R E S T R I C T E D

RETURN TO FiE CRY Report NO. TO-234b REPORTS DESK WITHIN

Public Disclosure Authorized ONI s preparedfor use within the Bank. In makingit availableto others,the Bankassumes no responsibilityto themfor the accuracyor completenessof the informationcontained herein.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized

IRAN

APPRAISAL OF THE DEZ MULTIPURPOSE PROJECT Public Disclosure Authorized

February 11, 1960 Public Disclosure Authorized

Department of Technical Operations CURRENCY EQUIVALENT

1 U.S. $ - 75.75 Rials * 1 Rial - 1.33 U.S. cents 1 million Rials - U.S. $ 13,333

* For convenience the rate of 1 U.S.$ - 75.00 Rials has been used in this report. IR A N

APPRAISkL OF THE DEZ AfULTIPUHPOSEPROJECT

TABLE CF CONTEITS Page No.

Summary and Conclusions i

I Introduction 1

II General Description of the Project 1

III The Reservoir and Dam 4

A. Hydrology of the Dez River Basin 4 B. Sedimentation 4 C. Size and Operation of the Reservoir 5 D. Location, Design and Construction of the Dam 6 E. Estimates and Allocation of Costs 7 F. Present Status and Schedule of Construction 8 G. Procurement 9

IV Agricultural Aspects 10

General 10 Summary Appraisal of Original Irrigation Project 11 Appraisal of Pilot Project 16

A. General 16 B. Present Conditions of Agriculture 16 C. Proposed Irrigation Works and Related Facilities 17 D. Execution and Operation of the Project 21 E. Increase in Value and Costs of Farm Production 25 F. Benefits and Return on Investment 25 G. Benefits for Pilot Scheme followed by Full IrrigationProject 28

V The Electric Power Aspects 30

A. The Power Market 30 B. The Size and Schedule of Installationof The GeneratingUnits 34 C. Description of the Power Facilities 35 D. Cost Estimates 35 E. Financial Projections 36 F. Operation and Management 37 G. Arrangementsfor the Expansion of the Distribution System 38 H. Comparison with a Thermal Alternative 40

VI Flood Control 44

VII Cash Flow Projections for the Authority 45 AMUEXES AND MAPS

1. Estimated Costs of the Dam and Power Facilities.

2. Pilot Irrigation- Present Pattern.

3. Pilot Irrigation - Requirementsof IrrigationWater per Month of Major Crops.

4. Pilot Irrigation- Present and Expected Crop Field.

5. Pilot Irrigation- Expected Farm Prices and Gross Value of Production.

6. Pilot Project followed by Full Project - Estimate of the Annual In- vestment Expendituresfor Irrigationand Flood Control.

7. Pilot Project followed by Full Project - Estimate of Gross Value and Costs of Productionand Return on the Total Investmentof the Ir- rigation and Flood Control Scheme.

8. HydroelectricPower Scheme - Peakload, Sales, Installed Capacity and Estimate Costs.

9. Estimate of Revenues and Operating Costs of the Power Scheme.

10. Thermal Alternative - Peakload, Sales, Installed Capacity and Esti- mated Costs.

11. Comparisonof Hydro and Thermal Systems.

12. Pilot Project followed by Full Project - Estimate of Income, Source, and Application of Funds.

12A. Pilot Project - Estimate of Income, Source, and Application of Funds.

Ma:M

Location of Dam, Power Facilities and IrrigationArea. Layout of Dam and Powerhouse. Pilot Area. Layout of Thermal Alternative. SUNIVRYAND CONCLUS0IES

The Dez River Project is the first step of a long-range program for the development of the Khuzistan area, proposed to the Plan Organization early in 1957 by the Development and Resources Corporation (DRC) of New York. The project is to be followed at some time in the future by other dams in the up- per reaches of the Dez and the adjacent Karun Rivers. DRC has been retained as the principal consultant for the planning, engineering and supervision of this program.

Khuzistan is the area in the south-west of Iran, bordered by Iraq to the west and the Persian Gulf to the south, in which are located the oilfields and the oil refinery of Abadan. Most of it is bare mountains and desert. Around Ankimeshk, Dezful, Shushtar and Ahwaz there is, however, some agriculture, partly dry-farming,and partly irrigation farming using water from the Karun and Dez rivers, which supports a population of about 150,000.

The Dez River project would primarily provide water to much of this land, initiallyto a pilot area of 20,000 hectares and, if the results of the pilot project should warrant this, to an additional 90,000 hectares. Furthermore, the project would provide electric power to Ahwaz, Abadan, Khorramshar,Dezful and Andimeshk, and it would reduce the peak of the floods of the Dez river, and thereby the flood damage which now periodicallyoccurs in the zone between Ahwaz and the Persian Gulf.

The principal structures of the project would be a thin concrete arch dam 190 meters high, creating a reservoir of 3,350 million cubic meters, an under- ground powerhousein the right embankment just below the dam, and the canals and distribution works for the irrigation area.

Operation of the reservoir would be controlled initially by the require- ments of flood control and electric power in that order. Later, if irrigation should be extended beyond the pilot scheme, its requirementswould gradually be given priority over those of electric power.

The high dam and the other works common to all purposes, and the irriga- tion end the power facilitiesof the project, appear in their broad lines technicallyfeasible, subject to a review of the design of the high dam to be made shortly by an internationalboard of engineers selected by the Bank. The proposed loan would not become effective unless this review would indicate to the satisfactionof the Bank that the constructionof such a dam would be technicallysound and feasible, and that any increase in the cost of the dam due to changes in its design would remain within such limits that the carrying out of the project would still be justified.

DRC would continue to be retained as the principal consultant for the carrying out and initial operation of all aspects of the project. Electrocon- sult, the designers of the dam, would also be retained as sub-consultantsfor the supervisionof its construction. The arrangementsfor engineering,super- vision and initial operation of the project are considered satisfactory. ii

The total investment in the high dam, power and irrigationwould, without interest during construction,amount to the equivalentof about US $ 83 million (of which roughly 48% in foreign exchange) for the pilot stage up to l966, and to about another US $ 82 million by'the time the full 110,000 hectareswould be under irrigation. About US $ 15 million so far has been spent on the con- struction and equipment for these principal features. (All the above figures exclude the costs of rehabilitation and expansion of the municipal distribution systems and of the sugar cane project.)

The principal contract for the constructionof the dam and powerhouse, those for the principal items of equipment and most of the smaller ones have been awarded on the basis of internationalcompetitive bidding. It has been agreed that all remaining major contractswould also be awarded on the same basis.

The access to the dam site and the powerhouse and the diversion tunnel have been completed, The main dam and the powerhouse with the initial two units are scheduled to go into operationby the end of 1962, and the pilot irrigation scheme partly in 1963 and partly 1964. If, as is hoped, a decision to proceed with the full scheme could be reached during 1966 or 1967, work on the extension of the area would start late in 1967, the first additional area would be irrigated in 1970 and the entire area come under irrigation in 1974.

The project has basically two distinct aspects, namely, agriculture (most of the flood control benefits also accruing to agriculture),and electric power. As costs and benefits in these two sectors are quite different in nature, they have been appraised separately. For that purpose one-third of the cost of the dam and other works common to all purposes has been allocated to power, and two-thirds to irrigation and flood control combined. The appraisal of the economic benefits of both sectors of the project is somewhat tentative,because the project would be the first of this size and type in the area, and there is thus no local experience and tradition in large-scale irrigation and large use of electric power on which to base forecasts and comparisons.

irrigationof the proposed area is generally feasible, both as regards topography and soils. Of the gross 125,000 hectares that would be irrigated, more than half has already irrigation of some sort from run-of-the-riverwater, About 84% of the gross area is privately owned, and eight family clans own some 85,000 hectares. Irrigationwater would be provided to the entire area by gravity flow. The basic studies, general plans and layouts for the irrigation scheme have been made by the NederlandscheHeidemaatschappij (NH) of Arnhem. Some 10,000 hectares of this land is already being developedby DRC as a sugar cane plantation,which is scheduled to enter into operation in 1962, using for the time being water pumped from the Dez River.

The original proposal was to proceed with all the major structures of the irrigationscheme, such as re-regulatingdam and main carals,concurrentlywith the high dam, and to bring the entire 110,000 hectaresunder irrigationby 1973. Tentative forecasts showed that under favorable circumstances this full develop- ment would only have started to yield to the econonm a modest return on the iii total investment after about 10-15 years, and that it would have taken equ.ali. long for irrigation to start contributing a small net cash surplus (before any debt service) to the operating agency. These results could only have been achieved, however, with transformation of the entire 110,000 hectares by about 1973, full utilization of the land and water the year round, and introduction of a considerably more efficient agriculture. This would in turn have required the government, the landowners and tenant farmers putting into effect within a few years a number of crucial organizational and admin- istrative measures; otherwise the full scheme could have resulted in a heavy deficit operation both to the econony and to the operating agency. Many of these measures had never before been introduced, nor indeed attempted, in Iran, and the Bank had serious doubts whether they could be carried out fully and on schedule on such a large scale.

As a result of these doubts the concept of a pilot scheme was developed, that would test and work out these organizational and administrative measures on a smaller scale. The pilot area has been well chosen and the approach that is proposed for trying to resolve the organization and administrative problems outlined previously appears suitable. If after a necessary trial period the results of the pilot scheme should be such as to warrant proceeding with the full scheme, the latter's return to the economy and its cash surplus to the operating agency should reach the levels estimated for the original proposal with a delay of only one to two years. Even if the results of the pilot scheme should not warrant proceeding with the full scheme, the pilot scheme could still be expected to break about even as regards costs and benefits to the econony, but it would earn little or no return on the public investment in the pilot scheme itself and that part of the common costs allocated to it. Revenue from water charges would not fully cover the agency's operating expenses in the irrigation sector, and therefore contribute nothing towards debt service on the proposed loan. However, the pilot area would certainly continue under cultivation,the research and extension programs and other measures to be introduced during the trial period would have a favorable effect on the agriculture of the surrounding areas, and there would undoubted- ly be some further private development taking advantage of the regulated flow of the river.

The planning, design, construction and operation of the irrigation scheme (and of the power facilities) would be entrusted to a Government agency still to be created and to be called the "KhuzistanWater and Power Authority". This agency would be semi-autonomousand responsibledirectly to a Deputy Prime Minister, and would have wide powers in these matters regarding the Dez River project as well as future similar projects in the area.

It is essential for the success of the project that the Government promptly adopt legislation and regulations for the establishingand functioning of this Authority. The principles to be included in this legislationand in the regulations,such as assessment of the water charge on the basis of area rather than actual use, and penalties in case of non-payment, appear suitable. No withdrawals could be made from the loan in excess of US$ 8 million for purposes other than payment of interest and other charges, until the Govern- ment would have put into effect legislation and regulations along the lines agreed upon. iv

It is also essential that the landowners Pnd tenants within the pilot area cooperate and actively participate in the scheme. No irrigation works and facilities would be started until arrangements satisfactory to the Bank would have been made with the landowners (in particular, regarding the works to be built by each landowner, how the costs would be shared between the land- owners and the government, and what commitments the landowners would make re- garding stabilization of tenure of the tenant farmers and the introduction of modern agricultural practices) to ensure their cooperation and participation.

Finally, no major works included in the remainder of the irrigation plan (including the re-regulating dam and the main canals) would be started until the pilot scheme shall have been under irrigation for at least three years, in order to provide sufficient experience an1 data for judging Whether this would be justified. At that time the Bank would be consulted regarding the results achieved during thetrial period and the nature and timing of further works.

DRC would continue to retain NH for the planning, engineeringand supervisionof constructionof all the irrigation facilities and of the re- lated services, and of their operation during the initial period.

The power facilities of the project would supply primarily the towns of Ahwaz, Abadan, Khorramshar,Andimeshk and Dezful, of which the first three are now served by the Consortium of Oil Companies operating the Abadan oil- fields and refinery. The total load of the towns is at present some 20 MW and expected to reach some 38 MW by 1963. Industrial users are expected to use about 10 MW at that time. Thereafter the peakload has been estimated to increase at the rate of 7% cumulative. The initial installationat the Dez powerhouse would be two units of 65 YW each, and the power would be transmitted to Ahwaz by a 230 kv line 166 kilometers long.

The returns on the investmentin the electric power sector would, with the proposed rates of sale of electricityby the Authority, from the start of operations be satisfactory, and the electric power alone would produce, after the fifth year of operation, a cash surplus sufficient to cover a debt service for the entire proposed loan (includingthe portions for the dam and other works common to all purposes and for the irrigationworks). Agreement has been recchedon an adequate initial average rate and on a satisfactorycovenant regarding future rates.

The comparison of the "present worth" of capital costs plus operating costs of the proposed hydro scheme with that of an alternative thermal scheme using natural gas shows the latter to cost substantiallyless, but the difference is subject to variation depending on the basic assumptionsthat are used in the comparison. In this connection one also has to bear in mind that construction of the high dam and of most of the generating equipment is already under way (roughlyUS $ 15 million has now been spent on it), and that much other preparatorywork for the proposed scheme has been done.

The facilitiesfor the distributionof the electric power in the five principal towns of Ahwaz, Abadan, Khorramshar, Andimeshk and Dezful are owned by the municipalities. These facilities are in poor condition and have not v eneugh capacity, and in order to distribute the peak loads assumed for 1963, they would have to be practically rebuilt and enlarged several times. The Plan Organization is assisting the municipalities in this by providing consultantsfor engineeringand supervisionand by contributingto their financing primarily through grants, and in some casesby loans. The pro- posed loan includes a substantial portion of the foreign currency cost of this rehabilitation and expansion of the distribution systems to ensure that by the end of 1962 they would be able to meet distribution requirements es- timated for that date. All the necessary steps would be taken to ensure that the facilities and management functions of these municipal power dis- tribution systems would in large measure be standardized and coordinated, so as to achieve in fact a joint operation, directed by the Khuzistan Water and Power Authority.

In conclusion, taking into account all the above factors and the agreements reached regarding scope, planning, execution and initial operation, the project as now proposed would be suitable for a Bank loan of the equivalent of about US $ [2 million. The Borrower would be the Government of Iran. A term of 25 years with a grace period of 41 years would be appropriate. I. INTRODUCTION

1. The Dez River Project is the first step in a long-rangeprogram for the development of the Khuzistan area, proposed to the Plan Organization early in 1957 by the Developmentand Resources Corporation (DRC) of INew York. The other componentsthat are at present included in this program are a sugar cane development and sugar refinery at Shush, a power trans- mission line from Abadan to Ahwaz (completedin 1959 to bring power from the oil refinery at Abadan to Ahwaz until the Dez Project enters operation),the rehabilitationand expansion of the electric power distributionsystems at Ahwaz, Abadan, Khorramshar and some smaller towns, and a number of surveys and studies. The Dez River Project is to be followed at some time in the future by other dams in the upper reaches of the Karun river and its tribu- taries.

2. The Dez River Project was first submitted to the Bank in September 1957. In October 1958 enough data were available for a Bank Mission to re- view it in the field. Upon the Mission's return in November 1958 much of the data needed to be firmed up further, and it was only in June 1959 that a tentative appraisal could be completed.

3. The main conclusionsof this interim appraisal were that the project was in its broad lines technicallyfeasible, but that there were considerabledoubts on the justificationof the irrigationscheme. It was considered that drastic changes in the methods of farming, landowner- peasant relationship and many other matters would be necessary before even a modest return on the large investmentin irrigationcould be obtained and that these changes could not be expected to be implementedeffectively within the envisaged schedule. The Bank suggested,therefore, to the Plan Organizationthat it should consider alternativedevelopments involving less risk of a large misinvestment.

4. Consequently,the Plan Organizationproposed in August 1959 to test and develop the above-mentionedorganizational and administrationmeasures first in a pilot irrigationscheme of some 20,000 hectares, before proceeding with the full irrigationscheme of 110,000 hectares. This report is an ap- praisal of this latest proposal, for which the data were submitted to the Bank from November 1959 to January 1960. For purposes of presentationa possible IBRD loan for this revised project has been calculatedat US$ 42 million, representingthe foreign currency expendituresafter September 1, 1959 on the main dam, the initial power facilities, the public investment in the pilot irrigationscheme, the rehabilitationand expansionof the distributionsystems of the five principal towns of the area and most of the interest during constructionon the proposed loan.

5. In the course of the Bank's review it became evident that, prima facie, there was the alternative of supplying electric power to the area by a thermal plant using natural gas, of which enormous quantitiesare being wasted from the nearby oil fields. The Bank retained, therefore,the con- sulting firm of Stone & Webster of New York to make a study of a thermal alternativeto the proposed hydro-scheme,the results of which are the basis of the comparisonsgiven in Chapter V.

II. GENERAL DESCRIPTION OF THE PROJECT 6. The Dez River Project is located in Khuzistan, the area in tb; south- west of Iran which is bordered by Iraq to the west and the Persian Gulf to the souath. The extensive oil fields of that area and the refinery at Abadan - 2 -

produce in value about8r of Iran's exports. Apart from the oil industry Khuzistan has, however, so far seen very little other development. Most of it is bare mountains and desert. Around Andimeshk, Dezful, Shushtar and Ahwaz there is some agriculture,partly dry-farmingand partly irrigationfarming using water diverted from the rivers, which supports a population of about 150,000. The town of Abadan depends almost entirely on the oil industry, and the town of Khorramsharlargely on the port. Ahwaz, the largest town in Khuzistan,has a slightly more diversifiedeconomic basis, serving, apart from the oil industry, as the center of the railway and road transport to and from Teheran, and as a trading center. There are no other industriesto speak of in the entire area. The tmnsrrmentioned above are the only settlementsof any size, except for the oil company installationsand, in the winter, the camps of nomadic tribes. The standards of living and the level of education of the population are generally very low.

7. Some of the land along the Karun and Dez rivers has, however, poten- tial for agriculturaldevelopment. Water from the two rivers is plentiful,arid. the fertility of the soils, now depleted from centuries of cultivation,could be restored. Being close to good road and rail connectionsand ports would facilitate such a development and also the shipment of its products to the markets.

8. The Dez River Project would primarily provide water to this land; initiallyto a pilot area of 20,000 hectares, and if the results of the pilot scheme should warrant this, to an additional90,000 hectares. Furthermore,the project would provide electric power to the towns of Ahwaz, Abadan, Khorramshar, Dezful and Andimeshk, from a power plant with initially two and ultimately eight units of 65 MW each. Finally, the reservoir would be operated in such a manner as to reduce the peak of the floods of the Dez River, and thus reduce the flood damage which now periodicallyoccurs, especiallyin the zone between Ahwaz and the Persian Gulf.

9. The principal structuresof the Project would be: (i) a concrete arch dam 190 meters high in the gorge of the Dez river north of Dezful, creating a reservoir of a total of 3,350 million cubic meters; (ii) an under- ground powerhousein the right embankmentjust below the dam; (iii) a re-regulatingdam a short distance below the main dam, (which would have to be built only if the irrigationarea is extended beyond the initial 20,000 hectares);and (iv) a 230 KV transmissionline, 166 kilometerslong, frointhe Dez dam to Ahwaz.

10. Operation of the reservoir would initially be controlledby the requirementsof flood control and electric power in that order; later, if irrigation should proceed beyond the pilot scheme, its requirementswould gradually he given oriority over those of electric power; this would prcbnbly mean the installationof thermal power after the sixth unit at Dez, in order to have enough capacity for generationduring dry years. 11. The main features of the Project would be built and operated by a semi-autonomousgovernment agency still to be established. Most of the land is privately owned, and the owners are expected to meet a substantial portion of the "on the farmt investments and to continue to own and operate the farms.

12. The total investment, excluding interest during construction, would be roughly as follows: Completion of Pilot Stage Full Scheme

(Up to 1966) (1967 - 1974) Foreign Local Foreign Local Currency Currency Total Currency Currency Total (Expressed in Mi2s. of US$) (Expressed in Mlils. of -US$)

Dam and other works common to all purposes 14.4 19.6 34.6 - - -

Power Facilities of Authority 21.2 9.4 30.0 7.9 1.2 9.1

IrrigationFacilities: Public Works 4.4 9.8 14.2 25.1 38.1 63.2

"Cn farm" - 3.7 3.7 - 9-3- 9.3

Total 40.0 42.5 82.5 33.0 48.6 81.6

Sugar Cane Company-) - 11.3 11.3 - 0.3 0.3

DistributionSystems2/ 4.0 - 4.0 - - -

1/ The Sugar Cane Company project has been started as a project distinct frola the pilot scheme, but it would draw water and receive farmer-growncane from the full scheme. 2/ Contribution of the Plan Organizationtowards rehabilitationand expansion of the electric power distributionsystems of the five principal towns.

13. The main dam and the powerhouse with the first two units are now scheduled to go into operationby the end of 1962, arn the pilot irrigation scheme by the end of 1963. Assuming the results of the three-yearperiod of the pilot scheme would warrant expansion of irrigation,the remaining irrigation works would at the earliest be started in 1967 and the first ad- ditional area irrigated in 1970. The experience gained during operation of the pilot scheme should, however, permit the remaining area to be put under irrigation in the four-year period 1970-1974.

14. As the project has basically two distinct aspects, namely agriculture (because most of the flood control benefits also fall into that category) and electric power, and the costs and benefits in these two sectors are quite different in nature, they are appraised separately in the subsequent chapters. - h -

III. THE RES:R1VOIRAND DAM

A. HYDROLOGYOF THE DEZ RIVER BASIN

15. The Dez river is the principal tributary of the Karun river and has a total drainage area of about 22,000 square kilometers,extending back to the mountain ranges east of Hamadan. The drainage area above the proposed dam site is about 17,000 square kilometers.

16. Precipitationvaries very considerablyover the area, from 350 to 55( millimetersper year in the upland plains to over 1,200 millimeterson the mountain ranges with snow cover. Practically all the precipitationfalls from November to April, with maxima occurring from December to March. Hardly any rain falls during the remainder of the year. The precipitationalso varies considerablyfrom year to year, and several very dry years in succession have been recorded.

17. Stream flow records for the Dez river at Dezful are only available for the last five years. The weekly flow has averaged during that period from 55 to 1,050 cubic meters per second. Records for the last sixty years are available, however, for the Karun river at Ahwaz, and the correlationbetween the flows of the Dez and Karun rivers over the five year period of simultaneous records show that the Dez average weekly discharge generally varies from about 30% of the Karun discharge at Ahwaz during low flows, to about 40% during the higher flows. This correlation, which is a rough approximation,has been used to calculate the average flows of the Dez for the sixty-yearperiod. The long-term average annual flow at the dam site calculated on this basis is 287 cubic meters per second.

18. Applying the above mentioned factors to the Ahwaz floods, the theoret- ical maximum flood of the Dez River at Dezful has been calculated at 4,500 cubic meters per second (the maximum flood on record at Dezful occurred in March 1959 and reached about 2,250 cubic meters per second). Because these calculationsof maximum floods are approximate,the spillway has been designed for a flood of 6,500 cubic meters per second with the assumption that this flood would occur with the reservoir level at the top of the spillway gates. With the reservoir at the level prescribed by the operatingrules during the flood season (see below) a flood with a peak flow of about 10,000 cubicn./sec. could be routed through the reservoir. Additional flood protection is provided by designing the dam for emergency overflow.

B. SEDIIIENTATION

19. The useful life of the reservoir is estimated to be of the order of 160 years, with its active storage beginning to be affected within 30 to 50 years. Measures to reduce this rate of sedimentation would, therefore, be necessary. One of these would be periodic "flushing" of the reservoir through the three sluiceways provided for the dam. lMore important would be measures - 5 - to reduce erosion in the watershed through the control of land use. This lould be supplemented by the construction of small rock filled structures in the gullies and small tributaries upstream from the reservoir to retain silt and coarser material and reforestation in the zones with sufficient rainfall. These measures are contemplated as part of the maintenance program and are reflected in the estimated operating costs.

C. SIZE=Er1k! MI) OF THE RESERVOIR

20. The normal maximum operating level of the reservoir would be 350 meters above sea level, corresponding to a reservoir volume of 3,350 million cubic meters. The active storage, i.e. from elevation 290 meters to the above "normal maximum" level, would be 2,h20 million cubic meters.

21. The operation of the reservoir would in the first instance be controlledby the requirementsof flood control. For this purpose the reservoir would from November 15 to January 1 be gradually drawn down from elevation 350 (meters) to 335, held at this level until April 1, and then allowed to rise again gradually to the maximum elevation of 350 by May 15.

22. Subject to this over-riding priority of flood control, the reservoir would during the period of the pilot scheme still be able to meet fully the requirements of both irrigation and power generation, since the requirements of the pilot irrigation scheme would at all times be substantially below even the flows of the estimated dry year occurring once every 20 years.

Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. Est. average flow of dry year cm/s 80 276 334 378 2h6 141 111 89 68 56 59 64

Requirements of the pilot area cm/s 2 b 7 14 11 38 46 42 32 21 6 3

23. With irrigation fully developed to 110,000 hectares, the require- ments of irrigation would, however, be given precedence over thos of power generation, and the following average flows would be released from the reservoir for the purposes indicated:

Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. (cubicmeters per secoTh7

For the Dez Irrigation area 20 35 56 76 67 161 17b 169 1b6 86 32 15

For downstream users 15 15 15 15 15 15 15 15 15 15 15 15

For the Karkheh irrigation area - - 5 10 8 30 34 33 27 12

Total 35 50 76 101 90 206 223 217 188 113 b7 30 24. The generationof power would thus be subordinateto the requirements of flood control and irrigation and would command operation of the reservoir only after both these requirementshave been met. In order to be able to meet the peak loads of the power system and its requirementsof generation to the greatest possible extent under these operating rules, the project provides for a re-regulatingdam a short distance below the main dam, with an active storage capacity of 12-15 million cubic meters.

25. In a dry year,that occurs on the average every 20 years, these irrigationreleases would be reduced by 10% once the power installationhad reached its full capacity, in order to be able to maintain a minimum of power generation. Under these operating rules thermal capacity would have to be added to the power system after the installationof the first six units at the Dez dam.

26. The operating studiesmade so far are rough first approximations sufficient to determine the feasibilityof the project; they would, however, have to be refined further in order to establish the method of operationof the reservoir in more detail. There is ample time to do this, since, as mentioned previously,there will be no conflict between the requirementsof power and irrigation until the latter would approach full development sometime in the 1970s.

D. LOCATION, DESIGN AND CONSTRUCTIONOF THE DAM

27. The dam would be located in the upper half of the narrow gorge just north of Dezful, where the river breaks through the last mountain range before entering the coastal plain. At that point the gorge has a depth of about 450 meters and a cross sectionwhich permits constructionof a concrete dam with a minimum of volume. The reservoir area is mostly arid, rocky land with little vegetation. It is covered by a uniform, compact conglomeratethat does not seem to present any danger of leakage from the reservoir. The land is all owned by the state.

28. The dam would be of the thin, double curvature (or dome) type with a total height of 190 meters and a width of 22 meters at the foundation, creating a reservoir of 3,350 million cubic meters. The foundation and abut- ments of the dam, and the location of the powerhouse and tunnels, would be in a calcereous pliocene conglomeratewith an unconfined compression strength of about 2,600 lbs. per sq. in., about equal to a weak concrete. The foundation explorationseems adequate and has shown the material to be very uniform over the entire height on both sides and all along the gorge, with few joints, no faults, seams or cavities and only a few pervious sections which would need grouting.

29. The design of the dam and powerhouse has been entrusted to a board of three engineers (Messrs. Meyer, formerly of TVA, and Semenza and Oberti of Italy), with Electroconsultof Milan responsiblefor the borings, testing of the materials and detailed design, and ISMS of Brescia, Italy, for the model tests. These engineers and the consultants combine a very wide experience in this field. As a result of the recent failure of another thin arch dam at Malpasset (France) the basis and method of design of the proposed dam are, however, presently being reviewed by Electroconsultjointly with the above mentioned DRC board of engineers. In addition the Bank has retained its own board of consultantsfor the same purpose, in order to have an independent view on the risks involved in the constructionof a thin arch dam at the proposed dam site. The reviews of both boards should be available in about two months time, i.e. well in advance of the start of any work on the founda- tions and the dam itself.

30. The preliminaryopinion of Electroconsultis that this review will not result in a drastic change in the design of the dam but possibly modest increase in its thickness and volume, and an increase in the grouting in the foundationsand the abutments. This possibility has been taken into account in the amount of contingenciesincluded in the cost estimates. Should the review of the two boards indicate a need for a substantialchange in the de- sign which would result in substantial increases in cost of the project, the Bank would have to review the justificationof the project and consequently of the proposed loan. The proposed loan would not become effectiveunless the review of the design by the Bank's board of engineers would indicate, to the satisfactionof the Bank, that the constructionof such a dam would be technicallysound and feasible, and that any increase in the cost due to changes in its design would remain within such limits that it would in the opinion of the Bank still be justified to carry out the project.

31. The waterways and the powerhouse have been designed by DRC's own staff, in part based on the results of model tests by the Georgia Institute of Technology.

32. The constructionof the dam and powerhouse would not present any exceptionalproblems. An access road to the rim of the canyon, the access tunnels to the location of the powerhouse and the diversion tunnel have al- ready been completed. The excavation was relatively easy, the material about as predicted on the basis of the exploration,and no lining necessary in any of the tunnels. Most of the work on the foundation of the dam, and also the concreting, would be done with the aid of two large cableways that would cross the gorge at the dam site.

E. ESTIMATESAND ALLOCATIONOF COSTS

33. The cost of the work already completed on the dam and other common works amounts to about 750 million rials (including equipment), or roughly one-third of the total cost of the dam and other works common to all pur- poses.

34. The estimates for the rest of the civil works (see Annex I) are, as regards quantities, based on the present design of Electroconsult. As mentioned above, this design is now under review, and these quantities may change. As regards unit costs, these estimates are based on the recent award of the main construction contract, which comprises the civil works of the dam and powerhouse, and tentatively also the installation of the mechanical - 8 - and electricalequipment, to Impresit, the group of Italian construction firms that is now successfullycompleting the Kariba dam on the Zambesi River. The contract provides for fixed unit prices and fixed lump sums which would not be subject to any kind of escalation.

35. The basis of the estimates is thus quite firm. They are still subject, however, to increases due to the following: (i) changes in the quantitiesof work (which should not exceed 5% to 10% of the estimated quantitiesunless the design of the dam is changed substantially; (ii) un- foreseen difficultiesduring construction(e.g. the flooding of the coffer- dam); (iii) substantialincreases in the cost of labor (which might force a revision of the unit prices although this is not now provided in the pro- posed contract); (iv) delays in the shipment of the equipment and supplies especially in the ports; and (v) possible labor problems. On the other hand there may be a modest decrease in the costs due to the possibilitythat more constructionequipment than now envisagedmay become available from the Karaj dam.

36. It is very difficult to evaluate to what extent any of these contin- gencies might occur. It has been estimated,however, that in combination, except for a revision of the design of the dam, they should not increase the costs by more than 15% on the foreign currency component and 15% on the local currency component still to be spent, and correspondingcontingency reserves have been included in the estimates. A possible further increase in the costs due to a change in the design of the dam can only be estimated after the engineering boards have completed their reviews>

37. The present breakdown of the estimated total costs into local and foreign currency, on which the amount of the proposed IBPD loan is based, has been determinedby DRC in the light of their experiencewith the con- struction of the access road and the access and diversion tunnels. The cur- rency breakdown of the remaining civil works on the dam and powerhousewill, however, only be finally negotiatedwith Impresit in the next month or so, and this present currency breakdown is, therefore, still subject to consid- erable change.

38. An allocation of the costs of the dam and other works common to their three purposes is necessary for the subsequentcalculations of returns and benefits. DRC has allocated roughly one-third of the common costs to each purpose, based on an analysis of the cost of alternative single-purpose investments,and the same allocation has been used in this report. Other methods might result in somewhat different allocations,but as the cost of the dam is only a relativelysmall portion of the total investmentin all sectors, a somewhat different allocationwould not change any of the con- clusions.

F. PRESENT STATUS AND SCHEDULE OF CONSTRUCTION

39. In August 1957 DRC started work with its own forces on the access road and accesstunnel from upstream to the location of the powerhouse. - 9 -

In February 1958 Morrison-Knudsenwas awarded a contract for the access road to the rim of the canyon above the dam site, an access tunnel, and the constructioncamp, and in January 1959 an additional contract for the diversion dam. All these works have since also been completed. Their total cost is roughly 750 million rials, of which a sizeable portion represents equipmentpurchased on behalf of the Plan Organization.

40. Impresit, the main contractorfor the civil works of the dam and powerhouse,and tentativelyalso for the installationof the mechanical and electricalequipment, will send the first personnel and equipment to the site shortly. By May 1961 the diversion of the river is to be completed and work to start on the foundations of the dam. The first unit is scheduled to go into commercialoperation by the end of 1962.

G. PROCUPEvENT

41. The first two constructioncontracts, for the camp and access roads, and for the access and diversion tunnel, were negotiatedwith Morrison- Knudsen on a cost plus fixed fee basis.

42. The contracts for the major items of equipment, and the principal civil works contract (with Impresit) have been awarded on the basis of wide internationalbidding, at fixed prices with no escalation. The relatively few remaining contractswould also be awarded on the same basis. - 10 -

IV. AGRICULTURALASPCTS

GJNIRAL

43. The agricultural sectors of the project are the development for irrigationof an area of 20,000 hectares, designed as a pilot trial of the feasibilityof the development of a total area of llOyCOO hectares, and flood control. The benefits from the reduction of flood damage in the area below the irrigation scheme would accrue mainly to agricultureand these have been added to the irrigationbenefits in calculatingreturns on invest- ments.

44. Irrigationwas the most important sector of the Dez project origin- ally consideredby the Bank and would have required by far the largest invest- ment and administrativeand organizationaleffort. A net area of 110,000 hectares (including10,000 hectares currently being developed for sugar cane) was to have been developed for irrigationat a cost of 8 billion rials (US$107million equivalent)excluding the allocationof the common costs of the high dam. The allocationof these common costs to irrigationand flood control would have increased the investmentto nearly 10 billion rials (US$132million equivalent),exclusive of interest during construction.

45. The Bank's appraisal of the original Dez project concludedthat the return on the investment in the irrigation sector would, under favorable conditions, only accrue after 10 to 15 years and even then be relatively small. This would presume transformation of the entire area by 1973, full utilization of the land and water all the year round and the gradual intro- duction of a much more efficient agriculture. This in turn would depend on the Government, the landowners and the tenant farmers putting into effect a combination of crucial organizational and administrative measures wJnch had never before been introduced,nor indeed attempted, in Iran. It was con- sidered unlikely that these measures could be carried out fully and on schedule on such a large scale. It was concluded that such a massive invest- ment could not be justifieduntil experienceon a smaller scale had demon- strated that organization,a&ainistrative and technical problems could be solved and that crop yields and benefits thought to be attainableunder favorable conditionscould, in fact, be achieved.

46. The present irrigationproject could serve this purpose. A pilot area of 20,000 hectares (net) within the Dez project area would be developed and the Governmentwould agree to defer other expenditureson irrigation, includingthe major investmentin a diversion dam and main canals, until the results of the pilot trial have demonstratedwhether or not the construction of the full project could be justified. If the pilot scheme proceeds on sche- dule, it is hoped that this decision could be reached by 1966 or 1967.

47. Since the present project is a pilot scheme, its overhead costs would be disproportionatelyheavy and it would not be financiallyviable in its own right. Its basic justificationmust therefore rest on the justifi- cation for the whole Dez project, should the pilot trial demonstrate that results as good or better than those anticipated can, in fact, be achieved under Iranian conditions. For this reason, a sumnary of the earlier apprai- sal of the whole Dez project for the developmentof 110,000 hectares precedes the appraisalof the present Pilot Project. - Jll-

SUPMARYAPPPATSAL OF ORIGIN.L DE7 PROJECT(110,OCO hectare) Present Conditions of Agriculture

48. The soils, which have been depleted by centuries of cropping,are mainly deep alluviels of medium to fine texture. The topographyis favorable and internal and surface drainage conditionsare generally quite good. About 85% of the area falls within Classes 2 and 3 of suitabilityof land for irri- gation and the balance is also irrigable. The average annual rainfall of about 400 mms. falls entirely in winter and the summers are dry and very hot.

49. The total populationis 130,000, of which 70,000 live in the two principal towns and 60,000 in 160 rural villages. Seasonal labor is employed for planting and harvest and there is considerableunderemployment during the rest of the year. About 90% of the populationis illiterateand sanitation and health standards are very poor.

50. The gross agriculturalarea is 125,000 hectares of which lO,0OO hectares would be irrigsted. Some 80,000 hectares of this is presently irri- gated under primitive conditionsfrom run of the river water. This gives some sort of supply to 62,000 hectares in winter and 18,000 hectares in summer. Winter crops are mainly wheat end barley and summer crops mainly rice and some sesame and vegetables. Farming practices are primitive and crop yields are low even compared to other parts of Iran.

51. Eighty-four percent of the area is privately owned and eight familyr clans own some 85,000 hectares (gross area). These estates are managed by a single representativesubsecuently referred to as the landowner. Tenants cul- tivate three-quartersof the area and crops are shared with the landownerson the basis of five production factors; la,nd,water, draft animals, seed and labor. The produce of livestock accrues entirely to the tenant.

52. The present value of production is estimated at about 500 million rials. The surplus to the tenentst subsistencerequirements and the landowner', share are sold for cash, mainly on poorly organized local markets. The tenant is usually in a poor bsrgainingposition at the time of sale because of his ignorance and indebtednessto the merchants.

Proposed IrrigationWorks

53. Irrigationwould be by gravity flow. Water released from the high dam would be diverted by a re-regulatingdam downstream into main canals on either side of the river with a combined length of 47 kms. A further 241 kms. of tnals would distributewater to f-rm boundaries. The works to farm bound- aries would be public and about two-thirdsof the costs of "on farm" tertiary canals, ditches and land preparationwould be met by public funds.

54. Design and supervisionof constructionwould be by Nederlandsche Heidemaatschappij(NIH) of Holland, under the general direction of DRC. Irri- gation would be introducedby stages from 1962 and all the area wejuldreceive a full water supply by 1973.

55. The sugar cane development,which is already operatina by punping from Dez River, would receive most of its water reqtirementsby gravity after corn-,letionof the right bank main canal. - 12 -

Necessary Organization and Administrative Measures

55. A very large governmental effort in organization and administra- tion, a substantial investment and an equally formidable organization effort by the landowners and a greatly increased labor effort by the tenant farmers would be necessary to achieve the production increases assumed in subsequent paragraphs. The problems involved and the measures considered necessary for their solution,which would be crucial to the success of the project, are out- lined in the followingparagraphs.

57. Zaticipation b Lando.ners The landowners control farm operations on the greater part of' the land in the area, either through their arrangements with the tenants or through direct operation. They would have to invest very considerable amounts of money in improving the land, building the tertiary canals and distribution systems, and in providing the necessary buildings and mechanical equipment. In addition to these investments,the landownerswould have to make an effort in organizing and managing their lands far beyond any- thing which has been done in this area or anywhere else in Iran to date. This would mean for the owners either to take direct personal charge or to appoint competentmanagers, and th1 ldrinR¢d training of a large :7taffat the level of supervisors, foremen and Techanics.

584 At the time of the appraisal,neither the Plan Organizationnor DRG had explainedto the landownerswhat they would be expected to do in these matters of investment and organization, and what incentives there would be for them to participate in the scheme. There was, therefore, no indication as to whether the landowners would be willing and able to undertake this effort and would give a commitment to that effect.

59. The Plan Organization would next have to inform the landowners about the various aspects of the project, and explain in detail what costs and ad- vantages would accrue to them. The commitment would have to take the form of an enforceablecontract which would have to cover the duties and obligations of the landowners, including those of the areas which, according to present plans, would be operated as fully mechanized farms. There is no pattern as yet for arrangements and commitments of this kind in Iran.

60. Assesment of the Water Charge. At present, the landowners are respon- sible for providing the irrigation water on that part of their lands which already have irrigation works. For that they are compensated by an additional share of the tenant farmerst crop.

61. No arrangements have been discussed as to what the water charge would be under the proposed new scheme, and on what basis it would be assessed. By far the most effective means to assure full utilization of the land would be to assess the charge on a per hectare basis, independently of how much of the available water is being used. This principle would be entirely new to Iran, and as in the case of many other irrigation schemes, it would, therefore, most likely have to be establishedby law or decree. Such legislationwould also have to give the operating agency the right to take appropriateaction to recover defaults on the payment of the water charge.

62-Land Tenure and Rartal Ar ang-F nts with the Tenant Farmers. At present, the major part o£ the land farmed by tena-n7sis reallocatedperiodically. It would rot seem feasible to improve the productivityof the land through crop rotation, fertilizers, etc., under this system; the tenan-t far-mers would have - 13 - no incertive in carrying them out because they would not be assured of reap- ing the benefits of the higher productivity in future years. Some landowners have indicated that they would be willing to change the system to a more per- manent tenure, but there was no assurance that all of them would be willing to follow suit.

63. The full use of the land and improvement of its productivity would also require changes in present arrangements between landowners and tenant farmers. The landowners would have to provide not only the land and the water but also the services of mechanical equipment, fertilizers, insecticides and other supplies. It is doubtful whether all this could be arranged within the traditional system of sharecropping. In order to have a workable landowner- tenant relationship which would permit the proper use of the land, it would probably be necessary to introduce cash payments for rent, water charges, ser- vices and supplies. This question has not yet been discussed with the land- owners. It would be a drastic departure from the long established tradition and it is not certain whether the change would be acceptable and, if so, how quickly it could be put into effect. The Government and the future operating agency would probably have to participate in working out the details of such a new system.

64, The Establishmentof an Operating Agency. The existing irrigation facili- ties are operated and maintained directly by the landowners. The proposed new facilities would be operated and maintained by a new agency that would deliver the water to the farm boundaries. From there on it would be distri- buted by the landowners. The responsibilities,methods of operation and or- ganizationof the operating agency have not yet been worked out. Considering that Iran has no experience in the organizationand operation of such an authority, it would probably take some time to obtain a workable agreement on it. For the same reasons, its management and staff would probably have to come from abroad for the first years of operation. The success of the pro- ject would depend largely on the extent to which this management would have effective control over the policies and administrationof the project.

65. The functions of the agency would have to include the operation of research stations, a special extension service, a training center and most likely also a village development service. All these services together would require a very considerablestaff of maybe some 400 people, and the manage- ment and senior staff of the services would also have to come from abroad. Such research and extension services on water management, salting, permeabi- lity of the top soil, drainage, fertilization,rotation of crops, etc., would be absolutely essential.

66. Coordinationwith Other Government Agencies. A number of serviceswill be required in the area of operation of the proJect, such as roads, schools and public health services,which would have to be provided either by the operating agency or the respectiveMinistries. Close coordinationwould be required between these activities.

67. Credit Facilities. The landownerswould have to invest some 250-300 mil- lion rials for land improvement,and about the same amount for mechanization of large-scale farms and certain operations of tenant farms. In addition,it is estimated that the landowners and tenant farmers will require by 1973 some 450-5P0 million rials of working capital. Existing facilities are inadequate for this task and it would, therefore, be necessary to adopt a new system. - 14 -

68.ffarketing. The expected expansion in production from the project wculd not raise any special marketing problems, but it would require a better market- ing organization if the tenant farmers are to obtain the margin of net income which is considered necessary to give them an appropriateincentive. Arrange- ments for such a marketing organizationwould have to be worked out after the necessary studies have been made.

Estimated Costs, Benefits and Return on Investment

69. The total investment in irrigation and flood control, including interest during the period of constructionof the irrigation facilities, 1959-1973,was estimated at 10.h billion rials (US$138million), of which roughly 90% would be public and 10% private.

70. Costs of farm productionwere difficult to predict, partly because of lack of reliable data on present costs and, more importantly,because the estimates of increased costs for future farm operations apply to conditions of farming which do not yet exist in Iran. The estimates of increased costs sho&n in paragraph 72 are therefore, subject to a wide margin of error.

71. There was even more difficulty in predicting future yields and total production. By far the greatest uncertaintywas the extent to which the various measures essential for the full use of the land and the water, and for establishinga considerablymore efficient agriculture,would be put into effect. The estimates of the gross value of increasedproduction with prices projected at present levels, given in paragraph 72, represent the maximum increase that could reasonablybe expected, assuming that all these measures would be carried out fully and on schedule.

72. Benefits could not be appraised separately for tenants, landowners and the operating authoritybecause the future rental arrangementswith tenants, water charges and taxes and other obligations of the landowners were not known. For this reason, benefits were appraised for the project as a whole on the basis of the total net return from the project (total increase in gross value of agriculturalproduction less total increase in costs of operation and production at all levels) as a percentage of the total invest- ment at both public and private levels. The results are given below for three points of time from the earlier projectionsextending over 25 years. 1966 represents the first year that the estimates show a net increase in the value of production;1973, the first full use of the land and water in growing two crops per year, and; 1925, considerablyhigher crop Yields follow- ing gradual improvementof agriculturalpractices. - 15 -

Millions of Rials 1966 1973 190

I. Assets in Operation 8,657 1O,S5 l0,oh5

II. Increase in Gross Value of Production Dez IrrigationArea 620 1,250 1,700 Sugar Cane Company 300 415 500

Total 920 1,665 2,200

III. Increase in Gross Costs of Production Project Operation 135 175 175 Firm Operations 560 1,060 1,265 Sugar Cane Company 170 230 230

Total 865 1,465 1,670

IV. Increase in Net Value of Production (II minus III) 55 200 530 V. Average Reduction in Flood Damage 40 40 40

VI. Return on Total Investment (%) 1.1 2.3 5.5

73. The full projection showed that on these assumptionsthere would be no return on the investment until 1966. Thereafter, it would increase gradually to about 2.3% by 1973 and 5.5% by 1985. The average return over the years 1962-1985would be less than 3%. These estimates representedthe maximum that could be expected if all the necessary measures were put into effect fully and on schedule. This was consideredunlikely and it was, as stated previously, concluded that such a large investmentwould not be war- ranted until it had been shown on a smaller scale that the measures essential for effective land and water use could be successfullyintroduced under Ira- nian conditions. - 16 -

APPRAISAI OF PILOT PROJECT (20,000hectares)

A. General

74. The pilot area, which is located immediatelydownstream from the town of Dezful on the left bank of the Dez River, has been well chosen. The reasons for selecting this area, were, first, that it is reasonably representativeof the entire Dez project area, second, that it is a natural drainage and water distributionunit and introductionof the new distribu- tion system would not interferewith prevailingwater use patterns elsewhere and, third, that if this part ofthe proposed distributionsystem for the entire Dez project were constructed, it could be se:ved tem,orarilyby a diversion canal from the Dez River. If the left bank main canal is subse- quently constructedto connect with the pilot area, the cost of the aban- doned diversion canal would be well below 1% of the total cost of the project.

B. Present Conditions of Agriculture in Pilot Area

75. Conditionswithin the pilot area, as compared with those of the Dez project as a whole, are described briefly below:

76. Climate, slopes and drainage conditions are representativeof those for the full Dez project. Soils of the pilot area are, however, slightly better than the average for the Dez project. Some 93% of the pilot land is classified as Class II, which is 17% higher than the presently irri- gated portion of the Dez project. This is some advantage in production potential but, due to past more intensive farming, current crop yields per hectare of the pilot area are not above average.

77. A population of 13,800 living within thepilot area gives a density of 59 persons per square kilometer, as against 50 for the Dez project. With closer proximity to Dezful the number of schools is more than proportionate and 15% of the population has some degree of literacy, as against 10%lfor the Dez project. Sanitation and health conditionsare similar.

78. The gross area of the pilot scheme is 22,200 hectares and, with 20,000 hectares to be irrigated, the percentage of non-agriculturalland is considerablylower than for the project. The agriculturalland is also more intensivelyirrigated at present. There is no dry farming and 30% of the pilot area is irrigated for the more intensivesummer crops and 70% for winter crops, as against 22% and 78% respectivelyfor the irrigatedareas of the whole project. However, production practices are equally primitive and there is no mechanized farming within the project area. The present and anticipated cropping pattern and crop yields are shown in Annex 2 and Annex 4.

79. Present irrigation is from 11 separate canals drawing water from the Dez River. These carry water at their full capacity,which could not be readily increased, when the river flow is relativelyhigh. As the flow falls, brush dams at the offtake point are progressivelyextended across the river in an attempt to maintain canal flow. All the canals cross the gravel flood plain -- for up to 2 kms. -- before reaching the solid banks. These flood plain sections must be reconstructed, or at least cleaned out, after the flood season each year. Silt must also be cleaned manually from the rernainingsections of the canals. The annual cost of canal and brush - 17 -

dam maintenance is very high and it would be impracticableto make any sub- stantial improvement to the existing system.

80. All land in the pilot area is privately owned, while 16% of the Dez project area is public domain and Government land. There are 58 land- owners (mainly family clans) of'whom 17 own 79% of the land in holdings of from 300 to 3,300 hectares. Three of these landowners have large holdings outside the pilot area itself and own some 20,000 hectares of the entire project. All but three of the landowner fanilies live within the Dez area. 1,660 tenant families farm the land under the same share cropping system that applies elsewhere. The average size of the tenant's "khish" is 12 hectares, which is 2 hectares snaller than the average for irrigatedland of the Dez project.

81. Because the land is somewqhatmore intensivelyused, the estimated average gross value of production per hectare is 5500 rials as against 4500 rials per hectare for the whole Dez project. The estimated gross value of present production for the pilot area is 110 million rials (see Annex 5). The pilot area has some marketing advantagebecause of proximity to Dezful but otherwisemarketing conditions are identical.

C. Proposed Irrigation Works and Related Facilities

82. IrrigationWorks. Design and supervisionof constructionof the main canals and water distributionand drainage systemswould be done by NH under the general direction of DRC.

83. The pilot area would draw water through a temporary diversion canal below the town of Dezful, without need for a weir in the main river channel. The hard river bank is close to the main flow and headworks would protect the canal from siltation during high flood, The temporary canal, 8.9 kms long, would intersect the proposed main canal for the full Dez pro- ject at the northern boundary of the pilot area. From here on the distri- bution and drainage system would be constructedas originally proposed for the Dez project. There would be 17.1 kms of main canal and 34.3 kms. of branch canals. Only 3.6 kms of the canals would require concrete lining. Existing private main canals, outside of farm boundaries,would be abandoned, though partly to be used as drains. The exact length of new tertiary canals and farm ditches on private land is not yet known.

84. NH would furnish technical assistance to landowners in redesigning their farm canals and drains and in land levelling. The works to farm bound- aries would be carried out at public expense and about half of the cost of private works would also be met from public funds. All works at public ex- pense and, it is expected, most of the privately financed works would be carried out by contract under the supervisionof NH.

85. All the public canals and re-alignmentof private canals should be completedby June 1963, which would coincide with the first regulation of the dry season flow of the river by the high dam. All of the proposed land levelling, which would substantiallyimprove the existing situation and permit rmuchmore efficient use of water, may not be completed until 1964. However, most of the pilot area should be irrigated under the new system for the summer crop of 1963 and the full area should be in operationby 1964. (see Time Schedule page 24). - 18 -

86. Water Requirements. Estimated requirements are shown in Annex 3e The estimated demand from July through October, with a peak in July of an average flow of 46 cubic meters per second is more than proportionateto the earlier estimates for the Dez project, Estimated requirements for the summer rice crop have been increased. This is because detailed studies of current water usage in the pilot area carried out by NH during last summer have shown an inordinately high usage on riceland. Technicians believe that this is due to present rice farming practice where the crop is planted, without plowing or puddling, on land that has completely dried out during 14 months fallow after a previous wheat crop. Cracks extend through several meters of soil to underlying gravel and great quantities of water are lost. The technicians are confident that the elimination of this soil cracking through year round irrigation, together with proper land preparation and puddling, will reduce rice water usage to normal for these climatic conditions. Since, however, this has not yet been demonstrated, a margin of safety is being included in the design of the distributionsystem. Actual water usage of the pilot area would need careful study if and when considerationis given to construction of the full Dez project.

87. Related Facilities and Services. In addition to completion of the above works, the pilot project would provide governmentalfacilities and services designed to assist in transformationof the area to year round irri- gation under a considerablymore efficient agricultureusing fertilizer,im- Froved seed and cultural practices and mechanized plowing and harvesting. These facilities and services have been planned on a substantialscale and, assuming proper operation, they should be adequate to show whether or not the area could be transformed in this way. In the case of research and training the facilitieswould be capable of ultimately serving the entire Dez Project area.

88. Field Trial Farm and Research Center. Arrangements would be com- pleted to purchase 160 hectares of irrigatea land near Dezful to serve as a center for testing new land, water and farming practices, crop varieties and for seed multiplication. It would be developed over a period under the direction of NH. Seed distributionfor commercial trial and demonstrationof improved farming practices would begin by 1961. Trial work by DRCto date on fertilizer response and new crop development, particularly fodder crops, which have shown highly satisfactory results, would be continuedpartly on and partly outside the Research Center,

89. Training Center. Located close to the trial farm, this school would be deveJop'ed during 1960-1962 to train water foremen and irrigation technicians,agricultural technicians, village development agents and tech- nical instructors. The first trainees would be available in 1961 and be given experience in actual water operationprior to delivery of controlled water in 1963.

90. Water RegulationService. This organization would be established in 1962 to regulaLe wazer distribution at farm boundaries. Water masters would be assigned to the pilot area about six months before the controlled water becomes available. Control gates passing water from branch canals at farm boundaries would be managed by employees of this Service. - 19 - 91. AgriculturalExtension. Trained in water use, new crcppirngpatterns, fertilizer use and pest control, agents for this work would deal directly with the landomsrs or their agents and tenants to bring about the necessaxr produc- tivity gains. The first field men would be assigned to duty at least a full year ahead of controlled water. This pilot area can serve as a training ground for Dez project as a whole.

92. Credit Service. Transformation of the farming system would require credit for both landowners and tenants and the proposed operating authority would be responsiblefor ensuring an adequate service. Since it is doubtful whether existing facilities could directly undertake this activity, the opera- ting authority (See Section D) would provide 150 million rials to be used ex- clusively as a revolving fund for short-term crop credits, medium-term credit, for machinery purchases and long term credit for land improvement. It is hcped that the Agricultural Development Bank would establish an office in Dezful to manage the service under the overall direction and at the expense of the Authority.

93. MechanizationService. In addition to credit for machinery purchase, mechanizationwould be encouragedby a demonstrationservice equipped with some agriculturalmachinery and a central workshop to service farmerstmaehinery. The co-operationof machinery firms would be sought in establishingand operat- ing the workshop and maintaining a pool of spare parts. Training courses for tractor drivers and mechanics would be given.

94. H4rketinzAssistance. After a marketing survey by NH in 1959 it was concluded that no Government or co-operativemarketing organizationis impera- tive in the pilot area at this time. The basic policy would be to encourage im- provement and expansion of the present private marketing system and for the Operating Authority to assist, as necessary, the landlord and tenant to get a fair price for their products. The main means would be through provision of credits to tenants by the proposed Credit Service instead of from the bazaar lenders, and by enforcementat Dezful of the fair market standards establis2ed for Iran, especiallyin regard to price discountsfor mixed grain (i.e. barley mixed in wheat), or inert material in grain. The Authority would employ one or more marketing specialiststo assist on these matters for the pilot area.

95. Associated Services. The Authoritywould also be responsiblefor en- suring that certain Government services,normally the responsibilityof exist- ing Government agencies,are performed in the pilot area to the extent that these services directly contribute to the outcome of the Pilot Project. It is, therefore,proposed to include minimum associated Government services in the project budget for the Authority. Performancewould be obtained either thrcug{i co-operationwith appropriateagencies at the expense of the Project or by the Authority directly. Additional financial co-operationwould be solicited from existing agencies. These services include:

96. Roads - The pilot area is wholly lacking in all-wither vehicle roads which would be essential for the movement of heavy constructionmachinery, andl later for canal maintenancemachinery and farm and project operation. About 75 kilometers of graveled roads leading from Dezful and related feeder roads, and a ferry across the Dez River linking the pilot area with the Sugar Planta- tion, would be needed. 97. Health, Sanitation and Education - Estimates include provision for vilJage sanitation and medical services necessary to enable the cultivatorsto undertake a workload which would be more than twice the labor previouslpyre- quired of them. The estimatesalso include funds for stimulatinggrowth of facilities and staff for more effective ccnrnunityschools. - 20

Cost Estimates 98. Estimates of annual investment expenditures for irrigation and flood

control are tabulated below: (in millions of rials) 1959 1960 1961 1962 1963 1964 1965 1966 1967 Total. I. Pilot Area and Flood Control

A. Public Investment 1. High dam alloca- tion (2/3) 476 354 520 280 100 1,730 2. Canals and asso- ciated works: Canzals and laterals,etc2l/ 50 326 362 46 784 Roads 30 40 38 108 Agric.& related facilities 2 20 30 40 33 123 Compensation:crop damage,rightof way 10 42 52

Sub-Total 1476 374 630 696 575 46 2,797

B. On Farm Investment

Canals & leveling 20 80 41 J41 Machinery 10 20 20 10 60 Working capital 20 20 20 18 78 Sub-Total 20 110 81 40 28 279

C. Total Pilot Area and FloodControl 476 374 630 716 685 127 40 28 3,076

II. Sugar Cane Co. 3/ 100 140 140 140 140 130 40 20 850 III. Total - Annual 576 514 770 856 825 257 80 48 3,926 - Cumulative 1090 1860 2716 3541 3798 3878 3926 - Assets in operation includinginterest duringconstruction 3067 3834 4105 4187 4219

g/ IncludesRials 174 millionas Governmentengineering and subsidy on private land development. g/ Includes village development and public health and sanitation. 3/ Exclusiveof investmentin mill and refinery. - 21 -

99. The estimatefor the irrigationworks has been preparedby NH on the basis of surveyand layoutof all the necessaryworks on approximately half of the pilot area. This estimatehas been revisedto take into account actual costs of similarwork for the sugarcanedevelopment, and then extra- polated over the full 20,000 hectares. The estimate for the temporary diver- sion canal (73 million rials included under the item for canals and laterals) is based on preliminary design to 65 cubicmeters per secondcapacity. The estimatesfor roads,agricultural facilities and farm canalsand levelling take into accountactual costs on the sugarcaneproject. An averageof 25% has been addedto the variousitems to cover engineeringand contingencies. Detailedlayout and designof the works for the whole area is currently being undertakenin the fieldby NH. The estimatesat this stagemust be regardedas preliminaryand, as such, they appearreasonable.

100. The costsof irrigationand land developmentof the Sugar Cane Com- pany, whichhas 200 hectaresof cane for seed multiplicationalready planted, are shown separately. These 10,000 hectares were included in the original 110,000 hectares project and would eventually receive under the project a regulated water supply by gravity and 7,000 hectares of farmer-grown cane for processing. Although distinct from the pilot project, the Sugar Cane Company has been included with the estimates for the pilot stage for reasons of conformity with subsequent analyses ol future benefits.

D. Execution and Operation of the Project 101. Planning, design and execution of the irrigation works and initial operation of the Pilot Project would be undertaken by Plan Organization through DRC.

102. Legislation is being prepared by the Government to establish a quasi-independent agency to which the work now being performed by Plan Organizationthrough DRC would eventuallybe transferred.This agency,to be calledthe KhuzestanWater and Power A1uthority(KUPA) would be respons- ible for planning, executingf and managingthe waterand power resourcesof Qthedrainage area of the five riversin the Khuzestanregion. The present KhuzestanElectric and Gas EnergyCompany would eventuallybe assimilated by the Authority. DRC would, for such time as is necessary,continue to providemanagerial and staffservices for the Authority.

103G Principlesto be includedin a bill and regulationsfor the esta- blishmentand operationof KWPA have been agreedduring negotiations. Tn brief summary,KIJPA would have legalpersonality and administrative indepen- dence from other Ministries of the Government. It would be responsible to a Deputy Prime Minister for Khuzestan Development for the performance of authorizedprograms and the expenditureof funds. It would have adequate powersto executeand operatepower and irrigationprojects including the f'ixingand collectionof charges. The Chief ExecutiveOfficer would be a ManagingDirector authorized to engagest-aff, including non-Iranians. Plan Organization would be authorizedunder the legislationto exercisethese functions and powers luntil such time as KSPA is actually established. - 22 - loh4 The basic policies concerning irrigation to be written into the Authority's charter would include:

a) The policy of the Authority would be to promote the optimum use of available water and land; it would use methods and provide technical and other services necessary for develop- ment of an efficientagriculture,

b) Water charges to be levied would be a base charge, consisting of a uniform charge per hectare plus a surchargeper cubic meter related to the proper beneficialuse of the w3ateras determined by the Authority. The base charge would apply with the first delivery of water and the surcharge two years later.

c) The level of base charge plus surchargewqould be fixed to re- cover as much as practicableof the capital and operational and maintenance costs of the projects, and of the costs of agricultural and related services.

d) Water made available by the project surplus to existing use would be the property of thleAuthority and no vested rights to any surplus water would accrue from use without payment.

e) The Authority would be empowered to assist in clarification and legal stabilizationof land and water rights, including the stabilizationof tenant assignments;the Authority would have power to Acquire lands on just terms if the landowner failed satisfactorilyto stabilize tenant assignments.

f) The Authority would be empowered to make loans for farm deve'opment,machinery and production. i05. The Government intends to present the bill for the establishment of KW?A to Parliamentby March 1960, together with legislation for ratifica- tion of the proposed loan. Since, however, the proposed bill contains features regarding irrigationwhich are novel to Iran, its enactmentmay not prove possible in the short time before Parliament dissolves on March 16. In that event it could not be passed until the new Parliament convenes in the autumn, . Since the enactment of adequate legislationwould be essential for success of the project, no withdrawals could be made from the loan in excess of UIS 8 million for purposes other than payment of interest and other charges,until legislation and regulationsalong the lines agreed upon would have been put into effect.

106. Although legislation along the lines proposed should provide the legal powers necessary for efficient operation of the project and trans° formation of the land, successful execution of the project would denend even more on the full cooperationof the landotmers. Their attitude is not definitely known at this stage because it has been considered inadvis- able to enter into negotiationswith them until a concrete proposal could be presented. Negotiationswould be held immediately the legislation and - 23 - regulations have been enacted and before any start would be made on the physical irrigation works. The mattersto be discussed would include:

a) What public water distribution facilities the Government is pre- pared to construct and maintain permanently for the pilot area.

b) How irrigation water will be scheduled and regulated at the farm boundaries and by whom.

c) 'What charges will be made for water, how the rates will be deter- mined, when commenced, and what the penalties will be for non- payment.

d) What types of agricultural and community services the' Government will organize for the pilot area, including technical guidance, agri- cultural credit, improved roads, schools.

The matters on which agreement would have to be reached include:

a) What water channels and land levelling each landowner will under- take for his lands; who will design and construct these private facilities, how the cost will be shared between landcwner and Government, and who will maintain these private facilities.

b) What commitments the landowner will make regarding stabilizing of assignment of khish, introduction of modern agricultural practices, and other steps to be taken to enable his land to make effective use of the irrigation water.

107. The Government hopes that agreement with the landowners could be reached by September 1960, but there would be a delay of approximately six months if the legislation for the establishment of KIrIPAwere not enacted before Parliament dissolves in 'iarch. However, the irrigation works would not be started, and disbursements against the irrigation port:on of the pro- posed loan (other than for consultants' fees) would not be made, until an agreement with the landowners satisfactory to the Bank had been reached.

108. Although there are indications that the landowqners would be pre- pared to participate on a satisfactory basis, there is some risk that this will not prove to be the case. Assessment of this risk has been made even more dif-ricult by the recent preparation of a general Land Reform Bill, iwhich would restrict the holding of irrigated land by any one family unit to 300 hectares. The threat of this legislation or its enactment may or may not make the Dez landowners more willing to participate in the project. Since, ho-wever, this would be a pilot project designed to show whether institutional problems, incl-ading farmer participation, could be solved to the extent neces- sary to permit a production increase sufficient to warrant a much more sub- stantial investment, the project must necessarily involve rnore than normal risks.

Time Schedule

109. The proposed timing of negotiations, legislation, construction and comm.encement of operations is shown on the schedule on tie following page. TIME SCHEDULE FOR PILOT PROJECT

1960 1961 1962 1963 1964 1 2 3 4 5 6 7 8 91011 12 1 2 3 4 5 6 78 91011 12 1 2 3 4 5 6 7 6 9 1011 12 1 2 3 4 5 6 7 8 9 1011 12 1 2 3 4 5 6 7 8 9 1011 12 A. Ngot&atimi & Lexiat.oc

1. lam negotiat± H 2. Preliulnwy d1scilms,ln with lhdoners

3. Rsaification of L*o

4. Iacteat of Legi1utioa frr the Authority' i/ 1

5 Negotiations with Landowners

6. lff2ectve.e i rrigat±,i Sector at LO

t D. Cuastzo4 m 1. High Dma 2. Canads and Roads

3. Private Cma. & Loaing

4. Field ram 1ia

5. Training Cmter

C. Qperasoas 1. irrigation

2. Tainig n

3. Field Trials on Fam i 14. tmsicn s, vice

5. Credit Service __ _

U If enactment proves impracticable in March, commencement of the pilot irrigation project would be delayed for approximately six months. 25-

EB. Estimated Increase in Value and Costs of Farm Production

110. The proposed services for farmers and other measures outlined in previous sections would,if effectivelyimplemented, be adequate to show whether the agriculture of the pilot area could be transformed as previously envisaged for the full project area. The following estimates of production increase in the pilot area assume that the measures would be effectively implemented and that the production increase would be obtained. Moreover, since the proposed inputs of technical and other farner services per hectare rould be considerably higher than previously contemplated, the estimates as- sume that the level of production per hectare previously estimnrted for 1973 for the full Dez project would, for the pilot project, be attained. by 1966.

111. The assumed cropping pattern is shown in Annex 2; assumed yielids per hectare are shown in Annex 4; and, assumed prices, which have been pro- jected at the current level, are showniin Annex 5.

112. The resulting increases in the gross value of production are also shown in Annex 5. The gross value would increase from an estimated 110 mil- lion rials at present to about 355 million rials in 1966. This would increase further to about b55million rials by 1973.

113. The increase in farm costs of production has also been estimated on the basis previously used for the full Dez project, adjusted for the changed cropping pattern. Farm production of sugarcane, which has a high production cost per hectare, is not provided in the cropping pattern and con- sequientlyestimated farm costs per hectare are below those for the full project.

11)4. The estimatedvalue of present production,110 million rials, has been taken as the present day cost of production, and costs by 1966 are esti- mated at about 280 million rials. The increase representsprimarily such items as labor, seeds, fertilizersand operation and depreciationof machinexy.

F. Estimated Benefits and Return on Investment

115. Estimates of benefits and the return on investmenthave been made on the same basis used for the earlier appraisal of the full Dez project. They represent calculationsof the return that would accrue to a hypothetical unity that were to make all investments,incur all costs of operation and increasedproduction and get all the receipts from the sales of the entire increase in agriculturalproduce. Water charges, rents and taxes do nob enter into this calculation as they would be "internal"transactions in this coneept.,

116. In the table on page 26 the figures for Total Assets in Operatioi are taken from the Cost Estimates or.page 20. The operating results for the pilot area and the Sugar Cane Comiparnyare shown separately and finally the estimated reduction in flood damage is added. - 26 -

ESTIMATES OF GROSSVALUE-, COSTS AlD NET VZLEJEOF PROD!T CTION (in millionrials)

1960 1961 1962 1963 1964 1965 1966

I. Total Assets in Operation, including interest during Construction 3067 3834 4105 4187

TI. Pilot Area

A. Increase over Present Level in Gross Value of Production 50 150 245

B. Increase over Present Level in Gross Costs of Production

1. Project Operation: Operation & maintenance/ 3 9 24 24 24 Road maintenance 5 7 10 ]15 15 Training,extension& research 10 20 30 50 60 60 60 Health, sanitation and education 1 1 5 20 20 20

Sub-Total 10 21 39 71 114 119 119 2. Farm operations 2/ 34 103 168

Total 10 21 39 71 148 212 2e7

C. Increase over Present Level in Net Value of Production

(A minus B) - (10) (21) (39) (71) (98) (74) (42)

II Sugar Cane Company Gross Value of Production 110 215 215 215 215 215 300 Gross Costs of Production 100 165 160 160 160 160 170

Net Value of Production 10 50 55 55 55 55 130 rV. Average Reduction in Flood Damage 40 40 0 4.0 4

1/ Includes replacementof non-permanentitems and two thirds of operationalcosts of dam.

2/ Excludes rent, water charges and any taxes. - 27 -

117. The estimated costs of pilot project operation are considerably above pro rata for earlier estimatesfor the full Dez project and reflect greatly increased overhead costs per hectare and a much higher level of farmer service inputs, particularlytraining, extension and research. The increase in the value of productionwould be about 2b5 million rials in 1966 but this would be about 42 million rials less than increased costs of farm production and project operation

118. If the estimated increase in net value of sugarcane production and the average reduction in flood damage is added,the net returnin 1966 to the general economy of the region would be about 130 million rials, -which would represent about 3% of the total investment.

2.19. Since this is a pilot project, benefits must be assessed for two alternatives; viz. that the pilot schemeis not sufficiently successful to warrantconstruction of the full Dez projectand, alternatively,that the demonstrationis successfuland the full Dez projectis implemented.

120. The futureposition under the first alternative is particularly difficult to predict becausepresumably this would imply thatthe estimated productionincreases have not been attairnedin practice. Assuming,however, that after initialdisappointments the productionincrease estimated for 1973 were to be attainedby that time,and that projectoperational costs were prunedto those necessarysolely for the pilot projectarea, the posi- tion in 1973 would be approximately as follows: (in millionrials) Increasein gross value of production 345 less increasedcosts of production: Projectoperation 70 Farm operation 215 285

Increase in Net Value of Production 60

60 millionrials would be equivalentto about 2.54 of the directinvestment -n the pilot scheme(1,419 million rials) plus one thirdof the cost of the l-ighdam (975 million rials),inclusivo of interest during construction 2/.

/ The rate of water charge proposed at this stage is a base charge cf 75J rials per hectare from initial provision of water, followed two years later by a surcharge amounting to 750 rials per hectare. Total revenuie on this basis by 1966 would be 30 million rials, or about 12%oof the in- crease in gross value of production.Project operation costs would be about 120 million rials, Leavingan operating loss of 90 million rials. g/ Pilot project operation would not be directly viable, even at the reduced cost of project operation assumed above. - 28 -

121. If the estimated fl od-o,ntrol benefits (40 million riala) are added, the return to the gmneral economy of the region-would amount to about 100 million rials, or about 35 on the investment, inc'uding two thirds of the cost of the dam,of aNu7t 3F370,W±llos riTla.

122. The benefits from the pilot -oroj-ctas calcult;t']nbove may not allbe attained if the pilot scheme fails to meet its full objectives and the whole Dez irrigationproject is not proceeded with. There weuld hovever be other general benefits to the agriculture of the region. The programs of research, training, farmer extension, credit, marketing, and social services under the pilot scheme must have a favorable impact on surrounding areas. Moreover, if the additional water following regulation of the Dez River is not all used under a Government Dez Project, there would be some expansion of irrigation by private interests.

123. Benefits under the second alternative,viz. a successful pilot scheme followed by the full Dez irrigation project, are analysed in the fol- lowing section.

G. Estimated Benefits for Pilot Scheme Followed by Full Dez Irrigatior Pro,ent

124. Costs and benefits have again been assessed on the basis followed in the original appraisal. Estimated annual investmentexpenditures are shown in Annex 6. The earlier estimateshave been adjusted for the altered time schedule. It has been assumed that, because of experience gained during the pilot period, the time necessary to develop the remaining area for irriga- tion could be shortened and that operation of the full area would commence in l974 instead of 1973 as planned earlier. The allocation of the high dam cost has been changed to the revised estimate and the estimate for the diversion dam has been substantially reduced as the result of redesign. An amount of 125 million rials has been added to cover compensationfor rights of way and crop loss during reconstruction of the existing irrigation systems. Other- wise the previous cost estimateshave not been changed.

125. Estimated operating results are given in Annex 7. The figures of increased gross value of production and increased costs of production repre- sent the pilot area until 1969. From then on the results from additional areas coming into production are on the same per-hectare basis as used in the oiiginal appraisal. The figures for 1986 are identical with those previousl: assessed for 1985. 126. Project operating costs per hectare for the additional areas which would come into production from 1970 to 1974 have been only slightly increased and reflect little of the considerablyhigher level of inputs in farmer sup- porting services under the pilot project. This is because the estimates of agricultural production during the later years have not been changed from the earlier appraisal. The approach is conservativesince project operating costs in 1986 are estimated at 219 million rials as against the previous figure of 175 million rials. - 29 -

127. The estimatesand projectionsof Annexes6 and 7 are necessarily approximateand subjectto a considerablemargin of error. With this reserva- tion;the projectionsindicate that:

i) the totalinvestment in irrigationand flood control would,inclading interest during construction, amount to about 10 billion rials (TJS$ 133 million),of which roughly 90% would be public and 10% private; and

ii) the return on the investment would be about 3% from 1966 to 1974 and thereafter gradually increase to somewhat over 5% by 1986. 128. Assuming that the pilot project succeeds, the experienceand additional data gained would permit a much more reliable appraisal at the time any decision was required concerning construction of the overall Dez irrigation project. This later appraisalmight well prove to be more favor- able since there is scope technicallyfor materiallyhigher crop yields if the measures to be applied under the pilot scheme succeed in increasingthe efficiencyof agriculturalpractice to a greater extent than anticipated at this stage. Success of the pilot scheme would also raise the possibility of very much wider benefits to Iran if the approach were to be applied in other areas where general conditionsof farming are quite similar to those in the Dez area. V. THE EL5CTRIC PC\JERASPECTS

A. THE POJER EARKET

'resent Situation

129. At present by far the largest Droducer aiid consumer of electric power in the area is the "Consortium" of oil companies which operates the large oil exploration,production and refining facilities in Southern Iran. Its main power plant is the thermal s-tationon the Shatt-el-Arabriver at Abadan, which has a capacity of 110 YiW(consisting of 20 SW of small older units, three units of 20 MW which are from 10 to 20 years old, and one unit of 30 NW which has just been commissioned). This plant is to be enlarged in 1961 to 140 MW by the addition of another unit of 30 YW, giving it a capacity of 110 YWwith the largest unit out of order. In about 1966 the smaller units are to be retired, so that after that date its firm capacity would be 90 MW, disregarding any interconnections. The plant now operates part of the time on oil and part of the time on gas from an oil pipeline that was convertedto gas a few years ago. After conversion of a second oil pipeline whizh is now under-Taythe plant will operate entirely on natural gas.

130. The total load of the plant is now roughly 73 NU and is expected to grow to about 106 1W by 1962, distributedas follows:

Beginning End of of 1959 1962 (in NW)

Refinery 28 35

Oil fields of Agha Jari) Port of Bandar Ilashur ) 1/ 12 15

Consortiumrs "domestic area" at Abadan 18 22 Municipal systems of Abadan and Khorramshar 6 12 Municipal system of Ahwaz 4 12 Station use and transmissionlosses 5 10 Total 73 106

131. In addition, the Ccnsortium has a number of smaller, not inter- connected,plants at the various fields and pumping stations, with capaci- ties up to 20 liW, some consisting of very modern and efficient gas turbines with units of 4-6 MW.

1/ Connected by 33 KV lines. - 31 -

132. Finally, there are in the area two groups of small plants with a total capacity of about 6 14Wserving the city of Ahwaz, several small diesel plants serving the few small towns and villages of the area,and a small hydro plant at Shush.

133. The use of the electric energy is, apart from the operations of the Consortium,almost entirely residentialand commercial;the only indus- trial users of some importanceare the ports at Abadan and Khorramsharand a few small industrial enterprisesat Khorramsharand Ahwaz.

134. The supply of power to the area by the Consortiumhas always been rather restricted;it first had to supply its o,m needs and was reluctant to make long-term commitments for a larger supply because it had no incen- tive to invest in power facilities for uses other than its mm. Private capital for this purpose has not been forthcoming and the municipalities and the government have not been able to allocate the necessary funds. As a result the supply of power in all three principal towns of the area, i.e. Ahwaz, Abadan and Khorrarshar has for some time not been satisfactory, not so much in the sense that there were restrictions and rationing, although there were occasionalcuts, but ra.therin the sense that existing subscriberswere having difficultiesin getting an increase in their supply, and that there were long delays in connectingnew subscribers. Somreof the new shops and commercial enterpriseswere, therefore, obliged to install their own small diesel plants.

135. The service has also generallybeen less than satisfactory;the distributionfacilities, in part owned by a private company and in part by the municipalities,are generally inadequate in capacity and poorly maintained and adrinistered. There is quite a large margin betweenwhole- sale and retail prices, but the private company has been investing very little in further expansion of its system and the improvement of service, and the municinalitieswhich distribute power themselvesdepended on the surplus from the sale of power as their major source of income for their general budget.

The Period 1959-62

136. The only addition of generating capacity in the area until the start of operationof the Dez dam, scheduled for 1. 15(2 will be the 'instal- lation of another unit of 30 111 at the Consortium'splant at Abadan, bring- ing the total capacity of that plant to 140 HI@. This will enable the Consortium to make available to the municipalities of Abadan and Khorramshar an additional 6 IW, and to Ahwaz up to 20 MW by 1962. This additional capacitywill probably come close to meeting the present backlog of demand in the first two towns and more than meet any backlog in the case of Ahwaz. How fast this additional energy will be absorbed during 1959-62 will depend largely on the rate of expansion cf the distributionsystems. The ?eriod 1963-73

137. Any forecasts of peakload and consumptionmade at this time for the period after 1962 are highly speculativefor a number of reasons. As regards the growth of the residentialload there are no yardsticks,because the past growth in the area has always been limited by a shortage of capacity and inad- equate di2tribution and is thus not representative;and comparisonswith other 32 - areas are hardly suitable. Forecasting of the indus trial load is even more difficult, No industrial projects have so far been definitely scheduled and financed. The follcwingparagraphs give the basic assumptions and cmment on the reliability of the forecasts of peakload and consumption for each principal sector as shown in Annex 8. 133. The residentialdemand of the area, now entirely suopliedby the Consortiun,has with one exceptionbeen assumed to be supplied by the Dez project immediatelyupon its conrpletion.It forms the bulk of the demand and has been projected on the basis of the followingassumptions:

(i) The system of the city of Ahwaz (population120,000) serves at present scme 8,300 customers, of which 5,200 are residential and the rest small industries,commerce and Government. The total capacity now avail- able is roughly 6.3 YN, supplied in varying amounts by plants of the muni- cipality, the Consortium,the Railways and a private spinning mill. The demand is larger than this supply; several hundred applieationsfor new connection are pending and small diesels are being insta'led by small industrial and commercialenterprises, It can, however, be assumed that this backlog will be filled by 1962 by the additional power becoming available through the transmissionline frcm Abadan. A total load of about 12.8 NWSin the city's residentialand commercial sector in 1963 has, t1here- fore, been used as a point of departurefor the projections.

(ii) The municipal systens of Abadan and Khorramshar are comparable in many respects. They both serve populations of some 60,000 inhabitants (in Abadan this does not include the "domesticarea" of the Consortium), and the number of customersserved is 3-4,000. The capacitiesavailable to the systems from the Consortiumat present are roughly 3 IW each, to be increased gradually to about 6 MW each by 1962. The situationsin the two tawns are in many respects also comparableto Ahwaz, and on the basis of the same assumptions 8.4 TN each has been determined as the most likely peakload for each of these two systems in 1963.

(iii) The present systems of the other toYTns,i.e.Andimeshk, Dezful, Shushtar and several smaller ones, are quite rudimentary and service is very limited. Their combined population is some 120,000 and their present installed capacity, consisting of small diesels, about 3 IW. Based on reasons similar to those outlined above, their combined load in 1963 might be about 6.14NW, to which has been added some 2 rISfor irrigation pumping facilities resulting in a total of 8,4 Hi.

139. The rate of growth of this domestic and commercialsector after 1963 is very difficult to predict. It will depend on the population growth, the growth of the family income (which for the majority of the families is at present still far below the level where they can afford electricity) and the availability of funds necessary for expansion of the distributionfacilities in the residentialand commercialareas. It is impossible to express these factors quantitatively. DRC has assumed that the growth will be 10% per year cumulative,but this seems quite optimistic and 7% has, therefore, been used in the projection in this report. The load factor of this residentialload, as of all others, has been assumed to be 50% annually,which is probably somewhat on the high side. - 33 -

140. The Consortiumts"domestic area" is the separate residentialarea at Abadan where the Lonsortiumlsemployees are hoased and where most public services are now provided by the Consortium at a ncninal cost. Its electric system presently serves about 15,000 customers and has a peakload of roughly 18 1V, which is expected to grow to about 22 tM in 1962. Unlike the other residentialloads of the area this load of the Consortium's domestic area is not likely to be supplied by the Dez project immediately after its com- pletion. First, the Consortium would at that tine have ample spare capacity in its plant at Abadan because all the other residential loads would then have been taken over by Dez. Secondly, the cost of the addi- tional generation to the Consortiumwould only be the additional cost of operation and maintenance,the natural gas for this purpose being free to the Consortium and the fixed charges accruing anyway. This poTer is now supplied to the emnloyees practically free of charge, and if the area were immediately supplied frcm Dez, the Consortium would aither havd to pay for this energy directly or give its employees a corresponiding additional allown- ance. It has, therefore, been assumed that the Consortiumwould keep on supDlying this residential load until at least the time when it would have to add capacity to its plant, say about 1965, and that the Dez project would supply it from that date. In practice the shift of the load would probably be somewhat more gradual. The growth of this load after 1966 has also been calculatedat 7% per year.

141. A limited industrial load has been assumed to develon in the area with electric power available at a reasonable cost. Lack of initiative, management, skills and especially risk capital,which has, up to now, been holding back industrial development of the area much more than lack of elec- tric power is, however, bound to continue for some time. It would, therefore, not be realistic to expect a large and rapidly growing peakload and consumptin from that sector. With very little to go on, the peakload of "Cther Indus- tries!t has rather arbitrarily been assumed to reach 10 14Win 1962 and to grow thereafter at the rate of 7% per year.

142. The Consortium has been assumed, in the attached forecasts of peakload and energy consumption,not to use power from the Dez project for its own operations of pumping and refining . The follcr1ingare the princi- pal reasons for this assumption.

143. First, the Consortium plant at Abadan would, after 1962, have a substantial excess capacity. As the Dez project would supply from that date all residential loads other than the Consortium'sown doraestic area, the load of the Consortium's plant at that time would be only aboult 72 MW (including the refinery, the oil field of Agha Jari, the port of Bandar IMashurand the domestic area), compared to a capacity of 140 14T. The Consortiumpresumes that this load may grow to 100-110 14 (equal to the firm capacity of the plant) by about 1965. With the Dez project starting to supply the Consortium'sdomestic area on that date, the load on the Consortium plant would thus be reduced again to 70-80 11T,still leaving an excess capacity of 3C IMJeven if the 20 14Wof small units were retired. - 34 -

144. Secondly, the Consortium does not have much of an incentive to buy poaer from Dez as long as it has sufficient capacity, because the cost of generation in its own plant is very low; the investment is already there and the natural gas burned in the plant is, under the oil agreement, avail- able to the Consortium without charge. The only saving that would accrue to the Consortium by buying power from Dez would be in the cost of opera- tion and maintenance, but that advantage would be small, because part of the plant would have to be kept as a spinning reserve anyway, in order to avoid interruption of the refining and pumping operations due to outage of the Dez power eouirment or transmission line.

145. Finally, there is the important technical reason that the Consortium would probably not want to depend for its principal operaGi ons on a plant not under its control, and on a long transmission lire over difficult terrain and thus subject to outages.

146. The Consortium has recently requested -Its own consultant in elec- tric power matters to review its 1ong-ranreneeds and sources of supply, and it is conceivablethat at some time in the future it roght purchase off-peak power from the Dez project, but probably not before it would have to install additionalunits of its own, and then only if the price of this of2-peak power were substantiallybelow that of primary power.

147. On the other hand, there would be an obvious interest for the Consortilm and KhuzistanWater and Power Authority to have from the very start a standby agreement with each other (the interconnectionalready being provided by the 132 KV Abadan-Ahwaz line), since this would allow pooling of the reserves and thus reduce the total investment,and the installationof the units in the Dez powerhousehas in fact been scheduled with this in mind.

B. TIE SIZE AND SCNEDIJLEOF INSTALLATIONOF THE GENERATINGUNITS

148. The ultimate capacity of the plant is estimated as 6-8 units of 65 Nileach, assuming operation of the reservoiras outlined pre-iously. Units of equal size were chosen because of the advantages of standardiza- tion, smaller powerhouse,ease of maintenance,higher efficiency,etc.

149. The timing of the installationof the individualunits is based on the forecasts of required generating capacity (see Annex 8), assuming further: a) that the interconnected system of the Xhuzistan hIater and Pmier flIthor- ity and the Consortium would always require a total reserve about equal to the largest unit in the system; b) that the Khuziotantiater and Pater iAuthority and the Censortium would enter into a standby arrangement with each other, under which the bwopartieswould (i) make their reserves fully available to each other, and (ii) coordinate the timing and size of additions of inits to their plants sc that the interconnectedsystem would always have the above- mentioned total reseive. c) that for various technical reasons t-e initial installationshould be two units, although strictly f-om the viewpoint of demand one unit would s'lfficein accordancewith the 3bove criteria. - 35 - C. DFSCRIPTIONTOF THE PCiJTVRFACTLITTIES

150. The general layout of the powerhouseand related facilitiesis shown in the attached layout of the project. Most civil works related to the power facilities would initially be built for the ultimate capacity of the plant. The intake works would be located on the right bank, consistLng of two concrete lined tunnels, each branching into four penstock tunnels lead- irigto the turbines. The powerhouse containing the generating equipment would be underground in the right embankment of the gorge; initially it would be 17 meters wide, 60 meters long and 36 meters high, providing suf- ficient space for the first four units.

151. Each unitwould have a capacity of 65 MW at best or near best efficiency, operating at a speed of 250 rpm under an average head of 152 meters. The maximum headwouldbe about 174 meters and the minimum 115 mneters. The step-up substation on a separate transformer deck in the canyon wall above the plant would consist of three-phase 84,000 kva, 13.8/220 kv transformers. The transmission line from the powerhouse to Ahwaz, 166 kilometerslong, would initially have one circuit of 230 kv, with the second circuit to be added with the third or fourth unit. A secondary 33 kv trans- mission system would take off from the trunk line to Ahwaz at a point 20 kilometerssouth of the darmto supply Andimeshk,Dezful and Shushtar. The very few other towns of the area are too small and too far away from the trunk line to justify construction of secondary lines and would initiallr be served by local diesel plants.

152. Present plans are for the Khuzistan 'Water and Power Authority to build also all secondary transmission lines and all substationsas far as l1 kv on the low tension siK'e, from which point the local systems would distribute the power to the consumers.

D. COST ESTIMATES

153. The cost estimates shown in Annex 1 are based: (i) regarding the civil works, on the contract recentl-yawarded to Impresit (see Chapter III, E), and (ii) regarding the equiprment,on the firm prices of the contracts already awarded for the first two sets of turbines, generatorsand trans- formers, and the ccntract tentativelyawarded for the transmissionline from the powerhouseto Ahwaz.

154. The basis of these estimates is thus quite firm. They are still subject, however, to increases in the cost of the civil works due to the reasons mentioned in Chapter III, E; in addition, unforeseen difficulties are always possible in the excavation and lining of an underground powver- house, oecause the prior explorationof the material of the cavern is neces- sarily limited. Finally, the contract for the installationof the rechanical and electricalequipment, which involves a considerablenumber of foreign staff, has not yet been finally awarded and the correspondingitems of the estimates are thus also still subject to change. It has been estimated thet in combinationthese various contingenciesshould not increase the total costs by more than on the foreign currency component. and 15 on the local currency component still to be spent, and correspondingcontingency - 36 - reserves have been included in the estimates. iviostof' the general comments made in relation to the estimates for the dam and other works common to all purposes likewise apply to the estimates for the power,iouseand transmission lines.

E. FINANCIAL PROJECTIONS

155. The power and irrigation facilities of the project would be built, financed and administeredby the proposed Khuzistan Water and Power Authority, and its cash requirementsand later surplus are summarized in Chapter VII.

156. However, in order to determine the return on the investmentin th2 power facilitiesalone, the revenues and operatingcosts of the power sector have been projected separatelyas shown in Annex 9. The projectionshave teen made with an average sales price for the electric energy of 1.0 Rials per kwh for the first three years and 0.75 Rials per kwh thereafter. The former is the price at which the Consortium is now selling electric power to the municipalities,and it was assumed that this price would be maintained for at least the initial years. It was thought that thereafter the average might havetobo dropped to 0.75 Rials per kwh because the residentialarea of the Consortium,which is to be served from 1966, would probably have to be given a somewhat lower price, and also because new industriesmight come into the area by that time in larger number, which would have to be offered electric energy at a price substantially lower than the above average in order to be attracted.

157. The fixed assets shown in Annex 9 include the cost of the trans- mission line Abadan-Ahwaz,which was completed in 1959, and an allocation of one-third of the common costs. This latter is a somewhrt arbitraryrallocation, but a different one would not affect the conclusionsof this Chapter too much, as this one-thirdof the common costs represents somewhat less than 30% of the total initial investment in the power facilities,and correspond- ingly less if the projection is carried further. The fixed assets also include interest during constructionat 6% per year.

158. The sales of energy have been assumed to be those shown in Annex 8, which, it should be recalled, are to be consideredas being orders of magnitude at best.

159. The operating costs of the Dez powerhouse, the transmissionlines and the substationsare based on separate estimates of the costs of operation, maintenance and administrationof these facilities,to which was added one- third of tihe cost of operation and maintenance of the dam and other features common to all purposes.

160. The Khuzistan 7Wlaterand Power Authority has been assumed to be exempt from all taxes.

161. Based on these assumptions,the operating revenues, before depre- ciation and debt service, would, during 1963-1970, expressedas percentages on the gross fixed assets, increase graduallyfrom 5.0% to 8.4%. During the same period tne net operatingreveinues after depreciationand before debt service would representreturns expressedas percentagescf net fixed assets increasing from 2.6% to 7.3%. Returns thereafterwould still continue to r;se, mct wjiththe bases of the projectionsther. becoming increasinglyun- certain, these returns are orders of magnitude at 'best. - 37 -

162. The Governmenthas agreed to set the power rates during the initial years of operation of the project so as to yield an average revenue of not less than 1.0 Rials (at the present level of prices) per kwh of primary powrer, Furthermore,the Governmentwill cause the rates thereafterto be maIntained always at such levels that they would (a) cover all the operating costs (includingtaxes, adequate maintenance and depreciation,and interest) and amortizationof long-termindebtedness insofar as this is not covered by depreciation, of the power portion of the assets of the Authority, and (b) create a surplus &afficientto cover a reasonable part of the cost of further expansion of its power facilities. An understandinghas also been reached as to the allocation of the costs and of the indebtednessof multipurposeassets, and on the need for periodic revaluation of the assets. These arrangements are considered satisfactory.

F. OPERATIOQlAI) MA'AGEMPIT

163. At--the recommendationof DRC the Government created, in August 1957, the Khuzistan Electric and Gas Erergy Company (KEG)maihly for the purpose of:

i) building and operating electric power generation, transmission and distribution facilities in the area;

ii) building and operating natural gas collection, transmission and distribution facilitiesin the area;

iii) selling (and in this connection also purchasing and exchanging) electric energy and gas, both wholesale and retail;

iv) promoting the use of electric energy and gas;

v) providing advisory and management services to electric and gas utilities operating in the area.

164. To carry out these functions the company is authorized to enter into contracts and to borrow and lend funds as an independent agency of the Government.

165. The companyts capital of one million Rials is wholly owned by the Plan Organization and its board of directors consists of three Iranians~ Initially, the management and staff of the company would be provided entirely by DEC, with Mr. John Oliver, the Vice President of DRC, as its managing director. For practical purposes the company is not yet operating as an independent unit.

166. As the first step towards its objective the company has entered into a contract with the Consortiumfor the purchase of electric energy from the latter's thermaL plant at Abadan, in order to supplementthe power supply to the Ahwaz area, pending the start of operation of the Dez River Project. The supply started with 4 M4Wearly in 1959 and is to increase to 20 MW in 1962. The 132 kv line from Abadan to Ahwaz and the related substations, which DRC completed early in 1959 for this purpose, is already being operated and maintained by the corpany. After completion of the Dez power plant this llne will transmit De7, power in the opp6site direction, to Abadan and Khorramshar, and provide the link for the standby arrangement contemplated with the Consortium. - 38 - 167. The companyhas also enteredinto a contractwith the mnunicipality of Ahwaz to reorganize the management of its distrioutionsystem and super- vise its present expansion, which is financed with Plan Organization funds. In fact, this will result in DRC operating the Ahwaz system for the time being. Similar arrangementsare contemplatedfor Abadanand Khorramshar.

168. As stated in Chapter IV in more detail,the Governmentnow plans to establish a new agency called the Khuzistan Water and Power Authority, that would plan, build, operate and maintain the entire Dez project (including the power facilities), and all future projects that might be builb in the area for water control, irrigation, power generation and transmission. The furnctions and responsibilities of KECTwould be transferred to this new agency without any substantial change. The Authority would have the power to set its own rates. It would keep separatebooks and accountsfor the irrigationand power parts of its projects. 169. As it is essentialfor the successof the projectthat the Government promptly adopt legislation and regulations for the establishing and functioning of this Authority, it has been agreed that no withdrawals could be made from the proposed loan in excess of US$ 8 million for purposes other than payment of interest and other charges, until the Government would have put into effect legislation and regulation satisfactory to the Banlk.

G. ARRANGE1METOF THE EXPANSIONOF THE DISTRIBUTIONSYSTEM

170. The consumption in the residential I-ectors of the towns of Ahwaz, Abadan, Khorramshar, Andimeshk and Dezful will in the foreseeable future make up by far the largest part of the power market. However, the systems of these towns, al1 owned and operated by the municipalities, now only distributea few NW each with obsolete and deficient facilities and a coaTespondingly poor service. In order to distribute the loads shown in the forecasts for 1963 they need to be practically rebuilt and enlarged several times, and thereafter they will have to be continuously expanded in order to keep up with the expected load growth.

171. This expansion of the municipal power systems is a problem not only in Khuzistan but it all of Tran. As the municipal organizations even in the larger cities have generally not been able to plan, finance and carr-y out such expansions, the Plan Organizationis assistingthem in a country-wide program: (i) by providing the planning and administration of such expansions through foreign consultants acting as the Plan Organization's agents; and (ii) by contributing half of the cost of these expansions in the form of grants (the other half to be contributed by the municipalities). - 39 -

172. The consultants retained 'by the Plan Organization for the above ex- pansion in the region of Khuzistan are Litcehfield,Whiting, Panero, Severud and Associates of VTewYork. They started the planning and design of thlenew systems in the three towns about three years ago (beforeDRC was engaged for the Dez project), but so far progress has been very slow. Most advanced is Ahwaz, where the layouit,the designs and the financing of the initial stage haveben agreed upon, and some work has been started. For Abadan and Khor- ramshar the layouts, designs and financing are still in the discussion stage.

173. In order to acceleratethe work on these distributionsystems the Plan Organization has recently given DRC general supervision over the con- sultants in charge. Furthermore,DRC has been authorized to lend to the municipalitiesfor expansion of their distributionfacilities (using its own appropriationsfor the Khuzistan development)in those cases where the municipalitiesare unable to provide their half of the cost of these system expansions. In the case of Ahwaz most of the municipal contributionfor the first stage of the expansion has been financed in this manner, so that nearly its entire cost has actually been made with Plan Organizationfunds, half as a grant and half as a loan. Similar arrangementsare contemplatedfor Abadan and Khorramshar.

174. The efficiency and speed with which these municipal distribution systems would be rebuilt and expanded would very much affect the market for the power from the Dez dam. It has, therefore,been agreed to include their rehabilitationand expansion in the project to an extent that would enable them to meet the distributionrequirements presently estimated for them at the end of 1962, when the power from the Dez dam is scheduled to become available. The Government will take all the necessary action to insure that the facilities and management functions of these systems would be in large measure standardized and coordinated so as to achieve in fact a joint operation under the direction of the KhuzistanW{ater and Power Authority. - 40 -

H. COMPARIPSONWITH A THERM[ALALTERNATIVE

1?5. In the appraisal of this project the question arises several times, in different form and context, as to what would be the cost of meeting the power requirements of the area with an alternative thermal scheme based on oil or natural gas. First, the broad cuestion presents itself', as to whether it would not be more economical to meet the principal objectives of this project during the first fe-wyears by supplying irrigationwater with pumping from the Dez and Karun rivers, and e'ectric power with a thermal plant, and to build the Dez dam and powerhouse only when the irrigation and poTwjerdemands would be larger and their future developmentestablished with more certainty. Secondly, the more limited question presents itself as to how the cost of power from the proposed hydro scheme (with the pro- posed allocation of common costs) compares with the cost of power from a thermal alternative. Finally, one might ask whether it would not be more economical to meet the olectric energy needs of the area with a thermal scheme even if a dam were built in any event for the purposes of irrigation and £lood control.

176. In view of the importance of the alternativethermal scheme in the appraisal of the project, the Bank retained the consulting firm of Stone & Webster to determine its feasibilityand its costs of constructionand oper- ation. The concepts and data used in the following comparison are based on their report.

The General Goncept of the Alternative

177. The capacity and layout of the thermal alternativewas determined in such a manner that it would, during 1963-83, meet the same neakload and generation demand which were assumed for the proposed Dez hydro scheme. It was found that technicallyand economicallythe most advantageousway to do this would be to build a tLermal plant at Ahwaz, based on natural gas from the oil fields nearest to the northeast (see attached map) or from a gas field recently discovered just outside Ahwaz.

178. The technical characteristics of the alternative thermal scheme are as nearly equivalent to the proposed hydro scheme as possible. It has been designed to meet the same peakloads in the same locations, with the same criteria regarding reserves. It is likely that in the case of the thermal schlemethe towns of Dezful and Andimeshk could for the first few years be served more economicallyby diesel plants instead of a transrmission line, because their initial load is very small. Both possibilitiesare commented on in the subsequent comparisonof coots.

179. The number, size and timing of the installationof the units of the alternativethermal plant at Ahwaz were determined so as to obtain, on the one hand, a maximum of standardizationand efficiency,and on the other, minimum of excess capacity (see Annex 10). In determiningthe reserve necessary at thfe plant, the same assumptions were made as for the hydro scheme regarding interconnectionand standby agreementwith the Consortium and necessary reserve in the interconnectedsystem. - 4;-_

180. For a number of technical reasons 60 YW was chosen as the maxirium size of the units. Initial steam pressure and temperatureswere assumed at 600 psi and 800° F., resulting in a reat4vely high heat rate. More effi- cient and consequentlymore expensive units were not considered justified in view of the low fuel costs. A 132 Ky single-circuit transmission 1ine on steel towers was assumed to supply the area of Shushtar,Dezful and Andimeshk.

The Fuel

181. The fuel for the thermal plant at Ahwaz would be natural gas from the oil fields which are in productionabout 130 kms to the east. Gas is being produced in these fields with the oil at the rate of 833 cubic feet per barrel of oil. At present some 260 million cubic feet per day of this gas is being wasted from the fields of Na't Safid, Haft Xel and Agha Jari alone, a quantity which would suffice to fuel a thermal plant of 1,100 ivYM. WJiththe adjoining field of Gach Saran coming into productionin 1962, the wastage will be even larger. Only a fraction of the oil reserves of these fields has been used up so far, and they are expected to produce at least at the present rates for maybe 20-30 years more. In addition, each of these oil fields has a huge gas cap above the oil deposit, which will be available for use after depletion of the oil reserve. Finally, a well -producingonly gas but no oil has just been brought in on the outskirtsof Ahwaz, which indicates that there are separate gas fields in the area. The needs of the thermal alternativescheme, on the other hand, would only be about 50 million cubic feet per day at full station load in 1973, which would only be a fraction of the gas now wasted, not consideringthe above-mentioned other gas reserves of the area and future increases in production. The use of this amount of gas for the thermal scheme would, therefore,still leave enormous quantitiesof gas available for industrialuses.

182. The gas supply system of the plant at Ahwaz would initially consist of about 130 kilometers of 1211pipeline taking the gas from the fields of Naft Safid and Haft Kel at the pressure of the separators. Later the capacity of the line would be increased by compressorstations. In case the gas well near Ahwaz could be used, the supply system would consist only of the equipment of the well and a very short pipeline.

Estimated Costs of Construction and Operation

183. The costs of the generating equipment, electric power and gas transmAssion lines and substations of the alternative thermal system have been based in the upper range of present-dayEuropean prices, which are about 80% of the correspondingU.S. prices. (This is a rather high price level, as a number of European manufacturersoffer comlparableequipment at 60-70% of U.S. prices).

184. The costs of erection of the equipment have been based on Euro- pean wages for the supervisory personnel and certain skilled labor. Local labor cost was assumed to be about 60% of the U.S. labor cost, taking into account lower wage rates and lower productivity of Iranian labor as ccm- pared iith that of the United States, which is supported also by the experience of the Consortium. _ 4_2-

185. To tWheestimates t'us arrived at, 10% was added for contingencies, which i.s in line with the contingency used in the estimates for the hydro system.

186. These estimates result in a total cost ner KW installed which is very close to that of a new thermal power station at Karachi recently financed by the Bank, and of similar plants recently built elsewhere.

187. The costs of operation, maintenance and administration have been based on normal requirements for staff, labor and materials in plants of this kind, and on wages and material prices presently paid by the Consortium.

188. The natural gas for the alternative thermal plant has been assumed to be availableat the wellhead free of charge. Under the oil agreement, any gas which the Consortiumdoes not need for its own operation belongs to the National Iranian Oil Company (NIbC). As all gas is now wasted in the enor- inousquantities mentioned above, as there is no alternative use in sight for many years, as 1NIOCwould not incur any cost in supplying the gas to a consuner at the wellhead, and as this calculationof costs is made for pur- poses of comparisonwith the proposed hydro scheme from the viewpoint of the national economy, it was consideredproper not to assume any costs for the gas at the wellhead. This assumrptionis valid in this context even if the electric power comnany would in fact have to pay a charge to I1!TOCfor the gas at the wellhead, because as far as the economy is cor.cernedthis would be offset by an eaual net income to NIOC. The costs of building and operating a system of pipelines, pumps and auxiliary equipment for collecting, cleaning and transporting the gas to the plant were, however, included in the capital costs of the thermal scheme.

Comnarison of the Costs of the H'vdro vs. the Thermal Scheme

189. The most suitable method for comparing the costs to the economy of the alternativehydro and thermal schemes is to establish for each the "presentworth'; of the capital costs plus operating costs over a suitable period of time (see Annex 11). The principal elemtentsentering into this oresentworth calculation have been deternined as follcws:

a) The forecast of the canital costs (excl. of interest during con- straction) has been carried to the point where the DeZ dam instal- lation would reach an installed capacity of six units of 65 FE each. According to the forecast of peakloads and sales this would be in 1984. After that date no further plant was added to either scheme, because thermal capacity would then also have to be added to the Dez scheme in order to firm it up, and the further addition to both schemes would, therefore,be comparable. These forecasts of capital costs include one-third of the common costs in the case of the hydro scheme. and the cost of the gas supply system in the case of the thermal scheme.

b) The forecast of the cost of operation include only. the cash expenditures for operation, maintenance and administration proper (labor, lubricants, spares and materials, maintenance, etc.), since the cost of gas for the thermal plant was assumed to be zero. - 43 -

Jfter the above-mentioneddate, the operating costs were held con- stant in each scheme, since it can again be presumed that any ad- ditional operating costs for plant to be added after that date would be the same in both cases. c) The period of comparisornwas limited to 30 years, the useful life of the initial installationof the thermal scheme. The present worth factor beyond 30 years becomes so small with the rate of interest of 8% used in this case (see below) that an extension beyond 30 years would make less of a difference in the final re- sults than the margin of error in the initial assumptions. d) The present worth calculations have been based on a rate of interest of 8% as a fairly likely composite of the rate of in- terest at which the Government might be able to borrow a part of the funds, and the rate of interest which the Government's own contributioncould earn in an alternativeinvestment.

190. From the projectionsthat have been made under these assumptions (see Annexes 10 and 11), the following principal conclusionscarn be drawn about the thermal alternative: a) The capital plus operating expendituresof the alternativethermal power scheme would, during the first few years, be very much lower than those of the hydro scheme. Together with an alternative pumping irrigationscheme it would thus serve the power and irriga- tion needs of the area during the initial may be 6-10 years as well as the proposed high dam, and at a considerably lower total expense. In judging whether at this stage it would still be more economical to proceed with this alternative thermal power-pumping irrigation scheme, one has to bear in mind, however, that roughly US$15 million has already been spent on the dam and generatingequipment. b) The present worth of the capital expendituresplus operating expendi- tures of the alternative thermal scheme would, over the entire thirty- year period, be some 22% lower than those of the hydro scheme (with the latter includingone-third of the cost of the dam and other works common to all purposes). In proportion to the present worth of the revenues over the same period of time, the thermal scheme would compare even more favorably. These differences are however an order of magnitude at best; variations in the load forecast and cost esti- mates, say, within the margin of error inherent in them, and a varia- tion in the method of comparisonand the rate of interest used for calculating"present worth", would affect the results of the com- parison either way quite considerably. Especially if in the cost estimatesfor the hydro scheme one were to include a part of the diversion dam, and if in the estimate for the thermal alternativeone were to leave out the transmissionline to Andimeshk and Dezful (as- suming these towns to be initiallysupplied by diesels) and leave out the gas pipeline (assumingthe gas field near Ahwaz to be suitable) then the difference in total cost between the hydro and thermal schemes would be substantiallylarger. - 44 -

c) The third question, whether it would not be more economical to provide pow-er by a thermal plant even if a dam were built. for ir- rigation and flood control anyway, is more difficult to ansier. In addition to the above cornparison it would be necessary to estimate also the changes in the total cost of the civil works (less height of the dar, no diversiondarn but alternativetunnels and canals etc.). It seems, however, that at least in order of magnitude; there would not be a large differencebetween the present worth of capital plus operating expendituresof the two solutions.

VI. FLOOD CON-TROL

191. The Dez river is now p.riodicallyflooding an area south of a point on the river about half way between Dezful and Band-i-qir, where the Dez flows into the Karun river. It also contributes, together with the Karun, to the periodic flooding o->the areas further south from Ahwaz to the Shatt-el-Arab,since the floods of the two rivers usually coincide. Thesefloods cause a certain amount of damage mostly to the agriculture of the area, concentratedlargely in the zone between Ahwaz and Khorramshar.

192. The proposed Dez reservoir,if operated as describedpreviously, would reduce the peak of the flood flow of the river anpreciably; as an ex- ample, a flood flow of 5,200 cubic meters per second above the dam, which occurs about every 30 years would be reduced to about 4,000 cubic meters per second below the dam. This would reduce the flood damage in both the above-mentioned areas. To determine the amount of the reduction is, however, in the case of this project somewhat speculative,because there are not sufficientdata to calculatethe frequency of various flood flows of the Dez river,the degree of coincidenceof floods of the two rivers, the contributionsof the Dez river to the floods below Ahwaz, and the extent of the damage at various flood levels in the two areas mentioned above.

193. The average annual flood damage has been estimated by DRC at 80 million Aials, mostly to the agriculturebelow Ahwaz, but this is an order of magnitude at best. For purposes of this report, it has been assumed that the proposed dam would reduce this damage to about half, and an amount of 40 million Rials has, therefore,been used in Chapter IV as the average annual flood control benefit for the purpose of calculatingthe return on the investmentin irrigationand flood control combined.

194. It should be pointed out in tnis connectionthat the proposed Dez irrigation scheme as well as the pilot irrigationscheme is entirely outside the flood zone of the Dez and Karun rivers; in other words, the flood pro- tection to be provided by the proposed dam is not a conditionfor being able to proceed with these irrigationschemes. - 45 -

VII. CASHFLOW PROJECTIONS FOR THE ATJTHCRITY

195. The precedingchapters sumnar-ize separately, for irrigationplus flood control,and for electricpowrer, the total investmentsand the returns on these investments;with two-thirdsof the commoncosts allocatedto irrigationplus flood control,and one-thirdto power.

196. The cash flow during the period of construction and operation has, however, been projected for all three purposes of the project combined, which would be the cash flow of the preposed Khuzistan ,later and Power Authority on the assumption that the Authority would also provide the funds for all the related expenditures such as for education and public health. The combination of all sourcesand applicationsof funds also has the advantageof showing to what extentelectric power, which startsearning at a much earlierdate and consistentlyhas a higherreturn, would have to "subsidize"'the other sectorsduring the initialyears.

197. The statementshows how much the governmentwould have to contribute to the projecteach year, in the form of appropriationsto the Authority,to meet the costsof constructionand operationof the project,over and above the proposedIBRD loan plus currentincome; "GovernmentAppropriations" are in fact the balancingitem of the projectionsuntil the operationstarts producinga net cash surplus. 198. The cash flow forecastsare shown separatelyfor the case that the pilot schemewould be followedby the developnentof irrigatior.to the full 110,000 hectares (Annex 12), and also for the case that irrigation would not proceed beyond the pilot scheme plus Sugar Cane Company (Annex 12A). Most items of the Annexes are self-explanatory. Special comments only apply to the following:

1. Cash Flow for the Pilot Scheme Followed by the Full Scheme (Annex 12);

a) The average price for the sale of electricity has been assumed at 1.0 Rials per kwh for the first three years, and 0.75 Rials for the period there- after for the reasonsoutlined previously,

b) The water charges have been assumedto start at 750 Rials per hectare per year from the firstyear of irrigation,plus a graduallyincreasing surchargestaiting with the thirdyear. The sum of the base chargeplus surcharge has been estimated at an arbitrary figure, 15% of the increase in the gross value of production. This assumption appears quite reason- able, but no agreermenthas yet been reachedwith the landownersregarding these water charges; the revenuesfrom this sourceare thus still subject to considerablechange, which is to be borne in mind when judgingthe resultsof these financialforecasts.

c) The amount of the proposed loan has been assumed to amount to the equiv- alent of $42 million which would cover the expenditures in foreign currencies after September 1, 1959 of the following items:

i) the high dam and other works commonto all purposes; - 46 -

ii) the powerhouse and the first two units (to go into cperation early in 1963) and to the related arxiliary and substation equipment; iii) the 230 RV line (onecircuit only) from the Dez dam to Ahwaz,and the related33 KV lines and substationsstepping down as far as 11 KV; arLd iv) the publicworks of the pilotirrigation scheme. v) the Plan Organization'scontributions towards the rehabilitation and expansion of the municipal power distribution systems of the towns of Ahwaz, Abadan, Khorramshar, Andimeshk and Dezful; vi) substantially all the interest on the proposed IBRD loan during the period of construction. The terms of this loan have, for purposes of presentation, been assumed to be 64-%interest, with the first repayment due in the second half of 1964 and the last in the first half of 1985. d) Working capital has been determined so that it would cover two months' receipts from power and irrigation,plus an amount estimated to be needed by the authority for extending short-term (7 to 12 months) credits to farmers for seeds, fertilizers, etc.

Under these assumptions the government cash contribution to the construction and operation of the pilot schemefollowed by the full scheme would be as follows MaximumGovernment appropriation in any one year 2079 million Rials Total Governmentcontribution (cumulative) 9407 million Rials First year with a surplusY 1974 Surplus by 1978 (cumulative)L/ 886 million Rials

2/ After operating expenses, debt service and nrovision for working capital. 2/ Cumulative from the first year of surplus without taking into account the "Tdeficits" of the previous years. The irrigation sector would start producing for the Authority a net cash surplus before any debt service by about 1975, and this surplus would thereafter increase rather gradually and slowly.

Debt selvice of the proposed IBRD loan would start being covered by the combined net cash revenues by about 1969, and thereafter coverage would steadilyincrease. 2. Cash Flow for the PilotIrrigation Scheme (Annex12A)

The assumptionsfor this forecastare basicallythe same as above,except for the water charges. In the full schemeit has been assumedthat the luga: Cane Companywould start payingwater chargesto the Authorityfrom the year it receives water by gravity from the main canals and could discontinue pumping power from the river. If irrigation development were limited to the - 47 - pilot area, it has been assumed that the Sugar Cane Company would not pay any water charges, because in that case it would have to continue pumping water from the river, involving substantialcharges for the operation and maintenance of the pumping installation.

Under these assumptionsthe Governmentappropriation to the con- struction and operation of the proposed scheme would be as follows:

Maximum Government appropriation in any one year 891 million Rials Total Government contribution (cumulative) 4501 million Rials

First year with a surplusA/ 1969

Surplus by 1978 (cumulative)!/ 869 million Rials

1/ After operating expenses, debt service and provision for working capital. 2/ Cumulative from the first year of surplus, without taking into account the "deficits"of the previous years.

199. Tt also follows from these forecasts that the pilot irrigation scheme alone, if not followed by the full development, would continue to cost the Authority a small net cash deficit for a number of years. It can be reasonably assumed, however, that the Authority would be able to levy at a later stage a small water charge on the Sugar Cane Company, because the high dam would contribiteto the latter in the sense that it would supply water of better quality and with more dependability. Further- more, it is quite likely that if the pilot scheme is not followed by the full s cheme, a number of the existing users of Dez water would improve their intakes and canals and considerably increase their use, on which the Authority would also be entitled to levy a water charge. Consequently it can be assumed that the Authority's revenues and expenditures from the pilot scheme alone, if it were not followed by the full scheme, would ultimately about break even. The overall net cash revenues would start covering debt service on the proposed IBfiDloan from about 1969 and thereafter coverage would steadily increase.

200. It follows from the above that in both cases the sale of electric power would for many years be the Authlority's only substantial source of funds. The average price per kwh to be charged by the Authority is therefore quite important for its financial position. As mentionedin paragraph 162, the Government has agreed to a satisfactory covenant regarding adequate power rates. - 4+8-

201. In judging these results one should always bear in mind that for both the pilot and the full scheme the forecastsare based on preliminary data and broad assumptions,and that the results are, therefore, orders of magnitude at best. This applies to the electric power sector, where the power market and consequentlythe revenues from the sale of power are difficult to predict, but even more to the irrigation sector, which would cause the deficits of the Authority during the initial years. These doubts about the financial situation of the Authority in the case of tne full irrigation scheme are another reason, in addition to the doubts of the returns on its investments to the economy as a whole, which make it advisable to proceed for the tire being only with the pilot scheme.

202. The concepts of debt/service coverage and debt/equity ratio have not much meaning in this case, and no covenants regarding these matters have been entered into. ANNEX1

I R A N

DEZ RIVER PROJECT

ESTIMATEDCOSTS OF THE DAMAND POWERFACILITIES

Foreign Local Currency Currency Total (Expressed in Millions of Rials)

A. DAMAND OTMERWTOLKS COEMON TO ALL

Engineering, Supervision and Administration 150 84 234

Land

Access Roads 91 107 198

Dam Diversion (Tunnels,Cofferdams etc.) 191 244 435 Excavation 62 102 164 Foundation Preparation 13 26 39 Concrete 261 525 786 Miscellaneous 14 7 21

Spillways 173 244 417

Sluiceways 31 14 45 Sub-total 986 1353 2339

Contingencies2'1 165 256

TOTAL lO1?7 151E 2595

(Equivalent in millions of US V (14.4) (20.2) (34.6)

AILOCATICNTO: PaVER 865

IRRIGATION 865

FLOOD C7OUTROL 865

1/ Based on the present design of the dam.

2/ 15> on foreign currency component still to be spent. 15,< on local " " " it " " ANNEX 1 Page 2

Foreign Local Currency Currency Total (Expressed in _4illionsof Rials,

B. POWERHOUSEAND FIRST TJO UINITSOF 65 liWEACH

Engineering,Supervision and Administration 94 52 146

Power Intakes 48 42 90

Water Conduits 93 136 229

Powerhouse Civil Vorks 143 173 316

Turbines 87 11 98

Generators 95 15 110

Auxiliary Equipment 165 51 216

Step-up Substationat Plant 179 46 225

Sub-total 904 526 1430

ContingenciesJ/ 127 63 190

TOTAL 1031 589 1620

C. TRAYSTSIISSIONPLANT RELATED TO FIRST TVTOUNITS

Engineerirg, Supervision and Administration 31 4 35

230 KV Line Dez Dam - Ahwaz (First Circuit) 173 27 200

Primary 3Step-down Substations 160 16 176

Secondary Lines and Substations 108 15 123

Spare Parts 38 - 38

Sub-total 510 62 572

Contingencies 1/ 54 9 63

564, 71 635

1/ 15% on foreign currency component still to be spent. 15-% on local " ft n" ANNEX1 Page 3

Foreign Local Total Currency Currency (Lxpr~e-ssedi-.llions cf Rials)

D. ADDITIONS TO THE PCWER FACILITIES UNTIL 1984

THIRD UNIT

- Civil Works, unit and substationexpansion 189 2154

-Expansion of transmission plant (incl. second circuit Dez Dam - Ahwaz) 196 32 228

Sub-total 38 7

FOURTH UiNIT

-Civil Works, unit and substation expansion 1.22 21 143

-Expansion of transmissionplant 90 10 100

Sub-total 212 31 213

FIFTH UNIT

-Civil Works, unit and substation expansion 389 223 612

-Expansion of transmission plant 83 9 92

Sub-total 472 232 704

SIXTH UNIT

-Civil Works, unit and substationexpansion 111 19 130

-Expansion of transmissionplant 45 5 50

Sub-total 156 2L 180 AInThiX2 ThAN~~~~~~~~~~~NTIX.2

MlRNT e ivr=Pr9jbct (t WU hectare s - neit)

FULL IMZ TFRJECT PILOT PROJFCT reetPattern Presenu Proposed Winter Crop Total Dry Farmed Irrigated Pattern Pattern

Wheat 60.10 15.00 45.10 10.57 8.80 Barley 18.60 3.00 15.60 2.88 1.20 Beans 1.65 0.30 1.35 0.h7 1.00 Peasantst Vegetables 0.42 - O.Lh2 --- 0.40 Sugar cane --- Research farms ------0.20 Landlords' Gardens 0.20 0.20 0.15 0,30 Forage and fallow 28,73 11.80 16.93 5,93 8.10

TOTAL 109.70 30.10 79.60 20.00 20.00

Summer Crop

Paddy 11.00 --- 11.00 4h61 7.4o Cotton ------2.60 Sesame 4.90 -. 90 0.97 2.00 Peasants' Vegetables 0.72 --- 0.72 0.34 2.4o Landlords' Gardens 0.92 --- 0.92 0.16 0,30 Sugar cane ------Research farins ------0.20 Forage and fallow 0%1.6 30.10 62.06 13.92 5.10

TOTAL 109.70 30.10 79.60 20.00 20,00 AInENX 3'.

IRAN £ez River Proiect PILOT IRRIGATICN 1/ PRQUIR7,YTDTS OF IRRIGATIGNWATYIR Pr,R MONTHOF MAJOR CROPS- (In millimeters or 10 cubic meters per hectare)

CRE1ALS ORCHARDSFCRAG2 & SUGAR MCOITH & HIANS IEiLCKS V:GS.V& GREENMANUBZ COTTON Sl,SAM7 CANi: RICE

Jan. 22 -- 41 __ __ 89 __ Feb. 51 -- 72 -- _ 126 __ March 68 94 9)4 -- -- 159 -- April 96 125 125 100 24 __ 199 __ May -- 175 175 154 72 -- 270 -- June __ 227 227 254 159 159 339 339

July -- 244 244 355 268 171 366 366 August - 239 239 282 258 167 357 357 Sept. -- 206 206 204 109 1h4 309 309 Oct. -- 172 172 86 -- 120 258 258 Nov. 70 -- 97 10 __ -- 164 - Dec. 31 - 52 ------104 - 338 1482 1744 1449 890 761 2740 1629

Average Monthly Flow in Cubic Meters Per Second

JAN. E.B. MAR. APR. MAY JT" JULY AUG. STEPT. OCT. NOV. DEC.

1.8 3.9 6,9 14.1 11.2 37.6 45.9 41.8 32.4 20.7 5.8 2.5

1/ Figures are revised for cotton and rice. ANNEX h

IRAN Dez RivecrPro ect

PILOT IRRIGATICN

PRESDNTAIND EXPICTCD CROP YTEID- kg/HECTAM2

1957 1966 1973

Wheat 675 1240 1590

Barley 735 1250 1600

Beans 925 1090 1290

Paddy 1600 2560 3080

Seed cotton -- 1000 1300

Sesame 220 310 320

L/ Because of substantiallyincreased technical services to be provided to farmers, yields asswmed for the pilot area for 1966 and 1973 are the same as those previouslyassumed for the full Dez project for 1973 and 1985, respectively. AkTEX5

IRAN Dez River Project PILOT =RRIGATICN

EXPECTEDFARM PRICGS AID GROSS VALULOF PRODUCTICN

Gross Value of Production Crops Prices (million rials) (rTai7Ulon) a1957 196 1973

Wheat 5,330 38eO 58.2 74.6 Barley 3,330 7.0 5cO 6.4 Beans 5,330 2.3 5.8 6.9 Paddy 5,30 39.3 lOloO 121.5 Seed cotton 10,030 -- 26.0 33.8 Sesame 10,200 2.2 6.3 6.5 Vegetables 1/ 6X5 33.6 39.2 LandownerstGardens 2/ 5.5 10.5 10.5 Alfalfa hay 9 2,250 -- 67.5 90.0

Total (barleyexcluded)WV 93.8 308.9 383.0

Animal Products

Meat 32,000 3.7 8.0 11.4 Milk 10,000 10.2 32.8 55.4 Eggs 37,500 1.4 4.5 h.4 Wool 56,000 .8 .6 .6

Total Animal Products 16.1 45.9 71.8

Grand Total (barley excluded)" 109.9 354.8 454.8

1/ Miscellaneousvegetables varying with the season. 2/ Miscellaneous fruits and vegetables. 3/ Includes only alfalfa hay for sale. 2/ Barley fed to animals, hence reflectedunder animal products. I R A IJ

DE7 RIVER PILOT PROJBT FOLLZZED BY FULL PROJECT

F.S'rINATE OF THE ANNUALTNVYES'TE.}T 20ENUDflThNE FOR IRRIOGTIO ALNDFLOOD COITROL

Expressed in lIllions of Riais

1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1 1971 1972 1973 1974 Total I. Dez Irrigation Area

A. Public Investment

1. High dam allocation (2/3) 476 354 520 280 1o0 1,730 2. Diversion dam 150 250 350 750 3. Canals and associated works Canals and laterals etc 50 326 362 46 280 860 1,525 304 200 190 95 4,238 Roads 30 40 38 50 120 120 46 20 20 ) 84 Agricultural & related facil-itiesJ 20 30 40 33 15 20 2o 15 10 9 212 Compensation: crop damage, rights of way 10 12 2.5 15 15 10 8 125 Sub-total 476 374 630 696 575 46 430 175 2,040 459 276 230 132 7,539 B. On Farm Investment

Canals anl leveling 20 80 41 40 30 30 15 16 272 1'achinery 10 20 20 10 70 45 45 25 25 270 Working capital 20 20 20 18 60 60 80 80 40 37 S35 Sub-total 20 3o 81 40 28 170 135 155 120 81 37 977

C. Total Des Area 476 374 630 716 685 127 40 28 430 1.345 2.175 614 396 311 169 8,516

II. Sugar Cane Company 1/100 140 140 140 140 130 40 20 10 10 870

- Annual 576 514 770 856 825 257 80 48 440 1,355 2,175 614 396 311 169 - Cumulative 1,090 1,860 2,716 3,5421 3,798 3,878 3,926 4,366 5,721 7,896 8,510 8,906 9,217 9,386 9,386 - Assets in operation including interest during construction 3,067 3,834 4,105 4,187 4,219 4,586 5,754 8,533 9,179 9,554 9,878 10,018

lJ Includes Eials 174 million as Government engineering and subsidy on private land development.

g/ Includes village development and public health and sanitation.

]/ Exclusive of investment in mill and refinery.

H 11E2 H4IM PILOT PRJIM ?OLWWNDBY FULL PROJECT

I1STR TE OF=SS VALUFAND C09TS or Pr)017CTIONAND 2P1DIU ON ME TQTSLI3.1!STIN2 OF 2U IRRIOATIOIIAND P2012 CONTROLS(CE1( (J inoliaoorl 1960 196 _%6 1963 196 1965 1966 196T 1968 1969 197 1971 1972 JU MA 39527 1978 1979 1980 U1819 2 193 1984 198 19866 1. Aea.ta in OperaLio including inta'ee 4uLi. ochroj.i36 834115148 41 4586 5754 8533 9179 9554 987810018 1001 10o1 10018 me01 me0119005 10023 lo0w 301118 IXnB 10018o

U.TorBeov Present level 24Gross VleOf adi.on 1. DesW Igrigsift ~~50150 245 265; 280 29% 575 845 13.35 230% 131451370 140011WS 11450 11475 1.5001530 1560 15~90 1625 1670 1700 2. 8guouza0e4epu 110152152 213 235300 375 3?5415 415 415 415 415 425 435 445 &55 65475 485 495 -00500IO500 500 500 TOWa -110 215 215 265 365 545 640 655 710 990 1260 155 1720 1770 1805 I54 1880 1915 1-950 1985 2025 2060 2090 212% 2170 2200 IIIXnre.a oer reegat Lorel In ~ootof Productlon tinn&aaiz2ttaionV3 9 24 24 24 24 24 24 14 61 7? 8% 92 92 92 92 92 92 912 92 92 92 92 92 92 flutuaintommee 5 7 10115515 152 0222421 4 24 21421424 24242424 24 24 2422442 24 TraaiW, 2ttommdhn,earch 10 20 3. 50 60 60 60 60 60 60 70 70 70 70 80 80 80 So So 80 80 So 80 8088so 80 80 4%h Isam,tatio atii&aattoaffi I 1 5 20 20 20 20 20 20 23 _23 23 23 23 23 23 23 23 23 23 23 23 2 1 3 2 Szd,-tetal mt 22 3Y 72 2lU -219 219 113 2122 1246278 M9 20221-9 219 21 29 229 229 219 223. 2I9 219 219 2Y 21 2. yams oepatiana A/ 34 103 168 17 183 190 1480 670 8.50 1040 1060 1080 1090 1105 1120 13.1401155 1175 2.190 121 1225 12140 1225 3. &gaW Ceaw Cbn3rzwh 1OD 163 160 160 160 170 210 210 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230 230

Teta1 10 121 204 231 308 382 1457 544 51$ 5s 870 1078 1274 11472 1509 1529 1.539 15514 1569 1589 1604 16214 16.39 1659 16714 1689 1-714 I.tacreeso over Pr'wexitLevel (10) (ii) Il (16) (43) (27) 88 136 140 166 120 182 276 2148 261 276 306 326 346 361 381 401 421. 1i3l 151 451 1486 In Net Valu, or Production

V.AM16- aWP13840 -- 40401 40140 1~LO 40 4040 40 14040140 40 -~ 14014o 4014040 40 4040 4 0 _40

VI. P.Mw onama! maatP~ou

flood dinig, 2.1 3.2 3.1 2.9 1.4 2.0 2.9 2.5 2.6 2.8 3.1 3.3 3.5 3.6 3.8 4.0 14.2 14.3 14.5 4.8 4.9 b) mLuiMOingy-4dliO,i in flood diamp 0.8 0.6 3.1 4.2 3.9 3.6 1.9 2.14 3.3 2.p 3.0 3.2 3.5 3.7 3.9 4.0 4.2 4.14 14.6 14.7 4.9 5.2 5.3

include. repl.anmtA of mawpe2wiamet;itina (gate., 7a1ves.etc,) and213 operation powL,at darn. rInlude. MUMlagDevelop.ntWl. h~ae water oberge $ad reftru an inveemogt.

Ft I R A N

DEZ RIVER PROJECT

HYDROELECTRIC POWER SCHH4E - FEaKLOAD. SALES. INSTALLED CAPACITY AND ESTIMATE COSTS

Total 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 and prior PEAKLOAD in MW

Residential and Commercial Sector

- Ahwaz 12.8 13.7 14.6 15.8

- Khorramshar 8.4 9.1 9.8 10.4

- Abadan 8.4 9.1 9.8 1o.4

- Other towns 8.4 9.1 9.8 10.4

- Consortium' a domestic area' - - - 30

Sub-total 38 41 44 77

Industrial Sector 11 11 12 13

GRANDTOTAL 49 52 56 90 96 103 110 118 126 135 145 155 165 177 189 203 217 232 248 266 284 304

SALES in MILLION KWH 215 228 246 394 422 451 483 516 553 591 633 677 725 775 830 888 950 1016 1087 1164 1245 1332

REQUIREDGENERATING CAPACITY in HW 52 55 59 95 101 109 116 125 133 143 153 164 174 187 199 214 229 245 262 281 300 321

INSTALLED GENERATING CAPACITY in MW

6 6 6 Number and size of units 2 x 5 1 x 65 1 x 5 1 x 5 65

Total in MW 130 130 130 130 130 130 195 195 195 195 195 195 260 260 260 260 260 325 325 325 325 390

Excess capability in MW 78 75 71 35 29 21 79 70 62 52 42 31 86 73 61 46 31 80 63 44 25 69

COSTS AT YEAR OF OPERATION in Million Rials

Generating Plant / 3584 2485 214 143 612 130

Transmission Plant 21 1105 635 228 100 92 50

Sub-total 4689 3120 442 243 704 180

EXPENDITURES BY YEARS in Million Rials 4689 693 707 1050 530 140 110 166 166 61 91 91 176 264 264 45 67 68

OPERATING COSTS in Million Rials 23 23 23 23 23 23 26 26 26 26 26 26 30 30 30 30 30 35 35 35 35 40

a/ Excludes interest during construction. i/ Includes allocation of 1/3 of the common costs (dam, spillway etc).

2/ Includes transmission facilities as far as 11 KV side of substation. I R A 1I

DZZ PTV,R J'gtRJsSOT

Estimate of Revenues and Onerating Costs of the 'ower Scheme

Expressed in I illions of Rials

1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 17 1974 1975 1 1977 1978

I. Energy Sales

Millions of kwh 215 228 246 394 422 451 483 516 553 591 633 ,77 725 775 830 8e8

II. Rlevenue Account

Revenue from sales of energy at 0.75 riPls per kwh / 215 228 246 295 316 338 362 387 415 443 475 508 544 581 622 666

Operation, maintenance and administration 2/ 23 23 23 23 23 23 26 26 26 26 26 26 30 30 30 30 Depreciation (straight line) 95 95 95 95 95 95 107 107 107 107 107 107 114 114 114 114 118 118 118 118 118 118 133 133 133 133 133 133 144 144 144 144

Net revenue before depreciation 192 205 223 272 293 315 336 361 339 417 449 482 514 551 592 636 Net operating revenue 97 110 128 177 198 220 229 254 282 310 342 375 400 437 478 522

Gross fixed assets in ooe ration;2' 3801 3801 3801 3801 3801 3801 4279 4279 279 4279 4279 4279 4544 4544 4544 4544 Accumulated depreciation 95 190 285 380 475 570 677 734 291 998 1105 1212 1326 1440 1554 1668 Net fixed assets in operation -' 3706 3611 3516 3421 3326 3231 3602 3495_ 3338 3281 3174 3067 3218 3104 2990 2876

Operatirg revenue as a percentage of gross fixed assets 5.9% 5.4% 5.9% 7.2, 7.7-4 8.3' 7.83 8.43 9.1;. 9.7z 10.5w 11.3% 11.3% 12.1% 13.0% 14.0%

Net onerating revenue as a percentage of net fixed assets 2.6% 3.-% 3.6% 5.2% 5.9% 6.8% 6.4% 7.3% 8.3% 9.4% 10.8% 12.2% 12.4% 14.1% 16.0% 18.1%

1/ 1.00 rial in 1963-65 2/ Including 1/3 of cost of operation of the high dam. 2/ Includirg interest durirg construction, 1/3 of cost of high dam and common facilities, and cost of existing transmission line Ahwaz Abadan. I R A N

DEZ RIVER PROJiCT

THERZALALIT•RNATITVE - FEAKLOA3., 3ALE;,. INST.;LLE3 CAFACITY.iND ESTEI.TED CO .

Total 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1574 1975 1976 1977 1973 1979 1980 L931 1982 1933 19J4 and prior

PEAKLOADin MW 49 52 56 90 96 103 110 118 126 135 145 155 165 177 189 203 217 232 248 266 284 304

SALES in MILLION KWH 215 228 246 394 422 451 483 516 553 591 633 677 725 775 330 888 550 1016 1087 1164 1245 1332

REQUIREDGENERATING CAPACITY in 14W 52 55 59 95 101 109 116 125 133 143 153 164 174 l87 199 214 229 245 262 281 300 321

INSTALLEDGENERATING CAPACITY in Ml

Number and size of units 1 x 6c 1x O3 IxoO 1 o x 'O

Total in MW 60 60 60 120 120 120 180 180 L80 180 180 180 240 240 240 240 240 300 300 300 360 360

Excess Capability in MW 8 5 1 25 19 11 64 55 47 37 27 16 66 53 41 26 11 55 38 19 60 39

COSTS AT YEAROF OPERATION -/ in Million Rials

Generating Plant 2 3357 602 551 551 551 551 551

Transmission Plant 2! 210 173 - - 17 - - 20

Gas supply system 1117 188 36 168 158 288 279

Sub-total 4684 963 587 719 17 7(9 839 850

EXPENDITURESBY YEAR in Million Rials 4684 132 333 498 94 237 256 94 237 358 17 94 237 373 94 237 508 94 237 519

OPERATINGCOSTS in Million Rials 46 46 46 51 51 51 61 61 61 61 61 61 75 75 75 75 75 93 93 93 111 111

1/ Exclusivo interest during construction.

2/ Includes substation at plant.

3/ Includes transmission facilities as far as 11 KV side of substation. J- P1 7 72

C7(10NOFHYF f 'llYIT7XI

1959 and otl PrIor 1967 1961 1962 1963 195 165 167 _9516 1960 19 (0 1971 107 2 1973 107 17 9 07 08 97 99 18 7982 963 198 198 ...... 993 I. PRMET WORTHF71020R 7~~~baoiofrom l9~~~~~~) 1.90 .93 .86 .79 .73 .68 .63 .58 .51 .50 .46 .L3 0) .37 .31 .31 .29 .97 .25r .23 .21 .271 .18 .19 .16 .65 .1L ...... 07

Eeqordi t-ms year by year 4689 693 707 _1050 530 140 110 166 166 61 91 91 176 261 26h 45 67 68 PresentWorth 3286 693 658 903 419 102 64. 90 83 23 31 L8 LI 63 55 8 11 1l.

Therm,al Systee3Ž

Eapendituree year by year 4681 132 333 198 92, 237 256 94 237 388 17 91 27 3891 237 508 91 237 519

Present -oth 2111 123 286 393 69 161 161 55 128 191 7 35 81 117 23 51 107 19 53 88 Ili. OPERiPill 01339 flydro Sy.tm

WSeaditures year by year 984 23 23 23 _23 23 23 26 26 26 26 26 26 30 30 30 30 30 35 35 35 35 10 ... 10 per year Present worth 2147 17 76 72, 13 72 ii I2 71 10 10 9 0 9 8 7 7 6 7 6 6 6 6 ho1985193 =36

Thermal Ssysteav

Fxpenditosreeyaar byyear 21,21 56 46 46 51 51 51. 61 61 61 61 61 61 75 75 75 7 5l39l3 1 1 ... llpery-a..-

Present smrth 600 34 31 29 3c 28 25 2 26 1 23 1 19 22 20 19 17 16 19 17 16 18 17 Totsl 985/93 =101

Pre2ent value of utay~ Hdr Thermal Imveotmmet 3286 2111, Operation 217 600O

______~~~~~~2711,~~~~~~~~~3533 Foclusive of interest daAing eccetrutio...- /2 Ioludes allocmtion of on-third oust of high d-m Includes transiossino facilities as far as 11 ky aide of oubstitlns. A.booig ni most at seell-head for gas traamitIed to hwoo. I R A 1

DEZ RIV7R 'ILOT 'IRJs 'r FOTl1O,T2)BY FLL'L J.

B7TE CF Lt;C151. 106a52 .15M A3'LI MON OF 9125015

Enore,nd ian Lillions of !i ale

1959 1960 1961 1962 1963 1964 1965 1%66 1967 1968 1969 1970 1971 1972 193 1974 1975 1976 1977 1979 Total and Ar I. REVENUBIAOCOUNT

A. IldIGATION AND FLOODCONTROL SECTOR

He-tares irrigated 25,000 25,00.) 27,500 27,500 77,500 50,000 70,0(O) 90,000 100,000 110,000 110,700 110,o'X 110,000 110,000 ]10,000

o0-ratieg revnaa, ln i7Lionri6j1 15 7 40 42 81 100 136 161 190 200 2P6 230 235 240

Operation eaint- nne 02nd adaistratioa of d-,s and .- IN / 3 9 21, 24 2, 24 2'4 '4 45 .1 77 35 97 92 90 92 02 Haistenance of roads 5 7 10 15 15 15 l 20 22 24 24 24 24 24 21, 24 24 Tr-inin.g ext- si-n nd research 10 20 30 50 60 40 60 60 60 60 70 70 70 70 60 80 00 80 80 Health, .nitatoti ad edd-ti-on 1 1. 5 120 20 20 20 20 20 23 3 23 223 23 219 23 23 23 10 21 39 71 114 11 119 .2.9 102 121 14 17 194 202 019 219 719 219 219

Net revenae before dopr-oiotion (10) (21) (39) (711 (99) (104) (82) (79) (80) (43) (60) (42) (33) (12) (l9) 7 71 16 21 (739)

B. P9102 SECTCI

E-nrrU sa-es in _illion khe 215 228 046 394 422 451 483 516 553 591 633 677 725 775 930 39e Arerage price per k,h, in riilo 1.00 1.00 1.00 0.75 0.7) 0.75 0.75 0.75 0.75 C."" 0.75 0. 75 0.75 0.75 0,75 0.75 Revnno-- ro.a sfi bs o.nr7.. , to d1l2000 ri,la 215 228 246 295 316 338 362 337 415 443 475 506 544 581 622 6b6 Operation, naintananne and adoidiotr-tton ! 23 23 23 23 23 23 26 26 26 '6 _26 26 30 9 _30 30 Net reenne Wofore depenintion 192 205 223 272 297 315 336 61 _ 389 417 449 _-9 514 551 592 43' L 7 TOTaL NET C,S REV0I'U1 A B) (lo) ()21) (39) 121 106 12-9 190 214 235 273 301 347 _34 _'7 571 __62 00 757 5.488

1-/loouding teen-thirds of -oot of operation or tho high d- 3/ Including ope-third of noet of operation 49 th. high d-a

II. S9U0CE0 OF FUNDS

N.t nash renane (10) (21) (39) 121 106 u9 190 1.4 235 293 301 247 721 437 1463 S71 564 609 657 .,400 IBRD loan 759 978 1,029 394 3,152 G-.r-eset ,rprPoAtins 1,170 420 891 445 506 219 195 743 703 .43'7 '.079 437 200 237 1131_ 9 40 Total 1,170 1.169 1.,430 1.435 1.011 324 314 433 922 1,645 2,372 788 407 621 555 463 501 562 106 657 17, 45

III. A0. LICTI0 OF PUNDH

Goprtrution

High dan 715 530 780 470 150 2,595 Per Caoilitie- 455 530 790 390 90 110 166 166 a1 90 91 176 '64 3,379 Contribution tow-rds ttstrihbtion f2oiliti.e 80 90 80 5' ?9 Irri,ation R--rUo1ti90 dm 550 757 310 750 'toit -anls ,nd laterals 50 326 362 46 ?'0 040'n 35 304 206 190 95 4,753 o-ads 30 40 39 50 130 l20 46 210 0 484 AgrticLturtl and m1Ooted f-ciliti-n 20 30 40 33 1S "°0 ' 15 10 9 212 Tompensotioe, crop dnaTae, ripht of wy 10 2 15 10 10 a 12' 1.17n 1,160 1,770 1,306 7h5 46 110 596 1.341 0 i( 459 276 291 223 91 176 264 12.09)

Debt Service a IBRD 1p n

Intornet 9 78 129 2 197 193 i 1.300 173 17' 1t 258 1 144 136 727 liq lo 93 ','13 loortination 37 77 92 '' 33 99 (36 113 120 177 135 144 153 163 173 1 177L 9 70 129 190 234 1 27 271 271 771 .71 :71 271L -7m ?71 271 7_1 271 '71 4.424 Additio-e to Wosti-n Capit.l

'nowe? 36 2 3 8 4 3 4 5 4 5 6 5 6 6 7 7 511 Iroi9otion - operaraUn 2 4 1 7 3 '; 4 5 1 S 1 1 40 - Iareerscredits 0 0 0 /414 55') S 50 S 61 56 50 e ' 65L 41. 13 3' 5333cl )1 59 161 6 14 6 9 s

Tottl 1.170 1,169 1,848 1.435 1,011 37214 3h 4'3 952 _11.,377 (3 44 121 -55 3627 9O72777 455 543 17.579

role fr nea 97 'e5 153 14 '06 Tobol 4 ? 5 1 S2 713 "5 1 lS,t I Ft A 1I

kliz i112 .160 126

007I41AT OF (16.0(I 7 .6 ii'L62Ii OF 6'.o

Oco--nd is nallo- of nt-is

______~159%1960 0961 192 17 94 1965 19166 1967 19691 1969 1970 1971 91672 1973 1974 1975 17 197 1972~ Taco and"ra 0. OK IIE AW]IUNH

A. IlHGOIOT0N AND 'LOWD ONTROL 0?=

He-tar- irrigated 25,010 26,010 27,50027,500 2'7, 500 27, 501 7750 1,51o 77,320 `7, .17 27,570 27,900 "7,310 27, 500 27, 510

Operating roonn, n Alis o I5 , 30 70 30 50 7030 O 30 30 70 30 7 37 Opertion,' ainio--e nd adinistration af d- ocdoa-)ai . 9 24 24, 24 24 24 )41 4 21, 7. 4 4 74 2 Maneac f reds 5 7 10 55 1, 110 6 b 6 6 6 6 6 6 6 6 Triaialg axenld.n -d reenorh 10 20 30 90 6o 60 60 610 40 Ii 31 7-1 31 71 36 31 71 71 31 Health, anitatIon and education 1 0 7 20 70 2 10 17 10) '. 16 .7 66 10 13) on on io 21 ~~~ ~~3971 114 11.9 119 114 90~ 371 "1 71 71 71 71 71 70 71 9 Net revnu befor dap-sitian (10) (70) (39) (71) (99) (14 8) (841) (50) (hi) (HE~ (hi) (afl (43) (41) (41) (415 (41) (3) (9797 03. POW4ERDOGCTO

Energ cairn in illi.oakah 215 223~ 246 794 4)12 451 483 516 5513 391 o7O3 277 775 775 .730 099 Overge prio- per kh, in nob 1.0 .0 .0 6. 75 0.75 0.70 0.3,3 -0.20 0.75 7.7 0.79 0.73 0.75 02.75 0.75 0.71

Rnveno fran sale of e-eaK in Mdflc air, 215 228 246 295 376 338 762 3.97 415 443 475 010 54.4 501 672 666 Operation, noneonoad a&dniatratj_n _2 23 2 7 23 23 23 26 26 76 26 26 26 30 30,,,,,,,,3 Net revec befor dopr-altin 19 05 29 7 93 09 3 31 399 1 49 42 5141 51 5920630 6_22'

T00AL NEr CASH ngngEo'2 (A e B) (lo) (a1) (3o) 121 106 no9 183 209 -2~ _ 25 3O JH 1 55 34H__ .36.. 4 flf 55 g, 5 3!Ineindiog ta-thirda of coat f parti-n of the high dma. /Ineidingon-third ef coot of opert- of the high d-n

11. 000U01 OF FUN1DS

Net o-h reeun(10) (21) (39) 121 106 119 19~3 709q 265 795 310O 7491 TM6 403l 41 473 510 951 595 5,250 10R0 loon 759 978 1,029 304 3,150 Go-rnnt aaprpriatioo 1.170 420 191 445 506 219 ~195 779L 257 1575 ___- ____ 4501 TctAl 3 170 1i160 1.0248 .4 35 324 343 7¼ _

III. OLPPIICATION?2 FUN1DS

oC-tn,tir,

High da, 715 530 780 420 150 7,59 Po-e f-rilitien 455 530 790 399 90 no( 366 166 61 91 176 "64, 0,380 Oentnihutic to-ads dIstribution fcilhttee so 90 90 90 307 Orr)gati-n Rn-rg.iati.g due noe Main -ani and ItSe50 326 362 46 724 cR..d. 30 L0 30 110 AgAinltnr'c and related f-aritti-n 20 30 40 33 123 ripbt -y OC-,oti-n orap daon 0 , af 10 42 .______-______2______1 170 1.160 1.770 1.306 765 4,6 HO0 166, 166 5 7 1______91 176 264 7.34 Debt On-nle on IB00 Icon

Interet 9 78 129 1710 197 193 199 183 170 6,72 165 151 151 64,4 136 127 .10 100 90 ",713 A-ncticatoo 37 7. 8 1_ " 3_" 9j 196 _10__ 110o i'7 079 121j _ 57 140,~ 1a17 1.11 9 78 129 1102~30 21 271 271 "73 "7 771 771 771 271 3f 3 0 3 3 fj1 441

Additicee to aeiCo paita

Pce 36 2 7 9 4 3 1 5 4, 5 (I 5 6 6 7 7 ill Irrigatin- operatio " - n -orrdita 3 102 50 2 1' "0 -______

T.tl1 1.7 .69 14 .35 161 74 014 - 41 ,1, "2276 770 337 39 ~36' 7"7 3' 45 502 -1"79

Snrepla for year 3 .,32.... 14 4 04 23 972...53 .9

Total9 1 37 3 765 407 >, 473 11 550 59 N

IRAN DEZ RIVER PROJECT LOCATION OF DAM, POWER FACILITIES AND IRRIGATION AREA

ANDIMESHk .DEZ DAM Existing 132KV Line .f.DEZ-FL - Proposed 33 KV Lines IR AT AREA}------Proposed 220KV Line IRRIGATION AREA"' W, ..-.-$-4-.-...-i-4.-4-H- | Railway Roads t ernonl...... Boundary

0 10 20 30 40 50 Kms

'>8\. B , 0 10 20 30 Miles

BAND I-OIR

AHWAZ2 ...... v..e...... S

EXISTING CONSORTIUM / q T4 THERMAL PLANT

WnA~~~BND

UNE PERSIA V GUL F

JUNE 1959 IBRD-556R IRAN DEZ RIVER PROJECT LAYOUT OF DAM AND POWERHOUSE

ROADY 1 TUNNEJt\r POWER

I \ j~~~~~~~~~IL

I IZzFIt-1

ROAD 4\(-Q! TU NN EL~~I - 0.0

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20 0 20 40 60 80 10OOM. DISCHARGES

IBRD-663 JANUARY 1960 IRAN i DEZ IRRIGATION PROJECT PILOT AREA

REGULATORS HEIDEMY PROPOSAL-NOVEMBER-1959

~~~ '~~~~~ ~SCALE (0 0 2 3 4 K(ilocmeters

X~~~~~

4,~~~~~~~~~~~9 0~~~~~~~~~~~~~~~~~~

ABDE SHAH JEIBARDALE

KUTYAN

BA LANJOON KUTYAN

9 WOUNAHLIX DtL

CD-

AA 16HAMOUN

SUGAR N AREA

JANUARY1960 IBRD-662 .' ,

tv IRAN DEZ RIVER PROJECT LAYOUT OF THERMAL ALTERNATIVE

,, C Thermal Stations X) O Major Substotions

Small Substations

- -_- TransmissionLines

j tsllittGas1~1 Supply Lines

0 10 20 30 40 50Kms

0 0o 20 30 Miles

ANDIMESH-K 0 OZUL AWDIMESHKgU0 ~~~~~~~~~~LcliOil Field

t s & 4%7~~~~~~US HTAR L0l~~~~~~~01 Field~~~Fel

4 Nuft-e-Sufid BAND-I-IR ~BAN0-l-OIR 4~'Oil Field

I,<< 0 ?0 9:,Hoft Kel I ~~~~~~~ ~~OilField

AHWAZ I

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Aoho Juri W0il Field

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KHOR AMSH Existing Consortium ermal Plant

PERS195IAN IGULF

JUNE 1959 IBRD-560R