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_,, r ° Document of 9 - \\~~~~~~~~~~~~C- u O %ic ,; Q w ..... - ... .. - [; v e 6 > --O -t7~~~~~~~~~~~~~~~ g "'9 Public Disclosure Authorized 13~~~~~~~~0 5 9F ' Doumn of( - ';0 K9 * t; ;3rs il ~~~~~~~~~~~~~~~~Report,No.698t-IN L, I, 99* ) C STAFFAPPRA1AIS REPORT Cb Public Disclosure Authorized "9~~~~ 9' '' :' '. , 0kd 9; '0 ;R S . '; ', ' 2p t a~~~~~~~~~~~~~~~~~~~~~~~~~~~' ' 'j O '9 Public Disclosure Authorized . - ~~~~~~~* 9 .j o - 9 ,;. .. ,,- o . ., o . ' V99? 0~~~~~~ lb / ntowws be ..~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.their~ Ibtns'a W a,Mk~~~~~~~~~~~~~~~~~~~~~~~~- Public Disclosure Authorized Asial C t De artment 1 (Lidig) .Q-9 Ti!ansport<az Ynergy Operatiodi~Division ; .; d~O t ThSdoqxna~~refl tk4eodcddktrbM * adn"y be used thoiEeperkrsu wof . '~~ ~~ 'D lo~~~~ n- - - 'N >CURRENCYOEQUIVALENS; -.Z CurrencyUnit - Rupees(Rs) =il;Rs Y 1,00 - ,Paisa100 j U/g;.00....tS$1+O =/-' Rs 13.00- sR1.00 US$0.077L Rs 1,000,000 US$76,923 MEASURES AND EQUIVALEMtS 1 Cubic;,Meter * 1.31 cubic yar4'i(cuyd)Y 35.35 cubic feet (cu ft) 1 Hectare(ha) " 10,000 squarbAters - 2.471 acres (ac) 1 Ton (t) - 1 metric ton = 2,200.,lbs 1 Kilocalorie(kcal) - 3,97BritishThermal units,(BTU) 1 Kilovolt(kV) 1,ooo volts (V) 1 Kilovoltampere (kVA) = 1,000 volt-ampefes(VA) 1 Megawatt(MW) = 1,000kilowatts (kW) 1 millionwatts 1 Gigawatt-hour(GWh) = 1,000,000kilowatt-hours'- 1 Horse Power (HP) 0.75 kilowatts (W) ABBREVIATIONSAND ACRONYMS AG - AccountantGeneral of Karnataka' i' CAS - Commercial Accoutfifiig System CEA - CentralElectricity Authority CIF - Cost Insurance Freight cWC - Central Water Commission DOPW - Department.of-Forestsand Wildlife GO1 -, -Governwent of.Incdia, GOK - Governmentof Xarnataka GOKDF - Government of Karnataka Department of Forests IBRD. - InternationalBank for Reconstructionand Development ICB - InternationalCompetitive Bidding ' 'IDA - InternationalDevelopment Association KEB - KarnatakaElectricity Board KPC - Karnataka Power torporation LCB - Local CompetitiveBidding LIB - Limited InternationalBidding LRMC - Long Run MarginalCost MIS - ManagementInformation System NHPC - NationalHydro ElectricPower Corporation NPP - NationalPorr Plan P.. NTPC - NationalThermal Power Corporation 06M - Operation and Maintenance , PFC - Power Finance Corporation 7 POE - Panel of Experts REB - Regional Electricity Board REC - Rural ElectrificationCorporation SCADA - System Control and Data Acquisition SEB - State ElectricityBoard SOE - Statement of Expenditures SREB - SouthernRegibnal Electricity Board STRS - Sharavathi Tailrace Scheme Beneficiari,isfinancial year ends March 31 - -S D 'I, ............................................................. FOROrFcIAL US ONLY INDIA SECONDKARNATAKA POWER PROJECT Loan and ProjectSummary Borrower: India,acting by its President. Beneficiaries: KarnatakaPower Corporation(KPC)s and KarnatakaEleptricity Board (KES). Amount: US$260million equivalent. Terms: Twentyyears, including a five-yeargrace period, at the-Bank'sstandard variable interest rate. OnlendingTerms: Governmentof. India (GOI) to Governmentof Karnataka (GOK): As part of Centralassistance to Karnataka for developmentprojects on terms and conditions applicableat the time. 0OK to KPC: About US$130million. Repaymentover twentyyears, including a five-yeargrace period,at GOK's interestrate applicableat tfi time for its lendingto KPC, but not less than ll.51 per unnum. CDK to KEB: About US$130million. Repaymentover twentyyears, includinga five-yeargrace period,at COK's interettrate applicableat the time for its lendingto KEB, but not less than ll.5S per annum. -I will bear the foreignexchange and interestrate risks. ProjectDescriptiont The Project'smain objectivesare to: (a) alleviate,the acute shortageof generatingcapacity in Karnatakaand the SouthernRegion by dovelopingthe 240 MW Sharavathi .Tailrace(STRS) Hydroelectric Station; (b) provide adequatetransmission capacity to evacuatepower from the STRS; (c) reduceenergy losses to economiclevels and improveservice quality by strengtheningthe State'stransmission grid and Bangalore'sdistribution system;(d) reducedistribution system capital and operatingcosts by introducingnew technologies;and (e) reduce indtallation,operation, and maittenance costsby providingmodern training,tools, and equipment. With the exceptionof those risks pertainingto the Talakalatle dam, there are no unusual technicalrisks associatedwith the project, Geologicalinvestigations have confirmedgood rock Th dAmumntbo' naM disutfibbnndmube md tin0*stns onb[a f pefoenue| ofttoflkdufblm Is ontntsmy t oftewibbeticsoud _houWodd Oankauc"w j ) -i i- -formationin the area of the hydroelectricscheme. The risks relatedto the Talakalaledam are being minimised by the use of specialisedconsultants. KPC and K83 ha*A sufficientstaff who ate experiencedin supervisingand executingactivities similar to those includedin the propose4.Project.Consultants will be used in all areas in which their in-houseexpertise is lac14king. 8etimatedCostt 1/ -Itim. Loeal Foreign Total .. ~--(U8$-- Million)- PreparatoryWorks - 6.0 0.1 6.1 Afforestation 0.5 - 0.5 Civil Works 43.7 8.6 52.3 t'owerMouse Equipment 36.3 53.4 89.7 Repairof Talakalale aum 7.4 3.0 10.4 TransmissionLines 51.9 9.4 61.3 Substations 29.2 27.9 57.1 DiltributionEquipment 31.9 20.5 52.4 InLtitutionalDevelopment 3.3 3.4 6.7 Engineeringand Administration 33.3 1.0 34.3 TotalBase Costs 243.5 127.3 370.8 PhysicalContingencies 20.2 9.6 29.8 Price Contingencies 43.2 23.3 66.5 Tot'alProject Cost 306.9 160;2 T467.1 Interestduring Construction: 68.0 35.0 103.0 Total FinancingRequirSments 374.9 195.2 570.1 1/ Includingabout WS$82million in taxes and duties. IBItD 10159.'O. .*2 0. 0,, ' 5 -i ii- ' ' F fi c,in,4,- PlanS, . " > - ^ .0 ' 2 ° - O ~~~~~~~(US,$Million) ?, 8outaeKP,i-- notat Loca39, ours 39.6 ~37.9192571 IUBD 82 101.0 ' 159.0 260.0 *1 Cm . i 5OK 159.8 36.2 ,. 196.0 -oKPCt ou 39.6b ;2 39.6 - KU r A 5 74.~5 - 374.9 195.2 "5S70.1 I- . istimatedDisbursements: , _USU Milli3n) la:nkFT ,FY89 F"Y90 FY91 FY92 FY93 FY94- FY95 FY96 FY97 - Annual 26.4 28.8 4.8.2 52.0 62.4 30.6 7.8 3.0 0.A C^umulative 26.4 55.2 103.4 155.4 217.8 248.4 256.2 259.23260.0 lateof ieturftZAbout. 12X. 21O' -0 ' '2 .0 O~~~~~''( O' .9~~~~~~~~ f ,.,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~2 )~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I '21~~~~~~~~~~ INDIA SECONDKARNTAXA POWER PROJECT STAPPAPPRAISAL REPORT - Table of Contents Page No. I. SECTORALCONTEXT .................. CoaercialEnergy Resources ... ,.......................... 1 ElectricitySupply and Demand- 2 Organizationof the Powe 8ubsector ........................ 3 Financeand Pricing*............................... 4 PowerSubsector Plauning , .............................. Managementand Operations .......................... S5..... OOI's Strategyin the Power Subsector....................... 6 Bank CroupStrategy in the PowerSubsector .8 a... Bank Group Participationo.....................*........... 10 II. THE BENEFICIARIES 11 Introduion 1 ARANATAKEPOWER CORPORATION ....................... 11 Background 11 Organization**e**,*.. 0* o .. ..............e* 12 P ersonneland Staffing ........... * * ...*...*.. .*o..... l i00* Planning*e-Oooooooo,0e9000006e;00-00..- ..-.... 12 ProjectImplementation ., 13 Operation and Maintenance 13 Training* ........................... 0......... 13 KAINATAKAELECTRICITY BOARD o........................ * ....0 14 ,'Background** ***** * o............. .*....... ......... 14 Organization oo*o*oo.oo.o0o0000******** 14 Personneland Staffing .*000o00000**o*0* 15 Planning 15 Operation and Maintenance ..................... 16 Load Dispatch . ........... ....... .. 16 MaterialsManagement ..................... 17 Training00000 0 .**..*... 17 Thisreport which is basedon the findingsof an appraisalmission to India in May/June1987, was preparedby Messrs.A. Guletone(Power Engineer), W. Jones(Senior Economist), R. Sharma(Financial Analyst), COK. Teng (FinancialAnalyst), and A. Posada(Consulting Engineer). -I PaLe no III. THE PROJECT .............. , 17 ` ProjectSetting ..... ............. e.g...... 17 ProjectObjectives *co.... oece.e- *c..e.e...ecgcoe ogce 19 ProjectDescription . ............... 19 ProjectEngineering 20.......0 ProjectImplementation and ConstructionSchedule 21 ProjectCosts 222.......... ProjectFinancing ........ 25 Procurement 26 Disbursements 27 -ProjectOperation and Maintenance 28 ProjectMonitorini ... 28 ProjectRi$ks ......... o 29 WaterRights ... 29 Rese$tlementegece ... ge....eggggoc*c ecceo .* eg... ,**.g. 29 Forestryand EnvironmentalAspects ....... e...ge.. 29 IV. FINANCE .. 31 KARPATAKAPCtOW CORPORATION ........... .oe.. 31 Background . ........ g 31 AccountingSystems and FinancialOrganization ..g.... ...e 32 Audit Arrangementsce..c..... 32 FixedAsset Accountingc3......e.............. e eec... 33 Insurancea ...... ,,...... ,, eec.... 33 AccountsReceivable ... , 33 Tariffse 33 PastFinancial Performance cccee..egggegg*og. ecoe.ce.o.c 34 PresentFinancial Position oee.egeeee.geee*egceoe.eoge7*ioooo 36 FinancialRecovery Program ... -c .cecoeog 37 ForecastInvestment and FinancingPlans ........ ..... o 37 IncomeTaxes cg 39 ForecastFinancial Pev£ormance ' 39 FinancialReporting and Monitoring 40 KABNATAKAELECTRICITY BOARD geggo.g.........c.cc. ............;41 Background -, 41 AccountingSystems and FinancialOrganization ................ 41 Audit Arrangements ............... g 42 FixedAsset Accounting .... c.. ococegoc. oc.....cc.egg...... 43 Insurance ...... e . 44 Meteringand Billing.. occc.geo.cceoco.gccoc.ggeceeoeeoeoe 44 AccountsRecivable ceeee..geeeceeggegg..e.c.c...c......c....e.