Tunisia - Second Power Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4456 PROJECT COMPLETION REPORT TUNISIA: SECOND POWER PROJECT (LOAN 1355-TUN) April 22, 1983 Projects Department Europe, Middle East and North Africa Regional Office 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.   FOR OFFICIAL USE ONLY TUNISIA SECOND POWER PROJECT (LOAN 1355-TUN) PROJECT COMPLETION REPORT Table of Contents Page No. PREFACE BASIC DATA SHEET HIGHLIGHTS 1. Introduction .................................................. 1 2. Bank Involvement in the Sector ................................. 1 3. PROJECT PREPARATION AND APPRAISAL ............................. 2 Origin and Preparation of the Project ..................... 2 Project Appraisal ......................................... 2 Negotiations, Approval and Effectiveness .................. 3 Rate of Return Covenant ................................... 3 Audit ..................................................... 3 Institutional Development ................................. 3 Project Objectives ........................................ 4 Project Description ....................................... 4 Covenants ................................................. 4 4. PROCUREMENT, PROJECT IMPLEMENTATION, COSTS AND DISBURSEMENTS 4 Revisions ................................................. 4 Procurement and Implementation ............................ 4 Costs and Disbursements ................................... 5 5. Operating Performance .......................................... 6 6. FINANCIAL PERFORMANCE .......................................... 7 Rate of Return ............................................ 7 Debt to Equity Ratio ...................................... 8 Working Capital and Accounts Receivable ................... 8 Working Capital and Accounts Receivable ................... 8 Audit ..................................................... 8 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.  Table of Contents (cont'd) Page No. 7. MANiAGEMENT PERFORMANCE ........................................ 8 Management and Organizational Effectiveness .............. 8 Institutional Development ................................ 9 8. PROJECT JUSTIFICATION ......................................... 10 Rate of Return ........................................... 10 9. Bank Performance .............................................. 11 10. Conclusions .................................................. 11 II. Lessons to be Learned ........................................ 12 ANNEXES 1. Bank Involvement in the Sector 2. Principal Covenants 3. Comparison of Estimated and Actual Cost of Project 4. Schedule of Disbursements 5. Incidents in Chronological Order 6. Combustion Turbine Statistics 7. Forecast and Actual Generation, Sales, Maximum Demand and Load Factor 8. Forecast and Actual Generation and Fuel Consumption of Interconnected System 9. Forecast and Actual Income Statement 10. Forecast and Actual Balance Sheet ll. Forecast and Actual Sources and Applications of Funds 12. Internal Rate of Return on Project 13. Assumptions on Rate of Return Calculation 14. Comments of STEG on the Draft PCR (0566P)  TUNISIA: SECOND POWER PROJECT (LOAN 1355-TUN) PREFACE The Project consisted of the supply, installation and commissioning of seven self-contained combustion turbine-generator sets for which Loan 1355-TUN of US$14.5 mliion was made to Societe Tunisienne de l'Electricite et du Gaz (STEG) in January 1977. The Loan Agreement became effective on May 4, 1977 and was closed on June 30, 1981. The Project Completion Report (PCR) was prepared by the Europe, Middle East and North Africa Regional Office based on the appraisal report and other documents in the Bank's files, a completion report prepared by STEG and the findings of a Project completion mission which visited Tunsia in July 1981. The PCR analyzes the extent to which the physical and institutional objectives of the Project, as envisaged at the time the loan was approved by the Bank's Executive Directors, were attained and examines the role of the Bank on connection with the Project in this light. Following normal procedures, a draft copy of the report was sent to the Borrower (STEG) and the Guarantor (Government) for their comments. STEG has indicated that the report is satisfactory and they have no comments to offer. The telex is reproduced as an Annex to the report.   - ii - PROJECT COMPLETION REPORT BASIC DATA SHEET LOAN 1355-TUN KEY PROJECT DATA Appraisal Item Expectation Actual Total Projet Cost (US$ million) 29.3 34.0 Overrun () - 16.04 Loan/Amount (US$ million) - 14.5 Disbursed - 14.4 Cancelled 10/27/81 _ 0.1 Repaid to _ Outstanding to - Date Physical Components Completed 12/80 11/78 Proportion Completed by Above Date (%) 100 100 Proportion of Time Underrun (%) - 108 Economic Rate of Return (%) 13.2 2.1 Financial Performance Satisfactory Institutional Performance Very Good CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS (US$ MILLION) As of December 31: 1977 1978 1979 1980 1981 (i) Appraisal Estimate 6.2 9.4 12.2 14.1 14.5 (ii) Actual 10.4 13.1 13.9 13.9 14.4 (iii) (ii) As % of (i) 167 139 114 99 99 OTHER PROJECT DATA Original Item Plan Revision Actual First Mention in Files or Timetable - - 12/17/75 1/ Government's Application - - 09/19/75 Negotiations 10/ /76 11/02/76 11/15/76 Board Approval 12/ /76 12/21/76 12/23/76 Loan Agreement Date 01/12/77 / / 01/12/77 Effectiveness Date 04/12/77 05/31/77 05/04/77 Closing Date 06/30/81 / /_ ___ 06/30/81 Borrower STEG 2/ Executing Agency STEG Fiscal Year of Borrower 1/ First in 1972 January 1 - December 31 Follow-on Project Name 2/ Societe Tunisienne Power III Project Loan Number de l'Electricite 2003-TUN Amount (US$ million) et du Gaz 41.5 Loan Agreement Date 04/17/81  - iii - PROJECT COMPLETION REPORT BASIC DATA SHEET (Cont'd) LOAN 1355-TUN MISSION DATA Sent Month, No. of No. of Date of Item by Year Weeks Persons Manweeks Report Identification / Preparation / Preappraisal 12/75 2 2 4 03/76 Appraisal 6.7/76* 4 3 12 12/76 Total 6 16 Supervision V 6/80 1 2 2 07/80 IV 2/80 1 1 1 03/80 III 6/79 1 2 2 07797 II 7/78 3 2 6 08/78 I 10/77 5 2 10 11/77 Completion 7/81 2 2 4 05/82 Total 13 25 COUNTRY EXCHANGE RATES Name of Currency (Abbreviation) Tunisian Dinar (TD) Year: Appraisal Year Average Exchange Rate: US$1= TD 0.429 Intervening Years Average US$1= TD 0.422 Completion Year Average US$1= TD 0.520 * June 14 - July 2, 1976.  - iv - TUNISIA SECOND POWER PROJECT (LOAN 1355-TUN) HIGHLIGHTS The Project consisting of the supply, installation and commissioning of seven self-contained combustion turbine-alternator sets was intended to ensure continuity of electricity supply after 1977 and to meet peak demand. It also had as its objective the formulation of a least cost generation expansion program, the continuation of the institution-building effort started under the two previous loans, especially the improvement of the pricing policy for oil, gas and electricity. All the Project objectives were fully achieved except in regard to energy pricing where the study was not completed to the required standard. However, a prime objective of the study has been achieved inasmuch as energy prices have been raised significantly towards international prices. The Project was completed ahead of schedule on the basis of fixed price contracts but the final cost was 12.3% above the estimate mainly because the Project cost estimates had excluded custom duties and taxes on imported equipment, and the cost of fuel for test runs (PCR para. 4.4). The initial performance of the combustion turbines was not satisfactory because of the inferior quality of the turbines, and the severe duty operation of the units (PCR para. 5.1). Despite this and the fact that actual sales and peak demand were about 2% higher than the forecast, STEG was able to meet the system's demand, although at times with a very narrow margin (PCR para. 5.5). In 1981, STEG and the manufacturer reached an agreement for bringing the units to normal operation (PCR para 5.3). Presently the units are operating satisfactorily. Institutional performance under the Loan was excellent. Prices of petroleum products and electricity tariffs were revised on a regular basis, although with some lag between the dates of their implementation (PCR para. 6.2). Because of adequate tariff increases, STEG was able to finance from internally generated funds a higher percentage of its investment program than was estimated at appraisal (28% compared to 27%), including customers contribution the self-financing level was 47% (PCR paras. 6.1 through 6.3). STEG also revised the connection charges levied for electricity supply, introduced a new organizational structure, implemented a staff training program, introduced key indicators to monitor performance and an optimum inventory management system, computerized its accounting and billing operations and reduced its accounts receivable to a reasonable level (PCR paras. 6.5 and 7.1 through 7.4). As a result of implementation of these measures and thanks to an effective management team, STEG has developed into an efficient utility.  As regards the rate of return on the Project, it is difficult to make a meaningful comparison between the actual and estimated economic rates of return. This is because the development of certain natural gas fields was -postponed, and this led to the firing of some combustion turbines with gas oil instead of gas from these fields, which was to be supplied at the cost of production. The Bank played a constructive role in the development of STEG, and the rationalization of petroleum product pricing, showing flexibility where needed (PCR paras. 6.3 and 9.1).  TUNISIA SECOND POWER PROJECT (Loan 1355-TUN) PROJECT COMPLETION REPORT 1. Introduction 1.1 The Societe Tunisienne de l'Electricite et du Gaz (STEG), a Government-owned corporation created in 1962 to take over the operation of seven private utility companies upon their nationalization, is responsible for the production, transmission and distribution of electricity for public consumption throughout the country. STEG is also responsible for gathering, transporting and distributing associated and non-associated gas, and manufacturing and distributing town gas in the city of Tunis, an activity that accounted for about 6% of its total revenues at the time of appraisal (1976). 1.2 During its early years, STEG concentrated on integrating into a single national power system the seven separate systems, and in 1976 its generating capacity amounted to 367 MW, consisting of 29 MW hydroelectric, 218 MW steam turbines, 105 MW combustion turbines, and 15-MW diesel units, and another 2x31-MW combustion turbines were under construction. At that time the Tunisian system was characterized by a pronounced peak and a relatively low base load demand (the plant factor was 45% for steam units and 34% for combustion turbines). Thus, STEG was faced with the need to meet the peak demand which was forecast to increase at an average rate of about 12% per year. After 1970, the corporation was able to embark on a systematic expansion of the integrated national system and by 1981 its installed generating capacity was increased seven-fold, the production of electricity eight-fold, and the number of customers two and one half-fold, while improving its management and financial position. 2. Bank Involvement in the Sector 2.1 During the period 1971-1981, the Bank made five loans to STEG (Loans 724-TUN, 815-TUN, 1355-TUN, 1864-TUN, and 2003-TUN) totalling US$112.5 million, out of which two were for its gas activities and three for power projects. Details of these loans are given in Annex 1. 2.2 Under Loan 724-TUN made in 1971 to finance a gas pipeline and Loan 815-TUN made in 1972 to finance 2 x 20-MW combustion turbines, the following issues were addressed: (a) improvement of manpower utilization; (b) collection of statistical and accounting information; (c) creation of subsidiaries;  - 2 - (d) maintenance of separate records for the capital and operating costs of the gas pipeline; (e) implementation by 1973 of comprehensive cost related electricity tariffs based on the marginal cost concept; (f) internal generation of funds in the power subsector to finance expansion; and (g) strenghthening of STEG's financial condition by limitation of debt/equity ratio to 45:55. 2.3 STEG, with the assistance of consultants, restructured its organization and decentralized its activities, improved the accounting system, billing and collections, introduced budgetary controls and an internal audit system, and implemented a cost-related tariff structure. The efficient development of the power subsector in the seventies attests to the justification for addressing the above issues in the two lending operations. 3. Project Preparation and Appraisal 3.1 Origin and Preparation of the Project: During the period 1972-75, various power projects were discussed by the Tunisian Government and the Bank for possible Bank financing to meet the particular needs of various times. These ranged from a rural electrification project to generation projects (installation of 2x60-MW steam units or several combustion turbine units to meet the rapidly growing power demand). However, for one reason or the other, no decision was made on the type of project to be financed by the Bank. 3.2 In September 1975, the Tunisian Government requested Bank assistance in financing a project having two components; (i) a generation component consisting of the installation of 90 MW in combustion turbines; an. (ii) a rural electrification component. At the same time, STEG informed the Bank for the first time that it had considered the following two alternatives for the development of its generation plant: (i) installation of 60-65 MW in combustion turbines by 1980 followed by two 120-150-MW steam units by 1981; and (ii) installation of one 60-MW steam unit by 1980, in lieu of the combustion turbines, followed by four to five 60-MW steam units until 1984. Common to both cases was the installation in 1977-1978 of 85-90 MW in combustion turbines which was the only feasible option for meeting the rapidly growing power demand within the available time frame, and 25 MW hydro in 1983 (Sidi Salem). It is noteworthy that the proposed installation of 90 MW in combustion turbines could have been avoided had STEG followed the Bank's advice in 1972 suggesting the installation of 60 MW in steam turbines to be commissioned by 1976. A preappraisal mission visited Tunisia in December 1975 but was informed that financing of the rural electrification component had already been arranged with Sweden. Thus, the mission identified a project with only a generation component. 3.3 Project Appraisal: The Bank Project was the combustion turbine component of STEG's 1977-1981 development program for generation facilities and was prepared entirely by STEG. The Bank appraised the Project in June 1976.  -3 - 3.4 Negotiations, Approval and Effectiveness: No major issues delayed loan processing. Negotiations took place in November 1976 and agreement was reached on the following important issues: a) Rate of Return Covenant At the time of appraisal of Loan 815-TUN (1972) there were uncertainties about the value of the assets on which the rate of return would have to be based. It was also felt that fluctuations in depreciation charges on account of commissioning of major assets would cause temporary fluctuations in the return. Consequently, the rate of return covenant was formulated by relating operating surplus before depreciation to the overall gross fixed assets. Subsequently, the value of STEG's assets was determined with accuracy, and a more conventional rate of return covenant was formulated under the subject loan, relating the operating surplus after depreciation to the average net fixed assets in service. While the formula was changed, the target rate was decreased from 8.5% to 8% beginning with 1977. b) Audit Because of the delays experienced in previous years in closing the accounts, the Tunisian delegation requested, and the Bank agreed, that audited accounts be submitted five months after the end of the fiscal year instead of four months as provided under Loan 815-TUN. c) Institutional Development i) Energy products were highly subsidized reflecting partly the Government's policy to promote industrialization, e.g. fuel oil supplied to STEG was priced at only 23% of the border price. The impact of this subsidization on resource allocation in the economy needed to be assessed with a view to formulating an appropriate pricing strategy for petroleum products and electricty. The Government agreed to undertake such an energy pricing study; ii) About 22% of the sector investment was planned to be financed through customer contributions. Whether or not this high level of connection charges would inhibit demand growth and access to electricity for poor consumers was not clear. Therefore, STEG agreed to undertake a study of the level and application of connection charges levied for electricity supply; iii) The introduction of offshore gas in the Tunisian market, expected at that time to start in 1981, would require STEG to construct and operate additional facilities for the transmission and distribution of natural gas. In order to define these new responsibilities, STEG agreed to undertake a study of its organizational strucure, staff training needs, and the necessary investments for the implementation of a program of transport and distribution of natural gas throughout Tunisia; and iv) Development of a monitoring system followed by the introduction of key performance indicators.  -4 - The Board approved the loan of US$14.5 million on December 23, 1976. The loan was expected to become effective by April 12, 1977; however, the date was extended to May 31, 1977 to allow the Government and STEG time to comply with the special condition of effectiveness, i.e., effectiveness of a loan of about US$9.2 million to STEG by a consortium of private banks. The loan actually became effective May 4, 1977. 3.5 Project Objectives: The main objectives of the Project were to ensure continuity ot electricity supply after 1977, to cover the need of peak power capacity in the system for which no other suitable sources were available, to formulate a least cost generation expansion program, and to continue the institution-building effort started under the two previous loans. Specifically, the institution-building effort aimed at improvement of STEG's organization and operations by decentralizing its financial activity, improvement of the accounting and billing system, introduction of budgetary controls, and improvement of the pricing policy for oil, gas and electricity (para. 3.4(d)). 3.6 Project Description: The Project consisted of the supply, installation and commissioning of 7x21.4-MW self contained units consisting of a heavy duty open-cycle combustion turbine, generator and control equipment housed in a mobile construction, and the transformer and switchgear to connect the alternator to the grid. Of the seven combusion turbines, two were to be fired with low heat natural gas from the recently discovered gas fields of Sidi Agareb-Sidi Bhara (about 30 km west of Sfax), and the remaining five with gas oil. The proposed locations and year of commissioning of the combustion turbines were as follows: - two units at Sfax, in 1977 - two units at Menzel Bourguiba, in 1978 - one unit each at Korba, Tunis-Sud, and Metlaoui, all to be commissioned in 1980. 3.7 Covenants: Annex 2 gives the major covenants of the Loan and Guarantee Agreements and the status of compliance with them. The objectives of the covenants have been substantially achieved as evidenced by timely completion of the Project and STEG's improved efficiency. 4. Procurement, Project Implementation, Costs and Disbursements 4.1 Revisions: There were no important changes in the project except that the two units of Sfax had to be ordered for operation with gas oil instead of natural gas, as the feasibility study of the Sidi Agareb-Sidi Bhara gas fields did not justify their development at that time. 4.2 Procurement and Implementation: After the preappraisal mission (January 1976), STEG invited tenders, on the basis of international competitive bidding, for the supply of 90 MW in combustion turbines with an option for an additional 60 MW capacity. Bids were opened in April 1976, about two months prior to the arrival of the appraisal mission, and a fixed price contract for the supply of 7 x 22-MW units was awarded in June 1976 to a foreign supplier who was the lowest evaluated bidder. The contract price was 16% lower than the estimate because the supplier was in fact proposing to supply equipment that was being manufactured for an infructuous contract of  -5- his. In order to take advantage of the favorable prices offered for a limited term by the supplier, the Bank approved advanced contracting. Disbursements were, however, conditional on the Bank being satisfied that the procurement was conducted in accordance with the World Bank Group guidelines for procurement. 4.3 The civil works for the five stations at which the combustion turbines were installed were awarded to three local contractors, also on the basis of fixed price contracts. 4.4 Costs and Disbursements: A comparison of actual and estimated costs and disbursements is given in Annexes 3 and 4. Although the project was completed ahead of schedule on the basis of fixed price contracts, the final total cost was 12.3% above the estimate (cost overruns were 62% in local costs, and 4% in foreign costs). The main cause of the increase in local costs was that custom duties and taxes on imported equipment, and the cost of fuel used for test runs were not included in the appraisal estimate. The increase in foreign costs was due entirely to the necessary mechanical changes resulting from the change of fuel to be used for firing the units at Sfax. 4.5 From the beginning, disbursements were well ahead of the appraisal estimate because of early supplies by the supplier. By June 30, 1979 i.e. two years in advance of the closing date (June 30, 1981), about 94% of the loan amount was disbursed, leaving only the retention money undisbursed. Disbursements were completed by July 17, 1981, and the undisbursed balance of about 3% ($98,349) resulting from exchange rate fluctuations was cancelled effective October 20, 1981. 4.6 The gas turbines were put into commercial operation on the following dates (with the contract commissioning dates in parentheses): Sfax: No 1 - December 15, 1977 (10/30/77) No 2 - December 15, 1977 (10/30/77) Menzel Bourguiba: No I - September 2, 1978 (07/15/78) No 2 - August 11, 1978 (07/15/78) Tunis Sud: No 1 - October 25, 1978 (08/15/78) Metlaoui: No 1 - July 15, 1978 (07/30/78) Korba: No 1 - November 8, 1978 (08/15/78) Except for the unit at Metlaoui, which was put into commercial operation 15 days ahead of schedule, commissioning of the remaining units was slightly late (varying from 27 to 85 days) mainly due to delays in the completion of civil works. However, the delays did not affect the power supply situation as the commissioning was still 18 months ahead of STEG's original time-table (150 MW by 1980).  -6 5. Operating Performance 5.1 The operating performance of these combustion turbines has not been satisfactory because of the inferior quality of the turbines, a condition which was aggravated by their severe duty operation. Test runs of the combustion turbines were not trouble free, and major mechanical and minor electrical problems were manifest in six units both before, and after their commercial operation (see Annex 5). In fact, all except one unit (the one at Metlaoui which experienced only minor teething troubles in the run-up periods) developed major mechanical problems including difficult start-ups, blow-off of flame, vibration in the reduction gear, oil leak from the alternator end bearing, seepage of rain water through the air filters into the alternator compartment, and malfunctioning of flow divider and fuel pump. The manufacturer rectified all the minor electrical problems and some of the major mechanical problems; however the turbines developed the following major defects within the warranty period: (i) rupture of turbine blades in the high-pressure stage; (ii) cracking of blades in the low-pressure stage; and (iii) premature corrosion of turbine hot part. In all cases, the warranty periods were extended appropriately, and various meetings were held between STEG and the supplier with a view to determining the cause of the problems and agreeing on a plan of action to rectify the defects. 5.2 After inspection of all units by a joint team, STEG and the supplier agreed at a meeting in March 1981 that the high level of non-availability of the units of up to 39% (Annex 6), compared to the normal level of less than 10%, was due to: (i) manufacturing defects in certain parts; (ii) severe duty operation of the units leading to excessive wear and tear and breakdown; and (iii) non-availability of spare parts either with the supplier or with STEG as a consequence of the maintenance and repair contract between the supplier and STEG. Since maintenance and repairs were the responsibility of the supplier, STEG carried a lower-than- recommended level of spare parts inventory, while the supplier also did not carry an adequate level of spares for fear of locking up capital and therefore could not supply off-the-shelf a number of spare parts. 5.3 Since both parties were responsible for the unsatisfactory performance of the units, STEG and the supplier agreed that the latter would bring the units to normal operation by September 30, 1981, and meet 82% of the total foreign cost of the operation (FF 8.25 million), while STEG would meet the balance of the foreign cost (FF 1.75 million) and the total local cost. However, the agreed scope of work has not yet been completed because of the dispatch of incorrect type of spares by the supplier. It is anticipated that the work would be completed by August 1982. 5.4 Since the maintenance and repair agreement is not conducive to efficient operation of the units, STEG and the supplier agreed to dissolve the contract. Future maintenance and repairs will be conducted by STEG. For this purpose, qualified staff from STEG's personnel are being trained by the supplier, and adequate quantities of spare parts have already been ordered.  -7- 5.5 A comparison between appraisal forecast and actuals of generation (GWh), sales, maximum demand and load factor is given in Annex 7. Annex 8 compares appraisal forecast and actual generation and fuel consumption. Annex 7 shows that generation, sales and peak demand increased at a slightly higher average annual rate than anticipated (14.8% compared to 13%, 15.4% compared to 13.5%, and 13.4% compared to 12.3% respectively), while the load factor remained unchanged at the 1976 level of 55% compared to the projected 57%. The excess generation was taken up by steam plants (Annex 8). Although the overall forecast demand was close to actuals, sales to industrial consumers increased faster than estimated (16.3% p.a. compared to 13% p.a.), while sales to low voltage consumers who are predominantly domestic, increased slower than estimated (13.5% p.a. compared to 14.5% p.a.), showing that domestic consumers are more sensitive than industrial consumers to tariff increases (the Tunisian price control system permits industries to pass on to consumers any increase in production cost). Annex 8 shows that overall there were only small deviations between forecast and actual generation mix during the period 1976-1981, while on a yearly basis the deviations were significant depending on the needs of the system and unit availability. 6. Financial Performance 6.1 Rate of Return: Prior to appraisal of the subject Project, STEG achieved the covenanted rate of return of 8.5% without requiring large tariff increases (between 1972 and 1976, only one tariff increase of about 16% was implemented in 1975) mainly because of the following: (i) the growth in sales and therefore of revenues was significantly faster than the increase in investments; and (ii) STEG enjoyed a substantial fuel subsidy (in 1976 STEG was paying about 23% of international prices for fuels consumed; this subsidy was estimated at about 22% of total operating expenses). 6.2 Beginning in 1977, Government moved decisively towards eliminating subsidies in the economy. During 1977-1982, six fuel price increases were introduced: fuel oil prices increased on the average at about 35% p.a.; and diesel oil prices at 16% p.a. Since these price increases were allowed to be passed on to electricity consumers, they experienced regular tariff increases. Electricity tariffs not only kept pace with inflation but increased at the rate of 3.2% p.a. in real terms. Specifically, tariffs were raised by 20% in 1977, 12% in 1978, 15% in 1980, 8% in February 1981 and again 26% in September 1981. However, tariff increases were not implemented simultaneously with fuel price increases. The lag between fuel price increases and tariff increases made it difficult for STEG to meet the covenanted 8% rate of return. During the period 1977-1980, STEG achieved a rate of return on unrevalued assets of 7.5% in 1977, 7.4% in 1978, 8.5% in 1979 and 7.9% in 1980. A comparison of actual financial results and appraisal estimates is given in Annexes 9 to 11. 6.3 Although the Loan Agreement required STEG to value its assets "from time to time in accordance with consistently applied appropriate methods of valuation or revaluation acceptable to the Bank," it was left to the discretion of STEG to select the methodology and timing for revaluation of assets. In fact, STEG did not revalue its assets because a high proportion of  -8 - these assets had been recently added, and because the corporation claimed that Tunisian law did not recognize such revaluation. Calculated on revalued assets, STEG achieved a rate of return of 5.6% in 1977, 5.4% in 1978, 6.6% in 1979, and 5% in 1980. Nevertheless, during the period 1977-1980 STEG was able to finance from internally generated funds (after meeting the working capital and debt service requirements) 28% of its investment program compared to 27% estimated at appraisal. Including customers contribution, the self-financing level was 47.2% against 49% estimat d at appraisal. Hence, the real objective of the covenant, namely, internal cash generation to cover a reasonable proportion of STEG's expansion requirements was substantially met. 6.4 Debt to Equity Ratio: The debt/equity ratio was maintained below the 45/55 level and therefore, as agreed under the loan covenant, it was not necessary for STEG to obtain the Bank's approval before incurring any new debt. 6.5 Working Capital and Accounts Receivable: As expected at appraisal, STEG's working capital position remained tight throughout the project period and its current liabilities consistently exceeded current assets. Because of the smooth functioning of the computerized billing system and the stringent collection policy, STEG was able to substantially reduce its overdue accounts receivable from the equivalent 145 days' revenues at the end of 1975 to 84 days' revenues at the end of 1980. However, the financially troubled company SOTEMI, municipalities and Governmental departments have still outstanding arrears. 6.6 Audit: From 1974 through 1979, STEG's accounts were audited by a foreign firm of chartered accountants. In an effort to bring a fresh look at its accounts, STEG appointed another auditing firm to audit its 1980 accounts. However, the audit report prepared by the new firm has been considered by STEG to be below standard, and therefore, another auditing firm is being appointed to audit its 1981 accounts. A short list of five firms is being prepared and selection of the auditor was expected late in April 1982. As regards promptness in preparing the accounts, STEG has had difficulty in closing the accounts in a timely manner and therefore audited accounts have in the past been submitted to the Bank with one to two months' delay. 7. Management Performance 7.1 Management and Organizational Effectiveness: Thanks to the implementation of measures instituted as part of the institution-building effort under the three Bank loans for the power sector, STEG has developed into an efficient utility fulfilling its appointed role in the subsector. The credit for this should go mainly to the effective management team that has guided STEG during this period and to the Government which has created the right operating climate for STEG's operations and taken appropriate measures for ensuring its financial viability. Some of the specific measures taken to strengthen STEG are discussed below. 7.2 As required under the Loan Agreement, STEG undertook the study of its organizational structure, training needs of its staff, and investment requirements for the transport and distribution of natural gas. A well-known firm of management consultants was appointed to review STEG's organizational structure. The study, completed with some delay, recommended the reorganization of STEG to improve its efficiency and to decentralize  - 9 - responsibility at the district level. Most of the recommendations of the study were implemented, and the performance indicators established as a result of this study are being used successfully as management tools. A Tunisian consulting firm with technical assistance from two expatriate firms was hired to conduct a study on the optimum inventory management and analysis of existing procurement procedures. The recommendations of this study have been implemented and the expected benefits stemming from the reduction of the level of inventory are becoming noticeable. STEG has also studied its training needs and for the past four years it has been preparing, on a yearly basis, a training program and implementing it with considerable success. The study of the necessary investments for the implementation of a program of transport and distribution of natural gas throughout Tunisia was undertaken by another expatriate firm of consultants, but the recommendations of this study have not yet been used because the development of the off-shore gas field of Miskar has been postponed. 7.3 The study of connection charges (para. 4.3 (d)(ii)) recommended that a distinction be made between two categories of service connections, single phase and three phase, and as a result of this change, all customers of each category who are not further than 30 meters from the grid now pay uniform charges. On the average, the new connection charges are lower than those charged earlier. However, connection charges are reviewed annually to ensure that they are appropriate as conditions change. 7.4 As required under the Guarantee Agreement, the Government appointed a foreign firm to conduct the energy pricing study. The scope of the study was subsequently expanded and it became an energy master plan study including pricing policy. Due to inadequate input data and the poor performance of the consultant, completion of the study was delayed, and in fact before the work was completed the consultant declared bankruptcy. The study was, however, continued by another consulting firm which prepared a preliminary report, but of very poor quality. The Tunisian Government rejected the dubious conclusions of this report and all efforts to complete this study have been abandoned. Since both the Government and the consultant were in breach of contractual agreements, the matter was not pursued any further and no suit was filed against the consultant. However, the scope of the energy study initiated under USAID financing in 1981 has been expanded to include the area covered by the aborted study and a comprehensive report which would draw, to the extent possible, on the preliminary report prepared by the consultants should be completed by 1984. 7.5 Institutional Development: Like most newly created power entities in developing countries, STEG has evolved rapidly from a small, urban-based power company into a mature national institution with country-wide operations and expertise in various fields. Most of the tasks which initally required outside assistance are now performed by STEG's own staff. To mention a few: preparation of feasibility studies for rural electrification, updating of the tariff study, preparation of least cost development programs, evaluation of bids, and various studies involving management control system, organization, standardization of distribution equipment, and socio-economic studies. STEG is also heavily involved in the field of renewable energy: (i) experimenting on the Hamam Biadha photovoltaic solar scheme with the assistance of NASA under USAID financing; (ii) implementing the solar scheme of Borj Cedria jointly with the Ministry of Education and Research; and (iii) collecting data  - 10 - and selecting the site for a wind energy scheme, the financing of which is partly met by USAID. Preliminary work is being undertaken on assessing the potential for geothermal and micro-hydro sources and the nuclear option is being considered for introduction by 1995. 7.6 Financially, STEG has reached a relatively strong position with access to the international capital market. Its first ever borrowing from foreign commercial banks for investment was for the subject project. Since then, STEG has secured many loans from foreign commercial banks. 7.7 Although STEG's planning capabilities, financial viability, and credit worthiness have improved considerably in the last four years, its investment decisions are often dictated by its ability to finance the program rather than by the intrinsic merits of the investment from a technical viewpoint. The action of deferring the construction of steam units in adequate capacity is a case in point. STEG has continued to suffer from the impact of deferring the construction of steam units and it is now faced with the need to install an additional 150 MW in combustion turbines to meet the demand until the next steam unit is commissioned in 1985. However, the latest addition in combustion turbines is not as disastrous as it would appear to be, because within the next 5 years the old units are schedulled for retirement, and the system still has to face a pronounced peak load. 8. Project Justification 8.1 Rate of Return: During appraisal, the rate of return on the Project was calculated on the basis that the two units installed at Sfax would be fired with flared gas from the Sidi Agareb and Sidi Behara oil fields, whose economic cost was assumed to be negligible. However, the Government decided to postpone development of these fields to a later date, and consequently all units were fired with gas oil. Thus, in the ex-post calculation of the rate of return, the fuel cost is considerably higher than the capital cost of the pipeline which was taken into account in the ex-ante calculation of the rate of return. In addition, the benefits attributed to the Project were overstated because the costs associated with transmission and distribution were not taken into account. Therefore, a meaningful comparison of the ex-post and ex-ante return on the Project is not possible. 8.2 The economic return on power projects is not a measure of their justification, but instead is a measure of the adequacy of tariffs in reflecting the economic cost of supply. It is more consistent with power systems operations in calculating the return on investments to take the entire development program over a period of time rather than isolate a component from the system. Therefore, for the calculation of the ex-post return, the time slice of STEG's investment program between 1976 and 1981 has been taken (Annex 12). The rate of return on this basis is 2.1% which demonstrates the divergence between the economic cost and actual tariffs charged by STEG (tariffs are about 75% of their economic cost of supply). 8.3 Although STEG's economic rate of return on its 1976-1981 development program is low (2.1%), the corporation was able to finance about 22% of its investment program from internally generated funds during this period. This was possible because STEG is not charged international prices for fuels used for generation (para 3.3 (d)), and because STEG bears only the transportation and distribution expenses associated with the El Borma gas wich accounts for about 35% of the corporation's total fuel used for power generation.  9. Bank Performance 9.1 During the period 1972-1976, the Bank on the one hand and Government and STEG on the other held divergent views on the priorities of power development. Constrained by financial resources, the Tunisians advocated the less capital intensive generation expansion strategy involving the installation of combustion turbines instead of steam units recommended by the Bank. Attempts at reconciling the two points of view proved fruitless and this might have somewhat soured the relations between the Tunisians and the Bank for a while. However, in spite of the short notice given (request for Bank assistance was made in September 1975), the Bank mounted a preappraisal mission in December 1975, and appraised the project in June 1976. 9.2 From the time of appraisal the relations between the Bank and the Tunisians have been excellent. 9.3 The Bank identified the right issues at appraisal and provided appropriate covenants to ensure action. This is borne out by STEG's present efficiency of operations, financial strength, and the Government's actions to achieve rational energy pricing. 10. Conclusions 10.1 The project was successfully completed and in spite of the technical problems encountered in the operation of the combustion turbines, the project achievements exceeded the overall expectations at appraisal except in regard to energy pricing. Even in regard to energy pricing, although the study itself has not been completed to the required standard, significant progress has been made in increasing energy prices to international prices which was one of the prime objectives of the study. Briefly, the achievements of the Project are as follows; (a) the demand through 1981 was satisfactorily met, with in fact greater reliability of supply, although the actual rate of growth exceeded the forecast; (b) adequate reserves of plant are now available to meet emergencies; (c) significant progress towards rationalization of energy prices, thus greatly reducing the burden imposed by the fund subsidies on the budget. For example, the domestic fuel oil price is now 74% of the border price compared to 23% at appraisal!/; (d) electricity tariffs have been increased to levels which enable STEG to finance more than 45% (including customers' contribution) of its current development program from revenues; (e) rationalization of connection charges to reflect STEG's real cost of connecting its customers to the system; 1/ Mediterranean average spot market price in January 1982 was US$163/ton (TD 87.5/ton).  - 12 - (f) reorganization of STEG and opening of more district offices to improve the quality of customer service; and (g) establishment of a systematic training program enabling STEG to operate the system with very little need of consulting services. 11. Lessons To Be Learned 11.1 There are two main lessons to be learned from this lending operation: (a) in cases where combustion turbines are called upon as an expedient means to meet the urgent load needs of a system and there are indications that the units would be operated under a severe dispatching schedule (more than one start-up per day, or operation exceeding 1,500 hours per year at base load rating or 1,000 hours per year at peak load rating) provision for the supply of ample spare parts (well above the recommended security stock) should be made. In instances where the owner does not already have plant of a similar type or is unlikely to be able to provide an adequate supply of spare parts, a comprehensive contract for the supply of spare parts and provision of expert staff can be used provided the responsibilities and obligations of the contractor are spelled out in detail and both the owner and the contractor adhere to the terms and conditions of the contract; and (b) by encouraging borrowers to secure financing from private commercial banks, the Bank could help open up for borrowers private commercial finance as a significant source of cofinancing for their investment programs. This has been demonstrated by the success of STEG in attracting a considerable amount of financing from commercial banks since it obtained a private commercial loan for the subject project in 1977. (566P)  - 13 - ANNEX I TUNISIA SECOND POWER PROJECT (Loan 1355-TUN) PROJECT COMPLETION REPORT Bank Involvement in the Sector (a) Loan 724-TUN (US$7.5 million; 1971) for 294 km gas pipeline from El Borma oil field to the gulf of Gabes for supplying associated gas to the thermal power plant at Ghennouch (2x30 steam, and lx5MW combustion turbine) then under construction, and other industrial consumers; (b) Loan 815-TUN (US$12.0 million; 1972) for 2x22MW combustion turbines at Ghennouch power plant, and expansion of transmission and distribution system; (c) Loan 1355-TUN (US$14.5 million; 1977) for 7x22MW combustion turbines at Sfax (2 units) Menzel Bourguiba (2 units), Korba, Metlaoui, and Tunis-Sud.; (d) Loan 1864-TUN(US$37.0 million; 1980, as amended in July 1981) for 400 km gas pipeline which will tap the intercontinental (Algeria-Tunisia-Italy) gas pipeline and transport natural gas to Tunis, Cap Bon, Sousse, Kasserine and Tadjarouine; and (e) Loan 2003-TUN (US$41.5 million; 1981) for the financing of STEG'S rural electrification program, rehabilitation of urban distribution systems, and training program. This report is based on information supplied by STEG to a Bank mission to Tunisia in July 1981, comprising Mr. C. Christofides, Power Engineer, and Mr. E. Baranshamaje, Financial Analyst, and on a project completion report prepared by the borrower and submitted to the Bank in November 1981.  - 14 - ANNEX 2 Page 1 of 3 TUNISIA SECOND POWER PROJECT (Loan 1355-TUN) PROJECT COMPLETION REPORT Principal Covenants Loan Agreement Action Taken 2.04. The Closing Date shall be June Complied with. 30, 1931 or such later date as the Bank shall establish. The Bank shall promptly notify STEG and the Govern- ment of such later date. 4.04. (a) STEG to complete by June 30, Actual dates of completion of 1978. a study or studies in accordance studies: with terms of reference to be (i) Organizational structure study determined in consultation with the and training program: March Bank on a new structure of its organi- 1980; and zation, on the training needs of (ii) Investment program for transport its staff and on the necessary and distribution of gas: August investments for the implementation of 1977. a program of transport and distribution of natural gas throughout Tunisia. 4.04. (b) In connection with the Actual date of completion of study: energy pricing study to be carried August 1979. out by the Government, STEG to carry out by June 30, 1978, a study in accordance with terms of reference to be determined in consultation with the Bank on the level and application of connection charges for electricity supply. 4.06. STEG to develop a system of key Actual date of completion: indicators to monitor its performance, December 1977. and to submit by June 30, 1977 or such other date as the Bank may agree, such system to the Bank for its comments and to thereafter implement such system with such modifications as the Bank may reasonably request.  -15 - ANNEX 2 Page 2 of 3 Loan Agreement Action Taken 5.04. (a) STEG to take promptly as With tariff increases introduced in needed all such action (including 1977, 1978 and 1980, STEG achieved without limitation adjustments of its during the period 1977-1980 an tariffs or charges) as shall be required average 7.8% rate of return on to provide in any fiscal year an assets valued at historical cost. annual return on the average of the current net value of its fixed assets in service, as revalued from time to time, at the beginning and end of such fiscal year at a rate of not less than eight percent (8%), commencing with the fiscal year starting January 1, 1977. 5.04 (b) STEG to (i) prepare and Complied with. submit to the Bank and to the Govern- ment, by October 31 in each year, a provisional forecast of operat- ing revenues, operating expenses and rate of return for the current year and the next following year, a statement of the tariffs and assumptions under- lying the forecasts, and a statement of the measures proposed, if any, in- cluding changes in tariffs, to produce the required annual return; and (ii) furnish to the Bank all such other information relevant to the said fore- casts in such detail as the Bank may reasonably request. 5.02. STEG to: (i) have its Complied with in the years through accounts and financial statements 1979 but the audited accounts for (balance sheets, statements of income fiscal year 1980 were delayed by and expenses and related statements) nine months. for each fiscal year audited, in accord- ance with appropriate auditing princ- iples consistently applied, by inde- pendent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than five months after the end of each such year, (A) certified copies of its financial statements for such year as so audited, and (B) the report of such audit by said auditors, of such scope  - 16 - ANNEX 2 Page 3 of 3 Loan Agreement Action Taken and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other infor- mation concerning the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request. Guarantee Agreement 3.04. (a) The Government to complete Complied in substance. The in accordance with terms of reference Government appointed a foreign to be determined in consultation with consulting firm to complete the pric- the Bank, a study to determine an ing study whose scope was expanded to appropriate pricing policy for become an energy master plan study. oil and gas in its territory and for The original consultant declared the supply of electric power, taking bankruptcy. The second consultant into consideration STEG's policies appointed to complete the study also on the level and application performed very poorly and the conclu- of connection charges for electricity sions of the preliminary report supply, to submit to the Bank by were rejected by the Government. September 30, 1978 or such other date Nevertheless, a comprehensive energy as the Bank may agree the recommenda- study is currently being conducted tions of such study and thereafter to under USAID financing, and the work exchange views with the Bank on the is expected to be completed in 1984. said recommendations.  - 17 - ANNEX 3 TUNISIA SECOND POWER PROJECT (LOAN 1355-TUN) COMPLETION REPORT Comparison of Estimated and Actual Cost of Project (TD 1,000) -------- Estimate ------- -------- Actual --------- Local Foreign Total Local Foreign Total Electro-mechanical Equipment 654 9,208 9,862 747 9,706 10,453 Civil Works 724 38 762 922 - 922 Engineering 38 152 190 33 297 330 Transport, Erection and Supervision 348 780 1,128 400 778 1,178 Custom Duties and Taxes - - - 741 - 741 Spare Parts - 433 433 - 433 433 Miscellaneous - - - 48 - 48 Physical Contingency 26 159 185 - - - Total Project Cost 1,790 10,770 12,560 2,891 11,214 14,105  - 18 - ANNEX 4 TUNISIA SECOND POWER PROJECT (Loan 1355-TUN) COMPLETION REPORT Schedule of Disbursements (US$ million) IBRD Fiscal Actual Actual as % of Year & Quarter Estimate Disbursements Appraisal Estimate 1977 March 31, 1977 - - - June 30, 1977 1.740 2.665 153 1978 September 30, 1977 3.920 8.652 221 December 31, 1977 6.220 10.384 167 March 31, 1978 8.460 12.721 150 June 30, 1978 9.120 12.875 141 1979 September 30, 1978 9.280 13.093 141 December 31, 1978 9.440 13.093 139 March 31, 1979 9.600 13.140 137 June 30, 1979 10.460 13.690 131 1980 September 30, 1979 11.325 13.880 123 December 31, 1979 12.185 13.880 114 March 31, 1980 13.045 13.880 106 June 30, 1980 13.410 13.880 104 1981 September 30, 1980 13.775 13.880 101 December 31, 1980 14.140 13.880 98 March 31, 1981 14.500 13.880 96 June 30, 1981 - 13.880 96 1982 September 30, 1981 - 14.400 99 December 31, 1981 - 14.401 99  -19- ANNEX 5 Page 1 of 3 TUNISIA SECOND POWER PROJECT (Loan 1355-TUN) COMPLETION REPORT Incidents in Chronological Order TUNIS SUD (Unit TG.3) - Unit accepting load for the first time, 8/25/78. - Fault: Presence of oil and water in cold air compartment of turbine, September 1978. - Unit commissioned for industrial operation, 10/25/78. - Fault: Malfunction of alternator's excitation, August 1979. - Final acceptance of unit, October 1979. - Fault: Broken turbine blade, 1980. - Fault: Cracked turbine blade, June 1980 - Replacement of flow divider, 1981. SFAX (Unit TG.1) - Unit accepting load for the first time, 10/21/77. - Unit commissioned for industrial operation, 12/15/77. - Provisional acceptance of unit, 5/15/78. - Fault: Failure of auxiliary power supply transformer, March 1979. - Final acceptance of unit, 7/15/79. - Fault: Cracked turbine blade, November 1979. - Corrosion in turbine hot part, December 1979. - Replacement of flow divider, 1981.  - 20 - ANNEX 5 Page 2 of 3 SFAX (Unit TG.2) - Unit accepting load for the first time, 10/17/77. - Unit commissioned for industrial operation, 12/15/77. - Provisional acceptance of unit, 5/15/78. - Fault: Failure of fuel pump, September 1978. - Fault: Armature failure of HT circuit breaker, October 1978. - Fault: Failure (resulting to a big electric arc) of auxiliary power supply transformer circuit breaker, April 1979. - Final acceptance of unit, 7/15/79. - Damage: Alternator motorized as a result of operational error. Rotor damaged, October 1979. - Corrosion in turbine hot part, December 1979. - Replacement of flow divider, 1981. MENZEL BOURGUIBA (Unit TG.I) - Unit accepting load for the first time, 6/23/78. - Unit commissioned for industrial operation 9/2/78. - Fault: Malfunction of alternator's excitation, January 1979. - Fault: Malfunction of alternator's excitation, May 1979. - Final acceptance of unit, September 1979. - Broken turbine blade in high pressure stage, 1980. - Replacement of flow divider, 1981. MENZEL BOURGUIBA (Unit TG.2) - Unit accepting load for the first time, 6/19/78. - Unit commissioned for industrial operation, 8/11/78. - Final acceptance of unit, August 1979. - Fault: Cracked turbine blade, September 1979.  - 21 - ANNEX 5 Page 3 of 3 Fault: Broken turbine blade in high pressure stage, 1980. Replacement of flow divider, 1981. KORBA (Unit TG.l) - Unit accepting load for the first time, 10/2/78. - Provisional acceptance of unit, 1/8/79. - Unit commissioned for industrial operation, November 1978. - Final acceptance of unit, January 1979. - Replacement of flow divider, June 1979. - Inspection of unit, October 1979. - Broken turbine blade in high pressure stage, 1980. METLAOUI (Unit TG.1) - Unit accepting load for the first time, 6/1/78. - Unit commissioned for industrial operation, 7/15/78. - Provisional acceptance of unit, 9/15/78. - Inspection of combustion chamber, July 1978. - Fault: Malfunction of auxiliary supply transformer's circuit breaker, February 1979. - Replacement of flow divider, 1981.  TUNISIA SECOND POWER PROJECT (LOAN 1355-TUN) COMPLETION REPORT Combustion Turbine Statistics Period of Period of Unit Average Operation Outpuc Observation Unavailabilityy Unavailability per Start-up Plant Factor2/ Load Factor3/ (NWh) (Hours) (Hours) (%) (Hours) (X) (x) bFAX No. 1 69,642 28,752 11,187 39 7 11.0 6q SFAX No. 2 110,283 28,632 6,218 22 A 17.5 70 MetlaouL 64,981 22,645 2,729 12 7 13.0 63 Menzei Bourguiba No. 1 88,364 22,208 3,824 17 10 18.0 60 Menzel Bourguiba No. 2 104,120 22,111 1,091 5 9 21.4 62 Tunis Sud 88,679 20,294 2,844 14 9 19.9 hl Korba 104,251 20,046 234 1 9 23.6 64 1/ Excluding programmed maintainance. 2/ Plant factor; output/period of observation (hours) x name plate capacity (MW) 3/ Load factor: output/period of operation (hours) x name plate capacity (MW)  TUNISIA SECOND POWER PROJECT (LOAN 1355-TUN) COMPLETION REPORT Forecast and Actual Generation, Sales, Maximum Demand and Load Factor Generation Sales Maximum Demand Load Factor Forecast Actual Forecast Actual Forecast Actual Forecast Actual HV&MV LV Total HV&MV LV Total 197b 1,360 1,339 760 371 1,131 742 287 1,129 280 272 55 56 1977 1,520 1,518 856 420 1,276 882 449 1,331 320 320 54 54 1978 1,700 1,786 957 480 1,437 1,022 515 1,537 350 374 55 54 1979 1,940 2,082 1,086 550 1,636 1,232 577 1,809 390 437 57 55 1980 2,230 2,524 1,234 630 1,864 1,426 645 2,071 440 490 58 55 1981 2,510 2,673 1,397 730 2,217 1,580 730 2,310 500 510 57 55 Average % Annual Increase 13.0% 14.8% 13.0% 14.5% 13.5% 16.3% 13.5% 15.4% 12.3% 13.4%  TUNISIA SECOND POWER PROJECT (LOAN 1355-TUN) COMPLETION REPORT Forecast and Actual Generation and Fuel Consumption of Interconnected System 1976 1977 1978 1979 1980 1981 1976-1981 Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Steam Fuel Oil Generation (Gwh) 555 536 430 771 455 778 720 862 710 1,238 1,765 1,526 4,635 5,711 Quantity required (103T) 181 175 142 266 152 269 244 278 226 405 493 452 1,438 1,845 Natural Gas Generation (Gwn) 440 436 440 340 460 401 460 380 470 278 300 3Q7 2,570 2,232 Quantity required (106m3)115 l14 115 90 120 108 120 100 123 75 89 107 682 594 Combustion Turbines Gas Oil Generation (Gwh) 40 39 20 59 5 183 10 375 555 212 290 85 920 953 Quantity required (103T) 13 16 6 22 2 66 3 128 173 87 91 45 2R8 364 Natural Gas Generation (Gwh) 300 273 600 315 750 381 720 467 465 627 125 635 2,Q6n 2,698 Quantity required (106m3) 86 82 172 95 233 116 225 150 150 202 53 201 Q19 846 Hydro Generation 25 53 30 30 30 28 30 32 30 24 30 29 175 196 Total Generation (Gwh) Steam 995 972 870 1,111 915 1,179 1,180 1,242 1,180 1,516 2,065 1,423 7,205 7,943 Combustine Turbines 340 412 620 374 755 567 730 842 1,020 839 415 720 3,880 3,754 Hydro 25 53 30 30 30 28 30 32 30 24 30 2Q 175 1Q6 Total 11,260 11,8o3 z t,1  - 25 - ANNEX 9 TUN15lA SECOID POWER PROJECT =LOAN 1355-TUN) COl4POET ION REPORT FODRCAST AND ACTVAL INCOYI STATEYM'.qT 1977-1981 TMAR LNIJLNG DECL9SER 3. Tro THOUSANDS 197 6 1977 1978 1979 1980 1981 Appraisal Actual Appraisal Actcu! AppraLsal Actual Appraisal Actual Appraisal Actual Aopral.8l Actual OPIEATIN REVEUES SALES OF ELECTRICITY 23,340 23,752 26,260 31,287 29,790 39,005 33,730 50.378 38.200 61,740 43,420 82,S31 SALES OF GAL 710 877 740 1,694 770 2,103 0OO 2,874 840 3,600 880 1,310 SALES OF GAZ EL SOR2A 200 1,469 560 3,399 790 4,099 860 5.116 1,350 6,220 1,350 18.801 OMTER UVENIUES 3.810 4,759 6.190 5.769 6,060 6,811 6.370 8,27 7,6S0 7,940 5.970 8,00 GCLOSS OPERATINC PROFITS 28,060 30,857 33,750 42,149 37,410 52,018 41.760 66,646 48,050 79,100 St,$20 110.772 OPERATING EXPENSES FUEL OIL 1.750 3,518 1,000 9,216 970 13,289 1,540 21,142 2, 330 2S4590 3,300 40,264 ATEIEL AND SERVICES 3,720 9,422 4,750 11,104 5,700 11,140 6.980 12,614 8,320 14,850 9,850 18,800 SALARIES AND WAGES 5,382 6,960 6,100 8,473 6,820 10,199 7,728 11,882 8,712 14,100 9,761 15,714 OTHER OPERATING EXPENSES 5,214 5,241 3,335 5,840 3.796 6,669 3,261 6,878 3,788 9,:29 4.100 :0,190 DEPECIATIONS 7,360 7,526 11,040 9,082 12.170 10,850 13,230 12.239 14.200 15,300 15,980 16,097 PROVISIONS FOR RENEWAL - - - 500 - 577 - 662 - - - - TOTAL OPERATING EXPENSES 23,426 32,667 26,225 44,215 29.456 52,724 32.739 65,417 37,350 78,269 42,990 1O0,OS5 LESS CAANED TO CAPITAL _ 7,040 - 8,585 - S,677 - 10 355 - 11,400 _ 12,67S 23,426 25,627 26,225 35,630 29,456 44,047 32,739 55,062 37,350 66,869 42,990 88,389 OPERATING llt"I 4,634 5,230 7,525 6,519 7.954 7,971 9.021 11.584 10,700 12.631 8.630 2,388 ADJUSTIIN FOR PAST YErtS - (241) - (594) - (1,004) - 2,091 - - - IVERST EVIISES (1.944) 2,61i 0,j546) 3.555 (U,170) 4423 5,778 6 330 7,538 6.00 9.039 7.547 mE flEOli 2.690 2.375 3,979 2.370 3,784 2.544 38243 7,345 5.162 6,591 (409) 14.836 198.1 0P 8A8L  - 26 - ANNEXLO0 Ct09PL51 [ON ELIORT !0O BAID LAZA. I&CE ShIIFT 1976-198I 1916 1917 1979 1L979 1990191 Appr4taal Actual Aopre..a1 Act"al AaWas.aI Actual Appraisal Act" I ApnraiaaI Acttul Appaisala Actual AS ETS GROSS 72210 ABECTS 136. 20 149.395 196.716 183,087 225,488 221,610 255.989 242,891 280,609 342,001 354.639 373,401 1.21 ACCUMULATED OIPIICIATZOfh 56Af51 .2