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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 15413 IMPLEMENTATIONCOMPLETION REPORT SRI LANKA Public Disclosure Authorized POWER DISTRIBUTION AND TRANSMISSION PROJECT (Credit 1933-CE) Public Disclosure Authorized March 18, 1996 Energy and Project Finance Division Public Disclosure Authorized Country Department I South Asia Region This document has 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. CURRENCY EQUIVALENTS Currency Unit = SL Rupees (SLRs) Appraisal year 1988 :US$1 = SLRs 32.0 Intervening year 1991 US$1 = SLRs 40.1 Completion year 1994 US$1 = SLRs 50.4 MEASURES AND EQUIVALENTS 1 kilometer (km) = 0.6214 miles (mi) 1 meter (m) = 39.37 inches (in) 1 kilovolt (kV) = 1,000 volts (v) 1 megawatt (MW) = 1,000 kilowatts (kW) = 1,000,000 watts 1 gigawatt hour (GWh) = 1,000,000 kilowatt hours (kWh) I MVA = 1,000 kilovolt amperes I MVAR = 1,000 kilovolt amperes reactive ABBREVIATIONS AND ACRONYMS CEB - Ceylon Electricity Board EIRR - Economic Internal Rate of Return GOSL - Government of Sri Lanka GTZ - Gesellschaft fuir Technische Zusammenarbeit ICR - Implementation Completion Report IDA - International Development Association KGMP - Kalu Ganga Multipurpose Project LECO - Lanka Electricity Company Limited OECF - Overseas Economic Cooperation Fund of Japan ROR - Rate of Return SAR - Staff Appraisal Report SCADA - Supervisory Control and Data Acquisition UNDP - United Nations Development Programme wtp - willingness to pay FISCAL YEAR January 1 - December 31 FOR OFFICIALUSE ONLY IMPLEMENTATION COMPLETION REPORT SRI LANKA POWER DISTRIBUTION AND TRANSMISSION PROJECT (Credit 1933-CE) Table of Contents Page No. PREFACE EVALUATION SUMMARY . ........................................ i PART I PROJECT IMPLEMENTATION ASSESSMENT .................... 1 Project Identity and Background . ........................................ 1 A. Statement/Evaluation of Objectives. 2 Project Objectives. 2 Project Description. 2 B. Achievement of Objectives. 3 Macroeconomic Policies. 3 Sectoral Policies. 3 Financial Objectives. 4 Institutional Development Objectives. 5 Physical Objectives. 5 Economic Analysis. 5 C. Major Factors Affecting the Project. 5 Factors not generally subject to Government Control. 5 Factors generally subject to Government Control. 6 Factors generally subject to Implementing Agency Control. 6 Project Costs and Financing. 6 Project Implementation. 7 Environentv. 7 D. Project Sustainability ................. 7 E. IDA's Performance. 7 Project Identification. 7 Project Preparation. 8 Project Appraisal. 8 Project Supervision. 8 Thisdocument has a restricteddistribution and may be usedby recipients only in theperformance of their officialduties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization. F. Performance of Borrower and Beneficiary ......... ..................... 9 Project Identification, Preparation and Appraisal .9....... 9 Project Implementation .9.......................... ....... 9 G. Assessment of Outcome .......................................... 9 H. Future Operation ........................................... 9 I. Key Lessons Learned .......................................... 10 PART II STATISTICAL ANNEXES .. 11 Table 1: Summary of Assessments ................................. 11 Table 2: Related Bank Loan and Credits ................. 12 Table 3: Project Timetable ..................................... 13 Table 4: Credit Disbursements: Cumulative Estimated and Actual .13 Table 5A: Key Indicators for Project Implementation - Distribution Works .14 Table 5B: Key Indicators for Project Implementation - Transmission Works .15 Table 6: Key Indicators for Project Operation .16 Table 7: Studies Included in Project .17 Table 8A: Project Costs .18 Table 8B: Project Financing ..................................... 18 Table 9: Economic Costs and Benefits . ............................. 19 Table 10: Status of Legal Covenants ................................ 20 Table 11: Compliance with Operational Manual Statements ..... ............ 23 Table 12: Bank Resources: Staff Inputs . ............................. 23 Table 13 Bank Resources: Missions ................................ 24 Appendices: A. Missions's Aide Memoire (September 27 - October 13, 1995) with Operational Plan . 25 B. Borrower's Evaluation .................................... 34 C. Ceylon Electricity Board's Financial Statements ......... ................ 44 D. Economic Internal Rate of Return .................................. 47 E. Changes in Project Scope .................................... 48 F. Local Authority Electricity Schemes Taken . ............................ 50 Map IBRD No. 27602 IMPLEMENTATIONCOMPLETION REPORT SRI LANKA POWER DISTRIBUTIONAND TRANSMISSIONPROJECT (Credit 1933-CE) Preface This is the ImplementationCompletion Report (ICR) for the Power Distributionand TransmissionProject in Sri Lanka for whichCr. 1933-CEin the amount of SDR 29.2 million (US$40.5 million equivalent)was approved on June 23, 1988. The Credit was closed on December31, 1994, as originally scheduled. Final disbursement took place on July 6, 1995, at which time a balance of SDR 15.5 million (US$21.5 million equivalent)was cancelled. Cofinancingof US$31.0 million was provided by the Overseas EconomicCooperation Fund of Japan (OECF). The ICR was prepared by Messrs. Somin Mukherji, Financial Analyst, and Mohinder Manrai, Consultant(Power Engineer), Energy and Project Finance Division, Country DepartmentI of the South Asia RegionalOffice. It has been reviewed by Messrs. Per Ljung, Chief, Energy and Project Finance Divisionand FakhruddinAhmed, Project Adviser, Country Department I. Preparation of this ICR began just before IDA's completion mission (September27 to October 13, 1995.) It is based on material in the Project file. The Borrower contributedto preparation of the ICR by preparing its own evaluationof the Project's execution; its commentson the draft ICR will be invited. OECF joined the completionmission and although they were invitedto commenton the draft ICR, no commentswere received to date. However, because the componentswhich OECF financedare now scheduled for completion by July 1997, a separate evaluation for inclusion in this ICR is not expected. IMPLEMENTATIONCOMPLETION REPORT SRI LANKA POWER DISTRIBUTIONAND TRANSMISSIONPROJECT (Credit 1933-CE) Evaluation Summary Introduction The Bank Group's involvementwith Sri Lanka's power sub-sectorbegan in 1954 when a loan (Ln. 101-CE) was made to the Government of Sri Lanka (GOSL) for the expansion of an Aberdeen-Laksapanahydroelectric scheme. Since then the Bank Group, through ten additional loans/credits, has been actively involved in providing resources needed for the developmentof the sub- sector in terms of capacity to meet demand at least cost, to improve the quality and reliability of supply and to encourageinstitutional reforms. The Project (made effective in 1988) was the tenth in the sector and is followedby one ongoing project. Prior to 1988, the Ceylon Electricity Board (CEB) was responsiblefor about 75% of the total electricity sales in Sri Lanka; the sale of the balance 25% was carried out by Lanka Electricity Company Limited and 212 licensees (Local Authorities). This fragmentation of responsibility for distribution was recognized as a major impedimentto the efficient operation and development of the power sub-sector. Under the NinthPower Project (Cr. 1736-CE),GOSL/CEB agreed to prepare a master plan for the developmentof distributionsystems; the master plan includedboth institutionalrequirements to rehabilitatethe systemsand appropriateorganizational/institutional reforms (para. 7). Consultantswere appointed in October 1987, and based on their recommendations,GOSL adopted an action plan to take over all the licenseesin a phased manner. In the initial phase, the plan includedCEB's taking over 133 licensees, which was financedunder this Project, and Lanka Electricity Company Limited taking over 23 licensees,which was financedby the Asian DevelopmentBank (ADB). The remaining56 licensees are being taken over by CEBunder the ongoingSecond Power Distributionand TransmissionProject (Cr. 2297-CE). Objectives The principalobjectives of the Project were to: rationalizethe organizationof the power distribution system; rehabilitate and expand the distribution systems managedby the licensees; reduce systems losses and improve the quality of electricity supply; implementCEB's least-cost transmission expansion program; strengthen CEB institutionallythrough the corporate-widecomputerization of its billing system; train staff in computerized accounts and engineering; improve CEB's financial performanceby reducing accounts receivablefrom licensees; and assist in the optimal developmentof the KaluGanga basin's land and water resources. The objectiveswere clear, realistic and consistentwith IDA's and GOSL's strategy for the power sub-sector (paras. 3 and 4). ImplementationExperience and Results The Project substantiallyachieved its major objectives and its overall assessmentwas satisfactory(para. 32). The sectoral(para. 8) and institutionalobjectives (para. 12) were met adequately and, on completion, the physical objectives will be met satisfactorilyas well (para. 13). Through the handing over of licensees' distribution systems to CEB, the organizationof the power sector has been -ii- rationalized. Subsequently, necessary investments were made
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