pNo. L-&G b RESTW;CTED Public Disclosure Authorized

This report is restricted to use within the Bank.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized

THE

SEYHAN RrVER MULTIPURPOSE PROTECT

IN'

Public Disclosure Authorized TURKEY

April* 1952 Public Disclosure Authorized

Loan Department PLEASE RETURN TO RrPORTS DESK CONVERSION RATES FOR TURKISH CURRENCY

us $1 TL 2.825 TL 1 US $0.354 TL 1,000,000 - US $353,982 1 kurus = 1/100 TL =US $0.0035 THE SElri`N ?IJV-.P , :.T?UPOSE PROJECT

IThDEX Page

Perspectiveof Proposed Seyhan Dam ...... Frontispiece

Summary and Conclusions ...... Preface

I. Purpose and Scope of Report ...... 1

II. Descriptionof the Project ...... , 1

III. Streamflow Data on the Seyhan River, *......

IV. Fcundation Conditions for the Dam ...... h4......

V. Estimated Cost of the Project .. '****ft****....* * 5

VI. Schedules of Constructionand Expenditures , . 7

V:II. Allocation of Costs to the .Aultipurpose Aspects of the Project **ftft**ft*****ft*ft*.ft.ft.*.ftft*...... 8

VIII. lIanagement ...... , *..... 10

IX, Justification of the Project ...... ,...... , ,2.

X. Revenues, Expenses and Net Earnings ...... 16

XI. Recommendations *so***...... 21

APPENDICES

Table I Estimated Electric Power Consumptionin Seyhan Power DistributionArea

Table II Cukurova Po;er Utility Company, Estimates of Revenue and Operating Jxpenses

Table III IrrigationPhase of Project, Income and Operating Expenses

Table IV Income, Expenses, and Net Returns from Operation of lulti- purpose Project

Table V Economic Benefits of iultipurposeProjeot

Sketch Mrp of Adana Region

PLEASE RETURN TO REPORTS DESK 7714-

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tS~~~~~~~~~~~ - SU2 ARY ANJDCONCLUSIONS

The proposal submitted by the Government of Turkey as a basis of a Barikloan involves the construction of a dam across the Seyhan River near Adana, a hydroelectricpols:er-generating plant, and a power transmissionsystem. These works are the predominantpart of a comprehensivedevelopment Project to provide flood protection, irrigation,and electric power in the Adana plain. The total cost of this Project is the equivalentof about $67 million, of which about $1O.5 million has been spent to date. The phase of this Project presented for Bank financingamounts to approxirately$36 million, and the Bank is being asled to provide the foreign exchange costs of this phase, $25.2 million. Constructionwill begin in the mid-year months of 1952 and will be completed by mid-year 1956. The irrigation canals will be constructedafter the comple-. tion of the dam and appurtenancesto be financed by the proposed loan.

1. The site selected for the proposed dam and the type of structure designed both seem suitable, consideringexisting conditions.

2. The foundation conditionsof the proposed dam are poor and extra- ordinary precautionswere necessaryin the design and specificationsto pro- vide a seal to minimize leakage. An independentappraisal by a board of corsultants,experienced in this type of construction,recommended the design featureswhich vrereadopted in the final design prepared by the International EngineeringCompany.

3. The progranifurnished the Bank by the Turkish Government indicates that the remainingphases of the Project will be carried to completion.

4, A multipurposedain of this nature requires exceptionallycompetent management,both during constructionto assure ccerdinationof its several aspects and in subsequent years to assure proper control and use of the water resources, and to safeguard a valuable property.

5. The managerial and financial policy fixed by Cabinet decree seems basically sound. It establishes the power facilities as a profit making enterprise, the irrigation operations as a non-profit and largely self-support- ing service, and the flood control service as a governmental financial respon- sibility.

6. The estimatesof power use included in this report wreresupplied by the Turkish Government and no independent check was attempted. They appear to be optimistic but could be substantially discounted without seriously affect- ing the justification of the Project for multipurpose operation. It is probable that full use vill be made of the povier and water from the Project, although not within the time period predicted by the Government.

7. The viorksto be financed by the Bank require from the outset the services of an engineering organization experienced in this type of construction to complete working drawings, advise in the award of contracts, and to supervise constructionfor compliancevwith plans and specifications.

8. Similarly, these works require the selectionof a contractorwith experience in building this type of structure, in order to assure experienced workmanship in carrying out plans and specifications. 9. Cost estimatesare believed to be conservativeand adequate to provide for the constructioncosts of facilities included in the project.

10. Although a four-year construction program is conten:latedby the Government,a three-yearconstruction schedule may be desirablefrom the stand- point of economy and to provide the benefits of the project at the earliest feasible date. Invitationsfor alternatebids for the shorter construction period would indicate its practicability,,

11. From a technicaland business viewpoint.theProject seems an appropriateone for considerationby.the Bank for a loan. THE SEYHAiNRITVR !1ULTIPURPKSEPROJECT IN T1UPJIY

I. Purpose and Scope of this Report

This report presents an appraisal of the Seyhan River project which has been submittedby the Government of Turkey as the basis for a loan from the Bank. The analysis of the technicaland business aspects of the Project is a revision of an earlier report dated April 13, 1950. The scope of the project for which a loan is requestedhas been revised, earlier cost estimates have been adjusted and supportinginformation brought up to date.

This report is based on a detailed investigationof the projectby Mr. J.R. deFargues, Engineering Consultant to the Bank, on engineering studies and designs prepared for the Governmentof Turkey by the InternationalEngineer- ing Company, Inc. of San Francisco, California,and on recent data and informa- tion supplied by the Government of Turkey. The investigationof the Project has been quite complete and comprehensive. It provides the necessaryinformation for consideringthe Project as a basis for a loan to Turkey.

Principalfeatures of the Project are presented in this report, along with detailedestimated costs and probable earnings. Conclusionsare stated as to the basis on which a loan for the Project might be considered.

II. Descriptionof the Project

The Project is a multipurposedevelopment involving the - constructionof a dam across the Seyhan River near Adana, a hydroelectric poviergenerating plant, a power transmissionsystem, flood contrel and irriga- tion works. The direct benefits of the development rillbe comfined to the Adana plain in Southern Turkey. This plain is triangularin shape wIitha base on the i•editerraneancoast of about 80 kilometers,having sides about 65 kilo- meterslong terminatingat the city of hdana. The plain is actually a delta formed by three rivers and contains some of the best agricultural land in Turkey. The cities of Adana, Tarsus and iJersinlocated in this area are importantindustrial centers. The proposed location of the dam is at the only site available for a dam on the Seyhan, if adequate reservoir capacity is to be obtained and if all its tributaries are to be controlled, and hence the site must be utilized in spite of poor fcundation conditions.

The Seyhan dam, regulatingthe dovmstream-flow of the Seyhan River, will- serve three purposes, namely, flood control, irrigationand power genera- tion. The need of flood protection for the Adana plain has been recognized for centuries, Irrigationhas also become a necessity to increase the agri- cultural productivityof the plain and to permit the raising of additional and more valuable crops. Industries for processing agriculturalproducts of the region would need cheap and abundant electric power. All these considerations led to the multipurpose development of vrhichthe proposed dam is the pre- dominant feature. -2-

This comprehensive plan of development is the outcome of an evalua- tion of numerous alternative development possibilities which were investigated. The proposed system of irrigation for the area provides for the utilization of almost the entire dependable flowv of the headvwater streams and for the irriga- tion of the maximum area of the most suitable lands that can be served.' Storage for poa,'rer and the appurtenant structures are planned to obtain the ma=Snum generat'ion of electricity practicable from the vwater released from the reservoir.' Storage for flood control will result in an appreciable reduction in the flood peak and levees are designed to carry the outflow.

Stages of Construction

Construction of the comprehensive development is planned Ln four successive stages. Included in Stage I are the flood control wrorks pre- viously started and rhich vrill be completed at the end of 1952, and a portion of the irrigation system.

Construction of wrorks included in Stage II, scheduled to start in 1952, is now under consideration for Bank financing. The dam and power features will be constructed in this stage.

Stage III construction consists of the completion of the irrigation system. Expansion of the irrigation system will be started right after the dam is built and wrill be completed in 1961. Stage IV is contemplated to occur after 1965. It will include the third generating unit which vwould be installed wrhen the demand for electric power exceeds the capacity of the presently projected two generators and the expansion of substations, particularly to serve the contemplated grovwth of the industrial load. A second transmission circuit is also included in this category.

Phase of Project Proposed for Bank Financing

It is now proposed that a loan be considered for Stage II of the Project, limited to the dan and povwer facilities. The structure will comprise an earth dam vith an integral power plant, and a flood spillway. The dam, writh its crest 70 meters above sea level, vrill have a height of 57 meters or 187 feet from its base and of approximately 50 meters or 16L4 feet above bottom of river bed, and a length of 1,568 meters (5,144 feet). Excavation of about 3 million cubic meters is required for stripping the foundation of overburden and a fill containing about L-l/3 million cubic meters is required for the body oi the dam. Suitable materials in adequate quantitiesare available at the dam site. Excava- tion, of all classes involved in stripping,, fills, channels, etc., will total more than 10 million cubic meters. An 85-meter spillwvay for flood release, eciuipped vwith tainter gates,, will be built in the right side of the dam and v*ill have a capacity of about 5,000 cubic meters per second. The storage capacity of the reservoirto be created by the dam is estimated at l1,450million cubic meters (approximately 1,176,000acre feet), with a useful storage of 575 million cubic meters (approximate- ly 466,0ooacre feet). The reservoirarea at spillvwayelevation totals approximately 4,9500hectares, -3-

The intake of the hydroelectricinstallation is through a conduit built through the center of the dam, on the downstreamend of vihichare provided valves to each of two turbines and additionalvalves for releasing water directly for irrigation if the amount passing through the turbines is inadequate. A steel surge tank will be provided on this conduit betwreenthe dam and powverhouse.

The power house will be of the outdoor type located on the down- stream toe of the dam. Station equinmentwill consist initially of two 18,000 kilovatt Francis-type vertical units of 50 cycle frequency operating at 803 povwer factor and 13,600 volts. These generators are designed to operate at a speed of 136 rpm at a head of 105 feet. Space is provided for a third generatc2r unit which may be added at a later date. The step-up substationat the power house vwillconsist of two banks of single phase transformer3,each designed to operate in conjunction w%ith one generating unit. The switchgeur and other auxiliary equipment will be conventional, This station rill step up the voltage from 13,800 to 66,000 requirecd for transmission. Thie Project includes a 66,000 volt transmission line about 80 kilometers long from its switchyard to three step-down substations at Adana, T'arsus, and Mersin. The transmissioxn line wvill be a double circuit steel tower line, but only one povwer circuit will be installed initially. The substations vwill be of 5,000 kva capacity and vill step down the voltage from 66 kv to 13.8 kv for local distribution.

Additional Phases of Project Not Included for Bank Financing

The dam wvillprovide flood storage and dowvnstreamregulation of river flow against excessive flood peaks. During the vwetseason from November 1 to April 1 the reservoirwill be kept at a pool elevation of 61 meters, or returned to this level followingheavy rains as soon as practic- able, by regulated releases.- To provide adequate flood protection to the Adana plain a supplementarysystem of levees is required,not only on the Seyhan River but on the Berdan and Ceyhan Rivers as well.

These flood control levees are practicallyccmpleted. A total of $4,408,264has been spent thus far on these works, and the estimatedcost of completion is $357,1h2. Present schedules call for completionby the end of 1952. The levees on either side of the Seyhan start just dovmstreamfrom the city of Adana and extend to the ,JediterraneanSea, a distance of approximately 50 kilometers(see sketch map in Appendix). Levees are also constructedalong the Berdan and the right bank of the Ceyhan, and these, together with the collectioncanals along the foothills above the Adana plain, will function as a part of the flood control system to protect the plain. These works will afford protectionagainst floods of up to 1,250 cubic meters per second. In the unregulatedriver, flood discharges exceedingthis amount occurred seven times during the 20 year period from 1927 to 1948.- The study of these flood data by the InternationalEngineering Com,any indicated that discharges from the proposed Seyhan reservoir during these floods wrouldnot have exceeded 800 cubic meters per second, a volume well vithin the range of protection provided by the levees. The provision of additional protectionby levees for flood releases greater than 1,250 cubic meters per second is not consideredto be justifiable,

The irrigationworks in this project are physically separate from the dam and power development. The Turkish Gavernment has already constructed a diversionweir on the Seyhan River 3 km above Adana or 5 km below the pro- posed dam site, a main canal on each of the triobanks of the Seyhan River and a system of secondaryand tertiary canals on the right bank,which provides a distributionsystem for an area about 17,150 hectares, The expansionof the irrigationsystem, which wrill be started immediatelyafter the completionof the dam, vill be carried out according to a construction program showm belqw., and v!ill be completed in 1961. Schedule for Expansion of Irri. ation System Year Area in Heoctares

1952 17,150 1956 57,600 1957 72,000 1958 86,400 1959 115,200 1960 129,600 1961 14 ,000

The plan of the existing and proposed irrigation system is shovm on the sketch map included in the Appendix. As mentioned before, the power facilitieswill be expanded after 1965.

III. StreamflovrData on the Seyhan River

Flow records are available for the Seyhan River at Adana dating from 1927. These records shov;a minimum flow of 36 cubic meters per second and a minimum annual average of about 80 cubic meters per second. Based on stream flow data of record and on the seasonal drawdovwnrequired in the operationof the reservoirfor flood control and irrigation,the minimum firm po-werwhich vwouldbe available at 100% load factor 100% of the time would be approximately 12,000 kw or firm poNwer of 23,000 kw will be avail- able 95,%of the time,which would permit a production of 202 million kwh per year. 'iater for an additional 82 million kwh as secondary power wll be available during the flood season and the period of drawdown. The installa- tion of two 15,000 kw units appears, therefore, to be fully justified on the basis of water availabilityand is necessary to meet expected peak loads on the system.

The amount of silt carried by the Seyhan River has been studied in considerabledetail, since this is recognizedas a serious problem in connec- tion vith reservoir design. Thseamount of silt carried by the river is unusually high even in times of low water. However, in viei of the large volume of dead storage in the proposed reservoir, it is estimated that the reservoir could function normally for more than 200 years even assuming an accumulation of silt at the rate of 3 million cubic meters per year.. These ca:Lculations indicate that the reservoir would have a sufficiently long span of life to justify its construction from the standpoint of silting.

IV. Foundation Conditions for the Dam

It has been pointed out that there is only one site available for a dam on the Seyhan River which will provide adequate reservoir capacity for this Project. Unfortunatelypthe foundationconditions on this site are poor. The basic formationis a miocene blue clay which is covered vwith successivelayers of conglomerate,red clay and alluvial deposits. The depth of overlay on the imperviousmiocene clay approximates36 meters. The con- glomerateis a mass of cemented and partly cemented coarse and fine material, and incorporatesboulders, coarse gravel and sand, with lime as the binding material. The practical interpretation of the geologist exploring the founda- tion conditionsat the dam site was that the cementationof the conrlomerate belovw the alluvial area near the river bed is very weak or even non-existent. in the flanks the cementation is more uniformly developed4 It vrasthese conditions which led the International Engineering Company in its design of the dam to provide for foundation excavation to be extended to sound con- glomerate,and below this, for a core trench along the center line of the dam extendinginto the miocene clay so as to provide an impervious seal tied into this stable material.

D-e to the nature of the foundationconditions and the t7;-,Deof materialsavailable for building the dam, unusual precautionshave been taken in the design to provide for drainage and to preventlandslidesi On the basis of curvent estim.ates,3 million cubic meters must be excavatedto provide a base for the dam. Howtever this is by no means a firm calculation. An overrun is more likely than an underrun in the estimated quantity of ex- cavated material.

The engineeringdata on the vworksunder considerationby the Baik were revievwedin the planning stage by a Board of Consultantscomprised of Lessrs. John S. Cotton, John L. Savage and Karl Terzaghi. In this Daord'6 formal report, dated November 5, 1949, the conclusion -was reached that the dam could be safely constructed at the proposed site provided certain features of the dam were redesigned. Such modifications were made by the project engineersin their final designs. The Board's report particularly dealt with foundation problems, stability of the structure, and provision against seepage. In the circumstances, it is essential that the Project have the services of an experiencedengineering organization to prescribe and check compliancewith the plans and specificationsduring construction. Furthermore,a highly competent contractormust be secured on this job so as to assure a careful selection of materials and their proper placement. This point is funda- mentally important.

There is little question that suf4icientmaterials for constructing the dam are available in the immediateareas Large deposits of red clay suit- able for use in the core -f the dam exist on the left bank of the river and by classifyingthe conglomeratewhich Will be removed in the ecmavation for the foundation,sufficient coarse material of proper quality can be obtained.

V. Estimated Cost of the Project

The InternationalEngineering Company has submittedan estinate dated January 24, 1950, covering the eouipmentand constructionwork required for the dam, power station, transmissionlines, and substations. This estimate is admittedly out of date. The Company would charge a fee of $50,000 to make a detailed revision of the estimate at present day pricesd It has, however, made a calculation of the increased costs and this revised estimate is given below. -6 -

In the opinion of the Bank's engineeringstaff, it would seem prudent to include in the estimate an allowance for contingenciesof 10% of the foreignexchange costs and to allorwfor an increase of 20%oon items subject to escalationsuch as turbines, generators,fabricated steel structures, etc. Allo-;.ance for these items is included in the revised estimate given belowv.

Estimated Cost of Stage II of - :',ultipurposet-roject included in Proposed Bank Loan (in thousandsof US dollars or equivalent)

Item Foreign Exchange Local Total 'Su Nr7Zru-rope-nTotal Currency chases Purchases

Purchase of land and high-way relocation 580 580 3,191 3,771

Construction6quipnent 2,593 1,668 4,261 - 4,261

Dam materials,supplies and construction 3,918 6,187 10,105 6,028 16,133

Electricalgenerating ecuipment and transmissionfacilities 443 4,321 4,764 1,228 5J,992

Engineer'sand contractor'sfees 2,531 - 2,531 192 2,723

Sub-total 9,485 12,756 22,241 10,639 32,880 Allowrancefor contingencies, 10% on foreignexchange 9L8 1,276 2,22 - 2,224

Allowancefor escalation,20% on selected fabricated items 272 463 735 - 735

Grand Total 10,705 14J495 25,200 10,639 35,839 7 -

Interest during constructionis not being rev'uestedas a component of the cost of the works to be financed by the Bank%, The total cost of Stage II of the Project, x;ithinterest included, and the net cost after adjust- ment for salvage of equipment is slhovwnbelow in US dollars or equivalent:

Cost of 'workssubmitted for Bank financing US$ 35,839,000 Interest during construction 2,361,000 Sub-total (funds required) 4 36,20600 Equipment salvage value 1,277,000 Net cost (investment) 36,923,0001

The cost estimatps of equipment and supplies are based largely on U.S, prices. It is probable, hovrever,that many of the equipment and materials items may be purchased in Europe. H;ence savings are not unlikely. Suitable and dependable constructionec.ripment to withstand more than 24 months intensive use will be required. The process of procuring principal items of this equipment vwillrequire from 8 to 12 months, depending upon whether priority ratings are applied. The Turkish Governmentdesires to ownnthe equip- ment at the end of the Seyhan job so that it wiillbe available in the country for additional heavy embanlc.entwork. On a current basis, the item of construc- tion equipment vwill probably run about $h.26 million. It is estimated that the equipment will have a salvage value at the end of the job of wl,277,0O0.

VI. Schedules of Construction and Expenditures

As presently planned, the Turkish Government contemplates comple- tion of the dam and power installationin four years. It is contemplated, however, that alternate bids vill be invited for completion in three years, provided procurementschedules for the constructionplant and for the construc- tion equipmentitems have progressedto the point of assuring deliveriesin time to utilize the full constructionseason of 1953. Such initial work as providing the access road and construction camp and plant, procuring equipment, preparation of final designs, etc, will begin about mid-year of 1952. Based on the four-year schedule, actual work on the dam wvill begin after the end of the flood season in !~ay 1953 and the embankment work will be completed by the end of 1955. Power generation should begin by February of 1956 and final installations and clean-up should be completed by mid-year of 1956. Four-Year Construction Program

Srieted It52i 2 1953 1954 195 Accessroads and oonstructioncamp x Stripping foundation (first stage) Embankment XXX x Transmissionlines and substations xxxxxa Powergeneration xxxxxx Finalclean-up LXX

A scheduleof currencyrequirements by years is indicatedin the follcwimgtable for the four-yearconstruc~tion schedule: -8 -

Estimated annual Expenditures, Stage II (in thousands of US dollars or equivalent)

First Year Second Year Third Year Fourth Year Total 1952-3 1953-h l954-5 l955-6

Foreign Currency

Expenditures 6,35o 7x7.50 6Y860 4,260 25,200 Interest during construction 302 770 1YO89 - 2,161

Local Currency

R)xpenditures 1,000 4,000 4,OCO 1,639 10,639 Interest during construction - - 200 - 200

Totals 7,652 12,J20 12,129 5,899 38,200

No interest on local currency expenditures is shownm for the first two years because the Government presently contemplates that these funds wMll be provided from budgetary sources, on which interest will not be charged (see Section X below). Interest during fourth year of construction period is considered an operating expense.

II.. Allocation of Costs to the liultipurpose Aspects of the Project

The estimated cost of the several stages of construction of the comprehensive Project is as follows: -9 - Estimated Cost of Full 1ultipurposeProiect (in US doliars or equivalent)

Foreign Local Total Currency Currency

Stage I

Irrigationworfis completed to date 5,811,161 Flood control works completed to date 4,402,264 Reouired for completionflood control works, 1952 357,142

Total 10,576, 567-

Stage II

Irrigationfeatures 5,877,656 2,543,8'1 8,421,66-, Flood control features 5,877,056 2,1,.3,810 2L?l,6, Povwerfeatures 15,605,267 4,474,330 20,079,607

Total 27,361,000 9,562,000 36,923,000

Stages III and IV2/

IrrigationFeatures 3,493,000 13,711,000 17,204,000 Power Features 2,472,600 - 2,472,600

Total 5,965,600 13 1711,000 19,676,000

Grand Total 33,326,600 33,8499,567 67,176,167.

In this project the allocation of investment for the dan and appurtenancesbetween the three functions of the Projectwras simply made. The allocationmethod wiasspecified by a Cabinet decree of February 18, 1952J and consisted of identificationof the cost of the power ins'allations,as separatelychargeable to power, and of considerationof the remainingcosts of the dam structure as common to flood control, irrigationand povwer,viith an equal share allocated to each. Thus of the total cost of Oita-jeII of "36,923,000,the separate power facilitieswere estimated to cost Si1,658,o0O, and the remaining cost of ,25,265,000vwas divided ecually amaonrthe three functional purposes. The costs of the separate flood control and irrigation vrorks comprisingthe multipurposeProject were included in the totals charge- able to the various functions of the comprehensive multipurpose project. The totals thus determined (and shovm below) are used in this report in estimating fixed charges.

1/ Scme expenditures for Stage I required foreign currency, but were financed from domestic resources. No breakdown between foreign and local currency expenditures is available.

Funds for the second transmission circuit, referred tc on page .3, are, not^ included. - 10 -

Estimated Cost of L.ultipurposeProject, by Function (in US dAollarsor eqjuivalent)

IrrLi-ation Flood Control Power Total

Stage I 5,811161 h,765,L4O6 - 10.,576,567 Stage II 8,y21,666 E,421,667 20,079,667 36,?23,coo Stages III and IV 17,,20,c00 _ 272,6002 19,676,600

Total 31,436,827 13,187,073 22,552,267 67,176,167

VIII. L.anagement

The construction oi hydraulic wvorks in Turkey is noi; hmndied chiefly by the Linistry of Public .orks,which has a large technical Stb&± cn:l an experienced admznistrative organization. The existinC irrigation and flood control works in the Seyhan Valley included under Stage I were constructed by the Mlinistry.

The construction of the dam, reservoir and power facilities under Stage II will aLso be a responsibility of the li.nistiy. The services of a Consulting engineeringfirm will be secured to assist with the technlial phases of the construction. Constructioncontracts will be negotiatedwith e:..perienced contractors,and internationalcompetition will be invited. The qualifications of the consulting engineeringfirm and the terms of its responsibilitiesshould be subject to Bank approval. Similarly the bank should require that t'e general contractorsmeet certain standards of qualification,in order to as2ure competen; *rorknanship.

The policy of the Turkish Government, set forth in a Cabinet decree, provides that flood control and irrigation services will be a governmental responsibility. For this reason, it is planned that the irrigation systemxand the flood control structures and the dam itself .ill, after construction, remain under the control and administrationof the Government and be operated by a "State hater .orks Adimnistration" to be estab'lished urder the inistry of Public wiorks to construct and operate all varieties of hydro installaticns. (The Bill to establish this Administration is now before the Grand .>ational Assembly.) Horwever, it has been found desirable to form a corporationto which the poemr-generatingand transmissionfacilities will be licensed for opera-. tion. Both the Government and private capital will share in the eqzity of t'is corporation,the Cukurova Power Utility Company, vwiththe majority stock being held by the private stockholders. The franchise granted th-1ecorpjoration will be for a term of 49 years and T.11 authorize the transmission anuL sale of po;er to municipalities, and to industrial consumers iihouse niore thlan ~5O0kilowatts. Rates for electric power will be fixed, in accordance .,ith the *rovisions of this license, in such manncr as' to enable the utility cof.l;any to earn revenues large enough to mect the annual operation, administration and maintenance expenses, replacement reserves, charge for wiater, special reserve for amortiza- tion and taxes and to distribute a dividend to stockholders. To cover the one-thirdof the cost of the dam allocated to powor, estimated as .:8,421,667, the corporationrill be charged for vwateruse thrcugh an assessnent of 1.5 kuru.e per kwih(O.52 cents) on power sold to custcmers.from-1956to 1965 and 1 kuru3 (0,35cents) afterwards The assets to be transfer-'ed to the mixed power utility corporation will consist of the instal.ltions of the Project which serve exclusivelyr to generate and transmit clectric povier., The capital of t'e corporation wl beel equal to the cost of the e:.clusively power features of the project plus about TL 2 million for operating purposes, the total currently estimated at TL 30 million. Of this amount TL 16 million has been allocated to private capital, an:' and subscriptions of this amount are nowvbeing received.. The initial capital of the corporation wvill be TL 16 million. l'Ohenthis has been subscribed, th-e company will become a le-al entity. Subscribers wiill pay in 25,.of the a.:ount subscribed at the founding of the corporation, and will pay in an a`litional one-fourth annually for three y,earsto complete their subscriptions..Of the TL 16 million capital, the corporationvjill transfer TL 14 million to the Government during the period of construction on account of install>tions which will ultimately be transferred to the corporation. it the > ination of construction, the capital of the corporationwill be cre.-.eitc. ''- 30 million, and "iL14 million of stocks ;rillbe delivered to the _tibank-acting on behalf of the Treasury in return for the Goverm.entts outlays for the -..orrcrinstalla- tions. The Etibank is a state-owined bank enCaged, amnongother thu-.gs,.in building and operating power projects, and is authiorizedby its statutesto participate in this kind of corporation.

The exact value of the power installationsto be turned over to the corporation will be fixed wvhen construction is completed. Should that value oe greater than the amount estimated, the capital of the corporationvYill be increasedaccordingly. T'he Govern.menthopes to be able to r,ile up)tho dIff-.erence from private subscriptions, in order Qo naintain private i,> cf.;inof t.e conpaq

IX. Justificationof the Project

Justificationof this ,'rojectis based on three principal considera- tions: (1) savings resulting from the prevention of flood damage on the Adana plain; (2) increasedagricultural production resulting from irrigation,a part of w-Aichcan be exported;and (3) production of electric power.

Flood Control Benefits

The Adana plain is the second most prod'uctivea-ricultural area 'n Turkieyand its contributionto the countryrtseconomy, can be greatly enhanced by its protection from floods and the availabilityof irrigationwater. 'Urnder preserntconditions the winter wiheatcrop is frequently .lamaged,in de-rees varying aithflood intensities. Knowing that floods are practicall;r assured, the peasants refuse to plant cotton before I..aylst, *which runs tle harvest into the next rainy season so that the yield is decreased by Jiscelorztion and damage.

The annual flood control benefits of the project are both direct and indirect. The measure of the direct benefit is the average annual loss which no,r occurs because of floods. This .-s -sti-nated by thlC Govc-rnm,ent by taking a 100-year period, and calculating from knoim records hlolJ many :lcods tould occur, hotr large they would be, the damage caused by each, and taking an average. Thus it vrascalculated that in 100 years four floods of 2100 cUDic metersper second(cms) or more may be expected. Two of thesewould be 2300 cms or more and of these tvwo,one will be 2500 cms or more. Proceedingin this manner, the follovwing figures are derived. - 12 -

Estimated -lood Damage

Seyhan discharge frequency in Damage at each Total danlage in rate, cubic meters 100 years discharge rate, 100 years, IL per second TL

2500 1 10, c00o00 10,50o,oo 2300 - 2500 1 9,900,000 9,900,000 2100 - 2300 2 9,900,000 l8,4oo,ooo 1800 - 2100 6 8,Loo,ooo 50,Loo,coo 1550 - 1800 10 7,700,000 77,0O0,000 950 - 1550 80 6,000,000 L8o,oco,Joo

T o t a 1 646,200,000

The average annual direct flood damage i as calcuilated as one hundredth of this total, or iL 6,462,000, about $2,310,00). ii,e indirect damages such as disruption of traffic, sickiness, and ocasicnally loss of life, vwhichcannot be accurately assessed,were estilati c.t'I, oi the direct losses or dM62,000. Thus the total annual flood control benefits to the Turkish economy could be estimated at approxirately .,2,772,000. No estimate can yet be made of the e.pected increased tax revenues resulting from upward revaluation of land values attributable to flood control services.

Irrigation benefits

The principal crops raised on the .'dana plain are wh.eat and cotton. The average area planted in each crop in the recent past has beer, about equal, although cotton novwpredominates, and comprisestogetherabout 90; of the agri- cultural lands. Cereal production in the area represents only about 0.9'0of the total production of lurkey, while about 30',of all the cotton )roductvion of the country occurs in the .danaplain.

The Seyhan project vill provide gravity irrigationto a total of 14",000 hectares, and about 95' of this would be cultivable. Of this area 17,150 hectares are presently irrigated. The needs for irri7'ationare extremelyvariable from one year to another. Past exsperienceindicates that about 10" of the acreage recquiredirrigation in a wet year, or about $0< of the time, and under' such conditions the demand for water may be very limited. The requ-rements for irrigation for an average year can be provided from the Seyhan River without reservoir storage. But the availability of irrigaticn will provide insurance against dry years and viill permit summer cropping as vrell as cultivation of nevrand more valuable crops. Irrigation for instance will enable farmers to sow the area ULth a summer crop likle esi..e;, and acreage of this crop is expected to increase greatly. Like-rise citrus groves and truck crops depend on a reliable vwater sup ly throughout the summer. The assurance of timely cultivationand the opportunityfor crop diversificationwill be greatly beneficial to the entire area.

Despite the recent predaninanceof cotton, it is likely that in the long run there ivillbe a crop rotation in which cotton acreage equals the areas under winter crops. A new cropping pattern has thereforebeen assurmed in which cottons vrheat and sesame are sown in equal areas of about 60,000 hectare each, and about 7,000 hectares each devoted to citrus and truck farming. Based - 13 -

on this pattern of cultivation - on the basis of available information on improved yieldas under irrigation- tne increase in farming profit for the entire Adana plain has been calculated and' is shown in the follo-ring tabulation. In -calculating tlhe incremrnt of profit, it has been recognized that adequately wet years for some crops occur 50' of tle tin-ie and hence credit has been taken for only half the added profit in the cases of wheat and cotton.

Estimated Increase in Crop Value and in Farming Profit Iesu nTt Dr-,Trri7Fation

Increase Price Value Increase in cost Added profit Crop in yields added of production -(kg/ha) (m7Wz na) ha ((L/ha) Cotton lint 290 2.0 580 Cotton seed 325 0.2 65 Total cotton farm value, 75jOof seed and lint 480 160 320 ',heat 3Lo o'.2C 95 30 65 Sesame 420 o.6 252 100 152 Citrusfruits 2200 3.0 6600 Lo4o 2600 Truck gardens - 4500 3500 1000

Total area Added Net added Total added Crop sown profit profit profit (ha) (TL/ha) 1(million X )

Cotton 60,000 320 160 9.6 '.heat 60,000 65 32.5 2.0 Sesame 60,ooo 152 152 9.1 Citrus fruits 7,000 2600 2600 2W.2 Truck gardens 7,000 1000 1000 7.0

Total 194,000 45.9

Thus the total increasedannual profits of TL h6 h,illionindicate a return of TL 237 (;Q8h)per hectare of area cropped, or a return of TL 336 (118) per hectare of cultivableland served with irrigation. It should be pointed out that the total investmentallocated to irrigation (,31,437,000) results in a capital cost per hectare for the 144,000 hectares served of approximately¢9.218 per hectare; 'Thisinvestment seems to be iielljustified by the potential net average annual gain of 4118 per hectare rlro;ing out of irrigationuse.

The estimated increases in yields and in profit to the farmer wrill readily permit pa-,mont for irrigation service at a r%to to support all costs allocated to chis feature of the Project. The net profit to the farmer will be sufficient to encourage irrigationand will permit urgently needed

1/ From 160 kg per hectare to 450 kg per hectare of cotton lint, and from ' 297 kg per hectare to 621 kg per hectare of cotton seed, - 1L - improvements in farming methods and the modernizationof farms. The Govern- ment has established three experrment stations in the adana plain to conduct research and demonstrations for the peasants, on correct met:cds of irrigation. Additional demonstrations are being carried out in a nimber of villages on selected farms to acquaint farners vith good irrigation practices.

Electric Povrer Benefits

The area to be served by this pro3ect is short on electric power. At present electric power in the region is generatledin the three munici,al- plants of Adana, Jersinand Tarsus and in t;welveindustrial plants. In addi- tion to the electric power used, about 50 industrial establishraentsare using mechanical pov.mlr. The installed capacities serving the region total 3,171 kv of electric generating capacity and mechanical porer of the equiv:alent capacst:t of approximately 8,000 kw. Generally speaking, these simall pover plants are expensive to operate because of the high costs of fuel and because of the low mechanical efficiency resulting from the use of worn equipment.

Electric power consumed in the region in 1951 totalled 24,721,9g66&. This representedan increase in use over 1950 of approximately 14h. The increase the previous year had been 8%. These increaseshave bern realized despite undependable service, high rates, and other factors limiting the -se of electricity.

(a) Industrial Use

The industries in the Seyhan Valley and adjoining areas are prLmarily engaged in. processing and packing aZricultural r-roducts and ccnverting those products into finished goodls. The -rincipal i-ndustrial activities consist of ginning cotton, extracting and refining cotton seed oil, producing soac, spinn- ing yarn, weaving textiles, packing citrus fruits and manufactu:'ing packing case. A number of small plants are engaged in the manufacture of hard,iare, agriclulturi< implements, leather productsar.d foindry vrorkand in the repair of tractors, agri- cultural machinery and transportation vehicles. She industry of the area is to a large extent concentratedin the cities of kdana, Tarsus and .Uersinal- though a few agricultural processing plants are located in tne other sraller towns of the Seyhan Valley, such as Ceyhan and Yenice.

The present level of inrdustrialdevelopment of the area is far belo-, the desirable requirementsand there are good opportunitiesfor future exnan- sion. A logical and effective developmentof industry can begin wiiththe expansionand increase in number of plants which are processing agricultural products,spinning yarn and veaving cotton textiles. The Turkish representa- tives recognizethat new industries and expansions of existing processir1g indlustriesrequire large additional investmentsof capital, which is reportedly available in the region and country. The new agriculturaland power resources of the Seyhan valley provided by the Seyhan project and the adequate supply of labor in this area offer a strong base for futlre industrial development. On the basis of these assumptionsthe Turkish Goverrnmentestimates that industrialpower requirementsvill amount to 125 million kwh in 1965.

(b) Domestic use

At present the use of electricityin homes is largely li.wiitedto lJighting and radio operation, Furthermore,in the three urban centers of - 15 - kdana, I5ersinand Tarsus, less than one th-rd of the houses are wfiredfor electricity.

ULiost of the cormunities in the Sevhan Valley power market area, with the exception of these centers, consist of small tovms, large and sm-iallvillages, and farms. The high tension transmissionline leading from Adana to ;hersin wrill run near important agricultural trading centers, -hose combi^ed population represents about 40'of the population of the area. In these rural &re-s, only- kerosene lamps are used for illumination purposes and considering that one kv4h of energy in the form of lighting as produced by a kerosene lam-pcosts about 0.90 TL, considerable shift to electric power in the rural districtsis predicted.

The Turkish Goverrment predicts that the average consumrtion of electricity will increase to an average of 70 k;h per capita per year for residential use in urban centers by 1965, a figure comparable to present ccn- sumption in Istanbul and Ankara. This consumption vrould amount, n-ith a total estimated urban population of 30L,000 in the area in 1965, to 21,300,0O kv-h of electricalenergy per year, not including the possible rural corsumption.

(c) Governmental and Municipal use

Little electric powier is nowr used for vrater su-,ly,% r9oses, and practically none is used for sanitary installations. On tho sthV2r hand, hygienic requirements together irith the fact that ve,, .igh tz-nr-r. Vures prevail during summers, make desirable a much higher consumption o; vater than is at present consumed in this area, which will considerably i ncrease the pumping requirements of urban centers. Street lighting is also inadequate at the present time, and should appreciably increase if a dependable and reason- ably cheap power supply were available. Included in the requirements for governmental use are the requirements of the new port facilities at Lersin and for the newwairfields now under construction in the area.

Viithall factors considered,it is estinated that municipal and government uses in 1965 will constitute, including the lighting of government and municipal buildings, street lighting and the use of power for pumping stations, about 5, of the total use of electricity,and will aqcount for approximately7,8202000 kvih.

Based on the foregoing assumptionsand forecasts,povwer use in the region would reach 154,000,000 kwh in l965, as follows: -16 -

Probable Power Requirementin 1965 _~~~~~~~~~~~~

1. Industrialuse Cotton ginning 20,000,00 Cotton textile manufacturing 6o Seed oil processing 20,000,000 Food canning, refrigeration,and other related small industries 8,0co,ooo Cement manufacture 12,000,000 Small auxiliary industries such as foundries,repair shops etc. 4,880,000

Sub-total 124,630,000

2. Domestic use 21,300,000

3. Governmentaland municipal uses, in- cluding street lighting and pumping 7,820po00

Total 154,000,000 when distributionlosses are taken into account, gross generation of approxi- mately 164 million kwh would be required to serve the above requirements. This compares lith a potential annual power production available from the frojectof approximately200 million kic:hfrom two generatorsand of ultirately 284 million kwh when the third generator is added. The forecast of pover con- sumption has been tabulated for the period 1951 through 1965 and is attached as Table I of the appendices of this report.

The anticipatedbenefits to the area from irrigationand power may not develop as rapidly as predicted. Certainly a rise in ircomeand in the standard of living wvillneed to precede increaseddomestic po;er use to the extent contemplated. The industrial and agriculturalexpansion foreseen in- evitably wtould be accorpanied by a rise in income, which wold facilitate the purchase of appliances. it is recognized that the forecastso-f 2owuer use are optimistic. But even if the estimates of use are not achieved to the degree or by the time anticipated,the validity of the Projectwould not be seriously affected, for their ultimate realizationmay be expected particularlyif a con- structive and diligent educational campaign is conducted to acquaint prospective users with potential benefits.

X. Revenues, Expenses, and Net Earnings

Revenues fram the Project will accrue from sales of electric power and irrigationvwater. The Cukurova PoFwerUtility Compang wiill operate the power facilities as a private enterprise, and besides carrying its operating costs and debt service, vrillreturn a profit to the stoc!holders. The State 'iater 'iorks Administration will operate the irrigation facilities on a brepl"- even basis, with rates fixed annually to cover expenses, including foreign debt service. Interest on local currency expenditures is not included as an expense. The flood control works w7ill be operated by the State 1,7ater '.orks Administration as an expense of the Government . -17 -

Povrer Revenues

The averag,e vrholesale rates to be charged for pcw-nr r1uring the first ten years of operation have been estirzated as follows:

Expected Average ,nholesale Fates for Seyhan Powrer

Year Rate TL/kwvh Equivalent cents/kwh

1956 0.08 2 -6 1957 0.075 2.45 195,8 0.075 2.45 19,59 0.070 2.45 1960o 0.070 2.45 196,1 0.060 2.1 1962 0.060 2.1 1963 0oo50 1.75 106h 0.050 1.75 1965 0.050 1,75

The above rates compare with the oresent cost of production per kw-;h in the Adana, Uersin and Tarsus miunicipalplants of TL 0.131, 'L0.185, and TL 0.261 (or h.59, 6.4S and 9.14 cents) respectively. The average retail price of electric power in the Adana plain in 1951, including taxes, -wrasTL 0.20 (7 cents) per lkwh, and even at that high rate the demand exceeded the supply.-

Irrigation Revenues

The bill creating the sitate ';ater i.orks Administration establishes the policy to be follo;r'ed in fixing annual rates for irrir-tion service and for provision of debt service payment. The rates vary for t'neperiod of construction, the neriod of initial operation wvhlchis not tv exceed the next following ten years, and for the period of full operation thereafter. Funds advanced by the Goverment for construction of the irrigation features of the project vrillnot bear interest but till be repaid to the Treasury in the period of full operation. R.epayment vrillbe made in 35 equal annuai. installments be- ginning not later than 10 years after completion of the irrigation facilities, estimated for 1961.

1/ The present retail electric rato structure and per capits consurpftior.in the Adana plain is as follows; Adana Mersir Tarsus TL Cents TL C.nts L Cents

Domestic rate, kwrh 0.30 10.5 0oh0o 1.0 0.35 12.25 Industrialrate, kwh 0.16 5.6 0.23 5.1 0.175 6.13 Street lighting, kwh 0.16 5.6 0.255 8.9 0.175 6.13 Annual average consumption per capita, kwh 87 40 18 - 18 -

Tent

Based upon the foregoingprinciples the idinistryof Public Viorks estimates that charges for irrigationwater will be appro,tdmatelyas followis:

Proposed Average irrigation Rates

Year TL per hectare Equivalent US4 per acre

19516 1T.0 2.57 1957 18.5 2.64 1958 22.5 3.22 19,59 22.5 3.22 1960 25.0 3.57 1961 25.o 3.57 1962 25.0 3.57 1963 25.0 3.57 1964 25.0 3.57 1965 25.0 3. 57 1966 and thereafter 32.4 4.63

These rates will be somewhat higher, on the average, than those prevailing in Turkey at the present time. The prevailingirrigation rates nowiin effect are as follows:

TL per hectare Irrigated land use

Uheat 10.00 3.9%7 Cotton 15.00 69.7% Truck 45.00 13.2% Citrus 25.00 13.2%

100 .0%

The weighted average present rate based on the above crop rates and the irrigatedland use is TL 20.1 (.v2.87)per hectare. The Talrkishofficials believe that farmerswill readily pay the anticipatedrates in vievwof tho availabilityof an adequate and dependablesupply of irrigationwater. Certainlythis can be accepted if it is assumed that agriculturalprices will retain a good relative position.

It seems likely that the irrigationcharges predicted by the Government on the basis of preliminaryestirates of the cost of construc- tion of the ,?roject l-illbe somerwhat inadequate to meet maintcnance and opera- tion charges and vrill need to be slightly increased as indicated on page 20~ Since the operation is set up by law on a break-even basis, a variation in rates wrlll not affect other features of the multipurpose .roject. - 19 -

Flood Control

Flood protection vworks are undertaken by the Government as a public service and capital costs allocated to this function of thel;rojectare not subject to repayment from direct revenues. No direct revenues will derive from flood control services and all expenses of flood control features of the Seyhan -Projectv,ill be borne by the Government.

COperationand :.aintenanceCosts

The working capital for the operation and maintenance of the irriga- tion and flood control features of the Seyhan Project vwillbe secured from the National Budget by the State .aterluorks Administration as provided.in the Blill. Operation and maintenance costs of power facilitieswill be paid from revenues of the Cukurova Power Utility Company.

The operation,maintenance, and administrativecosts of the various features of the Project have been estimatedas follows;

i. Dam and reservoir: Annual operation and maintenance cost of dam is estimated at about 0.5X0of its cost or approximately "126,000. This expense is allocated equally to flood control, powrer and irriZ.-tJone

ii. Power features; Annual operationand maintenunce ccst of the power house, transmissionlines and substations,includin, a`ministrative and general expenses of the Cukurova Power Utility Company (on the basis of an organizationchart and materials budget furnishedby the Government),is esti- mated at 4'357,000(approximately TL 1,000,000) at the beginning of operation in 1956. For the followingyears a 5%annual increase vwasassumed. Thus for the first ten years the annual average operationand maintenancecosts of the exclusivelypower features amount to approximately$449.,000.

±i4. Irrigationfeatures: Annual operation and maintenancecost of the irrigation systm is based on tho cxperiencn in maintaining .xisstingsystr-ms i.nTurkey. Present costs approximateTL 10 per hectare (.il.42per acre)..

iv. Flood control features: Annual operationand maintenance cost o, flood control features is estimated at approximately 2% of the construction cost or $100,000.

Based on the foregoing computations the summary of annual opera- tion and maintenance costs is as follows: - 20 -

EstimatedOperation and llaintenanceCosts (in US3dollars or equivalent)

L1956 ,Xvorage1956-65

Po'ier features

Dam and reservoir 42,000 42,000 Power facilities 357,000 Lh9,Coo

Sub Total 399,000 491,000

Irrigation features

Dam and reservoir 42,000 42,000 Irrigation facilities 74,000 311,000

Sub Total 116,000 353,000

Flood control features

Dam and reservoir L2,000 O2,000 Levees 100,000 100,000

Sub Total 1L2,000 142,000

Grand Total 657,o00 986,000

Tables II and III attached as ap,Dendicesrespectively shovw tr.e income and expense and net revenue estimatesfor the power and irrigation operations. Table II indicates that the Cukurova PowferUtilityiv Cor any, under its license, from the outset can be expected to meet all o)er.utingexpenses, payments to the Government for water rights and taxes and, in aClddition,accrue a substantialannual net profit. The Government will slare in t!ese net profits, as a receiver of l/30ths of the capital stock of the ccm;any, o.. corporation taxes amounting to 10%O,of net profits and of inc)Jmetax to the extent of 15% of dividends distributed to private shareholders.

Table III presents an expense and income'statement of the irriga- tion portion of the multipurpose rroject. Incone in the table io based on the scale of irrigation rates quoted in this report. The proposed law governing the irrigation-operations specifies that rates salal be fixed arLnuall'- to..-yield revenues sufficient to enable the operations to approximate, on the average, a break eTen level. Annual charges for irrigation -w-ill be as5essed on the basis of land and crops serviced, irrespective of annual wrater use. The annual collectionsvill not depend on the dryness of the season and therefore vwill not fluctuate as between wet and dry years. Basel on tIhe areas ascumei to be serviced, the Table indicates a gross income for the ten -,ears 1956-65 in- clusive of '7,444L,000and an accumulated net deficit of $392,000d thereby ,ndica ing that rates would need to average about 5% higher than those assumed if the operationis to break even by 1965.

Table IV presents the cost of the multipurpose'project to the Government and shovrs the estimated annual amounts of the subsidy to be met - 21 - by the Treasury. In this Table the net costs, or profits, from the flood control, irrigation and pov:er operations are shown in sum,mary. In the powver operations, credit is taken for direct payments by the Cukurova Povwer Utility Comupanyfor water rights, for the Goverument'sshare of its net earnings and for taxes. The annual debt service expense of the Treasury for the foreign exchange component of the po;;erand flood control investmentsis included as erp-nse, as are the operation and maintenance costs of flood control services. 1'jhileit may be debatable, interest assumed at 5% on the local funds invested in flood control, power (except the private equity) and irrigaticn facil-ties is showvn as a Treasury expense although it is recognized that these capital costs, at least in part, may be met from current taxes. No credit is sh'om as income to the Treasury for tax income resulting from increared property values at-tributableto irrigation and flood control, or for other increasedtax receipts attributableto beneficial developmentsresulting from the project. Colum-n(7)of the table therefore purports to show the annual burden on the Government to make the developmentpossible and to operate and maintain it.

Table V represents an effort to compare the annual costs incurred as a result of the existence of the iroject wiiththe direct benefits expected to derive from the Project. As in Table IV, there appears no basis for cal- culating the indirect benefits from the use of the povwerin the region, nor for calculatingthe cost of obtaining such benefits. Nonethelessthe calcula- tions made in the Table would seem to yield a conservativeestimate of the direct economic benefits obtained, Given these limitations,Table V indicates that the net excess of benefits over costs would be approximately$11 million upon completion of the irrigation system in 1961 and would rise to approximately -$17million by 1965, and indicates the worthwhilenessof the Project to the economy of the country.

XI. Recommendations

From a technical and business viewpoint the proposed Project seems apzropriate for Bank financing. Howevery appraisal of the Project indicates that the following conditions should be required of the Turkish V`overnzentif the Bank decides to grant a loan for the Project.

1. That the consulting engineer engaged by the Borrower to orepare plans and specificationsand to supervise the constructionof the Project, and the scope of the duties which he is to perform be satisfactoryto the 3ank;

2. That the quali,icationsfor the principal contractorsbe satis- factory to the Bank as a prerequisitefor participationin internationalbidding and

3. That, although construction schedules are now set up for a four yea,r construction Deriod for the Project, the Turkish Government should make its best efforts to invite alternate bids for completion in a shorter pertod in order to test the feasibility and economy of a shorter construction schedule.

Neil Bass

April 28, 1952 FSTIDAAT-FPET,RCTRTC PCOWER COWSD1P7rCRl= SGYHkN POTWSERDISTRIDUTION ARr-A 1/ (in thousanls of kwh)

Power supuliedc Potwer Produced and Con- Seyhan Power Net Total Total of Electrical to Industrial sumed by Industries Supnlied dir- Electrical and 14echanical .ower Government Users by Mounici- Mechanical e.ctly to Indus- Power Produced to serve Dcmestic & Municipal Street pal Powzer Plants Electric kwh tries using Consumption area Year Use Buildings Lighting Pow%r _suivalent ever 5C0 kw (1t 25 (3) _ ~~~ ~~(4) ()(6) (7W _ 9_(C i946 1,321 286 386 5,730 9,549 17,272 - 1947 1,710 284 497 5,316 10,682 * 18,489 1948 1,767 293 568 4,429 11,161 13,890 18,217 * 1949 1,930 730 674 5,755 11,018 * 20,1C9 * 1950. 2,613 380 801 6,902 11,030 21,727 * 1951 3,263 392 839 6,128 14,100 14,400 24,722 40,716 1952 3,769 426 880 6,766 15,900 16,260 27,741 L45,760O 1953 4,300 458 930 7,468 17,144 17,200 30,300 49,5 ;l, 1954 4,875 490 980 8,287 21,179. 15,200 35,811 53,279 1955 5,410 522 1,040 9.225 23,803 15,000 40,0CO 57, (3 1956 6,100 565 1,110 16,695 16,000 lt633C 44,0C0 63,530 1957 7,070 621 1,200 28,975 10,234 16,900 54,766 69,534 1958 8,480o 710 1,370 36,060 3,900 17,48C 64,100 73,48C 1959 10,050 802 1,550 43,580 18,C18 74,000 80,618 1960 11,920 912 1,770 46,500 19,898 81,C00 87,898 1961 13,970 1,034 1,950 48,430 25,616 91,000 98,516 1962 .16,080 1,256 2,080 51,765 31,819 103,000 111,019 1963 17,910 1,378 2,180 54,630 41,902 118,000 126,502 i.964 19,680 1,509 2,290 .56,845 54,676 135,000 143,976 1965 21,300 1,620 2,400 60,40o .68,280 154,000 163,780

' Data not available,

/ During 1951 tc 1955 inclusive estimates are based on production of existing municipal and industrial plants. From 1956 to 1958 inclusive, power requirements are met by Seyhan plant, municipal generation ceases, and change-over from mechanical to electric pcwer by industries gradually takes place. After 1959 total power requirements are supplied by Seyhan dam,

2/ Entire production assumed to be electrical after 1958. Total prcduction includes estimated transmission losses. TABLE II CtT]RCUVAPOJWER _TIITY CCM.AXY

ESTDIAATWSOF RFV-1JUE AID OP.4:R iTLG EPXTiSES (in thousands of US dollars)

Power Net Revenue Legal Sales Operation Income Special b-fore taxes, Reserve Net kwh Main. & Replacement Water Total less Reserve reserves & Cornoration and Earnings Year (Oco) Income Admin, Reserve Rights Expenses Rxpenses Fund bonuses Taxes Bonuses (1) (2) (-) .() (s) (6) (7) (8) (9) (lj. (11) (12) (1,)

1956 47,530 1,346 357 177 252 7866 56o 223 337 34 30 273 1957 59,300 1,575 375 17? 315 867 7C8 223 485 49 44 392 1958 69,58o 1,847 394 177 369 940 907 223 684 68 62 554 1959 80,618 1,998 413 177 428 1,018 980 223 757 76 63 613 196C 87.893 2,178 434 177 467 1,C78 1,1°° 223 877 88 79 710 1961 98,516 2,092 456 177 523 1,156 936 223 713 71 64 578 1962 111,019 2,359 478 177 589 1,744 1,015 223 792 79 71 642 1963 126,502 2,239 502 177 672 1,351 888 223 665 67 6o 538 1964 143,976 2,548 527 177 764 1,468 1,080 223 857 86 77 694 1965 163,780 2,899 554 177 870 1,601 1,298 223 1,C75 108 97 870

(4) Based on estimates for administrative organization, lsbor and materials; increases 5,-,each year.

(5) Investment of $11,658,000 on sinking fund basis: power house investment of $1,342,000 at 50-year life; other facilities of 910,316,000 at 30-year life = $176,697.

(9) Equal installmnents of company capital over 45 year period under license of 49 years, 14/30 of this fund to be transferred to the Government not later than the termination of license.

(11) 10)k tax on net operating revenue as provided by Turkish law.

(12) 5o of net profit must be held as a reserve in government bonds; the 'crrmercialCode and Statutes of the company provide for annual bonus to directors and staff, estimated here at 5>. TABILEIII IRRIGATIO11PHASE OF PROJECT E_-1COi, AND OPr .RiT rjG E'';P1SE! (in thousands of US dollars)

Gross Area Net Area Repayments to Operation by Debt Service Treasury of local Maintenance Accumulated provided with serviced Aetdeficit or distribution irrigation on Foreign currency invest- and Admin. Total Income surp)lus (hectares) Exchange ment costs zxpenses Income Year (hectares) (7) (8) (9) (IC) (1) (2) (3) (4) (5) (6) 553 134 - 419 - 419 1956 57,600 21,000 437 116 623 264 - 359 - 778 1957 72,000 40,300 437 186 - 208 _ 986 86,400 60,500 437 256 693 485 1958 642 - 122 1,108 1959 115,200 80,600 437 327 764 803 j 3 -1,105 1960 129,600 9O,700 437 363 800 847 i 29 - 1,076 1961 144,00O 95,800 437 - 381 818 956 95 - 981 144,000 108,000 437 - 424 861 2 1962 1,019 1132 - 849 1963 144,000 115,200 437 - 450 887 t 2C9 - 640 144,000 129,600 437 _ 5C1 938 1,147 7 1964 1,211 2482 - 392 1965 144,000 136,800 437 526 963

(3) About 95p of the gross area provided with distribution ultimately will be serviced as croplands. 4-3/4%o interest for 21 yen.rs, annual payments equal $437,460. (4) Foreign exchange of Stage II chargeable to irrigation is $5,773,192; on basis of for irrigation portion of Project will be repaid in 35 equal (5) Under terms of government bill, repayments to the Treasury of local funds advanced rate being increased if necessary to provide annual installments beginning not later than 10 years after completion in 1961, the irrigation for repayment. No repayment is assumed in the period 1956 to 1965. foreign loan and operation and maintenance costs (8) (9) (10) '.ater rates are to be computed annually between 1956 and 1965 to pay debt service on on an apnroximate break-even basis. See page 20 of text. TAB3LE,IV

COST OF MiULTIPURPOS' PPOJFCT TO T-, GOV MNEflT (in thousands of US dollars)

Year Treasury Outlay Let Returns Yet Returns Net Cost to Iv:uted Gross Subsidy for Nleod Control from Irrigation from Power the Treasury Interczt the Government (2) (3) ..... (4) ___6)

1956 - 575 -419 - 541 - 1,539 _ 868 - 2,4C7 1957 - 579 - 359 - 399 - 1,337 - 980 - 2,317 1958 -579 -208 - 239 - 1,o26 -1,C93 - 2,119 1959 -579 - 122 - 140 - 841 -1,205 - 2,046 1960 -579 4 3 - 3? - 613 -1,318 - 1,931 1961 -579 4 29 - 69 - 619 - 1,430 - 2,C49 1962 -579 4 95 4 39 - 445 - 1,430 - 1,875 1963 -579 ./132 4 55 - 392 _ 1,430 - 1,882 1964 - 579 ./209 4229 - 141 - 1,430 - 1,571 1965 - 579 4248 4 47? f l,l - 1,430 - ,,289

(S437,000). (2) Operation and maintenance cost ($142,000) plius debt service on foreign loan on 1/3 dam structure

(3) Taken from Table III, column (9). Irri-,aticn service ultim,rately% becomes a Eres-!-even crpertion.

(4) Receipts from water rights. plus taxes, plus GovernmentFsJ413O share of net earnings and of special reserves, less maintenance cost of 1/3 dam and less debt service on portion of foreign loan allocated to power,

(5) Sum of columns (2), (3) and (4).

(6) 50 interest on the total of local funds invested in -reroject except the TI 14 million of private capital. an (7) Beginning not later than 1971 (probably in 1966) the subsidy by the Government will be reduced annually by amount of $730,256 for 35 years, by repayments of local currency investment in irrigation facilities, TA:BLE V

EC0N5011CB0IM'FITS 0' JLULTIPURJPCIO?PROJECT (in thousands of US dollars) Actual Value Flood Increa7ed Operation Operation Operation Cperation Service -nl of Control Valuo of Total ar.d and and and on Lrntutedc Power Savings Crops Value Maintenance Mnintenance Maintenance Maintenance Foreign Interest Year Sold Dam Levees Irrigation of Power Loan zn 1ccal Totel 'et Canals Facilities 0urroncy Costs Inves tnent -W) (2) _0) (4) (S) (6) (7) 8 (9) (ic) (11) (1?) (1:1 )

1956 1,346 2,772 2,478 6,596 126 100 74 357 1,909 1,115 3,681 2,955 1957 1,575 2,772 4,758 8,925 126 100 144 375 1,909 1,227 3,881 5,C-.4 1958 1,847 2,772 7,137 li,,s6 126 100 214 394 1,909 1,340 4,083 7,673 1959 1,998 2,772 9,516 14,286 126 100 285 413 1,909 1,452 4,285 10,C1 1960 2,178 2,772 10,705 15,655 126 100 321 434 1,9C9 1,565 4,455 I1,2CG 1961 2,092 2,772 11,300 16,164 126 100 339 456 1,9C9 1,677 4,607 11,53? 1962 2,359 2,772 12,834 17,965 126 100 382 .478 1,909 1,677 4,672 1X?93 1963 2,239 2,772 13,594 18,605 126 100 4C8 502 1,9C9 1,67? 4,727 1D,8U3 1964 2,548 2,772 15,222 20,542 126 100 459 5?7 1,909 1,677 4,798 15, 44 1965 2,899 2,772 16,142 21,813 126 100 484 554 1,909 1,677 4,850 14,963

(2) Gross wholesale income.

(3) See pageos 11 and 12 of text for method of estimating flood control benefits.

(4) lased on area actually irrigated by years. *Peneits lbased on -Tr lu.tion on rages 12.4 of text,

(11) Includes interest on private capital in Cukurova Power Utility Comnany. EXIS rTNA/6 // MOU*1iNTAIN / MOUNTAINS ~~~~~~~~~~~SEYHANRIVER DAM LAND SUBJECTTO OVERFLOW RIVERS IRRIGATIONSYSTEM ..... DRAINAGESYSTEM LEVEES...... COLLECTIONCANALS

------IRRIGATIONA A SYSTEM DRAINAGE SYSTEM/

MERSIN~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

II V i' MILES

MERSIN C K \ >OMETERS

ADN VALE IRRI /ATIONSYSTEM