Documentof TheWorld Bank

FOR OFFICIALUSE ONLY Public Disclosure Authorized

ReportNo. 9492

PROJECT COMPLETIONREPORT

COTE D'IVOIRE Public Disclosure Authorized FIRST POWER PROJECT (LOAN 1896-IVC)

A2RIL 12, 1491 Public Disclosure Authorized

Industry and Energy OperationsDivision

Public Disclosure Authorized Country Department I Africa Regional Office

This documenthas a restricteddistribution and may be used by recipientsonly in theperformance of their official duties. Its contents may not otherwise be disclosedwithout World Bank authorization. LIST OF ABBREVIATIONS

CIDA Canadian InternationalDevelopment Agency EDC Export DevelopmentCorporation EECI Energie Electrique de la Cote d'Ivoire ESAL Energy Sector Adjustment Loan KfW Kreditanstalt fur Wiederaufbau TH WORLDiANxg FOROFFICIAL USE ONLY wWsW,fon.0 C. 20433 VS A o01tuQaf DirLetowg-OGMT. Opetwatls balsagla

April 12, 1991

MEMORANDUMTO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on Cote d'Ivoire First Power Prolect (Loan 1826-IV9)

Attached, for information, is a copy of a report entitled "Projecc Completion Report on Cote d'Ivoire - First Power Project (Loan 1896-IVC)" prepared by the Africa Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time.

Attachment

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Table of Contents

Page No.

Preface...... i Evaluation Summary...... ii

PART I: PROJECT REVlEW FROM THE BANK'S PERSPECTIVE

1. Project Identity...... 1 2. Background...... 1 3. Project Objectivesand Description . .. 2 4. Project Lesign and Organization ... 3 5. Project Implementation . . . 4 6. Project Results...... 7 7. Project Sustainability . . . 8 8. Bank Performance...... 9 9. Borrower Performance ... 10 10. Project Relationship . . . 11 11. Coneulting Services . . . 12 12. Project Documentationand Data ... 13

PART III STATISTICAL INFORMATION

1. Related Bank Loans ...... 15 2. Project Timetable ...... 16 3. Loan Disbursements ...... 17 4. Project Implementation ...... 18 5. Project Costs and Financing ...... 19 6. Project Results ...... 21 7. Status of Covenants ...... 23 8. Missions ...... 24

ANNEXES

Annex 1 Project Descriptionas Appraised...... 25 Annex 2 Changes in Size of Project Components . . . 27 Annex 3 The Man Spider Network ...... 29 Annex 4 Economic Aspects for the area of the Man Spider Network ...... 34 Annex 5 EECI Financial Statements ...... 36

This document has a restricteddistribution and may be used by recipientsonly in the performance of their officialduties. Its contents may not otherwisebe disclosedwithout World Bank authorization. - i -

COTE D'IVOIRE FIRST POWER PROJECT (LOAN 1896-IVC)

PROJECT COMPLETION REPORT

PREFACE

This is the Project Completion Report (PCR) for the First Power Project in Cote d'Ivoire, for which Loan 1896-IVC in the amount of US$33 million was approved on July 22, 1980. The loan was closed on December 31, 1988, three years behind schedvle. It was fully disbursed, the last disbursementbeing made on March 24, 1988.

The PCR was prepared by the Industry and Energy Operation Division of the Occidental and Central Africa Department, Africa Regional Office (Preface,Evaluation Summary, Parts I and III). A letter requecting the Borrower to prepare Part II and a copy of Part I were sent to the Borrower for comments on March 22, and March 23, 1991, respectively. The Borrower sent neither Part II nor comments on Part I.

Preparationof this PCR was started during the Bank's final supervisionmission of the project in January 1990, and is based, inter alia, on the Staff Appraisal Report; the Loan, and Guarantee Agreements; supervision reports; consultants'reports; correspondencebetween Bank and Borrower; and internal Bank memoranda. X Li -

COTE D'IVOIRE FIRST POWER PROJECT (LOAN 1896-IVC)

PROJECT COMPLETIONREPORT

EVALUATION SUMMARY

1. Objectives. The objectives of the project were twofold; to extend electricity supply to the Man region of western Cote d'Ivoire, and to strengthen the Borrower as an institution. The first objective translated into a program of village electrification,originally intended to benefit 172 villages. The second included a training program to prepare senior staff of the utility to replace expatriate technicians,a maintenance shop to service heavy equipment in the country, and a set of financial and engineeringstudies.

2. !mplementationexperience. The implementationschedule slipped by two years as compared with the plans, due to unforeseeable circumstances. These included the delay by another agency in choosing the consultantwho would also manage the Bank's project, a change in design, and the financial vicissitudesof the Borrower due to the 1982-1984 drought. Once starte4, the project proceeded smoothly. The relative size of the project components changed considerablywhen it turned out that fewer villages than expected were ready for electrification. Other componentswere then increasedto make full use "f the loan resources.

3. Results. The quantitativeresults w' e affected by the recession that afflicted the country during the 19808. 104 villages received electricity service for the first time, and in 16 more the main grid replaced local diesel generators as a source. The number of new users did not grow at the pace hoped for, among other reasons because of the high price of electricity compared with the dispcsableincome in the villages, see section 6. Project Results. The shutdown of the local diesel stations brought cost savings to the utility, and better quality of service to the users. The training program enabled the utility to expand its Ivorian technical staff. The new maintenance facilitiesfulfilled all expectations. The studies, especially the new ones for the institutional and financial reorganization,filled a need that had become urgent as a consequence of the problems of the 19809. When the recommendationsare fully implementedthey should produce a lasting improvement.

4. Sustainability. The demand for electricityhad grown at only a moderate rate in the Man area in the five years prior to implementationof the project. The load in the newly connectedvillages has, as expected, increased rapidly during the first three years of service, but should re-ert to the normal rate for the region when most of the users that can afford it have been served. The contributionto distributioncosts by the new cust.omersshould suffice to cover the running costs of the new - iii -

extensions. It is however unlikely that any substantialportion of the investmentcosts can be amortized over the useful life of the facilities unless there is an unexpectedimprovement in the disposable income of the users.

5. Findings and lessons learned. The electrificationproject confirmed that consumers'ability to pay and cost of installationare fundamental factors for the success of the project, and should rank ahead of preoccupationwith modern design or durabilitybased on experiencein temperate climates. Further, that the staff training should emphasize design and operation of distributionfacilities in the country, rather than overseas. The institutionalstrengthening of the utility should look beyond the overall corporate level, and include improvementsat the divisoxn and department level. Middle managers should be helped to become proficient in project accounting,and cost control of the subprojects for which they are, or should be, directly responsible. This would result in more autonomy and efficiency,provided the personnel remains in post long enough to acquire the necessary experience. Corporate reorganizationsand shifts of personnel should not be encouragedunless continuity of functions can be ensured. Finally, when a substantialreallocation of funds occurs within a loan, the task of supervisionwould be simplified if all changes were recorded and explaired in a single document, particularlywhen the supervising staff has to be rotated during the life of the loan. COTE D'IVOIRE FIRST POWER PROJECT LOAN 1896-IVC

PRf ECT COMPLETIONREPORT

PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE

1. Proiect Identity

Project Name : First Power Project Loan No 1896IVC RVP Unit Africa Region Country Cote d'Ivoire Sector Energy Subsector X Power

2. Background

2.01 Policy Context: The project was conceived at the end of the 1970s, a time when the Cote d'Ivoire was at the peak of its prosperity, following a number of years of favorableearnings from agricultural exports. The governmentembarked on an ambitious program to improve the standards of living in the countryside. The road network was extended and improved, a well drilling program provided drinking water, and a rural electrificationprogram was undertaken. Health and education facilities received correspondingattention. This policy continues to be implemented to this day, albeit with a reduced scope. Ten years of depressed markets for the country's major exports, coffee and cocoa, have substantially reduced the government'scapacity to finance programs with more social than financial benefits. Neverthelessit remains an important goal to make life in the villages more Lttractiveand to slow down the influx of people to Abidjan. The capital and the southeasternpart of the country were the first to be served by an extensive electricity system. When major hydroelectricprojects were built in the central (Kossou) and western region (Buyo), the stage was set for extending the electrificationto more remote areas. Between 1975 and 1980 discussions,planning, and studies took place which crystallizedinto several financing operations.

2.02 ParticipatingAgencies: The electrificationproject financed by the Bank is part of a largcr program for the electrificationof the western and northern districts, in which official aid and export agencies from Canada (CIDA, Canadian InternationalDevelopment Agency, and EDC, Export Development Corporation)and from Germany (KfW, Kreditanstalt fur Wiederaufbau)played important roles. These agencies concentratedon extending the high voltage grid (bulk transmissionat 225 kV and 90 kV) to these areas, and each included some village electrification. In contrast, the Bank project concentratedon village electrificat'on,and on strengtheningthe power company EECI through a program of training, studies, and maintenance facilities. - 2 -

2.03 MacroeconomicClimates The softening of the export markets for the principal Ivorian products, which had begun in 1979, proved to be a long range trend, rather than the isolated occurrence the government had hoped it to be. The resultantweakening of the econcmy affected EECI in that electricitydemand grew more slowly, cash infusions from the Government could no longer be counted on, and it became harder to collect the electricitybills. To cap these problems, in 1982-1984 a drought of unexpected severity and duration shrank drasticallythe production at the hydro plants; thermal plants had to be fired up to replace the energy hortfall, and a new 90 MW gas turbine plant had to be purchased and installed. The burden of importing fuel in large quantities strained the utility's fir.ances,EECI became unable to finance its portion of the investment,and had to impose a freeze on all constructionprojects.

2.04 Eventually the electrificationprogram was restarted after the Bank agreed to cover ninety percent of the local costs, in addition to all the foreign costs, and to reallo'ate resources to cover other urgent needs. The financial problems were closely linked with those of the Government, which remain serious. Consequentlythe financialcondition of EECI, which was rocognized as an issue in 1980, has not materially improved to date. The Energy Sector Adjustment Loan of 1989 will endeavour to help redress this situation. The first tranche of ESAL was released in January 1990.

3. Project Objectives and Description

3.01 Project Objectives: The main objectives of the project were to help: (a) finance a part of EECI's 1981-1984 rural electrification program; (b) rationalizethe power sector development;and (c) strengthen EECI's operating capability (training)as well as its financial position (includingtariff re1.ated questions). The program was to bring electricity to 172 villages with a total population of 315,000, and would be accompaniedby the shutdown of 19 isolated diesel power stations.

3.02 Project Components: The project components as originally appraisedwere:

(a) Man Spider Network (Rural DistributionSystem) consisting of:

(i) the extension of the Man 90/33 kV subststion to feed the new primary distributionlines;

(ii) the supply and erection of overhead distributionlines as follows:

- approximately770 km of primary (33 kV and 19 kV) lines;

- approximately655 km of secondary (low voltage) distributionlines in the villages; and -3-

- approximately2J5 pole mounted distribution transformers;

(iii) the supply of hardware for the service drops to the final users (meters, breakers, fuses, cables); and

(iv) consulting services for engineering,preparation of bid documents,analysis of bids, and supervisionof construction.

(b) Training

The training component would include 105 man-years of overseas training for EECI's senior technical staff.

(c) Central MaintenanceWorkshop

Constructionof a central workshop, and installationof machine tools for the maintenance of heavy generationand transmission equipment.

(d) Studies

(i) Execution of studies of 1. electricity rates; 2. nationwide rural electrificationplanning; and 3. developmentof urban electricitydistribution systems; and

(ii) Updating and completionof the feasibility study of the Soubre hydro project.

A more detailed description is reported in Annex 1. The Project was to be completed by December 31, 1985.

4. Project Design and Organization

4.01 CoordinationWith Other Agencies: The project was the Bank's contributionto the overall electrificationprogram for the western and northern regions. This was complementedby components for institutional strengthening. Coordinationwith the other agencies, CIDA and EDC, was good throughout. In fact, it proved very effectivewhen, later on, the Bank stepped in to relieve the other agencies by financing the remote control equipment. To maintain good coordination,the Bank agreed that EECI engage for its project the same Canadian consulting firm that CIDA-EDC had retained. This brought with it some technical innovation in that North American practices and equipment replaced the European ones to which EECI was accustomed. The change was not felt by the residentialusers, but it affected the industrialusers, and EECI's operating staff. -4-

4.02 Scale and Tim%jg: The s.ale of the project was reasonable. While the size of the project as built, i.e., the number of villages connected, was less than what the studies had assumed, the geographic area remained unchanged. The timing or the project was appropriate but as a recession hit the country, financialproblems prevented EECI . . contributingits share, and this delayed the start of construction. As the execution time lengthened,the engineering costs increased. In the end, however, the overall investment in the electrificationproject was lower than estimated. This was due to having cut by almost half the size of the project, to having rece - lower bids from suppliers of goods and services, as well as to the favorableexchange rate of the US Dollar which peaked in 1985 against the European currencies.

4,03 In retrospect,one possible change could have been that the studies might have been mor realistic in assessing the number of villages which would be ready for connection. Attention could have been devoted to containing the cost of distributionand connection, to the ability of end users to pay for the electricity,to the economic advantages they may derive from it, and how to ensure that this could be done with the new electrical system. The switch to single phase primary distributionwas a well intentionedattempt to reduce costs, but much more effort is needed to devise an affordable system of village electrification. A closer cooperationbetween the desiFners in the consulting office and the operations staff at EECI would have been useful. Whether the macroeconomic problems and the drought of the next few years could have been anticipated in 1980, is a question that defies a simple answer.

5. Project Implementation

5.01 Variances in Implementation: The main variances between the project as planned and what was actually implementedwere: the duration of the project, which exceeded the plan by three years; the extent of the Bank's participationin the financing,which rose to include 90 percent of the local costs in addition to the foreign costs; the size of the electrificationproject, reduced to half the original size, and the addition of new components to the project. The table below shows how the allocation of funds changed from appraisal to execution: Categor) Percent of funds allocated at appraisal actual Spider network of Man: Supyly and erection 72.3 41.2 Engineering and supervision 5.2 16.2

Maintenance workshop 5.8 11.3

Training of technical staff 7.4 15.S

Studies 9.3 15.4

100.0 100.0

Note: Unallocated category is: excluded included

As the electrificationproject absorbed less funds, the proportion devoted to other categories rose to approximately3. percent from the original 22 percent. Annex 2 details the changes. It is possible that the delay in execution could have been reduced if the Bank had decided to replace EECI in the financing of local costs as soon as the first problems became manifest. The delay in selecting the consultant,and the delay introduced by changing the electrical system were outside the Bank's control. Still, the largest individualfactor of disruptionwas the drought of 1982-1984 which materiallyworsened EECI's financialcondition. This could not have been foreseen but the Bank r"acted in a timely fashion to the emergency.

5.02 Electrification: The electrificptioncomponent, referred to as the Man Spider Network, was changed substantiallyin size and in design in 1983. After a lengthy/review of the consultant'sfeasibility study, EECI decided to connect 100 villages rather than to the 243 which the consultant deemed would fit within the available budget, or the 172 the appraisal report had anticipated. At the time only these 100 villages were ready for electrificationin accordancewith EECI's existing norms, see Annex 3. The ensuing cost reduction freed part of the loan for redeployment;part went to increase the proportionof Bank financing,thus alleviatingthe financial difficultieswhich EECI faced in 1984 and the followingyears, and part financed urgent diagnosticstudies and technical assistanceto EECI in the areas of organization,accounting, financial management, and project management. The constructionof the electrificationproject began in 1985 and was completed in September °1O6,approximately two years behind the SAR schedule. The number of villages increased to 104 during implementation,and another 16 villages who already had eleetricitywere also connected.

5.03 TrAning: The training component expanded to $4.81 million, approximatelydouble what had been planned. It financed 249 man years of higher education at ESIE (the ElectricalEngineering University at Bingerville)for prospectiveEECI staff during 1980-1986. Forty-two of the - 6 - new graduates are now employed at EECI, most of them in the Operations Department. It also financed overseas bursaries for technical staff in the amount of US$0.15 million. The emphasis of the training shifted thus from the original aim of providing advanced training abroad for senior technical staff to imparting a basic engineeringeducation to high school graduates. Short term training and maintenance courses for the operators were included with the procurement of new equipmenL or machine tools.

5.04 Maintenance: The expansion of the central maintenanceworkshop into a fine and modern facility was completed satisfactorily. The 4200 m2 extension, and the installationof heavy machine tools have enabled EECI to service and repair even its largest units. Delays in procurement caused some slippage in the execution schedule, approximatelytwo years. The equipment program selected was quite extensive. The Bank contributionrose to US$2.61 from the US$1.29 million budgeted, but as the total cost of the expansion exceeded US$8 million , EECI had to seek additional financing from commercial sources.

5.05 Studies: The original study componentwas completed close to schedule and below budget. The tariff and the electrificationstudies were ready in 1981, only the last updating of the feasibilityfor Soubre slipped into 1989. The total cost of these studies, at US$1.27 million, came in comfortablybelow budget (US$2.05million).

5.06 New Components: New hardware and more studies were financed with the savings from the electrificationproject. The largest item was the remote control equipment for the five high voltage substationsfinanced by CIDA-EDC (US$1.47 million) and the down payment (US$0.26million) for the replacementof dispatchingequipment in seven substationsof EECI's high voltage system. With the Bank's approval, the equipment was purchased directly from the manufacturerwho had previously supplied all of EECI's remote control and dispatchingequipment. Other new items were line maintenance trucks, and equipment for hot line maintenance work (US$1.12 million).

5.07 Three additional engineering studieswere financed for US$0.82 million: the generationand transmissionplanning study, the Soubr6-Taabo transmissionline study, and the hydrologicalstudy of the Bandama river, later extended to include the other major rivers where EECI has hydro plants. US$2.07 million were allocated to two new studies of the institutional/financialfield: the reorganizationof the accounting system, and an overall assessmentof EECI, which eventually produced a plan of action for institutionaland financial restructuring. This will be implementedunder the ESAL.

5.08 Unforeseen Factors: The most siCnificantvariance between planning and implementationwas the reduction in size of the electrificationproject. The Bank could not easily have foreseen or recognizedthe circumstancesthat led to it, namely the steady deteriorationof EECI's financialposition and tl, too optimistic estimates by both consultants of how many villages would be connected. The wide variations of the exchange rate against the dollar, which fluctuatedfrom 211 in 1980 to 490 in 1985, to settle around the 300 level at the end of the 1980s made it difficult to forecast with accuracy how much could be procured with the loan resources. The looming financialproblems of EECI were duly identified;the Bank expected that compliancewith the financial covenants of the loan agreementwould prevent such problems. When compliancewas less than perfect, and serious problems emerged, prompt action was taken to appoint consultantsto deal with them. The Bank reacted with flexibilityto the changes in the project; and it reassigned its funds to the best advantage of the Borrower. The delay of approximatelythree years (two for the electrificationproject), while substantial,is not extraordinaryunder the circumstances. It may be argued that when in 1983 a substantialamount of money was freed for reassignment,the Bank might have reappraisedthe priorities of the Borrower before approving a series of changes, but this may not have been a realistic possibility,nor is it certain that the outcome would have been more beneficial to the Borrower. All in all it can be said that the Bank put in a creditableperformance in the execution of this project.

6. Project Results

6.01 Effect of Electrification: The results of the rural electrificationproject are much more modest than forecastedby the studies upon which the SAR relied. The number of villages connectsd to the system is 120. Of these 16 which were previouslyprovided with electricityby isolated diesel plants, are now supplied by the more reliable main EECI system, and 104 have received electricityfor the first time. The number of users has increasedby 2700 between 1985 and 1988, and of these it is es.imated that 1400 are in the newly connectedareas, while the remainder iq in areas which were already served. The increase in energy consumption is very modest, approximately2,700 thousand kWh after three years of operation. Much of the increase is for public lighting,provided free to the villages. The remainder is practicallyall residentialconsumption. The industrialload increase is insignificant.

6.02 It is generally held in Cote d'Ivoire that the benefits of rural electrification will emerge only slowly, and that a 10 year horizon should be consideredbefore substantialchanges appear. This seems reasonable both because the standard of living is at a very basic level in the villages of the Man region, and because the high cost of electricity,and of electricalgoods makes it difficult for the user to reach levels of consumption at which they can derive significantbenefits, at a time when their income suffers from the depressed prices of agriculturalproducts.

6.03 The benefits that have begun to appear are more of a social nature. Public lighting is highly appreciatedand envied by those who do not have it; the villages take pride in being able to develop a social life comparableto that of the provincialcapital of Man. The most prized appliancesare those that improve the quality of life such as radios, television sets, and refrigerators. Education benefits in an indirect way. Villages with electricity can attract teachers to their schools more easily than those without. Villagers who have moved to the large cities are more apt to return and build new and better houses for themselves and for their relations. This is reinforced by EECI's rule to give service only to more permanent homes ("batis en dur") made of cement blocks with metal roofs, excluding the traditionalhuts with mud walls and straw roofs. The technologicalenvironment will be slowly developed,as th3 availabilityof electricitywill lead to people learning how to handle installationsand appliances,not to mention the spread of irnormationthat televisionwill promote. The physical environmenthas not been affected by the distributionlines and installations. It may eventually be, when the productive uses n- 'ectricityspread and contribute to more intensive exploitationof te nd, but this is still a fair distance away. While the social benef- Arr apparent, the project is not remunerativefor EECI.

6.04 Maintet.r.ie 'iability and Training: The new maintenance shop began operations in !.viS ith the repair of large hydro and steam turbines for the utility. Betwe6n major EECI jobs the shop accepts work for outsiders. This is a valuable service to local industry. The hot line maintenance equipment and the maintenance trucks have enabled EECI to reduce the length of scheduled and unscheduledpower outages. The training program attained its objective to replace expatriateswith Ivorian personnel. It also contributedto maintaining the high quality of EECI's technical stsff.

6.05 Impact of Studies: The findings of the 1981 tariff study were duly incorporatedin the rate schedule. Now, however, it is obsolete and needs to be updated, as the expansion plan used for the marginal costs no longer applies. The conclusionsof the engineering studies are used for operations programming (rule curves for the reservoirs)and for development planning. The reorganizationof the accounting system has borne fruit. EECI's financial statements are now reliable and are produced more punctually. The technical assistance in the institutionaland financial area began slowly and will be completed by the end of 1990. The conclusionsand recommendationsof its main report issued in March 1988 call for a fundamentalrestructuring of EECI and of its relationshipwith the government. This has not yet been fully implemented,but when it is, the objectives of the project will have been met.

7. Project Sustainability

7.01 Village Electrification: The rate of return on the electrificationproject will attain 4.7 2 at full development. This percentage is calculatedwithout taking into account the savings from the closing down of the diesel generating plants since part of the rationale of building a high voltage transformer station in Man must have been to shut down the diesels in Man and nearby towns. While this rate is considerably lower than the anticipatedone in the range 11-19 Z, it is not out of line with what can be expected from an electrificationproject in a rureularea. In fact, the Man spider network (electrificationproject) can be viewed as two parts. One consists of the feeder lines that join Man with the four major and the twelve smaller villages that already had electricity. The 9-

other is the set of extensions and secondarydistribution lines to the 104 new villages. This latter part, which accounts for the major part of the investment,is unlikely to produce monetary benefits surficientto amortize the investmentduring its useful life. The calculationsare reported in Annex 4. In essence, the investmentof US$11.3 million can be expected to bring electricity to approximately8000 new users by the end of the 1990s (1400 new users had been connected by 1988); the cost per new connection is too high to be paid for by the electricity sales that can be anticipated. To serve more users, the investmentand the distributionfacilities would have to be extended. This would only help if a way is found to reduce significantlythe cost of distributionfacilities. Increasing the price of electricitywould not help as it is already high compared with the users' willingness and ability to pay. In fact both the initial and the monthly cost of electricity service are higher than in most industrialized countries. Yet the disposable income in the villages is much lower, as it depends on the prices of their cash crops. The local prices of coffee and cocoa have dropped substantiallysince 1980; the governmentsupport has been withdrawn, and the internationalprices have fallen while the exchange rate remains unchanged.

7.02 Diesel Substitution: On t'ieother hand the retirementof the four diesel generatingstations in the four major villages was quite advantageous. Replacing the diesel productionled to a large monetary saving (approximatelyUS$0.6 million) per year. The economic saving is less since a large part of the cost was representedby taxes on diesel fuel. In any case, the investmentin the lines to the four villages representsthe least cost solution for supplying the existing users. The cost of serving too few new users in the 106 newly connected villages is what makes the project difficult to sustain.

7.03 Maintenance and Training: The investment in the maintenance shop is justified by the benefit of being able to repair major equipment in the country, rather than face six or more months' delay when it has to be shipped overseas, or have to invest in spare equipment as an insurance measure. Similar considerationsapply to the other maintenance equipment. The investmentin training is inherentlydifficult to assess in terms of return. It should however be noted that its cost was high. The ESIE is an excellent engineering school but at present it operates below capacity. Therefore its rates per student are higher than at comparableuniversities in North America and Europe.

8. Bank P3rformance

8.01 Strengths and Weaknesses: The Bank's strength derived from its position and image as an impartialdevelopment agency, devoted equally to the long term developmentof the Borrower, and to the completionof the physical project. This was quite evident in this project where the Bank worked alongside a bilateral aid agency (CIDA), and a commercial export agency (EDC). The Borrower was greatly helped by the Bank's flexibility in reassigning resources;this stands in stark contrast with the attitude of a group of commercialbanks who withdrew from the project in 1984. - 10 -

Protractednegotiations to replace their share contributedto delay construction. The Bank's insistence on internatioiialpublic tenders helped control procurement costs both for this and for other EECI projects, and strengthenedthe Bank's hand during negotiations.

8.02 The project and the Borrower would probably have benefitted from more intense supervision. While the average of a short mission every 9 months may be appropriate for a project that runs smoothly, it was too little for a borrower in the throes of serious and persistentproblems. When in 1984 the EECI resorted to such an extreme action as a freeze on all investments,there would have been good cause to reappraisethe project and to take stock of the situation. It is unlikely that a different course of action in reassigning resourceswould have been chosen in the end; but the decisionsmight have been taken faster, the delays could have been shorter, and the overall costs could have been less.

8.03 Suggestions for the Future: The appraisal by the Bank was reasonablein the light of the knowledge available at the time. In hindsight the Bank could have displayedmore skepticismtowards the rosy forecasts of the feasibilitystudies and towards the ready acceptanceby the Borrower of covenants it was unable to comply with. The supervision was the best possible within the limitationsof the available manpower. More time could have been spent when the crisis was at its peak. For the project execution all matters seem to have been left to the consultant doing the project management. A stronger presence by Bank technical staff might have elicited more inputs by EECI staff and might have prepared them better to operate the electrificationproject and to continue it in years to come.

8.04 The experienceof this project suggests that the following points should be ke-ptin mind in rural electrificationprojects. There is a great differencebetween the electrificationof large isolated farms in temperate climates, and that of African villages. The estimates of consumption need a thorough understandingof the prospective users; the design must suit local practices; the choice of materials and equipment must fit local conditions; the benefit-costratio must be considered in all aspects of the design. Planning and design are best done in the country itself. A turnkey project is more cost effective in the short run, but it is not the best way to start a long term program. A deep involvementby the local utility is essential to enable them to carry on the work, and this must begin at the design stage.

9. Borrower Performance

9.01 The participationof the Borrower at the time of project preparation is difficult to establish after the fact. Since EECI did not have much experience in rural electrification,it had to rely on the advice of the consulting firms selected by the donors, CIDA and KfW. Today, eleven years later, the utility has staff with experience,and could certainly contributegood technicaland economic inputs to the preparation of the next project. During the design phase of the project the Borrower's - 11 -

staff participated in the survey and selectionof villages. It does not appear that their opinions were sought to a significantextent in other aspects of the design. This, as well as the project management,was left entirely in the hands of the overseas consultingfirm.

9.02 At some point the Borrower was requestedto supply a number of field inspectorsto the consultant and was unable to do so to their satisfaction. Whether this small episode hints at lack of qualified staff or at unreasonableexpectations, or both, is hard to establish now, but it is typical of the differences in mentality between industrialand developing countries. As the project managementwas in the hands of the consulting firm, the Borrower's staff was only invited to participate in training courses and to follow the course of the work, but does not appear to taken an active role in the construction. While this was certainly the more efficient way to proceed with the work, the EECI staff did not have an opportunityto gain significanthands-on experience.

9.03 The Borrower is now aware of the importanceof his role for the success of village electrification. EECI has developed a rather elabol:ate economic computer model (named PROSPER)which establishes the rate of return of the electrificationof individualvillages or extensions. As the electrificationprogram continueswith its own resources,albeit on a more modest scale, it has built up an estimatingand design team that can participate in a future project. The operating experiencewhich EECI has acquired on the new electrificationprojects should allow it to give valuable inputs to the design and equipment selection of future projects.

9.04 The covenant that yearly inspectionsbe conducted at each hydro dam led to the formation of an EECI inspectionteam, which has undertakena comprehensiveprogram of work, and has produced its first set of reports in 1987-88. The tariff study included establishinglong range marginal costs. These need to be updated but EECI does not have the experience to do it. Assistance in setting up a team would be advisable,and it could build on the cost control departmentwhich is already producing good data.

10. Project Relationship

10.01 The relationshipbetween the Bank and the Borrower was close and a spirit of cooperationand of understandingprevailed. EECI however, was not free to make its own decisionsor to implement its commitments independently. The utility is such a major part of the Cote d'Ivoire's economy that the Government is reluctant to let it act in an autonomous fashion. Thus, major investmentand financial decisions tend to be postponed while the authoritiesponder and hope for a solution that is politically less painful. This contributedto various delays and to the fact that to this day, the institutionalcovenants mentioned at the time of the loan agreement have yet to be complied with. It further led to the need to invest US$2 million in institutionaland financial studies to pave the way for the restructuringof the utility. A first important step towards reform was taken in 1985 when the ElectricityLaw was approved. - 12 -

This outlines the necessary framework; the details have been worked out only recently and they should be implementedunder ESAL.

10.02 The participationof cofinancingagencies made for a cumbersome project relationship. As the Bank's part of the electrification project was smaller than that of CIDA-EDC, it was logical that they should take the lead in project design and management. While most of the goals of the two parties were parallel, they did not always coincide, and this restricted the Bank's freedom of action.

10.03 The Borrower's problem was more pronounced. As the CIDA financingwas on concessionalterms, they had little reason or possibility for that matter to hold and defend different opinions about the shaping of the project. The result is that the electrificat n projects built by foreign aid agencies are each different from what the country has already, creating several different standards. The problem is not a major one, since in the end all projects deliver electricity,but it complicates maintenance needlessly,and the Bank could usefully help the Borrower to promote standardizationin his own system. In general the Borrower should be encouraged to take an active role in all facets of a project such as this, which should be a model for his future projects.

11. Consulting Services

11.01 Role of Consultants: Consulting firms were used extensively on this project and in fact accounted for US$9.57 million, or 29 percent of the total Bank financing. For the electrificationproject a consulting firm was entrustedwith feasibility,design, project management, and constructionsupervision, at a cost of US$4.9 million, or 39 percent of the constructioncost. The cost was over three times the amount budgeted for the original, larger project. A partial explanationof the cost increase lies in the duration of their involvementwhich lasted over six years rather than the expected one or two years. Also, the consultant was charged with project management rather than only with project supervision, and thus had to perform some of the owner's functions. Finally, the percentage share of the Bark in the total engineeringcosts for the IBRD, CIDA, EDC electrificationproject was establishedin 1982 and remained the same even after the size of the Bank project had been changed; the Bank funded not only 902 of its own share of the local costs of the consultant but also some of the other two agencies,when EECI found itself in difficulties. All this added to the cost of the project. In technical matters the consultantsperformed satisfactorily. Two management consulting firms had an important role in the technical assistance for the accounting and financial restructuring. Their work was essential in bringing EECI up to satisfactorystandaras.

11.02 Suggestionsfor the Future: In retrospect it would have been better if the terms of referenceof the electrificationconsultant had explicitly included the tasks of maintaining project accounts in a form satisfactoryto the Bank; of ensuring that the operating staff of EECI were provided with full documentationand instructionnfor the installationsas - 13 -

built; and of providing assistance and on-the-job training during the first year of operation. This would have been most helpful in a case like this where the design and the equipment are new to the country and unfamiliar to the operators. The suggestionabout project accounts would obviate the difficultyof reconcilingthe Baisk'srecords, kept in US dollars, the Borrower'swhich are kept in Francs CFA, and the consultant's which were probably kept in Canadian dollars. As a consequenceof this it is difficult to agree on unit costs and on actual cost of each item of work. These costs are useful for refining the design, as a base for marginal costs, and for establishingfuture costs, besides being needed to properly audit the accounts. The consultants for institutional strengtheningmade their recommendationsto enhance the performance of the corporationas a whole. Subsequentlyan internal reorganizationtook place, departmentswere rearranged,middle management staff was rotated to new posts, some twice within two years. This created a lack of continuity which affected the operation of the utility, and which was certainly apparent during the search for project information. In a similar situation in future it would be advisable to combine the restructuringof the company with a redefinitionof the functionsand responsibilitiesof middle management, of the relationshipsbetween the various departments,and of their staffing. Inevitably, this should also include how the training program could contributeto the restructuring. In this project, the training program was conceived before the need for the restructuringarose, and thus the two activitieswere not coordinated.

11.03 The Bank insisted that InternationalPublic Tenders be called for the installationof the distributionsystem. The international contractorwho submitted the low bid performedwell and efficiently. This had a useful sile effect in that it provided EECI with a standard against which to compare the performanceof local contractorswho previouslyhad been quoting considerablyhigher prices. Equipment and rmaterialswhich were common with the CIDA-EDC portion were procured from Canadian suppliers,at internationallycompetitive prices.

12. Project Documentationand Data

12.01 The legal framework and documentationwas the customary one, and there is no indicationthat it was less than appropriate. Some of the financial covenants proved difficult to enforce, in the face of the Government'sreluctance or slowness to comply with them. The problem is not unusual and there is no easy remedy in sight.

12.02 Adequacy of Staff Appraisal Report: The staff appraisal reoort was useful and accurate in most respects;but it could not serve as a guide for the implementationof the electrificationproject, after it underwent substantialchanges in 1983. For this an updating or a reappraisalwould have been needed. The monitoring of operational and economic aspects which the staff appraisal report had recommendedwas not included in the consultant'stasks. Thus the Bank only received detailed reports on the physical progress from the consultant,and on the financial conditions from EECI. - 14 -

12.03 Availabilityof Data for PCR: Collection of the data for the PCR required some effort. For the electrificationproject the records kept by the project manager had not been reconciledwith those of the Borrower. The documentationkept by the Bank is sufficient to justify the disbursements. The project accountingkept by the Borrower did not include full details of the local inputs as would be desirable to produce unit costs, or to segregate subprojectsfor evaluationby management. The Borrower's records were not geared to keep track of commitments easily, so that after the loan had been fully disbursed several contracts remained for which EECI still had to find financing. - 15 -

PART IIIt STATISTICALINFORMATION

1. Related Bank Loans

Year of Loan Title Purpose Approval Status

Energy To achieve a more 1989 In Sector Adjustment efficient allocation Progress of resourcesto the energy sector; To encourage a greater contributionof private sector finance; and To enhance the competitive position of the COte d'Ivoire productive sector.

Loan 1896-IVC was the first and hitherto the only one in the power sector. A related loan was approved in December 1989, the Energy Sector Adjustment Loan, ESAL, Loan 3150-IVC, in the amount of US$100 million. The first Tranche of US$30 million was disbursed at effectivenessin January 1990. The disbursementof the next two tranches of US$35 million each, are linked to compliancewith conditionswhich include the restructuringof EECI. The purpose of the ESAL is to achieve a more efficient allocation of resources to the energy sector, to encourage a greater contributionof private sector finance, and to enhance the competitiveposition of the COte d'Ivoire productive sector. - 16 -

2. Project Timetable

Item Date Date Date Planned Revised Actual

Identification 00/09/78

Preparation - 00/04/79

Appraisal Mission 00/10/79 00/10/79

Loan/Credit 00/12/79 0 1/1C/80 01/10/80 Negotiations

Board Approval 07/22/80 07/22/80

Loan/Credit 09/11/80 09/11/80 Signature

Loan/Credit 03/27/81 - 03/27/81 Effectiveness

Loan/Credit 12/31/86 12/31/87 12/31/88 Closing

Loan/Credit 09/30/85 0 8/31/86 00/09/90 1/ Completion

1/ Date by which the TechnicalAssistance Contract for the Accounting of EECI is expected to be completed. The major part of the physical componentshad been completed by September 1986. - 17 -

3. Loan Disbursements

Disbursements (in US$ Million) Loan 1896-IVC Bank Fiscal Year Estimated Actual Actual Z of And Quarter Cumulative Cumulative Estimated

1980/81 3 1.7 4 2.7

1981/82 1 3.6 1.6 2 4.7 1.6 3 5.3 1.6 4 8.4 1.9

1982/83 1 10.6 2.2 2 13.3 2.2 3 15.3 2.4 4 17.4 2.7

1983/84 1 19.3 2.7 2 21.0 3.6 3 22.8 3.9 4 24.6 4.2

1984/85 1 26.4 4.2 2 27.8 4.6 3 29.4 5.3 4 30.8 6.6

1985/86 1 32.1 9.2 2 33.0 12.5 3 - 13.6 4 - 16.1

1986/87 1 - 17.8 2 - 19.0 3 - 20.3 4 - 21.9

1987/88 1 28.7 2 30.6 3 33.0 - 18 -

4. Prolect IM1ementi&tion

Appraisal Actual (or Estimate PCR Estimate) Indicators Installations Installations

Indicator 1 172 villages to 104 villages received receive electricity electricity for the first time, and 16 villages, previously served by diesel generating sets were connected to the main grid

Indicator 2 655 Km. of secondary 228 Km. of secondary distributionlines distributionlines (220 Volts)

Indicator 3 105 Man years of 249 man years of training for senior University level technical staff training for engineers

Indicator 4 Equipping maintenance Equipping maintenance shop shop and added line maintenance equipment

Indicator 5 3 studies, whereof 1 10 studies completed, tariff and 2 engineering whereof 4 studies financial/institutional and 6 Engineering studies

Comments:

- Indicators 1 and 2 reflect the reduction in size of the Man ElectrificationPro,ect decided upon in 1983. - Indicators3, 4 and 5 reflect the shift to the other componentsof resources saved from the electrical project. - 19 -

5. Project Costs and Financing

A. Project Costs

Appraisal Estimate Actual Local Foreign Total Local Foreign Total Currency Exchange Currency Exchange

1. Man SpiCer Network

a) Equipment and 12.4 12.4 06 6.4 7.0 Material b) Installation 7.3 3.6 10.8 3.6 2.1 5.7

C) Engineering and 06 1.1 1.7 1.8 2.6 5.7 Supervision

2. Maintenance - 1.3 1.3 4.8 4.1 8.9 Equipment

3. Training 07 1.6 2.3 4.8 01 4.9

4. Studies 02 2.1 2.3 NIA 4.5 4.5 5. New Items a) Remote control - - - 01 1.9 2.0 b) Local consultants 1.4 - 1.4 CIDA and EDC projects

6. Unallocated 4.6 11.0 15.6 - - -

TOTAL 13.4 33.1 46.4 17.1 21.7 38.8

Comments:

Note that the actual costs in local currency include items of foreign origin such as the US$4.8 million maintenance equipment. - 20 -

B. Project Financing

Source Planned Final Loan Agreement

IBRD Categories

1. Man Spider Network 17.1 16.1

2. Maintenance Equipment 1.3 4.1

3. Training 1.6 4.9

4. Studies 2.1 4.5

5. New Items - 3.4

6. Unallocated 11.0

SUBTOTAL IBRD 33.1 33.0

Domestic Source

1. Man Spider Network 7.9 1.1

2. Maintenance Equipment 4.7 3. Training 0.7

4. Studies '3).2

5. Unallocated 4.6

SUBTOTAL DOMESTIC 13.4 5.8

TOTAL 46.5 38.8 - 21 -

6. ProljectResults

A. Direct Benefits

Indicators Appraisal Estimate at Estimated at Full Estimate Closing date Development

Villages to Receive 172 120 120 Electricity

Diesel Generating 19 4 4

Plants Shut Down (Part of)

Staff Trained at 45 54 54 University Level - 22 -

B. Economic Impact

Appraisal E' timated Estimate Actual

Economic Rate of Return

Underlying Assumptions

1. Electrification of 172 16Z (Range 11/19Z) villages and towns

2. Scope reduced to 120 47Z Villages and towns - 23 -

7. Status of Covenants

Section Covenant Dead Line Status

Loan agreement

3.06(b) Perform Tariff Study 09/80 Completed by 02/81.

4.05 Carry out yearly dam 1981 Completed within inspectionwith expert 1987, but used expert assistance assistance only for one of five dams.

4.06 Modernize concession A.S.A.P. Legal framework agreement between promulgated in 1985 governmentand EECI implementation details under discussion (1990).

5.02 Submit audited June 30 Audited report financial statement each year submittedwith delay. September 1988 report presented in January 1990.

5.04 (i) Debt Coverage: each year Not complied with up Net revenues to to 1988. be at least 1.5 times debtd (ii) Short Term Debt each year Not complied with up not to recede 5Z to 1988. of gross revenues

5.05 Internal generationof each year Not complied with up funds to cover at least to 1988. 25 percent of annual capital expenditure

GuaranteeAgreement

3.02 Modernize concession A.S.A.P. Same comment as for agreement between section 4.06 of loan governmentand EECI agreement. - 24 -

8. Missions

Perfor. 1/ Stage of Month/ Number of Days in Special. rating Types of Project Cycle Year persons field Rep. Status Problems

ThroughAbpraisal Identification 07/77 1 4 Engineer N/A N/A Preappraisal 03/78 12 2 Engineer/ N/A N/A Financial Analyst Preappraisal 05/79 1 4 Engineer N/A N/A Appraisal 10/79 1 4 Engineer N/A N/A

Board Approval Through Effectiveness Supervision1 09/80 1 5 Engineer 1 Other Supervision 2 05/81 2 6 Engineer/ 1 Other Financial Analyst Supervision 3 12/81 2 29 Engineer/ 2 Financial Financial Analyst/ Supervision4 4/82 3 17 Engineer/ 2 Financial Financial Analyst/ Economist Supervision5 1/83 2 9 Engineer/ 2 Financial Financial Analyst Supervision6 3/84 2 10 Engineer/ 3 Financial Financial Analyst Supervision 7 6/84 2 8 Engineer/ 2 Financial Financial Analyst Supervision8 11/84 2 12 Financial 2 Financial Analyst/ Consultant Supervision9 10/85 2 10 Financial Not Not Analyst/ scaled scaled 'onsultant Supervision10 3/86 2 10 FP.nancial Not Not Analyst/ scaled scaled Consultant Supervision11 10/87 1 not Financial Not Not scaled Analyst scaled scaled Supervision 12/final 1/90 1

1/ 1: Minor problems 2: Moderate problems 3s Major problems - 25 _

Annex 1 Page 1 of 2 COTE D'IVOIRE FIRST POWER PROJECT (LOAN 1896-.VC)

PROJECT COMPLETIONREPORT

PROJECT DESCRIPTIONAS APPRAISED

The project components as originallyappraised were:

I. Han Spider Network (Rural DistributionSystem) consisting of:

A. the extension of the Man 90/33 kV substationto feed the new primary distributionlines;

B. the supply and erection of overhead lines as follows:

- approximately280 km of 33 kV three-phaselines; - approximately384 km of 33 kV single-phaselines with two conductors; - approximately106 km of 19 kV single-phaselines with one conductor and with ground return; - approximately265 pole mounted distributiontransformers; and - approximately655 km of secondary (low voltage) distribution lines in the villages;

C. the supply of materials and equipment for the service drops to connect the final users (meters,breakers, fuses, cables); and

D. consulting services for engineering,preparation of bid documents, analysis of bids, and supervisionof construction.

II. Training

The training componentwould include 105 man-years of bursaries for EECI's seuior technical staff to prepare Ivorians to replace expatriate personnel. It was to cover:

A. Provision of scholarshipsat overseas engineering schools for 10 engineers each year during three years.

B. Provision of one year scholarshipsfor 15 senior technicians for maintenance training overseas. - 26 -

Annex 1 Page 2 of 2 III. Central MaintenanceWorkshop

Constructionof a central workshop, and installationof machine tools for the maintenance of heavy generation and transmissionequipment.

IV. Studies

A. Execution of studies of (a) electricity rates; (b) nationwide rural electrificationplanning; and (c) development of urban electricity distributionsystems.

B. Updating and completionof the feasibilitystudy of the Soubre hydro project.

The Project was to be completed by December 31, 1985. - 27 -

Annex 2 COTE D'IVOIRE Page 1 of 2 FIRST POWER PROJECT (LOAN 1896-IVC)

PROJECT COMPLETION REPORT

CHANGESIN SIZE OF PROJECT COMPONENTS

The size of the project componentschanged during the execution of the project. The tables below compare the components as-built with the size envisaged at the time of appraisal/loanapproval.

I. Man Spider Network (Village Electrification)

A. Extension of Man Substation

No change.

B. Distributionlines for village electrification

Date: July 80 July 82 March 83 March 88 Event: Loan approval SNC-Dessau Approved Completion S.A.R Proposal Budget of work

Villages to be 172 243 83 104 connected plus 16

33 kV Three-phase 280 260 lines (km)

33 kV single-phase 384 1049 612 308 lines (km)

19 kV single-phase 106 27 extensions (km)

Addition of neutral not 59 to existing lines (km) contemplated plus 11

Distribution 265 Transformers

Low voltage lines 655 549 235 228 220-440 V (km)

C. Supply of materials and equipment for connectionof users to distributionlines

Not defined as to quantity - 28 -

Annex 2 Page 2 of 2

II. Training

A. 30 techniciansfor 90 3 years each (man-years) Substantialchanges B. 15 Technicians for 15 1 year each

III. Maintenance Workshop

Provision of machine tools for a total base cost of US$ 1.29 Bank contribution rises to US$2.61 m

IV. Studies

A. Tariff study (base cost US$) 0.19 (15 mm) Several additions B. Rural electrificationplan 0.66 (55 mm) C. Urban distribution 0.30 (25 mm) D. Soubre 1.10 (100 mm)

Total 5.87

Changes of Schedule

The scheduled completion dates evolved as follows:

Man Rural DistributionSystem Overall Schedule

As per appraisal report of June 1980 December 84 As per loan contract of September 1980 December 85 As revised in March 1983 December 85 Actual completion of construction September 86

Detailed schedule as per SAR Actual

Hire consultants mid 1980 End 81 Call for Tenders end 1980 Mid 84 Start Construction beg 1981 Mid 85 Completion beg 1985 End 85 - 29 -

Annex 3 COTE D'IVOIRE Page 1 of 5 FIRST POWER PROJECT (LOAN 1896-IVC)

PROJECT COMPLETIONREPORT

THE MAN SPIDER NETWORK

1. General: The Man project was part of a larger electrification program which was to bring electricity to the western and northern districts, at distances of 500 to 800 km from Abidjan, the capital and center of gravity of the power system. The name of the program, Centres AraignOe Ouest (western spider networks) aptly describes the layout : high voltage transmissionlines would be built to link the existing system to six centers (Man, Ddnane, Odienne, Seguela, Boundiali, and Ferke-Korhogo).Each center would have a transformer station from which the primary distributionlines would emanate as strands in a spider web. The voltage and the routing of the transmission lines were determined from the beginning by the position of the centers, and little could be done to reduce their cost. There was more freedom in designing and laying out the distributionlines between the centers and the villages.

2. The Man Spider Network: The principal facilities of the project financed by the Bank were:

(a) A 7500 kVA power transformerat the Man substation to supply the four feeder lines.

(b) The four 33 kV feeder lines linking Man with the towns that had their own isolated diesel stations,Duekoue, Bangolo, Facobly, and Sipilou. The feeders are three phase lines built on steel supports,with medium sized conductors (93 mm2), for a total length of 148 km.

tc) Three phase (33 kV) or single phase (19 kV) extensions to join the 104 new villages to the feeder lines. These lines carry lighter conductors (34 mm2) but are also built on steel supports. The total length is 111 km of three phase and 308 km of single phase lines, plus 27 km of taps (shorter line sections).

(d) Secondary distributionlines in the villages for a total length of 228 km. The secondary lines are fed by a pole mounted distributiontransformer in each village, and carry the 220 V wires that will serve the individualusers, as well as the wires for the public lighting. The supports are part steel and part wooden poles. Each pole or support carries a light standard.

The service drops to the final users were not installedas part of the project. The hardware for the purpose was supplied to the outdoor storage yard at Man. The house connectionswere made later by EECI personnel. - 30

Annex 3 Page 2 of 5

3. Quality of the Facilities: The facilitiesare well and solidly built, and should outlast most of the houses in the vilJ.ges. The use of galvanized steel supports firmly embedded in a concrete foundation block to support part of the low voltage distributionin villages gives an impressive aura of permanence. The conductor sizes used are well in excess of the present load, and probably of any anticipated load as well. The number of street lights, approximatelyone every 50 meters, is comparable to what is used in urban areas of industrializedcountries. The pole mounted distributiontransformers have held up well to the high intensity of lightning strokes which is typical of the region.

4. Quality of Service: The 1989 statistics show 70 unplanned outages, which is relativelyhigh for the 769 km of primary distribution lines in service (total of new and existing lines). After a program of inspecting and of clearing the right of way of encroachingvegetation, the outage frequency has diminished. No complaints are being received about voltage fluctuations,but this may indicate either that voltage is satisfactory,or that the users do not know whether or where to complain. Nor does EECI have enough experiencewith street lights to determinewhether their rate of failure is normal, or is affected by the conditions of service. More time will be needed to reach conclusions. The question of prolonged outages is mentioned below under the heading of selectiveprotection.

5. Single Phase Supply: The village electrificationwas done wherever possible using single phase distribution(North Am3rican practice), rather than three phase distribution (currentEECI and European practice). This achieved a saving in the primary (19 kV) lines, which appear to have cost approximately65 % of a similar three phase line. The overall advantage, however, was not that great, since the major portion of the cost was due to the secondary (220 Volt) distributionin the villages. On the other side, single phase distributionhas a significantdrawback in that three phase motors cannot be used. This means that neither maize or rice mills, nor water pumps can be installed in the villages; yet these should be the most logical productiveuses of electricityin this region. Of course, single phase motors and pumps exist or can be produced to order in industrializedcountries; in Abidjan, however, they are not currently available from the distributors. This problem had apparentlynot been foreseen,but it could be solved if the EEC! District Office in Man were to stock and sell single phase motors and pumps up to 10 HP, at prices competitivewiththree phase machines. In the case of a sawmill which seems to have been overlookedas a potential customer for a nearby single phase 19 kV line, the problem cannot be solved so cheaply; either the line is converted to three phase, or a phase converter must be procured; either of which will take a long time. Residentialusers are not touched by the problem, since home appliances are single phase anyway. - 31

Annex 3 Page 3 of 5

6. New Connections: In the villages new users have been slow to ask to be coiniected. This is not unexpected since farmers everywhere tend to be cautious and do not rush into novelties. By the end of the 1988 fiscal year (September)the total users in the Man and Duekoud districts had increased by 2741; approximatelyhalf of these, 1400 users, are estimated to be in the newly electrified areas, 400 in the areas previously served by diesel plants, and the r2est in the city of Man which has not been affected by the project. EECI did what they could to increase the number of users; they agreed to waive the connection charge for new users during the three years 1986 to 1989, and publicized this concession, Maybe they could have done more but they would have needed help for that. In other countries a variety of approacheshave been tried; demonstrationsof machines, disseminationof informationon productiveuses of electricity,a program for housewiring including deferred payment, locally stocking machines and spares, and credit for purchases. Some, if not all, may be applicablehere. There remains the fact that electricity is very expensive for a farmer. The housewiring for two or three lights or outlets may easily run to 20-30,000 CFA Francs (1 US$= 300 CFAF), the inspection fee CFAF4,000-8,000,and the normal EECI connection charge would add another 25-35,000 CFA Francs. The basic charge for consumption is CFAF700 every two months plus CFAF60 per kWh. At these rates, and with the price of coffee and cocoa supported at only 200 CFA Francs per kg, electricity is a luxury that not many can afford. Appliances, lightbuTbs,and motors cost about twice as much as in North America, with the prevailing exchange rate. At this level of costs it is difficult to expand the usage and consumptionof electricity. Electrificationbecomes more of an economic than a technical problem. This is also evident from EECI's records of disconnections. The number of users disconnectedfor non-payment is quite large compared with that of new connections,which indicates that people would like to have electricity,but cannot keep up with the payments. In sum, it will take a fundamentalchange in the cost and earnings relationshipbefore the consumption of electricitycan catch up with the hoped-for goals.

7. Materials and Hardware: The primary lines were built in the normal EECI configuration,i.e. with suspensioninsulators of tempered glass suspended from a steel superstructure. With this design EECI normally uses vibrated concrete poles, but galvanizedsteel supports were used in the project. This differs from the North American practice of using (rigid) pin type insulatorswith crossarms only for the three phase lines; and was somewhat more expensive. HIoweverthe major effect on line cost was the use of imported steel supports, presumably because wooden or concrete poles were deemed inferior. An unexpectedhazard was the theft of 50 km of aluminum conductor, after it had been strung as neutral on the lines. This could be an argument for using cheaper steel wire on the circuits were conductorswith low resistance are not necessary. The low voltage distributionused modern bundled conductors,which are much more costly to buy but cheaper to install than individualwires. The hardware for service drops was not entirely suited to Ivorian conditions. The 3m steel pipes customary in North America could not be installed on the less substantialone story Ivorian houses. - 32 -

Annex 3 Page 4 of S

The plastic housings specially built for the service entrances were discarded as unsuitable. The 30 Amp breakers supplied for overcurrentprotection of the customer installationdid not suit EECI's practice of using a breaker with variable setting to be used both as protection and as current limiting device to control the maximum demand. A large proportion of kWh meters were reported as having rusteu. Some of this might have been avoided if the design had been done in the country, and some weather damage might Lave been prevented if a storage building had been added to the project.

8. Selective Protection: A technical innovationwas the introduction of fuses, reclosers, and sectionalizers, on the 33 and 19 kV circuits for a selective and coordinatedprot.ction. This innovation does not seem to work as well as planned because of the lack of channels of communicationbetween users and utility. When a sectionalizerworks as expected and isolates a section of line where a fault has occurred, there is no easy way for the EECI personnel to learn about the oLtage because there are no telephones in the villages. Thus they are left without supply until a messenger reaches a police station that has a telephoneand alerts the Man office. The same applies when a fuse cuts out a transformer. This is not an unusual problem in a developing country where telephonesare not as ubiquitous as in the industrializedones. Another unanticipatedproblem was caused by the loads being unexpectedlysmall. The sectionalizersand reclosers depend for their power supply on the line current; but this is not always sufficient to recharge the battery in the sectionalizer. Unless some solution is devised, the advantages of the North American system of selective protectionwill not be realized.

9. DistributionTransformers: The single phase distribution transformershave performedwell and their failure rate is acceptable. In contrast with European three phase designs, they are normally provided with lightning arresters, a necessity in Cote d'Ivoire. They are relatively easy to exchange on their pole mount.

10. Other Equipment: The regulatingtransformer installed on the Man- Duekoue 33 kV feeder line is another item of equipment new to the Cote d'Ivoire. It is working well in its task of maintaining the voltage level at Duekoue under varying load conditions. The measuring devices of the Man substation are deslgned for much larger future loads and the current meters are either inaccurate or virtually unreadable at the prevailing low loads. The personnel have difficulty with the dial type kWh meters since they are used to the cyclometer type which is the EECI standard. All this can be remedied by changing hardware, but it indicates again that much care must be exercisedwhen importing standard designs from overseas. - 33 -

Annex 3 Page 5 of 5

11. Training,Manuals, and Spares: The staff at Man had not been left any operating manuals or service instructions,nor had they received training in the handling of new and unfamiliarequipment. When two of the ten sectionalizersfailed, they were simply taken out of service for lack of repair knowhow. No spares were available. The failures,and the rusting of some housings may indicate that African conditionsare more demanding than temperateclimates, or that different equipment should be provided. The stock of 33 kV fuses has run down, and the most frequentlyused sizes are no longer available. This renders selectivitydubious, and protectionhazardous. Since replacementshave to be obtained from North America there is a procurement difficulty,given that the normal trade channels are through France. The same applies to distributiontransformers. This seems to be an argument for installingonly consumption items for which replacementswill be easily available in the future from a distributor in Abidjan. It may possibly also indicate that procurement of maintenance items by EECI should be streamlined. In any case, there is good reason to recommend that -,hoev designs a new type of installation,should provide training and foilow up for two or three years as needed.

12. Overall Costs of Electrification: It seems fairly clear that village electrificationis more an economic than a technical or even a logistic problem. The designer must weigh the desire to build a modern and easy to operate installation(by industrializedworld standards)against building one that is adequate and arfordablefor local conditions. All component parts of the electrification,materials, equipment,and construction methods, should be optimized in the context of the requirementsof the end users, and of the operators. The selection of supports and of conductors seems to be the first target for cost control. Equipment such as reclosers, fuses, and transformersdoes not have a great influenceon the total investmentcost but its choice is important for the maintenance and operation of the system. The utility must check whether standards establishedfor the cities are really justified for the villages. Using heavy preasselzbledwire, installing individualmeters and current limit!ng breakers for extremely small loads may not be cost effective;nor should it be necessary that an outsida agency charge for an inspectionwhen the EECI staff should be perfectly capable of doing it for free. Expecting relativelyhigh connection fees from users who can ill afford them is unlikely to promote the use of electricity, even after the large initial investmentin the distributionlines has been made. The practice of providing free street lights on every pole may be desirable but is costly enough to deserve review. Basically a village electrificationteam should follow all these aspects within EECI. If continuityof staff can be maintained for a few years, they should be able to develop designs and practiceswhich are cost effective for the initial investment,as well as for the operatingcost, and which are affordable to most of the prospectiveusers. These problems are not unique to the Man project or to the Cote d'Ivoire and can be found in one form or another in several developingcountries. There is considerablescope for study and for discussion to develop information,guidelines, and to gather performance data on the many alternativesavailable for village electrification. - 34 -

Annex 4 Page 1 of 2 COTE D'IVOIRE FIRST POWER PROJECT (LOAN 1896-IVC)

PROJECT COMPLETION REPORT

ECONOMIC ASPECTS OF THE MAN SPIDER PROJECT

CONSUMPTION FORECAST FOR THE AREA OF THE MAN SPIDER NETWORK

1. Baseline: From the viewpoint of the electrificationproject there are three separate of user groups which are supplied by the Man 225 kV transformerstation:

(a) the 'New Villages', that is the 104 villages that have been given electricityservice for the first time with the Spider project;

(b) the 'Ex-DieselTowns', the 16 villages and towns including Duekoue, Bangolo, Sipilou and Facobly, which were already served and were the project made it possible to shut down the existing diesel plants;

(c) the city of Man, which has been connected to the main grid for some time and was not directly affected by the project.

The project was completed in September 1986. Therefore the 1981-1985 data will be used as baseline, and the 1986-1988 statisticswill give an indication of the first results of the project. The rates of growth recorded during the two periods for number of users and for electricity sales were:

Growth Rate in Percent per Year User Group Number of Users Electricity (MWh) Sales 1981-85 1986-88 19nl-85 1986-88

New Villages n.a. n.a.(1400) n.a. n.a.(2130)

Ex-Diesel Towns 6.6? 9.42 6.6? 12.1?

City of Man 3.7Z 8.6Z 4.0? 7.5?

The figures for the New Villages shown above between brackets are the best estimates available, and have been extracted from the EECI statistics for Man and Duekoue where they are included; this explains why the growth rate of these two districts shows a step increase in 86-88.

2. Future Growth: EECI staff estimate a reasonable rate of growth to be 4.5?, both for number of users and for electricitysales. As this is the actual experience for the combined district Man-Duekoue,there is no reason to - 35 -

Annex 4 Page 2 of 2

.isputeit for the city of Man. For the Ex-Diesel Towns a 72 rate of increase is assumed up to the year 2000 both for users and for consumption. For the New Villages the increase in number of users is posited at 152 per year, and in sales at 12 2 per year. With these rates there will be 7300 users in the villages by the year 2000. This is close to what the secondarydistribution system is likely to serve when the existing market is saturated, i.e. when the number of users is close to 40 per km of secondary line; and the average consumption of 1100 kWh per user per year is also a reasonableexpectation. Neither of these two values is likely to be exceeded, given the economic base of the region, and the price of electricity.The estimatesmay even turn out to be optimistic; they assume that the user density per km of line, and the consumptionwould approach that in Man today. The increase in sales would be slower than the number of users because the initial load included public lighting,which would not increase as long as no new lines were added. For the period after the year 2000 the increase in users and kWh consumption is assumed to be 32 per year.

3. Costs: The investmentcost of the Man project has been calculated at US$ 16 million, consisting of US$ 12.5 million for supply and erection, and US$3.5 million for the engineeringand project management. For the new users connected after 1988 the cost of materials has been estimated at US$ 100 each. The operating and maintenance costs have been estimated at US$ 1.24 million per year; these include the personnel costs for half of the personnel at EECI in Man (140 staff) at 80X of the average cost of EECI (US$16,000/year),a 30 2 addition for supplies and services,plus .52 of the capital cost for interim replacement. These costs would remain constant until the year 2000, assuming that the increasedworkload would be compensatedby an increase in efficiency. After 2000 the yearly costs would increase by 32 p.a., as does the load.

4. Revenue: The revenue attributableto the Man project has been calculated as the kWh sales in the 120 towns and villages, i.e. both the newly connected villages and the towns that had diesel power before, multiplied by US$0.12 per kWh. This amount is the revenue attributableto the distribution of electricity. The average selling price per kWh is US$ 0.19 per kWh, (FF61 for residentialand FF39 to industrialusers), from which the cost of power delivered to Man, US$0.07, must be subtracted.

5. Internal Rate of Return: With these assumptions,the internal rate of return of the project is 4.7a. If the rate of exchange of FF300 per US$ can be considered to be identicalwith the shadow rate, then the economic and the financial rate of return coincide. The willingness to pay of the prospectiveusers can be assumed to coincide with the electricityrates, and would therefore not change the result. COTE D'IVOIRE ANNEXPage 15 Energie Electrique de la C8te d'Ivoire 1/ Funds Flow Statement 1983 - 1993 CFAF Billion

ACTUAL FORECAST ------Total US S ------TotaI Total 1983 1984 1986 1986 1987 1988 83-88 Million 1989 1990 1931 1992 1993 89-93 90-93 Operatingincome 4 -22 -3 1 -1 7 -14 -44 12 8 10 15 14 69 47 Depreistioan/Proisbons 18 ___20 23 30 30 36 157 491 30 32 34 35 37 168 138

Cross lat.cashgeooration 22 -2 20 31 29 43 143 447 42 40 44 60 61 227 18S

Working capital 9 -38 31 -10 -17 10 -15 -47 24 -1 0 1 1 25 1 Interest 9 11 12 19 20 19 90 281 16 13 10 10 10 59 43 Principal 9 7 10 16 23 40 105 328 45 s0 20 20 22 1S7 112

Op.requlrements 27 -20 63 26 26 69 18O 5a3 86 62 30 3S 33 241 166

RICO -6 18 -33 6 3 .26 -37 -118 -43 -22 14 19 18 -14 29 Investmt. 89 60 28 42 26 21 216 672 10 11 11 15 17 64 64

Differtnce 44 42 01 36 22 47 252 788 63 33 -3 -4 -1 78 26 financedby: Capital increase 0 0 1 1 0 0 2 6 0 0 0 0 0 0 0 Operatingsubsidy 0 0 20 0 0, 0 20 68 0 0 0 0 0 0 0 Other equity -1 -4 -2 -9 -1 -4 -21 -a6 -1 -l -1 -1 0 -4 -3 Totalequlty i; -- _:_ ------Totel quity -1 -4 19 -8 -1 -4 1 a -1 -1 -1 -1 0 -4 -3 LT Debt a8 60 84 29 26 66 231 722 64 53 -2 -4 6 107 53 Thirdparties I I I 0 0 0 3 9 0 1 0 1 0 2 2 Total 36 47 64 21 24 61 236 734 53 5a -3 *4 6 105 62

Cash variation 4 5 -7 -15 2 4 -17 -63 0 20 0 0 7 27 27

Cash begn yar -1 -7 -2 -9 -24 -22 -1 -3 -is -18 2 2 2 -18 -18 Cash ndVy r -7 -2 -9 -24 -22 -15 -18 -c6 -18 2 2 2 9 9 9 Debt coverage 1.2 -0.1 0.9 0.9 0.7 0.7 0.7 0.6 1.S 1.7 1.6 Yearly NICO -13 30 -118 14 12 -124 -430 -200 127 127 106 Average NICO -10 48 -76 19 10 -139 -17 -307 -206 114 133 113 -22 64 Z :s= M=M M=2 = =

Rate of enchange: USS1lCFAF 320 AFlIE 20-Nov-69

1/ EECI accounts are being audited. Final audit report will be completed by June 30, 1991. ANNEX 5 COTE D'IVOIRE Page 2 Energie Electrique de la C8te d'Ivoire Balance Sheet 1983 - 1993 CFAF Billion ACTUAL FORECAST

1968 1964 1986 1936 1S87 1966 1969 1990 1991 1992 1993 1994 1996 19 1997 Fixed Assets in op. 304 833 366 374 422 475 462 492 602 S1S 627 639 SS1 56t 600 DepreciatIon 90 104 121 13* 151 172 196 219 244 270 297 326 864 8aS 417 Net Fixed Asset,, In op. 214 229 246 285 271 .-a 287 278 2U 245 230 214 197 203 183 Work Inprog 49 so 76 109 79 .47 50 61 52 54 69 67 78 61 !*2 Total Fied Asses 260 309 820 84 50 850 887 824 310 299 289 261 270 2a5M4

Cash I I I 8 2 8 2 2 2 2 9 17 26 88 67 Inventories 6 7 7 10 11 9 S 7 a a 6 7 6 8 8 Roeivables 31 86 86 30 o 82. 26 19 20 20 21 22 23 22 24 Other Crrent asses 12 5 6 6 6 9 6 6 6 6 6 6 a 6 6 Accrd rw 7 6 11 9 9 9 9 9 10 10 10 11 11 12 Total currt. sts 56 57 s9 57 6J 62 60 48 48 44 52 612 74 6 107

Total assets 819 36 379 401 406 412 67 867 S8 U84 841 843 844 840 *42

Capitol 6 6 7 6 6 I 3 3 S 6 S 6 a 6 S Reserve, 0 -88 -10 -80 -49 -61 -6 -70 -70 456 41 -S7 -58 47 -J9 @ provisions 174 176 162 167 175 15 192 199 207 215 225 285 246 267 266

Equity 1t0 149 169 145 184 1 185 187 145 1U8 172 166 201 219 287 LT Dbt 99 142 16o 179 161 1M6 206 20 13 162 146 18S 11 101 62 Cenmers deposits 5 6 7 7 7 7 S 6 9 9 9 10 10 11 SuppIeis" 10 24 19 16 2? 1s 10 5 6 a 6 7 8 4 5 OUe payables 17 42 16 25 1S 42 10 9 6 * * 7 *7 7 Bhn overdraft J 8 10 27 24 21 20 0 0 0 0 0 0 0 0 Total liabilitIes 819 86 879 401 406 412 867 867 U5 848 841 848 844 840 842 J___- -- G---_-J- -- I_- Debt/DebtAEqulty 85 49 S1 55 67 6o 6o 60 S6 S1 4e 42 87 82 28 EquityMsbt*Equity 6S 51 49 45 43 40 40 40 44 49 64 5 68 66 74 Current -tlo 1.6 0.3 1.8 0.6 0.7 0.3 1.8 8.1 8.1 8.1 8.7 4.1 4.9 7.3 6.9

AFIIE .M-oW-99 AJhNEX5 COTE D'IVOIRE agE 3 Page 3 Energie Electriquede la C8te d'Ivoire Revenue Account 1983 - 1993 CFAF Billion

ACTUAL FORECAST 1983 1964 1986 1986 1987 1988 1989 1990 1991 1992 1993 1994 1996 1998 1997 Sale of poer 67 72 O3 83 87 91 94 95 98 102 105 109 113 llt 122 Other reveue 14 11 8 6 11 10 4 6 5 S a 7 9 11 12 Total revenue 61 8a 91 88 98 101 98 100 103 107 111 116 122 128 134 Fuel 14 39 18 7 17 1i VA 14 17 16 12 13 14 t8 17 18 0 4 7 1 1 0 0 0 0 0 0 Personnel 14 0 0 0 0 t1 17 17 19 19 16 16 16 16 17 Material/Services 21 10 18 i8 19 19 20 24 20 16 16 17 18 19 20 21 Other I I I 22 24 24 1 4 3 a a 3 3 3 3 4 4 Rade,ael Tabo/Buyo 7 7 7 7 7 4 Deprctition/Provisions 7 7 7 7 7 7 7 7 7 7 20 22 24 30 31 36 30 32 34 --_ ____ -- _- ____ 36 37 39 41 44 46 ____ ------_ _ --- _ - ____ _------w Total op.espe_s 77 10 94 07 99 94 s6 92 93 92 97 102 110 11 118i Operatlngincem 4 -22 -3 1 -1 7 12 e 10 15 14 14 12 13 16 Interest 9 11 12 19 20 19 16 13 10 10 10 10 a 7 8 not ncombefore sub/ad]. -5 -83 -16 -18 -21 -12 -4 -5 0 6 4 4 4 a 8 Op.subeidy/adJustments/tx. 20 9 Nlt income after sub/odJ. -5 -33 6 -9 -21 -12 -4 -C 0 C 4 4 4 6 = - == = 8 =3= - === _ = == = = Operating ratio 96 127 103 99 101 93 s8 92 90 a6 87 s8 RII 1.9 -9.9 -1.3 0.4 90 90 88 -0.4 2.4 4.1 2.9 3.0 8.0 6.9 6.3 5.8 6.5 8.3

AFlIE 20-Nov-89