Uganda - Second Power Project

Docrment of The World Bank FOR OFFICIAL USE ONLY Report No. P-3964- - REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT IN AN AMOUNT OF SDR 29.5 MILLION TO THE REPUBLIC OF UGANDA FOR A SECOND POWER PROJECT February 28, 1985 This document hs a resticted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EOUIVALENTS (December 1984) Currency Unit - Uganda shilling (USh) USh 1.00 - US$0.002 USS 1.00 USh 550 I/ ABBREVIATIONS AND ACRONYMS CDC - Commonwealth Development Corporation EAC - East African Community ESMAP - Energy Sector Management Assistance Program ICB - International Competitive Bidding IRR - Internal Rate of Return LRMC - Long-run marginal cost MPPT - Ministry of Power, Posts and Telecommunications ODA - Overseas Development Administration (UK) UEB - Uganda Electricity Board WEIGHTS AND MEASURES GWh - Gigawatt hour km - kilometer KV - kilo volt KWh - Kilowatt hour MVA - Megavolt ampere MW - Megawatt toe - tons of oil equivalent FISCAL YEAR Government: July 1 - June 30 UEB : January 1 - December 31 1/ The exchange rate of USSI = USh 520 has been used in the calculations for the proposed project.  FOR OMCLAL USE ONLY UGANDA SECOND POWER PROJECT Credit and Project Summary Borrower: The Republic of Uganda. Beneficiary: Uganda Electricity Board (UEB). Amount: SDR 29.5 million (US$28.8 million equivalent). * Terms: Standard. Onlending Terms: 20 years, including 5 years of grace, at 10% annual interest; the foreign exchange risk to be borne by UEB. Project Description: The project consists of four main parts: (i) At the Owen Falls Power Station, ten turbo- generator units would be rehabilitated, and structural repairs would be implemented to the dam and to the power house. Furthermore, electrical and mechanical equipment would be rehabilitated, the workshop would be refurbished, and tools and equipment for maintenance would be provided. Cii) The Transmission and Distribution Network would be rehabilitated, one of the transmis- sion lines between Owen Falls and Kampala would be uprated, and the transmissior. lines between Kampala and Nkenda, and between Tororo and Lira would be strengthened. (iii) These components would be supported through the provision of vehicles, tools and equipment for maintenance and repair services and through the rehabilitation of UEB's Staff Training Center and UEB's operational build- ings and staff housing and the implementation of a Training Study. Engineering and consult- ing services for construction supervision would also be provided. (iv) The Project would also include studies of UEB's tariff structure and level and billing and collection system, and the provision of a computer for UEB. In addition, technical assistance would be provided focusing on the new Energy Department, on a forest and fuelwood plantation inventory, on fuelwood marketing, and on a household energy survey in major towns of Uganda. This document has a restricted distribution and may bc used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Project Benefits: The proposed Project would prevent the development of a bottleneck in power supplies that would hinder economic recovery in the medium term. It would also strengthen UEB's operational capability and contri- bute to future development of the power system through engineering and design work for the next hydroelectric project to be built in Uganda. Project Risks: The main risk affecting the Project is the ability of the Government to maintain security in the areas that will be traversed by transmission and distribution system to be rehabilitated under the Project. In addition to the physical security risk for work crews and equipment, there is also the risk that prospec- tive contractors might add a risk premium to their bids or that they may suffer losses in case of security incidents. In order to keep this risk low, contracts will contain provisions to protert contractors adequately. Estimated Project costs: Foreign Local Total - -(USS milion)- Owen Falls Power Station: (a) Civil Works 4.4 - 4.4 (b) Equipment 9.2 0.6 9.8 Transmission & Distribution Equipment 17.9 3.6 21.5 Tools, Workshop Equipment, Vehicles & Taxes - 0.9 0.9 Engineering & Supervision 2.9 0.8 3.7 Training Center & Study 0.3 0.4 0.7 Other Studies 4.1 1.4 5.5 Base Costs 38.8 7.7 46.5 Physical Contingencies 4.7 0.6 5.3 Price Contingencies 5.8 0.9 6.7 Total Project Costs 49.3 9.2 58.5 Interest Financed 3.1 11.8 14.9 Total Financing Required 52.$ 21.0 73.4  - iii - Financing Plan: Foreign Local Total ---(US$ million)- IDA 27.6 1.2 28.8 CDC 12.8 0.2 13.0 ODA 12.0 - 12.0 UEB - 19.6 19.6 Total 52.4 21.0 73.4 Estimated Disbursements: IDA FY86 FY87 FY88 FY89 FY90 -----(USS million)--- Annual 8.5 15.0 4.0 0.9 0.4 Cumulative 8.5 23.5 27.5 28.4 28.8 Rate of Return: 16.7X Staff Appraisal Report: No. 5329-UG dated February 28, 1985 Map: IBRD 18542.  REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE REPUBLIC OF UGANDA FOR A SECOND POWER PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Uganda for SDR 29.5 million (US$28.8 million equivalent) on standard IDA terms to help fina,.ce a second power project. The proceeds of the credit would be onlent to the Uganda Electricity Board (UEB) for a term of 20 years, including a grace period of 5 years, at 10% annual interest. UEB would bear the foreign exchange risk. PART I - THE ECONOMY 11 2. An economic mission visited Uganda in May-June 1983 and its report, entitled "Uganda - Country Economic Memorandum" (Report No. 4733-UG dated December 9, 1983), has been distributed to the Executive Directors. A summary of social and economic data is given in Annex I. Background 3. Uganda achieved independence in 1962 with a number of important advantages: (a) a favorable climate, fertile soils, and rich mineral base for economic developr'ent; (b) an established indigenous smallholder sector providing a widening range of export crops and an ample domestic food supply; (c) a small but rapidly growing industrial sector, contributing exports of copper and textiles; (d) a well-developed transport system, including facilities shared with Kenya and Tanzaria under the East African Community (EAC); (e) an exportable surplus of hydroelectricity, with substantial scope for further development on the Victoria Nile; and (f) one of the most advanced education systems in Eastern Africa. 1/ Part I is essentially the same as the one included in the President's Report for the Agricultural Development Project (P-3912-UG) of December 11, 1984.  -2- The initial years after independence clearly demonstrated the economic potential of the country. Real Gross Domestic Product (GDP) grew by 4.8% per annum from 1963 to 1970, implying an increase in per capita terms of at least 2% per annum. The country also was able to maintain a reasonable savings rate (averaging 13%), which permitted implementation of an ambitious investment program without undue pressure on domestic prices or the balance of payments. Although Uganda's export volumes grew slowly, export earnings were more than adequate to cover import requirements and the country maintained a current account surplus in most years. The Government's budgetary position also was sound. Revenue increased faster than recurrent expenditure during the latter half of the 1960s and, together with non-bank domestic borrowing, helped finance a significant proportion of development outlays. 4. Howe%er, after the coup in 1971, the situation quickly deterio- rated. Under the military regime, many skilled personnel left the country, the parastatal sector became bloated with the addition of many abandoned or confiscated industries, and professional standards within the administra- tion eroded. On top of these largely self-imposed problems, the Ugandan economy was shaken by a series of external shocks: the sharp rise in petroleum prices after 1973, the breakup of the EAC in 1977, and the damage and looting which occurred during the 1978-79 war. As a result of these developments, real GDP stagnated through 1977 and then fell over the next three years. Import levels had to be cut by 502 from 1970 to 1979 due to lower export volumes, worsening terms of trade (except during the coffee boom years of 1977-79), and dwindling aid receipts. The Government's budgetary position also became increasingly untenable as the revenue base was undermined and expenditure control collapsed. The resultant deficit was financed increasingly by bank borrowing, leading to monetary expansion and price inflation (averaging 74% per annum from 1977 to 1979). Not surprisingly, critical shortages developed and a large share of economic activity was diverted to the pervasive parallel market system called *magendo". Recent Developments 5. By April 1979, when the military regime was overthrown, the Ugandan economy was in ruins. Initial efforts to promote recovery were constrained by an unstable political situation, administrative weaknesses, and a severe shortage of foreign exchange. As a result, many of the adverse trends evident during the 1970s continued through 1980. In partic- ular, real GDP continued to decline while the inflation rate rose above 100% per annum. Then, in mid-1981, the Government made a dramatic break with the past by announcing a major devaluation of the Uganda shilling and related price adjustments. Through a series of financial programs, sup- ported by assistance from the International Monetary Fund (IMF) and other donors, further policy reforms have been introduced over the past three years (see paragraphs 7-9). As a result, economic performance has shown a marked improvement, despite the negative impact of internal security problems and adverse world economic conditions. The difficult security situation is explained by the disintegration of law and order during the 1970s and the need to discipline the security forces after the 1978-79  - 3 - war. Although most of the country is now at peace, periodic incidents continue to occur, especially around Kampala, disrupting production and transport activities and diverting budgetary resources to security-related activities. As regards the world economy, although Uganda's terms of trade improved after 1981, the index remains at less than half the peaks achieved during the coffee boom years of 1977-79 and only 65% of the level in 1970. Equally important, Uganda's export earnings are constrained by quotas on coffee sales imposed under the International Coffee Agreement (ICA). Uganda's coffee production substantially exceeds its quota limit, and stocks equivalent to 70% of quota exports have currently accumulated. The combination of economic recession and tighter fiscal policies in developed countries also has affected the availability of external assistance. For Uganda, aid mobilization has been made particularly difficult by the legacy of international isolation imposed during the 1970s and continuing concern overseas about the security situation. 6. Economic recovery is evident in a number of indicators: (a) Since 1980, GDP has grown on average by 6% per annum. Recovery was initially concentrated in subsistence agriculture, but growth has aubsequently been particularly strong in monetary agriculture (12% average annual growth 1982-84). Industry has been slower to recover. (b) Export volumes have risen by an estimated 41% from 1980 to 1983, and would have recovered even more without the coffee quota constraint. This export growth, together with better utilization of aid, has helped to finance a much-needed expansion of import volumes since 1981. (c) Significant budgetary improvements, including the establishment by FY 1982/83 of a healthy recurrent surplus, a major reduction in the dependence of budgetary financing on bank borrowing, and no less than a fiftyfold increase in recurrent revenues since FY 1980/81. These improvements have been absolutely central to bringing down the rate of inflation from over 100% in 1981 to about 30% in 1983. Recent developments indicate, however, some acceleration of inflation due to weakening of fiscal and monetary * discipline. Despite this progress, overall levels of economic activity and trade remain substantially below peak levels achieved in the early 1970s. As a result, per capita Gross National Product (GNP) still is only two-thiras of the 1970 level. The Government's Policies and Programs 7. The Government's primary goal is to restore law and order, a basic prerequisite for future economic progress. Second to this is the goal of rehabilitating the productive sectors. The first step toward rehabilitation was the introduction of the financial program for FY 1981/82, which has been followed by similar programs for FY 1982/83 and  -4- FY 1983/84. These programs have been supported by three stand-by arrange- ments with the IMF (for a total of SDR 320 million), drawings from the First and Second Reconstruction Credits (providing US$145 million after June 1981) made available by the Association, and assistance from other donors. Major actions taken by the Government are summarized below: (a) The official exchange rate was devalued from under USh 8 to USh 78 per US dollar in June 1981, and subsequently steadily depreciated to about USh 500 per US dollar in November 1984. In August 1982, the Government opened a second window where foreign exchange was more freely traded in an auction system. After the introduction of this dual exchange rate system, the two rates steadily depreciated (although the Window II rate appreciated for a while) and the differential between them narrowed. These adjustments led to a substantial reduction in the premium and importance of the unofficial market for foreign exchange. In June 1984, the two windows were merged. Foreign exchange now is made available through a weekly auction, with the rate determined by the marginal bid. (b) The initial devaluation in June 1981 was accompanied by the removal of most price controls. The major exceptions were for producer prices of traditional export crops, retail prices of petroleum products, and utility tariffs. For these controlled items, significant price increases were introduced. Petroleum prices were increased by more than twentyfold after December 1980 to reflect fully the impact of window-one exchange rate changes. Producer price adjustments were more moderate, with increases of about tenfold for most major export crops. However, these increases are still substantially higher than general inflation and net returns from the production of all major export crops are now positive. Producer prices are adjusted on a regular basis to ensure that net returns to the farmer remain positive. (c) Various measures have been introduced to improve monetary and fiscal discipline. To help control the demand for money and to allocate credit, most interest rates were nearly doubled over the past two years (although they remain negative in real terms). As part of its obligations under the IMF stand-by arrangements, the Government agreed to and met ceilings on the growth of net domestic credit and net credit to the Government. On the fiscal side, a number of measures were taken in mid-1981 to streamline and improve the elasticity of the taxation structure. Strict control also has been maintained over cash releases to ministries, although this has sometimes been at the cost of underfunding critical functions and accumulating domestic arrears. 8. The Government's original Recovery Programme, which included proposals for policy and institutional reform as well as a project-specific investment plan for FY 1982/83 and FY 1983/84, was presented to the meeting of the Consultative Group in May 1982. All participants at the meeting  -5- commended the Government's commitment, as reflected in the Recovery Programme, to prioritize rehabilitation activities and to restrict overall resource allocations to realistic levels. Following a progress review, the Government published a Revised Recovery Programme in October 1983. This updated document takes account of resource constraints and implementation problems encountered over FY 1983/84 and incorporates FY 1984/85 fully into the investment plan. However, the broad objectives and strategy remain the came, focusing on short-term revival of the productive sectors. Priority in all sectors is given to rehabilitation and improved utilization of existing capacity. Although provision has now been made for preparatory work on a number of new projects, most projects do not involve large expenditures through FY 1984/85 and are essential to maintain momentum in later years. The Revised Recovery Programme also includes a number of innovations and changes designed to make it more effective for decision making and to facilitate project implementation. This Programme was discussed at a further meeting of the Consultative Group in January 1984, at which participants again welcomed tle strategy and priorities as well as the implied level and composition of Uganda's aid requirements for 1984 and 1985 (see paragraph 16). 9. A decisive start in the process of economic recovery has now been made. The basic priority for further action is to strengthen the adminis- trative framework for implementing the Government's programs, for carrying them forward, and for making them more effective. In some cases, strengthening means rebuilding what already existed in the early 1970s; in others, it means developing new institutions and policies relevant to today's realities. The administrative weaknesses faced by Uganda (and many other Sub-Saharan African countries) are inherently difficult to tackle and progress will be slow. However, the magnitude of the task ahead should not be allowed to undermine the commitment to much-needed economic reforms. The Government has already initiated action in this area. The Report of the Public Service Salaries Review Commission, which covers many issues relating to the organization and operation of the civil service besides salaries, was presented in November 1982 and is still under Government review. The FY 1984/85 budget introduced a quantum increase in civil service salaries, although there are indications that the Government is having to borrow excessively from the banking system to finance this salary increase. If inflation is to be kept under control, this development will have to be monitored carefully. To facilitate recovery in the industrial sector, the Government passed the Expropriated Properties Act in February 1983 to provide a legal basis for resolving ownership issues, and initiated a series of financial and accounting studies on major parastatal organizations. Various measures were introduced over the past two years to improve foreign exchange budgeting and import licensing procedures. Finally, the Agricultural Policy Committee has been established to advise the Government on prices, marketing, and resource allocations for the agricultural sector. The Secretariat of the Committee undertakes on a regular basis an analysis of the production costs of the major export crops, and makes recommendations to the Government on appropriate adjustments to producer prices. Not surprisingly, given the severe erosion of the country's productive base and infrastructure during the 1970s, much remains to be done before Uganda's recovery can be considered complete.  - 6 - However, the Government's Revised Recovery Programme and evolving policies are headed in the right direction and merit support from the international community. Sectoral Priorities 10. Economic revival will depend on increasing production levels, especially of exports. This entails the highest priority initially being given to production of export crops, to rehabilitation of supporting transport and communications infrastructure, and to production of basic consumer goods, building materials, and agricultural inputs by the industrial sector. Other sectors, especially the social sectors, also require urgent rehabilitation. But in thte near future, rehabilitation of these sectors must be limited to the extent of their potential contribution to recovery. Improvements in medical services, repair of classrooms, and rehabilitation of urban water systems, for example, may be expected to provide an important, if unquantifiable, incentive to producers. 11. Agriculture dominates the Ugandan economy, providing the liveli- hood for about 90% of the population and supplying almost all Uganda's exports in recent years. Ugandan agriculture depends largely on small- and medium-scale peasant farms. No attempt was ever made to encourage expa- triate settlements. Even today, large-scale estates are only significant in tea and sugar production. With its favorable natural conditions, Uganda produces an overall food surplus in most years, although areas like Karamoja in the northeast, which are vulnerable to drought and depend on traditional trade of cattle for grain, have suffered periodic food short- ages as a result of low rainfall and insecurity. Rehabilitation of agri- culture is the top priority for Uganda's economic recovery. Coffee, cotton, tea, and tobacco exports could all continue to grow rapidly over the next three years (although the previous peak levels are not likely to be reached until later in the 1980s and coffee exports will probably remain subject to ICA quota constraints). In addition, scope exists for expanding non-traditional exports (e.g., hides and skins, foodstuffs, and fertil- izers) to neighboring countries. Revival of cotton and other agricultural production would also supply some domestic industrial needs. During the rehabilitation phase, the Government has given top priority to improving incentives, partly through adjustments in producer prices. Closely related is the supply of inputs, implements, spares for processing and trcnsport, and consumer goods to stimulate the production of surpluses. Over the longer term, agricultural services, including research and extension, also will need more attention. 12. Although Uganda's industrial sector has always been relatively small, it did in the past make a valuable contribution towards supplying the domestic market with basic goods and, in some instances (e.g., textiles and copper), produced a surplus for export. However, the sector largely collapsed during the 1970s. Although industrial production began a modest recovery during 1982 and 1983, indications are that this recovery may have halted in 1984, with many enterprises still closed and average capacity utilization of only about 30%. Recovery in the industrial sector has been hampered by a number of constraints. The bulk of the sector has not yet made the investments necessary to put their equipment in working order, due  - 7 - primarily to the shortage of working capital to purchase spare parts and equipment, foreign exchange for imported inputs, and locally-available materials. Other constraints, such as unresolved ownership questions, creditworthiness problems of firms, unreliable infrastructure, and poor management also deter recovery in the sector. The Government has declared its intention to follow a 'mixed economy" strategy, with only essential public services reserved exclusively for the public sector. In other areas, domestic and foreign private enterprise is encouraged, either wholly owned or in joint ventures with the Government. The Government expects to close or sell a number of existing industrial enterprises, while the financial viability of the remaining parastatals is to be restored through increased tariffs, asset revaluation, and injections of new capital. Actions initiated by the Government in this area, including the Expropriated Properties Act and a program of financial and accounting studies, were noted in paragraph 9. However, the modalities for restructuring the parastatal sector are still to be worked out fully. 13. Uganda's transport system, formerly one of Africa's best, deteri- orated rapidly during the 1970s for the same general reasons outlined ear- lier: departure of skilled personnel, political interference, and in- adequate provision of resources for essential functions like maintenance. In addition, the breakup of the EAC in 1977 had a serious effect, especially on Uganda's access to international trade routes. As a result, Uganda lost virtually all railway rolling stock and aircraft and her part-ownership of railways and port facilities in Kenya and Tanzania. This necessitated heavy new investments by Uganda and seriously disrupted international traffic movements while increasing their cost. Transport was, moreover, the sector possibly most seriously affected by the war and the widespread subsequent looting. The vehicle fleet, in particular, was decimated. Rehabilitation of the transport system and sector institutions thus becomes a key requirement for economic recovery. 14. The Bank Group recently updated its earlier assessment of Uganda's energy sector. Energy use is primarily based on fuelwood, electricity, and petroleum. Fuelwood is estimated to account for about 91% of total energy and 48% of commercial energy consumption in Uganda. Concern is, therefore, mounting that uncontrolled cutting will eventually deplete the most accessible forest resources and lead to further soil erosion. The proposed project includes provision for a national forest inventory and other surveys, as a precursor to rehabilitating the depleted forests and to the preparation of national fuelwood and household energy strategies. At present, Uganda's electric generating capacity is less than its rated capacity due to a backlog of major maintenance, and any unused capacity would be quickly absorbed as the economy recovers, as substitution is made for more expensive fuels (such as petroleum products), and if new long-term export agreements are concluded with neighboring countr'es. As regards petroleum, the Government has succeeded in reducing the cost of imports in recent years through the impact of higher retail prices on domestic consumption and smuggling as well as the improvement in supply arrangements. Promotion efforts for the exploration of petroleum resources in the Albert Rift are underway (through the Petroleum Promotion Exploration Project, for which a US$5.1 million IDA credit is being  -8- proposed separately'), although local oil production remalns a longer-term and uncertain prospect. 15. The Government endorses the goals of the International Drinking Water Supply and Sanitation Decade and is giving high priority to the water and sewerage sector. The main objective for this sector is to restore basic services through rehabilitation of existing water supply and sewerage facilities. In addition, with the assistance of the United Nations Development Programme (UNDP) and the Bank Group, an updated water sector study/action plan is underway using various studies previously prepared by the World Health Organization, Swedish International Development Association, and United Nations. This study will help to improve the Government's planning capacity in the water sector. Aid and Debt 16. Under the base-case scenario presented in the last Country Economic Memorandum, Uganda's GDP is projected to grow by 4.7% per annum through 1985 and 3.6% per annum over the subsequent five years. These projections assume a steady improvement in the internal security situation and continued progress on economic reforms. The viability of this scenario is also critically dependent on the availability of foreign exchange to finance recurrent imports and priority rehabilitation projects. The recent recovery in export performance is expected to continue. However, an important factor in this assumption is that Uganda's coffee quota will be increased from 2.3 million bags in 1983 to 2.5 million bags in 1985. Although Uganda's case for a higher quota is strong and a small increase was granted recently, a further increase is not assured. The current account deficit, in real terms, is projected to rise in 1984 and then steadily decline over the remainder of the decade. This has major implications for external financing requirements: (a) Commitment levels are required to increase by an average of 52 during 1984 and 1985 to US$444 million in 1985 and then to continue rising by about 4% per annum (below the projected rate of international inflation). (b) The composition of commitments is as important as the levels themselves. Under Ugandan conditions, balance of payments support will continue to be essential for at least the next two to three years. However, project aid will become increasingly important during the second half of the decade and even has a role to play in the short term, provided it is consistent with the rehabilitation priorities in the Revised Recovery Programme. Technical assistance, while not as large in dollar terms, is important to improve public administration and to make other aid effective. (c) The net benefit to Uganda of higher commitments could soon be eroded if they are not provided on concessional terms. This does not preclude the possibility of utilizing some commercial bank loans or suppliers' credits in essociation with concessional assistance, but only for selected projects that generate additional net foreign exchange earnings to cover fully the  -9 - related debt obligations. However, arrangements which involve prior claims on foreign exchange, such as coffee barter deals, should be avoided. 17. On the Ugandan side, every effort must be made to strengthen aid coordination and administration. To this end, the Government has now reaffirmed that formal responsibility for aid management, including signing agreements and approving disbursements, lies with the Ministry of Finance. To facilitate this function, an aid coordinator has been appointed at the Permanent Secretary level and he is to be assisted by a staff of twelve. In addition, the Ministry of Planning and Economic Development (MPED) has e vital role to play in assuring that aid mobilized is in line with the priorities of the Revised Recovery Program and in monitoring aid utiliza- tion and project implementation. Therefore, appropriate staff, facilities, and technical assistance should also be allocated to the MPED so that these functions can be performed effectively and working level contacts between MPED and the Ministry of Finance can be strengthened. 18. Uganda's external debt outstanding and disbursed had reached an estimated US$661 million by the end of 1983. Of this amount, 3.5% was due to the Bank/Association (for Uganda's notional share of EAC loans) and 13.5% to the Association alone. Fortunately for Uganda, the terms of new aid commitments since 1979 have been highly concessional, with about half being grants and the balance being loans with a grant element of 60%. However, other debt obligations, such as war-related assistance and IMF purchases, have helped to raise the overall debt service ratio to around 50% during 1981-83. Under the base-case scenario in the Country Economic Memorandum, the debt service ratio is projected to fall back to 46% in 1984 and 31% by 1990. This, however, is still cause for concern. The down-side risks are very real. Uganda's export structure still depends heavily on coffee earnings, which could be constrained by further quota restrictions and unfavorable price movements. Also, the Government may find reduction in import requirements for security-related activities difficult. Finally, adequate amounts of assistance on concessional terms may not be forthcoming to support recovery. This outlook reinforces the importance of external debt management. Progress has been made over the past year in improving debt recording and an External Debt Management Office has been estab- lished. The real priority now is to develop an appropriate borrowing program for Uganda. PART II - BANK GROUP OPERATIONS 2/ 19. Uganda joined the Bank, the Association, and the International Finance Corporation (IFC) in 1963. Two years earlier, in 1961, the Uganda 2/ Part II is essentially the same as the one included in the President's Report for the Agricultural Development Project (P-3912-UG) of December 11, 1984.  - 10 - Electricity Board had already received a World Bank Loan of US$8.4 million for a (First) Power Project (Ln. 279-UG of March 29, 1961) with the guarantee of the United Kingdom. Between 1967 and 1971, the Association provided seven credits to the country totalling US$48.0 million for projects in education, roads, and agriculture (tea, tobacco, and beef ranching). In addition, Uganda benefitted from 10 loans amounting to US$244.8 million for the development of common services of the East African Community and for the East African Development Bank. IFC's first investment in Uganda, in a textile company, was sold to the Government in 1970. The second, to help finance two lodges in the national parks, was cancelled in 1972 before construction began. IFC approved new investments in the Sugar Corporation of Uganda and in the Toro and Mityana Tea Company in FY84 and in the Development Finance Company of Uganda in FY85. Annex II gives further details about IFC investments in the country. 20. Operations of the Association in Uganda were interrupted because of the military regime from June 1971 until February 1980 (paragraphs 4 and 5). Since February 1980, the Association has provided 13 credits to Uganda totalling US$473.5 million. The credits were based on a lending strategy consistent with priorities identified in the Government's Recovery Programme and were designed to help restore the economy to a fully functioning level through: rehabilitation of basic infrastructure and productive capacity; strengthening of administrative, institutional, and technical capacity; and implementation of appropriate sector policies. 21. To meet urgent rehabilitation needs, the Association has been providing funds under three reconstruction credits. The first Reconstruction Program (Credit No. 983-UG of 1980 for US$72.5 million) included a participation of US$17.5 million by the Government of the Netherlands (Credit No. 983-1-UG). It also was complemented by a European Economic Community Special Action Credit (54-UG for US$20.0 million). In addition, the Government of Canada provided a grant of Can$3.0 million and the Organization of Petroleum Exporting Countries (OPEC) Fund made available a program loan of US$5.0 million. Although the Reconstruction Program originally experienced implementation delays and slow disbursements, it now is fully disbursed. A Program Performance Audit Report is under preparation. The Second Reconstruction Program (Credit No. 1252-UG of 1982 for US$70.0 million) is under implementation. The Governments of Canada and the Netherlands made grants in the amounts of CanS5.0 million and DFL 15.0 million, respectively, in supplementary financing for the Second Program. The Third Reconstruction Program (Credit No. 1474-UG of 1984 for US$50.0 million) became effective in November 1984. An amount of DFL 20.0 million is being provided as supplementary financing by the Government of the N-therlands. 22. The Association also has been supporting technical assistance to key institutions through the First Technical Assistance Project (Credit No. 1077-UG of 1981 for US$8.0 million) and the Second Technical Assistance Project (Credit No. 1434-UG of 1984 for US$15.0 million). Disbursements are nearly completed for the First Project. Commitments are being made more quickly for the Second Project. Although small in financial terms, technical assistance represents an essential component of  - 11 - the Association's lending strategy, both to strengthen the Government's administrative/institutional capacity as well as to facilitate project preparation and implementation. It also serves the vital objective of assisting training, both directly and through upgrading of facilities. 23. In addition, the Association has been providing rehabilitation credits, which total US$268.0 million, for engineering related to water supply and phosphate exploitation operations and for agricultural, education, highway, industry, telecommunications, and water supply and sanitation projects. These projects also include technical assistance components. Annex II gives further details about the projects. Implementation has been somewhat slower than expected, largely due to the shortage of Government counterpart funds (paragraph 25). 24. For the immediate future, operations of the Association will remain focused on rehabilitation projects. Operations of the Association are expected to shift gradually into traditional projects in the agricultural, energy, industry, and transport sectors. This shift will help support the continued recovery of the economy and its further development. The Association intends to continue to provide technical assistance in these sectoral projects. 25. Disbursements from the Association to Uganda grew from US$1.2 million in FY80 to US$41.2 million in FY84. A comparison with other portfolios in the Eastern Africa Region indicates that the disbursement rate for Uganda was higher than the average for the Region, ranging as a proportion of outstanding commitments from 44.4% in FY80 to 30.3% in FY83 (compared with 20.4% and 27.2% in the same years for the Region as a whole). In FY84, the disbursement rate for Uganda declined to 17.7%, mostly because of lack of local funds to be provided by the Government, whilc that of the Region declined to 23.1%. 26. In addition to its own lending portfolio, the Bank Group is administering an Agricultural Reconstruction Program financed by the International Fund for Agricultural Development (Loan No. 80-UG for US$17.6 million and Grant No. 85-UG for US$0.94 million of 1982); an Assistance in Economic Planning Project (No. UGA 79/011 of 1981 for US$3.3 million) and a Line of Credit to Assist the Uganda Development Bank (No. UGA 80/017 of 1983 for USS2.0 million) financed by the UNDP; and an Industrial Loan to the Uganda Development Bank (Loan No. 301-PG of 1983 for US$15.0 million) financed by the OPEC Fund. PART III: THE ENERGY SECTOR Sector Issues 27. The Government's recovery program which maps out a coherent strategy, embracing macroeconomic and sectoral policies as well as individual projects, now has as its basic objective the rehabilitation of the production sectors and the improvement of existing capacities. Thus  - 12 - the Government's evolving strategy in the energy sector has had timely support from the UNDP/World Bank Energy Assessment Report (Report No. 4453-UG, entitled 'Uganda: Issues and Options in the Energy Sector," dated July 1983) which identified the sector issues and made recommendations. These were endorsed by the Government and marked the first step toward a national strategy in the energy sector since the end of the civil war in 1979. 28. The main issues identified were: (a) the high cost of petroleum imports; (b) relatively low efficiency in the use of petroleum products and woodfuels; tc) distortions in retail prices of petroleum products and shortcomings in the retail pricing formula; (d) unreliability of power supply and high power system losses; (e) shortfall in power generation capacity to meet forecast demand beyond the mid-1980s; (f) low level of power tariffs and inappropriate tariff structure; (g) insufficient supply of fuelwood, especially in the Kampala/Entebbe region; (h) inadequate level of stumpage fees; and (i) lack of sectorwide coordination and planning. A follow-up Energy Assessment Status Report was issued in August 1984. 29. The major institutions of the sector are the Ministry of Power, Posts and Telecommunications (MPPT), Uganda Electricity Board (UEB), the Bank of Uganda (petroleum importation and marketing), the Forestry Department in the Ministry of Agriculture and Forestry, the Geological Survey and Mines Department in the Ministry of Lands, Minerals and Water Resources, and the National Research Council in the Ministry of Planning and Economic Development. The importation and marketing of petroleum products in Uganda is handled by six oil companies in three of which the Government has equal shareholdings with non-government partners. Energy policy is coordinated by a nucleus staff within MPPT, MPED and the subsector institutions. To assist in setting up the Energy Department newly instituted in MPPT to facilitate energy policy coordination and integrated sector planning, the Government requested technical assistance under the joint UNDP/World Bank Energy Sector Management Assistance Program (ESMAP) for an Energy Sector Institutional Review focussing primarily on the formation and operation of the Department. The Bank mission visited Uganda in June 1984 and has prepared a report outlining the technical assistance which is proposed to be a part of this project. 30. The Government has taken several important and well-directed initiatives in each energy subsector. It is also attempting energy efficiency improvements under the Bank's Industrial Rehabilitation Credit. During the last year and a half, these efforts have remaii:ed largely in the study phase, although in a few cases implementation has been initiated, including a number of fuel substitution efforts involving conversion to heavier fuel oil and bagasse. Energy-related rehabilitation efforts in the transport sector aim at reducing specific fuel consumption through improve- ments in vehicle maintenance and repair facilities, training of drivers and mechanics, railway track repair and regrading, and rehabilitation of road networks. As noted above the Government has also taken strong steps to strengthen the institutional capability of the energy sector and to seek technical assistance for priority activities in the energy sector.  - 13 - Energy Resources 31. Uganda has ample hydropower and woodfuel potential for energy development. It has the disadvantages common to many African countries of having to import all of its petroleum products. No petroleum or gas has been discovered but the Government is supporting the identification and promotion of prospects as de, cribed in paragraph 37 below in order to encourage future participation of oil companies. There is no coal; peat exists but does not justify exploitation. Geothermal sources and uranium prospects have been identified, but the former has low priority because of the great hydroelectric potential; assessment of the uranium potential is in progress. 32. Renewable Energy Resources - Fuelwood. Uganda's woodfuels contribute the main supply of energy to the population; forests and woodlands are estimated to cover 2.76 million hectares, or 12% of the country's total area. The energy assessment report recommended among other fuelwood production-oriented directives that a national inventory be made, complemented by a survey of consumption trends and projections for all wood products in order to identify the areas of critical shortage. A national inventory of natural forest reserves and plantations, together with fuelwood marketing and household energy surveys, which will serve as inputs for the preparation of a household energy strategy, is included in the Project. Preliminary estimates indicate that fuelwood consumption in 1983 was 13.6 million tons, which is well above the sustainable annual yield of 10.9 million tons (excluding non-energy uses) and an increase of 4% over 1982. 33. Hydroelectric Resources. Uganda's hydroelectric potential is concentrated on the Victoria Nile with its unlimited storage provided by Lake Victoria. The Nile within Uganda falls into three sections, namely Lake Victoria to Lake Kyoga, Lake Kyoga to Lake Albert (both forming the Victoria Nile), and Lake Albert to the Sudanese border at Nimule (Albert Nile). The available head is concentrated in seven locations, with a total potential capacity of about 1,745 MW and annual firm generation capability of about 10,200 GWh. Although the hydroelectric potential is substantial and relatively low-cost by world standards, the potential can be developed only in increments that are large relative to the size of the Ugandan demand, and therefore the potential for substantial exports to neighboring countries is a significant factor in determining the economics of development. . 34. Other Renewable Energy Resources. The assessment report recommended that studies should be made of the economics of new renewable energy options such as geothermal and solar energy, use of crop residues, alcohol, biogas, wind, peat and papyrus. Uganda's geothermal potential has not been studied since 1971 when a UNDP study concluded that it might be about 450 MW. To promote the use of crop residues, a USAID-funded pilot project for producing charcoal from coffee husks has been commissioned recently near Jinja. Makerere University is involved in a number of research programs in various forms of renewable energy: biogas production and utilization; solar water heating for industrial and commercial applica- tions; solar drying for food preservation; and solar crop drying. In  - 14 - addition, the Forest Research Center is engaged in research on charcoal production techniques. These modest programs were originally financed by Overseas Development Administration (ODA, United Kingdom) and carried uut with assistance from USAID and the Commonwealth Service Council. 35. Imported Energy: Petroleum. Uganda imports all of its petroleum requirements, either by refining crude through the Mombasa Refinery or by direct purchases on the Kenyan and Middle East markets. White products are transported to Nairobi by pipeline and on to Kampala by rail or road (more than 90% were transported by road in 1982 compared to only 20% in the early 1970s). The six oil companies operating in Uganda maintain their own storage facilities as well as retail outlets. In line with the pattern of economic activity, distribution and consumption of petroleum products are concentrated around Kampala and Jinja. In 1983, the transport sector accounted for 75% of consumption of petroleum products while the industrial and domestic sectors consumed 14% and 11X respectively. The complex import and marketing arrangements for petroleum products were reviewed in the energy assessment report, and the alternatives recommended to minimize the foreign exchange costs on these supplies were diversification of supply sources, reduction in transport costs to the Ugandan border, development of new supply routes and maintenance of a product stockpile. 36. The Petroleum Desk was established in 1982 in the Bank of Uganda as a subsector unit responsible for monitoring petroleum imports and distribution and has been useful in assisting the Ministry of Power, Posts and Telecommunmications (MPPT) with formulating policy recommendations. The Government and the oil companies operating in Uganda have diversified supply sources for petroleum products through purchases on the Middle East market as well as processing crude oil through the Mombasa Refinery. A second route through Tanzania in addition to the Kenyan route has been tried and determined to be feasible. The minimum safety stockpile has been increased from about two weeks consumption to the equivalent of four to five weeks based on present consumption levels. Petroleum Exploration 37. An air-mag survey has been completed to identify prospective areas of petroleum exploration as recommended in the assessment report, and the initiation of a petroleum exploration program in the northwest is anticipated. The Bank's proposed Petroleum Exploration Promotion Project would provide funds for gathering additional information on prospective areas and would cover: (a) geological data gathering and field mapping where necessary; (b) geophysical surveys; and (c) geochemical studies. The project, coordinating with petroleum exploration efforts in neighboring countries, notably Zaire, also would assist in preparing a promotion report that would be offered for sale to oil companies upon completion of the geophysical survey work mentioned above. Energy Demand and Supply 38. Per capita energy consumption in Uganda is estimated to have been 0.35 toe (tons of oil equivalent) during 1980, of which only 0.06 toe was commercial, i.e. petroleum products, electricity, and marketed woodfuels  - 15 - exclusive of woodfuels gathered as a free good. This level of commercial energy consumption is comparable to estimates for other low-income countries in Sub-Saharan Africa. In Uganda's case, the low level of commercial energy consumption reflects not only the country's low per capita income, but also the dominance of the subsistence sector and the significant decline in the industrial and transport sectors during the 1970s. For the same reasons, energy consumption is concentrated in the household sector and supplied primarily from woodfuels. Electricity, which is the major area of government involvement in the energy sector, has never supplied more than 4% of commercial energy consumption. In terms of primary supply, in 1980, 88% of Uganda's commercial energy was domestically produced from woodfuels, with the balance coming from imported petroleum products. 39. Since mid-1981 the Government has introduced a number of major policy reforms, including devaluation of the Ugandan shilling and related price adjustments. These measures have contributed towards a recovery in economic performance over the past two years. The impact of the Government's policy reforms (paragraph 7) on commercial energy consumption has so far been constrained principally by higher energy prices. The declining trend of commercial energy consumption since 1970 is now reversing, and even a conservative forecast growth rate of commercial energy demand averages 4.8% per year over the remainder of the 1980s. Total imports of energy-related petroleum products increased at an average annual rate of 3.6% between 1981 and 1983. Energy Prices and Pricing Policy 40. Petroleum Products. Retail prices for all energy sources in Uganda declined in real terms during the 1970s, contributed to a general deterioration of efficiency in the sector, and escalated the smuggling of petroleum products to neighboring countries. The assessment report recommended adjustment of petroleum product prices in line with major changes in the exchange rate to reflect their economic cost of supply. This has been done regularly since late 1982 and after the price increases announced in December 1984 petroleum prices at that time corresponded to the economic cost of supply. 41. Electricity. Up to mid-1984, tariffs were among the lowest in the world and far below the long run economic costs of supply despite three 50% increases since early 1982. In 1983 the average sales price to resident consumers was equivalent to about US cents 1fKMh. However by the time of appraisal of the proposed Project in mid 1984 the average price had declined to the equivalent of US cents 0.5/kWh due to devaluation of the Ugandan currency and it was determined that without an immediate tariff increase of between 400% and 500%, the Ugandan Electricity Board (UEB) would not be able to meet its operating costs and to service its debt for the remainder of 1984 and 1985. The Government subsequently authorized and UEB has put into effect as of August 1, 1984 tariffs that were considered to be sufficient to meet these needs. The effect of this increase (430%) and the need for further increases in 1986 and thereafter (or sooner if inflation continues at its present level) are discussed further in paragraphs 73 and 74 below. The tariff rate still remains low by world  - 16 - standards, yielding an average revenue from Ugandan consumers equivalent to US cents 1.5/KWh in late 1984. The tariff rate is also still well below the long-run marginal cost of meeting increases in demand above existing supply capacity in Uganda. A firm estimate of the long-run marginal cost will not be available until the ongoing Power Development Study on future hydroelectric development in Uganda and the tariff study included in the proposed project have been completed. However, a broad estimate of this cost, equivalent to about US cents 5/KWh, was derived in the energy assessment report. The bulk tariffs for supplies to Kenya (40% of total power sales) are also far below economic costs. 42. Woodfuel. In the woodfuel subsector the Government's major concern is the high level of retail prices for households, especially in Kampala. The most effective way to reduce retail prices for woodfuels would be to improve supply. The proposed project will begin to address this with a fuelwood marketing survey and a household energy survey in major towns, which would contribute to developing a strategy for the subsector. Power - Uganda Electricity Board (UEB) 43. UEB, the implementing agency of the proposed project, supplies 2% of Uganda's population with electricity principally from the Owen Falls Hydroelectric Station. The country's average annual generation capability is about 900 GWh. Due to the difficulties of the past decade, UEB has only been able to carry out routine maintenance, and the present firm capacity of the station is substantially below its rated firm capacity of 135 MW. At the time of the appraisal mission in mid 1984, four of the ten units were not in operation, and two of these four units require major overhaul before they can be restored to service. The proposed rehabilitation project includes measures to restore these units to service without which UEB would be unable to fully meet the demand on its system in the near future. UEB's organization and financial position are described in paragraphs 70 to 76 below. Transmission and Distribution 44. The transmission network in Uganda consists of overhead transmission lines and substations operated at 132, 66 and 33 KV, and is supplied from the Owen Falls power station. The 132 KV lines connect Owen Falls power station to Nkenda in the west (passing by Kampala), Masaka in the southwest, Tororo in the east and Lira in the north. A 132 KV line connects the Kenyan system to the Ugandan system at Tororo substation where sales to Kenya are metered. The total length of the transmission and distribution lines at the end of 1981 was 9,951 km. The total transmission transformer capacity was 395 MVA. 45. The transmission system is controlled from the control center located at Owen Falls Power Station. As the system is supplied by one source, any fault in the power station results in total loss of supply throughout the country and to Kenya. Total loss of generation at the Owen Falls power station has been experienced many times, although the duration  - 17 - has never exceeded about two hours. The transmission system has no loops, which reduces the security of supply to outlying areas. Some transmission lines are very long and pass through unpopulated areas; thin makes them difficult to maintain and operationally hazardous. The distribution networks of the main towns such as Kampala and Tororo are reaching their capacities and voltage drops affect the operation of equipment such as motors and TV sets. Local overloading of the distribution systems occurs due to rising domestic demand, including illegal connections. Total system losses have averaged about 16% of UEB's billings to Ugandan consumers for 1981-83. UEB is presently instituting some measures to reduce this level through reduction of unaccounted consumption apart from technical losses, and the proposed project includes additional measures. The power factor is low (about 65%). This situation has to be remedied before system demand rises beyond the present rated level of system supply capability, estimated to occur about 1988 or sooner if the generating units at Owen Falls Power Station are not rehabilitated. After rehabilitation is completed, system supply capability will meet forecast demand through 1991. Power System Rehabilitation 46. Due to scarcity of financial resources, both local and foreign, UEB's construction and maintenance program has been very limited since 1968. Despite reasonable success in maintaining power supply, UEB has not been able to undertake a major system reconstruction program. Assistance for transmission system repairs, especially in areas hit by war, has been obtained through grants under the Government's recovery program, totalling US$6.9 million. However, these financial resources were not enough to cover all rehabilitation requirements. UEB's need for vehicles, communication equipment and spares for the system is so acute that a list of emergency materials and equipment has been prepared for financing from IDA's Second Reconstruction Credit and these goods are currently en route to Kampala. Connections to the UEB System and Access to Service 47. The total number of connections in mid-1984 on UEB's billing records was about 106,000. Of this total, connections to domestic consumers accounted for about 75,000, commercial consumers about 30,200 and industrial and other consumers about 800. However, these totals include a category which UEB terms "nil consumers", which represents connections for which there has been no consumption registered on meters on successive readings. A review of the billing and connection records is included in the proposed project. 48. Analysis of UEB's billing records indicates that the active connections to residential consumers totaled about 40,000 in mid-1984. Assuming an average household size of six, the number of people having access to electricity is estimated to be about 250,000, which is only 2% of the total population. However, the proportion of the population in the major urban centers that is connected to the UEB system ranges from 15 to 20%. Per capita consumption of electricity in 1982 was only 23 kWh, one of the lowest levels in the world. In the late 1960s per capita consumption of electricity was more than double the present level.  - 18 - Sales to Kenya 49. In 1955 Uganda contracted to supply Kenya with firm power of 45 MW for 50 years starting in 1958. This provides a needed source of foreign exchange while providing low cost power to Kenya. This agreement was modified in 1964, when the contracted supply of firm power was reduced to 30 MW and Kenya was committed to maintaining a minimum load factor of 90%. Since 1981, Kenya has altered its pattern of demand on the Ugandan system. During 1984, maximum Kenyan demand has reached 63 MW at night. There has been a noticeable increase in Kenyan maximum demand from March 1984 due to the effect of the present drought in Kenya on its hydropower production. This practice, while never put on a formal basis, has worked to the advantage of both countries. For Kenya, the use of Ugandan power limits the drawdown of the country's steadily declining reservoir storage as well as the need for costly thermal generation. For Uganda, the arrangement has reduced the possibility of demand exceeding system supply capability during the peak load periods, and it has allowed Uganda to earn sales revenue from hydroelectric energy generated at nighttime that would otherwise be spilled. Exports to Kenya have accounted for a substantial proportion of UEB's revenues (44% in 1983), even though the contract price for this power is very low. 50. Ugandan power exports to Kenya remained within 260 and 300 GWh per year between 1971 and 1978, except for 1976 when it dropped to 237 GWh, thus showing remarkable consistency during a period of strained relations between Uganda and Kenya. Currently imports from Uganda account for about 11% of total supply in Kenya and 44% of total output in Uganda. Power exports to Kenya fluctuated substantially between 1978 and 1983, with the lowest levels of 165 GWh and 186 GWh occurring in 1979 and 1981, and the highest level of 300 GWh occurring in 1980 corresponding inversely with the availability of energy from hydropower stations in Kenya. Sales to Tanzania 51. The Government has recently agreed to construct a transmission link with a capacity of 16 MW (126 GWh/year) for export to Tanzania along the west side of Lake Victoria as far as Bukoba. Financing is being negotiated and the new transmission line and transformer station will be completed during 1987 at the earliest. The demand on the Uganda system from this region is forecast to be substantially below the transmission line capacity for some years after commissioning. Uganda is negotiating a bulk tariff with Tanzania and will use data from the Power Development Study (paragraph 52) for this purpose. Government Strategy in the Energy Sector and Power Subsector 52. Government is presently implementing an economic rehabilitation program and is addressing energy issues sectorwide (paragraphs 27 and 30). In the case of power, the Government plans to develop the country's advantage of abundant and relatively low-cost hydroelectric potential for export to neighboring countries. The proposed project is designed as part of the rehabilitation component of this strategy, together with the emergency assistance provided ahead of this project. The groundwork for  - 19 - development of Infrastructure is currently underway with the preparation of a Power Development Study. This study will determine the least-cost power development program, taking into account Uganda's comparative advantage in power production in the region, and it will identify the economically optimum location of the next major hydroelectric development in Uganda. Previous Bank Lending in the Power Sector 53. Before the country's independence the Bank made a loan to UEB in 1961 of US$8.4 million equivalent (Loan 279-UG) for the expansion and improvement of the transmission and distribution system and construction of small hydroelectric and diesel plants and distribution networks to supply isolated areas. Bank Group Support for the Energy Sector 54. After the resumption of lerding to Uganda in 1979/80, the Bank Group initiated its support for the energy sector through the Energy Sector Assessment Mission of October/November 1982 (paragraphs 27/28). The Bank Group is currently assisting the energy sector through project lending and through assistance from ESMAP. Energy efficiency improvements are being attempted under the Industrial Rehabilitation Project (Credit 1248-UG of 1982, US$32 million). In addition, the overall upgrading of the country's infrastructure, including airfields and roads, through the Second Reconstruction Program (Credit No. 1252-UG of 1982 for US$70 million) and the Third Highway Project (Credit No. 1445-UG of 1984 for US$58 million), will facilitate petroleum exploration. The proposed project will assist the electric power and forestry subsectors, by rehabilitating Uganda's power generation, transmission and distribution system and through inven- tories of forests and plantations to increase the supply of fuelwood. ESMAP and Bank staff are collaborating in the preparation of a forestry project. ESMAP has also prepared a proposal for expatriate petroleum specialists to assist the new Energy Department in finding less expensive means to procure and transport petroleum. It also is providing assistance in institutional strengthening, energy efficiency, a preliminary industrial energy audit, and a power loss reduction study (paragraph 30). In the petroleum subsector, the Bank Group is encouraging the Government to improve the efficiency of the sector with particular emphasis on regional cooperation (paragraph 37). Bank Strategy in the Energy Sector and Power Subsector 55. The Bank has an important role to play in promoting policy and institutional reform as well as providing additional resources for the power sector. The Bank's role is to bring about improvements to power system reliability and efficiency, to strengthen UEB's management, to promote rational pricing policies and sound financial performance, to ensure power system development in accordance with the least-cost option and to assist Uganda in exploiting its comparative advantage in hydroelectric resources by exporting more power. The Bank is also following a strategy of encouraging the development of regional projects where these projects have the potential to benefit all the countries concerned. Funds (US$2 million) have been included in the loan to Kenya  - 20 - for the Olkaria Geothermal Power Expansion Project (LN 2237-KE) for the revision of the long-term development program, considering among other options the future role of imports from neighboring countr4es for the benefit of both importing and exporting countries. The Power Development Study (paragraph 52) will provide a basis for discussions with neighboring governments. PART IV: THE PROJECT 56. The proposed project was prepared by the Uganda Electricity Board (UEB) with the assistance of consultants and the Association. It was appraised in July-August 1984. A Staff Appraisal Report entitled 'Uganda - Second Power Project" (No. 5329-UG, dated February 28. 1985) is being distributed separately to the Executive Directors. Negotiations were held in London in February 1985. The Ugandan delegation was led by H. E. Ambassador E. Kamuntu from the President's Office, Mdinistry of Finance, and included officials from UEB. The main features of the credit and project are given in the Credit and Project Summary at the beginning of this report. 57. The proposed project together with the emergency assistance, totaling US$6.9 million, being supplied from the Second Reconstruction Credit (paragraph 46), is part of the Government's energy rehabilitation strategy. The concept and the terms of reference for the feasibility study of the proposed project were included in the assessment report (paragraph 27). On this basis, the Government requested IDA to consider providing some of the funds needed to rehabilitate the Owen Falls hydroelectric scheme and the associated transmission and distribution facilities. As a result, a mission visited Uganda in July-August 1984, to appraise the proposed project. Objectives of the Project 58. The primary objective of the proposed Second Power Project is to prevent the development of a bottleneck in power supplies that would hinder economic recovery in the medium term. This objective would be achieved through uprating and rehabilitation of existing generation capacity at the Owen Falls power station and the capacity of the existing transmission and distribution system. The proposed project also has the objective of strengthening UEB's operational capability. Assistance would be given under the proposed project for studying UEB's electricity tariff levels and structure, planning and project implementation capability and training needs. The project also contributes to future development of the power system through inclusion of funds for carrying out engineering and design work for the next hydroelectric project to be built in Uganda. Studies which address the broader energy objectives of improving sector organization and laying the groundwork for a household energy strategy wGuld also be funded. The proposed project would establish the Bank's position as a major participant in the dialogue on Uganda energy sector  - 21 - development. The Bank's involvement in this project has enabled a firm financing plan to be arranged by encouraging other donor agencies to contribute substantital foreign exchange resources. The Bank will also use Its involvement in the project to provide technical assistance in line with the Bank's power sector strategy. The Bank will also assist the Government and UEB to strengthen UEB's financial situation through implementation of sound policies on tariffs and investment planning. Project Justification 59. The least cost power development program for Uganda is based on indigenous hydroelectric resources, with rehabilitation of Owen Falls Station as the first stage followed by a new hydroelectric station in 1991. A new hydroelectric station would not be a timely alternative to rehabilitation of the Owen Falls Power Station, and interim sources of power based on new thermal capacity would have to be installed to avoid major disruption to the Ugandan economy before the commissioning of new hydroelectric capacity. Rehabilitation of the Owen Falls Power Station provides a much lower-cost source of power than a new hydroelectric station. Thermal types of generation capacity are also much higher-cost options than rehabilitation of Owen Falls Station. Project Description 60. The main features of the proposed project are: (a) For the Owen Falls Power Station: structural repairs to the dam and power house; rehabilitation of the ten turbo-generator units; rehabilitation of electrical and mechanical equipment such as main cables, switchgear and control equipment, auxiliaries, intake and draft tube equipment, and service gates; (b) Transmission and Distribution works include: reconductoring and cable repairs, replacing wooden poles and brush clearance for overhead lines; rehabilitation of underground networks; rehabili- tation of substations; uprating of the 66 KV line between Kampala and Jinja and the strengthening of the lines between Kampala and Nkenda and between Tororo and Lira; and supplying tools and equipment for maintenance and repairs; (c) Supporting these components are provisions for: the purchase of vehicles for maintenance and repair services; refurbishment and rehabilitation of electrical and mechanical workshops; provision of a computer; rehabilitation of UEB's training center, opera- tional buildings and staff housing; engineering and consulting services for supervision of construction; and consultancy for carrying out studies of (i) the tariff structure, (ii) training needs, (iii) the billing and collection system, and (iv) engi- neering work for the next hydroelectric project; and (d) Technical assistance in the form of studies for the Ministry of Power, Posts and Telecommunications, which wGuld focus: on the  - 22 - formation and operation of the Energy Department; on a forest and plantation inventory and on a fuelwood marketing survey as well as a household energy survey in the major towns of Uganda. Implementation 61. Despite the past constraints mainly in obtaining spares, tools and vehicles, UEB has been relatively effective in providing power. However, UEB has not undertaken any major construction since building the Owen Falls Power Station. Therefore it is proposed that the project include engineering and consulting services for design and equipment specification works as well as for construct.ion supervision for both the power plant and the transmission and distribution systems. 62. UEB has enough sk'lled staff to undertake the major tasks of this project, but will require contractors for civil works on the dam and power house at Owen Falls and for the uprating of the 66 KV transmission line between Kampala and Owen Falls and the strengthening of the lines between Kampalr mnd Nkenda and between Tororo and Lira. UEB would provide the labor for rehabilitation of the electrical and mechanical equipment at Owen Falls under the supervision of the equipment and material suppliers as well as the consulting engineers. The transmission and distribution system rehabilitation works would be undertaken by UEB personnel under close supervision of consulting engineers. The consultants would provide technical assistance in planning, procurement, design and construction standards, project implementation and control. A Project Coordinator would be assigned by UEB to supervise the total project. During negotiations, agreement was reached with UEB for establishing and filling this post by June 30, 1985 (Section 3.04 of the Project Agreement). The proposed project includes funds for implementing the findings of the stores and workshop study. An initial emergency supply of vehicles have been financed from the IDA Second Reconstruction Credit. Additional vehicles and tools are included in the project. The successful bidder for the turbo-generator equipment will provide erection supervision; the successful bidder on communication equipment will provide the necessary training. The project will require five years to be completed, because the rehabilitation of the ten generating units at Owen Falls has to be carried out one at a time in order to minimize the reduction of in-service generation capacity. Cost Estimates 63. The project cost (net of interest on financing required, US$14.9 rillion) is estimated to total about US$59 million of which about US$49 million (about 84%) is in foreign exchange. The total financing require- ment, including interest during construction, is estimated to be about US$73 million. The local costs of about US$21 million include about US$0.8 million for duties and taxes, primarily on vehiCles, tools and equipment. UEB is exempt from taxes and duties on power system equipment. The project cost estimate is based on current quotations from various equipment manufacturers and contractors in Europe. The base costs are expressed in January 1985 price terms. Physical contingencies of 15% for civil works and 10% for equipment have been included. Price contingencies reflect the estimated international inflation rates. A detailed breakdown of the  - 23 - estimated Project Cost is in the Credit and Project Suwvary at the beginning of this report. Financing Plan 64. The local costs of the project (about US$21 million equivalent) would be funded by UEB (about US$20 million including interest during construction of US$12 million), using resources generated from its opera- tions, and by CDC and IDA (totalling about US$1.4 million equivalent). For the total foreign cost component, estimated at about US$52 million equiva- lent, IDA would make available about US$28 million equivalent. ODA would finance on a parallel basis a total of UKEII million (US$12.0 million equivalent) for specifically identified British-supplied Project components (consulting engineering for the Project and rehabilitation of Owen Falls generating units). The Commonwealth Development Corporation (CDC) would also make available a total of USS13.0 million equivalent for the proposed Project. The prospective financing plan is thus as summarized in the Credit and Project Summary at the beginning of this report. IDA funds would be onlent to UEB for a term of 20 years including a grace period of 5 years at an interest rate of 10% per annum. The Government would finance the interest requirement during the five years of project ,mpEimentation, and UEB would bear the exchange risk. ODA's terms for UEB would be the same. CDC's contribution of US$13 million would be provided to UTEB for a term of 20 years including a grace period on principal repayment of 5 years. CDC would finance the interest requirement during the five years of project implementation and would include this requirement in the principal amount (US$13 million equivalent) of the loan. UEB would bear the exchange risk. Procurement 65. All procurement would be evaluated by th2 consulting engineers prior to submission to the Central Tender Board of the Ugandan Government so that UEB would be responsible for bid evaluation and contract award in consultation with the consulting engineer. All major components of the project which would be financed from the proceeds of the IDA credit would be procured in accordance with :ne Bank Group's standard procurement guidelines. The minor civil works on transmission installation will be performed by UEB staff. However, the civil works for the training center and the local offices reconstruction (at Mbarara and at Masaka) and UEB staff housing would be cart.ed out by local contractors on the basis of local competitive bidding, as this work would be of no interest to inter- national bidders. The consulting engineering services for the rehabilita- tion of the intake gates, turbines and generators and associated equipment at Owen Falls funded by ODA, would be let on the basis of negotiated contracts. Negotiatee contracts with the original suppliers of the turbo- generator units would achieve the best contract conditions for UEB in terms of price, equipment performance and contract program. The CDC funds would be made available to UEB in accordance with joint cofinancing arrangements with the Bank. Thus all CDC-financed items would be procured in accordance with Bank procurement guidelines.  - 24 - Disbursement 66. The IDA credit would be disbursed over a period of five years and used towards the foreign costs of (i) the Owen Falls Power Station: US$5.4 million; (ii) the transmission and distribution system: US$17.5 million; (iii) vehicles, a computer, training facilities, and technical assistance: US$4.5 million; and (iv) technical assistance local costs: US$1.4 million. ODA funds would be used to finance the total foreign cost and of the turbo-generator work and the associated engineering. CDC funds would be used for financing 30.5% of foreign costs of all items financed by IDA plus the total foreign cost of interest during construction on their loan. 67. The disbursement is scheduled at a quicker rate than the standard profile for power projects in the Eastern Africa Region because most equip- ment would be procured within the first few years in order to be available for the transmission and distribution rehabilitation works. This plus the need for initial payments are the reasons for the relatively large dis- bursement in 1985. The project does not include the usual construction of new facilities, and all foreign currrency expenditures are for the purchase of equipment and erection materials. The project is scheduled to be completed by June 30, 1990, and disbursements would be completed by December 31, 1990. Project Monitoring and Evaluation 68. The records and reports necessary to monitor progress of the project, its evaluation, and the preparation of a project completion report were agreed upon during negotiations, as were monitoring guidelines for project implementation. Risks and Environment 69. The major project risk is the ability of the Ugandan Government to maintain secure working corditions for project implementation and subsequent maintenance. There are certain areas in the country in which the rehabilitation work on t'he transmission and distribution systems could be delayed and even suspended due to difficulties experienced by the local authorities in maitirai.iing public security. Most problems have occurred in the area located about ten to fifteen miles northwest of Kampala. No problems are anticipated at Owen Falls, the locale for most of the project works. Where necessary, contracts will contain provisions to protect contractors against losses resulting from security failures. The physical environment would remain unaffected by the Project. UEB's Management, Staffing and Training 70. UEB has remained a relatively effective institution during the last ten to fifteen years of national disorder. It has however become accustomed to performing a limited program under close supervision of top management. An in-depth study of UEB's organizational requirements is necessary to initiate changes needed for the management of the proposed project and also in the long term. This study will be financed through the Bank's Second Technical Assistance Credit (No. 1434). During negotiations  - 25 - agreement was obtained on implementing the findings of the organizational study as soon as these findings have been determined and agreed by the Government, UEB, and IDA (Section 2.05 of the Project Agreement). The project also includes a new computer for processing UEB's billings and collections. However, a complete in-depth study of billings and collections procedures is necessary before a new computerized system is implemented. The project includes funds for consulting services for this study. During negotiations agreement was reached that UEB should maintain an agreed relationship between outstanding accounts receivable and annual operating revenues [Section 4.02 (c) of the Project Agreement]. 71. UEB has a staff of about 2,600, of which about 150 are professional level, 650 are intermediate technical level and 1,800 are junior, skilled and unskilled workers. With the exception of the chairman/ managing director, all staff are Ugandan. For the immediate future, including implementation of the proposed project, the staffing situation is satisfactory, but an enlarged and upgraded training program and rehabilita- tion of the training center at Owen Falls will be required. A study of UEB's training needs up to the year 1995 is included in the project and would complement the Power Development Study. During negotiations, agree- ment was reached on the study's completion date of June 30, 1986 and a program for its subsequent implementation (Section 2.06 of the Project Agreement). UEB's Financial Posilion 72. UEB's financial ratios at December 31, 1984, based on the current estimates, appears to be acceptable with a current ratio of 2.1 and a debt- equity ratio of 39/61 (historical) and 3/97 (revalued). However, current assets include customer accounts receivable balances which reflect about five months of sales. Therefore UEB's current position at December 31, 1984 was not strong but is expected to improve due to the 430% tariff increase effected on August 1, 1984 (paragraph 41). 73. Inflation in Uganda which appeared to be diminishing and coming under control in recent years after a long period of high double digit gnitude, again soared after the implementation of the overall wage and salary increase in July 1984. It is now anticipated that the inflation * rate for 1984 will have reached about 60% on an annualized basis and that the level of inflation in the immediate future will be difficult to predict with accuracy. Therefore, for the purposes of this report, future operat- ing results and financial positions of UEB have been projected in USS terms. Thus the financial performance shown in these projections reflect only the anticipated international inflation in United States currency and tariff increases shown in these projections must be augmented by increases relative to the movement of the USh against the USS to derive the corres- ponding tariff rate in Ugandan currency terms, assuming that exchange fluctuation will be consistent with local inflation. Additional correc- tions will have to be made where there is a lack of consistency with local inflation. If inflation remains near the 1984 level during the project implementation period, significant tariff increases will be required to compensate for the related movement in the exchange rate.  - 26 - 74. Based on these USS projections, UEB would have positive earnings throughout the 1985-1991 period with rates of return based on a revalued asset-base of 1% in 1985, 5% in 1986, 6% in 1987, 7% in 1988 and 1989 and 8% thereafter. This performance anticipates tariff increases in US$ terms of 50% in 1986, 24% in 1987, 11% in 1989 and 16% in 1990. The tariff increase percentages for 1986 and 1987 apply to Ugsndan sales; the percent- ages for 1989 and 1990 apply to all sales including the bulk sales to Kenya and Tanzania. Revenues in 1991 based on this tariff program would be US cents 3.37/KWh for Ugandan services and US cents 2.77/KWh overall compared with the preliminary estimate for a long-run marginal cost of about US cents 5/KWh. During negotiations, agreement was reached that UEB will achieve these annual rates-of-return on average net revalued plant in operation and that this measure of performance will be based on the US$ equivalent of UEB's operating performance and financial position [Section 4.03 (a) and (d) of the Project Agreement|. UEB will review the adequacy of its tariffs to meet these requirements annually by June 30 and, if necessary, adjust its tariff structure or level accordingly [Section 4.03 (b) and (c) of the Project Agreement]. In addition, there will be quarterly reviews and, if necessary, appropriate increases of UEB's tariffs to take account of local inflation [Section 4.04 (a) of the Project Agreement]. 75. The performance measures detailed in the preceding paragraph will require special financial reporting quarterly and annually, respectively, showing UEB's operations in US dollar equivalents and reflecting the revaluation of UEB's fixed assets [Section 4.03 (d) of the Project Agreement], and showing the results of UEB's quarterly review and related tariff action within one month of the close of the calendar quarter [Section 4.04 (b) of the Project Agreement]. 76. The financial projections exclude the requirements for a second hydroelectric generating station since the decision on the size and plans for its financing have not been taken. It would appear that construction of this facility should begin about 1987 if it is to bE completed by 1991 when present demand forecasts show a need for additional generating capacity. Higher revenues and rates of return than those reflected in the projections will probably be required to provide at least the local fund component for the financing of the facility. This situation will be initially monitored through the application of the debt service covenant. Therefore, during negotiations agreement was obtained that UEB will consult with the Association on the development of the next hydroelectric station and UEB would not incur any new debt without IDA's agreement unless historical twelve-month net revenues of UEB cover future maximum debt service, including that related to the new debt, at least 1.5 times (Sections 4.02 of the Development Credit Agreement and 4.06 of the Project Agreement). Tariff - Bulk Supply to Kenya and Tanzania 77. In the past, when Uganda had substantial surplus capacity, sales to Kenya at even lower rates than the present levels were justified as extra income for power supplied at zero marginal cost, and these sales were an important source of income to UEB and foreign exchange to Uganda.  - 27 - However, when the demand on the Ugandan system surpasses existing generating capacity, which is projected to occur about 1991 if this proposed rehabilitation project is implemented, power supplies to Kenya will have an opportunity cost for Uganda equal to the long-run marginal cost of installing new capacity, estimated at about US$0.05/KWh in 1984 prices. UEB has been discussing the level of the Kenya bulk supply tariff with the Kenyan authorities and anticipates another increase in the near future, since even if the tariff is increased to reflect the cost of installing new capacity (paragraph 74), Ugandan power would remain a low-cost source of supply to Kenya. Kenya has unofficially indicated its willingness to review the situation. Formal discussions are scheduled to be initiated when the supporting data are available from the Power Development Study. 78. In 1983 the Government agreed to export 16 MW (126 GWh/year) to Tanzania along the west side of Lake Victoria as far as Bukoba, and UEB has agreed to construct the transmission line to connect with the Tanzanian transmission facilities to provide this service. This construction is unlikely to be completed before sometime in 1987 and revenue from this source has been reflected in the financial projections beginning in 1988. For projection purposes the revenues from this service and from that provided to Kenya have been estimated from 1988 reflecting a rate which approximates 50% of the average retail rate for service to Ugandan consumers. An additional increase in the Ugandan tariffs of 25% would be required in 1987 to compensate for the additional revenue projected from Kenyan sales if the 520% increase reflected in the export tariff cannot be negotiated. Therefore, the timing and amount of bulk tariff increases which can be obtained will influence what increases might be required to comply with the earnings requirements detailed in paragraph 74. UEB's Proposed Financing Plan and Terms 79. During the project implementation period j1985-1990), UEB's construction program anticipates expenditures of US$97.6 million including interest financed of US$14.9 million. About 71% or US$69.4 million of the total construction program during this period relates to the proposed project. Internal generation would cover the direct local cost of the project construction, the interest requirement on the project debt after the interest financing periods have expired, the debt repayment require- ments on the project debt after the grace periods have expired, and the debt servicing requirements on all other debt. Internal generation after covering debt services produces 39% of the funds required for construction during the project implementation period, which is reasonable. Future Operations and Financial Performance 80. The projected results of operation for UEB in USS equivalent for the 1984-1991 period indicate that UEB's financial performance and condition would be satisfactory throughout the period. This performance is based on the estimated average annual rate of increase in sales of about 7%, and the proposed tariff increase program in addition to the increase made effective August 1, 1984 and the revision of the bulk tariff in 1988.  - 28 - Internal Rate of Return 81. The internal rate of return (IRR) of UEB's present rehabilitation investment program, of which the proposed rehabilitation project is the major component, is estimated to be 16.7%. The IRR is derived from comparison of the economic costs of the program with the economic benefits in terms of demand that will be served from the rehabilitated facilities. The estimated IRR does not include investments required to meet major increases in demand, specifically a new power station. Benefits are defined by incremental energy demand served by reference to the case in which the rehabilitation program is not undertaken, valued at the average tariff yield prevailing in January 1985. At the tariff level required to meet UEB's financial objectives (paragraph 74), the IRR is estimated to be 21.6X. Both estimates of IRR are above the estimated value Eor the opportunity cost of capital in Uganda (12x). 82. A firm estimate of the long-run marginal cost (LRMC) of meeting increases in demand for power is not yet available. A preliminary estimate of the LRMC is about US cents 5/KWh. The present tariff yield (equivalent to US cents 1.4/KWh in January 1985) is thus much lower than LRMC. Government policy should be to raise tariffs in accordance with LRMC before the next hydroelectric station is commissioned. Furthermore, valuation of benefits according to the present low average tariff gives a minimum estimate of IRR since it excludes the value of consumer surplus. Since the increment of energy demand under consideration constitutes a large proportion of the total demand in some years, the element of consumer surplus is a substantial source of benefit for the project. The mission has derived a broad estimate of the value of the forecast consumption in terms of consumer willingness-to-pay for power from the public system of equivalent to about US cents 9.6/KWh, which is well above the LRMC of supply and, therefore, illustrates the scope Government has for tariff reform. PART V - LEGAL INSTRUMENTS AND AUTHORITY 83. The Development Credit Agreement between the Republic of Uganda and the Association, the Project Agreement between the Association and the Uganda Electricity Board, and the Recommendation of the Committee provided for in Article V, Section I (d) of the Articles of Agreement are being distributed separately. 84. The execution of a Subsidiary Loan Agreement between the Borrower and UEB and the execution of the CDC Loan Agreement between CDC and UEB and of the CDC Guarantee Agreement between CDC and the Borrower, and the fulfillment of all conditons for the commencement of disbursements from the CDC Loan, would be special conditons of effectiveness for the proposed credit [Section 6.01 (a) and (b) of the Development Credit Agreement]. Special conditions of the project are listed in Section III of Annex III to this report.  - 29 - 85. I am satisfied that the proposed development credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 86. I recomend that the Executive Directors approve the proposed credit. A.W. Clausen President By Ernest Stern Attachments Washington, D.C. February 28, 1985  - 30- ANNX I Page 1 of 5 TA S L r 3A UCANDA - SOCIAL INDICATOS DATA SHEEr UGawM RERNCE GROUPS (WEIGHTED AVERiAGE) la HOST (MoT RECENT CBTIATE) lb RICCNT LOW INCOME AFRICA MIDDLE INCOKM 9b0/b 1970/b ISTLATC/b SOUTH OP SAHARA AFRICA S. o0 SAHARA AREA (TJUSh1 SQ. RE) TOTAL 236.0 236.0 236.0 AGRICULTURAL 89.3 99.8 107.6 CWP PER CAPITA (US9) 100.0 160.0 Z30.0 249.1 1112.9 m caMUscu P CWAITAi (KILOGRAMS OF OIL EqUIVALrNT) 27.0 58.0 23.0 62.3 529.0 POPULATIO AM vnIAL mUnmcs POPULATtONHNID-YEAR (THOUSANDS) 7286.0 9758.0 13451.0 URBAN POPULATION (Z OF TOTAL) 5.2 8.0 8.7 19.2 29.7 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (HILL) .. .. 24.7 STATLONARY POPULATION (HILL) .. .. 8.5 POPULATION MOWENTIS .. .. 2.0 POPULATION DENSITY PER SQ. Di. 30.9 41.3 55.2 32.5 55.8 PER SQ. KM. AGRI. LAND 81.6 97.8 121.1 119.2 111.5 POPULATION ACE STRUCTURE (2) 0-l6 YRS 43.3 44.4 45.0 45.6 45.4 15-64 YRS 53.6 52.6 51.6 5l.5 51.7 65 AND A5OVE0 3.1 3.3 3.3 2.9 2.9 POPULATION CROWTH RATE (Z) TOTAL 2.8 2.9 2.7 2.8 2.8 URUA 7.3 7.1 3.4 6.2 5.2 CRUDE BIRTH RATE (PrER THOUS) 49.4 49.9 50.1 48.6 47.0 CRUDE DEATH RATE (PER THODS) 21.2 18.4 18.7 17.7 15.2 GROSS REPRoDUCTION RATE 3.4 3.4 3.0 3.2 3.2 FAMILY PLANNING ACCEPTORS. ANNUAL (THOOS) .. 3.3 16.1 /c USERS (2 OF MARRIED WOMEN) . .. FOOD AIID Im0TRrI INDEX OF FOOD PROD. PER CAPITA (I9*9-71-100) 107.0 99.0 86.0 85.8 91.6 PER CAPITA SUPPLY OF CALORIES (2 OF REQUIREMENTS) 96.0 98.0 80.0 86.4 98.2 PRoTEINS (CRAMS PER DAY) 51.0 55.0 50.0 49.9 56.7 or WHICH ANAKAL AND rULSE 23.0 24.0 27.0 /d 38.3 17.0 CHILD (AGES 1-4) DEATH RATE 28.0 17.0 22.0 23.8 38.7 LIFE EXPECT. AT nIRTH (YEARS) 43.0 46.8 46.6 48.4 52.7 INFANT MORT. RATE (PER1 THOUS) 138.9 113.2 120.0 117.5 102.7 ACCESS TO SAFE WATER (EPOP) TOTAL *- 22.0 35.0 /c 21.8 35.6 URBAN *- 88.0 100.0 Ic 61.5 54.1 RURAL .. 17.0 29.0 /;_ 14.2 IC 27.3 ACCESS TO EXCRETA DISPOSAL (2 OF POPULATION) TOTAL .. 76.0 94.0 /c 32.0 URBAN .. 84.0 82.0 Ic 69.2 RURAL .. 76.0 95.0 Ic 24.8 POPULATION PER PHYSICIAN 15050.0 9160.0 Ie 26810.0 /d 27477.8 11948.3 POP. PER NUIRSINC PERSON 1030.0 5120.0 7 4180.0 d 3396.2 2248.9 POP. PER HOSPITAL RED TOTAL 750.0 640.0 610.0 /c 1089.0 986.9 URBAN 80.0 80.0 100.0 Ic 395.2 368.7 RURAL 1710.0 1820.0 1600.0 Ie 3094.0