Document of

The World Bank

FOR OFFICIAL USE ONLY y

Report No. 291lb-BR

STAFF APPRAISAL REPORT

BRAZIL

ELECTRIC POWER SYSTEM COORDINATION PROJECT

(SINSC)

December 2, 1980

Projects DepartmentLatin 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

As of 6/30/79 1/

Currency Unit = Brazilian Cruzeiro (Cr$)Cr$1.00 100 centavos = US$0.0400US$1.00 = Cr$25.00

ABBREVIATIONS AND ACRONYMS

AGC = Automatic Generation ControlBNDE = Banco Nacional de Desenvolvimento EconomicoCIEEB = Companhia Auxiliar de Empresas Eletricas BrasileirasCBEE = Companhia Brasileira de Energia EletricacCOI = Comite Coordenador de Operacao InterligadaCCON = Comite Coordenador de Operacao do NordesteCEB = Companhia de Eletricidade de BrasiliaCEEE = Companhia Estadual de Energia EletricaCELESC Centrais Eletricas de Santa CatarinaCELG = Centrais Eletricas de Goias S.A.CELPE = Companhia de Eletricidade de PernambucoCEMAT = Centrais Eletricas Matogrossenses S.A.CEMIG = Centrais Eletricas de Minas Gerais S.A.CEPEL Centro de Pesquisa de EletricidadeCESP = Companhia Energetica de Sao Paulo S.A.CHESF = Companhia Hidro Eletrica do Sao FranciscoCOC = Comissao de CoordenacaoCOELBA = Companhia de Eletricidade do Estado da BahiaCOELCE = Companhia de Eletricidade do CearaCOIMP = Comite de ImplantacaoCOPEL Companhia Paranaense de EnergiaCOS = Centro de Operacao de SistemaCPFL = Companhia Paulista de Forca e LuzCSC = Centro de Supervisao e CoordenacaoDACS = Data Acquisition and Control SystemDNAEE = Departamento Nacional de Aguas e Energia EletricaELETROBRAS = Centrais Eletricas Brasileiras S.A.ELETRONORTE = Centrais Eletricas do Norte do Brasil S.A.ELETROSUL = Centrais Eletricas do Sul do Brasil S.A.EM = Energy ManagementESCELSA = Espirito Santo Centrais Eletricas S.A.FURNAS = Furnas Centrais Eletricas S.A.GCOI = Grupo Coordenador para Operacao InterligadaGERP = Gerencia do ProjetoGGF = Global Guarantee FundGPE = Grupo de Projeto EspecificoIDB = Inter American Development BankLIGHT = LIGHT-Servicos de Eletricidade S.A.OPE = Orcamento Pluriannual de Eletricidade

1/ The Brazilian Government follows a policy of frequent exchange rateadjustment. Dollar equivalent figures in this report are based on theJune 1979 rate unless otherwise indicated.

FOR OFFICIAL USE ONLY

Abbreviations and Acronyms (Cont'd)

RTSS = Real-Time Supervision SystemSCADA Supervisory Control and Data AcquisitionSINSC = Sistema Nacional de Supervisao e Coordinacao da

Operacao InterligadaSSC = Secretaria de Supervisao e CoordinacaoUPS = Uninterruptible Power Supply

UNITS AND MEASURES

kW = Kilowatt = 103 wattMW = Megawatt (103 kW)kWh = Kilowatt hour = 103 watt hourGWh = Gigawatt hour (106 kWh)TWh = 1000 Gigawatt hour = 109 kWh

kV = Kilovolt (103 volts)kVA = Kilovolt - ampereMVA = Megavolt - ampere (103 kVA)km Kilometer (0.6214 mile)average MW annual MWh/8760h

FISCAL YEAR

January 1 to December 31

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.

BRAZIL

STAFF APPRAISAL REPORT

ELECTRIC POWER SYSTaL COORDINATION PROJECT

(SINSC)

Table of Contents

Page No.

1. THE ENERGY AND POWER SECTORS

A. Energy Supply and Demand ..... ............... 1

Energy Demand ............. . 1

Energy Supply .................................... 0 ............... I

- Oil ........... ..................................... I

- Coal ............................. 1.................. - Hydro ................................ 2

- Nuclear ........ ............................................. 2

- Other Energy Sources ............................... 2

B. The Power Sector ...................................... 3

Bank Participation in the Power Sector ................ 3Organization of the Power Sector ...................... 3Electricity Tariffs ................................... 4Existing Facilities ....... 7Electric Energy Consumption ........................... 7Access to Service and Rural Electrification ............ 7Sector Development . .................................. . 8

Sector Expansion Program .............................. 8

2. THE BORROWER AND THE BENEFICIARY

The Borrower ........................... ................. 10Coordination of Operations of Electric Power Facilities .... 11The Beneficiary ........... .. . ............. ... . ................. 13

Companhia Hidro Eletrica do Sao Francisco (CHESF) .......... 13Organization ........................ ....................... 13Management System .................. ......................... 14

Bank Involvement ............. .............................. 14CHESF's Power Market ..................... .................. 14

Participation in Interconnected Operation .................. 15

This report is based on the findings of an appraisal mission consisting ofMessrs. Philip Owusu and Helmut Wieseman which visited Brazil in September/October 1979 and a supplemental visit by Mr. Philip Owusu in November/December 1979.

Table of contents (Continued)

Page No.

3. THE PROGRAM AND THE PROJECT

The Program for a National System for Supervision andControl of Interconnected Operations .................... . 16

Project Selection and Content .............................. 17Project Cost .... ......... - .*... .. 19Amount of Loan ............I........... .... .................. 21Project Implementation .. - ..... .... .... . . ....... ........ 21Procurement ....... o ........................................ 2 31Retroactive Financing ...... ....................... ......... 24Disbursement .o........................................... 24Environment . ......................... ............. . .... 25Project Risks ...... .......................... . ............ 25

4. ECONOMIC ANALYSIS

Introduction ..................--............ 26Least Cost Solution ............. . -......... --......... 26Economic Benefits ... o .................... .. ... 27

5. FINANCIAL ANALYSIS

Introduction ..................... ........... .... .. 28ELETROBRAS ................. . ............................. 28CHESF .... 30

6. AGREEMENTS REACHED AND RECOMMENDATIONS

Recommendation .... -- ....... ........ .............. 32

LIST OF ANNEXES

Annex 2.1 - Eletrobras Organization Chart .... ............ 33Annex 2.2 - CHESF Organization Chart ............ o....... 34Annex 3.1 - Control Areas of the Brazil Interconnected

Power System. ....... o............ 35Annex 3.2 - Technical Project Details ................ . . 36Annex 3.3 - Summary Project Cost Estimate ..... o .......... 39Annex 3.4 - Detailed Project Cost Estimate and Disbursement

Schedule, ELETROBRAS Subproject .- ......... 40Annex 3.5 - Detailed Project Cost and Disbursement Schedule

of CHESF Subproject ................... . . .... 41Annex 3.6 - Implementation Schedule of ELETROBRAS Subproject 42Annex 3.7 - CHESF Implementation Schedule .... o .......... 43Annex 3.8 - Configuration of SINSC ..... ............ 44

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Table of contents (Continued)

Page No.

Annex 5.1 - ELETROBRAS Financial Indicators 1976-1986 .... 45

Annex 5.2 - ELETROBRAS Sources and Uses of Funds 1979-86 . 46

Annex 5.3 - ELETROBRAS Actual and Forecast Income Statements

1976-1986 ......................... 47Annex 5.4 - ELETROBRAS Balance Sheets 1976-86 .... ........ 48

Annex 5.5 - CHESF Financial Indicators ................... 49

Annex 5.6 - CHESF Sources and Application of Funds ....... 50

Annex 5.7 - CHESF Income Statement 1976-86 .... ........... 51

Annex 5.8 - CHESF Forecast Cost of Service .... ........... 52

Annex 5.9 - CHESF Balance Sheets 1976-86 ..0 .............. 53

EXHIBIT A

Selected Documents and Data Available in the Project File. 54

BRAZIL

STAFF APPRAISAL REPORT

ELECTRIC POWER SYSTEM COORDINATION PROJECT

1. THE ENERGY AMD POWER SECTORS

A. Energy Supply and Demand

Energy Demand

1.01 The estimated total gross consumption of energy in Brazil in 1979was 116.5 million T.o.e. (0.97 T.o.e. per capita, compared to about 0.89T.o.e. per capita for Costa Rica and 1.6 T.o.e. for Mexico)l/ and it isexpected to grow at about 6% per annum in the next 5 years, reaching about1.19 T.o.e. per capita in 1985. Oil products account for about 42% of thenational energy consumption, mineral coal, wood products and wastes 32% andhydroelectricity 26%. In 1979, generation of electric energy from all primarysources is estimated to have been 122,000 GWh; its annual rate of growth since1974 has been 12% with per capita consumption growing from 550 kWh in 1974 to1,000 kWkh in 1979.

Energy Supply

Oil

1.02 Brazil's proven oil reserves are limited. Present domestic produc-tion of crude covers only 15% of the country's requirements and is concen-trated in the Northeastern region. To increase domestic production, Governmentaccelerated exploration in 1977 by granting risk type contracts to privatefirms, ending government monopoly in this field. Petroleum's share of theenergy supply has been reduced somewhat by hydroelectricity under the vastprogram of construction of hydro plants. However, a decrease in use oftraditional sources, especially wood, coupled with the growth in overalldemand, could produce a supply gap. Unless satisfactory results are obtainedin the oil exploration program, this gap may need to be covered throughincreased petroleum imports. 2/ In order to reduce the foreseen gap, Govern-ment is inducing the use of other energy sources, through fiscal incentivesfor the production of fuel alcohol and exploitation of coal.

Coal

1.03 Total coal reserves are estimated at 15.8 billion tons, and mostof it is located in the Southern region, primarily in the states of

1/ T.o.e.: tons of oil equivalent, approximately 10 kcal. Data source:Balance Energetico Macional, 1978 (Ministry of Mines and Energy).

2/ Government projections to 1987 show an average yearly growth of about4% in petroleum imports with a decrease of about 12% (from 42% to 34%) inits proportion of total energy utilization--Balance Energetico Nacional,1978 (Ministry of Mines and Energy).

Santa Catarina and Rio Grande do Sul. Coal represents about 4% of thecountry's energy supply. In addition to construction of coal-fired thermalplants, Government is also encouraging substitution of coal for other fuelsin industrial boilers; the cement industry is particularly suitable in thisfuel substitution and some of these plants are currently being converted--coalashes are also an important ingredient in cement. Through the incentives forhigher use of coal, Government expects a 50% increase by 1987 of coal's sharein the energy supply.

Hydro

1.04 Brazil has vast water resources with a potential for hydroelectricdevelopment estimated at about 200,000 MW, of which only about 24,100 MW havebeen utilized. An additional 38,600 MW are scheduled to be in operation by1990. Many watersheds could be developed economically but they are relativelyremote from the demand centers. When there are differences in regional hydro-logical regimes in a country, electrical interconnections result in a reductionin installed capacity and reduced use of fossil fuels for power generation.This diversity exists between the Southern and Southeastern regions and a highvoltage interconnection is under construction and being financed with Loan1343-BR to ELETROSUL. Other electrical interconnections are being consideredby sector authorities leading towards a least cost intraregional program. Therecent loan to ELETROSUL (Loan 1895-BR) will finance further expansion ofeletrical interconnections in the South.

Nuclear

1.05 About 3,000 MW of nuclear generating capacity is scheduled for1985 operation in the Southeastern region, the largest demand center in thecountry. The first unit of 625 MW, supplied by Westinghouse (USA), is ex-pected to operate in 1981. The Brazil-Federal Republic of Germany agreementof June 27, 1975 provides for the supply of an additional 2,400 MW in nuclearplants and a Brazilian option for six additional 1,200 MW units.

Other Energy Sources

1.06 With respect to other energy sources firewood, charcoal and sugar-cane bagasse are also used but not for electricity production for publicservice. Firewood is used only in some small industries and for cooking inrural and some urban low income households. Charcoal is also used for cookingand in blast furnaces. Bagasse is burned to produce steam in sugar millingand in the distillation of alcohol. These fuels represent about a quarter ofBrazil's energy utilization and would probably not increase. Other sourcesknown to exist in Brazil include natural gas, with small reserves in North-eastern fields for local supply. There are few sites for tidal energy devel-

opment, and geothermal fields have not yet been discovered. Brazil has beenactive in exploring alternative energy sources; the largest endeavor is theuse of alcohol as fuel in internal combustion engines. In the power sector,tests are being conducted on wind-driven generators.

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B. The Power Sector

Bank Participation in the Power Sector

1.07 Since 1948 the Bank has made 34 loans to the Brazilian power sectoramounting to about US$1.6 billion. Most have been for hydroelectric plantsand associated transmission facilities in the Southeastern and Southern regions.Bank participation has contributed to sector organization and planning andfacilitated foreign commercial financing of the sector. The Bank also assistedthe Government in its effort to implement a tariff policy which has enabledthe sector to contribute a considerable proportion of the funds required forsector investments. Project performance audit reports on power-plant 1/ anddistribution-system 2/ projects have been distributed to the Executive Direc-tors. These reports conclude that, despite construction delays and costoverruns, the projects were substantially successful. The latest reportpoints to the recent inadequacy of tariffs.

1.08 The most recent loans have been for transmission and distributionprojects: Loan 1895-BR of October 1980 to ELETROSUL to finance developmentof its high voltage transmission system; Loan 1824-BR of April 1980 toCompanhia Estadual de Energia Eletrica (CEEE), to finance the expansion ofits subtransmission and distribution system; Loan 1721-BR to COPEL to financeits 1980-83 distribution expansion program, May 1979; Loan 1538-BR to ELETROBRASfor the system expansion programs of three state-owned utilities in the South-eastern and southern regions, May 1978; Loan 1343-BR to ELETROSUL for itshigh voltage transmission expansion program, February 1977; Loan 1300-BR toELETROBRAS to finance part of the 1976-79 transmission and distribution expan-sion programs of three northeastern utilities, August 1976; and Loan 1257-BRto COPEL for its 1976-79 distribution expansion program, May 1976.

Organization of the Power Sector

1.09 Though complex and one of the largest in the world, the electricsector is well organized and the applicable policies have generally been wellformulated and applied. Decree 68,204 of June 7, 1967 established the currentsector organization under which the Departmento Nacional de Aguas e EnergiaEletrica (DNAEE) performs regulatory functions, grants licenses for generatingplants, assigns concessions, sets tariffs (after approval by the Ministry ofPlanning) and approves expansion plans. Centrais Eletricas Brasileiras(ELETROBRAS), a utility holding company, administers public funds for use byits subsidiaries and state-owned utilities, coordinates external borrowings,expansion plans for major generating and transmission facilities, and coordi-nates the operation of the interconnected electric power system in the country.

1/ Loan 404-BR (Sec. M 77-532 of June 28, 1977); Loans 442-BR and 566-BR(Sec. M 78-34 of January 13, 1978); and Loan 728-BR (Sec. M 79-756 ofOctober 23, 1979).

2/ Loans 475/476/477 and 478-BR (Sec. M 75-646 of September 4, 1975).

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1.10 The five geographical regions are served by ELETROBRAS' subsidiaries(bulk suppliers), in conjunction with state-owned utilities (principally indistribution) as follows: Centrais Eletricas do Norte do Brasil (ELETRONORTE)for the North and part of the Central-West; Companhia Hidro Eletrica do SaoFrancisco (CHESF) for the Northeast; Furnas-Centrais Eletricas (FURNAS) forthe Southeast and part of the Central-West; and Centrais Eletricas do Sul doBrasil (ELETROSUL) for the South. A joint Brazil-Paraguay authority (ItaipuBinacional) has responsibility for the Itaipu Hydroelectric project underconstruction on the Parana River where it defines the border between the twocountries. In January 1979, the Federal Government, through ELETROBRAS,acquired from Brascan Ltd. of Canada about 83% ownership of LIGHT - Servicosde Eletricidade S.A. (LIGHT), the electric power distribution company servingthe cities of Rio de Janeiro and Sao Paulo.

1.11 Government guidelines contained in the 1967 decree (para. 1.09)promote concentration of public electricity services in the individual statesinto single state-owned utilities. The resulting action produced mergers andacquisitions by the major state-owned companies of most municipal and privatelyowned utilities. The main existing state-owned utilities, ranked by value ofassets, are: Centrais Eletricas de Sao Paulo (CESP); Centrais Eletricas deMinas Gerais (CEMIG); Companhia Paranaense de Energia Eletrica (COPEL);Companhia Estadual de Energia Eletrica (CEEE) - Rio Grande do Sul; CentraisEletricas de Santa Catarina (CELESC); Companhia de Eletricidade do Estado daEahia (COELBA); Companhia de Eletricidade de Pernambuco (CELPE); and Companhiade Eletricidade do Ceara (COELCE). All these utilities have been borrowers orbeneficiaries under past Bank loans.

Electricity Tariffs

1.12 Consumer bills contain the following charges:

A. The tariff, which on a nationwide basis, provides about 78% ofrevenues collected from consumers. According to the current legis-lation, these charges should be set at levels to cover:

(a) operation, maintenance and administrative expenses;

(b) taxes other than for income (mainly property taxes);

(c) straight line depreciation of average gross revalued fixedassets in operation;

(d) reversion (federal tax of up to 5% of assets in operation) tofund loans to concessionaires for facility expansion, compensa-tion of private utilities for acquisition of their assets, andthe Global Guarantee Fund--a tariff equalization facility; and

(e) a legal return (normally between 10 and 12%) on remunerableinvestment (net average plant in service plus an allowance forworking capital).

B. The sole tax on residential, commercial and small industrial 1/consumer bills, which provides about 12% of sector revenues. Forty

1/ Industries using less than 2,000 kWh per month.

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percent (40%) from this source goes to federal sector agencies,fifty percent (50%) to state and federal district utilities, andten percent (10%) to municipal utilities; and

C. The Compulsory Loan (10% of revenues), an obligatory investmentscheme under which industrial consumers using more than 2,000 kWhper month acquire ELETROBRAS bonds (20-year maturity yielding 6%annual interest and revalued through monetary adjustments).

Since 1966, annual revaluation of assets used as a basis to determine remu-nerable investment, is mandatory. Currently, assets are adjusted monthlyfor monetary correction in accordance with changes in the ORTN index (themonetary correction index applied to Government bonds). In the past, thisindex was computed on the basis of past inflation and, though generallylagging slightly behind inflation, movements in the ORTN index roughlycorresponded to general price movements. Since 1977, however, the cumulativeORTN adjustment has only been 55% of inflation as the Government has beenlimiting ORTN corrections as part of a strategy to combat inflation. 1/As a result, there has been an erosion of the asset base on which the sector'sremuneration is calculated. The Government has recently announced that itspolicy to limit ORTN corrections to arbitrary ceilings would be discontinued,and that beginning in 1981 ORTN would be adjusted so as to follow closelythe movement of the national consumer price index. This should result inmore realistic asset revaluation in the future. The Bank is carrying on aclose dialogue with the Government on this issue.

1.13 In 1973 DNAEE initiated application of a policy to reduce regionaltariff inequalities in order to promote a more balanced economic development.By 1976, with minor exceptions, average tariff levels had been equalized. TheGlobal Guarantee Fund (GGF) is used in the tariff equalization process tosupplement earnings of eligible utilities, allowing them to obtain a returnon remunerable assets of up to 10%. The GGF is financed through a surchargeof up to 2% on assets in operation of all the utilities. DNAEE has used itscontrol over the GGF to encourage improved performance by participatingutilities. To be eligible for transfers from the Fund, utilities are requiredto: (i) have earned less than the legal minimum 10% return on remunerableinvestment; (ii) to have a valid agreement with the government of the statein which they operate for the payment of all bills in arrears by the stategovernment agencies; and (iii) when owned by the federal, state or municipalgovernments, and these have assumed a legal obligation to reinvest theirdividends into the utility, to have had all such dividends reinvested.

1.14 The absence of adequate tariff increases over the past four years,due mainly to Government's measures to curb inflation, has led to erosion ofsector revenues, causing utilities to rely on increasingly costly borrowingsto finance the sector's massive investment program. A recent (1979) studycompleted by ELETROBRAS and DNAEE showed that the sector would face seriousfinancial difficulties if Government fails to raise tariffs to allow utilitiesto earn the minimum 10% return on remunerable investment as provided for insector legislation. Following several Bank representations to Government onthis matter, tariffs were raised by 55% on December 1, 1979, after two other

1/ 1980 inflation is estimated at 100% while the ORTN correction will beonly 50%.

increases in the same year of 37% and 12%, respectively. In spite of theseincreases, the sector's remuneration in 1979 has been estimated by DNAEE at8.3% 1/. By mid-November, tariffs had been increased by a further 16% inMay and 20% in August. The Bank has obtained assurances from Governmentthat it will: (i) allow utilities that are Bank borrowers to recover, duringthe period 1981-1983, any shortfall in remuneration incurred before 1980 andfurther that shortfalls would be revalued i.e. maintained in real terms; and(ii) allow these utilities to earn the 10% return in 1980 and, in case thisintent is not entirely met recover any shortfall in that year in the next threeyears. Current (mid-November) estimates indicate that sector remuneration in1980 will be about 6.2%, based on currently used revaluation methods andofficial estimates of increases in the national treasury-bond index (ORTN) forthe rest of the year. Sector tariff policy for 1981 and beyond is currentlybeing discussed with Government in connection with power projects now beingprepared.

1.15 Under previous loans, the utilities involved were required tomaintain their revenues, including transfers from the GGF, at levels consis-tent with sound financial practice and in conformance with sector legislation.Under existing agreements with the Bank, Government confirmed the Bank'sunderstanding that the utilities' revenues should cover the cost of providingelectricity service and that their return on remunerable investment not belower than 10%. Utilities' revenues have deteriorated in the last four yearsmainly due to inadequate tariff increases and after DNAEE: (i) redefined"remunerable investment," effectively lowering the rate base; (ii) disapprovedsome operating expenses; and (iii) used more liberally a Compensation Account,which has the effect of deferring to future years revenues needed to covercurrent expenses. In relation to the recent loan to CEEE, Government agreedto (i) require DNAEE to allow the concessionaires a reasonable period toreduce their operating costs whenever DNAEE proposes not to recognize suchcosts in connection with tariff setting; (ii) require DNAEE to exchange viewswith the Bank on the foregoing and to inform the Bank of any changes in thecriteria used to determine the acceptability of concessionaires service costs;and (iii) require DNAEE to inform the Bank within 30 days of any decision onthe levels of electricity rates to be allowed to concessionaires. Withrespect to operating expenses, DNAEE agreed in connection with the CEEE loan,to complete sector efficiency investment study by June 30, 1981. This studywould contain recommendations on the basis to be used by DNAEE in assessingexpenses.

1.16 As is usual with loans to Brazilian power utilities the beneficiaryof the loan, Companhia Hidro Eletrica do Sao Francisco (CHESF), agreed tomaintain its earnings (including transfers from the GGF) at levels consistentwith sound financial public utility practices and in accordance with existinglegislation. CHESF also agreed to maintain its eligibility under normsprescribed by DNAEE in the event it requires transfers from the GGF. TheGovernment confirmed the usual understanding that DNAEE would allow CHESF arate of return on remunerable assets not less than 10 percent. The Governmentconfirmed, also, that beginning in 1981 no part of the 10% return would bedeferred to future years.

1/ Information for some companies has not yet been supplied to DNAEE.

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1.17 Before 1976, sector legislation enabled most of the Brazilianutilities to attain a reasonable return on invested capital and allowedthem to finance a considerable share of sector investments. Present tariffsalso contain generally appropriate features such as separate demand and energyrates for ind-.trial and commercial consumers, discounts to encourage largeindustrial consumers to accept supply at higher voltages, and life-line ratesfor rural and minimum residential consumption. However, the tariffs do notprovide for differentiation between peak and off-peak rates, and the equaliza-tion feature warrants reassessment. UTnder provisions of Loan 1300-BR, DNAEE,with the assistance of Electricite de France, completed in March 1979 a studyof bulk supply tariffs based on marginal costs. The principal conclusionsdrawn from the study were: (i) tariffs are below marginal costs; (ii) incor-poration in the tariff of components reflecting variations in seasonal anddaily demands has economic merit; (iii) tariff structure needs modifications,particularly with respect to energy (kWh) and capacity (kW) charges--theformer's proportion should be higher; and (iv) additional studies should bemade on generation, transmission, and distribution system costs, customerdemand characteristics, and application of marginal pricing for bulk supply.Terms of reference for the recommended additional studies have been preparedby DNAEE and approved by the Bank; work on the studies has already started.The foreign expenditures associated with these studies would be financed bythe proposed loan. A power sector memorandum, currently under preparationwill discuss progress on these recommendations in detail.

Existing Facilities

1.18 By the end of 1979 the power sector had about 28,400 MW of installedgenerating capacity of which about 85% was in hydroelectric stations and theremainder in thermal plants (one-third in oil-fired steam units, about 15% incoal-fired units and the remainder in diesel internal combustion and gasturbine units). The high voltage transmission system contains about 34,000circuit-km at voltages ranging from 230 to 500 kV.

Electric Energy Consumption

1.19 The consumption of electric power and other energy resources inBrazil is closely linked with economic activity. The southern and southeasternregions, where most of the country's agricultural and industrial productiontakes place, used in 1979 about 80% of all primary energy. The southeasternregion, with 42% of Brazil's population accounted for about 71% of the totalelectric energy utilized in the country in 1979. The southern region, with18% of the population utilized 12%. In the last five years, electricitygeneration in the southeastern and southern regions grew at 11% p.a. and15% p.a. respectively.

Access to Service and Rural Electrification

1.20 About 80% of Brazil's urban population is receiving electricityservice. However, the number of people receiving this service in the ruralareas, where about 40% of the population lives, is very low. Government ispromoting expansion of subtransmission and distribution facilities to provideelectricity service to a higher proportion of the population, particularly inrural areas.

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1.21 Rural electrification on a national level was started in 1970 whenthe Instituto Nacional de Colonizacao e Reforma Agraria, a self-governingagency attached to the Ministry of Agriculture, was made responsible for theplanning, promotion and control of rural electrification through consumercooperatives. Progress, however, was slow (4 to 5 thousand customers/year)and in 1974, ELETROBRAS created a rural electrification department to comple-ment the Ministry of Agriculture's activities. ELETROBRAS' approach to ruralelectrification has been that of financing distribution networks in ruralareas close to existing lines. It does not finance household wiring or con-nection fees. ELETROBRAS finances 50 to 80% of the cost of individual ruralelectrification projects at an interest rate of 12% (principal not subjectto monetary correction) with 15 years maturity including a grace period of 5years. This results in a large subsidy given inflation rates much in excessof the interest rate charged. The remaining cost is borne by utilities or byother consumers. The Ministry of Agriculture's program (which has beenassisted by two Inter-American Development Bank (IDB) operations totallingUS$84.4 million, including US$68.7 million of funds provided on concessionaryterms) grants similar terms to participating rural electrification cooperatives.

1.22 About 43,000 rural cooperatives, individual households and othercustomers (about 200,000 people) were connected in 1978 through ELETROBRAS-assisted programs at a total cost of about US$100 million. Of these newcustomers, about 44% were located in Southeastern region and 43% in the South.Over the period 1979-1981 ELETROBRAS expects to participate in projectsestimated at about US$570 million, and provide service to about 160,000 newrural connections (45% in the Southeast, 32% in the South, 3% in the Central-West, 19% in the Northeast and 1% in the North), thereby providing service toabout 800,000 people.

Sector Development

1.23 No constraints have been observed in sector organization thatcould adversely affect continued sector development. The high level ofinvestment required in the sector (about 9% of the country's gross domesticcapital formation) and the Government's present policy of limiting publicsector investments as part of the program to control inflation may, on theother hand, affect future sector investment programs. In connection with Loan1538-BR, ELETROBRAS agreed to prepare by the end of 1979 a long term plan forthe expansion of the Brazilian power sector up to the year 2000. This planwas to be based on an integrated perspective of the country's long term powerrequirements and was to give due consideration to economy and efficiency.ELETROBRAS has now prepared a plan ("Plano '95") specifying the plant to beinstalled up to 1995. Bank staff has reviewed the plan and concluded that itdoes not appear to meet the objectives envisaged by the Bank. The Bank iscontinuing the dialog with the Brazilians on the matter. The national electricpower supervision and control system, of which the proposed project is a part,is expected to provide a data base which can be used to enhance power systemplanning. ELETROBRAS has agreed to (i) continue to improve the methodologyit uses in its planning efforts; (ii) complement the "Plano '95" with analysesof alternative development sequences by the end of 1981; and (iii) continue toexchange views with the Bank on this subject.

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Sector Expansion Program

1.24 The Brazilian power sector expansion program during the project'sexecution is based on the "Plano '95" referred to in the preceding paragraph."Plano '95" assumed that during the 1980-1985 execution period of the project,electricity demand will continue to grow at about the 12.4 percent annualgrowth rate achieved during the past five years, which is reasonable. Tomeet this demand forecast during the project period, the plan envisages theaddition of the following principal electric power facilities during 1980-85:about 19,400 MW of hydropower plant, 625 MW of nuclear power plant, and about600 MW of other thermal plant at an estimated cost for additional generationof about US$19.7 billion equivalent (in constant June 1979 prices); andExtra-High-Voltage Direct Current (EHV-DC) transmission system of two + 600 kVlines from Itaipu parallel with a 750 kV EHV/Alternating Current (EHV-AC)transmission system to the Sao Paulo area; expansion of the existing trans-mission networks at 230 kV and above at an estimated cost for additionaltransmission of about US$10.3 billion equivalent (in constant June 1979prices); and distribution expansion amounting to US$5.3 billion equivalent(in constant June 1979 prices). Due to the sector investment ceiling imposedby the Secretaria de Planejamento in 1980 (para 1.23), and the possibilitythat similar ceilings will be imposed in the future, it is likely that theinvestment targets set by "Plano '95" will not be met, particularly in theareas of transmission and distribution. This topic will be discussed inthe power sector memorandum currently being prepared.

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2. THE BORROWER AND THE BENEFICIARIES

The Borrower

2.01 The Borrower would be Centrais Eletricas Brasileiras SA - ELETROBRAS,an autonomous Government institution created by Law No. 3890-A of April 1961.Of the subscribed capital of ELETROBRAS at December 31, 1978 amounting toCr$ 35.8 billion about 99.7% was owned by the Brazilian federal government andthe remaining 0.3% was owned by state and municipal governments and by privateshareholders. ELETROBRAS operates under the jurisdiction of the Ministry ofMines and Energy. The main functions performed by ELETROBRAS are:

(a) as a holding company exercising ownership on behalf of theFederal Government in those utilities in which the Governmenthas invested;

(b) as a financial institution administering and allocating fundsto assist the expansion of its subsidiaries and state andmunicipally owned utilities; and

(c) as a planning and coordinating agency assisting the Ministryof Mines and Energy to plan and execute the development ofthe power sector, coordinate the operation of generating andtransmission facilities, provide research, and, supply techni-cal, managerial and training services.

2.02 This will be the third Bank loan made directly to ELETROBRAS.The first two, Loans 1300-BR and 1538-BR, were made in 1976 and 1978 to beon-lent to state owned utilities in the Northeast and Southeast to assisttheir distribution expansion programs.

2.03. ELETROBRAS is administered by an Administrative Council, which setspolicy and an Executive Board of Directors which manages its operations. TheAdministrative Council consists of the President of ELETROBRAS, who acts asits Chairman, the five members of the Executive Board of Directors, two tofour members elected for three year periods representing the Government, onemember representing the state and municipal government stock holders, and, onemember representing private stockholders. The Executive Board of Directorsconsists of the President of ELETROBRAS as chairman and five directors, eachof whom serves as the executive head of a functional department in the company.In addition there is a five member Fiscal Council, elected annually by thestockholders, which is charged with the responsibility for reviewing itsfinancial affairs. ELETROBRAS has built up a competent organization. It iswell run and its organizational structure (Annex 2-1) is well suited to itsneeds. ELETROBRAS financial accounts have been audited satisfactorily by theBrazilian firm of Boucinhas, Campos & Claro Ltda. ELETROBRAS agreed to

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have its accounts audited by external auditors satisfactory to the Bank andsubmit audited financial statements to the Bank not later than four monthsafter the end of each fiscal year.

2.04 ELETROBRAS is the principal financing institution for the Brazilianpower sector. It is the major shareholder in the four regional bulk supplycompanies (para. 1.10). ELETROBRAS also owns majority shares in two otherpower distribution utilities and minority participation in 27 other associatedcompanies in the power sector. ELETROBRAS plays a role akin to a developmentbank in Brazil's power sector. In addition to its equity participation inthe subsidiaries and associated companies, it channels funds to the variousutilities through loans and grants. Through its financial leverage ELETROBRAShas been successful in improving the financial and technical efficiencies ofthe utilities.

2.05 ELETROBRAS is responsible for carrying out the policies estab-lished by the Ministry of Mines and Energy for the development of the sector.ELETROBRAS, on the basis of proposals from the utilities, prepares multi-annualbudgets (Orcamento Plurianual do Setor de Energia Eletrica - OPE) which serveas the principal planning document for the power sector. The OPE, whichcovers a period of 5 years, contains a market study, detailed regional andutility-specific investments necessary to satisfy this market and the corres-ponding financial forecasts. The OPE is prepared annually within the broadpolicy guidelines of the Government's five year development plans. It servesas a useful input in the planning of domestic electric manufacturing industrybecause it contains information on equipment requirements.

2.06 ELETROBRAS is also responsible for research beneficial to the elec-tric power sector. Together with its major subsidiaries ELETROBRAS hasestablished a research center (Centro de Pesquisa de Eletricidade - CEPEL)wvhich has been working closely with the power companies and the electro-mechanical equipment manufacturing industry. With respect to the proposedproject CEPEL is undertaking a survey of the capability of the local industryto furnish project components. It is expected to play a major role in thedevelopment of computer software and programs forming part of the project.

Coordination of Operations of Electric Power Facilities

2.07 The principal characteristics of the Brazilian interconnectedpower system are such that on-line coordination of operations by the variousutilities which own and operate the system is essential. The area coveredby the system is very large; the principal hydroelectric energy sources arelocated far from the major load centers; and several utilities own andoperate power plants in cascade on the same rivers. Because of the mixedownership of power plants, ownership and operation of the high voltagetransmission lines, particularly those serving the principal load centersof the South and Southeast, is also mixed. Each of the principal trans-mission systems constitutes, by itself, a sufficiently complex network

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to justify network analysis and security monitoring capability. However, noneof the utilities operating the principal transmission lines can adequatelymonitor and analyze its own system without receiving data on the operation ofthe systems operated by the other utilities. In recognition of the benefitsthat could be derived from coordinating their operations the major powercompanies in the Southeast voluntarily formed, in 1968, the Comite Coordenadorde Operacao Interligada (CCOI) - a coordinating Committee to establish thepolicies for interconnected operations. CCOI then set up task forces toperform studies on planning and coordination of energy production, coordina-tion of bulk power transmission, system operation, maintenance, dispatchingand control.

2.08 While the CCOI was initially successful in coordinating inter-connected operations it lacked the legal and organizational framework to copewith the needs of an increasingly complex and rapidly growing interconnectedpower system. To provide this framework, the government, through Law No. 5899of July 1973 and Decree No. 73.102 of November 1973, established the GruposCoordinadores para Operacao Interligada (GCOI) to coordinate the operations inthe interconnected power system of the South and Southeast regions. Two suchgroups were established: GCOI-SE covering the South-eastern regior and GCOI-Scovering the South. Although the Northeast power system will not be elec-trically interconnected with the South/Southeast interconnected network untilprobably late in the 1980's, Portaria No. 360 of the Ministry of Mines andEnergy dated March 17, 1977, established CHESF (the bulk power supplier forthe Northeast) as a member of GCOI-SE. CHESF was made a member of GCOI South-east because the ownership, in cascade, of the major hydro reservoirs onthe Sao Francisco river (Tres Marias by CEMIG of the Southeastern system andSobradinho by CHESF) and the coordination required for the operation of thesemajor reservoirs, functionally ties the Northeast and Southeast power systems.CHESF can therefore derive economies by coordinating its operations with theinterconnected South/Southeast system. The GCOI's are also charged with coordi-nating and directing the operations of the individual generating plants andtransmission systems to attain the maximum efficiency for the whole Brazilianpower system from a financial and operating point of view.

2.09 Policy direction at GCOI is provided by its Superior Council con-sisting of the Presidents of ELETROBRAS and the participating utilities withDNAEE's Director General acting as observer. The Executive Committee of GCOIis made up of the Directors of Operations of ELETROBRAS and the participatingutilities with the ELETROBRAS Director acting as chairman. DNAEE acts as anobserver of the deliberations of the Executive Committee. The ExecutiveCommittee is responsible for establishing the procedures and principles forinterconnected operations. The Executive Committee's decisions are imple-mented by the Secretaria de Supervisao e Coordenacao (SSC) which is a stafforganization within ELETROBRAS. Actual implementation of the procedures forinterconnected operations is carried out through five subcommittees consist-ing of not more than two representatives from each of the participatingutilities. Presently these five subcommittees are responsible for carrying

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out: (i) electrical studies; (ii) energy operations planning; (iii) operationsscheduling; (iv) maintenance programming; and (v) planning and operating tele-communications. ELETROBRAS has developed a competent staff organization toassist GCOI in each of these areas on an annual and monthly cycle basis. GCOIhas been able to effectively minimize the production of electric energy fromplants burning fuel oil while maintaining safe levels of multi-annual hydrostorage to meet future needs and establishing safe and economic operatingcriteria. GCOI annually simulates, for about the next three years, futuresystem operations using hydrological data compiled since 1931, and determinesan annual and monthly program of operations for each generating plant of theinterconnected system. GCOI estimates the cost of using fossil fuels forthermal generation for the interconnected system as a whole and allocates thiscost to the utilities in proportion to their power market. The other GCOIactivities include performing system stability studies to anticipate potentialoperating problems, identifying transmission system limitations, establishingdaily operating criteria, reserve and performance requirements. GCOI alsoproduces weekly, monthly and annual reports which summarize the overallperformance of the interconnected system.

2.10 While the GCOI has been effective in developing operations plans,establishing operating criteria and reviewing system performance, the presentmethod of operations, with little remote monitoring and control, is inadequateand it will become even more inadequate to meet the needs of the power sectoras the system continues to grow in complexity. The continued mixed ownershipof hydro power plants and transmission lines, the construction of largehydroelectric and nuclear power plants, the increasing interconnection of thenational grid, the introduction of extra high voltage transmission lines andpossible future interchange of energy with neighboring countries will all demanda level of power system monitoring, supervision, coordination and informationprocessing capability which is far beyond the capacity of the existing GCOI.The proposed national supervisory and control system (see Chapter 3) of whichthe project is a part would provide GCOI with this capability and hence itwould enhance the role entrusted to GCOI.

The Beneficiary

Companhia Hidro Eletrica do Sao Francisco (CHESF)

2.11 ELETROBRAS would on-lend about US$22 million from the proposedloan to the Companhia Hidro Eletrica do Sao Francisco (CHESF). CHESF wasestablished in 1948 as a subsidiary of ELETROBRAS and is charged with theresponsibility for the generation and transmission of electric power in theNortheastern region of Brazil (comprising the states of Bahia, Sergipe, Alagoas,Pernambuco, Paraiba, Rio Grande do Norte, Ceara, Piaui and Maranhao).CHESF's subscribed capital at December 31, 1978 was Cr$ 4.7 billion. Of thisELETROBRAS owned about 97%, the Superintendencia do Desenvolvimento do Nordeste(SUDENE) - a northeast regional development agency - owned 2%, and state andmunicipal government agencies owned the remaining 1%.

Organization

2.12 CHESF is administered by an Administrative Council and a Board ofDirectors. The Administrative Council comprises 3 members selected by the

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shareholders from the Directors of ELETROBRAS for a 3 year period. TheAdministrative Council is responsible for general policy formulation at thecompany. The Board of Directors, which is charged with managing the operationsof the company, comprises a president and six directors each elected to a 3year term by the general assembly of shareholders. Each board member alsoserves as executive head of an operating department. In addition, a FiscalCouncil, consisting of 3 members elected by the shareholders general assemblyto a one year term, approves the company's finances. At December 31, 1978,the company had about 11,300 employees. While the number of employees islarge by comparison with other Brazilian bulk supply utilities it is reasonableconsidering that its service area is spread over 1.5 million square kilometers.The company's organizational structure, which is shown in Annex 2-2, is sound.In the past few years CHESF has undergone frequent changes in its top manage-ment as persons holding top management positions at CHESF have been appointedby the government to fill positions in other utilities and elsewhere in thepower sector. These frequent management changes may have adversely affectedCHESF's operations and contributed to a slow recovery from delays experiencedin the execution of the Bank-financed Paulo-Afonso IV Project (para 2.14).The management situation at CHESF is beginning to stabilize and execution ofthe proposed project should not be adversely affected. CHESF has been ableto fill the vacancies of professional staff which resulted from moving itsheadquarters from Rio de Janeiro to Recife in 1975.

Management System

2.13 CHESF's financial planning, budgeting and management reportingsystems are satisfactory. Annual budgets and financial forecasts covering aperiod of 10 years are prepared and updated periodically. Internal controlfunctions under the internal audit department are satisfactory. CHESF's finan-cial accounts are audited annually by the firm of Boucinhas, Campos and ClaroLtda which is acceptable to the Bank. The provision in existing agreementsrequiring CHESF to have its accounts audited by external auditors satisfactoryto the Bank and to submit audited financial statements to the Bank not laterthan four months after the end of each fiscal year was repeated.

Bank Involvement

2.14 The Bank has made two previous loans to CHESF. The first, US$15million made in 1950, was to finance the first two 60 MW hydro electricgenerating plants on the Sao Francisco river. This project was successfullycompleted on schedule with minimal cost overruns. The second Bank loan ofUS$81 million was made in 1974 to finance transmission lines associated withthe Paulo Afonso IV hydro electric project. Because of design changes execu-tion of this project was delayed by about a year. The project is now proceedingsatisfactorily and will be completed in 1981. Its economic justification will

not be reduced by the delay.

CHESF's Power Market

2.15 CHESF is the sole utility generating electricity for public consump-tion in the Northeast. CHESF supplies energy in bulk to the nine state dis-tribution companies in its concession area. In addition, it supplies energy

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to several large industrial consumers. CHESF's power market has grown veryrapidly as a result of the Government's effort to industrialize the Northeast.Its energy sales grew at an annual rate of 15.7% between 1974 and 1978 com-pared to an annual growth rate of 12.4% nationally. CHESF's energy sales in1978 were i'.,179 GWh. CHESF's installed capacity at the end of 1979 was 3,000MW and its peak demand was about 2,700 MW. The generating reserve margin of10% in 1979 was low; however, during 1980 CHESF expects to increase itsgenerating reserve margin to a satisfactory 30% with the completion of anadditional 1,345 MW of hydro capacity.

Participation in Interconnected Operation

2.16 CHESF participates in the activities of GCOI-SE (para 2.08). CHESFhas been able to achieve economies of operations (e.g. fuel savings) bycoordinating its operating regimes with the interconnected South/Southeastsystem through regulation of the various hydro storage reservoirs on theSao Francisco river; in 1978, only 5% of energy generated in the Northeastwas fossil fuel based. CHESF also participates in the Comite Coordenador deOperacao do Nordeste (CCON). CCON includes DNAEE, ELETROBRAS and the ninestate power distribution companies of the Northeast. This committee ischarged with coordinating the short term planning of generation, transmissionand distribution in the Northeast, and establishing design standards andoperating procedures for CHESF and the nine state utilities. CCON has beeneffective in improving the operations and in achieving savings in investmentsin the Northeast system.

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3. THE PROGRAM AND THE PROJECT

The Program for a National System of Supervision and Control ofInterconnected Operations

3.01 To reduce Brazil's dependence on imported petroleum, the Government'sdevelopment policy stresses the maximum exploitation of domestic energyresources: hydroelectric, uranium/thorium and coal. Existing generationexpansion programs as well as the future generation expansion program containedin the "Plan 95" (para. 1.23) therefore emphasize the development of Brazil'sconsiderable hydroelectric potential. The Itaipu hydro project, the largestin the world, would add about 12,600 MW to Brazil's installed capacity when itis completed in 1987. The Tucurui project, under construction on the TocantinsRiver in the north, would add another 3,960 MW of capacity by 1987. It is,however, becoming increasingly more difficult to obtain the massive capitalinvestments required for their development. In recognition of this DNAEE/GCOI/ELETROBRAS are taking further steps to improve the coordination of theactivities of the various utilities in Brazil in order to achieve the mosteconomic installation and operation of their generation and transmissionfacilities.

3.02. GCOI currently directs interconnected operations by means of annualand monthly operation plans and dispatch schedules for the participatingutilities (paras. 2.08 and 2.09). Because there is no computerized supervi-sion and control system at the national level, the Brazilian interconnectedelectric power system is operated mainly by telephone directed operatorintervention. The power plants are operated principally in accordance withpredetermined generator loading schedules. Remote monitoring of the powerplants, substations and transmission lines, at most company, regional andnational levels, is non-existent. This situation is unusual for a large powersystem, in particular for an interconnected system as complex as Brazil's.The existing mode of operation does not provide enough flexibility for adaptingoperating plans and schedules to daily or hourly changes in hydrological andother system conditions. The proposed program would provide for this flexi-bility and would allow the operation of generation and transmission facilitiescloser to their technical limits while maximizing system reliability and thusstrengthen the coordinated operation of the interconnected power system ofBrazil (para. 2.10).

3.03. The proposed project will be part of a national system for supervisionand coordination of interconnected operations (SINSC). 1/ The SINSC programconsists of a computerized system which would allow for the remote supervisionof the interconnected power system at the national level and permit the coordi-nation of actions during serious emergencies. SINSC would also provide forremote supervision and control of the electric power facilities at theregional level2/ The principal components of the complete SINSC programare (i) a Real-Time Supervision System (RTSS) to be located at a national

1/ SINSC: Sistema Nacional de Supervisao e Coordenacao de OperacaoInterligada.

2/ Annex 3-1 shows the control areas of the major utilities.

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Supervision and Coordination Center (CSC 1/) in Brasilia; (ii) the DataAcquisition and Control Systems (DACS 2/) located at the System OperationsCenters (COS 3/) of major electric power supply companies and ITAIPU; and(iii) telecommunication systems. The RTSS will consist of computers, auxiliaryequipment consisting of consoles and video displays, computer programs, andthe interface equipment between the computers and the telecommunicationsystem. The DACS will consist of computer-based master stations, remoteterminal units, peripherals and supporting communication networks necessaryfor the COSs to control their areas of operation of the interconnected powersystem. The CSC computer will communicate with each of the computers at theCOSs through the communication systems. These systems (mainly on microwavesystems) consist of high quality voice grade channels. Annex 3-2 gives a moredetailed description of the elements of the SINSC program.

3.04. The facilities at the CSC and the COSs will form a hierarchicalcontrol system for the operation of the Brazilian interconnected power system.Annex 3-8 shows a schematic representation of the proposed national supervisoryand control system. The functions to be performed at the CSC, which will bethe top level of the system, include production scheduling and coordination,supervision of the main interconnected network, interchange accounting andoperations analysis and reporting. At the next level will be the COSs wherethe DACS will perform digital automatic generation control (AGC), supervisorycontrol and data acquisition (SCADA) and energy management (EM). The computerat the COSs will process, transmit and receive data from the CSC computer.At the bottom level will be the power plants and substations which will bemonitored and controlled from the COSs. To ensure the hierarchical integrityof the system there will be no direct communication between the CSC computerand the power plants and substations.

Project Selection and Content

3.05. As shown in Annex 3-8, the complete SINSC program will comprisethe CSC facilities and the COSs of 8 major utilities -- CHESF, FURNAS,CEMIG, CESP, CEEE, COPEL, ELETRONORTE, ELETROSUL-and also ITAIPU. Theproject proposed for Bank financing has been defined to comprise the initialcomponents of SINSC which are at an advanced stage of preparation. Theseare the CSC, to be located at Brasilia and implemented by ELETROBRAS, andthe COS of CHESF. Of the remaining COSs, COPEL's is already in operationand will require only minor modifications for integration into SINSC; theELETRONORTE system is being implemented and includes provisions for inte-gration into SINSC; the CEMIG system is being procured under an IDB-financedloan and will incorporate provisions for integration into SINSC. Thefunctional requirements and specifications for the COSs of FURNAS, ELETROSUL,

1/ CSC: Centro de Supervisao e Coordenacao - Center for Supervisionand coordination.

2/ DACS: Data Acquisition and Control System.

3/ COS: Centro de Operacao de Sistema - System Operation Center.

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CESP, CEEE AND ITAIPU are still in the process of study. The procurement ofthese remaining COSs is, however, not on the critical path for the gradualimplementation of SINSC. It was therefore decided to limit the project tothe CSC and the COS of CHESF in order to meet the target date for the initialoperation of SINSC. The full economic benefits of the SINSC program, however,would only be realized after the entire SINSC program becomes operational andtherefore appropriate assurances for the timely completion of the remainingSINSC components are necessary. ELETROBRAS has provided a time-table for theminor modifications necessary to integrate the COPEL and CEMIG COSs intoSINSC. ELETROBRAS agreed to (i) provide the Bank with the feasibility studies(up to system specification level) for the implementation of the COSs of CEEE,CESP, FURNAS and ITAIPU by June 30, 1981 - in the case of FURNAS and CESP thefeasibility studies would include provisions, satisfactory to the Bank, forthe coordination of operation of facilities under the LIGHT-Rio and LIGHT-SaoPaulo systems (see para 3.06); and (ii) to take all action necessary to ensurethat the entire SINSC program is completed in accordance with sound engineering,financial and public utility practice.

3.06 As noted at para. 1.11, in keeping with the Government's statedpolicy of concentrating distribution in single state-owned utilities, theGovernment recently decided to reorganize LIGHT by splitting the Rio andSao Paulo systems. Such reorganization of LIGHT will affect the originallyconceived configuration and operation of SINSC, under which LIGHT was to haveits own COS (to be located in Sao Paulo, but to control both the Rio deJaneiro and Sao Paulo systems). It was originally intended to finance theLIGHT COS from the proposed loan. However, following the Government's decisionto split the LIGHT-Rio and LIGHT-Sao Paulo systems it was no longer feasibleto control these two systems from the same COS. Instead, the LIGHT-Sao Paulosystem, which is to be owned by CESP will now be brought under the controlof the COS of CESP, and LIGHT-Rio de Janeiro under the COS of FURNAS. Sincefuture sector reorganizations could have implications for the SINSC program,the Federal Government and ELETROBRAS would afford the Bank a reasonableopportunity to comment prior to making any changes in sector organizationwhich would affect the configuration of SINSC, and would not implement anysuch changes which would substantially and adversely affect the operation ofSINSC.

3.07. The proposed project, covering the requirements of the CSC and theCOSs of CHESF and LIGHT, has been divided into three parts: (I) the supervisoryand control subsystem; (II) the complementary telecommunication subsystemnecessary to operate SINSC; and (III) a comprehensive training program andtariff studies for the power sector. The principal project components are asfollows:

I. Supervision and Control (Part A of Project):

(a) For ELETROBRAS: Installation of the Real Time SupervisionSystem (RTSS) at the CSC comprising: (i) computer hardware;(ii) support and application software; (iii) auxiliary equipmentconsisting principally of operator consoles, panels, videodisplays etc.; (iv) communication interface; (v) trainingrelated to the implementation and operation of the SINSC; and(vi) civil works, power supplies and related infrastructurefor the national supervision and coordination center.

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(b) For CHESF: Installation of a Data Acquisition and ControlSystem (DACS) at the COS' comprising: (i) a computer-basedmaster station; (ii) remote terminal units; (iii) software;(iv) operator consoles; (v) communication interface,(vi) training related to SINSC; and (vii) civil works,power supplies and related infrastructure.

II. Telecommunications (Part B of the Project):

(a) For ELETROBRAS: the provision of communication linksbetween the CSC and the COS's of the utilities participatingin SINSC.

(b) For CHESF: the provision of communication links betweenthe COS' and the dispatch centers, power plants andsubstations under CHESF's area of control.

III. Sector Training Program and studies (Part C of the Project):

A comprehensive training program for sector personnel to becarried out by ELETROBRAS in Brazil (about 3,060 man-months)and abroad (about 525 man-months). The sector trainingprogram will cover the following areas: system planningand operations, standardization and quality control, financialadministration, economics of public utility operation, environ-mental studies, work safety and industrial medicine. A similartraining program financed by the Bank has been successfullycarried out by ELETROBRAS under Loan 1343-BR. In addition part Cof the project includes studies on the application of tariffs inBrazil based on marginal costs (para 1.17).

3.08 In the case of ELETROBRAS, the telecommunication facilities requiredfor SINSC consist of minor additions and links to the existing microwavenetworks of the utilities. The CHESF telecommunication system included in theproject is part of an extensive and multipurpose communication system beingimplemented for the Northeast region. For SINSC purposes, channel capacitywould be provided in the Northeast communication system to link the computersat CHESF's COS to the computers at the CSC and also to the power plants,substations and dispatch centers within CHESF's control area. Because thechannels of the multipurpose CHESF telecommunication system are essentialfor the operation of SINSC, ELETROBRAS and CHESF agreed to take all actionnecessary to ensure timely completion of the Northeast telecommunicationsystem and to ensure that the channel capacity needed for SINSC is ready forproject commissioning.

Project Cost

3.09. The total cost of the project is estimated at about US$140 millionof which about US$58 million (41%) represents foreign costs. The project costestimate is shown in detail in Annexes 3-3 to 3-5 and summarized below:

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In US$ millionELETROBRAS CHESF TOTAL

Part A (Supervisory and Control System)

Supervision & Control (Base Cost) 28.6 31.0 59.6Physical Contingency 5.9 4.7 10.6Price Contingency 8.9 12.2 21.1

Total Part A 43.4 47.9 91.3of which Foreign 27.1 22.0 49.1

Local 16.3 25.9 42.2

Part B (Telecommunications System)

Communications (Base Cost) 3.5 15.7 19.2Physical Contingency 0.7 2.4 3.1Price Contingency 0.9 5.7 6.6

Total Part B 5.1 23.8 28.9of which Foreign 0.6 3.6 4.2

Local 4.5 20.2 24.7

TOTAL (Parts A and B) 48.5 71.7 120.2

of which Foreign 27.7 25.5 53.2Local 20.8 46.2 67.0

Part C (Sector Training Program)

Sector Training Program (Base Cost) 17.0 17.0Physical Contingency 1.0 1.0Price Contingency 2.0 2.0

Total Part C 20.0 20.0of which Foreign 5.0 5.0

Local 15.0 15.0

TOTAL PROJECT 68.5 71.7 140.2

of which Foreign 32.7 25.5 58.2Local 35.8 46.2 82.0

3.10 The base costs were estimated by ELETROBRAS/CHESF and theirconsultants on the basis of quotations of prices prevailing in December 1978updated by indexation as an attempt to reflect December 1979 price levels.These prices are reasonable. The base cost estimates include engineering andadministration costs for the project as well as applicable taxes and importduties. The cost of consulting services has been estimated on the basis ofabout US$13,500 per man-month, including subsistence and travel expenses.Physical contingencies average about 20% of the base cost which is reasonable

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for this type of project. Price contingencies for all costs were estimatedon the basis of 12% for 1979, 10.5% for 1980, 9% for 1981, 8% for 1982, 7% for

1983 to 1985, and 6% thereafter.

Amount of Loan

3.11 The foreign component of part A of the project is US$53.3 includ-ing price contingencies but excluding interest during construction. A loanamount of US$54 million is proposed to cover (i) the foreign exchange costof Part A of the project; and (ii) the foreign cost of the sector trainingprogram and tariff studies (Part C of the project). The proposed loan wouldbe made to ELETROBRAS for a term of 15 years including three years of grace.ELETROBRAS would on-lend, out of the proposed loan, US$22 million to CHESFon terms and conditions similar to the Bank loan. CHESF would bear theforeign exchange risk associated with the onlent funds.

Project Implementation

3.12 ELETROBRAS will be directly responsible for the implementation ofthe CSC and the related telecommunication links and the training in connectionwith the CSC. ELETROBRAS would also implement the sector training programand tariff studies (Part C of the project, para. 3.07). CHESF would implementits COS and the related telecommunications and training. ELETROBRAS wouldsupervise the implementation of CHESF's COS. Implementation of the remainderof the SINSC, which is not included in the project, would also be supervisedand coordinated by ELETROBRAS. This would provide the opportunity for assuringcompatibility of the various facilities in the implementation of the variouscomponents of the SINSC program. The detailed organization for implementingthe SINSC program has been specified in an agreement signed between ELETROBRASand the participating utilities (Convenio). It provides for a high levelcommittee--Comite de Implantacao (COIMP)--made up of the operations directorsof ELETROBRAS and the participating utilities. COIMP is headed by the directorof operations of ELETROBRAS who acts as its coordinator. COIMP establishesthe policies and guidelines for the implementation of the SINSC program.COIMP is assisted by a SINSC coordinating commission-Comissao de Coordenacao(COC) - which will make policy recommendations, monitor and coordinate theactivities during the implementation of the SINSC components. COC is headedby a coordinator, appointed by ELETROBRAS, and comprises representatives fromthe participating utilities with direct supervisory responsibility for theimplementation of the COS's. COC supervises a SINSC program managementteam-Gerencia do Projeto (GERP) - which has been established within ELETROBRASand is responsible for setting the standards and procedures for the executionof the SINSC components. GERP is headed by a competent manager and has builtup a qualified staff organization. The Convenio also specifies that actualimplementation of the SINSC program would be carried out through task forces -Grupo de Projeto Especifico-GPE. The GPEs may be specific groups within autility; project implementation units which have been formed at CHESF tohandle the installation of the COS are examples of such GPEs. Other GPEswould be permanent groups drawn from staff of ELETROBRAS and the utilities todeal with specific topics such as real-time systems, software preparation,telecommunications, civil works etc. The arrangements for the implementationof the project and the entire SINSC program are very advanced and satisfactory.ELETROBRAS and CHESF have hired suitable staff to implement the project.

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3.13 GCOI/ELETROBRAS and CHESF are using the assistance of consultantsto prepare specifications and bidding documents and to provide associatedengineering services and are in the process of contracting consultants for thesupervision of construction. ELETROBRAS would also use consultants to preparestudies related to the remainder of the SINSC program and also to developsoftware associated with existing GCOI operations. ELETROBRAS has alreadycontracted Hidroservice (Brazil)/Systems Control Inc. (SCI-USA) to providethese services. ELETROBRAS has also used the services of the CompanhiaAuxiliar de Empresas Eletricas Brasileiras (CAEEB of Brazil) for the prepara-tion of bidding documents for ICB procurement. CHESF is being assisted byits consultants--THEMAG (Brazil)/STAGG (USA) in project preparation. Theseconsultants would also assist CHESF in supervision of construction duringproject implementation. Implementation of the remaining SINSC components,which are not included in the project, will also be carried out with theassistance of consultants.

3.14 The successful operation of SINSC will depend on a well planned andintegrated training program for the staff which would operate the CSC and theCOSs. ELETROBRAS has agreed to formulate and to submit to the Bank not laterthan June 30, 1981, an acceptable training program which sufficientlycovers the needs of SINSC during implementation, operation and maintenance.The foreign cost of this training program will be financed from the proposedloan.

3.15 The SINSC program is expected to contribute substantially to thetransfer of modern technology to Brazil. The CSC and COSs would use thelatest computer system design technology. The GCOI staff involved withproject implementation is competent and is expected to absorb this know-how.In addition, in the course of project implementation, staff members involvedwith the project are expected to increase their technological know-how throughvisits to foreign power companies with complex control and supervision systems.The staff members are also expected to add to their technological knowledgethrough visits to the facilities of contractors involved with manufacturingproject components and systems. In view of the high technology nature ofSINSC and in order that the technology transfer objective is facilitated,ELETROBRAS agreed to set up not later than April 30, 1981, and thereaftermaintain a panel of specialists to monitor and advise on the various implemen-tation phases of the SINSC program. Membership of the committee will be drawnnationally and internationally from individuals experienced in power systemscontrol. These individuals may be designated members of specific organizationsor internationally-recognized independent consultants. The committee will makeperiodic visits to project sites in Brazil as well as to equipment fabricationlocations within and outside Brazil as necessary, but not less than twiceannually. For maximum efficiency in disseminating technical knowledge,seminars will he held as appropriate at the end of such periodic visits topermit the exchange of information between the Committee and Brazilian offi-cials. ELETROBRAS has notified the Bank of the composition of a workinggroup which will develop the terms of reference for the committee.ELETROBRAS also agreed to furnish such terms of reference to the Bank byApril 30, 1981. Foreign expenses associated with the work of the panel willbe financed from the proposed loan.

- 23 -

3.16 The existing agreements for the implementation of SINSC, which in-

clude the Convenio and the agreements to set up the COC and the COIMP providean acceptable commitment of ELETROBRAS, the participating power companies andDNAEE to the implementation of SINSC. To ensure that the appropriate legal

framework for the operation of SINSC exists, ELETROBRAS has agreed to includein the legal opinion to be submitted to the Bank in connection with theproject, appropriate assurances that all the legal arrangements necessaryfor the proper operation of SINSC have been made. ELETROBRAS would alsoinform the Bank that it will request the Minister of Mines and Energy to

enact an order (Portaria) to make ELETRONORTE a permanent member of GCOI by

the date of entering into operation of the interconnection between thenorthern and northeastern electrical systems, or by December 31, 1982, which-ever is earlier. (ELETRONORTE is currently the only utility participatingin SINSC which is not a member of GCOI).

3.17 The project is expected to be completed by June 30, 1985 and theentire SINSC program should be fully operational by June 30, 1986. Biddingdocuments for the CSC were issued in September 1979 after the Bank's reviewand acceptance. Bidding documents for the COS of CHESF were issued at the end

of April 1980. The implementation schedules for the various project componentsare shown in Annexes 3-6 and 3-7. These schedules, which are reasonable,would be used to monitor the progress of execution of the project.

Procurement

3.18 Procurement of goods and services proposed for Bank financing exceptfor standardized or proprietary items, would be made through International

Competitive Bidding (ICB) consistent with the Bank's Procurement Guidelines.Special metering equipment and miscellaneous auxiliary items, to be financedby the Bank, would be acquired through direct purchases at an estimated costof about US$900,000. These items are not considered suitable for ICB eitherbecause of the need for maintaining standardization or because they are

proprietary in nature.

3.19 Items which are not proposed for Bank financing include land,buildings, small civil works, auxiliary power supplies and air conditioningfor Part A and access roads, power supplies, buildings, towers, auxiliariesand related engineering and services for Part B; they are not consideredlikely to attract foreign bidders because of their small size and geographicdispersion. These items would be procured from local sources followinglocal competitive procurement procedures which are acceptable. Items notfinanced by the Bank also include the telecommunication equipment for Part Bin the amount of US$28.9 million (24% of total cost of the SINSC project)which could attract foreign bidders but is expected to be reserved by theBrazilians for local manufacturers because of a current large excess domestic

manufacturing capacity or because of the need to use standardized or proprietaryitems to expand the communication systems originally purchased from localsources. Out of the total US$28.9 million of telecommunication equipment,Brazilian suppliers (mostly licensees or affiliates of large international

firms) are expected to be competitive with foreign suppliers for a portion ofthis equipment. Purchase by reserved local procurement of the remainder(amounting to about 10% of the cost of the SINSC project) has a negligibleeffect on project cost.

- 24 -

3.20 Because the Brazilian control equipment industry cannot yet supplyintegrated, high technology computer based control systems for power systemsupervision and control, ELETROBRAS has indicated that all such systems forthe project with the related computer hardware and software, communicationinterface and remote terminal units (RTUs) would be furnished to the degreepossible as complete systems and under ICB by suppliers. However, ELETROBRASis undertaking a survey of the capacity of the Brazilian manufacturing industryto furnish project items. While this survey has tentatively concluded thatdomestic suppliers are not likely to be able to furnish some of the SupervisoryControl and Data Acquisition (SCADA) equipment, it is possible that in thecourse of project execution local industry might start producing some of theseitems and that the Government would want to add such equipment to the list ofreserved local procurement. In such case, the list of goods eligible for Bankfinancing and the loan amount would be correspondingly reduced.

Retroactive Financing

3.21 Retroactive financing of up to US$2 million, equivalent to about 3.7%of the proposed loan, is proposed to cover consultant services and specialstudies related to project preparation initiated after June 1, 1980 and fortraining in connection with the SINSC program. The above activities includethe detailed design, preparation of bid documents and related engineeringservices which cannot be delayed if the implementation schedules for theproposed project components are to be met.

Disbursement

3.22 Disbursements from the Bank loan, which would be fully documented,would be made for the following:

(a) 100% of foreign expenditures for imported equipment, materialsand services related to the installation of the computer-basedReal-Time Supervision System (RTSS) and the Data Acquisition andControl System (DACS) including the development of computer programs;

(b) 100% of the ex-factory cost of the equipment, materials andservices above if procured locally;

(c) 100% of foreign expenditures for consultant's services;

(d) 100% of foreign expenditures for training for the SINSC program;and

(e) 100% of foreign expenditures for the sector training program andtariff studies.

3.23 The estimated schedule of disbursements shown in the table below, hasbeen based on the assumption that the loan will become effective March 31, 1981.

- 25 -

Estimated Loan Disbursements (in US$ x 10 )

IBRD Semester Disbursed Cumulative DisbursementFiscal Year Ending During Semester at erd of Semester

1981 June 30, 1981 7.1 7.1

1982 Dec. 31, 1981 7.4 14.5June 30, 1982 4.7 19.2

1983 Dec. 31, 1982 4.1 23.3June 30, 1983 7.0 30.3

1984 Dec. 31, 1983 6.0 36.3June 30, 1984 4.5 40.8

1985 Dec. 31, 1984 6.4 47.2June 30, 1985 3.5 50.7

1986 Dec. 31, 1985 3.3 54.0

The closing date would be December 31, 1985, six months after project comple-tion to allow for the payment of retentions.

Environment

3.24 The project's effect on the environment would be minimal. The onlynotable environmental aspect will be the visual impact of microwave relaystations which form part of the telecommunications network. These stations,however, would be installed principally in the sparsely populated Northeastregion. The stand-by diesel generators which would be enclosed would bevery small and would run infrequently. They are therefore not expected tosignificantly affect the aesthetic and acoustic ambience of their immediatesurroundings.

Project Risks

3.25 There are risks associated with the project's high technology natureand the multifaceted approach to its implementation. The technology associatedwith power system supervision and coordination systems, such as SINSC, is veryadvanced, still evolving and changing very rapidly. There is therefore the riskthat staff involved in project implementation may lack certain necessary skillsat key dates. The participation of qualified consultants and the advisorypanel in project implementation should minimize this risk. To further minimizethis risk the SINSC training program will be carefully designed, but flexibleto permit adaptation to a rapidly evolving supervisory systems technology.The coordination of implementation to be provided by ELETROBRAS, and themonitoring and advisory role to be provided by the proposed advisory panel,should help ensure that the equipment and system configurations of the variousproject components under ELETROBRAS and CHESF are compatible.

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4. ECONOMIC ANALYSIS

Introduction

4.01 The principal goal of the SINSC program, of which the project isa part, is to increase reliability in and achieve more economic supply ofelectric power to the Brazilian market through better coordination of opera-tions of facilities of the interconnected power network. The SINSC programwould allow for improved sector management, reduced capital investments inpower generation and transmission facilities, reduced fuel use and lowermaintenance costs while permitting the facilities on the interconnected powersystem to be operated with greater security and reliability. The facilitiesto be installed in the SINSC program would provide GCOI/ELETROBRAS and theparticipating utilities with ready access to a data bank of the power marketsupply operations which would be used to enhance power system planning. TheSINSC would permit coordination of operation of the Itaipu hydroelectric powerplant with the operation of the numerous upstream power plants owned by otherutilities, and thus provide for optimal use of Itaipu's abundant low costenergy and hence result in minimizing the use of costly fuel for power genera-tion. SINSC would also provide GCOI with the capability to improve the pre-paration of operation plans for the utilities, allow the utilities to schedulethe operation of their generation and transmission facilities in a manner moreconsistent with these operational plans, permit continuous monitoring of theoperations of the interconnected power system and permit restoration ofservice faster than currently possible after interruption. The facilitiesof SINSC would also improve or permit rational dispatching and control ofpower plants and substations by the power companies. The contractual basisfor the project is established. Under the existing GCOI laws the utilitieshave entered into electric power interchange agreements in accordance withthe operating plans and criteria established by GCOI. Furthermore, Law No.5899 of July 5, 1973, requires the utilities on the interconnected system togive priority to the use of power and energy provided to Brazil from ITAIPU.In this regard the utilities are preparing to enter into 20 year contractswith FURNAS and ELETROSUL - the bulk suppliers designated to transmit Brazil'sshare of ITAIPU's output.

Least Cost Solution

4.02 For the scope of operations, speed of data transmission and thereliability of facilities to implement the national supervision and coordina-tion system, no reasonable alternative exists other than the digital computersystems which form the basis for the project and the entire SINSC program.For the configuration of the SINSC program ELETROBRAS and its consultantscompared the proposed SINSC configuration (Annex 3-8) to two other configura-tions. In one configuration only the COS's of the regional bulk supplier,subsidiaries of ELETROBRAS (FURNAS, ELETROSUL, CHESF, ELETRONORTE) communicatedirectly with the CSC at the national center while the other utilities communi-cate with the CSC through their regional centers. The third alternativeconsidered comprised setting up a separate supervision and control centerat each of the four regional bulk suppliers. The proposed SINSC configura-tion, which has the national center communicating directly with each of theten major utilities supplying power to the interconnected network, was foundto be the preferred alternative from a functional, operational and economic

- 27 -

viewpoint. The individual project components chosen and the system design ofthe CSC and the COS's are the least cost components resulting in a systemdesign compatible with the functional and reliability requirements of theSINSC. While the CSC and the COS's will all have dual redundant computersthis redundancy is essential to enable the SINSC system to carry out thenecessary supervision and control functions even when one of the computers atthe national or company centers is out of service. The COS's will performon-line operational control functions during normal system operating conditions.The CSC will not normally exercise on-line control, however, it will haveover-ride power and give directives to the COS's for the restoration ofservice during emergency conditions if such conditions would affect theoperations control of more than one COS.

Economic Benefits

4.03 The proposed SINSC program is expected to result in an overallimprovement in sector management, significant future reductions in capitalinvestments in generating and transmission facilities, lower requirementsfor fossil fuels for power generation, improvements in the reliability ofelectricity supply, and reductions in industrial output foregone because ofpower outages. The SINSC program can therefore be considered as an integralpart of a modern electric power generation/transmission complex. Because ofthe pervasive nature of the SINSC program, it is very difficult to quantifythe economic benefits associated with it. However, from the experience ofpower systems elsewhere that have installed national supervision systems(e.g., Electricite de France (EdF) and ENEL in Italy) annual savings of about1% in generation and transmission investments can be expected to result fromSINSC. These investment savings alone, used as a minimum measure of theproject's economic benefits, would result in an internal rate of return ofabout 13% for the SINSC program which compares favorably with the opportunitycost of capital in Brazil. Some of the savings in operating costs associatedwith the SINSC program can also be quantified by analogy with EdF and ENEL.From the experience of these utilities, the SINSC program should result inannual savings of about 0.3% of hydro generation from the improved productionscheduling and coordination of hydro facilities to achieve reduced spill.Annual savings of about one percent of transmission losses can also beexpected from SINSC as a result of improved transmission network management(i.e., better reactive generation dispatching and voltage control, moretimely scheduling of outages and faster restoration of service after inter-ruptions). With these savings in operating costs added to the savings ininvestment the internal rate of return of the SINSC program increases toabout 18%.

- 28 -

5. FINANCIAL ANALYSIS

Introduction

5.01 The proposed project (with an expected technological life of 10-15years), represents a relatively small percentage (less than 1%) of the 1980-1985 investment program of ELETROBRAS and CHESF. ELETROBRAS and CHESF should,therefore, not have any difficulties obtaining sufficient financing to coverthe local cost of the project assuming that the sector tariff issues (para.1.15 and 1.16) are satisfactorily resolved. The agreement signed betweenELETROBRAS and the participating utilities for the installation of the SINSCprogram (the Convenio) contains a provision that ELETROBRAS will provide anyfinancing needed by the utilities to cover their portion of the constructionof SINSC. This provision has been included in the agreements relating to theproject. Furthermore, as is usual with Bank power loans, the Federal Govern-ment agreed to cause to be provided any financing needed by ELETROBRAS andCHESF to complete the project in the event that funds available to them forthe project from other sources are inadequate. The financial history andprospects of ELETROBRAS and CHESF are summarized in the paragraphs below andsupplemented by Annexes 5-1 through 5-9.

ELETROBRAS

5.02 As the holding company for the power sector ELETROBRAS plays apivotal financial role in the development of the sector. It administers fundsto the power sector utilities in the form of loans and equity investments.ELETROBRAS is heavily dependent on sector based resources for its finances.This dependence coupled with its pivotal role tend to make trends in ELETROBRAS'financial condition mirror trends in the financial state of the sector. Overthe 1969-1975 period when sector tariffs were generally satisfactory, ELETROBRAS'financial condition remained very solid. It borrowed very little as consumerbased resources constituted about 91% of its financial requirements; its debtservice coverage ratio ranged from 3.1 to 6.4 and its debt/equity ratio im-proved from 41/59 to 36/73. In the past four years the power utilities haveexperienced a decline in their earnings as a result of inadequate tariffs.This decline has been reflected in an erosion of ELETROBRAS finances. Overthe 1976-1978 period the proportion of ELETROBRAS resources contributed byconsumers declined to 69%. To supplement these resources ELETROBRAS becameincreasingly dependent on costly borrowing mostly from foreign sources. Itsdebt/equity ratio at the end of 1978 was 49/51. Of ELETROBRAS debt outstand-ing as of December 31, 1978 amounting to about Cr$45 billion, about Cr$29.5billion was foreign--the principal debtors being Bank of America (Cr$6.4billion), Credit Commerciale de France (Cr$5.2 billion) and Deutsch Bank(Cr$5.2 billion).

5.03 Annexes 5-1 through 5-4 show ELETROBRAS actual financial resultsfor 1976-1978 and forecasts through 1986 which have been prepared on thebasis of the sector requirements contained in the sector investment programup to 1995 (para. 1.23). Based on these forecasts ELETROBRAS' needs forresources and sources of financing during the 1980-1985 construction periodof the project are summarized below and shown in more detail in Annex 5-2:

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Requairements

Cr$X10 US$X10 %

Capital Investments 112.9 4.5 i8.1

Loans 476.4 19.0 76.5Working Capital & Others 33.2 1.3 5.4

622.5 24.8 100.0

Sources of Funds

Net Internal Cash Generation 193.1 7.7 31.0Sole Tax 31.3 1.2 5.1Reversion 219.2 8.8 35.2Compulsory Loan 150.7 6.0 24.2

Total Consumer based Resources 594.3 23.7 95.5

Borrowing 27.0 1.1 4.3Other Sources 1.2 - 0.2

622.5 24.8 100.0

5.04 The forecasts of ELETROBRAS key financial indicators during theproject period (Annex 5-1) indicate that although ELETROBRAS financial con-dition will be eroded somewhat its overall financial soundness will be main-tained. ELETROBRAS financial soundness, however, may be achieved at theexpense of the financial viability of the utilities which are dependent onit for financing. There are indications that the terms of ELETROBRAS loans(currently 12% interest plus monetary correction, 10 year repayment) may betoo stringent for some of the utilities which rely on ELETROBRAS for mostof their loans. Some of these utilities such as ELETROSUL and CHESF haveunusually high debt equity ratios, low debt service coverage and unsatis-factory self-financing capacity. In addition ELETROBRAS financial partici-pation in the utilities has been about 80% in the form of loans, and about 20%in the form of equity and the forecasts indicate that ELETROBRAS will maintainthis proportion during the project's construction. This high proportion ofloan to equity financing may be jeopardizing the capital structure of theutilities and therefore ELETROBRAS may have to review its policy regardingthe proportion of loan to equity in its investment portfolio. The Bank hasalready initiated action to ensure the financial soundness of those powerborrowers dependent on ELETROBRAS financing: the Loan Agreements in connec-tion with the ELETROSUL transmission project (1343-BR) require ELETROBRAS toconvert a portion of its loans to ELETROSUL into equity to enable ELETROSULmaintain a satisfactory debt service coverage ratio; the Loan Agreementsrelating to the CHESF Paulo-Afonso IV Project (1008-BR) require ELETROBRAS toprovide CHESF with equity or other suitable financing to help cover CHESF'sfinancial obligations. An analysis of ELETROBRAS financing policies iscurrently being made in connection with a power sector memorandum on Brazil.The recommendations from this analysis would be discussed with ELETROBRASin the context of possible future Bank involvement with the power sector.

- 30 -

CHESF

5.05 During the 1976-78 period CHESF's financial rate of return rangedfrom 12% to 17%. Because of a heavy debt service burden, CHESF did not con-tribute anything towards its investment program during the period. ELETROBRASis CHESF's major creditor accounting for about 80% of its debt outstanding asof December 31, 1978. The appropriateness of the terms of ELETROBRAS loansfor Brazilian utilities forms part of the on-going Bank analysis of ELETROBRASfinancing policies.

5.06 CHESF's financial results for 1976-78 and forecasts through 1986 areshow in Annexes 5-5 through 5-9. The utility's debt-service will continue tobe high and hence it will not be able to contribute to the financing of itsinvestment program from its own resources. In connection with Loan 1008-BRCHESF agreed not to incur any debt if its outstanding debt exceeds 66-2/3% ofits total fixed assets. To enable CHESF keep within this limitation ELETROBRASperiodically converts a portion of its loans to CHESF into equity. This practicehas been instrumental in keeping CHESF's financial condition reasonable in thepast and it is expected that conversion of ELETROBRAS loans into equity willcontinue to be necessary through the project's completion. To provide theBank further opportunity to monitor CHESF's borrowings, CHESF agreed not toincur any long term debt without the Bank's concurrence if its debt servicecoverage ratio falls below 1.5. CHESF's requirement for funds and sources offinancing during the project's 1980-1985 construction period are as follows:

Cr X 109 US$ X 10 9 _%

Requirements

Construction Program 54.9 2.2Working Capital & Others (2.2) (0.1)

52.7 2.1 100

Sources

Gross Internal Cash Generation 57.0 2.3 108

Less: Debt Service (78.4) (3-1) (149)Dividends (0.1) - -

Net Internal Cash Generation (21.5) (0.8) (41)Equity Investment 14.9 0.5 28Borrowing 59.3 2 4 113

52.7 2.1 100

- 31 -

6. AGREEMENTS REACHED AND RECOMMENDATION

Loan Agreements:

6.01 During negotiations CHESF, ELETROBRAS and/or the Federal Government,as appropriate, agreed to the following:

(a) CHESF would maintain its earnings at levels consistent withsound public utility practices and in accordance with existinglegislation and would maintain its eligibility for transfers fromthe GGF. The Government confirmed the understanding that DNAEEwould allow CHESF a return of 10% and that, beginning in 1981,no part of this return would be deferred to future years(para 1.16);

(b) ELETROBRAS would (i) continue to improve the methodology ituses in its planning efforts; (ii) complement the "Plan 95"by the end of 1981; and (iii) continue to exchange views withthe Bank on sector planning (para 1.23);

(c) ELETROBRAS and CHESF would submit audited financialstatements to the Bank not later than four months after theend of each fiscal year (paras 2.03 and 2.13);

(d) ELETROBRAS would take all action necessary to ensurethat the entire SINSC program is completed in accordancewith sound engineering, financial and public utility practice(para 3.05);

(e) ELETROBRAS would furnish to the Bank, not later thanJune 30, 1981, the feasibility studies for the COS's of CEEE,CESP, FURNAS and ITAIPU (para 3.05);

(f) the Government and ELETROBRAS would provide the Bank theopportunity to comment prior to making any changes inpower sector organization which could substantially affectSINSC (para 3.06);

(g) ELETROBRAS and CHESF would take all action necessary toensure timely completion of the Northeast telecommunica-tions network (para 3.08);

(h) ELETROBRAS would on-lend out of the proceeds of the loanUS$22 million to CHESF on terms and conditions similar tothe Bank loan (para 3.11);

(i) ELETROBRAS would furnish to the Bank, not later thanJune 30, 1981, a training program, satisfactory to theBank, for the installation, maintenance and operation ofSINSC (para 3.14);

(j) ELETROBRAS would set up, by April 30, 1981 and thereaftermaintain, a panel to advise on implementation of the SINSCprogram (para 3.15);

- 32 -

(k) ELETROBRAS would provide supplementary financing to CHESFas may be necessary to complete its portion of the projectshould funds available to CHESF for this purpose from othersources be inadequate (para 5.01);

(1) The Federal Government would cause to be provided to ELETROBRAS,and CHESF supplementary financing needed to complete the projectshould funds available to them from other sources for this purposebe insufficient (para 5.01); and

(m) CHESF would not incur any long term debt without the Bank'sconcurrence if its debt service coverage ratio falls below1.5 (para 5.06).

Recommendation

6.02 With the assurances listed above, the project would constitutea suitable basis for a Bank loan of US$54 million equivalent to ELETROBRAS.The loan would be repaid over a period of 15 years including three years ofgrace.

ELETROBRAS ORGANIZATION CHART

GENERALASSEMB LY

MINS AT IVIE FISCALCOUNCJLCOUNCL

ECONOMY PLANNING AND UTILITY SYSTEMS|IADFINANCE CRDIR ATEN ENGINEERING MANAGEMENT OPERATION

DIRECTORATE D T DIRECTORATE DIRECTORATE DIRECTORATE

E ~~~~~~~~~~~~~~ & ~~~~~~~~~~~~~~~~~~ C~~~~~~EC

uJ 0~~~~~~~c R U) - m~I '

World >nk -a21397

CHESF ORGANIZATION CHART

SHAREHOLDERSGENERAL ASSEMBLY

ADMINISTRATIVE FISCALCOUNCIL COUNCIL

PRESIDENCY

ECONOMI1C ANDE. FINANCIAL SUPPLIES ENGINEERING CONSTRUCTION OPERATIONS

O IR ECTORATE D I R ECTOR ATE D IR ECTORATE DIRECTORATE DIRECTORATE

_ . E 0

X, 0 Cl

World 8ank-213'96

World Bank - 21396

- 35 - ANNEX 3-1

CONTROL AREAS OF THE BRAZIL INTERCONNECTED POWER SYSTEM

FURNAS CE

/ / -

I L

/~~~~~~~~00

NOTE1 -The dashed lines indicate the Control Areas

2-- itaipu as part of F URNAS Control Area is currently under study World Bank - 21393

ANNEX 3-2-36 - Page I of 3

1 Technical Project Details

For the GCOI/ELETROBRAS portion of the project (mainly the CSC) and

for the LIGHT (Rio and Sao Paulo) and the CHESF portions the implementation and

procurement arrangements would be along the following lines:

(a) The "Real-Time" (On-Line) Supervision System (RTSS) for the

CSC is to be acquired--under ICB--from a single prime contractor

who would be expected to provide extensive on-site support after

delivery of the RTSS. He would also be requested to offer as an

option a set of application software which would be fully documented,

in addition to the design, manufacture, integration, factory testing,

delivery and placing the RTSS into operation. (Some of the more

advanced application software would likely be developed by CEPELI/

staff in cooperation with specialized staff from the major operating

tutilities). The prime contractor would be responsible for the

integration of software provided by him and by others and assume

full responsibility for the system's performance during an extended

guarantee period. The RTSS would include:

(i) Computers;

(ii) Peripherals;

(iii) Man-machine interface equipment;

(iv) Communication subsystem equipment; and

(v) Application and support software.

(b) The top and next to top hierarchical level (the CSC and the ten

COSs ) of the overall Supervision and Coordination

System (SINSC) would follow the structure shown in Annex 3-10

1/ Centro de Pesquisas de Energia Eletrica (Grupo ELETROBRAS).

- 37 - ANNEX 3-2Page 2 of 3

Necessary COS facilities would be acquired when needed as complete

systems under ICB.! , mainly consisting of the Data Acquisition and

Control Systems (DACSs) of the regional and area (state) supply

companies or the expansion or adaptation of existing DACSs currently

being established. Each DACS would have:

(i) a computer-based master station (use of the analogue technique

would not meet requirements of overall economy, flexibility and

state-of-the-art requirements);

(ii) remote terminal units (RTUs); and

(iii) supporting telecommunication networks to the degree needed by

the ten companies owning the COSs for supervision and

control of their operating area.

Each company's master station equipment (located at its System

Operation Center - COS) would have for the master station a dual

(redundant) computer configuration with modern man-machine interfaces

(CRTs). The DACSs would provide the functions of:

(i) digital Automatic Generation Control (AGC);

(ii) supervisory control of the transmission system;

(iii) data acquisition;

(iv) energy management (such as production scheduling, load shedding,

voltage control); and

(v) network analysis.

1/ The Brazilian manufacturers are not expected to be able to supply such systemsduring the project period.

- 38 - ANNEX 3-2Page 3 of 3

(c) Computer-to-Computer Data Links. The ten companies currently

own extensive and efficient microwave or UHF telecommunication

systems or are in the process of acquiring and installing them,

The channel facilities are or will be ample and

can accomodate the requirements of SINSC at a relatively small

cost, requiring mainly only patching facilities for intercompany

transfer of information. The transfer to and from the CSC (and

each company's DACS) will be achieved by two four-wire full duplex

channels (with route diversity to a maximum extent).

2. The functions to be performed by the CSC on-line facilities are summarized

below:

(a) production scheduling;

(b) continuous production supervision;

(c) continuous transmission system operations supervision;

(d) network studies (such as real-time network modeling, operational

power flow analysis, and means to assist corrective rescheduling);

(e) operations reporting; and

(f) training, maintenance, and programming.

The communications links will provide for computer-to-computer communication

and provide for the use of programmer terminals for real-time data and message

transfers.

BRAZIL

Power System Coordination Project

Summary Project Cost Estimate

(In USS Million)

ELETROBRAS CHESF TOTAL PROJF T

foreign Local Total Foreign Local Total Foreign Local Total

I-Part A (Supervisory & Control System)

Infrastructure 0.1 2.9 3.0 3.0 3.0 0.1 5.9 6.o

Equipment & Materials 11.6 2.2 13.8 8.6 1.9 10.5 20.2 4.1 24.3

Engineering & Administration 1.2 2.6 3.8 2.5 8.1 10.6 3.7 10.7 14.4

Consultants 1.5 0.5 2.0 0.8 0.5 1.3 2.3 1.0 3.3

Training 1.3 o.4 1.7 0.4 1.2 1.6 1.7 1.6 3.3

Studies & Projects - 1.2 1.2 - 0.7 0.7 - 1.9 1.9

Subtotal (Base cost)/2/ 15.7 9.8 25.5 12.3 15.4 27.7 28.0 25.2 53.2

Physical Contingencies 2.9 2.0 4.9 1.9 2.3 4.2 4.8 4.3 9.1

Subtotal (before price contingency) 18.6 11.8 30.4 14.2 17.7 31.9 32.8 29.5 62.3

Price contingencies 8.j 4.5 13.0 7.8 8.2 16.0 15.9 12.7 28.6

Total (Supervisory & Control) 27.1 16.3 43.4 22.0 25.9 47.9 48.7 42.2 90.9

------

II-Part B (Telecommunication System) 2

Commur'cations (Base Cost) ) j- 0.3 2.8 3.1 2.1 11.9 14.0 2.4 14.7 17.1

Physical Contingencies 0.1 0.5 o.6 0.3 1.8 2.1 o.4 2.3 2.7

Price Contingencies 0.2 1.2 1.4 1.2 6.6 7.8 1.4 7.8 9.2

Total (Telecommunications) o.6 4.5 5.1 3.6 20.3 23.9 4.2 24.8 29.0

Total (SINSC System) 27.7 20.8 48.5 25.6 46.2 71.8 53.3 67.0 120.3

…---- -- -- -- - - - - - - -- - - -- --- -- - -- - - -- ---- --- -- - - --- -- - - - -- -- - -- -- - - - --- - -- - - - - -- - --- - -- - - - -- - -- -- -- - -- - - - - ----- - - -- - - -- - - - - - - - - - - -- - - - -- - -

III-Part C (Sector Training Program)

Training (Bess Cost) 4.2 12.8 17.0 4.2 12.8 17.0

Physical Contingency 0.2 0.8 1.0 0.2 0.8 1.0

Price Contingency 0.6 1.4 2.0 0.6 1.4 2.0

Total (Sector Training) 5.0 15.0 20.0 5.0 15.0 20.0

Total Project 32.7 35.8 68.5 25.6 46.2 71.8 58.3 82.0 140.3 z

v The Base Cost estimates shown here are in December 1978 prices. In para 3.08 of the text, these costs were indexed by the 1979 price contingency factor of

12% to reflect December 1979 price levels.

2,/ Exchange rate used was US$1 = Cr.20.447

Revised 12/2/80

- 40 - ANNEX 3-4

A

I 0000 -� 0 N I -� -0 N 0040 4 N4.0 I 10�fl00 N N 0 C 40 -4 o

- I No NflNNOO i -z

-� 0.0 CI 01- 00000 .040 00 I

00000 0.0 NO N 000 0 OIl(.40400N0N1 I ON 01

o �1 N N 0'' 4 41 -r OIlA . - - -I I Nil

0 N N 0 NON 01 I ON Or NI

ON 4 NON or 0.04101100 4 0(N NI N Nj0�

0.0 4 NO 04400104 I 0001 NI400N 004 III �> to-Il

04004 4,.r,0 0-. -� 4j

0 -- NOO �ii

0%0 000 000 C N0 NO 0 0 0 0 4 N 4 C NIl0 N 10 ,OON 40 40 N 0,1o N N NIA I N

4 N N 044 01 I ci

0 0 NN) 41 41.

404 I - -

0. 1*

0.0 NO 00 004 0 I Oil0 0004 .000 1- '0 0 0 0 N 0 N 4 1. (-I I .1

N NH -0 I .Ojj

0000 NOON .-� 41 411NO 00 ONONO 4 �14100 0 4 N 40 A �I �:

4NO 0 00 NI

0 0 �2�I �

NI NO.0

I.0 0.0 0000 N 00 '.0 l 4� NI 010 0 N 0 4 0 4 0 -0

0 .� N N I 410 0

0 0 044000 4000 Ni 0 - N ON Nj

0 N 4 N4 N 41 4 NIl(10 N 4 4 4 I 0 411

o 0 NO1

NI0 000010

NI

O 40 1.A 00 0.-

00 0.0 N 000 44 N 4 0 I ON II10 - (0 0 C NO 4 N 004 4

00 . o 4 N N - NON 000 � 000000 04

N 0 04 N 000 0440 N I 400 N Oil

WA 0 - N N - 4o 10 A

000 N4 �'o� 101

400001 0000

+000000 000 N 0 I 01 NI404000 0004 0 I I0004 -0 04 ON N I I

101 00

04000 044 N N 41 NO00 N 04 4000 0 I I

0 N N 4 N 0 4 4 I I

0 000

- I0� (140 40I 400 >04< 04 0 N 1.4 00

0 00 00 040 0.0

1.1 1.0 0 010 4 04 0 0 4 0 10 0 00 10 II 44I 0 0 0 0 00

04 0 0 0 01..' 01.) 0 0 0 0

I0000004 0 4 0 0 0 0 0 4 3. 04

'-010410100 0 0. N 0.1-( ON 0.0.

4 N -

BRAZIL

POWER SYSTEM COORDINATION PROJECT

DETAILED PROJECT COST AND DISDURSEMENT SCHEDULE OF CIRSF SUBPROJECT 1/ 4(in uDS 000

1980 1981 1982 1983 1984 1985 TOTALForeign | LoForei~ft~i1 Inotic 1 Tla, L.ocl F-inT. Lo..l Fo-irelSn L-ocal Eernn Local F1ii- I L..aI GRAND

Diroot IndSroc 2 J.| Dire ndOcEt I t _ ADt- Dirt Inrre I Drect Indirect I Direct Indi-ct TOTAL

A. S-ueris-o and control- 1

1. Infra-lr-ct.rn 15 649 1894 385 85 3028 3028

2. Eq.ipmn.t aod earecla 2275 79 455 819 79 454 2138 80 476 1933 82 475 1130 8315 320 186C 10495

3. E.gi.eer.sg and adm .nlatratio- 577 657 2295 127 1779 567 1805 659 :353 482 306 2492 8135 10617

4. Cons-ltaotn 180 150 135 75 85 25 85 15 135 75 180 150 800 500 1300

;. Tra-tn-8 74 252 75 302 75 303 75 254 75 50 75 50 449 1211 1660

6, Studi-n 100 1EO Iso 100 0 tOo 650 650

7. BDse .cet .1 (Supnrv. coctrol) 254 1094 3162 79 3876 1106 79 4625 2865 80 3045 2802 82 2138 1867 606 12056 320 15384 27760

8. PhyIca1 -onting-ncy 38 164 474 12 581 166 12 696 430 12 457 420 12 321 280 91 1808 48 2307 4163

9. Sobtotal (7 o 8) 292 1258 3636 91 4457 1272 91 5319 3295 92 3502 3222 94 2459 2147 697 13864 368 17692 31924

10. Pr Io canting-cy 68 292 1225 31 1502 565 40 2362 1819 51 1933 2230 62 1625 1732 530 7639 184 8244 16067

ti. Total Coat (Superv. control) 360 1550 4S61 122 5999 1837 131 7681 5114 143 5435 5452 156 4084 3879 1227 21503 552 25936 47991

B. Tninconaeonlcatlons 2/

1. Teleconm cate nons) 3/ 3/ 31 2100 11900 14000

2. Phy.li-l -ootinge-oy 300 1800 2100

3. Price contingency 1200 6600 7700

4. otal Cost (T.lacom-) 3600 20300 23800

TOTAL PROJECT COST 25J03 552 46236 T1791

1/ B.se cost -ati-et-s e in constant Dece-b-r 1978 pria.

2/ total cant of ChESF's nolciporpo-n t-loc- ia US027162 2 OllIlon '(liolodig U8570.3 m of forE.gn) ofthIl 0S"23.O m (i.cl dlog US$3.6 m fore-ig) 1-allocatnd to SNINC on the bals of channel usage.

31 Aru-l diabuTse-nt not shown for tlecommunliotiO. co-pocent becfa.e the cost sho-n is no a1ocationbend or choc-et uPs.e aDd dons cot r-pren..t phyolc-l1y identlfisble projeot 0its.

4/ Enchaogn -to ... d .ac US$SlCr20.47.

- 42 - ANNEX 3-6

Power System Coordination Project

Implementation Schedule of ELETROBRAS Subproject

1979 1980 1981 1982 1983 1984

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

I. Supervisory and Control System

A. RTSS

1. Bidding Process X X X X X

2. Manufacturing of Support Supply System X X X X X X X X3. Preparation of Application Software X X X X X X X X X X X X X

4. TraininS X X X X X X X X

5. Installation X X X X

6. Comaissioning X X X X

B. Off-line Information Subsystem

7. Specification X X

8. Preparation XX X X X X X X X X X X X9. Training X X X X X X X X X X X X X

10. Implementation XX X X X X ZX X X X X X

C. SINSC Data bank

11. Specification X X

12. Preparation of On-ltine and Off-line

Programs X X X X X X X13. Training X X X X

14. Implementation X X X X

II. Telecoemunication

1. Demand Studies X X X

2. Circuit Test for Utilities X X X S

3. Telephone Network X X X X S

4. Supervision & Communications X X X X

5. Acquisition of Site for CSC X X X

6. Survey of Inter-Utility Links X X X

7. Survey of CSC Links X X X8. Comsunication Infrastructure definition X X

9. Selection of Configuration of SINSC X X X

10. Bidding Process X X X

11. Fabrication, Transportation & Installation X X X X X

12. Acceptance Period X X X X13. Guarantee Period XX X X X 14. Integration of System X X X X X X

III. Building & Auxiliary Equipment

1. Hiring of Consultants X X

2 Land Purchase X X

3. Architectual Studies X X X

4. Engaging Contractors X X

S. Work Statement Preparation1/ X X X X X

6. Site Preparation X X

7. Construction X X X X X X; X X X

B. Purchasing and Installation of PowerSupplies & Batteries X X X X X X X X XX XIX

9. Purchasing and Installation of Fire Protection X X X X X X X X X X X X I X X X

10. Design Procurement and Installation of Micro-wave Towers X x x x ix x

1/ Work statement is the period after award of contract when detailed programs (statements) are prepared for the details of theimplementation steps of the project, including system design and engineering, software preparation kprograming) procurement,and other steps until satisfactory conmercial operation is reached for the system.

CHESF IMPLEMENTATION SCHEDULE

1979 1980 1981 1982 1983 1884 1989 1986 1987

4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

and F-n1i Proced- .s_

2 S-odord I., inn OC..plori- of

InffnltivcninmEhn SE and USPiEM,

3 MKO,l-caI-on E--c ..IO Plannmng

On h. SEIUS IG-pe I & 21

4 E-.-cunon of Mndrfi-ca-ons i _

The SE/US (Gro-p & 21

S SPTcrf,cafron InalOlne+

6 Prepacafion of The P;cPPOe|-

7 Ana-psy Of t. P 1op .osals_

8 Co--racI and W50k S-afnmnn-

8 fnlfrnal PrOpcnjOrrf for Impiomeng p

10 Msnofacfors Planning nM SCS

11 Maoofdclirn of SCS ESorpmnnf -I -_ _ _ _ _-

and SoWfwann fnfcgreiro_

12 Manu-fan-re nI 8.mof 7 Confrl_U-ll far G-ope I ond 2

13 F ctorv 1__f_

14 Tr-nWpnnfa-lo- ot Eqpmenf _

15. fnffefaronol Eqirpmnnt_

rOy n-d COS5

16 fnsfaiiann Hntmot Con-ro_

17 intallaf inn Of PeA-o3e Contro - -_ -_ -_ - -Uflife- G-np 2

18 neeina f Ad-ace Soft..er

19 Field Te.. f

7D Corn- -sionog of SCS

21 P-annnd4 id nvWfa._ _ i

I.o, COS Snilding

22 C-netr-ofion of 8E,ding

23 Coapera..on e.. -een CHESF and

24 Man.facfnre f InilafioO nIfRH ofa ConfrOl Ui Sn Gr-ps 3 (2 phi

- -_ - - l

25 Impl-.Ienfelo of Adenca-d

KrO9arn I2nd ft..ee on go I

TRANSDUCERS

23 S.e.. of Need fr Trantducae-

27 El&.ora.Ion of T.e0,rc-l endCommercial Spanf-n...ions

28 Infernal Prnpwur-e fI r Irp.i.nq _

29 SPani..a.in.s. a nA*

30 Prapsrafion 0l Proplt 1_

3f Anniosisol Propasals _ _

32 Men.l-fcr.r.g _

33 Dnio-Vn 0f Maf-al A A 4*HYDROMETEORAL NETWOR!S

34 Acoi iiron Of I-odromlr Masfer

and Coordination -- h SCS Suppior

JbD-'Igi rd, A-IaN-i f, th. Rtm- _ __.,. _. ilcdriinei

36 EIai.inr..on o Teohrca ,and!

31 S-0-i-linOOroc -son-co

38 P---naio 0f Proposal- _

39 A-alrnisof Procc-als

40 Meir- 9nil - oOliM Plans -cd, Siplnr

41 M -f--ur u E-uP-1n ,lMdl |-l_| m 4f 2 -nnlTc f R.nn rpoierr42loIccivininarrn 00TeonicS ci moin ConrroillltAts t

4d l3srllon 0r M>lrn Or--ron & Fr1ld Tsfst

44 Ielalo wPS,:! ion l|eI

45 irinrocrorronM'

ANDO PANE IS

Worldf 8nk 21If391

CONFIGURATION OF SINSC

AREA CONTROL E L R R

COMPANY SYSTEM SL CEEE CEL FURNAS CEMIG TAPI CESP CHS OTE

OPERATIONS CENTERS SUL

4:-

To Company RegionalOperations Centers

DISTRIBUTION

COMPANY SYSTEM CELESC CELG CEB ESCELSA LIGHT CBEE CEMAT CPFL LIGHT

OPERATIONS CENTERS RIO

COMPANYREGIONALOPERATIONSCENTERS

World Bank - 21394

Power System Coordination ProjectELETROBRAS

Financial Indicators 1976-86

Actual Forecast

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986

1 Times annual debt service coveredby gross internal cash generation ei 4.0 4.1 3.2 2.2 2.3 1.5 2.5 2.6 2.5 2.5 2.5

2 Net Internal Cash generation as% of total financial require-ments 31 28 26 15 29 13 32 35 35 35 34

3 Total consumer based contribu-tiona am % of total financialrequirements 75 68 65 53 92 76 97 99 99 100 100

l4 Borrowing as % of total financialrequirements 24 30 35 30 8 23 2 _ _ _

5 Debt/Equity Ratio 45/54 51/49 49/51 59/41 58/42 60/40 59/41 59/41 59/41 59/41 59/41 4sLA

6 Average yield on capital invest-ment bJ 6.9 8.5 0.1

7 Average yield on loan invest-melnts s/ 14.5 12.9 11.8

8 Average yield on totalinvestments #/ 11.9 11.6 7.6

9 Average cost of borrowing 6.o 6.5 5.7

10 Rate of return on total capitaliza-tion e/ 8.4 7.5 8.1

Notes

a' Grosa internal cash generation divided by debt service2/Reveniues from shareholdings divided by average investments in capital stockc/ Revenues from loans divided by average investments in loans

ReveIiUes from shareholdings and ]oans divided by average total investmentsNet incDme divided by the average at' equity and long term debt outstanding

Power System Coordination ProJectELETROBRAS

Sources and Uses of Funds 1979-86

in millions of June 1979 Cruzeiros Total1979 1980 1981 1982 1983 1984 1985 1986 1980-85

SourcesNet Operating Income 32980 39941 47485 55328 60467 67104 77420 90002 347745Less: non-cash additions to revenuel! (5308) (5672) (7546) (9298) (6060) (3413) (2262) (1596) (34251)Plus: Loan amortization receipts 5815 10427 13157 15921 20279 24364 28447 32994 113075

Gross Internal Cash Generation 33487 44696 53096 61951 75166 88055 103605 121400 426569

Less: Interest 10643 14558 14544 15966 17798 19602 21606 23844 104074Debt Repayment 4747 4785 22084 9295 11129 15232 20177 25541 82642Debt Service 15390 19343 36625 25261 26927 34384 4 49385 18776

Less: Net Dividends 5460 5130 5876 7611 8620 9243 10185 11868 46665

Total Deductions 20850 24473 42504 32872 37547 44077 51968 61253 233441

Net Internal Cash Generation 12637 20223 10592 29079 37619 43978 51637 60147 193128

Sector ContributionsSole Tax 2930 3854 4228 4693 5467 6123 6953 8031 31318Reversion 15684 23248 27775 33044 37915 43904 53281 65203 219167Compulsory Loan 12577 16913 19053 21736 26146 30599 36274 43804 150721

Total 31191 44015 51056 59473 69528 80626 96508 117038 401206

Total Consumer-based contributions 43828 64238 61648 88552 107147 124604 148145 177185 594334

Government Contributions 3755 - - - - _ _Borrowings 24511 5617 18746 2207 405 - - - 26975Others 10179 134 153 176 203 234 269 309 1169

Total Sources of Funds 82273 69989 80547 90935 107755 124838 148414 177494 622478

Uses of FundsEquity Investments 12090 12671 20538 27234 19572 15186 17661 20040 112862Loan and Advances 67807 51932 56971 60482 81568 102350 123106 148635 476409Others 2376 5386 3038 3219 6615 7302 7647 8819 33207

Total Uses of Funds 82273 69989 80547 90935 107755 124838 148414 177494 622478

t/ In addition to depreciation , this includes unrealized gains from investments in subsidiaries andassociated companies.

Revised 12/2/80

Power System Coordination Project

ELETROBRAS

Actual and Forecast Income Statements 1976-1986In millions of Cruzeiros

(Forecast In June 1979 Currency)Actual (In Current Currency) 1979

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986

Revenues s 1253 2316 40 10602 15215 18680 22044 21396 21224 22452 23295

From Loans & Financing 4245 6830 12877 25031 27691 32161 37056 43268 50562 60222 72609

From Other Sources 798 922 131 - - - - - - -

Total Revenues 6296 10068 13048 35633 42906 50841 59100 64664 71786 82674 95904

ExpensesAdmin., General & Other Expenses 631 974 1372 2653 2965 3356 3772 4197 4682 5254 5902

Net Operating Income 5665 9094 11676 32980 39941 47485 55328 60467 67104 77420 90002

Interest Payments 1325 2687 4622 10643 14558 14544 15966 17798 19602 21606 23844

Income before tax 4340 6407 7054 22337 25383 32941 39362 42669 47502 55814 66158

Income Tax _ - 454 737 641 893 3068 3752 4618 5845 7486

After Tax Income 4340 6407 6600 21600 24742 33834 36294 38917 42884 49969 58672

Plus: Net Monetary Adjustment b _ - 7525 - - - _- - - -

Net Income 4340 6407 14125 21600 24742 33834 36294 38917 42884 49969 58672 >

a/ Beginning in 1979 unrealized gains from investments (i.e. the difference between the equity value and cost of investments) are reflected

in revenues from shareholdings.

b/ In 1978 this account consisted of net monetary variation (Cr$ 10,003 million) and net monetary correction of fixed assets and

equity (Cr$ 9,478 million).

Revised 12/2/80

Power System Coordination ProjectELETROBRAS

Balance Sheets 1976-86(In 100 million cruzeiros)

In Current Prices In June 1979 Prices

As of' December 31, 1976 1977 1978 1979 1280 1981 1982 1983 1984 1985 1986

Assets

Fixed Assets 3 4 7

Current AssetsCash & Equivalent 14 15 56 10 9 12 12 14 17 20 23

Other Current Assets 36 94 126 104 132 159 208 244 284 330 396

Total 50 109 182 114 141 171 220 258 301 350 419

InvestmentsLoans 388 690 1365 2030 2410 2812 3200 3761 4489 5371 6445 1

Capital Stock 228 316 914 1622 1849 2146 2527 2811 3023 3247 3479

Total 616 1006 2279 3652 4259 4958 5727 6572 7512 8618 9924 CO

Total Assets 670 1120 2468 3766 4400 5129 59147 6830 7813 8967 10342

Liabilities & Capital

Long Term Debt 283 511 1107 171S 1942 2494 2940 3419 3947 4569 5327Currenit Liabilities 33 80 142 107 287 181 232 287 356 440 534

Capital & Reserves 351 525 1218 1183 1407 1691 2011 2358 2751 3185 3706

Deferred Credits & Liabilities 294 377 - 761 763 764 764 766 769 772 775

Total Liabilities & Capital 670 1120 2468 3766 4400 5129 5947 6830 7813 8967 10342

Pover System Coordination ProJect

CHES_

Financial Indicators

1976 1977 1978 1979 190 198 1 1982 1984 198 19856

1. Finarncial Rate of Return ia(%) 17 17 12 10.3 8.6 9.0 9.6 12.2 14.1 12.0 10.2

2. Operating Ratio (%) 40 35 39 36 39 38 38 34 32 48 56

3. Debt Service Coverage Ratio 1.1 o.6 0.5 o.6 o.6 o.6 0.7 0.8 0.9 0.7 0.7 4s

4. Self-financing Ratio . 3 L S v S/ / v L V V %0

5. Debt/Equity Ratio i 65/35 71/29 65/35 67/37 69/31 69/31 68/32 65/35 61/39 59/41 58/42

6. Receivables at year end (days sales) 162 106 60 56 60 60 60 60 60 60 60

7. Depreciation as % Average Gross Plant 3.1 3.4 3.3 3.0 3.2 3.5 3.6 3.6 3.7 3.7

N/ Ret operating income (excluding reversion and transfers from global reserve fund) as % of average net fixed assets in operationb/ Operating expenses divided by operating revenues

Gross internal cash generation divided by debt serviceNet internal cash generation as % of total financial resourcesNet divided by debt plus equityNegative self-financing ratio

- 50 -ANNEX 5-6

Pover System Coordination Project

C8ESF

Sources and Applications of Funds(In millions of June 1979 Cruzeiros)

Total1979 1980 1981 1982 1983 1984 1985 1986 1980-1985

Sources of Funds

Net operating income 3,000 3,362 4,585 5,525 7,686 9,095 7,278 6,013 37,531Depreciation 1,368 1,947 2,710 3,427 3.692 3.753 3,953 4 350 19.482Total 4,368 5,309 7,295 8,952 11,378 12,848 11,231 10,363 57,013

Less: Debt service

AmortizationInterestTotal 7,405 9,233 1 8 3,07 1 4,042 4,942 5 15,31359 78,387

Dividends 428 632 993 1,546 1,654 3,171Less reinvested dividends 414 610 _ _ 959 1,494 1.599 3.063

Net dividends 14 22 34 52 55 108

Net internal cash generation (3,051) (3,946) (4,487) (4,055) (2,664) (2,128) (4,202) (5,051) (21,482)

Equity Investments

ELETROBRAS loans converted to equity 1,199 2,045 2,257 3,000 2,900 2,500 2,000 1,000 14,702Advances for construction 797 114 120 234

1,996 2,159 2,377 3,000 -Y2,900 2,500 2,000 1,000 14,936

Borrowing

Local loans 8,525 9,885 8,877 6,231 6,894 7,166 8,881 9,428 47,934Foreign Loans 3,310 4,233 4,268 2,166 _ 665 _ _ 11.332

Total 11,835 14,118 13,145 8,397 7,559 7,166 8,881 9,428 59,266

Total Sources of Funds 10,780 12,331 11,035 7,342 7,795 7,538 6,679 5,377 52,720

Uses of Funds

Construction program 11,413 12,622 11,432 7,707 8,277. 7,822 7,025 5,571 54,885Net working capital changes (559) (212) (331) (331) (445) (250) (320) (180) (1,889)Cash surplus (deficit) (74) (79) (66) (34) (37) (34) (26) (14) (276)

Total Uses of Funds 10,780 12,331 11,035 7,342 7,795 7,538 6,679 5,377 52,720

Power System Coordination Project

CHESF

Income Statement 1976-86

(In millions of June 1979 Cruzeiros)

Actual Forecast

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986

Operating Reveniues 1419 2462 3711 6476 8075 10854 13232 16099 17733 19967 21591

Operating E:xpenses

Operations & Maintenaznce 366 526 740 962 1173 1418 1569 1804 1913 5617 7816

Depieciation i/ 183 325 714 1368 1947 2710 3427 3692 3753 3953 4350

Reversion b/ 220 453 709 1146 1593 2141 2711 2917 2972 3119 3412

Other Expenses 15 20 r_

Total 784 1324 2163 3476 4713 6269 7707 8413 8638 12689 15578

Net Opetating Iincome 635 1138 1548 3000 3362 4585 5525 7686 9095 7278 6013

Lees: InLerest Charges 143 759 1004 2082 3355 4322 5701 5632 5412 5446 5675

Net Other Expenses (revenuies) i (111) (143) (377) (619) (877) (647) (43) (811) (1400) ( 152

t'otal Deductions from ITrcome 32 616 627 1463 2478 3675 4858 4821 4012 3647 4147

Net Income 603 522 921 1537 884 910 667 2865 5083 3631 1866

j )epr,ciation estinmated at about '3 of depreciable plant. Beginning 1979 amortization quota of capitalized interest has been included

J Revevsioni includes the reserve f'or global guarantee and estimated at 3.5% of remunerable assets (2.5% in 1979).

e/ Tri:udes income f'rom investments, profits (loss) on sale of assets, etc.

Power System Coordination ProjectCHESF

Forecast Cost of Service

(In millions of June 1979 Cruzeiros)

1979 1980 1981 1982 1983 1984 1985 1986

Remunerable Gross Plant a/ 40329 55266 74711 93742 100595 102455 107556 117315Interest Capitalized b/ 1217 3969 9572 14144 16003 16275 17918 21468Materials and Supplies 185 268 381 491 532 542 573 635

Total 41731 59503 84664 108377 117130 119262 126047 139418

Less:

Accumulated Depreciation c/ 4421 6022 8149 10861 13968 17206 20536 24085Amortization reserve (of Idc) b/ 681 765 968 1325 1777 2262 2771 3359Donations and Contributions d/ 2144 2144 3341 3370 3371 3370 3584 3584Prior Years Shortfall - (1884) (5023) (9756) (13191) (15264) (19891) (27464)

Total Deductions 7246 7047 7435 5800 5925 7574 7000 3562

Remunerable Investment 34485 52456 77229 102577 11205 111688 119047 135856

Cost of Service

Remunerable Investment e/ 3000 5246 7723 10258 11120 11168 11905 13586Operating Expenses 941 1093 1335 1484 1716 1822 2063 2227Depreciation c/ 1368 1947 2710 3427 3692 3753 3953 4350Reversion f/ 1146 1593 2141 2711 2917 2972 3119 3412CCC (Fuel) Quota 21 80 83 85 88 91 94 97

Total 6476 9959 13992 17965 19533 19806 24594 29164

Sales (GWh) 13895 16140 19711 21902 25334 26893 30451 32882Average price (Cr¢kWh) g/ 44 50 55 60 64 66 66 66Sales Revenue 6057 8075 16854 13232 16099 17733 19967 21591Receipts from Global Guarantee Fund 419 - - - - - - -

Total 6476 8075 10854 13232 16099 17733 19967 21591

Revenue Shortfall - (1884) (3139) (4733) 3435 (2073) (4627) (7573)

a/ Principal difference from balance sheet item is pro-rating of plant additions.

b/ Decree No. 1506/76 requires interest on construction works to be put in a separate account and amortized overthe useful life of the asset after construction is completed.

ci/ Depreciation was estimated at the rate of about 3% of average gross fixed assets. n

d/ Contributions by consumers and other third parties are not remunerable.

e/ Equivalent to 10% of remunerable investment (8.7% in 1979)

f/ Reversion and Global guarantee quota were estimated as 3.5% (2.5% in 1979 of remunerable investment.

In the forecasts, effect of 55% tariff increase in November 1979 was not considered inasmuch as the forecasts are in June 1979constant cruzeiros. CHESF assumed a 10% tariff increase in 1980 and 1981 and 5% per year in each of 1982, 1983 and 1984.

Power System Coordination Project

CHESF

Balance Sheets 1976-86(In millions of Cruzeiros)

Actual (Current Prices) Forecast (Constant June 1979 Prices)

As of December 31, 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986

ASSETS

Gross Plant in Service 7195 14050 27425 54567 74434 93372 100321 102118 104316 110855 123776

Accumulated Depreciation (748) (1297) (3192) (5112) (6940) (9363) (12365) (15576) (18840) (22256) (25962)

Accumulated Amortization (227) (311) (561) (665) (665) (665) (665) (665) (665) (665) (665)

6220 12442 23672 48790 66829 83344 87291 85877 84811 87934 97149

Conistruction in Progress 10035 16827 34189 29895 22651 15144 15903 22382 28006 28494 21143

Exchange adjustment 434 871 -

Total Fixed Assets 16689 30140 57861 78685 89480 98488 103194 108259 112817 116428 118292

Current Assets

Cash 541 839 370 499 611 764 896 1054 1144 1268 1357

Accounts Receivable 633 715 615 1004 1338 1798 2192 2667 2938 3308 3577

Materials and Supplies 177 72 144 250 361 475 526 540 552 590 670

Other Current Assets 40 47 624 1252 1698 2304 2816 3435 3789 4270 4619

Total 1391 1673 1753 3005 4008 5341 6430 7696 8423 9436 10223 1Ul

Deferred Debits 38 37 4524 10085 14261 17378 19178 21036 23732 26856 29570

Total 18118 31850 64138 91396 107242 120571 128108 136274 144236 151940 157222

LIABILITIES & CAPITAL

Paid-in Capital 3150 3560 4681 5267 6096 6707 7505 8272 9596 11298 12743

Reserves 2480 4573 15672 21172 23919 26256 29335 32422 36212 39986 42761

Surplus 15 210 241 214 177 394 184 1102 2985 2981 1696

Total Equiity 5645 8343 20594 26653 30192 33357 37024 41796 48793 54265 57200

Long Term Debt 9880 17960 34003 52470 61755 68918 70410 70204 69253 70199 71421

Current Liabilities

Accounts Payable 721 1604 2204 3597 4796 6446 7859 9561 10532 11858 12823

Current Portion of Long Term Debt 558 2179 3577 2588 4832 5983 6906 7765 8117 7936 8205

Other Current Liabilities 428 1341 806 886 928 1967 2560 2701 2592

1279 3783 6209 7526 10434 13315 15693 19293 21209 22495 23620

Otber Liabilities

Deferred Credits 1294 820 -

Contributions & Donations 16 944 3332 4747 4861 4981 4981 4981 4981 4981 4981

i'otal 1310 1764 3332 4747 4861 4981 4981 4981 4981 4981 4981 "

Total Liabilities 12469 23507 43544 64743 77050 87214 91084 94478 95443 97675 100022

Total Liabilities & Capital 18118 31850 64138 91396 101242 120571 128108 136274 144236 151940 157222

EXHIBIT A- 54 -

BRAZIL

POWER SYSTEM COORDINATION PROJECT

Selected Documents and Data Available in the Project File

A. REPORTS AND STUDIES ON THE SECTOR

A.1 GCOI Documentos basicos do GCOI

A.2 Eletrobras - Directoria de Operaqao de Sistemas

Sintese do Plano de Operaqao para 1979das Regioes sudeste, nordeste e sulNovembro/ 1978 - DEOP/DVEO

A.3 GCOI - Sudeste/Sul - Secretaria de Supervisao e Coordenagao -

ELETROBRAS diretoria de Operaqao de Sistemasltrimestre 1979 - Relatorio de Acompanhamento Energetico

A.4 GCOI - Secretaria de Supervisao e Coordena;aoRelatorio Anual de Operaqao do Sistema Interligado - 1978ELETROBRAS - Directoria de Operaqgo de Sistemas - DEOP/DVEO

A.5 GCOI - Sudeste/Sul - Secretaria de Supervisao e Coordena-aoELETROBRAS Diretoria de Operagao de Sistemas1977 - Relatorio Anual de Operaqao do Sistema Interligado(GCOI Annual Report - 1977)

A.6 GCOI - Secretaria de Supervisao e Coordena'aoRelatorio Estat'stico de Operargo do Sistema Interligado - 1977ELETROBRAS - Diretoria de Operacao de Sistemas DEOP/DVEO(GCOI - Statistics on Operation of the Interconnected System -1977)

A.7 GCOI - Sudeste/Sul - Secretaria de Supervisao e Coordena9ao -

ELETROBRAS Diretoria de Opera9ao de SistemaslTrimestre 1979 - Relatorio de Acompanhamento Energetico(GCOI - Report on Energy Allocations)

A.8 GCOI - Secretaria de Supervisao e CoordenasaoRelatorio Anual de Operacao do Sistema Interligado - 1978ELETROBRAS - Diretoria de Operaqao de Sistemas - DEOP/DVEO(GCOI - Annual Report - 1978)

B. REPORT AND STUDIES ON THE PROJECT

B.1 Executive Summary of the Real-Time Supervision System; July1979; prepared by Consorcio Hidroservice - SCI for ELETROBRAS.

B.2 Technical Specification for the Real-Time Supervision System(in five volumes); December 1978; prepared by ConsorcioHidroservice - SCI for ELETROBRAS.

- 55 -

B.3 Technical and Economic Justification of .he National Supervisionand Coordination Center

(a) Report No. 27 -Consorcio Hidroservice - SCI (Systems Control Inc. in PaloAlto, California)October 1978

(b) Addendum No. 1, October 1978(Cost Comparison of SSC Configurations)

(c) Addendum No. 2, January 1979

1. Demostrativo dos Custos de Investimentos do ProjectoCSC. (Demonstration of Cost of Investments of CSC)

2. Demostrativo dos Custos de Operaqao do Centro Nacionalde Supervisao e Coordina9ao. (Demonstration ofOperating Costs of the National Supervision andCoordination Center)

3. Determinacao dos Beneficios minimos para a viabilidadedo Projeto CSC. (Determination of the Minimum benefitsfor the Feasibility of CSC Project)

4. Consideracoes sobre os Beneficios Esperados do ProjetoCSC. (Considerations on the Benefits Expected from theCSC Project)

(d) Anexos - January 1979

(e) Addendum #2 - Revisao - March 1979

(f) Anexos -

I through IV - March 1979

Annex I. Brazil South East/South System operation datato 1983.

Annex II. Le despatching nationale de 1'E d F (Thenational dispatching of EdF)

Annex III. Hierarchical computer control for ENEL electricsystem.

Annex IV. Impact assessment of the 1977 New York cityblack-out.

(g) Annexes V - IX March 1979

- 56 -

Annex V. Auerbach computer technology report.

Annex VI. Dispatcher training simulator

Annex VII. Custos de construgoes no Brazil (Constructioncosts in Brazil)

Annex VIII. Orqamento Geral de investimentos com treinamentode pessoal.

Annex IX. Supervision and Coordination System Project -Project Management Task.

(h) Anexo X - March 1979 - Relatorio #16 - Requisitos de Tele-communicagoes do Sistema de Supervisao e Coordenarao(actually prepared by Consorcio Hidroservice - SCI)December 1977.

B.4 Convenio Para Implantagao do Sistema Nacional de Supervisao eCoordenacao de Operaqao Interligade - SINSC (Agreement on theInstallation of the National Supervision and Coordination Systemfor Interconnected Operations)

ANNEX 1. Exposigao de motivos No. 028/79 do Exmo. Sr. Ministrodos Minas e Energia.

ANNEX 2. Organizaqao para a implantaqao do SINSC.

ANNEX 3. Directrivos basices para o funcionamento do SINSC.

B.5 System for Supervision and Coordination of the Operation of theBrazilian interconnected Electrical System Technical Specificationfor the Real-Time Supervision System Specification No. 1 - Volume1, December 1978, Consorcio Hidroservice - SCI.

Contents:

Volume I

1.0 Introduction and Background2.0 Executive Summary *

Volume II

3.0 Man-machine interface operation requirements4.0 Data communication requirements5.0 Support Software

Volume III

6.0 Application Software

- 57 -

Volume IV

7.0 Hardware requirements8.0 Overall RTSS requirements9.0 Workmanship and standards requirements10.0 Project implementation requirements

Volume V

Appendices:

A - DisplaysB - Summary of reportsC - Content of structured messagesD - System documentation delivery scheduleE - Glossary of terms and abbreviationsF - Content of Data received and Data transmit file

Attachment

Hardware and software requirements for the interface betweenthe national center and the companies data acquisition andcontrol systems.

B.6 Commissao de estudos de criterios para programa;ao de inter-cambios e sua contabiliza;ao - CEPIC

- Nova metodologia para programagao e contabiliza;ao de inter-cambios energeticos no sistema interligado - furnas/cemig/light - Sao Paulo/cesp/eletrosul

- Relatoria SCEN-CEPIC - 01/79Marqo de 1979

B.7 Organizagao do Projeto de Implantaqao do SINSC (Organization ofthe Implementation of SINSC); September 1979, ELETROBRAS

B.8 Energy Management System (EMS) Planning Document; September 1978;(in two volumes) prepared by THEMAG/STAGG for CHESF (Report isthe feasibility study for CHESF's COS)

B.9 Energy Management System (EMS) Procurement Spec; September 1979,THEMAG/STAGG for CHESF. (Report covers descriptive technicalspecification for CHESF's COS)

B.10 Energy Management System (EMS) Supplementary Spec; August 1979,THEMAG/STAGG for CHESF

B.11 Sumario do Projeto do Sistema de Controle e Supervisao; 11/12/1979; prepared by CHESF's department of operations (Report is asummary of the EMS Planning Document (Item B,.6))

- 58 -

B.12 Summario Executivo do Projeto do Sistema Integrado de Tele-comunicagoes; January 1980, CHESF (Report is a summary des-cription of the Northeast telecommunication project andincludes copy of the agreement for its implementation)

B.13 Sistema de Telecomunica;oes para suporte do sistema deControle e Supervisao da CHESF; December 1979, CHESF

B.14 Configura;ao do Sistema de Telecomunica;oes - CHESF, July 1979PROMON for CHESF

B.15 Companhia Hidro Eletrica do Sao Francisco - CHESF SistemaIntegrado de Telecomunicaroes Or;amento/Chronograma Fisico-Financiero; July 1979, PROMON for CHESF

B.16 Configuragao do Sistema de Telecomunicacoes - CHESF; July 1979,PROMON for CHESF

B.17 Sistema de Supervisao e Controle - SSC Implantarao de Recursosde Supervisao Controle e Agusigao de Dados Memorial TechnicoDescritivo; December 1979, LIGHT (Report is a summary offeasibility study of LIGHT's COS)

B.18 LIGHT - Servicios de Eletricidade S.A. Sistema Hierarquico deSupervisao e Controle Descriptive Technical Report; October1979 (later superseded by November 1979 revision). Preparedby PROMON

B.19 CHESF Sistema de Controle e Supervisao da CHESF Pedido deFinanciamento do Banco Mundial; circa September 1979; preparedby CHESF

- Dossier I: Contains technical information on CHESF's COS

- Dossier II, Volume I: Contains information on organizationaspects of CHESF

- Dossier II, Volume II: Contains financial information onCHESF

B.20 Real-Time Supervision System Bid No. 2000; 1979; prepared forELETROBRAS by CAEEB. (Report covers bidding documents andspecifications for the CSC).

B.21 Projeto SINSC: Termo de Referencia_para o Painel de Consultoresdo Projeto, April 1980 ELETROBRAS.

B.22 Projeto SINSC: Situagao Atual de Implantaqao do Projeto; April1980, ELETROBRAS.

- 59 -

B.23 Organizagao do Projeto de Implantagao do SINSC; March 1980,ELETROBRAS

B.24 OrganizaVao para Implantagao do Projeto; August 1980,ELETROBRAS

B.25 Plano Plurianual de Implantarao; July 1980,ELETROBRAS

B.26 Programa Anual de Implantapao; July 1980,ELETROBRAS

C. WORKING PAPERS PREPARED BY BANK STAFF

C.1 Miscellaneous financial forecasts, economic anaiyses, and costcomparisons.

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