should be completed within appraisal cost estimates, with disbursements ending in early 1977. iv. The eighth power project, financed in 1972 by Loan 840-NI (jointly with the Central American Bank for Economic Integration - CABEI), is expected to be completed in 1977 with a delay of about 14 months. The delay resulted from late agreement on the interconnection contract with Honduras (the contract was a condition of loan effectiveness), late procurement and late equipment deliveries, and the consequences of the 1972 earthquake. Together with inflation in Nicaragua and abroad, it led to cost overruns of US$14.6 million (42%). The overruns and additions to the project, costing of US$9.7 million (resulting from increases in construction standards and quantities of certain items notto be financed by the Bank) are being financed by a loan to ENALUF of US$16.1 million equiv- alent from the Venezuelan Investment Fund (VIF) which was secured with technical assistance from the Bank, by internal cash generation and by Government con- tributions. Despite these increases, the project continues to be economically justified. The top management of ENALUF is strongly centralized in the Execu- tive President and two Vice-Presidents. The need for improving this arrange- ment has become progressively more evident with the increased burdens imposed on ENALUF first by the 1972 earthquake and subsequently by the energy crisis. These strained ENALUF's financial situation and led to major changes in the power investment program. The Bank has assisted ENALUF in addressing these problems and further improvements are expected during the implementation of the proposed project.  - ii - v. The National Planning Council (NPC) now has overall responsibility for energy policy and planning, technical planning for electric power system expansion, however, remains with ENALUF. In this context, Nicaragua's power sector organization needs to be updated. The proposed project provides for a sector organization study and a long-range master plan for development of the electric power system. vi. Recent changes in the relative prices of primary energy have led to a reassessment of the previous strategy to expand thermal generation facilities, which resulted in savings of capital but was not conducive to energy self- sufficiency. The Government is now aiming at reducing the dependence on imported oil through balanced development and use of geothermal and hydro- electric resources to meet the demand for electricity, growing at about 12% annually. Consequently, Nicaragua has accelerated preparation of both the Momotombo geothermal and the Copalar hydropower project for which external financing is expected to be sought. vii. Nicaragua has extended electric distribution into most of its popu- lated areas, so that over 40% of the population now has access to service. About 23% of sales go to residential consumers, 47% to industry and 8% to irrigation. During 1976-1981, ENALUF's normal distribution expansion, its new IDB-financed rural electrification project, and the distribution facilities included in the proposed project to serve low-income areas are expected to provide access to service for an additional 400,000 people. viii. Average electricity tariffs are adequate at present; however, there are structural imbalances resulting from promotional tariffs (providing incentives to industry and irrigation customers) which are below incremental production cost. To prepare the basis for new tariffs (which would encourage most economical use of electricity) ENALUF agreed to carry out and review with the Bank, prior to implementation of its results, a tariff study based on the concept of long-term marginal cost of service. ENALUF also agreed to auto- matically adjust its rates for changes in fuel and purchased power costs. ix. The 1974 amendment to ENALUF's Constituent Law reflects the consul- tant's recommendations--prepared under the eighth power project--for ENALUF's reorganization. The organizational structure requires ENALUF's Executive President, who is also Board Chairman, to exercise a strongly centralized control. To assist him in supervising day-to-day operations and also in the implementation of the improvement programs agreed with the Bank, ENALUF has appointed a General Coordinator under satisfactory terms of reference. This Coordinator will be assisted by experts in procurement and training and also in other areas which he will identify. The experts will be engaged under arrangements agreed with the Bank. Conditions of effectiveness of the loan are (i) the engagement of experts in procurement and training and (ii) presen- tation of terms of reference for other experts, both to be satisfactory to the Bank. For the growing tasks ahead, ENALUF will also need to widen its manage- ment base along functional lines.  - iii - x. The proposed project would basically provide for: (a) the Nicaraguan portion of an interconnection line to the Costa Rican system; (b) transmission and distribution items which would complement the facilities for generation and transmission supplied under the eighth project; (c) a national load dispatch center to operate the ENALUF system and the Honduras-Nicaragua-Costa Rica interconnection more effectively; and (d) studies of tariffs, the future organization of the Nicaraguan power sector, institutional improvements for ENALUF (including a training component) and the preparation of a master plan. Due to the nature of its components, the project is not expected to have a major effect upon the environment. xi. The proposed project is estimated to cost US$32.3 million with a foreign component of about US$20.2 million; total requirements (including financial charges during construction) are US$36.2 million and US$24.2 million, respectively. The proposed loan of US$22.0 million would cover the foreign cost and about US$1.8 million in interest and other charges on the loan during construction. The remaining costs would be covered by ENALUF's net internal contribution to expansion. xii. For the various phases of the project, ENALUF has agreed to engage consultants who would mainly carry out their services within ENALUF's project groups to promote counterpart training and the transfer of technological know- how. xiii. To obtain more competitive prices, procurement of similar equipment and materials would be packaged to increase the size of orders. All contracts for Bank-financed works, goods and services (other than engineering and train- ing) would be awarded through international competitive bidding, except for standardized and imported items required in small quantities in a total amount of US$0.55 million. Retroactive financing is recommended up to US$0.8 million for expenditures for studies and engineering to advance the preparation of the project. As under the eighth project, the Bank would agree to the extension of preferences to local or Central American Common Market manufacturers of the lower of 15% of the CIF landed price or 50% of the applicable import duty. xiv. The project's physical components would be the least-cost alterna- tives. In view of the difficulty of allocating benefits -- measured in terms of revenues -- to the project or its components, a rate of return on the investment program has been estimated. Based on 1976 tariffs, the rate of return would be 13.1%; if sunk costs incurred prior to 1976 are excluded, the return would increase to 16.2%. xv. ENALUF's financial performance was poor in 1973 and 1974 due to the December 1972 earthquake, the energy crisis (which adversely affected sales), and the additions ENALUF made to the eighth project. As result of 1974-1975 tariff action, however, performance improved in 1975-1976 and should continue to do so. ENALUF would earn at least 8.5% on annually revalued net operating assets and cover its debt service at least 1.49 times on an annual basis. ENALUF's 1976-1980 expansion program provides for implementation of the projects described in paragraph vi and is, therefore, extremely ambitious.  - iv - It amounts to US$286.2 million (including interest during construction). The financing of this program is based on ENALUF's net internal contribution to expansion of US$63.3 milion (22%), borrowing of US$202.6 million (71%) and Government contributions for rural electrification and geothermal development of US$20.2 million (7%). ENALUF has agreed to undertake major expansions, other than the proposed projects, only after satisfactory economic justifi- cation and with adequate financing. xvi. The prQposed project would form a suitable basis for a Bank loan of US$22.0 million for a term of 17 years, including 3.5 years of grace, made to ENALUF and guaranteed by the Republic of Nicaragua.  NICARAGUA APPRAISAL OF THE NINTH POWER PROJECT Power Transmission Project Empresa Nacional de Luz y Fuerza (ENALUF) 1. INTRODUCTION 1.01 This report appraises a transmission and distribution project in Nicaragua, for which Empresa Nacional de Luz y Fuerza (ENALUF), an autonomous Government entity, has requested financial assistance from the Bank. Since 1953, the electric power sector has received eight Bank loans and one IDA credit totalling US$71.3 million, of which seven, totalling US$65.5 million, were made to ENALUF and its predecessor. Annex 1 contains a description of the main project components. The first seven of these projects have been completed successfully, although with some delay and cost overruns. These were particularly serious in the case of the seventh project (completed in 1972) which encountered substantial unforeseen geological problems. These problems arose during the construction of the dam, canal and power tunnel for the main project component, a 50 MW hydro power plant, but they did not affect its economic justification. Completion of another major component, a 40 MW steam electric unit, was delayed by strikes in the main contractor's country; this delay had only a temporary effect on the reliability of ENALUF's power production. The Bank, through its participation in these projects, has contributed to the financing of all of ENALUF's generating capacity in opera- tion or under construction and most of the transmission facilities. 1.02 The ongoing earthquake electric reconstruction project, executed by ENALUF (Part C of Credit 389-NI), is expected to be completed in early 1977. Most of the damaged facilities have been rehabilitated, and ENALUF has installed the distribution facilities needed to serve the relocated population and commerce with electricity. Due to delays in procurement, disbursements have been late, but cost overruns are not expected. 1.03 Although the eighth power project (Loan 840-NI) -- financed jointly with the Central American Bank for Economic Integration (CABEI) and consisting mainly of the 100 MW Tiscuco steam electric plant, near Puerto Somoza, asso- ciated transmission system and the interconnection with Honduras -- is still under construction, the lessons learned in the implementation of this project have guided the preparation of the proposed loan. 1.04 The eighth project is expected to be substantially completed in mid-1977, with a delay, on average, of 14 months compared with the appraisal. The delay was primarily due to: (i) late loan effectiveness (because of delay in signing the interconnection contract with Honduras); (ii) delayed delivery of equipment due to strikes; and (iii) consequences of the 1972 earthquake  - 2 - which delayed local works and services. Faced with these problems, ENALUF was slow in responding to the additional challenges posed by the sharp increases in its fuel costs since late 1973. ENALUF top management is strongly central- ized in the Executive President and two Vice-Presidents. The need for improv- ing this arrangement has become progressively more evident with the increased burdens imposed on ENALUF first by the 1972 earthquake and subsequently by the energy crisis. During the preparation of the proposed ninth project the Bank has assisted ENALUF in addressing these problems. Further improvements are expected during the implementation of the project (see paras. 3.04-3.07). Cost overruns, in connection with the eighth project, amount to US$24.3 million (70% of the appraisal estimate of US$34.7 million). Only US$14.6 million (42% over appraisal), however, are directly related to the original project; the balance of US$9.7 million resulted from additional works. 1/ Despite these increases, the project continues to be economically justified. To cover the financing requirements arising from the cost overrun, ENALUF has obtained, with technical assistance from the Bank, a loan from the Venezuelan Investment Fund (VIF) of US$16.1 million equivalent (Annex 16). 1.05 Originally, the proposed ninth project was expected to include the first geothermal unit at Momotombo (para. 2.20). Since the geothermal studies have been delayed and ENALUF and the Government now intend to finance the first unit with bilateral and suppliers' credit, the proposed project provides mainly for: (i) the interconnection with the Costa Rican system; (ii) high priority transmission and distribution works; (iii) a national load dispatch center to control the national system and the interconnections to Honduras and Costa Rica; and (iv) consultant services, studies and training (para. 4.02). The transmission and distribution works would complement ENALUF's facilities which are being built under the eighth project. 1.06 The proposed ninth project is an integral part of ENALUF's 1976-1980 expansion program. The total and foreign cost of this program are respectively, US$264.1 million and US$168.5 million (excluding US$22.1 million in financing charges); the total and foreign cost of the proposed ninth project are US$32.3 million and about US$20.2 million (excluding US$3.9 million in financing charges). 1.07 A loan of US$22.0 million is proposed to provide for the project's foreign financing requirement (including US$1.8 million in financing charges on the proposed loan). The loan would help ENALUF by (i) providing a portion of the US$202.6 million equivalent borrowing required for its 1976-1980 con- struction program for which it has obtained US$47.6 million so far; (ii) pro- moting regional integration through interconnection of power systems; (iii) strengthening ENALUF management; and (iv) improving sector organization and expansion planning. 1.08 This report is based on a feasibility study prepared by ENALUF, the findings of the December 1975-January 1976 appraisal mission composed of Messrs. Helmut Wieseman, Andrew Waldrop and John E. Graves, and information provided subsequently by ENALUF. 1/Resulting from ENALUF's decision to increase construction qualities and standards on certain items (operator's village, access road) not to be financed by the Bank.  - 3 - 2. THE SECTOR Energy Resources and Uses 2.01 Nicaragua has no proven commercially exploitable fuel deposits; exploration for oil and gas by private oil companies, however, has recently been intensified. Coal and fuels derived from oil are imported at present. The country's geological characteristics indicate that it has a large geothermal potential, which is presently being studied at the Momotombo volcano. In connection with the Central American Hydrometeorological Project sponsored by the United Nations, Nicaraguan hydropower potential was estimated at around 1,600 MW firm capacity, of which a large proportion would be from low-head hydro plants. If fully developed, annual energy in an average hydroyear would be about 11,000 GWh. Further hydropower studies are under way (para. 2.21). 2.02 Traditional sources (wood, bagasse) supplied 55% of primary energy in 1960 and 36% in 1973, when a total of about 1.1 million tons of petroleum- equivalent energy was used. Traditional energy is rapidly being replaced by commercial, petroleum-based energy. Coal usage is insignificant. Commer- cial energy requirements in 1973 were estimated at about 690,000 tons of petroleum equivalent, of which about 590,000 tons were supplied by imported oil and the rest by hydroelectricity. From 1960 to 1973 commercial energy demand rose at an average annual rate of about 10%, which was substantially above the real GDP growth rate of about 6.5%. Attachment 3 of Annex 2 pro- vides further details. Sector Organization 2.03 In January 1975, the Government strengthened planning by constitut- ing the National Planning Council (NPC). This Council has overall responsi- bility for technical studies and analysis and for preparing plans and recom- mendations for most sectors of the economy, for the consideration of the President of Nicaragua. Through its recently established National Planning Directorate (NPD), NPC is formulating plans and policies for the overall energy sector to implement the strategy outlined in paragraph 2.08. 2.04 The Electric Industry Law of April 1957 regulates public electricity supply. The National Institute for Electric Energy (NIEE) is the regulatory agency of the Central Government, responsible for the development, coordina- tion, regulation, control and supervision of electricity service. Due to technical and financial limitations of NIEE, however, the study and program- ming for optimum development of the sector, utilizing national energy resources, is assigned to ENALUF (an autonomous Government corporation) which supplies 87% of electricity generated in the country. The proposed sector organization study (para. 2.06) is expected to review this situation. 2.05 In addition to ENALUF, five cooperatives, 13 private companies and three municipalities distribute electricity; they account for 17% of sales at retail to 37% of the country's electricity clients (Annex 2).  -4- Power Sector Organization Study 2.06 In view of the need for substantial changes in Nicaragua's energy development strategy the Government is assessing the future organization of the energy sector. In the power sector there is need for formulation of (a) detailed development policies; (b) long-range plans; and (c) priorities for expansion. To provide the framework for future decisions in these areas and to rationalize sector organization and development, the proposed loan provides funds for a sector organization study. This study would be carried out by consultants working under NPD direction with terms of reference accept- able to the Bank (Annex 4) to which the Government has agreed. The study would be fully coordinated with the preparation of the master plan (para. 2.22) under the direction of ENALUF which has agreed to provide full coopera- tion. Energy Sector Development Strategy 2.07 Before the oil crisis, Nicaragua's energy sector development was basically oriented by a lack of low cost hydropower sites and by petroleum prices generally lower than those of its neighbors (Honduras and Costa Rica), the latter because of special incentives legislated for the local refinery. Due to the cost advantage of thermal generation in Nicaragua and abundant hydro energy of its neighbors, the country planned to import primary energy based on oil and hydropower. Preparation of investment-intensive projects (geothermal and large hydro) was given low priority. The country consequently continued expanding electric generation facilities on a thermal basis, fore- going energy self-sufficiency, while avoiding the larger investment required for building hydro or geothermal stations. Accordingly, ENALUF undertook, in 1972, the construction of the Tiscuco 100 MW steam electric station with the intent of selling excess power to Honduras which had better prospects for economic high-head hydropower. Thermal power would be needed in Honduras during the construction period of the El Cajon project in that country and to provide protection against dry years. The Bank supported this strategy by financing the construction of the station and an interconnection between Nicaragua and Honduras (Loans 840-NI and 841-HO). 2.08 Recent changes in the relative prices of primary energy (Annex 2) have led to a reassessment of this strategy. The Government is now aiming at reducing dependence on imported oil through balanced development and use of local geothermal and hydroelectric energy. Preparation of the Momotombo geothermal and Copalar hydropower projects (para. 2.20) has been intensified with the intent of reducing annual oil consumption for electricity production from a peak of about 30% of the total projected for 1978 to about 5% in 1985. Fuel oil will continue to be used for transport and industry. Electricity Supply and Consumption 2.09 Nicaragua has an area of 118,360 km2 and a population of about 2.1 million. Electricity supply is concentrated largely in the north, central and Pacific coast areas. The Pacific coast area, which includes all the major  towns (Managua, Leon, Masaya, Granada, Chinandega, Corinto) is the most devel- oped and industrialized part of the country. It consumes over 90% of all electric energy produced in the country, and 60% of its population enjoys access to electric service (compared to a national average of 41%). 2.10 Annex 2 shows the electric energy supply situation in 1974 in detail; it is summarized as follows: Generation in GWh Hydro Steam Diesel Gas Total % Public Service ENALUF 352.1 396.7 11.5 3.8 764.1 87.4 Private Companies 0.5 - 7.0 - 7.5 0.9 Subtotal 352.6 396.7 18.5 3.8 771.6 88.3 Self-Generation 16.0 30.4 56.2 - 102.6 11.7 Total 368.6 427.1 74.7 3.8 874.2 100.0 These figures show the high proportion of public supply and the importance of ENALUF in the sector. ENALUF's share of distribution sales at the retail level (85% in 1974) is expected to decrease to about 78% in 1990 because its sales are growing more slowly than those of other retailers. 2.11 The industrial sector is the largest consumer of publicly supplied electricity in Nicaragua, accounting for 47% of total power sales in 1974. On a national basis, the sales by client category have grown as follows in recent years: Average 1970 Sales 1974 Sales Annual Growth GWh % GWh % x Industrial 188.3 43.9 298.0 46.9 12.2 Irrigation 17.8 4.1 53.0 8.3 31.4 Pumping 15.9 3.7 27.7 4.4 14.9 Subtotal 222.0 51.7 378.7 59.6 14.3 Residential 117.4 27.4 145.8 22.9 5.5 Commercial 57.7 13.4 72.2 11.4 5.8 Government 21.6 5.0 24.2 3.8 2.9 Street Lighting 10.8 2.5 14.7 2.3 8.0 Total 429.5 100.0 635.6 100.0 10.3  Irrigation is the fastest growing category. Growth in the residential, com- mercial and Government categories was slowed by the effects of the Managua earthquake of December 1972 (Annex 14). Access to electric service in the country is shown in Annex 3; it was 32% in 1970 and was estimated at 41% for 1975. The largest increase in the rate of electrification is in the area served by cooperatives. Rural Electrification 2.12 ENALUF supplies electricity at wholesale to five cooperatives serving rural areas. The cooperatives began with a 1964 pilot project near Masaya followed by four cooperatives, set up between 1969 and 1975 under the First National Plan for Rural Electrification with financial assistance from US-AID, in the area towird the Pacific Ocean. The five cooperatives supply an area of about 20,000 km with a population of about 180,000 (or about 18% of an estimated rural population of one million). 2.13 In order to serve more rural clients directly, ENALUF, since late 1975, has been undertaking the first stage of the Second National Electrifica- tion Plan at a cost of about US$21 million, with IDB financing US$16.5 million and the Government contributing US$4.4 million equivalent as equity. With this project ENALUF is expected to provide about 70,000 people in the Matagalpa and Rama areas with electric service. 2.14 In line with the Bank's lending strategy to help spread the benefits of growth to more people, the proposed loan includes funds for extending elec- tric service into low-income (mainly urban) locations in the concession areas of ENALUF (para. 4.02). This would enable a comparison, in about three years, of the results obtained by the cooperatives and by ENALUF in increasing elec- trification and would assist the Government in determining the priorities for future development of Nicaragua's electric power sector. Electricity Tariffs 2.15 Although legal responsibility for electricity tariff regulation rests with NIEE, actual tariffs are determined (with ENALUF's informal assist- ance) at the highest level of Government. Current average electricity prices reflect the Government's policy of providing incentives to commercial agri- culture and industry through low, promotional tariffs. For instance, the 1976 price per kWh to irrigation and industrial clients will average USJ2.2 and USU4.1 respectively, compared with a fuel cost of USd2.1 per kWh sold from the Tiscuco steam electric station (at 1976 fuel prices). On the other hand, residential clients pay an average of USJ8.8 and commercial clients USJ6.4 in addition to substantial contributions in aid of construction and connection fees. Annex 15 shows the present tariffs of ENALUF, electric cooperatives, and other retailers, indicating notable differences in pricing. 2.16 In view of the Government's promotion of decentralization, the differ- ences between tariffs of ENALUF and those of other distributors need to be reconciled. Nicaragua's unfavorable resource endowment may require promo- tional tariffs to be adjusted to encourage more efficient use of electricity.  2.17 To prepare the basis for new tariffs, ENALUF agreed to carry out (as part of the proposed project) a nation-wide tariff study based on the concept of long-term marginal cost of service. The recommendations of this study would be reviewed with NIEE and the Bank. 2.18 ENALUF's present tariff schedule includes a nonautomatic fuel adjustment clause, on the basis of which ENALUF raised tariffs twice, in February and October 1974, albeit with a delay. As late application of the clause has caused notable loss of revenues, ENALUF and the Government agreed to an automatic adjustment of ENALUF's rates to cover additional operating expenses resulting from variations in the cost of fuel and purchased power. Power Sector Development 2.19 Since the interconnection with Honduras was commissioned in October 1976, ENALUF has supplemented its generation of electricity by purchases from the Empresa Nacional de Energia Electrica (ENEE) in Honduras. Beginning 1979 power would also be purchased from the Instituto Costarricense de Electricidad (ICE) in Costa Rica. As shown in Annex 5, ENALUF has projected substantial purchases from Costa Rica (averaging about 145 GWh from 1979 on) and after 1982 from El Cajon hydro electric project in Honduras (up to 77 MW and 590 GWh in 1984). 2.20 The next generation addition after the Tiscuco plant would be one 35 MW and two 50 MW geothermal units at the Momotombo volcano (Annex 6). This project, originally studied by the United Nations Development Programme (UNDP), is now being prepared with contributions provided by the Government. ENALUF completed the feasibility study for the first unit in late 1976 and expects to install the unit under a supplier-financed turnkey project by mid-1979; the second and third units are planned for operation in 1980 and 1981. In addition to the geothermal plant, ENALUF expects (based on a pre- feasibility study prepared with US-AID help) to build for 1985 operation a hydro electric plant with an ultimate capacity of 330 MW at Copalar on the Matagalpa river. 2.21 The above mentioned plans for the interconnection to Costa Rica, the Momotombo geothermal plant and the construction of Copalar are subject to confirmation by further studies and to firm agreements on interchanges with the neighboring systems: (a) the Momotombo geothermal reservoir is very complex; it may not yield 135 MW on a continuous basis. However, there is substan- tial manifestation of a large resource at the San Jacinto geothermal field just north of Momotombo. ENALUF is making plans to extend its geothermal investigation into this area as part of the master plan (para. 2.22); (b) the completion of the arrangements for financing the interconnec- tion with the ICE system may delay its construction (Annex 6); (c) the feasibility study for Copalar, which is being prepared for the Government by a Nicaraguan-Canadian consulting consortium,  - 8 - may recommend an earlier development of the Matagalpa river due to faster than predicted load growth (see (e) below); (d) the results of the San Juan river multi-purpose development study (financed by UNDP with IDB as the executing agency and contracted with the US Bureau of Reclamation) may be more favorable for hydropower than presently anticipated; and (e) the power market may develop more rapidly than ENALUF has predicted, in part because the Government may commit the construction of a fertilizer plant earlier than has been assumed; this plant could have electric energy as one of its primary inputs. 2.22 In view of these uncertainties, and since ENALUF is responsible for planning the expansion of the national electric power supply, the proposed project provides for the preparation of a long-term master plan by a team to be formed with ENALUF staff and consultants. The master plan would include a power market survey; an energy resource survey (hydro, geothermal, fuels); optimization of the development of the generation, transmission and distribu- tion system and international interconnections; and a study of alternatives for a national load dispatch center. It would review and build on the work undertaken by ENALUF and its consultant -- the International Engineering Company (USA) -- in connection with the prefeasiblity study for the Copalar hydropower project, which included an expansion plan for generation and transmission to 1988. The terms of reference for the preparation of the master plan are satisfactory. 3. THE BORROWER General 3.01 The borrower would be ENALUF, a Government-owned autonomous national enterprise established in 1954 for generating, transmitting and distributing electricity and related activities. ENALUF grew out of an initial consolida- tion of electricity companies that operated in its present concession areas. The effective generating capability of ENALUF's National Interconnected System (NIS) is 193 MW; the installed capability is expected to reach 428 MW by 1981 as shown in Annex 5. Organization and Management 3.02 ENALUF is governed by its Constituent Law, as amended April 1968 and November 1974. The November 1974 amendment reflects the organizational recom- mendations of the consulting firm, R.W. Beck & Associates (USA) as prepared under ENALUF's eighth project. These recommendations concerned mainly non- technical management, accounting and financial activities. The amendment  strengthened ENALUF's autonomy in budget formulation and established ENALUF's present organization (Annex 7). 3.03 ENALUF's Board of Directors comprises eight members: an Executive President who is by law the chief executive officer; two representatives of the Government - one each from the National Economic Council and the National Development Institute (INFONAC); one representative from the private associa- tions; two representatives of the majority political party; and two represen- tatives of the minority party. All Directors are appointed for two years by the President of Nicaragua and can be reappointed. Only two members have been on the Board longer than 24 months (the Executive President and one representative of the minority party). 3.04 The organizational structure requires the Executive President to exercise a strongly centralized control over ENALUF's activities. To relieve him of a part of the burden of supervising day-to-day operations and to assist in the implementation of the improvement programs agreed with the Bank, ENALUF has appointed a General Coordinator under satisfactory terms of reference. ENALUF has agreed to continue to employ a General Coordinator under terms of reference acceptable to the Bank and to give the Bank a reasonable opportunity to comment on any proposed new appointee to this position. Assisted by the General Coordinator, ENALUF's top line executives will be in a better position to attend to policy formulation, interdepartmental coordination, training of subordinates and development of team work. ENALUF should also prepare for broadening the line management base along five functional lines (engineering and construction; operations; commercial; financial; and general administra- tion). 3.05 The General Coordinator's terms of reference give him responsibility for directing the development and implementation of improvements in financial controls, planning, construction management, procurement, organization, staff- ing and training. He would be assisted by an expert in procurement and a training director (see below) and would identify the need for other experts. Presentation of satisfactory terms of reference for these additional experts (who are expected to deal with cost estimating, construction management, finan- cial control and budgeting) would be a condition of effectiveness of the pro- posed loan. 3.06 ENALUF needs to develop its staff more fully in order to utilize its experienced personnel in management and supervision. To institute a coordinated training program, which would also consider the future growth needs of the organization, ENALUF would set up a training unit under a full- time director with wide experience in power utility training. ENALUF agreed to prepare a training program acceptable to the Bank (see outline in Annex 21) by June 30, 1977 and begin implementation by December 31, 1977 through a training unit under a training director and under satisfactory terms of reference. The hiring of the training expert under satisfactory terms of reference would be a condition of loan effectiveness. 3.07 In recent years, ENALUF awarded several large orders (not financed by the Bank) locally on a negotiated basis, paying higher prices than would have been obtained under competitive bidding. To prevent a recurrence of this  - 10 - problem in the future the General Coordinator would review ENALUF's procure- ment regulations to ensure that procurement is based on placing orders (after appropriate competitive bidding or alternative procedures which would be re- viewed with the Bank) with the supplier offering the lowest evaluated price. He would be assisted in this work by an expert in procurement who would also suggest improvements in the organization of ENALUF's procurement activities. Hiring of the procurement expert under satisfactory terms of reference would be a condition of loan effectiveness. Insurance 3.08 ENALUF carries insurance with Compania Nacional de Seguros de Nicaragua (CNSN) providing coverage against catastrophic loss of some of its installations due to various risks, including the risk of earthquake. ENALUF suffered an uninsured loss of about US$2.8 million as a result of the 1972 earthquake. After discussions with the Bank, ENALUF contracted a competent insurance expert to study the adequacy of its current insurance program, with particular emphasis on casualty insurance for plant and equipment (Annex 16, para. 9). ENALUF agreed to submit the findings of the expert for review by the Bank within 10 days from loan effectiveness, and to take all necessary action in conformity with the report and the recommendations of the Bank to provide adequate insurance coverage. Management Information Systems and Audit 3.09 ENALUF is upgrading its internal management information system by implementing the recommendations of R.W. Beck and Associates for providing computerized accounting and budget control. ENALUF's financial statements have been certified by Arthur Andersen and Company (Nicaragua); their work appears generally satisfactory. ENALUF has agreed to have its accounts audited by independent auditors acceptable to the Bank and to send audited financial statements and the auditors' report to the Bank within four months of the end of the calendar year. Performance Indicators 3.10 During the project period, ENALUF expects to make improvements in the efficiency of its operations. These improvements are reflected in the annual targets listed in Annex 17, which would be used to monitor ENALUF's performance during project implementation. 4. THE PROGRAM AND PROJECT Investment Program 1976-1980 4.01 In line with the development strategy and plans to reduce Nicaragua's fuel imports (para. 2.08), ENALUF expects to carry out the following investment program in 1976-1980:  - 11 - (a) Generation: Completion of the Tiscuco 100 MW steam electric plant at Punta Tiscuco and construction of the 135 MW geothermal plant at Momotombo and of the initial works of the 330 MW Copalar hydroelectric development; (b) Transmission: Installation of 420 km of 230 kV and 160 km of 138 kV lines and 432 MVA of transformer capacity; (c) Subtransmission and distribution: Installation of 136 km of 69 kV lines; 20 MVA of transformer capacity for stepdown to 13.8 kV and 25 kV; and distribution system expansion; (d) Load dispatch: Installation of a national load dispatch center, including extension of communication and telemetering facilities; and (e) Studies. Annex 8 shows the projected annual disbursements for the investment program, which is expected to cost about US$264 million equivalent. About half of this amount would be for the Momotombo geothermal project, which ENALUF hopes to finance with the help of suppliers' credits (for the first unit) and loans from international agencies (for the second and third unit). Existing proj- ects account for 21% and are being financed primarily by the Bank, CABEI and VIF (13%) and IDB (8%) for the eighth power project and additions, and a rural electrification project, respectively. Major future expenditures include the normal distribution and general plant expansion (7%), the initial works of the Copalar hydroelectric project (5%) and the further geothermal studies (5%) financed by the Government. The proposed ninth power project would amount to 12% of the investment program. The above works appear to comprise a rational program for meeting the expected growth in demand. Project Concept and Description 4.02 As identified in detail in Annex 9 the ninth power project would provide for: (a) The ENALUF portion of an interconnection line to Costa Rica and the transmission and distribution items (which would complement the facilities for generation and transmission supplied under the eighth project), consisting of: (i) about 145 km of single circuit of 230 kV on steel towers for interconnection with Costa Rica; (ii) about 9 km of double circuit and 8 km of single circuit of 138 kV to complete the Managua Ring; and construction of about 5 km of single circuit transmission line of 138 kV to connect the Sebaco-Santa Rita line to the Matagalpa substation;  - 12 - (iii) construction, addition, and/or conversion of about seven sub- stations of 138/13.8 kV or 138/25 kV, by adding about 122 MVA transformer capacity; (iv) relocation of about 75 MVA transformer capacity of 69/13.8 kV to six existing substations; (v) installation of about eight 69 kV circuit breakers and of protective relaying and metering equipment; (vi) installation of about 65 MVAR switched and unswitched capacitors to supply reactive power; and (vii) installation of distribution lines, transformers, and connections in low income areas. (b) Construction of a national load dispatch center, and installa- tion of equipment for operating the Honduras-Nicaragua-Costa Rica interconnection and the national system; (c) Services of engineering, planning, tariff consultants and of expert advisors to assist in: Estimated man-month (i) carrying out the physical works of the project 180 (ii) preparing a master plan of power system expansion (para. 2.22) 144 (iii) preparing a study of alternatives and specifications for the national load dispatch center (para. 2.22) 20 (iv) preparing a nation-wide tariff study based on marginal cost pricing (para. 2.17) 10 (v) preparing and carrying out of a progam for improving ENALUF's management and administration and training (paras. 3.04-3.05) 96 (vi) preparing a sector organization study for NPD (para. 2.06) 18 4.03 The growing need for a reliable electricity supply from an increas- ingly complex national power system and the rather sophisticated operating requirements in the context of Nicaragua's central role in the existing and proposed international interconnections with Honduras and Costa Rica make it technically essential to promptly provide a modern load dispatch system. (Similar centers are already being built in the Central American isthmus in  - 13 - Panama, Costa Rica, Honduras and El Salvador with Bank participation and finan- cial support.) Detailed specifications would be prepared for the load dis- patch component after selecting the best evaluated alternative recommended by consultants who would prepare a study of alternatives and the specifications as part of the project under terms of reference satisfactory to the Bank. Approval of this study would be a condition of disbursement of the funds included in the proposed loan for the load dispatch center. 4.04 The interconnection with Costa Rica was recommended by a recently completed feasibility study carried out by Kennedy and Donkin (UK) for ENALUF and ICE. This study was financed by CABEI, with a view to financing the project. ICE has applied to CABEI for financing of the Costa Rican portion of the interconnection and CABEI has declared the project eligible for financ- ing. Based on the feasibility study, ENALUF and ICE are currently negotiat- ing an interconnection contract. Disbursements from the proposed loan for the Nicaraguan portion of the interconnection would be conditioned on the effec- tiveness of this contract and on presentation of satisfactory assurances on the availability of funds for the Costa Rican portion. Project Cost 4.05 The project is estimated to cost US$32.3 million with a foreign component of about US$20.2 million. Total financial requirements (including financial charges during construction) are US$36.2 million and US$24.2 million, respectively. The cost for lines, substations and distribution equipment is based on recent quotes obtained in Costa Rica and Honduras; and for the load dispatch center, on a recent installation with similar scope in Panama. These costs have been adjusted for expected end-1976 Nicaraguan conditions. The cost of engineering and other consulting services was estimated by ENALUF; compared with recent projects of similar scope, they are reasonable. The detailed cost estimate is shown in Annex 9 and summarized as follows:  - 14 - Cordobas (millions) US$ (millions) Local Foreign Total Local Foreign Total 1. Interconnection with Costa Rica 16.87 30.45 47.32 2.41 4.35 6.76 2. New substations, additions and improvements 11.90 27.02 38.92 1.70 3.86 5.56 3. Transmission lines 2.17 4.20 6.37 0.31 0.60 0.91 4. Capacitor installations 0.63 5.67 6.30 0.09 0.81 0.90 5. Distribution in low- income areas 18.20 11.90 30.10 2.60 1.70 4.30 6. National load dispatch center 3.78 18.34 22.12 0.54 2.62 3.16 7. Land and land rights 3.50 - 3.50 0.50 - 0.50 Subtotal 1. - 7. 57.05 97.58 154.63 8.15 13.94 22.09 8. Engineering and administ- ration 7.35 8.82 16.17 1.05 1.26 2.31 9. Training 1.05 1.75 2.80 0.15 0.25 0.40 10. Studies 5.74 11.76 17.50 0.82 1.68 2.50 Subtotal 8. - 10. 14.14 22.33 36.47 2.02 3.19 5.21 Total base line cost 71.19 119.91 191.10 10.17 17.13 27.30 11. Contingencies - physical 2.59 3.36 5.95 0.37 0.48 0.85 - price 10.71 18.62 29.33 1.53 2.66 4.18 Total Project cost 84.49 141.89 226.38 12.07 20.27 32.34 Financial charges - 27.24 27.24 - 3.89 3.89 Financing required 84.49 169.13 253.62 12.07 24.16 36.23 = ==-_= _zz 4.06 An allowance of 5% for physical contingencies was added for items 1, 2, 3, 5 and 6; this is reasonable since no major civil works are included and the other items are, by nature, not subject to such contingency (item 4 has been estimated as a program type component). To provide for expected price increases, annual inflation rates were used as follows: Installation and Equipment and Engineering and Civil Works Materials Administration (Local) (Foreign) (Local and Foreign) 1976 13 9 9 1977-1979 12 8 8 1980-1986 10 7 7  - 15 - Engineering 4.07 To gain experience in managing non-turnkey installations, ENALUF has agreed to hire consultants for engineering and construction supervision. They would perform most of their work at ENALUF to maximize training of counterpart staff. ENALUF has agreed to employ consultants satisfactory to the Bank. Annex 12 outlines agreed procedures expected to be followed for hiring the consultants. As shown in Annex 9, the average cost for consulting services (excluding price contingency, travel and subsistence) was estimated at about US$4,300 per man-month. Procurement and Disbursements 4.08 All contracts for Bank-financed works, goods and services (other than for consultants and training) would be awarded through international competitive bidding (ICB) in accordance with guidelines for procurement under Bank loans except for: (i) imported special protective relaying and metering equipment (for substations) which is not suitable for ICB because of the need for standardization, to be purchased on a negotiated basis at an estimated cost of about US$0.35 million; and (ii) other items of imported equipment and materials, totalling about US$0.2 million, which would be required in small quantities and which would be impractical for ICB, also to be procured on a negotiated basis. Suppliers whose bids contain items produced in the Central American Common Market (CACM) - of which Nicaragua is a member - would be granted preference of the lower of 15% of the CIF landed price or 50% of the applicable import duty. Items which could be competitive under this arrange- ment would include conductors for the lines, construction materials (including wood poles), low voltage switchgear and distribution transformers, accounting for up to about US$2.2 million of the amount proposed for financing by the Bank. 4.09 To obtain better prices, ENALUF plans to package the items, to be procured for the construction of the works, in agreement with the Bank. Complete supply-and-erect contracts would be awarded for the transmission lines, as is present practice, because of the smallness of these works. There is a sufficient number of experienced local or regional firms which are expec- ted to be engaged for civil and erection works; however, most of the major equipment would be installed under suppliers' supervision. Some construction, which would not be Bank-financed, is expected to be performed by ENALUF's own forces. Agreed project implementation schedules (Annex 10) would provide the basis for project progress reporting. 4.10 ENALUF and the Government have confirmed that they would continue, under the proposed project, their practice of reducing shipping costs through waivers, issued by the appropriate agencies, of any provisions of the shipping law of Nicaragua which would lead to delays, or freight charges above those of regular shipping lines and maritime conferences. 4.11 Disbursements would be made for the percentages of costs shown below: (i) 100% of the foreign exchange cost of imported equipment and materials and of the foreign currency cost of installation supervision;  - 16 - (ii) 92% 1/ of the ex-factory cost of contracts for goods awarded to Nicaraguan manufacturers; (iii) 75% 2/ of the total cost of locally procured goods for the project's distribution component up to the limit shown in paragraph 4.08 (ii); (iv) 100% of the foreign exchange cost of training and of the total cost of services of consultants and experts; and (v) 100% of the financial charges on the Bank loan through June 1979. Retroactive financing is recommended up to US$0.8 million for expenditures after July 1, 1976 for studies and engineering to advance the preparation of the project. Annex 11 shows the estimated loan disbursements, with a closing date of March 31, 1981. Because of the ongoing nature of distribution investments of ENALUF any funds remaining undisbursed at the completion of the project would be applied to other works of a similar nature, after agreement of the Bank. Environmental Effects 4.12 The transmission lines and substations included in the project are not expected to have a major effect upon the environment; substation works would be almost entirely in existing installations. Only two new substations would be built, both in uncongested rural areas. Having recently experimented with esthetic design for 69 kV lines while rerouting circuits near Managua, ENALUF is conscious of their visual impact and intends to minimize the impact of the proposed new lines. ENALUF has covenanted to carry out the project with due regard to environmental factors. Project Risks 4.13 The physical components of the project are relatively simple and their execution should involve few difficulties. The return on the low- income electrification component could be notably less than projected if the rate of new connections is lower than expected. ENALUF has therefore agreed to consult with the Bank on measures to improve this rate if actual results are lower than those shown in the project performance indicators. Successful implementation of the recommendations of the studies and of the management assistance component of the project will require a high degree of commitment 1/ To exclude the element of local taxes in the case of possible purchases from Nicaraguan suppliers. 2/ To exclude the mark-up by local suppliers and the element of local taxes paid by ENALUF.  - 17 - on the part of the Government and ENALUF. Although the risk exists that Nicaragua and Costa Rica would not agree on a satisfactory implementation of the interconnection it is considered to be small, given the benefits which the project would bring to both countries. Elimination of the interconnection would not notably affect the program's rate of return since the return on the interconnection alone is very close to the return on the investment program (paras. 5.07-5.09). 5. JUSTIFICATION OF THE PROJECT Project Objectives 5.01 The project is an integral part of ENALUF's investment program. The purpose of the major part (over 70%) of the project investment is to complement the generation and transmission facilities provided by the eighth power project. The bulk of the transmission investment would provide sub- station capacity to serve the rapid industrial expansion which has resulted from the policy of promoting Nicaragua's manufacturing sector. In addition to the large increase of facilities serving industrial, irrigation and pumping loads, the project would allow ENALUF and the retailers which it supplies to provide electricity to about 400,000 additional people in Nicaragua during the project period. The distribution component of the project would provide exclusively for extension of service to the low-income sections of ENALUF's concession area (para. 2.14). 5.02 The project would help the Government in developing a program to rationalize power sector organization and would include the preparation of a national master plan for the sector, which is urgently needed to es- tablish priorities in its future development plans based on least cost com- parison of alternatives. The marginal cost tariff study would enable ENALUF to determine how the present tariff structure should be gradually changed in order to provide for the most economical use of electricity. The consulting services and expert assistance for management and administrative improvements, combined with the engagement of a General Coordinator to assist the Executive President, are expected to notably improve the efficiency of ENALUF. Demand and Supply Forecast 5.03 Annex 13 describes the characteristics of demand by areas and the basis for the load forecast which is given in the appraisal. The sales fore- cast by categories to 1981 is in Annex 14. The number of clients (including those not directly served by ENALUF) is expected to increase at about 6.4% per annum, from 145,000 in 1975 to about 210,000 in 1981, for the whole country. In this period ENALUF's sales are expected to increase at 12.1% per annum, from 680 GWh to 1,350 GWh. With the forecasted tariffs, sales during the period through 1981 to industry and irrigation are expected to continue to grow rapidly (at annual rates of 12.3% and 15.5% respectively). Growth of residential consumption supplied directly by ENALUF is expected to be slower (9.1% per annum). However, because of the sales to retailers (cooperatives  - 18 - and other distributors) unsatisfied demand by residential users would be reduced notably since the proportion of the country's population with access to electric service would increase from the present 41% to about 50% in 1981. These projections are reasonable. 5.04 Annex 5 shows the energy balance to 1987, which is based on the above forecast and, in addition, assumes sales of energy to ENEE (Honduras) during the 1978-1981 period and purchases from ICE (Costa Rica). After 1982, purchases from Honduras are forecast on the assumption that a large Honduran hydroelectric project will be operational in that year. However, due to lack of firm commitments, purchases from Honduras have been excluded from the rate of return calculations. Low-Income Area Electrification Component 5.05 Supply of electricty in low-income areas of urban communities has not been adequately pursued in the past. These areas are often near existing primary distribution lines. Thus, using low-cost rural distribution tech- niques , they could be supplied at notably less than ENALUF's normal average cost per connection. The proposed distribution component would significantly improve on past connection policies and practices. Appropriate criteria have been agreed for selecting the areas which would be given priority. The financial returns on the investments should be above 4-5%. The socio-economic returns would be considerably higher, however, as they would include benefits for education and security from improved lighting and increase the potential for employment in small workshops within the areas to be served. Based on ENALUF's initial inventory of villages and urban communities some 160 poten- tial priority locations (housing some 60,000 people) have been identified for this first pilot program. Annex 19 describes in more detail the methodology to be used for selecting the areas to be connected. It was agreed that ENALUF would submit a detailed report showing pertinent details on the areas selected on the basis of the agreed criteria as a condition for disbursement for this component. Least Cost Solution 5.06 Kennedy and Donkin's feasibility study has demonstrated that the interconnection is the least cost alternative for supplying ENALUF's system during the periods when surplus energy is available in Costa Rica. The interconnection would provide ENALUF with an additional source of non fuel based energy, allowing Nicaragua to reduce its oil imports. The proposed routing and design of the interconnection line and associated substations would constitute the least cost alternative for all discount rates higher than 12% annually. The least cost analysis for the other physical project compo- nents is summarized in Annex 20. Return on Investment 5.07 A rate of return on the overall investment program, rather than on the project alone, has been estimated in view of the complexity of the systems  - 19 - effects, and of the difficulty in allocating the benefits (measured in terms of revenues) provided by the project or its components. Annex 18 shows the details of the calculations and assumptions to obtain the discount rate for equalizing the present worth of the revenues derived from incremental sales at 1976 tariffs (as a minimum measure of benefits) and the investment and annual operating, maintenance and general administration costs. The return on the investment in the program would be 13.1%. If sunk costs incurred prior to 1976 are excluded, the rate would increase to 16.2%. A sensitivity analysis shows that this return would reduce to 10.3% and 12.7%, respectively, if investment costs are assumed to increase by 10% and simultaneously benefits are assumed to decline by 10%. 5.08 These rates, being in line with the probable opportunity cost of capital in Nicaragua, suggest that consumers are presently paying -- on average -- a price that reflects incremental costs. However, imbalances in the tariff structure should be adjusted (para. 2.16). 5.09 The actual economic return on the investment program is, however, higher than calculated since the above does not include the indirect benefits to industry, commerce and other large consumers whose contribution to pro- duction would likely be lower if they would have to finance their own, higher cost, electricity generation facilities. 6. FINANCE SummarY 6.01 ENALUF's financial performance was poor in 1973 and 1974 due to the 1972 earthquake and the energy crisis, which adversely affected sales and earnings. As a result of tariff action in 1974-75, the performance of the utility improved in 1975-1976. ENALUF's performance during the project period, as reflected in the projected indicators listed in Attachment 1 to Annex 16, would be satisfactory. ENALUF would earn a return of 8.5% on annually revalued average net operating assets, and finance 22% of its large investment program from internal resources. Annex 16 contains details on ENALUF's finances which supplement the summary analysis given below. Past Earnings and Financial Position 6.02 ENALUF's financial performance through 1972 was very good, and it had no difficulty in complying with the requirement under prior Bank loans that it earn a return of 9% on net fixed assets in operation. In 1973-1974, the impact of the earthquake, local and international inflation, and increased investment expenditures resulting from cost overruns on the eighth project caused a decline in earnings and negative net cash flows. ENALUF's returns on net average unrevalued operating assets were 4.4% in 1973 and 5.8% in 1974, and it had to borrow about US$21.5 million (C$150.3 million) from commercial sources. To improve its financial position ENALUF hired the  - 20 - consulting firm of R.W. Beck & Associates (USA) to conduct a tariff and re- valuation study. The study ultimately led to implementation of a nonautomatic fuel adjustment clause (in 1974), a general tariff increase (in 1975), a revaluation of assets as of December 31, 1974, and significant improvement in ENALUF's rate of return (8.4% in 1975 on revalued assets). 6.03 Overdue accounts receivable had created problems for ENALUF in the past, and ENALUF agreed under previous loans to take all necessary action to maintain the total amount of its accounts receivables in arrears below 110% of the total average monthly billing corresponding to the 90 days immediately preceding the date of calculation (Annex 16, Attachment 10, para. 15). ENALUF's performance under this provision (which is repeated in the proposed loan agreement) has been good. Financing Plan 6.04 ENALUF's total funding requirements of US$286.2 million during the project period, 1976-1980, are summarized below, together with the proposed financing plan. Details are given in Attachment 3 to Annex 16. Financing Plan 1976-1980 (in millions) US$ Requirements of Funds (excluding changes in C$ Equivalent % working capital) Construction Program: Existing Projects 381.1 54.4 19.0 Proposed Ninth Project 226.4 32.3 11.3 Future Projects 1,020.6 145.8 50.9 On-going and Future Works (Normal Expansion) 132.7 19.0 6.6 Studies and Resource Investigation 88.2 12.6 4.4 1,849.0 264.1 92.2 Interest during Construction 154.9 22.1 7.8 Total Requirements 2,003.9 286.2 100.0  - 21 - US$ C$ Equivalent % Sources of Funds (including changes in working capital) Gross Internal Cash Generation 1,044.4 149.2 52.1 Less: Debt Service (509.7) (72.8) (25.4) Net Internal Cash Generation 534.7 76.4 26.7 Customer Contributions 44.6 6.4 2.2 Less: Increase in Non-Cash Working Capital /1 (136.3) (19.5) (6.8) Net Internal Contribution to Expansion 443.0 63.3 22.1 Borrowings: Existing Loans 333.1 47.6 Proposed IBRD Loan 154.0 22.0 Future Loans 931.0 133.0 Total Borrowings 1,418.1 202.6 70.7 Other Sources: Customer Deposits 25.5 3.6 1.3 Government Grants 141.6 20.2 7.1 Less: Increase in other current assets (24.3) (3.5) (1.2) Total Sources 2,003.9 286.2 100.0 /1 Excludes short-term bank borrowings. 6.05 The financing plan assumes application of the tariff policy des- cribed in paragraph 6.07, which would result in the financing of 22% of ENALUF'S large investment program from internally generated resources. As noted in paragraphs 2.13 and 2.20, the Government is providing contributions for rural electrification and geothermal development, which would account for 7% of total requirements. The balance of these requirements would be financed through borrowing. 6.06 The proposed Bank loan for US$22.0 million would be made to ENALUF for a term of 17 years, including 3.5 years grace. Interest on the loan has been assumed to be 8.5%. The proposed loan would finance US$1.8 million of interest and other financial charges during construction on the Bank loan in order to alleviate the heavy financial strain associated with ENALUF's large investment program. The proposed loan also includes funding (US$154,000) for a sector organization study (see item vi, para 4.02 (c)) to be carried out under the direction of NPD. ENALUF would act only as disbursing agent for this portion of the loan. The terms of ENALUF's other borrowing are summarized in Attachment 9 of Annex 16. As noted in paragraph 2.21, studies have yet to be completed on several large projects included in ENALUF's construction  - 22 - program. ENALUF agreed not to undertake any major expansion project, other than the project, without providing evidence satisfactory to the Bank that such expansion is economically justified and that adequate financial resources are available for carrying it out. A major expansion project is defined as one costing more than 1% of the value of gross fixed assets in operation. Future Earnings and Financial Position 6.07 ENALUF's projected income statements are shown in Annex 16, Attach- ment 2. They are based on the assumption that tariffs would be set at a level sufficent to produce a rate of return of at least 8.5% on annually revalued average net fixed assets in operation. The Government and ENALUF have agreed to adjust tariffs as required to meet this objective. 6.08 The forecasts show that ENALUF's finances should continue to improve over the construction period of the project. The operating ratio would decline from 67% in 1976 to 54% in 1980 and the debt-equity ratio would not exceed 47/53. As under previous loans, ENALUF has agreed to retain all its earnings for reinvestment in new facilities until the project is completed. 6.09 ENALUF's future annual debt-service coverage ratios are expected to be between 1.49 and 1.63, which would be satisfactory. ENALUF agreed to seek prior Bank concurrence to new long-term borrowing whenever net revenues are less than 1.5 times the maximum debt-service requirement for any succeeding fiscal year on all debt, including the debt to be incurred. 7. AGREEMENTS REACHED AND RECOMMENDATIONS 7.01 During negotiations agreement was reached with ENALUF on the follow- ing principal points: (a) A study of retail tariff structures based on long-term marginal costs will be carried out and its recommendations reviewed with NIEE and the Bank (para. 2.17); (b) The fuel adjustment clause will be applied automatically (para. 2.18); (c) An integrated master plan will be prepared to guide future sector development (para. 2.22); (d) ENALUF will continue to employ a General Coordinator under terms of reference acceptable to the Bank and would give the Bank a reasonable opportunity to comment on any proposed new appointee to this position (para. 3.04); (e) Programs will be prepared and implemented under the direction of the General Coordinator to improve financial controls, planning, construction management, procurement, organization and staffing (paras. 3.05 and 3.07);  - 23 - (f) A training program will be prepared and implemented on an agreed timetable (para. 3.06); (g) ENALUF will submit the findings of its insurance expert within 10 days of loan effectiveness and take all necessary action to provide adequate insurance coverage (para. 3.08); (h) The accounts will be audited by independent accountants acceptable to the Bank (para. 3.09); (i) ENALUF will not undertake any major expansion without provid- ing satisfactory evidence that it is economically justified and that adequate financial resources are available to carry it out (para. 6.06); (j) Tariffs will be set at levels sufficient to earn a return of 8.5% on average revalued net fixed assets in operation (para. 6.07); and (k) ENALUF will not incur any debt without the Bank's concurrence if it cannot meet the debt limitation test (para. 6.09). 7.02 Agreement was reached with the Government on the following principal points: (a) Preparation of a power sector organization study (para. 2.06); (b) ENALUF will be allowed to apply the fuel adjustment clause automatically (para. 2.18); and (c) ENALUF will be allowed to set tariffs at levels sufficient to earn a return of 8.5% on average revalued net fixed assets in operation (para. 6.07). 7.03 Conditions for the effectiveness of the loan would be: (a) the agreement with the Bank on terms of reference for the experts in the areas identified by the General Coordinator and agreed with the Bank as needing improvement (para. 3.05); and (b) the appointment of experts under terms of reference acceptable to the Bank, for training (para. 3.06) and procurement (para. 3.07). 7.04 With the indicated assurances, the project provides a suitable basis for a Bank loan of US$22.0 million for a term of seventeen years, including a grace period of three and a half years. March 30, 1977   ANNEA 1 APPRAISAL OF THE NINTH POWER PROJECT - NICARAGUA Power Transmission Project Empresa Nacional de Luz y Fuerza (ENALUF) Summary of Previous Bank Lending _or Power Loan/Credit Loan Date Loan Amount Borrower/Beneficiary Power Project Name Main Project Oomponents Number _USw Million _ Loan 82 9/4/53 D.45 Government/Predecessorl/ I Managua Diesels 3 MW diesel electric generator to ENALUF Loar 121 7/b/55 7.10 ENALUF/ENALUF II Thernal Power 30 MS steam plant; 69kV (1&C km) and 13.2 kV (91 on) transmission lines and suo-stations. Loan 122 7/8/55 0.40 Inst.Fom.Nac/Local dis- III Power Distribu- Distribution in 14 towns tributing tion companies Loan 154 i1/15/56 1.60 ENALUF/ENALUF IV Thermal Power Supplemental loan to complete project financed by 121-NI Loan 259 6/22/60 12.50 ENALUP/ENIALUF V Rio Tuma Hydro 50 MWT Hydro plant; 138 kV (Planta Centro transmission lines (12C km) and America) sub-stations. Loan 470 10/5/66 5.00 ENALUF/ENALUF VI Sixth Power 15 14W gas turbine unit; 13b kV transmission lines (100 km) and sub-stations; expansion of 13.2 kV distribution system; and con- struction of headquarters building. L.oan 543 6/21/68 15.25 ENALUF/ENALUF VII Seventh Power 40 MN steam unit addition to Santa Barbara Managua Power Plant; 50 MW nydro- Hydro (Plan'a plant ('anta oarbara) on Viejo Gral. Somozsa River; 138 kV (124 kn) trans- Garcia) mission ]ines and substations. Loan i40 6/28/72 2 4.oo EiALUF/ENALUF VIII Eighth Power 2 x 50 MW steam plant at Tiscico; (Pto. Somoza 230 kV (165 km) and 138 kV '165 Steam) km) transmission lines and su'- stations; management studies and supplementary financing for VII ProJect. Credit 389 6/6/73 5.00 Government./ENALUF Earthquake Re- Repair and rehabilitation of Part C construction existing installation in 71.30 Managua area (power plant, sub-station and distribution SYStem); extension of distri- TOTAL 8 Loans button network; and 1973-7b 1 Credit normal work program. 1/ ENALUF was established in 1954 May 6, 1976  ANNEX 2 Page 1 of 3 pages APPRAISAL OF THE NINTH POWER PROJECT - NICARAGUA Power Transmission Project Empresa Nacional de Luz y Fuerza (ENALUF) Organization of the Electric Power Sector and Supply of Electricity 1. Before the establishment of ENALUF electricity was supplied in Nicaragua mainly by Private companies and entrepreneurs, in addition to some municipalities. ENALUF grew out of an initial consolidation and merger of several electricity companies; it was created by decree Law No. 102, published October 23, 1954 (which was amended by decree Laws No. 86, published April 19, 1968, and No. 656 published Novenber 21, 1974) for the purpose of generating, transmitting and distributing electricity and complementary activities. The Government is the owner of ENALUI which has been formally under the control of the Ministerio de Obras Publicas (MOP) since the 197h Constituent Law amendment. ENALUF operates, as do all other public electricity suppliers in Nicaragua, on the basis of concessions (about 70), granted mainly in 1957 when the Electric Industry Law was decreed. Public Service Supply 2. ENALUF's role as a national electricity supply undertaking was mainly established in 1958 with the installation of two 15 MW steam electric units in Managua and associated 69 kV transmission lines interconnecting the isolated systems of Managua, Leon, Chinandega, Masaya and Granada; these works were financed by the Bank (Loan 121-NI). Since then, ENALUF has continued to incorporate other isolated systems into what has become the National Interconnected System (NIS) supplying the northern, central and Pacific coastal areas which contain more than 90% of Nicaragua's population. Some towns on the Caribbean coast continue to be served by isolated diesels. The name plate generating capacity of ENALUF grew from 40.3 MW in 1958 to 212.5 MW in 1974 - an increase of 427%; the production of energy increased in the same period from 60 to 764 GWh - an increase of 1173% at a remarkable growth of 17.2% per year. 3. At the end of 1975, ENALUF's nameplate capacity had been reduced to 201.5 MW and effective capability to 193 MW due to the retirement of several diesels, mainly at the Managua power plant, because of earthquake damage. The effective capability included 100 NW (52%) hydro, 70 MW (36%) steam electric, 8 MW (4%) diesel, and 15 MW (8%) gas turbine. ENALUF expects the first 50 MW unit of the Tiscuco 100 MW steam electric plant (near Puerto Somoza), financed by Loan 840-NI, to be fully commissioned in February 1977, and the second in July 1977. In 1975, ENALUF's gross generation was 821 GWh, of which 353 GWh (43X) was produced by hydro and the balance by fuel burning plant. Transmission and distribution losses and station use accounted for 141 GWh (a very reasonable 17.2%) leading to total sales of about 680 GWh. Maximum demand was about 141 MW. About 83% of these sales went to direct customers and 17% to the other retailers in the country.  ANNEX 2 Page 2 of 3 pages 4. ENALUF's generation and sales grew at an average annual rate of about 12% in 1966-75 while it was extending service to new areas and whole- sale clients. The number of direct customers rose from 51,200 to about 93,000, at about 7% per year in the same period. Excluding wholesale, per capita electricity generation in ENALUF's concession area was about 1,250 kWh in 1974, which was about 4 times the national average of 321 kWh; this reflects the heavy incidence of large clients in ENALUF sales. However, already about 60% of the population living in ENALUF's direct service area has service as compared with about 40% in the whole country. 5. Attachment 1 to this Annex shows the 1974 national electric energy supply situation in detail. ENALUF owned 81% of the country's electricity generation at year-end; this percentage will increase to 86% in 1977. The other producers' generation is mainly based on bagasse-fired steam plant and diesels; summarized below is the composition of installed capacity and generation: Installed Capacity Generation MW % GWh % Hydro 103 39.3 369 42.2 Steam 93 35.5 427 48.9 Diesel 51 19.5 74 8.5 Gas turbine 15 5.7 4 0.5 262 100.0 874 100.0 Fuel based generation is expected to increase to 70% in 1978 (Attachment 3); thereafter, geothermal generation is expected to rapidly reduce dependency on fuel, and generation from indigenous sources is expected to reach about 80% in 1982. Transmission and Subtransmission 6. ENALUF continues to extend its interconnected 138/69 kV system of 613 km (of which about 330 km are at 138 kV) and 30 substations with 558 MVA capacity. The principal transmission lines are those which link the Centro- america and General A. Somoza G. hydropower plants to the cities of Managua and Leon. ENALUF also operates the 224 km of 138 kV and 132 km of 69 kV lines and five substations with 60 MVA of the five rural electric cooperatives. The private companies and municipalities do not have transmission and subtransmissicn facilities. Distribution and Market 7. ENALUF distributes about 83% of the electricity sold in Nicaragua for public use to the final consumer. The five cooperatives, thirteen private companies and three municipalities distribute the balance to about 37% of the clients in the country as shown in the following table:  ANNEX 2 Page 3 of 3 pages Number of Number of % of towns served clients (thousands) Clients ENALUF 1 58 86.0 63.4 Cooperatives 5 12 23.6 17.4 Private companies 13 12 20.2 14.9 Municipalities 3 38 5.9 4.3 22 120 135.7 100.0 The five cooperatives and the Departments of the country they serve are: AMERRISQUE (Boaca); CONODER (Chinandega); COERDI (Rivas); CODERSE (Las Segovias) and CAEER (Masaya). The six major private and municipal companies are: Compania Electrica de Carazo; Compania Electrica de Corinto;"Matagalpa Power and Annex";Empresa de Servicios Publicos de Chinandega; Empresa Electrica de Esteli; and Empresas Municipales de Luz y Agua de Masaya. 8. Primarily 13.8 kV and 25 kV is used for distribution, the latter in the low density rural areas. Future expansion is standardized at these voltages. ENALUF's distribution design standards are modern and largely based on the expe- rience gained with the rural electrification program carried out in 1969-1975 with US-AID financing. The overall quality of service appears satisfactory, including that of the private companies. 9. As the private companies apparently are able to finance their distribution system additions from operations and without government support, ENkLUF has no immediate plans for future acquisitions since it needs all available funds to complete its ambitious 1976-80 expansion program. However, ENALUF plans to increase its sales to the retailers substantially during this period and to serve more clients directly by carrying out the first stage of the second National Electrification Plan with the help of IDB financing. The first stage would (at an estimated cost of about US$21 million) supply electricity to about 22 000 clients within ten years of operation,covering an area of about 4,600 km0 with a population of about 71,000 in the Matagalpa and Rama areas Some 260 km of transmission and 1,800 km of distribution lines with 33 MVA of stepdown transformer capacity would be provided. The Government is contrib- uting US$4.35 million as equity to ENALUF for the project. Captive Plants 10. As of early 1975 there were fifteen major and several other industrial power plants in operation,as shown in Attachment 1, with an installed capacity of 45.5 MW. They generated, in 1974 a total of 103 GWh,or about 12% of the total electricity produced. About 18 MW of this capacity are in steam units at sugar estates burning bagasse, about 3 MW are hydroelectric, and about 25 MW are diesel. The largest non-steam electric installations are 2.4 MW of hydro by a gold mining company, two 4.5 MW diesels by two other mining companies, 3.3 MW diesels by a cement producer, 1.6 MW diesels by the refinery, and 1.4 MW diesels by a vegetable oil factory. The other diesel installations are less than 1 MW each. The probability that these plants will interconnect with PTALUF is low because most of the plants are remote from ENALUF's system or provide process steam. Attachments 1, 2 and 3. September 1976 Revised December 1976 - Revised January 1977  Installed Generating Capacity and Generation i. Nicaragua - 1974 MW Installed Capacity MWh Annual Generation MWh MWh Diesel and Diesel and Station Net Hydro Steam Gas (G) Total Hydro Ste,m Gas (G) Total Use Generation Empresa Nacional de Luz y Fuerza - TOTAL 100.00 75.00 37.50 212.50 352,115 396,673 15,265 764,053 24,996 739.057 Interconnected System Plants - TOTAL 100.00 75.00 i/ 31.53 i/ 206.53 i/ 352,115 396,673 3,893 752,681 24.339 728,342 Centroamerica 50.00 - - 50.OG 207,118 - - 207,118 590 206,528 Gen. A. Somoza G. 50.00 - - 50.00 144,997 - _ 144,997 585 144,412 Managua _ 75.00 9.95 84.95 - 396,673 58 396,731 23,123 373,608 Chinandega _ - 15.60(G) 15.60 - - 3,767(G) 3,767 35 3,732 Leon - 2.37 2.37 - - 1 1 - 1 Granada _- 0.31 0.31 - - 5 5 - 5 Rivas - - 3.30 3.30 - - 62 62 3 59 Isolated Plants - TOTAL - 5.97 5.97 - _ 9,372 9,372 660 8,712 Ocotal - 3.65 3.65 - - 4, 946 4,946 247 4,699 Bluefields - 1.07 1.07 - - 2,536 2,536 254 2,282 Pto. Cabezas - O.80 0.80 - - 1,285 1,285 129 1,156 Ometepe _ - o.46 o.46 - - 606 606 30 576 Private Electric Companies Plants - TOTAL 0.20 - 3.89 4.09 521 _ 7,017 7,538 76 7,462 Cia. Elec. Carazo g/ 0.12 - o.63 0.75 - - - - - - Cia. Energia Elec. Corinto - - 0.11 0.11 - - - Emp. Municip. Luz y Agua Masaya /- 0.40 0.4 - - - 0.40 Matagalpa Power and Annex o.o08 - 0.31 0.39 521 - - 521 53 468 Emp. Serv. PuLbl. Chinandega g/ - - - - - - - - - _ Cia Electrica de Esteli V/ - - 1.63 1.63 - - 5,226 5,226 13 5,213 Other (not interconnected w/EiAflUF) - - 0.81 0.81 - - 1,791 1,791 10 1,781 Public Supply - TOTAL 100.20 75.00 41.40 216.60 352,636 396,673 22.282 771,591 25,071 746,520 Captive Plant - TOTAL 3.01 17.75 24.74 45.50 15,951 30,374 56,232 102,558 Sugar Estates (5) 0.61 17.75 0.95 19.31 245 30,374 3,416 34,035 - Food Processing (5) - 4.50 4.50 - - 2,445 2,445 - Mining (3) 2.40 o 9.76 12.16 15,706 - 35,018 50,724 Cement (1) - 3.30 3.30 - - 92 92 - Refinery (1) - 1.65 1.65 - - 8,786 8,786 - Other _ - 4.58 4.58 - - 6,475 6,475 - TOTAL FOR COUDTRY 103.21 92.75 66.14 262.10 368,587 427,o47 78,514 874,149 _ _ %/ Interconnected to ENAIUF's Main System. g/ Effective capability was reduced to 70 MW for steam; 23 MW for diesel and gas turbine; amounting to a total of 193 MW. J May 3, 1976  1974 Electricity Sales results ]:/, Clients and comparison with 1970 for Nicaragua Total Wholesale Total Sold Street Sale or Sold less Wholesale Residential Commercial Industrial Government Lighting Irrigation pmping Purchase 1974 Empresa NaciDnal de Luz y Fuerza (ENALUF) Clients 85,971 85,960 82,099 1,471 512 838 598 341 101 11 Sales 641,521 541,723 112,044 64,413 269,415 21,993 11,367 35,615 26,875 99,798 Revenue 161,263 143,455 51,793 20,603 50,197 6,881 3,142 4,620 6,220 17,808 KWh/client 7,462 6,302 1,365 43,788 526,201 26,245 19,008 104,442 266,093 9,072,518 Average price 25,14 26,48 46.23 31.98 18.63 31.28 27.64 12.97 23.14 17.84 Average monthly bill/client 158 139 53 1,167 8,170 684 438 1,129 5,132 134,909 Cooperatives (5) Clients 23,623 23,623 21,763 939 132 524 104 146 15 5 Sales 48,659 48,659 11,607 2,905 14,566 1,228 850 17,041 464 54,814 Revenue 15 ,286 15,286 6,722 1,731 3,502 4o0 268 2,501 162 7,552 KWh/client 2,o60 2,o60 533 3,094 110,348 2,344 8,173 116,719 30,933 10,962,800 Average price 31.41 31.41 57.91 59.59 24.04 32.65 31.53 14.68 34.91 13.78 Average monthly bill/client 172 172 26 154 2,211 64 215 1,428 900 125,867 Private Electric Companies (large-5) i/ Clients 20,881 20,881 19,P57 1,343 188 109 9 - - 5 Sales 38,903 38,903 18,625 3,971 13,372 798 2,137 - - 44,984 Revenue 16,045 16,045 9,314 2,215 3,532 398 585 - - 10,256 KWh/client 1,863 1,863 967 2,957 71,128 7,321 237,444 - - 8,996,800 Average price 41.24 41.24 50.01 55.79 26.41 49.87 27.37 - - 22.77 Average monthly bill/client 64 64 4