Ghana - Second Power Distribution Project

Cr. a5o FIL[E COPY RESTRICTED Rcport No. PUJ-52a, This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT APPRAISAL OF THE SECOND POWER DISTRIBUTION PROJECT ELECTRICITY CORPORATION OF GHANA REPUBLIC OF GHANA October 6, 1970 Public Utilities Projects Department  Curreny Equivalents Che New Cedi (NO) = 100 New Fesewa (NP) Cne New Cedi (NO) = Us$o.98 One US Dolar (US$) = N01.02 One million New Cedi (NO) - US$980,000 Measures Eqtdvalents One Megawatt (MW) = 1,000 kilowatts One Gigawatt hour (GWh) = 1 mdllion kilowatt hours ECG's Financial Year = Calendar Year Abbreviations and Acrony2M GWh - Gigawatt hour kV - Eilo volt kWh - Kilowatt hour MW - Megawatt CDA - Canadian International Developwnt Agency ECG - Electricity Corporation of Ghana GDP - Gross Domestic Product KI'W - Kreditanstalt fur Wiederaufbau VALCO - Volta Aluminium Company VRA - Volta River Authority Internal Financial Rate of Return - Equalizing discount rate of a cost and benefit stream attributable to investments made, expressed in financial terns  REPUBLIC CF GHANA ELECTRICITY CORPCRATICN OF GHAIIk APPRAISAL oF THE SECOND PCUYR DISTRIBUTION PROJECT TABLE CF CONTENTS Page No. SUMMRY i 1. ThTRCDUCTICN 1 2. THE POWER SECTOR 2 The Country and Its Economr 2 Organizations Responsible for the Power Sector 2 Volta River Authority 3 Electricity Corporation of Ghana 4 Institutional Changes 4 Power Utilization in Ghana 5 Rural Electrification 6 3. THE BORROJER AND THE BENEFICIARY 7 Managezent 7 Organization 8 Financial Management 9 Tariffs 9 Past Earnings 10 Present Financial Position 10 Taxes 12 I.nswrance 12 Audit 12 4. THE PROJECT 13 Background 13 Description 13 Cost Estimate 13 Procurement and Disbursement 11 Construction Schedule 15 Engineering Consultants 15 lanagement Consulting and Training Services 15 This report has been prepared by Messrs. E. A. Minnig and A. N. Memon of the Public Utilities Projects Department.  -2- Page 'No. 5. JUSTIFICATION 16 The Power Market 16 Internal Financial Rate of Return 17 6. FINANCING PIA!T AND FtUTURE PROSPECTS 18 Proposed Fnancing Plan 18 Financial Ou.tlook 19 Construction Expenditure Limitation 20 7. RECaIEATIONS 21  LIST OF ANNEXES 1. Diesel Generating Capacity 2. Tariffs 3. Income Statement 1968-75 4. Balance Sheet 1968-75 5. Quantities - 4 Main Centers and Smaller Systems 6. Cost Estimate - 4 Main Centers and Smaller Systems 7. Cost Estimate - Transmission Lines 8. Summary Cost Estimate 1971-73 Program 9. Disbursement Schedule 10. Diagram: Generation, Sales, Maximum Demand 11. Diagram: Sales by Tariff Classification 12. Analysis of Past and Forecast Generation, Sales, Maximum Demand 13. Table: Actual and Forecast Generation, Sales, I,a%ximum Demand Cost of Purchased/Generation 14. Table: Actual and Forecast Sales and Revenues 15. Sources and Applications of Funds 1970-75 MAP  REPUBLIC OF GHANA ELECTRICITY CORPORATION CF GHANA APPRAISAL CF THE SECOND PakTER DISTRIBUTICN PROJECT SUNARY This report appraises a distribution project of the Electricity Corporation of Ghana (ECG) proposed for construction from 1971 through 1973 and needed to meet the growing derand for power in Ghana. Because of Ghana's difficult foreign exchange situation, the Government on behalf of ECG has requested assistance from IDA to finance that part of the project's foreign exchange costs for which financing has not already been arranged from other sources. Total project costs are estimated at US$145. million, with foreign costs of US$10.1 million and local costs of US$4.4 million. The foreign exchange requirements would be provided by a US$7.1 million credit from IDA, a US$2.0 million loan from the Federal Republic of Germany (Kreditanstalt fur Wiederaufbau - KfW), and proceeds of a US$0.2 million UK loan to the Government, leaving US$0.8 million representing the cost of equipment already purchased and in stock. This would be the second IDA credit to ECG; the previous one, Credit ll8-GH in 1968 for US$10.0 million, was also for distribution. ii.