Jordan - Sixth Power Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-4318-JO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$27.5 MILLION TO THE HASHEMITE KINGDOM OF JORDAN FOR A SIXTH POWER PROJECT May 6, 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 athorization. HASHEMITE KINGDOM OF JORDAN CURRENCY EQUIVALENTS Calendar 1985 January 1986 Currency Unit = Jordan Dinar (JD) US$1.00 = JD .393 JD .368 JD 1.00 = US$2.54 US$2.72 Exchange rate used in the Appraisal Report JD1 = US$2.63 GOVERNMENT OF JORDAN AND POWER ENTITIES' FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS ATPS - Aqaba Thermal Power Station GWh - Gigawatt Hour (1000 MWh) HTPS - Hussein Thermal Power Station ICB - International Competitive Bidding IDECO - Irbid District Electricity Company IAEA - International Atomic Energy Agency JEA - Jordan Electricity Authority JEPCO - Jordanian Electric Power Company kWh - Kilowatt Hour (1000 Watthours) kV - Kilovolt (1000 volts) MEMR - Ministry of Energy and Mineral Resources MVA - Megavolt Ampere (1000 Kilovolt Ampere) MW - Megawatt (1000 Kilowatts) MWh - Megawatt Hour (1000 Kilowart hours) toe - Tons of oil equivalent FOR OFFICIAL USE ONLY RASHEMITE KINGDOM OF JORDAN SIXTH POWER PROJECT Loan and Project Summary Borrover: The Hashemite Kingdom of Jordan. Beneficiaries: Jordan Electricity Authority (JEA), Jordanian Electric Power Company (JEPCO) and Irbid District Electricity Company (IDECO). Amount: US$27.5 million equivalent. Terms: 15 years, including three years of grace, at the standard variable interest rate. Relending Terms: The proposed Bank loan would be made.to the Government. US$27.15 would be onlent to the three beneficiaries: US$3.15 million to JEA, US$20.0 million to JEPCO, and US$4.0 million to IDECO on the same terms as the Bank loan. The foreign exchange and variable interest rate risks would be borne by the power entities. The remaining US$0.35 million would be retained by the Government to finance a diagnostic study of the power distribution system. Project Description: The project which is part of the Government's high priority 1986-1990 least-cost program for the power subsector includes: (i) rehabilitation and expansion of the urban distribution network in JEPCO's and IDECO's concession areas with the supply, construction and erection of low- and medium-voltage lines, about 180 MVA of power and distribution transformer capacity, and three-phase and single-phase consumer connections; (ii) electrification of about 95 villages (35 villages in JEA's area, 45 in JEPCO's area and 15 in IDECO's), with the supply, construction, and erection of medium- and low-voltage lines and about 6 MVA of distribution transformer capacity, and single-phase consumer connections; (iii) supply of computer hardware and software and equipment and tools for operation and maintenance with specialized hot line work equipment and associated training; (iv) consulting services to assist JEPCO and IDECO in project engineering and construction supervision; (v) consulting services to assist the Ministry of Energy and Mineral Resources in undertaking a diagnostic study of the existing power distribution system in Jordan; and (vi) consulting services and equipment to help JEPCO implement the recommendations of the management information system study undertaken under the Fourth Power Project. The project, when completed, would initially extend the public electricity supply to about 32,000 new urban and rural consumers and improve the quality of service to about 73,000 existing consumers. It also would continue the institutional development objectives initiated under 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 Word Bank authorization. -ii- previous loans by providing assistance in introducing new technologies, reducing system losses and improving the power entities' management, planning and forecasting capabilities. There are no major risks associated with the project, although there are some uncertainties concerning JEA's electricity sales. Adequate provisions have been made to deal with this risk. Local Foreign Total (US$ Millions) Estimated Cost*: JEA's Component 1.12 2.59 3.71 JEPCO's Component 13.48 26.80 40.28 IDECO's Component 2.65 5.57 8.22 Diagnostic Study 0.12 0.28 0.40 Base Cost 17.37 35.24 52.61 Physical Contingencies 1.19 2.46 3.65 Price Contingencies 5.14 10.25 15.39 Total Cost 237I Financing Plan: Proposed World Bank Loan - 27.50 27.50 Government Contribution 0.15 - 0.15 JEA and Customer Contributions 1.55 0.25 1.80 JEPCO and Customer Contributions 18.40 16.60 35.00 IDECO and Customer Contributions 3.60 3.60 7.20 Total Financing 4Z, Estimated Disbursements: Bank FY 1987 1988 1989 1990 1991 USs Million- Annual 1.7 8.1 6.9 8.1 2.7 Cumulative 1.7 9.8 16.7 24.8 27.5 Rate of Return: 13 percent. Appraisal Report: Number 6075-JO, dated May 5, 1986. Map: Number IBRD 19554. * Cost estimates do not include import duties and taxes, from which the power entities are exempt. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE HASHEMITE KINGDOM OF JORDAN FOR A SIXTH POWER PROJECT 1. I submit the following report and recommendation on a proposed Bank loan to the Hashemite Kingdom of Jordan of US$27.5 million equivalent to help finance a Sixth Power Project. The loan would be for 15 years, including three years of grace, at the standard variable interest rate. The Government would onlend US$27.15 million of the Bank loan to the Jordan Electricity Authority, the Jordanian Electric Power Company and Irbid District Electricity Company on the same terms as the Bank loan. The power entities would bear the foreign exchange and variable interest rate risks. PART I - THE ECONOMY 1/ 2. A report entitled "Jordan Review of the Five-Year Plan" (No. 4129-JO, dated May 1983) was distributed to the Executive Directors ic June 1983. An economic mission visited the country in November 1985; its findings have been included in the present text. 2/ Country data sheets are attached as Annex 1. Recent Economic Developments 3. Conscious of the country's limited natural resources, its relatively narrow productive base and the sensitiveness of the economy to changes in its oil-rich regional environment, the Government has pursued liberal, outward-looking policies in trade, labor migration and foreign exchange. This enabled Jordan to alleviate the effects of a very high natural population growth rate (3.4 percent) through massive emigration stimulated by high salaries in the neighboring countries and, until 1982, through rapid expansion of domestic production fueled by an exceptionally high investment rate and rapidly growing export demand. At present, a large part of Jordan's total workforce is employed abroad. In addition to sizable workers' remittance inflows, Jordan has benefited from large inflows of grant aid from neighboring countries as well as from a rapid increase in regional demand for its exports. During the period 1976-82, the yearly inflow of workers' remittances and grants reached on average close to two-thirds of Jordan's GDP. The abundant supply of these resources and a favorable entrepreneurial climate enabled Jordan to maintain both very high consumption and investment rates. 4. As a result, the Jordanian economy expanded rapidly with an annual average GDP growth rate of over 10 percent in real terms during the 1976-82 period; almost full employment was reached. The overall balance of payments remained strong despite a large chronic deficit in merchandise trade. 1/ This section is substantially the same as Part I of the President's Report for the Jordan Water Supply and Sewerage Project (P-4294-JO), which was distributed to the Executive Directors on April 28, 1986. 2/ References in the text which follows are to the East Bank of Jordan. - 2 - Although exports of goods and non-factor services (primarily agricultural products, manufactured goods, tourism and exports of the new commodities, fertilizers and potash) grew at a rapid rate of about 16 percent in real terms during 1976-82, its small base in relation to imports led to a continuous deterioration of the resource gap. These trade deficits, however, were almost fully covered by factor income and transfers from abroad.. Government- guaranteed external borrowing remained therefore within reasonable limits and borrowing on commercial terms was reduced to a modest level. 5. Beginning in 1982, however, the economic slowdown in the neighboring countries has affected the Jordanian economy in many ways, leading to a slowdown of domestic economic activity and a reduction in the inflow of external transfers. The overall economic growth rate slowed to about 5.2 percent (in real terms) in 1983, still a satisfactory Verformance considering the unfavorable economic environment; foreign grant aid was about 23 percent lower, and workers' remittances stagnated while exports of manufactured goods and services to neighboring countries declined. Imports also declined, in line with the sizable reduction in public and private investments. 6. As a result, the current account deficit for 1983 showed only a slight increase to $390 million. In 1984, the decline in mercbandise imports, combined with an increase in exports of manufactured goods, contributed to reducing the balance of trade from nearly $2.5 billion in 1983 to about $2.0 billion. Taking into account a slight reduction in official transfers, the current account deficit fell to $269 million. Although preliminary estimates for 1985 show imports declining (in current terms) and exports increasing, reduced worker's remittances and grants more than offset the trade gains, leading to a rise in the current account deficit to about 7.2 percent of GDP, compared to 6.8 percent in 1984. 7. With the decline in government revenues from grnts, public investment has been reduced, and the Government has further intensified its domestic resource mobilization efforts through cuts in subsidies and improved collection of direct and indirect taxes. The main concerns of monetary policy have been mobilizing savings and controlling domestic liquidity. Private savings have improved, but public saviags have continued to be negative because of the high level of defense expenditures. To promote domestic savings, greater discretion has been given to the Central Bank in adjusting interest rates and banking commissions. As a result of increases in deposit rates in 1983, savings deposits rose faster than the money supply. A parallel situation materialized in 1984 and 1985 though both savings deposits and the money supply grew at slower rates in those years. Together with a marked decline in inflation to 3.9 percent in both 1984 and 1985, these increases have resulted in interest rates becoming substantially positive again in real terms. Medium-Term Prospects 8. Given the changed situation and outlook in the neighboring oil producing countries, GDP growth in the 4-5 percent range as is projected by the 1986-90 Plan appears feasible in the medium term. This projection assumes a reduction in the exceptionally high level of investments achieved during the early 1980s, which reflected the implementation of a number of large new projects such as potash, fertilizer and a refinery. While the new, natural - 3 - resource-based industries have provided some new employment opportunities, the economic slowdown and a rapidly increasing domestic workforce (para. 12) are likely to change the manpower situation in Jordan from one of selective shortages to one of general excess supply. 9. The industrial sector (including mining, manufacturing and construction) is expected to continue to lead the growth of GDP and exports. The new industries have contributed one third towards incremental GDP during 1984-85. Together with an expansion of phosphate mining and cement production, total industrial output would grow at an annual rate of about 6.2 percent for 1986-88 but slow down to an average rate of 4.9 percent per annum for the period 1988-90. Since the rapid expansion of infrastructure and private housing during the boom years of the 1970s and early 1980s has slowed down substantially, the construction industry is likely to grow at a substantially lower rate (3.5 percent per annum) during 1986-90. Thus, industrial growth during the next plan period will have to rely increasingly on the development of small and medium-scale higher technology manufacturing, largely for exports. The'projected 5.7 percent per annum for industrial growth (1986-90) assumes that adjustment of the industrial sector in this direction will be achieved, inter alia through changes in protection policies and improvements in export incentives. 10. Increased demand for services by returning Jordanians, coupled with their accumulation of savings and experience, is expected to stimulate private investment and growth of special services to an average annual rate of 4.5 percent per annum in the next few years. However it is expected that the transportation sector and the hotel industry, which at present have a large surplus capacity, will undergo a period of consolidation. In the trade sector, efficiency gains from modernization would likely be offset by increased pressure from higher unemployment to expand the less efficient informal trade sector. In contrast to the expected slow growth of traditional private services, the prospects are favorable for special services which can nse Jordan's skilled labor in areas such as consulting, contracting, and maintenance. Agriculture is projected to continue to grow by about 5 percent per annum. 11. The projections for the external accounts assume that exports of goods and non-factor services would grow by an average rate of about 5.0 percent per annum in real terms for 1986-90. Exports from the output of previous and new industrial, natural resource-based projects to the world market would make the largest contribution to this growth performance. The export projections for the late 1980s assume that adequate measures are taken to develop Jordan's manufacturing exports. The import growth projections assume that imports would slow down in line with the overall economic growth rate. The fall in oil prices is expected to benefit Jordan by reducing its 1986 import bill by about $110 million, or 4 percent of its total merchandise imports, assuming purchases are made at market prices. Even though I merchandise exports are projected to approach a rate of increase of 5 percent per annum while imports would grow at a lower rate, the trade deficit could remain large and approach the $3.0 billion mark in 1990. In relation to GDP, however, the resource gap is expected to show a further decline from about 44 percent in 1985 to about 28 percent in 1990. Unlike the past, net workers' remittances and foreign grants, which are likely to decline, will not be sufficient to meet the growing trade deficit. Jordan therefore would have to rely more on external borrowing (para. 15). To maintain its prudent debt management, Jordan will need to combine external borrowing with increased efforts to mobilize domestic resources, particularly in the public sector. Social Issues 12. Due to the substantial migration of Jordanian workers to neighboring countries and the rapid economic growth, the labor market situation has been characterized until recently by selective manpower shortages. However, according to recent manpower projections, supply of labor in Jordan in the medium term is likely to show selective surpluses, particularly throughout certain categories of skilled professionals. In 1985, it is estimated that 300,000 Jordanians were working abroad compared to a total domestic employment of about 645,000. Domestic employment includes a relatively large number of foreign workers currently estimated at about 143,000, half of whom are unskilled. A comprehensive manpower and training plan as well as improvements in vocational training are needed to help ensure that the education and training system is geared to meet both domestic and external demands for manpower. 13. The Government continues to emphasize social issues in the 1986-90 Five-Year Plan. Although the social indicators are relatively favorable in most sectors, social services are unevenly distributed across income groups and between urban and rural areas. Housing remains a problem despite the boom in 1978-80, mainly because housing costs have far exceeded the means of the lower income groups. External Assistance 14. With the large, chronic trade deficit offset by inflows of remittances and foreign transfers, the current account of the balance of payments was on average in equilibrium through 1975-81. Net workers' remittances increased from about $160 million in 1975 to about $980 million in 1984. In 1985, however, they decreased to $843 million reflecting the economic recession in the Arab Gulf countries. Following the Baghdad Arab Summit Conference in November 1978, which pledged assistance of about $1.2 billion per year over a 10-year period, net foreign grant aid rose from $400-500 million in 1977-78 to about $1.3 billion in 1980 and 1981; it declined to some $0.8 billion in 1983 and to $0.6 billion in 1985. In 1986 it is expected to remain at $0.6 billion. This decline was the main reason for the current account deficits of $390 million in 1983, and $330 million in 1985, both of which were financed largely by external borrowing and partly by drawing on reserves. Jordan's reserves have remained, however, equal to three months of imports. The external public debt outstanding and disbursed reached $2.5 billion at the end of 1985 (about 66 percent of GNP defined to include workers' remittances). External debt service payments amounted to $317 million in 1985 or 9.7 percent of total exports of goods and services. 15. Jordan's impressive growth, pragmatic economic and social policies and efficient economic management have helped to attract large amounts of foreign assistance. The grant component of this foreign assistance is projected to decline gradually in real terms over the next few years. The projections on that basis indicate a need for average gross external borrowing of about $1.0 billion over the 1986-1990 period, mostly in later years. While bilateral and multilateral sources can be expected to provide the bulk of external resources, Jordan is likely to resort increasingly to the financial - 5 - markets, and this would result in a hardening of loan terms. On these assumptions, the debt service ratio as a percentage of exports of goods and services is projected to reach 12.6 percent by 1990. Given this outlook and the country's record of prudent management, Jordan remains creditworthy for Bank lending. PART II - BANK GROUP OPERATIONS 1/ 16. Jordan has received 21 Bank loans totalling $524.4 million 2/ and 15 IDA credits totalling $86.1 million (net of cancellations) of which all the credits and four loans have been fully disbursed. Project implementation and disbursement performance have been generally satisfactory. In recent years, disbursements have amounted to about 55-65 percent of appraisal estimates, and this disbursement percentage has generally been higher than the average for the EMENA Region. The IDA credits have financed projects in key sectors, such as education, highways, water supply and sewerage, power, irrigation and tourism. By mid-1978, Jordan had attained a stage of economic development where it could be considered creditworthy for Bank lending and had reached a GNP per capita level that exceeded IDA limits. IDA lending was thus discontinued after March 1978. IFC has made loans and equity in Jordan with total commitments of $94.8 million. Annex II contains a summary statement of Bank loans and IDA credits, and IFC investments as of March 31, 1986. 17. Under its last two development plans, Jordan has aimed at restructuring its economy to achieve a wider manufacturing base, to reduce its dependence on external grants, and to spread the benefits of development among different regions. The Bank's strategy has been tailored to support those objectives and in particular is designed to help the Government: (a) to diversify the country's economic base and promote exports; (b) to alleviate manpower and infrastructure constraints in the productive sectors; and (c) to encourage more balanced growth and distribution of social services among regions and income groups, with particular emphasis on low-income groups. 18. Within this broad framework, past lending has emphasized support for capital infrastructure and manpower development. Since 1962, Bank Group lending has focussed on water supply and sewerage, power and energy development, education and urban and municipal development. The Bank Group has also lent for irrigation, agricultural and industrial credit, transportation, tourism, and recently became involved in the health sector with a loan for a Primary Health Care Project. In addition, the Bank Group has financed technical assistance for developing and implementing a plan for expanding phosphate rock mining. An engineering credit was made in FY75 to help prepare a large project for potash production from the Dead Sea via solar evaporation, for which a loan was approved in September 1978. These projects have been designed with an emphasis on institution building to assist the agencies involved to develop their capabilities to plan, prepare, and implement projects on their own. In addition to the proposed power 1/ Substantially unchanged from Part II of the President's Report for the Jordan Water Supply and Sewerage Project (No. P-4294-JO), which was distributed to the Executive Directors on April 28, 1986. 2/ Including Jordan Water Supply and Sewerage Project for $50 million. - 6 - distribution project, future lending would include projects for manpower development, transportation, water supply and sewerage, urban development, power generation expansion, and industry and mining. IFC has provided loans and equity contributions for a major fertilizer project and for projects in the construction materials subsector. It has also assisted the capital market and leasing ventures. 19. The Bank has recently helped the Government to review the energy, water supply, health, urban and education/training sectors, and the Bank's economic and sector work will continue to focus on strengthening the macroeconomic and sector base for our lending program. The Bank's economic work program aims to deepen and broaden the well-established policy dialogue with the Government in priority areas: (i) development planning, with a focus on resource mobilization and allocation; (ii) industrial and trade policies, including technology transfer and export strategy/promotion and industrial subsector studies; (iii) regional development and equity and efficiency of government revenues and social expenditures; and (iv) manpower development. These subjects are crucial because the substantially tighter balance of payments situation expected for the rest of the decade calls for increased efforts to step up domestic resource mobilization, to stimulate manufactured exports and to optimize resource allocation, while making particular efforts to reduce rural and urban poverty. 20. At the end of 1985, the actual Bank Group share in Jordan's total external public debt was estimated at 8.4 percent, and its share in debt service was 7.4 percent. In 1987, the Bank Group's shares in debt outstanding and in debt service are expected to be about 6.5 and 9.4 percent, respectively. PART III - THE ENERGY AND POWER SECTOR A. ENERGY SECTOR 21. Resource Base and Government Strategy. With the exception of solar and wind energy, Jordan's known energy resources are limited and consist of oil shale deposits, some tar sands, a small hydropower potential, and a few low temperature geothermal sources. To date, no commercially exploitable coal, lignite, uranium or oil and gas reserves are known to exist. Oil shale and solar energy are unlikely to contribute significantly to the future supply of commercial energy given present technologies and current and projected energy prices. There is also uncertainty about the extent and viability of geothermal resources, as well as the full development of the remaining hydropower potential, which is hampered by issues of riparian rights. Thus, Jordan is entirely dependent on imported oil for its commercial energy needs. Currently, the Government is undertaking a program to rationalize petroleum exploration with the participation of international oil companies. Unless a commercial discovery of oil or gas is made, however, the prospects of dome& - energy resources making a significant contribution to meeting the country's commercial energy needs appear bleak in the foreseeable future. Increasing economic constraints facing the country underscore the importance of government efforts, through conservation and other means, to reduce oil imports, which nevertheless have increased in value terms by 68 percent between 1980 and 1984. 22. The Bank's Energy Sector Study (No. 4012-JO) carried out a detailed review of the sector and recommended a comprehensive action plan, which - 7 - focussed on the development of domestic energy resources and improved energy conservation, pricing and planning and strengthening the sector's institutional framework. Based on discussions of this action plan, the Government has developed an energy policy aimed at reducing the relative impact of the oil import bill on the country's balance of payments. The strategy includes: (i) improving the efficiency of consumption and supply of energy; (ii) adopting pricing policies that ensure economic efficiency and financial viability of energy sector entities; (iii) improving energy planning; (iv) developing economically domestic energy resources (oiL/gas, solar and wind energy and oil shale); (v) strengthening energy sector institutions in planning, management and technical areas; and (vi) developing consistent subsectoral least-cost investment programs as a basis of sectoral development. Good progress is being made in implementing this strategy, as discussed below. 23. Energy Consumption. Gross energy consumption grew at an annual average rate of about 8 percent between 1980 and 1985 and reached 2.7 million toe. This represents a decline from the 15 percent growth rate between 1970 and 1980 and is attributable mainly to the slow-down of the economy. Nevertheless, energy intensity between 1980 and 1985 increased from 1.5 toe to 1.8 toe/1,000 JD of GNP, which is high compared to similar medium-income countries and reflects the commissioning of additional energy-intensive industries and expansions to existing ones. The Government is currently undertaking a program of energy conservation. Under the Energy Development Project (Loan 2371-JO), energy audits have been completed in key industries and the power plants, and funds have been provided in the new Five Year Plan for the implementation of the audits' recommendations. The Government has also set up an advisory unit within the Ministry of Energy and Mineral Resources (MEMR) to provide technical advice on building and home insulation and heating and cooling. Based on the expected continued slower growth in the economy and the above conservation efforts, gross energy consumption is forecast to grow at an annual average rate of about 5 percent from 1985 reaching about 3.4 million toe by 1990. 24. Petroleum Product Pricing. The prices of petroleum products are set by the Government and revised periodically. Since 1979 the Government has been phasing out subsidies that had been used after 1973 to buffer the economy from the adverse impact of higher energy prices; and it is the Government's policy to end petroleum product subsidies by 1989, an understanding which was reaffirmed during negotiations for the proposed loan. Currently, largely because of the fall in the price of oil, prices of petroleum products are above their economic costs, and the petroleum subsector is a net contributor to the government budget. Despite the recent fall in international oil prices, the Government's present policy is to maintain the prevailing retail prices in order to mobilize resources for the national budget. 25. Institutional Framework. In the past, the sector was plagued with problems of inadequate coordination and planning due to the large number of public and private institutions. In late 1984, the Government created the MEMR with the responsibility of formulating policies on pricing and development of the energy sector. Since the ministry is still in its formative stages, there is a need to strengthen its capabilities. A program of training and recruitment is under way, the emphasis of which is to increase capabilities in planning and pricing. The European Economic Committee, the International Atomic Energy Agency (UAEA), and the Bank are providing assistance. -8- B. POWER SUBSECTOR 26. Subsector Organization. Several entities are involved in the development and the operation of Jordan's power subsector: (i) the MEMR is responsible for the development, coordination and pricing policy formulation for the subsector and for regulating the operation of the private enterprises in the power subsector; (ii) the Jordan Electricity Authority (JEA), a financially and administratively autonomous government-owned utility created in 1967, is responsibld-for the formulation of plans for the overall development of the power subsector, the construction and operation of generation and transmission facilities, for virtually all publicly supplied electricity, bulk sales to large industries and the distribution companies, and for the distribution of electricity in the areas under its jurisdiction. JEA is also responsible for the formulation of the national rural electrification program in consultation with the Ministry of Planning and MEMR; (iii) the Jordanian Electric Power Company (JEPCO), a private company owned by the public, JEA and the municipalities, distributes electricity in the city of Amman and its environs (about 70 percent of total electricity sold at the medium-and low-voltage levels in 1985); and (iv) the Irbid District Electricity Company (IDECO), which is a semi-private company owned by JEA, the municipalities of the Irbid and Mafraq governorates, and by private investors. IDECO's service area encompasses the governorates of Irbid and Mafraq, except the Jordan Valley area which is entrusted to JEA, and its sales in 1985 amounted to about 15 percent of total electricity sold at the medium- and low-voltage levels. 27. Manpower Development and Training. The labor force employed in the electric power subsector has grown from about 3,500 employees in 1980 to about 4,200 in 1984, and labor productivity from 250 MWh sold per employee in 1980 to about 390 MWh in 1984, which is a relatively high productivity rate compared to other countries in the region. Overall, the three power entities are well managed and appropriately staffed and organized. JEA was reorganized on the basis of the recommendations of management consultants appointed under Credit 386-JO. It has training programs overseas and at a local training center, which train staff in technical, financial and administrative services, and is working on a proposal from the Japanese Government to provide for a more comprehensive training facility to cover all required services for the power subsector as a whole. The introduction of hot line work techniques included in the project would involve the training overseas of selected maintenance crews and training personnel for the three entities. JEPCO's staff is, on the whole, well qualified; although improvements are still needed in various areas including managecent, organization, and finance. In order to address this gap, a management study, financed under the Fourth Power Project (Loan 1986-JO), identified major issues and outlined a strategy for addressing them. JEPCO has started to implement recommendations on financial management, and the proposed project would include the implementation of organizational recommendations and improvements in personnel management and in operations and maintenance (para. 38). Finally, while IDECO's operations are reasonably well managed, improvements are needed in its organization and management, particularly in finance, operations and maintenance. Some of these weaknesses are being addressed under the ongoing Energy Development Project (Loan 2371-JO), which represents the first Bank operation with IDECO. A study to outline a strategy for strengthening IDECO's capabilities in the area of financial planning is currently in progress. The diagnostic study under the proposed project would outline measures to improve operations and maintenance (para. 38). - 9 - 28. General Characteristics of the Electric Power System. Jordan's power subsector has grown very rapidly. Total installed generating capacity in the country increased from about 30 MW in 1970 to about 692 MW in 1985, and the distribution system has expanded in unison with the growth in generating and transmission capacities. By the end of 1985, installed generating capacity in the three utilities alone was 608 MW, of which 60 percent was oil-fired steam units at the Hussein Thermal Power Station (HTPS), 30 percent was gas turbine plants firing heavy fuel oil and the remaining 10 percent consisted of diesel generator plants. In addition, industries own a total of about 84 MW of installed capacity in steam and diesel units which are connected to the public supply system. The first stage of a new oil-fired power station, Aqaba Thermal Power Station (ATPS), is under construction with Bank assistance, and the first of the 2x130 MW units is expected to be cimmissioned in late 1986. The transmission networks consist of 1320 circuit-km and substation capacity totalling 1370 MVA. A 400 kV transmission line between the ATPS and Amman South substation, to be operated initially at 132 kV, is currently under construction and is expected to be commissioned in 1986. Distribution networks consist of 3220 km, with substation capacity of 1670 MVA. 29. Power System Losses. Total power system losses are presently estimated at about 16 percent. Losses in the distribution system are about 12 percent, which are relatively high when compared to the economically achievable levels of about 6-8 percent. Consequently, as part of its general power system efficiency improvement program, the Government has initiated, under the on-going Energy Development Project, a Load Research and Management Study, with the assistance of consultants, which would (i) identify the sources and nature of distribution system losses and provide recommendations and an action plan to reduce them, (ii) provide information on consumer characteristics for tariff design, and (iii) propose recommendations on load management. Eased on this study which is expected to be completed by June 1987, the Government and the power entities would provide the Bank with an action plan for reducing distribution system losses over the next five years. 30. Electricity Consumption. Electricity consumption has grown at an average rate of about 19 percent per year since the early 1970s to about 1,770 GWh in 1985, or 709 kWh per capita, which is slightly higher than for similar middle income countries. The growth rate declined slightly to about 1.5 percent between 1980 and 1985 due to the slowdown of the economy and is forecast to grow at an annual average rate of about 10 percent between 1985 and 1990. Access to public electricity supply is now about 87 percent of the total population; and rural electrification has expanded rapidly, with access to public electricity supply increasing from about 25 percent of rural population in 1975 to about 85 percent at present. In the next five years access should reach about 100 percent of the urban and about 90 percent of the rural population. Between 1990 and 1994, the growth of demand is expected to average about 6 percent per year and about 5 percent thereafter. 31. Power Pricing. Electricity rates as of April 30, 1986 were on average about 125 percent cf the economic cost of supply, based on an economic cost for crude oil of $14.40 per barrel. The average electricity prices to all consumers, with the exception of rural domestic consumers, are above their respective economic costs. The average price to the rural domestic consumers is about 90 percent of economic cost, while the average for the domestic consumer category as a whole is 128 percent of economic cost. The tariff structure consists of peak demand and time-of-day energy rates for bulk supply - 10 - to the distribution companies and large industries and for medium scale industries, increasing block rates for domestic consumers and public buildings, a flat energy rate for commercial consumers, a declining block rate for small industrial consumers, and a fixed charge per month for domestic and small industrial consumers. For industrial consumers, there is also a penalty for poor power factor. In late 1984, electricity tariffs were changed by: (i) the introduction of uniform tariff structures for the various consumer categories throughout the country; and (ii) differential adjustments in electricity rates which led to an average increase of about 8 percent in the average revenue per kilowatt-hour sold to final consumers. 32. While the tariff structure has been adjusted, it could still provide greater incentives for industrial consumers and water pumping and heating operations to shift part of their electricity demand to off-peak periods. An energy pricing study is being undertaken by the Government, with financing from USAID, which will review the economic cost of supply and design tariffs for the various consumer categories, taking into consideration economic efficiency in consumption, financial viability of the power entities and the Government's social objectives. Terms of reference for the study are being finalized with Bank assistance; and the Government and the Bank would exchange views on the results of the study, expected to be completed by December 31, 1987, and on the steps to be taken to implement its recommendations. 33. Experience with Past Lending. The proposed loan would be the seventh Bank Group lending operation in the energy sector. The first two, Credit 386-JO (1973) for $10 million and Credit 570-JO (1975) for $5 million, with cofinancing from the Kuwait and Arab Funds, were designed to support government efforts to expand the development of Jordan's power generation capacity by financing three steam power units and a gas turbine at the HTPS, the reconditioning of the Marka diesel power station, and a study to plan the development of transmission and distribution grids in the southern region. The steam units and diesel station are operating satisfactorily. Loan 1688-JO (1979) of $15 million financed the development of the national transmission network and the extension of public supply of electricity to 33 villages in the areas served by JEA. The combined Project Completion Report (PCR) for the two credits (June 1982) and the PCR for Loan 1688-JO note that the projects fully accomplished, and in some respects exceeded, their objectives. Loan 1986--JO (1981) of $25 million covered parts of the development programs of JEA and JEPCO for the period 1981-1984. The project has been satisfactorily completed, and a PCR is being prepared. Loan 2162-JO (1982) for $35 million, with cofinancing from a number of bilateral and multilateral institutions, assisted JEA in covering the foreign exchange cost of a new thermal power station at Aqaba with a total cost of about $250 million. The implementation of the project is proceeding with only minor delays. 34. Finally, the Energy Development Project (Loan 2371-JO (1984) of US$30 million) with cofinancing from USAID and EEC was designed to support the Government's implementation of the action plan for the sector. It covered the foreign exchange cost of parts of the development programs of JEPCO's and IDECO's power distribution system, as well as assistance to the Government in petroleum exploration, energy conservation and planning, with the objective of improving Jordan's overall energy efficiency. After a delay in meeting the effectiveness conditions, implementation of the project is now proceeding satisfactorily. - 11 - 35. Rationale for Bank Involvement. Bank Group operations in the power subsector have been designed to support the development of a rapidly expanding and modern power system. The major objectives of these operations are the institutional development of the power entities, introduction of a pricing policy that would ensure their financial viability and economic efficiency in electrical consumption and the progressive interconnection of the power system to provide reliable and economic power supply. IDA/Bank lending has also been an important catalyst to attract other external financing for the energy sector. Finally, the Bank's sector work has been instrumental in helping the Government develop a comprehensive strategy for the energy sector, including the power subsector. While, as discussed above, significant progress has been made in all these areas, more remains to be done in generating and distributing electricity to keep up with forecasted demand and in electrifying rural areas. During a period in which growth of electricity demand is expected to be less robust than in the past, it becomes more important than ever to focus on those aspects which increase efficiency in the subsector. Thus, through our lending operations, our objectives in the subsector are to assist the power utilities to increase their financial autonomy and operating efficiency (through introducing new technologies for the distribution network and reducing power losses); and to improve power system planning and coordination of demand forecasting, investment planning, accounting, reporting and management information systems. The proposed project would enable the Bank to continue and expand its efforts towards achieving the above objectives, while building on the achievements under the previous loans and the Energy Sector Study. PART IV - THE PROJECT 36. The proposed project was identified in August 1984 and appraised in October 1985. Negotiations were held in Washington, D.C. April 21-25, 1986. The Jordanian delegation was headed by Mr. M.S. Arafah, Director General of the Jordan Electricity Authority. A Staff Appraisal report entitled "Jordan Sixth Power Project" (No. 6075-JO), dated May 5, 1986, is being distributed separately to the Executive Directors. The main features of the loan and project are given in the Loan and Project Summary and in Annex III. A map showing the project sites is attached. 37. Project Objectives and Description. The main objectives of the project are to assist the Government in: (i) improving the efficiency with which energy is supplied by expanding electricity supply from the grid in order to substitute for petroleum products, mainly kerosene for lighting and diesel fuel for isolated power generation, thus saving valuable foreign exchange; (ii) implementing some major investments that would contribute to the improvement of Jordan's power system efficiency; and (iii) continuing the institutional development in the power subsector, initiated under the previous loans, by providing assistance in introducing new technologies, reducing system losses and improving the power entities' management, planning and forecasting capabilities. 38. The project is part of the Government's high priority 1986-1990 national least-cost program for the power subsector. It includes: (i) rehabilitation and extension of the urban distribution network in JEPCO's and IDECO's concession areas with the supply, construction and erection of about 1200 km of medium- and low-voltage lines, about 180 MVA of power and distribution transformer capacity, and three-phase and single-phase consumer - 12 - connections; (ii) electrification of about 95 villages (35 in JEA's area, 45 in JEPCO's and 15 in IDECO's), with the supply, construction and erection of about 510 km of medium- and low-voltage lines and about 6 MVA of distribution transformer capacity and single-phase consumer connections; (iii) supply of computer hardware and software and equipment and tools for operation and maintenance with specialized hot line work equipment and associated training; (iv) consulting services to assist JEPCO and IDECO in project engineering and construction supervision (390 staff months); (v) consulting services to assist the Ministry of Energy and Mineral Resources (MEMR) in undertaking a diagnostic study of the existing power distribution system in Jordan with the objective of defining measures to improve its operational and technical efficiency (40 staff months); and (vi) consulting services (70 staff months) and equipment to help JEPCO implement the recommendations of the management information system study (para. 27). The consulting services under (vi) above would provide for the services of experts to assist JEPCO in undertaking specific studies to cover: (i) its organizational structure with definition of functional responsibilities, job analysis and description, staffing needs and an action plan for implementing the recommendations; (ii) review and development of formal consumer services procedures with the introduction of up-to-date techniques for customer information systems to improve the capability to respond rapidly to inquiries and complaints; and (iii) review and development of a modern materials management system. The experts would also assist JEPCO in implementing the recommendations of the studies. Terms of Reference for the Diagnostic Study and the JEPCO studies have been reviewed by the Bank and are satisfactory. 39. Project Cost and Financing Plan. The total cost of the project, including physical and price contingencies but excluding interest during construction, is estimated at about $71.7 million, of which $48.0 million (67 percent) is foreign exchange. Cost estimates do not include custom duties and taxes, from which the power entities are exempt. Estimates are based on anticipated January 1986 prices derived from detailed data provided by the power entities and discussed with the Bank and quotations received recently for equipment, materials and services similar to those included in the proposed project. Given the advanced stage of design and the routine nature of most of the project components, total physical contingencies are estimated at about 7 percent of the base cost. Price contingencies have been computed as follows: for international prices, 7.2 percent for 1986, 6.8 percent for 1987-1988, 7 percent for 1989; 7.1 percent for 1990 and 4 percent thereafter; and for local prices, 5 percent for 1986 and 7 percent thereafter. 40. The proposed Bank loan of $27.5 million would cover about 57 percent of the foreign exchange requirements and 38 percent of the total cost of the project. The balance would be financed by the power entities' internal cash generation and customer contributions and a small contribution from the Government for the diagnostic study. The proposed Bank loan would be made to the Government for 15 years, including a three-year grace period. The Government would onlend $27.15 million of the proposed loan on the same terms and conditions to JEA ($3.15 million), JEPCO ($20.0 million) and IDECO ($4.0 million), under subsidiary loan agreements satisfactory to the Bank, the execution of which would be a condition of effectiveness. The power entities would bear the foreign exchange and variable interest rate risks. The remaining $0.35 million would be retained by the Government for use by the MEMR for the diagnostic study of the power distribution system. - 13 - 41. Procurement and Disbursements. Procurement arrangements are summarized below: Procurement Method Project Components ICB LCB Other Total US$ million Power Distribution Equipment and 35.17 Materials (15 contract packages) (20.69) Autoreclosers and Hot Line Work 1.79 b/ Equipment (5 contract packages) (1.79) Diesel Units a/ 0.30 Installation/Erection Works 4.11 22.64 (4 contract packages) (1.72) (-) Diagnostic Study 0.50 (0.35) Engineering Services 4.99 (1.35) Management Information System 2.15 (Expert services and equipment) (1.60) TOTAL PROJECT COST 39.28 22.64 9.73 71.65 (22.41) (-) (5.09) (27.50) Note: Figures in parentheses are the amounts to be financed by the Bank. a/ Available in JEA's warehouses. b/ Limited International Bidding. The goods and services to be procured have been grouped into 6, 12 and 9 packages for the JEA, JEPCO and IDECO components, respectively. All items to be financed by the Bank would be procured in accordance with the Bank's procurement guidelines. For equipment to be procured under International Competitive Bidding (ICB), local suppliers would be allowed a margin of preference equal to the existing rate of custom duty applicable to nonexempt importers or 15 percent of the c.i.f. price of such goods, whichever is lower. As there are limited number of manufacturers for the specialized equipment such as autoreclosing circuit breakers and hot line work equipment and the relative amounts involved are small, procurement would be through Limited International Bidding. Local procurement procedures have been reviewed and found acceptable to the Bank. All contracts for works and equipment and materials to be financed by the Bank costing over $250,000 each would be subject to prior Bank review. Consultants would be selected in accordance with Bank guidelines. 42. The proposed loan would be disbursed over a five year period as follows: (i) 100 percent of the foreign expenditures of directly imported equipment and materials or 100 percent of the local ex-factory cost of goods - 14 - manufactured in Jordan; (ii) 45 percent of total cost of contracts procured through ICB procedures for installation and erection works; and (iii) 85 percent of local expenditures and 100 percent of foreign expenditures for consultants for JEPCO's components and for the diagnostic study. The estimated disbursement schedule in the Loan and Project Summary is somewhat shorter than the standard disbursement profile for similar projects, which is seven years on average. This is in recognition of the fact that the project entities are good performers, previous experience in project execution has been very good, project preparation is quite advanced, and the project itself is straight-forward. In order to expedite disbursements, a Special Account (revolving fund) of $2.0 million, equivalent to an average of about four months disbursements, would be opened by the Government and replenished on the basis of standard documentation for eligible reimbursable expenditures. Disbursements for contracts below $50,000 equivalent would be claimed under statement of expenditures, documentation of which would be retained for review by Bank missions. The loan closing date would be June 30, 1991. 43. In order to assist JEPCO in crucial preparation activities and the MEMR in undertaking the diagnostic study of the power distribution system, retroactive financing of up to $300,000 is proposed for costs incurred after December 1, 1985, for consultants, recruited in accordance with Bank guidelines. Project Implementation 44. The proposed project would be implemented by JEA, JEPCO, IDECO and the MEMR for the diagnostic study. Implementation of the proposed project, which is part of the extension and reinforcement of the existing electricity distribution system, is within the capabilities of the entities whose engineering departments are well-staffed. Consultants are included under the project to assist JEPCO and IDECO in some specific tasks related to the preparation of bidding documents, evaluation of bids and construction supervision. With regard to JEA, it has the in-house capability to carry out its relatively small component of the project. JEPCO and IDECO are expected to maintain the same firms for these tasks as those undertaking the engineering design, whose performances have been satisfactory to all concerned. 45. JEPCO's and IDECO's programs for the rehabilitation and expansion of the urban distribution networks are based on studies carried out by their staff with the assistance of consultants. The methodology and results of the studies have been reviewed by the Bank and are satisfactory. With regard to upgrading the network in Amman, which started in 1982 with Bank assistance (Loans 1986-JO and 2371-JO), the Bank has reviewed the scope of the remaining work with JEPCO, and it has been agreed that JEPCO would provide the Bank by December 31, 1986 with an action plan to ensure completion of this upgrading operation by 1990. For the rural electrification component, the project design constitutes the least-cost alternative for providing electricity service to the villages concerned. The technical specifications of equipment and materials to be used were reviewed by the Bank and are satisfactory. 'While consulting firms assisted both JEPCO and IDECO in the preliminary design and preparation of the proposed project, it should be noted that previous Bank assistance in manpower development enabled the staff of both companies to substantially increase their participation. The preparation of detailed design and tender documents for procurement of goods and services is underway and expected to be completed by December 1986. Land requirements and - 15 - rights-of-way for the project components have been secured. Installation and erection of the facilities covered under the proposed project would start in September 1987 and are expected to be completed by December 1990. Upon commissioning, the facilities would be owned, operated and maintained by JEA, JEPCO and IDECO. 46. The project is expected to have no adverse effects on the environment and in fact would have a positive impact by providing a cleaner and less hazardous form of lighting through electricity than can be provided by kerosene lamps. Financial Performance of JEA, JEPCO and IDECO 47. The combined power subsector's financial position, although containing certain short-term weaknesses is generally satisfactory, and long term projections indicate an improving financial position. Investments in electric utility assets for JEA, JEPCO and IDECO as of December 31, 1985 amounted to about $600 million at book cost, of which about 69 percent had been invested from 1982 through 1985. For 1986 through 1994, it is estimated that an additional $o24 million will be invested. Despite this ambitious program, the combined subsector obtained 32 percent of its total investments from internal sources for 1982-1985; and projections indicate about 40 percent of the 1986-1994 investments would be raised from internal sources. As investments are very intensive in certain years and benefits are derived over more than 30 years, the short-term yearly self-financing levels show wide variations. For instance, the fall in self-financing levels in 1987-88 (discussed below) largely reflects the expiration of the grace period for loans for the Aqaba Phase I project. 48. Revenue Covenant. The current revenue covenants for the three entities, established under previous loans, require that the following self-financing levels be achieved: for JEA, 25 percent in 1981 through 1983 and 35 percent in 1984 and thereafter; for JEPCO (after the payment of taxes and dividends) 25 percent in 1982 and 1983 and 35 percent in 1984 and thereafter; and for IDECO (after taxes and dividends) 20 percent for 1984 through 1988 and 30 percent in 1989 and thereafter. At the time these covenants were formulated, the financial targets were considered attainable in the light of the least-cost investment programs of JEA and JEPCO and the projected average growth in the electricity demand of about 13 percent annually from 1981 to 1995. However, due largely to the recent downturn in the economy, prospects for future growth are less optimistic; an expected average growth rate of only about 8.5 percent per year appears achievable over the period 1985-1994. 49. Thus, neither JEA nor JEPCO would be able to meet the self-financing levels in the timeframe originally envisaged without further increases in tariffs. JEA would not be able to meet the 35 percent level until 1989 and JEPCO not until 1988. As electricity rates are currently above the economic cost of supply (para. 31), the Government is reluctant to increase them over the short-term only to meet the self-financing target of 35 percent and has requested that the levels be lowered for these years. On the basis of financial projections agreed with JEA and JEPCO and which assume improvements in operational efficiency, the maximum self-financing level that JEA would attain in 1986-1988 and JEPCO in 1986-87 under the prevailing circumstances would be about 25-30 percent. These levels of internal cash generation, - 16 - however, would be adequate to cover the local components of JEA's and JEPCO's investments after meeting operating expenses, debt service and payment of dividends. Since the foreign exchange requirements of on-going projects have already been secured, and the financial position of JEA and JEPCO would remain sound with the lower self-financing levels, these lower levels are acceptable. It has been agreed that the Government and JEA and JEPCO shall take all measures required to enable JEA and JEPCO to maintain a self-financing ratio of at least 25 percent (after taxes and dividcad payments in the case of JEPCO) for 1986 and 1987, 30 percent for 1988 and 35 percent in 1989 and each year thereafter, computed on the average capital expenditures for electricity operations for the current and preceding year. 50. With regard to IDECO, the self-financing level of 20 percent for 1984-88 and 30 percent thereafter, agreed under the previous loan, is reasonable considering the rather large investment required to achieve the Government's plan for electrifying the villages and towns in the Irbid area and rehabilitating the existing network. It has been agreed to repeat the existing covenant under the proposed loan. 51. Due to the financially sensitive effects of fuel prices, exchange rates, operating expenses and costs involved in construction, the financial projections should be kept under annual review. Thus it was also agreed that the Government and the three entities should review, at least three months before the end of each fiscal year, the adequacy of revenues to produce, on the basis of a forecast, satisfactory to the Bank, the agreed self-financing level for the following year; and on the basis of the above review, take the measures required to achieve the agreed self-financing levels. This review would pay particular attention, in the case of IDECO, to financial weaknesses stemming from IDECO's provision of services to rural areas (para. 54). 52. JEA's past financial performance has been generally satisfactory, although the economic slow-down and the corresponding decline in electricity sales as well as the energy conservation program are reflected in reduced revenues. JEA's self-financing level, which was 42 percent in 1983 (including a fuel subsidy which JEA had been receiving from the Government) and 29 percent in 1984 (without the fuel subsidy which was removed in 1984), is projected to be 22 percent in 1985, thus falling somewhat short of the covenanted level (para. 48). Despite the economic slowdown and resulting decline in the growth of sales (estimated at about 8.5 percent annually during 1986-1994), JEA's financial position though 1994, assuming no tariff increases or government fuel subsidy, is expected to be satisfactory, provided JEA continues its program to maximize efficiency and control wages, salaries and administrative expenses. It would meet all of its annual operating expenses and debt service, and provide a self-financing level of 46 percent of its large long-term investment program. JEA's debt service coverage is expected to average about 1.5 during 1986-1994. Under Loan 1986-JO, JEA agreed to obtain the Bank's prior approval for any new long-term borrowings unless the net revenue for each year during the term of the debt (before depreciation and interest) was at least equal to 1.5 times the projected debt service requirement for such years on all its debts. In order to provide JEA the flexibility to raise the funds required for its planned construction program in a timely fashion, it has been agreed that JEA would not incur any debt in any one year over the equivalent of $1.0 million without prior Bank approval if its debt service coverage would be less than 1.5. - 17 - 53. JEPCO's past financial performan:e has been generally satisfactory, although its sales and revenues were also affected by the economic slow down. JEPCO's self-financing levels were 29 percent in 1983, 47 percent in 1984 and expected to be about 34 percent in 1985. JEPCO's financial performance in 1986-1994 is expected to be satisfactory. JEPCO would provide about 50 percent of its 1986-1994 construction requirements from internal sources, and its debt service coverage during this period would average 1.3. As with JEA, it has been agreed that JEPCO would not incur any debt over $1 million in any one year without prior Bank approval if its debt service coverage would be less than 1.5. 54. IDECO's financial performance has been generally satisfactory. Its self-financing levels have been 30 percent in 1982, 75 percent in 1983, and 31 percent in 1984 due to a rescheduling of a major portion of its long-term debt, not paying dividends in 1983 and reducing its construction program by 35 percent. With the subsidy granted to offset the effects of the recent tariff modifications (discussed below), internal sources are projected to provide about 52 percent of IDECO's construction requirements for 1986-1994. Because so much of IDECO's service is to rural areas, the tariff actions taken by the Government in December 1984 (para. 31) reduced IDECO's average tariff by 10 percent per kWh, while the price of electricity purchased from JEA per kWh increased by 15 percent. To offset this loss of revenues to IDECO, a rural subsidy from JEA was established. The Government, in the context of the annual review of the self-financing levels, would continue to take the necessary measures to offset IDECO's financial losses for rural electrification (para. 51). IDECO on its part would continue its program to improve efficiency and control costs. Provided that IDECO gets the required subsidies, or other measures are taken sufficent to meet its revenue requirements for 1986-1994, IDECO's financial performance would be satisfactory and its debt service coverage would average about 1.3 for 1986-1994. Due to IDECO's rather high debt/equity ratio and low debt service coverage, it was agreed that IDECO would not incur any debt without prior Bank approval if its debt service coverage would be less than 1.5. Reporting, Accounting, Billing and Audit 55. The accounting systems of JEA, JEPCO and IDECO are all adequate, and a committee of representatives of the three entities is reviewing measures to unify the three accounting systems. JEA maintains a uniform system of accounts, which has worked well but been in operation for some time. In view of JEA's significant growth in recent years, consultants are currently reviewing the adequacy of its accounting system and the computer requirements for the future. Implementation of JEPCO's new accounting system and training of accounting staff are underway with the assistance of consultants provided under Loan 1986-JO. With regard to TDECO, consultants included under the Energy Development Project outlined a plan to strengthen the company's capabilities in financial planning, management and control; and some recommendations regarding meter reading, billing and collections are already being implemented. Recommendations regarding accounting and financial control are being reviewed, and a new accounting system, conforming to those used by JEA and JEPCO, is expected to be in place by January 1987. As of September 1985, JEA's, JEPCO's and IDECO's accounts receivable were equivalent to 45, 69 and 52 days' billings, respectively. JEA's receivables are within acceptable limits, and JEPCO's represent a reduction from 96 days in 1984. In the case of IDECO, difficulties were due to arrears mainly from supplying electricity - 18 - for water pumping. Measures are now being taken to collect the arrears, and agreement has been reached that all necessary actions will be taken to ensure that the entities' accounts receivable do not exceed 45 days' billings. 56. Existing auditing arrangements are generally satisfactory; and JEA, JEPCO and IDECO have appointed independent auditors, satisfactory to the Bank. Audit reports have been submitted as agreed within five months of the end of tht year. The three entities have agreed to continue the existing auditing arrangements, with the addition of satisfactory arrangements to audit the Special Account and statements of expenditures. Finally, the comprehensive set of key indicators, agreed under previous loans, has been satisfactory for purposes of monitoring the technical and financial performance of the three entities and would be continued for the proposed project. Project Benefits and Risks 57. The proposed project is part of the Government's high priority five year pr6graW for the power subsector. It would continue the Government's rural electrification program, which represents the least-cost means of extending electricity service to the beneficiaries. Its rural components would involve the electrification of 95 villages and initially extend public electricity supply to about 4,200 new rural consumers. The urban rehabilitation and extension components would provide about 73,000 existing urban consumers with an improvement in the quality of service that has been characterized by frequent outages and brown-outs and would initially connect about 28,000 new urban consumers. 58. The benefits accruing from the project would be substantial but are difficult to quantify. In assessing these benefits, improvements in the quality of life and bringing electricity to rural areas for the first time are important factors. However, using revenues from electricity tariffs and customers' contributions and fuel savings to the economy as proxies of the benefits accruing from this project, rate of return (ROR) estimates were made for each project component, as well as for the total project, and the ROR for the total project is estimated at about 13 percent. The ROR underestimates the economic rate of return on the project, since other unquantifiable benefits such as the higher quality of electric lighting over kerosene lighting, the greater convenience of household electric appliances and improved service (reliability, stable voltage, etc.) were not taken into consideration in the evaluation of project benefits. In addition, the urban rehabilitation component involves the replacement and standardization of equipment, the benefit of which is not fully captured. However, the total project is justified, since the ROR is above the opportunity cost of capital to Jordan. 59. Finally, the project would continue the Bank's assistance to Jordan in strengthening sector institutions started under the previous loans. This assistance would be in introducing new technologies, reducing system losses and improving the power entities' management, planning and forecasting capabilities. 60. There are no major risks associated with the proposed project. However, there is some uncertainty surrounding likely JEA electricity sales. - 19 - A sensitivity analysis with a 10 percent reduction in sales indicates that JEA would incur net operating income losses. However, the revenue v (para. 49), which requires that the Government take action to etr4 the financial viability of JEA, would offset the risk. PART V - RECOMMENDATION 61. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. A. W. Clausen President Attachments May 6, 1986 Washington D.C. ANNEX I -20 - Page 1 of 7 J08DAN - SOCIAL INDICATORS DATA S0ET looDA varzNCE GIOUPS (wcIGNlTEO AV&RatEs) ta "mIT ($T 8 n äSTIMATE) il ECNT MIDDL INCOHE MIDOLE INCOME 1960Lik 1970Lt ESTIMATEL N. AFRICA 6 YID sAT LAT. AMERICA £ CAR ARa (<ansa s. cO TOTAL 97.7 97.7 97.7 ACRICULTURAL 12.0 14.0 14.8 P PER CAPITA (mE) .. .. 1640.0 /c 1134.9 1875.9 NC CDIEPTIO PER CA: -å (KILOGRAMS OF OIL EQUIVALENT) 127.0 211.0 706.0 623.9 993.6 POPULATION AND VITAL STATISTICE POPULATIO".HID-YEAc (THUSANDS) 1695.0 2299.0 3247.0 /d URBAN POFULATION (Z OF TOTAL) 42.7 50.5 71.6~ 49.0 67.7 POPULATION PROJECTICNS POPULATION IN YXAR 2000 (MIIL) 6.3 STATIONART POPULATION (MILL) 17.0 POPULATION MOHENTIM 2.0 POPULATION DENSITY PER SQ. KM. 17.3 23.5 33.2 37.8 48.0 PER SQ. M. AGRI. LAND 141.4 364.2 203.9 470.1 91.1 POPULATION ACE STRUCTURE (M) 0-14 YRS 44.4 45.8 48.7 43.5 38.5 15-64 TAS 51.4 51.0 48.4 53.0 57.1 65 AND ABOVE 4.c 3.1 2.8 3.3 4.2 POPULATION GROTH RATE (M) TOTAL 3.1 3.0 2.7 2.8 2.4 URBAN 5.2 4.7 4.0 4.4 3.6 CRUDE BIKTH RATE (PER TROUS) 47.4 47.6 45.0 40.0 30.9 CRUDE DEATH RATE (PER THOUS) 19.9 15.5 8.0 11.5 8.0 GROSS REPRODUCTION RATE 3.5 3.5 3.6 2.8 2.0 FAMILY PLANNINC ACCEPTORS. ANNUAL (TJBOUS) USERS (2 OF MARRIED 1OMEN) .. 22.0 . 26.0 21.4 45.3 POO Dl NuTION INDEX OF FODM PRO. PER CAPITA (1969-71-100) 220.0 79.0 71.0 95.1 109.6 PER CAPITA SUPPLT OF CALORIES ( OF REQUIREETS) 96.0 97.0 131.0 118.2 113.2 PROTEINS (GRAMS PER DAY) 62.0 60.0 81.0 77.8 69.4 OF VICH ANIMAL AND PULSE 15.0 15.0 16.0 if 17.8 34.2 C1ILD (AGES 1-4) DEATH RATE 22.9 15., 5.0 12.8 4.8 LIFE EXPECT. AT BIRTH (TEARS) 46.9 54.1 64.0 57.8 64.8 INFANT MORT. RATE (PER TROUS) 135.5 97.5 62.0 96.8 59.7 ACCESS TO SAFE MATER (POP) TOTAL 21.3 .. 80.0 67.2 65.3 URBAN 48.6 .. 100.0 93.4 76.5 KURAL 2.1 .. 65.0 4 45.8 44.2 ACCESS TO EXCRETA DISPOSAL (x OF POPULATION) TOTAL .. .. 78.0 45.9 56.3 URBAN .. .. 94.0 63.0 73.4 RUAL .. .. 34.0 28.6 25.5 POPULATION PER PRYSICIAN 5800.0 3780.0 900.0 le 4331.0 1909.7 POP. PER SURSING PERSON 1930.0 /t 1480.0 1990.0 7/ 1845.0 808.2 POP. PER HOSPITAL BED TOTAL 560.0 1350.0 520.0 /c 621.8 362.0 URBAN 390.0 It 1120.0 680.0 7?t 345.0 422.0 RURAL .. 5440.0 .. 2511.3 2716.7 ADMISSIONS PER HOSPITAL BED .. 36.5 45.7 /f 25.7 27.5 =SING AVERAGE SIZE OF HOUSENOLD TOTAL 5.3 6.1 6.7 1,.. URBAN 5.5 RURAL 5.1 AVERAGE NO. OF PERSONS/ROCH TOTAL .. .. 6.5 le.. URBAN .. RURAL . .. .. PERCENTAGE OF DUELLINCS WIT ELECT. TOTAL 17.0 .. 66.0 /e . URBAN 39.2 .. 90.0 .t.. RUKAL 1.4 .. 30.0 . 1 -21- ANNEX I Page 2 of 7 PAUt 2 JORDAN - SOCIAL INDICATORS DATA SEET JORDAN R0PSaNCE GROUPS (tIGf1lYm AVERAGES) I ttST (loSt CCENT CSTDIATE) 1b ICPNT MIDDLE tNCrls HIDDLE INCiXS 1961X 197n ESTDiATd-b N. AFRECA 1. 'IIi EAST LAT. ArAIICA 6 CAl sonsON ADJUSTED ENROLIENT RATIOS PRIANI TOTaL 77.0 72.0 103.0 Ic 19.8 106.7 .ALE 94.0 7q.0 103.0 fc 103.7 10".3 FEMALE 59.0 65.0 t0o.0 73.2 104.6 SECONDAITs TOTAL 25.0 33.U 77.0 /c 42.9 44.2 KALE 36.0 41.0 79.0 7 5U.9 42.7 TFOALS 13.0 24.0 76.0 7- 34.6 44.9 VOCATIONAL (M OF SECUNUART) 2.7 3.0 6.9 Ic 10.0 13.3 PUPIL-T&ACHER RATIO PUIMAW 34.0 39.0 32.0 /c 29.7 X9.9 SECONDARY 20.0 23.0 2L.U 18.8 16.7 00illIMPTION PASSENuER CARS/ITOUSAND 90 3.7 6.7 30.7 IA 17.8 46.0 RADID RECEVERSITHOUSAND POP 37.8 160.9 174.3 175.9 328.3 TV 11CIVERS/TKOUSAND 90P .. 20.0 64.0 51.2 112.4 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 1N.3 24.4 b4.4 37.2 61.1 C1EHA ANNUAL ATTENDACE/LaPIT4 3.2 '2.9 5.3 A 2.4 2.4 .AID PCC TOTAL LABOR FORCE (TROUS) 432.0 569.0 720.0 FEMALE (PERCENT) 5.0 5.6 6.9 11.0 23.6 AGRICULTURE (PERCENT) 44.0 34.0 20.0 42.4 3L.4 INDUSTRY (PERCENT) 26.0 9.0 20.0 27.9 24.3 PARTICIPATION KATE (PERCENT) TOTAL 25.5 24.7 22.2 26.2 33.5 NALE 46.7 45.5 39.8 46.2 51.3 FEALE 2.7 2.8 3.1 5.8 15.9 ZCOSOMIC DEPENDENCY RATIO 1.9 2.0 2.3 1.8 1.3 -NCAM DESTRIBIUTI PERCENT OF PRIVATE IhCOHE RECEIVED W RICHEST 52 OF tOUSVAOLDS .. HIGHEST 20% OF HOUSEHOLDS .. LOIEST 201 OF KOUSEHOLDS .. LOlEST 402 OF HOUSEHOLDS .. POMM TAXE CROUPS ESTIMATED ABSOLUTE POVERTY INCOnE LEVEL (USS PER CAPITA) URBAN .. .. 230.0 If 226.3 288.3 RURAL .. .. 100.0 rT 134.0 185.3 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 206.0 If 431.5 519.8 RURAL .. .. 135.0 /f 326.0 359.7 ESTIMATED POP. BELO ABSOLUTE POVERTY INCOME LEVEL C) URBAN .. .. 14.0 /l RURAL .. .. 17.0 i7 29.0 NOT AVAILALE NOT APPLICABLE NOTES /a The grasp averages for each indicator are populatiorwighted arithmetic neans. 0overage of countries amsong the indicators depends on availability of data and is not uniform. Unless ochearise nottd, "Data for 1960" refer to any year between 1959 and 19bl; "Uata for 197Vh beteen 1969 and 1971; and data for "Host Recent Estimaca" beaun 1981 and 1983. /c East Bank only; d 1983 East lank population is 2.5 tilion; A 1972; f 1977; f 1980; l 196t; lA 1979. JUNE. 1985 - 22 - ANNEX I Page 3 of 7 DEFINrIONS OF SOCIAL INDICATORS Notes Although the dta are drawn fom sources generallyjudged the most authoritative and reliabic_ it should also be noted thai they may not be internationally comparable because of the lack of standardized deAnitions mad concepts ted by different countries in collecting the data. The data are. nonetheless, ueful to describe orders of magnitude. indicate trends, and characterize certain major dilfere between countries. The refernce groups are (1) the sa-e country group of the subject country and (2) a country group with somewhat higher average income than the country group orthe subject country (except for "High Income Oil Exporters" group where "Middle Income North Africa and Middle East' ischosen because of stronger socio-cultural afiities). In the reference group data the enrages are population weighted arithmetic means for each indicator and shown only when majority ofthe countries in a group has data for that indicator. Since the coverage of countries among the indicators depends on the availability of data and is not uniform. caution must be exercised in relating averages ofone indicator to another. These averages are only useful in comtparng the value of one indicator at a time among the country and reference groups. AREA (thousand sq.km.) CrueRire (per thosd-Number of ve births in theycar Tosal-Total surface area comprising land area and inland waters; per thousand of mid-year population; 196. 1970. and 1983 data. 1960. 1970 and 1983 data. Crude Death Ate (per thousand-Number of deaths in the year Agrierftwsl-Estimatc of agricultural area used temporarily or per thousand of mid-year population; 1960. 1970. and 1983 dats. permanently for crops, pastures, market and kitchen gardens or to Gross Repodanion Rate-Average number of daughters a woman lie fallow. 1960. 1970 and 1982 data. will bear in her normal reproductive period if she experiences present age-specific fertility rates; usually five-year averages ending GNP PER CAPITA (USS)-GNP per capita estimates at current in 1960.1970, and 1983. market prices, calculated by same conversion method as World ui PhamsiV-Acprs, Amal (rhosmadl-Annual num- Bank Atlas (1981-83 basis); 1983 data. her of acceptors of birth-control devices under auspices of national ENERGY CONSUMPTION PER CAPITA-Annual apparent family planning program. consumption of commercial primary energy (coal and lignite, FmWyfP&wiw-User (percentoforiresornk-The percen- petroleum. natural gas and hydro. nuclear and geothermal dec- tage of marned women of child-bearing age who are practicing or tricity) in kilograms of oil equivalent per capita; 1960. 1970. and whose husbands are practicing any form of contraception. Women 1982 data. of child-bearing age are generally women aged 15-49. although for some countries contraceptive usage is measured for other age POPULATION AND VITAL STATISTICS groups. Toeal Popentai, Mid-Year (rhsensads)-As of July I; 1960.1970. FOOD AND NUTRITION and 1983 data. Urba Poulaion perentof otal-Raio f uran o lIndx of Fausd Prodmiction Per Capita (1969-71 = 100)-index of per Urb ifes rent fni tio of urban mtoa capita annual production of all food commodities. Production population; excludes animal feed and seed for agriculture. Food commodities ability of data among countries 1960. 1970. and 1983 data. include primary commodities (e.g. sugarcane instead of sugar) PApatR Piecrnw which are edible and contain nutrients (e.g. coffee and tea arc Population in year 2000-The projection of population for 2000. excluded); they comprise cereals, root crops, pulses oil seeds. made for each economy separately. Starting with information on vegetables, fruits, nuts. sugarcane and sugar beets, livestock, and total population by age and sex. fertility rates. mortality rates. and livestock products. Aggregate production of each country is based international migration in the base year 1980. these parameters on national average producer price weights; 1%1-65. 1970. and were projected at five-year intervals on the basis of generalized 1982 data. assumptions until the population became stationary. Per Caia Supply of Caloris (perent ofrequirenseas)-Comput- Stationary popularion-Is one in which age- and sex-specific mor- ed from calorie equivalent of net food supplies available in country tality rates have not changed over a long period, while age-specific per capita per day. Available supplies compise domestic produc- fertility rates have simultaneously remained at replacement level tion. imports less exports, and changes in stock. Net supplies (net reproduction rate= 1). In such a population, the birth rate is exclude animal feed, seeds for use in agriculture, quantities used in constant and equal to the death rate, the age structure is also food processing. and losses in distribution. Requirements were constant. and the growth rate is zero. The stationary population estimated by FAO based on physiological needs for normal activity size was estimated on the basis of the projected characteristics of and health considering environmental temperature, body weights, the population in the year 2000. and the rate of decline of fertility age and sex distribution of population. and allowing I0 percent for rate to replacement level. waste at household level; 191. 1970 and 1982 data. Popdation Monsentun-Is the tendency for population growth to Per Capa Supply of Proten (irants per day-prote content of continue beyond the time that replacenent-level fertility has been per capita net supply of food per day. Net supply of food is dfined achieved; that is, even after the net reproduction rate has reached as above. Requirements for all countries established by USDA unity. The momentum of a population in the year t is measured as provide for minimum allowances of 60 grams of total protein per a ratio of the ultimate stationary population to the population in day and 20 grams of animal and pulse protein, of which 10 grams the year r. given the assumption that fertility remains at replace- should be animal protein. These standards.are lower than those of ment level from year t onward, 1985 data. 75 grais of total protein and 23 grams of animal protein as an -ouAi Densiy average for the world, proposed by FAQ in the Third World Food Per sq.km.-Mid-year population per square kilometer (100 hec- Suppl: 1961.1970 and 1982 data. tares) of total area; 1960. 1970. and 1983 data. Per Capa Protein Supply fom Anima and Pahse-Protein supply Per sq.km. agridural land-Computed as above for agricultural of food derived from animals and pulses in grams per day; 1961-65. land only. 1960, 1970. and 1982 data. 1970and 1977 data. Itplation Age Smarte (percear)-Children (0-14 years), work- Cid (ages 1-4J Death Rate (pe skousandj-Number of deaths of ing age (15-64 years). and retired (65 years and over) as percentage children aged 1-4 years per thousand children in the same age of mid-year population; 1960. 1970. and 1983 data. group in a given year. For most developing countries data derived Popuision Growrh Rate (percenr)-totel-Annual growth rates of from life tables; 1960, 1970 and 1983 data. total mid-year population for 1950-60. 1960-70. and 1970-83. P!ptins Growth Rare (percent)-ara--Annual growth rates Life Expectany at Bith (year)-Number of years a newborn of urban population for 1950-60. 1960-70..and 1970-p3 data. infant would live if prevailing patterns of mortality for all people ANNEX I - 23 - Page 4 of 7 at the time of of its birth were to stay the same throughout its life; Pui-teacher Ratio - prbaoy. and secondary-Total students en- 1960, 1970 and 1983 data. rolled in primary and secondary leves divided by numbers of Isf&a Mortaty Rate (per thousad)--Number of infants who die teache in the corresponding levels. before reaching one year of age per thousand live births in a given year; 1960. 1970 and 1913 dati.. W'SUMfON Access to S* Water (perceur of popisda-u4esar s, and Passenger "s (per hm=st pg a -Nasow car COrn swrl-Number of people (total, urban, and runal) with reasonable prime motor carsmating less than eight persois; excludes ambul- acess to safe water supply (includes treated surface waters or anca, hea and military vehicles. untreated but uncontaminated water such as that from ectd A Recvers (per twassaipopulstion)-All type of receivers boreholes. springs and ssitary wells) as percentages of their respec- for radio broadcasts to general public per thousand of population: tie populations. In an urban area a public fountain or standpost excludes un-licensed receivers in countre% and in years when located not more than 200 meters from a house may be onsidered registration of radio se was in efcm data for rent years my as being within reasonable access or that house. In rural areas reasonable access would imply that the housewife or members of the household do not have to spend a disproportionate part of the day TvReift"(peribousi-116 TV receivers for broadcast in ftchng he amil's ate neds.to general public per thousand populationi excludes unlicend TV in fl countries and in yearswhen registration of TV sets nes Access to Excrete DIsposal (percent of populaies)-tal, aramn, and raral--Number of people (total. urban, and rural) served by excreta disposal as percentages of their respective populations. New er Ckcal. (Per rhnuad Ws)-hws the aver- Excreta disposal may include the collection and disposal, with or age circulation of "daily general interest newspaper," defined a a without treatment. of human excreta and waste-water by water- periodical publication devoted primarily to recording general news. borne systems or the use of pit privies and similar installations. It is considered to be "daily" if it appears at least four times a week. apdaion per Physicin-Population divided by number of prac- Cmn An ArrenAce per Cwia per Year-Based on the tising physicians qualified from a medical school at university level. number o tickets sold during the year including admissions to Population per Nrsing Persom-Ibpulation divided by number of drive-in cinemas and mobile units. practicing male and female graduate nurses, assistant nurses, practical nurses and nursing auxiliaries. rpnmtei per Horpiral Bed-o-ta, ar , and rall-lbpulation Total Labor force (thouss)-Economically active persona, in- (total. urban, and rural) divided by their respective number of eluding armed forces and unemployed but excluding housewives, hospital beds available in public and private, general and specialized students etc., covering population of all ages. Definitions in hospitals and rehabilitation centers. Hospitals are establishments comparable: 1960 1970 and 193 data. permanently staffed by at least one physician. Establishments prov- Peste (pervew-Female labor fe as percentage of total labor iding principally custodial care are not included. Rural hospitals, force. however, includ: health and medical centers not permanently staffed ApicAtive (jiffent)-Labur fort in farming. forestry, hunting by a physician (but by a medical assistant, nurse, midwife. etc.) and fishing as percentg of total labor force; 190, 1970 and 1990 which offer in-patient accommodation and provide a limited range data. of medical facilities. Iuisury (percent--Labor force in mining, construction. manu- Admissions per Hospital Bed-Total number of admissions to or facturing and electricity, water and gas as peretag of total labor discharges from hospitals divided by the number of beds. force: 1960, 1970 and 1980 data. Pdwo Rate (perwnr-w4 as -sfnsk-ricipation HOUSING or activity rates are computed as totaL mal and femal labor force Arnge Sime of Household (perso- per householdk--rl. ean as percentages of total, male and female population of all ages andreal-A household consists of a group of individuals who share respectively 1960. 1970. and 1933 data- These ar based on 1L's living quarters and their main meals. A boarder or lodger may or participation Tatsreflectingage-= structureoftbe populatio and may .* -t be included in the household for statistical purposes. long time trend. A few estimates are from national sources. Average Number of Persons per Room--taal, armin, and red-- Economic Depeadeney Ratio-Ratio of population under IS. and Average number of persons per room in all urban, and rural 65 and over to the working age population (those aged 1564). occupied conventional dwellings. respectively. Dwellings exclude non-permanent structures and unoccupied parts. ICOME DISTRIBUTION Perceaage of DweFgs wih E ictriety---rorl, arbean ad rea;- Pceniae of Tod Dptwb "cooe (boeh in cash ad kimd)- Conventional dwellings with electricity in living quarters as percen- Accmig to percentile groups of households ranked by total house- tage of total. urban. and rural dwellings respectively. hold income. EbUCATION POVERTY TARGET GROUPS Adjusted Eroffnenr Ratios Te following estimates are very appoximate measures of poverty Primary school - total. male and femal-Gross total, male and levels and should be interpreted with considerable caution. female enrollmpnt of all ages at the primary level as percentages of EstuniAschar Poverty Ancons Level rUSr cqpt)--rbe respective primary school-age populations. While many countries ad real-Absolute poverty income level is that income level consider primary school age to be 6-11 years. others do not. The below which a mmal nutritionally adequate diet plus essential differences in country practices in the ages and duration of school non-food requirements is not affordable are reflcted in the ratios given. For some countries with univ8sal Estued Relte fV ea L"e (CSSper ail- har education, gross enrollment may exceed 100 percent since sme azd rerl-Rural relative poverty income level is one-third of pupils are below or above the country's standard primary-school average per capita personal income of the country. Urban level is age, derived from the rural level with adjustment for higher cost of Secondary school - total, male and female--Computed as above; living in urban areas. secondary education requires at least four years of approved pri- Estated Papitiur leow Absolire Pbwwy Ince Leve (per- mary instruction, provides general, vocational. or teacher training cen)-arban - real- Percent of population (urban and rural instructions for pupils usually of 12 to 17 years of age; correspond- who are 'absolute poor* ence courses are generally excluded. Vocarional Enrollmeni (percent of seconday)-Vocational institu- Comparative Analysis and Data Division tions include technical, industrial. or other programs which operate Economic Analysis and Projections Department ri-dependen-y or as departments of secondary institutions. June 1985 - 24 - 5 of 7 .uuwi - ~acmc nsc:s ~uati=m 2.6 milinia (1984) 1/ cm per capital Us$ 1,710 (1398y/.2/ Indicator (illin U" at Acual (at 19m pimc~1 t (at 1rw prionø . a t pricea) 1984 1979 190 1981 1982 1983 l9m 15 3/ 1%6 197 1M 19 1M d~u t d. eic prodc 3,960 6.5 12.0 6.7 7.8 5.2 3.2 3.2 5.1 4.9 5.2 4.7 4.7 r Dculture 289 -27.9 30.5 3.0 2.0 3.0 2.0 3.2 5.0 5.0 5.0 5.0 5.0 Indutry 1,030 17.7 14.9 11.7 2.6 -0.1 5.8 4f.1 6.2 5.6 6.6 5.0 4.9 Serview 2,111 7.8 12.2 3.4 8.0 2.0 3.0 3.5 4.5 4.6 4.6 4.6 4.6 ran.Pia 4,584 13.5 -2.1 14.5 9.0 6.1 -0.6 2.2 4.1 4.8 5.2 4.0 4.3 Qass Inw e. 1,274 14.0 25.8 33.4 2.9 -16.9 -7.0 -2.0 5.9 4.8 5.4 4.5 4.7 Exporte GFS 1,847 20.4 26.4 13.0 0.8 4.5 -5.9 7.0 5.1 4.7 4.7 5.4 4.8 iporta of QWS 3,745 26.4 -1.7 19.0 6.8 2.9 -7.6 2.0 4.2 4.6 LO 4.2 4.2 0km. Nerinnl KR~ duct 3,771 6.4 10.4 8.6 7.5 3.4 0.1 1.2 5.8 3.5 3.6 1.9 LI GP Deflat~r 86.1 100.0 111.6 117.5 121.0 126.5 13.6 13.1 5echaqe late 3.33 3.35 3.07 2.84 2.76 2.6 2.56 2.O Sare of GIP at Mrket Prie CX) M g Aw Ies (et curret pricen) (at m== pri~U) 1975 190 1985 198 I- 1gN-90 C~ amtic Product 95.8 100.8 105.2 5.3 4.9 Agriculure 8.0 6.7 7.7 2.6 5.0 imry 24.0 29.0 27.6 4.1 5.7 Serice 61.0 55.8 56.2 4.0 4.6 -asumpi 124.5 110.0 120.6 5.8 4.5 (kas Inebt 27.3 41.6 32.0 -2.0 5.0 Eports of GWS 37.2 48A 50.8 2.7 5.0 bporte of GWS 92.5 99.0 98.4 3.3 4.5 G~s. ktinn l pkodct 100.0 100.0 100.0 3.9 3.6 Net Fator Ta 4.2 -0.8 -5.2 - - <Gs atinn~1 savirga -24.5 -10.0 -20.6 AD of GP (at arr price ) 1975 1980 1985 FJEIC FD~M Doi eee 26.8 23.3 28.0 Omr~É E&uIiares 37.6 34.6 34.9 udetary Se~ -12.8 -11.3 -6.9 ~ital Eeniture~ 23.6 23.4 17.8 For~g8 Fi ng 34.8 28.3 23.0 of ~diich foreigrarre 30.0 20.9 11.5 19815 195-0 ODER DEM~S IGE 8.4 6.2 S in8s Rate -0.7 -0.9 lirt 1anticity 0.6 0.9 1/ East Bak nly. P/ 1rel~iuinzy etimmre based n the revised series of natine~l a~res to be dieam~ vith e fl .*dc m-~ irwi r~ fr= lag te~ rmid~n: abr~ad dt are coidered capital tramfers. 3/ Preidnry estimte. Mhy 1906 018p3 - 25 - Eg 6 of 7 .Dm - ExE L TIE Jhmounthuaal Quuli Rate. Idikator (millias U at Acael (at 190 price) projted (at 19% Pria currnt prices> 194 1979 19e0 1991 1992 193 1984 195 .4/ 1986 1987 1988 199 1990 Merthmeidme exort~ I 2 679 23.6 22.7 22.6 0.5 -5.6 49.8 1.1 8.6 4.1 4.3 6.3 4.5 iYmry g 406 21.1 18.7 13.7 27.0 10.9 31.0 9.4 5.9 3.5 3.6 7.5 3.5 Komf.enama 275 27.4 28.4 34.6 -29.9 -39.8 121.3 -5.8 U.3 4.7 4.9 5.1 5.'4 MabwIire iortu 2 2,779 17.0 -2.1 20.3 7.3 5.7 -7.7 1.7 4.1 4.6 5.1 4.1 4.2 pad 420 7.9 0.5 31.6 20.0 -16.8 -6.5 2.3 3.5 4.2 4.6 3.4 3.7 rtrola a 533 10.8 1.4 15.2 27.9 -A -4.5 3.2 5.1 4.9 5.2 4.7 4.7 Kwchin~ry and ffäpent 421 13.0 20.7 50.4 -.9 -21.4 -26.5 -1.6 4.6 4.4 4.7 4.3 4.3 (ther 1/405 27.0 -20.5 -14.4 13.5 68.7 3.4 2.6 3.6 4.8 5.3 4.0 4.2 (1990-103) (19415) pt price i~ier - 84.2 100.0 114.7 125.4 114.6 124.8 95.7 '02.6 109.5 119.7 131.0 143.2 limort price inrir - 0.7 103.0 121.8 123.8 113.1 U9.0 98.6 99.7 1034 110.0 117.2 125.1 1 of trade inde - 104.4 100.0 94.2 101.3 101.3 104.8 97.1 102.9 105.9 108.8 U1.7 114.5 neuitiem of Me~chaudise 1&ade () ~herage Am1 Qkuth Ratb <at carret pricen) 5f (t csm ) 1979 1986 1989 1980-65 19m9 100.0 100.0 100.0 14.3 5.3 57.6 59.5 47.1 16.5 4.8 hamnae-~ 42.4 40.5 52.9 10.0 5.8 liprts 10.0 lO.O 100.0 3.0 4.5 lad 17.1 15.0 14.8 -0.4 3.9 letmoem 12.6 19.1 20.0 4.9 4.9 Hahi and e~ 32.8 22.3 21.6 -6.9 4.6 Other 37.5 43.5 43.7 15.4 4.5 9ura of 1tal Epts (2) Sure of 1btal iworts (Z) DmN C TME 1975 1983 1975 1983 De~ulquar mke a.en 17.6 4.9 62.6 46.3 De1 %pi ~. e e ri 70.2 82.0 29.2 46.5 of idic A~a countries 42.4 63.3 19.8 43.6 afitrally pla~md wec=mfi 12.2 13.1 8.2 7.2 1/ Fer~.ing re-emports. 2/ Tbtal expaortu and iorts are t~ken fra Ie Ministry of Plrming' national aocmo~ in c~stnt 1990 pria. Aprpriate defhator (fro= EMM and CA, adjuted by the excmge r.te idex) wre used for prå~nry exports. an for food, oil, mr capital gad iqmrts; omectumed eport ai other : mort m tere treated a resiäal. 3/ Ilude fmod, pb"~rke. and potash. d Prelimn åy teima. 5/ Qelams amy nt ~ duc to amriong. DEN6 CP1I-C Apri 1986 0185s/4 - 26 - AMI i 14m 7 of 7 .~ - ma OF M^S, EmL CPEL m DMr (milliom af ust at crnt pri~s> Actual Pojected 1979 1960 198L 1982 1983 1964 1965 1986 1987 198 1989 1990 prelia. DAT~ e Pr EIS porUt of god. 6 sritts 1819 2496 3144 3186 3M 3187 3270 3538 3873 4275 4752 5269 Of MiUb Herdbie fob. 402 575 735 751 50 757 780 943 1050 1198 1390 1590 Woä rs reittames 6W 794 1033 104 1110 1237 1123 1144 1200 1258 1319 136 :horsm of ~ads & service 2872 3459 4491 4580 4243 4170 42M 4511 5001 563 6325 7083 Of uic: merbmdiose fEb. 1957 2398 3170 3239 3036 2784 2761 2826 3150 3583 4012 4484 trher remittn: 80 154 158 177 20L 2% 280 294 306 315 323 330 Het trnter. 1046 1338 1305 1060 813 714 600 6W 600 600 600 6 orrent ken lant -7 374 -41 -336 -389 -269 -33 -373 -528 -768 -973 -1214 Privete dire. im.er 26 27 67 91 24 75 75 75 75 75 75 75 I 2oan (ne)t 193 232 274 242 306 460 186 352 576 855 1069 1327 Official 143 240 283 271 164 161 166 223 279 318 319 318 Private 50 -8 -9 -29 142 299 20 129 297 537 750 9 Oder caital 20 -265 -256 -173 165 -431 0 - - - - - <hn.. in er -232 -369 -43 175 -106 165 166 -54 -123 -161 -171 -190 ntmnnKmal rseres 1215 1586 1503 1211 1075 1240 1074 1128 1250 1411 1581 1M Of whick GYld 82 208 198 194 200 200 200 200 200 200 200 20 Rmerves a --ria of import 5.1 5.5 4.0 3.2 3.0 3.6 3.0 3.0 3.0 3.0 3.0 3.0 ML CAPDL AmD DM Crom Diburgmnrs 250 306 408 375 449 625 381 tGceim1 lam. 15L 33 126 184 234 218 236 IL 13 9 3 4 2 0 0 Ofhr 138 124 123 180 232 2 8 26 N=_C~i l 1n. 99 173 282 191 215 407 145 Official exportcredits 2 97 159 94 10 0 0 iD 4 22 19 11 28 26 36 Othe ultilera1 7 14 6 30 29 20 13 Prime 86 40 98 56 148 361 95 Etnal debt Debt c-nter-ng an diabu~rd 10r8 1266 1480 1685 1940 2336 2522 Official 765 993 1226 1464 1615 1718 18 Frisee 283 273 254 221 326 618 638 Utidrued debt 863 122L 995 831 896 790 536 Debt oervice Total service p ~itu 96 133 201 193 212 282 317 Temsr 40 58 66 6 88 117 122 By~ as % expts 5.3 5.3 6.4% 6.1% 7.1 8.a 9.72 rld Ek ~p dure of dibrent 6.W 10.12 5.42 4.M 6.2 4.12 i.t of debt service 0.M 1.1% 1.7 2.6 3.4 4.M 2 of dåbt raui~g 6 diab 6.7 8.M 8.3 8.82 85 8.1% d.4r urge interet m~e (2) 5.3 6.8 5.3 6.0 7.3 5.9 8.5 Aurage -ubrity (years) 21.4 14.8 17.7 20.1 14.1 14.4 11.0 iene 1 rr- (ysr) 4.7 3.8 4.3 5.0 3.3 4.2 4.5 As 2 of Debt Outstmnding at end of Yem wet Year <1984) Mearity trbre af debt Qatsr~iHg Marurities dua wirin 5 yer 52.6 Hanarities åe vi 10 yar 99.7 Interet ~u me of deb outstundi~a Interest du vithin firut yer 5.2 G858/p. 5 April 196 -27 - ANNER II Page 1 of 2 STATUS OF BANK GROUP OPERATIONS IN JORDAN al A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of March 31, 1986) US$ Million Amount (less cancellations) Number Year Borrower Purpose Bank IDA Undisbursed Fifteen credits Jordan fully disbursed 86.1 - Four loans fully disbursed 75.9 1893 1980 Urban Development 21.0 9.4 1986 1981 Power IV 25.0 2.3 2068 1982 d/ Education IV 25.0 15.2 2162 1982 Power V 35.0 12.5 2213 1983 Water Supply and Sewerage 17.0 6.6 2246 1983 d/ Education V 18.8 17.4 2334 1983 Urban Transport 30.0 27.6 2371 1984 Energy Devt. I 30.0 15.3 2378 1984 d/ Education VI 40.0 39.9 2425 1984 Eight Cities Water Supply and Sewerage 30.0 15.2 2463 1985 " Multi-Mode Transport 30.0 30.0 2483 1985 Greater Amman Water Supply and Sewerage 30.0 24.4 2531 1985 Primary Health Care 13.5 13.5 2587 c/ 1985 Urban Development II 28.0 28.0 2614 c/ 1986 CVDB II 15.0 15.0 2633 c/ 1986 Manpower Devt. 10.2 10.2 TOTAL b/ 474.4 86.1 282.5 of which has been repaid 17.5 4.1 Total now held by Bank/IDA b/ 456.9 82.0 a/ The status of the above projects is described in a separate report on all Bank/IDA-financed projects in execution, which is updated twice yearly and circulated to the Executive Directors on April 30 and October 31. b/ Includes exchange rate adjustments. c/ Not yet effective. d/ Education IV and Education V loans are substantially committed. Bidding under Education VI loan is progressing. - 28 - ANNER II Page 2 of 2 B. STATEMENT OF INVESTMENTS (As of March 31, 1986) US$ Million---- Year Obligor Type of Business Loan Equity Total 1974 Jordan Ceramic Ind. Co. Ltd. Ceramic Tiles 1.6 0.2 1.8 1975/ Jordan Fertilizer 78/81/82 Ind. Co. Phosphatic Fertilizer 79.5 1/ 8.7 88.2 1/ 1979 Jordan Lime and Silicate Building Materials 2.5 1.3 3.8 1979 Jordan Securities Money & Capital Corp. Market 0.7 0.7 1980 Jordan Leasing Co. Ltd. Leasing 0.3 0.3 Total Commitments 83.6 1/ 11.2 94.8 1/ Less Commitments Repaid, Sold or Cancelled 60.7 1/ 0.6 61.3 1/ Total Commitments now held by IFC 22.9 10.6 33.5 Total Undisbursed 1/ Includes a $50.0 million loan managed by IFC on behalf of other participants. - 29 - ANNEX III RASHEMITE KINGDOM OF JORDAN SIXTH POWER PROJECT SUPPLEMENTARY PROJECT DATA SHEET Section 1: Timetable of Key Events (a) Time taken by agency to prepare the project: 14 months (b) Agencies which prepared the project: Jordan Electricity Authority (JEA); Jordanian Electric Power Company (JEPCO); Irbid District Electricity Company (IDECO) (c) Date of first presentation to the Bank: August 31, 1984 (d) Date of departure of appraisal mission: October 24, 1985 (e) Date of completion of negotiations: April 25, 1986 () Planned date of effectiveness: October, 1986 Section II: Special Bank Implementation Actions None Section III: Special Conditions 1. Government and JEA, JEPCO and IDECO to take all required measures: (i) to enable JEA and JEPCO to maintain self financing level of not less than 25 percent for 1986 and 1987, 30 percent for 1988 and 35 percent in each year thereafter; and (ii) to enable IDECO to maintain a self-financing level of at least 20 percent for 1986 through 1988 and not less than 30 percent for 1989 and thereafter (paras. 49 and 50). 2. Government, JEA, JEPCO and IDECO to review the adequacy of revenues to produce, on the basis of a forecast satisfactory to the Bank, the agreed self-financing levels for the following year and take the measures required to achieve the agreed level (para. 51); 3. JEA, JEPCO and IDECO to stay within agreed debt limitation covenants (paras. 52-54); and 4. JEPCO to provide the Bank, by December 31, 1986, with an action plan to complete the upgrading of the network of Amman by 1990 (para. 45). IBRD 19554 MWUIsH 5 Y R I A N ARAB REPUBLIC s - M-Kh - s. Huet EJORMAN •iMi SIXTH POWER PROJECT MAIN GENERATION AND TRANSMISSION SYSTEM Une o. T"uruna NStaton na_ Fenn 230 kV Tanni~EnLn r~Et132 kV TrontwaissionLne -- 66 kV TVIim ian Line - SIXTHPOWE PROJECTs RER MA- GENERAT laON ADTSMSN~YSE CP onerCn . ,Ho.sa ammmeen. 400kV Tr~miss Ln I Thier7a oe tto A.., npu a o cne, Torns Vms National Hi~s O~ ~ 'q - <-3~. io Ro& EH r.%- - - - )~POscphae Tmnes NationalHibhway Seondlassod -a--.-. -ec -te 0a*t. -30 -'Rier ¥iasARAB - [Gr.,o 5 MA RCH 19 ear~ ~ ~~ G on. e .MAtCHE-TE6