Turkey - Second (TEK) Power Transmission Project

Document of The World Bank FOR OMFCAL USE ONLY Report No. 5304 PROJECT COMPLETION REPORT TURKEY: TEK TRANSMISSION PROJECT II (LOAN 1194-TU) October 24, 1984 Europe, Middle East and North Africa Region This document bas a restricted distibutio and may be used by recipients only in the perfornmnce of | their officisl duties. Its cotents may not otherwise be disclosed without World Bank authorization. |  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT TURKEY: TEK TRANSMISSION PROJECT II (LOAN -194-TU) Table of Contents Page No. PREFACE ........................................................ KEY PROJECT DATA ........................ ....................... HIGHLIGHTS ........................................... iv I. INTRDDUCTION .......................................... i II. PROJECT APPRAISAL AND OPIGINAL DESCRIPTION .... ........ 1 Project Origin, Appraisal and Negotiation .... ........ 1 Original Project Description ........................ 2 III. IMPLEMENTATION OF THE PROJECT ......................... 3 Loan Effectiveness .................................. 3 Change in Project Scope ............................. 3 Implementation ........ ............................. 4 Procurement ......................................... 5 Disbursement ........................................ 5 Project Cost ........................................ 5 IV. OPERATING PERFORMANCE ................................. 7 Project Facilities .................................. 7 Growth of Energy Demand and Capacity ................ 8 V. FINANCIAL PERFORMANCE ...... ...................... 9 Return on Assets and Internal Cash Generation ........ 9 Tariffs ................................. 10 Receivables from Municipalities ......................- 10 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.  PRDJECT COMPLETION REPORT TURKEY: TEK TRANSMISSION PROJECT II (LOAN 119 4-TU) Table of Contents (Continued) Page No. VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT .... ......... 11 Organization of TEK ................................. 11 Manpower Planning ................................... 12 VII. ECONOMIC EVALUATION ................................... 13 VIII. CONCLUSIONS AND LESSONS LEARNED ....................... 13 ANNEXES 1. Substations Financed Under the Loan and Commissioning Dates 2. Transmission Lines Financed Under the Loan and Commissioning Dates 3. Status of Compliance with Major Loan Covenants 4. Contracts Financed Under the Loan 5. Comparison of Estimated and Actual Cumulative Disbursements 6. Comparison of Estimated and Actual Operating Results and Plant Capacity 7. Original and Revised Financial Covenants and Actual Performanca of TEK, 1975-1981 8. TEK Financial Statements, 1974-1981: Comparison of Estimated and Actual Results 9. Comparison of Actual and Estimated Electricity Tariffs, Wholesale Price Index and Fuel Price Index, 1974-1981 10. Comparison of Actual and Estimated Investments by TEK 11. Rate of Return on Timeslice of Investment Program 12. Conclusion Section of Draft Project Completion Report Prepared by TEK Attachment A - Comments from the Director General of the Treasury Attachment B - Comments from the Ministry of Energy and Natural Resources Attachment C - Comments from TEK MAP IBRD No. 10774R1  PROJECT COMPLETION REPORT TURKEY: TEK TRANSMISSION PROJECT II (Loan 1194-TU) PREFACE This is a Project Completion Report of the Second TEK Transmission Project, for which Loan 1194-TU was approved on June 14, 1976 in the sum of US$56.0 million. The final disbursement on the loan was made on August 18, 1982, after cancellation of US$586,048.34. The Project comprised the construction and placing into operation of 380/154-kV and 154/33-kV substations, and various 380-kV transmission lines in different parts of Turkey, as well as training of TEK staff in the design and operation of the transmission system, and tariff, manpower and power system studies. The Project Completion Report (PCR) was prepared by the Europe, Middle East and North Africa Power and Energy Development Division, on the basis of; the appraisal report, supervision reports and other documents in the Bank's files, a completion report prepared by TEK, and information obtained during Bank missions in July and October, 1983. In accordance with the revised procedures for project performance audit reporting, this Project Completion Report was read by the Operations Evaluation Department but the project was not audited by OED staff. Following normal procedures, OED sent a copy of this draft report to the Government and TEK. CoLments received from the Director-General of the Treasury, the Ministry of Energy and Natural Resources and TEK are reproduced as Attachments A,B and C respectively.  - ii - PROJECT COMPLETION REPORr TURKEY - LOAN 1194-TU BASIC DATA SHEET KEY PROJECT DATA Appraisal Item Expectation Actual Total Project Cost (USe Million) 145.7 175.0 Overrun () - 7% /a Loan Amount (USt Million) 56.0 56.0 Disbursed 56.0 55.4 Cancelled - 0.6 Date Physical Components Completed June 30, 1979 June 30, 1984 Proportion Completed by Appraisal Target - 40% Proportion of Time Overrun ( - 125% Economic Rate of Return (X) 16% 5% Financial Performance - Unsatisfactory Institutional Performance Mixed Cumulative Estimated and Actual Disbursements (US$ Million) Year Ending December 31 1976 1977 1978 1979 1980 1981 1982 1983 (i) Appraisal Estimate 4.8 20.4 41.7 56.0 56.0 56.0 56.0 56.0 (ii) Actual - - 2.0 21.1 39.6 48.6 55.4 55.4 (ii) as % of (i) - - 4.8 37.7 70.7 86.8 98.8 98.9 OTHER PROJECT DATA Original Item Plan Revisions Actual First Mention in Files 9/24/74 Negotiations 5-6/75 Board Approval 11/18/75 Loan Agreement Date 6/14/76 Effectiveness Date 9/14/76 11/30/76 4/21/78 1/14/77 4/30/77 8/31/77 11/30/77 Closing Date 12/31/79 12/31/80 12/31/81 Borrower Turkish Electricity Authority (TEK) Executing Agency TEK Fiscal Year of Borrower Calendar Year Follow-on Project Name TEK Transmission Project III (Loan 2322-TU) /a Approximate. Appraisal and actual project cost not directly comparable due to changes in scope of project. /b Final disbursement made on February 9, 1982.  - iii - MISSION DATA Month No. of No. of Date of Year Weeks Persons Manweeks Report Identification 1/ Preparation 1/ - - - - - Appraisal 10-11/74 4 2 8 11/4/75 Total 4 8 Supervision I 3/76 2 3 6 4/7/76 II 10/76 3 3 9 11/24/76 III 7/77 2 3 6 7/22/77 IV 10/77 1 1 1 11/23/77, 1/26/78 V 6/79 3 1 3 7/3/79 VI 6/82 1 2 2 6/24/82 Completion I 7/83 1 2 2 - II 10/83 2 1 1 Total 15 30 COUNTRY EXCHANGE RATES Name of Currency (Abbreviation) Turkish Lira (TL) Used for Appraisal (1974) USt1 = TL 7.0 Actual-Average Rates: 1974 UStl = TL 13.93 1975 US91 = TL 14.44 1976 UStl = TL 16.05 1977 USgl = TL 18.00 1978 US91 = TL 24.28 1979 ust1 = TL 31.08 1980 USgl = TL 76.04 1981 US91 = TL 111.22 1982 UStl = TL 162.56 1983 UStl = TL 210.00 1/ No identification or preparation missions occurred. December 1983  - iv - PROJECT COMPLETION REPORT TURKEY: TEK TRANSMISSION PROJECT II (Loan 1194-TU) HIGHLIGHTS The Project was the twelfth Bank Group operation supporting the power sector in Turkey and the second loan to TEK for expansion of its electricity power transmission system. The main objective of the physical facilities of the Project was to assist TEK in the construction and placing into operation of 380-lcV transmission lines and 380/154-kV and 154/33-kV substations, as required to meet the rapid]y expanding demand for electrical energy in Turkey. This objective was largely realized. However, the Project succeeded only partially in meeting its institutional objectives. The loan financed the foreign costs of three sections of the 380-kV transmission network, totalling 507 kilometers in length, and nineteen 380/154-kV substations. Some components included in the original project scope -- the 154/33-kV substation, and two sections of the 380-kV network, totalling 167 kilometers -- were ultimately financed by other sources. Project start-up was delayed almost two years due to delays in loan effectiveness (para. 3.1), and project completion was ultimately four years later than expected. Operating performance of Project facilities has been good overall, based on experience to date. However, several project components had still not been comissioned at the time of drafting this PCR. The rate of return achieved on the 1975-1981 timeslice of the power investment program, estimated by using actual electricity tariffs was about 5%, compared to 16% as estimated at the time of appraisal. However, this is not a measurement of the economic justification of investments in power supply, but rather an indication of the inadequacy of electricity rates in comparison with the long run marginal cost of supply, and the willingness to pay for electricity. The following points may be of particular interest: (a) Loan processing and project start-up were delayed to allow TEK time to meet its obligations under the Loan Agreement (para. 3.1); (b) Design of the Project did not take into account adequately the weather conditions along one of the line routes, and as a result heavy rim ice formation caused the collapse of 17 towers (paras. 4.1-4.2); (c) Initial non-compliance with the return on assets covenant was followed by a decision to change the financial covenant, under which the adequacy of TEK's revenues would be monitored, from a rate of return on assets to an internal cash generation  covenant. The targets set by this covenant were also not fully achieved. (paras. 5.1-5.2); (d) Both the Bank and the consultants underestimated the obstacles to implementing changes in TEK's organization and personnel policy (paras. 6.4 and 6.8); and, (e) Project implementation suffered because the unit at TEK initially responsible for project management fell apart owing to staffing problems (para 8.6).  PROJECT COMPLETION REPORT TURK: TEK TRANSMISSION PROJECT II (LOAN 1194-TU) I. INTRODUCTION 1.1 Under the Ministry of Energy and Natural Resources ()ENR), the Turkish Electricity Authority (TEK) is responsible for the generation, transmission, and, since November 1982, the distribution of almost all the electricity sold in Turkey. TEK is also responsible for the implementation of the Government's program for rural electrification and the construction of all generating and transmission facilities, with the exception of hydroelectric plants. 1.2 The Bank's association with what today is the Turkish Electricity Authority (TEK) began in 1967 with a Technical Assistance grant to finance a reorganization study of Turkey's power industry. Loan 568-TU followed in 1968 to help finance Turkey's first 380-kV lines and substations to bring power from the Keban hydroelectric station to Istanbul and vicinity. Loan 763-lU in 1971, the First Transmission Project, covered the expansion of TEK's transmission system during 1972-1974. TEK Transmission Project II was the next stage of the Bank's support for TEK's transmission system expansion. It included lines and substations intended for initial operation in 1976-1979. The Elbistan Thermal Power Project (Loan 1023-TU) in 1974, involved development of an open-cast lignite mine and construction of a lignite-fueled thermal power station with four 340 MW units and related transmission lines and facilities. During the early 1970's, other Bank loans to the power sector in Turkey financed expansion of private power utilities. II. PROJECT APPRAISAL AND ORIGINAL DESCRIPTION Project Origin, Appraisal, and Negotiation 2.1 The Second TEK Transmission Project was added to the lending program in September 1974 and appraised in October 1974, as a substitute for another project (Karakaya Hydropower - Loan 1844-TU) which was experiencing processing delays. The Project was a time slice of the ongoing 380 and 154 kV program and was fully described in reports available in the Bank under the First Transmission Project. The Bank was intent upon moving quickly with a loan to TEK which would provide an opportunity to discuss TEK's structure and institutional framework with the Turkish authorities. Negotiations started April 28, 1975 and continued until June 4, 1975. Because of the short time span between project identification and appraisal, agreement on the institutional aspects of the project was left over to be reached during negotiations. The staffing situation at TEK was determined by the Bank to be critical, in particular, the low and decreasing average years of experience of the engineering staff, and the main issue during negotiations was the reform of TEK's recruitment, remuneration and overall personnel practices regarding which the Bank had requested detailed information. Discussions were further complicated when information on the personnel situation submitted during  - 2 - negotiations was at variance with the data presented to the appraisal team. Eventually, it was agreed during negotiations that TEK would undertake a manpower planning study as part of the Project (paras 6.6 - 6.8) and would send the Bank by September 30 of each year a program of staffing and recruitment for the next year together with the details of the compensation package that would assure satisfactory recruitment of staff. Furthermore, according to a supplemental letter signed with the Loan Agreement, TEK was to send to the Bank by July 31, 1976 (6 weeks after signing) "the corporate instruments providing for the establishment of new headquarters divisions and departments and of two new regional offices, their responsibilities and the delegation of authority to the heads of these units." 2.2 Board presentation of the Project was delayed, having been made conditional upon the resolution of problems with the Elbistan Thermal Project (Loan 1023-TU). Effectiveness of the Elbistan loan, which had been signed in June, 1974, had been delayed five times principally due to lack of implementation of an agreed tariff increase, and the revaluation of fixed assets in service through December 31, 1973. When Government commitment to implement an appropriate tariff increase by early 1976 appeared assured, the TEK Transmission II Project was then presented to the Board and approved on November 18, 1975. An increase in the average electricity tariff of 18% on May 26, 1976, then enabled the Elbistan loan to be declared effective June 1, 1976. Two weeks later, the TEK II loan was signed, almost a year after negotiations had been completed. Original Project Description 2.3 The Project was part of TEK's 1976-1979 development program and consisted of the following components; Part A (1) The construction and placing into operation of 380/154-kV substations with an aggregate capacity of about 2,550 MVA, principally at Kayseri, Babaeski, Istanbul II (Alibeykoy), Istanbul III (Ikitelli), Bursa, Ankara II, Eregli, Keban, Osmaniye, Osmanca, Izmir and Adapazari, comprising structures, switchgear, protective circuits, power transformers and related equipment. (2) The construction and placing into operation of 154/33-kV substations with an aggregate capacity of about 650 MVA, principally at Etibo, Ankara, Keban, Demizli, Bursa, Sivas, Kayseri, Orhangazi, Gaziantep and Adapazari comprising structures and equipment including power transformers and related equipment. Part B The construction and placing into operation of transmission lines at 380 kV between Keban and Elbistan (171 km); Elbistan and Osmaniye (174 km); Adapazari and Eregli (150 km); Babaeski and Istanbul II (200 km); and Istanbul II and Istanbul III (60 km including the Bosphorous Crossing).I/ Part C The training of TEK's engineers in the design and operation of the EHV (380 kV) transmission system. 1/ For Borrower's views, see Attachment C.  -3- Part D A tariff study embracing the electric power sector throughout Turkey. Part E A medium and long term manpower study of TEK's requirements for professional staff by year and category over a five-year period starting January 1, 1977. Part F Various power system studies. III. PROJECT IMPLEMENTATION Loan Effectiveness 3.1 The original effectiveness date for this loan, September 14, 1976, was postponed six times to April 21, 1978, almost two years after signing. While the Loan had no special conditions of effectiveness, declaring the loan effective would have immediately resulted in default in respect of several covenants having to do with the return on assets, manpower studies to be undertaken before November 1976, and TEK's problem arising from receivables due by municipalities. Thus the effectiveness deadline was postponed to enable TEK to meet its obligations under the Loan Agreement. The question of the studies had been resolved to the satisfaction of the Bank by early 1978. In order to deal with the rate of return issue, an agreement was reached to waive the covenant on the rate of return until December 31, 1979 and, thereafter to require a 5.5% rate of return on net revalued assets in 1980, to be increased gradually to 8% by 1982 (para 5.1). It was also agreed that, in view of the authority available to the Ministry of Finance to pay TEK arrears owed by municipalities, the arrears which were owed to TEK at that time should not stand in the way of declaring the loan effective. This agreement is embodied in a letter from the Bank, confirmed by the Government and TEK. 1/ Change in Project Scope 3.2 As a result of the delay in loan effectiveness, TEK was not able to use Bank financing for the 154/33-kV substations included in Part A(2) of the Project, due to the urgent need to proceed with constructing these substations. It was therefore agreed 2/ that this part of the loan be reallocated to include eight additional 380/154-kV substations in the Project, in addition to the original eleven. The substations and overhead lines ultimately financed by the Bank loan are listed in Annexes 1 and 2. Furthermore, two of tne five transmission lines under Part B of the project were ultimately financed from other sources. The Adapazari-Eregli line was financ.ed out of TEK's own resources. The Bosphorus Crossing (Istanbul II - Istanbul III) was financed by the Kuwait Fund for Arab Economic Development 1/ Letter from the Bank to the Ministry of Finance and TEK dated April 15, 1978. 2/ Telex from the Bank to TEK dated August 16, 1977.  - 4- (US $14 million). An amount of US$586,054.72 was cancelled from the Bank loan. Other sources of financing for the project included an Italian loan of 'JS$3 million, used for auto-transformzrs, and a Belgian loan of US$3 million used for current transformers. Implementation 3.3 Although the Project was part of a 1976/79 time-slice and at the tinme of appraisal was planned to be completed by December, 1979, its completion will not be achieved until late 1984. Given the generation capacity shortfall, some delay of selected lines included in the Project was justified, but not to the extent of delay actually occurring. The main constraints to timely physical implementation were: (a) the long delay in declaring the Loan effective; (b) the absence of a properly organized and continually functioning Project Management Unit within TEK to oversee project implementation, aggravated by the shortage of sufficiently experienced TEK staff; (c) the lack of consulting engineers to carry out construction supervision; (d) the difficulties encountered in site selection and expropriation of land for substations and lines; and (e) the problems encountered by TEK in retaining personnel for substations erection (done by force account) mainly on account of lower than competitive salaries, so that finally much of this work had to be contracted. The delay in deciaring the Loan effective which has been explained in paragraph 3.1 resulted not only in changes in the ploject scope but also in considerable delay in placing the orders for the substations and lines equipment. 3.4 The Project was beset with additional implementation problems in all phases, from preparation of bidding documents through coTmissioning of the different works involved. The geographic dispersion of project components would have made it difficult for one unit physically to inspect construction, but central coordination of procurement and construction timetables could still have been considerably improved. The rate of project implementation was further affected by the lack of consulting engineers to assist TEK in procurement, equipment inspection and construction supervision. At appraisal, it was felt that TEK had demonstrated by its performance under the First Transmission Project and its implementation of the ongoing 380-kV transmission program that it would be able to implement the project with only limited assistance from outside consultants. As it turned out, TEK's deteriorating manpower situation diminished its project implementation capacity. TEK employed only one individual consultant, highly competent in electrical engineering, who dealt with design problems, and was not in a position to influence the management of the project execution. Overall, the financial and organizational objectives of the project were not achieved. The status of compliance with major covenants is shown in Annex 3. 3.5 TEK's reports during progress of the Project were not designed in a manner that would permit TEK's management or the Bank to follow easily the Project's progress; the reports omitted essential information that could have permitted management to influence the implementation schedule of the different works and to forecast their completion date with greater accuracy. In this area also, the lack of assistance from a consulting engineering firm is reflected in the non-availability of a properly designed reporting system that could have greatly assisted management in monitoring the Project's progress.  -5- Procurement 3.6 -he complete list of contracts financed under the loan is snown in Annex 4. Some of the equipment procured with the Loan was not installed in the works included in the project scope (as defined in para. 3.2) but, as agreed with the Bank, was used to replenish stocks which had been depleted. It is now not possible to ascertain the end use of these supplies. Disbursement 3.7 The comparison between actual disbursements and the Loan disbursement schedule estimated at appraisal is shown in Annex 5. From this comparison it can be seen that as a consequence of the delay in Loan effectiveness, the Loan disbursements started two years later than anticipated at appraisal and that disbursement was completed 7.5 years after loan signing, but over the same length of time as estimated at the time of appraisal. Project Cost 3.8 The cost of the project as implemented amounts to USt 175.0 million of which 51 was in foreign exchange. The total cost is equivalent to US$ 115.2 million when expressed in 1974 US dollars, the price level used to estimate the base costs of the project at the time of appraisal. Table 3.1 gives a breakdown of the actual project cost, Total (A). It should be noted that TEK's cost accounting system did not provide accurate information on the foreign cost component of individual lines and stations, so that the figures provided here are estimates only. Table 3.1 Actual Project Cost (A) (In Millions of 1974 USt Equivalent) Local Costs Foreign Costs Total 3801154-kV Substations 32.0 39.0 71.0 380-kV Transmission Lines 24.0 20.0 44.0 Training and Consulting Services N/A 0.2 0.2 Tariff Study N/A N/A N/A Total Project Cost (A) 56.0 59.2 115.2 N/A = not available. 3.9 As explained in para. 3.2, the project as implemented differed from the project as appraised, consequently it is not possible to compare directly the project cost estimate CUSt 100.8 million excluding price contingencies) with the actual cost of US$115.2 million. In order to be able to make an approximate comparison of the actual cost and estimated project cost, the project -ost shown in Table 3.1 has been reduced by the actual cost of the 380/154-kV substations which were added to the project scope after loan effectiveness, resulting in an adjusted actual project cost, Total (B), as  - 6 - shown in Table 3.2. The appraisal project cost estimate must then be reduced by the estimated cost of the 154/33-kV substations eliminated from the project scope, Total (C), as indicated in Table 3.3. According to the comparison of Totals (B) and (C), the actual Project had a cost overrun of UStl.65 million, which was Less than 2Z over the Project Cost estimated at appraisal. It appears, consequently, that the base costs plus physical contingencies were quite accurately estimated at the time of appraisal. Table 3.2 Adjusted Actual Project Cost (B) Local Costs Foreign Costs Total --(In 1974 USt Million Equivalent)--- Total Project Cost (A) 56.0 59.2 115.2 Less: Cost of 380/154-kV substations added after loan effectiveness (9.0) (11.0) (20.0) Total (B) 47.0 48.2 95.2 Table 3.3 Adjusted Appraisal Project Cost Estimate (C) Local Costs Foreign Costs Total ---(In 1974 US$ Million Equivalent)- Base Line Project Cost 40.02 49.90 89.92 Physical Contingencies 6.32 4.64 10.96 Total Project Cost Estimate 46.34 54.54 100.88 (before price contingencies) Less: Base Line Cost of 154/33-kV (3.70) (2.80) (6.50) Substations Associated Physical Contingencies (0.62) (0.21) (9.83) Total (C) 42.02 51.53 93.55 3.10 In order to determine the adequacy of the price contingencies estimated at appraisal, the project cost estimated at appraisal less the 154 kV substations but including other price contingencies - Total (D) - was compared with the actual Project cost, adjusted by deducting the cost of the substations added after loan effectiveness - Total (E) - as shown ir. Table 3.4. According to these figures, price contingencies as estimated at appraisal were only 25% off from the actual impact of inflation on Project costs. This underestimation reflects basically the delay in project  -7 - implementation (para. 3.3) and higher than expected local inflation rates. The result was about a 7% cost overrun on the project overall. Table 3.4 Comparison of Estimated Costs Including Price Contingencies and Actual Costs Local Costs Foreign Costs Total (Iu Current US Million) Appraisal Estimate of Total Project Cost (D) 68.98 75.71 145.69 Less: 154/33-kV Substations (3.70) (2.80) (6.50) Associated Physical Contingencies (0.62) (0.21) (0.83) Associated Price Contingencies (2.52) (1.35) (3.87) Total (D) 62.14 71.35 134.49 of which: Price Contingencies 21.12 19.82 40.94 Actual Total Project Cost (E) 81.0 94.0 175.0 Less: 380/154-kV Substations Added after Loan Effectiveness (12.0) (18.0) (30.0) Total (E) 69.0 76.0 145.0 Difference: Total (E) minus Total (D) 6.86 4.65 10.51 Price Contingencies included in Total CD) 21.12 19.82 40.94 IV. OPERATING PERFORMANCE Project Facilities 4.1 Since most of the Project's facilities have been in service for a short period, and other components will not be commissioned until end-1984, it is difficult to assess the operating performance of the Project. However, based on the rather short observation period--ranging from a few months to two years-it is apparent that the Project's components have been performing satisfactorily, with the exception of the Babaeski to Istanbul line where ice formation on the conductors caused the collapse of 17 towers. The Babaeski-Istanbul line runs for some distance parallel to the Black Sea Coast at about 30 km inland. In this area the line is exposed during the winter to strong northern winds ladden with moisture. Conditions are such that rim ice forms easily on the conLductors. The surface exposed to wind is then greatly increased by the large rim ice formation. The resulting loading of the towers  - 8 - can exceed by far the design loads and the towers are liable to collapse. Analysis of the incident mentioned above indicated that the ice formation occurred in only very few spans directly facing low transverse valleys opening toward the Black Sea. This problem was not known at the time the line was designed but could have been anticipated by a careful study of weather conditions along the line route. L/ The damaged portion of the line was repaired by installing a number of additional towers in the more exposed locations to reduce the line spans. 4.2 The quality of the power supply to the load centers served by the Project has significantly improved with less power losses, lower voltage drop and greater continuity of service. Reliable and proven equipment has been used for the Project facilities. The operating performance of the equipment cannot be properly judged in the beginning of the Project's life cycle when it has not yet been fully loaded. Growth of Energy Demand and Capacity 4.3 Annex 6 shows the actual generation, plant capacity, electricity sales, and other variables for 1975-1982, compared with the appraisal forecast. While sales for the first three years (1975-1977) were within 2-5% of forecast sales, from 1978 onward sales began to slip much further from the forecast trend. Although the slippage of actual sales from estimated sales was as high as 16.2% in 1980 and 1981, the lower trend in energy demand was not foreseeable at the time of appraisal-October 1974, and subsequent updating in October 1975. The actual sales trend reflected the world recession during that period and the concurrent weakening of Turkey's economic situation. The slower-than-anticipated growth of installed capacity--which was expected to reach 8556 MW for the interconnected system by 1981 but in fact reached only 5188 MW--was the other major factor explaining the slippage of electricity sales. In other words, while actual demand for electricity continued to grow at a lower rate than had been forecast, inadequate plant capacity was, nonetheless, resulting in unmet demand and lower than expected electricity sales. While at the time of appraisal no purchases of power from other countries were anticipated from 1976 on, in fact it became necessary to increase steadily Turkey's electricity imports which reached almost 2,000 GWh by 1982. 1/ This problem of heavy rim ice formation is not restricted to the Babaeski-Istanbul area but occurs in other parts of Turkey with serious effects on the structural stability of transmission lines. Between 1975 and 1979 rim ice formation caused the collapse of 114 towers, out of a total 6658 towers, in 14 in idents. In all these cases, it was found that the mechanical design loadings used were insufficient to maintain the integrity of the lines.  -9 - V. FINANCIAL PERFORMANCE Return on Assets and Internal Cash Generation 5.1 It was agreed under the Project that TEK would increase tariffs as necessary to earn an annual return on a revalued asset base of 8% from 1976 onward. Although the target for 1976 was reduced to 6%, 1/ TEK was still unable to comply with this requirement, a major reason delaying loan effectiveness from November 30, 1976 to April 21, 1978 (para. 3.1). Ultimately, because of the detrimental impact that considerably higher electricity tariffs could have had on the Government's economic stabilization program, Bank management decided to waive the rate of return covenant until December 31, 1979, and thereafter to require a 5.5% rate of return in 1980, to be increased gradually to 8% by 1982. Subsequently, despite agreement on the methodology for the revaluation of assets, there was some disagreement between TEK and the Bank on the actual computation of the rate of return, mainly due to the inclusion or otherwise of certain assets in the asset base. Ultimately, the rate of return covenant was superseded. When the Karakaya Hydroelectric Project (Loan 1844-TU) was negotiated in May 1980, it was agreed to replace the rate of return covenant with a cash generation covenant, establishing targets for increasing shares of capital expenditures for power (including investments by both TEK and DSI) which would be financed out of TEK's net internal cash generation. 5.2 TSK's financial performance did not reach the levels anticipated in the financial covenants (Annexes 7 and 8). The actual rate of return on assets averaged below 3% during the 1975-1980 period. In 1981, TEK's financial performance fell slightly short of the level agreed to under the new covenant. Compared with a target ratio of 20%, the internal cash generation ratio was 19Z if decreases in working capital are included as a source of funds, as provided for in the covenant. (If working capital changes are excluded, the ratio was 12%.) To explain the financial shortfall during the project implementation period, it is necessary to look at the major trends affecting TEK's finances which were not anticipated at the time of appraisal. 5.3 Partly due to uncertainties regarding price trends, the financial forecasts were done mostly in constant 1974 prices, although some provision was made for revaluation of assets and modest increases in staff salaries; therefore, the differential impact of price changes on revenues, operating expenses and capital expenditures was not forecast. Inflation during the forecast period was high, climbing from 10% in 1975 to a peak of over 100% in 1980. The average tariff was expected at appraisal to increase 47% overall in real terms for the 7-year forecast period (1975-1981), equivalent to a 6% p.a. increase. However, the actual real increase was only 11% over the entire period, or only just over 1% p.a. (Annex 9), while TEK's base of commissioned assets was expanding at a much faster rate. Fuel price increases, which surpassed changes in the wholesale price index in 1979-1981, were not 1/ Supplemental Letter, Loan 1023-TU, dated October 16, 1975.  - 10 - recovered through tariff increases. 1/ Furthermore, appraisal estimates of the capital expenditures in thermal generation, power transmission and distribution did not prove to be accurate, when compared with actual expenditures in constant prices. TEK's actual capital expenditures were about half of the forecast level in 1975-1978, but in 1979-1981 actual expenditures were about 20% higher than forecast expenditures in real terms (Annex 10). Toward the end of the 1970s, the number of major plants under construction was expanded, resulting in an extensive drain on cash reserves. Tariffs 5.4 In parallel with the adjustments in the overall level of tariffs recommended by the Bank to meet TEK's financial requirements, changes in tariff structure were recommended to TEK in the study carried out in 1975 by a local consultant under Part D of the Project. Hlowever, the recommendations were not implemented and TEK has, at present, no plans to structure its tariffs along the lines recommended in the study. The study is now outdated and does not form an adequate basis for discussions regarding economic cost of supplying electricity to consumers. 5.5 A new tariff study is included under the recently approved loan for TEK Transmission Project III, Loan 2322-TU of June 27, 1983. The Bank will continue to press for an increase in level and improved structure of electricity tariffs so that prices may more adequately reflect the long run marginal cost, as well as provide a reasonable level of internally generated cash to finance future investment. The reduction of the SEE's financial dependence on the Government and improvement in the efficiency of SEEs are major goals of the structural adjustment program in Turkey, which The Bank has supported through four Structural Adjustment Loans (SALs I, II, III and IV). Receivables from Municipalities 5.6 The reduction of TEK's accounts receivable from municipalities was highlighted at the time of appraisal as a step important to further processing of the loan. Legislation was enacted to bring about a consolidation of debt among Government agencies, through December 31, 1973. The Government agreed to cause its agencies and municipalities to pay debts outstanding to TEK in excess of three months in accordance with a plan of action and timetable acceptable to the Bank and the Borrower (Guarnatee Agreement, Section 3.03). In fact, such an action plan was never submitted and TEK continued to have to face the problem of non-payment of bills by Government agencies and municipalities causing a serious working capital shortfall. Not until the absorption of municipal electricity distribution operations by TEK in 1982-1983 was this problem resolved. 1/ Supplemental Letter, Loan 1023-TU, dated October 16, 1975. 2/ Under Loan 1023-TU, the Elbistan Project, TEK had agreed to carry out automatic fuel cost adjustment of tariffs. (Loan Agreement, Section 5.06, dated June 24, 1974).  - 11 - VI. INSTITUTIONAL PERFORMANCE AND DEVEtOPMENT Organization of TEK 6.1 Subsequent to a reorganization study of TEK conducted by a foreign electric power utility (hereafter referred to as "Consultant A") in 1971-73 under a 1967 IBRD Technical Assistance Grant, TEK was to "complete the reorganization and staffing of its administration and cechnical structure in accordance with a detailed implementation schedule acceptable to the Bank," submitting the implementation schedule by July 31, 1976. While the recommendations of Consultant A had been approved by TEK's management in 1973, an implementation schedule was never submitted to the Bank. Some of Consultant A's recommendations have subsequently been implemented, however. 6.2 Many of the important issues highlighted by the diagnosis of Consultant A continue to be relevant today. For example, TEK had been found to be highly centralized. The General Manager, who has no deputy, is responsible for carrying out numerous administrative tasks and for clearing routine decisions, interfering with the more important responsibility of directing overall company policy. Consultant A also concluded that there was an inefficient allocation of responsibilities among the five departments of TEK, which are each supervised by an Assistant General Manager. Thermal plant construction continues to be managed separately from line and substation construction, an obstacle to coordinating the timing of construction efforts and to realizing economies of scale in the use of equipment and manpower. Training is the responsibility of the System Operation and Maintenance Department, where it is not regarded as a priority. Finally, the Board of Directors of TEK does not include managers who should be directly involved in setting company strategy. The Board has four members, including the General manager, two individuals from outside TEK nominated by two related Ministries, and only one of the five Assistant General Managers. 6.3 A major change was conceived for the System Operation and Maintenance Department, which Consultant A recommended should be managed principally through six regional offices, and coordinated only by a skeleton staff conducting research and setting policy at headquarters. Both thermal and hydro production of electricity as well as transmission facilities located in a given geographic area would be under a common authority, to enable them to share management and technical services, and to permit more effective use of scarce specialists. These regional divisions would each include several district operations units. TEK actually did set up regional offices based in three cities (Ankara, Istanbul and Izmir) between 1979 and 1982, an experiment which was partially successful, but which did not replace the strong centralized control of operations. The regional offices were closed in the light of other organizational changes following the transfer of urban distribution to TEK in November, 1982. In two of these three cases, the person who had been manager of the regional office has become the director of the newly formed regional distribution enterprise. 6.4 In conclusion, while the study of TEK by Consultant A was thorough and lengthy, including a detailed description of the proposed structure and (  - 12 - the tasks which would be undertaken by each division, it lacked analysis of the steps necessary to arrive at the new structure, and failed to treat the costs of the organizational and personnel changes recommended. It appears that TEK management and staff were not adequately involved in drawing up the recommendations, which of course diminished their commitment to carrying out these changes. Furthermore, legal restrictions on State Economic Enterprises (SEEs) constrained TEK management from implementing some of the Consultant's proposals. 6.5 In the context of a program to introduce reforms to SEE's and Public Economic Establishments in Turkey, Decree KHK/60 was approved by the Council of Ministers on May 20, 1983. Since then, the Board has been reorganized so that none of the Assistant General Managers sit on the Board 1/; this actually moves the composition of the Board further away from that recommended by the Consultant. Other implications of this Decree for TEK are not yet fully known, but a new legislative ervironment may eventually result in TEK management having more autonomy to determine its organizational structure. Manpower Planning 6.6 As required under the Project, TEK also hired consultants in 1976 to conduct a detailed manpower study. (Section 4.06 (ii) of the Loan Agreement) Historical and future allocation of staff and personnel practices were examined by the system sciences research institute of a domestic University, (hereafter referred to as "Consultant B"), in a nine-volume report submitted to TEK in September, 1977. Consultant B designed an "Integrated Manpower Planning Information System," relating existing staff levels to physical parameters. Observing that the given allocation of staff among departments was not optimal, the consultants recommended training surplus personnel and then shifting them to other departments. The study also treated other measures to increase manpower effectiveness, including the development of a performance evaluation and pay system, educational planning, and attempts to identify the causes of low job satisfaction. Without considering budget implications, Consultant B recommended wage increases which would raise TEK's overall wage bill by 50%. Given the legal wage ceiling for employees of State Economic Enterprises, the consultants recommended that TEK be placed under a special personnel law outside the general SEE Personnel Law (No. 637). This proposal may have had long-term merits, but it could not be immediately implemented by TEK. 6.7 At the completion of the manpower study, TEK appointed a committee to discuss its recommendations. However, TEK did not submit a staffing and recruitment plan to the Bank on an annual basis, as had been agreed under the Project. 6.8 The general approach of Consultant B is likely to have jeopardized the relevance of the study to TEK. Using an academic orientation rather than basing recommendations on practical experience in manpower planning, the consultants were heavily biased towards quantitative methods and analysis requiring extensive data collection and processing. For example, even in discussing training requirements, the study stresses the need for a computer tabulation of the evaluations collected after each course in order to monitor 1/ A subsequent decree of June 8, 1984 provides for two Assistant General Managers sitting on the Board but the decree has not yet (September 1984) been implemented.  - 13 - the success of training. The study relied on mathematical models to analyze the requirements, losses, supply and allocation of manpower at TEK. In order for the "Integrated Manpower Planning Information System" to be of practical use to TEK, several staff involved in personnel management at TEK would require computer training. Of course. for the model's output to be meaningful, the input data and future parameters would have to be continually updated. Finally, the consultants failed to consider adverse budgetary consequences of increasing wages and salaries without simultaneously reducing the number of staff. VII. ECONOMIC EVALUATION 7.1 As indicated in the Staff Appraisal Report, because the Project formed an integral part of TEK's power supply and distribution development program, benefits cannot be directly attributed to particular investments, but instead should be compared to a timeslice of the investment program of TEK and DSI in electric power. On this basis, using estimated tariffs as needed to fulfill the financial covenants, it was calculated at appraisal that the internal economic rate of return could be assessed at 16%, when benefits are measured by incremental revenues attributable to the total investment in the system operated by TEK and financial costs are adjusted for taxes and internal transfers. The ex-post evaluation (see Annex 11) indicated that the internal economic rate of return achieved was about 5%. However, this is not a measure of the economic viability of the project but rather an indication of the inadequate level of tariffs when compared with tariffs based on long-run marginal cost pricing. Moreover, it is likely that the incremental revenues understate grossly the benefits accrued to the users, in this case particularly the improvement in the reliability of electricity supply. The economic justification of the project must rest, therefore, upon the unquantifiable benefits derived from the integration of the Turkish electric power grid to permit bulk transfer of power from the main power stations to the main consuming areas, and the optimum utilization of thermal and hydro facilities according to their different operating regimes with resultant savings in the cost of operation. As explained in para. 3.3, not all facilities included in the project have been completed and for those in operation insufficient time has elapsed since commissioning to determine the full extent to which these benefits have been realized, but there is already evidence that the quality of power supply throughout the grid has significantly improved (see para. 4.3). VIII. CONCLUSIONS AND LESSONS LEARNED Achievement of Project Objectives 8.1 The Project's main objective was to assist the Turkish Electricity Authority (TEK) in the expansion of the national high voltage transmission network through the construction and placing into operation of 380-kV lines and 380/154-kV and 154/33-kV substations. This objective was largely realized. Three sections of the 380-kV network, totalling 507 kilometers in  - 14 - length, and nineteen 380/154-kV stations were financed by the loan, all but seven of which had been commissioned by the end of 1983. Construction of the other components originally included in the Project has also been completed, although these components were ultimately financed by other sources.l/ 8.2 The ambitious objectives of the Project for strengthening TEK's financial position and staffing situation were only partially met. Organizational and legal constraints on TEK as a State Economic Enterprise made it difficult to introduce practices associated with private utilities which could improve the efficiency of TEK's operations. Bank Performance 8.3 The Project was included in the Bank's lending program on short notice based on information already available in the Bank (para. 2.1). The design of the Project was economically justified and generally technically sound (with the exception of design problems mentioned in paras. 4.1-4.2). In regard to sectoral and institutional issues, although agreement was reached during negotiations between the Government, TEK and the Bank on an action program to resolve these issues, progress in implementing the program was limited in the deteriorating political situation and the fast-changing institutional environment marked by growing staffing, financial and management problems. In retrospect, it is clear that the Bank had unrealistic expectations of the policy changes which were likely to occur both prior to loan effectiveness and during project implementation. 8.4 The lesson to be learned for the Bank in this regard is that institutional reform cannot be divorced from the political and economic environmer-t in which the institution operates. 8.5 Another aspect of Bank performance which could have been strengthened was project supervision. Between mid-1979 and mid-1982, there was no full supervision mission specifically for the purpose of reviewing technical and institutional progress under the subject project. The geographical dispersion of project components impeded physical inspection by Bank missions. However, parts of the Project and institutional aspects were supervised in the course of missions for other power projects in Turkey. Project Management 8.6 Another lesson to be learned from this Project is the extent to which Project implementation suffered because the unit in TEK designated as responsible for project management ceased functioning owing to staffing problems. Several departments of TEK were responsible for certain stages of the Project (e.g. Engineering, Procurement, Erection), but none of these was ultimately held accountable by TEK management for the commissioning schedule of Project components, or the overall success of the Project. The administrative problems slowing Project implementation were emphasized in the draft Project Completion Report prepared by TEK (Annex 12, para. 4). 1/See para 3.2, regarding changes in Project scope.  - 15 - 8.7 In the light of the experience with project management for the Second Transmission Project, it has been agreed under the Third Transmission Project (Loan 2322-TUR) to establish a Project Management Unit, composed of TEK's Assistant Director for Transmission Lines and a team of local and foreign experts working with the newly formed consulting firm. While there is not yet adequate experience to date to assess the advantages of this approach to project management, it may to be a means to avoid the difficulties encountered under the Second Transmission Project. Financial Performance of TEK 8.8 TEK's financial performance during the implementation of the Second Transmission Project indicated that adjustments in electricity rates which maintained tariffs in real terms, but did not represent significant real increases, proved insufficient to meet the substantial financial requirements of the electric power sector. With real tariff increases averaging 1% per annum over the period 1975 - 1981, TEK was not able to earn a satisfactory rate of return on revalued assets; the rate of return achieved averaged about 3%. Fuel price increases alone surpassed changes in the wholesale price index. During the same period TEK's investment program expanded rapidly, but internal cash generation did not keep pace with the company's resource requirements, resulting in an increasing reliance on Government equity contributions. July 1984  - 16 - ANNEX 1 TUREY LOAN 1194-TU TEK TRANSMISSION PROJECT II PROJECT COMPLETION REPORT 380/154-kV Substations Financed Under the Loan /1 Name Commissioning Date Comments 1. Adapazari 1983 /2 2. Aliaga 1984 3. Alibeykoy (Istanbul II) 1984 4. Ankara II 1984 5. Babaeski 1983 6. Bursa 1983 7. Gebze (Istanbul) 1984 /2 8. Ikitelli (Istanbul III) 1983 9. Izmir 1983 10. Kayabasi 1982 /2 11. Kayseri 1982 12. Keban 1982 13. Nevsehir 1984 14. Osmanca 1984 15. Osmaniye 1982 16. Seydisehir 1984 /2 17. Seyitomer 1982 72 18. Tuncbilek 1983 72 19. Umraniye 1983 /2 /1 The 154/33-kV substations originally included in the Project were ultimately financed under other sources. /2 These substations were added to the Project definition following loan effectiveness. December 1983  -17- ANNEX 2 TURKEY LOAN 1194-TU TEK TRANSMISSION PROJECT II PROJECT COMPLETION REPORT Transmission Lines Financed Under the Loan /1 Name Length (km) Comnissioning Date 1. Keban-Elbistan 170 1982 2. Elbistan-Osmaniye 187 1982 3. Babaeski-Ikitelli 150 1982 /1 Two additional lines, included in the Project, were ultimately financed by other sources. These were the Adapazari-Eregli line (110 km) completed in 1981, and financed out of TEK's own resources, and the Ikitelli-Alibekoy- Umraniye line (57 km) expected to be completed in 1984. This last line includes the Bosphorus crossing completed in 1983. January 1984 (1582P)  - 18 - ANNU 3 Pag* 1 of 2 LOAN 1194-TU TEK TRASMSISSION PROJECT II PROJECT COMPLETION REPORT Complianco with Major Loan Covenants Section of Loan AMreement Covenants Compliance 3.03 Nationwide tariff study Prepared but not implemented. to be completed by February 28, 1977. 4.06 ti) Reorganization of TEK's Implementation schedule not administrative and submitted to Bank. technical structure in accordance with a detailed implementation schedule, due July 31, 1976. 4.06 Cii) Manpower study of T8K's Local consultant's report professional staff require- completed on schedule. ments to be completed by August 1, 1977. 4.06 (iii) Implement yearly program of Not possible to implement staffing and recruitment most of Consultant's based on manpower study. recommendations due to restrictions in State Personnel Law. 5.02 Submit audited accounts Audit Report generally not later than five months received thirteen months after the end of each after end of fiscal year. fiscal year. 5.05 TEK to earn ar 8S return on Not complied with. revalued assets. Return See Annex 7. on assets covenant super- seded by cash generation covenant under Loan 1844-TU in 1980.  -19 - ANNEX 3 Page 2 of 2 Section of Guarantee Agreement Covenants Compliance 3.03 Government to caur.e agencies Not complied with. However, and municipalities to pay electricity distribution TEK all receivables over transferred from municipal three months. Submit action ities to TEX in 1982/83, plan. enabling TEK to control all collections. February 1984 (1582P)  ARM4 -20- l4f 2 UMW 1194-W 1u _41M Pw IE ecr a r2L= S Ctz.t Pinia Thder tie Tin CantrectsFmcd iTA Tt h~~~~~~~cntmott Qmtity Pmn mm M3. ED ti CDs$) Date 1 CuC bria 38D-W 12 pes 2,036,298.60 d 1976 Delivery cmplete 2 Capacitie potentisl erfouur line otcg uit, 38D W 277 pcs 1,919,385.87 Dacerher I76 Delivery cmplete 3 DiScmact suidter, 380 W 39% pes 2,359.556.21 Dcbe 1976 Delivery cmplete 4 LnMJlabru hr diacomect switdhs, 381 W 2,770 pce 1,777,156.29 1-I l976 Delivery acolete 5 Peat insru1 ., 387 k 1,100 PCa 747,365.93 Der 1976 Delivery cmlete 6 li*ibrlg arresters, 3W W 102 pc 800,579.9 Juray 1977 Delivery ilete rasitity mmincumaed in cntrcet.eteam dated Octbdw 978. 7 PAer t Fi 38D W (1-150 MO 20 pes 11,385,585.92 Ahril I977 Delivery caclete 8 Shunt ren:s, 38D kV 7 p:s 2,606,847.71 July 1977 livy comple 9 Post ilatmrs, 38) W 640 pcs 450,63D.17 Deasrer 1977 Delivey Wlete 10 Circuit baees, 380 W (a) 16 pcs 1,376,856.00 lay 1978 Delivery cWlete (b) - 3,143,573.97 - Delivey cwPplete (C) 44 pCa 3,737,313.60 Hay 19;8 Delivey coplete 11 Trazianissico lie insulators and hardke, 38D W 190,000 pcs 1,723,521.25 - Delivery complete 12 Spy.. p1mdnzg tes Por - ,818.74 - Delivery omplete 13 System studies - 41,453.35 August 1975 Delivy coWlete 14 Trmdssizn line cmdjtce, 38D W 3,225 tea 3,565,653.53 Mardh 1978 Delivery compete 15 Trarnuia line ams,cta. 38) W 3,225 t- 3,538,94&.10 March 1978 Delivy coplete  - 21- AN 4 Page 2 of 2 -T 1KWMOMN lW44 EXU 3 MBIRAIfISIXl MEPK CtmCts Finaned UIhw th am Item QWntity brnt Cutra g3 D,rpto e r (US Dae Pmwrks 16 Vibcan d h.ch.ee, 38) I 150 pcs 462,968A3 October 1978 D1eivery cuxlete 17 Dtuwlar6 baw, A1afmm lO,2) pCs 252,3)1.35 Octder 1978 Delivery campere is Sbmnt rers, 15.8 w 13 pes 482,232.07 Octbaer 1978 Delivery cmIlete 19 swms cqmcirnr 3WD kV 6 pcs 4,998,011.8D Apil 1979 Delivery caWpete 20 PRcoctive delad. _ isat Sn adjacent 3W-RW Liam 35 pes 3M,22.28 Dma 1978 Delvery cawlete 21 Pmtetive reays, 38-W nm1 lines 43 pes 532,2Z3.27 December 1978 Delivey czple 22 Ptotaeeve relayirg. lat 4,255.866A2 December 1978 Delivdy emplate FMC equipt, Only $3,498,747.1 u,tdd,od equip- fine by IMD -t & eiiern 23 Distwrbaice recorders 42 pcs 246,143.17 Deber 1978 Deliery c-plete 24 Eltensia ordar diacce,,t s.ites 38D Id 16 pes 144,668.28 Dwer 1978 WDliy c-plete 25 Cuplig eapaceitrs 2? pcs 187,707.55 Demer 1977 Delivery czlete 26 Circuit bre*"s 5 pes 113,990.14 July 1979 Deliery caqplete 27 Dj1:fic stability Ir- p.duw lot 65,]O0.O0 - 28 Tednical does. lot 59,955.27 - Applied for *12,001,429 29 Tr rmiaia lime steel lot 1,814,748.81 - Delivery acWlete 3D Tr1aiai line steel Iot 252,409.15 - Delivery ca,lete lNAL 55,478,909.92 of wich, M= 55,413,951.66 1983 (1582)  - 22 - ANNEX 5 TURKEY LOAN 1194-TU TEK TRANSMISSION PROJECT II Schedule of Disbursements (US$ Millions) Appraisal Actual Actual as Z of Quarter Ending Estimate Disbursements Appraisal Estimate 1976 June 30, 1976 0.93 - 1977 September 30, 1976 2.79 - December 31, 1976 4.83 - March 31, 1977 7.87 - June 30, 1977 10.94 - - 1978 September 30, 1977 15.32 - - December 31, 1977 20.44 - - March 31, 1978 25.56 - - June 30, 1978 30.69 2.0 6.5 1979 September 30, 1978 36.18 6.8 18.8 December 31, 1978 41.67 12.7 30.5 March 31, 1979 47.16 17.4 36.9 June 30, 1979 52.64 21.1 40.1 1980 September 30, 1979 54.70 27.0 49.4 December 31, 1979 56.00 30.0 53.6 March 31, 1980 56.00 35.4 63.2 June 30, 1980 56.00 39.6 70.7 1981 September 30, 1980 56.00 43.2 77.1 December 31, 1980 56.00 44.5 79.5 March 31, 1981 56.00 46.8 83.6 June 30, 1981 56.00 48.6 86.8 1982 September 30, 1981 56.00 50.4 90.0 December 31, 1981 56.00 53.1 94.8 March 31, 1982 56.00 55.3 98.8 June 30, 1982 56.00 55.3 98.8 1983 September 30, 1982 56.00 55.4 98.9 December 31, 1982 56.00 55.4 98.9 /1 /1 About 1Z of the loan amount was cancelled (USt586,048.34). December 1983  AN 6 -23 - TUE1Y LoN 11944 PK TNSISSICN P3JBCr II P~mr aQQ~mI iE?om Cauparison of Appraisal Estimae and Actual Operating Results and Plant Capaity Gwth Rate 1975 1976 1977 1978 1979 1980 L981 1982 1975-81 1978-81 GEMPR=(N ( '000 GWE) Appraisal Estimate 12.3 15.2 17.8 20.5 22.8 24.9 26.9 - 13.91 9.5 Actual 12.8 15.5 17.2 18.0 18.9 19.4 20.6 22.9 8.3X 4.6X POSER PUIAES ('000 CWh) Appraisal Estinmte .5 0 0 0 0 0 0 0 Actual .6 .7 .8 .9 1.2 1.5 L8 L9 LOSS ('000 GIi) Appraisal Estimate 1.3 1.5 1.8 2.1 2.4 2.6 2.8 - Actual 1.2 L6 1.8 2.0 2.2 2.3 2.3 2.1 SES ('000 Wh) Appraisal Estimate 11.5 13.7 16.0 18.4 20.4 22.2 24.1 - Actual 12.2 14.6 16.2 16.9 17.9 18.6 20.1 22.7 AVERAM INtE (IU1Ia) Appraisal Estimate .39 .47 .54 .54 .55 .58 .58 - Actual .40 .45 .62 .92 '.26 3.32 4.91 6.40 PAE CAPA= (HO Appraisal Estimate 3,850 3,855 4,305 5,643 6,724 7,392 8,556 9,573 Actual 4,175 4,364 4,747 4,868 5,119 5,119 5,188 6,363 Deceier 1983  LAWN l11WI N muaunmr Orgnal and levued Finamal CoAi ad Actual Pufoa of M (1975-1981) FDWCIAL UVWN I ML PENEUl Return iteml Cah Awe Neit Not NC ltwm Cash a Geuratiat Ruenliui Aaata)s qprtirg DSI Poie Ca Return ciAsets /1 GeiemTtr Ratio /2 A ts Ratio in Senice 1 hzwebot GaUration 1975 - - 2.62 72 23,952 /3 612 6,796 489 1976 62 - 3.22 171 31,465 /3 1,010 11,397 1,936 1977 ex - 3.32 111 51,186 /3 1,683 16,278 1,859 1978 82 - 3.52 a 8),766 /4 2,785 25,W9 1,469 1979 2 - 1.1% 92 112,497 1,253 55,557 5,046 L983 82 - 2.0E 172 216,752 4,287 106,538 17,995 1981 - 211 2.82 12S 352,344 9,960 170,0OD 21,547 /1 Acodirg to Low Age t fOr 1a 119 , saip Jtm. 14, 1976. 71 As wvaed, ac=owd to Low Agramt for Lts 11144-J sWi lly 21, l9D. 7T As show in PCt for Lcu 56-'IU a 763-IU, dated Dwer 30, 191 (AtLtt 8). 7T Au Aam in Full &qvbielm PIot for Lem lWII*U, daed July 5, 1979 Ama 3). 7 Gross imam plaza diipuwLtbim wa ia tae t s, lus dbt e vice, a given in adit qpotts. Decar 1983 (1582P)  ItKa IN116 6AW1 1975-19B1 C narim of Avpraimal Cntiz.te with Actual /1 (In Hllicr of TL) 1975 1976 1977 1978 1979 1980 1981 Eatisted Actual Eathimted Actual Eatimted Actual Etitmted Actual Eatntsi Actual Eutit d Estid kbl Sales - M 11,500 12,183 13,650 14,640 16,008 16,213 18,410 16,897 20,398 17,956 22,227 18,624 24,145 20,090 Average Paem 58.0 491.0 (Kuwru6/) 38.8 40.1 46.8 45.3 54.2 61.8 54.2 91.8 55.0 125.6 58.0 332.0 Operatirg Revem 4,456 4,882 6,381 6,637 8,668 10,017 9,969 15,516 11,219 22,557 12,892 61,829 14,00. 98,495 Operatim, Exsea Coal 186 207 175 219 164 400 117 774 40 1,004 50 2,918 so 3,858 Lignite 216 106 375 151 436 225 636 873 926 2,104 1,292 4,769 1,539 9,932 Fuel Oil 1,033 1,203 982 1,142 1,441 1,622 1,328 2,431 1,129 4,488 586 13,946 I19 21,039 Gas Oil 582 550 307 460 307 1.542 307 1,378 - 1 171 - 5587 - 9 912 Total hl 2,017 2,06 1,839 1,972- I;I 3,789 2,3B8 5,456 2,095 eST 1,528 27,290 1,728 gl7i8 Purthased Pwer 171 519 - 480 - 376 - 997 - 1,247 - 3,173 5,818 )hterials Other than Fuel 56 49 60 185 65 139 70 247 85 313 92 763 96 2,339 Waas & Salries 445 486 524 851 633 1,197 n6 1,980 987 2,645 1,077 5,418 1,292 7,008 Miscellane Eqenea 72 74 78 59 82 I12 85 146 91 333 93 609 97 968 Depreciation /2 946 929 1,201 1,251 1,351 1,893 1,560 3,045 2,107 6,185 2,525 13,479 2,80O 19,004 Iedirct Tom 8 8 8 38 10 13 13 14 15 15 16 29 is 78* Imm Tom 79 139 867 791 1394 825 1.436 846 1,575 1.799 2.049 6.790 1,975 8,582 Total Operatitg ENpes 3,794 270 4,577 5,627 5,883 8,334 6,268 12,731 6,955 21,304 7,790 57,542 8,096 ,5 Net Oeratlre Imcm 662 612 1,804 1,010 2,785 1,683 3,701 2,785 4,264 1,253 5,112 4,287 5,908 9,960 Otier Imc2e Net of Eees (167) (47) (73) (166) (73) (520) (549) (1,345) (376) (1,72 (363) (1,312) (271) (1.732) Gross Incm 495 565 1,731 844 2,712 1,163 3.152 1,440 3,888 ( 519 ) 4,749 2,975 5,637 8,228 Total Interest Quhgea 522 708 874 980 1,603 1,323 2,285 1,886 2,709 2,329 3,075 6,213 3,316 15,223 Less: Interest aisqed (138) (337) (356) (492) (840) (735) (1,141) (1,141) (787) (1,023) (1,191) (Z,887) (441) 4269) to Comtnctinm Net Intereat Oaurgea 384 371 518 488 763 588 1,144 1,099 1,686 1,118 1,884 3,326 2,875 10,954 Net Incma II 194 1,213 356 1,949 575 2,008 341 2,202 (1,637) 2,865 (351) 2,762 (2,726) L All eatinted fiwma are in constant 1974 prices. All actual figume are in curunt pnices. 7 Depreci atim is calculated an the bais of rwlu.d asueta in service. December 1983 (1582P)  MR*: MUZ BWS 1975-1981 Carison of Awraisal zatte with Actusl /L (In Hillicms of WIJ 1975 1976 1977 1978 1979 1980 1981 Eatimsted Actual Estimted Actual Emtimted Actual Estimnted Actual Estiasted Actual Eataited Atal Eatuzted Actual AS Fixed Asets in Service 33,867 22,238 41,241 26,657 45,739 51,260 57,655 91,359 71,693 100,545 83,615 114,948 93,175 148,101 LIns: Accum. Depreciatio 6,8m 5,860 7,819 7,0 _9170 11.990 10,730 23,306 12,837 27,398 15,362 32.360 18.252 37,995 Net Fixed Aseta in Service 27,065 16,378 33,422 19,1.54 36,569 39,270 46,925 68,053 58,556 73,147 68,253 82,588 74,923 110,106 Workion-Progrea 7,415 5,869 13,954 10,279 23,268 16,187 24,058 28,373 19,164 57,204 16,297 130,383 22,557 253,879 Other LaUtenr Aeta 810 304 691 303 546 357 420 463 423 325 429 415 443 764 Oirrent Asets and Deferred Debits 1,915 4,155 2,194 6,C3 2,220 7,879 2.465 12,792 3,667 21,358 4,421 _39,529 3 69,545 Total Aets 37,205 26,706 50 262 35768 62 63,693 73,86 109,681 82,110 152.034 89 400 252,915 , CAPrTAL AND LIABIUXrES Capital 13,043 6,007 17,778 6,656 17,803 13,09 22,569 13,990 24,220 16,215 25,146 37,2M0 32,235 76,370 Resrves 103 257 279 469 562 766 853 1,070 1,172 1,759 1,587 4,111 1,987 6,975 Retained EamrbEs 605 384 1,642 384 3,308 384 5,m5 384 6,908 - 9,358 8,338 11,720 16,191 Capital aarplu Fro 10,576 7,848 11,504 9,960 11,504 22,EZ2 11,506 51,755 11,506 53,151 11,506 53,151 11,506 54,672 Raluatia Villep Ulectri- cation Fau d - - - - - - -- - - 19,570 Total Capital 24,327 14,496 31,203 17,469 33,177 37,781 39,953 67,199 43,806 71,163 47,597 12,967 57,448 173,778 Lo-ten,m Debt - Local 6,279 5,911 6,780 8,669 8,617 11,306 9,181 17,099 10,605 25,955 9,504 26,961 9,512 42,936 Foreign 4 172 2 372 9585 3 402 17,145 4 774 20 942 10133 24 144 31 8S 28118 70,529 - 112,500 Total 11 - 1 XT7 5 1 V *m 3fi 7f 9,4 39,359 155,436 Less; Due in One Year (755) - (330) - (385) _ (564) . (692) (853) (5.229) (1 041) (U) 556) Net LaWterm Debt 35 - - 29,539 - 34,057 - 36,769 92,261 38,31 Curraent Liabilitius 2,326 2,784 2,1.35 4,664 3,064 8,C06 3,343 12,403 3,102 20,059 3,728 48,910 3,99 10D,719 Other Liabilities 856 1,143 889 156 95 1.826 1m33 2,E47 1,145 3,017 1,306 8 77 1,484 14 917 Total Capital a8n Liabilities 37,205 26,706 50,262 35 62,603 73,868 , 152,04 229 101,244 434,294 /1 ALI estinted figu are in cctanrt 1974 figuru. All actual figurs am in cuTet prices, m sham in NiAe rports, vitheut revaluttiar Decber 1983 (1582P) wh  TM. suDm1 C StF AND APWLICAIMI6 CF FL6 1975 - 1981 Cearricn of Amrisal Eatimte with Actual /1 (In Hillian of TL) 1975 1976 1977 1978 1979 1980 1981 Eat htmi Actubl Esetzmtsi Actual Estimted Actual Esthated Actu Eat ~tedtmA l Estiimate Actn Zstad ActaLl SwFJ or FUI littrnl Cuh Geamration Grc. Imam 495 565 1731 8V4 2,712 1,163 3,152 1,440 3,e88 (519) 4,749 2,975 5,637 8,228 Plus. Depreciation 946 929 1,201 1,251 1,351 1.893 1,560 3 045 2,107 6.185 2.525 13.470 2.9 19 nj4 Total lIttenl Cuh J_ GTe1ntlon 1,441 1,494 2,932 2,095 4,063 3,056 4,712 4,485 5,995 5,666 7,274 16,445 8,527 27,232 Local - State Inyt. Bark 2,3D9 2,207 1,051 3,070 2,C05 3,792 760 8,449 1,619 9,870 - 1,709 208 16,73D (DYB) and Other Freign - Total 2 093 313 5 618 1 179 7 m 1,651 3 986 5,466 3,591 219 - 39,900 Total Borrowid 2,5I0 7 Y17 53 4 13, 5,21 I 4,4 7,5 Vil!w elet ifiti .ui t - 32,471 O;m-m Catibutionb Capita l iteaaw - 911 2,000 44 - _ 1,500 - - 943 - 16,849 - 38,285 Other Scaurz (623) - 452 - 1,156 - 345 _ (211) - 652 18,061 277 _ N ToIta of Fv ; ; 4,925 b 638 8.4T 18,40D 38.473 w11 TEM ____ Cast,ction RamuVWgrits 4,778 3,269 10,434 5,986 13,787 7,e69 9,438 14,105 7,493 33,497 8,129 76,538 8.731 130,253 duirE cmtwctio) Debt Service Lcl - m 6othr Wm9 645 600 313 168 1,155 196 2,656 195 1,014 1,101 703 200 755 Foreign - Total 159 128 155 149 162 279 189 107 389 287 512 1,211 681 2 555 Total Prinpal 48 7m 755 162 330 1,434 385 2,763 584 1,301 1,613 1,914 -WI ;3.31 Irterut 522 708 874 980 1,603 1,323 2,285 1,886 2,709 2,329 3,075 6,213 3,316 15,223 Lmai Oued to (138) (337) (356) (492) (840) (735) (1,141) (787) (1.023) (1.211) (1191) (2.887) (441) (4269) Net Intzmt 384 371 518 488 763 588 1144 1 099 1686 1118 1 884 3 326 2,875 10 954 Total Dbt Service 872 1,144 1,273 950 0 2,0 vi t7 * f w tt 3,756 R Other Roqdrtvs, Not of t /2 5 (430) 5 346 6 548 ) 66 (1.392) 336 433 1.231 2.27 786 11.206 (1.Q,05) 8,727 Tot l Appitcaticn 5,220 4,925 12.053 6.38 14.946 8.499 11,303 18,400 10,94 38,473 12,412 9 11,412 1S3.244 /1 All esti-td fiegsc an in cmutant 1974 price.. All etual flg.a m in currt prices. o /2 Ircluii dise in xi capital. w Douber 1983 5u)  - 28 - ANNEX 9 TDK TANRISSMN PW fI RID= COICN REWW Ccpajrisax of Acual and Estinated Electricity Tariffs, Wolesale Price Index and Fuel Price Index, 1974-1981 Estinated Average Wholessle Actual Average Tariff Tariff Price Fbel Price (luzus/kWh) (krus/kWb) Indec Indlex In Qfrreit In Conestnt 1974 /1 In comtant Prices Prices 1974 Prices (1974 - 1OD) (1974 = 100) 1974 39.4 39.4 39.4 100 0D0 1975 40.1 36.5 38.8 110 106 1976 45.3 35.7 46.8 127 110 1977 61.8 39.1 54.2 158 128 1978 91.8 38.1 54.2 241 269 1979 125.6 3L9 55.0 394 482 198) 332.0 40.6 58.0 818 1,301 l181 491.0 43.9 58.0 1,118 1,726 /1 Adjusted by %holesale price index. December 1983  - 29 - ANNEX 10 TURKEY LOAN 1194-TU TEK TRANSMISSION PROJECT II PROJECT COMPLETION REPORT Comparison of Actual and Estimated Investments by TEK in Electric Power /1 Actual as Actual Power Investments Estimated Investments % of (In Current (In Constant (In Constant 1974 Estimated Prices) 1974 Prices)/2 Prices) Investments ------------------Millionsof TL---- 1975 3,261 2,972 4,778 62% 1976 5,986 4,714 10,434 45% 1977 7,869 4,980 13,787 36% 1978 14,105 5,853 9,438 62% 1979 33,497 8,723 7,493 116% 1980 76,538 9,357 8,129 115% 1981 130,253 11,650 8,731 133% /1 Includes investments by TEK only, as DSI investments in hydropower generation were not estimated in the appraisal report. /2 Adjusted by wholesale price index. December 1983  -30 An 11 D 3wmassm PA= n Calculatijc of Internal Econosic Rate of Retrn for the 1975-1981 Tiumalice of Capital Eftedituxru in Electric Pow (In Mllca of TL, 1974 Purlaixg Posr) 1975 1976 1977 1978 1979 198D 1981 Inustmts: Costs (mit of dties and taxes) - MEIC 2,971 4,704 4,990 5,860 8,490 9,361 11,651 - DSI 1.466 1,870 2_ 33 2,81 3.329 3,669 4.115 Total Ius t Cost 4,437 6,574 7.925 8. A2 11,819 13,030 15766 Sles Pvemuea: Inrease in caumpticm related to inlesteltS (Oh) 1,944 4,401 5,974 6,658 7,717 8,385 9q81 Avere remues (Izus/Mi) 40.1 45.3 61.8 9L8 125.6 332.0 49LO Total RBveaj 780 1,9!4 3,692 6,112 9,693 27,838 48,319 Revemze defl to 1974 Purciairg Posu 709 1,567 2,341 2,539 2,456 3,4015 432 Irresse in fuel eqa es: (a) deflated by the wo1esa1e Price Ine (336) (683) 170 34 (U) 1,105 1,769 Cb) deflated by the Fuel Price IldeK (287) (447) 719 (210) (415) (135) (360) Increase in otber qieratizg eqxpes 92 307 450 524 372 368 461 Fuel Fuel Ineus- E tzy Eib usp Expms Otier 1t E Net Cah Flw yea Cost Pmniuse (a) (b) Eqes 7 N) tb) Reves ( (b) 1975 4,437 251 (336) (287) 92 4,444 4,493 709 (3,735) (3,784) 1976 6,574 156 (683) (447) 307 6,354 6,590 1,567 (4,787) (5,023) 1977 7,925 17 17 719 450 8,562 9,111 2,341 (6,221) (6,770) 197* 8,742 L93 34 (210) 524 9,493 9,249 2,539 (6,954) (6,710) 1979 11,819 95 (11) (415) 372 12,275 11,871 2,456 (9,819) 9,415) 1980 11,030 167 1,105 (135) 368 13,934 13,430 3,405 (10,529) (10,025) 1981 15,766 299 1,769 (360) 461 18,295 16,166 4,322 (13,973) (11,8b4) 1981-2011 - 299 1,769 (360) 461 2,529 400 4,322 1,793 3,922 Internal Rate of Rebun: (a) (0.23)Z (b) 5Z Note. Figures beeex braikets are ttixve. Desmber l93 (L5W)  -31 - ANNEX 12 Page 1 of 4 TURKEY LOAN J194-TU TEK TRANSMISSION PROJECT II PROJECT CONFLETION REPORT Conclusion Section of Draft Completion Report Prepared by TEK 1/ 1. Introduction This document consists of additional comments to TEK's Final Report on Transmission Project II financed through IBRD Loan No. 1194-TU. Moreover, some minor errors in the breakdown list of the above mentioned report have been determined and a revised breakdown list as well as other essential tables have been annexed. 2. Change in the Scope of Project The scope of the project to be financed through IBRD Loan No. 1194-TU was defined in Schedule 2 of the Loan Agreement. The construction and putting into operation of 380/154 kV and 154/33 kV substations were foreseen in Parts A(1) and AM2) respectively. 2/ Due to the delays in coming into force of the Loan Agreement and the subsequent developments, the original scope of the project was modified. The urgent need for the service of 154 kV substations necessitated the procurement of equipment for three substations, before the Loan Agreement came into force. Hence the 154-kV substations stated in Part A(2) have been excluded altogether from the scope. The part of the loan allocated to Part A(2) has been used to finance various 380 kV substations additional to those covered in Part A(M) all of which have prime importance in the overall Turkish Energy System. 3/ The tariff and manpower studies within the scope of Part D and Part E of Schedule 2, respectively, have been partly realized. Once the present conditions dictate a modified essence for these studies, they are foreseen to be covered under TEK Transmission Project III. 1/ This note was sub itted by TEK, partly in July 1983 and partly in October 1983. It accompanied a report showing the physical implementation schedule of each project component. 2/ Loan Agreement dated June 14, 1976, P. 13. 1/ IBRD telex dated August 16, 1977.  - 32 - ANNEX 12 Page 2 of 4 3. Delays The major delays have resulted basically from two orders: namely EHV series capacitors by ASEA under 103-ST/307 and EHV protection systems by BBC under 109-ST/314C. Because these two orders cover engineering services as well as equipment, the finalization of designs and procurement of equipment have both been later than aimed. A more or less detailed account of t;he above mentioned delays have been covered in TEK's Final Report. 4. Lessons to be Learned The following comments, related with problems encountered in the execution of the overall project, can be added to those already included in TEK's Final Report. (i) If IBRD and TEK purchasing departments ensure conformity in certain periods about the actual disbursements, it will be useful to keep track of the loan so as to prevent over and/or under usage of the loan; (ii) Tracing of the disbursements by TEK shall be facilitated if the documents of disbursements are submitted directly to TEK's Purchasing Department; (iii) To ensure healthy operation and tracing of the loan, TEK needs a reorganization within its own structure. TEK's technical operations have suffered because of its inability to employ and retain the service of experienced and competent personnel, which in turn result in delays. A coordination must be established between the departments of TEK that are related with the Project execution (e.g., TEK needed extra time to check drawings, and then correction of drawings was delayed.) (iv) It will be useful for those departments of TEK engaged in material procurement, to establish a team to pursue material flow as well as related disbursemerts. TEK Erection Department, responsible for withdrawal of Aaterial from customs, must inform the relevant departments about missing and/or defective units as soon as possible.  ANNEX 12 - 33 - Page 3 of 4 (v) On some occasions, suppliers send shipping documents long before the material is ready for shipment, which in turn results in early disbursements. This situation creates problems in customs as well. (vi) Delays resulting from variots reasons on suppliers' behalf have adverse effects on the execution of the Project. (vii) The existing regulations in the country, make it extremely difficult for TEK's experts to participate in the technical discussions during the finalization of the design and to attend acceptance tests. (viii) When compared with other loans available to TEK, the IBRD loan possesses outstanding advantages. The loan has enabled TEK to have responsive bids and facilitates the payment procedure, minimizing the problems that might have otherwise arisen between TEK and its suppliers. Cix) With respect to the utilization, the IBRD loan provides important facilities to TEK when compared with other loans. This in turn minimizes the problems between TEK and its related suppliers especially from the viewpoint of disbursements. 5. Breakdown List The "Breakdown List" prepared by TEK and included in the Final Report of June 1983 related with the IBRD Loan 1194-TU, has been revised. As can be realized from an inspection of the above mentioned list, the actual payment within the framework of the IBRD loan has come out to be US$55,413,945.28. The same amount appears as US$55,413,951.56 in the "Breakdown by W/A for Loan 1194-TU" of IBRD dated June 16, 1983. The difference of US$6.38 between the two figures has been concluded to result from round-off errors. As already known, the difference of US$586,048.34 between the loan amount of US$56,000,000 and the mentioned actual payment of IBRD constitutes the undisbursed balance. 6. Additional Lessons to be Learned - Difficulties encountered in site selection and expropriation for the substations haire created various problems which in turn have resulted in 1 to 2 years additional delays in the project execution. A substantial reform seems to be essential in the related procedures to expedite these activities.  ANNEX 12 34 - Page 4 of 4 - Various difficulties evolve in stock keeping of the materials and equipment procured locally and/or abroad. Sufficient storage facilities, in terms of appropriate location and number, are not available. An improved and computerized stock control mechanism as well as accounting system should be established. - At the initial stage of the loan agreement, TEK used contractors for civil works, tower supply and erection of the transmission lines since their magnitude made it desirable. Meanwhile, the substation installations of this project were mainly executed by TEK staff, i.e., TEK Erection Department, the performance of which was satisfactory then. Gradually, however, the services of competent and experienced personnel could not _e retained due to various reasons, which in turn resulted in further delays. As such additional delays could not be tolerated due to the urgent need for the servicing of the substations; TEK decided to contract the substation erection works to private contractors. December 1983  -35 - ATTACHMENT A COMMENTS FROM THE DIRECTOR GENERAL OF THE TREASURY MR. 0. MAISS, ACTING DIRECTOR OPERATIONS EVALUATION, INTBAFRAD, WASHINGTON REYOUR LETTER DATED JULY 30, 1984, REGARDING THE DRAFT COMPLETION REPORT OF TEX II, TRANSMISSION LINES PROJECT, WE HAVE NO OBJECTION TO THE CONTENTS OF THE ABOVE MENTIONED DRAFT REPORT. HOWEVER, ACCORDING TO TEK'S RECORDS THE LENGTHS OF THE TRANSMISSION LINES FINANCED BY THE LOAN (ANNEX 2) ARE AS FOLLOWS: AAA - KEBAN ELBISTAN 170 KM BBB - ELBISTON OSMANIYE 174 KM CCC - BABAESKI-IKITELLI 150 KM ALSO THE LENGTHS OF THE ADAPAZARI-EREGLI AND IKITELLI ALI- BEYKOY - UMRANIYE TRANSNISSIONLINES ARE 150 KM AND 57 KM RESPECTIVELY. I WOULD ALSO LIKE TO INDICATE THE MINOR PRINTING ERRORS WHICH TAKES PLACE - AT ANNEX 4 PAGE I of 2 OF WHICH THEIR CORRECTED FORMS LISTED BELOW: ITEM NO QUANTITY EACH CONTRACT AMOUNT A - 14 3,225 -TON 3,565,653.53 A - 15 3,225 -TON 3,538z944.1O REGARDS A.T. YORUK ACTING DIRECTOR GENERAL OF THE TREASURY 21.9.1984 36134 42285 MLYE TR  - 36 - ATTACHMNT B RCA SEP 24 03140 WORLDBANKA WSH 43287 ENER TR OTTO MAISS, ACTING DIRECTOR OPERATIONS EVALUATION DEPARTMENT THE WORLD BANK, 1818 H STREET, N.W. WASHINGTON, D.C. 20433, USA RE: PROJECT COMPLETION REPORT ON TURKEY: TEK TRANSMISSION PROJECT II (LOAN 1194-TU) DEAR MR. MAISS THE DRAFT OF PROJECT COMPLETION REPORT ON TEK TRANSMISSION PROJECT II, LOAN 1194-TU, HAS BEEN RECEIVED ATTACHED TO YOUR LETTER DATED JULY 30, 1984, AND HAS BEEN EXAMINED THOROUGHLY. THE DRAFT REPORT HAS BEEN FOUND SATISFACTORY AND THERE IS NO OBJECTION FROM OUR SIDE AGAINST PUBLICATION OF IT. SINCERELY YILPAR KAYNAK ASSISTANT DEPUTY MINISTER MINISTRY OF ENERGY AND NATURAL RESOURCES  - 37 - ATTACHENT C ZCZC DIST3743 JWB0834 OEDD2 REF: TCP HO JWS0834 JBY004 IN 25/02:19 out 25/02:25 24.9.1984 TO THE ATTENTION OF MR. OTTO MAISS IN REFERENCE WITH YOUR LETTER OF JULY 30, 1984 ON PROJECT COMPLETION REPORT ON TURKEY: TEK TRANSMISSION PROJECT II (LOAN 1194-TU) WE HAVE GENERALLY NO OBJECTION TO THE DRAFT EXCEPT THE FOLLOWING MINOR POINTS: EMENA Region PAGE CLAUSE COMMENTS NOTE IV HIGHLIGHTS FIRST PARAGRAPH, 10th LINE FROM THE TOP PCR, para.1 "545 KILOMETERS" SHOULD BE "507 KILOMETERS of High- lights revised. 2 2.3 PART B THE CONSTRUCTION AND PLACING INTO OPERA- TION OF TRANSMISSION LINES AT 380 KV This is BETWEEN KEBAN AND ELBISTAN (170 KM) not con- ELBISTAN AND EREGLI (110 KM) BABAESKI fined by AND IS-TANEBUL II (150 KM) AND ISTANBUL II