Document of The World Bank Public Disclosure Authorized
Report No. 14587-PM
STAFF APPRAISAL REPORT Public Disclosure Authorized
PAKISTAN
GHAZI-BAROTHA HYDROPOWERPROJECT Public Disclosure Authorized
NOVEMBER27, 1995 Public Disclosure Authorized Energy and Project Finance Division Country Department I South Asia Region CURRENCY EOUIVALENTS
Currency Unit = Pakistan Rupee (Rs) USSI = 31 Rs (end-June 1995) Rs 1 = $0.0323 (end-June 1995) USSI = 34 Rs (Novemnber15, 1995) RsI = $0.0291 RsI = 100 paisas
Fiscal Year
July 1- June 30
WEIGHTS AND MEASURES
1 kilovolt (kV) = 1,000 volts (V) I megavolt amperes (MVA) = 1,000 kilovolt-amperes (kVA) 1 megawatt (MW) = 1,000 kilowatts (kW) 1 gigawatt hour (GWh) = 1 million kilowatt hours (kWh) 1 barrel (bbl) 0.1342 metric ton 1 metric ton of oil (MTO) = 7.4 bbls. 1 cumecs = 1 cubic meter per second 1 BOPD = 1 barrel of oil per day MCF = 1 thousand cu. fl MMCFD = 1 million cu. fl per day BCFD = 1 billion cu. fl per day TCF = 1 trillion cu. ft. BTU I1 British Thenmal Unit 0.2520Kilo Calories (KCal) TOE l ton of oil equivalent = I thousand kilograms of oil equivalent KGOE = 1 kilogram of oil equivalent
ACRONYMS AND ABBREVIATIONS
ADB - Asian Development Bank BOM - Build-Own-Maintain BOO - Build-Own-Operate BOT - Build-Own-Transfer CIDA - Canadian International Development Agency DSM - Demand Side Management EIB European Investment Bank EMU - Environmental Management Unit ENERCON - National Energy Conservation Center ERP - Environment and Resettlement Review Panel ESMAP - Energy Strategy Management Assistance Program EUAD - Environment and Urban Affairs Division GBDO - Ghazi-Barotha Development Organization GBHP - Ghazi-Barotha Hydropower Project GBPMU - Ghazi-Barotha Project Management Unit GTZ - German Agency for Technical Cooperation ICB - Intemational Competitive Bidding ICG - Intemal Cash Generation IDB - IslamnicDevelopment Bank IPP - Independent Power Producers IRDP - Integrated Rural Development Plan IUCN - Intemational Union for Conservation of Nature and Natural Resources KESC - Karachi Electric Supply Corporation KfW - Kreditanstalt fuer Wiederaufbau MPNR - Ministry of Petroleum and Natural Resources MWP - Ministry of Water and Power NEPRA - National Electric Power Regulatory Authority NGO - Non-GovernmentalOrganization NWFP - North-West Frontier Province ODA - UK Overseas DevelopmentAdministration OECF - Overseas Economic Cooperation Fund of Japan OGDC - Oil and Gas DevelopmentCorporation PIC - Project Information Center POE - Panel of Experts PRO - Project Resettlement Organization RAP - Resettlement Action Plan SCARP - Salinity Control and Reclamation Project SNGPL - Sui Northem Gas Pipeline Limited SSGC - Sui Southern Gas Corporation USAID - United States Agency for International Development WAPDA - Water and Power DevelopmentAuthority WEC - WAPDA Environment Cell WPPO - WAPDA Private Power Organization PAKISTAN
GHAZI-BAROTHA HYDROPOWER PROJECT
Loan and Project Summary
Borrower: Governmentof Pakistan(GOP)
ImplementingAgency: Water and Power DevelopmentAuthority (WAPDA)
Beneficiary: WAPDA
Poverty: Not applicable
Amount: US$350.0million
Terms: Payablein 20 years, includingfive yearsgrace, at the standardinterest rate for LIBOR -basedUS Dollarsingle currency loans.
CommitmentFee: 0.75% on undisbursedloan balance,beginning 60 days after signing,less any waiver
OnlendingTerms: The total loan would be onlent to WAPDA on the following terms: (a) during constructionperiod of the project, a variable rate equal to the sum of the prevailing World Bank Lending Rate plus a spread of 150 basis points; (b) after completionof construction,a variablerate equal to the sum of the prevailingWorld Bank LendingRate plus a spread of 350 basis points. The repayment period would be up to 23 years includingup to 8 years of grace period. WAPDAwill bear the foreignexchange risk.
Proiect Description: The proposedproject woulidcomprise the constructionof the Ghazi-BarothaHydropower Plant (GBHP), the consolidationof the power sector reform program, technical assistance and training components. The GBHP aims at utilizing 76 meters of head available in the Indus River between the tailrace of Tarbela power station and its confluencewith Haro River,and includes:(a) a barrage and ancillaryworks near Ghazi village; (b) a 52-km long concrete-linedpower channeland its ancillary works with a capacity of 1,600 cumecs; (c) a power complexand ancillary works located near the villageof Barothawith an installedcapacity of 1,450 MW to generateabout 6,600 GWh of electricity annually; (d) transmission facilities for power evacuation; and (e) implementationof the EnvironmentalManagement and ResettlementPlans. The power sector reform componentincludes in particular: (a) setting up of GBHP as a separate project entity within the frameworkof the corporatizationprogram of WAPDA; (b) establishmentof a separatetransmission and dispatch corporateentity; and (c) reviewof the Government'spolicy and packageof incentivesfor private power investments. The technicalassistance and training componentsare mainly designedto assist WAPDA in carryingout the EnvironmentalManagement and ResettlementPlans.
Benefits: The Ghazi-BarothaHydropower Project is part of the least-costexpansion plan for the generation system in the country. It would promote the efficient development of hydropowerresources thereby reducingthe dependenceon importedpetroleum products and the chronic shortfall in electricity supply. The Economic Rate of Return on the power investmentprogram which includesthe proposed project, is estimated at about 27%. -ii-
Risks: Risks which could affect the proposed project could relate to macroeconomic performance of the country, uncertainty in the level of of private power supply and project implementation. The broader macroeconomic risk of deterioration of the short- term financial situation is mitigated by GOP's commitment to a sound fiscal and monetary program supported by appropriate structural reform measures. The risk of inconsistency between the macroeconomic framework and the increased level of Public Sector Development Program resulting from the implementation of GBHP has been mitigated by the provision of an annual review of WAPDA's investment program over a five-year rolling period and the agreement that, during the implementation of GBHP, GOP's Core Public Sector Development Program and its Social Action Program, would not be adversely affected by the financing requirements of GBHP. The risk related to the uncertainties in the level of private power supply has been mitigated by the agreement on setting up policies and appropriate solicitation mechanism that would ensure timely implementation of required additional capacity. The specific project implementation risks have been also mitigated so that the probabilities of delay in project implementation and cost overruns are considerably reduced. The non-mobilization of financmi risk has been mitigated by the high priority given by GOP to the development of the project, thie level and advanced status of commitments of different cofinanciers, and by the legal agreements requiring WAPDA to generate local funds through improvement in efficiency and satisfactory tariffs needed to enable it to comply with the financial covenants. WAPDA's consistent record over the last seven years in meeting an ambitious cash generation covenant provides additional comfort to the Project. Other major risks could be caused by unsatisfactory resettlement, relocation and compensation of persons affected by the project and delay in implementing steps identified to mitigate negative environmental impacts. These risks are being largely mitigated by the comprehensiveness of the Environment and Resettlement Management Plan and the monitoring arrangements through: (a) setting a Project Information Center at project site; (b) assistance of a Ghazi-Barotha Development Organization and of an independent consultant for monitoring resettlement and relocation of project affected people and implementation of environmental mitigation steps; (c) WAPDA's commitment to implement an Integrated Regional Development Plan to support locally-based economic activities in the area; and (d) continued support from the Independent Environment and Resettlement Review Panel. To reduce risks of engineering nature, WAPDA will be assisted by its consultant, and a panel of experts will monitor the activities periodically. Further, geological and hydrological uncertainties are reduced to a minimum because of the extensive investigations at the sites of the barrage, power chaniel and power house, and the comprehensive knowledge gained in the construction and operation of Tarbela Dam. Possible construction delays would be minimized by the advanced stage of the procurement of major works, effective project management through WAPDA's internal organization for the project and the assistance of its consultants. To reduce delays which could be caused by claims of the contractors, a Dispute Review Board is being appointed to settle all claims as expeditiously as possible. -111-
EstimatedCosts: Local Foreign Total ------US$ million------A. Land Acquisition 36.95 0.00 36.95 B. Relocationand Resettlement 51.62 0.23 51.85 C. PreparatoryWorks 17.95 11.97 29.92 D. CivilWorks: C-01 Barrage & AncillaryWorks 51.00 119.00 170.00 C-02 Power Channel& Anc. Works 87.00 203.00 290.00 C-03 PowerComplex &Anc. Works 113.97 265.94 379.91 E. Mechanical& ElectricalWorks 87.59 358.20 445.79 F. ConsultancyServices, Engineering, Administrationand Training 58.80 27.91 86.71 G. Taxes Customsand Duties 24.00 0.00 24.00
Total BaselineCosts 528.87 986.25 1515.12 PhysicalContingencies 55.03 114.81 169.84 Price Contingencies 87.44 91.13 178.57
TotalProject Costs 671.34 1192.19 1863.53 Interest During Construction -on IBRD Loan: 5.40 82.50 87.90 -on Other Loans: 170.26 128.31 298.57 TOTAL FINANCING REQUIRED 847.00 1403.00 2250.00
ProposedFinancing Plan: Local Forei2n Total ======U==lS$million ProposedBank Loan 0.0 350.0 350.0 Asian DevelopmentBank 0.0 300.0 300.0 Govt. of Japan/OECF 0.0 350.0 350.0 Govt. of Germany/KfW"/ suppliers' credits 0.0 150.0 150.0 EuropeanInvestment Bank 0.0 60.0 60.0 IslamicDevelopment Bank 1//suppliers' credits 0.0 40.0 40.0 WAPDAInternal Cash Generation 847.0 153.0 1.000.0 TOTAL ,47,Q 1403.0 2250.0 " to be confirmed.
EstimatedDisbursements: (US$ million)
FY1996 FY1997 FY1988 FY1999 FY2000 FY2001 FY2002
Annual 33.2 74.6 103.5 70.0 40.9 19.0 8.8 Cumulative 33.2 107.8 211.3 281.3 322.2 341.2 350.0
Economic Rate of Return: About 27%
Maps: IBRDNo. 25106 IBRD No. 25107
Project Identification Number: 39281
PAKISTAN
GHAZI-BAROTHA HYDROPOWER PROJECT
STAFF APPRAISAL REPORT
Table of Contents
1 TH. E ENEFc SECTOR ...... 1 1...... Overview...... 1 Institutional Setting...... 3 Institutional Development ...... 4 Encrgy Resource Endowment...... 4 Energy Demand and Supply...... 5 Energy Demand Forecast ...... I...7 Energy Supply Forecast...... 7 Energy Prices ...... 8 Envi ronmeand Energy nt Conservation ...... 8 Energy Strategy ...... 9
2. THIEPOWER SUBSECTOR ...... 12 Background ...... 12 Power Sector Reforn)s - Recent Developments.12 The I'ower Mark. .15 Elec.i icity Demand Foreca t. 15 Po .r Development Plan ...... 16 Dei..and-Side Managemert (DSM)...... 17 F!&,tricitvTariffs ...... 18 rJ ,vernment Strategy for the Power Subsector...... 20 Bank's Assistance Strategy in the Fower Sector ...... 21 Bank Group's Role in the Energy Sector and Experience with Past Lending...... 21
3. J r-.-EWATER AND POWER DEVELOPMENT AUTHORITY ...... 24 Organization and Management...... 24 WAPDA's Existing Facilities ...... 26 WAPDA's Power Development Program...... 27 Operational Performance ...... 28 Financial Management...... 29 Financial Improvement Program ...... 29 Accounting System ...... 30 Management Information System (MIS) ...... 30 External Audit ...... 30 Insurance...... 31
This report was preparedbased on the findingsof an appraisal missionwhich visited Pakistan in December 1994. Follow-upmissions were undertakenin March and July 1995and the project documentationwas updatedbased on findingsfrom those missions. The report was preparedby Mrs. Z. Ladhibi-Belk(Principal PowerEngineer, Task Manager),Messrs. M. Manrai (Sr. PowerEngineer), P. N. Gupta (PrincipalDam Specialist)C. Gavino (Financial Analyst), R. Aziz (Project Adviser - Resident Mission), L. Monari (Energy Economist), Mrs. A. Khawaja (Consultant),L. Lund (Consultant),S. Lintner (Pr. EnvironmentalSpecialist), A. Ghani (Anthropologist)and M. Mishra (Consultant). L. Salazar assistedin the productionof the report. Peer reviewerscomprised of: Messrs. P. Cordukes (Principal Financial Analyst), R. Hamilton (Senior Energy Economist), and B. Trembath (Sr. Power Engineer). Mr. Per Ljung is Chief, Energy and Project Finance Division, and Ms. Mieko Nishimizu is the Director,Country Department I, South Asia Region. -ii-
4. THE PROJECT[ ...... 32 Projcct Background ...... 32 Projcctivcs ic...... 33 Projcct Description...... 33 Projcct Engincering and Prcparation ...... 35 Safety Aspccts...... 37 Engineering...... 37 Independnt Panels of Experts ...... 37 Instrumcntation...... 37 Safcty Inspcctions During Operation ...... 37 Project Cost Estimate ...... 38 Financing Plan and Lending Arrangements...... 38
5. PROJECT IMPLEMENTATION ...... 41 Implementation Plans...... 41 Procurcmcnt...... 42 Disbursements...... 45 Disbursement Profile ...... 45 Advance Contracting and Retroactive Financing...... 45 Monitoring, Supervision and Rcporting...... 45 Project Monitoring and Reporting ...... 45 Project Supervision and Mid-Term Review ...... 46
6. ENVIRONMENTAL,AND RESETTLEMENT ASPECTS ...... 47 Introduction ...... 47 Environmental Impacts and Key Mitigation Measures ...... 47 Land Acquisition and Resettlement Process ...... 48 Participation and Consultation ...... 51 Implementation...... 51
7. WAPDA'S FINANCES ...... 53 Introduction...... 53 Past and Present Financial Performance...... 53 Fuel Adjustment Surcharge...... 54 Domestic Borrowing...... 55 Accounts Receivable...... 55 Hydroelectric Profits ...... 56 Financing Plan for WAPDA's Investment Programn...... 57 Future Finances...... 57
8. PROJECT BENEFITS AND RISKS...... 600 Introduction...... 60 Macroeconomic Impact of Ghazi-Barotha Hydropower Project...... 60 Least-Cost Analysis...... 62 Sensitivity on the Main Parameters...... 62 Sensitivity on New Private Projects ...... 62 Alternative Hydropower Plants ...... 63 Environmental Benefits and Costs ...... 64 Poverty Impact ...... 64 Economic Rate of Return - ERR ...... 65 ERR on the Power Investment Program ...... 65 Results ...... 66 Sensitivity Analysis ...... 66 ERR on the Project Alone...... 66 Economic Impact of Higher Compensation Releases ...... 67 Risks and Mitigation Measures ...... 67 Risks ...... 67 Risks Mitigation Measures ...... 67 Risks Analysis ...... 68
9. AGREEMENTS REACHED AND RECOMMENDATION ...... 70
ANNEXES
Annex LI. Energy Balance Sheet FY94...... 73 Annex 1.2 Imported Petroleum Products Prices and Domestic Prices ...... 74 Annex 1.3 Natural Gas Prices and Fuel Oil Parity Comparison as of June 1995...... 75
Annex 2.1 Load Shedding and Maximum Demand in WAPDA System (MW) ...... 76 Annex 2.2 Energy Conservation Activities ...... 77 Annex 2.3 Historical Growth in Demand (MW), Energy Generation and Sales (GWh) and Losses (%)...... 78 Annex 2.4 Demand Projections (Base Case)...... 79 Annex 2.5 Installed Capacity and Generation Program (Base Case)...... 81 Annex 2.6 Consultant for Energy Efficiency and Load Management Project Development - Terms of Reference...... 82 Annex 2.7 FY95 WAPDA Estimated Category-Wise Units Sold and Revenues ...... 84
Annex 3.1 WAPDA's Organization Chart ...... 85 Annex 3.2 Setting Up a Separate Project Entity of WAPDA to Operate the GBHP ...... 86 Annex 3.3 WAPDA's Investment Program (US$ Million)...... 89 Annex 3.4 WAPDA's Investrnent Program (RS Billion) ...... 90 Annex 3.5 WAPDA's 1995-2002 Investment Program & Macroeconomic Targets ...... 91
Annex 4.1 Detailed Project Description...... 92 Annex 4.2 Comparison of Alternatives Considered ...... 102 Annex 4.3 Engineering Services - Construction Supervision Consultant's TORs ... 104 Annex 4.4 Technical and Safety Review Panel -TORs ...... 109 Annex 4.5 Independent Environmental and Resettlement Panel TORs ...... 112 Annex 4.6 Total Project Costs by Contract Packages (US$ Million)...... 114 Annex 4.7 Project Cost by Years (US$ Million)...... 115 Annex 4.8 Project Cost by Years (Rs Million)...... 116
Annex 5.1 WAPDA - GBPMU Organization Chart ...... 117 Annex 5.2 Project Implementation Schedule...... 118 Annex 5.3 Estimated Procurement Schedule...... 122 Annex 5.4 Estimated Schedule of Disbursements ...... 123 Annex 5.5 Supervision Plan...... 124 Annex 5.6 Performance Indicators ...... 126 -Iv-
Annex 6.1 Environmental and Resettlement Management Plans ...... 129 Annex 6.2 Entitlement Packages ...... 156 Annex 6.3 Review of Outstanding Resettlement Issues Related to the Tarbela Dani - TORs ...... 161 Annex 6.4 WAPDA - Environment Cell - Organization Chart ...... 164 Annex 6.5 Project Resettlement Organization - Organization Chart ...... 165 Annex 6.6 Social Science Unit - TORs ...... 166 Annex 6.7 WAPDA - Social and Enviromnental and Resettlement Monitoring - TORs for Monitoring Consultant ...... 168 Annex 6.8 Project Non-Govemmental Organization - TORs ...... 175 Annex 6.9 Project Entities - Resettlement and Environment Organization Chart ...... 177
Annex 7.1 Actual and Forecast Financial Statements...... 178 Annex 7.2 Notes and Assumptions for Financial Forecasts...... 181 Annex 7.3 Financial Sensitivity Analysis ...... 185
Annex 8.1 Least-Cost Analysis...... 186 Annex 8.2 Economic Rate of Retum Analysis...... 197
Annex 9 Documents in the Project File...... 209
Drawings 1, 2 and 3
Maps IBRD No. 25106 IBRD No. 25107 PAKISTAN
GHAZI-BAROTHA HYDROPOWER PROJECT
STAFF APPRAISAL REPORT
1. THE ENERGY SECTOR
Overview
1.1 Since the late 1980s, the Government of Pakistan (GOP) has been implementing a broad- based macroeconomic adjustment and structural reform program, supported by the Bank and the Fund, for improving growth performance and addressing extemal and internal imbalances. The energy sector is critical to the achievement of these objectives, since it accounts for about 33% of public investments. In this context, GOP has been pursuing, with Bank support, a far-reaching policy reform program in the energy sector, aimed at strengthening the key institutions, enhancing energy efficiency, developing measures for resource mobilization, and attracting private investments. As a result, new institutions have been created to encourage the construction of power plants by the private sector and promote energy conservation, important energy price reforms have been introduced, some of the main institutions have been restructured, the operational and financial performance of the sector has improved, while the first private power generation project (Hub-1292 MW) is being implemented. Despite these efforts, the development of the sector continues to be constrained by a lack of financial resources and insufficient implementation capability, resulting in continued energy shortages that constrain economic growth. Load shedding persists, and reached the level of 27% of peak demand in FY94, while the gas supply shortfall reached 600 million cubic feet per day, or about 25% of demand, during the winter of 1994.
1.2 Recognizing the need for accelerating the implementation of the reform program in the sector, GOP has decided to complement and reinforce its policy reform program by adopting a more comprehensive energy strategy. An Energy Task Force (ETF) was constituted in late 1993 to formulate this strategy. ETF's report confirmed the need for the restructuring and privatization program for the power sector, and the setting up of an independent Regulatory Authority, as outlined in a Strategic Plan approved by the Government in July 1992 (para 2.3). The ETF report also formed the basis for a Policy Framework and Package of Incentives for Private Sector Power Generation Projects, and a Petroleum Policy, both announced in March 1994. In March 1995, GOP broadened its policy by introducing a package of incentives for private sector participation in the main 500 kV transmission lines, and in hydropower projects off the Indus River. These policy documents set out a vision of greater dependence on market forces and private sector involvement, including restructuring and privatization of the public enterprises in the sector. Further, these policies support the establishment of a consistent institutional and incentive ftameworkfor promoting energy conservation and the use of alternative energy resources.
1.3 The 1994 Petroleum Policy deals with both upstream and downstream activities. It provides for a reduction in GOP oversight and involvement in the sector, including a lower -2- mandatory participating interest for GOP in new concessions, elimination of the gas allocation policy for new discoveries in high risk areas, elimination of discretionary discounts for the producer price of domestic crude and natural gas, establishment of an independent Petroleum Regulatory Board, and the privatization of most of the public enterprises in the sector. For the major enterprises, several offers of strategic equity partnerships from foreign petroleum companies have been received. However, GOP has opted for a transparent bidding process rather than negotiated deals, and has appointed financial advisors to achieve this objective. The Policy also enhances the incentives for gas exploration in the country, by linking the producer price to a basket of crudes; provides additional fiscal incentives for oil and gas exploration and development; and introduces specific incentives for private investment in petroleum infrastructure projects (i.e. pipelines and storage facilities) and in new refineries. These initiatives have elicited a positive response from private investors, in particular international oil companies. As a result, as of end-1994, all the blocks of acreage offered for exploration by GOP have been awarded and active discussions are ongoing with private sponsors for investments in downstream petroleum facilities. The Government is now preparing, with Bank assistance, a new incentive package for off-shore petroleum exploration in Pakistan and an international road show held in July 1995 promoting six offshore blocks has generated considerable interest from private investors. An 87 km. long pipeline is being built by a private company to supply fuel oil to Hub and other planned power projects west of Karachi. A memorandum of understanding was recently signed between GOP and a private international consortium for the construction of an oil pipeline linking Karachi with major consumption centers up-country.
1.4 In the power sector, GOP has begun the implementation of a three-pronged strategy: (a) restructuring and unbundling the activities of the power sector utilities, including gradual divestiture of selected assets of the Water and Power Development Authority (WAPDA) and privatization of the Karachi Electricity Supply Corporation (KESC); (b) construction of all new thermal power plants and the main 500 kV transmission lines by the private sector on a Build- Own-Operate (BOO) and Build-Own-Maintain (BOM) basis, respectively; and (c) establishment of the National Electric Power Regulatory Authority (NEPRA). GOP has been very active on these fronts, and Chapter 2 gives the detail of progress made to-date. In particular, an amendment to the WAPDA Act was promulgated in 1994, to enable the sale of assets; a financial advisor has been appointed for the sale of WAPDA's 1,600 MW Kot Addu thermal power plant, preparatory work for the sale of KESC, the Jamshoro power plant (880 MW) and one distribution Area Electricity Board (AEB) is underway; an ordinance creating NEPRA was promulgated in January 1995, and staffing of NEPRA is underway.
1.5 With regard to the construction of new power generation plants by the private sector, the new policy elicited an overwhelming response from both domestic and foreign investors. GOP is negotiating security packages with sponsors of thirty-four different power plants with a potential generating capacity of about 9,000 MW. In addition to the ongoing 1,292 MW Hub Power Project, five other projects, with a total installed capacity of about 860MW (AES Pakistan Limited (360 MW), Kohinoor (131 MW), Gull Ahmed (136 MW), Raiwind (117 MW) and Tristar (120 MW)) reached financial closure in May, June, and October 1995, and at least four other projects with a total capacity of about 1,000 MW are expected to reach financial closure early 1996. -3-
1.6 The Strategic Plan mentioned in para 1.2 calls for WAPDA to continue to own and operate major hydropower projects in the Indus Basin, largely because of their importance for irrigation. Within this framework, WAPDA will also continue to build selected new hydro- electric plants that are part of the least-cost development plan for the power sector. The proposed Ghazi Barotha Hydropower Project (GBHP) will produce electricity at a lower cost than the available alternatives, (see Chapter 8). The option of inviting the private sector to implement GBHP on a BOO/BOT basis was reviewed during the final preparation stage. However, for reasons explained in para. 4.4, it was concluded that this would not be feasible. The Bank has been closely involved in Pakistan's power sector reforms and has supported these reforms through adjustment operations, regular investment loans for public sector projects and loans and guarantees for private sector generating projects. Bank support for Ghazi Barotha is linked with further progress on the power sector reform program. Thus, the proposed operation is consistent with the Bank's lending policy in the sector.
Institutional Settin2
1.7 The responsibility for the energy sector is shared by four ministries: the Ministry of Petroleum and Natural Resources (MPNR), the Ministry of Planning and Development, the Ministry of Water and Power (MWP), and the Ministry of Production (MOP). A high-level Cabinet Committee on Energy (CCE), chaired by the Prime Minister, is responsible for the review and approval of all plans, policies and projects in the energy sector, while the implementation of the approved projects is assigned to the respective ministries and entities. An Energy Review Group provides coordination among the entities and ministries and monitors the progress of ongoing projects, programs, policy actions and issues. In addition, the Environment and Urban Affairs Division (EUAD), Ministry of Environment and Urban Affairs, is responsible for formulating and monitoring the implementation of GOP's environmental policies, including those for the energy sector
1.8 The management of day-to-day operations in the energy sector is vested in a number of public and private sector entities. The public sector entities are: (a) the Water and Power Development Authority (WAPDA), which is responsible for developing Pakistan's water resources and for the construction, operation and maintenance of power generation, transmission and distribution facilities throughout the country, except the Karachi area; (b) the Oil and Gas Development Corporation (OGDC) for exploration and development of oil and gas; (c) the Pakistan Mineral Development Corporation, for the exploration and development of mineral resources; and (d) the State Petroleum Refining and Petrochemical Corporation which owns the National Refinery Limited (NRL), for processing crude oil. Also involved in the energy sector are a number of semi-autonomous entities in which GOP has a controlling interest either directly or through public institutions. These are: (a) Karachi Electric Supply Corporation (KESC), which is responsible for the construction, operation and maintenance of power generation, transmission and distribution facilities in the Karachi area; (b) Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Corporation (SSGC), responsible for the transmission and distribution of natural gas and which are in the process of being privatized; (c) two independent gas transmission networks which supply natural gas to WAPDA's Guddu power station and to three fertilizer plants; and (d) Pakistan State Oil Limited (PSO) responsible for marketing and distribution of petroleum products. Private sector entities include a large number of Pakistani coal mining -4- companies; two refineries; two companies for marketing and distribution of petroleum products, and a number of oil and gas development companies. MWP has jurisdiction over WAPDA and KESC, and MOP over NRL and Pakistan Refinery Ltd. (PRL). All other operational entities (public and semi-autonomous) are under the jurisdiction of MPNR. The list of private sector entities will be enlarged starting June 1996 by private power generation companies which are in the process of implementing their respective facilities.
Institutional Development
1.9 The 1994 Policies call for a redefinition of the role of the public sector in the energy sector. Through the restructuring and privatization of the main public sector entities, and the establishment of a transparent regulatory framework, the Government's role will be reduced. As policy maker, the Government will be primarily responsible for monitoring the development of the sector and, if necessary, introduce the corrective measures required to set the sector on its growth path. Thus, under the 1994 Petroleum Policy, GOP would create a holding company to handle the Government's participating interests in concessions so as to better separate the regulatory and ownership functions of GOP. Furthermore, GOP announced that it would privatize OGDC, SNGPL, SSGC, and the Pak-Arab Refinery, Ltd. Progress is being made and it is expected that SNGPL and SSGC would be privatized by June 30, 1996. Plans for the privatization of OGDC and the other petroleum entities in the public sector are actively being pursued. The institutional development aspects of the power sector is discussed in Chapter 2.
Ener2v Resource Endowment
1.10 Pakistan's commercially exploitable energy resources consist of hydropower, natural gas, oil and coal. In addition, the country has a large base of traditional fuels in the form of fuelwood and agricultural and animal waste, which provide a major share of rural consumers' energy needs. Despite its endowment of energy resources, Pakistan's dependence on energy imports has been higher than envisaged by GOP in the previous five-year plans, principally due to financial and implementation constraints.
1.11 The hydropower potential in Pakistan is estimated at about 27,000 MW under average hydrological conditions. As of December 1994, only about 4,825 MW (18%) of this capacity was developed or committed. A large number of medium and large sized hydroelectric projects have been proposed and studied to varying levels of detail. In particular, detailed engineering studies have been completed for Kalabagh hydropower project (3,600 MW), while steps are being taken to initiate the feasibility study for Basha hydro project (3,300 MW). Kalabagh studies were completed in 1985. However, the project could not be processed further because of provincial differences, its very large financing requirement, and the wide scope of its environmental and resettlement impacts. With the assistance of GTZ (the German Agency for Technical Cooperation), preparatory work has been initiated for the identification and feasibility studies of several medium-size hydel projects in the northern part of the country; these schemes have been analyzed in para 8.12.
1.12 In the oil subsector, the remaining recoverable reserves amount to about 27 million tons of oil equivalent (TOE) as against the original estimate of 64.5 million TOE. Pakistan's major oil fields (Dhurnal, Dhulian, Balkassar and Meyal) have largely been exploited, with domestic oil -5- production having increased from 39,300 barrels of oil per day (BOPD) in FY86 to about 57,000 BOPD in FY94, resulting in a reserves to production ratio of only nine years. With a view to improve the incentives for additional exploration activity, and offset the declining reserves to production ratio, the package of reforms announced in the 1994 Petroleum Policy (para 1.3) includes more expeditious procedures for awarding exploration licenses, the elimination of the discount mechanism for producer price of oil, and the deferment of duties on imported equipment for exploration activities to the production phase.
1.13 Pakistan has proven recoverable gas reserves estimated at 23 trillion cubic feet (TCF) (including 0.3 TCF of associated gas reserves) of which 9.6 TCF were discovered during the last 5 years, mainly through the new fields at Qadirpur (3.9 TCF) and Kadanwari (1 TCF). The Kadanwari gas field came on stream in May 1995 with an initial production of 80 MMCFD of gas. Over the same period, gas production has also increased from about 1.0 billion cubic feet per day (BCFD) in FY86 to about 1.7 BCFD in FY94. Despite the recent discoveries, gas exploration has proceeded at a slower rate of development than the resources warrant, in part due to the generally limited interest by the oil industry in gas exploration. To address this issue, the 1994 Petroleum Policy, in addition to the above-mentioned reforms common for oil and gas, introduces additional incentives for enhancing gas exploration and development.
1.14 Domestic proven reserves of coal and lignite in established fields are estimated at about 600 million tons, of which about 360 million tons are recoverable; in addition, reserves amounting to 475 million tons (of which about 285 million tons are recoverable) have been confirmed at the recently discovered Thar coal field in the lower part of Sindh. However, the economic viability of coal production from the Thar deposits still remain to be established. The quality of domestic coal is generally poor, requiring fluidized-bed technology if utilized for power generation. Thus, in FY94, production was only 3.5 million tons, of which 43,600 tons were used for generating about 44 GWh of electricity.
1.15 In addition to hydropower (para 1.11), most of the balance of the renewable energy is obtained by direct burning of biomass, while the use of solar energy and biogas remains insignificant. Given that the household sector accounts for over 80% of the biomass consumption, and in face of the rapid increase of the population, a greater pressure on the already dwindling stock of the country's forest resources as well as other forms of biomass is expected. Reliable statistics on the use of renewable energy have been developed under the recently completed Household Energy Strategy Study carried out by GOP in collaboration with the Energy Sector Management Assistance Program (ESMAP).
EnerLvDemand and Supplv
1.16 Pakistan's consumption of commercial energy increased between FY83 and FY94 at an average annual rate of about 6.1%, from 11.3 million TOE to 20.4 million TOE. This was due mainly to: (a) the growth of the economy of 5.7% p.a.; (b) increasing access to commercial energy resources by the population; (c) the modernization of the agriculture activities; and (d) the increasing pace of industrialization (industrial production increased during the period at 7.1% p.a., compared to 3.8% p.a. of the agriculture sector). In FY94, the pattern of commercial energy consumption was: 38.8% industrial, 33.1% transport, 18.6% residential, 3.9% agriculture, 6% others, as shown in Figure la below: -6-
PAKISTANCOMMERCIAL ENERGY CONSUMPTION(FY94)
Agricuture Others 4% 6% Residentil Ihdustrial 19% 38%
Transport 33%
Figure la
Table 1.1 and Figure lb below show the commercial energy supply growth from FY83 to FY94.
Table 1.1: COMMERCIAL ENERGY SUPPLY FY83 - FY94 (thousand TOE)
Average Annual FY83 (%) FY94 (%) Growth Rate for FY83-FY94 in % Gross Primarv Enerev SuDDIV 17,170 (100) 34,748 (100) 6.6
Oil & Petroleum 5855 (34.1) 14564 (41.9) 8.6 Domestic Oil 500 (3.2) 2,686 (7.7) 16.5 Imported Oil 3,625 (21.1) 4,161 (12.0) 1.2 Imported Petroleum 1,680 (9.8) 7,717 (22.2) 14.8
Natural Gas 7.48 (43.6) 13125 (37.8) 5.2
Coal 1.062 (6.2) 2 301 (6.7) 7.3 Domestic Coal 720 (4.2) 1,581 (4.6) 7.4 Imported Coal 342 (2.0) 720 (2.1) 7.0
Primary Electricity 2.767 (16.1) 4.758 (13.6) 5.0 Hydro 2,713 (15.8) 4,539 (13.3) 4.8 Nuclear 54 (0.3) 119 (0.3) 7.4 Source: Hydrocarbon Development Institute of Pakistan. Energy Yearbook, various issues. -7-
FY83 FY94 Hydro ~~~~Oil&Hyr 16dr Petroleum 14dr 16% 34% 14% Oil & Petroleum Natural 41% Gas Natural Coal 38% Coal Gas 6% 7% 44% Figure lb
1.17 Due to supply constraints, the share of gas in Pakistan's primary energy balance fell from 43.6% in FY83 to 37.8% in FY94. Over the same period, hydropower generation and coal production roughly maintained their shares and, consequently, the consumption of oil and petroleum products grew rapidly and their share expanded from 34.1% to 40.9%. However, despite the sharp rise in domestic crude production (17.7% p.a.) three-quarters of the increased consumption of crude oil and petroleum products were met through imports. Because of inadequate incentives, domestic refinery capacity expanded only slowly and the bulk of fuel imports were in the form of refined products. The Energy Balance for FY94 is presented in Annex 1.1.
Enerzv Demand Forecast
1.18 The forecast of unconstrained commercial energy demand (recently finalized by the Energy Wing in the Ministry of Planning and Development in collaboration with the Bank), calls for an annual increase of about 6.7% up to FY2008. The forecast is based on a regression analysis of past consumption trends and relationships, and assumes the implementation of an aggressive program of energy conservation and efficiency. These projections are also in line with recent trends towards decreasing overall elasticity of energy consumption to econornic growth from 1.10 in the period FY83-93 to 1.03 between FY93-2008.
Enerev Supply Forecast
1.19 In order to meet the projected demand at least cost, the supply of domestic energy resources is forecast to increase in absolute terms (although its share in total energy supply is expected to decrease from 68% in FY93 to about 62% in FY2003). However, despite the implementation of the proposed project, the share of hydro-electricity in total energy supply would decline from the present level of 15% to 12% in FY2003. The share of the largely imported oil and petroleum products is expected to rise from the present level of 34% to 44% of total energy supply in FY2003. This share could be reduced by substantially expanding the supply of gas either through development of new gas fields, and matching investments in the pipeline infrastructure, or gas imports by pipeline. Studies to determine the most economical options for increasing the supply of gas has been recently completed by ESMAP and in the Energy Options Study (para 1.28). These studies concluded that the likely gas supply shortfall in the country -8- could be sufficient to absorb economic supplies of natural gas which may be made available from increased levels of domestic production in the short to medium term, and from a major gas importation project in the longer term. In the absence of such an increase in supply, the share of gas may decline from 38% to as little as 24%. Under this assumption, the share of imported petroleum products in total energy supply would further increase from its current level of 34% in FY94 to 58% in FY2003, to substitute mainly for the use of natural gas in thermal power generation, and in the industrial sector.
Enerfy Prices
1.20 The Government has been gradually liberalizing energy prices, and generally moving towards more market-oriented and transparent pricing regimes. The 1994 Petroleum Policy introduced a more attractive market-based reference price for determining the domestic producer price of natural gas, and eliminated the discretionary discount applied by GOP on the border price of crude, for determining the producer price of domestically produced crude oil. These reforms have also rectified other anomalies in the producer pricing formula. As a result, producer prices for domestically produced crude continue to be pegged to international prices of crude, while the natural gas producer price is now indexed to the international price of a basket of crude oil. Refinery prices are directly linked to international market prices.
1.21 Consumer prices of petroleum products and natural gas have been periodically adjusted in line with movements in world market prices. As a result of the price increase of 5% introduced in the FY96 budget, consumer prices for petroleum products, with the exception of fuel oil, are currently at or above the corresponding import prices, adjusted for inland transportation and distribution margins (see Annex 1.2). On average, during FYs88-95, prices of motor gasoline have been raised by about 10% per annum, kerosene 11% per annum, diesel 7.8% per annum, and fuel oil 6% per annum. Consumer prices of natural gas were also increased by about 25% as part of the FY96 budget. As a result, gas prices for the general industry, cement, power (including raw gas tariffs) and commercial sectors are at parity or above the domestic price of fuel oil. Despite their recent increase, gas tariffs for residential consumers are at about 80% of the border price of fuel oil, due to the upward trend in international prices. Natural gas prices have been raised by 8.6% per annum for industrial and commercial sectors, about 12% per annum for the high consumption slabs of residential consumers, and 6.5% per annum for the low consumption residential slab during the same period. Annexes 1.3 give a detailed breakdown of gas tariffs compared to domestic and international prices of fuel oil. Electricity tariffs including the Fuel Adjustment Surcharge have been increased regularly, to enable WAPDA to finance at least 40% of its average investment program through internal cash generation. As a result, the average electricity tariff has risen from about Rs 0.64/kWh in FY85, to Rs 2.24/kWh in FY96 (para 2.18).
Environment and Ener2 Conservation
1.22 Responsibility for environmental protection in the energy sector in Pakistan is vested in the Environment and Urban Affairs Division (EUAD). The framework for the country's environmental protection was established in 1983, when the Pakistan Environmental Protection Ordinance was promulgated. Subsequently, EUAD prepared guidelines for environmental impact statements for energy-producing activities, and has notified the standards for protection against air and water pollution. The Ministry of Labor is developing improved health, safety and -9- emergency management standards for surface and underground coal mining activities. In addition, programs to strengthen the environmental management capabilities of OGDC and WAPDA are being supported through existing Bank operations.' The Directorate General, Petroleum Concessions in the MPNR is preparing, with Bank assistance, guidelines for environmental management and operational safety for petroleum exploration and production in the country. These efforts will be continued under the proposed project and with the assistance of the Canadian International Development Agency (CIDA).
1.23 In 1992, the Government approved a comprehensive National Conservation Strategy (NCS)2 , prepared with the assistance of CIDA, UNDP and the International Union for Conservation of Nature and Natural Resources (IUCN). The NCS sets out the Government's priority objectives and plans for promoting effective environmental and natural resource management. The NCS proposes to achieve these objectives through a broad-based program which is directed towards encouraging greater public participation in development and environmental management; merging environment and economic decision making; and promoting sustainable improvements in the quality of life.
1.24 As regards energy conservation, the National Energy Conservation Center (ENERCON) has, in accordance with its mandate, initiated information and outreach programs for enhancing awareness about energy conservation prospects; assisted in policy formulation and planning; developed investment projects and proposals for the promotion of energy conservation activities; and implemented pilot programs aimed at demonstrating the viability and benefits of such activities. The major activities completed to date include: (a) a draft National Energy Conservation Law and a National Building Energy Code; (b) detailed energy audits for 59 large industrial plants which have identified possible savings of 22% on average; (c) pilot tune-up programs for industrial boilers and automobiles, and retrofitting of tubewells; and (d) training programs for private and public sector managers, engineers and technicians. A proposed Energy Efficiency and Conservation Project, tentatively scheduled for FY97, would focus on the implementation of a comprehensive demand-side management program and activities in energy efficiency and conservation.
EnerRv Stratezr
1.25 The Government's basic policy documents3 provide a blueprint for a complete transformation of the energy sector from a situation where the whole sector is controlled
l Ln. 3500-PAK (DomesticEnergy ResourcesDevelopment Project, Approved June 1992). Ln. 3764-PAK (Power Sector DevelopmentProject, Approved June 1994)
2 In addition to CIDA and UNDP, a number of donors, including the Bank, have supported GOP's efforts to implement the NCS; Bank assistance includes the Enviromental Protection and Resource Conservation Project (Cr. 2383-PAK), and the Northern ResourceManagement Project (Cr. 2512-PAK).
3 Strategic Plan for the Privatization of the Pakistan Power Sector (April 1992), Energy Task Force Report (February 1994), Policy Frameworkand Package of Incentivesfor Private Sector Power Generation Projects (March 1994), Petroleum Policy (March 1994), Transmission Policy (March 1995), and Hydel Policy (May 1995). -10-
centrally, the main entities are publicly owned, the prices are set by administrative fiat, and the key concern is to expand supply, to a situation where the Government focuses on policy formulation, private sector owns most of the assets and operates within a transparent regulatory framework, most prices are set by competitive market forces, and proper incentives are provided for energy conservation and development of domestic energy resources. The concrete actions to implement this vision - most of which are already underway - include: (a) accelerate the ongoing restructuring and privatization of WAPDA, (b) complete the already initiated privatization of KESC, SNGPL, and SSGC, (c) extend the privatization program to the other major parastatals in the energy sector, i.e., PSO, OGDC and NRL; (d) further increase private sector involvement in power generation and transmission, oil and gas exploration, production and distribution through an internationally-competitive package for attracting local and foreign investors; (e) enhance domestic resource mobilization for energy projects through further capital market reforms; (f) establish a transparent regulatory framework for the power sector as well as the petroleum sector; (g) restrain energy demand growth, by introducing incentives for energy conservation; (h) reduce losses in transmission and distribution; (i) further develop domestic energy resources at least-cost; and (j) improve the operational efficiency of the energy enterprises that will remain in the public sector.
1.26 The Bank's Assistance Strategy is geared to supporting the Government's strategy outlined above and is fully consistent with the Country Assistance Strategy (CAS) being discussed along with this project. In particular, the Bank's strategy is to pursue the "unbundling" of various energy sub-sectors in order to maximize competition and to bring in private sector management skills and financing. This strategy comprises six basic elements:
(a) provide direct support for the privatization of the key utilities (with emphasis placed on creation of competitive market structures where feasible);
(b) encourage the mobilization of private sector resources through Bank lending and guarantees for energy and other infrastructure projects;
(c) establish appropriate - and stable - regulatory frameworks to both reduce risks for private operators and protect the consumers against potential monopolistic practices by private operators;
(d) rationalize pricing structures to enhance resource mobilization and ensure that the final costs of providing appropriate incentives to private firms is borne by the consumers and not funded through the Government's budget;
(e) continue institutional and financial support for the key agencies that will remain in the public sector; and
(f) help create and implement a consistent institutional and incentive framework for promoting energy conservation and use of alternative energy resources.
1.27 Since the mid-1980s, the Bank has been deeply involved in Pakistan's energy sector reforms through both policy advice and lending. The Bank was instrumental in developing the legal and institutional framework for private investments in generation and transmission, and -11- is strongly supporting the creation of NEPRA and the divestiture of WAPDA's thermal generation and distribution facilities. Past lending aimed also at improving economic efficiency and financial sustainability in the sector by encouraging least-cost planning and tariff setting to provide adequate levels of self-financing, ensuring compliance with international environment standards and strengthening implementation capability. The Bank's future lending program will further develop and enhance economic efficiency and the participation of private investors. The proposed Energy Efficiency and Conservation Project would strengthen Pakistan's demand-side management and energy conservation program (para 1.24). A proposed Hydrocracker Project to increase production of high-value petroleum products is being developed by a joint venture in which the private sector holds the controlling interest. Other projects would support additional private sector investments and the restructuring and privatization of public sector enterprises, including the Bank's proposed guarantee for the Uch Power Company, and the planned Third Private Sector Energy Development Project. To complement private sector investment in energy projects, long-term domestic resources need to be made available in the sector. To this end, the Bank is executing a study to review long-term domestic resource mobilization options and capital market reforms (para 7.5). Finally, the proposed project is consistent with the Government's policy framework for the sector, which envisages decentralization and deregulation of operational responsibilities, improvement of efficiency, and development of domestic energy resources at least-cost to reduce shortfalls of energy supply.
1.28 The Bank has also assisted the Government in (a) identifying the expected shortfall between energy demand and supply, and evaluating the options available to GOP for enhancing supplies; (b) assessing the effectiveness of the Government's strategy for promoting the necessary levels of investments; and (c) outlining the remaining agenda of policy reforms which would complement the ongoing reform program, and set the energy sector on the required growth path. An Energy Options Study,' concluded that energy demand growth is expected to remain strong - about 7% per annum between 1994-2018, and ensuring adequate expansion of energy supplies will entail substantially higher levels of investments than in the past. In order to ensure adequate investments for expanding energy supplies, while at the same time maintaining macroeconomic stability, a number of policy responses should be considered by the Government: (a) more aggressive efforts to curtail demand growth through appropriate price increases (aimed at raising the level of energy prices while reducing cross-subsidies for residential and agricultural consumers), and the elimination of tax exemptions; the latter would also mobilize additional resources for investments in the energy sector; (b) introduction of more state-of-the-art operations, maintenance and management practices to enhance the operational performance and efficiency of existing assets; (c) better phasing of the required investments so as to mitigate their adverse fiscal and balance of payments effects; and (d) targeting of the increased energy supplies largely towards the productive sectors, particularly export-oriented activities, in order to ensure sustainability in the balance of payments and prevent a deterioration in creditworthiness ratios. The proposed project will assist GOP in achieving some of these policy measures.
Report No. 14025-PAK,Green Cover, June 1995. The report will be distributedin Gray Cover to include commentsfrom governmentofficials. -12-
2. THE POWER SUBSECTOR
Back2round
2.1 The responsibility for power supply in Pakistan is currently shared between WAPDA and KESC WAPDA supplies power to the whole country except the Karachi area, which is served by KESC. The WAPDA and KESC systems are integrated through a 220-kV double circuit transmission line. As of December 1994, the power system included 10,675 MW of generating capacity in the WAPDA system (of which 4825 MW is hydel), 1738 MW generating capacity under KESC (all thermal), and a nuclear power plant (137 MW) connected to the KESC system. The system serves about 10 million consumers, in the following main categories: about 7.9 million residential, 1.5 million commercial, 200 thousand industrial, and about 160 thousand agricultural consumers. WAPDA accounts for about 84% of the total installed capacity of 12,550 MW, while supplying about 80% of the country's electricity consumption. A description of the existing WAPDA system is provided in para 3.10.
Power Sector Reforms - Recent Developments
2.2 As indicated earlier, GOP has been pursuing a far-reaching privatization and reform program for the power sector. Initiated in 1988, with the 1,292 MW Hub Power Project under a BOO scheme, GOP's commitment to the reform policy was further strengthened in July 1992 with the approval of the Strategic Plan for the Privatization of the Pakistan Power Sector. In March 1994 and 1995, the reform program was strengthened with the announcement of a new policy framework providing internationally attractive incentives for private investors in thermal power generation, and in hydropower generation off the Indus River and 500 kV transmission lines. The Bank is assisting GOP in implementing this reform program through policy advice and three operations: the Private Sector Energy Development Projects (PSEDP) I and II approved in 1988 and 1994 (Ln. 2982-PAK and Ln. 3812-PAK), and the Power Sector Development Project (PSDP) (Ln. 3764-PAK) approved in June 1994. The proposed project will further enhance Bank's assistance in this reform program.
2.3 The Strategic Plan envisages a gradual transition of the power system from integrated, state owned utilities to a decentralized system with substantial private ownership and management, and reflecting a commercial and competitive operating environment. In particular, WAPDA would be reorganized as a holding company with independent subsidiaries for the thermal and hydel generation, transmission and despatch, and distribution operations. The thermal and distribution subsidiaries would be gradually offered for sale to the private sector. Each subsidiary would be established as a company under the 1984 Companies Ordinance, with its own Board of Directors and management; preparation of independent year-end financial statements, evaluation of management performance, and accountability to owners/shareholders. At the same time, new thermal projects would be implemented only by the private sector. The power system, upon completion of the transition, would thus comprise a number of privately-
I Privatepower generation will enter intothe system starting June 1996. -13- owned generation companies operating under free market competition; an independent, regulated transmission and despatch entity responsible for the integrated operation of the system and for the wholesale power market; publicly-owned, corporatized entities for the operation of multipurpose hydel facilities; and private companies responsible for supplying electricity to the final consumers, including socially desirable subsidized services, with GOP bearing the cost of such services through transparent and explicit transfers from the budget. The Strategic Plan also provides for the establishment of an independent National Electric Power Regulatory Authority (NEPRA) to set standards and regulate a gradually privately-operated power sector. The PSDP is assisting GOP and WAPDA in setting the stage for this gradual restructuring and privatization program.
2.4 While the Strategic Plan deals mainly with the restructuring and privatization of WAPDA (the dominant public utility in the sector), the March 1994 and 1995 policy frameworks are oriented towards implementation of new power generation and transmission system under BOO/BOM schemes in the private sector. These policies provide attractive incentives to private investors and establish a streamlined "one window" approval process, based on the experiences gained through the prolonged process of negotiations preceding financial closure of the Hub Power Project. Box 1 presents a summary of the Incentives Package.
Incentivesfor PrivatePower GenerationProiects in Pakistan
| Bulk tariff of US cents 6.5/kWh (to be paid in Pakistan Rupees) for the sale of electricity to WAPDA/KESC,with indexationmechanism for fuel prices, US and Pakistaniinflation, exchange rate fluctuations,0 & M costs, etc.
* Fiscal incentivesconsisting of exemptionfrom corporateincome tax, customs duties, sales tax, lqra, and other surchargeson importedequipment.
* Standardizedsecurity package which includes a model ImplementationAgreement, Power Purchase Agreementand Fuel SupplyAgreement.
* Creationof a Private Power and InfrastructureBoard, so as to facilitatea one-windowoperation.
* Fiscal incentiveto facilitate the creation of a corporate securitiesmarket in the country, including permissionfor power generationcompanies to issue corporatebonds and shares at discountedprices, and establishmentof an independentrating agency.
2.5 Major actions taken todate by GOP and WAPDA towards the implementation of the reform program are summarized below:
(a) an amendment to the WAPDA Act was promulgated in April 1994, enabling WAPDA to be corporatized and divest selected parts of its assets;
(b) following this amendment, the Government finalized in early 1995 and with the assistance of a reputable international financial advisory firm, the short list of potential investors for the Kot Addu power station (1,600 MW). Bids from those -14-
investors are expected shortly.2 As a second step, GOP also initiated the due diligence required to proceed with the privatization of the 880 MW Jamshoro power station, and for the Faisalabad Distribution Area Electricity Board;
(c) an Ordinance was promulgated in January 1995 for establishing NEPRA. As provided for under the Ordinance, Provincial Governments have been requested to submit their nominations for the Members of the Authority3 , and the Chairman of NEPRA was appointed in September 1995;
(d) a tariff policy and administration study which would establish the commercial pricing principles for electricity, in support of GOP's privatization strategy, is underway, and its recommendations are expected to be formulated by January 1996 and their implementation thereafter;
(e) a manpower transition program study is being initiated to provide recommendations which would allow the privatization of the power sector to occur in a manner that addresses the concerns of labor and the purchaser,
(f) the restructuring program for WAPDA has been launched; accounting systems in line with the cost profit centers objective have been designed and their implementation initiated; and the process of appointing consultants for preparing and implementing the corporatization of WAPDA's existing assets started. This includes the preparation of the legal framework, management structure along cost/profit center lines and staffing plans, as well as computerized management information systems (covering, among others, accounting and finance, operations, personnel, materials management etc.), and operational and financial performance criteria for the corporate entities;
(g) the first major private generation project, the 1,292 MW Hub Power Project is under implementation, and the commissioning of the first unit is expected by June 30, 1996; and
(h) as a result of GOP's incentives packages of 1994 and 1995, GOP has received proposals exceeding 25,000 MW for new power generation projects and for its transmission projects. GOP has so far issued letters of support (LOSs) and is negotiating the security packages with sponsors of thirty-four different power plants with a potential generating capacity of about 9000 MW. Out of these, five projects, with an estimated total installed capacity of about 860MW, have reached financial closure, and projects for about 1,000 MW are expected to reach financial closure early 1996.
2 The processof sale of Kot Adduwas delayeddue to laborissues which have been resolvedlately. Financial closureis expectedby early 1996.
3 Twoout of fourProvinces noninated already their Members. -15-
2.6 The above overall progress on the various aspects of the reform program is encouraging and illustrates GOP's commitment. However this reform program will take time to be fully implemented, as it has been the case in other reforming countries. While recognizing this fact, and putting in place required measures to address the main issues, the need for accelerating the pace of its implementation remains critical for an optimal and efficient development of the sector and its positive impact on the growth of the economy. The proposed project would assist GOP and WAPDA in achieving this objective.
The Power Market
2.7 The electricity market has grown at a very rapid pace over the past two decades. Consumption of electricity increased from 6,097 GWh in FY73 to 38,218 GWh in FY94, at an annual average rate of growth of 9.1%, while real GDP growth rate averaged 5.7% p.a., showing an elasticity ratio of 1.6. Over the years, the domestic sector has emerged as a major electricity consumer, accounting for 37% of total consumption in FY94, compared to 11.7% in FY73, together with the industrial sector whose share has declined from 50.1% in FY73 to 39% in FY94. During the same period, the agricultural and commercial sectors have decreased their share in the overall consumption. The impressive growth of the domestic consumption has been caused by a five-fold increase in the number of connected households, equivalent to an average of over 380,000 new customers per year. Despite this progress, only about half of Pakistan's population of about 121 million, have access to electricity service, and the per capita electricity consumption (about 300 kWh) remains low both in absolute terms and in comparison with countries at a similar level of development.4
2.8 The country has been experiencing wide-spread power shortages, principally due to insufficient power facilities (generation, secondary transmission and distribution systems), coupled with variations in hydro flows and irrigation constraints. In FY94, power shortages reached a level of about 27% of peak demand (Annex 2.1) and estimates of the overall impact of load- shedding on the economy amount to about US$950 million. The proposed project would assist in gradually reducing the power supply/demand gap.
Electricity Demand Forecast
2.9 The electricity demand forecast through FY2020 has recently been finalized by WAPDA and reviewed by the Bank. The forecast is based on a regression analysis of past trends of the demand for electricity in Pakistan, and assumes as independent variables (a) the level of income; (b) electricity price; (c) price of alternate fuels; and (d) load-shedding. Three scenarios regarding macroeconomic performance and income growth were used for the analysis: (a) a High Scenario, which assumes full implementation and further deepening of the macroeconomic reform program, and is consistent with overall GDP growth of 6.2% per annum up to FY2002 and 7% per annum over the FY2002 to FY2020 period; (b) a Base Scenario, assuming a partial, and slower implementation of reforms, with a GDP growth of 5.3% and 5.6% per annum over the same
4 In 1990, the average electricity consumption per capita for the Asia region as a whole, was about 1,235 kWh. -16-
periods as above; and (c) a Low Scenario, which is based on little reforms, along with external difficulties, and assumes an overall GDP growth rate of 4.5% per annum over the entire period (FY94-2020). Because the historic load-shedding estimates were included in the data base, the resulting forecast provides a reasonable approximation of unconstrained electricity demand. The introduction of load management and conservation measures (Annex 2.2), including a gradual increase in the tariffs to move closer to the economic cost of supply, consistent with the provisions discussed in para 2.19, was then included in the model.
2.10 The resulting electricity demand under the Base Scenario is projected to increase at an average annual rate of 7.9% over the FY94 to FY2002 period, implying a decline in the level of losses from about 23.3% in FY93 to 18.5% by FY2000; and 6.5% over the FY2002 to FY2020 period. The growth rates become 9.6% and 8.4% for the High Scenario and 5.8% and 4.8% for the Low Scenario respectively. Annexes 2.3 and 2.4 summarize historical statistics of WAPDA system, and the results of the demand projections respectively.
Power DeveloDpmentPlan
2.11 In order to meet the electricity requirements estimated under the Base Scenario, additional generation capacity of about 9,770 MW needs to be installed in the power system by FY2002. As detailed in Annex 2.5, of this installed capacity, 1,830 MW relate to ongoing projects in the public sector to be commissioned by FY98, and 1,290 MW is under implementation by the private sector for the Hub Power project. Of the remaining 6,650 MW, 1,450 MW relate to Ghazi Barotha, and 5,200 MW relate to new thermal power plants to be implemented by the private sector. Under the Low Scenario, the required additional thermal generating capacity by the private sector is 3,100 MW by FY2002, while under the High Scenario, it is 7,200 MW. Table 2.1 below summarizes the growth rates and the required private generating capacities.
Table 2.1: GROWTH RATES AND REQUIRED PRIVATE GENERATING CAPACITIES
GDP Growth Electricity Demand Growth Level of New Private Power Plants FY1994-2002 FY2002-2020 FY1994-2002 FY2002-2020 Required Capacity in
Low Demand Scenario 4.5% 4.5% 5.8% 4.8% 3,100 Base Demand Scenaro 5.3% 5.6% 7.9% 6.5% 5,200
High Demand Scenario 6.2% 7.0% 9.6% 8.4% 7,200
2.12 As stated in para 2.5, the private sector, has shown an overwhelming response to the incentives introduced by the 1994 Policy. In particular, the Government received private sector project proposals for about 25,000 MW, and has limited the issuance of letters of support (LOSs) to 34 projects for about 9,000 MW. However, given the limited amount of debt financing available for Pakistan, the credit ceiling of Export Credit Agencies and multilateral institutions, it is likely that only half at most of the projects for which a LOS has been issued will be able to materialize. In particular, given the results of a recent assessment of the financial and technical -17- strengths of several sponsors, only a few projects amounting to about 1700 MW are expected to be commissioned by end-1997.
2.13 At present, there is a high degree of uncertainty regarding the required level for thermal generation from private plants, with the estimates of additional capacity needed by the year 2002 ranging from 3,100 MW to 7,200 MW, in addition to the proposed GBHP whose energy is significantly less costly than that of private thermal projects (Chapter 8). An over capacity would impose a heavy financial cost on WAPDA and its consumers, and strain Pakistan's balance of payment situation while an under-capacity would lead to continued high economic costs associated with power shortages and load shedding. Thus, it is essential that the Government carefully matches the sanctioning of new private power plants with the anticipated growth of demand in order to ensure commissioning of the "right amount" of power supply at the "right time." Fortunately, thermal power plants have relatively short construction periods (three years or less) and new plants can be solicited and approved as the demand forecast is firmed up over time. Therefore, during negotiations, the Government agreed to introduce not later than December 31, 1996 a set of policies, including an appropriate solicitation mechanism, satisfactory to the Bank, in order to ensure that the required power supply capacity will be implemented in a timely manner (para 9.2).
2.14 The power sector investment program (including Ghazi Barotha) up to year 2002 would amount to about Rs 406 billion, of which Rs 161 billion represents private investments, and Rs 245 billion represents investments by the public sector (WAPDA and KESC). The level of public investments, of which Ghazi Barotha represents about 30%, would rise to an average of Rs 33 billion per annum during FYs96-98 (when implementation of Ghazi Barotha is at its peak) before declining gradually to about Rs 23 billion by FY2002. By contrast, private investments (other than for the already-committed Hub Power Project) are expected to escalate from about Rs 24 billion in FY96 to an average of around Rs 30 billion per annum during FYs98-99.
Demand-Side Manaeement (DSM)
2.15 WAPDA, through its Energy and Load Management Cell, and in collaboration with ENERCON, is actively pursuing load management measures. They include: non-operation of Salinity Control and Reclamation Project (SCARP) tubewells during peak hours, staggering of weekly holidays, voluntary 25% reduction of the load by continuous process industries and textile mills and stoppage of steel melting furnaces during peak hours. Under the ongoing Rural Electrification (RE) Project (Ln. 3148-PAKJCr. 2078-PAK), WAPDA is implementing a program among 15,000 tubewells to control and restrict tubewell operations through ripple control, time switches and splitting and controlling residential and tubewell load in phases. Also under the RE Project, WAPDA has completed the installation of about 280 time-of-day (TOD) meters, and plans to procure an additional 1,000 TOD meters for the largest industrial consumers. With the assistance of the Asian Development Bank (ADB), a power factor improvement program has been initiated by ENERCON in collaboration with WAPDA. In addition, WAPDA conducts energy audit reviews in all sectors of the economy, with particular emphasis on the industrial sector. -18-
2.16 The new energy policy calls for a more aggressive approach to DSM. In particular, the following measures are being undertaken: (a) extension of peak/off-peak pricing to the remaining industrial consumers, and to large commercial and residential customers, and seasonal shift incentives for industrial consumers; (b) restriction of peak supply for agricultural tubewells (no supply during evening peak hours) through the ripple control system and extension to residential users; (c) introduction of a policy package and fiscal incentives to promote customer preference for energy-efficient fluorescent lamps vis-a-vis incandescent lamps; and (d) promulgation of a policy package to promote the manufacture and use of energy efficient motors for tubewells, pumps and compressors. These measures, depending on the speed at which they would be introduced, could reduce peak demand by some 1,000 MW by FY2002. In preparation of the proposed Energy Efficiency and Conservation Project (para 1.27), the proposed project would assist GOP and WAPDA in assessing the effeztiveness of the ongoing DSM program and, based on the lessons learned, outline a program of additional measures and related institutional arrangements to ensure effective implementation of an aggressive DSM program in line with GOP's policy. Annex 2.6 gives the draft Terms of Reference (TORs) for such a study. During negotiations, GOP and WAPDA agreed to appoint consultants not later than December 31, 1996, to undertake the required DSM study, to complete the study by December 31, 1997, to review and agree with the Bank on the recommendations of the study by March 31, 1998, and to implement the recommendations so agreed in accordance to a plan satisfactory to the Bank. (para 9.3).
Electricity Tariffs
2.17 Electricity tariffs are proposed by WAPDA and approved by the Govemment. The current tariff structure distinguishes between consumers under the following categories: domestic, commercial, industrial, agriculture, bulk consumers and others. Furthermore, tariffs, within each category are subdivided according to the level of consumption. Tariffs levied on industrial, some bulk and a small number of agricultural consumers are composed of two parts, i.e., the demand charge and the energy charge, while the other consumers pay only an energy charge. The exceptions to the structure are flat rates paid by: (a) the majority of the agricultural consumers (based on the water pump horsepower level); and (b) domestic consumers in the Federally Administered Tribal Areas (FATA consumers). All consumers, except those who are charged flat rate tariffs, also pay a Fuel Adjustment Surcharge (FAS) equivalent to Ps. 7/kWh for the lowest two slabs of domestic consumers, Ps. 1 5/kWh for the next domestic slab, and Ps. 75/kWh for the remaining domestic, agriculture, industrial, commercial, and other consumers. FAS is calculated on the basis of the average fuel cost incurred in the twelve-month period ending two months prior to the month of billing, and allows WAPDA to recover at least 95% of its fuel cost. Finally, all consumers pay a hydroelectric surcharge (10.4%) which is collected by WAPDA on behalf of the Government for payment of hydroelectric profits to the Provinces (para 7.9). Annex 2.7 gives the details on the levels and structure of current tariffs.
2.18 Since 1985, the level of electricity tariffs has been increased annually to enable WAPDA to finance 40% of its investment from internal sources. As a result, average revenue has increased in -19- nominal terms from 63.8 paisas/kWh in FY85 to about 224 paisas/kWh5 in FY96, representing average increases of about 4% per annum in real terms. Following these increases, the average revenue is now about 90% of the long-run marginal cost (LRMC). These increases have been used by the Government as an opportunity to gradually reduce cross-subsidies in the tariff structure. For example, in the recent tariff increase (July 1995), while overall tariffs were raised by an average of 14.5%, domestic tariffs were raised by 21.9%, and flat rate agricultural tariffs were raised by 25%. Commercial and industrial tariffs, on the other hand, were increased by only 13.5% and 10.8% respectively as consumers in these categories already pay tariffs higher than their respective LRMC. Furthermore, subsidies for consumer connection for agriculture have been eliminated. However, domestic and agricultural tariffs continue to be below their cost of supply as detailed in Table 2.2 below.
Table 2.2: SUMMARY OF WAPDA'S CURRENT TARIFFS AND LRMC ESTIMATES
Tariff as Category Percentage of total Average rate LRMC Percentage of consumption Rs./kWh Rs./kWh LRMC
Residential 39.0% 1.29) 51% Commercial 4.2% 5.41) 223% Tubewells 17.8% 1.27) 2.54 50% IndustrialLV 19.1% 2.99) 123% Bulk SupplyLV 4.6% 3.00) 123% Others 0.9% 3.82) 151%
IndustrialMV 12.8% 3.77) 149% Bulk SupplyMV 1.6% 3.16) 2.44 125%
WeightedAverage 100% 2.24 2.50 90% Source: WAPDAand Bank estimate.
2.19 Table 2.2 clearly indicates the need for further rationalization of the tariff structure. In particular, the residential and agriculture sector, which account for about 39% and 18% of total energy sales respectively, pay an average tariff equivalent to only 57% of WAPDA's average revenue and cover only about half of their cost of supply. Although this is a marked improvement from the prior tariff increase where residential and agricultural tariffs were 54% of WAPDA's average tariffs, there is a need to continue to rationalize the tariff structure. As a first step in facilitating the reduction of the level of distortion for flat-rate tubewells, it has been agreed under PSDP to include a metered energy charge component on all flat-rate tariffs charged for tubewells. Actions are being taken by WAPDA towards this objective. In addition, GOP and WAPDA agreed during negotiations, that any future tariff increase required in order for WAPDA to comply with its financial covenants will entail a reduction in the level of distortion with higher tariff increases for those consumers for whom the average electricity rates are below the overall
5 Includes the surchargeof 10.4% on electricityconsumption collected by WAPDA on behalf of the Governmentfor paymentof hydroelectricprofits (para 7.9). -20-
average electricity rates than that for consumers for whom electricity tariffs are above the overall average electricity tariffs (para 9.3).
2.20 Finally, in line with its objective to privatize the power sector, GOP has recognized the need to revise the pricing regime to make the power sector more efficient and attractive to private investors. As a first step, GOP introduced in 1994 a bulk electricity tariff of US¢ 6.5/kWh for new private power generators. In addition, under the ongoing PSDP, a study is being carried out to develop proposals and an action plan for reforming the retail pricing regime6 . In particular, the study will develop pricing principles linking the final tariff for each consumer category to the cost of supply. The study is near completion and the consultant's recommendations are expected to be presented to GOP and the Bank very shortly.
Government Strategy for the Power Subsector
2.21 The Government's strategy for the power sector aims at encouraging private sector participation on a build-own-operate (BOO), or Build-Own-Maintain (BOM) basis; and continuing the process of restructuring and privatizing existing utilities in order to maximize competition and bring in private sector management skills. GOP would continue its efforts to establish a transparent and autonomous regulatory framework and make it fully operational. The package of incentives offered to the private sector would be reviewed to ensure its adequacy for attracting additional investments, while at the same time limiting sovereign GOP guarantees to the minimum feasible levels, as agreed under the PSEDP-II Project (para 2.2). Ongoing efforts to rationalize energy prices, while developing conmmercialoperating principles and a competitive environment for those enterprises that rerrain in the public sector, would continue.
2.22 While incentives offered under the 1994 and 1995 Policies need to be adjusted regularly to ensure their competitiveness with those offered in other countries in the region, there is a more immediate need to review the magnitude and macroeconomic impact of these incentives. Specifically, exemptions from corporate income taxes, customs duties, sales tax, and other surcharges on imported equipment are provided for private power projects. However, this runs counter to the Government's urgent need to expand the tax base, and institute a consistent tax policy for all sectors of the economy. Experience worldwide has shown that, provided the level of the tariff is appropriate, additional incentives in the form of tax relief are not essential for attracting private sector interest. Rationalization of the incentive package, which could involve removal of these exemptions, rolling over and capitalizing such taxes, and including these in the capital cost component of the tariff, would thus provide additional revenues for the Government, while ensuring a uniformity of incentives across sectors. Therefore, during negotiations, GOP agreed to review not later than June 30, 1996, the incentives offeredfor private investments in the power sector, in particular in the form of exemptions from income and other taxes, and, based on such review announce and introduce not later than December 31, 1996, a set of such
6 Given the decentralizationof the powersector envisaged by the StrategicPlan, the study will also develop transfer pricing principlesfor exchangeof electricityat the wholesale level between generation and transrnission,and transrnissionand distribution,which can be effectivelyregulated. -21-
incentives under which such exemptions will no longer be provided as part of such incentives (para 9.2).
Bank's Assistance Strate2v in the Power Sector
2.23 The Bank will continue to actively support the Government's new power policies, seek to accelerate the reform program and expand the role of the private sector, while financing selected investments and improvement of the operational efficiency of the public enterprises. Specifically, Bank financing would include environmentally sound and attractive hydropower investments such as the proposed project, while pursuing further reforms in sectoral policies including tariffs and incentives for private power projects. Under the PSDP, the Bank is supporting the implementation of the Strategic Plan for the power sector which envisages the development of a competitive electricity market, restructuring and privatization of the main utilities, and the establishment of an independent regulatory agency. In line with the same objective, the Bank would seek to leverage its resources through the selective use of guarantees for new private projects (such as Uch Power Limited proposed in FY96) in order to mobilize private sector resources for the power sector to the maximum extent possible. In addition, the Bank would support, under the future Energy Efficiency and Conservation Project, the implementation of a more aggressive and comprehensive loss reduction, load management and energy conservation program.
Bank Group's Role in the Enerev Sector and Experience with Past Lending
2.24 The Bank Group's involvement in Pakistan's energy sector started in 1955, with a loan to KESC for the construction of a thermal power station. Since then, it has assisted in the implementation of projects in all energy subsectors. Prior to 1985, the Bank Group had made 16 loans/credits to Pakistan for energy projects. In the power subsector, the Bank had participated in the Indus Basin Development Projects, involving mainly the construction of Tarbela and Mangla hydropower projects, and provided a series of four credits/loans to KESC and three to WAPDA. In the petroleum subsector, the Bank's involvement included five loans to SNGPL for the expansion of the infrastructure for the transmission and distribution of gas, three to OGDC for exploration and development of oil and gas and the Refinery Engineering and Energy Efficiency Project (Ln. 2218-PAK) for restructuring product output and streamlining existing system. These projects have been completed, and the respective Project Completion Reports issued.
2.25 In 1985, the Bank's strategy for supporting the sector was broadened to address sectoral policies in addition to investments. The new approach was intended to address issues that cut across the energy subsectors, i.e., power, coal, oil and gas, to ensure that consistency in policies is maintained throughout the sector. In addition, the sectoral policies were intended to launch a broad program for structural reforms with the principal objectives to: (a) identify key investments needed to meet the energy requirements of the economy; (b) remove the distortions in energy prices and promote efficient use of energy; (c) strengthen the institutions in the sector to move them towards financial and administrative autonomy; and (d) deregulate the sector and create an enabling environment for the private sector to assume a greater role in the production and delivery -22- of energy. Two Energy Sector Loans7 were approved to accomplish these goals which provided an overall policy framework for the Bank's lending in the energy sector.
2.26 Since 1985, and in addition to the above mentioned Energy Sector Loans, the Bank has provided fourteen loans for the energy sector. These include, WAPDA IV and V (Lns. 2499- PAK and 2556-PAK) for the least-cost expansion and reinforcement of the secondary and high voltage transmission grid; the Petroleum Exploration Project (Ln. 2351 -PAK) and the Petroleum Resource Joint Venture Project (Ln. 2553-PAK) to assist GOP in mobilizing private sector involvement in exploration and development of oil and gas; the Kot-Addu Combined-Cycle Power Project (Ln. 2698-PAK) to add about 200 MW of generating capacity through the conversion of combustion turbines to combined-cycle operation; the Power Plant Efficiency Improvement Project (Ln. 2792-PAK) for the rehabilitation of existing power plants and conversion of combustion turbines to combined-cycle operation at Kotri and Faisalabad; the Refinery Energy Conservation and Modernization Project (Ln. 2842-PAK) for improving energy efficiency at the National Refinery Ltd.; the Private Sector Energy Development Project (Ln. 2982-PAK), the first of its kind to be approved by the Bank, and which provides for a fund to assist in the financing of energy projects sponsored by the private sector; the Transmission Extension and Reinforcement Project (Ln. 3147-PAK) to extend WAPDA's transmission grid; the Rural Electrification Project (Ln. 3148-PAK/Cr. 2078-PAK) which is the Bank's first operation in Pakistan to support the extension of the distribution network in rural areas; the Corporate Restructuring and System Expansion Project (Ln. 3252-PAK) which provides for the privatization of SNGPL as well as expansion of gas infrastructure; the Domestic Energy Resources Development Project (Ln. 3500- PAK), which provides for the development of the country's oil and gas resources; and the Power Sector Development Project (Ln. 3764-PAK), which is the first to support the implementation of a comprehensive strategy for the privatization of the power subsector in Pakistan and the restructuring and privatization of WAPDA; and the most recent Bank operation in the sector, the Second Private Sector Energy Development Project (Ln. 3812-PAK), which supports additional private investments in power generation and related infrastructure facilities.
2.27 Overall, the Bank has provided ten credits/loans to WAPDA. The first seven have been completed and the remaining projects are being implemented satisfactorily, after some delays in start ups. The Project Performance Audit Report (PPAR) and the Project Completion Report (PCR) for the Third Power Project (Cr. 968-PAK and SAC 39-PAK) were distributed to the Executive Directors in April 1989; the PCR for the Fourth WAPDA Project (Ln. 2499-PAK) was completed in June 1995; and the PCR for Ln. 2698-PAK was completed in November 1995. Implementation Completion Reports for Ln. 2556-PAK and Ln. 2792-PAK are expected to be distributed to the Executive Directors during FY96. The completion reports have concluded that the projects not only improved electricity supply, but also most of the aspects of WAPDA's operations including administration, technical and financial. However, despite these achievements, the projects were completed two to three years behind schedule because of weaknesses in WAPDA's overall management of the projects, delays in procurement (both for goods/works, and consultant services) and in the clearance of Project Concept (PC 1) documents,
7 ESL I - Ln. 2552-PAK.approved 1985, closed 1988; ESL II - Ln. 3107-PAK,approved 1989, closed1994. -23- as well as the periodic scarcity of local funds. In order to minimize delays in start-up, the Bank, under subsequent operations, has assisted WAPDA in preparing standard bidding documents and provided training to its staff in the Bank's procurement procedures and made the approval of PC Is as part of the up-front actions required to improve quality at entry. Moreover, through the sectoral approach to lending and annual reviews of the investment programs, the Bank has also been able to assist in identifying funding requirements for individual projects, mobilizing resources, and ensuring that adequate funding is provided in the budgets for high priority projects.
2.28 The proposed project would be the Bank's eleventh operation with WAPDA. It would follow up on the restructuring and privatization program for WAPDA, and would assist GOP and WAPDA in reducing the chronic shortages of electricity supply. Lessons learned from previous operationis, related mostly to improving the quality at entry, advanced procurement action to avoid risk of delays, securinigfullfiniancingfor the Project in a timely manner, and the needfor uipfronti actions for dealinzg with enivironmental and resettlement issues, were taken into consideration7in the design atndpreparation of the proposed project. As a result, the PC I for the proposed project was approved prior to the Bank's appraisal, and procurement for the main packages have been initiated early enough to allow for bids opening and/or award of the main civil works contracts prior to Board Presentation, thus minimizingthe risk of delays and cost overruns. GOP and WAPDA have also learned from previous similar projects, the importance of experienced foreign consultants and expert review panels and, for the proposed project, a strong project management team has been put in place and is being assisted by well-reputed joint venture of foreign/local consultants and panels of experts. Furthermore, the agreement to set up a Ghazi Barotha Hydropower entity, in line with the restructuring and corporatization program of WAPDA, would ensure an efficient and independent management and operation of the project.
2.29 Based on past experience both in Pakistan and Bankwide, the preparation and implementation of effective Environmental Management PIlansand Resettlement Action Plans have generally suffered from the following weaknesses: (a) lack of public consultation and participation; (b) shortage of funds to compensate the affected population in a timely manner; (c) failure to assign appropriate trained staff responsible for the implementation of the plans; and (d) lack of independent monitoring. These findings have been carefully integrated in the design and processing of the proposed project. As a result, an Environmental Resettlement and Review Panel (ERP) has been associated with project preparation from the onset; a proactive approach for public participation and consultation has been ensured, including the setting up of a Public Information Center (PIC) at the project site, sufficient funds for land acquisition and compensation are being made availablewell ahead of the transfer of land to WAPDA; WAPDA's Environmental Cell and Project Resettlement Organization are being adequately staffed; and external monitoring is being undertaken by ERP, a monitoring consultant, a Ghazi-Barotha Development Organization (GBDO), and the Bank's and other major donors' environmental specialists. -24-
3. THE WATER AND POWER DEVELOPMENT AUTHORITY
Organization and Management
3.1 WAPDA, the beneficiary of the proposed loan, was established in 1958 as a semi- autonomous agency to coordinate the development of Pakistan's water and power resources. WAPDA's current organization chart is shown in Annex 3.1. It is divided into two largely independent "wings," one for power and the other for water. The Power Wing is responsible for the planning, construction and operation of power generation, transmission and distribution facilities throughout the country, except the Karachi area which is served by KESC. The Water Wing is responsible for the overall planning and investigation of water resources, and the design and construction of surface and groundwater development projects for the federal and provincial governments.
3.2 WAPDA's governing body, referred to as the "Authority" has been enlarged since 1994, and comprises the Chairman, the Secretaries of Finance, Planning, and Water and Power along with three Members who are in charge of power, water, and finance, and are designated Member Power, Member Water, and Member Finance. The members are appointed by GOP and function as chief executives of their respective groups.
3.3 WAPDA's Power Wing compares favorably with most of the utilities supported by the Bank in terms of its financial performance and technical competence. With few exceptions over the last decade, WAPDA has consistently met an ambitious cash generation covenant (which requires it to finance at least 40% of its investment program from internally generated funds) and its return on assets is among the highest among the Bank's borrowers. WAPDA has also systematically reduced transmission and distribution losses, and has established a good track record in the planning, design and implementation of large projects.
3.4 Member (Power) is assisted by three Managing Directors, in charge of Distribution, Transmission and Grid Stations, and Customer Services respectively, and by General Managers responsible for thermal generation, hydro generation, planning, finance, coordination, and system control and load despatch. The distribution department is further divided into sections, each headed by a General Manager dealing with administration, customer services, management services, operations, planning and engineering, and purchasing and inventory control. Although WAPDA is highly centralized with respect to decision making, its Distribution Department is divided into eight Area Electricity Boards (AEB), which were established in 1981. Each AEB has a chairman who is the Chief Engineer for the area and is appointed by WAPDA for a five-year term; three full-time members (who are also directors in charge of departments), and three part- time members representing local interests, one of whom is normally a representative of the Provincial Government. The AEB members are appointed for a period of three years. In addition, and in order to coordinate activities related to the restructuring and privatization in the sector, WAPDA created a separate department headed by a Managing Director, the WAPDA Power Privatization Organization (WPPO). -25-
3.5 The Water Wing functions under Member (Water). For effective control, the entire country is divided into north, central, south and west zones, generally covering the provinces of NWFP, Punjab, Sindh and Balochistan, respectively, for execution of Salinity Control and Reclamation Projects (SCARP) and surface water development projects. A General Manager is responsible for each zone, while chief engineers and project directors implement projects falling under regions within the zones. In addition, the Water Wing has a General Manager (Dams and Coordination) for construction and operations of dams other than Tarbela, primarily Mangla Dam, the Mangla Watershed Management Project, and construction of link canals, barrages/syphon, including the Chashma Barrage. Because of the size and importance of these projects, the Water Wing has separate General Managers for Tarbela Dam and the Kalabagh/Hydroelectric Projects as well as one for the proposed project. The Water Wing also has a Water Resources Planning Organization responsible for preparing and reviewing water sector development plans. The Planning Division of the Water Wing, headed by a General Manager, is responsible for all planning activities on the water side, including SCARP. To ensure the safety of its dam projects, the Water Wing has a separate Dams Safety Organization (DSO) which is responsible for the review, analysis and interpretation of performance data collected by the project operation and maintenance group to detect any malfunctioning of the units. The DSO carries out an annual inspection of all WAPDA's dams, and is involved in the safety planning of future dam projects.
3.6 As stated in Chapters 1 and 2, the 1958 WAPDA Act was amended in April 1994 to enable WAPDA to be corporatized and divest selected parts of its assets mainly thermal generation plants and distribution areas. As a result, WAPDA will be reorganized and corporatized into a holding company with decentralized power generation, transmission and distribution subsidiaries operating as discrete autonomous profit centers, and selected parts of its assets will be offered for sale to private investors. While actions have been initiated by GOP and WAPDA towards achieving these objectives, as agreed under the PSDP, the time required for completing the full corporatization of WAPDA, originally set as of December 31, 1997, has been reassessed to ensure adequate implementation of the required measures. Therefore, during negotiations WAPDA agreed to complete the full corporatization of WAPDA by December 31, 1998 (para 9.4).
3.7 A key objective of the proposed project is to continue to assist GOP and WAPDA in the reform program for the power sector. Therefore, to ensure that Ghazi-Barotha Hydropower Project (GBHP) will be organized and operated in consistency with WAPDA's restructuring program, the technical assistance component of the proposed project will provide financing to assist WAPDA in providing GBHP with an organizational structure and management system and procedures more adapted to its corporate objectives. TORs for such assistance are provided in Annex 3.2. WAPDA agreed during negotiations that a project entity to operate GBHP be set up no later than December 31, 1998 consistent with the overall restructuring and corporatization program for WAPDA (para 9.4). Moreover and as recommended by the Strategic Plan, the transmission and despatch functions should be entrusted to a separate corporatized and regulated entity, responsive to the needs of the system. This Transmission and Despatch Entity (TDE), initially operating as a corporate subsidiary of the WAPDA Holding Company, would be responsible for the integrated operation of the power system and its timely extension and reinforcement to connect new generating facilities as well as new customers. This would also ensure that the central despatch mechanism is transparent, efficient and non-discriminatory -26-
between private and public sources of power generation. Under the Power Sector Development Project, WAPDA has already initiated the required study for preparing and implementing the corporatization of its existing assets, including its transmission and despatch facilities. One of the main objectives of the study is to recommend the optimal organizational structure and management system for the TDE. Therefore, during negotiations, GOP and WAPDA agreed to inmplenmentthe recommenidations of such study as agreed with the Bank and that a separate, corporatized national transmission and despatch entity be established by December 31, 1998 (para 9.3).
3.8 Staffing and Training. WAPDA's management staff is competent and well qualified. In 1993, WAPDA, including its Water, Power and Finance activities, had about 158,070 employees: 4,980 engineers, 1080 other professionals, 12,250 technical and other supporting staff, 27,310 administrative and accounts staff, 70,340 skilled workers and about 39,100 other employees including unskilled workers. Most of these employees (85%), are employed in the Power Wing. The number of consumers served by WAPDA was about 8.4 million consumers, which corresponds to a consumer/employee ratio of about 53. This ratio is relatively low when compared to other developing countries (181 in Indonesia and 99 in Thailand), and it reflects the overstaffing mainly in the Distribution Department. The manpower transition study being undertaken under the PSDP, would, in time, lead to an optimization of staffing levels. In the meantime, under PSDP, GOP and WAPDA confirmed their commitment to initiate specific measures such as a freeze on the hiring of new staff and retraining of staff to enable their redeployment, in parallel with the privatization process. This will reduce the number of staff that would likely become redundant as a result of privatization prior to implementation of actions to be agreed under the manpower transition program study.
3.9 Training in WAPDA is a separate activity and is well-supported. Each of the main functions, i.e., generation, transmission and distribution, operate technical training schools in a number of locations, which are efficiently run. There is a management training center at Tarbela which provides a comprehensive program to WAPDA's training staff. For training in specialized areas, support has been provided to WAPD A by bilateral and multilateral agencies. CIDA has provided extensive training to WAPDA's staff in the areas of load forecasting, generation, transmission and distribution planning, and in design, construction and operation and maintenance of the 500-kV network; USAID in the area of distribution; and the Bank in the areas of generation planning, maintenance and spare-parts management, and in financial and commercial areas. In addition, CIDA, as part of its ongoing National Power Plan Project, and in coordination with the Bank's training program under PSDP, will be providing training to WAPDA's Planning Department in DSM and to WAPDA's Environmental Cell.
WAPDA's Existing Facilities
3.10 As of December 1994, WAPDA's total installed generating capacity was 10,675 MW. About one-third of this capacity (2,917 MW) was commissioned during the last three and a half years. The existing generating system consists of 4,825 MW (45%) of hydro capacity and 5,850 MW (55%) of thermal capacity based mainly on dual-fired power plants, using fuel oil and natural gas. WAPDA's primary extra-high voltage (EHV) transmission system consists of about 2,800 km of 500-kV lines and seven grid stations whose aggregate capacity is about 6,774 MVA. The -27- secondary transmission grid (STG) consists of about 23,000 km of 220-kV, 132-kV and 66-kV lines and 600 grid stations, with a total capacity of about 22,344 MVA. The distribution system comprises 310,313 km of 33-kV, I 1-kV and 0.4-kV lines.
WAPDA's Power Development Program
3.11 WAPDA's Planning Department is using several computerized planning models, in particular the Wien Automatic System Planning Package III (WASP III), to prepare long-term development studies and medium-term development programs which are revised once a year, using sound methods and procedures for determining the programs to meet electricity demand at least cost. During the preparation of the proposed project, further assistance has been provided to WAPDA for the use and training of the VALORAGUA model, for the optimal planning and operation of the mixed hydro-thermal system. In coordination with the Energy and Load Management Cell and the Distribution Planning, the Planning Department also carries out feasibility studies on load management measures.
3.12 Generation Expansion Program. WAPDA's proposed generation program is consistent with GOP's latest policy in the power sector whereby all new thermal power generation projects would be undertaken by the private sector, and WAPDA will continue to be responsible for the construction and operation of the major hydropower projects. Therefore, the present WAPDA's generation program only includes the completion of ongoing thermal and hydropower generation projects, and the construction of GBHP.
3.13 WAPDA's future transmission and distribution program calls for the expansion and rehabilitation of the network to connect future load centers at least cost, including the new independent power producers (IPPs), and enhance WAPDA's efforts in improving the operating efficiency of the power subsector. These programs would allow for increased investments in loss reduction, load management, expansion and reinforcement of the network, and the expansion of rural electrification.
3.14 WAPDA's development program for the period FY95-2002, together with the annual phasing of expenditures for ongoing and new projects is presented in Annexes 3.3 and 3.4. The program which involves expansion in generating capacity, along with parallel expansion of the transmission and distribution network, is estimated to cost about Rs. 251.8 billion equivalent to about US$ 7.0 billion. This program assumes that implementation of the GBHP would be effectively initiated in FY96, with some minor preparatory works in FY95.
3.15 The Bank has reviewed WAPDA's investment program to ascertain its consistency with the macroeconomic and public investment targets of the Government's economic reform program. Annex 3.5 presents the details of the assumptions. The results indicate that WAPDA's projected investment program over the period 1995-2002 could be accommodated within the macroeconomic targets, given the policy of implementing new thermal power generation in the private sector, and provided that a sound macroeconomic framework would be maintained. In order to ensure that WAPDA's investment program will remain consistent with GOP's agreed macroeconomic targets, and avoid crowding out of other GOP's high priority projects, GOP and WAPDA agreed during negotiations to repeat under the proposed project the agreement under -28-
PSDP to review with the Bank before March 31 of each year, WAPDA's rolling investment program over a five-year period, covering the current year, the last preceding year and the next three following years, with a view to enabling the Bank to satisfy itself that the program remains consistent with the Borrower's macroeconomic targets (para 9.5). In addition, during negotiations, GOP antd WAPDA agreed that the GOP's Core Public Sector Development Plrogram and the Social Action Program, as discussed and reviewed with the World Bank on an annual basis, will not be adversely affected by the fitnancing requirements of GBHP (para 9.2).
Operational Performance
3.16 WAPDA operates and maintains its plants and equipment satisfactorily. The level of performance in generation operations remains satisfactory, particularly when considered in relation to the constraints arising from insufficient power generation capability and shortage of supply, fuel availability and quality, spare parts procurement procedures, aging plants requiring major overhaul, and financial and implementation constraints for generation development programs. This performance is expected to further improve with the actions undertaken under the recently completed Power Plant Efficiency Improvement Project (Ln. 2792-PAK) cofinanced by the Overseas Development Administration, and which involved station refurbishing, supply of spare parts, introduction of a computerized maintenance system, and a technology transfer component. In addition, arrangements are being undertaken to ensure additional supply of gas for power generation, and for additional combined-cycle units, thus improving the efficiency and availability of the generation system in general. Finally, the addition of generation capability to the system will allow WAPDA to improve the maintenance program of its power plants, therefore improving the availability of these plants.
3.17 Improvement in WAPDA's operational efficiency is also illustrated by the efforts made in reducing the level of its power system losses from 37.6% in 1977, to 24.2% in 1994, with transmission and distribution losses amounting to 9% and 12.1% respectively. This has been achieved through a continued program of power system reinforcement and rehabilitation. However, these losses remain higher than the economically achievable levels of about 3% and 8% for transmission and distribution system respectively. The PSDP, the proposed project and the loan covenant with ADB for the proposed project would assist WAPDA in enhancing its efforts for further loss reduction.
3.18 The transmission system is designed and constructed to high standards but maintenance is made more difficult due to the multiplicityof plants and difficulty of planning the extension of the transmission system, due to the location of the generating plants vis-A-vis the load centers. Despite the efforts already undertaken, the 132-kV system in particular will require additional measures to improve its operational efficiency. The implementation of the transmission component of the PSDP which is proceeding satisfactorily, would assist WAPDA in achieving this objective.
3.19 Until recently, WAPDA's investment programs were geared towards developing the generation and the transmission systems, thus limiting the resources for distribution development. Moreover, due to pressures to provide new connections, most resources were directed towards extending the network and little attention was given to the maintenance and operation of the -29- existing distribution system. Recognizing the need to overcome the inefficiencies stemming from this situation, and as a follow up to an agreement with the Bank, WAPDA created a distribution directorate under arrangements satisfactory to the Bank. Actions required to enhance the operational performance of this department are being continued by WAPDA on the basis of the recommendations of a study funded by USAID, and strengthened under the ongoing Rural Electrification Project (para 2.26). In order to assist WAPDA in evaluating the progress made, a distribution diagnostic study of one AEB would be undertaken under the PSDP. Despite the above mentioned improvements in its management and operation over the past several years, WAPDA is more required to further streamline its operations in view of the pressure and competition of the forthcoming private power generating plants. In line with its restructuring and reorganization program, WAPDA needs to strengthen its managerial, technical, and financial operations. To this end, during negotiations, WAPDA agreed to appoint, not later than September 30, 1996, a management consultant firm with relevant international power utility experience and under terms of reference satisfactory to the Board, to assist WAPDA in designing and implementitng a set of managerial, financial and technical efficiency objectives by which WAPDA would measure and improve the operational, managerial andfinancial performance of its power operations (para. 9.4).
Financial Manazement
3.20 WAPDA's financial function is headed by a Member Finance, while the day-to-day management of the financial function for the power sector is the responsibility of the General Manager Finance (Power), assisted by four senior deputy general managers for treasury, accounting and control, coordination, and field offices, a director for administration, and four senior managers in charge of accounts pertaining to thermal operations, hydro, transmission, and a resident representative in Karachi. The financial function was reorganized to: (a) accommodate the separation of the Distribution function headed by a Deputy General Manager in charge of accounts of all the AEBs; (b) address the problem of an excessive number of senior managers reporting to the General Manager Finance (Power); and (c) segregate the complex treasury tasks from those of financial management, including debt management WAPDA bonds and accounts consolidation and financial planning. The reorganized financial function is resulting in a more streamlined operation.
Financial Improvement Prouram
3.21 Under the Rural Electrification Project, WAPDA adopted a Financial Management Improvement Program aimed at enhancing WAPDA's resource mobilization and financial efficiency objectives. Implementation of the program is progressing satisfactorily. Measures to increase resources availabilityincluded: (a) recovery of tubewell connection costs from consumers through a loan program with the Agricultural Development Bank of Pakistan; (b) implementation of a cost recovery program for rural electrification operations; (c) regular aging of accounts receivables to improve collections monitoring; and (d) enhancement of security deposits to reflect current average billings. The subsidies for consumer connections including those in the rural areas, have been eliminated, and WAPDA now prepares a pro-forma balance sheet and income statement for rural electrification to identify the financial costs of this program to WAPDA. The regular aging of accounts receivable has resulted in an increase in provision for uncollectible -30- receivables in WAPDA's accounts. In addition, WAPDA is reviewing its accounts receivable overdue for more than three years to determine the uncollectible receivables to be adjusted on its balance sheet. Institutional measures to improve financial management efficiency have been carried out, including the reorganization of the financial function of WAPDA, regular review of the adequacy of premiums paid for its self-insurance scheme, and strengthening of WAPDA's internal audit functions. To further enhance efficiency, the accounting and financial information system of WAPDA is being automated with assistance of international consultants.
3.22 Accounting System. WAPDA has about 500 accounting units distributed over a wide geographical area. To cater to this large number of accounting units, WAPDA has adopted a decentralized, accrual-based accounting system. While the system is sound in structure, the utility is not deriving full benefits from the system primarily due to: (a) non-availability of trained accounting personnel, particularly in the distribution areas; and (b) the manual system of maintaining the accounts which causes significant delays in the flow of accounting information through WAPDA's hierarchy. To address these concerns, WAPDA is implementing a comprehensive training program for the accounting staff of the AEBs, with the assistance of the Electricity Supply Board of Ireland. Furthermore, under the Rural Electrification Project, the design of the automation of the accounting and financial management information system at headquarters has been completed and the computer hardware is being procured. In view of the corporate restructuring and privatization initiatives that GOP and WAPDA are pursuing, the design of the automated accounting system has been reoriented to accommodate truly decentralized accounting based on profit centers (generation plants, transmission, and AEBs). A pilot design for one thermal plant, one hydel plant, WAPDA's transmission facilities and interface with one AEB system has been completed. To ensure that an automated accounting and finance system on a profit center basis is implemented throughout WAPDA, consultants are being appointed under the PSDP to implement the program. Completion of WAPDA's automation for accounting, finance and a Management Information System program is planned to coincide with the corporatization of WAPDA, scheduled to be implemented by December 1998.
3.23 Management Information System (MIS). The manually-generated information system of WAPDA has led to delays in decision-making and cumbersome preparation and storage of data. The successful implementation of WAPDA's current corporate restructuring program would have to rely on a timely and reliable information flow. Thus, the development of a comprehensive and automated MIS covering WAPDA's technical and financial operations is urgently needed. With assistance from consultants, an MIS, covering, inter alia, WAPDA's technical and operational information requirements would be integrated with the ongoing work being done on the design of the automated accounting system. The process for obtaining proposals from consultants for the MIS design and implementation has been initiated. In addition, WAPDA has established an MIS Development Cell headed by a Director General whose responsibilities include all aspects of evaluation, planning, development, testing, maintenance of all financial and information systems and computer requirements of WAPDA.
3.24 External Audit. The responsibility for auditing WAPDA's accounts rests with the Auditor General of Pakistan (AG), who discharges this responsibility through a Director General assigned to WAPDA Audit on a permanent basis. WAPDA is required by the WAPDA Act to finalize the annual accounts and have them audited within six months of the end of the financial year. -31-
However, because of the large number of accounting units scattered throughout the country and the manual preparation of accounting data that feeds into the audit, the Audit Report is issued some eight to ten months after the end of the financial year. With the improvement envisaged through the automation of its accounting and financial information system, WAPDA expects to be able to have its finalized annual accounts audited within six months of the end of the financial year. Accordingly, the Bank Group's standard audit covenant which is included under all ongoing WAPDA Power Projects will be maintained under the proposed project (para 9.5). To improve the quality and timeliness of the external audit, WAPDA and the Office of the AG, Pakistan have agreed to appoint private auditors to participate in the audit of WAPDA's accounts. Under PSDP and as a first step, WAPDA would explore the scope and nature of the audit to be done by private auditors in close consultation with the AG. Therefore, WAPDA agreed during negotiations to appoint by June 30, 1996, a reputable private auditing firm, in consultation with the Auditor General of Pakistan, to develop, by December 31, 1996, a detailed audit plan salisfactory to the Bank, and to conduct beginning FY99 the audit of WAPDA's accounts in accordance with the agreed audit plan (para 9.4).
3.25 Insurance. WAPDA insures its assets under a self-insurance scheme established in 1981. The scheme covers substations, power houses, machinery and workshops against loss from fire, machinery breakdowns, and other calamities. Since the value of WAPDA's assets have been increasing, premium rates are regularly monitored based on the most recent twenty year experience in claims, and insurance coverage based on replacement value basis has been adopted. Since the last actuarial review of WAPDA's self-insurance scheme was done in 1990, a new actuarial review should be undertaken to ensure that WAPDA's self-insurance scheme remains adequate. Therefore, WAPDA agreed during negotiations to appoint no later than December 31, 1996, consultants whose qualifications are satisfactory to the Bank, to complete an actuarial study for the utility by December 31, 1997 and implement the recommendations by March 31, 1998 (para 9.4). -32-
4. THE PROJECT
Project Back2round
4.1 Downstream of the Tarbela dam, the Indus River briefly crosses a broad plain before it enters the Attock Gorge. The Indus River drops by about 76 m. in a distance of 63 Km. between the tailrace at Tarbela and the confluence of the Indus and Haro Rivers. This topographical feature makes it possible to economically utilize the available hydraulic head for power generation.
GBHP Barrage
N G h z laeRe;se ir
/ Powe~~~~~r Channel
AttockGorge i aoha
Power HOU i i ;ia I Village
River
4.2 A pre-feasibility study initiated by WAPDA in 1986 established that it would be possible to divert water near the village of Ghazi downstream of Tarbela and lead it through a canal to Gariala where a power station with a capacity of about 1,000 MW could be built. Because of its location, this scheme was named Ghazi-Gariala Hydropower Project.
4.3 In 1989, UNDP agreed to finance the feasibility study and the detailed engineering designs for the Ghazi-Gariala Project. The Bank was appointed executing agency. The feasibility and design studies were carried out by Pakistan Hydro Consultants (PHC), a joint venture of five consulting firms (para 4.6). The planning and design work were, from the onset, guided by an Independent Panel of Experts and an Environment and Resettlement Review Panel. Several alternatives and redesigns were examined in order to minimize resettlement and environmental impacts and to ensure the safety and technical soundness as well as the economic viability of the project. As a result of these studies, it was decided to locate the power house near the village of Barotha and, at the request of the local residents, the name was changed to the Ghazi-Barotha Hydropower Project.
4.4 Although GOP is pursuing private sector participation in hydro projects in secondary tributaries of the Indus River, the public sector, under the Government's policy', will continue to
1 Strategic Plan for the Privatization of Pakistan Power Sector (1992), and Hydel Policy (1995). -33- build, own and operate hydropower projects on the main Indus River. This is due primarily to their critical importance for the operation of the Indus Basin's irrigation system and flood control, whose benefits are vital to the Pakistan economy. Consequently, from the inception of the GBHP, whose operation will be dependent on the water releases from the Tarbela dam, it has been envisaged that the project would be implemented by WAPDA. Still, both GOP and the Bank seriously examined the possibility of having GBHP owned and operated by the private sector. However, it was concluded that this was not a viable option. Private sector lenders are generally more reluctant to finance hydropower than thermal generating projects on a BOO/BOT basis. This is partly due to the inherently greater construction and operating risks associated with hydropower plants due to hydrological and geological uncertainties. Other considerations also would make the project unattractive to the private sector: (i) its long gestation period and economic life compared to the much shorter repayment period of commercial loans; (ii) its large financing requirements, particularly in local currency, coupled with the scarce local resources available in the domestic capital market; and (iii) the equity-debt ratio required by the private sector in BOO/BOT structure, thereby increasing the overall external borrowing requirement for the project.
Proiect Objectives
4.5 The main objectives of the proposed project are to assist GOP in its efforts to: (a) develop domestic energy resources and reduce load-shedding in a cost effective and environmentally sustainable manner, thereby supporting the country's long-term energy development objectives; (b) reinforce and complement the reform program for the power sector; (c) strengthen WAPDA's capability to address environmental and resettlement issues related to hydropower projects; and (d) further rationalize the use of electricity. The proposed project is consistent with an overall sectoral approach that includes substantial attention to issues of pricing, demand management, environment, resettlement, and redefined roles of the public and private sectors in the energy sector.
Proiect DescriPtion
4.6 The description of the proposed project is summarized below and detailed in Annex 4.1, which also gives the main project data. The geographic locations of the project's physical components and the project layout are shown in IBRD Maps 25106 and 25107. Drawings Dl, D2 and D3 give the layout and cross section of the barrage, the power channel and the power house respectively. The proposed project would consist of:
(a) the construction of the Ghazi Barotha Hydropower Project (GBHP) which aims at utilizing 76 meters of head available in the Indus River between the tailrace of Tarbela power station and its confluence with Haro river, and which comprises the following three main components:
(i) a barrage and its ancillary works, located near Ghazi village at about 7 km. downstream of Tarbela Dam, with a normal pond level of El. 340 m, which would have an initial live storage capacity of about 62 M cu m, and would allow diurnal re-regulation of the discharge from Tarbela. The barrage -34-
would include 20 open-flume standard-bays, and 8 undersluices bays, each 18.3 m wide, with a crest level of El. 332.2 m and 326.0 m respectively; a dividing island of about 400 m width acting as two guide banks, one for the standard bays, the other for the undersluices and head regulator; a head regulator of 8 bays, each of 18.3 m width with a crest at El. 333 m for controlling flows, into the power channel, while allowing the pond level to fluctuate in response to diurnal variations in flow from Tarbela;
(ii) a 52 km long concrete-lined power channel with a capacity of 1,600 cumecs, and its ancillary works. The power channel would have a bed width of about 58.4 meters and a depth of about 9 meters. The concrete lining would be 135 mm thick, reinforced and joints with water stops would be provided at 9 to 12 m intervals. The underdrainage system is designed to maintain groundwater levels below the invert of the channel, and would comprise a filter layer under the concrete lining along the bed and sides of the power channel. The channel would have a bed slope of 1:9,600, with a resulting average water velocity of 2.33 m/s. Along the 52 km length of the canal, there would be 33 bridges for easy access, and 45 cross drainage structures. For safety reasons, the power channel would be fenced in the populated areas; and
(iii) a power complex and ancillary works, located near the village of Barotha with its tailrace outfalling at the confluence of the Indus and Haro rivers, and with an installed generating capacity of 1,450 MW comprising five units each of 290 MW. The power complex would generate 6,600 GWh of energy annually, would run as a base load station, and would have daily peaking capability throughout the year, provided by headpond storage of about 25 M cu m, and depending upon water released through Tarbela units;
(iv) the construction of power transmission facilities to connect GBHP to the interconnected grid, involving two 500 kV transmission lines of 100 km each, from Barotha to Rewat and related substations, and about 140 km of 500 kV loop in and out of existing 500 kV Tarbela-Gatti line at Barotha;
(b) the Implementation of an Environment and Resettlement Management Plan including:
(i) an Environmental Mitigation and Monitoring Plan;
(ii) a Resettlement Action Plan (RAP) involving land acquisition, compensation and rehabilitation plan for the project affected people; and
(iii) an Integrated Regional Development Plan (IRDP) to address the project's induced impacts and promote long-term sustainable development in the project area; and -35-
(c) the power sector reform component which involves:
(i) setting up of GBHP as a separate project entity; and
(ii) establishment of a separate transmission and despatch entity.
(d) a technical assistance component in the form of consultancy services to assist WAPDA in:
(i) the engineering design, procurement process, construction supervision and commissioning of part (a) above, including the environmental and resettlement components;
(ii) continuing the participation of two Panels of Experts, one technical and one for environment and resettlement, for periodic reviews during project construction, and overseeing the implementation of the project and of the Environment and Resettlement Management Plan respectively;
(iii) coordinating and monitoring the implementation of the Environment and Resettlement Management Plan;
(iv) strengthening its environment and resettlement capabilities;
(v) carrying out the power sector reform component;
(vi) improving its managerial, operational, technical as well as financial efficiency through appointment of a Management Consultant;
(vii) reviewing the effectiveness of WAPDA's ongoing DSM management measures and preparing a more aggressive action program in preparation of the forthcoming Energy Efficiency and Conservation Project;
(viii) auditing accounts of WAPDA by private auditors; and
(ix) reviewing the self-insurance scheme of WAPDA by actuarial consultants.
Proeect En2ineering and Preparation
4.7 GBHP. As stated earlier, PHC, a joint venture of five consulting firms (National Engineering Services Pakistan and Associated Consulting Engineers, both of Pakistan; Ewbank Preece, Binnie and Partners, both of UK; Harza Engineering Company, USA), carried out the detailed project feasibility, design and preconstruction studies. In accordance with the Bank's procedures, an independent Panel of Experts (POE) has been associated with the project preparation from the onset. An independent Environment and Resettlement Review Panel (ERP) also participated since the beginning of the project preparation process and design in the environmental assessment and resettlement studies. -36-
4.8 The proposed project has been the subject of intensive engineering and design studies and site investigations executed in several phases. During those studies, several alternatives were considered with due consideration to technical, safety, environmental, resettlement and economic aspects, mainly with regard to the project size, the barrage site, the power channel size and alignment and the siting of the power complex. In particular, five barrage sites were identified, several alternative designs for the power channel and its alignment were studied (unlined versus concrete-lined, twin channels versus one channel, and alignments into higher and lower ground), and five potential power complex sites were considered. This process allowed in particular for significant reductions in the potentially adverse environmental, resettlement and archeological impacts. The selected site for the barrage was preferred on environmental grounds; the power channel alignment and capacity were also selected on environmental, resettlement and safety grounds; and the Barotha site for the power complex was selected on environmental and technical grounds, as it offered the most favorable topography. Annex 4.2 summarizes the alternatives which were considered. The project feasibility study was completed in August 1992, establishing the project to be technically sound, economically viable, environmentally sustainable, and socially acceptable. This was also endorsed by the POE and the ERP. The project feasibility report is in the Project File. The Project Concept document (PC-I) has been approved by the Government.
4.9 Within the same assignment funded by UNDP and GOP, PHC prepared the detailed engineering design of the adopted scheme, and prequalification and bidding documents for the preparatory works, and the main civil works contracts for the barrage, the power channel and the power complex. Given the priority and complexity of the project and PHC's excellent performance during the feasibility studies and the already completed preparation phase of the project, GOP and WAPDA decided to extend the services of PHC to complete the preparation of the project, including the procurement process, and to assist in the construction supervision and project commissioning (para 5.1). The related TORs have been reviewed by the Bank, found satisfactory and are attached in Annex 4.3. While PHC is proceeding with its assignment, negotiations between WAPDA and PHC are currently underway for the finalization of the contract. Todate, contracts for the preparatory works have been awarded; bid evaluation reports for the barrage and the power channel civil works contracts have been reviewed by the respective financing agencies, and notification of award expected very shortly; bids for power complex civil works contract, the cranes and gates are being evaluated; bidding documents for the turbines and generators have been prepared, and are being reviewed by the respective financing agency.
4.10 Power Evacuation Facilities. WAPDA's arrangements for planning, engineering and supervision of works for the transmission system were reviewed. Load flows and stability studies, design criteria and environment and resettlement considerations were the basis for the adopted scheme for the evacuation of power from GBHP, and its connection to the grid system. These were also reviewed and found satisfactory. Detailed engineering design of the transmission component of the proposed project is being carried out jointly by WAPDA's transmission and grid stations staff assisted by National Engineering Services Pakistan (NESPAK). -37-
Safety Aspects
4.11 In accordance with the Bank guidelines for Safety of Dams and Structures (OMS 3.80, and the presently revised draft OP/BP 4.37), the project provides appropriate measures to ensure the safety of the proposed project and the associated structures.
4.12 Engineering. The PHC consortium prepared the project engineering and all detailed designs and technical reports with specific consideration of the safety of the project structures.
4.13 Independent Panels of Experts. As indicated earlier, POE and ERP have been associated with the project from the initial stages of the project preparation to carry out a comprehensive review of the feasibility study, project layout, and the detailed designs of the project, and to advise and ensure the safety of the project and the appurtenant structures, with specific consideration of the hydraulic, soil, seismic, structural, environmental and resettlement aspects. POE comprised eight internationally reputed experts with relevant expertise in dam/barrage, appurtenant structures and power house engineering, concrete lining of major channels and the underdrainage systems, and the electrical/mechanical equipment for the power station. ERP comprised three internationally recognized experts with relevant expertise in environmental and resettlement matters. The Panels contributed some important modifications for the design and implementation plan of the project. These Panels are being reconstituted to review, assist and guide on the critical technical and safety aspects of the proposed project, and their monitoring during construction and initial operation of the project. Related TORs are attached in Annexes 4.4 and 4.5. Most of the members of the previous Panels will continue on the reconstituted panels. Nomination of members to the Panels is ongoing and expected to be completed early January 1996.
4.14 Instrumentation. Extensive instrumentation is proposed to be installed at the project structures and the concrete lined power channel for safety monitoring. The same would be further reviewed by the POE and the Bank for its adequacy when instrumentation designs are finalized during construction, and additional instrumentation will be incorporated if considered necessary. The proposed instrumentation would provide data for studying the behavior of the various project structures and the power channel and foundations after construction, and enable the development of protective measures to cope with emergency conditions. Special provisions have also been made for monitoring and controlling the accumulation of sediments during project construction.
4.15 Safety Inspections During Operation. Periodic inspections of the dam and hydraulic structures will be carried out by WAPDA assisted by suitably qualified experts, acceptable to the Bank. WAPDA Dam Safety Organization staff are well trained in dam safety monitoring and conducts inspections of dams and major hydraulic structures in the country that generally follow the practices of the US Bureau of Reclamation. During negotiations, WAPDA agreed to maintain or cause to be maintained all facilities relevant to the project, and for making or causing to be made all necessary repairs to those facilities, in accordance with sound engineering, financial and power utilities practices (para 9.4). -38-
Project Cost Estimate
4.16 The total project cost estimate, including physical and price contingencies, local duties and taxes is about US$1,863.5 million of which about US$1,192.2 million (64 percent) would be the foreign exchange component. The financing required, including interest during construction, is estimated at about US$2,250.0 million. The cost estimate is based on June 30, 1995 prices. Land acquisition costs are based on the assessed market price including compensation to lessees and mortgagees. Their costs have been estimated by preparing detailed bills of quantities for each type of work and costing the quantities. Cost estimates for the preparatory works are based on the related contracts amount. Cost estimates for the barrage and the power channel are based on the evaluated bid of the recommended bidder. All other costs are based either on consultant's estimate or on recently opened bids for similar works. Physical contingencies are assumed to be: (a) 15% for the barrage, the power channel and the power station civil works because these works are of more difficult design and complex nature, and for the transmission lines which are being surveyed; (b) 10% for certain mechanical and electrical works (switchyard steel structure, cables and accessories, power plant auxiliaries and SCADA equipment). These works comprise many components and therefore need larger provision of contingencies than major mechanical/electrical works (turbines, generators, transformers, reactors, cranes, HV/MV/LV, switchgear, elevators, standby diesels and gates, etc.) for which a provision of 5% is made. The same percentage of 5% is assumed for preparatory civil works and technical assistance. Price contingencies have been included at annual rates of 1.8%, 2.6%, 2.5%, 2.5%, 2.4%/O,2.4% and 2.4% for foreign costs and at annual rates of 8.0%, 6.7%, 6.2%, 6.2%, 6.2%, 6.0% and 6.0% for local costs, for FY96 through FY2002 respectively. Custom duties and taxes on imported equipment, and Iqra (Education) surcharge would amount to about US$31 million. The estimated costs of the project are set out in Annexes 4.6, 4.7 and 4.8 and summarized in Table 4.1 below.
Financing Plan and Lendin2 Arrangements
4.17 The proposed Bank loan of US$350 million would finance about 15.6% of the total financing required for the proposed project and about 25% of its foreign exchange component. The proposed Bank Loan would include financing of a portion of IDC on the Bank loan (US$40.0 million) in order to help alleviate WAPDA's debt service burden over the medium-term, and its difficulties in raising financing in the commercial market (para 7.5). The remaining (US$1,900 million) is expected to be covered by the following identified sources: (a) The Asian Development Bank (ADB) for an amount of US$300 million; (b) The Government of Japan through the Overseas Economic Cooperation Fund (OECF) for an amount of US$350 million; (c) The Government of Germany through the Kreditanstalt fuer Wiederaufbau (KFW) for an amount equivalent to US$150 million;(d) The European Investment Bank (EIB) for an amount of US$60 million; (e) The Islamic Development Bank (IDB) for an amount of US$40 million; and (f) WAPDA's internal cash generation for an amount of about US$1,000.0 million, representing about 44.4% of the total financing required for the proposed project. WAPDA's share for the financing of the project is consistent with its overall financing of its total investment program for the period of the construction of the project (para 7.10). The proposed project financing plan is shown in Table 4.2 below. -39-
Table 4.1: PROJECT COST SUMMARY
(Rs Million) (USS Million) % % Total Foreign Base Local Foreign Total Local Foreign Total Exchange Costs A Land Acquisition 1,145.45 - 1,145.45 36.95 - 36.95 - 2 B. Relocation and Resettlement 1,599.93 7.11 1,607.04 51.61 0.23 51.84 - 3 C PreparatoryWorks 556.42 371 10 927.52 1795 11.97 29.9. 40 2 D. Civil Works C-01 Barrage&ancilliaryworks 1,581.00 3,68900 5,270.00 51.00 11900 170.00 70 11 C-02 Power channel & ancilliary works 2,697.00 6,293.00 9,990.00 87.00 203.00 290.00 70 19 C-03 Power complex & ancilliary works 3,533.16 8,244.05 11,777.21 113.97 265.94 379.91 70 25 Subtotal Civil Works 7,811.16 18,226.05 26,037.21 25197 587.94 839.91 70 55 E. Mechanical & Electrical Works ME-1 Turbines & auxiliaries 424.44 2,433.76 2,985.20 13 69 78 51 92.20 85 6 ME-2 Generators and auxiliaries 519.27 2,97753 3,496.80 1675 96.05 112.80 85 7 ME-3 Transformers and reactors 160.60 739.64 900.24 518 2386 29.04 82 2 ME-4 Cranes 38.47 246 73 285.20 1.24 7 96 9.20 87 1 ME-S HV switchgear, control and protection equipment 229.52 1,545.54 1,775.06 7 40 4986 57.26 87 4 ME-6 MV and LV swtchgear 83.83 64.97 148.80 2.70 210 4.90 44 - ME-7 Elevators 124 1767 18.91 004 0.57 0.61 93 ME-8 Diesel generating standby sets 1829 18.91 37.20 059 061 1.20 51 ME-9 Gate equipment 654 73 54528 1,200.01 2112 17.59 39.71 45 3 ME-10 Generator isolated phase bus 992 66 96 76.99 0 32 2.16 2.48 87 - ME-11 Switchyard steel structures and powerhouse masts 54 78 23 34 79.12 1.77 0 75 2.52 30 ME-12 Cables and accesories 6 20 70 68 76.99 0.20 2 28 2.48 92 ME-13 Miscellaneouspowerplant auxilliaries 3628 204.28 240.56 1.17 6.59 7.76 85 1 ME-14 Control, SCADA and telecom equipment 29.74 44239 472.13 0.96 14.27 15.23 94 1 ME-15 Transmission lines & substations 447.92 1,706.58 2,154.50 14.45 5505 69.50 79 5 Subtotal MechanicalS Electrical Works 2,71523 11,10426 13,819.49 87.59 358.20 445.79 80 29 F. Engineering and Administration Prolect ConsuKtancy 1,053 74 743 95 1,797.69 33.99 24.00 57.99 Monitorng and other Consuftancy 5897 121 14 180.11 1.90 3.91 5.91 WAPDAs Engineeringand Administration 676.11 - 676.11 21.81 - 21.81 Studies and Field Investigations 3410 - 34.10 1.10 - 1.10 Subtotal Engineering and Administration 1,822.92 865.09 2,689.01 58.80 27.91 86.71 32 6 G Taxes and Customs Duties 744.00 - 744.00 24.0 - 24.00 - 2 Total BASELINE COSTS 16,395.03 30,573.69 46,968.72 529.97 986.25 1,515.12 65 100 Physical Contingencies 1,70602 3,55898 5,265.01 5503 114.81 169.84 68 11 Price Contingencies 5,90466 9,245.61 15,150.27 87.44 91.13 178.57 51 12 Total PROJECT COSTS 24,005.72 43,378.28 67,384.00 671.34 1,192.19 1,963.53 64 123
Interest During Construction: IBRD Loan b/ 204 30 3,121 50 3,325.90 54 82.5 87.9 Other Loans 6,43298 4,86522 11,299.20 170.26 128.31 298.57
Total Financing Required 30,643.00 51,365.00 92,009.00 847.00 1,403.00 2,250.00 b\ Totals may not add due to rounding. \b Interest during construction (IDC) is based on onlending rate for projected disbursements of loan proceeds. Foreign currency portion of IDC is based on Bank loan variable rate for projected disbursements of loan proceeds. Table 4.2: PROJECT FINANCING PLAN (US$ Million) Possible Sources Local Cost Foreign Total Cost as % of Cost Total Proposed Bank Loan 350 350 15.6 ADB 300 300 13.3 Government of Japan/OECF 350 350 15.6 Govt. of Germany/KfW'Ysuppliers' credits 150 150 6.6 EIB 60 60 2.7 IDB 'a/supp1iers' credits 40 40 1.8 WAPDA Internal Cash Generation 847.0 153.0 1,000.0 44.4 Total Financing Required 847.0 1,403.0 2,250.0 100.0 /a To be confirmed. /b Includes IDC of about US$386.5 million out of which US$50.0 mnillionwould be financed by ADB and US$40.0 million by the Bank. -40-
4.18 The identified cofinancing sources are at different stages of commitment. ADB completed negotiations on November 13, 1995 and EIB's negotiations are scheduled for December 5, 1995. Submissions to their Boards are scheduled for December 21 and 12, 1995, respectively. The Government of Japan/OECF confirmed its intention to participate in the financing of the project. As regards the Government of Germany/KfW and the IDB, their intent to participate in the project and the level of their participation are expected to be confirmed very shortly, while they are completing their internal process for formal approval of their respective loans early 1996. Given the advanced stage of their internal processing, these financing sources are very likely to materialize. However, should they not materialize, the resulting financing gap would be covered by suppliers'credits. As a condition of effectiveness of the proposed loan, GOP and WAPDA should provide evidence that the ADB and OECF Loan Agreements have been executed and delivered and all conditions precedent to their effectiveness have been fulfilled (para 9.1).
4.19 The proposed Bank loan of US$350 million would be made to GOP at the standard interest rate for LIBOR-based US Dollars single currency loans, with a repayment period of 20 years including five years of grace period. The proposed Bank loan would be onlent by GOP to WAPDA on the following terms similar to those approved for PSEDP II, i.e., (a) during construction period of the project, a variable rate, to be reviewed semi-annually, equal to the sum of the prevailing World Bank Lending Rate to GOP plus a spread of 150 basis points; (b) after completion of construction, a variable rate, to be reviewed semi-annually, equal to the sum of the prevailing World Bank Lending Rate to GOP plus a spread of 350 basis points. The repayment period would be up to 23 years including a grace period of up to eight years. WAPDA will bear the foreign exchange risk. During negotiations, GOP and WAPDA agreed to execute a Subsidiary Loan Agreement satisfactory to the Bank as a condition of effectiveness of the proposed Bank loan (para 9.1).
4.20 The Government of Pakistan is eligible for the single currency loan (SCL) because it converted all its outstanding VLR82 loans to VLR89 terms. The proposed loan of US$350 million, which will be the only FY96 loan to Pakistan on SCL terms, represents 60 percent of the Bank's FY96 lending program to Pakistan of US$580 million, including guarantees. Furthermore, the Government of Pakistan has selected US dollar single currency loan terms within the context of its overall liability management strategy and the LIBOR-based interest rate in order to preserve standard country terms for this project. GOP judges that WAPDA has sufficient risk-bearing capacity to borrow on the proposed onlending terms. -41-
5. PROJECT IMPLEMENTATION
Implementation Plans
5.1 WAPDA would be fully responsible for the implementation of the proposed project. While WAPDA's track record in timely implementation of a large power system expansion program and hence large scale projects has improved over the last three years, given the priority and complexity of the project, WAPDA has decided to extend the services of PHC to assist in the implementation of the project until its commissioning. PHC's past association with the Indus Basin and the proposed project, its excellent performance during the preparation phase, and in order to avoid delay in the project processing (if fresh proposals were to be invited), the Bank has agreed to this extension. These services, which would amount to an estimated cost of about US$60.0 million, are being funded by WAPDA's own resources (para 4.8).
5.2 WAPDA has set up a Ghazi-Barotha Project Management Unit (GBPMU) headed by a Project Director with the rank of General Manager (Annex 5.1). WAPDA has already appointed key staff on full time basis, and is actively taking the required measures to fill all the posts of this unit in a timely manner. As stated earlier, the services of an independent POE to review the technical and safety aspects of the project and of the ERP will be continued during the construction phase. These services are expected to be financed by the proposed Bank loan. During negotiations, WAPDA agreed to incorporate, during project implementation, the comments of POE and ERP in the design and implementation of the project as appropriate (para 9.4).
5.3 To complement the above arrangements, a project implementation management plan (MP), which will clearly define the responsibilities of the different agencies involved, with WAPDA as the institution's primary responsible for the project has been set up. This MP would, in particular, ensure project completion in a timely manner, and reduce the risk of cost overruns. In addition to the regular meetings between GBPMU and PHC, the MP provides for the establishment of a Project Coordination Committee chaired by Member Water, WAPDA, which meets on a monthly basis, and another high level Executive Committee chaired by the Secretary of Water and Power, which would meet as required to review progress of project implementation.
5.4 WAPDA is proceeding with the land acquisition process expected to be completed by June 30, 1996, within the framework of the resettlement action plan (para 6.11). Preparatory works including access road, permanent colonies for WAPDA staff, power supply equipment, infrastructure in the new villages for RAP, and salvaging archeological sites have been initiated. Contracts for the construction of the barrage (C-01) and the power channel (C-02) are expected to be awarded very shortly. Bidding documents for the power complex, contract C-03, were released to prequalified bidders. Bids are expected to be opened early January 1996, and contract award is expected late April 1996..
5.5 Construction of the barrage will start with the temporary diversion of the Indus River to be completed in 1996, the cofferdams which will enclose the main barrage structures, the head regulator, undersluices and standard bays. The undersluices will be completed in 1997, while a -42- start will be made on the right guide bank and the fuse plug, and work on the head regulator including the gates, left guide bank and gates for the undersluices will continue for completion in 1998. The standard bays including gates, the right guide bank and fuse plug will be completed in 1999/2000, and the commissioningof the barrage structure will commence. The main features of the construction program of the power channel are as follows: (a) excavation for the channel lining, and the construction of the bridges and cross-drainage structures will all proceed from the downstream (Barotha) end; (b) bulk excavation of alluvial material will be carried out by mass loaders feeding mobile conveyor belts, allowing the excavated material to be moved directly to the spoil banks for spreading and leveling; (c) purpose made plant will be used to trim the excavation before lining, to install the underdrainage system and place filter materials, to place the concrete lining and apply curing compound to the finished lining; the channel will be lined in four passes and this work is scheduled to start mid 1997; (d) the bridges will be built ahead of the excavation of the power channel, so that communications across the channel are not interrupted; similarly, superpassages will be built early, to protect the excavation from monsoon floods. As regards the power complex, the main features of its construction program are as follows: (a) excavations for the power house and other structures will be completed in 1996, and the construction of the power house, penstocks and headpond/forebay embankments will start; (b) construction of the intake and spillway will start in 1997, and first built-in parts for the turbines will be installed; (c) all main structural work will be completed in 1999; and (d) in the year 2000, water received via the power channel will be allowed to fill up the head ponds, commissioning of turbines, generators and all associated equipment will start and continue until 2001.
5.6 The proposed project is expected to be completed by June 30, 2001, and the detailed implementation schedule is given in Annex 5.2. This plan was prepared by WAPDA and PHC and is based on full mobilization of the contractor as early as possible during the dry season.
Procurement
5.7 Procurement for the proposed project has been divided in various packages taking into account the size and complexity of the project, the barrage, power channel, power house and transmission system size and sites, and the various sources of financing. In particular, the packaging of the main project components is as follows: two lots for preparatory works, three lots for the main civil works (C-01 for the barrage, C-02 for the power channel, and C-03 for the power house), 9 lots for the electro-mechanical equipment, one lot for the transmission line, one lot for the substations, one contract for engineering and construction supervision (PHC contract), and a set of contracts for the remainder of the technical assistance component. The detailed list of these lots, the proposed timing for their procurement and the allocation of funding for each package are outlined in the project procurement schedule in Annex 5.3, defined in line with the overall project implementation schedule. Overall, there will be about 17 packages ranging in value from about US$500.0 million for the power complex to US$0.70 million for the elevators. Contracts for generators, turbines, transformers, switchgears, control and instrumentation, substations and transmission lines would be awarded on supply, delivery, erection supervision and commissioning basis. Contracts for gates, cranes, elevators, diesels would be awarded on supply, delivery and supervise basis. The remaining contracts would be awarded on supply and delivery basis and the contractors of the main civil works contracts would be responsible of their erection as well as the erection of gates, cranes, elevators and diesels. In addition, the contractors for each -43- of the main civil works contracts will be responsible for the overall coordination and commissioning of the barrage, the power channel and the power house respectively. The coordination, supervision and commissioning for the overall project is the responsibility of the Engineer.
5.8 Table 5.1 below summarizes the proposed procurement arrangements for the project, and the identified source of financing. The procurement arrangements will be consistent with the requirements of the financing agency. In particular, the main civil works contracts C-01 would be funded by ADB, C-02 by the Bank, C-03 joint-financed by the Japanese Government through OECF and the Bank, and the turbines and generators by the Government of Japan/OECF and Germany/KfW. Respective procurement requirements will be applied. Bank funds would also be used for some electromechanical equipment and specialized instruments and control equipment for environment monitoring and laboratory; and part of the technical assistance component. Annex 5.3 gives the detailed contract packaging and allocation of funding.
5.9 Goods, works and services to be financed by the Bank would be procured in accordance with the Bank Guidelines dated January 1995. With the exception of the items listed in the following paragraph, all contracts to be funded by the Bank would be awarded through international competitive bidding (ICB). For purpose of bids comparison, a preference limited to 15% of the CIF cost of the imported goods, or the custom duty applicable, whichever is less, would be extended to eligible locally manufactured goods. In the procurement of works WAPDA may grant a 7.5% margin of preference to domestic contractors in accordance with the provisions of the Bank's procurement guidelines.
5.10 Specialized instruments and control equipment for environment monitoring, in contract packages not to exceed US$400,000 and US$200,000, shall be procured through international and local shopping respectively, all of which will not exceed US$4.0 million in aggregate. Consultants for studies and technical assistance would be selected in accordance with the Bank Guidelines and employed under terms and conditions satisfactory to the Bank. The Bank will review all ICB procurement above US$1,000,000 and hiring of consultant firms above US$100,000 and individuals above US$50,000 on a prior review basis. All other relevant contracts not financed by the Bank shall be subject to consultation with the Bank prior to award, including the consultancy services. -44-
Table 5.1: PROCUREMENTARRANGEMENT
PROCUREMENTMETHOD (US$ million)
PROJECT COMPONENT ICB NCB OTHER NBF N.A TOTAL COFI- FINAN. NANCING REQD. 1. Land Acquisition 41.8/a
______41.8 ______2. ResettlementActivities 60.2/b 60.2 3. Preparatory Works -accessroad to power 29.4 29.4 complex and colonies -three model villages 4.0 4.0 4. Civil Works -barrage (COI) 214.7 214.7 ADB -power channel (C02) 366.2 366.2 (250.0) (250.0) -power house (C03) 487.2 487.2 Japan & (53.0) (53.0) WAPDA 5. Equipment and Material -turbines and ancillary 106.6 106.6 }Japan, -generators and ancillary 130.4 130.4 }Germany, -others 4.0 196.8 200.8 }ADB (4.0) (4.0) }EIB, IDB & .______.___ _ }W APDA 6. Transmission Lines & Substs. 88.7 88.7 } 7. Technical Assistance -construction supervision 68.5 68.5 } -Power Sector Reforms, POEs, 6.8 6.8 } Mgmt. Consultants and others (3.0) (3.0) }
-WAPDA eng. & admin. 24.9 24.9 } -Other studies 1.2 1.2 }
-Training 1.0 1.0 } 8. Taxes and Duties 31.1 31.1 9. Interest During Construction 386.5 386.5 WAPDA & (40.0) (40.0) ADB 882.8 4.0 13.0 932.6 417.6 2250.0 TOTAL (303.0) (7.0) (40.0) (350.0)
Notes: (i)Figures in parentheses are the respective amounts to be financed by the proposed Bank loan; (ii) Not Bank Financed (NBF); and (iii) Not applicable (N.A.). a The compensation cost of the land assessed by GOP based on the market rates. b The compensationcost of relocatingthe projectaffected people, Pakistan Air Force and AeronauticalComplex facilities and other resettlementworks. -45-
Disbursements
5.11 The proposed Bank loan would be disbursed against: (a) 70% and 15% of total expenditures for civil works and installation and erection for the main civil works contracts, C.02 and C.03 respectively; (b) 100% of foreign expenditures for equipment and materials imported directly, 100% of ex-factory cost of expenditures for equipment and material manufactured locally and 80% for other items procured locally; (c) 100% of all expenditures for consultant services, including studies; and (d) interest and other charges on the Bank loan during construction up to an amount of US$40.0 million. Full documentation would be required by the Bank to support withdrawal applications for consultant services above US$100,000 for firms and US$50,000 for individuals and all other contracts above US$1,000,000. Disbursement for amounts less than US$1,000,000 would be made on the basis of itemized statement of expenditure (SOE). The SOE documents would be maintained by WAPDA and made available for review by Bank supervision missions
5.12 To facilitate disbursement, a Special Account (SA) of about US$15.0 million would be maintained by WAPDA in a commercial bank in Pakistan. This SA will be used for all eligible foreign and local expenditures. Replenishment to the Special Account should be submitted on a monthly basis or whenever 20% of SA funds have been used, whichever occurs first. At its option, WAPDA may submit withdrawal requests, outside the SA, provided the individual request reaches or exceeds 20% of SA balances.
5.13 Disbursement Profile. Annex 5.4 gives the estimated disbursement schedule for the proposed Bank loan defined on the basis of the project implementation schedule and the advance procurement actions which have been taken for the civil works. Because of the nature of the project, no comparison has been made with the Bank's standard procurement profile. Based on the estimated commissioning date of the fifth unit (June 30, 2001) and in order to allow time for payment of the contractors' retention money and unforeseen delays, the loan closing would be June 30, 2002.
5.14 Advance Contracting and Retroactive Financing. In order to meet the construction timetables, the Bank has agreed to carry out most of the procurement activities for contracts to be financed by the proposed loan as advance procurement. Therefore, expenditures amounting to a maximum of US$35.0 million (10% of the loan amount) which would be incurred prior to the signature of the proposed loan, but after October 1, 1995, to finance advance payments for contract C-02 (power channel and auxiliary works) and other additional payments related to technical assistance, would be eligible for retroactive financing.
Monitorin2, Supervision and Reporting
5.15 Project Monitoring and Reporting. Given the size of the project, its multiple sectoral, environment and resettlement aspects and the need for close coordination among several donors, understanding has been be reached during negotiations on satisfactory procedures for monitoring, evaluating and reporting progress on the project. WAPDA would submit to the Bank and the other donors brief monthly reports and comprehensive quarterly progress reports, which would include in particular an analysis of progress toward project objectives and key targets, lessons -46- learned and their incorporation in forward planning. These would cover all aspects related to GBHP implementation, as well as the other project components. Environmental and resettlement issues would be addressed through implementation of the resettlement action plan and the environmental mitigation, monitoring and institutional strengthening plans (paras 6.16 and 6.19). WAPDA would establish a computerized Project Management System (CPM) to closely monitor the implementation of the project. It is expected that the POE and ERP would meet at least twice a year to review progress on implementation of the GBHP and the Environment and Resettlement Management Plans, and to provide advice on corrective actions as required
5.16 Project Supervision and Mid-term Review. Supervision of the project will extend over a period of seven years, 1996-2002. To make efficient use of resources, the supervision will be combined with supervision of other ongoing power projects, preparation for future projects, and organized jointly with the other donors whenever possible. Halfway through the implementation of the project, in June 1998, a mid-term review will be held to analyze if there are any critical problems which require management review.
5.17 The key issues that would be focused upon during project supervision are: (a) review of Pakistan's and in particular WAPDA's power development plan in keeping with changes in the economic scenario; (b) a continuing dialogue with GOP and WAPDA on the restructuring and efficiency improvement of the power sector, and on required measures to ensure compliance with the financial covenants; (c) close monitoring of the implementation of the environment and resettlement management plan, including the RAP for GBHP and for the 500 kV transmission lines; and (d) technical supervision of the physical implementation of the project. The Bank missions would also assist GOP in analyzing policy issues and options in the power sector, and in formulating and/or fine-tuning the strategy within the agreed Country Assistance Strategy. The total Bank staff-weeks requirement is estimated at about 20-25 staff weeks per year, with three missions annually for the first three years and an average of two missions per year for the following years. The project supervision plan and the key performance indicators that would be used for supervision are given in Annex 5.5 and Annex 5.6 respectively.
5.18 An Implementation Completion Report (ICR) will be drafted by the Bank within six months after closing of the proposed Bank loan, and GOP and WAPDA would assist in the preparation of the ICR. GOP and WAPDA would adopt the plan for the operational phase of the project in line with the corporatization program of WAPDA, and as indicated in para 3.6. In particular WAPDA will define the performance indicators to monitor operations and development impact of the project. WAPDA will prepare and make available to the Bank its own evaluation reports assessing the project execution including environment and resettlement issues and initial operation, its costs and benefits, and the extent to which the objectives of the project were achieved. -47-
6. ENVIRONMENTAL AND RESETTLEMENT ASPECTS
Introduction
6.1 The proposed project has been placed in environmental screening category "A" and has been subject to the preparation of an environmental assessment and a resettlement action plan consistent with the procedures of the World Bank and the requirements of the Government of Pakistan Ordinance XXXVII, "Control of Pollution and Preservation of Living Environment (December 1983)." As indicated earlier, one special feature of the project is the participation of an independent Environmental and Resettlement Review Panel (ERP) during the detailed feasibility studies and project engineering design. The Environmental Assessment Executive Summary (EAES) prepared by WAPDA and endorsed by GOP, was distributed to the Executive Directors in November 1994 (Report No. SecM94-1147), and provides an overview of these environmental and resettlement studies. The EAES and Resettlement Action Plan (RAP) have been translated into Urdu and made available to the people permanently and temporarily affected by the project, as well as to Non-Governmental Organizations (NGOs). In addition, Urdu information booklets describing the land acquisition process and the entitlement packages in simple and concise terms have been prepared for the affectees.
6.2 With the assistance of the ERP, environment and resettlement aspects, including the protection of cultural heritage sites, were considered in detail in the evaluation of design alternatives and in the adoption of a number of design modifications to mitigate potential adverse impacts through careful siting of the principal components of the project and in establishing the alignment of the power channel (para 4.8). A summary of the environmental and resettlement aspects of the proposed project, including details of the alternatives considered is provided in Annex 6.1.
Environmental Impacts and Key Mitization Measures
6.3 Under the current project design, potential environmental impacts include: (a) changes of land use in areas acquired for construction of the barrage, reservoir, power channel and power complex; (b) reduction in the flows in a portion of the main channel of the upper Indus River, immediately below the Tarbela Dam, when the power complex is in operation: (c) impacts to two minor archaeological sites along the power channel alignment, which would be subject to salvage excavation, in consultation with the Provincial archeological authorities; (d) relocation of two mosques and 14 graves, with the approval of religious leaders and concerned families; (e) potential risks for persons and livestock if they enter or fall into the power channel; and (f) safety issues associated with transmnissionlines.
6.4 Potential environmental impacts have been examined in the environmental studies and action plans, mitigation measures and monitoring programs have been prepared accordingly. Annex 6.1 gives more details on the Environmental Mitigation and Monitoring Plan. In particular, the impact of land acquisition will be largely mitigated by the redevelopment of excavation spoil for agriculture. The spoil banks and terraces will be leveled, covered with top- soil, provided with tubewell irrigation, and resold to interested affectees consistent with the -48-
entitlement provisions of the project. Measures for fair and prompt compensation as well as a number of other measures are also being adopted to ensure that the affectees are provided adequate support during the transition period and that the compensation process is transparent. During periods of low flow, the river downstream of the barrage will be fed by compensation releases at the barrage, to maintain aquatic ecosystems and provide local users access to water releases. Detailed studies and evaluations of the potential hydrological and ecological impacts of reduced flows in the Indus river have been made, and a compensation release of 28 cumecs was found to be more than adequate. Furthermore, and as provided for in the Environmental Mitigation and Monitoring Plan, to be implemented by WAPDA as an integral part of the project, the water quality in the river downstream will be closely monitored, especially during the low flow season, and any adverse environmental impacts promptly mitigated by adjusting the water release pattern. A new sewerage system will be provided for Ghazi-Khalo and fisheries resources will be enhanced by stocking fish species in the barrage pond. To protect persons from entering or falling into the power channel, chain link fencing will be placed in populated areas. Transmission lines would be routed to avoid passage over or close to residential, educational, health or commercial facilities and relocation for safety reasons would be compensated consistent with project entitlement procedures.
Land Acquisition and Resettlement Process
6.5 Early consultations with residents of the project area led to identification of land acquisition and resettlement as major issues which have been addressed in the project design, and much attention has been paid during project preparation to the resettlement and compensation aspects. Based on a complete focused census and sample surveys of the affected persons, WAPDA has prepared a RAP. A legal task force appointed by WAPDA was associated to review Bank policy and national legislation and to find or propose legal basis for the entitlements proposed in the RAP. Field-based reviews were also conducted in the areas of relevant recent projects in Pakistan to incorporate the "lessons learned" in the preparation of the RAP.
6.6 The RAP makes a commitment to improving or restoring the current standards of living and earning capacity of the people permanently and temporarily affected by the project. This policy commitment has been given operational form through the development of entitlement packages (Annex 6.2) clearly identifying the type of land loss or disturbance, definition of an entitled person, definition of entitlement/right, additional facilities and services for the affectees, including training, work opportunities, credit and provisions for infrastructure. The RAP has been reviewed by the Bank and found acceptable. The RAP has also been formally approved by the Governments of North West Frontier Province and Punjab Province, where the project facilities are located. At present, the implementation of the RAP is well underway.
6.7 To avoid or minimize resettlement, civil works were sited either on higher ground or more difficult terrain. As a result only the resettlement of 179 families with a surveyed population of 899 persons, currently living along the power channel and at the power complex sites, and the demolition of 110 private housing units will be required. The number of persons adversely affected by the loss of land and employment is currently estimated to be 21,460, bringing the total number of adversely affected persons to 22,359. Table 6.1 below gives the breakdown of the total persons between private title holders, and others affected by the loss of land and employment. -49-
Table 6.1: PROJECT AFFECTED PEOPLE Affectees Number
Private Title-holders 19,875
Others afTectedby loss of Land and Employment 2,484
TXotalNumber of Affectees 22,359
Total number of affectees requiring resettlement 899
6.8 Most resettlement would be accomplished close to the original sites of the 110 private housing units and their associated buildings to be demolished. Three model villages are being established at the following locations: (a) about I km from Ghazi, for those losing 13 houses in Haripur; (b) adjacent to Banda Feroze, for those losing 33 houses in Banda Feroze; and (c) adjacent to the existing houses of Barotha village on the tailrace alignment for those losing 22 houses in Barotha. These locations have been identified by the concerned affectees and will accommodate 68 of the 110 houses which need to be relocated. Construction of these villages is underway. For the remaining 42 houses which are widely scattered, replacement housing would be constructed in the vicinity of the existing house. In addition, in each resettlement village, a road network, a water supply and sewage system, and electricity would be provided. A primary school, a mosque, a basic health unit, and overhead water storage tanks would also be provided by WAPDA.
6.9 Approximately 4,770 hectares of land would be acquired by the project, 3,457 hectares of which are privately owned. Uncultivated, the public land is free of any claims by individuals or groups with customary rights. All of the privately owned land will be legally acquired. Out of the total land to be acquired, 1,640 hectares would be only needed temporarily for spoil banks. Through an innovative approach, these lands would be developed, provided with irrigation facilities and used as the core of land-for-land option for the adversely affected landowners. It is estimated that the potential income of a typical farmer presently working barani (rain-fed) land who receives land on irrigated spoil banks should be up to twice that of his present income. This would provide the adversely affected people an economic base in the project area by not forcing them to resettle in unfamiliar host communities. Table 6.2 below gives the details of the land required for the project.
6.10 The provisions set forth in the Pakistan Land Acquisition Act of 1894 have been complemented through the provisions of the RAP to ensure fair and equitable compensation to the affected people. These concerns formed the basis for the formulation in the RAP of the land acquisition and compensation process. In particular: (a) instead of revenue officials determining the replacement cost of lands and houses, this cost is being decided by a Land Valuation Committee composed of the Assistant Commissioner of the subdivision, a WAPDA representative, two representatives of the affectees, and a representative from the specially created Ghazi-Barotha Development Organization (GBDO) (para.6.18); (b) before commencing the land acquisition process each Land Acquisition Collector (LAC) is issuing guidelines for the public's information setting forth the considerations governing the land evaluation process; (c) all persons losing privately owned agricultural land would be entitled to receive compensation either in the form of cash or land; (d) cash compensation is being based on the market value of the land -50-
pIus an additional premium of 15% for the compulsory acquisition of the land; (e) each person losing land, dwelling or other property is being issued a Compensation Certificate clearly outlining the value of all assets and the precise physical details of the property, and compensation payments are being made directly into the accounts of the affectees prior to the transfer of land to WAPDA; (f) the amounts deposited into the accounts of the affectees are being cross-checked with the Compensation Certificates by the project field teams, including representatives of the GBDO, to ensure that compensation payments have been made accurately; (g) the affectees would be permitted to farm the land, even after WAPDA has taken possession, until the land is required for construction; (h) any scheme for compensating laborers and others who have lost their livelihood wvillbe put on a sound legal footing; and (i) land acquired for the purposes of the project is being transferred promptly to the Federal Government consistent with the requirements of the project.
Table 6.2: LAND REQUIRED FOR THE PROJECT Land Required (ha)
Privately Owned
SR Project State Permanent for Temporary for Total No. Component Owned Structures Spoil Banks
1. Barrage and pond 1,180 1,180
2. Power channel 133 867 1,640 2,640
3. Power complex including colony and roads 950 950
Total 1,313 1,817 1,640 4,770
6.11 The land acquisition process seems well on its way towards completion by June 30, 1996. So far 8 awards, (cost of replacement), have been announced. Another 55 awards still need to be made. Out of a total amount of about Rs 2.0 billion required for land acquisition, Rs 380 million have been deposited by WAPDA with the LAC, and the balance will be provided as soon as needed. The functionaries appear to have gained confidence in the process and WAPDA is pursuing its e fforts to ensure that the required land acquisition and compensation process are proceeding smoothly. In addition, to complement the provisions of the RAP, GOP and WAPDA agreed during negotiations that: (a) land acquisition, compensation and resettlement under the proposed project would be carried out in line with the provisions of the RAP and in accordance with plans satisfactory to the Bank; (b) a legal framework satisfactory to the Bank would be established to apply to persons whose land has been acquired but who have been left in possession for the time being, and the standard legal documentation setting forth the terms and conditions of such continued possession made available to the Bank; and (c)for the transmission lines a land acquisition and resettlement action plan satisfactory to the Bank, to apply to the persons affected by the acquisition of land requiredfor the transmission lines, will be furnished to the Bankfor its review not later than December 31, 1996 (para 9.3). -51-
6.12 In order to complement the RAP and to provide additional safeguards for the population being affected by the project, WAPDA has had the National Rural Support Programme, a local NGO, prepare an Integrated Regional Development Plan (IRDP) for the affected area. The IRDP would ensure that the local communities benefit from the construction of GBHP in a long-term and all-round way and not only by way of piecemeal compensation. This plan would include social uplift (education, health); agricultural development (credit extension services); and business and industrial development. One main feature of the IRDP is to involve community participation, during its preparation, implementation and beyond. It will include specific programs for women and other vulnerable groups and emphasize long-term job development in the region.
6.13 WAPDA's experience with resettlement issues has not always been effective. As a consequence, a number of outstanding claims resulting from the Tarbela Dam Project, implemented in the mid-1970s with the Bank's assistance, still remain unresolved. Based on a preliminary survey being undertaken by an independent consultant, along with a legal expert, the major issue relating to these outstanding claims appears to be the application of the land-for-land compensation policy. According to this preliminary survey, out of a total number of about 4,930 families eligible to receive land-for-land compensation, about 1,440 families (29%) are still awaiting the allocation of their land. Although there is no direct relation between the resettlement aspects of the proposed project and those related to the Tarbela Dam Project located upstream of GBHP, efforts were made during the preparation of the proposed project to discuss the best approach to deal with the outstanding resettlement issues of the Tarbela Dam Project. As a result, WAPDA has appointed the above mentioned independent consultant to define a clear action program based on a survey to deal with the outstanding claims. Annex 6.3 gives the terms of reference related to these services. The mechanism to be put in place for addressing outstanding grievances should be transparent in terms of legal and financial aspects. During negotiations, GOP and WAPDA agreed that as a condition of Loan effectiveness, a survey will be carried out to assess the status of outstanding claims of persons affected by the Tarbela Dam Project, and an action plan to address legitimate grievances in a timely manner will be agreed with1the Bank (para 9. 1).
6.14 Participation and Consultation. Public participation has been an integral part of project preparation. Preparation of the environmental and resettlement studies for the proposed project have included extensive consultation at the national, provincial, district and local levels. Village level meetings ('scoping sessions') have been conducted with groups of men and women throughout the area. These scoping sessions have been designed to inform the affected people about the project as early as possible and to listen to their views and concerns. Consultations, including field visits, have been conducted with local NGOs including the World Conservation Union (Pakistan), the World Wide Fund for Nature (WWF/Pakistan), and the Sungi Foundation.
6.15 WAPDA has established a main Project Information Center (PIC) at the project site for the systematic and broad dissemination of all technical, environmental and resettlement information to the affectees in particular, and to the media and NGOs in general, among others on the land acquisition and compensation process and entitlement packages. Two smaller subcenters are also being established at Attock and Topi to provide easier access for affectees to project information. The information center is a critical part of the communications channel for redressing grievances about the land acquisition and compensation process. Since it was established in December 1994, it has undertaken an active program of outreach activities, including over 146 scoping sessions as of October 31, 1995. It has commissioned a popular film/video on the project, including its environmental and resettlement aspects. It has also prepared key documents in Urdu, including a schedule of public announcement of awards, Urdu -52-
translation of the EAES, entitlement packages and the full RAP. An advisor has been recruited to the PIC to assist in the preparation of written and audio/visual information for the PIC, support outreach activities for the affected people and provide training for the information center staff.
6.16 Implementation Given the complexity of the proposed project, adequate institutional arrangements are being developed to ensure smooth implementation of the environmental mitigation and resettlement plans. WAPDA's Environmental Cell (WEC) has been reorganized and is now headed by a Gieneral Manager (Annex 6.4). To ensure close monitoring of the project's environment and resettlement aspects, and adequate coordination with the Environmental Cell responsible for all WAPDA operations, WAPDA has set up within the GBPM1Ua Project Resettlement Organization (PRO) to deal exclusively with environment and resettlement issues of the proposed project (Annex 6.5). The PRO includes a Social Sciences Unit which is expected to play an important role in developing WAPDA's capacity for supervising and monitoring resettlement. The terms of reference for the Social Science Unit are attached in Annex 6.6. A key responsibility of this Unit is to ensure that the affectees, particularly women, small landowners, landless tenants and laborers fully understand their entitlement and procedures of compensation as provided under the RAP. It is also responsible for informing WAPDA of grievances of the affectees, as well as any serious and sustained deviations from the provisions of the RAP. Staffing of this unit has been completed and the appointed members are already in the field.
6.17 To support the Environmental Cell and the GBPMU/PRO, mainly during the transition period of appointment and training of the relevant staff, external monitoring consultants were appointed in August 1995, for an estimated 30 staff-months. The monitoring consultants will assist with the monitoring of the environmental and socioeconomic aspects of the project as well as the implementation of the RAP. Related terms of reference are attached in Annex 6.7.
6.18 In addition to the PRO, WAPDA is supporting the creation and providing a grant to the Ghazi- J3arotha Development Organization (GBDO), originally referred to as the Project NGO (PNGO). Terms of reference for this organization are attached in Annex 6.8. The GBDO will undertake contacts with the local population, particularly for matters related to land acquisition, compensation, the formation of Tubewell Users Associations and the allocation of land on the developed spoil banks. The RAP mandates that its representatives participate in Land Valuation Committee meetings which are required for the land acquisition and compensation process. It will also be the administrator of the IRDP. WAPDA has selected the National Rural Support Program (NRSP), an internationally recognized independent Pakistani NGO, to set up the GBDO for the project. A memorandum of understanding was signed between the two organizations in October 1994. The GBDO was formally registered under Section 32 of the Companies Ordinance (XLVII of 1984) in October 1995.
6.19 To ensure coordination among all the different units involved, an Environment and Resettlement Review Committee (ERRC) is being set up under the chairmanship of the Project Director. This Committee will meet periodically, and its members will comprise the chief of the PRO, representatives from the WEC, the Social Science Unit, the monitoring consultant, and a representative of each of the construction contracts, and the GBDO. Annex 6.9 outlines the organization of the relations between all the parties involved in the resettlement and environment monitoring. To assist in all these matters, the Government of Japan has approved grant funds of about US$1.2 million to assist WAPDA in implementing and supervising its environment and resettlement plans for the project. -53-
7. WAPDA'S FINANCES
Introduction
7.1 WAPDA's financial affairs are governed by the WAPDA Act of 1958 which requires the utility to operate along commercial principles, and to generate sufficient revenues from electricity sales to cover operating costs and achieve a reasonable return on investment. To ensure that adequate funds are available for the implementation of its investment program, WAPDA has agreed under ongoing operations with the Bank on an Internal Cash Generation (ICG) covenant, which requires WAPDA to generate annually from internal sources at least 40% of its capital expenditures, averaged over the previous, current and ensuing year, taking into account changes in working capital. WAPDA is also required to consult with the Bank before incurring new debt should it be unable to maintain a debt service coverage of at least 1.5 times. WAPDA's tariffs are set to ensure that these two financial objectives are met. Except for a couple of years, WAPDA has achieved these financial performance targets satisfactorily since FY85, and is one of the few electric utilities in the developing world to achieve this high level of ICG to finance its investment program.
Past and Present Financial Performance
7.2 Financial statements showing WAPDA's performance during the period FY90-95 are presented in Annex 7.1 and summarized in Table 7.1 below.
Table 7.1: WAPDA'S FINANCIAL RESULTS,FY90-FY95
KEY FINANCLIL FY90 FY91 FY92 FY93 FY94 FY95 INDICATORS UNAUD.
kWh Generated (Millions) 31427 34345 38067 40791 42396 45917
kWh Sold (Millions) 24121 26584 29267 31272 32131 35081
Average Revenue/kWh Sold (Rs.) 1.06 1.16 1.27 1.26 1.41 1.75
Increase in Average Revenue (%) 11.9 10.2 11.9 5.0 12.4 13.9
Operating Revenues (Rs./kWh Sold) 1.09 1.19 1.33 1.39 1.55 1.77
Operating Expenses (Rs./kWh Sold) .61 .70 .82 .92 1.08 1.14
Net Operating Income (Rs./kWh Sold) .48 .51 .53 .51 .50 .63
Investment Program (Rs. Million) 16764 16030 24804 22310 25591 26395
Intemal Cash Gen. (%) - 3 Yr. Ave. 40.7 47.3 50.0 44.0 28.0 39.9
Rate of return on Ave. Net Fixed 20.8 19.0 19.2 18.6 16.4 19.0 Assets (%) a/
Debt Service Coverage Ratio 1.8 1.5 1.6 1.4 0.9 1.5
Debt:Equity Ratio 58:42 57:43 56:44 57:43 56:44 57:43 /a On historical cost basis. -54-
7.3 WAPDA's overall financial performance during the period has been satisfactory. Its self- financing performance has been sufficient (exceeding 40%) in all the years, except in FY94 due mainly to WAPDA's retirement of its Second bond issue of Rs.5.6 billion which it was unable to roll-over because of unfavorable market conditions. A substantial tariff increase in November 1994 (averaging 24%) led to an improvement of WAPDA's financial performance, enabling it to meet the financial covenants during FY95. Thus, WAPDA is expected to earn a satisfactory rate of return on net fixed assets during FY95 of about 19.0%. Average revenue has steadily increased from Rs. 1.06/kWh in FY90 to Rs. 1.75/kWh in FY95. Operating revenues increased from Rs. 1.09/kWh in FY90 to Rs. 1.77/kWh in FY95 representing an average annual increase of 10.8%, while operating costs increased at an average annual rate of 13.3% during the same period. The faster increase in operating expenses is due to a lower recovery of fuel costs in FY94 and FY95 and higher fuel costs resulting from an increase in thermal generation to compensate for the low hydro generation during these two years. With average inflation rates running at about 10 - 12% during the period, WAPDA has been achieving rates of return well above inflation, based on assets valued at historical book values, the normal practice of public sector agencies in Pakistan. While WAPDA's debt-equity ratio has been satisfactory at about 57:43, WAPDA has had to resort to substantial short-term borrowings in recent years, in part due to its high levels of receivables, especially from Government agencies and departments, and the difficulty in mobilizing long-term financing due to the general tightness in credit markets. WAPDA also faced increasing difficulties in its bond issues due to the removal of GOP guarantees. Finally, WAPDA continues to pay hydroelectric profits to the Provinces out of the surcharge it collects for the purpose, and the balance of the payments is paid by the Federal Government. To safeguard WAPDA's future financial viability, an arrangement where the tariffs will be adjusted to fully cover hydroelectric profits has been agreed under the proposed project (para 7.9).
Fuel Adiustment Surchar2e
7.4 In the current tariff structure, all consumers pay a fuel adjustment surcharge (FAS), except those who are charged flat rate tariffs. The current FAS rates vary from Paisas (Ps.) 7/kWh for the lower two levels of domestic consumers to Ps. 75/kWh for other domestic and all the other consumers. The FAS rates are normally adjusted in line with variations in fuel prices. However, during the August 1993, fuel prices increased, but WAPDA was not allowed to adjust its FAS rates accordingly, thereby adversely affecting its cash flow position. As a result, WAPDA was unable to make its fuel payments at the new rates. To compensate for this shortfall, the Government advanced Rs. 3.0 billion to fuel suppliers on WAPDA's account, which is being recovered through the tariff increase for FY96. For the future, the Economic Coordination Committee (ECC) of the Cabinet has authorized WAPDA to automatically charge the FAS "in accordance with the prescribed rules without reference to the Government." Accordingly, the GOP agreed during negotiations that WAPDA would be authorized to automatically adjust the FAS rate or any other component of its electricity tariff to ensure full recovery of fuel costs (para 9.2).
Domestic Borrowin.
7.5 WAPDA's local debt comprise mainly of bonds issued in the local financial markets, raising Rs. 21.0 billion in six bond issues since FY88. All issues were in the form of bearer -55- certificates except the fourth and fifth issues which had pre-maturity encashment features. During the last two domestic borrowing programs, WAPDA experienced difficulties in mobilizing long- term resources for its investments because of: (a) the withdrawal of Federal Government guarantees on domestic borrowing of public corporations; (b) limits imposed by the State Bank of Pakistan on the level of WAPDA bonds that can be purchased by the banking sector; and (c) lack of well-developed discounting arrangements for the WAPDA bonds. Thus, WAPDA's last bond issue was only marginally successful. To address the issue of meeting WAPDA's long-term financing needs, a Domestic Resource Mobilization (DRM) Study is underway with the assistance of consultants to review WAPDA's long-term financing options, assess the prospects of different long-term financing instruments, and make policy reform recommendations to the Government to enhance the long-term domestic resource mobilization capability of WAPDA. Accordingly, GOP anid WAPDA agreed during negotiations to discuss the findings of the DRM Study with the Bank by June 30, 1996, and implement the agreed recommendations of the study, as it relates to WAPDA, by December 31, 1996 (para 9.3).
Accounts Receivable
7.6 Over the years, WAPDA's overall accounts receivable has varied around three months. Collection from private consumers has been steady at around two months' of sales, but until recently, Government receivables were a persistent problem, exceeding 3.0 months' sales. Since November 1994, the Government and WAPDA have taken bold steps in improving the collection of Government receivables. The ECC approved a set of budget adjustment measures to ensure recovery of these receivables directly through deductions of payments due to WAPDA from budgetary releases to the Government departments and agencies. As a result, in June 1995, some Rs.3.0 billion was deducted and adjusted against WAPDA's debt service to the Government. This has ensured WAPDA to comply with the existing covenant under the ongoing Bank loans, which provides that all Federal and Provincial government departments and agencies settle all bills for the supply of electricity within three months. In order to ensure that WAPDA's cash flow is not adversely affected by high levels of Government receivables, the existing agreement under ongoing projects, whereby GOP has agreed to cause all federal and Provincial governmental agencies to settle all bills for the supply of electricity by WAPDA within three months of receipt of the bills, will be retained under the proposedproject (para 9.5).
7.7 There is also concern with WAPDA continuing to carry accounts receivable of over three years in its books. As of February 1995, total receivables amounted to Rs. 14.8 billion of which Rs. 4.8 billion (32%) have been outstanding for more than three years (see Table 7.2 below):
Table 7.2: WAPDA'SAGING OF ACCOUNTS RECEIVABLE AS OFFEBRUARY 1995
Period Upto 1 Year 1-3Years Over3 Years Total Rs.Million 5,234 4,778 4,821 14,803 % ofTotal 35.4 32.1 32.5 100.0 AccountsReceivable -56-
7.8 Under the Rural Electrification Project (Ln. 3148-PAK/Cr. 2078-PAK), WAPDA agreed to carry out an aging analysis of its accounts receivable, and reflect on its balance sheet only receivables outstanding for less than three years and deemed collectible. Although the aging analysis is done by WAPDA regularly, a determination of which accounts are deemed collectible has not been made. To address this problem, WAPDA has agreed to increase its provision for bad debts to ensure that its balance sheet properly reflect its financial condition with respect to accounts receivable. Furthermore, to ensure that WAPDA adjusts from its books those receivables over three years which are deemed uncollectible, the existing agreement under ongoing projects where WAPDA has to carry out, by September 30 of each year, an aging analysis of its accounts receivable and thereafter, but not later than December 31 in each year, adjust its accounts receivable on its balance sheet of the previous financial year to reflect only those receivables that are outstanding for less than three years and deemed collectible, will be maintained under the proposed project (para 9.5).
Hydroelectric Profits
7.9 Under Article 161 of the Pakistan Constitution, the net profits earned by WAPDA on bulk generation of power at hydroelectric stations, computed in accordance with a formula set by the National Finance Commission of the Federal Government, are to be paid to the Province in which the hydroelectric station is situated. In this regard, WAPDA was instructed by GOP to pay hydro profits, estimated at Rs. 6.0 billion, to the North West Frontier Province (NWFP) for the Tarbela Hydroelectric Plant. In order for WAPDA to make the payment and, at the same time, maintain the 40% ICG level covenanted under the Bank loans, the Government introduced a hydro surcharge in its tariff structure, which is levied on all consumers. The surcharge is currently equivalent to 10.4% of the base tariff and raised about Rs. 4.3 billion in FY94. The balance amounting to Rs. 1.7 billion was paid directly by the Federal Government to the NWFP. In the proposed project, WAPDA would be required to pay hydroelectric profits to the Punjab Province in accordance with the instructions of the Government. The required payments would be treated as an outflow of WAPDA resources, and would be recovered directly from electricity consumers. Therefore, in order to safeguard the financial viability of WAPDA, and minimize the financial impact of distribution of profits on GBHP, the Government and WAPDA agreed during negotiations that consumer tariffs will be adjusted to fully cover the payments of hydroprofits, and that WAPDA should only pay hydroelectric profits that it collects for payment of such profits (para 9.3).
Financin2 Plan for WAPDA's Investment Program
7.10 A summary of WAPDA's financing plan for its projected capital expenditure program during the project period (FY96-FY2002) as indicated in Annexes 3.2 and 3.3, is summarized in Table 7.3 below: -57-
Table 7.3: WAPDA'SPROJECTED CAPITAL EXPENDITURE PROGRAM AND FINANCINGREQUIREMENTS (FY96-FY2002)
Requirements Rs. Million USSMillion %
Capital Investments 224890 6640 100.0 (including IDC) Total Requirements 224890 6640 100.0
Sources Gross Internal Sources 438314 12941 Less: Debt Service 280541 8283 Other Outflows 26564 784 Working Capital Increase 29941 884
Net Internal Cash Generation 101268 2990 45.0
Borrowing Local Loans 12003 354 5.3 Foreign Loans: Proposed Bank Loan 11854 350 5.3 Ongoing Bank Loans 16946 500 7.5 Other Exist.Fore.Loans 68894 2034 30.6 Unidentified Fore.Loans 13925 412 6.3
Subtotal Borrowing 123622 3650 55.0
Total Sources 224890 6640 100.0
The financing plan assumes that the required tariff increases to enable WAPDA to comply with the financial covenant under the Bank loan agreements would be made from July 1 of each year. The financing plan does not include any proceeds from future privatization of WAPDA's assets nor does it include any budgetary allocation from GOP. Overall local loans are expected to amount to US$354.0 million during the project period. After taking into account the proposed loan and all committed loans, the foreign exchange financing gap for implementing the FY96-02 program is estimated to be US$412.0 million, equivalent to 6.3% of the investment program, which is expected to be covered by export credits, and other loans and credits from bilateral and multilateral sources. Based on WAPDA's past experience in mobilizing foreign financing from these sources, it should be able to secure these funds on reasonable terms.
Future Finances
7.11 The projected balance sheet, income statement and sources and applications of funds statement for the period FY96-FY2005 based on the covenants discussed above is shown in Annex 7.1, and the assumptions used for preparing these forecasts, are shown in Annex 7.2. As stated earlier, WAPDA's financial performance is currently assessed on the basis of a 40% ICG covenant and a debt service coverage ratio of 1.5 times. To ensure that WAPDA achieved these covenants in FY96, the Government implemented a tariff increase in July 1995, averaging 14.5% of the existing tariff (27.7% on an annualized basis). To further ensure that WAPDA's investment program including the proposed project continues to be adequately financed, the existing financial -58-
covenants would be maintained. Therefore, GOP and WAPDA agreed during negotiations to repeat the covenant requiring GOP and WAPDA to take all necessary measures including adjustment of the structure and levels of tariffs, to enable WAPDA to generate for each year from internal sources 40% of its capital expenditures averaged over the previous, ongoing and one ensuiing year (para 9.5). Furthermore, in order to ensure that WAPDA's debt service coverage continues to be satisfactory, GOP and WAPDA agreed that the debt limitation covenant under ongoing Bank Group operations which provides that WAPDA would consult with the Bank, should it seek to incur new debt that would result in its debt service coverage falling below 1.5, will be repeated under the proposed project (para 9.5).
7.12 WAPDA's forecast financial performance from FY96-FY2005, based on these assumptions (Base Case), is summarized in Table 7A4below.
Table 7.4: WAPDA's FORECAST FINANCIAL PERFORMANCE (FY96-FY2005) (BASE CASE)
KEY FINANCIAL INDICATORS FY96 FY97 FY98 FY99 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005
kWVhGenerated by WAPDA (Millions) 48188 48534 45395 43874 43912 50068 57282 57282 57282 57282
kWh Purchased Private Sector(Millions) 0 3153 10511 16858 22074 23651 25385 27293 29391 31700
Total kWh Available (Millions) 48188 51687 55906 60732 65986 73719 82667 84575 86673 88982
kWh Sold (Millions) 37346 40419 44445 48889 53779 60449 67787 69351 71072 72965
Average Revenue/kWh Sold (Rs.) 2.24 2.53 3.10 3.12 3.36 3.37 3.56 3.88 4.11 4.34
Increase in Average Revenue (%) 27.7 / a 13.1 22.4 0.7 7.5 0.5 5.7 9.1 5.7 5.7
Ave. Operating Cost/lkWh Sold (Rs.) 1.28 1.55 2.06 2.22 2.50 2.41 2.52 2.72 3.02 3.35
Net Operating Income (Rs./kWh Sold) 0.97 1.00 1.00 0.92 0.87 0.98 1.06 1.18 1.11 1.01
Investment Program (Rs. Million) 35250 42040 45670 34950 29540 22220 15220 20285 22884 38422
Internal Cash Generation (/*) - 3 Yr. A v. 40.0 40.0 40.0 40.0 52.0 58.7 78.3 /b 85.8 74.2
Operating Ratio 0.57 0.61 0.66 0.71 0.74 0.71 0.70 0.70 0.73 0.77
Current Ratio 1.6 1.6 1.6 1.7 1.7 2.0 2.2 2.5 2.7 2.7
Rate of Return Net Fixed Assets (%) /c 27.0 27.5 28.4 23.9 22.0 24.2 27.2 29.6 27.7 25.4
Debt Service Coverage Ratio 1.8 1.6 1.7 1.5 1.5 1.5 1.5 1.5 1.5 1.5
Debt:Equity Ratio 53:47 51:49 49:51 47:53 45.55 39:41 32.68 24:76 17:83 10:90 /a On an annualized basis. /b WAPDA's internal cash operation is expected to fully cover its investment program. /c On historcal cost basis.
7.13 The sales forecast are based on demand projections, WAPDA's generation expansion plan, and purchases from private sector power plants beginning in FY97. During the project period, sales are expected to reach 65,072 GWh in FY2002 from 36,731 GWh in FY96, an annual average increase of about 10% which is consistent with the average growth in electricity sales for the past ten years. Based on these assumptions, WAPDA's forecast financial performance during the period is expected to be ffilly satisfactory. The average tariff increases, on an annualized basis, required from these financial projections are as follows: 27.7% in FY96, 13.1% in FY97, -59-
22.4% in FY98. 0.7% in FY99, 7.5% in FY2000, 0.5% in FY2001, 5.7% in FY2002, 9.1% in FY2003, 5.7% in FY2004 and FY2005. The steeper tariff increases required in FY97 and FY98, though still within levels of the past years, are mainly due to the purchases of power expected from the private sector at the average bulk cost of 6.5 US cents per kWh. The higher tariff increase projected in FY98 results from the large purchase of power from the private sector (10,511 GWh) compared to 3,153 GWh in FY97, and the tariff premium paid to private power plants commissioned by December 1997. Beyond FY98, the tariff increases required are within reasonable levels averaging between 0.5% to 9.0%. Based on these projected tariff increases, WAPDA's internal cash generation is expected to remain in excess of 40% of its average investment program. The rate of return on net fixed assets throughout the project period are well above inflation. The current ratio and capital structure remain to be fully satisfactory, particularly during the later years of the project period, when WAPDA begins to retire long-term debt, and borrowing requirements for capital expenditures decline.
7.14 WAPDA's management is aware of the need to strengthen its finances, and have agreed to pursue cost efficiency measures in addition to tariff adjustments (para. 3.19). These measures include, inter alia: (a) making improvements in operational efficiency and cost controls; (b) using more prudent investment planning, taking into account the company's financial constraints; and (c) maximizing loan maturities for future investments. In this regard, international management consultants will, among others, assist WAPDA in implementing financial efficiency measures. In addition, these consultants would review the ongoing study on WAPDA's financial performance criteria, and make appropriate recommendations consistent with WAPDA's corporatization and commercialization objectives.
7.15 Sensitivity tests of adverse scenarios with respect to high system losses, increases in investment costs, increases in accounts receivable and commercial rates for all future foreign exchange borrowings were made (Annex 7.3). Overall, the sensitivity analysis indicates that WAPDA's required tariff increases are in line with the Base Case. Even in the most pessimistic scenario, which combines high system losses of 24.2% (the highest level in the last five years), increases in investments costs by 25% (which is unlikely as WAPDA adjusts its investment costs in response to availability of financing), increases in accounts receivable to 3.6 months sales (compared to the normal overall performance of 2.4 months' sales) and commercial foreign exchange borrowing rates at 19% compared to past onlending rates between 11%-14%, WAPDA's tariff increase requirements would remain reasonable with the exception of one year (FY98, 28.8%). The probability of this one-year, worst-case scenario is very low, considering that: (i) WAPDA is committed to reducing its line losses through a covenant with the ADB (para. 3.17) and is now implementing a time-bound, loss-reduction program; (ii) WAPDA's five-year rolling investment program is subject to review with the Bank to assess its adequacy and ensure its financeability, thereby making program costs increasing by 25% unlikely; (iii) WAPDA's collection of Government accounts receivable has now been institutionalized, resulting in automatic collection of Government receivables through direct deduction from budgetary releases; and (iv) foreign borrowing from bilateral and multi-lateral sources have been onlent to WAPDA at a maximum of 14% as the onlending spread (kept by the Government) is already high at between 9%-1 1% (only 1 foreign loan out of 35 onlent to WAPDA in the past ten years has been at 14%, the rest have have been onlent at 11% or lower). -60-
8. PROJECT BENEFITS AND RISKS
Introduction
8.1 The project is attractive in terms of its fiscal sustainability, its contribution to power development, its positive impact on the poor, and its high economic return. The implementation of the proposed GBHP would be sustainable from a macroeconomic point of view provided that GOP continues its reform program, and from an environment and resettlement point of view, as long as the required mitigation measures are implemented. The least-cost analysis shows that GBHP is an integral part of the optimal development plan of the Pakistan power system and it is required to be implemented at its earliest commissioning date, even under more conservative and unfavorable assumptions. The project was selected by the optimal generation expansion model, after allowing for significant savings expected from energy conservation and demand-side measures (paras 2.15 and 2.16). Furthermore, given its limited adverse environmental impact compared to alternatives, GBHP is the best candidate for system expansion under integrated resource planning methodology. The project is also expected to have a considerable beneficial impact on poor households, as a result of the expansion of the rural electrification and reduction of load shedding in rural areas.
8.2 The Economic Rate of Return (ERR), calculated on the investment program of the national power system, consistent with the Base Scenario of the electricity demand forecast (para 2.10) is estimated at about 27%. When computed on the GBHP alone, the ERR is estimated at about 30%. There are also significant non-quantifiable benefits derived from the project consisting of reduced cost of unserved energy, improved operational and managerial efficiency of the utilities and further development of WAPDA's capability to address environmental and resettlement issues related to hydropower projects. Further, the consolidation of the reform program in the power sector as envisaged by the project is expected to have positive overall economic benefits, consisting of savings achieved by raising the overall efficiency of operation of the system, fiscal relief obtained from the reduction of subsidies and the decrease in public sector power expenditures. The increased reliability of the power system will, in turn, save business lost output and redundant investments. Such benefits, which are expected to continue materializing beyond the implementation period of the project along with the introduction of sectoral reforms, would further increase the estimated ERRs.
8.3 The results of an integrated risk analysis indicate that the probability of an ERR (calculated on the power development program including GBHP) falling below the opportunity cost of capital is estimated at 8 percent.
Macroeconomic Impact of Ghazi-Barotha Hydropower Project
8.4 In order to analyze the impact of the project on the fiscal and balance-of-payments position of the country, an assessment of its macroeconomic sustainability has been carried out. Such assessment has been developed on the basis of a comparison of key macroeconomic projections for the FY1995-2010 period derived from WAPDA's investment program including the project, with those resulting from WAPDA's investment program without GBBP, using data on investment costs, import requirements, and the financing plan for the project (see paras 3.14, -61-
3.15, and Annex 3.5). Both scenarios assume a somewhat slower pace of macroeconomic and structural reforms than that proposed in the Government's reform program as described in the 1993 Policy Framework Paper.
8.5 The results of the analysis can be summarized as follows: (a) the share of WAPDA's investment program, including GBHP, in the Public Sector Development Program would not exceed historical levels even at the peak of project investments in FY1998, and would decline significantly thereafter, as new thermal power plants are to be built by the private sector; (b) due mainly to the policy of no new public sector investments in thermal power plants, the budgetary public investment/GDP ratio would decline from 4.5% in FYI 995 to 4% by FY2000; and (c) the external current account deficit is expected to worsen somewhat during the project implementation period but would improve over time in line with expected improvements in export and economic performance.
8.6 Given its lower cost per unit of electricity generated compared to other alternatives, implementation of GBHP will result in lower electricity tariffs, and lower increase in the rate of petroleum imports, which, in turn, will have a beneficial impact on the economy and on the balance-of-payments. Moreover, given the high economic cost of power shortages (estimated between US$0.27 and US$0.75/kWh), the reduction or elimination of load shedding resulting from the implementation of the project is expected to remove an important constraint to Pakistan's economic growth, and in the industrial sector in particular.
8.7 It should be noted that since the local currency requirements during the construction period of the project and the debt service for the foreign loans are expected to be met from WAPDA's cash flow, there should be no direct impact on GOP's finances and no direct crowding out of other priority public investment projects, including those in the social sectors. However, GBHP financing could affect the funding of other priority public sector projects indirectly. That is, if budgetary resources would be required for the financing of GBHP, there could be a reduction in the local counterpart funding of other high priority projects. Furthermore, if a significant deterioration in the macroeconomic performance of the country were to occur in the medium term, the overall balance-of-payments sustainability could be further worsened by the implementation of GBHP. A lower export growth, in particular, would lead to debt servicing difficulties and a deterioration in creditworthiness over the medium-term.
8.8 There is, therefore, a need to closely monitor the consistency between the power sector investment program and the overall macroeconomic targets, as well as the adequacy of the funding of GOP's Core Public Expenditure Program and the Social Action Program, as discussed and reviewed with the Bank on annual basis. The agreement reached during negotiations (para 3.15) would ensure that the financing of GBHP will be independent from budgetary resources, so as to protect the funding of high priority public sector projects including in the social sector. As regards the macroeconomic performance of the country, the Government's decision to slow the pace of the reform program in June 1995 raised a number of uncertainties, and resulted in a sharp deterioration in Pakistan's balance-of-payments position during the July-October 1995 period. As a first step to reversing the deterioration, the Government announced in late October 1995 a -62- package of measures aimed at strengthening Pakistan's fiscal and external position.' In November 1995, the Government of Pakistan reached, ad referendum, agreement with the IMF staff on a stabilization program for the remainder of FY1996 and for FY1997, which provides the basis for a stand-by arrangement. This is expected to allow the resumption of a more comprehensive macroeconomic and structural adjustment program at an early date. Such a program would help improve Pakistan's creditworthiness over the medium term, thereby mitigating macroeconomic uncertainties.
Least-Cost Analysis
8.9 The least-cost analysis to assess the level of additional power capacity required by the system, and to compare GBHP with alternatives is detailed in Annex 8. 1. The analysis has been developed on the basis of the three electricity demand forecast scenarios, described in para 2. 10. Under all three scenarios, the proposed project is selected at its earliest completion date. The Internal Rate of Return calculated on the difference between the power generation costs of the expansion program with and without GBHP is 33%. A sensitivity analysis has been developed to test: (a) the robustness of the least-cost solution to variations in the main parameters of the analysis, such as a higher discount rate, lower cost of unserved energy, elimination of the reliability criterion, higher capital cost for GBHP, lower and higher demand forecast; (b) the robustness of GBHP as part of the least-cost solution through changes in the number of private thermal power projects which could be implemented before the commissioning date of GBHP; and (c) the inclusion in the analysis of a group of medium-size hydropower projects identified by GOP with the assistance of GTZ (the German Agency for Technical Cooperation).
8.10 Sensitivity on the Main Parameters. The results of the sensitivity analysis on the main parameters used in the analysis indicate that GBHP is an integral part of the least-cost solution, and that it should be implemented as early as possible. In particular, the least-cost expansion generation program including GBHP is not affected by the adoption of a higher discount rate (15%), the elimination of the reliability criterion, the introduction of a low cost of unserved energy (US$0.27/kWh), and higher capital cost for GBHP (+40%), even under the Low demand scenario.
8.11 Sensitivity on New Private Projects. As also indicated in para 2.11, the least-cost analysis indicates that under the Base demand scenario, about 5200 MW of private power thermal projects would be required to be commissioned by FY2002 along with the ongoing projects and GBHP. Under the High and the Low demand scenarios, the required amount of private projects by FY2002 is about 7200 MW, and 3100 MW respectively. In order to test the robustness of the GBHP, a higher number of private thermal power projects has been imposed on the least-cost solution under the Base and Low scenarios. The results are given in Table 8.1 below.
1 These included a 7% devaluationof the rupeeagainst the US dollar, a 10%import surcharge, a 5% minimum tariff on selectedtax-exempted imports, and a 7% increasein domesticprices of petroleumproducts. The State Bank of Pakistanwas also given full authorityto implementa tight monetarypolicy, and subsequently raised interestrates for concessionalcredit by 100basis points to 14%. -63-
8.12 Alternative Hydropower Plants. About fifteen medium-size hydropower projects have been recently studied at inventory level by the Sarhad Hydroelectric Development Organization (SHYDO) with the assistance of GTZ. A detailed list of these projects, whose size varies from a minimum of 80 MW to a maximum of 850 MW, is given in Annex 8.1. Although a comprehensive data base (including some hydrological data) has been developed, more information is required to consider these projects at par with the already identified hydropower projects included in the base case. For example, no data related to land acquisition, resettlement, environmental mitigation costs is available. More detail work is needed for the selection of design parameters, including an assessment of seismic risks and several other design parameters according to site conditions.
Table 8.1: IMPACT OF HIGHER NUMBER OF PRIVATE POWER PROJECTS ON GBHP COMMISSIONING DATE
Scenario By FY2002 FY2001\a Postponementof GBHP commissioningdate OptimalPrivate Power AdditionalPrivate Power Requirements Projects
Low Demand 3100 MW No Delay
Low Demand + 600 MW I Year Delay
LowDemand + 1200MW 3 Year Delay
Base Demand 5200 MW No Delay
Base Demand + 600 MW No Delay
Base Demand + 1200MW I Year Delay
Base Demand + 1800 MW I Year Delay
\a Capacityin additionto the optimalrequirements of the system
8.13 However, for the purpose of confirming the economic integrity of GBHP, several sensitivity analyses were carried out with the SHYDO projects as represented in the available reports. These analyses indicate that when this broader range of projects is considered, GBHP is still selected at its earliest possible completion date. Thus, the medium size hydropower projects identified by SHYDO, even at the preliminary costs and conditions presented in available reports, are not competitive with GBHP. Further, the analyses also indicate that many of these projects might be marginally more attractive than thermal power projects. While this conclusion might be a result of the rather incomplete data available and the extremely preliminary nature of the cost estimates, further investigations are merited to establish the economic viability and the environmental impact of the SHYDO projects.
8.14 Under technical assistance provided by the Bank, a report on the "Feasibility of Setting up 100 Small Hydel Schemes in NWFP" was finalized in July 1987. The hydro schemes are located in six districts of NWFP, Abbottabad, Mansehra, Kohistan, Dir, Swat and Chitral. A total potential of about 75 MW was identified through 100 schemes. Sixty-three of these schemes are -64-
situated at remote locations, at least 10 miles from the grid. Given their size and incomplete information available, such schemes cannot be included in the present analysis. Certainly, their size indicates that they cannot compete with GBHP. However, it is suggested that more work be carried out to investigate the feasibility of these schemes, particularly in the context of an optimal rural electrification plan.
Environmental Benefits and Costs
8.15 The proposed project will provide major environmental benefits from a lower increase of consumption of petroleum products, in particular High Sulfur Fuel Oil and Diesel Oil. On the basis of simulations of the operation of the power system with and without GBHP, the difference in petroleum products consumption and associated major pollutants emissions have been estimated. Table 8.2 below presents the increase in pollutants emissions taking into account the characteristics of the fuels used in power generation 2
Table 8.2: INCREASEIN POLLUTANTSEMISSIONS IN THE WITHOUTGBHP CASE ('000 TONNESPER YEAR)
FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 Particulates 3.941 3.792 4.069 5.540 5.345 5.393 SO2 161.43 155.52 167.58 227.64 219.50 221.44 NO, 19.420 18.716 20.162 27.377 26.397 26.628 CO2 5,660,000 5,606,000 4,420,000 6,337,000 6,252,000 6,269,000
8.16 There are no significant negative externalities associated with the implementation of the project. The environmental and resettlement mitigation measures (see Chapter 6), whose costs have been included in the least-cost and economic analyses, are expected to more than compensate the loss of welfare to the population in the project area. In particular, through the provision of irrigation facilities, the agricultural productivity of the land (development of the spoil banks) to be returned to the farmers is expected to be twice that of the total land to be acquired for the project, which is mainly rainfed. The low water flows between the barrage and the Indus river confluence with the Kabul river (41 km) would not have a significant negative impact on vegetation, and on the recreational and economic activities of the population in the area. Additional income benefits for the population are expected from the development of fisheries in the barrage and headponds, more than offsetting the reduced fish-catches in the river. Public and private transportation and economic activities in the area will not be significantly affected, given the construction of 47 bridges (1 for railway, 34 for vehicles and 12 for pedestrian) as well as 26 superpassages along the power channel. The ERR estimates (see paras. 8.21 and 8.25) would further improve if the above net positive externalities were included.
Poverty Imoact
8.17 The development of the power sector in Pakistan is essential to support the country's economic growth, which is the basis for a sustained improvement of the living standard of a
2 If the gas imports schemeto Pakistanmaterializes (see para. 1.19), and used extensivelyfor power
generation,SO 2 emissionswould be reduced,while NO, emissionscould increase. -65- rapidly growing population. Expansion of power supply is required to reduce the high cost of electricity load shedding, and to continue increasing the access to electricity in rural areas 3, where poor households are mostly concentrated 4. The implementation of GBHP will allow to continue and accelerate the rural electrification program, thereby generating direct and indirect benefits to poor households. In particular, an estimated two million additional electricity consumers, mainly rural population, would be supplied by the project at a tariff considerably lower than that of alternatives. The experience in similar countries 5 indicates that rural electrification, by facilitating growth of new economic activities, and a more rapid growth of agricultural production, stimulates economic development, improves the quality of life and the condition of the poorest groups of the society. The availability of electricity may also help to accelerate industrial growth by improving efficiency and lowering costs in areas that already experiencing economic growth. The project will also provide direct relief to the rural population through a reduction or elimination of load shedding, which, at present, severely affects rural areas.
8.18 As a result of the implementation of the project, and in particular of the Integrated Regional Development Plan (para 6.12), social improvements, agricultural, industrial, and commercial development will be implemented. The plan will include specific programs for vulnerable groups and emphasize long-term job development in the region. Finally, the project is expected to provide employment to about 10,000 workers.
Economic Rate of Return - ERR
8.19 ERR on tlkaPower Investment Program. In order to evaluate the economic viability of the proposed project, an ERR has been calculated on the basis of the incremental cost and benefit streams associated with the overall least-cost investment program for the period FY95-2006 of which the proposed project is an integral part (Annex 8.2). Benefits are valued in terms of the incremental demand that can be served under this program compared to the lower level of demand that could be served if no new supply capacity were added to the power system. Similarly, the costs are the difference between power system costs for meeting the demand forecast with this program (FY95-2006) and the system costs without any investments in new supply capacity and related transmission and distribution facilities (FY95-1999).
8.20 Total benefits for new residential users is divided into the following two components: (a) substitution of existing methods of lighting, i.e., kerosene lanterns, by electric lighting, that is resource cost savings; and (b) the consumers' surplus derived from the additional quantity of electricity above the substituted level caused by the large drop in the price of energy that comes with a switch from non-electrical method of lighting to electric forms. For the other consumer categories, i.e., industrial, agricultural, and others, the basis for valuing the benefits after FY2000 is their avoided cost. This is the cost that those users would incur if they had to meet their
3 Despite considerableprogress made in the rural electrificationprogram, less than half of the country's populationhas accessto electricity. WAPDA'srural electrificationprogram has been constrainedby the insufficientgeneration capacity.
4 About74 percentof the poor live in rural areas (PakistanPoverty Assessment, 1995)
5 Rural Electrificationin Asia: A Reviewof Bank Experience(1994) -66- electricity needs by installing and operating diesel-based generators or tubewells, instead of taking electricity from the national grid.
8.21 Results. The ERR for the power sector development program under the Base case is estimated at about 27%. A sensitivity analysis has been carried out to assess the robustness of the ERR to more unfavorable discrete changes in the main parameters of the analysis, such as a lower demand, higher costs, lower benefits, schedule slippage, and additional number of private power plants.
8.22 Sensitivity Analysis. The results indicate that the ERR is quite robust to any change in the main parameters and to any combination thereof In particular, the main outcomes of the analysis are the following:
(a) in the Base demand scenario, the ERR is in the range of between 19% to 27%; and
(b) in the Low demand scenario, the ERR is in the range of 14% to 20%, with the exception of 11.3% when an increase of 20% in the capital cost of the program is associated with an overall delay in program commissioning of 2 years.
8.23 ERR on the Project Alone. Because of the interdependence in the power sector, the standard methodology adopted by the Bank for power projects, and followed in the above analysis, is to evaluate the costs and benefits associated with the investment program as a whole. Although the least-cost analysis has demonstrated the robustness of GBHP to the main parameters of the analysis, such as increase in capital costs, lower demand, etc., it is desirable to more directly assess the impact of certain adverse events on the economic viability of GBHP. The reason for this separate analysis is that large hydropower projects tend to be more susceptible to delays and cost overruns than smaller thermal projects.
8.24 The ERR is calculated on the basis of the incremental cost and benefit streams associated with the implementation of GBHP. The costs associated with GBHP consist of the estimated capital costs and related operating and maintenance costs. Benefits are valued in terms of the incremental demand that can be served by GBHP, adopting a methodology almost identical to the one used in the previous analysis.
8.25 The results of this analysis indicate that the estimated ERR is about 30%6. Such result is independent of the overall demand scenario, as the least-cost analysis has demonstrated that under the low scenario, GBHP is still required at its earliest completion date. A sensitivity analysis has been also developed to determine the robustness of the economics of the project to changes in cost profile and schedule. The results indicate that the estimated ERR would remain well above 20% even under a combination of high project cost overruns (+30%) and considerable delay in the commissioning of the project (2 years).
6 The ERR for GBHPalone is higher than the ERR for the programas a whole, since GBHPis more economicalthan the thermalpower plants that make up the bulk of the generationinvestment in the least-cost developmentprogram. -67-
8.26 Economic Impact of Higher Water Compensation Releases. As indicated in para. 6.4, detailed studies and evaluations indicated that, in order to mitigate the potential hydrological and ecological impacts of reduced flows in the Indus river, a compensation release of 28 cumecs would be more than adequate. Nevertheless, the water quality in the river downstream will be closely monitored, especially during the dry low flow season, and any adverse environmental impacts quickly identified and mitigated by adjusting the water release pattern. In this context, a sensitivity analysis have been carried out to assess the economic impact of a higher compensation release of about 420 cumecs, which is equivalent to the existing flow in the river during the dry low flow season. This would result in a lower level of energy generated by the project, as the water flow in the power channel would decrease to about 5 cumecs. The results of the least-cost analysis demonstrates that, even under such unfavorable assumption, GBHP is still selected at its earliest completion date. The results of the economic analysis on GBHP alone indicates the ERR would decline from about 30% to 27%. Such reduction would be lower for the ERR calculated on the investment program, as the decrease in the energy generated by GBHP would be partially compensated by other power plants.
Risks and Mitieation Measures
8.27 Risks. Bank's experience indicates that there are always substantial risks associated with large scale hydroelectric projects. In order to reduce such risks, various measures have been considered in the preparation, design, institutional arrangements and processing of the proposed project. In particular, risks which could affect the proposed project could relate to the macroeconomic performance of the country, possible excess amount of private power supply, and to project implementation. The risk of a deterioration in the economic performance of the country and related creditworthiness could result in a lower electricity demand, delay in implementation and/or higher cost of both public and private sector power projects. The risk of an excessive power supply due to a higher than required level of new private thermal power plants could result in a delay in the operational start-up of GBHP.
8.28 Risks related to project implementation that could result in potential cost overruns, delays or a combination of both, could stem from the following: (a) non-mobilization of financing requirements, including the local financing component, (b) a unsatisfactory resettlement, relocation, and compensation of Project Affected People and delay in implementing steps identified to mitigate negative environmental and cultural heritage impacts, (c) construction delay, and (d) risks of engineering nature generally associated with hydroelectric projects, such as geological and hydrological uncertainties.
8.29 Risks Mitigation Measures. Various measures have been designed to mitigate the risks described above so that the economic viability of the project will be safeguarded. The broader macroeconomic risk of deterioration of the short-term financial balance is addressed by GOP's commitment to an acceptable fiscal and monetary program supported by appropriate structural measures designed to strengthen its revenue mobilization capacity. The risk of inconsistency between the macroeconomic framework and the increased level of Public Sector Development Program resulting from the implementation of GBHP, has been mitigated by the agreements proposed in para. 3.15. The risk related to the amount of private power supply, which could result in a possible mismatch between power demand and supply has been mitigated by the -68- agreement reached during negotiations that the Government will introduce policies and an appropriate solicitation mechanism to ensure timely implementation of the required additional capacity. (para 2.13).
8.30 The specific project implementation risks have been also mitigated so that the probabilities of delay in project implementation and cost overruns are considerably reduced. The risk of non- mobilization of financing has been mitigated by the high priority given by GOP to the development of the project, the level of commitments of all cofinanciers, and by the legal agreements requiring WAPDA to generate local funds through improvement in efficiency and satisfactory tariffs needed to comply with the financial covenants. WAPDA's consistent record over the last seven years in meeting an ambitious cash generation covenant provides additional comfort in the project. The risks related to an unsatisfactory resettlement, relocation and compensation of affectees and delay in implementing steps identified to mitigate negative environmental and cultural heritage impacts are being largely mitigated by the comprehensiveness of the Environmental and Resettlement Management Plan and monitoring arrangements through: (a) setting a Public Information Center at the project site; (b) obtaining assistance of a Project Non-Governmental Organization and an independent consultant for monitoring resettlement and relocation of affectees and implementation of environmental mitigation steps; (c) WAPDA's commitment to implement an Integrated Regional Development Plan to support locally-based economic activities in the area; and (d) continued support from the Independent Environment and Resettlement Review Panel. To mitigate risks of engineering nature, WAPDA is being assisted by its consultants, and a Panel of Experts will periodically visit the site. Further, geological and hydrological uncertainties are reduced to a minimum because of the extensive investigations at the sites of the barrage, power channel and power house, and the comprehensive knowledge gained in the construction and operation of Tarbela Dam. Possible construction delays are being minimized by the advanced stage of procurement of the major works, ensuring effective project management and supervision through WAPDA's internal organization for the project and assistance of its consultants. To avoid delays caused by claims of contractors, a Dispute Review Board is being appointed to settle all claims as expeditiously as possible.
8.31 Risks Analysis. The risks described above have been analyzed and summarized under different scenarios. Probabilities have been assigned to each scenario, so that a weighted average ERR and a probability distribution for the ERR can be obtained. The scenarios considered in the analysis are the following: demand uncertainties (high, base, and low scenarios), cost profiles (no cost overruns, 15 percent costs overruns, 30 percent cost overruns), schedule delay (no delay, I year delay, and 2 year delay) and amount of additional capacity provided by private projects (3100 MW, 5200 MW, and 7200 MW). The analysis has been carried out separately for the ERR on the overall power sector program and for the ERR on GBHP alone. Details of the assumptions and results are given in Annex 8.2. A cumulative probability of ERR on the power system program is provided in Figure 8.1.
8.32 The results indicate that the risk-weighted ERR calculated on the overall power investment program is 18.5%, which is lower than the ERR of the Base Case, but still considerably higher than the opportunity cost of capital estimated at 12%. The probability of the ERR falling below the opportunity cost of capital is estimated at 8%. Furthermore, the risk- weighted ERR is quite robust to changes in the basic probabilities. -69-
Fig. 8.1 -Cumulative Probability of ERRon Power Investment Proaram
Cum. Probab. 1 .00 0.90-- - - -
0.80 0.70 0.60 - - - - - 0.50...... 0.40 ...... 0.30 - - - - -
0.20 - - - - 0.10
soo o - - e uii r. so so 6 6 _ in tO Co ______N N N (' ^' N' "'
ERR
8.33 The above analysis has been repeated for GBHP alone. In this case, the risk-weighted ERR is over 23%, and its probability of falling below the opportunity cost of capital is zero. This is because under any unfavorable scenarios considered (including project implementation delay of 3 years and higher cost overruns), the ERR is always in the range of 18%-30%. In particular, in the event of an excess of private projects commissioned by FY2001, the consequence to GBHP will be a delay in its commissioning date, which is not, however, considerably affecting its economic viability. Figure 8.2 below shows the cumulative probability of ERR on GBHP alone.
Rg. 8.2 - Cumulative Distrlbution of ERR on Ghazi Barotha alone Cum. Rob. 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 ___iE 0.20 m 0.10 0.00
'P C) (N 9 r 't C co LO W M to - 'IT LO NC- in c0)"i g( (N N |r- e - (N N N N N N N N N N N N X ERR -70-
9. AGREEMENTS REACHED AND RECOMMENDATION
9.1 Conditions of Effectiveness:
(a) GOP and WAPDA to provide evidence that the ADB and OECF Loan Agreements have been executed and delivered and all conditions precedent to their effectiveness fulfilled (para 4. 18);
(b) GOP and WAPDA to execute a Subsidiary Loan Agreement satisfactory to the Bank (para 4.19); and
(c) a survey will have been carried out to assess the status of outstanding claims of the persons affected by Tarbela Dam Project, and an action plan to redress legitimate grievances in a timely manner will have been agreed with the Bank (para 6.13).
9.2 With GOP:
(a) to adopt, not later than December 31, 1996, a set of policies and an appropriate solicitation mechanism in order to ensure that the required power supply capacity will be implemented in a timely manner (para. 2.13);
(b) to review by June 30, 1996, the incentives offered for private investments in the power sector, in particular exemptions from income and other taxes, and based on this review, announce and introduce not later than December 31, 1996, a new package of incentives, under which such exemptions will no longer be provided as part of such incentives (para 2.22);
(c) that GOP's Core Public Sector Development Program and Social Action Program as reviewed and discussed with the Bank on an annual basis, will not be adversely affected by the financing requirements of GBHP (para 3.15); and
(d) WAPDA would be authorized to automatically adjust the FAS rate to ensure full recovery of fuel costs (para 7.4);
9.3 With GOP and WAPDA:
(a) to appoint consultants by December 31, 1996, to undertake the required DSM study, to complete such study by December 31, 1997, and to implement the recommendations of the study in accordance to a plan satisfactory to the Bank (para 2.16);
(b) that any future tariff increases required in order for WAPDA to comply with its financial covenants will entail a reduction in the level of distortion, with higher increases for those consumers for whom the average electricity rates are below the overall average electricity rates than that for consumers for whom electricity tariffs are above the overall average electricity tariffs (para 2.19); -71-
(c) to complete the full corporatization of WAPDA by December 31, 1998 (para. 3.6);
(d) to implement the recommendations of the corporatization study as agreed with the Bank and to establish a separate, corporatized transmission and despatch entity by December 31, 1998 (para 3.7);
(e) that: (i) the land acquisition compensation and resettlement under the proposed project will be carried out in line with the provisions of the RAP and in accordance with plans satisfactory to the Bank; (ii) a legal framework satisfactory to the Bank will be established to apply to persons whose land has been acquired but who have been left in possession for the time being, and the standard legal documentation setting forth the terms and conditions of such continued possession made available to the Bank; and (iii) for the transmission line a land acquisition and resettlement action plan satisfactory to the Bank, to apply to the persons affected by the acquisition of land required for the transmission line, be furnished to the Bank for its review not later than December 31, 1996 (para 6. 11);
(f) that the agreed recommendations of the Domestic Resource Mobilization Study be reviewed with the Bank and implemented by December 31, 1996 (para 7.5); and
(g) that consumer tariffs will be adjusted to fully cover the payments of hydroprofits, and that WAPDA should only pay those hydroprofits it collects from the surcharge levied for the purpose (para 7.9).
9.4 With WAPDA:
(a) to set up by December 31, 1998 a project entity to operate GBHP in line with the corporatization program of WAPDA agreed under PSDP (para 3.7);
(b) to appoint, not later than September 30, 1996, a management consultant firm with relevant international power utility experience and under terms of reference satisfactory to the Bank, to assist WAPDA in designing and implementing a set of managerial, financial and technical efficiency objectives by which WAPDA would measure and improve the operational, managerial and financial performance of its power operations (para. 3.19);
(c) to appoint by June 30, 1996, a reputable private auditing firm, in consultation with the Auditor General of Pakistan, to develop, by December 31, 1996, a detailed plan satisfactory to the Bank and to conduct beginning FY99 the audit of WAPDA's accounts in accordance with the agreed audit plan (para 3.24);
(d) to appoint no later than December 31, 1996, consultants whose qualifications are satisfactory to the Bank, to complete an actuarial study by December 31, 1997, and implement the recommendations by March 31, 1998 (para 3.25); -72-
(e) to maintain or cause to be maintained all facilities relevant to the project, and to make or cause to be made all necessary repairs to those facilities in accordance with sound engineering, financial and power utility practices (para 4.15); and
(f) to incorporate the comments of POE and ERP in the design and implementation of the project as appropriate (para 5.2).
9.5 The following covenants which are included in other ongoing power projects would be repeated under the proposed project:
(a) GOP and WAPDA to review with the Bank before March 31 of each year, WAPDA's rolling investment program over a five-year period, covering the current year, the last preceding year and the next three following years, with a view to enabling the Bank to satisfy itself that the program remains consistent with the Borrower's macroeconomic targets (para 3.15);
(b) WAPDA to have its accounts and financial statements for each fiscal year audited in accordance with the appropriate auditing principles consistently applied by independent auditors acceptable to the Bank and furnish the audit reports to the Bank no later than six months after the end of each fiscal year (para 3.24);
(c) GOP to cause all federal and provincial governmental agencies to settle all bills for the supply of electricity by WAPDA within three months of receipt of the bills (para 7.6);
(d) WAPDA to carry out, by September 30 of each year an aging analysis of its accounts receivable and adjust its accounts receivable on its balance sheet of the previous financial year to reflect only those receivables that are outstanding for less than three years and deemed collectible (para 7.8);
(e) GOP and WAPDA to take all necessary actions, including adjustment of the structure and levels of tariffs, to enable WAPDA to generate each year from internal sources, 40% of its capital expenditures averaged over the previous, ongoing and one ensuing year (para 7.1 1); and
(f) WAPDA to consult the Bank should it seek to incur new debt that would result in WAPDA's debt service coverage falling below 1.5 times (para 7.11).
Recommendation
9.6 On the basis of the project justification and the agreements reached at loan negotiations with GOP and WAPDA, the proposed project is suitable for a Bank loan of US$350 million to GOP for a term of 20 years, including a five-year grace period, at the standard interest rate for LIBOR-based US Dollar single currency loans.. ANNEXES
PAKISTAN Ghazi-Barotha Hydropower Proiect Ener2v Balance Sheet FY94
NaturalGas \a PetroleumProduc ts Liqui wded Raw |Processed I Non- Petroleum Hydro Nuclear Electricy \b \c Total Crude Oil Energy Energy Gas Coal \d \d \d Total ENERGY SUPPLIES I Indigenous Production 13,125,078 13,125,078 2,773,622 42,451 1,581,054 4,639,217 118,630 22,280,052 2 Imports 4,333,487 8,058,993 30,513 719,743 13,142,736 3 Exports& Bunkers -291,160 -241,949 -26,654 -559,763 4 StockChanges /c 41,518 -62,207 -10,89 -114,617 5 Net Primary Energy Supplies 13,125,078L 13,125,078 6,774,431 7,754,837 -37,546 72,964 2,300,797 4,639,217 118,630, 34,748,408 TRANSFORMATIONS 6Gas ProcessingPlants -9,261,054 8,132,692 -1,128,362 _ I r 1 -1,128,362 7 PetroleumRefineries -6,722,980| 5,950,801| 435,141| 43,629| -293,409 8 Electric PowerStations -2,014,787 -2,215,712 -4,230,499 -3,825,842 -9441 -19,508 -4,639,217 -118,630 4,124,208 -8,710,432 9 Energy Transformed -5,358,861 -6,722,980 2,124,959 434,197 43,629 -19,508 -4,639,217 -118,630 4,124,208 -10,132,203 DIVERSIONS 10 Transport and Distribution Losses -170,854 -159,406 -58,794 -940,348 -1,329,402 IIAuxiliary Consumption of Energy Sector -53,632 -965 -140,042 -194,639 t 12 ConsumptionforNon-EnergyUses -1,109,542 -519,478 -1,629,020 -336,892 -719,743 -2,685,655 1 13 Spare by-product Electricity by PASMIC 570 570 14 Statistical Differences - -51,451 - - I I - -51,451
15 Final Energy Use _ 15,966,3439,666,7581 1 116,5931 1,561,5461 | 3,044,3881 20,355,628 SECT. USES OF FINAL ENERGY 16 Domestic 1,929,582 608,490 87,445 1,481 1,151r035 3,778,033 17 Commercial 356,595 29,148 207,441 593,184 18 Industrial 3,679,160 1,624,207 1,560,065 1,029,178 7,892,610 19 Brick Kiln 1,560,065 20 Cement 238,379 21 Fertilizer 739,695 346,318 1,086,013 22 General Industry 2,354,768 23 Agriculture 320,722 470,042 790,764 24 Transport 1,006 6,739,599 2,191 6,742,796
| 25 Other Government - - 373,739 - - 184,501 558,240 Source: Hydrocarbon Development Institute of Pakistan - Energy Yearbook 1994 \a Includes associated and non-associated gases. \b Raw Gas includes gas supplied by production companies to gas distribution companies and directly to major consumers likepower and fertilizer plants. \c Processed Gas includes gas supplied after processing by gas distribution companies to various consumers. \d Hydro and Nuclear energy inputs for electricity generation are expressed in terms of equivalent primary energy at 10,000 Btu/kWh, whereas electricity generated in power plants and supplied to o to consumers is expressed in terms of actual energy content viz. 3,412 Btu/kWh. ANNEX1.2 Page 1 of 1
Pakistan Ghazi BarothaHydropower Proiect
ImportedPetroleum Products Prices and DomesticPrices Febraury1995 - July 1995
Inland CIF transp. and Economic Domestic Ratio Product Price margins Cost Price Domestic/ Rs/litre Rs/litre Rs/litre Rs/litre ImportedPrice \b \c
Gasoline 3.89 0.566 4.46 13.75 3.09
Kerosene 4.22 0.48 4.70 6.25 1.33
Gas oil 4.06 0.6195 4.68 6.50 1.39
Fuel Oil \a 2971.82 71.65 3043.47 2986.00 0.98
Source:Platt's OilgramReports, various issues, PSO \a price expressedin currency/metrictonne \b Arab Gulf Spot Prices(and Postingfor Gasoline)adjusted by transportationcosts \c Costsand marginsset by GOPas proxy for inland costs PAKISTAN Ghazi Barotha Hydropower Project
Natural Gas Pricesand Fuel Oil Parity Comparison February 1995 - July 199 Parity Price Annual Retail Retail Prices as % with Border/ Under ESL II and SNGPL VI, PSAL Gas Consumer Group Consumption Percentage Price of Border/Domestic Domestic Price to reach full parity with HSFO price FY94 consumption Rs/MCF Price of HSFO of HSFO by MMCF in FY94 Rs/MCF
Domestic \a 82,461 14.97% 54.73 76.66% of Border Price \b 71.40 100% by April 1995
Commercial 15,239 2.77% 95.05 132.50% of Domestic Price 71.74
General Industry 100,674 18.28% 84.48 117.76% of Domestic Price 71.74
Cement 10,187 1.85% 84.48 117.76% of Domestic Price 71.74
Fertilizer on SNGPL system 37,000 6.72% as feedstock 22,200 4.03% 22.5 31.36% of Domestic Price 71.74 energy use 14,800 2.69% 84.48 117.76% of Domestic Price 71.74 on Mari Gas Co. system 107,514 19.52% as feedstock 64,508 11.71 % 9.75 18.42% of Domestic Price 52.92 energy use 43,006 7.81% 66.95 126.50% of Domestic Price 52.92
Power on SNGPL's and SSGC's systems 94,688 17.19% 84.48 117.76% of Domestic Price 71.74 raw gas from: \c Mari field (723 BTU) 33,867 6.15% 54.45 102.88% of Domestic Price 52.92 100% by June 1995 Sui field (933) 34,914 6.34% 66.44 97.28% of Domestic Price 68.30 100% by June 1995 Kandhkot field (800) 34,225 6.21% 62.69 107.05% of Domestic Price 58.56 100% by June 1995
Weighted Average 550,769 100.00% 63.35 96.25% 65.82
Sources:MPNR, Energy Yearbook and Bank's estimates
\a WeightedAverage of four consumerslabs \b CIF Karachi \c ParityPrice for raw gas suppliedto GudduPower Station is discountedby depreciationfactor (Rs. 1.02) for pipelinebuilt by WAPDA
0 PAKISTAN
Ghazi-Barotha HvdroDower Proiect
Load Shedding and Maximum Demand in WAPDA System (MW)
Load Shed Maximum FY Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Demand
86 1,164 541 132 0 238 1,307 1,746 965 679 329 175 660 3,933 87 110 0 0 166 242 644 680 307 516 651 882 1,126 4,325 88 283 611 513 0 182 840 714 770 1,074 973 910 938 5,031 89 400 646 1,009 338 300 700 616 820 1,154 1,405 2,151 1,853 5,440 90 1,394 1,041 904 886 755 1,594 1,715 1,448 1,089 537 318 496 5,680 91 511 778 921 702 263 706 837 1,038 336 623 1,116 773 6,090 92 1,393 1,041 933 256 348 208 1,129 1,108 869 753 1,048 921 6,532 93 604 857 820 557 242 837 1,713 241 244 748 1,245 2,198 7,522 w 94 1,133 1,732 1,344 178 121 219 1,974 2,276 2,229 2,557 2,225 2,096 8,067 7' 95 135 89 60
Source:WAPDA, Power System Statistics, February 1995 -77- ANNEX 2.2 Page 1 of 1
PAKISTAN
Ghazi-Barotha Hydropower Prolect
Energy Conservation Activities
1. The government's energy strategy for the next five-year plan places special emphasis on the introduction of demand management measures aimed at restraining the growth of energy demand. As part of these measures, GOP intends to improve energy efficiency in the economy, particularly in the industrial sector, by strengthening pricing and non-pricing policies, adopting demand management policies such as load shedding/management at peak periods, and promoting interfuel substitution towards the use of indigenous resources such as coal and gas.
2. As regards non-pricing measures to improve energy efficiency and conservation, GOP intends to support the ongoing activities which are being implemented by the National Energy Conservation Center (ENERCON). For the Eighth five-year plan, GOP has endorsed the following ENERCON-sponsored investments: (a) Power Factor Improvement Program, aimed at saving 1,343 GWh/year or over TOE 115,000 (equivalent to a net saving of 76 MW/year of installed generation capacity) through the installation of bank capacitors at 2,400 industrial plants, financed by ADB, (b) Commercial Building Lighting Efficiency Improvement Program, aimed at saving about 110 GWh/year (equivalent to TOE 9,500/year) by replacing lighting fixtures in the commercial buildings of the main cities; (b) Industrial Boiler and Steam Systems Efficiency Improvement Program, which would save 0.23 million TOE/year of natural gas by replacing and retrofitting low-efficient boilers among 500-750 industrial consumers; (c) Municipal Pumpsets Efficiency Improvement Program, aimed at saving 60-70 GWh/year (equivalent to TOE 6,000 thousand/year) by retrofitting 500 large capacity pumpsets used in conjunction with water supply and sewerage operation (d) Agricultural Tubewells Efficiency Improvement Program, consisting of implementing retrofit measures for 26,000 pumpsets for tubewell irrigation operation, saving about 180-200 GWh/year (equivalent to over TOE 17,000/year), and (e) Road Transport Fuel Efficiency Improvement Program, for the tune-up of gasoline and diesel-driven vehicles aimed at fuel savings of 11%. In addition, GOP intends to promulgate regulations aimed at promoting energy conservation among energy producers/consumers, and to concede preferential duties/taxes for energy efficient equipment.
3. GOP is initiating action to enact an Energy Conservation and Management Bill that would establish a firm legal and organizational framework for the National Energy Conservation Program in the country. When enacted (GOP plans to submit the bill on the proposed law to the Parliament for ratification in the near future), the proposed law would provide the legal basis for the establishment of the Pakistan Energy Conservation Council (PECC), which would have the authority to enforce regulations on energy conservation. Under the provisions of the proposed law, ENERCON would be transformed into an executing agency for the PECC, and accordingly charged with responsibilities previously outside its mandate, including: (a) developing schemes to mobilize and channel financing for energy conservation investments, including the creation of a National Energy Conservation Fund; (b) implementing technology transfer schemes in the field of energy conservation; and (c) developing or revising equipment performance specifications to incorporate minimum energy efficiency standards for procurement by public sector organizations. Accordingly, ENERCON with the Technical Assistance of ESMAP, is in the process of preparing a Long-Term Strategy and an Action Plan for the period 1993-98 which would transform the center into a sustainable organization. PAKISTAN Water and Power Development Authority Ghazi-Barotha Hydropower Proiect Historical Growth in Demand (MW). Enerav Generation and Sales (GWh) and Losses (%)
Fiscal Years 1980 1991 1982 1983 1934 1985 1986 1987 1983 1989 1990 1991 1992 1993 1994
InstalledCapacity MW 2685 3254 3254 3954 3954 4339 4949 5349 5549 5949 6409 7053 7493 8152 9681
PeakDemand MW 2076 2473 2846 3163 3295 3791 3933 4325 5031 5440 5680 6090 6532 7522 8067 Growth Rate % 5.3 19.1 15.1 11.1 4.2 15.1 3.7 10 16.3 8.1 4.4 7.2 7.3 15.2 7.2
EnergyGenerated GWh 12124 13206 14768 16492 18052 18777 21055 23630 27451 28898 31427 34435 38066 40791 42396
Losses Auxiliary % 2.20 2.60 2.60 2.40 2.20 2.10 1.90 1.70 1.60 1.70 1.98 2.49 2.43 2.28 2.62 Transmission % 11.00 10.70 9.20 9.60 9.90 9.40 9.10 8.70 8.50 8.30 8.69 8.69 9.18 8.99 8.77 Distribution % 19.50 18.10 18.50 17.70 17.20 15.20 15.40 14.50 14.50 13.90 12.58 11.62 11.50 12.07 12.82 oo Total % 32.70 31.40 30.30 29.70 29.30 26.70 26.40 24.90 24.60 23.90 23.25 22.80 23.11 23.34 24.21
EnergySales Domestic GWh 1564 1858 2408 2866 3470 3888 4514 5357 6290 6939 7647 8618 9691 11220 11964 Commercial GWh 389 445 574 634 739 796 875 991 1054 1068 1106 1152 1192 1303 1318 Industrial GWh 3154 3482 3960 4417 4708 5061 5894 6436 7236 7579 8360 9114 10213 10912 10532 Agricultural GWh 2056 2125 2357 2546 2663 2782 2880 3452 4394 4357 5004 5595 5823 5595 5742 Public Lighting GWh 50 58 75 78 75 77 90 110 117 127 148 178 228 195 216 BulkSupply GWh 901 1056 872 1002 1069 1115 1215 1361 1571 1877 1818 1895 2091 2020 2332 Traction GWh 46 44 42 44 38 37 36 38 40 35 38 33 29 27 27
Total EnergySales GWh 8160 9068 10288 11587 12762 13756 15504 17745 20702 21982 24121 26585 29267 31272 32131 GrowthRate % 16.9 11.1 13.5 12.6 10.1 7.8 12.7 14.5 16.7 6.2 9.7 10.2 10.1 6.9 2.7
Numberof Consumer 000 2795 3270 3588 3901 4231 4475 4877 5279 5780 6419 6871 7261 7736 8176 8592
Consumptionper Consumer kWh 2919 2773 2867 2970 3016 3074 3179 3361 3582 3425 3511 3661 3783 3825 3740
I0 ANNEX2.4 -79- Page 1 of 2
PAKISTAN
Ghazi-Barotha Hydromower Proiect
Demand Projections
WAPDAAND KESC BaseLoad Forecastwith DSM
Estimated Estimated Demand Gener req Peak DSM DSM with after DSM Load Demand Savings Savings DSM (excl.Aux) Factor after DSM Demand* Demand** MW GWh % MW GWh MW 1994 0 0 43,333 53,174 65.25 9,303 1995 0 0 49,184 59,981 65.00 10,534 1996 11 51 52,572 63,724 65.29 11,142 1997 50 115 56,494 68,075 65.57 11,851 1998 133 196 61,175 73,293 65.86 12,704 1999 276 300 66,470 79,195 66.15 13,666 2000 594 574 72,445 85,847 67.00 14,627 2001 1,154 810 80,503 95,179 67.29 16,146 2002 2,144 1,126 85,796 101,211 67.59 17,094 2003 3,675 1,562 91,199 107,349 67.89 18,051 2004 5,882 2,144 96,504 113,347 68.19 18,976 2005 7,038 2,528 102,588 120,235 68.50 20,037 2006 8,758 3,061 108,650 127,072 68.90 21,054 2007 9,130 3,354 116,644 136,137 69.30 22,426 2008 9,979 3,762 124,791 145,344 69.70 23,805 2009 10,823 4,195 133,620 155,311 70.10 25,291 2010 11,660 4,651 143,185 166,095 70.50 26,895 2011 12,491 5,016 153,544 177,784 70.60 28,747 2012 13,316 5,398 164,755 190,421 70.70 30,747 2013 14,137 5,799 176,884 204,073 70.80 32,906 2014 14,953 6,220 190,001 218,819 70.90 35,234 2015 15,674 6,650 204,274 234,846 71.00 37,759 2016 16,572 7,136 219,512 251,930 71.10 40,449 2017 17,374 7,632 236,079 270,480 71.20 43,367 2018 18,173 8,158 253,977 290,496 71.30 46,511 2019 21,191 9,122 271,087 309,550 71.40 49,492 2020 24,710 10,212 289,241 329,735 71.50 52,645 aagr 1994-2002 8.91% 8.38% 7.90% 2002-2020 6.98% 6.78% 6.45% 1994-2020 7.57% 7.27% 6.89%
* EstimatedGWh savingsdue to a comprehensiveDSM Program EstimatedMW savingsderived from the DSM programcombined with general improvementin Load Factor(assumed to be 65% from 1996-2020with no improvement) -80- ANNEX2.4 Page 2 of 2
Base EnergyDemand Forecast after DSM by consumercategory (WAPDA+KESC)
Residential Commercial Industrial AgricultureTotal and Others gWh gWh gWh gWh gWh
1994 17,493 5,510 13,748 6,582 43,333 1995 20,039 5,840 14,761 8,543 49,184 1996 22,100 6,106 16,157 8,209 52,572 1997 24,443 6,368 17,793 7,891 56,494 1998 27,037 6,608 19,945 7,585 61,175 1999 29,969 6,845 22,368 7,288 66,470 2000 33,309 7,070 25,078 6,988 72,445 2001 38,073 7,321 27,765 7,345 80,503 2002 40,532 7,410 30,129 7,725 85,796 2003 43,054 7,391 32,629 8,126 91,199 2004 45,497 7,203 35,257 8,547 96,504 2005 48,311 7,312 38,064 8,901 102,588 2006 51,081 7,283 41,016 9,270 108,650 2007 54,779 7,693 44,519 9,653 116,644 2008 58,510 7,996 48,231 10,053 124,791 2009 62,536 8,339 52,275 10,470 133,620 2010 66,876 8,726 56,680 10,903 143,185 2011 71,552 9,159 61,477 11,355 153,544 2012 76,588 9,642 66,700 11,825 164,755 2013 82,008 10,177 72,384 12,315 176,884 2014 87,839 10,768 78,569 12,825 190,001 2015 94,155 11,446 85,317 13,356 204,274 2016 100,850 12,133 92,620 13,909 219,512 2017 108,093 12,916 100,585 14,485 236,079 2018 115,873 13,772 109,247 15,085 253,977 2019 123,117 14,039 118,222 15,710 271,087 2020 130,724 14,237 127,920 16,360 289,241 aagr 1994-2000 11.33% 4.24% 10.54% 1.00% 8.94% 2000-2020 7.08% 3.56% 8.49% 4.35% 7.17% 1994-2020 8.04% 3.72% 8.96% 3.56% 7.57% -81- ANNE 2. 5 Page 1 of 1 PAKISTAN
Ghazi-Barotha Hydropower Proiect
Installed Capacity and Generation Expansion ProEram (Base Case)
Year Peak Load Capacity Additions (committed Total System LOLP (MW) Additions shown in parenthesis) Capacity (MW) of which: of which: (%) Hydro Thermal (MW) (MW)
1995 10,534 11.869 4,814 7,055 13.841
1996 11,142 (Muzaffargarh 210MW, Bin 12,357 4,814 7,543 14.499 Qasim 21OMW)
1997 11,851 (Muzaffargarh 530MW, Kot 13,930 4,814 9,116 4.327 Addu 397MW, Hub 646MW)
1998 12,074 Private Thermal Power Plants 16,977 4,814 12,163 .144 for 2502MW
(Hub 646MW)
1999 13,666 (Chasma Barrage 184MW) 17,036 4,998 12,038 .789
2000 14,627 3 GTS, I IPPS 18,261 4,998 13,263 .938 (Chasma Nuclear 300MW)
2001 16,146 3 IPPS 19,916 4,998 14,918 .869
2002 17,094 Ghazi Barotha Hydropower 21,267 6,434 14,833 .376 Project - 1450MW
2003 18,051 1 IPPS 21,737 6,434 15,303 .786
2004 18,976 2 IPPS 22,807 6,434 16,373 .694
2005 20,037 2 GTS, 2 IPPS 24,113 6,434 17,679 .972
2006 21,054 I GTS, 2 IPPS 25,258 6,434 18,824 .905
2007 22,426 1 GTS, Kalabagh (1-4) - 26,747 7,823 18,924 .975 1400MW
2008 23,805 Kalabagh (5 - 8) - 1200MW 28,165 9,523 18,642 .786
2009 25,291 I IPPS, Tarbela 4th - 960MW 29,725 10,483 19,242 .714
2010 26,895 I GTS, 3 IPPS 31,625 10,483 21,142 .985
2011 28,747 1 GTS, 3 IPPS 33,525 10,483 23,042 .947
2012 30,747 4 GTS, 2 IPPS, I IPPC 35,725 10,483 25,242 .955
2013 32,906 4 GTS, 2 IPPS 38,182 11,340 26,842 .986
2014 35,234 3 GTS, I IPPC, 4 IPPS, Basha 40,762 11,340 29,332 .980 (I - 4) - 1840MW
2015 37,759 3 IPPC, 3 IPPS 43,842 11,340 32,502 .897
2016 40,449 3 GTS, 1 IPPC, 4 IPPS 46,518 11,340 35,178 .999
2017 43,367 Basha (5 - 12) - 2520MW 50,028 13,860 36,168 .998
2018 46,511 2 IPPC, 4 IPPS 53,628 13,860 39,768 .940
2019 49,942 11 GTS, 4 IPPS, TAUNSA, 57,392 14,124 43,268 .993 JINNAH-264MW
2020 52,645 4 GTS, I IPPC, 4 IPPS 60,792 14,124 46,668 .997 -82- ANNEX 2.6 Page 1 of 2 PAKISTAN
Ghazi-Barotha Hydropower Project
Consultant for Energv Efficiency and Load Management Proiect Development
Terms of Reference
Staff Costs (USD) $100,000 Travel Costs (USD) $25,000 Total Costs $125,000
1. Consultant will begin work in Pakistan on or about December 1, 1996 and work will continue for a term of six-nine months, depending on work program and budget.
2. Objective of the consultant assignment will be to assist GOP and WAPDA in assessing the effectiveness of ongoing DSM program and, based on this assessment, outline a program of additional measurea and related instuttuational arrangements to ensure effective implementation of an agressive DSM program in line of with GOP's stated energy policy objectives.
3. In meeting these objectives consultant will carry out the following tasks:
(a) Compile and review the background materials in the Bank and other sources including USAID concerning ongoing and previous initiatives on DSM, including load management, power factor correction, end-use energy efficiency, market transformation, and supply-side energy efficiency efforts, undertaking by WAPDA, ENERCON, KESC and pertinent NGOs and private organizations.
(b) Compile and review the numerous WAPDA, ENERCON, MWP, GOP documents dealing with the role of and targets for energy efficiency, load management and DSM in the energy sector and the power sector, specifically, Report of Prime Minister's Task Force on Energy. National Power Plan Pakistan. Pakistan Household Energy Strategy Study. and others.
(c) Identify, recommend, and implement remediation of gaps in the planning data bases available on customer, rate class, and tariff populations, load shapes by rate class, end-use, and appliance (especially peak demand contributions), end-use categories and characteristics, selected demographics, and salient regional/state-by-state variations. -83- ANNEX2.6 Page 2 of 2
(d) Identify, recommend, and implement remediation of gaps in the planning/analytic capabilities of ENERCON, WAPDA, KESC, and MWP as regards demand-side planning and management. Develop and coordinate some shared load and energy impact estimation, project cost estimation, and benefit/cost and financial evaluation capabilities that are shared across the government and utility organizations.
(e) Identify and help develop key institutional capabilities and inter- organization coordination needs for ENERCON, WAPDA, KESC, and MWP as regards meeting the GOP's DSM objectives. This effort should in particular build upon the nascent coordination role played by the ad hoc Y'oint Working Group for Energy Conservation/Management", formed by office order of WAPDA dated February 3, 1995. This working group, comprised of ENERCON, WADA, and MWP senior staff, could be the beginning of an inter-organizational planning and implementation supervision body that could ensure the overall GOP goals for energy efficiency and load management are met.
(f) Using the newly-developed planning data bases, analytic capabilies, and inter-organization coordination abilities, re-evaluate and fine-tune the several GOP and Bank plans for energy efficiency and load management. This re-evaluation should seek to ensure that the most cost-effective and highest-impact projects and measures are being pursued and in the right order.
(g) Again working with the individual organizations and the Joint Working Group, develop detailed implementation strategies for the Bank-financed Energy Efficiency Project. These implementation strategies should takeaccount and capitalize on the institutional capabilities of all the government, utility, NGO, financing, manufacturing, and private sector groups within Pakistan.
(h) Develop a monitoring and tracking scheme that would allow both the GOP and the Bank to track the success and progress of the Bank-financed project and other parallel projects addressing energy efficiency and load management efforts. PAKJSTAN GHAZIBAROTHA HYDROPOWER PROJECT FY95WAPDA ESTIMATEDCATEGORY-WISE UNITS SOLD AND REVENUES
CATEGORIES Esimated Percent FrAedCharges EAsting Average Estmated Hydel |Hyd |Adcdbonal Addbonal FAS FAS Total Total Consurrp,|Consmo. Energya Rate Revenue Surchrge Suhar Surcharge Sucharg! Revenue Average Charges Tariff from Base . Rate Tsrln (GWh) ( (RsrKW/Mo.) PsAiWh PsfWth Mhi.Rs. Ps&VMh Mhi.Rs, PsA(Wh Min.Rs. PsA1 Mhi.Rs. Mh. Rs PsACWi
DOMESTIC I I_I I_I FlatRate FATA 1426 4.1X Rs.SCanslMo 6 5 6.5 93 Rs.GCoAwqo. 10 Rs.36/Conswo. 85 0 0 188 13.2 Flrst50 kWh 4723 13.6% 54.0 54.0 25501 6 283 19 897 7 331 3778 80 0 S1-150 4091 11.8X 68.0 68.0 2782 a 327 27 1105 7 286 4500 110.0 151-300 2021 5.8X 77.0 77.0 1561 10 203 38 770 15 304 2838 140.0 3C01-100 648 1.9X 110.0 110.0 713 19 123 53 343 75 486 1666 257.0 1001-200W 139 0.4% . 147.0 146.8 204 23 32 66 92 75 104 432 310.6 2001-3000 52 0.2X 147.0 146.2 76 23 12 79 41 75 39 168 323.2 3001-4000 39 0.1% 147.0 146.2 57 23 9 87 34 75 29 129 330.5 Above 20W 28 0.1X _ 1470 146.4 41 23 6 96 27 75 21, 95 340.4 Total Domestc 13173 380% 61.3 8077 a 1006 25 3394 12 1600 13794 104.7
COMMIERCIAL_ 1-1W0 256 077 217.0 217.2 556 30 77 127 325 75 192 1150 4492 Above100 1133 3.3% 241.0 241.0 2731 33 374 135 1530 75 850 5484 484.1 TotalConiercial 1389 4.0% 236.3 236.6 3287 32 451. 1855 75 1042 6634 477 6
INDUSTRY 400 V UPTo 70 kW 2478 7.1% 119.0 119.0 2949 20 496 95 2354 75 1859 7658 309.0 400 V 71-500kW 1821 5.3% 151 68.0 147.2 2681 23 419 105 1912 75 1366 6378 350.2 11133kV 5111 14.7% 145 67.0 97.6 4986 18 920 89 4549 75 3833 14288 279.5 66/132kV 1910 5.5% 140 62.0 89.4 1707 17 325 86 1643 75 1433 5107 267.4 1 Total Iftistry 11320 32.7% __ 108.9 12323 19 2159 92 104581 75 8491 33431 295.3 .: BUL,K______
Licensees& NornLicersees 64 0.2%1 83.0 82.8 53 16 10 84 54 75 48 165 257.81 Otlers 516 1.5% 110 68.0 95.3 492 l1 93 88 454 75 387 1426 276.3 11If33KV Ucensees& Non-Llcensees 611 1.8% 69.0 69.1 422 15 92 79 483 75 458 1454 238 0 POF 45 0.1X 95.0 95.6 43 18 8 88 40 75 34 125 277.1 Oth rs 784 2.3% 108 65.0 95.8 751 18 141 88 6901 75 588 2170 276.8 66{132KV 1 64 0.2% 107 63.0 90.6 58 17 11 .86 55 75 48 172 268.6 Total BuA 2084 60S 87.3 1819 17 354.87 1775 75 1563 5512 264.5
TUBEWELLS _ SCARP 77 22X 85.0 85.0 658 17 132 84 650 75 581 2021 261.1 Puniab& Sindh Flat RateTariff 4068 11.7S1Rs.147MPAMo. 1393 Rs.15/Conso. 145 Rs.85iCons/Mo 1000 0 0 2538 62.4 Metered 343 1.0% 41 49.0 100.0 343 18 62 89 305 75 257 967 281.9 NWFP & Baoctistan Flat RateTariff 1005 2.9% Rs.1221HP&Alo. 328 Rs.13Consaeo. 34 Rs.71lConsiMo. 350 0 0 712 70.8 Metered 148 0.4% 36 34.0. 64.9 96 15 22 78 115 75 1111 345 232.9. TotalTubewels 6338 18.3% 44.5 44.5 2818 6 395 33 2092 15 949 6582 103.9
PUBLICLIGHTING 242 0.7% 152.0 152.1 368 24 58 106 257 75 182 865 357.3
TARIFFH 0.20 105.015 105.0 84 19 1 91 73 75 6 232 2900 l i TRACTION 40 0.1 610t 60.0 24 14 6 77 31 75 30 90 226.0
GRANDTOTAL 34666 100.0% 83.1 28800 12.8 4444 57.5 19933 13917 67140 193.7 Ft t _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- _-J PAKISTAN Ghazi-Barotha Hydropower Proiect Water and Power Development Authority Oreanization Chart
Membber(Water) Menber(Power) MMnberChairrnan(Finance)
Seconhoringt&a|r|yGrerneteiraletag| General Manager Mann Directr M Da)naetor -anagDrer
General ~~~~~~~~~~~~~~IA| Kalabagh A C (or^)= Dam -1IGndl (Daeff& s |ooronation)nissiorStation M GeneralManager Gen M G a General| Managere GeneralManager | u Giane(CdnealManagr) § Gnra aae j GenteraMaae eea aae eea aae GedeaSMansge || eneralOpnaeratio
Audit~~~~~~~~Slf colg (Tarela GridnngSyte Cortitoylm owerarnPinSsen jGeneral Manager Ge l M r GeneralManagerM e GeneralManager | g&~ ~~~~~~~~~~~~~~ Ineby olo |oDndpelTabl
and Standardsd SabnsThrml
gGn eraM,anager Ge neraMager |
Planning,Engineenng PlannineraMaoaer |
| GeneralManager GeneralManager CustomerServices GTelecomraucalions -86-
ANNEX 3.2 Page 1 of 3 PAKISTAN Ghazi-Barotha Hvdropower Project Setting Up a Separate Proiect Entity of WAPDA to Operate the GBHP Terms of Reference for Consultants
Background:
1. The Government of Pakistan, in conjunction with the Water and Power Development Authority, is implementing a program for the corporatization and privatization of the Pakistan Power Sector. Towards this objective, a Strategic Plan has been prepared by WAPDA, with the assistance of international consultants' financed by USAID, and approved by the Cabinet Committee on Privatization on July 18, 1992. This, along with the recommendations of a high level Energy Task Force (ETF), culminated in the policy pronouncement in March 1994 titled 'Policy Framework and Package of Incentives for Private Sector Power Generation in Pakistan".
2. The Plan envisages the implementation of the program in two sequential phases: corporatization and commercialization of the existing entities, followed by the divestiture/privatization of the corporatized entities. The restructured power sector would comprise: WAPDA reorganized as a holding company; privately-owned thermal generation companies operating under free market competition; publicly-owned, corporatized entities responsible for the operation of multipurpose hydropower facilities; an independent, regulated transmission and despatch entity responsible for the integrated operation of the system and for the wholesale power market; private companies responsible for supplying electricity to the final consumers; and an independent National Electric Power Regulatory Authority (NEPRA) to set standards and regulate the power sector.
Obiectives:
In consonance with the stated policy which calls for WAPDA to own and operate major hydropower facilities as separate, corporatized subsidiaries of a WAPDA holding company, WAPDA has proposed to build the GBHP as a part of its least-cost development plan for the power sector. Therefore, it plans to:
(i) set up a subsidiary 'Ghazi-Barotha Hydropower Company" (GBHC) to organize and operate GBHP as a discrete, autonomous profit center engaged in hydropower production; and
International Resources Group IIRG); Putnam, Hayes & Bartlett Inc.; and Hunton and Williams. -87-
ANNEX 3.2 Page 2 of 3
(ii) design and adopt, for the subsidiary, an appropriate corporate structure in accordance with the overall corporatization and privatization goals of the GOP in the power sector.
Scope of the Work:
4. The consultants would carry out all the required tasks for the setting up and organizing the GBHC, which would include, but not be limited to, the following key components:
A. Legal and Organizational Component:
. Prepare the requisite legal documents, including the Memorandum, Articles of Association, and By-Laws, under the relevant corporate laws for the GBHP subsidiary.
* Determine the legal and regulatory requirements to corporatize GBHP subsidiary, and assist WAPDA in the formation and registration of the subsidiary in compliance of the relevant laws, rules and regulations, and in obtaining business license/clearance for the subsidiary to engage in hydropower production and sales activities as an independent power producer.
* Recommend the organizational structure, including the structure and composition of the Board of Directors and management, prepare a human resources plan, and determine qualifications for the senior staff.
* Assist WAPDA in clearly defining the rights and obligations of the subsidiary, including those relating to land and water, insurance, limits of liability, key performance documents, and also its rights and obligations vis-a-vis the parent company with respect to the legal, financial, organizational and operational requirements of the subsidiary so as to ensure adequate autonomy, responsibility and efficiency.
* Assist the corporate subsidiary in complying with the requirements under the existing and proposed regulatory framework for the power sector, including those on the labor, consumer protection, and environment.
* Assist the subsidiary in establishing relevant legal agreements, including power sales agreement and water release agreement, for securing its long-term financial and operational interests so vital to its efficient functioning. -88-
ANNEX 3.2 Page 3 of 3
B. Financial. Accountin! and Manazement Component:
* Identify the assets and liabilities of the GBHC, and recommend an optimal capital structure.
* Prepare the balance sheet, income statement, cash flow statement, and other financial statements for the subsidiary, and obtain their certification by reputed international auditors.
* Develop and implement for the subsidiary efficient, and preferably computerized, management systems for accounting, finance, budgeting, operations, materials, personnel and management information/reporting.
5. In view of the fact that the existing units of WAPDA are in the process of being corporatized and commercialized, the consultants should ensure consistency of GBHC with the structure of the rest of WAPDA's corporatized subsidiaries under a WAPDA holding company.
WAPDA Responsibilities:
6. WAPDA, through its WAPDA Private Power Organization (WPPO), will supervise the consulting assignment. Its responsibilities will include, but not be limited to, the following:
- Arrange access for the consultants to relevant records, people, entities and information needed to carry out the assignment.
* Conduct timely reviews of any progress made and interim reports submitted by the consultants.
* Supervise the formation of the subsidiary, and ensure that all the tasks proposed to be undertaken by the consultants are completed on time. PAKISTAN
Ghazi-Barotha Hydropower Project
WAPDA's Investment Programn
US$Million
A. lnneslsnnts (without GBHP) 1995 1998 1997 199 1999 2000 2001 2002 TOTAL la,b LC PC TOT LC PC TOT LC PC TOT LC FC TOT LC FC TOT LC PC TOT LC FC TOT LC PC TOT LC FC TOT 1 Thermal 94.51 16259 257.10 5630 104.61 160.91 62 81 27.76 90.57 10 32 5.48 15.91 - - . ------223.94 300.44 524.38 2 HydroElectric(without GBHP) 14.52 54 51 69.03 2372 34 29 58.02 38 35 69 29 106.64 3451 55.81 90.32 9.76 22 43 32.20 4.96 6 21 11.17 - - . - - - 125.93 241.55 367.38 3 EHVrComponent 25 80 49 03 74.84 62687 10061 163.48 55 14 11541 170.55 72698 119.66 192.26 46 45 55 41 101.96 18.20 '1696 35.16 1452 12.90 27.42 13 55 12.26 25.81 309.11 482.27 791.38 4 STG 50.65 37 74 88.39 43 72 3430 78.02 51 50 45 65 97.14 47 10 42.58 89.68 39 32 36694 76.27 61.22 64 13 125.34 48 06 50 33 98.39 46 77 50 97 97.74 398.34 362.63 760.97 5. Rural Electrification 7 74 4.452 62.26 743 39 16 48.59 9 13 45 65 54.76 549 36 45 41.94 7 39 30.86 38.26 8 69 43 85 82.54 48S4 30.64 35.48 4 52 27 42 31.94 55.22 298.56 353.78 6. Extens & Rehab.of Distribution 32 90 290D4 61.94 28 29 28 87 57.16 35 79 38 34 74.14 30 00 35.16 65.16 18 21 32.72 50.93 27.30 47 58 74.68 20 00 37.42 57.42 16 71 36.13 54.64 211.21 295.25 496.48 7. Taxesand Custom,sDuties 57.10 . 57.10 51 44 - 51.44 51 13 . 51.13 44 52 . 44.82 26 92 . 28.92 28498 . 25.48 1935 - 19.35 19 35 - 19.35 296.29 . 296.29 Total BASELINECOSTS 283.21 3T7.43 660.65 273.79 3411.93 615.62 303.84 341.10 64..94 244.51 295.16 539.68 1148.05176.39 326.44 146.85 178.72 325.56 1106.77131.29 238.06 102.90 126.78 229.68 1,609.93 1,970.70 35680.63 PhysicalContingencies 19.84 29 61 49.45 20 14 25 65 4.5.79 23 07 27 46 60.53 18.70 23.47 42.17 10 12 12.55 22.656 8 86 9 96 18.64 6 12 6.69 13.90 5 90 6.65 12.54 112.74 142.26 254.97 Total Bass.- Physical Cont 303.05 407.05 710.10 293.94 367.48 661.41 326.91 368.56 695.47 263.21 318.63 581.85 168.17 190.93 349.10 155.71 188.70 344.40 112.89 1138.118251.06 108.80 133.42 242.22 1,722.67 2,112.96 36835.60 PriceoContingencies 14.13 3.05 17.30 10 05 961 35.52 40 48 18 19 58.96 42 06 22 70 64.87 30 06 18.39 48.66 33 79 23.95 56.00 2886 21.07 60.15 35 53 24.62 60.43 234.96 141.58 394.20 Total A 317.18 410.10 727.28 303.98 377.09 681.07 367.40 386.75 754.15 305.27 341.33 646.60 188.22 209.33 397.55 189.50 212.65 402115 141.75 I89.25 301.00 144.33 188.04 302.37 1,957.63 2,254.S4 4,212.17 Interest During Construction 48.89 54 92 103.61 47 63 48.42 96.05 53 99 48.75 102.74 44 57 42.06 86.63 27 05 25.07 52.12 27 31 24.65 51.96 2040 18.14 38.94 20 65 18 14 38.79 290.49 260.15 570.64 Investment Financing Required 366.07 485.02 631.99 351.61 425.51 777.12 431.38 435.51 8568.9 349.84 383.39 733.23 215.27 234.40 449.67 218.81 237.30 494.11 162.15 177.39 339.54 164.98 176.18 341.16 2,248.12 2,534.69 41,782.811
S. GBHP Total BASELINECOSTS 16.06 2.58 20.64 119.61 104.73 224.34 96.36 181.42 2T7.78 120.68 273.57 394.48 934.64 228.97 323.51 48.67 114.07 162.74 23.43 57.83 81.26 7.33 23.07 30.40 528.87 9868.251,615.12 Phys,calContingencies 0.90 0 13 1.03 8 77 11.13 19.96 1068 21 91 32.59 1464 33.47 48.11 10 92 26.44 37.35 5 55 13.00 18.55 2 64 6 19 8.83 0 94 2.54 3.48 85.03 114.81 169.64 Total Bse.- Physical Cont 18.96 2 71 21.87 12838 115.86 244.24 1070D4203.33 310.37 135852307.0.4 442.56 10545 25541 360.86 64 21 12707 181.29 26 07 64.02 90.09 8 27 25861 33.88 583.91 1,101.09 11,684,1.916 PriceContingencies 0688 0 02 0.00 1170 2 80 14.49 1360 9 50 23.10 21 17 22.53 43.70 19 51 25.60 45.10 11.70 16 17 27.87 6 55 9.87 16.42 2 32 4866 6.98 87.42 91.15 178.57 Total B 19.85 2.73 22.58 140.07 1118.66 258.73 120.64 212.83 333.47 156.69 329.57 486.28 124.96 281.01 405.97 68.92 143.24 209.16 32.62 73.89 106.51 10.59 30.27 40.86 671.34 1,192.19 1,863.53 InterestaDuringConstruction 0.06 0 06 0.18 3 31 3 50 6.81 11 70 1285 24.55 24 69 26.14 52.83 38 41 45.36 83.77 46.90 57 33 164.23 50 57 63.55 114.12 - . . 175.68 210.81 386.47 Total Financing Required 19.93 2.81 22.74 143.38 122.16 265.94 132.34 225.68 358.02 181.38 387.71 539.09 163.37 328.37 489.74 112.82 200.57 313.39 83.19 137.44 220.63 10.59 30.27 40.86 847.00 1,403.00 2,250.00 for 6BHP ______I__ _I______I__ TOTAL INVESTMENTPROGRAM 366.00 467.83 853.83i 494.99 547.67 1,642.66 553.72 661.19 1.214.911531.22 741.10 1,272.321378.64 560.77 939.411 329.63 437.67 767.601245.34 314.83 S60.1171175.57 206.45 382.021 3,095.12 3,937.69 7,032.811 (A.BtIDC) at Totalsmay not adddue to roundin b% -.means acost of zero. O000'm
>t PAKISTAN
Ghazi-Barotha Hydropower Project
WAPDA's Investment Profram
Rs Billion
A. Invustnwnts (without GBHP) 1"s 1996 1997 1998 1999 2000 2001 2002 TOTAL \a,b LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT 1. Thermal 2.93 5.04 7.97 1.75 3.24 4.99 1 95 0.86 2.81 0.32 0.17 0.49 -6.94 9.31 16.26 2. HydroElectric (without GBHP) 045 1.69 2.14 0.74 1.06 1.80 1.19 2.12 3.31 1.07 1.73 2.80 0.30 0.70 1.00 0.15 019 0.35 3.90 7.49 11.39 3. EHVComponent 080 1.52 2.32 1.95 3.12 5.07 1.71 3.58 6.29 2.25 3.71 5.96 1.44 1.72 3.16 0.56 0.53 1.09 0.45 0.40 0.85 0.42 0.38 0.80 9.58 14.95 24.53 4. STG 1.57 1.17 2.74 1.36 1.06 2.42 1.60 1.42 3.01 1.46 1.32 2.78 1.22 1.15 2.36 1.90 1.99 3.89 1.49 1.56 3.05 1.45 1.58 3.03 12.04 11.24 23.28 5. Rural Electrification 0 24 1.38 1.62 0.23 1.21 1.44 0 28 1.42 1.70 0.17 1.13 1.30 0.23 0.96 1.19 0 27 1 36 1.63 0.15 0.95 1.10 0.14 0.85 0.99 1.71 9.26 10.97 6. Extens. & Rehab. ofDistribution 102 0.90 1.92 0.88 0.89 1.77 1.11 1.19 2.30 0.93 1.09 2.02 056 1.01 1.58 0.85 1.47 2.32 0.62 1.16 1.78 0.58 1.12 1.70 6.55 8.84 15.39 7. Taxes and Customs Duties 1.77 - 1.77 1.59 - 1.59 1.58 - 1.58 1.38 - 1.38 0.83 - 0.83 0.82 - 0.82 0.60 . 0.60 0.60 - 0.60 9.18 . 9.18 Total BASELINE COSTS 8.78 11.70 20.48 8.49 10.60 19.08 9.42 10.57 19.99 7.58 9.15 16.73 4.59 5.53 10.12 4.55 5.54 10.09 3.31 4.07 7.38 3.19 3.93 7.12 4991 61.09 111.00 Physical Contingencies 0.62 0.92 1.53 0.62 0.80 1.42 0.72 0.85 1.56 0.58 0.73 1.31 0.31 0.39 0.70 0.27 0.31 0.59 0.19 0.21 0.40 0.18 0.21 0.39 3.49 4.41 7.90 0 Total Base + Physical Cont 9.39 12.62 22.01 9.11 11.39 20.50 10.13 11.43 21.58 8.16 9.88 18.04 4.90 5.92 10.82 4.83 5.85 10.68 3.50 4.28 7.78 3.37 4.14 7.51 53.40 65.50 118.90 Price Contingencies 0.60 0.30 0.90 1.55 1.16 2.71 2.58 1.96 4.54 2.80 2.37 5.17 2 10 1.87 3.97 2.47 2.33 4.82 2.13 2.04 4.18 236 2.13 4.51 16.58 14.16 30.81 Total A 9.99 12.92 22.91 10.66 12.55 23.21 12.71 13.38 26.1u 10.96 12.25 23.21 7.00 7.79 14.79 7.30 8.18 15.48 5.63 6.32 11.95 5.73 6.27 12.00 69.98 79.67 149.65 Interest During Construction 1.54 1.73 3.27 1.59 1.61 3.20 1.87 1.69 3.55 1.60 1.51 3.11 1.01 0.93 1.94 1.05 0.95 2.00 0.81 0.72 1.53 0.82 0.72 1.54 10.28 9.86 20.14 Investrnent Financing Required 11.53 14.65 26.18 12.24 14.17 26.41 14.58 15.07 29.65 12.56 13.76 28.32 8.01 8.72 16.73 8.35 9.13 17.48 6.44 7.04 13.48 6.55 6.99 13.54 80.26 89.53 169.79
B. GBHP Total BASELINE COSTS 0.56 0.08 0.64 3.71 3.25 6.95 2.99 5.62 8.61 3.75 8.48 12.23 2.93 7.10 10.03 1.51 3.54 5.04 0.73 1.79 2.52 0.23 0.72 0.94 16.40 30.57 46.97 PhysicalContingencies 0.03 0.00 0.03 027 035 0.62 0.33 0.68 1.01 045 1.04 1.49 0.34 0.82 1.16 0.17 0.40 0.57 008 0.19 0.27 0.03 008 0.11 1.71 3.56 5.27 Total Base + Physical Cont 0.59 0.08 0.87 3.98 3.59 7.57 3.32 6.30 9.62 420 952 13.72 3.27 7.92 11.19 1.68 3.94 5.82 081 1 98 2.79 0.26 0.79 1.05 18.10 34.13 52.23 Price Contingencies 0.04 0.00 0.04 0.68 036 1.04 0.86 1.06 1.92 1.42 231 3.74 1.38 2.54 3.92 0.86 1.58 2.43 0.49 0.95 1.44 0.18 045 0.63 5.90 9.25 15.15 Total B 0.63 0.09 0.71 4.68 3.95 8.62 4.17 7.36 11.54 5.63 11.83 17.46 4.65 10.45 15.10 2.54 5.51 8.05 1.29 2.93 4.23 0.44 1.24 1.68 24.01 43.38 67.38 InterestDuringConstruction 000 0.00 0.01 0.11 0.12 0.23 0.40 0.44 0.85 0.89 1.01 1.90 1.43 1.69 3.12 1.81 2.21 4.01 2.00 2.52 4.52 - - . 6.64 7.99 14.62 Total Financing Required 0.63 0.09 0.72 4.77 4.07 8.84 4.58 7.81 12.39 6.51 12.84 19.35 6.08 12.14 18.22 4.34 7.72 12.07 3.29 5.46 8.75 0.44 1.24 1.68 30.64 51.37 82.01 for GBHP TOTAL INVESTMENT PROGRAM 12.16 14.74 26.90 17.02 18.23 35.25 19.16 22.88 42.04 19.07 26.60 45.67 14.09 20.88 34.95 12.69 16.85 29.54 9.73 12.50 22.23 6.99 8.23 15.22 110.91 140.90 251.80 (A+B+IDC)
al Totals may not add due to rounding b\ - means a cost of zero; 0.00 means a cost of less than 0.005 but more than zero.
olX PAKISTAN GHAZI BAROTHA HYDROPOWER PROJECT
WAPDA'S 1995-2002 INVESTMENT PROGRAM AND MACROECONOMIC TARGETS 1994 (est.) 1995 1996 1997 1998 1999 2000 2001 2002 GDP at current market prices (Rs. billion) 1554.6 1852.1 2156.6 2462.9 2787.0 3154.5 3577.7 4059.6 4590.1
Public Sector Development Program (PSDP): Rs. billion 110.4 124.1 144.6 167.8 190.3 217.3 242.6 273.4 308.0 % of GDP 7.1% 6.7% 6.7% 6.8% 6.8% 6.9% 6.8% 6.7% 6.7%
WAPDA Investment Program 1! with Ghazi Barotha: % of GDP N.A. 1.3 1.0 1.5 1.5 1.0 0.6 0.4 0.3 % of PSDP N.A. 19.1 22.0 22.2 22.3 15.6 9.9 5.7 5.2
WAPDA Investment Program I/ without Ghazi Barotha: % of GDP 1.7 1.2 1.1 0.8 0.6 0.4 0.3 0.2 0.2 %ofPSDP 24.1 17.7 16.0 11.3 9.5 6.1 3.4 2.8 2.4
Ghazi Barotha: % of GDP - 0.04 0.3 0.6 1.0 0.5 0.3 0.08 0.08 % of PSDP - 0.6 3.9 8.5 10.1 7.3 4.9 1.3 1.3 Source: WAPDA and Staff Estimates 1/ WAPDA investmentprogram excludes investments in new thermalpower plantsafter 1998, in accordancewith GOP policy to leave thermal power investmentsto the privatesector. In 1995WAPDA thermal investments totalled Rs. 7.97 billion (US$ 257.1 million),representing 33.7%of WAPDA'stotal investmentprogram, 6.4% of the PSDP,and 0.4% of GDP. Eu1 -92- ANNEX 4. 1 Page 1 of 10
PAKISTAN
Ghazi Barotha HydroDower Project
Detailed Project DescriDtion
A. Proiect Description
I. The proposed Ghazi-Barotha Hydropower Project is a major run off the river environmentally sustainable power project located at about 7 km. downstream of Tarbela dam. The project would utilize about 76 meters of available head between Tarbela tailrace and Indus River's confluence with Haro River -- a stretch of 63 km. There would be no consumptive use of the water by the project. The optimization and economic studies undertaken for the Feasibility Report resulted in a recommended Project for implementation, of five 290 MW units, giving an installed capacity of 1,450 MW, a channel capacity of 1600 cumecs, and headpond live storage of about 25 M cu m. The project will have the following main components, and its principal data are indicated in Attachment 1:
(a) Barrage. A barrage about 7 km downstream of Tarbela with a gated head regulator to divert water released from Tarbela into the power channel. The barrage would also raise the water level at the entrance to the power channel to maximize the power generation capability. A pond of approximately 7 km in length and 1.5 km in width with about 62 MCM live storage capacity, created between Tarbela dam and the barrage would be used to re-regulate the Tarbela peaking outflows on a daily basis. The barrage works will include the following main features:
(i) a normal pond level at El. 340 m;
(ii) 20 standard bays, each of 18.3 m width, with a crest at El. 332.2 m;
(iii) 8 undersluice bays, each of 18.3 m width, with a crest at El. 326.0 m;
(iv) a dividing island of about 400 m width, separating the undersluice bays from the standard bays;
(v) a head regulator of 8 bays, each of 18.3 m width, with a crest at El. 333 m for controlling flows into the power channel;
(vi) a skimmingplatform for separating flows between the head regulator and the undersluice bays so as to reduce the entry of coarser sediment into the power channel;
(vii) left and right guide banks for guiding the approach flow and for retaining the water in the pond; -93- ANNEX 4.1 Page 2 of 10
(viii) a fuse plug in the right guide embankment for augmenting the flood discharging capability of the standard and undersluice bays in the event of extreme floods;
(ix) a separation dyke and a cunette to assist in developing a central river channel for flows from the standard bays; and
(x) protective embankments for low-lying areas along the pond shoreline.
The barrage will also provide a road crossing of the Indus river.
(b) Power Channel. A 52 km concrete lined power channel to convey up to 1,600 cumecs of water to the powerhouse and connected to two head ponds of about 25 million cubic meters with structural arrangements for impoundment of surplus waters. The power channel would have a bed width of about 58.4 meters, a water depth of about 9 meters, and a bed slope of 1:9,600, with a resulting velocity of 2.33 mis. The concrete lining would be 135 mm thick, reinforced, and joints with water stops would be provided at 9 to 12 m intervals. The underdrainage system is designed to maintain groundwater levels below the invert of the channel. The underdrainage system would comprise a filter layer under the concrete lining along the bed and sides of the power channel. The power channel works will include the following principal structures: cross drainage structures - 26 super-passages, one culvert and 18 inlets to the power channel, five escapes and 33 bridges including: one railroad bridge, one arterial road bridge, five district road bridges, six village road bridges and 20 minor bridges. A significant impact will be created by the quantity of excavated material that has to be disposed of, which will cover about 1,640 ha of land. In order to mitigate this impact, suitable measures (including tubewell irrigation) have been proposed to permit the return of this land to the affected people for agriculture. Provisions will be made to minimize the areas of land taken out of cultivation at any time and to return the disposal areas to cultivation as early as possible.
(c) Power Station. A power station located at the end of the channel with five units of 290 MW each. The power station complex works include:
(i) a forebay connecting the power channel tail regulator to the power intake, and including the spillway intake and the entrances to the two headponds;
(ii) headponds, north and south of the forebay, with low-level outlet works and embankments constructed largely of material from required excavations;
(iii) a spillway with a multibarrel siphon intake, stilling basin and baffle chute leading to the tailrace; -94- ANNEX4.1 Page 3 of 10
(iv) a power intake within the forebay leading to the penstocks;
(v) penstocks, to serve each of the five units, connecting the intake to the powerhouse;
(vi) a powerhouse containing five turbine-generator units with an installed capacity of 1,450 MW, set deep enough to take full advantage of the range of Indus river water levels in generating energy;
(vii) a tailrace channel to carry the discharge back to the river; and
(viii) a switchyard to receive the output from the powerhouse and connect it to the WAPDA high voltage grid through 500 kV circuits.
(d) Transmission Works. The transmission requirement for evacuation of power from Ghazi-Barotha and its interconnection with the power system consists of the following:
(i) 500 kV transmission lines
a. Diversion to Barotha of both 500 kV existing transmission lines between Tarbela and Gatti (140 km);
b. Two 500 kV transmission lines between Barotha and Rewat substation (200 km); and
(ii) extension of the 500 kV Rewat substation for the connection of the above mentioned Barotha-Rewat transmission line;
B. Proiect Studies. Safety Aspects and Status of Investigation
2. Studies. While finalizing the design, the following studies were carried out:
(a) meteorological, hydrological and seismic observations, their analysis and appropriate hydraulic model studies for barrage and power complex;
(b) sediment studies, using mathematical models, to determine sediment estimated outflow from the Tarbela, impact on Tarbela's live storage and sediment's transport in the power channel;
(c) techno-economic studies to determine the most optimum capacity of power channel in terms of cumecs and merits of single versus double channel; ANNA 4. 1 Page 4 of 10
(d) layout studies to finalize location of barrage and power complex and alignment of power channel; and
(e) system studies to determine generating unit size, system transmission, voltage and configuration;
3. Present Status. The Project's feasibility study, field investigations, laboratory testing, analysis of various studies, project layout of structures, detailed design criteria and detailed designs, technical specifications and bid documents for civil works have been successfully completed and the same have been reviewed by the Bank , an independent technical panel consisting of eight experts and an independent Enviromnental Resettlement Panel from time to time. The Panesl of Experts have concurred with technical soundness, economical viability and environmental sustainability of the overall project. A summary of the project's hydrology, geology and seismicity is provided in the following paragraphs.
C. Hydrolofv
4. Flood Hydrology. During the summer season (June to September), storm run off from an area of about 10,000 sq. km immediately upstream of Tarbela is usually superimposed on high snowmelt flows. Nearly all annual maximum floods have occurred in July or August. Annual maximum one-day flows over the past 30 years have mostly been in the range of 8,500 to 11,300 cumecs. The flood of record (1929) at Tarbela is estimated at about 18,700 cumecs. The maximum peak outflow in the last 15 years of Tarbela operation, has been 14,100 cumecs during July 1989.
5. Design Flood. The design flood has been considered as the flow which can pass through the barrage's gated bays with no surcharge above normal pond level. It has been estimated as 18,700 cumecs equal to the 1929 flood of record (a return period of over 200 years). The Tarbela Dam with its two large spillways and five tunnels can release up to 48,700 cumecs which is more than twice the flood of record. The peak outflow under emergency conditions with Tarbela reservoir full has been estimated at 47,000 cumecs when units 15-17 have been installed on Tunnel 4, and 48,700 cumecs when Tunnel 4 is still available as an irrigation outlet. The routed outflow of the PMF for Tarbela reservoir, with a peak of 46,200 cumecs has been estimated as the survival flood for the project. A fuse plug has been designed to be provided with self trigger arrangement when the flood rise reaches a preset level, so that extreme floods up to the survival flood can be passed. For the larger emergency drawdown outflow, there would be sufficient notice for the fuse plug to be breached in advance. The construction flood adopted is 14,500 cumecs (return period of 40 years).
6. Sedimentation. The sedimentation of the Barrage Pond for the proposed Ghazi- Barotha Hydropower Project would primarily depend on the sediment outflows from Tarbela. Based on mathematical sedimentation model studies, the maximum sediment concentration during the month of May (when the reservoir level of Tarbela is generally low) is estimated at about 1,500 parts per million. In the other months, the sediment concentration is estimated as less than -96- ANNEX 4.1 Page 5 of 10
about 110 ppm, with particle size distribution (PSD) of about 42% clay, over 57% silt and less than one percent sand. The major sediment outflow volumes generally occur during the periods of low reservoir levels (April to June) and also during periods of high flows (July and August). During an average and wet year, the concentrations are low, below 500 ppm, but these could be much higher during a dry year. However the sand content would be negligible. The predicted sediment from Tarbela outflows for up to 25 years would be predominantly of silt and clay. After that period, the sand concentrations should increase. Specific structural arrangements (including the undersluices and the skimming platform) have been made under the project, to desilt the barrage pond and avoid the coarse sediment flow into the power channel. Also the power channel has been designed as high velocity channel with self-cleaning velocities of 6 ft./sec. It is also proposed to have a dredger to keep the area of the pond clear upstream of the head regulator, as and when necessary.
7. Sediment model studies as recommended by the POE have been undertaken and would be continued to confirm the design assumptions used in various components of the project and to suggest modifications for improved performance. Earlier, eight hydraulic model studies pertaining to barrage, undersluices, head regulator, siphon, spillways, super passage and power complex were completed as planned.
D. Geolo2
8. Barrage. The river channel right bank at the barrage site is composed of crystalline and metamorphic rocks with non-fossiliferous sedimentary deposits. The left bank on the other hand is wholly composed of unconsolidated terrace deposits. The barrage is mainly based on alluvium foundation (consisting of sands, gravels, cobbles and boulders). While the thickness of alluvium at Tarbela Dam in the riverbed was found to exceed 200m, the same in the barrage area is found to be erratic in nature, with some boulders right at the surface and bedrock in some holes at depths of 30 to 40m.
9. Power Channel. The 52 km long power channel passes through varying geology in the area. The first part of the channel from Ghazi to Kamra complex passes through alluvium which forms a thick mantle overlying the bedrock. At Kamra the channel passes through the northern foot of the hills consisting of agrillites, limestones, and guartzites. Beyond Kamra, the channel mainly passes through varying deposits of alluvium (silts, clays, gravels), except at the northern end of high grounds at Haji Shah and Rumian where rock outcrops forming the Attock- Cherat range are exposed.
10. Power Complex Areas. The area investigated for the power complex lies along the left bank of the Indus River extending from Dakhner in the north to the Haro River in the south. The area is geologically known as the Attock basin, defined by the east-west trending ridges of the Attock-Cherat range, 7km to the north and the Kalat- Chitta range 5km to the south. The basin is filled with thick alluvial sediments deposited nearly horizontally by the Indus, Kabul and Haro rivers which flowed through the area in the past. The principal alluvial units include more -97- ANNEX 4.21 Page 6 of 10
recent deposits of sand, silts and gravel, overlying relatively older beds of siltstone, sandstone and at the deepest exposures sandy gravel with varying degrees of cementation.
E. Seismicitv
11. The seismicity of the area is characterized with preinstrumental data as highly modified Mercali (mm) intensities of V to VIII. The instrumental data for the present century shows earthquakes of magnitude greater than five on the Richter scale with very few events of magnitude greater than six recorded within the 200 mnileradius of the project. A probability of exceeding ten percent during the 60 year project life has bean adopted as the basis for design, resulting in ground acceleration of 0.17g for the Operational Base Earthquake (OBE). The Maximum Credible Earthquake (MCE) has been estimated to generate a horizontal ground acceleration of about 0.5g. The water retaining structures whose failure could lead to the flooding of villages and loss of life including: (a) the barrage rim embankments; (b) the power channel embankments and culvert; and (c) the head pond and foreby embankments, have been designed on the basis of MCE.
F. Water Availability and Operation of Proposed Power Plant
12. The live storage in Tarbela reservoir at the time of commissioning of the proposed Ghazi-Barotha Project would be about 9,700 M cubic meters (about 13% of average annual flow). The daily releases from Tarbela reservoir are governed by the requirement of irrigation systems except when excess water is spilled. The hourly variations in the releases are governed by power requirements. These hourly variations have become very pronounced after Tarbela started operating as a peak load station on commissioning of four additional units.
13. Overall operation of the Project and of the generating plant will be controlled from the powerhouse control room, which will be linked to the National Control Centre (NCC) at Islamabad and to the control centre at Tarbela. All significant aspects of Project operation will be measured and recorded by a comprehensive SCADA system.
14. The barrage will have a control room linked to the SCADA system. The barrage gates will be controlled to maintain the required pond levels to exclude coarse sediment from the power channel, to prevent sediment deposition near the outlets, and to minimize waste of water.
15. Flows in the power channel will be controlled by means of the head and tail regulators. Constant flow will be maintained in the power channel during each 10-day period. The SCADA system will provide the operating staff with full data about discharges and water levels in the power channel.
16. The operation of Ghazi-Barotha Power Station will be as follows:
(a) discharging excess flows through the barrage during the high-flow period (June - September) when the average daily discharge exceeds the power channel capacity; -98- ANNEX 4. 1 Page 7 of 10
(b) re-regulating the daily peaking discharges from Tarbela within the barrage pond during the low-flow period (October - May); (c) releasing a constant flow into the power channel, by appropriate operation of the head regulator gates, equal to the average daily release from Tarbela less water discharged through the barrage, water lost through seepage and water provided to the existing Pehur canal upstream of the barrage; (d) maintaining fMll supply level at the downstream end of the power channel by appropriate operation of the tail regulator gates; (e) operating the turbines at higher discharges during peak hours, automatically drawing on water stored in the two head ponds with a combined capacity of 25 million cumecs; and (f) outside peak hours, reducing turbine output in order to allow the flow in the channel to refill the head ponds before the next peak demand period.
17. The operation of the barrage gates will also take into account the need for flushing sediment from the barrage pond and reducing sediment entry into the power channel.
18. The resulting patterns of maximum power, base load energy and total energy generation on a period by period basis for average hydrology are shown in Annex . The maximum power available in May and June indicates the contribution of the project to meeting the annual system peak demand, which occurs in this period. Sufficient water will not be available for an economic low-head generation. Therefore, no specific provision has been made in the layout for future installation of a low-head hydropower at the barrage.
G. Dam Safety Aspects
19. In accordance with the Bank guidelines for Safety of Dams and Structures (OMS 3.80, and the presently revised draft OP/BP 4.37), the project provides the following specific measures to ensure safety of the proposed dam/barrage and the associated structures.
20. Engineering. Pakistan Hydro Consultants (PHC), with extensive experience in major hydro projects for over 30 years, prepared detailed design reports related to the safety of civil structures.
21. Independent Panel of International Experts. An independent panel of international experts was associated with the project from initial stages of the project feasibility to carry out a comprehensive review of the detailed feasibility, project layout of structures and the detailed designs of the project, and to advise and ensure the safety of the dam/barrage and the appurtenant structures, with specific considerations of the geologic hydraulic, soil mechanics, sedimentation, seismic and the structural aspects. The Panel was comprised of eight well known experts with relevant expertise in dam/barrage, appurtenant structures and powerhouse engineering, concrete lining of major channels and the underdrainage systems, and the electrical/mechanical equipment for the power station. The Panel contributed some important modifications for safe designs and has endorsed the project as technically sound and economically highly attractive. Most of the ANNEX 4.1 Page 8 of 10
members of this Panel are proposed to be retained and continued for the technical panel during construction of the project. The Bank would participate in the Panel meetings as and when appropriate
22. Instrumentation. Extensive instrumentation is proposed to be installed at the project structures and the concrete lined power channel for safety monitoring. The same would be further reviewed by the Panel and the Bank experts for its adequacy when instrumentation designs are finalized during construction and additional instrumentation will be incorporated (if considered essential). The proposed instrumentation would provide handy tools for studying the behavior of the various project structures and the power channel and foundations after construction and for timely requisite protective measures to control undesirable developments or emergency conditions.
23. Safety Inspections During Operation. WAPDA conducts regular inspections of all dams and the major hydraulic structures in the country and generally follows the practices of the US Bureau of Reclamation in this respect. The safety inspections by WAPDA assisted by individual experts (as necessary) would be acceptable to the Bank. All works completed under the project including the barrage, undersluices, fuse plug, head regulator, syphons escapes, inlets, super passages, concrete lined power channel, the under drainage system, spillways, head ponds, intake structures, penstocks, forebay and tailrace, and the electrical and mechanical equipment would be maintained by WAPDA in a satisfactory manner. -100- ANNEX 4.1 Page 9 of 10 Attacbment 1
Principal Proiect Data
BARRAGE
Normal pond level 340.0 m (1115.5 ft) Maximum (survival) pond level 341.5 m (1120.4 ft) Design flood discharge capacity 18,700 cumecs (660,000 cusecs) Discharge intensity (average) 36.5 cumecs/m (393 cusecs/ft) Survival flood capacities Gated sections 23,000 cumecs (812,000 cusecs) Fuse plug 23,200 cumecs (819,000 cusecs) Combined 46,200 cumecs (1,631,000 cusecs) Construction flood 14,500 cumecs (512,000 cusecs) Standard bays No of gates 20 Gate size 18.3x8.3 m (60x27 ft) Gate type radial Crest level 332.2 m (1090.0 ft) Undersluices No of gates 8 Gate size 18.3x3.5 m (60x1 1.5 ft) Gate type radial Crest level 326.0 m (1069.5 ft) Head regulator No of gates 8 Gate size 18.3x7.5 m (60x25 ft) Gate type radial Crest level 333.0 m (1092.5 ft)
POWER CHANNEL
Design flow 1,600 cumecs (56,480 cusecs) Longitudinal slope 1:9,600 Length 52,027 m (32.3 miles) Full supply depth 9.0 m (29.5 ft) Bed width 58.4 m (191.6 ft) Side slope IV:2H Total excavation 76 M cu m (99 M cu yd) -101- ANNEX 4.1 Page 10 of 10 Attachment 1
POWER COMPLEX
Penstock diameter 10.6 m (34.8 ft) Tubines Type Francis Number 5 Full gate output 295 MW Design net head 69 m (226 ft) Design flow 400 cumecs (14,125 cusecs) Runner discharge diameter 7.0 m (23.0 ft) Elev. of distr'r centreline 256.3 m (840.9 ft) Generators No. x capacity 5x290 MW = 1,450 MW Synchronous speed 100 rpm Headpond & Forebay Area 540 hectares (1,334 acres) Live volume 25.5 M cu m (20,670 acre ft) Full supply level 334.0 m (1095.8 ft)
Annual average energy output 6,600 GWh PAKISTAN Ghazi-Barotha Hvdrovower Proiect CornDarison of Alternatives Considered
TYP. bESCRIPlION ADVANTAGES DISADVANTAGFS NO ACT1ON Pmjct not built; power *m othcr soures a Nationalpower demand met * Air qualikydegrdation * Highereot (oasil fuel) Projt not buik; power demandnot met * No landloss * Hinderedlocarnstionsl economic developimnct * No socl disrrqtion * Nolocal reductionof Indus owr
ALTERNATIVE Fossilfelb * Ltss ocial disruption IPOWER * Air qualiy degradation * Compdition SOURCE with odwerfuel demands * Coolingwter effocts.healing of river wtlcr Other hydropower(Kalabagh A Bashr Dome.wbich * Lnd takenis les pxductivc * Largescek irseulemcnt (Kalabagl) am in the phsing Pic") * Ls socialobdido * Local n andwater rights disputc(Brslia * High tansponationcost for Basha BARRAGE Location: Site A * Slightlylees inadton * SocIo-eeonomicgowlb for Ghaui-Khblo Site C * Greaterstorse capacciy * Littc differet from A.. but kss favorablcto Glmza-Khab to Low-headhydropower at pcak flows * Addijonal energycxuractbn t litkk cxit cod * Lessflood watcr avilable for sluicug POWER Useof two channes * Projectcould functionwith onechannc ots of * Groundwater CHANNEL pressuremight cndangerempty serve channel * GrActetlnd taking Alignment:balanced eut andAU * Lessspol to be disposedof * Disruptionof populationcentcrs * Lower atetural intcgriy of the chsnncl * Difficultia in nutlshemrssings Alignmed:on high grund * Avois diruption of populationcentr * More cxcavation;grater a*nounmtof spoil * Bedteraesuap fDr nullh flows thfough material supeClpasges * Improvedintegrity against pressurc of watcr Avoding archaeologicabitorkal ske, rigious * Reduced cukurmlimpacts * Slightlymore excavation 1d d a nd goyv ds * SUli hcese in klegth Routeltrough Kamrs AesunaudealCepbI: mouit * No _dt a air aa * Sub_ianallygrter tent o ceate * t coatrouting * Cannel In f.i riplacementof sructurems soush * Lhde impet on air baa * Considetble xcavatin required PAKISTAN Ghazi-Barotha Hydropower Proiect Comparison of Alternatives Considered
TYPE DESCRIPI7ON ADVANTAGES DISADVANTAGES
POWER Spoildisposal: rivcr banksehmmtion * Rechimbnd previouslyeroded * Unceainty asto ultimstc falc of material CHANNEL (cont) terracing * Recovcrwastelands and eroded fbnnhand
rdditional frdcboard * Overflowsurge protection
spoil banks * Convertsome marginal bnds into irigated * Requirescareful managcmcot to mcet cosas cropbnds * Landacquisition/lale may be scnoitivc * Largevolumes possible
nulabhreclamtion * Makenullh bedsmore useful * May recrode quickly unicssprotected with pmpergmd andvegeation
POWER Location: Dakhner * Shotterpower channel * Prohibitivegeotechnical problems COMPLEX
G(nlk * Topographynot suitabic Jaba * Shonatrpower chal * Long (4 km) talrace channel * SSmaflebead * Highed mric risk
Dher * RWgIdbrings power dchmel to within I km of * Narrownessof ridgc mcns klesstructurnl rim scurty or chanmel
Barotba not * WLsagricukurl disruption (than south * Headlss of0 b m( II%) emandve)
south * MaLimumhead of sll sites * Disruptionof irrigatedagricukurc
I-h. to -104- ANNEX 4.3 Page 1 of 5
PAKISTAN
Ghazi Barotha HydropowerProiect
EnOineerin2Services - Construction Sunervision
Consultant'sTerms of Reference
A. Introduction
1. Engineering services are required to be provided by the consultants for the following stages of the Ghazi Barotha Hydropower Project:
Phase I - Preparatory Works includingBidding
Phase II - Construction Supervision
2. The terms of reference for these services are given hereunder.
3. WAPDA would have the option, subject to mutual written consent of the parties, at any time to alter, increase or decrease the scope of services. During both Phase I and II, a panel of experts appointed by WAPDA would visit and review the consultant's work periodically.
B. Scope of Services for Phase I
4. The engineering services to be provided by the consultants are for completing identified project processing activities to the extent of evaluation of the bids for the civil works, preparing bid documents for all mechanical and electrical works and completing all other documentation for presentation to the World Bank and other donors for approval/concurrence and for arranging financing commitments, planning and supervising field investigations including hydraulic model studies, and ensuring that all work being performed by the Consultants is in conformity with the agreed mitigation plans.
5. Under the above scope, the consultants would undertake the following services:
(a) Update the estimated cost of the project, the project schedule for the anticipated dates of award for the civil and main mechanical and electrical (M&E) contracts, and other activitiesuntil project completion; -105- ANNEX 4.3 Page 2 of 5
(b) prepare Engineer'sestimates for the civil works, turbine and generator and other mechanical, electrical contracts to permit evaluation and bid comparison. The Engineer'sEstimate will be kept confidentialand delivered to the General Manager, Project confidentially;
(c) finalize the draft prequalificationdocuments for the civil works contracts and assistWAPDA in the prequalificationactivities;
(d) review the bid documents for the civil works to conform with the current mandatoryrequirements of the World Bank;
(e) assist WAPDA in the bidding activities for the civil works contracts, includingholding of prequalificationand pre-bid conferences(s), issuance of addenda and evaluationof tenders;
(f) prepare bid documents for all mechanical and electrical (M&E) contracts (para 10);
(g) assist WAPDA in the bidding activities for the turbine and generator and other M&E contracts includingholding of pre-bid conference(s) wherever needed, issuanceof addenda and evaluationof tenders;
(h) plan and supervise hydraulic model studies and field investigations for the Project;
(i) assist WAPDA in matters relating to relocation and preparatory works, includingthose related to the Kamra Complex;
(j) assist WAPDA in the preparation of documentation required for the approval and financingof the Project;
(k) assist WAPDA with environmentaland resettlement issues, and ensure that all work being purformedby the consultants is in conformitywith the agreed mitigationplans; and
(1) prepare monthly and quarterly progress reports covering the progress achieved on aspects related to the provisionof consultingservices;
C. Scope of Services for Phase II (To be updated)
6. The principal purpose of the supervision of the construction is to ensure that the Project is constructed satisfactorily and in compliance with the approved drawings and specifications and within the scheduled contract time. -106- ANNEX 4.3 Page 3 of 5
7. The consultants would prepare the detailed construction drawings and supplemental specifications required to construct the Project according to the approved program. These drawings would be complete in all respects and would show clearly all the dimensions and details required by the field engineering forces and the contractor(s). The principal purposes of the construction drawings are to enable the project to be constructed with maximum economy and to ensure quality construction.
8. To carry out this assignment, the consultants would do every thing necessary and proper for the object in view and among other things, undertake the following:
(a) prepare the detailed constructiondrawings for all contracts in coordination with the schedulesfor procurement and construction;
(b) prepare supplementalspecifications where required;
(c) revise the construction drawings as the construction progresses to reflect accurately detailed and changed conditions which may appear as the foundations are exposed;
(d) coordinate the interfacesbetween the various contracts;
(e) establishand monitor qualityassurance systemsfor the Consultant as well as for verificationof the contractors' and manufacturers'programs, review and approve contractor's construction drawings, check and test the quality of civilworks through the field laboratory;
(f) review and approve, amend or reject submittals of the contractors to minimizethe possibilityof claimsand litigation;
(g) review and monitor the contractors' management and control systems for ensuringthat the works are constructed in accordance with the requirements of the specificationsand drawings;
(h) arrange for periodic quality audits and inspections at the manufacturers' works of plant and equipmentbeing manufactured for the Project, including witnessingwork tests;
(i) monitor overall progress on the Project, updating the Project program and criticalpath analyseswhere appropriate;
(j) make arrangements,select the location and inspect and make any additional subsurface exploration that may be necessary to test foundation and other materialsto verify hat designparameters are met; -107- ANNEX 4.3 Page 4 of 5
(k) supervise the field and inspection staff in performance of the field duties enumerated below:
(i) issue instructions to contractors and provide engineeringsupervision to the executionof the work;
(ii) record levels and other data required for measurement of works quantities as a basis for progress payments to contractors;
(iii) issue certificates to WAPDA for payments to the contractors;
(iv) superviseacceptance tests of permanent equipment;
(v) assist in liaison between WAPDA and contractors except in cases of litigationand arbitration;
(vi) supervisetraining of local operating personnel; and
(vii) prepare information necessary for preparation of the record drawings and Project CompletionReport during the constructionperiod.
(I) check the manufacturer'sdrawings;
(m) inspect equipment/componentsat critical times during manufacture, and superviseand report on shop tests;
(n) prepare monthly and quarterly reports covering all aspects of the Project, highlighting milestones achieved, any delays that have occurred, and the actions taken to minimize the overall impact of such delays on the completion of the project;
(o) prepare budget estimates for the Project and update these at regular intervals;monitor and update cash flow projections;
(p) arrange for the testing, commissioningand bringing into operation of the Project;
(q) provide adequate consultation and advice to WAPDA as and when requested; -108- ANNIX 4. 3 Page 5 of 5
(r) prepare the necessary operationand maintenancemanuals;
(s) prepare record drawings of the Works; and
(t) prepare a completionreport for the Project.
D. Mechanical and Electrical Equipment
9. A possible list of M&E equipment needing preparation of bid documents is as follows:
* Generators * Turbines * Transformersand Auxiliaries * Cranes * HV Switchgear, Control and ProtectionEquipment * MV and LV Equipment * Elevators * Diesel GeneratingStandby Sets * iGateEquipment i Generator Isolated Phase Bus * SwitchyardSteel Structures and Powerhouse Take-OffMasts * Cables and Accessories v MiscellaneousAuxiliaries D Control and Instrumentation,SCADA and TelecommunicationEquipment * High Voltage transmissionline 3 Packaging of the above equipment will be discussed during appraisal. -109- ANNEX 4.4 Page 1 of 3
PAKISTAN
Ghazi-BarothaHydropower Project
Technicaland Safety ReviewPanel
Terms of Reference
I. GENERAL
1. An independent panel of experts is to be established by the owner to undertake periodic, comprehensive, independent reviews to evaluate features and actions pertaining to the safety of the dam embankments, dikes and the major hydro structures and the appurtenances and to recommend actions that may be needed to achieve acceptable safety standards. The panel is guided by internationally accepted standards and current dam safety practices.
11. PANEL OF EXPERTS/PURPOSE OF ASSIGNMENT
2. The technical panel of experts (POE) in consultation with the owner (Water and Power Development Authority (WAPDA), will undertake a detailed and comprehensive review of the modified designs (if any) and the construction drawings during the construction supervision of the Ghazi-Barotha Hydropower Project including the field and laboratory investigations, and model testing, to ensure safe economic and timely construction of the project structures (Barrage, Power Channel, Powerhouse and the associated structures), in consideration of the structural,. geologic, soil and rock mechanics, seismic, hydrologic, hydraulic and sedimentology, and other aspects (see specific Terms of Reference).
3. The POE will consist of six permanent members with expertise as listed below. Other short term specialists for specific assignments may be added, if and when considered necessary.
(i) Structures and foundations. (ii) Soil mechanics/engg. geology/rock mechanics. (iii) Construction aspects/contacts. (iv) Lined power channel. (v) Electrical/mechanical equipment. (vi) Sedimentation/hydraulics/spillways.
4. The POE shall meet at the project site and in Lahore (as necessary) about two to three times each year, as the need may arise, during the project construction period. The actual timing of meetings will be determined in consultation with the WAPDA and the Panel members. During the construction phase, in addition to the scheduled POE meetings during various stages of construction, additional meetings may also be scheduled during major Diversion Schemes and when the foundation is opened to allow critical areas to be observed.
5. At each meeting, the POE will review the progress of the construction works, investigations and other technical and critical issues and with particular attention to actions taken by the Consultants in regards to recommendations made by the POE in previous reports. The POE will report its findings and make such recommendations on the specific technical and safety issues necessary to -110- ANNEX4.4 Page 2 of 3
ensure safe, economic and timely construction of the project structures, in writing to WAPDA at the termination of each review meeting.
6. The POE will work as a team, along with the Chairman to be designated from among the Panel members, to ensure long-term safety of the project structures and quality control of construction. Each member will not only cover his own specialty/discipline,but will also coordinate efforts to achieve a safe and technically sound construction of the project works and allied structures.
7. The POE meetings will be participated by the Bank representative as and when convenient, and copies of the POE reports will be transmitted to the Bank.
III. SPECIFIC TERMS OF REFERENCE
8. Specifictasks of the Members of the Panel of Experts, in addition to any other items which they deem pertinent to the safety of the project and allied structures,wouldbe to investigate, examine and review the various items as listed, including suggestions concerned with safeguarding, treatment, and/or modifications necessary during testing, field investigationsand construction supervision of the project. The elements to be reviewed and evaluated by the Panel include but not limited to the following:
a. Major river diversion scheme.
b. Adequacy and methodology of quality surveillance procedures.
c. Need for modifyingfoundation treatment or excavation limits on the basis of inspections of the opened foundation.
d. Major design changes dictated by changed field conditions.
e. Suitabilityof construction materials, including aggregates for concrete.
f. The batching plant and mixing plants composition of aggregates and quality control for concrete.
g. Preparation and contingency for river closure.
h. Adequacy of construction plan, methods and equipment.
i. Plan for initial reservoir filling,including special safety considerations.
j. Adequacy of operation and maintenance manuals and reservoir and the channel regulation plans.
k. Availabilityof emergency action plans in case of some structural failure.
1. Reservoir and channel drawdown arrangements.
m. Additional instrumentation program (if necessary). -111- ANNEX 4.4 Page 3 of 3
IV. THE POE REPORT
9. The report of each panel meeting will be prepared and signed by all Panel members before they leave. The report will usually cover:
a. Action on previous recommendations.
b. Information presented by the owner and/or consultants.
c. Issues raised by owner and/or consultants.
d. Panel recommendations on specific issues. -112- ANNEX4.5 Page 1 of 2
PAKISTAN Ghazi-Barotha Hydropower Proiect Water and Power Development Authority Independent Environmental and Resettlement Panel Terms of Reference
1. Introduction. In accordance with OperationalDirective 4.01, EnvironmentalAssessment" and OperationalDirective 4.00. Annex B, "EnvironmentalPolicy for Dam and Reservoir Projects' of the World Bank, an independentpanel of environmentaland resettlement experts (ERP) is required to be establishedto review these aspects of the Ghazi Barotha Hydropower Project (GBHP) on a regular basis. Consistent with these procedures an ERP was established early during the project feasibility and detailed engineering stage. An independentERP is now required to be establishedby WAPDA for the implementationphase of the Project. The work of the ERP would be guided by the environmental mitigationand monitoringplan for the Project and the ResettlementAction Plan (RAP). The ERP would work closely with field based representatives of the Project Information Center (PIC), WAPDA EnvironmentCell (Water Wing). Social Science Unit (SSU). Mlonitoring Consultant,Ghazi-Barotha Development Organization (GBDO), local non-govermnental organizations and the affectedparties.
2. Panel NIembership. The ERP would consist of three permanent members, one of whom wouldserve as the chairman, including: (a) an environmentalspecialist. (b) an agriculturalspecialist. and (c) a social scientist. The panel chairman would have the authority to appoint short term specialists, as may be required, for specific assignments. The ERP will work as a team; the members wvillnot only address their own area of specialty, but will also contribute to the inter-disciplinary worklof the ERP.
3. Mode of Operation. The ERP would review the i-mplementationof environmentaland resettlement aspects of the Project at least twice a year during the project implementationperiod. The chairman has the authoritv to call for additionalreviews if determined to be necessaryfor effective managementof these aspects of the Project. The schedule for these reviews would be establishedby the panel in coordinationwith WAPDA. The reviewswould be conducted at the project site and may also require visits to Islamabadand Lahore to meet with GOP, WAPDA and project consultants. The ERP members have authority to request meetingswith any parties thev deem necessary to effectively conduct their work. They would also be provided with full access to all data bases and sites in the project area to facilitate their work.
4. Key Tasks. The ERP would undertakethe following key tasks:
(a) Review implementationof the environmentalmitigation plan for the Project;
(b) Review implementationof the environmentalmonitoring plan for the Project;
(c) Review implementationof the ResettlementAction Plan for the Project;
(d) Review the activities of the Project InformationCenter;
(e) Identify actions and srudies which should be undertakento support the objectives of the environmental,resettlement and public informationobjectives of the Project; ANNEX4.5 -113- Page 2 of 2
(t) Provide advice and guidance for addressing unanticipatedenvironmental and resettlementaspects of the Project which may arise during the implementationphase; and
(g) Be available, at the request of WAPDA, to review terms of reference for environmentaland resectlementactivities to be supportedunder the Project.
5. Supervision. The ERP would work as an independentgroup and provide its comments and recommendationsdirectly to the Chairman of WAPDA. Administrativeand logisticalsupport for the ERP would be provided bv the GBHP and the Project Director would assign a senior staff member to serve as the regrularconta.ct point within WAPDA.
6. Schedule. It is anticipatedthat appointmentsof the members of the ERP would be made by WAPDA. follov.ingcorsultation with the Bank, by January 31, 1995.
7. Reporting. The ERP, under the leadershipot the chairman, would prepare a report of its finding'sfor each review. A detailed briefing would be given to WAPDA and other concerned parties at the end of each review. These reports would provide an overview of the status of environmentand resettlement issues, identify issues which need to be addressed, and make recommendationsfor further actions. The panel would prepare for each review visit a report which would be prepared and signed by all ERP members before they leave. The review report would normally cover, but not be limited to, the following:
(a) Status of environmentaland resettlement issues;
(b) Review of PIC operations;
(c) Action taken on previous recommendations;
(d) Issues which need to be addressed:
- Identified by the ERP;
Identified by WAPDA/GBHP;
Identitied by EnvironmentalCell, Social Science Unit, Project Information Center;
Identifiedby the MonitoringConsultants, GBDO, etc.;
- Identifiedby affected parties and local nongovernmentalorganizations.
(e) Results and implicationsof monitoring programs; and
(t) ERP recommendationson specific issues and actions which should be taken. PAKISTAN Ghazi Barotha Hydropower Project TOTAL PROJECTCOSTS by Contract Packages US$ Million
Base Cost + Contract Package /a Base Cost Physical Contingencies Physical Contingencies Price Contingencies Total Project Cost Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total
A. Land Acquisition 36.95 - 36.95 1.85 - 1.85 38.80 - 38.80 3.00 - 3.00 41.80 - 41.80 B. Relocationand Resettlement 51.61 0.23 51.84 2.58 0.01 2.59 54.19 0.24 54.43 5.71 0.01 5.72 59.90 0.25 60.15 C. PreparatoryWorks 17.95 11.97 29.92 0.90 0.60 1.50 18.85 12.57 31.42 1.72 0.30 2.02 20.57 12.87 33.44 D. Civil Works C-01 Barrage and ancilliaryworks 51.00 119.00 170.00 7.65 17.85 25.50 58.65 136.85 195.50 9.09 10.07 19.16 67.74 146.92 214.66 C-02 Powerchannelandancilliaryworks 87.00 203.00 290.00 13.05 30.45 43.50 100.05 233.45 333.50 15.51 17.18 32.69 115.56 250.63 366.19 C-03 Powercomplex and ancilliary works 113.97 265.94 379.91 17.10 39.89 56.99 131.07 305.83 436.90 22.86 27.46 50.32 153.93 333.29 487.22 Subtotal Civil Works 251.97 587.94 839.91 37.80 88.19 125.99 289.77 676.13 965.90 47.46 54.71 102.17 337.23 730.84 1,068.07 E. Mech & ElectricalWorks ME-01 Turbines and auxiliares 13.69 78.51 92.20 0.68 3.93 4.61 14.37 82.44 96.81 2.48 7.33 9.81 16.85 89.77 106.62 ME-02 Generatorsand auxiliaries 16.75 96.05 112.80 0.84 4.80 5.64 17.59 100.85 118.44 3.03 8.97 12.00 20.62 109.82 130.44 ME-03 Transformers and reactors 5.18 23.86 29.04 0.26 1.19 1.45 5.44 25.05 30.49 0.94 2.25 3.19 6.38 27.30 33.68 ME-04 Cranes 1.24 7.96 9.20 0.06 0.40 0.46 1.30 8.36 9.66 0.21 0.65 0.86 1 51 9.01 10.52 ME-05 HV switchgear, control and protection 7.40 49.86 57.26 0.37 2.49 2.86 7.77 52.35 60.12 1.31 4.41 5.72 9.08 56.76 65.84 ME-06MVand LVswitchgear 2.70 2.10 4.80 0.14 0.11 0.24 2.84 2.21 5.04 0.48 0.18 0.65 3.31 2.38 5.69 ME-07 Elevators 0.04 0.57 0.61 0.00 0.03 0.03 0.04 0.60 0.64 0.01 0.06 0.07 0.05 0.66 0.71 ME-08 Diesel generating standby sets 0.59 0.61 1.20 0.03 0.03 0.06 0.62 0.64 1.26 0.10 0.05 0.15 0.72 0.69 1.41 ME-09 Gate equipment 21.12 17.59 38.71 1.06 0.88 1.94 22.18 18.47 40.65 3.65 1.51 5.16 25.83 19.98 45.81 - ME-10 Generator isolated phase bus 0.32 2.16 2.48 0.02 0.11 0.12 0.34 2.27 2.60 0.06 0.20 0.27 0.40 2.47 2.87 ME-1 Switchyard steel structures and powe 1.77 0.75 2.52 0.18 0.08 0.25 1.95 0.83 2.77 0.31 0.08 0.39 2.26 0.90 3.16 ME-12 Cables and accessores 0.20 2.28 2.48 0.02 0.23 0.25 0.22 2.51 2.73 0.04 0.23 0.27 0.26 2.74 3.00 ME-13 Miscellaneouspowerplant auxiliaries 1.17 6.59 7.76 0.12 0.66 0.78 1.29 7.25 8.54 0.24 0.75 0.99 1.53 8.00 9.53 ME-14 Control, SCADA, and telecom equipm 0.96 14.27 15.23 0.10 1.43 1.52 1 06 15.70 16.75 0.20 1.59 1.80 1.26 17.29 18.55 ME-15 Transmission line 14.45 55.05 69.50 2.17 8.26 10.43 16.62 63.31 79.93 2.93 5.83 8.77 19.55 69.14 88.69 Subtotal Mech & Electrical Works 87.58 358.21 445.79 6.03 24.61 30.64 93.61 382.82 476.43 16.00 34.09 50.09 109.61 416.91 526.52 F. Engineerng and Administration 58.80 27.91 86.71 2.94 1.40 4.34 61.74 29.31 91.05 9.36 2.02 11.38 71.10 31.33 102.43 G. Taxes and Custom Duties 24.00 - 24.00 2.94 - 2.94 26.94 - 26.94 4.18 - 4.18 31.12 - 31.12 GRAND TOTAL 528.86 986.26 1,515.12 55.03 114.81 169.84 583.89 1,101.07 1,684.96 87.43 91.14 178.57 671.33 1,192.20 1,863.53
\a Totals may not add due to rounding.
F- I
0E PAKISTAN Ghazi Barotha Hydropower Project Project Costs by Years
USS Million
1995 1996 1997 1998 1999 2000 2001 2002 Total Contract Package Ia,b LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT A. Land Acquisiton 11.50 - 11.50 25.45 - 25.45 - . . . 36.95 - 36.95 B. Relocation and Resettlement 1.50 - 1.50 32.08 0.23 32.31 13.70 - 13.70 3.15 3.15 1.18 1.18 51.61 0.23 51.84 C. Preparatory Wors - - 17.95 11.97 29.92 - - - . - 17.95 11.97 29.92 D. Civil Works C-01 Sanage&anclliaryworks . - 7.65 17.85 25.50 11.73 27.37 39.10 14.79 34.51 49.30 10.20 23.80 34.00 4.08 9.52 13.60 2.55 5.95 8.50 . 51.00 119.00 170.00 C-02 Powerchannel & ancilliary - 13.05 30.45 43.50 20.01 46.69 66.70 25.23 58.87 84.10 17.40 40.60 58.00 6.96 16.24 23.20 4.35 10.15 14.50 . 87.00 203.00 290.00 C-03 Power complex& ancilliary . 4.56 10.64 15.20 22.79 53.19 75.98 34.19 79.78 113.97 22.79 53.19 75.98 17.10 39.89 56.99 6.84 15.95 22.79 5.70 13.30 19.00 113.97 265.94 379.91 Subtotal Civil Works 25.26 58.94 84.20 54.53 127.25 181.78 74.21 173.16 247.37 50.39 117.59 157.98 28.14 65.65 93.79 13.74 32.05 45.79 5.70 1330 19.00 251.97 587.94 839.91 E. Mechanical & Electrical Works ME-1 Turbines&auxiliares . 2.05 11.78 13.83 2.05 11.78 13.83 2.74 15.70 18.44 2.74 15.70 18.44 2.05 11.78 13.83 1.37 7.85 9.22 0.68 3.93 4.61 13.69 78.61 92.20 ME-2Generatorsandauxiliaies - 251 1441 16.92 2.51 14.41 16.92 3.35 19.21 22.56 3.35 19.21 22.56 2.51 14.41 16.92 1.68 9.60 11.28 0.84 4.80 5.84 16.75 96.05 112.80 ME-3 Transfomers and reactors - - . 0.78 3.58 4.36 1.55 7.16 8.71 2.07 9.55 11.62 0.52 2.38 2.90 026 1.19 1.45 - - 5.18 23.86 29.0 ME-4 Cranes . 0.12 0.80 0.92 0.12 0.80 0.92 0.50 3.18 3.68 0.43 2.79 3.22 0.06 0.40 0.46 - . 1.24 7.96 9.20 ME-S HV switchgear,control an - - - 1.85 12.46 14.31 2.22 14.96 17.18 2.22 1496 17.18 0.74 4.99 5.73 0.37 2.49 2.86 7.40 49.86 57.26 ME-6MVandLVswitchgear 0.41 031 0.72 1.08 0.84 1.92 1.08 084 1.92 0.14 010 0.24 - - - 2.70 2.10 4.80 ME-7 Elevators - 0.00 0.06 0.06 0.03 0.43 0.45 0.00 0.06 0.06 0.00 0.03 0.03 - 0.04 0.57 0.61 ME-8 Diesel generating standby . 0.06 0.06 0.12 0.41 0.43 0.84 0.09 0.09 0.18 0.03 0.03 0.06 - - 0.59 0.61 1.20 ME-s Gate equipment 2.11 1.76 3.87 3.17 2.64 5.81 6.33 5.28 11.61 6.33 5.28 11.61 2.11 1.76 3.87 1.06 0.88 1.94 - 21.12 17.59 38.71 ME-10Generatorisolatedphase - - 0.03 022 0.26 0.11 0.76 0.87 0.13 0.86 0.99 0.03 0.22 0.25 0.02 0.10 0.12 0.32 2.16 2.45 ME-1i Switchyardstlel structur . .- 1.23 0.53 1.76 0.44 0.19 0.63 009 004 0.13 - - . 1.77 0.75 2.52 ME-12Cablesandaccesornes - . 0.02 0.23 0.25 0.07 0.80 0.87 007 0.80 0.87 0.03 0.34 0.37 0.01 0.11 0.12 - 0.20 2.28 2.48 ME-13Miscetlaneouspowerplan - - . 0.23 1.32 1.55 0.76 4.28 5.04 0.06 0.33 0.39 0.06 033 0.39 006 0.33 0.39 1.17 6.59 7.76 ME-14 Control. SCADAand tele . 014 2.14 2.28 0.19 2.86 3.05 0.29 428 4.57 0.19 2.86 3.05 0.10 1.42 1.52 0.05 0.71 0.76 0.96 14.27 15.23 ME-1i Transmissionlines & sub - - . 5.78 22.02 27.30 7.22 27 53 34.75 1.44 5 51 6.95 ------14.45 55.05 69.50 SubtotalMechanical&EI ectrical 6.80 28.74 35.54 11.15 4862 59.77 25.82 95.08 120.90 27.26 106.78 134.04 1002 45.19 55.21 4.91 24.02 28.93 1.63 9.77 11.40 87.59 358.20 445.79 F. Engineering and Administrati ProjectConsulLancy 2.64 1.68 4.32 6.06 4.37 10.43 736 4.60 11.96 6.40 4.37 10.77 6.40 4.37 10.77 3.84 2.99 6.83 1.29 1.62 2.91 - - 33.99 24.00 57.99 MonitoringandotherConsull 0.40 0.90 1.30 0.24 0.48 0.72 0.48 0.95 1.43 0.48 0.95 1.43 0.24 0.24 0.48 0.07 0.24 0.31 - 014 0.14 - . 1.90 3.91 5.81 WAPDAs Engineeringand Adm 1.28 1.28 1.85 - 1.85 3.58 - 3.58 3.87 - 3.37 4.26 - 4.26 4.68 - 4.68 2.29 - 2.29 21.81 - 21.81 Studies and Field Investigafions 0.74 - 0.74 0.32 - 0.32 0.04 - 0.04 ------1.10 1.10 SubtotalEngineeringandAdm 506 2.58 7.84 8.47 4.85 13.32 11.46 5.55 17.01 10.75 5.32 16.07 10.90 4.61 15.51 859 3.23 11.82 3.58 1.76 5.34 . . 58.80 27.91 86.71 G Taxes and Customs Dubes - - - 3.60 - 3.60 5.52 - 5.52 6.96 - 6.96 4.80 - 4.80 1.92 - 1.92 1 20 - 1.20 . 24.00 - 24.00 Totai BASELINE COSTS 18.06 2.58 20.64 119.61 104.73 224.34 96.36 181.42 277.78 120.88 273.57 394.45 94.54 228.97 323.51 48.67 114.07 162.74 23.43 57.83 81.26 7.33 23.07 30.40 528.87 96.25 1515.12 PhysicalConsngences 0.90 0.13 1.03 8.77 11.13 19.90 10.68 21.91 32.59 14.64 33.47 45.11 10.92 2644 37.35 5.55 13.00 18.55 2.64 6.19 8.83 0.94 2.54 3.48 55.03 114.81 169.84 PriceContngencies 0.88 0.02 0.90 11.70 2.80 14.49 13.60 9.50 23.10 21.17 22.53 43.70 19.51 25.60 45.10 11.70 16.17 27.87 6.55 9.87 16.42 2.32 4.66 6.98 87.43 91.14 178.57 Total PROJECT COSTS 19.85 2.73 22.58 140.07 118.66 258.73 120.64 212.83 333.47 1U6.69 329.57 486.26 124.96 281.01 405.97 65.92 143.24 209.16 32.62 73.89 106.51 10.59 30.27 40.86 671.34 1192.19 1t863.53
InterestDuringConstruction 0.08 0.08 0.16 3.31 3.50 6.81 11.70 12.85 24.55 24.69 28.14 52.83 38.41 45.36 83.77 46.90 5733 104.23 50.57 63.55 114.12 - - 175.66 210.81 386.47
Total Financing Required 19.93 2.81 22.74 143.38 122.16 265.54 132.34 225.68 358.02 181.38 357.71 539.09 163.37 326.37 489.74 112.82 200.57 313.39 83.19 137.4 220.63 10.59 30.27 40.86 847.00 1,403.00 2,250.00 a\ Totals may not add due to munding. b\ -' means a costof zero; 0.00 meansa cost of less than 0.005 but more than zem.
0tE PAKISTAN Ghazi Barotha Hydrorwer Project Project Costs by Years
Rs. Million
19S5 1996 1*97 low 1999 2000 2001 2002 Total Conrct Packag to LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT LC FC TOT A LandAcqumition 357 357 789 - 789 - - 1,145 1,145 S. Relocationand Resettement 47 - 47 994 7 1.002 425 - 425 98 - N 37 - 37 1,600 7 1.607 C. PreparatoryWorks 556 371 928 - - - 556 371 323 D. Civil Works ------C-01 Barrage& andilliaryworks , 237 553 791 364 848 1.212 458 1,070 1,528 316 738 1,054 126 295 422 79 184 264 1.581 3,689 5,270 C-02 Powerchannel&ancilliary 405 944 1,349 620 1,447 2.06S 782 1,825 2,607 539 1,259 1,796 216 503 719 135 315 450 2.697 6,293 8,090 C-03Powerconplex&ancilliary 141 330 471 707 1,649 2,355 1,060 2,473 3,533 707 1,649 2,355 530 1.237 1.767 212 495 706 177 412 5SO 3,533 8,244 11,M Subtl Civil Works 783 1,827 2,610 1,691 3,945 5.635 2,301 5,368 7,660 1,562 3,645 5.207 872 2,035 2.907 426 994 1,419 177 412 580 7.311 18,226 26,037 . Mechanical& Electrical Work! - - --- ME-1 Turbines&ateliaribnes 64 365 429 64 365 429 85 487 572 85 487 572 64 365 429 42 243 286 21 122 143 424 2434 2.85S ME-2 Generatorsand auxiliaries , 78 447 525 78 447 525 104 596 699 104 596 609 78 447 525 52 298 350 26 149 175 519 2978 3S4S7 ME-3Transforniersandreactor - - 24 111 135 48 222 270 64 296 360 16 74 90 8 37 45 161 740 900 ME4 Cranes 4 25 29 4 25 29 15 99 114 13 86 100 2 12 14 -38 247 285 ME-5HVswitchgear,control anc 57 386 444 69 464 53S 69 464 533 23 155 178 11 77 89 230 1,546 1,775 ME-6MVandLV ewtchgear 13 10 22 34 26 60 34 26 60 4 3 7 84 65 14S ME-7 Elevators , 0 2 2 1 13 14 0 2 2 0 1 1 1 18 19 ME-8 Dieselgeneratirig standby 2 2 4 13 13 26 3 3 6 1 1 2 ------1S 10 37 ME-9Gateequipment 65 55 120 98 62 160 196 164 360 196 164 360 65 55 120 33 27 60 655 545 1,200 ME-10Generator iolated phase - 1 7 a 3 23 27 4 27 31 1 7 a 0 3 4 10 67 Ty ME-11 Swtchyardsteelstructur , , 38 16 55 14 6 20 3 1 4 55 23 78 ME-A2Cablesandaccesorles 1 7 8 2 25 27 2 25 27 1 11 11 0 3 4 6 71 77 ME-13Miscellaneous powerplar - - 7 41 48 24 133 156 2 10 12 2 10 12 2 10 12 36 204 241 ME-14Cortrol. SCADAandtele 4 66 71 6 89 S5 9 133 142 6 89 95 3 44 47 1 22 24 30 442 472 ME-15Transmission lines & sut 179 683 862 224 853 1,077 45 171 215 -U-- 8 1.707 2,155 Sub-oa IbMchankal&Eectrical 211 891 1,102 346 1,507 1.853 800 2,948 3,748 845 3,310 4.155 310 1,401 1,712 152 745 897 50 303 353 2.715 11,104 13,81S F. Engineering end Administrtl ------Proect Consultanry 82 52 134 188 135 323 228 143 371 198 135 334 198 135 334 119 93 212 40 50 90 1,054 744 1,796 Monitorinnand other Consuf 12 28 40 7 15 22 15 30 U 15 30 44 7 7 15 2 7 10 4 4 59 121 10 WAPDAsEngineeringandAdm 40 - 40 57 - 57 111 - 111 120 - 120 132 - 132 145 - 14 71 - 71 7S676 Studiesand Field lnvestigations 23 - 23 10 - 10 1 - I S4 - 34 SubtotalEngineerngendAdm 157 80 237 263 150 413 355 172 527 333 165 498 338 143 481 266 100 3M 111 55 166 1,823 865 2.668 G.TaxesandCustomsDuties 112 - 112 171 - 171 216 - 216 149 - 149 60 - 60 37 - 37 7U - 744 Total BASEUNECOSTS 560 80 640 3,706 3,247 6,955 2,907 5,624 6,611 3,747 8.481 12,228 2,931 7,096 10,029 1,500 3,536 5,045 726 1,793 2519 227 715 042 16.305 30,574 46,96S PhysicalContingencies 28 4 32 272 345 617 331 679 1,010 454 1,038 1,401 338 820 1.158 172 403 575 82 192 274 29 79 10S 1,706 3,559 5,265 PriceContingencies 37 2 39 685 360 1,04 856 1,061 1,916 1.424 2,313 3.737 1,379 2,536 3,915 857 1.575 2433 487 949 1,436 179 450 629 5.905 9,246 15,150 Total PROJECTCOSTS 625 86 711 4,665 3,951 8,616 4,174 7,38641153 5.625 11,U3217,457 4648 10,AU415,102 2,538 5,515 8,052 1,295 2,034 4,228 435 1,244 1,679 24.006 43,37S 7.384
InteltOurtng Constrcton 3 3 6 110 117 22? 405 445 850 886 1,010 1,896 1,429 1.687 3,116 1,806 2,207 4,013 1.999 2.519 4,518 6.637 7,S97 14,624
Total Financing Required 628 a 717 4,775 4,068 ,831 4.579 7,S00 1238 6,511 12,842 19,353 6,077 12.141 18,218 4,34 7.2 12,065 3.293 5453 8,748 435 1,244 1,679 30,643 51,365 n,oOw a%TotWs may not add due to rounding. I\ - meansa cost d zero; 0 mens a coat of less than 0.5 but more than zero
'-'cc Water and Power DevelopmentAuthority GEAZI-BAROTHAHYDROPOWER PROJECT ORGANIZATION CHART Phase - I
__ 21 TechnicalCoordination JENERLAL MANAGE __ _ - of all E & M works with G.M.(Hvdel Power
| ChiefEngineer | | Chief Engii#er | | ChiefaE=ineer | Chief Engineer l Corrtracts l l Ghazi l | Ba l |Electrical& Mechanica
Director Director Director Director Durecd | Superintending u Budget& Account Contracts- I Contracts- H Scheduling LLC & PIC Gogist Engieer a I I ~ ~~~~~~~~~~~~~~~~~~~~~~~~~(Elctical ica
Senior Dy. Director Dy. Director Dy. Director Dy. Director I Senior Dy. Director/ Dy. Director/ Budget & Accourt Contracts Contracts Sr. Agronomist Geologist Senior Engineer Senior Engineer 2 2 ~ ~ ~~~~22 1 333
Budget& ACCOUni Asstt. Director/ Asst. Direclor/ A4stt.-Director/ Asstt. Directors Cummulity Dev. Junior Asstl. Director/ Assn. Director/ | Officcr 4 Junior Engineer Junior Engineer Junior Engineer GeologistcSpeialist Junior Engineer Junior Engineer 2 ~ ~~2 42Soilgs23
I Sentor L | AssU.Director PublicRelation DY.Director Asstt. Director Bud et & Account |(P/SA) , r I r I Officer (Admn.) Adinistrtion ff,er PAKISTAN GHAZI BAROTHA HYDROPOWER PROJECT PROJECT IMPLEMENTATION SCHEDULE
1994 11996 1996 11997 1999 1999 2000 12001 ID TaskNunH Q I Q2TQ31q41Q1Q2lQ3lQ41Q1 IQ2lQ31Q41Q1 Q2lQ3lQ4lQl 92lQ3lQ4 01 0IQ2Q3Q41Q1 0Q21Q3IQ41Q IQ2 1 Land Acquisition
2 Notfation of Section 5 |
3 Declarationof Section 6
4 Formationof LVC's
5 Awards notified - Section 11
6 Compensation:Cash + CertificatesAwarded
7 WAPDA takes possessionof land
S Relocation and Resettlement
9 Appointment of Project NGO & Training . . , .
10 Appointment of Monitoring Consulbnt
11 Appointment of EnvironmentalPOE (ERP)
12 Replacementand Relocationof ExdstingInfrastructu 13 Pehur Intake - 14 All other - g 16 Infrastructurefor Resettlenent Vllages_
16 Housing Construction Barotha
17 Housing Construction Ghazi, Banda Feroze
1S Developmentof Spoil Banks and Resettlement _ | 19 Construction of Pilot Fams on Spoil Banks - - m 23 Relocationof Graves and Mosques - 24 Protection/Salvageof Culural Properties m ------
26 Establishmentof Project InformationCentre
26 IntegratedRegional developmentProgramme:
27 Plan Preparation& Review
28 Plan Impemeiont-
2S ProratWorks 0
30 Colonies, Offices, and Laboraty X s
C: WINPROJ\GHAZIlZOUBEIDAMSARlZOU1A.MPP as of 6/27/95, 3:23 PM iiIIffIiliiiiJ ~~~~~~~~~~~~~~~~~~~'U0V u 1:~~~~~~ 13 C 111
IIjI *:°F I
C,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'o
0 C
-U~~~~~~~~~~~~~~~~~~~~~~~~~~~~s)
z.5 -611-
...... W
>o iz -- I.
0
v Jo z 95,c -6T1- Z'S 5ONNV -120- ANNEX 5.2 Paqe 3 of 4
a
C-
"a a ...... a ...... " a N~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4
^ N C~ al
a C.)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C n o_ CL a ...... :. a l CDa4a )
~~wa a~~~~
z0j a 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~04
a~~~~~~~~~a9 C., c CL, F- L L 0~~~~~'
ct o 0 1| ZO IIUWL
'A LU~~~~~~~~~~~~~~~~~~~UL zAC - 1, 0 0 ui EL ~~~~~~~~~~~~~~~~~~~~~;~~~a) 0 1 PAKISTAN GHAZIBAROTHA HYDROPOWER PROJECT PROJECTIMPLEMENTATION SCHEDULE 1994 11996 1994 1997 11998 1999 2000 12001 ID TaskName Q11020Q304010IQ2lQ3lQ40Q1IQ20Q31040Q1IQ2lQ3104010IQ2lQ3lQ401QQ020Q30Q41010Q20Q31040Q1IQ2 . Evaluationof Tenders,approval & award: 90 ME-04,ME-09 93 ME-01,ME-02 96 ME-03,ME-10, ME-11, ME-15 99 ME-05,ME-12, ME-13 102 ME-06,ME-08 106 ME-14 103 ME-7 111 M&EContracts: Supply& Installation Design/Manufacture, SupplyAlnstallation
112 ME-1 Turbines & audliaries ...... 116 ME-2Generators and awdliaries 118 ME-3Transformers and reactors
121 ME-4Cranes "I* _ H 124 ME-5HV switchgear,control and protection equipm, 127 ME-6MV andLV switchgear 130 ME-7Elevators 133 ME-8Diesel generating standby sets
136 ME-9 Gate equipmenr't ...... 139 ME-10 Generatorisolated phase bus 142 ME-1I Switchyardsteel structures and powerhouse 145 ME-12 Cablesand accesories 148 ME-13Miscellaneous powerplant auxilliaries 161 ME-14 Control,SCADA and telecom equipment 164 ME-I5 Transmissionlines & substations 167 Test/Conisffsloning .
0
C:AWINPR0JNGHAZI\ZOUBEIDA\SAR\IZOUIA.MPP,s of: 6/27/95 ,3:23 PM PAKISTAN Ghazi-Barotha Hydropower Proiect Estimated Procurement Schedule
Submission Bid Approval Award Completion Name Contract Amount Contract Packages Bid Does or Bid Docs Release of Bids Evaluation of of of or USSM Completed to Bank /a Approval Bid Does Opening to Bank/i Contracts Contract Works Fin. Agen. Local Foreign Total
R PARATORY WORKS Powcr Channel Colony Aug-94 Aug-94 Sep-94 Sep-94 Apr-95 Jun-95 Jun-95 Jun-95 Jun-95 WAPDA Power Complex Colony Aug-94 Aug-94 Sep-94 Sep-94 Apr-95 Jun-95 Jun-95 Jun-95 Jun-95 WAPDA 9 Access Roads Aug-94 Aug-94 Sep-94 Sep- 4 Apr-95 Jun-95 Jun-95 Jun-95 Dec-95 WAPDA Resettement Vilages Oct-94 Oct-94 Feb-95 -- Feb-95 Feb-95 Dec-95 WAPDA
CIVIL WORKS CONTRACTS Baffage and ancllary works - C-01 May-94 Jun-94 Jul-94 Aug-94 May-95 Jul-95 Aug-95 Nov-95 Jan-00 ADB Power channel and ancl'ary works - C-02 May-94 Jun-94 Jul-94 Aug-94 May-95 Jul-95 Aug-95 Nov-95 Jan-00 IBRD Power complex and ancilary works - C-03 May-94 Jun-94 Jul-94 Aug-94 Dec-95 Feb-95 Mar-96 Apr-96 Jun-01 IBRD/OECF Penstock (nominated subcontractor for C-03) Dec-95 _ _ Jan-96 Apr-96 - Aug-96 Sep-96 Jan-00 KfW
CHANICAL & ELECTRICAL EQUIPMENT N) 9 5 ME-l Turbines and auxiliaries Jan-95 Apr-95 Sep- Jan-96 Apr-96 - Aug-96 Sep-96 Jun-01 KIfW/OECF ME-2 Generators and auxiiazies Jan-95 Apr-95 Sep-95 Jan-96 Apr-96 Aug-96 Sep-96 Jun-01 OECF ME-3 Transformers and reactors May-96 - - Sep-96 Jan-97 _ Jun-97 Jul-97 Sep-00 KfW 9 5 -E4 Cranes Mar-95 Jun-96 Jui-95 Sep- Jan-96 Jul-96 Aug-96 Apr-96 Mar-00 ADB ME-5 IHV swhchgear, contol & protection equip. Mar-96 May-96 Jul-96 Jul-96 Dec-96 Mar-97 Apr-97 May-97 Mar-00 EIB 9 6 ME-6 MV and LV switchgear May-96 -- - Sep- Jan-97 - Jun-97 Jul-97 Jan-00 KfW 7 ME-7 Elevators Jun-96 Jul-96 Aug-96 Sep-96 Jan-97 Jun-97 Aug-97 Sep-9 Jan-00 WAPDA ME-8 Diesel generating standby sets May-96 - - Sep-96 Jan-97 -- Jun-97 Jui-97 Jan-00 KfW ME-9 Gate equipment Jan-95 Apr-95 May-95 May-95 Aug-95 Dec-95 Nov-96 Mar-96 Jan-00 ADB 9 6 ME-10 Generator isolated phase bus May-96 Sep- Jan-97 - Jun-97 Jul-97 Scp-00 KfW1 ME- II Switchyard steel structures and powerhouse take-off masts Aug-96 Sep-96 Oct-96 Nov-96 Feb-97 Jul-97 Aug-97 Sep-97 Sep-00 WAPDA 9 6 ME-12 Cables and accessries May-96 _ Sep- Jan-97 Jun-97 Jul-97 Mar-00 KfW 9 6 ME-13 Miscellancous powerplant auxiliaries May-96 Sep- Jan-97 _ Jun-97 Jul-97 Feb-00 K1W ME-14 Control & instrumentation, SCADA and tcleconumunication equipment Jan-96 Feb-96 Mar-96 Apr-96 Aug-96 Dec-96 Feb-97 Mar-97 Dec-00 Kf(W 6 -15 Transmismon Sep-9 1 Jan-97 Jun-97 -- Aug-97 Sep-97 Jan-00 ADBIDBI
/a for the packages to be funded by the Bank. /b as per WAPDA communicaton of November 24, 1995, and in order to comply with KfWs request, ME-3, ME-6, ME-8, ME-I0, ME-12 and ME-13, to be funded by KfW, will be combined and procured as one package ME-3.
isu -123-
ANNEX 5.4 Page 1 of 1
PAKISTAN
Ghazi-Barotha Hydropower Proiect
Estimated Schedule of Disbursements (US$ million)
Bank Fiscal Year Disbursements Cumulative and Semester in Semester Disbursements Cumulative %
1996 December 31, 1995 ------June 30, 1996 33.2 33.2 9.5
1997 December 31, 1996 32.0 65.2 18.6 June 30, 1997 42.6 107.8 30.8
1998 December 31, 1997 39.3 147.10 42.0 June 30, 1998 64.2 211.30 60.3
1999 December 31, 1998 38.6 249.9 71.4 June 30, 1999 31.4 281.3 80.3
2000 December 31, 1999 28.1 309.4 88.4 June 30, 2000 12.8 322.2 92.0
2001 December 31, 2000 10.5 332.7 95.0 June 30, 2001 9.0 341.7 97.5
2002 December 31, 2001 5.1 346.8 99.0 June 30, 2002 3.2 350.0 100.0 -124- ANNEX 5.5 Page 1 of 2
PAKISTAN
Ghazi-Barotha Hydropower Proiect
Supervision Plan
1. The supervision is expected to require about 20-25 staff weeks per fiscal year during the first three years of implementation, and 15 staff weeks per year thereafter. The schedule below is in addition to the regular review requirements for procurement actions, progress reports and correspondence, estimated to be about 9 staff weeks per year in the first two years, and 7 staff weeks per year thereafter.
ARproximate Activity ExDected Skill Requirement Staff Date Weeks
12/95 Supervision Mission Engineer, Environment and Resettlement 8 (Project Startup) Specialist, Disbursement Specialist, Financial Analyst, Economist, Lawyer
3/96 Supervision Mission Engineer, Dam Specialist, Environment 8 and Resettlement Specialist, Financial Analyst, Lawyer
7/96 Supervision Mission Engineer, Environment and Resettlement 8 Specialist, Disbursement Specialist, Financial Analyst, Economist
12/96 Supervision Mission Engineer, Environment and Resettlement 8 Specialist, Dam Specialist, Financial Analyst, Economist
3/97 Supervision Mission Engineer, Procurement Specialist, 8 Financial Analyst, Economist
9/97 Supervision Mission Engineer, Financial Analyst 6
2/ 98 Supervision Mission Engineer, Financial Analyst 6
6/98 Supervision Mission Engineer, Procurement Specialist, 6 (Mid-term Review) Disbursement Specialist, Financial Analyst, Economist, Environment and Resettlement Specialist -125- ANNEX 5.5 Page 2 of 2
3/99 Supervision Mission Engineer, Resettlement Specialist, 6 Economist, Financial Analyst
9/99 Supervision Mission Engineer, Procurement Specialist, 6 Financial Analyst
2/00 Supervision Mission Engineer, Dam Specialist, Financial 6 Analyst
9/00 Supervision Mission Engineer, Resettlement Specialist, 6 Economist, Financial Analyst
2/01 Supervision Mission Engineer, Procurement Specialist, 6 Financial Analyst
9/01 Supervision Mission Engineer, Dan Specialist, Financial 6 Analyst
2/02 Supervision Mission Engineer, Resettlement Specialist, 6 Econornist, Financial Analyst
12/02 ICR Preparation Engineer, Procurement Specialist, 8 Mission Disbursement Specialist, Financial Analyst, Economist, Environment and Resettlement Specialist, Lawyer -126- ANNEX5.6 Page 1 of 3
PAKISTAN
Ghazi Barotha Hvdronower Proiect
Performance Indicators
1. Project Monitoring will focus on a series of target dates for major events in the project implementation program, as indicated in the legal agreements; in the project implementation schedule (Annex 5.2); and procurement schedule (Annex 5.3). The project progress reports to be furnished to the Bank and the main cofinanciers will include a summary of the status of all project components (sector reforms, GBHP, training, etc.), and performance indicators, actual costs incurred and revised project cost estimates, project financing arrangements, Bank loan disbursements by major categories, and WAPDA's financial statements.
2. The following indicators will be used to measure the effectiveness of project implementation and operation.
A. Power Sector Policy and Reform Component
- progress in the establishment and operation of NEPRA, and its ability to enforce regulations; * progress in the corporatization program of WAPDA to be completed by December 31, 1998; * progress in the unbundling of WAPDA; * progress in the setting up of the Ghazi-Barotha Hydropower Project entity in line with the corporatization program of WAPDA; progress in the setting up of a separate corporate Transmission and Despatch Entity (TDE), to be completed by December 31, 1998; * progress in the review of set of policies and introduction of a solicitation mechanism for private power projects; * progress in the review of package of incentives to private power investors with the objective of removing taxes and custom duties exemptions by December 31, 1996; * progress in the design of measures and their implementation to enhance resource mobilization for power projects from the domestic capital market; and * review of level of tariffs and pricing structure (ratio of tariff to LRMC; reduction in cross-subsidies among various consumers).
B. WAPDA Level Indicators
B 1. Efficiency Improvement
* review progress in the appointment of a Management Consultant to assist WAPDA in improving its managerial, operational and financial efficiency; -127- Annex5.6 Page2 of 3
* review progress in the design of the criteria and measures required to achieve these criteria; * review progress in reducing level of losses (technical and non-technical); * review progress in carrying out the DSM study and implementation of the agreed recommendations; * planned and forced outages (by classification) in Power station, and in transmission and distribution networks; * review progress in load shedding reduction; * plant and load factors and plant availability;and * quality of supply to the consumers (number of interruptions, duration classified according to causes and voltage conditions at the consumer end.).
B2. Financial Indicators
* review of financial efficiency of WAPDA, through compliance with agreed financial covenants (self-financing ratio, debt-service ratio) and review of its operating ratio; * review of effectiveness of WAPDA's commercial operations (accounts receivable as compared to the covenanted 3 months billing level for Government agencies); and * review of ability of WAPDA to pay its suppliers and contractors.
C. Proiect Level Indicators
C1. Project Implementation
* procurement actions by bid packages (bid specificafion, bid invitation, opening o bids, bid evaluation, award of contracts, and contracts signing); * mobilization of construction and other equipment and installation of the screening, batching, and the concreting plants to schedule; * control of Indus River and Diversion to schedule; * effective construction of plastic concrete diaphragm cut-off' s to schedule; * trouble free and timely excavation of foundations and dewatering of foundations for construction of the various hydraulic structures; * actual construction of the Kamra Airforce Colony to schedule and timely availability of the Kamra Complex land for construction of the Power Channel; * actual construction of the Power Channel and the cross-drainage structures to schedule; * timely procurement and installation of the safety monitoring instrumentation; * actual and trouble free construction of the earthen dykes and storage ponds embankments; * construction of the Barrage, Power Channel and Power house to schedule and meeting the Bank's dam safety requirements; * rigid Quality Control for internationally accepted standards of construction of civil works; -128- Annex5.6 Page 3 of 3
* effective and successful coordination for construction of the Barrage, Power Channel and the Power house; * physical progress according to project components and contracts (highlighting critical activities); * progress report on land acquisition and resettlement of those affected by the project; * progress report on the environmental issues connected with the project; * minutes of the meetings and reports of the International Panel of Experts (POE); * information on problems encountered during implementation (including major mishaps), and expected impact of commissioning schedule; * actual project costs and expenditures (local and foreign) and estimated remaining expenditures (local and foreign), projected on an annual basis through project completion; and * disbursements to schedule (for Bank loan and other loans).
C2. Project Operation
3 trouble free and effective operation of the Barrage Gates and stop logs; * trouble free and effective operation of the drainage system behind the Power Channel concrete lining; * trouble free and effective operation of all the Gates at all the Hydraulic structures; - trouble free and effective operation of the fuse-plug as and when necessitated during high floods; - trouble free and efficient working of the installed monitoring instrumentation; and trouble free and effective operation of the combined system with Barrage, Power channel and the Power house;
C3. Social and Environmental Indicators
* progress on the compensation and acquisition of privately owned land; * timely construction of the three model villages and other replacement housing; * progress in developing the spoil banks for irrigated agriculture; review execution and effectiveness of the IRDP programs and other compensatory activities undertaken by the GBDO, including the distribution of work permits; * progress report on environmental issues, including impacts on water compensation releases, surface and groundwater, and the ecosystem; * effective excavation of archeological sites in accordance with international standards; * relocation of two mosques and fourteen graves; * effectiveness of public safety measures along the power channel; and * minutes of the meetings and reports of the Enviromnental and Resettlement Review Panel (ERP). -129- ANNEX 6.1 Page 1 of 27
PAKISTAN
Ghazi-BarothaHvdropower Proiect
Enviromnentaland ResettlementAspects
I. INTRODUCTION
1. Incorporationof Enviromnentaland ResettlementIssues into the proposedProject. The preparation of the proposed project has includedthe direct participationof Pakistaniand foreign environmentalspecialists and social scientistsfrom the earliest stages of project developmentand it is planned that this approach would continuethroughout the implementationphase. Emphasis has been placed on early identificationof potential environmentaland social impacts at all levels of project planning. Environmentaland social considerationshave been includedin the process of evaluation investmentalternatives and selection of project layout alternativesfor the siting of the primary and secondary structures. The analysis of layout alternativeshas allowed for a significantreduction in the level of potential resettlementand archaeologicalimpacts. This process has been conductedwith regard to land acquisition,design of components,public safety and project operations. The direct participationof environmentaland social science specialistson a routine basis has enabledthe planning team to identify and avoid, or at least mitigate, the potentiallyadverse environmental,social and archaeologicaleffects which are associatedwith the project. In addition, World Bank environmentand resettlementspecialists have regularlyparticipated in project preparationmissions since the UNDP supportedfeasibility study was initiatedin 1989.
2. ApplicableReview Proceduresand Reports. The proposed project has been the subject of extensiveenvironmental, resettlement and archaeologicalstudies as mandated by the policies of the Governmentof Pakistan, and the World Bank. An environmentalassessment and complementary resettlementaction plan have been prepared for the proposed project consistent with the requirements of Government of Pakistan Ordinance XXXVII, "Controlof Pollutionand Preservationof Living Environment(December 1983)" and the applicableWorld Bank OperationalDirectives (4.01, "EnvironmentalAssessment;" 4.00, Annex B, "EnvironmentalPolicy for Dam and Reservoir Projects;" 4.30, "InvoluntaryResettlement;" and the EnviromnentalAssessment Sourcebook Update on "Cultural Heritage in EnvironmentalAssessment"). The preparationof the environmental assessmentand resettlementaction plans has been conductedby an interdisciplinaryteam of Pakistani and internationalexperts.
3. The environmentalassessment for the proposed project includes the following reports:
(a) EnvironmentalAssessment Executive Summary (1994), which presents the main findingsof the environmentaland resettlementstudies, it is available in English and Urdu;
(b) Volume 7 of the FeasibilityReport (1991), which presents the detailed results of the environmentaland social studies carried out during the feasibility studies;
(c) Report on ArchaeologicalStudies (1991), which presents the results of the survey of archaeologicaland historical sites; -130- ANNEX 6.1 Page 2 of 27
(d) Report on SupplementaryEnviromnental Studies (1992), which presents the results of the supplementarystudies undertakenduring the tender design stage
(e) Report on AdditionalSupplementary Environmental Studies (1994), which presents the results of the additionalstudies undertakenduring the preconstructionstage; and
(f) EnvironmentalAssessment of TransmissionLines (1995), which presents the results of environmentaland resettlementstudies for the proposed transmissionlines.
The ResettlementAction Plan (1994) provides a comprehensiveoverview of social conditionsin the project area and provides detailed recommendationsto address resettlementand local economic developmentin an equitable manner. The ResettlementAction Plan is available in English and Urdu. It is complementedby analysis of potential socioeconomicimpacts of the proposed project which are includedin the EnvironmentalAssessment - Main Report, a detailed land ownership survey and the recentlyprepared "IntegratedRegional Development Plan for the Ghazi-BarothaHydroelectric Power Project Area."
4. Activities of the Environmentaland ResettlementReview Panel. Consistentwith the provisionsof the World Bank OperationalDirective 4.01, "EnvironmentalAssessment," and OperationalDirective 4.00, Annex B, "EnvironmentalPolicy for Dam and Reservoir Projects," an independentEnvironmental and ResettlementPanel (ERP) was establishedfor the proposed project. This panel was composedof Professor KazuyoshiKawata, chairman and environmentalspecialist, Dr. Anis Dani, social scientist and ProfessorJanusz Kindler, water resources managementspecialist. The panel has conducteda series of field visits to the project area and conductedmeetings on-site, in Islamabadwith the Govermnentof Pakistanand in Lahore with WAPDA. It has reviewed draft reports on the environment, resettlementand archaeologicalaspects of the project, provided comments on proposed approachesto these aspects of project design and recomrnendedsupplementary studies be undertaken for a set of specific issues. It is planned that the activitiesof the panel would continue on a routine basis during the implementationand evaluationphases of the project.
5. Meetings with GovernmentAgencies, Potentially Affected Parties and Non-Governmental Organizations(NGOs). A major planning activity, importantin making the project environmentally and socially acceptable, has been early and frequent interactionswith the local people, directly and through governmentagencies. This has kept the planning team attuned to public concerns and desires, and facilitated the inclusionof the local populationin the planning process. A series of meetings were held with the civil administration;with national, provincial and district level public representatives,and with the local populationat the village level. A list of these meetings is provided in AttachmentA.
6. Separatemeetings for men and women were conductedat the village level by social scientists. Meetingswere held with representativesof Pakistaninongovernmental organizations (NGOs) includingthe World ConservationUnion' (IUCN/Pakistan),the World Wide Fund for Nature (WWF/Pakistan)and the Sungi DevelopmentFoundation, a local NGO. Experts from IUCN/Pakistan and WWF/Pakistanvisited the project area to review the scope of the proposed activities and recommendedmitigation actions and to discuss the proposed monitoringplan. Meetings have also
Formerly the International Union for Conservation of Nature and Natural Resources. -131- ANNEX 6.1 Page 3 of 27 been conducted for preparation of the Resettlement Action Plan and are being undertaken as a routine activity by the Project Information Center (see paragraph 72).
II. SETTING OF THE PROPOSED PROJECT
7. The proposed project area is immediately downstream from the Tarbela Dam on the Indus River in the Punjab and Northwest Frontier Provinces of Pakistan. The area is crossed by the historic Grand Trunk Road which links the project area to Peshawar to the West and Islamabad to the East. The project area crosses the Chhachh and Sarwala plains. The Chhachh plain, which lies between the Grand Trunk Road and the Indus river to the north, is a region that is rich in history, archaeology, and communities that for centuries have drawn their sustenance from the fertile alluvial soil. The Sarwala plain lies to the south of the Grand Trunk road and is a dry tract of land which is poor, sparsely populated and dependent on barani (rain-fed) cultivation.
8. Two other areas will also be affected by the project. The most significant of these is the broad Indus flood plain and the river bank villages on both sides of it. These villages use the river and its islands for water, fuelwood and grazing. The other area is the Gandghar mountains, which close off the Chhachh plain on its eastern side. The population of this upland and mountainous area depends on the lowlands for market, employment, and health and educational facilities. Considerable two-way traffic passes between this area and the market villages of Ghazi and Khalo.
9. From the start of the power channel to the Grand Trunk road, there are many villages, graveyards and shrines. After the Grand Trunk road, the Kamra Aeronautical Complex lies across the route of the channel. Downstream of Kamra, the land is undulating and there are few villages up to the Indus river.
10. The Indus river between Tarbela and the mouth of the Kabul river flows in a broad braided channel with a number of islands (belas) which are either temporary or permanent. Some permanent belas are flooded only very rarely and these support a vegetation of trees, shrubs and grasses. Those located near the river banks are grazed by large number of cattle, while some are cultivated.
11. The project area supports no permanent natural wetlands or open water bodies, other than seasonal pools along the Indus. There is little aquatic vegetation in these pools or in the river. The rich animal life that existed in the project area early in this century has been decimated by habitat destruction and hunting. What remains is largely limited to the wilder areas of the Kala Chitta Range (south of the project area).
12. Densities of waterfowl and other water-related birds are not large. The lack of suitable habitat and the variability of the water regime make in unlikely that the stretch of the floodplain in the braided channel zone is more than a temporary resting place for water birds on their way to the coastal wetlands. The most abundant fish in the Indus are the mahseer, chaina, rohu, thaila, and mallah, which are caught by fishermen who live on the islands for part of the year. A few families near the river fish at the subsistence level, using nets and rods.
13. The proposed project will be implemented in parts of two provinces. The barrage and the first 12 km of the power channel will be in the Northwest Frontier Province with the rest of the project in the Punjab Province. The governing authority in the project area is at the District level -132- ANNEX 6.1 Page 4 of 27 with the District Commissioner serving as the key administrative officer. At the local level, elected District and Union Councils play an important role.
14. The area is occupied by a mixture of Pathans and Punjabis. Most of the population in the project area are conservative Muslims with arranged marriages and veiling of women common. Women perform traditional household tasks of child bearing, laundry and cooking, and some income producing work such as caring for crops and livestock. There are no permanently settled indigenous (tribal) people in the project area in the sense of the Bank's definition; however, there are some transient tribal people, the Powindah or Kuchis, who summer in the Afghan highlands and winter throughout Pakistan.
15. Agriculture is the largest economic activity in the project area, employing about 56% of the male workforce. Wheat, the major crop, is planted on 55 % of the cultivated land during the Rabi season (November-March) and some is planted during the Kharif season (April-October). Most agriculture is barani (rain-fed) with about 25 % of the land under irrigation, predominantly with tubewells. Land holdings in the project area tend to be small and fragmented with about 90% of the farmers working less than 5 hectares, which is considered the minimal economic holding in Punjab.
III. ANALYSIS OF ALTERNATIVES
16. Preparation of the Environmental Assessment included an extensive analysis of alternatives which is summarized in Annex 4.2. In addition to evaluation of the "no action" alternative and other options for addressing energy demands, the consultants evaluated in detail, on the basis of field visits and consultations, a large number of alternatives for the siting of the barrage, alignment of the power channel and siting of the power complex. This process allowed for significant reductions in the potentially adverse environmental, resettlement and archaeological impacts through direct incorporation of these recommendations into the planning process for the proposed project during the lay out phase conducted in the early part of the feasibility study.
(a) No Action Alternative. The latest (1993) estimate of future power demand in Pakistan envisages an increase of nearly 6,000 MW in the peak demand by the turn of the century from the present level of around 9,000 MW. It has been projected that various measures being implemented to conserve energy may reduce the additional demand by up to 1,000 MW. At present, load shedding takes place on a large scale whenever generation from Tarbela and Mangla dams is reduced significantly. This occurs during January when the releases (which are determined by irrigation requirements) are minimal, and also in May and June when both reservoirs are drown down. Reduced load shedding occurs in the intervening period. Failure to meet this increase in demand will result in more load shedding which will disrupt manufacturing processes and commerce, and have serious consequences for national economic development.
(b) Alternative Generation Projects. In the economic assessment of the Project, alternative generation projects (thermal, nuclear and hydropower) were considered. Under all the scenarios studied, hydropower has been shown to be the most attractive option for meeting future demand. With Ghazi-Barotha included in the list of candidate plants, it was selected immediately. From an environmental and resettlement perspective, Ghazi-Barotha was extremely favorable due to the minimal and manageable nature of potential environmental, resettlement and archaeological impacts when compared with other potential investments given -133- ANNEX 6.1 Page 5 of 27
its unique design and flexibility in layout options which allowed for minimization of potential impacts. The use of small-scale hydropower had been previously reviewed by WAPDA and determined to provide 70 MW so that it was viewed as a complementary rather than alternative investment option.
(c) Barrage Alternatives. Five barrage sites were identified in the reach of the Indus river between 7 and 12 km downstream of Tarbela. Of these, two sites, A and C, were selected for detailed study. Site C offered the advantage of greater storage capacity, whereas Site A was preferable on environmental grounds. An independent study by the World Conservation Union (IUCN/Pakistan) confirmed the choice of Site A.
(d) Power Channel Alternative. Alternative designs studied for the power channel included an unlined channel and twin channels. Both options would have required a substantially wider right-of-way, with greater socioeconomic impacts and construction costs. Therefore these options were discarded. The most economical alignment for the channel would have passed through several long-established villages and was considered environmentally ad socially unacceptable. Therefore, the power channel alignment was moved into higher ground in order to avoid all villages. The resulting alignment would then have passed through several graveyards, some very large. Accordingly, further modifications were made to the alignment to avoid these graveyards. As a result, the power channel alignment is largely in cut nearly 70 m cu m of surplus excavated material. Five alternative routes through the Kamra Aeronautical Complex were studied, and an acceptable alignment was selected that passes through a relatively less important part of the Complex. A number of options have been studied for disposal of the surplus spoil from required excavations. The spoil will be used for terracing of wasteland where the surface relief is very rugged and for construction of spoil banks. About 1,640 ha of land will be acquired temporarily for spoil disposal. The spoil banks will be graded, provided with tubewell irrigation and sold back to the affected farmers which would minimize the need for relocation outside the proposed project area.
(e) Power Complex Alternatives. Five potential power complex sites were initially studied, between Dakhner and the Haro River. Jaba, Dher, and Barotha sites were selected for a detailed evaluation. All three sites being comparable from environmental impact considerations, Barotha was selected as it offered the most favorable topography. Various alternatives were studied for headpond sites and embankment alignments. The selected alternative requires more land, all of it barani and pasture land with no habitations, but significantly increases peaking capacity and also utilizes more of the surplus material from the required excavations. Two tailrace alignments were considered, north and south of Barotha village. The latter has been selected because it uses the additional fall in the Indus and results in less spoil. Following review of several alternative routes, the route adopted for the 7 km access road from Haji Shah to the power complex follows an existing dirt road which would be upgraded and widened. Various alternative routes for the 500 kV transmission links were studied. The routes selected have minimal environmental, social and archaeological impact. During detailed design, the alignment and tower locations will be fixed so as to provide specified clearances from villages and houses, to have a minimum impact on trees and agriculture, and to avoid archaeological sites. -134- ANNEX 6.1 Page 6 of 27
IV. POTENTIALIMPACTS FROM THE PROPOSEDPROJECT
17. The main anticipateddirect impactsfrom the proposed project are associatedwith the constructionand operation of the three major project elements: (a) a barrage and its pond near the village of Ghazi; (b) a power channel running between the barrage and the power complex; and (c) a power complex at Barotha. Secondaryimpacts would be associatedwith constructionof transmission lines. Indirect impactswill be primarily social, relating to the changes in the local economy as a result of the project and the settlementof a limitednumber of new residents with different social traditions, especiallynear the power complex. A summaryof the potentialimpacts is provided in AttachmentB.
A. Effects of the Barrage and Pond
18. Implementationof this element of the proposed project would result in the conversion of a currently braided stretch of river bed into a pool with a fluctuatinglevel covering about 1000 ha and an additional 140 ha for the barrage. An additional35-40 ha would be required for the construction work area. All burrow material will be obtained locally and all spoil used in the construction program. It is anticipatedthat secondaryland use impactswould occur due to commercial developmenton both sides of the barrage road which will cross the river and especially in the Ghazi- Khalo area.
19. The flow in the Indus river down to the confluencewith the Kabul river is controlledby the Tarbela darn. The main effect of the barrage will be to partly redirect this flow into the power channelfor non-consumptiveuse. During the high-flowseason, the river will receive the major portion of the release from Tarbela. During periods of low flow, the river downstreamof the barrage will be fed by compensationreleases at the barrage with a minimum compensationflow of 28 cumecs. When data from the water quality monitoringprogram indicatesthe need for more flow, it will be released from the barrage.
20. Downstreamof the barrage, the Indus water is used to provide an estimated 10% of the consumptivewater demands of 15 riverside villages, principallyfor watering livestock, washing and as receiving waters for sewagefrom settlements. Little water is taken for irrigation or drinking due to the use of wells and tubewells. Flood reductionswould adversely affect about 80 ha of recession agriculture in Malla and Noor Malli; however, this could be addressedby the project providing tubewells for these areas. In the hotter monthsdry season pools are used for bathing by a small percentageof the population. Adequate compensationwater for these purposes will be provided downstreamof the barrage through releases from the barrage supplementedby the provision of tubewellsto replace traditionalwells in selected areas. The project would support rehabilitationand upgrading of wastewatertreatment facilitiesfor the Tarbela colony and Ghazi-Khalo. In addition, releases of sewage compensationand sewage wouldbe coordinatedduring the low flow season to maximizedilution.
21. The effect of the project on flora and fauna of the riverain area will be minimal. The loss in riverain ecosystem in the barrage pond is expectedto be balanced by the developmentof aquatic ecosystemin this reach and increase in riverain ecosystemdownstream of the barrage due to reductionin flood peaks. Riverain fisheries may be affected by the reduction in dry season flows which would have an effect on part-time seasonal fishermen. With effective management,the barrage -135- ANNEX 6.1 Page 7 of 27 pool fisheries should replace this loss and provision would be made to assign fishing rights to those who have traditionally engaged in fishing in the area.
22. At present, the Indus river is eroding its banks and destroying agricultural lands of the villages on the left bank downstream of the barrage site which is a major concern of local residents. The barrage will significantly reduce this process by providing greater regulation of the flood flows and reducing peak flood events.
23. The provision of a new crossing of the Indus river over the top of the barrage, much shorter and more convenient than the crossing over the Tarbela dam, will be an important regional benefit, in addition to boosting the economy of adjacent villages.
B. Effects of Power Channel
24. The design process for the proposed project involved the extensive analysis of alternative routes for the power channel, with priority being given to minimization of potentially adverse impacts to villages, graveyards and shrines, and to archaeological sites by avoiding such features. It is anticipated that about 1,000 hectares of land would be permanently taken by the power channel and its right-of-way. Current land use in the area to be affected by the power channel is a mixture of irrigated and rain-fed agriculture, and grazing. In addition, military facilities and industries are located at the Kamra Aeronautical Complex. It is estimated that 93 % of this land is in agriculture, including pasture and fallow. The power channel does not pass through any forest reserves or natural areas.
25. While avoiding direct impacts to settlements and other features, the construction of the power channel will result in the generation of about 70 million m3 of excess spoil from excavation cuts which will require disposal. An additional 1,640 hectares will be used for the planned disposal and redevelopment of excavation spoil for agriculture. The proposed approach for the disposal of spoil has been designed to avoid excessive costs in hauling the material over long distances, while providing for an environmentally satisfactory permanent solution. Under the proposed plan, the spoil would be used for banks providing additional channel freeboard, concrete aggregates, construction of spoil banks along the power channel, terracing of wasteland, reclamation of land along the left bank of the Indus river, and filling portions of deep gullies and nullahs. The spoil banks and terraces will be leveled, covered with top soil, provided with tubewell irrigation and resold to interested affectees consistent with the provisions of the Resettlement Plan.
26. The major impact of the power channel thus centers on the land required for its construction and the disposal of excess spoil. Extensive village surveys have been carried out to ascertain the views of potential affectees. These have shown that some of the affected people would prefer to have land for land, but would not wish to move elsewhere. Since much of the land is barani (rainfed), many people would be prepared to work with less land if it were irrigated by tubewells which would allow for higher and more reliable yields from crops. Therefore, of the 2,640 ha to be acquired for the power channel and spoil banks, about 1,640 ha will be developed for irrigated agriculture and resold to the affectees.
27. The power channel will be lined and an underdrainage system will be installed which should result in seepage losses having a minimal effect on local groundwater levels. The underdrainage -136- ANNEX 6.1 Page 8 of 27 system should reduce waterloggingfrom the over applicationof irrigation water by farmers in areas along the channel. The impact of the power channel on groundwaterwould be monitored.
28. The constructionof the power channel will result in the passage of a large fast flowing channel running through an agriculturalarea. As a safety measure, chain link fencing will separate the channel from populatedareas. Other safety measures will include cattle grids to prevent livestock from wandering on to the service roads, high curbs on the channel side of the service roads to prevent traffic being driven close to the channel's edge, handrails at points of public access, and frequent floatingbooms and grab rails to assist in climbingout of the power channel. A large scale public educationprogram would also be undertakento alert residents of potential risks, actions which should be taken to avoid these risks, and recommendedprocedures to be used in emergency situations.
29. In order to minimizethe disruption of pedestrian, livestockand vehiculartraffic, the proposed project would provide for the constructionof 46 crossingsof the channel which would be somewhat closer together in the more populousupstream region. Most of these are located at the traditional crossing points.
C. Effects of Power Complex
30. Constructionof the power complexnear the village of Barotha will include: (a) headponds and their embankrnentsrequiring about 636 ha of poor, rain-fed agriculturalland and woodlandand (b) power complex structures, switchyardand tailrace which will take a further 214 ha of land. The effects of this change in land use will be mitigatedby the developmentof tubewell-irrigated agriculture on the more fertile river terraces.
31. A road bridge across the tailrace channel will ensure that the present access between Barotha village and its lands to the south of the Barotha nullah will be maintained. New roads will be constructedin this area to link the villageswith the secondary road system. In the general area of the power complex, 50 hectares of barani and grazing land would be acquirednear the Attock-Dakhner road for constructionof the power complexcolony. An additional50 hectares of similar quality land would be required for constructionof a new access road from the Attock-HajiShah road.
32. The constructionof the power complexwould result in the obstructionof flows in Barotha nullah, require restructuringof the local irrigation system and creation of two headpondswhich would provide habitat for wildlife and opportunitiesfor fishery development. The irrigated land near Barotha village, which takes its water from the small perennial flows in Barotha nullah, will have its supplies safeguarded.
D. Potential Health Effects
33. Possiblecauses of changes in the health of the local populationare the creation of the barrage pond, the headpondsat the power complex, the reductionin low-seasonflows in the Indus down to the confluencewith the Kabul river, and the high-velocityflows in the power channel. Malaria mosquitoespresently breed in pools along the Indus river bed, and in waterloggeddepressions in the Chhachhplain. The project will reduce the former and perhaps the latter. The barrage ponds and the headpondswill be poorly suited to mosquitobreeding but if this becomes a nuisance, the larvae could be dislodged by rapidly varying the water level by 0.3 to 1 m. Oriental sore could become a problem -137- ANNEX 6.1 Page 9 of 27 among the constructionworkers but can be readily controlledby destroying rodent burrows, using residual insecticides inside dwellings and other measures.
E. Archaeologicaland HistoricalSites
34. Consistent with the AntiquitiesLaw of Pakistan and the policies of the World Bank, a survey of archaeological,historical and religious sites was conductedby the Departmentof Archaeologyand Museums of the Governmentof Pakistan. This includeda review of known sites in the project area, which was complementedby a field survey of the barrage and associatedpool, the proposed alignment of the power channel (500 meters on both sides of the alignment),the power complex and proposed excavationareas for constructionmaterials. The survey identifiedfive archaeologicalsites along the proposed channel corridor. Two of these sites, Musa I and Musa III (both Buddhistperiod stupa and settlementsites) are located in the alignmentof the proposed power channel and are recommendedfor archaeologicalsalvage excavations. Musa II (Buddhistperiod stupa), Pindanwala Tibba (Buddhistperiod stupa and settlementsite) and an unnamed mound between Rumian and Dakhner (Paleolithicsite) are at risk of being indirectly affecteddue to constructionactivities in their area and precautionswould be taken to avoid their burial by the disposal of excavated soil so that they remain available for future investigations. Additionalsurveys will be conductedas part of the final planning process for access roads and transmissionlines.
F. ReligiousShrines and Relocationof Graves
35. Project implementationwill require relocationof a small mosque and 14 graves in a family cemetery near Banda Feroze. A second mosque would need to be relocated at Kamra. The mosques and graves would be moved to an adjacent locationby WAPDA after obtaininga religious pronouncementas required under Pakistanilaw. WAPDA will also notify village leaders to avoid further burials in areas which would be potentiallyaffected by the proposed project. In addition, a minor religious shrine on the right bank of the barrage pond, 1 km upstream of Galla, would be protected by an embankment.
V. RESETTLEMENTAND SOCIALISSUES
36. ConstructionPhase Employment. Implementationof the proposed project would result in large scale employmentof professional, skilledand unskilledworkers. Constructionof the barrage would take approximately51 months and require 2,500 workers with another 300 staff from WAPDA and consultantson the site. The professionalswould be housed mostly in the barrage colony. Skilled and unskilledworkers would either be provided with temporaryquarters or live at home. Constructionof the power channel is anticipatedto take approximately51 monthsand require a workforceof 2,600 workers with another 200 staff from WAPDA and consultantsat the site. The permanent colony, located at an existingWAPDA colony near Lawrencepur,will be available for housingprofessional staff; other workers would be provided temporaryhousing or live at home. The constructionphase at the power complexwould last approximately64 months and require a workforce of 2,700 with another 300 WAPDA and consultantpersonnel at the site. A new permanent colony would be developedat the eastern side of the Gariala-Dakhnerroad and would house professionals and skilled laborers. Unskilledlaborers would be either provided with temporary quarters or live at home. For all three constructionactivities, WAPDA would give preferenceto local affectees in recruiting the constructionworkforce. -138- ANNEX 6.1 Page 10 of 27
37. Operational Phase Employment. The operating staff of the barrage would number 210 persons, most of whom would be housed in existing WAPDA facilities at Tarbela. The power channel would require an operating staff of about 390 persons, most of whom would be housed in the permanent colony. The power complex would require an operating workforce of 800 persons, most of whom would be housed in the new permanent colony. WAPDA would give preference in all three locations to local affectees in recruiting the operational workforce.
38. Land Acquisition in the Project Area. Under the proposed project, land would be acquired for the following purposes: (a) permanent use for the barrage and pond which is nearly all owned by either the Government in the form of river bed or currently owned by the Government of Pakistan (1,180 ha); (b) permanent use for the power channel (1,000 ha); (c) use for spoil disposal followed by redevelopment for agricultural use (1,640 ha); (d) construction of the power complex and related facilities (900 ha); (e) for project related rights-of-way for service roads (approximately 50 ha); and additional land would be required for transmission line right-of-ways. In addition, a portion of the power channel would cross through the Karma Aeronautical Complex which is controlled by the Pakistani military.
39. The removal of these lands from their present, predominantly agricultural and grazing use will have both short-term and long-term impacts. The primary impact would be a permanent loss of agricultural production from the 1,000 ha for the power channel, 950 ha for the power complex and its associated colony, and approximately 200 ha for the barrage, roads and other facilities. Critical to mitigation of these impacts would be the successful reclamation of the 1,640 ha of land to be redeveloped for irrigated agriculture following its use for spoil disposal. Development of fisheries at the barrage pond and power complex headponds will only provide for minimal employment opportunities. The secondary effects of the removal of income-producing land will be felt by the artisans and shopkeepers in the support sector and the landless farmers and laborers who will require special assistance under the propose project.
40. Resettlement. Implementation of the proposed project would require the resettlement of 179 families with a surveyed population of 899 persons currently living at the power channel and power complex sites and the demolition of 110 private housing units and their associated buildings. As the power channel was routed to avoid villages, concentrated impacts would occur only at the village of Banda Feroze where strip development has spread settlement across the channel corridor and near Kamra where a small cluster of houses and a small mosque will need to be relocated. The remaining dwellings are scattered along the right-of-way.
41. Most resettlement will be accomplished close to the original sites of the houses. Three model villages for resettling affected families will be developed near the power channel alignment as part of the project. Compensation for immovable property will be based on replacement cost, and moving expenses will also be paid. In addition, the proposed project would fully fund the relocation and/or replacement of elements of local infrastructure including water towers, roads, agricultural buildings, tubewells, etc.
42. Barrage and Pond - Reduced Channel and Seasonal Pool Access. Construction of the barrage and pond may have some secondary social effects during the low flow season including: more difficult access to the riverfront or to large pools which could affect social gathering of women and the more restricted access to water could change social dependency relationships between village poor and those households with their own water supplies. -139- ANNEX 6.1 Page 11 of 27
43. Power Channel - Redevelopment of Spoil Banks for Agriculture. A major feature of the proposed project is the redevelopment of 1,640 ha of spoil banks for agricultural purposes. This activity would minimize the need to relocate families whose land would either be used for construction of the power channel or for use as a spoil disposal site by providing redeveloped land with tubewells in the same area. As the land would be more productive due to the provision of water for irrigation, it could support a comparable number of families on a smaller amount of land. In order to achieve this objective, great care will need to be taken in the implementation of the redevelopment program and monitoring of the performance of these areas. The project would provide support for applied research and demonstration activities concerning the use of these areas, as well as supporting proper agricultural extension services.
44. Power Complex - Possible Social Issues at Barotha. Construction of the power complex at Barotha should have a potentially beneficial social impact over the long term; however, it will be heavily affected by the project through the construction of major facilities in the village and indirectly by the development of the nearby WAPDA colony. During the construction phase, WAPDA would need to assure that adequate attention is given to controlling the collection and disposal of sewage from workers to avoid any problems with disease. In addition, action will need to be taken by WAPDA to closely supervise the contractor to avoid potential damage to non-project areas surrounding the village by controlling the location and quality of roads, closely regulating the disposal of solid and liquid wastes from the construction operation, stopping the unnecessary felling of trees, etc. Measures should also be taken to control potential problems of friction and strife between outside workers and villagers hired for the proposed project and villagers who retain their traditional way of life. It will be necessary for WAPDA social scientists to carefully monitor developments in Barotha to avoid the development of such problems.
45. Unplanned Economic Development. The river crossing provided by the barrage would result in regional road traffic and create increased business opportunities in the road junctions at Ghazi-Khalo and Topi. These opportunities will result in additional population growth to that which would be generated by the proposed project. Similar development can also be expected to occur along the Attock-Dakhner Road and in the vicinity of the new power complex colony. This growth will create additional demands on administrative and social services in these areas. It will also result in land use problems unless adequate and timely technical and planning assistance is provided for these areas.
46. Management of the "Boom and Bust" Cycle. Measures should be taken by the Government of Pakistan, in cooperation with the concerned Provincial Governments and WAPDA, to try to minimize the "boom and bust" cycle in the project area which would result from the undertaking and then completion of a major construction project. Interventions could be usefully made with regard to supporting the development of alternative sources of employment in the area which would come "on stream" following completion of the project. These could be especially useful in the effective channeling of extra income that may have been generated in the areas into productive investments which are employment-generating. Measures could also be taken in the planning process to reduce adverse effects from unplanned development in the project area. -140- ANNEX 6.1 Page 12 of 27
VI. ENVIRONMENT AND RESETTLEMENT MANAGEMENT PLAN
A. Implementation Responsibility
47. Role of WAPDA. WAPDA will have overall responsibility for implementation of the Environment and Resettlement Management Plan for the proposed Project. To ensure coordination among the different units involved in the proposed Project, an Environment and Resettlement Review Committee (EREC) will be established under the chairmanship of the Project Director. The EREC will meet periodically and its members will include the Chief of the Project Resettlement organization, the Social Science Unit, the Monitoring Consultant, a representative of each of the construction contractors and the Ghazi-Barotha Development Organization. Representatives of the Punjab and NWFP Departments of Archaeology will also be invited to attend these meetings.
48. Role of the WAPDA Environment Cell. Routine oversight for implementation of the Environment and Resettlement Plan will be the responsibility of the Environmental Cell of the Water Wing of WAPDA. This unit has been strengthened through recruitment and training. The technical divisions of WAPDA and other Government Departments, will support the work of the Environment Cell, by collecting data pertaining to such aspects as land resources, river morphology, groundwater and riverain ecosystems. The Environment Cell will be responsible for coordination of Project activities with the Pakistan Environmental Protection Agency (PEPA); Punjab Environmental Protection Agency; Punjab Department of Archaeology; NWFP Environmental Protection Agency; and the NWFP Department of Archaeology.
49. Role of the Project Resettlement Organization. The proposed Project will include the use of a Project Resettlement Organization (PRO) which will report to the Project Director and facilitate routine on-site implementation of the Environment and Resettlement Management Plan. The PRO will include a Social Sciences Unit (SSU) which will supervise resettlement activities. The SSU will ensure that the affectees, particularly women, small landowners, landless tenants and laborers, fully understand their entitlements and the procedures for compensation as provided for under the Resettlement Action Plan.
50. Role of the Monitoring Consultant. A special external Monitoring Consultant will support the Environmental Cell and the Project Resettlement Organization, as required, in monitoring the environmental and resettlement aspects of the proposed Project. The Monitoring Consultant will have full-time personnel on-site in the project area to support implementation of these activities.
51. Role of the Ghazi-Barotha Development Organization. As per the recommendation of the Environment and Resettlement Panel, implementation of the proposed project will include development and funding of a Ghazi-Barotha Development Organization (GBDO). The GBDO will undertake contacts with the local population, particularly for mattes related to land acquisition and compensation. As mandated in the Resettlement Action Plan, representatives of the GBDO will participate in Land Valuation Committee meetings to assure that proper procedures are used for land acquisition and compensation. The GBDO will also evaluate social trends, identify possible mitigation actions and consult with local organizations on their implementation. It will also receive funding to implement an Integrated Regional Development Program to support a wide-range of small- scale activities to promote "grassroot" economic and social development in the project area. -141- ANNEX 6.1 Page 13 of 27
52. Role of the Environmental and Resettlement Panel. The activities of the Environment and Resettlement Panel will be continued as an element of the mitigation, monitoring and institutional strengthening plan for the proposed project. Members of the panel will make field visits on a periodic basis and, where necessary, suggest ways of strengthening the project implementation, monitoring and evaluation process. The panel will continue to have three members with Professor Kazuyoshi Kawata continuing as the chairman.
B. Environment, Resettlement and Cultural Heritage Mitigation Actions
53. The direct participation of environmental specialists and social scientists in all stages of project preparation have allowed for mitigations to be incorporated into the proposed project at a variety of levels. Mitigation of potential adverse environmental and social impacts from the proposed project has included direct modification of the original project concept approach through changes in the siting of the components, especially the alignment of the power channel, and inclusion of specific design provisions to address these issues. There have also been a series of mitigations incorporated into the planning and design of the project as presently planned. In addition, the proposed project will include mitigation actions which will be implemented during the construction and operational phases of the proposed project to avoid or reduce impacts. The actions to be included in the Mitigation Plan are summarized in Attachment B.
C. Modification of the Project
54. Siting. In development of the proposed project, significant attention was given to analysis and selection of siting alternatives which resulted in the least possible adverse environmental and social impacts. These have included:
(a) Barrage and Pond. The decision on siting of the barrage, after review of several alternatives, was made to minimize environmental and social impacts directly from the barrage and those from the associated power channel offtake;
(b) Power Channel. The present alignment of the power channel was developed to establish a route, which despite significantly increased construction costs, will have the least adverse impact to villages, archaeological and historical sites, religious shrines and graveyards. The present alignment was developed by a team of engineers, environmental specialists and social scientists on the basis of the study of a series of alternative alignments and field surveys. The alignment was subject to numerous minor adjustments to avoid a variety of issues identified during field surveys and village level scoping sessions. Key features of the alignment include:
(i) Resettlement. Development of the alignment has reduced the number of parties who need to be resettled to a minimum and it is anticipated that resettlement can be accomplished close to the original site of the houses which will considerably reduce social impacts. It should be noted, however, that implementation of the proposed project will still require taking land for construction of the power channel which will require significant measures to address the restructuring of the agricultural system in these areas. Issues related to resettlement are discussed in more detail below; and -142- ANNEX 6.1 Page 14 of 27
(ii) Archaeological,Historical and Religious Sites. The alignment of the power channel was selected to avoid archaeologicaland historical sites, religious shrines and graveyards to the fullest extent possible. As a result, only two archaeologicalsites, Musa I and Musa III, will require salvage excavation and three sites will require precautionsto avoid accidentalburial. No religious shrines will be damagedand no major graveyard disturbed. Only one small family graveyard with 14 graves and 2 small mosques will need to be relocated. Actions to be taken to address these issues are described below; and
(iii) Kamra AeronauticalComplex. The proposed project will pass through the large Kamra AeronauticalComplex; however, extensiveanalysis of alternative alignmentsresulted in the developmentof an approach which was acceptable to Pakistanimilitary authorities; and
(c) Power Complex. Followingevaluation of a series of alternativelocations for the power complexin which environmentaland social impact considerationsplayed a role, the Barotha site was selected. As a result of a recommendationmade during the local scoping session, the name of the proposedproject was changed from Ghazi- Gariala to Ghazi-Barothato reflect this siting decision. In addition, the layout of the complex at Barotha was also adjusted, followingfield review and consultationwith local parties, to minimizepotential impacts.
D. Design Provisions
55. Movementin the Project Area. Constructionof the power channel will create a physical barrier which will require crossings if present transportationroutes are to be maintained. In addition, access needs to be maintainedbetween villages and their fields. To address this issue, the project has includeda total of 46 crossings of the power channel, most of which are located at the traditional crossing points, which should minimizethe impact of the proposed project on pedestrian, livestock and vehicular traffic.
56. Power Channel Safety. The design of the power channel includes fencing, warning signs, floatingbooms and grab rails for safety purposes. There will be floatingbooms at bridges and superpassages. Grab rails running down both sides of the channel into the water will be at 100 meter intervalsnear villages, but less frequent where the risk of falling into the channel would be less. Public education activitiesto alert residentsto the risks of the power channel and proper emergency procedures are outlinedbelow.
E. MitigationActions Incorporatedinto the Planningand Design of the Proposed Project
57. CompensationWater. On the basis of analysisperformed as part of the environmental assessment,a program has been developedto ensure that adequate compensationwater is released from the barrage during periods of low flow. These releases will maintain a base flow in the Indus river channel for maintenanceof water quality and ecology in the channel and provide adequate water suppliesfor human and livestockuse in villagesalong the river bank. The minimum compensation flow will be 28 cumecs. When data from the water qualitymonitoring program indicates the need for more flow, it will be released from the barrage. -143- ANNEX 6.1 Page 15 of 27
58. Spoil Disposal and Rehabilitation. The balancebetween excavationand fill will leave about 70 million cubic meters of surplus material. The majority of this material will be used as constructionmaterials for embankmentsand structures. About 30 million cubic meters will be placed in spoil banks to be located at identified sites along both sides of the power channel where this material will be placed, graded, covered with topsoil, provided with tubewellirrigation and returned to agriculturaluse. The redevelopmentof these areas for irrigated agriculturaluse will serve as an importantmitigation action for provision of land to parties who lost land due to constructionof the power channel.
F. MitigationActions to be Taken During ProjectImplementation
59. ResettlementAction Plan. The actions to be undertakenby WAPDA to address potential resettlementand social issues associatedwith the proposed project are provided in the Resettlement Action Plan (RAP). The RAP makes a commitmentto improve or restore the current standard of living and earning capacity of the project affected people. This policy commitmenthas been given operationalform through the developmentof entitlementpackages (Annex 6.2) which clearly identify the types of land loss or disturbance,definition of entitled person, definition of entitlement/right, additionalfacilities and services for project affectedpeople includingtraining, work opportunities, credit and provision of local infrastructure.
60. Land Acquisition- Valuationand Compensation. Project implementationwould require the acquisitionof approximately3,457 ha of land from private landowners. The implementation authority will purchase all private land for the barrage, power channel, spoil areas, power complex and supportingphysical and social infrastructure. Compensationfor land would be given at current market rates, but only after WAPDA completesa field survey to ensure that those who have made improvementsare fully compensatedeven if these improvementshave not been recorded by patwaris. Compensationpayments will be prompt and direct, they will be made directly by WAPDA to the landholders without any intermediaries. Procedureswould be adopted to allow for maximum transparency in the valuation and acquisitionprocess. Parties in the project area would be advised of the procedures which they could use if they wish to contest an assessmentof land value. In order to avoid having land out of cultivationfor an unnecessarynumber of seasons after it is purchased but before it is actually used by the project, it is proposed to lease it to the farmers for the intervening period.
61. Replacementof Lost Land for RedevelopedLand. The proposed project would use a procedure under which land will be replaced with redevelopedland in the same area to the fullest extent possible. This would reduce the potential negative aspects of the proposed project on agriculturalproduction and significantlyreduce the need for an out-of-arearesettlement program which is socially less desirableas well as costly. Redevelopedland will be resold at the same rate as that at the time of acquisition. Therefore, the farmers will be saving over half of the compensated amount, part of which will be spent on developmentof the land and part will be compensationfor loss of crops for the period of constructionand related activitiesin the area.
62. The land would be sold to affected landholdersin the village as soon as it is ready for handing over. Under the proposed project, affectedparties would have irrigated land replaced with a comparable amount of irrigated land while rain-fed land would be replaced with irrigated land at a 2:1 ratio. Tubewells would be constructedin the redevelopedareas with a normal capacity of 0.25 cusecs to provide irrigation water. The tubewells would be provided to the farmers without cost with shares -144- ANNEX 6.1 Page 16 of 27
assigned on a basis equal to their share of land commanded by the well. An agricultural extension program would be supported by the proposed project to assist in the formation of water user associations and to support the effective use of the redeveloped areas.
63. Priority would be given to implement a "pilot program" for the reclamation of spoil banks for agriculture. This would allow for detailed field testing of techniques for the cultivation of these areas and the development of practical information for agricultural extension personnel.
64. Resettlement. The 899 persons which would need to be resettled would be provided with compensation for their land consistent with the practices described above. Compensation for housing and other buildings would be according to a basic schedule developed by WAPDA based on replacement cost. This schedule would be reviewed by the GBDO to ensure that the prices would fully reflect replacement costs in the various sections of the project area. It is planned that the affected parties would be allocated plots, in the vicinity of their village, which would be a minimum of 500 square meters or double the size of the existing house plot, whichever is greater.
65. The relocation of housing sites would be coordinated with the allocation of agricultural lands to ensure these are near each other. Those villagers who wish to may relocate into either of three model villages which have been prepared by WAPDA and whose alternative sites are currently under review by WAPDA and the Bank. The project would allow for affected parties to remove the remains of their buildings to their new site free of cost. Affected families would be provided with vehicles from WAPDA/Government of Pakistan for the movement of their belongings, equipment and livestock to the location of their new settlement site.
66. Replacement of Existing Facilities and Construction of New Facilities. The proposed project would fund relocation and/or replacement of key elements of infrastructure including water towers, roads, agricultural buildings, tubewells, etc. New facilities to be supported by the project, largely identified as a result of the environmental assessment and resettlement plans include: (a) rehabilitation of sewage treatment facilities at the Tarbela Colonies and provision of such facilities at Ghazi-Khalo; and (b) a Girls Degree College for Ghazi.
67. Employment Preference. WAPDA will give priority in employment to the affectees in the construction phase and in filling opening in all job categories in the permanent operations and maintenance staff. This would be accomplished by the establishment of a work permit system under which WAPDA would distribute permits to those directly affected by loss of land and/or occupation for preferential employment. This would include tenants and field laborers who work on land acquired for the proposed project.
68. Two types of permits would be issued, one for those directly affected and a second for residents of affected villages who have suffered a partial loss. It is planned that one work permit per household would be issued which would be transferable between members of the same household. The work permit would not be treated as an employment contract but as a means for identification of those who should receive preference in recruiting employees. A provision for this employment preference process has been incorporated into the tender documents for the proposed project.
69. Integrated Regional Development Plan. The proposed project would include funding for an Integrated Regional Development Plan which would be implemented by the GBDO with the cooperation of WAPDA. The development program would be run independently of the main project -145- ANNEX 6.1 Page 17 of 27 and would seek to mobilize public and private sources of funds from within and outside Pakistan to make investmentsin the economy of the project area. The program would focus on facilitatingthe economicdevelopment of the greater project area through, for example, small-scaleinputs for developmentof farmer's marketing organizationsand small industrialestates as vehicles for development.
70. Safety Measures. A comprehensiveevaluation of dam safety issues was prepared as part of the feasibility study consistentwith the provisionsof World Bank Guidelines for Safety of Dams and Structures (OMS 3.80 and the present revised draft of OP/BP 4.37). The project design includes requirementsfor emergencyplanning, instrumentationand routine safety inspectionsduring operation. In addition, implementationof the proposed project would include adoption of the following safety measures to reduce the risks associatedwith humans and livestockfalling into the power channel: (a) a public informationprogram will be undertakento inform the public about the dangers of the channel and actions to be taken in case of accidents; (b) a special program will be developedfor children which will be presented at schools and in villages concerningthe risks of the channel; (c) physical measures will be includedin the project to keep people out of the channel; in populated areas the channel will be fenced and warning signs posted; and (d) physical measures will be adopted to get people out of the channel who have fallen in or otherwiseentered the channel; this will includethe use of floating booms and grab rails.
71. Archeological,Historical and ReligiousSites. Mitigation actions to be conductedduring the project implementationphase include: (a) salvage excavationof the Musa I and Musa III archaeologicalsites; (b) adoptionof precautionsto avoid accidentalburial of Musa II, Pindanwala Tibba and an unnamed mound between Rumianand Dakhner; (c) an agreementto be reached with the Departmentof Archaeologyand Museumsto have staff archaeologistsmake regular visits during excavation activities; (d) adoption of "chancefind procedures"to be used if archaeologically significantproperties are uncovered during the constructionactivities, which will be included as standard provisions in all constructioncontracts; (e) relocation by WAPDA two smail mosques and of 14 graves located along the power channelalignment to an adjacent location after obtaininga religious pronouncementas required under Pakistanilaw; (f) notificationof village leaders to avoid further burials in areas which would be potentiallyaffected by the proposed project; and (g) a minor shrine near Galla would be protectedby an embankment.
72. Public InformationCenter. WAPDA has establisheda Project InformationCenter (PIC) at the project site, near Ghazi for the systematicand broad disseminationof all technicalenvironmental and resettlementinformation. The PIC is also a critical part of the communicationschannel for redressinggrievances about the land acquisitionand compensationprocess. Since it was establishedin December 1994, the PIC has undertaken and active program of outreachactivities to provide informationto affected parties, local NGOs and governmnentagencies among others on the land acquisitionand compensationprocess and entitlementpackages. It has commissioneda popular film/videoon the project, includingits environmentaland resettlementsaspects. It has also prepared, with the support of translationconsultants, key documentsin Urdu, includinga schedule of public announcementof awards, Urdu translation of the EnvironmentalAssessment Executive Summary, entitlementpackages and the full ResettlementAction Plan. WAPDA is currently in the process of recruiting an expert to be contractedto serve as an advisor to the PIC. The focus of this advisor will be to assist in the preparation of written and audio/visualinformation for the PIC, support outreach -146- ANNEX 6.1 Page 18 of 27
activities for affectees and provide training for PIC staff. It is planned that the PIC would be a permanent element of the proposed Project. Two smaller subcenters are being established at Attock and Topi.
G. Elements of the Monitoring Plan
73. The monitoring program for the proposed project would be a continuous program of data collection and analysis designed to ensure the effectiveness of the Environment and Resettlement Management Plan and to bring to the attention of WAPDA management any environmental or social problems which were not identified during the project preparation process. It is planned that monitoring reports would be submitted every six months in a format and using indicators which are approved by the Bank.
74. Environmental Aspects. The following environmental aspects would be monitored under the proposed project:
(a) Land Resources. The critical areas of land resources requiring monitoring will be the spoil areas and the river banks to identify possible excessive erosion, cropping problems and failure of the land to reenter the agricultural system. Although the project is expected to have a negligible effect on the riverain morphology and ecosystem, these aspects will also be monitored.
(b) Water Resources. A regular program of water quality analysis will be conducted, in cooperation with local and regional health authorities, to ensure than compensation water releases are sufficient to maintain dry season water quality in the river downstream of the barrage. Groundwater will also be monitored. The most important issues included in the monitoring program are the groundwater recharge from the barrage pond and the land on either side of the river downstream of the barrage, changes in groundwater movement that may be caused by the power channel, and seepage from the headponds and the power channel. Moreover, the power channel underdrainage system may affect water levels in wells falling within the effective zone. All of these aspects will be monitored on a regular basis throughout the project life.
(c) Biological Resources. The ecosystem of the braided channel zone will be monitored to assess the change in plant succession. The grazing trend will also be monitored and mitigatory actions taken if deterioration of the ecosystem is observed. The monitoring program will include monitoring of fish, other aquatic species, birds and other wildlife in the barrage pond, the Indus river below Ghazi, and the headponds and adjacent habitat near the power complex.
(d) Health Effects. In conjunction with health authorities, health conditions among the permanent and temporary residents in the project area will be monitored. A special program will be established for mosquito monitoring at the barrage pond and the power complex pond. In conjunction with the PNGO, monitoring of the health of resettled individuals would be monitored. -147- ANNEX 6.1 Page 19 of 27
(e) ArchaeologicalValues. As per the recommendationof the Departmentof Archaeologyand Museums, during the excavationof the power channeltwo archaeologistsfrom the Departmentof Archaeologyand Museumswill make regularly scheduled visits to examinethe areas under excavation. In addition, WAPDA and Monitoring Consultantpersonnel will receive guidanceconcerning the monitoring of constructionsites to determineif unknown archaeologicalsites are encounteredand the appropriateprocedures to be taken if such a situation occurs.
75. ResettlementAspects. A number of resettlementaspects would be monitored under the proposed project on an active basis to ensure proper implementationof planned actions and to address unanticipatedproblems. The GBDO would monitorthe land acquisitionand compensationprocess to ensure that each landholderpromptly receives the full market value of their holding. Monitoring would be done of the process used for leasing temporaryborrow areas and assuring proper compensation,including quick payment to landholdersfor inadvertentdamage to fields and crops from constructionactivities. There would be active monitoringof the movementof families to ensure that replacementis comparableor better than that destroyed. Implementationof the project local labor hiring policy would also be monitoredto ensure that those directly affected by project activities are given priority in hiring and that labor-hiringpolices generally benefit the residents of the project area.
76. A special monitoringactivity would be conductedin the Barotha area where the power complex is to be constructed. This would includeactivities to ensure that irrigation is maintained along the nullah and that constructionactivities are avoided in this area. In addition, monitoringof the land acquisitionprocess, constructionof access roads, work sites, housingareas (temporaryand permanent), social services and sewagedisposal would take place to make certain they comply with good practices and do not contribute to the social destabilizationof the village.
H. InstitutionalStrengthening
77. The proposed project would support the developmentand strengtheningof the Environmental Cell of the Water Wing of WAPDA. This would includetraining on environmentaland resettlement issues for personnel assigned to both WAPDA headquartersin Lahore and personnelon assignmentin the project area. The establishment,with project funding, of the Ghazi-BarothaDevelopment Organizationwill also contribute to institutionalstrengthening by developmentof a "model organization"which could be copied for other major projects in Pakistanto promote social developmentin project areas.
I. Special Actions
78. The following specialactions would be includedunder the proposed Project:
* Conduct special training for WAPDA EnvironmentalCell and consultantpersonnel concernedwith environmentaland resettlementissues;
Hold Pre-Bid Conference(s)and Instructionsfor Bidders to address environmental, resettlementand archaeologicalissues; and
ContinueEnvironment and ResettlementReview Panel. -148- ANNEX 6.1 Page 20 of 27
I. Estimated Costs and ImplementationSchedule
79. Estimated Cost. The total costs for implementationof the Environmentand Resettlement ManagementPlan Mitigationand Monitoring Plans is estimatedto be US$ 182.74. In addition, the Governmentof Japan has approved a grant of approximatelyUS$ 1.20 million to assist WAPDA in implementationand supervisionof the Environmentand ResettlementManagement Plan. These costs are summarizedin AttachmentC.
80. ImplementationSchedule. The projected implementationschedule for the Environmentand ResettlementManagement Plan is provided in the implementationschedule for the overall project (Annex 4.1).
VII. SUPERVISIONAND EX-POSTEVALUATION
81. Supervision. The supervisionplan for the proposed project includes the regular participation of Bank environmentalspecialists and social scientistswho would support the task manager in overseeing environmentaland resettlementaspects of the proposed project. These specialistswould conduct supervisionmissions twice yearly to ensure that provisionsof the environmentalmitigation plan, resettlementplan and combinedenvironmental and resettlementmonitoring plan are being implementedconsistent with agreementsreached between GOP, WAPDA and the Bank.
82. Ex Post Evaluation. The project completionreport submittedto the OperationsEvaluation Departmentwill include an evaluationof: (a) environmentalaspects of the project and assessmentof their impact and the effectivenessof various types of mitigationmeasures; (b) resettlementand its impact on tne standard of living of the resettled populationand those who have land taken by the proposed project; and (c) effectivenessof the project in supportingthe developmentof a capacity within WAPDA to better manage activitieswith major environmentaland resettlementissues.
Attachments
AttachmentA Summaryof Consultationswith ConcernedGovernment Agencies, Potentially Affected Parties and Local NongovernmentalOrganizations
AttachmentB Summaryof Potential Impacts, Mitigationsand Monitoring
AttachmentC Budget for Environmentand ResettlementManagement Plan -149- ANNEX6.1 Page 21 of 27 Attachment A Summary of Consultations with Concerned Government Aeencies. Potentially Affected Parties and Local Noneovernmental Organizations
SCOPING SESSIONS VENUE DATE OTAL KEY PART:Z:IPANTS i HELD WITII PAnYICtPANTS
! Cinl Administration Committee Room. Juiy 1. 1990 I 5 Oefurv Commssironers of AbbottrilOd. GM Olfce. Tnrb-la Saoi arnd Altocs
j Cs:r.cl Council. Distu'e Council Nov. 13. 190 10 Deputy Commissioner. Aobottabad Aboottcoaa Hail Abbottabad Chairman. District Council. Abbotoabd .Counecillor. Ghan:
2. J istrict Council. District Council Nov. 14 s990 30 Deputy Commissioner. Attoclk Attock Hall. Attack Chairman. Oistrict Council. Attack |Councillors of Ghurgnusntb. Kthgwenr. Musa. Ksmra. Thikarian. Male. Shnh Oher and Rangpur
4. Local Ponulation Is- Nov. 15. 1090 27 Chairmen. Union Councils of Ghuri. (Male) Jallo Nov. 17 1990 23 Ghurgnushb. Sh-ngi. Sahadur Hasanpur Nov. 1i. 1990 43 Khan and Kamnra Mien Oh,rl Nov. 20. 1900 12 Vice Chairmen. Union Councils of Ghurghuzhii Nov. 20, 1990 54 Khagwani. Ghaz: and Rurnien. Malak Mala Nov. 21. 1990 25 Memoers. Union Counciis of Ghazi. 9hangi Nov. 24. 1990 32 Kotehra. Ce.ipur. K-mra. Salem Khln Khegweni Nov. 25. 1990 18 Village Notables and Farmers Musa Nov. 2a. 1990 29 janadur Khan Nov. 27. t900 21 Kamrr Nov. 25. 1990 21 Gha:i Nov. 29. 1990 52 Nursur Karmalia DOc. 02. 1990 43 Barotita Dec. C2. 1990 107
5. Local PooulAtion Isa Nov. 15. 1900 29 .Notable Lacies of the rea (FPemale) Julio Nov. 17 1990 J0 School Teacners |hasanpur Nov. 1i. 1990 91 Lady Doctors Ghutgnushti Nov. 20. 1090 15 Social Worrers Mien Oherl Nov. 20. 1990 *4 House*iv*s Mei k Male Nov. 21. 1990 9 School Gifts Barazai Nov. 21. 1990 '9 Wai,dad Nov. 24. 1990 15 Khagweni Nov. 25. 1990 17 Muss Nov. 25. 1990 17 Jetial Nov. 27. 1990 17 Kamre Nov. 20. 1090 23 Nursur Karmalia Dec. 02. 1990 lS Swtrosha DC CZ. 1990 12
S. Memoeri of National a Committee Room. Jan. 14. 1991 Is Memoer National Assemoly from Attack Proviicial AssembiiMm GM Office T-ro-i- M*,ner National Asermbly irom Sw-abi Members Provincial Assembly from Atlock (2) .Councillor. Ghurghusht,
7. So.aser National Committee Room. Mar. 12. 1991 5 Speaker National As-rmbly`Mermber Assembly National Assembly Nationsl Assembly from Abbotabod
A. Chief Minister. NWFP Chief Minister s Feb. 16 1992 10 Chi-f Minister. NWFP Secretariat. .Minrsteir for Finance. NWFP Peshawar Minister for Irrigation. NWFP .Chief Secretary. Govt. of NWFP.
9. International Union lor IUCN Office at Feb. 27. 1992 ° Programme Administrator Conservation of Nature Karacni and Natural ReAoursre (IUCN/P sistan)
|tO. World Wide Fund for PHC Office. L-hore May 25. i9e Dircetor. WWF. Pakistan Nature (WWF/Pakielan) Dirtctor. Land and Wildiie. WWF. USA
i t. Sung, Development Cam-diree Room. July 12. 1992 14 Chairman. Sungl Development Foundation Foundation GM Otle. Talrbela Programme Admmniisttor (tUCNlPekistani
i 2. Atlected House Owners Tarbela Ghazi Nov. 4 15 19A 25 Afetee osing housCs |Banda Fero2- A Apr 04 1994 30 A1te11es losing houcee .Berolh. lo Aff.ctees losing houses Attachment B. SUMMARY OF POTENTIAL IMPACTS, MITIGATION AND MONITORING Resource Components T Impact [ Mitigation/Enhancement | Action/Monitoring
Land Barrage * Land taking and conversion to Project structure * Land belongs to Government * Assistance from WAPDA Environmental Resources Cell (WEC) and Project Nongovernmental * Changes in land use at Ghazi - agricultural to * Planning assistance required to avoid Organization (PNGO) commercial unplanned development
Power Channel * Conversion of 867 ha of private land to Project * Fair and prompt compensation * Payments cross-checked by PNGO, with use monitoring by Project Resettlement Organization (PRO), WEC and Project Monitoring Consultants (MC)
* Taking 1,640 ha for spoil disposal * Equitable purchase/resale arrangements * Monitoring by WEC, MC and PNGO * Prompt payment * Effective rehabilitation of spoil banks for irrigated agriculture
Power Complex * Land taking and conversion of 850 ha to * Replacement with comparable irrigated land * Monitoring by WEC, MC and PNGO Project structures and 100 ha for colony and * Fair and prompt compensation access road * Measures adopted to protect irrigated agriculture in adjacent nullah
* Commercial development along Attock- * Planning assistance required to avoid * Assistance from WEC and PNGO Dakhner Road/ Haji Shah-Barotha Road unplanned development
Water Barrage and * Change of flow in Indus river * Compensation water releases at barrage to * Quarterly water sampling and analysis by LJ Resources Pond supplement seepage WAPDA Staff to regulate compensation water releases, coordinated by WEC
* Provisioni of sewage treatment facilities for * Assistance from WEC with cooperation of Ghazi-Khialo Technical Divisions of WAPDA
* Reduced flooding of recession (sailaba) * Tubewell irrigation possible, depending on * Monitoring by WEC, MC and PNGO agriculture lands downstream of barrage severity of impact
* Reduced flooding of sailaba islands downstream * No action necessary; benefits to * Overseeing by WEC with the assistance of of barrage wildlife/livestock Technical Divisions of WAPDA
Power Channel * Potential reduction in groundwater levels * Replacement wells * Collection of periodic well observation * Beneficial in waterlogged areas data by Technical Divisions of WAPDA, and coordinated by WEC
* Seepage from power channel * Reduced by reinforced lining and waterstops * Monitoring by WEC with the assistance of * Collected by underdrainage system and Technical Divisions of WAPDA rt tQ pumped back N
Power Complex * Reduced flows in Barotha Nullah * No action unless serious social effects are * Monitoring by WEC and MC N found O
* Interruption of irrigation system * Replacement of structures and provision of * Overseeing by WEC and PNGO t- -. tubewells, if required
* Reduced erosion by flood flows in smaller * No action needed, beneficial nullahs Attachment B. SUMMARY OF POTENTIAL IMPACTS, MITIGATION AND MONITORING Resource. | Components J Impact | Mitigation/Enhancement | Action/Monitoring
Biological Barrage and * Potential fishery development in pond * Management through stocking and * WAPDA on-site fisheries manager to Resources Pond controlled harvesting monitor catch statistics by total weight and * May induce change in plant succession in the individual fish size braided channel zone of Indus river * Monitoring of ecosystem by WEC
Power Channel * No significant biological impacts
* Loss of crops, orchards and trees due to land * Fair and prompt compensation * Monitoring by PRO, WEC, MC and taking PNGO
Power Complex * No significant biological impacts
* Loss of crops, orchards and trees due to land * Fair and prompt compensation * Monitoring by PRO, WEC, MC and taking PNGO
* Potential fishery development in headponds * Management through stocking and * WAPDA on-site fisheries manager to controlled harvesting monitor catch statistics by total weight and individual fish size
Social/ Barrage * Replacement of communal bathing/laundry * Seepage from barrage to maintain *nstant * PNGO to maintain communication with Cultural areas with scattered water points, depriving flow in river channel on right bank :sr leading women to evaluate need for a Resources village women of a gathering place Galla and Pontia villages meeting place and apprise WEC for necessary action
* Change in social dependency relationships due * Additional tubewell water points, if needed * PNGO should maintain contact with to more restricted access to water village poor to determine whether they have difficulty in obtaining water and apprise WEC for necessary action
* Health risk due to impoundment at barrage * Water level fluctuation to control mosquito * Monitoring by Health Department pond breeding
* Rapid population growth in Ghazi-Khalo, due * Development of a town plan for Ghazi- * PNGO to meet periodically with local to Project and river crossing; results in Khalo community leaders and administrators stressing community services and facilities, * Infrastructure development including schools, health centers, etc. sewerage and sewage treatment
Power Channel * Regional and local loss of income from 867 ha * Resettlement on spoil banks * Organized by Project field teams of agricultural land * Job opportunities to landless displaced * Monitoring by WEC, PRO, MC and persons PNGO * Project NGO to maintain contact with 1a such families and apprise WAPDA
* Temporary loss of agricultural production and * Resettlement on spoil banks * Monitoring by WEC and MC income from lands receiving spoil * Hiring of farmers on Project labour force * Assistance by PNGO for reinvestment * Investment of balance sale proceeds 0O . * Credit and self-employmentschemes t;h Attachment B. SUMMARY OF POTENTIAL IMPACTS, MITIGATION AND MONITORING
Resource Components Impact Mitigation/Enhancement Action/Monitoring
Social/ * Threat to public safety due to risk of drowning * Education programmes on dangers of * WEC to maintain contact with community Cultural channel, in schools and village meetings leaders to learn of concerns through Resources * Waming posters in schools, clinics, public PNGO cont'd buildings, and at the channel * Fencing at villages, bridges, and other places where people are near the channel * Escape assistance; handrails extending into water and floating booms
* Resettlement of 179 families with 899 surveyed * Resettlement villages with social amenities * Monitoring by WEC and assistance by inhabitants living in 110 scattered houses and infrastructure PNGO
* Disruption of archaeological sites * Salvage provided for two surveyed sites * Monitoring for unanticipated discoveries by WAPDA, salvage by Archaeology Department
* Relocation of 14 graves and one small mosque * Proper procedures would be used for * Assistance from WAPDA, monitored by relocation of graves and mosque WEC, PNGO and religious authorities
Power Complex * Loss of agricultural production due to farmers * Planning assistance to families in managing * Project field teams to monitor overall hiring on with Project; may be offset by new cash flow and altered resource base living conditions of affected families and additional income apprise WEC
* Introduction of diseases by contact with * Health checks for incoming workers * Overseeing of contractor's wastewater workers from elsewhere or from poorly treated * Careful attention to Project wastewater management practices by WEC (.0 sewage in Barotha nullah management l
* Degradation of village lands by poor * Careful auention to construction methods, * WEC to monitor local conditions construction practices chemical disposal
* Friction between outside workers (or villagers * Formal and informal meetings between * Project NGO to be alert to problems as working for the Project) and villagers following Project management staff, Project NGO and they develop and apprise WEC. No the traditional life style village leaders formal monitoring other than keeping lines * Establishing a formal grievance channel to of communication open. take care of more serious problems
* Health risk due to impoundment at barrage * Water level fluctuation to control mosquito * Monitoring by Health Department pond breeding
* 7.2 km road would improve access to Barotha * Compensation to be provided to land * WEC, PRO, PNGO, and Archaeological village and Power Complex, requires owners as in other elements of project Department acquisition of 19.8 ha of private land * Actions to control strip development measures to support safety * Archaeological survey included in fuinalizationof design. kq
* Transmission lines would require relocation of * Compensation to be provided to land * WAPDA Transmission Line Cell, WEC, NJ a number (to be determined) of houses, schools owners and parties to be relocated PRO, PNGO, Archaeological Department m E and commercial structures and other * Archaeological review activities to be O improvements to meet safety requirements included in final design process r -h W_l Attachment B. SUMMARY OF POTENTIAL IMPACTS, MITIGATION AND MONITORING
Resource I Components Impact | Mitigation/Enhancement f Action/Monitoring
Project All Components * Need for access to informationconcerning the * Project wouldsupport a Project Information * WAPDA,WEC, PRO and PNGO Area environmentaland social aspects of the Project Center (PIC) Social and Economic Resources * General Project effect on economicresources * Formationof Integrated Regional * Monitoringby WEC and PRO with the * Loss of traditionalcategories of work DevelopmentPlan (IRDP) to organize credit assistanceof PNGO and local l* Boom-bust' cycle of Project construction and self-employmentgeneration scheme; communities * Urbanization small industrialand businessgrowth; and long-termjob growth
ul
tA))
r1 a0 LrN-) -154- ANNEX6.1 Page 26 of 27 Attachnert C
SR. | COMPONENT 7OTALCOST NO. LOCA_ FOREIGN (RS M) (USSM)
71, LANOACCUISITION (Privately-owned land)
Irrigae3d (107 ha) 125.86 Barani (2.616 ha) 1550.76 Uncu.iivabie (470 ha) 92.98 Conwngency Land (264 ha) 146.39 Less resaie of land an spoil banks (1,640 ha) -845.38
Sub-Total 1071.51
2. COMPENSATION FOR PAF & PAC KAMRA INCLUDING 875.89 LAND
3. REPLAC-MENT COST OF RESIDENTIAL HOUScS
Tyoe A houses(covered area 1,213 sq m) 4.85 Type B nouses(covered area 1.012 sq m) 3.24 Type C houses(covered area 5, 90 sq m) 12.46 Type 3 houses(covered area 4.388 sq rn) 7.02
Sub-Total 27.57
4. REPLAC-ME-NT COST OF PRIVAT_LY OWNED INFRASTRUCTURE
Irrication tubewells(20) 1.40 Open wells19g) 0.35 Irrinaton watercsurses(3) 5.00 Water diversion structures(2) 0.10 Deras(23) 0.23 Cattle sned(2) 0.01 Cattle 'arm(1) 0.50 Fish 'arm(1) 0.50 Poul'ry farm(2) 1.00
Sub-Total 10.12
5. COMPENSATION FOR FARM PRODUCE
Crops 1.20 Orchards 9.10 Other trees 20.00
Sub-Total 30.30
6. RELOCATION OF COMMUNITY INFRASTRUCTURES
Relocation of graves & mosque 1.49 Relocation of water supply systern & over head tanks 6.00 Relocation of village roads 6.00
Sub-Total 13.49
7. RELOCATION OF PUBLIC INFRASTRUCTURES 271.26 0.23 ANNEX6.1 -155- Page 27 of 27 Attachment C Budget for Environmental and Resettlement Plan
SR I COMPONEN TOTAL COST NO.. LOCAL FOREIGN (RS M) (USSM)
a. RIVER CR^SSING 40.80 1.38
9. iROTECrON AGAINST RIVER EROSION 209.39
10. COST OF _RIDGES (VRB & MB) 224.31
1t. SALVAGE OF CULTURAL PROPER.. ES 2.01
12. WORKS FOR SAFETY MEASURES 128.72
13. COSTOFC.-HANN=-' AVOIDINGVILLAG-S 1864.47
14. COST OF R-SEcF LEM_ENTVILLAC-GS
Develornment of Resetlement Villages 5.79 Social innrastruc:ure for rese"tIernent villages 2.76
Sub-Total _ .55
15. COST OFP EVELOPMENT OF SPO!L BANKS 60.36
16. TRUST FUND FOR GBIDO 100.00
17. CONTRIBUTION TO INTEGRATED REGIONAL 176.00 DDEVELOPMENT PROGRAMME
18. CC-ST ASS CIATED WiTH WO RK ER M i TS 9.00
1 9. COST OF STUDIES
Integrated Regional Development Plan 2.00 Sewage and treamnent facilities fcr Ghazi-Khalo 1.00 Town p:anning for Ghazi-Khaio 2.00 Pilot prolect for spoil banks 5.00
Sub-Total 10.00
20. MONITORING COSTS
Cost of Environrmental Monitoring Cell (WAPDA) 9.00 Cost of Allied Organisations of WAPDA 3.00 Moniltonng Consultants 18.00 Visits of Environmental Review Panel 5.00 0.60 Environmental Laboratory 5.00
Sub-Total 40.00 0.60
21. WAPDA - ADMINISTRATION COSTS (3%) 155.24
22. CONTINGENCIES (5%) 266.50
TOTAL 5596.49 2.21
Note: Equivalent amount in USS is 182.74 M witPi conversion rate ol 1 USS = Rs. 31.00. PAKISTAN Ghazi-Barotha HydroDower Project Entitlement Packaees
ACTORS ADDITIONAL FACILITIES/ ACTIONS SR. TYPE OF LOSS On DEFINITION OF OEFINMTION OF ENTITLEMENT SERVICES NO. DISTLIRBANCE ENTITLED fERSON (EPS
1 Loss d pivately- owned agricultual land I. Overat management by: credit tacily I DtefminatIon d market vaue br the lend Itwough d lend I Cash cur landcompensatIon I. Access to a A. Irrigated Owner - LAC InhIne with a Land Valuation Commritbe (LVC) consIsting d: in the provided under IRP *s rocorded - AC WAPDA PNGO a - Cash compensation at lull market priorIties lied In accordance Revenue Record Repesentahres ot Et's. Impact of he Projecl. - Assklanl Commissioner JAC) ot updated through the value plus additIonal I 5% d she with the especive subdision (Charman) census survey and to valoutr oompuhsry acquiition, - be vrxied In 2 Vocational Seining and Set t schemes under IRDP - WAPDA Represantelte (Grade 19) accordance with legal - Entitled to purchase same size ol p o employment prIorlits tixed as requhramanls. on Irgaled Ipolt batns, but at baranl In Iis with - PNGO Represenrtetic rate. The dilference wl enable EPs to above. maIntain thei slandard ot living dwing Ihe acquired - Two represenlaliaes ot EPs d4 Ihe the hrensilion pelrod. 3 Licence to culliaile tm land tiMsuch time Ihatthe respecti v age. The representatlks shea be EPa losing private lend and 2. Blue _or permits (one for each EP). land Is required fr constuclion EPs -wi be noltied about nominated by other EPs losing private lend. 3. Landownrs who e lsing Ihei the data of thi requirement entie lnd and ho have no olher belore Ihe sltwrl the nesl sowing Issuance ot ordes lo, Ie lofrmration ol LVC 2 Oisuict Colliecto SoWCee1o income wilt be given period. EPs will nol be aiowed 2 to do any development on the tend green work permits. DisictAdministalion & LfI duling the license period. 3 Updaling ot Land records in esp cl o land 3. clesslicelton and ownrship as per census Project Reselltement Orginsaltlon (PRO). WAPDA 4. Assistence hI Tubwell Users Asso- SLvey al*er legal vereicatlon. catbon (TUA) formatlon and 4 Land Acquisition Cotlector (LAC) operatlon. 4 Prompt payments within stipulated peid.
Itwough crosse,l S. LAC. Comrmercial Bents & EPs S Agliculthal etenslon serwvces 5 Payment ot compensation amount lot spol banks. cheques Into eccounts f te EPS opened by mob,li commefcldt banks
6. Opening joint accounts In Ihe name ci each EP v-d 6. LAC. PRO & EPs. WAPOAbrF the amount required Iof purchase ot spoil baitk t4rd. The amount wE remain rlposit,.rl in the joint account tieit Is payable to WAPDA
V Issuance of Conpnenstbon Certilicates to EPs. I7. PRO
S Public Notice of awards to EPa to make process aS. PRO. transparent.
9. Grelanceresolutloneslating o entitlements 9. PRO. PNGO & LVC
_o. Paynt of stamP duty on purchase of lend to. Provincial Government; on spott barks by WAPDA. t not exempted WAPOA. by Provincial Governments.
II. Provision 04 the guadlenalhip certaicatle 1, minors t 1. GuardIans of mines%.LAC S prior to payment being released. PRO.
t2. Asesre payment cheque. lo womnownerea are t2. LAC. PROS CommerciletBanks. 0 m-adeout In their Ownname eanddepositeda
In theirown accounts. (L y. PAKISTAN Ghazi-Barotha Hydropower Project Entitlement Packages
SR TYPEOF LOSS OR DEFINITIONOF DEFINITIONOF ENTITLEMAENT ADDITIONALFACILITIES/ ACTIONS ACTORS NO OIS1IJAiIANCE ENtITLED SERVICES PERSON(E P)
13 Enswe vwopee coclstuction of spoIl banks,,lop .3 Contacto,. Prcoctl Consultants. sodlplacemenl. Wrading. sic. PRO& Environmental Col.
14 Layofi. dernia,ktalonand alloimoenlof plot ol .I PRO. PNGO. Emwkonrenlnal spoilbarkks. Cell& EPa.
IS5 Siting and lsinalallon o1 tubewalls. arid formation I PRO. PNGO. Emvironmenlal 0f Tubew-GUUsere, Association (TUA) Call. EPs & Provincial
Go.arnments
I6 Research Mnorapid achlevemenl ol agicullwal i.WAPDA Technical Divisions. produzctionifom spoi banks,. PicovinctalDepeilaoenls ol Agrlcullsweand PNGO.
I?7issuance of wail, permit PRO. PNGO & ConSector
I 8 Access lo training and ciedi1 It8PRO. PNGO & Commercial
B.Rean, land Owner d land I Cash curnland compensalion I Access oh cled,llacility pioviderd Actions I through tO &51o, CalegceyIA above Aclois l0, -ahous aictons astior as rocoi ded m lIhe unitaf iDP in lIn with piiorities Calegoly IA above. Revenue Rlecord - Cash compensation at lull martial iWadin accoldancewith the impact updaled thiough flr value plus additional 15% o4 the 01the Piotect census s-rvy and to value to. compulsory acquisition U be -crited in 2 Vocatiornalba-iiin and sal - acc.idairce with legal - Enhrttedto puichase hail size of plot emptomenl sche.es undie IRDP requirenrenis on erigalad spoi banks, but at balani in line wtlh plioltles kiued as above .Mle. TIre d.ltsioer wiiienable EPs to maintain the. standard 1 lIrvingduring 3 Licence l0 cuttsate the acquited thie I-iurtston pe-id 14nd lilt sucl.linra that the land ismlqulied lot consluction 2 Blue wo,i permits (One Icr each EP) EPs will Le notdliedabout the date of Ibis recuiienment 3 Land owners who we losing thew belore tire stait of the vent sowning enliC land, and who have no othe, period EPswill not be allowed sourcesat incofmewilt be geren to do any development on the land green work peimit. dur,ng the license petiod
4 Ass.tistanci TUA loimaton and operatiion
5Agricultural e,xtensionservies to, sport banks
tI. Loss cil privaely Owner of land I Cash compensation attll. maikel I Access toea credit facittly provi.ded Actions Ito S0.7to10 as lor Categoryt]A above Acdo,stot relevant actions as lo, owned as recotded in the ,ateS ptus additional t5% of lhs under PlOP in ine with priorities Category IA above uncult,neble Revenue Record value to. compi.isary acquisition fieed in accordanca with the impact land updatedIteough the of the protect. Lj census survey and to 2 Bluework permits (one tot each EP) ( be vairtiedmi 2. Vocational trawling and setl- t acoudance with legat employment schemes undw IRDP 0 ,oqiurrenrents In lin with p'lo'dles heed as above -O PAKISTAN Ghazi-Barotha Hvdropower Proiect Entitlement Packaees
SR. TYPEOF LOSS OR DEFINITIONOF DEFINITIONOF ENTITLEMENT ADDITIONALFACIUTISIs ACTIONS ACTORS NO DISTURBANCE ENlTILED SERVICES PERSON(EP)
3. Provided thi tsaptlus land bi availableon the spoi banks. owners d1 uncufivable land vv have U11tighl to purchase land on spoi banks equal o on. - quaIl of Ihe, holding of unculilvable land.
III. Loss d Shambla As ecorded n ihse I Cash compenston accordng lo he None. Aclions I o S. 7 o 9. 11. 12. 176 lo as for Aclols fore elavenl aclions as for (common) land Revenue Record she o0 owners hi Shamil. Category IA above. Clbgory IA above.
IV. Loss d crops. Land ownesAenanls/ I .Cash compensaion. as piovided under None. I. Value will be delarmined Ihroughiihe I. LAC. LVC. orchawdsand renbIesas par Revenue he Law. Land Valualion CommIlle (LVC). olh usees. Record updaled tivough census suavey 2. 11shoriletl land is culliraled. 2. It the conslaucLionschedule permils. the cullivifi, 2. PRO 6 Projecl Consullmnbs and lo be vetiied in compensalion will be paid 10 Ihe will be allowed to harvesl Ihe cops. accordance wilh legal culvealors. lequitemenls.
V Loss of Ag9iculloral Land owners/lrnenrls I Replacermnnlcost in csh None. I Value ol Ihe Icillty wdi be delminvoed I. LAC.LVC & WAPOAEngiesering kilfsukldlu-es (9e evniles as appropi.e Ih,ousghthe Land Valualion Comnmillee Division. lubewells. open (LVC) as stuclured above. vells. deras. collie sheds and Mims. lish & poulCy arms. pivalely owned i kfigalbon diversion iX stuclures. elc.)
VI Loss d esidenlial A Oer/v occupanl. I .AImen 0ola plol qual to Ihe plol on which I. Additional plows) d S00 sq m in iha I. Vaiuoalonby WAPDA Enginacring Division. I. LAC. LVC & WAPDAEngineering house. he house Is built (min. S sq in). providedlo0 e"neltllmentvlllagalo member(s) ofihe Division. p10lowner. lanly d over 25 year01 age sharing Ihe plasanl esidence, up lo a maxlmum of 2. Allolmnlol a plo d OOsq m to the 100 sq m lot each housl o b occupanl ol Ihe houibs.I dinsernl rltocalad. bom ownw. 2. Occupanl will have the ighl to sairage 2. Paynmenbs01 isbalennA Al appropflale 2 LAC. PRO & PNGO. 3. Fuereplacemninvalua lobe paid In 4 advance housing mblerialliee of cosl. rmnes.loadvance, afll foundationcompleted. alleI inlelmenbs fo bh constuclion d a walls completed and when tooing complebed. house on the abled plot paid 1othe owner 3. WAPDAwiL provide banspcrl to of Ihe house srucIure. move the lamily and 11sbelongings. 3 Evacuallon lo be compblebdprior 10requbremnl ol land 1w constuclion. I Ihe sluctlure Is nol PRO. PNGO & WAPDA 4 1 occupanl ol house is dillrenl lbom Ihe completed in lme by Ihe EP. MhenWAPDA Engineeing Division. owner ol Iho house stucure. tne will shl I the EP lo rouled accomodalion occupani wiN be aIlolbd a plt ol 500 sq mn *I EPs cost and given credil lacily lor constuction ol a house.
orI U1I%3 PAKISTAN Ghazi-Barotha HydroDower Proiect Entitlement Packages
SR. TYPE OFLOSS OR DEFINITIONOF DEFINITIONOF ENIiTLEMENT ADDITIONALFACILITIES/ ACTIONS ACTORS NO DISTULRHANCE ENTITLED SERVICES PERSON(EP)
Vil loss d publrc/ ANfsctd -sItrluon I. The Pojecl wil Ire ssponsible for None I Inswe thaIlthe euclurs afe timely telocaled to that I PRO. PNOO a WAPDA community communiy telocatton of inrastructures such as graves. conskrucliondoes not interrupt Ihe relvant srvices to FngneaerlngDivision hlb estrucltire mosques.w.te supplysystem end osarhead the communitV. tanks near Ghazi - Khaooand villageroads leading to Barolha and Dhr.
VIII. Fragmented and Persons who are losing 1. It desaed by the EP. Ihe Fesidual None Same actions as lot appropriale calegory of Aclors for relerant aclcOnsas lt pil of a conliguous ltagrn5nt ol the land will be ecqused. tend being acquired appropirsle ctegory ot tand landholding. and ihe being ocquired residual IfragmentIs smater than 2 kenal
IX Severed land Persons whose land is I As permissible unoer the Law None LAC. PROand PNGO lo assess claims ol EPs t AC. PROa PNGO seveied by Ihe Prolect
X Los0 d Land I rnancy Rights
A Legal Tenants Legal tenants in aCcord- | Rrght to parot she cash compensalion I Access Io a credt lfacilily prowided Actions I o S. 10 IS as lot Calegory IA above Aclors lo relevant actions as ance wilth updaled r Icr the land owner m accordance with the under IROP in tne with tha prioridres tor Calegory IA above Re.enue Record povrisions 01 the Law. Wild In accordance wilh the impacl of the Prolect. 2 Cash corqponsaun lot physical inest- ments n land. inctclkng crops and rees 2. Vocalonal gaining and set - I employment schemes unde IRDOP 3 Blue waori petmts (one lot each EP) In tine wilh ptorlies hxed as above
3 Provided that siaplus land rs availableon the spoil banks. itnant with a residual lenancy d less Ihan OS ha writ have the Itght to purchse tend on spoI banks equal to one-hall ol Ihe tenancy land acquIred.
B Inlormaal4tnanhs Inltoimal tenants as I Green work pesmlis I Priority access lo credrttacitily Actions 9 10.13101 as lot Category IA above. Actors for relevant actions as documeneld by the provided under IRDP. lot Category IA above. census stavey. 2 Cash cormpensalon lot physical .mesim- anIs in land. irtudrng crops and 1tees 2 Vocational gaining and sel- nmploynienl acheiwa under IHOP on priorly basis.
3 Pruvrdrrd hOalsuplus lad is avaalalk ur lIre bpul baril.ks tenalrb wIh a l ebidual tenancy 01lass lhan 0.5 ha wil have Uhe rigtrl to puwchtseLand on spoil banks qual to one -haN ot Oretenancy land
acquIred. RI
01K) PAKISTAN Ghazi-Barotha Hydropower Proiect Entitlement Packages
SR. TYPE OFLOSS OR DEFINITION OF DEFINITIONOF ENTITLEMENT ADDITIONALFACILITIES/ . ACTIONS ACTORS NO. DISTURBANCE ENTITLED SERVICES PERSON (EP)
Loss d Rental Ijaradar as per conract 1. Right lo prt d ithe payment made . Access to crdlt acilty provided Actions 1 lo S. 7 to 15 as tor Category IAabro. Aclors tor relevant actilon as Rights (11eraderi) to the landowner In accordance with under IROP In tne with thek lor Category IA above. the provislons of Ihe Law. priorities fied In accordance wilh the Impact ot the Prolect. 2. Blue work permit. 2. Vocational traiing and sel - employment schemes under IRDP In tne with priorities.
3. Provided Ihat surplus tend Is available on the spoll banks, tenants with a resIdual tenancy tess Ihen 0.5 ha will have the right to pwuchasetnd on spoil banks equal to one -halt ot the tenancy lend acquired.
Loss ot A. Permanent agrIcultlual 1. Green work permit. 1 PrIorily access to a credil tacitity I. Issuance ot green work permil. PRO. PNGO & Contractors. Employment labourer or amity provided under IRDP. labourar documented 2. Access to trainIng and credit. 2. PRO. PNGO & Commercial by census swvey. 2. Vocatonoalteining and eel - Batks. employment schemes under IRDP on priortly baste. -
S. SeasonalLabourer 1. Blue workpermit. I Access to vocallonal trainingand I. Issuance of blue work permIts. PRO. PNGO a Contrecors. sal - employment schem under IROP 2. Access to training end seE- 2 PRO. PNGO & CommercIal emnploymentschemes. Basnks.
NOTES: Holders ot green work permits wlt be gIven prIorily over those hotding blue work permits, who I lun wni hve plorIty over non-permIt holders. Holders d gren wok prmit It b paldR .500 per mon.. unit theytind wnrk tor a perlod o0 up to one year.
uthtro'
tunt ;t -161- ANNEX6.3 Page 1 of 3
PAKISTAN
Ghazi-Barotha Hydropower Proiect
Water and Power Development Authority
Review of Outstanding Resettlement Issues Related to the Tarbela Dam
Terms of Reference
1. .Introduction. The proposed independent review would be prepared to assist the Government of Pakistan to assess the current status of outstanding resettlement issues related to the Tarbela Dam Project, provide a series of recommended actions to address these issues, and develop an estimate of the costs associated with implementation of the proposed actions. It is essential that the findings of this study be widely accepted as a credible and independent assessment of the nature and magnitude of the resettlement issues associated with the Tarbela Dam Project and provide practical recommendations to address these concerns. Through this process the independent consultant, would provide WAPDA a framework to address these outstanding problems both on compassionate grounds to speedily redress legitimate grievances and to establish an improved trust of WAPDA's management of project related resettlement programs.
2. Key Tasks. The consultant would conduct, in consultation with representatives of WAPDA, concerned Provincial Governments, legal experts and affected parties, the following key tasks:
(a) Phase I - Assessment of the Situation
(i) Initial Meeting with WAPDA Executive Management. The independent consultant would meet with WAPDA Executive Management to review the major issues associated with the resettlement program for the Tarbela Dam Project.
(ii) Review Procedures Used for the Tarbela Dam Project. The independent consultant would review the procedures established for the resettlement program for the Tarbela Dam Project. They would also review the history of the resettlement program and process used for compensation of the affected parties. This would include a review of the out of area resettlement programs in both Punjab and Sind. This review would provide background for the effective review of the current situation.
(iii) Assess the Current Status of Resettlement Issues. The independent consultant would prepare an assessment of the current status of outstanding resettlement issues related to the Tarbela Dam Project. This would include an evaluation of the following issues: (a) provision of a smaller number of plots than the number of -162- ANNEX6.3 Page2 of 3
houses demolished; (b) out of area resettlement in Punjab and Sind and; and (c) outstanding legal actions against WAPA by affected parties. The independent consultant would prepare a detailed list of the key issues and identify the specific affected parties involved and the status of their claims against WAPDA.
(iv) Consult with Legal Authorities. The independent consultant would consult with various legal authorities concerning legal aspects of the procedures used for the Tarbela Dam Project and to assist in the identification of procedures which may be used to allow for the timely resolution of outstanding issues. These meetings would be documented and form part of the report for Phase I.
(v) Consult with Affected Parties. This process, especially the assessment of the current status of resettlement issues, would include meetings by the independent consultant, with a representative sample of affected parties for the independent consultant to obtain direct information concerning their views and concerns. These meetings would be documented and form part of the report for Phase I.
(b) Phase II - Recommended Actions
(i) Recommended Actions. The independent consultant would prepare a series of recommended actions which could be implemented by WAPDA, with the support of the Federal and Provincial Governments, to resolve utstanding resettlement issues associated with the Tarbela Dam Project. These recommendations should be practical, action oriented and implementable under Pakistani conditions in a timely manner.
(ii) Preliminary Cost Estimate. The independent consultant would prepare a preliminary cost estimate for implementation of the proposed actions.
(iii) Proposed Implementation Schedule. The independent consultant would prepare a proposed implementation schedule for WAPDA to undertake the recommended actions in a timely manner.
(iv) Major Briefings. The independent consultant would provide an extensive briefing on the findings and recommendations of the study to the Executive management of WAPDA. This briefing would be completed by additional briefing sessions for high level representatives of the Federal Government and concerned Provincial Governments. A series of briefings would be held with representatives of affected parties at key locations in the project area for the Tarbela Dam. These briefings would be documented and form part of the report for Phase II.
(v) Report of Findings and Recommendations. The independent consultant would prepare a statement of their findings and recommendations, in both English and Urdu, which would be distributed to the public. The PIC established for the -163- ANNEX6.3 Page 3 of 3
Ghazi-Barotha Hydropower Project would support dissemination of the findings and recommendations of the independent consultant in the Tarbela Dan Project Area.
3. Supervision. To effectively undertake this study the independent consultant would be provided support at the highest levels of the GOP, WAPDA and the concerned Provincial Governments. The Director PIC would serve as the contact point for the independent consultant within WAPDA.
4. Schedule. It is anticipated that the work of the independent consultant would be started on October 30, 1995. Phase I will e completed in a period of six weeks. The draft report under Phase II shall be submitted by the end of the following three weeks. The report shall be finalized in a period of 1-2 weeks after receipt of comments from the World Bank. The final printed copies of the English and the Urdu translation shall be submitted in 3-4 weeks thereafter. Proposals prepared by the independent consultant would form the basis for resolving the outstanding resettlement issues of the Tarbela Dam Project affectees.
5. Reports. The independent consultant would prepare two reports at intervals elaborated under schedule item no. 4 (above). The first report would provide preliminary findings based on the data collected during Phase I - Assessment of the Situation. The second report which would be prepared as a review draft and followed by a final draft, would contain the finding under Phase II - Recommended Actions.
6. Consultant Support. The independent consultant would be provided a budget to retain specialized support to conduct this study and to pay for secretarial services. A budget for printing of the reports would also be provide. PAKISTAN Ghazi-Barotha Hydropower Project Water and Power Development Authority Environment Cell Organization Chart
GENERAL WANAGER(P) JAVED SALEEN QAMAR
_ . CHIEF ENGINEER (RPO) MUHAMMAD JABDAR
DIRECMOR(maC) NUNIR AHNED CHAUIDHRV IXLZ
EHVXIQNHEHTAL ENGINEERS-2 DEPTY RIRECR-1 1. S.WALI VAMEED 1.ZAFAR HASHMAT(GOOtGIST) 2. VACANT
Jl1LQR KHKEINRZI- BESEARCH 9FFICERS-3 1. ABDUL QAYVU" 1. M. SAZED SALEENI(CHEIM) 2. M. ASIM BUTT 2. Ms. NAFFIA BUTT(CHEO) 3. ZAFA I_ _ _AL _. Ms. NASFEI BUTT(BOT)
1. SAULAT KAMAL 1. ZAHII LATIF J
LANDfRESQUBRgE51 GIS / EDHLS-] 0 1. H.D.KALIK (RO) 1.FARHAT ZAMAN(GEOLOGIST) 2.MUHAMMAD RAUZ PAKISTAN Ghazi-Barotha Hydropower Project Project Resettlement Organization Or2anization Chart
CHIEF ENGINEER& PROJECTDIRECTOR
PROJECTRESETTLEMENT ORAGNISATION WAPDARESIDENT STAFF I nSupsrintendin I Engineer(Resettnamert) AND PROJECTCONSULTANTS
ADMIN ACCOUNTS DRAWING LEGAL SOCIAl SCIENCES LAND LITIGATION ENGINERI RANCH BRANCH BRANCH BRANCH BRANCH COORDINATION BRANCH BRANCH Un Senior Social Scientist Senior Agronomist I Director DevelopmentSpecialist (F) I Field Staff (M) I Surveyors XEN Junior Field Social Scientist (F) I Patwaris LAWRENCEPUR TARBELA (M) I System Analyst (MIS) Xen I Xen I Data Entry Technidan Jr Engineer 3 Jr Engineer 3
LAND ACQUISITION LAND ACQUISITION COLLECTOR COLLECTOR
NWFP Punjab
HO Fk a1 -166- ANNEX 6.6 Page 1 of 2
PAKISTAN
Ghazi Barotha Hydropower Project
Social Science Unit
Terms of Reference l. Introduction. The Social Sciences Unit is expected to play an important role in the development of WAPDA's capacity for supervision and monitoring resettlement in its projects. It would also take n interactive role between affectees and WAPDA organizations. In order to effectively undertake the RAP, a Social Science Unit (SSU) would be established as an integral part of the management structure for the GBBP.
2. Staff Composition. The SSU would be a field based group headed by a senior social scientist and including a senior agricultural specialist and two community development specialists (male and female). The Project Director plans to appoint the team leader of this unit in a Grade- 18 position, but will consider the mission's proposal to seem a more senior social scientist. It is recommended that the senior social scientist and community development specialists be hired on long-term contracts by WAPDA while the senior agricultural specialist would be assigned from WAPDA staff. The SSU would work closely with field based representatives of the Project Information Center (PIC). WAPDA Environment Cell (Water Wing), Monitoring Consultants and the Ghazi-Barotha Development Organization (GBDO).
3. Key Tasks. The SSU would undertake, but not be limited to, the following key tasks:
(a) ensure that affectees, particularly women, small landowners, landless tenants, and laborers, fully understand their entitlements and procedures of compensation as provided under the RAP;
(b) ensure that project authorities are speedily informed of legitimate grievances of affectees with regard to implementation of the RAP;
(c) ensure that project authorities are speedily informed of adverse project impacts that were unintended or unanticipated in the RAP;
(d) ensure that both the direct affectees and the general population in the project area understand how the Integrated Regional Development Program (IRDP) would be undertaken as an additional effort to develop the area;
(e) maintain a village-level data base to record the implementation of the RAP and bring to the Project Director's attention serious and sustained deviations from the provisions of the RAP; -167- Annex 6.6 Page 2 of 2
(f) maintain a sample data base to establish the success of income restoration goals and to examine the degree to which affectees may be a dynamic advantage or disadvantage with regards to the rest of the area population;
(g) maintain a data base to examine the specific problems that women may face due to the project;
(h) provide the required level of technical assistance to farmers that is needed to assist them in avoiding income losses due to changes in land and livestock or switching from barani to irrigated farming;
(i) provide special assistance to work permit holders to obtain appropriate employment with contractors; and
(j) provide recommendations to the Project Director for resolution of all problems faced by affectees related to the above tasks.
4. Supervision. The SSU, since it needs to conduct a broad range of interactions, would report to the Project Director. Its operations would be consistent with a work plan and schedule which would be reviewed and approved by the Project Director. The SSU would be expected to closely coordinate the development of this work plan with the PIC. Administrative and logistical support for the SSU would be provided by the GBHP. -168- ANNEX 6.7 Page 1 of 7
PAKISTAN
Ghazi-Barotha Hydropower Proiect
Water and Power Development Authority
Social and Environmental and Resettlement Monitorin2
Terms of Reference for Monitoring Consultant
1. Introduction. The Ghazi Barotha Hydropower Project is a major run-of-the-river environmentally sustainable power project, designed to meet the acute shortage of power in Pakistan. The Project will utilize the fall of about 76 meters in the Indus river between the tailwaters of Tarbela Dam and the confluence of the Indus and Haro rivers. It involves construction of a barrage near Ghazi village located about 7km downstream of Tarbela Dam, to divert water into a 52 km power channel. The power channel would convey water to a power complex of 1450 MW, comprising five units each of 290 MW installed capacity near the village of Barotha to generate about 6600 GWh of energy annually. A 500 kV transmission line and related substation would connect the power complex to the Peshawar grid substation. The project location and layout plans are illustrated in drawings 1 and 2.
2. Environmental Aspects. The proposed project has been subject to the preparation of an environmental assessment consistent with the procedures of the World Bank and the requirements of the Government of Pakistan(GOP) Ordinance XXXVII, 'Control of Pollution and Preservation of Living Environment (December 1983)." The project preparation process included the adoption of a number of design modifications to mitigate potential adverse impacts through careful siting of the principal components of the project and in establishing the alignment of the power channel. Under the current project design, potential environmental impacts include: (a) changes in land use in areas acquired for construction of the barrage, reservoir, power channel and power complex; (b) reduction in the flows of a small portion of the main channel of the upper Indus River, immediately below the Tarbela dam, when the power complex is in operation; (c) impacts to two minor archaeological sites in the power channel which would be subject to salvage excavation; (d) relocation of 14 graves; (e) potential risks of persons and livestock being killed or injured if they enter or fall into the power channel; and (f) safety issues associated transmission lines. To address these issues an environmental mitigation and monitoring plan has been prepared which would be implemented by the Environmental Cell of the Water and Power Development Authority (WAPDA). An Environmental Assessment Executive Summary has been prepared by WAPDA and endorsed by GOP.
3 Resettlement Aspects. The proposed project requires the acquisition of approximately 4,770 hectares of land, 3457 hectares of which are privately owned. All of the privately owned land will be acquired; but as 1,640 hectares would be needed temporarily, these lands would be provided with irrigation facilitates and offered for sale at reduced prices to the affected persons. The total number of persons adversely affected by the loss of land, houses, and employment is -169- ANNEX6.7 Page2 of 7 currently estimated to be 22,359, only 899 or 4% of whom need to be resettled. Based on a complete focused-census an sample surveys of the affected persons and a clearly formulated package of entitlements, WAPDA has prepared a Resettlement Action Plan (RAP). The RAP has been reviewed by the World Bank and found to be acceptable.
Social and Enviromental Monitorinf
4. Objective of the Monitoring Program. The objective of the monitoring program is to ensure that the Environmental Mitigation Plan and the Resettlement Action Plan are implemented as specified in the project documents. To this end, the Consultants will provide professional services to monitor project implementation. These services will include identification of implementation issues as they arise and evaluation of practical actions to address these problems in a timely manner. The Consultants will formally advise WAPDA through regular reports of both successes and problems encountered in the implementation of these aspects of the proposed project.
General ScoDe of Work
5. Personnel Required to Reside in the Project Area. The Consultants will have full-time senior level personnel resident in the project area to properly monitor and evaluate the implementation of the environmental and resettlement aspects of the proposed project.
6. Direct Access to WAPDA Management. During project implementation, the Monitoring Consultants will have access to the senior management of WAPDA and, through the Project Engineer, to project contractors and consultants in order to investigate and resolve environmental concerns, social complaints, and/or negative social developments. The Monitoring Consultants will also recommend mitigation measures.
7. Coordination with WAPDA's Environmental Cell. The Consultants will work under the supervision of WAPDA's Environmental Cell (WEC) and in close coordination with WAPDA personnel responsible for project implementation.
Key Mana2ement Tasks
8. Management Tasks. Key tasks for the Consultants will include, but not be limited to the following:
9. Computerized Project Management (CPM) Implementation Schedule/List of Indicators. The Consultants will maintain and update a detailed computerized project management implementation schedule (developed using MSProject) for all tasks as well as key progress indicators and milestones for monitoring environmental and resettlement activities. This implementation schedule will be maintained in close cooperation with the WEC, the Technical Divisions of WAPDA and representatives of the Ghazi-Barotha Development Organization (GBDO). Updates will be submitted to WAPDA for review and approval. 170- ANNEX6.7 Page3 of 7
10. Development and Maintenance of a Data Base. The Consultants will be responsible for the development and maintenance of a data base for the monitoring of the environmental and social aspects of the project. This data base will be structured in such a way that it can be expanded to contain the relevant environmental and resettlement data concerning other hydropower and irrigation projects involving the construction of dams and their associated structures. To prevent overlapping activities, the Consultants, with the support of the WEC will have access to data collected by different WAPDA divisions. Arrangements will also be made to allow for other divisions of WAPDA to take measurements and collect data to support implementation of these aspects of the project at the request of the WEC on behalf of the Consultants.
11. Planning and Supervision of Additional Studies and Surveys. The Consultants will plan and supervise additional studies and surveys about issues which in the course of the implementation process are determined to require further investigation. In some cases these investigations, following approval by WAPDA, will be conducted by either personnel from the Consultants or outside parties working under the supervision of the Consultants.
12. Coordination with the Ghazi-Barotha Development Organization. The Consultants will closely coordinate with the GBDO, the implementation of the Regional Development Plan. Special attention will be given to monitoring the process of developing the spoil banks and other activities that are to be planned and implemented by the GBDO.
13. Monitor Contractor Meetings. The Consultants will regularly monitor meetings between contractors and village representatives to minimize interferences with labor, as well as cultural and religious events of the citizens in areas in which excavation and construction is to take place.
Environmental Monitoring Tasks
14. Monitor Water Compensation Releases. The Consultants will monitor the timing, volume and impact of the release of compensation water from the barrage. They will provide verification that the releases are consistent with the design flows which were developed to ensure maintenance of aquatic ecosystems in the Indus river channel.
15. Design a Surface Water and Groundwater Monitoring System. The Consultants will design a practical system for the routine monitoring of the quantity and quality of surface and groundwater in the project area. This design will include the identification of proposed monitoring sites, frequency of the data collection, parameters to be measured, analytical techniques to be used and formats for the collection, storage and retrieval of data. Water quality will be tested for temperature, pH, BOD5, DO, TDS, SS and total and fecal coliform. It will also identify necessary equipment needed for field data collection, field testing and laboratory testing.
16. Upgrading of Tarbela Chemical Laboratories. To support the design of the water quality monitoring system, the Consultants will prepare an evaluation of the necessary actions to be taken to upgrade the capabilities of the existing Tarbela chemical laboratories for use as a local -171- ANNEX 6.7 Page 4 of 7
chemical and physical analytical facility to support the monitoring requirements of the proposed project. The Consultants will provide recommendations for the upgrading and extension of the analytical capabilities and training required to use fully these capabilities. The Consultants will also recommend regular maintenance procedures for equipment and provide a training course for laboratory employees in correct sampling methods and statistical evaluations of measured data. The Consultants will prepare technical specifications for the procurement of the necessary equipment, chemicals and spare parts. Provision should be made for supplier provided training for any major equipment purchases. The Consultants will promote the exchange of sample measurements with other laboratories to increase the reliability of measurements and identify systematic errors in analytical measurements.
17. Power Channel Impacts on Groundwater Movements. The Consultants will monitor the impact of the power channel on groundwater flows and their impact on irrigation and drinking water wells. This monitoring program will be based on data measured by the Technical Division of WAPDA with analysis of the data being conducted by the Consultants.
18. Wastewater Monitoring. The Consultants will monitor discharges from wastewater treatment plants in the project area to ensure they are in good working order and that water quality is protected. This will include routine measurements of discharges for temperature, pH, BOD5, DO, TDS, SS, total and fecal coliform.
19. Sedimentation and Erosion Monitoring. The Consultants will design and implement a sedimentation and erosion monitoring program which will include evaluation of processes both in the river bed and on the river banks. This program will be developed in coordination with the parties responsible for protection of the river banks.
20. Design an Ecosystem Monitoring System. The Consultants will design a practical system for routine ecosystem monitoring in the project area. This design will include the identification of proposed monitoring sites, frequency of data collection, parameters to be measured, analytical techniques to be used and formats for the collection, storage and retrieval of data. The system will also include, but not be limited to the monitoring of:
-the river floodplain and area along the braided channel zone to access changes in plant succession including grazing trends. Deteriorations should be analyzed and mitigation actions proposed;
-areas used for grazing at the margins of the project area may be subject to more intense grazing as the result of disruptions caused by construction activities, and
-development of fish resources and other aquatic aspects, birds and other wildlife in and around the barrage pond and the power channel, the Indus river below Ghazi, and the headponds.
21. Agricultural Development Monitoring. The Consultants will design a system for monitoring the impact associated with changes in agricultural practices in the project area as the -172- ANNEX6.7 Page 5 of 7 result of the redevelopment of agriculture on spoil areas, provision of tubewells and access of farmers to new technologies through the use of compensation payments for new types of equipment. The impact of the use of additional tubewells will be monitored to avoid waterlogging or salinization due to over application of water and/or drainage problems. Attention will be paid in recession lands (so-called sailaba agriculture) to determine if tubewell irrigation is required.
22. Construction Monitoring. The Consultants will monitor activities to ensure that good environmental practices are used by the contractors with regard to the minimization of damage to vegetation, soils and infrastructure. The Consultants will check that liquid and solid wastes are properly stored and disposed of by the contractors. They will also monitor actions to control dust and noise associated with construction. The Consultants will check to see that the health and safety standards used by the contractors are consistent with those required by the Govermnent of Pakistan and international agencies.
23. Barotha Construction Area. The Consultants will monitor the Barotha construction area to ensure that the nullah used for irrigation is not damaged either directly or indirectly during the construction of the powerhouse and associated structures in this area. Land acquisition, access roads, work sites, housing, social services and sewage disposal will meet environmental standards to be monitored by the Consultants.
24. Archaeological Issues. The Consultants will monitor implementation of the archaeological salvage program and effective use of archaeological '"hance find" procedures in the case of excavation and construction activities.
25. Monitoring of Vector Habitat, Incidence of Vectors and Prevalence of Diseases. The Consultants will undertake, in cooperation with local health authorities, a routine program for monitoring of vector habitat, incidence of vectors and prevalence of diseases related to project activities. Special attention will be given to the management of potential vectors associated with the impoundment of water in the barrage pond, headponds in the shallow pools formed a seasonal basis in the Indus river bed.
26. Monitoring of Public Safety. The Consultants will monitor public safety along the power channel and the tailrace. They will evaluate the effectiveness of the fencing and educational programs to deter people from using the power channel and tailrace channel for bathing, swimming, washing and/or watering of livestock. If safety problems occur, the Consultants will immediately advise WAPDA management and assist in the identification, testing and implementation of improved safety measures.
Resettlement Monitorine Tasks
27. Monitoring Land Acquisition and Compensation Processes. The Consultants will monitor the acquisition of privately owned land and related compensation processes. -173- ANNEX 6.7 Page 6 of 7
28. Monitoring Leasing of Borrow Areas and Compensation. The Consultants will monitor the leasing of borrow areas, the compensation process used including review of payments, and ensure that payments are made to landowners for damage to fields and crops.
29. Monitoring Housing Replacement. The Consultants will monitor activities for the replacement of housing and other structures for families that are resettled and ensure that the new structures are at least comparable in value and quality to the property destroyed.
30. Monitoring Hiring of Labor in Project Construction. The Consultants will monitor on a regular basis the hiring of labor to make certain that preference is given to qualified individuals with project issued work permits and others from the project area. The Consultants will also monitor local hiring by WAPDA for its permanent operating colonies. The findings of this monitoring will be a regular element of the Consultant's monthly reports.
31. Other Compensatory Activities. The Consultants will monitor programs developed by the GBDO to provide vocational training, credit, and self-employment generation schemes for Project Affected People in the project area.
32. Spoil Bank Development. The Consultants will monitor all activities involved in developing the spoil banks for irrigated agriculture, including the effectiveness of the tubule users associations and agronomy extension services.
33. Monitoring of Social Change. The Consultants according to a work plan approved by WAPDA will monitor social changes, both positive and negative, within the project area and make recommendations to correct problems which develop during project implementation.
34. Monitoring the IRDP. The Consultants will monitor the effectiveness of the JIRDP programs.
Special Tasks
35. Evaluation of Computer Hardware and Software. The Consultants will support the WEC in the evaluation and preparation of technical specifications for the procurement of computer hardware and software for use by the WEC and Consultants for monitoring and data collection use. Preferably these systems will be compatible with existing WAPDA equipment and programs, or else adequate interfaces should be recommended.
36. Support for Institutional Strengthening and Training of the WEC. The Consultants will undertake a program of training activities for the general strengthening of the environmental and resettlement management capacity of the WEC. The Consultants will conduct training activities both in the Project area and at WAPDA headquarters in Lahore.
37. Career Development Within WAPDA. The Consultants will prepare an evaluation of measures that the WAPDA Water Wing may wish to take to make environmental and social science experts have a career opportunity within WAPDA, This will include provision of -174- ANNEX6.7 Page 7 of 7
recommendation on how to enable WAPDA to keep professionals, skilled technicians and social workers within the WEC.
Reporting Tasks
38. Informal Reports. The Consultants will provide informal reports, both oral and written, to the Director of the WEC and to field staff of the WEC as necessary.
39. Monthly Reports. A monthly status report will be submitted to WAPDA which provides a brief description of the activities undertaken, results achieved, data collected and problems encountered. It will also provide a status report on the use of project funds and resources as related to the tasks included in their contract for services.
40. Monthly CPM Implementation Schedule Updates. The Consultants will submit to WAPDA an updated CPM implementation schedule every month. The Consultants will identify and provide explanations for any tasks on the critical path timeline which may be slipping behind schedule.
41. Semi-Annual Report. A report prepared every six months will be submitted to WAPDA which provides a review of the status of environmental and resettlement aspects of the proposed project. -175- ANNEX 6.8 Page 1 of 2
PAKISTAN
Ghazi-Barotha Hydropower Project
Ghazi-Barotha Development Organization (GBDO)
Terms of Reference
1. WAPDA will establish a GBDO to assist in carrying out resettlement activities. This GBDO will continue the practice started early during Project planning of consulting local communities and will take the process further by actively involving these communities in their own resettlement. The GBDO will be staffed by individuals with demonstrated experience in grass-roots and village organizing and in developing community level credit and self-employment generations schemes.
2. The legal organization and registration of the GBDO will be under Section 42 of the Companies Ordinance (XLVII of 1984). The Companies Ordinance provides for the greatest degree of financial accountability and transparency of operations, as compared to those of the Cooperatives Act and the Societies Act. These features will help to attract foreign donor support which the GBDO will solicit for the Integrated Regional Development Plan (IRDP). The GBDO will also register with the Trust for Voluntary Organizations (TVO) at Islamabad.
3. The GBDO will have a Governing Board, which will include WAPDA's Member (Water) and the Chief Engineer and Project Director (GBHP). The Board will be self-perpetuating and will always include at least one woman. It may also elect to include three noted individuals from the Project region, one each from the Ghazi, Chhachh and Sarwala subregions, having demonstrated involvement in development in their areas. The Governing Board will hire the Director of the GBDO and approve senior staff hiring. It will oversee the operations of the GBDO and approve annual budgets and the IRDP.
4. The role of the GBDO will be vital to the success of key compensatory activities in the Project. The GBDO will participate in the following actions:
(a) Assist in the formation of Project Contact Committees at the village level.
(b) Liaise with local NGOs to find ways the latter can assist in Project aims and operations.
(c) Assist the Social Sciences Unit (SSU) in further scoping sessions the affected people to provide Project-related information, particularly on the provisions of the RAP.
(d) Participate as a member of Land Valuation Committees to assess the market values of land and communicate these to the Land Acquisition Collectors.
(e) Ensure that all a people permanently or temporarily affected by the Project are fairly and promptly compensated. -176- ANNEX 6.8 Page 2 of 2
(f) Ensure that interests of vulnerable affectees groups (women, minors, landless affectees) are adequately safeguarded.
(g) Assist the Project Resettlement Organization and Land Acquisition Collectors in ensuring that Certificates of Compensation are signed with all people affected by the Project.
(h) Assist in formalizing consensual agreements between WAPDA and relevant affected people covering land for land compensation.
(i) Assist in working out the modalities for opening joint bank accounts.
(j) Assist the Social Science Unit in organizing agrarian production systems on the spoil banks, including farmers' committees to decide on the organization of the field system, an equitable plot allotment procedures, the formation of tubewell users associations, the establishment of warabandi (water distribution), and the mobilization of agriculture extension services by other government agencies.
(k) Work with the Project Resettlement Organization and the Project Contact Commitees to see that schedules for resettler housing are maintained. Work with the affectees to allocate plots in the new settlements, decide on other layout features, and the development and implementation of a detailed plan to move the resettling households.
(1) Work with the land acquisition staff to insure that the resettlers receive title and deeds for their new land in a prompt and efficient manner.
(m) Assist the Social Science Unit in the development of lists of work-eligible individuals in those Project-affected families with a work permit, grouped in skill categories relevant to the Project. Check to see that these people are being hired to work on the Project in accordance with the established priorities.
(n) Assist the affectees in gaining access to training and credit facilities in accordance with the established priorities.
(o) Assist the Social Science Unit in aiding Barotha village and other vulnerable areas to cope with Project impacts and gain Project benefits, and assist in the settlement and development of village community organizations in the resettlement village.
(p) Assist in resolution of grievances put forth by the affectees..
5. The GBDO will prepare monthly reports summarizing its activities, and highlighting any aspects requiring attention. PAKISTAN Ghazi-Barotha Hydropower Project Project Entities - Resettlement and Environment Organization Chart
GHAZI-BAROTHA CONSTRUCTION WAPDA MONITORING DEVELOPMENT CONTRACTORS CHIEFENGINEER ENvIRONMENTAL CONSULTANTS ORGANIZATION & CELL PROJECTDIRECTOR ZI_ILI I PROJECTRESETTLEMENT ORGANISATION S.E. (Resettlement)
REGIONAL PROJECT LAND SOCIALSCIENCES LEGAL DEVELOPMENT FIELDETIGATION BRANCH BRANCH GROLUP TEAMS -- COORRDIATICHON
. <~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-
RESETTLEMENT& ENVIRONMENTALREVIEW COMMITTEE CE/GBHP.Chaimian PD, PRO Senior Social Scientist SeniorAgronomist Representative,WAPDA Environmental Cell RepresentatiwProject NGO _ _ _ __Representative, Project Management Consultants Representative,Project Contractors. hvited Representative,Monftorig Consultants,Observer
0 olG CASE A: BASE CASE PAKISTAN GHAZI BAROTHA HYDROPOWER PROJECT WATERAND POWER DEVELOPMENT AUTHORITY ACTUAL AND FORECAST INCOME STATEMENT
(RUPEES MILLION)
…-…- -Actual---- …- --Unaud -- -…------Forecast…------FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05
GWh PURCHASED: KESC/PRIVATESEC 265 42 463 517 351 177 0 3153 10511 16858 22074 23651 25385 27293 29391 31700 GWh GENERATED (HYDRO): WAPDA 16925 18298 18647 21111 19436 22131 21994 21940 21940 23011 23011 29611 29611 29611 29611 29611 GWh GENERATED (THERMAL): WAPDA 14237 16095 18956 19163 22609 23609 26194 26594 23455 20863 20901 20457 27671 27671 27671 27671 TOTAL GWh GENERATED (MILLIONS) 31427 34345 38067 40791 42396 45917 48188 51687 55906 60732 65986 73719 82667 84575 86673 88982 GWh SOLD 24121 26584 29267 31272 32131 35081 37346 40419 44445 48889 53779 60449 67787 69351 71072 72965 GWh SOLD/GWh GENERATED(%) 76.8 77.4 76.9 77.6 75.8 76.4 77.5 78.2 79.5 80.5 81.5 82.0 82.0 82.0 82.0 82.0 AVE. REVENUE/KWh SOLD(PAISA) 105.7 116.5 130.5 137.0 153.9 175.4 223.9 253.1 309.8 312.1 335.5 337.0 356.1 388.5 410.7 434.0 %INCREASEINAVE.REVENUE 11.95 10.21 11.96 5.02 12.35 13.94 27.7 13.1 22.4 0.7 7.5 0.5 5.7 9.1 5.7 5.7 AVE. TARIFF/KWh SOLD(PAISA) 75.0 82.2 87.2 86.9 101.0 122.1 170.5 174.0 230.2 234.1 258.8 261.9 282.4 315.0 337.5 361.1 %INCREASE INTARIFF 10.6 9.5 6.2 -0.3 16.1 20.9 39.7 2.1 32.3 1.7 10.6 1.2 7.8 11.6 7.1 7.0
OPERATING REVENUE (RS MILLION)
SALES OF ELECTRICITY 18097 21845 25534 27189 32443 42823 63664 70335 102322 114426 139201 158323 191403 218448 239866 263447 FUEL ADJJSTMENT SURCHARGE 7405 9130 11578 12262 12786 14194 15088 25304 27824 30606 33667 37843 42437 43416 44493 45678 OTHER OPERATING REVENUES 906 630 630 672 473 511 552 596 644 695 751 811 876 946 1021 1103 HYDRO SURCHARGE 1067 3392 4227 4507 4855 6676 7561 7561 7561 7561 7561 7561 7561 7561
TOTAL OPERATING REVENUES 26408 31605 38809 43515 49929 62035 84159 102911 138351 153288 181180 204538 242277 270371 292942 317789
OPERATING EXPENSES (RS MILLION) 1 POWER PURCHASES 184 32 398 445 302 152 0 9888 35948 51080 71961 78111 88548 100716 119595 143239 C FUEL COST 6768 9150 11259 11771 16238 18005 23292 25304 23879 22727 24362 25514 36927 39512 42277 452371 MAJNTENANCE 1517 1675 2063 2555 2684 3891 3051 3425 3919 4511 5137 5732 6267 6723 7127 7528' OPERATION& ADMINISTRATION 3540 4342 5467 5961 6802 7295 8025 8827 10328 11360 12496 14621 16083 17691 20699 22768 DEPRECIATION 2765 3385 3784 4194 4886 6078 7480 8502 9787 11264 12707 14044 15203 16170 17088 18043 HYDRO PAYMENTS 1000 3800 3860 4599 6100 6676 7561 7561 7561 7561 7561 7561 7561 7561
TOTAL OPERATlINGEXPENSES 14774 18584 23971 28726 34772 40020 47948 62621 91422 108503 134225 145583 170589 188373 214347 244377
NET OPERATING INCOME 11634 13021 14838 14789 15157 22015 36211 40290 46929 44786 46955 58954 71688 81998 78595 73412 ADD: MISC. NON-OPER. REVENUES 645 695 1221 934 1152 1164 1175 1187 1199 1211 1223 1235 1247 1260 1273 INTEREST ON SINKING FUND 0 0 0 0 68 0 407 738 1127 1519 1562 127 193 200 446 693
INCOME AVAILABLE FOR FIXED 11634 13666 15533 16010 16159 23167 37782 42203 49243 47504 49727 60304 73117 83446 80301 75377 CHARGES
FIXED CHARGES ______INTEREST 6271 8070 9752 11136 12436 13881 16906 22671 25817 28869 31317 30051 27840 24743 20096 16327 LESS:INTERESTCHARGED CONSTN. 1445 1753 2166 3031 3335 2819 3101 4945 5831 5741 5361 4684 3840 3617 3634 4577 ------_- _ ------_- _- - - - - _- _- - - - - _- _------_- _- - - - - _- _- - - - - INTEREST CHARGED TO OPERATIONS 4826 6317 7586 8105 9101 11063 13804 17726 19986 23127 25956 25368 24000 21126 16462 11750
NET INCOME AFTER FIXED CHARGES 6808 7349 7947 7905 7058 12104 23977 24477 29257 24376 23771 34937 49117 62320 63839 63627
2 5 RATE OF RETURNON FIXED ASSETS 20.8 19.0 19.2 18.6 16.4 19.0 27.0 27.5 28.4 _ 23.9 22.0 24.2 _ 27.2 29.6 27.7 _ .4
oe X CASE A: BASE CASE PAKISTAN GHAZI BAROTHA HYDROPOWER PROJECT WATERAND POWER DEVELOPMENT AUTHORITY ACTUAL AND FORECAST BALANCE SHEET
(Rupees Million)
-- …-…-…- -Actual ------… - Unaud.------Forecast…------ASSETS FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05
FIXED ASSETS ______FIXED ASSETS IN OPERATION 91731 108184 120700 130807 158474 193011 213728 242902 279640 321825 363070 401258 434372 461992 488235 515523 LESS:ACCUMMULATED DEPRECIATION 17978 21384 25188 29409 34323 40401 47881 56383 66170 77434 90142 104186 119389 135559 152647 170690
NET FIXED ASSETS IN OPERATION 73753 86800 95512 101398 124151 152610 165846 186519 213470 244391 272928 297072 314983 326433 335588 344833 WORK IN PROGRESS 18777 25004 40556 53738 55484 46975 64609 82421 97183 95689 89346 78061 64008 60290 60565 76275
TOTAL FIXED ASSETS 92530 111804 136068 155136 179635 199585 230456 268939 310653 340081 362274 375133 378991 386724 396153 421109 OTHER ASSETS 163 20 974 1199 368 368 368 368 368 368 368 368 368 368 368 368 SINKING FUND 0 1965 0 370 0 0 4523 7769 11015 11307 8720 586 639 2692 4745 805 ESCROW ACCOUNT 1500 3000 10784 15324 21588 23433 26564 30215 35878 42972 CURRENT ASSETS
CASH 6179 6438 6042 5730 5324 7737 14441 11676 9419 11220 14021 27388 45461 65294 81708 88837 INVENTORIES 5194 6417 6551 6833 7573 7823 12202 13699 15676 18044 20547 22930 25069 26891 28507 30113 ACCOUNTS RECEIVABLES 4208 6099 8253 9493 10223 11611 16832 20582 27670 30658 36236 40908 48455 54074 58588 63558 WATER WINGACCOUNTS 310 984 196 823 1081 1000 1192 1251 1314 1380 1449 1521 1597 1677 1761 1849 OTHER CURRENTASSETS 2196 1783 4902 3773 3989 3800 4398 4618 4849 5091 5346 5613 5894 6188 6498 6823 - - - - _ _- - - - _- _------_- - - - _- _------_- _- -…------_- _- - - - _- _- - - - _- _- - - - _- _ - - - - _- _ _ _ l TOTAL CURRENT ASSETS 18087 21721 25944 26652 28190 31971 49065 51826 58928 66392 77598 98359 126475 154124 177061 191179 _1
TOTALASSETS 110780 135510 162986 183357 208193 231924 285912 331903 391749 433472 470548 497880 533037 574122 614205 656432
CAPITAL AND LIABILITIES
EQUITY
GOVERNMENTINVESTMENTS 2452 2495 2501 2501 2239 2239 2239 2239 2239 2239 2239 2239 2239 2239 2239 2239 GOVERNMENTEQUITYCONTRIBUTION 4429 4889 5659 9410 11194 11194 11194 11194 11194 11194 11194 11194 11194 11194 11194 11194 CONSUMER CAPITAL CONTRIBUTIONS 7501 9325 11370 13412 15361 17505 20678 24461 28571 31717 34376 36375 37745 39571 41630 45088 RETAINED EARNINGS 29375 36676 44210 43704 48015 55280 82358 106835 136092 160468 184239 219176 268293 330612 394451 458078
TOTAL EQUITY 43757 53385 63740 69027 76809 86218 116469 144730 178097 205618 232048 268984 319471 383616 449515 516600
LONG TERM DEBT 59566 69630 81069 91454 99421 112273 133959 151079 171776 184063 188383 173142 150302 121271 90369 60077
SECURITY DEPOSITS 525 620 861 1159 1415 1697 1993 2304 2630 2973 3333 3711 4108 4524 4962 5421 INTERESTACCRUED 1449 1532 1615 1698 1782 1865 1948 2031 2114 2197 2280 2363 2446 2529 2612 2695 CURRENT LIABILITIES 5483 10343 15700 20019 28766 29871 31542 31759 37132 38621 44504 49680 56710 62181 66748 71639 ------_- _ ------TOTAL CAPITAL ANDLIABILITIES 110780 135510 162985 183357 208193 231924 285912 331903 391749 433472 470548 497880 533037 574122 614205 656432
DEBTAS %OF DEBT+EQUITY 58 57 56 57 56 57 53 51 49 47 45 39 32 24 17 10 Z EQUITY AS % OF DEBT+EQUITY 42 43 44 43 44 43 47 49 51 53 55 61 68 76 83 90o Z
w~~~______-_ CASE A: BASE CASE PAKISTAN GHA23 BAROTHA HYDROPOWERPROJECT WATER AND POWER DEVELOPMENT AUTHORITY ACTUAL AND FORECAST SOURCES AND USES OF FUNDS
(RUPEESMILUON)
SOURCES OF FUNDS ------Actual ------Unaud.------Forecast I------FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 F=Y04 FY05 FUNDS FROM OPERATIONS ------NET INCOME FOR FIXED CHARGES 11634 13668 15533 16010 16159 23167 37782 42203 49243 47504 49727 60304 73117 83446 80301 75377 DEPRECIATION 2766 3385 3784 4194 4886 6078 7480 8502 9787 11284 12707 14044 15203 16170 17088 18043
SUBTOTAL FUNDS FROM OPERATIONS 14400 17051 19317 20204 21045 29245 45282 50704 59031 58768 62434 74348 88320 99615 97389 93420 GOP SHARE CAPITAL/GRANTS/ADVANC 548 503 776 -250 1522 0 0 0 0 0 0 0 0 0 0 0
CONSUMER CONTRIBUTIONS 1244 1824 2045 2042 1949 2144 3173 3784 4110 3146 2659 2000 1370 1826 2060 3458 SECURITYDEPOSITS 68 95 241 298 256 282 296 311 326 343 360 378 397 417 437 459 RET. EARN. ADJUST/DEF. UAB. -10 -791 -2128 -3288 -3355 0 0 0 0 0 0 0 0 0 0 0 BORROWNGS: RUPEE LOANS 6901 280 3068 2499 5993 2534 9894 0 459 1203 447 0 0 0 0 0 FOREIGN LOANS 7625 7590 13898 12348 14079 14682 17106 20353 23095 18489 15485 11847 7932 10666 11958 19684 PROPOSEDBANKLOAN 0 0 0 0 0 0 1124 2527 3505 2371 1385 643 298 0 0 0
SUBTOTALBORROWNGS 14526 7850 16766 14847 20072 17196 28124 22880 27059 22063 17297 12490 8230 10886 11958 19684
TOTAL SOURCES OF FUNDS 30776 26532 37017 33853 41489 48867 76855 77679 90528 84318 82750 89216 98316 112524 111844 117022
11854 APPUCATIONS OF FUNDS
CAPITAL INVESTMENTS 16764 16030 24804 22309 25591 28395 35250 42040 45670 34950 29540 22220 15220 20285 22884 38422 I OTHER INVESTMENTS 954 226 O ------9-3------TOTALINVESTMENTPROGRAM 16764 16030 25758 22535 25591 26395 35250 42040 45670 34950 29540 22220 15220 20285 22884 38422
DEBT SERVICE INTEREST 6291 8070 9752 11136 12436 13881 16906 22671 25817 28889 31317 30051 27840 24743 20096 16327 LESS:INTERESTACCRUED 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 AMORTIZATION 1591 1840 2693 2776 5561 5998 5603 5760 8362 6776 6977 17544 29070 39697 42860 43984 SINKING FUND PAYMENTS 1901 31 1100 5193 0 2257 3246 3246 3292 3412 2053 2053 2053 2053 2053
SUBTOTAL DEBT SERVICE 7799 11728 12393 14929 23107 19796 24682 31594 35343 38854 41823 49566 58880 86410 84926 62280
ESCROW FOR POWER PURCHASES 1500 1500 7784 4540 6264 1845 3131 3651 5663 7093 CHANGE IN WORKING CAPITAL CASH 4206 259 -396 -312 -406 2413 6704 -2766 -2256 1801 2801 13367 18072 19833 16414 7129 OTHER THAN CASH 2007 -1485 -738 -3299 -6803 263 8719 5310 3986 4174 2521 2218 3013 2345 1957 2097
NET CHANGE IN WORKING CAPITAL 6213 -1226 -1134 -3611 -7209 2676 15423 2544 1730 5975 5323 15585 21086 22178 18371 9228
TOTALAPPUCATIONS OF FUNDS 30776 26532 37017 33853 41489 48867 76855 77878 90526 84318 82750 89216 98316 112524 111844 117022
DEBT SERVICE COVERAGE RATIO 1.8 1.5 1.8 1.4 0.9 1.5 1.8 1.6 1.7 1.5 1.5 1.5 1.5 1.5 1.5 1.5 INTERNAL CASH GEN. RATIO-3 Yr. AVE 40.7 - 47.3 50.0 44.0 28.0 39.9 40.0 40.0 40.0 40.0 52.0 58.7 78.3 110.2 85.8 74.21 1 Z
-4s - 181 -
Annex 7.2 Page 1 of 4
PAKISTAN
GHAZI BAROTHA HYDROPOWERPROJECT
WATER AND POWER DEVELOPMENT AUTHORITY
NOTES AND ASSUMPTIONS FOR FINANCIAL FORECASTS (FY1996 TO FY2005)
Income Statement
Inflation Estimates
1. Inflation rate projections, both domestic and international, are based on estimates of the Bank during project appraisal as follows:
1996 11997 1 998 [19 9 2000 2001 2002 2003 2004 2005
Local. 1) 9.0 6.7 6.2 6.2 6.2 6.0 6.0 6.0 6.0 6.0 Int rnational 6) 1.8 2.6 2.5 2.5 2.4 2.4 2.4 2.4 2.4 2.4
Sales of Electricity and Power Purchases
3. The forecast generation, private sector purchases, sales and projected losses are shown in the table below:
(gWh) FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05
PRIVATE SECTOR __ PURCHASES 3153 1051 16858 22074 23651 25385 2729 29391 31700 1 3
WAPDA GENERATION 48188 48534 4539 43874 43912 50068 57282 5728 52782 57282 5 2
TOTAL GENERATION 48188 51687 5590 60732 65986 73719 82667 8457 86673 88982 6 5
LOSSES (%) 23.0 21.8 20.5 19.5 18.5 18.0 18.0 18.0 18.0 18.0
ELECTRICITY SALES 37346 40419 4444 48889 53779 60449 67787 6935 71072 72965 5 1
INVESTMENT PROG. (Rs. 35250 42040 4567 34950 29540 22220 15220 2028 22884 38422 Bil . 0 5
4. The electricity sales forecasts are based on demand growth of 10% per annum in line with 10-yr. historical sales of WAPDA between 1984-1994. Estimated losses are projected based on actual losses in December 1994 (24.2%), and assuming a gradual reduction from FY96 resulting from reduction in non-technical losses and gradual decrease in technical losses as a result of WAPDA's loss-reduction program agreed with the ADB. Private sector purchases are based on the following capacity additions from the private sector: - 182 -
Annex 7.2 Page 2 of 4
PRIVATE POWER CAPACITY ADDITIONS (MW)
FY97 FY98 FY99 FY00 TOTAL
HUB 600 600 -- -- 1200
OTHER PRIVATE POWER PRODUCERS -- 800 1200 1000 3000
TOTAL 600 1400 1200 1 1000 4200
Average Revenue per kWh Sold
4. The average revenue per kWh sold include the unit base tariff plus the fuel adjustment surcharge. Tariff increases are projected to achieve the average revenue required to meet both the 40% Internal Cash Generation covenant and the Debt Service Coverage covenant of 1.5 times.
Fuel Adjustment Surcharge (FAS)
5. The FAS rate as set by the government is 75 paisas/kWh for all consumers except for the first three blocks of domestic consumers which pay a lower rate, and flat rate agricultural and Federally Administered Tribal Areas consumers which are exempt. From FY97, the FAS rate is assumed to recover at least 100% of WAPDA's total fuel cost.
Other Operating Revenues
6. Other operating revenues consist of income and fees for items such as transfer/replacement of meters, application fees, reconnection of service, etc. These revenues are shown to increase minimally based on prior years revenues.
Hydroelectric Profit Surcharge and Payments to the Provinces
7. A surcharge on all electricity sales is levied by WAPDA on behalf of the Government to help pay for hydroelectric profit payments due to the Provinces in accordance with a formula set by the National Finance Commission. The surcharge amounted to Rs. 4.3 billion (10.4% of sales) in FY94. The Federal Government paid the difference between the revenues from the surcharge and the actual payments during that year (Rs. 6.0 billion) . From FY97, WAPDA's hydroelectric profit payments are assumed to be paid by WAPDA in full.
Fuel Costs
8. Fuel costs, fuel prices and projected consumption are based on WAPDA's estimated actual average fuel cost and consumption in FY95 for its thermal generation, with estimated increases in fuel prices of 16.6% in FY96 (actual), and 7% thereafter.
Maintenance Expenses
9. Maintenance expenses are related to plant in service and are forecast at 1.5% of average gross fixed assets in operation. - 183 -
Annex 7.2 Page 3 of 4
Operation and Administration Expenses
10. Operation and maintenance expenses are forecast to increase by 13% annually, taking into account system expansion, inflation and past experience. During FY98 and FY2001, an additional increase of 7% is assumed to account for general wage increases granted to Government employees.
Depreciation
11. WAPDA applies a composite rate of depreciation of 3.5% to its average gross fixed assets in operation.
Balance Sheet Cash
12. Cash balances are projected at the level required to cover at least six weeks of cash operating expenses.
Inventories
13. Inventories are forecast at 6% of gross fixed assets in operation.
Accounts Receivables
14. WAPDA's overall accounts receivables have been projected at 20% of billings equivalent to 2.4 months' sales based on actual experience.
Other Current Assets
15. Other current assets include miscellaneous receivables, advances and clearing accounts. These are forecast to increase by 5% annually based on past experience.
Current Liabilities
16. Current liabilities include accounts payable, deposits for works to be carried out for other agencies, contractor deposits, duties payable and accrued salaries. Current liabilities are assumed to be 70% of current assets (other than cash) from FY97.
Security Deposits
17. Security deposits are forecast to increase at 5% per annum.
Sources and Uses of Funds
Consumer Contributions
18. Consumer capital contributions consist of payments for connection costs, including cost of conductors, meters and transformers for large consumers. These are assumed to be 9% of WAPDA's investments. - 184 -
Annex 7.2 Page 4 of 4
Investment Program
19. WAPDA's investment program includes investments for generation plants, transmission and distribution expansion and rehabilitation. The investment program is reviewed with the Bank annually and adjusted to reflect revised commissioning dates, local and foreign cost variations, and financing availability.
Borrowing
20. These are projected on the basis of WAPDA's capital investment program. Forty percent of the capital investment program are assumed to be financed from internal cash generation. Projections assume that local currency borrowings are from WAPDA 10-Yr. bond flotations, and all foreign costs of the investment program financed from foreign loans.
Debt Service
21. New debt is assumed to have the following terms: local borrowing through bonds at 19% interest, repayable after 10 years. Regular sinking fund appropriations are assumed to cover the repayment at maturity date or are rolled-over. Foreign borrowings are assumed at the weighted average cost of WAPDA's foreign borrowings.
Escrow Account
22. An escrow account representing two months' purchase payments for private power sector has been established by WAPDA in accordance with the power purchase agreements with the independent power producers. The escrow account is treated as a fund application. - 185 -
ANNEX 7.3 Page 1 of I PAKISTAN GHAZI BAROTHA HYDROPOWER PROJECT WATER AND POWER DEVELOPMENT AUTHORITY FINANCIAL SENSITIVITY ANALYSIS
Scenariosfrom FY97
1. Case A: Base Case
2. CaseB: SystemLosses at the same levelas December1994 (24.2%).
3. Case C: InvestmentProgram Costs increasedby 25%.
4. Case D: AccountsReceivables increased to 30% of billingor 3.6 months' sales comparedto 20% of billingor 2.4 months' salesof Base Case.
5. Case E: All future foreigncurrency borrowing at commercialrate of 19%,inclusive of borrowingspread and foreign exchangeinsurance of 9.6%), comparedto Base Case weightedaverage cost of foreignborrowing.
6. Case F: Case B and C combined.
7. Case G: Case B, C and D combined.
8. Case H: CaseB, C, D and E combined.
IIMPACTON WAPDAs AVERAGE TARIFF INCREASES(%)
FISCALYEAR 1996 1997 1998 1909 2000 2001 2002 2003 2004 200
BASECASE 27.7 13.1 19.0 3.3 7.6 0.4 5.7 9.1 5.7 5.7
CASEB 27.7 17.0 21.0 4.6 9.0 1.0 5.7 9.1 5.7 5.7
CASEC 27.7 15.4 20.0 4.8 8.2 0.3 4.9 8.6 5.4 5.4
CASED 27.7 13.1 22.3 0.6 7.8 0.4 5.7 9.1 5.7 5.7
CASEE 27.7 16.0 19.1 4.9 7.4 0.1 4.9 8.3 5.0 5.1
CASEF 27.7 19.3 22.0 6.1 9.6 0.9 4.9 8.6 5.4 5.4
CASEG 27.7 19.3 25.4 4.0 8.8 1.1 4.8 8.6 5.4 5.4
CASEH 27.7 22.4 25.4 4.7 9.4 0.4 4.2 7.9 4.7 4.8 -186- ANNEX 8.1 Page 1 of 11
PAKISTAN
Ghazi-Barotha Hydropower Project
Least Cost Analysis
A. Load Forecast
1. The load forecast for the Pakistan system has been developed on the basis of an econometric partial adjustment model developed by ADB\1, which desegregates for the following consumer categories: residential, commercial, industrial, and agriculture. The adjustment period varies for each consumer category and it's in the range of 1.0 to 2.2 years. The model explains the energy demand for each consumer category as dependent on the following variables: (a) income, (b) own-electricity price, (c) price of alternative fuel, and (d) load shedding. On the basis of historical data, the model estimates the elasticities related to each of the above independent variables. The projections of these independent variables are then imposed to the model to derive the electricity demand forecast for each consumer category.
2. Three macroeconomic scenarios, presented in Attachment 1, have been formulated and used in the analysis. The three scenarios are the following: (a) High scenario, which is predicated on deepening and fully implementing the macroeconomic reform program, (b) the Base Scenario, which assumes some reforms and slower implementation, and (c) the Low scenario, based on little reform combined with external difficulties. The Base scenario envisages an average rate of GDP growth of 5.7% per year during the period FY95-2004, and a constant rate of 5.5% for the remaining period. Under the Low and High scenarios, the average rate of GDP growth is 4.5% and 6.7% per year respectively for the period FY95- 2004, and 4.5% and 7% thereafter.
3. Electricity price projections are in line with the assumptions used in the financial analysis, and assume a gradual elimination of the cross-subsidies to agriculture and residential consumers. Fuel price projections are based on World Bank projections\2 (see Attachment 2) . Load shedding is expected to be gradually reduced, and eliminated by FY2002, as a result of increase in supply capacity along with improvements in supply efficiency, and demand-side management measures, as described below.
4. Transmission and distribution losses are assumed to decrease from the FY94 level of 22.71W, to 18.5t in FY2000, 16W in FY2010, and 14% in FY2020, as a result of the ongoing loss reduction program in WAPDA's system, and continuous efforts to reduce the level of non-technical losses. An aggressive Demand-Side Management Program, consisting of pricing (e.g., time-of-use tariffs), and non- pricing measures (e.g., ripple control, efficiency and conservation activities) are expected to result in demand savings of about 1000MW by FY2002, and about
1/ See WAPDA XII Project in Pakistan Appraisal Report, ADB November 1991.
2/ World Bank Commodity Markets and the Developing Countries, February 1995. -187- ANNEX 8.1 Page 2 of 11
4000MW in FY2010, depending on the penetration rate of such measures. As a result of the above, the system load factor is estimated to improve from the level of 65.25% in FY94, to 67% in FY2000, and to 70.5% in FY2010.
5. Electricity demand after DSM is thus expected to grow at the average growth rate of about 8.8% during the period FY94-2002 and 6.6% between FY2002-2020 or an average of 7.3% during the period FY1994-2020 for the base case scenario. Due to the reduction in losses, and the impact of DSM, the resulting peak demand is expected to increase at the average annual rate of about 6.6% for the FY94-2020 period, and in particular at 7.8% for the period FY94-2002 and 6.1% for the period FY2002-2020. These projections are in line with the ones used by WAPDA under the National Power Plan (NPP), which forecast an overall growth rate of energy demand of 7.5% without DSM program and 7.2% with DSM for the whole period, and a load growth of 7.4% and 6.7% respectively.
B. Characterization of the existing svstem
6. Existing and committed hydropower and thermal plants belong to WAPDA and KESC with the exception of the Hub Project (1292MW), at present under implementation, which is in the private sector.
7. The main hydropower plants (Tarbela, Mangla, and Warsak), along with small hydropower plants (96MW), belong to WAPDA. The total combined hydropower capacity at the beginning of the study period is 4814MW. The total peaking capacity at full storage level is 5146MW. An additional ongoing project, Chasma Barrage with a capacity of 184MW is scheduled to be completed in FY1998.
8. Given its stochastic nature, the hydrology is represented in the WASP III model, into three hydro conditions: (30%) dry, (40%) average, and (30%) wet. The capacity and energy available for each hydroelectric project is specified in each hydro condition.
9. The existing thermal power plants in the Pakistan system account for 7055MW, mainly dual fired (natural gas and fuel oil) . WAPDA and KESC have 1347MW of ongoing committed projects, which are expected to be commissioned by FY97. In addition, the first private sector power generator (Hub Project) with an installed capacity of 1292MW, is expected to be commissioned in FY98.
Candidate Generating Units for System Expansion
10. Hydropower candidate projects. Several promising hydroelectric projects are characterized for analysis of the national system. All proposed hydropower projects included in the analysis have been studied at prefeasibility level (Basha, Kohala, and Tarbela 4th extension), and at feasibility stage with detailed engineering design for Ghazi Barotha and Kalabagh. These projects, whose main characteristics are described in Table 1, form part of the sequence used in the analysis. Further, in the sensitivity analysis (see Section F below), a group of other hydropower projects identified in a study carried out with the assistance of GTZ has been included as alternative sequence.
11. In order to characterize the hydropower system for this study, certain assumptions made by WAPDA under the NPP have been revised and more conservative assumptions compared to the ones used by WAPDA have been adopted. First, a -188- ANNEX 8.1 Page 3 of 11 minimum 10% of inflow energy is assumed for all hydro projects (the NPP input data assumes 0.0 minimum energy for any month). This modification reduces the flexibility in the operation of the hydropower plants, as a minimum outflow is assumed to be always required for purposes such as preservation of flora and fauna, irrigation, etc. Second, WAPDA adopts an integrated hydrological model which allows to optimize the power and energy from each hydropower plant given the irrigations constraints incorporated into the model. In other words, WAPDA hydrological model assumes a synchronized hydrological system which would allow to optimize water releases from each reservoir and barrage, while, at the same time, optimizing the energy and power from each hydropower project. This has a particular positive impact on the outflows from Tarbela, which determines the inflows to the Ghazi Barotha project, by allowing a higher level of water releases from Tarbela during the dry period viz-a-viz the average and wet periods. While the mission does not discard the possibility of such optimization, a more conservative approach has been adopted: the energy and power which can be produced by GBHP are based on the historical water release from Tarbela in the last few decades.
12. Finally, in this study a more conservative set of assumptions has been included as regards the costs of the candidate hydropower projects, as illustrated in Table 1.
Table 1: Characteristic of the Main Hydropower Projects
Project Name Installed Capacity Economic Cost Capital Cost (US$/Kw) Construction period (MW) (US$million) (*) from award of contract (*) (year)
Ghazi Barotha 1450 1732 1648 6
Kalabagh 2400 4086 1769 9
Tarbela 4th Extension 960 442 586 5
Basha 3360 5285 2300 11
Kohala 500 766 1850 6
Taunsa Barrage 144 2600
Neelum-Jhelum 1 576 1140 2810 6 IncludlingTIransmission cost ** Including IDC at 12 %
13. All capital costs include cost estimates related to the costs of ameliorating their environmental impacts and the costs of land acquisition, compensation and rehabilitation, as well as the cost of transmission lines. The environmental cost estimate are more complete for some projects, such as GBHP and Tarbela 4th extension, while for others, such as Kalabagh and Basha (for which detailed environmental and resettlement studies have not been undertaken), the available information has been updated and additional estimates have been included. -189- ANNEX 8.1 Page 4 of 11
Thermal Candidates
14. Thermal candidates include new thermal projects such as Gas Turbines, Steam Plants, and Combined Cycle Plants which would be built-owned and operated by the private sector (IPP) in accordance with the 1994 Power policy. In order to characterize such projects in the least-cost analysis, the capacity and energy charge provided for in the power policy have been included (see Table 2). However, in order to ensure consistency with the discount rate used in the least- cost analysis, such payments have been capitalized at the beginning of the period at the prescribed discount rate of 10%, and re-calculated on annual basis at 12% discount rate. Further the fuel cost included in the energy charge has been separated in order to adjust it according to the fuel price projections, as indicated in the power policy. A common feature of the IPP under the 1994 power policy is the efficiency benchmark of 38.6%. The policy prescribed the bulk tariff on the basis of such efficiency, thereby providing a financial incentive to private investors to increase this efficiency level. This implies that regardless the type of fuel, private sector power plants will be remunerated on the basis of the benchmark efficiency, and the implied technology (steam plant) In this study, the base case includes base-load plants using fuel oil.
15. The 1994 power policy has been conceived for base-load power plants, which are normally characterized by higher capital cost and lower energy cost compared to peaking-load plants. In this analysis, Gas Turbines have been included as candidate projects, but their cost has been expressed as capital cost and O&M charges, rather than as a capacity and an energy charge. Such representation has the advantage of being more conservative. Further, it provides an indication of the maximum tariff which could be offered to private power investors for gas turbines by assessing their benefits in the system.
Table 2: Characteristics of Candidates Thermal Power Plants Plant Min. Max. JCapitalCost Forced Days/year O&M Energy MW MW US$/kw- Outage schedule fixed Charge rate (%) maintenance USS/KWM USS/Mwh
Gas Turbines 50 100 520 12 20 1.00 12.50
IPPs (Steam Plants) 150 600 6.0 30 15.50
IPPc (combined Cycle) 150 600 6.0 30 17.00
16. Other Private Power Plants. Since March 1994, with the announcement of the 1994 power policy, GOP has issued Letters of Support (LOSs) to private power project proposals for about 9000MW. Some of these projects are at advanced stage of preparation, while others appear to lag behind the tight schedule imposed by the Government (one year from the date of issue of the LOS to reach financial closure). For the purpose of this analysis, some of these projects have been represented in the WASP III model on the basis of the available information related to their technical characteristics and other preliminary contractual arrangements. -190- ANNEX 8.1 Page 5 of 11
C. Economic Assumptions and Constraints
17. The discount rate used in the analysis is 12%, which is the estimated opportunity cost of capital. Fuel prices include inland transportation costs and margins, and are escalated in real terms according to World Bank projections.
18. Given GOP's objective of reducing load shedding as soon as possible, WAPDA, in formulating the assumptions for the least-cost analysis of the system, imposes a maximum reliability criterium (LOLP) of 1%, i.e. 3.65 days a year. Such criterium appears reasonable, also when considered that it is higher compared to the ones adopted in North America and in Western Europe, and in other developing countries, e.g., Thailand uses 3 days a year. The imposition of a reliability criterium is usually made in alternative to the expected cost of unserved energy, i.e. the expected damages to the economy when a certain amount of electrical energy is not supplied. WAPDA adopts a cost of unserved energy of US$0.27/Kwh. The present level of outage is not, however, an equilibrium level and the high degree of load shedding has led to consumers taking steps to ameliorate the effects of load shedding. This leads to a lower unit cost of outages than in an entirely reliable system. Therefore, the outage cost of US$0.27/Kwh estimated by WAPDA is most probably a reasonable level until reliability improves. In the Energy Options Study, the cost of unserved energy has been estimated at US$0.75/Kwh. For conservative purposes, the present analysis assumes a cost of unserved energy equivalent to US$0.27/Kwh.
D. Base Case Sequence
19. The least-cost generation expansion program (LCGEP) for the period FY94- 2020 formulated on the basis of the above outlined assumptions is presented in Table 3. Upto FY2002, it includes GBHP and 5202MW of new thermal power projects, besides the ongoing and committed WAPDA and KESC projects and Hub. This implies that over 70%- of private thermal power projects for which LOSs have been issued by GOP are required along with GBHP. The results of the analysis also indicates that, by FY2002, 300MW of Gas Turbines, which are assumed to utilize expensive diesel oil, should be installed. GOP should, therefore, consider the promotion of two or three peaking-plants. After FY2002, the LCGEP selectes all other hydropower projects, that is: Kalabagh, Tarbela 4th extension, Kohala, and Basha. The total Net Present Cost at 12% discount rate is US$32,824 million.
20. An alternative base case, without GBHP, has been developed in order to quantify the direct benefits to the power system attributable to the proposed project. In this case, the LCEGP replaces GBHP with 2x6OOMW IPPs, and 2xlOOMW Gas Turbines in FY2002. The Net Present Cost (at 12% discount rate) associated with this case without GBHP is US$33,281 million, or US$457 million higher than the Base Case with GBHP. The annual cost difference between these two LCGEPs, without and with the project, provides an initial indication on the economics of GBHP viz-a-viz the alternative projects. The resulting ERR is 339. -191- ANNEX 8.1 Page 6 of 11
Table 3: Least-Cost Generation ExpansionSchedule for Base Load Forecast
Year Peak Load Capacity Additions (committed Total System LOLP (MW) Additions shown in parenthesis) Capacity (MW)
1995 10,534 11,869 13.841
1996 11,142 (Muzaffargarh 210MW, Bin 12,357 14.499 Qasim 210MW)
1997 11,851 (Muzaffargarh 530MW, Kot 13,930 4.327 Addu 397MW, Hub 646MW)
1998 12,074 Private Thermal Power Plants 16,977 .144 for 2502MW
(Hub 646MW)
1999 13,666 (Chasma Barrage 184MW) 17,036 .789
2000 14,627 3 GTS, I IPPS 18,261 .938 (Chasma Nuclear 300MW)
2001 16,146 3 IPPS 19,916 .869
2002 17,094 GBHP 21,267 .376
2003 18,051 1 IPPS 21,737 .786
2004 18,976 2 IPPS 22,807 .694
2005 20,037 2 GTS, 2 IPPS 24,113 .972
2006 21,054 1 GTS, 2 IPPS 25,258 .905
2007 22,426 1 GTS, KALABAGH 26,747 .975
2008 23,805 2 KALABAGH 28,165 .786
2009 25,291 1 IPPS, TARBELA 29,725 .714
2010 26,895 1 GTS, 3 IPPS 31,625 .985
2011 28,747 1 GTS, 3 IPPS 33,525 .947
2012 30,747 4 GTS, 2 IPPS, I IPPC 35,725 .955
2013 32,906 4 GTS, 2 IPPS 38,182 .986
2014 35,234 3 GTS, I IPPC, 4 IPPS, BASHA 40,762 .980
2015 37,759 3 IPPC, 3 IPPS 43,842 .897
2016 40,449 3 GTS, I IPPC, 4 IPPS 46,518 .999
2017 43,367 3 HYDRO 50,028 .998
2018 46,511 2 IPPC, 4 IPPS 53,628 .940
2019 49,942 11 GTS, 4 IPPS, 2 HYDRO 57,392 .993
2020 52,645 4 GTS, I IPPC, 4 IPPS 60,792 .997 -192- ANNEX 8.1 Page 7 of 11
E. Sensitivity Analysis
21. Sensitivity analysis was carried out to test the robustness of the LCGEP, and in particular of GBHP. Revised assumptions related to the LOLP criterium, the availability of Gas Turbines, a higher discount rate, cost overruns were considered on the Base Case. Further, the other two load forecasts, Low and High scenarios, were developed. Finally, a sensitivity analysis was performed on the number of thermal power projects to be commissioned by FY2002 for the three load forecast scenarios in order to test the robustness of GBHP. The results are summarized in Table 7 and detailed below.
22. Sensitivity Analysis on the Base Case. A sensitivity analysis was developed to test the robustness of GBHP to change in assumptions related to (a) unconstrained LOLP criterium, (b) the availability of Gas Turbines, (c) a discount rate of 15%, and (d) +23 percent higher capital cost for GBHP. In each of the above cases, the results of the LCGEP analyses indicates that GBHP is always required at the earliest commissioning date (FY2002).
23. In particular, the assumption of LOLP unconstrained in conjunction with a conservative estimate of the cost of unserved energy (US$0.27/Kwh) translates into a lower number of IPPs (4300MW) required by FY2002, equivalent to almost 60% of private thermal power projects for which LOSs have been issued by GOP. In case no Gas Turbines were allowed in the system, the Net present Cost (at 12% discount rate) associate with this LCGEP is US$320 million higher than the Base Case with Gas Turbines. The use of a higher discount rate penalizes large-scale projects, which are capital intensive and with long gestation period. The results of a LCGEP carried out with a discount rate of 15%, compared to the estimated opportunity cost of capital of 12%, and the same amount of IPPs (5202MW) as in the base case is required by FY2002. As the economic cost attributed to GBHP in the Base Case is US$1,732 million, which includes physical contingencies for about 10%, a capital cost of US$2123 million (equivalent to 23% higher cost than the base case, or 35% of the base cost without physical contingencies) was attributed to GBHP. The results of the LCEGP indicate that the same amount of IPPs (5200MW) as in the Base Case are required by FY2002 along with GBHP.
24. Given the uncertainties related to the number of private power projects for which LOSs have been issued by GOP, an analysis has been carried out to test the robustness of GBHP to increasing level of private power projects. For the Base load forecast, the results are the following: (a) if one additional IPP (600MW, for a total of 5800MW - 64% of proposed projects) is added in FY2001, there are no changes in the GBHP schedule, (b) if two additional IPPs (1200MW, for a total of 6400MW - 71% of proposed projects) are added in FY2001, GBHP is delayed by one year to FY2003, (c) if three IPPs (1800MW, for a total of 7000MW - 78% of proposed projects) are added in FY2001, GBHP is delayed by one year in FY2003, and (d) if four IPPs (2400MW, for a total of 7600MW - 84% of proposed projects) are added in FY2001, GBHP is postponed by two years in FY2004.
25. Sensitivity Analysis on the Low Forecast Scenario. The results of the LCGEP analysis for this case are summarized in Table 7. The program shows that GBHP is still required in FY2002. This scenario require a lower level of capacity of private power projects, i.e., 3100MW by FY2002, compared to the Base case. Further, + 40% higher capital cost were attributed to GBHP in order to -193- ANNEX 8.1 Page 8 of 11 test the robustness of the project. Again the results indicate that GBHP is still required at its earliest commissioning date.
26. Sensitivity Analysis on the High Forecast Scenario. The results of the LCGEP analysis for this case are summarized in Table 4. The program shows that GBHP is still required in FY2002. This scenario require a higher level of capacity of private power projects, i.e., 7202MW by FY2002, compared to the Base Case. Table 4: Least-Cost Generation Expansion Schedule for Low Load Forecast
Year Peak Load Capacity Additions (committed Total System LOLP (MW) Additions shown in parenthesis) Capacity (MW)
1995 10,534 11,869 13.841
1996 10,972 (Muzaffargarh 210MW, Bin 12,357 11.576 Qasim 210MW)
1997 11,462 (Muzaffargarh 530MW, Kot 13,930 2.235 Addu 397MW, Hub 646MW)
1998 12,002 Private Thermal Power Plants 16,977 .025 for 2502MW
(Hub 646MW)
1999 12,592 (Chasma Barrage 184MW) 17,036 .101
2000 13,098 (Chasma Nuclear 300MW) 17,361 .280
2001 14,054 1 IPPS 17,816 .715
2002 14,569 GBHP 19,167 .112
2003 15,019 19,037 .340
2004 15,382 18,907 .736
2005 15,998 3 GTS, I IPPS 19,713 .990
2006 16,534 2 GTS, I IPPS 20,358 .884
2007 17,383 KALABAGH 21,747 .532
2008 18,191 KALABAGH 22,665 .431
2009 19,056 2 GTS, TARBELA 23,365 .790
2010 19,984 1 GTS, 2 IPPS 24,665 .764
2011 21,067 23 IPPS 25,865 .513
2012 22,227 1 IPPS, BASHA 27,425 .866
2013 23,467 2 IPPS 28,625 .599
2014 24,793 3 IPPS 29,615 .877
2015 26,224 1 GTS, I IPPC, 2 IPPS 31,085 .893
2016 27,720 1 GTS, 1 IPPC, 2 IPPS 32,361 .945
2017 29,335 1 GTS, 1 IPPC, 2 IPPS 34,051 .990
2018 31,058 1 GTS, 3 IPPS 35,951 .995
2019 32,490 4 GTS, 1 IPPC, I IPPS 37,551 .991
2020 33,955 I GTS, 3 IPPS 39,451 .985 -194- ANNEX 8.1
Page 9 of 11
Table 5: Least-Cost Generation Expansion Schedule for High Load Forecast
Year Peak Load Capacity Additions (committed Total System LOLP ______(MW) Additions shown in parenthesis) Capacity (MW)
1995 10,534 11.869 13.841
1996 11,349 (Muzaffargarh 210MW, Bin 12,357 18.974 1 Qasim 210MW)
1997 12,301 (Muzaffargarh 530MW, Kot 13,930 8.069 Addu 397MW, Hub 646MW)
1998 13,452 Private Thermal Power Plants 16,977 .604 for 2502MW
______(Hub 646MW)
1999 14,761 2 IPPS 18,236 .734 ______(Chasma Barrage 184MW)
2000 16,120 1 GTS, 2 IPPS 19,861 .919 (Chasma Nuclear 300MW)
2001 18,066 4 GTS, 3 IPPS 21,916 .911
2002 19,318 GBHP 23,267 .653
2003 20,586 2 IPPS 24,337 .893
2004 21,895 2 GTS, 2 IPPS 25,607 .994
2005 23,540 4 IPPS 27,913 .979
2006 25,256 2 GTS, 3 IPPS 29,758 .979
2007 27,413 1 GTS, 2 KALABAGH 32,347 .759
2008 29,672 6 GTS, 1 IPPS, 1 IPPC, 34,365 .958 TARBELA
2009 32,144 4 GTS, 2 IPPS, KOHALA 36,925 .938
2010 34,854 5 IPPS, I IPPC 40,525 .807
2011 37,982 1 GTS, 4 IPPS, I IPPC 43,625 .995
2012 41,416 2 GTS, 4 IPPS, 2 IPPC 47,425 .984
2013 45,182 4 GTS, 4 IPPS, 1 IPPC, BASHA 51,682 .989
2014 49,132 5 GTS, 3 IPPC, 5 IPPS 56,172 .979
2015 53,853 3 GTS, 2 IPPC, 6 IPPS, BASHA 61,682 .962
2016 58,800 5 GTS, 3 IPPC, 6 IPPS 66,958 .999
2017 64,241 6 GTS, 3 IPPC, 4 IPPS, BASHA 73,228 .977
2018 70,204 4 IPPC, 7 IPPS 79,828 .975
2019 76,333 8 GTS, 8 IPPS, 2 IPPC 86,628 .977
2020 82,996 8 GTS, 3 IPPC, 9 IPPS 94,628 .990 -195- ANNEX 8.1 Page 10 of 11
F. Sensitivity Analysis on SHYDO Hydropower Protects
27. GTZ and the Sarhad Hydroelectric Development Organization (SHYDO) has recently conducted a desk-top level inventory study of the hydropower potential of the northern areas of Pakistan. Under the study, the following fifteen hydropower candidates have been identified: Karrang (453.5MW), Kai Gah (548.5MW), Duber (comprising Patan (111MW) and Moze (11.1MW), Spath Gah - Tokyae - Chor Nalla (comprising Spath - Chor Nalla (818.9MW) and Tokyae (31.9MW), Allai IV (124.4MW), Besham (66.3MW), Swat Scheme Al (104.7MW), Swat Scheme Bl (428.5MW), Naran (219.3MW), Suki Kinari (651.8MW), Kotli-2 (104.1MW), Sehra-1 (67.3MW), Chakothi (139MW), Hari Gel (53.8MW), and Neelum-Jhelum (576MW). Some of those projectes are run-of-river type, while others are reservoir type. The earliest commissioning date for these projects varies between FY2002 and FY2010.
28. Although a comprehensive data base (including some hydrological data) has been developed, more information is required to consider these projects at par with the already identified hydropower projects in the base case. For example, no data related to land acquisition, resettlement, environmental mitigation costs is available. More detail work is needed for the selection of design parameters, including an assessment of seismic risks and several other design parameters, according to site conditions.
29. However, for the purpose of confirming the absolute economic integrity of GBHP, a sensitivity analysis of the Base Case with the SHYDO projects, as characterized in the available reports, has been carried out. The LCGEP indicates that, under the assumptions provided by SHYDO, those projects are competitive compared to thermal power plants. The results also indicate that, when those projects are competing with GBHP, the latter is still selected in FY2002. The total net present cost at 12% discount rate is US$425 million compared to the Base case without SHYDO projects. This confirms that the overall, SHYDO projects are not competitive with the other hydropower projects, and in particular with GBHP.
30. An additional sensitivity analysis was developed by replacing the hydro sequence including Ghazi Barotha, Kalabagh, Basha, etc., with the SHYDO projects. Again, the LCGEP selects almost all SHYDO hydro projects (fourteen out of fifteen) . The total net present cost at 12% discount rate is US$33,232 million, or US$408 million higher than the Base case excluding SHYDO projects. This demonstrates that the SHYDO projects, even at the preliminary costs and conditions identified at desk-top level, are not comparable with GBHP. Finally, the above analysis was developed under the low demand scenario. The results indicate that, under the above conditions, the commissioning date of GBHP would be delayed by one year.
31. The above analysis demostrates that, under the available information provided by SHYDO, these projects appear to be attractive from an economic point of view. However, their availability does not affect the economic viability of Ghazi Barotha. It is therefore suggested that more work be carried out to investigate the feasibility of these projects to determine their economics and their environmental impact. -196- -196- Page ~~~~~ANNEX11 of 8.111
Small Hydropower Schemes
32. Under Technical Assistance provided by the Bank, a report on the "Feasibility of Setting up 100 Small Hydel Schemes in NWFP" was finalized in July 1987. The hydro schemes are located in six districts of NWFP, Abbottabad, Mansehra, Kohistan, Dir, Swat and Chitral. A total potential of about 75MW was identified through 100 schemes. Sixty-three schemes are situated at remote locations, at least 10 miles from the grid. Given their size and incomplete information available, such schemes cannot be included in the present analysis. Certainly, their size indicates that they cannot compete with the GBHP. However, it is suggested that more work be carried out to investigate the feasibility of these schemes, particularly in the context of an optimal rural electrification plan.
Table 6: Summary of Sensitivity Analysis Results
Scenaric Commissioning Date of GBHP Total Discounted Total Amount Cost of the (MW) of Private Optimum Solution Power Plants (USS million) by FY2002
Base Load Forecast 2002 32,824 S200MW ILOLP= 1 % fromFYI1998)
LOLP unconstrained 2002 32,348 4300MW ENS = US$0.27/Kwh
without GBHP --- _ 33,281 6400MW
without Gas Turbines 2002 33,144 5500MW
15% Discount Rate 2002 24,726 5200MW
with 600MW new IPPs by 2001 2002 5800MW
with 1200MW new IPPs by 2001 2003 6400MW
with 1800MW new IPPs by 2001 2003 7000MW
with 2400MW new IPPs by 2001 2004 33,190 7600MW
SHYDO Hydro Projects with GBHP 2002 32,399 5200MW
SHYDO projects without GBHP and 33,232 5900MW hydro sequence Base Case
Cost Overruns (+23% GBHP) 2002 32,935 5200MW
Low Load Forecast 2002 24,225 3100MW
with 600MW new IPPs by 2001 2003 24,317 3700MW
with 1200MW new IPPs by 2001 2005 4500MW
Cost Overruns (+23% GBHP) 2002 24,330 3100MW
Cost Overruns (+40% GBHP) 2002 24,490 3100MW
SHYDO projects with GBHP 2003 24,023 3100MW
High Load Forecast 2002 43,376 7200MW
High Load Forecast with 2003 43,563 8600MW 1800MW new IPPs by 2001 -197- ANNEX 8.2 Page 1 of 12
PAKISTAN
Ghazi-Barotha Hydrovower Prolect
Economic Rate of Return Analysis
Introduction
1. In order to determine the economic viability of the proposed project, two different methodologies have been applied. The first is the standard methodology adopted by the Bank in power projects. It is based on the evaluation of costs and benefits associated with the overall power investment program including the project. Such approach better reflects the interdependence of a power system. The second methodology is based on the evaluation of costs and benefits associated directly with the project. Such methodology is required because hydropower projects tend to be more susceptible to delays and cost overruns than smaller thermal projects. Such approach, however, requires to formulate simplified assumptions regarding the specific contribution of the project to the benefits to the economy. For each methodology, this Annex describes assumptions and results of the Economic Rate of Return and Risk analyses.
Economic Analysis on the Power Investment Proaram
Main Assumptions
2. The Economic Rate of Return (ERR) has been calculated on the basis of the incremental cost and benefit streams associated with the national least-cost investment program for the period FY1994-2006 of which GBHP is an integral part (see Annex 8.1). Benefits are represented by the incremental demand that can be served under this program compared to the lower level of demand that could be served if no new supply capacity were added to the power system. Similarly, the costs are the difference between power system costs for meeting demand with this program (FY1995-2006) and the system costs without any investments in new supply capacity and related transmission and distribution facilities. As the investments related to ongoing and committed projects between FY1994 and FY1999 are the same for both with and without program case, the net costs used to calculate the ERR are the investments associated to uncommitted and new projects between FY1999 and FY2006. The choice of the year 2006 as upper date has been made in order to exclude from the calculation of costs and benefits the other hydropower projects which could be commissioned starting FY2007.
3. Benefits are valued as the difference between the benefits with and without the program, i.e., the incremental demand that is met under this program (1994-2006) relative to the much lower level of demand that could be served if no new capacity were added to the power system. The sequence related to the period includes the following projects: (a) for the period between FY1995 to FY1999, ongoing projects of WAPDA (1117MW), and KESC (210MW), in parallel with Hub (1292MW). Further, in order to meet system requirements, it was assumed that other private power projects (2500MW) would be implemented by FY1998, (b) between -198- ANNEX 8.2 Page 2 of 12
FY1999-2006, GBHP (1450MW), and the following private power projects: llx6OOMW base load plants and 6xlOOMW peaking-load plants.
4. Local costs are converted to border prices by using a Standard Conversion Factor (SCF) of 0.822 in FY95, increasing to 0.901 in FY1998 and remaining constant thereafter, in line with the macroeconomic projections. Such projections are in line with the macroeconomic assumptions used as a basis for the formulation of the load forecast, which reflect the expected gradual liberalization of Pakistan's trade policy regime.
5. The costs associated with the power investment program includes: (a) the costs of generation, transmission and distribution facilities to be undertaken by WAPDA and KESC; (b) an estimate of the capital cost/' of private power 2 generation projects (US$1000/Kw) / , including an estimate of the additional transmission costs required to connect them to the grid; (c) the operations and maintenance costs for WADPA and KESC, estimated as a percentage of the cumulative investments in transmission (2%) , and distribution (3%), and for generation, the O&M provided by the least-cost generation expansion program; (d) fuel costs for WAPDA's and KESC's thermal power plants, as well as for private thermal power plants escalated on the basis of the World Bank energy price projections, which assume a real price increase of about 17% by FY2005 and constant thereafter, and (e) energy purchases from private thermal power projects, i.e., energy charge as dispatched. The same cost categories have been calculated for the "without program" case. the difference between the costs of the "with program" case and the "without program" case represents the incremental costs of meeting the electricity demand forecast.
6. Transmission and distribution losses are assumed to constantly decrease during the period of analysis from an average of 22.7% in FY94 to 18.5% in FY2000, to 17% in FY2006. This is due to an ongoing and future transmission and distribution technical loss reduction program, and to an assumed reduction in non-technical losses.
7. Since the major investments in the power development program have economic lives that stretch well beyond FY2006, a run-out period of 25 years is added to the costs and benefit streams for computing the ERR in which costs and benefits are maintained at the levels for FY2006.
1/ Under the 1994 Power Policy, WAPDA and KESC will pay an annual capacity charge which has been determined on the basis of capital costs, financial charges including Interest During Construction, and a rate of return on equity. In the least-cost analysis, such capacity charge has been included as a fixed operating cost, to better represent the cost to WAPDA and KESC of buying power from the private sector, and to reflect the actual dispatch of the system. For the purpose of the economic analysis, financial charges, and rate of return should be excluded. Further, private power projects are to be considered as investments to be funded at the beginning of the period of analysis.
2/ This capital cost reflect a conservative estimate, more compatible for steam plants (among the different private sector projects there are combined cycle plants with a lower capital cost). -199- ANNEX 8.2 Page 3 of 12
8. The economic benefits associated with the power investment program are the values of the incremental sales made possible by implementing the proposed long- term development program. From FY1999 onwards, WAPDA and KESC would be able to increase their sales, even in the without program case, due to a more intensive use of the available capacity. In order to take into account these factors, the results of the optimization model developed under the without program case, have been incorporated into the economic analysis.
9. The valuation of benefits derived from incremental sales has been desegregated by consumer categories namely, residential, industrial, agriculture, and others (which include commercial, public lighting, bulk, and traction) . For the evaluation of the benefits, a distinction has to be made between consumers already connected to the system by FY1998, and new consumers that are first connected from FY1999 onwards. In the without program case, the incremental consumption of existing consumers (no new consumers are assumed to be connected to the system, as neither WAPDA and KESC will have adequate supply capability) is a function of the overall income growth of the Pakistan economy.
10. For the calculation of the benefits, a disaggregation of projected sales for each consumer category has been done by developing a spreadsheet model of projected sales as a function of the following:
* overall sales growth, - the rate of new connections, the projected tariff levels needed to meet WAPDA's financial objectives and a gradual elimination of cross-subsidies (through price elasticity of category demand), the projected growth in incomes (through income elasticity of projected demand), and - the build-up rate of consumption from new connections.
Combination of values of these factors (for which assumptions have been made) was chosen to calibrate the total desegregated sales to the projected overall path of sales, so as to make the benefits evaluation derived from the model consistent with the projected sales.
Benefits Evaluation
11. Benefits to Residential Consumers. The increase in population growth is expected to decline from the present 3% to 2.89 in FY2000, and 2.52% thereafter. Given the average GDP growth rate between FY1994-2006 of about 5.6% for the base macroeconomic scenario, the resulting GDP per capita is expected to increase at the average of about 2.9% p.a. during the same period. This growth rate, which has been adopted as proxy for the annual growth in household income, is equivalent to an increase in real household income of 40% between FY1994 and FY2006. This assumes no change in average household size.
12. In the last 12 years, new connections in the residential sector increased at the average of about 400,000 per year. However, during the last seven years, new connections averaged 453,000 a year. For modelling purposes, during the period FY1994-2006, new connections to households are assumed to increase at the average of about 660,000 per year. Such a rate of new connections appears to be sustainable over a medium term, given that, at present, less than half of the -200- ANNEX 8.2 Page 4 of 12
Pakistan population has access to electricity. The other assumptions used for the modelling of residential sales are the following: a price elasticity of - 0.35, and electricity price in real terms for households almost doubling upto FY2006; an income elasticity of 2.6 between FY94-2000, and 1.8 between FY2001- 2006; and an average consumption rate of 1967kWh/year for a mature consumer.
13. Valuation of the benefits for new residential users is divided into the following two components: (i) substitution of existing methods of lighting (kerosene lanterns) by electric lighting, that is resource cost savings; and (ii) the consumers' surplus derived from the additional quantity of electricity above the substituted level caused by the large drop in the price of energy that comes with a switch from non-electrical method of lighting to electric forms.
14. The results of the Household Energy Strategy Study indicates that the average consumption of kerosene per non-electrified household in Pakistan is about 60 litres/year (of which over 98% is primarily used for lighting purposes). This result, combined with field observations, suggests that a non-electrified household consumes on average an equivalent 42kWh/year of kerosene lantern, equivalent to an annual expenditure of about Rs. 850 (or an average cost of Rs.20/Kwh). This estimates identifies the resource cost savings associated to a new connection.
15. The consumption rate for a mature connection at the prevailing tariff identifies the upper limit at the margin of total consumption. In FY1999, this point is defined by Rs.1.3/Kwh (the projected tariff in 1994 prices) and 2525kWh. The benefits associated to such induced consumption (consumers' surplus), are a function of the area under the user's demand curve for electricity. In other words, consumers' surplus for each user depends on the shape of the demand curve. Under the modelling of residential sales, it was assumed that a semi-log demand curve/ passes through the two points described above. The choice of a semi-log form has the advantage of estimating on conservative basis the consumers surplus from the use of electricity.
16. However, given the income effect created by the large drop in the price of energy, an adjustment to the demand curve is necessary in order to avoid an overestimate of the consumers' surplus. Thus, the demand curve has been recalculated to take into account such compensating variation for the consumer. On the assumption of a linear relationship between the level of electricity consumption and household income, this adjustment factor is 0.87.
17. Benefits to Industrial and other sectors. The basis for valuing the benefits of post-1998 incremental sales to industrial and other users, i.e., agriculture, commercial, bulk supply, etc., is the cost that these users would incur if they had to meet their electricity needs by investing in and operating diesel generators on their own premises, instead of being able to take supply
3/ The semi-log form is: Q = A + B ln P where A is a positive constant and B is a negative constant. The adoption of a straight line curve would overestimate the consumers' surplus. -201- ANNEX 8.2 Page 5 of 12 from WAPDA and KESC. That is, an avoided user cost has been used as proxy for this class of consumers.
18. Industrial consumers are divided into two categories: small users with 1lkW ginset and an annual consumption of 22886kWh, and medium- and large users with a 500kW ginset and an annual consumption of 55592kWh. Excluding amortization of capital costs, the cost per equivalent unit of electricity (which includes fuel and operating expenses) amount to Rs.5.59/Kwh and Rs.4.79/Kwh for small- and medium/large size industrial consumers respectively.
19. Agricultural consumers utilize using diesel oil tubewells as alternative to electricity. According to field observations provided by WAPDA, most of the tubewells use low speed diesel oil, and the average rating of the diesel pump is 19HP with a utilization factor of 32.5%. The equivalent amount of electricity corresponds to 22886kWh. Under these assumptions, the cost per unit of electricity equivalent (excluding depreciation) is Rs.4.35/Kwh.
20. For the "others" consumer category including commercial, bulk consumers, public lighting and traction, an avoid cost average between small industry, residential and agricultural has been calculated. The assumed average annual operating time is 2320 hours per year, and the cost per equivalent unit of electricity is Rs. 4.96/Kwh.
Economic Rate of Return for the Base Case
21. The Economic Rate of Return (ERR) for the base case is estimated at about 27% based on the methodology and assumptions outlined in the previous sections. Table 1 presents the streams of costs and benefits of the base case.
Table 1: Economic Rate of Return on Power Development Program
Fiscal Year (FY) IncrementalCost (Rs. million) Valueof Incremental Net BenefiLs Consumption(Rs. million) (Rs. million)
1995 - 536 - 536
1996 - 4.030 - 4,030
1997 - 12,722 - 12,722
1998 - 28,449 - 28,449
1999 - 42,0OD - 42,000l
2000 -56,326 25,307 31,019
2001 37,403 30.708 - 6,695
2002 47,047 34,822 - 12,225
2003 - 53,240 53,849 609
2004 - 56,881 77.354 20,473
2005 47,719 115,138 67.419
2006 -30,601 146,750 116,149
2007 -2031 - 9,982 146,750 136,768
ERR= 26.7% -202- ANNEX 8.2 Page 6 of 12
22. Sensitivity Analysis. A sensitivity analysis on the base case has been carried out to test the robustness of the ERR of the proposed development program to less favorable scenarios regarding increase in program costs (including GBHP), delay in implementation of the program, decrease in benefits, and combinations of these events. Further, a sensitivity analysis was carried out on the additional amount of capacity (MW) from private power projects commissioned during the period, particularly by FY2002.
23. The results of this sensitivity analysis are given below:
Table 2: Sensitivity Analysis on Base Load Forecast
Case ERR
Base case 26.7%
20% Higher Capital Costs 22.9%
2 years delay in program commissioning date 23.1%
10% lower benefits 24.4%
20% higher capital cost and 2 years delay in program commissioning 19.2%
24. The results of the sensitivity analysis on an increasing amount of new capacity due to new private sector thermal power plants to be commissioned before GBHP are presented below.
Table 3: Sensitivity Analysis on Private Thermal Power Plants to be implemented by FY2002 for the Base Load Forecast
Additional Amount of Private Sector Power Capacity ERR
Base Case (5202MW pnvate thermal power plants) 26.7%
Base Case with 5802MW 25.3%
Base Case with 6402MW 24.1%
Base Case with 7002MW 23.1%
Base case with 7602MW 21.1%
25. Sensitivity analysis of the ERR has also been carried out for the Low load forecast. The results are presented below.
Table 4: Sensitivity Analysis on Low Load Forecast
Case ERR
Low case 20.2%
20% Higher Capital Costs 17.4%
2 years delay in program commissioning date 14.1%
10% lower benefits 18.7%
20% higher capital cost and 2 years delay in program commissioning 11.3% -203- ANNEX 8.2 Page 7 of 12
26. Similarly to the Base Case, a sensitivity analysis has been carried out for the Low Load Forecast to test the robustness of the ERR to increasing additional capacity of private thermal power plants. The results are presented below.
Table 5: SensitivityAnalysis on Private ThermalPower Plantsfor the Low Load Forecast
Additional Amount of Private Sector Power Capacity ERR
Low Case (3102MW private thermal power plants) 20.2%
Low Case with 3702MW (+600MW) 18.4%
Low Case with 4302MW (+1200MW) 17.0%
Low Case with 4902MW (+1800MW) 15.8%
Low case with 5502MW (+2400MW) 14.7%
Low case with 6102MW (+3000MW) 13.8%
27. Under the High Load forecast, the ERR is estimated at about 32%. A sensitivity analysis was carried out to test the robustness of the ERR to a 20% increase in capital cost of the program. The resulting ERR is about 28%
Risk Analysis
28. Introduction. The sensitivity analysis has demonstrated that the ERR of the proposed development program is robust to uncertainties related to capital costs, delay in program schedule, and to combinations of the above. The analysis has also demonstrated that the ERR is well above the opportunity cost of capital under different assumptions regarding the amount of additional capacity assumed to be installed by the private sector. However, the number of risks that are extraneous to the project design are numerous. Given that a combination of such risks could occur, a probabilistic approach in evaluating the economics of the proposed development program is warranted.
29. This approach assigns probabilities to the different scenarios so that a weighted average ERR can be obtained. In this way, each scenario is not treated as a simple alternative of any other, as is the case for the sensitivity analysis, but provides a good understanding of which outcome is more or less likely. Finally, such risk analysis allows to construct a probability distribution of ERRs.
30. Demand Profiles. The probability to be attached to each macroeconomic scenario, on the basis of which the demand forecast is formulated, is subject to change depending on the new developments in the country. Nevertheless, the Base scenario, i.e. gradual pace of reforms and uneven progress across different components of the program is much more likely to materialize than either the High scenario, i.e., deep reforms implemented in a timely fashion across all components of the program, or the Low scenario, i.e. serious policy slippage. Therefore the probabilities associated with the underlying macro and structural policies in each scenario (from which certain key outcomes such as the rate of growth of GDP, inflation, trade performance, etc. are derived), are the following: 50 percent for the Base scenario, 25% for the Low scenario, and 25% for the High Scenario.
31. Cost Profiles. The risk analysis considers two scenarios with respect to cost overruns for the power system development program. As regards investments -204- ANNEX 8.2 Page 8 of 12 in generation, which account for about 56 percent of the total investments during the period FY1994-2006, a distinction should be made between GBHP (the only new public sector investment) and private thermal power projects. The advanced level of preparation of GBHP, and the conservative cost estimates included in the analysis, as also demonstrated by the recent results of two of the main three bids, would suggest to assume moderate probabilities on cost overruns for this project. GBHP investments account for about 10 percent of the total cost of the power program FY95-2006, and about 18 percent of the generation capital cost in the same period. Based on the above, the following probabilities for the cost profile for GBHP have been assumed: 20 percent no cost overrun, 40 percent with cost overrun of 15 percent, and 40 percent with cost overrun of 30 percent.
32. Given the increasing private sector investments in the power system (accounting for about 68 percent of total generation cost during the period), it is unlikely that cost overruns could affect other generation projects. However, a distinction needs to be made between private generation projects, and ongoing public sector projects (accounting for about 14 percent of total generation investments in the period). For the private sector investments, the following probabilities have been assigned: 60 percent with no cost overrun, 30 percent with 15 percent cost overrun, and 1.0percent with 30 percent cost overrun. For ongoing public sector projects, the following probabilities have been assumed: 40 percent with no cost overrun, 50 percent with cost overrun of 15 percent, and 10 percent with cost overrun of 30 percent.
33. Similarly to other public sector projects, the implementation of transmission and distribution investments (accounting for about 44 percent of the total program cost in the period) could be subject to cost overruns. The following probabilities have been therefore utilized: 40 percent probability of no cost overruns, 50 percent probability of cost overruns of 15 percent, and 10 percent probability of cost overruns of 30 percent.
34. Based on the incidence of each of the above component in the investment program for the period FY1995-2006, the following weighted probabilities have been utilized: 45 percent probability of no cost overruns, 40 percent probability of cost overruns of 15 percent, and 15 percent probability of cost overruns of 30 percent.
35. Schedule Profile. The risk analysis of schedule delay in the power development program is similar to the one discussed above for the cost overrun scenarios. However, in order to take into account possible difficulties in securing the financing requirements for private sector projects, a higher probability has been attached to a two year delay in the program. Therefore, the following probabilities have been utilized:
no delay (40%) 1 year delay (40%) 2 year delay (20%)
36. IPP. As of March 1995, 32 projects with a combined capacity of about 9000MW were supposed to be commissioned in the next few years, including an agreement with a private sector group for the implementation of power generation complex of 1240MW based on imported coal. A recent analysis on those projects carried out in collaboration with the Government, and in consultation with representatives of private sector investors involved in those projects, concluded that about 1600MW of those projects are very likely to be commissioned by FY1998, and an additional 1000-1500MW could be commissioned by FY2000. The prospects for -205- ANNEX 8.2 Page 9 of 12 the remaining projects being implemented are considerably lower. This is because several LOSs were issued to sponsors with uncertain capability of implementing their projects. Further, only limited debt financing is likely to be available due, in part, to the Pakistan country risk perception from lenders, and the country credit ceiling from both export credit agencies and multilateral institutions.
37. Notwithstanding the above analysis, the least-cost analysis (see Annex 8.1) has demonstrated that the minimum additional private power generation required by the system by FY2002 is 3100MW (Low Scenario). Therefore, as the purpose of this analysis is to assess the robustness of the proposed program to uncertainties in the number of thermal power projects to be implemented, 3100MW has been taken as the minimum expected additional capacity. Based on the above considerations and analysis, the following probabilities have been therefore assigned to additional capacity of private power projects:
3100MW (50%) 5200MW (40%) 7200MW (10%)
38. Risk Analysis: Results. On the basis of the above analysis, there are four factors, i.e., demand, schedule profile, cost overruns and number of private power projects, each with three alternative states. The total possible number of outcomes is thus fifty-four. For each outcome, the expected value of the ERR, calculated as probability times its own ERR, is then summed over all outcomes to give the expected ERR. A probability distribution of ERR has been calculated, and shown in Fig. 8.1.
39. The expected value of the ERR is 18%, which is lower than the ERR of the Base case (27%), but still higher than the opportunity cost of capital. The probability of being below 12 percent is 8%. The histogram of the ERRs presented in Fig. 8.1 (probability distribution of ERR) indicates that the highest probability is associ.ated with ERRs in the range of 16% to 23% (combined probability of over 55%), followed by ERR between 12% to 15% (combined probability of about 25%). The remaining 18% is distributed between very high ERRs above 24% (about 10%) and ERRs less than 12% (8%). -206- ANNEX 8. 2 Page 10 of 12
40. It should be noted that under the Base and High demand scenarios, the probability of ERR lower than the opportunity cost of capital is zero, even under the most unfavorable combinations of higher capital costs, delay in the schedule, and increasing number of private power plants. The 8 percent probability of ERR being below 12% is mostly attributable to a combination of Low demand scenario, 30 percent higher capital cost, and two year delay in the implementation of the program.
41. A sensitivity analysis has been carried out on the probabilities attached to the capital cost, schedule and demand risks (see Table 6) . The results again confirms that the weighted-risk ERR is around 171-18%, and the risk of falling below 12% is in the range of 10%, mostly attributable to a combination of the above greater risks with a Low demand scenario.
Table 7: Sensitivity Analysis
Weighted Average ERR Probability of ERR < 12%
Basic Risk Analysis 18.0% 8.0%
With Higher Capital Cost Risk (Probability: 17.4% 9.0% 30%=0, 40%=+15%,30%=+30%)
With Greater Schedule Risk (Probability: 17.5% 9.6% 40%=No, 35%=1 year, 25%=2 year)
With Greater Demand Risk (Probability: 16.6% 14% 50%=Low,40%=Base, 10%=High) I I
Economic Analysis on Ghazi Barotha alone
42. Introduction and Main Assumptions. Hydropower projects are generally more prone to cost overruns and schedule delays than smaller thermal power projects. Thus, in order to more directly assess the impact of these adverse events on the economic viability of Ghazi Barotha, a separate economic analysis has been developed for the project alone. The ERR is calculated on the basis of the incremental cost and benefits streams associated with the implementation of the project.
43. The costs associated with GBHP consist of the estimated capital costs and related operating and maintenance costs calculated as a percentage of the capital costs (one percent) . Benefits are valued in terms of the incremental demand that can be served by the project. Such demand has been calculated on the basis of the average annual electricity generated by the project less the transmission and distribution losses. The valuation of the benefits derived from incremental sales has been desegregated by consumer categories, i.e., residential, industrial, agricultural, and others, according to their shares in the demand forecast. The methodology utilized to estimate benefits for each consumer category is almost identical to the one adopted in the previous analysis on the power investment program. New consumers are assumed to be connected to the grid as a result of the implementation of the project, on the basis of their proportion in overall demand, and their average consumption in FY2002. This connection program is assumed to be implemented in four to five years. -207- ANNEX 8.2 Page 11 of 12
44. ERR and Sensitivity Analysis. The results indicate that the estimated ERR is about 30%. Such estimate is consistent with the results of the economic analysis on the power investment program, as GBHP is more economical than the thermal power plants representing the bulk of the generation investment program. The estimated ERR is independent from the demand scenario adopted, as the least- cost analysis has demonstrated that even under the Low scenario, GBHP is required at its earliest completion date.
45. A sensitivity analysis has been developed to determine the robustness of the economics of the project to changes in cost profile and schedule. The results, which are presented in Table 8 below, show that the ERR is always above 20 percent.
Table 8 - Sensitivity Analysis on GBHP Alone
ERR
Case with no delay and no cost overruns 29.50%
with 1 year delay 26.14%
with 2 years delay 23.52%
with cost overrun of 15% 27.35%
with cost overrun of 15% and 1 year delay 24.34%
with cost overrun of 15% and 2 years delay 21.96%
with cost overrun of 30% 25.56%
with cost overrun of 30% and 1 year delay 22.82%
with cost overrun of 30% and 2 year delay 20.65%
46. Risk Analysis. Based on the methodology and similar assumptions adopted for the power investment program, a risk analysis on the GBHP alone has been developed. While the scenarios identified in the previous analysis are the same, a different set of probabilities and risks have been identified for this analysis. In particular, a higher cost overrun risk and a schedule slippage risk have been assigned to the project alone, given its riskier nature compared to the overall power investment program. The new scenarios and probabilities are given below:
Cost Overruns Schedule Slippage
No Cost Overruns probability I0.20 No Delay probability 0.20
+15% Cost Overruns probability = 0.40 1 Year Delay probability = 0.40
+30% Cost Overruns probability = 0.30 2 Year Delay probability = 0.30
+40% Cost Overruns probability = 0.10 3 Year Delay probability = 0.10
47. The risk-weighted ERR for the project alone is estimated at about 23%, and its probability of falling below the opportunity cost of capital is zero. This -208- ANNEX 8.2 Page 12 of 12
is because under any unfavorable scenarios considered, the ERR remains above the level of 18%. The least-cost analysis (see Annex 8.1) has demonstrated that, even under the Low demand scenario, GBHP is selected at its earliest completion date. Thus, the adverse impact derived from a combination of high cost overruns and schedule delay, though in evidence, does not affect the overall viability of the project. The probability distribution of ERR on GBHP alone is shown in Fig. 2 below.
Probability Fig. 8.2 - ProbabilityDistribution of ERR on GBHPalone
0.40
0.35
0.30
0.25___
0.20
0.15
0.10
0.05
0.00 18%-20% 21%-22% 23%-24% 26%-30% ERR -209-
ANNEX 9 Page 1 of 1
PAKISTAN
Ghazi-Barotha Hydropower Project
Documents in the Proiect File
1. PHC Feasibility Study (August 1991- Volumes 1 to 9)
2. GBHP-Project Report (July 1992)
3. Design Reports Nos. 4, 5, and 6 for Barrage, Power Channel and Power Complex respectively
4. Resettlement Action Plan (RAP)
5. Environmental Assessment Executive Summary (October 1994- PHC)
6. Least-cost Analysis Report
7. Economic Analysis Report
8. WAPDA's Financial Projections (FY96-FY2002)
9. WAPDA' s Audited Financial Statements (FY94)
10. Pakistan Domestic Resource Mobilization Study Draft Final Report (October 1995)
11. WAPDA Review of Financial Performance Criteria Draft Report (October 1995)
PAKISTAN GHAZI BAROTHA HYDRO POWER PROJECT Drawing 1
Section of Standard Bays Bridge Crest axis | Bridge ~ Gantry crane rail
10 0 10 20m Scale Normalpond level340.00
Drainage tE12s :32.0:15O 2 47.00 56.00 23.00 1900o17.00 Barrage Layout linkgs/c/road X<\ Cunette t ~~~~~~Spur-,'' \Standard bays Fuse plug V Y tl sr sr Gr st s7S f _ _ t = ~~~~~~~~ Rightguide bank ( Ei /'' g-P ~~~~~~~~~~~~~~~~~~~~Co.nto building Separation dyke; v |-Didngsld Power~ channel~~ ~ ~ ~ ~ ~ ~ ~~~~~~~~igtfln Undersluices I.- ~~is{ gg ~~Skimmingplatform .eA ~~~~~~~~~~~~~~~~Lfeguidebank GHAZI VILLAGE ,, ,>+ \ ~~~~~~~~~~~~~~Abandonedrailway line /SZ-' ~~~~~~Headregulator 1001020 ; ; < ~~~~~~~~~~~~~~~~~~~~~~Scale ksr/cS/w52996ab PAKISTAN GHAZI BAROTHA HYDRO POWER PROJECT Drawing 2 Typical Spoil Banks . e ~~~~~~~~~~~~~~~Spoil Bank- . l l 9 ~~~~~~~~~~~~~~~Power Channel------ Spoil Ban- Spoil Bank j \Cross DrainageStructure ' .Nallah Power Channel - Typical Cross Section _N.S.L. Varies 1.0Freeboard road Underdrainage /-- ' L -Sumps Sumps- 10 0 0o 2Drm Scale ksr:c5/w52996cd PAKISTAN Drawing 3 GHAZI BAROTHA HYDRO POWER PROJECT Power Complex Layout Plan N Road to Dakhner g 9 \ ~~~~~~~~~~Northheadpond\ / J A g t Power channel PenstocksaFoe Power House--.~reuao trN Switchyard O 0 < \ > ~~~~~~~~~~~~~SourthheadpondJ _Barotha s; 200 0 200 400m 4 E?0 To Attock |Scl SectionThrough Powerhouse Draft tube gates Surge Unloading Bay gantry crane (1OOt) Arrestor *\ \ | ~~~~PowerhouseRoof lEL 293.00 ELt 282.50L. l _ 2 2x550/60t E.O.T Main Cranes Mf.ELW 2250.10 L EL 266.00 Tansformer ll (unit) 3 - 70/101 Overhead , L L | ~~~~~~ServiceCraneEL2.5 I~~~~~~~~~~~~~E272.50 j ~~~~~~~~~~~~EL 266.00 _ Min. TW.L. EL 260.00EL263 EL 250.OC l___ Sill level EL 238.00 4 24.00 10 13.50 10.50 10 0 10 20m Scale ksr/c5/w52996ef LAHORERING TURKMENISTANA TAJIKIsT1N CHINA ,dA 'I A- ~I I /_ - AFGH \NISTAN ToAXIo/Te.l ,// :).''S\~~ // g. _ r PAKISTAN Rci~~54 TUND\ , I~~~~~~~~~~~~~IDI NEr.t_ (J IDI ;; Multon ~~- _~~= < \; . /, _ L I N D I A / ~~WARSAKr /Apb -. 1--- I ) -~~~~~~~A " FAISALABADRING JAUIHANJAMU 1,AGH SIAMAlAD AND I'DUNIV ~~KASIIMIR \ t v~ ~KSK .AR .TA R /6S I AiMf GATl j BANNU\ REW A NGMALA CHASHMAA 0-~DU NABANWALA NUCLEAR KH\EL NISHATBD RA O MIANWALI \ N SAMMUNDRI wl KKHA SIALKOT ROAD 1 L1, \' SAROODU\ 11 11," -. hb MoIL,o/P,o,nohob - X.--.;- ~~~~~~~~~~~~~~~~~~~~~~~~URANWALA_X - ! \| , ; \ / - 66 / N SHAEi. RA < - j 0 ZHOB/ ,P. ;/| 9tAISALAD -10(,ZHO'B- - - . 0 g NT F DjNA / _#) \ _~~~~/ fl °-CTN VEAl' AOQUETTA / 0L MU7~~~~~~~~~~ADFOGAIR "\sA 330 - ( 0 OMULTAN ~VEHARI-- ) BAHAWALPUR , / \ ) GU,?._, .RGUD Y KHAN - - O KHUZDAR / iP PAKISTAN - / -GHAZI^/ BAROTHA HYDRO POWER PROJECT MAIN POWERSTATIONS AND HIGH VOLTAGE TRANSMISSIONLINES DADUO/ UNDER PROJECTCONSTRUCTION EXISTING (- \ \\ 1 .MURO . IRANSMISSION LINES -26 (_ _ -26 - =- _ -\ ) 72°500v 26 - 1 ~~~~~~~~~~~~~~~~~~~220EV LUAMSHORO f i 5~~~~~~~~~~~~~~~~~~~~~~~~__UBSTATIONS 8 I / / > HALA ROAD _ 765 v HIE K O h 500 Lv 0 AO HYDERABAD 1 *220 kV Ac* 5 POWER SIATIONS KARACHI NUCLEAR K \ HYDROELECTRIC POWER PLANT ; * THERMAL NUCLEAR <~,_ g (\,> -,, } [, (> C0,,, MAJOR CITIES rn /s I.' j _e_ ~ @ NATIONAL CAPITAL w w' -- J 0 50 TOO 150 200 -D- INTERNATIONALBOUNDARtES _ 66 2 I KII I I I '12 ~~~~66 KILOMETERS 74 'I) ~~~~I -0' IBRD2510, ToShang PAKISTAN GHAZIBAROTHA HYDRO POWER PROJECT PROJECTLAYOUT PROJECTCOMPONENTS I POWERCOMPLEX BARAGE .__ _- __ POWERCHANNEL TURKJENISTAN, `y -2_>- ? ITAILRACE 'UZBEKISTANTAJIKISTANV: - Y T A Z / ,/ 36'; _ ' 35._ . t / 36 S * NATIONALCAPITAL ~~ >;z~??~. TOWNS AFGHANISTAN MIDQTARY COMPLE \ dt,KASHMIR,,S MILITARYCOMPLEX\ / 3-% ROADS 32, r OM~ p _ -. ----.- ' RAILROADS ToMonshero PAKISTAN J RIVERS /1 _-_- _ - -,1 t2PROVINCE BOUNDARIES 28' '28- - - INTERNATIONALBOUNDARIES ,' - INDIA 62' 66 7 24' . 66~~70' 74. ~~~~~~~ToMordon. 7 Mardan \ t-4C)R '" - W,1-4 RONT9ER N ~~~~~~~~~~~~~~~4~~~~~~~~~~~~~~~~~~~rpur Nowshe t S&e/ t J ~~~~~~Hazro i Afo urce / t . , s ~PU=, oI JAB > ISLAMABAD o oio-osodony.j''.\ o~tn -Jmpa. nolimply, ?/ on th poltof Ih World > oo-kGcu, ony judgmel O 10 MILES ~1:> > _ bourdories. i O~~ 5 ~ 10 15KILOMETERS > ~ TooMil3nwnl Fatchiang Rawapimd 1 L~~ TO Mianwalii NOVEMBER1995 GD a-) O a 2;; < 2-1 I.E