Papua New Guinea - Yonki Hydroelectric Project

Domia of The World Bank FOR OMCIL USE ONLY Report No. P-4323-PNG REPORT AND RECOMMENDATION OF TlIE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$28.5 MILLION TO THE INDEPENDENT STATE OF PAPUA NEW GUINEA FOR A YONKI HYDROELECTRIC PROJECT May 21, 1986 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Kina (K) = 100 toea (t) Average 1985 December 1985 US$1 = K 1 US$1 = K 1 K 1 = US$1 K I = US$1 FISCAL YEAR July 1 to June 30 through 1977 January 1 to December 31 beginning in 1978 WEIGHTS AND MEASURES m = meter (3.281 feet) m3 cubic meter (35.31 cubic feet) m3s = cubic meter per second (35.315 cubic feet per second) km kilometer (0.62 miles) km2 = square kilometer (0.386 square miles) kWh = kilowatt hour (860-42 keals) GWh = gigawatt hour (1,000,000 kilowatt hours) kW = kilowatt (1,000 watts) MW = Megawatt (1,000 kilowatts) kV kilovolt (1,000 volts) KVA = kilovolt-ampere (1,000 volt-amperes) TCF trillion cubic feet (0.283 x 10 cu m) PRINCIPAL ABBREVIATIONS AND ACRONYMS USED ADAB - Australian Development Assistance Bureau ADB - Asian Development Bank BCL - Bougainville Copper Limited CIF - Cost, Insurance, Freight EIB - European Investment Bank ELCOM - Electricity Commission EPU - Energy Planning Unit MME - Ministry of Minerals and Energy NDS - National Development Strategy OECF - Overseas Economic Cooperation Fund PNG - Papua New Guinea SMEC - Snowy Mountains Engineering Corporation of Australia UNDP - United Nations Development Program  FOR OFFCIAL USE ONLY PAPUA NEW GUINEA YONKI HYDROELECTRIC PROJECT Loan and Project Summary Borrower: Independent State of Papua New Guinea (PNG) Beneficiary: The Electricity Commission (ELCOM) Amount: US$28.5 million Terms: 20 years, including 5 years of grace on repayment of principal, at the standard variable interest rate. Relending: The Government will onlend the proceeds of this loan to ELCOM at its applicable rate for power projects (currently llX) or at the prevailing Bank rate, whichever is higher, for the same term as the proposed Bank loan. ELCOM will assume the foreign exchange risk. Project Description: The project comprises: (a) construction of a 60 m high earth- fill dam on the Ramu River with a total embankment volume of about 1.8 million cu m, a spillway system and outlet struc- ture, and associated works; (b) installation of two additional 15 MW generating units together with step-up transformers at the existing Ramu I power station; (c) relocation of a part of the Highlands highway and local access roads, together totalling 22 km; (d) engineering and consulting services; (e) a training program; (f) technical assistance for institutional support; and (g) a rural electrification component. Benefits: The proposed loan supports a major hydroelectric power development which would reduce ELCOM's dependence on costly imported oil and replace it with indigenous hydro resources. The project would also provide adequate training and institu- tional support to assist ELCOM's development of local staff resources, and develop an institutional and policy framework for a future rural electrification program. Risks: The project faces no special risks. ELCOM has endeavored to minimize the project risks during construction particularly with respect to the treatment of the embankment foundation. A grout curtain has been designed to fill cavities in the con- glomerates with cement and possible sand lenses with chemical grout. The design is satisfactory. ELCOM has also acted promptly in prepariza- to upgrade the operating voltage for the transmission lines to 132 Kv in readiness for the commissioning of the power station. This document has a restricted distribution and may be used by recipients only in the performance of their official dutiea Its contents may not otherwise be disclosed without World Bank authoriatdon.  - ii - Estimated Costs: Local Foreign Total - -- US$ million -- Civil works 14.0 21.0 35.0 Electrical and mechanical 2.0 5.0 7.0 Engineering and consuLting services /a 3.0 5.6 8.6 Construction-related establishment expenses 5.5 - 5.5 Training and institutional development 9.4 5.1 14.5 Rural electrification 1.2 2.4 3.6 Base Cost /b 35.1 39.1 74.2 Contingencies Physical 4.2 5.0 9.2 Price 7.7 8.5 16.2 Total Project Cost 47.0 52.6 99.6 Interest during construction 7.3 10.5 17.8 Total financing required 54.3 63.1 117.4 Financing Plan: Local Foreign Total --- US$ million -- IBRD loan 12.7 15.8 28.5 ADAB grant - 1.0 1.0 EIB loan 7.0 9.0 16.0 OECF loan 11.2 26.8 38.0 ELCON internal cash generation 23.4 10.5 33.9 Total 54.3 63.1 117.4 Estimated Disbursement: Bank FY 1987 1988 1989 1990 1991 1992