China - Beilungang Thermal Power Extension Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 15446 IMPLEMENTATION COMPLETION REPORT CHINA BEILUNGANG THERMAL POWER EXTENSION PROJECT (LOAN 2955-CHA) MARCH 22, 1996 Infrastructure Operations Division China and Mongolia Department East Asia and Pacific Regional Office 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 EQUIVALENTS Currency Unit: Yuan (Y) At Appraisal (February 1988) $1 = Y 3.7 Exchange Rates During Project Years Year Ave. 1988 - 3.73 1989 - 3.73 1990 - 4.86 1991 - 5.36 1992 - 5.49 1993 - 5.75 1994 - 8.60 1995 - 8.30 WEIGHTS AND MEASURES Metric System FISCAL YEAR January I to December 31 ABBREVIATIONS AND ACRONYMS ECEPDI - East China Electric Power Design Institute ICB - International Competitive Bidding ICR - Implementation Completion Report IERR - Internal Economic Rate of Return MOEP - Ministry of Electric Power ZPEPB - Zhejiang Provincial Electric Power Bureau ZPEPC - Zhejiang Provincial Electric Power Company  FOR OFFICIAL USE ONLY CONTENTS Preface ...........................................................ii Evaluation Summary .......................................................... iii PART I: PROJECT IMPLEMENTATION ASSESSMENT .................................1 A. Project Objectives ...........................................................1 B. Achievement of Project Objectives .........................................................2 C. Implementation Record and Major Factors Affecting the Project ...............3 D. Project Sustainability ...........................................................8 E. Bank Performance ...........................................................8 F. Borrower Performance .................. ..8 G. Assessment of Outcome ....................9 H. Future Operation ....................9 I. Key Lessons Learned ......................9 PART II: STATISTICAL TABLES ........................... 11 Table 1: Summary of Assessments .................................................... 11 Table 2: Related Bank Loans .................................................... 12 Table 3: Project Timetable .................................................... 15 Table 4: Loan Disbursements: Cumulative Estimated and Actual ................ 15 Table 5: Key Indicators for Project Implementation ...................................... 16 Table 6: Key Indicators for Project Operation ................................................ 16 Table 7: Studies Included in Project .................................................... 17 Table 8a-1: Project Costs ..................................................... 18 Table 8a-2: Project Costs ..................................................... 19 Table 8b: Project Financing ..................................................... 19 Table 9: Economic Costs and Benefits ..................................................... 20 Table 9: Attachment: Ex-Post Internal Economic Rate of Return of Beilungang Thermal Power Extension Project (Ln. 2955-CHA) ...... 21 Table 10: Status of Legal Covenants .................................................... 22 Table 11: Compliance with Operational Manual Statements ......................... 23 Table 12: Bank Resources: Staff Inputs ..................................................... 23 Table 13: Bank Resources: Missions .................................................... 24 ANNEXES Annex 1: ZPEPB Financial Statements .......................................................... 25 Annex 2: Aide-Memoire Of The Supervision Mission ............................................... 30 Annex 3: Project Review From The Borrower's Perspective .......................................................... 35 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.   - ii - IMPLEMENTATION COMPLETION REPORT CHINA BEILUNGANG THERMAL POWER EXTENSION PROJECT (LOAN 2955-CHA) PREFACE This is the Implementation Completion Report (ICR) for the Beilungang Thermal Power Extension Project in China for which Loan 2955-CHA in the amount of $165 million was approved on June 14, 1988 and made effective on February 2, 1989. The loan was closed on June 30, 1995, 24 months beyond the date originally envisaged, June 30, 1993. The balance of the loan, $55,505.73, was canceled on October 31, 1995. The total disbursed amount was $164,944,494.27. The ICR was prepared by Shigeru Kataoka and Elaine Sun, Infrastructure Operations Division, China and Mongolia Department of the East Asia and Pacific Region, and reviewed by Mr. Richard Scurfield, Division Chief, and Mr. Yo Kimura, Project Advisor. The Borrower/Beneficiary provided comments, which are included as an annex to the ICR. Preparation of this ICR was begun during the Bank's final supervision mission in March 1995. It is based on the Staff Appraisal Report, the Loan and Project Agreements, Supervision Reports, correspondence between the Bank and the Borrower/Beneficiary, internal Bank memoranda and interviews with Bank and Borrower/Beneficiary staff involved in project implementation. The Borrower/Beneficiary contributed to the preparation of the ICR by commenting on the draft ICR, preparing an evaluation of the project's execution and implementation, and by contributing views reflected in the mission's aide-memoire.  I  - iii - CHINA BEILUNGANG THERMAL POWER EXTENSION PROJECT (LOAN 2955-CHA) EVALUATION SUMMARY Project Objectives 1. The Beilungang Thermal Power Extension Project was designed to support industrial growth in East China by increasing electricity supply to the East China Grid, which was suffering from acute power shortages. The project was also used as a vehicle to: (a) support the national policy of developing large coal-fired thermal power generating units to make effective use of China's abundant coal reserves; (b) continue the effort to introduce modern technology in plant design and construction management of 600 MW thermal power units; and (c) provide technical assistance to the implementing agency, the Zhejiang Provincial Electric Power Bureau (ZPEPB), for reorganizing its operations and strengthening its management. This assistance was aimed at facilitating its transforrnation from a power bureau to a more autonomous power entity. 2. Financing under the project provides for: (a) extension of the Beilungang Thermal Power Plant by adding a second 600-MW unit and constructing the second single circuit of 500-kV transmission line (245 km between Beilungang and Pingyao) and extension of the Shaoxin and Pingyao substations; (b) provision of consulting services for engineering, procurement, and review of design drawings and interfacing among various contract packages; (c) a study for ZPEPB's reorganization and management improvement; (d) a study for expanding and improving the distribution networks for the cities of Hangzhou and Ningbo; and (e) a training program. Implementation Experience and Results 3. Project implementation was generally successful and the above objectives were achieved within the budget. The project provided a fully integrated state-of-the-art 600 MW coal-fired unit that set technical and economic performance standards for a series of same size units that were subsequently installed in China. This was the second such unit designed, constructed and operated by ZPEPB and only the fourth in China. As such, it represented a remarkable technical achievement. The project's successful implementation of the special study on ZPEPB's reorganization and management improvement led to implementation of recommended changes and priming ZPEPB for full commercialization under subsequent operations. The final cost was $170.6 million in foreign expenditures and Y 649.3 million in local costs, compared to an estimated $199.7 million in foreign costs and Y 333.0 million in local costs. The local cost increase mainly resulted from inflation- related cost increases for both labor and materials and additional scope of supply for the second 500-kV line between Shaoxin and Pingyao.  - iv - 4. Commercial operation of the power plant was about 30 months later than expected at appraisal due to delays in procurement of main equipment, erection work (due to bad weather), the need to correct deficiencies in equipment quality, and difficulties in coordinating suppliers. Throughout implementation of the project, ZPEPB performed satisfactorily, and responded to problems appropriately by taking firm measures with contractors, expanding its project management staff, and reinforcing its quality assurance system. Summary of Findings, Future Operations and Key Lessons Learned 5. Along with a previous Bank-assisted operation (the first Beilungang Thermal Power Project, Ln. 2706-CHA), the project was instrumental in laying the basis for ZPEPB's future development, in terms of its facilities, manpower, financial strength and commercial orientation. First, the project facilitated the transfer to ZPEPB of up-to-date technology for the construction and operation of a second 600-MW coal-fired unit which was followed by three additional 600-MW units and major transmission and urban distribution expansion under the current Zhejiang Power Development Project (Ln. 3846-CHA, 1995). Second, implementation of the recommendations of the project's institutional study realized the study's goal of introducing managerial autonomy and accountability as well as modem management organizations, systems and procedures. Corporatization, the long-term objective of these initial efforts, is occurring under the current project. 6. Under this project, ZPEPB accumulated experience in design and construction technology of state-of-the-art 600 MW large-capacity coal-fired plants. The project's rate of return calculated at completion, was 17.1 percent, compared to the appraisal estimate of 15 percent because the "willingness to pay" for power is now demonstrated to be higher than original estimates. 7. Based on lessons learned from the first Beilungang project, the project management system and quality assurance system were reinforced in this project. However, in the course of implementation, ZPEPB again experienced technical defects in the plant equipment and increasing difficulties of management of interfaces within and between the various contract packages. This experience suggested the need for more stringent quality-assurance systems for both ZPEPB and the contractors, and also suggested that the number of contract packages should be minimized to the extent possible to reduce interfacing problems. The need for greater external expertise, particularly in construction management, was similarly a project lesson.  IMPLEMENTATION COMPLETION REPORT CHINA BEILUNGANG THERMAL POWER EXTENSION PROJECT (LOAN 2955-CHA) PART I: PROJECT IMPLEMENTATION ASSESSMENT A. PROJECT OBJECTIVES 1. The Beilungang project is located in a major load center in the East China Grid. When the project was identified, East China was already one of the country's most important industrial areas, accounting for about 25 percent of total national production. However, a shortage of electricity supply was a major constraint to economic development in the region. Power curtailment by rotation was enforced in almost all industries, limiting their operation to only four to five days a week, with consequent underutilization of plant facilities and manpower. 2. Of necessity, the Government's commitment to industrial development entailed a commitment to modernize and expand the power sector and make it more efficient. To this end, it encouraged: (a) expansion of generating capacity as rapidly as possible; (b) increased financial autonomy of sector enterprises; (c) gradual introduction of a more rational pricing system; (d) modem techniques in project design and system planning; (e) development of coal-fired thermal plants at mine mouths and ports; (f) construction of extrahigh-voltage transmission lines for interconnection between regions; and (g) replacing medium-sized (50-100 MW) units with higher pressure (300-600 MW) units to improve energy generation efficiency. 3. The Beilungang Thermal Power Extension Project for construction of the second 600-MW unit responded to these goals by: (a) alleviating the acute power shortage of a major load center in East China; (b) developing a large coal-fired thermal power plant in a port area; (c) continuing the effort to introduce modem technology in plant design and construction management of 600 MW thermal power units; (d) constructing 500 kV transmission lines to transfer power between optimal generating sites and load centers, facilitating eventual regional interconnections; and (e) providing technical assistance to the implementing agency, the Zhejiang Provincial Electric Power Bureau (ZPEPB), for reorganizing its operations and strengthening its management, to facilitate its transformation from a power bureau to a more autonomous power entity.  -2 - 4. The project comprised: (a) extension of the Beilungang Thermal Power Plant by adding a second 600- MW unit; (b) construction of the second single circuit of 500-kV transmission line between Beilungang and Pingyao (245 km) and extension of the Shaoxin and Pingyao substations; (c) provision of consultant services for engineering, procurement, and review of design drawings and interfacing among various contract packages for equipment; (d) a study for ZPEPB's reorganization and management improvement; (e) a study for expanding and improving the distribution networks for the cities of Hangzhou and Ningbo; and (f) a training program. B. ACHIEVEMENT OF PROJECT OBJECTIVES 5. The project achieved its primary objectives of alleviating power shortages and supporting economic growth in the region through development of a large capacity coal- fired unit with transmission to the major load centers. This was the second 600-MW unit designed, constructed and operated by ZPEPB (and only the fourth in China). It represented a remarkable technical achievement and set the stage for the Zhejiang Power Development Project (Ln. 3846-CHA, approved in 1995) for construction of three additional 600 MW units and a major transmission network expansion. 6. The institutional development objective was successfully achieved through the special study for ZPEPB's reorganization and management improvement. The study was carried out to define needed measures to reorganize ZPEPB's operations and further strengthen its management. The main objective of the reform measures was to begin to transform the Bureau into a company with increased autonomy and accountability. The tariff study included in the reorganization study similarly set the stage for improvement of ZPEPB's financial performance. The study reviewed the level and structure of power tariffs for the East China power system, and introduced the marginal cost pricing principles now widely accepted in China. Following on from these studies, ZPEPB has completely redesigned its tariff structure, and the revised structure is being phased in. 7. The objective of transferring technology was also achieved. Through the special study for extending and improving the distribution networks for the cities of Hangzhou and Ningbo, a program for renovation of the distribution network was developed and the required investments until the year 2000 are being financed under the subsequent Zhejiang  - 3 - Power Development Project. Further technological upgrading of distribution planning techniques will occur under that project. C. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT Implementation Schedule 8. The project power plant was synchronized to the system in April 1994, commissioned in October 1994 (the date of completion of 7-days full load operation) and put into commercial operation in November 1994, 30 months behind the appraisal estimate. (See Table 5 for details.) The delay resulted from: (a) about 7 months delay in procurement of major equipment packages; (b) about 9 months delay in finalization of foundation designs, which delayed the start of pilings for the boiler and main building foundations;' (c) delay in civil works to overcome unforeseen soft soil conditions; (d) delay in civil works due to record-breaking cold temperatures in the winter of 1991 and an abnormally heavy rainfall in March 1992; (e) necessary corrections and repair works for rectification of deficiencies in equipment quality during the commissioning and postcommissioning periods; and (f) interfacing problems between contract islands. Factors (c) and (d) accounted for about 6 months of delays, and factors (e) and (f) accounted for 8 months of delays. The loan closing date was extended by two years, from June 30, 1993 to June 30, 1995, to accommodate the delayed completion. Outstanding Issues During Implementation 9. Experiences gained under the first Beilungang Thermal Power Project (Ln. 2706- CHA) which constructed the first 600-MW unit, were reflected in the design and implementation of construction of the second unit, especially in the following areas: (a) Since coal quality problems may have caused a boiler accident in the first project, management of coal supply and coal quality control were reinforced in the second project to ensure compliance with requirements of operational specifications. To avoid formation of excessive slag, which may also have contributed to an explosion in the boiler under the previous project, operating criteria for the sootblowers were improved and the tube metal temperature was strictly controlled within the design value; (b) Project management and the quality control system were reinforced; and The SAR estimate for the start of pilings was January 1989, based on the date of contract of major equipment packages in August 1988. The actual dates of the contracts for the boiler and turbine-generator packages were January and March 1989, respectively. To meet with this revised schedule, the start of piling was rescheduled to start in January 1990. Subsequently, further delay caused by the events of June 4, 1989 occurred. Design liaison meeting was postponed for several months. This resulted in delay in finalization of foundation drawings of major equipment. This delay was counted for 9 months.  - 4 - (c) Counter measures were taken for soft soil conditions at the site. For reinforcement of the foundation, a vertical isolation wall was added between the two units. This provision required about 6 months extra time in the construction schedule and additional expenditure of Y 20 million. 10. In spite of reinforcement of the project management and quality control system, construction difficulties continued in the following areas: (a) Problems were experienced in managing interfacing of major and auxiliary contracts packages, largely for two reasons. First, major equipment contractors for units #1 and #2 were different and consisted of two different boiler contractors and two different turbine generator contractors in one power station. On the other hand, contractors for the instrumentation and control system and electrical equipment for house auxiliaries were the same for the two. Considerable additional interfacing and coordination work among major and auxiliary islands was therefore needed. Second, the start of contracts for some auxiliary equipment (the ash handling system and electrical equipment) was delayed because of shortages in foreign funds due to devaluation of the US dollar against European and Japanese currencies in 1990 (para. 14 for details). (b) During the construction commissioning and postcommissioning periods, many defects in equipment quality were discovered. To rectify these defects, the date of the commercial operation was delayed (see para. 8) and also the performance acceptance tests for major packages were delayed (see Table 5 for details). During the construction period, defects in the turbine low-pressure casing (deformation), high-pressure condenser tube sheet (leakage), generator support plates, a cracked nozzle of the boiler drum, etc. were experienced. And during the commissioning period, various problems and defects of the equipment, such as vibration of the turbine because of deformation of the lower casing, defects in the boiler feed pump, lube oil system, material of oil cooler, rotating rectifier, etc. were experienced. During the postcommissioning period, defects in the exciter, turbine-driven boiler feed pump and high-pressure heater were found. 11. Power Generation. The operation record during 1994-95, following completion of the 7-day full load test on October 20, 1994, is summarized below: 94 95(EH) 95(SH) Power generation 383.1 1,049.3 1,452.5 (GWh) Note: FH = first half; SH = second half.  - 5 - 12. Project Costs Excluding Interest During Construction. The estimated cost of the project at appraisal was $178.0 million in foreign costs and Y 306.73 million in local costs, equivalent to a total of $260.9 million (Y 965.3 million). The final cost was $170.58 million in foreign costs and Y 649.18 million in local costs, equivalent to a total of $276.89 million (Y 1,559.60 million) (see Tables 8a-1 and 8a-2 for details). As compared with the appraisal estimate, the project had a cost overrun of about 6.1 percent when expressed in US dollars and a cost overrun of about 61.5 percent when expressed in local currency. These variations were mainly caused by: (a) higher-than-expected inflation; (b) the devaluation of the local currency; and (c) additional equipment purchases (see para. 13 for details). The exchange rate changed from Y 3.7 to $1 at the time of appraisal to Y 8.7 to $1 by the end of 1994, when the main components were completed. The compound average exchange rates over the construction period (1989 to 1995) were Y 5.3 to $1 for foreign cost expenditure, and Y 6.1 to $1 for local cost expenditure. The impact of the devaluation of the Yuan caused a cost increase of about Y 43 million for locally-financed imported materials (steel, cement, timber, etc.). 13. The local project expenditures, expressed in Yuan terms, increased for four reasons: (a) an additional Y 20 million needed for additional construction of the isolation barrier between foundations of the two units due to soft soil conditions; (b) an additional Y 157 million for substantial inflation-driven increases of salaries for local laborers and locally procured materials for civil and erection works; (c) an additional Y 5.0 million for coal handling plant which was originally planned to be imported and subsequently changed to local procurement, due to the unexpectedly high price of imported equipment; and (d) an additional Y 150.0 million for the transmission lines and substations due to: (i) additional procurement of the second 500-kV line between Shaoxin and Pingyao (100 km), and (ii) inflation-driven cost increases. 14. A summary comparison of the estimated disbursements at appraisal with the actual disbursements is given in Table 4. The original loan closing date was June 30, 1993. The actual closing date was June 30, 1995, after two extensions due to delayed completion of the unit. A total of $55,505.73 was canceled from the loan on October 31, 1995. The total loan amount disbursed was $164,944,494.27. 15. Procurement. The project included 25 procurement contracts, of which 12 entailed international competitive bidding (ICB). The total amount of the procurement contracts was $162.13 million equivalent, of which $159.74 million equivalent was under ICB packages. All procurement activities for the project were performed in accordance with the Bank's procurement guidelines and were generally carried out satisfactorily.  - 6 - 16. One problem did arise in project procurement. In the procurement financed by the Bank's loan, over 85 percent of the contract amount required non-US currency. The devaluation of the US currency against European and Japanese currencies in 1990 resulted in a cost overrun (about $13 million) and affected procurement of auxiliary facilities (ash handling plant and electrical equipment). Due to the shortage of foreign currency, the downpayments for the contracts for the ash handling plant and electrical equipment could not be paid. To respond to ZPEPB's request, the Bank agreed to utilize about $7 million from Loan 2706-CHA for the down payment on the ash handling plant. In addition, about $6 million was financed by the Bank of China. Implementation of the above contracts were delayed by about one year. 17. Consulting Services and Training. Following the completion of the first unit under Ln. 2706-CHA, the need for consulting services for the project was considered to be greatly reduced. A foreign firm was selected to carry out consulting services for assistance to ZPEPB for bid evaluation and contracting; assistance on foundation design; coordination for interfacing of various islands; and assistance in the review of vender's drawings. The performance of the consultants was satisfactory and met the requirements of their terms of reference. Participation of the foreign consultant in the consulting services terminated in 1991. After that, construction management for interfacing among various contract islands was carried out by ZPEPB. ZPEPB, however, experienced some problems with project construction management and quality control of the plant (see para. 10). One lesson leamed under the project was the continuing need for external consulting services, with particular regard to construction management. This lesson has been taken into account in defining the scope of consultancy services in the subsequent Zhejiang Power Development Project. 18. In this project, training mainly focused on project-related areas like the use of up-to- date technology for CAD-aided design review, erection, commissioning, operation and maintenance of large capacity units. Both domestic and overseas training was provided under the project. Domestic training covered operation and maintenance staff (120 persons, 270 staff-months) at domestic power plants. The international training comprised visits abroad for 50 persons (127 staff-months) to the United States, Canada and France. 19. Economic Performance. At appraisal, the ex-ante internal economic rate of return (EIRR) was estimated at about 15.0 percent, based on measurable economic costs and benefits associated with the 600 MW development. The ex-post EIRR is about 17.1 percent (with shadow price adjustment as shown in Table 9). The higher EIRR came from increases in tariffs. The electricity sales price of Y 0.42/kWh (Beilungang bulk supply) was used. This price was set according to the "new plant/new price" policy and is fully passed on to the consumers. The ex-post IERR of 17.1 percent is based on annual generation ranging from 2,220 GWh to 3,300 GWh. The variation reflects projected annual generation taking into account scheduled overhauls. If the annual generation is based on the estimates of the SAR (3,900 GWh; 600,000 kW, 6,500 hours), the IERR is even higher at 19.7 percent.  - 7 - 20. Financial Performance. Salient features of ZPEPB's finances during the period 1987-94 are sunmrarized in Annex 1. ZPEPB's overall operating results and financial position were satisfactory even though its actual rate of return on fixed assets in service, 8.1 percent, fell short of the expected 12.2 percent. This notwithstanding, tariff increases were higher than expected, from 8.5 fen/kWh in 1987 to 27.5 fen/kWh in 1994, representing an annual increase of 18.1 percent in nominal terms; at appraisal, a tariff of 16.1 fen/kWh was projected in 1994, with an increase of 9.6 percent per year. The higher tariff levels were due to the much higher than expected inflation in China over the period, which resulted in an annual increase of 33 percent in operating costs. Average annual growth in energy sales was generally in line with expectations, 12.3 versus 12.8 percent at appraisal, with a more even growth pattern from year to year. However, as a result of macroeconomic controls by the Government during 1989-92, investments and borrowing both were short of expectation, about 75 percent and 90 percent of projections, respectively. ZPEPB, therefore, met the financial performance targets set forth under the project except in 1994. Two factors contributed to ZPEPB's poor performance in 1994, with self-financing capability falling below the target of 25 percent. First, the tariff increase was tightly controlled by the Government as an anti-inflation measure, with tariffs increasing only by 4.6 percent while operating costs rose by 25.2 percent. Second, capital expenditure grew by 121 percent from 1993 to 1994. ZPEPB expected to raise its tariff level to 33 fen/kWh in 1995 and improve its financial position and meet the Bank's financial covenants. The debt/equity ratios were kept at a conservative level throughout the period, with the highest of 64/36 in 1991. 21. Environment and Resettlement. The Beilungang site is located in a scarcely populated agricultural area along the seacoast. The project was designed to meet environmental standards of Chinese and World Bank guidelines. ZPEPB carried out periodic environmental monitoring before and after commissioning of the first and second 600-MW units. Monitoring showed that the project had no excessive impacts on the environment. 22. This project was an extension project to the existing Beilungang plant for which necessary resettlement was already carried out. The project required very little resettlement, all of which was done satisfactorily, with standards of living sustained. Compensation levels were adequate. Details of the resettlement related to the existing plant are shown in the ICR for the first Beilungang project (Report No. 14717, dated June 27, 1995). The additional resettlement related to this extension project was due to the second single 500-kV line between Shaoxin and Pingyao substations, which had 212 towers, passing through municipalities and counties such as Shaoxin, Zhuji, Xisoshan, Fuyang and Yuhang. Land for the 212 towers, totaling 2.67 ha, was required, and houses and other buildings with a total area of 23,575.6 m2 were relocated. Eighty-five families with 340 people were relocated. The cost for land acquisition and resettlement was Y 4,777,049.0.  - 8 - D. PROJECT SUSTAINABILITY 23. The project is sustainable. First, demand for the plant's full output exists since power shortages continue to be acute and economic growth has been sustained at a high level. The unit is therefore being operated with a high plant-load factor. Second, current and future provincial average power sales tariffs are designed to fully recover capital and operating costs. From 1987 to 1994, the electricity sales of ZPEPB grew at an average annual rate of 12 percent. 24. Through this project and subsequent power projects supported by the Bank, the Chinese have made good progress in evaluating the economic costs of electricity and coal, and in suggesting approaches to gradual price reform. For electricity, long-run marginal costs and target tariffs were established for East China in 1988. Since then, the Bank has continued to sponsor the formulation of tariff action plans adapted to the specific conditions of regional power grids. 25. With reference to institutional development, the study undertaken to address improvement of ZPEPB's organization and management was successfully conducted. It made recommendations for, inter alia, appropriate capital and corporate structures, as well as for performance monitoring and evaluation systems. These recommendations have already had some influence in development of the Zhejiang Provincial Electric Power Company as an independent entity, and will be more fully implemented under the Zhejiang Power Development Project supported by Bank Loan 3846-CHA. E. BANK PERFORMANCE 26. Bank performance from project preparation through completion was satisfactory. The Bank maintained good relations with the borrower, the beneficiary and the consultants throughout project execution. During implementation, the Bank regularly supervised the project, including the construction schedule, procurement, financial aspects, loan covenants, project cost updating, and studies and training activities, to ensure smooth implementation. In addition, with its first three power projects in China (Beilungang, Beilungang extension and Wujing), the Bank established a basis for cooperation and dialogue between the borrower/beneficiary and the Bank in the development of the power subsector in China, including institutional restructuring and electricity pricing reform. To date, the Bank has assisted in implementing 17 power projects in China with total assistance of about $3.8 billion. F. BORROWER PERFORMANCE 27. ZPEPB successfully completed the major project components, its second 600-MW coal-fired unit and associated 500-kV transmission line and substations in spite of many difficulties. It overcame problems as they arose, including the delay in design finalization due to the events in 1989, soft soil conditions, poor quality of some equipment, and interfacing problems, and translated the lessons learned under this project into strategies for avoiding similar problems under the subsequent project. ZPEPB introduced and absorbed  - 9 - the latest design technology and construction management and operational management techniques for power plants, with the assistance of foreign consultants and training activities. It also developed institutionally and, under the recently approved Zhejiang Power Development Project, is fully commercializing its operations. G. ASSESSMENT OF OUTCOME 28. The project outcome is rated as satisfactory. ZPEPB achieved the project objectives, and completion of the project contributed significantly to mitigating the shortages of power supply in the East China grid and promoting industrial production and regional economic development. Training for technical personnel in design, construction, commissioning, operation and maintenance contributed to transferring the up-to-date technologies needed for large-capacity coal-fired plants. H. FUTURE OPERATION 29. Operation of this project is expected to be smooth, and will be monitored during supervision of the recently approved Zhejiang Power Development Project. The latter provides for: (a) a major expansion of the power station, with three 600-MW coal-fired units; as well as (b) technical assistance aimed at commercialization and corporatization of what is now the Zhejiang Provincial Electric Power Company (ZPEPC) and its affiliated enterprises. An Action Plan for Power Sector Reform under this last project would develop ZPEPC into a power company separated from government, with operational autonomy, accountability for profits and losses, and self-sufficiency in its development. ZPEPC's institutional improvements already carried out have allowed the latest project to be funded in part by a Bank partial guarantee for long-term commercial funds, as well as a security package for a joint-venture-developed cogeneration plant. These projects therefore show the value of incremental reform fostered under Bank operations in this sector. I. KEY LESSONS LEARNED 30. The major component of this project was the construction of the second 600-MW coal-fired unit, subsequent to the construction of the first 600-MW unit. Experience and lessons learned with the first unit were reflected in various aspects of constructing and operating the second unit, including improved coal management, technical countermeasures to prevent formation of slag, civil works designs geared to soft soil conditions, reinforcement of project management, reinforcement of the quality control system, and improved procurement management using the Bank's model bidding documents. In spite of these improvements, ZPEPB experienced some technical problems in project construction, mainly related to: (a) management of interfacing of the various contract packages; and (b) technical defects in plant equipment encountered during erection and commissioning.  - 10- 31. Key lessons learned from the project were: (a) Although the design parameters of the major equipment were selected on the basis of fully-proven designs, the project experienced many defects in design and workmanship of the major equipment. This experience suggested the need for more stringent quality assurance systems in both ZPEPB and the contractors. (b) Regarding island-based procurement management, the number of contract packages should be minimized to the extent possible to reduce interfacing problems. (c) The effectiveness of consulting services, particularly for construction management, benefits from inputs by international experts. (d) The devaluation of the US dollar against European and Japanese currencies resulted in the beneficiary's loss of $13 million. Measures to avoid or minimize risks related to foreign currency movements should be sought. 32. Based on the above lessons, reinforcement of construction management using foreign consultants and more manageable procurement packaging were introduced in the subsequent Zhejiang Power Development Project.  - 11 - PART II: STATISTICAL TABLES Table 1: SUMMARY OF ASSESSMENTS Achievement of Objectives Not Substantial Partial Negligible Applicable Macroeconomic policies X Sector policies X Financial objectives X Institutional development X Physical objectives X Poverty reduction X Gender concerns X Other social objectives X Environmental objectives X Public sector management X Private sector development X Project Sustainability Likely Unlikely Uncertain x Bank Performance Highly Satisfactory Satisfactory Deficient Identification X Preparation assistance X Appraisal X Supervision X Borrower Performance Highly Satisfactory Satisfactory Deficient Preparation X Implementation X Covenant compliance X Assessment of Outcome Highly Satisfactory Satisfactory Unsatisfactory Highly Unsatisfactory x  - 12 - Table 2: RELATED BANK LOANS Year of Loan Title Purpose Approval Status Ln. 2382-CHA To construct a rockfill dam, a spillway, 02/21/84 Loan was closed on Lubuge Hydroelectric an underground powerhouse, to install 4 06/30/92. Project generating units of 150 MW each, 3 single circuits of 220 kV transmission lines; to provide consultant services and a training program. Ln. 2493-CHA To construct a 500 kV transmission line 02/19/85 Loan was closed on Second Power Project from Xuzhou to Shanghai and 5 asso- 06/30/92. ciated substations totaling 3,500 MVA in capacity, to install tele-control and tele- communications equipment for load dispatching, and to provide training for 500 kV transmission lines and substa- tions. Ln. 2706-CHA To construct a coal-fired thermal power 06/14/88 Loan was closed on Beilungang Thermal project with the first 600-MW unit with 06/30/94. Power Project the first single circuit of 500 kV trans- mission line with associated substations, and to carry out a training program and a tariff study for the East China power grid. Ln. 2707-CHA To construct a 110 m high concrete 05/29/86 Loan was closed on Yantan Hydroelectric gravity dam, a spillway, a powerhouse, 06/30/94. Project and a shiplift; to install 4 generating units of 275 MW each, 2 single circuits of 500 kV transmission lines and 3 associated substations; and to carry out a training program. Ln. 2775-CHA & To construct a 101 m high concrete 01/06/87 & Implementation under Ln. 3515-CHA gravity dam, a spillway, a powerhouse 09/01/92 way. Closing dates Shuikou Hydroelectric and a navigation lock; to install 7 gener- 06/30/93 & 12/31/96. Projects I & II ating units of 200 MW each; to carry out a resettlement program in the reservoir, an action plan for tariff reform, and a training program for planning and funan- cial management  - 13 - Table 2: (Cont'd) Year of Loan Title Purpose Approval Status Ln. 2852-CHA To install 2 additional coal-fired units 06/23/87 The loan was closed on Wujing Thermal Power of 300 MW each and associated 06/30/95. Project 220 kV transmission lines and substa- tions; to provide online computer con- trol and automatic load dispatching center; to carry out a masterplan study for the distribution network in Shanghai and a training program. Ln. 3387-CHA & To construct a 240 m high arch dam 07/02/91 Implementation under Ln. 3933-CHA with an underground powerhouse, to & way. Closing dates Ertan Hydroelectric install 6 550-MW generating units and 08/22/95 12/31/96 and Projects I & 11 associated equipment; to carry out an 12/31/2001. environmental management program, studies of power pricing and reservoir operation, and a training program. Cr. 2305-CHA & To construct a 56 m high gravity dam 10/31/91 Implementation under Ln. 3412-CHA and an underground powerhouse with way. Closing date Daguangba Multipurpose 4 x 60 MW generating units; to erect a 12/31/97. Project 36 km long double-circuit 220 kV transmission line and to build canals to irrigate 12,700 ha of land. Ln. 3433-CHA To install two 300-MW generating 01/14/92 Implementation under Yanshi Thermal Power units and five 220-kV transmission way. Closing date Project lines and associated substations; to 12/31/97. carry out a tariff study, a tariff action plan, and a training program for upgrading the technical, financial and management skills for HPEPB staff. Ln. 3462-CHA To install 2 additional 600 MW 04/12/92 Implementation under Zouxian Thermal Power generating units; to construct 500 kV way. Closing date Project and 220 kV transmission lines and 06/30/99. substations; and to carry out an air quality control study, a power tariff study, an action plan for tariff adjust- ment, and a training program for the technical, financial, and management staff of SPEPB.  - 14 - Table 2: (Cont'd) Year of Loan Title Purpose Approval Status Ln. 3606-CHA To construct a pumped-storage hydro- 05/18/93 Implementation under Tianhuangping electric power plant with six 300 MW way. Closing date Hydroelectric Project reversible pump-turbine units, together 12/31/2001. with upper and lower reservoirs, a water conveyance system, an under- ground powerhouse; to erect 250 km long 500 kV transmission lines; to carry out studies of optimal power plant operation and its output pricing; and to strengthen the beneficiary's organization through technical assis- tance and training. Ln. 3718-CHA To construct a coal-fired thermal 03/22/94 Implementation under Yangzhou Thermal power plant with two 600 MW gener- way. Closing date Power Project ating units; to erect two 500 kV trans- 12/31/2000. mission lines (30 km long); to extend technical assistance for the develop- ment and implementation of improved accounting and financial management information systems; and undertake management development and staff training. Ln. 3848-CHA To construct a new 500 kV transmis- 02/28/95 Implementation Sichuan Transmission sion network consisting of 2,260 km of commenced. Closing Project transmission lines and 5,250 MVA of date 12/31/2001. substations; provide technical assis- tance for implementation of sector reform plan, organizational improve- ments and financial management systems. Ln. 3846-CHA To construct Beilungang Phase 11 02/28/95 Implementation Zhejiang Power power plant consisting of three 600 commenced. Closing Development Project MW coal-fired units; to construct 400 date 12/31/2002. circuit-km of 500 kV transmission lines, 2,250 MVA of 500 kV substa- tions and reinforce distribution net- works in Hangzhou and Ningbo; to extend technical assistance to assist the power company in commercialization and corporatization, establish compu- terized financial management informa- tion system, improve transmission and distribution planning and upgrade environmental monitoring.  - 15 - Table 3: PROJECT TIMETABLE Steps in project cycle Date planned Date actual/latest estimate Identification/Preparation 11/87 Appraisal 02/8 8 02/88 Negotiations 05/88 05/88 Board presentation 06/88 06/14/88 Signing 10/20/88 Effectiveness 02/02/89 Project Completion 05/31/92 11/18/94/a Loan closing 06/30/93 06/30/95 /a Commercial operation. Table 4: LOAN DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 Appraisal estimate 25.0 100.5 140.1 151.0 165.0 Actual 19.0 48.6 111.7 130.5 136.7 140.7 145.6 164.9 Actual as % of estimate /a 76.0 48.4 79.7 86.4 82.8 Date of final disbursement: October 31, 1995. La S55,505.73 was canceled from the loan on 10/31/95. Total disbursement was $164,944,494.27.  - 16- Table 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION Indicators Appraisal estimate Actual (Comparison) I Major equipment contract 08/31/88 Boiler island 01/12/89 T-G island 03/23/89 (+7 months) 2. Construction of the second 600-M W unit: a) Start piling. 01/89 05/90 (+16 months) b) Start boiler steel structure 10/89 08/91 (+22 months) c) Boiler Drum Lift 01/90 06/19/92 d) Boiler Hydrostatic Pressure Test 03/91 06/26/93 e) Synchronizing 04/02/94 1) 7 days full load test completion (end of 02/28/92 10/20/94 commrissioning) g) Commercial operation 05/31/92 11/18/94 (+30 months) h) Completion of Acceptance Tests - Boiler June 2-5, 1995 - Turbine Generator November 12-14, 1995 Installation of the second 500-kV transmission To be com- line and associated substations: missioned in 01/92) a. Beilungang-Shaoxing Line (145 Kni) Completion in 12/93 b. Shaoxing-Pingyao Line (100 Kin) Completion in 12/94 c. Extensioni of Pingyao Substation Completion in 06/92 Table 6: KEY INDICATORS FOR PROJECT OPERATION (Not Applicable)  -17- Table 7: STUDIES INCLLJDED IN PROJECT Purpose as defined at Study appraisal/redefined Status Impact of study (i) A study for To ilitiate improvements in Completed The study was carried out ZPEPB's ZPEPB's managemenlt and to define needed measures reorganization and carry out the following to reorganize ZPEPB's management tasks: operations aid further improvement, strengthieni its management. a) Increasing managerial The main objective of the autonomy and account- reform measures was to ability for investment, begin to transform the financing, pricing. Bureau into a company employment and with increased managerial procurement; autollomy and account- ability. This is being b) Making recommenda- accomplished under the tions for: an appropriate follow-up operation, the capital structure for Zhejiang Power ZPEPB; possible corporate Development Project forms, a performance (Lii. 3846-CHA). evaluation and monitoring system; improvements in organization and procedures; utility planning system; and MIS development. (ii) A study for To formulate a master plan Completed The study results were distribution network for the next 15 years to reflected in the distribution improvements for meet the demands of rapid system renovationi for the Hangzhou and Ningbo load growthi and improve two cities finianced by the cities. reliability for power supply. Zhejiang Power Development Project (Ln. 3846-CHA).  - 18- Table 8A-1: PROJECT COSTS Appraisal estimate (S M) Actual/latest ($ M) Item Local Foreign Total Local Foreign Total Power Plan (I) Site preparation - - - - Pile & Foundation 6.7 - 6.7 8.07 - 8.07 Civil Construction 19.7 - 19.7 30.03 - 30.03 Boiler 4.3 69.0 73.3 5.49 67.09 72.58 Turbine-Generator 2.5 66.0 68.5 2.73 78.51 81.24 Coal Convevintg Svstem 0.1 0.6 0.7 1.89 0 1.89 Ash Disposal System 0.8 7.5 8.3 1.03 0 1.03 Water supply system 0.4 - 0.4 1.70 0 1.70 Electrical equipment 1.1 5.0 6.1 4.99 6.14 11.13 InstruLnent & control system 1 .0 8.0 9.0 0.65 8.56 9.21 Construction & office equipment '. - 2. 0.87 0.99 1.86 Training 1.2 - 1.2 0.28 - 0.28 Distribution network study 0.5 0.4 0.9 0.13 - 0.13 Technical assistance for institutional building 0.5 0.5 1.0 0.20 0.25 0.45 Consulting services 1 .1 2.3 3.4 1.59 2.47 4.06 Supervision 8.1 - 8.1 9.46 - 9.46 Base Cost 50 .2 159.3 209.5 Physical contingency 5.0 5.7 10.7 Subtotal 55.2 165.0 220.2 69.10 164.01 233.11 Associated Transmission (11) Base Cost 18.8 18.8 37.22 6.57 43.79 Physical contingencv 2.0 - 2.0 0 0 0 Subtotal 20.8 - 20.8 37.22 6.57 43.79 Price contingency (1+11) 6.9 13.0 19.9 0 0 0 Total Prowect Cost 82.9 178.0 260.9 106.31 170.58 276.89 Interest during construction IBRD loan - 21 .7 21.7 - - - Local loans 7.1 - 7.1 - - - Total Financing Required 90.0 199.7 289.7 106.31 170.58 276.89 Note: SI = Y 3.7 for appraisal. Actual cost is based on compound average exchange rates of $ = Y 5.3 for foreign expenditure and SI = Y 6.1 for local expenditure.  - 19- Table 8A-2: PROJECT COSTS Appraisal estimate ($ Y) ActualAatest ($ Y) Item Local Foreign Total Local Foreign Total Power Plant (B) Site preparation - - - - - Pile & foundation 24.79 - 24.79 49.26 - 49.26 Civil construction 72.89 - 72.89 183.38 - 183.38 Boiler 15.91 255.30 271.21 33.54 358.07 391.61 Turbine-generator 9.25 244.20 253.45 16.65 419.02 435.67 Coal conveying system 0.37 2.22 2.59 11.57 - 11.57 Ash disposal system 2.96 27.75 30.71 6.26 - 6.26 Water supply system 1.48 - 1.48 10.35 - 10.35 Electrical equipment 4.07 18.50 22.57 30.47 32.77 63.24 Instrument& control system 3.70 29.60 33.30 3.96 45.69 49.65 Construction & office equipment 8.14 - 8.14 5.32 5.28 10.60 Training 4.44 - 4.44 1.70 - 1.70 Distribution network study 1.85 1.48 3.33 0.80 - 0.80 Technical assistance for institutional building 1.85 1.85 3.70 1.20 1.33 2.53 Consulting services 4.07 8.51 12.58 9.70 13.18 22.88 Supervision 29.97 - 29.97 57.77 - 57.77 Base Cost 185.74 589.41 775.15 42193 875.35 1297228 Physical contingency 18.50 21.09 39.59 0 0 0 Subtotal 204.24 610.50 814.74 421.93 875.35 1L29728 Associated Transmission (11) Base Cost 69.56 Q 69 5k 227.25 35.0 262.32 Physical contingency 7.40 0 7.40 0 0 0 Subtotal 76.96 Q 2766 227.25 35.0 262.32 Price contingency (1+11) 25.53 48.10 73.63 0 0 0 TotalProiectCost 30673 658.0 96533 649.18 91042 1.559.60 Interest during construction IBRD loan 80.29 80.29 Local loans 26.27 26.27 Total Financing Required 33300 738.29 1071289 649.18 91042 1559.60 Note: $1 = Y 3.7 for appraisal. Actual cost is based on compound average exchange rates of SI = Y 5.3 for foreign expenditure and $1 = Y 6.1 for local expenditure. Table 8B: PROJECT FINANCING Appraisal estimate (S M) Actual/atest ($ M) Item Local Foreign Total Local Foreign Total IBRD - 165.0 165.0 - 165.0 165.0 Provincial Govt. Loan 54.1 - 54.1 - - - PCBC Loan 35.9 34.7 70.6 106.31 - 106.31 Bank of China Loan - - - - 5.58 5.58 Total _Q.9 199 7 289e7 106231 170.58 276.89  - 20 - Table 9: ECONOMIC COSTS AND BENEFITS Appraisal Estimate Actual Internal economic rate of return (IERR) 15.0 17.1% Assumptions: end- 1987 end- 1994 Price base Fuel Cost Y 112/ton Y 286.3/ton 0.1272 Y/kWh Fuel Consumption 0.306 0.321 (kg of standard coal per kWh) Efficiency of power plant 40.1% 38.3% House auxiliaries consumption 5.5% 4.6% System loss (for transmission & 8% 7.0% distribution) Average sales price of electricity 0.169 (1995) 0.292 (1995) (Y/kWh) (Provincial average) 0.42 Za O&M cost: - for generating plant 2.3% of capital investment 2.63 fen/kWh - for transmission 1% of capital investment 2.25 fen/kWh /a Selling price of Beilungang bulk supply. Note: See Attachment.  - 21 - Table 9 ATTACHMENT: EX-POST INTERNAL ECONOMIC RATE OF RETURN OF BEILUNGANG THERMAL POWER EXTENSION PROJECT (LN. 2955-CHA) Energy Costs Generation O&M Cost Fuel Total Generation Sales & Year Cost Generation T&D Cost Cost (GWh) (GWh) Revennue Benefits 1988 0.0 - - - 0.0 - - - 0.0 1989 525.6 - - - 525.6 - - - -525.6 1990 307.1 - - - 307.1 - - - -307.1 1991 679.5 - - - 679.5 - - - -679.5 1992 319.0 - - - 319.0 - - - -319.0 1993 211.3 - - - 211.3 - - - -211.3 1994 114.7 8.9 7.6 43.2 174.5 383.0 339.8 142.7 -31.8 1995 150.7 56.0 47.9 270.9 525.4 2,400.0 2,129.3 894.3 368.9 1996 - 77.0 65.9 372.4 515.3 3,300.0 2,927.8 1,229.7 714.4 1997 - 77.0 65.9 372.4 515.3 3,300.0 2,927.8 1,229.7 714.4 1998 - 77.0 65.9 372.4 515.3 3,300.0 2,927.8 1,229.7 714.4 1999 - 65.8 56.3 318.2 440.3 2,820.0 2,502.0 1,050.8 610.5 2000 - 77.0 65.9 372.4 515.3 3,300.0 2,927.8 1,229.7 714.4 2001 - 72.3 61.9 349.8 484.1 3,100.0 2,750.4 1,155.2 671.1 2002 - 77.0 65.9 372.4 515.3 3,300.0 2,927.8 1,229.7 714.4 2003 - 57.4 49.1 277.6 384.1 2,460.0 2,182.6 916.7 532.5 2004 - 70.0 59.9 338.6 468.5 3,000.0 2,661.7 1,117.9 649.4 2005 - 65.8 56.3 318.2 440.3 2,820.0 2,502.0 1,050.8 610.5 2006 - 70.0 59.9 338.6 468.5 3,000.0 2,661.7 1,117.9 649.4 2007 - 58.8 50.3 284.4 393.5 2,520.0 2,235.8 939.0 545.5 2008 - 70.0 59.9 338.6 468.5 3,000.0 2,661.7 1,117.9 649.4 2009 - 65.8 56.3 318.2 440.3 2,820.0 2,502.0 1,050.8 610.5 2010 - 70.0 59.9 338.6 468.5 3,000.0 2,661.7 1,117.9 649.4 2011 - 51.8 44.3 250.5 346.7 2,220.0 1,969.6 827.2 480.6 2012 - 63.0 53.9 304.7 421.6 2,700.0 2,395.5 1,006.1 584.5 2013 - 58.8 50.3 284.4 393.5 2,520.0 2,235.8 939.0 545.5 2014 - 63.0 53.9 304.7 421.6 2,700.0 2,395.5 1,006.1 584.5 2015 - 51.8 44.3 250.5 346.7 2,220.0 1,969.6 827.2 480.6 2016 - 63.0 _53.9 304.7 421.6 2,700.0 2,395.5 1,006.1 584.5 2017 - 58.8 50.3 284.4 393.5 2,520.0 2,235.8 939.0 545.5 2018 - 63.0 53.9 304.7 421.6 2,700.0 2,395.5 1,006.1 584.5 IERR 17.1% 1. I x600 MW construction. 2. All costs are indicated in Y million of constant end- 1994 price. 3. Shadow price for investment costs (Local portion): CF=SCF*(0.7 for labor and material+0.3*2 for equipment). 4. Inflation Index: MUV Index. 5. Fuel cost: Y 286.3/ton; Y 0. I 272/kWh. 6. Electricity sales price: Y 0.42/kWh (selling price of Beilungang bulk supply). 7. House auxiliaries loss: 4.6%; Transmission and distribution losses: 7.0%.  - 22 - Table 10: STATUS OF LEGAL COVENANTS Cove- Original Revised Agree- nant Present fiulfillment fulfillment ment Section type status date date Description of covenant Comments Loan 3.01(b) 13 C GOC shall enter into a subsidiary loan Article Hi agreement with ZPEPB under terms satisfactory to the Bank. 4.01(b)(ii) I C GOC will fumish to the Bank not later Article IV than 6 months after the end of each fiscal year the auditor's report. Sched. 4 5 C GOC and ZPEPB shall employ consul- Section 11 tants satisfactory to the Bank. Project 2.06 10 C ZPEPB shall carry out the study on Article 11 ZPEPB's reorganization and management. 2.07 6 C ZPEPB shall carry out an environmental Article 11 monitoring program satisfactory to the Bank. 2.08 7 C ZPEPB shall carry out the resettlement Article Ill under the project. 4.01(b) 2,1 C ZPEPB shall fumish audited financial Article IV statements and auditor's report within 6 months after the end of each fiscal year. 4.02(a) 2 C ZPEPB shall take all measures including Article IV adjustment of the levels and structure of tariffs as determined by GOC to produce, for each of its fiscal years after its fiscal year ending on December 31, 1987, net operating income equivalent to not less than (i) 12.5% of its average annual investment program for the years 1988- 90, (ii) 20% for the period 1990-93, and (iii) 25% thereafter. 4.03(a) 2 C ZPEPB shall not incur any debt unless a Article IV reasonable forecast of the revenues and expenditures shows that the projected intemal cash generation for each fiscal year during the term of the debt to be incurred shall be at least 1.3 times the estimated debt including the debt to the incurred. 4.04 2 C By April 30 of each year, commencing Article IV December31, 1988, ZPEPB shall pre- pare and fumish a rolling long-term financial plan containing projected income statements, sources and applications of funds, and balance sheets for each of the next eight fiscal years.  - 23 - Table 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS (Not Applicable) Table 12: BANK RESOURCES: STAFF INPUTS Planned Revised Actual Stage of project cycle Weeks $'000 Weeks $'000 Weeks $'000 Preparation to appraisal 54.8 27.3 Appraisal 25.1 47.7 Negotiations through 16.4 33.8 Board approval Supervision 58.0 165.4 Completion 3.0 13.0 Total153 28.  - 24 - Table 13: BANK RESOURCES: MISSIONS Performance Rating Specialized Imple- Develop- Stage of Month/ No. of Days staff skills mentation ment Type of project cycle year persons in field represented La status objectives problems Through appraisal 11/87 3 17 E,E,FA Appraisal through Board 02/88 3 12 E,E,FA approval Board approval through effectiveness Supervision: 1 03/89 3 5 E,E,FA I 2 04/90 3 5 E,E,FA I 3 11/90 2 4 EC,EC 2 Delay in implementation of a study on ZPEPB's organization and management. 4 03/91 3 7 E,E,FA I Delay in civil work due to soft soil condition. 5 06/91 1 3 E I 6 06/92 4 4 E,E,FA,L I Delay in schedule. 7 09/92 1 6 EC I 8 06/93 1 4 E I Quality control. 9 04/94 1 2 E 2 Quality control and project managemcnt. 10 03/95 1 3 E I Project manage- ment and quality control. Completion (None) La E: Engineer, FA: Financial Analyst, EC: Economist, L: RMC Staff  - 25 - ANNEX 1 ANNEX 1: ZPEPB FINANCIAL STATEMENTS  Zhejiang Provincial Electric Power Bureau Table 1: INCOME STATEMENTS (1987-1994) (Y million) Year Ended December31 1987 1988 1989 1990 1991 1992 1993 1994 SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual Operatint Revenues Sales Increase(%) 14 1 14 1 3.2 11.9 17 3.5 12.3 8.2 22.3 160 ISS 13.6 22.1 15.0 10.6 16.3 Energy Sales(GWh) 14,127 14,127 14,580 15,802 14,835 16,347 16,660 17,686 20,372 20,507 23,587 23,294 28,789 26,790 31,854 31,151 AveragePrice(fen/lkWh) 85 8.5 9.0 9.5 10.2 11.4 11.2 135 134 15 1 14.4 16.7 15.1 263 16.1 27.5 Total Operating Revenue 1.204 1200 1.31S 1507 1.520 1 862 I 873 2378 2735 3094 lf2 3902 4355 7054 5131 8.561 ODeratinez Costs Fuel 427 429 487 512 565 732 746 1,037 929 1,275 1,049 1,582 1,371 2,827 1,668 2,903 Purchnsed Power 254 243 223 250 207 337 210 401 304 599 563 641 741 1,497 820 2,661 Operation &Maintenance 98 III 113 134 130 147 155 196 182 264 241 397 277 548 322 1,558 Administration 39 46 44 54 51 71 58 93 67 112 77 191 89 379 102 10 0 Sales Tax 120 148 132 168 152 215 187 295 273 253 339 321 435 632 513 62 Depreciation 90 89 101 113 123 121 156 149 230 201 309 319 376 458 443 743 Total Oeratine Costs 1028 1066 1100 1.231 1.228 1623 1512 2.171 1985 2704 2.578 3450 3,289 6341 3868 7,937 Operatinz Income 176 134 218 276 292 239 361 207 750 390 808 452 1.066 713 1.263 623 Otherlncowme(net including interest) (7) 1 (23) 1 (32) (6) (64) (8) (181) (98) (232) (101) (274) 60 (299) 72 Net Income Before Income Tax 169 135 195 277 260 233 297 199 569 292 576 351 792 773 964 695 Income Tax 59 0 44 42 79 25 80 20 149 25 169 13 177 23 307 141 NetIncome 110 135 151 235 181 208 217 179 420 267 407 338 615 750 657 554 Rate Base 1.795 1,980 2,105 2,308 2,553 2,648 3,232 3,116 4,884 4,584 6,606 6,203 7,926 7,736 9,189 11,209 Rateof Retum on Net Fixed Assets(%) 98 68 104 120 11.4 90 11.2 67 154 85 12.2 7.3 13.4 92 13.7 5.6 z m  Zhejiang Provincial Electric Power Bereau Table 2: BALANCE SHEETS (1987-94) (Y million) AsoftDecember31 1987 1988 1989 1990 1991 1992 1993 1994 SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual ASSETS Current Assets Cash 252 284 275 348 295 504 285 713 261 1,194 302 1,681 285 3,005 315 3,547 Inventories 74 90 77 96 83 156 109 259 150 228 174 395 220 392 259 356 Accounts Receivable 57 53 60 63 63 409 66 518 69 1,798 73 3,290 76 2,556 80 5,467 Total Current Assets 382 427 412 507 441 1.069 460 1489 480 3221 549 5.36 581 5,953 655 9,370 Long-tem Investment 0 0 0 0 0 0 0 0 0 0 0 0 0 997 0 731 Fixed Assets Plant in Service 2,440 2,796 3,073 3,095 3,559 3,698 4,712 4,286 7,249 6,963 8,695 8,006 10,575 11,447 12,039 16,846 Less. Accumulated Depreciation (601) (586) (702) (690) (825) (808) (981) (945) (1,211) (1,137) (1,521) (1,427) (1,897) (2,555) (2,339) (3,320) Net Plant in Service 1,839 2,210 2,372 2,405 2,734 2,890 3,730 3,341 6,038 5,826 7,174 6,579 8,679 8,892 9,700 13,526 ConstructionWIP 797 447 1,357 1,302 2,593 2,107 2,921 2,487 1,788 3,124 1,750 2,192 1,614 4,412 1,957 4,045 TotalFixedAssets 2.637 2.657 3729 3.707 53'7 4,997 651 828 7826 8.950 8924 8771 10,293 13,304 11.657 17.571 Special Fund 341 400 344 516 358 376 371 425 424 534 470 855 472 225 493 0 Intangible and Deferred Assets 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 263 Total Assets 3.360 3.484 4 484 4.730 6125 6442 7,483 7.743 8 72 12705 9,944 14.991 11.346 20,479 12805 27.935 LLABILITIES & EQUITY Current Liabilities Accounts Payable 260 267 265 321 271 548 276 771 281 2,265 287 3,536 293 425 299 5,019 OtheerPayable 26 36 26 10 26 89 26 122 26 221 26 410 26 2,876 26 1,009 Total CurrentLiabilities 286 303 291 331 297 637 302 893 307 2.486 313 3946 319 3301 325 6,027 LongL-teren Liabilities 1,352 954 2,289 1,879 3,737 2,760 4,860 3,050 5,725 5,648 6,586 5,356 7,468 6,797 8,434 9,871 Eouitv Government Funds 1,285 1,703 1,429 1,828 1,564 2,240 1,738 2,711 2,008 3,233 2,246 3,959 2,695 - 3,094 0 Working Capital Funds 48 48 48 57 48 56 48 62 48 71 48 84 48 - 48 0 Special Funds 390 476 427 635 480 749 535 841 641 1,038 751 1,481 816 - 904 0 Paid-in Capital 0 0 0 0 0 0 0 0 0 0 0 0 0 7,343 0 6,878 Capital Reserve 0 0 0 0 0 0 0 0 0 0 0 0 0 2,229 0 4,142 Earned Surplus 0 0 0 0 0 0 0 114 0 158 0 150 0 539 0 1,016 Retained Earnings 0 0 0 0 0 0 0 71 0 71 0 15 0 270 0 0 TotalEautit 1.723 2.227 1.904 2.520 2092 3.045 2,321 3.799: 2.697 4,571 3.045 5.689 3.559 10.381 4.046 12037 Total Liabilities & Eauilv 3 360 3 484 4484 4.730 6.125 6 442 7483 7 742 8.729 12.705 9944 14.991 11346 20.479 12.805 27.935 Z m Debt/(Debt &Equity) Ratio(% 49 36 58 47 66 53 69 SI1 69 64 69 62 69 49 68 57  Zhejiang Provincial Electric Power Bereau Table 3: FUNDS FLOW STATEMENTS (1987-94) (Y milOD) YearEndedDecember31 1987 19SS 1989 1990 1991 1992 1993 1994 SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual SOURCES OF FUNDS Internal Cash Genenation Net Incomne 110 135 151 235 181 208 217 179 420 267 407 338 615 750 657 554 Depreciation 90 89 101 113 123 121 156 149 230 201 309 319 376 458 443 743 Maintenance SF Allocation 32 34 34 40 43 43 50 73 66 109 101 161 122 0 148 0 ConsumerConnectionSF 69 112 70 118 71 122 71 145 72 160 73 275 74 274 74 0 Others 0 222 0 245 0 247 0 249 0 299 0 490 0 0 0 108 Total Internal Sources 301 22 356 21 411 741 494 7225 211 L36 90 E582 1.8 1M4U2 1.322 1.405 Borrwmgs Proposed IBRD Loan 0 64 52 200 194 674 219 694 89 613 5 294 52 1,039 0 4,546 Project Related Loans 150 80 568 129 729 134 454 0 326 0 194 0 625 701 1,075 0 Other BanklLoans 414 154 404 966 611 273 602 788 790 600 949 894 773 0 431 0 IDC Borrowed 39 0 53 0 104 0 126 0 45 0 64 0 22 0 62 0 TotalBorwm!gns[ 603 298 1.077 1.295 1 636 1.081 L!U1 1482 1.250 1.2 1.E211 1.1 1. 1.42 1 740 1.567 4.54 Government Fuds 2 381 _ 40 _ _ _