Bolivia - La Paz private power technical assistance

World Bank/UNDP/Bilateral Aid Energy Sector Management Assistance Program Activity Completion Report No. i1/go Country: BorImA Activity: U PAZ PRIVATE POWER TECICL ASSISTANCE FEBRUARY 1990 Energy Efficiency and Strategy Unit Industry ,and Energy Department Report of the World Bank/UNDP/Blateral Aid Enegy Sector Masiagement Assistance Program This document has a restricted distribution. Its contents may not be disclosed without authorization from the Government, the World Bank or the UNDF. ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM PURPOSE The World Bank/UNDP/Bilateral Aid Energy Sector Management Assistance Program (ESMAP) was launched in 1983 to complement the Energy Assessme.it Program which had been established three years earlier. The Assessment Program was designed to identify the most serious energy problems facing some 70 developing countries and to propose remedial action. ESMAP was conceived, in part, as a preinvestment facility to help implement recommendations made during the course of assessment. Today ESMAP is carrying out preinvestment and prefeasibility activities in about 60 countries and is providing a wide range of institutional and policy advice. The program plays a significant role in the overall international effort to provide technical assistance to the energy sector of developing countries. It attempts to strengthen the impact of bilateral and multilateral resources and private sector investment. The findings and recommendations emerging from ESMAP country activities provide governments, donors, and potential investors with the Information needed to identify economically and environmentally sound energy projects and to accelerate their preparation and implementation. ESMAP's policy and research work analyzing cross-country trends and issues in specific energy subsectors make an important contribution In highlighting critical problems and suggesting solutions. ESMAP's operational activities are managed by three units within the Energy Strategy Management and Assessment Division of the industry and Energy Department at the World Bank, - The Energy Efficiency and Strategy Unit engages in energy assessments addressing Institutional, financial, and policy issues, design of sector strategies, the strengthening of energy sector enterprises and sector management, the defining of investment programs, efficiency Improvements in energy supply, and energy use, training and research. - The Household and Renewable Energy Unit addresses technical, economic, financial, institutional and policy issues in the areas of energy use by urban and rural households and small industries, and includes traditional and modern fuel supplies, prefeasibility studies, pilot activities, technology assessments, seminars and workshops, and policy and research work. - The Natural Gas Development Unit addresses gas issues and promotes the development and use of natural gas in developing countries through preinvestment work, formulating natural gas development and related environmental strategies, and research. FUNDING The ESMAP Program is a major International effort supported by the World Bank, the United Nations Development Programme, and Bilateral Aid from a number of countries including Australia, Belgium, Canada, Denmark, Finland, France, Iceland, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Sweden, Switzerland, the United Kingdom, and the United States. FURTHER INFOR4ATION For further information or copies of the completed ESMAP reports listed at the end of this document, contact: Energy Strategy Management OR Division for Global and Interregional and Assessment Division Programmes Industry and Energy Department United Nations Development Programme The World Bank One United Nations Plaza 1818 H Street N.W. New York, NY 10017 Washington, D.C. USA 20453 USA BOLIVA IA PAZ PRIVATE POWER TECHNICAL ASSISTANCE FEBRUARY 1990 Energy Efficiency and Strategy Unit Industry and Energy Department .,t• &.”寫里審喜畢’i蓄 嗡 糊挪’！〕‘纖’!& 抑 ABBREVIATIONS GWh Gigawatt hour kW Kilowatt kWh Kilowatt hour C.U. Cos4 insuranci , fi*k IDC bona during construction MCF Thousand cubic feet MW megawatt WA Kilovok-amperes MWh Megawatt hour TWh Terawatt hour v Vohs Qmma Currency Unit: BoUvIano (13s) Excbange Rate: 2.57 Bs/US$ (May, 1989) POREWORD The following report analyzes the issues surrounding the possible renewal of a distribution concession contract between the Municipality of La Paz, Bolivia, and CompafMa Boliviana de Energia Eldctrica (COBEE) and discusses options for the institutional strengthening of the power sector. The report was prepared by the joint UNDP/World Bank/Bilateral Aid Energy Sector Management Assistance Program (ESMAP) and is based upon the findings of a mission that visited Bolivia in May, 1989. 1 The mission members express their appreciation for the cooperation and hospitality displayed by the Government of Bolivia, the Municipal Authorities of La Paz, COBEE, ENDE, UNDP and the bilateral donor agencies. Funding for the report was provided by the United Kingdom through a bilateral contribution to ESMAP, and supplemented by an in-kind contribution from the World Bank. * The mission members were Messrs. Jayme Porto Carreiro, Energy Planner, ESMAP and Fernando Lecaros, consultant, who were also responsible for preparing the report. TABLE OF CONTENT L SUMMARY AND RECOMMENDATIONS 1 IL THE POWER SECIOR Macroeconomic Environment 10 The Power System 11 Institutional Structure 12 Legal Framework 13 Tals 14 I. COBEB Background 16 The Market for Electricity in La Paz 16 Quality of Service 18 Investment Requirements 19 COBEEs Finances 20 IV. ISSUES, OPTIONS AND AGENDA FOR ACTION Objectives 25 Issues 26 Options 29 Agenda for Action 38 V. THE CONCESSION CONTRACT The 1950 Contract between the Mmicipality of La Paz and Bolivian Power Company (COBEE) 44 Frame of Reference for a New Contract 45 Contract Recommendations 48 TABLES Table 1: Total Electrical Installed Capacity 12 Table 2: Investment Requirements in Distribr on 19 Table 3: Generation and Transmission Investments 20 Table 4: Investment and Financing Requirements 22 Table 5: Objectives and Proposed Approaches 38 Table 6: Proposed Actions and Responsible Agencies 41 Table 7: Action Plan - Cost Estimates 42 Table 8: Action Plan - Schedule 43 Table 9: La Paz - Electricity Consumption 52 Table 10: Distribution of Residential Users per Average Consumption 52 Table 11: COBEE - Tariff Structure 54 Table 12: COBEE - Average Tariff by Consumer Class 56 Table 13: Long Run Marginal Costs 56 Table 14: Long Run Marginal Costs per Consumer Class 57 ANNEXES Annex 1: The Market for Electricity in La Paz 51 Annex 2: Marginal Costs and Tariffs 54 Annex 3: Organization of an Electricity Control Unit in the Municipality of La Paz 58 Annex 4: Concession Contract - Main Body 60 Annex 5: Concession Contract - Regulations (7 L SUMMARY AND RECOMMENDMIONS 1. The concession contract of Compagla Boliviana de Energfa Eldetdca (COBEE) for power generation and transmission in Bolivia and distribution of electricity in the Municipality of La Paz expires in September, 1990. Therefore, the Government and the Municipality should either extend COBEE's concession or, in line with Governmens policy of increasing private sector participation in the economy, replace COBEE by another qualified private company. 2. COBEE is part of a US corporation (Bolivian Power Co. Ltd-BPCo). It has operated in Bolivia since 1925 and has operated as both a generation and a distribution company. Its generation assets in the La Paz region consist mainly of a chain of hydro plants totalling 114 MW in the Zongo valley. As a distribution company in the La Paz area, it serves the city itself and a number of smaller municipalities. 3. The granting of licenses for generation and transmission is a responsibility of the Ministry of Energy and Hydrocarbons (MEH), while licensing for distribution is a responsibility of the municipalities. These licensing processes are carried out independently. Consequently, two different problems arise in connection with the expiration of COBEE's contract: on the one hand, there is the question of legalizing the continued use of its hydro plants, and on the other, there is the problem of formalizing its concession as an electricity distributor in La Paz. Henceforth, COBEEs functions will be distinguished from each other by referring, when necessary, to "COBEE- Generation" or COBEE-Distribution". 4. The original objective of this project was to assist the Municipality in preparing a concession contract that would stimulate and guarantee that COBEE would operate efficiently and invest economically. During field work in La Pa. it became apparent that a good contract was not enough to achieve the quality of service and efficiency goals pursued by the Municipality. Although there is ample scope for improving the quality and efficiency of the electricity distribution system in La Paz, many of the issues and measures identified are more concerned with building conditions for an effective interaction between the different organizations involved in the power sector than with the design of a rigid contract laden with impositions and penalties. A 2 good contract, by itself, does not guarantee a good service. If the preconditions for its fulfillment are not instituted, it will be no more than a statement of intents that will not contribute to the achievement of the Municipality's objectives. Therefore, the scope of the project was broadened to investigate the issues and requirements to accomplish the goals mentioned beforehand. 5. The concession contract with the Municipality is a secondary issue because the major control instruments such as priing policies and electricity service regulations are outside the jurisdiction of the Municipality. Notwithstanding, it is worthwhile noting that the contract does provide a legal basis for the concessionaire's operation in the city, by establishing and regulating rights related to the use of public spaces and, in general, by integrating the electric utility into the process of planning and supplying public services to La Paz. 6. Having taken into account these considerations, it was decided that the scope of the report should encompass the role of COBEE within the power sector, the coLpany's institutional future, and the role of the public agencies involved in planning and regulation. In order to accomplish this, the report is structured as follows: - Description of the power sector and COBEE - Identification of issues - Structuring of options - Recommendations and an agenda for action Objectives of the Municipality and of the Distribution Company 7. The objectives of the Municipality and those of the distribution company were established in order to identify potential areas of conflict and common ground for cooperation. The Municipality's objectives are (a) to formalize the distribution concession in a clear and transparent manner, and (b) to sustain the quality of service at the current level, while keeping the moderate tariff (US4 2.9/kWh) paid by residential consumers in La Paz, which is the lowest in the country. The preoccupation of the municipal authorities with the transparency of the negotiations is caused by political pressure against COBEE's status as a foreign company. Although it is recognized that COBEE is well run and that tariffs are relatively low, some constituencies within the city of La Paz believe public services should be nationalized as a matter of principle and favor the creation of either a municipal or a mixed-capital company. The 3 objectives of the distribution concessionaire are an adequate rate of return on its investments and a satisfactory relationship with both its consumers and the municipal authorities. 8. Set within a broader perspective, the objectives of the Municipality are to assure that consumers enjoy a reliable power supply and a wide coverage at the least possible cost compatible with the technical characteristics of the service. 9. The reconciliation of these objectives should be pursued not only through legal documents, such as contracts and regulations, but also through institutional changes in the Municipality and in the Ministry of Energy and Hydrocarbons to improve the communication and coordination between the Government and the -tility, thereby creating favorable conditions for accomplishing the efficiency and reliability goals. Man rsues 10. For analysis purposes, overall power sector objectives were classified as: - EffLcn objecties for providing minimum cost service at the supply level and encouraging the economic use of electricity at the demand level. - Quality of service objectives for assuring the provision of electricity under acceptable conditions of continuity, voltage regulation and frequency controL - Distribution obiectives which encompass the allocation of the surplus generated by sales of electricity (as further explained in par. 13) according to national priorities as well as the addressing of subsidization issues. 4 11.issu that were identified in the analysis were: - The need for the power sector to develop a bulk-level economic dispatch supported by a commercial system that will encourage a least-cost operation. - The need to define priorities to be followed by COBEE when designing the expansion of the distribution system. - The need for the distribution concessionaire in La Paz to operate and invest with a perspective of loAg term stability and, consequently, the need to encourage an institutional strengthening of COBEE. * The need for developing a comprehensive tariff policy that will encourage users to make the best use of electricity and provide incentives for investment and economic operation at the supply level. - The implementation of corrective measures for the purpose of reducing losses and theft. - The encouragement of institutional cooperation in order to assure coherence between urban planning in La Paz and electricity supply programs. - The addressing of the public lighting problem in La Paz where there is a duplication of functions between the concessionaire and the Municipality. 12. Ouality of service issues are: - The need to embark on a rehabilitation program at the distribution level due to the deterioration of service standards in recent years. - The need for irtitutionalizing means for setting and monitoring service standards, diagnosing operational problems and encouraging remedial actions. 5 - The design of regulations for providing customer service standards regarding administrative responsiveness to factors such as connection requests, the correction of billing errors and the reaction to complaints. 1. Distribution issues concern: - The allocation of economic rents produced by existing inframarginal generation resources owned by COBEE. This issue arises because the average generation cost to COBEE is significantly below the power system's long run marginal cost. This is due to the use of a very efficient hydro resource, coupled with the fact that its plants have already been considerably depredated. - The need for establishing an unambiguous subsidization policy for low income groups; in the case of Bolivia full marginal cost pricing (which would ensure demand efficency by providing the correct economic price signal to users) could lead to large tariff increases which would unduly burden poor consumers. If favoring these groups is deemed desirable from a social standpoint, the question of subsidy targets and financially feasible subsidy levels should be addressed explicitly. Qptom (Chapter 4) 14. Proposals for addressing the issues outlined above were organized according to four main lines: - The development of a tariff policy oriented towards seeking solutions to efficiency- related questions having to do with the provision of rational price signals both at the bulk and final consumption stages; and the setting, if necessary, of an explicit subsidization policy. - An oranization mroach that would tackle - The bulk-level interchange aspect 6 - The strengthening of COBEE as it relates to the development of a positive environment for continuing its operations + - The addressing of quality control problems and service standards by identfying institudonal measures to be taken The problem of integrating electricity planning in La Paz into the urban planning process -Lqle at action oriented towards - Updating electricity service regulations - Providing a legal basis for the solution adopted for bulk-level interchange - Redefining responsibilities between MEH, DINE and local governments regarding the provision of electricity - Defining the terms of the COBEE generation concession - Defining the terms of the Municipality/ concessionaire distribution contract - An..=perati a for taking specific action concerning the subjects of control of losses, distribution system rehabilitation, and public lighting. Anda for Action (Chapter 4) 15. The approaches outlined above were translated into the following specific actions which cover a 24-month time period: SOrganiing an electricity control section within the Municipality's planning office in order to act as liaison with the distribution company, to monitor service conditions, and to ensure that distribution investments are planned in accordance with urban development requirements. Granting a genation concession to COBEE. Finalizing the distribution contract with COBE in order for the latter to proceed with needed short term investments. 7 - Commissioning of a tariff study by DiNE in order to design a comprehensive pricing policy for electricity and to address the imsues of efficiency (including the bulk- level dispatch problem), rent allocation and subsidization. - Conducting an analysis, to be commissioned by MEH, for studying the feasibility of mobilizing local resources in order to incorporate Bolivian private capital within COBEE. The objective of this operation would be to strengthen COBEE institutionally by reducing its political vulnerability as a foreign corporation. - Defining the priorities on the design of the expansion of the distribution system by MEH. - Commissioning and supervision by COBEE of a Distribution Master Plan, including diagnosing the state of the network, designing a short term rehabilitation plan for quality of service enhancements and the reduction of losses, and providing a 5- year investment programme within La Paz. - Executing a joint action plan between COBEE and the Municipality for implementing short term recommendations derived from the first phase of the Distribution Master Plan regarding system rehabilitation and control of losses. - Commissioning by DINE of a project oriented towards updating service regulations reviewing: (a) the Electricity Code, in accordance with tariff study recommendations; (b) the set of rules and practices governing the terms and conditions of service, such as extension of the network (defining who is responsible for paying for the extension of new lines and on what conditions), fees for connections, types of service contract between COBEE and consumers, and obligation to supply electricity. 16. Resources necessary for implementing the recommendations were estimated to be in the order of US$470 000, broken down as follows: 8 Tariff Study US$270 000 Resource Mobilzation Study US$ 45 000 Distribution Master Plan US$100 000 Electricity Regulations Updating US$ 20 000 Municipality Electricity Service (one power engineer - 2 man.years) US$ 35 000 The Distribution Concession Contract (Chapter 5) 17. Despite its limited impact, dhe distribution contract is necessary for formalizing COBEE's operations within La Paz. Accordingly, an outline of the contract was designed which incorporates recommendations relative to its structure and contents. Stipulations contained in the main body of the contract consist of: - Conditions and procedures for rescinding the contract. - Concessionaire obligations relative to the provision of services, investments, cooperation with municipal authorities regarding information disclosure, and compliance with the Electricity Code. - Concessionaire rights relative to the sale of electricity, the use of public spaces, and the regulation of private property developments, if such action is deemed necessary for technical reasons. - Municipality rights relative to demanding the concessionake's cooperation with other public services and free access to all technical and statistical information possessed by the concessionaire. - Municipality responsiblities regarding the protection of the concessionaire's assets, the regulation of the use of public spaces in order to facilitate the development of the electricity distribution infrastructure, and the cooperation for eliminating theft and reducing losses. - Applicable municipal taxes. 9 - The use of municipal property. - The conditions for transferring the contract to third parties and arbitration conditions in the case of discrepancies. 18 A complementary section of the contract was designed as a regulatory element that could be changed according to circumstantial conditions. This regulatory element would address questions relative to service standards, the monitoring of service quality, the planning of electricity distribution, including definition of priorities for investment, and the commitment of COBEE to commissioning a Distribution Master Plan. 19. The recommendations relative to the contract were delivered and discussed with the municipal authorities who concurred with the provisions and agreed to develop the outlined sections into a final version. 20. The legal aspects of the contract are outside the scope of this ESMAP Technical Assistance, but should be carefully examined. Therefore, the Municipality should contract a legal consultant to review all the legal aspects and implications of the concession contract. 10 IL THE POWER SEC1OR Macroeconomic Envyoment 21. The Bolivian economy suffered a brutal crisis in the first half of the 1980's. During this period GNP fell at an annual average rate of 2.5% and inflation escalated to hyperinflation, reaching a rate of more than 10,000 % p.a. in 1985. The immediate cause of this depression was a sudden reduction in the inflow of foreign capital combined with an unfortunate sequence of natural disasters. However, poor investments financed by external capital borrowed in the 1970's, a large and inefficient public sector, poor economic management and extensive and harmful government intervention in the economy contributed decisively to the economic chaos. 22. In August, 1985, the present G!vernmet took office and immediately imposed an austere economic stabilization program, which quicIdy brought inflation under control; in 1987 inflation was down to 11% and in 1988 it was 22%, a low figure by Latin American standards. However, Bolivia continues to, face serious economic problems largely due to a dependency on exports of natural gas and minerals (mainly tin and silver) as sources of foreign exchange to service its relatively huge external debt. In 1988 these commodities represented 83% of total merchandize exports. Terms of trade declined 46% between 1985 and 1988 due to a depression in the international prices of tin and hydrocarbons, thereby increasing the current account deficit. For the first time since 1981, GDP grew in 1987 and 1988, but not enough to compensate for the increase in population and consequently per capita income continued to fall. 23. The future of Bolivia's economy will still be constrained by a large external debt, the concentration of exports on a small number of traditional products, low domestic savings, and limited managerial resoures in the public sector. Nevertheless, the present Government has achieved remarkable progress with its economic reforms. If the next Government, which takes office in August, 1989, continues to adopt sou=d economic policies, manages to reschedule the debt service payments and obtains support from international donors, it may be possible to -revert 11 the decline in GNP per capita (US$ 580 in 1987) and achieve sustained economic growth, in the order of 3.8% p.a. The Power Sytem 24. In 1988, the installed generation capacity in Bolivia was 605 MW. Hydro plants represented 50% of total capacity and generated more than 60% of the 1.8 TWh of electricity produced in that year. Per capita consumption was 250 kWh/p.a., reflecting the low income level, low electricity intensity of GDP, and the fact that only 30% of residential consumers have electricity service. 25. There are two bulk generation utilities in the country* the national power company, ENDE (Empresa Nacional de Electricidad), and COBEE-Generation. ENDE is headquartered in Cochabamba and is in charge of generation planning and operations at the bulk level. The La Paz division of COBEE, in addition to distributing electricity, operates its generation plants and therefore encompasses what for the sake of convenience has been referred to in this report as COBEE-Generation. ENDE and COBEE are interconnected at 115 kV. ENDE supplies COBEE with power to cover the excess of demand over peak load, while COBEE supplies energy to ENDE during off-peak periods. The La Paz division has a peak demand of around 128 MW and an installed capacity in the order of 110 MW. 26. COBEE is an important part of the power system. COBEE-Generation had, in 1988, a total installed capacity of 140 MW, representing 46% of the country's hydro capacity and 32% of total electricity generation. COBEE-Distribution is the largest distribution company, having sold in this same year 0.46 TWh, serving 32% of the country's residential consumers. 27. The interconnected system supplies 85% of total demand and it links the main load centers (La Paz in the north of the country, Cochabamba and Oruro in the center, Potosi and Sucre in the south, and Santa Cruz in the east) to the two bulk generators, ENDE and COBEE- Generation. There are several small isolated systems covering small cities and microsystems spread out over the country with capacities ranging from 20 kW to 1000 kW. 28. Table 1 shows the growth of installed capacity in Bolivia during the last twenty years. Between 1968 and 1988 installed capacity grew at an average annual rate of 5.1%, while 12 per capita consunption increased from 150 kWh/p.a. in 1968 to 250 kWh/p.a. in 1988, or 2.6% p.a., on average. TIb.te TOTAL ELECTRICAL INSTALLED CAPACITY (NW) Total Nydro Share (M) 1968 222 33 1978 428 44 198 605 50 IMusa NEN 29. The "Plan Nacioal de Electrificaci6n 1990-20100, completed by ENEL (Italy) and ENDE in May, 1989, assumes a moderate economic recovery and forecasts a 6% annual increase in demand, which would require the installation of an additional 1000 MW during this period. According to this study the least cost expansion alternative includes a mix of hydro plants and gas turbines. Five hydro plants would add 270 MW to generation capacity and the remaining units would all consist of low cost single cycle gas turbines of 20 MW, 40 MW, and 80 MW, fueled by indigenous natural gas. Although Bolivia has tapped only a small fraction of its hydro potential, abundant and inexpensive natural gas is available at an opportunity cost estimated at US$ 1/MCF. This combined with excess capacity in the domestic pipe-line network, makes the installation of low cost gas turbines near the large cities more attractive than most of the hydro projects envisaged in the study. 30. The Plan assumes that COBEE-Generation would continue to operate in Bolivia and would build three hydro plants along the Zongo River (Zongo I - 20.4 MW; Zongo II - 13 MW; and Huaji - 27.7 MW) Iustitutional Structure 31. The Bolivian power sector is regulated by the Ministry of Energy and Hydrocarbons (MEH) through its electrical sector directorate (Direcei6n Nacional de Electricidad -DINE). DINE's responsibilities include authorizing electricity rates for all companies operating in the power sector. 13 32. The Municipalities' Law, discussed in the next section, invests municipal authorities with the power to subscribe concession contracts for electricity distribution subject to the approval of the city councils. Lea Frame_rk 33. Two main sources of legislation form the legal frame of reference for a future concession contract: the Municipalities Law and the Electricity Code. The Municipalities Law (January, 1985) defines the areas of competence of the municipal governments and the city councils. Some of the responsibilities listed within the law and pertinent to the contract are (i) the provision of basic infrastructure, (i) the provision and regulation of public services and (if) the provision and maintenance of public lighting. The city councils are responsible for approving contracts submitted by the Mayor, including those defined as service concessions; they are also responsible for approving urban projects and plans. A specific chapter of the law deals with Municipal con- tracts and concessions. It specifies that the rendering of public services through ways other than those of the municipal government should necessarily be performed by means of a concession to be awarded through a public bidding process. It also stipulates that concession contracts should transfer, free of cost to the Municipality, all assets once the concession expires. In a first draft of the contract made by DINE, this clause was waived by the parties; however, given that it is specified by a law, there is uncertainty as to whether such a clause would be legally binding. The major obstacle to undertaking the public bidding process lies in that COBEE already has a major infrastructure for distribution and therefore any third party would necessarily have to negotiate with COBEE for its acquisition. Consequently, it would appear that the only viable alternatives would be to either buy out COBEE or renew the contract. However, the management of the dis- tribution system, were COBEE bought out, could be the object of a competitive bidding process. 34. The Electricity Code contains detailed regulations concerning the following aspects of concession contracts: - The awarding of concessions or permits. * Rights of Way. - Concession Assets. 14 - Conditions of sale for electricity and tadffs. - Taxes. * Penalties. The Code contains a number of detailed presciptions concendng the content of concession contracts and the rights and obligations of the concessionaire. A limit of 40 years is set as the maximum concession period. There do not appear to be any incompatibilities within the code relative to the concession contract with the Municipality. 35. Taziffs in Bolivia are regulated by DINE using a traditional financial approach that allows recouping costs plus a 9% rate of return on the rate base. 36. The present tariff structure and levels for COBEE are analyzed in Annex 2. The main problem identified in this area, when comparing marginal costs to present tariff levels, is that the residential tariff level is too low. It can barely cover the marginal distribution cost. The fact that the company accepts operating under such a condition is because it can achieve its desired rate of return through (a) higher general and industrial tariffs and (b) a low cost generation infrastructure which leads to average costs that are substantially below marginal cost. Nevertheless, low residential tariffs in La Paz are an incentive to inefficient use of electricity in households, thus inducing distortions in the pattern of energy consumption. 37. If the power companies operated within a perfectly competitive framework marginal costs would prevail. However, a blank recommendation of implementing such levels would not be necessarily desirable: on the one hand, it would induce a correct use of electricity on the demand side but, on the other hand, it would generate large rents for COBEE with its existing low cost generating infrastructur-. Syphoning the natural resource rents from COBEE could be performed either through taxes or by creating a fictitious sale/resale point such that the rents could be directed to the consumers or to the public sector. & &,‘·―[ · , · ，…，뱁’, . . . & 16 HIs COBEE 39. COBWs operations in Bolivia date from 192S when it acquired the facilities of a former company (General Enterprise Ltd.). Its fim contract for supplying electricity was subscribed Mi December, 1931 with the La Paz Municipality. This contract ended in December, 19SO and the present contract, covering a period of 40 years, was signed in October, 19SO; it will expire in October, 1990. 40. COBER also operates in the Oruro district where it distributes electricity through a contract between the Munkipality and ELFEO, a subsidiary The contract with Oruro has no term and can be abrogated on two-year notim ne_ Market f9I MCCWft in La Paz 41. The city of La Paz is located on the embanlanents of the La Paz river. It possesses a hilly topography with steep grades extending from a central canyon. Urban development has teLen place on the sides of the canyon as well, as on a broad plateau which was recently separated from the Municipality. Future areas of extensive urban development are scarce and growth will, proceed more through increased density. 42. 7be present population of the city is estimated at around IS million; municipal authorities project a population of 1.06 million by 1999. Ihe corresponding growth rate estimate of 3.S% per year appears to be too high. Although Bolivia as a whole has high population growth (around 2.8% per annun) and the predominsuitly rural population a migrating to the cities. it is not chw that ffiq will setfle in La Paz with its harsh climatic conditions, where opportunities tend to be concentrated in commercial activities and where the building of dwellings is difficult due to a lack of land suitable for development. Furthermore, growth in the last yew has been spurred by the migration of unemployed mining workers who were laid off due to the depressim of prices in the metals market Da the last year the situation has 17 reversed itself, mines are reopening, and the city could receive a smaller influx of immigrants. . Consequently, it is unlikely that the population of La Paz will grow excessively or that it will develop megalopolis dilemmas. Its urban problems are likely to remain within manageable proportions. 43. As mentioned beforehand, the topographical features of La Paz mark a tendency towards creating a relatively dense population center as compared, for example, to the low density developments on the plateau where the suburban Municipality of El Alto is located. The scarcity of space as well as the problems associated with transportation along steep grades create a predominantly residential and commercial, as opposed to industrial, market. 44. COBEE's market statistics confirm these facts: the city of La Paz has at present 92,000 residential users (85% of the total number of clients), 16,500 general service users (15%) and only 386 industrial consumers. In relation to consumption, residential sales account for 60% of the market with the remaining percentage being 24% for general service (mostly commercial), 13% industrial and mining, and 3% public lighting. In contrast, the Municipality of El Alto, located on the plateau above La Paz, has 47% in industrial sales due to the favorable conditions for locating industrial concerns. 45. Domestic sales are concentrated in the 280 kWh/month range (56%) with 44% consuming an average of 80-100 kWh. Less than 1% has a consumption of over 1000 kWh. 46. Electricity service coverage in La Paz is uncertain due to a large number of illegal connections. ENDE's estimates are in the order of 57% which appear to be exceedingly low. As shown in Annex 1, real coverage, including illegal domestic users, should be in the order of 90- 95%. However, this implies that as many as 39,000 dwellings enjoy electricity through illegal connections. 47. The relatively high loss figures bear this out: losses in the La Paz division of COBEE have risen from around 13% of available energy in the early 1980's to 19% in 1987 (18% 18 in 1988). Although an increase in physical losses would appear to be inevitable due to the low level of investment, theft seems to be the main cause of this increase. 48. Generation facilities in the La Paz division consist of 9 hydroelectric plants with an installed capacity of 114 MW. Most of these (109 MW) are cascaded along the Zongo river valley. The Oruro division has an installed capacity of 19 MW in hydro plants. 49. The La Paz division showed a customer peak of 127 MW in 1988. The difference between demand and generation was covered by a 115 kV interconnection with ENDE. The transfers between COBEE and ENDE are regulated by an interconnection agreement of 12 May 1986 which expires in September, 1990. It contains the following specifications: - Contracted Capacity of 10 MW (20 MW at present) - Reserve Cipacity of 13.5 MW - Commercial Conditions: Fixed charge of US$ 35 000 per month kW charges for Reserve Capacity (US$ 6.25/kW.month), Contracted Capacity (US$ 13.5/kW.month) and Additional Capacity (same as contracted capacity) kWh charges of US$ 0.01/kWh for purchases from ENDE and 70% of the latter for purchases by ENDL In practice, these tariffs are adjusted (with the exception of the fixed charge) such that the bill, as a percentage of the La Paz division billing, is proportional to the capacity provided by ENDE for serving the La Paz division load. Therefore, at present, the La Paz division pays ENDE an amount equivalent to 20 - 25% of its total sales. Qualit of Service 50. From the point of view of the Municipality, one of the main concerns in formulating a new contract consists of evaluating the quality and status of the distribution infrastructureinLaPa. Such an analysis was performed recendybyIDB: *COBEE- AnAlisis del Sistema de Distribuci6n Ectrica by Jorge Cavallotti, October 1988. The study presents a diagnosis of the situation of COBEEs subtransmission and distribution system. According to this 19 analysis, the distribution system has not expanded enough to keep up with demand. Quality of . service has decreased since 1982 due to lack of investment The system also faces operations problems as well, due to the overloading of feeders and 69 kV lines. According to the report, feeder outages increased from 185 in 1986 to 203 in 1987 and interrupted MVA increased from 246 to 329 In the same period. Investment equirements 51. The solutions contained in the IDB report consist basically of strengthening the subIransmission and distribution network, together with the installation of a control,center, which could be implemented in a three year period. The estimated investment in these items is of the following magnitude: Isb..: INVESTMENT REQUIREENTS IN DISTRIBUTION, 1990-92 USS mitt tons Subtranhmi9sion 4.2 Distribution 15.5 Control Center 0.7 General Plant 3.9 Total 24.3 Srce: IDB - Andlisis del Sisteme de Oistribucidn Eldctrica, J. Cavattotti (1988) 52. In addition to the latter investments which would be oriented towards reducing losses as well as improving service quality, COBEE could develop additional hydro generation along its existing chain of plants. These include: First Phase: extension and repowering of existing facilities up to 20.4 MW of additional capacity with a cost of around US$ 16 million. This phase would also involve transmission investments of US$ 6.4 million for a total investment of US$ 22.4 million. Second Phase: extension of an existing generating station by 4 MW and construction of 37 MW in new plants with a cost of US$ 43 million, together with transmission costing US$ 2.5 million for a total of around US$46 million. 20 53. Generation investments are attractive to COBEE because they can result in an immediate return by reducing purchase costs from ENDL With the reference values given above, the first phase would have a unit cost, including transmission but excluding interest during construction (IDC), of US$ 1100/kW, equivalent to around US$ 11/kWmonth which compares favorably with the capacity charge levied by ENDE, especially given construction times of only around 2 yews which would greatly reduce IDC. In the case of Phase 2, the cost would amount to a slightly higher but still attractive value of US$ 1240/kW. 54. ENDE's own cost estimates for phases 1 and 2, excluding taxes, are even lower than those of COBEE: around US$ 800/kW for phase 1 and US$ 866/kW for phase 2 without the Huaji plant. The latter has a cost, according to ENDE, of US$1529/kW including IDC which leaves it to be developed last, around 1995. Otherwise, the investments for Phases 1 and 2 would be on line by 1993. According to ENDE data, investments in generation in the COBEE area of service would amount to the following (dates have been delayed one year considering that COBEE would only commit funds after 1990): Tgle3J: GENERATION AND TRANSMISSION INVESTMENTS IN US$ MILLIONS (INCLUDES TAXES) 1991 1992 1993 1994 1995 Phas 1 3.5 .3 8.8 Phase 2 (exct.NuaJI) 2.4 3.5 .9 Subtotal 5.9 8.8 14.7 Nuulp 0.8 5.7 11.1 14.9 6.6 Total 6.7 14.5 23.8 14.9 6.6 Soggc: ENDE 55. From the point of view of the La Paz Municipality, distribution investments compete for funds with generation investments and therefore a priority problem arises. Experience shows that whereas generation investment is lumpy and, once initiated, cannot be rescheduled, distribution investments are considerably more modular and subject to rescheduling. 21 COBEE's Finances 56. COBEEe's finances in the last years have been influenced by macroeconomic conditions as well as the uncertainty surrounding the renewal of its concession contract. In 1984 and 1985 Bolivia underwent a period of economic chaos with quadruple digit inflation. COBEE, whose finances depend on tariffs that were not readjusted as fast as the price level, was at one point obliged to defer its payroll payments. On the other hand, the cost of its purchases from ENDE, indexed in dollar terms, grew to a point where they were not payable. Once the economy stabilized, the accumulated debt with ENDE was formally agreed to be covered in monthly installments which expire in September, 1990. This also explains why the present interconnection agreement specifies a limit in bolivianos proportional to the power supplied by ENDE relative to COBEE's demand. This experience, combined with the expiration of the concession contract has created incentives for COBEE to (i) limit its investments to a minimum and (ii) to transfer income to the parent company. 57. In the years 1986, 1987 and 1988 COBEE's rate of return on its rate base, after all taxes including the 10% tax on profits, was 9.26%, 7.08%, and 7.68% respectively. During the 1986-88 period COBEE shows an average net income of US$ 4.7 million, of which 90% was transferred to the parent company, leaving a 10% tax reserve. Investments in 1987 and 1988 were about US$ 0.9 million and US$ 2.0 million, respectively. Other uses of funds for these years were amortization of debt (an IDA credit lent by the Government to COBEE, and the ENDE debt) which amounted to US$ 0.8 million and USS 0.6 million, and increases in net working capital (US$ 0.4 million and US$ 1.4 million). Financing of these uses of funds was performed mainly through depreciation (US$ 1.9 million and US$ 2.8 million). 58. The question that interests the Municipality for the purpose of a future concession contract is (i) COBEE's financial shape in September 1990 and (ii) its capacity to finance new investment. Using 1988 financial statements information as an approximation, by the end of its concession COBEE will have paid off all of its debt, both with Government and ENDE. Its current assets, excluding inventories, would exceed current liabilities by around Bs 9.3 million. This would be enough to cover other liabilities such as client deposits or employee severance which amount to Bs. 6.4 million. In the futme, if the level of sales and costs in 1988 can be mainted, the company could conservatively generate funds from depreciation of about US$ 2.9 million and US$ 4 million from operational gains. This would indicate that a maximum of US$ 22 7 mflion/year could be provided towards contributon to investment. This amount would be an upper di=it, since the company Is expected to distibute dividends to its share holders. 59. From an analysis of the inestment fgures shown beforehand, the following fnancing requirements appear (the distribudon investment has been broken down arbitrarly into a 5-year period): Iabl INVEsTNENT AND FINANCING REQUIREENTs (U~s NILLIONs) 1991 1992 1993 1994 1995 Total Phase 182 (exct. HwJi2) 5.9 8.8 14.7 29.4 Hujil 0.8 5.7 11.1 14.9 6.6 39.1 Distribution 5.0 5.0 5.0 5.0 4.3 24.3 Totat 11.7 19.5 30.8 19.9 10.9 92.8 Total w/o Nuuji 10.9 13.8 19.7 5.0 4.3 53.7 Financin: Internat Funds 7.0 7.0 7.0 7.0 7.0 35.0 Externet Funds: With uaji 4.7 12.5 23.8 12.9 3.9 57.8 Iithout 1uji 3.9 6.8 12.7 • Percent Contributfon of Internal Funds to Investnent with suif 60 36 23 35 64 38 ithout Nuaji 64 51 36 100 100 65 Srcg:: Mission estimates. 60. Although the underlying assumption that COBEE would reinvest all its funds may be unrealist these figures illustrate the extreme case in which all internally generated funds are dedicated to ~nancing new assets. The analysis shows that COBBE could easily undertake the expanin of Phase 1 together with those elements of Phase 2 (Par. 52) that do not involve the construcion of the new Huaji power plant: overall flnancing requirements would not exceed 35- 40% of costs and given that they consist of extensions to existing power plants, construction risk 2n ui project consisti of a 27.7 IM hydro plant downstrem from the existng plants on the Zonso river. 23 is small. Additionally, COBEE would be able to keep up dividend payments except, possibly . during year 3 when investment requirements are greatest. On the other hand, the construction of Huaji would strain COBEE's finances by reducing contribution to investment to 38% and increasing financing requirements to more than 60% of costs. In case any unforeseen develop- ments occur, COBEE could be forced into a situation where it must cut back on distribution investment in order to proceed with projects already under construction. This would probably preclude any dividend payments during the construction period. 61. From the project scheduling point of view it becomes clear that financial considerations favor postponing the construction of the Huaji plant until Phase 1 and 2 projects are already carried out. From the contractual point of view concerning the Municipality, a clause imposing some priority on distribution investments would benefit La Paz users by avoiding deterioration of electricity service in case a financial crunch develops. 62. Due to the economic conditions during 1984 and 1985 as well as the proximity of COBEE's concession contract's expiration, investment in infrastructure has been relatively low in the last years. The consequence has been a deterioration in service quality and an increase in losses. The technical aspects of COBEE's operations were recently analyzed by IDB. The report recommends developing a distribution plan in the near future in order to upgrade service conditions. A necessary condition for such an investment would be to obtain a contract legalizing COBEE's operations after September, 1990. 63. COBEE has interest in developing generation facilities because of the savings in operation costs by the reduction of imports from ENDL These investments are regulated by the Electricity Code and require a concession to be awarded by the Ministry of Energy and Hydrocarbons, and therefore do not lie within the scope of an eventual concession contract with the Municipality. However, they do have an indirect impact on the quality of service in the near term because of the relatively large scale of investment they require which could divert resources from the reinforcements necessary to supply La Paz. As analyzed beforehand, both developing the future hydro plants and investing in distribution would require financing of around US$ 58 millions in addition to funds generated internally. This would represent a financing of more than 60%, which theoretically would be within the compan's reach. However, as previously noted, the assumption that COBEE would reinvest all its returns may be unrealistic. The company might 24 well opt to use part of its profits to pay dividends to its shareholders, as it is common practice, especially if its management feels Insecure about the future of COBEE in Bolivia, contemplating the possibility of a change in Governments attitude with the adoption of hostile policies towards foreign companies. Investments in generation might then tend to crowd out investments in distribution if adequate contractual provisions are not taken. 64. Finally, despite the problems noted in the previous sections, it is worthwhile obsetving that COBEE is an efficiently run company with a customer/ employee ratio of about 200 which is very high by South American standards. 25 IV. ISSUES, OPTIONS AND AGENDA FOR ACTION 65. Distibutionof electricity in La Paz is the last stage of a process that begins at the generation level from an operational viewpoint, and is embedded within a particular institutional structure from the organization standpoint. Consequently, in order to achieve distribution-stage objectives an eamination of the power sector within a broad perspective provides the appropriate frame of reference for formulating opti6ns, policies and for recommending specific actions. 66. The analysis of options was designed in the following stages: - Setting out objectives together with a diagnosis of the problems they involve. - Formulating options and policies for reaching the desired goals. - Laying out an action plan scheduling specific activities. Objectives 67. Overall power sector objectives can be classified in three principal categories: - Efficiency objectives oriented towards providing minimum cost service at the supply level and fostering the economic use of electricity at the demand level. - Quality of service objectives in order to provide electricity under acceptable conditions of continuity, voltage regulation, and frequency control. - Distribution objectives whereby the surplus generated by sales of electricity is allocated according to government priorities. This encompasses social objectives for providing electricity to very low income consumers. 26 68. As stated, these objectives reflect a general interest viewpoint; however, conflicts of interest between the parties involved appear at different stages, namely: - The government is interested in country-wide efficiency and therefore favors policies that distribute costs and benefits independently of location-specific characteristics while, on the other hand, the Municipality of La Paz favors the benefits accruing to its residents and therefore endorses policies which justify a preferred treatment to them. - COBEE as a private organization seeks to obtain a rate of return on its assets that will reflect its cost of capital and will generate profits for its shareholders. As a subsidiary objective it seeks to maintain an image vis i vis the public that will enable it to maintain its presence in the country. This may translate, for example, into differences in investment priorities between COBEE on one hand and the Municipality or the government on the other. These conflicts of interest should be recognized beforehand in order to formulate coherent policies from the outset and to establish a dlearly defined line of action by which the national (as opposed to regional) interest is advanced. Issues 69. The overall effidency objective can be broken down into a set of sub-objectives to be addressed by specific policies: - Having a least cost dispatch at the generation level that will minimize operational costs. - Implementing a comprehensive commercial, bulk-level, interconnection agreement, including prices for the sale and purchase of energy at the high voltage stage, in - order to promote a least cost operation. -27 - Fostering necessary distribution investments in La Paz by creating a supportive environment for COBEE in the sense of assuring its continued and stable presence vis A vis public opinion, government, and municipal authorities. - Developing a tariff policy that will encourage investing in distribution by providing adequate financial incentives. - Correcting conditions of electricity waste caused by losses due to deteriorated equipment as well as controlling the theft of electricity. - Assuring the coherence between urban plans in La Paz and electricity supply programs. - Providing customers with correct price signals in order to encourage an adequate use of electricity. - Rationalizing the public lighting service in La Paz. 70. Quality of service objectives refer to supply conditions insofar as reliability and delivery conditions are concerned. They depend as much on generation and transmission-level conditions as on the state of the distribution infrastructure. Specifying the problem to the distribution level, the following requirements emerge: - The need for redressing the decline in service quality in La Paz observed during recent years (see Chap3 for details) and which can be attributed to the uncertainty surrounding the status of the distribution company in Bolivia. - The need for setting service standards at a national level in order to improve quality and achieve, as far as possible, uniform delivery conditions. - The need for monitoring service standards, diagnosing operational problems and encouraging prompt remedial action. 28 The development of communication channels with consumers and establishing standards of customer service such as connection requirements and response to complaints. 71. In the area of income distribution two principal questions arise: The problem of rents associated with the use of inframarginal resources at the generation level: at present COBEB owns hydrogeneration stations that were built at a very low cost and which, in some instances, are fully depreciated. These plants have been kept in good condition and continue to operate; therefore, if energy were traded at the generation level at prices that reflect the present cost of electricity, COBEE would enjoy large windfall profits resulting from the use of a particularly efficient natural resource. A quantification of these rents can be obtained by comparing the economic value of the plants with their book value; net energy production in the last ten years has been around 500 GWh/year with a generation peak of 105 MW. Valuing these benefits at the marginal generation cost in Bolivia of US4 135/kWh and US$70/kW-year, the economic value of the plants would amount to US$100 million using a 12% discount rate. At present, COBEEs production facilities in the La Paz division show a book value of US$40 million and therefore the use of the hydro resource would generate potential rents on the order of US$60 millions. In terms of unit values, the marginal generation cost is equivalent to US4 2.8/kWh with a 55% load factor, by contrast, the financial cost of COBEE's hydro plants would only amount to about US4 1.1/kWh. At present, these rents are not being captured by COBEE due to the low tariff levels it applies; consequently, the rents are being appropriated by La Paz consumers who thereby enjoy low cost power services at rates which are below those prevailing in the rest of the country. The problem lies in that (a) it is open to discussion whether hydro rents should be enjoyed by consumers who are geographically near the resources and (b) the price signal received by consumers does not reflect the true cost of electricity and therefore does not encourage its correct economic utilization. 29 The problem of subsidies to specific consumer groups. At present no explicit subsidization policy exists and low cost service in La Paz is being provided to basically all residential users. This is possible, as noted before, by transferring the hydro rents to this consumer group; however, there is also an element of cross- subsidization through higher rates which are charged to commercial and, to a lesser extent, industrial customers. In the long run, COBEE's average costs will approach marginal cost levels, particularly if hydro rents are distributed differently, in which case the problem of subsidizing certain low income groups will become an issue for which clear-cut answers must be sought. The problem revolves around (a) identifying needy consumers and excluding those customers which do not fall into the target category, (b) determining a tariff structure that will not create perverse incentives conducive to demand inefficiency and (c) deciding the feasible amount of such subsidies by taking into account financial constraints. Options 72. In the next sections a set of proposals are developed in order to address the problems and questions posed beforehand. These options are organized functionally along four principal lines: Development of a tariff policy oriented towards seeking solutions to efficiency. related questions having to do with the provision of rational price signals both at the bulk and final consumption stages and setting mn explicit subsidization policy. An oranization aproach that would tackle - The bulk-level interchange aspect - The strengthening of COBEE as it relates to the development of a positive environment for continuing its operations - The addressing of quality control problems and service standards by identifying institutional measures to be taken - The problem of integrating electricity planning in La Paz into the urban planning process 30 - A leislative action line oziented towards - Updating regulations, including the Electricity Code for supporting the tariff policy, and the rules governing the terms and conditions of service - Providing a legal basis for the solution adopted for bulk-level interchange. - Redefining responsibilities between MEH, DINE and local governments regarding the provision of electricity - Defining the terms of the COBEE generation concession - Defining the terms of the Municipality/concessionaire distribution contract - tio la for taking specific action concerning the subjects of control of losses, distribution system rehabilitation and public lighting. Tarif P_Eolica 73. The development of tariff policy covers two main areas: bulk-level supplies at the interconnection level between power companies, and retail-level supplies for final consumers. The basic criteria to be defined consist of (a) the costing system to be considered for tariff-setting purposes, (b) the application criteria (country-wide tariffs versus regional tariffs, structure and voltage levels, price adjustment or indeation mechanisms), (c) the subsidization policy to be enforced if such a measure is considered desirable and (d) the pertinent financial constraints. 74. Structuring a tariff policy and analyzing the pertinent costs requires commissioning a tariff study with external technical assistance. Tariff setting functions are the responsibility of MEH/DINE who would commission and supervise the study together with a steering committee integrated by representatives from the principal utilities. The objectives of the study consist of: - Formulating alternatives for the commercial framework to be applied at the level of bulk energy supplies within the Bolivian interconnected system, together with its proposed organization (see Organization Approach section). - Characterizing consumers and the costs they impose upon the system according to their consumption patterns. 31 * Identifying costs of service, using a marginal cost approach, from the generation to the distribution level. In the latter case, a dscrimination of costs of service by type of utility would provide the basis for choosing between alternatives of establishing nationwide tariffs or opting for a limited number of regional ones. - Evaluating the cost to consumers of adjusting to new price levels and price structure. This cost derives from investments in new equipment to lower total costs (investment plus operating costs) of using energy. In the case of an increase in electricity tariffs this might include the cost of switching to an alternative fuel or the acquisition of more eficient electrical equipment. Adjustment costs must be taken into account to design a smooth transition from the present tariff system to one based on long run marginal costs. - Individualizing target groups for preferential treatment and the justification and means for discriminating in their favor. - Designing subsidization alternatives (internal cross-subsidies versus external subsidies). - Implementing a methodology for updating cost of service studies and training power sector personnel in this type of analysis. - Framing specific tariff schedule proposals together with procedures for adjusting their levels according to price index increases and exchange rate variations. 75. Cost versus Price-based Regulation. Traditional regulation consists of allowing a utility to recover its costs plus a return on investment (cost-based regulation); in this approach there are no incentives for operating efficiently given that costs can be passed on to consumers through tariffs. In order to provide distribution utilities with incentives for efficiency at the retail * level, an alternative consists of stipulating prices that allow for a given margin relative to the bulk-level tarif. This distribution component would be fixed (allowing for voltage-level differences). This approach of price-based regulation would allow retail companies to reap the benefits of an efficient operation and would penalize them for inedficiency. 32 76. General requirements of the tariff study are: - In order to seek economic efficiency, tariffs should be designed to reflect both marginal cost levels and marginal cost structure. - A proliferation of tariff schedules should be avoided by seeidng as far as possible, a unification of tariff levels and structures. - Prices and their indexation should be consistent between the bulk level and the retail level: if bolivianos are adopted as the basic price numraire, this unit should be kept throughout the tariff schedule without mixing it with other elements which could lead to the financial problems experienced in previous years with dollar-based bulk tariffs and bolivianos-based consumer rates. - An automatic adjustment mechanism should be incorporated into tariff regulations in order to account for inflation and exchange rate fluctuations. - Subsidization, through mechanisms such as lifeline rates, should be explicit and measures should be designed to identify the target groups and to maintain control in such a way thtt other consumers are not favored by special treatment. - Financial constraints should be taken into account to assure that power companies are able to maintain an adequate cash flow situation and a reasonable level of contribution to investment. Ormaizaton ADrach& 77. The Bolivian power sector is fairly decentralized with a number of enterprises of different characteristics (private, public, national, regional) being involved in the provision of electricity. The purpose of this approach to the problem is to orchestrate the interaction between the different agencies by defining areas of competence, responsibilities, and by developing an environment where tariff objectives can be realistically achieved . 33 78. The oreanization of a bulk-level power pool for the purpose of reaching an efficient dispatch as well as for addressing the hydro rents problem would be conducted as part of the tariff study, as it cannot be reasonably conceived as an isolated problem. The suggestions that follow are oriented primarily towards the rents issue at the bulk level: The operation of the interconnected network, together with the control of power interchange, should be performed by a single organization. ENDE could assume this role given its importance at the generation level, insofar as it does not confuse its interests as a generation company with its role as interconnection network operator. This can be achieved through supervision from an interconnection committee operating a dispatch center, with DINE and COBEE representation. - A mechanism should be designed such that utilities who own generation assets transfer their production to the interconnection operator at a price that reflects investments in generation. In the case of OCOBEE-Generation" this would imply selling the production of the hydro plants at a price that would cover O&M costs, depreciation and a rate of return on their production assets. Asset revaluation procedures should be designed in order to protect Seneration enterprises from an erosion of the rate base due to macroeconomic developments outside the control of the power sector. In this manner, the generation companies would be prevented from capturing windfall profits which could be distributed according to the national interest. - A single, uniform, bulk level price would apply for sales to distribution companies which would reflect marginal generation costs. 79. The incorporation of local capital into COBEE: the common pattern of evolution of private power companies in Latin America, usually foreign owned, has consisted of nationalizing them by either turning them into local autonomous institutions or by absorbing them into a greater, iational company. In the case of COBEE, foreign ownership has traditonally been a source of debate and controversy within Bolivia. Although current economic thinking would favor continuing its present status. It is possible that some time in the future this emotion-laden ownership issue will arise again. Given the time span of investments in the power sector, the company should be able to operate with a long-term perspective of stability. A way of accomplishing this could be to partially *Bolivianize" COBEE through the injection of 34 local capital. This would endow the enterprise with a lower profile vis A vis those groups that have insisted on its nationalization for political reasons. 80. COBEE could be capitalized with public or private funds. However, these equity contributions should take advantage of broadening the ownership by including shareholders interested in furthering the company's efficiency and not imperiling its performmce by introducing extraneous decisions into its management This would be a reason for avoiding the use of public funds, either from the central government or from the Municipality, in addition to the consideration that such resources would better serve the public's interest by channelling them towards more needy sectors of the economy such as health and education. However, this does not exclude the possibility of incorporating "quasi-public" capital such as some public sector pension funds or organizations such as COMIBOL, the state mining corporation. Capitalization sources from the private sector could be attracted from the financial community (insurance companies, banks); this would avoid interference in COBEE's day-to-day management and it would simultaneously strengthen it by requiring that the company generate profits. To determine the feasibility of this approach would require an evaluation of the prospects and means of equity contributions to COBEE by local institutions. 81. Quality control questions require action in the following areas: - Setting standards of service which would be a responsibility of MEH and DINE, the idea being that such standards should have a national coverage. - Setting standards for attention to consumers, i.e. requirements for connection, and channels of communication with the distribution company. - The monitoring of service quality which would be a decentralized, local process. In the case of COBEE the proposed solution would consist of having the Muni- cipality organize a control unit in order to monitor distribution-level service quality. - Designing mechanisms for enforcing quality of supply and customer service standards. In the case of La Paz, monitoring and enforcing standards could be performed in a decentralized manner by delegating these responsibilities to the municipal government. 35 82. At the distribution level, electricity supply should be viewed as an integral part of the provision of public services. In the case of La Paz, electricity planning has not been taken into account at the urban planning level. The organization of an electricity planning unit within the Municipality of La Paz would therefore have as functions (a) coordinating urban plans with the electricity supplier, (b) monitoring service quality and (c) ensuring that remedial measures are incorporated into the utility's expansion plans. 83. At the Municipal level the problem of organizing the public lighting service calls for placing this responsibility either within the Municipality or within the electricity company thus avoiding the present duality of functions. The dominant agency at present is the Municipa- lity which maintains more than 80% of public lighting in La Paz and the easiestreorganization would consist of transferring COBEE's lighting to the Municipality. As noted in chapter 3, this leads to a duplication of functions and interference between the two operators; it would be more efficient to have public lighting function delegated to the electricity company with the Municipa- lity accomplishing a monitoring, rather than an operational, role. This would require developing a public lighting contract and transferring assets between the Municipality and COBEE. Le&isativhSppr 84. In order to enforce the results of the tariff study as wel as the organizational measures, legislative action must be taken either for the purpose of modifying existing regulations or for the purpose of incorporating new ones. Institutional changes in Bolivia are not particular- ly difficuk due to the nature of the underlying legislation: an important amount of the latter has been enacted through executive decrees which can be modified through new decrees (as opposed to laws enacted by Congress which require a lengthier process). In the case of some tariff regulations, they can be applied in a first step through an executive decree and subsequently reaffirmed through a law which would invest them with a more permanent status. 36 85. The basic element in this area would consist of an updating of the Electricity Code according to findings in the tariff and organizational areas, and a review of the regulations on conditions of service provision: - The tariff-related sections of the Electricity Code would have to be changed in order to allow for marginal cost-based electricity prices as opposed to the present financially-oriented ones. - The bulk tariff purchase and sale process would have to be incorporated into the code. This would involve modifying those parts of the code that concern the operation of generation concessions. - The responsibility for setting and monitoring service quality standards would be incorporated in the code. - The set of rules and practices governing the terms and conditions of service, including: - extension of the network (defining who is responsible for paying for the extension of new lines and on what conditions) - fees for connections, disconnections and reconnections - temporary connections - meter ownership - customer's installations - deposits required from consumers - types of service contract between COBEE and consumers - obligation to supply electricity. 86. The concession contract for distribution of electricity in La Paz would be another legal area where a number of measures could be institutionalized. Although the contract itself has a secondary character, it involves a number of elements which provide a basis for the operation of the electrical utt, such as: - Duration of services and procedures for extending, modifying or terminating the contract. 37 - Concessionaire rights in the way of providing services, using public spaces and applying for the expropriation of private properties necessary to extend the electri. city infrastructue. - Concessionaire obligations relative to the supply of services, investments and cooperation with other public services. - Municipality rights relative to quality control, access to planning studies and cooperation of the concessionaire. - Municipality obligations relative to cooperation with the concessionaire for the protection of its assets, control of losses and penalizing cases of theft - Conditions for the use of municipal property. Operational Masmrs 87. This area consists of specific actions to be undertaken for the purpose of finding solutions to present short term problems: - Distribution System Rehabilitation. One of the conditions that should be incor- porated in the Municipality/ concessionaire contract is the commissioning by COBEE of a study that would provide a Distribution Master Plan covering the next five years. This plan would provide (a) a short term diagnosis on the present quality of service, conditions of coverage and the state of distribution equipment and (b) an investment plan in order to reach service goals to be agreed to with the Municipality. The municipal government would only be involved in this study insofar as setting service goals compatible with the city's urban plans; otherwise, all technical matters would be COBEE's responsibility. 38 Reduction of losses. This would involve actions to be undertaken between COBEE and the Municipality for the purpose of lowering the level of losses from the present 18% to at least the level prevailing in the early 1980's of around 13%. These actions would involve the legalization of clandestine connecdons, meter instalation, and the replacement of high loss ad-hoc lines. 88. The following table presents a summazy of objectives and issues addressed by the proposed approaches: TabtaeS OBJECTIVES AND PROPOSED APPROACHES OBJECTIVES APPROACH Tariffs Organization Legislation Operations Efficiency Oblectives Least Cost Dispatch x x Interomuetion Agreement N X X COEE asport x x Financial Incentives X Control of Losses x X x Urban Planning Coordination X Demand-side Efficiency N Quality of Service Oblectives: Correction of service Quality x Setting Service Standards x X onitoring Service Standards x Enforcing Service Standards x customer Support M x Income Distribution Issues: Nydro Rents Problem X x Subsidization Policies X Amnafor Action 89. The olective of this section is to outline specific actions to be taken by each agency within the power sector and to indicate their sequence. The executing agencies would be ENDE and COBEE in the power sector, MEH/DINE at the central government level and the Municipality of La Paz through the 'Municipal Strengthening Project" (Proyecto de Fortaleclaien- to Municipal -PFM-). 39 90. As an initial organization step, the Municipality should establish an electricity coordination and control section within PFM. This section would consist, at least initially, of a single electrical engineer who would be supported by local consulting services. The functions of this section of PFM would be to act as liaison between COBEE and the urban planning divisions of PFM and coordinate with COBEE periodic quality control operations. If public lighting functions were transferred to COBEE it would be in charge of supervising the corresponding contract. Annex 3 includes a description of the functions and requirements for the proposed section of PFM. 91. MEH and DINE have agreed with COBEE on the subject of the generation concession. This contract has already been drafted and awaits a decision from MEH for signing it This action would be a fiat step in legitimating COBEE's status within Bolivia and should be executed as soon as possible. 92. The next area for action would consist of finalizing the distribution contract between the Municipality and the distribution concessionaire which would probably be COBEE. As noted in previous sections, this contract is not of primary importance but it does have the positive effect of providing a legal basis for COBEE to remain in Bolivia. The outline and conditions of the contract are included in the next chapter. 93. The basic element of the options identified beforehand is the tariff study. This study, given its scope, should be commissioned by DINE with the cooperation of the major generation and distribution companies who would provide the logistic support for the analysis (ENDE, COBEF/ ELPEO, ELFEC, COMIBOL ...). 94. In parallel with the tariff study, DINE would also commission a study with the objective of detemining the feasibility for mobilizing local resources in order to support COBEE with Bolivian capital. The purpose of the Resource Mobilization Study would be: - To identify opportunities for incorporating local capital to COBEE. 40 - To quantify the extent of such contributions. - To design the legal mechanisms for changing COBEE's equity mix. 95. Once the Distribution Contract is formalized, COBEE would commission a Master Distribution Plan for La Paz with the following scope: - A diagnosis of the state of the distribution network, the problems of service quality and the remedial measures to be taken in the short term. The results of this first phase of the study would consist of (a) a short term investment program and (b) a program for loss and theft reduction. - A five-year expansion plan based upon a demand projection that would take into account the probable evolution of the city insofar as demographic trends, new urban developments and industry location factors are concerned. 96. Once the first phase of the Master Distribution Plan is complete, COBEE with the cooperation of the Municipality would undertake actions necessary for reducing losses and rehabilitating the distribution network. 97. Once the tariff and resource mobilization studies are completed, DINE would commission a final project with the purpose of updating the Electricity Code. The scope of this project would be to incorporate the institutional measures identified in the previous studies into the legislative support of the power sector. 41 98. The following table provides a summary of the actions outlined beforehand: Tat..A: PROPOSED ACTIONS AND RESPONSIBLE AGENCIES ACTION AGENCY RESOURCES Organization of Electricity Control Unit PFM Own Distribution Contract PFN/COBEE Om Tariff Study Commissioning DINE Term of Reference External Advisors Execution Consultants Electricity Regulation Updating DINE Consultants Resource MobfIization Study DINE Terms of Reference External Advisors Execution Management Consultants Master Distribution Plan COBE Consultants/0m Pubtlic Lighting Policy PFN/COBEE Own 42 99. Estmation of resources requied for implemenng these actions: Tjkle ACTION PLAN - COST ESTIMATES Tariff Study Consuting Services US$190 000 Local Resources US$ 80 000 Sub-Total USS270 000 Resource Mobiization Study Consulting Services US$ 40 000 Local Resources USS 6 000 Sub*Total USa 46 000 Electricity Regulations Updating Consutting Services USS 8 000 Local Legal Services US$ 12 000 Sub-Total US$ 20 000 COE Master Distribution Plan Consulting Services US$100 000 Electricity Control Unit (PFM) 2 years cost US$ 34 000 Total Resources US$470 000 43 100. Approimate time schedule for the recommended plan of action. Tabte 8: Action Plan - Schedule mnth 1 2 3 4 5 6 7 8 9 10 11 12 PFN Organization xxx Distribution Contract xxx xxx OM X DM M00 xxx xxx xx x Tariff Study Term of Reference X00 X00 Executon NUx xx0 NUx NUx xxx )DM xxx xxx Resource NobitLization Stud Terms of Reference NUx NUx Execution NUM )M )M NU NU N Master Distribution Plan DIagnosis NUx Nx N Pubtic Lighting Organization Organization Study NUx NUx NU Contract Negotiatton NUM NUM NUM N 13 14 15 16 17 18 19 20 21 22 23 24 Tariff Study Butk-Levet Organization NUM NUx NUx Tariff tapteentation NUM NU NU NUx NUx N aster Distribution Plan 5-yer PLan NUx NUx NUx NUx Nx NU N Loss Correction Actions NU NU NU NUx NUx NUx NU NU N0 N Nx N Legislative Slqport NUx NU Nx NU Nx NU N 44 V. THE CONCFSSION CONTRACT 101. As noted in the previous chapters, the distribution concession contract plays a minor role with regard to many of the issues related to the provision of electricity. However, from a formal point of view, it performs the function of providing the distribution concessionaire and the Municipality with dear-cut rights and responsibilities. During the mission in La Paz, an outline of the contract was drawn up which incorporates the functions, privileges and commit- ments to be covenanted between the Municipality and the distribution company. This chapter reviews the existing contract between COBEE and the Municipality, establishes a frame of reference for a new contract and translates the ensuing conditions into an outline. The 1950 Contract between the Municipality of La Paz and Bolivian Power Co. 102. The contract due to expire in 1990 contains the following elements: - Company rights relative to the use of public spaces and Municipality duties to back the company for such purposes. - Company commitments relative to supplying electricity to all customers who demand it. - Conditions for the use of existing municipal facilities. - Tariff regulations which are no longer applicable (the Ministry is now responsible for rate authorizations). - Customer regulations and metering conditions. - Municipal taxes. - Arbitration clauses. 45 103. The contract has never been challenged by either party. It has been sufficiently resilient to encourage COBEE to provide extensive electricity coverage for 40 years in the La Paz region. The field where the contract has not been effective concerns the conditions to be met before it expires: in 1984 a decision should have been taken relative to modifying, terminating or renewing the contract. If a decision had been taken it would have encouraged the company to continue investing in the electricity infrastructure or it would have set the stage for a planned transfer of assets to another party. Unfortunately, 1984 and 1985 were years of economic debacle that were not conducive to maldng such a decision, 104. At present, COBEE is seeking a legal basis for remaining in Bolivia. Two routes are possible: on one hand, a generation concession contract has been drawn up with DINE and MEH but it has not been signed; on the other, there is the perspective of the Municipality contract. COBEE's present focus is on legalizing the generation contract which would enable it to continue operating as a generation company. Alternately, the Municipality contract would afford COBEE with a legal basis for its operation as the country's principal market for electricity. Frame of Reference for a New Contract 105. The areas where the Municipality can further its interests are those related to planning of public services and the integration of the electricity company to this process and those functions related to monitoring and ensuring that service quality throughout the region conforms to approved standards. 106. The principal subject consists of emphasizing the need for a structured approach to electricity service planning within the Municipality. Urban planning in La Paz las been strengthened through the "Proyecto de Fortalecimiento Municipal" (PFM), a project financed by the World Bank. PFM has concentrated on urban infrastructure problems, but electricity service has not been analyzed and implicitly it was conceded that COBEE took on this responsibility. Withifl a new contract, a stronger approach to planning would require that electricity be integrted into the urban planning problem especially considering that there would be a strong support from a private concessionaire in the way of data collection, analysis etc. 46 107. Assuring a good standard of service can be achieved by the following means: - Developing annual plans for the expansion and upgrading of the distribution system In the city according to overall urban development objectives. - Achieving cooperation between the Municipality and the concessionaire for the purpose of legalizing ad hoc connections, providing reliable and lower loss secon- dary networks and prosecuting theft from existing customers where "need7 is not a mitigating circumstance. - A joint monitoring of service quality as measured by voltage levels, loss levels and outage rates. - Streamlining the connection process in order to minimize red tape and bureaucra- tic requirements that are not germane to electricity service. - Cooperating with other public services (namely distributing and collecting bills for garbage collection where consumers cannot be excluded due to significant exter- nalities) in cases where the electricity company is better equipped to do so. - Organizing public lighting services by avoiding the present duplication of functions between COBEE and the Municipality. Some of the more significant of these questions are developed in the following sections. 108. The questions of loss control, planning and customer control should be addressed jointly due to the very large number of illicit connections at the domestic level. As shown in Annex 1, there could be more than 30,000 illegally connected households, equivalent to one third of the present number of legal customers. This impacts directly on both commercial and physical losses due to the low quality of connections. Furthermore, at present the legalization of connections requires complying with a number of other municipal constraints which a low- income dwelling cannot achieve. The natural consequence of such barriers is to either obtain a 47 legalizaton through "informal" intermediaries or to make a clandestine connection to the network. What is required is therefore: - Feeding information to the concessionaire on how the city is expected to develop - Requiring from the concessionaire an expansion and investment plan - Developing a plan for legalizing squatter developments - Leaving the problems of customer installation control to the concessionaire who Is ultimately responsible for service conditions. 109. Concerning losses, it is apparent that they are excessive at present (18%) and historical evidence shows that lower levels are feasible. Furthermore, the trend towards a den- ser power market in La Paz should make it possible to further reduce physical losses. Distribu- tion losses are system-specific. However, ballpark estimates for energy losses at this level are on the order of 4 - 6%. Combined with trnsmission and generation losses, total physical losses measured in energy terms should not exceed 10%. Assuming that an inevitable amount of misbilling and theft occurs, an overall loss level of 11-12% would be an acceptable goal. An extra incentive for the concessionaire (in addition to increasing its sales) to reduce losses could be implemented at the DINE level by only allowing a given percentage of losses to be included in the rate calculations. 110. The question of monitoring service quality requires setting technical performance levels. This revolves around allowable voltage fluctuations and service cuts. The problem at the medium voltage level (i.e. larger customers) is to a large extent a question that is settled between the customer and the concessionaire. The problem at the low voltage level does require mo- nitoring by an external agency such as the Municipality due to the difficulty for this type of customer to evaluate the quality of service he is receiving. Consequently, a monitoring campaign at the low voltage level would involve making peak-hour measurements on a sample of distribution transformers with the purpose of keeping voltage regulation within a suggested range of :15% of nominal voltage. As for service cuts, the IDB evaluation of COBEE, as indicated in Chap. 3, exhibits statistics that indicate an increasing number of disconnection hours as well as an increase in the number, duration and severity of disconnections. Setting an a priori standard of service with respect to disconnection rates is not straightforward as they may depend on factors (e.g. weather conditions) which are out of the control of the concessionaire. Rather than seeking to keep a control on number of disconnections, it would be more profitable to maintain 48 a data base with causes, and in particular those related to the overloading of either lines or substations. Such overloading is likely to show up at lower voltage levels which, if controlled and monitored as indicated beforehand, would be corrected in time by incorporating remedial measures in the investment plan. 111. Public lighting used to be a responsibility of the concessionaire. It was revoked since 1977 and this function is at present performed by the Direction of Electricity Services of the Municipality. However, lights that were the property of COBEE are still under its responsibility (around 2,000 out of a total of 13,500). This creates a duality of functions, confusion among city dwellers as to who is responsible for the service, and interference between employees on each othe's system. A new contract should seek to set the responsibility under a single entity, preferably the concessionaire. 112. Talks are presently under way for the purpose of distributing garbage collection bills together with electricity bills and making them payable jointly. This type of cooperation should be institutionalized within the contract as it would provide a significant service to the community by allowing adequate financing for garbage collection. Contract Recommendations 113. The legal aspects of the contract are outside the scope of this ESMAP Technical Assistance, but should be carefully examined. Therefore, the Municipality should contract a legal consultant to review all the legal aspects and implications of the concession contract 114. Annexes 4 and 5 contain recommendations regarding the structure and contents of the contract which incorporate the considerations made beforehand. These recommendations were discussed with the municipal authorities who agreed with their provisions. The contract was designed with a main body incorporating general provisos which are not expected to change within the span of the agreement; and a control body which covers specific regulations or understandings that may evolve according to the circumstances. 115. The main body of the contract is organized in the following sections: 49 - gal Basis - Duration: 40 years - Conditions for rescinding the contract: non-compliance of the concessionaire in relation to covenanted investments, deterioration of service conditions or deteriora- tion of the concessionaire's financial condition. - Concessionaire responsibilities: operational duties to provide electricity, investment obligations and administrative pledges concerning the provision of information and the cooperation with other public services. - Concessionaire rights: commercial privileges to sell electricity, rights to use public spaces. - Municipality rights: access to information, first option to transfer the contract in case of its abrogation. - Municipality responsibilities: organization of an electricity control unit, cooperation with the concessionaire, protection of the concessionaire's assets. - Local taxes and in particular the exemption of taxes from the use of public spaces. - Public lighting provisos if feasible. - Use of some specific municipal assets. - Conditions for transferring the contract to third parties with approval from the Municipality. - Arbitration of discrepancies. - Provisions prior t6 contract expiration. 116. The control body of the contract contains the following elements: 50 - Technical regulations: types of service, metering conditions and quality of service standards. * Regulation of a customer contract: billing periods, payment dates, service suspension conditions. - Planning coordination provisions. - Planning control and monitoring measures. - Quality control procedures. - Concessionaire's obligation to commission a Distribution Master Plan for La Paz. 51 ANNEX 1 THE MARKET FOR ELECTRICITY IN IA PAZ 117. The La Paz Division of COBE covers the municipalities of La Paz, El Alto, Viacha, Achacachi, Achocalla and Palca. 118. A cursory examination of the data relative to the period 1979 - 1988 reveals the following trends: - Domestic sales grew on average at a rate of 5.1% p.a. - General Service sales grew at 2.9% per p.a. - Industrial demand decreased from 66 GWh to 63 GWh during the period due to the economic recession in the country in general and in the mining industry in particular. With respect to the number of customers, domestic users increased at an average rate of 4.2% p.a., which varies significantly for certain periods. 119. Average sales per customer at the residential level increased slightly during the last ten year period, from an average of 1899 kWh/user.year in 1979 to 2051 kWh/user.year in 1988. 120. One of the more significant changes during the period concerns the increase in losses. As a percentage of available energy, they went from 14% in 1979 to 19% in 1987 with a slight decrease (18%) for 1988. 52 La Paz Data 121. When limited to the Mmipalityof La Paz, the data for the month of April 1989 shows the following values: Tebte : LA PAZ - ELECTRICITY CONSUMPTION Tariff No.Users MA Sitted Percent kWh/User1 Damestic: 82 (220V, I Phase) 38288 320 1008 3 (110y, I Phase) 36173 3745 1248 84 (110/220V. I Phase) 1869 14347 3324 85 (110/220V, 2 Phase) 189 403 25584 Subtotal 92059 18815 60 General Service: C1 (Demand 9 10kM) 15209 3259 2568 C2 (Demand 10k) 1242 4130 39900 Subtotal 16451 7389 24 Industriat: S(Demaind S S0kVA) 250 403 19344 E (Demand > S0kVA) 135 2650 235560 Special 1 23 276000 Subtotal 386 3076 10 95630 Public Lighting 1 900 3 Other 2 984 3 Annual Equivatent 122. In regard to the distribution of domestic customers, they show the following aspect: Ihte.10: DISTRIBUTION OF RESIDENTIAL USERS PER AVERAGE CONSUMPTION Average kMh4mnth 84 104 279 2132 2 Users 4.2 39 56 0.2 soug: emu 53 123. Concerning the coverage of electricity service in La Paz, there appears a wide * discrepancy between sources. On one hand, ENDE estimates a coverage of only 56% based upon a population for the La Paz division of 1.1 million, an average of 5 persons/dwelling and a nominal number of customers of 126,000. Although these figures encompass El Alto, where there is a large number of dwellings without service, it does not seem reasonable for La Paz. 124. A better approximation to electricity coverage should take into account not only the nominal (i.e. legal) connections but also an estimate of illegal, low consumption, connections. According to urban planning data, population in La Paz for 1989 is estimated to be 750,500. Distrbution losses in the La Paz division are estimated to be 79 GWh for sales of 462 GWh (17% of sales). In 1980, total losses amounted to 13% of available energy; distribution losses amounted to 27 GWh for sales of 366 GWh (7%), a reasonable figure. Using the same basis for 1988, losses should not exceed 32 GWh. This shows excess losses due to theft on the order of 47 GWL Assuming that this amount can be attributed to illegal connections with a low consumption on the order of 100 kWh/month (1200 kWh/year), this would yield around 39,000 illegal users. However, COBEE estimates that this number should not exceed 5000 (6-7GWh/year), which would indicate that a proportion of theft must be attributed to non-domestic users (industries, commercial customers) through meter tampering. Together with the total of 92,000 domestic users, there would be around a total of 97,000 residential connections in La Paz. With a number of persons per dwelling of 6 to 7, this would yield a coverage of 78-90%. COBEE estimates a coverage on the order of 92%. 54 ANNEX 2 MARGINAL COSTS AND TARIFFS 125. Electricity tariffs ace regulated by the Electricity Code. It specifies that tariff- setting functions are a responsibility of DINE (Direcei6n General de Electricidad of the Ministry of Energy and Hydrocarbons). 126. According to the Code, tariffs should be set at a level that allows for covering the following costs: - Operations, maintenance and management costs - Depreciation on tangible assets - Amortization of intangible assets - Taxes - A 9% rate of return on the Rate Base 127. COBEEs tariff structure has the following categories (monthly billing): IeiS.11: COM * TARIFF STRUCTURE Residential Category 32 220V 1 Phase kWh/mo. Bs./kWh USt/kMh Bs. Minfim Charge 0-50 4.87 Next 51-300 0.066 2.57 Next 301-500 0.068 2.65 Excess 501+ 0.070 2.72 853 110V, Phase inim Charge 0-50 5.01 Next 51-300 0.068 2.65 Next 301-500 0.070 2.72 Excess 501+ 0.072 2.80 55 lih/&. Bs./kWh USt/kWh Is. 04 110/220V, 1 Phase miniu Charge 0-50 5.67 nxt 51-300 0.070 2.72 Nxt 301-500 0.072 2.80 Excess 501+ 0.075 2.92 o5 110/220V, 3 Phase Minimau Charge 0-50 10.96 Next 51-300 0.070 2.72 ~ext 301-500 0.072 2.80 Exces 501+ 0.075 2.92 Generat Category Cl (emand S 10kW) Minimna Charge 0-50 6.38 nt 51-300 0.115 4.48 Exces 301+ 0.120 4.67 C2 <Deand> 10k) Dmand Charge as 5.48/ku.mo. (USB2.13/kW.w.) Energy Charge: First 100 hours of use øs 0.121/kWh 4.71 E~ Bs 0.126/kWh 4.90 IndAstril Category D ( d 5 SkVA) Dehand Charge Is 3.60/kVA.mo. (US$1.40/kVA.mo.) Energy Charge: FIrst 100 klWh/kVA Os 0.068/kWh 2.65 Excess s 0.054/kWh 2.10 E Nor than 50kVa instatled capacity ead Charge Os 7.44/kVA.mo. (US$2.90) COSEE Transformer ør øs 6.20/kVA.mo. (US$2.41) User transformer Energ Charge: First 100 kUs/kVA os 0.054/kh 2.10 Exce 8s 0.041/kWb 1.60 255: COBEE 56 128. The average price by category is: TaM L1 CO - AVERAM TARIFF BY COMSMER CLASS ******B/kh---------- -USt/kWh--** Tariff COBE Taxes Totat COBEE Total 82 0.082 0.028 0.11 3.23 4.3 3 0.077 0.028 0.105 3.01 4.1 84 0.070 0.031 0.101 2.76 3.98 a5 0.066 0.032 0.096 2.61 3.86 Cl 0.109 0.042 0.151 4.29 5.94 C2 0.159 0.062 0.221 6.28 8.70 D 0.101 0.022 0.123 4.0 4.84 E 0.088 0.021 0.109 3.5 4.29 Souce: COE 129. Marginal costs for COBEE. The November, 1987 study "Basis for the Formulation of a Bolivian National Energy Plan" provides an approximation to marginal costs at the system level. At the bulk (High Voltage -HV-) level, marginal costs were estimated to be US$ 8.9/kW.- month and US: 1.4/kWh. Distribution costs were estimated on the basis of information from ELFEC, the Cochabamba distribution enterprise. The resultant delivery cost levels were: Tabe 13: LONG RUN MARGINAL COSTS Voltage Level Medfun LoW Energy Cost (USMhM) 1.42 1.5 Capacity Cost (USS/k.aonth) 12.6 19.8 Source: ESMAP Report ftasis for the Formulation of a National Energy Plan", November, 1987 The study also provides average costs by different customer categories: 57 igjje: LONG RUN MARGINAL COSTS PER CONSUMER CLASS Industrial Comercial Residential Average Cost (US*/kWh) 4.1 5.5 6.9 Source: ESNAP Report *Basis for the Formutation of a National Energy PLn", November, 1987 130. On the average, using as a basis the HV cost and a system load factor of 53%, the HV cost would be around USt 3.7/kWh. Therefore, the markup between the HV and LV level would be in the order of US4 3.2/kWh. This markup could be slightly lower in La Paz with its denser market but it is in the order of magnitude for such costs in other countries. 131. From COBEE's point of view, its purchases from ENDE at the interconnection tariff of US$ 13.5/kW-month and US4 1/kWh would represent its marginal operating cost. This is equivalent roughly to a load factor of 40% for imports during peak hours with an average cost of US4 5.6/kWh. A comparison with the actual tariffs clearly shows that customer prices perceived by COBEE are not enough to pay for the marginal HV level imports necessary to supply demand. 132. The fact that COBEE can maintain such a situation lies in its hydro capacity with low cost plants that are really inframarginal resources. As a consequence, COBEEs average accounting cost can bear the low tariff level, at least in the short run. However, even if the rationale for the low tariffs can be explained by the fact that COBEE is not being allowed to fully exploit the economic rents arising from its use of a low cost natural resource, the markup between the HV and LV levels, particularly in the residential category, is not enough to pay for the distribution investment necessary to supply that demand. 58 ANNEX 3 ORGANIZATION OF ELECTRICInY CONTROL UNIT IN PFM ORGANIZACION DE UNA UNIDAD DE CONTROL DEL SERVICIO DE ELECTRICIDAD EN LA ALCALDIA DE LA PAZ 133. En este documento se incluyen algunas sugerencias para organizar la unidad de planifica- ción y control del servico eléctrico (UPE), tal como se menciona en el proyecto de contrato de concesión de serviCos. Funciones 134. Las funciones de la unidad tienen dos aspectos principales: por una parte está la función de servir como medio de comunicación entre la concesionaria y las unidades de planificación urbana y, por otra, está la función técnica de control de calidad de servicio. En cualquier caso, la UPE debería tener un mnimo de funciones meramente administrativas, como autorización de conexiones u otras que puedan entorpecer su desempeio como ente de planificación. 135. Funciones de Planificón: - Colaborar e intervenir en la formulación, junto con la concesionaria, de los términos de referencia para un plan maestro de distribución de la ciudad. - Proveer al ejecutor del estudio con los datos necesarios relativos a planes de desarrollo urbano, población, densidades de población, planos urbanos etc. - Supervisar la ejecución del estudio en conjAto con la concesionaria. - Desarrollar, junto con la concesionaria, los planes anuales de distribución y llevar a cabo un seguimiento de su implementadón. 59 - Comprobar las necesidades de expropiación de predios que solicite la concesiona- ría. - Supervisar el diseflo e implementación de una base de datos de distribución como parte del plan maestro al cual tenga acceso libremente la municipalidad. 136. Funciones Administrativas: - Actuar como canal de comunicación con los organismos municipales encargados de las acciones de expropiación de predios. - Solicitar el apoyo de la fuerza pública cuando ello fuere necesario para Intervenir los casos de fraude. 137. Funciones de Control Técnico: - Disefiar los procedimientos a seguir para el control de calidad de servicio. - Comprobar los métodos utilizados por la concesionaria para llevar a cabo el control de calidad. - Estudiar, junto con la concesionaria, los resultados de las pruebas de control y traducrlos a medidas remediales si fuera necesario. Recursos Humanos 138. Para estructurar una unidad con estas funciones, se necesita de un profesional con alguna experiencia en planificación de sistemas de distribución que se encargaría de las funciones de planificaeión y del área administrativa. Para la parte técnica se necesitaría otro profesional con una mayor experiencia operativa, pero es improbable que se requiera una presencia de tiempo completo; se sugiere por lo tanto que esta funcin sea ejecutada por alguien de la división de servicios eléctricos adscrita al alumbrado público. 60 ANNEX 4 CONCESSION CONTRACT - MAIN BODY CUERPO PRINCIPAL DEL CONTRATO Base Legal. Deniciones ' Obeto 139. Base Legal de suscripción del contrato: citar las leyes y decretos que autorizan a suscribirlo e identificar las partes. 140. Definiciones: DINE, MEH, qué se entenderá por "servicio eléctrico* en el contexto de este contrato. 141. Estructura del contrato: se indicará que el contrato se regirá tanto por su cuerpo principal como por su cuerpo rglamentario que forma parte integral del mismo. 142. Objeto del Contrato: el objeto del contrato si determinar las condiciones de prestación del servicio eléctrico, sin carácter exclusivo, dentro dei perimetro de la municipalidad de La Paz. Pazo del Contrt 143. El plazo nominal del contrato puede establecerse como 40 años, similar al contrato vigente con la COBEE o puede optarse por un plazo indefinido como en el caso de Oruro. Este último caduca a opción de los contratantes con un preaviso de 2 años. Caducidad del Contrato 144. Propiedad de las instalaciones: se indicará que el concesionario será el propietario de las instalaciones fsicas para prestar el servicio de distribución a la caducidad del contrato. Igual- mente, debe quedar explícito que este derecho conduce a que la municipaHdad no tenga que responder por ningn pasivo a cargo del concesionario en relación con dichas instalacioaes a menos que ello se haya acordado de manera expresa. 145. Se reproducirán en este artculo algunas de las causales de caducidad contempladas en el Código de Electricidad, como son: 61 - No realización de obras o extensiones de servicio de acuerdo con los planes anuales detallados en el reglamento del contrato. - Cuando el estado de conservación de las obras necesarias para prestar el servido se haya deteriorado en detrimento de la calidad y no se hayan tomado las acciones correctivas contempladas en el reglamento. - Cuando la situación financiera del concesionario Indique que no estará en capacidad de acometer las inversiones necesarias para dar cumplimiento a las obligaciones establecidas en el contrato y en su reglamento. 146. Procedimiento de Liquidación del Contrato: se detallar (a) el plazo para llevar a cabo la liquidacón, (b) el procedimiento para tasar las obras e inversiones del concesionario y (c) el periodo de transferencia. Obliacdones del Concesionario 147. Cefirse a las disposiciones del Código de Electricidad y a las del reglamento del presente contrato. 148. Obligaciones Operativas y de Suministro: - Suministrar energía eléctrica a todo el que la solicite dentro del área de servicio definida en el objeto del contrato. - Suministrar la energía en las condiciones de calidad de servio que se definen en el reglamento del presente contrato. - Controlar el cumplimiento de las normas técnicas en las instalaciones de los clientes que soliciten el servicio. - Proveer los equipos y los recursos humanos para facilitar el conuol de calidad técnica del servicio tal como se especifica en el reglamento. 149. Obligaciones de Ejecución de Obras: 62 - Realizar las extensiones de servicio que se hayan acordado en el plan anual de dis- tribución tal como se detalla en el reglamento. - Realizar el mantenimientode las obras con el objeto de prestar el servicio en las condiciones de calidad estipuladas en el reglamento. - Dar prioridad a las inversiones en distribución en la municipalidad para cumplir las metas de los planes de expansión. 150. Obligaciones Aminstrativas: • Facilitar las visitas de. funcionarios de control de la municipalidad a las ins- talaciones del concesionario. - Proveer toda la información requerida para la realización de los planes de dis- tribución. - Colaborar, como servicio público, en asegurar el funcionamiento de otros servicios vitales para la comunidad. Derechos del Concesionario 151. Derechos Comerciales: - Distribuir, vender y percibir el importe del servicio de energía eléctrica, sin carácter exclusivo, para cualeulaer usos de carácter público y privado. 152. Derechos Relativos al Uso de Areas Públicas: Se sugiere reproducir el Art. 37 del Código en lo relativo a - Tender redes - Ubicar equipos - Atravesar bienes de dominio o uso público 63 - Romper el pavimento con la condición expresa de dejarlo posteriormente en el mismo estado en que se hallaba originalmente - Cortar ramas de árboles 153. Derechos Relativos al Uso de Areas Privadas: el concesionario podrá solicitar a la municipalidad la expropiación mediante debida compensación al propietario, la cual correrá por cuenta del concesionario, de áreas privadas que juzgue necesarias para la prestación del servicio. Derechos de la Municipalidad 154. La Municipalidad teídrá derecho a declarar la caducidad del contrato por las causales indicadas en el numeral pertinente. 155. En caso de caducidad del contrato, la Municipalidad tendrá la primera opción para la transferencia del servicio público de electricidad. 156. La Municipalidad tendrá derecho a exigir del concesionario su colaboración para asegurar la operación eficiente del conjunto de servicios públicos de la ciudad de La Paz siempre y cuando ello no detracte de manera significativa del propósito principal de la concesionaria. 157. La Municipalidad tendrá libre acceso a examinar todos aquellos estudios técnicos que sean desarrollados para analizar el sistema de distribución. Igualmente, tendrá libre acceso a las bases de datos de tipo computacional que contengan datos técnicos relativos a los usuarios o relativos a la infraestructura del servicio. La Municipalidad tendrá derecho a solicitar copias, por su cuenta, de los estudios mencionados así como copias de las bases de datos mencionadas sin más erogación que los materiales utilizados para la transferencia. oblilaciones de la Municipalidad 158. Obligaciones de carácter administrativo: - Organizará una undad de planificación y control (UPE) cuyo objetivo será el de actuar en coordinación con el concesionario para asegurar una prestación 64 ordenada del servicio eléctrico de acuerdo con los planes de desarrollo urbano de la municipalidad. - Estudiará las expropiaciones que a petición del concesionario fueren necesarias para la prestación del servicio. - Declarará áreas de utilidad pública y/o reglamentará la construcción de tal manera que se hagan provisiones adecuadas para el futuro en lo relativo a corredores de acceso para las subestaciones del concesionario. - Agilará los procedimientos de control para la conexión de nuevos usuarios. 159. Obligaciones de carácter judicial y de uso de la fuerza pública: - Llevar a cabo las expropiaciones que se estimen convenientes y necesarias para la prestación del servicio. - Establecer la- servidumbres que fueren necesarias para el servicio. - Colaborar con el concesionario en la imposición de multas o sanciones a aquellos suscriptores que mantengan conexiones fraudulenta. - Apoyar al concesionario en la legalización de conexiones clandestinas de carácter colectivo. - Utilizar la fuerza pública si fuere necesario para la protección de las instalaciones del concesionario. - Velar para que las áreas de utilidad pública mencionadas anteriormente no sean utilizadas u ocupadas para fines incompatibles con las futuras expansiones del seicio eléctrico. 65 Grayámenes 160. Se buscará estipular en esta sección cuáles gravámenes de origen municipal pueden imputarse al concesionario y de cuáles queda exonerado. En pardcular, se estipulará que el uso de áreas públicas por parte del concesionario para la prestación del servicio no causará gravámenes. Alumbrado Público 161. Se indicará cuál entidad estará a cargo del servicio de alumbrado público. En caso de que esté a cargo del concesionario, se estipularán los reglamentos pertinentes así como las con- diciones de traspaso al concesionario de los equipos actualmente a servicio de la municipalidad. En caso de que continúe a cargo de la municipalidad conviene estipular que los activos de pro- piedad del concesionario (para el caso especifico del concesionario actual) serán en lo sucesivo mantenidos por la municipalidad. En cualquier caso, se buscará que este servicio esté bajo la dirección de un solo organismo. Afuas de Milluni e Instalaciones de Propiedad Municipal 162. Se especificarán las condiciones de explotación de las aguas y de las obras de infraestruc- tura de propiedad municipal junto con las condiciones de suministro de agua a la ciudad, tal como está estipulado en el borrador de DINE. Transferencia del Contrato 163. Se especificará que el contrato podrá ser transferido con previa aprobación de la Municipalidad. Sin embargo, la municipalidad se reservará el derecho de acceder a dicha transferencia a nombre propio en igualdad de condiciones con la empresa a la cual la con- cesionaria solicita la transferenci. Discreancias entre las partes y Arbitrale 164. Asiento Legal: se indicará que el contrato se sujeta a la ley boliviana y se indicará dónde se ventilarán los procesos judiciales a que hubiere lugar. Igualmente, el concesionario renunciará al recurso diplomático para discutir sus diferencias con la municipalidad. 66 165. Arbitraje: en los casos en los cuales surgieren discrepancias en la interpretación del contrato, se indicará las condiciones de arbitraje para solventarlas. Ta~ri 166. Tal como se indica en el borrador de DINE, los precios a ser cobrados por la energia eléctrica distribuida en la municipalidad serán reglamentados por DINE de acuerdo con las disposiciones del Código de Electricidad. Previsión Previa a la Caducidad por Término Contractual 167. En esta cláusula se reproducirán las medidas a tomar previas a la caducidad del contrato, tal como se especifica en el borrador de DINE. 67 ANNEX 5 CONCESSION CONTRACT - REGULATIONS CUERPO REGLAMENTARIO DEL CONTRATO Obietivo del Reglamento 168. El objetivo del reglamento es precisar (a) las condiciones de prestación del servicio, (b) las obligaciones de los contratantes respecto al control de la calidad del mismo y (c) los procedi- mientos de planificación Viecadel Reqdamet 169. El reglamento hace parte integral del contrato principal y estará vigente mientras no se declare la caducidad de éste último. 170. El reglamento podrá ser modifIcado de común acuerdo entre las partes cuando las con- diciones técnica de prestación del servicio así lo exijan. Replamento Técnico del Servicio 171. Servicios que prestará el concesionario: los proponentes a ser adjudicados el contrato de concesión indicarán las características técnicas de los servicios que prestarán a los usuarios de la municipalidad y dichas especifcaciones se incorporarán al reglamento. 172. Medidores: en este artculo se dejará constancia de la obligación del concesionario de • proveer los medidores básicos de energfa y potencia eléctricas acordes con la tarifa Jel usuario y de mantener su calibración dentro de tolerancias especifcadas. 173. Normas de calidad del servicio a ser prestado a los usuarios: en este ártículo se indicarán las restricciones técnicas a ser observadas por el concesionario para el suministro de electricidad. Se sugieren las siguientes normas: 68 - Niveles de Voltaje en Subestacones: el concedonario se comprometerá a mantener el voltaje nominal en las horas de máxima demanda dentro de un rango de +/- 15%. - Niveles de Voltaje a nivel de transformadores de distribución: el concesionario se compromete a mantener el voltaje de servido dentro de un rango de +/- 15%. 174. El concesionario divulgará periódicamente un Manual de Instaladones Eléctricas mediante el cual se provean las instrucciones para asegurar que las redes a cargo de los clientes estén conforme a las normas técnicas. Relaciones con los Usuarios y Contrato del Suscriptor 175. Las relaciones entre el concesionario y el suscriptor serán regulados por un contrato con el suscriptor el cual será aprobado previamente por la municipalidad. En dichos contratos se incluirán las disposiciones relativas al servicio a ser prestado, el período de facturación, los plazos de pago, las condiciones que justifican la suspensión del servicio, las multas en caso de fraude y las restricciones de orden técnico como son el factor de potencia, los lmites de capacidad contratada y las consecuencias de sobrepasar dichos limites. Igualmente se especificarán los derechos de los usuarios en lo referente a redamos por facturación o por calidad de servicio y las obligaciones de la concesionaria a este respecto. 176. El concesionario se compromete a dar aviso por los medios de comunicadón de las interrupciones programadas de servicio originadas en la necesidad de mantenimientos, remodela- dones de redes o instalación de nuevos equipos. Planificación del Servicio Eléctrico de la Municipalidad 177. La unidad de planificación del servicio eléctrico (UPE) de la municipalidad, en conjunto con la concesionaria, será responsable de desarrollar los planes de extensión del servicio en el área de la ciudad de La Paz. 17& La UPE será responsable de aportar los datos fundamentales para la planificación del servicio basados en las proyecciones de desarrollo urbano de la municipalidad, como son las previsiones de crecimiento de la población, las extensiones de asentamientos humanos, los planes de localización de plantas o complejos industriales y los planes de urbanización. 69 179. De acuerdo con los controles de calidad de servicio, la planificación a ser desarrollada tendrá en cuenta las medidas correctivas necesarias para mejorar las deficiencias encontradas. 180. Una vez estudiadas las soluciones técnicas, los planes de distribución acordados indicarán las metas de servico a ser logradas por la concesionaria, entre las cuales conviene mencionar: - Metas de cobertura del servicio - Metas de legalización de conexiones clandestinas de carácter colectivo. - Metas de extensiones de las redes primaria y secundaria. - Previsiones para corredores de acceso a subestaciones. - Planes de desarrollo de nuevas subestaciones. - Metas de refuerzo de redes y cambios de transformadores para subsanar deficien- cias de servicio. 181. El resultado del plan de expansión a nivel de distribución será sustentado mediante un plan financiero a ser presentado por la concesionaria en el cual se asegure que las metas acordadas son de realización factible. Control del Plan 182. La UPE, junto con la concesionaria, se comprometen a llevar a cabo un control periódico respecto al desarrollo del plan de expansión de distribución. En caso de no lograe las metas previstas se explicarán los retrasos con el objeto de tomar las medidas correctivas necesarias. 183. Debe dejarse explIcito que los retrasos que pueda sufrir el plan de distribución originados en financiación defectuosa de las inversiones serán de responsabilidad de la concesionaria la cual se obliga a dar prioridad a las obras acordadas. Control de Calidad de Servicio 184. Con el objeto de que el servicio cumpla con las condiciones técnicas del presente reglame- nto, la UPE y la concesionaria organizarán un control periódico respecto a dichos indicadores. Los resultados de dicho control servirán como base para la elaboración o ajuste del'plan de distribución. 70 185. La UPE tendrá derecho a solicitar que se lleven a cabo las mediciones y los muestreos correspondientes, para lo cual la concesionaria aportará los equipos. y los recursos humanos necesaros. Plan de Distribución de La Paz 186. A la iniciación del presente contrato, la concesionaria elaborará o contratará por su cuenta un plan maestro de distribución para la ciudad de La Paz. Dicho plan buscará establecer: (a) un diagnóstico respecto a la calidad de servicio, a la cobertura poblacional, al estado de las redes y subestaciones de subtransmisión y distribución y (b) un plan de inversiones sobre un período de cinco años mediante el cual se logren metas de servicio a ser acordadas con la UPE. Igualmente, el plan buscará determinar, mediante mediciones, afpros o muestreos las carac- terksticas de consumo del mercado eléctrico en La Paz que puedan sustentar la planificación del sector de energía eléctrica a nivel nacional. ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Activities Completed Country Project Date Number ENERGY 8FFICIENCY AND STRATEGY Africa Regional Participants' Reports - Regional Power Seminar on Reducing Electric System Losses in Africa 8/88 087/88 Bangladesh Power System Effiziency Study 2185 031/85 Botswana Pump Electrification Prefeasibility Study 1/86 047/86 Review of Electricity Service Connection Policy 7/87 071/87 Tuli Block Farms Electrification Prefeasibility Study 7/87 072/87 Burkina Technical Assistance Program 3/86 052/86 Burundi Presentation of Energy Projects for the Fourth Five-Year Plan (1983-1987) 5/85 036/85 Review of Petroleum Import and Distribution Arrangements 1/84 012/84 Burundi/Rwanda/Zaire (EGL Report) Evaluation de l'Energie des Pays des Grands Lacs 2/89 098/89 Congo Power Development Plan 2/90 106/90 Costa Rica Recommended Technical Assistance Projects 11/84 027/84 Ethiopia Power System Efficiency Study 10/85 045/85 The Gambia Petroleum Supply Management Assistance 4/85 035/85 Ghana Energy Rationalization in the Industrial Sector of Ghana 6/88 084/88 Guinea- Recommended Technical Assistance Bissau Projects in the Electric Power Sector 4/85 033/85 Management Options for the Electric Power and Water Supply Subsectors 9/89 100/89 Indonesia Energy Efficiency Improvement in the Brick, Tile and Lime Industries on Java 4/87 067/87 Power Generation Efficiency Study 2/86 050/86 Diesel Generation Efficiency Improvement Study 12/88 095/88 Jamaica Petroleum Procurement, Refining, and Distribution 11/86 061/86 Kenya Power System Efficiency Report 3/84 014/84 Liberia Power System Efficiency Study 12/87 081/87 Recommended Technical Assistance Projects 6/85 038/85 Madagascar Power System Efficiency Study 12/87 075/87 Malaysia Sabah Power System Efficiency Study 3/87 068/87 Mauritius Power System Efficiency Study 5/87 070/87 Panama Power System Loss Reduction Study 6/83 004/83 Papua New Energy Sector Institutional Review: Proposals * Guinea for Strengthening the Department of Minerals and Energy 10/84 023/84 Power Tariff Study 10/84 024/84 Senegal Assistance Given for Preparation of Documents for Energy Sector Donors' Meeting 4/86 056/86 Seychelles Electric Power System Efficiency Study 8/84 021/84 Sri Lanka Power System Loss Reduction Study 7/83 007/83 Syria Electric Power Efficiency Study 9/88 089/88 Energy Efficiency in the Cement Industry 7/89 099/89 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Activities Completed Country Project Date Number ENERGY EFFICIENCY AND STRATEGY (Continued) Sudan Power System Efficiency Study 6/84 018/84 Management Assistance to the Ministry of Energy and Mining 5/83 003/83 Togo Power System Efficiency Study 12/87 078/87 Uganda Energy Efficiency in Tobacco Curing Industry 2/86 049/86 Institutional Strengthening in the Energy Sector 1/85 029/85 Power System Efficiency Study 12/88 092/88 Zambia Energy Sector Institutional Review 11/86 060/86 Energy Sector Strategy 12/88 094/88 Power System Efficiency Study 12/88 093/88 Zimbabwe Petroleum Supply Management 2/90 109/90 Power Sector Management Assistance Project: Background, Objectives, and Work Plan 4/85 034/85 Power System Loss Reduction Study 6/83 005/83 BOUSEHOLD9 RURALy AND RENEVABLE M=ERf Burundi Peat Utilization Project 11/85 046/85 Improved Charcoal Cookstove Strategy 9/85 042/85 Cape Verde Household Energy Strategy Study 2/90 110/90 China Country-Level Rural Energy Assessments: A Joint Study of ESMAP and Chinese Experts 5/89 101/89 Fuelwood Development Conservation Prolect 12/89 105/89 Costa Rica Forest Residues Utilization Study, Volumes 1-11 2/90 108/90 C08te d'Ivoire Improved Biomass Utilization-Pilot Projects Using Agro-Industrial Residues 4/87 069/87 Ethiopia Agricultural Residue Briquetting: Pilot Project 12/86 062/86 Bagasse Study 12/86 063/86 The Gambia Solar Water Heating Retrofit Project 2/85 030/85 Solar Photovoltaic Applications 3/85 032/85 Ghana Sawmill Residues Utilization Study, Vol. I & 11 10/88 074/87 Global Proceedings of the ESMAP Eastern & Southern Africa Household Energy Planning Seminar 6/88 085/88 India Opportunities for Commerc..alization of Non-Conventional Energy Systems 11/88 091/88 Indonesia Household Energy Strategy Study 2/90 107/90 Jamaica FIDCO Sawmill Residues Utilization Study 9/88 088/88 Charcoal Production Project 9/88 090/88 Kenya Solar Water Heating Study 2/87 066/87 Urban Woodfuel Development 10/87 076/87 Malawi Technical Assistance to Improve the Efficiency of Puelood Use in the Tobacco Industry 11/83 009/83 Mauritius Bagasse Power Potential 10/87 077/87 Niger Household Energy Conservation and Substitution 12/87 082/87 Improved Stoves Project 12/87 080/87 Pakistan Assessment of Photovol.taic Programs, Applications and Markets 10/89 103/89 Peru Proposal for a Stove Dissemination Program in the Sierra 2/87 064/87 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Activities Completed Country Project Date Number HOUSEHOLD, RURAL, AND RENEWABLE ENERGY (Continued) Rwanda Improved Charcoal Cookstove Strategy 8/86 059/86 Improved Charcoal Production Techniques 2/87 065/87 Senegal Industrial Energy Conservation Project 6/85 037/85 Urban Household Energy Strategy 2/89 096/89 Sri Lanka Industrial Energy Conservation: Feasibility Studies for Selected Industries 3/86 054/86 Sudan Wood Energy/Forestry Project 4/88 073/88 Tanzania Woodfuel/Forestry Project 8/88 086/88 Small-Holder Tobacco Curing Efficiency Project 5/89 102/89 Thailand Accelerated Dissemination of Improved Stoves and Charcoal Kilns 9/87 079/87 Rural Energy Issues and Options 9/85 044/85 Northeast Region Village Forestry and Woodfuel Pre-Investment Study 2/88 083/88 Togo Wood Recovery in the Nangbeto Lake 4/86 055/86 Uganda Fuelvood/Forestry Feasibility Study 3/86 053/86 Energy Efficiency Improvement in the Brick and Tile Industry 2/89 097/89