Nepal - The Karnali Preparation (Phase I) Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 11013 PROJECT CONPLETION REPORT NEPAL KARNALI PREPARATION PROJECT - PHASE I (Credit 1452-NEP) August 7, 1992 Energy and Infrastructure Operations Division Country Department I South Asia Regional Office 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.  CURRENCY EQUIVALENT Currency Unit - Nepalese Rupee (NR) NR 1.00 - US$0.064 (end-1983) - US$0.023 (end-1991) US$1.00 - NRs 15.65 (end-1983) - NRa 42.70 (end-1991) WEIGHTS AND MEASURES km - Kilometer (- 0.6214 miles) kV - Kilovolt (thousand volts) kW - Kilowatt (thousand watts) kWh - Kilowatt hour (- 860.42 Kilocalories) MW - Megawatt (thousand kilowatts) ABBREVIATIONS AND ACRONYMS CIDA - Canadian International Development Agency CK - Committee on Karnali FSL - Full Supply Level GOI - Government of India HPC - Himalayan Power Consultants HMG/N - His Majesty's Government of Nepal KCC - Karnali Coordinating Committee KCG - Karnali Consultants Group KMP - Karnali (Chisapani) Multipurpose Project NEA - Nepal Electricity Authority NK - Nippon Koei Co. Ltd. OBI - Overseas Bechtel Incorporated PCR - Project Completion Report SMHA - Snowy Mountains Hydroelectric Authority TOR - Terms of Reference UKHP - Upper Karnali Hydroelectric Project UNDP - United Nations Development Programme WB - World Bank FISCAL YEAR July 16 - July 15  FOR OFFCIAL USE ONLY THE WORLD SANK Washington, D.C. 20433 U.S.A. Ofce of DirectonCenai Operat:mn Evaluatkn August 7, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on NEPAL Karnali Preparation Project - Phase I (Credit 1452-NEP) Attached, for information, is a copy of a report entitled "Project Completion Report on NEPAL - Karnali Preparation Project - Phase I (Credit 1452-NEP)" prepared by South Asia Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment 2 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 NEPAL KARNALI PREPARATION PROJECT - PHASE I (Credit 1452-NEP) TABLE OF CONTENTS Page No. Preface . Evaluation Summary .......................... .i PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Project Identity . 2. Background . 3. Project Objectives and Description.. 2 4. Project Design and Organization.. 3 5. Project Implementation.. 4 6. Project Results.. 6 7. Bank Performance... 8 8. Borrower Performance . .. . . . . . . .8 9. Project Relationships ..9 10. Consulting Services 9.9 11. Project Documentation and Data.. 9 Annex I - Project Organization.. . 10 Annex 2 - Project Summary Statistics.. 11 Part II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 1. Project Identity.... . . . . 12 2. Background ..... ..... 12 3. Objective ....... .... 13 4. Scope of Work.......... . 13 5. Project Organization . . . .. ...... . 14 6. Project Implementation 14... ..... 14 7. Study Results.... ..... 14 8. Development Impact .... .. .... 15 9. Lessons Learned and Recommendations...... . 16 10. Other Matters. . ...... 17 11. Bridging Studies.... ...... 17 12. Integration Studies .... .. .... 18 13. Concluding Remarks . . ..... . . 18 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.  TABLE OF CONTENTS (Cont.) Page No. PART III: STATISTICAL INFORMATION 1. Related IDA Credits .e .. ... . ........... 19 2. Project Timetable . . . . . . . . . . . . . . . . . . . . . . . . 20 3. Credit Disbursements . . . . . . . . . . . . . . . . . . . . . . . 21 4. Project Implementation ........... . .......... 21 5. Project Costs and Financing . . . . . . . . . . . . . . . . . . . 22 6. Project Results . . . . . . . . . . . . . . . . . . . .23 7. Status of Covenants ...... .. ........ . 23 8. Use of Bank Resources . . . . . . . . . . . . . . . . . . . . . . 23  PROJECT COMPLETION REPORT NEPAL KARNALI PREPARATION PROJECT - PHASE I (Credit 1452-NEP) PREFACE This is the Project Completion Report (PCR) for the Karnali Preparation Project - Phase I in Nepal, for which Credit 1452-NEP in the amount of SDR 10.2 million (US$ 11.0 million equivalent) was approved on March 20, 1984. The final disbursement under the Credit was made on November 13, 1990, and the Credit was closed on December 31, 1990 with a total disbursement of SDR 10,148,368.30. SDR 44,452.16 was undisbursed as of December 31, 1990 and was cancelled as of that date. SDR 7,179.54 undisbursed in the Special Account was refunded to the Credit Account on August 8, 1991 and was cancelled as of that date. The PCR was jointly prepared by the Energy and Infrastructure Division, Country Department 1, South Asia Regional Office (Preface, Evaluation Summary, Parts I and III) and the Borrower (Part II). Preparation of the PCR was started in November 1990 during IDA's final supervision mission for the project and is based, inter alia, on the President's Report, Development Credit Agreement, supervision reports, progress reports, correspondence between IDA and the Borrower and internal Bank memoranda.  I  - li - PROJECT COMPLETION REPORT NEPAL KARNALI PREPARATION PROJECT - PHASE I (Credit 1452-NEP) EVALUATION SUMMARY i. The development of a major hydropower project at Chisapani on the Karnali River in Western Nepal has long been recognized as one of the most promising hydroelectric developments in Nepal which could generate substantial benefits from power export to India. Previous studies had examined the project's viability but did not consider the multipurpose aspects of the development and were inconclusive on the issues of project size and dam location. A final feasibility study was needed to confirm the project's technical and economic feasibility, given the geological and seismic risks in the area. At the same time, given India's stake and interest in the project development, India had to be closely involved in the study's supervision. IDA provided a credit of SDR 10.2 million to His Majesty's Government of Nepal (HMG/N), the executing agency being a Project Unit within the Ministry of Water Resources. India's involvement in the study's supervision was through two joint committees: (a) a high level (Secretariat) committee, the Committ-e on Karnali; and (b) a technical coordinating committee, the Karnali Coordinating Committee. This was the second credit granted to Nepal in the power sector following the Kulekhani project (Cr. 600-NEP) approved in 1976. Since then IDA has provided three additional credits, the most recent of which was approved in March 1992. Oblectives ii. Overall the project achieved its specific objectives and has defined the optimum location and design of a viable scheme, hence resolving the issues raised in the previous feasibility studies. iii. The project also established the prefeasibility study of an attractive 240 MW run-of-river scheme on the Karnali Bend upstream of the Chisapani site. Implementation ExDerience iv. Despite about one and a half years delay, overall project implementation was satisfactory. The project implementation delay was due mainly to: (a) the delayed appointment of the Study Consultant (para. 5.3); (b) protracted management decision processes within HMG/N's bureaucracy (para. 5.4); (c) the lengthy and delayed review process involving India through the main and coordinating committees (para.5.5); and (d) the Study Consultant's difficulty in gaining access to basic data mainly from India (para. 5.6).  - iii - Results v. The project confirmed that the Karnali (Chisapani) Multipurpose Project (KMP) scheme (10,800 MW at a cost of US$ 5 billion in 1988 dollars) is technically feasible and economically very attractive. However, the projeet did not address the numerous financial and institutional issues associated with the development of a binational project of this size. These issues and the project's macroeconomic impacts on the Nepalese economy vill be addressed under a UNDP-financed Integration Study which may also involve India's participation and is expected to start in 1992 or 1993 with IDA as the executing agency. IDA also plans to carry out sector work on Nepal-India power trade issues starting in 1993. vi. While the prefeasibility of the 240 MW run-of-river scheme upstream of Chisapani has been established, fundamental questions concerning the weak geology, dam foundations and sedimentation remain to be answered. These issues will be addressed through further site investigations to be carried out under the proposed Upper Karnali feasibility study. vii. The institutional arrangements devised to involve India in the supervision of the study did not succeed in raising India's interest in the project's development and in moving the project to the next phase of detailed engineering as was initially anticipated. Findings and Lessons Learned viii. The main lessons to be learned from the project are: (a) for a binational project, more binding binational arrangements -- probably in which both countries borrow and are obligated to IDA -- should be considered (para. 8.3); (b) the complex institutional, financial and macroeconomic aspects of the KMP development should have been part of the feasibility study (para. 7.3); (c) a contracting philosophy of a Client/Consultant relationship, as opposed to an Owner/Contractor relationship, should be adopted for studies where terms of reference and scope may change during contract execution (para. 9.1); (d) to facilitate good working relationships, the compensation package for counterpart personnel provided to the Consultant should not be too different from that of the local labor market from which the Consultant may hire local consultants (para. 6.3); and (e) when IDA supports preparation of a binational project, arrangements need to be made to insure that IDA has an effective dialogue vith both countries (para. 7.2).  PROJECT COMPLETION REPORT NEPAL KARNALI PREPARATION PROJECT - PHASE I (Credit 1452-NEP) PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Prolect Identity Name : Karnali Preparation Project - Phase I Credit Number : 1452-NEP RVP Unit : South Asia Region Country : Nepal Sector : Energy Subsector : Power 2. Background 2.1 Nepal's energy resources consist mainly of hydroelectric potential estimated to be around 83,000 MW, of which less than 250 MW had been developed by 1992. Traditional fuels, mainly wood, account for 93X of total energy use. Commercial energy (coal, petroleum products and electricity), which accounts for 7% of total energy use, supplies industry, commerce, transport and residential consumers in the main cities. Coal and petroleum products are imported from India as there is no domestic production or known reserves of fossil fuels in Nepal. 2.2 About 9% of Nepal's population has access to electricity, and annual per capita consumption is about 25 kWh, one of the lowest in the world. Although electricity consumption grew at a rate of 18X in the 1970's and 9S in the 1980's, the local market remains limited, and Nepal will not be in a position to use a substantial amount of its hydroelectric potential in the coming 40 to 50 years. On the other hand, the construction of medium and large projects with lower development costs (on a unit-cost basis) will not be possible unless Nepal can export a substantial portion of the electricity generated to India, the natural customer for it. Electricity exports would not only reduce the cost of internal consumption through economies of scale but would also generate foreign.exchange to support development efforts in Nepal. The substitution of Nepalese hydropower for coal-fired generation in India would also be environmentally beneficial. 2.3 The Indian power system is developing rapidly. In 1989 the total installed capacity was about 50,000 MW, which included 19,000 MW for the Northern India region and 8,500 MW for the Eastern India region, both of which border Nepal. Demand has continued to grow at a rapid rate (9-10% p.a.), and the supply capability has not kept pace with growth in demand. As a consequence, India has continued to suffer from very significant load shedding. 2.4 It has long been recognized that one of the most promising multipurpose developments in Nepal would be a major hydropower project at Chisapani on the Karnali River in Western Nepal. Before breaking through the  -2- last mountain range onto the Terai, the river has carved a 4 kilometers (km) long deep gorge which provides an ideal location for a high dam. In 1962, His Majesty's Government of Nepal (HMG/N) obtained financial aid from UNDP for a survey of the Karnali River potential. The studies, carried out by Nippon Kosi Co. Ltd. (NK) of Japan between December 1962 and February 1966, identified ten sites with potential varying from 18 to 1,800 MW. Among the various sites, the consultants recommended the development of a concrote gravity-arch dam with an 1,800 MW surface hydro plant at the upstream site of Chisapani. 2.5 NK's studies and recommendations were reviewed by the Snowy Mountains Hydroelectric Authority (SMHA) of Australia in 1968 under a UNDP- funded contract with HMG/N. Further site investigations were recommended in parallel with the study of an alternative embankment dam at the downstream site and an increased installed capacity. In 1976 HMG/N hired two firms, Norconsult from Norway and Electrowatt from Switzerland, to carry out further studies. Both firms concurred with SMHA's recommendation and proposed tho development of an embankment dam at the downstream site with 3,600 MW installed capacity. Both of these earlier studies, however, viewed the Chisapani project as a single purpose project, and no quantitative evaluation of potential irrigation in the Terai was carried out. 2.6 In view of the results of the studies, in 1978 HMG/N and the Government of India (GOI) established a high level joint committee, the Committee on Karnali (CK), to promote bilateral discussions on the Karnali (Chisapani) Multipurpose Project (KMP). At its first meeting in 1978, the Committee agreed to review the consultants' reports and the proposed projoct's economic and financial aspects. It was recognized that the first step would be to carry out a final feasibility study of the project which would consider the relative merits of the two alternative dam sites, assess the water-related benefits, and ensure that the selected devolopment would be compatible with the most likely development of the Karnali basin. In 1981 the CK also agreed that this feasibility study would be carried out under joint supervision, mutually agreed terms of reference, and jointly selected consultants. Subsequently, IDA was invited to propose draft terms of reference (TOR) for the studies of Chisapani. The draft TOR, completed in September 1981 and reviewed by both Governments, was the basis of appraisal of the project by IDA in February 1983. 3. Prolect Obiectives and Description 3.1 The project's main objective was to assess the economic justification and technical viability of the KMP as a multipurpose project on the Karnali River in Nepal, with India being closely involved in the study's supervision. The findings of the feasibility study of Chisapani would form the basis on which India and Nepal would decide whether or not to undertake the next phase, which would include detailed engineering, design and preparation of bidding documents. The project was also to assess tho prefeasibility of a smaller hydroelectric project upstream of Chisapani (Upper Karnali), mainly for domestic use.  -3- 3.2 The project consisted of: (a) preparation of the final feasibility study for Chisapani including all necessary engineering work to confirm the scheme's technical and economic feasibility; (b) prefeasibility of a proposed smaller project upstream of Chisapani (Upper Karnali); and (c) provision of advisory consulting services to HMG/N for overall supervision of the project. The project also included the acquisition of equipment, materials and instruments needed for site investigations as well as civil works related to: - rehabilitation and maintenance of a 2 km runway and related airport facilities at Tikapur, the nearest airport to Chisapani; - construction, operation and maintenance of a heliport at Karnali Bend; - rehabilitation and maintenance of about 25 km of access roads from Tikapur to Chisapani; - construction of exploratory tunnels at Chisapani (about 800 meters); and - construction of temporary housing and office facilities at Chisapani and Karnali Bend. 4. Proiect Design and Organization 4.1 Although the feasibility study was financed solely by Nepal, India was to be closely involved through the Committee on Karnali in the selection of the Study Consultant, supervision of the study, and endorsement of its recommendations. To advise the CK on technical matters regarding execution of the Chisapani studies, a joint technical committee, the Karnali Coordinating Committee (KCC), was established in 1984 with four technical staff appointed by each Government. The coordinating committee was to review the Study Consultant's work and make recommendations to the CK on policy decisions. Further, an International Board of Experts was to be appointed to advise the coordinating committee on specialized technical matters. 4.2 Nepal's Ministry of Water Resources was responsible for administering the project. A Project Director, who reported to the Secretary, Ministry of Water Resources, was responsible for day-to-day administrative matters. He had to provide the logistic support and qualified counterpart personnel to the Study Consultant and served as a liaison between the parties involved in the project. The studies under the project were carried out by Himalayan Power Consultants (HPC)1, in accordance with TOR approved by the CK in February 1984. Since Nepal did not have sufficient capability to execute projects of the size and complexity of Karnali, HMG/N appointed independent consultants, Overseas Bechtel Incorporated (OBI), to serve as its general project advisors. The project organization chart is given in Annex 1. 1/ HPC is a consortium of consultants which includes Acres (Canada), Ebasco (USA), Shawinigan (Canada) and SNC (Canada).  -4- 4.3 The prefeasibility study of a smaller project upstream of Chisapani (Upper Karnali) was carried out by HPC under the supervision of the Nepal Electricity Authority (NEA) and did not involve the CR since the project, unlike Chisapani, was intended mainly to supply the Nepalese domestic market. 4.4 The institutional arrangements were designed to involve India as much as possible in the KMP studies through the main and coordinating committees because India would be the sole customer of the energy to be generated by the KMP. However, the two committees did not function as efficiently as anticipated, and as a result, the two sides had conflicting views on the project design and benefit evaluation. The Indian counterparts in the coordinating committee did not endorse the methodology proposed by HPC of avoided cost for the evaluation of power benefits and denied that there could be any irrigation benefits. HPC was, therefore, not provided access to all of the data needed for power planning in India and for irrigation developments. Further, the Indian counterparts in the main and coordinating committees raised reservations on some important project design features (para. 6.5) and were unwilling to agree that an International Board of Experts be appointed to review the study and provide an independent expert opinion on the key design parameters. 5. Proiect Implementation 5.1 Credit 1452-NEP was approved on March 20, 1984, and signed on March 22, 1984. The Credit was made effective on June 21, 1984, upon submission of the legal opinion since there were no special conditions for effectiveness. 5.2 At the time of appraisal, both the KMP feasibility study and the Upper Karnali prefeasibility study were expected to be completed by June 30, 1988, and the Credit closing date was December 31, 1988. The studies were actually completed in December 1989, almost a year and a half behind the original schedule. This was due mainly to: (a) the delayed appointment of the Study Consultant; (b) protracted management decision processes within the Nepalese bureaucracy; (c) the lengthy and delayed review process involving the main and coordinating committees; and (d) the Study Consultant's difficulty in gaining access to basic data mainly from India. Further, the Project Unit adopted a rigid approach in administering the contract, placing all risks associated with unavoidable delays and cost overruns with the Consultant. 5.3 In view of the contract's size (the original contract amount was about US$ 8.5 million), the project raised world-wide interest in the consulting community, and a working group was set up within the Bank to monitor the selection process. Following an invitation issued on May 28, 1984, proposals were received from seven consortia of consultants representing 23 major consulting firms from 11 countries. The proposals were evaluated by a joint Nepal-India technical group which ranked the consultant Karnali Consultants Group (KCG)2 first and HPC second. The evaluation of the proposals by the OBI advisor, who took office in January 1985, reached a different conclusion and ranked HPC first. The results leaked outside, and 2/ KCG: Snowy Mountain (Australia), Harza (USA), Nippon Koei (Japan), and Binnie & Partners (UK).  -5- both consultants complained to the Bank. Political events in India in lato 1984 prevented the KCC from meeting between October 1984 and April 1985. Following its own review, the coordinating co =ittee confirmed the OBI advisor's recommendation, and on June 6, 1985, HMG/N notified IDA that the Committee on Karnali had selected HPC for the studies and sought IDA's concurrence. However, in view of inconsistencies in the evaluation reports submitted by HMG/N, IDA decided to review KCG's and HPC's proposals. IDA's evaluation concluded that both consortia scored about the same number of points, and on November 1985, IDA gave its concurrence to HMG/N's selection of HPC. It then took another six months for EMG/N to complete the negotiations with HPC, and the contract was executed only on May 28, 1986, exactly two years after the invitation of proposals. Actual mobilization of HPC was effective in June 1986. 5.4 The original contract for the KMP feasibility study was optimistically scheduled to be completed in June 1988, and all field investigations were to be carried out in one dry season. By March 1987, HPC recognized the need for a Contract Variation because of delays of approval of equipment procurement and subcontracts, unavailability of data on a timely basis, extension of the project scope in relation to the scheme's installed capacity, and introduction of a cost escalation budget not provided in the original contract. Following protracted and lengthy negotiations, Contract Variation 1, based on completion of the project in December 1988, was finally signed in July 1988. It was soon realized, however, that because of further delays which had occurred, the project could not be completed in December 1988, within the schedule and budget of Contract Variation 1. Protracted negotiations of Contract Variation 2 were held beginning in January 1989 and led to signing of Contract Variation 2 in July 1989, with project completion scheduled for December 1989. 5.5 The coordinating committee's supervision of the study turned out to be too infrequent and too formal and bureaucratic; and the "positioning effort" of each side prevented consensus even on technical matters. The working relationship within the coordinating committee was highly sensitive to the political climate prevailing between the two countries. In particular, the coordinating committee did not meet during the Trade and Transit Dispute (March 1989 to April 1990). Although informal contacts were maintained during this period, India's final comments on the final draft reports were received only in October 1990. 5.6 Lack of key data from India concerning power system planning and irrigation developments delayed execution of parts of the study. To complete the study, HPC had to use published data and make a number of assumptions which could be questioned. In view of the long-term planning horizon, the assumptions made on load growth, fuel cost, load factor, project cost and construction schedules necessarily include some risk and uncertainty. A number of sensitivity studies were carried out, however, to test the robustness of the study findings. 5.7 The prefeasibility of the Upper Karnali scheme was equally delayed, and the final report was issued only in December 1989. With the delayed issuance of the report, the Upper Karnali scheme was no longer the next most attractive option since HMG/N had already committed itself to the Arun 3 scheme, the detailed design of which was well underway.  -6- 5.8 The delay in the execution of the studies, combined with HIG/N having drastically reduced HPC's proposed staff time during contract negotiations, resulted in the need to increase contractual amounts during the study's execution. In particular, the number of staff months included in the contract to carry out satisfactory environmental and resettlement work was totally inadequate, and HPC had to devote much greater staff time to this critical area. There were two Contract Variations with HPC and three with OBI. The cost increases were directly related to the increased level of effort and duration of the study as well as adjustment of consultant fees. For the KMP feasibility study, the level of effort deployed was almost 701 greater than anticipated (560 staff months against 332 budgeted). Also, during the review process, HPC had to maintain a team of experts in Kathmandu over a longer period than planned to address the various comments from the KCC, IDA and HMG/N. Further, to respond to comments by IDA, additional studies were carried out to test the project's robustness under various planning assumptions concerning the Indian system, and an additional contract had to be concluded with HPC (US$ 215,000 and NRa. 1.4 million). 6. Prolect Results 6.1 Overall the project achieved its specific objectives. The KMP study defined the optimum location and design of a viable scheme, resolving the issues raised in the two previous feasibility studies. Further, the Consultant should be given credit for having prepared a design which provid-e three times the original capacity. This substantially enhances the project's potential economic benefits through displacement of peak capacity in the Indian system. However, this led to adopting several design parameters at scales which generated reservations among the Indian counterparts, who lacked experience with projects of the proposed scale. The optimized KMP scheme recommended in the study (10,800 NW at a cost of USS 5 billion in 1988 dollars) is technically feasible and economically very attractive. The optimized project's main features are given in Annex 2. The study recommended a 270 meter high embankment dam located at the upstream site of the Chisapani gorge; an underground powerhouse cavern for 18 units of 600 MW each; re- regulating facilities located 8 km downstream to provide uniform daily flows for irrigation from the highly variable flows of the DMP; and five 765 kV transmission lines to connect to the Indian system 300 km away. Regulation by the dam would provide a four-fold increase in dry season low flow with corresponding increases in agricultural production. In order to construct the project, however, it would be necessary to resettle about 60,000 people. Although not fully assessed yet, there may also be some loss of river habitat and encroachment on the Royal Bardiya Wildlife Reserve which is an area of special environmental significance. 6.2 The project also established the prefeasibility of an attractive 240 MW run-of-river scheme on the Karnali Bend upstream of the Chisapani site. However, unlike the KMP, the consultant did not carry out sufficient site investigations to address the fundamental questions of the weak geology, dam foundations and sedimentation. These investigations would be carried out under a proposed Upper Karnali feasibility study. 6.3 The project also achieved to some extent its objectives of transferring knowledge and providing on-the-job training. The study was  -7- executed entirely in Nepal with wide participation by Nepalese engineers (up to 40 Nepalese for 22 expatriates). Problems were encountered, however, with the timing and continuity of the counterpart staff provided. Further, the system of salary scales and incentive allowances for counterpart staff, compounded by differences with remuneration packages offered by HPC for directly hired local staff, contributed to problems in creating good team working relationships. 6.4 Unlike the previous studies, a major effort was made to assess the KMP's environmental impact and resettlement issues using local and expatriate staff. Further work is needed, however, to firm up the baseline environmental conditions to allow an authoritative assessment of impacts and mitigation. Some of the main outstanding environmental questions will be addressed in the Bridging Studies which commenced in November 1991 under financing by the Canadian International Development Agency (CIDA). In addition, an environmental impact statement and resettlement plan would need to be prepared during the detailed engineering phase of the MP's development. 6.5 The project did not succeed, however, in winning India's full commitment to the KMP, and a decision to proceed with the next phase (detailed engineering) is still uncertain. As yet, the feasibility study has not been formally approved by the Committee on Karnali because of reservations raised by the Indian counterparts on some KMP design features. These reservations pertain to: (a) the dam height and size -- the full supply level (FSL) of 415 meters with a 270 meters high dam is considered too risky; a lower FSL is preferred with a smaller dam; (b) the rate of sedimentation of 260 million tons per year estimated by HPC is judged excessive; (c) the probable maximum flood of 63,000 cubic meters/second is regarded as too high; (d) the underground powerhouse cavern's size is considered risky in view of the site's geological and seismic conditions; and (e) there is no agreement on the methodology used to evaluate the project benefits. The Panel of Experts (para. .7.1) appointed by IDA to review the study did not raise such concerns and concurred that the proposed scheme is technically feasible. 6.6 Despite these reservations, India is convinced that the KRP is a very attractive project which will be implemented at some time in the future. However, based on the latest meetings of the India-Nepal Sub-Commission on Water Resources, it seems that other projects, such as the Pancheswar Multipurpose Project on the Mahakali River on the Nepal/India border, may be considered for development as well. Therefore, at the conclusion of the KMP feasibility study, it is unclear whether India and Nepal are closer to signing an agreement to proceed with implementation of the KMP than they were before the study. In addition, further work (which has now been initiated under the  -8- Bridging Studies) is needed to confirm the project's environmental acceptability. 7. Bank Performance 7.1 At the identification stage, the Bank devoted great efforts to convince Nepal and India to undertake the KMP final feasibility study as a first phase of the KMP's development. The Bank drafted the terms of reference and assisted in finalizing the institutional arrangements for joint supervision of the study. Using a trust fund, the Bank appointed a Panel of Experts which provided detailed comments on the study. 7.2 The Bank recognized at the outset that Joint development of large export-oriented projects would face difficulties in agreeing how the project should be developed and the benefits shared. During supervision, the Bank's role was more focused on the progress of the study itself rather than on the Nepal-India interactions. The Bank's role as an intermediary "honest broker" was made more difficult by the split of internal responsibility for Nepal and India into two separate departments. To play an effective intermediary role, the Bank needed to communicate with both countries at the highest level, and the management of the project from only one country department may not have been as effective as it might have been under the pre-1987 Bank organizational structure. However, the Bank could not have anticipated the souring of political relations between the two countries, and an even more intensive Bank dialogue with India would not have achieved much during a period of such strained relations. 7.3 Resolution of the complex technical, financial, institutional, legal and riparian rights issues of large hydro projects in Nepal to be developed for export to India is complicated by the asymmetrical economic and political relations between the two countries. While most of the technical and engineering aspects of the KMP scheme have been satisfactorily covered under the feasibility study, the institutional and financial aspects as well as the macroeconomic impact on Nepal have yet to be addressed. These important issues, which should have been part of the feasibility study, are the subject of a UNDP-financed Bank-executed Integration Study which may involve GOI's direct participation and is expected to commence in 1992 or 1993. IDA also plans to carry out sector work on Nepal-India power trade issues starting in 1993. 8. Borrower Performance 8.1 At the beginning, the project suffered from protracted delays in selecting the Study Consultant. Once the Consultant was selected, it took another six months of negotiations to finalize the contract, which is excessive. The project also suffered from poor communication with the Consultant, leading to unresolved contractual and payment matters which adversely affected the working relationship and forced Consultant staff to spend time on unproductive activities. The Project Director's replacement in February 1989 greatly facilitated the resolution of all contractual matters in dispute and improved the working relationship. 8.2 The handling of relations with India was critical to the project's success. While the coordinating committee held eight meetings between 1984  -9- and 1992, this was not enough; and more importantly, the meetings were too formal, and the two sides did not seem to share a comnon goal for the project. In binational projects, it would be preferable to agree on a formula for sharing the benefits before engaging jointly in major studies. Further, Nepal does not seem to have a clear strategy for marketing its high potential hydro resources. Learning from past experience, Nepal should be more aggressive in selling its hydropower and integrating its power system with India. 8.3 The institutional framework adopted for the study gave India the right to review and criticize without having any significant responsibility. Nepal had to borrow the funds and satisfy IDA, whereas India could delay meetings and offer cavalier criticisms at will. The lesson is that in such circumstances more binding binational arrangements -- possibly in which both countries borrow and are obligated to IDA -- should be considered. 9. Proiect Relationships 9.1 HMG/N adopted a contracting philosophy of an Owner/Contractor relationship rather than a Client/Consultant relationship during contract negotiations and continued this approach during contract execution. This atmosphere, combined with HMG/N's policy of attaching personal financial liability to HMG/N staff, tended to shift all schedule and cost overrun risks to the Consultant and contributed largely to the delayed and protracted decision-making process. This is not desirable in contracts where terms of reference and scope may change during the contract. The project's success, however, is a result of the catalytic role of the consultant OBI and the effective working relationship between the Bank and HMG/N and the various consultants. Another contributing factor was the high professionalism of the parties involved, particularly on the part of the consultants HPC and OBI. The Bank failed, however, to maintain the dialogue with India on the KMP project as it did during the preparation stage. Also, Nepal and India's "positioning efforts" during coordinating comittee meetings did not contribute to the resolution of issues at hand. 10. Consulting Services 10.1 The high technical quality of the KMP feasibility study was the result of the level of effort, expertise and quality control devoted to the project by the consultants. In addition to the review provided by OBI and the Bank, HPC appointed an internal panel of experts to review the main critical design areas. Although the project's technical feasibility cannot be questioned given the amount of investigations and thorough analysis carried out under this study, some project features are unprecedented in South Asia. Perhaps in part for this reason, despite a high level of dedication, HPC did not succeed in winning the Indian counterparts' agreement on the merits of the KMP design features. 11. Prolect Documentation and Data 11.1 The Credit Agreement was adequate and appropriate for achieving the project objectives. Since it was a technical assistance project, there was no Staff Appraisal Report but the project data base was adequate for the preparation of the PCR.  PROJECT ORGCANISATION Karnali (Chisavani) KultipurDose Ipper Karnali Hydroelectric Proiect Project | ZEP^ | |IUDIA | COWITTEE ON KARNALI 1. LEGAL ADVISER NINISIR OF NEPAL ELECTRICITY UATER ESOURCES I AUTNoRln 2. FINANCIAL ADVISER Ka rnwf Co- Ordinatfng Committee ADVISER CNSULTAIT PROJECT DIRECTOR Overse B chtel Inc. PROJECT MANAGER LEAD ADVISER INTERNAL SlIDY OUNSJLTANT TECHNICAL COORDINATING . Himilayn AND ADVISORY COIUITTEE Power Consuttants |AD141MISTRATION SECTION FIELD OFFICE HNICAL SECTION TECHNICAL SECTION ADMINISTRFIELD OFFICE AND TECHNICAL AND TECHNICAL ADMINISTRATION ADMINISTRATION GENERAL A STRATI ri ADMINISTRATION O]>  - E11 - ANNEX 2 Chisapani Project Summary Statistics Location - at Chisapani on the Karnali River in western Nepal 600 km west of Kathmandu, 500 km east of Delhi Purpose - hydro power, primarily for export to India, and flow regulation for increased irrigated agriculture and flood control in both India and Nepal Hydrology - drainage area - 43 679 km2 - average tlow - 1389 m3/s Reservoir - full supply level (FSL) - 415 m, above sea level (asl) - average tailwater level - 203 m, asi - drawdown - 60 m - surface area (at FSL) - 339 km2 - live slorage - 16.2x109 m3 (37% of average annual runoff) Dam - type - gravel till wilh central core - crest elevation - 445 m, asi - maximum height - 270 m - embankment volume - 45x1 Of m3 Power Facilities - location - left bank. underground - capacity - 10 800 MW installed (9000 MW firm) - units eighteen 600-MW units (500 MW at minimum operating level of reservoir) - average energy - 20 842 GWh/yr Reregulating Facilities - location - 8 km downstream from Main dam - reservoir - 100x106 m3 live storage - dam - 6-km long embankment (maximum height-24 m) - power plant - six 14-MW units Transmission Facilities - five 765-kV lines from Chisapani power plant to India, 300 km long - one 22G-kV line from Reregulating power plant to India, 160 km long Irrigation - potential in Nepal - 191 000 ha net - potential in India Sarda Sahayak - 2 OOO 000 ha gross Saryu - 1 200 000 ha gross rotal - 3 200 W0 ha gross (Project provides supplemental water to existing and committed irrigation developments in India.) Costs (1988) - capital cost - US $4.890 million - economic cost (November2003) - US $6,808 million - equivalent economic unit costs - US $630 AW (3.3 tAkWh) Economic Evaluation (at 10% discount rate) - gross economic benefits (November 2003) - US $16,780 million - net economic benefits (November 2003) - US S 9,972 million - benefit/cost ratio - 2.46  - 12 - PROJECT COMPLETION REPORT NEPAL KARNALI PREPARATION PROJECT - PHASE I (Credit 1452-NEP) PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE The Government's contribution to the PCR was prepared by the Karnali (Chisapani) Multipurpose Project Office under the WinIstry of Water Resouues. The text below is as received from the Borrower; its contents are not attributable to IDA. Footnotes 1-6 have been added by IDA to clarify certain points in the text. .1 Proiect Identity Name Karnali Preparation Project - Phase I Credit No. 1452 - NEP Executing Agency Ministry of Water Resources, HMG/N Implementing Office Karnali (Chisapani) Multipurpose Project, Kathmandu Sector Power 2. Background 2.1 Nepal, a comparatively small nation with a territory of 147,181 kI2 and population of around 20 million has boen highly endowed by nature with immense water resources. More than 600 small and big rivers flowing through her territory from north to south and contained in three major river basins - Mahakali and Karnali, Gandaki and Koshi - generously offer the opportunity to develop around 83,000 MW of hydroelectric potential along with the vast possibility of developing irrigation and other uses. Nevertheless, due to poor economy and the preliminary stage of technological development, only less than 1% of the potential has been harnessed so far. 2.2 HMG/N has been developing and planning micro hydel plants up to 1,000 - 2,000 kW capacity in the rural hilly areas of the country. Small scale hydel plants of 50 - 100 MW capacity and medium sized projects of 250 - 1,000 MW capacity are also under planning to meet the internal power demand of the country. Whereas, mega project developments of multipurpose nature (power, irrigation, flood control, end navigation) on large rivors like Mahakali, Karnali, Sapta Gandaki end Sapta Koshi are being envisaged for bulk power export to India which is the only market. The demand of loectricity in rural terai areas is being met through the distribution network of national power system and operated by Nepal Electricity Authority. 2.3 Karnali river at Chisapani offers a unique location for a multipurpose development of mega scale. The feasibility of the project has been studied three times, the latest being completed in 1990 by Himalayan Power Consultants (HPC), a consortium of three Canadian and one American consultants. The previous two studies were conducted by Nippon Ko-i (NR) of Japan during 1962 - 1966 and Norconsult of Norway and Electrowatt of Switzerland during 1976 - 1978. While the first two studies viewed the project as a power generation project only with an installed capacity of 1,800 and 3,600 MW respectively, the last study by HPC had explored the multipurpose aspects of the project.  - 13 - 2.4 The feasibility study of Karnali (Chisapani) Multipurpose Project (KMP) was financed by the World Bank under a loan agreement between HMG/N tnd WB1 under credit number 1452-NEP for an amount of 10.2 million SDR. The initial contract amount of the.HPC was 7.8 million SDR which was raised to 9,127,603.26 SDR due to time extensions for the consultants and amendment in the initial scope of work. 2.5 Although the cost of the feasibility study was solely borne by Nepal, India has been participating in its supervision through policy level Committee on Karnali (CK) constituted in 1978 and the technical level Karnali Coordinating Committee (KCC) constituted in 1984 consisting of both Indian and Nepalese technical and administrative officers. 2.6 A total amount of 10,148,368.30 SDR inclusive of the reimbursed amount of 93,897.39 US $ for local coverage of costs spent from the loan amount. A sum of NRa 75,153,344.00 was also contributed by HMG/N as local component to conduct the study. 2.7 The project also included the prefeasibility study of Upper Karnali Hydroelectric Project (UKHP) a run-of-river hydroelectric scheme of smaller size upstream of the Chisapani reservoir for Nepal's internal use. 3. Oblective The basic objective of the project was to study in detail all the technical aspects of KMP and assess its technical viability and economic attractiveness along with identification of its scale of development and benefits that could be derived from the implementation of KMP. This would serve as a basis for Nepal and India to negotiate the possible implementation of KMP jointly. 4. Scope of Work The project consisted of following scope of works: 4.1 Preparation of a detailed feasibility study of the Chisapani Multipurpose scheme including field investigations, mapping and other engineering works in the form of a set of technical reports along with recommendations on the technical viability and economic attractiveness of the scheme. 4.2 A prefeasibility level study of a medium size run-of-river scheme upstream of Chisapani - Upper Karnali Hydroelectric Project (UKHP). 4.3 Procurement of necessary equipment, materials and instruments to carry out investigations and other relevant civil works as needed. 1/ World Bank.  - 14 - 5. Proiect Oraanization 5.1 MWR, HMC/N2 was responsible for the implementation of the project through the Karnali (Chisapani) Multipurpose Project Office working under it. Participation of India was facilitated in the supervision of the study through CR taking policy decisions based on reporting of KCC, a committee of technical staffs appointed by Government of India (GOI) and HMG/N. 5.2 An independent advisory consultant, Overseas Bechtel Inc (OBI) served as a project advisor to the Karnali (Chisapani) Multipurpose Project during the execution of the study. 5.3 HPC carried out the detailed feasibility study of KMP under the direct supervision of the RMP office. HPC also carried out the prefeasibility study of UKHP under the supervision of NEA. 5.4 Nepalese counterpart engineers were deputed to HPC to work with the expatriate personnel in different disciplines in order to facilitate transfer of technology and to coordinate different activities envisaged in the scope of work. 6. Proiect Implementation 6.1 The Credit 1452-NEP was made effective on June 21, 1984. The decision of HMG/N and GOI through CR to entrust HPC to carry out the detailed feasibility study of KMP was made in May 1985. The contract agreement with HPC was signed in May 28, 1986. The study was initially scheduled to be completed in June 30, 1988. However, the study was completed only in December 1989 and full set of final reports were delivered to KMP office in February 1990. Lack of constructive inter relationshiR between KMP office and HPC during the first period of execution of the study and lack of promptness in decision making from the HMG/N and RIP administration caused the delay. 6.2 Agreement for conducting the prefeasibility study of UKHP was signed between NEA and HPC in May 1986 and the study was also scheduled to be completed by June 30, 1988. However, the study was completed only in December 1989. It would appear that frustration of the consultants due to non payment on time for Chisapani study works resulted in lack of sincerity of the consultant to complete this study on time, although it was administered not by RMP office but by NEA project manager. 7. Study Results 7.1 Final conclusions of the feasibility of the Chisapani Project has shown that an economically attractive multipurpose scheme can be developed at Chisapani with a 270 m high embankment dam and an underground powerhouse of 10,800 MW capacity. As a peaking station, KMP would generate a total of 20,842 GWh of average energy annually. The project would also provide 2/ Ministry of Water Resources, HMG/N.  - 15 - irrigation facilities for 192,000 hectares3 of new command area in Nepal and for additional irrigation development of existing 3.2 million hectares of land in India besides providing some flood control and marginal navigation benefits. The project would cost 4.89 billion US $ at 1988 price and generate a net economic benefit of around 10 billion US $, that could be shared by Nepal and India. The study also indicated a high benefit-cost ratio of 2.46 for the project. 7.2 The prefeasibility study of UKHP indicated that given to the topography of the site an economically very attractive run-of-river hydroelectric scheme with an installed capacity of 240 MW can be developed at an estimated cost of 365 million US $ including access road (about 65 km) and more than 200 km of 220 kV transmission line up to main load conters in Nepal. 7.3 In spite of the high quality of the feasibility report, high standard of methodologies applied, critical and scientific analyses of project economics, detailed study of relevant technical aspect. of the project, the Indian side has expressed reservations on the project parameters recommended by HPC and the methodologies and quantitative evaluation of benefits derivable from the project. This has questioned the project development and moving into the detailed engineering and design phase. This is mainly because of India visualizing KMP from the traditional viewpoint of developing large projects in India internally and ignoring its international dimensions and undermining the role of KMP in Indian system in spite of the acute power shortage in the Indian system, which can be met only by undertaking more costly alternatives, basically the thermal plants. Further, the Indian side has always maintained a position of scaling down the project, turning it into more as a hydropower project (sic) and has always shown their unwillingness to accept the rational of evaluation and sharing of all logical benefits that may be derived from the project. 8. Development Impact 8.1 The project has resulted in developing technical skills of about 30 to 40 Nepalese engineers. Many Nepalese local consultants were bonefitted in acquiring technical knowledge from the consultant. High level decision makers in HMG/N have acquired pretty good knowledge of diversities, complexities and magnitude of administrative and technical works to be handled while undertaking a feasibility study of a mega project. 8.2 Although Nepal was not fully successful in securing the commitment of India for immediate undertaking of the project the interaction of high level HMG/N officials with the concerned Indian counterparts have been very useful for Nepal to understand and evaluate India's attitude towards development of this binational mega scheme. This can be well applied in negotiating other mega projects with India. The content of the feasibility reports, specifically the statistical information and methodologies applied in the feasibility study will serve as a very useful basis for planning power development in Nepal for quite a foreseeable future. Project advisory 3/ Feasibility study gives a figure of 191,000 hectares.  -16 - consultant OBI has played appreciable role in guiding the KMP office for the successful completion of the project. 9. Lessons Learned and Recommendations 9.1 Contract negotiations between HMG/N and HPC took unusually long period of around six months which delayed the commencement of the feasibility study. 9.2 It has been realized that a very healthy working inter relationship between the client and the consultant must be maintained for smooth and timely completion of the study. 9.3 The WB should have played more effective role and paid more atten- tion towards resolving the difference of opinion between the consultant plus the Nepalese side and the Indian side. In this regard a steering committee consisting of representative of the Bank, EHG/N, GOI and the consultant to review the progress of the study and quick resolution of the differences of opinions might have been useful. The Bank should consider this for future involvement of the Bank in moving the Karnali Project towards Phase II. 9.4 The interaction between the KMP office and concerned Indian counterparts was poor due to several reasons. Exchange of views with the Indian officials could be made only in the CK and KCC meetings which used to take place after long gaps. This has contributed to non resolutions of several issues. 9.5 HPC expatriates were not always accommodative towards India's request for making some complimentary studies and failed to win the goodwill of the Indian officials. 9.6 In future studies or Phase II works of KMP, Indian involvement both technically and financially and joint day to day administration of the activities might be fruitful. However, their commitment for openness, exposure of information, allowances for reasonable compromise on important issues and timely response should be secured. 9.7 In the KMP administration, only technical personnel as counterparts have been provided with hardship allowances. Accounts and administrative officials were being provided only their regular salaries. This has reduced the internal efficiencies of the project management. Provisions for such allowances should be considered. 9.8 The prefeasibility study of the Upper Karnali Hydroelectric Project was completed in December 1989. A 240 MW run-of-river hydroelectric scheme was found very attractive. This project has a special significance, because of (i) no hydroelectric scheme has been developed so far in the Far Western Region of Nepal, (ii) it can supply construction power for Chisapani and Pancheswar projects, and (iii) it can significantly help socio-economic promotion of the area. A Terms of Reference (TOR) on the feasibility study of UKHP was developed by KMP in 1990 and had been approved by the Bank. It  - 17 - indicated a total requirement of 2.2 million US $ (at 1990 price level) to complete it. 9.9 In all the missions between June 1990 and June 1991 of the WB to Nepal, the Bank had been consistently recommending and encouraging HMG/N to request for financing the feasibility study of this project. HMG/N made a request to the Bank in September 1990, but the Bank has not yet responded to it. HMG/N is very eagerly awaiting for the Bank's positive response to it.4 10. Other Matters 10.1 A summary of statistical information on credit disbursements, project costs and financing etc. are given in Part III of the PCR. These information were found to be adequate. 10.2 In item number 7 "Status of Covenants" of the Part III of the PCR, there is a remark on delay of audit reports. The delivery of audit reports were delayed due to auditing procedures of HMG/N in spite of prompt actions taken by the Project to complete them on time. 10.3 The Bank's views and analysis contained in Part I of the PCR are agreeable to KMP. Moreover, the relationship between the Bank and the Borrower right from the beginning of the study has been always encouraging and productive. 11. Bridzina Studies 11.1 A program of studies including data collection/collation around the dam site consisting of hydrometric, sedimentation and seismic measurements as well as environmental impact studies is currently undergoing with the assistance of Canadian International Development Agency (CIDA) and is being conducted by HPC. However, another important study related to the resettlement of population around the Chisapani reservoir area still needs to be undertaken for a better assessment of socio-economic impacts of the project. These studies being taken up as a bridging activities between Phase I - Feasibility Study of and Phase II - Detailed Engineering and Design work. of the project are very important for accurate establishment of design parameters of the project as well as for the more detailed analysis of socio- economic and environmental impacts both in Nepal and India. Continuation of these studies is felt essential and HMG/N is looking for arrangement of additional financing to complete these studies from the donor agencies. In addition, study on irrigation development in Karnali command area in Nepal and some complimentary studies related to the resolution of the feasibility study issues specifically those raised by the Indian side also need to be completed. The cost requirement for these studies under a package titled "Bridging Studies - Phase 2" will be from 1.5 M US $ with irrigation development and 3.5 4/ The Bank advised HMG/N in early 1992 of its willingness to finance the feasibility study under the ongoing Third Technical Assistance (Pancheawar) Project (Cr. 1902-NEP) and/or the recently approved Power Sector Efficiency Project (Cr. 2347-NEP).  - 18 - M US $ inclusive of irrigation development in Karnali command area of 192,000 hectares (sic). 12. Integration Studies 12.1 The scope of detailed feasibility study of KMP did not include analysis of the issues related to Financial, Institutional/Contractual arrangements for the implementation and operation of the project as well as issues related to the role of KMP in Indian and Nepalese power systems, assessment of benefits and macro economic impact of the project in the context of Nepal's economy. These studies called "Integration Studies" are being financed by UNDP with WB acting as executing agency and KMP office coordinating as implementing agency.5 12.2 Better part of these studies can be conducted solely by Nepal whereas analysis of KMP in the Indian power system along with assessment of power, irrigation and flood control benefits requires Indian participation for obtaining more accurate results of the analysis for better appreciation of financial, institutional/contractual arrangements both by Nepal and India. HMG/N intends to contact GOI in this regard. It is realized that both WB and UNDP could play a role of "third good will party" to coordinate the matter between HMG/N and GOI.6 13. Concluding Remarks 13.1 KMP, if materialized, will be the largest hydro development in the Indian subcontinent and one of the ten largest projects in the world. By virtue of its location in Nepal and market availability of generated energy in India (sic), it is a binational project between Nepal and India. It will require a huge investment of around 6 billion US $ by the time of its completion. A scheme of such a nature and magnitude naturally requires resolution of cost and benefit sharing issues between Nepal and India and also a strong and effective organization to manage its construction along with arrangement of finances and commercial arrangements etc. As such it is advised that all concerned parties continue their best efforts to keep the project moving on. 5/ Issues related to the role of KMP in the Indian and Nepalese power systems and assessment of benefits were addressed in the feasibility study of the KHP. However, access to the data needed for power planning and irrigation develop- ments in India was limited in the feasibility study (paras. 4.4 and 5.6 in Part I), and it is intended to strengthen these aspects of the analysis in the Integration Study. 6/ Based on the "lessons learned" under the present project vis-a-vis the importance of India's direct participation in studies of binational projects such as the KMP (para. 8.3 in Part I), it was agreed in March 1992 that, as a first step, HMG/N would approach GOI about its possible participation in all aspects of the Integration Study.  - 19 - PROJECT COMPLETION REPORT NEPAL KARNALI PREPARATION PROJECT - PHASE I (Credit 1452-NEP) PART III: STATISTICAL INFORMATION 1. Related IDA Credits Credit Purpose Year of Status Comments No. Approval Cr. 600-NEP Help expand 1976 Completed 21 month delay Kulekhani the hydropower in 1982 and 80Z cost Hydroelectric generating overrun Project capacity (2 x 30 MW) Cr. 1478-NEP Provide generation 1984 Hydroplant Physical Harsyangdi capacity up to commissioned implementation Hydroelectric 1993 in February successful Power Project 1990 NEKA financial (3 x 23 MW) performance unsatisfactory Cr. 1902-NEP Carry out field 1988 Under Third Technical investigation for implementation Assistance the Pancheswar (Panch-swar) Multipurpose Project Project Finance studies and TA in the power sector Cr. 2347-NEP Increase NEA's 1992 Not yet signed/ Powor Sector effective supply effective Efficiency capacity Project Strengthen NEA's financial/ institutional performance Enhance energy conservation measures  - 20 - 2. Project Timetable Item Date Date Data Planned Revisod Actual Identification (Executive - - 03/03/82 Project Suinary) Preparation Hission - - 06/82 Appraisal Hission - - 02/22 - 03/05/83 Crodit Negotiations (Completed) - - 05/30/83 Board Approval - - 03/20/84 Credit Signature - - 03/22/84 Credit Effectiveness 07/84 _ 06/21/84 Credit Closing 12/31/88 12/31/89 12/31/90 Credit Completion 06/30/88 06/30/89 06/30/90  - 21 - 3. Credit Disbursements (US$ Million) Estimated Actual Actual as a IDA Fiscal Year Cumulative Cumulative % of Estimate June 30, 1985 4.5 0.14 3% June 30, 1986 9.5 2.15 23% June 30, 1987 10.5 3.41 32% June 30, 1988 11.0 6.98 63% June 30, 1989 11.0 9.77 89% June30, 1990 11.0 12.66 115% Final disbursement was made on November 13, 1990, bringing the total disbursement to SDR 10,148,368.30. SDR 44,452.16 was undisbursed as of December 31, 1990 and was cancelled as of that date. SDR 7,179.54 undisbursed in the Special Account was refunded to the Credit account as of August 8,1991 and was cancelled as of that date. The increase in the amount of the Credit expressed in US$ equivalent Is due to appreciation of the SDR relative to the USS. 4. Proiect ImDlementation N.A.  -22- 5. Project Costs and Financing A. Project Costs (USS Million) Appraisal Estimate Actua Foreign Foreign Local Exchange Local Exchange Expenditure Categoro Costs Costs Total Costs Cot TotlI 1. Consulting Services (a) For the Studies 1.2 5.6 6.8 2.17 10.99 13.16 (b) HMG/N Advisors 0.1 0.6 0.7 0.07 1.12 1.19 2. Equipment and Tools 0.3 0.5 0.8 0.07 0.20 0.27 3. Miscellaneous Constructlon 0.8 2.3 3.1 0.09 0.11 0.20 4. Operation Expenses Project Office 0.4 0.1 0.5 0.02 * 0.08 0.10 5. Contingencies 0.4 1.7 2.1 6. Taxes and Duties 0.6 0.6 Total Cost: 3.8 10.8 14.6 2.42 12.50 14.92 Includes local taxes. Additional drilling equipment costing the equivalent of about US$660,000 was provided by CIDA (Canada) in the form of a grant. B. Financina Plan (USS Million) Planned Actua Sources IDA HMG/N Total IDA HMG/N ioail Foreign 10.8 10.8 12.5 12.5 Local 0.2 3.6 3.8 0.1 2.3 2.4 Total: 11.0 3.6 14.6 12.6 2.3 14.9 * Additional drilling equipment costing the equivalent of about US$660,000 was provided by CIDA (Canada) In the form of a grant.  - 23 - 6. Prolect Results A. Direct Benefits : N.A. B. Economic Impact : N.A. C. Financial Impact : N.A. D. Studies : The project was a technical as-istance project consisting of a feasibility study and a prefeasibility study as discussed in the text of the PCR. 7. Status of Covenants Brief Description Section Conformity Remarks 1. The Borrower to furnish DCA 4.01(ii) No Although the period was increased within nine months after to 12 months (amendment of March 8, the end of each fiscal 1989), the audit r port of the year a certified audit project accounts certified by the report of the project AuditorGCeneral was always received accounts. beyond the deadline. The audit incLuded the verification of the use of funds from the Special Accouint. 8. Use of Bank Resources A. STAFF INPUTS* Stage of Proiect Cycle Actual CQmmts Through Appraisal 42.8 sw Includes 5.7 LOP Appraisal through Board 9.2 sw IncLudes 6.1 LOP Supervision 75.5 Sw Includes 2.2 PAD Project CompLetion Report 2.4 sw TOTAL : 129.9 sw * Local higher level staff and local consultants discounted at 4:1 ratio.  - 24 - 6. MISSIONS Stags of Month/ Number of Days in SpecializatIon Psrfoc* Type of Proeif yct Yea nr Persons Field Reresented Probles (of which is KarnaLi)ZY Through Aoraisat Preparation 06/82 1 Engineer Appraisal 02/83 1 13 Engineer Sucervision Supervision 1 06/84 1 4 Engineer 1 Supervision 2 03/85 1 4 Engineer 2 Supervision 3 06/86 3 14 Engineer (2) 1 Financial (4) Financial Analyst Supervision 4 10/86 1 6 Engineer 2 Supervision 5 03/87 2 5 Engineer 2 Financial Analyst Supervision 6 01/88 4 20 Power Engineer (2) 2 (5) Financial Analyst Consultant Supervision 7 06/88 2 14 Power Engineer 2 Financial (6) Financial Analyst Supervision 8 10/88 6 12 Power Engineer (4) 2 (8) Financial Analyst Consultant Supervision 9 05/89 5 15 Power Engineer (3) 2 (5) Financial Analyst Economist Supervision 10 11/89 6 11 Power Engineer (3) 2 Financial Analyst Economist Consultant Supervision 11 05/90 3 8 Power Engineer (2) 2 (4) Financial Analyst Supervision 12 11/90 3 13 Power Engineer 2 Issue of reports delayed (3) Financial Analyst Economist / 1 - Problem free or minor problems; 2 -Moderate problems; 3 - Major problem. 2 Conbined mission with other projects.