Philippines - Bacon Manito Geothermal Power Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6999-PH STAFF APPRAISAL REPORT PHILIPPINES BACON MANITO GEOTHERMAL POWER PROJECT May 31, 1988 Industry and Energy Operations Division Country Department II Asia Regional Office Thid doment has a re.dcled duu a mway be used by recI4ds only In te pedronmance of their offcial dudles Its contents may not owse be dscosed wihout Wodd Bak aodzallon  CURRENCY EQUIVALENTS Currency Unit - Philippine Pesos (I) US$1.00 # 20.5 1 1,000 - US$48.78 P 1 - 100 Centavos (Ctvs.) WEIGHTS AND MEASURES MMTOE - Million tons oil equivalent MMBOE - Million barrels oil equivalent BOPD - Barrels of oil per day HT - Million tons MW - Megawatt (1,000 kilowatts) TWh a Terrawatt-hours (billion kilowatt-hours) kWh - Kilowatt-hours (1,000 watt-hours) kW - Kilowatt (1,000 watts) kV . Kilovolt (1,000 volts). m . meter (3.2808 foot) km - Kilometer (0.6214 mile) MWh - Megawatt hour (1,000 kilowatt-hours) MkWh - Million kilowatt-hours ABBREVIATIONS AND ACRONYMS ADB - Asian Development Bank BED - Bureau of Energy Development BEU - Bureau of Energy Utilization COA - Commission on Audits DBP a Development Bank of the Philippines EdF - Electricitb de France EHV a Extra High Voltage ERB - Energy Regulatory Board GSIS a Government Services Insurance Systems ICB - International Competitive Bidding KfW 3 Kreditanstalt fur Wiederaufrau KRTA - Kingston, Reynolds, Thom and Allardyce LCB - Local Competitive Bidding LIB m Limited International Bidding MERALCO - Manila Electric Company MIS Management Information System MOE - Ministry of Energy NEA Natiohal Electrification Administration NEDA - National Economic Development Authority NPC - National Power Corporation NPCC - National Pollution Control Commission NPV - Net Present Value OKA Office of Energy Affairs PGI a Philippine Geothermal Inc. PLC a Power Line Carrier PNOC - Philippine National Oil Company PNOC-EDC a PNOC-Energy Development Corporation PNOC-EDI - PNOC-Energy Drilling Inc. PNPP - Philiprine Nuclear Power Plant SCADA a Supervisory Control and Data Acquisition SER a Sequence-of-Event Recording SGS - Steam-Gathering System SOEs a Statements of Expenditures FISCAL YEAR January 1 to December 31  FOR OMCUIL USR ONLY PHILIPPINES BACON MANITO GEOTHERMAL POWER PROJECT LOAN AND PROJEC SWMMARY Borrowers: National Power Corporation (NPC) Philippine National Oil Company (PNOC) Guarantors Republic of the Philippines Beneficiar-y PNOC Energy Development Corporation (PNOC-EDC) Amounts Two loans amounting to an aggregate of US$100 million, consisting of a loan to NPC of US$59 million and a loan to PNOC of US$41 million. Lendinit Tomes Repayable over 20 years, including five years of grace, at the standard variable interest rate. RelendinE Terms PMOC would relend the proceeds of its loan to PNOC-EDC under the same terms and conditions as the Bank loan. Pro4ect DescriptLons The project constitutes an integrated approach to resource development, power generation and transmLssion. the project's main objectives are to (a) develop an existing geothermal steam field and a new 110 MM power plant at Bacon Manitol (b) support the delineation and assessment of geothermal sites for use in Lu:.; (c) support measures for upgrading and expanding NPC'u system facilities; and (d) support Institution-building and financLal recovery efforts at NPC. The project provides for ti) drilling of about 18 wells for delineationlappraisal of geothermal sites, drilling of additlonal productian/injection wells at Bacon Manito I field, and construction of a steam-gathering system; (II) construction of 2 x 55 MV power plant Including turbine generators, auxiliary equipment and 32 km of 230 kV transmission line; (Iii) construction of 142 km of 115 kV single and double circuit transmission lines, rehabilitation of substations and extension of conmunlcatLon links; and (iv) consultancy servlces. Rilskss The project entails no unusual twchnlcal rLsks. Extensive scLentLflc LnvestLgatLons and independent resource assessment have confirmed existence of sufficient steam rese: ves. NPC and PNOC have staff experlenced in supervLsLon and executlon of works similar to those required under this project. However, as a result of financLal weaknase, NPC could have dLfficalty realizing counterpart funds and keeping to This document has a striced distbution and may be used by reipients only in the performance of their official duties. its contents may not ohedwse be disclosed without Wodd Dank authodratin.  - it - the project implementation schedule. Measures to minimize these risks have been incorporated in the project design. Estimated Costss Local Foreign Total --------US$ Million------- PNOC-EDC Development of Steam Field 4.9 19.3 24,2 Delineation/Appraisal 30.1 17.2 47.3 Base Cost 35.0 36.5 71.5 NPC Thermal Power Plant 12.6 46.6 59.2 Transmission System 2.9 8.3 11.2 Upgrading/ExpansioD 8.2 32.0 40.2 Consultancy Services 0.8 3.0 3.8 Base Cost 24.5 89.9 114.4 Total Base Cost 59.5 126.4 185.9 Physical Contingencies 6.0 12.6 18.6 Price Contingencies 3.3 8.5 11.8 Total Project Cost /a 68.8 147.5 216.3 Interest During Construction -- 10.7 10.7 Total Financing Requirements 68.8 158.2 227.0 Financing Plan: Government of Italy 4.8 55.2 60.0 IBRD 7.7 92.3 100.0 PNOC-EDC 39.7 3.0 42.7 NPC 16.6 7.7 24.3 Total 68.8 158.2 227.0  - iii - Estimated Disbursementas IBRD Fiscal Year 1989 1990 1991 1992 1993 1994 -___________________ (US$ million) ------ ----^--- NPC 1.6 9.1 15.0 13.0 9.1 11.2 PNOC 13.6 22.7 4.7 Cumulative 15.2 47.0 66.7 79.7 88.8 100.0 Economic Rate of Returns About 19Z /a This project is exempt from duties and taxes.  - iv - PHILIPPINES BACON MANITO GEOTHERMAL POWER PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. I. THE ENERG.7 SECTOR .............* . ... ...*. .. ....* *.............. 1 A. Overview ................ ..* ............... 1 B. Domestic Energy Resources ..... * . . * . * . . * . * * . * * * * . . . * . . . . . 1 C. Energy Sector Institutinne . .... ................................ 2 D- Energy Sector Objectives, Issues and Strategy ............. 2 E. The Power Sector ....... ** .... ......** ................... ..* 3 P. The Geothermal Sector ....... ....... 5 G. Bank Lending for the Sector ..... * . . . . * .............................. , 7 H. Sectoral issues ............... ....*.****...**.. ... 7 I. Rationale for Bank Involvement .........*................... 9 II. THE PROJECT .............. ........... 10 A. Background ......* ** ******. . ............ *.. ...... ...... 10 B. Project Objectives ...........................*............ 10 C. Project Description .........*.. .* ......................... 10 D. Project Costs .............................................. 15 E. Financing Plan ......... ................................... 17 F. Project Implementation and Schedule ...... ................. 17 3. Procurement ...... ## ............................ 19 H. Disbursements ............ *.*........*.. ...*... ... .. ... .. . 22 I. Monitoring and Reporting . ................................ . 22 J. Environment .............*...*............ 23 III. THF BORROWERS AND THE BENEFICIARY ............................. 24 A. NPC .#.##....... *oo.... #o....... ............................ 24 Organization, Management and Staff ...................... 24 Training .......................................................... 25 Operations, Maintenance and Losses ...................... 25 Accounting System .................... 000* ..... 25 Financial Planning and Budgeting ........................ 25 Commercial Systems ... ............... ......... ...... 25 Audit ........ *.# ..... 26 Taxes .............................*..*... 26 Insurance .................................... 26 This report is based on the findings of an appraisal mission to the Philippines in August 1987. Mission members included Anil K. Malbotra (mission leader), Jamil Sopher, Darayes B. Mehta, Hossein Razavi (World Bank), and P.T. Venugopal (consultant).  Page No. B. PNOC and PNOC-EDC ................................ ......... 26 PNOC ............*. ..... ............. 27 Organization and Management ...................... ....... 27 Budgeting .................................. 27 Accounting and Audit ................................................... 27 Insurance ..*.*..........*................................. ............ 27 PNOC-EDC ....to.**.....*. *****. **. * . q..*... ...... 28 Organization, Management and Staff ...................... 28 Training and Technical Assistance ....................... 28 Collections ........................................................ 29 Accounting and Audit ....... ........ ........ ............ . 29 IV* FINANCE ....... .......... ............................ 29 A. NPC .................... .................... ...*.......... 29 Past and Present Financial Performance .................. 29 Foreign Exchange Exposure ............................... 31 Valuation of Assets ..... ....... ............................. 31 Tariff . .................................................... 32 Financing Plan . ......................... ................ 32 Future Financial Performance ............................ 33 B. PNOC and PNOC-EDC .. .. ................... .. ........... 35 PNOC ***.*... .. *...*........... . ..***............... 35 Capital Structure ..................................... 35 Financial Performance ................................. 36 Asset Valuation ... ...................... .............. 37 Tariffs .................. **........... ................. 37 Future Financial Performance ...,....................... 37 PNOC-EDC * *** ** *** *** **......... ..... ......... ... 38 Capital Structure ........... ...... ............... ..... 39 Financial Performance . ...... ....... ... ...... 40 Taxes ................ ,.#.....to.. 40 Tariffs . ................... ........................... 40 Future Financial Performance .............. ............ 41 Financial Analysis of the Geothermal Steam Component .............................................. 42 Sensitivity and Risk Analysis ......... ................ 43 V. PROJECT JUSTIFICATION AND RISKS ... ........................ 44 A. Justification ........................................................ 44 B. Economic Rate of Return .......*. **.*...................... 45 C. Risks ..................................................... 46 VI. AGREEMENTS ......... . ***. *****************............. * 46  - vi - ANNEXES 1.01 NPC's Gross Generation 1.02 NPC's Installed Capacity by Grid and by Plant-Type (1981-86) 1.03 Load Forecast for the Luzon Grid 1.04 Load Forecast for the Mindanao Grid 1.05 Load Forecast for the Visayas Grid 2.01 Transmission Line and Substation Projects of NPC 2.02 Detailed Project Cost - PNOC-EDC Component 2.03 Detailed Project Cost - NPC Component 2.04 Project Implementation Committee - Terms of Reference 2.05 Organization Chart for PNOC-EDC 2.06 Project Organization for PNOC-EDC 2.07 Project Organization for NPC 2.08 Implementation Schedule - Critical Activities 2.09 Implementation Schedule for PNOC-EDC 2.10 Implementation Schedule for NPC 2.11 Major Project Procurement Contracts 2.12 Disbursements Schedule of the Project 2.13 Disbursement Schedule - PNOC-EDC 2.14 Disbursement Schedule - NPC 2.15 Consultancy Services for NPC 3.01 Organization Chart for NPC 3.02 NPC - Staffing Profile 3.03 Organization Chart for PNOC 3.04 PNOC.-EDC - Staffing Profile 4.01 NPC's Annual Financial Statements (1984-95) 4.02 KPC - Action Program to Reduce Accounts Receivable and Accounts Payable 4.03 NPC's Tariff 4.04 PNOC and Affiliatest Financial Highlights - 1987-1992 4.05 PNOC and Affiliates: Income Statements, Balance Sheets, and Internal Cash Generation (1984-1992) 4.06 PNOC-EDC: Income Statements, Balance Sheets, Cash Flows (1984-1995) 4.07 PNOC and Affiliates and PNOC-EDC: Assumptions on Financial Projections 4.08 PNOC-EDC: Financial Analysis of Investment in the Bacon Manito I Geothermal Project 5.01 Calculation of the Economic Rate of Return (Versus Coal Alternative) 5.02 Calculation of the Economic Rate of Return 5.03 Estimated Loss Reduction Benefits of the TransmissionlDistribution Components 5.04 List of Documents in Project File MAPS IBRD 20275 - Grid Map of National Power Corporation IBRD 20278 - Existing Geothermal Power Projects in Operation  I. THE ENERGY SECTOR A. Overview 1.1 The energy sector acquired pre-eminence in the Philippine economy as a result of the oil crisis of the last decade. At the time of the first major oil price increase in 1973, imported oil accounted for 952 of total energy consumption. As a result of the Government's implementation of an energy diversification/management policy, the ratio of imported oil to total energy usage declined to 56X in 1986. Also, total consumption of energy, which had grown rapidly prior to 1973 (at 9.62 p.a. during 1965-73), increased at the modest level of 3.82 p.a. between 1973 to 1979. After the second oil shock, consumption actually declined continuously from the peak of 9.2 million tons of oil equivalent (MfTOE) in 1979 to 8.5 MMTOE in 1983 and 7.1 MMTOE in 1985. Several factors contributed to this decline including the low GDP growth of the early 19808, the decrease in GDP of the 1984-85 period, and the increased use of non-conventional energy. Energy usage has started to increase with the recent economic recovery; total energy consumptior. reached 7.5 MMTOE in 1986 and 9.6 MHTOE in 1987, representing growth rate of 62 and 282 for 1986 and 1987, respectively. 1.2 The shares of energy consumption by sector have remained stable over the years. The residential/commercial sector's accounts for about 142 of usage, industrial consumption 51X, and transport 31?. The share of electri- city as a proportion of energy consumption has increased considerably; power generation accounted for about 47X of primary energy consumptica in 1986, compared to only 222 in 1973. B. Domestic Energy Resources 1.3 Indigenous energy resources are relatively modest and proven reserves of petroleum, coal and of natutai gas are small. The proven reserves of petroleum are estimated at 4 million tons of oil equivalent (MMTOE) while potential reserves are projected at a possible 14 MKTOE. Domestic oil fields at Nido, Cadlao and Matinloc produced 14,000 barrels of oil per day (BOPD) and contributed 7.42 of total prinary energy consumption when commercial produc- tion began in 1979; since then, production rates from these fields have decreased so that, by 1987, domestic oil's share of total energy consumption was only 2.22. Natural gas deposits, found in Northern Luzon, are considered to be sub-commercial; and probable uranium reserves are estimated at about 1.2 MMTOE. Its total potential coal resource is estimated at about 1,500 millions tonnes but most of it is low grade and expensive to mine. The major coal fields at Semirara (152.1 million metric tons (MT)), Cagayan (65.8 million MT), Surigao (36.8 million MT) and Zamboanga (18.6 million HT)--which account for an estimated 89.42 of total proven coal reserves--contributed only 4.32 uf total energy consumption in 1987. Philippine hydropower resources are quite substantial, with a theoretical power potential in excess of 10,000 MW. However, development of hydro resources is relatively costly due to the distance of the bettor sites from the main transmission grid. Hydropower contributed 10.22 of total energy consumption in 1985. Geothermal reserves are not yet fully evaluated, but about 4.431 MW of probable reserves, 1640 MV  - 2 - of which have been tested, but only 894 MW of capacity has been installed. In 1987, geothermal energy generated about 221 of the nation's electricity supply. biomass resources abound in the Philippines, with an estimated annual potential of 1.0 MMTOk from agricultural wastes. This source's share of total primary energy consumption was 16.8? in 1985. C. Energa Sector Institutions 1.4 The basic organization of the energy sector was established by a Presidential Decree in 1977. That decree created the Ministry of Energy (MOE) as the central policy, planning and regulatory agency for energy; in turn, MOE operated through two major bureaus, one for energy development (BED) and the other for energy utilizatlon (BEU). The responsibilities of the Philippine National Oil Company (PNOC), formed in 1973 to assure the adequacy of the country's oil supply, were extended in 1976 to include development of indigenous energy resources; PNOC-Energy Development Corporation (PNOC-EDC) became responsible for geothermal exploration and development. The National Power Corporation (NPC) (responsible for power generation and transmission), and the National Elactrification Administration (NEA) (responsible for rural electrification), were also strengthened by that Decree. PNOC and NPC were attached to MOE for program and policy coordination. A committee to coordi- nate their activities was established within the Ministry, and the Minister held the position of Chairman of the Board cf both PNOC and NPC. NEA, in turn, was attached to the Ministry of Human Settlements. Following the change of Government in 1986, MOE was dissolved in June 1986, and all its units were placed temporarily under the Office of the President. In June 1987, Executive Order 193 formally placed the Office of Energy Affairs (OEA) under the Office of the President and gave it primary responsibility for the formulation, planning, implementation and coordination of policies and programs in the field of energy. NPC and PNOC were brought under the direct control of the Office of the President. The National Coal Authority was abolished and its regulatory functions transferred to the Energy Regulatory Board (ERB). A part of BEU was transferred to ERB which was given price-setting authority over private sector suppliers of petroleum and electricity. The organization structure of the energy sector is still somewhat fluid; working arrangements under this structure have not yet been established. Coordination of the sector's entities would still need to be strengthened and the Bank is expected to assist this process through the Public Resource Management Loan, the proposed project and the ongoing energy sector study (para. 1.23). D. Energy Sector Obiectives, Issues and Strategy 1.5 Prior to the first oil price hike of 1973, the Philippines did not have a comprehensive formulation of energy sector programs and policies. Initial reactions to the 1973 oil crisis focused mostly on securing a stable and adequate supply of crude petroleum. To complement this, a longer term program of (a) indigenous energy resource development and (b) energy demand management was implemented. The objective of indigenous energy resource development was met through heavy Government participation in developing oil and non-oil resources. The search for domestic crude oil sources was pursued under an innovative production sharing scheme. The policy of diversifying energy sources focused on coal development as of 1976, geothermal exploration and development as of 1978, and construction of the 620 MW Philippine Nuclear  - 3 - Power Plant (PNPP) in 1979-85. Non-conventional energy development was left primarily to private enterprise, with the Government providing fiscal incen- tives for research, development and utilization of these resources. 1.6 Energy demand management was initially focused on direct Government iiterveation via fuel allocation and rationing schemes. In 1975, the Energy Conservat-on Program was enacted; however, the Government quickly recognized that pricing was more permanent and effective than legislation as a policy tool. Thereafter, the Government pricing policy emphasized a rapid and full adjustment of domestic petroleum product prices to uorld market levels. 1.7 Despite the notable past success in the energy diversification and management policies, the sector is now facing a number of issues with regard to its long term development strategy. These issues are all the more argent because of the substantial capital needed for energy development at a time when the country is facing other urgent economic prioritiess (a) Until 1986, the Government was planning to meet increases in demand for electricity in Luzon with generation from PNPP. The Government's decision, made in the summer of 1986, to mothball PNPP along with the downgrading of generating capacity in Tiwi geothermal power plant and the relatively sharp increase in power demand in 1987, created a sudden need to reexamine and optimize energy options for meeting expected increases in demand for electricity; (b) The recent collapse in the international energy prices has introduced considerable uncertainty regarding the economics of domestic energy resources. In particular, the development of domestic coal, geo- thermal steam and certain hydro resources may no longer be viable alternatives to energy imports; (c) The Government's decision to abolish MOE has led to a lack of coordi- nation of energy sector activities and, in particular, a lack of clear direction for energy resource development; (d) Finally, the Government's energy pricing policy needs to be reexa- mined. In particular, further rationalization of power tariffs and pricing policies for geothermal steam and coal are needed in order to eltsure the economic efficiency of their development and use. With the Bank's assistance, the Government is planning to: (a) reexamine the economics of various sources of energy; (b) prepare a consolidated plan for development and utilization of indigenous energy; and (c) strengthen a coordi- nating body so that it can resume many of MOE's former responsibilities. E. The Power Sector 1.8 Overview. The electric power industry in the Philippines is divided into two segments: (a) generation and transmission; and (b) distribution. The industry has a number of participating organizations, some of which are publicly, and others privately, owned. By far, the largest organization is NPC, which is responsible for the generation of bulk power and its transmi;- sion through a number of grids that serve virtually the entire country except  - 4 - for remote rural areas and smuJl outlying islands. Power is distributed to major urban areas by a number of investor-owned utilities. Of these, the largest is the Manila Electric Company (MERALCO), which serves Metro Manila and accounts for about 70X of NPC's sales in Luzon. The rural areas are served by over 100 cooperatives, a few of which are either wholly or partly auto-generating. NEa was established to service the cooperatives by mobiliz- ing funds, providing tichnical assistance, and arranging procurement of common materials. 1.9 At the end of 1986, the total installed capacity of the Philippine power subsector was about 6,600 MW, of which 5,788 MW (88?) belonged to NPC (Annexes 1.01 and 1.02). The major part (41Z) of NPC's capacity is oil-fired, while geothermal (152), hydro (372), and coal-fired (7?) plants comprise the rest. Currently, NPC operates 19 oil-fired, 17 hydro, 4 geothermal and 1 coal-fired power plants. Total genexation from NPC facilities was 19.2 kWh in 1986, accounting for about 902 of the Philippines' total generation. The residential sector accounted for 23X of electricity sales; the commercial sector, 22?; industry sector, 502; and the Government, street lighting and water supply, 5Z. Losses exceeded 20? of gross generation. 1.10 Currently, NPC's facilities are organized into separate systems for Luzon, the Visayas and Mindanao. Among them, Luzon is the largest. Total energy sales in 1986 were 17.6 billion kWh from which the Luzon grid accounted for 76?; Mindanao, 17?; and the Visayas, 7?. The growth of electricity consumption was well above 15? p.a. in the 1960s and the early 19709. Following the steep rise in oil prices in 1973, the corresponding increases in power tariffs reduced the growth rate to 122 p.a. for 1973-79. The slow-down in the economy further reduced the growth rate to 4.9? p.a. for 1980-86. Electricity sales in Luzon, which grew during 1980-83 at 4.6?, declined by 4.8? in 1984 and by 0.8? in 1985. A modest rebound of 2.5? and a sharp increase of 10.5? were experienced in 1985 and 1986 respectively. Growth rates of 6? and 55? are projected for 1988-90 and 1990-95, respectively. 1.11 Power Sector Investment Program. The existing generating capacity in Luzon is 4,100 MW, consisting of 1,925 MW of oil-fired, 1,226 MW of hydro- power, 660 MW of geothermal, and 300 MW of coal-fired plants. The oil-based power plants have not been maintained adequately in the past and have deterio- rated to conditions of poor reliability and low thermal efficiency. However, the Malaya power plant units No. 1 and 2 (300 MW and 350 MW respectively) are being rehabilitated and are scheduled to be recommissioned in 1988. Sucat units No. 1 and 4 (150 MW and 300 MW respectively) are scheduled for rehabili- tation in 1988-89. Rehabilitation of other units at these plants, however, must be delayed until some new generating capacity is added so that the system will have sufficient capacity while the units to be rehabilitated are taken off line. Thus, the actual capability of the oil-fired power plants is, and will be, substantially lese than their rated capacity, at least until early 1990s. In addition, from the 660 MW of geothermal power, 220 MW of Tiwi plant will be retired during 1989-90 due to technical problems related to the steam supply. Therefore, the total available capacity, after rehabilitation of oil- fired plants, will be about 3,000 MW. In contrast to installed capacity, the Luzon grid's current peak demand of 2,500 MW is projected to reach 3,200 MW by 1992. No new generating plant is under contruction despite the (a) projected increase in load, (b) decrease in installed capacity due to the unexpected  - 5 - retirement of the geothermal units at Tiwi, and (c) mothballing of the nuclear plant. As a result, system reliability is expected to fall very sharply; the loss of load probability (LOLP) is expected to increase from its present level of 2 days/year to 7 days/year in 1989 and more than 30 days/year in 1991. 1.12 Rectification of this deteriorating situation will require some heavy investment, precisely at a time when both NPC and the Government are facing resource mobilization constraints. Short term relief can only be provided through projects involving low lead time for which substantial financing can be obtained on attractive terms. Longer term investment decisions need to be optimized in order that finite available resources can be stretched as far as possible. In this regard, NPC currently plans to: (a) address peaking requirements in 1989 and 1990 by installing two gas turbines (150 MW and 200 MW); (b) address base load requirements for 1991 and beyond by constructing the Bacon Manito geothermai power plant; and (c) address longer term requirements by optimizing the economic and technical aspects of other candidate plants and use sound financial practices to develop the optimal candidates. Although the relative economic merits of geothermal versus imported coal are not clearly established, the Bacon Manito geothermal plant is clearly the least-cost option to supply the next increment of base load generating capacity because of the investment which has already been incurred in developing the steam production wells; from the total capital cost of US$73.3 million for geothermal development, more than 702 has already been expended. The economic viability of other geothermal candidate plants will, however, need to be investigated in a least-cost framework. In conjunction with the ongoing Energy Sector Study, the Bank and NPC are conducting a joint review of NPC's investment program through the year 2000. At negotiations, NPC agreed that it would review its investment program annually with the Bank. In conjunction with the Energy Sector Study, the Bank ascertained that NPC was developing methodologies for investment program formulation that were satisfactory; therefore, the annual reviews of NPC's investment program could focus as mtuch on the methods used for investment optimization as on the constituents of the program. F. The Geothermal Sector 1.13 The share of geothermal in total energy use has been steadily increasing during the last five years. In 1979, consultants visited 25 of the major geothermal manifestations in the Philippines and identified 11 as priority areas for further investigation. In addition to these 11, explora- tory drilling is planned or already under way in a number of additional areas; also, where ongoing geoscientific work is likely to lead to drilling prospects in still additional areas. Based on exploration to date, the total geothermal resources of the Philippines are estimated at 8,000 MW. Four fields, Tiwi and Makiling-Banahaw (MakBan) on Luzon and Tongonan and Palinpinon in the Visayas, are currently operating and drive a combined generating capacity of 894 MW, thus ma'ing the Philippines the world's second largest producer of geothermal energy (after the USA). As of the end of 1986, more than 320 geothermal wells had been drilled in the Philippines, principally in the four fields under development; in turn, geological, geophysical and geochemical analyses have been completed at a number of other sites. But during the period 1984-86, geothermal exploration and development activity slowed considerably; PNOC- EDC's drilling activity dropped from 26 wells in 1983 to six in 1984, four in  - 6 - 1985 and one in 1986. Attempts are now being made to accelerate the exploration and development program and PNOC has proposed a program to drill 171 wells providing an additional 1,290 MW geothermal steam capacity for the period 1987-1994. 1.14 The first 2.5 kW geothermal power plant on Luzon was put into opera- tion at Tiwi in 1969 and the first commercial geothermal power station in Leyte, supplying 3 MW of electricity to Ormoc City, was put into operation in 1977 at Tongonan. Large-scale geothermal power production began in 1979 in both the Tiwi and MakBan areas, when a 110 MW power station was commissioned in each area. Currently, Tiwi and MakBan both have 330 MW installed capacity; both fields are operated by Philippine Geothermal Inc. (PGI) under a service contract with NPC. PNOC-EDC operates two geothermal fields, both supplyirg 112.5 MW plants, at Tongonan on Leyte and at Palinpinon on Southern Negros. 1.15 Geothermal Exploration and Development. Geothermal exploration and development is govez-nsd by Presidential Decree No. 1442 (The Geothermal Exploration and Development Act, 1978). The terms apply equally to foreign and local contractors and joint ventures. Contracts were administered earlier by the Ministry of Energ, through its BED. With %'he recent constitution, BED's functions have been transferred to the Office for Energy Operations within OEA. 1.16 From a resource development perspective, geothermal steam has many parallels with oil and gas; in the Philippines, they are administered compar- ably. The basic features of the service contracts previously entered into by BED for geothermal exploration, drilling and production paralleled those of petroleum production-sha,.ing segments. Although details may be negotiated and variations may occur, the contractor must in all cases take all exploration and development risks, meeting all costs as incurred and recovering those costs from a share of future production (the contractor's take is a maximum of 401 of net income). The Government's intention was for NPC to purchase the steam at the "power plant fence" on a cost-related approach, with a firm contract price based on estimated costs plus a target rate of return. The service contract is supplemented by two prior contracts for geoscientific studiess a geophysical survey contract, providing an exclusive right to a contract area; and a geophysical permit, providing a non-exclusive right to an area. Foreign companies considering operating in the Philippines generally regard the contractual arrangements as satisfactory and their relations with the Government, OEA and PNOC to be good. But world-wide, few companies parti- cipate in geothermal development and even fewer (less than 10) operate inter- nationally. 1.17 Difficulties inhibiting further geothermal development have also arisen because of the need to agree with NPC to a steam price in advance of commencing exploration, a need arising from both lack of major alternative uses for steam in most locations and the relatively low initial risk of failing to find a commercial resource. Almost no international precedents exist for steam pricing! and further study and contract initiative are needed to ease and accelerate the contractual process, and to provide for uncertain- ties which may arise during geothermal field production. In the past, Caltex and Total had proceeded with basic geothetmal exploration in advance of a steam contract, and Union Oil has continued on the basis set out in its  existing geothermal license (1970) (Union Oil's license for geothermal development is different from current practice; it was issued prior to the Presidential Decree and provides for development to be on a cost-reimbursable basis to be met from future earnings, but without formal limitations on the contractor's take); but other interested companies have been extremely cautious and have not been prepared to undertake even basic exploration in advance of reaching an agreed steam selling price. PNOC-EDC, as a subsidiary of a state company, has undertaken exploration in advance of any steam contract in the interests of national energy development objectives. A number of highly promising areas, not being explored by PNOC-EDC, are still available to the private sector; in any case, PNOC-EDC is willing to consider seriously suitable joint venture proposals. The Government has established within OEA a special inter-Governmental committee charged with the responsibility to resolve the steam pricing issue on the basis of the recommendations of a recent Steam Pricing Study fostered by an existing Bank geothermal project. G. Bank Lending for the Sector 1.18 Since 1957, the Bank has made nine lending operations (eight loans and one credit) to the power sector, amounting to US$290.2 million equivalent, and one for geothermal exploration amounting to US$36 million equivalent. These lending operations include sever to NPC, for a total amount of US$218.2 million to finance three hyd opower projects, two thermal power plants, and one transmission project. Apart from considerable slippage in the project construction schedules and a consequential cost overrun on the fifth and sixth projects, all projects were completed without major problems and the resultant facilities are operating satisfactorily. The seventh loan, which was the Bank's last operation with NPC (1460-PH, US$58 million, 1977) and which fivanced the expansion of the transmission system in Luzon and construction of a load dispatching center, was closed in 1985. Bank group lending to the Philippine power sector has also includeds (a) a loan to NEA for US$60 million in 1978, to help finance the 1979/80 portion of the rural electrifica- tion program; and (b) a commitment by the International Finance Corporation (IFC) of US$12 million equi. lent to MERALCO in 1967. The role of geothermal energy was considered in some detail in the energy assessment undertaken by a joint World Bank/Asian Development Bank (ADB) mission in 1980 and a project (Loan 2203-PH, US$36 million, 1982) comprising a 25-well exploration program at the Bacon Manito and Palinpinon fields, is scheduled for completion in end- 1988. Two of the aforementioned projects have been audited: the Fourth Power Project (PPAR No. P-0980, January 1976)--a thermal plant at Bataan; and the Rural Electrification Project (PPAR No. P-5372, June 1985). Both audit reports identified major problems, such as implementation delays and cost overruns, and their causes, such as project design changes, cumbersome contract award procedures and weak project management. H. Sectoral Issues 1.19 Because solutions to the power sector's problems are so capital intensive, the prevailing uncertainties in energy sector development and coordination can have a substantial cost to the economy. The power sector is now facing a number of issues in the areas of resource allocation and utili- zation. In the area of resource allocation, the sector needs to optimize investment, but currently lacks a clear direction regarding the economic  - 8 - advantages of various sources of supply. This problem became particularly urgent after the decision to mothball the nuclear plant, which had been planned to meet all increments of electricity demand in the Luzon grid through 1994/95. Thus, the plant's capacity of 620 MW needs to be replaced with more conventional power generation. New plants powered by domestic or imported coal, geothermal steam or hydro resources, as well as rehabilitated existing oil-fired plants are all feasible fuel alternatives for meetirg future growth in demand. However, except for the proposed geothermal plant, which is econo- mically justified based on its incremental cost., the other candidates cannot be optimized because a reliable basis for cost comparison is lacking. To resolve this issue, a thorough examination of the development cost of coal, geothermal and hydro resources, together with a comprehensive analysis of their economic positions within a consolidated investment program, is needed. In addition, the option of rehabilitating several existing oil-fired generat- ing facilities should be weighed against each of the other alternative sources of capacity expansion. 1.20 Pricina. Adjacent to the above issue are problems related to steam and coal pricing. In brief, these resources need to be priced in a way that reflectt their relative economic merits. Currently, pricing of both resources is being disputed by concerned entities and has created a bottleneck in NPC's planning for new, and operation of existing, coal-fired and geothermal power plants. For NPC and PN0C, the price of geothermal steam must fall between the cost of production and the 'avoided cost' of using alternative fuels; however, the specific parameters to be used in the computation of cost of production and 'avoided cost' must still be developed and agreed between the two parties before a specific pricing structure can be fixed. An ADB-financed study has provided an important tool for resolving the issue. It includes a model for geotherna) steam pricing. The Government has appointed an inter-Governmental committee to establish a price to cover the steam needed to power the proposed Bacon Manito project, and to develop a long term steam pricing policy based on the study. The Bank is expected to assist in (a) providing information on the most important input into the model, namely the least-cost power development program, and (b) addressing the financial and fiscal implications of various pricing policies. 1.21 In addition to optimizing investment programs, NPC and the other power sector participants need to ensure that they are as efficient as possible at managing their businesses and producing revenues. In particular, transmission losses need to be kept at existing levels, distribution losses need to be reduced, tariff structures need rationalization and the financial performance of NPC, MERALCO and NEA need substantial improvement. 1.22 Losses. System losses within Luzon have increased from 142 in 1978 to 242 in 1986. NPC appears to have been effective at controlling transmis- sion losses; however, distribution losses are excessive and need to be reduced. MERALCO, which supplies 752 of the total electricity used in Luzon, by itself recorded losses In excess of 202 in 1986. 1.23 Tariffs. Rationalization of power tariffs has alreauy received considerable attention. A tariff study was completed recently; it concluded that, although average revenue realizable from aggregate electricity sales is consistent with the average aggregate production and delivery costs, the  -9- structure of the tariff, as well as the allocation of rates between demand and energy charges, needs to be altered substantially in order for rates to reflect efficiently the cost of providing service to each consumer. The Government has adopted a policy of revising present tariffs to reflect the marginal cost of power supply and is currently developing guidelines for changes to both bulk rates and retail tariffs. 1.24 Financial Restructuring. A number of factors have had a negative impact on the financial performance of NPC, MERALCO and NEA. These organiza- tions all have had serious accounts receivable problems; as a result, to meet some of their working capital requirements, all three have stretched their accounts payable beyond reasonable limits. All are undercapitalized, with NPC not being able to raise peso denominated long term loans bearing appropriate maturities and MERALCO having insufficient paid-in equity capital. This problem has constrained NPC's cash flows and has affected some of MERALCO's investment and resource maintenance decisions. NPC, with Government support, has already implemented measures which would relieve its cash constraints, at least for the next year or two. MERALCO's problems can only be resolved through an action program to attract fresh equity capital that will need some years to implement. 1.25 In discussions regarding the proposed project with the National Economic Development Authority (NEDA), NPC, PNOC, MERALCO and OEA, all parties noted that the aforementioned issues needed to be addre3sed within a compre- hensive and consolidated framework. Accordingly, these organizations indicated their interest that the Banks (a) provide assistance through the proposed project to (i; reduce distribution losses, (ii) facilitate the coor- dination among the concerned entities, especially with regard to geothermal development and steam pricing, (iii) relieve NPC's cash constraints, and (iv) rationalize MERALCO's financial structure; and (b) conduct a sector study aimed at developing an action plan to resolve medium and long term energy issues. The sector study, initiated in early 1988, would: (a) assess the geothermal reserves and review the cost estimates of future exploration and development activities; (b) carry out a technical and economic analysis of various coal de;elopment schemes; (c) develop a concensus regarding NPC's least-cost investment program for the period through 2000; (d) propose guidelines for the pricing of geothermal steam, coal and petroleum products; (e) review the technical and economic aspects of plant rehabilitation and loss reduction; and (f) analyze the various instruments available for enhancing the capitalization of power sector organizations. I. Rationale for Bank Involvement 1.26 The efficient development of the Philippine power sector requires close cooperation and coordination among the principal parties--NPC as the generator and wholesaler of power, PNOC as the primary supplier of fuels to NPC, and the major private and public distribution franchisees. Through its past operational involvement, the Bank has developed constructive relation- ships that enable it to facilitate important interactions between NPC, PNOC and PNOC-EDC. The Bank can play a significant role in resolution of issues such as coal and steam pricing, and on the consequent analysis of investment strategies. The sector's institutions all have considerable scope for improvement of operational performance, financial stability and investment  - 10 - planning. The project would afford the Bank an opportunity to assist NPC and MERALCO in implementing financial recovery measures. Finally, by using Bank procedures for procurement, the real cost of investment in the project can be optimized. The Government is keenly interested in the Bank's continued involvement in a sector which is critical for the country's industrialization. II. THE PROJECT A. Background 2.1 Several Bank missions during 1984-86 reviewed with NPC, PNOC and PNOC-EDC the development of the power and geothermal sectors in Philippines. An examination of NPC's least cost power development program indicates that development of a 110 MW power plant at Bacon Manito in southern Luzon should be NPC's next development priority. PNOC has already invested US$51.5 million in developing the Bacon Manito geothermal steam field to sustain a production level of 70 MW and needs an incremental investment of about US$24 million to upgrade the field to 110 MW. To optimize the efficiency of investments in generation, there is a need to upgrade and expand the facilities of NPC's system. B. Proiect Objectives 2.2 The main objectives of the project are to: (a) support the delineation and assessment of geothermal resources for use in Luzon, and thereby reduce the need to rely on imported fuel for power generation; (b) develop an existing geothermal steam field at Bacon Manito I and an associated 110 MW base load power plant that would provide a new source to meet demand growth in the Luzon grid; (c) support measures for upgrading and expanding NPC's system facilities; and (d) support institution-building and financial recovery efforts at NPC during this critical stage of the economic recovery period. C. Proiect Description 2.3 The project includes the following components: (a) Geothermal Steam Exploitation and Distribution (i) development of the Bacon Manito I geothermal field including drilling of additional production and injection wells, and engineering, procurement, installation and commissioning of the steam-gathering system;  - 11 - (ii) delineation/appraisal of geothermal sites for power supply to the Luzon grid. This includes drilling of about 18 wells to an average depth of 2,800 meters, and studies for assessing the extent of geothermal resources and the feasibility of their development. (b) Power Plant and Associated Transmission System (i) construction of the 2 x 55 MW Bacon Manito geothermal power plant including turbine generators, auxiliary equipment, steam condensing and gas extraction systems, cooling towers and the 230 kV switching system; (ii) construction of about 32 km of double circuit 230 kV transmis- sion line for evacuating power from the generating station. (c) Upgrading and Expansion of NPC's System Facilities (i) expansions of Bantay, Balintawak, San Jose, San Esteban, Laoag, Olongapo, Dasmarinas and Binan substations, construction of 21 km of 230 kV double circuit Balintawak-San Jose and 121 km of 115 kV single circuit San Esteban-Laoag transmission lines and rehabilitation of substation transformers and switchgear in the Luzon grid; expansions at Lugait, General Santos and Davao substations in the Mindanao grid; and expansions at Tunga, Santa Barbara, Panitan, Medelin and Bacolod substations in the Visayas grid (Annex 2.01); (ii) extension of the communication link to Mindanao and Visayas and expanding telecommunication facilities of the Luzon grid load dispatch system; installation of computer hardware and software for enhancing NPC's Management Information System (MIS); and procurement of mobile environmental monitoring units for NPC's environmental division; and (iii) rehabilitation of instrumentation and controls for the 50 MW coal/oil-fired unit at the Naga thermal power station. (d) Consultancy Studies for (a) establishing the feasibility of transmitting power from Leyte to Luzon; (b) Tongonan Geothermal Power Plant Siting and Development; (c) establishing the feasibility of transmission interconnections to the islands of Masbate, Mindoro, Marinduque, Romblon, Batanduanes and Basilan; (d) developing cost estimating techniques for power system components, and a computerized data base; (e) developing norms for cost of power supply outages; and  - 12 - (f) establishing feasibility of the latest techniques in the construction of hydro-electric dams. 2.4 Development of Bacon Manito Geothermal Field. The first reconnais- sance survey of the Bacon Manito geothermal field, located about 600 km south of Manila in southern Luzon, was started in May 1977 by PNOC and Geothermal Energy of New Zealand, Ltd. During 1977-85, PNOC carried out detailed geophysical, geological and geochemical studies and delineated a geothermal field, about 10 sq. km. In Bacon Manito, a total of 24 wells have already been drilled and only three additional wells are needed to complete the production and reinjection requirements of the 110 MW plant. Of the total wells drilled, only 16 are presently hookable to the steam-gathering system, while four wells could be used in the future for power on a modular concept. The current production capacity is 102.5 MW, and the additional wells will enable attainment of the plant rated capacity of 110 MW, plus an additional 10 MW reserve capacity. An independent resource assessment completed in 1985 concluded that the site has reserves sufficient to supply a 110 MW power plant for 25 years. This conclusion has been confirmed by an independent expert, who assisted the Bank in 1987. The project component includes the drilling of additional three wells so as to develop the first section of the Bacon Manito geothermal field, and construction of the required steam-gathering system. The steam-gathering system (SGS) is comprised of a piping network, three separator stations, cross-country steamlines and reinjection lines. The SGS, designed to drive as a base load station, although provisions for load peaking will be included, will have a fully automatic control system with a secondary provision for full blow-off capacity to take care of major plant operating upsets. 2.5 Delineation and Appraisal of Geothermal Sites for the Supply of Power to the Luzon Grid. Geoscientific studies, including geological, geophysical and geochemical studies, will be conducted to identify appropriate locations and targets for drilling operations. The project includes the drilling of 19 confirmatory wells on the basis of the above geoscientific studies and/or based on results of drilling already undertaken earlier. Three wells will be drilled to an average depth of 2,800 - 3,000 meters to complete the eight wells that are necessary to define an area for a 110 MW development at Bacon Manito II, including both the production and reinjection wells; five wells with an average depth of 2,800 - 3,000 meters which will be drilled in Pinatubo are necessary to complete the ten wells required to delineate a resource area capable of sustaining a 110 MW development; and approximately ten wells will be drilled to an average depth of 2,800 - 3,000 meters in one or more of the following areass Del Gallego, Mariveles Natib, and Greater Leyte area to confirm the resource potential of the chosen area. On completion of geoscientific surveys and drilling, studies of geothermal resource and feasibility of development will be carried out. An independent resource assessment and feasibility study by an internationally reputed organization will confirm and establishs (a) the existence of an exploitable geothermal resource sufficient to support a first stage development of up to 110 MW on two sites; and (b) the future drilling and development plans. 2.6 Bacon Manito Geothermal Power Plant. A feasibility report detailing the parameters of the Bacon Manito geothermal power plant has been prepared by  - 13 - NPC, and a site for the power plant has already been selected. The project construction includes a power house installed with two 55 MW generating units, auxiliary equipment and controls, steam condensing and gas extraction systems and the cooling water system including cooling towers. Power from the genera- tors would be sterped up to 230 kV by transformers leading to an adjacent gas insulated metalclad 230 kV switching station. A 10 km long 230 kV double circuit transmission line will convey power to the nearest 230 kV switching station at Daraga and thence to Manila by the 500 kV EHV system currently under construction. The project would provide the Luzon grid with a source of additional firm energy of about 800 GWh annually from 1991/92. 2.7 Upgrading and Expansion of NPC's System Facilities. To meet the projected increases in power demands in its Luzon, Mindanao and Visayas grids, NPC has formulated a sizeable investment program (US$6,337 million equivalent over the period 1989-1995) to strengthen its system facilities. This program envisages construction of new transmission lines and substations, augmentation of transforming and reactive control capacity at existing substations and rehabilitation of transmission lines and substation equipment. For more efficient system operation, NPC plans to extend its communication facilities and enhance its management information system. A portion of NPC's investment program for the 1989-91 period is expected to be financed by an ADB's power sector loan currently under appraisal. The proposed project includes compo- nents (para. 2.4(c)) which would complement the ADB project. 2.8 Extension of NPC's Communication System. The Luzon-Visayas-Mindanao microwave link, which will establish an integrated communication network for NPC, will provide communication channels needed among the NPC offices in Luzon, the Visayas, and Mindanao. The channels will be used to transmit data (computer, telex, facsimile) and voice information between the regional offices and the head office. This will also allow communication between the different plants, substations and offices of NPC and will contribute to an efficient and effective operation and management of the corporation. The existing microwave system will be extended to the south from Kalayaan to Tiwi and to the north from La Trinidad to San Esteban. Power Line Carrier (PLC) equipment will be used to replace equipment which was installed and commis- sioned a decade ago and provide for expansion of PLC channels to plants/sub- stations that cannot be reached via microwave. The upgrading of the microwave system in Luzon will provide the communication channels needed for improved high voltage transmission line protection, supervisory control and data acqui- sition (SCADA) computer terminals of plants/substations, centralized sequence- of-event recording (SER), telephone, telex, facsimile and other communication facilities required in plants, substations and offices. Microwave and PLC equipment will be used to establish a communication network among the islands of Visayas. The communication channels will be used for telephone, telex and facsimile, transmission line protections, SCADA, centralized SER and computer terminals. 2.9 Enhancement of NPC's MIS. With the rapid power expansion program of the 70s, information systems did not evolve to match NPC's growth. In 1982, NPC engaged Computer Information Systems (a subsidiary of MERALCO) to formu- late its MIS plan. This plan envisaged development of 43 MIS software modules and installation of a total of 27 computers for major offices and plants. Currently, NPC has three Burroughs mainframes for commercial work and a VAX  - 14 - computer for engineering applications. While NPC has made substantial progress in the implementation of the Materials Management and Project Management Information systems, considerable work still needs to be done for the Financial Management, Maintenance Management and Administrative Information Systems. In order to complete the MIS System Plan, NPC needs to purch4se additional hardware and software including four mainframe computers and eight minicomputers, software, and consulting assistance for the Maintenance Management and Project Management systems. The four mainframes will serve as regional computers whereas the eight minicomputers will handle Maintenance and Materials Management systems at eight major power plants. 2.10 Consultancy Studies. Draft terms of reference for all the studies, including cost estimates, are presented in Annex 2.15. These drafts were discussed and confirmed at negotiations. (a) Establishing the feasibility of transmitting power from Leyte to Luzon. This study will determine the feasibility of transmittine large blocks of power (500-1200 MW) from the Tongonan Geothermal Project in Leyte to the Luzon grid over a distance of 460 km (23 km submarine). The study will consider a.c. versus d.c. transmission and establish the least cost technically feasible transmission option. The feasibility study carried out in Phase 1 will be followed by engineering studies and preparation of procurement documents in Phase 2. This study is estimated to require 70 man- months of consultancy services. (b) Tongonan Geothermal Power Plant Siting and Development. This study will determine the least cost technically feasible alternative for siting, sizing and interconnection of power plants in the vast geothermal steam complex at Tongonan. This study is estimated to require 30 man-months of consultancy services. (c) Establishing the feasibility of transmission interconnections to the Islands of Masbate, Mindoro, Marinduquie, Romblon, Catanduanes and Basilan. This study will determine the feasibility of transmitting electricity from the mainland grids to the nearby islands mentioned above, thus mitigating the need for expensive local diesel power generation on the islands. The feasibility study carried out under Phase 1 will be followed by engineering studies and preparation of procurement documents under Phase 2. This study is expected to require 70 man-months of consultancy services. (d) Developing cost estimating techniques for power system components and a computerized data base. This study will establish techniques for estimating the cost of major power system components such as thermal power plants, hydroelectric power plants, transmission lines, substations and civil works. The study which will be followed by preparation of a computerized data base and a cost estimated manual will assist NPC in major planning exercises for power system development. This study is expected to require 25 man-months of consultancy services.  - 15 - (e) Developing norms for the cost of power supply outages. This study will establish norms for the determination of cost of power supply outages in the various grids of PNC, which would assist NPC in developing its future generation expansion plans. This study is expected to require 25 man-months of consultancy services. (f) Establishing feasibility of the latest techniques in the construction of hydroelectric dams. This study will determine the applicability of latest techniques in dam construction in the Philippines with particular reference to the application of Roller Compacted Concrete. The study will review in detail the design of seven prospective hydroelectric dams and recommend the most cost-effective construction techniques. This study is expected to require 25 man-months of consultancy services. D. Project Costs 2.11 The total project cost is estimated at US$216.3 million excluding interest during construction, of which about US$147.5 million is expected to be in foreign exchange. A summary of project cost is shown below in Table 2.1 for the two agencies executing the project.  - 16 - Table 2.1s PROJECT COST ESTIMATE Foreign Cost Pescs Miltlon US$UMillton as X of Local Foreign Total Local Foreign Total Total PNOC-EDC Development of Bacon Manito I Steam Field 100 898 496 4.9 19.8 24.2 79.8 Delneaotlon-Cum-Appraseal 617 a85 970 B0.1 17.2 47.2 36.6 Total Boso CoOt 717 749 1.466 36.0 86.6 71.6 F1.O Physteal Contingoncy 72 75 147 3.5 8.7 7.2 51.4 Price Contingoney 180 64 220 1.2 0.8 2.1 40.0 Total Prolect Cost (PNOC-EOC) 925 908 8a3 89.7 41.0 80.7 60.8 NEC Bacon Manito Thermal Power Plant 258 955 1,213 12.6 46.6 59.2 78.7 Transmission System for Bacon Manito s0 170 230 2.9 8.8 11.2 74.1 Upgrading and Expansion of NPC'o System Facilities 168 656 824 8.2 82.0 40.2 79.8 Consultancy Services 18 82 78 0.8 8.0 8.8 78.9 Total Base Cost $02 1.843 2.845 24.5 09.9 114.4 78.9 Physical Contingencets (lOx) s0 184 284 2.6 6.9 11.4 78.6 Prie