Guatemala - Aguacapa Power Project

Document of FILE COPY The World Bank RETURN TO FOR OFFICIAL USE ONLY R P TSIN ONE WEEK Report No. P-2069-GU REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO INSTITUTO NACIONAL DE ELECTRIFICACION WITH THE GUARANTEE OF REPUBLIC OF GUATEMALA FOR A THIRD POWER PROJECT May 5, 1977 This document has a restrictcd 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 EQUIVALENTS Currency Unit = Quetzal (Q) Q1.00 = 100 centavos = US$1.00 FISCAL YEAR INDE's fiscal year ends December 31 FOR OFFICIAL USE ONLY ABBREVIATIONS CEL - Comisi6n Ejecutiva Hidroelectrica del Rio Lempa (El Salvador) EEG - Empresa El6ctrica de Guatemala FIV - Fondo de Inversiones de Venezuela INDE - Instituto Nacional de Electrificaci6n IDB - Inter-American Development Bank CABEI - Central American Bank for Economic Integration This document has a restricted distribution and may be used by recipients only in the performance of their offical duties. Its conents may not otherwise be disclosed without World Bank authorization. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO INSTITUTO NACIONAL DE ELECTRIFICACION WITH THE GUARANTEE OF THE REPUBLIC OF GUATEMALA FOR A THIRD POWER PROJECT 1. I submit the following report and recommendation on a proposed loan for the equivalent of US$55.0 million to Instituto Nacional de Electrificacion (INDE), with the guarantee of the Republic of Guatemala, for a third power project. The loan would have a term of 17 years, in- cluding 3-1/2 years of grace, with interest at 8.2 percent per annum. Co-financing for the project will be provided by loans totalling US$30.0 million from the Venezuelan Investment Fund (VIF) and US$8.8 million from the Central American Bank for Economic Integration (CABEI). PART I - THE ECONOMY 2. A report entitled "Memorandum on Recent Economic Development and Prospects of Guatemala" (Report No. 681-GU) was distributed to the Executive Directors in March 1975, and a special report on the situation following the earthquake of February 4 was distributed on March 16, 1976 (Sec m86-171). An economic mission visited Guatemala in November 1976 and is now preparing a report that will focus on the resource requirements for a simultaneous implementation of the earthquake reconstruction program and of the 1975-79 Development Plan which was prepared prior to the earthquake. The main conclusions of the above reports and the preliminary conclusions of the November mission have been incorporated in the following paragraphs. A country data sheet is attached as Annex 1. 3. Guatemala has the largest population and the most diversified physical environment of the five countries in Central America. The rugged central highland area is marked by continuing volcanic activity and occasional seismic disturbances, the,most recent of which was the devastating earthquake of February 4, 1976. The varied climate and rich soils allow the cultivation of almost any type of agricultural product. Some mineral resources exist, of which one of the most important is nickel; its commercial production will begin this year under a project receiving financial support from the IFC. Guatemala's natural beauty, pleasant climate, archeological monuments, folk- lore and proximity to the United States give it a high potential for tourism development. Most of the country's population and economic activity is in the central highlands.' Nearly all the major urban centers and most of the country's industrial and agricultural activities are also located there. - 2 - 4. According to the latest revised census data, Guatemala's population now totals about 6.5 million and is growing at 3.2 percent per year. The most significant characteristic of the population is its sharp ethnic division. The pure Indians, who make up about 40 percent of the total population, live outside the mainstream of Guatemalan society. While their separation from the rest of the population has its roots in the cultural and linguistic differences between the two groups, it has been accentuated by disparities in access to land, employment, infrastructure, and other public services. Although a national income distribution enquiry has never been conducted, an unequal pattern of land tenure, combined with the limited access to productive employment outside of agriculture, points to a sharply skewed pattern of income distribution. Considering, however, that a large part of the people live essentially outside the monetized sector, any effort to reduce income disparities must place emphasis on providing increased access to public services, so as to integrate the Indian population into the economic life of the country and make their efforts to increase their meager incomes more productive. The Government's strategy for rural development places emphasis on extending social and productive infrastructure to the rural areas (see paragraph 8). 5. The economy grew at an average annual rate of 5.7 percent in real terms from 1970 to 1975. Commerce and agriculture were the main contributors to growth, accounting together for over one-half of the total increase in GDP over the period. These sectors each accounted for about 28 percent of GDP in 1975. Although manufacturing had been a vital source of growth in the economy in the 1960's, during the period 1970-75, it grew slightly more slowly than total GDP; its average growth in 1974 and 1975, influenced by the world recession, was only 1.5 percent per year. 6. In February of 1976, an earthquake spread ruin across about 3,500 square miles of the most heavily populated part of Guatemala. However, the country's agricultural and industrial production capacity was not heavily damaged, and although there was substantial damage to infrastructure (trans- portation, communication and water supply in particular), most facilities, other than those at Puerto Barrios, were restored rather quickly to their pre-quake levels.l/ Consequently, the earthquake had little lasting impact on the country's productive capacity. Although in 1975 the GDP growth rate slowed to 2 percent (due partly to adverse weather for agriculture), in 1976 there was a strong recovery. With the impetus of the reconstruction activity, favorable coffee prices and better climatic conditions, the increase in GDP last year was about 8.6 percent. In the coming years, Guatemala should be able to maintain an average annual growth rate at or exceeding the 6 percent level of the early 1970's. 1/ The facilities at Puerto Barrios are now being restored with financial assistance from the World Bank under the Earthquake Reconstruction Project which the Board approved on July 16, 1976. - 3 - 7. The Government has estimated the cost of earthquake reconstruction at about US$1.1 billion in current prices over the next ten years, of which about US$750 million represents expenditures to be made during the first three to four years. Around US$500 million of the total might be considered as direct replacement costs excluding upgrading. Details of the damage suffered by various sectors in the economy are given in the above-mentioned earthquake reconnaissance report and the President's Report for the Earth- quake Reconstruction Project (No. P-1888-GU). 8. Despite the high cost of the reconstruction program, the Govern- ment has announced its intention to continue the 1975-79 Development Plan, a plan which implies more than a doubling of the present public investment level and substantial increases in current expenditures. This program places considerable emphasis on two areas. First, it stresses the need to increase the productivity of small- and medium-size farmers, the majority of whom are Indians, so that their standard of living may be brought more into line with that of the rest of the country. The program proposes that the Government's rural sector objectives be met through public investment in infrastructure, in marketing and credit facilities and in technological improvements. This investment, which constitutes about 15 percent of the planned public capital expenditures, is expected to stimulate widespread complementary investment by the private sector. 9. Second, the plan gives high priority to accelerating investments in the electric energy sector, where rapid action is required to prevent energy shortages from becoming a bottleneck in the country's development. This investment in power is critical to Guatemala's future development, both economic and social, for the very low level of investment in this sector in recent years has left Guatemala the most poorly supplied of all Central American countries in terms of installed capacity per capita and the lowest after Honduras in terms of per capita consumption of electric power. Moreover, Guatemala is far below the international average for a country with its current per capita income; a study of 70 developing countries indicates an expected value for annual consumption of 400-500 kWh per capita instead of Guatemala's actual 184 kWh. 10. Furthermore, unless Guatemala takes steps towards a fuller utilization of her substantial hydroelectric potential, development in the medium and long term will be adversely affected by the diversion of foreign exchange resources to pay for oil. Even though oil has been discovered in the northern part of Guatemala, present proven and probable reserves would be sufficient to meet only less than one-fourth of the internal demand projected for 1980. Expenditures on imported oil in 1976 are estimated at US$135 million (14 percent of the import bill), compared to only US$15 million or 5 percent of imports in 1970. The Government's policy of accelerated investment in hydro power, which will lessen dependence on oil- fired thermal generation, will have a significant impact on Guatemala's future balance of payments situation. For example, the proposed Aguacapa hydroelectric project is expected to produce oil import savings of about US$15 million per year compared to producing the same amount of energy with a thermal plant designed to handle similar peak loads. This saving is equal to 11 percent of the current oil import bill. By 1983, both Aguacapa and the proposed 300MW hydroelectric unit at Chixoy should be in operation. These, combined with the planned 30MW Moyuta geothermal unit, will reduce the share of oil-fired plants in total generation capacity from the present 63 percent to about 27 percent. If thermal rather than the proposed hydro and geothermal projects had been chosen to meet the projected demand, the additional cost of oil imports by 1985 would have been about US$50 million per year (at today's oil prices). This expected import saving is equal to about 25 percent of present capital goods imports. 11. Full achievement of the investment targets will require efforts to improve project preparation capacity. Also, mobilizing the financing required to support the increased government investment, including both the recontruc- tion effort and the revised 1975-79 Development Plan, will probably require both increased participation of external lenders and internal fiscal reform. Public sector savings traditionally have been low; although Central Government savings increased significantly in 1973 and in 1975, they have remained below 2 percent of GDP. In 1974, a number of changes were made in the tax laws which sought to provide the Government with more adequate revenues. Since a major share of these tax measures were enacted early in 1974, the effect on government revenues was felt immediately; overall tax revenues in 1974 exceeded those of 1973 by nearly 32 percent. These measures raised the share of government tax revenues in GDP from 8.3 to around 9 percent. In 1975, the share rose to 9.4 percent, but in 1976 is estimated to have fallen back to 8.9 percent because an inelastic tax structure yielded revenues whose growth was falling behind the inflationary indicators, and there were no further reforms to rectify this effect. Also, tax collections were somewhat less strictly enforced during the period following the earthquake 12. As a first step towards increasing its revenue to meet reconstruction requirements, the Government has instituted a forced savings plan by which all businesses, and individuals earning more than US$200 per month, are obligated to invest in government reconstruction bonds, which are also available for voluntary purchase. This measure is intended to generate gross revenues of US$122.0 million over a 12-month period, which would be 80 percent of the additional revenues needed specifically for projected Central Government local currency expenditures on earthquake reconstruction. The Government expects at least half of the issue to be purchased on an obligatory basis and that most of the remainder will be taken up voluntarily. Even though this measure represents an important new source of finance, the Government will probably have to seek additional sources of revenue if it is to finance the public sector investment planned for this decade. The reasons for this are several: First, it is likely that some of the reconstruction bonds planned for sale on a voluntary basis will not be placed in the private sector but will remain with the Central Bank; second, the funds generated by the reconstruction bond sale will have to be repaid with interest; and third, Government savings together with forecast foreign assistance will still not be sufficient to fully cover the proposed total public sector investment through 1979. However, a slight increase in the tax burden from 8.9 to about 10 percent of GDP should be feasible and should hold to manageable levels the amount of commercial borrowing necessary to complete the financing of the planned investment. 13. The balance of payments situation improved markedly between 1971, when there was a current account deficit of US$49.0 million (due largely to a decline of agricultural export earnings), and 1973, when there was a US$8.0 million surplus on current account. From 1973 to 1976, the trade gap increased - 5 - dramatically. The volume of merchandise imports grew by 11.6 percent per year while that of exports grew by 4.5 percent. This, combined with the price increases led by petroleum, resulted in a 126 percent increase in import value compared to a 59 percent increase in the value of exports over this three-year period. By the end of 1976, the resource balance had deteriorated to a minus US$142 million, compared to a positive balance of US$15.2 million in 1973. There was a positive current account balance of about US$5 million in 1976, however, largely because of the extraordinary level of transfers (see below). 14. Foreign exchange reserves rose from US$196.1 million in 1973 to an estimated US$513.4 million by the end of 1976. An important factor in this growth was the large increase in private sector flows, of which about half has been direct investment. In 1976, transfers were also substantial; this category - in large measure donations related to the earthquake - increased from US$72.7 million in 1975 to US$207.5 million in 1976. In relation to imports, reserves grew from the equivalent of 5 months of imports in 1973 to 5 1/2 months at the end of 1976. 15. Coffee continues to be the leading export of Guatemala and is estimated to have accounted for US$265 million or about 34 percent of merchandise exports in 1976. Sugar exports were particularly profitable in 1975, but the earnings in 1976 are estimated to have fallen by almost 20 percent with the sharp drop in the world price of sugar. Earnings from tourism in 1976 will show a slight increase over the 1975 level in spite of the earthquake. 16. Medium-term prospects for the balance of payments are difficult to assess because of the uncertainties surrounding the effects of the earthquake. Most tourist facilities are already back in operation, and it is hoped that tourism will continue its past rapid growth in 1977. Prospects for agricultural exports in the medium term are also fairly good, considering that the prices for coffee and for beef should remain relatively high for a few years to come. 17. Nickel exports will begin in 1977, and the rate of growth of export volumes of manufactured goods should rise from 7 percent in 1977 to about 10 percent per year by 1980. Important to this growth, however, will be the planned acceleration of investment in electric power. As mentioned above, investment in this sector has lagged badly in recent years, and present firm capacity is almost fully utilized. Without an expansion of generating capacity, the industrial sector, which consumes nearly half of all power generated, is likely to stagnate. 18. On the import side, expenditures in 1977 and 1978 should be only moderately above the high levels of 1976. However, the transfers associated with the earthquake will largely cease in the next year or two, which will result in significantly larger current account deficits between now and 1980. Nevertheless, it is unlikely that the current account deficit will exceed 4-5 percent of GDP in the next few years. - 6 - 19. Because Guatemala has traditionally borrowed little on commercial terms, there is scope for increasing foreign borrowing without impairing the country's creditworthiness. Guatemala's debt service ratio has been relatively low in the past (about 3 to 4 percent of exports in 1973 through 1976). Also, the structure of the external public debt has improved substantially over the last few years as a result of the increased share of international financial institutions in Guatemala's external borrowing. It is expected that commercial borrowing.together with the expected levels of official lending which will be required to finance the planned public investment will increase the debt service ratio from its present level of 4 percent to a maximum of about 10 percent in the early 1980's. External Assistance 20. Apart from the Bank, official external financing has been provided primarily by USAID, the Inter-American Development Bank (IDB), and the Central American Bank for Economic Integration (CABEI). IDB funds have carried a substantial concessional element and often contain significant components repayable in local currency. The IDB has made loans for agriculture (credit, irrigation and fisheries), electric power, housing, transportation, water supply and health services. USAID has financed mainly rural development, rural electrification, housing and health facilities. CABEI has concentrated mainly on projects with a regional impact in highways, telecommunications, agriculture and industry. The lending of these agencies from 1950 to the end of 1975 is summarized as follows: (In millions of US dollars) IBRD AID IDB CABEI Total Total (1950-1975) 92.5 94.8 148.5 119.5 455.3 Cumulative Lending 1950-65 18.2 16.0 23.3 6.4 63.9 Cumulative Lending 1966-75 7W.3 7T8T 125.2 113.1 391.7 Transport - .8 33.1 38.0 71.9 Power and Telecommunications 64.0 7.0 1/ 38.3 109.3 Education 6.3 8.6 18.8 - 33.7 Health 5.9 49.8 2.4 58.1 Agriculture 4.0 32.0 14.9 26.2 77.1 Industry - 10.0 - - 10.0 Other - 14.5 8.6 8.2 31.3 1/ IDB made loans of US$105 million for electric power in 1976. 21. In the next few years, IDB is expected to consider financing of projects in electric power, industry, tourism, agriculture and rural development, highways, health and education. AID is expected to consider projects principally in education, agriculture and rural development, and CABEI, projects with a regional impact. It is too early to say precisely how much reconstruction finance Guatemala can expect from official sources, but it seems likely that the US$270.0 million which the Government has requested may be difficult to raise. Based on loan approvals and plans of other multilateral and bilateral agencies, an amount of around US$200.0 million appears more realistic. - 8 - PART II - BANK GROUP OPERATIONS 22. Guatemala to date has received ten Bank loans, totalling US$133.5 million. The most recent operations are loans for a second education project (for US$14.5 million signed March 5, 1976), and for earthquake reconstruction (US$26.5 million, including US$20 million on Third Window terms, signed on August 2, 1976). These loans have only just become effective because of delays arising from the lengthy internal procedures required for Congressional ratification of the loans and execution of subsidiary agreements. In the meantime, however, implementation of the education and reconstruction projects has been proceeding with Government funds. Annex II contains a summary statement of Bank loans and IFC investments as of March 31, 1977, and notes on the execution of ongoing projects. 23. In addition to the loans for earthquake reconstruction, the Bank has provided assistance through two loans for education, two loans for power, two loans for telecommunications and one loan each for highways and livestock development. After an initial loan for highways, made in 1955, the Bank suspended operations in Guatemala because of the failure of successive Guatemalan Governments to settle a dispute regarding three outstanding sterling bond issues. Following settlement of the sterling debt, the Bank resumed lending to Guatemala in 1967. 24. Bank lending to Guatemala in the next several years will be designed to (1) support projects in the more traditional sectors where we expect to be able to make a meaningful contribution to sectoral objectives, and to strengthening and diversifying the productive base of the economy, (2) give increased emphasis to the rural sector, (3) assist Government programs in education and training, and (4) assist Guatemala to strengthen institutional capacity to provide low cost housing in Guatemala City and secondary urban centers. Given the importance to the balance of payments of exploiting Guatemala's ample hydroelectric resources, the importance to industrial growth of a reliable supply of electric energy, the large resource requirements of the sector, and the fact that there is a major role for the Bank in the strengthening of sectoral institutions, a substantial share of Bank lending is planned for electric power. As the two projects in the medium-term power investment program for which Bank financing has been requested - the proposed project and the Chixoy hydroelectric project - are scheduled to go forward this year, proposed Bank lending for electric power would be concentrated in 1977. 25. In agriculture and rural development, the Bank has participated in an analysis, now being finalized, of Guatemala's agric'lftural plans and programs conducted as part of a joint IBRD, IDB and AID agricultural and rural survey of the five Central American countries. A number of projects estimated at a total cost of more than US$1.30 million have been identified through this process. These projects cover the areas of soil conservation, irrigation and drainage, rural roads, cooperative development, rural formal and non-formal education, livestock, marketing development, agro-industry and credit. The next step will be for the Government to propose - 9 - an allocation of the projects among the external lending agencies. In the meantime, a second agricultural credit project is being considered for appraisal within the next two months. The project would assist Guatemala in raising production of livestock, food crops and edible oils. It will benefit small farmers, mainly those settled under programs for the distribution of public lands, as well as medium and large farmers and agro-processors. In education, future lending is likely to give priority to expanding lower secondary education, with pre-vocational orientation, to small towns and rural areas throughout the country. In urban housing, a sites and services project would be developed in light of the experience gained under the earthquake reconstruction project. 26. It is expected that the Bank's share of total external public debt disbursed and outstanding will be 10-15 percent on average through 1980. The Bank's share of debt service in 1976 is estimated at 16 percent; it is projected to drop slightly in the future with increased borrowing from commercial sources. 27. IFC has made two investments in Guatemala. The first, a US$200,000 loan in 1958 for a flour mill, has been fully repaid. The second, a loan of US$15.0 million to Exploraciones y Explotaciones Mineras Izabal, S.A. (EXMIBAL), a Guatemalan company established to exploit a nickel ore deposit at Lake Izabal in eastern Guatemala, was approved in July 1973. After some initial delays in finalizing the project design and in arranging additional financing made necessary by substantial cost overruns, construction is progressing satisfactorily and plant operation is expected to begin in mid-1977. - 10 - PART III - THE SECTOR Energy Consumption and Resources 28. Gross energy consumption in Guatemala is low by Central American standards. It amounted to 1.97 million tons of oil equivalent (M.T.o.e.) in 1973, which converts into 0.34 tons of oil equivalent (T.o.e.) per capita, a figure well below the regional average of 0.44 T.O.e. per capita. While consumption of energy derived from petroleum and hydrologic resources has been growing in importance, a high proportion (estimated at about 46 percent in 1973) is still derived from wood and bagasse. 29. Guatemala presently imports all petroleum fuels; exploratory work in potential petroleum areas is being carried out, with some limited success already apparent (see paragraph 10 above). The country has a large, technically exploitable hydroelectric potential which is estimated at 4,300MW. This contrasts sharply with the 121MW (2.5 percent of the potential) in installed hydroelectric capacity. Guatemala should also have an exploitable geothermal potential, as the geological characteristics of the country are similar to those of El Salvador and Nicaragua, where the feasibility of geothermal-based power development has been established. 30. Gross consumption of electric energy grew at an average rate of 11.5 percent per annum between 1970 and 1975. In 1975 the industrial sector accounted for 45 per.cent of the total power consumption, while residential consumption amounted to 27 percent and commercial consumption to 15 percent. The remainder was absorbed by the government sector. The relative market share of the industrial sector is expected to grow during the project period and reach about 47 percent of the market by the end of the decade. The overall electricity consumption is forecast to grow at 11 percent per annum through 1982. 31. In 1974 Guatemala ranked fourth among the Central American countries in consumption of electric energy per capita and fifth in terms of installed capacity per capita. Consumption Installed Capacity Country (KWh per capita) (KW per 1,000 population) Costa Rica 764 212 Nicaragua 405 126 El Salvador 254 79 Guatemala 184 43 Honduras 157 49 The geographical distribution of the electricity load is very uneven. While, on the one hand, the average consumption of electricity by - 11 - the 1.8 million inhabitants of Guatemala City and nearby areas (Departments of Guatemala, Escuintla and Sacatepequez) was 456kWh per capita; on the other hand, the average consumption of electricity in the rest of the country, with 4.7 million inhabitants, was 33kWh. This disparity is largely the result of higher industrial consumption in Guat-mala City and its environs, although household consumption is also he -ily concentrated in this area. Thus, 50 percent of households in this area had electricity service, as compared with only 16 percent in the rest of the country. Power Sector Organization 32. Public electric service in Guatemala is provided by the Instituto Nacional de Electrificaci6n (INDE), Empresa E16ctrica de Guatemala S.A. (EEG), a few small private enterprises, and numerous municipalities. Some of the smaller utilities have their own generating capacity and are not in the interconnected system; the remainder purchase bulk energy from TNDE or EEG. 33. EEG, a former subsidiary of Boise Cascade, USA, was created in 1922 and received a 50-year concession covering Guatemala City and environs. Shortly before the EEG concession expired in May 1972, the Guatemalan Government and EEG's parent company reached an agreement whereby the Government bought 95 percent of EEG's common stock. A new Board and new General Manager were appointed, and a five-year extension to the concession was granted. INDE was created in 1959 by the Government to serve the country outside the EEG concession area and to assume responsibility for the expansion of power generation capacity. In 1975 INDE's share of public service generation was 68 percent compared to 30 percent for EEG; in the same year EEG's share of retail sales was 76 percent while INDE's was 10 percent. Of the present total generating capacity of 326MW, about two-thirds is in the interconnected system served by EEG and INDE and located in the southern part of the country where three-fourths of the population resides. Power Sector Development 34. Although INDE's charter endowed it with ample authority, it was unable to generate the financial resources or develop the institutional capacity commensurate with its challenging tasks. It was charged with developing and executing a program for expansion of power generation capacity, requiring heavy capital investment, yet it was unable to raise adequate tariff revenues, mainly because of resistance by its major customer, the strong and well- established EEG. Furthermore, inadequate planning and weak project preparation capacity prevented INDE from exploiting the country's abundant hydroelectric potential. Between 1962 and 1976, only 40 percent of capacity additions were hydroelectric compared with 95 percent recommended by the UNDP-financed power study carried out by Acres International in 1960-62 with the Bank as Executing Agency. - 12 - 35. As a result, installation of new generation capacity has not always kept pace with growing needs, there have been periods of service interruptions and, at present, the system does not have adequate reserve. Moreover, the failure to develop hydroelectric resources forced the country to confront the energy crisis with a primarily thermal-based power system. 36. The Government that took office in 1974 adopted as a major policy objective the development of the country's hydroelectric potential and the overall strengthening of the energy sector. The Government's new emphasis coincided with the completion of the first phase of a master plan for the development of the electric system which grew out of discussions between the Bank and the Guatemalan authorities in 1972 and was financed by a technical assistance grant from the Federal Republic of Germany. This work enabled the Government for the first time to base its power investment program on a comprehensive long-range plan. The medium-term program which had been developed from individual project studies was confirmed by the master plan and includes the 90MW Aguacapa hydroelectric project for operation in 1979 and the 300MW Chixoy hydroelectric project for 1982. To fill capacity requirements before Aguacapa comes on stream, the program includes two 25MW gas turbine plants (now undergoing trial operation) and one 53MW steam plant scheduled for operation by mid-1977. The program also calls for development of a first (30MW) geothermal plant by 1981 (subject to confirmation by feasibility studies now underway). 37. In transmission and distribution, aside from the normal expansion associated with the new generating plants to be constructed, INDE is now planning two important initiatives. The first is an interconnection line to link the power systems of Guatemala and El Salvador. INDE and the Salvadorean power company have contracted consultants for a feasibility study of the interconnection to be financed internally by both El Salvador and Guatemala. To reduce the heavy imbalance in access to electricity between the EEG concession area and the rest of the country, INDE early in 1976 began preparing for the first timeanational rural electrification program. Some limited efforts in this area have been initiated in recent years. In 1971, USAID with a US$7.0 million loan, financed transmission lines and related substations through the Western Highlands (San Marcos, Huehuetenango and Quiche) and the Northern Lowlands (Baja Verapaz and Alta Verapaz). These transmission lines were connected to distribution systems to serve 61 towns and villages, thereby providing reliable, full-time power to these areas. The transmission network now in place is adequate to serve a large number of other villages as well. INDE has recently built some substations and distribution networks in the eastern part of the country, laying the foundation for further expansion in this area. The new program,preparation of which has now been completed, is designed to expand the rural electrification effort substantially, both in size and in geographical coverage. Since the construction and operation of rural distribution systems are relatively simple and do not require a large number of skilled workers, INDE will have the capacity to expand services to the rural population while construction of large hydro projects is being carried out. -13- 38. When the medium-term power investment program outlined above was developed by the Government in 1975, it was apparent that even with planned strengthening of sector entities (discussed below), there would be need for substantial external assistance for the program, the total cost of which during 1977-81 is approximately US$550 million. The Government therefore has approached the Bank, CABEI and the Venezuelan Investment Fund - VIF (under the latter's oil facility for Central America) for financing Aguacapa; the Bank, IDB,CABEI, VIF, supplier's and commercial banks for the large (estimated cost: almost US$300 million) Chixoy project; CABEI for geothermal development and the interconnection line with El Salvador; and IDB (and possibly AID) for the rural electrification program. The interim thermal investment program is being financed by suppliers' credits and local bond issues. In view of the long construction lead time required, construction of Chixoy has to begin at approximately the same time as Aguacapa, and IDB has already approved a loan package of US$105 million for this project (of which US$15 million represents commercial bank financing channelled through IDB). Bank appraisal of Chixoy is in progress, with Board presentation tentatively planned for early FY78. Improvement of Institutional Arrangements 39. The Government recognizes that the present division of the sector between EEG and INDE has been one of the principal reasons for the financial weakness of INDE. Although steps were taken after the Government obtained control of EEG in 1972 to improve INDE's situation, through an arrangement whereby Government dividends from EEG were passed on to INDE, the transfers involved have been inadequate to meet INDE's needs. Moreover, EEG's natural concern for serving the needs of its concession area complicates the sectoral planning process. The Government, therefore, in order to lay the groundwork for a strenghtening of the institutional framework in which the power development program is to be carried out, established a Sector Reorganization Commission in January 1976. The Commission was to study alternatives for the future organization of the sector, was to propose broad policies in the areas of tariffs and the strengthening of INDE, and was to propose recommendations for action to the Cabinet-level National Economic Council. The Commission has completed its report and presented it to the Council for review. The Government intends to decide on a specific reorganization scheme by June 30, 1977, and to complete the sector reorganization by the end of 1979. Prior Bank Projects 4o. The Bank has made two loans for the power sector in Guatemala. Loan 487-GU of US$15 million equivalent,signed in March 1967, assisted TNDE in financing the construction of the 60MW Juruin-Marinala hydroelectr-c project and associated facilities, transmission lines, installation of 12.7MW gas turbine, and some diesel units. The project was completed cl)se to the original schedule; actual construction costs were 12 percent higher than the estimates prepared at the time the project was appraised. The - l4 - investment in Jurun-Marinala compared with an equivalent thermal plant was found, according to the appraisal report, to be the most economic alternative at discount rates of 10 percent or less; however, due mainly to the subsequent very large increases in fuel prices, it will be the most economic alternative even at discount rates higher than 10 percent. 41. The second power loan, 545-GU of US$7 million equivalent, signed in June 1968, financed the foreign exchange component of a 33MW steam unit, and site investigations, pre-investment studies and design of the first stage of the Atitlan hydroelectric project. The original Guacalate site for the unit was ruined by a flood in September 1969, after works had already started. The flood revealed that the proposed site lay in an ancient river bed, and works had to be restarted. at a new site (Escuintla), involving substantially greater civil works. This incident was the main factor causing a 22-month delay in completion of the unit and a 60 percent cost overrun. Given the delays in preparing hydroelectric projects that had occurred, the 33MW steam unit was probably the best system addition that could be made at the time. Moreover, the investment is expected to yield a satisfactory economic return to Guatemala, despite the difficulties it experienced, as its benefits have been greatly enhanced as a result of delays which have occurred in the construction of additional capacity to keep up with system load growth. INDE has not achieved the financial rates of return contained in the tariff covenants under the two loans. The poor financial performance has its roots in INDE's weak position vis-a-vis EEG, as discussed above. The Bank appraised a power project in 1972, but this project did not go forward as a result of a disagreement between the Bank and the Government over a proposed bid award for two thermal generating units, the main components of the proj-ect. It has thus been almost nine years since the Bank's last loan for electric power in Guatemala. 42. A project performance audit report prepared by the Operations Evaluation Department on the First and Second Power Projects was distributed to the Executive Directors on February 14, 1975. The main conclusions of this report were that, although the Bank had played a large part in the expansion of Guatemala's power supply and in helping to establish INDE as "the major institution" in the power sector, it could have contributed more tothe solution of the two most serious problems in the sector -- the poor financial performance arising mainly from the unsatisfactory arrangements between INDE and EEG, and the lack of development of Guatemala's hydroelectric resources. Agreements reached with the Government and INDE in connection with tne proposed loan are designed to tackle both of these problems. - 15 - PART IV - THE PROJECT 43. A report entitled "Appraisal of Aguacapa Power Project of Instituto Nacional de Electrificacion" (INDE) (No. 1361b-GU, dated March 31, 1977) is being distributed separately. The main features of the loan are summa- rized in Annex III. The project was prepared by INDE with the assistance of consultants, and appraised in March-April 1976. Negotiations were held in Washington on January 26-28, 1977. INDE was represented by Mr. Rene Nuyens, General Manager; the principal Government representative was Mr. A. Boesche, Under Secretary of the Planning Council. Project Description 44. The project comprises the construction of: (1) a dam in the Aguacapa river and a reservoir of 300,000m3 for daily regulation; (2) a 12km power tunnel; (3) a 3.7km steel penstock; (4) a power station with three 30MW generating units; (5) step-up transformer facilities at the power plant; (6) a switching station; and (7) 23km of transmission line at 230kV. In addition, the project includes about 36 man-months of consultants' services. This project constitutes 25 percent of the sector investment program for 1977-79, the disbursement period of the proposed loan. Project Cost 45. The total cost of the project is estimated at US$100.0 million, with a foreign exchange component of US$59.5 million. Interest on loans during construction would add US$11.2 million, bringing total foreign financing requirements to US$70.7 million. The proposed Bank loan of US$55.0 million would cover 92 percent of the foreign exchange component (excluding interest during construction). The Central American Bank for Economic Integration (CABEI) would provide two loans for the project totalling US$8.8 million, while the Venezuelan Investment Fund would provide loans totalling US$30.0 million during 1977-79 (from the proceeds of the Central American oil facility) to help cover local currency costs. The remaining US$17.4 million would be financed by net internal cash generation and Government contributions. Physical contingencies have been calculated at 10 percent for civil works and 5 percent for equipment and materials. Base costs have been estimated at prices of June 1976, to which has been added an allowance for price increases of 9 and 13 percent per annum for foreign and local costs, respectively, in the second half of 1976, and 8 and 12 percent per annum for foreign and local costs from 1977-79. Details of project costs and of the financing plan are presented in Annex III. - 16 - The Borrower 46. INDE is an autonomous agency of the Guatemalan Government. While INDE's charter gives it full authority to set rates, in practice its rates to EEG are negotiated between the two companies, and these rates together with all other INDE rates are subject to Government approval. 47. INDE's Board of Directors is composed of five directors and three alternates, all appointed by the President of Guatemala. Management is entrusted to a General Manager and two Sub-Managers, one responsible for technical operations, the other for administrative and financial matters. INDE is short of specialized and experienced professionals, particularly at mid-management level. Also the number of operational employees is high (1,560) in relation to the number of customers served. Intensive construction activity on force account has caused INDE to increase its temporary unskilled staff substantially from 800 in 1975 to 3,580 by mid- 1976. With the completion of civil works on steam plants by mid-1977, and the initiation of work by contractors on Aguacapa and Chixoy in 1977, INDE should be in a position to phase out completely construction on force account of major works. Also INDE needs to develop its capacity to plan system expansion to enable it to assume a function which up to now has been handled by outside consultants, and it needs to strengthen its financial planning staff and increase the mechanization of accounting functions. 48. INDE's management is aware of the areas requiring improvement but has been reluctant to initiate major reforms pending the Government's decision on sector reorganization. There are, however, some improvements which could be made immediately, while others could be started after sector reorganization begins in mid-1977. To this end, INDE has agreed to carry out the following measures before May 31, 1977: (a) strengthen the financial unit of its planning group by hiring one or two experienced professionals; (b) strengthen the personnel unit by hiring an experienced specialist who would prepare a program to improve personnel policies and practices; and (c) simplify and improve the handling and control of correspondence and filing. It should also be feasible to plan major organizational reforms in the next few months, even if these may require some adjustments after the final sector organization is defined. Consequently, INDE agreed on a schedule that would enable it by June 30, 1978, to: (a) reorganize its planning group into a department, incorporating the technical team trained by the master plan group; (b) reorganize the financial group into a department headed by an experienced financial manager who would implement a program for effective financial planning and improvement of all accounting functions; and (c) finalize planning for a new main office building (the existing facilities are inadequate) (Section 4.01(b) of the Loan Agreement). To assist INDE in carrying out the above programs, particularly personnel upgrading and accounting improvements, forty man-months of consultant services would be provided under the loan. The average cost of these consulting services, assuming that they will be recruited from abroad, is estimated to be about US$4,750 per man-month. - 17 - Financial Position and Future Earnings of INDE and the Sector 1. 49. The power sector's financial performance through 1973 was satisfactory. In the period 1971-73 it achieved an average rate of return of 9.7 percent on historically-valued assets, a high debt-service coverage ratio (4:3) and a satisfactory contribution to its modest investment program (38 percent). The satisfactory consolidated sector performance resulted from the high earnings achieved by EEG,but as discussed in Part III above, INDE was never able to charge a sufficiently high bulk tariff to EEG to share adequately in sector revenues. The sector's financial performance deteriorated in 1974-75 as tariff increases authorized in those years were insufficient to offset substantial increases in fuel costs. The situation improved in 1976, after an additional tariff increase which enabled the sector to achieve an estimated 7.2 percent return on historically valued assets, and subject to the implementation of actions discussed below, should improve further during the period of disbursement of the proposed loan (1977-79). 50. The power sector's capital investment program during 1977-79 is expected to total approximately US$380 million (including interest during construction). Of this amount, over 95 percent represents investments to be made by INDE. Given the magnitude of the INDE program and the heavy concentration of investment expenditures in the next few years, the Government recognizes the importance of timely action to imnrove the financial arrangements between INDE and EEG, which is a major objective of the proposed sector reorganization. It recognizes as well the importance of mobilizing an adequate amount of consumer-based resources for the program to complement the necessarily large amount of external borrowing, but at the same time, takes the position that any proposed tariff action should take into account the lumpy nature of the sector investment program. 51. Accordingly, the Government intends to base its power pricing policy on the long-term costs of production and financing needs of the sector and proposes to cover through equity contributions and loans, the short-term financing shortfalls attributable to the large investment program needed to meet the growth in energy demand and alleviate dependence on imported fuel. In terms of the financing plan for the 1977-79 sector expansion program, this means that the Government proposes to finance about US$278 million, or 74 percent, from external borrowing (of which US$166 million has either already been committed in approved loans or is being negotiated for the Aguacapa project), about US$57 million equivalent, or 15 percent, from net internal cash generation, and the balance of $45 million from Government equity contributions. This tariff policy and financing plan are reflected in a series of agreed financial conditions which, since they have been developed from the standpoint of the requirements of the sector as a whole, would apply to the new sectoral entity if the Government decides to merge EEG and INDE. 1/ The financial analysis contained in these paragraphs assumes a Bank interest rate on the Aguacapa loan of 8.5 percent per annum. The actual Bank rate to be charged (8.2 percent per annum) will result in a marginal improvement in INDE's financial position from that shown. - 18 - 52. In the absence of a proper valuation of the sector's assets, it is proposed that contribution to investment be used for the time being as the main criterion to determine the adequacy of its revenues. It was agreed that retail tariffs of EEG and INDE will be set at levels sufficient to finance from net internal resources an average of 15 percent of their consolidated construction expenditures in 1977-79; and that after completion of the Aguacapa project, tariffs should be sufficient to earn a rate of return of at least 9 percent on their respective revalued net fixed assets in operation (Sections 3.02 and 3.03 of the Guarantee Agreement and Section 5.04 of the Loan Agreement). Under these covenants, it is projected that an acceptable debt service coverage will be obtained (averaging 1.38 times in 1977-79). The sector's debt equity ratio is expected to rise from 35/65 in 1976 to 59/41 in 1981 and decline thereafter. Agreement has been reached with the Government and INDE to carry out a review of the power sector's asset value, under terms of reference and on a timetable agreed with the Bank (Sections 3.01, 3.02 and 3.03 of the Loan Agreement). 53. To achieve the proposed 15 percent minimum contribution to expansion, the retail tariffs of EEG and INDE will need to be raised in 1977 so that they would yield additional revenues totalling US$25.4 million during 1977-79, and in addition, any increases in fuel prices would need to be passed on to consumers. Agreement has been reached that fuel price increases will be passed on (Section 3.06 of the Guarantee Agreement); the necessary retail tariff increase would be a condition of effectiveness of the Loan Agreement (Section 7.01(b) thereof). In addition, it has been agreed that retail tariffs of the sector will not be lowered during the construction period of the project (Section 3.11 of the Guarantee Agreement). In order to provide the basis for the implementation of longer-term tariff policy, it is necessary that a comprehensive tariff study be conducted which will recommend new tariff levels and structures to all final consumers. The Government has agreed on a timetable for execution of the tariff study (Section 3.07 of the Guarantee Agreement). In addition, as the sector reorganization has not yet been implemented and in order to assure that the bulk of sector revenues are passed on to INDE, the Government has agreed that INDE's tariffs to EEG would be adjusted annually at levels sufficient to channel to INDE any funds generated by EEG in excess of the latter's requirements for operations, debt service, working capital and construction, and that the Government will reinvest in equity capital of the Borrower all its cash dividends from EEG (Sections 3.05 and 3.10 of the Guarantee Agreement and 3.06 of the Loan Agreement). 54. Excessive overdue accounts receivable from public agencies (especially municipal entities) have represented a financial burden to both EEG and INDE. This situation should improve as a result of a recent judgement obtained by EEG against the Guatemala City water company, which owes it more than two years'consumption. The Government has agreed to take all necessary measures to reduce EEG and INDE's accounts receivable from public agencies to a maximum of 60 days'consumption by the end of 1977 (Section 3.09 of the Guarantee Agreement and 5.07 of the Loan Agreement). - 19 - 55. To ensure adherence to the proposed capital investment and financing plans, agreement has been reached with the Government and INDE that Bank concurrence will be obtained during construction of Aguacapa before allowing: (a) EEG to increase its construction expenditure beyond US$14.1 million durinj execution of the Aguacapa project (Section 3.08(b) of the Guarantee Agreement) (b) INDE to begin any new project not included in the program involving an expenditure in excess of US$1 million prior to the completion of the Aguacapa project (Section 5.08 of the Loan Agreement); and (c) INDE to contract any long-term debt, unless its net revenues are at least 1.5 times the maximum debt-service requirement for any future fiscal year (Section 5.09 of the Loan Agreement). As in previous loan agreements, agreement has been reached that INDE would appoint independent auditors satisfactory to the Bank and send to the Bank the audited financial statements and auditors' report within four months from the end of the fiscal year, each year for the duration of the loan (Section 5.02 of the Loan Agreement). Project Execution 56. INDE has contracted Electrowatt (Switzerland) to assist in design, procurement and construction supervision of project works. INDE expects to execute the project by contracting all major works, as well as the supply and installation of equipment and materials. The project is expected to be in operation by June 30, 1979. Procurement and Disbursement 57. Procurement of equipment, materials, and construction services ior the project to be financed by the Bank is being conducted under international competitive bidding (ICB) in accordance with Bank guide- lines forprocurement. Because of the urgency of the project, INDE initiated procurement soon after project appraisal by the Bank. ICB for all major contracts was conducted in May/June 1976 and bids were received from suppliers in six Bank member countries. Bid evaluations have been completed; the Bank has reviewed them and concurred with INDE's award recommendations on three of the four contracts that would be financed with the proposed loan. INDE has issued letters of intent to enter into a contract with the successful bidders on the three contracts (these letters condition signing of contracts on Bank approval of the proposed loan). Award of the fourth and largest contract (civil works) was complicated by an INDE proposal to divide the award (as permitted by the bidding documents) between the two contractors who presented bids for the complete works. INDE eventually decided, with the Bank's concurrence, to retender the civil works contract. Bids on this contract were opened in March 1977 and INDE's recommendation for contract award is expected in May 19' 58. Disbursements would be made for the percentages of costs shown below: (a) 49 percent of total expenditures for civil works (representing the estimated foreign cost component); (b) 100 percent of the foreign cost of imported equipment and materials, including installation, and of erection of facilities; and - 20 - (c) 100 percent of the foreign cost of consultants' services. Environmental Effects 59. The project should not have any adverse impact on the environment. The area to be flooded by the reservoir is very small (about 30,000m2) and uninhabited. No archaelogical sites will be disturbed and no animal species will be endangered in the reach of the river (about 22km) that will dry up as a result of its permanent diversion. Project Risks 60. Geophysicists who have studied the effects of the major Guatemalan earthquake of February 19T6 are in agreement that its cause appears to have been the movement of lithospheric plates producing a massive rupture along the Guatemalan Motagua fault (See map attached as Annex V). The Aguacapa site is located about 65km south of this fault line. Geologic investigations at the project site have not disclosed any adverse effects from the quake. However, to reduce the risks of seismic activity, the project has been designed to withstand seismic effects of the magnitude recorded during the recent quake. Economic Justification 61. This project is the least-cost solution for expanding Guatemala's generating capacity, as determined after comparing various sequences of conventional thermal, geothermal and hydroelectric plants and various possible designs and stages for the Aguacapa project. The return on investment is estimated by comparing the stream of costs associated with the projectthrough its assumed life of 40 years and those of the related sub- transmission and distribution system investments (not part of the project), with the estimated benefits measured by the forecast revenues from sale of electricity at the agreed 1977 tariff level and the savings of fuel. The rate of return under these assumptions will be 14.9 percent. A sensitivity analysis shows that this returnwouldbe reduced to 13.0 percent if investment cost were assumed to increase by 10 percent and to 12.7 percent if energy sales were 10 percent lower. 62. These rates of return indicate that electricity prices will, on average, be higher than incremental costs for the system. The actual economic rate of return probably will be higher than the above calculations would indicate, as the electricity rates used as the measure of benefits probably do not fully reflect the indirect benefits to industry, commerce and other large consumers whose production and employment depend on a reliable electricity supply. In order to prevent waste of energy, duplication of facilities, and unnecessary investment, assurances have been obtained from Government that it will take all actions necessary to bring about the economic operation of all generating and transmission facilities in the interconnected system and that expansion of these facilities will be based on economically justifiable programs (Section 3.08 (b) of the Guarantee Agreement). - 21 - PART V - LEGAL INSTRUMENTS AND AUTHORITY 63. The draft Loan Agreement between Instituto Nacional de Electrificacion and the Bank, the draft Guarantee Agreement between the Republic of Guatemala and the Bank, the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement of the Bank, and the text of the Resolution approving the proposed loan are being distributed to the Executive Directors separately. The draft Loan and Guarantee Agreements conform to the normal pattern of loans for power projects and their more important features have been included in Part IV of this report. There are three special conditions of effectiveness of the Loan Agreement (i) the execution by the Government, INDE and EEG of a Subsidiary Contract satisfactory to the Bank, the specific purpose of which is to ensure that EEG, not a party to the agreements with the Bank, will take all necessary action as and when required; (ii) that the agreed 1977 increase in retail power rates has taken place; and (iii) that the Venezuelan Investment Fund (or other source satisfactory to the Bank) has approved a loan of at least US$17.0 million equivalent to help meet the project's 1977 financial requirements. 64. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATIONS 65. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments May 5, 1977 раа�о! Ь раtев TABLE ЗА БиАтЕмАLд - 5оС1А� [NDiCATORS DATA 5ИЕЕ1 �вио даЕА lтнои кн21 ----------------�--------------_--..,..------ --------------- GuATFNAIA REFEaENCE COUNTRiES 119701 ТОтлL 108.9 М05т RECENT Асагс. г5.о 19во 197о ЕsпндтЕ оонlиlсаи REp РЕаи о0sтв икс► ем -----�------------------------ - ---------- ------ --------- GNP PER СлР1ТА 1USf1 220.0� Э50,0 • 550.0 r эВ0.0 520.0 560.0 ------'-'---------'- РоРи�Ат]ои Аи0 v(та� 5ТАт15тtСs -------------------- ° �---�--�- POPULATION 1M1D-Y0.. и]1L/0N) 3.9 в 5.4 w 6.3 е 4.1 1Э.Э 1.7 POPUTATION DEN$1ТУ РЕа SOUeaE КМ. 36.0 49.0 58.0 В3.0 10.0 Э4.0 PER S0. КИ. eGRiCUI,TURe� LeND 1Т9.0 La 216.0 234.0 174.0 45.0 93.0 Ч(ТАL STeт[5TiC5 CRUDE BIRTЧ аАТЕ (ITнOU+ 4V1 49.6 45.1 42.8 47.3 42.9 41.1 Саи0Е оЕлт� еатЕ 1irн0u.AV1 21.9 16.8 1Э.7 13.4 14.7 В.Э 1NFANT MORTALITY RATE (/ТНОи) 91.9 дт.1 79.6 10Э.0 L 65.1 �S 62.0 LTFE ЕХРЕСтАNСУ АТ В]R7н 1YR51 44.2 51.1 54.1 52.2 58.0 66.8 GROSS REPRODUCT[OtJ алтЕ 3.4 Э.1 3.0 � Э.5 2.9 3.4 РОаи1АТ1оЧ г;аоытн аАтЕ 1i1 тОтАl Э.Ч и 3.2 м 3.2 ве 2.9(�Ь 2.8 3.Э UPBAN э.8 L6 Э.2 � Э.2 5.6 4.7Lb 5.2�, UaBAN POPULATION 1я OF TOTAl1 Ээ•б /а ЭЭ.8 ЭЗ.В 40.0 52.5 36.5 AGE STaUCTUPE 1PEPCFN�1 0 т0 l4 YFeRS 45.5 а 45.4� 45.1 47.5 45.0 а 47.4 1s То ь4 vEAas 51.е � 51.7 52.о 49,4 51.9 49.з 65 YkдRC дЧ0 OVER 2.7 а 2.9 2.9 э.1 Э.1 3.Э AG'г DEPENOENCY аАТ10 0.9 а 0.9 0.9 1.0 0.9 1.0 ECONOMIC OEPENDENCV реТ10 1.8 � 1.6 L 1.7 (а 1.9L 1.5 а а 1•6 [� FANIIY PLANNING АССЕРТОаS 1CUMULA7TVE• ТНОи1 .. 41.3 96.2 ЭЬ.В .. 165.0 USEPS (� OF иARR1ED ЧОИЕNI .. .. 4.4 .. .. .. Е MPLOYME>1Т ТОТдL LeBOP FOaCE ITHOUSANDI 1300.0 L 1600.0 1800.0 � 1100.0 4Э00.0 (!} 540.0 LeBOP FOPCE 1N AG4ICULTUPE 1В1 65.0 La 61.0 57.0 Ь 55.5 45.0 [r1i� 46.3 L UNFMPLOYED (>: OF LABOP FOaCE1 •• .. .. 14.0 L 5.0 5.1 1ИСОИЕ O1SтPtBUT10N ------------------- Х OF PRIVATf INCOME REC�D ВУ- H1GNE5T 5t OF HOUSFHOLDS .. .. •• 26.3 � •. .. мIGHEST ?0� OF н0иSЕнОL05 .. .. .. 54.3 е .. .. �ОЧЕSТ 20R OF HOUSEHOLOS .. .. .• 4.3 .. .. IOЧEST 40R Of НОи$�НПL05 .. .. •. 12.4 .. .. D[STRlBUTiON OF 1AND ОЧNЕа5М1 ---------------------------^-^ /а � ОЧЧЕ� BV ТОР 10f ОР OЧNERS 76.6 .. .. 62.7 .. .. У ОЧЧЕО ВУ SNALLEST lOR ОЧИЕаS 0.5 �а .. •. 1.8 .. .. H�ALTH АИО NuTRlTION , --_'-°-'-----'-----' РоvиlАтlзи PEF Рнrslс(аи .. .. 457�.0 а ц оа.о 192о.о 1ьzо.о vпоиlлТtпи Реа ииаslис РЕаsои .. 15ао.о э9г0.о згоо.о 1ьао.о Pavu1A•Iон vea нОSРtтеС ее0 .. ат0,� .. э5о.о 47о.о г5о.о PER САРТТл SUPPLY ОЕ - GAIORfES 1R Of REOUIPEмEЧTS1 86.0 97.0 97.0 е 91.0 98.0 110.0 Ра0ТЕIи (GRANS РЕа DeY1 5Э.0 59.J 59.0 а 50.0 62.0 6Э.0 -ПF ЧНiСн ANI�AL eND PULSE 1В.0 L 19.0 .. 29.0 24.0 35.0 DЕАтн Чл-Е 1/Тм0U1 AGES 1-4 29.0 24.4 25.9 [� 17.0 .. 4.6 EOUCATION лUJU$TED FNPOILMENT RATiO PRiNePY SCHOOL 49.0 59.0 64.0 д 107.0 107.0 10В.0 SЕСОи0даУ SCHOOL В.О 11.0 8.0 д 19.0 Э5.0 2В.0 УЕ4а5 OF SCHOOIINC PROVlDED (F1P5T ANO SECOND IEVEL] 12.0 12.0 12.0 12.0 L2.0 11.0 VОСдТ20Чд1 FNaOLIMENт 1S OF SECONOARYI 19.0 15.0 Lb 16.0 �, 5.0 19.0 L 10.0 дOUIT l[TEoALY RATE 1!1 Э8.0 � .. 47.0 50.0 .. .. нDU51NG РЕа50Ч5 РЕР ад0И (иаВеиl 1.9 L .. .. .. .. 1.1 OCCUPIEO DЧELI]NGS Ч1ТМОиТ P1vE0 Ч4тЕR 1Е1 89.0 � .. .. .. .. .. АССЕ55 ТО ELECTц1CiTY 1S ОК дLl DЧELLINGSI 22.0 � .. .. .. .. .. RUaдL DЧELIINGS CONNCCTEO ТО EIECTaIG1TY 1S1 4.0 � .. .. .. .. .. CON$UMPTION -аА0l0 aECEIVERS (PER ТНОи РОР1 54.0 111.0 40.0 1ЭЬ.0 72.0 PлSSENGEa CARS (PER ТЧОи РОР1 7.0 В.О 9.0 (� 10.0 17.0 2Э.0 ELFCTRICITY (КЧн/YR PER САР) 72.0 146.0 1Н4.0 `i 227.0 415.0 �ЕЬ.С � NFЧSPPINт 1кG/YR PER СрР) 1.0 1.5 1.2 1.0 3.7 6.4 ----------------------------------'-----------°--^--------------"----------------- ^----------------------- 5ЕЕ NOTES eN0 DEFlN1T1CN5 ОЧ aEVERS: �1 РвQв 2 a�f 4 рВвв � 0¢lвоо оtЛетеlве мид, двtв for 1960 »tsr to иу уеат Ьвдrио 1959 ввд 196t, for 1970 ъвtrвва 1968 ид 1970, вт £ог lbat Ввавоt LцлаLв Мtrввв 197Э ид 1975• ♦ 9етlеад offцlal рориlвtlы tlgeres lиesd ы 191Э Овввм. ФВ рт ырltв вЪат 1в Овввд ы fлвва LtssC ppLtlon t1Qwв вnд dвlaoLLed ы 1976 Чет1д Dвnk Ацвв Ьавдв. OR рдг ыр14 Ъеlога pepulsцon тwlвlовд rав U81 2ТО.0 !ег 19601 09� ЭВО,О !ет 1970 вnд OBaj 650.0 tor 1975. и � л[е о! ыtдтаl lдеrиеа ыt соврапDlа v1tM1 IffitD popnlatlae porrtЬ твtв дае to дцtаквпt овпwв Ьаие. ие Coeta %са Ъае bssn eelected и и еЬ�евL1л еотtг7 for Оыtывlв Ъво�и 1t Аве attalaвd в hlgЬвт 1ввв1 of ьсооевlо вод ис1а1 деваlорвsеt, rA11a Лавlаg в е]п11вг тааот•се bane, e�ort stavetare вод dsgres of орвоввв 1л 1te ьсооыр. ВоеЛ oonnte'1ве hвго ввьвц ррLtцев, ид ЪоtЬ belong 1л [Ле Сеаtтвl 4веriевд Гото Merkat. ��Iy 1�Ь0 /в t9641 Lb 1950-Ь41 L t9621 L t%t-63t L Prfer W 19651 L Iaelde оа11в 1� L 19bL-70t LD 1ac1ading e�1ag кЬеоlвl [с_ Ввцо �! рорlаЕlоа мддт 15 впд 65 вод owr to totel Lbor lетсв. 1(05! RECS1т PSTIM►TSt L 9дцо of pnpulatloa тдет 15 ввд 65 аад оюr 1л евуlоувд в8вд 15 уеатв апд orerf LЪ ��вв т- вврlауедl /�с Ао pr¢eatвgs of sployrnt{ Ld 19711 L 1969-71 аvвюgе7 (ь ймlидlпВ a.aning веlюв�l (у t9M1 L IurludiOE тiдьпfеl•у ;ersonгlel; fi 1974 8р)(р(1�( р�_ . � L Сепвре flgaю7 L6 1цв [о eбgratlon, рерlаtlдп groeRЛ лЧ 1в lоиг LЬва tLs nte о! мtиг�� ю�� nl� Ввцо of рораLцоо ипдет 15 вод б$ and овег Lo Letв1 1аЪог fотсеl L 9вп4 1Ьвlаgо о[[1у1 L pgдD � /_ тгаlадев Lдцп 1аоglв ррilацыl Lb 1961-701 L Вацо of рораlацоа вадп 1$ ид 65 аад over to total LЪот tопеl L Drbвa ов1�1 L 1м1ад1лg вв+оlп8 ееЬооlв. а0sТв AIG � /а 1%Э-го7 /b 9вцо ог ррlегlы mder 15 вад 65 впд омг tл Wta1 1вЬот гогоеl (._ 1967; 1i 1974. НЬ, Febroвry 11,19ТТ -----°-°° °--------°------------"'---°-------'----'°--------"----------------' °--------°-° °------°----------° ° °----------' ---------------------'- DEFЛ7TII(1NS ОР SOCIAL INDICATORS Iлnd Агее ([hou 1т2) PopuleClon рег ашвlад реюоа - Рориlе[1w дlуlдед Ьу питЬег of prae[1c1nQ Тоее1 - То[а1 eurtece агеа comprlning lапд егее and 1аlвад и[ете. теlе вffi femele gгадм[в ¢иге<в, "[ralned" от "cer[1f1ad" яигеев, е� ARr1c• - Иовс recenc евсlта[в о£ agrlculcurel еюа шед temporarlly от аик111вгу реюоыеl v1Ch [ralaing ог екрегlеме. регтв¢еп[1у for сгорв, рав[игев, merket Ь kltchen gегдем ог Со 11е Рориlв[1оп рег hospltel Ьед - Рориlе[1од дlуlдед Ьу ттЬег of hoapltel Ьеде fa11w. вув11аЪ1е 1n риЫ1с and ргlув[е generel впд epeelalieed hоврlсвl е¢д reha611teC1on сеп[еге; ексlидее nuraing homes е¢д ее[еЫlвЪтвn[в £ог СНР яет сарlсв (и5$1 - CNP рег серlга евтlте[ее ес е еа[ merkec ргlеы , шеодlаl апд prwгоelve в ееlсиlвсед Ьу в rslon mechod ав Чог1д ВвnlсиА[1вв (1973-75 Ьав1в); Рег еерl[в aupplv of свlотlевг(Х of гввиlгеаюосв) - Сотрисед from вмгgу 1960, 1970 епд I975сдеге. equlyelent of п<[ Еоод виррllев eve11e6e 1п cowery рвг еврl[е рег деу; вуеllеЫе еиррl£ев сотргlве дотев[1г ргодисСlоп, lтрог[е lевв <хрогсв, Рориlаеlоп апд у1гв1 sсвгlвсlсв впд changee 1а в[осk; м[ виррllм nxelude апlтвl feed, ееедв, qм¢[1е1ее Рориlа[1оп (т1д-уг. т1111о¢) - дв of 7и1у flrat: 1f no[ eva11a6e, шед 1п food ргьседвlnв еад lоввев 1а д1в[г1би[1о¢; юqиlгетвп[в иге everage of tvo епд-уеег евсlтесев, 1960, 1970 апд 1975 деСе. евеlтееед Ьу £АО Ъмед вв phyвlologleel мадв Еог матеl ectlvl[y еад heal[h сомlдегl¢g вwlго®en[а1 [етрегвеиге, Ьоду velgh[в, age end ве Рориlас3оп депвltу - рег ввмте 1� - М1д-уеег рориlаСlап рег вqмга k11o- dletr16ut1one of populetlon, end e11d1eg 10Х for ивесе в[ hoшehold 1eve1. тееет (100 hecrarea) о£ [огаl егеа. �и1а[1оп denelry - оег вдивге 1т о£ вдгlс. lапд - Сотри[ед дв aбwe for Рет ceD1[e euDD1y of vю[е1¢ (дгвте рег дау) - Рго[е1п гопее¢[ of рег agrlculCurel lвпд оп1у. сарl[в ne[ виррlу of food рег дву; мс виррlу о£ food 1в deflaed е еЬоуе, requlremente £ог е11 еошегlев вв[еЫLhвд Ьу USDA Есоаотlс V1ге1 вгесlвгlсв Resaarch Sвгуlсеа prwlde for в тlпlтит ellwanee of ЬО grems of Сгиде blrch rate оет thouaend, еуегаде - Маш1 11ve бrthe рвг [houeand со[д1 рго[е1п рег дау, end 20 gтвтв of вnlтвl е¢д риlве proteln,of of т1д-уеаг рориlвсlоп, сеп уеаг arlthme[1с eyereges ending 1п 1960 епд иhlch 10 gгатв ehould Ье епЕтаl ртосеlп; cheee в[епдегдв вге lоиг 1970, епд flye-year eyecage ending 1п 1975 Еог тове г ев¢[ ав[!те[е. than сhове оЕ 75 greme of со[а1 ргосеlп впд 2Э gzeme оЕ апlтвl proceln Сгиде deech ге[е раг сhошвпд, ау гвде - Апnш1 дев[hв рег сhошепд оЕ т1д- аа а erage Еог [he иогlд, ргоравед Ьу FAO 1п che Thfrd Чог1д Роод г рориlагlпп, гвп-уеет arlchme[1c everegee ending 1а 1960 епд 1970 апд Survey.y flve-year eyerage епдlпg 1п 1975 for тоег recen[ ев[lтвtе. Рег ир1[а рго[е!п виррlу fcom епlтвl end риlвв - Рго[е1а еиррlу о£ £оод Infenc morcallev гвге (/chou) - Аппш1 девгhв of 1пЕепев wdec опе уеаг дегlуед from впlтвlв впд риlвев 1п gгвтв pez дау. af age рег гhошвпд 11уе 61г[he. Deeth ге[е (/[hou) вдев 1-4 - Аппш1 deache рет choшand Ln age group L1fe ехрес[апсу е[ бlrch (vгв) - Ayerage иаЪег оЕ уевгв оЕ 11£е етаlп- 1-4 qaere, со chlldren 1п еh£в ege group; euggeeced ав ао 1ndlcыtor of 1ng аг 61г[h, шиеllу flve-year averagea ending 1п 1960, 1970 врд теlписгlгЕоп. 1975 Еог deyeloping гоип•_г1еа. Сговв гергодис[1оп гаге - Ayerege питЬег оЕ liye deugheere а иотеп и111 Educaclon Ьеет 1п her п гтвl гвугодисгlvе регlад 1f вhе experlencee ргеввпе age- Адlшсед еnгоllтепг ге[1о - ртlтагу school - Enrollment о£ в11 egee ев , speclElc ferc111ty га[ее, ивмllу flye-yeac еуегвgев endlag 1п 1%0, ретсеаСвgе of ргlтвry echool-ege рориlе[1оп, 1псlидев chlldren eged 1970 апд 1975 Еог deyeloping countrlee. б-11 уеега Ьи[ вд]шСед £ог dlfferent 1<ngche of ргlтегу едисе[1оа; Р�иlасlоп дгы[h ге[е (Х) - гогвl - Compeund етшl grwch твсев of т1д- for сомtгlее v1N шlуегваl вдиее[lоп, епгоllтепс теу ехсеед 100Х уеег рориlвсlоп for 1950-ЬО, 1960-70 апд 1970-75. elnce аоте рирllе аге Ъе1ы ог eбwe the оЕЕ1с1е1 achoo7 ege. Рориlагlоп дгысh гв[е (Х) - игЬвп - Сотри[ед 11ke grwгh гвсе of [о[а1 Ад]ш [ед епгоllтеп[ ге[1о - ввгопдвту всhооl - Сотриеед ав ebove; рориlвСlоп; dlfferenr def1n1c1one о£ игЬап вгеав теу affec[ саарвга- васопдату едисв[1оп гвqиlгев ве lеевс four уеею оЕ арргыед ртlдиry Ъ111[у оЕ деса among сошстlев. lмсгис[1оп, prwldee gомгаl, уосаеlомl ог севсЬег cralnlag Urban рориlв[1оп (Х of tocel) - Rec1e of игЬеп [о со[а1 populetlon, 1м Сгvееlоп £ог рирllв of 12 со 17 уедтв of ege; соггевропдепсе dlfferen[ deflnftlons of итЬап егеав тву effeet compara6111ty of даю сыгвев аге generelly ехсlидед. among соип[г1ев. Yearo of всhооllпд vrwlded (Е1гес evd вегопд 1еуеlв) - То[а1 уеаю of Аде structure (percenU - ChLldren (0-14 уевтв), vorking-oge (15-64 уеатв), echooling; в[ весоодвту 1еуе1, уоса[1ом1 lmtructlon теу Ье рег- впд гесlгед (65 уевгв апд over) ев pereentegee оЕ т1д-уваг рориlа[1on. [1в11у ог сотрlе[е1у ексlидед. Age дереадепсу тасlо - Евс1о oF рориlа[1оп ипдег 15 end 65 end wer [о Vосе[1опа1 епгоllтеп[ (Х о£ весапдагу) - Vocatlonal 1пвс1[utlone choee of agee 15 chrough 64. 1аеlиде techalcel, lадшегlвl ог other pzograme vhlch орегаСе Егопотlс дерепдепеу гвгlо - Rac1o оЕ populeclon шдег 15 апд 65 апд ыег lадерапдт[1у от ее depertaence of eecondery 1м [1еиеlом. со rhe 1аЬот £огсе 1п ege grwp оЕ 15-64 уееге. ддиlс 11[вгасу га[е (Х) - L1[ere[e адиlсв (вЫе [о геад апд vr1Ce) ае Fem11v рlвппlпд - вссерсоге (cumulaclve, chw) - Ситиlа[1уе питЬег оЕ percen[age о£ [оевl адиl[ рориlа[1on aged 15 уеагв епд aver. ссергогв оЕ бlreh-conCrol деуlсее under еиарlсев of мtlапвl femlly plannLng ргоДгвт вlпсе lпсергlоп. Нош 1ад Fдm11v рlеппlм - е(Х of тегг£ед итеп) - Percnncegee of твггlвд Регвом рвг гоат (игЬеа) - Ayerage питЬег of рвгепм рвг гоот 1n иотеп оЕ ch11d-beering ege (15-44 уеага) vho ше 61г[h-cootrol devlcee оссирlед сопуеп[1о¢а1 dve111nge 1п игЬаа аюае; dи111nge аксlиде [о а11 твггlед иетеп 1п вете ege grouD• поn-рвгтвмо[ в[гvсСшее аад шоссирlед рвт[в. OccuDled ди111nдв vlchou[ рlосд иаСег (7,) - Оггирlед conven[1ona1 Етрlоутепс ди111оgв 1п urban апд гигаl агедв иlthout 1м1де от ыСвlде рlрвд ТоСа1 1аЬаг force (сhошапд) - Есопот1са11у всеlув регеопв, 1nc1uding ивсег fec111C1ee ае pereentege оЕ а11 оссирlед дьго111аgе. встед Еоггеа дпд шетрlау<д Ьис excluding M1ошеиlуев, erudente, etc.; дееевв ео electrlclCV (Х ot а11 дие111мв) - Convantlonal ди111аgв деЕ1п1с1опв 1n увгlош соипсгlеа аге пос сотрвгаЫе. w1[h еlесегlсl[у 1n 11y1ng qмг[егв ав рвгсап[ of [е[в1 dve111nge 1n Laбor foree 1п едгlсиl[ите (Х) - АgгlсиlСигеl 1еЬог force (1а feкming, urбan впд гигвl втаев. foreacry, hшcing апд Eцhing) ав ретсеп[age of Со[а1 lebor £оке. Rura1 ди111ма соппьс[ед [о electrfгlcv Гй) - С®ри[ед ае abwe Еог Unemployed Сй оЕ 1аЬог Еотге) - Unemployed аге и.иеllу деflмд вв гигеl дие111пgе оп1у. ретвопв vho в вЫе впд w1111ng гп ceke в]о6, оис of �]о6 оп в glyen дву, гетвlпед ои[ оЕ а]о6, апд вeektng иотk for а epeclfled Сопвитр[1оя тlпlтта ретlод по[ exceeding опе veek, тву not Ье сотрагг�lе Ьепговn Rad1o гесеlуегв (оег [hw рор) - А11 typee of юсеlvегв for тадlо Ъгоед- оипсгlев дие со dlfferent де£1п1[1ом of и¢етрlоуед вад еоигеа of гев[е [о generel риЫ1г рек [hoшand of рориlесlоа; ехеlидав десе, e.g., employmenc ofElce в[в[1всlсв, ветрlе aurveys, сотриlвоку unllceaeed гесеlvею 1а со�т[тlев and ц уевгв vhen reglstracloo of ипетрlоутеп[ lпвигвпге. гедlо ве[в ивв 1п effecc, дв[а for гесеп[ уеагв тву пос Ь< сотрагаЫе вlпсе тоас сып[гlва ebollshed 1lceneing. Income д£в[г1Ъи[1оп - Percencage of ргlув[е lпготв (both 1п еввh апд Ревеепдвг сетв (рег [hou роо) - Peeeenger евю сотргlее то[от еею klad) recelved Ьу гlгhеее 5Х, rlcheec ТОХ, роогее[ 20Х, впд роогев[ eeeclag lвев [han elgh[ регвот , ексlидев ®Ьуlвасев, hееювв and 40$ оЕ hoшeholde. т111[ery уеhlсlев. Е1ее[гlсlсу (kvh/уг рег сар) - Аnпш1 сопе�тр[1оп of 1¢дш [т1е1, сот- Dlecrfbuclan of lвпд оиегвЬlр - Percencegee of lапд оиед Ьу иеlСhlев[ тегсlеl, риЫ1с в¢д ргlуе[е еlессгlсlсу 1п kflwac[ houre рвг еарl[а; 10Х епд рооювс 10Х of lапд ыпегв. generвlly Ьевед оп ргодие[1о¢ да[а, vfthout аllыаасе For lоеаев Еп grlde Ьие e11w1ng for lтрогее snd ехрог[в оЕ electrLeley. Healch and Nисгlс£оп Иаирг£¢е (1гп/�г• раг еар) - Рвг еерiю аwшl сопвитр[1оа 1а kllogramв Рориlа[1од сег D6vafcien - Рориlе[1оп d1v1d<д Ьу ттЬег of prвc[1c1ng ев[1тв[ед fr® дотва[1с ртодие[1оп р1ш пвс lтрог[в of nevsprln[. рhуеlсlем qш1ЕЕlед Етот е тедlиl nchoo! вс шlуегвl[у 1eve1. GULTKPAIA rag 301 (ANDOM In WE omv or U. 16"T MW INV cta 1960- 1 - 1975 - 1976 0 iLO5 6 go 10 AMONQ ACOOUM s Rat- v!M rAzmauk1 Growth Pates As Percent of ar Gross Domestic Product .9 1 M73 8 -F331kRa!2J 4 3339.0 4682.3 5A 8.6 7.0 98 103T 10M .7 Gains from Terms of trade 22.6 .3 1 4. 1 .T _eg Gross Domestic T 0 07 19F6 ;W5 2*1 3 &Y M5 44 & o im Import (inel. as) 178.3 3o6;7 399.7 458.5 553.3 735.4 5.5 5.4 U. 7 5.1 16.7 18.5 444.6 122ds- " (invort cakscity) Resource Gap W2 V W7 V W 44 _W3 *AO Consumption Expenditures 971.4 1535.7 1916.7 2068.6 2672.8 3771.8 4.6 4.5 7 9 6 91.2 83.5 91.2 Investment " (incl. stocks) 117.4 228.2 389.5 464.2 632.8 887.3 8.3 11.3 19:2 7:5 11.0 18.7 11.0 Domestic Saving 93.2 239.9 322.8 407.5 571.3 788.5 8.6 6.1 26.2 6.3 8.8 16.5 8.8 National Saving: 104.5 221.1 340.8 477.1 586a 83:L.9 8.2 9.0 40.0 4.6 9.8 19.3 9.8 )MCHMISE TRADE. Annual Data at Current Prices As Percent-of Total Dnporta Consumer Goods 51.7 79.7 Ma 231&.5 352.5 687.8 8.0 18.2 27.4 12.7 37.5 24.0 22.1 Petroleum and Lubricants 13.9 14.9 lio.5 135-0 167.3 288.1 14.8 49.3 22.2 8.8 10.1 13-8 9.3 Intermediate Goods 45.2 108.3 323.9 419-9 7M.3 1499.6 14.0 24.5 29.6 15.2 32.8 42.8 48.2 of which oonatrtNtiOn Mat. 12-3 16.8 42.1 107.3 115.0 220.0 8.5 20.2 1524.9 8.) 8.9 21.0 7.2 capitaa Goods 27.0 56.1 181.5 189.7 321.9 633-1 13.5 26.5 4.5 "3 19.6 19.4 20.4 Total Imports x9porte Primary Products 106.8 169.5 441.9 561-0 917.4 1377.3 9.9 21.1 27.0 10.5 91.9 71.1 61.8 of whichs -IrArOl 1.5 4.6 9.5 10.5 87.1 140.3 13.1 15.6 10.5 33.4 1.3 1.3 6.3 Manufactured Goods other 92 43 19:9 2R:1 A0 408 21:1 3J:J 18:4 4 0 N 209 30 Total March. Exports (fob) HUM 297-.9- K7-.2 89 6 IT67 2 5 9h -&T IE-0- jo-O -0 3.00.0 Tourism and Border, Traae 2.0 11.0 78.0 81-9 143.2 288.0 27.7 50.0 5.o 15.0 1.7 Merchandise Trade Indices 1 -61 - &." Export Price Index ;7age 175 !r 271.0 375.4 3.8 lo.4 15.8 7.1 Import Price Index 85.3 109.8 230.1 244.9 323.3 244.9 6.8 15.9 6.4 7.0 Terms of Trade Index 118.0 97.5 76.1 82.8 83.8 83.5 -2.9 -4.8 8.8 0.1 Exports Volume Index 51.o u9.5 164.0 170-5 213.8 261.1 8.1 6.5 4.o 4.8 VALUE ADDED BY SECTOR Annual Data at 1967 - 69 Prices and Exchange Rates Average Annual Growth Rates As Percent of Total (At factor cost) Agriculture & Mining 320.0 424.1 564-9 610.1 845-0 1078.4 3.8 5.9 8.0 6.5 30.7 25.8 24.4 Industry 163.5 341.1 41a.6 503.0 662.1 972.8 6.8 5.3 15.8 7.6 15.7 21.3 22-0 Service 560.4 886.5 la66.9 1247.2 1654.5 2375.2 5.o 5.7 10.0 7.4 53.6 52.9 53.6 Total Im" M7 n7TT TJWr M" =6T -97 77 IN" TW7 = PUBLIC FINANCE As Percent of GDP T-e,Tt-rLlGo"r=-nt) Current Receipts 88.9 152.7 216.o 223.8 us-9 468 2 6.1 2.3 3.6 8.5 8.5 8.9 IU.0 t Expenditures 75.3 138.4 176.9 192.2 283.8 388:6 5.8 1.6 8'6 8.1 7.2 7.9 8.3 B-4etary Savings M7 -T T -77T -7rW -W7--?M 77 -r9 3 1 7 Investment 26.6 40.4 60.6 212.3 go.5 139.2 5.6 2.7 250.3 9.0 2.5 8.6 3.0 Y CURRENT EXPENDITURE DETAILS Actual Prelim. Est. Proj. DETAIL OR 197Y79 Devel2pneat Plan As % Total Current Expend.) 19,65 P73 197 1976 1980 PUBLIC SECTOR U31 in millions )& of Total Education 22.6 T 2MY 2" a 'IT I NVE STMENT PROGRAM (19 - Other Social Services 20.7 21.3 18.8 19.1 20.0 .1 Sectors 4a -8) ---r3= Agriculture 3.1 3.8 5.2 5.8 6.5 Agriculture 60.5 4.3 Other Economic Services 7.8 8.0 8.2 9.0 10.0 Industry and Mining 16.3 1.2 Administration and Defense 38-3 35.3 40-5 38-4 35-0 Power 377.8 26.9 other 10.3 7.2 7.4 7. Transport and communications 268.2 19.1 Total Current Expenditures T44 TWT 0" =16 0" other (Touriam) 74.8 5.3 Total Expenditures 17 100.0 SELECTED INDICATOR ig6o- 1965- 1970- 1975. FINANCIW (Calculated from 5!year averaged data) 1965 1970 1 .71 1980 Average ICOR' =12 T 25 1.ta Z70 Public S .ctor Savings 322.5 23.0 Import Plasticity 1.65 o.66 1-03 1-00 Internal Barrmring g48.8 ?.o Marginal Domestic Savings Rate 0.18 0.18 0-13 0.24 Foreign Project Aid 31.1 45.0 Marginal National Savings Rate 0-13 0.16 0.16 0.25 Total Financing 1407-.13 a/ Post-quake revision of 1975/79 Development Plan, LABOR FORCE AND Total Labor Force value Added k C* Rates) OUTPUT PER WORKER In Thousands -J& Of Total In U.S.DDllars Pe;;MeTof Aver ' PriceR9 t, 9M - LM Lro h Rat,! ja q 12 73 960 73 Growth Rate Agriculture 773.8 797.9 66.o 56.8 0.7 U1.1 772-8 45.9 49.7 5.0 Industry 164.2 272.0 14.o 19.4 4.o 1007.3 1530.1 3.12.6 98.4 3.2 Service 234-7 335.1 20-0 23.8 2.8 WO.3 3439.6 269.4 221.1 2.8 Total nfT.' lEr. iffi.T 1M-.T T.r W .7 IM74 iff.-o- 10-05, 7 -.3 not applicable ni.L or negligible LAC - IB not available less than half the February 14, 1977 smallest unit shown вlоgк 1 �"Го7 L бШlФУL В� ОР PцMRlBi � 18Вffi!l.1D6 1tD 1�Л ввт е е .. о�ат'оо Р вм всЕивl бвtlaebd Рго tвд ♦ с Е а а 1 SstLвted � � DIDS � I®т 3Т$9ICS � уаllцl¢ оР Panвiers оР�7iй�3�в ТЕLеь,ама 58.6 94.z ц0.1 141.8 22L.1 в>аогЕв (1т1. ms) 232.5 э49.5 т91.9 9ге.6 1590.т 2Л2.L гаЕ.,пвс оа РоDцс I1вьt 3.5 6.4 г.г 12.1 14.L гЕв 1дв1 ру) 284J, зз6.7 917.5 112о.7 к788.9 3ц7.о 8epqsseи ол Р,тцс nsы 1Э.В 2о.б 12.9 ц.9 1о.5 аеоипе е Z-M) �jГ.� ZT.� -� -�� .г �: i -�i.�Б Tota1 PoD11c Debt 9вгтlоа 17.3 27.0 20.0 24.0 24.9 mta,vat (тЕ) -5.1 -8.3 -г.б до.о б,б -2о.5 В�два ол бкрогЕ $arnlлge (д) Dlreet цnае4еааЕ Iдтт -1L.з -29.9 1i2.4 -54.3 д+.8 -77.3 Wrkere� eeвlttanoe 4.1 4•з 5.6 7.9 РаЬцо Deбt 9вг�lса 1.4 7.7 3.7 з.0 2.5 (,1ur��t heoatere т) �9.Э 17.5 Т2•Т 20Т.5 �Ь` 155 9 тID.Mreot IлавС. Iac. 13.6 1Ь.3 10.6 9.5 8.1 ое оа coonCe .Ь2.0 -7.9 -10e.tl 5.4 _154.5 -Tj�6 Рr1лЧ ltlxset 7аввволвL 18.2 22.5 82.Ь 99.6 96.8 155.9 в�� твгтв о[ Раь11е Л°Dt Otf1e1a1 Сврltаl ОгввЕв 3.3 7.6 73.2 1Во.о ц.о 22.о �пгвgв квигввs (д) 5.9 5.1 3.9 5.3 5.4 lлrage МвЕ�1Еу (угв.) 15.8 25.7 28.4 23.2 22.4 РиЬце l6L1' Loam П1еМпветыд.а 3L.8 36.9 39.3 71.В 20з.5 252.9 IHiD Овьt Out. А DfвD�ceea _�R в�тв 1з.е 2о,з ц.9 1о.5 -65.1 2 e7�t�в�eeasnte -'1±.� �� "17Т �Т TJ�7+ . " вв д Рвbцс Dabt Одд1 8.2 12.4 22.9 27.В 22.2 " ав д Риьцс гмьЕ 8ervice ц.5 1о.2 13.2 14.8 1Ь.1 Оtмег !&LT lлвги рlдqцв®влЕв , , . . . . ID� ПвЬЕ ОиЕ. б Dlebicmd eote Fг еп . -� -ЭТ.ff �:4 - - • аа д Риь11с I1aDt ОбD - - - - - " аа д Риьцс I1ebt 3errlce ' ' ' ' - Сар1Еа1 7Увлвасцот п.в.1. 24.0 -1L.0 В1.6 11иб смвпqе га ыеЕ ятпvав (- - µie) at.5 -24.8 -и9.а -217.о -95.7 -6.9 АеЕи.1 пвьЕ оиЕвЕвлд оп I1ec. 1 1 ЕПffiiN1L I1EBx в tcm егсе ФUКI A17b IU117 ФМц1МNlS 0 1с Ь�ant-11ke 3.3 7.6 7з.2 1В0.0 ВО.О 95.0 Wor1d Ввоk 39.L 27.В IIY� РиЫ1с lВгI.Т Iоие Othar Ми1t11вnтвl 41.6 29.й Iтгп 15.о _ 26.о 41.о 45.о 63.1 со.аттввЧ 53.6 37.8 пц - - 5аррцегв 5.8 4.1 кю 1з5.о 78.6 32.1 45.о F1лис1вl InetlEnLlwe о.9 о.б OtMr Mu1t11ateral 5.9 1.8 1о.б 2о.4 15.о z1.o Вопдв о.4 о.3 оо�оТМ®в+�Ев 6.4 25.1 20.з 78.6 27.7 31.6 Риьцс Debte в.в.1. s,юvцвтв 4.7 19.г п_о г5 о 1дб.5 15о.о тоtвг Раьцс ныьт nsьte � i06ц Рlлвпеlаl Insцtutlom юль, 1В.5 - - - - оЕмвт нц,т nеьtв . . wьцс� .�а ��2,� sмогЕ-хакт гмьс (д1sь. оаlу) . . '� 'T��.S �,.3 'RD33 -Т1а3 �£т . not врр11ць1в е ataff eetla.G .. mt ввsцль]в - nц ог mg11g1Ыe ... not вл11аь1е вервтвtаlу ьиL 1леlидед 1л WCa1 -- lвва Смвп hвlt Lме втвllввt unlt ehovn LПС - 2В Februnry 14, 1977 ANNEX II Page 1 Of 3 THE STATUS OF BANK GROUP OPERATIONS IN GUATEMALA A. STATEMENT OF BANK LOANS (As of March 31, 1977) $ Million Amount (net of cancellations) Loan No. Year Borrower Purpose Total Undisbursed Four loans fully disbursed 46.5 722 1971 Government Livestock 4.o o.6 792 1971 GUATEL Telecommunications 16.o o.8 llo4 1975 GUATEL Telecommunications 26.o 24.8 1212 1976 Government Education 2/ 14.5 14.5 1314 1976 Government Earthquake 2/ Reconstruction Education and 6.5 6.5 Port 1315-T /1 1976 Government Earthquake 3/ ReconstrucTion Urban Sites and 20.0 20.0 Services Total 133.5 of which has been repaid 22.4 Total now outstanding 111.1 Amount sold 3.5 of which has been repaid 3.1 o.4 Total now held by Bank 112.1 Total undisbursed J.2 B. STATEMENT OF IFC IMST=TS (As of March 31, 1977) $ Million Amount Year Obligor 13Me of Business Loan Equity Total 1958 Industria Harinera Guatemalteca, S.A. Flour Mill 0.2 - 0.2 1973 Exploraciones-y Explota- Mining and Process- ciones Mineras Izabal, S.A. ing of nickel 15.0 - .15.0 Total.Gross Commitments less cancellations, terminations, repayments and sales 0.2 - -0.2 Total now held by IFC, 15.0 - 15.0 of which has been disbursed - - - l/ Third Window Loan. 2/ Effective April 20, 1977. T/ Effective May 5, 1977. - ANNEX II Page 2 of 3 C. PROJECTS IN EXECUTION 1/ Loan/Credit No. Ln. 722 Livestock Project; US$4.0 million of February 10, 1971; Effective Date: July 19, 1971; Closing Date: June 30, 1977. Progress of this project has been slower than anticipated, and it is likely that disbursements will not be completed until about 18 months after the original closing date of December 31, 1975. Operations improved when the Bank and the Borrower (Government of Guatemala) agreed to extend the project area to include the Central Northern and Atlantic Coastal regions in addition to the Pacific Coast, and the Government introduced measures suggested by the Bank to accelerate commitments and disbursements. Ln. 792 Telecommunications: US$16.0 million of January 5, 1972; Effective Date: July 17, 1972; Closing Date: December 31, 1977. Initial delays, resulting from the consolidation of the principal sector entities and lags in procurement will delay completion of disbursements by about one year beyond the original closing date of December 31, 1976. --The project is now progressing satisfactorily, and all contracts for the Drocurement of goods have been signed. Ln. 1104 Telecommunications: US$26.0 million of April 29, 1975; Effective Date: November 25, 1975; Closing Date: June 30, 1979. International competitive bidding is in process. Ln. 1212 Education: US$14.5 million of March 5, 1976; Effective Date: April 20, 1977; Closing Date: December 31, 1979. Consultants have been selected and designs for the schools are being prepared. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of the strengths and weaknesses in project execution. ANNEX II Page 3 of 3 Ln. 1314 Earthquake Reconstruction (Education and Port Rehabilitation): US$6.5 million of August 2, 1976; Effective Date: April 20, 1977 Closing Date: June 30, 1980. Consultants are preparing the plans and specifications for the rehabilitation of the quay at Puerto Barrios. Ln. 1315-T Earthquake Reconstruction (Urban Sites and Services): US$20.0 million of August 2, 1976; Effective Date: May 5. 1977: Closing Date: June 30, 1980. Designs for the first phase of the project have been finalized and bidding is in progress. ANNEX III Page 1 of 3 GUATEMALA: THIRD POWER PROJECT OF INSTITUTO NACIONAL DE ELECTRIFICACION BORROWER: INDE GUARANTOR: Republic of Guatemala AMOUNT: US$55.0 million equivalent TERMS: 17 years including 3-1/2 years of grace with interest i 8.2 percent PROJECT DESCRIPTION: The project consists of: A. Generation (1) Construction of a concrete gravity diversion dam in the Aguacapa River (90,000 m ) and a reservoir of 300,000 m for daily regulation; (2) Construction of a concrete lined power tunnel of 2.5 m, net inside diameter, and 12 km. in length; (3) Construction of a steel penstock of 2.5 m. average inside diameter and 3.7 km. in length; and (4) Construction of a power station with three 30 MW generating units. B. Transmission (1) Construction of step-up transformation facilities at the power plant (13.8/230 kV, 3 x 37.5 MVA); (2) Construction of a switching station (230 kV) at about 500 m. downstream from the power plant; and (3) Construction of a single-circuit transmission line at 230 kV to the existing Escuintla substation (23 km.). C. Consultant's Services (1) 4o man-months for personnel administration and financial management. ANNEX III Page 2 of 3 ESTIMATED COST: (US $ Millions) Foreign Local Total Infrastructure - 1.3 1.3 Civil works 20.1 23.7 43.8 Electromechanical equipment 13.2 0.8 14.0 Ancillery mechanical equipment 8.7 1.3 10.0 Transmission system 0.9 0.2 1.1 Sub-total 42.9 27.3 70.2 Engineering and administration 4.5 4.7 9.2 Consultants' services 0.3 - 0.3 Sub-total 4.8 4.7 9.5 Total base cost 47.7 32.0 79.7 Contingencies: (i) physical 3.4 2.6 6.0 (ii) price 8.4 5.9 14.3 Total project cost 59-5 4o.5 100.0 Financial charges 11.2 - 11.2 Financing required 70.7 40.5 111.2 FINANCIAL PLAN (US'$ Millions) Foreign Local Total Percentage IBRD proposed loan 55.0 - 55.0 49.5 CABEI (Central American Bank for Economic Integration) 4.5 4.3 8.8 7.9 FIV (Venezuelan Investment Fund) 8.0 22.0 30.0 27.0 Internal cash generation and Government capital transfers - 17.4 17.4 15.6 Total Sources 67.5 43.7 111.2 100.0 Percentages 60.7 39.3 100.0 ESTIMATED DISBURSEMENTS (US$ Millions by FY) 1977 1978 1979 1980 Annual 9.0 24.4 16.2 5.4 Total Accumulated 9.0 33.4 49.6 55.0 ANNEX III Page 3 of 3 PROCUREMENT: International competitive bidding (ICB) for all Bank-financed works and equipment. TECHNICAL ASSISTANCE: Local or foreign consultants will be contracted to provide about 40 man-months of specialist services for personnel administration and financial management. RATE OF RETURN: 14.9 percent (on project and related subtransmission and distribution system investments). APPRAISAL REPORT: Report No. 1361b-GUdated March 31, 1977. ANNEX IV Page 1 of 3 GUATEMALA THIRD POWER PROJECT Supplementary Project Data Sheet Section I: Timetable and Key Events (a) Project Preparation (i) Pre-Feasibility Study - December,1975 (ii) Feasibility - June,1976 (b) Project Preparation Agency Instituto Nacional de Electrificaci6n (INDE) (Electrowatt Engineering Services Ltd., Switzerland, consultants) (c) Preparation - Preappraisal (i) First formal request for project financing - April,1975 (ii) Power Sector Review - August,1975 (iii) First Bank Mission to consider project - February,1976 (d) Appraisal Mission Departure - February 23, 1976 (e) Negotiations Completed - January 28, 1977 (f) Loan Effectiveness Planned - June, 1977 Section II: Special Bank Implementation Actions Special Bank activities in implementing the project and the development of the sector: (a) Follow progress in implementation of National Rural Electrification Program. ANNEX IV Page 2 of 3 Section III: Special Conditions The Borrower has agreed that it will: (a) (i) Reorganize its planning group into a department, incorporating the technical team trained by the Master Plan group, before June 30, 1978; (ii) reorganize the financial group into a department headed by an experienced financial manager who would implement a program for improvement of all financial functions before June 30, 1978; and (iii) finalize planning on INDE's own main office building, before June 30, 1978 (paragraph 48). (b) Retain all its net internal cash generation and take all necessary measures to reduce accounts receivable from public sector agencies to a maximum of 60 days by the end of 1977(paragraph 54). (c) Not undertake any new project not included in the program involving any expenditure in excess of US$1 million prior to completion of the Aguacapa project (paragraph 55). (d) Not contract any long-term debt, unless its net revenues are at least 1.5 times the maximum debt-service requirement for any future fiscal year (paragraph 55). (e) Appoint independent auditors satisfactory to the Bank and send to the Bank the audited financial statements and auditor's report within four months from the end of the fiscal year each year for the duration of the loan (paragraph 55). The Government has agreed that: (a) Retail tariffs of EEG and INDE will be set at levels sufficient to cover with net internal resources, 16, 13, and 16 percent of their consolidated construction expenditures in 1977, 1978, and 1979 respectively and 18 percent in the following years until the completion of the Aguacapa project; and that after completion of the Aguacapa project, tariffs should be sufficient to earn a rate of return of at least 9 percent on their consolidated revalued net fixed assets in operation (paragraph 52). (b) Retail tariffs will be raised in form and substance satisfactory to the Bank as a condition of effectiveness (paragraphs 53 and 63). (c) Any increase or decrease in fuel prices would continue to be passed on to consumers (paragraph 53). (d) INDE's bulk tariffs to EEG would be adjusted annually at levels sufficient to channel to INDE any funds generated by EEG in excess of its requirements for operations, debt service, working capital and construction (paragraph 53). ANNEX IV Page 3 of 3 (e) It will invest in equity capital of the Borrower all its cash dividends from EEG (paragraph 53). (f) Retail tariffs will not be lowered during the construction period of the project (paragraph 53). (g) The value of the power sector's fixed assets will be reviewed under terms of reference satisfactory to the Bank (paragraph 52). (h) It will take all necessary measures to reduce accounts receivable by EEG and INDE from public sector agencies to a maximum of 60 days consumption by the end of 1977 (paragraph 54). (i) It will seek Bank's concurrence before allowing EEG to increase its construction expenditure beyond US$3.9, US$4.5 and US$5.7 million in 1977, 1978 and 1979 respectively (paragraph 55). () It would take all necessary actions to bring about the economic operation of all generating and transmission facilities in the interconnected system and to assure that expansion of these facilities will be based on economically justifiable programs (paragraph 62). (k) Unless the Bank should otherwise agree, it would make equity contributions to INDE of US$11.5 million, US$17.5 million and US$15.7 million in the years 1977, 1978 and 1979, respectively (paragraph 51). (1) It will carry out a comprehensive tariff study (paragraph 53). (m) The Government, INDE, and EEG will execute a Subsidiary Contract satisfactory to the Bank (as a condition of effectiveness), the specific purpose of which is to ensure that EEG, not a party to the agreement with the Bank, will take all necessary action as and when required (paragraph 63). (n) As a condition of effectiveness, the Venezuelan Investment Fund (or other source acceptable to the Bank) will have approved a loan for the Project of at least US$17.0 million equivalent (paragraph 63). М:г,:��� % � М Е Х 1� С О , i а:~-�.� _� �{{)J �� � 'МЕХIСО� �дЕ[1ZE Со.�бдвоп � "-" ---'--'----- � 5е � � - н D RгS Д о � GиА1Е=д . 1 � 5�� �� �� t 4�сид,iС_ае // '�F:�."� co,oi гог,г,г о�го� Ъ го� _ 1 � wsrn кк GUATEMALA � ��`'°аи `""��, + 1NST1TUT0 NACIONAL DE ELECTRIFICACION 4 cowм�iP I я,. м и..,,. „ т,. ( ( 1 N D Е� � ч'we�i,,."гi��йi�г.ии иа, т,м .�.._...�.� ��' � ОвЕдмюгди г � � ± `s 9�. ,�. � Jб-� � В Е L 1 Z Е О F�ORES { � Р Е Т Е F1 1 1 1 4.о г /о Рог� I 1 м� х i с о � г � г � � � l г 1 ._.�.-�-.,,,��_�_. 1 � �--�-...-.��----.�-��--� Gud� с! ноплигзг СЬ' I 16. / / 1 .�.,r,-г,�. �то„9вв С\ �� ыоr 1 \ � NUEHUETENANGO �'о А L 7 А V Е R А Р А Z �� °'"0� �РиЕвЕовлнвiоs / �Iоп ��--� ьд'°� � _.!' � �ое сеч . 1 Z А i'try'� А 1 ^лвд �. ев� � к '_`-"" _ tiJ и, /, ойе ` ✓� / � �Ь � СО�� х.п /м ба! _\ -- - -- -_ , СН/ХОУ ' СоЛсо .................... i� ^\ / /1j -_-�� • \v �� ✓, � U " - "___-_.--' _.�_ 5апlоСгих � � % EtENaNGOo OSaweol :� Уего� iыо_и�z гн�. -cиiгg.i� � Т ./� < `'' е:(�-и � с н Е �� и., Ео��в. 1 � У,. � сь,.о, /. ��., �А � � В А 1 А V Е R \ R, А Z • вго ногооо � _�/� Н О N D U R А 5 1 (�,, -sлитл ceuz � ❑ '!:• �--`.•SANM С '�iJi.i�l�6:P� г EL:�UICHE � tXy4cj Аоа ���.Р<� !С' _ -- lЕгл�.v�йiи о /� Q<� ,soi' zдсдгд � ,6 о , а�е сго„д. � Ewmou�as тотq �сд N • � � � ��' _ ��асво _ ��! `+ Mabwran �.,\ м _ t5P С IpaL.�nE CJ �1 а' ^ ELPR К 1 wyad,Io<aw� СйUу1�_т .� (>(J �, Р -C,J��, � {_ " ! �l �� ` � о снi иЕа�}�1 в.м.о��в � СеЕ 9 ur< �`о vUATF1� �LA _,/ � II �• 'tCENORES�ue � , S LQii1 с лг" � ��-у � СН) i©�Мlгрреаие � � �i�ли иц5�ои " -' - ' ""- ' ti � р�� АРАО О � i 1 l_ _ �iStiиG ау,/о G. TENA h P�huta � �Jw GU TEMALA ,J А � Р А / � 2�р �." ® -- - - LHU Е � ее , д �`� CITY � �� µ 138 k� �� � р,'�ppti . ✓ # ьv4в - 12ETACHULE 5UC! ТЕРЕGг: Е" д д ,�„о �, so k� - 5 Гиб� �sго �.^ � RUN- ���� Е1 Рго9гею � �'�,� 1 Э454v - '^ � /, ЕSСИ L� О!. 'Nq[А о ) 22 kv -- лG Сдлл а�,п,.,м. И о ese� Ча �\л о >� 'V СиооооГ , i р °г-'L, ��jtl� Gапв,еЬпр r vcxo � `" �1 иiопгь ❑ ❑ " а д Е йп ❑ros es vosl U Т 1 А РА �._- С г"ЕаМ^Е; г Д,о ё �ев� � ' � � 5uhsior опs ® ♦ Q о = �_ а SAf�TA ROSA сеотневмдЕ � �-.,✓F1ELD r N сеигедi 2а���поi Syяems � �т Е S�поС U 1 N L�= 'ъ �`'--, омеwго ��'1 � � _ oevu�i�eeг веи�де„вв � Р г � - lпгегпоirепеl Воипдапеs � .пi2j � -___- Geпbгj�r Feuln / -_ _ °m,i ' R�ve � Е`L 5 А L V А D О R °^ � Р А С! F l С 0 L' Е А N � ���� а w �ю ю ю sa ю ю ю Ф о 9r - �6• gq. �NiloMEtERS � л � 1