Honduras - Rio Lindo Hydroelectric Project

CONFIDENTIAL Report No.76* INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT PERFORMANCE AUDIT REPORT on HONDURAS THIRD POWER PROJECT May 30, 1975 Operations Evaluation Department PREFACE Loan 541-HO and Credit 116-HO, to the Government of Honduras for on-lending to the country's main power enterprise ENEE (Empresa Nacional de Energia Electrica) were signed in June 1968 and closed, fully disbursed, in July 1972. This report covers a performance audit of achievements measured against the objectives on the basis of which the loan/credit was originally approved and of the Bank's participation in the project. To prepare the audit, relevant Bank files were reviewed, and project implementation was discussed with IBRD staff members who had been directly concerned with the operation. Note: Currency Equivalent (Lempiras) US$ 1 = 2 Lempiras (applied throughout this report) 1 Lempira = 100 centavos TABLE OF CONTENTS Page No. SUMMARY i - ii BASIC DATA SHEET ii - iv I. Background 1 II. The Project 2 III. Project Implementation 3 IV. System Planning and Economic Justification 7 V. Financial Performance and Project Financing 8 VI. Organization and Management 10 VII. Conclusions 11 LIST OF TABLES Table 1: Loan 591-HO/Credit 116-HO. Actual vs Projected Disbursements Table 2: Actual vs Estimated Project Costs (Detailed Breakdown) Table 3: Actual vs Projected Sources and Application of Funds (Detailed Breakdown) 1967-1971 Table 4: ENEE Actual vs Projected Income Statement Table 5: ENEE Actual vs Projected Balance Sheet Table 6: ENEE Actual vs Projected Energy Sales Table 7: ENEE Actual vs Projected Energy Sales - By Area Table 8: ENEE Interconnected System: Energy Sales, Energy Generation, Maximum Demand & Firm Capability Maps: Empresa Nacional de Energia Electrica Rio Lindo Hydroelectric Project (2) Units and Measures kw = kilowatt Mw = megawatt = 1,000 kilowatts kwh = kilowatt hour Gwh = gigawatt hour = 1,000,000 kwh kv = kilo volt m3= meter = 3.28 ft. m = cubic meter = 35.5 cu ft Abbreviations ENEE = Empresa Nacional de Energia Electrica CABEI = Central American Bank for Economic Integration  SUMMAR Y Loan 541-HO, and Credit 116-HO, of US$ 7.5 million and US$ 4.0 million respectively, to the Government of Honduras for on-lending to the country's main power enterprise, Empresa Nacional de Energia Electrica (ENEE) were signed on June 12, 1968 and fully disbursed by July 1972. The purpose of the loan/ credit was to finance the foreign exchange cost of a US$ 17.7 million project expected to account for about 70% of ENEE's investment expenditures 1967-71. The project consisted principally of: 1. The 40 MW Rio Lindo hydroelectric scheme, using water discharged from the Canaveral plant built under an earlier loan and intended to be the most economical addition that could be made to meet growing demand on ENEE's main interconnected system; 2. A 69 kv transmission line of about 32 km from Bufalo to La Lima and El Progreso, with related substations, to supply these two important secondary towns with more economical elec- tric power from ENEE's main system; 3. A 53 km 138 kv transmission line from Rio Lindo Power Station to San Pedro Sula to increase the reliability and eventually quantity of power supply to this most important industrial cen- ter in the country; and 4. Feasibility studies of future hydroelectric developments, to identify and prepare a project which could be built between 1972 and 1975 when the next major system addition was expected to be required. The Rio Lindo scheme, which accounted for about 85% of expected and 90% of actual project costs, took about 25% longer than expected to build and cost nearly 25% more than expected, but was undoubtedly the most economical addition that could have been made at the time to system generating capacity, and it immediately filled a major place in Honduras' electricity supply when it was completed in mid-1971. The most important cause of cost and time overruns was unexpected geological problems; the adequacy of prior geological investi- gations should have been assessed more closely at appraisal with a view to either extending them or including in project cost estimates more adequate contingency allowances; 38% of basic estimated construction and equipment cost would actually have been required instead of the 15% provided. The Bank made a useful technical contribution to discussion of possible design revision during project construction which prevented a proposed reduction in the operating capabilities of the Canaveral-Rio Lindo system from being made. Apart from early problems with leakage from the pipelines conveying water from Canaveral to the Rio Lindo plant and the non-operability of the telecontrol system linking the two plants, Rio Lindo has operated satisfactorily. The 69 kv transmission project was designed and built with much more limited foreign technical assistance or supervision than previous power schemes in Honduras and it suffered serious delays but it was eventually executed satisfactorily and the work may have had some additional training value. - 11 - The 138 kv line was dropped from this project to be replaced with a 15 MW gas turbine, not financed with Bank/IDA funds, at San Pedro Sula, providing greater security of supply to that important area, though at higher cost. Only the existing 138 kv line from Canaveral was reconditioned under the loan, and the second 138 kv line was not in the end built until 1974, under the Bank's fourth power loan to Honduras. Under the hydroelectric feasibility study item a review of sites on the Rio Humuya was undertaken, beginning nearly a year after the date targeted in the loan discussions. It led to the selection of one particular site which has since been studied in much greater depth to yield a proposed 500 MW project at El Cajon now recommended for execution in the middle 1980s. Partly for lack of prepared hydroelectric projects of appropriate scale and partly because of extension of its main system, even though aggregate loads have been almost 10% less than projected, Honduras has diverged completely from the 1968 appraisal report's projection that all generation additions on the interconnected system would be hydroelectric and installed nearly 60 MW of thermal plant between 1969 and the end of 1974. The Bank may have given too little emphasis early on to the preparation of smaller hydroelectric projects, in the expectation that a larger scheme would induce more rapid interconnection between the Central Americancountries, which is now coming about slowly (the Bank's 1972 loan to ENEE financed part of a 230 kv interconnection with ENALUF of Nicaragua) but is not yet at a stage to permit projects of the scale of El Cajon. Omission of the 138 kv line and lower outlay than planned on bydroelec- tric feasibility studies partially offset the cost overrun on the Rio Lindo hydroelectric scheme so that the overrun on the project as a whole was held to 14% and total cost to US$ 20.2 million, accounting for about 60% of ENEE's actual investment 1967-71. ENEE's financial performance was significantly better than projected and all financial covenants to the Bank/IDA loan/credit were satisfactorily adhered to. Although energy sales were on the average about 8% lower than projected, gross revenues were slightly higher because of larger than expected sales to residential and commercial users, who pay higher tariffs. At the same time fuel costs were generally lower than projected, mainly due to good hydrological conditions reducing the call that had to be made on thermal genera- tion. The financial rate of return on average net fixed assets was conse- quently higher than projected at appraisal time and well above the 10% provided in the Bank's rate covenant; most other financial indicators, such as debt- service coverage and debt-equity ratio, were stronger than projected; and ENEE managed to finance out of internally generated funds nearly 40% of its investment requirements 1967-71 instead of the 32% of the smaller program envi- saged in 1968, which the Bank then felt was the most that could be expected. Although the Bank does not seem seriously to have followed up on the loan covenant calling for ENEE to agree with it on the recommendations of its management consultant that it would implement and on a phased program for such implementation, the Bank did participate in discussions about organizational matters and ENEE did make a new contract with the management consultant for assistance in implementation of his recommendations. His efforts covering a wide range of fields - including personnel policies and training, distribution system maintenance, company by-laws and more recently computerization - together with ENEE's efforts to strengthen its training programs and the hiring of expa- triate engineers have all contributed to strengthening the company steadily over the last few years. - iii - HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA THIRD POWER PROJECT PERFORMANCE AUDIT BASIC DATA SHEET Technical Report No. TO-623a President's Report No. P-595 Loan No. 541-HO Credit No. 116-HO 1. Borrower Republic of Honduras 2. Beneficiary Empresa Nacional de Energia Electrica 3. Loan/Credit Amount Loan: US$ 7.5 million Credit: US$ 4.0 million 4. Amount Disbursed (as of Loan: US$ 7.5 million December 31, 1974) Credit: US$ 4.0 million 5. Amount Outstanding (as of Loan: US$ 6.945 million December 31, 1974) Credit: US$ 4.8 millionl/ 6. Amount Repaid (as of Loan: US$ 0.555 million December 31, 1974) Credit: nil 7. Date of Loan/Credit Agreement June 12, 1968 8. Date of Effectiveness September 13, 1968 9. Closing Date Original: December 31, 1971 Actual: July 12, 1972 10. Terms of Loan/Credit- Loan: 25 years Credit: 50 years 11. Grace Periods Loan: 3-1/2 years Credit: 10 years 12. Interest Rates Loan: 6-1/4% p. a. Credit: nil 1/ Includes US$ 811,728.21 of adjustment for devaluation of the US dollar. 2/ The total proceeds of the loan and credit were relent to ENEE through a Government loan, which has a term of 25 years, including a grace period of 3-1/2 years, and carries an interest rate of 6-1/4% p.a. and a com- mitment charge of 3/4% p.a. - iv - 13. Charges Loan: Commitment charge: 3/4% p.a. Credit: Service charge: 3/4% p.a. 14. No. of Supervision Visits 71/ 15. Overall Cost Overrun 17% 16. Overall Local Cost Overrun 32% 17. Overall Foreign Cost Overrun 4% 18. Overall Time Overrun 18% on the Rio Lindo Scheme 87% on the transmission line 19. Fiscal Year ends December 31 1/ November 1968 November 1969 February 1970 December 1970 March 1971 August 1972 June 1973 2/ The overrun is 14% if the transmission work subsequently transferred to the Fourth Power Project is excluded. PROJECT PERFORMANCE AUDIT: HONDURAS - THIRD POWER PROJECT I. BACKGROUND Empresa Nacional de Energia Electrica (ENEE) is a Government-owned corporation established in 1957 for the development of the power sector of Honduras. It is governed by a five-member Board of Directors, including the Minister of Communications and Transport, the Minister of Natural Resources, and representatives of the Planning Council, the National Develop- ment Bank and the private sector. A General Manager, appointed by the Board, is responsible for all managerial and administrative functions. ENEE employs about 1,600 permanent workers. With its 140 MW of installed capa- city, ENEE generates, transmits and distributes about 85% of the country's total electricity supply. The United Fruit and Standard Fruit Companies own the largest private utilities, which account for another 13% of total electricity available; the remainder is provided by local municipal systems. Honduras has an abundance of attractive hydroelectric sites whose potential capacity far exceeds the nation's current demand for electric power. Although it has been growing rapidly, annual electricity consump- tion, at about 150 kwh per capita, is among the lowest in Central America - where the range is from 145 to 600 kwh in the different countries. Public electricity supply is available only in the more densely populated parts of the country and, where available, it has been relatively expensive; about 18% of the country's population is believed to have access currently. The Bank and IDA have been associated with the development of the Honduran electric power sector since 1959. The first Bank loan (226-HO) of US$ 1.45 million to ENEE was for the provision of 2.5 MW of diesel generating capacity and for the improvement of distribution facilities. In 1960, the Bank made a second loan (261-HO) of US$ 8.8 million for the first stage of the Lake Yojoa - Rio Lindo Development, comprising principally the 30 MW Canaveral hydroelectric project, and for associated transmission works. In 1968 Loan 541-HO, together with IDA Credit 116-HO, of US$ 7.5 million and US$ 4.0 million respectively, helped finance the second stage of the Lake Yojoa - Rio Lindo Development, in the form of the Rio Lindo plant with 40 MW installed, and the expansion of the main transmission system. In 1970 a US$ 11.0 million contribution (Loan 692-HO/Credit 201-HO of US$ 5.5 million each) was made to help finance transmission lines, substations and a 15 MW gas turbine plant in Tegucigalpa. A fifth loan (841-HO) was made in 1972, to help finance a 28 MW diesel plant at La Ceiba, on the north coast, further transmission lines and the Honduran portion of a 230 kv interconnection with Nicaragua; and a sixth (1081-HO) was made in January 1975, principally for the third stage of the Lake Yojoa - Rio Lindo Development, including installa- tion of a further 40 MW capacity in the Rio Lindo station and construction of small dams to divert additional water through the existing plants, as well as for expansion of the distribution system. - 2 - This report represents a performance audit of the third project (Loan 541-HO/Credit 116-HO). On the basis of a feasibility report completed in May 1967 by ENEE's consultants, Harza Engineering Company International of the USA, the project was preappraised in June 1967 and appraised in September- October 1967. II. THE PROJECT The objective of the project was to meet the growing demand for electric power on ENEE's main system, which serves the country's most densely populated and economically important zone, extending from the capital city of Tegucigalpa in the south to Puerto Cortes in the north and including San Pedro Sula, the main industrial center. The project, with an estimated cost of US$ 17.7 million equivalent, was expected to account for about 70% of the total"cost of ENEE's 1967-71 expansion program and to increase the company's installed capacity by nearly 90%. The principal component of the project was the Rio Lindo hydroelec- tric scheme. Water discharged from the Canaveral plant would be conducted through a steel pipeline, about 1350 m long, then through a 900 m tunnel, to a 750,000 cu m regulating reservoir created by a 25 m high earth and rock- fill dam. A 350 m power tunnel and a long 5,200 m steel penstock would bring the water from the regulating reservoir to a power station situated near the village of Rio Lindo in the Sula valley. Here two generating units, each of 20 MW capacity and operating under an average net head of 380 m, would be initially installed. Water discharged from the power station would flow through an open canal to the Lindo river. The project also included three transmission developments: a) construction of a double-circuit 138 kv line, about 2 km long, to connect the Rio Lindo Power Station to the main system at Canaveral; b) construction of a single-circuit 138 kv line, about 53 km long, direct from the Rio Lindo station to San Pedro Sula, to provide more reliable supply and meet future load growth, and expansion of the substation at San Pedro Sula; and c) reconstruction of the single-circuit 69 kv line from Bufalo, on the existing 138 kv line from Canaveral to San Pedro Sula, to La Lima and extension of the line s.ome 20 kms to El Progreso, with construction of associated substations, to enable these two important secondary towns to be supplied from ENEE's main system. Finally the project included a feasibility study of future hydroelec- tric developments, so that a suitable hydroelectric project would be ready for commencement in 1972 with a view to completion in 1975 when the next large increment to capacity was expected to be needed. - 3 - Harza Engineering Company International was to design and supervise construction of the Rio Lindo scheme and the 138 kv transmission lines and related substations, while work on the 69 kv lines and substations was to be handled by ENEE staff. For the feasibility studies of future hydroelectric development ENEE was to engage consultants acceptable to the Bank before October 1968. At the Bank's suggestion ENEE had engaged at its own expense a firm of management consultants, R. W. Beck and Associates of Seattle, to study its organization and operating procedures and to make recommendations for improve- ment. One of the loan covenants negotiated provided for ENEE to agree with the Bank on which of the recommendations should be implemented and on a program and timetable for the implementation. Second, ENEE's rates were to be adjusted from time to time in order to provide revenue sufficient to cover operating expenses, including taxes and levies, adequate maintenance and depreciation, and to produce a financial rate of return of at least 10% per year on its total net fixed assets in operation. During construction tariffs were to be maintained at least at their existing level. Third, ENEE's finan- cial statements were to be audited by an independent firm and transmitted to the Bank not later than four months after the close of the fiscal year. Fourth, without the prior approval of the Bank, ENEE was not to incur new debt which would so raise total debt service in any future year that it was not covered at least 1.5 times by cash earnings in the twelve-month period preceding use of the borrowed funds. Fifth, subject to approval by Congress, the Govern- ment was to make a contribution to the cost of the project of at least US$ 0.75 million equivalent in the form of participation in ENEE's capital. Sixth, ENEE was to continue its policy of reinvesting all its earnings. Finally, ENEE was to carry out its functions under the direction of a qualified and experienced general manager, mutually satisfactory to ENEE and the Bank. III. PROJECT IMPLEMENTATION With the exception of the 138 kv transmission line to San Pedro Sula, which accounted for only 4% of originally estimated costs and was dropped at ENEE's request in April 1969, the project was implemented largely as-planned, but with some delays and cost overruns. The Rio Lindo station was commissioned about 6 months late, in May 1971, and the 69 kv transmission additions were some 2-2 years late. The Rio Lindo scheme cost about US$ 18.4 million, 23% more than projected, but omission of the main transmission item in the Bank project and a smaller outlay than expected on feasibility studies reduced the total project cost increase to about US$ 2.5 million, or 14%. Summarized below is the actual versus estimated cost of the project: Actual vs Estimated Project Cost (US$ million equivalent) Estimated Actual Local Foreign Total Local Foreign Total 1. Rio Lindo Hydroelectric Scheme: Direct Cost 4.9 8.5 13.4 6.4 9.6 16.0 Engineering, supervision and overhead 0.5 1.1 1.6 1.0 1.4 2.4 Total 5.4 9.6 15.0 7.4 11.0 18.4 2. Transmission System Ex- pansion 0.3 0.8 1.1 0.2 0.1 0.3 3. Feasibility Studies on Future Hydroelectric Development 0.2 0.4 0.6 0.1 0.3 0.4 4. Interest During Construc- tion 0.3 0.7 1.0 0.5 0.6 1.1 Total 6.2 11.5 17.7 8.2 12.0 20.2 Source: IBRD Final Construction Report The 25% time overrun on the Rio Lindo scheme was due in about equal part to some unexpected geological difficulties encountered in construction of the upstream tunnel and the dam and reservoir, and to deficiencies in the tur- bine needle valve mechanism and in governor operation which had to be corrected before full commercial operation began. Bids had been let a few months later than expected but as of December 1968, when the main contract was signed, it had still been hoped that the plant would be completed before the end of 1970, as projected in the appraisal report. The cost overrun - of similar proportion to the time delay but of more serious impact - was due to a number of causes among which the geological problems, initial underestimate by the engineer of the main civil works contract and subsequent currency revaluations, particularly of the German DM against the US dollar, were the most important. The general construction contract went to a consortium headed by the German firm Zublin, whose bid was considerably the lowest of the five received but still 30% above the engineer's estimate; this increase was however partially offset by bids for some other items falling substantially below the estimates, particularly for the other most important contracts - penstock construction and installation, awarded to the - 5 - Austrian firm Voest, and turbines and generators, awarded to Hitachi of Japan. During construction, problems arose principally for geological reasons. In the upstream tunnel, initial excavation was slowed by clay and fractured rock zones of 25 to 50 m near both portals and some shear zones with either clay seams or cavities in the central portion; tunnel sections in these zones had to be reinforced. Second, stripping of the dam foundation revealed sinkholes, ranging from 2 to 5 m in depth and widening beneath the surface, in much larger number than expected; as many as 92 were then encountered in the floor of the regulating reservoir, and all of these too had to be filled. At one point, late in 1969, the supervising engineers, Harza, became so concerned about this phenomenon that they proposed a substantial design change which would have siguificantly reduced the flexibility of operation of the Canaveral-Rio Lindo system, and the Bank seems to have played a useful role in suggesting an alternative which would maintain original operating characteris- tics at very small extra cost. To reduce the water load on the reservoir lining, particularly in places where cavities might have remained undetected, and to save time and money on construction of the lining itself Harza suggested reducing the normal operating level of the reservoir from elevation 485 m to 481.5 which would have reduced useful storage capacity from about 750,000 cu m to 330,000 cu m and decreased the average net head on the turbines, sacrificing about 600 kw of dependable capacity and an estimated 3 million kwh of annual energy output. The Bank pointed out that the loss of weekly regulation involved could have more serious consequences for system operating flexibility and that the consequences in the long run - when additional units might be installed at Canaveral - could be more serious and it suggested consideration of another alternative, building the lining to elevation 485.5 m (enough for a normal operating level of 485 m) instead of to the originally envisaged 490 n. Harza's revised analysis suggested that this would in fact be only about US$ 100,000 more expensive than their proposed scheme while it would essentially preserve originally intended generation and regulation capacity, and this was the solu- tion finally adopted. The Bank has taken the view that these geological problems which cropped up during project execution should have been foreseen, and that the lesson of the case is to emphasize the need for more thorough geological investigations prior to project appraisal. But it is also clear in retro- spect that, given the stage which such investigations had reached at the time of appraisal, larger contingencies should have been built in. The table illustrates the evolution of the cost estimates at major stages. - 6 - Evolution of Cost Estimates for Rio Lindo Hydroelectric Scheme (in US$ millions) May 1967 May 1968 May 1969 Dec. 1972 Feasibility IBRD Construction Final Report Appraisal Start Actual Costs Construction and Equipment 11.5 11.6 13.7 16.0 Contingencies and Escalation 2.3 1.8 0.6 Sub-total 13.8 13.4 14.3 16.0 Engineering and Overhead 2.1 1.6 2.1 2.4 Total 15.9 15.0 16.4 18.4 In its appraisal report the Bank provided a single 15% allowance of the basic cost estimate, to cover both unforeseen construction difficulties and price escalation during the construction period; coverage of actual final costs would have required an allowance for contingencies and escalation of 38% on construction and equipment and also 54% on engineering and overhead. Apart from initial difficulties with the Hitachi turbines, as mentioned, and some minor problems of leakage from the steel pipelines between Canaveral and Rio Lindo plants - which have involved periodic brief shutdowns to repair the joints, but now seem to be overcome - the Rio Lindo plant has operated satisfactorily. However the telecontrol system (with a cost of some US$ 100,000- 200,000), whereby Rio Lindo was originally intended to be operated remotely from Canaveral, has never worked satisfactorily, due to problems with the buried cable involved and to design deficiencies; Rio Lindo continues to be controlled locally. The long delay on the relatively simple 69 kv transmission work under the project appears to have been due partly to the difficulties of securing appropriate people in Honduras to do the work and partly to delays in reaching agreement with bulk consumers on a power supply contract, a problem that has continued to arise. Having decided that it could not itself do the engineer- ing work, as originally planned, ENEE at one point considered giving the con- tract to Harza but finally, in August 1969, engaged a local consulting firm (CODEMSA), headed by a former general manager of ENEE. The 3ank urged that CODEMSA should obtain assistance from a foreign firm, and such arrangements were made - but apparently not very much used - so that the Bank found the bid documents, when eventually submitted in August 1970, deficient. They were revised and the necessary materials eventually procured, for force account construction of the line and El Progreso substation, in March-October 1972. Construction of the substation at La Lima and the start of sales there were delayed a further year by lack of agreement on a power supply contract with the United Fruit Company, which had been serving tho town with its own diesel generator, until June 1973. -7- As for the feasibility studies on future hydroelectric development ENEE did not meet the target date of October 1968 agreed at loan negotiations for the start of such studies but,with help from its management consultants R.W. Beck and Associates in the preparation of documents and selection of firms, it finally signed a contract in August 1969 with Motor-Columbus of Switzerland. It was then envisaged that a Phase I report, covering selection of the most suitable among various alternatives on the Rio Humuya, would be completed by March 1970 and the Phase !I report, providing a detailed feasi- bility study of the one selected, would be ready by December 1970. When Phase I of the study was concluding on schedule the Bank raised a question whether it would not be advisable to do further work on smaller projects than the rela- (ively large 245 MW El Cajon scheme that Motor-Columbus had recommended. Some survey work on other rivers was begun, but the foreign costs of this as well as of the detailed feasibility vork on El Cajon were met from the new financing line (Loan 692-HO/Credit 201-HO) which was signed in June 1970. IV. SYSTEM PLANNING AND ECONOMIC JUSTIFICATION Despite the construction cost and time overruns and somewhat slower growth of loads on ENEE's interconnected system than expected, there is no question, in light of recent fuel price trends, but that the Rio Lindo scheme was a highly worthwhile investment. It was originally planned to have 40 MW capacity in the first stage, with a 90% capacity factor (about 300 million kwh in the mean year) but has in fact been able to carry a peak load of 46 MW, which is now the figure used for planning purposes. The appraisal report pointed out that Harza had compared various alternative programs, found the one including Rio Lindo by far the most economic and estimated the rate of return on the incremental investment in Rio Lindo over a thermal alternative at about 16% assuming a fuel price of US$ 2.25 per barrel,and 14% assuming US$ 1.75 per barrel. Recent increases in fuel prices to at least US$ 8.00 per barrel (US$ 11-15 per barrel actually now being paid by ENEE for its existing thermal stations) would clearly outweigh the effects of the construction cost overrun and lengthened construction period in any recalculation of this rate of return. The decision to drop the 138 kv line Rio Lindo - San Pedro Sula from the project, approved by the Bank in April 1969, was based on studies by ENEE's economic planning division and Harza, recommending postponement of this new line in favor of reconditioning the existing 60 km 138 kv line Canaveral - San Pedro Sula and installation of a gas turbine at this industrial center. The principal consideration seems to have been that, for comparatively small additional investment of about US$ 1 million in a 15 MW gas turbine rather than the new transmission line, a considerably higher degree of reliability of power supply could be assured in the San Pedro Sula area (where loads were booming - they were expected to increase from 12 MW in 1968 to 20 MW in 1971 - and many of them were industrial), particularly in 1970 and 1971 just before the completion of Rio Lindo and just after it when Canaveral would be shut down temporarily for overhaul and installation of the control system for Rio Lindo. A 15 MW gas turbine was procured with the aid of a loan from CABEI and completed at a cost of about US$ 1.5 million equivalent (US$ 100/kw), and the 138 kv link - 8 - between Rio Lindo and San Pedro Sula was not eventually built until 1974, following a different alignment, under the Bank/IDA fourth Honduras power project. The gas turbine was finally completed about a year late, at the end of 1970, only a few months before Rio Lindo itself, and ENEE has had since mid-1971 very ample noiinal generating capacity relative to loads (see Table 8). However the gas turbine has had advantages for system stability and for re- assuring consumers in the important San Pedro Sula area of ENEE's ability to meet demands, and it has been particularly useful on a few occasions, as when the difficulties arose with the Rio Lindo turbines and pipelines, and after Hurricane Fifi in 1974. As regards system planning more generally, it would seem in retrospect -- even without taking account of hindsight on fuel prices -- as though yet greater stress should have been placed on survey of Honduras' considerable hydroelectric potential and study of potential smaller projects, in place of the sometimes rather exclusive emphasis on larger-scale projects, favored by the Bank partly in the hope they would encourage needed interconnection between the small national power systems of Central America. Whereas the 1968 appraisal report foresaw only hydroelectric additions to generating capacity on ENEE's interconnected system (in 1974 and 1975), in fact by the end of 1974 ENEE had added nearly 30 MW of gas turbine capacity (plus another 30 MW of diesel capacity in an area to wbich the interconnected system was extended in 1974) - even though combined peak loads have been about 10% smaller than projected. The ultimate conclusion of Motor-Columbus to date on El Cajon is that, in the context of the system which will be created by interconnection in late 1975 between Honduras and Nicaragua (with about twice Honduras' system load), it should be built to 500 MW but not before the early or middle 1980s. The only other new hydroelectric project which is being actively considered for possible completion before El Cajon is the 70 MW Naranjito project for which a feasibility study is only now being done. V. FINANCIAL PERFORMANCE AND PROJECT FINANCING A. Financial Results ENEE's financial performance during 1967-71 was consistent with loan/ credit agreement covenants and generally better than projected; revenues were slightly higher than expected and operating costs generally lower (mainly due to lower fuel requirements). The debt service coverage ranged between 2.0 and 2.8 compared with projected 1.4 to 1.8. The return on average net fixed assets ranged between 11.3% and 16.1% as compared to the 10% required.; current ratio ranged between 1.1 and 2.3 as compared to 1.2 and 1.7 projected. The ratio of long-term debt to equity varied between 1.1 and 1.4 as compared to the projected range of 1.3 and 1.6 (Table 5). 1/ Attention was not given to revaluation of assets in light of inflation until 1974, but recent analyses indicate that ENEE's return to revalued assets probably did not fall much below 10% until 1974, when it was 7.4% according to the calcula- tions of R.W. Beck, ENEE's consultants for revaluation. Returns in the coming years are now expected to be substantially above 10% on revalued assets, following an average 25% tariff increase, plus introduction of a fuel adjustment clause, late in 1974 in accordance with the recommendations of the same consultants. - 9- Although total energy sales were 6% to 11% lower than projected, revenues were slightly higher than expected (Table 4), in spite of the fact that the tariff structure and level remained unchanged during the construction period. Larger industries consumed 15% less energy than projected during the five-year period and the smaller industries took 12% less, while residential and commercial users - who pay higher tariffs than industry - took, respectively, 13% and 20% more than projected (Table 6). Sales to Mochito mine and Bijao cement factory (both located in the Northern District and belonging to the larger industry group), amounting to one-third of total projected sales, were 25% lower than projected for the period 1967-71 (Table 7) as both customers continued to generate their own power for some time. In both cases the customers decided, after contracting for the service, that they could not accept the risk of interruption involved with only a single-circuit line to ENEE's system, and they operated their plants in parallel on a continuous basis. Second circuits have since been added. Despite the rapid growth of the system and the scale economies which might have accrued, general operating expenses per unit sold increased quite rapidly instead of falling, as projected, through 1971; they have however since begun to fall. But for most of the years through 1971 the effect of this was more than offset, as shown in the following table, by savings in fuel expenses due to reduced need for thermal generation because of good hydrological condi- tions. The completion of the Rio Lindo project in May 1971 also helped reduce fuel costs by displacing diesel and gas turbine generation. Actual vs Estimated Operating Costs and Revenues (Centavos/kwh) 1967 1968 1969 1970 1971 1972 1973 Act. Est. Act. Est. Act. Est. Act. Est. Act. Est. Act. Act. Operating Revenues 7.5 7.2 7.4 6.9 7.2 6.8 7.3 6.7 7.5 6.2 7.6 7.4 Operating Costs: Operating expenses 2.7 2.6 2.4 2.5 2.4 2.2 2.5 2.1 2.8 2.1 2.7 2.5 Fuel )1.1 1.0 0.4 1.0 0.3 1.3 0.7 1.4 0.6 0.2 0.3 0.3 Depreciation ) 0.9 1.0 1.0 0.9 0.9 0.8 1.1 1.0 1.2 1.2 Total 0 erating Costs-a 3.8 3.6 3.7 4.5 3.7 4.4 4.1 4.3 4.5 3.3 4.2 4.0 Gross Margin 3.7 3.6 3.7 2.4 3.5 2.4 3.2 2.4 3.0 2.9 3.4 3.4 a/ excluding interest. Source: Table 4 B. Project Financing ENEE's actual investment over the five-year period 1967-71 was US$ 33.5 million equivalent, US$ 9 million or 37% higher than originally projected (Table 3). Of this increase, the Rio Lindo project accounted for US$ 2.5 million, the San Pedro Sula gas turbine for US$ 1.5 million, and distribution facilities for US$ 5.0 million. - 10 - More than 50% of this increase in the investment program was financed by ENEE out of internal cash generation, and its self-financing ratio for the 1967-71 period as a whole was in fact 39% compared with 32% projected in the Bank's appraisal for the smaller original program. The other principal additions to the financing were the CABEI gas turbine and distribution loan and a small part of the next IBRD/IDA loan/credit. Government provided, in the form of equity subscription, the amount envisaged as its contribution to the original financing plan for Rio Lindo, and some US$ 3 million equivalent, or slightly more than expected, was raised through 10-year bond issues guaranteed and placed by the Central Bank of Honduras. VI. ORGANIZATION AND MANAGEMENT The management consultants, R. W. Beck and Associates, completed their study in the middle of 1968. It concluded that many areas needed attention: ENEE had never had sufficiently qualified engineering and management personnel in key positions, as salary levels were inadequate; internal financial reports were several months late; inventory controls were inadequate; provi- sion of service to new customers was subject to delay; service turn-offs for nonpaying customers were usually delayed; personnel administration was hap- hazard, and interdepartmental cooperation was insufficient. The consultants made several recommendations for improving these weak areas, including reorgani- zation of ENEE, the hiring of expatriate engineers and establishment of a train- ing program for ENEE's technical staff. Although there is no evidence that the Bank ever tried seriously to agree with ENEE on the recommendations to be adopted and programs and timetables for their implementation, as proposed in the appraisal report for the Rio Lindo project, the Bank did nonetheless actively participate with ENEE and their con- sultants in discussion of the latter's findings. In November 1968 ENEE's Board approved the proposed reorganization plan in principle and also an implementation contract with Beck. Beck worked actively on personnel problems, salary struc- ture, distribution maintenance and upgrading, personnel training, preparation of new By-Laws (approved by ENEE's Board in December 1969) and a variety of other tasks; they have remained associated with ENEE, working more recently on computerization of billing and collection and now of inventory control, payroll and budget. ENEE's overall capability appears definitely to have strengthened over the years and it has benefitted both from the work of the management consultant and from the training programs that it has instituted for its staff. But a real assessment of what has been achieved and of the contribution of the manage- ment consultants would require a deeper study than is possible within the frame- work of a project performance audit; such an analysis may be worth undertaking as part of a more general study on the contribution of management consultants to Bank borrowers' development. - 11 - VII. CONCLUSIONS The central objectives of the Bank/IDA-financed project have been achieved. Despite unexpected geological problems and consequent delays and cost overruns, the Rio Lindo hydroelectric project has proved a very worth- while investment and, in retrospect, the most economic system addition that could have been made; although loads grew a little slower than expected it was badly needed by the time it was completed. And the Bank made a useful technical contribution, at an important moment in construction, to preserve originally intended reservoir capacity. ENEE satisfactorily adhered to all the principal covenants attached to the loan - except that regarding a schedule for implementation of the management consultant's recommendations, which the Bank did not pursue very hard -- and its financial performance has been significantly better than projected at appraisal, achieving a financial rate of return on average assets well in excess of the agreed minimum and covering nearly 40% of investment costs out of retained earnings, compared with the 32% of a smaller expected program which the Bank considered in 1968 was the most that could be expected from such a rapidly growing entity. Weaker parts of the project were the minor items. Probably the most serious shortcoming in retrospect was the long delay in arranging for the hydroelectric feasibility studies, which were probably also of narrower scope than would have actually been worthwhile in view of the gap that has since arisen between Honduras' believed hydroelectric capability and the actual exploitation of it for meeting the country's energy needs; the studies undertaken did not at all produce the result intended, i.e. a hydroelectric project of appropriate scale that could be built between 1972 and 1975, although they did result in a project which will probably play a very useful role in later power development. The minor 69 kv transmission item, though successfully completed in the end, was accomplished with great delays at every stage, but perhaps it has served to provide some useful practical training to Hondurans.  HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA THIRD POWER PROJECT Table 1: LOAN 541-HO/CREDIT 116-HO. ACTUAL VS PROJECTED DISBURSEMENTS (in US$ million) Actual Projected Year Loan Credit Total Loan Credit Total 1968 .3 .2 .5 1.1 .5 1.6 1969 1.9 1.0 2.9 3.6 1.9 5.5 1970 3.5 2.0 5.5 2.5 1.4 3.9 1971 1.4 .6 2.0 .3 .2 .5 1972 .4 .2 .6 - - - Total 7.5 4.0 11.5 7.5 4.0 11.5 HONDURAS EMPRESA NACIONAL DE ENERCIA ELECTRICA THIRD POWER PROJECT Table 2: ACTUAL VS ESTIMATED PROJECT COSTS (DETAILED BREAKDOWN) (in US$'000) Actual Projected Local Foreign Total local Foreign Total Rio Lindo Hydroelectric Scheme Land and land rights 138 - 138 40 - 40 Camp 620 - 620 150 50 200 Relocation of Interoceanic Highway - - - 10 16 26 Site explorations 535 - 535 69 16 85 Clearing - - - 3 - 3 Access roads 128 132 260 10 21 31 Power plant structure 870 1,299 2,169 300 444 744 Canaveral control structure 288 374 662 103 190 293 Pipeline to regulating reservoir 267 495 762 428 919 1,347 Tunnel 610 765 1,375 494 741 1,235 Regulating reservoir 800 1,024 1,824 382 802 1,184 Intake 120 198 318 209 293 502 Penstock 1,389 2,3h9 3,738 1,624 1,975 3,599 Tailrace 76 98 174 43 89 132 Turbines and generators 153 832 985 53 694 747 Accessory electrical equipment 45 330 375 108 360 468 Miscellaneous power plant equipment 27 156 183 58 188 246 Warehouse, maintenance building, station yard 38 235 273 24 90 114 Rio Lindo substation 121 5h5 666 131 499 630 Subtotal-Direct Cost 6,225 8,832 15,057 4,239 7,387 11,626 Contingencies and price escalation 150 805 955a/ 637 1,169 1,806 Engineering, supervision and overhead 1,047 1,338 2,385 488 1,060 1,548 Total Construction Cost 7,422 10,975 18,397 5,364 9,616 16 980 . Transmission System Expansion Rio Lindo - San Pedro Sula 138 kv line 1 4 5 191 286 477 San Pedro Sula substation expansion - - - 22 102 124 Bufalo-El Progreso 69 kv line and substations 192 91 283 72 214 286 Subtotal-Direct Cost 193 95 288 285 602 887 Contingencies and price escalation - - - 43 92 135 Engineering, supervision and overhead 3 12 15 33 90 123 Total Construction Cost 196 107 303 361 784 1.145 Interest during Construction 463 600 1.063 300 700 1,000 Feasibility Studies on Future Hydro Development 126 277 403 200 400 600 Grand Total 8227 11.959 2166 6,225 11,500 725 The 955 remaining in contingencies represents cost increases from currency value fluctuations (585) and claims (370), which were not distributed over items of the project. If they had to be distributed, the currency value fluctuations would probably be assigned prorate according to foreign cost, all the claims related mostly to the tunnel. ;ource: ENEE HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA Table 3: ACTUAL VS PROJECTED SOURCES AND APPLICATION OF FUNDS (DETAILED BREAKDOWN) 1967-1971 (in millions of Lempiras) 1967 - 1971 Actual Projected SOURCES OF FUNDS Internal Cash Generation: Operating income and depreciation 45.1 39.4 Debt service 18.0 22.8 Net internal cash generation 27.1 16.7 Contributions: From Government 1.5 1.7 Other 0.6 - Total contribution 2.1 1.7 Borrowings: IBRD/IDA 541/116-Ho 23.0 23.0 IBRD/IDA 692/201-HO 1.9 - CABEI distribution loan 1.5 2.0 CABEI gas turbine and distribution loan 6.1 - Honduras Central Bank loan and/or local bond issues 6.0 5.5 Supplier financing and other 1.4 3.5 Total borrowings 39.9 -37. TOTAL SOURCES 69.1_ 2.3 APPLICATION OF FUNDS Construction Program: Rio Lindo Project 38.9 33.4 Fourth Power Project 2.0 - Diesel units - 2.6 San Pedro Sula gas turbine 3.0 - Distribution and other 23.0 12.9 Total construction 6.9 77. Addition to working capital 2.2 .t TOTAL APPLICATIONS 69.1 52.3 Source: Final Construction Report HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA THIRD POWER PROJECT Table 4. ACTUAL VS PROJECTED INCOME STATEMENT- (in thousands of LUpireas) 1967 1968 1969 1970 1971 1972 1973 Actual Unaudited Actual Projected Actual Projected Actual Prolected Actual Projected Actual Unaudited Sales I ncrease in Percent 19.7 25.5 22.0 24.3 18.2 17.0 12.5 14.6 10.7 18.5 12.6 16.5 Sales (G h) 140.6 147.1 171.3 182.9 202.4 214.0 227.8 245.3 251.0 279.2 281.7 328.1 Average Revenue per kwh (centaes) 7.5 7.2 7.4 6.9 7.2 6.8 7.3 6.7 7.5 6.2 7.5 7.3 Op,ratLng Revenues 10.596 10.596 12,650 12,580 14,561 14,479 16,641c 16,515.18.88.17,41 21 195 24,102 Operating Costs: Oper,ting expenses excl. fuel )3,852 852 4.060 4.500 4.806 4,770 5,759 5.056 7,130 5,867 3 Fuel ) ) S 703 1.82 643 2.675 1,549 3 420 1,518 562 '8.387 9,421 1)cyr-cta ico 1,9 Li 1,2 1,803 1.993 1,916.! 1.973 2.031 2,6 2,1 3,383 3.718 Total Operating Costs 5.345 5,345 6,390 81185 7 9,361 9.281 1 11.342 9.243 11.77 13.13 Net Income from Operations 5,251 5,251 6.260 4,395 7.119 5.118 7.360 6.008 7.545 8,158 9,425 10 963 Other Ieceee 100 171 266 50 172 50 236 50 367 50 150 284 Nt rncome before Interest 5421 5.422 6.526 4 7.29 5.168 7.S9 6.058 11,247 Interest Payable 1,594 1,594 1,606 1,907 2.153 2,497 2,535 3,099 3,268 3.288 4,212 5,736 Lec- Interest Calit.li-ed 6 6 77 13 567 65535 1,16497 20124 Ne1ncm8g83 99796 0 24 interes IBCh r ad ta Operatin 1.588 588 1.529 1.724 1.586 1844 1.576 May 1968 and.2Supv 4R004 4492 Se l_nC5833 3833 4 997 j 2.2 5,0 3,2 6.2 4.123 4.920 5 571 65 .3o,rce: 1BRD Appraisal Reports of May 1968 ond Superviaicm Reports. 9MPRESA NAC1NAL DR_ ZERGIA ELECTACA THIRD POWER PROJECT Table 5: ACTUAL VS PROJECTED BALANCE SHEET (in thousands of Lampicas) 1967 1968 1969 1970 1971 1972 1973 Actual Unaudited Actual Projecte Actual Projected Actual Projected Actual Projected Actual Unaudited ASSETS Utility plant at cost 54,646 52,229 56,113 59,096 60,683 62,429 63,341 64,795 110,380 101,793 118,565 125,756 Construction work in progress - 2417 5,441 .60 16546 19 -.4. 3757 31600 271 Utility plant - gross 54,646 54,646 61.554 64,696 77,229 81,829 100,912 96,395 113,334 101,793 124,314 152,856 Less: accumulated depreciation 91959 9.93 190 11,76 13,784 13.678 15999 15709 19.035 18, 53 22,503 26,682 Utility plant - net 44,687 44,687 49,864 52,934 63,445 68,151 84,913 80,686 94,299 83,270 101,811 126,174 Current Assets: Cash and banks 897 740 1,836 830 1,960 1,039 1,444 1,182 417 2,033 520 496 Accounts receivable 2,370 2,377 3,069 2,652 3,433 2,952 4,386 3,252 4,549 3,552 5,943 6,608 Materials and supplies 3,201 3,200 2,982 3,300 3,536 3,500 4,248 3,700 5,957 3,900 8,096 6,586 Prepaid expenses 115 115 128 115 306 115 585 115 760 115 555 299 Other - - - - - - - 1_- 2497 73 Total Current Assets 6,583 6,432 8,015 6,897 9,235 7,606 10,663 8,249 13,129 9,600 17,611 14,062 Deferred Debits Pre-investment studies 1,217 1,218 1,518 1,218 988 1,218 2,242 1,218 4,499 - 6,877 7,560 TOTAL ASSETS 21487 52-337 59_397 61,049 7366 Z iLU2 9-2 810 126,299 147_796 LIABILITIES AND EQUITY Cspital and surplus 21,797 21,797 27,021 24,700 33,488 28,754 39,488 33,607 44,325 38,507 48,507 56,059 Long-term debt 27,107 27,106 29,067 33,040 36,995 45,112 55,587 53,637 63,702 51,654 73,629 87,888 Less: current portion 1 307 1,307 1,806 2,228 1,856 2,675 1 4,670 2 6,01 9 0766 Net long-cerm debt 25,800 25,799 27,261 30,812 35,139 42,437 53,639 50,654 59,032 48,805 67.616 79,122 Current Liabilities: Current portion of long-term debt 1,307 1,307 1,806 2,228 1,856 2,675 1,948 2,983 4,670 2,849 6,013 8,766 Notes and accounts payable 2,426 2,720 2,046 2,595 1,697 2,395 722 2,195 1,636 1,995 1,179 804 Accrued expenses 474 31 500 31 641 31 1,069 31 1,190 31 1,179 1,311 Customers' deposits 683 683 763 683 847 683 952 683 1,07 685Lj ~ 1 0 Tatal Current Liabilities 4,890 4,741 115 5,6 ,5 3 1,176 1,18 Deferred Credits and Liabilities 426 TOTAL LIABILITIES AND EQUITY 529487 1WE 5 1 7 668 7 975 ZjM _90812 =j:=870 147_796 Retlrn on average net fixed assets 12.5 12.8 14.6 9.9 16.0 10.8 16.1 12.4 11.4 12.4 10.2 11.5 Debt service coverage 2.7 2.7 2.8 1.8 2.4 1.5 2.2 1.4 2.0 1.8 1.6 1.5 Current ratio 1.4 1.4 1.6 1.2 1.8 1.3 2.3 1.4 1.5 1.7 1,7 1.2 Long-term debt to equity ratio 1.2 1.2 1.1 1.3 1.1 1.6 1.4 1.6 1.3 1.3 1.4 1.4 Source: IBRD Appraisal Reports of May 1968 and June 1972 HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA THIRD POWER PROJECT Table 6: ACTUAL VS PROJECTED ENERGY SALES (in Gwh) % of 1967 1968 1969 1970 1971 1967-1971 Total Residential Actual 30.5 37.9 43.9 49.9 58.5 220.7 22 Projected 28.6 33.5 38.5 44.4 50.9 195.9 18 Commercial Actual 22.2 27.2 30.1 38.4 65.2 163,1 17 Projected 20.7 23.6 26.7 30.2 34.4 135.6 13 Small Industry Actual 14.7 18.3 21.1 25.6 31.2 110.9 11 Projected 17.5 22.3 24.5 28.1 33.h 125.8 12 Large Industry Actual 61.5 75.7 94.0 97.5 100.6 429.3 43 Projected 66.6 88.9 108.6 117.6 123.0 504.7 47 Government and Municipality Actual 7.0 7.4 8.6 11.2 11.7 45.9 5 Projected 6.6 7.2 7.9 8.6 9.4 39.7 4 Street Lighting Actual 4.1 4.4 4.4 4.8 5.3 23.0 2 Projected 4.6 5.1 5.5 5.9 6.3 27.4 3 Internal Consumption Actual .3 .3 .3 .3 .4 1.6 Projected .3 .3 .3 .3 .3 1.5 Sales to Other Systems Actual .1 .1 .1 .1 .1 .5 Projected 2.2 2.0 2.0 10.2 21.5 37.9 3 Total Actual 140.4 171.3 202.5 227.8 253.0 995.0 100 Projected 147.1 182.9 214.0 245.3 279.2 1068.5 100 * Less than 1% Source: IBRD Appraisal Report and ENEE HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRiCA THIRD POWER PRDJECT Table 7s ACT!UAL VS P& TED ffl f SALES - BY AREA 196 1968 1969 1970 1971 u Pteute AL 12 Projted Aetual PrOjoted ctr tet NA IN SYSTkk Central District Tegucigalpa 50.2 51.2 58.8 59.9 64.8 68.5 73.2 76.8 83.6 86.1 comayagua and Siguatepeque .6 .8 1.2 .9 1.6 1.8 1.0 2.2 1.0 Subtotal 700 1 6.0 .._ 1.0 Northern District Sar Pedro 3ula b2.5 50.1 52.8 46.7 67.1 54.2 76.0 63.? 84.3 73.7 Puerto Cortes 4. 4.4 5.0 4.7 5.5 5.1 6.3 5.6 8.9 6.3 Mochito Mines 24.5 26.0 29.1 35.5 35.7 36.0 35.5 36.5 38.5 73.0 Cement Factory 13.7 20.0 17.8 21.8 18.8 30.0 21.6 30.0 18.7 30.0 El progreso Miscellaneous Sales 2 .2 .2 .6. 1.6_8.8 1.1 19.9 Subtotal 1 M. r34 1.6 5 1 Total Ma,n System 1 1=kl 92.0 1-å 216.0 237.3 ISOLATED SYSTEM .Southern Dzstrict-1 Choluteca 1.5 1.2 2.3 1.4 2.5 1.6 3.3 1.9 3.8 San Lorenzo .3 .5 .9 8.0 2.0 13.0 1.7 17.0 2.1 Nacaome Subtotal.3 2 Other Isolated Systems lä .2 6.1 4.3 6.1 iö Total Isolated Syster m:.6 12.8 6 Total EE6L. 1. L.4 4. Tota 2RE11 182.9 22. 214-0 227.8 ____3 1/ asumed to be connected to the mein system In 1974 Source: IBRD Appra'sal Reports of May 1968 and June 1972 HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA THIRD POWER PROJECT Table 8: INTERCONNECTED SYSTEM ENERGY SALES, ENERGY GENERATION. MAXIMUM DEMAND & FIRM CAPABILITY 1967 1968 1969 1970 1971 1972 1973 Energy Sales Gwh Actual 136.1 164.9 193.7 215.7 237.1 262 308 Projected 142.7 170.1 195.4 221.9 254.0 293 326 System Losses % Actual 12 14 11 11 13 16 12 Projected 13 13 13 13 13 13 13 Energy Generation Gwh Actual 154 192 219 243 273 310 348 Projected 164 196 225 255 292 337 374 Annual Load Factor % Actual 59 58 56 59 62 62 62 Projected 60 60 60 60 60 60 60 Maximum Demand Mw Actual 30.0 37.6 44.5 47.1 50.3 57.4 64.0 Projected 31.2 37.4 42.8 48.5 64.1 69.1 71.2 Installed Capacity Mw Actual 44 54 54 65 105 118 118 Projected 44 54 54 94 94 94 94 Capacity Factor % Actual 40 41 46 43 29 Projected 43 41 48 31 35 Firm Capability Mw Actual 28 39 39 50 90 105 105 Projectea 29 39 139 74 74 - 74 74 Surplus (Deficiency) Mw Actual (2.0) 1.4 (5.5) 2.9 39.7 47.6 41 Projected (2.2) 1.6 (3.8) 25.5 18.2 9.9 2.8 Source: IBiD Appraisal Report of May 1968 and ENEE MAP I GUlF OF HONDURAS TRUJILLO. :PUERTO CORTES o BARACOA TELA P"' BIJAO SAN PEDRO SULA É A LIMA 6 EL PROGRESO È 69XV H O N D U R A S EMPRESA NACIONAL DE Y P ROWLEN ENERGIA ELECTRICA SANTA BARBARAMOCHIT STATION , R1O LINDO HYDROELECTRIC PROJECT MACALTO SANTA A ROSA YO7JOA v JUT ICALPA SIGUATEPEQUE COMAYAGUA LA ESPERANZA o MARCALA o TEGUCIGALPA '-'---.. 0 ANL I NACAOME o - EXISTING 138KV TRANSMISSION LINE oSAN LORENZO EXISTING 69KV TRANSMISSION LINE PROPOSED 138KV TRANSMISSION LINE C PROPOSED 69KV TRANSMISSION LINE M POTENTIAL HYDRO POWER SITE ATILANTIC- MEXCOOCE AN* HONDURAS NICARAGUA 20 0 60 PAC/FIC KILOMETERS MO9OCEAN MAY 1968 IBRD 2187.Rl  MAP 2 HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA (ENEE) LAKE YOJOA - RIO UNDO HYDROELECTRIC DEVELOPMENT SAN PEDRO SULA * / FUTURE DAM TO DIVERT WATER FROM THE RIO po / o LINDO THROUGH A PIPE LINE INTO THE PROPOSED RIO LINDO SCHEME RI RIO LINDO PO R STATION RIO CANAVERAL POWE S ATION RIO Loke Yojoa OVERFLOW WHEN a: LAKE IS FULL Rio Joit ue 0 10 20 30 40 50 KILOMETERS FEBRUARY 1968 IBRD-2197R