China - Shuikou Hydroelectric 2

 ICRR 10311 Report Number : ICRR10311 ICR Review Operations Evaluation Department 1. Project Data : OEDID : OEDID: L3515 Project ID : P003526 Project Name : Shuikou Hydroelectric 2 Country : China Sector : Hydro L/C Number : Loan 3515-CHA Partners involved : Prepared by : Alvaro J. Covarrubias, OEDST Reviewed by : Alain A. Barbu Group Manager : Gregory K. Ingram Date Posted : 06/30/1999 2. Project Objectives, Financing, Costs and Components : The Second Shuikou Hydroelectric Project supported by a loan for US$ 100.0 million equivalent was approved in FY92 and closed in FY98 after a one year extension . A total of US$14.4 million was canceled. This loan was a follow up of loan 2775-CHA in the amount of US$140.0 million approved in FY87, which supported the construction of the first stage of the Shuikou hydroelectric project . The appraised cost of the combined first and second stages of the project was US$1,011.2 million and the actual cost is estimated at US$ 1,283.3 million or 26.9 percent cost overrun. The objectives of the project were to complete the Shuikou hydroelectric; transfer of modern power system technology; optimize the operation of the mixed hydro thermal generation system; improve the provincial power pricing arrangements; and assist the power bureau in financial management . These objectives were to be met by completing the construction of the Shuikou dam and power house components; resettling 67,000 people; constructing navigation facilities; and providing technical assistance to the Fujian Provincial Electric Power Bureau (FPEPB) on system planing, monitoring, and operation; tariff design and implementation; and training . In July 1996, the Board approved the addition to the project of a 500 kV transmission component to evacuate the output of the Shuikou plant. The project was completed in June 1998 with a delay of 18 months. About 99 percent of actual project cost (of which 17 percent the Bank) was allocated to the purchase of equipment, materials and services, and project administration for the construction of the dam; supply and installation of seven 200MW generating sets and ancillary equipment; construction of locks and shiplift facilities for two 500 ton ships; resettlement of 74,454 people; supply and installation of an energy management system (SCADA), and more than 200 km of 500 kV transmission lines and 1,800 MVA in two 500 kV transformer substations. 3. Achievement of Relevant Objectives : The project achieved its primary objective of developing efficiently a major hydroelectric site . The ex-post ERR is estimated at 25.8 percent (19.1 percent at appraisal). Also, the successful resettlement of 74,454 people exceeded the 67,000 estimated at appraisal, and the navigation facilities and environmental protection measures were completed. The FPEPB benefited from a generation planing study (preparation of a least-cost expansion plan to year 2010); a tariff study (transfer of tariff design methodologies, and development of a tariff reform plan ); a planning and commercial management study (transfer of software for demand forecasting and analysis, and business management); and a comprehensive training program (including study tours) on most important technical, financial, commercial, financial and management topics for the sound operation of a power utility . A total of 168 persons were trained. 4. Significant Achievements : In addition to the successful completion of the 1,400 MW Shuikou hydroelectric plant and navigation and environmental protection facilities plus the associated 500 kV transmission system, it is worth mentioning the highly satisfactory outcome of resettling more than 74,000 people. Recent surveys indicate that the enhanced agricultural and non-farm activities supported by the project have created more than 38,000 jobs increasing the average income of the resettled population by 44 percent after allowing for inflation . Moreover, the average per capita housing space of the resettled has increased from 30 to 38 square meters (the Shuikou resettlement experience was the subject of case study for OED's recent resettlement study ). 5. Significant Shortcomings : None. 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Highly Satisfactory Highly Satisfactory Institutional Dev .: Substantial Substantial Sustainability : Likely Likely Bank Performance : Highly Satisfactory Highly Satisfactory Although project preparation and appraisal was relatively slow, the Bank did it efficiently with only 83 staff weeks. Supervision was highly satisfactory by focusing in key implementation components (navigation facilities, resettlement, and tariff studies and action plan) and efficient (38 staff weeks spread over 7 supervision missions in 4 years). Borrower Perf .: Highly Satisfactory Highly Satisfactory Quality of ICR : Exemplary 7. Lessons of Broad Applicability : This project is replete of good practice lessons on population resettlement, which can be replicated elsewhere . Also, based on the successful experience had with the two - loan approach for the Shuikou hydroelectric plant, the ICR points out that an APL could be the appropriate lending instrument for large lumped infrastructure projects . It commits the Bank to the project, mitigates the early loan repayment burden before the project is commissioned, and reduces commitment charges. 8. Audit Recommended? Yes No 9. Comments on Quality of ICR : The ICR is exemplary. It presents an excellent description of project implementation and results, and a sound recalculation and analysis of the IERR of the project . It also offers many good practices derived from the experience had with the planning and implementation of the resettlement of about 74,000 people. The ICR includes the Borrower’s project implementation report, the plan for future operation of the project, and a detailed aide -mémoire of the ICR mission. It also includes photographs of the completed dam and powerhouse .