Ghana - Petroleum Refinery Rehabilitation and Technical Assistance Project

DOC_MIt of The World Bank FOR 0 CUL USE ONLY MI CROFI CHE COPY Rop No. 10240 Rteport No. 10240-GE Type: (PCR) TWEDDLE, E/ X31707 / T9 073/ OEDD3 PROJECT COMPLETION REPORT REPUBLIC OF GHANA PETROLEUM REFINERY REABILITATION AND TECHNICAL ASSISTACE PROJECT (CREDIT 1446-GH) DECEMBER 27, 1991 Industry and Energy Division Country Department IV Africa Regional Office Tis document has a resnicted distribution sad may be @sed by recipieots ondy in the performance of their ofricial duties. Its contents may not otherwise be disclhsed without World Bank autborization.  FISCAL YEAR January . - December 31 ABBREVIATIONS AND ACRONYMS BEICIP Bureau d'Etudes Industrielles et de Cooperation de L'Institut Francais du Petrole EIB European Investment Bank ENI Ente Nazionale Idrocarburi ERR Economic rate of return FCC Fluid catalytic cracker GRAIP Ghanaian Italian Petroleum Company Limited GNPC Ghana National Petroleum Corporation GOG Government of Ghana GOIL Ghana Oil Company MFP Ministry of Fuel and Power KIP Management Improvement Program NPV Net present value PCR Project Completion Report SBM Single buoy mooring TC Thermal cracker  FOR OMCUIL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. ONse of Dkfectt-eneraI Opratios EvaWtion December 27, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Ghana Petroleum Refinery Rehabilitation and Technical Assistance Project (Credit 1446-GH) Attached, for information, is a copy of a report entitled "Project Completion Report on Ghana - Petroleum Refinery Rehabilitation and Technical Assistance Project (Credit 1446-OH)" prepared by the Africa Regional Office with Part II contributed by the Borrower. No audit of this pro.iect has been made by the Operations Evaluation Department at this time. 2 Attachment 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.  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT REPUBLIC OF GHANA PETROLEUM REFINERY REHABILITATION AND TECHNICAL ASSISTANCE PROJECT (CREDIT 1446-GH) Table of Contents Page No. PREFACE .............................. . . EVALUATION SUMMARY . . . . . . . . . . . . . . . . . . . . . . . .i PART I - REVIEW FROM THE BANK'S PERSPECTIVE . . . . . . . . . . . . 1 Project Identity .1... . . . . . . . . . . . . . . . . . . . . Background .1... . . . . . . . . . . . . . . . . . . . . . . . Energy Sector . . . . . . . . . . . . . . . . . . . . . . . .1 Petroleum Sector .1... . . . . . . . . . . . . . . . . . . Petroleum Sector Organization ... . . . . . . . . . . . . . 2 Petroleum Refining. 2 Project Objectives and Description. 3 Project Design and organization . . . . . . . . . . . . . . . . 3 Project Implementation ... . . . . . . . . . . . . . . . . . . 4 Project Cost .5... . . . . . . . . . . . . . . . . . . . . S Procurement and Audit . . . . . . . . . . . . . . . . . . . . 5 Disbursement .... . . . . . . . . . . . . . . . . . . . . 6 Project Results .... . . . . . . . . . . . . . . . . . . . . 6 Refinery Rehabilitation ... . . . . . . . . . . . . . . . . 6 Technical Studies .... . . . . . . . . . . . . . . . . . . 7 Training . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Project Management . . . . . . . . . . . . . . . . . . . . . 9 Bank Performance .... . . . . . . . . . . . . . . . . . . . . 9 Borrower Performance .... . . . . . . . . . . . . . . . . . . 9 Project Relationships ... . . . . . . . . . . . . . . . . . . 10 Consulting Services . . . . . . . . . . . . . . . . . . . . . 10 Project Documentation and Data ..... . . . . . .. . . . . . 10 PART II - REVIEW FROM THE BORROWER'S PERSPECTIVE . . . . . . . . . 11 Introduction ................ . 11 Project Objectives and Description . . . . . . . . . . . . . . . 11 Project Design and organization .... . . . . . . . . . . . . 11 Project Implementation . . . . . . . . . . . . . . . . . . . . . 12 Project Results ....... .. .. .. .. .. .. .. . . . 12 PART III. STATISTICAL INFORMATION . . . . . . . . . . . . . . . . 14 1. Related Bank Loans and/or Credits in the Petroleum Subsector 14 2. Project Timetable .................. . . . 15 3. Credit Disbursements ..16 4. Project Implementation .17 5. Project Cost and Financing ..18 6. Project Results . . . . . . . . . . . . . . . . . . . . . . . 19 7. Status of Covenants . . . . . . . . . . . . . . . . . . . . . 19 8. Use of IDA Resources .......... ... ... ... . 22 ATTACHMENT r. Comments from the Cofinancier . . . . . . . . . . . . 24 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.  PROJECT CO PLETION REPORT REPUBLIC OF PETROLEUM REFINERY REHBILITATION AND TECHNICAL ASSISTANCE PROJECT (CREDIT 1446-GH) PREFACE This is the Project Completion Report (PCR) for the Petroleum Refinery Rehabilitation and Technical Assistance Project in Ghana, for which Credit 1446-GH in the amount of SDR 6.6 million was approved on March 13, 1984. The credit was closed on December 31, 1988, three years behind schedule. SDR 288,383 was cancelled and the last disbursement was in June 1989. The PCR was jointly prepared by the Industry and Energy Division, Country Department IV of the Africa Regional Office (Preface, Evaluation Summary, Parts I and III) and the Borrower (Part II). The cofinancier provided comments on the PCR (Attachment I). Preparation of this PCR is based on the President's Report, the Development Credit and Pro.ject Agreements, supervision reports, correspondence between the Bank and the Borrower, and internal Bank memoranda.  - ii - PROJECT CO*?LETION R13POR. RE,puBLI 01 GHANA PRJC PETROLEUM REFINERY REHABILITATION AM TECHNICAL ASSISTANCE PROECT (CREDIT 1446--GE)1 EVALUATION SUMMARY Background 1. The Project had its genesis in the heavy burden Ghana's petroleum imports placed on its balance of payments. While, at appraisal in 1983, its petroleum consumption was less than that of other African countries with similar per capita incomes, petroleum import claims on the country's total export earnings increased from about 19 percent in 1979 to 47 percent in 1982. This was expected to continue to increase despite Government controls on consumption because of rising international oil prices and declining export revenues. At appraisal, it appeared that opportunities to further reduce petroleum consumption without seriously hurting economic activity was very limited. Petroleum was being used mainly to meet basic needs and reducing consumption even through substitution of other energy forms such as electricity appeared infeasible. It was felt that the best method to reduce petroleum importation was through refinery optimization and an improved distribution system. 2. Ghana's petroleum refinery, the Ghanaian Italian Petroleum Company Limited (GRAIP), faced many serious problems: high fuel consumption and loss due to design limitations and inadequate maintenance and repairs, a product yield pattern that was not in balance with Ghana's demand profile resulting in deficits of middle distillates and surplus of fuel oil (which had to be exported at depressed prices), and significant losses in the shipment of crude to the refinery and in the distribution of final products to the consumers. 3. The Bank's involvement in the petroleum sector in Ghana began with an IDA credit of SDRl0.2 million in May 1983 (closed as of December 31, 1990) for an Energy Project and an IDA credit for SDR6.6 million for this Petroleum Refinery Rehabilitation and Technical Assistance Project in 1984. Through these two projects, IDA focussed and assisted in strengthening the capabilities and operations of the sectoral institutions; addressed key policy issues on energy pricing and investment programming; accelerated the exploration and development of indigenous hydrocarbon resources through the revis.L. i of petroleum laws and acquisition of seismic data and basin studies for promotion to foreign oil companies. Proiect Objectives 4. The Project was designed to provide technical assistance to (i) conduct studies and prepare plans to rationalize the petroleum refinery to match its production to domestic demand, improve the refinery's energy and operating efficiency, reduce losses of crude oil in ocean transport, at the harbor and in the refinery itself, and improve the product distribution system in the country; and (ii) finance equipment and materials already identified and immediately required for rehabilitation and energy efficiency improvement. The Project also provided technical assistance for a management improvement program (MIP) and for training for GHAIP refinery staff.  - iii - Proiect ImDlemetnt_tgf 5. The Project was implemented by GHAIP three years longer than originally planned mainly because of delays in appointing and finalizing contracts with consultants. The Project closed on December 31, 1988. A total of SDR 6.3 million was disbursed and about SDR 0.3 million was cancelled. 6. The main objectives of the Project were substantially met. Though delayed, the implementation of the refinery rehabilitation and energy efficiency improvement component of the Project was successful. Studies and inspections were completed and recommendations were reviewed with the Bank, GRAIP, and GOIL, as required, on the following: refinery and crude handling facilities; crude oil loading, transportation and unloading system; rehabilitation, revamping, and maintenance improvement; energy conservation, marketing and distribution facilities; bitumen manufacturing facilities; Volta Lake transportation of petroleum products; single buoy mooring facility; and the lube blending plant. 7. The component addressing institutional development for GHAIP and GOIL took considerably more time than was originally expected mainly due to the delay ;.. appoInting the consultants and large scale reduction in staffing. However, as a result both organizations have achieved considerable reduction in staff (around 350 against 681 in 1988 for GHAIP and 394 against 497 in 1968 in GOIL). The study on the management improvement program (MIP) was seriously delayed and implementation of the recommendations of the consultants had to be carried out under the succeeding project, Petroleum Refining and Distribution Project (Cr. 1819-GH). The training for the refinery staff received throligh this Project was only partially successful in increasing the efficiency of GHAIP's operations since the major reduction in staffing took place after the training. Additional training will be required to improve the quality of the staff in the reorganized GHAIP. 8. The Bank's guidelines for the procurement of equipment and hiring consultants were followed by the Borrower except where prior agreement had been reached with IDA that the technical consultants, Bureau d'Etudes Industrielles et de Cooperation de L'Institut Francais du Petrole (BEICIP), with whom GHAIP had a long working relationship, would be retained to carry out the inspection work and the technical studies. The quality of BEICIP's work on the feasibility studies was satisfactory but their detailed engineering, procurement and construction supervision services were less than satisfactory. This put pressure on the Bank staff who had to provide intensive supervision efforts so that the Project could be successfully implemented within the estimated costs. Proiect Results 9. The principal objectives of the Project were successfully met. The Project also served as a vehicle for dialogue with the Government on policy issues such as the rationalization of the investment program in public and private petroleum refining and distribution and the role of private sector investment in the marketing subsector. 10. In addition, groundwork had been laid so that the benefits received under this Project would be further enhanced by the implementation of Credit 1819-GH. These benefits include: improved reliability of the refinery; reduction in the cost of supply of petroleum products; further reduction of oil pollution from the refinery; and a stronger operating and earning capacity for GRAIP. 11. The economic life of the refinery was extended by 12 years and the petroleum import bill could be reduced, through decreased fuel  - iv - consumption and hydrocarbon losses by about US$3 million in 1990 and could docrease further by US$1.2 million per year at the present average international prices for products and assuming that the refinery operation in maintained at 1 million tons per year of Bonny light crude oil. Findincs and Lessons 12. The long delay in completing the Project components was attributed mainly to problems related to lack of familiarization with IDA procurement guidelines and disbursement procedures and delays in hiring consultants and finalizing contracts with them. A salient lesson of the project experience points to the need for ensuring that all tasks, whether performed by the implementing agency, consultants or contractors are coordinated and strictly monitored if unexpected delays are to be minimized and covenants adhered to.  P*OJECT COMPLETION REPORT REPUBLIC OF G PEOLEUM EFINERY REHILITATION-AND TECHNICAL ASSISTANCE PROJECT (C0DIT 1446-GE) PART I - REVIEW FROM THE BANK'S PERSPECTIVE A. Proiiect Identity Project Name: Petroleum Refinery Rehabilitation and Technical Assistance Project Credit No. : 1446-GH RVP Unit : Africa Region Country Republic of Ghana Sector : Energy Subsector : Petroleum B. Backaround Enercv Sector 1. At appraisal in 1983, Ghana's per capita energy consumption of around 177 kg of oil equivalent (kgoe) was relatively low compared to the world average of 1,455 kgoe. Their consumption was about 12% of the world average but twice that of the average for Sub-Saharan Africa of 88 kgoe. Principal sources of energy were wood and hydroelectricity derived from domestic resources and petroleum products obtained from imported crude oil and refined in the country's sole refinery at Tema, near Accra. of the total energy consumed, wood and charcoal accounted for 71%; hydroelectricity, 9%; thermal electricity, 1%; and petroleum products, 19%. Petroleugm.. sector 2. By international standards Ghana is not a petroleum intensive economy. At appraisal, per capita petroleum consumption was at a modest 35 kgoe, less than that of other African countries with similar per capita incomes such as Angola, Kenya and Sudan. However, its claims on Ghana's declining export earnings continued to increase. Petroleum import claims on the country's total export earnings increased from about 19 percent in 1979 to about 47 percent in 1982. Despite Government controls on consumption, petroleum consumption claims on the country's export earnings continued to increase because of rising international oil prices and declining export revenues. 3. Ghana's petroleum consumption profile was dominated by middle distillates (kerosene and diesel oil). Kerosene was used primarily in rural areas for lighting while diesel was used for mass and freight transportation and fishing boats. Middle distillate consumption was around 55 percent of total domestic petroleum product consumption (excluding bunker). Light and middle distillate consumption increased from about 86 percent of the domestic market (excluding bunker) in 1979, to over 91 percent by 1982 and could have been even more if it were not for Government rationing restrictions after 1982. The trend toward increased distillate demand and decreased fuel oil demand was expected to continue until thermal electricity generation becomes necessary. 4. Government rationing brought about a decline in consumption of kerosene and diesel oil. At appraisal, opportunities to reduce future petroleum consumption without seriously hurting economic activity appeared limited. Petroleum was being used mainly to meet basic needs and there was little scope for reducing consumption other than through substitution of other energy forms. This did not appear immediately  - 2 - feasible. Only limited reduction in consumption was possible through conservation. Thus, it was felt that future reduction in total petroleum imports would best be achieved through refinery optimization and an improved distribution system. Petroleum Sector Organization 5. The petroleum sector in Ghana continues to be managed by the Government through the Ministry of Fuel and Power (MFP), which was recently renamed the Ministry of Energy. Crude oil exploration, production and importation was the responsibility of the Petroleum Department of MFP, which was later transferred to the Ghana National Petroleum Corporation (GNPC), established in 1983. Crude oil was processed at Ghana's sole refinery located at Tema, and owned by the Ghanaian Italian Petroleum Company Limited (GHAIP), a 100-percent Government-owned company. GNPC paid a processing fee to the refinery for processing crude oil and maintained ownership of the crude and the products. Refined products were then distributed by five petroleum marketing companies operating in the country: Shell, Texaco, British Petroleum, Mobil and the Ghana Oil Company (GOIL), also a Government- owned company. Petroleum Refininq 6. The GHAIP refinery is a 28,000 barrels per stream day (bpsd) or 1.25 million tpy simple hydroskimming refinery. The facilities consist of crude oil distillation, catalytic reforming, and treating units for light naphtha and kerosene/jet fuel. There are no secondary conversion facilities to convert the residual fuel oil into distillate products. The refinery has the necessary offsite facilities and an oil jetty (32 feet draft) connected to the refinery crude tank-farm through an 8- kilometer pipeline (24/16 inch pipeline). The refinery facilities were commissioned in 1963 by Snamprogetti for GHAIP, then owned by Ente Nazionale Idrocarburi (ENI) of Italy. In November 1976 the ownership of the refinery was transferred to GOG. COMERINT, a consultancy service company under the ENI group provided technical assistance to GHAIP until 1983 when GHAIP management fully assumed responsibility for the operation and maintenance of the refinery. 7. The refinery was originally designed to process Iraqi Kirkuk crude oil. However, in order to maximize distillate products to meet the market requirements and minimize fuel oil production, the refinery has been processing light crude oils from Nigeria during the past several years. In spite of processing lighter crude, the refinery continued to face significant surpluses of fuel oil which had to be exported at depressed prices. 8. The refinery's equipment and processing configuration resulted in a product yield pattern that was not in balance with Ghana's demand profile. The yield pattern resulted in substantial deficits of middle distillates and surplus of fuel oil. In addition to the problem of excess fuel oil, the refinery incurred an unusually high fuel consumption and loss due to the design limitations and inadequate maintenance and repairs. Energy efficiency of the distillation unit was low. Consequently, total fuel consumption and loss in the refinery was about 8.5 percent of the crude processed compared to a norm of about 4.5 to 5.0 percent for a well-maintained refinery of similar size and configuration. In addition, there were significant losses in the shipment of crude to the refinery and in the distribution of final products to the consumers. Ocean losses and port handling losses were estimated at about 2.0 percent of crude transported compared to the industry upper limit of 0.5 percent.  C. Prodect Obiectives and Descri2tion 9. The Project was expected to assist OHAIP to: (i) prepare detailed plans to rehabilitate the refinery; (ii) conduct studies to revamp and rationalize the refinery to match its production to domestic demand; (iii) improve the energy and ooerating efficiency of the refinery; (iv) conduct studies to reduce ocear 'reight losses and improve the crude handling system at the Tema k as well as in the refinery; and (v) carry out studies to improve product distribution system in the country. 10. The following components were included in the Project i. Technical assistance for the inspection of the refinery and crude handling facilities; surveyor's inspection of the crude oil loading, transportation and unloading system; studies related to demand forecast, rehabilitation, revamping, maintenance improvement, energy conservation, marketing and distribution facilities; 2.i Technical assistance for feasibility studies on secondary conversion options and bitumen manufacturing facilities, Volta Lake transportation of petroleum products, single buoy mooring (SBM) facility at the Tema port, and lube blending plant; iii. Technical assistance for the management improvement program (MIP) and training for GHAIP staff; iv. Equipment and materials required immediately for rehabilitation and energy efficiency improvement. 11. According to the covenants of the Development Credit Agreement (Sections 3.02-3.03), the Government of Ghana (GOG) was to employ consultants by April 1, 1984 to assist them in carrying out the studies and training components of the Project. GOG was also required to review with the Bank, GHAIP and GOI' (when both institutions were involved) and prepare a plan of action to implement recommendations emanating from the inspection of the refinery and crude handling facilities and the preliminary evaluation of the secondary conversion options. In additicn, by July 1, 1984 GOG was to complete the study on the development of MIP, including accounting and management information systems for GHAIP, GOIL and the Petroleum Department and by December 31, l9P4, review with the Bank, GHAIP, and GOIL the recommendations from tF .,study and prepare a plan of action. D. Proiect Desion and Organization 12. At the time of the appraisal measures were taken to ensure there was a clear conceptual foundation for the Project. Following the completion of an energy assessment report prepared by the Bank in 1980 and a project preparation mission to Ghana in 1982, it was agreed with the Government that the rationalization of the refinery sector would be carried out in two phases: the first phase (financed under this Project) focussing on the rehabilitation, revamping and energy conservation of the refinery and product distribution system, a thorough inspection of the existing refinery and the preparation of feasibility studies for the optimum secondary conversion option suited to the requirements of Ghana; and the second phase focussing on the implementation of the secondary conversion facilities. 13. To ensure the Project appropriately met the needs of the refinery, the exact scope and scale of the Project was defined only after a thorough inspection of the refinery was completed by a specialized  -4- engineering firm. The inspection was funded uider the Project Preparation Facility (PPF). The PPF, amounting to US$1 million, also covered the preliminary *valuation of alternative secondary conversion options to convert fuel oil into premium distillates, costs for the maintenance shutdown, and the purchase of equipment and materials required to recommission the refinery after the shutdown. 14. Measures were also taken to ensure roles and responsibilities of the Project team and the consultants responaible for the Project were clearly defined and understood. During project preparation, the Government expressed their decision to retain the Bureau d'Etudes Industrielles et de Cooperation de L'Institut Francais du Petrole (BEICIP) of France as the consultants to carry out the inspection and other studies under the Project in view of their good and long- established relationship with the consultants. However, because the Bank felt the consultants, though competent for conducting feasibility studies, lacked adequate in-house expertise to carry out the engineering inspection work and prepare detailed bid documents, the Bank insisted that BEICIP subcontract the services of engineering consulting firms to strengthen their capabilities. Despite this understanding being reached prior to Board presentation, the delay in selecting an engineering subcontractor satisfactory to IDA was one of the major reasons for the delay (by about 8 months) in project implementation. E. Proiect Implementation 15. The Project was to be implemented in over i8 month's time (1984- 1985) but required over four years before it was finally closed on December 31, 1988. Project execution was the responsibility of GHAIP, assisted by consultants. 16. The delays in Project closing were due in part to the following reasons: (i) Even though the IDA Credit became effective in July 1984, withdrawals could not be made until conditions for disbursement of the EIB loan were fulfilled (EIB loan became effective on December 21, 1984); (ii) delays in the execution of the engineering agreement brought about by delays in the selection of an experienced engineering subcontractor acceptable to IDA; (iii) the delays in the selection of a construction contractor (who had to be selected on the basis of work output from the engineering subcontractor); and (iv) delays in the implementation of the training component and the MIP. 17. The implementation of the refinery rehabilitation and energy efficiency improvement component of the Project, though delayed, was successful. GOG reviewed with the Bank, GHAIP and GOIL, as required, recommendations and plans of action emanating from the inspection of the refinery and crude handling facilities, studies on the demand forecast, rehabilitation, revamping, maintenance improvement, energy conservation, marketing and distribution facilities, the preliminary evaluation of the secondary conversion options, and feasibility studies on the bitumen manufacturing facilities, the Volta Lake transportation of petroleum products, single buoy mooring facility, and the lube blending plant. By contracting tankers for ocean transport through competitive bidding, the excessive loss of crude oil was brought down. On this basis, the Government requested that the inspection of the crude oil loading, transportation and unloading system be deleted from the project scope. 18. The implementation of the MIP was not as successful as that of the refinery rehabilitation component of the Project. A study was to be carried out for the improvement of the organization and management of the petroleum refinery sector, including GHAIP, GOIL and the Petroleum Department of the Ministry of Fuel and Power (MFP). Implementation of the study was seriously delayed due in part to the changes in the sectoral organization (the Petroleum Department, which was then  - 5 - responsible for the bulk purchase of crude oil as well as bulk sales of products to the oil marketing companies, was subsequently abolished and partially absorbed into a newly created GNPC) and the Government's general decision to request assistance on a grant basis from bilateral and multilateral aid agencies to carry out this work. As a result, none of the deadlines specified by the covenants of the Development Credit Agreement (para. 3.03) regarding employing consultants, completing the study and reviewing recommendations emerging from the study were met. The delay in carrying out the study for the KIP, which was finanlly completed in June 1989, was a major reason for the extension of the Project's closing date by two more years. The implementation of the plan of action and recommendations emanating from the MIP study had to be incorporated in the succeeding project, Petroleum Refinery and Distribution Project (Credit 1819-GH). However, since the closing date of the project, considerable progress has been achieved by GHAIP and GOIL in carrying out the action program recommended by the consultants regarding management restructuring and reducing overall staffing. Additional training of personnel is planned, to improve the quality of personnel in both companies. 19. The timely appointment (prior to Board presentation) of a project team contributed to the successful implementation of the refinery rehabilitation and energy efficiency improvement component of the Project. Proiect Cost 20. Total Project cost estimated at appraisal was $18.3 million. The final cost was also $20.1 million equivalent. IDA's financing amounted to $7.6 million (SDR6.3 million equivalent) including the refinancing of the PPF of $0.8 million (SDR683,763 equivalent). An undisbursed balance amounting to $0.3 million (SDR288,383 equivalent) was canceled in part due to GOG's inability to submit all documentation to allow disbursement prior to the final closing date of the credit. The EIB provided $7.8 million while the GOG contributed the remaining $4.7 million. Procurement and Audit 21. Except for the retention of BEICIP to carry out the inspection and technical studies as agreed between the Bank and GOG at appraisal, Bank guidelines were observed in the procurement of equipment and materials and in the hiring of consultants to do the engineering and construction work and carry out the MIP study and training components. 22. GHAIP made good progress in keeping its accounts up to date in the early years of implementation. It met its audit reporting requirements with delays brought about by shortage of qualified staff and machine breakdowns. The 1984 accounts were not audited until eighteen months after the close of the year. While there was improvement with the 1985 and 1986 accounts (audited within eleven months after year-end), the audited 1987 accounts were not completed until 23 months after year end. These accounts were audited by Pannell, Kerr and Forster Chartered Accountants, a private auditing firm. The quality of these reports was good. However, for 1988 and 1989, the Borrower did not comply with its audit reporting requirements. From the Bank's correspondence files and Aide Memoires left with the Government, it seemed that the Bank did not make sufficient emphasis on supervision and monitoring efforts to ensure that good audit reporting, characteristic of the early years of project implementation, was maintained. At this time (1987-1989) the Bank and the Government seemed to concentrate their efforts mainly on the resolution of the policy issue on bulk procurement of crude and petroleum products, a condition for credit effectiveness of Credit 1819- GH.  23. The requirements the Borrower had to adhere to in order to comply with Section 3.02(g) of the Development Credit Agreement on the completion of a PCR were set out in an Aide Memoire dated December 5, 1989. Again it seemed that the Bank was not emphasizing enough in its supervisory role on this issue because there did not seem to be any follow through on the subject until over a year later. Disbursement 24. Disbursement under the Credit was initially slow because of delays on the part of the Government in meeting conditions for disbursement of the EIB loan, problems with EIB loan disbursement procedures and problems in establishing letters of credit. After these problems were settled, disbursement proceeded fairly smoothly. The project was completed with an underrun of $0.3 million (SDR 288,383 equivalent). F. Proiect Results 25. Overall, the project was successful in meeting principal objectives of rehabilitating the refinery and conducting detailed techno-economic studies. The Project also served as an important vehicle for dialogue with the Government on a number of important policy issues, namely the rationalization of the investment program in public petroleum refining and distribution and the role of private sector investment in the marketing subsector. 26. The Project laid the groundwork so that the benefits received under this Project would be further enhanced under the Credit 1819-GH, currently under implementation. These benefits include further improvements on the reliability and operating efficiency of the refinery; reduction in the cost of refining and distribution of petroleum products throughout the country; further reduction of oil pollution from the refinery; and a stronger operating and earning capacity for GHAIP. Refinery Rehabilitation 27. Prior to IDA involvement, the facilities at the Tema refinery were worn out and corroded primarily because the refinery was old (about 20 years) and poor maintenance practices were followed in the previous years. Under the Project's refinery rehabilitation component the following rehabilitation work was accomplished: replacement of reactor effluent coolers and distillation column overhead condensers with air cooled exchangers, air drier package, air preheaters, marine and truck loading arms, burners for steam boilers, power plant and utility units instrumentation, power plant switch gears and electrical distribution boards, 6 kv cable line from refinery to harbor pump house; repair of storage tanks, steam boilers, piping, pumps, machinery, columns, vessels, jumpers, motors and reinsulation of crude distillation column; reconstruction of three storage tanks; installation of antifire sys'.-.em at the oil jetty, fourth steam boiler and crude oil desalter. The refinery revamping work contributed to the mechanical integrity, reliability and safety of the refinery processing system. The construction work performed by Motherwell Bridge was satisfactory. The facilities are commissioned and are operating satisfactorily. 28. As a result of the refinery rehabilitation work, it is estimated that the economic life of the refinery was extended by 12 years. The Project represented the first stage of a major effort on the part of the Government to improve the operating efficiency of the Tema refinery and reduce the cost of petroleum products distributed in Ghana. As a result its petroleum import bill could be reduced by about US$3 million in 1990 through reduced fuel consumption and hydrocarbon losses when the  refinery Li operated at a capacity level of 1 million tons per year of Bonny light crude oil. With the refinery rehabilitation, a greater balance between refinery production and demand was attained and the need to import distillate products and export surplus residual fuel oil at distress prices were reduced. Full consumption and hydrocarbon losses at various stages of unloading, storage, processing and handling were reduced from 8.5% at appraisal to 6%. Technical Studies 29. On the demand forecast study, the consultants assumed Ghana's economic recovery by 1985 and recommended the central scenario with 4 percent per year growth from 1985 to 2000. The mission however, felt that the economic recovery would take more time and the growth would be somewhat lower. The mission suggested that in view of the relatively small difference between the central and low scenarios, and the potential ability of the refinery facilities to be expanded to 34,000 bpsd capacity at marginal costs, the refinery capacity planning could be based on the central scenario, but the economic evaluation should be on the basis of low growth rate scenario. It was also decided that Nigerian Bonny light crude would be the basis for developing the refinery material balance. The demand projected under the two scenarios and actual consumption during 1987 to 1990 are as follows: Petroleum Products Demand (tons '000) Actual Consumption 1/ Projected Growth by Conultants Year 1990 1995 1996 Scenario 1987 1988 1989 1990 Law Central Low Central Low Central Products: LPG 5 5 5 6 10 10 1 1 13 15 18 Gasoline 244 284 344 334 292 318 344 391 405 480 Kerosene 131 131 141 118 153 162 183 204 220 253 Jet Ful 18 22 27 39 37 44 47 59 58 76 Diesel 281 289 313 316 347 370 412 454 486 553 Fuel Oil 51 54 6S 60 87 94 103 116 121 141 Total 730 MS 89 873 926 998 1.100 123.7 1.305 1.521 30. The results of the evaluation by the consultants of alternative secondary conversion options to convert fuel oil into premium distillates indicated that thermal cracker (TC) or fluid catalytic cracker (FCC) would be the most suitable options. Investment requirements would range from US585 million to US$130 million for TC and FCC, respectively. In view of the prevailing uncertainties in crude and finished product prices in the international market and the need to reduce the public sector investment program, the Bank persuaded the Government to postpone the major investment for refinery expansion and a secondary conversion project and limit investment to improving the efficiency of existing operations through increased energy conservation and recovery of higher priced liquified petroleum gas which was being flared or burned in the furnace. 31. The lube oil blending plant feasibility study revealed that a lube blending plant with 24,000 tons per year capacity in single shift operation 1/ Source: GOIL.  -8- at a cost of US$15.0 million would be economically justifiable (20% ERR and $1S.69 million NPV at a 10% discount rate). In view of the attractive return and the potential interest of the private oil companies, the Bank recommended that the lube oil blending plant be earmarked for the private sector. The plant is nearing completion with private oil companies' participation in providing technology and financing. 32. The single buoy mooring (SBM) study showed that installing an SBM facility with submarine pipeline for crude oil unloading using 100,000 DWT tankers was uneconomical, given that the most economic crude oil sources for the Ghana refinery are Nigeria or other neighboring countries. It concluded that the existing shore jetty facilities with minor rehabilitations would continue to serve the refinery during its remaining economic life. 33. The bitumen study showed that light Nigerian crude generally processed in the refinery is not suitable for bitumen. Importing bitumen quality crude from the Middle East or the Carribean was found to be uneconomical from the point of view of crude oil transportation cost and overall products pattern. 34. The Volta Lake transportation of petroleum products study found such system to be economically viable. This study formed the basis of the IDA- financed Petroleum Refinery and Distribution Project (Cr. 1819-GH), currently under implementation. 35. The study on the bunkering facilities at Tema ahowed that the present bunkering market for Ghana was less than 20,000 tons oer year. A 1,000 DWT self-propelled barge at a cost of $2.63 million was :ound to be technically suitable. However, this arrangement would be uneconomical since a 5% reduction in prices assumed for bunker fuel and diesels would give a negative cash flow. Since it was doubtful that Ghana could attract additional volume of sales in competition with other bunkering ports in the West Africa region, a project for bunkering facilities at Tema could not be economically justified. 36. The study on the rehabilitation needs of GOIL product marketing and distribution system indicated that an investment of about US$9.5 million to rehabilitate retail outlets of various marketing companies was reasonable. However, it was felt that the marketing companies should rationalize their facilities to reduce cost, especially at locations where they are clubbed together. The Bank recommended that since marketing companies are fully owned subsidiaries of international oil companies, they should themselves make the investments needed to replace their existing obsolete facilities. Rehabiliation of GOIL's marketing and distribution facilities is under implementation under Credit 1819-GH. 37. The MIP study was included in the Project to review the organizational structures, financial management and accounting systems of the sectoral entities, GHAIP and GOIL. As mentioned earlier, this study was seriously delayed due to the reorganization of the sector (creation of GNPC) and the Government's insistence in finding grant money for the study. Although UNDP financed the study for GNPC, no grant funds had been obtained for the GHAIP/GOIL study. The study was finally completed in June 1989 but implementation of the consultant's recommendations had to be carried out under Credit 1819-GH. Both GHAIP and GOIL have made considerable progress in management restructuring and reducing overall staffing in their organizations. GHAIP expects to keep the overall staffing at around 300 in the future (from 681 in 1988). Trainina 38. GHAIP's technical staff, particularly those dealing with the refinery operation, are competent as evidenced by their successfully assuming the responsibility for running the refinery when ENI gradually phased out. They benefited from various training programs over the past years and from  further training under the Project. However, to maintain the desired level of competence and to replace some of the trained staff who left the organization, additional training is being planned. Proiect Manacement 39. GHAIP personnel acquired considerable experience from this IDA- financed project. Under Cr. 1819-GH, GHAIP agreed to maintain the project unit established under this Project and the engineering consultants, BEICIP, to continue on preparation and evaluation of bid documents, and project supervision at least until the completion of the second phase of the refinery rehabilitation under this credit. G. Bank Performance 40. The project was properly identified and appraised. IDA played a crucial role in the implementation of the work program provided under the different components of the Project. The Bank assisted the Government to ensure procurement procedures were followed and closely monitored the studies intervening when necessary to improve the quality of the studies. 41. The project was periodically supervised during its implementation with an average of two missions per year. The frequency and timing of the missions were necessary for the supervising staff to assess the activities in progress and to express their views and recommendations on project implementation. The quality of Bank supervision for this Project seemed to decline since 1987 as the Bank concentrated its efforts on getting Credit 1819-GH effective. Aide Memoires left with the Government did not cover Government's non-compliance with audit reporting requirements. 42. The dialogue and rapport between the Ghanaian officials, consultants, and Bank staff was constructive. The Bank, in consultation with Government representatives, maintained close contact with the consultants to ensure the work program was adhered to, that the output met quality standards, and that Bank procurement procedures were followed. B,nk staff continuity was good and the composition of the team working on the Project was constant and adequate. H. Borrower Performance 43. GHAIP was the beneficiary and implementing agency for the Government on this Project. They implemented their share of the Project in a satisfactory manner and in accordance with the covenants set forth in the Credit Agreement for the refinery rehabilitation and technical studies components but delayed adherence to the covenants dealing with the MIP (mainly due to Government insistence as expained earlier) and in audit reporting in the last two years. They provided local support for the proper implementation of the Project components. 44. In the early years of project implementation, GHAIP had difficulties in several aspects of Project implementation: establishing letters of credit, procurement, withdrawal requests, and selection of consultants. These were eventually resolved and decision making and project execution became reasonably efficient thereafter. 45. The Borrower did not seem to focus adequately on the MIP and training components during project implementation; as a result the implementation of these components was seriously delayed. Decisions to overcome these issues were postponed at several stages of project implementation. However, the situation was totally reversed and considerable progress has been achieved since 1990. 46. BEICIP's detailed engineering, procurement and construction supervision services were less than satisfactory since sufficient experienced engineering man-hours were not co-opted as stipulated by IDA when the Government insisted upon the appointment of BEICIP as engineering  - 10 - congultants.. This caused intensive supervision efforts by IDA staff to ensure successful project implementation. 1. P2xject Relationship 47. Relations between the Bank, GHAIP and the consultants were constructive and satisfactory. J. Consultina Services 48. Overall, the performance of the consultants was satisfactory. The quality of the techno-economic studies carried out by BEICIP was good and the studies were completed on time and within budget. The Bank is of the opinion, however, that the quality of the engineering work could have been better if more experienced engineers were selected to carry out the work. K. Proiect Documentation and Data 49. Bank supervision and back-to-office reports were satisfactory. Between missions, follow-up letters and telexes on issues that needed to be addressed, were sufficient, though sometimes delayed.  - 11 - PROJECT COMPLETION REPORT REPUBLIC OF GHANA PETROLEUM REFINERY REHABILITATION AND TECHNICAL ASSISTANCE PROJECT (CREDIT 1446-GH) PART II - REVIEW FROM THE BORROWER'S (MINISTRY OF ENERGY) PERSPECTIVE A. Introduction 50. Following the 1983 Budget Statement in which the Government of Ghana announced a series of economic reforms aimed at restructuring the country's economy, a request was made by the Government to the World Bank to provide assistance in co-financing a number of structural/sectoral adjustment operations as well as investment programmes in the country. 51. In November 1983 a meeting of the Ghana Consultative Group, convened by the Bank Group, endorsed the ERP which also included the Petroleum Refining Sector. This project had earlier been appraised by an IDA Mission (March 1983) and approved by the IDA (July 1983) and negotiated in November, 1983. All of this culminated, in March 1984, in the investment of SDR 6.6 million for the project. B. Proiect Obiectives and Description 52. The objective of the project is to increase substantially efficiency in the Petroleum Downstream Operations, decrease losses, and improve in energy conservation etc. 53. The Project consists o.r the following: Part A: Technical Assistance in the form of: inspection of refinery, studies related to petroleum products demand forecast, rehabilitation, revamping, maintenance improvement, energy conservation, training of GHAIP Personnel. Part B: Technical Assistance for feasibility studies for secondary conversion options, bitumen plant, Volta Lake transportation of products, single buoy mooring facilities at Tema port, lube oil blending plant, options for transportation of products from Tema to Akosombo i.e. petroleum products pipeline study. Part C: Technical assistance for management improvement programme. Part D: Equipment and material acquisition for rehabilitation and energy efficiency improvement of the Refinery. C. Proiect Desion and Organization 54. Parts A, B and C fall under the Ministry's component of the project. The implementation of Part C was delayed and was therefore completed under Credit 1819 even though payment was made from Credit 1446. 55. The project was designed in answer to a number of important policy issues on rationalization of the investment programme in the public and private sectors, including petroleum refining and distribution in Ghana. The results of the studies under the Refinery Rehabilitation and Technical Assistance Project conducted by BEICIP, a consultancy firm based in France showed that the operation and maintenance of the refinery and off site facilities had not been carried out satisfactorily and this became the conceptual foundation of the project.  - 12 - 56. All the energy sector institutions that are affected by the projects agreed on the scope and objectives of the projects. Several discussions were held between officials of the beneficiary institutions; namely GHAIP, GOIL, VRA, Ministry of Energy, Ministry of Finance & Economic Planning and the Project's supervisory missions from the World Bank and common ideas were shared by the named parties on the project. 57. The project concept was very good and innovative. Its scope and scale was appropriate and in line with stated objectives. The project was well prepared and its timing appropriate. 58. The roles and responsibilities of the institutions and agencies involved in execution of project were clearly defined and understood. 59. Co-ordinated efforts by the projects management team for GRAIP and BEICIP, the consultants coupled with the role of the Ministry of Energy, as well as the World Bank supervisory role and prompt action on honouring disbursement applications contributed tremendously to the successful and timely completion of the project. D. Proiect Implementation 60. All the projects under this component (Parts A & B), (apart from the Training of GRAIP Refinery personnel), were completed in December, 1984. Training for GHAIP Refinery staff was completed in November, 1988. A report on the status of the various components under Parts A and B, highlighting the completion dates, consultants and cost of study had already been forwarded separately to the IDA (reference our letter No. MFP/226/SF.15 of January 15, 1990). 61. The most critical variances between planned and actual project implementation were as follows: (a) The implementation of the Management Improvement Studies Programme was delayed far beyond the implementation period of project and therefore carried over to Credit 1819. It became a conditionality for effectiveness of Credit 1819. The initial cost of carrying out the study by the Arthur D. Little (ADL) far exceeded the amount budgeted for under Credit 1446. There was therefore a long lead time in looking for additional funding to cover study which proved to be futile. The scope and cost of study was therefore modified. (b) The "Inspection of Crude Oil Loading, Transportation, Unloading and Storage facilities of the Ghaip Refinery to determine the best ways and means of ensuring that future ocean losses are within industry norms" was not carried out at the request of the Government. 62. Some of these variances could not have been avoided due to financial constraints, Government policy issues, etc. 63. There were no risks associated with this component of project. E. Proiect Results 64. To a large extent the project achieved its objectives. On the macro and/or social growth policies, the project had led to: (a) Awareness on the part of policy makers on the future requirements of petroleum products and especially of the Refinery's capacity and configuration. (b) Identification of storage capacities and pipeline options for product distribution.  - 13 - (C) Implementation of Credit 1819. (d) Establishment of a Lube Oil Blending Plant. (a) Implementation of Phase II of Refinery Rehabilitation. (f) Improved operational performance of GHAIP and GOIL.  - 14 - PROJECT COMIPLETION REPORT REPUBLIC OF GUANA PETROLEUM REFINERY REHABILITATION AND TECHNICAL ASSISTANCE PROJECT (CREDIT 1446-GH) PART II. STATISTICAL INFORMATION 1. Relatgd Bank Loans and/or Credits in the Petroleum Subsector Project Title/ Year of Credit No. Puroose APProval Status Energy Project To rekindle interest and 1983 Completed as of (Cr. 1373-GH) accelerate petroleum December 31, 1990. exploration in Ghana; project entails collection, procissing and evaluation of exploration data; project includes technical assistance to strengthen the technical capabilities of the Ghana National Petroleum Corporation and the National Energy Board. Petroleum To rationalize the 1987 Under Refining and investment plan in the implementation Distribution petroleum refining and Project (Cr. distribution subsector; 1819-GH) increase the reliability and reduce the cost of petroleum products supplies in the country; reduce oil pollution from Tema refinery operations; improve the supply of agricultural products in the remote areas by bringing diesel and kerosene to these areas; counter deforestation with the increased availability of LPG and kerosene; and strengthen the organization, management and operating practices of GHAIP and GOIL.  - 15 - 2. Project Timetable Date Date Date Item Planned Revised Actual Identification 07/82 Preparation 1/83 03/83 Appraisal Mission 7/83 03/83 Credit Negotiations 4/84 8/83 11/83 Board Approval 12/84 10/83 03/84 Credit Signature 03/84 Credit Effectiveness 5/84 7/84 07/84 Credit Closing 12/85 12/86,12/87 12/88 Credit Completion 6/85 11/89 Issues Raised at Each Stage of the Proiect Cycle ,NoDraisal: *The mission recommended that subcontractors experienced in carrying out engineering inspection and preparation of detailed bid documents be hired alongside the continuous appointment of the technical consultants, BEICIP. Credit Closing: First Extension (to 12/30/86): Disbursed as of 12/85 - US$1.5 million Delays in the fulfillment of conditions for disbursement of the EIB loan; delays in the execution of the engineering agreement; delays in the selection of an engineering subcontractor and a construction contr2ctor; difficulties in the disbursement of the EIB loan due to certain EIB disbursement procedures. Second Extension (to 12/30/87): Disbursed - US$3.0 million Delay in appointing consultants for the management improvement study and training program for GHAIP. Third Extension (to 12/30/88): Disbursed - US$6.24 million Delay in appointing consultants for the management improvement study and training program for GHAIP.  - 16 - 3. Credit Disbursements Cumulative Estimated and Actual Disbursements 1US9m) June Year End 1984 ,195 1986 1987 1988 1989 Appraisal Estimate 2.5 6.0 6.9 - - - Actual 0.7 1.5 3.0 6.2 6.9 7.6 Actual as % of Estimate 3.0 25.0 43.5 89.9 100.0 110.1 Date of final disbursement: June 1989 Cancelled amount : $0.3 million Time Line of Planned and Actual Disbursements Disbursed Amount (US$m) 8 1984 1985 1986 1987 1988 1989 Year Appraisal Estimate 1 Actual  - 17 - 4. Prolact Imolementation Appraisal Estimate actual Indicator 1 Inspection of refinery and Completed crude handling facilities; surveyor's inspection of the crude oil loading, transportation and unloading system, studies related to demand forecast, rehabilitation, revamping, maintenance improvement, energy conservation, marketing and distribution facilities Indicator 2 Completion and di3cussions Studies were all on recommendations made on completed on time and the following studies: within budget secondary conversion options, bitumen manufacturing facilities, Volta Lake transportation of petroleum products, single buoy mooring facility and lube blending plant Indicator 3 Completion of the Study was seriously management improvement delayed and study - July 1, 1984 and recommendations are review with the Bank being implemehted recommendation emanating under Credit 1819-GH from the study by December 31, 1984  - 18 - 5. Prolect Cost -and inancina A. Proteet Cost (USSmI Appraisal Estimate Actual Local Foreign Total Local Foreign Total Item Costs Costs Costs Costs C0sts Costs (USS million) (US$ million) Inspection of refinery 0.08 1.79 1.87 0.01 0.74 0.75 and crude handling facilities; studies on demand forecast, rehabilitation, revamping, energy conservation, marketing and distribution facilties and training Feasibility studies for 0.02 0.75 0.77 0.00 0.75 0.75 secondary conversion options and bitumen manufacturing facilities, Volta Lake transportation of petroleum products, single buoy mooring facility and lube blending plant Management improvement 0.05 0.30 0.35 0.03 0.32 0.35 program Equipment/materials 1.20 11.65 12.85 2.39 15.86a/ 18.25 required ianmediately for rehabilitation and energy efficiency improvement Base cost estimate 1.35 14.49 15.84 2.43 17.67 20.10 Physical contingency 0.14 1.45 1.59 0.00 0.00 0.00 Price contingency 0.11 0.76 0.87 0.00 0.00 0.00 Total Project Cost 1.60 16.70 18.30 2.43 17.67 20.10 a/ Estimated cost. B. Financing Plan (USSm): Anyraisal Estimate Actual Local Foreign Total Local Foreign Total Item Costs Costs Costs Costs Costs Costs (USS million) (USS million) IDA 0.0 6.9 6.9 0.0 7.6 7.6 European Investment 1.6 4.7 6.3 0.0 7.8 7.8 Bank Government of Ghana 0.0 5.1 5.1 2.3 2.4 4.7 1.6 16.7 18.3 2.3 17.8 20.1  - 19 - 6. Project Results A. Direct Benefits The refinery rehabilitation work is expected to extend the economic life of the refinery by an estimated 12 years. The petroleum import bill could be reduced by about US$3 million in 1990 through decreased fuel consumption and hydrocarbon losses and could decrease further by US$1.2 million per year at the present average international prices for products and assuming the refinery operation is maintained at 1 million tons per year of Bonny light crude oil. A greater balance between refinery production and demand was attained and the need to import distillate products and export surplus residual fuel oil at distress prices were reduced as a result of the refinery rehabilitation work. Fuel consumption and hydrocarbon losses at various stages of unloading, storage, processing and handling were reduced from 8.5% at appraisal to 6% in 1990. GHAIP and the Government conducted a major restructuring program in order to reduce its excessive and unproductive labor force from 681 in 1988 to about 350 in 1991. GHAIP expects to maintain its work force at around this level in the future. B. Economic Imnact Appraisal Actual Estimate (At Final Development) Economic Rate of Return a/ 65% 21% Underlying Assumptions 1. Project costs $14.1 m $18.2 m 2. Reduced fuel consumption and hydrocarbon losses SlOm/year $ 4.2 m a/ Relating to the rehabilitation and energy efficiency improvement component. Comments The lower rate of return was due mainly to the increased costs of the rehabilitation and energy efficiency improvement as well as the collapse in oil prices subsequent to Board approval of the project.  - 20 - C. Studies Studies Status Impact of Studies To establish the diemand Completed Assisted Government in forecast and determine making structural/physical requirements for the improvements in the rehabilitation, revamping, refining and distribution maintenance improvements, network energy conservation, marketing and distribution facilities To prepare feasibility report Completed Assisted the Government on on the secondary conversion a number of policy issues: option, bitumen manufacturing the rationalization of the facilities, Volta Lake investment program in transportation of petroleum petroleum refining and products, single buoy mooring distribution; and the role facility and lube blending of private sector plant investment in the marketing subsector 7. Status of Covenants Deadline for Covenant Subiect Comnliance Status Develonment Credit Agreement Sec. 3.02(b) Employment of April 1, 1984 Complied but consultants delayed Section 3.02(g) Completion 6 months after Complied but report closing date delayed Section 3.02(i) Audit reports 6 months after Delayed but end of each complied for fiscal year years 1984- 1987; Bank has not yet received reports for 1988-1989 Section 3.03(a) Review of Complied; recommendations refinery emanating from inspection inspection of completed refinery and 11/83; crude handling discussions facilities with Bank 1/84 Section 3.03(b) Review of Discontinued at recommendations the request of emanating from the Government inspection of since the crude oil losses in ocean loading, transport could transportation, be reduced to unloading and acceptable storage levels through competitive  - 21 - Deadline for Covenant Subtect aompliance Status facilities of tanker GHAIP refinery chartering. Section 3.03(c) Carry out an Complied action plan based on preliminary evaluation and recommendations of alternative secondary conversion options and options for installing a bitumen plant Section Complete the July 1, 1984 Study was 3.03(d)(i) study on the completed in management June 1989. improvement program for GHAIP, GOIL and the Petroleum Department Section Prepare plan of December 31, Seriously 3.03(d)(ii) action based on 1984 delayed; recommendation implementation of study on the to be carried management out under Cr. improvement 1819-GH program Proiect Agreement Section 2.01 Acquisition of Complied Section 2.06 equipment and materials for the rehabilitation and energy efficiency improvement of the refinery Section 2.04(d) Coinpletion 6 months after Complied but report closing date delayed Section 2.07(a) Review of Complied recommendations emanating from inspection of refinery and crude handling facilities Section 2.07(b) Review of Cancelled at recommendations the request of emanating from the Government.  - 22- Deadline for Covenant Subiect ComDliance Status inspection of crude oil loading, transportation, unloading and storage facilities of GHAIP refinery Section 2.07(c) Prepare plan of December 31, Seriously action based on 1984 delayed; recommendation implementation of study on the to be carried management out under Cr. improvement 1819-GH program Section 4.02(b) Audit reports 6 months after Complied for end of each years 1984- fiscal year 1987; Bank has not yet received reports for 1988-1989 S. Use of IDA Resources A. Staff Input Planned Revised Actual Through Appraisal n.a. n.a. 2.3 Appraisal through Board Approval n.a. n.a. 52.6 Supervision n.a. n.a. 59.8 Total 114.7 n.a. - Not available  - 23 - S. Mission$ Month/ No.of Day.- Special- Types of Proiect Cycle Year Persons Field ization aatina Problems Through Appraisal 7/82 n.a. n.a. n.a. - Appraisal through Board 3/83 2 14 FA, PE - 1/84 1 5 PE Board through Effectiveness 4/84 2 16 FA, PE Engineer'g sub-contractor Supervision 9/84 2 8 FA, PE 4/85 2 16 FA, PE 2 Delay in selection of engineering sub-contractor 10/85 3 35 FA, PE 2 EIB disburse- LO ment procedure 2/86 2 11 l/ FA, PE 2 Slow disburse- ments 11/86 2 14 1/ FA, PE 2 Appoint- ment of consultants for MIP. 11/87 4 32 1/ FA, PE 2 Delay in implementation of training component, ap- pointment of consultants for study on the HIP 6/88 2 6 l/ ES, PS 2 Appointment of consultants for MIP 10/88 1 3 l/ PS 2 - do - GE n.a. - Not available 1/ Exact number of days uncertain as supervision/preparation for other projects took place at this time Specialization: FA-Financial Analyst, PE-Petroleum Engineer, LO-Loan Officer, ES-Energy Specialist, PS-Petroleum Specialist, GE-Geologist Rating 2 - Moderate problems  - 24 - ATTACHMENT I B El I |ElI B Don Europaeiske Investeringsbank 9 =;> >hi~ ~ ~ ~~~EIEI Europaische Investitionsbank EUPwW0oKli Tpd6Te4a Enev6#uewv European Investment Bank Banco Europeo de Inversiones Banque europ6*nn* d'investissoment Banca europee per gli investimenti Europese Investenngsbank Banco Europeu de Investimento Ms Mary Oakes Smith Chief Industry and Energy Operations Western Africa Department World Bank 1818 H Street, N.W. USA - WASHINGTON, D.C. 20433 Luxembourg, 27 May 1991 PA/ACP2-CICC/met/ 0 U622 Subject Ghana - Petroleum Refinery Rehabilitation and Technical Assistance Project (Ghaip) Dear Ms Oakes Smith, We acknowledge, with thanks, receipt of your letter dated 10 May .1991 enclosing your draft Project Completion Report concerning the above- mentioned project. We have studied this document with great interest since, as you know, the EIB has also been involved in the second phase of work on rehabilitating Tema oil refinery. If, by and large, the report does not give raise to specific comments, we are nevertheless surprised that on page 9, point 5, second paragraph, sub-para (v), you mention that one of the reasons for the delay in the project implementation was due to certain EIB procedures. This statement seems to be inconsistent with sub-para (i) of same paragraph as the EIB loan became effective only six months after the IDA credit. Moreover. we think that delays in the delivery of some equipment financed by the EIB, due to difficulties which arose in certain payments, did not affect the construction schedule because the equipment was not on the critical path. On the other hand, we are also of the opinion that the main reason for the delay was caused by problems in finalising the contract between Ghaip and the project engineering consultant, Beicip, and its sub-contractor Socetec. Accordingly, we should be grateful if you would take our comments into consideration when revising the text and we look forward to receiving one copy of your final document. Yours sincerely, C. Christofidis C. Cortese 100, boulevard Konrad Adencuer 3 L-2950 Luxembourg Tf: 4379-1 Luxembourg-Kirchberg Tx: 3530 bnkeu lu Fax: 43 77 04