Tanzania - Sixth Power Project

D_mt of The World Bank FOR OMCLAL USE ONLY Rbpt No. P-5937-TA MEMORANDUM AND RECOMNENDAtION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 144.2 MILLION TO THE UNITED REPUBLIC OF TANZANIA FOR A POWER VI PROJECT APRIL 13, 1993 L~ ~ _ This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Ban;k authorization.  CURRENCY EQUIVALETS (As of Jamry 1993) Currency UDit = Tanznian Shilling Tsh 1.0 = US$ 0.003 US$ 1.0 = Tsh3S0 WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet 1 square meter (m2) = 10.75 square feet 1 hactare (ha) - 2.47 acres 1 cubic meter (n3) = 35.3 cubic feet L kilovolt (kcV) = 1000 volts 1 kilowatt hour (kWh) = 1300 watt hours 1 megawatt (MW) 2 1000 kilowatts 1 gigawatt hour (GWh) - 1 million kilowatt hours 1 megavolt ampere (MVA) = 1000 kilovolt ampere GLOSSARY AND ABBREVIUTIONS BA = Envirnental Assessment EI = European Investment Bank ESMAP = Joint UNDP/World Bank Energy Sector M gement Assistance Program KfW = Kreditanstadt fOr Wiederaufbau LRMC = Long Run Marginal Cost MWEM = Ministry of Water, Energy, & Minerals NORAD = Norwegian Aid Development ODA Overseas Development Administration TANESCO Tanzania Electric Supply Company Ltd. ZSFPC = Zanzibar State Fuel and Power Corporation FlSCAL YEAR Government: July 1 to June 30 TANESCO: January 1 to December 31  FOR OMCLIAL USE ONLY TANZANIA POWER VI PROJECT CREDIT AND PROJECT SUMMARY Borrower: The Government of Tanzania Beneficiaries: Tanzania Electric Supply Company Limited (TANESCO); Zanzibar State Fuel and Power Corporation (ZSFPC); Ministry of Water, Energy and Minerals (MWEM). Credit Amount: SDR144.2 million (US$200 million equivalent) Terms: IDA Standard Terms, with maturity of 40 years including 10 years grace period. US$180 million will be relent to TANESCO at an interest rate of not less than 7.43 % per annum, to be repaid over 20 years including a grace period of 5 years, with TANESCO bearing the exchange risk. US$2 million will be relent to ZSFPC with the same terms. The balance, US$18 million will be passed on to MWEM as a grant. nJS$ mllon) TANESCO 99.9 IDA 200.0 ODA 3.1 Other Donors 128.8 Private 3.0 Financing Gap 5.6 Total 440.4 Economic Rate of Return: 14% on TANESCO's portion of the project. Staff Appralsa Report: 11367-TA MaD: IBRn' 22162 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World bank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF TIlE INTERNAIONAL DEVELOPMEIT ASSOCIATION TO TEE EXECUTIE DIRECTORS ON A PROPOSED CREDIT TO TANZANIA FOR A POWER VI PROJECT 1. I submit for your approval the following memorandum and recommendation on a development credit to the Government of Tanzania for SDR144.2 million, the equivalent of US$200 million, on standard IDA terms with a maturity of 40 years to help finance a project in the energy sector. The Government will relend US$180 million to Tanzania Electric Supply Company Limited (TANESCO) for 20 years hcluding 5 years of grace, at 7.43 percent rate of interest, with TANESCO bearing the foreign exchange risk. Also, the goverment will relend US$2 million to Zanzibar State Fuel and Power Corporation (ZSFPC) under the same terms. The Government will pass on the balance of US$18 million to the Ministry of Water, Energy and Minerals (MWEM as a grant. NORAD, ODA, EIB, K1W, DANIDA and the Government of Belgium indicated interest in cofinancing the project and firm commitments are being discussed with them. 2. Background Tanzania's total energy consumpdon is 11.4 million tons of oil equivalent of which about 92% is woodfuel, 7 percent is petroleum, and only 1 percent is electricity. At a per capita income of only US$100 (1991), Tanzania is one of the 25 po-.test countries in the world. The level of per capita energy consumption and the high share of fuelwood in the total midicate the country's poverty. Per capita energy consumption, including traditional fuel, is 0.5 toe while per capita commercial energy consumption is less than ten percent of that amount (0.04 toe), and only slightly more than half of the average per capita commercial energy consumption of low- income Sub-Saharan African countries as a group (0.07 toe). 3. There is a considerable imbalance between energy resources and demand. Wood resources are large but because of their uneven distribution, consumption of woodfuels exceeds sustainable supply in certain areas with a high population density. Although there are oil-bearing structures, there have been no commercial oil discoveries and Tanzania imports petroleum. Proven coal reserves amount to 300 million tons. There are gas reserves of 725 billion cubic feet (bcf) offshore on Songo Songo island, and 20 bcf at Mnazi Bay. Hydropower potential is about 3,800 MW compared to an installed hydro capacity of 474 MW. Government policy for the use of these resources is to (i) develop substantial hydroelectric and other indigenous resources, such as coal and gas; (ii) arrest fuelwood depletion; (iii) assure reliability and security of energy supply; and (iv) minimize energy price fluctuations. 4. Electricity demand rose rapidly in the second half of the 1980s, due in part to the Government's Economic Recovery Program. In contrast to average annual GDP growth of less than 1 percent in the early 1980's, GDP increased annually at about 4 to 5 percent on average in the latter part of the decade. During 1985-90, electricity sales grew by 10.3 percent anmually and the conesponding peak demand grew by 7 percent anmually. Base case electricity demand projections indicate an increase frotm 1,395 GWh in 1991 to 2929 GWh in 2002, a yearly average growth rate of seven percent. Corresponding maximum demand on the system will increase from 297 MW in 1991 to 565 MW in 2002, an averabe annual growth of six percent. A deficit in electricity supply has occurred since early 1992 caused by higher load growth than  - 2 expected, severe drought hydrology, equipment failures, design defects and slow rehabilitation of thermal plants. These factors combined reduced TANESCO's available capacity from 304 MW in 1991 to about 205 MW in 1992. The rehabilitation of existing diesel units and construction of about 100 MW of gas turbines before 1998 will provide additional thermal capacity and both the redevelopment of the Pangani Falls Station (1996) and the commissioning of the Lower Kihansi scheme (1998) will provide new hydro capacity. Despite this, however, TANESCO will need substantial new generating facilities in the 1990s to meet growing demand and to assure security of energy supply. 5. The Tanzania Electric Supply Company, Ltd. (TANESCO), a public company, generates and sells about 95 percent of electricity consumed in Tanzania. TANESCO sells about 8 percent of dhe electricity it generates to Zanzibar in bulk, which the Zanzibar State Fuel and Power Corporation (ZSFPC) sells and distributes. The Government is the sole shareholder of TANESCO, which operates as an enterprise under the regulations of Tanzania's Company Ordinance. In recent years the company has earned sufficient income to pay corporate income tax. Consistent with the Government's ongoing parastatal reform program, the Government and I'ANESCO have shown their commitment to operate TANESCO as an independernt, financially viable company functioning at arms-length from the Government. A recent Policy Statement adopted by TANESCO's Board and endorsed by the Government defines the relativ, roles of the company and the govermnent in the power sector. Furthermore, the Government and TANESCO, since 1988, already have taken steps to increase TANESCO's independence and financial viability within the existing structure of the power sector. These steps include: (i) restructuring TANESCO's finances and offsetting the adverse effects of currency devaluation through regular tariff increases; (ii) reducing excess staff and establishing a productivity improvement program for the staff retained; (iii) decentralizing the company's distribution operations; (iv) revamping the company's billing and accounting operations; and (v) establishing a plan for divesting the company of activities which are more appropriate for private sector operations, such as the company's line construction business. In ordcr to offset recent cost increases and devaluation, the Government has, in the context of this project, raised the average tariff to the equivalent of US$ .07 per kWh and has agreed to raise it again to Uc$0.09 kWh which is close to the estimated long run marginal cost. 6. Rationale for IDA's Involvement and Linkage with Country Assistance Strategy. The proposed project will form an integral part of IDA's country assistance strategy which the Board will discuss in June, 1993. This strategy calls for reform of the parastatal sector, private sector development and improvements in infrastructure, including the efficient delivery of energy and use of the country's abundant hydropower resources. IDA's involvement in the proposed project will benefit Tanzania by: (a) promoting restructuring of the electric power sector for more efficient operation, including the development of a program to increase private sector involvement along with the required regulatory framework; (b) implementing necessary follow-up work on reconmendations of ESMAP and IDA technical assistance to increase transmission and distribution efficiency and improve TANESCO's commercial operation; (c) supporting the investment program for the least-cost option in power system expansion; (d) implementing demand side management initiatives; (e) promoting sound financial management and planning and (f) strengthening the capability of TANESCO staff through an extensive training program. Furthermore, IDA will continue to play an important role in coordinating the traditional s . ces of financing and developing new ones in the private sector. 7. Project Objectives. The main objectives of the proposed project correspond to Government policy objectives for the power sector, which IDA supports. These are: (i) meeting  -3 - the growing demand for electricity at least-cost through the construction of the Lower Kihansi hydroelectric scheme; (ii) helping the Government restructure the power sector to promote efficiency and private investment; (iii) continuing the work already started on improving energy efficiency by reducing system losses, improving service quality, and supporting demand side management initiatives; (iv) providing training and technology to improve the skills and management effectiveness of staff in sector institutions; and (v) promoting the development and operation of natural gas fueled generation by private investors. 8. Project Description. The proposed project consists of three main parts: The first part, which TANESCO will implement, includes: (i) the 180 MW first stage of the Lower Kihansi hydroelectric scheme; (ii) expansion, reinforcement, and loss reduction in the distribution systems of major load centers; (iii) provision of vehicles, tools, and meters to improve distribution and commercial operations; (iv) completion of the rehabilitation of the Kidatu hydroelectric plant; (v) management support and training; (vi) provision of computerized management infornation systems, and services to support TANESCO's decentralized operations; (vii) studies on tariff', asset valuation, the power system master plan, hydroelectric plant feasibility, and distribution standards; (viii) demand side management activities, including audits and advertising; (ix) upgrading of the dispatch center equipment and communication systems; and (x) provision of workshop equipment. 9. The second part, which ZSFPC will implement, consists of: (i) a study of the operation of ZSFPC's operations to define feasible options for its future structure; (ii) provision of a commercial manager for ZSFPC to oversee commercial operations until the completion of the utility restructuring; and (iii) provision of prepayment meters and associated materials to help improve collections. 10. The third part, which MWEM will implement, consists of: (i) a study of the structure of the power sector and its associated regulatory f.amework in Tanzania to define options for restructuring to improve efficiency, including privatization with particular emphasis on distribution privatization; (ii) provision of consulting services to help promote private sector financing and operation of thermal generation using gas from Songo Songo; (iii) provision of equipment to help develop generation (about 9 MW) from the Mnazi bay gasfield in a joint arrangement with the private sector; and (iv) training and office technology for energy staff of the MWEM. Schedule A gives a breakdown of costs and the related financing plan. Schedule B shows the amounts and methods of procurement and of disbursements. Schedules C and D provide a timetable of key project processing events and the status of Bank group operations in Tanzania. IBRD Map 22162 shows the project location. 11. Project Implementation. TANESCO will establish a project management unit, to coordinate its part of the proposed project, which a senior TANESCO executive with qualifications and experience acceptable to IDA, will direct. The unit will hire a qualified project manager to supervise and coordinate the activities of the consultants and contractors at the Kihansi site. A Panel of Experts, which TANESCO has retained, will continue to comment on critical design and construction decisions. TANESCO will recruit an experienced consulting firm to plan and coordinate the upgrading of the distribution system, loss reduction and expansion, the other major components of the proposed project. It will engage specialist consultants for various other components. The Department of Energy (DOE), within MWEM, will be responsible for promoting Songo Songo field development and arranging the contracts for the Mnazi Bay gas development. The Department will hire competent consultants to manage both. ZSFPC will hire  -4 - a qualified commercial manager who will be responsible for implementing the commercial improvements included in the project. 12. ProJect Sustainabilitv. TANESCO has been able to adjust its tariffs regularly to substantially meet the utility's financial obligations and support its operations. However, the drought and devaluation of the currency have made the tariff increases insufficient to achieve the desired fmancial results. The proposed project will help remedy this situation and re-establish TANESCO as a financially sound entity capable of generating a reasonable return on its assets, paying dividends to its shareholders and attracting private -ector participation in its ownership. Increases in tariffs and strengthening TANESCO's management, in conection with this project, will help in achieving this objective. Also, the Government, in 1994, will make further changes after determnig the most efficient structure for the electric power sector through a study of the structure of the sector. The emphasis in the Government's review is on introducing competition and private sector involvement. 13. Past Achievements and Lessons Learned. Through energy sector studies and technical assistance, IDA has helped establish planning capabilities for the energy sector in MWEN and for electric power in TANESCO. A succession of loans and credits in the electric power sector has helped guide power system expansion from a small, diesel-based operation to a country-wide, hydro-based power system with a relatively good record of technical performance. Concerning other energy subsectors, IDA has financed petroleum exploration promotion, which has attracted exploration financing from international oil companies. This exploration has result d in a major gas discovery, the Songo Songo field, which will make a significant contribution to domestic energy supply and possible exports. Also, Tanzanians, with technical assistance and training from IDA, have developed the capability to assume the major responsibility for the operation of their energy enterprises, in which expatriates formerly played the leading role. 14. IDA has learned a number of important lessons from its past power projects and action has been taken to implement them in the proposed project. First, there should be a thorough independent review of hydropower design. For this purpose, TANESCO has set up a panel of independent experts, which has reviewed the project definition report and will review other aspects of the proposed project, including the results of hydraulic testing. Second, an expert evaluation of cost estimates is important to ensure they are realistic, thus minizing the possibility of cost overruns. In the preparation of the proposed project, an experienced independent engineer reviewed these estimates. Third, it is prudent to design financing arrangements which will protect the proposed project from disruption. In this regard, IDA has maintained a continuous dialogue with donors and IDA would be in a position to reallocate some of its financing if some expected donor financing is not confirmed (pan 23). Fourth, it is important that appropriate experts familiar both with hydroelectric conactig and IDA procurement guidelines review the bidding documents. IDA has arranged such a rewiew. Fifth, on the financial side, it is important to establish realistic goals for the improvement of the utility's financial performance and use cash covenants for performance analysis. The proposed project has established achievable goals for cash generation, and supports tariff increases as well as improvements in billing, collection and accounting as means of achieving them. Sixth, recognizing the importance of mainaing a highly skilled staff, the proposed project includes a comprehensive training program to upgrade managerial and technical skdlls. Seventh, IDA has learned the importance of periodically supervising the ecological effects of a project. In this connection, the supervision missions of the proposed project will include an environmental specialist.  -5 - 15. Actions Agreed bL the Government. During project negotiations, the Government agreed to: (i) make the necessary arrangements to separate TANESCO's irr-house business for the construction of transmission and distribution lines from the rest of the company and offer this business for sale to private investors by December 31, 1993; (ii) engage consultants. by January 1, 1994, to examine sector structure, privatization options, and an appropriate regulatory system, review IDA's comments on the study, agree with IDA on a plan of action and implemen the resulting plan; (iii) provide fuli financing or reimburse TANESCO for any rural electrification project or other investment which it requires TANESCO to make, that it considers socially important but is not fnanciaWly viable; (iv) As a condition of disbursement fcr its onlending to ZSF?C, that ZSFPC will raise tariffs in line with those on the mainland; (v) hold a mid-term review of the proposed project no later than June 30, 1996; (vi) hold an interur review of the proposed project, no later than June 30, 1994, with the joint participation of the Govenment, TANESCO, IDA and the co-financiers, to examine the progress made in meeting the key conditions designed to inprove TANESCO's performance and implementing a partial divestiture of its operations; (vii) make direct payments to TANESCO on a quarterly basis, beginning September 30, 1993, for the electricity consumption of those consumers which, for humanitarian reasons, the Government does not want TANESCO to disconnect; and (viii) ensure compliance with the tariff agreement between TANESCO and ZSFPC and cover any shortfall to TANESCO due to non-payment by ZSFPC. 16. Actions AWreed by TANESCO: During negotiations, TANESCO agreed to: (i) until the inplementaton of the agreed recommendations of the tariff study (para 17), adjust tariffs by 3.5 percent annually in US$ terms to offset the estimated interational inflation; (ii) not incur any debt unless a reasonable forecast of its revenues and expenditures shows that the projected internal cash generation is at least 1.3 time.' the projected debt service requirement on all debt, including the debt to be incurred; (iii) review its investment program with IDA on an annual basis, incorporate changes acceptable to IDA before making any investment in excess of US$5 million not included in its investment program and provide IDA with satisfactory evidence of the investment's economic and technical viability; (iv) not change the agreed Statement of Policy without IDA's approval; (v) generate sufficient cash to finance yearly, from internal sources, the equivalent of not less than 15 percent for 1993, 25 percent for 1994, 20 percent for 1995 and 30 percent for 1996, 1997 and 1998, of the average annual capital expenditures incurred or expected to be ixurred for that year and the next three fiscal years; and (vi) before the end of September, in each of its fiscal years, TANESCO, on the basis of forecasts acceptable to IDA, will review the extent to which it has met the above requirements and if the review shows that TANESCO would not meet the he requirements, TANESCO and the Government would promptly take all necessary measures in order to meet such requirements. 17. Agreed Imnlementation Prora. TANESCO has agreed to carry out an implementation program, the major provisions of which are to: (i) survey salaries of commercial organizations in Tanzania and establish a competitive compensation structure for TANESCO by January 1, 1994; 'ii) furnish to IDA, by December 31, 1993, a demand side management program satisfactory to DA; (iii) study the company's manpower requirements with the assistance of an external manpower expert, review the results with IDA by December 31, 1994, implement the reommendations by June 30, 1995 and maintain the freeze on hiring, except for essential vacant positions, until it has implemented the recommendations of the manpower study; (iv) execute an asset revaluation study by June 30, 1994 under terms of reference satisfactory to IDA; (v) execute a tariff study by June 30, 1994, implement its recommendations within six months of the study's completion and update tariffs regularly based on the methodology which the study proposes; (vi) implement an environmental mitigation plan satisfactory to IDA, by June 30, 1994, for the Lower  -6- Kihansi scheme and the transmission lines from Lower Kihansi to Iringa and from Lower Kibansi to Kidatu; and (vii) enforce a detailed plan of action accepiable to IDA for the recovery of overdue accounts from the government agencies and parastatals as well as its policy for disconnecting private consumers, prepare a quarterly report for IDA's review summaizing outstanding consumer accounts and reduce accounts receivable, by December 31, 1994 to no more than .5 days of sales, maintaining then at less than 75 days in the future. 18. Conditions of Effectiveness. Before IDA declares the credit effective: (i) the Government and TANESCO will execute a subsidiary loan agreement; (ii) the Government will nmake satisfactory progress in finalizing co-financing arrangements for the project; (iii) TANESCO will engage an expert project manager for the lower Kihansi hydro-power scheme, whose qualifications axid terms and conditions of employment will be acceptable to IDA; (iv) TANESCO will establish a project management unit and appoint a Project Manager with qualifications and experience acceptable to IDA; (v) TANESCO will have completed the certification of bills for outstanding debts of Government Agencies and the Government will have paid TANESCO for all outstanding certifiei bills; and (vi) there will be an increase in TANESCO's average tariff to US$ 0.09 pe, kWh. 19. Environmental Issues. On behalf of the Government and TANESCO, consultants have prepared an Environmental Assessment (EA) for the Lower Kihansi hydroelectric scheme, including the associated Transmission lines, which is a Category A Project. The EA took place in several stages between 1989 and 1992 and involved concerned government and TANESCO departments and other interested groups. The Lower Kihansi dam will inundate 30 hectares and create a pondage of 1.4 milion cubic meters. Approximately 50 percent of the area which will be inundated is agricultural land and the remaining area is second-growth natural forest. The proposed project will require the removal of two dwellings temporarily occupied. TANESCO would, however, ensure equitable relocating of the two households, and compensate other owners for any losses and as well as other land holders who will lose cropland or commercial trees. The run-of-river is not expected to have a serious downstream impact on wildlife or fisheries. Any effects on flora and fauna should be wininimal and temporary. The proposed project will not affect water quality adversely, although indirect effects of intensified agriculture brought about by improved access could be deleterious in the long-term. There should be no increase in water- related diseases as a result of the project, but there will be a distinct threat that members of the labor force may introduce AIDS into the remote, sparsely populated region. TANESCO will address this potential threat through the bid documents for civil works which would require that the bidders prepare and implement effective measures to control spreading of AIDS during the construction period. 20. Benefits. The project will assist Tanzania in meeting additional demand for power at the least-cost, improve the quality of service, reduce losses and improve planning and management of the power sub-sector. The estimated economic rate of return (ERR) of TANESCO's investment program, of which the proposed project is a significant part, is 14 percent, which is above the opportita, cost of capital in Tanzania. The ERR is relatively insensitive to moderate cost increases and delays in project implementation; for example, 20 percent increase in investment costs would reduce the ERR to only 12.1 percent. Furthermore, a combination of a one year delay in the commissioning of the Lower Kihansi plant and a 20 percent increase in investment costs would lower the ERR to only 11.8 percent.  -7- 21. Response to Bank's Promram Objective Cate ories. The project supports Basic In6rastructure, Privatization and Public Sector Reform, and Human Resources Program Objective Categories. 22. Proiect Risks. The inclusion of substantial project management inputs by specialist wnsultants for the critical components should help minimize various risks to the proposed project's implementation. Nevertheless, because of Tanzania's everall economic situation and the nature of the work, the following present higher than usual risks: (i) financing for critical project components; (ii) delays in commissioning of the Lower Kihansi hydroelectric plant due to unforeseen geological conditions; and (iii) difficulties in completing institutional reforms. 23. The proposed project requires substantial foreign currency financing which the Government and TANESCO expect to come from at least six multilateral and bilateral institutions other than IDA. B"t it may be difficult to coordinate this arrangement, as priorides of the institutions sometimes change. In order to minimize the risk of disruption to the major components of the proposed project, the Lower Kihansi plant, IDA is prepared to reallocate resources from less critical components. These resources principally would come from distribution and generation rehabilitation components and if necessary from some of the insttutional strengthening components. The Government is conducting intensive discussions with the donors involved and they have indicated willingness to provide support. Also, satisfactory progress by the Government in finalizing co-financing arrangements is a condition of effectiveness of the proposed project. 24. Because of the difficult terrain at the Lower Kihansi site, the consultants have done sufficient investigations to permit design, costing, and tendering, viewing the construction process as the final definitive exploration and definition of subsurface conditions. The Independent Panel of Experts endorsed this approach as appropriate for the conditions and noted that it requires a flexible risk-sharing contractual philosophy and strict supervision. The Panel will review the contract documents to assure adoption of the correct contractual approach and will review progress of the project regularly. These arrangements, coupled with the project management resources that the proposed project provides, should permit prompt adjustments in response to unforeseen problems. If the problems are serious enough to affect the critical path of the project arid a delay is inevitable, the scheduling would provide TANESCO with the opportunity to respond by increasing the capacity of short-delivery g-as turbines it plans to install in the period prior to the commissioning of Kihansi. This would limit the potentially deleterious impact of unserved demand. 25. The project envisages significant institutional restructuring, which should result from the study on the structure of the power sector included in the project. These reforms are usually difficult to implement because they affect control of the sector and often have significant impacts on employment and personnel practices. However, it is possible to reduce the risk of failure by maintaining a clear view of the fundamental objectives and carefully crafting the transition to minimize any harmful impact on the stakeholders in the process. Moreover, the Government will minimize the risks by employing competent consultants to plan the transition to the agreed structure. The other major risk is the perception of country risks by potential investors since the participation of the private sector will be an integral part of sector reform. The carrying out of the Government's overall macroeconomic policy reform program, and its planned adoption of a well-defined regulatory framework for the power sector along with IDA's continuing dialog with the Government should help reduce these risks.  -8 - 26. Recommendat on. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and reommend that the Executive Directors approve the proposed credit. Lewis T. Preston President Attachments Washington DC April 13, 1993  TANZANIA SCHEDULE A POWER VI PROJECT PROJECT COST SUMMARY .Locl Foreign T:I1 (US$ Miflion) Tanesco Components Lower Kiasi 30.0 179.5 209.5 Distribution Irovement 4.1 36.8 40.9 Generation Rehabilitation 1.3 11.8 13.1 Equipment & Vehicles 0.3 6.0 6.3 Institutional & Studies 1.7 20.6 22.3 ZSFPC Component Assistance to ZSFPC 0.0 1.7 1.7 MWEM Component Power Sector Study 0.0 0.8 0.8 Gas Field Development 0.0 15.6 15.6 Technical Assistance 0 0.9 Total Base Cost 37.4 273.7 311.1 Physical Contingencies 3.9 24.3 28.2 Price Contingencies 1.9 42.5 44.4 Total Project Cost 2 3405 3,7 Interest During Const. 56.7 0.0 56.7 Total Fancing Required 99.9 30 PROJECT FINANCING PLAN Local Foreign Total (US$ Million) TANESCO ~~~~~~~~~99.9 99.9 TANESCO 200.0 200.0 NORAD 51.3 51.3 EI)A 24.0 24.0 BOB at 35.3 35.3 KfDAl 3.1 3.1 Govt. of Belgium n4 14.3 14.3 DANIDA aI 3.9 3.9 PRIVATE 3.0 3.0 OTHER TOTAL 2 340.5 440.4 aI To be confirmed  SCHEDULE B Page 1 of 2 TANZIANA Power VI Proiect Summary of Procurement Arrannements (US$ million) ICB QF B a/ TOTAL Foreign Local TANESCO Components Kihansi Preparatory & Civil Works 99.9 2.2 102.1 (81.0) (81.0) Electromechanical 75.3 17.4 92.7 Transmission & Substantions 33.5 7.8 41.3 Distribution Materials 50.1 50.1 (45.9) (45.9) Vehicles & Tools 1.8 0.6 2.4 (1.8) (0.6) (2.4) MIS & System Control 2.6 0.4 1.8 0.1 4.9 (2.6) (0.4) (3.0) Workshops 5.4 0.3 5.7 Demand Side Management 1.8 0.5 2.3 (1.6) (0.4) (2.0) Generation Rehabilitation 15.3 15.3 (13.6) (13.6) Consultants & Training 35.9 7.2 0.5 43.6 (31.8) (31.8) Proprietary Software & 0.3 0.3 Equipment (0.3) (0.3) ZSFPC Components Consultants 0.8 0.8 (0.8) (0.8) Meters & Assoc. Materials 1.2 1.2 (1.2) (1.2) MWEM Compo_ts Gasfield Equipment 16.6 16.6 (13.6) (13.6) Consultants & Training 4.1 4.1 (4.1) (4.1) Office Technology 0.3 0.3 (0.3) (0.3) Total 189.6 42.6 123.2 28.3 383.7 (161.6) (38.4) (200.0) I/ Not finmced by IDA Amounts in brackets are IDA fianced Consulting services under IDA guidelines  SCHEDULE B Page 2 of 2 TANZANIA POWER VI PROJECT IDA Credit Summary of Allocation Category Amount Expenditures to be financed (US$) (1) Civil Works (Including engineering) 88.7 100% of foreign expenditures (2) Electrical Equipment 56.6 100% of foreign expenditures (3) Vehicles and Other Equipment 4.5 100% of foreign expenditures (4) Training 1.4 100% of foreign expenditures (5) Consultants' Services 8.0 100% of foreign expenditures (6) Refunding of PPF 0.8 (7) Unallocated 40.0 Lstimated Disbursement of IDA Credit IDA's FY 1993 1994 1995 1996 1997 1998 1999 2000 Annual 0.8 10.2 44.0 51.2 44.4 29.5 14.7 5.2 Cunmlative 0.8 11.0 55.0 106.2 150.6 180.1 194.3 200.0  SCHEDULE C TANZANIA POWER VI PROJECT Timetable of Key Proiect Processing Events (a) Time taken to prepare: 18 months (b) Prepared by: TANESCO, Consultants (c) First Bank mission: January 1991 (d) Appraisal Mission departure: June 22, 1992 (e) Negotiations: February 1993 (t) Planned date of effectiveness: June 1993 (g) List of relevant OCR's and PPARs: Power: PCR for loan 1306-TA This project was appraised by: Asaf Malik (Task Manager) Sr. Financial Analyst Pavi Kojlonen Economist Alfred Gulstone Sr. Power Engineer Anthony Sparkes Sr. Power Engineer Reynaldo Castro Financial Analyst Petter Langseth Sr. Personnel Officer Jack Mossop Chief Personnel Officer Mr. Francis X. Colaro is the Managing Department Director and Mr. Stephen Weissman is the Division Chief. Mr Joseph Gilling is the Peer Reviewer.  STATUS OF SANK GROUP OPERATIONS IN TANZANIA Schedule 0 ..-.--........................ Pave l of 3 A. STATEMENT OF AM LOANS AND IDA CREDITS (as of Deceder 30 1992) .---- USS Million. --- Amwout(Less Cancellations) Loan or Ficatl Undisf Credit No. Year Borrower Purpose Bank IDA bursed ........ ... .... ... ...... Ninateen (19) Loans and sixty five (65) Credits fully disbursed, 313.06 908.3? of which SECALS, SALs and Program Loans/Credits: a/ Cr. 11330 1981 Tanzai Export Rehab. S0.00 0.00 Cr. A0240 1987 Tanzania Multi-Sec. RN I 46.20 0.00 Cr. 17410 1987 Tanzania Multi-Sec. RH I S0.00 0.00 Cr. A0241 1988 Tanzanis Multi-Sec. RH 1 26.00 0.00 Cr. 17411 1988 Tanzania Multi-Sec. RH 1 30.00 0.00 Cr. 19691 1989 Tanzania Ind. & Trade Adjus. Cr. 12.50 0.00 Cr. 19692 1990 Tanzania Ind. 8 Trade Adjus. Cr. 10.30 0.00 Cr. 21161 1991 Tanzania Agric. Adjustment 16.10 0.00 Cr. 21162 1992 Tanzania Agric. Adjustment 11.30 0.00 252.40 0.00 Cr. 10150 1980 Tanzania Groin Storage & Mill 43.00 1.36 Cr. 15360 1985 Tanzania Ports Rehab. 27.00 0.69 Cr. 16040 1985 Tanzania Petro Sector T.A. 8.00 2.86 Cr. 16870 1986 Tanzania Power Rehab./Energy 40.00 1.6? Cr. 16880 1986 Tanzania Roads Rehab. 50.00 8.24 Cr. 18100 1987 Tanzania Telec. It 23.00 1.38 Cr. 18910 1988 Tanzania Agr. Experts Reh. 1 30.00 21.23 Cr. 19690 bI 1989 Tanzania Ind. & Trade Adjus. Cr. 135.00 8.67 Cr. 19700 1989 Tanzania lat'l. AS. & Liv. Ros. 8.30 6.77 Cr. 19940 1989 Tanzania Agric. Ext. 18.40 11.19 Cr. 20500 1989 Tanzania Tree Crops 25.10 17.13 Cr. 20950 1990 Tanzania Ports Modernization 37.00 36.11 Cr. 20980 1990 Tanzania Health & Nutrition 47.60 45.24 Cr. 21160 b/ 1990 TaZania Aoric. AdJustmnt 200.00 19.83 Cr. 21370 1990 tanzaniu Educ. Platning & Redab. 38.30 33.43 Cr. 21490 1990 Tanzania Roads 1 180.40 157.34 Cr. 22020 1991 Tanzania Petrol Rehab 44.00 46.33 Cr. 22670 1991 Tanzania Railways Restructuring 76.00 71.87 Cr. 22910 1992 Tanzania Urban Sector Eng. 11.20 9.50 Cr. 23080 b/ 1992 Tanzania Fin. Sector 200.00 112.78 Cr. 23300 1992 Tanzania Engineering Credit 10.00 6.60 Cr. 23350 1992 Tanzania Forest Resourees Nan 18.30 17.68 Cr. 23081 b/ 1993 Tanzania Finanisal Sector 11.32 11.23 Cr. 24130 1993 Tanzania Financial & Legal Na 20.00 18.93 Total 313.06 2210.29 668.06 of which repaid 204.67 S3.26 Total held by Sank