Jordan - Third Power Project

Document of The World Bank FOR OMCIAL USE ONLY Repwt No. 5172 JORDAN PROJECT COMPLErION REPORT THIRD POWER PROJECT (LOAN 1688-J0) June 28, 1984 Power and Energy Development Division Europe, Middle East and North Africa Region I wh docnent has asiced diso d my e used by repient in the pfarfunce of| their ofllmi doi lb eotaf may not admerw be duids1ed wittm World Blc ztionxon.|  FOR OFFICUIL USE ONLY JOBDAN PROJECT COMPLETION REPORT THIRD POWER PROJECT - LOAN 1688-JO Table of Contents Page No. PREFACE i * BASIC DATA SHEET ii HIGHLIGHTS iv I. INTRODUCTION 1 Background 1 Bank Group's Involvement in the Power Sector 1 II. PROJECT PREPARATION AND APPRAISAL 2 Project Appraisal, Negotiations and Effectiveness 2 Project Description 2 Changes in Project Scope 2 Project Objectives 3 III. PROJECT IMPLEMENTATION 4 Project Execution 4 Training 4 Procurement 5 Project Cost 5 Disbursements 6 Operating Performance 6 Financial Performance 6 Institutional Development 7 IV. ECONOMIC RE-EVALUATION 8 V. CONCLUSIONS 9 . ANNEXES: 1. Comparison of Estimated and Actual Cost of Project 10 2. Schedule of Disbursements 11 3. JEA's Sales (GWH) 12 4. Income Statements 13 5. Assumptions Underlying Re-evaluation of ERR 14 Attachment A - Comments from the Borrower 16 Attachment B - Comments from National Planning Council 17 Attachment C - Comments from JEA 18 Thi document has a restcddistribution and may be used by recipients only in the performance of their offiial duties. Its contents may not otherwise be disclosed wiLtout World Bank authorizaon.  JORDAN PROJECT COMPLETION REPORT THIRD POWER PROJECT - LOAN 1688-JO PREFACE The Project, supported by Loan 1688-JO for US$15.0 million made to the Government of Jordan and relent to Jordan Electricity Authority (JEA), consisted of 132-kV transmission lines and substations to supply certain industrial and rural distribution loads in the central region of Jordan, a system operation control center, electrification of 39 villages in the central region and a training program for JEA's engineering and accounting staff. The loan was closed on the criginal closing date of June 30, 1983 and except for a sum of $0.62 million was fully disbursed by that date. Final disbursement was made on October 25, 1983 when the account was closed. This Project Completion Retort (PCR) was prepared by the Europe, Middle East and North Africa Regional Office based on the Bank's appraisal report, supervision reports and other documents in the Bank's files, a completion report prepared by JEA in December 1983 and on the findings of a project completion mission Which visited Jordan in November 1983. The PCR summarizes the main points of interest. The loan was the third of a continuing series of IDA credits and Bank loans to JEA, begun in 1973, which have helped develop JEA into an efficient and financially viable national public utility. In accordance with the revised procedures for project performance audit reporting, this Project Completion Report was read by the Operations Evaluation Department but the project was not audited by OED staff. Following normal procedures, OED sent a copy of the draft report to the Government and JEA. Comments received from the Ministry of Finance, the National Planning Council and JEA are reproduced as Attachments A, B and C respectively.  - ii - JORDAN PROJECT COMPLETION REPORT THIRD POWER PROJECT - LOAN 1688-JO BASIC DATA SHEET KEY PROJECT DATA Appraisal Expectations Actual Total Project Cost (US$ Millions) 53.5 45.5 Overrun (Z) - (15) Loan Amount (US$ Millions) 15 15 Disbursed - 15 Cancelled - _ Date Principal Components Completed 12/31/82 11/01/83 Proportion Completed by Above Date (Z) 100 70 Proportion of Time Overrun tZ) 21 (for RE component completed last) Economic Rate of Return (X) 13 13 Financial Performance Very Good Institutional Performance Excellent CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS (US$ million) As of June 30: 1980 1981 1982 1983 (i) Appraisal Estimate 3.5 10.1 14.0 15.0 (ii) Actual 1.4 8.0 12.8 15.0 (ii) as X of (i) 40 80 91 100  - iii - OTHER PROJECT DATA Original Plan Actual First Mention in Files of Timetable - 1977 Government's Application April 1977 Negotiations 03/21/ 79 Board Approval 04/12/79 Loan Agreement Date 05/04/79 Effectiveness Date 08/06/79 10/11/79 Closing Date 06/30/83 06/30/83 a/ Borrower Hashemite Kingdom of Jordan Executing Agency Jordan Electricity Authority Fiscal Year of Borrower January 1 - December 31 Follow-on Project Name Fourth Power Project Loan Number 1986-JO Loan Amount $25 million Loan Agreement Date 6/22/81 MISSION DATA Month/ No. of No. of b/ Date of Year Weeks Persons Manweeks Report Appraisal Total Supervision I 10/79 2 2 1 10/79 Supervision II 06/80 2 2 1 07/80 Supervision III 11/80 3 4 1 12/80 Supervision IV 05/81 2 1 0.5 05/81 Supervision V 12/81 2 2 1 01/82 Supervision VI 06/82 2 1 0.5 07/82 Supervision VII 10/82 1 1 0.5 11/82 Supervision VIII 05/83 3 2 0.5 06/83 Completion 11/83 2 2 1 02/84 Total _ COUNTRY EXCHANGE RATES Name of Currency (Abbreviation) Jordanian Dinar (JD) Year: Appraisal Year Average JD 1 = US$ 3.30 (1979) Intervening Years Average JD 1 = US$ 3.09 (1980-82) Completion Year Average JD 1 = US$ 2.75 (1983) a/ The books were kept open until the final disbursement on October 25, 1983. b/ Only time spent on supervision of subject project is included.  - iv - JORDAN PROJECT COMPLETION REPORT THIrD POWER PROJECT - LOAN 1688-JO HIGHLIGHTS The purpose of the Project was to supply the electric power needs of a potash complex, phosphate mining works, a cement plant and rural distribution loads in the central region of Jordan, to further the long-range objective of interconnecting the entire country and to continue the institution-building effort started under the earlier Bank Group lending operatLons. The Project, as finally implemented, consisted of about 300 km of 132-kV double-circuit transmission lines, six new 132/33(11)-kV substations and extension of two existing substations, a system operation control center, with power line carrier and related courmunication equipment, electrification of 39 villages in the central region and a training program for JEA's engineering and accounting staff. The Project fully accomplished its objectives (paras 3.06 and 3.08) and achieved a re-estimated economic return of about 13%, the same as was estimated at appraisal (para. 4.01). The re-estimated economic return on the rural electrification component was about 8% against 9% estimated at appraisal (para. 4.01). The Project significantly contributed to the development of JEA as a well-managed, efficient and financially viable public utility. There is one aspect of JEA's development which must be noted, namely JEA's dependence on Government subsidies to compensate for increased fuel costs arising from Government's policy of not allowing it to automatically implement the fuel adjustment charge in its tariffs (para 3.10). Despite a substantial increase in the Project scope (increase from about 225 km of 132-kV double-circuit transmission lines to about 300 km, from five new substations to six and from 33 villages to 39), the final Project cost was within the appraisal estimate. A 23Z reduction in the cost of transmission lines as a result of keen competition in bidding fully compensated for cost increases in other components. Except for the rural electrification and control center components, the Project was completed before the original estimated date of December 31, 1982. The rural electrification component required 21Z more time than anticipated partly because of the increase in the number of villages from 33 to 39. The control center component (7% of total Project cost) required about 19% more time than anticipated partly because of the contractor's delay in execution and partly because of the addition of an independent building to the center.  JORDAN PROJECT COMPLETION REPORT THIRD POWER PROJECT - LOAN 1688-JO I. INTRODUCTION Background E 1.01 Prior to 1967, Jordan's power subsector was highly fragmented, consisting of three fairly large private companies supplying power to the cities of Jerusalem, Amman and Irbid, a number of municipal undertakings and many small local installations on industrial and Government premises; all relying on diesel engines for electrical generation. There was no coordinared development program for the sector and the service was unreliable. In order to make good these deficiencies, the Government, in early 1967, created the Jordan Electricity Authority (JEA) with a mandate to coordinate development and extend electricity supplies to all areas of the Kingdom, not already included in the licenses of existing undertakings. In addition, JEA is required to serve as a regulatory body of the Government for the two main distribution companies in the country, the Jordan Electric Power company responsible for electricity distribution in the city of Amman, and the Irbid District electricity company responsible for electricity supply in the Governorate of Irbid. Bank Group's Involvement in the Power Sector 1.02 In 1973 and 1975 IDA made two Credits to the Government of Jordan for the development of the power sector, the first in 1973 for $10.2 million to finance two 33-MW steam power units and one 13-MW combustion turbine at the Hussein thermal power plant at Zarqa near Amman; and the second in 1975 for