Colombia - Petroleum Project

Docuumt of The World Bank FOR OMCIL USE ONLY Rape N.. P-3888-CO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANTK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO USt130 MILLION TO EMPRESA COLOMBIANA DE PETROLEOS WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA FOR A PETROLEUM PROJECT October 19, 1984 This doent has a reticted distributio ad may be used by reWimts oy in the perfemance of officialW dudes Its conent my not otberwise be dislosed withut Wodd Rank authrztin  CURIENCY EQUIVALENTS Currency Unit = Colombian Peso (Col$) Col$1 = 100 Centavos (ctv) Col$79.50 (1983 appraisal assumption of average) US$1 Col$1,000 = US$12.58 (1983 average) Col$1,000,000 (MColS) US$12,578 (1983 average) CoIS107.01 = US$1.00 (exchange rate effective September 30, 1984) Co1S1,000 = US$0.0093 (exchange rate effective September 30, '"84) WEIGHTS ANhD MEASURES 1 metric ton (m ton) = 1,000 kilograms (kg) I metric ton (m ton) = 2,204 pounds (lb) 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 miles (mi) I cubic meter (m3) 35.3 cubic feet (cu ft) 1 barrel (Bbl) = 0.159 cubic meter I barrel (Bbl) 42 gallons I metric ton of oil (API 30) 7.19 barrels I kilocalarie (kcal) 3.97 British thermal units (BTU) I ton of oil equivalent (t.o.e.) = 10 milLion kcal (39.7 million BTU) GLOSSARY OF ABBREVIATIONS BD Barrels per day XBD = Thzsa-r.d barrels per day gal Gallon kW = kilowatt MCF = thousand cubic feet TCF Trillion cubic feet M!CFD = Million cubic feet per day W M= hegawatt TOE = Ton of Oil Equivalent CONPES - National Economic and Social Policy Council DNP - National Planning Department ECOPETROL - Empresa Colombiana de Petroleos ENE - National Energy Study FEN - National Electricity Development Bank FRG - Federal Republic of Germany FISCAL YEAR January 1 to December 31  FOR OmCAL USE ONLY COLOMBIA PETROLEM PROJECr Loan and Project Sumuary Borrower: Eppresa Colombiana de Petroleos (ECOPETROL) Guarantor: Republic of ColombiLa Amount: US$i30 million equivalent, including front-end fee. Terms: Repayment in 14 years, including four years of grace, with interest at the 8ank's standard variable rate. Guarantee Fee: An amount equal to 10% of the amount of interest payable by the Borrower to the Bank will be paid by ECOPETROL to the Guarantor. Project The project will consist of: (i) a secondary oil recovery Description: program in the middle Magdalena Valley (Casabe field) which would enable recovery of about 70 million barrels of oil, reaching a peak production of 20,000 barrels per day in 1988; (iI) field development under association contracts between ECOPETROL and private oil companies, with a peak production of 16,500 barrels per day in 1988. ECOPETROL participates for 50% of the cost of the development; (iii) a 290 km pipeline to move Occidental Association crude from Cano Limon in the Llanos across the Andes mountains to Rio Zulia where it would enter existing westward-bound pipelines; and (iv) technical assistance and studies. The project would reduce Colombia's dependence on imported oil. The estimated value of incremental oil production under the project would be about US$545 million in 1988, representing 9% of the projected import bill in that year. The proposed Bank lending would help alleviate external commercial lenders' reluctance to increase exposure in Colombia through the proposed B-loan financing. With the concomitant aim of minimizing public sector capital outlays to the extent practicable, private investors would play a major role in project financing. The project would promote continued sound petroleum pricing policy anc- investment choices to favor efficiency of resource allocation. The project would buttress ECOPETROL's operational efficiency and functioning effectively in partnership with private investors. It would also help to incorporate adequate environmental safeguards into its activities. ThliS docoment his a restric-ed disribution and may be md by rectients only in the perfonnc at o thbei oMci duis Its coQnats may iot otherwee be disclosed witout Wodd Bak tbo  - ii - Risks: All available information on the Casabe field has established it as an excellent candidate for secondary oil recovery by water injection. ECOPETROL has taken steps both during the preparation of the project and the pilot phase to ensure efficient execution with safety features, and would be assisted during the production phase by a reputable foreign engierinubg firm. The risks associated with the association field development component have been minimized as the operators, who contribute 50Z of all development investments, are experienced oil companies. The pipeline is subject to risks normally associated with construction of such projects in difficult terrain. Since a qualified and experienced contractor would be in charge of construction, and the necessary finance for it secured, delays would be minimized; pipeline cost estimates include adequate contingencies. Estimated Cost:l/ Local Foreign Total - US$ Million Casabe Secondary Recovery 166 209 375 Association Field Development 132 2.21 353 Cano Limon-Rio Zulia Pipeline 73 67 140 Technical Assistance 2 8 10 Subtotal 373 505 878 Contingencies: Physical 26 35 62 Price -10 2/ 51 40 161 86 102 Total Project Cost 389 591 980 Project Financing Plan: Local Foreign Total - US$ million - IBRD - 130 130 Comercial banks/B-loan - 80 80 Export credit agencies - 107 107 Private investors/operators - 274 274 ECOPETROL 389 - 389 Total 389 591 980 I/ At mid-1984 prices. Does not include taxes and import duties, from which ECOPETROL is exempt. 2/ This amount assumes continued depreciation of the Peso at a rate faster than the local inflatioa rate.  Estimated Disbursements: Bank FY 85 86 87 88 (US$ millions) Annual 24 62 32 12 Cumulative 24 86 118 130 Rate of Return: About 43Z on the Casabe component and about 23Z or more on the Association Field Developments. The rate of return for the pipeline is expected to exceed 18Z. Appraisal Report: Report No. 5084-CO dated October 19, 1984.  INIERNTIOAL BANK FOR RECONSTRUCTION ND DEVELOPMET REPORT AND RECO NDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO EMPRESA COLOMfBIANA DE PETROLEOS WTH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA FOR A PETOLEU PROJECT 1. I subidt the following report and recomuendation on a proposed loan to Empresa Colombiana de Petroleos, with the guarantee of the Republic of Colombia, for the equivalent of US$130 million to help finance a Petroleum Project. The loan would have a term of 14 years, including 4 years of grace, with interest at the Bank's standard variable rate. PART I - THE ECONOMY1/ 2. An economic mission visited Colombia in July 1982 and its report (4444-CO) was distributed to the Executive Directors in August 1983. This mission was followed by a small updating mission which visited the country in February 1984. Also, a mission to review the external sector and agriculture visited Colombia during April/May 1983, and its report (4981-CO) was distributed to the Executive Directors in April 1984. This section reflects both missions' major findings. Country data sheets are presented in Annex I. Background 3. The Colombian economy has become more resilient to external shocks as a result of the structural changes that have occurred over the past thirty years. Rapid economic growth has resulted in a substantial structural trans- formation of the country from a predominantly rural and self-contained eco- nomy to a more diversified urban, industrial, services and open economy. Colombia has reached a point where population pressure on land no longer increases much, if at all. Public sector investment and output now play a greater role, primarily as a result of increased activity on the part of decentralized agencies and public enterprises. Also, non-coffee exports, particularly exports of manufactured goods, expanded rapidly and the range of products sold abroad widened considerably. The growing urban-industrial- services oriented economic activity and a rapid expansion of surplus labor in rural areas attracted by higher wages and better services in the cities has given rise to rapid rural-urban migration. This phenomenon, together with the increased participation of women in the labor force, has been instru- mental in reducing poverty and improving income distribution over time. Financial and capital markets have evolved pari-passu with the growing needs of the economy, and Colombia has become an active participant in interna- tional capital markets. I/ This section is an updated version of Part I of the report for the Cucuta Water Supply and Sewerage Project (No. P-3869-CO of August 17, 1984).  4. Real GDP per capita rose by about 2.2% on average during the 1950-83 period, with each succeeding decade registering greater gains in per capita income. This was the result of lower population growth, which after having remained in the 3.0% to 3.5% range during the 1950s and early 1960s, declined dramatically after 1965 as a consequence of a sharp fall in the fertility rate. Greater economic and educational opportunities for women, rapid rural-urban migration, rising per capita income and increased effec- tiveness of family planning programs contributed to the decline in fertil- ity. Colombia's population is presently growing at an annual rate of 2.0Z. As a result of the high proportion of women now entering childbearing years, this rate of population growth is likely to continue until the. early 1990s. 5. The combination of rising per capita income and expanded public services has brought about a significant improvement in the welfare of the poorest, in absolute and relative terms. As a result of increased sanitation control, improved diets and better health care, the crude death rate fell by over 50Z and life expectancy rose from 48 years in the early 1950s to 64 years currently. The child mortality rate declined from 11 per thousand in the early 1960s to 4 per thousand in the late 1970s. Infant mortality fell to 54 per thousand in the late 1970s, from about 124 per thousand in the early 1950s. School enrollment ratios have increased substantially at all grade levels since the 1960s and, by the late 1970s, 80% of urban children aged 7 to 14 were enrolled in school. The poorest income groups have experi- enced the greatest increases in electricity and water services in recent years and have benefitted more than the average of the population from services of the national health system. In spite of this progress, Colombia remains largely underdeveloped, with a relatively small modern sector super- imposed on a broad, traditional and economically poor base. Development has been concentrated in relatively few areas of the country, public services are still not available to many of the rural and urban populations and unemploy- ment and underemployment are relatively high. The coverage of health care and water supply requires further improvement, and adequate housing is not available to a substantial portion of the population. Rapid migration to the large and medium-sized cities has created urban development problems, with attendant social difficulties. Moreover, in spite of the steady increase in per capita income over the past 30 years, substantial efforts are still required to improve and extend the benefits of development to the poorest income groups. 6. In large part, the achievements of the past 30 years were the results of government efforts to stimulate the productive sectors, provide the required economic and social instrastructure and establish an effective institutional base in the economy. In the 1950s and early 1960s, development policy favored import substitution supported by high tariff protection and the provision of economic infrastructure by the public sector. It was during this period that the country's major commaunication and transportation net- works were developed and the transformation to a semi-industrial economic structure began in earnest. By the mid-1960s, the prospects for further import substitution were substantially diminished, and the country was con- fronted with great economic uncertainty, arising from the fact that economic activity and the balance of payments were heavily influenced by developments in the world coffee market. In order to ease this constraint, during 1967 the authorities adopted an outward-looking development strategy, expanding and diversifying exports and, among the export markets, increasingly tapping  the Andean Group countries. Export promotion policies, including frequent small exchange rate devaluations, export tax rebates and other export incen- tives were introduced and the authorities began lowering tariffs somewhat and freeing capital markets from controls as means of raising efficiency and increasing the competitiveness of Colombian goods in external markets. These measures were highly successful in relieving the foreign exchange constraint and stimulating growth and employment. However, by the mid-1970s the economy was once again experiencing difficulties caused primarily by the world recession and by excessive Central Bank financing of the Central Government's overall fiscal deficit. Recent Economic Developments 7. In late 1974, the Government introduced a wide range of measures designed to correct the structural and policy weaknesses prevailing in the economy at that time. Before these reforms were fully effective, the economy was subjected to strong inflationary pressures arising from a sharp increase in world coffee prices. The increased receipts from coffee exports, together with some official surrender of foreign exchange from illegal exports, caused a turnabout in the balance of payments. Incomes rose rapidly and stimulated aggregate demand; inflation accelerated. Economic growth also accelerated, and unemployment fell substantially, both in rural and urban areas. Largely as a consequence of increased coffee tax revenues, the public finances generated overall surpluses averaging about 1Z of GDP during the 1976-78 period and, by the end of 1979, net official international reserves had risen to about US$4.1 billion, equivalent to about 12 months imports of goods and non-factor services. 8. while beneficial in many respects, the foreign exchange boom had a somewhat negative impact on the evolution of the Colombian economy, largely as a consequence of the need for measures to stabilize the economy. Public investment was curbed, thereby delaying some badly needed additions to econo- mic and social infrastructure. The rate of currency devaluation was slowed, and the conversion of export receipts into pesos was delayed to moderate the growth of domestic demand, with adverse effects on export expansion and diversification. Also, the Government was compelled to maintain high reserve requirements and expand controls over credit thereby reducing, in real terms, the financing available to the private sector via the official capital market. 9. The stabilization measures were virtually unchanged from early 1977 through 1979 and were partially successful in restraining aggregate demand growth, but relatively high inflation persisted. In response to the effects of increasing restraint on aggregate demand and the troublesome financial market distortions caused by inflation and the extended period of monetary restraint, the authorities began in late 1979 to adjust the stabilization program. The rate of peso devaluation was advanced to increase export incen- tives and reduce borrowing abroad, and in early 1980, credit restraints were relaxed by lowering reserve requirements. At the same time, interest rates on time deposits captured by commercial banks and development finance compa- nies-and on lending therefrom-were freed from controls. To offset the inflationary effects of these measures, the authorities further liberalized import payments and adopted the policy, supported by the emission of new short-term certificates, of not expanding the subsidized selective credit  - 4 - operations of the Central Bank in excess of the resources captured from private savings for this purpose. The authorities also increased the sur- veillance and control of the illegal export trade. The effects of the above measures were not immediately noticeable. Real GDP growth declined to 4Z in 1980, unemployment started to creep up, and inflationary pressures continued. 10. In 1981 the economic situation took a turn for the worse and the problems bave continued through 1983. Real GDP growth which had decelerated to 2.5Z in 1981 fell to 0.9Z in 1982 and to about 0.8Z in 1983. Agricultur l output was hard-hit both in 1982 and 1983 as the production of cotton, oil seeds and other agricultural commodities dropped as a result of low international prices, reduced fertilizer use and adverse weather. Industrial activity deteriorated on account of depressed aggregate demand, and unutilized capacity continued to increase, particularly in manufacturing. After experiencing a surplus for six years, a deficit emerged in the resource balance in 1981 of about US$1.5 billion, which continued at roughly this level through 1983. These deficits resulted mainly from a drop in exports by about 9Z annually in real terms: major reasons were the slowdown in world demand, a major devaluation and the introduction of import restrictions in Venezuela--a major trading partner-in 1983, and the reduction in Colombia's coffee export quota in the International Coffee Agreement significantly below the 1981 coffee export level. Net foreign exchange reserves declined by about US$1,800 million in 1983 and Colombia's net international reserves were equivalent to about 6.7 months of imports of goods and non-factor service at year end. To a significant extent, the fall in foreign exchange reserves was caused by the difficulties in tapping capital markets which resulted from the external debt problems of other countries. Inflation slowed down in 1983 to a 20% average for the year, down from 282 in 1981 and 25Z in 1982. 11. Since 1983 the Government has been introducing a series of measures designed to stimulate aggregate demand and to initiate the adjustment process required to expand and diversify non-coffee exports, stimulate domestic production, and resume economic growth. The rate of peso devaluation is being accelerated with a view to regaining the 1975 real exchange rate during 1985; the housing construction industry is being provided with incentives to mobilize an increasing amount of resources; and open market operations are being discontinued to increase liquidity in the economy. Temporary import restrictions are being introduced to arrest the falling foreign exchange reserves; these are to be lifted once the real exchange rate achieves its equilibrium level and exports respond fully to this incentive. The stabilization measures introduced in 1977 have been gradually dismantled, followed by government legislation, measures and regulations designed to reduce the fiscal deficit and ease distortions and restrictions in the financial system. While these measures have been in the right direction, there is need for significant additional efforts, as recognized by the authorities. In particular, the country continues to be affected by the tight international capital market in 1984: a sharp reduction in the credit lines available to Colombia resulting from the overall debt problem of Latin America has contributed further declines in foreign exchange reserves. The continuing pressure on the external sector has brought to the Government's attention the need for further and timely actions to reverse the current trends. Such a policy package would need to include vigorous export promotion, stepped-up external resource mobilization, promotion of foreign investment, assistance to resolve private sector financial difficulties and fiscal and monetary measures for adjustment.  -5- Development Strategy 12. The Government's strategy for accomplishing its development objectives is set forth in the 1983-86 National Development Plan. This strategy emphasizes growth with equity with the purpose of expanding the benefits of development to Colombia's population. This is to be achieved through increasing participation of all social and regional groups in the process of economic growth. The strategy also places high priority on the resumption of growth while maintaining price stability. The strategy strengthens the previous emphasis on export promotion as a means of supplementing domestic demand and assuring balance of payments stability, and on policy measures designed to increase economic efficiency and raise institutional capacity. It proposes a continuation of the large effort in public investment, giving high priority to energy, agriculture and industrial projects and to the provision of transport infrastructure. Economic decentralization, regional autonomy and the uniting of regional growth centers through improved transport, communication and financial links are directed towards creating en integrated national market. The development plan's strategy also places emphasis on the promotion of both small-scale and commercial agriculture as a means of diversifying and increasing exports, assuring adequate domestic food supplies, holding down inflation and contributing to the Government's nutrition and welfare goals. Industrial policy objectives are to provide an environment of certainty, along with adequate credit and infrastructure, so that entrepreneurs are encouraged to invest and expand output. Because of its benefits in opening foreign markets, creating employment and bringing in new technology, private foreign investment is to be encouraged. The financial sector is also to be strengthened. The Government's approach to helping the poor takes on a new orientation in the development plan's strategy. Its efforts are focused upon improving efficiency in the use of resources, broadening coverago- of services and strengthening the social service institutions. Programs in the housing, health, and education sectors are to be better focused and integrated, and selected low income and disadvantaged groups, such as workers in the informal sector, children and unemployed youth, are singled out for special attention. Combined with a significant expansion in construction of low-income housing and the extension of the Integrated Rural Development (DRI) program, the new directions given to social programs are expected to raise significantly the welfare of low income groups in Colombia. 13. After many years of being a net petroleum exporter, Colombia became a net oil importer in the mid 19?0s and, in recent years, 10-15% of merchandise imports have been accounted for by petroleum. In the absence of rapid energy development, energy shortages could become a major constraint on growth later in this decade. Resolution of the energy problem depends on the country's success in developing its abundant domestic energy resources- hydroelectricity, coal and natural gas-and also upon increasing petroleum exploration and development. The strategy for doing this will require energy pricing policies that balance consumption with energy resource availabili- ties, a least cost program of investments, sufficient domestic and external financing for these investments, strengthened sector institutions, improved program execution capability and rapid carrying out of investments. Although planning and policy making have improved substantially in many energy sector institutions in recent years, further improvements in overall sector planning and coordination are needed. A recently completed National Energy study  - 6 - carried out by the Government is providing the basis for seeking such improvements. Additionally, recent oil pricing decisions have gone a considerable way towards providing the correct signals for regulating consumption and encouraging production. The prices paid to producers (primarily foreign companies) for "incremental" and 'new" crude provide adequate production incentives, and the retail prices of petroleum products have been increased substantially in recent years, reflecting, on the whole, international levels. 14. Colombia's agricultural growth performance has slowed down markedly in recent years. Both demand and supply constraints have been responsible for this. To increase output, utilization of additional acreage for cultiva- tion is projected to involve greater investment than in the past, implying the increasing need to pursue options of yield improvements. In addition to productivity gains, additional land could and should be brought under irriga- tion and/or drainage for more intensive cultivation. Watershed management and forestry development should also become integral parts of a long-term strategy for growth and for conserving the natural resources. The generation and delivery of technological innovations should receive priority in the array of long-term measures. Research and extension institutions are in need of rehabilitation and strengthening. Marketing constraints also need to be relaxed if higher production is to be sustained. Sufficient credit availabi- lity for production and marketing is also essential. Recently the Government initiated a major policy redirection to address these issues and the develop- ment plan assigns a key role to future investments in the sector. 15. Colombia's high transportation costs and inadequate services could become a constraint on economic growth and exports, affecting particularly the development of the country's vast coal reserves and its agriculture. The State Railway is in poor condition and the road network needs maintenance and rehabilitation. The authorities have taken steps to improve the country's infrastructure and the development plan assigns an important share of future investments to the sector. An important part of this effort is the ongoing Rural Roads, Railway Rehabilitation, and Highway Sector Projects. Investment and its Financing 16. An increase of public sector investment will be required in the next several years to carry out the development strategy outlined in the development plan. Over the 1984-86 period, such investment is expected to increase by about 2% p.a. in real terms. The energy and transportation sectors are expected to account for the bulk (about half) of this investment; however, real increases in investment are also expected in the small- and medium-scale agriculture, housing, nutrition and health, industry (including mining), water and sewerage, and education sectors. Overall, public fixed investment is projected to average 7% of GDP during the 1984-86 period, and is expected to total Col$890 billion. Private investment will have to increase also during this period to provide the goods and services required by the expanding economy. 17. The execution of the investment program will demand a major resource mobilization effort on the part of Colombia's public sector. In particular, the size of the overall Central Government deficit will have to be reduced significantly. The buoyancy of the tax system (excluding coffee  tax revenues and receipts from earnings on foreign exchange holdings), which has declined in recent years, will have to be increased through new taxes and better tax administration; the growth of expenditures will have to be checked; resources will have to be used more efficiently; and the charges levied for public services will have to be raised substantially in real terms. A package of measures to tackle some of these issues was approved by Congress in 1983, including measures related to broadening the base and increasing the average rate of the sales tax, increasing other indirect taxes, reducing the earmarking of revenues, reducing tax evasion, and strengthening tax administration. Additional actions on both revenues and expenditures have been proposed to Congress, all of which, when approved, are expected to have a significant effect in reducing the fiscal deficit in 1985. Since this effort is likely to coincide with increased private sector demand for investment resources, the importances of measures to expand domestic savings cannot be over-stressed. The recent capital market liberalization should encourage savings. A significant increase in voluntary private savings is not likely, however, as long as inflation remains high. Consequently, stabilization remains a sine qua non for the country's future growth and development. Growth and Balance of Payments Prospects 18. Given the country's strong resource base, sound economic management and the efforts mounted to realize the projected increases in capital inflows during 1984-86, Colombia's growth prospects for this decade are reasonably good and significant advances in economic welfare are anticipated. However, because of the decline in coffee prices from the previous boom levels and the weakening in exports caused by the recession and by import restrictions in some of traditional Colombian markets, in addition to the need to increase imports to develop the country's resource potential and restore higher economic growth, the current account deficit of the balance of payments is projected to average US$1.7 billion per year during 1984-86, equivalent to about 5% of GDP. Almost half of the deficit is projected to be financed by reducing foreign exchange reserves and by direct foreign investment. By the end of this period, net official international reserves would have fallen to a level of about three months of imports of goods and non-factor services (a level which is adequate for Colombia) without prejudice to the country's creditworthiness. This should be sufficient to support an average growth of real GDP of 2% during this period. Beyond 1986, the current account deficit should improve as a result of increasing export proceeds (jparticularly coal) and a leveling-off of imports resulting from increased doMqstic production of petroleum. The current account deficit would gradually fall to about 1.5% of GDP by 1990. To achieve real GDP growth of about 2% per annum during 1984-86, gross fixed investment will have to be maintained at 19% of GDP to complete existing long-gestating projects in the energy and mining sector, and to avoid too large an increase in foreign indebtedness, gross national savings would need to average about 18% of GDP. 19. Gross external capital requirements are projected to total about US$7,772 million in current prices for the 1984-86 period, for an annual average requirement of about US$2,591 million. Net foreign investment is expected to account for US$825 million during 1984-86. This should provide about 11% of the gross external financing required. Of the remaining 89% (US$6,947 million) about US$5,271 million, has been either committed or is expected to be secured from multilateral and bilateral sources, while the  -8- difference, US$1,676 minlion, will need to be borrowed abroad from financial markets and suppliers' credit sources. At the end of 1983, Colombia's public and publicly guaranteed external debt disbursed and outstanding amounted to US$6.9 b'.llion, equivalent to 18.52 of GDP. The Bank/IDA share of this external debt was 22Z. Reflecting the recently increased Colombian borrowing from comrcial sources, this share is expected to remain at about 20% during 1984-86. The public debt service ratio at the end of 1983 was 202 and is expected to climb to 282 by 1986, peak at about 282 in 1988 and then decline gradually to 23% in 1990. The World Bank's share in public debt service is expected to remain below 25Z during 1984-86. With continued sound economic and financial management, Colombia is expected to maintain its creditworthiness through and beyond the 1984-90 period. PART 1I - BANK GROUP OPERATIONS IN COLOMBIA 20. The proposed loan, the 109th to be made to Colombia, would bring the total amount of Bank loans to Colombia to US$4,251.9 milion (net of cancellations). Of this amount the Bank held, as of March 31, 1984, US$ 2,981.3 million; TDA made one credit of US$19.5 million for highways in 1961. Disbursements have been completed on 66 loans and the IDA credit. Before 1979, disbursements averaged US$86 million equivalent per year, but had increased to to US$248 million in FY82 and US$286 million in FY84, reflecting the higher level of commitments in the late 1970s. While disbursements in Colombia have been slower than those recorded in the Latin Aerican Region for similar projects, concentrated efforts to overcome problems to initiate project execution have resulted in a significant increase in disbursements during FY83 and FY84. Improving performance of social sector institutions in the execution of Bank-financed projects, the --adual containment of inflationary pressures and the effects of the xe-cently-introduced fiscal reforms, which should improve counterpart funding, all point to a higher level of disbursements in the future. IFC has made investments and underwriting commitments of US$119.9 million in 29 enterprises and as of March 31, 1984, it held US$48.0 million. Annex II contains a summary statement of Bank loans, the IDA credit and IFC investments as of March 31, 1984. 21. Since the initial loan was made in 1949, Bank lending to Colombia has become quite diversified. Although through the mid-1960s, 88Z of the loans made were for power or transport, since then the Bank has broadened its participation in lending for agriculture and industry, and initiated lending for irrigations and watershed management, education, water supply, telecommu- nications, urban development and nutrition. By the late 1970s, 53% of the loans made to Colombia were for projects other than transport and power. Of the loans made since 1978, 39Z were for power and transport, 16% each for agriculture and industrial projects, 7% each for urban development and water supply, 4% each for telecommunications and irrigation, and 72 for education, nutrition and multipurpose projects. The diversification was indeed a desirable aim as it helped provide close contact with a broader range of Colombia's evewlopment problems. The experience gained has served to identify areas in which the Bank's role can only be a marginal one and, thus, to enable lending to be focussed upon sectors in which the Bank's presence can have a meaningful impact. 22. The Bank lending to Colombia in FY84 consisted of loans for power sector financing, coal exploration, earthquake reconstruction, agricultural  - 9 - diversification and multipurpose water supply and electricity, totalling US$464.1 million. In addition, the Bank participated in two B-loans for a total of 142 of the loans, or US$28.75 million. In response to Colombia's having undertaken a gradual adjustment process to expand and diversify non-coffee exports and resume growth, the thrust of Bank support has shifted towards strengthening the Government's programs, enhancing the effectiveness of resource use, and emphasizing quick-yielding investments. Loans recently approved by the Board and a number of operations at an advanced stage of preparation reflect this overall direction. Regarding infrastructural investments, the FY85 program stresses rehabilitation, moderaization and a more intensive use of facilities already in place, as in the cases of recently approved water supply and electricity distribution projects. The recently approved power development finance project was entirely geared toward completion of ongoing projects. Similarly, increased emphasis has been placed on directly productive operations, such as the already-approved agricultural diversification and small-scale industry projects. The project described in this report and the development banking project which will be considered by the Board soon fall in that category. Beyond FY85, work is also underway on projects for further petroleum development, electric power, development finance, agricultural extension and marketing, fertilizers, and irrigation for possible consideration by the Executive Directors during the next two years. 23. The proposed Bank lending is consistent with the Government's development strategy. Future loans would finance agriculture and industry to support the Government in its efforts to raise overall productivity, income and employment, increase and diversify exports, and help develop renewable sources of energy through lending for bydropower and arranging associated co-financing. Closely related to these objectives would be Bank lending for infrastructure that would facilitate the increasing inter-regional flow of goods and services. Finally, several loans are being prepared in support of the Government's efforts to help the poorer segments of the Colombian population. Proposed lending for further rural development, agricultural credit, water supply and sewerage, and irrigation projects are principally designed to improve the standard of living of the poor. 24. The operations of external lenders in Colombia are shown in Annex I. While IBRD, IDB and bilateral sources provided about 75% of total external financing to Colombia in the 1961-72 period, their share had decreased since then to some 49% for the 1975-82 period and is expected to decline further to about 40% of external capital requirements during the eighties. Like the Bank, IDB has given increased emphasis to energy-related projects, in addition to those for low-cost housing, urban and rural develop- ment, agrarian reform, university education, water supply, rural electrifica- tion and land erosion control, which are aimed at improving living standards of the lower-income population. In the future, it proposes to assist Colombia in developing sources of domestic energy and in expanding productive sector activities to help generate increased employment. USAID has supported programs in education, rural development and small farm development, but is phasing out its program in Colombia. The Government of Canada, the Federal Republic of Germany and the Netherlands have also provided conces-'onal financing for basic needs and regional integration projects.  - 10 - PART III: THE ENERGY SECTOR - PETROLEUM Energy Resources and Policies 25. Colombia is rich in energy resources, particularly hydroelectricity and coal. Its reserves of oil and natural gas are modest by international standards, yet significant at the national level. In terms of known re- serves, about 53Z of Colombia's primary energy potential lies In hydroelec- tricity, 45% in coal, and only 2% in oil and natural gas. Even the high share of hydroelectricity understates its importance because it is a renew- able resource. In contrast, production of commercial energy relies primarily upon oil products (41%) and less on hydroelectricity (25Z), natural gas (22Z), and coal (12%), although the hydroelectricity share h_s increased in the last six years. Rational use of Colombia's energy resources requires a gradual, long-term shift of consumption from oil to coal and hydroelec- tricity, which is the current Government policy. There is still considerable room for substituting bydropower and coal for the present oil and gas usage in sectors outside transportation. In the medium and short-term, however, there is an urgent need to increase the recovery of existing hydrocarbon reserves and to develop new fields (para. 47). 26. Colombia's coal resources are substantial, with reserves estimated at some 10 billion tons, of which only about 20% can be classified as measured. Coal production grew at about 7% per annum on average over the 1970s to reach a level of about 5 million tons in 1981. Production came from about 400 small and medium-scale mines, virtually all of which are non-mecha- nized. More than half of coal production and consumption is concentrated in the highlands near Bogota. Sixty percent of all coal is consumed by indus- try, and most of the rest by the power sector. Colombian coal is bituminous. with high calorific value and low sulphur content, and some possesses coking properties. 27. At present rates of use, the country's coal reserves would last two thousand years. In view of the magnitude of reserves, Government policy encourages domestic consumption (para. 30) and promotes coal exports. Since 1979, the UNDP and the Bank, as executing agency, have been working jointly with the State Coal Corporation, (CARBOCOL), which cogether with an EXXON subsidiary has undertaken to produce 15-millon tons per year from El Cerrejon North for the export marKet. The recently-approved Bank loao ror a coal exploration project (Loan 2349-CO) will assist in assessing the economic potential of several other promising areas. 28. Colombia's hydroelectric potential, at about 100 GW, is among the largest in the world. The country has made important strides in developing this potential over the past 10 years, but only some 4% has been developed! to date, although plants now under construction will virtually double capacity by 1988. Hydroelectric plants at present represent about 80% of the installed capacity. Since the plentiful hydro-reserves can be developed at relatively low cost, they represent an option of high priority. However, the optimal mix of generation sources needs to be re-examined to take advantage of the projected increased supply of coal and existing natural gas surplus. This matter is currently under study (para. 29). 29. Measured natural gas reserves stood at about 4.1 trillion cubic feet at the end of 1983, or almost 30 year's consumption at present rates of  - 11 - utilization. Most reserves, production and consumption are concentrated on the northern coast, and total consumption growth averaged about 7Z per annum over the last five years. Thermal power plants now account for about half of total gas use. Industry represents the bulk of the remainder, with oil refineries being also important consumers. The excess supply in the northern region would further increase through ongoing and planned substitution of coal for u3Ltural gas iL power generation and industry. To this end, the Government is making arrangements to initiate studies to review possible alternative gas uses. ECOPETROL has recently conducted a pilot study for use of compressed natural gas as fuel for transportation vehicles and is exploring ways for application of this technique on a commercial scale. Energy Policy and Investment 30. Since 1977 Colombia has followed a strategy to develop rapidly and at minimum cost a domestically-based energy supply, to encourage rational consumption choices through pricing and other incentives (para. 34) and to strengthen its institutional capacity and data-base for long-term energy investment planning. In line with this strategy, the aforementioned electricity and coal development programs have been launched, and private sector initiatives in petroleum exploration and development have been successfully promoted (paras. 34, 35 and 39). The Government' b energy substitution policy has resulted in conversion of all sizeable oil-burning electricity plar.ts to natural gas. More recently, only coal-based generation has been authorized for new thermal plants, and present gas burning power plants will be gradually phased out. Additionally, major industrial users, particurlarly cement, have converted to coal. The future growth in domestic market for petroleum products and gas will likely be principally in transport and, to a lesser degree, in residential uses. Reduced overall petroleum consumption growth in the long run, combined with higher production, would enable Colombia to become practically self-sufficient by 1988; however, the continuation of that position in subsequent years will depend on additions to proven reserves. In the short- and mediumr-term, an aggressive exploration and development program for crude oil is expected to contribute meaningfully to Colombia's balance of payments position. The Government's petroleum sector strategy is discussed in paras. 33-43. 31. Electricity, petroleum and natural gas prices are set by the Government, while coal prices are market-determined. Positive Government actions in recent years have produced important increases in electricity rates in real terms, 44Z during 1981-83 alone. Domestic petroleum product prices have risen from a small fraction of international prices in 1974 to a level virtually equivalent to the international one. Nevertheless, there is room for further improvements in long-term pricing policies to reflect better the opportunity cost of the various energy sources and to provide, within the Government's broader objectives, appropriately balanced incentives for their development. The extent to which current prices actually provide such incentives is not clear. The Government has undertaken a major effort to improve sector knowledge through a National Energy Study (ENE), which was carried out between 1979 and 1982 by the National Planning Department (DNP) with the help of local consultants and technical assistance from UNDP and the Federal Republic of Germany. This study provides significant information aeeded for energy planning, including preliminary evaluation of demand growth and investments that could best serve such growth. As a follow-up to this major study, the ENE has commenced several specialized studies including  - 12 - those concerning energy conservation policies in industry and transportation, alternative uses for natural gas supplies from the Atlantic coast, and planning for development of energy resources. The Bank will be closely following the progress of these studies. Mhis effort has also elicited foreign technical assistance from official sources. Federal Republic of Germany will provide assistance on modeling and data gathering, France on industrial energy savings, Italy on rural electrification, and the Organization of American States (OAS) on energy use in transportation. 32. Over the past six years, Colombia has been successful in mobilizing external financing for energy development, through direct foreign investment (in oil and gas first and lately in coal) and external loans to the energy agencies, including power companies. However, current conditions in the international capital market are making financing more difficult to obtain. Local financing requirements are covered by internally generated resources and Government contributions, with the incipient local capital market provi- ding only a marginal share of financing. To increase internal resource mobilization by the main energy agencies, prices charged to consumers of petroleum products and electricity have been significantly increased in real terms, as mentioLed above (para. 31). Furthermore, in 1980 the Government created the National Coal Fund that receives revenue from a tax on coal production and finances coal exploration (80%) and small and meeium-scale coal mining operations (20%). In 1982, a power development bank (FEN) was established to mobilize domestic as well as foreign resources for the power sector. PEN has been quite successful in its initial forays into the domestic capital market and has recently borrowed US$370 million from the Bank and external commercial lenders for a power development finance project (Loan 2401-CO). In the petroleum sector, private investors-togetber with ECOPETROL-played a significant role in support of development in production. Petroleum 33. Sector Development and Prospects. Colombia is a mature petroleum producing country which has been relatively well explored but offers signifi- cant scope for further exploration. Colombia's sedimentary basins with characteristics for generation and accumulation of hydrocarbons cover an aggregate area of about 586,000 ku2. Since the early 1900s, nearly 900 exploratory wells bave been drilled in 11 of the 12 sedimentary basins, giving an exploratory rate of one well per 829 km2 compared to one well per 15 kmZ of sedimentary basins in the United States. Proven reserves total 734 million barrels of oil, corresponding to about 13 years' consumption. On average, Colombia's exploratory efforts have resulted in a favorable ratio of one discovery well for nine dry wells. There is scope for additional exploratory work and ECOPETROL is promoting development in association with foreign oil companies. 34. From the early 1920s through about 1970, the framework of contrac- tual stability and price incentives attracted heavy involvement by private oil companies. During most of the 1970s, unattractive terms for exploration and production, including low producer prices, resulted in a sharp decrease in private initiative, and ECOPETROL undertook the task of filling this vacuum through its own investment. However, by the late 1970s, alarmingly rapid growth of oil imports and the prospect of serious deterioration in the country's balance of payments led the Government to reestablish a favorable climate for private investment. ECOPETROL, at first, continued to envisage  - 13 - a major role for itself in exploration and development activities but, during 1980-81, the Government scaled down substantially ECOPETROL's plans. In line with this change, private investment in exploration and development has risen from US$18 million in 1976 to US$230 million in 1983 for exploration alone. At present, private investors, which provide 80Z of exploration expenditures, account for 54% of production. In its own operations, ECOPETROL now focuses mainly on maintaining and developing the oil fields and infrastructure that have reverted to it pursuant to expiration of concessions, and promotes aggressively private investment in the oil sector. 35. ECOPETROL pays international prices for newly discovered oil, and the price of base and incremental production from existing fields has also been increased. Aided by this incentive, 59 new exploration contracts were signed with pril-te companies from 1980 to 1983. Of the 49 wells drilled annually on average over the last seven years, 39 were financed by private investors. ECOPETROL's own exploration is concentrated in areas close to producing fields, where the geology is reasonably well known, whereas the private companies are exploring in areas of higher risk, but where the financial rewards could be substantial. Exploration activity during 1979-83 has increased recoverable reserves by about 343 million Bbls (or nearly 53%). Moreover, the higher prices for crude oil have stimulated private investment in production facilities which has doubled, from US$18 million to US$36 million annually, during 1978-82. As a result, the decade-long decline in production was reversed in 1980, and production has increased since then by 7% p.a., resulting in about 9O0 self-sufficiency by 1983. By 1988, Colombia expects to cover 962 of its estimated petroleum requirements from domestic sources, with an important share of additional production deriving from the proposed project (para. 48). 36. Until 1975, retail prices for oil products in Colombia were low in comparison with international prices (para. 31). As a result of regular increases (in real terms) made since then, the price level came close to the international level and, since 1980, have been fluctuating between 90-105% of it. At present, domestic prices edge to the lower end of the range with international price levels. Price adjustments are normally made once a year (January), to raise the prices above international price levels, and allow an erosion to develop as the year progresses due to exchange rate adjustments. Consumption estimates indicate that demand during 1980-82 was 52 lower on average annually, compared to 1974-76. With increases in production higher than increases in consumption since 1980, net imports of petroleum products declined from about US$313 million in 1981 to an estimated US$197 million in 1983. Gross oil imports in 1983 were still high (US$636 million, or 13% of the country's total imports of goods), but were partly offset by the export of petroleum products. 37. Institutional Framework and Contractual Arrangements with the Private Sector. Responsibility for national petroleum policy and pricing resides with the Minister of Mines and Energy, subject to approval of the President of Colombia. The state-owned oil company, ECOPETROL, the Borrower for the proposed loan, started operations in 1951 when a major refinery and several oil fields reverted to the state after expiration of contracts with private operators. Since then virtually all the refineries in the country and various oil fields have reverted to it (para. 39). ECOPETROL is a legally and financially autonomous company. In 1983, its fields accounted for 46Z of the crude oil produced in Colombia. It also owns and operates all  - 14 - refinery capacity of 220,000 BD and controls about 65Z of the oil and gas transportation system (7,700 km of pipelines). ECOPETROL is the sole exporter of hydrocarbon products from Colombia. 38. ECOPETROL is governed by a 5-member Board of Directors appointed by the President of Colombia and chaired by the Minister of Mines and Energy. ECOPETROL's President, also appointed by the President of the Republic, is assisted by five managers responsible for exploration, manufacturing and production, engineering and projects, finance, and administration. The persons currently holding these positions are well-qualified and competent, with 16 years or more of service with ECOPETROL. In 1983, ECOPETROL staff numbered 8,000 of whom 2,500 were technical supervisory staff. Overall, ECOPETROL is a mature company, technically sound and competently staffed. It intends to strengthen its capability to assess the potential of fields which have already reverted to the State, and several others which will revert in future years. ITis would enbance not only ECOPETROL's technical field evaluations, but also its ability to evaluate the options -private or its own operations-for further development of promising fields. ECOPETROL has now set up a Secondary Recovery Unit and, by December 31, 1984, will employ there at least three suitably-qualified engineers (Section 3.01(e) of the draft Loan Agreement). In support of this effort, technical assistance is to be provided under the proposed loan. The Bank and ECOPETROL would review together the viability and proposed production arrangements for fields to be considered in the coming years for secondary recovery (paras. 45 and 48(d)). ECOPETROL's accounting system is satisfactory. Under the proposed loan, external auditing, following standard commercial practices acceptable to the Bank, would be proviVed (Section 5.02 of the draft Loan Agreement). 39. Prior to 1969, exploration and development work in Colombia was undertaken through concession contracts with private investors. From these contracts, the Government derived a royalty of 14.5% (later raised to 20x), plus income taxes on profits. In 1969, association contracts were introduced for the first time and, since 1974, only such contracts were permitted by law, although remaining concession contracts continue to be honored. Under the new system, the associated company provides all funds for exploration. ECOPETROL shares with the company 50% of development expenses and receives 50% of production after deducting a 20% Government royalty on total output. ECOPETROL, in turn, retains 40% of the royalties. Currently there are 25 foreign and local oil companies active in Colombia. These include major well-known international companies such as EXXON and TEXACO; independents, Occidental and Houston Oil and Gas; a European company - Elf Aquitaine; and many smaller companies such as Louisiana Land and Exploration and PETROCOL, a Colombian company which received assistance from IFC. There are 14 foreign companies active in exploration and/or production under 23 association contracts with ECOPETROL and 16 concession contracts. In 1983, association contracts accounted for 13% of crude production and concessions for 41%. 40. The 1984-88 Petroleum Investment Program. The key objectives of the 1984-88 Petroleum Investment Program are: (i) rapid production increases from old oil fields through secondary recovery at relatively low risk; (ii) rapid development of new discoveries (under association contracts) and provision of required infrastructure particularly in the Llanos area; and (iii) promotion of new exploration by foreign oil companies in the Llanos and in 11 other sedimentary basins, some of which have not been explored in depth as yet.  - 15 - 41. The 1984-88 Investment Program envisages continued cooperation between ECOPETROL and foreign companies. Including all expected public and private capital outlays in the sector, it amounts to US$3.1 billion of which ECOPETROL would account for about US$2.1 billion and the private companies, about US$1 billion. ECOPETROL's capital outlays consist mainly of its share under its association contracts with private companies, infrastructure investments in support of private sector activities, and the Casabe secondary recovery scheme included in the proposed project (para. 48(a)). Private sector activity would continue to be concentrated in those activities requiring risk capital, i.e., mainly exploration and development of new fields, whereas ECOPETROL would concentrate its own operations on the further development of fields which reverted to it after the expiration of concessions and which entail minimal risk, and on infrastructure. The investment program takes account of ECOPETROL's implementation capability and financial constraints, and contains only highest priority investments in exploration, development, refineries and petrochemicals, and pipelines. In making commitments to new capital expenditures, ECOPETROL would ensure that its capabilities to implement the proposed Bank project will not be adversely affected as a result of such commitments (Section 5.04(c) of the draft Loan Agreement). 42. ECOPETROL's exploration program would amount to US$203 million or 10% of Its investment program, while the private risk capital likely to be invested for exploration (US$450 million) would be more than double this amount. ECOPETROL's exploration would include seismic surveys used, in part, to promote acreage to private industry. The bulk of ECOPETROL's investments, US$990 million, would be in development, reflecting the high priority attached to increasing production. Some 40% of this effort would be ECOPETROL's share with private association partners, who will contribute US$379 million, and US$375 million (on the basis of the currently estimated development costs) would be for the Casabe secondary recovery. In addition, ECOPETROL would invest US$225 million to continue development drilling in 13 of itS own, mainly old, fields. In pipelines, ECOPETROL would invest US$323 million including the Aptay-Yopal-Velasquez pipeline, which, together with the Cano Limon - Rio Zulia pipeline to be partly financed under the proposed project (para. 48(c)), would bring newly-discovered oil from the Llanos area over the Andes to connect to the existing pipeline system. The proposed Llanos pipelines, one of which is to be constructed as a joint venture with private enterprise, could spur further oil industry interest in that area, given the prospect of considerable reduction in transport costs. In the area of refineries and petrochemicals, ECOPETROL would commit US$358 million, of which US$252 million would be tentatively allocated for a new refinery unit still under study. Such a unit would convert the heavy petroleum, of which Colombia has an oversupply, into lighter products which are in short supply. On the whole, this investment program is well balanced both as regards its size and the individual components. In terms of operational management of the program, the private sector would be responsible for about a half, including its own program and ECOPETROL's share of association field developments. 43. ECOPETROL's internal cash generation is expected to meet nearly 60% of the cost of its 1984-88 investment program, but the company will have to borrow the remaining 40%, or US$890 million, from external sources. For this purpose, ECOPETROL plans to rely as much as practicable on suppliers' credits (US$300 million) to help finance the equipment required for its  - 16 - investments. The remainder (US$590 million) has to be institutional borrowing, including the proposed Bank loan. Until 1980, ECOPETROL was able to mobilize long-term funds at reasonable cost, but fiuancing from commercial sources has now become severely limited as a result of the current Latin American debt crisis. The proposed Bank loan would ease ECOPETROL's task of raising funds from commercial sources and export financing agencies. The recent increase in the estimate of recoverable oil reserves of the Llanos oil fields may improve ECOPETROL's prospects for attracting private investors and commercial lenders for joint ventures in the Colombian oil sector. ECOPETROL is now exploring with its lead banks possible long term financing, including loans from commercial sources and export financing agencies. It is also firming up its estimate of financial needs which would arise from further promising field developments in association with private partners. During the first half of 1985, when the outcome of ECOPETROL's exploratory discussions will be clearer, the Bank would support the effort with a B-Loan (in an amount of about US$80 million, with a Bank contribution of up to 20%), as in the case of the recently approved Bank loan to FEN for a Power Development Finance Project (Loan No. 2401-CO). Agreements now reached with ECOPETROL to ensure that its financial soundness will be maintained in future should help facilitate its access to commercial credit sources of finance (para. 56). The Role of the Bank in the Energy Sector 44. Since 1950, the Bank has supported development of Colombia's energy sector with 29 loans totalling US$1,708.6 million for electricity and a US$9.5 million loan for coal engineering (para. 27). The power loans have assisted in the expansion of generating capacity, creation of a national transmission network and provision of distribution facilities, including expansion of electricity distribution to low-income areas. In addition, the Bank has financed and executed technical assistance projects to strengthen power system planning, sector organization, institutional strengthening and studies on marginal-cost-based tariffs. Previous Bank lending to Colombia's power sector has been found generally successful in several OED reports, particularly its contribution to countrywide coordinated sector development. Present Bank technical assistance efforts in the power sector concentrate on issues of investment and financial planning, tariff structures, the distribution program, and energy losses-as recommended by OED. 45. The Bank support of ECOPETROL's investment programs would focus mainly on its field development work in joint ventures with private partners, provision of infrastructure needed for increased private investment and, in oil fields reverted to ECOPETROL, on quick-yielding, high-return projects which would strengthen ECOPETROL's finances and erhance its ability to pay its share of joint field developments with private partners. The proposed Bank loan to ECOPETROL represents the culmination of several years' effort, by the Colombian authorities and the Bank, to reach agreement on targets that would assure ECOPETROL's financial soundness. The agreements involved are designed to ensure, inter alia, that ECOPETROL's debt structure remains manageable and that an appropriate part of its investment program is financed through internal cash generation. An annual review with ECOPETROL of its investment program would focus attention on high priority investents for which financing is available and provide an opportunity to encourage  - 17 - continued strong private sector participation (para. 56). Taken together, the financial performance covenants would entail the passing on of price increases for crude oil purchased by ECOPETROL from its partners and external suppliers to domestic consumers, thus ensuring that sales prices remain within the range of international price levels. Finally, particular importance is attached to augmenting ECOPETROL's technical and managerial capability, to carry out its secondary recovery programs and to assess field development options. The latter would involve, specifically, a detailed review of the public vs. private options for operating oil fields which will be reverted to ECOPETROL after termination of their concessions, with the objective of encouraging private investment to the extent indicated by technical, risk and financial considerations (para. 48(d)). PART IV: THE PROJECT Background 46. The proposed project was prepared by ECOPETROL, the private oil companies, and the Bank, and was appraised by a Bank mission that visited Colombia in February 1984. Negotiations were held in Washington during the week of August 20, 1984 with a Colombian delegation led by Dr. Rodolfo Segovia, President of ECOPETROL. A Staff Appraisal Report is being distributed separately to the Executive Directors. A supplementary data sheet appears as Annex III. ProJect Objectives 47. Taken together, Colombia's abundant array of energy resources offer impressive prospects for future industrial development, as well as for major expansion and diversification of its export base. A serious effort to real- ize this potential has been underway since 1977. Although important progress has been made, there is still a long way to go since the country has not yet regained its previous self-sufficiency in energy supply. The proposed project would assist Colombia to build upon the gains made so far by further- ing the following objectives: Firstly, on the macroeconomic level, it would reduce Colombia's dependence on imported oil. The estimated value of the 36,500 barrels per day of incremental oil production under the project would be US$545 million in 1988, representing 9% of the projected import bill in that year. Secondly, the strain on long-term investments needed for growth represented by external commercial lenders' reluctance to increase exposure in Colombia would be alleviated by the proposed Bank lending, including a B-loan which would follow the current lending operation. With the concomitant aim of minimizing public sector capital outlays to the extent practicable, private investors would have greater scope to play a major role in the Colombian oil sector. Thirdly, the project would promote continued sound petroleum pricing policy and investment choices, to favor efficiency in resource allocation. On the sectoral and institutional level, the project would buttress ECOPETROL's capability to increase the efficiency of its operations, incorporate adequate environmental safeguards into its activities, better evaluate field development prospects, and function effectively in partnership with private investors.  - 18 - Project Description 48. The project (IBRD map 18402) consists of four main components: (a) ECOPETROL Casabe enhanced oil recovery program: Casabe is an existing oil-ptoducing field which reverted to ECOPETROL from Shell in the early fifties pursuant to the expiration of its concession agreement (para. 37). Based upon pilot water injections made by ECOPETROL during 1980-83 to help define recovery methods and recoverable reserves, it is now estimated that about 70 million barrels of additional oil can be expected for recovery from this field by 2004, through a water injection program (at a base cost of US$375 million) with low residual risk and attractive pay-off rate to ECOPETROL. The project would provide for the drilling of about 500 injection and 53 producing wells, drilling and completion rig services, design and construction of surface facilities to process fluids, store and transfer crude oil, work-over of producing wells, plant for water injection and the treating of residual water to remove pollutants before disposal into the nearby Magdalena River. Producing an incremental 20,000 BD by 1988, valued at about US$295 million, the Casabe component would contribute 12Z of the country's crude oil ouput and would enhance ECOPETROL's finances to participate in joint field developments with private investors (paras. 35 and 45). Successful execution of this project component will, however, require resolution of difficult technical problems which may emerge as the project implementation advances. To assist in handling them, provisions would be made under the proposed loan for consultant and engineering services for the detailed design, execution and monitoring of the execution; the Bank would also maintain close supervision; (b) Field development under ECOPETROL's association contracts with private companies: This project component covers field developments, at a base cost of US$353 million {ECOPETROL's share of the total development costs), to include the recent oil discoveries by Occidential Petroleum (U.S.), Elf Aquitaine (France) and Chevron (U.S.) in the Llanos area, as well as enhanced oil recovery by steam injection in an old field in Cocorna by Texaco (U.S.). Under its association contracts with private investors/operators, who provide their contributions in the form of equity, ECOPETROL is obligated to contribute 50% of the development costs (normally in equity) and is entitled to receive 50% of production, after deducting 20Z Government royalty on total output. Initially, the investors/operators would provide all funds for exploration (para. 39). Under this project component, the Bank would finance a part of ECOPETROL's contractual financial obligations to private inestors/operators for field developments (para. 49). This project component is estimated to produce an incremental 16,500 BD by 1988, with an annual value of about US$250 million, equivalent to about 10% of Colombia's total projected crude oil production in that year. (c) Cano Limon - Rio Zulia Pipeline: Construction of a 290-km, 18/20 inches pipeline at a base cost of US$140 million to transport the  - 19 - westward-bound pipeline to refinery. The pipeline would be constructed and operated under an association contract between ECOPETROL and Occidental Petroleum on a 50/50 partnership basis. For the construction, Occidental Petroleum would provide 50% of the required funds in the form of equity; ECOPETROL would contribute 3%, the Bank 6% and the remainder would be borrowed from export credit agencies/commercial sources, all of which would constitute ECOPETROL's equity share. ECOPETROL would assume the servicing obligation for loans raised on account of its snare of the financing; (d) Technical assistance, training and studies: In comparison with the techniques now in use, the enhanced secondary oil recovery technique in locations other than Casabe is estimated to allow production of an additional 100 million barrels of oil from existing fields. To help attain this objective, the project would provide technical assistance to the Enhanced Oil Recovery Unit, established in ECOPETROL during preparation of the proposed project (para. 38), to strengthen its capability in design and supervision of technical studies, and in planning and evaluation of pilot field tests. Reservoir simulation studies would be carried out in 18 fields operated by ECOPETROL and private companies, as well as 4 pilot field tests using enhanced recovery techniques. ECOPETROL personnel would receive training in these techniques, both on-the-job and abroad. An environmental protection study would be undertaken under the project to facilitate establishment of national policy and appropriate safeguards to minimize undesirable effects on the environment from development and use of liquid hydrocarbons. In total, 280 man-months of consulting services would be provided under the project's technical assistance component. Costs and Financing 49. The total project cost is estimated at US$980 million, of which US$591 million (60%) would be in foreign exchange. ECOPETROL would finance about US$389 million, or 40% of the total project costs, from internal cash generation, thus covering the full local costs. Foreign costs would be financed by the private operators (US$274 million), export credits (about US$107 million), commercial banks/B-loan (about US$80 million) and the Bank (US$130 million). The following are the detailed cost estimates for the major project components and the proposed financing plan (in US$ million): Estimated Cost Financing Plan ECOPETROL Cash Commer- Private Genera- Export cial Opera- Project Components Foreign Local Total tion Credits Banks IBED tors Casabe enhanced oil recovery 252 168 420 285 25 40 70 - Association field developments 235 156 391 97 18 40 40 195.5 Cano Limon - Rio Zula pipeline 94 63 157 5 64 - 10 78.5 Studies and Techni- cal Assistance 10 2 12 2 10 - Total 591 389 980 389 107 80 130 274 (Z) (60) (40) (100) (40) (11) (8) (13) (28)  - 20 - The project costs are based on mid-1984 estimates prepared by ECOPETROL; they include physical contingencies amounting to 7%, which is considered adequate in view of the advanced stage of project preparation. Price contingencies are provided for at 8% in 1985 and 9% in 1986-88 for foreign costs and 20% in 1985 and 1986 and 18% in 1987 and 1988 for local costs. The Colombian currency is projected to devalue by 28% in 1984, 23% in 1985, 13% in 1986, 10% in 1987 and 9% in 1988. The Bank loan would finance a relatively small part of the proposed project: 13% of the total costs and 22% of the foreign costs. The Bank financing would be associated with those components (Casabe, joint venture field developments and studies) that lend themselves to the Bank's guidelines for procurement; US$10 million out of the loan proceeds would be allocated for the pipeline construction because Occidental Petroleum company, which is arranging the balance of the financing for its own account and that of ECOPETROL, reported that the commercial lenders approached considered direct Bank involvement-even on a small-scale--to be an important element in their decisions. Procurement under the Bank loan for this component would be on the basis of purchase of selected equipment and services, in accordance with the Bank guidelines. The Borrower's Finances 50. ECOPETROL's revenues originate from the domestic sale of oil products and natural gas, and the export of fuel oil and middle distillates. On the expenses side, ECOPETROL purchases the full output of oil and gas produced in Colombia by private oil companies. In addition, ECOPETROL imports crude oil and gasoline (to make up for the short-fall in crude production and the output of the domestic refineries). Lastly, ECOPETROL produces natural gas and crude oil which is processed together with the domestically-purchased and the imported crude in its two major refineries. 51. Both the prices and volumes of ECOPETROL's operations are largely determined by forces "cternal to ECOPETROL. The prices at which ECOPETROL sells oil products ant. natural gas are Government-regulated (para. 36). The prices at which it purchases domestic crude oil and natural gas from the foreign companies are based on the concession and association agreements (para. 39). The prices at which it exports fuel oil and imports crude oil and gasoline are determined by the international market. Consumers' demand determines the amount of petroleum products sold in Colombia. Volume of imports reflects the sales in excess of domestic production which, in turn, is largely determined by foreign operators. 52. In past years ECOPETROL has earned profits from the sale of domestically-produced oil and its own crude production. The losses it incurred on the resale of imported gasoline and crude cil (resulting from excise taxes of close to 30% that ECOPETROL pays to the Goverment) have reduced its profits, resulting in a still-satisfactory financial performance which has shown small profits of about US$10 million in 1981 and 1983. Overall losses in 1980 and 1982 were limited to US$5 million and US$10 million, respectively. 53. ECOPETROL's low profitability reflects to a considerable extent its accounting practice under which foreign exchange losses on external debt are entered into annual income statements as costs, while the actual losses occur only when payments fall due. Thus in the interim, ECOPETROL's cash flow situation remains strong. Over 1980-83, it was able to finance from internal  - 21 - from internal sources about half of its investment program of approximately US$1.0 billion. Considering the project's and ECOPETROL's favorable cash flow projections, the maturity of the proposed Bank Loan would be set at 14 years, instead of the usual 17-year maturity for Colombian loans (the shorter maturity of the loan will be compensated by extending the terms in forthcoming operations on Colombia). ECOPETROL's main problem in the last two years has been the unavailability of long-term financing because of Colombia's difficulty in tapping the international capital markets, with the company consequently resorting to short-term borrowings. In recent years, ECOPETROL was able to raise only two long-term loans, one syndicated by Chemical Bank (US$200 million in 1979) and another by Manufacturer's Hanover Trust (US$100 million in 1980). Short-term loans outstanding, which had peaked at US$365 million at end-1982, have now fallen below US$200 million. Had ECOPETROL obtained long- rather than short-term financing, its current ratio at end-1983 would have been an acceptable 1.1 rather than 0.7. The proposed Bank loan and cofinancing loans (including the proposed B loan) would strengthen ECOPETROL's financial position and improve its future borrowing prospects (para. 56). 54. At end-1983, ECOPETROL's debt:equity ratio was 65:35, which is rather low in relation to the type of business it conducts. But, this ratio was calculated on a very conservative basis since it was based on unrevalued assets while long-term liabilities were revalued. In accordance with Colombian law, ECOPETROL revalues only partly the assets on its books. For instance, at end-1983 for insurance purposes, ECOPETROL's oper2ting assets (excluding pipelines) were valued at US$1.9 billion, against a book value of US$0.75 billion. Had ECOPETROL revalued its assets on the basis of replacement costs, its debt:equity ratio at end-1983 would have been 33:67 rather than 65:35. 55. In the future, ECOPETROL would have to buy an increasing share of crude oil priced at international price levels from fields exploited under association contracts. By 1988, association crude could represent 38% of Colombia's production, against 13% in 1983, while the share of concession crude, which is priced at about half that of association crude, would decline from 41% to 20%. As a result, the average cost of purchase by ECOPETROL would more than double from US$11.71/Bbl in 1983 to US$26.80/Bbl in 1988. This cost increase together with the financial performance targets agreed during negotiations (para. 56), would imply a projected increase in consumer prices of 5% annually, in real terms. Thus, domestic prices expressed in US$ are expected to increase broadly at the same pace as current international oil prices. Frov the revenues generated, ECOPETROL is expected to finance out of its own resources some 60% of its investment program. The remainder would be financed through loans and private equity contributions(para. 43). 56. To ensure sustained, satisfactory financial performance, ECOPETROL's operating income (before depreciation and debt service charges) for each full fiscal year would be equivalent at all times to at least 1.4 times aggregate projected debt service requirements (Section 5.07 of draft Loan Agreement). Long-term debt to equity ratio would not exceed 60:40, based on assets revalued according to a method satisfactory to the Bank, and ECOPETROL would complete the revaluation of assets not later than March 31, 1985 (Section 5.05 of draft Loan Agreement). The company's current ratio would be at least 0.8 in 1984, 0.9 in 1985 and 1.1 thereafter (Section 5.06  - 22- (a) of draft Loan Agreement) - Moreover, by February 28 of each year, ECOPETROL would furnish to the Bank for its review and comment detailed five-year financial projections, including proposed investments and financing plans. In the event these projections should indicate that ECOPETROL would not meet one or more of the financial covenants, the company would exchange views with the Bank on measures it proposes to take to do so (Section 5.04 (a)(b) and (c) of draft Loan Agreement). Altogether, these covenants would constitute a -proxy- for satisfactory pricing policies since the cost impact of petroleum imports and domestic purchases would need to be compensated by maintaining domestic prices at levels close to international prices. Under all probable scenarios tested, the proposed financia. covenants required appropriate pricing levels. Their utility is, however, sensitive to domestic production increase well beyond the currently projected quantities. Procurement and Disbursement 57. Goods and services to be financed from the proposed loan and procured under international competitive bidding procedures in accordance with Bank guidelines would include drilling and pumps both for Casabe and for pilot enhaaced oil recovery operations. Other specialized services such as cementing, logging and perforating needed during completion of wells would be procured by requesting bids from a2l firms known to supply these services (a small number worldwide). The association partners, who are the operators for the association field developments, would procure the drilling and selected specialized services (which represent about 50% of total foreign exchange cost of these developments and are equal to ECOPETROL's share) according to international competitive bidding, to enable the Bank to provide financing for these contracts (Schedule I of the draft Loan Agreement). Technical assistance and consultant services would be carried out by qualified and experienced consultants under terms of reference satisfactory to the Bank (Section 3.02 of the draft Loan Agreement). Procurement for other project items to be financed from otber than Bank sources would follow acceptable oil industry practice, which is expected to result in competitive prices in line with the project cost estimates. 58. The proposed Bank loan would finance: (a) 50% of total expendi- tures (representing 100% of the foreign exchange cost) for drilling services for Casabe, the field developments, and enhanced oil recovery pilot field tests; (b) 90% of total expenditures (representing 100% of the foreign exchange cost) of specialized services (logging, perforating and cementing) for Casabe, field developments and enhanced oil recovery pilot field tests; (c) 100% of foreign expenditures for pumping units for Casabe, for the enhanced oil recovery pilot field tests and for pipeline equipment and services and (d) 10OZ of foreign expenditures for enhanced oil recovery studies, technical assistance, training and laboratory tests. A condition of disbursement for the Cano LImon - Rio Zulia pipeline would be satisfactory contractual arrangements between ECOPETROL and Occidental Petroleum Company for construction of the pipeline in accordance with a feasibility study and financing plan, satisfactory to the Bank. Approval by the Bank of a feasibility study and evidence of contractual arrangements between ECOPETROL and private companies would also be a condition of disbursement for each of the field developments (Schedule 1 of the draft Loan Agreement). 59. Loan proceeds would be disbursed into a dollar-denominated special account in Banco de la Republica, to be established by ECOPETROL solely for  - 23 - the purposes of the project. The Bank would uake an initial deposit into the account of up to US$20.0 million. Disbursements from the specilal account would be made for eligible expenditures under rhe loan. Replenishment of the dollar equivalent amount of disbursements from that account would be made upon receipt of withdrawal applications from ECOPETROL under certified statements of expenditures. In addition to the external auditing of ECOPETROL (para. 38), the revolving fund account would be audited annually by independent auditors acceptable to the Bank (Section 5.02 of the draft Loan Agreement). The Closing Date would be June 30. 1989. Implementation 60. The Production Projects Division of ECOPETROL's Production Department would be in charge of project implementation of the Casabe enhanced oil recovery sub-project. Implementation would ztart in the second half of 1984 and coniissioning would take place at the end of 1987. The division is well staffed and competent; it would be assisted by suitable consultants on specialized technical subjects. As regards the field developments, private oil companies would be in charge of developing the reserves, once ECOPETROL bas given its approval to the initial development plan and an annual go-ahead. This arrangement is satisfactory. Regarding the Cano Limon - R;o Zulia pipeline, a contract has been signed for turnkey works with Hannesman (Germany) in August 1984 under which the general contractor will do the detailed design, supply the materials and construct the pipeline system by January 1986. Occidential F?troleum Company will thereafter operate the pipeline under its association contract with ECOPETROL. Inspection during construction will be carried out jointly by Occidental Petroleum Company and ECOPETROL, assisted by consultants. Completion of all other project components is expected by December 31, 1988. Ecology and Safety 61. No major environmental risks are likely to result from the project. So far, ECOPETROL has had an excellent safety record and its pollu- tion and fire prevention 2ractices, which are standard for the petroleum industry, are satisfactory. Oil spills resulting from pipeline failures and blowouts are always possible, but ECOPETROL is experienced and takes precau- tionary measures. With respect to the Casabe component, large volumes of water with a high salt content must be disposed of. To avoid damage to agriculture and cattle-raising in the area, or pollution of the nearby Magdalena River, the produced resUc-al waters would be treated in a special unit to achieve an acceptable level of oil and salt content before disposal in the river, which is acceptable. Under the project, a study would be carried out to enable establishment of a comprehensive petroleum policy framework for environmental protection (para. 48(d)). Benefits and Risks 62. The project involves significant benefits for the Colombian economy. It would provide for nearly 22% of estimated domestic petroleum product sales in 1988 and would replace alternative imports, thus relieving pressure on the balance of payments. By the same token, the project would strengthen ECOPETROL's financial situation, since it would avoid costly imports, and thus generate sufficient funds to allow further increases in production and reserves. Moreover, ECOPETROL's capabilities in the  - 24 - techniques of enhanced oil recovery would be developed and permit the preparation of similar such projects with important economic benefits. The economic rate of return for the Casabe component has been calculated at 43Z. For the association field developments and the pipeline, the corresponding rates are calculated at 23Z and 182 or higher, respectively. From the pipeline, for an approximate investment of US$157 million, ECOPETROL would derive a yearly saving of some US$40-50 million based on a production of 30,000 BD from Cano Limon. Since the peak production is likely to be even higher than this, the benefits are also likely to be higher, and the rate of return is likely to exceed significantly the estimated opportunity cost of capital in Colombia. 63. The geological, operational, financial and political risks associated with the project are those inherent in the petroleum industry. The geological risks associated with the field developments component have been minimized as the operators, who contribute 50% of all development investments, are well known and experienced oil companies. With respect to the enhanced oil recovery component, information already available on the Casabe field has established it as an excellent candidate for secondary recovery by water injection. ECOPETROL has already taken steps both during the preparation of the sub-project and the pilot phase to ensure an efficient and safe execution. Key success factors will be the performance of the project unit, assisted by a well-known, reputable foreign engineering firm. The pipeline is subject to risks normally associated with such construction projects in difficult terrain; since a qualified and experienced contractor under a turnkey, fixed price contract would be in charge of construction, delays would be minimized. The feasibility study confirms the existence of sufficient reserves for adequate utilization of the pipeline. The Bank participation in its financing would provide an element of stability and objectivity in this long-term infrastructure investment. The agreements reached during negotiations would ensure that ECOPETROL achieves a healthy financial structure thus minimizing financial risks to the project. A part of finance for the Casabe and the field development components of the project has still to be raised (para.43.) If an unexpected delay occured in raising of such additional funds, expend ures on these project components may be curtailed without compromising the project's viability. PART V: LEGAL INSTRUMENTS AND AUTHORITY 64. The draft Loan Agreement between the Bank and ECOPETROL, the draft Guarantee Agreement between the Republic of Colombia and the Bank and the report o. 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. 65. Special conditions of the the loan are listed in Section III of Annex III. There are no special conditions of loan effectiveness.  -25 - 66. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI: REC DX 67. I recommend that the Emecutive Directors approve the proposed loan. A. W. Clausen President Attachments Wasbington, D.C. October 19, 1984  - 26 - ANNEX I T&BSL 3r Paae I of 5 COLUMBA - SOCIAL IinIxrAT 00Th E cDLGMU! OC GOUS; ( AenffM iIa csr ~~~ RRUNAZE}) -b 196m 1970t Sr= LA. AER CA zoomE aim cixain sq. me TUaL 11389 1135.9 13_.9 AEZCILTURAL 350.5 350.5 32s 0 _ W VW wm CO) 70-:o 440.0 1400.0 21056 230&.3 (EIULDJ6 OF OIL EQCMYALES) 355s0 495.0 090.0 9,-5 1122.8 PMFOAIXON MM WITAL SMTrISCS POPULIIE*RlD--TEAR (ITFSARS) 15754.0 21206.0 269sS-0 0 12Am roFuLaTIOS (C o TOTAL) 48.2 59.5 04.9 00.5 48 POFOIATI00 mIOECrIOMS 1O6MATIe. L IS YEA -000 (MILL) 375 _ SmnTIO.ARi POFLAUr g (HILL) 01-. FoPULITIOS 31ETm 1_8 PIWULALOTO DENmITY PER SQ. ER. 13.0 1607 23.2 35.7 rSZ9 PER Sq. E. aaI LA_D 05.0 6007 8524 92-4 156.9 ALAToL ACE SLUcTraE (_) 0-14 lAS 4._. 46.2 3s_2 39.9 31_6 15.0 viRs 50.3 511 6003 5b_0 61_1 65 *0D ABOVE 2.9 2_8 3.4 0.1 7.L 90PMATIO G- CRT H RATE CZ) TTAL 3_t 3.0 2_0 2.4 1.6 CRUX 5_7 5_2 2_7 3.6 3.7 CRUDE IUR : RATE (PER ThOCS) 47.2 33.8 20_9 31.3 23.4 CRImE DEATH RMTM (PER TN}S) 17.4 9.7 74 8.1 8.8 ROSS REPRODTI0U RATE 3.3 2.3 1_8 2.0 1.6 FAMILY PLAtiSG ACPTORS. ALAL CTHMS) . 115-4 1928 USERS (2 OF MARRIED ME __ -_ 49.0 40.3 M D r iD oF FDOD PRQc0 PER CAPITA (1909-71-LO) 100.0 99.0 124.0 114.3 l14.5 PER CAPIT cPPLT OF CALLAILS CZ OF RSQUIREKENTS) 96.0 87.0 106.0 110.* 1286, PROTEIS (GRAMS PMR DAY) 540 o b.0 55.0 67.3 89.7 OF 1IC0 *A1111L ANT POSE 28.0 20.0 25.0 Ic 34.1 30.5 tXLD CAGES 1-4) DEATH RATE 11.: b.0 0.0 5.7 5.2 LIFE EPECT. AT B1IRTH (YEARS) 53.1 58.9 b3.7 007 07.4 IDFA:r FRT. RAT (KPR TMWS) 93.: 70.6 53.9 600. 54.2 ACCESS TO SAFE lATER (=POP) TUOAL 30.0 J, 63.0 6000 /d 65.4 *- CR"o 5s4.9 7 88.0 73.0 7;i 78.1 - RUR 6. Je 28.0 46_0 Td 462 ACCESS TO EICRETA DISPOSAL ( OF POPLIATIOR) TOTAL _ 47.0 40. Id S2.9 - C* ._ 75.0 60.0 Tdi 7_0 _. RLUAL ._ 8.0 14.0 7 24.5 P0P0ATIOR PER PHYSICIAS Z640.0 2330.0 1710-0 If 1917.7 1065-8 POP. PER L4lSISC PERSONi 4220.0 730 0 600.0 7T 815.8 7004 POP. PER OSPITL RED TOTAL 360.0 *50.0 580.0 If 367.2 320.3 UIMS -- 380.0 490.0 T0 11.5 20 .5 RURAL _ ._ _. 263603 115510XS PER HOSPITi.L LED MM 22.9 29.8 Ic 27.3 20.0 AVERACE SIZE OF HOUSEHOLD TOTAL _ 5.7 lb - CEMAI __ 5_5Jh URAL __ 5.9._ AVERACE NO. OF PERSOIIS/tOO TOTAL _ 1.8 Ib URWA 1.6 -___ RURAL __ 2.47 . ACCESS TO ELECT. (C OF DELLINGS) T0amL 4'7.0 /I 5831 lb 1AX 83.0 77 S7_5 71 RUMA .0o 13.2 W  - 27 - ANNEX I .A&&Z a it Page 2 of 5 am UTUZU=) alMKS USA 1970D- umkiza z-. Ann" & Ca D mm a8U- U Fi4a s 77.0 105. 130. 10.4 9101. JUA13 77n.0 110.0 13.0 104.5 IL. scU wom 2.0 2.0 "-. 43.2 5.I 313 13.0 25.0 4.0 43.3 6.1 YOM U.0 24.0 51.0 4.5 50.6 10C6L ci 0o _ )mlM 30.8a 20.2 21.6 Le 3. 21.6 plum~ 35.0 3.C 31.O 30.1 2ML lac W U11.0 17.0 21.0 1. 20.5 A : = 3= & 62.5 61.0 .5 75s sun== CatIiAu 3.7 1.2 18.6 f 46.0 54.7 VA= UZ1Uv7 UAU 03S5 14.3 11.3 2.6 164.3 :v iinicsaI 1W 9.5 33.L U.9 107.2 13.8 ts133 C5= COSIAL m:_}c- CEL= m 6U 101cATM 50.0 18.7 50.2 jg 63.5 96.3 WI& AIMC M JC .. .. 2.9 I 2.9 ULo0 MICs COc) 4727.0 6353.0 *S90.0 igumr t l ) 29.2 24.6 24.7 .2 34.5 5 C7UCZ) 5. 4 37.3 25l 31.5 40.7 nc CtDo 19.2 21.0 21-2 23. 23.3 TL 30.0 23.9 34.1 32.2 42.9 1413 45S 45.L 51.2 4.3 54.7 13343 U11.5 14.68 16.5 15.2 31.0 OCC= l= 1.7 1.6 1.2 1.4 0.9 lV St Or 0 41.2 h k 31.9 n :x 35 or 3111 11 67.7-6fi 60.1. 1 350=o MO390005 3.1 k 3 LS 'M or usu1 6.1 10; MMMAISMI TIZ 705!PC= tQsA 9. u14rx 0333 . . 267.0 /e 522.8 ~AL ,, .. 122.0 7; 372.4 powrr Ds:= Lzu CZ) .. .. 34.0 Ic 30*2 .. .. . .. 501r AVUAIXAN VW sro- weree for eac isilcatr we r--u *hcA eritheatic us. Covere of c tr_e oag the sndicastor depend savaiIaMlty of date nS to not unUrfo. Mae" othawale mated. 'tsfr 19W' reafr to w YOr batuae 1359 and 1961; -Dat for 1970' betwee 1969 d v9n; end das for -Mot Useat tatlmte betwean 1960 end 196. .e 1977; L ,1976; A 16; WI7; LL 1962; /h 1973; I 1979;