Madagascar - Energy Project

Dammat of The World Bank FOR OMCIAL USE ONLY QC flk2t- k'cN Report No. P-4438-MAG REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT OF SDR 19.8 MILLION (US$ 25.0 MILLION EQUIVALENT) TO THE DEMOCRATIC REPUBLIC OF MADAGASCAR FOR AN ENERGY PROJECT April 9, 1987 I This documcnt has a restricted distribution and may be used by recipienis only in the performance of their official duties. Its contents may not otherwise be discicqed without World Bank authorization.  DEMOCRATIC RlEUBLIC OF MADAGASCAR CURRENCY EgUrIVATgNTS Calendar 1986 January 19117 Currency Unit Malagasy P onc (FMG) US$ 1.00 - FHG 676 FMG 755 FMG 100 - US$ 0.15 USS 0.13 SDR 1.00 11U$ 1.11 US$ 1.25 US$ 1.00 - SDR 0.85 SDR 0.80 EKchange rate used in Appraisal and President'a Reports USS 1o00 FMG 750 (am of July 1986), WEIGHTS AND MEASURES 1 cubic meter (m3) - 35.29 cubic feet 1 kilometer (km) - 0.621 mile 1 kilovolt (KY) - 1,000 volts 1 megawatt (MW) - 1,000 kilowatte 1 gigawatt hour (G0H) - I million kilowatt hours (KWH) 1 ton of oil equivalent (toe) - 10,500,000 kilocalories 1 gigawatt (OW) - 1,000 MW 1 hectare (ha) - 2.47 acre ABBREVIATIONS BADEA - Banque Arabe pour le Developpement Economique en Afrique (Arab Bank for Economic Development in Africa) INI - Banque Nationale pour l'Industrie (National Bank for Industry) CCCE - Caisse Centrale de Cooperation Economique (France) CIDA - Canadian International Development Agency DEE - Department of Electricity and Water DEF - Department of Fishery and Forestry DGP - Planning Directorate ESMAP - Energy Sector Management Assistance Program FAC - Fonds d'Aide et de Cooperation (France) FANALAMANGA - Malagasy Industrial Wood Plantation Authority FAO - Food and Agriculture Organization FED - Fonds Europ;en de Diveloppement (European Development Fund) GOM - Gover nment of Madagascar ICS - Inter-Connected System JIRAMA - Malggasy Electricity and Water Corporation MIEM - Ministry of Industry, Energy and Mines MPAEF - Ministry of Animal Production, Fisheries and Forests MPABA - Ministry of Agricultural Production and Agrarian Reform OMNIS - National Military Office for Strategic Industries PSIP - Public Sector Investment Program RIP - Power Sector Reference Investment Program SOLIMA - Malagasy National Petroleum Company UNDP - United Nations Development Program USAID - United States Agency for International Development EZ - Major Power Production Zone Outside ICS IZ - Small Isolated Power Systems FISCAL YEAR January 1 - December 31  FOR OFFICIL USE ONLY MADAGASCAR ENERGY PROJECT CUEDIT AND PROJECT SUMMARY Borrowers Government of Madagascar. Amounts SDR 19.8 million (US$25.0 million equivalent). Beneficiaries: The Malagasy Electricity and Water Corporation (JIRAMA); the Ministries of Industry, Enqrgy and Mines, of Agricultural Production and Agrarian Reform and of Animal Production, Fisheries and Forests; public enterprLses involved in the boiler program; local private charcoalers; and the Hmlagay Industrial Wood Plantation Authority (FANALAMANA). Terms: Standard IDA terms.1i Prolect Oblectives: The purpose of the credit is to: help the Government and JIRAMA improve the reliability of power production and supply through the rehabilitation and expansion of existing infrastructure; strengthen JRAMA&'s financial and operational performance; maximize the commercial use of existing hydropower resources and other economically accessible household energy resources; and strengthen enorgy sector institutions, particularly in the area of policy formulation, planning, and investment programming. Prolect Description: The project would finance the hlghost priority components of JIRAHA's investment plan for 1987-92, and equipment and technical assistance for strengthening energy sector planning capability and developing economically accessible energy resources. The project consists of the following main components: (a) for the power sector: rehabilitation and expansion of high-priority generating plants and transmission and distribution facilities; provision of telecommunication equipment and vehicles and related spare parts; mobile maintenance equipment, computer hardware and software in support of planning and investment programming; staff training, technical assistance and studies; and installation of electric boilers to use the surplus hydropower in the Inter-Connected System; and (b) for the energy sector: equipment for production of pine charcoal and rice husk briquettes; and technical assistance and studies to strengthen energy planning and support household energy demand strategy formulation. I/ Onlending terms to IrRAhA would be 1.1 times the interest rate of the Bank at the time of Board presentation for a period of 25 years including a grace period of 5 years. This document has a restricted distribution and may be used by recipients only in the performance of their oficia duties. Its contents may not otherwise be dislobsed without World Bank authorization.  - ii - Beneflt.: By reducing outages, the proposed project would help to stabilize power supply, facilitate Industrial output and export growth, and the connection of new domestic consumers. It would lead also to savings In imported fuel oil and coal, as well as to sound financial management in JIRAM& and energy sector investment planning and investment programming. Risks: The two main risks facing the project are that: JIRAMA could have difficulty in administering the rehabilitation works and Government could delay required tariff increases and other financial measures. These risks would be minimized by the hiring of consultants to assist with the implementation of the rehabilitation program and through the careful definition of precise conditions tied to the release of the proposed IDA credit. Other major physical risks are minimal since the project concentrates mostly on rehabilitation and JIRAMA has a good record of safe engineering practices. Local Foreign Total -5- US$ Million ------- Estimated Costs I. Power components Generation 1.9 13.4 15.3 Transmission and Substations 0.6 2.2 2.8 Distribution 1.1 11.1 12.2 General Plant 0.0 4.4 4.4 Power Sector Institution Building 0.3 0.9 1.2 Feasibility Studies 0.1 1.0 1.1 Electric Boiler Program 0.2 1.4 1.6 Sub-Total Power Components 4.2 34.4 38.6 II. Energy components Household & Industrial Fuels Production 0.1 1.2 1.3 Energy Planning Support 1.8 2.8 4.6 Studies 0.0 0.6 0.6 Sub-Total Energy Components 1.9 4.6 5.5 ProIect Preparation 0 0.9 0.9 Base Cost 6.1 39.9 46.0  - iii - Contingeancess Physical 0.4 2.6 3.0 Price 0.4 2.3 2.7 Duties and Taxes 8I1 0.0 8.1 Total Project Cost 15.0 44.8 59.8 Local Foreign Total -------US$ Million------- Financing Plan IDA 25.0 25.0 EIB 14.4 14.4 BADEA 5.4 5.4 JIRAMA 10.5 - 10.5 Others 0.2 - 0.2 Government 4.3 - 4.3 Total Financing 15.0 44.8 59.8 Estimated IDA Disbursements Bank Fiscal Years 1988 1989 1990 1991 1992 ---- US$ Million - Annual 1.0 4.0 7.5 7.0 5.5 Cumulative 1.0 5.0 12.5 19.5 25.0 Economic Rate of Return: 33 percent for the JIRAHA power system 46 percent for the Inter-Connected System alone Appraisal Report: 6405-MAG Na-p:. IBRD No. 18816  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE DEMOCRATIC REPUBLIC OF MADAGASCAR FOR AN ENERGY PROJECT 1. I submit the following report and recommendation on a proposed IDA credit of SDR 19.8 million (US$25.0 million equivalent) to the Democratic Republic of Madagascar on standard IDA terms to help finance an Energy Project. Out of the credit proceeds, (a) US$17.9 million would be onlent to JIRAMA at 1.1 times the Bank's interest rate at the time of Board presentation for 25 years including a grace period of 5 years; and (b) US$1.8 million would be channeled through BNI, to private charcoalers and selected enterprises for the purchase of electric boilers to use surplus power generated by JIRAMA. Cofinancing for the project is expected to be provided by the European Investment Bank, and by BADEA. PART I - THE ECONOMY 2. A report entitled "Current Economic Situation and Prospects" (Report No. 5996-MAG) was distributed to the Executive Directors and to participants in the Madagascar Consultative Group in March 1986. Its conclusions as well as the results of IMF negotiations on a Sixth Standby Program are reflected below. Country data sheets are provided in Annex I. 3. With a population of 10 million and a per capita income of US$250 in 1985, Madagascar is one of the poorest countries in the world. The country is sparsely settled, with a population density of about 17 inhabitants per square kilometer. While generally well endowed with natural resources and a variety of soils, there are large regional variations in ecology and climate. Agriculture is the mainstay of the economy, providing employment for 85 percent of the population, creating two fifths of GDP and generating more than 80 percent of export earnings (coffee, vanilla and cloves). 4. The years following 1972 marked a turning point in Madagascar's political and economic development. The government that took office in 1972 emphasized national control of the economy. It introduced inward- looking policies aiming at self-sufficiency in industry and agriculture, nationalized most of the larger private companies (which were essentially foreign-owned), and established direct or indirect state control over the greater part of agricultural marketing. A new system of regional and local government (the fokonolona system) was introduced, intended to provide for decentralization within a framewqrk of centralized control. The present regime, which came to power in 1975, intensified, extended, and codified these policies. Pricing policies became biased in favor of urban consumers. Fiscal and external economic policy remained cautious through most of the decade, and the level of public external debt was extremely low. In 1978, however, Government decided to diversify the economy, taking advantage of Madagascar's borrowing potential, and adopted a policy of  - 2 - "all-out investment." Many new parastatal companies were created. Unfortunately, many of the projects selected made very little contribution to GNP, exports, or debt-servicing capacity, so that by 1980 the debt service ratio was rising sharply. 5. From 1973 to 1982, real per capita GDP fell by an estimated 28 percent. The main factors behind this decline were: (a) the persistent climate of uncertainty within the private sector created by the nationalizations of the mid-1970s, combined with the rapid expansion of an inefficient and unmanageable public sector; (b) excessive market regulation, through price fixing and controls that favored urban consumers, restrictive licensing legislation, quantitative import restrictions and exchange controls, and the establishment of national and regional marketing monopolies (cereals, agricultural inputs, basic comnodities, road and sea transport, financial institutions); and (c) the neglect of smallholder agriculture in favor of import-substitution manufacturing, including enterprises of dubious economic value. 6. The financial crisis that started in 1980 was the result both of inappropriate policies and of external shocks. While export prices flagged and international oil prices doubled, GDP and export volumes continued to decline, the budgetary deficit rose to 18 percent of GDP, domestic inflation reached 30 percent per year, external debt service obligations (before rescheduling) relative to exports escalated from about 4 percent in 1978 to a peak 90 percent in 1985, and the current account deficit of the balance of payments reached 18 percent of GDP. As resource constraints tightened, domestic investment plummeted. Under the impact of heavy external payment obligations, declining export earnings, and reduced creditworthiness, severe foreign exchange shortages prevailed. Import constraints, the severe rationing of foreign exchange, and an overvalued exchange rate contributed to a sustained decline in industrial and agricultural production. 7. Faced with an unsustainable external current account gap, Government began to implement stabilization measures in 1981 with IMF assistance. From 1983, aggregate expenditure was steadily reduced and gross domestic savinge increased. Among the notable measures taken to control demand were the abolition of consumer subsidies and tight monetary management. Sustained austerity combined with measures to boost revenues helped reduce the budget deficit;and inflation. Measures were also taken to restore production incentives. Throughout 1982-85, the FMG underwent a real depreciation of 25 percent vis-a-vis the SDR, and a further 20 percent depreciation was implemented in August 1986. Public sector tariffs were increased, while a program of liberalization of prices and markets was undertaken in the agricultural, industrial, and transport sectors. 8. Between 1980 and 1985, agricultural output fluctuated. Production of rice remained at around 2 million metric tons of paddy per year. Madagascar had to continue importing rice throughout the period, although the volume imported declined steadily from a peak 356,000 metric tons in 1982 to about 105,000 metric tons in 1985. The decline in rice imports, however, was due to foreign exchange scarcity rather than any marked increase in domestic self-sufficiency. Production of other food crops (maize, potatoes, cassava, sweet potatoes) grew steadily and significantly, following higher demand for these crops as a result of increased rice prices. Coffee exports since 1982 averaged 50,000 tons per year, compared  - 3 - to 70,000 tons in 1980. The decline was the result of low producer prices, shortages of inputs and transportation bottlenecks. Cotton production grew rapidly in response to increased producer prices and, with the support of a project financed by IDA and France, Madagascar became a net exporter of cotton fiber. The production of other industrial and export crops generally stagnated (e.g., tobacco and pepper) or declined (e.g., groundnuts) due to inappropriate pricing and marketing policies which reduced incentives to producers and traders. The output of two other principal export crops, vanilla and cloves, was stagnant in the face of limited world market demand. 9. Industrial output declined sharply between 1980 and 1984 with a modest recovery in 1985 and 1986. Industrial manufacturing capacity has been heavily underutilized in recent years owing to shortages of domestically supplied and imported inputs and spare parts. The construction industry also remained slack. On the policy front, Government initiated positive changes, easing pricing controls, improving the administration of foreign exchange allocation, and legislating a new Investment Code aimed at attrseting foreign private investors. A liberalized import regime is being implemented which will eliminate quantitat'ive restrictions on about 15 percent of merchandise imports. 10. Owing to the slow growth of agriculture and industry, transport activity also stagnated. Costs escalated due to the dilapidated state of the transport system. Low admin.'stered tariffs reduced incentives to private transporters, thus further discouraging the provision of services. To improve the transport system and the policy environment, Government selected an "economic network" of about lO,000 kms of primary and secondary roads for priority rehabilitation; established a road fund for maintenance; and permitted tariff increases for the roads, railways, and the national airline. A national transport plan is now being prepared with IDA support. 11. Public Finance. The "all-out investment" campaign of the late 1970s caused an unprecedented growth in public capital expenditures. It was largely financed by external loans and substantial budget deficits, leading to the accumulation of arrears. Between 1981 and 1985, the bulk of the fiscal adjustment was accomplished by cutting capital expenditures, reducing general Government activity, containing the expansion of the payroll, and phasing out budgetary subsidies to parastatals (many of which subsequently became indebted to the banking system). Given the low level of activity of the economy, attempts to increase revenues were generally less successful. The magnitude of the overall budgetary deficit, which stood at 18 percent of GDP in 1980, was reduced to 4.5 percent in 1985. Current budgetary deficits were eliminated from 1983 on, so that the Government was in a position to contribute to development expenditures. Nevertheless, the size of the current surplus remains small relative to public investment needs, so that the execution of a number of foreign- financed projects is stifled due to the lack of local cost financing. 12. Monetary developments during 1980-85 were generally in line with fiscal developments, reflecting implementation of stabilization measures. Throughout the period, the growth of credit to Government was reduced and, beginning in 1982, credit to the non-government (i.e., parastatal and private) sectors generally expanded faster than credit to the Government. Domestic inflation was reduced, from about 30 percent in 1981 and 1982 to approximately 11 percent in 1985. The reduction of inflation during the period was all the more remarkable in that it occurred at a time when the Malagasy Franc was depreciating.  - 4 - 13. Madagascar's balance of Payments remained weak throughout 1980-85, despite substantial annual reductions in the volume of imports to the point of adversely affecting economic activitiss. The position remaiAed weak owlng to poor export performance and heavy debt service payments. Stabilization efforto throughout the period led to steady and marked Improvements in the resource and current balances. In 1985, the resource gap (US$140 million) and current account deficit (US$258 million) had fallen to 25 percent and 45 percent of their respective 1980 levels. 14. Based on the external debt portfollo at and 19B6 and after taking into account pipeline disbursements, Madagascar will need gross capital inflow of about US$450 million per year during the 1987-90 period to cover current account deficits, meet scheduled debt repayments, and maintain a modest amount of gross reserves. The country will therefore continue to need increased financial assistance from the international community in the form of grants, concessional borrowings and debt relief. The conditions under which Madagascar is able to obtain new finance and reschedule the debt are of crucial importance and will determine whether the country will be able to overcome present external payment constraints, even with a high- quality policy program. 15. Financial Strategy. Sincc the emergence of the debt crisis at the beginning of the 1980s, Madagascar has managed the balance of payments by cutting imports, through the demand management measures described above, complemented by substantial debt rescLeduling. These measures are very costly, involving disruption of economic activity and refinancing of some originally concessional loans at less concessional terms. Even more important, they have yet to lead to a viable balance of payments, which can only be achieved by restoring growth in export earnings. Madagascar now has probably reached a limit to further cuts in imports as these are down to bare essentials. While the country's creditors may continue to accord debt rescheduling, to generate significant amounts of debt relief the rescheduling arrangements would need to be more concessional than previously. In the future, therefore, Madagascar must attempt to boost export earnings as a means of strengthening the balance of payments and reducing the debt burden. Concessional balance of payments support will continue to be needed. 16. Relationship with the IMF. The Government complied with the performance crlteria of the Fifth Standby Agreement signed in April 1985. Most of the important program targets were achieved. A Sixth Standby Program was approved by the Fund Executive Directors in September 19B6, and the first review of it was completed by the Fund Board in March 1987. While continuing measures to stabilize the economy, the program emphasizes the promotion of economic growth by means of further liberalization of the external account, the rehabilitation of selected parastatals, improved domestic producer prices and marketing systems, and a substantial step devaluation of the FMG. Madagascar is eligible for IMF Structural Adjustment Facility resources, and a medium-term program is being formulated with the help of the Bank and the IMF. 17. The third meeting of the Consultative Group for Madagascar took place on April 25 and 26, 1986. The participants agreed that the Government's program of policy reforms was on the right path and it was urgent that It be pursued and developed further. It was recognized that if Government's efforts were to succeed, Madagascar needs substantial external support. This would be provided by a combination of higher official  development asuimtance, particularly in the form of quick disbursing aid, and debt rescheduling. Agreement on rescheduling was reached at a meeting of the Paris Club on October 25, 1986, and the Consultative Group is expected to moet again in late 1987. PART II- BANK GROUP OPERATIONS IN MADAGASCAR 18. Overall Lending Lbvels and Sectoral Composition. As of September 1986, IDA credits to Madagascar amounted to US$607.9 million (including US$29.9 million from the Special Fund) and Bank loans totaled US$32.6 million. Bank Group assistance to Madagascar has been concentrated on infrastructure, including urban and social infrastructure (48 percent of lending), agriculture and industry (41 percent), and onergy (11 percent). IFC has four investments in Madagascar, in textiles, footwear, and fisheries. Annex II contains a summary statemont of past loans and IDA credits as of September 30, 1986. 19. Energv lending. The energy sector has received growing Bank Group attention. In 1978, IDA participated with several co-lenders in the f.nancing of the large Andekaleka hydroelectric project, which was successfully completed in June 1982. The Petroletum Exploration Promotion Credit (US$12.5 million) and the Tsimiroro Heavy Oil Exploration Credit (US$11.5 million) approved respectively in 1980 and 1982, have both supported Government's efforts in attracting foreign oil companies for exploration development. 20. Infrastructure Lending. The Bank has supported eleven transport projects with IDA credits totaling US$201.8 million. Six credits (US$147.2 million) were for the construction, maintenance, and rehabilitation of highways; two (US$23.6 million) in 1970 and 1986 to improve Madagascar's main port of Toamasina and sector institutions; and three (US$31.0 million) to support the railway's modernization efforts in 1974, 1979, and 1986. Out of the eleven projects, seven have been completed. Urban infrastructure development benefited in 1980 from a Water Supply and Sanitation Credit for the capital city of Antananarivo (US$20.5 million) and an urban development project (US$12.8 million) in 1984. In 1984, IDA responded to the need to reconstruct cyclone damage with a US$15 million credit. A supplemental credit of US$10 million, following the March 1986 cyclone, was signed in August 1986. 21. Agricultural Lending. The Bank has supported 15 agricultural projects, of which five have been completed. This has included projects in livestock development (three), irrigation (four), agricultural institution development (two), forestry (two), agricultural credit (one), rice intensification (one), and cotton development (one). An Agricultural Sector Adjustment Credit, with complementary Special Facility for Africa and Special Joint Financing resources, was approved in May 1986. 22. Other Lending. In 1980, a US$5 million credit was made to the Industrial Development Bank of Madagascar. An Industrial Sector Adjustment Credit of US$40 million became effective in August 1985, and a Supplemental Credit of US$20 million from the Special Facility for Africa was approved in December 1985. In the social sectors, education has been the major recipient of Bank assistance, with two credits in 1967 and 1976 totaling US$11.8 million. A credit of SDR 9.4 million (US$11.5 million) for an accounting and audit training project was approved in 1981; and a second  credit of US10.3 million for management and acccQnting training in February 1986. 23. Implementation Problems. Problems encountered in the execution of a number of projects included mainly delays, cost overruns, deficiencies in management, and inadequate financial performance. Current problems center on difficulties linked to the country's economic crlsis, notably the acute shortage of foreign exchange and budget funds, and Institutional problems with the parastatal system. The Bank has addressed generic issues in part through Country Implementation Reviews, technical assigtance and secondment staff. The Government h%s been responsive and there have been improvements in Government portfolio management. 24. Prolect Evaluation. Eight completed projects have been audited by the Operations Evaluation Department. Audit Report No. 1622 of December 1976 on the first Lac Alaotra project concluded that the project was generally successful. However, the Impact Evaluation Report No. 3600 of August 1981 concluded that earlier assessments of project performance had been over-optimistic, and that the actual rate of return was probably negative. Audit Report No. 1143 of April 1976 of the first Education Project concluded that the education and manpower training objectives were satisfactorily achieved. Report No. 2143 of July 1978 concluded that the Third Highway project was well justified and had a satisfactory rate of return despite substantial cost overruns. Report No. 2299 of December 1978 concluded that the physical objectives of the Tamatave Port project were satisfactorily achieved, but pointed out that the institutional objective was not accomplished during project implementation because of inadequacies in the staffing of the port authority. Report No. 5434 of January 29, 1984, on the first Railway Project concluded that due to overruns and delays, the scaled-down project had an estimated rate of return of less than 10 percent. Report No. 5403 of December 28, 1984, covered two agricultural projects: the Morondava Irrigation and Rural Development Project was a profoundly disappointing operation, but the Village Livestock and Rural Development Project contributed to laying the groundwork for more effective services for traditional livestock owners, with good prospects for sustainability. 25. Bank Stratexy and Future Program. The Bank strategy is to support the Government's efforts to rehabilitate and restructure the economy by: (a) promoting policies and programs aimed at reforming incentive structures, setting a more favorable climate for private sector initiative and investments, and providing financial and other support for appropriate policy prograns; (b) supporting sectoral strategies aimed at rehabilitating productive infrastructure and establishing conditions for long-term growth, and providing financial and technical assistance for these programs; (c) strengthening the institutions responsible for sectoral policy formulation and management; and (d) helping Madagascar to mobilize and to make effective use of donor financial and technical support. 26. Lending Program Development. On the assumption of continued Government responsiveness, the Bank plans to support Government adjustment efforts with sectoral and, possibly, structural adjustment lending. Further sector adjustment operations in agriculture and industry are being prepared. These would support continued market deregulation, export promotion, cost recovery, private investment, parastatal reform, and rehabilitation of productive and economic assets. The program would also address longer term issues in human resource development, health,  - 7 - agricultural research, and forautrylenvironmentsl degradation. Overall, future landing would concentrate mainly on agriculture, Industry, and transport. 27. Tho main vehicle for aid coordination has bean the Consultative Group (CO). An Important element of the Bank country assistance strategy has been to make the CG a more effective means of addressing Madagascar's economic and financial problems, with a belief that donor and creditor support of a comprehensive financing stratogy, combined with a sound Government program to stimulate real growth, would offor the best prospects for future development. 28. Economic and Sector Work. Tho Bank Group economic and sector work program for the next three years is intended to support the identificrition of future adjustment measures, am wll as donor coordination within the CG framework. It Is directed at parastatal reform, improvement in sector planning and public investment program formulation, and development of a core medium-term lending program. UNDPIIBRD technical assistance projects to assist the Directorate-General for Planning in investment planning and aid coordination have recently been signed. A study of the population and health sector has recently been carried out. The Bank Group is also providing technical assistance in policy analysis and selective institution-building; two Bank staff members have been seconded to assist the Government (irn public lnvestment programning and ln the management of the livestock sector). The Bank's Resident Mission has been strengthened by a resident economist. PART III. THE ENERGY SECTOR 29. Madagascar's main indigenous energy resources are hydropower, woody biomass from forests and agriculture, heavy oil and oil shale, coal, and peat. Although Madagascar is endowed with substantial energy resources, economically recoverable quantities are not known as their physical and technical accessibility is generally difficult. Inefficient planning and coordination within the sector has resulted in inadequate utilization of those resources that are economically accessible, particularly in hydropower and woody biomass. 30. In 1984, at the request of the Government, the Bank conducted an overall assessment of the energy sector under the joint UNDP/World Bank Energy Sector Assessment Program. The study concluded that sector issues requiring the most urgent actions are (a) deforestation and the related environmental deterioration; (b) poor condition of power subsector infrastructure; (c) substantial under-utilization o existing hydropower surplus available from the Andekaleka hydroelectric generating station within the inter-connected zone; (d) definition of the future form of petroleum product supply and the need to assess the viability of and options for rehabilitating the SOLIMA refinery and its distribution system; (e) inadequate definition of the physical availability and the economic accessibility of the major potential energy resources, particularly in regard to hydropower and woody biomass; and (f) general weaknesses in energy policy formulation and planning.  - 8 Energy Resources and Network 31. Electric Power. The total installed capacity in Madagascar is 267 MW, of which 77 percent is owned by the public sector, managed by JIRAMA, the Malagasy Electrici4y and Water Corporation, and 23 percent by the private sector. The public power system comprises 169 diesel generating units and 30 hydropower generating units with a combined installed capacity of 205 MW. The public supply is organized in three supply zones: the Inter-Connected System (ICS), the External Zone, and the Isolated Zone, with the major supply zone being the hydropower-dominated ICS. In 1985, the ICS included 51 percent of the total installed capacity in the public sector and provided 64 percent of total electricity (318 GWH) supplied from the public sector, 73 percent of which was generated from hydropower generation capacity (105 MW). All urban centers are served by electricity provided from public supply. Only 6 percent of the total population is connected to electricity, and per capita consumption is 33 KWh per year; the level of electrification in Madagascar is relatively low by regional standards. 32. Very little of Madagascar's hydropower potential has been exploited, due in part to limited information on the potential to economically displace existing diesel generating plants with micro- hydropower installations and to the absence of a comprehensive least-cost development plan. Weaknesses in Government investment planning have led to a serious imbalance within the system between generation expansion (there is excess hydropower in the ICS) and maintenance and rehabilitation of the existing infrastructure. Electricity supply in Madagascar from hydropower is expected to grow from 68 percent of total public supply in 1985 to 84 percent in 1995. A medium-term strategy for the power subsector is to inter-connect major isolated power systems to stabilize supply and increase the consumption of hydropower in substitution for imported fuels. 33. Petroleum. Most exploration has been concentrated in the Morondava basin located in the west, where tar sands and heavy oil deposits have been found. Deposits in this basin are estimated to contain roughly 5 to 20 billion barrels of oil equivalent. Since 1979, some major international companies, notably Mobil, AGIP, Amoco, and Occidental, have invested about US$220 million in oil exploration in Madagascar. However, most wells drilled by these companies or under the ongoing IDA heavy oil exploration project in the Tsimiroro arda were found dry or without sufficient oil saturation for commercial exploration. Nevertheless, exploration activities are still being pursued, and the Government is reinforcing its promotional activities. Although petroleum import volumes have been declining since 1978, in 1983 Madagascar's net petroleum imports represented a third of total merchandise imports and absorbed half of non- energy export revenues.21 Because of foreign exchange constraints, Madagascar continues to procure its crude and refined products at prices considerably higher than those achievable under optimal arrangements. 34. SOLIMA, the Malagasy National Petroleum Company, is responsible for petroleum importing, refining, distribution, and marketing. Presently, the refinery is operating below its full capacity and is in deteriorated condition due to lack of maintenance and rehabilitation. In addition, at 21 Fuel oil surplus to country requirements is re-exported from the Toamasina refinery.  the Port of Toamasina, where moat petroleum imports are unloaded, handling facilities and storage as well as coastal transport and inland distribution systems are all in poor operating condition, causing substantial product losses. The Government is planning a major rehabilitation program for the SOLIHA refinery, and the French Caisse Centrale de Cooporation Economique has expressed interest in partial financing of this program, although no firm arrangements have been made. The petroleum subsector requires an overall review, in order to: define ways to minimize costs of procurement of crude and products; improve the operation, marketing and distribution systems of the refinery; prepare a master plan; and rationalize overall subsector organization and policy, particularly in the area of pricing. Forests 35. There are about 12.5 million ha of natural forests and about 265,000 ha of eucalyptus and pine plantations. Only about 20 percent of the natural forest is economically accessible under environmentally sound management practices. Because of the current regional imbalances and the fact that surplus production in other regions cannot be economically transported to deficit areas, major demand centers for woodfuels are experiencing serious shortages leading to substantial increases in prices over the past decade. In 1983, household energy represented 83 percent of final energy consumption, of which firewood and 'charcoal represented 96 percent. This situation is unlikely to change over the next decade. Without appropriate interventions, the supplyldemand imbalance projected for the period 1988-95 will lead to a loss of about 1.5 million ha of natural forests, or 12 percent of present forest resources. It is probably not feasible to reforest the country at the pace of the anticipated deforestation. This problem can be ameliorated through a variety of household energy supply interventions, inclading expanded use of modern fuels (kerosene, electricity) as well as improved recovery of woody biomass and forest residues as part of a better management of existing forest resources. 36. The FANALAMANGA parastatal (Malagasy Industrial Wood Plantation Authority) has about 80,000 ha of industrial pine plantation in the Haut Mangoro region. A thinning program for this plantation is planned to start in 1987, to thin commercially viable stands within the plantation. Presently, thinning products have higher value as a charcoal feedetcck than for other uses. A minimum of 250,000 m3 per year would be available, representing about 25,000 tons of pine charcoal or more than 25 percent of the Antananarivo market. Quantities may reach more than 500,000 m3 per year in the medium term. Utilization of this resource for household cooking fuel could substantially reduce regional deforestation. A feasibility study of Haut Mangoro pine charcoal production completed in July 1986, under UNDP and USAID financing, showed that such activity could yield a financial rate of return of 20 to 30 percent if market acceptance were achieved, and if appropriate technical and financial assistance were provided to FANALAMANGA as well as to interested private charcoalers for carbonisation of this pine smallwood resource. 37. Other Biomass Resources. The main agricultural crop residues that could eventually be used as fuels for domestic and industrial consumption are rice and sugar crop residues. Cellulosic residues generated annually from rice, the main agricultural crop in Madagascar, are estimated to be about 4.6 million tons of which 500,000 tons are rice husks. Except for the Lac Alaotra Region where about half of the rice husk residues are used  - 30 - am fuel for rice milling, rice husks are mostly disposed of as wastes, while they could be briquetted and used as household fuels in substitution for woodfuels. Bagasse and cane field residujes also offer a long-term potential economic source of energy that could be used to produce electricity for sugar mills and serve regional demand within the public distribution syutems. 38. Coal, Limnite and Peat. The main coal reserves are in the Sakoa Basin located in the southwest part of the country. Coal resources are estimated at about one billion tons, of which 82 million are recoverable by underground methods and only 23 million by open pit methods. At present, the exploitation of coal resources seems uneconomic, and the present industrial demand of about 30,000 tons per year is met through imports. Lignite resources are mainly in the central highland region. Proven lignite reserves are estimated at about 11 million tons, but their low quality makes them uneconomic to mine. Peat resources scattered around the country could also be substantial, but no national inventory has been made. Peat resources are used widely for brick production. Energy Policy and Planning 39. The Ministry of Industry, Energy and Mines (MIEN) is responsible for formulating energy policy and preparing energy pLans and investment programs, although the National Military Office for Strategic Industries (OMNIS) has also played an Important role in this area until recently. The other two agencies under the authority of MIEN are JIRAMA (the National Electricity and Water Corporation) and SOLIMA (para. 34). Other ministries and government agencies involved with woody biomass fuel management include the Ministry of Animal Production, Fisheries and Forests (MPAEF), the parastatal timber producer, FANALAMANGA, which is under the authority of MPAEF with respect to woodfuel production (especially charcoal), and the Ministry of Agricultural Production and Agrarian Reform (MPARA), with respect to agricultural residue fuels. Coordination among these ministries and agencies has not been effective; and formulation of a coherent energy policy and development of adequate planning and investment programming have been inadequate. Currently, there is no explicit energy sector investment program. Energy sector components included in the Public Sector Investment Plan have been compiled from the plans and programs provided by the various agencies and ministries involved in the energy sector without prior review and consideration of sector-wide priorities and least-cost solutions. 40. During the preparation of the proposed energy project, the Government agreed to the need for strengthening MIEN, particularly in regard to its planning functions, and confirmed the central role and responsibility of MIEM for energy policy formulation and investment planning and programming. To address the above issues, MIEN requires substantial technical assistance and supporting facilities (such as computers) to develop effective energy planning and administration within its Energy and Water Department (DEE). JIRAMA 41. Management and Organization. JIRAMA is a parastatal created in 1975 to own and operate all public electricity and water supply facilities in Madagascar. JIRAMA is managed by a Director General under the general  - 11 - supervision of a Board of Directors which is presided over by the Minister of HIEM. JIRAMA enjoys reasonable autonomy in the conduct of its day-to- day operations, but is subject to Government control over its electricity tariffs and interference in its investment decisions. JIRAMA has recently been reorganized, and all planning activities and economic studies have now been consolidated within the single Department of Planning and Economic Studies, which will be strengthened with technical assistance under the project proposed in this report. 42. JIRAHA's managerial efficiency continues to be constrained by inefficient and obsolete telecommunications equipment combined with a deteriorated vehicle fleet, which is rendering communications between headquarters and the regional offices extremely difficult. There is a need to modernize JIRAMA's communications for efficient operations. Also, in order to help JIRAMA to improve the quality of its services and reduce its financial dependency, there is a need for a complete review and reform of the commercial and administrative relationship between the Government and JIRAMA. Government is taking important steps toward such an objective through measures adopted for the financial restructuring of JIRAMA under the proposed project (see pares. 48, 49 and 50). Government and JIRAMA would prepare and present for IDA review by December 31, 1987, a reform package in the form of a draft Contract Plan that would outline mutual responsibilities and obligations regarding power sector financial, management, and administrative matters; and provide IDA by June 30, 1988 with the final contract plan. This would aim to lead JIRAMA to a greater financial viability and management autonomy based on a commitment to achieve certain minimum performance criteria consistent with increasingly sound financial performance and reliable low-cost power supply. 43. To facilitate improvement in JIRAMA's management, a simple management information system (MI$) is required to monitor agreed financial and technical indicators. This MIS would also help the newly created Department of Planning and Economic Studies to monitor and evaluate key technical and cost parameters as part of the ongoing planning process. JIRAMA would require technical assistance and computer facilities to implement this MIS, as well as for the computerization of consumer billing and accounting in regional supply centers, the asset inventory, and maintenance management systems. 44. StaffinR and Training. As of mid-1986, JIRAMA had a total of about 4,100 employees, about half of whom were concerned with electricity operations. JIRAMA's staffing level for electricity operations is considered satisfactory (58 consumefs per employee) by regional standards, although there is scope for increasing the number of consumers served per employee as anticipated growth in connections materialize under the proposed project. JIRAMA's salaries are reasonably competitive, and the company has been able generally to attract suitable staff. JIRAMA's training activities are well organized; and most training is provided through its in-house training facility. Training abroad has been severely restricted due to lack of foreign exchange resources. Although JIRAMA has competent technical staff, 'it has been to some extent isolated from the latest techniques. JIRAMA requires some overseas training in the form of refresher and short courses on recent developments in the power industry and utility administration, and needs to strengthen its local training program with the introduction of modern preventive maintenance methods.  - 12 - 45. Infrastructure. Most generating plants and transmission and distribution facilities are in poor condition, due to age, shortages of basic spare parts, materials and consumables, and hence lack of routine maintenance over a long period. Many supply centers are also suffering from serious imbalances between capacity and system demand. Consequently, plant availability is low, and generation costs are high. These problems, combined with a weakened transmission and distribution system, mean that power supply in several major towns is now seriously jeopardized. Moreover, poor communications between power plants and load dispatch centers hamper the efficient use of available hydropower resources within the ICS. There is an urgent need to rehabilitate key power subsector infrastructure, to improve the reliability of supply, and to provide JIRAMA with an adequate supply of spare parts, consumables, equipment and materials to maintain the network and expand the transmission and distribution system to supply the present considerable unmet demand through the use of the existing hydropower surplus in the ICS. 46. Financial Performance. During the period of 1983-85, JIRAMA has not been able to meet its debt service obligations, nor to contribute to its investment programs. Rates of return on revalued net fixed assets for the same period were, respectively, 1.9 percent, 1.5 percent, and 3.7 percent against the agreed 8 percent rate of return under the completed Andekaleka project (Cr. 817-NAG, closed in September 1986). Return on assets is presently not a meaningful performance indicator because JIRAMA's asset base is significantly overvalued due to overinvestment in generating capacity, a substantial proportion of which still remains unutilized. Presently, there is a need for a detailed review of JIRAMA's asset base and for its revaluation and computerization. JIRAMA would prepare and complete this asset revaluation for IDA review by June 30, 1909. 47. In addition to inadequate investments and tariff adjustments, JIRAMA's poor financial situation results mainly from a number of structural weaknesses that include: (a) accounts receivable from Government and municipalities represent 12 to 14 months of sales; (b) payables are high and include about 11.4 months obligations towards SOLIMA for fuel supplies; (c) a significant portion of other current assets and liabilities cannot be collected until a trilateral clearance of accounts takes place among the Government, the municipalities and JIRAMA; (d) JIRAMA's lightbulb, electrical appliance, and water meter manufacturing subsidiaries are highly unprofitable; (e) to compensate for operating cash shortfalls, JIRAMA has had to rely heavily on an overdraft facility with BNI that carries an annual interest rate of 21 percent; and (f) the Andekaleka hydropower plant for which most of the long-ternm debt was incurred is currently operating at only 35-40 percent of its capacity due to lack of demand in the ICS. In addition, devaluation of the Malagasy currency has increased JIRAMA's foreign exchange risk exposure. 48. In order to restore its short and medium-term financial viability, JIRAMA requires a set of reform measures that would call for a full financial restructuring including: tariff increases to improve its internal cash generation and additional capital to strengthen its capital base throughout the period 1987-92 (paras. 86 and 88); simplification of existing tariff structure and system (para. 51) for more equity among its consumers; reductions in its outstanding accounts receivable and payable through the settling of Government and municipality arrears; restructuring of JIRAMA's outstanding short and long-term debts to limit payments of debt service obligations to fixed assets in operation; and increasing use of the  - 13 - existing hydropower surplus in the ICS through the installation of large electric boilers, and extension of the distribution system to serve the unmet demand and enhance JIRAMA's revenues. 49. The Government has introduced a tariff increase of 17 percent effective February 1, 1987. The Government has, effective February 1987: (i) increased .1IRAMA's capital by FMG 7.42 billion; (Li) consolidated FMG 1.73 billion ot JIRIMA's overdraft into a five-year loan; (iii) rescheduled its outstanding long-term debts relating to the Andekaleka and Namorana loans in line with the utilization of these assets; and (iv) divested JIRAMA's lightbulb and electric appliance activities. 50. Payment to JIRAMA of an amount equivalent to 50 percent of the aggregate arrears of the Government and the "Collectivites Dacentralisaes" relating to water and electricity sales, adoption by the Government and the `Collectivites Decentralisees" of new payment modalities for future electricity consumption, and the signing of agreed boiler contracts between JIRAMA and interested enterprises would be conditions of effectiveness of the proposed credit. The remaining 50 percent of arrears between JIRAMA, Government and "Collectivites decentralisees" will be settled by September 30, 1987. 51. Tariff Structure and Policy. JIRAMA's tariff structure is complex, cumbersome and costly to administer. There are several hundred tariffs, and large arbitrary differences exist between them for the same consumer group in the same supply zone. Tariff levels are historically based and bear virtually no relation to the cost of s'tpply. A tariff reform study is required to adjust tariffs closer to economic costs, introduce incentives to stimulate demand in regions of surplus supply and simplify tariff structure and administration. The number of tariffs was recently reduced by 50 vercent, as a first step towards rationalizing tariff structure. Government and JIRAMA would prepare a tariff study for IDA review before September 30, 1988, and implement an agreed new tariff structure by January 1, 1989. 52. Investment Plan. JIRAMA's and Government's main objectives for the power subsector are to; (i) improve the reliability of production and supply throughout the country at the least cost; (ii) increase the use of indigenous natural resources for electricity generation wherever economically justified; (iii) maximize the use of existing low-cost production capacity; and (iv) improve the financial management of the sub- sector. Achievement of these objectives would require the preparation.of an adequate least-cost power system expansion plan and detailed feasibility studies for economically attractive major power developments. However, JIRAMA has never prepared a comprehensive least-cost expansion plan as it lacks experienced personnel, as well as the required supporting facilities for effective planning. Planning weaknesses have led to overinvestment in generation capacity in certain regional centers and limited utilization of available hydropower supply in the main ICS. The most serious problem arises from the construction of the 58 MW Andekaleka hydropower plant in the ICS feeding the Antananarivo region. Projected load growth, which initially justified this investment, did not materialize due to economic stagnation and abandonment of a number of planned industries. In 1985, about 64 percent of this plant capacity was unutilized. JIRAMA would revise its commercial policies to increase household electricity connections and to promote the use of hydropower electricity wherever financially and economically justified.  - 14 - 53. During appraisal, JIRAMA, Government and IDA reached agreement on reasonable load forecasts based on a tentative minimum Reference Power Sector Investment Program (RIP) for the period 1987-91, pending the completion of a least-cost expansion and rehabilitation plan under the proposed project. The RIP is estimated to cost US$57.5 million including a foreign exchange cost of US$50 million. No major investment in generation expansion is envisaged for the ICS for the next seven years, since installed capacity will continue to exceed demand in peak hours until the mid-1990s. However, the RIP assumes for the External Zone the construction of a new diesel power station for the Nosy-Be region required in 1990-91 and a start on the Ambodiroka hydropower project by 1991. Other than these projects, the RIP emphasizes the rehabilitation of high-priority generation plants and distribution and transmission systems in major demand centers. 54. JIRAMA would have the RIP reviewed annually by each September 30th, and revised as appropriate in agreement with IDA, particularly following the completion of the planned least-cost expansion plan study. In addition, until the completion of the proposed project, JIRAMA would not undertake any major investment (i.e., greater than US$2 million or 1 percent of JIRAMA's net fixed assets, whichever is smaller) that is not included in the agreed RIP unless the economic and technical justification of such investment is established in consultation with IDA. Bank Group Involvement in the Energy Sector 55. The Bank Group strategy in the energy sector is to: (a) promote the economic use of indigenous energy resources, power sector efficiency, and the formulation of comprehensive energy policies leading to rational energy pricing and import substitution; and (b) enhance the role of the private sector in energy resource management and development. From 1974 to 1986, the energy sector benefited from about US$64.6 million or 11 percent of Bank Group financing, of which US$40.6 million was for the Andekaleka hydropower project financed in 1978, and US$24 million for the two projects financed in 1980 and 1982 for the petroleum subsector. 56. The Andekaleka hydropower project partly achieved objectives of: (a) utilizing an important portion of the country's hydropower resources in substitution for thermal power generation in the ICE; (b) strengthening JIRAMA's staff competence in major project design and implementation; and (c) improving JIRAMA's organizational and managerial practices. But the project did not achieve its objectives of strengthening planning and of maintaining a sound financial situation for JIRAMA. Lessons learned from the project include the need (a) for improved demand forecasting techniques and market analysis to reduce the risk of premature investments; and (b) to focus on financial policies designed to foster sustained sound financial performance. The petroleum exploration promotion project was satis- factorily completed. The Tsimiroro heavy oil exploration project is still ongoing. These projects allowed OMNIS to establish an appropriate legal and fiscal framework for petroleum exploration by foreign oil companies and to gather the required data base on the subsector for flurther oil exploration; approximately $220 million in exploration investment has been made.  - 15 - PART IV - THE PROJECT 57. The proposed project was appraised in February 1986. A staff appraisal report entitled "Democratic Republic of Madagascar - Energy Project" (6405-MAG) dated March 31, 1987 is being distributed separately. A supplementary project data sheet is attached as Annex III. Negotiations were held in Washington, D.C. from February 24, 1987 through March 2, 1987. The Madagascar Delegation was led by Mr. Jose Rakotomavo, Minister of Industry, Energy and Hines. Prolect Background and Preparation 58. The objectives of the proposed project were largely formulated and agreed with the Government during the energy sector assessment carried out in 1984-85 under the joint UNDP/World Bank Energy Sector Assessment program. This assessment was followed up, under the joint UNDP(World Bank Energy Sector Management Assistance Program (ESMAP), by a power sector efficiency audit study, which helped define all priority infrastructure and facilities in need of rehabilitation and repair In the power subsector. The agreed RIP has been framed within the priorities defined by this study. US$870,000 from the proceeds of the proposed IDA credit has been provided under two Project Preparation Facility (PPF) advances to finance an engineering study for the rehabilitation and expansion of the Volobe hydropower plant damaged by the March 19B6 cyclone; and consultant services to undertake the detailed preparation of Phase I of the diesel and hydropower rehabilitation program (para. 76) and the formulation of tho preventive maintenance program and to assist in the preparation of the electric boiler program and the establishment of the MIEM PMU project management unit (para. 77). Detailed specifications and pre-feasibility and feasibility studies carried out for overall project preparation were undertaken, under IDA coordination, by consultants financed mostly under grants provided by several bilateral aid agencies3/ and international organizations.41 Project Objectives 59. The proposed operation carries through, at the project level, one of the central themes of the IDA country strategy: supporting sectoral strategies aimed at rehabilitating productive infrastructure and establishing the conditions for long-term growth (para. 25). The main objectives of the proposed project are to help improve the reliability of power production and supply throughout the country and the power sector's financial and operational performance; maximize the efficient use of locally available and economically accessible energy resources; and strengthen energy sector planning capability. To achieve these objectives. the project would: (a) help rehabilitate, maintain and expand the power generation, transmission and distribution network in order to maximize the productive use of existing assets; (b) strengthen JIRAMA's planning capability and prepare a least-cost power system expansion plan; (c) increase JIRAMA's financial autonomy and strengthen the efficiency of its 31 USAID, FAC, Swedish Agency for International Cooperation ana Swiss Government. 4/ UNDP and FAD.  - 16 - management system; (d) increase the use of existing hydropower surplus capacity and energy in the ICS by expanding the electricity distribution system and encouraging increases in large-scale industrial consumption of electricity whenever economically justified; (e) encourage the production of economically accessible energy resources such as charcoal and rice husk briquets by the private sector for household and industrial fuels; and (f) help develop, within MIEM, the capability to prepare and evalL..Le energy sector policies and inveso;ment plans and programs and to initiate household energy sector planning. Project Description 60. The proposed project would include the following components: (a) for the power subsector: generation rehabilitation and expansion; transmission and substation improvement; distribution rehabilitation and expansion; improvement in general plant and services; power sector institution building; power sector studies; and an electric boiler program; and (b) for the energy sector: household and industrial fuels; energy planning support; and energy sector studies. Power Sector Components 61. Generation Rehabilitation and Expansion. This component would include the provision of four 800 KW units for a new Nosy-Be diesel generating station; and rehabilitation of two priority diesel generating stations5i as well as other smaller diesel generating stations in the External Zone, and four hydropower generating stations.61 Restoration of these plants to full operational capacity would require the pur.hase of urgently needed spare parts and consumables, and provision of additional spare parts and required mobile maintenance equipment to ensure adequate routine maintenance during the project period. 62. Improvement in Transmission and Substations. The proposed project would include the completion of the ongoing rehabilitation of the 63 KV line between Antananarivo and Antsirabe, the provision of new poles and lightning protection, and the repair and maintenance of other priority transmission lines to prevent outages and enable stable long-term operations. Switchgears and new transformers would also be provided for substation rehabilitation and to cover system expansion and improve distribution reliability. 63. Distribution Rehabilitation and Expansion. Rehabilitation materials including conductors, pole hardware, and distribution transformers would be procured under the proposed project to reinforce the existing distribution system. The project would also include new connection materials that would expand the system to supply about 6,500 new customers per year; there is presently a backlog of about 10,000 new consumers. A pilot project would also be undertaken to establish revised design criteria that could eventually reduce the cost of the distribution system serving households and small commercial consumers. 5/ Mahajunga and the existing Nosy-Be diesel generating stations. 6/ Antelomita, Manandray, Manandona and Mandraka hydropower generating stations.  - 17 - 64. Improvement In General Plant and Services. This component would include provisions for (a) the purchase of new vehicles and the spare parts needed for their maintenance over the project period, now tele- communications facilities for communications between power plants and supply centers and spare parts for existing telecommunication facilities; (b) meter testing equipment; and (c) new computer hardware and software compatible with existing computer facilities. About 7 man-months of technical assistance would also be provided to review JIRAMA's computerization policy and planning and to train its staff in computer maintenance. 65. Power Sector Institution Building. About 87 man-months of technical assistance will be provided as follow: (a) 24 man-months of a resident consultant advisory service for the Energy Department in MIEM to help strengthen power sector planning; (b) 27 man-months of back-up consulting services to strengthen JIRANA's Department of Planning and Economic Studies and its Department of Electrical Equipment, and provide on-the-job training in planning, including overseas training and study tours; and (c) 36 man-months to improve hydropower resource assessment and development management. Computer hardware and software, as well as specialized office equipient, would also be provided under the proposed project in support of planning improvement. 66. Power Sector Studies. These would include the preparation of a rational least-cost power sector master plan including a national power tariff review, and supplemental funding to complete the feasibility study for the Ambodiroka hydropower plant. Terms of reference for the hydropower feasibility study have been prepared and agreed upon with Government. Terms of reference for the least-cost power sector master plan were completed in March, 1987. 67. Electric Boiler Program. To increase the use of the existing hydropower surplus within the ICS, about 18 NW of electric boiler capacity, requiring an annual energy supply of about 96 GWH, would be installed in four enterprises, which are expected to be PAPNAD (paper mill), Savonnerie Tropicale (soap factory), SOMACOU (textile factory), and the Hilton hotel. The proposed project would finance boiler procurement for these enterprises. Energy Components 68. Household and Industrial Fuels. The proposed project would attempt to launch commercial production of charcoal from the pine thinning products of the Haut Mangoro pine plantation and to achieve under a pilot- scale project the production of about 1,500 tons of rice husk briquettes per year from the substantial volume of rice husk residues that are available in the surroundings of Antananarivo. About 30 man-months of technical assistance as well as production equipment and material would be provided to train and assist traditional private charcoalers in improving charcoal production methods and to review the voodfuel business, and carbonization efficiency. The project would also provide equipment and consultancy services to commission and monitor rice husk briquette production. 69. Energy Planning Support. This component would include about 63 man-months of technical assistance and consulting services, and computer equipment and materials to strengthen energy planning and staff training  - 18 - within MIEM, and about 118 man-months of technical assistance and consulting services to support the development of household energy supply and demand management strategies; this work would include the introduction on a trial basis of various cooking efficiency interventions, and petroleum supply and distribution studies (para. 34). 70. Enerrg Sector Studies. Two energy sector studies would be undertaken under the proposed prn-jft. They are: (a) industrial energy audits to review industrial energy conservation needs and design changes required to reduce energy costs in manufacturing industries; and (b) a Lac Alaotra regional energy planning study to prepare a least-cost master plan for energy development in the Lac Alsotra region. Terms of reference for these studies were prepared by IDA staff and agreed upon with the Government during appraisal. Project Cost 71. The total project cost for the five-year implementation period (1987-91) is estimated at FMG 65.5 billion (US$59.8 million) including foreign exchange costs of FMG 50.0 billion (US$44.8 million) or 71 percent of the total cost. Baseline costs were estimated at January 1987 prices and were increased by an average of 6 percent to include physical contingencies. Price escalation for foreign costs is estimated at 3 percent in 1987, 1 percent in 1988-90 and 3.5 percent in 1991. Local cost escalation assumes a price inflation of 17 percent for 1986-88 and 15 percent for 1989-91. Adjustments in project cost have been made to reflect the 20 percent devaluation in August 1986, and an allowance for further currency depreciation. Local taxes and duties are estimated at US$8.1 million or 14 percent of total costs. Project costs include US$5.5 million for technical assistance and consultancy services. Financing Plan 72. The total foreign exchange cost of the project is US$44.8 million, of which IDA would finance US$25 million equivalent, and cofinanciers would finance US$19.8 million. Cofinanciers are the European Investment Bank (EIB) for US$14.4 million, and the Banque Arabe de Developpement Economique en Afrique (BADEA) for US$5.4 million. Local project costs total US$15.0 million equivalent of which JIRAMA would finance US$10.5 million equivalent and GOM US$4.3 million equivalent. Local funds (US$0.2 million equivalent) for the electric boiler component would be obtained by the firms concerned. In addition, financing has been obtained for the balance of the power subsector RIP which, in addition to the above-mentioned cofinancing, includes parallel financing by Caisse Centrale de Cooperation Economique (CCCE) of US$13.5 million, and by the Swiss Government of US$1.5 million. The IDA Credit 73. About US$0.9 million equivalent has been provided under Project Preparation Facility (PPF) advances to finance preparation and project start-up work, and the engineering study for the rehabilitation and expansion of the Volobe hydropower plant. The advances would be refinanced from the proceeds of the proposed IDA credit. Out of the US$25.0 million IDA credit, the Government would (a) onlend to JIRAMA US$17.9 million; and (b) channel up to US$1.8 million through the National Industrial Bank (BNI), to enterprises interested in procuring electric boilers and to private entrepreneurs involved in the lmplementation of the Haut Mangoro charcoal component.  - 19 - 74. Conclusion of a subsidiary loan agreement, acceptable to IDA, between JIRAMA and the Government would be a condition of credit effectiveness. This agreement would include a final maturity of 25 years, including five years of grace, an interest rate 10 percent above IBRD leanding rate at the time of Board presentation, and the foreign exchange risk to be borne by JIRAMA. Project Implementation 75. Project execution would start in July 1987 and is expected to be completed in December 1991. Project ManagementrUnits (PMU) would be established within JIRAMA and MIEM, which would co-ordinate implementation, with the implementing agencies being the ministries and the parastatal concerned. 76. Power Sector Components. Most of the proposed power subsector rehabilitation components would be carried out in two phases. The first phase would include mainly the most urgently required spare parts that are needed to prevent disruption of the power supply in the short term, and consultant services to define precisely the rehabilitation needs in the diesel and hydropower generation areas. The second phase would represent works and provision of spare parts required to restore the reliability of the power system in the medium ternm. 77. The repair and rehabilitation of power facilities would be carried out primarily by JIRAMA's staff, with support from local contractors. Consultants would be retained to supervise the management and coordination of the generation rehabilitation component, and would be under the responsibility of a Project Manager to be appointed from within JIRAMA. The formal establishment of a PMU in AIRAMA and the appointment of a Project Manager woula be conditions of effectiveness of the proposed credit. For the institution building component, a consulting company would be retained to provide an advisor to the Planning and Economic Studies Department of JIRAMA, and to assist with the coordination of back-up consulting services, and with on-the-job training of JIRAMA's st&ff in power system planning. Great emphasis would be placed on JIRAMA staff's direct participation to ensure that they would benefit from appropriate training during the project period. 78. The Electric Boiler Program. This component would be implemented by the four enterprises concerned (para. 67) with assistance from the JIRAM& PMU. Financing for the procurement of the boilers will be channeled through the National Industrial Bank (BNI). The foreign exchange portion for the imports of the boilers will come from the proceeds of the IDA credit (para. 73); and BNI will provide the local currency financing from its own resources. Each enterprise is willing to install electric boilers subject to the establishment with JIRAMA of satisfactory electricity supply contracts. JIRAMA has already provided the enterprises with full documentation on the technical and financial implications of each boiler proposal in order to facilitate the negotiation of such contracts. With assistance from consultants, JIRAMA will help the enterprises to prepare the required technical specifications and documentation for the procurement of the boilers and their related ancillary equipment, which would be grouped in one package. 79. Energy Components. The energy components would be implemented by four departments under three ministries and by the FANALAMANGA parastatal.  - 20 - The Department of Energy and Water (DEE) within MIEM would be responuible for the energy planning support component; the Minisetry of Agricultural Production and Agrarian Reform (MPARA) for the rice husk briquetting pilot project and agriculturdl reeidue resource assesoment; the Department of Water and Forests (DEF) within the Ministry of Livestock Production, Fisheries and Forests (MPAEF) for the review of woodfuel business and carbonization efficiency improvements; and the FANALAMANGA parastatal for the pine charcoal production component. Each of these departments and FANALAMANGA would nominate a focal point for communications with the MIEM PMU for project execution. The MIEM PMU would be the local counterpart for IDA and cofiniancing agencies, consultants, and contractors involved in the implamntation of the energy components and would handle correspondence, progress reports, proctrement and requests for disbursement. The various ministries would be assisted by experienced consultants and contractors who would work under torms of reference or technical specifications satisfactory to IDA. Accounting for the energy components will be carried out by the MIEM PHU. Government would have energy component accounts audited by independent auditors, satisfactory to IDA, six months after the end of each fiscal year. 80. Because of the importance of the MIEN PMU role in coordinating and supervising the implementation of the proposed project, establishment of the MIEM PMU headed by a Halagasy manager, acceptable to IDA, and staffed adequately would be a condition of effectiveness of the proposed credit. Also, following established practice between JIRAMA and MIEM, the MIEM PMU will review, record, and forward to IDA all project implementation documentation and disbursement requests for the power subsector components. The MIEM PHU manager would report to the DEE Director, and would be assisted in his functions by a steering committee representing the other implementing ministries, ard the FANALAMANGA parastatal. 81. Since the Haut Mangoro charcoal production component represents an opportunity to involve the private sector in the commercial exploitation of Government-owned timber resources, Government and FANAIAHANGA would actively seek private sector participation in the implementation of this component. If by the end of 1987 achievement of full-scale private sector involvement should fail, a commercial scale pilot project of 5000 tons per year of pine charcoal production would be financed by IDA through HPAEF and implemented by FANALAMANGA, which would be adequately equipped and provided with technical assistanice. Procurement 82. The proposed procurement arrangements are summarized in the following table. Many of the items to be purchased from the proceeds of the propoard IDA credit are proprietary in nature and can be supplied only by the original manufacturer (e.g. diesel engine parts). The total cost of these items is not expected to exceed US$2.6 million (about 10 percent of the credit) and would be purchased directly Vy JIRAMA from the suppliers. The other materials and equipment financed by IDA would be assembled into groups of similar iters, and purchased either through international competitive bidding, following IDA's procurement guidelines, for contracts valued at or exceeding US$100,000, or under international shopping procedures for items costing less than US$100,000 for which several suppliers would be !nvited to submit proposals. Thus, all contracts above US$100,000 would be subjected to IDA's prior review and approval. Small civil works would be carried out by local contractors through local  - 21 - competitive bidding, using procedures satisfactory to IDA. Items of the projeat financed by other lending agencies would be purchased In accordance with their respective procurment guidelines. Consultants to be hired under the proposed project would be selected in accordance with IDA guidelines, end their terms of reference and conditions of employment would be satisfactory to IDA.  - 22 - PROCUREMENT METHOD/I (US$ millions) N.1. Consul- Cofinan- Item ICB LCB Otherb/ cl tsntad/ ciers Total Power Sector Components Nosl-Be New Diesel - - - 0.3 - 1.9 2.2 Hydropower Rehab. 2.9 0.5 0.6 0.2 0.2 - 4.4 (2.9) (0.5) (0.6) (0.2) (4.2) Diesel Reht.o. 3.2 - 2.0 1.6 0.3 3.5 10.6 (3.2) - (2.0) (0.3) (5.5) Transmission - - - 0.6 - 2.5 3.2 Electric Boilers 1.5 - - 0.2 0.1 - 1.8 (1.5) (0.1) (1.6) Distribution 3.0 - - 1.3 - 9.9 14.2 (3.0) (3.0) Support Servicesel 0.6 - - - 0.5 2.0 3.1 (0.6) (0.5) (1.1) Vehicles 1.7 - - - - - 1.7 (1.7) (1.7) T.A. Planning&/ 0.4 - - 0.3 0.4 - 1.1 (0.4) (0.4) (0.8) Training 0.2 - - - - - 0.2 (0.2) (0.2) Studies - - - 0.1 1.1 - 1.2 (1.1) (1.1) Subtotal 13.5 0.5 2.6 4.6 2.6 19.8 43.6 (13.5) (0.5) (2.6) (2.6) (19.2) Energy Sector Components Energy Planning Administration 0.7 - - 0.5 0.7 - 1.9 (0.7) - - (0.7) - (1.4) Household Energy 0.6 - - 1.6 1.0 - 3.2 (0.6) (1.0) (1.6) Energy Production Charcoale/ 0.7 - - 0.1 0.3 - 1.1 Rice Husksel (0.7) (0.3) (1.0) 0.2 - - - 0.1 - 0.3 (0.2) (0.1) (0-3) Energy Studies Industrial energy - - - - 0.6 - 0.6 - - - - (0.6) - (0.6) Subtotal 2.2 - - 2.2 2.7 - 7.1 (2.2) (2.7) (4.9) PPF 0.9 0.9 (0.9) (0.9) Overall Totalf/ 15.7 0.5 2.6 6.8 6.2 19.8 51.6 (15.7) (0.5) (2.6) (6.2) (25.0) a/ Amounts in parenthesis are IDA-financed. b/ Proprietary spare parts that can only be purchased from manufacturers of original equipment. c/ Design and labor to be provided by local implementing agency. dI Consulting services retained in accordance with IDA guidelines. ej Includes training aids and equipment. f/ Does not include duties and taxes  _ 23 - Disbursement B3. The proposed credit would be disbursed against 100 percent of foreign expenditures for civil works, imported materials, equipment, consultancy services and training abroad, and against 80 percent of local expenditures eligible for IDA financing (in the table on the preceeding page). All disbursements would be fully documented except that statements of expenditures (SOE) will be used for all proprietary parts costing less than US$50,000 and for local civil works. These SOEs will be kept at the PMUs for verification by IDA supervision missions and by auditors. Funds for spare parts, materials, equipment and vehicles would be disbursed mostly in 1988 and in 1989, though high priority items would be received during 1987. In order to expedite project execution and give the implementing agencies rarid access to IDA credit proceeds, the Government will open two Special Accounts at the Central Bank. Account A, for the MIEM MPU, will have an initial deposit of US$300,000 and Account B, for JIRAMA, an initial deposit of US$1,000,000. The disbursement schedule for the proposed project conforms with the standard profile for Bank loans and IDA credits for power projects in the Eastern and Southern Africa Region. 84. Conclusion of an intermediary agreement,'acceptable to IDA, between the Government and BNI, would be a condition of disbursement for the electric boiler and the Haut Hangoro pine carbonization components. Under such agreement, BNI would earn a one-time coomission of 0.5 percent for all funds channeled through it; and the private charcoal companies and enterprises interested in procuring electric boilers would either bear the foreign exchange risk with an interest rate equal to the prevailing lending rate of IBRD multiplid by a factor of 1.1, or the prevailing interest rate of BNI plus a foreign exchange risk premium of 3 percent per annum. Establishment of commercial arrangements, satisfactory to IDA, maximizing the private sector's involvement in the implementation of the Haut Mangoro pine carbonization component, would be a condition of disbursement for this component. The closing date for the credit would be December 31, 1992. To ensure that Government would allow appropriate adjustments in JIRAMA's tariffs and capital contributions in a timely manner, the proposed project would be phased into two well-defined investment segments for which proposed IDA financing would be released as JIRAMA achieves specific agreed financial performance covenants as described in paras. 86 and 88. Project Phasing and Financial Covenants 85. JIRAMA's financial performance will be monitored during project implementation and by each September 30, an annual review process will be undertaken jointly by JIRAMA, GOM, and IDA to ensure the company's sound finarcial position. The review process and associated criteria have been defined, and are contained in six formal measures, reflected in financial covenants ard conditions of effectiveness and disbursement. 86. The first measure establishes that the investments to be financed by the credit will be phased in two well-defined phases. The magnitude and required timeliness of the financial measures to be adopted to ensure the short to medium term financial viability of JIRAMA warrant phasing of the project. The proposed phasing is in synchrony with the annual in-depth IDA reviews of JIRAMA's financial performance, which will lead to a determination of the precise measures to be adopted to meet the performance criteria required for undertaking the second phase of investment. The  - 24 - first phase, comprising US$15 million of investments, will be undertaken upon credit effectiveness, and the second phase of US$10 million will become eligiBle for financing subject to meeting other specified financial performance criteria. The financial performance criteria targeted for effectiveness are: (i) that generation of internal funds is sufficient to make a positive contribution (defined as one percent) to the investment program of 1988; (ii) that JIRAMA has at its disposal adequate funds in 1988 to cover the local cost of that year's investment program; and (iii) that the Government has made a capital increase of at least 4 billion FMG. For 1988 this is expected to require a tariff increase of not less than 9 percent as of January 18t of that year and a combination of capital increase and import duty exemption on spare parts and rehabilitation materials yielding about 7.6 billion FMG. 87. The second phase of investment will become eligible for IDA financing when revenue increases and other measures are adopted which will lead to (1) generation of funds from internal sources sufficient to contribute not less than 15 percent to the 1989 investment program; (ii) a debt service coverage ratio for that year of not less than 1.2; and (iii) definitive resolution of the outstanding issue between the Municipality of Antananarivo and JIRAHA of disputed ownership of water and electricity networks and installations. The goods to be included in the proposed second phase are distribution materials, vehicles, diesel plant spare parts and computers and related services, which can be easily prepared as discrete packages for procurement and implementation. Urgently required spare parts and distribution materials are provided by cofinanciers, or through parallel donor financing, during the period of the first phase of the proposed credit. 88. The second measure, a financial covenant, stipulates that JIRAMA during each year after 1989: (i) maintain a rate of return of not less than 8 percent on net fixed revalued assets as indicated by the asset revaluation study whose results would be available by June 30, 1989; (ii) generate funds from internal sources of not less than 30 percent of the average of that year's investment program; and (iii) maintain a debt service coverage of not less than 1.4. The third measure is a covenant, stipulating that prior to September 30 of each year, GOM will review with IDA whether JIRAMA would meet the covenant requirement set out as the second measure above for the ongoing as well as upcoming phase of Investment. If the review were to show that the requirement would not be met, JIRAMA and GOM would need to promptly take all necessary measures, including tariff adjustment, in order to meet such requirements. The fourth measure is a covenant confirming that JIRAMA will seek IDA approval for changes in the agreed investment program of any given year if such changes represent more than the lesser of either 1 percent of JIRAMA's net fixed assets or US$2 million. The fifth measure is a financial covenant, whereby JIRAMA agrees that it will not Incur any debt without IDA's agreement unless reasonable financial projections indicate that the debt service coverage, including the new debt, will not be less than 1.4 times in any given year of the projection period. The sixth measure is a financial covenant, whereby JIRtAMA agrees that it will reduce its accounts receivable by 1988 and maintain them thereafter at no more than 90 days of sales and its accounts payable at no more than 90 days of non-payroll cash operating expenditures.  - 25 - Protect Benefits and Risks 89. Benefits. The main benefits of the proposed project are to allow the power sector to provide more reliable output; increase the consumption of the existing hydropower surplus; improve the use of economically accessible energy resources, and strengthen energy sector planning and investment programming. These benefits would enhance JIRAMA's revenue generation, and provide substantial savings in imported fuel oil and coal. Without the proposed investments, JIRAMA's effective generating capacity would be gradually eroded, resulting in substantial increases in system outages and important losses in the production of export goods. The combination of the electric boiler program, the rehabilitation and expansion of transmission and distribution facilities, and increases in consumer connections will utilize a substantial proportion of the existing surplus hydropower capacity in the ICS. The rehabilitation of the 63 KV transmission line would contribute to meeting peak demand in the Antsirabe region. 90. Economic rate of return. The calculation of the economic rate of return (ERR) for the project is based on the agreed reference investment program (RIP) for the power subsector for the period 1987-92. Two major ERRs have been calculated; the ERR for the entire JIRAMA system is 33 percent and ICS alone is 46 percent. These ERRs are high because of the distortion in financial prices for key inputs, such as fuel oil, and the sunk-cost effect of substantial hydroelectric and diesel electric generating plants which will be used to meet much of the incremental demand for energy foreseen during the 1987-1992 period. 91. Project risks. There is little physical risk associated with the project because civil works would be minimal. The main risk to the power subsector components is institutional in nature, as JIRAMA may encounter difficulty in administering the project, and Government may not promptly allow required tariff increases. These risks would be minimized by the employment of consultants to assist in the supervision of the project, by the conditions tied to the release of proposed credit, and by the undertaking of joint and regular review of JIRAMA's financial performance. Cost overruns also represent another financial risk. However, the nature of the project is such that the works and materials to be purchased could be reduced in scope with no detrimental effect on the completed portion. 92. Environmental aspects. The power subsector components do not involve any significant negative environmental aspect. The electric boiler program and the biomass fuel production components would have a positive impact, by reducing the exploitation of forests in the hinterland of Antananarivo. Energy components place heavy emphasis on improved management and efficient utilization of natural forest resources; and the proposed charcoal component, as envisaged, would displace charcoal produced from untramelled harvesting of the natural forest with charcoal made from thinnings and clear-fell smallwood from the Haut Mangoro pine plantation. The rice-husk briquette pilot project would also examine the commercial prospect of producing good quality cooking fuels from otherwise discarded cellulosic residues in substitution of firewood and charcoal.  - 26 - PART V - RECOMMENDATION 93. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President Attachments Washington, D.C. April 9, 1987  -27- ANNEX I WDAOAcM- flffHhC DSRCA!3N1Page 1 of 3 Mlid-3,116 Pepuletlia (mile.) IC 16oo Pa. Capita 0W is WURI S8 A. hunts of Orgem Dastle Product P. GetA Estee (II per aomue) (free correct priee dante) (fern amuSes prig. dat.) toes we 1lee 10014 I"Sa lI'ee 1We-3 aen3-e togaO-H iWiop 1low oreat, geastla Produas e.p. we0 1oo me0 10 iO "a .. a -1.4 2.2 0.9 M4b at im reat Tame, 11.0 33.4 . . . .. Aerlcaltura . . ItS3 a6.1 .2.4 4 3.2. 0.;. 1 9 2.2 * Iimdemttjt ..00,0 201.2 is 18.6 16.4 iLl . 1.6 -4.? LI1 -1.0 Wa u*1c abrufactulrlne) 2. saraiegee. 47.4 450 4 41.6 42. 1.0 -.2 15 . Rmaeurca ft.m.a -1.4 -4 -17.1 -4.4 4.8 -4.7 . Cuperte ofOam 15.7 14.9 itO0 ILl11 14.8 1s.1i -1. 1.0 _lo:; 4.a II lmpara of unp fl.1 20.9 02.0 20 10.8 11.6 0.6 2.? -14.5 '-0.8 7 ImijI lapanilturee 106.41 101 117.1 106.4 106.3 104.7 .. 1.3 -Li3 11.6 1.6 Total Comnmaptiif 0.11 89.7 90.8 90.6 01.3 00.6 . 0.9 -1.5 1.5 - . Poulitn Canamptlm. 72.6 72.4 71.4 7.3 77.c 77.7 .. 0.2 -1.5 1.4 1.2 Genearl ioerment 2.11 17.8 17.1 135. 18.8 12.e 3.3 4.3 -1.8 1.0 0.? Grom. DaMMtLc lmeat.satwe 10.1 14.3 2U.S 13.3 14 14.2 4.2 3.2 -11.6 2 4.6 Plead briassmnt .. 18.8 n2.m . . . OMengastoi St"c . 0.3 0.7 .. . ... Cream Smatis Savins 3.6 10.3 6.1 01.2 1.7 4.5 .. .4. 10.8 -8.1 8.9 1M1n Factor beam -4.1 -2.2 -1.4 4.1 4 -.3 -4.6 . Hot Currant Treamfara L. .4 Li1 4.1 ... Crm" Rbtianal Saving .. .. 6. 6.1, 7.5 ... -n.22 .1 -3. In dIliias of LACIJ' 10611 1978 10610 161 I0Sp 1066. Cat camatmnt 1060 pricsm) - Cream Uomiasti Product .. 235 60 668 680 66" I -1.41 2.12 0.91 Capacity to xmpa. 12in lie WS a2 4i2 3..4 . -4.7 44 -7 u.s .16"Mr if Trada Adjuatment 40 64 0 1o 10 17 . Creame omeahic Inenc. .. so VWo us in0 an . ... -4.6 o.e ie CreamsP' Naiconl Product .. 62 66 7 7 90 .. 1.2 *W-3.0 0.9 2.3 Cram. blEat Lnaio as65 60 8 6 36. -8.1 -0.6 3.6 C.- PrimO IadiCaa 1060 io 103 1964 lOge. long 1965-73 107840 1900-64 LiIMP time CAnmuame Prica (IFS H4) 100 172 25.3 225.8 .. . .4 WAi 22.1 Whulamala Prima (IF-S 63) lo... . . ... Implicit (W Oaf late 100 1594.8 103.7 212 2383' 278.9 .. 1.2 21.3 Is 17.3 Implicit lipenditorma DOaf lter 100 1357.6 100.3 207.2 213. 270.6 .. 11.7 20.5 12.7 11.8 DI. Otuer Indi caters 2965-73 11173-fl 100-&ISp Ilates CS P.m.)-~~~~lte. - Populatian 2.4 2.? 3.0 Vitanlm onteconomic ladiscaterm tibiae Labor Pwart ... . haud foil. thei dtmfingteoa and Crmam National lace.o p.c. . -2.7 -5.5 concepts of th.m Standard Tabias and Private Conump.tion p.c. . -2.4 -.0. Standard Attachainta. The 'indicatire dha l nclude data Sternc the meet, :aPert Clamilcity: ricantly compiatad cmladiar year; (ir ImOrert (0095) / CDP (NW) .2.7 fiseal game ink the coam if fijcal yer Countries). Stiff ecastite nag ha used tereimmi Sv.ngm Roatin: If flail or prealiminary metuale ere nel. Cries National So.;.m ye..pt sal labia. The tea of Atimatam mad Cries Ceieatc Swivni pailminmftry figoree .1hiold bem indicated byg- :cm (peri.Odaveaa:...- aaeatisatad dt Aenar if TitalI i4ces ion3 iaw IOSP p aprelimimarp data .sherPirVcs int- Aericultur. 88.2 82.0 30.9 Ue Ind""r 4.3 8.2 5.9 2.7 Se"kea 10.8 11.9 18.1 9.2 TotlM *NOT'E: Certain anomalies in the present tables, possibly including minor incontsistenceies vis.-8-vis text data. are attributable to the very recent change in format of these Economic Indicator Tables. - Staff are working to resolve these problems.  -28 - ANNEX I MOACASA - WIlcC POICAT M I* Page 2 of 3 _._................. _.... Volu ..nd.. (I.O - 1002: val .t Current Prise (! lIlens 16),I --------------...... -..--------------_ ---- . . ..-- .... . .... . ... ---- .-.---.-... I. H|erWshudE lee tt. 130 3632 16331 164 163w 3633 1630 163 163 163 168 1*3 Ce1medit s I I cu.. 10O.0 74.2 72.7 74.0 34.3 72.1 214 120 141 160 104 126 C__dl4g 2 Vaillla 100.0 21.3 23.0 201.7 103.7 165.1 16 3 7a 71 44 UL cemSI4 3 Clawse 100.0 240.1 33.2 143.1 334.4 233.7 81 101 32 43 36 30 Cmwmdlw 4 .. .. atr2 m r.. .. .. .. .. .. .. 27 1as 3 3 2 0iber rpert. .. .. .. .. .. .. 143 1I0 62 lOg 72 72 Tetel Norchendllj Eapertm POI 0.O 110.6 1IT.3 I1J.1 105.4 123.0 433 421 351 443 2=1 0 P. Hledetedllee Import. Few 100.0 333.5 Uli.a 10.0 120.2 146.3 36 102 33 3O so 51 PO, end Other Energy 100.0 140.7 U1e.3 13.9 133.2 94.3 70 137 133 133 a5 40 Sib., lmperts Other Ceneumr Gasd 1O0.0 43.5 16.1 43.3 0.0 43.6 aS 4e 36 47 82 43 Other Xnter.mdinete 0 . 1o00.0 32.7 3s.3 83.2 31.3 44.0 22 147 146 liO IoC lS Ce;p1el aeedm 100.0 33.9 27.3 26.6 26.6 30.4 173 146 114 I 66 10L ToLal Herlbspdile Zweerts CIF 100.0 03.7 4d.1 42.9 42.4 4 49.0 913 676 m U43 461 - 373 0. Term S Trade (1660 - 100) 1660 IO2 1963 1904 169Uw 1966. ------ -------_-___ -___________