Argentina - Second Yacyreta Hydroelectric Project

Document ef The World Bank FOR OFFICIAL USE ONLY - ' f Hhpi;'! ' s.. . H 1 .'Report No. 10696-AR k/ I . ,.. I ., 1! ' STAFF APPRAISAL REPORT ARGENTINA YACYRETA HYDROELECTRIC PROJECT II AUGUST 31, 1992 Infrastructure and Energy Division Country Department IV Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the perfonnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency = Peso (P) P1.00 = US$1.00 [exchange rate as of January 1, 1992 (fixed in March 1991)] E:ASURES MMTOE million tons of oil equivalent W watt Wh watt-hour V volt VA volt ampere k kilo thousand (103) M mega million (106) G giga billion (109) T tera trillion (1012) ACRONYMS AyE Agua y Energia Electrica S. E. (federally-owned, nationwide electric utility and irrigation agency) CFE Consejo Federal de Electricidad (Federal Electricity Council) CNEA Comisi6n Nacional de Energia At6mica (National Nuclear Energy Commission) CTMSG Comisi6n T6cnica Mixta del Salto Grande (A-gentine/Uruguayan commission in charge of the Salto Grande hydroelectric plant) DC Despacho Unificado de Carga (Dispatch Center) EBY Entidad Binacional Yacyreta (Argentine/Paraguayan entity in charge of the Yacyreta hydroelectric plant) HIDRONOR Hidroelectrica Norpatag6nica (federally owned, electricity generation aaud transmission utility) ME Ministerio de Economia y Obras y Servicios Piablicos (Ministry of Economy and Public Works and Services) NIS National Interconnected System SE Sucretaria de Energia Electrica (Secretariat of Electric Energy, under the ME) SEGBA Servicios Electricos del Gran Buenos Aires (federally owned, electric utility serving the Buenos Aires metropolitan area) UESTY Unidad de Ejecuci6n del Sistema de Transmisi6n de Yacyret& (Execution Unit for the Yacyret& Transmission System, under the SE) UNDP United Nations Development Program FISCAL YEAR January 1 - December 31  FOR OmCL USE ONLY AROBTRWI YACYRET& II PROJECT STAFF APPRAISAL REPORT Table of Cantents LOAN AND PROJECT S .T...RY ..i............ . . ... . iii-iV 1. THE ENERGY AND POWER SECTORS A. The Energy Sector .1..................... . I Energy Resources, Demand and Supply . . . . . . . . . . . . . 1 Energy Policy, Sector Objectives, and Institutional Structure 1 B. The Electric Power Sector .................. . 2 Organization, Regulation, and Private Participation . . . . . 2 Expansion Planning .... . . . . . . . . . . . . . . . . . . 5 Investment and Finances . ................. . 9 Sector Strategy . . . . . . . . . . . . . . . . . . . . . . . 12 Bank Participation: Lesoons Learned, Assistance Strategy, and Rationale ...................... . 12 2. TH PROJECT A. Background .16 Project Origin and Status of Preparation .16 Project Objectives and Description . . . . . . . . . . . . . . 18 Estimated Cost and Financing Plan . . . . . . . . . . . . . . 20 B. Execution ..23 Legal Arrangements ..23 The Beneficiary ..23 Implementation and Monitoring ..27 Resettlement and Environttental Management Programs. . . 30 Procurement and Disbursement ..32 C. Economic Justification .................... . 35 D. Risks .......................... 36 3. AGRBEE1NTS REACHED AND REC.NDATIO . . . . . . . . . . . . . . . .37 7his repo s based on the fndings of an rsl miion conist of Meu. Neson de Franco odison LAder), Ricado Kiockner, Hean Garcia, Vrliam Paridge, nd George Led, which visied Agni d the project site in April 992. Mesrs. Jor6 Lreono Vieti, Robet Schneider, nd Bdwin Moore wee pecr reviewer. Supervison Manue include: Mr. min Ihys, Division Chief and Mr. PiFngCbeung Lob, Depament Direcor. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents -nay not otherwise be disclosed without World Bank authorization.  (ii) LIST OF ANNBXS 1.1 Energy Sector Organization Chart . . . . . . . . . . . . . . . . . . . . 1.2 The New Regulatory Fri tework . . . . . . . . . . . . . . . . . . . . . 1.3 The Power Market . . . . . . . . . . . . i . . . . . . . . . . . . . . . Attachments 1-2, Demand Projections for High and Low Scenario . . . . . 1.4 Capacity and Energy Balances . . . . . . . . . . . . . . . . . . . . . . Attachment 1, Installed Capacity . . . . . . . . . . . . . . . . . . . Attachment 2, Energy Requiremants for High and Low Demand Scenarios . . Attachments 3-6, Balances for High/Low Scenarios & Normal/Dry Conditions 1.5 Finances of the National Utilities . . . . . . . . . . . . . . . . . . Attachment 1, Electricity Tariff of SEGBA and Provincial Utilities Attachment 2, Combined Income and Source, and Application of Fund Statemento of the National Utilities (1991-1992) . . . . . Attachment 3, Balance Sheets of the National Utilities (1991-1992). . .. 2.1 The Yacyret& Treaty. . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 The Yacyreta Hydroelectric Sclenme . . . . . . . . . . . . . . . . . . . Attachment 1, Status of Execution . . . . . . . . . . . . . . . . . . . Attachment 2, Execution Schedule . . . . . . . . . . . . . . . . . . . Attachment 3, Estimated Cost of the Hydro Project Component (19Q2-1995) Attachment 4, Estimated Cost and Financing (1992-1995) . . . . . . . . Attachment 5, Cost Variations Since the Project's Inception . . . . . . Attachment 6, Reduced Elevation Operation Study . . . . . . . . . . . . 2.3 The Yacyret& Transmission System . . . . . . . . . . . . . . . . . . . . Attachment 1, Estimated Cost and Financing . . . . . . . . . . . . . . 2.4 -Estimated Project Costs and Financing (1992-1995) . . . . . . . . . . . Attachment 1, Summary of Estimated Project Cost and Financing . . . . . Attachment 2, Project Financing Plan . . . . . . . . . . . . . . . . . 2.5 EBY's Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . 2.6 BBY's Finances . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attachment 1, Detailed Total Cost and Financing . . . . . . . . . . . . Attachment 2, Actual and Forecast Income Statements . . . . . . . . . Attachment 3, Actual and Forecast Balance Sheets . . . . . . . . . . . Attachment 4, Long-term Debt Schedule ................. Attachment 5, Forecast of Debt Service - Amortization . . . . . . . . . Attachment 6, Forecast of Debt Service - Interest . . . . . . . . . . . Attachment 7, Disbursement of Loans and Credits . . . . . . . . . . . . 2.7 Resettlement and Environmental Management Progrms . . . . . . . . . . Attachment 1, Resettlement Program . . . . . . . . . . . . . . . . . . Attachment 2, Environmental Management Program . . . . . . . . . . . . . Attachment 3, Execution Timetable for the Resettlement and Environmental Management Programs . . . . . . . . ... . . 2.8 Project Disbursement .. . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 Bconomic Justification ............... .......... . Attachments 1-5, Net Present Value and Rate of Return for Various Schemes . . . . . . . . . . . . . . . . . . . . . . . 2.10 Project File ....... ... .. ... .. .. . ........ IS=: IBRD Nos. 14128R and 21188R  - ifii - ARGZNTINA YACYRSTI HMDROBLECTRIC PROJZCT IT ETAFF APPRAISAL REPORT LOAN AND PROIRCT SX-MARY Borrower: The Argentine Republic Beneficiaries: Entidad Binacional Yacyrett (EBY) and the Executing Unit for the Yacyret6 Transmission System (URSTY) Amount: US$300 million equivalent of which US$299 million for EBY and US$1 million for URSTY Terms: Repayment in 17 years including four years of grace, with interest at the Bank's standard variable rate. Proiect Oblectives: The project is designed to achieve the following objectives: (a) help provide efficient supply of energy in the mid 19905 by ensuring completion of Yacyret