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World Bank Document Document of The World Bank Public Disclosure Authorized FOR OFFICIAL USE ONLY Report No: 20634 IMPLEMENTATIONCOMPLETION REPORT (23470) Public Disclosure Authorized ON A CREDIT IN THE AMOUNT OF SDR 48.1 MILLION (US$65 MILLION EQUIVALENT) TO THE GOVERNMENT OF NEPAL FORA POWER SECTOR EFFICIENCY PROJECT Public Disclosure Authorized June 27, 2000 Energy Sector Unit South Asia Sector This documenthas a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized CURRENCY EQUIVALENTS (ExchangeRate EffectiveFebruary 1999) Currency Unit = Nepalese Rupees (NRs) NRs 62.00 = US$ 1.00 US$ 0.0161 = NRs 1.00 FISCAL YEAR July 16 - July 15 ABBREVIATIONSAND ACRONYMS ADB Asian Development Bank CIWEC Canadian International Water and Energy Consultants DCA Development Credit Agreement DHM Department of Hydrology and Meteorology DOR Department of Roads EA Environmental Assessment EdF Electricite de France EIA Environmental Impact Assessment EIRR Economic Internal Rate of Return EWS Early Warning System GLOF Glacier Lake Outburst Flood GOF Government of France GTZ The Deutsche Gesellschaft fur Technische Zusammenarbeit GWh Gigawatt - hour HEP HydroelectricProject HMGN His Majesty's Government of Nepal HV High Voltage IDA Intemational Development Association KfW Kreditanstalt fur Wiederaufbau KV Kilovolt KWh Kilowatt - hour MCMPP Marsyangdi Catchment Management Pilot Project MHDC Multipower Hydroelectric Development Corporation MHPP Marsyangdi Hydroelectric Power Project MOI Ministiy of Industry MOWR Ministry of Water Resources MW Megawatt NEA Nepal Electricity Authority NDF Nordic Development Fund OEES Office of Energy Efficiency Services O&M Operation & Maintenance PA Performance Agreement PSEP Power Sector Efficiency Project PSR Power Subsector Review ROR Rate of Return SAR Staff Appraisal Report SFR Self Financing Ratio S&R Screening & Ranking Vice President: TMiekoNishiomizu Country Director: Hans M. Rothenbuhler Sector Director: Alastair J. McKechrnie Task Team Leader/Task Leader: Tjaarda P. Storm van Leeuwen/Argun Ceyhan FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT CONTENTS Page No. 1. ProjectData 1 2. PrincipalPerformance Ratings 1 3. Assessmentof Development Objectiveand Design, and of Quality at Entry 1 4. Achievementof Objective and Outputs 4 5. Major Factors Affecting Implementationand Outcome 10 6. Sustainability 12 7. Bank and Borrower Performance 13 8. LessonsLearned 15 9. Partner Comments 16 10. AdditionalInformation 16 Annex 1. Key PerformanceIndicators/Log Frame Matrix 21 Annex 2. Project Costs and Financing 23 Annex 3. Economic Costs and Benefits 25 Annex 4. Bank Inputs 28 Annex 5. Ratings for Achievementof Objectives/Outputsof Components 29 Annex 6. Ratings of Bank and Borrower Performance 30 Annex 7. List of SupportingDocuments 31 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. Project ID: P0 10392 Project Name: POWER EFF IMPROVEMEN TeamLeader: Argun Ceyhan TL Unit: SASEG ICR Type: Core ICR Report Date: June 27, 2000 1. Project Data Name: POWER EFF IMPROVEMEN L/C/TF Number: 23470 CountryIDepartment: NEPAL Region: South Asia Regional Office Sector/subsector: PH - Hydro KEY DATES Original Revised/Actual PCD: 10/23/89 Effective: 10/15/92 01/15/93 Appraisal: 06/23/90 MTR: 03/01/96 Approval: 03/26/92 Closing: 12/31/97 06/30/99 Borrower/Implementing Agency: HMGNINEA Other Partners: Nordic Development Fund STAFF Current At Appraisal Vice President: Mieko Nishimizu D. JosephWood CountryManager: Hans M. Rothenbuhler J. Kraske Sector Manager: Alastair J. Mckechnie Frederick C. Temple TeamLeader at ICR: Tjaarda P. Storm Van Leeuwen Donal O'Leary ICR Primary Author: Argun Ceyhan 2. Principal Performance Ratings (HS=HighlySatisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L-Likely, UN=-Unlikely, HUN=Highly Unlikely,HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: M Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The project's primary objectiveswere to: * Increasethe supply capacity of the Nepal Electricity Authority (NEA)by improving technical and operationalefficiency, upgrading existinggeneration capacity and improvingthe system load factor; * Restore NEA's financial viability and strengthen its institutional performance; * Enhance energy conservationmeasures, implementedby the Ministry of Industry (MOI) and NEA; and * Address the remaining environmentalconcerns arising from the Marsyangdi Hydroelectric Project (Cr. 1478-NEP)by supporting an innovativeapproach to catchmentmanagement on a pilot basis, implementedby the Ministry of Local Development,Department of Roads (DOR) and NEA. 3.2 Revised Objective: FollowingIDA's decision in August 1995 to defer considerationof the Arun III HydroelectricProject (Arun III HEP), HMGN and IDA agreed to add as an objective the developmentof a high quality pipeline of hydropower projects to be offered for development. The reasonfor this was not only the expected future scarcity of public multilateraland bilateral aid funds, but also the need to more explicitlytake into account environmental and social impacts in project selection. To define such a pipeline, a Medium HydropowerStudy, launched as part of the Project, included a comprehensiveScreening and Ranking (S&R) process for project selection. 3.3 Original Components: The project included the following components: A. ComponentsImplemented by NEA: * GenerationRehabilitation. Upgrading of the civil works of the Trishuli and Devighat hydroelectricplants and the retrofitting of the Trishuli electro-mechanicalequipment. * High Voltage TransmissionNetwork Reinforcement. - Investmentsin the KathmanduValley to: * Increase the 66 kV circuit capacity to improve voltageregulation and reliability; * Upgrade the 66/11 kV transformercapacity at existing substationsand construct two substations near the load centers in Kathmandu(Teku and Bhaktapur); * Construct a S km 132 kV intertie between the Marsyangdiand Kulekhari system and a 12 km 132 kV line from Bhaktapurto New Chabel(initially operated at 66 kV); and * Constructa 4 km, 4-circuit 132 kV line between Teku and Suichatar. * Investmentsin other parts of Nepal to: * Provideequipment, spare parts and tools for the Western, Eastern and Bagmati transmission sections; * Constructa 132 kV interconnectionline betweenDuhabi and Kataiya (Bihar, India) to upgrade power exchange capabilitywith India; and * Install the second circuit on the existing 132 kV Kusaha-Dhalkebarline and expand the associatedsubstations. * NEA Infrastructure/Buildings.The componentincluded: * NEA Headquarters:provision of importedequipment such as electrical/mechanicalbuilding services, communicationequipment, computers, filing and drafting systems and other appropriatefurnishings; * Workshops:provision of spare parts, tools, cranes and vehiclesfor NEA's mechanical and electrical workshops;and * Training Center: constructionof a Central Training Facility and provision of training equipment together with consultantservices to extend NEA's training programs. * Rural Electrification.Electrification of the Besisahararea and vicinity under the Marsyangdi Catchment ManagementPlan. * Technical Assistanceto NEA in the form of consultantservices to assist NEA in: * Implementationof the generationrehabilitation and high voltage (HV) network reinforcements; * Design of NEA infrastructureand buildings; * Preparationof feasibilityand/or detailed engineeringstudies for priority hydroelectricprojects; * Continuationof the "twinning" supportto NEA (para. 10.3); * Preparationof a TrainingMaster Plan and detailed project for a new central training facility in Kathmandu (para. 10.4); and * Efforts to improvethe system load factorby providing servicesand equipmentto upgrade NEA's load dispatch center and install low frequencyrelays, load monitoringequipment, time of day metering -2 - and communicationsequipment to be used for the load managementprogram. B. ComponentsImplemented by Other Agencies: * MarsvangdiCatchment ManagementPlan. The componentincluded financing of consultantservices, materialsand equipmentnecessary to implementthe pilot project which covered: * A soil conservationand sedimentreduction program, implementedby the Ministry of Local Development; * Institutionalsupport to the Local DevelopmentOffice (Lamjung District) of the Ministry of Local Developmentand to the Departmentof Soil Conservationand WatershedManagement of the Ministry of Forests and Environment; * Upgrading of the Dumre-Besisaharroad, implementedby DOR; and * Electrificationof the Besisahar area and vicinity,implemented by NEA (see above). * Industrial Energv Audits. The componentimplemented by MOI, included: * Financing of consultant services and equipment needed for the establishmentof an Energy Audit Unit within MOI which would provide technicaladvisory servicesto assist local industries in implementingenergy conservationmeasures. * Technical Assistance to DOR. This componentincluded consultantservices to assist DOR in upgrading of the Dumre-Besisaharroad. 3.4 Revised Components: The following componentswere
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