Turkey - TEK Restructuring

 ICRR 11036 Report Number : ICRR11036 ICR Review Operations Evaluation Department 1. Project Data: Date Posted : 08/13/2001 PROJ ID : P009071 Appraisal Actual Project Name : TEK Restructuring Project Costs 362.7 288.5 US$M ) (US$M) Country : Turkey Loan/ US$M ) 300 Loan /Credit (US$M) 254.6 Sector (s): Board: EMT - Power Cofinancing None (100%) US$M ) (US$M) L/C Number : L3345 Board Approval 91 FY ) (FY) Partners involved : Closing Date 06/30/1995 12/31/2000 Prepared by : Reviewed by : Group Manager : Group : Sunil Mathrani Andres Liebenthal Alain A. Barbu OEDST 2. Project Objectives and Components a. Objectives The initial objectives of the project were to support (a) the corporate restructuring of TEK, (b) the implementation of an agreed least-cost investment program for 1991-94 and (c) the strengthening of capacity to assess the environmental impact of power sector Investments. When the project was restructured in 1995 the original objectives were left unchanged and the additional objective of privatization of selected portions of sector infrastructure was added. b. Components Initially the project had three components: (i) the implementation of a corporate restructuring plan for TEK; (ii) financing of part of the foreign exchange cost of transmission and distribution facilities included in TEK’s 1991-94 investment program; and (iii) technical assistance to build up TEK’s capability to carry out environmental impact assessments. There were minor revisions to the above components to take account of the creation of two entities out of TEK in 1994 (TEAS & TEDAS) and a new component was added following the Marmara earthquake in 1999 to permit the repair and replacement of distribution equipment and lines damaged by the quake. c. Comments on Project Cost, Financing and Dates Of the original $300m loan, all but $10 m was envisaged for physical investments, essentially transmission lines, substations and distribution equipment. The original Loan of $300m to TEK was split into two in 1995, following the replacement of the original borrower by two new entities, TEAS ($260m) and TEDAS ($40m). A total amount of US$ 255m for the two loans was disbursed by the final closing date, of which over two-thirds was for transmission investments. The project as a whole financed only a small fraction of the Turkish electricity sector investment program during the 1990s. The creation of the new entities was a major contributor to the five-year delay in completing the project. 3. Achievement of Relevant Objectives: The project achieved most of its objectives, although more than five years later than envisaged . The corporate restructuring of TEK entailed the implementation of financial and operational improvement programs, debt restructuring and the production of annual corporate performance plans. The ICR states that these were “generally implemented.