Papua New Guinea - Second Power Project

Document of FL C PY The World Bank FOR OFFICIAL USE ONLY Report No. 3912 PROJECT PERFORMANCE AUDIT REPORT PAPUA NEW GUINEA SECOND POWER PROJECT LOAN 999-PNG Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  PROJECT PERFORMANCE AUDIT REPORT PAPUA NEW GUINEA SECOND POWER PROJECT (LOAN 999-PNG) TABLE OF CONTENTS Page No. Preface .................... .......... ............................ i Basic Data Sheet ...................................................... ii Highlights .. ....................................................... iv Appendices: Comments from the Government ....................... vi PROJECT COMPLETION REPORT I. Introduction ............................... .........1 II. Project Identification and Preparation .....3........... 3 III. Project Implementation ............................ 4 IV. Operating Performance .............9.................... 9 V. Financial Performance ................................... 12 VI. Project Achievements and Economic Re-evaluation .......... 15 VII. Bank Performance .............................. ......... 16 VIII. Conclusions and Lessons Learned ..................... .... 16 Annexes 1. Actual Disbursements vs. Appraisal Estimate .............. 18 2. Papua New Guinea Electricity Commission Comparison of Appraisal Forecasts with Actual - Income Statements.... 19 3. Papua New Guinea Electricity Commission Comparison of Appraisal Forecasts with Actual - Balance Sheets 20 4. Papua New Guinea Electricity Commission Comparison of Appraisal Forecasts with Actual - Sources and Applications of Funds ..................... .......... 21  PROJECT PERFORMANCE AUDIT REPORT PAPUA NEW GUINEA SECOND POWER PROJECT (LOAN 999-PNG) PREFACE This report presents the results of a performance audit of the Papua New Guinea Second Power Project, for which Loan 999-PNG of US$10.8 million was made in May 1974 to the Government of Papua New Guinea Electric- ity Commission (ELCON). The loan was signed in June 1974, became effective in December 1974, and was closed in December 1979. The report consists of Highlights prepared by the Operations Evaluation Department (OED) and a Project Completion Repoit (PCR) prepared by the East Asia and Pacific Regional Office. The PCR takes into account the findings of a completion mission which visited Papua New Guinea in March 1981, and the information provided in a completion report submitted by ELCOM. In accordance with OED's abbreviated procedures, OED staff have reviewed the Appraisal and President's Reports, the loan documents, the Minutes of the Board discussions, ELCOM's completion report and the PCR; the project experience was also discussed with Bank staff. On the basis of this limited revLew, the audit finds no reason to disagree with the general analysis and conclusions of the PCR. Following normal OED procedures, a copy of the draft audit report was sent to the Government and ELCOM for comments. Those comments which were received have been taken into account in finalizing the report and are also reproduced as appendices to the Highlights.  - ii - PROJECT PERFORMANCE AUDIT BASIC DATA SHEET PAPUA NEW GUINEA: SECOND POWER PROJECT (LOAN 999-PNG) KEY PROJECT DATA Appraisal Actual or Item Estimate Current Estimate Total Project Cost (U!S$ million) 17.25 17.13 Underrun (%) - 0.7 Loan Amount (US$ million) 10.8 10.8 Disbursed ) -10.8 Novembec 30, 1981 Repaid )- 0.87 Date Physical Components Completed 12/31/79 12/31/79 Proportion Completed by Appraisal Target Date (%) 100 100 Incremental Financial Rate of Return Upper Ramu (%) 18.8 13.5 /a Training (%) 48.0 neg.- Financial Performance Good Uncertain despite re- cent tariff increases Institutional Performance Good Requiring improvement (see PCR paras. 4.04 and 8.02) Cumulative and Actual Disbursements (US$ million) As of June 30: 1974 1975 1976 1977 1978 1979 1980 (i) Appraisal Estimate 0.57 3.98 7.26 8.88 10.25 10.80 10.80 (ii) Actual - 1.08 5.75 8.58 9.99 10.55 10.80 (ii) as % of (i) - 28 79 97 97 98 100 OTHER PROJECT DATA Original Plan Actual First Mention in Files or Timetable - 09/72 Government's Application - 12/73 Negotiations - 03/74 Board Approval Date - 05/30/74 Loan Agreement Date - 06/12/74 Effectiveness Date 07/74 12/29/74 Closing Date 12/31/79 12/31/79 Borrower The Government of Papua New Guinea Executing Agency Papua New Guinea Electricity Commission (ELCOM) Fiscal Year of Borrower Through 1977: July 1-June 30; After 1977: Jan. 1-Dec. 31 Follow-on Project Name None /a See PPAM para. 4 and PCR paras. 6.02-6.04.  - iii - MISSION DATA Month/ No. of No. of Staff- Date of Item Year Weeks Persons weeks Report Identificatior/a 09/72 2.0 1 2.0 11/14/72 Appraisal 06/73 6.0 2 12.0 05/15/74 Total 8.0 14.0 Supervision I/a 12/74 1.5 1 1.5 02/15/75 Supervision 1I/a 07/75 2.0 1 2.0 09/08/75 Supervision IIL/a 06/76 1.0 2 2.0 08/10/76 Supervision IV.ta 09/77 1.0 1 1.0 10/20/77 Supervision V 06/79 0.4 1 0.4 07/16/79 Completion 03/81 0.4 1 0.4 04/08/81 Total 6.3 7.3 COUNTRY EXCHANGE RATES Name of Currency (Abbreviation) Kina (K)Lb Appraisal Year Average (1973) Exchange Rate: US$1 = K 0.6722 Completion Year (1979) US$1 = K 0.6902 /a Including supervision of the First Power Project. /b Kina was introduced in 1975. 1 K = 100 Toea = 1 A$ (Australian dollar) before 1975.  - iv - PROJECT PERFORMANCE AUDIT REPORT PAPIJA NEW GUINEA SECOND POWER PROJECT (LOAN 999-PNG) HIGHLIGHTS 1. The second power project, supported by a Bank loan (999-PNG) of US$10.8 million, aimed at helping to strengthen the Papua New Guinea Electricity Commission (ELCOM) and reduce its dependence upon expatriate assistance. The project consisted of: (i) technical assistance for ELCOM's in-service training program during the period 1974-79 (about 44% of the loan); (ii) expansion of ELCOM's distribution network (about 22% of the loan); and (iii) financing to cover the cost overrun on the Upper Ramu Hydroelectric Project (34% of the loan), which was the major component of the first power project (Loan 737-PNG).Il. The total cost of the project was estimated at US$17.25 million, and the project was to be completed by end 1979. 2. In line with the Government's policy of encouraging Papua New Guinea nationals to play a greater part in the economy, the objective of the technical assistance component of the project was to reduce ELCOM's expatriate staff from 240 in 1974 (21% of total staff) to 34 in 1980 (2% of total staff) by training 528 nationals. The distribution component, which included rehabilitation, strengthening of existing systems and expansion, was expected to be sufficient to meet ELCOM's needs through 1979. 3. The physical components of the project were completed on time, with only few modifications and within the estimated cost (PCR paras. 3.03 and 3.07-3.13). However, the objectives of the technical assistance program, as envisaged at appraisal, were not achieved. Although the degree of local staff participation reached 94% by mid-1980, the number of expatriates among ELCOM's personnel totaled 169 instead of the 34 expected at appraisal (PCR para. 1.05). High turnover of expatriate staff designated as trainers and the moving of some trainers to technical positions to enable ELCOM to function seem to have been the major reasons for the disappointing results (PCR paras. 3.04-3.05). 4. The incremental financial rate of return (IFRR) on the Upper Ramu Hydroelectric project is now recalculated at 13.5% compared with 18.8% esti- mated at the time of appraisal of the second project (PCR para. 6.02); the lower IFRR is due mainly to higher than expected operating costs. At 1/ A Project Performance Audit Report was prepared for the "Upper Ramu Hydroelectric Project" (Loan 737-PNG) in October 1979, OED Report No. 2687. The cost overrun on the first project was mainly attributable to exchange rate adjustments.  - v - appraisal, an IFRR was calculated on the training component of the project, using as benefits the financial savings due to the salary differential between expatriate and local staff of equivalent grade and responsibility. The discount rate which equalized ELCOM's cost without the training (continued employment of expatriates) and ELCOM's cost with in-service training (reducing the number of expatriates over time as local staff would accept full opera- tional responsibility) was found to be in excess of 48%. The calculation did not take into consideration the quality of work performed which is, of course, difficult to quantify, and it is not clear over how long a time period the expatriates were expected to be phased out, or whether the replacement of expatriates by locals was assumed to be on a one-for-one basis. For reasons further described in the PCR (para. 6.04), the IFRR of the training element of the completed project was not calculated. However, it is expected that the IFRR would be negative in view of the increased number of expatriates and the cost of the consultants who have recently been brought in to strengthen ELCOM's planning and engineering capabilities (PCR para. 6.04). No IFRR was calculated at appraisal or at project completion for the distribution compo- nent of the project (PCR para. 6.03). 5. Actual financial performance during the earlier years of project implementation was satisfactory, due principally to tariff increases and rescheduling of debts. However, ELCOM incurred losses in 1980 and with the tariff increases which were approved from November 1980 and from April 1981, it is expected that ELCOM will only just break even in 1981. The rate of return covenant (on nrevalued assets) was met in some years; audited accounts have only been prepared up to 1977 (PCR paras. 5.01-5.09). ELCOM is currently facing institutional problems, which are partly due to the inexperience of its management and staff (PCR para. 8.02), and has in consequence recently appointed a team of consultants to provide supporting services in management, system planning and engineering (PCR paras 4.04-4.05). While Bank supervision of the physical part of the project appears to have been adequate, ELCOM could probably have benefited from more supervision of the training component (PCR para. 7.02). 6. An important lesson emerging from the experience of this project and which would be important for any possible future lending to ELCOM is that training programs should be more carefully planned and supervised to achieve greater success in increasing the degree of local staff partici- pation in the management and operation of ELCOM. Furthermore, as the PCR points out (para. 8.04), in-service training should be carried out over a longer period of time and expatriate support should be maintained until local counterparts are sufficiently experienced to take over.  - vi - APPENDIX 1 COMMENTS FROM THE GOVERNMENT FINANCE NE22,218 MR SHIV S. KAPUR DIRECTOR i':2 NA -8 Ai IV OPERATIONS EVAL,]ATIQ)JPL WORLD BANK wASHJNiTON REF URTELEX 5 MAR. 82 AND URLETTER Ai\D RPT ON LOAJ4 999 PåG SECOND POWER PRGJECT 25 JA,N 82. DISCUSSIONS HAVE 3EEN HEL.D WITH RELEVANT 130VT. OFFICIALS AND PNG ELECTRICITY STAFF. CCNSENSUS VIEA IS COi1CURRENCE aITH 3A,mK'S PROJECT PERFRi.AiCE AUDIT RPT lII PARTICULAR AWREEMENT wITH BAiNK'S STATErIENTS A33UT ISTITUTIOrN BUILD,G AND LOCALISATION PORTION OF THE LUAtm. WITH BEST REGARDS EKERE 'lORAUTA SECR.ETARY FOR Fi\ýANCE P:3. WORLDBANK440098 FI'A*CJ 1122218iJ<.i - vii - APPENDIX 2 COMMENTS FROM THE GOVERNMENT WU INFOMASTER 1-003837A068 03/09/82 ICS I·PMWGWC WSH ZCZC 03130 03-09 r851A EST&:' TLX 89650 WORLDBANK WSH TB 1-?07679Gn67 03/08/82 IISS F M WUI 08 2049 UW A86n2 SWU184 LAA767 T380 UWNX CC NEXX 058 PORTMIORESBY TLX PNG 58 9 lO1 lH-U S. KAPUR DI kEGTOR OPErATIONS EVALUATIUN DEPT WA SHI NGTON USA RE YR TEl AND LETTER. PROJECT PERFO:VMANCE AUDI T REPORT IN ORDER CORPECTION HOQAEVER ON PAGE ELEVEN. DELETE SENTENCE ''THE HEAD OF THE LONSULTANTS TEAM1 .,!LL ACT Ab ELCOr GENERAL MANAGER' '. REPLACE vITH '' AN EXPATRIATE GENERAL :ANAGER WJILL E APPOINTED SHDRTLY'' vY APOLOGIES FOR DELAYI% RESPONSE kN A A ONI A) SECHET A hY Mn5n EcST PAPUA NEW GUINEA SECOND POWER PROJECT (Loan 999-PNG) PROJECT COMPLETION REPORT I. INTRODUCTION The Power Sector 1.01 The Papua New Guinea Electricity Commission (ELCOM) was established on July 1, 1963. It was originally responsible for the operation of 9 gen- erating centers consLsting of Port Moresby, Lae, Madang, Goroka, Wewak, Samarai, Rabaul, Kokopo and Kavieng. In 1972, Kieta, which was supplied from the nearby BouganvilLe Copper Mine, was transferred to ELCOM by the Papua New Guinea Administration and in 1975 following completion of the first phase of the Upper Ramu hydroelectric scheme (financed under Loan 737-PNG) the towns of Mt. Hagen, Kianantu and Kundiawa which were supplied from Ramu were also taken over by ELCOM. The following Government generating centers were transferred to ELCOM in January 1979: Aitape, Alotau, Bainyik, Buka, Daru, Finschhafen, Kerema, Kimbe, Lombrum/Lorengau, Mendi, Popondetta and Vanimo. In addition, there are about 130 Government-owned small and isolated generating centers served and maintained by ELCOM. 1.02 At the end of 1979, the installed capacity and generation in the country were: Installed capacity (MW) Generation Hydro Thermal Total (%) (GWh) (%) ELCOM 94.0 73.7 167.7 (51.9) 395 (31.5) Government - 10.0 10.0 (3.1) 31 ( 2.5) Bougainville copper mine - 135.0 135.0 (41.8) 790 (63.0) PNG forest products 5.5 - 5.5 (1.7) 23 ( 1.8) Other private - 5.0 5.0 (1.5) 15 ( 1.2) Total 99.5 223.7 323.2 (100.0) 1,254 (100.0) - 2 - 1.03 The major transmission system, which also forms part of the Upper Ramu scheme financed by the Bank, consists of about 540 km of 132/66 kV transmission lines which link the highland's towns of Goroka, Mt. Hagen, Kundiawa, Kainantu and the north coastal towns of Lae and Madang. The Borrower and the Beneficiary 1.04 The Borrower of the Bank loan was the Government of Papua New Guinea (which became an independent nation in 1975); the Guarantor, the Commonwealth of Australia; and the Beneficiary, ELCOM. Following independence, Papua New Guinea adopted its own currency, the Kina, to replace the Australian dollar. ELCOM is a statutory authority established under the Electricity Act of 1961. ELCOM's Board consisted of a full-time Chairman (Commissioner) and five other associate commissioners (part time), responsible to the Minister of Minerals and Energy. ELCOM has four Assistant General Managers who head the departments of Management, Commercial, Development and Operations. Following a recent amendment to the Electricity Act (gazetted on March 27, 1981) the position of Commissioner was abolished and a general manager was appointed by the Minister of Minerals and Energy as the Chief Executive Officer. He is not to be a member of the Commission. At the same time, the Commission was re-established with four Government representatives comprising the department heads of Finance, Minerals and Energy, Lands and the National Planning Office. In addition, two commissioners will be appointed to represent the private sector. 1.05 As of July 31, 1980, ELCOM's personnel totalled 2,734, of whom 2,565 (94%) were nationals and 169 (6%) were expatriates. This compares with ELCOM-s targets for mid-1980 at the time of appraisal of about 1,700 of whom about 34 or 2% would be expatriates. Lack of expertise in some technical areas has necessitated continued overseas recruitment. The positions of the commissioner, three of the four Assistant General Managers and seven of the twelve division chiefs have been occupied by Papua New Guinea nationals. 1.06 This was the second power loan to the country. The first one (Loan 737-PNG) financed the Upper Ramu Hydroelectric Development Project, which consisted of the construction of a diversion weir, an underground power station (3 x 15 RW), a surface control building and step-up switchyard, 540 km of 132/66 kV transmission lines and associated substations, and consultancy services. 1.07 The conclusions of the PPAR for the Upper Ramu Hydroelectric Project were that (i) the project was delayed by about nine months (para. 3.07) with a cost overrun of about 29% primarily because of currency fluc- tuations; (ii) financial results were generally lower than originally envisaged due mainly to increases in operating costs not fully covered by tariff increases. The lessons learned were that: (i) detailed project preparation, particularly extensive exploratory drilling, contributed towards successful implementation of the project; and (ii) training programs helped to cope with the policy of employing national staff. - 3 - II. PROJECT IDENTIFICATION AND PREPARATION 2.01 The project was identified during a supervision mission of the Upper Ramu Hydroelectric Project in September/October 1972; its preparation was carried out by ELCOM from October 1972 through May 1973 and it was appraised in June 1973. Project Description 2.02 The project consisted of: Part A: Technical assistance for ELCOM-s in-service training program during the period 1974 through 1979, which provided for 385 trainer man-years and 1,038 trainee man-years; Part B: Financing to cover the shortfall in funds for meeting the off-shore expenditures for the Upper Ramu Hydro- electric Project attributable to exchange rate adjustments; and Part C: Distribution expansion consisting of about 150 distribution transformers, about 47 km of 11 kV and 22 kV primary dis- tribution lines, and about 119 km of secondary distribution lines together with service connections, street lights and meters. Project Role in ELCOM's Long-Term Plan 2.03 Part A of the project was designed to accelerate the replacement of expatriate staff by PNG nationals. This followed the government's policy of increased localization to enable the national population to play a greater part in the economy and encourage greater self reliance. Part B of the project facilitated the completion of the Upper Ramu Hydroelectric Project. The construction of the hydropower station and associated transmission lines was of significant economic importance, permitting the use of an indigenous, renewable and non-polluting resource. The Upper Ramu system now forms the second largest connected system in Papua New Guinea, and permits the diesel stations at Lae, Madang, Goroka, Kundiawa, Kianantu and Mt. Hagen to be operated as standby facilities. The area served by Upper Ramu contains almost half of the country s population., and has great potential for economic development. Part C of the project helped finance the off-shore cost of the distribution system expansion. -4- Loan Covenants 2.04 The covenants in the Project Agreement included:- (a) Sec. 2.06: ELCOM shall continue to maintain in existence and operate the Training Center. (b) Sec. 3.02 (d): ELCOM shall exchange views with the Bank before making any new appointments to the positions of the General Manager the four Assistant General Managers and the Principal of the Training Center. (c) Sec. 4.02 ELCOM shall furnish copies of its financial statements and audit report within 4 months of the end of its fiscal year. (d) Sec. 4.03 (b): ELCOM shall take all necessary steps to establish and maintain tariffs for electric power services and take such other actions as shall be required to earn an annual rate of return of not less than 9% in the fiscal years 1974 through 1976 and not less than 10% thereafter on average net fixed assets in service, valued from time to time in accordance with sound and consistently maintained methods of valuation acceptable to the Bank. (e) Sec. 4.04: Prior to undertaking any construction project estimated to cost in excess of $A 10 million, ELCOM shall obtain the approval of the Bank for the financial plan covering such project. (f) Sec. 4.05 (a): ELCOM shall not incur debt unless its net revenue for the fiscal year preceding the date of such incurrence or a later 12 month period, which ever is greater, shall be not less than 1.5 times the maximum debt service requirements. (g) Sec. 4.06: ELCOM shall not declare or pay any dividends prior to July 1, 1978. All the above covenants have been met with the exception of (c) and (d) (see paras. 5.03-5.08). In the case of (d) the rate of return target was met during fiscal years 1977 and 1978. III. PROJECT IMPLEMENTATION Effectiveness and Startup 3.01 The loan became effective on December 29, 1974, about six months after loan signing but about 4 1/2 months after the due date for loan effectiveness. The reasons for the delay were: (a) elections in Australia - 5 - which affected the delay in the approval of the Guarantee Agreement by the Australian Parliament, and (b) receipt of legal opinions from the Department of Law, PNG. 3.02 Tenders for the supply of the first-year's requirements of distri- bution equipment and materials (Tender No. 15 A-M 74/75) were called in August 1974, opened on October 31, 1974 and awards were made in January 1975. Tenders for the supply of distribution equipment and materials for the remaining three-year-s requirements (Tenders No. 1-17 75/76) were advertised in early April 1975, opened on June 30, 1975 and awards were made in August/September 1975. Project Implementation and Revisions 3.03 The project was carried out principally as designed. Minor modifications and variations were made during the execution of the project. 3.04 The actual number of trainers and trainees over the period 1974 through 1979 compares with the appraisal estimate as follows: Table 3.1: IN-SERVICE TRAINING - APPRAISAL VS. ACTUAL Appraisal Estimate Actual Trainers Trainees Trainers/a Trainees/a 1974 99 /b1 162 /b 66 /b 123 1975 107 240 75 80 1976 91 207 85 145 1977 75 197 86 141 1978 50 221 49 94 1979 25 /b 184 /b 24 118 Total 385 1,038 352 701 (man- years) Ratio of trainees/trainers 2.7 2.0 /a Based on the number of trainers and trainees at the end of the fiscal year. /b Six months only. - 6 - 3.05 In the first phases of project implementation (1974 and 1975), ELCOM had problems retaining the trainers due to movement of overseas staff back to Australia following self-government and then independence and diffi- culties in recruiting expatriate staff. Some trainers had to be moved to in-line positions to enable ELCOM to function and this tended to reduce the effectiveness of the in-service training program. This contributed to a lesser number of trainees being trained than originally expected. Another contributing factor was the loss of ELCOM trainees and trained staff to other employers who offered better salaries and conditions than ELCOM could offer. 3.06 The physical works accomplished under Part C of the project compare with the appraisal estimate as follows: Table 3.2: DISTRIBUTION EXPANSION-APPRAISAL VS. ACTUAL Appraisal Unit Estimate Actual Distribution Transformers Number ea 150 109 MVA 15 20 22/11 kV Primary Distribution Lines km 47 58.1 Secondary Distribution Lines km 119 152.3 Service Connections ea 8,000 4,165 /a Street Lights ea 900 798 Meters ea 9,000 4,613 /a /a The actual service connections and meters installed at Port Moresby, Madang, Goroka, Wewak, Rabaul and Mt. Hagen were all considerably less than the appraisal estimates, due to less favorable economic environment. Implementation Schedule 3.07 Civil works of Part B of the project, the Upper Ramu Hydroelectric Project, were completed on May 23, 1975, about three months ahead of schedule. The commissioning of the generating units was however delayed about nine months due to the following reasons: (a) late ordering of cables, the delivery of which was further delayed as a result of industrial disputes at the manufacturers factory; - 7 - (b) delays by the alternator subcontractor in the fabrication of pole wheel plates (pole wheel plates were initially rejected during shop tests for not complying with specifcations); (c) delays in the manufacture and shipping of turbine governors; (d) late preparation of the final design data for control board manu- facture; (e) lack of coordination and a proper manufacturing and erection program; (f) late arrival of erection and test personnel; and (g) an inadequate supply of test instruments. 3.08 Part A and Part C of the project were completed as scheduled. Procurement 3.09 Preparation of bid documents for procurement of distribution equip- ment and materials was in accordance with the Bank's guidelines. Processing of tenders and award. of contracts were carried out equitably and expeditiously. There was little time lost on procurement. Project Cost 3.10 The project cost is within the original estimate as indicated below: Table 3.3: PROJECT COST-APPRAISAL VS. ACTUAL (in $000-s) Appraisal Estimates Actual Foreign Local Total Foreign Local Total I. Technical Assistance 4,700 3,111 7,811 5,436 3,598 9,034 II. Ramu Project Shortfall 3,753 - 3,753 3,617 3,617 (Loan 737-PNG) III. Distribution Expansion 2,347 3,339 5,686 1,747 2,734 4,481 Total 10,800 6,450 17,250 10,800 6,332 17,132 -8- Disbursements 3.11 The loan amount of US$10.8 million was fully disbursed as of the original closing date of December 31, 1979. The actual disbursements against the appraisal forecast are shown in Annex 1. 3.12 The actual allocation of the proceeds of the loan compared with Schedule I of the Loan Agreement is as follows: Table 3.4: ALLOCATION OF THE PROCEEDS OF THE LOAN Category Original Actual ------------ Us$ --------------- I. Part A: Technical Assistance 4,700,000 5,435,407 II. Part B: Loan 737-PNG Shortfall 3,750,000 3,617,297 III. Part C: Distribution Equipment and Materials 1,850,000 1,747,296 IV. Unallocated 500,000 Total 10,800,000 10,800,000 3.13 The increase in funds required to meet the in-service training was caused by the higher cost of retaining trainers due to inflation and the strength of the PNG currency. This applied particularly to the engineering divisions where it was necessary (and is still necessary) to recruit senior expatriate trainers. The problem was compounded by the lack of suitably qualified nationals to hold senior technical positions. As at July 31, 1978, expenditures for Part A of the loan reached the originally allocated amount of US$4.7 million. The unallocated amount of US$0.5 million was therefore transferred to Part A. The expenditures required to meet the shortfall in off-shore expenditures under Loan 737-PNG and the purchase of goods and services under Part C of the loan were less than anticipated, and an amount of US$235,407 was transferred from Parts B and C to Part A of the loan. Project Supervision 3.14 The field supervision of civil works and electrical and mechanical works for the Upper Ramu Project was carried out by the consultants (see PPAR of Loan 737-PNG). No consultants were required for the distribution expansion. All works were undertaken and supervised by ELCOM. -9- IV. OPERATING PERFORMANCE System Growth and Operations 4.01 ELCOM's gowth and operations over the period 1974/75 to 1979 are summarized below: Table 4.1: OPERATING STATISTICS 1974/75 1975/76 1976/77 1977/a 1978 1979 (half year) act. (est.) act. (est.) act. (est.) act. act. (est.) act. (est.) Installed capacity (MW) 88.2 104.3 126.5 127.7 127.9 167.7 Maximum demand (MW) 44.0 (50.7) 48.2 (58.6) 51.5 (64.2) 61.0 64.4 (68.2) 79.9(73.3)/b Energy generation (Gwh) 279.6(259.3) 309.0(295.4) 334.1(318.7) 175.0 396.8(342.6) 440.1(368.9)/b Energy sales (Gwh) 255.8(234.0) 274.0(265.8) 302.9(285.6) 153.33 338.8(308.1) 379.6(330.8)/b System losses (%) 8.5 11.3 9.3 12.4 14.6 13.8 No. of consumers - Domestic 21,805 23,435 24,911 25,440 26,721 31,377 - General supply 4,848 4,954 5,158 5,393 5,611 6,797 - Maximum demand 21 20 21 22 24 29 - Public lighting 1 1 1 1 1 1 0 Total 26,675 28,410 30,091 30,856 32,357 38,204 No. of employees - Expatriate 207(225) 166(180) 123(100) 135 134(75) 127 (50)/b - National 1,553 1,667 1,790 1,795 2,156 2,420 Total 1,760 1,833 1,913 1,930 2,290 2,547 No. of consumers per employee 15 15 15 16 14 15 Sales per employee (kWh) 143,340 149,482 158,338 - 147,948 149,038 /a Since 1977, ELCOM's fiscal year was changed to January 1 - December 31. /b Figures shown in the brackets are those estimated in the appraisal report. - 11 - 4.02 ELCOM's generation centres are isolated and because of this the number of consumers per employee is low. Staff Training and Development 4.03 ELCOM operates an extensive training center, offering courses for technicians, clerks and trades skills. There are approximately 400 students attending various courses at the training center at any given time. Apprenticeships are provided in the electrical, mechanical and commercial fields. Other courses include training in management, supervision and communications. In addition to those attending ELCOM's training center, there are about 40 students being sponsored at universities and colleges within Papua-New Guinea. 4.04 At the time of appraisal of the Second Power Project, ELCOM-s management was described as "able" and the staff "competent." At that time the management was largely in the hands of expatriate Australians. However, following Papua-New Guinea's independence in 1975, the Government stepped up its localization policy under which it encouraged appointment of young nationals to positions previously held by expatriates. Thus in pursuance of this policy, ELCOM appointed Papua-New Guineans to the top positions in charge of the Engineering, Administration, Training and Commercial Divisions. The incumbents were to step aside and become in-service trainers leaving the new appointees and the Commissioner (who was also a national appointed in 1974) to take full responsibility. The Government informed the Bank of these changes and the Bank concurred with the appointments. However, shortly after the new management was in place, the former expatriates who had become for practical purposes redundant began to leave. From this point, which occurred about the end of 1976, it would appear that ELCOM's current tech- nical and institutional problems began to emerge. The new managers were not supported by the former managers for sufficiently long to allow them to develop the experience their new responsibilities required. In 1979, a new commissioner was appointed from within ELCOM following a review of ELCOM-s top management structure by consultants in consultation with the Government's Public Service Commission. In the subsequent reorganization, ELCOM replaced some of its top management. However, early in 1981 the Government, appar- ently dissatisfied with ELCOM's management and aware of growing institutional and technical problems, replaced the Commissioner with an expatriate general manager on a temporary basis (para. 1.04). It has since appointed a team of consultants to strengthen ELCOM's planning and engineering capability. An expatriate general manager will be appointed shortly. In addi- tion, ELCOM has increased the number of expatriates particularly in finance and commercial positions and transferred some of the former top management staff to other positions. By the end of 1980, ELCOM expected to have increased the number of expatriates to 200 from the level at mid-1980 of 169. 4.05 In retrospect, it would appear that the process of localizing ELCOM's staff particularly at management levels was too rapid. As a result it is facing severe institutional and technical problems which are probably not able to be corrected in the short-term e.g.: decline in the rated - 12 - capacity of some of its plant due to inadequate maintenance, load shedding due to poor plant efficiency and failure to plan and construct new capacity to meet long-term system growth. V. FINANCIAL PERFORMANCE Financial Results 5.01 Energy sales during the four and one half year period 1973/74 to 1979 increased at an average annual compound rate of 11% and revenues from energy sales had an average compound growth of 24% p.a. Operating expenses increased at an average annual compound rate of 23%; and net income before interest at a rate of 30%. 5.02 ELCOM's income statements, balance sheets and sources and applica- tions of funds statements for the period 1973/74 to 1979 are shown in Annexes 2, 3, and 4. The actual results are compared with those forecast at the time of appraisal. The key indicators are summarized here: - 13 - Table 5.1: KEY INDICATORS Half-year Dec Dec to 1978 1979 1973/74 1974/75 1975/76 1976/77 Dec 1977 Revenue per kWh sold (Toea) Ia. Appraisal 4.00 3.99 4.04 4.04 - 4.04 4.03 Actual 3.85 4.34 5.45 6.22 6.22 6.17 6.15 Operating ratio (%) /b Appraisal 67 66 59 59 - 61 63 Actual 80 80 69 57 55 61 76 Rate of return (%) /c Appraisal 9.5 9.7 8.4 6.9 - 7.3 7.4 Actual 5.9 6.9 8.7 11.3 12.0 11.5 7.9 Debt service coverage /d Appraisal 2.5 2.1 1.9 1.6 - 1.6 1.6 Actual 1.4 1.6 2.9 1.3 2.6 2.7 2.2 Debt/Equity ratio /e Appraisal 80/20 81/19 76/24 75/25 - 78/22 77/23 Actual 74/26 79/21 77/23 53/47 50/50 48/52 46/54 /a Toea 1 = US cents 1.45 (10) Toea = 1 kina). /b Operating expenses (including depreciation) as percentage of operating revenue. Tc Operating income as percentage of rate base on historic cost basis. /d Times that internal cash generation (operating income plus depreciation) covers debt service. /e Long-term debt to equity and reserves. - 14 - Financial Covenants 5.03 The Project Agreement requires that ELCOM take all necessary steps to achieve an annual rate of return /1 of not less than 9% in the fiscal years 1974 through 1976 and not less than 10% thereafter (para. 8.03). For FY74 and 75, the actual rates of return (ROR) were lower than the covenanted rate because of larger than expected increases in operating costs. Two tariff increases (the first effective from December 1974 and the other from December 1975) were implemented which helped increase the average price per kWh sold from less than 4 Toea in FY74 to about 6 Toea in FY76 and thereafter. For FY76, the actual ROR of 8.7% was almost equal to the covenanted rate. In the subsequent years 1977 (half year) and 1978, ELCOM's actual performance was well above the 10% ROR covenanted in the Loan Agreement. However, ELCOM-s operating results for 1979 suffered a setback because of a substantial rise in fuel costs (much greater than appraisal estimate). The ROR fell to 7.9%. ELCOM's debt service coverage was greater than 1.5 times throughout the period except in FY77 because of a much larger amortization of debt in that year due to prepayment of some of ELCOM's long-term debt as a part of the restructuring of its finances (paras. 5.04-5.06). 5.04 During a visit to Papua New Guinea by a Bank mission in mid-1975 discussions took place with ELCOM and the PNG Department of Finance with a view to strengthening ELCOM-s financial position. Proposals were subsequently drawn up which were designed to improve ELCOM's debt/equity ratio from 79/21 in 1974/75 to the 60/40 figure recommended by the Bank. 5.05 Since 1963 the Government had lent to ELCOM K42,112,000. This debt comprised 55 loans bearing interest charges ranging from 5.125% to 10%, and maturing in periods of either 25 or 40 years. All loans were to be repaid in lump sums at maturity. ELCOM had established a sinking fund to meet these commitments. 5.06 The financial package agreed to resulted in: conversion of 40% of total debt (K 16.8 million) to government equity; government purchase (at face value) of ELCOM's loan redemption sinking fund of K 4 million, and the use of the proceeds to reduce the debt; consolidation into a single loan of the remaining debt (K 21.3 million) bearing an 8% interest charge and repayable over 40 years (equal semi-annual payments of K 0.9 million); a dividend of K 0.5 million to be paid to the government for fiscal year ending June 30, 1977, and further dividend payments to be determined by negotiation between Government and ELCOM. This restructuring was effective from January 1, 1977. 5.07 In view of the substantial improvement in ELCOM's liquidity posi- tion, the Bank agreed to permit ELCOM to make dividend payments before July 1, 1978 (the date set in the Loan Covenants). /1 On average net fixed assets in operation (valued from time to time in accordance with sound and consistently maintained methods of valuation acceptible to the Bank. In practice ELCOM has not revalued its assets, and the rates of return given in para. 5.03 are on an unrevalued basis. - 15 - 5.08 Further increases in the costs of fuel during 1980 and two conse- cutive dry years which have forced ELCOM to operate its gas turbine, near Port Moresby, to supplement the reduced availability of its hydro plant have resulted in ELCOM incurring a net loss of about US$7.5 million for 1980. In response Government has approved rate increases of 35% from November 1, 1980 and 25% from April 1, 1981 which are expected to be sufficient to enable ELCOM to breakeven in 1981 but not to enable it to achieve the 10% rate of return target in 1981. Audit 5.09 Prior to independence in 1975, ELCOM's accounts were audited by the Commonwealth Audit Office which was part of the Australian Government. Since 1975 they have beea audited by the Papua New Guinean Auditor General's Office in accordance with the Electricity Commission Act (1973). This arrangement was accepted by the Bank on the understanding that the Commission would employ an independent firm of professional accountants to either assist the Auditor General or provide a supplementary audit to the Government's audit if the latter did not have the personnel to carry out a commercial audit. The Auditor-General reported on ELCOM's accounts to December 31, 1977 on July 25, 1980 but has since been unable to finalize its audits for subsequent years. Initially, the Papua New Guinea Auditor General had difficulties attracting and retaining suitably qualified staff but ELCOM, for its part, has not been able to finalize its accounts for 1979. At the Bank's instigation ELCOM had discussions with the Auditor-General and a new program for complei:ion of the audit reports has been established. A sugges- tion by the Bank that ELCOM engage a public accounting firm to carry out the audits was not adopted. VI. PROJECT ACHIEVEMENTS AND ECONOMIC RE-EVALUATION Project Achievements 6.01 The project was executed as planned and the physical objectives of the project have been achieved. The Upper Ramu project is being operated satisfactorily and forms the second largest connected system in Papua New Guinea. The distribution system expansion covering the 12 Government centers is sufficient to meet ELCOM's needs through 1979. About 1/3 of ELCOM's national staff have benefited from the in-service training program but in terms of meeting the Government's localization objectives it would appear to have been too optimistic. - 16 - Rate of return 6.02 The internal rate of return for the Upper Ramu Hydroelectric Project at post project evaluation including the cost overruns financed under this project and by ELCOM was 13.5% (see PPAR of Loan 737-PNG) compared to 18.8% estimated during appraisal. 6.03 No rate of return calculation was made on the distribution component of the project at the time of appraisal due to difficulty allocating incre- mental revenues to existing and new facilities. Therefore for the same reason no calculation has been made following project execution. 6.04 In the case of the in-service training component, it has not been possible to recalculate the internal rate of return achieved because of factors mentioned elsewhere in this report particularly (paras. 3.05 and 4.04): a) some trainers had to be moved to in-line positions to enable ELCOM to function. b) the loss of ELCOM trainees and trained staff to other employers. c) ELCOM had problems retaining the trainers due to movement of over- seas staff back to Australia following self-government and then independence. d) ELCOM has recently had to bring in consultants to strengthen ELCOM's planning and engineering capabilities and increased the number of expatriates particularly in finance and commercial positions. If all these factors could be quantified, it is expected that the rate of return would be negative. VII. BANK PERFORMANCE Project Content 7.01 The project was well packaged to meet ELCOM's specific needs. Supervision 7.02 Four supervision missions were made from 1975 to 1979. The interval between missions of about once a year was adequate. Normally only one staff member was dispatched. However, the level of supervision of the training component after 1976 was minimal, in retrospect, but given ELCOM's good per- formance under the first power project and its very able management at the commencement of the project and the fact that the Ramu hydro plant was operat- ing satisfactorily by 1976, it would have been difficult to justify assigning more staff time to supervision. The fact that there was no planned new operations in the power sector probably contributed to the reduced time of supervision visits. - 17 - Working Relationship 7.03 The working relationship between the Bank, the Government and ELCOM has been very good. Recommendations made by the Bank missions have usually been accepted or given due consideration (e.g. tariff adjustments and increase in government equity). 7.04 Due to staff constraints, ELCOM was late in the preparation of the project completion rEport. VIII. CONCLUSIONS AND LESSON LEARNED 8.01 The project was executed as planned. The objectives of the project have largely been met. The project was completed within schedule and within cost. 8.02 ELCOM is currently facing institutional and technical problems, some of which are due to elements beyond its control but others are due to the inexperience of Lts management and staff. It appears that the process of localization has been too rapid. The in-service training program provided ELCOM with the most-aeeded period of transition. In the letter of December 10, 1979, t*e Bank asked ELCOM to provide assurances that there are sufficient qualified and trained staff to support the top management to ensure the efficient operation and maintenance of the country's electricity supply and to coordinate new construction currently underway or planned. Following the recent amendments to the Electricity Act, the Bank sent a telex to the Ministry of Finance on April 8, 1981 requesting information on actions being planned or already in course to further strengthen ELCOM's management and staff. ELCOM has now engaged a consulting firm to provide supporting services in management, system planning and engineering. 8.03 Although ELCOM achieved the rate of return objective of 10% in 1977 and 1978, it did so without any revaluation of its rate base which continued to be valued in terms of acquisition or historical costs. If ELCOM had con- ducted regular revaluation of its assets to reflect changes in current price levels, it is unlikely that its performance would have met the covenant. In mid-1979 ELCOM was asked to consider revaluation of its assets. During the recent visit of ELCOM's Acting General Manager, he agreed in principle to the need for revaluation and to undertake this task subject to the availability of staff to accomplish this task. 8.04 An important lesson learned from this Project is that localization especially of senior management should be implemented over a much longer period of in-service training and expatriate support should be maintained until local counterparts are sufficiently experienced to take over. The Bank's involvement in the power sector is still highly desirable. - 18 - ANNEX 1 PAPUA NEW GUINEA SECOND POWER PROJECT (LOAN 999-PNG) PROJECT COMPLETION REPORT Actual Disbursements vs Appraisal Estimate (US$'000) Cumulative disbursement Quarter Actual Appraisal ending A B C Total estimate 1973/74 March - - - - 270 June - - - - 570 1974/75 September - - - - 1,670 December - - - - 2,800 March 303 - - 303 3,940 June 1,079 - - 1,079 3,890 1975/76 September 1,356 361 81 1,998 5,810 December 1,658 1,834 471 3,963 6,560 March 2,145 2,156 688 4,989 6,910 June 2,385 2,452 912 5,749 7,260 1976/77 September 2,827 2,946 1,493 7,266 7,700 December 2,937 3,185 1,669 7,791 8,100 March 3,121 3,198 1,700 8,019 8,500 June 3,590 3,246 1,747 8,583 8,880 1977/78 September 3,730 3,563 1,747 9,040 9,240 December 4,044 3,620 1,747 9,411 9,600 March 4,337 3,620 1,747 9,704 9,930 June 4,572 3,670 1,747 9,989 10,250 1978/79 September 4,831 3,675 1,747 10,253 10,550 December 4,888 3,675 1,747 10,310 10,800 March 5,013 3,675 1,747 10,435 10,800 June 5,129 3,675 1,747 10,551 10,800 1979/80 September 5,168 3,675 1,747 10,590 10,800 December 5,378 3,675 1,747 10,800 10,800 PAPUA NEW GUINEA SECOND POWER PROJECT (LOAN 999-PNG) PROJECT COMPLETION REPORT Papua New Guinea Electricity Commission Comparison of Appraisal Forecasts with Actual - Income Statements (In thousands of Kina) /a 6 months to /b Period ended: 06/30/74 06/30/75 06/30/76 06/30/77 12/31777 12/31/78 12/31/79 Appr. Actual Appr- Actual p AcLual Appr. Actual Actual Actual Actual Units generated and purchased (GWh) 245.5 254.9 261.6 279.6 296.1 309.1 319.2 337.9 174.9 350.0 440.1 Units sold (GWh) 218.7 231.6 234.0 255.8 265.8 274.0 285.6 302.9 153.2 348.2 380.6 Average price per kWh (Toea) 4.00 3.85 3.99 4.34 4.04 5.45 4.04 6.22 6.27 6.17 6.15 Operating Revenue Sales of electricity 8,763 9,049 9,336 11,254 10,735 15,087 11,530 18,839 9,603 21,494 23,407 Sales of water 38 33 45 35 55 38 65 38 18 39 48 Other 75 107 82 100 87 103 92 117 44 102 1,207 Total Operating Revenue 8,876 9,189 9,463 11,389 10,877 15,228 11,687 18,994 9,665 21,635 24,662 Operating Expenses Operations and maintenance 2,738 3,855 3,168 5,413 3,087 5,905 3,138 6,364 3,008 8,353 12,865 Administrative expenses 1,767 2,052 1,541 2,045 1,240 1,705 1,152 1,624 847 1,896 2,657 Depreciation 1,482 1,478 1,580 1,62S 2,104 2,894 2,595 2,774 1,424 2,923 3,195 Total Operating Expenses 5,987 7,385 6,289 9,083 6,431 10,504 6,885 10,762 5,279 13,172 18,717 Operating Income 2,889 1,804 3,174 2,306 4,446 4,724 4,802 8,232 4,386 8,463 5,945 Nonoperating Income 103 328 106 303 101 197 99 643 69 115 972 Interest Interest on loans 2,800 2,573 3,721 3,302 3,983 5,236 4,032 3,780 1,954 3,639 3,446 Less: Interest capitalized (1,347) (1,009) (1,840) (1,607) (988) (3,284) - - - - (5) Net Interest Expense 1,453 1,564 1,881 1,695 2,995 1,952 4,032 3,780 1,954 3,639 3,441 Net Income 1,539 568 1,399 914 1,552 2,969 869 5,095 2,501 4,939 3,476 Rate base 30.3 30.5 32.7 33.4 52.7 54.0 69.1 72.9 73.3 73.3 75.6 % rate of return thereon 9.5 5.9 9.7 6.9 8.4 8.7 6.9 11.3 12.0 11.5 7.9 Operating ratio 67 80 66 80 59 69 59 57 55 61 76 /a Appraisal estimates are in Australian $. In 1975, the Australian $ was replaced by the Kina (K). /b In 1977 ELCOM changed its fiscal year to the calendar year; hence no appraisal data are given for FY78 and FY79. PAPUA NEW GUINEA SECOND POWER PROJECT (LOAN 999-PNG) PROJECT COMPLETION REPORT Papua New Guinea Electricity Commission Comparison of Appraisal Forecasts with Actual - Balance Sheets (In thousands of Kina) Period ended: 06/30/74 06/30/75 06/30/76 06/30/77 12/31/77 12/31/78 12/31/79 Appr. Actual Appr. Actual Appr. Actual Appr. Actual Actual Actual Actual Assets Fixed Assets Gross fixed assets in operation 40,110 39,565 45,466 45,863 83,198 85,332 84,687 89,262 90,295 93,670 100,633 Less: Depreciation (9,166) (8,603) (10,852) (10,104) (13,392) (13,026) (16,093) (15,821) (17,147) (20,132) (23,045) Net Fixed Assets in Operation 30,944 30,962 34,614 35,759 69,806 72,306 68,594 73,441 73,148 73,538 77,588 Work in progress 29,197 22,716 33,263 31,114 961 1,201 1,244 1,158 1,862 5,496 10,386 O Total Fixed Assets 60,141 53,678 67,877 66,873 70,767 73,507 69,838 74,599 75,010 79,034 87,974 1 Long-term investments 4,660 5,916 5,500 5,789 6,500 6,882 7,510 3,639 3,639 3,358 5,719 Current assets 5,201 3,869 4,738 6,147 4,075 8,129 5,540 14,078 18,286 19,954 19,225 Deferred charges 574 176 1,785 749 2,691 1,212 3,300 1,668 2,693 2,486 1,846 Total Assets 70,576 63,639 79,900 79,558 84,033 89,730 86,188 93,984 99,628 104,832 114,764 Liabilities Equity 14,275 16,279 15,874 15,224 19,021 18,341 20,172 41,593 44,191 49,130 54,802 Insurance fund 1,960 - 2,180 2,571 2,450 2,983 2,700 3,889 4,325 5,036 6,114 Long-term debt 48,392 44,868 57,534 58,135 60,225 63,020 60,900 46,314 44,906 44,710 45,934 Current liabilities 4,370 1,440 2,357 1,899 1,742 2,350 1,771 1,267 4,562 4,698 6,999 Deferred credits 1,579 1,052 1,955 1,729 595 3,036 645 921 1,644 1,258 915 Total Liabilities 70,576 63,639 79,900 79,558 84,033 89,730 86,188 93,984 99,628 104,832 114,764 Current Ratio 1.2 2.7 2.0 3.2 2.3 3.5 3.1 11.1 4.0 4.2 2.7 Debt/Equity Ratio 80/20 74/26 81/19 79/21 76/24 77/23 75/25 53/47 50/50 48/52 46/54 PAPUA NEW GUINEA SECOND POWER PROJECT (LOAN 999-PNG) PROJECT COMPLETION REPORT Papua New Guinea Electricity Commission Comparison of Appraisal Forecasts with Actual - Sources and Applications of Funds (In thousands of Kina) Period ended: 06/30/74 06/30/75 06/30/76 06/30/77 12/31/77 12/31/78 12/31/79 Appr. Actual Appr. Actual Appr. Actual Appr. Actual Actual Actual Actual Sources of Funds ItLernal Cash Generation Operating & nonoperating income 2,992 1,804 3,280 2,306 4,547 4,724 4,901 8,232 4,386 8,463 5,945 Depreciation & amortization 1,652 1,478 1,892 1,625 2,540 2,894 3,135 2,774 1,424 2,923 3,195 Provision for leave, etc. 747 - 125 - 125 - 140 - - - - Total Internal Cash Generation 5,391 3,282 5,297 3,931 7,212 7,618 8,176 11,006 5,810 11,386 9,140 Borrowings 16,675 9,195 10,399 13,086 3,333 6,799 1,346 5,078 725 704 1,905 Capital contributions & advances 10 } 1,687 10 } 840 10 } 776 } 10 } 4,634 426 } 868 } 2,006 Deferred interest 626 } 341 } (1,296) } } } Total Sources of Funds 22,702 14,164 16,047 17,857 9,259 15,193 9,532 20,718 6,961 12,958 13,051 Application of Funds Construction Expenditures Upper Ramu project 18,906 9,414 } 9,422 9,723 3,872 6,375 }1,772 - - - - Other construction ) 2,419 } 4,972 } 3,182 } 3,887 1,737 7,009 11,854 Total Construction 18,906 11,833 9,422 14,695 3,872 9,557 1,772 3,887 1,737 7,009 11,854 Debt Service Amortization 314 378 270 356 257 329 642 4,630 304 635 667 Interest expense 1,453 1,467 1,881 1,573 2,995 1,803 4,032 3,780 1,954 3,639 3,441 Sinking fund 390 444 420 492 462 502 478 - - - - Total Debt Service 2,157 2,289 2,571 2,421 3,714 2,634 5,152 8,410 2,258 4,274 4,108 Increase (decrease) in working capital (446) (437) 2,537 662 337 1,531 1,465 7,756 913 1,478 (3,370) Training costs capitalized 638 1 479 1,417 } 79 1,236 11,471 11,043 665 12,053 } 197 } 459 Leave pay, etc. 1,447 1 100 } 100 1 1 100 1 1 } Total Application of Funds 22,702 14,164 16,047 17,857 9,259 15,193 9,532 20,718 6,961 12,958 13,051 Debt service coverage 2.5 1.4 2.1 1.6 1.9 2.9 1.6 1.3 2.6 2.7 2.2 z