Colombia - Bogota Power Distribution Project

Document of The World Bank FILE co FOR OFFICIAL USE ONLY Report No. P-2676-CO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO EMPRESA DE ENERGIA ELECTRICA DE BOGOTA WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA FOR THE BOGOTA POWER DISTRIBUTION PROJECT February 22, 1980 This docment has a restrited distributon and may be used by recipients only In the performance of their offcial dutdes. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Average Calendar 1978 Mid-1979 Estimate Currency Unit = Peso - Col$ Col$ US$1 = Col$39.25 42.06 Col$1 = US$0.0255 0.0238 WEIGHTS AND MEASURES 1 meter (m) 2 = 3.281 feet (ft) 2 1 square kilometer (km ) = 0.386 square mile (mi ) 1 cubic meter (m3) = 35.315 cubic feet (ft3) it = 264.2 gallons (gal) 1 kilogram (kg) = 2.206 pounds (lb) 1 ton (t;metric;1,000 kg) = 1.100 short tons (sh. tons) 1 kilowatt (kW) = 1,000 watts (103 kW - 106 W) 1 kilowatt-hour (kWh) = 830.3 kilocalories (kcal) 1 gigawatt-hour (GWh) = 1,000,000 kWh (106 kWh) 1 kilovolt (kV) = 1,000 Volts (V) 1 kilovolt ampere (KVA) = 1,000 Volt amperes (103 VA) 1 megavolt ampere (MVA) = 1,000 kVA (106 VA) 1 megavolt ampere reactive (MVAr) = 1 megavolt ampere reactive (COSq = 00) GLOSSARY OF ABBREVIATIONS CORELCA = Corporacion Electrica de la Costa Atlantica CVC = Corporacion Autonoma Regional de el Valle del Rio Cauca DNP National Planning Department EEEB = Empresa de Energia Electrica de Bogota EiPM = Empresas Publicas de Medellin ICEL = Instituto Colombiano de Energia Electrica IDB = Inter-American Development Bank ISA = Interconexion Electrica, S.A. JNT = Junta Nacional de Tarifas de Servicios Publicos FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY COLOMBIA BOGOTA POWER DISTRIBUTION PROJECT LOAN AND PROJECT SUMMARY Borrower: Empresa de Energia Electrica de Bogota (EEEB) Guarantor: Republic of Colombia Amount: US$87 million equivalent Terms: Repayment in seventeen years, including three years of grace, at 8.25% interest per annum. Project Description: The proposed project would support the government's objective of increasing the delivery of electricity to the final consumer. The proposed project forms part of EEEB's 1979-82 Investment Program, and is aimed at expansion, rehabilitation and modernization of the urban distribution network, including strengthening of the company's distribution planning, design, operating and maintenance practices. The impact of the project on Bogota's development would be considerable; it is estimated that it would supply electricity to an esti- mated 157,000 new residential, commercial and industrial subscribers. About thirty-five percent of the new subscribers are expected to be in the lower income group. The project would also contribute to enhancing the reliability of electricity services throughout the urban area. The project is not subject to significant risks and is expected to be carried out as scheduled. All appropriate provisions have been made to minimize the environmental impact of the facilities. Tbi document has a restricted distribution and may be used by recipients only in the performance of ther officil duties Its contents may not otherwise be disclosed without World Bank authorization.  Estimated Cost (net of taxes): Local Foreign Total --(US$ million equivalent)-- Subtransmission 1.5 18.8 20.3 Distribution 56.8 42.2 99.0 Other Equipment 0.7 5.6 6.3 Consultants and Training 0.5 1.2 1.7 Engineering and Administration 10.4 - 10.4 Base Cost 69.9 67.8 137.7 Physical Contingencies 5.4 6.0 11.4 Price Contingencies 19.9 13.2 33.1 Total Project Cost 95.2 87.0 182.2 Note: During the period 1979-82, EEEB will carry out other works with an estimated cost of US$777 million equivalent (including interest during construction amounting to US$97 million), will require an increase in working capital estimated at US$35 million and will invest approxi- mately US$176 million in Interconexion Electrica, S.A., in which it is a shareholder. Financing Plan: Local Foreign Total --(US$ million equivalent)-- Internal Cash Generation 1/ 38.2 _ 38.2 Commercial Borrowings 1/ 57.0 - 57.0 Proposed IBRD Loan - 87.0 87.0 95.2 87.0 182.2 1/ These estimates reflect the relative proportions of internal cash generation and commercial borrowings anticipated for total investments during 1979-82- Rate of Return: 12% Appraisal Report: Report No.2649b-CO, dated February 22, 1980.  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOIMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO EMPRESA DE ENERGIA ELECTRICA DE BOGOTA WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA FOR THE BOGOTA POWER DISTRIBUTION PROJECT 1. I submit the following report and recommendation on a proposed loan to Empresa de Energia Electrica de Bogota (EEEB), with the guarantee of the Republic of Colombia, for the equivalent of US$87 million to help finance the Bogota Power Distribution Project. The loan would have a term of 17 years, including three years of grace, with interest at 8.25% per annum. PART I: THE ECONOMY 2. An economic report on Colombia (2535-CO) was distributed to the Executive Directors in June 1979. A small updating mission visited Colombia in mid-December and this section reflects its major findings. Country data sheets are provided in Annex I. Background 3. Colombia has made substantial progress over the past two decades in the transition from a predominantly rural and agricultural economy scattered among several isolated, but largely self-contained, regions to a more inte- grated, urban industrial economy. The productive base of the economy has been widened and diversified, and a modern sector relying heavily on imported inputs has developed. The country's external sector has been strengthened by the rapid growth of non-traditional exports. Fluctuations in domestic economic conditions resulting from unpredictable shifts in world coffee prices, while still considerable, have become more manageable. 4. Following several years of erratic economic growth and high unemploy- ment, the Colombian authorities introduced in 1967 a dramatic change in devel- opment policy, shifting emphasis from a protectionist policy of import substi- tution to measures designed to expand and diversify exports. With only minor modifications, this export promotion strategy remained in effect until the mid-1970s. These policies were successful in expanding non-coffee exports, thereby alleviating the foreign exchange constraint to growth and making possible a higher level of investment. As a consequence, real GDP growth accelerated to an average 6.5% p.a. between 1968 and 1974, well above the historic average, and non-coffee merchandise exports rose nearly threefold. 5. Despite these advances, the economy showed signs of deteriorating by late 1974. This was largely the result of slower growth in the industrial economies, an inelastic tax system, imported inflation which led to a weakening of the public finances and balance of payments and an acceleration in domestic  - 2 - inflation. In addition, the country was faced with a pending loss of self- sufficiency in petroleum, its primary energy source. These developments -prompted the authorities to introduce a stabilization program, accompanied by basic reforms of the fiscal, monetary and trade systems aimed at restoring the basis for self-sustained long-term growth. Concurrently, petroleum pricing policy was modified to improve incentives for oil exploration and development and policies were initiated to reduce the subsidy on local consumption of petroleum products. These reforms were successful in improving the public finances and reducing inflation in 1975, but initially caused economic growth to slow (from 6.0% in 1974 to 3.8% in 1975) as the economy adjusted to the changing domestic and international circumstances. Recent Economic Developments 6. During the three years 1976-78 the Colombian economy was subject to severe inflationary pressures which caused the Government to focus economic policy on short-term stabilization rather than on long-term development issues. The origin of these pressures was the exceptionally high world coffee price prevailing during this period which caused Colombia's export earnings from coffee to increase to US$1.8 billion and US$2.1 billion in 1977 and 1978, respectively (from an average US$725 million in 1974-75), producing a sharp rise in incomes and aggregate demand. The supply of consumer goods, particu- larly of basic foodstuffs which was adversely affected by drought conditions in most of the country, lagged behind the growth in demand and inflation accelerated to the unprecedented rate of 44% in the twelve months ending June 1977, from 26% the preceding year. The authorities responded rapidly by introducing a broad range of fiscal, monetary and trade policies designed to gain control over the increase in prices. As a consequence of these measures and of a favorable second semester harvest, inflation declined sharply through- out most of the following 18 months, with the annual inflation rate leveling off at 29% in 1977 and falling to 18% in 1978. 7. Because of the lack of dynamism in world markets and modest increases in domestic investment, the Colombian economy expanded only moderately in 1976 and 1977, with real GDP growing by 4.6% and 4.8%, respectively. In 1978, however, real GDP rose by an estimated 8.5% in response to continued strong growth in aggregate demand, supported by expanded private investment financed increasingly through a rapidly growing extra bank market and by favorable agricultural conditions. Since growth was concentrated in the relatively labor intensive sectors of the economy--personal services, trade, transport and communications, and small-scale manufacturing and agriculture--unemployment declined sharply during this period. In 1978, unemployment in the four major cities averaged about 8% of the labor force, compared with an average of about 12% a few years earlier. Both the balance of payments and the public finances generated large current surpluses in the 1976-78 period. Largely as a result of increased coffee export receipts, Colombia's net official international reserves had risen from US$573 million at the end of 1975 to US$2.5 billion by the end of 1978, equivalent to about nine months imports of goods and non-factor services. This increase in reserves occurred despite nearly 12% p.a. real growth in imports and slow growth in manufactured exports. Curbs on public investment and higher revenues from the coffee tax and from earnings on international reserves made possible unprecedented overall surpluses in the public finances.  - 3 - 8. Despite continuation of the stabilization policies in effect since early 1977, inflationary pressures increased somewhat in 1979. A mild frost in Brazil's coffee areas caused world coffee prices to rise early in the year, resulting in an acceleration in reserve accumulation and in aggregate demand growth. Widening interest rate differentials favoring Colombia and some real appreciation of the peso, generated short-term capital inflows, which, toge- ther with delays in import payments, led to further reserve increases. Receipts from illegal exports provided an additional source of funds for the already overly liquid economy. In all, net official reserves rose by approximately US$1.6 billion for the year, reaching the equivalent of 11 months imports at year end. About mid-year the authorities issued a new series of short-term securities carrying highly competitive interest rates in an effort to absorb some of the excess liquidity existing in the formal and informal credit markets. This issue, which represents a significant break with past open market operations that were non interest-competitive and forced onto financial institution portfolios, was successful in attracting funds equivalent to 5.4% of the monetary base by year end, helping to reduce money supply growth (M2) in the formal market from 34% in 1978 to 28% in 1979. Nevertheless, large wage increases and higher energy costs, together with rapid growth in domestic demand, pushed inflation up to 30% for the year. Economic growth was strong again in 1979, with real GDP rising by an estimated 5.5%, and unemployment remained low. In January 1980, inflation appears to be slowing down (on an annual basis the increase in the cost of living was 28.3%). The Government is committed to reducing further the rate of inflation during 1980. Distribution and Welfare 9. The steady gains in per capita income, together with rapid rural/ urban migration and expanded employment opportunities for women over the past quarter century caused a dramatic drop in the crude birth rate. The achieve- ment of lower birth rates was facilitated by expanded family planning programs. Consequently, Colombia's population growth rate declined sharply, from over 3% in the late 1950s, to about 2.8% in the early 1970s and to an estimated 2.1% at present. About 66% of the population lives in urban centers, and there are now 22 cities with populations exceeding 100,000 persons. Some of the major cities have serious transportation, housing and urban congestion problems, however, and large numbers of persons live under poor conditions. 10. Available evidence suggests that the welfare of all income groups in Colombia has increased significantly since the 1950s and that the propor- tion of the population living in absolute poverty has declined. These gains were in part a consequence of reasonably good economic growth and of efforts to raise welfare through investment in health, education, low income housing, water and sewerage, and other social services. Data on income distribution trends present a less clear picture. It is probable that some improvement occurred in income distribution between 1950 and the mid-1960s as a result of a strong shift of the labor force from rural areas to higher productivity jobs in urban industry and services and of relative wage gains for urban unskilled workers. Accelerated inflation through the early and mid-1970s caused real wages to increase less rapidly than returns to non-labor  - 4 - factors of production. While the trends in income distribution during this period are unclear, it seems unlikely that any significant improvement -occurred. Since 1977, however, rural wages have risen in real terms and unemployment has declined notably, supporting the presumption of some distributional improvement. Development Strategy of the Current Administration 11. The development strategy of the present Government is essentially unchanged from that of the previous administration, with the most significant variation being a greater emphasis on expanding economic and social infrastruc- ture. The key elements of this strategy are the promotion of non-coffee exports and investment, supported by measures to increase allocative and productive efficiency. Factor (particularly capital) and product markets are to be freed from unnecessary controls in order to increase efficiency and lower costs, and tariff and non-tariff barriers to imports are to be reduced to provide greater competition to domestic industry. These steps, along with periodic exchange rate adjustments as required by relative cost differences, tax rebates and favorable access to credit, are expected to provide the stimulus for rapid growth in non-coffee exports and in private investment. Public investment is to be accelerated, with particular stress on improving and extending the transport and communications network and on resolving the country's rapidly growing energy problem. Investments in transportation are expected to lower freight costs substantially and those in telecommunications to facilitate economic activity as well as to minimize the unnecessary use of transport; both are aimed at integrating regional growth centers into a national market. Complementary measures to encourage industry to locate outside the four major metropolitan areas have been introduced. 12. Raising investment and productivity in agriculture and industry are important objectives of the Government's plans to expand growth and employment. Substantial increases in credit are being provided to agriculture. Extension programs are to be expanded to cover larger numbers of small and medium scale farms and widened to include farm management and broader dissemination of crop research. Innovative programs such as the integrated rural development (DRI) and nutrition (PAN) projects financed by the Bank are expected to receive continued high priority. Low income rural areas are to be helped through rural electrification, health and education programs and through an expanded feeder roads program. Industry, which is experiencing high capacity utiliza- tion ratios because of lagging investment in recent years, is expected to benefit from improved functioning of domestic capital markets, as a result of the gradual removal of artificial controls from them, and from increased incentives for exports as the real effective exchange rate recovers to pre-1976 levels. This, plus increased competition from imports as tariff and non-tariff barriers are lowered, should provide the stimulus for greater industrial investment and bring about more rapid technological change. 13. Projections of Colombia's energy balance indicate a rapidly growing deficit which is expected to reach significant proportions in the mid-1980s in the absence of an aggressive energy development program. High priority is  - 5 - being given to the development of additional energy resources in order to avoid the constraint on growth that large scale shortages of energy would -entail. The strategy adopted is designed to reduce the country's dependence on petroleum as an energy source by developing substitutes. Major projects are being executed and others prepared to expand hydroelectric power genera- tion, and incentives are being given to private foreign companies for accel- erated exploration and development of the country's petroleum, coal and natural gas potential (paragraph 26). Exports of coal and natural gas are expected to offset a large portion of the petroleum imports projected for the mid to late 1980s. Higher energy prices are expected to slow the growth in energy demand. While the total investment cost of future energy development is still being determined, preliminary estimates indicate that the required investment could run as high as US$8.0 billion in 1979 prices over the next decade. Even under the most optimistic assumptions regarding development of energy resources, however, Colombia will continue to rely heavily on energy imports until the mid-1980s when exports of coal and natural gas begin to reduce the nation's net energy deficit. 14. With Colombia's long-term growth prospects enhanced by the increased availability of foreign exchange and with inflation expected to moderate, the authorities are beginning to focus policies on a number of issues that need to be addressed if the country is to achieve its full growth potential and poverty is to be alleviated at a more rapid pace. These issues include the reduced competitiveness of Colombian goods in external markets brought about in recent years by the relatively high domestic inflation uncompensated by foreign exchange adjustments, and the slow modernization and lowered efficiency of domestic industry resulting from low investment levels and limited foreign competition. Public investment has not increased significantly in the past few years and domestic resource mobilization is still insufficient, particu- larly in comparison to the expansion required in public investment. While income distribution and welfare trends appear favorable, substantial efforts will have to be made to reduce the widespread poverty still existing in the country. 15. Economic policy is presently in a period of transition as the authorities attempt to combine stabilization and growth measures so as to arrest inflation while still permitting the economy to expand. Some advances have already been made in dismantling the existing stabilization program and in bringing about conditions favorable to increased investment and growth. For example, the 100% marginal reserve requirement imposed on commercial banks has been rescinded and the Government has taken a more active role in the capital market through open market operations. The transition process, however, has been moving slowly in certain respects and the Government recog- nizes the importance of acting quickly in finding appropriate solutions to these potential constraints to growth. Exchange rate adjustments must once again become a tool of development, rather than a component of stabili- zation policy, and further measures to stimulate private investment and encourage technological change are needed. As inflationary pressures continue to recede, controls on interest rates and credit, which have already been relaxed somewhat, are expected to be further reduced as are tariff and non- tariff barriers to trade. Such measures, once fully effective, could be expected to produce a sizeable jump in private investment and in economic  -6- efficiency. Delays in carrying out economic and social infrastructure invest- ments could adversely affect growth of the productive sectors and reduce economic welfare. Thus public investment needs to be accelerated at the maximum consistent with continued progress toward economic stability. The Government is particularly concerned with the slow growth of energy sector investment (with the exception of investment in hydropower). Although some progress has been achieved as capital outlays by foreign oil companies have risen as a result of more profitable wellhead prices and the growth in demand for petroleum products has been slowed by higher retail prices, the Government intends to advance development of the country's other energy resources, i.e., coal and natural gas. 16. Since in the absence of corrective measures both the current account of the balance of payments and public sector savings are expected to weaken over the next few years, mobilization of domestic resources to support the strong expansion required in public investment is likely to be a critical issue in carrying out the Government's strategy. The authorities are already moving ahead on this issue, having taken measures to improve tax administration and enforcement and to generate resources through large real increases in charges for public services. Additional tax measures will probably be needed, however. Capital market improvements, including realistic interest rates on savings deposits, are expected to stimulate private savings. These efforts are being complemented by measures to encourage the production of basic foodstuffs--which weigh heavily in the consumer market basket--as a means of reducing inflationary pressures and moderating inflationary expectations, which should have a further favorable effect on savings. 17. Given the country's strong resource base, with continued sound economic management, Colombia is expected to achieve annual real GDP growth averaging about 6% during the 1980-85 period. However, because of the expected decline in coffee prices and with accelerating oil imports and the high import content of future investment, the current account of the balance of payments is projected to be in deficit throughout the early to mid-1980s. Colombia is likely, therefore, to continue to be a large net importer of capital for some time to come. Even assuming that the Colombian authorities permit a drawdown of international reserves to the equivalent of three months' imports in the years immediately ahead, gross external capital requirements are projected at US$10 billion between 1980 and 1985, or an annual average of about US$1.7 billion. An increasing proportion of this capital inflow is expected to be provided by foreign commercial and financial sources. 18. Colombia's public external debt repayable in foreign currency amounted to an estimated US$4.4 billion at the end of 1978, equivalent to about 18% of GDP, of which US$2.8 billion was disbursed and outstanding. The Bank/IDA share of this external debt was 26.5% in 1978. Because of the expected decline in commitments from bilateral sources and corresponding recent acceleration in Bank lending, this share is expected to exceed 30% in the early 1980s, before falling to about 27% by 1985. Although the public debt service ratio fell in recent years as export growth accelerated, this ratio is expected to increase from 10% in 1978 to about 15% in 1985. Balance of payments prospects beyond the early 1980s will depend heavily on the timely  development of domestic energy sources and on progress made in executing several natural resource-based export-oriented projects currently under preparation. Given the expected continuation of sound economic and financial management and timely execution of the country's energy program, Colombia is considered creditworthy for the required external borrowing on conventional terms. PART II: BANK GROUP OPERATIONS IN COLOMBIA 19. The proposed loan, the 84th to be made to Colombia, would bring the total amount of Bank loans to Colombia to US$2,356.6 million (net of cancella- tions). Of this amount, US$1,803.9 million is now held by the Bank; IDA made one credit of US$19.5 million for highways in Colombia in 1961. Disbursements have been completed on 48 loans and the IDA credit. During 1972-77, disburse- ments averaged US$86 million equivalent per year, then declined slightly to US$74 million in 1978 and increased sharply to US$135 million equivalent in 1979. The improving performance of social sector institutions in the execu- tion of Bank-financed programs, the gradual containment of inflationary pressures which should allow for relaxation of fiscal restraint and the recent Bank lending for infrastructure projects, all point to higher levels of disbursements in the future. IFC has made investments and underwriting commitments of US$53.9 million in 24 enterprises and now holds US$16.7 million. Annex II contains a summary statement of Bank loans, the IDA credit and IFC investments as of December 31, 1979. The Annex also contains summaries on the execution of the 34 ongoing projects. 20. In response to the priority objectives established by successive Governments (self-sustained economic growth, increased employment and improved income distribution), since 1966, Bank lending in Colombia has become increas- ingly diversified and has been concentrated on production-oriented programs and activities which emphasized social as well as economic benefits. Eleven of the thirteen loans for industry have been made since then, eleven of the thirteen agricultural loans, all three loans for education, one loan for a nutrition project, two loans for urban development projects and all nine loans for water supply and sewerage. During the same period only fourteen loans in the power and transport sectors were made, while before 1966 twenty-two out of a total of twenty-five were to these sectors. 21. Bank lending to Colombia in FY79 consisted of two loans each for water supply/sewerage and power, and one each for urban development, aviation development and agricultural credit, totalling US$311.5 million equivalent. In addition to the loan proposed in this report, the FY80 program includes the recently approved loan for a nickel project, as well as proposed loans for vocational training, power generation, secondary oil recovery and exploration, industrial credit, including small-scale industry, and telecommu- nications. Work is also under way on projects for land settlement, agro-indus- tries, railways, ports, feeder and rural roads, further mining development, power (including village electrification), irrigation, agricultural credit, water supply and sewerage, urban development and environmental improvement, for possible consideration by the Executive Directors during the next two years.  -8- 22. The proposed Bank lending conforms closely with the Government's development strategy which is attuned to the requirements of the era that -began with the 1973 price rise of internationally traded petroleum. To help Colombia develop domestic sources of energy, a sizeable part of the proposed lending would be for hydropower. The Bank intends to assist the development of coal mines and petroleum, which hold potential in helping Colombia meet part of its energy requirements and in diversifying exports. Bank involvement in the energy sector would help mobilize additional external financing as some of the projects would require co-financing. Other future loans would finance agricul- ture and industry (including agro-industries) to assist the Government in its efforts to raise overall productivity, income and employment, and to strengthen and diversify exports. Closely related to these objectives would be the proposed Bank lending for transport infrastructure. In this context, the Bank is assisting the Government in preparing a rural and feeder roads project to integrate the more backward areas of the country into the modern economy. Other loans under preparation for ports and railroads are aimed at helping Colombia handle larger volumes of non-traditional exports and the imported inputs on which the modern sector of its economy relies for expansion. Lending for telecommunication would assist the Government in its efforts to integrate the smaller towns into the national economy and reduce the large amount of congestion in existing networks. Finally, a relatively large number of loans are being prepared in support of the Government's efforts to help the lowest 50% of the Colombian population. Lending for urban development and slum improvement, rural electrification, land settlement, water supply and sewerage, irrigation and environmental improvement projects is principally designed to improve the standard of living of the poor. 23. The operations of external lenders in Colombia are shown in Annex I. While IBRD, IDB, and bilateral sources provided about 75% of gross disburse- ments to the public sector from external sources in the 1961-72 period, their share has decreased since then to approximately 50% for the 1975-77 period and it is expected that during the period 1979-83 this share will decline further to about 38% of external capital requirements. Like the Bank, IDB has given increased emphasis to social projects and has financed projects in low cost housing, urban and rural development, agrarian reform, university educa- tion, water supply, rural electrification and land erosion control. In the future, it proposes to assist Colombia to develop sources of domestic energy and to expand the activity of the productive sectors to help generate increased employment. USAID has supported programs in education, urban development and small farm development, but it plans to phase out its aid program in Colombia over the next few years with the disbursement of a US$6 million nutrition loan. The Governments of the Federal Republic of Germany and the Netherlands have also provided concessional financing for social and regional integration projects.  - 9 - PART III - THE ENERGY SECTOR AND POWER REQUIREMENTS Energy Resources and Requirements 24. Colombia is endowed with substantial primary energy resources (hydropower, natural gas, petroleum and coal), the most promising of which is hydropower, estimated at a potential 100 GW, of which only 2.7% have been developed to date. Coal resources have been barely explored, but reserves are estimated to range from 20-40 billion metric tons, at which level they would be the largest in Latin America. A recent discovery of natural gas in the Guajira Peninsula, amounting to 3.5 trillion cubic feet, has brought proven reserves to a level well above 5 trillion cubic feet. On the other hand, because of insufficient exploration, known reserves of crude oil have fallen and are estimated to amount to less than seven years of 1976 output. However, only one of Colombia's nine sedimentary basins (the Magdalena River Valley) has been explored on a systematic basis, although the state oil company, ECOPETROL, in association with foreign oil companies, is now explor- ing other basins. Additionally, investigation of nuclear, geo-thermal and solar energy is under way. 25. Since 1965, output of primary energy has lagged behind overall economic growth, mainly because of declining crude oil output. By 1977, production of crude (281 trillion Btu) had fallen to 69% of 1965 output. While during 1965-77 total energy output increased by 10%, from 578 trillion Btu to 637 trillion Btu, annual energy consumption increased by 132%, rising from 271 trillion Btu to 629 trillion Btu. (Exports and losses account for the difference between production and consumption figures.) By 1978, hydro- carbon imports exceeded exports by US$79 million equivalent. Projections of Colombia's energy balance indicate an expanding deficit that could become so large in the mid-1980s as to become a constraint on economic growth (paragraphs 13 and 15). Energy Development Objectives and Strategy 26. As stated, the Government's objective is to overcome the energy deficit by developing domestic energy sources and by promoting rational use of them. To this end, it has adopted several measures. First, it has recast its hydrocarbon pricing and regulation policy to stimulate output of petro- leum, natural gas and coal. Foreign oil companies, in response to these measures, have initiated new explorations. Second, CARBOCOL, a Government agency established to develop the country's coal resources, has concluded contracts with various foreign companies to undertake exploration and develop- ment of several coal fields, particularly El Cerrejon, in the Guajira region. Third, considerable substitution of gas for petroleum products in industry and thermal power generation is being carried out on the Atlantic Coast. Fourth, a program for expansion of power generation and transmission facilities to meet forecast demand over the 1978-85 period has been drawn up (paragraphs 32 and 33). Fifth, the Government has concluded a contract with the French Minatome Group to explore the country's uranium potential. Lastly, the Government has adopted a policy calling for charging the full cost of energy  - 10 - to consumers in order to promote rational energy use and self-generate an important share of the financial resources required for investment in the sector (paragraph 31). The Power Market, Service Levels and Institutional Framework 27. Electric power is the fastest-growing form of energy use in Colombia. Its share of total energy consumption has risen from 14% in 1960 to 25% in 1977. Colombia's installed capacity at the end of 1977 was about 3,800 MW, including self production; hydro stations account for 68% of total power generated. Since 1971, production of electricity has been growing at an annual rate of 9.6%, i.e., one and a half times as fast as the growth rate of GDP. Power sales also have been rising rapidly (9.5% per annum since 1972). Annual per capita electricity generation stands at 610 kWh, which is below the average for Latin America. Households (42% of the total), industry (33%) and commerce (14%) are the major electricity users. 28. About 62% of Colombia's 25.2 million population has electric power, compared to 45% in 1970 and 26% in 1950. The urban population, comprising about 66% of the population, has greater access to electricity. 1/ In 1976, for example, 85% of households in large cities (population of 50,000 or more) had electrical service while in rural towns (population between 500-2,500) the corresponding figure was 36%; in other rural areas, 16%. 2/ With the assis- tance of external lenders, the Government is carrying out programs to increase the supply of electricity to rural areas. 29. The Ministry of Mines and Energy is charged with formulating national policy for power generation, transmission and distribution. In defining investment priorities, it shares responsibility with the National Planning Department (DNP). The Government cannot enforce its policies directly on the municipally controlled power companies, but Interconexion Electrica, S.A. (ISA), a generating and transmission company, of which the shareholders are the largest municipal power companies and the Government-owned national power companies, 3/ provides a mechanism for reaching agreement on major issues affecting the sector. ISA defines the generation and transmission expansion program for the interconnected system, after approval by DNP, this becomes the national power expansion program. Public utility tariffs are regulated by the Junta Nacional de Tarifas de Servicios Publicos (JNT) in the 1/ Residents of cities with 2,500 or more inhabitants at the end of 1977. This data differs from that given as the most recent estimate in the Social Indicators Data Sheet (Annex 1) which is an average for the period 1974-77. 2/ Estimate for end-1977. This data differs from that given as the most recent estimate in the Social Indicators Data Sheet (Annex 1) which is an average for 1973. 3/ EEEB, Empresas Publicas de Medellin (EPM), Corporacion Electrica de la Costa Atlantica (CORELCA), Corporacion Autonoma Regional del Valle del Rio Cauca (CVC), and Instituto Colombiano de Energia Electrica (ICEL).  - 11 - DNP. JNT, which was established in the late sixties with Bank support, has the power to approve requests from the power companies for tariff increases. The power companies, however, are free to set rates lower than those approved by JNT. Power Development and Its Financing 30. Colombia's power sector has developed rapidly. Between 1950-1977 installed generating capacity increased by 3,515 MW or fifteenfold, electricity service has been provided to one-third more of the population (paragraph 28) and the task of interconnecting the country's regional systems to form an inte- grated national network is nearing completion (paragraph 38). A substan- tial part of this expansion was financed with internal cash generation (in the case of the large municipal cQmpanies, about 40% of total capital outlays) and with contributions from the National Treasury, chiefly to ICEL, CVC and CORELCA. The Bank and IDB were the main sources of foreign financing for the power sector (US$607 million equivalent combined), although in recent years suppliers' credits and external commercial banks have increased their partici- pation. 31. During 1971-74, power tariff adjustments lagged behind cost increases and the companies' finances deteriorated, with the result that construction of needed works was delayed and the operating efficiency of the companies suffered. However, investment outlays have picked up sharply since 1977, when the Government and the major power companies initiated a program of tariff increases with the aim of generating an adequate portion of investment funds for planned expansion. They propose to continue adjusting tariffs as necessary to generate sufficient resources for investment. Also, to promote rational energy use, the power companies and the Government, under the San Carlos I Hydro Power Project (1583-CO), are studying the internal structure of rates with a view toward bringing them more in line with the cost of supply to each consumer category. The study is taking into account the Government's social welfare policies with respect to rates to be charged to low income consumers (paragraph 57). Power Requirements and Proposed Investments 32. To catch up with rising power requirements, in view of the under- investment in new facilities during the first half of the 1970s and to sub- stitute some electricity for more costly forms of energy, effective generating capacity is planned to be increased by 130%, or about 4,800 MW, by 1985. Of this total, about 580 MW were completed in 1977 and 2,700 MW are under con- struction. 33. Investments in generation and transmission through 1985 are expected to amount to about US$4.2 billion in mid-1979 prices, of which some 60% would be foreign exchange. Thus, in accordance with national policy of financing only foreign costs with external borrowings, external financing on the order of US$600 million equivalent on average per annum, in nominal terms, would be required. A substantial share of these funds are expected to come from foreign capital markets, which have recently been providing increased finan- cing to the power sector, including to Bank-financed projects. Future  - 12 - distribution investments are only partially known nation-wide but, for EEEB and EPM, are estimated to amount to some US$700 million in 1979 prices during the aforementioned period. 34. To provide for future sector expansion, ISA and its shareholders, under San Carlos I, are preparing a Master Plan for generation and transmission facilities covering the period 1980-1990 in detail, and 1991-2000 in more general terms. This plan is being supplemented by a Master Plan for distri- bution covering the same period. This combined effort should encourage not only improved investment planning but also greater attention to system design, operation and maintenance in light of modern techniques with a view toward enhancing the quality and reliability of service to consumers. Overall, the consolidated master plan is expected to provide a valuable framework for long-range decisions on sector expansion, financing, pricing and rural elec- trification. The Bogota Power Market 35. Bogota, Colombia's capital city, is also the country's principal commercial, financial and industrial center, and accounts for roughly one-third of GDP. Industrialization and expanded economic activity have given rise to steadily-growing employment opportunities (Bogota's unemployment rate is 40% below the national average), which have attracted considerable migration to the city, mainly from rural areas. In addition to its attractive employment possibilities, Bogota's cool, even climate, ample space for physical expansion, and substantial hydrological resources are indicative of the city's long-term development potential. With its population increasing at 5.8% since 1970, Bogota's inhabitants numbered about 3.8 million in 1978. Despite Government programs to foster the development of secondary cities, Bogota is expected to continue to grow rapidly, with its population reaching more than 7 million by 1990. 36. Charged with supplying electricity to this expanding market, in 1978 EEEB served 500,000 customers, who in that same year consumed 3,550 GWh. Households (40% of the total), and commercial (18%) and industrial establish- ments (32%) are EEEB's major customers. The company's sales have been growing rapidly, at an annual rate of 9.7%. In line with the country's favorable economic outlook and Bogota's growing urbanization, EEEB's gross energy requirements are expected to rise even faster during 1980-85 (about 11% per annum). 37. To keep pace with the city's household requirements and to facilitate commercial and industrial expansion, EEEB is carrying out a program to extend and modernize its electricity distribution network. In 1978, for example, EEEB connected 27,730 new urban customers, including provision of service to 31 marginal neighborhoods (totalling about 3,800 subscribers) and to approxi- mately 1,840 rural families in 48 villages. By 1985, EEEB's system is expected to serve an estimated 910,000 customers, with a peak demand of 1,600 MW, and a total energy demand of 8,407 GWh per annum. The 1978-85 National Power Expansion Program, which includes EEEB's Mesitas hydropower facility (1628-CO), would ensure the required power supply. To deliver this power to the final  - 13 - consumer, the company's Investment Program (1979-85) provides for necessary additions to transmission and distribution facilities, as well as rehabilita- tion and modernization of older parts of the system. This program includes the proposed project (1980-82), which would be the first Bank loan exclusively financing distribution in Colombia. The project is aimed not only at providing additional connections to electricity services but also at increasing the coverage of low income neighborhoods and at improving the efficiency and reliability of the overall urban network, particularly in the older sections of the city (paragraph 43). The Investment Program also includes rural distribution (1982, with proposed Kreditanstalt fur Wiederaufbau support) and future urban distribution (1983-85). Bank Participation in the Power Sector 38. Since 1950, the Bank has made 22 loans to Colombia's power sector, totalling US$682 million. Eighteen loans have assisted the expansion of generating capacity and transmission and distribution facilities in the systems serving Bogota, Medellin, Cali, Cartagena, Bucaramanga and Manizales, including expansion of electricity distribution to low income areas (874-CO, 1973). In addition, the Bank has supported rural electrification under 246-CO (1960) and 313-CO (1962) and under the ongoing Integrated Rural Development Project (1352-CO, 1977). The most recent loans included the 500 kV Inter- connection Line (1583-CO, 1978) and the San Carlos I and II Hydropower Projects (Loans 1582-CO, 1978; 1725-CO, 1979) which would, respectively, complete the task of interconnecting the country's regional power systems begun under 575-CO (1968), and add 1240 MW of capacity to the national inter- connected system; EEEB's Mesitas Hydropower Project (1628-CO, 1979) would meet about 95% of projected incremental demand in the Bogota system during 1982-84. Taken together with the abovementioned projects and the Master Plan referred to in paragraph 34, the proposed project reflects the Bank's expanding participation in overall power development in Colombia, from the planning stage through financing and construction of generation and transmission facilities, to delivery of service to the final consumer. It is envisaged that the proposed project would be followed in the coming year by a project in support of village electrification in northern Colombia. 39. EEEB has received four Bank loans, totalling US$169.6 million equivalent. The first two (246-CO, 1960; and 313-.CO, 1962) assisted in financing the addition of 305 MW to hydro and thermal plant capacity, trans- mission lines and distribution system expansion. The works financed included the rebuilding of distribution networks in several, mostly rural, towns near Bogota, as well as expansion of rural sub-transmission. The third loan (537-CO, 1968) supported a 200 MW increase in EEEB's hydro plant capacity, and expansion of transmission and distribution facilities. Despite delays, all works under the three projects were successfully carried out. A Project Performance Audit Report (SecM77-536, June 1977) of Loan 537-CO observed that project objectives had been met, both in terms of project execution and institutional performance. With respect to financial performance of the utility, EEEB had exceeded the 9% covenanted annual return on partially- revalued assets. Moreover, despite the fact that the cost of total invest- ments for the Third Expansion Program (1968-74) were substantially higher  - 14 - than anticipated at the outset, EEEB was able to generate from revenues a satisfactory 45% of total investment costs. Under the fourth loan (1628-CO, 1978), EEEB is constructing the 600 MW Mesitas hydro plant (paragraph 38) scheduled for completion by mid-1982. 40. Bank support of sound power development financing has, until recently, been most successful with the large municipal companies, EEEB and EPM. The consolidation of public power entities into regional companies, the joint participation of the major regional and municipal companies in national expan- sion programs through ISA and, most importantly, the national adoption of policies designed to ensure orderly expansion of power facilities through sound planning, coordination and financing of development have enabled the sector to attain the current overall satisfactory level of performance. 41. Past Bank lending to Colombia's power sector has been reviewed in four OED reports. "Power Interconnection (Loan 575-CO) and Chivor Hydroelectric Projects (Loan 681-CO)" (Report No. 2720, October 29, 1979) details the Bank's participation in Colombia's successful effort to evolve a stronger and more efficient power sector organization. Through the creation of ISA in conjunc- tion with these projects, and the steps taken to overcome financial and institutional difficulties, real progress was made toward coordinated sector development. Despite construction delays and increased costs, both projects were successfully carried out. The conclusions of "Third Power Expansion Program - Loan 537-CO" (Report No. 536, June 29, 1977) are discussed in paragraph 39. A third report, "Third Medellin Power Project - Loan 369-CO" (Report No. 450, May 24, 1974) concluded that the project had been very well executed despite considerable geological difficulties. Although EPM's power rates were in general maintained at a level which should have generated sufficient funds, anticipated revenues did not fully materialize because of power losses in the distribution system, a problem which has since been rectified. Overall Bank operations in the sector were reviewed in an OED report entitled "Bank Operations in Colombia, an Evaluation" (Report No. Z-18) of May 25, 1972. The report concluded that Bank financing was successful in assisting the power companies to develop hydroelectric plants at lower unit cost than they otherwise would have been able to do. In turn, this permitted greater urban coverage as well as cheaper and more reliable electricity to supply to industry. The report commended Bank efforts in the establishment of JNT and the central interconnected system which facilitated further power sector development. Among other things, the report recommended that in the future the Bank pay increased attention to the companies' financial planning, tariff structures, distribution programs and energy losses. These points have been addressed under the aforementioned recent loans, and complementary measures are provided for under the proposed project. PART IV - THE PROJECT Background and Objectives 42. The project, prepared by EEEB through consultants (INGETEC, Colombia), comprises part of EEEB's 1979-85 Investment Program, and covers EEEB's planned 1980-82 expansion and rehabilitation of its urban distribution network, and  - 15 - technical studies. The project was appraised by a Bank mission which visited Colombia in February/March 1979. Negotiations were held in Washington D.C., during the week of January 21, 1980, with a Colombian delegation led by Dra. Leonor Montoya de Torres, Director of Public Credit, and Mr. Roberto Caceres, General Manager of EEEB. 43. Project objectives are: (a) to provide facilities necessary to supply electricity service to about 157,000 new residential, commercial, industrial and low income urban customers over 1980-82 and to improve the quality and reliability of service throughout the system; (b) to support EEEB's efforts to improve its distribution planning, design, operating and maintenance practices; and (c) to continue support of the Government and the Bank's power sector objectives, including sound sector financing, operational efficiency and economic structure of tariffs to promote rational energy use. Project Description 44. The physical facilities comprise: (a) Subtransmission: installation of 450 MVA of substation capacity at 230 kV, 390 MVA at 115 kV and 42 km of lines at 115 kV; (b) Distribution: line extensions and improvements at 11.4 kV or 13.2 kV, and 34.5 kV aggregating about 1,330 circuit km; instal- lation of about 630 km and improvements to about 1,150 km of lines at 120/208 V; installation of about 250 MVA of distribution transformer capacity at 120/208 V and 66 MVA at 480 V; installa- tion of about 3 MVA of voltage regulators and 200 MVAR of capaci- tors; installation of about 48,000 kWh meters; and installation of about 33,000 street lights; and (c) Vehicles and Equipment: acquisition of about 331 utility vehicles and specialized equipment, and 300 mobile radios for operation and maintenance of the system. (EEEB's vehicle maintenance practices are excellent, as evidenced by the fact that about 25% of the company's operating fleet is from 15-20 years old.) EEEB's fleet requires urgent replacement and additions to ensure adequate upkeep of the distribution system to be renovated under the project. Moreover, financing under the proposed loan would enable EEEB to procure the vehicles through international competitive bidding, thus realizing substantial savings. 45. Studies (a) Distribution Planning. Consultants are being engaged (paragraph 59) to assist EEEB in strengthening its distribution and planning practices and to advise the company on technical and economic aspects of future system expansion, including the distribution Master Plan (paragraph 34). The study would be presented to the Bank for comments by November 30, 1980, and, by January 31, 1981, implementation of Bank-agreed procedures would be initiated (Section 3.02(b) of the draft Loan Agreement);  - 16 - (b) Dispatch Center. Consultants would be employed by July 31, 1980, to carry out a study of the economic justification, preliminary design and cost of a regional energy control and dispatch center that would permit delivery to consumers of least cost electricity with an adequate level of reliability. This facility, which is provided for in EEEB's 1979-85 Investment Program, would operate as a satellite of ISA's national control center. By August 31, 1981, the results of the study, together with EEEB's program for implementation, would be received by the Bank for review and comments (Section 3.02(c) of the draft Loan Agreement); and (c) Insurance. To assist EEEB in designing an appropriate insurance policy for its fixed assets and in establishing a specialized department to deal with insurance matters, consultants would be engaged by June 30, 1980. The study would be presented to the Bank for review by April 30, 1981. EEEB would then prepare a plan of action, satisfactory to the Bank, to provide its assets with adequate insurance and, by December 31, 1981 put it into effect (Section 3.02(d) of the draft Loan Agreement) 46. Training. To prepare EEEB's supervisory technicians to modernize the company's operational and maintenance practices in distribution, a twelve- month training program satisfactory to the Bank will be carried out by August 31, 1981 through consultants to be engaged by May 31, 1980 (Section 3.02(e) of the draft Loan Agreement). Costs and Financing 47. Total project cost is estimated at US$182.2 million equivalent, of which US$87.0 million equivalent correspond to the foreign exchange component. During project execution (1980-82), EEEB plans to carry out other investments at a cost of US$777 million equivalent, including investments in ISA, and will require an increase in working capital of US$35 million equivalent. Project costs are based upon estimates prepared by INGETEC (Colombia) for EEEB, and include physical contingencies amounting to approximately 8% of the base cost; also included are price contingencies equivalent to about 24% of base costs, reflecting estimates of yearly price increases. The cost of consultant services for studies and training includes an average of US$4,500 per man- month for local services (53 man-months) and US$11,500 per man-month for foreign services (56 man-months). All such services would be provided by consultants whose qualifications, experience, and terms and conditions would be satisfactory to the Bank and EEEB (Section 3.02 of the draft Loan Agreement). 48. The proposed loan of US$87.0 million would finance 48% of the total funds required for the project, i.e., 100% of the project's foreign exchange cost. The remaining costs (52%) would be financed by EEEB's internal cash generation and commercial borrowings. The Borrower, EEEB 49. EEEB is an autonomous company owned by the Municipality of the Special District of Bogota. It was established by private Colombian interests and has operated the city's electric service for the past 79 years, since 1951 under municipal ownership. It has an installed capacity of 719 MW, 81% of which is hydro and the balance coal-fired thermal.  - 17 - 50. EEEB is administered by a seven member Board of Directors and a General Manager appointed by the Board. The General Manager is responsible for day-to-day operations with the support of four Assistant Managers heading, respectively, the administrative, finance and commercial, technical and operations branches of the organization. The Board of Directors is chaired by the Major of Bogota, and consists of two members elected by the Municipal Council, three members chosen by the Council from lists submitted by associa- tions representative of banks, commerce, and industry in Bogota, and one member chosen by the President of Colombia. This composition was worked out in connection with the Bank's initial loan to EEEB (246-CO) and has generally proven satisfactory. Although EEEB has a history of stable and competent management, turnover in its senior personnel increased during the past three years resulting in a reduction in the number of experienced financial officers. Recently the financial staff have been strengthened, particularly as a result of the appointment of a new financial manager and the hiring of management consultants to advise on managerial, budgetary and accounting systems, and financial planning. This consultant assistance is to be supplemented by additional middle-management staff and a specialized training program for middle management staff (Section 3.02(g) of the draft Loan Agreement). 51. EEEB had 2,254 employees at the beginning of 1979, including a technical staff of 608, and 1,348 operations personnel, as well as 146 con- struction staff. The history of the company's staff growth over the past ten years, in relation to number of customers served and energy sold, shows a steadily improving trend: 220 customers and 1,603 MWh per employee in 1978, compared with 174 customers and 1,021 MWh per employee in 1968. These figures compare favorably with those of electric utilities serving similar markets. 52. Finances. Over its 18-year relationship with the Bank, EEEB has maintained a satisfactory financial position. During the past ten years its internal cash generation has provided on average more than 50% of annual investments, including substantial contributions to ISA. The balance of the company's investment funds have been obtained through borrowings, most of which have been secured from IBRD and IDB; no government funding has ever been required. 53. As a result of the measures taken by EEEB under the San Carlos I and Mesitas projects (including full revaluation of assets for monitoring of financial performance), the company's financial structure has been strengthened. At the end of 1978, EEEB's debt to equity ratio was 34/66, calculated on the basis of revalued assets, with 70% of the debt in long-term obligations to the Bank and the IDB. EEEB's 1979-82 investment program amounts to US$959 million equivalent, of which US$182 million correspond to the proposed project. The Mesitas project, partially financed by Loan 1628-CO, is the largest component of the program, requiring an investment of US$311 million. In line with Govern- ment practice to finance the local cost of investments only from domestic sources, EEEB would be required to generate internally approximately 40% of the funds required during this period, taking into account that no more than Col$6,146 million (US$115 million equivalent) would likely be available from domestic commercial banks. The balance would be obtained through existing and future external borrowings. The favorable structure of EEEB's debt and its  - 18 - program of tariff increases (paragraph 54) place it in a good position to obtain the additional financing it will need over and above that provided by the Bank. For example, EEEB has recently concluded negotiations with a commercial bank for part of the Mesitas foreign costs (10.5 years, 6 years grace, interest 3/4% over LIBOR, commission 3/8%, management charges 1/2% flat, government guarantee not required). As a condition of effectiveness of the proposed loan, EEEB would make satisfactory arrangements for the balance of financing for its 1980-81 investments (Section 8.01(a) of the draft Loan Agreement). 54. The projected cash generation in EEEB's financing plan is based upon the company's planned tariff increases. The plan assumes continuance of the current 2.2% monthly tariff increase through 1982, plus a further increase estimated at 12% in mid-1980, in order to generate adequate cash. As a condi- tion of loan effectiveness, EEEB will have to demonstrate it has taken all necessary measures to achieve the agreed rate of return for 1980 (paragraph 55 and Section 8.01(b) of the draft Loan Agreement). The monthly 2.2% increase, which has been in effect since 1977, has been authorized by JNT through 1980; EEEB will have to request necessary authorization to continue it through 1982. In this way, by end-1982, EEEB's rates would have increased 86% over 1977 rates in real terms. Such an increase is consistent with the policy of the Government of charging the full cost of energy to the final user in order to promote rational power use and self-generate an important share of the resources needed for investment (paragraph 26). 55. Based on the above, EEEB's projected net operating income would produce annual rates of return on fully revalued assets ranging from 12% in 1979-80, on average, to 14% in 1981 and annually thereafter (Section 5.06 of the draft Loan Agreement), compared with the 12% agreed upon under the San Carlos I and Mesitas loans. (Although EEEB is expected to achieve an annual average of 10.5% over 1978-80, rather than the 12% envisaged under the afore- mentioned loans, the company's financial performance is considered acceptable.) These returns are consistent with the aforementioned internal cash generation (paragraph 53). 56. EEEB's debt service coverage ratio during 1979-82 would be 2.0 times as a result of the substantial revenue increase and the grace period of foreign borrowings. In subsequent years, the ratio is expected to fall no lower than 1.7, which would still be satisfactory. EEEB has confirmed that, unless the Bank should otherwise agree, it would not incur debt in any fiscal year which would reduce the coverage of its maximum future debt service by internal cash generation below 1.5 times (Section 5.08 of the draft Loan Agreement). It is expected that the company's debt/equity ratio will decrease slightly from the current proportion of approximately 34/66 during the next two years, and decline to 45/55 by the end of 1983. Lastly, to ensure adherence to the financing plan as well as to the national least-cost power expansion program, until project completion, EEEB has agreed not to undertake, without prior concurrence of the Bank, investments in any year in excess of 1% of the value of its net fixed assets in service other than for (a) the proposed project, (b) generation expansion included in the national expansion program, provided that adequate financing would be available, (c) its obligations to  - 19 - ISA, and (d) transmission/distribution expansion up to US$9 million equivalent in each of the years 1980-82 (Section 5.04 of the draft Loan Agreement). Currently, EEEB is considering the possibility of building, in association with ISA, the planned Guavio Hydro Power Project. EEEB, therefore, has confirmed that, before proceeding with this project, it will present the Bank with a satisfactory financing plan, as provided for in the agreement described above. 57. Tariff Structure. EEEB's average tariff level has been rising in real terms and is scheduled to continue doing so over the next two-and- one-half years. However, its charges to industrial and commercial electricity consumers are higher than the corresponding residential charges, even though the cost of residential service would be at least equal to the cost of service to industrial or commercial customers. Since late 1977, the gap between residential and other rates has widened by the allocation of a smaller portion of overall tariff increases to the residential category and by the exemption of residential consumers using less than 300 kWh per month from tariff increases. A study on cost of service to final consumers and pricing implica- tions, to be carried out under San Carlos I, is expected to detail the precise dimensions of the structural imbalance. In view of the importance to the energy sector, and to the Colombian economy as a whole, of minimizing distor- tions in energy pricing structure, EEEB would, as agreed under Mesitas and confirmed under the proposed loan, take account of the study's recommendations and establish a related program in agreement with the Bank. In the event that study results would be delayed, EEEB would implement an interim program to overcome the most obvious aspects of the imbalance (Section 5.09 of the draft Loan Agreement). Ultimately, the aggregate cost of service to each category of consumers (residential, industrial, commercial and governmental) would be covered approximately by the aggregate price charged to each category, with the exception that the revised tariff structure would take account of the government's social welfare policies with respect to the lowest-income consumers. Procurement, Implementation and Disbursements 58. All the items to be financed by the proposed loan (except consulting services and training) would be procured by international competitive bidding (ICB) under Bank guidelines. Colombian manufacturers would receive a margin of preference of 15% or the applicable import duties, whichever is the lower, for purposes of bid evaluation. To avoid delays in project implementation, EEEB will procure through local competitive bidding a small amount of distribu- tion equipment, valued at less than US$2 million; equipment specifications are satisfactory. The project commenced in January 1980 and would be completed by end-1982. 59. Disbursements would be made against: (a) 100% of foreign expendi- tures for imported equipment; (b) 94% of the ex-factory cost of locally manu- factured equipment and materials; and (c) 100% of foreign and 50% of local expenditures for consultant services and training. Retroactive financing of up to US$500,000 equivalent is proposed for consultant services paid after January 1, 1980 (paragraph 45(a)). The loan is expected to be fully disbursed by December 31, 1983.  - 20 - Benefits and Risks 60. The impact of the project on the development of Bogota and its surrounding area would be considerable, in view of the economic and social effects of making electricity supply available to an estimated 157,000 new residential, industrial and commercial subscribers. About thirty-five percent of these new subscribers would be among the lower-income group (those consuming less than 200 kWh per month), representing about 340,000 people. The project would improve the reliability of power supply throughout the system and facilitate commercial and industrial expansion, thus contributing to increased employment opportunities. Small industries are expected to benefit in par- ticular, as improvements in electricity supply would permit them to reach higher levels of efficiency. 61. A return on investment was calculated by relating the combined costs (capital and incremental operating/maintenance costs) of EEEB's 1979-85 development program to estimated incremental revenues. On this basis, the discount rate at which the present value of project costs equal benefits would be 12%, i.e., above the estimated opportunity cost of capital in Colombia. The incremental revenues, however, which are based on official tariffs rather than on the--unmeasurable--consumers' willingness to pay, underestimate the benefits to subscribers, particularly in commerce and industry. The measurable benefits also exclude the social benefits accruing from connecting more than 57,000 low income households for the first time and from increased safety which accompanies better street lighting. The results of a sensitivity analysis indicate that, even assuming a 10% increase in projected costs, or an equivalent decrease in projected revenues, the rate of return would not fall below 10%. 62. Project risks are considered minimal. The procurement and construc- tion schedules are reasonable, and there are no difficult or unusual technical aspects. Furthermore, EEEB is an experienced and competent company. Ecology 63. EEEB has carried out previous projects with due regard to environ- mental protection and safety considerations. Under the proposed project, works will be carried out in a like manner, consistent with the aim of minimal effect on land usage and adverse visual impact. PART V: LEGAL INSTRUMENTS AND AUTHORITY 64. The draft Loan Agreement between the Bank and EEEB, the draft Guarantee Agreement between the Republic of Colombia and the Bank and the report of the Committee provided for in Article III, Section 4(iii) of the Bank's Articles of Agreement are being distributed to the Executive Directors separately.  - 21 - 65. Special conditions of the loan are listed in Section III of Annex III. Additional conditions of effectiveness would be that EEEB has made satisfactory arrangements for the balance of required financing for invest- ments programmed for 1980-81, and that arrangements satisfactory to the Bank have been made by EEEB to achieve the agreed 1980 rate of return (paragraphs 53 and 54). 66. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI: RECOMENDATION 67. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments February 22, 1980   -22 - ANNEX I TABLE 3A I2e . of 5 CO7MIA - SOCIAL INDICATORS DATA SREZT REEEO GDUPS (ADJUSTED A1I~R LAND ARL4 (TWUJA% S. Kt.) COUXOIA - yDSS SCams X8TAS ) COLOMBIA ~~~- ,DS nCW ISTDIATE L TOTAL 1138.9 SBlA SAME NXT HIGER AGRICULTURAL 225.6 OST RECENT GECORAPRIC INCOE INCOIE 1960 /b 1970 /b ESTIMTE3 /b DCION c GRIUP d GROUP Lo GNP PER CAPITA (US5) 240.0 380.0 870.0 1124.4 1097.7 1942.6 ENERCY CONSUITION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 691.0 606.0 685.0 943.1 730.7 1646.7 POPULATION AND VITAL STATISTICS POPULATION, KID-YEAR (MILLIONS) 15.8 21.3 24.6 UR8AN POPULATION (PERCENT OF TOTAL) 48.2 59.8 65.5 59.3 49.0 51.2 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (HILLIONS) 38.0 STATIONARY POPULATION (MILLIONS) 55.0 YEAR STATIONART POPULATION IS REACHED 2065 POPULATION DENSITY PR SQ. F.M. 14.0 19.0 22.0 23.5 44.6 28.2 PER SQ. Nll. AGIUCULTURAL LAND 71.0 93.0 109.0 80.5 140.7 100.5 POPULATION AGE STRUCTURE (PERCENT) 0-14 YES. 46.0 46.8 38.0 40.9 41.3 35.4 15-64 YES. 51.0 50.5 59.0 54.4 55.3 56.3 65 YRS. AND AOV 3.0 2.7 3.0 3.9 3.5 5.1 POPULATION GROWTH RATE (PERCENT) TOTAL 3.1 3.0 2.1 2.4 2.4 1.7 URBAN 6.0L 5.2 3.9 3.7 4.5 3.0 CRUDE BIRTS RATE (PER THOUSAND) 46.0 36.0 30.0 32.8 31.1 27.5 CRUDE DEATH RATE (PER THOUSAND) 14.0 11.0 8.0 8.5 9.2 9.1 GROSS REPRODUCTION RATE 3.2 3.2 1.8 2.4 2.2 1.8 FAMILY PLANNING ACCEPTORS, ANNUAL (TSRUSANDS) .. 115.4 263.8 USERS (PERCENT OF MARRIED WOMN) .. .. 48.6 17.7 34.7 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 97.0 99.0 107.0 99.4 104.4 102.0 PER CAP ITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 94.0 92.0 94.0 107.0 105.3 120.8 PROTEINS (GRAMS PER DAY) 50.0 51.0 45.5 60.4 64.4 80.9 OF WHICH ANIMAL AND PULSE 28.0 29.0 36.8 28.3 23.5 31.3 CHILD (AGES 1-4) MORTALITY RATE 17.0 13.0 9.0 6.7 8.6 5.1 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 53.0 58.5 62.0 63.6 60.2 65.6 INFANT MORTALITY RATE (PER THOUSAND) .. .. 98.0/| 76.1 46.7 45.5 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 63.0 64.0 63.4 60.8 69.4 URBAN .. .. 73.0 79.5 75.7 85.1 RURAL .. .. 46.0 38.6 40.0 43.0 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 47.0 48.0 58.8 46.0 70.1 URBAN .. 75.0 73.0 77.8 46.0 88.3 RURAL .. 8.0 13.0 24.5 22.5 33.2 POPULATION PER PHYSICIAN 2400.0 2170.0 1820.0 1841.9 2262.4 1343.2 POPULATION PER NURSING PERSON 3740.0 2040.0 .. 933.7 1195.4 765.0 POPULATION PER HOSPITAL BED TOTAL 580.0 510.0 530.0 563.4 453.4 197.6 URBAN .. .. 320.0 279.4 253.1 260.2 RURAL .. .. 9670.0 1140.9 2732.4 1055.0 ADMISSIONS PER HOSPITAL BED .. 23.0 25.0 25.7 22.1 17.3 HOUSING AVERAGE SIZE OP HOUSMHOLD TOTAL .. 6.0 5.7/ 5.0 5.3 4.7 URBAN .. .. 55 4.8 5.2 4.4 RURAL .. .. 5.9.j 5.3 5.4 5.1 AVERArE NUMBER OF PERSONS Pn ROOM TOTAL .. .. 1.8/J 1.3 1.9 1.1 URBAN .. .. 1.6Z 1.3 1 6 1 2 RURAL .. .. 2.4 1.5 2.5 1.2 ACCESS TO ELECTRICITY (PERCENT OF DWELLI7NS) TOTAL 47.0/f *- 58.1j/ 54 3 SO5. 66.0 URBAN 83.07 .. 87.5L 80.1 71.7 85.1 RURAL 8.07! .. 13.2 14.2 17.3  - 2 3 - ANNEX I Paxe 2 of 5 TA3_E 3A COLOMBIA - SOCIAL INDICATORS DATA SHEET REFERZINCE GROUPS (J 7USTE) AIRAGES COLOFtBIA ~~~- MOST RECENT E TrMTl)- SAME SAME NEXT HIGHER MOST RECENT GEOGRAPHIC INCOME INCOME 1960 lb 1970 /b ESTIMATE /b RECION /c GROUP /d GROUP /a EDUCATION AbJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 77.0 100.0 106.0 107.3 102.5 101.7 MALE 77.0 98.0 103.0 109.1 103.6 110.0 FEMALE 77.0 102.0 109.0 107.4 97.1 92.8 SECONDARY: TOTAL 12.0 23.0 35.0 40.5 33.5 51.2 MALE 13.0 23.0 35.0 40.4 38.4 56.4 FEMALE 11.0 22.0 35.0 39.0 30.7 43.7 VOCATIONAL ENROL. (i OF SECONDARY) 31.0/h 21.0 17.0 18.5 11.5 18.3 PUPIL-TEACHER RATIO PRIMARY 38.0 38.0 30.0 37.1 35.8 27.1 SECONDARY 11.0 17.0 19.0 17.9 22.9 25.3 ADULT LITERACY RATE (PERCENT) 63.0 73;0 81.0 77.4 64.0 86.1 CONSUMPTION PASSENCER CARS PER THOUSAND POPULATION 7.0 11.0 16.5 29.1 13.5 53.4 RADIO RECEIVERS PER THOUSAND POPULATION 139.0 105.0 119.0 172.1 122.7 225.9 TV RECEIVERS PER THOUSAND POPULATION 11.0 38.0 51.0 67.9 38.3 102.6 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 56.0 . 69.0 76.1 40.0 78.5 CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. 6.8 4.2 3.7 3.6 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 5100.0/f 6200.0 6700.0 FEMALE (PERCENT) 18.9 24.6 24.6 21.5 25.0 24.5 AGRICULTURE (PERCENT) 51.4 37.9 31.0 30.2 43.5 28.9 INDUSTRY (PERCENT) 19.2 21.0 23.0 23.8 21.5 30.6 PARTICIPATION RATE (PERCENT) TOTAL 30.6 29.7 29.7 30.9 33.5 33.8 'ALE 49.8 44.9 44.7 47.3 48.0 51.3 FEMALE 11.6 14.6 14.6 13.3 16.8 16.3 ECONOMIC DEPENDENCY RATIO 1.7/f 1.7 1.6 1.5 1.4 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 41.2tf,i 31.9/i .- 23.7 20.8 HIGHEST 20 PERCENT OF HOUSEHOLDS 67.7/f.i 60.1/i .. 58.7 52.1 57.6 LOWEST 20 PERCENT OF HOUSEHOLDS 2.1/f i 3.57? .. 2.9 3.9 3.4 LOWEST 40 PERCENT OF HOUSEHOLDS 6.8Zff 10.1/i .. 9.9 12.6 11.0 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 214.0 265.6 270.0 RURAL .. .. 197.0 185.1 183.3 ESTIMATED RELATIVE POVERTY LNCOME LEVEL (USS PER CAPITA) URBAN .. .. 267.0 396.3 282.5 550.0 RURAL .. .. 122.0 308.1 248.9 403.4 ESTIMATED POPUbLATION BELoW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN *- *- 34.0 35.2 20.5 RURAL .. .. .. 46.6 35.3 Not available .Not applicable. NOTES /a The adjusced group averages for each indicator are population-weighted geometric means, excluding che extreme values of the indicator and the most populated country in each group. Coverage of countries among the indicators depends on availability of data and is not uniform. ,b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1974 and 1977. /c Latin America 4 Caribbean; td Intermediate Middle Income (5551-1135 per capita, 1976); /e Upper Middle Income (51136-2500 per capita, 1976); /f 1964; /S 1951-64; /h Includes teacher-training at the third level; /i Economically active population; /j 1973. Most Recent Estimate of GNP per capita is for 1978. Revised October 1979  - 24 - AN~NEX I MI)FIIU CY sCCa mIrTORSo Page 3 of .5 - Pts: ltcg thedata are, drama fromsourcses generally judge the meet anthoritative end reliable, It should also be noted that they may sot be interna- tionlL c bmnle hams. of the lack of standardized definitions ad Concepts used by different countries in Collacting the data. Ths dat.are, noontheles, useful to desoribe orders of --itade. indicate trande, ad oh-aratsine cetain msa.or differences bstess hoosntris.. Ike44,fl4,j~p,avep3es for ewac indetor are, population-weighted geometric maso, ascluding the extrma values of the, indicator and the mwst populated coutr ineah gou. Teeto ako. aa grap avenges of all indicators for Capitol Surplus Oil. Enporters nod of Indioators of Access to Water and ecrets Pidsp.se1, Basing, bocoms Distribution sod Povrty for other c.-try groups are populi.niin-eightsd geomtric ana cithout sacluio of the sebreme, value and the ast poPlaIted country. sincth coergo ounres san the indica 1.tors prond oaeilabiiity ofdt ad beso o!hifo;:rm -atio mast be fsuercisd in relating average of one indicao osohr hs vrgsaeietrueu sapoitoso eped" aue he oesiAg thevausoon indicator at atime sang the .Country ad refrence grouse.me LAM AMA (thouand sq.he.) ACcess to Excreta. ROenosl(ecn fnplto)-ttl ra,a oa --- !;'t= Total surface area comprising lad area ad island waters. flanhe of people (toa,ubn and a al sered by crta dispsa a Uiouclturai - Mbet recent estimate of agricultural area used temporarily percetgee of their spective populations. Excreta disposal my include or permanently for crops, pastures, maket and kitcha gardens, or to the nol1eotlon and disposal, cith or without treatmet,Iof boomo -eurta lie fallow, and wate-water by wtater-borne systema or the une of pit privies end s.aiiar - lIP per capita estiapes at current market prices, puL4h p,ps ~icin- Population divided by ouster of practicing physicisos calculated7h smconeversion method as World Beni Atlas (i976-.7H basis); 'Tjif7fithimediaL cola nvriylvl 1560, 1970, ad 1978 data. ~~~~~~~~~~~~~~~~~~~Pbopulation per Horsing Pesn- Poplation, divided bly numbr of practicing male n,mMP Mruw ION PRO CAPITA - Annalcuumpim f oCasreis. enrap sod femal grdut cures* prctca -'ese' and assistant nurse.. (coal ead lignite, petroleu, natural ga and bydro-, ncdlear ad gec- Population paerHsital3rd&-. to-tal.iurh. sod rura -iPoplation (total, urban thrmal electricity) in kilogras of coaI equivlent per caPita; 1960, ad rural) dlivdd byterrsetv ubro1optlbd e I'aiei 1970, end 1976 data, public and private gerarl ad specialiced hostpiisl and rebabilItaetIon.. cetero. Hospitals are netblisobmnts permanently staffed by at leant Cone physi'cian. POPoLATIOII AND PTTAL. STATISTICS Ruosilism-nas providing priocipaluc cut~odial car ar ot inniuded. uR-l Total90polctin. Hd-Yer (nllios) -As of J0i1 1; 1960, 1970, ad hospitals, howeveor, macdud boaltb and aedical onotera not permanetly staffed 197 data. by a physician (but by a adiosi assitetnt, nurse, adwife, etc.) h0mb offer Uirban P.poain(preto tota) - natto of aria to total population; in-patient acco-adatios ad provide a alsted rage of medical1 facilitie.. different deinition of uban, areas may effect comparability of data Adndiseoas per Hospi,t,al Hod,-Ttal outer of adaissio- to or disciegen from .-n cutrie; 1960, 1970, and 1975 data. bospitalo dividdb the ouer of beds. 1,ya OO- Current population projections are based on HOOHIJY 1975 total pulton by age and sea and their onrtality and fertility AveriageSr ofRurod (proeper toebl) - tct, urbanm n ua mos. peoV.ctics paramters for srtLity rates coprise of tires A busbod consits fa ru f lnlcduinob shmhvo uresad levels asuing life expeotoncy at birth increasinLg with cotuntrys eChi an aa.Abadro odgwr my or yno betcue othe per Capita icome level ad female life vopeCtsoy utbilising at hoonehod for statistical porpnseo. 77.5 years. The parameters for fertility rate also have three levels Avrerge outer of perecwo per roo - tota,uban, sod rurl derge cober a.ssumng declice on fertility accordin in incme level sod past of pereono Per room in ei urban, and rural occpied convetional Awelling fami Cly eanning performance. cch country is then assigned one of these rPesetively. itell_ings occludde oo-po net struture sod unccpied posts. ninetcobinations of mortality sod fertility trends for projectioc Aco..ss to Electrict (percent of dwelings) - total, aria, ead ruirol - Con- pu-poses. retlonal doelliogs ith electricity in l1ivig quartero as percenitgo of Staticosr Pomlatico -in a stationary population there is no groth total, urban, and rurl. delliogs repectively. 5ME"th birth vaoi qual to tin dsath rate, cdc.A ls the gpe struturerem inconstant. This Lo achievd conly after fertility rates EDUCATIONI decline to th replacemet level of unit son reproduction rate, .. Adjuoted Enrolinet ntion .-ch generation of soec ropiaces itself cuartly. The stationary pupu- Prisr shool - total. male and female- Groua total, mule and female enroll- latioone was estimated on tie basin of the projected charactevintice asen ofal gesat the primacy levla percntages of resPective prisarY of tie popuItioc in the year lWO, sod toe rote of deue. of fertility school-age populetiono; normally includes oJlldre aged 6-il year out rate torpisoe_et leel a.djusted fo.r differeot le-9tis of prassry education ; for coutries with Pear eotati"nar nplation in roameCd - The year en stationar y pplation universal education onrolnet may ecceed 100 percent o1oe som pupils sine has been reaphed. ar eowo bov the oftici. scoo"ae Poosclaticn Desty Seodr cool. --oaI.l ndfnl - Compted Pi.. e snocr Per s. km. - id-year ppoplation per square kilometer (120D heotare.) of educa.tion rqiest least Four years of uppr-ced -pimr Iotc ti-o. totalue provides generale. oote, o tooch-r trelang inotr-tioo for pupilo Per so. Am. gioltitral land - foNpted as above for agricultural land inuall of 12 to 17 year of age; -orveopocoene ..u.... ar e g-ecrally honly. e-oludd. pu-ltio Ma"iroue 'oRre-t) - Childrec (0-14 year), soking-ago Vosloa erll,ot orre--. of soisy - Vctio...l 1n-totu-os o .lode (5-6k yean),tan .Iroov (A5 year and over) pretgsof cod-year tvooioal, todutr-1, or ~thr progren oc-h operate independertly or so popultion; 1960, 1970, and 1977 data. depwsrtento of orocdary7 boi-tuttiocs. PuatCo Growth Rate (Perot) - total - noAl o1R-eth rates of total aid- P'uiltenbh rto-rlryanscody-Ttlsudeoto etrolld in yerppltoofor 1950-O 17609-70, and 10-77. pri_ry ad secondar leel deedby ouner, ofteChes 'nthe roye- PouainGrowth Rate (posre.ti - urban - Annual groth rates of urban spoiog "vI popuatoo o 150r, 90-..ad.90-5 Adult 'lttcr-c rotc (pe--tv) - Litcoto odulto nble tored and -rite)a Crude Birth Pats os.r thouand) - Annal live birtho per th-ouad of did- operts-tago of total dolt populatioc aged 15 year and over. year popultion; 1900. 1970, and 1977 data. foods Dinet, nate (oper thcuead) - nno,l deaths per thoonand of old-yea COPoitrTOdrio pouaio;16, 1970; end 1977 data. Paaee ao(ro tho-cnd p-uolc anegror cpriar outr or Gross Reprduot1ios Rate - ueAge o.her of dnaghtere a o ill hear nesting: les t'han cogt per-oo; eM clude soaaoe aonad si Lvoy in her crca lreprodoci period b1 ohe -operlesoe pre-et agw-reila spewific fertiLity ruten; usull fire-year a-rges ending in 1960, Rsl eerr e bcad 1p,1ulnoo- - All type,.tof rceos--rsfor radio i970 , and 1975. br _dnto to ge--s pIoprtuuad of puolto;vcudouloce Famiy Plenig: - Ac.cetors. A-cuo 'thirosads) - Anacual ounhr of reeivers to ooutric and -c pear cioego oltrtiov of radi sta co In acetrs of birth-contro1le Geroosuder aupice of sationi1 fesily offwot; data if- orr-t year nay cot Ice -opri icrmt -cutri-v planing pragr-n aholisied Ioccg Fm~ily Planaloci1 -Uleers(pero,Ft of caried cps Percen.tage of mnmad TV Ocovr Pertotin pop,ia.tton - Tb eevr for brondo-t to g--reJ wome of hil-hesing ge 5-44 ye-v) cAn one birth-cotrol devaCes1 puli pro tioccead ppultioc, ec-1udeculio-er..d Tb reeirrriniooutr-e to all inried ees in ton ag group. and in yea o cis vsgit-rtioo of TV oto ca Is effect. espprCr'ultion (per thou-an c?lnt... - io the average cir-ulatiot POOP AID MIJTRrTlOG of "daLy gCeva interes osospaper oficed as n periodical publicotlos loden of rod Producion per fcita (196-71=100( - Indeo~f pcrc-p,tt decntsd priouily to sod n eea cr0- It in c...lidred to hr daili anul produetioco llfo cditiwu. P-du-tico scolulee seed ad If it nppwar at leant four tiec.s u-es. feed and is on alendar year booio. Cosaditice covr primacy goods Cinema Annul bttro.donn per Capita nr ia - bate.d en the c,inir o if tcAts (..ugcaeinst-od of ciga) oci,h are wdibis and ...otalssottrsut told Gurng tie year, i_uluiog a .o ontoo to dr-v-in ole- and sot, (eg.cffee and tea ar -oolded). Aggregate production of each coutry 'uio ishoe co- na,tinl cso prod.o-r price ceigits. Percaiasplofclre (percest of recoir: ..ntc( - Computed from IABIR FORCEB energy squivealt of sot foo.d upplien avilablc is coutry per capita Total lahn.r Feev othousudo) - E-ononlnly active persone,. t.oldiu arced pr dey. Available -opplios -enriue doectlo production, im.-r. less forcest and -psnicyd lot -o1ldi.g hou-eiv-, -td-ots, etc. Defl-titl-.t experts, and changes to stock, Net -oppliso coci.de anisni feed, seds, ito v-iou e-otroe are cot zoepaoIble. _tuatitle used in food pr--ssis, and 1o-en it dit-tribtlos. Require- F.-aL.ron -.F.e.!e ibo- foros as percentage of total labor fovo.. -etn wre etimated by FA0 based cchybyiologicol eoedo for vorna! c.t - Labor forc in farming foveutry, hootig and activity and vealti ov...ider-g envirarsetal teeperatuvo, body -righto, flohing no per-etugv of total labor force. age and pen doti,,bucione of pepuLttoc, and ell.o-g 10 perosot for Industr'y (percen.t) - Labor if-octcoig ecstrooi-s, esnufotoroag sod no ten oueod bed. el-eotrivty, saver and unti poreetags of total labor force. Pe, .apita -upply of Protein grso per day) - Protei ocotest of per Porticpation Rate (perrt)- to"talsl,an eae- Part loipatiot or capita set oupply of foci per dy. Net oupply of food it declord an aciiyrtn r opod to total, sole, adfn ao oc spr ovePeurVemeoto for all o-utr-e established by USDA proide for a eotog-o of ctal~,1sao and fvaslv popuot-c of all agen repeotirely; nic _i aloance of 60 gr-m of total protein per dey and 20 gino of i960, 1970,_ad 1975 data. Thee are rIOt partiolpatios rates vefleCtiag aninl ad puse rooro, f oblob 10 gean olhoald he animal, protein. age-se otrutove of the Ppopultion, and bo.g tom treod. A few cetimatec These candarusare bor than those of 75 grams of total protein and aefo ainltu e 29 gram of --una pvoteio asa -vrge for tie coldA, proposed by PAt Po--val Reen cytai -Oai of cpoplation under 15 and 65 nod over to is the Third World food Suroy. the labor forceinag group of 15-64 year.. Per capita rti --pp nmL and noise - Protein supply of food fill (aes --' tralltt ate'er ihuc=d (- Annual d-atia per thoocand Preon fPiaebos(oht cbaOnd eedb ins in age group 1-4 year, to ohildee n t thin ago grop; for sst dee1- 5 -pecent, toheo:t 10 perosat, pereot 2O Percent, and poorest 40 peroeat opiog ounrIes data derived from life tubles. of htoucebolds. HEALTH 0 VE0TY TARIOT IPOtYPO liedpcao t Birth (Years) A-Aerge nuber of years of life Et-timed Aboob.tc P-erety Iooms Lovel 00 c sp )-uban tad rurl- remainng mu irth; 9c0, 1970, ad17.at.Absolute povety iaccn 1wel. iv that oon lereS beLo dirtasc bofoco ttrt.lity bats (per thousand) - Annual deaths of infants under one ouit-tina.. l.y adequate diet plus es..eotial tn.-food reqoiremno to st year of age per thousand. lIre birth.. affordbln. Arveso to Safe Water (percent of cpla s- btal, urban, and -,orl - Est-mtod Relntive Povety IooeL- lee Gs; ower capita) - urban and rurl itunber of peopl totl, urban, aond ua hraoal accen to biral relative poverty i.cncm l-ee in ooe-third of average per Cap,ta oaf cater supply ; lcludes treated surface tatrs or untrea.ted but personal income of the o-unty. Ulba level is dented fros the rura level unootamitmud eater ouc as that from. protected boreholes, oprongs, cith adjoetneut for higher cos t of living in urbanaes and sanitary e_ls) en Pern-tage of their -ep-oi-e populatons- in tisocted rpbaioBelo- Aisoot Povety "oom lee ( et - urban and so urban area a public fountain or Stendpost located not acre tha rra - Pret of popultio turba and rural) co,ae'halt poor". 200 nter. fry a hous my he ocosid-rd an being sthA reasonable acoesaof that house in rura area r..asunable anon coud imply that ths bhossufe or eters of tie bousekhold do cot have to spend a ooso,uc and Ocotal Deos Dtoi-on disproportionate part, of the day in ftething the family. esater ne.eds Eoosoic Aionlysin and Poetin Dpartacot August 1979  ANNEX I ECONOMIC0 DEVELOPMENT DATA Pnge 4 at 5 (I. Mlilli.oo of UtS Dollar,) A-tu1 stitlnted Projected Ae....e Ann.ua lCrunh Rat.. A. Percent of CDP 1967-69 (1967_69)_ 1975_ 1980- A-trsg. 1975 1976 1977 1978 1979 1980 1985 74 79 8s 1975 1979 1985 NATIONAI. ACODJNTS 1976 Price. ned ftchocAe ntr- Den.. Dn.s.tlt Product ~~~~9,660 14 567 15,236 15.971 17,329 18,282 19,379 29,933 6.5 5.8 6.0 100.0 100.0 1090 Gan reTars nO lIteae(6 71 -9 697 624 03 -24 4A34- - 14.8 0.5 1.7 Gres. Derastit Incane8.909 13,868 15,236 16.668 17,753 18,365 19.115 25.499 7.4 7.3 5.9 99.2 100.5 98.3 Ieot(nt.95 1,491 2.047 2,302 2,618 2,895 3.181 3.411 5,012 7.5 11.7 8.0 14.1 17.4 19.3 Eararta (ntl. 8801(Se. C.paOity) -1.419 -2.297 -2,782 -h9 84 :.3,314 3.464 4.498 6.