Angola - Power Sector Rehabilitation Project

Document of The World Bank FOR OFFICILl USE ONLY MICROFICHE Copy Report No. 10524-ANG Report No. 10524-ANG Type: (SAR) MILLAN, T./ X34019 / J7 065/ AF3IE STAFF APPRAISAL REPORT PEOPLE'S REPUBLIC OF ANGOLA POWER SECTOR REHABILITATION PROJECT MAY 21, 1992 Industry and Energy Operations Division South Central and Indian Ocean Department Africa Region This document has a restricted distribution and may be used by redpients only in the perfonnance of their ofliciCl duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EO'JIVALENTS Date Currency Unit New Kwanza Mar. 91-Nov. 1991 US$1.00 = NKz6O Nov. 16, 1991 US$1.00 = NKz9O Feb. 29, 1992 US$1.00 = NKz18O April 1992 US$1.00 = NKz55O WEIGHTS AND MEASURES 1 hectare (ha) = 2.47 acres 1 kilometer (km) = 0.624 miles 1 kilogram (kg) = 2.2 pounds (lb.) 1 meter (m) = 3.28 feet 1 metric ton (m ton) = 2.204 (lb.) 1 square kilometer (kIn2P = 0.386 square mile (sq.m.) GLOSSARY ABBREVIATIONS AfDB = African Development Bank BNA = National Bank of Angola CCCE = Caisse Centrale de Coop6ration Economique (France) CELB = Companhia Electrica do Lobito e Benguela (power utility) EDFI = Electricite de France International EDEL = Empresa de Distribucao de Electricidade de Luanda (power utility) EIB = European Investment Bank ENE = Empresa Nacional de Electricidade (power utility) ESMAP = Energy Sector Management Assistance Programme GWH = Gigawatt- Hour HV = High Voltage ICB = International Competitive Bidding IDA = Intemational Development Association LCB = Local Competitive Bidding Kv = Kilovolt MV = Medium Voltage MW = Megawatt OGE = Orcamento Geral do Estado (General Budget) PPF = Project Preparation Facility SAR = Staff Appraisal Report SEEA = Secretaria de Estado de Energia e Aguas (Ministry of Energy) SDR = Special Drawing Rights SONEFE = Sociedade Nacional de Estudos e Financiamento de Empreendimentos Ultramarinos (Northem AngolaElectricity Company) TCF = Trillion cubic feet UCP - Project Coordinating Unit FISCAL YEAR January I to December 31  FOR OMCAL UUS ONLY ANGOAL POWER SECTrOR REHABITlO R,5: Tabl of CantenA CREDI1 AND PROJECT SUMMARY ........................... . i-iU 1. THE ENERGY S R ................................... Country Background ...................................... I Energy Resources ....................................... 1 Energy Consumptio-n ..................................... 2 Energy Insdtueons ....................................... 3 Bank Activides in the Sector ............................ 3 II. THE POWER SUBSECTOR ................................ 3 Power Supply ......................................... 3 Electricity Consumption ................................... 5 Demand Projections ....................................... 6 Electricity Tariffs. 7 Priority Program of Rehabilitation .8 The Capanda Hydroelectric Project ............................ 9 m. THE IMPLEMENTING AGENCIES .......................... 10 State Secretariat for Energy and Water .......................... 10 Empresa Nacional de Electricidade (ENE) ........................ 10 Sociedade de Estudo e Finan^;amento de Empreendimentos U3tramarinos (SONEFE) .................... .11 Staffing and Personnel Management ............................ 12 Billing and Collection .................................... 13 IV. TH PROJECT ........................................ 14 Program Objectives ...................................... 14 Project Description ....................................... 14 Institutional Reforms ..................................... 14 Rehabilitation of the Central Power System ....................... 1S Quileva-Huambo transmission line ............................ 15 Substations ....... . .................................. 1S Huambo distribution ................................ 15 This report is based on the finding of an appraisal mision to Angol in Fiebnuay-March 1992 which consisd of Mears. Paticio Milan, Senior Economis (Task Manage); Angel Baide, Power Engineer; lhomas Pereir, Fumancial alyst; Joao laptit, Enery Consultat; Leif Jensn, Power Engineer Consukaint; Leidal Tontein, Power Engie Consultant. Mr. Antonio Coinbra, Pin l Analyst Consulant participftd in a previous mission and contrlbuM-d to the repot Mr. Docar Thiam was the Per Reviewer and Mr. Alfred Guitone, tho Lead Advisor. Ms. Liliane Yomepe pravided secrtl suppost in the preption of the repot Mr. Michael Sarus and Mr. Francisco Aguirrn.SAsa are the managing Division Chief and the Depaitment Director, repctively, for the operation. 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.  Capacity Building for Power Maintenance ....................... IS Pilot Program of Prepayment Mete ........................... 1S Capacity Buildint for Management ........................... IS Technical Assistance to the SEEA ............................ 16 Rehabilitation of the Northern Power System ..................... 16 Project Preparation ...................................... 16 ProjecCosts .......................................... 16 FinancingPlan ............ ............................. 17 Project Implementation 1.................................... i Disbursements ........ ...... 19 Procurement .......................................... 19 Monitoring and Reporting ....... .......... ................. 22 Environmental Considerations ............... ................ 23 V.FINANCIAL ANALYSIS ................................... 23 Accounting Systems ..................................... .2 5 Audit ............................................... 2S Insurance ...................................... . 25 Past Financial Results .................................... 25 Future Performance ...................................... 26 VI. PROJECT JUSTIMCATION AND RISKS ...................... 27 Project Benefits ........................................ 27 Project Risks .......................................... 28 VII. AGREEMENTS AND RECOMM[ENDATIONS ...... .. .......... 29 Conditions of Credit Effectiveness ............................. 30 Recommendaion ....................................... 31 TEXT .ABLE 2.1 Demand Projections .... 6 4.1 Program Cost Summary ................... 17 4.2 Program Financing Plan ........... ....... 18 4.3 Disbursement Schedule .................. 19 4.4 Summary of Proposed ProcurementArngemis ............... .... 21 6.1 EconomicViabiityofRehablitationWorks ........ ............... 28 ANIXLM 1.1 Letter of Power Sector Policy 2.1 Installed and Available Generating Capacity in June 1991 2.2 Total Electricity Generation, Distribution and Losses 2.3 Thermal Plant- Current Situation and Actions in Progress 2.4 Hydro Plants- Current Situaton and Actions in Progress 2.5 Distribudon System in Luanda Province- ion of the present situation and actions in progress 2.6 Distribution Systems of Lobito-Benguea- Crcion of the prest situation and actions in progress 3.1 Organiztonal Chart of the State Secretariat of Energy and Water (SEEA) 4.1 Costs Tables  4.2 Capacity Building for Maintenance- Terms of Reference 4.3 Capacity Building for Management- Terms of Reference 4.4 Team of Expe