completion report - asian development bank · project number: 24273 loan number: 1405 september...

Completion Report

Project Number: 24273 Loan Number: 1405 September 2005

India: Power Transmission (Sector) Project

CURRENCY EQUIVALENTS

Currency Unit – Indian rupee/s (Re/Rs) At Appraisal At Project Completion (30 September 1995) (9 July 2003)

Re1.00 = $0.032 $0.021 $1.00 = Rs31.40 Rs48.27

ABBREVIATIONS

ABT – availability-based tariff AC – alternating current ADB – Asian Development Bank CERC – Central Electricity Regulatory Commission EIRR – economic internal rate of return EMS – energy management systems FIRR – financial internal rate of return GBPP – gas-based power plant HVDC – high voltage direct current ICB – international competitive bidding ICT – interconnecting transformer IDC – interest during construction IPP – independent power producer LILO – loop-in loop-out NEEPCO – North Eastern Electric Power Company Ltd NER – northeastern region NHPC – National Hydroelectric Power Corporation Ltd PLCC – power line carrier communication PLF – plant load factor POWERGRID – Power Grid Corporation of India Ltd RSCC – regional system control center RTU – remote terminal unit SCADA – supervisory control and data acquisition system SEB – state electricity board TA – technical assistance

WEIGHTS AND MEASURES

A (ampere) – unit of current cct km – circuit kilometers GW (gigawatt) – 1,000 MW GWh (gigawatt-hour) – 1,000,000 kWh kV (kilovolt) – 1,000 volts kVA – kilovolt ampere kW (kilowatt) – 1,000 watts kWh (kilowatt-hour) – 1,000 Wh MVA – mega volt ampere MVAR – mega volt ampere reactive MW (megawatt) – 1,000 kW t – metric ton V (volt) – unit of electrical pressure W (watt) – unit of real power Wh (watt-hour) – unit of electrical energy

NOTES

(i) The fiscal year (FY) of the Government of India ends on 31 March. FY before a calendar year denotes the year in which the fiscal year ends. For example, FY2005 begins on 1 April 2004 and ends on 31 March 2005.

(ii) In this report, “$” refers to US dollars.

CONTENTS Page

BASIC DATA iii MAPS ix I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 2 A. Relevance of Design and Formulation 2 B. Project Outputs 3 C. Project Costs 6 D. Disbursements 7 E. Project Schedule 7 F. Implementation Arrangements 9 G. Conditions and Covenants 9 H. Related Technical Assistance 9 I. Consultant Recruitment and Procurement 10 J. Performance of Consultants, Contractors, and Suppliers 10 K. Performance of the Borrower and the Executing Agency 10 L. Performance of the Asian Development Bank 11 III. EVALUATION OF PERFORMANCE 11 A. Relevance 11 B. Efficacy in Achievement of Purpose 12 C. Efficiency in Achievement of Outputs and Purpose 12 D. Preliminary Assessment of Sustainability 12 E. Environmental, Sociocultural, and Other Impacts 13 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 15

A. Overall Assessment 15 B. Lessons Learned 16 C. Recommendations 16

APPENDIXES 1. Chronology of Main Events in Project Implementation 18 2. Cost Breakdown by Project Components 21 3. Project Costs and Summary of Contracts 22 4. Annual Average Exchange Rates 25 5. Project Financing Plan 26 6. Projected and Actual Disbursements of Loan Proceeds 27 7. Implementation Schedule 28 8. Organization Chart and Project Implementation Structure 30 9. Status of Compliance with Major Loan Covenants 31 10. Financial and Economic Evaluation 34 11. Summary of Environmental and Social Impact Assessment 49 12. Quantitative Assessment of Overall Project Performance 53

ii

CONTENTS Page

SUPPLEMENTARY APPENDIXES (available upon request) A. Balance Sheets 54 B. Income Statements 55 C. Sources and Uses of Funds 56 D. Recent Policy Initiatives in Indian Power Sector 57

iii

BASIC DATA A. Loan Identification 1. Country India 2. Loan Number 1405-IND 3. Project Title Power Transmission (Sector) Project 4. Borrower Power Grid Corporation of India Limited 5. Executing Agency Power Grid Corporation of India Limited 6. Amount of Loan (net after cancellations) $251.98 million First Cancellation $9.00 million 17 October 2002 Second Cancellation $6.50 million 20 February 2003 Third Cancellation $7.52 million 9 July 2003 7. Project Completion Report Number PCR: IND 915 B. Loan Data

1. Appraisal – Date Started 20 September 1994 – Date Completed 29 September 1994 2. Loan Negotiations – Date Started 10 October 1995 – Date Completed 12 October 1995 3. Date of Board Approval 16 November 1995 4. Date of Loan Agreement 18 July 1996 5. Date of Loan Effectiveness – In Loan Agreement 16 October 1996 – Actual 16 October 1996 – Number of Extensions None 6. Closing Date – In Loan Agreement 31 March 2001 – Actual 9 July 2003 – Number of Extensions 1 7. Terms of Loan

– Interest Rate 6-month variable ordinary capital resources (OCR) rate

– Maturity (number of years) 20 years – Grace Period (number of years) 4 years

8. Terms of Relending (if any) Not applicable 9. Disbursements a. Dates

Initial Disbursement Final Disbursement Time Interval 25 October 1996 9 July 2003 80 Months

iv

Effective Date Original Closing Date Time Interval 16 October 1996 31 March 2001 54 Months

b. Amount ($ million) Category or Subloan

Original Allocation

Last Revised

AllocationªAmount

Cancelled Amount

Disbursed

Undis-bursed Balance

1. Project Expenditure 234.00 223.54 15.50 200.52 7.52 2. Interest During Construction

41.00 51.46 0.00 51.46 0.00

Total 275.00 275.00 15.50 251.98 7.52 ª Last revised allocation completed on 1 August 2001. Source: Controller’s Department, Asian Development Bank, Manila.

10. Local Cost (ADB–financed) 0 C. Project Data

1. Project Cost ($ million)

Cost

Appraisal Estimate Actual Foreign Exchange Cost

338.34 251.98

Local Currency Cost

258.67 167.82

Total 597.01 419.80 Sources: Asian Development Bank estimates and data from POWERGRID.

2. Financing Plan ($ million)

Appraisal Estimatea Actual Cost Foreign Local Total Foreign Local TotalImplementation Costs ADB-Financed 234.00 0.00 234.00 200.52 0.00 200.52 POWERGRID 57.08 0.00 57.08 0.00 152.43 152.43 Domestic Borrowing 0.00 215.62 215.62 0.00 0.00 0.00IDC Costs ADB-Financed 41.00 0.00 41.00 51.46 0.00 51.46 POWERGRID 6.26 0.00 6.26 0.00 15.39 15.39 Domestic Borrowing 0.00 43.05 43.05 0.00 0.00 0.00Total 338.34 258.67 597.01 251.98 167.82 419.80

ADB = Asian Development Bank, POWERGRID = Power Grid Corporation of India Limited, IDC = interest during construction. a Including the cost estimates of additional subprojects approved in 1998. Source: Asian Development Bank estimates.

v

3. Cost Breakdown by Project Components ($ million)

Appraisal Estimate Actual Component Foreign Local Total Foreign Local TotalA. Base Cost 1. Augmentation of Northeastern

Transmission System 17.02 11.57 28.59 17.54 12.46 30.00

2. Agartala Transmission System 2.65 1.98 4.63 2.73 2.13 4.86 3. Kopili Stage-I Extension Transmission System

3.17 2.28 5.45 3.28 2.46 5.74

4. Northeastern Regional System Coordination Center (RSCC)

35.52 16.33 51.85 18.59 33.78 52.37

5. Unchahar Stage-II Transmission System

19.28 13.25 32.53 19.19 11.52 30.71

6. Vindhyachal Stage-II Transmission System

113.26 81.50 195.76 97.82 54.45 152.27

7. East South Interconnector 30.45 21.60 52.05 24.33 24.60 48.93 8. Grid Strengthening for North Bengal

10.31 6.88 17.19 7.22 4.30 11.52

9. Grid Strengthening for North Bihar

12.51 8.34 20.85 7.12 5.21 12.33

10. Grid Strengthening for West Bengal

1.78 1.19 2.97 1.04 0.74 1.78

11. Grid Strengthening for Orissa 1.88 1.25 3.13 1.20 0.78 1.98 12. Consultancy Services 2.00 0.00 2.00 0.46 0.00 0.46 Subtotal (A) 249.83 166.17 416.00 200.52 152.43 352.95 B. Contingencies 1. Augmentation of Northeastern


2. Agartala Transmission System 0.35 0.35 0.70 0.00 0.00 0.00 3. Kopili Stage-I Extension



6.14 4.27 10.41 0.00 0.00 0.00


3.08 3.59 6.67 0.00 0.00 0.00


19.05 22.80 41.85 0.00 0.00 0.00

7. East South Interconnector 4.94 5.86 10.80 0.00 0.00 0.00 8. Grid Strengthening for North Bengal

1.97 3.88 5.85 0.00 0.00 0.00

9. Grid Strengthening for North Bihar

2.39 4.70 7.09 0.00 0.00 0.00

10. Grid Strengthening for West Bengal

0.22 0.24 0.46 0.00 0.00 0.00

11. Grid Strengthening for Orissa 0.23 0.26 0.49 0.00 0.00 0.00 Subtotal (B) 41.25 49.45 90.70 0.00 0.00 0.00

C. Interest During Construction 47.26 43.05 90.31 51.46 15.39 66.85 Subtotal (C) 47.26 43.05 90.31 51.46 15.39 66.85

Total 338.34 258.67 597.01 251.98 167.82 419.80

Source: Asian Development Bank estimates.

vi

4. Project Schedule

Appraisal Estimate Actual Item Start End Start End Augmentation of Northeastern Transmission System Pre-award activities, including engineering,

preliminary site survey, preparation of cost estimates and tender specifications, and issue of tender notices

Mar 1994 Jun 1995 May 1994 Jun 1995

Opening of bids, evaluation, approval, and award of contract

Sep 1995 Mar 1996 Oct 1995 May 1996

Supply of equipment, installation, testing, and commissioning

Apr 1996 Sep 1998 Jun 1996 Dec 1999

Agartala Transmission System Pre-award activities including engineering,


Mar 1994 Jun 1995 Mar 1994 Jun 1995


Sep 1995 Mar 1996 Oct 1995 May 1996

Supply of equipment, installation, testing and commissioning

Apr 1996 Sep 1998 Jun 1996 Nov 2000

Kopili Stage-I Extension Transmission System Pre-award activities, including engineering,


Mar 1994 Jun 1995 Mar 1994 Jun 1995


Sep 1995 Mar 1996 Oct 1995 May 1996


Apr 1996 Jun 1997 Jun 1996 Jul 1998

Northeastern Regional System Coordination Center (RSCC) Pre-award activities, including engineering,


Mar 1994 Sep 1995 Mar 1994 Jun 1997


Dec 1995 Dec 1996 Aug 1997 May 2000


Jan 1997 Mar 2000 May 2000 May 2003

East-South Interconnector Pre-award activities, including engineering,


Mar 1994 Jun 1995 Mar 1994 Aug 1995


Sep 1995 Jan 1996 Dec 1995 Dec 1996


Feb 1996 Mar 1999 Jan 1997 Mar 1999

Vindhyachal Stage-II Transmission System Pre-award activities, including engineering,


Jan 1994 Sep 1995 Jan 1994 Aug 1995


Dec 1995 Jun 1996 Dec 1995 May 1996


Jun 1996 Mar 1999 Jun 1996 Oct 1999

Unchahar Stage-II Transmission System Pre-award activities, including engineering,


Oct 1994 Oct 1995 Oct 1994 Jan 1996

vii

Appraisal Estimate Actual

Item Start End Start End Opening of bids, evaluation, approval, and award of

contract Jan 1996 Jun 1996 May 1996 Nov 1997


Jul 1996 Jun 1999 Dec 1997 Dec 1999

Consulting Services for RSCC Pre-award activities, including scope of services,

preparation of cost estimates and tender specifications; and issue of request for proposals

Jul 1995 Sep 1995 Jul 1995 May 1997


Sep 1995 Jun 1996 Aug 1997 Jul 1998

Delivery of consulting services Jul 1996 Mar 1997 Aug 1998 Sep 2003 Grid Strengthening for North Bengal Pre-award activities, including engineering,


Jan 1998 Oct 1998 Jan 1998 Dec 1998


Jan 1999 May 1999 Feb 1999 May 2000


May 1999 Jan 2002 Jun 2000 Dec 2002

Grid Strengthening for North Bihar Pre-award activities, including engineering,


Jan 1998 Oct 1998 Jan 1998 Dec 1998


Jan 1999 May 1999 Feb 1999 May 2000


May 1999 Jan 2002 Jun 2000 Oct 2003

Grid Strengthening for West Bengal Pre-award activities, including engineering;

preliminary site survey; preparation of cost estimates and tender specifications; and issue of tender notices

Jan 1998 Oct 1998 Jan 1998 Dec 1998


Jan 1999 Mar 1999 Feb 1999 Mar 2000


Apr 1999 Mar 2001 Apr 2000 Jun 2003

Grid Strengthening for Orissa Pre-award activities, including engineering,


Jan 1998 Oct 1998 Jan 1998 Dec 1998


Jan 1999 Mar 1999 Feb 1999 Mar 2000


Apr 1999 Mar 2001 Apr 2001 Sep 2002

Source: Power Grid Corporation of India Limited.

5. Project Performance Report Ratings

Ratings

Implementation Period Development

Objectives Implementation

Progress (i) From 1 Jan 1997 to 31 Dec 1999 S S Overall Rating

(ii) From 1 Jan 2000 to 9 Jul 2003 S HS = highly satisfactory, S = satisfactory. Source: Project Performance Reports of the Asian Development Bank.

viii

D. Data on Asian Development Bank Missions

Name of Mission Date No. of Persons

No. of Person-Days

Specialization of Membersª

Fact–Finding 11–28 May 1993 4 72 a, b, e Reconnaissance 23 Nov–8 Dec 1993

5 16 b, c, e, h, i

Follow-up 28–30 June 1994 2 6 b, j Pre–appraisal (was upgraded to Appraisal Mission in April 1995)

20–29 August 1994 6 60 b, c, e, h, k

Follow-up 6–17 February 1995 4 48 a, b Inception 21 Feb–4 March 1996 4 52 a, e, f, g Review 1 25 Nov–5 Dec 1996 6 66 a, g, m, n Review 2 7–12 December 1998 3 18 a, l Review 3 2–5 May 2000 2 6 g Review 4 8–12 October 2001 2 5 g Review 5 16–17 Dec 2002 2 5 g Project Completion Review Missionb

26 April–1 May 2005 26 May 2005 28 – 29 May 2005

2 11 a, e

ª a = engineer, b = financial specialist, c = counsel, d = economist, e = procurement and/or consultant specialist, f = control officer, g = program officer, h = environmental specialist, i = investment officer, j = manager, k = mission secretary, l = project analyst, m = young professional, and n = assistant. b This report was prepared by V. Rao Karbar (Mission Leader), Project Implementation Officer (Energy), India Resident Mission (INRM); and a staff consultant . Source: Back-to-Office-Reports of the Asian Development Bank.

28 00'No28 00'No

96 00'Eo

91 00'Eo 96 00'Eo

23 00'No 23 00'No

91 00'Eo

Khandong

Kopili

Namirup

Lakwa

Mariani

TinsukaDibrugarh

Jonai

Silapathar

Dhemajai

NorthLakhmipur

Gohpur

Itanagar

SeppaRanganadi

GolaghatDoyang

Kiphire

Kohma

Dimapur

Lanka Diphu

Dimapur

BokajanMisa

KopiliNew

TezuPasighat

Along

Daporjo

Ziro

Miao

Kathalguri

Deomali

Khonsa

Umrangoy

KhliehriatUmiam

Kydemkulai

Umtru

Longpi

Chandrapur

Jagiroad

Umiam

Shillong

Cherrapunji

Nangal BibraTura

Tejpur

Guwahati

Amingaon

Samagur

RangiaRowta

Bornagar

Agia

Lhao

Tenga

Banpara

HaflongImphal

Imphal

Thoubal

Kakching

Ning

Thoukhong

Churachandpur

Dullabchera

Dharnagar

Kailashahar

Kamalpur

Khowal Ambassa

Agartala

Monarchar

Rokhia

Kumaghat

Saitual

KhawzawlW. Phaileng

Aizwal(Zemabawk)

AizwalKolasib

Serchip

Marpara

Lungsen

Lungdare

Lunglei

Luwinglai

AgartalaGPP

Mokokchung

Pilapool

Komeng

Loktak

M I Z O R A M

T R I P U R A

M A N I P U R

N A G A L A N D

A R U N A C H A LP R A D E S H

A S S A M

M E G H A L A Y A

I N D I A

AUGMENTATION OF NORTHEASTERN TRANSMISSION SYSTEM,AGARTALA AND KOPILI TRANSMISSION SYSTEMS

POWER TRANSMISSION SECTOR PROJECT

05-2878 RM

Substation

Thermal/Gas Power Station

Hydroelectric Power Station

Augmentation of Transmission System in

South Assam, Mizoram and Tripura

Agartala Transmission System

Kopili Expansion Stage - I Transmission System

400 kV Transmission Line (Existing)



220 kV Transmission Line (Under Construction/Approved)

132 kV Transmission Line (Under Construction/Approved)

State Boundary

International Boundary

Boundaries are not necessarily authoritative.

0 100 200

Kilometers

N

B H U T A N

M Y A N M A R

18

12

2116

15213

199

20 10

8

1

7

17

5

6

11

I N D I A

POWER TRANSMISSION SECTOR PROJECTUNCHAHAR STAGE-II TRANSMISSION SYSTEM

83 00’Eo

83 00’Eo74 00’Eo

74 00’Eo

31 00’No

74 00’Eo

31 00’No

HIMACHAL PRADESH

P U N J A B

UTTARANCHAL

U T T A R P R A D E S H

R A J A S T H A N

M A D H Y A P R A D E S H

CHHATTISGARH

BIHAR

Substation



SEB 400 kV Transmission Line (Existing)

Power Grid 400 kV Transmission Line (Existing)

Power Grid 400 kV Transmission Line (Under Construction/Proposed)

SEB 765 kV Transmission Line (Existing)


220 kV Transmission Line (Under Construction/Proposed)

Unchahar Transmission System


765 kV Transmission Line (Under Construction/Proposed)

Series Capacitor

High Voltage Direct Current Back to Back

High Voltage Direct Current Bipole

State Boundary



0 100 200

Kilometers

N

05

-28

78

d R

M

Chamera

BaraisulParbati - II

Parbati - III

PongDasuya Pooling Point

N. JhakriHamirpur Dehar

KoldamJalandhar

Amritsar

MogaMalerkotla

LudhianaPatiala

Tehri

Rishikesh

Koteshwar

Dhauliganga

Pithorgarh

Tanakpur

Kitchcha

Bareilly

Fatehbad

Hissar

Bhiwani

Mainpuri

Agra

Ballabhgarh

BhiwadiJaipur

Jaipur(RSEB)

Dausa

Merta

Jodhpur

BhilwaraAnta

KotaKankroli

Chittorgh’h

UdaipurNagda

RAPP-C

RAPP-B

Gwalior

Auraiya

KanpurUnchahar

Naubasta

Lucknow Lucknow (New)

Sultanpur

Gorakhpur

(UPPCL)

Azamgarh

Mau

Allahabad

Varansi

Barh

Patna

BaliaBiharshariff

SasaramObra

Anpara

Rihand

Singrauli

Vindhyachal

Muzaffarpur

II

I

III

1. Kunihar2. Muradabad3. Kishenpur4. Udhampur5. Sarna6. Nalagarh7. Abdullapur8. Panipat9. Bawana

10. Bamnauli11. Panki12. Unnao13. Muradnagar14. Mandaula15. Merrut16. Muzaffar Nagar17. Kaithal18. Agra (UP)19. Dadri20. Bahdurgarh21. Roorkee

Bareilly(PG)

PEOPLE'S REPUBLIC OF CHINA

P A K I S TA N

05

-28

78

c RM

Pune

Singrauli

Ranchi

NagdaWankbori

Valthan

JabalpurBirsinghpur

Korba

Vapi

Nardipur

Ranchodpura

Khadoli

Zerda

Dehgam

KaramsadLimbdi

Rajkot

Jetpur AmreliGandhar (GEB)

Gandhar

Ukai

Kakrapar

Bharuch

UtranKawas

NavsariMagarwada

Tarapur Ext.

Kharadpada

Boisar

Nagothane Lonikhand

Koyna

Dhabol

Karad

Kolnapur

Sholapur

Pandharpur

Parli

New Parli

Bableshwar

Aurangabad

Akola

Chandrapur STPS

Bhadravati

WardhaBhusawal

Dhule

Khandwa

Satpura Seoni

Narmada Sagar

Itarsi

Bhopal

Koradi Bhilai

Bhatapara

Shujalpur

Bina

Damoh

Indore

Rajgarh

Sardar Sarovar

RourkelaRaipur

Sipai

Padghe

Kalwa

Raigarh

Korba (STPS)

Satna

Vindhyachal

Mapusa

Gwalior

Pench

To Ramagundam

I N D I A

POWER TRANSMISSION SECTOR PROJECT--VINDHYACHAL STAGE II TRANSMISSION SYSTEM

Substation 765 kV Power Grid (Under Construction/Proposed)

Thermal/Gas Power Station 220 kV Power Grid (Under Construction/Proposed)

Vindhyachal Stage-II Transmission System Series Capacitor

220 kV Transmission Line High Voltage Direct Current Back to Back

400 kV Power Grid High Voltage Direct Current Bipole

400 kV State Electricity Board State Boundary

400 kV Power Grid (Under Construction/Proposed) International Boundary

400 kV State Electricity Board Boundaries are not necessarily authoritative.

(Under Construction/Proposed)

GUJARAT

M A H A R A S H T R A CHHATTISGARH

M A D H Y A P R A D E S H

K A R N A T A K A

GOA

A N D H R AP R A D E S H

O R I S S A

R A J A S T H A N

U T T A R P R A D E S H

J H A R K A N D

16 00’No 16 00’No

25 00’No 25 00’No

72 00’Eo

72 00’Eo

80 00’Eo

80 00’Eo

A r a b i a n S e a

N

1000 200 300

Kilometers

P A K I S T A N

PURNEA

MALDA

JEYPORE

SILIGURI

SIKKIM

TeestaTala

Chukha

Singigaon

BongaigaonBirparaSiliguri

Dalkhola

Begusarai

Purnea

Muzaffarpur

Barh

Hazipur

Khagaul

FatwaArrah

Patna Kahalgaon

FarrakaLalmatiaDehri

Bodhgaya

Nabinagar

GarwaNKSTPP Tenughat

Bokaro

K’neswariMaithon

PatratuRamgarh

Cn’pura

Maithon-RB

Mejia

Sagardighi

Gokarna

Bidhannagar

BakeswarSantaldih

Jeerat

KasbaArambag

Howrah

Kolaghat

Ranchi

Chandi

Joda

BhadrakRengal

Nalco

Talcher

IN VALLEY

Hirakud

Brajrajnagar

Tarkera

Balasore

Paradeep

Chandaka

Daitari

Aska

Nayagarh

Chhatrapur

Bhanjanagar

Indravati

Bolangir

Theruvelli

U. Kholab

Balimela

Gazuwaka (SR)

Behrampur

Bhubaneswar

Baripada

Gazuwaka

Gorakpur

Rourkela

Meramundli

Durgapur

Biharshariff

Subhasgram

Conductor Change

Waria

Talcher (NTPC)

Substation



Series Capacitor

Second ICT at Malda and Jeypore

High Voltage Direct Current Back to Back

(Under Construction/Approved)

High Voltage Direct Current Bipole


Jeypore-Gazuwaka 400 kV D/C Line

Lilo of One Circuit of

Bongaigaon-Malda 400 kV D/C at Siliguri

Lilo of Other Circuit of

Bongaigaon-Malda 400 kV D/C at Purnea




765 kV Transmisison Line


400 kV Transmission Line


220 kV Transmission Line


State Boundary



I N D I A

POWER TRANSMISSION SECTOR PROJECTGRID STRENGTHENING SCHEMES FOR EASTERN REGION AND

--EAST SOUTH INTERCONNECTOR

BANGLADESH

NEPAL

BHUTAN

Karamnasa

To Raipur (WR)

To Korba (WR)

To Siptat (WR)

To Rihand (NR)

To Sahupuri (NR)

To Allahabad (NR)

To Balia (NR)

To Kolar (SR)

25 00’No

19 00’No

25 00’No

19 00’No

82 00’Eo

82 00’Eo 87 00’Eo

87 00’Eo

05-2878ba RM

B I H A R

M E G H A L A YA

JHARKHAND

CHHATTISGARH

WESTBENGAL

O R I S S A

B a y o f B e n g a l

NN

0 100 200

Kilometers

I. PROJECT DESCRIPTION 1. The objectives of the Project were to strengthen the transmission systems of Power Grid Corporation of India Limited (POWERGRID) in order to reduce system losses and allow efficient utilization of existing and planned power plants by (i) supporting development of the northeastern regional power grid, (ii) interconnecting the southern and eastern regional power grids, (iii) constructing transmission facilities for power evacuation from new and expanded power plants, and (iv) providing consulting services. The broader indirect objectives, being pursued in the policy dialogue with the Government, included (i) supporting the restructuring of India’s power sector by facilitating unbundling of generation, transmission, and distribution, and the entry of independent power producers (IPPs); (ii) putting all bulk power supply and transmission on a sound economic basis by putting in place appropriate pricing; and (iii) putting all transmission transactions on a sound commercial basis, to ensure POWERGRID’s profitability and liquidity. 2. At appraisal, the Project comprised the (i) construction of 8 132 kilovolt (kV) transmission lines comprising 675 circuit kilometers (cct km) and substation extensions in Assam, Mizoram, and Tripura in the northeastern region; (ii) construction of 195 cct km of 132 kV transmission lines and substation extensions to evacuate power from the 84 megawatt (MW) Agartala gas-fired power plant in Tripura; (iii) construction of a 220 kV transmission line of 85 cct km and a substation extension to evacuate power from the 100 MW extension of the Kopili hydroelectric plant in Assam; (iv) establishment of a modern regional system coordination center (RSCC) for the northeastern region with computerized load dispatch facilities in all seven states in the region; (v) construction of 6 400 kV transmission lines comprising 890 cct km and substation facilities to evacuate power from the 1,000 MW stage-II of the Vindhyachal coal-fired thermal power plant; (vi) construction of a 400 kV double circuit transmission line of 550 cct km and substation facilities to interconnect the eastern and southern regions; (vii) construction of 220 kV transmission line of 600 cct km and substation extension to evacuate power from the 420 MW stage-II of the Unchahar coal-fired thermal power plant; and (vii) consulting services. Subsequently, four grid strengthening schemes in the eastern region were included in the Project to use the cost savings accrued due to favorable market conditions and depreciation of the Indian rupee against dollar. The schemes comprised: (i) grid strengthening for north Bengal consisting of a loop-in loop-out (LILO) of the first circuit of 400 kV Bongaigaon–Malda line at Siliguri substation; (ii) grid strengthening for north Bihar consisting of LILO of the second circuit of 400 kV Bongaigaon–Malda double circuit line at Purnea substation; (iii) grid strengthening for West Bengal consisting of 400 kV bays at Farakka and Malda, including installation of an inter connecting transformer (ICT) at Malda substation; and (iv) grid strengthening for Orissa with installation of a new ICT at Jeypore substation. 3. At appraisal, India had an installed power generation capacity of 81,174 MW. Power shortages, poor quality of supply with significant voltage fluctuations, and frequent load shedding in most parts of the country undermined industrial competitiveness and posed severe constraints on economic development. Demand for electricity at the end of the 11th five-year plan in 2012 was estimated at 975 billion KWh which required an installed capacity of about 200,000 MW with matching augmentation of transmission and distribution facilities. Financing these capacity expansions was a major challenge for state electricity boards (SEBs) reeling under heavy debts arising from inadequate tariffs, payment defaults by consumers, and huge transmission and distribution losses. 4. The power system in India is organized into five electrical regions: northern, northeastern, eastern, western, and southern. Each electrical region attempts to connect and

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synchronize power systems of neighboring states within the region, but interregional transmission capacity is limited. This means some regions with surplus installed capacity are unable to export power to regions in deficit. Further, in India the investment ratio for generation and transmission, including distribution, is about 70:30, against the recommended ratio of 50:50. This has limited the scope for interregional and intraregional power transfer capabilities and inhibited (i) optimum utilization of existing installed generation capacities, and (ii) development of mega-power plants. Before the establishment of POWERGRID in October 1989, the National Thermal Power Corporation (NTPC) and the National Hydro Power Corporation (NHPC) constructed and operated the transmission facilities that evacuated power from their power plants and transmitted it to client SEBs. As the requirements for transmission facilities had grown considerably since the establishment of NTPC and NHPC, the Government of India recognized that it would be more efficient to have a national transmission utility that would (i) be responsible for developing transmission systems to evacuate power from central power sector plants, and (ii) construct and operate transmission facilities to transfer power among SEBs within a region and between regions. 5. New government policies in the 1990s to promote mega-power plants prioritized (i) development of additional transmission capacity to evacuate power from planned power plants, (ii) provision of high-voltage transmission corridors to facilitate interregional power transfers, and (iii) formation of a national grid. To meet these objectives, POWERGRID formulated a detailed long-term transmission development plan in 1994. From FY1996 to FY2000, the capital requirements of this Plan were estimated at about $4.2 billion. To meet part of these requirements, ADB agreed to finance the Project through a transmission sector loan. 6. A $275 million ADB loan was approved in November 1995. Under the original financing plan, ADB was to finance $275 million (52.1%) of the total cost of the Project, and the balance of $252.4 million equivalent was to be financed by POWERGRID from its own resources and domestic borrowings. The total project cost at appraisal was $527.4 million with a foreign exchange cost of $300.8 million. In 1998, additional subprojects were included with the approval of ADB. According to the revised cost estimates, ADB was to finance $275 million (46%) of the revised estimated cost of the Project, and the balance was to be financed by POWERGRID ($322.01 million). The project components funded under the loan included (i) substation equipment; (ii) transmission line towers, aluminum conductors, and insulators; (iii) all equipment and services for the regional system coordination center; and (iv) consulting services. In addition to the cost of equipment and materials, the loan amount covered 70% of the cost of installation.

II. EVALUATION OF DESIGN AND IMPLEMENTATION 7. The main events in project implementation are presented chronologically in Appendix 1. A. Relevance of Design and Formulation 8. Although the total energy production in India has grown from 379 billion kWh with an installed capacity of 81,174 MW at appraisal to 586 billion kWh with an installed capacity of 114,739 MW in 2005, the country is still experiencing a peak power shortage of 12.1% and an energy shortage of 7.2%. It is estimated that demand for electricity will grow to 975 billion kWh in 2012, with an installed capacity of over 200,000 MW. The interregional power transfer capacity of 500 MW in 1995 has grown to 9,500 MW in 2005 and will increase to 30,000 MW by 2012. The present interregional power exchange is at its full capacity of 9,500 MW. The Project

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has made a significant contribution to providing a transmission system capable of evacuating more than 1,500 MW from the new generating plants commissioned during 9th five-year plan period (1997–2002). It has strengthened the northeastern, eastern, and western regions so they can meet increased power demands and facilitated interregional power transfers. At completion the Project was relevant. Since the demand for power is still growing and the energy sources in India are unevenly distributed, bulk power transmission and interregional power exchanges will continue to increase, so the Project will continue to be relevant. The Government has put greater emphasis on development of transmission corridor across the regions that would be capable of providing power exchanges to the extent of 30,000 MW by 2012. 9. At appraisal, ADB’s country operational strategy for India supported reinforcing and expanding existing transmission and distribution systems relating to existing and new generation, and establishing regional and national grids. ADB’s assistance was designed to support POWERGRID’s efforts to establish a transmission infrastructure to (i) evacuate power from the new generating plants being constructed at coal pit-heads; (ii) use existing generating capacities efficiently by facilitating interregional power exchanges; (iii) increase the power availability and improve the reliability of the power supply in the northeastern region, which has the lowest per capita power consumption in India; and (iv) strengthen the northeastern, eastern, and western regional grids. ADB support to POWERGRID was also a key element of ADB’s strategy to improve power sector efficiency, since the infrastructure provided under the Project has made the utilization of existing generating capacities more efficient, and improved the performance of the northeastern regional grid by establishing the RSCC, which improved the plant load factor of the power plants in northeastern region and reduced grid disturbances. The support to POWERGRID at central and state levels also helped implementation of the availability-based tariff (ABT), improvements to grid discipline in the power sector, and determination of the bulk supply and transmission tariffs on a commercial basis. The subprojects will help POWERGRID to establish and operate a national grid on a real time basis, which will result in efficient utilization of the existing power infrastructure facilities and long-term utilization of energy resources optimally. 10. The Project’s components were implemented without any deviations from the designs adopted at appraisal. POWERGRID is able to operate all the components of the Project satisfactorily and the annual availability of transmission system is above 99%. The Project has helped to (i) facilitate the transfer of power from the power-surplus eastern region to the power-deficit southern region; (ii) improve the plant load factor (PLF) of power stations in the northeastern region, and improve the system reliability and stability of the northeastern regional grid by establishing the RSCC; (iii) optimize existing installed capacities by facilitating interregional power exchanges; and (iv) strengthen the eastern and western regional transmission systems to enable them to meet growing demand. This demonstrates the appropriateness of the project design and rationale. B. Project Outputs 11. At appraisal, it was envisaged that the Project would (i) augment the northeastern transmission system; (ii) establish the RSCC in the northeastern region; (iii) construct a 400 kV transmission system for evacuation of power from Vindhyachal stage II and Unchahar stage II power stations; (iv) establish an interregional link between the eastern and southern regions; and (v) provide consulting services. In 1998, eastern region grid strengthening schemes were included. All the components of the Project have been completed as envisaged. A brief review of the status of the completion of project components follows.

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1. Augmentation of Northeastern Transmission System 12. This subproject comprised construction of (i) 493 cct km of 8 132 kV lines; (ii) two new substations at Khleihriat and Badarpur; and (iii) bay extensions at six substations, including installation of 20 MVAR reactors at two substations. The subproject was completed in December 1999 and has been operating satisfactorily since then. It was estimated that 120 MW of power could be added by this subproject. Although the new system is able to handle more power, present usage is limited to 100 MW because of constraints on subtransmission and the distribution network of the states. Efficient operation and maintenance by POWERGRID ensured this transmission system was available more than 99% of the time and that the region was able to meet increased demand. The annual energy supply of the seven states in the northeastern region increased from 4,350 million kilowatt hour (million kWh) in FY1998 (before project completion) to 5,345 million kWh in FY2001 (after project completion). The Project has also helped to improve the reliability of the power system in the region, particularly in Assam, Tripura, and Mizoram. It is facilitating export of surplus power from Meghalaya to Tripura and Mizoram and evacuation of imported power from the eastern region to important load centers in northeastern region.

2. Agartala Transmission System

13. This subproject comprised construction of 15 cct km of a 132 kV double circuit line from the 84 MW Agartala gas-based power plant (GBPP) to an existing substation at Agartala and another 132 kV single circuit line of 100 cct km from Agartala GBPP to Kumarghat substation, including the extension of bays at Agartala and Kumarghat substations. The Agartala GBPP–Agartala section of the line was completed in April 1998, but the Agartala GBPP–Kumarghat section was delayed because of law-and-order problems and was not completed until November 2000. POWERGRID was able to ensure that the system was available more than 99% of the time and it has evacuated over 500 million kWh per year since it was commissioned (against the appraisal estimate of 419 million kWh per year). The power evacuation during April–November 2004 was 425 million kWh.

3. Kopili Stage-I Extension Transmission System

14. This subproject comprised construction of 76 cct km of a 220 kV single circuit line from Kopili stage-I to Misa and a bay extension at 220 kV side of the 400/220 kV Misa substation. Construction of this line took only 6 months and was completed in July 1998 to coincide with the commissioning of the generating station. Advance procurement action was taken with prior approval of ADB to achieve this important milestone. It was estimated that this line, originally intended to improve the redundancy of the existing Kopili evacuation network, would evacuate 21.9 million kWh per year. The total power evacuation from the Kopili hydroelectric plant has gone up by over 260 million kWh per year since completion of this subproject and the usage of this particular line is much higher than the appraisal estimates. The line acts as a main evacuation system for the generating station, as well as providing redundancy. The total generation at Kopili during April–November 2004 was 1,037 million kWh.

4. Northeastern Regional System Coordination Center

15. This subproject comprised construction of (i) a modern power system coordination center for the northeastern region with supervisory control and data acquisition (SCADA) and energy management system (EMS); (ii) computerized load dispatch centers in seven states; and (iii) a dedicated broadband communication system through fiber optic, digital microwave

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and power line carrier communication (PLCC) linking the remote terminal units (RTU) at power stations and substations with the RSCC and state load dispatch centers. The system was completed in May 2003. Commissioning the RSCC has enabled (i) coordinated scheduling and economic dispatching, leading to improved plant load factor (PLF) at all generating stations in the region; (ii) avoidance of grid disturbances (there were 61 partial and 5 total grid collapses in 2002–2003 and only 8 partial and no total grid collapses in 2004–2005, following the commissioning of the RSCC); (iii) a reduction in the number of line trippings and faster restoration; and (iv) implementation of the ABT regime in northeastern region. The central sector generating stations (of National Hydroelectric Power Corporation Ltd and North Eastern Electric Power Company Ltd) with an installed capacity of 1,235 MW in the northeastern region have increased their energy production from 3,543 million kWh in FY2003 to 5,764 million kWh in FY2005, an increase of 63%. This jump in energy production has been the result of coordinated scheduling and economic dispatching with the help of RSCC. A reliable and dedicated communication system built for the RSCC facilitates real-time coordination with power system control centers of other regions, which has enabled more surplus power to be exported from the northeastern region.

5. Vindhyachal Stage-II Transmission System 16. This subproject comprised construction of: (i) 5 400 kV lines totaling 1,363 cct km from Vindhyachal and Korba, (ii) bay extensions at Bina and Korba 400 kV substations, and (iii) new 400/220 kV substations at Satna and Raipur. The subproject was completed in October 1999. It was estimated that 6,000 million kWh per year would be evacuated from the 1,000 MW Vindhyachal stage-II power station and that the evacuation system for 1,260 MW stage-I of Vindhyachal thermal power station would be strengthened. The average annual power evacuation through this subproject is in the range of 14,500 million kWh. With the completion of this subproject, the power supply situation in Madhya Pradesh, Gujarat, Maharashtra, and Chathisgarh has improved considerably as the system operates at full capacity with above 99.5% availability.

6. East–South Interconnector

17. This subproject comprised construction of 442 cct km of 400 kV double circuit transmission line from Jeypore to Gazuwaka and switchyard extensions at Jeypore and Gazuwaka 400 kV substations. The subproject was completed in March 1999. The subproject was intended to facilitate export of 500 MW of power from the eastern region to the southern region with an estimated energy transfer of 3,005 million kWh per year. The power transfer through this interconnector has improved the reliability and efficiency of the power systems of both the regions because of the load diversity and the generation mix differences between two regions. The average annual power transfer from the eastern region to the southern region during the past 5 years is 2,900 million kWh. POWERGRID has already implemented another 500 MW HVDC back-to-back station at Gajuwaka to enhance the power transfer capacity from the eastern region to the southern region, which was commissioned in February 2005. The completion of this subproject was timely and has helped to meet part of the increasing power demand in the southern states and improve the utilization of existing generating capacities in the eastern region.

7. Unchahar Stage-II Transmission System 18. This subproject comprised construction of 2 220 kV double circuit lines from Unchahar power station in Uttar Pradesh to Kanpur, a major load center in the northern region. The

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existing 400 kV POWERGRID substation was expanded to accommodate these four circuits from Unchahar. The original scheme was completed in December1999. However, the two LILOs of existing 220 kV transmission lines to the expanded Kanpur substation, which were included in the Project in 1998, were completed in October 2000 and September 2003. This transmission system is evacuating power from the 420 MW coal-fired Unchahar thermal power station to important load centers in the power deficient northern region. The system evacuates 2,400–2,600 million kWh per year against the appraisal estimate of 2,097 million kWh per year.

8. Grid Strengthening Schemes for the Eastern Region 19. This subproject comprised (i) grid strengthening for north Bengal through a LILO of one circuit of 400 kV Bongaigaon–Malda double circuit line at Siliguri; (ii) grid strengthening for north Bihar through a LILO of the second circuit of 400 kV Bongaigaon–Malda double circuit line at Purnea; (iii) grid strengthening for West Bengal consisting of extension of 400 kV bays at Farakka switchyard and Malda substation and installation of a 315 MVA interconnecting transformer (ICT) at Malda enabling the charging of the existing Farakka–Malda line at 400 kV; and (iv) grid strengthening for Orissa with a new ICT of 315 MVA at 400 kV Jeypore substation. These schemes were completed progressively in October 2003. The commissioning of these subprojects enabled (i) to serve an additional peak load of 150 MW in north Bengal; (ii) to serve an additional load of 100 MW in north Bihar with 720 million kWh per year of power absorption; (iii) annual power absorption of 650 million kWh in West Bengal; and (iv) annual power absorption of 350 million kWh in Orissa. The 400 kV Bongaigaon–Malda line, which was subjected to frequent and prolonged outages, has stabilized after completion of the two LILOs at Siliguri and Purnea, which increased the power exchange capacity and reliability of this important interregional link and also increased the power transfer capacity of the line.

9. Consulting Services

20. Consulting services for the implementation of the RSCC and implementation of the recommendations of the tariff study were included in the scope of the Project, but were used only for the RSCC. Consulting services for bulk supply and transmission tariffs and for a related regulatory framework were not used because the Government had formed special task forces to implement the recommendations of the tariff study, and the Central Electricity Regulatory Commission (CERC) was established in 1998 to develop the regulatory framework. C. Project Costs 21. At appraisal, the total cost of the Project, including additional grid strengthening projects approved in 1998, was $597.01 million equivalent, comprising $338.34 million in foreign currency (57%) and $258.67 million equivalent (43%) in local currency. The ADB loan at appraisal was $275 million, of which only $251.98 million (91.6%) was utilized. Cost savings of $177.21 million equivalent (29.7%) consisted of $86.36 million in foreign currency and $90.85 million equivalent in local currency. Appendix 2 compares estimated with actual project costs. The project costs and summary of contracts are given in Appendix 3. Appendix 4 provides the average exchange rates used to convert local currency to the dollar equivalent. 22. Appendix 5 compares the project financing plan, which initially envisaged a foreign currency expenditure of $275 million from the ADB loan (46% of total project cost), with $25.80 million in foreign currency and $257.00 million equivalent in local currency from the internal resources of POWERGRID, and from domestic borrowings. POWERGRID’s share of $25.80 million foreign currency expenditure was not required, since the foreign currency requirements

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of the Project were met from the ADB loan proceeds. Total project expenditure was $419.80 million, comprising $251.98 million in foreign currency from the ADB loan and $167.82 million equivalent in local currency from POWERGRID’s funds. ADB’s share of financing increased from 46% to 59%, despite a decrease in the loan amount from $275.00 million to $251.98 million. 23. The foreign exchange cost savings of $86.36 million can be attributed to (i) lower-than- estimated costs in equipment procurement due to competitive bidding, (ii) depreciation of the Indian rupee against the US dollar, (iii) a general recession in the power sector market, and (iv) savings in physical and price contingencies. The local currency cost savings of $90.85 million equivalent can be attributed to (i) a depreciation of the Indian rupee against the US dollar, (ii) non-utilization of contingencies, and (iii) savings in interest during construction (IDC). D. Disbursements 24. ADB approved a loan of $275 million from ordinary capital resources on 16 November 1995. Disbursements totaled $251.98 million out of the original loan amount of $275 million. $23.02 million was canceled in three stages as loan savings. Initial disbursements under the loan started on 25 October 1996, and the final disbursement was on 9 July 2003 (80 months later). In June 2001, POWERGRID asked ADB to reallocate $12.96 million to IDC and this was approved by ADB in August 2001. During the initial stages of the Project, actual disbursement exceeded the annual disbursement projections, as POWERGRID had made advance procurement actions and used the retroactive financing provision under the loan. The projected and actual disbursements are given in Appendix 6. E. Project Schedule 25. The planned project implementation steps of various subprojects are compared with the actual sequences of events in Appendix 7. At appraisal, all the subprojects were estimated to be completed by June 2000. As all the subprojects could not be completed before the loan closing date of 31 March 2001, the date was extended to 31 March 2003 and, to enable disbursements under the loan account to be completed, kept open up to 9 July 2003. The major milestones in the implementation of subprojects follow.

1. Augmentation of Northeastern Transmission System 26. Advance procurement action, with prior approval of ADB was taken for this subproject and all contract packages were awarded by May 1996 against an appraisal schedule of March 1996. However, the components were not completed until December 1999 against the appraisal schedule of September 1998. The main reasons for the delay were the consequences of adverse weather conditions, such as heavy floods, landslides, rivers changing course, and inaccessibility of work locations. Construction work on some components was badly affected by the law-and-order situation. Although there was a delay with respect to the schedule, completion of a 132 kV transmission system totaling about 493 cct km in mountainous terrain with substation works at eight locations spread over three states in three working seasons is a major achievement considering that the working season in this region is less than 5 months a year.

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2. Agartala Transmission System 27. The subproject was scheduled for completion by September 1998. The Agartala GBPP–Agartala section of the line was completed in April 1998, but the Agartala GBPP–Kumarghat section was delayed because of law-and-order problems and finally completed in November 2000.

3. Kopili Stage-I Extension Transmission System 28. Although the original schedule was June 1997, this subproject was completed in July 1998 to coincide with the commissioning of the generating station. The site work was carried out in 6 months despite serious law-and-order problems in the area.

4. Northeastern Regional System Coordination Center 29. Because of delays in obtaining investment approval from the Government, the contracts were awarded in April 2000, against the appraisal estimate of December 1996. The subproject was completed in May 2003, against the original schedule of March 2000. This is a major achievement considering that the system involved the laying of 964 km of optic fiber ground wire (OPGW) on transmission lines under live line conditions; setting up 12 digital microwave links; installing 120 PLCC terminals; and installing 67 RTUs at generating stations and substations in seven states.

5. Vindhyachal Stage-II Transmission System 30. Major contracts for this subproject were awarded as scheduled in May 1996 and the system, which involved 1,363 cct km lines and two new substations as well as bay extensions in another two substations, was completed on time for unit synchronization of the generating plant. This subproject was completed in October 1999 against the original schedule of March 1999.

6. East–South Interconnector

31. This subproject was completed in March 1999 although awarding of the contract was delayed by about 12 months.


32. The schedule of completion for this subproject at appraisal was June 1999 and, despite a delay of more than a year in awarding the contract (because of noncompliance with loan covenants by the utility in Uttar Pradesh), the scheme was completed in December 1999. Two additional LILO schemes at Kanpur approved in 1998 were completed in October 2000 and September 2003.

8. Grid Strengthening Schemes for Eastern Region 33. Placement of orders for the four grid strengthening schemes was delayed by about a year. The scheme for north Bengal was completed in December 2002 against a schedule of January 2002. The implementation of the north Bihar scheme was affected by law-and-order problems and was completed in October 2003 against the schedule of January 2002; the West Bengal scheme was completed in April 2002 against the schedule of March 2001; and the

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Orissa scheme was delayed by heavy rains and water logging and was completed in September 2002 against the schedule of March 2001.

9. Consulting Services 34. Contracts for consulting services for implementation of the RSCC in the northeastern region were awarded in August 1997 against the schedule of June 1996. Consultants performed the scope of work assigned to them and contributed to the successful completion and operation of the RSCC. F. Implementation Arrangements 35. The implementation arrangements were the same as envisaged at appraisal, and ADB found them adequate. Overall responsibility for project implementation was with Director (Projects) of POWERGRID, who was assisted by the corporate monitoring group. Construction supervision of each subproject was under the respective regions headed by Executive Directors, who were assisted by the planning, engineering, finance, and personnel departments at regional headquarters. Engineering and contracting activities for all contract packages funded under the ADB loan component were carried out from the corporate headquarters of POWERGRID in New Delhi. Executive Director (Corporate Planning) was in-charge of overall coordination with ADB. POWERGRID’s computerized integrated project management system enabled (i) a master network schedule for each project; (ii) separate work schedules for each contract package with contractors to meet the master network schedule; and (iii) regular progress review and monitoring at field, regional, and corporate levels. Progress of the subprojects was periodically monitored by the respective regional Executive Directors through weekly and monthly review meetings. The implementation progress of each subproject was reviewed regularly by POWERGRID’s top management during quarterly management committee meetings. Forest clearances, land acquisition for substations, and rehabilitation of project-affected persons were planned and executed well in advance to avoid delays. The organization chart of POWERGRID is in Appendix 8. G. Conditions and Covenants 36. There were no particular conditions for the effectiveness of the Loan Agreement. No covenants were modified, suspended, or waived during implementation. The status of compliance with covenants is given in Appendix 9. POWERGRID was generally in compliance with major loan covenants except for the following (i) POWERGRID had agreed to increase the service charges on overdue accounts payable and to impose a penalty rate of 2% per month (from the existing 1.5%), which could not be complied with; and (ii) the conditions pertaining to negative lien could not be complied with. As far as (i) is concerned, POWERGRID informed the Project Completion Review (PCR) Mission that this issue is under the jurisdiction of CERC. With regard to (ii), discussions are continuing between POWERGRID and ADB to ensure compliance with the covenant. POWERGRID informed the PCR Mission that, as of 31 May 2005, the arrears in equivalent months as per CERC notified billing, work out to 1.56 months equivalent. POWERGRID submitted its audited accounts and financial statements to ADB. H. Related Technical Assistance 37. No technical assistance is related to this Project.

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I. Consultant Recruitment and Procurement 1. Consultants 38. At appraisal, it was envisaged that consultants would be engaged to (i) implement the RSCC, (ii) implement bulk supply and transmission tariffs, and (iii) develop the related regulatory framework. However, consultant was engaged only for implementation of the RSCC. The scope of work entrusted to the consultant included (i) review of tender documents and evaluation reports; (ii) assistance in negotiation with contractors; (iii) witnessing type tests and factory acceptance tests of equipment; and (iv) assistance to POWERGRID during project commissioning. The consultant was recruited in accordance with ADB’s Guidelines for the Use of Consultants. Consulting services for implementation of bulk supply and transmission tariffs and for development of related regulatory framework were not utilized since the Government had constituted special task forces to implement the recommendations of tariff study, and CERC was established in 1998 to develop the regulatory framework.

2. Procurement 39. POWERGRID had made use of advance procurement and retroactive financing facilities as agreed by ADB. About $10 million was disbursed under the retroactive financing facility against the retroactive financing provision of $27.5 million for disbursements made between 19 April 1995 and loan effective date of 16 October 1996. ADB cooperated with POWERGRID to achieve the important milestones in project implementation by according necessary approvals expeditiously. In general, POWERGRID carried out all procurement activities for ADB-financed contract packages in accordance with ADB’s Guidelines for Procurement, except for the price negotiations carried out by POWERGRID with successful bidders after receiving ADB’s approval for award of contract. During the audit by the ADB Country Portfolio Review Mission (CPRM) in November 2000, it was observed that POWERGRID had carried out price negotiations with successful bidders after receiving ADB’s approval for the award of contracts in 31 cases out of 38 contracts reviewed by the audit. POWERGRID took the view that the price negotiations with the lowest successful bidders were carried out according to Government guidelines, and that price negotiations were held with only 14 bidders. To resolve the issue, ADB fielded a Special Loan Administration Mission in November 2001 that conducted a detailed examination of the entire procurement process and concluded that the objections raised by the CPRM of November 2000 were valid. The mission informed POWERGRID that its approach could make it difficult for ADB to finance contract packages negotiated in this way in future. Subsequently, POWERGRID confirmed that it did not anticipate any difficulty in awarding ADB-funded packages as per ADB’s Guidelines for Procurement in future. J. Performance of Consultants, Contractors, and Suppliers 40. POWERGRID reported that the consultants performed the assigned tasks diligently and professionally and in accordance with their terms of reference. POWERGRID also reported that the performance of all contractors was generally satisfactory. All goods and services procured for the Project complied with the specifications and other operational performance standards. K. Performance of the Borrower and the Executing Agency 41. POWERGRID was both the Borrower and the Executing Agency. The overall performance of POWERGRID in both roles was satisfactory. All components of the Project were completed successfully, although there was time overrun in some subprojects. The RSCC was

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delayed because of late investment approval by the Government. In the case of subprojects in the northeastern region, despite difficult terrain and law-and-order problems, POWERGRID completed all the subprojects within a reasonable time. It was also able to operate and maintain the transmission system at very high levels of availability, which was commendable. Overall annual availability of POWERGRID’s transmission system during 2004–2005 was 99.72% with 3.25 tripping per line per year, which compares well with the best transmission utilities in the world. Overall, POWERGRID has demonstrated its capacity to formulate and appraise, arrange finance for, and carry out engineering, procurement and construction of a variety of projects across the country conforming to approved specifications and standards and to the satisfaction of ADB. L. Performance of the Asian Development Bank 42. ADB closely and regularly monitored the project progress through review measures, quarterly progress reports, and provided useful advice in several areas, including procurement, project management. ADB accorded timely approvals that enabled project milestones to be achieved, which contributed to smooth project execution. 43. ADB’s India Resident Mission (INRM) also closely monitored project administration. Administration of the Project was delegated to INRM in September 1999. ADB, POWERGRID, and officials from the Indian Department of Economic Affairs held many tripartite meetings, which helped in the successful implementation of the Project. INRM also closely monitored project administration, and timely corrective measures were proposed at several occasions. Thus, ADB’s overall performance was satisfactory.

III. EVALUATION OF PERFORMANCE

A. Relevance 44. At appraisal and completion, the Project was rated highly relevant to the objectives of the Government for power sector, and the sector strategy and country strategy of ADB for India (paras. 8–10). At appraisal, the Government’s objective was to improve efficiency in the power sector by removing transmission bottlenecks to facilitate better utilization of existing and planned generating stations and entry of independent power producers (IPPs). ADB’s country strategy was to fund infrastructure projects in key sectors that contributed to economic growth. Its sector strategy focused on (i) reinforcing and expanding existing transmission and distribution systems relating to existing and new generation, and establishing regional grids and national grid; (ii) reforming state power sectors with particular emphasis on SEB restructuring and commercialization; (iii) rationalizing power tariffs, at bulk and retail levels; (iv) reforming the regulatory framework; and (v) improving energy efficiency. Further, POWERGRID, because of the critical services it provides, was considered a significant agent for change in the power sector, which was going through radical reforms in the 1990s. At project completion, ADB’s strategy for the power sector in India is in synergy with the 10th (2002–2007) five-year plan objectives of the Government to develop infrastructure for economic growth and poverty reduction. ADB’s present strategy for assistance to the power sector includes (i) reinforcing the power sector; (ii) promoting higher efficiency and low-carbon power sources; (iii) expanding and optimizing transmission and distribution systems; (iv) providing institutional strengthening to implement reforms required by the Electricity Act, 2003; (v) promoting private sector participation; and (vi) encouraging energy conservation and ensuring environmental and social sustainability. The project outputs contributed to achieving these objectives.

12

45. Central and state governments are pursuing capacity expansion, reforms, provision of a transmission infrastructure that optimally utilizes existing installed capacities, tariff (bulk and retail) setting on commercial terms by independent regulators, and private sector participation. To achieve these objectives, the Government enacted a comprehensive Electricity Act in 2003. The Project was aimed at making the transmission sector more efficient and it was therefore relevant at appraisal and at completion. The Project will continue to be relevant in future because of the rapid expansion of the power sector, including bulk transmission of power and greater interregional power exchanges. B. Efficacy in Achievement of Purpose 46. The Project achieved its immediate objectives of (i) strengthening the transmission and evacuation of power from expanded and new power plants, thereby increasing access to electricity and reducing system losses in the northeastern region; (ii) improving the power system operation through reliable and economic dispatches by implementing the RSCC in the northeastern region; (iii) evacuating power from new and expanded power plants in the northern and western regions; (iv) facilitating export of power from the power-surplus eastern region to the power-deficit southern region; and (v) strengthening the eastern region network. POWERGRID was able to complete all evacuation schemes to coincide with the commissioning of the generating stations, and the project components are being operated and maintained at very high levels of efficiency. The Project achieved the physical targets established at appraisal, although not within the estimated implementation period. The Project was rated efficacious. C. Efficiency in Achievement of Outputs and Purpose 47. The Project is rated efficient. It has been implemented efficiently and all the subprojects have been operating continuously at almost full capacity from the date of commissioning (paras. 11–19). 48. The financial internal rate of return (FIRR) of all the subprojects is well above POWERGRID’s weighted average cost of capital (WACC) of 6.9%. The economic internal rate of return (EIRR) of all the subprojects has been reevaluated at more than 12%. The financial and economic analyses were made using the world price numeraire. Major assumptions used in the financial evaluation, economic evaluation, and detailed calculations of FIRR and EIRR are in Appendix 10. Balance sheets, income statements, and sources and uses of POWERGRID’s funds can be found in the supplementary appendixes. D. Preliminary Assessment of Sustainability 49. Technically, the design of all the subprojects and the technology adopted are robust and appropriate given the technical parameters, requirements of the Indian power sector, and the Project’s long-term sustainability. Future funding for the required operation and maintenance is not expected to be a problem. Transmission tariffs are determined based on cost plus methodology, which ensures the recovery of costs incurred at normative availability of the transmission system at 98.5% and a return on equity of 14% per annum. As the FIRR of all the subprojects exceed the WACC, the Project is financially viable (para. 48), and returns from it will contribute to POWERGRID’s overall financial health. Further, (i) as POWERGRID has executed commercial contracts with all the beneficiaries of the Project to provide the transmission system, and (ii) POWERGRID is also holding a letter of credit (LC) for 104% of the monthly billing of the beneficiaries, the Project is expected to remain financially sustainable. In accordance with Government forecasts, power shortages and constraints in the power delivery system will

13

continue in the future. As a result, there will be adequate demand for the evacuation of power from existing stations and for the transfer of power from regions with a surplus to regions with a deficit, ensuring the optimum utilization of the transmission systems established under the Project. The technical standards and quality systems adopted, and the material and equipment procured and installed, are superior and are unlikely to become obsolete. POWERGRID also has in-house capacity to operate and maintain the subprojects effectively and efficiently. Hence, all the components of the Project are expected to be used at full capacity throughout the life of the Project. The PCR Mission did not foresee any problems with the long-term sustainability of the Project. E. Environmental, Sociocultural, and Other Impacts 1. Environmental Impacts 50. The transmission system subprojects executed were intended to reduce the total output of pollutants from power plants by encouraging optimal use of generation facilities by (i) implementing a tariff structure that encouraged merit-order dispatching; (ii) injecting electricity into the system from new efficient thermal, clean hydro, and natural gas power plants; (iii) transferring electricity across the regions to take advantage of the diversity in peak demand and to ensure optimal interregional use of power plants; (iv) reducing demands on coal transportation on the overcrowded road and rail networks; and (v) improving grid stability and reliability. 51. The project outputs have exceeded the intended environmental benefits. None of the subprojects posed any threat to endangered species. POWERGRID has taken adequate safety measures as agreed at project appraisal to minimize the project impacts on the environment. These measures include (i) special care in route selection of transmission lines, (ii) avoiding damage to forests as far as possible, and (iii) creating robust institutional arrangements for monitoring of environmental mitigation measures. Details of specific steps taken to achieve these goals are described in Appendix 11. POWERGRID has prepared initial environmental examination (IEE) reports for the subprojects and submitted them for ADB’s approval along with the subproject appraisal reports. The IEE reports of all the subprojects were reviewed and approved by ADB. 52. As per the Forest Conservation Act, all the transmission lines infringing upon the ecologically sensitive areas have to be approved by the Ministry of Environment and Forests (MOEF). Approval from MOEF was obtained well in advance for all the subprojects that infringed on forest lands. Forests were avoided as far as possible while selecting the transmission line route. Where it was not possible to avoid forests, the routing of the lines in the forest area was conducted in consultation with respective forest authorities to minimize damage to the forests and to ensure that the impact of the transmission lines on wildlife would be nil. Over the total 3,200 cct km of transmission lines built under the Project, a total of 362.64 hectares (ha) of forest area was affected, for which Rs17.25 million (about $0.40 million equivalent) was paid as per the Government rules to the state forest departments for compensatory afforestation. The line routes avoided wetlands and unstable areas. The routing of the transmission lines was selected so as to avoid relocation of people and threats to common property resources. Engineering and biological measures were taken to prevent soil erosion on the transmission line route. The project-induced encroachment on forests is not reported.

14

53. Impact on agricultural land on the route of the transmission line was restricted to the construction phase, and adequate compensation as determined by the district authorities was paid to the affected persons. At appraisal, POWERGRID had agreed to make compensation for land lost at transmission line tower footings. However, this had not been done as the transmission lines were constructed in states where no such special land laws exists and, hence, a utility can build transmission lines under the protection of Indian Telegraph Act and Indian Electricity (Supply) Act without paying compensation for land. POWERGRID paid compensation for loss of crops during construction and loss due to damage of trees. 54. The transformers and other equipment used in the Project are free from poly-chlorinated biphenyl (PCB). Batteries and transformer oil are being disposed of through lead waste reprocessors in accordance with the provisions of MOEF and compliance with these provisions is reported to MOEF through biannual reports.

2. Social Impacts 55. The Project is gender-neutral with regard to beneficiaries as all categories of electricity consumers—domestic, agricultural, industrial, and commercial—derive benefits from the Project. These benefits include increased power availability, fewer interruptions, and less load shedding. The Project increases the availability and reliability of power supply in the northeastern region, which is the most disadvantaged and least-developed area in the country. Other benefits include increase in industrial productivity and job creation in the manufacturing sector through additional power supply. 56. Satisfactory measures have been taken by POWERGRID to address the concerns of the project-affected persons (PAPs) and to provide rehabilitation assistance to them. These include (i) special care in route selection of transmission lines to avoid human rehabilitation, threats to survival of vulnerable communities, and common property resources; (ii) adequate compensation for damages to crops, trees, and buildings/structures; (iii) adequate compensation and resettlement for PAPs; (iv) robust institutional arrangements for monitoring of rehabilitation measures; (vi) permanent employment to most vulnerable PAPs; (vii) employment for PAPs through contractors during construction; (viii) employment for PAPs through contractors during operation and maintenance; and (ix) industrial training for the children of PAP families. 57. The Project involved seven new substations (four 400 kV substations, one 220 kV substation, and two 132 kV substations) for which land was acquired. In the case of the 132kV substations at Kleirahat and Badarpur under the augmentation of Northeastern transmission system subproject, the land acquisition did not entail any human resettlement as 2.43 ha of land was acquired from a single private owner at Kleirahat and 11.33 ha of government land was acquired at Badarpur. A total of 159.20 ha of land was acquired for the remaining five substations (two under Vindhyachal transmission system, two under the Eastern region strengthening scheme, and one under Unchahar transmission system), which involved 20.50 ha of government land and 138.71 ha of private land. Total compensation of Rs41.80 million (about $0.95 million equivalent) was paid to 435 PAPs in accordance with the compensation amount fixed by the respective district administration authorities. POWERGRID informed the PCR Mission that the acquisition of government land did not displace any non-titled users. 58. Land for all the seven substations were acquired in accordance with Land Acquisition Act, 1894 (amended in 1984). The provisions of the act, which involved prior notification and consultations with PAPs, were complied with. Compensation for private land was paid to

15

individual landowners, including compensation for trees, crops, and structures as fixed by the respective district administration in a time-bound manner as per the provisions of the Land Acquisition Act. POWERGRID indicated that the structures involved were mainly temporary cattle sheds and other temporary storage sheds. The compensation paid by POWERGRID normally exceeded the present commercial market value. Apart from adequate compensation for land and crops, additional measures were taken for the rehabilitation of the PAPs. Details of such measures undertaken are in Appendix 11. 59. POWERGRID was the first agency in India to adopt environmental and social policy and procedures (ESPP) in 1998, with the guidance of ADB and the World Bank. POWERGRID is also certified for ISO 9001, 14001, and 18001. The ESPP, which is substantially consistent with ADB’s social and environmental policies, describes POWERGRID’s approach and commitment to deal with environmental and social issues relating to its transmission projects, and describes the management procedures it will employ to mitigate these. The ESPP includes a framework for identification, assessment, and management of environmental and social concerns at corporate and project levels. The ESPP outlines POWERGRID’s commitment to the goal of sustainable development through conserving natural resources, continually improving its management system, accessing specialist knowledge for the management of significant environmental and social issues, and introducing state of the art internationally proven technologies while strictly following the basic principles of avoidance, minimization, and mitigation. Under the ESPP, rehabilitation action plans and the environmental assessment management plan are prepared and implemented in the first 12 months of the project construction period and are monitored at the corporate level. Feedback is obtained to enable continuous improvements. The ESPP is currently being revised with inputs from public consultations. 60. At appraisal, POWERGRID was following Government guidelines for environmental and social issues. It had agreed to upgrade the environment management cell in the corporate center to a fully-fledged environment management department. This was complied with and experienced environmental officers were appointed at all regional headquarters who monitored implementation of the environmental impact mitigation measures of the subprojects. The PCR Mission is satisfied with the efforts being undertaken by POWERGRID to resettle PAPs, and found arrangements to be adequate for transmission line projects.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS A. Overall Assessment 61. Project formulation and design were consistent with ADB’s country strategy and sector strategy and with POWERGRID’s plan to develop a national grid. The performance of the Executing Agency and the Borrower, consultants, and contractors was generally satisfactory. Although completion of the subprojects was delayed, implementation of the project components was achieved as conceived at appraisal without cost overruns. All the subprojects achieved a high level of performance within few months of being commissioned. POWERGRID has the capability to operate and maintain the subprojects to derive maximum benefits from them. The Project in general has met the objectives. 62. The PCR Mission observed that the indirect and broader objectives of the Project (para.1) have been realized as (i) bulk power transmission is being carried out on a commercial basis; (ii) CERC was constituted in 1998 and it fixed transmission charges, ensuring a 16% return on investments with effect from 1 April 1998 (this was subsequently reduced to 14% in

16

April 2004 due to market conditions); (iii) the Electricity Act, 2003, made it mandatory for all SEBs to unbundle and restructure; (iv) 13 (out of 23) SEBs have unbundled and corporatized and 2 of them have privatized distribution; (v) 23 states have constituted state electricity regulatory commissions (SERCs), 18 of them have issued tariff orders and the remaining states are in the process of establishing SERCs; (vi) about 7,000 MW of IPP plants are presently in operation and several more are in various stages of implementation; (vii) the “Power for All by 2012” program launched by the Government in 2002 envisages the addition of 100,000 MW of generation capacity and matching augmentation of transmission and distribution infrastructure by 2012 to ensure access to electricity for the entire population of the country. These important initiatives, envisaged at project appraisal, are considered very important steps in the development of the power sector in India. 63. POWERGRID indicated that, after implementation of Ahluwalia Committee recommendations, the dues of SEBs to POWERGRID have come down to an average of 1.56 months’ billing. SEBs are maintaining letters of credit up to 104% of monthly billings for current payments. The PCR Mission is of the opinion that these arrangements are adequate to ensure the financial viability of the Project. Further, the provisions of the Electricity Act 2003, such as open access to transmission and the introduction of ABT and commercial contracts with SEBs or state power utilities will improve the financial viability of the Project. The benefits generated by the projects are observable, and the EIRR and FIRR computed using actual project benefits confirm this. Overall, the Project is rated successful. B. Lessons Learned 64. With proper planning, effective project monitoring mechanisms, and motivated and well-trained personnel, infrastructure projects can be implemented successfully even in difficult terrains, despite adverse weather conditions and areas affected by insurgencies. 65. POWERGRID took action to acquire land and other statutory clearances well in advance, which helped in project implementation. In earlier ADB-assisted power sector projects, delays in land acquisition had delayed the Project before construction could start. 66. Regular discussions with the Government on implementing assurances under the Project prompted the Government to (i) increase the rate of return on POWERGRID’s equity from 12% to 16% with effect from 1 April 1997;1 (ii) address the issue of dues from SEBs; and (iii) take necessary actions to enable POWERGRID to enter into commercial contracts with beneficiaries. Further, the implementation of ABT in all the regions helped POWERGRID to operate the regional grids with improved system stability and reliability. C. Recommendations

1. Project-Related

a. Future Monitoring 67. All project components have been successfully implemented and are operating without any operational problems. As POWERGRID has a long and successful track record of not only

1 However, the Central Electricity Regulatory Commission has reduced the rate of return on equity to 14% with effect from 1 April 2004 in view of the prevailing interest rates in the market.

17

operating and maintaining the transmission system, but also of operating the five regional grids on a real time basis, no future project monitoring by ADB is required.

b. Covenants 68. Most of the covenants were complied with. The exceptions were the covenant for an increase in the interest rate on outstanding dues by SEBs, and the covenant related to the negative lien. The details are given in Appendix 9. Based on the discussions between POWERGRID and ADB, plans have been made to comply with the negative lien covenant. SAEN and INRM need to follow up with POWERGRID expeditiously to comply with this covenant.

c. Further Action 69. The Project does not require any specific follow-up action by ADB. The reliability and future performance of the project components are being closely monitored by POWERGRID, as well as by beneficiaries of the Project. However, ADB needs to ensure that the loan covenant related to the negative lien is implemented.

d. Timing of Project Performance Audit Report 70. A project performance audit report (PPAR) mission may be fielded in the second quarter of 2006 to prepare a PPAR.

2. General 71. The past record of POWERGRID illustrates its capacity for successful project implementation, and the World Bank and ADB have approved repeated loans to POWERGRID. A second loan (Loan 1764–IND) of $250 million was approved by ADB in October 2000 and a third loan of $400 million (Loan 2152–IND) was approved in December 2004. 72. The Project implemented by POWERGRID has contributed to (i) overall growth of the power sector; (ii) a reduction of transmission system losses; (iii) enhancement of interregional power exchange capacity, and an improvement in the PLF of generating stations, particularly in northeastern region; and (iv) coordinated scheduling and economic dispatching with the help of modern system coordination centers in all regions. The Electricity Act, 2003, which ensures open access to transmission, has heralded an era of power trading activities which make use of the POWERGRID transmission system for interstate and interregional power trading. With continuing support from ADB and the World Bank, POWERGRID should be able to establish a national grid in India, facilitating the transfer of 30,000 MW power across the five regional grids and thus to help India use already installed generating and planned capacities optimally. This will also help India in the optimal utilization of its energy resources.

Appendix 1 18

CHRONOLOGY OF MAIN EVENTS IN PROJECT IMPLEMENTATION

Date Event 1993 11–28 May Fact-finding mission activities carried out. 23 November–8 December

Sector review and reconnaissance mission agreed to the request of the Government of India to process the transmission portion of the loan, to be executed by the Power Grid Corporation of India Limited (POWERGRID).

1994 10 June Management review meeting (MRM). 28–30 June Follow-up mission recommended approving the appraisal of transmission

component of the loan. 20–29 September Appraisal activities carried out.

1995 6–17 February Follow-up mission recommended loan enhancement to $275 million. 21 February Investment approval by the Government for the East–South Interconnector. 21 March Special mission activities carried out. 31 March Investment approval by the Government for augmentation of the

northeastern transmission system. Investment approval for Kopili and Agartala transmission systems was granted in 1993.

26 July Staff review committee meeting held. 6 October Investment approval by Government of India for Vindhyachal stage-II

transmission system. 10–13 October Loan negotiations held. 16 November Approval of Project by ADB Board of Directors.

1996 21 February–4 March

Inception mission activities carried out.

3 April Investment approval by the Government for Unchahar stage-II transmission system.

15 May Contracts worth $26.7 million and Rs1,095.2 million awarded (i) for supply of tower material and construction of transmission lines for Vindhyachal stage-II transmission system; and (ii) for the supply of conductors, insulators, and hardware for Jeypore–Gazuwaka transmission system.

31 May Contracts worth $5.34 million and Rs324.31 million awarded for supply of tower material and construction of transmission lines for the augmentation of the northeastern transmission system.

18 July Loan agreement signed. 16 October Loan declared effective. 25 October First disbursement under the project made. 27 November Contracts worth $37.04 million and Rs1,871 million awarded for the supply

of conductors and earthwire for the Vindhyachal stage-II transmission system.

29 November Contracts worth Rs100.45 million awarded for the supply of hardware and accessories for Vindhyachal stage-II transmission system

Appendix 1 19

Date Event 25 November–5 December

First review mission conducted.

9 December Contracts worth Rs155.05 million awarded for supply of substation equipment of Jeypore substation.

26 December Contracts worth Rs163.80 million awarded for supply of insulators for Vindhyachal stage-II transmission system.

1997 31 January Contracts worth $5.29 million and Rs29.30 million awarded for supply of

conductors, earthwire, insulators, hardware, and accessories for augmentation of northeastern transmission system.

7 March Contracts worth Rs166.09 million awarded for supply of substation equipment for northeastern transmission system.

21 March Contracts worth Rs563.46 million awarded for supply of substation equipment for Vindhyachal stage-II transmission system.

15 May Contracts worth Rs630.36 million awarded for supply of substation equipment for Vindhyachal stage-II transmission system.

7 July Contracts worth F20.58 million awarded for supply of Gazuwaka substation equipment for Jaypore-Gazuwaka transmission system.

28 July Contracts worth $4.20 million and Rs38.61 million awarded for supply of substation equipment for northeastern transmission system.

21 August Investment approval by the Government for Regional System Coordination Center (RSCC) for northeastern region.

27 August Contracts worth $10.435 million and Rs113.88 million awarded for supply of tower material, conductors, insulators and construction of transmission line for Unchahar stage-II transmission system.

1998 20 July Award of contract for consulting services for implementation of RSCC. 30 July Completion of Kopili transmission system. 7–12 December Second Review mission conducted.

1999 31 March Completion of East–South Interconnector. 10 September Loan administration transferred to India Resident Mission. 31 October Completion of Vindhyachal stage-II transmission system. 31 December Completion of Unchahar stage-II transmission system; Completion of

Augmentation of Northeastern transmission system.

2000 15 March Contracts worth Rs121.507 were awarded for supply of substation

package of Jaypore, Farakka, and Malda substation. 27 April Contracts worth $0.809 million and Rs2.923 million were awarded for

supply of power supply and UPS system for RSCC. 28 April Contracts worth SwF5.882 million and Rs61.35 million was awarded for

supply of Digital Microwave system for RSCC. Contract worth Rs288.11 million was awarded for supply of substation equipment for grid strengthening at north Bihar.

2–5 May Third Review mission conducted.

Appendix 1 20

Date Event 12 May Contracts worth Rs82.515 million awarded for supply of power line

carrier communication (PLCC) and private automatic exchange (PABX) system for RSCC.

15 May Contracts worth $3.887 million, €8.015 million and Rs36.952 million awarded for supply of supervisory control and data acquisition system (SCADA), and energy management system (EMS) for RSCC.

26 May Contracts worth DM9.776 million and Rs181.052 million awarded for supply of optical fiber cable for RSCC.

30 May Contracts worth $6.158 million and Rs105.40 million were awarded for supply and erection of transmission line material, including conductors and insulators for grid strengthening of north Bihar.

31 May Contracts worth Rs253.274 million were awarded for supply of Silguri substation package of for grid strengthening of north Bengal and north Bihar.

30 November Completion of Agartala transmission system (one line from the Agartala gas-based power plant (GBPP) to Agartala substation was completed in April 1998).

2001 3 January Request from POWERGRID for extension of loan closing date by 2

years to 31 March 2003 approved by ADB. 28 June Request from POWERGRID to ADB for reallocation from surplus in

contract of $12.96 million to interest during construction (IDC). 1 August POWERGRID’s request for reallocation of $12.96 million to IDC

approved by ADB. 8–12 October Fourth Review mission conducted.

2002 30 April Completion of grid strengthening of West Bengal. 30 September Completion of grid strengthening of Orissa. 30 November $9.0 million was cancelled from the loan amount. 31 December Completion of Grid strengthening of north Bengal. 16–17 December Fifth review mission conducted.

2003 20 February 10 May

$6.5 million was cancelled from the loan amount. Completion of RSCC for northeastern region.

9 July Final loan disbursement; $7.52 million was surrendered as undisbursed amount.

30 October Completion of grid strengthening of north Bihar

2005 26 April–1 May 26 May 28–29 May

Project Completion Review Mission activities were carried out.

DM = Deutsche mark, F = French franc, Rs = Indian rupees, $ = US dollar, € = euro. Source(s): Back-to-Office-Reports of the Asian Development Bank, LFIS of Asian Development Bank, and Power Grid Corporation of India Limited.

Appendix 2 21

COST BREAKDOWN BY PROJECT COMPONENTS ($ million)


Item Foreign Local Total Foreign Local Total A. Base Cost

1. Augmentation of Northeastern Transmission System

17.02 11.57 28.59 17.54 12.46 30.00




35.52 16.33 51.85 18.59 33.78 52.37


19.28 13.25 32.53 19.19 11.52 30.71


113.26 81.50 195.76 97.82 54.45 152.27

7. East–South Interconnector 30.45 21.60 52.05 24.33 24.60 48.93 8. Grid Strengthening for North

Bengal 10.31 6.88 17.19 7.22 4.30 11.52

9. Grid Strengthening for North Bihar 12.51 8.34 20.85 7.12 5.21 12.33 10. Grid Strengthening for West

Bengal 1.78 1.19 2.97 1.04 0.74 1.78

11. Grid Strengthening for Orissa 1.88 1.25 3.13 1.20 0.78 1.98 12. Consultancy Services 2.00 0.00 2.00 0.46 0.00 0.46 Subtotal (A) 249.83 166.17 416.00 200.52 152.43 352.95

B. Contingencies 1. Augmentation of Northeastern





6.14 4.27 10.41 0.00 0.00 0.00


3.08 3.59 6.67 0.00 0.00 0.00


19.05 22.80 41.85 0.00 0.00 0.00

7. East–South Interconnector 4.94 5.86 10.80 0.00 0.00 0.00 8. Grid Strengthening for North

Bengal 1.97 3.88 5.85 0.00 0.00 0.00

9. Grid Strengthening for North Bihar 2.39 4.70 7.09 0.00 0.00 0.00 10. Grid Strengthening for West

Bengal 0.22 0.24 0.46 0.00 0.00 0.00

11. Grid Strengthening for Orissa 0.23 0.26 0.49 0.00 0.00 0.00 Subtotal (B) 41.25 49.45 90.70 0.00 0.00 0.00

C. Interest During Construction

47.26 43.05 90.31 51.46 15.39 66.85

Subtotal (C) 47.26 43.05 90.31 51.46 15.39 66.85

Total 338.34 258.67 597.01 251.98 167.82 419.80 Source: Asian Development Bank estimates.

22 Appendix 3

PROJECT COSTS AND SUMMARY OF CONTRACTS

PCSS No.

Category No.

Category Description Contract Amount ($)

Amount Disbursed ($)

0001 01 Supply of towers and construction of transmission lines under Kopili transmission system

1,401,599 1,401,599

0002 01 Supply of towers and construction of transmission lines under Agartala transmission system

1,412,023

1,412,023

0003 01 Supply of towers and construction of transmission lines under augmentation of northeastern transmission system

7,439,316 7,439,316

0004 01 Supply of conductor and earthwire for East–South interconnector 11,311,059 11,311,0590005 01 Supply of anti-fog type disc insulators for East–South interconnector 1,576,512 1,576,5120006 01 Supply of hardware fittings; and accessories for conductor and earthwire

for East–South interconnector 786,074 786,074

0007 01 Supply of towers and construction of transmission lines under Vindhyachal stage─II transmission system: Vindhyachal─Satna line

10,279,264 10,279,264

0008 01 Supply of towers and construction of transmission lines under Vindhyachal stage─II transmission system: Satna─Bina line

7,538,792 7,538,792

0009 01 Supply of towers and construction of transmission lines under Vindhyachal stage─II transmission system: Korba─Raipur line; and loop-in loop-out (LILO) of existing transmission lines in Raipur substation

15,374,022 15,374,022

0010 01 Supply of insulators for transmission lines under Vindhyachal stage─II transmission system

4,019,085 4,019,085

0011 01 Supply of hardware fittings and accessories for conductor and earthwire for transmission lines under Vindhyachal stage─II transmission system

2,770,554 2,770,554

0012 01 Supply of conductor and earthwire for transmission lines under Vindhyachal stage─II transmission system: Vindhyachal─Satna line

12,937,796 12,937,796

0013 01 Supply of conductor and earthwire for transmission lines under Vindhyachal stage─II transmission system: Satna─Bina line

13,918,590 13,918,590

0014 01 Supply of conductor and earthwire for transmission lines under Vindhyachal stage─II transmission system: Korba─ Raipur line and LILO lines in Raipur

7,372,946 7,372,946

0015 01 Turnkey package for substation at Jeypore under East–South i interconnector

2,943,789 2,943,789

0016 01 Supply of conductor and earthwire for transmission lines under: (i) augmentation of northeastern transmission system, (ii) Kopili transmission system, and (iii) Agartala transmission system

4,338,926 4,338,926

0017 01 Supply of disc insulators for transmission lines under: (i) augmentation of northeastern transmission system, (ii) Kopili transmission system, and (iii) Agartala transmission system

780,723 780,723

PCSS No.

Category No.



0018

01

Supply of hardware fittings, conductor, and earthwire for transmission lines under: (i) augmentation of Northeastern transmission system, (ii) Kopil transmission system, and (iii) Agartala transmission system

321,977

321,977

0019

01 Turnkey packages for substations under: (i) augmentation of northeastern transmission system, (ii) Kopili transmission system, and (iii) Agartala transmission system: new substations at Badarpur and Kleirahat

3,451,829 3,451,829

0020 01 Turnkey package for substations under Vindhyachal stage─II transmission system: Satna and Bina substations

11,258,731 11,258,731

0021 01 Turnkey package for substations under Vindhyachal stage─II transmission system: Raipur, Bhilai, and Korba substations

12,346,316 12,346,316

0022 01 Turnkey package for Gazuwaka substation under East–South interconnector

8,043,189 8,043,189

0023 01 Turnkey package for substations under: (i) augmentation of Northeastern transmission system, (ii) Kopili transmission system, and (iii) Agartala transmission system: Kumarghat, Jiribam, Aizwal, Khandong, Bairabi, and Misa

4,427,777 4,427,777

0024 01 Supply of towers and construction of transmission lines under Unchahar transmission system

6,157,067 6,157,067

0025 01 Supply of disc insulators for transmission lines under Unchahar transmission system

724,816 724,816

0026 01 Supply of conductor and earthwire for transmission lines under Unchahar transmission system

6,049,621 6,049,621

0027 01 Supply of hardware, and accessories for conductor and earthwire for transmission lines under Unchahar transmission system

266,507 266,507

0028 01 Turnkey package for Kanpur substation under Unchahar transmission system

5,731,590 5,731,590

0029 01 Consultancy services for energy management system (EMS) and supervisory control and data acquisition system (SCADA) under Regional System Coordination Center (RSCC) for northeastern region

497,662 497,662

0030 01 Substation package under eastern region strengthening scheme in Orissa: Jeypore

870,517 870,517

0031 01 Substation package under eastern region strengthening scheme in West Bengal: Malda and Farakka

823,329 823,329

0032 01 EMS and SCADA system package under RSCC for northeastern region─offshore supply

4,010,941 4,010,941

0033 01 Auxiliary power supply system package under RSCC for northeastern region

651,932 651,932

0034 01 Substation package under eastern region strengthening scheme in north Bihar : Purnea

4,182,498 4,182,498

Appendix 3 23

24 Appendix 3

PCSS No.

Category No.



0035

01 Supply of towers and construction of transmission lines under eastern region strengthening scheme in North Bihar and North Bengal.

6,645,093 6,645,093

0036 01 Power line carrier communication (PLCC) and private automatic exchange (PABX) system package under RSCC for northeastern region

1,370,469 1,370,469

0037 01 Digital microwave telecommunication package under RSCC for northeastern region

3,472,244 3,472,244

0038 01 Substation package under eastern region strengthening scheme in North Bengal: Siliguri

3,616,599 3,616,599

0039 01 EMS and SCADA system package under RSCC for northeastern Region─onshore Supply

2,717,584 2,717,584

0040 01 EMS and SCADA System package under RSCC for northeastern region─onshore erection

219,769 219,769

0041 01 Fiber optic telecom package under RSCC for northeastern region─offshore supply

4,246,512 4,246,512

0042 01 Fiber optic telecom package under RSCC for northeastern region─erection

2,199,217 2,199,217

0043 01 Fiber optic telecom package under RSCC─onshore supply 12,368 12,368 No. = number, PCSS = procurement contract summary sheet.

Source: LFIS of Asian Development Bank.

Appendix 4 25

ANNUAL AVERAGE EXCHANGE RATES

Fiscal Year Indian Rupees

(Rs) Per $

1991

17.95

1992

24.52

1993

26.41

1994

31.36

1995

31.40

1996

33.46

1997

35.50

1998

37.16

1999

39.36

2000

43.33

2001

45.61

2002

47.53

2003

48.27

Source: Reserve Bank of India.

26 Appendix 5

PROJECT FINANCING PLAN ($ million)


Item Foreign Local Total Foreign Local Total

A. Implementation Costs

POWERGRID Total

= Power Grid Corporation of India Limited. 338.34

1. Asian Development Bank 234.00 0.00 234.00 200.52 0.00 200.52 2. POWERGRID 57.08 0.00 57.08 0.00 152.43 152.43 3. Domestic Borrowing 0.00 215.62 215.62 0.00 0.00 0.00B. Interest During Construction Costs 1. Asian Development Bank 41.00 0.00 41.00 51.46 0.00 51.46 2. POWERGRID 6.26 0.00 6.26 0.00 15.39 15.39 3. Domestic Borrowing 0.00 43.05 43.05 0.00 0.00 0.00

258.67 597.01 251.98 167.82 419.80

Source: Asian Development Bank estimates.

Appendix 6 27

PROJECTED AND ACTUAL DISBURSEMENTS OF LOAN PROCEEDS ($ million)

Projectedª

Actual

Calendar Year For the Year Cumulative For the Year Cumulative

1996

7.500 7.500 10.075 10.075

1997 51.250 58.750 53.993 64.0681998 49.860 108.610 72.423 136.4911999 18.500 127.110 36.203 172.6942000 13.500 140.610 26.115 198.8092001 15.910 156.520 24.009 222.8182002 21.620 178.140 23.920 246.7382003 7.360 185.500 5.240 251.978

ª Projections are those as made in the annual loan financial information system (LFIS). Source: LFIS of Asian Development Bank.

M O M M O M M O M M O M M O M M O M M O M M O M M O

IMPLEMENTATION SCHEDULE

Activity1995 1996 1997 1998 1999 2000 2001 2002 2003

J F M A J J A S N D J F A J J A S N D J F A J J A S N D J F A J J A S N D J F A J J A S N D J F A J J A S N D J F A J J A S N D J F A J J A S N D J F A J J A S N DA. Augumentation of Northeastern Transmission

1. Pre-award activities and issue of tender notice2. Bid opening, evaluation, and contract award3. Supply of equipment, installation, testing, and commissioning

B. Agartala Transmission System


C. Kopili Stage-I Extension Transmission System


D. Northeastern Regional System Coordination Center (RSCC)


E. East-South Interconnector1. Pre-award activities and issue of tender notice2. Bid opening, evaluation, and contract award3. Supply of equipment, installation, testing, and commissioning

F. Vindhyachal Stage-II Transmission System

1. Pre-award activities and issue of tender notice

2. Bid opening, evaluation, and contract award3. Supply of equipment, installation, testing, and commissioning

28 Appendix 7

M O M M O M M O M M O M M O M M O M M O M M O M M OActivity1995 1996 1997 1998 1999 2000 2001 2002 2003

J F M A J J A S N D J F A J J A S N D J F A J J A S N D J F A J J A S N D J F A J J A S N D J F A J J A S N D J F A J J A S N D J F A J J A S N D J F A J J A S N DG. Unchahar Stage-II Transmission System


H. Consulting Services for RSCC

1. Pre-award activities and issue of request for proposal2. Bid opening, evaluation, and contract award3. Delivery of consulting services

I. Grid Strengthening for North Bengal

1. Pre-award activities and issue of tender notice2. Bid opening, evaluation, and contract award

3. Supply of equipment, installation, testing, and commissioning

J. Grid Strengthening for North Bihar


K. Grid Strengthening for West Bengal


L. Grid Strengthening for Orissa


LegendProjectedActual

Source: Power Grid Corporation of India Limited.

Appendix 7 29

30 Appendix 8

ORGANIZATION CHART AND PROJECT IMPLEMENTATION STRUCTURE

Director (Projects)

CorporPlanni

Company Secretary Vigilance Contract Services Materials

Director (Finance)

Accounts, Budget, and

Taxation

Commercial Finance

Bonds, Banking, PF,

Pension, Establi ent

Inte l Au

ESMD

ons)

Operation Services

stem RLDC

RLDC

WRLDC

SRLDC

NERLDC

Commercial

Law

Telecom

Human Resources

Engg and QA

LD&C and IT

CMG

BDD

BDD

NRTS

Fina ial Concu nce, Cost gg.

ERSTS

DMS

Director (Personnel)

Chairman and Managing Director

BDD = business dtransmission systedispatch center, Nquality assurancetransmission systeSource: Power Gr

shm

rnadit

ncrreEn

- I NRTS - II ERTS WRTS SRTS - I SRTS - II NERTS

evelopment departme = corporate monitoring group, DMS = distribution management services, ERLDC = eastern region load dispatch center, ERTS = eastern region m, ESMD = environm social management department, IT = information technology, LD&C = load dispatch and communication, NERLDC = northeastern region load ERTS = northeas n ansmission system, NR = northern region load dispatch center, NRTS = northern region transmission system, PF = provident fund, QA =

, SRLDC = south ad despatch center, SR = southern region transmission system, WRLDC = western region load despatch center, WRTS = western region m. id Corporation of I a

terern

ndi

ate ng

SyOpe

nt, CMGent and

region trregion lo

Limited

LDCTS

rations
N
E

CCom

Dire

orpormunic

ctor (O

ate ations

perati

Appendix 9 31

STATUS OF COMPLIANCE WITH MAJOR LOAN COVENANTS

Covenant Reference in Loan Documents

Status of Compliance

1.

The Borrower shall make available, promptly as needed, the funds, facilities, services, land, and other resources required in carrying out of the project.

Loan Agreement (LA), Article (Art.) IV, Section (Sec.) 4.02.

Complied with.

2. The Borrower shall employ competent and qualified consultants, if required, and contractors acceptable to Asian Development Bank (ADB), in carrying out of the project.

LA, Art. IV, Sec. 4.03 Complied with.

3. The Borrower shall take out and maintain with responsible insurers, or make other arrangements satisfactory to ADB for, insurance against such risks and in such amount as shall be consistent with sound practice.

LA, Art. IV, Sec. 4.04 (a). Complied with.

4. The Borrower shall submit to ADB, the quarterly progress reports on the execution of the projects, with in 30 days of the end of the quarter to which the report relates.

LA, Art. IV, Sec. 4.06 (b). Complied with.

5. The Borrower shall promptly, with in five months after completion of The project, submit to ADB a project completion report (PCR) in a format approved by ADB.

LA, Art. IV, Sec. 4.06 (c) Partly complied with. PCRs for two subprojects were submitted.

6. The Borrower will submit audited financial statement within 7 months after the end of the fiscal year.

LA, Art. IV, Sec. 4.07 a (ii).

Complied with. However, submission was delayed by 2–4 months for some fiscal years.

7. The Borrower shall, commencing from 31 December 1995 and thereafter not later than 31 December in each year, prepare and furnish to ADB, financial projections including its investment program, financial plan, income statements, cash flow statements and balance sheets for at least the ten succeeding years.

LA, Art. IV, Sec. 4.07 (b). Complied with.

8. The Borrower shall at all times operate and maintain its plant, equipment and other property, and as needed, make all necessary repairs.

LA, Art. IV, Sec. 4.09 (c) Complied with.

9. The Borrower shall not, except with the approval of ADB, sell, lease or otherwise dispose of any of its assets which shall be required for the efficient carrying on of its operations or the disposal of which may prejudice the ability of the Borrower to perform satisfactorily any of its obligations under this loan.

LA, Art. IV, sec. 4.10. Complied with. The Borrower reported that it had not sold or disposed of any assets.

32 Appendix 9



10.

If the Borrower or any of its subsidiaries, (i) create any lien on any of its assets as security for any debt, such lien will ispo-facto equally and ratably secure the payment of the principal of, and interest and other charges on, the loan and the Borrower in creating or permitting the creation of any such lien will make express provision to that effect; and (ii) if any statutory lien shall be created on any assets of the Borrower or any of its subsidiaries, as security for any debt, the Borrower shall grant to ADB an equivalent lien satisfactory to ADB.

LA, Art. IV, Sec. 4.11 (a).

Not complied with. In December 2004, ADB approved the Borrower’s request for a waiver of the negative pledge clause for domestic borrowings, but advised the Borrower to expeditiously comply with the negative pledge clause for foreign borrowings. Discussions are continuing between Power Grid Corporation of India Limited (POWERGRID) and ADB to ensure compliance with the covenant.

11. The Borrower will (a) take all necessary measures to produce, starting from FY 1996, funds from internal sources equivalent to not less than 20 percent of its capital expenditures (on a three-year moving average); and (b) not incur any debt that will cause the debt: equity ratio to exceed 80:20.

LA, Art. IV, Sec. 4.12 (a) and 4.13

Complied with.

12. The Government of India (GOI), the Guarantor of the loan, will, by 31 March 1996, approve setting the Borrower’s transmission tariffs at a level that will enable the Borrower to recover full costs of service and earn a 16 percent rate of return (ROR) on its equity investments in transmission projects commissioned after 1 April 1997.

LA, Schedule (Sch.) 5, para. 7.

Complied with. Revised tariff notification ensuring 16% ROR on equity was issued on 16 December 1997 with effect from 1 April 1997. However, CERC has revised the ROR on equity to 14% with effect from 1 April 2004 due to prevailing interest rates in the market.

13. Prior to 1 April 1997, the Borrower will enter in to commercial contracts for transmission services with its customers on terms and conditions satisfactory to ADB and in accordance with the commercial conditions to be designed as part of the implementation of the recommendations of the Tariff Study.

LA, Sch. 5, para. 8 Complied with. Commercial contracts were executed with beneficiary states in all regions with effect from 1 April 1997. Central Electricity Regulatory Commission (CERC) was constituted in 1998 and availability based tariff (ABT) was notified by CERC on 4 January 2000. ABT was implemented in the western region on 1 July 2002, in the northern region on 1 December 2002, in the southern region on 1 January 2003, in the eastern region on 1 April 2003, and in the northeastern region on 1 November 2003.

14. The Borrower will exercise its rights under the commercial contracts with state electricity boards (SEBs), particularly the right to suspend service to a SEB that is delinquent in the payments to the Borrower.

LA, Sch. 5, para. 9. The Borrower informed the PCR Mission that it had suspended the service several times in the past to SEBs that failed to clear their dues or replenish the letters of credits (LCs). After the implementation of the Ahluwalia Commission recommendations, all SEBs have raised their LC limits to 104% of the monthly billings.

Appendix 9 33



15.

Prior to 31 August 1996, the Borrower will increase the service charge on overdue accounts to penal rate of not less than 2 percent per month.

LA, Sch. 5, para. 10.

Not complied. However, the present outstanding dues are less than 2 months’ billing, and the LC limits of SEBs are maintained at 104%. This covenant was modified in Loan 1764-IND which specified that 2% service charges will be applicable only if the outstanding dues are more than 2 months’ billing. POWERGRID informed that as per the CERC notification, the service charges can be levied at the rate of 1.25% per month of the outstanding billing amount beyond 2 months.

16. The Borrower will take all necessary steps to maintain its accounts receivable at a level not exceeding the total billings for its transmission services for the preceding two months.

LA, Sch. 5, para. 11. Could not be complied with initially, but after implementation of Ahluwalia Commission recommendations, the outstanding billings have come down to less than 2 months as informed by POWERGRID. POWERGRID informed the PCR Mission that, as of 31 May 2005, the arrears in equivalent months as per CERC notified billing works out to 1.56 months equivalent.

17. The Borrower shall, by 30 June 1996, place an environmental officer at each of its regional offices involved in the project to monitor project and assist with environment assessment at new site.

LA, Sch. 5, para. 13. Complied with. POWERGRID appointed senior officers at the rank of deputy general manager or chief manager at each of its regional headquarters to monitor the assessment of environmental and social impacts and implementation of mitigation measures.

18. The Borrower shall arrange to provide ADB, with annual monitoring reports on the compensatory forest’s status for a period of five years after establishing the plantations.

LA, Sch. 5, para. 14. Not complied with. POWERGRID informed the PCR Mission that compensatory forest development is the responsibility of the forest department once payments are made by POWERGRID. It could not submit such reports due to nonavailability of such reports.

19. The Borrower shall take all necessary action to ensure that all land, rights of way, easements and other rights in land or privileges required for the project shall be made available on a timely basis.

LA, Sch. 5, para. 15. Complied with.

20. The Borrower shall take all necessary steps during the planning and design of the project facilities to ensure social acceptance of the facilities.

LA, Sch. 5, para. 16. Complied with.

34 Appendix 10

FINANCIAL AND ECONOMIC EVALUATION 1. The major assumptions used in the financial and economic evaluation of the project investment are discussed in this appendix. A. Financial Evaluation 2. The financial evaluation of the Project was carried out using the concept of financial cost incurred and benefit streams realized on a subproject basis. Costs and benefits were evaluated for each of the subprojects. All costs and revenues in the calculations are expressed at constant March 2005 prices. 3. The Power Grid Corporation of India Limited (POWERGRID) charges a regulated tariff for transmission services based on its cost of services and an allowed rate of return on equity. In this financial evaluation, the incremental tariff revenue generated due to implementation of the subprojects has been considered. No change in the tariffs from these levels, in real terms, has been considered. 4. The capital costs considered include all capital expenditure for the project components and do not include interest during construction. The operating costs are based on the actual costs of operating and maintaining the subprojects incurred by POWERGRID. 5. The financial internal rate of return (FIRR) estimated for the subprojects is shown in Table A10.1.

Table A10.1: Financial Internal Rate of Return of Subprojects

Subproject

FIRR at Appraisal

FIRR at Project

Completion Vindhyachal Stage-II Transmission System

8.4 11.5

Augmentation of Northeastern Transmission System (including Agartala and Kopili Transmission Systems)a

11.7

Northeastern Regional System Coordination Center (RSCC)a

14.2

Unchahar Stage-II Transmission Systema

15.2

East-South Interconnectora

10.7

Grid Strengthening Schemes for Eastern Regiona 7.8

a Financial internal rate of return (FIRR) calculations for these subprojects were not carried out during appraisal. Hence, FIRR figures are not mentioned. Source(s): Power Grid Corporation of India Limited.

Appendix 10 35

6. At the time of appraisal, the FIRR was estimated for the Vindhyachal subproject as 8.4% (which was higher than the weighted average cost of capital [WACC] of 7.4%) and the FIRRs for the other subprojects were expected to be similar. At the time of preparation of PCR, the FIRR of the Vindhyachal subproject is estimated as 11.5%, which is higher than POWERGRID’s WACC of 6.9%. The FIRR of all the subprojects at the time of preparation of the PCR are higher than POWERGRID’s WACC of 6.9%. B. Economic Evaluation 7. The economic evaluation of the subprojects was carried out using two approaches depending on the economic benefits of the subproject: (i) on the basis of alternative coal transport costs from the mine head to the load centers, and (ii) on the basis of economic benefits of power consumption to the final consumers represented by their willingness to pay (WTP) as applicable. 8. The economic analysis was carried out using the world price numeraire. The economic costs were derived from the financial costs by deducting the taxes and duties and applying a standard conversion factor (SCF) of 0.95 on all non-tradable components and a shadow wage rate factor (SWRF) of 0.85 for surplus labor. 1. Vindhyachal Stage-II Transmission System 9. The Vindhyachal stage II transmission system entailed construction of power evacuation facilities for the 1,000 MW pit-head power plant in a corner of Madhya Pradesh to important load centers in Chattisgarh, Gujarat, Madhya Pradesh, and Maharashtra. The alternative would have been to transport coal by rail from the mines to the power plants near the load centers, a distance of about 575 km. Based on alternative costs of coal transport, the economic internal rate of return (EIRR) is estimated at 20.1% against 19.7% at appraisal. 2. Augmentation of Northeastern Transmission System 10. The economic evaluation of the subproject is based on the economic benefit due to increased power availability represented by the consumer’s willingness to pay (WTP) or economic cost of alternate energy sources replaced by electricity. For incremental users, average retail tariff for the region has been considered as WTP. For non-incremental consumption, economic benefit was calculated based on the alternative economic costs of other energy sources, such as diesel generators and kerosene lamps that were replaced by electricity, which is considered on average as $0.125/kWh1 for all categories of consumers across the country. The EIRR at PCR is estimated as 17.4% as against 18.2% at appraisal. 3. Northeastern Regional System Control Center 11. The economic benefits of the northeastern Regional System Control Center (RSCC) have been estimated on the same basis as that described above (para. 10). The EIRR is estimated at 21.8% against 22.5% at appraisal.

1 ADB. 2004. Report and Recommendation of the President to the Board of Directors on Proposed Loan to India for the Power Grid Transmission (Sector) Project. Manila. (Loan No. 2152-IND approved on 21 December 2004).

36 Appendix 10

4. Unchahar Stage-II Transmission System 12. The Unchahar stage-II transmission system in Uttar Pradesh will evacuate power from NTPC’s 420 MW Unchahar Stage II power plant to load centers in the northern region, based on alternative coal transport costs over a distance of about 500 km. The EIRR is estimated at 18.8% against 13.6% at appraisal. Higher values can be attributed to (i) lower subproject implementation costs, (ii) more-than-estimated energy transfers through the system, and (iii) lower-than-estimated operations and maintenance costs. 5. East-South Interconnector 13. The east–south interconnector enabled power transfer of 500 MW between the eastern and southern regions. These two regions were not previously connected. The alternative would have been to transport coal about 1,000 km. The economic benefits have been evaluated on the basis of alternative coal transport costs from Talcher to important load centers in the southern region. Although ADB funded only the alternating-current portion of this subproject, for economic (and financial) analysis, the complete costs of the high voltage direct current (HVDC) back-to-back station and its revenue has been considered. The EIRR is estimated at PCR at 14.0%, against 21.3% at appraisal. 6. Grid Strengthening Schemes for Eastern Region 14. Grid strengthening schemes for north Bengal, north Bihar, West Bengal, and Orissa in the eastern region have facilitated (i) increased availability of electricity in the important load centers in the eastern region; (ii) increased energy transfer between eastern and northeastern regions; and (iii) increased export of electricity from eastern region to southern region. The economic benefits for this subproject have been estimated on the same basis as that described above (para. 10). The EIRR is estimated as 31.1%. 15. The EIRRs estimated for the subprojects are shown in Table A10.2.

Table A10.2: Economic Internal Rate of Returns of Subprojects

Subproject

EIRR at Appraisal

EIRR at Project

completion Vindhyachal Stage-II Transmission System 19.7 20.1 Augmentation of Northeastern Transmission System (including Agartala and Kopili Transmission Systems)

18.2 17.4

Northeastern Regional System Coordination Center (RSCC)

22.5 21.8

Unchahar Stage-II Transmission System 13.6 18.8 East-South Interconnector 21.3 14.0 Grid Strengthening Schemes for Eastern Regiona 31.1

a Economic internal rate of return (EIRR) calculation for this subproject was not carried out during appraisal. Hence, EIRR figure is not mentioned. Source(s): Power Grid Corporation of India Limited. 16. Sensitivity analysis has been conducted to evaluate the impact on the estimate EIRR of the subprojects of (i) a 20% reduction in subproject benefits, (ii) a 20% increase in operation

Appendix 10 37

and maintenance costs, and (iii) a combination of (i) and (ii). All the subprojects continue to be economically viable under these adverse scenarios.

Table A10.3: Financial Evaluation for Vindhyachal Stage-II Transmission Systema

(Rs million)

Fiscal Capital Operating Total Revenue Net Net Flow Year Costs Costs Costs Earned Cash at 2005

Flow Prices 1996 112.7 112.7 (112.7) (174.4) 1997 357.5 357.5 (357.5) (528.9) 1998 1,963.2 1,963.2 (1,963.2) (2,782.2) 1999 2,345.1 2,345.1 (2,345.1) (3,136.8) 2000 451.8 48.7 500.5 541.5 41.1 53.2 2001 165.9 94.7 260.7 1,037.3 776.7 918.7 2002 12.5 58.5 71.0 868.0 797.0 929.9 2003 2.5 62.0 64.5 875.2 810.7 914.7 2004 65.7 65.7 1,031.9 966.2 1,033.7 2005 65.7 65.7 1,031.9 966.2 966.2 2006 65.7 65.7 1,031.9 966.2 966.2 2007 65.7 65.7 1,031.9 966.2 966.2 2008 65.7 65.7 1,031.9 966.2 966.2 2009 65.7 65.7 1,031.9 966.2 966.2 2010 65.7 65.7 1,031.9 966.2 966.2 2011 65.7 65.7 1,031.9 966.2 966.2 2012 65.7 65.7 1,031.9 966.2 966.2 2013 65.7 65.7 1,031.9 966.2 966.2 2014 65.7 65.7 1,031.9 966.2 966.2 2015 65.7 65.7 1,031.9 966.2 966.2 2016 65.7 65.7 1,031.9 966.2 966.2 2017 65.7 65.7 1,031.9 966.2 966.2 2018 65.7 65.7 1,031.9 966.2 966.2 2019 65.7 65.7 1,031.9 966.2 966.2 2020 65.7 65.7 1,031.9 966.2 966.2 2021 65.7 65.7 1,031.9 966.2 966.2 2022 65.7 65.7 1,031.9 966.2 966.2 2023 65.7 65.7 1,031.9 966.2 966.2 2024 65.7 65.7 1,031.9 966.2 966.2 2025 65.7 65.7 1,031.9 966.2 966.2 2026 65.7 65.7 1,031.9 966.2 966.2 2027 65.7 65.7 1,031.9 966.2 966.2 2028 65.7 65.7 1,031.9 966.2 966.2

Economic Internal Rate of Return 11.5% aTariff being regulated depends only on the system availability and is not influenced by kWh transmitted. Source(s): Power Grid Corporation of India Limited.

38 Appendix 10

Table A10.4: Financial Evaluation for Northeastern Transmission Augmentationa

(Rs million)


Flow Prices 1996 43.7 43.7 (43.7) (67.6) 1997 118.3 118.3 (118.3) (175.0) 1998 419.1 419.1 (419.1) (594.0) 1999 518.9 0.9 519.8 73.9 (445.8) (596.3) 2000 277.2 7.9 285.1 73.9 (211.1) (273.4) 2001 69.7 48.7 118.4 318.8 200.4 237.1 2002 47.2 52.0 99.2 318.8 219.6 256.2 2003 37.2 57.0 94.2 318.8 224.6 253.4 2004 23.6 74.8 98.4 318.8 220.4 235.8 2005 20.8 71.4 92.2 318.8 226.5 226.5 2006 71.4 71.4 318.8 247.3 247.3 2007 71.4 71.4 318.8 247.3 247.3 2008 71.4 71.4 318.8 247.3 247.3 2009 71.4 71.4 318.8 247.3 247.3 2010 71.4 71.4 318.8 247.3 247.3 2011 71.4 71.4 318.8 247.3 247.3 2012 71.4 71.4 318.8 247.3 247.3 2013 71.4 71.4 318.8 247.3 247.3 2014 71.4 71.4 318.8 247.3 247.3 2015 71.4 71.4 318.8 247.3 247.3 2016 71.4 71.4 318.8 247.3 247.3 2017 71.4 71.4 318.8 247.3 247.3 2018 71.4 71.4 318.8 247.3 247.3 2019 71.4 71.4 318.8 247.3 247.3 2020 71.4 71.4 318.8 247.3 247.3 2021 71.4 71.4 318.8 247.3 247.3 2022 71.4 71.4 318.8 247.3 247.3 2023 71.4 71.4 318.8 247.3 247.3 2024 71.4 71.4 318.8 247.3 247.3 2025 71.4 71.4 318.8 247.3 247.3 2026 71.4 71.4 318.8 247.3 247.3 2027 71.4 71.4 318.8 247.3 247.3 2028 71.4 71.4 318.8 247.3 247.3 2029 71.4 71.4 318.8 247.3 247.3 2030 71.4 71.4 318.8 247.3 247.3

Economic Internal Rate of Return 11.7% aTariff being regulated depends only on the system availability and is not influenced by kWh transmitted.

Source(s): Power Grid Corporation of India Limited.

Appendix 10 39

Table A10.5: Financial Evaluation for Northeastern Regional System Coordination Centera

(Rs million)


Flow Prices 2000 79.3 79.3 (79.3) (102.7) 2001 173.1 173.1 (173.1) (204.8) 2002 390.0 390.0 (390.0) (455.0) 2003 579.9 579.9 (579.9) (654.3) 2004 493.1 26.0 519.2 347.6 (171.6) (183.6) 2005 93.4 40.9 134.3 347.6 213.3 213.3 2006 40.9 40.9 347.6 306.7 306.7 2007 40.9 40.9 347.6 306.7 306.7 2008 40.9 40.9 347.6 306.7 306.7 2009 40.9 40.9 347.6 306.7 306.7 2010 40.9 40.9 347.6 306.7 306.7 2011 40.9 40.9 347.6 306.7 306.7 2012 40.9 40.9 347.6 306.7 306.7 2013 40.9 40.9 347.6 306.7 306.7 2014 40.9 40.9 347.6 306.7 306.7 2015 40.9 40.9 347.6 306.7 306.7 2016 40.9 40.9 347.6 306.7 306.7 2017 40.9 40.9 347.6 306.7 306.7 2018 40.9 40.9 347.6 306.7 306.7 2019 40.9 40.9 347.6 306.7 306.7 2020 40.9 40.9 347.6 306.7 306.7 2021 40.9 40.9 347.6 306.7 306.7 2022 40.9 40.9 347.6 306.7 306.7 2023 40.9 40.9 347.6 306.7 306.7 2024 40.9 40.9 347.6 306.7 306.7 2025 40.9 40.9 347.6 306.7 306.7 2026 40.9 40.9 347.6 306.7 306.7 2027 40.9 40.9 347.6 306.7 306.7 2028 40.9 40.9 347.6 306.7 306.7 2029 40.9 40.9 347.6 306.7 306.7 2030 40.9 40.9 347.6 306.7 306.7


40 Appendix 10

Table A10.6: Financial Evaluation for Unchahar Stage-II Transmission Systema

(Rs million)


Flow Prices 1998 177.7 177.7 (177.7) (251.8)1999 450.9 450.9 (450.9) (603.1)2000 139.8 3.5 143.3 96.2 (47.2) (61.1)2001 45.3 17.8 63.1 176.0 112.8 133.5 2002 3.0 43.1 46.1 185.8 139.7 163.0 2003 28.2 45.7 73.9 190.0 116.1 131.0 2004 1.3 48.4 49.7 228.6 178.9 191.4 2005 48.4 48.4 228.6 180.2 180.2 2006 48.4 48.4 228.6 180.2 180.2 2007 48.4 48.4 228.6 180.2 180.2 2008 48.4 48.4 228.6 180.2 180.2 2009 48.4 48.4 228.6 180.2 180.2 2010 48.4 48.4 228.6 180.2 180.2 2011 48.4 48.4 228.6 180.2 180.2 2012 48.4 48.4 228.6 180.2 180.2 2013 48.4 48.4 228.6 180.2 180.2 2014 48.4 48.4 228.6 180.2 180.2 2015 48.4 48.4 228.6 180.2 180.2 2016 48.4 48.4 228.6 180.2 180.2 2017 48.4 48.4 228.6 180.2 180.2 2018 48.4 48.4 228.6 180.2 180.2 2019 48.4 48.4 228.6 180.2 180.2 2020 48.4 48.4 228.6 180.2 180.2 2021 48.4 48.4 228.6 180.2 180.2 2022 48.4 48.4 228.6 180.2 180.2 2023 48.4 48.4 228.6 180.2 180.2 2024 48.4 48.4 228.6 180.2 180.2 2025 48.4 48.4 228.6 180.2 180.2 2026 48.4 48.4 228.6 180.2 180.2 2027 48.4 48.4 228.6 180.2 180.2 2028 48.4 48.4 228.6 180.2 180.2 2029 48.4 48.4 228.6 180.2 180.2 2030 48.4 48.4 228.6 180.2 180.2


Appendix 10 41

Table A10.7: Financial Evaluation for East South Interconnectora

(Rs million)


Flow Prices 1996 949.1 949.1 (949.1) (1,468.9)1997 1,474.6 1,474.6 (1,474.6) (2,181.7)1998 1,253.3 1,253.3 (1,253.3) (1,776.2)1999 987.5 987.5 (987.5) (1,320.9)2000 453.7 53.7 507.4 709.9 202.5 262.2 2001 29.4 97.6 127.0 1,220.2 1,093.2 1,293.1 2002 57.2 57.2 1,084.3 1,027.2 1,198.5 2003 60.6 60.6 878.0 817.4 922.3 2004 64.2 64.2 977.0 912.8 976.6 2005 64.2 64.2 977.0 912.8 912.8 2006 64.2 64.2 977.0 912.8 912.8 2007 64.2 64.2 977.0 912.8 912.8 2008 64.2 64.2 977.0 912.8 912.8 2009 64.2 64.2 977.0 912.8 912.8 2010 64.2 64.2 977.0 912.8 912.8 2011 64.2 64.2 977.0 912.8 912.8 2012 64.2 64.2 977.0 912.8 912.8 2013 64.2 64.2 977.0 912.8 912.8 2014 64.2 64.2 977.0 912.8 912.8 2015 64.2 64.2 977.0 912.8 912.8 2016 64.2 64.2 977.0 912.8 912.8 2017 64.2 64.2 977.0 912.8 912.8 2018 64.2 64.2 977.0 912.8 912.8 2019 64.2 64.2 977.0 912.8 912.8 2020 64.2 64.2 977.0 912.8 912.8 2021 64.2 64.2 977.0 912.8 912.8 2022 64.2 64.2 977.0 912.8 912.8 2023 64.2 64.2 977.0 912.8 912.8 2024 64.2 64.2 977.0 912.8 912.8 2025 64.2 64.2 977.0 912.8 912.8 2026 64.2 64.2 977.0 912.8 912.8

Economic Internal Rate of Return 10.7% aTariff being regulated, depends only on the system availability and is not influenced by kWh transmitted. Source(s): Power Grid Corporation of India Limited.

42 Appendix 10

Table A10.8: Financial Evaluation for Eastern Region Grid Strengtheninga

(Rs million)

Fiscal Capital Operating Total Revenue Net Price Net Flow Year Costs Costs Costs Earned Cash Index at 2005

Flow Factor Prices 1999 14.8 14.8 (14.8) 1.34 (19.8)2000 11.8 11.8 (11.8) 1.30 (15.3)2001 340.4 340.4 (340.4) 1.18 (402.6)2002 454.1 454.1 (454.1) 1.17 (529.8)2003 234.6 8.7 243.3 20.6 (222.6) 1.13 (251.2)2004 36.8 52.6 89.4 133.0 43.6 1.07 46.6 2005 54.7 55.7 110.4 186.7 76.3 1.0 76.3 2006 55.7 55.7 186.7 131.0 1.0 131.0 2007 55.7 55.7 186.7 131.0 1.0 131.0 2008 55.7 55.7 186.7 131.0 1.0 131.0 2009 55.7 55.7 186.7 131.0 1.0 131.0 2010 55.7 55.7 186.7 131.0 1.0 131.0 2011 55.7 55.7 186.7 131.0 1.0 131.0 2012 55.7 55.7 186.7 131.0 1.0 131.0 2013 55.7 55.7 186.7 131.0 1.0 131.0 2014 55.7 55.7 186.7 131.0 1.0 131.0 2015 55.7 55.7 186.7 131.0 1.0 131.0 2016 55.7 55.7 186.7 131.0 1.0 131.0 2017 55.7 55.7 186.7 131.0 1.0 131.0 2018 55.7 55.7 186.7 131.0 1.0 131.0 2019 55.7 55.7 186.7 131.0 1.0 131.0 2020 55.7 55.7 186.7 131.0 1.0 131.0 2021 55.7 55.7 186.7 131.0 1.0 131.0 2022 55.7 55.7 186.7 131.0 1.0 131.0 2023 55.7 55.7 186.7 131.0 1.0 131.0 2024 55.7 55.7 186.7 131.0 1.0 131.0 2025 55.7 55.7 186.7 131.0 1.0 131.0 2026 55.7 55.7 186.7 131.0 1.0 131.0 2027 55.7 55.7 186.7 131.0 1.0 131.0 2028 55.7 55.7 186.7 131.0 1.0 131.0 2029 55.7 55.7 186.7 131.0 1.0 131.0 2030 55.7 55.7 186.7 131.0 1.0 131.0

Financial Internal Rate of Return 7.8% aTariff being regulated depends only on the system availability and is not influenced by kWh transmitted. Source(s): Power Grid Corporation of India Limited.

Appendix 10 43

Table A10.9: Economic Evaluation for Vindhyachal Stage-II Transmission Systema

(Rs million) Fiscal Capital Operating Total Addl Cost of Alternate Benefit Net Flow Year Costs Costs Costs Units Supply Coal Tpt Accrued at 2005

MkWh Costs Prices

1996 105.9 105.9 (164.0)1997 353.9 353.9 (523.6)1998 1949.5 1949.5 (2762.7)1999 2572.6 2572.6 (3441.1)2000 667.3 47.2 714.5 6000.0 900.0 2070.0 1170.0 590.0 2001 185.2 91.8 277.0 8900.0 1335.0 3070.5 1735.5 1725.3 2002 11.8 56.7 68.5 9000.0 1350.0 3105.0 1755.0 1967.8 2003 2.4 60.1 62.4 8983.3 1347.5 3099.3 1751.8 1906.1 2004 63.7 63.7 8966.7 1345.0 3093.5 1748.5 1802.7 2005 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2006 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2007 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2008 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2009 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2010 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2011 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2012 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2013 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2014 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2015 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2016 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2017 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2018 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2019 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2020 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2021 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2022 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2023 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2024 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2025 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2026 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2027 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0 2028 63.7 63.7 8993.3 1349.0 3102.7 1753.7 1690.0

Economic Internal Rate of Return 20.1%Addl= Additional Units; Tpt= Transport; MkWh=million kilowatt-hour a POWERGRID indicated that the average energy transmitted through the subproject is in the range of 15,000 million kilowatt-hour (million kWh), which is due to the strengthening of the existing transmission system of Vindhyachal stage 1 (1,260 MW) through Korba super thermal power project. For economic evaluation, besides the originally estimated 6,000 million kWh, another 1/3rd of the additional energy flow recorded on the Vindhyachal Stage 2 transmission system i.e. (15,000-6,000)/3 has been considered. Source(s): Power Grid Corporation of India Limited.

44 Appendix 10

Table A10.10: Economic Evaluation for Northeastern Transmission Augmentation (Rs million)

Fiscal Capital Operating Total Addl Supply Cost for WTP for Benefit Net Flow Year Costs Costs Costs Units Costs Non-Inc Inc Accrued at 2005

MkWh Users Users Prices 1996 39.0 39.0 (60.3)1997 114.5 114.5 (169.5)1998 424.6 424.6 (601.7)1999 565.1 0.9 566.0 (757.0)2000 328.7 7.6 336.3 234.0 666.9 377.3 401.3 111.7 (290.9)2001 73.8 47.2 121.0 1,008.8 2,874.9 1,626.6 1,730.0 481.7 426.7 2002 44.1 50.4 94.5 1,008.8 2,874.9 1,626.6 1,730.0 481.7 451.7 2003 34.5 55.2 89.7 1,008.8 2,874.9 1,626.6 1,730.0 481.7 442.3 2004 21.1 72.5 93.6 1,008.8 2,874.9 1,626.6 1,730.0 481.7 415.2 2005 18.6 69.2 87.8 1,008.8 2,874.9 1,626.6 1,730.0 481.7 393.9 2006 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2007 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2008 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2009 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2010 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2011 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2012 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2013 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2014 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2015 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2016 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2017 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2018 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2019 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2020 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2021 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2022 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2023 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2024 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2025 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2026 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2027 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2028 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2029 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5 2030 69.2 69.2 1,008.8 2,874.9 1,626.6 1,730.0 481.7 412.5

Economic Internal Rate of Return 17.4%Addl = additional; Inc = incremental; WTP= willingness to pay; MkWh = million kilowatt-hour. Source(s): Power Grid Corporation of India Limited.

Appendix 10 45

Table A10.11: Economic Evaluation for Northeastern Regional System Coordination Center

(Rs million)

Fiscal Capital Operating Total Addl Supply Cost for WTP for Benefit Net Flow Year Costs Costs Costs Units Costs Non-Inc Inc Accrued at 2005

MkWh Users Users Prices 2000 72.7 0.0 72.7 (94.2)2001 173.5 0.0 173.5 (205.2)2002 408.4 0.0 408.4 (476.5)2003 647.3 0.0 647.3 (730.3)2004 474.9 25.2 500.1 1,100.0 3,135.0 1,773.8 1,886.5 525.3 26.9 2005 84.7 39.7 124.4 1,100.0 3,135.0 1,773.8 1,886.5 525.3 400.9 2006 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2007 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2008 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2009 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2010 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2011 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2012 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2013 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2014 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2015 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2016 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2017 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2018 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2019 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2020 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2021 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2022 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2023 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2024 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2025 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2026 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2027 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2028 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2029 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6 2030 39.7 39.7 1,100.0 3,135.0 1,773.8 1,886.5 525.3 485.6

Economic Internal Rate of Return 21.8%Addl = additional; Inc = incremental; WTP = willingness to pay; MkWh = million kilowatt-hour. Source(s): Power Grid Corporation of India Limited.

46 Appendix 10

Table A10.12: Economic Evaluation for Unchahar Stage-II Transmission System (Rs million)

Fiscal Capital Operating Total Addl Trans- Alternate Benefit Year Costs Costs Costs Units mission Coal Tpt Accrued

MkWh Costs Costs 1998 321.6 321.6 1999 544.3 544.3 2000 158.9 3.4 162.4 363.9 52.8 109.2 56.42001 45.3 17.3 62.6 1,285.9 186.4 385.8 199.32002 3.4 41.7 45.1 2,240.5 324.9 672.2 347.32003 60.2 44.2 104.5 2,081.5 301.8 624.5 322.62004 23.5 46.9 70.4 2,480.7 359.7 744.2 384.52005 46.9 46.9 2,627.9 381.0 788.4 407.32006 46.9 46.9 2,600.0 377.0 780.0 403.02007 46.9 46.9 2,600.0 377.0 780.0 403.02008 46.9 46.9 2,600.0 377.0 780.0 403.02009 46.9 46.9 2,600.0 377.0 780.0 403.02010 46.9 46.9 2,600.0 377.0 780.0 403.02011 46.9 46.9 2,600.0 377.0 780.0 403.02012 46.9 46.9 2,600.0 377.0 780.0 403.02013 46.9 46.9 2,600.0 377.0 780.0 403.02014 46.9 46.9 2,600.0 377.0 780.0 403.02015 46.9 46.9 2,600.0 377.0 780.0 403.02016 46.9 46.9 2,600.0 377.0 780.0 403.02017 46.9 46.9 2,600.0 377.0 780.0 403.02018 46.9 46.9 2,600.0 377.0 780.0 403.02019 46.9 46.9 2,600.0 377.0 780.0 403.02020 46.9 46.9 2,600.0 377.0 780.0 403.02021 46.9 46.9 2,600.0 377.0 780.0 403.02022 46.9 46.9 2,600.0 377.0 780.0 403.02023 46.9 46.9 2,600.0 377.0 780.0 403.02024 46.9 46.9 2,600.0 377.0 780.0 403.02025 46.9 46.9 2,600.0 377.0 780.0 403.02026 46.9 46.9 2,600.0 377.0 780.0 403.02027 46.9 46.9 2,600.0 377.0 780.0 403.02028 46.9 46.9 2,600.0 377.0 780.0 403.02029 46.9 46.9 2,600.0 377.0 780.0 403.02030 46.9 46.9 2,600.0 377.0 780.0 403.0

Economic Internal Rate of Return 18.8% Addl = additional; Tpt = transport; MkWh = million kilowatt-hour. Source(s): Power Grid Corporation of India Limited.

Appendix 10 47

Table A10.13: Economic Evaluation for East–South Interconnector (Rs million)

Fiscal Capital Operating Total Addl Trans- Alternate Benefit Net Flow Year Costs Costs Costs Units mission Coal Tpt Accrued at 2005

MkWh Costs Costs Prices 1996 856.1 856.1 (1,324.97)1997 1,469.6 1,469.6 (2,174.38)1998 1,475.3 1,475.3 (2,090.73)1999 1,440.4 1,440.4 (1,926.67)2000 649.1 52.0 701.2 2,576.4 386.5 1545.82 1,159.4 593.50 2001 26.5 94.6 121.1 3,939.5 590.9 2363.68 1,772.8 1,953.79 2002 55.4 55.4 3,214.3 482.1 1928.57 1,446.4 1,623.01 2003 58.7 58.7 1,907.3 286.1 1144.38 858.3 902.15 2004 62.2 62.2 2,493.1 374.0 1495.86 1,121.9 1,133.75 2005 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2006 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2007 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2008 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2009 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2010 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2011 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2012 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2013 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2014 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2015 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2016 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2017 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2018 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2019 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2020 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2021 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2022 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2023 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2024 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2025 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76 2026 62.2 62.2 3,200.0 480.0 1920 1,440.0 1,377.76

Economic Internal Rate of Return 14.0% Addl = additional; Inc = incremental; WTP = willingness to pay; MkWh = million kilowatt-hour. Source(s): Power Grid Corporation of India Limited.

48 Appendix 10

Table A10.14: Economic Evaluation for Eastern Region Grid Strengthening (Rs million)

Fiscal Capital Operating Total Addl Supply Costs for WTP for Benefits Net Flow Year Costs Costs Costs Units Costs Non-Inc Inc Accrued at 2005

MkWh Users Users Prices 1999 13.9 13.9 (18.6)2000 11.4 11.4 (14.7)2001 343.2 343.2 (406.0)2002 513.2 513.2 (598.8)2003 320.5 8.4 328.9 511.0 1,737.4 549.3 1,430.8 242.7 (97.2)2004 70.2 50.9 121.1 976.5 3,320.1 1,049.7 2,734.2 463.8 366.7 2005 51.1 54.0 105.1 1,333.5 4,533.9 1,433.5 3,733.8 633.4 528.3 2006 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2007 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2008 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2009 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2010 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2011 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2012 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2013 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2014 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2015 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2016 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2017 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2018 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2019 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2020 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2021 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2022 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2023 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2024 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2025 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2026 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2027 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2028 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2029 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4 2030 54.0 54.0 1,333.5 4,533.9 1,433.5 3,733.8 633.4 579.4

Economic Internal Rate of Return 31.1%Addl = additional; Inc = incremental; WTP = willingness to pay; MkWh = million kilowatt-hour. Source(s): Power Grid Corporation of India Limited.

Appendix 11 49

SUMMARY ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT A. Introduction 1. The initial environment examination (IEE) reports for all subprojects were submitted to the Asian Development Bank (ADB) which described the extent of the environmental impact of each subproject and the proposed mitigation measures. The IEE reports of all the reports were reviewed and approved by ADB. In accordance with the Forest Conservation Act, all the transmission lines infringing upon the ecologically sensitive areas are required to be cleared by the Ministry of Environment and Forests (MOEF). Accordingly, approval from MOEF was obtained well in advance for all the subprojects. The details of forest land involved and the mitigation measures undertaken for each subproject are presented in Table A11.1.

Table A11.1: Subproject Details of Forest Land Involved and Compensation Paid

Subproject Area of Forest Land

Infringed (hectares)

Amount of Compensation Paid to State Forest

Departments ($ million)

Augmentation of transmission system in northeastern region

127.37 0.128

Agartala transmission system 100.24

0.150

Kopili transmission system 59.50 0.055 Vindhyachal stage–II transmission system:

64.90 0.024

Unchahar stage-II transmission system No forest land was

infringed.

East–south interconnector 10.63 0.037 Regional System Coordination Center (RSCC) for NER

No forest land was infringed.

Eastern region strengthening schemes No forest land was

infringed.

NER – northeastern region. Source(s): Power Grid Corporation of India Limited. B. Environmental Compliance 2. At appraisal, POWERGRID agreed to take special care to minimize environmental impacts of the projects (paras. 50–54 of the main text). The status of its environmental compliance is given in Table A11.2.

50 Appendix 11

Table A11.2: Specific Steps taken to Comply with Environmental Compliance

Goals Specific steps taken A. Special care in route selection

of transmission lines (i) Monuments of cultural and historical importance were avoided. (ii) Route of transmission lines selected did not encroach upon national

parks and wildlife sanctuaries. (iii) Route of transmission lines selected did not to infringe upon areas

of natural resources. (iv) Route of transmission lines were kept 10–15 km away from major

towns wherever possible. (v) Engineering and biological measures were undertaken to prevent

soil erosion. B. Avoid damage to forests (i) Forest was avoided as far as possible.

(ii) Wherever not possible to avoid forest, routing of transmission lines in forest was done in consultation with concerned divisional forest officers.

(iii) Line routes avoided wetlands and unstable areas. (iv) Routing of lines was selected so as to minimize the impact of

transmission lines on wildlife. (v) Lopping of trees in forest areas to maintain line clearances is being

done under direction from Forest Department. (vi) Project-induced encroachments are being monitored by

POWERGRID. (vii) Compensatory afforestation was carried out according to the law.

C. Robust institutional arrangements for monitoring of environmental impact mitigation and rehabilitation measures

(i) Environment management cell in the corporate center of POWERGRID was upgraded to an environment management department, which formulated a policy framework for environmental impact mitigation and rehabilitation measures.

(ii) Environment officers were appointed in regional offices to monitor the implementation of environmental impact mitigation and rehabilitation measures.

GOI = Government of India, km = kilometer, POWERGRID = Power Grid Corporation of India Ltd. Source(s): Power Grid Corporation of India Limited. C. Resettlement and Rehabilitation Measures Undertaken 3. At appraisal and during project implementation, POWERGRID followed Government rules and regulations on land acquisition and rehabilitation. However, in 1998, POWERGRID finalized its environmental and social policy and procedures (ESPP) and implemented the applicable provisions of the ESPP in the subprojects where construction activities were still under progress. The social and rehabilitation measures that POWERGRID agreed to undertake at appraisal and its status of compliance are presented in Table A11.3.

Table A11.3: Resettlement and Rehabilitation Measures Undertaken Goal Specific Steps Taken A. Special care in route

selection of transmission lines

(i) Route of transmission lines did not entail human rehabilitation. (ii) Route of transmission lines selected will not threaten the survival of

any communities, and did not threaten the survival of common property resources (CPR) such as playgrounds, parks, schools and markets, and monuments etc.

B. Adequate compensation for agricultural lands

(i) Proper measures were taken to ensure that impact on agricultural land was restricted to construction phase only.

(ii) Satisfactory steps were taken to adequately compensate the damage to crops and trees during construction by determining the amount of compensation in consultation with district authorities and its timely disbursement.

Appendix 11 51

Goals Specific steps taken C. Compensation (i) Several persons were given temporary employment (during

construction) and are still being engaged in the project-related works through contractors.

(ii) Proper procedures were adopted for satisfactory determination of compensation for land acquired and the amount was disbursed on time.

(iii) Loss of CPR was adequately compensated wherever applicable. (iv) Social and community development schemes are being undertaken

(schools, roads, clinics, etc.) where contracted. D. Robust institutional

arrangements for monitoring of environmental mitigation and rehabilitation measures

(i) The environment management department in the corporate office laid down a policy framework for environmental mitigation and rehabilitation measures; and environmental officers were appointed at regional headquarters to monitor the implementation.

(ii) Social assessment and rehabilitation plans were prepared and approved for all subprojects with project-affected persons (PAPs).

(iii) Grievance redress committees (GRC) have been formed at some of the subprojects.

Source(s): Power Grid Corporation of India Limited. 5. Details of rehabilitation activities undertaken for each subproject are summarized below. 6. Grid Strengthening Schemes for North Bengal–Siliguri Substation: 24.28 ha of private land were acquired from 40 project-affected persons (PAPs) of which 20 were relatively rich persons living at nearby Siliguri town. The remaining 20 PAPs were farmers living in the adjacent villages; but none were below the poverty line. The social impact survey indicated that the average income of the PAPs had gone up because of increased economic activities in the area after commencement of project execution. The rehabilitation measures undertaken include: (i) monetary assistance to 34 PAPs, ranging from $50 to $300 in proportion to land lost, family size, and income levels, (ii) assistance to a local primary school to expand its infrastructure, (iii) installation of two hand-pumps (for drawing water) at common places in the villages being inhabited by the PAPs, (iv) industrial training for one child each of four PAP families, (v) employment of PAPs through contractors, and (vi) encouragement for PAPs to undertake petty-contract work from main contractors of POWERGRID. A grievance redress committee (GRC) of PAPs was constituted with members from the local administration, village panchayat1, POWERGRID, and PAPs to monitor the rehabilitation measures being undertaken. 7. Grid Strengthening for North Bihar–Purnea Substation: 31.57 ha of private land were acquired from 82 PAPs for the Purnea substation. A small patch of government land being used as a village road was inside the substation. The loss was compensated for by constructing an alternative road around the boundary of the substation to connect to the old road, and the entire length of the old village road was strengthened. Another access road from the National Highway was also strengthened by POWERGRID. None of the PAPs were from families below the poverty line. The steps already taken include (i) construction of roads in lieu of village road acquired, (ii) strengthening of the access road from national highway and the old village road, (iii) construction of 12 toilets and 3 hand-pumps in the village inhabited by some PAPs, (iv) guidance to 32 PAPs who formed a civil construction company which undertook several subcontracts from POWERGRID’s main contractors, (v) hiring by POWERGRID of the tractors of six PAPs for construction work purchased with their land compensation money , (vi) engagement of PAPs by POWERGRID for small maintenance jobs and horticulture work in the substation, and (vii) engagement of 15 PAPs through a housekeeping contractor in the substation. The GRC of PAPs was constituted with members from the local administration,

1 Village committee constituted by elected members.

52 Appendix 11

village panchayat, POWERGRID, and PAPs to monitor the rehabilitation measures being undertaken. 8. Vindhyachal Stage-II Transmission System–Satna Substation: 47.51 ha of private land and 14.23 ha of government land were acquired for the Satna substation in 1996. The acquisition of private land affected 62 PAPs, for whom a total of Rs4.2 million ($0.096 million equivalent) was paid as compensation. The rehabilitation measures undertaken included (i) permanent employment for five persons from the most vulnerable PAPs, (ii) employment for about 55 persons through maintenance contractors, (iii) engagement of about 50 persons as daily rate workers through construction contractors of POWERGRID for various construction activities which are still ongoing, (iv) construction of 1.2 km of village road connecting to the main road, (v) adding a room and toilet to the primary school in the village, and (vi) training of women in tailoring and distribution of nine sewing machines. 9. Vindhyachal Stage-II Transmission System–Raipur Substation: 31.16 ha of private land and 6.07 ha of government land were acquired for Raipur substation in 1996. A total of Rs7.5 million ($0.17 million equivalent) was paid as compensation to the PAPs. In addition the following rehabilitation measures were undertaken (i) permanent employment was offered to 5 of the most vulnerable PAPs, (ii) employment was offered to about 55 persons through maintenance contractors, (iii) about 50 persons were engaged as daily rate workers through construction contractors of POWERGRID for various construction activities which are still ongoing; and (iv) awareness programs for women were held on on training and welfare schemes. 10. Unchahar Stage-II Transmission System–Kanpur Substation: The 220 kV substation at Kanpur was built under the Unchahar transmission system by acquiring 4.14 ha of land adjacent to the existing 400 kV substation of POWERGRID. The entire 4.14 ha of land was acquired from a rich landlord at a price fixed by the local administration.

Appendix 12 53

QUANTITATIVE ASSESSMENT OF OVERALL PROJECT PERFORMANCE

Table A12.1: Overall Rating

Criteria Rating (0-3) Weights (%)

Weighted Rating

Relevance

3

20

0.60

Efficacy 2 25 0.50 Efficiency 2 20 0.40 Sustainability 2 20 0.40 Institutional Development 2 15 0.30

Overall Rating

2.20

(Successful) Notes: Relevance: – Project objectives and outputs were relevant to strategic objectives of the Government and the Asian Development Bank (ADB). Efficacy: – Project achieved its targets and objectives. Efficiency: – Project achieved its objectives in an efficient manner. Sustainability: – Project benefits and development impacts are sustainable. Institutional Development – Project had beneficial impacts on government policy and

institutional capacity, and other positive social impacts Source: Asian Development Bank estimates.

Table A12.2: Rating System Rating Relevance Efficacy Efficiency Sustainability Institutional Value Development 3 Highly Highly Highly Most Likely Substantial Relevant Efficacious Efficient 2 Relevant Efficacious Efficient Likely Significant 1 Partly Less Less Less Likely Moderate Relevant Efficacious Efficient 0 Irrelevant Inefficacious Inefficient Unlikely Negligible Rating: > 2.5, and no rating less than 2 = Highly Successful 1.6–2.5, and no rating of 0 = Successful 0.6–1.6m and no more than 2 ratings of 0 = Partly Successful < 0.6, or 3 or more ratings of 0 = Unsuccessful Source: Asian Development Bank estimates.