Ghana - Sixth Power Project (Volta River Authority)

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 8207-GH STAFF APPRAISAL REPORT GHANA VOLTA RIVER AUTHORITY SIXTH POWER PROJECT FEBRUARY 6, 1990 Industry and Energy Division Western Africa Department |Thb docment has a retuclted dlbdbuton and may be used by repient oniv if te peormance of thdir officfad duies Its contens my no oedwise be didosed witout W;rld BDnk authdwlon|  I CURRENCY EQUIVALENTS Currency Unit Cedi (0) US$1 = 0 280 (Auction Rate) 01 3 US$0.004 WEIGHTS AND MEASURES Kilowatt (kW) , 1,000 watts Megawatt (MW) , 1,000 kilowatt (kW) Kilowatt hour (kWh) 1,000 watt hour Gigawatt hour (GWh) . 1 million kilowatt hour (kWh) Kilometer (km) - 1,000 m or 0.62 miles Kilovolt ampere (kVA) = 1,000 volt ampere Megavolt ampere (MVA) - 1,000 kilovolt ampere (kVA) One barrel (bbl) - 0.16 cubic meters One ton of oil equiv. (TOE) 3 about 7 bbl of crude oil PRINCIPAL ABBREVIATIONS AND ACRONYMS USED AfDB - African Development Bank CCCE Caisse-Centrale de Cooperation Economique, Frar^e CDC 3 Commonwealth Development Corporation CEB - Communaut6 Electrique du Bdnin CEDC X Canadian Export Development Corporation CIDA Canadian International Development Agency DANIDA - Danish International Development Agency ECG 3 Electricity Corporation of Ghana EECI = Energie Electrique de la COte d'Ivoire EIB G European Investment Bank ESB - Electricity Supply Board of Ireland GOG - Government of Ghana MFP - Ministry of Fuel and Power NEB - National Energy Board NED - Northern Electricity Department, VRA PNDC - Provisional National Defence Council SONABEL - Societe Nationale d'Electricite du Burkina UNDP - United Nations Development Program VALCO Volta Aluminum Company VRA - Volta River Authority FISCAL YEAR January 1 - December 31  FOR OMCUIL USE ONLY GHANA STAFF APPRAISAL REPORT VOLTA RIVER AUTHORITY SIXTH POWER PROJECT Table of Contents Page No. CREDIT AND PROJECT SUMMARY . . . . . . . . . . . . . . . . . . . . .(i)-(iii) I. THE ENERGY AND POWER SECTORS . . . . . . . . . . . . . . . . . . . 1 A. Energy Resources and Consumption . . . . . . . . . . . . . . . 1 B. Energy Sector Organization . . . . . . . . . . . . . . . . . . 2 C. Energy Policy and Pricing . . . . . . . . . . . . . . . . . . . 3 D. Existing Electricity Supply Facilities . . . . . . . . . . . . 3 E. Access to Electricity Service ... . . . . . . . . . . . . . . 4 F. Trends and Pattern of Electricity Consumption and Exports . 4 G. Power Sector Objectives, Strategy and Development . . . . . 5 H. Power Sector Financial Objectives and Tariffs . . . . . . . . . 7 I. VRA - The Implementing Agency .8 1. Organization, Management, Staffing . . . . . . . . . . . . 9 2. Accounting, Audit and Insurance . . . . . . . . . . . . . 10 3. Recent Financial Performance . . . . . . . . . . . . . . . 11 4. NED Finances .......... ... ... .... .. . 13 5. Financing Plan ......... ... .. ... .. .. . 15 6. Future Financial Position ..... . . . .. . . . . . . 16 J. Bank Group Role in the Power Sector . . . . . . . . . . . . . . 16 1. Past Lending .......... ... ... .... .. . 16 2. Rationale for IDA Involvement . . . . . . . . . . . . . . 17 II. THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 A. Project Objectives ...... .. . .. . .. . .. . .. . . 17 B. Project Description ...... .. . .. . .. . .. . .. . . 17 C. Project Cost ........................ . 18 D. Project Financing Plan ......... ... ... ... . . 19 E. Project Implementation . . . . . . . . . . . . . . . . . . . . 20 1. Status of Preparation and Execution . . . . . . . . . . . 20 2. Monitoring and Reporting Requirements . . . . . . . . . . 21 3. Procurement .... . . . . . . . . . . . . . . . . . . . 21 4. Disbursements .... . . . . . . . . . . . . . . . . . . 22 5. Environmental Aspects .... . . . . . . . . . . . . . . 23 F. Project Justification. Benefits and Risks .. . ..... . . . 23 1. Justification and Economic Rate of Return ... . . . . . 23 2. Risks .... . . . . . . . . . . . . . . . . . . . . . . 25 III. AGREEMENTS REACHED AND RECOMMENDATION .25 This report is based on the findings of an IDA appraisal mission in June/July 1989 comprising Messrs. K. K. Framji (Task Manager); S. Mikhail (Power Engineer), J. Boroumand (Economist) and Ms. M. Manalo (Operations Assistant). Ms. Eleanor H. George. Mit. Teri Velilla and Ms. Angie Wahi provided word-processing and secretarial support. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ANNEX!ES 1-1s Ghanat Energy Supply/Dematd Balance, 1987 1-2: Ghanas Electricity Consumption and Exports (1979-88) 1-3s Ghana: Electricity Load Forecast and Energy/Capacity Balance (1989-2000) 1-4s VRA: CapLtal Expenditure Program (1989-1996) 1-5s Ghana: 1989 Tariff Schedule 1-6: VRA: Organization Structure 1-7: VRA: Income Statements, Balance Sheets and Funds Flow Statements (1986-96) 1-8: VRA: Assumptions for Financial Projections 2-1: Detailed Project Description 2-2: Suuuary Project Costs 2-3: Project Financing Plan 2-4: Organization Chart for Project Management 2-5: Project Implementation Schedule (Akosombo Retrofit) 2-6: Procurement Arrangements 2-7: Estimated Credit Disbursements 2-8: Economic Analysis 3-1: Documents Contained in the Project File MAPt IBRD No. 21913  GHANA VOLTA RIVER AUTHORITY SIXTH POWER PROJECT CREDIT AND PROJECT SUMMARY Borrowers Republic of Ghana Beneficiary: Volta River Authority (VRA) Amounts SDR 15.2 million (US$20 million equivalent) Terms Standard IDA, with 40 years maturity Onlending Terms: The Credit would be onlent for 20 years, including a 6-year grace period, at the prevailing IBRD interest rate. VRA would bear the foreign exchange risk. Proiect Descrintions The project would enable VWA to: (i) maintain the high standard of reliability of the country's electricity supply; (Li) meet projected domestic and export demand through the year 1995 including an interconnection with Burkina Faso; and (iii) implement its ongoing program of institutional development, designed to meet the challenges of the 19909. The project would support VRA's investment program for the period 1990-95. The main components would be the retrofitting of the Akosombo plant- -generators, turbines and auxiliary systems; transmission developments comprising a second bulk supply substation in Accra, extension of the 161 kV northern grid to supply the Upper West Region, including Wa, its capital city, anu an interconnection to Burkina Faso; distribution needs in Northern Ghana; training facilities; and, studies of future system requirements. Proiect Benefits & RLskss The proposed project would ensures (a) the continuity of an adequate and reliable supply of power, consibtent with broader economlc goals: and (b) orderly sector development, subject to agreement on investment priorities. There are no unusual risks associated with the project.  - ii - Estimated Proiect Costt a/ Foreign Total as a X of as a I of Local Foreign Total Total Total ---(US$ Million)------ A, Akosombo Retrofit 5.5 58.7 64.2 91 54 B. Transmission Extension and Accra Bulk Supply Substation 2.1 25.9 28.0 92 24 C. NED Distribution 5.0 12.4 17.4 71 15 D. Training Facilities & Studies 2.7 5.8 8.5 68 7 Total Base Cost 15.3 102.8 118.1 87 100 Contingencies* Physical 1.0 8.0 9.0 89 Price 2.8 16.5 19.3 86 Total Project Cost 19.1 127.3 146.4 87 Interest During Construction _9.6 9, 100 Total Financing Required 19 136 as at VRA is exempt from customs duties and taxes. Financina Plan Local Foreisa Total ----