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This report is restricted to use within the Bank.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TECHNICAL REPORT

OF THE

PAULO AFONSO HYDROELECTRIC PROJECT

IN

BRAZIL

May 24, 1950

Loan Department

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PAULO AFONSO HYDROELECTRIC PROJECT - BRAZIL

I. Purpose and Scope of this Report

This report presents an analysis of the Paulo Afonso hydroelectricnroject wi,rhich h-s been presented by the Brazilian Government as a basis fora loan from the International Bank. The analyrsis is designed to determinethe suitability of the project for this purpose. The report also includesthe recommendations of the Engineering Staff concerning this project.

The report is based on rather complete documentation received from t:eprospective borrower concerning the technical and buisiness features of theproject except in the case or the secondary transmission sys'tem. It is basedalso on a suoplementary study of the power markcet to be served by the projectwhich has been made for the 3Bnk by Mr. Tracy Martin of M14adigan-Hyland, 4ewYork, and on recent discussio.'.s in WaslhinZto; with Colonel Carlos Berenhauser,negotiator for the comnoany.

This report supersedes a memorandum of june 13th, 1949, prepared by Dr.'. W. Rembert and a ioreliminary renort of January 17, 1950, on the samesubject.

II. The Borrower

The prospective borrower will be Oomnanhia Hidro Eletrica do SaoFrancisco (CHESF) which will build and operate the system. This company islegally organIzed as a private corporation but is controlled by the BrazilianCGovernment and has, by law, a fifty-year concession for the exploitation ofthe power resources of the middle nortion of the San Francisco River. Thearea in which the company is authorized to operate has a radius of about450 km. with Paulo Afonso Falls, the location of the power station, as itscenter. Organization of the company was authorized by law in October 1945end the comnany was formed in March 1948.

Present capital of the company amounts to Cr. 400 million ($21.4 million)wrhich is represented by 200,000 shares of common and 200,000 shares of pre-ferred stock, each class having a par value of Cr. 1,000. Both issues havebeen fully subscribed. The Brazilian Treasury has subscribed all of thecommon stock. The nreferred shares have been subscribed by state and munici-pal governments, autarchies, banks and private irnvestors. Detpils of thedistribution of the present stockholdings are given in Table I.

As a part of the SALTE plan, it is planned that the common issue willbe increased by another 400,000 shares (Cr. 400 million), all of which willbe subscribed by the Brazilian Treasury. This increase has been authorizedby the Chamber of Deputies and the Senate and now requires the approval ofthe President of Brazil. (Since this Renort was nrepared, the President hasapproved the capital increase. See also p. 9 and Tnable I.)

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Cash payments of 10% are required on all stock at the time of subscrip-tion. In addition, the Brazilian Treasury has raid an additional 301 of itssubscription in 1948 and l5-p in 1949, for a total -maid in of Cr. 110 million.The Treasury has been authorized to nay un the balance of its subscription ofCr. 90 millior in 1950. In the case of the preferred shares, payments are atthe rate of 15~ per year on subscribed stock. Payments through 1949 haveamounted to 25p or Cr. 52.5 million. Total payments up to December 31, 1949,on all issues, therefore, amount to Cr. 162.5 million. The bill authorizingthe issue of an additional 400,000 shares auithorizes payments by the Treasuryat the rnte of Or. 100 million per year for 4 rears startiiig in 1950. Thetota1 raid in capitpl will, therefore, be Cr, 380 million by the end of 1950.

The Federal Government guarantees a dividend of 6% on all preferredshares and till pay any deficit in earnings of the comnany required to meetsuch dividend payments. The government requires reimbursem!ient for such pay-ments from the individual shareholders to the extent to wh-ich dividends ofmore than 6% may- be raid.

By law, voting nower is limited to the common stock and the Treasury mustretain 515, of the cormon issue. It is permitted to sell the remaining 49%to other government agencies and institutions.

Administratior, of the company- is in the hands of a President and threeDirectors elected by the shareholders for a four-year term. Re-election ispermitted. The representative of the goverament at shareholders meetings isappointed by the President of the Republic. It is obvious, therefore, thatfor practical purposes the management of the com-any will be controlled bythe President of the Republic. Reports of Bank rerresentatives indicate thatthe present management of the company is competent and is funietioning in anefficient manner. Eiowever, the situation in which the management will alwaysbe in the hands of rresidential appointees leaves such to be desired.

III, Description of the Pro.et

The Sao Francisco i9iver, with a total length of more than 3,000 km., isdivided into three -rincioal zones. The upper river flows through molntainouscountry and, thence, throagh a high nlateau from which it drops through aseries of rarids and falls to the coastal plain. Paulo Afonso Falls is a partof the drop from the plateau to the plain and renresents about 25% of the totalchange in elevation bet-ween these levels. The falls are about 150 miles up-stream from the mouth of the river.

The project which has been oroposed as a basis for a loan contemplatesthe instellation of a generating capacity of 120,000 kv at Paulo Afonso Falls.Thls site, without reservoir storage, has an estimated potential hydroelectricca;oacity of 540,000 kw. 'ith adequate upstream storage, the full potential ofthe middle Sao Francisco River is estimated at 900,000 kw, but no reservoirstorage is contemnlated in the foreseeable future.

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A low concrete dam, built in twro sections and averaging about 10 metersin height, will be built immediately above the falls to divert the flow ofthe river to the power station. The total. length of this dami will be about4,4 km. (2.7 miles). The dam will cross a large numiber of channels existingin the river at this point and will be -rovided with gates and spillways forsi,illing water not required for power generation into the existing channels.The dam does not provide significant reservoir capacity and is designecd onlyfor diversion of the flow of the river to the intake of the power station.

Foundation conditions appear to be excellent for the dam and the rower-house, the rock formation in this area being massive granite. Borings havebeen made according to conventional practice and are considered adeqaate toassure good foundation conditions.

The headworks are relatively simple. A separate intake and nenstoc17 isprovided for each 6o,ooo 3,J unit. The penstoc:s are vertic.al tunnels cut insolid gra,nite with short horizontal runs at the bottom into the nowerlh,ox-Lse.The powerhouse will be entirely underground and designed in the first stagefor the installation of three 60,000 kw units. The layout is such, however,that fur-ther excavation can provide for the ultimate installation of 9 generat-ing units. The tailrace consists of a short pressure tunnel and surge tank,the tunnel discharging into the canyon below th-e powerho-use.

The gross hLead on the turbines has been established at 83.5 meters fo.normal operation. However, this inst311ation is peculiar in that the riseirL the river below the fails during flood neriods is greater tilan the riseabcove the falls and abou.t 305 of the time the station will be operating witha downstream water level considerably above the turbines. This particu.laraspect of the design of the ple,nt has beer investigated by Professor L. Escandiof' Toulouse University in France. In this investigation, scale models wereused and. the design now adooted has been proven to be practical.

Generating equirment will consist of two 60,000 kw iunits, each consistingof an 33,000 H.P. Francis type vertical turbine, directly connected to a.generator rated. at 60,000 kw a.t a 905 power factor, The generating voltagewill be 13,800 volts with a frequency of 60 cycles. Station auxiliary eq,uin-ment is corventional and has been fully specified.

Two ban'cs of single -phase trsnsformers will be used in an o-atdoor SUD-

station at the falls. Bach bank will consist of three 22,500 lzva units forstepping up from thae generator voltage of 13,800 volts to the transm2sslonvoltage of 220,000 volts. Four smaller 3 phase tran-isforners are to be usedfor station and local service. The switchgear is conventionel and is fullyso,ecified.

Plans for the transLmission system in this project have been changed severaltimes but can now be considered to be relatively firm so far as the n,,,rimarytransmission lines are concerned. This rart of the systeem consists essentiallyof' two 220,000 V, single circuit lines originating at the step-up substationat, Paulo Afonso. One of these lines will riun to the east to .iecife viaPaquevira, this line having a length of about 400 Im. The other will run to

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the south to Salvador via Itabaiana, this line having a length of approximately440 km. Step-down substations rated at 40,000 kva each will be installed atRecife and Salvador for service to these cities. A 30,000 kva frequency

changer will be installed at Recife to convert from 60 to 50 cycles, in orderto tie into the existing distribution system. A 20,000 kwa synchronous con-denrser will be installed at Salvador, in order to improvre the powaer factor ofthe system. Switchgear and auxiliaries in these substations are conventional.

Plans for the secondary transmission system are not yet firm. Furtlerdesign and market stuclies are required but, as presently conceived, this sys-tern will require the installation of 10,000 kva step-down substations atPaquevira and Itabaiana and a 20,000 kva substation at ?ecife in addition tothe one *rhich will serve the city. These stations will step down from220,000 V to 66,ooo V and 33,000 V, the operpting voltages of the secondarylines. Amnroximately 505 km. of 66,0oo v lines are required, 90 km. of whichwill be double-circuit with steel towers. The remainder will be single-circuitusing wood noles. Six step-down substations are required in the 66,ooo Vsystem averaging about 5,000 kva each.

The 33,000 V esYstem involves about 800 ici. of single-circuit line, allof which will use wood *ooles, This system will connect into about 40 townsand cities, each of which will require a step-down substation to connect intothe distribution systems.

The layout of the ertire transmission system as now contemolated is shownon the nap at the end of this report.

ITo distribution lines or equipment are included in this rroject. It iscontemnlated that CHIESF will sell power at the distribution voltage to theexisting: nrivate and municinal companies o-perating in the co.mmunities wrhichrill be served., Furthermore, no rural electrification is provided as a part

of this project.

The engineering design and estimating on this nroject has been done en-tirely by Brazilian engineers except for the special studies made in Franceand some now under wayv by Westinghouse on the design of the transmission system.The project has been logically and efficiently developed and the work whichhas been presented to the Bank indicates th'at the CHESF has a competent tech-nica1 anti business staff.

IV. Water Availability

There is no -nroblem of water availability in the first stage of thePaulo Afonso development of 120,000 '.t. The water requirement for full loadon thlis installation amounts to about 180 cu.m./second. Correlated stream-flow data available for this locatiorn since 1928 establish a minimum flow ofthe San Francisco hiver at Pa.ulo Afonso Zalls of 800 cu,m./second. The firststnge of the development will, therefore, use less than 25% of the minimumflow.

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Silting above the darm does not seem to be an im-oortant consideration in

this project. Reservoir capacity is not a factor and if sufficient channelsare held open the dam will function indefinitely for a simple diversion of the

streinmf low.

V. Estimated Cost of the Project

The following estimate of the cost of the project is based, on the bestiinfor-mation available as of April 1950. All costs have been converted into

U.S. dollars using the rate of Cr. 18.72 = $1.00.

all in $.000Cost in ForeignLocal Exchange Total

Item Currency Cost Cost

I. Paulo Afonso Power Station1. Construction camp 908 - 9082. Construction equipment 171 375 5463. Roads and bridges 374 20 3944. Dam 6,784 - 6,7845. Cofferdam 535 265 8006. Intake works 801 - 8017. Underground works 1,522 - 1,522

8, Tunnel lining 30 42 729. Outdoor buildings 107 - 107

1.0. Gates and. screens 23 1,100 1,12311. Turbines - 620 62012. Generators - 1,370 1,37013. Transformers - 412 41214. Switchgear - 735 73515. Accessorles & auxiliary equipment 283 100 38316. Traveling c7anes & elevator - 310 310

17. Erection of eqa-irment _49 80 539Sub-total forPaulo Afonso Stqtion 11.997 4 1 72..6

II. 220 KV TransmisSion Lines1. Survey anad 'and rights 468 - 4682, Towers 4,332 - 4,3823. Insulators and hardware - 400 400

4. Cables and grouindwires - 2,547 2,5475. Splices a.nd colmterpoise 2 153 1556. Labor, food & temnrorary camps 9,250 - 3.950

Sub-total forTrtansmission Lines 8,802 3,100 11,902

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all in $1,000Cost in Foreignlocal fLxchenge Total

Item CurrcLcZ Cost Cost

III. Recife and Salvador Substations1. Land and buildings 117 - 1172. Structures and svitchgear - 3lO 39403. Three-phase transformers - 862 8624. Shunt reactors 80 805. Frequency changers 6715 6756. Synchronous condenser - 180 i807. Auxiliaries and accessories 17 21 338. Erection of equipment 47 _

Sub-total forSubstations 181 2,168 249

IV. Secondary Transmission System1. 66 EV Lines and Substations

(a) 505 Ion. lines 3,631 3,631(b) Substations 657 2,C10

4,288 1,353 5,6412. 33 KV Lines and Substations

(a) 801 km. lines 1,523 - 1,523(b) Substations 8 _ .373.

1,603 293 1,896

Sub-total forSecondary System 5,891 1,646 J2,S

G. General Plant1. Structures and im'orovements 801 - 8012. Office furniture & equipment 155 - 1553. Transportation equinoment 641 200 8414. Stores eauipment 64 - 645. Iaboratory equir,ment 22 - 226. Tools and eaui ment 641 350 9917. Com=unications equipment 69 - 698. iiiscellaneous equipment 320 150 4709. Other nrorerty 91 - 9110. G-en. expenses during construction1?2Z7 50 1,327

Sub-total forGeneral Plant 4,081 750 4.831

VI. Continsencies, Freight & Overhead1. Freight and insurance 3,860 205 4,o652. Overhead and. contingencies 31993 879 4,8723. Eng4neering and suaervision 1,574 50 1,6244. Interest during construction - 1,042 1,o42

Sub-total for Contingencies,Freight and Overhead 9,2 11,6

TOtTAL FSTIYATED COST 40.379 15,269 5_,648

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In the original estimates submitted by CPESF dated March 1949, the totalcost of the -oroject was estimated at about $43.2 million, of which the foreignexchange requirement was nbout $15 million. This estimate has since beenrevised three times taking into account changes in -olans for the transmissionsystem and changes in -prices on those items wl.hich were firm from a designstandpoixit. On a com-oarable basis, the trend in estimated costs has beendoun from the standopoint of foreign exchange requirements anid up substantial'yin the case of local currency expenditures.

In the current estimate, account has been ta'len of changes resulting fromdiscussions between the Bank and the Brazilian negotiators which took placein February and May nnd, also, revisions in the estimate which have been foundnecessary due to changes in designs. Furthermore, the complete secondary trans-mission system has been included in the nroject to be considered by the Bankfor the first time. At present, the total estimated cost of the -oroject amountsto the eouivalent of $55.7 million, of which $15.3 million is estimated as theforeign exci;ange reouir-ement. This includes the cost of the secondary trens-mission system, estimated to cost the equivalent of $9.00 million, of which$1.80 million is required as foreign exchange.

In the above estimate, all freight is assumed to be poaid in local currencywhich is in 'Line with instr-uctions which have been received by CHESF from theBrazilian Government. Payments for insurance, storage, U.S. inland freight andSirlilar items, to tse entent of $205,000 will be made in foreign currency.

Nqo interest during construction has been included on the estirmiated localcurrencyr exnenditures, since all local currency will be iorovided through pay-ments on stock subscriptions.

The CM_SF estimate as submitted to the Bank in February included thecost of the trsnsmission towers as a foreign exchange item amounting to about$4.3 million. Originally, it was contemplated that these towers would beproduced in Brazil, since the Brazilian steel industry can manufacture thetypes and sizes of steel required and adequate fabricating facilities are avail-able in the country. Recent argumrents 4ae been presented by CHESF in favorof purchasing the towers abroad, alf 'b"s'e'&'ro%taining lower prices, but thisnoint will not be definitely established until bids obtained in April have beenopened and analyzed. In the estimate as presented above, therefore, the costof the towers has been shown as a local currency item, If the towers are boughtabroad, the Government of Brazil has undertaken to nrovide the foreign exchangefrom its own resources.

Overhead and contingencies are now included in the estimate at about 8,5%of the total cost of the project, whlaich is a reasonable figare at this stageof development. The cost of the general plant estinated at the equivalent of$4.8 million is correctly included as a capital item but, on the basis of cur-rent estimates, the cost is considered to be high for a project of this type.

The cost of the Paulo Afonso power plant and substation, including freight,contingencies and interest during construction, is now estimated at the equiva-lent of about $22,1 million and this estimate apnears to be reasonable. On

this basis, the cost is $184 per installed kw, which comperes !iith $300to M6Oo for reservoir type plants.

Previous estimates covering the 1)rimary transmission system w^nere ofthe order of' $45,000 per mile. This figure has been reduced to aboutt$30,000 noer mile in the current estimate but this cost is still consid.eredto be excessively high. It i s believed that the cost of the tren-smi.s½ionlines should annroach about $20,000 per mile and if this is realized ad'`i-tional savings equivalent to $4 to $5 million will be obtained. .Estirmatedcosts oni ttie secondary lines are uroportionally high.

Provisions for engineering and su-oervision amount to the equivalent of$1.62 million, which is unusually low for a proJect of this size.

It is believed t.hat the cost estimates covering the various itens inthis nroject are high by 20-25',4 exce-ot for those itemis on which orders havebeen nlacod. However, the fact that the cost estimates are nroba'bly highis nlot imporrtant so long as the t7roject is confined to the itelmns coveredby this rerort. The balance of local currency over the actual cost willapsTepr as working cep.ital and any balance of foreign exclainge resulti.ng fromoverestim,ating will result ir a redluction in the moanot of the 3ank lcanaccording to the ,olan used for Salvador.

VI. Construction Schedule

WIork on this nroject is in progress. A camp to house about 5, 000workers is -practic.a.lly coyrnrlete, this cam-p incluling homes for families,dorm!,itories for single work:ers and auxiliary buildin-gs. Corstruction hasbeen started on the founadations for the dam and some concrete has been ivoured.A considerable eimount of cornstruction equinrment ha.s been ur)rc4hase& and isbeing used. on the job.

The dam is excected to be com-plete.d by the end of 1951, thLe Lunder,-,roundpowerhouse by October 1951. The complete nower station and -orimary trarns-mission system are eimsected to be cormpleted by the end of 1952 and to bein operation at the beginning of 1953. The secondary transmission systemwill be started in tihe first half of 1952 and comnoleted in the first h-alfof 1954.

Detai:Led schedules of estimated construction Trogress are availeble.

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VII. Schedule of Znenditures

The estimated schedule of expenditures for this project is as follows:

Local Currency Forein_ E:-chanF-mein Cr. 1,000 in $1,000

Srent thru 12/31/49 127,6001950 143,824 3,4901951 233,500 6,9041952 145,100 2,5691953 86,ooo 1,2001954 36,700 211

Total Z772,74 i2tL3

In the above schedule, the local currency expenditures through December31, 1949, includes Or. 18.72 million which was converted to foreign exchange(l$1 millioni) for rurc!aases abroad. Included also are inventories and goodsin transit amounting to Cr. 16.94 million.

In connection with the foreign exchange e:nenditures made through December31, 1949, it is exnected that only $105,000 of the total of $1 million willbe reiTntursed and thiis amount has been includ.ed in t1ie schedule for 1950 asforeign exchange. The balance of -895,000 will not be reimbursed and, there-,ore, the total foreign exchange expenditures of $14,374,000 in the aboveschedule is less tharn the estimated for-eign excliange requireaezts of the project

:($15,269,000) by this amount.

VIII. Methods of Financina

On the basis of a total cost of the nroject equivalent to $55.65 million,about 38% of this amounlt or $21.4 million is alread.y covered by capital sub-scriptions. If a foreign exchange loan from the Bank is granted -for $15.0 mil-lion, additional financial requirements, entirely in local currency, will amountto the equivalent of about $19.25 million. It is essential, therefore, thatthe additional common stockI issue of 400,000 shlares ($21.4 million equivalenit)be authorized and subscribed by the Treasury wlth paymenats starting in 1950and finishing in 1953.

IX. Power Marhet

The market studies submitted by CXESF dated March 1949 indicated thatthe installed ca-nac4ty in the area to be served by the Paulo Aforso nrojectwas about 73,000 kw in 1947. This capacity produced about 257 million kwh inthnat year. HI1owever, this market is disnersed over a very wide area, and theinvestment in trpnsmission lines required to reach all potential customers isso great that resulting rates would be -rohibitive to a substantial number ofthe smaller communities in the area.

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Subsequent power market studies by CPESF submitted to the Bank inldicatethat it should be economically possible to reach a-rproximately 40 cities andtowns in OHESF's area of operation. While rates would necessarily be highby American standards, the cost of thermal power in thne less accessible townsin the CHESF area is already so high that hydroelectric power from PauloAfonso will, in most cases, be cheaper. ivioreover, genera.ting facilities areso limited in most of these cities as to not allow for further exrnarsion ofthe mar'kets. It is expected that power from Paulo Afonso will meet thle latentdemands for electricity in some of these localities.

The two major load centers for Paulo Afonso will be Recife and. Salvador.In 1948, these cities hlad installed capacities of 21,000 kw and 20,000 l;kwrespectively, which produced 96 million and 91 million kwh resoectively. Allof the capacity at Rlecife is in steam plants. In Salvador, however, about!59 million kwh were rroeuced by a small low cost hydro plaint.

Additional load centers of immediate iTnortance are Maceio, AracaeJu andJoao Pessoa. These towns, while small in relation to the above-mentionedtwo large cities, siould increase the market for power by roughly 16l. Inaddition, there are' towns where mower can probably be economicall.- sup-p-lied on the basis of the existing cost of power.

It is planned to begin sup7lying power to Salvador and Recife in 1953.Construction work on transmission lines and substations for the secondarymarkets mentioned above should be completed by the middle of 1954 so thatpower can be supplied to all of these communities beginning about July ofthat year. For income and. expenditure calculations, and for the determ4nationof power rates, however, it was assumed that it would not be possible to supplynower to the smaller towns until the beginning of 1955.

The 7ngineering Staff estimate of the development of the market for powerfrom Paulo Afonso is nresented inl Table II. Historical records indicate thatfor the two large and three smaller cities mentioned above the market forelectric nower may be satisfactorily approximated on the basis of the assumip-tion that there wJould be a 25% increase in consum;tion betw,,een 1948 and 1953,and a 75; annuial increase thereafter. For the smaller towns a -oreliminarymarket study recently made by CHESF was taken as a oase for estirmating probablefuture coinsumption. This study presents figures on actual consumption in 1949and estimated probable consumption in 1955, when Paulo Afonso power would be-come available. However, thp Engineering Staff enrects that the expa,nsion ofthe clistributioon systems and consumption facilities within these particularlocalities will be much slower than estimated by C12SF. It was accordinglyassumed that CHESF estimates of demand in 1955 will gradually develop over anDeriod of three years and will not be reached until 1958, and that theneceforth*the annual rate of increase will be 6%.

In the case of Salvador, the fact that the local distributing companyalso operates a small low cost hydroelectric station must be taken into account.Accordingly, the supp0oly of power for Salvador from Paulo Afonso was reducedbY a flat 70 milTion kwh/year, the estimated annual production of the localhydro station.

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On the basis of the calculations described above, the fi.gures shown inTable II were obtained. These indicate that initial total consumption ofenergy in 1953 would be 157 million kwh increasing to 201 million iwh by1954, as Aracaju, Maceio and Joao Pessoa are connected to the system, ther to24o million in 1955 as the smaller towns are ad&ed, and risiing to 339 millionin 1959. This will require a rroduction of about 420 million ¢ch at the sta-tion, giving a load, factor of 405% which is about the meximum that can be ex-nected in a market of this type. It will be necessary, thzerefore, to use apart of the existing steam and diesel capacity for peak load requirementsstarting in 1960 or install a third unit at Paulo Afonso to be ready foroneration at that time. If a new unit is installed, work must start in 1958.

The average annual rate of in.crease of the load on Paulo Afonso is about11.45 per year. The reason for the fact that this annual rate of increaseis more than 7% is a consenuence of the widening of the area served by thestatio.n as well as the fact that the power supplied to Salvador representsrequirements over and above its base load consumption of 70 million kwh/year.

The two main load centers, Recife and Salvador, are now supplied byAmerican and Foreign Power subs1Oiaries, Since it was necessary to makecertain that OKESF could sell power to these two cities, wihich even in 1963will consti tute 81% of CHESF's total marlket, negotiations were begun by CHF]SFand the Brazilian Electric Power Comi-any which opeirtes the companies surply-ing power to Recife and Salvador. In a letter dated F'ebruary 21, 1950, theBrazilian Electric Power CommDany sets forth iurobable terms of reference fora contract for the sa.le of power from CHESF to Brazilian lectric. In thlatletter, Brazilian Electric indicates its willingness, subject to conditionsdiscussed elsewhere in this report, to discontinue generation of power withsteam and di-esel plants and to substitute power purchased from CHESF. Thecomnany indicates that in 1953 it will probably require 50 million kwh inSalvador and 110 million kwh in Recife, wrhich it would be willing to obtainfro:n Paulo Afonso. The comomany considers, however, that these estimates areconservative and believes that its requirements may develop as follows:

Year Recife Salvador Total

1953 110,500 62,000 172,5001954 117,500 69,ooo 186,5001955 125,000 76,ooo 201,0001956 133,000 83,000 216,0001957 141,500 91,000 232,500

The Engineering Staff estimate is in close agreement on the Recife marketbut is considerably more conservative in its esti.mates of reouiremrents forSalvador. It is believed, however, that the Engineering Staff estimates aremore realistic in view of the fact that Brazilian Electric estimates 50 million.wh as the probable requirement for Salvador in 1953.

It is difficult to predict the development of the peak load on PauloAfonso. This will be determined by the load factors which are obtained

r

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in the system and information is lacking which wrould permit ananelysis of thlis tylpe. However, it is to be expected that the load factorin cost of the srmpller communities will; be quite low, since the rates willnot be low enough to encourage rapid exzoansion of industry in these towns.In the larger cities it may be expected. t a.t satisfactory base will be )ro-vi.ded for the growth of industries where power costs are not too imnortanta factor in thle cost of the product. However, while there has been somed4 c,-.ssion and suggestions for the erection of plants manufacturing such nrc-ducts as nitrogen fertilizer, phcsrohate fertilizer and bag2sse bo.ard, thecost of power and mnarket considerations are such as to make these appear inm-practical.

X. Cost and Price of Power

Hydl.roelectric projects such as Paulo Afonso are basically fixed costoperations. Except as new secondary transmission systems are built, therebyincreasing the area7 to be patrolled, and the a1nount of equinment to be main-tained., total annu.l costs for a company which wholesales h;ydroelectric powerwill be almost indenendent of the level of consumpotion in e.3.ch consuming,center. T'e unlit cost of electric energ-, i.e., cost rer kilowatt hour, willvary with the level of sales, unit costs declining as sales increase.

The cost of su-nlying power to any particular consum.ption center, however,will depend not onl?y on its rela.tive consumption, but als,o on tlle costs ofonerotion of that part of the tr-nsmission a4.nd substation system which isnronerlyr c}.argeable to that consumpotion center. Accordingly, it is importantto allocate costs to thie separate localities to whlich power will be sold inor.der to determine whether the costs involved in, extending the transmissionlines to a particular locality can be justified on the basis of lowrer eostscom-oared with the erection of a small local d.-iesel or steam lant.

In order to test the desirabsility of extending the C--ESF network in themanner indicated on the map at the end of this report, it was necessary toma.ke a. detailed studrw% of the cost per kwh delivered to each of these communi-ties. The method em,.ploy,-ed involved first the determination of annual orerat-in' costs for the power station, for each section of the transmission lines,ad. for each substation. These costs, as noted previously, are substan.tiallycors'tc^nt th'troughout the -oeriod under study.. Second, by determining the quan-tity of electric energy flowing, in each year, tirough each section of lineand through each substation, it was possible to calculate onerating costs peri.rh for the power station and for each section and subsection of the traiis-mission system. Third, the cost ner lo'h at each delivery point was determinedby adding together the operating costs per icrih for the power station and. foreach section of the transmission system that leads toward and into the de-livery point.

Or the above basis, it was f oundi that with few exceptions the cost oftransmitting CHESF -ower to the various sma,ll towns is low enough to be com-petiti-ve with the cost of diesel electric power produced by small units of

- 13 -

the type that would be recuired by these commnun-Ities. And, as the marketdevelo-ps, it should be poossible to reduce charges to a point consic..eracblybelow that at which diesel rocwer can be fur:nished.

Total annual costs of all CHESF operntions are estimated at $2,778,000U.S. for 1953, rising to $3,212,000 in 1954 and to $3,0540,000 for s..u`se-quent years through 1959. Anrnual costs rise to $-3,770,000 in 1960 and sub-sequent years d,ue to the oreration of a, third unit. Of this tota 71,5l3, 0 0 0re-oresents costs of oreration of the Paulo Afonso station and. of trle cnicr..l-plant, with the bala.nce re-oresen-ting the costs of o-s,eration of tle tranis-mission network. The term operating costs as used here z.nc'udes se'i ofthe IBID debt, derreciation of equizment, generation taxes, insur..rce, oe 'dividends on the p;referred. stock, wages and salaries, supplies, on' inser"nce,an1l miscellaneous items.

The nrice of -,ower to each community shloald, in gen-eral, be su.fficientto (a) cover costs of supplring power to that comm.unity, and (b) nay areas;onable rate of returLLn on the investment. In line with these con.idera-tions, it was assu-med that rates for all localities excent Salvaodor -..ndRecife %%ould be set irn accordance with the followiig somewhat arbitrxryfcrmula: cost ner :kwh in 1955 1zlus 15"/;. F'or Salvador and Recife thle r.ateswere talken at 35 centavos (1.87 cenits U.S.) and 30 centavos (1.6 cents Uj.S.)res-i:,ectively. These rates hnave been agreed by the Brazilian Electric Conrpsonny,in the previously mentioned letter of February 21, 1950, anf' are based chieflyon earlier findirgz of° the Bvnkns Engineerin,g Staff of tle ninimun ratesnecessary to cover CkES- operating costs in the first years of op)era,tion.Hlowever, a.t the time these rates were suggestel, it had been t,he inten.tionof the A&WT comnany onerating in Salvador to build 40 kiloneters of 220 I0Vtra.nsmission line to and a substation to serve the city. Since then, thecomea,ny has reqtuested CF3SF to finance this project, with th'e underst.andingthat the comnrany wiould reprurchiase the line and sabstap;tion from ChIESE. Also,local currenacy requirements for the complete project have 'seen increaseC con-siderably, and these are reflected in increased. depreciation and mainte-nancecosts. The above rates f'or !kecife and Salvador will, therefore, not bequite sufficient to cover o-oeratinF costs cUargeable to these ci,es in 1953.Similarly, the retes determined fo:r Ararcaju, Mlaceic and Joao Pessoa ;rill re-sult in. small deficits in the accounts for these towns i.n 1954. By 1954,however, income from the sale of power of thle entire system -plus debt serviceon the Salvador extension will be nore th un nufficient to nay o-perrating ex-poenses.

A serious problem concerning this project is the fact t'nat firm con-trects covering the rrice of power to be sold by CKESF cannot be si,neduntil operations are started in any given market. Brazilian law requiresthat the Ministry of Agriculture set rates for hydroelectric systems onlyafter this stage is reach'aed., so that the total investment in the s,y'stem isknown. The Liinistry is then required to esteblishtP rates which willl insuLrethe financial stability of the comnnany. For this -nurnose rates may be setto allow up to 10% return on the investment.

Thle Bank has, on file, letters from CJMSF, Brazilian Electric ared theMinister of' Agriculture setting forth the intentions of the parties concerned.

J

-14, -

Brazilian Electric has stated. that they eill shut down threir th'ermnal- pl.Entsln Recife and Salvador. They undertake to purchase all of their re(luire-ments for Recife frorn C-ESP after Ppaulo Afonso is in o-ocration. Those re-auirements are estimDted at 100 mil.lion kwh in 1953. Brazilian Electrica.grees to purchase this r,ower at a -oiice of 30 centavos (1.6f). In Salva,lor,they undert,-ke to purchase all recuiremients over the r;roduction of a smallexlsting hy.dro uolant. Requirenments are estimated at 50 million T:,ih in 1953.They agree to -,ay 35 centavos (1.870) for this oower. Since it is exooctedthat Brazilian Electric will purchase about 80 rof thle total rower soid byCOFfSF, it is obviously necessary th.at equitable agreemeiits be reachecd 1cetweea,lthe two compm.nies. As matters now stand, this deiDends or the conntlinued g-ocdfaith and assumed self-interest of the com-Danies involved, and the l-ovorn;Tient

of Brazil.

XI. Exnenditures, Incoi,-e and Cash Position

The relation of income to exTend.itures is -oresented in Table III. In-comne was comy-,outed on the basis of the rate structure develor,ed in thc >roced-ing section anrd the individual loa-d develolDmeiat curves for all the co!uun:t!it esincluded in the CHEST market survey, plus debt service on the 40 ion. of trans-mission line aid. substation at Salvador. Th'e exact amnouant involved in thelatter item cannot be calculated at uresent, as it deioends on the terms ofthe re-ourchlase agreement, but it has been ass-nmed that yments to CH'i'SF willbe in eaual instalJments of local currelcy equivlent to $230,000/year (costolus 6%- on uinnaid balance) for a period of 12 years.

The fig-ures of this table show very clearly that as the m.ar.et ex;ands,profits from sales of energy at constant rates will increase sharp-ly, be-cause of the fixed-cost character of the orerations. On this basis, tlierate of return on the system, would emount to about 4/1 in 1958.

Based on the assum-otiorns which have been made, CIiBSF will urobably show arrofit st-rting in 1953, the first yea.r of orera.tion. hiow:ever, the re-l nroblemfor tile comi)any will arise somewihat earlier. According to urcjections ofC:';SF's cash -oosition during the reriod 1950-1954 (see Table IV) th-ere w:illbe a shortage of local currency amrourtilng to a'bo-.;t 12 million cruzeiros at.enc of 1952, if current -orograms of construction rates an(I of u-mnta` s oncai-ital stock subscriTtions are met. But during 1953, it is ex;-,ec,ed thlatpay aenrots on stock subscrirotion will be more than sufflci.ent to vi%rie out theindicated. deficit in 1952.

There are three ways of avoiding the shnortage of funds indicated cduring195 2 These are (a) reducing the rate of construction exuenditu-.res durinigthat i(eriod; (b) moving forward the dates on whichn stock s;ubscrir-tions falldue, or borrowinv short-term fiands from bank:s until caritcal nymc.nts aremade; and (c) reducing costs of construction. Since it appears to t.he En-gineering Staff that costs of the -oroject are in many resmects overestimated,it is quite likely tliat sa,vings can be realized throu,gh method (c) suf"ficientto avoid either slowing down construction sch-iedules or increasing the rateat which capital payments are made.

- 15 -

Two methods of meeting the deficit in production estimated to start in1960 are available. A thXird 60,000 kiw unit can be installed at Paulo Afonsoor the steeaTrm and diesel equipment held for standby servi.ce can be used forcarrying peak loads. Actually, the deficit in 1960 is estimated at about6 mli ion bah and, in this year, it would nrobably be cheapner to use thermnalnower than to operate a third unit. However, starting in 1961, a thlird un.itbecomnes zmore economical than the use of thermal plants. This is due pri-n.rily to the low cost of a third hydro unit, this being estimated at theequiv.slent of $3.8 million (Or. 71.2 million) including additions to th<.elarger ste-p-dox.'n substationsin the system. Oerating costs are estimated atthle equivalent of $130,000/year for the thiird unit and auxiliaries.

Considering the fact that cumulative earnings in 1958 and 1959 are .morethan adequate to cover the cost of the third unit, it 'has been assumed thatit; would. be installed i.r. these years and start operations in 1960. It isassumed. that it would be finan-ced entirely out of earnings anc. the cash nosi-tion of the comrany haPs been estimated on this basis. T'nis assumes thatearnings will be accunulated ard, not s-oent for other -rurposes in t'h.e years-orior- to 1958.

XII. Recommended Easis for a Loan

The Paulo Afonso nroject is considered by the Brazilian Governrent tobe necessery for the economic develonment of nort;.eastern Zrazil and hasbeen given ton priority Pmorg the devielopmjent orojects which are snoonsoredby the government. It is tl.e intention of th^. government to complete thisnroJect as soon as possible.

Paulo Aforso is a high cost *nro,ject based. on shcrt and r medium tern, nowerrequire-aents of the m.-arkets whichl can be eco-nom.ically reached due lar.elyto the heavy investmsent required in transmission lines. This means thIat thecost of ncower to load centers wrhich can be econom:.ically reached, whilegererally less thn..n the pnresent cost of steam and diesel power, w^sill bemuch too high for the substantial development of heavy industry.

Within thle inmediate area of Paulo Afonso Walls, rowder can be T-roducedat a lowr cost since t-rosnmission costs do n'lot represent a si Snificant factorin the price to the consumer. The Paulo A_fonso station omerating at a 100%lo.d factor would be a'ble to produce power at the equivalent of about 1.5U.S. mills/J1n h, which is well within thie ran.ge oermitting the develo,ment ofelectro-chem;ical and electro-.-etallurgica iIadustries. At the p;esent ti.e,however, there are no plans wnich appear to be practical for develo-rJments ofthls type.

Production is estim.ated for the first year at 172 million "1117h w.ithsales of 156) million Mah, which would- utilize only about 16% of the productionca-ncity of the olant. With the addition of the secondary system in 1954and 1955, production is estimated to increase to about 40% of capacity dur-ing the first seven .,rears of operation. With this load, wQhich is estimatedat the 5e1nd of seven Wears (1959), the nature of the load will probably besuch that this produaction will represent the limit of the first installationof 120,000 lkw.

16

This *project can, in time, be a highly profitable undertaking if sell-in- orices are maintained in -oro-oortion to the cost of ge erating steam ancdiesel mower. Howiever, it is exoected that the comimany will pass on someof the cost reduction realized at higher .roduction rates and tha.t t'he sell-ing Tmice of power to the distributing comnanies will be maintained at alevel which. will afford a reasonable return or. the commnon stock, in additicnto meeting all operating and financial charges. However, in this analysis,no account has been taken of common stock dividends or of a reduction in rates.

Of a total cost equivalent to abo-at $55,65 million, it is expected,based on Tpresent estirnates, that not more than $14.5 million will be financedthrough a loan.

On the basis of available information, the -oroject a-o-oears to be justi-fied on the basis of the nossibilities of replacing steam and diesel p)owerat substantially lower rates after about three years of o-oeration in thelarge load centers of Recife and San Salvador and within the scope of thesecondary systeem as -oresently plannec.; Thermal power generating costs inRecife and Salvador now run about 2 l/20 to 30 per 1c.th end, within ten years,it is estimated thnat the cost of pow,er from Paulo Afonso may reach dz, averagedeliverea cost of about 1X per kih.

?Pulrther justif'ication is based on savings in foreign excihange no,- ro-quired for :lmporting fuel. The cost of fuel required for power opnerationi inRecife and. San Salvador in 1953 is estimated at more than $l rillion ald,ta'king iinto account th'ae small pla.nts serving the communities in the secondarysystem, this saving should exceed $3 million annually at the end. of ten years.These figures com-pare withTi an estimated dollar loan service of about $1,l00,000

a year.

If it is decided in -orincimle to make a loa-n on this mroject, it an-OcarsthaKat a commitment of un to $15.0 million is jasti.fied to cover forelgn ex-chLange requirements. Th1is amount breaks down approximately as follows:

Paulo Afonso Station $ 5,000,000Pr:imary Transmission System 3, 10o,0 o0Recife and Salvador Substations 2,200,000Secondary Transmission System 1,700,000General Pl.ant 300,000Gverh ead and Contingpenicies 1,o100,000Interest during Constr-action l,l00,000Uncnecified __ 500 000

Total PI5 o,0C 000

U!.2he cost of the tranzmission to:wers has been elim.inated firom the CL SPestimate as a foreign exchlange item. It was originally miLanned thatthese towers would be nroduced in :razil usinlg 'razilian steel and thereis, Pt tl-e nomeAt, no aprent rerson i;hy this ptian ::;should nc't still .efollow.ed FTl_ CozEac.e f steel ihTOlVed is rec:tively sitacl kl2,';00 '..T.)and is required over a three-year period.

-17-

1n the above breakdown, account has been taken of the fact that apDroxi-Tmately $900,000 spent as foreign exchange up to December 31, 1949, willnot be reimbursed. This is distributed between the power station and thegeneral plant in about equal proportions and accounts for the lower foreignexchange requirements in the table above as comoared with the estimatedtotal foreign exchange cost of the project. The above figures do include$105,000 spent prior to December 31, 1949, which will be reimbursed.

E. Wayne Rembert

J. Grauman

TABLE I

ISYPLRU9st;TICrm nIt CM.O AN TPrRUENT) SIJAREW

OF CH3SF

Ord.inary 'otal No. of

Shares P r ef e r e n i a S har r e s_ _ ubscribers of

Ird.inary and.National | Private F Federal kreferential

j%vernIents |iuicipalities Individuals &IAutarchies Savings Banks 'hares p/State

SUBSCRIBERS Treasury GoveT rea ats Entities Banknks h

;F drfF :U Q4

0 ndn43 90.) }* CtDr|9

0 0 Q)*rd 0Owr a *r h h h *t3 h o uxxX uz l F S O^r h| *hI h 0) a) a) 0) 0) 0) a) ~~~~~~~~~~~0)j ()

0V.H V . U-9 a ,0 o-i a a) 4aanE ) 0& m

2 (Dderal District (1) o8i 0 -H 6 ,| 1s8

3 Stateof Perrmbuco | l | 1 |3C,OQO|6 | 164 Pi P4 31 1,6 ;- $- k $4 |4 1 4 90 |8,6

.0 * 0 Cd *0 Cd Udc C Q (1C *U t V *j 4* CI U

40Sta(e of 1ahia 1 DO,OOW 4 20 7w V,4 1 U) to

1 Federal Governasient 1 200,000 1 105000

2 Federal District o80 6,297 11 80,000 1 5,000 3 2,lCO 823 93,397

3 State of Pernamb-uco 1 30,000 86 16,475 3,03 1,692 1390 48,167

14 Sta-te of Bahia 1 30,00C 1 20 732 3,880 1 254~O735 34,150

5 State of Alagoas 1 15,0 1 100 91 605 1 150 194 15,855

6 State of Sergipe 1 2,00 13 310 260 1,273 274 3,583

7 State of Paraiba 6 80 446 1,719 452 1,799

8 State of Sao Paulo 457 2,530 1457 2,530

9 State of Minas Gerais _ 135 469 _1_ __ 50 | jL36| 519

-otal 1 200,000 4 77,000t 1071 16,9854,32 18,465 111 80, 5, 00 235Total 1 200,000 4]77',000{ 107 16,985 j,31845 180000 3 5,20 430139362 400,000

TABLE; IT

DEVELOPI OUE OF SALES BY i LAJOi. : h-ARIxETS

(in thousands cf l-ih per year)

1953 19554 1955 1956 1957 1958 1959 1960 1(,961 1962 1963

Total Sales 156,600 201,150 239,565 262,245 286,551 312,613 338,956 366,533 395,410 428,247 462,317

Northern Branch: total 112,900 14.3,650 169,673 282,390 195,990 210,302 224,845 239,974 256,203 273,539 291,999

Recife: city only 112,900 120,800 129,200 138,300 140,000 158,000 169,400 181,200 193,900 207,500 222,000Recife: secondary trans-

mission lines only 12,500 20,126 21,919 23,881 26,027 27,592 29,249 31,006 32,865 36,837Paquevira: secondarytrans. lines only 10,350 20,342 22,171 24,109 26,275 27,8553 29,525 31,297 33,174 35,162

Southern Branch: total 43,700 57,500 69,892 79,055 90,561 102,311 114,111 126,559 139,257 154,708 170,318

Salvador 43,700 51,500 60,000 68,900 78,500 89,000 100,000 111,600 124,300 137,900 152,500Secondary transrussionlines 6,000 9,892 10,955 12,061 13,311 14,111 14,959 14,957 16,800 17,010

TA.BLZ IIIOPEERSTING IREVPNUES ANyJD EXENDITUFE3S OF CHESF

(in U.S.$lo000)

Net OperatingSurplus (1) or

Cperatin, Expenses 2/ Deficit

t,DHI ,4|I 0 Ii h4- C1 0 tInp

*r|W 5r H 12 0 .1, 2 co r a) * i)0 Od *rl4 ' O < X h 2 *, X -4 z2 Z P4 'T -e@ hO ,o $ a) e3 @ U U O A n -cO-'-~w -PdC) ..- 4o3c'iStn ct 00) G10 02 o~I i>h

- 4 >:It O m gl U H H .O *- a) a) CH d a co-

C) ) a)~- 0) Pi ; ) *HOa) C ~ -'q. pq ) cw O0 p -H ;,IO14 0 4 E~-4 cq 30 Oct- < 4q -4 CH Pc r- -4 E F-4 Yi.iH p- r

1953 2,853 570 267 500 160 1,497 1,356 640 716 641 * 75 1 751954 3,781 608 290 614 189 1,701 2,080 870 1,210: 641 1 569 1 6441955 4,553 679 333 675 212 1,899 2,554 1,100 1,554 641 913 1 1,5571956 4,968 679 333 675 212 1,899 3,069 1,100 1,969 641 11,328 1 2,8851957 5,419 679 333 675 212 1,.899 3,520 1,100 2,420 641 11,779 7 4,6641958 5,900 679 333 675 212 1,899 4,001 1,100 2,901 641 12,260 1 6,9241959 6,383 679 333 675 212 1,899 4,484 1,100 3,384 641 12,743 8 9,6671960 6,877 727 373 712 217 2,029 4,848 1,100 3,748 641 13,107 112,7741961 7,402 727 373 712 217 2,029 5,373 1,100 4,273 641 13,632 116,4061962 7,994 727 373 712 217 2,029 5,965 1,100 4,865 641 14,224 120,6301963 8,592 727 373 712 217 2,029 6,563 1,100 5,463 641 14,822 125,452

1/ includes $230,000 per year in debt service on forty kilometers of transmission line to and substation in Salvador.

/ Operating Expenses include the following items: Denreciation, calculated on an average 30 year, 6%o sinking fundbasis, for each segment of the project, beginning with the date of entering into iperation; taxes, amoanting to$.50 U.S. per kw; insurance, at 1/4 of 1% of investment. Contingencies amount to about $130,000 to cover unforeseentaxes, rents and. similar items.

3/ Based on a commitment fee of 2 1/2% per annum on the unexpended balance,. an interest plus cormmission rate of4 1/4%, with amortization of the principal over 22 years be-inning in the second half of 1954; dividends of 6% onpreferred stock; operation, naintenance and overhead calculated separately for each section Df the project and thencombined.

4/ Does not include deoreciation of 40 km. of transmission line to and substation at Salvador, which would amountto about US $24,000 per annum. Cost of transmission line and substation is estimated at U.S. $1,932,000.5/ Surplus from curre-t operations only. Cash position is given in Table IV. Nqeither table takes intt accountinterest on investment of surplus.

TABLE IV

ESIIIMi.OD CASI F031-7O1N CF CHSIF 2/

To Dec. 31, 1950 1951 1952 1953 1954 1955 1956 1957 1950 19591949 I II T II I II I II _I ii .__________

A. Local currencyin Cr. 1000Bal.from preced-ing period - 34,961 34,443 106,643 66,631 3,131 13,121 -11,979 25,760 34,410 32,55C 38,400 55,600 80,500 113,800 120,500

Paymr.ents on: lstcoTmmon issue 110 000 45,000 45,000 - - - - - - - - - - - - -

Preferred 52,561 27,482 - 29,900 - 29,990 - 29,989 - 29,990 - _ _ _ _ _Second common - - 100,000 50,000 50,000 50,000 50,000 50,000 50,000 - - - - - _ _Sale of power - - - - - - - 24,100 25,000 32,700 33,800 81,000 88,700 97,100 106,100 115,200Debt service -Salvador dis-tribution - - - - - - 2,150 2,150 2,150 2,150 4,300 4,300 4,300 4,300 4,300Total fundsavailable 162,561 107,443 179,4143 186,631 116,631 83,121 63,121 94,260 102,910 99,250 68,500 123,700 148,600 101,900 224,200 240,000

Constructionexpenditures 127,600 " 73,000 72,800 120,000 113,500 70,000 75,1C0 43,000 43, 000 36,700 - - - - 35,600 35,600

Operating expensesincl. financialcharges - - - - - - - 25,500 25,500 30,000 30,100 60,100 68,100 68,100 68,100 60,100Balance at endof period 34,961 34,443 106,643 66,631 3,131 13,121 -11,979 25,760 34,410 32,550 38,400 55,600 80,500 113,800 120,500 136,300

B. Foreign exchangein $1,000Bal.from preced-ing period - - 13,300 11,510 0,010 4,606 3,106 2,037 1,237 837 626

IBRD loan - 15,000 - - - - - - - - -Expenditures - 1,70C 1,790 3,500 3,404 1,500 1,069 800 400 211 -

Balance - 13X300 11,510 0,010 4,606 3,106 2,037 1,237 837 626 626

/ Includes Cr. 18.72 million which -was converted into and spent as foreign exchange and Cr. 16.94 million as inventories and goods in transit.g Does not include accumulated cash in depreciation account.

CHESF POWER AREA

j ? - ---- 'e /,

I~~~~~~CF

e3> 0 ~~~~~~~~P E R N A M B U /,

n , ~~~~~~PAULO AFONSOt 4 -t >

Nsu- ,, t\S Wk ~~~~~~~~A G C)

gr_o,,4i / ~~ITABAIA

TRANSMISSION LINES

STATE BOUNDARY

- - G2 COUNTY BOUNDARY

SALVADOR

CHESF POWER AREA

-,

J, EMP IFEH ESE

A~~~~~~~AE

k PAULO AFONSO4 \9_t 9LOCATION MAP

IRANSMISSION LINES STATE BOUNDARY

- 220KV C OUNTY BOUNDARY

SALVADOR

INTERNATIOMAL BANK FOR CONFIDENTIALREQQNSThUCT.ION AND DEVELOPENT

R - 330o

Mlay 26, 1950

PROPOSED LOAN TO COMPANHIA HIDROEI1TRICA DO SAO FRANCISCO

It is requested that the attached map be substituted

for that appearing on the last page of the Technical

Report of the Paulo Afonso Hydroelectric Project (attached

to Report (R-330)).

Distribution:

Executive Directors and AlternatesPresidentVice PresidentDepartment Heads

LD:gmSecs4-195