0.04A) I-b t4~~~~~~~~ 61 ,. . V. ., RESTRICTED Report No.PU-8a

Public Disclosure Authorized This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized

GHANA

VOLTA RIVER AUTHORITY

APPRAISAL OF VOLTA EXPANSION PROJECT Public Disclosure Authorized

May 8, 1969 Public Disclosure Authorized

Public Utilities Projects Department CURRENCY EQUIVALENTS

1 New Cedi (NO) = 100 New Pesewa (NP) 1 NO = US$0.98 1 NO million US$980,000 1 US$ = N¢1.02 1 LStg =N2.45 (10 mills = 1 US cent)

WEIGHTS AND MASURES EQUIVALENTS kw = Kilowatt 1$W = Megawatt (1,000 kw) kwh KKilowatt hour GWh = Gigawatt hour (1 million kwh) kv = Kilovolt (1 thousand volt) MVA = Megavolt-ampere One Kilometer (km) = 0.6214 mile One metric ton (m ton) = 2,240 pounds

VRA's Financial Year = Calendar Year

ACRONYMSAND ABBREVIATIONS

VRA - Volta River Authority VALCO - Volta Aluminum Company ECG - Electricity Corporation of Ghana U.K. E.C.G.D. - United Kingdom Ecport Credit Guarantee Department Ex-Im Bank - U. S. Export-Import Bank 0 AID - U. S. Agency for International Development The Act - Volta River Development Act (1961) APPRAISALOF VOLTAEXPANSION PROJECT

VOLTARIVER AUTHORITY

GHANA

Table of Contents

Page No.

SUNFARY i

I. IMTRODUCT ION 1

II. THE BORROWR 3 Organization 3 Pianagement 3 III. THE PO} . SECTOR 5 Relation to the Economy of Ghana 5 OrganizationsResponsible for the Power Sector 5 Existing Facilities 6 Future Power Development in Ghana 6 Export of Power 7

IV. THE PROGRAI, PROJECT AND LOAN 8 The Program 8 The Project Cost Estimate 9 Sources of Finance 10 The Loan 11 Procurement and Disbursement 13

V. JUSTIFICATION 15 The Power Market 15 Justification of the 1969-1972 Program 16

VI. FINANCIALASPECTS 18 Past Performance and Present Position 18 Past iiarnings 18 Balance Sheet 19 Plant Account and Depreciation Policy 20 Accounting and Audit 20 Financing Plan 1969-1972 21 Future Expansion 23 Projected Performance 23 Estimated Earnings 23 Future Financial Position 23

VII. CONCLUSIONS 24

This report was prepared by Messrs. E.A. liinnigand G. Vacchelli LIST OF AN,EX',S

1. ilaximum Demand and Available Capacity - Diagram

2. Sales and iaximum.Demand 1965-1976

3. Elements Utilized in the preparation of the Load Forecast

4. Cost T7stimate and Financing Arrangements, Expansion Progra.n 1969-1972

5. Cost Estimate: Expansion of !kosombo Potser Plant

6. Cost Estimate: Items additional to the Ckosombo Expansion included in the 1969-1972 Program

7. Cost Estimate: Portion of the 1969-1972 Program to be financed by the Proposed Bank Loan

3. Revenues 1965-1976

9. InvestigatedHydro Potential of Ghana

10. Tariffs

11. Actual and Forecast Income Statements1965-1977

12. Forecast Sources and Applicationsof Funds 1969-1977

13. Actual and Forecast Balance Sheets 1965-1977

1h. Sta'f Situation June 30, 1968

15. Rate of Return on New Investmentin the

S* IH,apof Ghana GHIAA

VOLTARIV7R AUTHORITY

APPRAISAL OF VOLTAEXPANSION PROJECf

SUPINARY i. This report covers the anpraisalof the 1969-1972 expansion program of the Volta River Authority (VRA), consisting mainly of the completion of the Volta River Project (in part financed by Loan 310- GH). The estimated cost of the program, including two generating units, substationexpansion, an 85 mile, 165 kv transmissionline to Togo and Dahomey a third 165 kv double circuit transmissionline Akosombo - Volta (Tema), minor works, and consulting services,is N022.4 million (us$21.9million) of which about N¢16.1 million (US$15.8million) would be in foreign exchange. This program is technicallysound and the es- timated cost is reasonable. ii. A Bank loan of US$6.0 million equivalenthas been requested, to cover the balance of the foreign exchange requirementsfor which no other external financingis available. Canada, US AID and Italy pro- pose to make availableabout US$10.3 million equivalent. An undisbursed amount of about US$O.1 million from Loan 310-GH is available towards the purchase of the fifth unit and the financingplan would be completed by VRA's own resourceswith USW).5 million equivalent. iii. The nrolect w ith w%hichthe Bank would associateitself (power plant and substation expansion) is an integral part of the program and its justificationlies in V-RA'scontractual obligation to serve increasingdemand from the smelter operated by the Volta Aluminum Company. The smelter presently accounts for about 75% of VRA's total energy sales. The incrementalrate of return on the project is 265-. iv. The proposed project would be a suitable basis for a Bank loan of US$6.0 million equivalentwith a term of 25 years includinga grace period of 10 years. GHTAN7A

VOLTARI'v- AUTHORITY

APPRAISALOF VOLTAEXPANSION PROJECT

I. INTRODUCTION

1.01 The Volta River Authority (VIRA), an autonomous statutory corpo- ration establishedto develop the Volta River area, has requested a Bank loan of US$6.0 million equivalent to help finance the final two units at the Volta River HydroelectricProject at Akosombo,and associatedsub- station facilities. The installationof the generating units, which would bring the power plant to its ultimate planned capacityof six 147 IV, units or 882 MJ5¶,is necessary to meet VRA's obligations to the Volta Aluminum Company (VALCO)which proposes to expand its smelting facilities at the seaport of Tema. VRA's expansionprogram also includes the construc- tion of a transmissionline to the Togo border as part of an international scheme to export power from Ghana to Togo and Dahomey and a third double circuit transmissionline from Akosombo - Volta (Tema). The estimatedcost of all new facilitiesto be constructedby VRA during 1969-72 is US$21.9 million equivalentof which the Bank project would amount to US$4.4 million equivalent.

1.02 This would be the second Bank loan to VRA. In February 1962 Loan 310-GH was made for US$47.0 million equivalent,to assist in financingthe Volta River HydroelectricProject (with four units installed totalling 588 NW) and transmissionfacilities to permit bulk sales to VALCO, several large mining enterprises,and the ElectricityCorporation of Ghana (ECG) which provides generalpublic power supply. (See TO-281a, August 1961). The United Kingdom Export Credit Guarantee Department (ECGD), and the United States Export-ImportBank (Ex-Im) and Agency for International Development (AID) also provided loans aggregating USt31 million equivalent. This project wqas completed in early 1966, about one year ahead of schedule, and at a cost of US$162.5 million as compared to the estimate of US$189.7 million equivalent. Initial sales of powierto ECG and several mines started in late 1965 and to the smelter in April 1967.

1.03 The principalconsumer of Volta River power is VAICO, which pre- sently accounts for 75,<0of VRA's sales, and 52% of revenues. VALCO has recently started arrangementsto constructan additionalpot-line which is expectedto be in serviceby early 1972. Under the power sales agreement VRA is required to furnish up to about 315 1W and 2,600 Grfh annually to VALCOas from April 1972. Upon completionof its expansion,VALCO will require about 57% of the total ultimate production capabilityof the Volta River Project. Thus, the viability of the hydroelectricdevelopment has been based upon the creation of a large powser-intensiveindustry.

1.04 The hydroelectricpotential of the Volta River had been re- cognized since 1915 but only in the 1950's was it studied in connection with the possibilityof manufacturingaluminum utilizingGhana's bauxite deposits. A report published in 1956 recommendedconstruction of a power project and aluminum producing facilitiesnear the present Akosombo site. In 1958 the Governmentcommissioned Kaiser Engineers & Constructors,Inc. (U.S.A.) to review the earlier proposal. This led to the Volta River Project and to the sponsorship by Kaiser Aluminum and Chemical Corporation of the VALCO aluminum plant at Tema. At present, VALCO's production capability is 115,000 m.ton/year, and will reach 150,000 m ton/year by early 1972.

1.05 The first four generating units installed at the Project were suppliedby a Canadian manufacturer,and Canada has offered favorable financing (50 years, interest free) for purchasingthe additionaltw?o generators,transformers, and auxiliary equipmentfrom Canadian sources. Canada has also offered to finance the engineeringand constructionof a 165 kv double circuit transmissionline to Togo-Dahomey. (See paragraph 4.05, i).). llloreover,US AID has agreed to allow VRA to use funds from the original loan for the Volta River Project to pay for consultingservices associatedwith the installationof the two additionalgenerating units. Tne small undisbursedbalance in Loan 310-GH would be used in purchasing the fifth turbine. Proceeds of an ItalianLoan made available to the Government of Ghana will be utilized to construct the Third 165 kv double circuit transmissionline from Akosombo to Volta (Tema).

1.06 Following completionof the Volta River Project to its ultimate installedcapacity of 882 MW (6 units at 147 MS), VRA will have to exploit other sources. Present estimates of VRA's market growth indicate new generating facilities will be needed by the late 1970's. One possibility is the import of power from Nigeria. There is ample time to plan the next phase of system expansion.

1.07 This report was prepared by E. A. Mimnig and Giovanni Vacchelli from informationobtained from VRA, the Canadian Government,during a field appraisal in Ghana during July-August1968, and during negotiationsin March 1969. -3-

II. THE BORROWER

Organization

2.01 VRA was establishedby the Volta River DevelopmentAct of 1961, which was reviewed by the Bank prior to its enactment. The Authority can take any action required for the success of the Volta River Project and is required to conduct its affairs in accordancewith sound public utility practice. Under the Act VRAis empowered to go well beyond the boundaries of the pou7er sector, making it an integrated regional development agency. The creation of the VIolta lake opens up the possibility of the development of water transportation and fisheries. VRA is also responsible for general medical research and promotion of the well-being of the population in the area. In the fields of agricultural development and forestry VRA acts as an executing agency, administering government funds. The seven-man Board of Directorsis appointedfor terms of three years by the President of the Republic,who is Chairman ex-officio. At the present the chairmanshiphas been assumed by a member of the National Liberation Council (NLC). The other members include the Chief Executive of VRA, the Managing Directors of EGG and VALCO, and four members representing the general public.

Management

2.02 The Chief EXecutive, a Ghanaian, previously Chief Engineer of the ElectricityDivision, the predecessorof ECG, was appointedto his present position in 1966 and is responsiblefor the general direction and day-to-day operationof VRA. Loan 310-GH requires the Governmentto obtain the approval of the Bank prior to the appointmentof subsequentChief Executives. This conditionhas been maintainedin the ,proposedloan.

2.03 The ChilefExecutive is able, but lacks adequate administrative supportingstaff. A number of senior positions are vacant and others will soon become vacant when contractswith foreign staff expire. VRA (and ECG as well) have in the past found it difficultto fill senior staff vacancies and it will be necessary to engage in an extensive recruitmentcampaign. The principal vacancies are: the Director of Engineering (presentlya Canadian whose contract is nearing expiration); the Deputy Director of Engineering (a Ghanaian expectedto retire due to ill health); the Treasury, Financial Accounting, Plant Account and Budget Officers; and the Chief Internal Auditor. At present the functionsof these latter officers are performedby non-qualifiedstaff, who need constant supervisionby the Director of Finance and the Chief Accountant. Three qualified accountants have recently returned after training in the UK. They will fill three of the above vacancies. To fill engineeringvacancies approaches have been made to the AustralianGovernment to second to VRA engineersfrom the Snowy MountainsAuthority. VRA also proposes to advertise outside of Ghana and the UN have agreed to recruit for VRA an experiencedengineer to assist with operations. VRAalso intends to continue the relationshipwith Ontario Hydro of Canada which in the past has seconded experiencedoperation engineersand a reoluestfor replacementof those whose contractsare due to expire has been made. -4-

2.04 The Chief Accountanthimself is qualified,but the shortageof qualified assistantshas forced him to undertakedetailed work which nor- mally should be delegated. This problem should.now be overcome on the return of the three young accountantsthat have receivedtraining in the UK. The accounting department however needs to be reorganized generally to reduce unqualified staff and to secure a better qualified middle echelon. Procedures need to be improved. Special weaknesses are evident in the month-Iy bank reconciliations, control of mniscellaneous debit balances, control over accounts payable and accruals and control of stores. The contractsledgers have not been kept with the same care as during construc- tion of the project. VRA has agreed to carry out a review, with the assistanceof consultantsif necessary, of its operations;organization structure; staffing policies; and accounting system and practices.

2.o5 On the other hand, VRA.'spower facilitiesare satisfactorily operated by staff uell trained by a team from Ontario Hydro of Canada which initiallyoperated the facilities and gave on-site training. Complete operationalresponsibility was transferredto the C-hanaiansin 1967. Two Canadian advisers remainingat Akosombo are scheduledto leave in mid-1969.

2.o6 lThilesufficient oualified personnel is lacking, as of June 1968, VRA's total staff numbered 2,969: 830 in power including167 in operation and maintenance;and 2,139 in non-power activities. Staff employed in various categories are given in Annex 14. There is danger that VRA's upper management may be overextendingitself, while at the same time overstaffing exists. Durinn negotiations agreement was reached that VRA, in the carrying out or expansion of its non-power activities, would ensure that both orga- nization and staff are adequate to enable non-poweractivities to be carried out without detrimentto the efficient conduct of its power operations. III. THE POW1.SECTOR

Relation to the Economy of Ghana

3.01 Ghana is on the West Coast of Africa alnost in the center of the countries along the Gulf of Guinea. The area is about 92,000 square miles and the population wyas estimated at 7.8 million in 1967. Its growth rate is about 2.6 - 3.0M. Gross domestic product (GDP) was estimated to be US$1,758 million in 1967 at currentprices, or about US$225 per capita. The most important sector is agriculture producing about 50%lof GDP and employing some 70% of the country's work force. Modern manufacturing accounts for about 7% of GDP and mining for less than 3%. During 1960-65, GDP rose at an annual average rate of 3.8%. GDP per capita also rose over the same period but by only 1.1%, fell during 1964-1966, and showed a modest increase of about 1% in 1967 over 1966.

3.02 Almost all consumptionof publicly supplied electricityoccurs in the southernpart of the countrywhere about two-thirdsof the total popula- tion lives, and where are to be found the bulk of commercial agriculture, all manufacturing, all mining, and VALCO.

OrganizationsResponsible for the Power Sector

3.03 Two organizations,VRA and ECG are chargedwith public generation, transmissionand distributionof power. The principalprivate producersof power, the mines, have placed their generatingequipment on standbyand use power produced by VRA. Under the Volta River DevelopmentAct, VRA is respon- sible for bulk supplies to the aluminum smelter, EGG, the mines and Akosombo Township. VRA may also supply individualconsumers at voltages above 34.5 kv whose continuousdemand is above 20 NVA. ECG is responsiblefor distribution of VRA pot-erin Southern Ghana and the generationand distributionof diesel powHerin areas that cannot as yet be economicallyconnected to the VRA trans- mission system. ECG may supply individualconsumers at voltages not ex- ceeding 34.5 kv whose continuousdemand is less than 20 I4VA.

3.0o4 When the Volta River ProjectTwas considered by the Bank in 1961, it was clear that its long-term financialsuccess would depend on the future developmentof the non-smelterdemand served by ECG. As shown in Annex 8, in the years 1965-76 3CG is expectedto provide 40% of VRA's revenues, other non-smelterconsumers 18%, and the smielter2%. Thus one of the conditions of Loan 310-GH was the reorganizationof ECGts predecessor,then a government department,as an autonomouspublic utility, to be operated on a sound commercialbasis. This was done in 1967 with a Government Decree establishing ECG. Necessary expansionand reinforcementof distributionfacilities were * prevented for a time by a weak financialposition. Since 1966 work on the rehabilitationand expansionof distributionfacilities has been underway, financed in part by a West German loan and British supplier credits. An IDA Credit (118-GH) of US$10.0 million equivalentof June 14, 1968 will further assist in the improvementof these facilities. (See TO-629a, May 1968). This Credit became effectiveon September20, 1968 and about US$2.4 million equivalenthave been disbursedup to the end of arch 1969. -6-

-xistingFacilities

* RA

3.05 The Volta River Project presently has four 147 MI 1/ units installed. Provisionwas made for two additionalunits, which would complete the power station and raise installedcapacity to 882 MW. The average annual energy availableis 5,400 GWh. VRA owns and operates a 500 mile 165 kv transmissionring servingthe VALCO smelter; ECG systems in the main towns of Accra, Tema, Sekondi-Takoradi,and Kumasi; a number of smaller towns and villages;and gold and diamond mines at Tarlka, Dunkwa, Obuasi and Aktiatia.

ECG

*S 3.06 ECG owns and operated 90 'Hq of diesel generatingcapacity installed

in 29 power stations, but when TVRA commenced supplying power eleven of these stationswith a capacity of 64 IiWwere shut down, and the 17 MM4Accra plant was placed on standby. About 9 1,11are in service outside the area served by VRA's transmission system, of which about 3 11Jwill become redundant in 1966-1970as further areas are connectedto the VRA system. Six new diesel stations totalling 3 24IWwJill be constructedin areas not served by VRA and seven existing up-country stations will be expanded by 6 1HE. By the end of 1970, therefore, 32 1,11of diesel generatingcapacity will be in service of which 15 NV1supply areas outside the VRA system and 17 NW, the Accra plant, would be on standby.

Mines

3.07 The captive generating capacity installed at the mines, amounting to about 36 24-W,has now been placed on standby since all supplies are taken from the VRAtransmission system.

Future Power Development in Ghana

3.08 The completed power plant at Akosombo is expected to meet market requiremrents until 1977. At that time VALCOmay exercise a final option, install a fifth pot-line and increase its demand from 295 214 to 370 i'l]. To meet this increase and also the increase from the normal growth of ECG and other consumers,VRA will have to provide additional capacity. Various potentialhydro developmentson the Volta, Pra and Tano Rivers have been investigatedin various degrees of detail in the past and are listed in Annex 9 with their capacities, energy generation and estimated costs. It would be possible to install thermal capacity, but indigenous fuel does not exist. There is also the possibilitythat there might be an interconnection with KIigeriawhere surplus power might be exported to Ghana in about 1977. It is thus important that a thorough examination be made of these various

1/ The name plate rating of the units is 147 1W, but only 128 64 can be achieved under all operating conditions. VRA for planning purposes therefore prudently assumes a firm output per unit of 128 14!. -7- possibilities. The foreign exchange costs of suc'h studies would be financed under the proposed Bank loan.

Export of Power

3.09 Since 1966 discussionshave taken place between VRA, Togo and Dahomey concerningpurchase of VRA power by Togo and Dahomey. A draft power agreementbetween the three countries has been concluded and negotia- tions on tariffs took place in February 1969. The CanadianGovernment has offeredto financeon favorableterms the 185 mile 165 kv transmissionline from Akosombo to Lome (Togo) and Cotonou (Dahiomey).About 85 miles of the line would be within Ghana and about 100 miles within Togo and Dahomey. A routing study prepared by Canadian consultants (Demers, Lemieux et Roy of MIontreal and T. Ingledow and Associates of Vancouver) and financed by Canada was approved by the three Governments in July 1968. A definitive engineeringreport with cost estimatewas issuedin February1969. It is estimated that the line could be in service by mid-1971. - 8 -

IV. THE PROGRA?H,PROJECT AND LOAN

The Program

4.01 VRA1s expansion program covering the period 1969-1972 includes:

i) completion of the Akosombo (Volta River) power station by the addition of the fifth and sixth 147 lIT generating units;

ii) expansion of 165 kv substations at Akosombo, Volta (Tema), and the VALCOsmelter to meet increased smelter demand;

iii) expansionof 165 kv substationfacilities at Tema, Sekondi- Takoradi, and Xumasi to serve EICG;

* iv) constructionof a 165 kv transmissionline from Akosombo to the Togo border at Aflao for the export of VRA power to Togo and Dahomey;

v) constructionof a third double circuit 165 kv transmission line Akosombo - Volta (Tema) to increase system reliability;

vi) purchase of specializedvehicles required in connectionwith the transportof equipment,tools and materialsfor maintenanceof the 165 !v transmissionsystem;

vii) miscellaneousminor works for routine improvementsto generatingand transmissionfacilities, housing, district stores, etc.;

viii) consultingservices associatedwith the completionof the Akosombo power station and expansionof substationfacilities; and

S4 ix) consulting services to review future expansionplans, to re- organize the accountancydepartment, and to improve operations.

The Project

4.02 The project with which the proposed Bank loan would be associated includes all of the program items listed above with the exceptionof item (iv) constructionof a 165 kv transmissionline from Akosombo to the Togo border at Aflao for the export of VRA.power to Togo and Dahomey and (v) construction of the third double circuit 165 kv transmission line Akosombo - Volta (Tema).

4.03 These lines are not essentialfor the physical completionof the project proposed for Bank financing,nor for its economic justification. -9-

Cost Estimate

4.04 Annex 4 gives the cost estimate of the 1969-1972 expansion program and shows the proposed finanoing arrangements. Annex 5 gives the cost estimate for the expansion of the Akcosomabopower plant only and Annex 6 the cost estimate of items additional to the po">,erplant extension included in the program. Summarized below are the cost estimates of the 1969-1972 prngrar.- and the proj ect.

VOLTARIVER AUTHORITY Expansion Program 1969-1972 Summary Cost Estimate

In millions of N10 In millions of US'^ Foreign Local Total Foreign Local Total

1. Fifth & Sixth Units at Akosombo 8.13 1.29 9.42 7.96 1.27 9.23 2. Substation Expansion 3.52 0.31 3.83 3.45 0.30 3.75 3. Ghana Section Togo-Dahomey Transmission Line 1.90 o.64 2.54 1.86 0.62 2.48 14. Third double circuit transmission line Akosombo - Volta (Tema) 1.05 0.45 1.50 1.03 0.44 1.47 5. Construction & Service Vehicles 0.15 - 0.15 0.15 - 0.15 6. Consulting Services for Akosombo & Substation Expansion 0.66 0.13 0.79 0.65 0.13 0.78 7. VRAOverheads - 0.33 0.33 - 0.32 0.32 8. Miscellaneous Minor Works 0.31 2.99 3.30 0.30 2.94 3.24 9. Consulting Services for Expansion Review and IHanagement 0.36 0.15 0.51 0.36 0.14 O.50

TOTALPROGRA3 16.08 6.29 22.37 15.76 6.16 21.92

TOTALPROJ3CT 1/ 12.43 2.25 14.68 12.18 2.21- 14.39

A contingency allowance of about 13 is included on each item in the above estimate.

1/ Without: a) item 2., Volta (Tema) substation bays for the third double circuit line recuiring N¢0.70 million in foreign exchange and N¢0.06 million local currency; b) item 3., Togo-Dahomey transmission line; c) item 14., third double circuit transmission line Akosombo-Volta (Tema); and d)item 8., local costs for minor works, total-ling N02.89 million (US$2.814million) not specifically required for improvements to generating and transmission facilities. - 10 -

Sources of Finance

4.05 The program would be financed by Canada, US AID, Italy, IBRD Loan 310-GH, VRA and the proposed Bank Loan.

i) Canada: Canadian financingtotalling US$7.92 million, of which US$7.6 millionwill be as a loan and US$0.32 million as a grant, will be used for the following items:

- generators,step-up transformers,auxiliary electrical equipmentand substationequipment for the Akosombo power plant and Akosombo substation,all to be obtained from the supplier who was the successfullow bidder for the original project at a price negotiatedto allow for escalationin costs since the original bidding;

- foreign exchange costs of the installationof Canadian supplied equipmentbut not the transportcost of such equipment;and

- foreign exchange and local cost componentof the trans- mission line to Togo including engineeringservices. 73ngineeringservices estimatedat US$0.32 million will be financed by a grant.

Canada imposed three conditionson their loan. These are:

a) formation of a joint Togo and Dahomey Electricity Authority;

b) agreementby Ghana, Togo and Dahomey on a trans- mission line routing study; and

c) negotiationof a mutually acceptabletariff for S4 the export of VRA power to Togo and Dahomey. The first two con6citionswere met in July 1968. An agreementon the tariff was reached in February 1969, thus fulfillingthe conditions and allowing the Canadiansto proceed with their loan.

ii) US ATD: AID is rrepared to finance out of the undisbursed porncicnof their original Volta River Loan an amount of US$0.65 mi, -ionto cover the foreign exchange costs of the engineeringconsulting services associatedwith the pro- posed power plant and substationexpansion. VR4.has en- gaged for this purpose the services of Kaiser Engineers& Constructors,Inc., (U.S.), the Government'sconsultants for the original project. The contractbetween VRA and Naiber.-insofae as the scope of w-orkis concerned,is satisfactory.

iii) Italy: The Italian Governmenthas made availableto the Government of Ghana a loan of US$10.0 million. VRA would utilize US$1.71 million of this for: - 11 -

- foreign exchange costs of the third double circuit transmissionline Akosombo - Volta (Tema);and

- foreign exchange costs of the Volta (Tema) substation expansionneeded for the two additionalcircuits.

iv) I3RD, 310-GTH: As provided in Loan 310-GH, the US$0.1 million, representing the undisbursedportion of the original loan, would be utilized towards the cost of the fifth turbine.

v) VRA: VRA would finance,with the exception of the transmission line to Togo and Dahomey, all the estimated US$5.54 million local currency cost component of the program. VRAwould also finance the cost of the services of Preece, Cardew and Rider of the UK, VRA's consultants for a power cost allocation study, and a -review of present tariffs. This work w^as started in September 1968 and completed in March 1969 and will allow VRA to assess the consequencesof the July 1967 devaluation. Data to enable a satisfactory tariff to be negotiated with Togo and Dahomeywas also provided for. Since the costs involved are small (Ii03-5,000)they are not included in the above estimate and VRA considers this as an operational expense.

vi) Proposed Bank Loan: The remaining items with a foreign exchange cost of US$6.0 million equivalentwould be financed by the proposed loan, more fully describedin the following paragraphs.

The Loan h.o6 The proceeds of the proposed loan would finance the foreign cost component of the followingspecific facilities and works:

i) The fifth and sixth 147 rmYturbine units at Akosombo. Penstocksof units five and six are already in place and the major civil works completed. The works to be financed by the proposed loan and associatedwith the power plant extensionare limited to the supply and installationof the two turbines includingauxiliary mechanical equipmentsuch as governors,valves, piping, etc.

ii) To meet the increasedsmelter demand, supply and installationof substationequipment at Volta (Tema) and the smelter, including structures,appropriate switchingand control equipment,a 165/13.8 kv, 85 IVIVA transformerat the smelter and two miles of 165 kv transmissionline from the Volta substationto the smelter. - 12 -

iii) To meet increasedECG demand, supply and installationof substation equipment at Tema, Seklondi-Takoradi, and Kumasi, including structures, appropriate swiitching and control equipment, and four 165/34.5 kv, 25/33 M'VAtrans- formers.

iv) Civil works associated w'ith the installation of the fifth and sixth units and substation expansion described above.

v) Purchase of construction and service vehicles needed for maintenance of the 165 kv transmission facilities.

vi) Consultingand training services to review future expansion -plans, to reorganize the accountancy department, and to improve o-perations.

4.O7 The estimated cost of workcto be financed by the proposed loan is set out in Annex 7 and summarizedbelow: - 13 -

VOLTARIVE AUTIHORITY Summary Cost Estimate of the Portion of the 1969-1972 Program to be Financed by the Proposed Bank. Loan

In millions of NO In millions of US$ Foreign Local Total Foreign Local Total

1. Turbines, Governors & Auxiliary I4echanical Equipnent, Including Transport 2.02 1/ - 2.02 1/ 1.98 I/ - 1.98 1/

2. Installation of Turbines _ and Auxiliary Alechanical Equipment and Civil W;orks l.49 0.55 2.04 1.46 0.54 2.00

3. SubstationExpansion Inc. Civil Works 1.79 0.16 1.95 1.76 0.16 1.92

4. Constructionand Service Vehicles 0.15 - 0.15 0.15 - 0.15

5. Consulting Services for Revieulof Future 11'xpansionPlans and Accountancy Reor- ganization,etc. 0.36 0.15 0.51 0.35 0.15 0.50

6. HtinorTWorks 0.31 0.10 0.41 0.30 0.10 0.40

TOTAL 6.12 0.96 7.08 6.00 0.95 6.95

A contingencyallow-ance of about 1G% is included on each item in the above estinate.

Procurementand Disbursement

4.08 Items to be financed by the proposed Bank Loan woud be procured on the basis of internationalcompetitive bidding in accordancewqith the "Guidelinesfor Procurementunder World Bank Loans and DA Credits." Specificationsand tender documentswill be prepared by VRA or VRA's

l/ An amount of i'T0100,0 or US$95,000, available from Loan 310-GH, has alreadyr been deducted. - 14 - engineeringconsultants and will be subject to review by the Bank. Disbursementsof the proposed Bank loan would be made only for the actual foreign exchange costs of equipment,their installation, civil works, service vehicles and consulting services as specified in the contracts. Surplus funds would be cancelled. The proposed project is scheduledto be completed during 1972 and the proposed loan should be fully disbursedby mid 1973. - 15 -

V. JUSTIFICATION

The PoTwer Iliarket

5.01 Annex 2 shovs sales and maximnu demand per consumer as experienced by VRA in 1965-1968 and as presently forecast for 1969-1976. This information is summarizedbelow and compared with the forecast in the original Volta River Appraisal Report TO-281a of August 1961.

Actual & Current Forecast August 1961 Forecast Energy Maximum Energy Maximum Sales Demand Sales Demand in GWh in !Il1/ in GWh inNK

1965 2/ 98.2 77.4 - _ 1966- 4h9.7 96.7 384.4 85.0 1967 3/ 1,453.9 332.0 853.9 265.0 1968 2,428.1 342.0 1,752.9 33h.o 1969 2,497.0 352.0 2,257.3 349.0 1970 2,596.2 375.0 2,l401.9 363.0 1971 2,738.3 403.0 2j480.7 379.0 1972 3,079.0 497.0 3,009.h 509.0 1973 3,569.4 514.0 3,468.9 529.0 1974 3,850.4 553.0 3,645.4 551.0 1975 3,959.0 573.0 3,758.6 574.o 1976 4,070.4 594.o 3,868.2 600.0

5.02 Annex I graphicallyshows VRA's "Total System Demand" as currently estimated and as estimated in 1961. WJiththe exceptionof initial operation

__ both demand forecastsare practicallyidentical. The reason for the differ- IS ence is that the smelter came into service with a higher demand than originallyexpected.

5.03 Energy sales have been consistentlyhigher than originally esti- mated. A comparisonof actual sales in 1967 with estimatesmade in 1961 shows that:

i) sales to the smelter were nearly 50A%higher owing to a higher demand and a better-than-assumed load factor;

1/ Demand at generatingplant, includingtransmission losses. 2/ Commercial operationwith supply to ECG and mines started in September and October 1965, earlier than scheduled. 3/ Smelter commencedcommercial operationin April 1967, also ahead of schedule. - 16 -

ii) sales to the mines were nearly double, reflectingthe fact that the mines, originallyreluctant to depend for power supply on VRA because of fears about the quality of service offered, placed confidence in VRA earlier than anticipated; and

iii) sales to ECG were lower by 7% for two reasons:

a) between 1963 and 1965 the rate of growth of the economy in general was slower than had been anti- cipated; and

b) a shortage of funds slowed the developmentof ECG's distributionnetworks and thus its ability to use VRA power.

5.04 The current estimate for 1969-1976 energy sales is higher than that in 1961 because new industrial loads and the export of power to Togo and Dahomey are noiw expected. These new loads, especially the power to be exported, have hign load factors.

5.05 VPA's overall sales are estimated to increase at an annual average rate of 12.1%o during 1967-1976. ,Iaximumdemand, without transmissionlosses, would increase at an annual average rate of only 7.5% during the same period as growth of higher load factor sales predominates. Annual system load factor would improve from 51.4% in 1967 to 82.3% in 1976 as sales to VALCO increase, and base-load power is exported. The increased smelter and mine loads are assured; the neTwindustrial loads and the export of power to Togo and Dahomey have been estimated on a conservative basis. On the other hand, EGG's load growth is subject to greater uncertainty. The effect on VRA's sales and revenues of a possible variation in ECG's load may be expressed in probability terms. It is estimated to be 95% probable that VRA's 1976 total sales figure will be at least 98.8% of the forecast, and-revenues at least 97.9%.

Justification of the 1969-1972 Program

5.06 VRAk's contractual obligations to VAICO require it to install additional generating capacity by April 1972 at the latest. VAICO has started negotiations with the US 2,Xport-Import Bank to finance the smelter extension. VALCOestimates it will require no more than 18 months to install the fourth 70 111iJpot-line. VRA on the other hand requires 30-36 months, as from the date of signing an engineering consulting contract or recruitment of experts, to increase available capacity.

5.07 Although only one additional generating unit at the Volta River power plant would be required to meet the increased smelter demand it is proposed to install unit six at the same time as unit five, with only six months difference in the in-service dates. Given the present load forecast unit six would not be needed until 1974. The decision to install it now is based on an estimate of the likely savings in installation costs and in - 17 -

purchase price. A present worth calculationshows a differencein favor of the proposed acceleratedschedule of about N0600,000,assuming a cost of money of 8f.

5.o8 Using current power prices the rate of return on the incremental investmentfor units five and six and associatedsubstation expansionis 26%. This high rate, while correct, is attributableto the fact that the investmentfor certain common facilitiesneeded for units five and six is already sunlk. This calculation is shown in Annex 15. If account had been taken of the investments already made and of the time such investments were made in penstocks, draft tubes and the major part of civil works, and that reserve plant capacity mnust also be allocated to the new units, the rate of return attributable to units five and six would be 6.8%. Similarly, the rate of return on the investmentneeded for transmissionfacilities to 0 export power to Togo and Dahomey is 25%. - 18 -

VI. FINANCIALASPECTS

Past Performance and Present Position

6.01 As noted in Chapter II, VRA as a regional development authority is becoming increasingly involved in a number of activities unrelated to power operations, the most important of which are likely to be development of lake transportation, and agriculture. Most non-power activities are at present relatively small in comparison with power (although lake transpor- tation might claim sizeable amounts of finance in the near future). No attempt therefore has been made here to present a consolidated financial statement. The income and fund statements, and the balance sheets shown in Annexes 11-13 cover only power operations. VRA also administers Akosombo township and hospital. The expenses involved are the costs of welfare for VRA staff, the administration and maintenance of VRAproperties, and the cost of operating public services on behalf of the Government. The Govern- ment has agreed to contribute N0300,000 per year starting from fiscal 1967- 1968 for the Akosombo Administration, and to meet, as a public service, most of the hospital and health administration expenses. Further resettlement administration expenses are to be met entirely by the Government.

Past Earnings

6.02 In consideration of the special nature of VRA's market, and the fact that the Authority was initiating operations with a very substantial size project, Loan 310-GH contains a performance target, to be met only by 1974, of an 8% return, calculated after payment of interest, on the Govern- mentls equity. A minimum interim requirement that revenues cover all ope- rating expenses, including depreciation, interest and any debt amortization in excess of depreciation,has not been met in 1967 for the reasons discussed in paragraph 6.03. It has however been met in 1968, and compliance is expected in the future.

6.03 Because the project was geared to meet VALCOts requirements,which did not beginuntil April 1967, earningsfor 1965-1967 are hardlymeaningful. Sales during 1965-1966 were relatively small as the period was one of transi- tion from completion of constructionto full-scalecommercial operation. It was not until 1967 that VRA started to depreciate its power project assets and discontinuedcapitalizing interest: both these charges are also sub- stantiallyhigher than expected due to the 1967 devaluationof the Cedi, only partially offset by higher revenues from VALCO, paid in United States dollars. The result has been a N03.1 million operating loss in 1967. More- over, misinterpretationof calculatedand applied tariffs for non-smelter conswmers (discussed in detail in Annex 10, paragraph 4) also had an adverse effect on revenues. It is expected,however, that VRA's earnings will improve with the growth of the market and that the rate of return would exceed 8% in 1974, 1975 and 1976. For 1977 this rate drops to 6.5%. This results from depreciationbeing charged on Kpong facilities for the first time and dis- continued capitalization of interest on the loan assumed to help finance them. As mentioned in paragraph 6.11, however, the forecast is based on the most capital intensive alternative, the Kpong hydro-electric scheme, the final selection being dependent on the results of the study describedin - 19 - paragraph 3.08. It would thereforenot be necessaryat this stage to consider alternativemeasures to improve the rate of return until the consultantshave reviewed future expansionplans.

6.04 The details of cash operatingexpenses -- about N01.9 million in 1968 -- are shown in the followingtable:

Fiscal Year Ending December 31, 1968 1/ (in thousands of N0)

Salaries and Wages 853 Materials 135 Transportation 266 General and Mliscellaneous 305 Akosombo Administration(net) 200 Akosombo Hospital (net) 126

Personnel expenses are high because of the overstaffing mentioned in para- graph 2.06, which may be more a result of the general economic policy of the Government than of any inherent organizational defect. In viem of the simple nature of VRAts power operations it would appear that material savings could be achieved, particularly through reduction of personnel, reasonableallocation of common costs to power and non-power activities and more efficientcontrols. As mentioned in paragraph 2.04, a compre- hensive review of these problems has been agreed upon. The forecast takes into considerationappropriate increases due to the expansion of operations.

Balance Sheet

6.o5 VRA'sba'ance sheet as of December 31, 1968 is condensed below; figures are preliminaryand subject to audit. It reflects the arrangements made for financing the Volta Project. Equity includes Government funds made available to VRA both in local currency and foreign exchange. The 1961 Development Act however assigned the responsibility for expenses of resettlementarising from flooding the reservoirarea to the Minister in charge of Social Welfare, and limited VRA's contributionto EG3.5 million or N07.0 million. Accordingto VRA's records an additionalN014.1 million had been spent for resettlementdirectly by the Governmentby the end of 1967, but is not consideredas invested in the project. Followingthe 1967 devaluationof the Cedi, VRA has revalued all foreign exchangeassets, whether acquiredwith foreign loans or Government equity; also, following the 1967 pound sterling devaluation,VRA has included in the equity the resultingexchange difference.

1/ Preliminaryfigures, subject to audit. - 20 -

In millions of NO ASSETS Fixed Assetsin Operation 145.8 Depreciation (7.5) Net Fixed Assets in Operation ,Workin Progress .8 CurrentAssets 5.1 TOTAL 17 .2 LIABILITIES Equity 63.1 Long Term Debt IBRD 310-GH (5-3/4%, 25 years) 45.0 AID (3-1/2%, 30 years) 21.7 Ex-Im Bank (5-3/4%, 25 years) 7.1 U.K. E.C.G.D. 1/ 1.9 75.7 Current tiabilities 5-4 TOTAL 1WITI

Plant Account and DepreciationPolicy

6.o6 Included in the N0145.8 million gross fixed assets in the table in paragraph 6.05 are certain elements of cost, totalling about Ug60 million, such as interest during construction,resettlement expenditure charged to the project, constructioncamp facilities,and an amount equal to re- valuation of assets financed by foreign debt. As of December 31, 1967 these costs had not been allocatedto specific plant accounts such as the dam, generatingequipment or transmissionlines, and were being written off over various periods as long as 100 years. The average depreciationrate on VRA's total fixed assets in operationwas about 2.7% in 1967. VRA plans to prepare a newqplant account,which would properly allocate the above mentionedcosts and to adopt a new depreciationschedule, with the assistanceof consultantsif necessary (see paragraph 2.0h). For the purposes of this report, a provisionalallocation of costs has been made and an average depreciationrate of 2.5% has been used from 1969 on.

Accountingand Audit

6.07 VRA's accounts and accountingorganization will be satisfactory when the weaknesses described in paragraphs2.0h and 6.06 have been eliminated. Separate accounts are already kept for non-power activities, but the allocation of costs common to power operations,non-power operations and activitiesundertaken on behalf of the Governmentis not satisfactory and needs to be improved. An undertakingto this effect was obtained during negotiations. The audit arrangements,with Cooper Brothers & Co. (the Ghana branch of a United Kingdom firm), are satisfactory.

1/ This loan is amortizedby means of EStg 130,000 promissorynotes (equivalentto about N0318,000)with semi-annualmaturities until October 31, 1972; the interest rate on the notes, variable depending on conditionsprevailing at the date of issue, is in the order of 6%. _ 21 1

FinancingPlan 1969-1972

6.08 During the period 1969-1972,VRA's expansionprogram will consist mainly in fully developing the potential of present facilities. The financ- ing plan presented in the followingtable is satisfactory.

Total 1969-1972

In millions of NO % ConstructionExpenditures

Foreign Exchange Program 1969-1972 16.1 61 I. Future Expansion 3.0 11 Subtotal F/E 19.1 72

Local Currency Program 1969-1972 6.3 4 Future Expansion 1.0 LI Subtotal L/C 7.3 28

Total 26.4 100

Sources of Financing

Internal Cash Generation 37.8 Debt Service (2965) Net Internal Cash Generation 8.3 32 Dividends on Government Equityr (1.0) (4) Net Increase in working capital (.6) (2)

Cash GenerationApplied to Construction 6.7 26 Canadian Grant .3 1 Foreign Exchange Borrowings Proposed IBRD Loan 6.1 23 Other, 1969-1972Program 10.3 1/ 39 Future Expansion 3.0 11 Subtotal Borrowings 19.4 73

Total 26.4 100

1/ Of which IN4.6 million local currency cost componentof transmission line to Togo and Dahomey financedby Canada. m 22 -

6.09 V1A %ould finance internally all of the local currency and that portion of fo-3i,n exchange expenses for which external financing could not be secured,3 uch as transport costs of Canadian supplied equipment and miinor Tzorks. Tne following loans have been assumed:

i) tUe proposed US$6.0 million equivalent Bank loan, repayable c rer 15 years, -efter'l10.earsof grace& at -.n assumed interest rate of 6-1/2%;

ii) the proposed US$7.6 million equivalent Canadian loan to the Governmenton concessionaryterms (no interest,50 years), relent to VRA at 2-1/2%, for 25 years plus 5 years of grace;

iii) US$1.7 million equivalent,part of an Italian credit to the Government,to be made availableto VRA at an interest rate of 6

iv) a final US$0.1 million equivalentdisbursement under Loan 310-fkl;and

v) an additionalUS$0.7 million disbursementunder the AID loan.

This would complete the debt financing,for a total of US$16.1 million (N016.4million) excludingfuture expansion requirements. The Government has decided to make available to VRA as equity a Canadian grant, of US$0.3 million equivalent,covering the engineeringof the Togo-Dahomey transmissionline.

6.10 Ghana's need to borrow most of the foreign exchange require- ments is expectedto result in VRA having a surplus of local currency funds not required for power expansion. Direct investment of these in Sw non-power operations, although provided for by the Act, would not seem from a general economic point of view to use them to best advantage. It would be preferableto return them to the Government'sdevelopment budget, so that their allocationcould be made on the basis of overall national priorities. The Act provides that, having regard to its financialposition and future requirements,ViUA may pay the Governmenta return out of net income, or repay part or all of the Republic'sinvestment. The first formula seems preferable,and during negotiationsVRA stated its intention to follow it and, in any case, not to finance directly, from power operations revenues,its other activities. The level of such dividend payments would be variable,dependent on the financialrequirements of VRA's power operationsyear by year. Under the present forecast they would total about N012 million between 1972 and 1977, and would average about 3% of the Governmentequity in the power operation. Should the Government decide to promote development of non-power sectors in the Volta lake region, new allocations would be made frorm the development budget, and the funds made availableto V'LAin the form of new equity on which an adequate return to be determinedsector by sector, should be earned. The advantagesof this mechanism are: 23 -

i) to allocate funds to developmenton the basis of nationally- assigned priorities,rather than by the narrower criteria of the 1961 DevelopmentAct;

ii) to bring about an effectiveseparation of accounts for the various activitiesof VRA; and

iii) to provide a ready measure of the relative efficiencyof investmentsin differentpublic sectors, such as power, agriculture,and transportation.

Future Expansion

6.11 As noted in paragraph 3.08, additionalpower sourceswill be required by 1977. A forecast based on the most capital intensivealter- native under consideration,the Kpong hydro-schemeon the Volta River downstreamof Alosombo, shows that 14051.0million would be required,.inclu- dftg N042.0 million (82.0%) in foreign exchange. It is expected thiat NU3h.3 millionwill be borrowed and a loan at 6-1/2% interest and 20 years plus 5 years ol grace has been assumed.

ProjectedPerformance

Estimatecd 7arnings

6.12 Fo-recast revenues for the period 1969-1977 are satisfactory. Tariffs have been assumed to remain at current levels; although VRA is envisaging the possibilitv of future increases, they do not appear to be necessary (see Annex 10). Provided operating expenses are kept under control and the power operationis not burdened with expenses for non- power activities,the 8% return on the power operation'sequity envisaged by 1974 under the ternis of Loan 310-GH would be achieved. (see however also paragraph 6.03). For purposes of comparison, Annex 11 also shows the return on net fixed assets in operation plus a working capital allowance. On this basis, the average return over the period 1974-1977 would be about 7.3%, which is acceptable considering the contractual natu-re of the preponderance of VRA's sales as well as V&A's limited requirements to generate funds for future expansion. The rate of return covenant as in Loan 310-GH was con- firmed, but the rate base more clearly defined, to include in addition to the Government'sactual investment in the Project, as recorded in VRA's books at historic values: i) amounts correspondingto appropriatere- valuations of assets; and ii) net cumulative retained earnings.

Future Financial Position

6.13 Gross fixed assets in operationwould increase about 55% to M0226 million by 1977, reflecting the assumption of the addition of a second major hyclro-plant. The equity/rate base would increase from N063 million to N090 million in the period 1968-1977, while outstanding debt as a percentageof total capitalizationwould decrease from 56% to 52%. On average, internal cash generation would be 1.5 times annual debt service, - 24 - a satisfactorycoverage on year by year basis. Homever, the debt limitation covenant of Loan 310-OH,which would be maintained,prescribes that, except as the Bank and the Borrower shall otherwise agree, internal cash generation of the fiscal year or a later 12 month period prior to the incurrence of a debt shall be not less than 1.5 times the maximum debt service require- ment in any succeedingyear on all outstandingdebt plus the debt to be incurred. Although the coverage on this basis would be of only 1.1 times, the Bankcintends to agree to VRA entering the described financing arrange- ments for the 1969-1972 program in view of the justification of the pro- posed investmentsand the substantiallyhigher level of future cash generationforecast.

6.14 The ratio of current assets to current liabilities,which was one in 1968, is expectedto remain around unity throughout the period. This level is acceptable. Most of the current liabilitiesconsist of current maturities on long term debt. Cash and securityholdings as of year end are expected to be maintained at prudent levels, adequate, includingadditional cash generationfrom operationsthrough the year, to meet debt maturities and other cash requirements.

6.15 Starting from a substantialasset base built up in a relatively short time, expansionof VRA's power activitiesto meet market requirements will necessarilybe slower in the future. Expansionof other sectors will however have to be limited, until organization and staffing have been strengthened. Subject to this condition, VRA should not have problems in achievingand maintaininga satisfactoryfinancial position.

VII. CONCLUSIONS

7.01 Since engineeringof the proposed expansionproject is based on work already executed and in operation,no engineeringproblems should be experienced. The estimatedcost reflects past experienceand is reasonable. The new facilities are required to meet growing market requirements and contractual commitments such as the increased smelter demand resulting from the proposed smelter expansion.

7.02 The two-unit extension to the existing powerplant completes the originallyplanned developmenton the Volta River and representsthe least cost means of supplying the growth in demand until 1977. The indicated incrementalrate of return on the proposed investmentin the two units is 26%, reflecting the fact that certain investments common to all six units have already been made.

7.03 The structure,organization and staff of VRA require review and improvement. Current management,suitably assisted by consultantsor a team of experts, are competent to carry out the project. VRA's recent and projected financial position is acceptable.

7.04 During negotiations, the following assurances were obtained:

i) VRAwill take adequate steps to ensure that qualified personnel is recruited to fill existing vacancies - 25 -

(paragraphs2.03 and 2.04).

ii) VRA will retain if necessary appropriatemanagement and accountancy consultants on terms and conditions satisfactory to the Bank in carrying out a review of:

a) its accounting system and practices (paragraph 2.C4). b) the Authority's organization structure aad staffing (paragraph 2.04).

c) cost allocation and appropriatedepreciation rates (paragraph6.06).

iii) VRA will retain appropriateengineering consultants on terms and conditions satisfactoryto the Bank to:

a) prepare tender documentsand specifications, design and supervisepower plant and sub- station expansion; (paragraphs1.05 and 4.05 ii); and

b) review future expansionplans (paragraph3.08).

iv) VRA will not, and the Governmentwill not require it to, expand non-power activitiesbeyond their present scopes unless proper measures are taken to insure efficient operations (paragraphs2.06, 6.07 and 6.15).

v) VRA shall not apply any net earnings from power operations to the expansion of non-power activities (paragraph 6.10). vi) The covenants on debt-limitation (paragraph 6.13), rate of return after 1973 (paragraph 6.12), interim revenue requirement up to and including 1973 (paragraph 6.02), and approval of appointment of subsequent Chief Exe- cutives (paragraph2.02) will be maintained.

The project would form a suitable basis for a Bank loan of US$6.0 million, for a term of 25 years includinga 10 year period of grace. It has been agreed that the proposed loan would not become effective until: i) The Canadian Government's loan to VRAto finance the two generators with electrical auxiliaries and trans- formers is also effective (paragraphs 1.05 and 4.05, i), and

ii) VALCO shall have made satisfactoryarrangements to finance the expansion of its smelter (paragraph 5.06).

May 8, 1969 0 0

REPUBLICOF GHANA: VOLTA RIVER AUTHORITY (VRA) MAXIMUM DEMAND AND AVAILABLE CAPACITY 1,000 I IIl III 1,000

6th UNIT IN SERVICE 6/30/72 > INSTALLED CAPACITY 882 MW

900 6 UNITS @ 147 MW 900

5th UNIT IN SERVICE 1/1/72 800 800 7 5

700 FIRM CAPACITY 640 MW 700

I-~ ~ ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ g SmNT 2M cn 60

500 500

VRA TOTAL SYSTEM DEMAND ( ,FIRM CAPACITY 384 MW / FOECAST OCTOBER 1968

4003___s/ UNITS 2 128MW ___ 400

300 VRA TOTAL SYSTEM DEMAND 300 300~~~RCAPACIT FORECAST VOLTA RIVER APP RAISALI__30

200 ;_-M _,961______

1 00 ____- TOGOAND -DAHOMEY 100

...... ~~~~~MNE OTHR 0 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 z z (2R) IBRD -3999 )( REPUBI=C OF GHANA

VOLTARIVER AlJTHOIrI(VRL)

Salesa Maxims DemarA

15 1966 1967 1968 L969 1970 1971 1972 1973 1974 1975 1976 T-k CTIL------L-FCEC------

SALES (in GWH)

Valco (Smelter) - 13.9 923.2 1,820.0 1,820.0 1,820.0 1,820.0 2,039.0 2,440.0 2,628.0 1/ 2,628.0 3/ 2,628.0 1/

Electricity Corporation 82.6 300.9 360.3 419.6 477.5 536.5 598.0 667.6 745.0 830.0 925.0 1,028.0 Mines 13.2 127.2 164.1 180.0 185.0 190.0 195.0 195.0 200.0 200.0 205.0 205.0

Akosombo Township 2.4 7.7 6.3 7.6 8.5 10.0 10.5 12.5 12.5 12.5 12.5 12.5

Akosombo Textiles -- - - 0.9 6.o 22.6 33.8 33.8 33.8 33.8 33.8 33.8

Chlorine Saltpond - - - 17.1 53.6 70.1 70.1 70.1 70.1 70.1

Togo and Dahomey ------27.4 61.0 68.o 76.0 84.6 93.0

T 0 T A L p8.2 449.7 1,453.9 2,428.1 2,497.0 2,596.2 2,738.3 3,079.0 3,569.4 3,850.4 3,959.0 4,070.4

MAXMUMDEMAND (in MW)

Valco (Smelter) 5.o 220.5 221.4 220.0 220.0 220.0 295.0 295.o 315.0 / 315.0 / 315.0 j/

Electricity Corporation 57.9 568.6 73.4 77.8 87.0 98.0 107.5 119.0 133.0 148.0 165.0 182,0

Mines 14.2 / 26.1 27.7 28.0 29.0 29.0 30.0 30.0 31.0 31.0 32.0 32.0

Akosombo Township 1.3 1.4 1.4 1.7 1.9 2.3 2.4 2.9 2.8 2.8 2.8 2.8

Akosombo Textiles - - - 1.0o 1.8 7.2 7.2 7.2 7.2 7.2 7.2 7.2

Chlorine Saltpond - - _ 6.o / 12.0 12.0 12.0 12.0 12.0 12.0

Togo and Dahomey / - - - - - 7.8 6/ 8.7 9.7 10.8 12.1 13.3

T O T A L 73.4 91,1 323.0 ?329.9 339.7 362.5 386.9 474.8 490.7 526.8 546.1 564.3

AVERAGEANNUAL LOAD FACTOR (in %) 55.0 56.3 51.4 84.0 83.9 81.8 80.6 74.0 83.0 83.4 82.8 82.3

TOTALGENERATION (in GWH) 103.6 477.0 1,495.4 2,515.0 2,589.0 2,690.0 2,850.0 3,220.0 3,740.0 4,040-0 4,159.0 4,280.0

LOSSES (in GWH) 5.4 27.3 41.5 86.9 92.0 93.8 111.7 141.o 170.6 189.6 200.0 209.6

LOSSES (in %) 5.2 7/ 5.7 7/ 2.8 3.5 3.5 3.5 4.0 4.5 4.6 4.7 4.8 4.9

MAXIMUMDEYAND AT AXOSOMBO(in MW) 77.4 96.7 332.0 342.0 352.0 375.0 403.0 497.0 514.0 553.0 573.0 594.0

3/ Valco "Take or Pay" Contract ,/ Commercial Operation, September 1965 3 Commercial Operation, October 1965 Factory in Operation, Jume 1968 Factory in Operation, April 1970 Transmission Line in Service, July 1971 j/ Turbine-Generator Acceptance Tests ( Rheostat)

December 17. 1968 ANNEX3 Page 1 of 5 pages

REPUBLIC OF GHANA

VOLTARIVER AUTHORITY(VRA)

Elements Utilized in the Preparation of the Load Forecast

Smelter (VALCO)

1. The power contract between VALCOand VRA, concluded for a period of 30 years, requires VRA to make available a constant amount of power to the smelter increasing at stated intervals up to 390 MW inclusive of trans- mission losses. On the "PermanentDelivery Date" (PDD), April 25, 1967, VRA was required to make available at the point of delivery 158 MWand thereafter as follows:

April 25, 1968 210 MW April 25, 1969 315 MW1/ April 25, 1970 370 MW 2/

1/ Increase subject to one year's notice 2/ Increase subject to two year's notice

2. If by the tenth anniversaryof the PDD, April 25, 1977, VALCO has not exercised its option, VRA need not provide more than 315 MW, however, without prejudice to any higher figure which may be in effect at that date.

3. For energy consumed VALCO pays in foreign currency at the rate of US mills 2.625/kwh, subject to a minimum consumptionof:

Year beginning April 25, 1967 66 MW or 578 GWh 1/ April 25, 1968 167 MW or 1,463 GWh 1/ April 25, 1969 200 MW or 1,752 GWh 1/ April 25, 1972 267 MW or 2,339 GWh 1/ and April 25, 1973 300 MW or 2,628 GWh 1/ 1/ Computed on the basis of 100% load factor

4. Commencingcommercial operation on April 25, 1967 with three pot-lineseach of 70 MW capacity,about 115,000 tons of aluminum are presently produced annually (7 kwh/lb aluminum). The load served VALCOamounts without transmissionlosses to about 220 MW including auxiliary requirements. VALCO now proposes to extend the smelter by adding a fourth pot-line of 70 MWto be in servicenot later than April 25, 1972 increasing smelter output to 150,000 tons/annumand smelter power requirementsto about 295 MW. The construction time of the smelter extension is estimated at about 18 months so that con- structionwould have to commence by not later than mid-1970.

5. VALCO's power and energy requirementsare therefore estimated to develop as follows: ANN3X3 Page 2 of 5 pages

1968 1970 1972 1974 1976 Energy, GWh 1,820.0 1,820.0 2,039.0 2,628.0 1/ 2,628.0 1/ Maximum Demand, MW 221.4 220.0 295.0 315.0 1/ 315.0 T/

1/ If no fifth pot-line is added by 1973, the take or pay clause of the con- tract becomes effective after April 25, 1973 (see paragraph 3 above).

6. The apparent discrepancybetween contractualpower ceilings and actual demand is because originallyit was VALCO's intention to install pot-lines of 50 MW capacity rather than the 70 MW actually installed. With four pot-lines originallycontemplated as an initial development,power demand would have coincided with the April 25, 1968 requirements of 210 MW including 10 MWauxiliary requirements. Similarly the accellerated smelter expansion contemplated the addition of a fifth and sixth pot-line by April 25, 1969 raising power requirements to 315 MWinclusive of 15 MWauxiliary requirements.

7. With the change to 70 MWper pot-line, with contractual arrangements remaining unchanged, the smelter is now expected to develop as follows:

April 25, 1968 1/ 3 x 70 MWpot-lines = 210 MW+ 10 MWauxiliary requirement

April 25, 1972 1/ 4 x 70 MW pot-lines = 280 MW+ 15 MW auxiliary requirement by not later than April 25, 1977 1/ 5 x 70 MWpot-lines = 350 MW+ 20 MW auxiliary requirenent

1/ Dates corresponding to full capacity operation rather than in service dates of the pot-lines.

It is anticipated that VALCOat some future date, not later, however, than April 25, 1977 will install a fifth pot-line provided that alumina for conversion to aluminum will continue to be imported. Should VALCO however exercise its option to develop bauxite deposits in Ghana, it may very well be that rather than extend smelter capacity VALCOwould utilize some of the remaining power of 75 MW for the production of alumina to be used in the smelter.

8. Since by the end of 1976 VRA would have surplus firm capacity of 46 MWand some time in 1977 additional generating capacity would be taken into service to meet domestic power requirements -- either by the construc- tion of the 140 MWKpong hydro scheme, a thermal plant or by interconnection with Nigeria -- smelter development over the contractual 315 MWdemand would not influence VRA's next expansion plans or VRA's ability to serve the increased smelter demand, would however accelerate expansion after 1977. For this reason smelter developmentin excess of the addition of the fourth pot-line has not been taken into account in the present forecast.

Electricity Corporation of Ghana

9. From 1961 to 1966 ECG's total sales increased at an average annual rate of 13.3% and are estimated to increase at 13.9% for the period 1967-1972. ANNEX3 Page 3 of 5 pages

Energy supplied by VRA is estimated to increase for the same period at an average annual rate of 14.3% from 360.3 GWh to 667.6 GWh and demand at 13.2% from 66.8 NM to 119.0 MW. It is estimated that this growth rate would continue at least until 1976/77. The lower growth rate in demand as against the energy growth rate results from an improvementin ECG's average annual load factor as a consequence of tariff measures and increased industrial use of power.

10. Power consumptionof ECG's consumers,divided into the six tariff classificationspresently in force shows summarized the following:

Average Annual Consumer Category Energy Consumption Increase in GWh (Decrease)in%

1967 1972 1967 - 1972

1. Domestic 131 217 10.9 2. CommercialLight 21 22 1.0 3. CommercialPower 57 80 5.5 4. Special Load - Large Consumers 85 241 27.4 5. Special Rate - Military, Hospitals, and Non-Profit Organizations 1 18 7.8 6. Other - Street Lighting, Flat Rate 2 3 8.4

Total Sales 310 581 13.9

DistributionLosses 79 111

Total Generated or Purchased 389 692 13.0

Energy Purchased from VRA 360 668 14.3

Energy Generated by ECG 29 24 (3.9)

Total Generated or Purchased 389 692 13.0

11. Based on past development,known new industrial loads and reasonable future prospects, the EGG demand to be served by VRA has with a 95% probabi- lity a toleranceof ±5%. With expected sales by VRA to EGG by 1976 estimated at 1,028.0 GWh the range would thereforebe, upper limit 1,080.0 GWh and lower limit 980.0 GWh.

Mines

12. Some mines are working successfully and may as a result of the July 1967 Ghana currency devaluationincrease their output. Other mines however are marginal operations. It is thereforeunlikely that there will be any significantincrease in overall power demand above the present level of 28 MW. The forecast neverthelessallows for a modest increase in power consumption from 164.1 GWh in 1967 to 205.0 GWh by 1976 at an average annual increase rate of 2.5% mainly from the connectionof a new consumer at the Konongo substation. ANNaX3 fage 4Tof 5 pages

Other Consumers 13. AkosomboTOwnship. Originallythe Volta Projectconstruction camp, this township not only has developed into VRA's center of operations and field activity, but has also attracted other residents and industries. The load forecast thereforeassumes that power consumptionwill not only be influencedby a continued developmentbut also by VRA's activities associated with the current expansion program. For the period 1967-1976 the average annual growth rate is estimated to be 8%.

14. Akosombo Textile Factory. With an installed capacity of 3,000 kw and estimated peak demand allowing for diversity of 2,400 kw, the factory, due to difficultiesexperienced with the supply of raw materials and labor, has not operated at capacity. Maximum demand in June 1968 did not exceed 450 kw. Oil burning process steam generatorsare presently installedwhich the Union Trading Company (UTC), the owners, by mid-1970 intend to convert to electricityadding a further demand of 4,800 kw. In the forecast it has been estimated that power requirements would increase gradually to 2,400 kw by mid-1970, that single shift operation would continue until mid-1969 (operatortraining period) and that after mid-1969 two shifts would be employed.

15. Chlorine Plant, Stond. The in service date of this plant was given as April 1970. To allow for a period of training and start-up it has been estimated that demand would increase from 1,500 kw in April 1970 to 12,000 kw by September 1971. Two shift operationhas been assumed.

Export of Power to Togo and Dahomey

16. Since the proposed line to serve Togo and Dahomey would consist of one single circuit, it is probable that for supply security existing diesel generating facilities at Lome and Cotonouwould be kept on a standby basis. In such an event and depending on the tariff finally negotiated with Ghana, consistingof a demand and an energy charge based on power costs at Akosombo with possibly a fixed annual charge for transmission facilities to the border, it could prove to be more economical for Togo and Dahomey to import base load power at a high load factor only, whilst utilizing standby equipment to generate peak power.

17. For the purpose of the load forecast and expected revenues therefore, it has been estimated that 60% of the combined Togo-Dahomey maximum demand with an energy content of 82% would be imported and 40% with an energy content of 18% would be locally produced.

18. Energy sales during 1960-1966 increased in Togo (Coastal Region) at an average annual rate of 19.5% from 4.2 to 12.3 GWh and in Dahomey (Coastal Region) at 16.0% from 8.4 to 20.3 GWh. Load forecasts prepared by Electricite de France for UNDP in connection with the Mono River Study and the formation of a joint electricity company,andby the IBRD Economic Mission of May 1967, estimate that power consumptionwould increase for the period 1966-1970 at an average annual rate of 13.2% from 12.3 to 20.0 GWh in Togo and at 10.3% from 20.3 to 30.0 GWh in Dahomey. For the period 1970-1975 the estimated average annual increase rates are 11.5% from 20.0 to 35.0 GWh in Togo and 11.7% from 30.0 to 52.0 GWh in Dahomey. ANNEX 3 Pag-e Tof 5 pages

19. The potential Togo and Dahomey power market for VRA energy and power including transmissionand distributionlosses is estimated to increase from 60.0 GWh in 1970 to 114.0 GWh in 1976 at an average annual growth rate of 11.3%. Maximum demand in the same period would increase from 11.9 MW'to 22.5 MW.

20. On the assumptionmade in paragraph 17 above it is estimated that VRA would need to supply 27.4 GWh in 1970 (six months,linein servicemid-1971) to 92.0 GWh by 1976. Maximum demand would increase from 7.8 MW to 13.3 MW correspondingto an average annual load factor of about 79% compared with a Togo and Dahomey total system load factor of about 58%.

.

December 17, 1968 , 4 REF001IC OF GOANA VOLTARV18ER A3TCROTT

7xo -zg2A1969-1972 Cost Erioac iumi3Arnot Cost EBtin-te Finoiy Arrogneots To thotanada of 10 I. thboo,dse of US $ Co t2oads of I71,0FDhoa of V3 3 Oaok Loo Proposed Bn onPooe ForeoicD Lqgal Tot.l Foreign Lgocl Total Cond. USAID Itl 310-2 Baj Loon VVA Total Canda US AIC It.1, 310-Ol B. Loan VAU Total A. Akososho 5th & 6th Voita 1. G.-ertor=a Orulor r' 3,335 - 3,335 3,265 - 3,265 3,335 3,335 3,265 3,265 2. Isoltd Ph.. Coot 112 51 :63 30 So 160 112 51 163 110 50 160

3, To,-soPort ssrtoos o3.0?repoe foxrm Ere - 291 291 - 285 285 291 291 285 265

4. ftpply at Ioetall- ao3,o, eanl3n eleot- rilon qarpeot 321 82 403 315 80 395 321 82 403 315 80 395

at T-r -on.e 750 321 1,071 735 315 1,o5o 750 321 1,071 735 315 1,050 6. To-tees ned Govsoor t.olTbi.g T-ep ort 2,122 - 2,122 2,080 - 2,080 9S 2,024 2,122, 95 1,985 2,050 7. hopoly o IOoetallatitn eeollchaoioal t 265 31 296 262 30 290 265 31 296 260 30 290 8. Um -tblo-t.onTblnss713, 306 1,020 700 300 1.0a0 711 306 1,020 70 300 1,003

9. 11il wnr-n 5ll 209 720 500 205 705 _ - - - 511 209 720 _0 _ 205 705 2 10. SUB-TOTAL 8,130 1,291 9.421 7,965 1.265 9,230 4 518 _ _ 98 .51I 1.291 9,21 42b S _ ..z25- 95 1.265 9230 n. SobeotLonos

U2. Ak-eo,bh 1) s-nratosByh 699 61 760 685 60 745 699 61 760 055 60 7h5 2) Togo .,A Des.y ays 332 31 363 325 30 355 332 31 363 325 30 355

12. Volta (Te-) 1) C-settan to 1oxltr 189 15 20a 185 15 2W 189 15 204 185 15 200 2) 3rd T-dn-teto lin Bys 699 61 760 055 60 745 699 61 760 635 60 745 13. 7h7S4lter 1 515 h65 b0 505 474 hl 515 b65 60 505

lb. RC0SbotBtisx 1,122 102 1,224 1,100 00O 1,200 _ 1,122 102 1,22b, __ 1 .100 100 1,200

15. BUB-TOTAL 3,515 311 3.826 3245 305 3 750 1,031 - 699 _ 1,785 31 3.526 1010 6585 _ L750 300 3.750 C. COxnaltig Eorlos. 16. flogoneerg for A 6 B 1. ove 664A 129 793 650 125 775 664 129 793 650 125 775

17. ¶n=aasent at Tratoii 107 46 153 l00 b5 l50 107 b6 153 105 45 150

18. Tutors OopaOtoo 255 102 357 253 100 .S - - _ -_ 255 A52 357 - - - - 250 100 350 19. S0-TOTAL 1.026 277 L,3033 1,5 270 1,275 _ 664 _ ._362 277 1,303 _ 650 _ _ -- S 270 1.275 D. !T.sanUono- Itn 20. V3A Pro-jot 0-rheode - 330 330 - 325 325 330 330 325 325

21. Wor Works 306 2,991 3.330 300 2.935 3,235 306 2,99b 3,300 300 2,935 3,235

22. Coantrool ot- 22. toloes ti s .5153 - 153 150 - 150 - _ _ _ 15153 .53 - _ _ _ 15O 150

23. RE3-TOTAL h59 L2?2 3,783 4150 3,260 3.710 - - 1,59 L23?( 3;783 - _ 1 2 3,0260 3,1 E. Trooseieeio Liose 2. Togo - DBoLroso 1,632 578 2,210 1,600 565 2,165 2,210 2,210 2,165 2,165

.30 POndrLeol1es Tra-l-iesoo Lia 269 57 326 265 55 320 326_' 326 320-1 320 26. 3rd LDbiLe oiropit Lian Ak.ooeobo- Volta (Tao) -1 no_e_g 1 ,.s 1 025 OS440rg .b 4 - b O___ 6SO 1.01.050 _ S504 100 S _ _ 702S _025 _ 4bl O

27. SUB-TOTAL 2JS1 LOU kur 2 1.306 3 ,950 2.536 - 1.50 - _ 1 50 4 ,036 B185 - 1.05 - 440 3O

28. AL 16.01 6j258 22,369 15 .75 6,160 2111 5 664 1 749 98 6,100 5,53 02,309 7,600l 600 1.610s 555 21.957 8.0592 7.92 2

1/ CooadtooLoan April 1,a 1969n

ApTil 1, 1969 * * .

REPUBLIC OF GHANA

VOLTARIVER AUTHORITY

Expansion of Akosombo Power Plant Cost Estimate

In Thousands of N¢ In Thousands of US$

Foreign Local Total Foreign Local Total

A. Akosombo 5th and 6th Units

1. Generators and Transformers 3,335 - 3,335 3,265 - 3,265

2. Isolated Phase Duct 112 51 163 110 5o 160

3. Transport Generators and Transformers - 291 291 - 285 285

4. Supply and Installation of ancillary electrical equipment 321 82 403 315 80 395

5. Installationof Generators and Transformers 750 321 1,071 735 315 1,050

6. Turbines and Govenors including Transport 2,122 - 2,122 2,080 - 2,080

7. Supply and Installation of ancillary mechanical equipment 265 31 296 260 30 290

8. Installationof Turbines and Govenors 714 306 1,020 700 300 1,000

9. Civil Works 511 209 720 500 205 705

10. SUB-TOTAL 8,130 1.291 9,421 7,965 1,265 9,230

B. Sub-stations

11. Akosombo 699 61 760 685 60 745

12. Volta (Tema) 189 15 204 185 15 200

13. Smelter 474 41 515 465 40 505

14. SUB-TOTAL 1,362 117 1.479 1,335 115 1,450

C. ConsultingServices

15. Engineering for A & B 664 129 793 650 125 775

16. VRA Project Overheads to be Capitalized - 330 330 - 325 325

17.. SUB-TOTAL 664 459 1,123 650 450 1.100

18. TOTAL 10,156 1,867 12,023 9,950 1,830 11,780

April 1, 1969 BEPVULIC OF GHANA

VOLTA RIVER AUTHORITr

Iteum Additional to Expansion of Akosambo Power Plant

Included in 1969-1972 Program

Coat Estimate

In thousands of NO In thousands of US$

Foreign local Total Foreign Local Total

A. Substations

1. Akosowbo

Togo and Dahomey Transsisoion line 332 31 363 325 30 355

2. Volta (Tema)

Third Double Circuit Transmission line Akosombo-Volta (Ten) 699 61 760 685 6o 745

3. ECG S2bstationn at Tema, Takoradi, and Iniai 1.122 102 1.224 1,100 100 1.200

4. Sub-Total 2.153 194 2,347 2.11 190 2.300

B. Trmanemission lines

5. Togo and Dahomey Tranoaxioin line/ 1,901 635 2,536 1,865 620 2,485 6. Third Double Circuit line Akosoebo - Volta (Ths.) Y 1,050 450 1,500 1.025 440 1.465

7. Sab-Total 2.951 1,085 4.036 2.890 1,060 3,950

C. Miscellaneous Itemo

8. Construction, Service Vehicles 153 - 153 150 - 150 9. Minor Worko

i) Improvement to generating facilitieo 60 2/ 20 80 59 2/ 20 79 ii) ITnprovements to transmission facilities 647 2/ 66 713 634 7/ 65 699 iii) Connection of now consmoero 47 2/ 16 63 46 2/ 16 62 iv) AkosomboTownship, Roads and Drainage, etc. - 390 390 - 382 382 v) Housing a) Akoscabo 152 152 - 149 149 b) Accra and Tema. 492 492 _ 482 482 vi) Office Building & Stores: Accra, Tema, Kumasi and Takoradi - 448 448 - 439 439 vii) Tools & Equipment: Generation & Transmission 125 2/ - 125 123 3 123 viii) Office Equipment: Head Office 50 3/ 150 200 49 2/ 147 196 Other Offices 15 3/ 35 50 15 3/ 34 49 ix) Household Equipment - 70 70 - 69 69 x) Vehicles (other then sarvice vehicles) 480 3/ - 480 470 3/ - 470 xi) Road improveenuts at aubstations - 37 37 - 36 36

10. Sub-Total 4594/ 2.994 3.453 450 4/ 2,9355/ 3.385

D. Consulting Services

U1. Management and Training 107 46 153 105 45 150 )t 12. Fature Ecpaznion 255 102 357 250 100 35

13. Sub-Total 362 148 510 355 145 500

14. TOTAL 5.?5 4.421 10.346 5,805 4,330 10.135

1/ Engineering consulting services, included.

2/ Proposed Bank Loan would finance NO 306,000 (BS$300,000) of foreign exchange requirmenta totlling NO 754,000 (US$ 739,000). Balance of NO 448,000 (GS$439,000) would be financed by VRA with localcurrency either because of restricted tenderirg or because expenditure alreac7 cosaitted.

A/although foreign exehange required, purchasela possible in local currency. Vehicles (sedans eco.) would not be eligible for Bank financing.

4/ Repreaents total to be financed from proposed Bank loan.

5/ Represents total of foreign and local currency require,ents to be finnaced by 6RA.

April 1, 1969 a~ ~ . .

REPUBLIC OF GHANA

VOLTARIVER AUTHORITY

Portion of 1969-1972 Program to be Financed by Proposed Bank Loan

In Thousands of N¢ In Thousands of US$

Foreign Local Total Foreign Local Total

Proposed Proposed Bank Loan VRA Bank Loan VRA

A. Akosombo 5th and 6th Units

1. Turbines and Governors etc. including Transport 2,122 - 2,122 2,080 - 2,080

2. Supply and Installation of ancillary mechanical equipment 265 31 296 260 30 290

3. Installation of Turbines 714 306 1,020 700 300 1,000

4. Civil Works 511 209 720 500 205 705

5. SUB-TOTAL 3,612 546 4,158 3,540 535 4,075

B. Substations

6. Volta (Tema), Connection to Smelter 189 15 204 185 15 200

7. Smelter 474 41 515 465 40 505

8. ECG Substations 1,122 102 1,224 1,100 100 1,200

9. SUB-TOTAL 1,785 158 1,943 1,750 155 1,905

C. Miscellaneous

10. Construction and Service Vehicles 153 - 153 150 - 150

11. Improvements to Generating and Transmission Facilities 306 102 1408 300 100 400

12. SUB-TOTAL 459 102 561 450 100 550

D. Consulting Services

13. Management and Training 107 46 153 105 45 150

14. Future Expansion 255 102 357 250 100 350

15. SUB-TOTAL 362 148 510 355 145 500

16. TOTAL 6,218 954 7,172 6,095 935 7,030 .j._ _L_ _

Less undisbursed Balance Loan 310-GH (98) (95)

TOTAL PROPOSED LOAN 6,120 6,ooo

April 1, 1969 REPUBLIC OF GHANA

VOLTARIVER AITHOItIY (VRA)

Revenues

1965 1966 1967 1968 1969 1970 1971 1972 1973 1L74 1975 1976 --A-ATUA-L ------FORECAST------

SALES (in GWH) 98.2 449.7 1,453.9 2,428.1 2,497.0 2,596.2 2,738.3 3,079.0 3,569.4 3,850.4 3,959.o 4,070.4

MAXIMUM DEMAND (in MW) 73.4 91.1 323.0 329.9 339.7 362.5 386.9 474.8 490.7 52608 546.1 564.3

REVENUE (in 1,000 NO) 1/ (1 NO = 0.98 US $)

Valco (Smelter) - 56.9 2,310.2 4,875.0 4,875.0 4,875.o 4,875.0 5,450.o 6,540.0 7,030.0 7,030.0 7,030.0

Electricity Corporation 600.2 2,122.2 2,695.3 3,305.0 3,726.9 4,122.0 4,542.9 5,000.7 5,580.1 6,216.7 6,928.3 7,699.7

Mines 93.1 844.3 1,054.8 1,152.0 1,224.0 1,250.0 1,273.0 1,273.0 1,311.0 1,311.0 1,351.0 1,351.0

Akosombo Township 19.8 61.8 47.5 57.0 63.7 75.o 78.7 93.8 93.8 93.8 93.8 93.8

Akosombo Textiles - - - 19.2 65.0 257.5 278.0 278.0 278.0 278.0 278.0 278.0

Chlorine Saltpond - - 166.2 458.1 488.3 488.3 488.3 488.3 488.3

Togo and Dahomey ------298.5 632.0 670.0 710.0 752.0 793.0

T 0 T A L 713.1 3,085.2 6,107.8 9,408.2 9,954.6 10,745.7 11,804.2 13,215.8 14,961.2 16,127.8 16,921.4 17.733.8

AVERAGEREVENUE/KWH (NP) (1 NP = 0.98 US cent)

Valco (Smelter) - 0.409 0.250 0.268 0.268 0.268 0.268 0.268 0.268 0.268 0.268 0.268

ElectricityCorporation 0.727 0.705 0.748 2/ 0.788 0.781 0.768 0.760 0.749 0.749 0.749 0.749 0.749

Mines 0.705 0.664 o.643 0.640 3/ o.662 0.658 o.653 0.653 0.656 o.656 o.659 0.659

Akosombo Township 0.825 0.803 0.754 0.750 0.749 0.750 0.750 0.750 0.750 0.750 0.750 0°750

Akosombo Textiles - - - 2.133 1.083 1.139 0.822 0.822 0.822 0.822 0.822 0.822

Chlorine Saltpond - - - 0.972 o.855 0.697 0.697 0.697 0.697 0,697

Togo and Dahomey ------1.089 1.036 0.985 o.934 0.889 0.853

T 0 T A L 0.726 0.686 0.420 0.387 0.397 o.414 0.431 0.429 0.419 0.419 0.427 o.436

j/ Tariffs at 1968 level, no further increase assumed / 10% Tariff Increase, September 1967 / 10% Demand Charge increase June/July 1968

Deceber 17, 1968 ANNEX9

REPUBLIC OF GHANA

VOLTARIVER AUTHORITY(VRA)

Investigated Hydro Potential of Ghana 1/

Installed Capacity Annual Energy in GWh Cost/kw Project in MW Firm Secondary Total in NO 2/

Volta River

1. Akosombo 882 5,400 - 5,400 198 2. Kpong 140 790 - 790 365 3. Bui 260 895 105 1,000 403 4. Pwalagu 36 133 - 133 366

Sub-Total 1,318 7,218 105 7,323

Pra River

5. Awisam 88 156 124 280 392 6. Kojokrom 36 95 71 166 622 7. Abatumesu 63 165 121 286 527 8. Hemang 54 232 138 370 503

Sub-Total 241 648 h54 1,102

Tano River

9. Asuaso 51 90 26 116 600 10. Sedukrome 26 66 22 88 546 11. Jomuro 26 69 17 86 597 12. Tanoso 30 131 62 193 1,025

Sub-Total 133 356 127 483

TOTALGHANA 1,692 8,222 686 8,908

1/ The location of these projects is shown on the attached map.

2/ Based on current 1968 prices allowing for July 1967 Ghana currency devaluation. 1 N,9= 0.98 US$.

November4, 1968 ANNEX10 Page 1 of 2 pages

REPUBLIC OF GHANA

VOLTARIVER AUTHORITY(VRA)

Tariffs

1. VRA's tariffswere established in 1964 on the basis of a study utilizing estimated construction,operation and maintenance costs and an optimisticnon-smelter load forecast.

2. Since the tariff charged the smelter is fixed by contract for a 30-year period at US mills 2.625/1kwh,the profitabilityof VRA is dependent on the development of the non-smelter load and the tariffs charged non- smelter consumers.

3. One basic tariff is utilized by VRA applicable to EGG and to the mines and other consumers, consisting of an annual demand charge of N¢30/kw and an energy charge of NO.O00183/kwh.

4. Since VRA bills on a monthly basis the above tariff was subse- quently revised to

- a demand charge of N92.50/kw/month and - an energy charge of N¢0.00183/kwh.

Dividing the annual demand charge by 12 and billing on a monthly rather than on an annual basis,produced annual revenues which from ECG were lower by 8-10% and from the mines were lower by about 3-4%.

5. In September 1967 VRA increased its tariff to EGG to

- a demand charge of N02.75/kw/month and - an energy charge of NOO.00183/kwh.

Contracts with the mines signed for five years did not allow their tariff to be adjusted. Nevertheless,the mines voluntarilyagreed to a tariff increase as from June 1, 1968 equal to the increase for ECG.

6. VRA has engaged the services of Preece, Cardew and Rider of the UK to review its tariffs and to make a power cost allocation study. This review which took into account the effect of the 30% July 1967 Ghana currency devaluation and the current load forecast was started in September 1968 and completed in March 1969. 7. Revenues in this report are based on current tariffs and no further increase has been assumed. Present indications are that any tariff adjustmentswill be either small or not necessary. Nevertheless,VRA is contemplatingthe following tariffs:

ECG - a demand charge of N43.00/kw/month and - an energy charge of N0.002/kwh as from April 1970

Mines - a demand charge of N03.00/kw/month and - an energy charge of NOO.0025/kwh as from September 1970 when the present contracts expire. ANNEX 10 Page 2 of 2 pages

8. The tariff negotiatedbetween VRA and Togo-Dahomey,consists of a three part tariff of

- a charge of US$24,500/monthto recover the cost of transmission facilities from Akosombo-Aflaoand their operationand mainte- nance during the initial contractperiod of 15 years;

- a demand charge of US$2.0/kw/month;and

- an energy charge of US mills 2.0/kwh.

M.

Nay 6, 1969 &. a

REPUR3LICOF GHANA

VOLTA RIVER AUTHORITY (VRA)

2 Actual and Forecast Income Statements, ! 1965-1977 (in thousands of NO, unless otherwise indicated)

------A C T U A L ------F O R 1L C A S T ------

Fiscal Year ending December 31, 1965 1966 1967 1968-/ 1969 1970 1971 1972 1973 1974 1975 1976 1977

Erergy sold, in GWJh 98.2 449.7 1,453.9 2,428.1 2,497.0 2,596.2 2,738.3 3,079.0 3,569.h 3,850.4 3,959.0 4,070.4 4,653.4

Average revenue per kwh, in NP .73 .69 .42 .39 .40 .41 .43 .42 .42 .42 .43 .44 .43

Operating Revenues

Sales of Energy 713 3,085 6,075 9,482 9,955 10,746 11,804 13,216 14,961 16,128 16,921 17,734 19,893 Other '155 153 227 150 150 150 150 150 150 150 150 150

Total 713 3,240 6,228 9,709 10,105 10,896 11,954 13,366 15,111 16,278 17,071 17,884 20,043

Operating Expenses

Salaries andwages 143 714 833 853 895 940 990 1,085 1,140 1,200 1,260 1,320 1,740 Materials - - 185 135 140 150 160 200 200 200 200 200 350 Transportation 34 357 241 266 280 290 300 320 330 340 350 360 400 General charges 108 715 253 305 320 336 353 371 390 410 430 450 475 Akosombo Administration (net) - - 311 200 200 200 200 220 220 230 240 250 250 Hospital & Health Administration (net) - - 29 126 130 130 140 140 150 150 150 150 175 Depreciation 8 128 3,455 3,542 3,693 3,713 3,811 4,249 4,270 4,292 4,314 4,334 5,658

Total 293 1,914 5,307 5,427 5,658 5,759 5,954 6,585 6,700 6,822 6,944 7,064 9,048

Operating IncTme 420 1,326 921 4,282 4,447 5,137 6,000 6,781 8,411 9,456 10,127 10,820 10,995

Interest 1,848 3,312 4,003 4,049 3,900 3,M43 3,915 4,063 4,302 4,774 5,132 5,214 5,254

Less: Interest charged to plant (1,848) (3,312) _ (6) (164) (429) (748) (475) (1,124) (1,674) (1,962) -

Total - - 4,003 4,9 3,894 3,679 3,486 3,315 3,827 3,650 3,458 3,252 5,254

Net Income (Loss) 420 1,326 (3,082) 233 553 1,458 2,514 3,466 4,584 5,806 6,669 7,568 5,741

Return on Equity, % 2.2 - .4 .9 2.3 3.9 5.1 6.5 8.0 8.6 9.0 6.5

Return on Average Net Fixed Assets in Operation plus Working Capital Allowance, % 1.2 .7 3.1 3.2 3.8 4.5 4.8 5.8 6.7 7.3 8.0 7.0

1/ Power operations only. 2/ Preliminarey figures, subject to audit.

April 24, 1969 ANNEX12

REPUBLICOF aHANA

VOLTARIVER AUTHORITY(VRA)

Forecast Sources and Applications of Funds,- 1969 through 1977

(in thousad of NO)

Subtotal Total Fiscal Year Ending December 31, 1969 1970 1971 1972 1973 1974 1975 1976 1977 1969-1972 1969-1977

SOURCESOF FUNDS

Internal Cash Generation

Operating Ineome 4,447 5,137 6,004 6,789 8,419 9,464, 10,135 10,828 11,003 22,377 72,226 Depreciation 3,693 3.713 3.807 4.241 4,.262 4.284 4,.306 4.326 5.650 15 454 38.282

Total 8,1140 8,850 9,811 11,030 12,681 13,748 14,441, 15,154 16 653 37,831 110,508 Ecuity

Canadian Grant 100 150 76 - - - - - _ 326 326

Borrowings

Proposed IRD Loan 337 2,145 2,435 1,203 - - - - - 6,120 6,120 IBRD Loan 310-3 135 - - - _ _ _ _ - 135 135 US AID 214 184 184 82 - - - - - 664 664 Canadian Loan 650 2,820 3,472 817 - - - - - 7,759 7,759 Italian Loan - 370 700 679 _ _ _ _ _ 1,749 1,749 Future Expansion Loan _ - _ 3,075 8.,450 11.500 5.,450 3.425 2.400 3.075 34.300

Total 1,336 5,519 6,791 5,856 8,450 11,500 5,450 3,425 2,400 19,502 50,727

TOTALSOURCS 9.576 14,.519 16.678 16,886 21.131 25.2413 19,891 18.579 19.053 57,659 161.561

APPLICATIONSOF FUNDS

Construction Proaram 2,619 6,720 9,157 7,948 10,850 15,900 10,350 5,325 4,250 26,444 73,119

Debt Service Interest Proposed IBRD Loan 3 92 240 359 398 398 398 398 398 694 2,684 IBRD Loan 310-OH 2,568 2,479 2,385 2,285 2,179 2,067 1,949 1,8e3 1,691 9,717 19,426 US AID 755 729 702 679 651 621 589 557 523 2,865 5,806 uS Edms-Bank 424 393 362 331 300 269 238 208 178 1,510 2,703 UK E.C.G.D. 148 88 53 40 - - - - 329 329 Canadian Loan 2 51 130 18M 194 194 193 187 181 367 1,316 Italian Loan - 11 43 85 105 101 91 79 67 139 582 Future Expansion Loan - - - 100 475 1.124 1.674 1.962 2.216 100 7.551

* ,Total,!-t 3,900 3,843 3,915 4,063 4,302 4,,774 5,132 5,214 5,254 15,721 40,397

Asortization IBRD Loan 310-GII 1,465 1,550 1,642 1,738 1,838 1,946 2,059 2,180 2,306 6,395 16,724 US Am 393 759 786 809 837 866 897 928 962 2,747 7,237 US Exim-Bank 537 537 537 537 537 537 537 537 537 2,148 4,833 UK E.C.G.D. 637 637 637 637 42 - - - - 2,548 2,590 Canadian Loan ------227 233 239 - 699 Italian Loan - - - - - 177 187 199 211 - 774 Future Expansion Loan ------_ - 872 872

Total 3,032 3,483 3,602 3,721 3,254 3,526 3,907 4,077 5,127 13,838 33,729

Total Debt Service 6,932 7,326 7,517 7,784 7,556 8,300 9,039 9,291 10,381 29,559 74,126

Dividends 1,000 2,500 1,000 - 3,500 4,000 1,000 12,000

Variation in Workina Capital

Securities, Banks and Cash - 123 - 84 175 48 202 363 172 207 1,167 Other Items (net) 25 350 4 70 0 - 300 100 250 442 L49 Nat Increase (Decrease) 273 4* 154 225 -7I 502 2,316

TOTALAPPLIaATIONS 9,576 14,519 16,678 16,886 21,131 25,248 19,891 18,579 19,053 57,659 161,561

Times Total Debt Service covered annually by Internal Cash Generation 1.2 1.3 1.4 1.7 1.7 1.6 1.6 1.6 1.3 1.5

/ Power operationa only.

April 24, 1969 REPUBLICOF OaRA

VOLTARIVER AUTHORITY(VRA)

Actual and Forecast Balame Sheets.'' 1965-1977

ACTUAL FUlBAST As of December 31, 1965 1966 19 1968 1/ 1969 1970 1971 1972 1973 1974 1975 1976 1977

ASSE

Fixed Assets in Operation 106,127 114,903 145,040 145,853 147,722 148,522 152,443 169,956 170,806 171,706 172,556 173,381 226,323 Less; Depreciation (122) _(20) 14*082 (72529) (11.2W (14.965) (1i8.76) (3.02 (27.295) (1.';871 (40.2) (45.8D) 4 Not Fixed Assets in Operation 16,00 1,63 0,9 13,29 137 7 1337 931 143,511 YU0, 119 1 5 13,1s Work in Progress 536 211 1.03. 769 1.$25 7.609 12274 4.457 14212 31056 42.230 48.692 Total Fixed Assets 106,5M1 114,864 141,997 139,063 137,995 11,166 1 1 151,388 158,443 171,175 178,885 181,83B 180,b30

Mon Projest Expenditures 12,567 13,278 14,143 Less; Government Contribution (12.567) (13.278) (14.143)

Current fslets Inventories 282 472 653 732 750 750 750 750 900 900 1,000 1,000 1,250 Accounts Receivable, Power 354 548 865 1,000 1,000 1,000 1,000 1,100 1,100 1,150 1,250 1,350 1,450 Asosunts Receivable, Other 304 422 647 1,078 1,100 1,100 1,030 900 800 750 650 550 450 Securities, Banks and Cash 2.114 2,348 1.561 2.338 2.338 2.1461 21 2.545 2.720 2.768 2.970 3.333 3.50

Total 3,054 3,790 3,726 5,148 5,188 5,311 5,241 5,295 5,520 5,568 5,870 6,233 6,655

TOTALASSETS 109.595 n18,654 115.723 144-21 143.183 146.477 152.182 156,683 163,963 176.743 184,755 188.071 187.085

LIABILTES

Equit, Republic of Ghana Investment 58,833 59,218 58,354 58,446 58,546 58,696 58,772 58,772 58,772 58,772 58,772 58,772 58,772 Revaluation and Exchange Difference - - 5,600 5,738 5,738 5,738 5,738 5,738 5,738 5,738 5,738 5,738 5,738 Reserves asod Surplus 420 1,746 (1.336) (1.103) (550) 908 3,422 5,888 7,972 12.778 19,447 23.515 25.256

Total 59,253 60,964 62,618 63,081 63,734 65,342 67,932 70,398 72,482 77,288 83,957 88,025 89,766

Long Ters Debt Proposed IBRD Loan - - - - 337 2,482 4,917 6,120 6,120 6,120 6,120 6,12o 6,120 I8RD Loan 310-GI 28,354 32,330 46,231 44,974 43 559 41,917 40,179 38,341 36,395 34,336 32,156 29,850 27,411 US AID 8,930 14,190 21,561 21,690 21,145 20,5W3 19,918 19,163 18,297 17,400 16,472 15,510 14,514 US Eaxi-Bank 5,910 5,722 7,617 7,101 6,564 6,027 5,190 1,953 4,416 3,879 3,342 2,805 2,268 UK E.C.G.D. 2,6o0 2,540 2,548 1,953 1,316 679 42 ------Canadian Loan - - - 650 3,470 6,942 7,759 7'759 7,532 7,299 7,060 6,815 Italian Loan - 370 1,070 1:749 1,572 1,385 1,186 975 752 Future Expansion Loan - - - 3075 11,525 23,025 28.475 31.028 32,499

Total 45,794 54,782 77,957 75,718 73,571 75,488 78,558 81,160 86,084 93,677 95,050 93,348 90,379

Current Liabilities Accounts Payable and Accruals 4,512 2,424 2,534 2,380 2,395 2,045 1,971 1,871 1,871 1,871 1,671 1,571 1,571 Cerrent Portion of Long Terns Debt 36 484 2,614 3.032 3,483 3,6o 3,721 3.254 3.526 3.907 4.077 5,127 5.369

Total 4,548 2,908 5,148 5,412 5,878 5,647 5,692 5,125 5,397 5,778 5,748 6,698 6,940

TOTALLIABILTES 109.595 5 145,723 144.211 143,183 146.477 152,182 156.683 16363 176.743 184755 188.0 187.085

Debt as S of Total Capitalization 44 47 56 56 55 55 55 55 55 56 54 53 52

Current Asfets to Current Liabilities .7 1.3 .8 1.0 .9 .9 .9 1.0 1.0 1.0 1.0 .9 1.0

% Power operatioss only. g/ Preliminary figures, subject to audit.

April 24, 1969 ANNEX14 Page 1 of 3 pages

REPUBLIC OF GHANA

VOLTARIVER AUTHORITY(VRA)

Staff Situation Juno 30, 1968

A. Power Activities

1. Management and Administration 50 2. Generation, Transmissionand System Planning 167 3. Civil Works Maintenance and Hydrology 46 4. Clerical Staff 355 5. Workshops and Stores 90 6. Akosombo Administration 122

TOTAL POWER 830

* B. Non-Power Activities

1. Akosombo Township Maintenance 485 2. Lake Transport and Volta Research Project 41 3. Lakeside Health and Safety 254 4. Resettlement (Administration) 137 5. Resettlement (Agriculture) 1,222

TOTAL NON-POWER 2,139

TOTAL VRA Jurne30, 1968 2,969

A breakdown into functions is shown below;

A. POWERACTIVITIES

1. Management and Administration

- Management 10 - Senior Staff - Finance 1 - Personnel 5 - Services 13 - Legal 1 - Audit 1 - Chief Executive Office 1 - Akosombo Administration 8 4O 50

2. Generation,Transmission and System Planning

- Operating 57 - Line Maintenance 26 - Protectionand Control 20 - MechanicalMaintenance 28 - ElectricalMaintenance 31 - EngineeringStaff 5 167 ANN 14 Page 2 of 3 pages

3. Civil Works Maintenance and Hydrology

- DazmStudies 7 - Civil Maintenance Engineer 1 - Design and Hydrology Engineer 1 - Project Engineer 1 - EngineeringStaff 36 46

4. ClericalStaff

- Chief Executive'sOffice 2 - Legal 5 - Finance 54 - Personnel 13 - Audit 4 - Services 144 - Engineering 16 - Operatingand Line Maintenance 68 - Protectionand Control 14 - ElectricalMaintenance 31 - MechanicalMaintenance 24 355 5. Workshopsand Stores

- Mechanical Workshop 62 - Central Stores 28 90 6. AkosomboAdmdnistration

- Personnel 3 - Administration 10 - Accounts 15 - Property and Real Estate 14 - Publicity 3 - Telephone Exchange 8 - Security 44 - Transport 25 122 TOTAL A. POER ACTIVITIES 830

B. NCN-POWERACTIVITIES 1. Akosombo Township Maintenance

- Civil Maintenance (Utilities) 291 - Engineering 144 - Amenities 30 - Schooland Nursery 20 485 ANNEX 14 Page 3 of 3 pages

2. Lake Transport and Volta Research Project

- Marine 22 - Lake Transport 17 - Research 2 41

3. Lakeside Health and Safety

- Administration 5 - Health Services 115 - Hospital 134 254

4. Resettlement (Administration)

- Management 4 - Compensation 9 0 - World Food Program 12 - SettlementsAdministration 47 - Clerical Staff and Services 65 137

5. Resettlement (Agriculture) 1,222

TOTALB. NON-POWERACTIVITIES 2,139

TOTALVOLTA RIVER AUTHORITY 2,969

November 4, 1968 ANNEX 15 Page 1 of 2 pages

REPUBLIC OF GHANA

VOLTARIVER AUTHORITY(VRA)

Rate of Return on New Investmentin the Project

The method followed to determinethe rate of return on the addi- tional investmentsrequired to complete the developmentof the Akosombo plant, consists of comparing the streamsof costs and benefits attributableto the project. In the calculation,the following elements have been taken into account:

Costs

i. Investmentsin generating facilitiesbetween 1969 and 1972, includingthe fifth and sixth units and related civil works, installationand auxiliaryequipment (see Annex 5, item A);

ii. Investmentsin transmission/substationsfrom 1969 to 1976, by which time the new generatingfacilities will be fully utilized (see Annex 5, item B and Annex 6, item A.3);

iii. Consulting services and miscellaneousworks related to these investmentsbetween 1968 and 1976 (see Annex 5, item C and minor works of N0410,000 as explained in footnote 1 at page 9);

iv. Operation and maintenanceexpenses, starting from 1972, and continuingfor the assumed 33-year economiclife of the described facilities;

Benefits

v. The revenues,at current tariffs, from the sale of energy attributableto the new facilities over their assumed eco- nomic lives; this has been calculatedtaking into consideration the commissioningdates (January1972 for the fifth unit and July 1972 for the sixth unit), and the market forecast (maximumdemand, load factor and sales).

,, The resulting streamsof costs and benefits are shown on page 2. The rate of return on the proposed investment is the discount rate at which the present value of costs equals the present value of benefits. The rate of return is in excess of 25% and has been estimatedto be 26% by extrapo- lation. IEPUELIC OF GHANA

VOLTA RIVER AUTHORITY(VRA)

Rate of Return on New Investment in the Project Detail of Costs and Benefits, 1969 through 2004 (in thousands of Ni)

1969 1970 1971 1972 1973 1974 1975 1976 1977-2004 Annually ODSTS

Investments AkosomboFifth and Sixth Units 620 2,500 4,367 1,934 - - - - Transmission/Substations Expansion 235 955 1,095 428 400 400 400 400 Consulting Services and Miscellaneous 314 469 469 289 250 250 250 250

Subtotal 1,165 3,924 5,931 2,651 650 650 650 650

Operation and Maintenance - - - 200 300 300 300 300 300

Total Costs 1,169 3,924 5,931 2,851 950 950 950 950 300

BENEFITS

Revenues attributable to Fifth and - - - 2,212 3,958 5,124 5,918 6,730 7,413 Sixth Units

April24, 1969 U PPER VOLTA

- OLGATANGA z _ ALl ) * VRA SJ3STATIONS

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PROPOSED 165KV TRANSMISSION PWALAGU LINE TO TOGOS DAHOMEY 3 E/ G3E 35/11KV LEC TRANS'IISSION - LINE IN SERV ICE OR UNDER CON STERU T ION

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