India - Second Singrauli Thermal Power Project

Document of The World Bank FOR OFFICIAL USE ONLY bSwt No. 9162 PROJECT COMPLETION REPORT INDIA SECOND SINGRAULI THERMAL POWdER PROJECT (CREDIT 1027-IN) NOVEMBER 30, 1990 Transport and Energy Operations Division Country Department IV Asia Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their oMcial duties. Its contents may not otl arwise be disclosed without World Bank authorization.  Country Exchange Rates (Yearly Averages) Currency and (Abbreviation) Rupee (Rp) Year Rupees/US$ 1978 (Project Preappraisal Starts) 8.19 1979 (Project Appraisal) 8.13 1980 (Project Approved and Becomes Effective) 7.86 1981 8.66 1982 9.45 1983 10.10 1984 11.36 1985 12.37 1986 12.61 1987 12.96 1988 14.60 1989 (Project Completed) 15.00 Government of India Fiscal Year April 1 - March 31 Abbreviations AC Alternating Current CEA Central Electricity Authority CMD Chairman and Managing Director GOI Government of India IERR Internal Economic Rate of Return KfW Kreditanstalt fur Wiederaufbau NHPC National Hydro Power Corporation NTPC National Thermal Power Corporation PCR Project Completion Report PMI Power Management Institute SAR Staff Appraisal Report SEB State EleLtricity Board  TFf WORLO OgbX FOR OFFICIAL USE ONLY Wdvwnon. 0 C. a0433 U.S A Otfie of Director-amoral Opaetatlma Uvalueati November 30, 1990 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on India Second Singrauli Thermal Power Proiect (Credit l027-IN) Attached, for information, is a copy of a report entitled "Project Completion Report on India - Second Singrauli Thermal Power Project (Credit 1027- IN)" prepared by the Asia Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment The document ha a mtrgU datnbuton and may be tmmd by nm snm msh i tUN psvfwmame of their otkacS duum. It cont nu may not othetrw be dwine without Wul lAk XUtnoon.  FOR OFFICIAL USE ONLY INDIA SECOND SINGRAULI THERMAL POWER PROJECT (CREDIT 1027-IN) 2ROJECT COMPLETION REPORT TABLE OF CONTENTS Page No. PREFACE ........................................................... i EVALUATION SUMMARY ................................................ ii PART I: PROJECT REVIEW FROM BANK's PERSPECTIVE .1 Project Identity .1 Background. 1 Project Objectives. 1 Project Description. 1 Project Design and Organization. 2 Project Implementation. 3 Environment, Resettlement and Rehabilitation. 4 Project Results. 5 Project Sustainability ......................., 6 IDA Performance. 7 Borrower Performance ...................... 7 Project Relationship ................................... 8 Consulting Services .................................... 8 Procurement ............................................ 9 Project Documentation ana Data ......................... 9 PART III: STATISTICAL SUMMARY .................................... 10 ANt'EXES ........................................................... 22 1 Ex-post Internal Economic Rate of Return 2 Consolidated Income Statements 3 Sources and Applications of Funds 4 Balance Sheet This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  INDIA SECOND SINGRAULI THERMAL POWER PROJECT (CREDIT 1027-IN) PROJECT COMPLETION REPORT Preface This is the Project Completion Report (PCR) for the Second Singrauli Thermal Power Project in India, for which Credit 1027-IN in the amount of US$300 million was approved on May 22, 1980. The credit was closed on June 30, 1989, one year and three months behind schedule. It was fully disbursed and the last disbursement was on March 15, 1990. Cofinancing in the amount of DM 240 million was provided by Kreditanstalt fur Wiederaufbau (KfW) of Federal Republic of Germany. The PCR was jointly prepared by the Transport and Energy Operations Divisicns, Country Department IV (India) and the Energy Division, Technical Department, both of the Asia Regional Office (Preface, Evaluation Summary, Part I and III). The Borrower did not prepare Part II as requested. Preparation of this PCR was started by the Borrower during the Association's Supervision Mission in October, 1989. Subsequently, based on the revised guidelines for PCRs, a fresh draft was begun on arrival of the Association's final Supervision Mission in February 1990, and is based, inter alia, on the Staff Appraisal Report (No. 2745b-IN), the Credit and Project Agreements, supervision reports, correspondence between IDA and the Borrower and internal IDA memoranda.  - ii - INDIA SECOND SINGRAULI THERMAL POWER PROJECT (CREDIT 1027-IN) PROJECT COMPLETION REPORT Evaluation Summary Objectives The two main objectives of the project were: (i) to provide the National Thermal Power Corporation (NTPC) assistance to construct two 200 MW and two 500 MW coal fired thermal power generating units as the second stage of NTPC's Singrauli Thermal Power Project to mitigate power shortages in the Northern Region Interconnected system of India and (ii) to assist the Government of India (GOI) in achieving its objective of further advancing the regional and national integration of the power subsector (Part I, paras. 2 and 3). Implementation Experience NTPC successfully implement.d the project. The first 200 MW unit (Unit No. 4) was commissioned three months behind schedule and the second 200 MW unit (Unit No. 5) was commissioned as scheduled. The two 500 MW units which were NTPC's first pithead coal fired 500 MW units were commissioned 10 months (Unit No. 6) and 9 months (Unit No. 7) behind schedule after overcoming many difficulties (Part I, paras. 11 and 14). Results The project fully achieved its main objectives through successful completion of two 200 MW and two 500 MW units of the second stage of Singrauli station and associated 400 kV transmission lines. Following this completion, and with the addition of the three 200 MW units built within the first stage, the Singrauli fhermal Station became the first of the 2,000 MW class coal K fired thermal stations of NTPC and, at that time, the largest power station in the country. NTPC's financial rate of return on historically valued net fixed assets for the last four years was between 14? and 172 against the covenanted rate of return of 9.5? for the period FY89 and beyond. The economic rate of return of the project was about 20? against the estimated figure of 102 (Part I, paras. 18, 22 and 31). Sustainability The operational efficieuicy of NTPC in this power station as well as in other NTPC plants is good in spite of the continuing high growth rate of the utility, and thus contributes to sustaining the benefits from the projects NTPC carries out (Part I, paras. 23 to 26).  - iii - Findings and Lessons Learned Major finding was as follows: (a) The project management and construction management of NTPC executed the project very competently and were "forced," through actual experience, to construct the first 2,000 MW coal fired plant, including two 500 MW units, which were being installed in India for the first time. (Part I, para. 29). Major lessons learned were as follows: (a) To improve implementation performance and consequently to accelerate disbursements, key actions should be taken up- front. In the case of this project, the project consultants should 2-.ve been requested to be appointed as early as possible, id.t-lly before negotiations. Similarly, by the time the credit was presented to the Board, the bid documents should have been ready. (Part I, para. 13). (b) The Association could have been more forceful in seeking NTPC's compliance with the receivables covenant, a critical element to ensure NTPC's liquidity. (Part I, para 31). (c) Similarly, the Association could have been more convincing in its efforts to improve the revenue covenant. (Part I, para 31). (d) The Association should have acted earlier in identifying remedies to alleviate the environmental and resettlement problems and having them implemented by the authorities, and in enhancing NTPC's ability to address adequately environmental and resettlement matters. In this context, the implementation of the Environmental Action Plan agreed within the proposed Regional Power Systems Project should be monitored by the Bank very closely (Part I, paras. 15 to 17).  INDIA SECOND SINGRAULI THERMAL POWER PROJECT (CREDIT 1027-IN) PROJECT COMPLETION REPORT PART I: PROJECT REVIEW FRUM BANK'S PERSPECTIVE Project Identity Name Second Singrauli Thermal Power Project Credit Number : 1027-IN RVP Unit Asia Region Country : India Sector Energy Subsector : Power Background 1. Power shortages of the 1970s and the adverse effect these were having on the productive sectors of the economy prompted the Government of India (GOI) to intensify its efforts to balance the demand and supply of electricity. The strategy of the GOI was to supplement efforts of State Electricity Boards (SEBs) in increasing installed capacity and the establishment of high voltage transmission lines. Emphasis was laid in the power subsector in: (a) accelerating the development of the hydropower potential and large coal fired power plants at both pithead locations and in the proximity of load centers; (b) improving the efficiency of thermal power plants and reducing losses in the transmission and distributionl networks; (c) expanding the rural electrification program; and (d) strengthening the organizational and management capabilities of the SEBs. In 1974 GOI decided to proceed with the construction of the first stage of four large thermal power stations of 600 MW each at Singrauli, Korba, Ramagundam and Farakka, located near coal fields and supplying bulk power to the beneficiaries through interconnected 400 kV transmission systems. GOI established in 1975 two power generating companies, the National Thermal Power Corporation (NTPC) and the National Hydro Power Corporation (NHPC) to construct and operate large thermal and hydro power stations and associated transmission systems. The feasibility study of the Singrauli project was prepared by NTPC in 1978 and the project appraisal was made by the Association in 1979. Project Objectives 2. The primary objectives of the project were to: (a) provide NTPC with assistance needed to assume its envisaged role, including the mitigation of power shortages in the Northern Region of India; and (b) assist GOI in achieving its objective of further advancing the regional and ultimately the national integration of the power subsector. Project Description 3. The Second Singrauli Thermal Power Project (Credit 1027-IN) formed part of NTPC's second stage thermal power aevelopment located on the fringe of the Rihand Reservoir close to the Singrauli coal field deposits in the State of Uttar Pradesh and consisted of the installation of two 200 MW and two 500  - 2 - MW mine-mouth thermal power generating units and associated transmission facilities, including the followirg components: (a) Two 700 tonnes/hour boilers and two 200 MW turbogenerating units complete with all a.xiliaries and ancillary electrical and mechanical equipment including switchyard; and (b) Tvo 1,700 tonnes/hour boilers and two 500 MW turbogenerating units complete with all auxiliaries and ancillary electrical and mechanical equipment including switchyard; (c) 400 kV Alternating Current (AC) Transmission System consisting of 1,826 kms of lines 1/ and complete with all auxiliaries and ancillary electrical and mechanical equipment including switchyard. Acquisition of steel for structural works, cement and reinforcement steel under the scope of NTPC's ongoing other projects, was subsequently included under the scope of this project in 1986. Project Design and Organization 4. As in the case of the first stage, the expansion phase of Singrauli Development comprised a number of major works (including NTPC's first two 500 MW units) and required careful coordination to ensure efficient progress. Much of the detailed power station engineering and design work had been carried out for the first stage. NTPC had already acquired adequate experience in the area of design and engineering of 200 MW units, especially from the first stage of the Singrauli power plant, and therefore there was no need to appoint consultants for the 200 MW units. As for coal fired 500 MW units, which were being installed for the first time in India, a consultant was employed by NTPC to assist in the design, the preparation of specifications and bidding documents, the evaluation of bids and the project management for part of the project covering the two 500 MW units. 5. Under the first Singrauli project, GOI agreed to take necessary steps to make available adequate coal supplies for the 2,000 MW power plant. Coal supply has so far not hindered the operation of all units. 6. The project was prepared and timed by the Association in a manner to enable the Borrower to reduce the gap between the demand and supply of power in the Northern Region Interconnected System, as well as to further strengthen the institutional developmient of NTPC. I/ 400 kV transmission lines consisted of the following circuits: (Circuit km) Singrauli - Lucknow 402 (470) Lucknow - Moradabad 322 (330) Moradabad - Muradnagar 132 (150) Muradnagar - Panipat 36 ( 95) Singrauli - Kanpur II 384 (455) Kanpur - Agra-Jaipur 500 (475) Total: 1,826 (1,975) Figures in parentheses show estimation at the time of appraisal.  7. At the time of appraisal, NTrC had ad3pted a two-tier organizational structure--one at the central/corporate~