the woi ld bank

Document of

The Woi ld Bank

FOR OFFICIAL USE ONLY

Report No. 9165

PROJECT COMPLETION REPORT

HAITI

THIRD POWER PROJECT

(CREDIT 1281-HA)

NOVEMBER 30, 1990

Infrastructure and Energy DivisionCountry Department IIILatin America and the Caribbean Regional. Office

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit = Gourde (G)

USS 1.00 = G$ 5.00

G$ 1.00 = US$ 0.20

WEIGHT AND MEASURE

t (metric ton) = 1,000 kgs (2.205 pounds)k cal (kilo calorie) = 3,968 Btu (British thermal units)1 barrel = 42 US gallor.s = 159 liters1 kilovolt (kV) 1,000 volts (V)1 kilowatt (kW) = 1,000 wattts (W)1 megawatt (MW) = 1,000 kilowatts (kW)1 kilowatt-hour (kWh) - 1,000 watt-hours (Wh)1 gigawatt-hour (GWh) = 1,000,000 kilowatt-hours (kWh)1 megavolt-ampere (MVA) = 1,000,000 volt-ampere (VA)1 kilometer (km) = 0,6214 mile (mi)1 hertz (Hz) 1 cycle per second

ABBREVIATIONS AND ACRONYMS

BMRE =Bureau of Mines and Energy ResourcesCCCE =Caisse Centrale de Cooperation Economique (France)CIDA =Canadian International Development Agency (Canada)DECON =Deutsche Energie-Contult (Germany)EdH =Electricite d'HaitiIDB =Inter-American Development BankKfW =Kreditanstalt fur Wiederaufbau (Federal Republic of

Germany)MARNDR IM;2<try of Agriculture, Natural Resources and Rural

DevelopmentPTC =Petroleum Technical CommitteeUNDP =United Nations Development Programme

FISCAL YEAR

October 1 - September 30

TFt WORLD llNK FOR OFFICIAL USE ONLYWASf"810to.fVC 20433

U S A

Office of Director-GeneralOperatiosa 2vaMlatiou

November 30, 1990

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on HaitiThird Power Project (Credit 1281-HA)

Attached, for information, is a copy of a report entitled "ProjectCompletion Report on Haiti - Third Power Project (Credit 1281-HA)" prepared bythe Latin America and the Caribbean Regional Office. No audit of this projecthas been made by the Operations Evaluation Department at this time.

Attachment

This aocument hs a mtsrctd dgtnbuuon and may be sued by ml:wnts only in te f=M'aceI of their ofmcti duueL Its conw nu may not otvwae be dcmea withOut World ana auu_on.aon

FOR OFFICIAL USE ONLY

HAITI


THIRD POWER PROJECr (CREDIT 1281-HA)

TABLE OF CONTENTS

Page No

PREFACE ........................................... (i)EVALUATION SUMMARY ......................................... (ii)

PART I PROJECT REVIEW FROM BANK'S PERSPECTIVE

Project Identification ................................ 1Background .......... 1IDA Lending to the Sector ............................. 1 Electric Power Sector Organization ..... .............. I

Project Objectives and Descriptions ......................... 2

Project Objective .................................. . 2Project Description ................................. 2

Proiect Design and Organization ............................. 3

Origin ................................. 3Preparation ................................. 3Appraisal and Negotiations ............................ 3Estimated Pruject Cost and Financing .................. 3

Project Implementation ...................................... 3

Generation and Distribution Components ................ 3Execution Timetables .................................. 3Execution Problems .................................... 4Procurement ................. ......................... 4Project Cost and Financing ......................... 4Distributinns ......................... 4Performance of Consultants, Contractors, and Suppliers 4Covenants ......................... 4

Project Results ......................... 5

Market Growth ......................... 5Rate of Return ......................... 5Comparison of Forecast and Actual Performance. 6

Sustainability. 6

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

TABLE OF CONTENTS (Cont.)

Page No.

IDA Performance ............................................. 6

Lessons to be Learned Regarding thie Performance ....... 6

of IDA

PART II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE ......... 9

PART III STATISTICAL INFORMATION ......................... 10

Table 1. Related IDA Credits ........................ 10

Table 2. Project Timetable .......................... 11

Table 3. Credit Disbursements ....................... 12

Table 4. Project Implementation ..................... 13

Table 5. Project Cost and Financing ................. 15

Table 6. Project Results ............................ 16

Table 7. Status of Key Covenants .................... 17

Table 8. Mission Data ............................... 18

ANNEXES:Annex 1. Forecast and Actual lncome Statements ...... 19

Annex 2. Forecast and Actual Balance Sheets ......... 20

Annex 3. Forecast and Actual Sources andApplication of Funds Statements ............. 21

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HAITI


THIRD POWER PROJECT (CREDIT 1281-HA)

PREFACE

This is the Project Completion Report (PCR) for the Third PowerProject, which was partially financed by Credit 1281-HA (SDR 23.1) ofJune 1982. The Borrower is the Republic of Haiti and the ExecutingAgency was Electricite d'Haiti (EdH). Project works started on time butwere concluded 18 months behind schedule.

The Infrastructure and Energy Division, Department III of theLatin American and Caribbean Regional Office (LA3IE) prepared Parts Iand III of the PCR based on the Staff Appraisal Report; the Credit andProject Agreements; supervision reports; correspondence between IDA andthe Borrower; internal IDA memoranda; and on final project data preparedby the Executing Agency. Part II was not prepared because it would havebeen difficult for the Borrower and Executing Agency to complete sincemany of their representatives have moved on to new assignments.

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HARII


ELECTRICITE D'HAITI (EdH)


EVALUATION S'JMMARY

Objectives

1. The project's main objective was to provide additional generatingcapacity by June 1984, promote the use of indigenous resources,reduce energy losses, and improve EdH'. institutional performance.In addition, an important prc:-ct objecti7e was construction of anew headquarters office buildi) ) for EdH, rehabilitation of part ofthe Port-au-Prince distribution network, and repairs of Peligrehydro facilities. (para. 3.01).

Implementation Experience

2. Overall completion of the project suffered 18 months delay, mainlybecause of the unsatisfactory performance of the principalconsultant which was unable to expeditiously prepare designs for thenew diesel generating plant, and the distribution renovationprogram. Further, their design for the headquarters building wasunsuitable and had to be redone by others, thereby delaying itscompletion (para. 5.01).

Result

3. The project achieved its main objective with a delay of only 5months. But it was unsuccessful in reducing energy losses during theproject period, promote the use of indigenous resources, or improveEdH's performance. On the other hand, it succeeded in improvingelectricity service reliability and with the new headquartersbuilding, provided a sound foundation for improvements in EdH'sinstitutional performance (paras. 6.01 and 8.01).

Sustainability

4. Through two subsequent credits, IDA has assisted the sector byfinancing required additional generating capacity, reducingtechnical losses through distribution network rehabilitation, andstrengthening of EdH to improve its performance. Nevertheless, EdHcontinues to depend too much on foreign consultants. This practiceshould cease because it is expensive and constrains autonomy. If

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EdH is unable to operate effectively without such help, Governmentshould consider transferring some, or all, of the utility'soperation to the private sector. (para. 7.01).

Findings and Lessons Learned

5. The institutional framework was not diagnosed in dept'Ž to permitdesign of improvements, if requi-ed (para. 9.01).

6. When the institutional framework is adequately diagnosed by staffspecialized in this field, IDA should then determine if requiredremedies may be achieved and sustained through a specific project(para 9.02).

7. The project did not provide for preparing EdH to operate withoutforeign consultants in its day-to-day activities (para. 9.03).

8. IDA did not examine the effects of high tariffs on energy losses, orthe relationship between tariffs and the residential and commercialconsumers' ability to pay for electric services. It also did notpursue options to lower costs such as fuel substitution andrationing. As a consequence, tariffs are very high (third highestin the Americas and in the top quarter in the world), which induceelectricity theft and principally contributed to EdH's dismalfinancial performance (para. 8.02).

9. The economic analysis assumed that financial constraints did notexist, which was not the case. Instead, IDA should have determinedmore affordable investment routes for EdH to follow, taking intoconsideration particularly the financial capacity of its residentialand commercial consumers to pay for electricity services (para.9.04).

10. IDA should thoroughly assess Government's and the Executing Agency'sattitudes towards expected commitments with IDA prior to Creditapproval and should continuously assess the appropriateness ofcertain agreements under current circumstances (para. 9.05).

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HAITI


ELECTRICITE D'HAITI (EdH)

THIRD POWER PROJECT (CREDIT 1281-H4)

PART I: PROJECT REVIEW FROM IDA'S PERSPECTIVE

1. Project Identity

Name: Third Power ProjectCredit Number: 1281-HARVP Unit: LAC RegionCountry: HaitiSector: Energy (Power)

2. Background

2.01 IDA Lending to the Sector. IDA has assisted Haiti in developmentof its power sector since 1976, through five credits totaling theequivalent of US $102.0 million, of which the project under review(Credit 1281-HA) was the third operation. IDA's assistance throughthese operations has been through: (a) the formulation and application

of least-cost national power development plans; and (b) institutionaland financial strengthening of EdH.

2.02 The First Power Project (Credit 645-HA of July 1976 for US $16.0

million) comprised the installation of the first three diesel generating

units totaling 21 MW at the new Varreux plant, plus correspondingtransmission facilities; and reorganization and institutional

strengthening of EdH, through technical assistance. The Second Power

Project (Credit 895-HA for US $16.5 million signed in May 1979) covered!

the installation of three additional diesel generating units at Varreux,totaling 23MW; transmission lines and substations; renovation of the

Port-au-Prince distribution system; some diesel units and relateddistribution networks in the provinces; and consulting services and

training of EdH's staff. The Third Power Project continued assistancein increasing generating capacity; the Fourth Power Project (Credit

1527- HA) for SDR 21.8 million (US $22.1 million of December 12, 1984)

followed up on increasing generating capacity and improvement of the

distribution network of Port-au-Prince, and institutional strengthening

of EdH. The Fifth Power Project (Credit 2053-HA for SDR 18.6 (US $24.0

million) of August 9, 1989) continues assistance towards improving

system reliability by increasing generating capacity, reducing system

losses, and supporting EdH's institutional performance.

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2.03 Electric Power Sector Organization. EdH, an autonomousgovernment agency created in 1971, is the agency reFpcnsible forelectric power generation, transmission and distribution !.n Paiti.

EdH's Board of Direetors is composed of the Minis-er of Public Works,Transport and Comnunications (Chairman), the Minister of Economy and

Finances, the Minister of Commerce and Industry, the Minister ofPlanning and External C3operation, the Governor of the Central Bank, and

EdH's General Manager. The Board approves majo-; investments andborrowings, sets policy, and approves tariffs.

2.04 EdH's present organization, which is based on a 1981 study by

consultants financed under the Second Power Project, worked well until

about 1965. Improvements were deemed to be required for more effectivework between the Technical and Commercial departments and higher

productivity in the Administration Department. These improvements arebeing sought through the Fifth Power Project.

3. Project Objectives and Description

3.01 Project Objectives. The projects objectives were many, variedand ambitious: a) rationalize sector development and promote the use ofindigenous resources; b) provide access to electricity to a greater

number of households; c) accelerate connection of labor-intensiveindustries; d) establish a continuous training prograr,i for EdHpersonnel; f) establish a program to reduce energy losses to reasonablelevels; g) achieve EdH's financial independence through adequatepricing, and h) increase the institutional and managerial efr iency atEdH.

3.02 Proiect Description. Based on the findings of the appraisalmission, the Project consisted of:

A. Generation

a) Installation of two 7.8 MW diesel generating units at the newCarrefour power plant, designed to accommodate these units plusthree future ones;

b) repair of the Peligre hydro works, comprising severalhydromechanical components that needed to be repaired orreplaced, plus extensive repairs of concrete works,particularly in the stilling basin;

B. Distribution SZstem

a) Rehabilitation of about 10 km2 of the Port-au-Princedistribution network;

C. Office Building

a) Construction of a new EdH headquarters building;

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D. Consultl.ng Services

a) Survey, feasibility study and preparation of bid documents for

the Guayamouc hydroelectric plant;

b) General and utility management assistance; and

c) Personnel training.

4. Project Design and Organization

4.03 Origin. In 1976 UNDP financed the preparation of the study

entitled "Long-term Preinvestment Study of the Power Sector", which was

carried uut by the French consuling firms SOFREMINES and SOFELEC and

supervised by IDA, as executing agency. This study was updated and

expanded under the Second Power Project. The principal conclusion of

these studies was that power development in the urban centers was needed

to enhance the country's economic development. The Third Power Project

was designed to meet the defined power -equirements between the period

1982-1986.

4.04 Preparation. Based on the above mentioned study, and with the

assistance of EdH's staff and consultants, I'A defined the generation,

transmission and distribution components of the projects and assessed

EdH's organiza,ion and performance. IDA designed the other proiect

components, which comprised construction of a new headquarters building,

repairs of the Peligre hydro works, consulting services, aid training of

EdH's staff.

4.05 Appraisal and Negotiations. The appraisal mission concentratel

efforts on completing updating of the generating plant expansion

program, final designs of the Carrefour power plant, and the

headquarters building, but prudently did not subject credit processing

to such completion since it was not crucial for reliable cost estimates.

Nevertheless, the appraisal mission had to be postponed from April to

July 1981 due to budgetary restrict.ions and staff constraints.

Negotiations were completed by the end of May 1982 without substantive

chanr.>s in the draft credit documents. The Board of Executive Directors

app -ved the credit in June 1982.

4.06 Estimated Proiect Cost and Financing. The estimated cost of the

project, excluding financing charges, was US $34.0 million. The US

927.0 million foreign currency component was financed by IDA (US $26.0

million) and Government (US $1.0 million). EdH financed the total local

cost (US $7.0 million).

5. Project Implementation

5.01 Generation and Distribution ComDonents. Overall completion of

the project suffered 18 months delay mainly because of the

unsatisfactory performance of the principal consultant Hydro Quebec

International which was unable to expeditiously prepare designs for the

Carrefour plant and bidding documents for the generating units thereby

delaying contracting and commissioning of the plant. They did not

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diligently prepare the distribution renovation program, de!aying itsexecutin.l in the field. And third, they prepareo an unsuitable designof the headquarters building which had to be redesigned completely,causing some 12 months delay in construction completion. Thisconsultant's contract was reduced considerably in May 1985.

5.02 Execution Timetables. The project timetable as forecast andexecuted appears in Table 4, Part III.

5.03 EXecution Problems. Aside from the delays in executing theproject for the above reasons, no major problems were encountered incarrying out the proji'^t.

5.04 Prgcurtment. Procurement of all works and goods, as well ascontracting of consultants, were carried out in close adherence to IDA'sguidelines.

5.05 Project Cost and Financing. Table 5, Part III, shows acomparison of the estimated and actual costs of the project. Theprojen^t was executed some 8% below the estimated cost in "IS dollarsequivalent and the financ'.ng originally envisaged was carried cut: IDAfinanced all foreign cost, except 50% ($0.9 million) of those forrepairs of the Peligre hydro works; this and all local costs were borneby EdH.

5.06 Disbursements. Project execution delay-, particularly in theCarrefour plant delayed credit disbursements by 12 months (See Table 4,Part III)

5.07 Performance of Consultants. Coatractors. and Suppliers. Asstated above, the performance of EdH's general consultant was notsatisfactory. The rest of the consultants performed well: TAMS (USA)in the Peligre repairs, Hydroplan (Germany) ard Benjamin and JadotteArchitects (Haiti) in the headquarters building, DECON (Germany) in thedistribution network, and Prise Waterhouse in administration andfinancial management assistance.

5.08 All the contractors involved performed well: TECINA (Haiti) ihCarrefour, Les Chantiers Modernes (France) with International UnderwaterContractors (USA) in Peligre and COMEI (Mexico) in the distributionnetwork.

5.09 Covenants. The key covenants for the Credit (CA) and ProjectAgreement (PA) deal with financial performance and are summarized inTable 7, Part III.

5.10 Not once during the project period (1982-86) did Government orEdH comply with the most important financial covenant dealing with rateof return (CA 4.02 and PA 4.03).

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6. Proiect Results

6.01 The project failed its main objective of promoting the use of

indigenous resources, because to date not a single new hydro, wind,biomass, or new hydro power project has been put into service, exceptthe Guayamouc hydro plant which was already underway. However, it

succeeded in improving supply reliability and, with the new headquarters

building, notably excelled in providing a sound foundation forimprovements in EdH's institutional performance.

6.02 Following immediately after the Third Power Project, the FourthPower Project was also intended to accomplish the institutional

objectives expected through the Third Power Project. This objective was

also not met.

6.03 Market Growth. Forecast and actual sales differed sharply fromthe beginning (1982), when total actual sales were 248 GWh instead of

283 GWh. forecast at appraisal a year earlier, or 14% lower. Throughout

the 1982-86 period, total sales grew steadily at 5.5%, instead of 14%

expected at appraisal (See Table 4, Part III), while recorded total

generation increased evenly also at 5.5%. Although total average losses

during the same period were somewhat higher (28% vs. 23%) such minor

difference had no effect on the growth trend in total sales. In

summary, appraisal forecasts were off significantly and the only

explanatiGn available is that the growth trend was not reliably

estimated.

6.04 Rate of Return. The approach described in the appraisal was to

determine the rate of return of the investment program for the period

1981-1991, containing the project and other components which extendedbeyond project completion. Since none of the assumptions on

investments, which comprised the so-called least-cost program,materialized, except the project, a realistic way of gaging the

project's economic merits would be to analyze it, as it actually began

to operate and could continue to do so during its prescribed economic

life of 15 years. In this analysis, the maximum possible benefits were

assigned to all components of the project. The result of these

calculations appear in Table 6, Part III, and show that the project has

an acceptable rate of return of 11.0%, compared to 13.0% expected

originally for the ten-year investment program.

6.05 Comparison of Forecast and Actual Performance. Annexes 1, 2, and

3 show appraisal forecast income statement; sources and application of

funds, and balance sheets for EdH. The ink had not dried on the

appraisal report when EdH's financial position began to decline to the

extent that forecasts and reality became distant relatives. From 1981to 1983 the rate of return fell from 6.8 to zero, when it was expectedto stay at the agreed 8%. Such weak performance was principally due to

lower than expected sales; increase in accounts receivable frominadequate monito.ing, and an ineffective service disconnecting policy;

higher operating expenses, fuel prices, and inadequate tariffs. For the

same reasons the self-financing ratio was also considerably lower than

expected, as well as the debt-ser-ice coverage, which deteriorated from

7.4 to 1.0, together with the debt-equity ratio, which went from an

adequate 36/64 to a poor 54/46.

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6.06 The rate of return, which was the principal financial covenant ofthe credit, was, throughout the entire project period, considerablylower than the agreed 8%. However, IDA did not once press Governmentand EdH to comply with their commitment on this important provision.Although on several occasions IDA discussed with Government and EdHthese problems, and officially requested them to improve the latter'sfinancial situation, particularly in public sector arrears onelectricity bills, it did not strongly pursue remedial action to reversethe obviously deteriorating financial situation of EdH. The only stepstaken to improve EdH's finances (and late ones at that) were a modesttariff increase (10.2%) in 1984 and an agreement signed betweenGovernment and EdH in May of that year to settle the former'saccumulated arrears of US $2.5 million during the subsequent threeyears.

7. Sustainability

7.01 Through two subsequent credits, IDA has assisted the sector byfinancing required additional generating capacity, reducing technicallosses through distribution network rehabilitations and strengthening ofEdH to improve its performance. Nevertheless, Edh continues to dependtoo much on outside consultants and this practice should cease becauseit is expensive and constrains autonomy. If EdH is unable to operateeffectively without such help, Government should consider transferringsome, or all, of the utility's operations to the private sector.

8. IDA Performance

8.01 The Borrower. Executine Agency, and IDA. The appraisalassessment of EdH's institutional features concentrated on outliningsome of the achievements reached under the First and Second PowerProjects and reiterate the objectives to : a) establish a continuoustraining program for EdH personnel; b) achieve EdH's financialindependence through adequate pricing and reduction in losses andelectricity thefts; and c) increase the institutional and managerialefficiency at EdH. lowever, it failed to define how these objectiveswere to be met. It provided for consultants to assist EdH inadministration and finances but without guidelines or clear schedule ofgoals. It is no simple task to pruperly diagnose institutionalperformance and tougher still to prescribe the right medicine for anyailments. In the absence of such diagnosis, a sound judgment cannot bemade on the contributions that the Third Power Project may have made toinstitutional improvements, if any. In spite of this constraint, thenew headquarters office is a major achievement of the Third PowerProject in establishing modest, yet well designed and comfortableworking facilities, while giving EdH a prestige symbol to uphold.

8.02 At the time of appraisal EdH's tariff averaged US cents 11.0/kWhand the appraisal team argued that this cost was reasonable incomparison with countries in "similar economic circumstances". Inaddition it felt that any incremental demand had to be supplied bythermal generation and for such reason, rates should be maintained atleast at that level in real terms. It went on to argue that futureexpansion would not be able to change the trend because it comprised

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either thermal generation with high-cost fuel or hydro generation withhigh capital cost. Further, it agreed that Government was not in afinancial position to contribute substantially towards EdH's expansionprogram. Consequently, continued power expansion depended largely onadequate internal generation of funds, i.e. adequate rates. Duringproject supervision, however, these admonitions were not observed andEdH's financial performance was dismal, because it had inadequate ratesthroughout the entire project period. IDA did not behave consistently,in ellowing EdH to default on the rate of return covenant, while itapparently held fast to the notion that EdH's average rate wasreasonable. In reality, the average revenue was very high (thirdhighest in the Western Hemisphere and in the top quarter in the world)in one of the poorest of countries and where residential and commercialelectricity consumption is about one third of total consumption. IDAshould have examined Instead EdH's finances in light of current sales,since revenues were consistently much lower than forecast figures, thenit should have reassessed EdH's financial objectives and adjusted systemoperations to sustain EdH's financial health.

9. Lessons to be Learned Regardinz the Performance of IDA

9.01 Institutional DeveloRment. From all indications at appraisal,EdH was performing well institutionally. There was no predominantreason, then, to improve upon it. It appears that appraisalcommentaries on this matter were window dressing.

9.02 When institutional problems are clearly defined IDA should thendetermine if remedies may be achieved and sustained through a specificproject.

9.03 At appraisal, EdH was dependent on consultants to carry out itsday-to-day operations, but the project did not provide for preparing EdHto operate effectively without them.

9.04 Expansion Program. The "least-cost" expansion program was basedon meeting the demand apparently at any price, under the premise that itwas "crucial for economic development". The economic analysis assumedthat financial constraints did not exist, which was definitely not thecase. IDA should have determined instead more affordable investmentroutes for EdH to follow, taking into consideration the financialcapacity of its consumers to pay for its electricity services. Theseoptions could have been: rationing, delegating investments to serveprivate industry to the private sector, small hydro (such as thesuccessful Guayamouc hydro, initiated with the project) to substitutecostly thermal generation, or a combination of all these options.

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9.05 Compliance with Agreements. IDA should thoroughly assessGovernment and the Executing Agency's attitudes towards expectedcommitments with IDA prior to credit approval. Government and EdHrepeatedly defaulted with major contractual agreements with IDA, andweak reactions of IDA on their defaults apparently encouraged themfurther. To reduce the risk of non-compliance, IDA should seekfulfillment of selective policy conditions such as tariffs, servicepolicies and supply, on which there are questions on the Government'scommitment prior to, or as conditions for, processing the credit.Deferral of such obligations to later stages of credit preparationjeopardizes the carrying out of related provisions. However, projectsupervision should not only monitor compliance with credit agreementsbut should assess continuouslv their appropriateness under currentcircumstances and make adjustments when necessary.

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II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE

This part will not be prepared because it would have beendifficult for the Bozrower and Executing Agency to complete since manyof their representative have moved on to new assignments.

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HAIT



PART III

STATISTICAL INFORMATION

1. Related IDA Credits

Number Title Purpose Year of AmountApproval SDR

(US$ million)

645-HA First Power Varreux diesel plant(21 MW) plustransmission 1976 (US$16.0)

895-HA Second Power Varreux second stage(23.4 MW) plustransmission anddistribution networkrenovation 1979 (US$16.5)

1281-HA Third Power Carrefour first stage,2 x 7 MW diesels, newheadquarter buildingand Peligre hydro 23.1 SDRrepairs 1982 (US$23.3)

1527-HA Fourth Power Carrefour second stage,2 x 7.8 MW diesels,plus distribution 21.8 SDRnetwork renovation 1984 (US$21.8)

2053-HA Fifth Power 2 x 20 gas turbine 18.6 SDRgenerator 1989 (US$24.0)

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2. Proiect Timetable

Date Date DateItIm Plnngd Revised Actual

Identification - - 11/80

Appraisal Mission 7/81 - 6/82

Credit Negotiations - - 5/82

Board Approval - - 7/6/82

Credit Signature - - 8/18/82

Credit Effectiveness - - 11/23/82

Credit Closing - - 6/30/86

Credit Completion - - 6/30/86

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3. Credit Disbursements

Cumulative Disbursement(million of SDR)

Actual asFiscal Year/Semester Forecast Actual of Forecast

December 31, 1982 2.4 1.9 79.2June 30, 1983 6.1 4.3 70.5

1984

December 31, 1983 11.8 6.5 55.1June 30, 1984 15.9 12.2 76.7

1985

December 31, 1984 19.0 15.1 79.5June 30, 1985 21.4 16.7 78.0

198k

December 31, 1985 23.1 18.6 80.5June 30, 1986 - 20.0 86.6

1987

December 31, 1986 - 23.1 100.0

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4. Project Implementation

Item DATES

Forecast Actual

Contracting of Consultants

General Services 3/82 N.A.

Carrefour Plant 12/81 N.A.

Guayamouc Hydro 9/81 N.A.

Peligre Hydro Repairs 7/82 3/83

Procurement

Carrefour - Call for Bids 2/82 N.A.

Contract Award 7/82 N.A.

Distribution - Call for Bids 12/82 11/83Contract Award 4/83 N.A.

Headquarters - Call for Bids 1/83 N.A.

Contract Award 5/83 11/84

Peligre Repairs - Call for Bids 10/82 N.A.

Contract Award 1/83 N.A.

Completion of Construction

Carrefour (2 units) 6/84 11/84

Distribution 6/85 6/86

Headquarters Building 12/84 1/87

Peligre Repairs 3/85 4/85

4>

Performance Indicators

1982 1983 1984 1985 1986

Forecast Actual Forecast Actual Forecast ActuaL Forecast Actual Forecast ActuaL

Market Penetration

Sales in Port-au-Prince (GUh) 253 220 286 224 327 241 375 258 429 261

Sates in provinces (GWh) 30 28 35 33 38 38 42 39 46 45

Customers in Port-su-Prince (1,000) 60 55 66 64 71 70 77 62 83 66 3

Customers in provinces (1,000) 20 20 21 25 25 28 28 28 32 30 r

0

Efficiency Indicators n0

EwpLoyees in 9ort-au-Prince 830 931 877 838 895 988 906 1265 930 1265

Employees in provinces 245 281 260 368 275 387 290 401 300 416

System losses, Port-au-Prince 27 30 25 32 23 28 21 31 19 36

System losses, provinces (X) 28 19 26 15 24 15 22 25 20 27 _

Customer/emqployee, Port-au-Prince 72 59 75 74 79 71 85 49 89 57

MMJ sold/employee, Port-au-Prince 305 236 326 213 365 243 414 203 461 182

HWh soLd/consumer - Port-au-Prince 4.2 4.0 4.3 3.5 4.6 3.4 4.9 4.2 5.2 3.9

WUh sold/consumer - provinces 1.5 1.3 1.6 1.3 1.5 1.4 1.5 1.4 1.4 1.5

Financial Indicators

Rate of return (X) 7.7 5.2 8.0 0.0 8.0 5.7 8 5.4 8.0 1.4

Self-financing (X) 52 N.A. 42 N.A. 38 41 34 42 25 -1

Debt service coverage ratio (times) 7.4 N.A. 9.1 N.A. 4.3 3.5 4.3 1.8 3.1 1.0

Debt/equity ratio 36:64 N.A. 40:60 N.A. 43:57 44:56 46:54 49:51 51:49 54:46

Accounts receivable (days) 60 125 60 118 60 63 60 88 60 97

Current ratio 5.1 N.A. 3.9 N.A. 3.4 2.1 2.9 2.1 1.9 1.7

Average cost of borrowing (X p.a.) 7.1 N.A. 7.3 N.A. 7.5 7.6 7.7 7.1 7.9 7.2

-15-

5. Project Cost and Financing

A. Proiect Costs

(In current US $ million)

Appraisal ActualDifference

Component Local Foreign Total Local Foreign Total Cost %

(In million of current USS)

2 x 7.8 Diesel generatingunit at Carrefour, includingauxiliaries and fuel storagetanks 1.08 9.99 11.07 1.20 9.0 10.2 -0.87 -7.9

Civil works

Site preparation and worksat Carrefour plant 1.40 2.10 3.50 2.40 1.70 4.1 0.6 17.1

Distribution renovations 0.70 2.80 3.50 1.00 4.0 5.0 1.5 42.9

Various

Headquarters building 1.00 0.80 1.40 1.40 1.40 2.8 1.0 100.0

Peligre dam repairs 0.30 1.50 1.80 0.40 1.80 2.2 0.4 22.2

Consulting service

Headquarters building - - - 0.30 0.20 0.23 0.23 100.0

Carrefour engineering 0.28 1.17 1.45 0.10 2.50 2.60 1.15 79.3

Guayamouc hydro engineering 0.19 0.73 0.92 0.10 1.20 1.30 0.38 41.3

Peligre dam repairs 0.07 0.33 0.40 0.02 1.00 1.02 0.62 55.0

General 0.13 1.74 1.87 0.03 1.30 1.33 0.54 28.9

Administration 0.06 0.37 0.43 0.08 0.30 0.38 0.05 11.6

Training 0.03 0.20 0.23 0.08 0.10 0.18 0.05 21.7

Base Cost 5.24 21.73 26.97 6.84 24.5 31.34 4.37 16.7

Physical contingencies 0.38 1.44 1.82 - - - - -

Price contingencies 0.33 3.83 5.16 - - - - -

Total Cost 6.95 27.00 33.95 6.84 24.5 31.34 -2.61 -7.7

B. Project Financing

Sources Planned Final

IDA 26.0 (US$ millions) 23.3Domestic 8.0 8.0

TOTAL 34.0 31.3

COSTS (million US S) BENEFITS

Operation and Maintenance

Total Project Tariff RevenuesNo Year Investment Fuel b/ Total Cost Sales(GWh) (US S/kWh) (USS x 1062

1 1981 - - - 0.110 -

2 1982 1.4 1.4 - 0.112 -

3 1983 4.8 4.8 - 0.113 -

4 1984 11.1 J 1.9 0.3 2.2 13.3 31.0 0.143 4.4 Ct

5 1985 13.7 1.0 0.4 1.4 15.1 62.0 0.147 9.1 o6 1986 31.3 0.6 0.9 1.5 32.8 62.0 0.147 9.17 1987 - 0.7 0.9 1.6 1.6 62.0 0.147 9.18 1988 - 0.5 0.9 1.4 1.4 62.0 0.147 9.1 ct

9 1989 - 0.6 0.9 1I. 1.5 62.0 0.147 9.1 '

10 1990 1.5 1.5 62.0 0.147 9.111 1991 1.5 1.5 62.0 0.147 9.112 1992 1.5 1.5 62.0 0.147 9.1

13 1993 1.5 1.5 62.0 0.147 9.114 1994 1.5 1.5 62.0 0.147 9.115 1995 1.5 1.5 62.0 0.147 9.116 1996 1.5 1.5 62.0 0.147 9.117 1997 1.5 1.5 62.0 0.147 9.118 1998 1.5 1.5 62.0 0.147 9.119 1999 1.5 1.5 62.0 0.147 9.120 2000 1.5 1.5 62.0 0.147 9.1

' Commissioning on 6/84 (2 x 7.8 MW), operating 4,000 hrs/year

b Bunker C, at 15.5 kWH/gallon. Cost: 1984, US $.094/gal; 1985, US $0.52; 1986, US $0.29;1987, US $0.38; 1988, US $0.27; 1989 onward, US $0.32

9 3% per year

Rate of return - 11.0%

-17-

7. Status of Key Covenants

Description Status

Credit Agrement

The Borrower and/or EdH shall not undertake, prior to thecompletion of the Project, any investment in the power sectorexceeding 1% of the new value of EdH's fixed assets, nor permitunbudgeted costs for rural electrification to exceed 0.2% (Section4.01); yes

The Borrower shall tnke measures to permit EdH to earn theagreed rate ot return (Section 4.02); no

The Borrower and its agencies shall pay electricity bills ontime (Section 4.03); no

The Borrower shall authorize EdH to maintain interest-bearinginvestments or accounts (Section 4.05); yes

Project Agreement

EdH shall employ engineering, management and trainingconsultants (Section 2.02); yes

The qualifications of the General Manager, Technical Director,Planning Director, Financial Director, and Internal Auditor to besatisfactory to the Borrower, IDA, and EdH (Section 3.01 (b)); yes

EdH shall reduce energy losses to 27% by 1982, then 2% less everyyear until reaching 15% by 1988 (Section 3.02); no

EdH shall carry out a training program satisfactory to IDA(Section 3.06); yes

EdH shall earn a rate of return of 8% (Section 4.03); no

EdH shall maintain a debt service coverage 1.5 times or higherthan operating, maintenance and administrative expenses and notincur any short-term debt, unless the aggregate of all short-termdebt incurred by EdH, is equal to or less than one-sixth (1/6) ofche operating, maintenance and administrative expenses (Section4.05 (a) and (b). no

-18-

8. Mission Data

Specialization PerformanceType of Nlission Month/ Number of Staff Representl4 Rating 2 3

Year Persons Weeks in Field _ Status _ Problem 3/

IdenJification/ 11/80 2 1.4 PE-FAPreparation

Appraisal 7/81 3 7.3 PE-PE-FA

Supervision 4/ 6/82 2 3.1 PE-FA 2 M-T

Supervision 4/83 1 2.1 PE 2 M-T

Suipervision 9/84 1 1.3 PE 2 F-T

Supervision 12/84 2 2.6 PE-FA 2 T

Supervision 4/85 2 2.9 PE-FA 2 T

Supervision 10/85 2 6 PE-FA 2 M

Supervision 6/86 2 2.9 PE-FA 1 -

Supervision 2/87 2 3.1 PE-PA 2 M

_/ PE - Power Engineer and FA - Financial Analyst

2/ 1 - Problem free or minor problem; 2 - Moderate problems; and 3 - Major problems.

3/ F - Financial, M - Managerial; T - Technical; 0 - Other

4/ Includes supervision of the Second and Fourth Power Projects.Estimated time for the Third Power Project is 10 staff weeks.

ELECTRICITE DINAITI

THIRD POWER PROJECT (CREDIT 1281 - PA)

Forecast and Actual Income Statements

(millions of current US S)

1982 1983 1984 1985 1986

Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual

Total Sales (GUh) 282.7 247.9 320.9 257.6 365.4 279.5 416.7 291.6 475.00 296.6

Average tariff (USS/hWh) 0.087 0.112 0.087 0.128 0.087 0.143 0.087 0.147 0.087 0.147

Fuel surcharge/kWh 0.042 - 0.051 - 0.053 - 0.062 - 0.061 -

Operating revenues 36.5 27.7 44.3 32.9 51.2 39.9 62.2 42.8 70.4 44.7

other revenues 0.1 0.1 0.1 - 0.2 0.3 0.2 0.3 0.2 0.5

Total 36.6 27.8 4'.4 32.9 5!.4 40.2 62.4 43.1 70.6 45.2

Operating expenses I

Salaries 4.2 - 4.9 5.6 5.7 - 6.6 - 7.6 - D

Fuel 14.9 8.1 19.9 15.6 23.6 12.1 30.9 13.8 34.7 9.1 1

Operation and maint. 2.7 6.4 3.3 5.5 4.0 8.8 4.9 12.4 6.0 12.6

Gen. and admin. 2.1 2.7 2.6 - 3.1 3.9 3.7 4.5 4.5 5.0

Depreciation 5.3 4.5 6.6 6.3 8.3 6±J 9.9 7.3 11.5 8.0

Total 29.2 21.7 37.3 33.0 4-h 3 7 56.0 38.0 64.3 34.7

Operating income 10.7 5.9 3.e c 5 17.1 8.5 20.5 5.1 23.2 10.5

Interest charges 4.0 2.9 5.9 5.9 8.4 5.9 11.7 8.1 16.6 8.1

Less: Interest d. constr. 2.2 0.9 4.1 2.4 3.7 2.4 6.5 2.7 8.2 1.7

Interest charged to ops. 1.8 1.9 1.9 3.4 4.7 3.4 5.2 5.4 8.4 6.4

'-, ;,come 8.9 4.0 11.7 5.1 12.4 5.1 15.3 (0.3) 14.8 4.1

ELECTRICITE D'HAITI

THIRD POWER PROJECT (CREDIT 1281 - "A)

Forecast and Actual Balance Sheet Statements (1982 - 1986)

(millions of current US S)

1982 1983 1984 1985 1986


ASSETS

Plant in operation 199.9 166.3 242.9 192.2 310.0 210.7 355.3 242.9 409.1 282.9

Less: depreciation 46.4 40.4 56.5 49.7 69.1 56.2 84.2 59.2 100.7 65.6

Net plant 153.5 125.9 186.4 142.5 240.9 154.5 271.1 183.7 308.4 217.3

Work in progress 11.7 11.8 31.9 24.8 39.4 35.9 94.0 21.8 166.9 11.3

Total fixed assets 165.2 137.7 218.3 167.3 280.3 190.4 365.1 205.5 475.3 228.6

Cash and equivalents

Operational req. 1.0 - 1.3 1.0 1.5 3.3 1.9 - 2.2 3.7

Temporary surp. 16.7 5.7 14.1 - 10.4 - 5.6 - 0.0 -

Accounts receivable 6.6 6.6 8.5 11.7 10.3 10.3 12.8 17.3 14.6 12.3

Materials and supplies 6.9 5.1 11.0 5.6 13.2 6.1 17.5 5.3 24.3 6.6

Other Current assets 0.4 2.9 0.d- 0.8 0.4 3.6 0.4 3.2 0.4 4.0

Sub total 31.6 20.3 35.3 19.1 35.8 23.0 38.2 25.8 41.5 26.6 1.

Total 196.8 158.0 253.6 186.4 316.1 213.7 403.3 231.3 516.8 255.2

LIABILITIES

Equity

Capital 36.3 40.4 36.3 40.7 36.3 41.9 36.3 42.9 36.3 43.9

Retained earnings 31.8 28.3 43.6 26.8 55.9 33.9 71.2 35.7 85.9 40.3

Gov't contrib. 5.4 - 7.0 - 9.1 - 11.3 - 13.4 -

Revaluation reserv. 45.6 30.1 57.1 38.9 71.1 37.2 89.1 35.5 105.4 35.2

Total 119.1 98.8 144.0 106.4 172.4 113.0 207.9 114.1 241.0 119.4

Long-term debt (gross) 67.7 53.3 96.3 68.2 128.3 87.5 176.3 101.4 247.1 119.3

Current Liabiiities

Accounts payable 4.6 1.9 7.4 4.9 8.8 3.5 11.7 6.4 16.2 3.9

Other 1.7 1.4 1.6 3.2 1.7 3.9 1.7 3.2 1.7 3.2

Overdrafts 0.0 0.5 0.0 0.8 0.0 2.3 0.0 2.5 4.3 4.8

Total 6.3 3.8 9.0 8.9 10.5 9.7 13.4 12.1 22.2 11.9

Consumer contribution 3.9 2.6 4.4 3.1 5.0 3.5 5.7 3.8 6.4 4.9

Total 197.0 156.0 253.7 186.6 316.2 213.7 403.3 231.4 516.7 255.5

ELECTRICITE D'HAITI

THIRD POWER PROJECT (CREDIT 1281 - HA)

Forecast and Actual Sources and Aoplication of Funds Statements (1982 - 1986)

(millions of current USS)

1982 1983 1984 1985 1986


SOURCES

Operating Income 10.7 N.A. 13.6 (0.1) 17.1 8.5 20.5 5.1 23.2 10.5

Depreciation 5.3 N.A. 6.6 6.3 8.3 6.9 9.9 7.4 11.5 8.0

Consumer contribution 0.5 N.A. 0.5 - 0.6 - 0.7 0.7 -

16.5 N.A. 20.7 6.2 26.0 15.4 31.1 12.5 35.4 18.5

Less: Debt service 2.2 N.A. 2.3 3.5 6.1 4.3 7.2 10.1 11.4 12.1

14.3 N.A. 18.4 2.7 19.9 11.1 23.9 2.4 24.0 6.4

Working capital 2.5 N.A. 3.5 0.1 2.8 N.A. 4.3 2.6 4.3 1.6

Net internal cash gen. 11.8 M.A. 14.9 2.6 17.1 11.1 19.6 5.0 19.7 8.0

l

Borrowings:

Existing KFW 0.3 N.A. 0.0 0.0 0.0 2.7 0.0 - 0.0 -

IDA-EEC (895-HA) 5.2 N.A. 0.6 3.2 0.0 1.9 0.0 6.9 0.0 9.5

CIDA 10.0 N.A. 3.9 N.A. 0.0 3.7 0.0 - 0.0 -

Proposed IDA 2.8 N.A. 10.7 5.5 8.1 9.8 4.4 0.0 0.0 0.0

Loan for 3rd unit 0.3 N.A. 1.2 N.A. 0.9 N.A. 0.5 - 0.0 -

Future KFU 1.3 N.A. 5.4 N.A. 4.3 N.A. 0.0 0.0 -

Future IDB 0.0 N.A. 2.2 N.A. 11.2 N.A. 18.7 - 20.0 -

Other Existing loans 0.0 N.A. 0.9 13.2 5.2 3.9 19.8 4.8 45.6 9.7

Total borrowings 19.9 N.A. 24.9 21.9 29.7 22.0 43.4 11.7 65.5 19.1

TOTAL SOURCES 31.7 N.A. 39.8 24.5 46.8 33.1 63.0 18.6 85.3 29.3

APPLICATIONS

Ongoing and future wks 24.3 N.A. 30.8 28.8 40.2 27.8 65.2 15.4 97.2 26.1

Proposed project 3.1 N.A. 13.3 2.3 12.4 2.4 4.8 2.7 - 1.7

Total 27.4 N.A. 44.1 31.1 52.6 30.1 70.0 18.1 97.2 27.8

the woi ld bank

Documents