Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 24899 IMPLEMENTATION COMPLETION REPORT (CPL-30240; SCL-3024A) Public Disclosure Authorized ON A LOAN IN THE AMOUNT OF US$ 485 MILLION TO THE GOVERNMENT OF INDIA FOR THE NATHPA JHAKRI POWER PROJECT Public Disclosure Authorized 09/25/2002 Energy & Infrastructure Unit South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective ) Currency Unit = Rupee (Rs.) Rs. 13.3 = US$ I (at SAR) US$ I = Rs. 48.5 (at Loan Closing Date) FISCAL YEAR April 1 March 31 ABBREVIATIONS AND ACRONYMS CAT Catchment Area Treatment CEA Central Electricity Authority CERC Central Electricity Regulatory Commission CMD Chairman and Managing Director CWC Central Water Commission DRB Disputes Resolution Board GHP Government of Himachal Pradesh GOI Government of India HPSEB Himachal Pradesh State Electricity Board IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding ICR Implementation Completion Report IERR Internal Economic Rate of Return NHPC Nathpa Hydro Power Corporation NJPC National Jhakri Power Corporation PAFs Project Affected Families PAPs Project Affected Persons PFC Power Finance Corporation PIB Public Investment Board PLF Plant Load Factor POE Panel of Experts PPA Power Purchase Agreement QAG Quality Assurance Group of World Bank R&R Resettlement and Rehabilitation ReAP Rehabilitation Action Plan RBI Reserve Bank of India SEB State Electricity Board SERC State Electricity Regulatory Commission MEASURES AND EQUIVALENTS I Kilovolt = 1,000 volts (V) I Kilovolt ampere (kVA) = 1,000 volt-amperes (VA) 1 Kilowatt-hour (kWh) = 1,000 watt-hours 1 Megawatt-hour = 1,000 kilowatt-hours 1 Gigawatt-hour (GWh) = 1,000,000 kilowatt-hours I Million watt (MU) = 1 Gigawatt-hour (GWh) INDIA - Nathpa Jhakri Power Project - Loan 3024A-IN Implementation Completion Report PREFACE This is the Implementation Completion Report (ICR) for the Nathpa Jhakri Power Project in India, for which Loan 3024 and 3024A-IN in the amount of US$485 million equivalent was approved on March 2, 1988 and made effective on August 31, 1988. The Borrower was India, acting by its President. The Implementing Agencies for the project were the Nathpa Jhakri Power Corporation (NJPC), the Himachal Pradesh State Electricity Board (HPSEB) and the Central Electricity Authority (CEA). The project comprised a 1,500 MW hydro generation component, the corporate strengthening of HPSEB, the construction of transmission components in Himachal Pradesh, and technical assistance to CEA. Due to force majeur delays in implementation of the hydro generation component, the original loan closing date of December 31, 1997, was extended twice, firstly to December 31, 1998, and then to March 31, 2002. The project had not been completed by March 2002. However, the first of its six turbo-generators is scheduled for commissioning in December 2002, and it is expected that implementation will be completed in 2003. In November 2001, the Bank informed the Government of India that it would be difficult to further extend the loan closing date. GOI did not request an extension, and the loan closed on March 31, 2002. On August 22, 2002, the remaining balance of US$54.7 million in the loan account was cancelled. This ICR was prepared by Sunil Khosla (Task Team Leader), Judith Plummer (Senior Financial Analyst), I. U. B. Reddy (Social Development Officer), Devesh Mishra, (Senior Procurement Specialist), Tapas Paul (Consultant Environmentalist), Sunil Mathrani (Consultant Economist), Anthony Sparkes (Consultant Engineer) , Alessandro Palmieri (Lead Dam Specialist), Deepti Sharma and Fowzia Hassan (Program Assistants). Reviewed by Penelope Brook, Sector Manager (Energy), South Asia Region and Kurt Schenk (Senior Power Engineer, East Asia and Pacific Region). Preparation of this ICR began during the Bank's final project supervision mission in March 2002, and was finalized during an ICR mission in April and May 2002. It is based on material in the project files and site-specific information collected during the supervision and ICR missions. The aide memoire of the ICR mission is provided as Attachment A. The implementing agencies contributed to the preparation of this ICR by providing technical data, details of the cost estimates to project completion, financial records and projections. The agencies' evaluation of the implementation exercise, NJPC's plans to complete, operate and maintain the hydropower scheme, are provided in Attachment B. Vice President: Mieko Nishuimizu Country Director: Michael Carter Sector Manager: Penelope J. Brook Task Team Leader: Sunil Kumar Khosla INDIA NATHPA JHAKRI POWER PROJECT - Loan 3024A-IN Implementation Completion Report CONTENTS Page No. I. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 6 5. Major Factors Affecting Implementation and Outcome 14 6. Sustainability 17 7. Bank and Borrower Performance 18 8. Lessons Learned 21 9. Partner Comments 23 10. Additional Information 24 Annex 1. Key Performance Indicators/Log Frame Matrix 25 Annex 2. Project Costs and Financing 26 Annex 3. Economic Costs and Benefits 29 Annex 4. Bank Inputs 32 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 35 Annex 6. Ratings of Bank and Borrower Performance 36 Annex 7. List of Supporting Documents 37 Annex 8. Latest Update on Implementation Progress of the Project 38 Annex 9. Attachment A. ICR Mission Aide-memoire 39 Annex 10. Attachment B. Contirbutions to the ICR by the Beneficiaries-NJPC, HPSEB 55 and CEA ProjectID: P009869 Project Nanie: Nathpa Jhakri Power Project Team Leader: Sunil Kumar Khosla TL Unit: SASEI ICR Type: Core ICR Report Date: September 30, 2002 1. Project Data Name: Nathpa Jhakri Power Project L/C/TF Number: CPL-30240; SCL-3024A Countrv/Departrnent: INDIA Region: South Asia Regional Office Sector/subsector.' Power (95%); Sub-national government administration (5%) KEY DATES Original Revised/Actual PCD: 01/28/1986 Effective: 08/31/1988 01/3011990 Appraisal: 11/30/1987 MTR: 07/01/1994 03/31/1997 Approval: 03/02/1989 Closing: 12/31/1997 03/31/2002 Borrower/Implementing Agency. GOI/NATHPA JHAKRI POWER CORPORATION; HPSEB AND CEA Other Partners: STAFF Current At Appraisal Vice President: Mieko Nishimizu Atilla Karaosmanoglu County Manager: Michael F. Carter Bilsel Alisbah Sector Manager: Vincent Gouarne Eugene McCarthy Team Leader at ICR: Sunil Kumar Khosla Alfonso Sanchez ICR PrimaryAuthor: Anthony E. Sparkes 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Un]ikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability:L InstitutionalDevelopment Impact: M Bank Performance:U Borrower Performance:U QAG (if available) ICR Quality at Entry: U U Project at Risk at Any Time: Yes 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: 3.1.1 The proposed project was designed to (a) alleviate the acute shortage of electricity generating capacity in the Northem Region of India, especially at times of system peak load, by developing 1500 MW of renewable and versatile run of the river hydro-power at Nathpa Jhakri on the river Satluj in Himachal Pradesh state; (b) reinforce and expand the transmission system of Himachal Pradesh; (c) modemize and strengthen HPSEB operations, and its load and financial management capability; and (d) strengthen CEA, CWC and other selected agencies in the planning, design and management of hydropower projects. 3.1.2 These objectives are judged to have been appropriate, as detailed in the following paragraphs. 3.1.3 In 1987, the Northern Region of India, was experiencing serious power deficits. Only about 75% of the peak demand and 90% of the energy demand was being met and the utilities of the Northem Region were resorting to electricity rationing. Poor supply voltages and periods of low system frequencies were leading to increased costs to consumers, especially industries. It was also difficult to operate with appropriate flexibility, the predominant thermal capacity to follow the varying peak demand, which hydropower can usually more easily, efficiently and economically accommodate. To correct the imbalance between thermal and hydroelectric sources, and to meet the increasing unsupplied demand, it was appropriate to develop a large hydroelectric scheme. The 1,500 MW Nathpa Jhakri scheme was the preferred component in the Northern Region's least cost long-term expansion plan. 3.1.4 However, if the scheme was being considered today, its positive contribution of limiting the deleterious impact on the environment of India's inevitable power sector expansion, alongwith the rmn-of-the-river scheme's minimal social and environmental impacts, especially as they could be mitigated appropriately, would feature high in its appraisal. Nathpa Jhakri will generate into the Northern Region grid about 7,000 GWh of electricity each year. In doing so, it will delay the necessity of the construction of either coal or oil-fired thermal plant of a similar capacity, and will thus hugely reduce India's greenhouses gas emissions, and