FeasibiIity Study on BobovdoI Thermal Power Plant Upgrading Project

March 2001

New Energy and Industrial Technology Development Organization(NEDO) usted To :Tokyo Electric Power Company Feasibility Study on Bobovdol Thermal Power Plant Upgrading Project

Entrusted to: Tokyo Electric Power Company March 2001

Purpose of the study : The purpose of the study is to recover remarkably aged Bobovdol Thermal Power Plant located in the suburb of Sofia, Bulgaria, to meet the level of output that was available when it was newly built. This will be accomplished by introducing cutting edge technology available in Japan and implementing a combined cycle power generation system using a highly efficient gas turbine as a substitute. It is also aimed to implement F/S for the project to reduce carbon dioxide emission, so that it can be applied for the future joint implementation project* (JI) with Japan. NEDO-IC-00ER11

FeasibiIity Study on Bobovdol Thermal Power Plant Upgrading Project

March 2001

New Energy and Industrial Technology Development Organization (NEDO) Entrusted To :Tokyo Electric Power Company March 31, 2001 Tokyo Electric Power Company

Introduction

The report includes results of the basic study on the development including joint implementation project for the “Improvement Project for Bobovdol Thermal Power Plant” entrusted to Tokyo Electric Power Company (TEPCO) by New Energy and Industrial Technology Development Organization of Japan (NEDO) as the project of the year 2000. Repair work plan for Bobovdol Thermal Power Plant located in the suburb of Sofia, Bulgaria (approximately 60km southwest of Sofia) has been drawn up aiming at energy saving and reduction of greenhouse effect gas. The report also provides results of the Field Study including field surveys on estimated effects of greenhouse effect gas reduction and energy saving upon implementation of the plan as well as costs required for the improvement.

We also would like to express our gratitude to staff members of the Bulgarian Government ’s State Agency for Energy and Energy Resources (SAEER) and Bobovdol Thermal Power Plant for their considerable cooperation provided during field surveys and discussions conducted for the preparation of this report. List of Study Members

Tokyo Electric Power Company

Etsuji Kodama Project Manager, Consulting Service Group of International Affairs Department Shigeru Saito Engineer, Consulting Service Group of International Affairs Department Hiroyuki Okubo Engineer, Consulting Service Group of International Affairs Department Tatsushi Yamaguchi Engineer, Consulting Service Group of International Affairs Department Akio Matsuzaki Engineer, Overseas project Group of Thermal Power Department Tomitake Maruyama Engineer, Overseas project Group of Thermal Power Department Yoshikazu Handa Engineer, Overseas project Group of Thermal Power Department Mitsunori Tsuchiya Technical Advisor Masanori Date Technical Advisor Toshimitsu Houdai Technical Advisor Takanobu Tashiro Technical Advisor Kazuhiro Mori Technical Advisor Contents

Introduction

I. Summary...... 1-1 1. Outline of the project investigated in the survey ...... 1-3 2. Summary of survey results...... 1-5 2.1 Outline of the existing facilities before implementing the project ...... 1-6 2.2 Outline of the proposed repair project ...... 1-7 2.3 Energy saving effect...... 1-9 2.4 Reduction of carbon dioxide emission ...... I-10 2.5 Economic feasibility of the project ...... I-11 3. Conclusion ...... 1-13

II. MAIN REPORT...... II-1 1. Basic Matters of the Project ...... D-3 1.1 The Situation in Bulgaria ...... II-5 1.1.1 Political, Economic and Social Situations ...... 11-6 (1) Social situation ...... II-6 (2) Political situation ...... IT-9 (3) Economic situation...... 11-14 1.1.2 Current status of Energy ...... 11-35 (1) Energy ...... 11-35 (2) Current situation of power generation ...... 11-36 1.1.3 Necessity for Joint Implementation ...... 11-48 1.2 Necessity for Introduction of Energy Conservation Technologies into the Industry ...... 11-49 1.3 Project ’s Meaning, Necessity, Effect and Influence on Other fields...... 11-50 (1) Meaning of the implementation of the project ...... 11-50 (2) Necessity for and effect of the implementation of the project ...... 11-50 2. Implementation of the Project ...... 11-53 2.1 Project Plan ...... 11-55 2.1.1 Briefing on the area subject to the project ...... 11-55 2.1.2 Contents of the project ...... 11-59 2.1.3 Greenhouse gas subject to the project, etc...... 11-60 2.2 Description of the applied site...... 11-61 2.2.1 Degree of concern at the applied site ...... 11-61 2.2.2 Current situation of the relevant facilities in the thermal power plant...... 11-63 (1) Description of the existing power generating facility ...... 11-63 (2) Summary of the power plant facility ...... 11-64 (3) Operational record of the existing power plant facility based on the site survey ...... 11-72 2.2.3 Project conducting capability of thermal powerplant ...... 11-73 (1) Engineering capability ...... 11-73 (2) Control system ...... 11-73 (3) Management basis, management policy ...... 11-73 (4) Financing capability...... 11-79 (5) Capability of personnel in Charge ...... 11-79 (6) Implementation scheme...... 11-79 2.2.4 Contents of the thermal power plant and specifications of related facilities after rehabilitation ...... 11-82 (1) Selection of a draft of the project plan...... 11-82 (2) Contents of the project plan...... 11-106 (3) Operation guide for the power plant after rehabilitation takes place...... 11-115 2.2.5 The Range of funds, equipment, facilities and services, etc. supplied by both sides when the project is implemented... 11-118 (1) Establishment of the project planning...... 11-118 (2) Funds...... D-118 (3) Equipment and facilities...... 11-120 (4) Providing the services...... 11-120 (5) JI scheme...... II-120 2.2.6 Presupposed conditions and possible problem areas, etc. to consider in implementing the project ...... 11-121 2.2.7 Project implementation schedule...... 11-122 2.3 Implementation of the financial plan...... 11-125 2.3.1 Financial plan for implementing the project ...... II-125 2.3.2 Scope of the financial plan ...... 11-126 2.4 Relevant items concerning conditions for joint implementation (JI)...... 11-127 2.4.1 Conditions and items to be discussed with Bulgarian side for materialization of JI...... 11-127 2.4.2 The possibility of reaching agreement on the project as JI 11-128

3. Effects of the Project ...... :...... 11-129 3.1 Energy-Saving Effects ...... II-131 3.1.1 Technological Grounds for Producing Energy-Saving Effects ...... II-131 3.1.2 Baseline to Serve as a Basis for the Calculation of Energy-saving Effects...... 11-134 3.1.3 Concrete Amounts, Periods and the Cumulative Amount of Energy-Saving Effects ...... II-136 3.1.4 Concrete methods for verifying energy-saving effects .. 11-142 3.2 Greenhouse Gas Reduction Effects...... II-143 3.2.1 Technical Grounds for Generation of Greenhouse Gas Reduction Effects ...... 11-143 3.2.2 Baseline to Serve as a Basis for the Calculation of Greenhouse Gas Reduction Effects...... 11-144 3.2.3 Concrete Amounts, Emergence Periods and the Cumulative Amount of Greenhouse Gas Reduction Effects...... 11-146 3.2.4 Concrete Methods for Confirming and Monitoring Reduction Effects of Greenhouse Gas Emissions ...... 11-150 3.3 Influence on Productivity ...... 11-153

4. Cost performance of the project ...... 11-155 4.1 Cost performance of the project (Financial Internal Rate of Return : FERR)...... 11-157 4.1.1 Required costs for project implementation ...... II-158 4.1.2 Post project implementation cost ...... 11-163 4.1.3 Cost performance of the project (Internal Rate of Return : FIRR)...... 11-164 4.2 Cost effectiveness of the project ...... 11-171 4.3 Others ...... 11-175

5. Confirmation of dissemination effects ...... 11-183 5.1 Possibility that technology introduced by this project will disseminate to other locations...... 11-185 5.2 Various effects of wider dissemination ...... 11-186

6. Others Effects ...... 11-189 6.1 Effects derived from the project other than greenhouse gas emission reduction ...... 11-191

III. Conclusion ...... m i

IV. Attached Materials...... IV-1

A. Attached Drawings

A.l CASE-2 1) PLOTPLAN 2) GENERAL ARRANGEMENT (PLAN) 3) 220kV SWITCHGEAR SINGLE LINE DIAGRAM A.2 CASE - 3 & CASE - 5 1) PLOTPLAN 2) GENERAL ARRANGEMENT (PLAN) 3) GENERAL ARRANGEMENT (ELEVATION) 4) 220kV SWITCHGEAR SINGLE LINE DIAGRAM A.3 CASE - 4 1) PLOTPLAN 2) GENERAL ARRANGEMENT (PLAN) 3) GENERAL ARRANGEMENT (ELEVATION) 4) 220kV SWITCHGEAR SINGLE LINE DIAGRAM A .4 EXISTING 1) PLOT PLAN ABBREVIATION

BOOT Build, Own, Operate and Transfer

CFB Circulating Fluidized Bed-combustion Boiler

CIS Commonwealth of Independent States

COP3 the 3rd sessions of the Conference Of Parties

CO2 Carbon Dioxide

DCS Distributed Control Systems

EBRD European Bank for Reconstruction and Development

EPC Engineering, Procurement and Construction

EU European Union

FIRR Financial Internal Rate of Return

GCC Gas Combined Cycle

GDP Gross Domestic Product

HRSG Heat Recovery Steam Generator

IAEA International Atomic Energy Agency

IMF International Monetary Fund

IPCC Intergovernmental Panel on Climate Change

JBIC Japan Bank for International Cooperation JI Joint Implementation

JICA Japan International Cooperation Agency

L/A Letter of Agreement

LO LubricatingOil

MRF Movement for Right and Freedom

NATO North Atlantic Treaty Organization

NEK National Electricheska Kompania

NOx Nitrogen Oxides

ODA Official Development Assistance

OECD Organization for Economic Cooperation and Development

PPA Power Purchase Agreement

SAEER State Agency for Energy and Energy Resources

SOx Sulfur Oxides

SPM Suspended Particulate Matter

STG Steam Thrbine and Generator

UDF Union of Democratic Forces I. Summary

-i-1 - -1-2- 1. Outline of the Project Investigated in the Survey

Bobovdol Thermal Power Plant to be repaired is a group of thermal power generating facilities consisting of standard type boilers fueled by coal (brown coal) produced in suburban Bobovdol, steam turbines and generators. This station consisting of three 210 MW units, is designed exclusively for power generating purposes for which condensing turbines are used. The rated output of the station is 630 MW. These power generating facilities in service since the mid 1970 ’s, however, have shown declined capability now equivalent to about 540 MW due to their obsolete and therefore deteriorated functions or poor fuel coal properties. With gross thermal efficiency also having substantially dropped to about 30%, the station is in need of the earliest possible repair or reconstruction. Generic investigation was also conducted to address the continued use of the coal-fueled thermal power plant and the need to consider the use of peat from the Sophia Area or imported coal to compensate for the depleting coal reserves in the current source mine in suburban Bobovdol. The build & scrap method may be adopted by the project to convert the existing thermal power generating facilities into a state-of-the-art gas combined cycle plant with improved thermal efficiency (30% up to 50% in gross thermal efficiency), restored generating capacity and substantially reduced emission per unit electrical output of carbon dioxide, nitrogen oxides, sulfur oxides, soot and dust (SPM). Located near Sophia, the capital of the country, the station serves as a key power plant that is therefore strongly expected to rehabilitate its functions and become capable of more reliable supply in order to meet the community ’s needs for stable power supply. For that end, it is now proposed to immediately repair antiquated Unit 1 and Unit 2 of the existing thermal power generating facilities to make them serviceable for another 15 years or so. Also proposed is the construction of a new Block 1 gas combined cycle generating facility [210 MW] for completion by 2007 followed by Block 2 gas combined cycle generating facility [210 MW] for completion by 2012 alongside the successive removal of the existing thermal power generating facilities from service. From an environmental point of view, the best solution, without doubt, would be the quickest possible conversion of the existing facilities into gas-combined cycle generating facilities. However, rapid conversion would have an immense effect on the mining industry in suburban Bobovdol. The project has to be implemented in a manner that minimizes possible effect on the community. These complications have led to the adoption of step-by-step construction starting with Block 1 that is due to be completed by the end of 2007. The project will ultimately cover the construction of Block 3 gas combined cycle generating facility [210 MW], and we have reached a general agreement with the Bulgarian State Agency for Energy and Energy Resources [SAEER] on the proposal that the existing generating facilities be converted completely into gas combined cycle generating facilities preferably by 2017. After these new gas combined cycle generating facilities are completed, the

-1-3 - existing generating facilities will be taken out of service. It was decided that the project would be run for 41 years including 6 years for the completion of Block 1 following the repair of the existing plants and 35 years thereafter. This type of gas-combined cycle generating facility generally has an economic life of about 25 years. At the expiration of this period, therefore, Block 1 and Block 2 are destined to undergo repair work to expand their lives. Once this project is completed, Bobovdol Thermal Power Plant will be able to contribute to stable power supply in the metropolitan area while also enabling substantial energy saving by improved heat efficiency, substantial reduction of greenhouse gases by the shift of fuel from coal to natural gas and improved thermal efficiency and substantial suppression of such emissions as nitrogen oxides, sulfur oxides and soot and dust (SPM).

-1-4- 2. Summary of Survey Results

In this F/S survey, we have gained a profound knowledge of the generating performance, fuel usage and operating and repair experiences of the existing thermal power generating facilities from the results of field surveys and field meetings. On the strength of this knowledge, discussions were held with the Bulgarian State Agency for Energy and Energy Resources (SAEER) to work out an agreeable repair plan capable of successfully reducing greenhouse gas emission. The outcome of the negotiation is this project plan designed to contribute to energy saving and the suppression of greenhouse gas emission.

(1) First field survey (September 2000) This survey involved a briefing on the intent and purpose of the basic investigation conducted to promote joint implementation (“JI” in this case) at Bobovdol Thermal Power Plant and its auxiliary facilities and to identify the feasibility of repairing or reconstructing the generating facilities. The purpose of this survey was to reach a general agreement with SAEER and the power plant in question on the project plan conceived and proposed by the investigation commission.

(2) Second field survey (November 2000) We discussed with representatives from the SAEER and Bobovdol Thermal Power Plant the proposed repair plan for the station based on the results of the first field survey conducted in September 2000. The main purpose of this survey was to determine the direction in which to lead the future project. A briefing was given again to interested parties to promote better understanding concerning the joint implementation (hereafter referred to as “JF) and emission trade that was approved at COP3 held in Kyoto. We also informed them that the current proposed repair plan met with the intent of COP3 and that a yen loan available for environmental purposes with low interest and agreeable repayment terms was applicable to the project, and would make the project economically feasible.

(3) Third field survey (January 2001) Discussion took place with representatives from the Bulgarian SAEER and the Bobovdol Thermal Power Plant over the survey report concerning the repair plan for the station drafted on the basis of the results of the first and second field surveys held in September and November 2000 respectively and the related meetings. The main purpose of this survey was to define the direction in which to lead the future project.

-1-5- 2.1 Outline of the existing facilities before implementing the project

The existing Bobovdol Thermal Power Plant consists of three 210 MW units as outlined below:

Unit 1: 210 MW (specialized generating facility in service for 27 years since 1973) Unit 2: 210 MW (specialized generating facility in service for 25 years since 1975) Unit 3: 210 MW (specialized generating facility in service for 23 years since 1977)

Total capacity of the generating facilities: 630 MW

Note: Cumulative operation time of each unit has reached about 130,000 hours (as of August 2000).

-1-6- 2.2 Outline of the proposed repair project

The project will use the build & scrap method to convert the existing standard type thermal power generating facilities into gas turbine-based high efficiency gas combined cycle generating facilities.

Step 1: Emergency repair work will be implemented in a way that focuses on coal handling equipment and boilers in order to provide Unit 1 and Unit 2 of the existing station with improved functions and longer lives. The completion of this repair work is scheduled for the end of 2002, and these facilities will be able to remain in service for another 15 years thereafter. The existing Unit 3, on the other hand, will not be subject to the repair work but will be maintained for operation when required as a standby unit. [These facilities will continue to be operated from 2003 through 2017 with then- generated energy to be decreased gradually in response to the inauguration of gas combined cycle facilities.]

Step 2: A new Block- 1 gas combined cycle generating facility (multi-axial 2-2-1 type 210 MW gas combined cycle generating facility using a 70 MW gas turbine) will be constructed in a vacant lot to the west of the existing generating facilities. After it is put into service, power generation by the existing generating facilities will be decreased gradually, and this will be compensated by gradual increases in power generation by the gas combined cycle generating facility. This construction work is projected to end by the end of 2007. [This new facility will be operated for 36 years from 2008 to 2043, during which time, repair work will be carried out in 2033 to prolong its life.]

Step 3: A new Block-2 gas combined cycle generating facility (the same multi-axial 2-2-1 type 210 MW gas combined cycle generating facility as cited in Step 2) will be constructed, and the existing generating facilities will be removed from service. This construction work is projected to end by the end of 2012. [This new facility will be operated for 31 years from 2013 to 2043, during which time, repair work will be carried out in 2038 to prolong its life.]

Step 4: A new Block-3 gas combined cycle generating facility (the same multi-axial 2-2-1 type 210 MW gas combined cycle generating facility as cited in Step 2) will be constructed to meet the growing power needs. This construction work is projected to end by the end of 2017. [This new facility will be operated for 26 years from 2018 to 2043.]

-1-7- It was decided to ran the project for 41 years from 2003 to 2043, and investigation was conducted to address such issues as the extent to which carbon dioxide emission could be reduced and energy saved. The project needs to be adjusted and planned so that the closure of the suburban mine currently supplying fuel coal to Bobovdol Thermal Power Plant will have the least possible impact on the community.

-1-8 - 2.3 Energy saving effect

(1) Fuel consumption (baseline) when the existing power plant continues to be used: The following are annual fuel consumption figures calculated assuming that the existing power plant continues to be used (starting from the completion of the repair work for the existing units): 2003 to 2007: For 5 years; 33,708 TJ/yr. (annual power transmission: 2.5 billion kWh) 2008 to 2012: For 5 years; 33,708 TJ/yr. (annual power transmission: 2.5 billion kWh) 2013 to 2017: For 5 years; 40,449 TJ/yr. (annual power transmission: 3 billion kWh) 2018 to 2043: For 26 years; 49,888 TJ/yr. (annual power transmission: 3.7 billion kWh) Total fuel consumption over 41 years: 1,836,413 TJ

(2) Fuel consumption (project-specific) after the power plant is repaired: The emergency repair work for Unit 1 and Unit 2 of the existing power plant will be completed by 2002 so that they can resume operation by 2003. The existing plant will be operated on its own until 2007. With the start of the operation of a 210 MW gas combined cycle generating facility [Block -1] in 2008, a combination of the existing Unit 1 and the new Block- 1 gas combined cycle generating facility will be used until 2012. In 2013, a similar gas combined cycle generating facility [Block-2] will also be put into operation, and thereafter, the gas combined cycle blocks will dominate power generating operation in lieu of the existing units that will be retired but maintained operable as standby units. Annual fuel consumption becomes as follows if another similar gas combined cycle generating facility [Block-3] is assumed to initiate operation from 2018: 2003 to 2007: For 5 years; 33,708 TJ/yr. (annual power transmission: 2.5 billion kWh) 2008 to 2012: For 5 years; 24,503 TJ/yr. (annual power transmission: 2.5 billion kWh) 2013 to 2017: For 5 years; 28,177 TJ/yr. (annual power transmission: 3 billion kWh) 2018 to 2043: For 26 years; 27,184 TJ/yr. (annual power transmission: 3.7 billion kWh) Total fuel consumption over 41 years: 1,138,724 TJ

(3) Fuel consumption reduction after the power plan is repaired: Fuel consumption reduced during 41 years after the repair: 697,689 TJ Fuel consumption reduction rate: 37.99% 16.37 million tons of fuel in the form of crude oil can be saved over a period of 41 years provided that the heat generation is 42.62 TJ per thousand tons of crude oil.

-1-9- 2.4 Reduction of carbon dioxide emission

(1) Greenhouse gas (carbon dioxide) emission (baseline) when the existing power plant continues to be used: The following are annual greenhouse gas emissions calculated assuming that the existing power plant continues to be used (starting from the completion of the repair work for the existing units): 2003 to 2012: For 10 years; 3,343,000 tons/yr. (annual power transmission: 2.5 billion kWh) 2013 to 2017: For 5 years; 4,012,000 tons/yr. (annual power transmission: 3 billion kWh) 2018 to 2043: For 26 years; 4,948,000 tons/yr. (annual power transmission: 3.7 billion kWh) Total greenhouse gas emission over 41 years: 182,128,000 tons

(2) Greenhouse gas emission (project-specific) after the power plant is repaired The emergency repair work for Unit 1 and Unit 2 of the existing power plant will be completed by 2002 so that they can resume operation by 2003. The existing plant will be operated on its own until 2007, and with the start of the operation of a 210 MW gas combined cycle generating facility [Block -1] in 2008, a combination of the existing Unit 1 and the new Block- 1 gas combined cycle generating facility will be used until 2012. In 2013, a similar gas combined cycle generating facility [Block-2] will also be put into operation, and thereafter, the gas combined cycle blocks will dominate power generating operation in lieu of the existing units that will be retired but maintained operable as standby units. Greenhouse gas emission becomes as follows if another similar gas combined cycle generating facility [Block-3] is assumed to initiate operation from 2018: 2003 to 2007: For 5 years; 3,343,000 tons/yr. (annual power transmission: 2.5 billion kWh) 2008 to 2012: For 5 years; 1,955,000 tons/yr. (annual power transmission: 2.5 billion kWh) 2013 to 2017: For 5 years; 2,162,000 tons/yr. (annual power transmission: 3 billion kWh) 2018 to 2043: For 26 years; 1,525,000 tons/yr. (annual power transmission: 3.7 billion kWh) Total greenhouse gas emission over 41 years after the repair work: 76,950,000 tons

(3) Greenhouse gas reduction after the power plant is repaired Greenhouse gas reduction over 41 years after the repair work: 105.18 million tons Greenhouse gas reduction rate: 57.75%.

-I -10- 2.5 Economic feasibility of the project

(1) Budgets for the repair and construction of the thermal power generating facilities Phase 1 work (repair work to prolong the lives of the existing two 210 MW units) In foreign currencies: US$ 31,000,000.00 In domestic currency: US$ 78.300.000.00 Total: US$109,300,000.00 (US$63/kW) Note: These values represent pure investment not including the residual value of the existing plant. Phase 2 work (construction of Block- 1 210 MW gas combined cycle generating facility): In foreign currencies: US$ 92,000,000.00 In domestic currency: US$ 23.500.000.00 Total: US$115,500,000.00 (US$550/kW) Phase 3 work (construction of Block-2 210 MW gas combined cycle generating facility): In foreign currencies: US$ 90,500,000.00 In domestic currency: US$ 18.700.000.00 Total: US$109,200,000.00 (US$520/kW) Phase 4 work (construction of Block-3 210 MW gas combined cycle generating facility): In foreign currencies: US$ 90,360,000.00 In domestic currency: US$ 14.640.000.00 Total: US$105,000,000.00 (US$500/kW) Phase 5 work (repair work to prolong the life of Block- 1 210 MW gas combined cycle generating facility): In foreign currencies: US$ 8,000,000.00 In domestic currency: US$ 2.000.000.00 Total: US$10,000,000.00(US$47/kW) Phase 6 work (repair work to prolong the life of Block-2 210 MW gas combined cycle generating facility): In foreign currencies: US$ 5,500,000.00 In domestic currency: US$ 1.500.000.00 Total: US$ 7,000,000.00 (US$33/kW) Total work cost for this project: In foreign currencies: US$317,360,000.00 In domestic currency: US$138.640.000.00 Total: US$456,000,000.00

-I-11 - (2) Cost effectiveness of energy saving and greenhouse gas reduction For details, refer to Chapter 4 “Cost Performance of the Project ” and 4.2 “Cost effectiveness of the Project. ” ■ Total repair work cost: US$456 million ■ Energy saving over 41 years: 697,689 TJ (16.37 million tons in crude oil) Energy saving (in crude oil) per dollar of repair work cost: 0.0359 ton Work cost per ton of energy saving (in crude oil): US$27.86/ton ■ Greenhouse gas reduction over 41 years: 105.18 million tons Greenhouse gas reduction per dollar of repair work cost: 0.2307 ton/US$ Work cost per ton of greenhouse gas reduction: US$4.34/ton

(3) Profitability of the project (FIRR) For details, refer to Chapter 4 “Cost Performance of the Project ” and 4.1.3 “Cost Performance of the Project (Internal rate of return : FIRR).” When calculated based on various data collected by field surveys, FIRR becomes 5.66% with zero trade assumed for reduced carbon dioxide emission (Note *). The project will be economically feasible but with marginal profits if soft loans are raised from Japan Bank for International Cooperation (JBIC) or other organizations. Note *: It was anticipated that international frameworks would be established at COP6 held in Hague in November 2000 for such issues as the benefit distribution method for greenhouse gas reduction achieved by a JI project and emission trade. However, no such international agreements were reached at COP6.

-1-12- 3. Conclusion

The existing thermal power generating facilities have degraded with age and extremely abated efficiency and capability has resulted in increased fuel cost, air pollution due to nitrogen oxides, sulfur oxides and soot and dust and other environmental problems resulting from heavy releases of carbon dioxide, a greenhouse gas. This project involving the renovation of the existing facilities into state-of-the-art high efficiency gas combined cycle generating facilities, will not only reduce energy consumption by half (to 16.37 million tons in crude oil over 41 years) but also substantially mitigate air pollution due to exhaust gas. The true objective of this project is to substantially suppress carbon dioxide emission, one of the causes of global warning, and this objective is expected to be achieved (105.18 million ton reduction over 41 years). It goes without saying that the maximum use will be made of available infrastructure in implementing the repair project. However, during the construction of new facilities stable power supply will continue through the use of the existing generating facilities. After the new plant is completed, the existing plant is projected to serve as a standby unit for emergency use. The resulting power plant will become far more efficient and powerful with the capability of assuring stable power supply under any circumstances. Recognized as one of the key power plants by the Bulgarian government, this station calls for the earliest possible completion of a new high efficiency power generating plant that does not rely on the existing facilities.

-1-13- -1-14- II. MAIN REPORT

-n -1- -n-2- 1. Basic Matters of the Project

Based on the investigation of prevailing circumstances particularly in relation to energy in the country in question, the study is to be focused on the necessity of introducing energy-saving and environment improvement technologies, as well as the significance of and need for project implementation.

-n-3- -n-4- 1.1 The Situation in Bulgaria

The Republic of Bulgaria is located at the southeast end of the European Continent and on the East Balkan Peninsula. It is at the position where Europe comes into contact with Asia Minor Peninsula and Central Asia. The country has a population of about 8.28 million (as of the end of 1999) and has a total area of 110,912 km2, which is slightly smaller than one third of the area Japan has. In the 7th century, the Bulgars from Central Asia invaded the land where Bulgaria is currently located. They assimilated with the Slav and constructed the first Bulgarian Empire (in the year 681). After that, following the rule of the Byzantine Empire and construction of the second Bulgarian Empire, Bulgaria was then ruled by the Ottoman Empire for about 500 years. In 1878, as a result of the Russo-Turkish War, Bulgaria was liberated from the Ottoman Empire, and after the World Wars I and II, the Communist Party became the sole dictator in 1946. In November 1989, the government of the Communist Party collapsed and democratization started. Then, the Rostov Cabinet, which is currently in power, began in May 1997 (the second Rostov Cabinet began in December 1999). Its most critical issues include introduction of the democratic system and market economy as well as participation in EU and NATO. At first, the Rostov Cabinet was eagerly working for stabilization of the economy, which had been confused under the previous cabinet of the Socialist Party. However, after establishing the Currency Reserves Committee in July 1997 with the support from IMF and other organizations, Bulgaria saw the stabilization of the foreign exchange market, settling down of inflation, reduction of interest rate level, increase of foreign currency reserves and so on and its macro economy is therefore stable at present. From now on, the largest problem Bulgaria is faced with is how to advance structural innovation while also considering the political and social stabilization in the country. Japan continues to support Bulgaria in democratization and market economy introduction through economic assistance, cultural exchange and human resources exchange. At the same time, Japan is making efforts to maintain and promote friendship between the two nations.

-n-5- 1.1.1 Political, Economic and Social Situations

(1) Social situation

1) Overview of the country (Name of the nation) Republic of Bulgaria (National land) Land area: 110,912 km2 (0.29 times the area of Japan) (Population) 8,280,000 (As of the end of 1999) (Language) Bulgarian (Slav family, Cyrillic alphabet) (Religion) The Bulgarian Orthodox Church (Christianity). In addition, there are also very small numbers of people who believe in Islam, Judaism, Roman Catholicism and Protestantism. Freedom of belief is secured by the Constitution. (Geographic Outline) Bulgaria is located at the southeast end of the European Continent and on the east Balkan Peninsula, bordered by Rumania on the north, by new Yugoslavia (Serbia) on the west, by Greece and Turkey on the south and by the Black Sea on the east. It is traversed from east to west at the central part by the Balkan Mountains, and has Danube plateau at the northern end facing the Danube River. About 40% of the national land area is occupied by hills 200 to 600 m above the sea and about 30% by mountains 600 m or higher. The land below 200m above the sea represents the remaining 30% only. (Climate) Bulgaria is at the position where the European continental climate transits to the Mediterranean climate, and it is generally warm. In particular, the southern part is warm because the Balkan mountains block the cool air from the north. The change of the seasons is quite noticeable. The temperature can be as low as -14^--30cC in winter in cold districts such as the plain along the Danube River and ravines in high mountains, however, the annual average temperature is about 10"C. (Currency) Bulgarian lev (Plural: leva) (Exchange rate) 1 lev = 1 German mark (From July 1999), 2.049 leva/ US dollar (as of January 15, 2001) (Fiscal year) January 1 to December 31 (Country code for telephone) 359 (Bulgaria), 02 (Sofia) (Weights and measures) Metric system (Voltage/Frequency) 200/380 volts, AC 50 Hz Table 1.1.1-A Average Temperature in Sofia (Capital) (Unit: °C]

Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec

-0.4 1.2 5.9 11.1 15.8 19.6 22.1 21.3 17.4 11.5 6.3 1.2

- H - 6- 2) Culture and Society

(a) History The Bulgarian capital, Sofia, is one of the cities that have been developed from the oldest times in Europe. It dates back to about 5000 years ago. Aboriginal Thracians called the area around current Sofia “Serdi”. When the Roman Empire started to rule Serdi in the first century, Serdica was established as the capital at the center of the area. We can still see many remains and pavements, which remind us of prosperity in the old days in the central part of the city where the Sheraton Hotel and Tzum Department Store are located. Positioned at the transit point of the route connecting Pannonia (current Hungary) and Eastern Rome, Sofia had been a critical region as the center of commerce and traffic since the Roman era and it was therefore strategically important. For this reason, Sofia was invaded by Gaud, Magyar, Hun, the Crusades and so on and further ruled by the Ottoman Empire for five centuries in its history. Since its founding in the year 681, Bulgaria has changed its capital from Pliska to Preslav, and then to Veliko Tumovo. Sofia became the capital when Bulgaria was liberated from Turkey in 1878. Sofia has grown into a modem city with a population of about 1,150,000 and serves as the center of politics, economy and culture of Bulgaria. To the south, it faces the beautiful Vitosha mountain whose height is 2200 m above the sea. Referred to as “Garden City, ” Sofia has an abundance of plants.

(b) Races The racial make-up of Bulgaria is as follows: Bulgarian represents 85.3% of all people in Bulgaria, while Turkish represents 8.5 % , gypsy represents 2.6 %, Macedonian represents 2.5 % and people of other races comprise 1 %. Bulgarian people are generally said to belong to Slave. According to their history, however, their racial origins is considered to be a mixture of Slav, primitive Bulgarian from Turkish-Tatar origin and ancient Thracians. “Bulgar ” indicates “a person having a hoe. ” Turkish people representing 8.5 % of the population mainly live in the southeast and northeast parts of Bulgaria and believe in Islam. The assimilation policy for Turkish the government enforced in the latter half of the 80 ’s was withdrawn and the racial problem is calmed down for the time being. In the economic depression continuing long since 1989, however, requests from Turkish-origin inhabitants has been affecting the political situation in Bulgaria through the organization of “Movement for Right and Freedom ” established in January 1990 to represent their interest.

(c) Religion

-n-7- Since Bulgaria was under a strong influence of the Byzantine Empire until the 12th century, its people tend to believe in Christianity. Many people believe in the Bulgarian Orthodox Church, which is of Greek Orthodox Church descent. Freedom of religion is assured by the constitution. In addition, there are also a small number of Catholics and Protestants.

(d) Education The duration of compulsory education is 11 years. Children aged 6 to 16 are subject to such education. The education level of the people is relatively high. In particular, engineering and IT technology levels are higher than those in other East European countries. Foreign companies are highly willing to take advantage of this point.

(e) Transportation and communications The infrastructure in Bulgaria including both transportation and communication networks is still developing. It needs to be further improved from now on. (Transport) Most freight is transported by automobiles (57% of total freight amount, 1993) and railways (24% for the same). In addition, vessel transport utilizing the Black Sea and the Danube River represents 13%. The government is making efforts to take advantage of Bulgaria ’s geographic positioning as an intermediary country of trade by providing domestic trunk line network, the port of Varna on the Black Sea and the port of Burgas, as well as land bases along the Danube River. Further, it is proceeding with projects to build bridges (two bridges from Vidin to Calafat and from Oriahovo to Beket) across the Danube River along the border of Rumania, the neighboring country. At present, there is only one bridge between Russe and Giurgiu. Free trade areas are set in the following locations: Vidin and Russe (both along the Danube River), Burgas (by the Black Sea), Plovdiv (the second largest city in the inland of Bulgaria), Dragoman (near the border of Rumania) and Svilengrad (near the border of Turkey). (Communications) Bulgaria had positively promoted diffusion of telephone lines since it was a Socialist country, and it had the largest amount of telephone lines among the previous Central and Eastern European countries. However, they were not highly developed in terms of quality and reliability. After the change of its system, it is now implementing the 12-year digital system project with borrowing funds from international organizations and cooperation of European and American communication corporations. Its telecommunications are being improved rapidly. Cellular phones for automobiles are compatible with international standard (GSM) and handy phones, facsimile and e-mails

-H-8- are becoming popular mainly for business use. Direct communication with Japan via satellite communication is possible.

(2) Political situation

1) Political circumstances

(Change to a democratic nation) The democratization movement, which rose in Eastern Europe in 1989, also affected Bulgaria. Zhivkov, Secretary-General of the Communist Party, was forced to resign his post as the leader of the nation, a leadership which lasted as long as 33 years. The dictatorial system of the Communist Party since 1946 ended and large-scale innovation directed toward the democracy and market economy started. In July 1991, a democratic constitution was adopted for the first time in Eastern European countries. In the first general election under the new constitution in October, Union of Democratic Forces (UDF) appealing the democratization and reform of economy acquired the position of the leading party by a small majority. With the cooperation of the organization of “Movement for Right and Freedom (MRF)” having Turkish residents as the base of support, the first non-communist single-party government after the World War II with Dimitrov as the head was established. This government successfully formed the Foreign Investment Act, Private Corporation Act, Land and Property Act. However, struggle for power within UDF, disclosure of weapon export corruption and anti-government demonstration led to proposal of nonconfidence, which was approved with MRF sided, and the Cabinet resigned as a body. After that, the Berov Cabinet (for one year and nine months) and the Indjova Provisional Cabinet (for three months) administered the affairs of state. In December 1994, a general election took place three years after the previous election, and the democratic leftist union mainly consisting of the Socialist Party (Previous Communist Party) obtained the majority of seats. In January 1995, the Socialist Party Cabinet with Videnov as the head was established. (Resignation of the Socialist Party Cabinet) The Videnov Cabinet was expected to stabilize the political situation and promote structural reform and thereby accelerate shift to the market economy. In 1996, however, the life of the people became considerably worse: insufficient reform of economy caused economic depression, grains were exported despite the possibility of hunger under reduced production, food shortage was caused by holding back, and economic and financial failure occurred with bankruptcy of banks. Under these circumstances, the presidential election was conducted (in November). The candidate from the Socialist Party suffered a crushing defeat and Stoyanov from UDF was elected as the President with the support of 59.7% in the votes of the people. With the criticism of the

-II-9- Prime Minister Videnov and the executives rising in the party, the Cabinet was forced to resign in the following December. At the beginning of January 1997, large-scale protest activities calling for the resignation of the Socialist Party Cabinet and immediate general election were triggered off mainly by UDF, labor unions and students. This made the Socialist Party relent and agree with the nongovernment parties to conduct an earlier general election in April. For the period until the general election, an election administration cabinet was formed with the Mayor Sofianski from UDF serving as the head (in February 1997). (Forming of UDF Rostov Cabinet) The Prime Minister Sofianski came out with policies obviously close to those of Western European countries aiming at participation in EU and NATO. As a result of the general election in April 1997, the coalition group “Unified Democratic Power ” mainly comprising UDF won the majority of the seats. In May, the Cabinet with Rostov (Head of UDF) as the prime minister started. This Cabinet promoted the policies of the preceding Cabinet under Sofianski. It pledged to participate in EU and NATO, promote privatization, destroy organized crime, return agricultural land, and perform contracts with international financial institutions. It started the four-year plan for structural reform in the economic, social and financial fields with the motto of transparency, and has achieved successful results to a certain extent so far. In July 1997, it established a currency reserve committee based on advice from IMF and other international financial institutions, which has delivered results in suppression of inflation and stabilization of the currency (Lev). In October 1999, a local election was conducted for the first time after the start of the Rostov Cabinet. The number of votes obtained by UDF in the 1997 general election was reduced by about 1,200,000 and UDF therefore fell a long way short of achieving its goal. Although the power of the Socialist Party weakened considerably from the previous local election, it nevertheless continued to be formidable. In December 1999, the Cabinet was reformed and the structure was reorganized. In April 2000, the previous Cabinet ministers and nongovernment parties criticized the countermeasures against corruption addressed by the Rostov cabinet. In May, the Socialist Party and others proposed a vote of nonconfidence in the Cabinet. Though the nonconfidence motion was rejected, the percentage of the people supporting the Rostov Cabinet has been decreasing. (According to the public opinion poll in April by Gallup, those who support the current government represent 20% and those not supporting it represent 63%). The general election is planned in spring 2001.

2) Political system

(Form of government) Republican form of government

- H -10- (Presidential Center) President: Petar Stoyanov Vice President: Todor Kavaldzhiev

(Council of Cabinet Ministers) (the government; the second Kostov Cabinet started in December 1999) Prime Minister and Minister of State Administration: Ivan Kostov Deputy Prime Minister & Minister of Economy: Peter Zhotev Minister of Foreign Affairs: Nadezhda Mihailova Minister of Interior: Emanuil Yordanov Minister of Justice: Teodossiy Simeonov Minister of Finance: Mouravei Radev Minister of Defense: Boiko Noev Minister of Transport and Communications: Antoni Slavinski Minister of Health: Hko Semerdjiev Minister of Environment and Waters: Evdokia Maneva Minister of Regional and Urban Development: Evgeni Chachev Minister of Labor and Social Policy: Ivan Neikov Minister of Agriculture and Forestry: Ventsislav Vurbanov Minister of Education and Science:Dimiter Dimitrov Minister of Culture: Emma Moskova Minister without Portfolio: Alexander Pramatarski (Seats in the Parliament by each party (Total number of seats: 240)) Union of Democratic Forces: 126 seats People ’s Union: 11 seats Democratic leftist (Socialist Party and others): 58 seats People Relief Union (Movement for Right and Freedom and others): 17 seats Euro-left: 17 seats Independent: 11 seats

* Functions of the President and Parliament as specified by the Constitution are as shown below: President ------The head of the nation who preserves the nation ’s integrity and represents Bulgaria to foreign countries. Vice President assists the President. Major tasks-Promulgation of laws, conclusion of international treaties, enforcement of election and decision of election day, declaration of emergency and war,

-H- 11- approval of changes in borders and administrative districts, appointment and dismissal of ambassadors and representatives for international organizations proposed by the council of Cabinet members, etc. Parliament Major task is to establish laws. With the presence of majority of the parliament members, the proceedings become effective. A bill passes when supported by the majority of the present parliament members. Council of ------The supreme administrative organization in charge of domestic Cabinet members and diplomatic policies, budget execution, military force control and law and order maintenance. Local ------Bulgarian territory can be divided into prefectures and governments municipalities (cities, towns and villages). The governor is appointed by the council of Cabinet members and rules the applicable prefecture. The head of municipality is directly elected by the residents together with the municipal council members, and rules the applicable city, town or village. The term of office is four years.

3) Diplomacy

(a) The Kostov Cabinet considers the membership to EU and NATO as important issues of diplomatic policy and is making positive diplomatic efforts. Regarding membership to EU, Bulgaria was permitted to be a subject country of membership at the European Council in Helsinki in December 1999. It is expected to achieve formal membership in January 2007. In terms of participation in NATO, Bulgaria has taken part in Partnership for Peace (PEP) since 1994. When NATO started aerial bombardment of Yugoslavia in March 1999, Bulgaria took the position not to directly participate in the dispute at first. However, in line with its policy of close ties to NATO, Bulgaria decided to approve NATO’s application for passing its territorial airspace. In April 1999, it adopted a military doctrine describing various rules and procedures regarding assurance of the nation ’s safety, and continues to make efforts such as promotion of modernization of military organizations and equipment.

(b) As a member of the Balkan States, Bulgaria contributes to stabilization of the Balkan region. It holds discussions at various levels with Rumania, Turkey and Greek to destroy organized crime and smuggling of drugs. In addition, it provided headquarters in Plovdiv for the multinational peace-keeping force in Southeastern Europe. The opening ceremony of the headquarters was held in September 1999.

-n-12- (c) Bulgaria ’s stance on Kosovo is to face the problem in all aspects with a position equivalent to that of EU countries. At the same time, it positively takes an initiative of trying to solve the problem as a member of the Balkan region, and it adopted “Joint Declaration on Kosovo Problem ” in March 1998. When NATO started aerial bombardment of Yugoslavia in March 1999, Bulgaria was reluctant to directly participate in the dispute at first. However, according to its policy of close ties with NATO, Bulgaria decided to approve NATO’s request for passing its territorial airspace. From the viewpoint of the economy, the transport route with Western Europe was held up and Bulgaria suffered a large loss in the transport industry. As the long dispute continued Bulgaria ’s economy suffered accordingly. After the bombing ceased it supported the initiative of cooperation for stabilization of Southeastern Europe proposed by Germany. The President Stoyanov and the Minister of Foreign Affairs Mihailova attended the top-level conference for the Agreement held in Sarajevo on July 30. Assistance to local projects within the scheme of Southeastern Europe Stabilization Agreement is largely expected. In relation to this issue, the second bridge construction across the Danube River (from Vidin to Caiafat) was approved as a project to be started soon. Bulgaria and Rumania signed the related document between the governments in March this year and are proceeding with discussions toward start of construction. Bulgaria has been in the joint chairperson group of the third working committee (Safety Problem) from July last year. (d) Relations with Japan are underscored by Bulgaria ’s high evaluation of the importance of Japan in international society. Considering the relation with Japan as a “mutual trust relationship ” (President Stoyanov) and “special partnership model ” (Deputy Prime Minister Bakardjiev), it is making efforts to develop the mutual relationship in political, economic, cultural and all other fields.

4) National defense (a) With the Warsaw Treaty Organization dissolved and with conventional and nuclear military power largely reduced in the Eastern and Western blocks, Bulgaria, as a signatory to CFE Treaty, also started to reduce its conventional military power. After democratization, according to the diplomatic policy of uniting with the European and Atlantic Organization, Bulgaria signed the document for the “Partnership for Peace (PFP)” scheme in February 1994 and has since positively participated in the activity of the scheme. On the diplomatic front, the Kostov Cabinet, which started in 1997, gives a more obvious priority to gaining membership to NATO and EU. With consensus obtained from all nongovernment parties except for the Socialist Party, the cabinet is promoting positive diplomatic activities. However, following NATO top-level

-H - 13- meetings in Madrid (1997) and in Washington (1999), Bulgaria was not appointed as a subject country of larger NATO. Bulgaria expects to be invited to membership to NATO in 2002 with other candidate countries for membership.

(b) Innovation of Bulgarian national force is being executed on the assumption that it will join NATO soon. The documents serving as the foundation for this are “National Safety Concept ” (approved in April 1998) clearly describing the guidelines of the national safety and the military doctrine (mentioned earlier; approved in April 1999). The aim of the armed forces is to reduce the number of troops while securing a high level of mobility and preparation for battles, as well as making the armed forces structure and weapons compatible to the NATO standard. The number of soldiers at present (about 90,000) will be reduced to 45,000 by the year 2004, which is six years earlier than the original plan. The general mobilization plan for the military strength will be mapped out for 250,000 people in total. Functionally, the national land is to be divided into two army corps zones and two division zones according to the duties. In these zones, the defense forces, the immediate developing forces and the territorial defense forces will be developed. In May 2000, the Parliament approved the bill to reduce the present one-year conscription period by three months to nine months.

(c) According to its military doctrine, the national safety of Bulgaria can be largely threatened by various concerns including massacre of minority races' and/or religious organizations, territorial and border military activity, armed secessionism as well as international terrorism.

(3) Economic situation

1) Bulgaria started economic reform to shift to a market economy in February 1991. However, it faced large difficulties including hyper-inflation, which reached 311% in 1996 and 578% in 1997, and the government of the Socialist Party collapsed. The Kostov cabinet, which came into power in May 1997, established the Currency Reserve Committee in July of the same year and worked for low exchange rate (by introducing the fixed exchange rate with 1 German mark = 1,000 leva, and also by executing denomination for 1 German mark = 1 lev in July 1999), cooling down of inflation (1998: 1.0%, 1999: 6.2%), lower interest rate level (about 200% at the beginning of 1997 was lowered to about 3.9% at the end of 1999), and increase of foreign currency reserves (610,000,000 German marks at the beginning of 1997 became 6,271,000,000 German marks at the end of 1999). Under the structural reform guided by IMF, the Bulgarian economy has stabilized.

2) Considering GDP, Bulgaria achieved an increase of 2.4% from the previous year in 1999 when under influence of the Kosovo dispute. The year of 1998 also showed an

- n -14- increase of 3.5%. Though it had negative growth rates in 1996 (-10.1%) and in 1997 (- 7.0%), the situation has been reversed thereafter. For the first quarter in 2000, GDP of 4.8% was achieved. The government expects a yearly growth rate of 4%. In terms of finance, the fluctuation of Bulgaria ’s deficit is within a range of about 2% of GDP. It was about 1 % of GDP in 1999 and the country had surplus of 2% in 1998. Accordingly, the financial structure is making sound development.

3) The population of those of working age in Bulgaria (those aged at least 15 and below 60) is about 5,110,000 in 1999, which represents about 60% of the entire population. The unemployment rate, which recorded 15% in 1997, decreased to about 12% at the end of 1998, but rose to 15.9% at the end of 1999. It constantly continued to rise in the year 2000. It was 18.2% in June 2000 and the regional difference is becoming larger. This means that, although the increase of employment by civil sectors was larger than the reduction of employment by the national sectors for a while, restructuring measures taken by large-scale national enterprises are causing, an increasing number of unemployed people. Also, the average wage in 1999 increased by 6.2% from 1998 and reached 202.6 leva (per month).

4) In terms of foreign trade, Bulgaria marked a deficit of US$1,487 million in 1999. At present, it is restructuring its export product base. The figures for conventional key export articles such as fertilizer and iron steel have remarkably declined, and export of foods, cigarettes, textiles and furniture have been growing. The cost of imports however are on the increase. The factors which have contributed to this tendency include a weak lev against the dollar, a rise in international energy prices, and expanding needs for consumption goods and investment property produced in foreign countries. The resultant deficit in trade is countered by the profit obtained from investment into foreign countries and income from tourism. Major exported articles are clothes/shoes, cast iron, nonferrous metals, foods and machinery. On the other hand, major imported articles include crude oil, lumber/paper, machinery, natural gas and chemical products. About 50% of exports in 1999 were made to the EU. Russia represents 9% in exports and about 23.5% in imports.

5) Wage Trend Wages paid in Bulgaria have rapidly increased along with inflation, and monthly average of wages went from 214 leva in 1985 to 934 leva in 1991, followed by 2,132 leva in 1992,5,090 leva in 1994 and 7,616 leva in 1995. In 1996, inflation was aggravated due to the sudden drop of the leva, and actual purchasing power was lowered by the increase of import prices. On the other hand,

-n -15- inflation in the first half of 1997, which indicated four -digit value, was steadily lowered, and actual wages have gradually been recovered from the latter half of 1997. The average wage in 1999 was 202.6 leva, an increase of 6.2% from 1998. With infiltration of marketization, it was impossible to avoid expanding wage disparities among individual companies. This climate may provide opportunities for workers in the companies with strong management structure to negotiate their wages further. 6) Revision of Relevant Laws for Taxation System Relevant laws for the taxation system reform that would become preconditions of the government budget in 1998 were approved. Key points of the revision include to bring up private companies, to cut effective tax rate of corporate tax in order to promote activities of companies (40. 2%—>37%), to set items of zero or low tax rate and extend refund term (3 —> 6 months) for VAT, to exempt companies taking environmental measures from corporate tax, as well as to raise the rate of income tax for individuals. Summary of the revision is as shown below:

(a) Value Added Tax (VAT) Introduced on April 1, 1994. Tax rate is 22%, but some foodstuffs (bread, milk, yogurt, cheese and water), energy for home use (coal, electricity, etc.), medicines, textbooks, etc. are exempted from taxation. Tax required for land transaction, financial / insurance services, education / welfare services, etc. are also exempted. VAT imposed on export goods will be returned after completing customs clearance. Consumption Tax (excise duty): Changed to the ad valorem duty system from July 1, 1996. The range of tax rate is between 10 % and 110%. The following list shows the individual tax rates for main products: Gasoline — 70 ~ 110% according to octane rating. 60% on lead -free gasoline, and 30% on diesel oil. Automobile — Tax -free ~ 40% according to displacement. Gambling — 50%. Alcoholic beverage — 15% on beer, 20% on wine, and 50% on spirits. Tobacco — 60%. Coffee and Tea — 30%. According to the new bill (approved on November 13, 1997) for value -added tax (VAT) reaching up to 1.6 trillion leva or 26% of revenue of the new budget (6.9% of estimated GDP), the list of zero and/or low tax rate-applied goods and/or services is to be prepared separately, while the basic tax rate is kept unchanged as 22% based on IMF’s advice. VAT refund term was extended from original three (3) months to six (6) months, but export companies can also offset newly created payment duties by VAT already paid. Furthermore, the annual lowest sales required for VAT registration was

-n -16- reduced from 75 million leva to 50 million leva. If registered, each company is eligible to receive refunds on VAT imposed on purchased goods As a background to such reduction measures, it is intended to eliminate claims for VAT refunds made by bogus companies using forged invoices.

(b) Corporate Tax The basic tax rate of corporate tax payable to the government was lowered from 36% to 30% (the tax rate against 150 million or less leva profit subject to taxation was 20%), while that payable to each local authority was increased from 6.5% to 10%, and this caused the effective tax rate to be lowered from 40.2% to 37% accordingly. (c) Income Tax The rate of income tax imposed on individuals is to be increased from 15.6% to 16.9% on average. Note that, for up to 60,000 leva per month, tax can be deducted. (d) Local Property Tax For local property tax, a high rate of taxation was imposed on nominal price of subject property so far. The rate was cut this time, but since subject of taxation would be changed to market prices, taxation amount would essentially be increased. (e) Exemption of Corporate Tax and Value-Added Tax For corporate tax and value-added tax, tax benefits are applied to environmental measures as applied to foreign investments. According to the law regarding reduction of environmental impacts of wastes approved on November 24, exemption of corporate tax for five (5) years is to be permitted to produce techniques to reduce wastes and energy to utilize wastes, as well as to purchase machines/equipment and waste treatment facilities for such production. Also, companies approved under the new laws regarding waste collection, transportation, storage and processing can be exempted from VAT. (f) Separation of Health Insurance System According to the health insurance law newly enacted, 6% of gross wage is to be collected from both employers and employees and pooled for funds for system operation. Based on such a system, the health insurance can be separated from other general social insurance’s. (g) Asset Revaluation At the end of 1997, assets of all companies were reevaluated to allow depreciation to meet real needs as much as possible. The previous asset revaluation was conducted in 1992, and since inflation was aggravated after that time, it was required again. Note that, through the revision of the accounting laws, provisions were made to implement revaluation of asset values when the annual inflation rate exceeds 33%. 7) Industrial Structure

-n -17- (a) Agriculture After the end of the World War n, shrinkage in the farm population has been remarkable, with the immediate post-war ratio shrinking from 60% to approximately 9.5% in 1995. Accordingly, the position of the farming industry in the overall economy has gradually been lowered, indicating 13% of GDP (in 1995). However, in Bulgaria, the agricultural sector in fact employed 24% of the total labor force (in 1995), given the condition that 55% of the land where weather is very temperate is used as farming land, it is true that agriculture is critically important industry for the Bulgarian economy. Since 1990 when the former farm system collapsed, the agricultural output has declined from year to year, and during 1992 to 1993, it actually reduced by 16 to 18 %. However, due to the reorganization of agricultural output system and recovery of farmers’ will for production, the output has indicated higher growth year to year since 1994, increasing by 7.1%. Other than impacts of economic turbulence and market losses of CIS members due to the structural reform, it is considered that the slump of the farming industry was also caused by recent drought damages and interrupted transportation route to European countries due to the economic sanction against Yugoslavia, restricting export of vegetables, fruits, animals, meat and dairy products. Although export of agricultural products and other food products to EU countries was expected to grow because the provisional trade agreement with EU became effective in 1994, it has not yet reached the level hoped for. . One of the reasons for this is believed to be potential competition between export products from Bulgaria and items produced in EU countries. While the collective farm was collapsed during the transition process to the market economy and the land allotment to farmers is behind schedule, many parts of farmlands have been left uncultivated. The number of farm animals has also decreased, and 640,000 farm animals in 1985 were halved to 370,000 in 1997 because of shortage of animal foods and serious scarcity of food in the winter of 1996. Although the output was shifted favorably in 1995, the production of grain was drastically reduced in 1996 and agricultural output was suddenly lowered by 13.3% compared with the previous year due to shortage of funds caused by the financial crisis and insufficient elements including farming machines and fertilizers. As a result, the government was forced to import grains to overcome potential food crisis expected in the winter of 1996. According to the statistics of the national statistical institute, the average of annual wheat production during the past twelve (12) years between 1984 and 1995 was 3.3 million tons, but in 1996, the figure dropped to a record -breaking 1.8 million tons which was even below the past lowest mark of 2 million tons in 1939. Experts suggest that the decrease in food production was caused fundamentally

-n - is- by the government ’s low price policy which weakened farmers’ motivation, rather than status of actual harvest of each year, and insist that the only way to solve such a situation is to liberalize grain prices and withdraw import regulations, demanding that the government draw up policies to procure grains from farmers at international rates, and in the area of retailing, abolish support of fixed price with subsidiary payments to strengthen social aids for consumers. For the farmland reform plan started from 1990, 70 % of the land planned to be privatized (5.8 million hectares) has been allotted, but only 18% of owners obtained private ownership title, and schedules for the market formation for land liquidity and development of long term land lease to full-time farming families were delayed. An average of 2.5 hectares or less of farming land was returned to former owners (or their inheritors) before the period of the socialist system. According to the law recently established, intensive lease of farmlands were accepted, and this provided the way to develop large scale farming by unifying small agricultural lands. Foreigners were also permitted to lease privately-owned lands, and accepted to participate in auctions for national land privatization under the condition of leasing. The farmland reform is also expected to promote privatization of wineries and processing factories for agricultural products as well. Although grain output was insufficient in 1996, export of the popular products wine and white cheese was continued. Of the 240,000-liter output of wine, 80% was exported, and 100,000 liters of this exported wine were sent to the U.K., which is the traditional market for Bulgarian wine. White cheese is exported to Greece and the Middle East, and in 1996, 5,700 tons of cheese were shipped to these regions, reduced by 10 % over the previous year. On the other hand, due to a sharp decline in the leva, large amounts of cheese, other than mentioned above, were smuggled to Greece and Turkey. Good news occurred for those engaging in both livestock and grain production, when people raising livestock were stimulated by the liberalization of meat prices implemented in the beginning of 1997 and a potential increase in meat production was anticipated accordingly, while wheat production in 1997 was expected to become higher than the originally planned amount of 3.7 million tons due to lowering of the wheat export tax from 15% to 10%. The Department of Agriculture and Food Industry Agency considered that the planting conditions in the winter of 1996 were favorable, and if 3 to 3.5 million tons of harvest could be ensured in 1997, it would be possible to meet domestic demand as well as to export 250,000 tons (not including the amount required to replace the emergency import made the previous year).

-H - 19- (b) Mining Industry (General Situation) Except for copper, lead and zinc, Bulgaria is poor in mineral resources. Although it is estimated there are approximately 4.5 billion tons of coal deposits, more than 90% of this is brown coal, with thermal power only about 80% of the imported coal used for thermal power generation. Consequently it is primarily utilized for heating. Since only small amounts of oil and natural gas can be mined in this country, Bulgaria has a high dependence on imports from other countries such as Russia for these resources. It is assumed that domestic demands of these resources are 5-6 million tons for oil and 700 million cubic meters for natural gas. Coal : Recently, the production is stagnant and domestic demands cannot be satisfied. Dependence on the domestic production is 63.67% (in 1993) . The Bulgarian Government reworked the coal policy in July 2000, and came up with the plan of coal mine privatization.. Also, since it is expected that coal in the Bobovdol region can only be mined for about an additional 3 to 5 years according to the current basis (cost/quality), Bobovdol Coal Thermal Power Plant plans to use mixed coal of lignite from Sofia region and imported brown coal from other countries including Ukraine, Russia and Indonesia. The following are the details of freight rates for IMPORTED COAL transportation: To use the railroad transportation in Bulgaria, MONOPOLY. IMPORTED COAL CONSUMERS of the state-owned BULGARIAN STATE RAILWAY individually make a transportation contract with BULGARIAN STATE RAILWAY. Railroad Transportation: NORMAL RATE ( 5 ~ 10% DISCOUNT is available for customers with large order.) • BOURGAS-BOBOVDOL (540KM, Double Track) : US $ 4.45/TON • VARNA-BOBOVDOL (620KM, Double Track) : US $ 4.85/TON * Other than above, SVISHTOV-BOBOVDOL ROUTE via DANUBE RIVER is also available for IMPORTED COAL transportation route. The privatization of Bobovdol coal mining area was implemented as shown in the table 1.1.1-B below:

- n - 20- Table 1.1.1-B Privatization of Bobovdol Coal Mining Area Contents Implemented Responsible on: Agency Bobovdol; Reorganized Bobovdol Coal Mine by 20 June 2000 SABER Coal establishing the state -owned holding Mining company. Area Announced to close Ive Losev coal mining 30 June 2000 SABER area. Announced procedures for the 30 June 2000 SABER, PA privatization of Botev coal mining area. Announced procedures for the 30 June 2000 SABER, PA privatization of Bobovdol coal mining area.

Natural Gas : The use of coal as plant fuel is gradually shifting to natural gas. The country depends entirely on Russia to meet the domestic demands for natural gas. Difficulties were experienced in the negotiations between the Bulgarian government and Russia over import price of gas, as Bulgaria tried to discuss this along with the issue of constructing pipeline within the country for gas transportation to Greece, Turkey and the Balkan States as requested by Russia. However, negotiations were finally concluded in October 1997. According to results of the negotiations, Russia’s Gazprom would make a contract with the state-owned Bulgargaz for the 10-year gas supply agreement, and guarantee 6.5 billion cubic meters of annual consumption in Bulgaria. 6 billion cubic meters were supplied in 1998, and the amount can be increased as required. 50% of gas price is paid for construction work done by Bulgaria ’s state-owned construction company Glav Bulgarstro. The price for natural gas was cut by 16.42% by Bulgargaz on November 1, 2000. Therefore, the current natural gas price is set at 138.05 dollars/1000 cubic meters including 20% of VAT. Also, regarding the natural gas supply to Bobovdol Coal Thermal Power Plant when combined cycle system is applied to this plant, Bulgargaz considers that it is possible to review the following three (3) options: CD The capacity of transit pipeline from Compressor Station/CS Lozenetz to CS Ihtiman 16 million m3 gas per 24 hours: - Pipeline to Greece 7.7 million m3 per 24 hours - Pipeline to Macedonia 2.6 million m 3 per 24 hours

-H-21- - Possible supply to Yugoslavia 4.8 million m3 per 24 hours

Of the above, the possible supply to Yugoslavia which is 4.8 million m3 (per day) can be sent to the Bobovdol Thermal Power Plant via the transit pipelines (to Greece or to Macedonia). Note that the maximum consumption in the Bobovdol Thermal Power Plant is estimated to be approximately 2.4 million m3 (per day). (2) Bulgargaz, currently supplying gas to Yugoslavia, is also able to provide 2—2.5 million m3 natural gas to CS Ditiman daily via the southern part of Ring / Main gas pipeline. It is also possible to send 2—2.5 million m3 (per 24 hours) natural gas to Bobovdol Thermal Power Plant by using the transit pipelines (to Greece or to Macedonia). (3) Additional pipeline was constructed for the Main Gas Pipeline from Pemik to Bobovdol. The length of pipeline is 50—60 km, and its transit capacity is 3 million m3 gas (per 24 hours). The diameter of pipe is 500 mm. Oil : Oil was imported from the former Soviet Union (estimated approximately 1,200 tons) until 1986, and part of such imported oil was re-exported to the western countries aiming at acquisition of foreign currencies to repay for external debts. While Russia raised its exporting price to the level of the international market price, Bulgaria was coping with decreasing foreign currencies. Due to this situation, import from Russia has recently been diminishing, so that the country seemed to have barter import from other countries such as Libya, Iraq and Iran. Imported amount of crude oil has also decreased from 7.4 million tons in 1996 to 5.6 million tons in 1997. (c) Manufacturing Industry Due to the heavy industrialization line under the centralized planned economy after the World War II, new industrial sectors such as steel, machinery/metal, chemicals and electric machinery were established. Based on the national income produced, the manufacturing industry accounted for 51.3% in 1980 and 47% in 1990, expanding to become the current largest industrial sector. Of the above, growth has occurred in machinery/metal processing, chemicals/rubbers, electronic technology and foods sectors, accounting for 65.7% of the entire manufacturing industry. However, with the development of the market economy, the service sectors have also expanded, and the share of the manufacturing industry based on the national income produced actually diminished from 44.8% in 1990 to 34.7 % in 1995. On the other hand, the service sectors including transportation/communication, trade and housing have raised shares, expanding from 30.8% in 1990 to 51.1% in 1995. Among these service sectors, the share of trade made large increase from 8.7% in 1991 to

- n - 22- 10.7% in 1993. In the manufacturing industry, many of state-owned large companies took or are taking procedures to be privatized. But, since most of them do not have sufficient international competitiveness, restructuring was inevitable, increasing the number of unemployed accordingly. Industrial output has recovered after hitting bottom in the latter half of 1993, making an increase of 7.8% in 1994 and 9.8% in 1995 over the previous year respectively. The main reasons for this increase were the improvement of labor productivity by rationalization and reduction of stock of finished goods. However, industrial output had in fact diminished drastically by 51.5% for five (5) years since 1989 when the system began to change, and given 100 for index of industrial production in 1990, only 60.9 was marked in 1994, and that of 1996 again became minus (A2.1%). Minus growth is also expected in 1997, meaning that industrial output could become less than the level of 1990. Although the industrial sector employed 40% of the entire labor force in 1993, this amount has rapidly decreased since then reaching 33.9% in 1995. Therefore, employment reduction in the state-owned sectors needed to be adjusted by employment capacity of private companies. In particular, the number employed by foods industry and chemical industry has been increasing. Most of the state-owned companies, including those privatized, have been required to restructure respectively, but have not yet implemented sufficiently. Because reduction of equipment has not practically been conducted even though the labor force numbers have been cut and production level has been lowered, losses have in face increased accordingly, and bank loans that could not be applied to investment have gradually accumulated. As the full-scale restructuring seems to start hereafter, the government listed up 64 state-owned companies with cumulative debts that would be closed if not successfully privatized, and also listed up 70 companies requiring remedial methods due to the necessity of drastic measures to reorganize. (d) Trend of Trade Bulgaria ’s foreign trade showed a 1.487 billion dollar deficit in 1999. The country is currently in the middle of a reconstructing process regarding the distribution of export goods. Past key export products such as fertilizer and steel have remarkably reduced, and instead, export of other goods including foods, tobacco, textile and furniture is expanding. The cost of imports is increasing, and reasons for this include depreciation of the lev against the dollar, increase in the international energy price, and increasing demands for foreign consumption goods/investment goods. Trade deficits have been adjusted by revenue from foreign investment and tourism. Main export products include items such as clothing/shoes, cast iron goods, non-iron/metal goods, foods and machinery. On the other hand, main import products

- n - 23- are crude oil, wood/paper, machinery, natural gas and chemical products. Approximately 50% of export in 1999 was trade with EU, while the ratio of export to Russia was 9%, and import from Russia was 23.5%. Energy resources such as crude oil and natural gas are mainly imported from Russia. 8) Exchange Rate Management System Basic law of exchange rate is based on the foreign currency transaction and foreign exchange control Act of 1966. But, in accordance with Act No. 15, it was significantly liberalized in 1991. Exchange rate is controlled by the Ministry of Finance and National Bank in Bulgaria. Every day, the National Bank announces foreign currency exchange rate reflecting foreign currency transaction on the previous day. Target value has been set for the exchange rate in order for the National Bank to intervene and control the rate within the target value. The only currency permitted within the Bulgarian region is the leva, except for the free trade zone and duty free shops at the customs house. Although almost all of current transactions have been liberalized, special permission from the National Bank is required to pay for investment to foreign countries and government loans upon the agreement of the Ministry of Trade and the Ministry of Finance. Residents are free to open and/or close an account in foreign currencies (US Dollar, Deutsche Mark, Swiss Franc, etc.). The limited amount Bulgarian people are permitted to exchange for travel abroad is 10,000 leva per person and per year. However, there is no limit on people possessing foreign currency deposits. It is also prohibited for Bulgarian currency to be taken in and out of the country. (Note) The system is as described above. However, in order to cope with unprecedented exchange rate/financial crisis in 1996 and therefore to stabilize exchange currency, the currency committee was introduced from July 1, 1997 to supervise import payment and exchange rate management. Leva is fixed to mark and controlled within ±5% fixed band of 1 mark = 1,000 leva. Therefore, it is believed that changes have actually been made to the above system. 9) Other Taxes Value Added Tax (VAT): Introduced on April 1, 1994. Tax rate is 22%, but certain foodstuffs (bread, milk, yogurt, cheese and water), energy for home use (coal, electricity, etc.), medicines, textbooks, etc. are exempted from taxation. Tax required for land transaction, financial/insurance services, education/welfare services, etc. are also exempted. VAT imposed on export goods will be returned after completing customs clearance.

- n - 24- Consumption Tax (excise duty): Changed to the ad valorem duty system from July 1, 1996. The range of tax rate is between 10 % and 110%. The following list shows the individual tax rates for main products: Gasoline —70 ~ 110% according to octane rating. 60% on lead -free gasoline, and 30% on diesel oil. Automobile — Tax -free ~ 40% according to displacement. Gambling — 50%. Alcoholic beverage — 15% on beer, 20% on wine, and 50% on spirits. Tobacco — 60%. Coffee and Tea — 30%. 10) Foreign Capital Policy (General Situation) Introduction of foreign capital in Bulgaria became possible when “Act No. 535, regarding the economic cooperation between the People ’s Republic of Bulgaria and foreign corporations as well as individuals” was issued in 1980 under the socialist system. After that, details were revised in February 1989 including the contents such as improvement of profit remittance and payment in foreign currency to employees stationed abroad. Also, after the system was reformed in November 1989, conditions for foreign capital to make inroads became advantageous, and activities related to foreign capital in Bulgaria were considerably liberalized, as related laws were enacted which were the “foreign investment law” in June 1991 and the “protective law for economic activities by foreigners and foreign investment” in January 1992. According to the foreign investment agency, the amount of foreign investment between January and September 1997 was 412 million dollars, and the total value for the year exceeded by 120 million dollars the previous record of 120 million dollars in 1996. In 1996, Holland ’s advance through the purchase of a beer company by Heineken and Korea ’s promotion by Daewoo Group ’s positive investment were remarkable. Cumulative investment amount since 1992 became 1.203 billion dollars. However, this figure was still much lower than Poland, Czech Republic and Hungary, and even below the level of Romania and Slovenia. Foreign capital is mostly focused in the industrial sectors, and 610 million dollars, which was about half of the entire investment, were provided to this sector, while 216 million dollars (18%) was invested in the trade sectors and 144 million dollars (12%) in the financial and insurance sectors, followed by tourism and transportation. Of the above, remarkably expanded sectors include financial/insurance and tourism. In particular, with the progress of privatization, foreign capital was targeted at such markets as hotels in the metropolitan areas and tourist resort improvement businesses on the coast of the Black Sea after

- n - 25- 1996. Comparing relative stakes of each country, Belgium became the country with the largest cumulative investment (251.6 million dollars, 20.9% of the entire value), as Union Miniere invested 80 million dollars to acquire 56% of Pirdop copper refinery, and Solvay, the chemical company, bought Sodi Devnya (160 million dollars), followed by Germany ’s 233 million dollars, Holland ’s 92 million dollars, the UK’s 71 million dollars and the US’s 33 million dollars. Only relatively small amounts have been invested in the agriculture, construction and telegraph/telephone sectors. (Development of the Foreign Capital Law Amendment) Currently, Bulgaria is quickly implementing a policy of environmental settlement to introduce foreign capital, considering this issue as one of the most important topics of its strategy statement for the preparation of market integration within EU regions. As part of this, the laws such as the “state/local authority-owned company transfer and privatization law,” the “privatization fund law” and the “protective law for economic activities of foreigners and foreign investment” have been revised to settle the investment environment. Key contents include (1) to expand the existing guarantee if there are any non-profitable changes for existing foreign investments based on the legislation, (2) to widen the scope of foreign investment definition, (3) to apply appropriate exemption of corporate tax to companies whose equity owned by the state became less than one third after being privatized, that is to exempt corporate tax for the first three (3) years, and exempt 50% in forth and fifth years, ® to impose no duties on profits obtained through stock possessions and transactions in terms of investment funds required for privatization, and (5) to also impose no taxes on dividends received by holding companies from subsidiaries. According to the proposal for the revision of the foreign investment law passed through the primary parliament of the Diet in the beginning of September 1997, it was decided to abolish the minimum investment amount (50,000 dollars), approve foreigners ’ proprietary rights for real estate as well as that of farmlands with certain conditions, and exempt customs duties related to imports of machines/facilities for large scale foreign investments that meet other tax benefits or designated requirements, as well as leave 50% corporate tax unchanged for the first ten (10) years following investment. Lease, approval/license rights, administration contract, etc. were also admitted as the foreign investment. In order to receive tax benefits based on the above law, investors need to apply to the foreign investment agency for such plans in advance and follow the necessary procedures for registration. To do this, any of the following requirements should be satisfied: (D the total of invested amount is more than 5 million dollars, (2) investments are carried out through utilizing local resources effectively and creating

- n - 26- employment of more than 200 people, and (3) investments are provided to regions designated as an area where infrastructure improvements are required due to high ratio of unemployment. (Expectation of Large Scale Investment) The Bulgarian government intends to conduct significant economic reconstruction based on the introduction of large foreign capital, and expects foreign capital to play a role in privatization of large-scale state-owned companies. Considered high priority projects requiring foreign investment, 49 plans such as expressways, bridge-building construction over the Danube River, Sofia ’s subways, construction of water treatment plants/power plants and improvement of railways/communication networks, as well as 104 plans such as development of mines and improvement of irrigation facilities have been listed up. The country also agreed with organizations including the World Bank and EBRD to obtain 160 million dollar loans for the completion of these projects. Key sectors in which Bulgaria counts on entry of foreign capital are as listed below: CD The sector for infrastructure : Development of communication networks, improvement of roads used for 70% of transportation and energy-related development including reconstruction of Kozrlodui Nuclear Power Plant. (2) Processing of agricultural products : Vegetables, jam, ketchup, juice, canned fruits, cheese, rose oil, cosmetics, mineral water, etc. (D Production of construction materials : Bricks, tiles, paints, varnishes, preservatives, etc., in expectation of potential increase in construction such as companies, stores and hotels in the future. (D Tourism : Reconstruction as well as additional construction of hotels. (5) Others : Production of furniture, medicines, etc. (Main investments from Japan: marketing and services) According to the Foreign Investment Agency, cumulative investment amount from Japan to Bulgaria between 1991 and September 30, 1996 was 580,000 dollars, and there were 18 investments mainly in marketing and service businesses. In addition to three (3) firms, Fanuc Machinex (electronic equipment/system sales), Medicom (electric/communication equipment sales) and K&B International (household electrical appliance), that had already entered into the Bulgarian market during the pre-1989 socialist system, an additional five (5) firms, namely Nissan Bulgaria (Nissan’s car sales), TM Auto (Toyota ’s car sales), Sony Bulgaria (household electrical appliance sales), Summit Motors (Matsuda’s car and Kia car sales) and Sumi-Agro (fertilizer sales) have entered and registered Therefore a total of eight (8) companies could be counted after the country ’s system changed.

- n - 27- (Investment Ratio of Foreign Capital, Tax Benefits, etc.) [Registration] Registration can be completed by submitting the register issued by home country after receiving translated certificate from the Bulgarian Embassy in that country. [investment Ratio of Foreign Capitals] There is no limit on obtaining stocks. While the minimum capital and investment ratio are not limited, approval from the government ’s related authorities is required for investments in bank, insurance and munitions industries, as well as development and excavation of natural resources in the special areas designated through the meeting of cabinet ministers, continental shelf and territorial waters. [Taxation] Corporate tax is 37%. Taxation imposed on profits from dividends, stock sales, commission revenues and loyalty is 15%. [Tax Benefits] No customs duties are to be imposed when importing raw materials and facilities required to produce export items. Companies capitalized at 5 million dollars or more and whose foreign capital investment ratio is 50% or more are exempted from corporate tax for three (3) years, and even from the fourth year, the rate of corporate tax is to be half of the actual profitability ratio for two (2) years. Companies receiving tax benefits are responsible for reinvesting an amount equal to half of the corporate tax that should have been paid during the five (5) years when tax reduction measures were being applied. [Profit Remittance] Profits obtained through convertible currencies may be remitted abroad as leva-dominated profits gained based on the contract with related state-owned companies. 11) Balance of International Payments/Foreign Debts (General Situation) According to data from OECD, the current account has continually been in the red and recorded a 25.6 million dollar deficit in 1995. On the other hand, the balance on goods went into the black, and indicated 121 million dollar surplus as increased exports exceeded the value of imports. Surplus of the balance on services also increased as compared with that of 1994 due to increased tourism revenue and improved balance on transportation, but it was affected critically by a 432 million dollar deficit of the balance on income generated by aggravation of inflation and outflow of income overseas in order to get rid of falling leva. However, based on the flow up to 1995, it can be said that deficit range tends to be reduced. Direct investments rose to 105.4 million dollars in 1994, 2.6 times as much as the

- H - 28- previous year, but of the figure for 1995 was slightly lower than the previous year.. Portfolio investments created a 65.8 million dollar loss because overseas outflow of funds exceeded inflow. The entire balance of capital and government finance also went into the red and showed a 113.8 million dollar deficit. While the country was able to obtain inflow of funds through IMF’s emergency loans, donation of funds, technical cooperation, etc. in 1996, it was considered that the capital and financial account overall actually ran into the red due to payment for interest of debts as well as interest remittance for investment. Regarding the current account between January and September 1996, the balances on goods and services were improved, while deficits increased to 33.7 million dollars due to reduction of surplus of the balance on services and current transfers. On the other hand, the current account in 1996 based on the tentative figures provided by EBRD showed 115 million dollar surplus. The prompt report on the first half status in 1997 announced that the current account went into the black as balance on services improved significantly while surplus of balance on goods increased. Surplus of capital and financial account expanded to more than 600 million dollars in the first quarter, because direct investments and portfolio investments became activated due to loans from IMF and the World Bank and progress of privatization. During the private debt reduction negotiation conducted at the London Club in November 1993, the basic agreement was made to reduce 9.3 billion dollar debts by 50%. Also in the Paris Club in April 1994, it was agreed to defer repayment of 1.02 billion dollar public debts for eleven (11) years. The government obtained 40 million dollar stand-by credit from IMF in 1996 in order to prepare for foreign debts, however, this agreement was made on the condition that monthly inflation ratio was maintained at 2%, 64 virtually bankrupt banks and deficit companies were closed and 70 firms with deteriorating management were rationalized. Gold and foreign currency reserves were dropped to the low level of 500 million dollars in 1996 due to a sudden drop of leva in that year, and then the reserves further lowered to 415 million dollars because of payment of 135 million dollar interest for the Brady bond (debt exemption bond) in January 1997. But after February, the reserves started to recover through improvement of balance on goods and capital and financial account, and returned to 500 million dollar level at the end of March, then increased up to 1.09 billion dollars at the end of May. Main causes of this increase were 150 million dollar revenue through the sale of state-owned Sodi Devnya, 178.7 million dollar loan from IMF, and dollar purchase by the National Bank. Gold and foreign currency reserves at the end of October 1997 were 1.09 billion dollars. At the end of 1999, the foreign debts of Bulgaria were 9.98 billion dollars

- H - 29- (approximately 10.1 billion dollars at the end of 1998). Gold and foreign currency reserves, which were 3.5 billion dollars at that time, were on the increase (approximately 2.76 billion dollars at the end of 1998). The total amount of foreign investment was about 755 million dollars in 1999 (620 million dollars in 1998). Starting from Cyprus, the order of investor countries in 1998 was the UK, Spain, Germany and Austria. Japan was ranked at 19 th. In terms of the cumulative amount between 1992 and 1998, Germany was ranked at the top followed by Belgium, the US, Cyprus and Holland, while Japan was placed at 23rd. Regarding the relationship with international financial institutions, in September 1998, the Bulgarian government concluded the extended credit agreement (8.67 million dollars) with IMF for three (3) years until June 2001, in order to carry out the structural reform, while proceeding with marketization even further. Of the twelve (12) planned transfers, disbursement of up to the eighth transfer has been completed. Due to the structural reform led by IMF, the Bulgarian economy has been stabilized so far from the macro point of view, but GNP, at about 1,200 dollars per capita, is still low. Since disadvantageous aspects of the reform such as increasing number of unemployed have been noticeable, the future theme would be how to coordinate the balance between consideration for the socially disadvantaged and improvement of productivity. 12) Economic Cooperation (General Situation) After the reform of the system and dissolution of the former COMECON system in 1989, the country ’s economic cooperation has been targeted particularly on the advanced countries including Western Europe, the US and Japan. As also indicated through the change of trade amounts, Bulgaria has strengthened its inclination toward the West, especially EU (the European Union). One of the signs of such inclination was the joint agreement with EU that became effective on February 1, 1995. This agreement included comprehensive contents that prescribed economic exchanges. Also, at the same time, a tentative trade agreement was made to take immediate actions for trade issues. This agreement was put into effect on January 1, 1994 and is expected to abolish customs duties between Bulgaria and EU in 10 years. The same type of agreement was also made with EFTA (the European Free Trade Association) in March 1993, and enforced since the beginning of 1994. Bulgaria made an application to become a member of EU in December 1995. (Cooperation of the International Financial Institutions) The international financial institutions consider the results of Bulgaria ’s reform programs under the Rostov Administration so far as a certain success, and have a positive outlook for support of the reform even further.

- n - 30- In April 1997, an agreement on 371.9 million dollar SDRs of IMF’s stand-by credit was reached to support reconstruction of the financial system as well as restructuring and privatization of companies, and a total of 230.8 million dollar SDRs was financed in April and July, followed by 62.2 million dollar SDRs provided in August. As a new financial support, the protocol for 100 million dollar financial / enterprise sector adjustment loan (FESAL) was signed between Bulgaria and the World Bank on September 25, 1997. Negotiations for this loan that complements the current account had already started in 1992, but were frozen for one year in 1996 during the economic crisis. Signing was completed as conditions for privatization of 20% of national assets provided in the initial agreement were clarified. (The actual value at the end of September 1997 was 17.8 %.) Also, the condition for the second loan of 80 million dollars was to privatize 40% of national assets. In 1998, discussions on 800 million dollar investments in total in the real estate sector, infrastructure settlement, as well as agricultural and environmental protection related projects would begin further. To have strategic investors in large scale projects, EBRD prepared a loan of 300 million dollar ECU (the total of 1 billion dollar ECU for the project) to be provided by the end of 1998 as financing for sales/privatization programs in Bulgaria, giving priority to metallurgy, chemical and infrastructure sectors. (Relationship with Japan) (a) Political and Diplomatic Relationship From the Imperial Family of Japan, Their Majesties the Emperor and Empress visited Bulgaria in October 1979 as did Their Highnesses Prince and Princess to deepen the ties of friendship between two countries. In June 1987, Their Highnesses Prince and Princess Mikasa paid another visit, followed by The Imperial Princess Sayako in September 1996, and were warmly received as the guests of the state respectively. From the government, the then Foreign Minister Abe visited Bulgaria in 1983, followed by the former deputy Prime Minister Kanemaru in July 1988, the former Prime Minister Kaifu in May 1994, the then Transportation Minister Kamei (the first minister to visit in 13 years since the then Foreign Minister Abe) in August 1996, and the then Posts and Telecommunications Minister Horinouchi in July 1997 on behalf of the former Prime Minister Hashimoto. From members of the Diet, Okonogi, chairman of the Diet members’ association of Japan-Bulgaria friendship and member of the House of Representative, visited Bulgaria in 1988 and 1990, and after that, Watanuki, member of the Diet who took over this post, visited in 1992, 1993 and 1994. Also, Chuma, chairman of the foreign affairs committee and member of the House of Representatives, made a visit to this country in August 1999. In reciprocation, Zhivkov, chairperson of the national council (the head of state),

-H-31- visited Japan from Bulgaria in March 1978 as the guest of the state, and also made visits as the honored guest of Osaka International Exposition in 1970 and Tsukuba International Exposition in 1985. After Bulgaria entered into the democratic system (1989), the mission of the constituent assembly visited Japan in 1993 and 1996, and the President Stoyanov then paid a visit as the guest of the state in November 1997 to establish a new relationship based on the market economy. During the President’s visit, ten (10) items mainly about economic cooperation were agreed with the Prime Minister Hashimoto (at that time). These agreed items are currently being implemented steadily. In April 1999, the deputy Prime Minister and Regional Development/Construction Minister Bakardjiev made a visit to Japan, while the Agriculture and Forestry Minister Vurbanov visited in March 2000 and the Finance Ministry Radev visited in April of the same year. Also, Vice President Kavaldzhiev paid a visit in June in order to attend the funeral of the late Prime Minister Obuchi. Also, in November 2000, Mr. Shiliashki, director (equal to the minister) of the State Agency of Energy and Resources (SAEER), made a visit to Japan, and expressed great interest in the field study mentioned in this report to Japanese people concerned. (b) Trade The total amount of trade with Japan in 1999 represented 52 million dollars with exports from Japan accounting for 18 million dollars and imports to Japan accounting for 34 million dollars. As a result, imports to Japan exceeded imports to Bulgaria from Japan by 16 million dollars. Import goods from Japan include electric appliances, textiles, passenger cars and communication equipment, and export goods exported from Bulgaria include wine, raw material (copper/coal, aluminum) and seafood. Also, the cumulative amount of investment by Japan in Bulgaria is at about 2 million dollars (automobile sales, etc.) so far. (c) Economic Cooperation After Bulgaria introduced the democratic system, Japan began to provide economic support such as technical cooperation, and then, upon the visit of the President Stoyanov as a guest of the state, Japan began to offer yen loans And various types of grants, a) Yen Loans Yen loans have been provided for the following projects so far: (D Sofia Hotel Construction Project (4.832 billion yen, both parties signing the official document in 1975.) (D Plovdiv Region Industrial Pollution Improvement Project (5.955 billion yen, both parties signing the official document in 1995.) (I) Eliseina Region Industrial Pollution Improvement Project (2.081 billion yen, both

- n - 32- parties signing the official document in 1995.) (3) Bourgas Port Expansion Project (14.312 billion yen, both parties signing the official document in 1998.) When Deputy Prime Minister Bakardjiev visited Japan in April 1999, further yen loans were requested for the following four (4projects: (T) Improvement of Bobovdol Thermal Power Plant (2) Shipka Pass Tunnel (3) Chaira Hydroelectric (Pumped Storage) Power Plant @ SOFIA Subway * Of the above four (4) projects, a JBIG SAPROF MISSION was sent to Bulgaria between September and November 1999 in conjunction with the SOFIA Subway plan. b) Grant Assistance As described by the country in 1998, Bulgaria became the first country to receive general grant and grass-roots grant assistance. Japan has given assistance in the following instances: (D the “water treatment system construction in Bistitza water purification facility in Sofia City ” (general grant assistance), ©support for the losses caused by the Kosovo Dispute as non-project grant assistance (500 million yen), and (3) the “foundation of Bulgaria ’s future,” “Bulgaria Red Cross, ” Teteven City, Dryanovo City, “hospice charitable funds,” etc. as grass-roots grant assistance. Also, as an emergency grant assistance, 22 million yen was provided to the International Red Cross for nutrition/food supplement to infants, food supply on streets and at schools, etc. c) Technical Cooperation (Seven (7) types of tasks as shown below): (D Research workers have participated in various types of training programs including economic policy, production control, trade promotion, energy saving, environment measures and nuclear power safety measures have been conducted based on applicable organizations ’ systems, such as JICA. (Received a total of 476 workers by March 1999.) (2) In addition to project-based technical cooperation such as the energy saving center project and a fermented daily products development program, experts have been sent individually for long terms to improve quality and productivity as well. (3) More than 50 members of Japan Overseas Cooperation Volunteers have been sent throughout Bulgaria, and have been playing active parts in various fields. Volunteers have included Japanese teachers, system engineers, and others in the fields of arts, archaeology and judo. (A total of 132 members were sent by February 2000.) @ In the area of project-based technical cooperation, initiatives such as the improvement of energy consumption based on the “energy saving center project ”

- n - 33- (1995.11 ~ 2000.10) , and the production/distribution and quality control of fermented daily products based on the “fermented daily products development program ” (1997.7^2002.6) have been implemented. ©To draw up industrial policies and provide intellectual support, a pivotal support and cooperation program started in July 1999, sending experts to Bulgaria from Japan for a long term/short stays. © Various equipment and materials have been supplied to Bulgaria other than that required for project-based programs including medical related devices, water quality inspection equipment, information processing devices, equipment for cultivation research, equipment for earthquake engineering study, etc. (7) Development research for “the Maritza basin environment preservation program ” is to be completed by March 2001. So far, eight (8) projects of development research have been implemented. d) Export -Import Bank Loan (D On December 18, 1998, a 50 million dollar export - import untied loan contract with joint financing from the World Bank EFSAL (Financial Enterprise Sector Adjustment Loan) was signed. © On April 21, 1999, at the G24 / CG joint meeting held in Brussels a pledge was made to provide 50 million dollar fund cooperation as an export-import bank loan. Also, on April 24, 2000, a loan contract was signed with Japan Bank of International Cooperation (JBIG) with joint financing from the World Bank Second FESAL.

- H - 34- 1.1.2 Current Status of Energy

(1) Energy 1) Energy resources Energy resources are scarce in Bulgaria, and the country imports over 70 % of its energy needs to meet the domestic energy demand. Oil production has been decreasing from the peak of 70,000 tons/year achieved in 1989, and annual production in 1998 was 31,200 tons while the annual demand was about 6 million tons. The annual production of natural gas was 28 million m3 in 1998, and this figure is only 10 % of the annual demand. However, a natural gas field was recently discovered under the coast of the Cape Garata in the Black Sea and production is expected to start around the year 2000. If this field can be fully developed, it is estimated that this domestically produced gas will provide for about 7 % of the country ’s energy demand. The estimated reserves of oil and natural gas in the ground are 56 million tons and 173 billion m3 respectively while the natural gas reserve under the coast of the Black Sea is estimated to be over 200 billion m3. It is estimated that the coal reserve is 4.5 billion tons, but most of it is brown coal, low-grade coal. Major coal fields include the Maritza Iztok Coal Field, Bobovdoll Coal Field, Stannyantsi Coal Field, Belibryag Coal Field, and Chukurovo Coal Field. Among those, the Maritza Iztok Coal Field is the largest open cut mine in Bulgaria.

2) Energy policy In August 1998, the Energy Committee (current State Agency for Energy and Energy Resources) issued the energy policy of the county. In the opening of this policy entitled “National Strategy for Development of Energy and Improvement of Energy Efficiency Toward 2010” (hereinafter referred to as “National Energy Strategy ”), the following major seven objectives are stated.

(a) To meet the domestic energy demand through stable supply of energies at lowest possible costs. (b) To ensure the safety of nuclear energy. (c) To improve the self-supply rate. (d) To improve energy efficiency. (e) To develop environmentally benign energies. (f) To establish the domestic energy market. (g) To integrate the domestic power transmission network and energy market into those of Europe. The policy also sets out the following activities to achieve these objectives.

- H - 35- (a) Structuring and introduction of legal and regulative framework compatible with that in the EU. (b) Introduction of market-oriented structure into energy sector, development of competition principle, and privatization of energy sector. (c) Protection of public and user interests, introduction of well-balanced economical institutions for energy-related companies that exclusively utilize natural resources, and implementation of market price policy for energy resources. (d) Research and development of the energy sector. (e) Technological revolution in the energy sector. (f) Diversification of fuel importers, optimum utilization of domestic energy resources, and study and implementation of reduction of energy consumption in the private sector. (g) Promotion of environmental conservation.

With the drop in domestic production, most industries in the country suffering from elimination of conventional transaction routes for foreign markets are presently forced to reduce the production rate. As a result, inefficient industries are screened out, and the companies are forced to change their business activities to manufacture products based on the domestic resources and to provide services. Also, demands for these new business activities in domestic and foreign markets are being increased. Recently, a change in the structure of the GNP is being changed to that of the advanced countries is being observed: i.e., the ratio of extraction and processing industries is decreasing while the ratio of the service industry is increasing. It is estimated that the manufacturing industry will share about 24 %, the service industry will share about 58 %, and the transportation industry will share about 5 % of the GNP by around 2010.

(2) Current situation of power generation 1) Power generating facilities The gross power generating capacity in Bulgaria is 12,668,000 kW, and the figure can furthermore be broken down into 6.556 million kW (51.7 %) for thermal power generation, 3.76 million kW (29.7 %) for nuclear power generation, 1.92 million kW (15.2 %) for hydraulic power generation, and 432,000 kW (3.4 %) for pumped storage power generation ( these figures refer to current levels around the end of 1997/ beginning of 1998). The power generating capacity owned by NEK is 11.062 million kW and constitutes 87.9 % of the country ’s gross capacity. The figure can be broken down into 4.95 million kW (44.7 %) for thermal power generation, 3.76 million kW (34.0 %) for nuclear power generation, 1.92 million kW (17.4 %) for hydraulic power generation, and 432,000 kW (3.9 %) for pumped storage power generation. Therefore,

- II - 36- all nuclear power generation and hydraulic power generation (including pumped storage power generation) are owned by NEK. In addition to facilities owned by NEK, there is a further thermal power generating capacity of 1.606 million kW. This additional capacity is generated by the systems owned by the local heating companies and industrial private power generation systems. A combined cycle gas turbine system is used for the generation of heat and electric power. Statistical data from the United Nations shows that the gross power generating capacity in Bulgaria was 12.087 million kW in 1996 with the breakdown: 11.333 million kW from industrial systems and 754,000 kW from private systems.

< Thermal power generating facilities > Coal-fired systems burning brown and other coals play a major role in thermal power generation. Table 1.1.2-A lists major thermal power generating facilities in the country. 3.29 million kW is generated from domestic coals (brown coal and lignite) and 1.66 million kW is generated from imported coals. The Varna Thermal Power Plant (1.26 million kW) is fueled by the bituminous coal mined in Ukraine and used to be the largest thermal power plant in the country. The Maritza Iztok thermal power plant site is located at the mouth of the Maritza Iztok Coal Field, and No. 1 Station (200,000 kW), No. 2 Station (1.45 million kW), and No. 3 Station (840,000 kW) are fueled by the brown coal produced in this coalfield. The Maritza Iztok No. 2 Thermal Power Plant is presently the largest thermal power plant in Bulgaria. The Bobovdol Thermal Power Plant (630,000 kW) is fueled by the lignite mined in the Bobovdol Coal Field. The Russe Thermal Power Plants (400,000 kW) is fueled by the bituminous coal mined in Ukraine.

- II - 37- Table 1.1.2-A Major Thermal Power Generating Facilities in Bulgaria

Capacity Boiler steam conditions Turbine (MW) No. T/h MPa No. MW Power Plant Fuel of of units units Maritza Iztok 200 Brown 6 210 14 540/540 4 50 No.l TPP coal

Maritza Iztok 1,450 Brown 8 250 14/2.9 540/540 4 150 No.2 TPP coal 4 670 14/2.8 540/540 2 210 1 215 1 215 Maritza Iztok 840 Brown 4 670 14/2.8 540/540 4 210 No.3 TPP coal

Bobovdol 630 Brown 3 650 14/2.6 540/540 3 210 TPP coal Maritza No.3 170 Brown 21 170 10 510 2 25 TPP coal 380 14/2.8 540/540 1 120 Varna TPP 1,260 Imported 6 670 14/2.4 545/545 6 210 coal, gas

Russe TPP 400 Imported 2 220 10 540 2 30 coal 2 365 14/3.5 540/540 2 110 2 220 10 540 2 60 Source: NEK Annual Report 1997

< Nuclear power generating facilities > The Kozlodui Nuclear Power Plant is the only nuclear power plant in Bulgaria and has four VVER-440/V-230 (440,000 kW) units and two VVER-1000/V-320 (1 million kW) units. The total capacity is 3.76 million kW and constitutes about 40 % of the country ’s gross power generation. The construction of this power plant began in 1970, and Units 1 through 4 were put into operation in 1974, 1975, 1980, and 1982, respectively. Units 5 and 6 were put into operation in 1988 and 1993, respectively. (Table 1.1.2-B lists these power plants.) Since Units 1 to 4 were first-generation VVER-440 nuclear power plants designed by the former USSR, many countries expressed concerns over safety, and, consequently, various improvements were implemented through technical cooperation with the IAEA. The early shutdown of the

- H - 38- Kozlodui Nuclear Power Plant was determined as a precondition for Bulgaria to start negotiation on affiliation with the EU, and to this end, Bulgaria and the EU mutually agreed that the government would shut down the old-model Units 1 and 2 (440,000 kW each) by 2003 (2004 or 2005 in the National Energy Strategy). The parties also agreed that the shutdown timing of Units 3 and 4 would be reviewed together with the amendment of the National Energy Strategy in 2002 and Bulgaria would get a loan (250 million Euro) for modernization and safety improvement of Units 5 and 6.

Table 1.1.2-B General Description of Kozlodui Nuclear Power Plant Unit Reactor type Turbine system Start of operation 1 VVER-440/V230 K220-44 X 2 1974 2 VVER-440/V230 K220-44X 2 1975 3 VVER-440/V230 K220-44 X 2 1980

4 VVER-440/V230 K220-44 X 2 1982 5 VVER-1000/V320 K1000-60/1500 1988 6 VVER-1000/V320 K1000-60/1500 1993

The WER-1000 reactor was installed in Units 5 and 6, and the modification of these plants was started in 1998. Although the initial schedule set out the modification to be completed by 2005, the early shutdown of Units 1 and 2 prompted concerns about possible effects on this modification plan. The EURATOM approved financial support for Units 5 and 6. Construction of two 1 million kW class nuclear power plants (VVER-1000) was started in 1986 and 1987 respectively on the riverside of the Danube in Belene, but the project was suspended because of resistance from the local community in February 1990 and the central government announced the termination of the project due to insufficient seismic design in 1991. The production of uranium in Bulgaria began in 1946 and continued until 1994. The total production was 16,720 tons during the period. Since the central government determined to completely close the uranium manufacturing industry in 1994, all manufacturing activities were terminated, the financial account of the uranium mines was liquidated, and the financial account of ore processing plants were to be liquidated by 1999. Each unit of the Kozlodui Nuclear Power Plant is equipped with a consumed fuel storage pool capable of storing consumed fuels for 3 to 5 years. A wet storage facility was also built at the site. In the former system, spent fuels were temporarily stored in

- n - 39- Bulgaria and then transported to Russia. After the nuclear fuel supply agreement that was concluded between Bulgaria and the former USSR which stipulated that the transportation of consumed fuels lost its validity in 1990, both countries were unable to reach a final agreement with respect to prices and transportation to Russia was suspended. However, the on-site storage facility reached full capacity in November 1997 and Bulgaria was forced to resume the transportation of consumed fuels to Russia. With the conclusion of a new agreement, transportation was resumed in November 1998. NEK has since modified the on-site storage facility and is now waiting for an operation permit from the safety regulatory authority. NEK is also planning to expand the storage facility. The National Energy Strategy plans that the second storage facility be constructed by 2005. < Hydraulic power generating facilities > NEK has seventy-seven (77) hydraulic power plants. As shown in Table 1.2.2-C, the Chaira Pumped Storage Power Plant (432,000 kW), Belmeken Pumped Storage Power Plant (375,000 kW), and Sestrimo Hydraulic Power Plant (240,000 kW) are major power plants and all of these plants are located in the Belmeken-Sestrimo-Chaira river system. The power plants with capacity greater than 100,000 kW include Momina Klisura Hydraulic Power Plant (120,000 kW), Anton Pumped Storage Power Plant (160,000 kW), Peshtera Hydraulic Power Plant (125,000 kW), Kurdjali Hydraulic Power Plant (106,000 kW), and Ivailovgrad Hydraulic Power Plant (104,000 kW). “Other plants” in Table 1.1.2-C (309,000 kW) mainly consists of those plants with capacity less than 10,000 kW.

- H - 40- Table 1.1.2‘C Hydraulic Power GeneratingFacilities (owned by NEK) Capacity 00 Capacity 00 Power Plant Head, m Power Plant Head, m (MW) (MW) Belmeken-Sestrimo-Chaira river system Batak river system Chaira PSPP 690 432 Batak HPP 421 40 701 394(P) Peshtera HPP 586 125 Belmeken PSPP 730 375 Areko HPP 272 66

730 hoop ) Subtotal 231 Sestrimo HPP 553 240 Arda river system Momina Klisura 251 120 Kaljari HPP 93 106 HPP Sub-total 1,167 Studen Kladenez 66 60 HPP 504(P) Ivailovgrad HPP 54 104 Vacha river system Sub-total 270 Teshel HPP 341 60 Iskar river system Devin HPP 156 80 Anton PSPP 125 160 Pasarel HPP 115 32 125 45 (P) Kokaliane HPP 96 22 Kuritim HPP 172 80 Sub-total Vacha No. 1 HPP 91 14 Other plants 309 Vacha No. 2 HPP 87 7 Sub-total 401 Grand total 2,432 549(P) Source: NEK Annual Report, 1998 Note (a): “P” indicates pumped storage power plant.

2) Electricity industry The Bulgaria National Electricheska Kompania (“NEK”) was organized according to the Cabinet Order of November 7,1991 and commenced its business activities from January 1992. NEK is a state-owned company and covers the power generation and transmission business, as well as heat generation and supply business. NEK owns and operates the major power plants (seven Thermal Power Plants, Kozlodui Nuclear Power Plant, and most hydraulic power plants) and all the power transmission systems throughout the country. It also has twenty-eight (28) branch offices and affiliates: ten

-n-4i- (10) offices in the power generation sector, fifteen (15) offices in the power transmission sector, two (2) offices for construction and investment sector, and one (1) office in the maintenance sector (see Table 1.1.2-D). NEK had 31,708 employees as of 1998. The Energy and Energy Efficiency Act enacted in July 1999 describes regulations applying to the energy sector, including the electric industry, and also stipulates that the national regulations for the electric industry are controlled under the National Energy Regulatory Commission. This Commission permits construction of power generating facilities, issues licenses for power generation, power transmission and power distribution businesses, and controls the power rates. The National Committee for Peaceful Use of Nuclear Energy controls the nuclear-related regulations.

- n - 42- Table 1.1.2-D Branch Offices and Affiliates of NEK transmission > Kozlodui Nuclear Power Plant branch office Sofia City power distribution company Maritza Iztok No.l Thermal Power Plant Sofia area power distribution company branch office Maritza Iztok No.l Thermal Power Plant Vratza power distribution branch office branch office Maritza Iztok No.3 Thermal Power Plant Breben power distribution branch office branch office Bobovdoll Thermal Power Plant branch office Goma Oryahovitza power distribution branch office Varna Thermal Power Plant branch office Russe power distribution branch office Russe Thermal Power Plant branch office Shumen power distribution branch office Maritza No.3 Thermal Power Plant branch Varna power distribution branch office office Rodopi Thermal Power Plant group branch Bourgas power distribution company office Rira Hydraulic Power Plant group company Haskova power distribution branch office < Branch office and company for investment Stara Zagora power distribution branch office

Hidro Eelctro Invest Plovdiv power distribution company Drafo Eelctro Invest Pazardjik power distribution branch office Yazoviri i Kaskadi Blagoevgrad power distribution branch office Source: NEK Annual Report 1998

The State Agency for Energy and Energy Resources (“SAEER”) (former Energy Committee) organized according to the aforementioned “Energy and Energy Efficiency Act” is under direct supervision of the Cabinet (three top directors including secretary are directly appointed by the prime minister), and directly controls and supervises NEK and power plants, including the Bobovdol Thermal Power Plants that became independent of NEK, as discussed later. Other than the above, the SAEER is responsible for drawing out and implementing national energy policies

- n - 43- generally under the Cabinet. Duties of the SAEER are as summarized below: (a) preparing the policy for development of the energy sector and efficient utilization of energies and energy resources, and getting approval from the Cabinet and the Congress, (b) approving short-term, middle-term, and long-term national energy balance plans based on Cabinet policy, (c) approving the programs for efficient deployment of environmental protection, privatization, restructuring, and investment in the energy sector, (d) approving and announcing the list that describes new power plants with capacity equal to and greater than 25 MW, new heat supply networks, new natural gas supply networks, and natural gas depots biyearly, taking into consideration the nation-wide energy supply and demand balance, (e) proposing construction of nuclear power plants or other power generating facilities with capacity greater than 200 MW to the Cabinet, (f) coordinating the state-owned companies and institutions involved in the energy sector, and executing national authority over these entities as stockholder, (g) proposing to the Cabinet establishment of organization aimed at operational management of power systems and bulk transaction of power, and (h) preparing legal framework so that the domestic energy market will be compatible with that in the EU.

The attached chart shows the organization of the State Agency for Energy and Energy Resources.

- n - 44- §• s &

ENERGY

ENERGY ENERGY

PUBLIC FINANCIAL

REFORM ISSUES NUCLEAR MANAGING

SECTOR EUROPEAN

SAFETY

DEVELOPMENT

&

THERMAL AND ACTIVITIES

RESOURCES RELATIONS ENERGY INTEGRATION DIRECTORATE

ELECTRICAL RESOURCES

ENERGY OWNERSHIP OF DIRECTORATE STRUCTURAL DIRECTORATE DIRECTORATE DIRECTORATE DIRECTORATE ECONOMIC AND DIRECTORATE COMMERCIAL DIRECTORATE DIRECTORATE

- II - 45- 3) Privatization (a) The National Energy Strategy states that the electric industry of Bulgaria must be restructured according to the EU’s electric market deregulation directive, assuming the future affiliation with the EU, and the optimum model for the country is “single buyer model ”. (b) The National Energy Strategy states that the major part of NEK’s assets should be privatized by the end of 2001. It clearly stipulates two privatization methods: 1) privatization of to-be-independent sections through sellout and 2) establishment of independent corporation based on assets and activities of NEK. The National Energy Strategy states the following initiatives be implemented for the affiliates of NEK by the end of 2001. (D Twenty-two (22) hydraulic power plants will be privatized by the privatization agent through the pool privatization system. (D Three (3) Thermal Power Plants, i.e., Maritza No. 3 Thermal Power Plants, Russe Thermal Power Plant, and Bobovdoi Thermal Power Plant, will be sold to private companies. (3) Forty-one (41) small hydraulic power plants will be privatized. (D A joint corporation will be established to rehabilitate the Maritza Iztok No. 3 Thermal Power Plant and Varna Thermal Power Plant through introduction of foreign capital. (5) An alternative facility of the Maritza Iztok No. 1 Thermal Power Plant will be constructed through the BOOT system, based on the international tender. (6) After the relevant sections become independent of NEK and the organization of NEK is divided, the power distribution companies will be privatized. (c) After the Energy and Energy Efficiency Act is enacted, the construction of new power generation plants will be determined mainly based on tender. According to the policy mentioned above, the government announced the restructuring plan aiming at dividing NEK into power generation, power distribution, and power supply sectors in January 2000. Since seven (7) independent power distribution companies were established on June 1, 2000 in line with the government ’s NEK division policy, these new companies currently cover the twenty-eight (28) areas that were formerly controlled by fifteen (15) power distribution companies of NEK. However, the privatization schedule of these seven power distribution companies after separation from NEK is not yet drawn out and the implementation of the plan has been unavoidably delayed due to strong resistance from the labor union.

- H - 46- Four Thermal Power Plants, Maritza No. 3 Thermal Power Plant, Russe Thermal Power Plants, Bobovdol Thermal Power Plant, and Varna Thermal Power Plant became independent of NEK from April to July 2000. For the Maritza No. 3 Thermal Power Plant, however, NEK is still discussing the joint development of refurbishment and upgrading with the Entergy Power (joint venture established by Entergy of the U.S. (66 %) and NEK (34 %)) and, therefore, the power plant is still under control of NEK. (d) Current status of the Bobovdol Thermal Power Plant after separation from NEK: - The Bobovdol Thermal Power Plant separated from NEK on July 1, 2000 is currently managed independent of NEK, using the separate balance sheet. - PPA was concluded between the Bobovdol Thermal Power Plant and NEK in September 2000, and the Bobovdol Thermal Power Plant currently sells the electricity via NEK since the two organizations now use different accounts. (e) Current progress of privatization of Maritza Iztok Thermal Power Plant Nos. 1, 2, and 3 stations: Regarding the privatization of the Maritza Iztok Thermal Power Plant Nos. 1, 2, and 3 stations, both the PPA and EPC contractors are negotiating with the related parties.

Progress of BOOT for Maritza Iztok Thermal Power Plant Nos. 1, 2, and 3 Stations

Maritza Iztok Maritza Iztok Maritza Iztok

No. 1 TPS No. 2 TPS No. 3 TPS

PPA Under negotiation Under negotiation Under negotiation

TARIFF Under negotiation Under negotiation Under negotiation

EPC Under negotiation Under negotiation Under negotiation

CAPACITY 2X320MW= 1,450MW 4X210MW= 640MW 840MW

PROJECT COST US$900mil US$400mil US$400mil

PROJECT AES (USA) RWE (Germany) ENTERGY (USA) COMPANY

- n - 47- 1.1.3 Necessity for Joint Implementation

Energy resources are scarce in Bulgaria, and the country imports over 70 % of its energy needs to meet the domestic energy demand. In Bulgaria, brown coal is the major constituent of the coal reserve and the Bobovdol Thermal Power Plant is fueled by such low-grade coal. It is estimated that coal of the same cost and quality level as the currently mined coal will run out within 3 to 5 years. Therefore, it is imperative that coal-fired Thermal Power Plants cease operations to be replaced by natural gas fired combined cycle Thermal Power Plants. Bulgaria has a large foreign debt and it is very difficult to develop refurbishment projects using the funds on hand. Given this situation, the Bulgarian government is keen to promote the joint project between Bulgaria and Japan since it will provide effective choices for solving Bulgaria ’s problems and also reduce the emitted carbon dioxide.

The Kyoto Protocol of COP3 determined that Bulgaria should reduce greenhouse gas levels by 8 % from 1988 levels. This target is to be achieved jointly by Bulgaria, Russia, and Ukraine, with each country contributing equally to the target.

- n - 48- 1.2 Necessity for Introduction of Energy Conservation Technologies into the Industry

Bulgaria is in low supply of mineral resources, except for copper, lead, and zinc. Although the coal reserve is estimated to be 4.5 billion tons, lignite comprises more than 90 % and its caloric value is about 80 % of the coal exported for use in power generation and, therefore, is mostly used for heating. Since the domestic production of oil and natural gas is very low, these resources are imported from foreign countries such as Russia. The domestic demand is 5 million to 6 million tons for oil and 700 million m3 for natural gas. The gross thermal efficiency of the power generation systems in Bulgaria is very low due to less technological development and decrepit facilities caused by various factors including economical problems. Introducing the combined cycle system into the current steam power system is the objective of the joint project. With the combination of a steam power system and a gas turbine, the final thermal efficiency will be increased from 29 % to 50 %, restrictions on generation of high-temperature steam in the steam power system will be removed, and the thermal efficiency of the total power plant can substantially be improved. After this project is successfully completed, the improved thermal efficiency will reduce the fuel consumption and consequently the amount of fuel imported from foreign countries can be reduced. The Kozlodui Nuclear Power Plant is the only nuclear power plant in Bulgaria and is equipped with first-generation VVER-440 reactors designed by the former USSR. Because of the accident at Chernobyl Nuclear Power Plant constructed by the former USSR and located in current Ukraine, many countries expressed concerns over the safety of the power plant and consequently various improvements were implemented through technical cooperation with the IAEA. The early shutdown of the Kozlodui Nuclear Power Plant was determined as a precondition for Bulgaria to start negotiation on affiliation with the EU, and to this end, Bulgaria and the EU mutually agreed that the government would shut down the old-model Units 1 and 2 (440,000 kW each) by 2003 (2004 or 2005 in the National Energy Strategy). Therefore, Bulgaria must construct high-efficiency combined cycle power plants to efficiently utilize the limited domestic resources available.

- n - 49- 1.3 Project’s Meaning, Necessity, Effect, and Influence on Other Fields

(1) Meaning of the implementation of the project The Bulgarian government strongly expects this joint project will not only contribute to improving the current industrial and social environments but also constitute the first step towards renovation of the economy and development of new industries. Under the leadership of the government ’s State Agency for Energy and Energy Resources, the Bobovdol Thermal Power Plants is preparing to implement the project. We understand that Bulgaria can receive financial aid to boost its ailing economy, and moreover, the implementation of the project can also serve to stimulate the country ’s vitality. The project also needs frequent exchange of technology and personnel, and such activity contributes to the establishment of partnership between Bulgaria and Japan. The objective of this feasibility study is to identify the possibilities of the project. The project has numerous merits. For example, it will serve as a basis for Japan to gain the cooperation of Bulgaria in determination of country-by-country (or area-by-area) carbon dioxide emission levels, and promote further action and agreement on the reduction of greenhouse gases.

(2) Necessity for and effect of the implementation of the project The power plant refurbishment project will play a key role in enabling Bulgaria to cope with the reduced power supply capacity incurred by the close of the Kozlodui Nuclear Power Plant and contribute to development and renovation of local economies and industries. Since the electric utilities in Bulgaria are still using out-dated, low-performance power generating facilities, the operating efficiency of each power plant has declined. Most power generating facilities in Bulgaria were constructed in 1970s and 1980s like the Bobovdol Thermal Power Plants and feature low thermal and operating efficiencies. The requirement for higher fuel consumptions to operate these plants is an obvious financial burden. In the stream toward the free economy based on the economic revolution, the electric utilities strongly need to introduce economical, low-cost fuels, increase the generating efficiency, and modify the power plants with the latest technologies allowing higher operating efficiency. Since Bulgaria neighbors various countries, the introduction of state-of-the-art

- II - 50- power generating plants to solve environmental and safety problems will draw attention to both Bulgaria and those neighboring countries. With a future affiliation with the EU in mind, an adaptation to the relevant environmental standards is Bulgaria ’s national policy and, to this end, the country, as a member of international society, committed to a reduction in greenhouse gases of 8 % at the Kyoto Conference on Global Warming held in December 1997. In the course of the shift to a market economy, the country defines the clearance of environmental problems as a major issue. The capacity of the Bobovdol Thermal Power Plants is diminishing. Presently, the plant does not substantially affect power supply conditions on a national level as most output is used for local needs. However, if it does not upgrade its facilities it will not be able to accommodate the future increase of power demand. Under the prevailing conditions, this refurbishment project seeks to improve the plant efficiency within the shortest period by effectively utilizing the existing infrastructure rather than constructing a new plant. Taking into consideration several factors including improvement of efficiency, extension of service life and environmental protection, modification into a combined cycle system is an essential condition for the deployment of this project. This is supported by the National Energy Strategy that defines strategies and milestones up until 2010, wherein the Bulgarian government stipulates that the country will analyze the improved Bobovdol Thermal Power Plants and study the effects of a shift from coal to gas as a possible fuel source.

- H - 51- - n - 52- 2. Implementation of the Project Plan

This chapter investigates the necessity of the execution of a rehabilitation project, selection of the optimum rehabilitation plan, laying out the project execution plan, implementation of the financial plan and the possibility of the project execution in the JI scheme etc. on the basis of survey results of the current state of this thermal power plant.

-E 53- -n 54- 2.1 Project Plan

2.1.1 Briefing on the area subject to the project

Bobovdol, where this thermal power plant is located, is in the western part of the Republic of Bulgaria and about 60 km south-southwest of metropolitan Sofia. The Bobovdol Thermal Power Plant is close to the national highway to Greece and to Macedonia and has an important role as a thermal power plant in the metropolitan area. It was constructed in the 1970s as a mine-mouth power plant that uses brown coal produced in the area as fuel. However, the production of cheap, good-quality brown coal obtained by open cut mining has decreased recently and mining is moving underground so the price of the coal has not been able to compete with imported coal. The State Agency for Energy and Energy Resources (SAEER) has a plan to stop using the brown coal from the Bobovdol area after three years and has conferred with the coal mining company resulting in a basic agreement between them. The area neighboring the thermal power plant is mainly an agricultural area and has no big industry; so most of the generated electric power is transmitted to Sofia via 220 kV and 110 kV transmission lines. After the coal mine is closed, the plant has to use imported coal mixed with Lignite produced in the Sofia area. However, the imported coal has to be transported about 500 km from the port, and the Lignite has to be transported about 100 km and in large quantities (reaching as much as 10,000 tons daily). At present, the railway from metropolitan Sofia to Bobovdol is a single-wire line; transportation by railway or by road is expected to present a major difficulty. The area is an internal basin with a height of about 540 m, and has a relatively dry climate throughout the year. A large capacity gas pipe line to Greece is installed about 4 km from the power plant, and a gas pipeline to Macedonia is installed about 1 km from the plant.

As the Bobovdol power plant is located near metropolitan Sofia (60 km south), the description of the subject area is a description of Sofia area as shown below.

Description of the Sofia area

a. Geography, climate Bulgaria is located in the central eastern part of the Balkan peninsula, in the southeast end of the European continent and its latitude is almost the same as that of Hokkaido. Metropolitan Sofia is located in the western part of Bulgaria. The climate is relatively warm and gentle, and there are four distinct seasons.

-H-55- Climatic conditions of the subject area of the project

As the power generation plant to undergo rehabilitations is a gas turbine combined cycle plant, the power output depends upon ambient temperature and atmospheric pressure. Also moisture and the oil component of the air cause clogging of the Air Intake Filter of the gas turbine resulting in decrease of efficiency. Therefore, we investigated and listed below the climatic conditions such as air temperature, atmospheric pressure, moisture etc.

Annual Temperature

Table 2.1.1-A Yearly temperature and moisture in the subject area of the project

Average Maximum Minimum Average Month temperature temperature temperature moisture ra ra ra [%]

January -0.4 15.5 -30 83

February 1.2 17.2 -2. 1 78

March 5. 9 215 -13. 5 70

April 11. 1 30.5 -4. 1 62

May 15.8 34.6 1. 1 63

June 19.6 21 4 6.4 61

July 211 312 7.3 57

August 2b 3 318 5.2 55

September 17.4 313 -0.9 61

October 11. 5 315 -3. 7 73

November 6. 3 27.0 “11.8 80

December 1.2 19. 1 -22.1 84

- H - 56 - Atmospheric pressure

Table 2.1.1-B Atmospheric pressure in the subject area of the project

Atmospheric Maximum Average Minimum pressure [mmHg] [mmHg] [mmHg] January 734. 8 717. 6 689. 8

February 731.9 716. 5 692. 8

March 732. 0 716.3 696. 9

April 727. 1 714.8 699. 7

May 728. 3 715.4 702. 7

June 723. 5 716.0 704. 6

July 723. 7 716. 1 707.4

August 723. 6 716. 5 706. 9

September 725. 5 718.2 705. 3

October 730. 3 718.0 699. 3

November 730. 7 718.2 693. 3

December 731.9 717. 7 696.4

Yearly maximum and minimum rainfall (average per hour)

Table 2.1.1-C Rainfall in the subject area of the project

Maximum Minimum

Yearly 912. 7 (1937) 414.0 (1934)

Unit [mm/hr] , [rnm/hr]

Atmospheric conditions near the power plant

The flowing in of polluted air including exhaust gas from nearby plants and dust particles from the coal-yard, which would have a bad effect on the air suction filter for the gas turbine and other equipment of the power plant, is rather low and there are no factories producing air pollution in the neighborhood of the Bobovdol power plant.

-n-57 - Basic data for the design of the power generation plant

Earthquake coefficient Richter scale IX Wind-force coefficient 300 (kg/m 2) Wind velocity (maximum) 40 (m/s) Height of the power plant Elevation 508 (m) Power plant ground force resistivity Less than 2 (kgf/cm 2)

- n - 58 - 2.1.2 Contents of the project

It will be possible to reduce emission of environmental contamination particles such as nitrogen oxide (NOx), sulfur oxide (SOx), smoke and dust (SPM) etc. per unit of electrical output and emission of the greenhouse gas carbon dioxide substantially as well as improving the thermal efficiency (increasing the efficiency of generating end from 30 % to 50 %) by renewing the existing and decrepit thermal power plant to a highly efficient gas combined cycle power generating plant. Additionally, as the power plant is located in a suburb of metropolitan Sofia, near the center of demand, the rehabilitation and the improvement of supply reliability of the power plant as the trunk power plant providing a stable power supply is highly desired.

Therefore, initially, emergency rehabilitation of the existing and aging generating facility that has been operating for nearly 30 years is to be carried out around the end of 2002 to make the plant operable for another 15 years. The rehabilitation is to be the minimum necessary aiming at stable operation as the most important factor without regard to improvement of thermal efficiency. Therefore, the two units, the first unit and the second unit, whose controllers have already been repaired, are to be the focus of repairs and the third unit will undergo the minimum necessary repairs to restore it to a condition of preliminary generator for emergencies. In parallel with continuing operation of the repaired existing units, block 1 of the high efficiency gas turbine combined cycle generating facilities will be installed around the end of 2007. Shared operation of coal-fired thermal power generating facilities and gas-fired gas turbine combined cycle generating facilities will continue until 2012. In addition, block 2 of the high efficiency gas turbine combined cycle power generating facilities will be newly installed around the end of 2012. The operation will be weighted heavily toward gas turbine combined cycle power generating facilities. However, with protection of the coal industry in mind, the continued use of coal as a supplemental fuel is foreseeable. Block 3 of the high efficiency gas turbine combined cycle generating facilities will be newly installed around 2017, completing the transfer of fuel from coal to gas. After the completion of block 3 of the high efficiency gas turbine combined cycle generating facilities, the existing coal-fired thermal power generating facilities will cease operations and be used only for emergencies.

-fi-59 - 2.1.3 Greenhouse gas subject to the project, etc.

Of the six types of greenhouse gases, carbon dioxide, contained in the exhaust gas generated by the firing of fuel, is the greenhouse gas subject to this project. In this project, the consumption rate of fuel will decrease considerably by replacing the existing and aging conventional type coal-fired thermal power generating facility with a highly efficient natural gas-fired turbine combined cycle generating facility. In addition, switching the fuel from brown coal to natural gas will decrease the amount of carbon dioxide contained in the exhaust gas to less than half.

- n - 60 - 2.2 Description of the applied site

2.2.1 Degree of concern at the applied site

Bobovdol Thermal Power Plant is located in a suburb of metropolitan Sofia (about 60 km to the south) and plays an important role as a trunk power plant at the center of the power system. However, as the plant aged and spare parts became harder to get, the thermal efficiency decreased to about 30 % and the power output decreased to about 500 MW despite a rated capacity of the facility of 630 MW. Also due to bad cost performance caused by expensive fuel coal (about 1.5 times that of the coal from the privatized coal mine in the suburbs of Maritsa), etc., the operation time is limited and the plant does not function efficiently. As a trunk power plant in the metropolitan area, the rehabilitation of the plant, aimed at stable operation is urgent, and the staff and the administration of the Bobovdol power plant are highly interested and willing. With this background, when Mr. Bakardjiev, then Vice-Prime Minister, visited Japan in 1999, a Yen loan request for the rehabilitation of the power plant was formally submitted, however, an F/S was not attached to the request. According to the State Agency for Energy and Energy Resources and NEK (National Electric Company), although the F/S on this rehabilitation was made a few years ago, satisfactory results were not obtained with regard to efficiency and economy and the rehabilitation considered by the F/S was not sufficiently far-reaching. Then we suggested making a F/S on the basis of fundamental rehabilitation that would bring about recovery of the generation capability, a stable supply of electric power and environmental improvement such as reduction of carbon dioxide, etc. by replacing the existing generating facility with a combined cycle fired natural gas facility. They showed very keen interest in this suggestion. However, they requested we keep in mind the employment situation of the coal mines which supply fuel coal for the plant at present. This issue has the potential to develop into a significant social problem, so the idea of a rapid changeover from coal to gas is to be averted..

Planning to join the EU, the Bulgarian government reached agreement with the European Committee in December 1999 to close 4x440 MW Soviet-built nuclear power plants by 2006 (2 plants each in two steps) and, as a result, power generating capability to make up for the lost power will surely be necessary in the future. At present, Bulgaria exports about 7 % of its overall generated electric power (actual results 1999), however it is expected that the country will not be able to satisfy the domestic demand in the future so the stabilization of the power supply from this plant is considered important from this viewpoint. In reality, some of the interested parties at the site say “electric power deficits actually occur in the neighboring countries and we cannot rely on imports. Therefore a shortage of domestic electric power due to the shut down of nuclear

-H-61 - power plants is foreseeable ”

Furthermore, indications are that coal reserves are decreasing. If so, the plant will have to rely on Lignite from the Sofia area or imported coal. A person in charge of the thermal power plant of SABER noted: “Anyway, the existing power plant is not highly efficient, and we consider that it is best to transfer to combined cycle thermal power plants gradually, unit by unit over the interval of about 5 years as shown in the F/S at this time.”

-H 62- 2.2.2 Current situation of the relevant facilities in the thermal power plant

The Bobovdol Thermal Power Plant subject to rehabilitation is a mine-mouth thermal plant built to fire coal obtained from the neighboring coal mines including Bobovdol coal mine and consists of a conventional type boiler that fires coal, steam turbine and generators. The plant consists of three 210 MW units and the total output is 630 MW. The NO.l unit was completed and entered into commercial operation in 1973, and the NO.2 and NO.3 units entered into commercial operation one by one within an interval of two years. Each unit was constructed as a dedicated power-generating unit using a steam condensing turbine and heat-supplying equipment is not installed. Although the total rated output is 630 MW, the available output has decreased to 540 MW at present due to aging and deterioration in function. The thermal efficiency has also decreased considerably, therefore, extensive rehabilitations or rebuilding is urgently required.

It will be possible to reduce emission of environmental contamination particles such as nitrogen oxide (NOx), sulfur oxide (SOx), smoke and dust (SPM) etc. per unit of electrical output and emission of the greenhouse gas carbon dioxide substantially as well as improving the thermal efficiency (increasing the efficiency of generating end from 30 % to 50 %) by renewing the thermal power plant to a highly efficient gas combined cycle cogeneration power plant as a kind of “scrap and build” project.

(1) Description of the existing generating facility a. 210 MW steam power generating facility (Refer to the description of facilities described later for the details) Though four units of the 210 MW steam turbine power generation facilities were planned to be built, actually only three units were installed and entered into commercial operation in 1973, 1974 and 1975 respectively. The configuration of the boiler and the steam turbine is a unit type. As for major equipment of the plant, the boiler is a natural circulation and drum type boiler constructed in Poland and the rated evaporation figure is 650 ton/hr. The steam turbine generator was constructed in Russia. The turbine is a one axis three room reheating regenerating condensing type and the generator is cooled by hydrogen. As the characteristics of the coal are inferior to expectations, the boiler cannot satisfy the necessary steam generation and the available output decreased to 180 - 190 MW as compared to the rated output of 210 MW. The thermal efficiency is as low as 30 %. The auxiliary power consumption has reached about 11.0 %. b. The make-up water for the power plant is taken from two locations, a reservoir and a river, and,

-H-63 - in particular, water has not been a problem so far. The cooling tower used for cooling of the condenser is a natural draft type and the total cooling capacity of the three units is 90,000 m3/hr. Though the tower was designed as a unit type, three units share the connection at present. The temperature of the cooling water in summer is around 30t3 at the outlet of the cooling tower. c. The fuel coal is carried by freight cars from neighboring coal mines and the calorific value varies from 2,000 to 5,000 kcal/kg, so the fuel is used in mixed form resulting in a wide variation in performance. The coal has high moisture and ash content; sulfur content is about 2 % on average. The boiler can be fired only up to 60 % of a load by coal. Below that it is designed to be fired by coal mixed with heavy oil. Heavy oil is also used at the starting and stopping time. d. Switchgears for transmission lines are designed for 110 kV and 220 kV use. The first unit is connected to a 110 kV line and the NO.2 and NO.3 units are each connected to 220 kV lines. An autotransformer of 200 MVA connects the switchgears of 110 kV and 220 kV. e. The sending transmission lines are six circuits using 220 kV lines that are connected to metropolitan Sofia, and six circuits using 110 kV lines are connected to the substations in the neighborhood. The transmission capacity will not be a problem after new plants are added. f. The stack is a single collective stack with a height of 250 m and exhaust is made through an electrostatic precipitator. Desulfurizing of the exhaust gas is not carried out yet. Therefore, it will necessary to install exhaust gas desulfurizing equipment at the next rehabilitation. g. The availability factor (operability) of the facility is low due to the bad supply of fuel coal, etc. The yearly load factor is below 50 %. Recently, the yearly power generation amount is a little below the target of 2800 million kWh. h. The power plant is operated by 1100 staff members including a chief at present.

(2) Summary of the power plant facility

The summary of the facility specifications of the Bobovdol Thermal Power Plant is as follows.

1) Boiler

- n - 64 - a. Type: OB-650-040 b. Number of Units: 3 c. Manufacturer: Rafioko, Poland d. Year of Production : 1971,1972, and 1973 e. Nominal Output : 650 (ton/hr) f. Type of Coal: Brown Coal g- Calorific Value of Coal : 2100-3500 (kcal/kg) h. Moisture of Fuel: 14-19 (%) i. Dry Ash Mass: 49-56 (%) j- Steam Nominal Pressure: 138 (ata) k. Drum Design Pressure: 154 (ata) 1. Reheat Steam Pressure: 26.5 (ata) m. Super Heater Outlet Temp. : 540 (C) n. Feedwater Temp. : 240(C) 0. Cold Reheat Steam Temp. : 330(C)

P- Hot Reheat Steam Temp. : 540 (C) r. Minimum Load under Coal Burning : 60 (%) s. Short Time Max. Load : 700 (ton/hr) t. Fuel Consumption : 240 (ton/hr) u. Pipe Diameter of Water Wall: 57 (mm)

V. Water Wall Pipe Thickness : 5 (mm) w. Length of Water Wall Pipe : 37.18 (m)

X. Number of Water Wall Pipes : 676 y- Heating Surface of Water Wall: 3,894 (m2) z. Volume of Furnace: 4,200 (m3) aa. Thermal Loading of Furnace : 348 (Mcal/m3) ab. Internal Diameter of Drum: 1,600 (mm) ac. Drum Length : 16,400 (mm) ad. Drum wall Thickness : 100 (mm) ae. Water Temp, in Drum: 343 (C) af. Drum Pressure: 54 (ata) ag. Drum Water Volume : 18.5 (m3) ah. Drum Volume : 32.15 (m3) ai. Drum Material: Steel 18CrNiMg aj- Gas Temperature at Furnace End : 834 (C) ak. Gas Velocity through Furnace Chamber: 7 (m/sec)

-n 65- al. Number of Stage of Economiser : 2 am Number of Stage of Air heater: 2 an. Crushing Coal Mill -Type: KSC-40-50 - Number of Unit: 8/boiler - Capacity : 32-52 (ton/hr) - Type of Motor : Induction Motor - Motor Rating : 800 (kW) - Nominal Voltage : 6,000 (V) - Nominal Current: 55(A) - Speed : 500 (rpm) ao. -Air Fan -Type: WPP-200/1.4 - Number of Unit: 2/boiler - Discharge Volume : 373,000 (m3/hr) - Type of Motor : Induction Motor - Motor Rating : 800 (kW) - Nominal Voltage : 6,000 (V) - Nominal Current: 88(A) - Speed : 740 (rpm) ap. Induced Fan - Type : WPWP-190/1.4S - Number of Unit: 3/boiler - Discharge Volume : 720,000/522,000 (m3/hr) - Type of Motor : Induction Motor - Motor Rating : 1,000/500 (kW) - Nominal Voltage : 6,000 (V) - Nominal Current: 120/60 (A) - Speed : 735/585 (rpm) aq. Fuel Supply - Coal: 300,000 (ton) - Fuel Oil: 5,700 (ton) x 3 ar. Water Treatment Plant - Water Supply Capacity : 200 (m3/hr) - Filtered Water Tank : 400 (m3) - Filter capacity : 200 (m3/hr)

- n - 66 - - Capacity of Ion Exchanger : 210 (m3/hr)

2) Steam Turbine a. Type : K-200-130-6 b. Number of Unit: 3 c. Manufacturer: Leningrad metal Plant, Russia d. Year of production : 1971,1971, and 1973 e. Nominal Output : 210 (MW) f. Steam Condition : - HP Inlet Pressure : 130 (ata) - HP Inlet Temp. : 535 (T) - Reheat Temp. : 535 (t)

- Feedwater Temp. : 240 (C) g. Number of Stage - High Pressure: 12 - Intermediate Pressure: 11 - Low Pressure: 8 -Total : 31 h. Critical Speed - High Pressure shaft: 1,750 (rpm) - Intermediate Pressure shaft : 1,780 (rpm) - Low Pressure shaft : 1,610 (rpm) i. Number of Bearing: 11 j. Control Valves - High Pressure Inlet: 4 sets - Intermediate Pressure Inlet: 4 sets - Low Pressure Inlet: Nil k. Steam Bleed - Number of Bleed Point : 7 - Bleed Point (stage) : 9,12,15,18,21, 23, 25 - Bleed Pressure (ata) : 41.5, 27.6,12.7,6.7, 2.9,1.34,0.23 l. Condensate Pump -Number of Unit: 3 (sets/unit) [50% x 3] - Capacity : 320 (ton/hr) - Head : 160 (m) - Motor Rating : 174 (kW)

- n - 67 - - Voltage : 380 (V) - Current: 28.7 (A) - Speed : 1,480 (rpm) m. Circulating Water Pump -Type: 140A-4.0 - Number of Unit: 2 (sets/unit) [50% x 2] - Capacity : 15,000 (ton/hr) - Head: 25 (m) - Motor Rating : 6,000 (V) - Current: 195 (A) - Speed : 495 (rpm) n. Boiler Feedwater Pump -Type : 15Z33 x 8 - Number of Unit: 3 (sets/unit) [50% x 3] - Capacity : 360 (ton/hr) - Head : 2,045 (m) - Motor Rating : 3,150 (kW) - Voltage : 6,000 (V) - Current: 353 (A) - Speed : 3,920 (rpm) o. Turbine Lubricant Oil System - Starting Oil Pump Capacity : 300 (m3/hr) Head: 480 (m) - Spare Oil Pump Capacity : 180 (m3/hr) Head: 30 (m) - DC Emergency Pump Capacity : 108 (m3/hr) Head: 24 (m) p. Generator Lubricant Oil System - AC Pump Capacity : 34 (m3/hr) Head: 115 (m) - DC Pump Capacity : 34 (m3/hr)

- n - 68 - Head: 176 (m) q- Lubricant Oil Quantity -Tank : 28 (m3) - Total System : 32 (m3) r. Steam Ejector - Starting : 1 no - Normal Operation : 2 nos s. Deaerator -Type : A-6 - Capacity : 680 (ton/hr) - Pressure: 6 (ata) - Useable Volume : 145 (ton) t. Cooling Water System -Type : Closed system - Number of Cooling Tower : 3 - Tower Area: 4,000 (m2) - Condenser Tube Cleaning : Ball Cleaning System, TECHNEGRO

3) Generator and Exciter a. Generator -Type : TBB-200-2A - Number of Unit: 3 - Year of Manufacturer: 1971,1972,1973 - Rated Output : 210 (MW) - Rated Capacity : 247 (MVA) - Power Factor 0.85 (lag) - Frequency : 50 (Hz) - Efficiency : 98.6 (%) - Stator Nominal Voltage : 15.75 (kV) Nominal Current: 9,060 (A) Dimension : 6,500(mmL),3,960(mmD) Weight : 170 (ton) Winding : Double Star Insulation Class: B

- B - 69 - Max. Winding temp : 105 (C) Cooling Media: Hydrogen/Water Hydrogen pressure : 3.5 (ata) Cooling Water: 27 (m3/hr) - Rotor Nominal Voltage : 220 (V) Nominal Current: 2,640 (A) Speed : 3,000 (rpm) Critical Speed : 1,370/3,400 (rpm) Dimension : 9,770 (mmL), 1,140 (mmD) Weight : 42.2 (ton) b. Exciter - Nominal Output : 1,230 (kW) - Nominal Voltage : 370 (V) - Nominal Current: 2,220 (A) - Frequency : 500 (Hz) - Rotating Speed : 3,000 (rpm) c. Pilot Exciter - Nominal Output : 30 (kW) - Nominal Voltage : 230 (V) - Nominal Current: 93.5 (A) - Frequency : 400 (Hz) - Rotating Speed : 3,000 (rpm) d. Field Switch: 3,200 (A)

4) Electrical Auxiliary a. AC/DC Converter - Nominal Voltage : 470 (V) - Nominal Current: 3,000 (A) b. Emergency Generator - Nominal Output : 1,010 (kW) - Nominal Voltage : 360 (V) - Nominal Current: 2,800 (A) c. Storage Battery - Capacity : 540, 600 and 600(AH)

-n-70- - Voltage : 220 (V) - Type of Battery : Lead Acid

5) 220 kV Switchyard a. Configuration of Bus: One and half CB, Air Insulation b. Interrupting Current: 40 (kA) c. Interrupting Capacity : 15,000 (MVA) d. Interrupting Point per Phase : 2 e. Operating Media: Compressed Air f. Current Transformer : 300-600-1200/1 x 3 (A)

g- Voltage Transformer : Capaciter Type 220,000/-/”3:100//~3x2:100/3x2 (V) h. Main Step-up Transformer - Capacity : 250 (MVA) - High Voltage : 231 (kV) - Low Voltage : 15.25 (kV) - Impedance Voltage : 11.7 (%)

6) Power House Crane a. Main Hoist : 100 (ton) b. Aux. Hoist : 20-5 (ton)

-n-7i- (3) Operation record of the existing power plant facility based on the site survey

Table 2.2.2 Operating record of the existing generating facility

Amount of Power consumption Operation Average Consumption Consumption of Year generated power in the power plant time output of coal fueloil [1000 kWh] [1000 kWh] [Hr] [MW] [ton] [ton] 1974 1, 002, 467. 600 113, 545. 30 5,590 179 1, 024, 543 13508 1975 2, 351, 392.150 233, 991. 38 17, 168 137 2, 507, 012 21660 1976 2, 348, 504. 700 234, 846. 00 17, 873 131 2, 505, 341 10985 1977 2, 548, 249. 860 248, 856. 00 17, 070 149 2,713,417 5501 1978 2, 814, 101. 800 266, 207. 00 18, 915 149 2, 978, 938 5566 1979 2, 703, 880. 900 255,688. 00 17, 576 154 2, 990, 706 5293 1980 2, 578, 675. 500 252, 700.12 16, 989 152 2, 914, 858 7106 1981 2, 569, 128. 406 246, 648. 62 16,584 155 2, 904, 035 5068 1982 2, 638, 813.950 268, 901. 12 17, 765 149 3, 256, 202 5592 1983 2, 805, 448. 450 295, 691. 36 18,432 152 3, 299, 830 5581 1984 3,178, 578. 350 319, 155. 72 20, 165 158 3,524,758 5366 1985 2,657,611. 25Q 279, 885. 24 16, 932 157 3,128, 700 8350 1986 2, 665, 200. 400 278,459. 64 16,848 158 3, 057, 464 7567 1987 2, 628, 310.500 265,434. 58 16, 217 162 2, 999,479 9206 1988 2, 261, 707.500 236, 232. 30 14, 155 160 2, 677, 922 7793 1989 2,433, 375.000 250,500. 98 14, 719 165 2, 888, 357 9054 1990 1, 922, 289. 350 200, 206. 86 11, 870 162 2, 330, 307 6848 1991 1,578,438. 750 158, 726. 98 9, 447 167 1, 895, 000 4086 1992 1, 914, 659. 600 187, 704. 08 11, 454 167 1, 970, 887 5516 1993 2, 409, 996. 700 222,611. 50 14, 434 167 2, 278,162 6326 1994 2, 075, 071. 600 200, 870. 92 12, 653 164 2, 302, 938 6361 1995 2, 405, 334. 500 247, 565.10 14, 073 171 2, 541, 475 5298 1996 2,598, 614.550 282, 903.13 15, 391 169 2, 858,185 9705 1997 2, 564, 619. 120 276, 843. 08 14, 739 174 2, 925, 362 4053 199% 2,466, 786. 360 259,438. 38 14, 257 173 2, 888, 000 4488 1999 2, 178, 395. 730 227, 660.13 12, 894 169 2,626, 600 3612

- n - 72 - 2.2.3 Project conducting capability of the thermal power plant

(1 Engineering capability The Bobovdol Thermal Power Plant has continued operation for more than 27 years since the first unit started operation, and during this time the operators have obviously gained abundant experience in the operation and maintenance of a conventional type thermal power plant. At the same time, it cannot be denied that their overall engineering level is a little lower than that of Western Europe concerning state of the art technology. However, the personnel of the power plant have enough actual experience in managing, operating, maintaining and controlling as well as the planning, designing and building of a power plant. So it can be said that they have the necessary experience and capability to implement the project.

Though they have no experience in new power generation plant projects or construction of power generation plants with the state of art technology due to the economic confusion since the collapse of the Soviet Union (Bulgaria belongs to the Eastern Europe group which was highly affected by the Soviet Union), there are no major concerns about the implementation of the project since this project is to be implemented by JI with the cooperation of Japan and Bulgaria.

It seems that the average technology level is rather high due to the education and training system in power plants (an influence of the former Soviet Union). However, they have almost no experience with state of the art control and instrument technology based mainly on a distributed computer control system(DCS) centering on computer control or with state of the art gas turbine combined cycle generating facilities. In carrying out the project, the technology transfer should be made through planning, designing, constructing and training in order to provide a sound basis for understanding the technology involved in operation and maintenance.

(2) Control system Facility, employees Power generation facility: 630 MW Employees: About 1,100 at present (including all of the technical staff and office staff). The plant can be operated by almost the same number or less staff after the rehabilitation process.

(3) Management basis, management policy The Bobovdol Thermal Power Plant separated from Bulgaria/State Agency for Energy and Energy Resources to stand independently on July 1, 2000 and has since made financial

-H-73- statements (such as balance sheet) independently. The balance sheet of the Bobovdol Thermal Power Plant as of the separation on June 30, 2000 is listed in Table 2.2.3-C shown below. At present NEK and the power plant have a PPA (Power Purchase Agreement) and it is understood that the plant gets revenue by selling electricity which covers the costs of operation, maintenance and fuel.. However, for the purpose of construction of new units or large-scale maintenance work, a loan from the government is assumed. Therefore, to perform large scale construction work that cannot be carried out on a self-financing basis, the full-scale cooperation of the State Agency for Energy and Energy Resources is to be obtained although the plant is officially an independent corporation. In particular, long-term plans are still being made by the State Agency for Energy and Energy Resources at present and the plant is ranked as strictly an executing organization.

- H - 74 - Table 2.2.3 BALANCE SHEETS of Bobovdol Steam Power Station as at 30th June, 2000

ASSETS

01.05.2000 Amount in Thousand Leva 30.06.2000 Current Year SECTIONS, GROUPS, ITEMS Previous Line code Balance year Book value Adjustment sheet value a b 1 2 3 4 A. Capital subscribed but not paid-in 0100 — — -- -- B. Fixed assets I. Tangible assets 1. Buildings, land, forests and perennials 0011 11,143 13,915 2,857 11,058 2. Machinery, plant and equipment 0012 34,984 107,083 69,664 37,419 3. Other fixed tangible assets 0013 2,251 7,357 5,182 2,175 4. Costs of acquisition of fixed tangible 0014 10,457 11,927 - 11,927 assets Sub-total of Group I 0010 58,835 140,282 77,703 62,579 EE. Intangible assets 1. Incorporation and expansion 0021 expenditures 2. R&D products 0022 3. Software products 0023 15 25 6 19 4. Patents, licenses, concession rights, 0024 know how, trade marks 5. Other intangible assets 0025 Sub-total of Group II 0020 15 25 6 19 HI. Long-term Investments 1. Majority interest 0031 2. Significant interest 0032 3. Minority interest 0033 4. Investment in property 0034 5. Others 0035 Sub total of Group HI 0030 IV. Long-term Receivables 1. Receivables from related enterprises 0041 2. Receivables per extended commercial loans 0042 3. Other long-term receivables 0043 Sub total of Group IV 0040 V. Goodwill Sub total of Group V 0050 Tbtal of Section B 0150 58,850 140,307 77,709 62,598 C. Current Assets I. Current Tangible Assets 1. Materials 0061 12,309 11,965 11,965

-n-75 - 01.05.2000 Amount in Thousand Leva 30.06.2000 Current Tear SECTIONS, GROUPS, ITEMS Previous Line code Balance year Book value Adjustment sheet value a b 1 2 3 4 2. Products 0062 3. Goods 0063 43 43 43 4. Young live-stock and failings 0064 5. Work-in-process 0065 6. Other current tangible assets 0066 Sub total of Group I 0060 12,352 12,008 12,008 II. Short-term Receivables 1. Receivables from related enterprises 0071 Including dividend 0072 2. Receivables from sales 0073 47 57 6 51 3. Advances granted 0074 4. Receivables per extended commercial 0075 loans 5. Receivables from court awards 0076 62 - - - 6. Tax refunds 0077 7. Other short term receivables 0078 30,568 28,574 28,574 NEC 30,150 28,466 28,466 Sub-total of Group II 0070 30,683 28,631 6 28,625 IH. Short-term Investments 1. In related enterprises 0081 Including shares and bonds bought 0082 back 2. Other short-term investment 0083 Sub-total of Group HI 0080 IV. Cash 1. Cash in hand 0091 9 7 7 2. Funds in bank accounts 0092 4 4 4 3. Blocked funds 0093 Sub total of Group IV 0090 13 11 11 V. Prepaid Expenses 0105 Total of Section C 0200 43,042 40,650 6 40,644 TOTAL ASSETS 0300 101,892 180,957 77,715 103,242 D. Off balance Sheet Assets 0350 580 584 584

-n 76- LIABILITIES Amount (Thousand Leva) Balance SECTIONS, GROUPS, ITEMS Line Previous Book sheet code year value value a b 1 2 3 A. Owner’ s Equity I. Capital 1. Capital stock 0411 2,529 2,529 2. Additional (reserve) capital 0412 Sub-total of Group I 0410 2, 529 2, 529 II. Premiums from Issues 0420 III. Revaluation Reserve 0430 9, 731 9,727 IV. Reserves 1. Statutory reserves 0441 2. Additional reserves 0442 57, 910 57, 910 Sub-total of Group IV 0440 57, 910 57, 910

V. Results from Prior Periods 1. Retained earnings 0451 12 12 2. Uncovered loss 0452 Sub-total of Group V 0450 12 12 VI. Results from Current Period 1. Profit 0461 2. Loss 0462 Sub-total of Group VI 0460 Total of Section A 0400 70,182 70,178 B. Long-term Liabilities I. Long-term Liabilities 1. Liabilities to related enterprises 0511 2. Liabilities per bank loans received 0512 46 45 3. Liabilities per commercial loans received 0513 4. Deferred taxes 0514 5. Other long-term liabilities 0515 Sub-total of Group I 0510 46 45 II. Deferred Incomes 1. Negative goodwill 0521 2. Other deferred incomes 0522 Sub-total of Group II 0520 Total of Section B 0500 46 45 C. Short-term Liabilities I. Short-term Liabilities 1. Liabilities to related enterprises 0611 Including dividend 0605

-H-77- Amount (Thousand Leva) Balance SECTIONS, GROUPS, ITEMS Line Previous Book sheet code year value value 2. Liabilities per bank loans received 0612 3. Liabilities per commercial loans received 0613 4. Payless to suppliers 0614 1,155 1,316 5. Advances received 0615 6. Liabilities to the government budget 0616 130 106 7. Liabilities to the staff (salaries and wages) 0617 1,220 1,173 8. Social security liabilities 0618 214 153 9. Other short-term liabilities 0619 27, 993 29, 376 NEC 27,819 2% 180 Sub-total of Group I 0610 30, 712 32,124 II. Deferred Incomes 0630 8 7 Total of Section C 0600 30, 720 32, 131 D. Financing I. For Fixed Assets 0710 944 888 II. For Current Operations 0720 Total Section D 0700 944 888 TOTAL LIABILITIES 0800 101, 892 103, 242 R Off-balance Sheet Liabilities 0850 580 584

-n-78- (4) Financing capability As the Bobovdol Thermal Power Plant is a state-controlled company, the Bulgarian government bears the expenses to implement the project and the government naturally expects international financial support. However, when the company is privatized, support may be possible on the condition that the current land and equipment should be charged on the Bulgarian side. The actual charge of expenses will be decided in the negotiations with the partner of the agreement when the rehabilitation project is implemented.

(5) Capability of personnel in charge The Bobovdol power plant in Bulgaria has plenty of human resources in the field of civil engineering, architecture, machinery, electricity and instruments, etc. necessary for the plant design and for processing much of the work at site. Therefore, there is no perceived shortage of human resources for planning works before implementing the project.

(6) Implementation scheme The implementation scheme will vary depending on whether the corresponding power plant is under the control of the government or civilians when the rehabilitation project is implemented and on the way the project is financed. Specifically, however, a project team including consultants is to be organized for “joint work ” by the Japanese side and implementation of a better scheme for the project is to be considered.

-H-79 - The scheme for project planning and project implementation

The following charts display a scheme for project planning after completion of the survey and a scheme for project implementation after agreement on the project. (Based on the assumption that privatization has not taken place)

The scheme for project planning (draft)

Government of Bulgaria

State Agency for Energy and Energy Resources

Owner (100 %)

Bobovdol Thermal Power Plant

- H - 80 - The scheme for project implementation (draft)

This scheme will be applied until the completion of the rehabilitation project of the power plant after agreement on the terms of the project.

State Agency for Energy and Energy Resources (SAEER) (Project team)

Supervising the implementation of the project

Engineering company (Work design, supplying equipment and material on the Bulgarian side)

Consulting and directing The Bobovdol Thermal Power Plant (Management at site and civil engineering, architecture, installation, tests, etc.)

-H-81 - 2.2.4 Contents of the thermal power plant and the specifications of related facilities after the rehabilitation

(l)Selection of a draft of the project plan Based on the results of the survey at site of the Bobovdol power plant, the following five cases can be considered as possible methods of rehabilitation after fully considering the urgency of the rehabilitation work.

Case-1: Conserving the existing facilities, intending to recover the functions and to prolong the usable period by making big rehabilitations as well as taking care of the exhaust pollution by adding desulfurization equipment. (Recover the output of 210 MW and the total output becomes 630 MW) Case-2: Newly install the thermal power plant of a coal-fired type with three 210 MW units using a circulating fluidized bed-combustion boiler that has low performance degradation against variations of the properties of coal and can control the generation of SOx by putting limestone into the furnace together with the coal. The existing thermal power plant is to cease operations Case-3: Replace existing facilities with a high efficiency gas combined cycle power generating unit as a “scrap and build” project. The new unit consists of three blocks of multi-axis 2-2-1 type using a 70MW class gas turbine (Consisting of two gas turbines, two units of exhaust heat recovery steam generator and one steam turbine, total output is 210 MW) resulting total output of 630 MW. Case-4: Replace existing facilities with a high efficiency gas combined cycle generating unit as a “scrap and build” project. The new unit is considered to be two blocks of single-axis 1-1-1 type (total output is 370 MW) using a 240 MW class gas turbine resulting in total output of 740 MW. However, a 370 MW combined cycle unit is not favorable as the fluctuation for the system is high at trip time considering the size of the present power system, partial load operation of the turbine may frequently be forced and the operating thermal efficiency may decrease. Case-5: This is a compromise plan combining Case-1 and Case-3. At first, the recovery of the functions and the extension of the usable term are realized by the minimum necessary rehabilitations and then replacement with the high efficiency gas combined cycle plant, the same as in Case-3 will be made within a few years. (This plan that was agreed upon by the investigation team and the representatives of the Bulgarian government.)

-H-82 - Comparing the above five plans, the plan to conserve the existing facilities as shown in Case-1 is not a fundamental solution, and it is not realistic to expect continuing operation of more than 25 years after the rehabilitation for a power unit that has continued operation for more than 25 years. Also this plan cannot be said to be attractive from the viewpoint of the reduction effect of greenhouse gas emissions and energy saving which are the intentions of the survey at this time. It will be particularly difficult to satisfy the recent regulations on atmospheric contamination with this plan, so this plan can be enacted only as an emergency measure. The Case-2 plan is to replace the existing unit with a coal-fired power-generating unit using a circulating fluidized bed-combustion that is the latest coal fired technology. However, in this case, it is necessary to use Lignite from the Sofia area mixed with the imported coal due to the decrease of capability of the coal mines in the Bobovdol area and the transportation problem is worrisome. In addition, not much reduction in greenhouse gas and energy saving, which are the intentions of the survey at this time, can be expected. As for the reduction of SOx that may be a problem with a coal- fired strategy, this plan can support firing limestone mixed with the fuel. The plans of Case-3 and Case-4 are the plans to replace the existing plant with a high efficiency gas combined cycle plant based on a state of the art, high efficiency gas turbine and are said to be the plans best suited to the object of the survey at this time. Though the state of the art gas turbine has not been used in Bulgaria yet, the plants using the turbines have already been fully used and verified around the world. It is possible to introduce the plant to Bulgaria. The Case-5 plan is a compromise plan combining Case-1 and Case-3. The plan was investigated to combine the minimum necessary rehabilitation of the existing plant with the implementation of a high efficiency gas combined cycle plant.

1) Project cost

We assumed the project costs of the above five cases as follows: (Refer to Tables 2.2.4-1, 2.2.4-2, 2.2.4-3, 2.2.4-4 and 2.2.4-S for the details.)

Case-1: Foreign portion US$159,500,000.00 Domestic portion US$ 109,800,000.00 Total US$ 269,300,000.00

Case-2: Foreign portion US$ 488,250,000.00 Domestic portion US$ 162.750.000.00 Total US$ 651,000,000.00

-n-83- Case-3: Foreign portion US$ 286,360,000.00 Domestic portion US$ 60.340.000.00 Total US$ 346,700,000.00

Case-4: Foreign portion US$ 292,640,000.00 Domestic portion US$ 73.160.000.00 Total US$ 365,800,000.00

Case-5: Foreign portion US$ 317,360,000.00 Domestic portion US$ 138.640.000.00 Total US$ 456,000,000.00

-n 84- Table 2.2.4-1 Project cost (Case l) (Rehabilitation of Existing Steam Turbine Generating Plant) [unit: US$. Forei ?n Currency Local Currency Sr. Items Unit Q'ty Unit Unit No. Amount Amount Price Price

1 Present Value of Existing Plant lot 1 69,300,000

2 Addition of FGD an CEM System unit 3 58,000,000 7,000,000

3 Rehabilitation of Boilers and Andllaries 41,000,000 13,000,000 - Burner and control system unit 3 - Repair of damaged boiler tubes unit 3 - Control and instrument system unit 3 - Air heater unit 3 - Coal mills unit 3 ■ Air heater unit 3 - Piping and valves lot 1 - Thermal insulation and lagging lot 1 - Draft fans unit 3 - Inspection of andllaries and repair as required unit 3 - Inspection and repair of ESP unit 3

4 Rehabilitation of Steam Turbine units and 14,500,000 5,500,000 Andllaries - Bearing and shaft seals unit 3 ■ Condenser tubes and water boxes unit 3 • LO and hydraulic oil system unit 3 - Turbine control system unit 3 - Disassembling inspection of turbine and unit 3 generator, and repair as required - Inspection of andllaries and repair as required unit 3 - Control and instrumentation system unit 3

5 Rehabilitation of Electrical equipment 3,000,000 3,000,000 ■ Transformer oil analysis and treatment lot 1 - Inspection of equipment and repair as required lot 1 - Inspection of cables and replacement as lot required

6 Rehabilitation of Common Facilities 28,000,000 7,000,000 - Coal handling and storage facilities lot 1 - Cooling towers and circulating water system lot 1 - Ash handling lot 1 - Water treatment lot 1

7 Contingency lot 1 15,000,000 5,000,000 [Tbtal] 159,500,000 109,800,000

[Grand Tbtal] 269,300,000

-H-85 - Table 2.2.4~2 Project cost (Case-2) (Modernization with 3 new units of 210 MW STG Plant employing Circulating Fluidized Bed Combustion) ______[unit: US$. Foreign Currency Local Currency Sr. Items Unit Q'ty Unit Unit No. Amount Amount Price Price 1 Block" 1 Conversion to New STG [Phase-ll 1.1 (STG: 210 MW) a No.lCFB Boiler unit 1 77,000,000 b No.l 210 MW STG unit including condenser unit 1 48,000,000 c Step up Trs., station Tr. & unit aux. Tr. lot 1 2,000,000 d DCS control systems lot 1 3,500,000 e Auxiliary facilities lot 1 12,500,000 f Spare parts lot 1 6,000,000 [Sub-total] 149,000,000 31,000,000

12Others a 220 kV switchgears to be replaced with new ones lot 1 4,000,000 b Cooling tower and circulating water system lot 1 10,000,000 [Sub-total] 14,000,000 3,000,000

1.3 Building and civil works a Site preparation lot 1 b Foundation works lot 1 c Building works lot 1 d Road and fencing lot 1 [Sub-total] 1,250,000 32,750,000

[Phase-1 Tbtal] 164,250,000 66,750,000 2 Block-2 Conversion to New STG [Phase-2] 2.1 (STG: 210 MW) a No.2 CFB Boiler unit 1 77,000,000 b No.2 210 MW STG unit including condenser unit 1 48,000,000 c Step up Trs., station Tr. & unit aux. Tr. lot 1 2,000,000 d DCS control systems lot 1 3,500,000 e Auxiliary facilities lot 1 12,500,000 f Spare parts lot 1 6,000,000 [Sub-total] 149,000,000 31,000,000

2.2 Others a 220 kV switchgears to be replaced with new ones lot 1 2,000,000 b Cooling tower and circulating water system lot 1 10,000,000 [Sub-total] 12,000,000 2,000,000

2.3 Building and civil works a Site preparation lot 1 b Foundation works lot 1 c Building works lot 1 d Road and fencing lot 1 [Sub-total] 1,000,000 15,000,000

[Phase-2 Tbtal] 162,000,000 48,000,000 Sh-1/2

-n 86- Table 2.2.4 2 Project cost (Case-2) (Modernization with 3 new units of 210 MW STG Plant employing Circulating Fluidized Bed Combustion) ______[unit: US$. Foreign Currency Loca Currency Sr. Items Unit Q'ty Unit Unit No. Amount Amount Price Price

3 Block-3 Conversion to New STG [Phase-3]

3.1 (STG: 210 MW) a No.3 CFB Boiler unit 1 77,000,000 b No.3 210 MW STG unit including condenser unit 1 48,000,000 c Step up Trs., station Tr. & unit aux. Tr. lot 1 2,000,000 d DCS control systems lot 1 3,500,000 e Auxiliary facilities lot 1 12,500,000 f Spare parts lot 1 6,000,000 149,000,00 [Subtotal] 31,000,000 0

3.2 Others a 220 kV switchgears to be replaced with new lot 1 2,000,000 ones b Cooling tower and circulating water system lot 1 10,000,000 [Subtotal] 12,000,000 2,000,000

3.3 Building and civil works a Site preparation lot 1 b Foundation works lot 1 c Building works lot 1 d Road and fencing lot 1 [Sub-total] 1,000,000 15,000,000

162,000,00 [Phase-3 Tbtal] 48,000,000 0

488,250,00 162,750,00 [Tbtal] 0 0 [Grand Tbtal] 651,000,000

Sh-2/2

-H-87- Table 2.2.4 3 Project cost (Case~3) (Conversion to Gas Combined Cycle Plant 210 MW Block x 3) ______[unit- US$. Forei gn Currency Local Currency Sr. Items Unit Q'ty Unit Unit No. Amount Amount Price Price 1 Block- 1 Conversion to GCC [Phase-1] 1.1 (GCC: 70 MW Class 2-21) a ^o.l-l 70 MW GTG unit unit 1 17,000,000 b No. 1-2 70 MW GTG unit unit 1 17,000,000 c No. 1-3 80 MW STG unit including condenser unit 1 16,000,000 d No. 1-1HRSG unit unit 1 5,200,000 e No. 1-2 HRSG unit unit 1 5,200,000 f Step up Trs., station Tr. & unit aux. Tr. lot 1 1,800,000 g DCS control systems lot 1 3,500,000 h Auxiliary facilities lot 1 9,000,000 Spare parts lot 1 4,000,000 [Sub-total] 78,700,000 11,500,000

1.2 Others a 220 kV switchgears to be replaced with new lot 1 4,500,000 ones b Cooling tower and circulating water system lot 1 6,500,000 [Sub-total] 11,000,000 2,500,000

1.3 Building and civil works a Site preparation lot 1 b Foundation works lot 1 c Building works lot 1 d Road and fencing lot 1 [Subtotal] 2,300,000 9,500,000

[Phase-1 Tbtal] 92,000,000 23,500,000

2 Block-2 Conversion to GCC [Phase-2] 2.1 (GCC: 70 MW Class 3 31) a No.2-1 70 MW GTG unit unit 1 17,000,000 b No.2-2 70 MW GTG unit unit 1 17,000,000 c No.2-3 80 MW STG unit including condenser unit 1 16,000,000 d No.2-1 HRSG unit unit 1 5,200,000 e No.2-2 HRSG unit unit 1 5,200,000 f Step up Trs., station Tr. & unit aux. Tr. lot 1 1,800,000 g DCS control systems lot 1 3,500,000 h Auxiliary facilities lot 1 9,000,000 i Spare parts lot 1 4,000,000 [Subtotal] 78,700,000 11,500,000 Sh-1/3

- n - 88 - Table 2.2.4 3 Project cost (Case 3) (Conversion to Gas Combined Cycle Plant 210 MW Block x 3) [unit: US$. Forei m Currency Loca Currency Sr. Items Unit Q'ty Unit Unit No. Amount Amount Price Price

2.2 Others a 220 kV switchgears to be replaced with new lot l 3,000,000 ones b Cooling tower and circulating water system lot l 6,500,000 [Sub-total] 9,500,000 1,500,000

2.3 Building and civil works a Site preparation lot l b Foundation works lot l c Building works lot l d Road and fencing lot l [Subtotal] 2,300,000 5,700,000

[Phase-2 Tbtal] 90,500,000 18,700,000

3 Block-3 Conversion to GCC [Phase-3] 3.1 (GCC: 70 MW Class 2-2-1) a No.3-1 70 MW GTG unit unit l 17,000,000 b No.3-2 70 MW GTG unit unit l 17,000,000 c No.3-3 80 MW STG unit including condenser unit l 16,000,000 d No.3-1 HRSG unit unit l 5,200,000 e No.3-2 HRSG unit unit l 5,200,000 f Step up Trs., station Tr. & unit aux. Tr. lot l 1,800,000 g DCS control systems lot l 3,500,000 h Auxiliary facilities lot l 9,000,000 i Spare parts lot l 4,000,000 [Subtotal] 78,700,000 11,500,000

3.2 Others a 220 kV switchgears to be replaced with new lot l 3,000,000 ones b Cooling tower and circulating water system lot l 6,500,000 [Subtotal] 9,500,000 1,500,000

3.3 Building and civil works a Site preparation lot l b Foundation works lot l c Building works lot l d Road and fencing lot l [Subtotal] 2,160,000 1,640,000

[Phase-3 Tbtal] 90,360,000 14,640,000 Sh-2/3

-H 89- Table 2.2.4*3 Project cost (Case 3) (Conversion to Gas Combined Cycle Plant 210 MW Block x 3) [unit- US$. Forei m Currency Loca Currency Sr. Items Unit Q’ty Unit Unit No. Amount Amount Price Price

4 Block- 1 Rehabilitation for life extension [Phase-4] [Phase-4 Tbtal] lot l 8,000,000 2,000,000

5 Block-2 Rehabilitation for life extension [Phase-5] [Phase-5 Tbtal] lot l 5,500,000 1,500,000

[Tbtal] 286,360,000 60,340,000 [Grand Tbtal] 346,700,000

Sh-3/3

-n-90- Table 2.2.4 4 Project cost (Case 4) (Conversion to Gas Combined Cycle Plant 370 MW Block x 2) ______[unit: US$] Foreign Currency Local Currency Amo Items Unit Q'ty Unit Unit unt Amount Price Price

1 Block* 1 Conversion to GCC [Phase* 1]

1.1 (GCC: 350 MW Class 1*1*1) a No.l GT/ST & Generator unit including unit 1 86,000,000 condenser b No.l HRSG unit unit 1 19,000,000 c Step up Trs., station Tr. & unit aux. Tr. lot 1 2,000,000 d DCS control systems lot 1 3,500,000 e Auxiliary facilities lot 1 11,000,000 f Spare parts lot 1 5,900,000 [Sub-total] 127,400,000 20,000,000

1.2 Others a 220 kV switchgears to be replaced with new lot 1 4,000,000 ones b Cooling tower and circulating water system lot 1 8,000,000 [Sub-total] 12,000,000 3,000,000

1.3 Building and civil works a Site preparation lot 1 b Foundation works lot 1 c Building works lot 1 d Road and fencing lot 1 [Subtotal] 1,200,000 14,000,000

[Phase-1 Tbtal] 140,600,000 37,000,000 Sh-1/2

-H-91 - Table 2.2.4 4 Project cost (Case 4) (Conversion to Gas Combined Cycle Plant 370 MW Block x 2) ______[unit- US$. Foreign Currency Loca . Currency Sr. Items Unit Q'ty Unit Unit No. Amount Amount Price Price

2 Block-2 Conversion to GCC [Phase-2]

2.1 (GCC: 350 MW Class 1 1 1) a No.2 GT/ST & Generator unit including unit 1 86,000,000 condenser b No.2 HRSG unit unit 1 19,000,000 c Step up Trs., station Tr. & unit aux. Tr. lot 1 2,000,000 d DCS control systems lot 1 3,500,000 e Auxiliary facilities lot 1 11,000,000 f Spare parts lot 1 5,900,000 [Subtotal] 127,400,000 20,000,000

2.2 Others a 220 kV switchgears to be replaced with new lot 1 2,500,000 ones b Cooling tower and circulating water system lot 1 8,000,000 [Subtotal] 10,500,000 2,000,000

2.3 Building and civil works a Site preparation lot 1 b Foundation works lot 1 c Building works lot 1 d Road and fencing lot 1 [Sub-total] 1,140,000 9,160,000

[Phase-2 Tbtal] 139,040,000 31,160,000

3 Block- 1 Rehabilitation for life extension [Phase-3]

[Pase-3 Tbtal] 13,000,000 5,000,000

[Tbtal] 292,640,000 73,160,000 [Grand Tbtal] 365,800,000

Sh-2/2

-n-92 - Table 2.2.4 5 Project cost (Case 5) (Rehabilitation of Existing Steam Turbine Plant & Conversion to Gas Combined Cycle Plant 370 MW Block x 2) ______[unit- US$, Foreign Currency Loca Currency Sr. Items Unit Q'ty Unit Unit No. Amount Amount Price Price 1 Present Value of Existing Plant lot l 69,300,000

2 Rehabilitation of Existing Stream Turbine Plant [Phase-1] 2.1 Rehabilitation of Boilers and Andllaries 17,000,000 5,200,000 - Burner and control system unit 2 - Repair of damaged boiler tubes unit 2 - Control and instrument system unit 2 - Air heater unit 2 - Coal mills unit 2 -Air heater unit 2 - Piping and valves lot 1 - Thermal insulation and lagging lot 1 - Draft fans unit 2 - Inspection of andllaries and repair as unit 2 required - Inspection and repair of ESP unit 2 2.2 Rehabilitation of Steam Turbine units and 3,000,000 1,200,000 Andllaries - Bearing and shaft seals unit 2 - Condenser tubes and water boxes unit 2 - LO and hydraulic oil system unit 2 - Turbine control system unit 2 - Disassembling inspection of turbine and unit 2 generator, and repair as required - Inspection of andllaries and repair as unit 2 required - Control and instrumentation system unit 2 2.3 Rehabilitation of Electrical equipment lot 1 2,000,000 600,000 - Transformer oil analysis and treatment - Inspection of equipment and repair as required - Inspection of cables and replacement as required 2.4 Rehabilitation of Common Facilities lot 1 5,000,000 2,000,000 - Coal handling and storage facilities - Cooling towers and circulating water system - Ash handling - Water treatment

2.5 Contingency lot 1 4,000,000

[Phase-1 Trial] 31,000,000 9,000,000 Sh-1/4

-H-93 - Table 22.4-5 Project cost (Case-5) (Rehabilitation of Existing Steam Turbine Plant & Conversion to Gas Combined Cycle Plant 370 MW Block x 2) ______[unit- US$. Forei gn Currency Loca Currency Sr. Items Unit Q'ty Unit Unit No. Amount Amount Price Price

3 Block- 1 Conversion to GCC [Phase-2] 3.1 (GCC: 70 MW Class 2-21) a No. 1-170 MW GTG unit unit l 17,000,000 b No. 1-2 70 MW GTG unit unit l 17,000,000 c No. 1-3 80 MW STG unit including condenser unit l 16,000,000 d No. 1-1HRSG unit unit l 5,200,000 e No. 1-2 HRSG unit unit l 5,200,000 f Step up Trs., station Tr. & unit aux. Tr. lot l 1,800,000 g DCS control systems lot l 3,500,000 h Auxiliary facilities lot l 9,000,000 i Spare parts lot l 4,000,000 [Sub-total] 78,700,000 11,500,000

32 Others a 220 kV switchgears to be replaced with new lot l 4,500,000 ones b Cooling tower and circulating water system lot l 6,500,000 [Subtotal] 11,000,000 2,500,000

3.3 Building and civil works a Site preparation lot 1 b Foundation works lot l c Building works lot l d Road and fencing lot l [Subtotal] 2,300,000 9,500,000

[Phase-2 Tbtal] 92,000,000 23,500,000

4 Block-2 Conversion to GCC [Phase-3] 4.1 (GCC: 70 MW Class 3-31) a No.2‘ 1 70 MW GTG unit unit l 17,000,000 b No.2-2 70 MW GTG unit unit l 17,000,000 d No.2 ‘3 80 MW STG unit including condenser unit l 16,000,000 e No.2-1 HRSG unit unit 1 5,200,000 f No.2'2 HRSG unit unit l 5,200,000 h Step up Trs., station Tr. & unit aux. Tr. lot l 1,800,000 i DCS control systems lot l 3,500,000 j Auxiliary facilities lot l 9,000,000 k Spare parts lot l 4,000,000 [Sub-total] 78,700,000 11,500,000 Sh-2/4

- n - 94 - Table 22.4-5 Project cost (Case-5) (Rehabilitation of Existing Steam Turbine Plant & Conversion to Gas Combined Cycle Plant 370 MW Block x 2) ______[unit: US$. Forei gn Currency Loca Currency Sr. Items Unit Q'ty Unit Unit No. Amount Amount Price Price

4.2 Others a 220 kV switchgears to be replaced with new lot 1 3,000,000 ones b Cooling tower and circulating water system lot l 6,500,000 [Sub-total] 9,500,000 1,500,000

4.3 Building and civil works a Site preparation lot l b Foundation works lot l c Building works lot l d Road and fencing lot l [Sub-total] 2,300,000 5,700,000

[Phase-3 Tbtal] 90,500,000 18,700,000

5 Block-3 Conversion to GCC [Phase-4] 5.1 (GCC: 70 MW Class 2-21) a No.3-1 70 MW GTG unit unit l 17,000,000 b No.3-2 70 MW GTG unit unit 1 17,000,000 c No.3-3 80 MW STG unit including condenser unit 1 16,000,000 d No.3-1 HRSG unit unit l 5,200,000 e No.3-2 HRSG unit unit l 5,200,000 f Step up Trs., station Tr. & unit aux. Tr. lot 1 1,800,000 g DCS control systems lot 1 3,500,000 h Auxiliary facilities lot l 9,000,000 i Spare parts lot l 4,000,000 [Subtotal] 78,700,000 11,500,000

5.2 Others a 220 kV switchgears to be replaced with new lot l 3,000,000 ones b Cooling tower and circulating water system lot l 6,500,000 [Subtotal] 9,500,000 1,500,000

5.3 Building and civil works a Site preparation lot l b Foundation works lot l c Building works lot l d Road and fencing lot 1 [Subtotal] 2,160,000 1,640,000

[Phase-4 Tbtal] 90,360,000 14,640,000 Sh-3/4

- n - 95 - Table 2.2.4 5 Project cost (Case 5) (Rehabilitation of Existing Steam Turbine Plant & Conversion to Gas Combined Cycle Plant 370 MW Block x 2) ______[unit- US$. Foreign Currency Local Currency Sr. Items Unit Q’ty Unit Unit No. Amount Amount Price Price

6 New Block- 1 Rehabilitation for life Extension [Phase* 5]

[Phase-5 Tbtal] lot 1 8,000,000 2,000,000

7 New Block'2 Rehabilitation for life Extension [Phase-6]

[Phase-6 Tbtal] lot 1 5,500,000 1,500,000

138,640,00 [Tbtal] 317,360,000 0 [Grand Tbtal] 456,000,000

Sh-4/4

- n - 96 - 2) Preconditions for the study i) Yearly power supply (at Send Terminal) a.Case-1 2003 through 2012; 2,500 million kWh 2013 through 2017; 3,000 million kWh 2018 through 2032; 3,700 million kWh

b.Case-2, -3 and-4 2008 through 2012; 1.500 million kWh 2013 through 2017; 2.500 million kWh 2018 through 2043; 3,700 million kWTi

c.Case-5 2003 through 2012; 2,500 million kWTi 2013 through 2017; 3,000 million kWh 2018 through 2043; 3,700 million kWTi ii) Heat Rate (Thermal efficiency) a. Base Case; 12,000 kJ/kWh(30.00 %) (Coal fired thermal) b. Case-1; 11,500 kJ/kWh (31.30 %) (Coal fired thermal) c.Case-2; 9,000 kJ/kWh (40.00 %) (Coal fired thermal) d. Case-3; 7,200 kJ/kWh (50.00 %) (CCGT) e.Case-4; 6,600 kJ/kWh (54.55%) (CCGT) f. Case-5; 12,000 kJ/kWTi (30.00 %) (Coal fired thermal) & 7,200 kJ/kWh (50 %) (CCGT) iii) Units for cost comparison a. Sales price of electric power; US$ 0.035/kWh (assumed, based on the present sales price of the plant) b. Sales price of natural gas; US$ 3.75/GJ (Large quantity gas charge of the Bulgarian gas company at the end of December 2000) c Sales price of coal; - Bulgarian coal US$ 34.00/ton (converting with standard coal of 7,000 kcal/kg) - Imported coal US$ 52.00/ton (converting with standard coal of 7,000 kcal/kg)

- II - 97 - iv) Auxiliary Power consumption a. Conventional type coal fired thermal power plant 11.0 % (Case-1 and Case-5), 10.0 % (Case-2) b. Gas combined cycle power plant 2.0 % (Case-3, Case-4 and Case-5)

3)Energy saving effect a. Fuel consumption over 30 years in Case-1 1,234,165 TJ The fuel consumption when the plant is operated according to the base case during the same period. 1,287,645 TJ (53,480 TJ/4.15 % reduction compared with the base case.) b. Fuel consumption over 36 years in Case-2 1,162,000 TJ The fuel consumption when the plant is operated according to the base case during the same period. 1,566,753 TJ (404,753 TJ/25.83 % reduction compared with the base case.) c. Fuel consumption over 36 years in Case-3 853,719 TJ The fuel consumption when the plant is operated according to the base case during the same period. 1,566,753 TJ (713,034 TJ/45.51 % reduction compared with the base case.) d. Fuel consumption over 36 years in Case-4 782,496 TJ The fuel consumption when the plant is operated according to the base case during the same period. 1,566,753 TJ (784,257 TJ/50.06 % reduction compared with the base case.) e. Fuel consumption over 41 years in Case-5 1,138,724 TJ The fuel consumption when the plant is operated according to the base case during the same period. 1,836,413 TJ (697,689 TJ/37.99 % reduction compared with the base case.)

4)Effect of carbon dioxide reduction a. Carbon dioxide emissions over 30 years in Case-1 122,399,550 ton Carbon dioxide emissions when the plant is operated according to the base case during the same period. 127,703,480 ton (5,303,930 ton/4.15 % reduction compared with the base case) b. Carbon dioxide emissions over 36 years in Case-2 115,242,512 ton Carbon dioxide emissions when the plant is operated according to the base case during the same period. 155,384,292 ton

- n - 98 - (40,141,780 ton/25.83 % reduction compared with the base case) c. Carbon Dioxide emissions over 36 years in Case-3 47,893,627 ton Carbon Dioxide emissions when the plant is operated according to the base case during the same period. 155,384,292 ton (107,490,665 ton/69.18 % reduction compared with the base case) d. Carbon Dioxide emissions over 36 years in Case-4 43,898,038 ton Carbon Dioxide emission when the plant is operated according to the base case during the same period. 155,384,292 ton (111,486,254 ton/71.75 % reduction compared with the base case) e. Carbon Dioxide emissions over 41 years in Case-5 76,950,372 ton Carbon Dioxide emissions when the plant is operated according to the base case during the same period. 182,128,092 ton (105,177,720 ton/57.75 % reduction compared with the base case)

5) Comparison of cost performance

Financial internal rate of return (FIRR) of each case is as follows under the conditions assumed above. However, it does not include the trade amount for the reduced emission of carbon dioxide.

a. Case-1 FIRR = 16.04 % b. Case-2 FIRR = 8.73 % c. Case-3 FIRR = 1.99 % d. Case-4 FIRR = 4.87 % e. Case-5 FIRR = 5.66 % (Refer to Tables 2.2.4-6 to 2.2.4-10)

From these results it can be said that the plans except for Case-1, are not economically viable projects, but the plans for Case-2, Case-4 and Case-5 may be barely payable by utilizing soft loans such as JBIC. However, needless to say, basically revising the rates for selling power is necessary.

As seen in the result of the comparison study, the conventional coal fired thermal type power plant of Case-1 and Case-2 is superior to the gas-fired combined cycle plant from an economical perspective . This is because of the cheap price of coal per unit power generation. The price of the imported coal is about half the gas price and the price of the coal produced at site is about one third of the gas price. However, it should be noted that

- II - 99 - plans for Case-3, Case-4 and Case-5 are superior in the reduction effect of the emission of carbon dioxide, a major objective of the F/S at this time.

Case-5 was selected as the project case finally after overall discussions on the implementation schedule of the project, the feasibility of realizing soft loans such as JBIC, the energy-saving effect and the reduction effect of carbon dioxide emissions, etc.

- n-100 - Table 22.4-6 Internal rate of return flKR] (630 MW, 35 Years after Renovation) [Case l] [Coal Fired Existing B-T

321185* 3,539,221 2.466,544 3,929,744 9,537,218 8066,849 7,41899 9232366 8771,277 6823161 6275,195 5,771,229 5,307,737 4,881,4® 4,489,431 4,128885 3,797,291 3,492327 295390 2,716,671 2,49850 2297,8k Vale •2189.486 •3,043725 1127506 10,088572 12,651,579 12260224 17,136,968 15,760,685 14,494,933 10,370,044 13,330,834 ■21214821 •48,846.581 •71,877883 •24,789,493 •14275,67- •29251,946 •13,407,559 ,004m 7,000 IRR= (CKl+rXn Resent $52.0Otm $34

1 Price

Oral

3,74872: 6,618723 •4,651,277 ■831212* 12,687,871 23,187,872 23,187.871 65,414,851 65,414,851 65,414,851 65.414,851 44,414,851 65,414,851 65,414,851 65,414,851 65,414,851 65,414851 65,414,851 65,414851 65,414,851 65,414,851 65,414,851 65,414,851 65,414,851 65,414,851 65,414,851 65,414,851 65,414,851 65,414,851 65,414,851 65,414,851 65,414,851 65,414,851 -23,10,000 •57,750,00 •9340,00 •34,650,00 •25,651277 ■57,151277 •39,812,12* Cool

1,40.969.101 (0 Imported OtcaMcg) Nethcome Domestic (CMAHB) Mixed 78151277 57,750,00 34,650,00 57.151277 23,100.000 48751277 46,651277 95,812,128 74812,12* 64,065,141 9340,00 64,312,12* 64.31212* 85.085,141 64,085,141 64,085,141 64,065,141 64,085,141 64,065,141 64,085,141 64,085,141 64,065,141 64,085,141 64,085,141 64,085,141 64,085,141 64,085,141 64,085,141 64,085,141 64,065,141 64,085,141 64,065,141 64,065,141 64,065,141 64,085,141 64,085,141 64,065,141 64,085,141 109,651277 127,31212* 2.662030,891 03) Total | I I |

3,643,333 3,643333 3,64333; 3,643333 9,796881 3,643,333 6,633224 6,633225 6,633222 6,633225 6,633225 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881 9,798881

306,148888 Years)

080 35 2,310,060 4,44000 6,510,000 O&MCcst

0&M(V) lUSOTearl [USSMWhJ O&MRxcd

MW, ||

Cost

(630

at

22,007,943 22,007,943

22,007,943 22,007,943 22,007.943 36,679,90 36,679,90 36,679,90 36,679,90 5428620: 54286200 5428620 36,679,90 51,286,260 5428620 5428620 5428620 54286266 5428620 54286260 642862a 542862a 542862a 542862% 5428620 5428620 5428620 5428620 5428620 5428620 5428620 5428620 5428620 5428620 5428620 5428620 Cost

l,704,88y)l( Rate

1.47 9,00 Pud IkJ/kWhJ FXelCost [US$G)I Generating Heat Return of

II | || oaJ

Rate

000,0a 57,750,00 34,650,00 52,50,00 52,50,00 23,10,00 92,40,00 23,10,00 21,00, 84,00,00 31.50,00 21,00,00) 21,00,00] 21,00,00 84,00,000 31,50,00 CFB]

651, [US$1

000,000 , Construction Cost $i,oaww $l,00McW $l,106kW 231,000,000 210,00,00 210 Fired Construction

Internal

|| [Coal oa oa oa ax oa

CtKRl mo,oa 52,500,0X1 52,500, 52,500,000 52,500,000 52,500, 87,50000 87,50,000 87,60,00 87,50,00 87,50,00 129,50, 129,50,00 129,50,000 129,50,00 129,50,000 129,50,00 129,50,00 129,50,00 129,50,00 129,50,00 129,50,00 129,50,00 129,50,00 129,50,00 129,50, 129,50,00 129,50,00 129,50,00 129,50, 129,50,00 129,50,00 129,50,00 129,50,00 129,50,00 129,50,00 129,50,00 4,067, Total [Case-2] return return

(AHa+b) of

rate || 0 0 0 0 0 t 0 d < 0 ( c ( ( ( (

a c ( ( ( ( ( ( c ( c ( c c ( ( ( ( c c c

C02

002 Internal

|| (XX) ax oa oa ax oa oa oa ax ax ax ax Table

500.0a 500,0a 500.0X 500,0a 500,0a 000,0a

52,500.00 52,500, 52,500,0X1 52,500,000 52,500,000 87,500.000 87,500,000 87.500,000 87,500.000 87,500,000 Sold

129,500,000 129,500,000 129,500,000 129,500,000 129,500,000 129, 129,500,000 129, 129,5OO,O0d 129,500, 129,500, 129,500,0a 129,500,0a 129,500, 129,600,0a 129, 129,500, 129,500, 129, 129,500, 129, 129,500, 129,500, 129,500, 129,500, 129,500, (a) 4,067, 0.035 [TergySoW [US&kWhl Energy

|| (XX oa ax (XX ax oa ax ax oa

000,0a 000,0a 000,0a 000,(XX 000,(XX 000,ax 000,0a anoa 000.0a 000,0a 706000,ax 700.0000a 7060060a

1,500,000,000 1,500,006000 1,500,000,000 1,500,000,000 1,500,000,000 2,500,000,000 2,500,000,000 2,500,000,000 3,700,000,000 2,500,000,000 2,500, 3,706000, 3.706000, 3,700,000, 3,700, 3,706000, 3, 3,700, 3,700, 3,706000, 3,700,000, 3,700,000, 3,700,000, 3,700,0060a 3,700,000,0a 3, 3,700, 3,700, 3, 3.7oaooo,

4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4, 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 4,111,111,111 1,660,666,667 1,666,666,667 1,666,666,667 1,666,666,667 1,666,666,667 2,777,777,778 2,777,777,778 2,777,777,778 2,777,777,778 2,777,777,778 Hr.lHr] IkWl

7,937 6,614 6,526 (kWh) Energy 210,000 420,000 630,000 Generated Output 129,111,111,111 Operating 2011 2008 2010 2013 2005 2022 2024 2026 2009 2012 2014 2015 2016 2017 2018 2001 2006 2005 2085 2019 2020 2021 2023 2021 2027 2028 2029 2012 2945 20% 2081 20% 2004 2081 2037 2088 2M( 2041 2041 20% 203E Year Tbtal 4 5 H : 2 3 ( a 11 10 k 12 1 V 15 17 If It 20 21 % % 2f 3t 27 2f 2t 31 35 34 3C 37 25 2f 3f 4C 3( 35 35 41

H -102- 1 7 f £ 5 ? 4 f £ 11 1C 12 If 14 If 11 17 If 1£ 25 3C 31 3E 4C 25 25 2? 21 27 36 35 34 3? a 37 3£ 2C 21 24 55 n l+r= im 1.01990751 (UnitUS$)

II I ( c 12 19E ltt

49C

•757,131 •40122? n 8370351 2,671,241 7,889,7% 7,735,72( 7,68X727 7,291,52- 7,149,2a 7,009,65? 9.60881-1 9,421,255 9237,38 9,057,006 8880,277 8700,945 8538996 801878? 3,925,38 6,872,83? 6,73808? 321824? 9,995, 9908106

•8531,8a •4,364,9a •4,855, •4,200,6a A 10,194,175 18387, 10,815201 10,601,106 10,397,

-10,011,424 •11,324,55? •32,0189a •12,828,615 •27,758771 •43,517,127 • •24,76792? = Value

3,75 irr 30,000 (CMl+r) Ftesenl $0.135/Ncum a 0 oa ,

550 . -922106 -502,106 4,825,441 7,825,441 4,325,441 •5,358061 ■4,728061 •5,752105 11 14,825,441 14,825,441 14,825,441 14,825,441 14,825,441 14925,441 14,825,441 14,825,441 14,825,441 14925,441 14,825,441 14,825,441 14,825,441 14,825,441 14,825,441 14,825,441 14,825,441 14,825,441 14,825,441 14,825,441 14,825,441 14,825,441 14,825,441 28.875.OX -46200, -17,325,OX •37,488001 •10,188001 ■16252106 •32002106 -21,108001 119,710,857 Price

Income (O

Gas [USSGJl Net (CKA)-©) Otd/Naun) 14f OX oa (XX 11,550,OX 17.325, 73,008001 28875, 46200, 67.858061 57228.061 89,988061 62,088061 88422,106 88002,106 93252106 114,674,551 114,074,551 114,674,551 114,674,551 114.674,551 114,674,551 114,674,551 114,674,551 114,674,651 114,674,651 114,674,551 114,674,551 114,674,551 114,074,551 114,074,551 114,674,551 114,674,551 114,674,551 114,674,551 114,674,551 124,674,551 119,502105 114,674,551 114,674,551 114,674,551 121,674,551 103,752,106 125.174,551 3,947,289, (B) Total 4,981,531 4,981,531 4,961,531 4,981,531 4,981,531 8624,551 8624,551 8624,551 8624,551 862X551 12,735,771 12,735,77( 12,735,770 12,735,770 12,735,771 12,735,771 12,735,771 12,735,771 12,735,771 12,735,776 12,735,771 12,735,776 12,735,771 12,735,771 12,735,771 12,735,771 12,735,771 12,735,776 12,735,771 12.735.771 12,735,771 12,735,771 12,735,771 12.735.77C 12.735,771 12,735,771 399,160,571 2.50 Years)

O&Cost 1,155,000 2247,000 3297,000 0&M(V) [US$/YearI [USWWh] 35 O&MFlxed

II MW, Cost

Blocks]

at (630

41,320,531 41,320,531 41,320,531 41,320,531 08877,551 08,877,651 08877,551 68877.551 08877,551 41,320,531

101,938770 101.938770 101,938770 101,938770 101,938770 101,938770 101,938770 101,938770 101938771 101.938770 101,93877( 101.93877C 101.93877C 101,938771 101,938770 101,938771 101,938770 101,938771 101,93877( 101.93877C 101.938771 101.93877( 101,938770 101,938771 101,938770 10I.93877C Cost Cost, 3201,428571

Rate

3.75 2-21,3 7200

fuel IkJ/kWhl lUSSGJl Fuel flRR] Generating Heat MW

|| return

210

a a 0 oa oa Oa oa 0 of , ,

500 500

, , 7,000,000 rate 11.550.OX 10,000,000 11,550,0a 10,380,0a 10,920,0a 10 15,750,ax 17,325,0a 10,920,ax 10 43.680.ax 28875, 46200, 27,300,ax 20250, 42,000,

[AGCC 346,700,000

$520kW $500kW $550kW Cc6tlUS$] Conshucticn 115,500,000 100200,000 105,000,000 Construction Internal

[Case-3] II i oa oa oa oa oa oa oa oa oa oa oa oa oa OX oa (XX oa oa oa oa oa oa oa oa oa 52,500,0a 52,500, 52,500, 52,500,0a 52,500, 87,500.ax 87,500,ax 87.500.ax 87,500, 87,500, 129,500,000 129,500, 129,500,0a 129,500, 129,500, 129,500, 129,500, 129,500,0a 129,500, 129,500, 129,500, 129.500.ax 129,500,0a 129,500, 129,500,000 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500,0a 129,500, 4,007,000, Dable2.2.4-8 r Total (AMjrth) 0 ( ( ( ( ( ( ( ( ( ( ( 0 0 0 0 ( ( ( ( ( 0 0 ( ( c ( ( ( ( ( ( ( ( c ( ( 002 CQ2

II oa oa oa oa oa oa oa oa oa oa oa oa oa oa oa OOC OOC ax ax oa ax oa oa oa oa oa oa oa OOC OOC OOC ax

52.500, 52,500, 52,500, 52,500, 87,500.(XX 87,500, 87.500, 87,500, 87,500, 62,500, 129,500, 129,500, 129,500, 129,500, 129,500,000 129,500, 129,500, 129,500,0a 129,500,0a 129.500,0a 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129.500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, Sold Sold

4,067,000, W 0.085 lira® [USSkWli] Energy

|| (XX (XX (XX (XX (XX (XX (XX (XX (XX (XX (XX (XX (XX (XX OCX (XX (XX (XX (XX (XX (XX (XX (XX OOC 00C

OOOOOC OOOOOC OOOOOC OOOOOC 000,

TOO, 1,500,000, 1,500,000, 1,500,000, 1,500,000.00 1,500,000,00 3,700000(XX 3,700,000, 3,700,000, 3,700,000(XX 3,700,000, 3,700000(XX 3,700,000, 3,700,000, 3,700,000, 3,700,000, 2,500,000, 2,500,000, 3,700,000, 3, 3,700.000(XX 3,700000, 3,700, 3,700,000, 3,700,000, 3,700, 3,700,000, 3,700000,(XX 3,71X1,000, 2,500, 2,500, 3,700,000, 3,700,000, 3,700000, 3,700000, 3,700000, 2,500,000, 0.02 [pul Sold (kWh) Energy Aux.Gonsmp. 116200,000,000 |

HrlHr] [kWl

1,530,012245 1,530612245 1,530,012245 1,530012245 1,530,012245 3,775,51020 3,775,51020 3,775.510201 3,775,51020 3,775.51020 3,775,51020 3,775,51020 3,775,51020 3,775,51020 3,775,510201 3,775,510,20 3,775,51020 3,775,51020 3,775,51020 3,775,51020 3,775,510,20 3,775,51020 3,775,51020 3,775,510201 3,775,510201 2,551,020,406 2,551,020,406 2,551,020,406 2551,020406 3,775,510,201 3,775.510201 3,775,510201 3,775,510201 3.775,510201 2,551,020,408 3,775,510201 7288 5,992 6,073 (kWh) Energy 210,000 420,000 030,000 Generated Output 118571,4281571 Operating

1 I 1 1 | I 2011 2013 2011 2032 2033 2034 2035 2089 2010 2025 2011 2012 2030 2031 2086 2037 2088 2011 202( 2022 2023 2024 2020 2027 2028 2029 2015 201f 201' 2010 200 200f 2021 200f 200f 201( 201' 2017 201f 200( 2007 Year Tbtal 1 7 f ? f f 6 4 f 11 If If 17 If 1( 16 If 14 If 3f 40 2fl an 31 * 3' 3 37 21 2f 3f 41 27 2f 3? 3f 2f 26 ?/ 2f 2f

-103- 1 3 7 5 4 £ C t £ 11 1! 1C 1C 12 14 IE 17 1! 1£ 23 2E 2C 22 24 20 27 2! 30 31 32 3! 37 21 20 34 X 30 3! 30 4C n 1.0187a l+r= 487% (UnitiUS$)

1 ( IE

OKI

162,214 •480,81' 1934,060 7,750,74! 7.398790 7,017,563 5,876,034 6,110,557 6,777,06! 6,462,33! G, 9,831,180 9,374,614 8,939,24c 8524,09' 8128228 6,728256 5,828775 5998138 5,062.086 4,817,461 3,968981 3,621,622 2,998592 6,408150 4,598733 4,380,391 4,176,964 3,7980a 3,458430 ■8891,55' •4,790,06' 10,074,480 14,887, 10,812,122 10,300,994

•16,935,2a •22,025,4 ■40,371,786 ■61,594,991 • •27954,03' Val*

375 IRR= 3G,000 (OtHrhn Resent $0.135/Noum | (XX

•811,30 6,119,347 9,014,81( 9,014,811 9.014.811 5,139,347 9,014,81( •8745,181 •9,321,3a 1600668 23,139,347 23.139,317 23,139,347 23,139,317 23,139,317 23139,347 23,139,347 23,139,347 23,139,317 23,139,347 23,139,317 23,139,347 23,139.347 23,139,347 23,139,347 23,139,347 28139,317 23,139,347 23,139,347 23.139,317 23,139,347 23,139,317 23,139,317 23,139,347 -17,760,000 -44,400, •71,010,000 ■26,640,000 ■51,871,3a •26,311,30 361,940,571 Price

(0 heeme Net Cas (USSCJl (CWAHH) (kJ/Ncu.m) (XX 17,760,00(1 71,010,000 88311,30 44,400, 26,640,000 61845,18 43.485,181 43,485,18 43,485,18 43.485.181 71891,30 96,821,30 113,841,30 106,360,653 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,360,65! 124,360,65! 139,371,30 123,380,65! 106,360,653 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,360,65! 106,300,65! 106,360,65! 3,705,069,421 (BO Total I | 91G,77(

5,602531 5,602531 5,602531 6,602531 5,602531 8,153.551 8,153,551 8153,551 8158551 8158551 12916,771 12916,771 12916,771 12916,776 12916,776 12,916,771 12916,776 12916,771 12916,776 12916,771 12,916,771 12916,771 12916,771 12, 12,916,771 12,916,771 12,916,771 12916.77C 12,916,77C 12916,771 12916,771 12916,771 12916,771 12916,771 12,916,771 12,916,771 401,616,571 Years)

250 35 O&Cost

1,778000 3,478000 lUSOTcarl 0&M(V) lUSS/MWh] O&MHxed MW.

II || Cost Blocks]

(740

2

______37,882,653 37,88265! 37,882,65! 37,882,65! 37,882,653 63,137,75! 63,137,75! 93,443,87! 93,443,87! 63,137,75! 63,137,75! 63,137,75! 93,443,87! 93,443,87! 93,443,87! 93,443,87! 93,443,87! 93,443,87! 93,443,87! 93,443,87! 93,443,87! 93,443,87! 93,443,87! 93,443,87! 93,443,87! 93.443,87! 93,443,87! 93,443,87! 93,44387! 93,44387! 93,443,87! 93,443,87! 93,443,87! 93,443,87!

93,443,87! 93,44387! Cost

2,934.642,859 Out

Ml, flRRl 3.75

6,600 Pud IkJ/kWh] Fuel IUWW1 Generating HeatRateat return

1 | of

000 (XX (XX (XX oa OCX (XX oa OK

rate (MO,

17,020, 17,760,00(J 17,760, 17,020, 18000, 000 44,400,000 71, 26,640,000 42,560, 68,060, 25,530, [AGCC370MW 365,800, (US$1

GOO, $4GQkW $4GQkW $mkw Construction Cost 177, Internal 170200,000 Construction

[Case-41

1 (XX (XX OCX (XX OOC (XX (XX (XX OCX OOC (XX (XX OOC OOC (XX OOC OOC OOC OOC OOC OOC OOC OOC 2.2.4~9

52,500,000 52,500,000 52,500,000 52,500,000 52,500,000 87,500,000 87,500, 87,500, 87,500,000 87,500, 129,500,000 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500,000 129.500.00C 129,500, 129,500, 129,500, 129.500.CXX 129,500, 129,500, 129,500, 129,500,001 129,500, 129,500, 129.500.00C 129,500, 129,500, 129,500, 129.500.00C 129,500, 4,067,000, Table Total (ANa-A) t ( t ( t ( t c c c c c ( ( ( ( ( ( ( ( ( c ( ( ( c ( ( ( c ( c c ( ( c ( 002 COS

52,500, 52.500, 52,500, 52,500, 52,500,000 87,500,(XX 87, 87,500, 87,500, 87,500,(XX 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500,001 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500, 129,500,001 129,500, 129,500, 129,500, 129,500, Sold

4,067, (a) liner®'Sold [USSAWhl Energy OCX (XX (XX (XX (XX OCX (XX (XX (XX (XX OtX (XX (XX (XX (XX OCX (XX (XX (XX (XX (XX (XX (XX (XX (XX (XX 00C (XX OOC OOC OOOOOC OOOOOC 700,000,(XX 1,500,000, 1,500,000, 1,500,000, 1,500,000,000 1,500,000, 2500,000.(XX 2,500.000, 3,700,000, 2,500,000, 3500000, 3,700,000, 3,700,000, 3,700,000, 3,700,000, 3,700000, 3,700.000, 3,700,000, 3,700,000, 3,700000, 3,700,000, 3,700,000,(XX 3,700000, 3,700000, 3,700,000, 2,500,000, 3,700,000, 3,700,000, 3,700,000, 3,700,000, 3,700,000, 3,700000, 3, 3,700, 3,700,000, 3,700, 3,700000, Sold Ip.ul (kWh) Energy AuxGonsmp. 116200,000,000 | | |

Irl

IkW]

1,530,612245 1,530,612245 1,530,612245 1,530612245 1,530,612245 2551,02040! 2,551,020,40! 2551,02040! 3,775,510201 3,77551020 3,775510201 3,775,510201 3,775,510201 3,775,510201 3,775,51020 2551,020408 3,775,51020 3,77551020 3,775,51020 3,775,510201 2,551,02040! 3,775510201 3,775,51020 3,775,51020 3,775,51020 3,77551020 3775,510201 3,77551020 3,775,51020 3,775,51020 3,775,51020 3,775510201 3,775,51020 3,775,51020 3,775,51020 3,775,510201 [Mrl 5,108 OtVVli) Energy 740,000 370,000 Generated Output 110571,420571 OlxrratingIIr.il

1 1 | ! C .' ! C ; 2011 2010 200 201 2015 201' 2001 2005 20CX 2007 203( 2031 203/1 203C 202 2021 2025 202! 202/ 202 202C 2027 202! 2000 201 201' 201C 2017 201! 2011 201 2085 208! 203! 2087 208! 202! 2015 2011 208! 201C Year 'Ibtal ! 7 a 2 3 4 t ! C ( a t n It 17 It It 15 1! U 1C H 27 2 3! 2C 21 25 2 2- 2 3t 4C 2 3C 31 35 3-1 3f 37 2 3t 41 3C 35

H -104- 5 ! 7 4 t ! ! ( 16 V 11 1! 1! 1( 15 1! 1! 1( 11 14 21 2 a 27 2 2 X 31 35 $ a 21 25 Z: 34 $ 3 37 $ $ * 41 45 4!

1. 1- l.5S|| 1.06662 n l+r= 66664 IUS$GJl (UnitUSS)

| | || < 70 $$ 1,0® 1,5® 1,5$ 1,01! 1,54! 1,931 1,73 1,631 1,4$ 1,38! 3,9® 3,741 3,54( 3,3® 3,001 29* 2,68! 204 4371 4621 428 02$ 4921 46® 441! 417( 3,171 227! 21® 29H %5K 42$ ■2961 ■99$ •5,10 15,58 26251 ■8451' •17.91' ■109* •1392'

3.75 IRR= 7,(XX) 36000 (CMt+i^n $5200tcn $31GOtm 70640064 PrmcntVhluc $Q13544cum tore Rie

1 || Gas Goal

19® 3,9$ 4,32 482 792 21® 7.425 9,1$ 07$ 077!

■896! ■0551

1482 1492 13,6® 1482 1482 1482 1482 1492 1482 1492 1492 1492 1492 1482 1492 1492 1492 1482 1482 1482 19,42 1482 1492 1492 1482

30,97! ■803* •200® ■1522 -203$ -22301 274544 Cbal

Incane (O

liportcd OicaWg) Dcmeetic |US$GJ1 (CMAXB) tkJNcum) Net Mixed | oa

lss 89,3® 20, 6052 739® 6507! 85.4® 80,7® 80,07! 96451 85,53 9022 9690 111,55 11487! 11467! 11467! 11467! 11407! 11467! 11407! 11487! 11467! H467I 1128$ 114,07! 114,67! 114,07! 114,67! 12467! 11467! 11467! 11467! 11467! 11467! 11467! 11467! 11467! 101.06! 125,175 11407! 121,67! 10272 127,30 Chet 44924® (B) Thtal (US$GJl Coal

II

292 292 292 292 292 57® 039 039 039 039 039 07® 57® 87® 87®

1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 1273 421,53

Cost

075 Gas

O&Cbst (US$GJ1

II | (1000$)

N.

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1,53568 1,53568 1,53568 1,53565 1,53568 2010,88 3,775,58 3,77558 3,7755 3,77558 3,77558 077558 3,77558 3,77558 077558 077558 3,77558 077558 077558 201588 2010,88 201588 201588 3,77558 077558 3,77558 3,77558 077558 077558 077558 3,77558 3,77558 3,77558 077558 077558 3,77558 0.02 AGCC (MWh) AGCC 115020406

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011 (MWK) Existing Existing 25281,80 | Generated | | It

1 3,775,511 2,80898 3,77558 577558 3,77558 3,77558 3,77558 3,77558 2(612® 3,101415 3,101415 3,101415 3,101415 3,101415 3,77651! 3,77&51( 3,77558 3,77558 3,77558 3,77558 3,775,58 3,77558 3,77558 3,77558 3,775,58 3,77558 3,77558 3,77558 3,77558 3,77558 28898 28898 28898 28898 26542® 26542® 2(812® 26642® 3,775,58 3,77558 3,77558 lllrl Thtal IkWl 5688 7,501 5,908 (MWh) 420,000 420,000 630,000 141,3018)7 Operating - 2011 2031 2032 2003 2001 203i 20a 201? 2016 2020 2021 203 2027 202 202 200? 200fi 20a 20K 2014 201E 2016 2017 2001 2002 2003 2001 2006 2011 2015 an. 2030 203" 20® 20® 20K 2025 20K 202- 2026 20a 2012 2013 Yar Thai ' ( l ! I 11 1( 1! l( If IS 15 1- u a 31 35 3' S' 3f a a 2: 25 Z a a a a 4 45 4' 35 a a a 2 2

w -105- (2)Contents of the project plan

l)The first stage: Urgent rehabilitation of the existing generating facilities (implemented in 2002 and 2003)

All of the three 210 MW units of the existing generating facilities need urgent rehabilitations. So minimum urgent rehabilitations are to be made on the No.l and No.2 units as operational units before rebuilding the gas combined cycle generating facility, and the No.3 unit is to be secured as a reserve power unit to maintain the present operable state. The main goal of the rehabilitation is that the units will be able to operate for 10 to 15 years after the rehabilitation and installation of pollution preventing equipment, though improvements in efficiency will not be carried out. Major rehabilitation items are as follows:

• Repair of boilers and their auxiliaries (Check and repair of burner, control equipment and tubes of boilers, check and repair of control equipment and instrumentation, check and repair of air heater, check and repair of coal mills, check and repair of boiler auxiliary, check and repair of fan for combustion air, check and repair of electrostatic precipitator and repair of heat insulating material and protection material, etc.) • Repair of steam turbines and their auxiliaries (Check and repair of bearing and shaft sealing, check and repair of condenser tubes, check and repair of lubricant and control oil system, check and repair of turbine control system, checkup and repair of steam turbine and generator, check and repair of turbine auxiliary, check and repair of control facility and instrumentation, etc.) • Check and repair of electrical facility (Analysis and treatment of transformer oil, check and repair of switchgear, check and repair of cable, etc.) • Repair of coal handling and storage facility • Repair of cooling tower and circulating water system • Repair of ash handling facility • Repair of water treatment facility

2)The second stage: Construction of the first block (210 MW) of the 2-2-1 gas combined cycle

(aiming to complete construction by 2007) As a first step of the gas combined cycle generating facility, the 2-2-1 configuration gas combined cycle plant is to be constructed on available land at the site of the existing power plant.

-H-106 - The newly constructed plant will not depend on the existing plant, however, the power transmission facility will use the existing 220 kV lines by extending them.

The overall output of block 1 will be 210 MW under ISO design conditions (15%2, 1,013 bar), however, as the standard unit sizes of the gas turbine differ depending on the manufacturer, the output of the plant will somewhat differ. Therefore, the suggested total output should be the proposed one. The actual output will be determined by the output of the standard unit size of each manufacturer.

Basic equipment configuration of block 1 is as follows:

-Gas turbine generator : Two units of 70 MW -Heat recovery steam generator: Two units -Steam turbine generator: One unit of 70 MW

-Equipment configuration: 2-2-1 -Expected thermal efficiency: About 50 % (52 % when newly installed)

There are two combined cycle power generation units; the single-axial type and the multi-axial type. We recommend the multi-axial type for this project for the following reasons.

-Improvement of the thermal consumption rate and thermal efficiency at partial load -Limitation of unit size (within 10 % of the total capacity of the power system) -Flexibility in partial load operation -Flexibility of the check and maintenance plan -Increased reliability of multi units i) Type of gas turbine generator

As for the gas turbine power generator unit, we recommend a new high performance type and outdoor heavy duty industrial use package unit type. The main fuel is natural gas, however, diesel oil can be used as preliminary fuel.

This F/S uses the state of the art technology 1300"C class gas turbine (F6FA) made by General Electric Co. as a basis for the study. ii) Type of heat recovery steam generator

- II -107 - There are many kinds of heat recovery steam generators such as the vertical forced circulation type, the vertical natural circulation type and the horizontal natural circulation type, etc. We recommend a horizontal natural circulation type heat recovery steam generator of modular construction incorporating a fin tube and without auxiliary firing for the reasons shown below.

-Operation and maintenance are easy. -Exchange of the heat conducting module is easy. -Transportation is easy. -Installation is easy. -Construction is simple.

As the gas turbine is operated using two kinds of fuel, natural gas (main fuel) and diesel oil (auxiliary fuel), highly corrosion resistant material should be used for the parts such as the flue gas duct of the heat recovery steam generator or the heat conducting tube, etc. that are exposed to corrosive gas (SOx) especially in the relatively low temperature region. Also we recommend use of a diverter dumper to switch simple cycle operation and combined cycle operation and to additionally install a sliding damper to more completely prevent the leakage of exhaust gas to the bypass stack and to the heat recovery steam generator side. iii) Steam cycle

The heat recovery steam generator of this size usually requires a steam cycle of single pressure type or compound pressure type. The steam cycle of the compound pressure type is superior to that of the single pressure type from the viewpoint of thermal efficiency but rather expensive in equipment cost. In comparing the two steam cycles, the merits and demerits depend on several factors, so this project has considered both cycles. In order to keep the cost of the project to a minimum and to simplify the system, both the single pressure type and the compound pressure type employed non-regenerating type condenser turbines are to be used. Whether a reheating cycle is used or not will be considered at detailed design. iv) Steam condition

The temperature of the exhaust gas of this class is about 580°C under the conditions of the design on site. Accordingly, the maximum steam temperature will be below about 540°C considering the temperature difference of the pitch points and the temperature difference of the

-H -108- approaches. So for the purposes of this study, 90 bar (9 Mpa), 540%] is to be adopted as the high pressure steam condition at the outlet of the boiler. v) Type of the steam turbine

The steam turbines should be single current and single pressure types or mixed pressure types and be condensing turbines. As each turbine manufacturer has its standard turbine, it is most economical to adopt the standard turbine when selecting a steam turbine. vi) Cooling method of condensers

The cooling method of condensers in this project is a closed cycle method cooling condensers by circulating water using a wet type cooling tower with water circulation pump. The make-up water facility and cooling tower facility are designed to be used in close liaison with the existing facilities. vii) Control of heat recovery steam generator and steam turbine

The amount of steam generation of the heat recovery steam generator without auxiliary firing and the temperature of the steam can be controlled by adjusting the throttles of the bypass stack damper and the damper at the inlet of heat recovery steam generator. However, as the range of the control is very limited, the generation amount of steam is usually proportional to the output of the gas turbine. Therefore in order to maintain the temperature of the exhaust gas as high as possible, a movable inlet guide vane is installed to the gas turbine unit. Also we recommend variable pressure operation to increase the efficiency of the turbine at partial loading of the steam turbine. This is a very useful operation method for reducing thermal fatigue of metal and to make faster starts and stops. viii) Description of the plant facilities a. Design conditions at site The design conditions at site of this project are as follows: -Maximum temperature: 40°C -Minimum temperature: -22%] -Daily average temperature: Max. 30%] -Design temperature: 15°C (ISO condition) -Relative humidity: Max. 85%

-H -109 - -Max. wind velocity: 30 m/sec -Earthquake coefficient: 0.2 g (Horizontal) -Yearly rainfall: 700 mm b. Fuel This plant uses natural gas as the main fuel and diesel oil as an auxiliary fuel. c. Preparation work All preparation work including grading of the site is implemented by the Bulgarian government (SABER) side. d. Civil engineering, building construction -Excavation, back filling and fundamental working of reinforced concrete * Gas turbine generator and its auxiliary unit * Heat recovery steam generator and its auxiliary unit * Steam turbine generator and its auxiliary unit * 220 kV switchgear equipment * Main transformer * Cooling tower * Water tank * Buildings * Others -Piling -Cable and piping trench -Drainage -Garden construction -Fence making construction -Steam turbine and controlling buildings (Steel frame assembly, roof and wall constructions) -Road e. Supply of electricity and plant equipment i) Gas turbine generator * Type: Outdoor type, heavy duty, industrial use package unit * Output: About 70 MW * Quantity: 2 units * Starting method: Electric motor or thyristor start

-H-110- * Black start: Diesel generator for emergency use * Suction filter: Inertial filter (Primary filter) + High efficiency pad filter (Secondary filter) * Fuel system: Natural gas (Main fuel), Diesel oil (Auxiliary fuel), Dry type low NOx combustor * Generator: Enclosed type, air cooling synchronous generator, 2 poles, 50 Hz, 11 kV, 0.8pf (lag), 3,000 rpm * Exciter: Static or AC exciter with rotating rectifier * Automatic voltage regulator: Solid state type * Synchronous system: 11 kV generator breaker * 12 kV generator switchgear: Indoor type, metal clad model (incorporating GCB, surge absorber, load breaker with power fuse for auxiliary transformer, CT, PT and neutral grounding transformer, etc.) * Unit auxiliary transformer, starting transformer and 6.6 kV switchgear equipment * Unit power center transformer and 400 V switchgear * Control and protection equipment (Local and center) * DC power supply system and uninterruptible AC power supply system * Carbon dioxide fire extinguisher * Inlet and exhaust silencer * Bypass stack, diverter damper and sliding damper * Others ii) Heat recovery steam generator * Type: Unfired, single or dual pressure horizontal natural circulation type * Quantity: 2 unit * Stack height: Minimum 60 m iii) Steam turbine generator * Type: Single flow, mixed pressure, condenser turbine * Output: About 70 MW * Quantity: 1 unit * Generator: Enclosed type, air cooling synchronous generator, 2 poles, 50 Hz, 11 kV, 0.8pf (lag), 3,000 rpm * Exciter: Static or AC exciter with rotating rectifier * Automatic voltage regulator: Solid state type

-II- 111 - * Synchronous system: 220 kV breaker (No breaker at generator voltage) * 12 kV generator switchgear: Indoor type, metal clad model (incorporating surge absorber, load breaker with power fuse for auxiliary transformer, CT, PT and neutral grounding transformer, etc.) * Unit auxiliary transformer, starting transformer and 6.6 kV switchgear equipment * Unit power center transformer and 400 V switchgear * Control and protection equipment (Local and center) * DC power supply system and uninterruptible AC power supply system * Surface condenser * Circulating water system (Circulating water pump 100% x 2) * Boiler feed water system (Boiler feed water pump 100% x 2) * Water treatment facility (Reverse osmosis membrane + mixed bed ion-exchange resin) * Others

iv) Step up transformer * Type: Outdoor type, oil-immersed, self cooling/oil-immersed air cooling 3-phase transformer * Quantity: Two for gas turbine use, one for steam turbine use * Capacity: Matches the capacity of the generator * Rated voltage: 11 kV/220 kV * Vector group: YNdl * Neutral grounding: Direct grounding v) 220 kV switchgear * Bus configuration: Compound bus system * 245 kV Breaker: SF6 gas insulator type (5 units) * 245 kV Disconnecting switch: Horizontal revolution type Without grounding switchgear (12 units) and with grounding switchgear (2 units) * 230 kV Current transformer: Four cores insulator type (15 units) * 230 kV Transformer: Condenser type (8 units) * 196 kV Arrester: Gapless oxide type with operation counter (12units) * Bus, porcelain insulator, connection fixture, steel frame, etc.

-H-112- vi) DCS system

vii) Diesel generator for emergency use (necessary capacity for black starting)

viii) Others * Grounding and arresting facilities * Lighting and miscellaneous power source * Communication equipment (Power-line-carrier communication equipment, telephone exchanger, paging equipment) * Fire detector, fire extinguisher * Water supply and drainage facilities * Cables for power line, control, instrumentation and raceway materials

ix) Maintenance facility * Ceiling crane (for gas turbine, steam turbine) * Workshop instruments * Special tools

f. Equipment and material for building, installing, testing and test running g. Preliminary parts h. Tools for building and installing ix) Updating shared facilities a. Pure water equipment The present pure water equipment is already aged and not sufficient for use in the new plant, therefore, new equipment is to be installed. Type: Reverse osmosis membrane type + Mixed bed ion-changing resin Quantity: Two series Processing capability: 50 ton/hour (for one series) b. Pump facility for intaking make-up water Must be constructed to be able to totally supply the overall plant, the same as the existing facilities.

3)The third stage Construction of the 2nd block (210 MW) of the 2-2-1 gas combined cycle (aiming for completion by 2012) The second block of the gas combined cycle is to be constructed on a site, next to the first

-H-113- block. The 2-2-1 construction gas combined cycle plant is completely the same as the first block. The range of the construction work is almost the same as the second stage excluding some partial sharing facilities.

4) The fourth stage Construction of the 3rd block (210 MW) of the 2-2-1 gas combined cycle (aiming for completion by 2017) The third block of the gas combined cycle is to be constructed on a site, next to the second block. The 2-2-1 construction gas combined cycle plant is completely the same as the first block. The range of the construction work is almost the same as the second stage excluding some partial sharing of facilities.

5) The fifth stage Repair work for prolonging the life of the block 1 combined cycle plant (aiming for completion by 2032) The rehabilitation work on block 1 combined cycle plant will be made around 25 years after starting operation to prolong the life so that the end of its life will coincide with that of block 3. The plant is expected to be operated for 36 years in total. The main rehabilitation work includes the checking and repairing the hot gas path parts including exchange of failed parts, regeneration of the thermal barrier coat, etc.

Parts to be replaced are as shown below: a) Combustion related parts b) Turbine first stage nozzle c) Turbine first stage bucket d) Turbine second stage nozzle e) Turbine second stage bucket f) Turbine third stage nozzle g) Turbine third stage bucket h) Instruments in the high temperature region, etc.

6) The sixth stage rehabilitation work for prolonging the life of the block 2 combined cycle plant (aiming for completion by 2037) The rehabilitation work on the block 2 combined cycle plant will be made around 25 years after starting operation to prolong its life so that the end of its life coincides with that of block 3. The plant is to operate for 31 years in total. The main rehabilitation works include checking and repairing the hot gas path parts including exchange of failed parts, regeneration of the thermal barrier coat, etc. and almost the same as that of block 1. As the operating hours after

-H -114- the rehabilitation are rather short, only the minimum rehabilitations will be carried out.

(3) Operation guide for the power plant after the rehabilitation takes place

Though the Bulgarian people have not experienced a combined cycle based on gas turbine, the operation basically does not differ much from that of a steam power plant consisting of conventional boiler and steam turbine. Learning the technology through on the job training (OJT) during construction and test running and training concerning the operation and maintenance is not difficult. In the case of the gas turbine, many parts are exposed to high temperature combustion gas directly and the life control of hot gas path parts is very important. Since the combustion temperature of recent high efficiency gas turbines especially has risen considerably, control of the thermal barrier coating, etc. is very important.

The control of hot gas path parts by firing hours should be noted especially, and operation control carried out according to the maintenance and control manual determined by the manufacturers is required. In general, periodic checks should be made in the following cycles when natural gas is used:

-8,000 hours (about 1 year): Check and repair of combustors (including small repairs) -16,000 hours (about 2 years): Check and repair of combustors (including small repairs) -24,000 hours (about 3 years): Check and repair of hot gas path parts (including small repairs) -32,000 hours (about 4 years): Check and repair of combustors (including small repairs) -40,000 hours (about 5 years): Check and repair of combustors (including small repairs) -48,000 hours (about 6 years) Checkup and repair (including small repairs) This cycle is to be repeated afterwards

In general, the unit with high thermal efficiency is operated preferentially in a power system from the viewpoint of economy, therefore, after a gas combined cycle unit is completed, usually the unit will be operated preferentially.

The heat balance chart of the combined cycle is shown below.

-H-115- -911- (70,000 (70,000 GENERATOR GENERATOR

kW) kW)

COMPRESSOR COMPRESSOR |

UNIT UNIT 756,000,000^7

#1-2 #1-1 GAS GAS

TURBINE TURBINE DIVERTER DIVERTER DAMPER DAMPER BYPASS BYPASS STACK STACK STEAM HEAT STEAM HEAT HP

RECOVERY

RECOVERY

GENERATOR GENERATOR DRUM

HEAT

BALANCE (1

BLOCK)

DIAGRAM WATER BOILER

PUMPS, FEED

WATER MAKE-UP DEAERATOR TURBINE I ____ STEAM WATER BOILER HP

PUMPS FEED CONDENSER

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INPUT

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ft

\ COOLING DIAGRAM

UNIT)

BALANCE

(ONE HEAT kJ)

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:

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370,000 6,600

IP : : HEAT STEAM TURBINE

WATER IP/HP BOILER GAS

UNITS)

2

x THROUGH

DRUM

OUTPUT EFFICIENCY

LP CASE-4 INPUT

(370MW THERMAL ELECTRIC HEAT

1) 2) 3) o

H -117- 2.2.5 The range of funds, equipment, facilities and services, etc. supplied by both sides when the project is implemented.

(^Establishment of the project planning

The basic plan necessary to implement the project with the JI scheme is to be established by the leadership of the Japanese side in cooperation with the Bulgarian government SABER. We will encourage both the Japanese government and the Bulgarian government through this plan to make agreements to implement the project. After the agreements are reached, the project implementation plan is to be made with the cooperation of both sides.

(2)Funds

In this JI scheme, the size of the budget necessary for the implementation of the project will be determined through leadership on the Japanese side with the cooperation of both sides. As for the arrangement of the budget, the Japanese side will arrange the foreign money to purchase the facilities of the plant that cannot be purchased in Bulgaria and make allocations for the charges for dispatching the foreign engineers necessary for the test running of the plant, etc, and the Bulgarian government SABER will arrange the domestic money to purchase the equipment and material for civil engineering and construction that can be purchased in Bulgaria, the charges for civil engineering and construction of buildings and the charges for installation, etc.

As this project has to presuppose official development assistance (ODA) from Japan, at present, the work and fund sharing concerning the provision of Yen loans is as shown below.

-n-118 - The work sharing presupposing PDA

Japanese side Support given in handling the procedures to make a request for Yen loan at Bulgarian side. Bulgarian side Procedures for request for Yen loan at Bulgarian side. (Procedures for approval by related Ministries, etc.) (Refund term 40 years, interest 0.75 %)

Exchange Note Loan Agreement Bulgarian government Japanese government

Loan Agreement

Agreement on equipment

Bulgarian government SABER Manufacturers to supply the equipment

-H-119- (3)Equipment and facilities

The Japanese side has the responsibility for the basic plan through the completion of selection of equipment and facilities, determination of the purchasing specifications and the paper work for purchasing, etc. and quality control after the completion of the plant. Meanwhile the Bulgarian government SABER is to arrange the equipment and facilities necessary for the civil engineering and construction. As the corresponding plant is a modem plant for Bulgaria, the Japanese side will continue to cooperate on its operation and maintenance for one or two years after the completion. Bulgaria has no heavy-machine industry in the country and actually still depends on foreign companies for large scale civil engineering works so they have to borrow the capability of foreign companies to implement this project. Therefore Japanese companies should support deliveries of the equipment and facilities or building constructions, etc.

(4) Providing the services

The Bulgarian government SABER has the responsibility for the services such as submission of papers for authorizations necessary internally in Bulgaria and the acquisition of the approvals and implementation of EIA concerning pollution problems, etc., however, the Japanese side will cooperate on the preparation of necessary technical documents, etc. The Japanese side has the responsibility of establishing the basic plan on the implementation of the project, establishment of the implementation plan, engineering work concerning the purchase of equipment and facilities and factory testing of the purchased equipment and facilities needed outside Bulgaria, etc., The Japanese side also has the responsibility for providing necessary advice on training, operation and maintenance for the Bulgarian engineers in charge of the state of the art technology gas combined cycle plant.

(5) JI scheme

It is considered the implementation of the corresponding project is to be undertaken with the JI scheme, however, job responsibility in the JI scheme and the allocation of the merits obtained from the result of the project are not yet clear. We are awaiting the results of COP6-II, therefore, we think some correction will be necessary after obtaining the results of COP6-II scheduled to be convened in May 2001.

- H -120 - 2.2.6 Presupposed conditions and possible problem areas, etc. to consider in implementing the project

The presupposed conditions/assumptions shown below regarding implementation of the project (funding, agreement methods, specification of equipment, rules and standards on implementing etc) are based on the survey results of the F/S a) Considering the current economic climate and conditions, it is hard to imagine Bulgaria being able to finance the project alone and it is a presupposed condition that the financing of the project would be made possible through financial support from a special environmental Yen loan or some equivalent financial support. b) The definitive trading scheme for reducing the amount of greenhouse gases involving a joint implementation is concluded by the council of the Conference of the Parties of the United Nations Framework Convention on Climate Change. c) The likelihood of authorizations or permissions from the authorities concerned in the Bulgarian government is commensurate with the perceived importance of this project in Bulgaria.

Though the Bobovdol power plant is a privately-operated organization separated from the government of Bulgaria, this is unlikely to present a barrier from getting a Yen loan from the Japanese government as long as the Bulgarian government guarantees it.

-H -121 - 2.2.7 Project implementation schedule

The facility and equipment of the Bobovdol power plant is already quite run down due to the long time it has been in operation, therefore rehabilitation and construction work should be done quickly. However, about 2 years are needed for the urgent rehabilitation work of the existing power plant and about 6 years are required before the combined cycle power plant (Block 1) could start operation (including the preparation period and the paper work for the loan, etc.) Also as the Bobovdol power plant is an important power plant supplying electric power to the area centering around Sofia city, it cannot be stopped for a long period. So the construction method should be the “scrap and build” method. The description of the plan is as follows:

(1) Urgent rehabilitation work on the existing generating facility (implemented in 2001 and 2002 respectively.)

The funds necessary for the emergency rehabilitation work should be provided by the Bulgarian government. The existing No.l and the No.2 unit are to be rehabilitated and to start operating from 2003.

(2) Construction of the combined cycle generating facility (Each unit will be completed by 2007,2012 and 2017)

It is considered that a soft loan such as one offered by JBIG can be utilized to implement the construction project of the combined cycle generating facility. In the earliest case scenario, the project schedule for construction of block 1 utilizing such a loan could be as follows:

-2001, Approval by the Bulgarian government on the question of making a Yen loan request and actual request for the loan to the Japanese government. -2002, Confirmation by the Japanese government that it will provide the Yen loan. -Agreement of the Bulgarian government and the Japanese government concerning the implementation of the project by joint implementation (JI), conclusion for Exchange of Note (E/N), conclusion of L/A -2003, Preparation of EPC agreement, End of 2004, Conclusion of EPC agreement -End of 2007, Completion of block 1 of the combined cycle plant.

Thereafter blocks 2 and 3 will be implemented using the same scheme within a 5 year interval.

-H-122- (3)The rehabilitation work to prolong the life 25 years after start of the operation of the combined cycle plant should be implemented with funds from the Bulgarian government.

-H-123- 43744

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-124- 2.3 Implementation of the financial plan

2.3.1 Financial plan for implementing the project

Though the external debt of Bulgaria remains at US$ 9,980 million, as of 1999, the exchange rate has stabilized, inflation is easing, the interest rate is reducing and reserves of foreign money have increased since the money reserving board was established in July, 1998 and the fixed exchange rate with the German mark was introduced. The economy of Bulgaria is going to stabilize under economical operations led by the IMF. Economic reforms aiming at a market economy are developing such as privatization of big national enterprises and reform of production methods. The growth rate of the economy in the first-quarter of 2000 reached 4.8% exceeding the expectations of the government. At the discussions with the IMF carried out in June, 2000, they agreed with each other in principle and the 8th tranche (total 12 tranche) of the 3 year credit extension agreement was carried out.

Meanwhile unemployment has increased due to the effect of the reform, the unemployment rate reaching 19% in April, 2000 (18.33% as of July, 2000). The deterioration of the standard of living is especially troubling in districts where the unemployment rate is high. In addition, a drop in industrial production coupled with problems of export competitiveness (trade deficit of around US$ 1,500 million in 1999) mean that the most important problem is how to proceed with the construction reform while taking care of political and social stability in the country. As a result of the Kosovo conflict, Bulgaria has suffered the loss of the transportation route to Mid and Western Europe via the new Yugoslavia. (According to the announcement of the Bulgarian government, the direct loss is about 100,007,000marks). As for this problem, the Bulgarian government is going to ask the companies in Bulgaria to join a project that is going to create infrastructure under the agreement for stabilizing South and East Europe (Railway construction between Bulgaria and Macedonia and construction of the second bridge on the Danube river, etc.).

In view of the situation as described above, obtaining funding within Bulgaria itself for implementation of the project seems unlikely. The present Bulgarian economy is in the midst of structural reform and the starting time for this project is to be 6 to 7 years from now, so it is hard to imagine the future standing of the Bulgarian economy. So we assume as a condition a special environmental Yen loan or equivalent financing from outside Bulgaria. Alternatively, depending on the result of COP6-II to be convened in May, 2001, financing by trading in international permits in greenhouse gases may be a possibility, considering that the intention of the project is reduction of greenhouse gas emissions.

-H-125- 23.2 Scope of the financing plan

As this F/S involves a rehabilitation project aiming to reduce greenhouse gas, the Bulgarian side naturally expects a low interest rate on an environmental Yen loan from a Japanese bank such as JBIG. The financing is assumed to be long term, low interest rate financing such as an environmental Yen loan from Japan.

Meanwhile the cost of making emergency rehabilitations on the existing plants in order to maintain the short term functions is approximately US$ 40 million, and can be arranged with profits from the Bobovdol power plant, therefore, the financing is presupposed to be solved on the Bulgarian side.

-H-126- 2.4 Relevant items concerning conditions for joint implementation (JI)

2.4.1 Conditions and items to be discussed with Bulgarian side for materialization JI

Conditions to be negotiated/adjusted with the partner to realize this project as a joint implementing project (JI) can be considered as shown below, however, as the scheme to implement jointly has not been determined internationally, we have to say that the conditions and items should be dependent on the results of COP6-II scheduled to be convened in May, 2001.

a) Adjusting the organization to arrange the project and the project implementing system for joint implementation by Bulgaria and Japan. b) Adjusting the allocation method of the reduction amount of carbon dioxide (CO% credit) obtained by the implementation of the project on the Bulgarian side and Japanese side.

-B-127- 2.4.2 The possibility of reaching agreement on the project as JI

In the Bobovdol coal mine near the Bobovdol thermal plant, coal of the same level (in cost and quality) as the one being mined at present can be mined only for about 3 to 5 years more. However, natural gas pipe lines from Russia to Greece, Macedonia and Yugoslavia run near the Bobovdol thermal power plant and it is possible natural gas can be used as fuel. Also the Bobovdol power plant has generated electricity since the mid 1970s, so the life of the existing plant is almost over.

Under the circumstances described above, minimum measures to deal with the yearly deterioration should be taken urgently and the rehabilitation of the generating facility by transferring the existing plant to the state of the art gas combined cycle gradually through a “scrap and build” method aiming at improvement of efficiency, etc. is strongly advocated. However, considering the present financial status of the Bobovdol power plant and the State Agency for Energy and Energy Resources (SAEER), it may be difficult to rebuild the aged power plant without outside assistance which makes the prospect of “joint implementation ” a favorable one. When the third survey on site was carried out the State Agency of Energy and Energy Resources (SAEER) called interested parties such as representatives of the power plant, the coal mine and the government, etc. The plan for rehabilitation was explained at this time in order to reach agreement among all interested parties after exchanging opinions, and it was decided to submit the plan to Cabinet Office.

-H-128- 3. Effects of the Project

Based on the results of surveys of the present situation of the Thermal Power Plant in question, various matters such as the following shall be considered; the necessity of implementing the Project, the selection of optimum rehabilitation plans, the devising of project-implementation plans, and the feasibility of implementing the Project under the JI scheme.

- H-129 - -n-i30- 3.1 Energy-Saving Effects

3.1.1 Technological Grounds for producing Energy-Saving Effects

In the case of the power generation equipment based on a steam turbine cycle (Rankine cycle) used in the existing facilities, electric power is produced by rotating turbines using thermal energy produced by combustion through the medium of steam. Due to the intrinsic properties of steam, when the steam is converted back into water, more than half of the energy which the steam possessed is discarded into cooling water by way of the condenser. As a result, even with the latest steam turbine generating units, the highest possible limit of efficiency that can be economically achieved stands at approximately 45 percent at the best. On the other hand, in the case of gas turbine-based combined cycle generation, thermal energy obtained by combustion is converted into electric energy by means of a gas turbine without the need for first changing the thermal energy into steam. Furthermore, the thermal energy contained in the exhaust gas from the gas turbine is recovered in the form of steam with the help of a heat recovery steam generator so that a steam turbine can be used to generate additional power. In this manner, combining the gas turbine cycle (Brighton cycle) and the steam turbine cycle (Rankine cycle) makes it possible to raise the thermal efficiency to approximately 60 percent. Thus when comparing the thermal efficiencies of the gas turbine combined cycle power generating facility to that of the conventional type steam turbine power generating unit having the highest thermal efficiency, the thermal efficiency of the gas turbine combined cycle plant is about 30% higher than that of the conventional type steam turbine power generating unit which only manages around 45% efficiency.

The objective of this feasibility study is to enhance the thermal efficiency of the plant through the rehabilitation of the aging facilities/equipment and, thereby, obtain the effects of energy-saving and greenhouse gas reduction. Through comparisons between the existing thermal power plant and the "post-rehabilitation" thermal power plant operated under the same simulated operating conditions (assuming the same annual amount of power supply), the energy-saving and the greenhouse gas reduction effects shall be worked out.

To demonstrate and verify the effects of the Project concretely, the most reliable method is to run plant-operation performance tests and thermal-efficiency tests on both the existing plant and the post-rehabilitation plant and make comparisons of the test results. However, it is extremely difficult to conduct performance and efficiency tests on the existing plant at the time of implementation of feasibility studies. Furthermore, where the post-rehabilitation plant is

-ff-131 - concerned, it is impossible to run such tests unless rehabilitation work on the plant has already been completed. Therefore, it has been decided to adopt average values, determined on the basis of the 1988 operating track records, for use as the annual thermal efficiency of the existing plant to serve as a baseline. On the other hand, the thermal efficiency of the post-rehabilitation plant shall be estimated based on the thermal efficiency of similar plants while giving consideration to thermal efficiency and aged deterioration under the current operating conditions of the plant. Based on the thermal efficiency as determined above, the amount of fuel consumption and the amount of carbon dioxide emissions per annum before and after the implementation of rehabilitation shall be worked out, and energy-saving and carbon dioxide emission reduction effects shall be determined.

In the case of the F/S, as the baseline on which to determine the effects of the Project, annual thermal efficiency shall be calculated based on the amount of power generated, the amount of fuels (coal and heavy oil) consumed and the like determined from the 1988 operation track record of the existing thermal power plant. And, the amount of carbon to be used and the amount of carbon dioxide to be discharged shall be calculated by factoring in aging-caused efficiency deterioration which is expected to take place if the facilities were continually operated in the future. As far as thermal efficiency values for the post-rehabilitation thermal power plant are concerned, efficiency values demonstrated by power plants that have been constructed based on the high-temperature enhanced-efficiency gas turbine technology of recent years' shall be used, and the amount of carbon to be used and the amount of carbon dioxide to be discharged shall be calculated by factoring in efficiency deterioration which occurs over time as a result of plant operation. As for carbon dioxide emissions, the amount of emissions shall be calculated by switching the fuel from coal to natural gas and the obtained value shall be referred to as the post-rehabilitation value. Furthermore, the reduction in fuel consumption (in terms of heat quantity) arising from the pre-and-post-rehabilitation efficiency differential shall be construed as the energy-saving effect while the amount of carbon dioxide emissions based on fuel reduction obtained from the energy-saving effect shall be referred to as the greenhouse gas reduction effect.

On the basis of the reduction in fuel quantity and the reduction in carbon dioxide emissions that have been obtained using the methods discussed above, cumulative amounts during the transitional project effects periods shall be calculated based on the annual utilization factor of the post-rehabilitation generating plant.

To check the emergence of the post-rehabilitation plant's Project effects, it is considered necessary to continuously conduct monitoring. In addition, to maintain the emergence of the

- H-132 - renovated plant's Project effects at high levels, the plant shall be operated under the following conditions:

• The annual load factor of the renovated plant shall be maintained at 60% or higher. • The renovated plant shall be operated continuously, as much as possible, at 100% load conditions where the highest efficiency is achieved. This reduces energy losses that arise from operating at low efficiency factors, cuts down on the number of start/stop sequences, and reduces energy losses due to warm-up at starting time. As a result, it becomes possible to keep the consumption of fuels to a minimum. • As for fuels, natural gas characterized by low carbon dioxide emissions shall be used as the primary fuel while alternative reserve fuel should be used as little as possible.

Not only No.l Unit, which has been in operation since its construction more than 28 years, but also No.3 Unit, which has seen approximately 26 years of service, have declined in thermal efficiency. The fuel efficiency of both Units stand at around 30 percent, a considerably low figure when compared with that of the latest plants. Through the rehabilitation of the existing low-efficiency power plant into the latest high-efficiency gas turbine-based combined cycle power plant, the amount of energy to be fed in comes down while the output power remains the same. In other words, the amount of reduction in input energy constitutes the amount of reduction in fuel consumption, thereby producing an energy-saving effect.

The annual energy-saving effect is expressed by the following equation. However, the yearly amount of power generation shall be the same for both the pre-rehabilitation plant and the post-rehabilitation plant.

Annual fuel reduction amount (TJ/year) = Annual power generation amount (TJ/year) x {(14- Existing power plant's thermal efficiency (pu)) - (14-Renovated power plant's thermal efficiency (pu))}

-H-133- 3.1.2 Baseline to Serve as a Basis for the Calculation of Energy-saving Effects

(1) Setting the Baseline (Before rehabilitation)

In the case of this F/S, as the baseline on which to determine the effects of the Project, the amount of fuel consumption shall be worked out based on the 1988 operation track record of the existing thermal power plant by calculating the annual thermal efficiency factor based on the amount of power generation, the amount of consumption of fuels (coal and heavy oil) and the like, while factoring in efficiency deterioration and the like, which may occur over time if, and when, the existing plant would be continually operated in the future. To be more specific, a hypothesis that the plant will be operated over the coming 35 years under the present performance conditions without the implementation of the project shall be used as the baseline. As for the annual power generation amount and the overall thermal efficiency, the values given below shall be used. These values have been determined by calculation based on the past operation track records as well as demand growth projections (that have been made based on the results of the meetings held with our counterparts in the ODA-recipient country during on-site surveys) and values representing aging-induced plant deterioration as calculated based on empirical values. The aforementioned values are, therefore, considered to be appropriate.

For the purpose of serving as the baseline, the thermal power plant's power supply under this Project has been hypothesized as per the table shown below. Both new and existing plants are hypothetically supposed to supply power under the conditions given below.

2003- 2008- 2013- 2018- 2007 2012 2017 2043 Amount of From existing units 2, 500 2, 500 3, 000 3, 700 power supply From newly 0 0 0 0 (GWh) (*1) installed CCGT Total power supply amount (GWh) 2, 500 2, 500 3, 000 3, 700

Notes: * 1: Amount of power supply as measured at Send Terminal *2: It is hypothesized auxiliary power consumption accounts for 11.0% at the existing plant and for 2.0% at the gas combined cycle plant to be newly constructed.

-n-134- 1) Power generation amounts on the baseline a) 2003 through 2007 Amount of power supply at Send Terminal: 2,500 GWh Amount of power required to be generated: 2,808.989 GWh [2,500 x (1/0.89)] b) 2008 through 2012 Amount of power supply at Send Terminal: 2,500 GWh Amount of power required to be generated: 2,808.989 GWh [2,500 x (1/0.89)] c) 2013 through 2017 Amount of power supply at Send Terminal: 3,000 GWh Amount of power required to be generated: 3,370.787 GWh [3,000 x (1/0.89)] d) 2018 through 2043 Amount of power supply at Send Terminal: 3,700 GWh Amount of power required to be generated: 4,157.303 GWh [3,700 x (1/0.89)]

2) Fuel consumption amounts on the baseline a) 2003 through 2007 Amount of power required to be generated: 2,808.989 GWh [2,500 x (1/0.89)] Amount of fuel consumption: 33,708 TJ [2,808.989 x 106 x 12,000 x 103/1012] b) 2008 through 2012 Amount of power required to be generated: 2,808.989 GWh [2,500 x (1/0.89)] Amount of fuel consumption: 33,708 TJ [2,808.989 x 106 x 12,000 x 103/1012] c) 2013 through 2017 Amount of power required to be generated: 3,370.787 GWh [3,000 x (1/0.89)] Amount of fuel consumption: 40,449 TJ [3,370.787 x 106 x 12,000 x 103/1012] d) 2018 through 2043 Amount of power required to be generated: 4,157.303 GWh [3,700 x (1/0.89)] Amount of fuel consumption: 49,888 TJ [4,157.303 x 106 x 12,000 x 103/1012]

Note: The baseline thermal efficiency and the baseline heat consumption rate at the generating end shall be 30% and 12,000 kJ/kWh respectively. Total heat consumption over a period of 41 years: 1,836,4 13TJ

- n-i35 - 3.1.3 Concrete Amounts, Periods and the Cumulative Amount of Energy-Saving Effects

(1) Project case to serve as a basis for the calculation of energy-saving effects (after rehabilitation and reconstruction)

As for the amount of power to be supplied by the post-rehabilitation thermal power plant, it is hypothesized that the renovated thermal plant will supply power equal to the baseline under the same conditions as shown in the table below. As far as the setting of thermal efficiency at the post-rehabilitation plant is concerned, heat-efficiency values that have been demonstrated at power generation plants designed based on the high-temperature enhanced-efficiency gas turbines of recent years' shall be employed. These values shall then be coupled with aging-caused deterioration in operating efficiency for the purpose of working out the amount of fuel consumption. The difference between pre-rehabilitation fuel consumption and post-rehabilitation fuel consumption, arising from the difference in efficiency, becomes the energy-saving effect.

2003- 2008- 2013- 2018- 2007 2012 2017 2043 Amount of From existing units 2, 500 1,000 1, 000 0 power supply From newly 0 1, 500 2, 000 3, 700 (GWh) (*1) installed CCGT Total power supply amount (GWh) 2, 500 2, 500 3, 000 3, 700

Notes: *1: Amount of power supply as measured at Send Terminal *2: It is hypothesized auxiliary power consumption accounts for 11.0% at the existing plant and for 2.0% at the gas combined cycle plant to be newly constructed.

1) Power generation amounts in the Project case a) 2003 through 2007 Amount of power supply at Send Terminal: 2,500 GWh Amount of power required to be generated: From existing units: 2,808.989 GWh [2,500 x (1/0.89)] From newly installed CCGT: 0 GWh [0 x (1/0.98)] b) 2008 through 2012 Amount of power supply at Send Terminal: 2,500 GWh

- H-136 - Amount of power required to be generated: From existing units: 1,123.595 GWh [1,000 x (1/0.89)] From newly installed CCGT: 1,530.612 GWh [1,500 x (1/0.98)] c) 2013 through 2017 Amount of power supply at Send Terminal: 3,000 GWh Amount of power required to be generated: From existing units: 1,123.595 GWh [1,000 x (1/0.89)] From newly installed CCGT: 2,040.816 GWh [2,000 x (1/0.98)] d) 2018 through 2043 Amount of power supply at Send Terminal: 3,700 GWh Amount of power required to be generated: From existing units: 0 GWh [0 x (1/0.89)] From newly installed CCGT: 3,775.510 GWh [3,700 x (1/0.98)]

2) Fuel consumption amounts in the Project case

a) 2003 through 2007 Amount of power required to be generated: From existing units: 2,808.989 GWh [2,500 x (1/0.89)] From newly installed CCGT: 0 GWh [0 x (1/0.98)] Amount of fuel consumption: 33,708 TJ From existing units: 33,708 TJ [2,808.989 x 106 x 12,000 x 103/1012] From newly installed CCGT: 0 TJ [0 x 106 x 7,200 x 103/1012] b) 2008 through 2012 Amount of power required to be generated: From existing units: 1,123.595 GWh [1,000 x (1/0.89)] From newly installed CCGT: 1,530.612 GWh [1,500 x (1/0.98)] Amount of fuel consumption: 24,503 TJ From existing units: 13,483 TJ [1,123.595 x 106 x 12,000 x 103/1012] From newly installed CCGT: 11,020 TJ [1,530.612 x 106 x 7,200 x 103/1012] c) 2013 through 2017 Amount of power required to be generated:

- H-137 - From existing units: 1,123.595 GWh [1,000 x (1/0.89)] From newly installed CCGT: 2,040.816 GWh [2,000 x (1/0.98)] Amount of fuel consumption: 28,177 TJ From existing units: 13,483 TJ [1,123.595 x 106 x 12,000 x 103/1012] From newly installed CCGT: 14,694 TJ [2,040.816 x 106 x 7,200 x 103/1012] d) 2018 through 2043 Amount of power required to be generated: From existing units: 0 GWh [0 x (1/0.89)] From newly installed CCGT: 3,775.510 GWh [3,700 x (1/0.98)] Amount of fuel consumption: 27,184 TJ From existing units :0 TJ [Ox 106 x 12,000 x 103/1012] From newly installed CCGT 27,184 TJ [3,775.510 x 106 x 7,200 x 103/1012]

Note: In the Project case, it is assumed that the generating-end thermal efficiency stands at 30% for the existing units and at 50% for the CCGT plant. It is also assumed that the heat consumption rate of the existing units is 12,000 kJ/kWh while that of the CCGT plant is 7,200 kJ/kWh. Total heat consumption over a period of 41 years: 1,138,724TJ

(2) Concrete Amounts, Periods and the Cumulative Amount of Energy-Saving Effects

Based on the values established under 3.1.2 "Baseline to Serve as a Basis for the Calculation of Energy-saving Effects" and (1) Project case to serve as a basis for the calculation of energy-saving effects, concrete fuel consumption amounts and reduction amounts are calculated. Cumulative amounts of reductions in fuel consumption over the periods of the emergence of energy-saving effects are shown in Table 3.1-1.

1) Fuel consumption amounts i) Baseline (pre-rehabilitation) annual fuel consumption amounts a) 2003 through 2007 Amount of fuel consumption: 33,708 TJ b) 2008 through 2012 Amount of fuel consumption: 33,708 TJ c) 2013 through 2017

- n-138 - Amount of fuel consumption: 40,449 TJ d) 2018 through 2043 Amount of fuel consumption: 49,888 TJ

Total fuel consumption over a period of 41 years: 1,836,413 TJ ii) Project case (after rehabilitation) annual fuel consumption a) 2003 through 2007 Amount of fuel consumption: 33,708 TJ b) 2008 through 2012 Amount of fuel consumption: 24,503 TJ c) 2013 through 2017 Amount of fuel consumption: 28,177 TJ d) 2018 through 2043 Amount of fuel consumption: 27,184 TJ

Total fuel consumption over a period of 41 years: 1,138,724 TJ iii) Reduction in fuel consumption a) 2003 through 2007 Amount of fuel consumption: 0 TJ (Reduction rate: 0%) b) 2008 through 2012 Amount of fuel consumption: 9,205TJ (Reduction rate: 27.31%) c) 2013 through 2017 Amount of fuel consumption: 12,272TJ (Reduction rate: 30.34%) d) 2018 through 2043 Amount of fuel consumption: 22,704TJ (Reduction rate: 45.51%)

Total fuel consumption reduction amount over a period of 41 years: 697,689 TJ (Reduction rate: 37.99%)

The amount of energy savings achieved over a period of 41 years reaches 697,689 TJ and this amount translates into 16.37 million tons of crude oil (assuming that the heating value of 1,000 tons of crude oil is 42.62 TJ).

-H-139- Table 3.1-1 Fuel consumption reduction amounts

Riel consumption Fuel consumption amounts [TJ] reduction amounts [TJ] Year Baseline Project case Reduction Annual Cumulative Annual amount Cumulative Annual amounts Cumulative rate amount amount [Coal] amount [Coal] [Natural gas] [Total] amount [%] 1 2003 33,708 33,708 33,708 0 33,708 33,708 0 0 0.00% 2 2004 33,708 67,416 33,708 0 33,708 67,416 0 0 0.00% 3 2005 33,708 101,124 33,708 0 33,708 101,124 0 0 0.00% 4 2006 33,708 134,832 33,708 0 33,708 134,832 0 0 0.00% 5 2007 33,708 168,540 33,708 0 33,708 168,540 0 0 0.00% 6 2008 33,708 202,248 13,483 11,020 24,503 193,043 9,209 9,209 27.31% 7 2009 33,708 235,956 13,483 11,020 24,503 217,546 9,205 18,410 27.31% 8 2010 33,708 269,6641 13,483 11,020 24,503 242,049 9,209 27,619 27.31% 9 2011 33,708 303,372 13,483 11,020 24,503 266,552 9,205 36,820 27.31% 10 2012 33,708 337,080 13,488 11,020 24,503 291,055 9,205 46,029 27.31% 11 2013 40,449 377,529 13,483 14,694 28,177 319,232 12,272 58,297 30.34% 12 2014 40,449 417,978 13,483 14,694 28,177 347,409 12,272 70,569 30.34% 13 2015 40,449 458,427 13,483 14,694 28,177 375,586 12,272 82,841 30.34% 14 2016 40,449 498,876 13,48^ 14,694 28,177 403,763 12,272 95,113 30.34% 15 2017 40,449 539,325 13,483 14,694 28,177 431,940 12,272 107,385 30.34% 16 2018 49,888 589,213 0 27,184 27,184 459,124 22,704 130,089 45.51% 17 2019 49,888 639,101 0 27,184 27,184 486,308 22,704 152,793 45.51% 18 2020 49,888 688,989 0 27,184 27,184 513,492 22,704 175,497 45.51% 19 2021 49,888 738,877 0 27,184 27,184 540,676 22,704 198,201 45.51% 20 2022 49,888 788,765 0 27,184 27,184 567,860 22,704 220,905 45.51% 21 2023 49,888 838,653 0 27,184 27,184 595,044 22,704 243,609 45.51% 22 2024 49,888 888,541 0 27,184 27,184 622,228 22,704 266,313 45.51% 23 2025 49,888 938,429 0 27,184 27,184 649,412 22,704 289,017 45.51% 24 2026 49,888 988,317 0 27,184 27,184 676,596 22,704 311,721 45.51% 25 2027 49,888 1,038,205 0 27,184 27,184 703,780 22,704 334,425 45.51% 26 2028 49,888 1,088,093 0 27,184 27,184 730,964 22,704 357,129 45.51% 27 2029 49,888 1,137,981 0 27,184 27,184 758,148 22,704 379,833 45.51% 28 2030 49,888 1,187,869 0 27,184 27,184 785,332 22,704 402,537 45.51% 29 2031 49,888 1,237,757 0 27,184 27,184 812,516 22,704 425,241 45.51% 30 2032 49,888 1,287,645 0 27,184 27,184 839,700 22,704 447,945 45.51% 31 2033 49,888 1,337,533 0 27,184 27,184 866,884 22,704 470,649 45.51% 32 2034 49,888 1,387,421 0 27,184 27,184 894,068 22,704 493,353 45.51% 33 2035 49,888 1,437,309 0 27,184 27,184 921,252 22,704 516,057 45.51% 34 2036 49,888 1,487,197 0 27,184 27,184 948,436 22,704 538,761 45.51% 35 3037 49,888 1,537,085 0 27,184 27,184 975,620 22,704 561,465 45.51% 36 2038 49,888 1,586,973 0 27,184 27,184 1,002,804 22,704 584,169 45.51% 37 2039 49,888 1,636,861 0 27,184 27,184 1,029,988 22,704 606,873 45.51% 38 2040 49,888 1,686,749 0 27,184 27,184 1,057,172 22,704 629,577 45.51% 39 2041 49,888 1,736,637 0 27,184 27,184 1,084,356 22,704 652,281 45.51% 40 2042 49,888 1,786,525 0 27,184 27,184 1,111,540 22,704 674,985 45.51% 41 2043 49,888 1,836,413 0 27,184 27,184 1,138,724 22,704 697,689 45.51% 1,836,413 303,370 835,354 1,138,724 697,689 37.99%

Note) The rate of fuel consumption reduction over a period of 41 years turned out to be 37.99%.

- n-i4o - Graph 3. 1-la Fuel consumption reduction amount:

000

000

000

000

0

000

000 t— CD CO CO CO co co o o o o o o o o CD CD O CD O O O o

2007 CO CO CO CO CO CO CO Year 3.1.4 Concrete methods for verifying energy-saving effects

Greenhouse gas reduction effects, the main objective of this Project, represent a synergistic effect brought about by energy-saving effects and switching the fuel from coal to natural gas. An accurate determination of the degree of energy-saving effects is very important also for the purpose of verifying greenhouse gas reduction effects.

The energy-saving effects of the Project stem from energy-consumption reduction effects which in turn stem from the enhancement of efficiency resulting from the rehabilitation of the plant. The calculation of thermal efficiency of the post-rehabilitation plant is based on the results of measurements of the amount of fuel used by the plant and the resulting generated output power.

As for concrete methods for checking energy-saving effects after completion of the rehabilitation of the thermal power plant, the amount of energy charged into the renovated plant (the amount of fuel consumption) and the amount of power generated shall be accurately measured and recorded. In parallel with this, the obtained figures shall be compared with the pre-rehabilitation plant's baseline annual fuel consumption amounts calculated under 3.1.3 to determine the amount of energy-saving effects generated.

As for concrete measurement methods, the amount of usage of natural gas shall be determined by keeping records on an hourly basis with an integrating flowmeter, continuously conducting flow measurements using DCS, and integrating the amount of gas usage on a monthly basis. By means of these mutually differing measurement methods, it can be assured that measurement errors are within tolerance. In parallel with this, the amount of fuel gas usage is measured on an hourly, daily and monthly basis. In general, tolerance on these measurements are +/- 0.5%. On the other hand, the amount of outgoing power undergoes measurement of the integral of the power being delivered on an hourly, daily and monthly basis by means of high-precision-type integrating wattmeters (within a tolerance of +/- 0.2%). Based on this measurement data, hourly, daily and monthly fuel consumption rates are calculated for comparison with estimated fuel consumption rates to enable the verification of whether intended energy-saving effects have been attained. Needless to say, these measurements and calculations are already performed continuously by the DCS and an alarm sounds when the fuel consumption goes abnormally high or if any other abnormal condition occurs.

- n-142 - 3.2 Greenhouse Gas Reduction Effects

3.2.1 Technological Grounds for the Generation of Greenhouse Gas Reduction Effects

This Renovation Project aims to enhance thermal efficiency of the existing coal-fired thermal power plant, which has been significantly reduced due to dilapidation and aging-caused deterioration, by renewing the plant with a state-of-the-art high-efficiency gas turbine combined cycle generating plant, thereby cutting down on the amount of fuel consumption because of enhanced efficiency. By virtue of synergy between this fuel consumption reduction and the switching of fuel from coal to natural gas, the amount of carbon use is also supposed to decline. As a result, the amount of carbon dioxide emissions will be reduced resulting in greenhouse gas reduction effects.

As has been described in 3.1.1, through the adoption of gas turbine-based high-efficiency combined cycle power generating facilities, it is possible to significantly conserve energy when compared with conventional steam turbine-based thermal power generating facilities. As a result, the amount of carbon usage reduces. In addition, this combines with the reduction in the use of carbon resulting from the switching of the fuel from coal to natural gas to produce a synergy effect which, in turn, significantly reduces the generation of carbon dioxide. The technological grounds illustrating how the gas turbine-based combined cycle plant outperforms the steam turbine-based plant in terms of thermal efficiency are set out in Section 3.1.1.

-H-143- 3.2.2 Baseline to Serve as a Basis for the Calculation of Greenhouse Gas Reduction Effects

As has been discussed in Section 3.1 "Energy-Saving Effects," the amounts of carbon dioxide emissions shall be calculated under the same conditions, where the amount of power supply remains unchanged, for both the pre-rehabilitation and the post-rehabilitation facilities. In this F/S study, as a baseline on which to determine the effects of the Project, the annual thermal efficiency shall be calculated based on the amount of power production, the amount of consumption of fuels (coal and oil) and so on, making reference to the 1990 operation track records. And, by factoring in efficiency deterioration and the like which may occur over time if, and when, the existing plant is continually operated in the future, the amount of use of carbon and the amount of carbon dioxide emissions shall be calculated. To be more specific, a hypothesis that the plant would be operated over the coming 41 years under the performance conditions at that time shall be used as the baseline. As for the annual power generation amount and the annual thermal efficiency, the values given below shall be used. These values have been determined by calculation based on the past operation track records as well as demand growth projections (that have been made based on the results of meetings held with our counterparts in the ODA-recipient country during on-site surveys) and values representing aging-induced plant deterioration as calculated based on empirical values. The aforementioned values are, therefore, considered to be appropriate. The power supply generated by the thermal power plant under this Project has been assumed to be in accordance with the following table. For the purpose of serving as the baseline, the thermal power plant's power supply under this Project as determined at its exit has been hypothesized as per the table shown below. Both new and existing plants are hypothetically supposed to supply power and produce heat under the conditions given below.

2003- 2008- 2013- 2018- 2007 2012 2017 2043 Amount of From existing units 2,500 2, 500 3, 000 3, 700 power supply From newly 0 0 0 0 (GWh) (*1) installed CCGT Total power supply amount (GWh) 2,500 2, 500 3, 000 3, 700

Notes: *1: Amount of power supply as measured at Send Terminal *2: It is hypothesized auxiliary power consumption accounts for 11.0% at the existing plant and for 2.0% at the gas combined cycle plant to be newly constructed.

(1) Computational conditions for the calculation of the amount of carbon dioxide emissions

- 33-144 - Basically, the amount of carbon dioxide emissions shall be calculated in accordance with the IPCC Guideline titled ”1996 IPCC Guidelines for National Greenhouse Gas Inventories:

Reference Manual/1.4.1 Carbon Dioxide (CO2) Emissions" using the equation given below:

Annual amount of carbon dioxide emissions (tons/year) = Amount of fuel consumption (TJ/year) x Carbon emissions intensity (ton-C/TJ) x Correction factor for incomplete combustion X Molecular weight ratio of CO2 and C

Where, * Carbon emissions intensity (Coal): 27.6 (ton-C/TJ) * Carbon emissions intensity (Natural gas): 15.3 (ton-C/TJ) * Correction factor for incomplete combustion (Coal): 0.98 * Correction factor for incomplete combustion (Natural gas): 1.0 * Molecular weight ratio of C02 and C: 44/12

Note: As per the EPCC Guideline "1996 IPCC Guidelines for National Greenhouse Gas Inventories: Work Book/Table 1-1 Carbon Emission Factors (CEE)"

(2) Fuel consumption amounts (Refer to Table 3.1-1 under 3.1.3 "Fuel consumption reduction amounts.")

- n-145 - 3.2.3 Concrete Amounts, Emergence Periods and the Cumulative Amount of Greenhouse Gas Reduction Effects

Based on "Computational conditions for calculation of the amount of carbon dioxide emissions" and Table 3.1-1 "Fuel consumption reduction amounts" under 3.2.2, the amount of carbon dioxide emissions and the amount of reduction shall be determined by calculation. The cumulative amount of carbon dioxide emission reduction over the period in which green house gases begin to decline is shown in Table 3.2-1.

(1) Calculation of the amounts of carbon dioxide emission reductions

1) Baseline (Before rehabilitation) a) 2003 through 2007 Amount of fuel consumption: 33,708 TJ/year Amount of carbon dioxide emissions: 33,708 x 27.6 x 0.98 x 44/12 = 3,343,025 ton/year b) 2008 through 2012 Amount of fuel consumption: 33,708 TJ/year Amount of carbon dioxide emissions: 33,708 x 27.6 x 0.98 x 44/12 = 3,343,025ton/year c) 2013 through 2017 Amount of fuel consumption: 40,449 TJ/year Amount of carbon dioxide emissions: 40,449 x 27.6 x 0.98 x 44/12 = 4,011,570ton/year d) 2018 through 2043 Amount of fuel consumption: 49,888 TJ/year Amount of carbon dioxide emissions: 49,888 x 27.6 x 0.98 x 44/12 = 4,947,692 ton/year

Total amount of emissions over a period of 41 years: 182,128, 092ton

2) Project case (After rehabilitation) a) 2003 through 2007 Amount of fuel consumption: 33,708 TJ/year From existing units: 33,708 TJ [2,808.989 x 106 x 12,000 x 103/1012] From newly installed CCGT: 0 TJ [0 x 106 x 7,200 x 103/1012] Amount of carbon dioxide emissions: 3,343,025 ton/year From existing units: 33,708 x 27.6 x 0.98 x 44/12 = 3,343,025 ton From newly installed CCGT: 0 TJ

-B-146- b) 2008 through 2012 Amount of fuel consumption: 24,503 TJ/year From existing units: 13,483 TJ [1,123.595 x 106 x 12,000 x 103/1012] From newly installed CCGT: 11,020 TJ [1,530.612 x 106 x 7,200 x 103/1012] Amount of carbon dioxide emissions: 1,955,412 ton/year From existing units: 13,483 x 27.6 x 0.98 x 44/12 = 1,337,190 ton From newly installed CCGT: 11,020 x 15.3 x 1.0 x 44/12 = 618,222 ton c) 2013 through 2017 Amount of fuel consumption: 28,177 TJ/year From existing units: 13,483 TJ [1,123.595 x 106 x 12,000 x 103/1012] From newly installed CCGT: 14,694 TJ [2,040.816 x 106 x 7,200 x 103/1012] Amount of carbon dioxide emissions: 2,161,523 ton/year From existing units: 13,483 x 27.6 x 0.98 x 44/12 = 1,337,190 ton From newly installed CCGT: 14,694 x 15.3 x 1.0 x 44/12 = 824,333 ton d) 2018 through 2043 Amount of fuel consumption: 27,184 TJ/year From existing units: 0 TJ [0 x 10A6 x 12,000 x 103/1012] From newly installed CCGT: 27,184 TJ [3,775.510 x 106 x 7,200 x 103/1012] Amount of carbon dioxide emissions: 1,525,022 ton/year From existing units: Oton From newly installed CCGT: 27,184 x 15.3 x 1.0 x 44/12 = 1,525,022 ton

Total amount of emissions over a period of 41 years: 76,950,372 ton

Total amount of emissions reduction over a period of 41 years: 105,177,720 tons [Reduction rate of 57.75%]

-n-147- TableS. 2-1 Amount of carbon dioxide emissions reduction

Amount of carbon dioxide Amount of carbon dioxide emissions [ton] emissions reduction [ton] Baseline Project case Reduction Year Amount of fuel Amount of fuel C02 C02 Annual Cumulative Rate consumption consumption amount amount Cumulative Cumulative [Coal-TJ] [ton] [Coal-TJ] [Natural gas-TJ] [ton] [%] amount amount i 2003 33,708 3,343,025 3,343,025 33,708 0 3,343,025 3,343,025 0 0 0.00% 2 2004 33,708 3,343,025 6,686,050 33,708 0 3,343,025 6,686,050 0 0 0.00% 3 2005 33,708 3,343,025 10,029,075 33,708 0 3,343,025 10,029,075 0 0 0.00% 4 2006 33,708 3,343,025 13,372,100 33,708 0 3,343,025 13,372,100 0 0 0.00% 5 2007 33,708 3,343,025 16,715,125 33,708 0 3,343,025 16,715,125 0 0 0.00% 6 2008 33,708 3,343,025 20,058,150 13,483 11,020 1,955,412 18,670,537 1,387,613 1,387,613 41.51% 7 2009 33,708 3,343,025 23,401,175 13,483 11,020 1,955,412 20,625,949 1,387,613 2,775,226 41.51% 8 2010 33,708 3,343,025 26,744,200 13,483 11,020 1,955,412 22,581,361 1,387,613 4,162,839 41.51% 9 2011 33,708 3,343,025 30,087,225 13,483 11,020 1,955,412 24,536,773 1,387,613 5,550,452 41.51% 10 2012 33,708 3,343,025 33,430,250 13,483 11,020 1,955,412 26,492,185 1,387,613 6,938,065 41.51% 11 2013 40,449 4,011,570 37,441,820 13,483 14,694 2,161,523 28,653,708 1,850,047 8,788,112 46.12% 12 2014 40,449 4,011,570 41,453,390 13,483 14,694 2,161,523 30,815,231 1,850,047 10,638,159 46.12% 13 2015 40,449 4,011,570 45,464,960 13,483 14,694 2,161,523 32,976,754 1,850,047 12,488,206 46.12% 14 2016 40,449 4,011,570 49,476,530 13,483 14,694 2,161,523 35,138,277 1,850,047 14,338,253 46.12% 15 2017 40,449 4,011,570 53,488,100 13,483 14,694 2,161,523 37,299,800 1,850,047 16,188,300 46.12% 16 2018 49,888 4,947,692 58,435,792 0 27,184 1,525,022 38,824,822 3,422,670 19,610,970 69.18% 17 2019 49,888 4,947,692 63,383,484 0 27,184 1,525,022 40,349,844 3,422,670 23,033,640 69.18% 18 2020 49,888 4,947,692 68,331,176 0 27,184 1,525,022 41,874,866 3,422,670 26,456,310 69.18% 19 2021 49,888 4,947,692 73,278,868 0 27,184 1,525,022 43,399,888 3,422,670 29,878,980 69.18% 20 2022 49,888 4,947,692 78,226,560 0 27,184 1,525,022 44,924,910 3,422,670 33,301,650 69.18% 21 2023 49,888 4,947,692 83,174,252 0 27,184 1,525,022 46,449,932 3,422,670 36,724,320 69.18% 22 2024 49,888 4,947,692 88,121,944 0 27,184 1,525,022 47,974,954 3,422,670 40,146,990 69.18% 23 2025 49,888 4,947,692 93,069,636 0 27,184 1,525,022 49,499,976 3,422,670 43,569,660 69.18% 24 2026 49,888 4,947,692 98,017,328 0 27,184 1,525,022 51,024,998 3,422,670 46,992,330 69.18% 25 2027 49,888 4,947,692 102,965,020 0 27,184 1,525,022 52,550,020 3,422,670 50,415,000 69.18% 26 2028 49,888 4,947,692 107,912,712 0 27,184 1,525,022 54,075,042 3,422,670 53,837,670 69.18% 27 2029 49,888 4,947,692 112,860,404 0 27,184 1,525,022 55,600,064 3,422,670 57,260,340 69.18% 28 2030 49,888 4,947,692 117,808,096 0 27,184 1,525,022 57,125,086 3,422,670 60,683,010 69.18% 29 2031 49,888 4,947,692 122,755,788 0 27,184 1,525,022 58,650,108 3,422,670 64,105,680 69.18% 30 2032 49,888 4,947,692 127,703,480 0 27,184 1,525,022 60,175,130 3,422,670 67,528,350 69.18% 31 2033 49,888 4,947,692 132,651,172 0 27,184 l,525,02d 61,700,152 3,422,670 70,951,020 69.18% 32 2034 49,888 4,947,692 137,598,864 0 27,184 1,525,022 63,225,174 3,422,670 74,373,690 69.18% 33 2035 49,888 4,947,692 142,546,556 0 27,184 1,525,022 64,750,196 3,422,670 77,796,360 69.18% 34 2036 49,888 4,947,692 147,494,248 0 27,184 1,525,022 66,275,218 3,422,670 81,219,03d 69.18% 35 3037 49,888 4,947,692 152,441,940 0 27,184 1,525,022 67,800,240 3,422,670 84,641,700 69.18% 36 2038 49,888 4,947,692 157,389,632 0 27,184 1,525,022 69,325,262 3,422,670 88,064,370 69.18% 37 2039 49,888 4,947,692 162,337,324 0 27,184 1,525,022 70,850,284 3,422,670 91,487,040 69.18% 38 2040 49,888 4,947,692 167,285,016 0 27,184 1,525,022 72,375,306 3,422,670 94,909,710 69.18% 39 2041 49,888 4,947,692 172,232,708 0 27,184 1,525,022 73,900,328 3,422,670 98,332,380 69.18% 40 2042 49,888 4,947,692 177,180,400 0 27,184 1,525,022 75,425,350 3,422,670 101,755,050 69.18% 41 2043 49,888 4,947,692 182,128,092 0 27,184 1,525,022 76,950,372 3,422,670 105,177,720 69.18% 1,836,413 182,128,092 303,370 835,354 76,950,372 105,177,720 57.75%

Note: Carbon dioxide emission reduction rate over a period of 41 years: 57.75%

- H-148 - Amount of Carbon Dioxide Emissions [ton] Graph

3.2-la

Amount

of

Carbon Year

Dioxide

Emission

Reductioi — - he -♦ A —Baseline — — Amount P roject

of case

reduction

3.2.4 Concrete Methods for Confirming and Monitoring Reduction Effects of Greenhouse Gas Emissions

The major objective of this project to lower greenhouse gas emission refers in particular to carbon dioxide, but in practice it is very difficult to measure its emission. In this section, therefore, the emissions will be calculated on the basis of measured results of fuel input and its properties, according to the calculation method of the Intergovernmental Panel on Climate Change (IPCC) described in 3.2.2. As explained in 3.1.4, the amount of coal and natural gas used after conducting this project has been continuously monitored and recorded, and carbon dioxide emissions have been monitored on an hourly, daily, and monthly basis and recorded through DCS, so that they can automatically be compared with the target figures. Particularly for natural gas fuel as in this case, un-bumt carbon in a gas turbine is almost negligible; therefore, if the accurate quantity of consumed fuel is known, the amount of carbon dioxide emissions can also be obtained through calculation. As a matter of course, such calculations can also be automatically carried out by DCS.

Carbon dioxide emissions are proportional to the quantity of consumed fuel and generated electric energy; consequently, the emissions will increase or decrease in proportion to the quantity of generated electric energy. That is, since both the base line and the project case are in a similar relationship, the quantity to reduce emissions changes in proportion to the quantity of generated electric energy.

In the future, in trading the reducing right of greenhouse gas emissions, it will become very important to grasp accurately the amount of greenhouse gas to be reduced. Therefore, it is necessary to establish a convincing method which will be internationally recognized, to confirm the amount of greenhouse gas emissions.

(1) Monitoring of Greenhouse Gas Emissions

The monitoring method and the measurement of quantity to reduce greenhouse gas emissions are scheduled to be decided in detail at the Conference of Parties to the United Nations Convention on Climate Change, but they have not been established at the present stage. When they are decided, therefore, it will be necessary to discuss them in detail in order to adjust them with international rules.

1) Objective Gas for Monitoring

-n-150- At this stage, carbon dioxide (CO2) is the object of monitoring.

2) Major data items to be collected and measuring methods i) Component Analysis of Fuel (Natural Gas) On the basis of gas composition obtained by component analysis with a gas chromatograph attached to a thermal conductivity detector (TCD), calorific values and carbon dioxide emissions will be calculated. ii) Measurement of Concentration of Carbon Dioxide Contained in Emission To obtain the amount of carbon dioxide exhausted, the concentration of carbon dioxide contained in the emission is measured directly. As a measuring device, an infrared analyzer for carbon dioxide (non-dispersion type) is considered to be appropriate. With this analyzer, carbon dioxide (C02) as well as sulfur dioxide (S02), nitrogen oxides (NOx), oxygen (02) and carbon monoxide (CO) can be simultaneously measured. By connecting the analyzer with a recorder or a computer, regular monitoring (continuous measurement) of the concentration of carbon dioxide and others also will be possible.

In addition, as measuring devices of the concentration of carbon dioxide, a portable chemical gas analyzer (Orsat analyzing apparatus) to measure the ratio of carbon dioxide, oxygen and carbon monoxide, an electric carbon dioxide meter, which makes use of thermal conductivity of carbon dioxide, and a specific gravity type carbon dioxide meter, which utilizes the specific gravity of carbon dioxide, can be considered. iii) Measurement of Consumed Fuel Consumed amount of fuel (natural gas) is regularly measured and recorded by a gas flow meter. iv) Measurement of Output Output of Generator Output of the generating end is regularly measured and recorded by an integrating wattmeter. v) Plant Operation Hours

-H-151 - Operation hours of a gas turbine and a steam turbine are checked and recorded daily.

3) Monitoring Intervals i) Componendal analysis of fuel (natural gas): around once every two months ii) Other data: Tabulation per hour, day and month

- H-152 - 3.3 Influence on Productivity

If this project is carried out, the productivity will be greatly improved not only because of the energy saving and large scale reduction of greenhouse gas emission that are its major objectives (mentioned in 3.1 and 3.2), but also because of marked marked improvement in thermal efficiency and utilization rates using the latest highly efficient gas combined cycle electric power generation facilities. At the same time, by introducing the operation and control systems of the Distributed Control System (DCS), operation of the facilities will become easier and the number of operators and controllers can be reduced so that much higher productivity growth can be expected.

As for the annual electric power supply with the new combined cycle electric power plants of this project, after completion the following three stages are estimated. Productivity, when this project is realized, will be about 30 to 50 % higher than before the repair.

- From 2008 to 2012 2.5 billion kWh - From 2013 to 2017 3.0 billion kWh - From 2018 to 2043 3.7 billion kWh

With the realization of this project, the reliability and safety of electric power plants will be secured and the quality of supplied electricity will be improved.

It is also possible to expect improvement in worker productivity with the decrease of operators and administrative supervisors required for operation, control, and monitoring systems of the DCS and by the reduced working hours of repairmen required at the new facility.

-11-153 - -n-i54- 4. Cost performance of the project

-n-155- - II -156 - 4.1 Cost performance of the project (Financial internal rate of return: FIRR)

Profitability evaluation of the project implementation is generally performed through calculation of the internal rate of return (FIRR) or cost benefit ratio (B/C) and so on. This method has been utilized at Japan International Cooperation Agency (JICA), Japan Bank of International Cooperation (JBIC) and other international project execution organizations, for a long time.

As one of the methods of economical evaluation, calculation of the internal rate of return (FIRR) is an evaluation method of project profitability determined by obtaining the discount rate (internal rate of return called FIRR) that will make the total project expenses converted into the present value of the project break even with the total profit of the project converted into present value, and then compares the FIRR to the social discount rate, which may reflect the capital opportunity cost. This method is generally and widely applied for cases in various sectors.

A strict financial evaluation needs analysis of cash flow, rate of return on investment, review of the line of balance (LOB), analysis of fund management (current ratio, fixed asset ratio, capital and liabilities ) and so on. However, the object of this investigation is to study the feasibility of the project from the viewpoint of energy saving and reduction of greenhouse gas emissions, and subsequently, in this investigation, the internal rate of return (FIRR) is to be calculated based on the following conditions, in order to evaluate the project propriety, without conducting the detailed financial calculations mentioned above.

-H -157 - 4.1.1 Required costs for project implementation

Required costs for execution of this project are shown as Table 4.4-1 "Project costs". However, expenses related to the following items are not included in the above-mentioned project costs.

(1) land acquisition cost and various guarantee costs related to construction (2) costs for obtaining project approvals and licenses . (3) administrative expense during the construction period (4) cost for water, electricity, chemicals, fuel and so on during test operation (5) modification cost of existing transmission line.

-H-158- Table 4.1-1 Project Cost (Rehabilitation of Existing Steam Ttirbine Plant & Conversion to Gas Combined Cycle Plant 370 MW Block x 2) [unit: US$] Foreign Currency Local Currency Sr. No. Items Unit Q'ty Unit Unit Price Amount Price Amount

1 Present Value of Existing Plant lot 1 69,300,000

2 Rehabilitation of Existing Stream TXirbine Plant [Phase-1] 2.1 Rehabilitation of Boilers and Ancillaries 17,000,000 5,200,000 - Burner and control system unit 2 - Repair of damaged boiler tubes unit 2 - Control and instrument system unit 2 - Air heater unit 2 - Coal mills unit 2 - Air heater unit 2 - Piping and valves lot 1 - Thermal insulation and lagging lot 1 - Draft fans unit 2 - Inspection of ancillaries and repair as required unit 2 - Inspection and repair of ESP unit 2 2.2 Rehabilitation of Steam Turbine units and 3,000,000 1,200,000 Ancillaries - Bearing and shaft seals unit 2 - Condenser tubes and water boxes unit 2 - LO and hydraulic oil system unit 2 - Turbine control system unit 2 - Disassembling inspection of turbine and unit 2 generator, and repair as required

- Inspection of ancillaries and repair as required unit 2 - Control and instrumentation system unit 2 23 Rehabilitation of Electrical equipment lot 1 2,000,000 600,000 - Transformer oil analysis and treatment - Inspection of equipment and repair as required - Inspection of cables and replacement as required 2.4 Rehabilitation of Common Facilities lot 1 5,000,000 2,000,000 - Coal handling and storage facilities - Cooling towers and circulating water system - Ash handling - Water treatment

2.5 Contingency lot 1 4,000,000

[Phase-1 Total] 31,000,000 9,000,000

Sh-1/4

-n-159 - Table 4.1-1 Project Cost (Rehabilitation of Existing Steam Tbrbine Plant & Conversion to Gas Combined Cycle Plant 370 MW Block x 2) ______[unit: US$" Foreign Currency Local Currency Sr. No. Items Unit Q'ty Unit Unit Price Amount Price Amount

3 Block-1 Conversion to GCC [Phase-2] 3.1 (GCC : 70 MW Class 2-2-1) a No.1-1 70 MW GTG unit unit 1 17,000,000 b No. 1-2 70 MW GTG unit unit 1 17,000,000 c No. 1-3 80 MW STG unit including condenser unit 1 16,000,000 d No.1-1 HRSGunit unit 1 5,200,000 e No. 1-2 HRSG unit unit i 5,200,000 f Step up Trs., station Tr. & unit aux. Tr. lot l 1,800,000 g DCS control systems lot l 3,500,000 h Auxiliary facilities lot l 9,000,000 i Spare parts lot l 4,000,000 [Sub-total] 78,700,000 11300,000

32 Others a 220 kV switchgears to be replaced with new ones lot l 4,500,000 b Cooling tower and circulating water system lot l 6,500,000 [Sub-total] 11,000,000 2,500,000

33 Building and civil works a Site preparation lot l b Foundation works lot l c Building works lot l d Road and fencing lot l [Sub-total] 2,300,000 9300,000

[Phase-2 Total] 92,000,000 23300,000

4 Block-2 Conversion to GCC [Phase-3] 4.1 (GCC: 70 MW Class 3-3-1) a No.2-1 70 MW GTG unit unit l 17,000,000 b No.2-2 70 MW GTG unit unit l 17,000,000 d No.2-3 80 MW STG unit including condenser unit l 16,000,000 e No.2-1 HRSG unit unit l 5,200,000 f No.2-2 HRSG unit unit l 5,200,000 h Step up Trs., station Tr. & unit aux. Tr. lot l 1,800,000 i DCS control systems lot l 3,500,000 j Auxiliary facilities lot l 9,000,000 k Spare parts lot l 4,000,000 [Subtotal] 78,700,000 11300,000 Sh-2/4

-n -160 - Table 4.1-1 Project Cost (Rehabilitation of Existing Steam Turbine Plant & Conversion to Gas Combined Cycle Plant 370 MW Block x 2) [unit: US$] Foreign Currency Local Currency Sr. Unit No. Items Q'ty Unit Unit Price Amount Price Amount

4.2 Others a 220 kV switchgears to be replaced with new ones lot 1 3,000,000 b Cooling tower and circulating water system lot 1 6,500,000 [Sub-total] 9,500,000 1300,000

4.3 Building and civil works a Site preparation lot 1 b Foundation works lot 1 c Building works lot 1 d Road and fencing lot 1 [Subtotal] 2300,000 5,700,000

[Phase-3 Total] 90300,000 18,700,000

5 Block-3 Conversion to GCC [Phase-4] 5.1 (GCC : 70 MW Class 2-2-1) a No.3-1 70 MW GTG unit unit 1 17,000,000 b No.3-2 70 MW GTG unit unit 1 17,000,000 c No.3-3 80 MW STG unit including condenser unit 1 16,000,000 d No.3-1 HRSGunit unit 1 5,200,000 e No.3-2 HRSG unit unit 1 5,200,000 f Step up Trs., station Tr. & unit aux. Tr. lot 1 1,800,000 g DCS control systems lot 1 3,500,000 h Auxiliary facilities lot 1 9,000,000 i Spare parts lot 1 4,000,000 [Sub-total] 78,700,000 11300,000

5.2 Others a 220 kV switchgears to be replaced with new ones lot 1 3,000,000 b Cooling tower and circulating water system lot 1 6,500,000 [Subtotal] 9300,000 1300,000

53 Building and civil works a Site preparation lot 1 b Foundation works lot 1 c Building works lot 1 d Road and fencing lot 1 [Sub-total] 2,160,000 1,640,000

[Phase-4 Total] 90360,000 14,640,000 Sh-3/4

-n-161- Table 4.1-1 Project Cost (Rehabilitation of Existing Steam Tkrbine Plant & Conversion to Gas Combined Cycle Plant 370 MW Block x 2) ______[unit: US$~ Forei gn Currency Local Currency Sr. Items Unit Q'ty Unit Unit No. Amount Amount Price Price

6 New Block-1 Rehabilitation for life Extension [Phase-5]

[Phase-5 Total] lot 1 8,000,000 2,000,000

7 New Block-2 Rehabilitation for life Extension [Phase-6]

[Phase-6 Total] lot 1 5,500,000 1,500,000

138,640,00 [Total] 317,360,000 0 [Grand Total] 456,000,000

Sh-4/4

-n -162 - 4.1.2 Post project implementation cost

Costs incurred after commencement of the project operation include fuel cost (natural gas), maintenance cost, expenses for supplies and so on. Required costs for these items for the 41 year plant operation period are outlined below.

(1) Fuel cost

Natural gas : US$ 3.50/GJ, cost for large demand in present Bulgaria is used. Coal : Local coal, US$ 34.00/ton (7,000kcal/kg), US$ 1.16/GJ Imported coal, US$ 52.00/ton (7,000kcal/kg), US$ 1.77/GJ Mixed coal (using 70% imported coal and 30% local coal) is to be used at a cost of US$ 1.59/KJ. Fuel consumption is shown as Table 3.1-1.

(2) Operational maintenance cost (including expenses for supplies)

Operational maintenance cost is considered to be US$ 3.00/MWh for generated electric power as a variable expense and annual fixed expense of 1.5% of construction cost is to be prepared.

-H-163- 4.1.3 Cost Performance of the project (internal rate of return: FIRR)

The internal rate of return: FIRR is calculated on the basis that the operation period of the co-generation plant is to be 41 years after modification, in order to properly evaluate the project propriety.

(l)Prerequisite for calculation of FIRR l)Project cost (from Table 4.1-1 Project cost)

a. the first construction work: US$ 109,300, 000.00 (including emergency modification work of the existing facilities, and residual value of the existing facility to be US$ 69,300,000.00*) b. the second construction work: US$ 115,500,000.00 (CCGT No.l block newly installed) c. the third construction work: US$ 109,200,000.00 (CCGT No.2 block newly installed) d. the fourth construction work: US$ 105,000,000.00 (CCGT No.3 block newly installed) e. the fifth construction work: US$ 10,000,000.00 (CCGT No.l block modification) f. the sixth construction work: US$ 7,000,000.00 (CCGT No. 2 block modification)

total US$ 456,000,000.00

Note:l) When using an existing facility, the comparison is to be made by including the residual cost of the existing facility to make an impartial judgment.

2) Electricity rate

For the electricity dealing price, the following one which is converted into US$ value from the price shown by the Bulgarian side, is to be used. As for the exchange rate, the following numbers are used based on the official rate in December, 2000.

US$1.00 = ¥111 =2.20 Leva Electricity rate: US$ 0.035/kWh (generating end dealing value)

3) Auxiliary power consumption ratio The following numbers regarding station service power derived from the operation experience of the existing steam turbine co-generating plant and the newest similar gas combined cycle, are to

-H -164- be used for calculation. a. existing thermal power facilities (existing modified generating plant) *11.0% of generated output b. newly installed gas combined cycle generating plant *2.0% of generated output

4) Annual electric energy sales ■ 2003 to 2007: 2,500 GWh/year ■ 2008 to 2012 2,500 GWh/year ■ 2013 to 2017 3,000 GWh/year ■ 2018 to 2043 3,700 GWh/year

5) Plant life

The economical life of the gas combined cycle generating plant is usually 25 years or so. However, in this feasibility study (F/S), the life is defined to be 26 years and the project period is a 26 year operation period after completion of CCGT No.3 block.

6) Annual construction investment rate The investment rate for each fiscal year is shown in the following table.

-n-165 - Table 4.1-2 Construction cost for each fiscal year Fiscal year Investment (US$) Investment ratio(%) Remarks 2001 89,300, 000 19. 60 Emergency 2002 20, 000, 000 4.38 modification work on existing facility 2004 11,550, 000 2.53 New installation of 2005 28, 875, 000 6.33 CCGT No. 1 block 2006 46,200, 000 10. 13 2007 17, 325, 000 3.80 2008 11,550, 000 2.53 2009 10, 920, 000 2.39 New installation of 2010 27, 300, 000 5.99 CCGT No. 2 block 2011 43,680, 000 9.58 2012 16,380, 000 3.59 2013 10, 920, 000 2.39 2014 10,500, 000 2.30 New installation of 2015 26, 250, 000 5.76 CCGT No. 3 block 2016 42, 000, 000 9.21 2017 15, 750, 000 3.45 2018 10,500, 000 2.30 2033 10, 000, 000 2.19 Modification of CCGT No. 1 block 2038 7, 000, 000 1. 53 Modification of CCGT No. 2 block

7)Reduction amount of carbon dioxide gas emissions and dealing price of emission amount (Note: In the case of the JI project execution, the study was carried out as a part of the economical evaluation of the project, even though details regarding the distribution method of the C02 credit and so forth were not clearly disclosed until the COP6-II.)

a. Reduction amount of carbon dioxide gas emission (from Table 3.2-1 Reduction amount of carbon dioxide gas emissions) ■ 2003 to 2007 0 ton/year ■ 2008 to 2012 1,387,613 ton/year ■ 2013 to 2017 1,850,047 ton/year ■ 2018 to 2043 3,422,670 ton/year

b. Dealing price of emission amount Since the dealing price of the reduced amount of carbon dioxide gas emissions has not been clearly defined, the rate of return in this F/S is to be calculated based upon the presumption that the dealing price will be US$ 5.00/ton and US$ 10.00/ton. Also, the dealing amount of emission amount is presumed to be half of the reduction amount.

- II -166 - (2) Financial internal rate of return (FIRR) The calculation result of the financial internal rate of return (FIRR) is shown in Table 4-1-3. The detailed calculation of FIRR is shown as Tables 4.1-4,4.1-5 and 4.1-6.

Table 4.1-3 Rate of internal return (FIRR)

CO2 dealing price FIRR 0 5.66 %

US$ 5 /ton 10. 93 % US$ 10 /ton 14.23 %

As shown in the Table 4.1-3, when dealing in the reduced amount of carbon dioxide gas emissions is not taken into consideration, it is likely the project can not maintain good profitability without applying a soft loan such as a special environment yen loan by JBIG. Also, the Bulgarian government has evaluated and concluded that a soft loan such as that provided by the JBIG is absolutely necessary for maintaining a higher economical return rate and plant operation in a healthy economic situation.

As previously described, the key to the realization of this project is to obtain a soft loan such as a special environment yen loan and consequently, we, the company, will make our best efforts to realize the project under close collaboration with the Bulgarian government.

-B-167- ; : t i i : i < n i: 11 k 13 U K 11 17 1! Z 2 2! X 2 X 21 25 X 31 31 3 3 21 Z * * 37 * 35 43 41 41 4 1.16 1.77 1.5ij| 105662! n 1+r- 566% (Uni:US$) HJSSGJ]

|

| ______|| -1 78* 98 1513 1595 15*8 1505 1931 1,7* 1537 1551 1$ 1,461 4,176 3953 3741 3540 3350 3171 3501 28*0 2279 9283 457 452 4$0 5205 4,413 268! 2544 2156 20*1 425* 4927 4563 -5161 -2867 4238 15581 26257 -17914 -8*514 -10910 -13821

\tiuc

375 7500 «R= 36,000 (CXWn $S200tan $34BOton Resent 70%:$% »135Tfaim Rice Rice

1 || Gas Coal 198 8,77! 210 7.4Z 39* 492 792 679 9,19 452 -895! 6551 19,42 1492 1492 1492 1492 14,82 1365 1452 14921 1492 1492 14,82 1492 1492 1492 1492 1492 1492 1492 1492 1492 1492 1492 1492 1492 2050 30971 253* 22301

89$

-1592

27454

, Chi

income (Q

(kaHig) Domestic (USSGJ) Inportcd (WNcum) Net (CHAXB) Mixed ilij

20500 8540 80708 80071 855* 89$ 5652 73853 66073 96451 96221 95801 11155! 114)671 114571 114)671 114)671 114)671 114)671 114571 114)671 114)671 11263! 125,171 114)671 114)671 114)571 114)671 114)671 114/671 124)671 114)671 114/671 121/675 114)671 114)671 114)671 10272 127$ 101561 114)671 114)671 114)671 4,49248 Cast

|| 292! 292 292 292 292 676 676 676 676 639 639 639 639 639 676 127* 127* 127* 127*

127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127*

4215*

5 O&Os |US$GJ] KChsCoti

|| | (1(300$)

5359 5359 5359 5359 6276 7654 76541

5359 6276 6276 6276 76541 76541 76541 6276

10193! 10193! 10193! 10193! 10193! 10193! 1019* 10193! 10193! 1019* 10193! 10193! 10193! 10193! 1019* 10193! 10193! 10193! 10193! 10193! 10193! 10193! 10193! 10193! 101935 101935 Coa 3614921 7,200 Em AOOC Existing RriCht EbtRafe IfcaRac [kMtWh]

|| | 750 11550 11550 16501 17525 1693 16380 16920 1650 1600 15,750 89$ 26000 28)875 Z750 26251 4620 43580 42)30

45600

ton) d (« mo 250 400)300 1,155)0) 2547)50 3597)0) 0&M(V) (USVYttr] Cbnseuctian |US$MWh| O&MRrni 0.00/

1 | I | (

875® 87501 87501 87500 87500 87500 8750 87500 8750 8750

KBOOl 105)300 106)00 105)00 106)300 129501 129500 12950 12950 129500 12950 12950 12950 129500 129500 12950 12950 I2950(i 12950 129500 12950 129500 12950 12950 12950 12950 12950 12950 129501 12950 12950

4,767)30 am Tetil $63kW (AHaO)) csokw SSOOkW $520*W 4010 11550m I09$im 105000000 Blocks]

(CQ2=US$

|| |l || 1 ( ( ( 1 ( 1 1 1 1 C < ( ( ( 1 ( ( 1 ( 1 ( a C i c c 1 1 ( c 1 c 1 ( c ( c

$) 002

1000 2-2-1,3 [us$i [us$l (

RdttiB return a« an

Constotien Raimi Inane MW of

|| KBJOmfflcn 210

8750 8750 8750 8750 8750 8750 8750 8750 8750 8750 rate 10500 1Q50O 12950 12950 12950 10500 10500 10600 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950 12950

4,767)30 Vile

002 Sciei

Sail

(a) 000 Scil 0035 Resort

Energy (ISMcWh] Energy Reduced [AGCC KttcfEFCChl Internal

I ('ljlreiti; OOOOC am am 5 150000C I50000C 150QOOC I I50000C 200000C 200000C zoom 20 270000 270000 2700000 20 270000 270000 270Cm 2700000 2700000 270000 27000% 2700000 2700000 270Q0O 27ami 2700000 2700000 270000 270000 270000 270000 270000 270000 270000 270000 270000 270000 11270000 AOOC (MWh) Tfrble4.1-4 i i i i i i < i i i i i ( i i c i i i i i i i i 1 ( O O O m m am am 0000 0000 10000 I I 10000O loom 10 100 100000 100 100000 250000 250000 250000 25000X 250001 225 Energy

(MWh) Existing ScU a a a a a 25000a 20000 mm 2700000 Z50O001 25000a 25000a 2500000 250OOX 25000a 270000 25000 20000 20000 20000 27oooa OToooa 27000U 270000 270000 270000 270000 270000 270000 270000 270000 270000 270000 270000 250001 25000a 270000 270000 270000 270000 270000 270000 270000 27oooa 270000 270000 TttU (MWh) 136200000 | 1 1 ( 1 1 1530611 1530611 1530611 1,53061: 1530611 2040811 20*2811 2040811 2D408K 2040811 27755U 2775511 2775511 2775511 2775511 2775511 2775511 2775511 2775511 27755K 2775511 27755K 2775511 2775511 2775511 27755K 2775511 2775511 2775511 2775511 2775511 27755K 2775511 2775511 2775511 2775511

002 AOOC (MWh) AGOC 116020408

|| ! (pal 0 ( 1 1 1 0 1 ( ( ( 1 0 ( 1 1 1 1 1 ( < ( ( ( ( ( ( AircCcnsmp

1,122996 1,122276 1,122976 1,122956 1,122996 U22596 1,1229* 1,122991 1.1229* 1,1225*

28061989 28065851 280858 2806589 280858! Energy

Oil Existing Basing (MWh) 25280899 Gerald | | 16*412 265*3* 265*206 216*412 2772510 2772510 2775510 2772510 ZKS989 zsoem 2906989 2806989 263*206 265*208 265*206 2772511 2775511 2772511 2772511 2775511 3,16*412 216*412 216*41: 2772511 27725K 27755U 2772510 2772511 2772511 2772510 2772510 2772511 27725K 2772511 2772511 2806,989 2775511 2772511 2772511 27725K 2772511 It

IW Ttial [kW| 6,688 7534 5593 (Xpt (MWh) 420000 420000 630000 141$1$7 Charting d 2018 2001 2009 20H 2012 2013 2014 2002 2003 20$: 2029 2a* 203 2033 3331 2033 2031 20* 2017 2019 2020 202 2022 2023 2021 2023 202C 2028 2001 2005 200 2006 2011 $15 $1( 2001 am: 2332 20* 2037 20* 2041 2021 Year Thai : ‘ < ( ! 11 12 17 It 1 H i; V e 1( Z Z % 3 3 3 21 Z l z % z 2f 31 3: 31 3< 37 3! 3! 4 41 41

-168- * : i < ( 5 16 11 i: 1! IS 11 12 14 1! 1< n Z X 27 21 25 X 21 21 Z 22 2 31 37 * 3: 31 37 3! $ y 4( 41 4: 4:

1.77 1. 1.10933: " 1+f- 1003% (Unk:US$) [USSGJ]

II | i 8* 366 56 71! 93* 78 687 48- 55! 58 4% 48 -711 10* 1,74) 1571 1,421 1581 U5- 159 2151 258 228 131: 264) 2381 508 56* 4,44! 36* 125! 2037 88* 4675 4511 468 -5671 -2481 -818 12827 2269 -18251 -8849!

175 7/500 IRR= 38000 $5200tan $3400tai 70*35% (Oti+tm FYoatXtiuc S)l3SNcccm Rite Rice

|l Gas Coal 218 808 m -m 19,42! 1552! 1369 117* 1458 18)32 18445 1*195 21,4* 310* 310* 310* 310* 310* 310* 310* 310* 310* 210* 3IO* 310* 310* 310* 240$ 310* 310$ 310* 310* 3097 310$ 310* 310* 310* 3IO* 310* -1848 -13JQ51

-8958 -2081

8824* Income (9

(kaHtg) |US$GJ) liporlcd Domestic (klNaim) Net MbeodCcal (CHAKB) 1.59

85,48 855* 8958 2008 7359 8078 8007! 95001 5852 6307 9849 98221 111551 11467: H467: 1128* 11467 11467: 11467: 11467: H467: 11467: 11467: 11467: 11467 12467 U467: 11467: 11467 H467: 11467 H467: 11467: 11467: U467: 127501 10166! 125,17! 11467: 11467: 11467! 12167: 18272: 4,492451 (B) Ural |US$GI] CralCcd

|| 878 292! 292! 292! 2921 292! 8,76 378 378 378 839 839 839 839 839

127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 12731 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127* 127*

4215*

Cost

275 Gas

(UStGJ] O&Cca N.

|| (1000$)

5359 7854 7854 7854 7854 78541 53# 5359 5359 5359 62,76! 62,76 62,76 62,76 6276 10103! 101O3! 10103! 10103! 101O3! 10103! 10103! 1010* 101539 101039 10103! 10103! 10103! 10103! 1010* 1010* 1010* 1010* 1010* 1010* 1010* 1010* 1010* 1010* 101035 10103! Cost Rate Rate 3614921

72*3 12000 AGCC Basing Hal |kHcWh] Hat (WCod | | | | 70* 1159 16581 105* 105* 1159 1752: 10921 10921 1373 100* 275* 2829 895* 200* mr. 43681 420* 482* 4580*

1*1) 250 090 400000 1,155000 2247000 3297000 ARMS 0&M(V) (USVYrar) Ccnstuetkn [USVMWh| O&MRxod 5.00/ton)

1 1 875* 875* 875* 875* 875* 94,43 94,431 94,43! 94,431 94.43! 11429 11429 114291 11429 11429 146613 146613 148613 14861: 14861: 14861: 14861: 14861: 14861: 14861: 14861: 14861: 14861: 14861: 14861: 14861: i486): i486): i486!: 14861: i486': i486:: i486): 14861: i486): i486i: 5292881 Tend S53AW $520kW $9MW (AHitb) SSSOkW 4QOOOOOO 115500000 109200000 105000000 Blocks]

(CQ2=US$

II || || i i < < i

8931 8931 8931 8931 9,29 929 929 929 8931 929 17,11: i7.ii: i7.ii: i7.ii: I7.u: i7.ii: i7,ii: i7,ii: i7.ii: i7,ii: i7,ii: 17,112 i7.li: i7.ii: 17.112 17.112 i7.ii: i7.ii: i7.ii: i7.ii: i7.ii: i7,ii: i7.ii: i7.ii: i7,n: i7,ii: 525,881

002

2-2-1,3 (10001) [USD

I[US$| return

Rihiii

oe O Cod GnstuAn Raimi of Inexme mHan

MW MW

|| || $6)50 rate 210

875* 875* 875* 875* 875* 875* 875* 875* 875* 875* 1050* 1295* 1050* 1050* 1050* 1Q50* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295* 1295*

\titic 4,7670*

002

Scid Sctd

(a) 500 Sdti Brant Q035

[USMeWh) Energy Energy Reduced [AGCC Internal IO%cfEPCOs

(*l)6ieiife

II 1 ( 1 1 1 15000* 15000* 15000* 15000* 15000* 37000* 37000* 20000* 20000* 20000* 20000* 2*00* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 1137000* AGCC (MWh) Tablc4.1-5 ( ( 1 1 ( 1 1 1 1 1 1 1 ( 1 1 1 1 1 1 1 1 ( ( ( 1 1 10000* icoaoa 10000* 10000* 10000* 10000* loooo* loooo* 10000* 10000* 25000* 25000* 25000* 25000* 25000* 225000* Energy

(MWh) Basing Seid 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 25000* 25000* 30000* 30000* 30000* 30000* 30000* 370000 370000 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 37000* 370QO* 37000* 37000* 37000* 37000* 2500001 25000* 25000* 25000* 25000* 25000* 25000* 25000* 37000* Ttei (MWh) 138200000 1 ( 1 ( ( 153061: 153061: 153061: 153061: 153061: 3773511 20*0811 20*0811 20*0811 3773511 3773511 37735K 3773511 3773511 37735K 37735H 3773511 3773511 3773511 3775511 2W08K 20*0811 3773511 3773511 3773511 37735K 3773511 3775511 3773511 3773511 3773511 37735K 3773511 3775511 3775511 37735K om AGCC AGCC (MWh) 118020406

II [pul 1 1 1 1 1 1 ( 1 1 1 1 1 1 1 1 ( 1 ( ( 1 1 ( 1 ( ( ( AinCcraip

1,123# 1,123# 1,123#

1,123# 1,123# 1.123# 1.123# 1,123391 1,123# 1.123# 280898 280896 280898 280898 280896 an Existing BdSwig (MWh) 25,280899 GmcrafcdEnagy | | |

3773511 3773511 3773511 3773511 3773511 3773511 316*41: 3773511 3773511 3773511 3773511 3773511 3773511 3773511 3773511 3773511 280896 280898 2*5*201 265*201 265*3* 265*201 265*2* 3i6*4i: 280898 3773511 1* 3773511 3773511 3773511 3773511 3773511 37735K 3773511 3773511 3773511 3773511 280896 316*41: 316*41: 316*41: 2806198

!»] Ttti IkW) 5*3 m 733* CXipU (MWh) 420000 420000 630000 14130*307 Opening

1 : a 201 20*: 20t 203C 2031 20B2 2003 202 203: 20* 203 2031 20% 20*1 301 2011 2011 2021 202 202 2021 202 2021 202! 20K 201: 20i: 2016 30 20* 2021 20Z 20Z 200 200 200 200 200 301 201* 2001 200 200 Yeer Ural * 1 ■ < 11 u r if V If V, 1 V V If 11 1 t 3- V T if if 71 7. 7 % 7 7f 71 41 •v 4 41 71 z % 4

-169- 1 : 2 ! 4 ( ' 5 ; 11 i: 12 V 1! 1( 17 If 15 2 21 2 21 2 2f 25 21 21 Z 31 31 X X y X * 16 X 3$ 35 41 41 4 *

1.77 1. l.5S|| 14231:

1 n 1+r- (Unk:US$) 1423% (USSGJ)

1 : | C || *: 79! 18 161 901 6» 4* 53 461 is: 26$ 274 235 2IC 40$ 452 1® 1500 1621 1,76 15 15s 1.18 1® 557$ 7.129 843 350$ 259! 4538 4500 2538 351! 191! 142 1® 262 2X313 6857 -2652 11,405 2078 -78175 -15527

50%

>75 7®) IRR- (CXl+ffn $5200tai RaotXtiue SJtfDtan 70% $013SNcum Rice Rice

1 || Gas Cm) 2ia isa 491S 19.42 136$ 15®$ 11950 20® 3097! 2066$ 2159$ 2758C 27,700 224$ 3855: 49® 49® 49® 49® 49® 49® 49® 49® 49® 49® 49® 49® 49® 39® 49® 49® 49® 49® -89® 49® 42® 49® 49® 49® 36®) -15525 49® 49® -11,462

1528311 Ccel

(0 Income

(kraHig) [USSGJ] liportcd Dameak Nd (CXAXB) (WNcum) Mixed l.5S|

895a 20® 5652 85,40 73,851 80® 8007$ 8553$ 6807! 9645$ 9622 95® 11283$ 11155 102® 114675 127® 114675 11467: H467: 11467: 11467: 11467: 11467: 11467: 11467: 104051 125,175 11467: 11467: 11467: H467: 12167: 11467: 11467! 11467! 11467! 11467! 12167! 11467! 11467! 11467! 11467! 4,492451 ® ltd (IJSSGJ] CcalCcfl

|| ® ® ® ® 2® 292f 292$ 292$ 292$ 8,76C 87® 8760 6393 6393 6393 6393 6393 8760 876C 12® 12® 12® 12® 12® 12731 12® 12® 12® 12® 12® 12® 12® 12® 12® 12® 12® 12® 12® 12® 12® 12®

12 12 12 12

4215*

Cost

175 Gas

O&Coa [UStGJ] N.

|| | (1000$)

® ® ® ®

5159" S3® 53® 53® 53® 62,7® 62,7® 627® 627« 627® 7651 7651 7654 76541 76541

101® 101® 101® 101® 101® 101® 101® 101® 101® 101® 101® 101® 101® 101® 101® 101® 101® Cat 101® 101® 101® 101® 101 101 101® 101 101 3614® Rate

75® 12®) AOCC RriCca Exiting Hal IfcaRze IklkWhl 1 | | | 7® 11® 1752! II® 1091 16583 10920 10® 89® 20® 15,750 10500 2852 46® 27® 26® 10® 4168C 42®

456®

|

® (*D 2 090 4®®) &RMS 1,155® 2®7® 1297® Ganshtikn 0&M(V) lUSWrar) [USSMWhl O&MRxcd 10.00/ton) c

87® 87® 87® 87® 87® 101571 101JX 101576 101576 101576 123® 123® 123® 123® 123® 161727 161727 161727 161727 161727 161727 16172) 161727 161727 16172 161721 161727 16172 16172 16172 16172 16172 16172 16172 16172 16172 16172 16172 16172 16172 16172 551872 Told (AHatb) $SVVW $550kW $S20kW JSOttW 40000®) 115500®) 109®)®) lasjooooro Blocks]

II || || (CQ2=US$ 11876

11876 11876 11876 11876 18® 18® 18®l 18®! 18® 1422 >422 >422 1422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422 >422

1735477: 002

2-2-1,3 (10001) (US$) (US$) 0»

Mda Goa Cos return Reduced Ccnstulian Incane MW of

|| | 210 $6930ntiSm

8750 8750 8750 87® 87® 87® 87® 87® 87® 87® 105® 105® 105® 105® 1(6® 129® 129® 129® 129® 129® 129® 129® 129® 129® 129® 129® 129® 129® 129® 129® 129® rate 129® 129® 129® 129® 129® 129® 129® 129® 129® 129®

4,767®

002

Sold

(a) ScH 10® Root Ofl35

EnagySdd [USSkWh] Energy CAGCC Reduced Internal 10%cfHCCoa

(♦IJfcriude |l II 1500® 1500® 1500® 1500® 1500® 2®tm 2000m 2®tm 2000® 2®ira 2700® 2700® 2700® 1700® 2700® 1700® 170Q® 1700® 2700® 1700® 1700® 170Q® 270Q® 2700® 2700® 1701® 2700® 2700® 1700® 2700® 2700® 1700® 2700® 2700® 2700® 1700® 111700® AOCC (MWh) Thble4.1-6 i i i i i ( ( i i i i i i i ( i i i c c 1 1 ( 1 ( 1 UKora u$om i®wm i®im 1®1OT urn® imm i®i® 2500® uooo® i®ira 2500® 2500® 2500® 2500® 22500® Energy

(MWh) Exsfog Sdd 250OC0C 25000a 25000% 25000a 25000a 2500000 250000C 2500000 2500000 2500000 lOOClOa looooa icoooa 10000a 10000a ITOooa 17000a 1700® 1700001 1700® 1700® 1700® 1700® 2701® 1700® 1700® 1700® 2700® 1700® 1700® 2700® 1700® 2700® 1700® 1700® 1700® 1700® 1700® 2700® 1700® 1700® mu (MWh) 1362000® | 1630612 1630612 1530612 1530612 1530612 2010816 2010816 1010816 20*1811 20*181( 1771511 1771511 17755K 1771511 1771511 1771511 17715K 1771511 1771511 17715K 1775511 1771511 17715K 1771511 1771511 1771511 17715K 1771511 1771511 1771511 1771511 17715K 17715K 17715K 1771511 1771511

am AOCC (MWh) AOCC 116020408

|| 1 1 1 1 1 ( 1 1 1 1 1 1 1 1 1 1 1 1 1 ( ( [pu] ( c ( 1 ( AinGcnsmp

1,121596 1,121596 1,121596 1,121596 I.IHS6 1,11136 1,111596 1.12136 4121591 1,121591 1808989 1806989 1808989 1808989 1808989

Enogy

an Existing (MWh) Exiting 25180899 Generated 1 1 | | | | 1( 2808985 1808985 2808985 2808965 1808985 1654208 1654208 2654208 1654208 2654208 3.164412 1164412 1164412 116441: 3,775511 1775511 1771511 1771511 1771511 116441:

1771511 1771511 1771511 1771511 1771511 17715 1771511 1771511 1771511 1771511 1771511

1771511 1771511 1771511 1771511 1771511 1771511 1771511 1771511 1771511 1771511

mu Plr] IkW] m 75M 1993 (MWh) CXipu 420600 420000 630000 1413)4307 C^uawiglfc 200 201 200 200 200 200 2oa 200 2oa 201( 200 2012 2013 2014 2017 2018 5)26 2027 2028 2013 2016 2029 2030 203 203: 2019 202C 202 2022 2023 202 2025 203: 203. 203! 2036 203: 2031 200! 20* 2011 20$: 2013 Yea- mu ' 4 t 1 1( i; 14 17 12 15 16 ii 1! •il a 31 21 2! Z z 2 2f 21 31 2. 2 2 3! z 3( 2 31 2 41 41 4: 4:

. -170- 4.2 Cost effectiveness of the project

Following is the cost effectiveness analysis of implementing this project evaluated by construction cost for each ton of carbon dioxide emission amounts over a 41 year economical calculation period.

(1) Project cost (from Table 4.1-1) Total project cost: US$ 456,000,000.00 a. the first phase: US$ 109, 300,000.00 b. the second phase: US$ 115, 500,000.00 c. the third phase: US$ 109, 200,000.00 d. the fourth phase: US$ 105,000,000.00 e. the fifth phase: US$ 10,000,000.00 f. the sixth phase: US$ 7,000,000.00

(2) Effectiveness of project of energy saving cost The amount of fuel consumption reductions for a 41 year period is 697,689TJ as shown in Table 3.1-1. This amount corresponds to the equivalent of 16.37 million ton crude oil.

Cost effectiveness: ■ total energy saving effect during the 41 year period: 697,689TJ( 16,369,991 ton crude oil equivalent) ■ total investment: US$ 456,000,000.00 ■ total energy saving amount per US$ 1 modification work cost (crude oil equivalent tonnage): 0.0359 ton ■ construction cost per 1 ton (crude oil equivalent tonnage):of energy saving amount: US$ 27.86

Cost effectiveness for each fiscal year is shown in Table 4.2-1 Cost effectiveness of energy saving.

(3) Amount of carbon dioxide emission reductions The amount of carbon dioxide emission reductions during the 41 year period is 105,177,720 tons as shown in Table 3.2-1 Amount of carbon dioxide emission reductions:

-n-171 - Cost effectiveness H Amount of carbon dioxide emission reductions during the 41 year period: 105,177,720 ton

M Total investment: US$ 456,000,000.00 ■ Amount of carbon dioxide emission reductions per each US$ 1 of modification work cost: 0,2307 ton ■ Construction cost per each ton of the amount of carbon dioxide emission reductions: US$ 4.34

Cost effectiveness for each fiscal year is shown as Table 4.2-2 Cost effectiveness of reduction of carbon dioxide emissions.

No details of the emission amount dealing will be disclosed before COP6-II. However, revenue balancing to input cost can be obtained solely by selling-out the reduction amount of carbon dioxide emissions when the dealing price of the reduction amount is higher than US$ 8.68/ton, with the condition that a half of the reduction amount can be sold out.

The above analysis indicates that cost effectiveness is sufficiently high and taken with energy saving effects and reduction in greenhouse gas emissions the implementation of this project is deemed a good proposition.

-H-172- Table 4.2-1 Cost effectiveness of energy saving

Accumulated energy Annual Energy saving Construction Accumulated saving converted Cost Cost Fiscal energy converted into cost construction cost into crude oil effectiveness effectiveness year saving crude oil equivalent equivalent [US$] [US$] [TJ] [ton] [ton] [ton /$] [$/ton] 1 2001 89. 300, 000 89, 300, 000 0 0 0 0 - 2 2002 20, 000,000 109, 300, 000 0 0 0 0 - 3 2003 0 109,300, 000 0 0 0 0 - 4 2004 11, 550, 000 120,850, 000 0 0 0 0 - 5 2005 28, 875, 000 149,725, 000 0 0 0 0 - 6 2006 46, 200, 000 195,925, 000 0 0 0 0 - 7 2007 17. 325, 000 213,250, 000 0 0 0 0 - 8 2008 11. 550,000 224,800,000 9,205 215. 978 215, 978 0. 0010 1040. 84 9 2009 10, 920, 000 235,720, 000 9, 205 215, 978 431, 957 0. 0018 545. 70 10 2010 27, 300, 000 263,020, 000 9,205 215, 978 647, 935 0. 0025 405. 94 11 2011 43, 680, 000 306,700, 000 9,205 215, 978 863, 914 0. 0028 355. 01 12 2012 16, 380, 000 323,080, 000 9,205 215, 978 1.079.892 0. 0033 299.18 13 2013 10, 920, 000 334,000, 000 12, 272 287, 940 1.367.832 0. 0041 244 18 14 2014 10, 500, 000 344, 500, 000 12. 272 287, 940 1, 655, 772 0. 0048 208. 06 15 2015 26, 250, 000 370, 750, 000 12, 272 287, 940 1, 943, 712 0. 0052 190. 74 16 2016 42,000, 000 412, 750, 000 12, 272 287, 940 2, 231, 652 0. 0054 184 95 17 2017 15, 750, 000 428, 500, 000 12,272 287, 940 2,519, 592 0. 0059 170. 07 18 2018 10, 500, 000 439, 000, 000 22.704 532, 708 3, 052, 299 0. 0070 143. 83 19 2019 0 439, 000, 000 22, 704 532,708 3, 585, 007 0. 0082 122.45 20 2020 0 439, 000, 000 22, 704 532, 708 4, 117,715 0. 0094 106. 61 21 2021 0 439, 000, 000 22, 704 532, 708 4, 650,422 0. 0106 94 40 22 2022 0 439, 000, 000 22, 704 532, 708 5, 183,130 0. 0118 84 70 23 2023 0 439, 000, 000 22, 704 532, 708 5, 715, 838 0. 0130 76.80 24 2024 0 439, 000, 000 22, 704 532. 708 6, 248, 545 0. 0142 70.26 25 2025 0 439,000, 000 22, 704 532, 708 6, 781, 253 0. 0154 64 74 26 2026 0 439,000, 000 22,704 532,708 7, 313, 961 0. 0167 60.02 27 2027 0 439,000, 000 22, 704 532, 708 7, 846, 668 0. 0179 55. 95 28 2028 0 439, 000, 000 22, 704 532, 708 8, 379, 376 0. 0191 5139 29 2029 0 439, 000, 000 22. 704 532, 708 8, 912, 084 0. 0203 49.26 3C 2030 0 439, 000, 000 22, 704 532, 708 9,444, 791 0. 0215 46.48 31 2031 0 439, 000, 000 22,704 532, 708 9, 977,499 0. 0227 44 00 32 2032 0 439, 000, 000 22, 704 532,708 10, 510, 206 0. 0239 41. 77 33 2033 10,000, 000 449, 000, 000 22, 704 532,708 11,042, 914 0. 0246 40. 66 34 2034 0 449, 000, 000 22, 704 532, 708 11, 575, 622 0. 0258 3&79 35 2035 0 449, 000, 000 22, 704 532, 708 12, 108, 329 0. 0270 37.08 36 2036 0 449, 000, 000 22, 704 532, 708 12, 641, 037 0. 0282 35.52 37 2037 0 449, 000, 000 22, 704 532. 708 13, 173, 745 0. 0293 34 08 38 2038 7, 000, 000 456, 000, 000 22,704 532, 708 13, 706,452 0. 0301 3127 39 2039 0 456, 000, 000 22,704 532,708 14, 239,160 0. 0312 3102 40 2040 0 456,000, 000 22, 704 532,708 14.771. 868 0. 0324 30.87 41 2041 0 456, 000, 000 22, 704 532. 708 15, 304, 575 0. 0336 2180 42 2042 0 456, 000, 000 22, 704 532. 708 15,837. 283 0. 0347 28.79 43 2043 0 456, 000, 000 22. 704 532. 708 16, 369, 991 0. 0359 2186 456, 000, 000 697, 689 16, 369, 991

-H-173- Table 4.2-2 Cost effectiveness of reduction of carbon dioxide gas emissions

Reduction amount Accumulated reduction Fiscal Construction Accumulated Cost Cost of carbon dioxide amount of carbon year cost construction cost effectiveness effectiveness gas emissions dioxide gas emissions [US$] [US$] [ton] [ton] [ton /$] [$/ton] 1 2001 89, 300, 000 89. 300, 000 0 0 0 - 2 2002 20, 000, 000 109, 300, 000 0 0 0 - 3 2003 0 109, 300, 000 0 0 0 - 4 2004 11, 550, 000 120, 850, 000 0 0 0 - 5 2005 28, 875, 000 149, 725, 000 0 0 0 - 6 2006 46, 200, 000 195, 925, 000 0 0 0 - 7 2007 17, 325, 000 213, 250, 000 0 0 0 - 8 2008 11,550,000 224, 800, 000 1, 387, 613 1.387. 613 0. 0062 162. 00 9 2009 10, 920, 000 235, 720, 000 1, 387, 613 2, 775, 226 0.0118 84.94 10 2010 27, 300, 000 263, 020, 000 1, 387, 613 4. 162, 839 0. 0158 63.18 11 2011 43, 680, 000 306, 700, 000 1, 387, 613 5, 550, 452 0. 0181 55. 26 12 2012 16, 380, 000 323, 080, 000 1, 387, 613 6, 938, 065 0. 0215 46.57 13 2013 10, 920, 000 334. 000, 000 1. 850, 047 8,788.112 0. 0263 38.01 14 2014 10, 500, 000 344, 500, 000 1, 850. 047 10, 638, 159 0. 0309 32.38 15 2015 26, 250, 000 370, 750, 000 1. 850, 047 12,488, 206 0. 0337 29.69 16 2016 42, 000, 000 412, 750, 000 1, 850, 047 14, 338, 253 0. 0347 28.79 17 2017 15, 750, 000 428, 500, 000 1, 850, 047 16, 188. 300 0. 0378 26.47 18 2018 10, 500, 000 439, 000, 000 3, 422, 670 19, 610, 970 0.0447 22.39 19 2019 0 439, 000, 000 3.422, 670 23, 033, 640 0. 0525 19.06 20 2020 0 439, 000, 000 3, 422, 670 26,456,310 0. 0603 16.59 21 2021 0 439, 000, 000 3, 422, 670 29,878. 980 0. 0681 14. 69 22 2022 0 439, 000, 000 3. 422, 670 33, 301, 650 0. 0759 13.18 23 2023 0 439, 000, 000 3,422, 670 36, 724, 320 0. 0837 11. 95 24 2024 0 439, 000, 000 3, 422, 670 40,146, 990 0. 0915 10.93 25 2025 0 439, 000, 000 3, 422, 670 43, 569, 660 0. 0992 10.08 26 2026 0 439, 000, 000 3, 422, 670 46, 992, 330 0.1070 9.34 " 27 2027 0 439, 000, 000 3, 422, 670 50,415, 000 0.1148 8.71 28 2028 0 439, 000, 000 3, 422, 670 53, 837, 670 0.1226 8. 15 29 2029 0 439, 000, 000 3, 422, 670 57, 260, 340 0. 1304 7.67 30 2030 0 439, 000, 000 3. 422, 670 60, 683, 010 0.1382 7.23 31 2031 0 439, 000, 000 3, 422, 670 64, 105, 680 0. 1460 6.85 32 2032 0 439, 000, 000 3,422, 670 67, 528, 350 0. 1538 6. 50 33 2033 10, 000, 000 449, 000, 000 3, 422, 670 70, 951, 020 0. 1580 6.33 34 2034 0 449, 000, 000 3,422, 670 74, 373, 690 0. 1656 6.04 35 2035 0 449, 000, 000 3,422, 670 77, 796, 360 0. 1733 5. 77 36 2036 0 449, 000, 000 3.422, 670 81, 219, 030 0. 1809 5.53 37 2037 0 449, 000, 000 3,422, 670 84, 641, 700 0. 1885 5. 30 38 2038 7,000, 000 456, 000, 000 3.422. 670 88, 064, 370 0. 1931 5.18 39 2039 0 456, 000, 000 3,422, 670 91,487, 040 0. 2006 4.98 40 2040 0 456, 000, 000 3, 422, 670 94, 909, 710 0. 2081 4.80 41 2041 0 456, 000, 000 3,422, 670 98.332, 380 0. 2156 4.64 42 2042 0 456, 000, 000 3,422, 670 101, 755, 050 0.2231 4.48 43 2043 0 456, 000, 000 3, 422, 670 105,177, 713 0. 2307 4.34 456, 000, 000 105, 177, 713

-H-174- 4.3 Others

(1) Sensitivity analysis

As shown as Table 4.1-3 in the section 4.1.3. (2), only in the case that a soft loan such as

JBIG is applied, will the internal rate of return (FTRR) stay at the balancing level of the

project economy, that is FTRR equals 5.66%, when the dealing amount of reduced carbon

dioxide emissions is entirely neglected. A sensitivity analysis was conducted to determine

the possible influence of changes in project costs, fuel costs and electricity selling costs on

the economic balance of project estimates. The results of this analysis are outlined below.

1) when construction cost rises by 10%:FTRR = 4.35% (Refer to Table 4.3-1)

2) when construction cost falls by 10%:FTRR = 7.21 % (Refer to Table 4.3-2)

3) when prices of natural gas and coal rise by 10%: The FTRR becomes a negative value and the project balance can not be maintained (Refer to Table 4.3-3)

4) when prices of natural gas and coal fall by 10%: FTRR = 9.18% (Refer to Table 4.3-4)

5) when the electricity selling price is US$ 0.04/kWh: FTRR = 16.73% and the project can maintain a satisfactory balance . (Refer to Table 4.3-5)

6) when the electricity selling price is US$ 0.03/kWh: the FTRR becomes negative and

the project can not maintain satisfactory balance. (Refer to Table 4.3-6)

- H -175 - 2 3 8 4 5 6 7 9 1C II 12 13 14 15 16 17 18 IS 23 24 2! 26 28 2C 21 22 27 29 3C 33 34 35 36 31 32 37 38 39 42 4C 41 43 59|| 16

1. 1.77 1. US$)

n 1.043456 1+r- 425% [USVGJ] (Unit:

I | || -c 12! -636 1.04: 127( 1,101 1.489 8,849 3,929 4,238 4,292 5,445 5,22: 5® 4,796 3,877 3,716 3,413 3,271 4261 6,466 6191 5,93: 5,686 4297 4.40! 4.22: 4,016 3.134 3,® 2,759 2,644 2234 2.42* 2227

-7,714 -4,966 15,412 27,264 -87,498 -20,206 -15274 -18,677 -13,531

Vtiue

3.75 7,0® nw= 36.0® (Cy(Hr)-n $52(XPton $34.0O4on 70%:30% Present 50.135/Ncu.m Price Price

|| || Gas 209 Coal -787

5222 6,215 7,462 7,924 2,149 2,946 4,496 7,496 -9,401 18,270 112*18

14,496 14,496 14,496 14,496 14,496 14,496 14,496 14,496 14,496 14,496 14,496 14,496 14,496 14,49( 14,496 14,496 14,496 14,496 14,496 14,496 14,496 14.496 14,496 30,975

•912® -22,0® -19,845 -11,803 -29,821 -26,726 227201 Coal

Income (Q

sported sported

(keal/kg) Domestic [USVGJ] 1 Net (kJ/Ncam) (CMAHB) Mixed

1.59 22,0® 88,287 912® 56225 81,978 81,285 87,291 69,230 75282 99203 97238 97,076 115® 107,345 117221 114,401 115,004 115,® 115® 115,® 115® 115® 115® 115® 115® 115® 115® 115® 115® 131,726 102,851 126254 115,004 125® 115® 115® 115® 122,001 115® 115,® 115® 115® 115,® Cost

4239,699 (B) Total [USVGJ) Coal

||

2,928 2,928 2,928 25728 22728 6208 6208 6208 6208 8,985 8,985 8,985 858! 8,98! 6208

13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13,06! 13.06! 13,06! 13.06! 13,06! 13,06! 13,06! 13,06! 13.06! 431,809

Cost

Cost

3.75 Gas cost) 05: [USVGJ] N.

|| | (10®$)

53297 53297 53297 53299 53297 62,765 62,765 62,765 76241 76241 76241 62,765 62,76! 76241 76241 Cost 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101.93! 101,93! 101,93! 101,93! 101.93! 101,93! 101,939 Rale Rate Cost

3.614.92C 7,2® 12,0® AGCC Existing Pud Heal [kJ/kWh) Heat

|| -

7.0® construction construction

12,705 19,058 12,705 12,012 11250 18,018 12,012 17225 11250 10,0® 22,0® 31,763 30,030 912® 50,820 48,018 28,875 46,2® 492,970 of Fixed

(*1) 220 0.90 Rehabili

4®,0® 1,2702® & 2,471,7® 3,626,7® G&M(V) [USVYear] Construction [USVMWhl O&M rise

c 0 872® 87200 872® 872® 872® 872® 872® 872® 872® 872® 105,0® 105,0® 105,0® 105,0® 105,0® 1292® 1292® 1292® 1292® 1292® 1292® 1292® 1292® 129200 1292® 1292® 1292® 1292® 1292® 1292® 1292® 1292® 1292® 1292® 1292® 1292® 1292® 1292® 1292® 1292® 1292® 10% 4.767.0®

Total of $63/kW (A)-(atb) $55®W $52McW SSOtVkW

44,000,000 120,120,000 115200.000 127,050,000 Blocks]

|| || || || 0 0 0 0 0 0 0 0 ( 0 a d ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( c c c c t c c ( c c 3 case

C02

(in 2-2-1, (1000$) |US$|

[US$1 (b)

Rehabili million

Cost Cost Reduced Construction MW

Income $69.30

II || 210

(XX oa oa (F1KR)

Vtiue

87200 87200 87200 87200 87200 87200 87200 87200 87200 87200 105,000 105,000 105, 105, 105, 1292a 1292a 1292a 1292a 1292a 1292a 1292a 1292a 1292a 1292a 1292a 1292a 1292tt 1292a 1292a 1292a 1292a 1292a 1292a 1292a 1292a 1292a 1292a 1292a 1292a 1292a

4,767,0a

C02 Sold

Sold

Present

(a) [AGCC 0.00 Sold 0.035 Energy lUSVkWhl Energy Reduced return

)lndudc

10%ofEPCCtei 1

1 1 (* of 0 0 0 0 1

ood oa oa ax oa oa oa oa oa 1200,000 1200,000 1200,000 1200, 1200,0a 2,000,0a 2,000,0a 2,000,0a 2,000,0a 2,000,0a 3.700, 3,700,ax 3,700,0a 3.700.0X 3,700,ax 3,700, 3,700,0a 3.700.OX 3,700.0a 3.700.0X 3.700, 3.700.OX 3.700.OX 3,700, 3.700.OX 3,700,0a 3.700.OX 3,700,0a 3.700.OX 3,700, 3.700, 3,700, 3.700.0X 3,700,0a 3,700,0a 3.700.0X rate 113,700,

AGCC (MWh) ( 1 ( ( 1 1 1 1 1 ( 1 1 ( 1 ( 1 1 1 1 1 1 1 1 1 1 1 ood 1,000,000 1,000,000 1,000,000 1,000,000 1,000, 1,000,000 1,000,000 l,ooo,ax 1,000,0a 1.000.0a 2200,000 2200,000 2200,000 2200,000 2200,000 Internal Energy 22200,0a

(MWh) Existing Sold 4.3-1

ood oa oa oa oa oa ax oa 700,ax 2200,000 2200,000 2200,000 2200,001 2200,0a 2200,000 2200, 2200,000 2200,0a 3,000,0a 2200,0a 3,000,0a 3,000,0a 3,000,0a 3,000,0a 3,700,0a 3,700, 3,700, 3,700, 3,700,ax 3,7C0,ax 3,700,ax 3,700,0a 3,700,0a 3,700, 3,700,0a 3,700, 3,700,ax 3,700,0a 3,700,0a 3,700,ax 3,700,0a 3,700,0a 3,700, 3,700,0a 3, 3,700,0a 3,700,0a 3.700, 3,700,0a 3,700.ax Total (MWh) Table 136,200,000 | 0 0 0 0 0

1230,612 1230,61: 1230,61: 1230,61: 1230,61: 2,040,811 2,010,811 2,010,811 2,010,811 2,010,811 3.7752K 3,775211 3,775211 3,775211 3,775211 3.775211 3,775211 3,775211 3,775211 3,775211 3,775211 3,775211 3.7752U 3,775211 3,775211 3.7752U 3.7752K 3,775211 3,775211 3,775211 3,775211 3,775211 3,775211 3.7752H 3,775211 3.7752H 0.02 AGCC (MWh) AGCC 116,020,408

II 0 c 1 1 1 1 1 1 1 1 1 1 1 1 1 ( 1 1 1 ( 1 1 1 1 1 1 lpu.|

Aux.Ccnsmp.

Energy 1,123296 1,123296 1,123296 1,123296 1,123296 1,123296 1,123296 1,123296 1,123296 1,123291

2,808,989 2,808.989 2,808,989 2,808,989 2,808,989 011 (MWh) Existing Existing 25,280,899 Generated | | | | | | 1(

Hr.

2,808,989 2,808,989 2,808,989 2,808,989 2,808,989 2,654,208 2,654,208 2,654,208 2,654,208 2,654,208 3,161,412 3,164,412 3,164,41: 3.77521C 3.7752511 3,164,41: 3,164.413 3,7752K 3,775,5 3.77525K 3.7752K 3.7752K 3,775216 3.77521C 3.77521C 3,775,511 3.7752K 3,7752511 3,775211 3.7752H 3,775211 3,775211 3,775211 3,775211 3,775211 3,775211 3,775211 3,775211 3,775211 3,775211 3,775211 [Hr| Total [kW] 6,688 7234 5,993 (MWh) 420,000 420,000 630,000 141201207 Operating 2011 2001 2005 2006 2007 2008 2009 2002 2003 2004 2017 2023 2024 2027 2010 2012 2013 2014 2015 2030 2031 2032 2033 2034 2018 2019 2020 2021 2022 2025 2026 2028 2029 2016 201: 2013 203! 203< 2037 2031 203! 2016 2011 Year Total 7 8 3 4 5 ( 9 ; 11 10 i: i: 17 If IS 14 i: 1( 21 2; 22 24 2! 26 27 2: 2S 3( 31 32 32 34 3 36 37 3f 35 2t 42 43 4C 41

-176- 1 2 3 4 5 ( 7 8 9 16 11 12 13 14 15 16 17 19 24 1C 25 26 3C 32 33 35 37 38 39 2C 21 22 27 28 29 31 34 36 4C 41 42 43 59||

1.77 1. 1. US$)

1.072074 » l*r- 731% [USVGJ] (Unit:

1 | C || 874 81! 519 579 76C 937 1,879 1,752 1,634 1,422 13% 1,237 1,154 1,00 1,612 1,761 I.63C 2,852 2.66C 2,482 3,768 3314 3378 3,058 2315 2,159 2,014 3322 3,953 4,039 4,08! 9,451 4.62C 4,613 9,699

-6.985 -3,048 -1302 -5,871 1538C 25,139

-81,431 -15,661 n

‘

Value

3.75 7,000 IRR= 36,000 $52.6KYion $34.001on (Cy(l+r) 7056:30% Present $0.l356Ncu.m Price

Price

s |l Ga Coal

5,155 8,155 4,988 8,062 8.63C 3,716 5,74! 5.70!

-6,112 -3,701 15,15! 15,155 15,155 15,15! 15,15! 15.155 15,155 15,155 15,155 15,155 15,155 15,155 15,155 15,155 15.155 15,15! 15,155 15,155 15,155 15,155 15,155 10,096 10,474 15,155 15,155 15382 2038C 30,97! -10,605 -17,876 -8730 -is,oa -20,854 321,787 !) Coal

Income (C)

(kcaVkj Domestic Imported IUSVGJ1 (kJ/Naim) Mixed Net (Q-CAHB) S9||

oa

1. 18, 8730 82312 72,117 83,784 56325 665*2( 98,105 79,437 78.87C 93,612 94,90) 94,526 99,251 114345 114345 114345 114345 114345 114345 114345 114345 114345 1143451 11434! 11434! 114345 11434! 11434! 11434! 114345 114345 11434! 11434! 114345 1213*5 11434! 114345 122,876 124345 108.354 108,701 123,79! 4,445,21: (B) Total (USVGJ| CoalCal

II

8436 8436 8436 2,928 2,928 2,928 8436 8436 2,928 2,928 6,277 6.277 6,277 6,277 6,277 12,406 12,406 12,406 12,406 12,406 12,406 12,406 12.406 12,406 12,406 12,406 12,406 12,406 12,406 12,406 12,406 12,406 12,406 12,406 12,406 12,406 12,406 12,406 12,406 12,406 12,406 411,265

Cost

3.75 Gas [USVGJ] cost) O&Cot N.

II || 61000$)

76441 76441 76441 76441 76441 53497 53497 53497 53497 53497 62,765 62,765 62,765 62,765 62,76! 101,939 101,939 101,939 101,93! 101.93! 101,93! 101,93! 101.93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 101,93! 1015*3! 1015*3! 101,93! 101.93! 101,93! 101,939 101.939 101,93! 101,93! 101,93! 10I5>3! Cost Rale

Rate 3,614,926 7,200 12,000 AGCC Existing [kJ/kWh] Heat Heal

|| || 7,006] 9,828 9,456 9,456 9,82! construction construction 10,006 14,175 18,006 1049! 1549! 14,741 10495 23,62! 37,806 87406 25,98! 24476 39411 41486 419,036

fixed of

2.50 (♦i) 0.90 400,000 1,039400 2,022400 2,967400 ARchabtli 0&M(V) (USVYcar] lUSVMWhl Construction O&M fall

C C 87406 8740C 8740C 87406 87406 87406 87406 87406 8740C 87406 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 105,006 105,006 105,006 105,006 105,006 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 10%

4,767,006 Total of S63AW $556McW $526VkW S506VkW

(A)-(a+b) 36,000,000 98,280,000 94400.000 160,950,000

i | 1 Blocks]

ll 0 0 0 0 0 0 6 6 6 0 0 0 6 6 6 6 6 6 6 6 6 6 6 61 c 6 6 6 C C C C c 6 C 6 ( ( ( ( 6 C 3 case

COZ (in

(1000!) 2-2-1, (b)

million Rehatili

Cost|US$l Reduced Construction MW

Income $69.30

|| || 210

Wue

Cos|US$|

8740C 87406 87406 87406 8740C 8740C 87406 87406 87406 87406 129400 129400 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 129406 129400 129400 129406 105,006 105,006 105,006 105,006 105.006 129406 129406 129406 129406 129406 129406 129406

4,767,006

C02

Sold Sold

Present

(a) [AGCC 0.00 Sold 0.035 ofEPCCost

lUSMcWh] Energy Energy return(FTRR) Reduced

10% (*l)Include of

c 6 6 ( C 00d l,5OO,00C 1400,00C 1400,006 I400,00C 1400.00C 3,700,006 3,700,006 3,700,006 3,700,000 3,700, 2,000,006 2,000,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,0061 3,700,006 2.000.00C 2,000,006 2.000.006 3.700.006 3,700,006 3,700,006 3,700,006 3,700,006 rate

113,700,006 AGCC (MWh) 6 6 0 0 0 0 0 6 6 6 6 6 6 6 6 6 6 6 6 6 ( 6 6 6 6 6 c c c 00 00 00 . , , Internal 1,000,006 1,000,006 1,000.006 1.000.00C 1,000,006 1,000.006 1,000,006 1,000,006 l,00O,00C 1,000.006 2400 2400 2400 2400,006 2400.00C

22400.006 Energy

(MWh) Existing Sold c c c c c c c c 4.3-2 c c c c c c a

00 00 00C 0 00 00 00 00 00 00 00 00 00 00 00 00 , , . , , , , , , , , , , , , 000 000 000 000 000 , . , , , 3,700,006 3,700,006 3,700,006 3,700,006 3.700,006 3,700,006 3,700,006 3.700,006 3,700,006 3.700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 2400 3 3 3 3 3,700, 3,700,00c 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 2400 2400 2400 2400 2400 2400 2400 2400 2400 3 Total (MWh) Table 136,200,000 || 6 6 6 ( 6

1430,615 1430,612 1430,615 1430,615 1430,615 3.7754K 3,775410 3,775410 3,775410 3,775410 3,775410 3.775410 3,775410 3,775410 3,775410 3.775410 3,775416 2,040,816 2,040,816 2,040,816 2,040,816 3.7754K 3,775416 3,775416 3.7754K 3.7754K 3,775416 3.7754K 3,775416 3,7754K 3,775416 3.7754K 3,775410 3,775416 2,010,816 3.775416 0.02 AGCC AGCC (MWh) 116,020,408 U-l

|| 6 ( 6 0 6 6 6 6 6 6 6 ( 6 6 6 6 6 6 6 6 6 6 6 6 6 6 &

Aux.Consmp.

Energy 1,123496 1,123496 1,123496 1,123496 1,123496 1.123496 1,123496 1,123496 1,123496 1,123496

2,808.98! 2,808,98! 2,808,98! 2,808,98! 2,808,98! 0.11 Existing (MWh) Existing 25,280,899 Generated Hr.

3,775410 3,775416 3,775416 3,775416 3,775416 3,775410 3.775416 3,775416 3.775JK 3,775^16 3,775311 3,775416 3,775416 3.7754K 3,775416 3,775416 3,775416 3,775416 3,775416 3.7754K 2,654,20! 2,654,208 3,164,411 3,164,411 3,164,411 3,164,411 3,164.411 3.77531C 3,775,516 3,775416 3.7754K 3,775416 3,775416 2,808,98! 2,808,98! 2,808,98! 2,654,208 2,808,98! 2,808,98! 2,654,208 2,654,208 IIH IkW] Total 7434 6,688 5,993 (MWh) 420,000 420,000 630,000 141401407 Operating

| 1 1 2035 2038 2039 2041 2042 2043 2036 2031 2032 2033 2034 2036 2037 2040 2026 2021 2022 2023 2024 2025 2011 201! 201! 2026 2021 202! 202! 200! 2012 201: 2014 201! 2016 2017 2001 2005 2004 2006 2007 200f 2009 201C 2002 Total Y«r 8 i 7 7 9 c

n 19 11 n u 1 16 17 If If 17 4? 47 X 31 3? 3: 34 35 V 17 39 40 41 21 22 r 74 71 ?f 7f 76 27 7<

H -177- 1 2 4 5 7 8 2 c 5 e 1C 11 12 13 14 15 If 17 18 15 22 24 21 22 25 2 27 26 3C 31 2C 28 32 33 3C 34 35 37 38 38 4C 41 42 43 1.95 1.28 1.75|| US$)

n 0.985592 1+r- -144% (USVGJ] (Unit:

: 1 | || 10 , 2,258 2,987 3,74* 3.94* 6,467 452C 6.28: 6474 6561 6,657 7,055 7,158 7,262 7466 6 6,191 6.755 6.85: 6,954 758C 7,697 7,81C 8,157 8.27C 8497 852C 8,645 7,924 15,110 -258: -1591 -7.62C -4,111 -8.66C 20586 32454 -90,605 -20589 -15,135 -16,610 -3457: -14,995 -35.08C

= Vtiue ton ‘

413 7,00 irr 36,00 (Cy(l+rrn $57.2(Vtan $37.40 Present 70%:30% SO.I49/Ncum Rice Price

1 |l Gas Coal ,ia 2 2,659 3,285 3.265 3,685 4,63: 4.63: 4,63: 4,63: 4,63: 4,63: 4.63: 4.63: 4,63: 4.63: 5468 4,632 4,632 4,632 4,632 4,632 4,632 4,632 4,632 4,632 4,632 4,632 4,632 4.632 -1561 19,425 -2,171 -5,86* 13,650 -2468

30,975

-27,811 -8940 -20,00 -15.225 -13,091 -29,471 -12,061 -38,711 Coal

Income (Q

(kcaUtg) Imported Domestic [US$/GJ| Net (CWAHB) (kJ/Ncu.m) Mixed

l.59| 8940 85,40 84,841 84,211 20,(XX 56425 68,075 73,850 89,671 102,725 10491 116,971 101,731 101411 117,061 132,811 124,86* 124,86* 124,868 106461 13546* 124,86* 124,86* 124,86* 124,86* 124,86* 124,868 124,868 124,868 124,868 124,868 124,868 134,868 124,868 124,868 124,868 124,868 131,868 124,868 124,868 124,868 124,868 124,868 Cost

4,805.711 (B) Total (USVGJ] Coal

||

2,928 2,928 2.928 2,928 2,928 8.76C 8,76( 8.76C 6493 6493 6492 8.76C 8.76C 649: 6492

12,736 I2.7X 12.7X 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12.736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 421436

Cost

4.13 Gas

o&c« [USVGJ| N.

|| 1 (100$) cost)

53497 53497 53497 53497 82,051 82,051 53497 66,898 66,898 66,898 82,051 82,051 82,051 66,898 66,898 Cost 112,133 112,13: 112,13: 112,133 112,13: 112,13: 112,13: 112,132 112,13: 112,13: 112,132 112,132 112,132 112,132 112,132 112,132 112,132 112,132 112,132 112,132 112,133 112,132 112,132 112,133 112.133 112,133 Cost Rate Rate

3528,175 7,20 12,00 AGCC fuel Pud Existing

(kJ/kWhJ Heal Heat of 1 | c

a a a 0 0 . , 7,0a 1145 17425 1145C 10,920 16480 10,920 894a 104 15,750 104a 20 28,875 274a 10 46.2a 43,680 26,250 42,000 4560C rise

(*i> 240 0.90 40,00 AMRxod 1,155,00 &RdiabiIi 2,247,00 3,297,00 0&M(V) Construction (USVYcar] fUSVMWhl 0 10% I | | 0 0 a a a a a a a a a a a a a a a a a a a a a a a a a a a a 0 oa oa , , , of

874 874 874a 874M 874a 874a 874a 874 874 874

105 105 105 10500 105,00 12940 12940 129400 129400 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 4,767.0a Total case $63*W (AMa+b) $55(YkW $520kW $50CVkW

40.000.0a l!54a,0a 109,20000 105,00,00 Blocks]

(in || || || ll 0 0 0 0 0 0 ( d ( ( ( ( ( c ( ( c c ( c c c c c c c c c c c c c c c c c c c c c c c 3

C02

(lOOOt) 2-2-1, (US$1 (b)

Retobili million

Cost|US$I Cost Reduced Construction MW

Income $69.30

II II 210 a a a a a a a a a

a a a a a a a a a a a a a a a a a a a a a a a a oa oa 0 , oa , , Vtiue

874a 874 874 874a 874 874a 874 874 874 874a 10500 105 105,oa 105 1294 1294 1294 1294 105 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 1294 return(FIRR)

4,767, Sold

C02

Sold

Present (a) [AGCC of Oa Sold 0.035

ofEPCCost Enagy

lUSUWhl Energy Reduced )lnclude

10% 1

(* rate II II 0 0 0 0 0

a 000 0 , . a,oa a a,oa a.oa a,oa a,oa a,oa a,oa a,oa a,oa a,oa a,oa m,oa a,oa a,oa a,oa a,oa m,oa a,oa a,oa m,oa a,oa m,oa a.oa 00 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 4 . , . , , . , , . . , , , , , , . , , , . i4a,oa 14 14 14 i 2 2,000,0a 2,000,0a 2.000,0a 2.000.0a 3 3 3 3 3 3,7a,oa 3 3 3.7a,oa 3 3 3 3 3 3 3 3 3 3.7a,oa 3,7m,oa 3 3,7a,oa 3 3,7a,oa 3,7a,oa 3 113 AGCC (MWh) Internal

c c c c c c c c c c c c c c c c c c c c c c c c c c a 0 000 , , a,oa a,oa a,oa a,oa a,oa a a,oa a,oa m,oa m,oa a,oa a,oa a,oa 0 0 0 0 0 0 0 0 , , , , , , , , l.ooo.cxx i.oa.oa 1 1 1 1 1 1 1 24 24 24 1 2400 24 Energy 224 4.3-3

(MWh) Existing Sold c a a a a a a a 00C oa oa 00 oa oa oa oa oa 0 oa oa 0 0 oa oa oa 0 oa 0 oa oa 0 0 , . , , , , , , Table 700 700 700 700 700 700 700 700 , , , , . , , , 2400,000 2400,000 2400,000 2400,000 2400,000 2400,000 2400,000 2400,000 2400,000 2400,000 3,000,000 3,000,000 3.000, 3.000,0a 3,000,000 3,700, 3,700, 3 3.700.00C 3,700, 3,700, 3,700, 3,700,0a 3,700, 3 3.700, 3 3,700, 3,700, 3 3,700, 3,700, 3,700, 3 3,700,00C 3,700, 3 3,700, 3 3,700, 3 Total (MWh) 136,200,000 1 0 0 0 0 0

1430,61: 1430.61: 1430,612 1430.61: 1430,61: 2,0*0,816 2.0*0,816 2,0*0,816 2.0*0,816 2,0*0,816 3.77541C 3,77541C 3.77541C 3.77541C 3.77541C 3,77541C 3.7754IC 3.77541C 3.77541C 3.77541C 3.7754IC 3.77541C 3.77541C 3.77541C 3.77541C 3,7754K 3.77541C 3,77541C 3.77541C 3.77541C 3,77541C 3,77541C 3,7754IC 3.77541C 3.77541C 3.77541C 0.02 AGCC (MWh) AGCC 116,020,408

II C C c c c t c c c c c c c c c c c c c c c c c c c c Ipu.)

Aux.Consmp.

Energy 1,123496 1,123496 1,123496 1,123496 1,123496 1.123496 1,123496 1,123496 1,123496 1,123496 2,808,989 2,808,989 2.808,989 2,808,989 2,808,989 0.11 (MWh) Existing Existing 25.280,899 Generated 1 1 | | | |

Hr.

2,808,989 2,808,989 2,808,989 2,808,989 2.654,208 2,654,208 2,654,208 2.654,208 2,808,989 2,654,208 3,164,412 3,164,412 3,164,412 3,164,41: 3,164,41; 3.77551C 3.77551C 3.7755K 3.77551C 3.77551C 3.7755IC 3.775.5IC 3.77551C 3.77551C 3,7755'C 3.7755K 3.7754IC 3.77541C 3,77541C 3.7754IC 3,77541C 3.77541C 3,77551C 3,77551C 3.7754IC 3.77541C 3,77541C 3.77541C 3.77541C 3.77541C 3.77541C Tool |Hr| 7434 |kW) 5,993 6,688 (MWh) 420,000 420,000 630,000 141401407 Operating 2011 2004 2005 2006 2007 200 2017 2003 2008 2009 2012 2013 2014 2002 2015 2016 2018 2019 2023 2024 2010 2027 2021 2036 2031 203: 203: 2020 2021 2022 2025 2026 2029| 2034 2035 2036 2031 20K 20*1 20*3 2037 203S 20*: Year Tool 1 4 7 8 2 6 9 i C fi 11 i: 17 id 12 13 14 16 11 IS 2 21 2: 2 2 26 27 2f 2S X 31 32 32 34 36 22 35 37 31 3S 4C 42 42 41

-178- |

$ 2 3 7 8 4 5 € 9 04 11 16 17 18 19 1C 12 13 14 15 2 36 22 23 24 25 26 27 29 30 31 32 33 34 35 37 38 39 40 41 42 43 20 21

I. 1.59 1.4^[ US$)

1.091781 n l*r- 9.18% [USVGJ] (Unit:

1 ______C f || c 12 82$ 815 971 641 746 683 626 573 . -275 I.96C 1,796 1,645 15a 1,264 1,15$ 1.06C 1554 3,625 332C 3,041 2,785 2351 2537 2,146 2,98! 4521 3,95! 5,243 2,125 4502 2,126 4,717 7382 5,412 4563

-8,071 4 -8,989 -2,005 13,672 23,802 -81,793 -16,779 n

e

Wue

7,000 3375 IRR= (Cy(l+r) 70%:30% $46.8(yton $30.60ton Present $0.!22/Ncu.m Price Price

s __3^_ || Ga Coal ,ia

2 6,095 9,45!

-4,825 -1,041 15,01! 18,01! 19,425 13,656 10.925 11,555 14,28! 14,70! 14,51! 25,01! 25,01! 25,01! 25,01! 25,01! 25,01! 25.01! 25,01! 25,01! 25,01! 25,019 25,01! 25,01! 25,01! 25,01! 25,01! 25,01! 25,01! 25,01! 25.01! 25,01! 25,01! 25,01! 30,975 89,3a -16,791 -20,(XX -15,225 -21,205 587,79! Coal

Income (C)

(kcaVkg) Iroorled Domestic IUSVGJ1 (kJ/Noun) Mixed Net (C)-(AXB) a 59|| 0

, 1. 85,4a 81,405 89,3a 20 56^25 73.85C 76475 75.945 90,711 90,291 95441 68,075 92425 111,481 114,481 104,481 104,481 114,981 104,481 104,481 104,481 104,481 104,481 104,481 104,481 104,481 104,481 104,481 104,481 104,481 104,481 104,481 104,481 104,481 104,481 104,481 108,705 106,041 121,791 104,481 104,481 104,481 102,725 Cost

4,179,201 (B) Total (USVGJ) Coal

||

2,92$ 2,92$ 8.760 8,766 8.76C 8.76C 8.76C 2,92$ 2,92$ 2,92$ 6393 6392 6392 6593 6392 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12.736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 12,736 42036

Cost

3.38 Gas

[USVGJ] O&Cost N.

|| || : (1000$) cost)

91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91,745 91.745 53597 53597 53597 53597 58,632 58,63: 58,632 58,63: 58,632 71.03C 71,036 71,036 71,036 71,036 91,745 91,745 91,745 53597 Cost Rate Rate

Cost

3,301,665 7,200 12,000 AGCC Existing [kJ/kWh] Heat Heat Pud fuel

c of a a a

oa 0 , 7,0a 10.OX 1155 1155C 1052C 10,926 105 15,751 105 17,325 1658C 89,3a 28,876 275a 26,256 20 46,2a 43.68C 42,0a 456, fall

2.50 (*D 0.90 Rchabili

400,000 1,155,000 2,247,000 3,297,000 0&M(V) [USVYear] & Construction [USS/MWh] O&MHxod 10%

1 | c c a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a oa oa ax oa 0 , , , , , of

875a 875 875 875 875 875a 875 875 875 875 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 105 105 105 105 105 1295 1295 4.767.0X Total $63/kW case $550kW $520kW $50CVkW (AMa+b) 40,000,000

105,000,000 115500,000 109,200,000

1 Blocks]

II (in || || c c c ( c c ( ( ( ( c c ( C C C C c c c c c ( c c c ( ( ( c c c c c c ( ( ( ( C C c 3

C02

(1000$) 2-2-1, [us$i (b)

million Rchabili

Cost[US$] cost Reduced Construction MW

Income $69.30

II 210 a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a

ax oa , , \Mue

875a 875 875 875a 875 875a 875 875 875a 875 1295 129500 1295 105,oa 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 1295 12950d 1295 1295 1295 1295 1295 105,ax 105,oa 105 105 1295 return(FlKR)

4,767,000

C02

Sold Sold

Present

(a) [AGCC Sold of 0.035

[USS/kWhl Energy Energy Reduced __aoo__Jj )Indude

10%ofEPCCost I

1 (♦ rate C ( ( ( (

a a a a a a a a a a ax ax 0 ax oa oa oa 0 0 0 0 0 0 0 0 0 ax oa , . , . , , . , , , , 700.OX 700 700 700 000 000 000 000 , , , , , , 1500 1500 1500,(XX 1500 1500 3,700, 2 2,000,(XX 2 3,700, 3,700,0a 3, 3,700, 3,700, 3.700.OX 3.700.0X 3,700,ax 3,700,0a 3 3,700,0a 3,700, 3,700,ax 3, 3,700,ax 3,700.0a 3,700,ax 3.700.0X 3,700,0a 3,700, 3,700, 3,700,ax 3,700,ax 3 3,700,0a 2 2 113,700,000 AGCC (MWh) Internal

( ( ( ( ( ( 0 ( ( ( ( < a ( ( ( ( ( ( ( ( ( 0 ( ( ( a a a a a a a a a a a 0 0 ax 0 0 0 0 0 0 0 0 0 , , , , , , , , , , , , 000 000 000 000 000 000 000 000 000 , , , , , , , , , 1 1 1 1 1 1,000,(XX 1 1 1 1 2500 2500 250O,(XX 2500 2500,(XX 22500,000 Energy 4.3-4

(MWh) Existing Sold 00C 00C (XX ax (XX 00C 00C 00C (XX (XX (XX (XX (XX (XX Table 00O,00C 3.700, 3,700, 3.700, 3,700, 3,700, 3,700, 3,700, 3.700, 3,700, 3,700,(XX 3,700,000 3,700,(XX 3,700, 3,700, 3.700.0X 3.700.0X 3,700,(XX 2500.00C 2500.00C 2500,00C 2500,00C 2500.00C 2500.00C 2500.00C 25OO,O0C 25OO,O0C 2500.00C 3, 3.000,00c 3.000.00C 3,00O,00C 3,OOO,0OC 3.700.00C 3.700.00C 3,700, 3.700.00C 3,700, 3.700.00C 3.700.00C 3,700, 3.700.00C Total (MWh) 136,200,000 || t t t t t

1530.611 1530,611 1530,611 1530,611 1530,611 3,7755" 3,7755" 3,7755" 3,775510 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,775510 3,775510 3,775510 3,7755" 3,775510 3,775510 3,775510 2,040,816 2,040,816 2,040,816 2,040,816 2,040,816 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 0.02 AGCC AGCC (MWh) 116,020,408

II t ( t t t t t t t t t t t t t c t t t t ( t t t t t (p.u.) AuxConsmp.

Energy 1,123596 1,123596 1,123596 1,123596 1,123596 1.123596 1,123596 1,123596 1,123596 1,123596

2,808985 2,808,985 2,808,985 2,808,985 2,808,985 0.11 Existing (MWh) Existing 25,280,899 Generated K K If H 1( K If K

|

Hr.

3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,775510 3,7755" 3,775510 3,775,5 3,775^5 3,7755" 3,7755" 3,7755 3,7755 3,7755 3,7755 3,7755 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 2,654,208 2,654,20! 2,654,201 2,654,20! 3,164,411 3,164,411 3,164,412 3,164,411 3,164,411 3,775,511 3,7755 2,808,98! 2,808,985 2,808,985 2,808,98! 2,808,985 2,654,201 Hr)

I [kW| Total 6,688 7534 5,993 (MWh) 630,000 141501507 Operating

1 1 1 I : < 2040 2042 2043 2037 2039 2011 2041 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2038 201! 202f 2021 202 2024 2025 202 201! 201( 2017 201! 2021 2002 2001 2001 2005 2006 2001 2001 200! 201( 2012 201: 2014 2001 Total Year i 7 ■ f 4 f 1 <

1 16 17 If It it 11 17 r \< 21 71 n V 31 37 3" 34 3' 3f 37 31 3< 7f 71 r, r 74 7- 4f 41 4? 43 It

W -179- 2 3 5 8 4 £ 7 9 10 11 12 13 16 17 18 19 14 15 21 22 23 24 25 20 26 27 28 29 30 31 32 33 34 35 36 37 38 39 16 40 41 42 43 59||

1.77 1. US$)

" 1.167297 1+r- 16.73% (Unit: |US$6G7| 1. 1 | C || 80 74 61 55 50 43 14: 17: 141 127 105 754 836) 814 276 956 697 597 51: 32: 236 431 37! -614 1,410 1511 1,294 1,105 1566 1.76: 8,855 6,737 5597 2266 277! 4,951 3.18:

-1,077 -2542 17,195 27534 -14,678 -76502

Wluc

3.75 7,000 mn= 36,000 (Cy(ltr)*n $52.06tton $34.6XVton Present 70%:30% $0.1357Ncu.m Price

II || Coal 3542 8,449

-2725 14,600 -7501 19.922 19,292 14,46: 18,949 31,925 26,150 43,475 2282! 3352 23,779 24.199 33525 3352 3352 3352 3352 3352 3352 3352 3352 3352 3352 3352 3352 2352 3352 3352 3352 33525 2652 3352 3352 3352 3352 3352 -89500 -20,000 -12838 955544 Coal

Income (Q

(kcaVkg) Inxrrled [USVG7] Domestic Net (Q-(AMB) (kJ/Nctim) Mixed S9| 00C

1. 8950C 20, 85,400 56525 80,708 68,075 73,850 80,078 85538 96,458 96,221 95,801 102725 111551 114,67! 112838 127501 101,051 125,175 114,675 114,675! 114,67! 114,67! 114,67! 114.672 114,675 114,67! 114,67! 114.675 114,675 114,675 114.675 124,675 114,675 114,675 114,675 114,675 114,675 121,675 114,675 114.675 114,675 114,675 Cost

4.492456 (B) Total [USVGJ] Coal

||

2.928 2,928 2,928 2528 2,928 8,760 8,760 8,760 6593 6593 6593 6593 8,766 8,7661 6593 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 421536

Cost

3.75 Gas 0.04/kWh) O&Ccst (USVGJJ

N.

|| | (1000$)

US$

53597 535M 53597 53597 53597 62,765 62,765 62.765 76541 76541 76541 76541 62,765 62,765 76541 Cost 101,93! 101,939 101,939 101,93! 101,93! 101,93! 101.93! 101,93! 101,93! 101,935 101,935 101,93! 101,935 101,935 101,935 101535 101539 101,935 101,939 101539 101539 101,935 101,935 101,939 101,935 101,939 Rate Rate

3,614,926 of

7,200 12,000 AGCC Existing (kl/kWh] Heat Heat price 7,006 11556 17525 11550 10,920 89506 20,006 16580 10,920 10500 15,750 10500 28,875 10,006 46,206 27500 43,680 26,250 42,000 456.006 (*1) Rdiabili 2.50 0.90

400.000 & 1,155,000 2,247,000 3597.000 0&M(V) Construction [USVYear] |USVMWh| O&MRxed selling

1 | ||

100,006 100,006 100,006 100,006 100,000 100,000 100,000 100,000 100,000 100.000 120,000 120,000 120,000 148,000 120.000 120,000 148.000 148.000 148,000 148.000 148,000

148,000 148,000 148.006 148,006 148,006 148,006 148,000 148,006 148,000 148,006 148,006 148,006 148,006 148,006 148,006 148,006 148,006 148.006 148,006 148,006 5.448.006 Total $63/kW (AMatb) $556VkW $526VkW $506VkW 40,000,000 115500,000 109,200,000 105,000.000 Blocks] electricity

|| 0 0 0 0 0 || |l || 0 0 0 0 0 6 ( 0 0 q ( ( 6 6 6 6 6 6 6 6 6 c c c 6 6 6 6 6 6 6 6 6 6 6 6 c 3 of

•

(X)2

(10001) 2-2-1, [US$1 (US$| (b)

Rdtabili million case

Cost Cost Reduced Construction MW

Income (in

$69.30

|| || 210

06X \Mue

100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 120,000 120,006 120.000 120,000 148,000 120,0061 148, 148,006 148,006 148,006 148,006 148.006 148,006 148,006 148,006 148,006 148.006 148,006 148,006 148,006 148,006 148,006 148,006 148,006 148,006 148.006 148,006 148,006 148,006 148,006 148.006

5.448.006 Sold

C02

Sold

Present (a) [AGCC

0.00 Sold 0.040 Energy "JSJAWhl Energy Reduced )Include

10%ofEPCCost 1

1 (* II 0 0 return(FlKR)

1500,000 1500,000 1500,000 1500,000 1500,000 2,000,006 2,000,006 2,000,000 2,000,000 2,000,000 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700.006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 113,700,006 of

ACXX (MWh) ( ( rate ( 6 6 6 t 6 6 6 c 6 6 6 c c 6 6 6 £ 6 6 6 6 6 6

1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 2500,000 2500,000 2500.000 1,000,006 1,000,006 1,000,000 2500,000 2500,000 Energy

22500,006 (MWh) Existing Sold 2500.000 2500,000 2500,000 2500,000 2500,000 2500,000 2500,000 2500000 2500,000 2500,000 3,000,000 3,000,000 3,700,000 3,000,000 3,000,000 3,000,000 3,700,000 3,700,006 3.700,006 3.700,006 3,700.006 3,700,006 3,700,006 3,700.006 3,700,006 3,700.006 3,700.006 3,700,006 3,700,006 3,700,006 3,700,006 3,700,000 3,700,006 3,700,006 3,700,006 3,700,006 3,700,006 3,700.006 3,700,006 3,700,006 3,700,006 Total 4.3-5 Internal (MWh)

136,200,000 | 0 Table

1530,612 1530,612 1530,612 1530,612 1530,612 2,040,816 2,040,816 2,040,816 2,010,8161 2,010,816 3,775510 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3.7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3.7755" 3,7755" 3,7755" 3,7755" 0.02 AGCC (MWh) AGCC 116,020,408

|| ( ( ( ( ( ( ( C C t t c t c c c c c c c c c c c c c (pu.|

Aux.Consmp.

Energy 1,123596 1,123596 1,123596 1.123596 1,123596 1,123596 1,123596 1,123596 1,123596

1,123596 2,808,989 2,808,989 2,808,989 2,808589 2,808,989 0.11 (MWh) Existing Existing 25,280,899 Generated It

Hr.

2,808,989 2,808,985 2,608,989 2,808,989 2,808,989 2,654,208 2,654,208 2,654,208 2,654,208 2,654,208 3,164,412 3,164,412 3.164,412 3,164,412 3,164,412 3,775510 3,775510 3,775510 3,775510 3.775510 3,775510 3,7755 3.775510 3.7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3.7755" 3,7755" 3.7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" 3,7755" Total IHrl [lcW] 6,688 7534 5,993 (MWh) 420,000 420,000 630,000 141501507 Operating 2003 2004 2005 2011 2002 2006 2007 2008 200 2015 2016 2017 2019 2009 2010 2012 2013 2018 2020 2021 2014 2027 2031 203: 2022 2023 2024 2025 2026 2021 2025 2030 2032 2034 2035 2036 2037 2038 20" 2041 2035 2042 2043 Year Total 3 5 2 4 6 8 9 10 II 15 16 17 IS 11 12 13 14 at 21 2: 22 % 25 26 27 2t 2$ 36 31 32 33 34 35 36 3V 38 46 41 42 42

-180- ll 1 1 2 3 7 8 4 5 9 6 11 1C 12 13 14 15 16 17 19 16 18 25 26 27 3C 2C 21 22 24 28 29 31 32 33 34 23 35 36 37 38 39 46 41 42 43

1.77 1. l59 US$)

% " 00 . 1+r- 0 [USVGJ] (Unit:

1 | ll a 0 , 1.I5C 6,925

-3,675 -3,675 -3,675 -3,675 -3,675 -5,70! -5,07! -6,221 -5,801 -3,675 -3,675 -3,675 -3,675 -3.675 -3,675 -3,675 -3,675 -3,675 -3,675 -3,675 -3,675 -3,675 -3,675 -3,675 -3,675 -3,675 -3,675 18,475 20 -11,051 -89ja - -27,725 -21,451 -37,83! -37,301 -10,4a -10,53! -21,551 -14,175 -13,675

-10,675 -406,456

Vbluc

3.75 7,000 IRR= 36,000

• 70%:30% (Cy(l+r)*n $34.0(Yton $52.

|| Gas Coal 1.I5C

6,925 -5,70! -5,07! ■6,221 -5,801 -3,675 -3,675 -3,67: -3,675 -3,675 -3,675 -3,675 -3,675 -3,675 -3,675 -3,67: -3,675 -3,675 -3,67: -3.67: -3,675 -3,675 -3,675 -3,675 18,475 -3,675 -3,675 -3,675 -3,675

-11,051 -893a -20,000 -10,40d -27,725 -21,451 -37,83! -10531 -21551 -37301 -14.175 -13,675 -10,675 406,451 Coal

Income (Q

(keal/kg) [USS-GJI Domestic (sported (sported Net (kJ/Ncum) (O(AMB) Mixed 59|

1. 8940 20,000 56425 68,075 85,40d 73,850 80,708 80,078 85438 96,458 96,221 95,801 111451 102725 112838 114,675 114,675 114.67: 114,67: 114,675 114,675 114,67: 114.67: 114,67: 114,67: 114,67: 127401 101,051 125,175 114,675 114,675 114,67: 114,675 124,675 114,675 114,675 114,675 114,67: 114,675 114,675 114,675 121,67: 114,675 CoS

4,492457 (B) Total [USVGJ] Coal

|| 6C

8.76C 2928 2928 2928 292! 2928 8.76C 8,7 8.76C 8,7« 6393 6393 639: 6493 6393

12.736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12736 12,736 12736 12736 12736 12736 12736 12736 12736 12736 12736 421436

Cost

3.75 Gas 0.03/kWh) O&Cost [USVGJ|

N.

II 1 (1000$)

US$

53497 53497 53497 53497 76441 76441 76441 53497 62765 62765 62765 62765 62765 76441 76441 101,93! 101,93! Cost 101.93! 101,93! 10143! 101,93! 101,93! 101,93! 101,93! 101,93! 10143! 10143! 101,93! 101,93! 101,93! 101,93! 101,93! 10143! 101,93! 101435 101,935 101435 101435 101,935 101,935 101435 614.92C Rale Rale

3, of 7,200

12000 AGCC Existing [kJ/kWh] FhdCost Heat Heat

7,OX price 11450 17425 11450 16480 10.920 10400 10,920 10400 15,750 io,ood 89400 20,000 28,875 27400 43,680 26250 46200 42000

456,(XX fixed

(*1> 240 0.90 Rchabili

400,000 1,155,000 2247,000 3,297,000 & 0&M(V) [USS/YearJ Construction [USVMWh| O&M selling | | | | 0 0 a a a a a a a a a a a a a a a a 0 0 0 0 0 0 0 0 0 0 0 0 0 0 oa 0 0 , , , , . , , , , , , , , , , ,

1

75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 90,000 90,000 90,000 90,000 90,000 111,000 111,000 111,000 111,000 m.oa 111,(XX II 111 111 111 111 111 U1.00C 111 111 111 111 111 111 lll.oa lll.oa 111 111 111 lll,ax 111 4,086, Total $63/kW $55WkW (A)-(atb) $520kW $50MtW 40,000,000 115400,000 109,200,000 105,000,000 Blocks]

electricity

|| || ll || ( ( < ( a ( ( 0 0 0 0 0 ( ( 0 ( 0 ( ( c ( ( ( ( ( t t ( c c c c c c c c c c c c c c 3 of

C02

[US$| |US$| 2-2-1, (10001)

(b>

case Rchabili million

Cost Cost Construction Reduced MW

Income (in $69.30

ll || 210 a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a

0 0 oa 0 0 0 0 0 0 0 0 0 0 0 ax 0 0 0 0 0 0 0 0 0 0 0 0 0 ax 0 0 0 0 0 0 0 ax , , , , , , , , . , , , , , . , , , , , , , , , , , , , , , , , , , , , , Value i,ax

75 75 75 75 75 75 75 75 75 75 90 90 90 90 90 111 111 111 111 111 111 111 111 111 111 111 iu,oa 111 111 11 111 ni,ax 111 iiijoa 111 111 111 111 111 111 111

4,0860a C02

Sold

Sold

Present

(a) [AGCC Sold 0.00 0.030 ofEPCCost |US$AWh] Energy Energy Reduced )Indude

10% 1

1 (* II 0 0 0 0 0 a a a a 0 0 oa 0 0 ax ax oa ax oa oa oa oa , , , . return(FIRR)

700 700 700,ax , . 1400,000 1400,000 1400,000 1400,000 1400,000 2000,000 2000,000 2000 2000,000 2000 3.700.00d 3.700.OX 3,700,000 3,700,ax 3,700, 3 3 3,700, 3,700,0a 3.700.0X 3.700, 3,700, 3.700.0X 3.700.0X 3.700, 3,700,0a 3,700,0a 3,700,0a 3.700.OX 3, 3,700,ax 3.700, 3.700.OX 3,700, 3.700.0X 3,700, 113,700, of

AGCC (MWh) ( ( ( ( ( C ( ( ( ( ( ( ( c C ( c c c c c c c c c c rate a a a

oa oa ax 0 0 oa 0 , , , , , , 000 000 , , i.ooo.oa i.ooo,oa i.ooo.oa i.ooo,oa 1 i,ooo,ax 1 i,ooo,ax i,ooo,ax i,ooo,ax 2500, 2400 2500.OX 2400 2400 22400 (MWh) Existing SddEncrev Internal a

ooq 0 ooq 00C ooq ax ax ax ax oa ax ax . 000 . 2500,000 2500,000 2500,000 2500,000 2400.000 2500,000 2500,000 2500,000 2400,000 2500.000 3,000.000 3,000, 3 3,ooo,ood 3,000,000 3,700,000 3,700,000 3,700,000 3,700,000 3,700,ax 3,700,00C 3,700, 3,700,0a 3,700.0a 3,700, 3,700, 3,700, 3,700,00C 3,7C0,

136200,000 | t ( < < < 1( Table

1430.61: 1430,61: 1430,612 1430,612 1430.61: 2010,81( 2010,8 2010,8" 2010,8" 2010.8" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 0.02 AGCC (MWh) AGCC 116020,408

■U.I -onsmp. II p 0 0 0 0 0 0 0 ( ( 0 ( ( ( q ( ( ( ( c c ( ( ( c c c I

Aux.C

Energy 1.123496 1,123496 1,123496 1,123496 1,123496 1,123496 1,123496 1,123496 1,I2349< 1,123496

2808,989 2808,989 2808,989 2808,989 2808,989 0.11 (MWh) Existing Existing 25,280,899 Generated Hr.

2808,989 2654,208 2654,208 2,808,989 2808,989 2808,989 2808,989 2654.208 2654,208 2654,208 3,164,412 3,164,412 3,164,412 3,164,412 3.164.412 3,775,510 3,775,510 3,775,510 3,775,510 3,775,510 3,775,510 3,775,510 3,775^10 3,7754" 3,7754" 3.775.510 3,775.510 3.775,510 3,775,510 3,775,510 3,775410 3,775410 3.775410 3.7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" 3,7754" [Hr| Total |k\V] 6,688 7434 5,993 (MWh) 420,000 420,000 630,000 141401407 Operating 2011 2018 2019 2005 2006 2007 2008 2009 2010 2012 2013 2001 2002 2003 2004 203C 2031 203: 203: 2034 2020 2021 2022 2023 2024 2025 2026 2027 2021 2029 2014 2015 2016 204: 2031 2036 2037 203! 204C 2042 2039 2041 Year Total 5 7 4 6 9 ( in n 13 1? It 12 14 it it 2 3f 31 32 3.' 34 35 21 22 V 24 V 21 27 2f % V 37 3! 42 42 39 4C 41

-181 - -n -182 - 5. Confirmation of dissemination effect

The possibility of adopted technologies in this project being disseminated to surrounding power generation facilities, and the resultant effects on energy saving and greenhouse gas reduction are considered here.

-11-183- -11-184- 5.1 Possibility that technology introduced by this project will disseminate to other locations

Apart from the the Bobovdol thermal power plant, the following coal fired thermal power plants are also in operation in Bulgaria: Maritza Iztok #1 (50MW X 4 = 200MW), Maritza Iztok #2 (150MW X 4,210MW X 2, 215MW X2 , total 1,450MW), Maritza Iztok #3 21OMW X 4=840MW, ), Maritza Iztok #3 (25MWX2 , 120MWX l, total 170MW), Varna (210MWX6 = 1260MW) and Russe (30MWX2, 110MWX 2,60MWX 2 , total 400MW). The total output of these thermal power plants is 4,320MW but, like the Bobovdol power plant, many of them are old and inneed of emergency modifications. Through replacement of the facilities in these power plants to high efficiency gas combined cycle power generation facilities, which are the same ones proposed for the Bobovdol thermal power plant, obvious improvements such as energy saving, reduction of greenhouse gas emission amounts, reduction of NOxgas emission amounts and so on, can be expected. Even higher energy saving and reduction of greenhouse gas emissions than planned for the Bobovdol thermal power plant can be realized with the construction of a combined cycle plant based on a larger capacity gas turbine.

Taking into consideration the protection of the local coal mining industry, it is unreasonable to expect that all thermal power plants will switch over to gas-fired combined cycle power generation.. However, we believe that the gas combined cycle plant that is proposed for this project is highly likely to be adopted in construction of new thermal power plants and also to be seriously considered for modification of existing coal-fired thermal power plants. The greater effect on reduction of greenhouse gas emission is an obvious benefit of such an approach.

-11-185- 5.2 Various effects of wider dissemination

Although annual power generation in Bulgaria is as much as some 39 billion kWh and around 50% of that amount is generated by ordinary coal fired B-T-G thermal power facilities (no gas turbine power plant exists at present), the thermal efficiency of thermal power generating facilities is extremely low at around 30% or so. Around 40% of electricity is generated by nuclear power and the remaining portion is generated by hydropower and others.

The future possible energy saving effect and degree of carbon dioxide emission reduction can be illustrated by comparing present figures with figures generated using gas combined cycle generation. At present 20 billion kWh of Bulgaria ’s annual power generation is produced by coal-fired thermal power facilities with a thermal efficiency of 30%. The same output from gas combined cycle generation facilities operating at 50% thermal efficiency yields the following improvements. (1) Energy saving effect

a. Annual fuel consumption of power generation of 20 billion kWh with thermal efficiency of 30%: = (20 X 109 /0.3) X 3.6 X 106= 240,000 X10 12(J) = 240,000TJ/year

b. Annual fuel consumption of power generation of 20 billion kWh with thermal efficiency of 50% : = (20X 109 /0.50) X 3.6X10*= 144,000X10 12(J) = 144,000TJ/year

c. Energy saving ratio: = (240,000-144,000)7240,000 X 100 = 40.0%

d. Annual energy saving: = 240,000-144.000 = 96,000TJ (around 2.25 million crude oil equivalent)

(2) Amount of greenhouse gas emission reductions a. Annual amount of carbon dioxide gas emissions resulting from coal-fired power generation of 20 billion kWh with a thermal efficiency of 30%: = 240,000 X 27.6 X 44712 = 24,288,000 ton/year

b. Annual amount of carbon dioxide gas emissions resulting from natural gas-fired power

-II-186- generation of 20 billion kWh with a thermal efficiency of 50%: = 144,000 X 15.3 X 44/12 = 8,078,400 ton/year c. Annual reduction ratio of carbon dioxide gas emissions: = (24,288,000-8,078,400)/24,288,000 X100 = 66.7%

-11-187- -11-188 - 6. Other effects

Environmental and economic effects derived from the project other than the energy saving effect and the effect of greenhouse gas emission reductions are considered here.

-11-189 - - n-i90 - 6.1 Effects derived from the project other than greenhouse gas emission reduction

When the project is implemented, it will undoubtedly have certain environmental, economic and social effects. Such effects will be felt inside the power station site and district of Bobovdol and from a wider perspective, by the whole country.

The extent of these effects will vary in accordance with changes in the Bulgarian economic and social situation. Conversely, the project itself is likely to be affected by such changes in the economic and social situation. Effects other than an energy saving effect and the effect of greenhouse gas emission reductions are considered here, based on the present situation. These effects fall into the categories of (1) environmental effects, (2) economical effects and (3) social effects. The extent of every effect varies in accordance with the content of the purpose of the power plant modification, and subsequently it is required to understand that the project plan is a modification project having the purpose of energy saving and reduction of greenhouse gas emissions. Also it is required to minimize the economic and social effect to the maximum possible extent, as well. Each effect of (1), (2) and (3) mentioned above is described hereafter, dealing separately with the time of project implementation and the time after the project is completed and commencement of operations begins.

(1) Environmental effects

Effect during the project implementation

The environmental effects of carrying out the project probably include dust and soot generated by vehicles used in the construction work, sewage from construction work, generation of noise, waste, excess soil, waste building materials, waste from electrical and mechanical works, and chemical wash water. It is possible to minimize all the effects by sufficient study and preparation of countermeasures in advance of project implementation. Needless to say, the ISO14000, the index of environmental countermeasures, has to be strictly followed when the countermeasures are studied.

Effects after the project implementation

Apart from the reduction in carbon dioxide gas as already demonstrated, nitrogen oxide (NO%) and sulfur oxides (SOJ can also be reduced substantially.

-ff-191 - a. Nitrogen oxide (NO*)

The NOx concentration at stack outlet is presumably 700 to 800ppm or so since no low NOx burner is applied to the boilers used at Bobovdol thermal power station. The NOx concentration at stack outlet can be reduced to 25ppm or so, by replacement with a gas combined cycle power generation facility, which is proposed in the modification proposal. That will result in a reduction to around 1/30 of the present level. b. Sulfur oxides (SOJ

Sulfur content of the coal now used at Bobovdol is around 2% and SOx concentration is presumed to be 500ppm or so. The SOx concentration can be reduced to almost zero at stack outlet, by replacement with a gas combined cycle power generation facility as proposed in the modification plan. c. Waste water treatment

The present waste water treatment facility is not sufficient even though some modification has been conducted since its original installation. It was planned and constructed some 30 years ago and has obviously aged considerably. The modification plan proposed here aims to reduce hazardous waste water discharge to the environment effectively down to zero. d. Noise

In general, noise from a gas turbine is higher than that produced by a steam turbine. However, the noise level of a gas turbine can be easily reduced by adoption of a low noise enclosure, a high efficiency silencer and so on, and consequently, some improvement on the present status is under planning.

(2) Economical effects

Effect during the project implementation This project is rather large in scale and will bring job opportunities in the district and activate the local economy. It will also provide an opportunity for local people to learn new technology.

-H-192- Additionally, it will provide local opportunities in the procurement of construction materials and consequently will make significant contributions to local development in every sense.

Effect after the project implementation At present, the unstable electricity supply adversely affects local industry, and the project implementation will contribute to development of local industry through the production of a stable electricity supply. A stable electric power supply is likely to promote the induction of industries to this local district.

(3) Social effects

Effects during the project implementation Along with an increase in job opportunities and people's incomes, improvements in social stability and safety can be expected. Implementation of a large scale project requires infrastructure support in other areas and a resultant boost in involvement between the local community and the project. Until now, major personal exchanges are limited to within the Soviet Union or CIS, but the implementation of this project will open up an exchange between Japanese and European culture.

Effect after the project implementation The project implementation may cause the closing-up of neighboring coal mines. For this reason, it is necessary to pay attention to minimizing detrimental effects to the local economy.

(4) Others

On the whole, the perceived negative effects are very small except for the closing-up of the neighboring coal mines, and many positive effects are expected with the actual project implementation. The project is designed for active implementation of measures to minimize negative effects through close contact with counterpart organizations of the Bulgarian government.

- n-193 - - n-194 - III. Conclusions m-2 1. In this investigation, based on conference and confirmation with the Bulgarian side, the change to combined cycle power facilities, based on the latest gas turbine, at the Bobovdol thermal power plant (an ordinary type, coal-fired power generating facility with a boiler-steam turbine-generator) was discussed. As a result, under our assumed conditions, the following energy saving effects and reduction of greenhouse gas emissions (carbon dioxide) were found feasible.

Energy Saving Effect I to 5 years 0 TJ/ year 6 to 10 years 9,205 TJ/year II to 15 years 12,272 TJ/year 16 to 41 years 22,704 TJ/year Total (41 years) 697,689 TJ (Reduction rate 37.99%)

In a conversion based on crude oil, this amounts to 16.37 million tons over 41 years. In other words, cost-efficiency in energy saving will be 27.86 US$/ton (in crude oil conversion).

Effect of Reduction of Greenhouse Gas Emissions I to 5 years 0 ton/year 6 to 10 years 1,387,613 ton/year II to 15 years 1,850,047 ton/year 16 to 41 years 3,422,670 ton/year Total (for 41 years) 105.18 million ton (Reduction rate 57.75%)

As mentioned above, the cost-efficiency of the reduction of greenhouse gas emission amounts to 4.34 US$/ton.

2. It is decided to estimate the profitability by an internal rate of returns (FIRR). Trial computation of internal rates of returns were carried out for three carbon dioxide emission trading prices (US$ = 0, US$ = 5, and US$ = 10 per ton). US$ 0/ton: 5.66 % US$ 5/ton: 10.93 % US$ 10/ton: 14.23 %

As described above, in consideration of the trading of carbon dioxide reductions, it is also reasonable to say that the economy of this project is rather low. One of the factors would be that the domestic unit price of electricity is lower than the international level, and the other is that the price of natural gas is high. This level seems to rise while this country grows as the national consensus is being achieved. From the point of securing economic soundness of power plants, the best way of promoting this project seems to be through arranging funding under the best possible terms, such as a special environmental yen loan.

As the next steps toward the realization of this project, the approval for conducting the project in Bulgaria must be obtained; furthermore, the necessary procedures for fundraising must be followed. These issues will be carried out after achievement of a consensus from the committee consisting of the financial deputy premier, the deputy premier of the Japan and Bulgaria Joint Economic Committee, and the committee of the Ministry of Finance, Foreign Economic Bank, Ministry of Overseas Investment, Ministry of Environment, and Ministry of Energy Industry.

3. From the preparation stage to the completion of this feasibility study, on the basis of conducting the Project under the JI scheme, great attention and support were obtained from those concerned in the Bulgarian Government and various organizations.

The detailed scheme of the JI will be decided at the Sixth Conference of Parties to the United Nations Convention on Climate Change (COP6-II) which is scheduled to be held this year. On the basis of this scheme, we intend to further discuss this Project in detail between the two countries and pursue the interests of the two countries.

March 2001 Tokyo Electric Power Company

IE-4 IV Attached Materials IV-2 Attached Materials

A. Attached Drawings A-l Case-2 1) TEPCO-BOB-G001-C2:PLOT PLAN 2) TEPCO-BOB-G002-C2:GENERAL ARRANGEMENT (PLAN) 3) TEPCO-BOB-E201-C2:220kV SWITCHGEAR SINGLE LINE DIAGRAM

A-2 Case-3 &Case-5 1) TEPCO-BOB-G001-C3:PLOT PLAN 2) TEPCO-B OB -G002-C3: GENERAL ARRANGEMENT (PLAN) 3) TEPCO-BOB-G003-C3:GENERAL ARRANGEMENT (ELEVATION) 4) TEPCO-BOB -E201-C3:220kV SWITCHGEAR SINGLE LINE DIAGRAM

A-3 Case-4 1) TEPCO-BOB-GOO!-C4:PLOT PLAN 2) TEPCO-BOB-G002-C4:GENERAL ARRANGEMENT (PLAN) 3) TEPCO-BOB-G003-C4:GENERAL ARRANGEMENT (ELEVATION) 4) TEPCO-BOB-E201 -C4:220kV SWITCHGEAR SINGLE LINE DIAGRAM

A.4 EXISTING 1) TEPCO-BOB-G004 :PLOT PLAN

IV-3 IV-4 nnili lllllllll

(FOR EXISTING

4-4H-Mi'!-W^4TTTT^S^ffiTTr \

(FOR EXISTING BLOOM) (FOR EXISTING

EXISTING BLOCK- i1,2 * 3 BOILERS

EXISTING BLOCK-1,2 * 3 STEAM TURBINE BUILDING

EUE/CONT

NEW BLOCK-3 STG NEW BLOCK- .OCK-1 STG L--g

[l*!ION_.

EXISTING 110kV SWTCHYARD

EXISTING |220kV SWTCHYARD i

NEW 220kV SWITCHYARD

:CMPBE5SOR STATION

STATE AGENCY FOR ENERGY AND ENERGY RESOURCES OF BULGARIA (SAFER)

BOBOVDOL TPP C02 EMISSION REDUCTION A MODERNIZATION PROJECT

BOB-G001-C2 PLOT PLAN

TOKYO ELECTRIC POWER COMPANY SUMITOMO CORPORATION TEPCO-BOB-G0O1-C2 220000 6000 10000 40000 BLOCK-3 65000 EXISTING BOILER 70000

STG

PUMP

S*

,6000, ATI

ON 70000 Zj/ BLOCK-2

BOILER 226000 STACK 86000

STG FILTER ELE/CONT BUILDING 80000 60000 -1 57000

STG 30000 EXISTING 5000 EXISTING EXISTING

220kV NEW STATION PUMP

CW

COAL TURBINE MAIN BLOC EXIST

SWITCHYARD EXISTING

(-3 NG

TR BINS 0

5 BUILDING

10

BOILER 20

J 30 1

EXISTING /-MU/

Dl

IUD

BLOCK-3 CT

ATI

AM TOKYO STATE BOBOVDOL M.TSUCHIYA SUMITOMO T.HOOAI

ELECTRIC

AGENCY

TPP

CORPORATION

POWER

C02 OF

FOR EMISSION

COMPANY BULGARIA

ENERGY

REDUCTION

GENERAL (SAEER) AND TEPCO-BOB-G0O2-C2

A

ENERGY MODERNIZATION

(PLAN) ARRANGEMENT CASE-2

RESOURCES

PROJECT

PEZERVNO PEZERVNO STUDENA STRUMA VI TOSH A VERILA

o-oNhi'ES

220kV BUS-1

jN xi -es

< ES

220kV BUS-2

BLOCK-3 (A BLOCK-2(A STATION TR. STEP-UP >T STEP-UP >T TR. VS TR. Kt

6.6kV

BLOCK-1 6.6kV 6.6kV BLOCK-2 6.6kV BLOCK-3 GENE. GENE. i GENE. CASE-2 BLOCK-2 BLOCK-3 GENE. GENE. STATE AGENCY FOR ENERGY AND ENERGY RESOURCES OF BULGARIA (SAFER) EXISTING B0B0VD0L TPP C02 EMISSION REDUCTION & MODERNIZATION PROJECT

B0B-E201-C2 220kV SWITCHGEAR

M.TSUCHIYA SINGLE LINE DIAGRAM

TOKYO ELECTRIC POWER COMPANY SUMITOMO CORPORATION TEPCO-B0B-E201-C2 | CASE-3 & 5j

STATE AGENCY FOR ENERGY AND ENERGY RESOURCES OF BULGARIA (SAFER)

BOBOVDOL TPP C02 EMISSION REDUCTION A MODERNIZATION PROJECT

DW T.HOOAI 19.0CT.2000 CAD No. B0B-C801-C3MS CHKD PLOT PLAN APPO M.TSUCHIYA ts.oa.2ooo 1/1500

TOKYO ELECTRIC POWER COMPANY DWG. No. SUMITOMO CORPORATION TEPC0-B0B-G001-C3 3000 189000 6000 55000 6000 55000 6000 55000

EXISTING HEAVY FUEL OIL S""ORAGE TANKS EXISTING

OFFICE BOILER

I 1 i 1 L

LXISTING PUMP STATION

BLOCK-3 BLOCK-2

EXISTING BOILER

EXISTING HEATING EQUIP. -STORAGE

EXISTING COAL BINS EXISTING | EXISTING EQUIP. STORAGE - EQUIP. STORAGE

EXISTING FITTING & EXISTING TURBINE BUILDING & VALVE STORAGE WATER TAtll BLiOCK—13 STl

NEW GAS RECEIVING & METERING STATION EXISTING WATER BLOCK-j TREAT MAIN TR NFW C/C PLANT POWER STATION ~n—- NEW CW 1 EXISTING BLOCK PUMP -I TW PUMP 9TATI STATION

20000 34000 123000 1 CASE-3 k 5

0 5 10 40 50(m)

STATE AGENCY FOR ENERGY AND ENERGY RESOURCES OF BULGARIA (SAEER)

BOBOVDOL TPP C02 EMISSION REDUCTION & MODERNIZATION PROJECT

T.HOOAJ

CHKD - GENERAL ARRANGEMENT

22.0CT.2000 (PLAN)

NEW 220kV SWITCHYARD EXISTING 220kV SWITCHYARD TOKYO ELECTRIC POWER COMPANY DWG. No. SUMITOMO CORPORATION TEPCO-BOB-G0O2-C3 STACK

BYPASS STACK

STEAM TURBINE BUILDING

AIR INTAKE FILTER DEAERATOR O.H. CRANE

PIPE RACK

GAS TURBINE

! iii AUX. BUILDING

GL±0 > >

HEAT RECOVERY STEAM GENERATOR (HRSG) DIVERTER DAMPER STEP-UP TR. STEP-UP TR.

10000 12000 10000 22000 SECTION A

O.H. CRANE O.H. CRANE

IBL0CK-3 STG| 0LOCK-2 STG| IBL0CK-1 STG]

STEAM TURBINE CONDENSER STEAM TURBINE CONDENSER STEAM TURBINE CONDENSER

GENERATOR GENERATOR GENERATOR

FUtO FL±0 FL±0 GL±0 GL±0 III III III III III HI

cw. PipT" CW. PIPE CW. PIPE 10000 10000 10000 10000 13000 10000 10000 10000 10000 10000 10000 10000 40000 43000 40000 123000 CASE-3 & 5

SECTION B - B STATE AGENCY FOR ENERGY AND ENERGY RESOURCES OF BULGARIA (SAFER)

BOBOVDOL TPP C02 EMISSION REDUCTION ft MODERNIZATION PROJECT

0 5 10 20 30 40___ 50(m) DWR T.HODAI 25.0CT.2000 CAD No. DUE B0B-06O-C34C5 □ IltD SCALE GENERAL ARRANGEMENT

APPD M.1SUCHIYA 23.0CT.2000 1/200 (ELEVATION)

TOKYO ELECTRIC ROVER COMPANY SIZE DWG. No. REV SUMITOMO CORPORATION A1 TEPCO- BOB- G003- C3 0 PEZERVNO PEZERVNO STUDENA STRUMA VI TOSH A VERILA

220kV BUS-1

ES

| 220kV BUS-2 >

BLOCK-2(A BLOCK-3(A STEP-UP, STEP-UP, STEP-UP, STATION TR., STEP-UP, STEP-UP, STEP-UP, AT—200 STEP-UP >" STEP-UP, TR. x_y

6.6kV

6.6kV #3-2 #1-2 6.6kV #1-3 6.6kV #2-1 6.6kV #2-2 6.6kV 6.6kV 6.6kV 70MW #1-1 70MW i 70MW 70MW I 70MW 70MW i

BLOCK-2 BLOCK-3 GENE. GENE.

CASE-3 & 5

EXISTING I NEW

STATE AGENCY FOR ENERGY AND ENERGY RESOURCES OF BULGARIA (SAEER) BOBOVDOL TPP C02 EMISSION REDUCTION & MODERNIZATION PROJECT

DWR T.HODAI 24.0CT.2000 CAD No. TITLE B0B-E201-C3&C5

CHKD SCALE 220kV SWITCHGEAR

APPD M.TSUCHIYA 24.0CT.2000 NONE SINGLE LINE DIAGRAM

TOKYO ELECTRIC POWER COMPANY SIZE DWG. No. REV SUMITOMO CORPORATION A2 TEPCO-BOB-E201-C3 0 lllllllllll lllllllll lllllll

NEW COI UNC TOWER

"me STATION

# // BLOCK-1) EXISDNC BLOCK- i1,2 * 3 BOILERS

EXISTING BLOCK-1.2 * 3 STEAM TURBINE BUILDING

NEW GAS RECEIVING >

EXISTING HOkV SWITCHYARD

NEW 220kV j EXISTING j220kV SWITCHYARD SWITCHYARD

COMPRESSOR STATION !

STATE AGENCY FOR ENERGY AND ENERGY RESOURCES OF BULGARIA (SAEER)

BOBOVOOL TPP C02 EMISSION REDUCTION & MODERNIZATION PROJECT

9.0CT.2000 B0B-G001-C4 PLOT PLAN M.TSUCHIYA 9, OCT.2000

TOKYO ELECTRIC POWER COMPANY SUMITOMO CORPORATION TEPCO-BOB-GO01-C4 112500 3000 6000 100500 6000

EXISTING HEAVY FUEL OIL STORAGE TAM EXISTING ENGINEERS iNAL OFFICE 3LANT

EXISTING PUMP STATION

STACK

STACK

WATER JAN

WATER TREAJ fEANT EXISTING BOILER

EXISTING COAL BINS EXIST. EQUIP. EXISTING EQUIP. STORAGE STORAGE

EXISTING TURBINE BUILDING

NEW GAS RECEIVING & METERING STATION

EXISTING BLOCK-2 MAIN TR —rr

12000 13500 1 EXISTING BLOCK-3 J rw PIIUD CTATinW NEW CW PUMP STATION

0 5 10 40 50(m)

STATE AGENCY FOR ENERGY AND ENERGY RESOURCES OF BULGARIA (SAFER)

B060VD0L TPP C02 EMISSION REDUCTION ft MODERNIZATION PROJECT

T.HOOAI 23.0CT.2000

GENERAL ARRANGEMENT

M.TSUCHIYA 23.0CTJ000 (PLAN)

NEW 220kV EXISTING 220kV SWITCHYARD TOKYO ELECTRIC POWER COMPANY SWITCHYARD SUMITOMO CORPORATION 7EPCO-BOB-G0O2-C4 STACK

TURBINE HALL CRANE

GENERATOR HALL CRANE

STEAM TURBINE GAS TURBINE

GENERATOR

CONDENSER

COOLING WATER HEAT EXCHANGER

AIR INTAKE FILTER HEAT RECOVERY STEAM GENERATOR (HRSG)

38000 20000

SECTION A - A

I CASE-41

STATE AGENCY FOR ENERGY AND ENERGY RESOURCES OF BULGARIA (SAFER)

0 5 10 20 30 40 50(m) BOBOVDOL TPP C02 EMISSION REDUCTION * MODERNIZATION PROvECT DWR T.HODAI 25.0CT.2000 CAD No. TITLE B06-G003-C4 CHKD SCALE GENERAL ARRANGEMENT 1/200 APPO H.TSUCHIYA 25.0CT.2000 (ELEVATION)

TOKYO ELECTRIC POWER COMPANY SZE DWG. No. REV SUMITOMO CORPORATION A1 TEPCO-BOB-G0O3-C4 0 PEZERVNO STUDENA STRUMA VITOSHA VERILA PEZERVNO

220kV BUS-1

DS\

220kV BUS-2

BLOCK-2(A STEP-UP >T STATION TR. TR. VA

6.6kV

6.6kV CASE-4 BLOCK-2 BLOCK-3 AGCC #1 AGCC #2 GENE. GENE. 370MW 370MW

STATE AGENCY FOR ENERGY AND ENERGY RESOURCES OF BULGARIA (SAFER)

BOBOVDOL IFF C02 EMISSION REDUCTION & MODERNIZATION PROJECT EXISTING T.HODAI 220kV SWITCHGEAR

M.TSUCHIYA 24.0CT.2000 SINGLE LINE DIAGRAM

TOKYO ELECTRIC POWER COMPANY SUMITOMO CORPORATION TEPCO-BOB-E201-C4 STATE AGENCY FOR ENERGY AND ENERGY RESOURCES OF BULGARIA (SAEER)

BOBOVDOL TPP C02 EMISSION REDUCTION A MODERNIZATION PROJECT

DWR T.HOOAI 9.0CTJOOO CAD No. BOB-G0O4 CHKD PLOT PLAN

APPD MJSUCHIYA 8,00.2000 1/1500 (EXISTING)

TOKYO ELECTRIC POWER COMPANY DWG. No. SUMITOMO CORPORATION TEPC0-B0B-G004 Permission of New Energy and Industrial Technology Development Organization (NEDO) International Cooperation Center is required before publishing any part of the contents of this report

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