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FILEOP 4 oyc I-, XR E S T R I C T E D
Report No. TO-310a
This report was prepared for use within the Association. It may not be pub-lished nor may it be quoted as representing the Association's views. TheAssociation accepts no responsibility for the accuracy or completeness of thecontents of the report.
INTERNATIONAL DEVELOPMENT ASSOCIATION
DAMODAR VALLEY CORPORATION EXPANSION
FOURTH PROJECT
INDIA
February 6, 1962
Department of Technical Operations
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CURRENCY EQUIVALENTS
U.S. $1 = 4.76Z Indian RupeesU. S. 21 cents = 1 Rupee or 100 Naya PaisaU.S. $1 million = Rs 4,800,000U.S. $210, 000 = Rs 1 millionU. S. 2. 08 mills = 1 Naya Paisa
DAMODAR VALLEY CORPORATION
INDIA
TABLE OF CONTENTS
Page
SUMMARY i
I. INTRODUCTION 1
II. DEVELOFMENT OF THE DAMODAR VALLEY 1
III. THE DVC 2
Organization and Management 3
IV. PR.EVIOUS LOANS TO DVC 3
V. THE POWER MARKET
Existing Electric Power Facilities in theDVC Area 5
Prospective Demand 6
VI. THE PROJECT 8
Description 8Durgapur Thermal Power Station 8Transmission System 8
Present Status and Schedule of Completion 9Durgapur Thermal Plant 9Transmission System 9
Arrangements for Engineering Supervisionand Construction 9
Purchasing Procedures 10Completion Date of Project 10Cost Estimates 10Sources of Funds 11Cost of Production 11
VII. RATES 11
VIII. FINANCIAL ASPEQTS 12
Past Fihandial Record 12F-inancial --Forecasts 13
IX. CONCLUSIONS 15
ANNEXES
1. Increase of Load by Main Categories of Consumers.
2. DVC Power System, Installed Capacity, Capability, Maximum Demandand Sales.
3. Graph of Maximum Demand, Installed Capacity and Firm Capacity.
4. System Load Factor 1960.
5. Generating Capacity to be added in India during Third Plan Period1961-1966.
6. Details of Project.
7. Detailed Costs of Project.
8. Cost of Generation Durgapur Power Station.
9. Fixed Assets and Income Statements 1954-1961.
10. Forecast of Fixed Assets and Income Statements 1962-1966.
11. Cash Flow Forecast 1962-1966.
12. Forecast of Interest and Debt Service Coverage 1962-1966
13. Bar Chart of Construction Program.
Map
DAMODAR VALLEY CORPORATION
INDIA
SUMMARY
i. This report covers an appraisal of the expansion of the Durgapur
power station and associated transmission system of the Damodar Valley Corpora-tion (DVC) for which the Government of India has asked the Association for a
credit of $18.5 million.
ii. The DVC is a semi-autonomous organization created by the Indian Legis-
lature in March 19h8 to carry out a unified scheme of development of the Damodar
Valley in the States of Bihar and Bengal, northwest of Calcutta. The capitalrequirements for the development are provided by the Central Government andthe Governments of Bihar and ,Test Bengal. The Corporation generates power inthe Damodar Valley and sells power wholesale to industries, privately ownedlicensees and State Electricity Boards of Bihar and West Bengal. Other activi-ties of the Corporation include flood control, irrigation, navigation (in themain irrigation canal), afforestation and general welfare in the Valley.
iii. The Bank has already made three loans to the Government of India tohelp with the development of the Damodar Valley by DVC. The first loan of$18.5 million, subsequently reduced to $16,720,500, was made in April 1950;the second of $19.5 million, subsequently reduced to $10.5 million, was madein January 1952; and the third of $25 million, subsequently reduced to $22million, was made in July 1958. The projects included in the loans were ther-mal generating plants with a capacity of 255 MW at Bokaro and 165 IN atDurgapur, three multipurpose dams, two hydroelectric installations totaling100 Mi, a barrage and irrigation system and transmission system facilities.
iv. A power survey taking into account the additional demands of theproposed third five-year industrial plan, 1961-1966, shows that DVC will beunable to meet the power requirements in its area even with the addition ofthe generating capacity now proposed. DVCts long-range program envisions allfuture power expansion by the construction of thermal generating facilities,except the construction of one small hydro power plant.
v. The project for which the Association has been asked to make a creditincludes the construction of 140 MWl of thermal generating plant and additionaltransmission facilities. The thermal plant would be an extension of the exist-ing Durgapur power station, adjacent to the Durgapur steel plant, and woulduse coal middlings which are a waste product from an adjacent coal washingplant, or low grade coal. The total cost of the project is estimated to bethe equivalent of $36.8 million of which the foreign exchange component, ex-clusive of interest during construction, is $18.38 million.
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vio The project is sound and is expected to be commissioned in the latterhalf of 1965. The estimates of cost are reasonable.
vii. Since 1958 when the last Bank loan was made for DVC, the earningsposition of DVC's operations has deteriorated due to delays in commissioningnew capacity. DVC has, therefore, agreed to take necessary steps to adjustits rates to assure a return of not less than 7% on its net fixed powerassets in operation as soon as practicable.
viii. To facilitate an assessment of the rate adjustment necessary toachieve this, DVC will employ a firm of chartered accountants, satisfactoryto the Association, to assist DVC in a revision of its accounting system.
ix. On the basis of a 7% rate of return on its net fixed power assetsin operation DVC will be able to generate internally a substantial portionof funds for its present expansion program and thus reduce the proportion offunds required from the participating governments 0
x, The project is suitable as a basis of a credit of $18.5 mill2ioto the Government of India which will in turn supply to the DVC the foreignexchange required for the project.
DAMODAR VALLEY CORPORATION
INDIA
I. INTRODUCTION
1. The Government of India has asked the Association for a credit ofjl_365 million for the expansion of the power facilities of the Damodar Valley
Corporation (DVC) which supplies electricity in the most industrially developedpart of India northwest of Calcutta.
2. The project consists of a 140 MW extension of the Durgapur thermalstation and additional transmission facilities. The location is shown on themap at the end of this report.
3. Following three Bank loans, this would be the first credit for theDamodar Valley Corporation to help finance the development of the DamodarValley. As the credit would be made to the Government of India there wouldbe a Project Agreement between the DVC and the Association.
4. This report covers an appraisal of the project. It is based on in-formation supplied by DVC, June 1961 field investigations by an Associationmission and discussions with Indian negotiators in December 1961.
II. DEVELOPmENT OF THE DAMODAR VALLEY
5. The Damodar Valley, an area of about 9,250 square miles, is theindustrial heart of India. The Damodar river rises in the State of Bihar,flows 340 miles through Bihar and West Bengal and empties into the Hooghlyriver about 30 miles below Calcutta. The area already has some of India's mostimportant heavy industries. New industries are being established in increasingnumbers. In and close to the Valley are rich natural resources of coal, ironore, chromite, mica and asbestos. In the upper valley the land is of poorquality and soil conservation is essential to the welfare of the area, butthe lower valley consists of fertile alluvial soil. About 2.5 million acresare under crops but only less than half the acreage has been provided withirrigation.
6. Already operating in and near the Valley are iron and steel plantsat Burnpur, Kulti, Jamshedpur and Durgapur. The Third Plan provides for anew plant near Bokaro. These operations have stimulated widely diversifiedindustry in the Valley - steel fabricating plants, locomotive works, foundries,wire and cable plants, pipe plants, cycle and wagon factories, and machine toolplants. An aluminum plant, cement plants and a large fertilizer plant arein production and are being expanded. The principal railways leading to thesouth, west and north of India run through the Valley, furnishing direct
transportation for the raw materials and products to the rest of India. Theport of Calcutta is readily accessible for imports from and exports to foreigncountries.
7. The Valley has long been ravaged by floods. After the disastrousflood of 1943, which caused great agricultural and industrial losses and dis-rupted highway and railroad communications for weeks, an inquiry committeerecommended a system of storage reservoirs. This led to a multipurpose schemeto develop the whole Valley, on the pattern of the Tennessee Valley Authorityin the U.S.A. In February 1948 a special act of Parliament established thesemi-autonomous Damodar Valley Corporation (DVC) to carry out the programwithout political interference.
8. In addition to three loans totaling $49.2 million net of cancella-tions made in the past for the development of DVC projects, the Bank has madethe following loans for projects in the operational area of DVC: Tata Ironand Steel Company ($107.5 million) and Indian Iron and Steel Company ($71.0million) for increasing production; Indian Railways ($379 million) partly forrehabilitation and electrification of the railroads in the Valley; and the Portof Calcutta ($50 million) for ;Thabilitation and improvenent of port facilities.
III. THE DVC
9. The DVC is owned jointly by the Central Government and the States ofBihar and West Bengal. The Corporation's scheme of development, in additionto power, includes flood control, irrigation, navigation, drainage, afforest-ation and soil conservation, as well as the promotion of public health and thegeneral well-being of the inhabitants of the area.
10. Past appraisals have found the DVC program and objectives justifiedon economic grounds. The DVC's program was designed principally:
i) to provide power for the rapidly expanding industry of the area andCalcutta;
ii) to prevent floods which have caused serious damage; and
iii) to irrigate one million acres of land which includes provision fordouble cropping about 300,000 acres of the total.
11. The program completed up to the end of 1961 consists of four multi-purpose projects: Tilaiya (4 IiJ), Maithon (60 MW), Panchet Hill (40 SMW) andKonar. The program also includes Durgapur barrage and part of the associatedirrigation system, two thermal plants, Bokaro (255 nI), first stage (165 MW)of the Durgapur thermal plant and a transmission system serving practically allof the Valley, Jamshedpur, and Calcutta. The first stage (280 HW) of a newChandrapura power plant, partly financed from a DLF loan, is to begin opera-tion in 1964.
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12. With the completion of the four multipurpose projects the principalresponsibility of the Corporation is to expand the power facilities of theValley, which DVC has the right to do under the Act. The DVC supplies poweralso outside its operational area to the State Electricity Boards of BiharandliWest Bengal and to licensees including the Calcutta Electric Supply
Company and Tata Iron and Steel, which supplies power to Jamshedpur. DVCsales outside its operational area are, however, limited to the loads already
contracted for.
Organization and Management
13. The DVC Act provides that the DVC shall consist of a Chairman andtwo members appointed by the Central Government after consultation with theState Governments. A Secretary and a Financial Advisor are appointed by the
Central Government. The Secretary is the Chief Executive Officer and General
Manager of the Corporation.
14. DVC policy is guided by instructions from the Central Government.The DVC may make regulations for carrying out its functions but such regu-lations must have the previous sanction of the Central Government. The
Ministry of Irrigation and Power acts on behalf of the Central Government.
15. In 1956 the Bank assisted in a review of the DVC organization andrecommended a number of changes which have been put into effect. The organi-
zation is operating satisfactorily and is well staffed.
16. The generation and transmission of electricity is, for administra-tive and accounting purposes, operated as a separate division of the DVC.
IV. PREVIOUS LOANS TO DVC
17. As already stated the Bank has made three loans to the Governmentof India for DVC projects.
180 The first loan (23 IN) of $18.5 millioJ/ was made in April 1950to finance the foreign exchange requirements of the 150 14r1 Bokaro thermalplant on the Damodar river, the multipurpose Konar dam on the Konar river,
and transmission lines with the necessary substations.
19. The Bokaro thermal station was put into operation in 1953, approxi-
mately as scheduled despite the Korean war.
1/ $1,779,500 was subsequently cancelled at the request of the Government of
India due to changes in the project.
20. The Konar reservoir, which supplies cooling water during the dryseason to the Bokaro thermal plant, began partial operation early in 1953and was completed in 1954, two years behind schedule due to design changesin the dam. Konar reservoir water is also used for irrigation in the lowervalley and will supply a future small hydroelectric power station.
21. The transmission facilities associated with the above projects werecompleted some months behind schedule due principally to late delivery ofpower transformers.
22. Total costs on the first loan projects exceeded the original esti-mates of $55 million by about 27% due to design changes in the Konar dam,increased costs of housing at the Bokaro plant site, and increases of wagesand equipment costs following the Korean war.
1/23. The second loan (72 IN) of $19.5 million- was made in January 1953to finance foreign exchange requirements of the Maithon and Panchet Hill multi-purpose dams, the Durgapur irrigation barrage, and the principal irrigationcanals.
24. About 60% of usable reservoir capacity is reserved for flood storage.Power installations consist of 60 M-i at Maithon and 40 MN at Panchet Hill.Of the water dischargled from the reservoirs for irrigation and other usesabout 37% is passed through the turbines.
25. Water from the reservoirs is diverted into the canal network by theDurgapur barrage and is distributed to townships, industry and provides forabout one million irrigated acres in the lower Damodar Valley.
26. The Maithon dam project was completed in 1957, about two years behindschedule, and the Panchet Hill project in mid-1959, about 3- years behindschedule. The Durgapur barrage and main canal works are completed. The sub-sidiary canals are in final stage of construction.
27. Construction of the second loan projects was undertaken almostentirely by the DVC. The DVC lacked experience and skilled personnel, whichaccounted for the delays.
28. Original cost estimates of about $100 million equivalent have beenexceeded by about 10% due to design changes, construction delays and in-creases in prices and wages.
1/ $9 million was subsequently cancelled at the request of the Governmentof India due to the desire to use own sterling resources.
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29. The third loan (203 IN) of $25 millionl/ was made in July 1958 tofinance the addition of 247 MW of thermal plants to the DVC electrical system,together with additions to the transmission system and substations.
30. The thermal plants comprise an 82 M extension of the Bokaro powerstation and the construction of the Durgapur power station with a capacity of165 M . The Bokaro extension commenced operation in March 1960, approximatelysix months ahead of schedule, and the new Durgapur power station in December1960, about eight months behind schedule. Correction of manufacturing defectsdelayed full output of the turbo generators at both Bokaro and Durgapur.
31. The transmission facilities were originally planned for completion bythe end of 1959 but the work was not completed until mid-1960.
32. The above project was estimated to cost $56 million. Final cost will
probably be about equal to, or possibly slightly lower than, the T.O.D. esti-mate.
V. THE POJER MARKET
Existing Electric Power Facilities in the DVC Area
33. The DVC operational area extends outside the Damodar Valley withthe approval of the two States. DVC also supplies part of the requirements
of the cities of Calcutta and Jamshedpuar.
34. The DVC supplies bulk power to four major licensees (CalcuttaElectricity Supply Corporation, Sijua Jharia, Dishergarh Power Supply Company,and Associated Power Supply Company), two State agencies (West Bengal and
Bihar State Electricity Boards), two railways (Eastern and South Eastern)
and to a number of large industries, including Tata Iron and Steel Company,
Indian Iron and Steel Company and Chittaranjan Locomotive Works. These cus-
tomers are served through about 1,000 miles of transmission lines and about40 substations.
35. The DVC has an installed capacity of 524 MWJ. The DVC network isconnected to the Sindri Fertilizer Works where there is 25 NW of surplus
capacity at present. The available firm capacity is 371 MW after allowing
for losses, for seasonal operation of the hydroelectric plants and for emer-gency shutdown of the largest unit. This capacity will be increased in 1964
when the Chandrapura thermal station is commissioned. For further details
see Annex 2.
36. In addition to the DVC installations at least 420 MN are in publiclyand privately owned utility plants and industrial plants. Much of the publicutility equipment is obsolete. The industrial equipment, while old, is in
fairly good condition. The DVC Act forbids utility and industrial plants to
1/ $3 million was cancelled at the request of the Government of India due to
savings in the execution of the project.
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construct new, generating facilities over 10 IJ or expand or renew existingfacilities without DVC's permission. During the first ten years after theestablishment of DVC there was little expansion of generating capacity in thepublic utility and industrial plants. There was, in fact, a transfer of loadsto DVC as equipment wore out.
Prospective Demand
37. A power market study was undertaken in 1959 jointly by the CentralWJater and Power Commission and the DVC. This covered the DVC operational areaand adjoining areas served by DVC with permission of the State Governments.After study of this survey it was agreed by the participating governments thatDVC would continue to supply the load within the operational area and the con-tracted load already supplied outside this area. Any increase in demand out-side the Damodar Valley would be met by the State Electricity Boards.
38. The power market study has been revised as more definite informationhas been received on future industrial development. A forecast of the 1961-70increase of demand is detailed in Annex 1. The forecast now includes powerrequirements of the third five-year industrial plan proposed by the Governmentof India for the period 1961-66. Having regard to an increase in output from1 to 1.6 million tons per annum of the Durgapur steel works, a large increasein the output of both state and privately owned coal mines, an extension ofthe Sindri fertilizer factory, new steel fabrication industries and increaseddemand from licensees and the railway system, the forecast of power require-ments in the planning period 1961-66 is summarized below in IvW:
Demands on the DVC System 1961/62 1962/63 1963/64 1964/65 1965/66
State agencies 156.5 165.7 174.9 184.9 193.3Licensees 150 158.6 168.9 179.7 192.2
Industries 172.6 175.4 215.1 243.6 278.6Railway electrification 131.1 131.1 131.1 131.1 131,1
Total non-simultaneousdemand 610.2 630.8 690o0 739.3 795.2
Total simultaneous demand 509 525 575 612 662c5
39. From 1966 to 1970 the forecast envisions no increase in demand out-side the Damodar Valley, a 10% per annum increase by licensees and industrywithin the Valley, and a 2% per annum increase in the demand of the railwaysystem.
4o. The forecast assumes achievement of the third five-year industrialplan, and a resulting 7% overall average annual increase from 1961 to 1971.This is a moderate rate for the most heavily industrialized area of India.It would be higher if DVC were not restricted by State Government plans toprovide for their own load increases outside the Valley.
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410 Annexes 2 and 3 show the generating capacity existing and plannedcompared with forecast load growth. They also show an almost continuous short-age of generating capacity. The following table (from Annex 2) shows theforecast demand, installed and authorized expansion of capacity, capabilityand the forecast demand in excess of capability during 1961/62 and 1965/66.The authorized increase has been allocated by the Central Government and in-cludes: installation of one 140 MJ unit, the subject of this report; two140 MNW units in the Chandrapura power station financed with the assistance ofthe Development Loan Fund; and one 140 MtJ unit for which financing has beenrequested from the U.S. Government.
Projections in nWJ
1961/62 1962/63 1963/64 1964/65 1965/66
Installed capacity 524 524 524 524 804Authorized expansion - - - 280 280
Total Installed Capacity 524 524 524 804 1,084
Capability 1/ 371 371 371 546 727Maximum demand 509 525 575 612 662
Excess of demand overcapability, with reserve 138 154 204 66 0
Excess of demand overcapability, with noreserve 55 71 121 0 0
42. The above table confirms the Bank's 1958 forecast (Loan 203 IN) thatexisting facilities, together with those authorized and under construction forcommissioning by 1966, would not enable DVC to meet demands arising out ofindustrial expansion plans. As all generating facilities will no doubt be usedto capacity, DVC will not be able to keep a unit in spinning reserve foremergencies, as would be normal practice in a public utility of this size.No increase in DVC's generating capacity has been authorized beyond 1966.
Unless additional increases are authorized in the very near future, DVC mustcontinue to limit supply to consumers. It will also require them to retainin service old and inefficient generating plants, limit new loads, mSale maxi-mum use of "off peakt" demand and to continue deferring maintenance as long aspossible.
1/ Capability includes allowances for transmission losses, power purchasedby DVC, statutory boiler inspections, plant maintenance, and the largestunit out, as a reserve.
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43. The forecast of kwh sales, shown in Annex 10, and the financial pro-
jections are based on a nominal 60% load factor applied to authorized gener-
ating capacity through 1966, and to estimated maximum demand from 1967 through
1970. The actual load factor would probably be higher from 1961 to 1965 as
the maximum kwh would be generated. The estimate of sales is, therefore,
probably conservative. This situation may be conpared with present load
factors shown in Annex 4, which indicates an annual load factor of 74% for
the year 1960. Operating conditions then existing may continue through 1961-65.
44. The data in Annex 5 was prepared by the Central Water and Power
Commission and shows 7.7 million kw of new capacity to be installed in all of
India during the planning period April 1961 to March 1966. This ambitious
program will be essential if the rate of industrial growth is to be maintained.
As shown in the table, allocation to the DVC of 560 MI represents only 7% of
the total.
45. This project represents only a part of the new capacity required forthe DVC system. Its output will be fully absorbed as soon as it comes into
operation.
VI. THE PROJECT
Description
Durgapur Thermal Power Station
460 The Durgapur thermal station is near Oyaria railway station about100 miles northwest of Calcutta and adjacent to the Durgapur steel plant, in
the Damodar Valley. To existing 2 x 75 MX installations will be added one
hydrogen cooled turbo-generator with a maximum continuous capacity of about
140 1bl,J designed to operate on the unit system with its own condenser, circula-
ting water and condensate pumps, steam generator, transformer and other
auxiliary equipment. The reheat turbine will operate at an inlet steam
pressure of about 1800 p.s.i. at 1000°F and reheat to 10000F. The single
steam generator will be semi-outdoor with an evaporative capacity of about
960,000 lbs. per hour. It will be the dry bottom type designed to burn low
grade coal from nearby mines and middlings from coal washeries. The turbo-
generator will be directly connected to an outdoor type power transformer
of about 165 IVA, which will step up the generator voltage to 138 kv. The
high voltage side of the transformer will be connected with the high voltage
busbar through 138 kv circuit breakers.
Transmission System
47. (a) Transmission line construction will comprise about 5 miles of132 kv double circuit line and about 12 miles of 33 kv line.
(b) The substations at Durgapur, Bokaro, Chandrapura, Sindri,Kalipahari, Ramgarh, Luchipur, Ramkanali, Burdwan, Oyaria and
Maithon will be modified and extended.
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(c) A central load dispatch and system control station will beconstructed at Maithon.
(d) It is expected that the project will be completed by the endof 1965.
Further details of the project are given in Annex 6.
Present Status and Schedule of Completion
Durgapur Thermal Plant
48. As the project is an extension of the recently constructed Durgapurthermal station, the site is already prepared and only very minor preparatoryworks will be necessary. The new unit is to be technically similar to two
units already ordered for installation in the new thermal station now beingconstructed at Chandrapura for which specifications were checked and approvedby consulting engineers in consultation with DVC engineers, and the same basicdesigns have been utilized in specifications for the new plant. Bids forturbines and boilers have been called on an international basis.
49. Preliminary details of the civil engineering works were prepared bythe staff of DVC for estimating purposes but the detailed designs cannot befinalized until firm orders are placed for the mechanical and electrical equip-ment.
Transmission System
50. Detailed engineering for the transmission system expansion is beingcompleted by DVC.
51. The transmission systems of the DVC, West Bengal and Bihar are inter-connected and a comprehensive study of the stability and operating character-istics of the combined systems has been made on a network analyzer at Bangalore.
Arrangements for Engineering Supervision and Construction
52. Proposals from consulting engineers were received November 15, 1961.
Consulting engineers, satisfactory to the Association, are to be appointed toreview all specifications, assist in preparing detail designs, analysis ofbids, and supervision of construction.
53. DVC will undertake the civil engineering work involved in extendingthe Durgapur power station. This is satisfactory as they have now had ex-perience in this field.
54. Successful bidders for the electrical and mechanical equipment mustprovide skilled personnel for the erection, testing and commissioning of theequipment up to the stage of satisfactory commercial operation. These arrange-ments are satisfactory,
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Purchasing Procedures
55. All specifications prepared by the DVC for international biddingare scrutinized by various departments of the Indian Government to ensure thatno parts are purchased abroad which could be manufactured in India. This isto minimize the use of foreign exchange. When calling for bids, DVC must sub-mit specifications through Embassies and the Indian Supply Missions as well asdirect to prospective bidders.
56. After DVC's engineer's recommendation for the acceptance of a bid afurther scrutiny is made by the Central Government before the' issue of foreignexchange permits.
57. This procedure is unnecessarily complicated and time-consuming. Delaysof nine months have occurred between the preparation of specifications andplacing of orders. This has been discussed with governrnent officials duringnegotiations in an endeavor to remove this cause of delay.'
Completion Date of Project
58. Preliminary work is scheduled to commence toward the beginning of1962. The project is expected to be commissioned in mid-1965. If, however,purchasing procedure is not simplified delays will be incurred.
Cost Estimates
59. Cost estimates prepared by DVC take into account costs of similarequipment already ordered for the Chandrapura power station, discussions withmanufacturers and past experience in building thermal plants and erectingtransmission facilities.
6o. Estimates have been compiled from a detailed breakdown of each item.They include allowances for engineering, overheads, purchasing, shipping,customs and insurance. Shipping, customs and insurance are estimated asapproximately 16% of the cost of imported equipment. A contingency allowanceof 15% included on each local and foreign expenditure should be adequate tocover possible increases in costs of plant, labor and materials.
61, Interest during construction is included as a local currency expendi-ture because all of DVCts financing is derived from the participating govern-ments in local currencies and is not included in the credit.
62. The estimates, which are based on recent procurement prices, shouldbe ample to cover the costs of the project. They are summarized below:
(In millions of US$)Local ForeignCurrency Exchange Total
Durgapur power station 10.18 15.1 25.28Transmission and substations 4.92 3.28 8.20
15.10 _17378 33.48
Interest during construction 1051 1i84 3.35
Total 16.61 20.22 36.83
Detailed cost estimates are shown in Annex 7.
Sources of Funds
63. According to the DVC Act the cost of power facilities must be sharedequally by the three participating governments. Foreign exchange costs willbe covered by the proposed Association credit to the Governnent of India in arounded-out amount of $18.5 million equivalent. The proceeds from this creditwill be made available to DV C by the Ce ntral Government in the fcnm cf nonrepayableadvances carrying interest at a fixed rate which is expected to be 42%. Thenet amount to be supplied from local sources, therefore, will be local currencycosts, including all interest during construction, or a total of $18.45 millionequivalent. The three governments have approved the project and are committedby the Act to supply the necessary funds.
Cost of Production
64. On the basis of recent cost estimates, the investment would be about$195 per kw installed.
65. Based on fuel costs at Rs 20 per ton, the cost of production ofenergy at Durgapur when the new unit comes into operation is estimated to be6.3 US mills per kwh (Annex 8). This estimate is based on an operating sys-tem load factor of 60%.
VII. RATES
66. Existing rates were established in January 1959 and there have beenno changes since that date. Power contracts have been made in general on along-term contractual basis. Most contracts are for a period of seven years.Adjustments in the rate can be made after a period of three years on 12 monthsnotice. Most of the contracts are over three years old. The level of ratesnow in effect provides DVC with a rather low return on its investments inpower facilities. (This is discussed more fully in paragraph 72.) Sinceadjustments in rates will require 12 months notice and also a statement ofthe amount of adjustment proposed, DVC cannot take immediate steps to changeits contracts with its 14 bulk consumers. DVC, however, agreed during nego-tiations to notify its consumers as soon as practical that adjustments inrates would be made and also that future supply agreements would provide forrate adjustments on 90 days notice. However, new rates would be applied toall new customers as soon as they are established.
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VIII. FINANCIAL ASPECTS
Past Financial Record
67. For a period not exceeding 15 years from its establishment, DVC isrequired, if it runs a deficit, to maintain financial records which includeas capital costs: capital expenditures, operating expenditures and interest.From these, total sales revenues are deducted in order to arrive at net capitalexpenditures for power. This total is allocated in equal parts to the threeparticipating governments as their capital contribution to the DVC power facili-ties.
68. Interest varying between 32% and 4N, has been charged on the govern-ment contributions at the end of the fiscal year. For a period not exceeding15 years, i.e., through March 31, 1963, DVC is authorized under the Act to
capitalize this interest. As of March 31, 1961 total government contribu-tions of Rs 818.2 million include accrued interest of Rs 197.8 million.
69. There is no provision for depreciation in the DVC financial records.
70. As in the previous Bank loan for DVC (203 IN) a considerable de-parture from these methods of accounting has again been necessary in order toappraise the financial situation of the DVC power operations. The past finan-cial records have been adjusted to separate capital expenditures from opera-ting expenses so that capital expenditures include interest during constructionand operating expenses include an adequate provision for straight line deprecia-tion. To arrive at realistic annual financial results, interest not capitalizedas interest during construction has now been charged to operations. Interestis regarded as an accrued liability until paid.
71. Adjusted financial statements for 1954-61 are shown in Annex 9.They indicate that only since 1959 have DVC power operations earned net income
equal to the total interest payable to the participating governments.
72. The improvement in 1959, 1960 and 1961 was forecast in the TechnicalReport of July 1958 (TO 176 a) which also forecast further improvement, indica-ting a return on investment of about 9% over the five years 1962 to 1966.This forecast assumed that increasing sales at existing rates would providethese earnings. However, the new power generating capacity fell behind sche-dule, so these sales forecasts did not materialize. The return was only 5.4%in 1961. Moreover, due to the changed basis of the DVC future operations,as a result of the 1959 power study (paragraph 37.), the sales forecast inthe 1958 Technical Report had now to be reduced.
- 13 -
Financial Forecasts
73. To produce reasonable financial forecasts the basis mentioned inparagraph 70 has been followed. On this basis the balance sheet as ofMarch 31, 1961, except for working capital, would be approximately as follows:
Thousands of RupeesASSETS
Total fixed assets in operation 788,775Less: Accumulated straight line
depreciation 75,214
Net fixed assets in operation 713,561Work in progress 52,270
Total net fixed assets 765,831
Accumulated operating results - 1948-61Net loss 32,45h81/
Total Assets 798,289
LIABILITIES
Total government contributions to power(excluding provisions for working capital)
Net contributions 600,519Accrued interest 197T,770 798,289
1/ The operating results are based on the assumption that interest amount-ing to Rs 98,478,ooo is charged to construction, representing 13% ofnet capital expenditures on plant during 1948-61e
- 14 -
74. Financial statements projected into 1962-66 assume notionally thatforeign loans have been made directly to the DVC power operations and thatinterest and repayment of loans and government advmrces are to be met by DVC.A balance sheet as of March 31, 1961 would therefcre include Rs 182,784,000of loans made by the World Bank and by DLF to the Government of India on behalfof the DVC power operations and a government contribution of Rs 615,505,000,or total liabilities of Rs 798,289,000 as shown above.
75. The financial forecast for 1962-66 is summarized in Annex 10. Returnon the average net fixed assets in operation would decrease from 5.4% in theyear ending March 31, 1961 to 4.4% in 1965 and then increase to 5% in 1966,at existing rates.
76. If DVC had to pay all interest on foreign loans at the interest ratesapplicable to the loans made to the Government (assuming also that the termsto DVC for the proposed credit were those of a Bank loan), 4h2% interest on thegovernment contribution, amortization of all debt (including repayment of thegovernment contribution on a 30-year basis) it would be able to provide frominternally generated funds onl, about 8% of its capital expenditures during1962-66. If the government contributions were not amortized, this percentagewould be about 16% (Annex 11).
77. Annex 12 shows that DVC's income from operations would not cover thetotal interest on its debt before 1966, and that debt service coverage wouldbe inadequate during this time,
78. From these estimates it must be concluded that DVC's earnings posi-tion has deteriorated since the previous Bank loan was made. During negotia-tions DVC agreed to adjust its rates so as to earn a return of not less than7% on its net fixed assets in operation, after provision for adequate straight-line depreciation. The notice of such adjustment would be given as soon asthe firm of chartered accountants have established a value of DVCts assets,but in any event not later than June 30, 1962. The actual adjustment of DVC'srates, except for new consumers, will occur 12 months after its consumers havebeen notified.
79. As previously stated, the financial statements and forecasts includedin this report are not founded on proper accounting records. It is thereforenot possible to make a reliable and substantiated assessment of the rate in-crease required. The desirability of changing the accounting procedures ofDVC has long been recognizedbut the procedures followed have been in accordancewith the DVC Act and the institution of any new procedures would have meantelaborate extra bookkeeping until 1963 when changes in any case will be neces-sary. The deterioration of DVC's earnings position and the impending expira-tion of DVC's authorization to use its present accounting methods, however,make a revision of these methods a matter of urgency.
80. DVC will employ a suitably qualified firm of chartered accountants,satisfactory to the Association, to assist in establishing accounting proceduresconsistent with commercial operation of its power facilities.
- 15 -
81. DVC has assured the Association that the substantial portion of thenet profit, after making provision for operating expenses, adequate mainte-nance, straight-line depreciation, taxes and interest on capital advances,will be allocated to a special reserve for the primary purpose of financinga part of its future expansion of power facilities.
IX. CONICLUSIONS
82. The project is sound and necessary to help meet the growing demandfor electricity in the DVC area (paragraphs 39, 45).
83. As the credit will be made to the Government of India, a ProjectAgreement is to be entered into between the DVC and the Association (para-graph 3).
84. The DVC organization is operating satisfactorily and is well staffedto undertake the planned expansion with the aid of consulting engineers whowill be retained to review its engineering and supervise construction. Arrange-ments for construction are satisfactory (paragraphs 15, 52-54).
85. The revision of DVC's accounting procedures will be necessary toprovide financial information required for sound commercial operations (para-graphs 79, 80).
86. The adjustment of DVC's rates to ensure a return of not less than7% on net fixed power assets in operation should enable DVC to provide fromits own resources a substantial portion of funds required for its proposedexpansion program and accordingly reduce the amount required from the par-ticipating governments for continuing expansion (paragraphs 78 and 81).
87. The agreed-to reduction of from one year to ninety days in the timerequired for notification of rate adjustments should enable DVC in the futureto take the necessary action to adjust rates to meet the requirements of therate covenant with reasonable promptness (paragraph 66).
88. The project is suitable for a credit of $18.5 million to the Govern-ment of India,
DADDAR VALLEr O2RPORATION AVV= 1
Load on Power System
____________ ~~Load in KW CaBfctoSubstation Consumer or area supplied 60/61 6162 L263 a6 ClaesiTioation
Iron and Steel Industry
Kalipahari IISOO, Buropur 9.0 9.0 9.0 9.0 9.0 9.0 Iron and SteelMsithon IISOO, Kulti 9.0 9.0 9.0 9.0 9.0 9.0 Iron and SteelDurgapur Hindusthan Steel 31.5 36.o 39.6 42.3 45.0 80.0 Iron end SteelJamshedpur TISCO and Allied Industries 81.0 81.0 81.0 81.0 81.0 81.0 Iron and Steel
Monoharpur, Noamundi End Gua Nines 8.0 8.o 8.0 8.0 8.0 8.0 Iron ore Mines
Sub-total 138.5 143.0 146.6 149.3 152.0 187.0
Coal Industrv
Ra2garh NCDC & cther private collielies 25.0 33.0 35.0 38.0 40.0 42.0 CoalBokaro " " n 1" 12.0 19.8 22.4 25.1 30.5 34.0 Coal & coal washeries explosive factoryKalioahari Associated Power Co. (Seebpur & Luchipur) 10.6 12.5 1h.6; 21.8 25.9. 30.2 Mainly coal
Pandaveswar area 2.7 3.7 4.4 5.2 5.8 6.7 nNCDC Collieries - - - 7.0 7.0 7.0 Coal
Maithon Dishergarh Power Supply Co.i) Dishergarh 8.8 10.2 12.4 16.7 20.9 25.8 Mainly coal
ii) Kumardubi 7.3 7.9 8.5 9.2 9.9 10.7Nisra & Karnatorn areas 4.0 4.5 5.0 5.5 6.0 6.6 Coal
Putki Sijua(J) Electricity Supply Co. 13.0 20.4 22.1 22.1 24.0 26.5 Mainly coalDigwadih & Ganeshpur area 7.5 9.1 10.4 11.2 12.2 12.7 CoalNCDC Collieries - - - 30.0 30.0 30.0
Sub-total 90.9 121.1 136.8 191.8 212.2 232.2
Cement Industry
Putki ACC, Sindri 6.4 6.4 6.4 6.4 6.4 6.4 CementBarun 27.0 27.0 27.0 27.0 27.0 27.0 Cement, paper, chemicals and sugar
Sub-total 33.4 33.4 33.4 33.4 33.4 33.4
Chemical Industry
Sindri Sindri Fertilizers 10.0 10.0 10.0 10.0 10.0 10.0 Fertilizers and chemicalsHowrah WBSEB 5.0 5.0 5.0 5.0 5.0 5.0 Mainly for calcium carbide factory
Sub-total 15.0 15.0 15.0 15.0 15.0 15.0
Other Industries
Maithon CLI, Chittaranjan 10.4 14.4 14.4 14.4 14.4 14.4 Locemotive worksHindusthan Cables, Rupnarainpur 0.8 0.8 0.8 0.8 0.8 0.8 Electric cables
Mosabani ICC, Ghatsila 6.0 6.0 6.0 6;0 6.0 6.0 CopperTilaiya Mines 5.0 5.0 5.0 5.0 5.0 5.0 Mica
Sub-total 22.2 26.2 26.2 26.2 426..2 26.2
Howrah CESC 99.0 99.0 99.0 99.0 99.0 99.0 Steel fabrication, foundries, automobile,jute mills, chemicals & other industries
Other Loads for State Electricity Boards of West Bengal & Bihar
Burdwan State Electricity Board, West Bengal 3.2 3.6 3.9 4.3 4.6 5.0Kharagpur C n 2.8 2.8 2.8 2.8 2.8 2.8Purulia n n n 1.5 1.5 1.5 1.5 1.5 1.5Durgapur n n - 1.5 2.5 4.3 4.5 5.0Maithon Bihar State Electricity Board, Bihar 10.0 10.0 10.0 10.0 10.0 10.0Mosabani n n n 1.0 1.0 1.0 1.0 1.0 1.0Gaya * " n n n 6.0 6.0 6.0 6.0 6.0 6.0Patna C n15 0 15 0 15O.0 15.0 15.0 15.0
Sub-total 39.5 41.4 42.7 44.9 45.4 46.3
Railway Electrification Load
24.5 131.1 131.1 131.1 131.1 131.1
Misoellameous Industries
_ _- - 25.0 25.0
GRAND TOrAL 463.0 610.2 630 8 00.7 73 795.2
SYSTEK DEHWD (Diversity Factor 1.2) 386.o 509.0 525.0 575.0 612.0 662.g.
ZrIKATED L(AD INCREASE 1966/71
- 1965/66 1966/6 1967/68 1968/69 1969/70 1970/7
Outside Valley MW 262.7 262.3 262.3 262.3 262.3 262.3Inside Valley - 401.8 543.0 597.0 657.0 723.0 795.0Railway Electrification 131.1 134.0 137.0 140.0 143.0 146.oAggregate 1 J95.2 939.3 -996.3 1,059.3 1,128.3 1,203.3
Simultaneous demand(with Diversity Factor 1.2) 662.5 783.0 830.0 883.0 %0.0 1,003.0
Abbreviations used in the above tables
XISCO Indian Iron and Steel Co. TISCO Tata Iron and Steel Co. RCCC Natioml Coal Developmen CorporatiACC Associated Cement Co. WBSEB Vest Bengal State Electricity Board CDI Chittarnjan Loeomotive WorksIOC Indian Cable Ccpany CEBC Calcutta Elsotri4 Supply C P,ay
.DAMODAR VALLEY CORPORATION POWER SYSTEM
Installed CapacitY, CaPability,Maximum Demand and Sales
ACTUAL ESTIMATED
(Mi) 19SS 1956 1957 19S8 19S9 1960 ____ 1962 1222 6 2i9- 1967 1968 12926 197
Installed Capacity 1/
Eydro 4 4 24 64 104 104 104 104 104 104 104 104 104 104 104 104Thermal 172 -172 172 172 4 420 420 700 980 _980 1.120 1.20 1.260 1.260
Total 176 176 196 236 276 276 524 524 524 804 1,084 1,084 1,224 1,224 1,364 1,364
Pirm Capacity 9/ us 118 138 155 155 155 384 384 384 599 823 823 963 963 1,103 1,103
Station Audlliary andTFransmission Losses 12 12 14 16 16 16 38 38 38 60 103 103 120 120 138 138
Usable Capacity 106 106 124 139 139 139 346 346 346 539 720 720 843 843 965 965
Pbver Purohased - - 25 25 25 25 25 25 25 7 7 7 7 7 7 7
Total Capability 106 106 149 164 164 164 371 371 371 546 727 727 850 850 972 972
System Haximum Demand 57 a0 149 178 209 292 509 525 575 612 662 783 830 883 940 1,003
Surplus or Deficit (-) 49 26 (0) (14) (45) (128) (138) (154) (204) (6) 65 (56) 20 (33) 32 (31)
I Includes nsw capacity authorized in third five year plan (2 x 140 MW units in 1964, 2 x 140 MW units in 1965) and new capacity notauthorized (14o MW in 1967, 140 MW in 1969).
/ Based on dependable output of b7dro capacity, statutory boiler maintenance and largest unit out (82.5 MW through 1963, 140 MW after 1964).
I N 0 1 A 0
DAMODAR VALLEY CORPORATION _ _
Installed Capacity, Total Capability,and Maximum Demand 3 l C
eNOO _ - ] ° ___ ___ o <a _____ ____
40
1100 00J 4 ___ __
0 aximum Demond
____Y_N _ ° -____ r_____ ______ 1_ _ <Taal Capfbility
*00 _ _ _4 -0~~~~~~~~~~~~~~~~~~~~~0C
0~~~~(
400 _ 56 '0 _ ' 56NOVEMBER 11 Y E A0 R 5
MO O-X ~ ~ ~~____ - - Capacity authorized - ___
0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~___ Now capacity required.lx ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~but not authorized
so5 *se '5 s '59 '60 'el 62 6 4 5 66 '67 66 69 70 '71
NOVEMBER 1961 YEARSIBRD-905 R
ANNEX 4
DVC PO'WER SYSTEM
System Load Factor Year 1960
MonthlyE. F.
Month %
January 77 42
February 74.32
March 70.07
April 70.o4
May 71.95
June 70.67
July 72.52
August 70.34
September 80.89
October 78.80
November 79.22
December 73J83
Average 74.17
ANNEX 5
STATEiENT SHOI,.OING ADDITIONAL GENE.RATING CAPACITY
TO BE ADDED IN INDIA DURING THE THIRD FIVE Y1EAR PLAN PERIOD
(APRIL 1961 - MARCH 1966)
State Capacity to be Added (IW)
Andhra 366.0Assam 112.2
Bihar 455.0
D.V.C. 560.0
Gujarat 411.0
Jammu & Kashmir 38.0
Kerala 334.0
Madhya Pradesh 443.0Madras 505.0Maharashtra 810.0Mysore 674.9
Orissa 387.0
Punjab 569.0
Rajasthan 261.0
Uttar Pradesh 769.5
West Bengal 468.o
Delhi 150.0Total for Other Union Territories 8.8
Neyveli 4000
Total 7,722.4
ANNEX 6
DESCRIPTION OF THE PROJECT
Durgapur Power Station
1. The Durgapur power station is near Oyaria railway station approxi-
mately 100 miles northwest of Calcutta, and adjacent to the Durgapur steel
plant.
2. The power station, with a capacity of two 75 MW hydrogen-cooledturbo-generator units, is of the semi-outdoor type, the generating units being
in a machine hall with the steam raising equipment constructed as an outdoor
annex.
3. Adequate cooling water comes from a canal supplied from the Durgapurflood control barrage.
4. The station boilers are designed to burn coal middlings from thecoal washery of the steel works on a belt conveyor system feeding into the
coal bunkers and low-grade coal from nearby mines. In addition, the boilers
have gas nozzles to burn waste gas piped from the steel works. Railway and
road access to the power station coal handling system permits emergency stock-
piling of coal received direct from the Damodar Valley coal fields.
5. The present unit system of operation, whereby each generator, turbine,
boiler and their auxiliaries operate as an independent unit, would be continued
with the proposed generating plant. This would be similar in characteristics
with two units being installed at the ChandrapuLra power station.
6. The generator would be hydrogen-cooled with a nominal rating of
about 125 MW and a maximum rating of about 140 MIJ. It would be directly con-
nected to a unit transformer of about 165 MVA capacity to step up the genera-
tor voltage of 15 kv to the main switching station voltage of 138 kv.
7. The turbine would be of the reheat type operating at a steam inletpressure of 1800 p.s.i. and temperatures of l000F/1000(F.
8. The boiler would operate as a unit with the turbine and have anevaporative capacity of about 960,000 lbs. per hour at a steam pressure of1950 p.s.i. and temperatures of 1000OF at the superheater and reheater outlets.The boiler furnace would be fired with pulverized coal.
Transmission System
9. To provide transmission facilities for the additional generatingcapacity and to new loads to be added during the 1961-65 industrial plan, the
following extensions and modificatics- to the transmission system are proposed:
ANNEX 6Page 2
a) 132 kv double circuit steel tower transmission line, approximately
5 miles long from the Chandrapura power station to a new steelworks near Bokaro;
b) a 33 kv single circuit transmission line 12.5 miles long from
Kalipahari substation to Luchipur;
c) Extensions and modifications to substations at Durgapur power station,
Chandrapura, Sindri, Bokaro, Kalipahari, Ramgarh, Luchipur, Burdwan,
Ramkanali, Oyaria and Maithon, and a new high voltage substation
constructed at the new steel works at Bokaro;
d) Miscellaneous transmission system extensions within the DVC operational
area for the mines of the National Coal Development Corporation, the
Bengal State Electricity Board and Bihar State Electricity Department;
e) A central load dispatch and system control station will be constructed
at Maithon.
ANNEX 7
Estimated Costs of Project
Foreign LocalExchange Costs Total
1O00's of Esa) Land acquisition, survey, site prepara-
tion, housing, site buildings andfacilities - 7,720 7,720
b) Civil works and power station buildings - 9,250 9,250
c) Boiler unit, dust collectors, feed pumps,instrumentation and control equipment 22,400 - 22,400
d) Generator, turbine 2nd condenser 14,300 - 14,300
e) Coal conveyor equipment and ash handlingplant 3,300 3,300
f) Feed heating and water treatment plant,cooling Dater plant, oil purificationplant 2,500 - 2,500
g) Pining and valves, compressed air.plant,miscellaneous equipment 4,870 620 5,490
h) Auxiliary electrica'l equipment 4,950 1,340 6,290
i) Miscellaneous works, construction equip-ment, tools and spare parts 3,000 2,650 5,650
J.) Erection 3,980 3,320 7,300
k) Transport, freight, insurance, customs 970 9,930 10,900
1) Establishment and Indian SupplyMissions chaa-ges 200 4,700 4,900
m) Engineering and inspection 2,150 220 2,370
Sub Total 62,620 39,750 102,370
n) Contingencies @ 15% 9,380 5,950 15,330
o) Audit and overhead charges - 2;850 2,850
p) Interest during construction 7,200 4,855 12,055
TOTAL 79,200 53,405 132,605
Estimated salvage value of constructionequipment 3,300
Cost per kw installed tJS$ 195
ANTEX 7Page 2
Foreign LocalExchange Costs Total
1000ts of RsTransmission System
132 kv double circuit transmission line 5 mileslong from Chandrapura to new steel works atBokaro 2
20 480 500
33 kv transmission line 12.5 miles long fromKalipahari to Luchipur 50 430 1 480
Extension of Durgapur switchyard by additionaltransformers and switchgear 1,980 2,190 4,170
Extension of Chandrapura switchyard by addi-tional switchgear for new steel wiorks supply 40o 380 780
132 kv substation including transformers atnew steel works substation 1,580 h,050 5,630
Extension of Sindri substation by new trans-formers and switchgear 300 280 580
Extension of Bokaro substation by additionaltransformers and switchgear 540 2,000 2,540
Modification of Kalipahari substation by in-creased capacity of transformers and addi-tional switchgear 230 1,790 2,020
Modification of Ramgarh substation by in-creased capacity of transformers and addi-tional switchgear 200 1,780 1,980
Extension of Luchipur receiving station byinstallation of additional switchgear 170 140 310
Installation of 60 MVAR capacitor and asso-ciated switchgear at Xalipahari substation 1,560 800 2,360
Extension of Ramkanali substation by addi-tional transformer and switchgear 550 580 1,130
Construction of new receiving station atOyaria 990 710 1,700
Modification material for 132 kv and 33 kvswitchgear for increasing rupturing capacityat Maithon substation 120 30 150
ANNEX 7Page 3
Foreign LocalExchange Costs Total
1000ts of Rs
Installation of additional transformers atBurdwan substation 50 50
Extensions of substations for supply toNational Coal Development Corporation, coalmines, and allied industries 1,350 650 2,000
Construction power supply to new Bokarosteel works - 200 200
Central load dispatch and system controlstation 3,150 150 3,300
Transport, freight, insurance 50 350 400
Erection 50 250 300
Establishment including consultants services 50 2,300 2,350
Inspection and Indian Supply Missions charges 280 - 280
Sub Total 13,620 19,590 33,210
Contingencies @ 15% 2,050 2,937 4,987
Audit and overhead charges - 918 918
Interest during Construction 1,567 2,344 3,911
TOrAL 17,237 25,789 43,026
Estimated value of equipment recoveredafter changes and modifications 1,100
ANNEX 8
DAMODAR VALLEY CORPORATION
Durgapur Power StationCost per Unit Generated
Annual Charges Rs x 1000
Present Capacity Future Capacity2 x 82.5 nM 2 x 82.5 NW
1 x 140 MW
Operation and Maintenance
Repairs, head office and localestablishment, tools and plant,water, insurance, audits andoverheads 2,997 5,551
Fuel @ Rs 20 per ton 7, 8 54 14,342
Depreciation 5,962 9,253
Interest, 41% per annum 6,698 12.491
Total Annual Charges 23,511 41,637
Annual generation (millions of kwh) 706 1,326
Cost/kwh generated (Naiya Paisa) 3.33 3014Cost/kwh generated US Mills 6.8 6.3
Notes:
Generation on the DVC system is by combined thermal and hydro powerstations and the estimated generation at the Durgapur thermal station has beenbased on the requirements of the transmission system operating at 60% loadfactor. Depreciation, at 30 years life of the plant, straight line method.
DVC - PO01ER DIVISION
gixed Asaets 1954-1961(Thousands of Rupees)
Years ended March 31: 19SL 19 1956 197i 1960 1261
Total capital expenditures 357,048 398,053 450,648 526,846 634,285 730,954 835,647 940,337Less: Interest charged to operation 3,082 10.933 19,575 29.569 L1.756 57,898 76.642 99,292Total fixed assets 353,966 387,120 431,073 497,277 592,529 673,056 759,005 841,045Ies: Work in progress 1149.064 164,154 176,463 192.556 192.908 219.138 246.080 52,270Total fixed assets in operation 204,902 222,966 254,610 304,721 399,621 453,918 512,925 788,775Lesg: Straight-line depreciation 5.922 12.L435 19.512 27.L19 36.548 47.845 60.353 75.214.Net fixed assets in operation 198,980 210,531 235,098 277,302 363,073 406,073 452,572 713,561
DVC - POWER DIVISION
Income Statements 1954-1961(Thousands of Rupees)
Years ended March 31: 195z MU 1956 19S8 1960 1961
Kwh sales (millions) 109 163 283 420 807 1081 1312 1564
Average revenue per Kwh in N.P. 5.2 5.1 4.8 4.8 4.3 4.4 4.7 4.8
Groaa revenue 5,669 8,354 13,634 20,000 34,915 47,669 61,604 75,000
Operating expanses 6,916 9,047 8,136 9,970 15,034 18,703 20,610 25,537Cost of purchased power 1,591 1,418 347 - 902 688 368 2,909Straight-line depreciation 5.922 6.513 7,077 7.907 9,129 11.297 12.508 14,861Total operating coat 14. ,29 16,978 15.560 17,877 25.065 30,688 33,486 43.307Net income from operations (8,760) (8,624) (1,926) 2,123 9,850 16,981 28,118 31,693
Total interest to be paid 11,044 9,514 13,870 19,697 34,143 24,978 30,471 35,290Less: Interest charged to construction 8,353 1.663 5,228 9,702 21,956 8.836 11,727 12,640Interest charged to operations 2,691 7,851 8,642 9,995 12,187 16,142 18,744 22,650
Net income after interest (11,451) (16,475) (10,568) (7,872) (2,337) 839 9,374 9,043
Return on investment (net incoms fromoperations in % of two year average net deficit deficit deficit 0.8 3.1 4.4 6.6 5.4fixed assets)
Number of times interest covered by netincome from operations - - - 0.2 0.8 1.0 1.5 1.4
DVC - POWER DIVISION
Forecast of Fixed Assets 1962-1966(Thousands of Rupees)
Years ending March 31: 1961 1962 1963 196L 1965 1966Actual
Total fixed assets in operation 788,775 788,775 795,714 1,057,052 1,388,878 1,388,878Less: Depreciation 75,21L 99,032 122.850 1L6,867 179,595 223,017Net fixed assets in operation 713,561 689,743 672,864 910,185 1,209,283 1,165,861Work in progress 52,270 1L6,595 263.846 169,598 56,232 92,8L9Total net fixed assets 765,831 836,338 936,710 1,079,783 1,265,515 1,258,710
Accumulated operating loss 1948-1961 32.L58 32,458 32.458 32,458 32,458 32,458Total assets 798,289 868,796 969,168 1,112,241 1,297,973 1,291,168
DVC - POWER DIVISION
Forecast of Income Statements 1962-1966(Thousands of Rupees)
Years ending March 31: 1961 1963 196k 1965 1966
Kwh sales (in million) 1564 1950 1950 1950 2473 3202Average revenue per Kwh (in N.P.) 4.8 5.10 5.10 5.16 5.15 5.14
Gross revenue 75,000 99,400 99,400 100,700 127,300 164,500
Operating expenses 25,537 33,412 33,412 33,646 46,488 60,329Cost of purchased power 2,909 5,614 5,614 5,614 1,684 1,684Straight-line depreciation 1L,861 23,818 23,818 2L,017 32,728 L3,422Total operating cost 43,307 62,844 62,844 63.277 80,900 105,435
Net income from operations 31,693 36,556 36,556 37,423 46,400 59,065
Rates of Returnt
Net income from operations in % of averagetwo year net fixed assets in operation 5.4 5.2 5.4 4.7 4.4 5.0
HO
ANNX 311
DVC - POWER DIVISION
Cash Flow Forecast 1962-1966(Assuming fulI interest and Amortization Payments on all Outstanding Debt)
(Thousands of Rupees)
Years ending March 31: 19" 120 1966 1962-66
Capital expendituresw v94,325 124,190 167,090 218,460 36,617 640,682
Sources of fundsNet income from operations 36,556 36,556 37,423 46,400 59,065Depreciation 23.818 23.818 2?A017 32.728 43.422Internal cash generation. 60,374 60,374 61,440 79,128 102,487DeductionsInterest on foreign loan8 8,907 10,831 12,529 16,372 16,603Amortization of foreign loans 9.205 15.L12 15.963 16.651 20,772Debt service on foreign loans 18,112 26,243 28,492 33,023 37,375
4j% Interest on Government contribution 27,696 28,264 30,916 35,389 40,439Amortization of Governmnnt contribution 9.849 10.652 12.244 1L.582 17,266Debt service on Government contribution 37,545 38,916 43,160 49,971 57,705
Total debt service 55,657 65,159 71,652 82,994 95,080Less interest during construction 8.575 11.290 15.190 19.860 % g28
Total deductions 47,082 53,869 56,462 63,134 91,752
Net cash svailable 13,292 6,505 4,978 15,994 10s735 51,S504
Government advances 22,473 69,573 111,652 126,786 22,532 353,016
Loan disbursements:DLF 28,560 28,560 28,560 14,280IBRD-203 30,000 18,552
2Pronosd IDA Dredit 1000 21.900 61.LOO 3 QTotal loans 58,560 48,112 50,460 75,680 3,350 236,162
Total funds available 94,325 124,190 167,090 218,460 36,617 640,682
Net cash available in % of capital expenditures 14.2 5.2 3.0 7.3 36.6 8.o
Net cash available in % of capital expenditures ifno repayment of Government contributions wouldbe made 23.9 11.6 7.5 11.4 70*3 15.6
J Including 10 intereet during construction.
'DVC - POWER DIVISION
Forecast of Interest and Debt Service Coverage 1962-1966(Assuming full debt service on all Outstanding Debt)
(Thousands of Rupees)
Years ending March 31: 1962 1963 1964 1965 1966
Interest coverage
Net income from operations 36.556 36,556 37,423 46,400 59,065
Interest on foreign loans 8,907 10,831 12,529 16,372 16,6034j-2p Interest on Government advances 27,696 28,264 30,916 35.389 40,439Total interest 36,603 39,095 43,445 51,761 57,042
Number of times interest covered 0.9 0.9 o.8 0.9 1.0
Debt service covere
Net income from operations and depreciation 60,374 60,374 61,4L0 79.128 102,487
Debt service on foreign loans 18,112 26,243 28,492 33,023 37,375
Debt service on Government contribution 37.545 38,916 L3,160 49,971 57,705Total debt service 55,657 65,159 71,652 82,994 95,o80 |
Number of times debt service covered 1.1 0.9 o.8 0.9 1.1
INDIA
DAMODAR VALLEY CORPORATION125/140MW EXTENSION-DURGAPUR POWER STATION
CONSTRUCTION PROGRAM
1961 1962 _ _1963 1964 1965
Extension of Power Station, A BE GBuildings, Crane rails, Turbineand Boiler Foundations
Boiler
Boiler Auxiliary Equipment
Turbine and Alternator D E _GTurbine and Alternator -
Turbine and Alternator -Auxiliary Equipment
A B G DE GMain and Auxiliary Transformers -
Electrical Equipment, Control- A B C D E G
gea r, etc.
T ransmission Fa cilities
A - B Preparation and calling for bids >C - D Comparison of bids and placing orderD- E Manufacture and shipping xE - G Erection and commissioning
OCTOBER 1961 IBRD-893R
To PATNA- 5851
INDIA
D. V. C POWER SYSTEM
.a ar Va_y Ba,,,,,,,,,,,, Ae A R wB ENGAL
~~~~~~~~~~~......... ..... Da oa >lyBsnra........... ........ ots<v
~Protrincial Boundary ~ -- Railroatds //zReservroir and Darn /132 KV Transmission Lines Bank Project / MosAB t.
- Proposed 132 KV Transmission Lines ,/,2 - 33 Ky Transmission Lines Transmission Lines /,+ /^c
* Thermal Power Station * Thermal Power Staxtion '0 Swttc hing Si atton and Suibstatlo n 0 Swlitchbisg Stat ion and Subs tat ionn * Recettving Station ReceivingStto---
Rtatin AN PANDLES
SEPTEUS[R 1961 JIBALOIA -i5=R