Turkey - Berke Hydropower Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 15649 PROJECT COMPLETION NOTE TURKEY BERKE HYDROPOWER PROJECT (LOAN 3476-TU) May 24, 1996 Infrastructure Operation Division Country Department I Europe and Central Asia Region 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.  CURRENCY EOUIVALENTS Currency Unit - Turkish Lira (TL) 1992 (April 24) - TL 6,585 = US$ 1.00 1992 (average) - TL 6,872 = US$ 1.00 1993 (average) - TL 10,984 = US$ 1.00 1994 (average) - TL 29,608 = US$ 1.00 1995 (average) - TL 46,396 = US$ 1.00 WEIGHTS AND MEASURES kVA - kilovolt ampere kW - kilowatt kWh - kilowatt hour GWh (Gigawatt hour) - 1,000,000 kWh MW (Megawatt) - 103 kW ABBREVIATIONS AND ACRONYMS BOD - Board of Directors of CEAS CEAS - qukurova Elektrik A.S. (Cukurova Electric Company) ROT - Republic of Turkey MENR - Ministry of Energy and Natural Resources POE - Panel of Experts FISCAL YEAR OF BORROWER January 1 to December 31  FOR OFFICIAL USE ONLY PROJECT COMPLETION NOTE TURKEY BERKE HYDROPOWER PROJECT (Loan No. 3476-TU) CONTENTS Preface .............. Evaluation Summary ....................................................... PART 1: FINDINGS AND LESSONS .......................................... I A. Background ................................... I B. Project Objectives, Description and Design ............ ............... 1 C. Major Factors Affecting the Project ................................ 2 D. Perfonnance ................................... 4 E. Lessons to be Learned .................................... 5 PART II: STATISTICAL INFORMATION ......................................... 6 Table 1: Summary of Assessments ........... 6 Table 2: Bank Power Loans to Turkey Since 1985 ...........7I.......... 7 Table 3: Project Timetable ................................... 10 Table 4: Loan Disbursements ................................... II Table 5: Project Base Costs ................................... 12 This document has a restricted distribution and may be used by recipients only in the performance of their Iofflicil duties. Its contents may not otherwise be disclosed wiLhout World Bank authorization.   i PROJECT COMPLETION NOTE TURKEY BERKE HYDROPOWER PROJECT (Loan No. 3476-TU) Preface This is the Project Completion Note (PCN) for the Berke Hydropower Project in Turkey, for which loan 3476-TU in the amount of US$270 million equivalent was approved on May 29, 1992 and made effective on October 29, 1992. The Borrower was the Republic of Turkey; the beneficiary, a privately-owned, regional power company -- Cukurova Elektrik, A.S. (CEAS). Because of non-compliance by the Borrower and CEAS with procurement covenants of, respectively, the Loan and Project Agreements, the Bank, after extensive discussions and communications with Turkish authorities, suspended disbursements from Loan 3476-TU on February 1, 1995, and closed the loan on March 3, 1995, about three years before the originally scheduled closing date. At that time the project was about one year behind schedule and less than 30% complete; a balance of US$227.5 million equivalent was canceled. The PCN was prepared by Luiz Gazoni, Task Manager, Infrastructure Division, ECI. It was reviewed by Ricardo A. Halperin, Division Chief and George C. Zaidan, Project Advisor. The Borrower and the implementing agency were requested to provide comments on the draft Project Completion Note; however, their comments have not reached the Bank in time to be included in the the Note.   ii PROJECT COMPLETION NOTE' TURKEY BERKE HYDROPOWER PROJECT (Loan No. 3476-TU) Evaluation Summary Introduction Power Loans to Turkey. The Bank has loaned over US$2.0 billion to Turkey to help finance power projects, including US$1.57 billion since 1985. The subject loan--Loan 3476-TU (US$270 million; 1992), which was to help finance the Berke Hydropower Project--was the seventh Bank loan to benefit Qukurova Elektric A.S. (CEAS), a privately-owned regional power company. The Borrower was the Republic of Turkey (ROT) (para. 1). Proiect Objectives and Description Objectives. The objectives of the Project were to assist the ROT in accelerating the development of the country's hydropotential and expanding the role of the private sector in power generation (para. 3). Description. The project was to consist of a concrete arch dam, related structures (including tunnels, spillways, intake, surge tank, and a power house with an installed capacity of 510 MW), and a reservoir; 730 km of transmission lines, the extension of six substations and the construction of six new ones; technical assistance for the studies related to the regional dispatch center; and a resettlement program. The expected total project cost and project completion date were, respectively, US$663.3 million and mid 1996 (para. 4). Evaluation. The project objectives and description were compatible with sector guidelines and clearly stated in the loan documents (para. 5). l Because the project implementing agency - the Cukurova Elektric A. S. (CEAS) did not complete the implementation of the proposed Berke Hydropower Project, this report is a Project Completion Note (PCN) which focuses on the reasons that led to the premature closing of the loan and assesses the performances of the Borrower, CEAS and the Bank.  iii Implementation Experience and Results Achievement of Objectives. In July 1994, the main civil works contractor terminated his contract due to disagreements and disputes with CEAS. CEAS subsequently sought a new contractor without adhering to the Bank requirements on procurement. Because of non-compliance by CEAS with respect to the agreed procurement procedures, the Bank closed the loan on March 3, 1995 -- about three years before the originally scheduled closing date--and cancelled the undisbursed balance of US$227.5 million. At that time, the project was about one year behind schedule and less than 30% complete; and no project objectives had been achieved. Clearly, this outcome is highly unsatisfactory. The failure to complete the project does not make it possible to discuss the sustainability of project objectives or benefits, the least- cost rationale, or the internal rate of return (para. 7). Factors Affecting Implementation. CEAS' shares are traded in the stock market and distributed among a relatively large number of shareholders. In April-May 1993 a new group of investors acquired a controlling interest in the company. Shortly after the management was replaced, disputes arose with the main civil works contractor that had been selected in August 1992, following ICB procedures acceptable to the Bank. In July 1994, the main civil works contractor decided to terminate the contract and the CEAS Board of Directors did not follow the Bank's procurement procedures in his replacement. Performance. Given the unsuccessful outcome of the project, the performances of the Government and CEAS are rated as highly unsatisfactory. The Bank did what it could to keep the project on track, trying to promote the reconciliation of the CEAS with the civil works contractor, but its best efforts were not successful. The Bank's performance is, therefore, rated as satisfactory (paras. 17-20). Future Operation and Lessons to be Learned Future Operations. No further projects are planned with CEAS (para. 7) Key Lessons. The experience of this project suggests that: (i) in connection with loans benefitting private power companies, the appraisal process should include an explicit evaluation of the vulnerability of the power company to a takeover by a new group of owners (para. 20); (ii) the Government should strengthen the regulatory framework and regulatory capacity to better deal with similar problems in the future; this is being undertaken under a separate project (paral7); and (iii) the Bank would be well advised to make a standard lending requirement the placement of a reputable engineering consulting firm in a position of responsibility to supervise the implementation of a hydroelectric power project (para. 12).  PROJECT COMPLETION NOTE (PCN) TURKEY BERKE HYDROPOWER PROJECT (Loan No. 3476-TU) PART I: FINDINGS AND LESSONS A. Background 1. Bank Power Lending to Turkey. The Bank has made twenty one power loans to Turkey, amounting to over US$2.0 billion, including eight loans since 1985 amounting to US$1.57 billion. To help finance the Berke Hydropower Project, the Bank made Loan 3476-TU (US$270 million; approved on May 28, 1992) to the Government of Turkey (GOT) which on-lent the proceeds to (ukurova Elektric A.S. (CEAS), a privately-owned regional power company. This on-lending feature had already been utilized in previous six loans benefitting CEAS since 1963. The loan next preceding Loan 3476-TU was Loan 2750-TU (US$132 million, approved on August 26, 1986), which helped finance the Sir Hydroelectric Project. B. Project Objectives, Description and Design 2. Power Sector Strategy and Policies. The Government's basic strategy for the power sector was to ensure a balanced, least-cost expansion of the system at a rate adequate to meet the country's economic growth requirements. The Sixth Five-Year Plan called for the exploitation of domestic energy resources, especially hydro. To advance this strategy and at the same time limit the financing demands and the budget the Government sought, inter alia , to maximize private investment in power generation. The proposed Berke Hydropower Project was identified as supporting this strategy. 3. Project Objectives. According to the loan documents, the objectives of the Project were to assist the Borrower in: (a) accelerating the development of the country's hydropotential; and (b) expanding the role of the private sector in power generation. 4. Project Description. The project included the following components: (a) the construction of a concrete dam 201 meters high to forn a reservoir with a storage capacity of about 427 million m3, and related structures ( tunnels, spillways, intake, surge tank, power house), that would allow for the installation of three generating units with a combined installed capacity of 510 MW; (b) the construction of 730 kms of transmission lines and the extension of six substations as well as the construction of six new ones; (c) technical assistance for studies related to a regional dispatch center; and  -2- (d) carrying out a resettlement program for 144 people affected by the Project. The project was expected to cost US$663.3 million, including financing charges of US$71.2 million. After deducting cumulative expenditures through 1991 (land acquisition, access roads, etc.) amounting to US$39.6 million, the financing required to complete the project amounted to US$623.7 million, including the Bank loan for US$270 million. Following approval of the Bank loan (1992) project implementation was expected to be completed by about mid 1996. 5. Evaluation. On the basis of the information available at appraisal, the project objectives and description were compatible with sector guidelines, and, as set forth in the loan documents, they were clearly stated. 6. Project Design. CEAS followed the same approach to project design which had been successfully used in connection with the Sir Hydroelectric Project (para. 1). For the dam and the powerhouse, CEAS established a separate Project Manager and associated support staff. An international engineering consulting firm was engaged to complete detailed engineering and design, to prepare the main bidding documents, and to assist CEAS in construction supervision. The loan documents, however, did not specify the role of these consultants, which CEAS financed from its own funds. During construction, an international panel of experts (POE) was to advise CEAS on design/safety problems and to monitor progress and their appointment and role were covenanted in the loan. 7. Achievement of Project Objectives. At the time of the cancellation of the loan, the project was about one year behind schedule and less than 30% complete. No objectives had been achieved. Clearly, this outcome is highly unsatisfactory. The non-completion of the project voids the relevance of any discussion on the sustainability of project objectives, the least-cost rationale for the project, or its actual vs. expected economic internal rate of return. No further projects are planned with CEAS. C. Major Factors Affecting the Project 8. Project implementation, although delayed by 6 to 8 months, proceeded in a satisfactory manner until about May 1993 when a corporate takeover took place and control of CEAS shifted to a new Board of Directors (BOD). The new BOD expressed dissatisfaction with what they considered the uneconomic ways of the then current management, most of whom promptly departed (May-June 1993), including the project management team. 9. The change in management had a very significant effect on the way that CEAS was run; decision making became highly centralized and all decisions were referred to the company president who resided in Istanbul (CEAS' headquarters are located in Adana, in SE Turkey). Furthermore, the position of site project manager was left vacant for a long period of time, and many technical problems had to be referred back to the BOD, thus hindering construction activities. 10. In the summer of 1993, disputes on technical issues started between, on the one side, the contractor, the consultant, and the POE and, on the other side, the new BOD. For example, some variations in geological conditions led to disputes over how to deal with the right bank stabilization, the left bank upstream excavation, the T-2 tunnel, and the tail race outlet structure. The recommendations of the consulting engineers and the POE on the technical issues were not followed by CEAS who, having consulted third-party engineering consultants, instructed the contractor to implement simplified solutions  - 3 - that the Bank feared could have serious impact on the safety of the works. These technical disputes contributed to the growing mistrust between parties involved in the project construction. In October 1993, the POE resigned as a group because they felt that their advice was being ignored. This became a serious issue in the dialogue with the Bank; however, eventually the Bank agreed to the appointment of a new POE composed of well known technical specialists. 11. Soon after the problems with the POE, commercial disputes arose with the contractor regarding the down payment (made by the previous management) and the interpretation of the contractual price adjustment mechanisms. As a consequence, contractor invoices were disputed and not paid by CEAS. The Bank tried at all levels and on several occasions to mediate between CEAS and contractor; however, the situation continued to deteriorate until the contractor decided to terminate (July 1994) the contract on the grounds that CEAS failed to give them proper and timely instructions, to reply to the application for time extension and to certify and pay the works performed. The matter was then taken to court, and no final ruling has yet been given. 12. Following the termination of the construction contract, the Bank and CEAS again had many exchanges on the best course to follow to complete the project in a sound manner. Finally, CEAS sought to find new contractors, but ignored the procurement procedures recommended by the Bank. The procedures chosen by CEAS raised safety concerns. Specifically, in early September 1994, CEAS completed new bidding packages and published a procurement notice for the Berke Project which, instead of one single civil works contract as earlier, split the civil works into three separate contracts, the main dam, the powerhouse and tunnels, and drilling plus grouting. The Bank objected to this approach as well as to the documents. The main concerns that the Bank had were: a) the lack of an independent project engineer (it had become evident that the engineers then in place were playing a very limited role which limited their efficacy) which had become an issue in view of the highly technical nature of some of the points of contention between CEAS and the Bank; b) the necessity of addressing, based on the recommendations of the POE, the geological problems on the right bank of the dam which posed a threat to its stability; c) the lack of contractor responsibility for the dam, given that instead of one company being responsible for the entire civil works, two, and possibly four companies, were to be responsible for the entire works; d) CEAS' ignoring Bank procurement procedures since the bidding documents and procurement notice used by CEAS were not satisfactory to the Bank; and e) uncertainty about the financing plan and project costs given the delays resulting from the termination of the prior construction contract. 13. In the bidding carried out in October 1994, CEAS received no bids either for the main dam contract or for the powerhouse and tunnels contract. Only one of the three packages, the small drilling and grouting contract, was awarded; however, the Bank had not approved the bidding documents and was not informed about the award. It took CEAS until January 1995, when it received a bid from a local contractor to contract the remaining works, again without Bank approval. 14. As events unfolded, the Bank made its views clearly known to CEAS and the Government that the course of action taken by the CEAS management regarding the project construction was risky. This course of action, in addition to ignoring agreed procurement procedures, was leading to unnecessarily increased construction risks, impinging on the safety of the dam, which by far outweighed the immediate monetary gains that CEAS was presuming would accrue from its disputes with the contractor. 15. As the project implementation got further delayed on account of the above, and the possibility of a compromise between the Bank and CEAS faded away, CEAS started to question the cost of the Bank loans it still had to service, alleging that it was too high and that the currency pooling system was not  - 4 - defined clearly in the loan documents. CEAS management complained about the lending terms of the Bank, and, although it received clarifications from the Bank, it continued to raise the subject and requested a change in the loan terms. 16. After providing several opportunities to CEAS to reconsider the course it was following for project implementation, and given the unwillingness of the Government to intervene, the Bank decided to suspend, as of February 1, 1995, disbursements under the loan and then, as no positive demarches were made either by the Borrower or the implementing agency, close the loan on March 3, 1995. The Bank could not continue to be associated with a project under a management who disregarded the use of agreed procurement procedures. The undisbursed proceeds of the loan (about $227.5 million equivalent) were cancelled. D. Performance 17. The Borrower and the Beneficiary. The performance of the Government authorities during the events that led to the cancellation of the Bank loan, was quite passive; however, it is difficult to imagine what the Government could have done short of intervening in the management of the company, which was not warranted. It is debatable whether a more graduated and proactive role on the part of the Government vis-a-vis CEAS would have changed the course of events. However, the takeover of CEAS by a new group of shareholders was beyond the control of the Government. Even if the Government could have legally prevented the takeover had it wished to, it is doubtful whether this would have been desirable. On the other hand, as the Government seeks to promote an expanded private sector role in electricity generation it will need to strengthen its regulatory framework and regulatory capacity to deal better with similar problems in the future. 18. The new management received a project with the financing lined up, the bulk of the contracts signed within reasonable conditions, and it managed from the outset to antagonize most of the organizations who were collaborating on the implementation of the project. Its actions undermined many of the mechanisms in place that would ensure sound implementation like, for example, an experienced project team, the working of the panel of experts, the contractual responsibility for construction, and its relations with the Bank. 19. In November 1995 the Istanbul Stock Exchange suspended trading of the CEAS shares, and the Ministry of Energy and National Resources took control of the company for breach of its license. The control was later returned to the majority shareholder after its statements to the Exchange limiting the activities to the ones defined in the license. In January 1996 the local press reported labor relations difficulties in some of the company's power plants. 20. The Bank. The supply of electricity to the country has clearly suffered a major setback not only because of the uncertainty regarding the completion of this project, but also because of the challenge to the model of private sector development for major hydropower projects. If, on one hand it is difficult for the Bank to dissociate itself from the failure, it is also difficult, to imagine what the Bank could have done that it did not do. Even if the vulnerability of CEAS to a hostile take over had been detected during appraisal, it is not clear what could the Bank have done to preserve the competent management with whom it negotiated the loan. The Bank was proactive enough in trying to promote the reconciliation between the civil works contractor and the new management of CEAS; however, the Bank was not in a position to advise the Government to take over the project, although there were indications (like the questioning of the cost of Bank loans and complete disregard of the agreed procurement procedures for  - 5 - the contracting of the civil works contractors) that this could be the final outcome. The Bank did what it could to keep the project on track, but its best efforts were not successful. The decision to suspend and cancel the loan was justified as failure to do so would have rendered the obligations in the loan agreement meaningless and the Bank would have been associated to a project that posed unacceptable risks. Under these circumstances the Bank's performance should be rated as satisfactory as there were no alternatives open to keep the project on track. Regarding the Bank's performance it is worth mentioning that the resettlement plan developed for the project demonstrated that the private sector has the flexibility of compensating the affected populations promptly and providing resettlement assistance effectively. E. Lessons to be Learned 21. The experience of this project suggests two lessons: (i) in connection with loans benefitting private power companies, the appraisal process should include an explicit consideration of the vulnerability of the power company to a takeover by a new group of owners; (ii) the Government should strengthen the regulatory framework and regulatory capacity to better deal with similar problems in the future; this is being undertaken under a separate project; and (iii) the Bank would be well advised to make as a standard lending requirement the placement of a reputable engineering consulting firm in a position of responsibility to supervise the implementation of a hydroelectric power project.  - 6 - PART II. STATISTICAL TABLES Table 1: Summary of Assessments A. Achievement of objectives Substantial Partial Negligible Not Applicable Macro policies lI E E m Sector policies E1 l El [ Financial objectives El l Ix E Institutional development l LI E l Physical objectives ] El ElO Poverty reduction l [ 1 E ll Gender issues EE El Other social objectives LEl El Environmental objectives l El El Public sector management El El El Private sector development E E Other (specify) E El El B. Project sustainability Likely Unlikely Uncertain C. Bank Performance Highly Satisfactory Satisfactory Deficient Identification El El Preparation assistance El El Appraisal El El Supervision E El D. Borrower performance Highly Satisfactory Satisfactory Deficient Preparation El El Implementation E Covenant compliance El E Operation (not applicable) ElE El E. Assessment of outcome Highly Satisfactory Satisfactory Unsatisfactory Highly Unsatisfactory El11: El El  - 7 - Table 2. Bank Loans for Power in Turkey Since 1985 Amount Loan Number (in US$ Year of & millions) Purpose Approval Status Project 2586-TU; TEK 142.0 To expand the high 1985 Loan closed on 12.31.91, a Transmission voltage interconnected year late. Project was IV system of the Turkish completed in 1992; almost two Electricity Authority years late. Delay was due to (TEK) and thereby poor compliance with Bank ensure supply of procurement guidelines. electricity in response to Project cost amounted to growing demand and to US$268 million or 29% more increase TEK's network than expected. Due to low planning and design electricity rates, economic capacity (lines & benefits of project are substations). underestimated. The outcome of the project is rated marginally satisfactory. The institutional development impact of the project is rated as negligible. 2602-TU; 140.0 To assist TEK in (i) 1985 Loan closed 12.31.93, three Power System achieving efficient years late. The project was Operations utilization of its power completed in 1994, four years Assistance generation, transmission, late. Delay was due to and distribution facilities; frequent changes in TEK and (ii) ensuring management resulting in - lack reliability of electricity of commitment to the project supply by upgrading and its objectives. Also operational and contributing to delay were maintenance procedures. financial constraint. The PCR could not establish the final project cost. While the physical objectives of the project were partially met, the project outcome is rated as marginally unsatisfactory and its institutional development is l _________________ ____________ __________________________ ______________ n eg lig ib le .  8 Table 2: Bank Loans for Power in Turkey Since 1985 (cont'd) Loan Number Amount & (in US$ Purpose Year of Status Project millions) Approval 2650-TU; 10.0 To complete construction 1986 Loan closed 12.31.88, six Elbistan and completion of months late. The project Operation & Elbistan units 3 & 4. consisted of the third and Maintenance fourth units of the Elbistan Assistance power plant and improvements in TEK's operation and maintenance capability at the plant. The overall outcome of the Elbistan Project, which was initially supported by Loan 1023-TU (US$148 million, 1974) is rated unsatisfactory due to uncertain operational performance and negligible institutional development. 2655-TU, B014 200.0 To help the Government 1986 Loan closed 11.23.93, about & B015; 33.0 to maximize the 13 months ahead of schedule. Karaktepe 19.2 utilization of indigenous The project was never Hydropower energy resources to implemented because the Project provide flood protection Government, in circumstances to the city of Silike and of declining electricity growth adjacent 5,000 hectares due to poor macroeconomic of irrigated farmland. conditions, became increasingly less interested in the project. 2750-TU; Sir 132.0 To assist CEAS in 1986 Loan closed 12.31.92; as Hydropower maximizing the planned. Project completed Project utilization of its December 1991 or about 9 indigenous energy months late. Project cost resources through the US$306 million, an 18% development of overrun, mainly due to price hydroelectric generating rises double the estimated on the Ceyhan River in 15 % price contingency. The response to growing overall project outcome is demand for additional rated as satisfactory and its power; and to encourage sustainability is likely. the development of Institutional development is private sector rated as substantial. participation in the sector.  9 Table 2: Bank Loans for Power in Turkey Since 1985 (cont'd) Amount Loan Number (in US$ Year of & millions) Purpose Approval Status Project l 2856-TU; 325.0 To support the 1987 Loan close 09.30.93, three Energy Sector continuation of the years late. Bank loan Adjustment Government reform consisted of two tranches, Loan program in the energy fast disbursing component sector, especially policy (US$175 million) supporting measures which improve the purchase of general the efficiency of energy imports; and a project- production and usage and financing component (US$150 which assist the million) financing physical Government in its effort investment, studies and to facilitate private technical assistance to eleven investment in the sector. energy sector state enterprises. Associated with Bank loan were two "B" loans amounting to US$500 million. Reforms in the energy sector were not achieved; the project outcome is rated as unsatisfactory. Institutional development was negligible. 3476-TU Berke 270.0 To assist the Government 1992 Project object of this PCN Hydropower to accelerate the Project development of the hydropotencial and to expand the role of the private sector in power generation 3345-TU; TEK 300.0 To support TEK 1991 Still under implementation. Restructuring corporate restructuring as Loan restructured to reflect part of large state division of TEK into two enterprise reform enterprises: TEAS and program and to TEDAS. implement a least cost expansion plan TOTAL 1,571.2 l  10 Table 3: Project Timetable Steps in Project Circle Date Identification (Initial Exec. Project Summary) 02/05/90 Preparation (Final Exec. Project Summary) 12/06/91 Appraisal 01/06/92 Negotiations 04/06/92 Board presentation 05/28/92 Signing 06/12/92 Effectiveness 10/29/92 Project Completion NA2 Loan Closing 03/03/95 2 The project is not completed.  11 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (USS thousands) Appraisal Actual As IBRD Fiscal Year Estimate Actual Percentage of (US$ thousands) Estimate 1993 46.9 22.6 48 1994 66.4 11.1 16 1995 82.4 8.8 11 1996 56.5 - - 1997 17.8 -- Date of Final Disbursement: 02/01/1995  12 Table 5: Project Base Costs Appraisal estimate 9/94 Estimates' (US$ million) (US$ million) Item Local Foreign Total Local Foreign Total costs costs costs costs 1. Berke Hydropower Project 204.3 211.2 415.5 164.1 162.0 326.1 2. Transmission Network 38.4 30.4 68.8 38.4 30.4 68.8 3. Technical Assistance 0.2 1.0 1.2 0.1 1.0 1.1 4. IDC 0.0 71.2 71.2 1.7 51.4 53.1 Total3 242.8 318.8 556.7 204.3 244.8 449.1 * These estimates updated the project costs after the award of the major contracts but before the termination of the contract for the civil works (para. I 1). The costs shown are lower than the appraisal figures due to the intense competition for the Bank-financed contracts. If the costs were to be updated to consider the turmoil suffered by the project in 1994, it is likely that the estimates would show figures considerably higher than the appraisal estimates, but such information is not presently available. 3 Total without contingencies     IMAGING Report No: 15649 Type: PCN