a~CIRCULATING COPY

TO BE REfURNED TO REPORTS DESK

DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTINTERNATIONAL DEVELOPMENT ASSOCIATION

Not For Public Use

Report No. P-1147

REPORT AND RECOMMENDATION

OF THE

PRESIDENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

TO THE

GUYANA ELECTRICITY CORPORATION

WITH THE

GUARANTEE OF GUYANA

FOR A

POWER PROJECT

December 18, 1972

IThis report was prepared for official use only by the Bank Group. It may not be published, quoted Ior cited without Bank Group authorization. The Bank Group does not accept responsibility for theaccuracy or completeness of the report.

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CURRENCY EQUIVALENTS

US$1 - G$2.1667

G01 - US$0.4615

The Guyana dollar is currently floating

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP1MENTINTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN

TO THE GUYANA ELECTRICITY CORPORATIONWITH THE GUARANTEE OF GUYANA

FOR A POWER PROJECT

1. I submit the following report and recommendation on a proposed loanto the Guyana Electricity Corporation (GEC), with the guarantee of Guyana,for the equivalent of US$6.0 million to help finance a power project. Theloan would have a term of 20 years, including four years of grace, with interestat 7-1/4 percent per annum. The Government of Guyana would charge GEC aguarantee fee of one percent per annum on the outstanding amount of the Bankloan, bringing the cost of the loan to GEC to 8-1/4 percent per annum.

2. Under parallel financing arrangements, the Canadian InternationalDevelopment Agency (CIDA) and the U.K. Overseas Development Administration (ODA)will lend the Government Can$4.0 million (about US$4.0 million equivalent) and£3.1 million (about US$7.5 million equivalent) respectively for the project.

PART I - THE ECONOMY

Introduction

3. A review of economic developments in Guyana was contained in an EconomicMemorandum that was distributed to the Executive Directors on April 6, 1972; morerecent developments are covered in the remarks that follow. A country data sheetis attached as Annex I to this report.

Recent Economic Developments

4. Although Guyana's economic performance in recent years has been uneven,it has been, as a whole, satisfactory. The resource base is adequate and the na-tionalization of the country's largest bauxite mining company in mid-1971 washandled judiciously. The Government's recent policy measures, taken within theframework of a concept of "cooperative socialism," have emphasized equity,local participation in the economy and self-reliance. It is still prematureto forecast the full economic and political impact of these measures; earlysigns suggest that the implementation of the Government's policy for anincreased emphasis on social equity is being accompanied by some uncertaintywithifi the private sector and, combined with other adverse factors, by adiminished growth of the economy over the short term. The longer-term outlook

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for Guyana's economy; however, promises to bV favorable, given the ong'oingadtivities and the plans of the Governmeht and the private sector in Guyana'smain connmmoditiess bauxite, sugar and rice. In addition, the Government hasshown its *illingness to maintain austerity measures, and to 'curb the imlpbrtof &onimer gooads.

5i. -Econom:c growth has averaged 4 percent a year over the last few years.Mining; construction and gvbrziment seivices continue to be the 'most dynamicsectors; wiith agricuiture increasing at about half the rate of overall output.This grokth has beeh achieved with the help of heavy investment in miniiig anda steady growth of public capital formation, of which a third has been finanicedfrom public savings. The growth of the edonomy has, however), beeh subject toannual fluctuationsj refledting Guyanais heavy dependence oh its three princip&lcommodities. Sigar and rice pr`oduction in 1972 have been affedted by badWeather, and produc4iAon ifn the miiiing sector by a w'eakehihg of the *or±ld &l hinumma'rket.

6 . The most important rec-ent development hai been the nationalization inJuly, 1971 of the Demerara Bauxite Cobnpany Ltd. (DEMBA), the largest bauxitemining company ih Guyana, ana a wioilly owned subsidiary of the Aluminum Companyof Canada Ltd. (AL'CAN). In recent years DEMBA had provided almost one-'fi'fth ofGDPj twd fifths of coiimodity expo±td ahd about 10 percent 'of total governmen'trevenues. The Guyana Bauxite Comupaify (GUYBAU), Which took over DEMBA, despitehatiin ifiherited productioh, financing and marketing problems from its predecessor,has progressed well. Pioductioh has been tifintaihed at levels clbse to thoseachieved by DENBA in the first half of 1971; Although prices fori bauxite 'ahdalUmina have weakened in the world markdtj GUYBAU has been able to inaintain itssales proceeds by raising the price of caldined bauxite, in which Guyana holdsa virtual monopoly; mairkets for cailcined bauxite appear reasonably assured inthe futurej although the recent increase ih price might bring about the develop-ment of substitutes or of alternative sources of supply. For tha moment, inspite of a shutdown bf alumina production due to lack of buyers ith June arnd Ju-ly6f 1972j GUfYBAU should be able to maintain its compensation payments to ALCANwithout having to rely on government subsidies, and a subAtantiLl investment planfor expansion and ratibnalizati6h of prodictibn is expected to be shortly initiatedih time to ensure con tinuing increase in output..

7. The nationilization of DEMBA is part of a newly emergeht pattein inGuyana. Since 1970, when the country became a cooperative republic, the Govern-meht has been reassessing its economic policies; its objective is to evolve astrategy of development in which the public and the cooperative sedtors wouldplay a leading role. Within the framewiork of a 15-yIear plan for 1972-86, whichis presently in preparationj a five-year operationlal plan for 1972-76 would aimto reach seilf-sufficiency in foodstuffs and textiles and to meet the mostpressing housing needs by 1 976. While continuing to develop the traditionalexport sectors, the plan would place special emphasis on the development of otherlines of agriculture, forestry and fisheries, and on the penetration of the

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country's interior. The industrial strategy of Guyana would be based on theprocessing of the country's basic resources for the local market and for exportto other CARIFTA countries, rather than assembly-type production.for the localmarket. The plan would also focus on the reduction of unemployment - presentlyestimated at 15 percent - and the upgrading of human resources through trainingprograms.

8. In line with the broad strategy outlined above, the cooperative movementcontinues to grow. A Wholesale Society, which would serve as an outlet foragricultural and industrial goods produced by cooperatives, and which would linkwith a chain of retail cooperatives, has been started in 1972. Labor ContractSocieties would facilitate the participation of the unemployed in labor-intensiveworks. An External Trade Bureau, set up in 1971, has been assigned the exclusiveright to import goods valued at about one-fifth of the country's total imports.The National Cooperative Bank, in which the Government has majority shareholding,has been established as a commercial bank and provision has been made for financiaand technical assistance for the cooperatives. In regard to direct Governmentparticipation in the economy, other proposed activities include timber and kaolinexploitation, textile manufacture and shrimping operations, with foreign partici-pation in at least two of the activities. To ensure the efficiency of publicenterprises, the Guyana State Corporation (GUYSTAC) was created toward the closeof 1971 under the chairmanship of the Prime Minister, with broad responsibilitiesfor wage policies, rate determination and investment planning and financing forautonomous undertakings.

9. The new socio-economic thrust has been nevertheless tempered to asignificant degree by pragmatic policies and actions, exhibiting an awareness ofthe realities of international economics. The Government has not assumed directcontrol of all enterprises involved in the exploitation of natural resources. Ithas shown a marked reluctance towards majority participation in the sugar industry,where a delicate labor union situation, involving the two principal politicalparties, has cautioned against direct government involvement in the managementof this industry.

10. The Government's policy to increase its participation in the economy isevident in the fiscal accounts. Public expenditures in 1971 amounted to 38percent of GDP compared with 32 percent five years earlier; the share of thepublic sector in overall investment rose from one-third in 1966 to almost two-thirds in 1971, when private investment, particularly in mining, dropped sharply.Public investment is now equivalent to almost 12 percent of GDP. Between 1965and 1970 public sector savings increased from one to six percent of GDP. In1971, however, fiscal difficulties became evident; whereas current expenditureskept on rising at the rate of about 8 percent, or slightly below the rateexperienced in recent years, current revenues in 1971 were actually lower thanin 1970. This could be principally attributed to a poor sugar crop in the

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preceding year, d,elays in income tax payments pqn,4in g the outcome of litigationon new taxe, i4Vp@u4e in 1970, low level of ttx payments by the bauxite sectorfollq,t4 Rpopm pat aliza4tio,n and the cessation of tax payments by PEMBA afterthe first artr n and a dr,o,p in imports. The 1972 bu4dqge,t sought tgrestSprt,q Fa su^rp¾l0st ewn c9x,e t account by means of an increase r§venuq of 1Qperce,nt, whlS diqg ,dw, the rise in curret ,expenditure to 6.5 parcent. Agood repm,Rq ryr qox 9,rpT-ate tax payments from sugar is reasonabl_y as,sured duq toa repp > Ccr,op, in 371 at increased prices. Income tax cqfl,ct,i,n proceuresare ~4pgbveinF +FgEg ,I, e~f'onts ,t.o, sla4w down t,he rate of current ?e,xdendit1,st,e,s.meaqwnp,s pj ,br ttj_ en by the Government to p14t p.ti4p enterprixseson a squlfdcanh,rpi4 fpoipg? aq ioxe stringent expp,nd,ture'cont.rpls, ¾,ve 1:eg,, intQr,o

'Ii. 4-ying 1971 the gain in external res,,,rvyes, amo,punted tjU,6 milli,on. T,,higain is to be attribeted tp, a gqqd sugar ,pp;, a ,e,reaae inp the, le,e, of gp,prt,a high lpy,e, opf d.sbsqepts don opqg-term oticial atssi4tance,! ax4 tA,e ,reprpatriationo,f D *s p,§nsi,on funq Because q2 a p, pdem sungar. 9r9p a4 feor ,d.en, fbauxite, balqqe 4 pof pa ents managemaent in 15,7? ppre ts sone ,4fiylt4qs, Hqeyer,,two dje~,5lgaAti,,s o,f yyanese 4p.llar - 4 t,,e tVn 9f' t.e ,c,'pcy rea4gnx,e,nt,two deya9.ation s of the~ Gu0~ 4n, D,,eeempme; 19,71 yhn a de$r,ciation ofX b9 perc,nt, in tAerw, p t)e, pqp,, qteqat inggi4mplied dp qRr an e depreciatip t,he Gganq of ogly P erQct, andthe subseqq'uent ddwnwend dClopt withA Ww. E9Pd s si,nQe. me, I%2 - haMe. hz4a, poisitiy,e ~Tect on the hbaance °z-r po p La ts, fq ;a,re.sul, rig4p qe; -ch,ager ce,se r avp. bhey iPvntained a,nd m,, ey registelr m,,o,et, gai,n'by end o,f 1,9q7f2,.lo,st pJGtf yaals; external caj4tal reirepe4,rts i, t,4,e, pas.t 4avye !b?e,e met, pp highly,,c,onckeqs.on,ars tJrmy! as a cols,quen9e,4 t pe.ht se,rgice rat.p is relatj,eylow. i the circumst,annce.s an a t# cof the, fen,t.iwe, ,,t,erpalassistO , p be forthc4n on s i q t a,n,a %ay be re g,rded as cre4dtwort4hy for c istqerab,ie bor.roing qp cqnenti,fl9 trms.

External Assistance

12. The need for continuejd aid ,gnc,e,s,a9si,y terms has, k[eerecognizec pY bilater4 aid donors in th,e pas; t aid flow, has no,t been affec.t,e,d,by t,he emergeXnce of t,ht new, goyerr;q,ent p,oicy, pf 'toop,,rativ.e oci,al1sm. Inl29.71, as,s4vs,taSc,, 'from vbiL;a%e4 siou e,ss ppg4vd,ed by. the Uni,ted Saates (at a,level of authorization ciqee, t,o US$,J 4jiion a yer),, W the Unit,ed Kingdo m(abo,ut US$5; millioxO and by Ca,ada (a,bo $,4 milliin USAID asiss,tance. has,fo,cusesd its efforts on t,e agrcult, l ,s4c.t,r, ,nd on infrastgrlctwa. assistance;involvi,ng roads and water TheUpplyn. iitfdKingdom has lpe, tnfiancingsea,ed,q,ernse,s a.nd social s.ervic5s; -i C5a.~1na.ian Inte,xational Dey;4j-opme,pt Agency(CIDA), ha,s concentrated its, capital taid An a4r.tx p,,ortation and e,duca,tion.Capital aid,from thesge tir,epe ,major n d,ono c,oi riA l,qes be en acc,o,p,,e,d by

nc,:R'dditioptechnical assistance, in itin t, tha, pro4d e4 '§by the Unita%c NAti,onr Dev.elop-ment Progra4i an,d,b,y G,re g,n , past 1oa ns,i v4krkpt" from the. pvn,qipa,% agencieesam siiriaxized below:

Loans/Grants IBRD IDA USAID CIDA U.K. Total(Commitments) (in US$ mil1io_T -

1966-1971

Transport _ 4.4 25.0 6.0 - 35A4 (23 h%)Power, communi-cations - - - 17.8-&/ 1 7. 84v (11.8%)

Water, sewerage - - 2.6 2.3 - 4.9 (3.2%)Sea defense 10.4 - 1.0 - 7.2 18.6 (12.3%)Education 2.9 2.9 o.6 3.4 0.2 10.0 (6.6%)Agriculture - 2.2 114.6 2.6 19.4 (12.8%)Other _ _ 10.3 5.2 29.9 45.4 (29.9%)

Total 13.3 9.5 54.1 16.9 57.7 151.5

(8.8%) (6.3%) (35.7%) (11.1%) (38.1%) (100.0%)

1/ Includes grants of $18.6 million, based on disbursement estimates.T/ Private bank loans and suppliers' credits guaranteed by Government

of Guyana.

PART II - THE BANK GROUP'S ROLE IN GUYANA

Introduction

13. The Bank made a loan for $0.9 million for agricultural crodit in 1961 whenit was the colony of British Guiana; this loan has been repaid in full. Sincethe countryts independence in 1966, the Bank Group has lent US$22.8 million toGuyana: US$13.3 million from the Bank and US$9.5 million from IDA. Approximatelyhalf of this lending has been for sea defense projects; the remainder being foran education, a livestock and a highway project. The proposed loan would be thefirst Bank loan for power in Guyana. There have been no operations of the Inter-national Finance Corporation (IFC) in Guyana, and no investments are at presentbeing considered. A summary statement of Bank loans and mDA credits to Guyana asof October 31, 1972 is attached as Annex II.

Bank/IDA Lending in the Past

14. Through the close relationship that has been developed between the BankGroup and the Government of Guyana we have been able to discuss broad economicpolicy issues with the Government, and have helped to shape its investment andfinancing program. Projects financed by the Bank Group in various sectors havecontributed to the strengthening of social and economic infrastracture, andhelped to lay the basis for economic diversification in the future.

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15. Our sea defense projects have been part of a 12-year program aimed atprotecting coastal areas below sea level against cyclical and local erosion andtidal inundation. The threatened zone includes Guyana's main institutional andadministrative centers as well as important residential and public utilitiesinstallatibns. The first Bank-financed project ($5.0 million; 1968) is nowprogressing satisfactorily. The second sea defense project ($5.4 million; 1971)has, however, run ihto difficulties; only two bids for civil works contractshave been received, both at prices much in excess of the original cost estimates.the Gover'mieht has proposed construction by force account as an alternative, andthe matter is being reviewed by the Bank jointly with the Government and theconsultants.

i6. Our IDA credit for education ($2.9 million; 1969) was based upon a newstrategy for human resources development that would focus on establishing apattern of mdultilateral secondary school education and on teacher training.It will help finance the construction and equipment of one teacher training collegeand several multilateral schools; a technical assistance component inter-aliafinanced a study of materials and construction methods for schools. The constructionof all project schools is expected to be completed by April 1975 about 18 monthsbehind the original schedule; slippage has resulted principally from delays inappointing consultant architects and in awarding civil works contracts followingopening of bids. Other elements of the project are progressing satisfactorily.

1i. iThe IDA credit ($2.2 million; 1970) for livestock development wasconceived as the first step in a continuing, longer term effort. It providesfunds for on-lending to private, cboperative and company ranches in the coastaland the intermediate Savannah areas. Training and technical services as well asstudies of beef marketing and processing are also included in the project. Al-though the project has moved slowly, steady progress is being made towards gettingthe on-lending program operative. The highway improvement credit ($4.4 million;1972) is the Bank Group's first operation ih the transport sector. The projectwill support agriculture, which ranks high in the Government's order of prioritiesfor development; improve the organization and operations of the Ministry of Works;assist in the preparation of a proper highway maintenance program; and contributeto the formaulation of a national transport strategy.

Future Direction of Bank Lending

18. In line with our analysis of Guyana's requirements and the Government'spriorities, we are planning to concentrate future lending by the Bank and IDAmainly on agriculture. As regards lending for other sectors, the project beforeyou emphasizes institutional improvement and will bring about much-needed integra-tion of the national power system through frequency standardization and systemihterconnection (Paragraphs 34-36). We also plan to lend for highways in support

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of agricultural development and for education in order to more closely matchskills and job opportunities and thus contribute towards maximizing output andemployment. We may also propose one more loan for sea defense and we may berequested to assist in financing investment in calcined bauxite production shouldGUYBAU's plans for expansion and kationalization go through (Paragraph 7). Al-though the capacity for decision making and administrative sophistication doexist at senior levels of Government, these are not yet matched by technicalexpertise and the ability for project preparation and implementation at middlelevels. However, starting with the budgeting process for 1972, investment projectsfor implementation will be given closer attention by the authorities so as to mini-mize administrative delays, and the establishment of GUYSTAC (Paragraph 8) mightalso be expected to facilitate timely project preparation. On our part we considerthe Bank's role in helping to achieve institutional improvements in the country ofcrucial importance; in coordination with the UNDP and other lending agencies, there-fore, we plan to continue providing technical assistance to Guyana as an integralpart of our future lending activities.

19. As already mentioned, the highest priority is being given to the develop-ment and diversification of Guyana's primary resources. A land development andrehabilitation project is being studied for diversifying the country's agriculturalsector outside sugar. A satisfactory credit channel will be needed for the sub-sequent financing of this project; the Government proposes to set up an AgriculturalDevelopment Bank for this purpose, and we would expect to be called upon to providetechnical and financial assistance. The development of an efficient credit mechanismwould of course also be of considerable importance for Guyana's agricultural develop-ment in general. A second livestock project is planned to follow up on the earliercredit operation which broke new ground in instituting a modern livestock industry.A forestry development project has been identified comprising a 60-mile forestryaccess road and a forestry industry coaplex. The Government is carrying out thesurveys needed for the access road, and has planned a market survey which CIDAwill finance. In the fisheries sector, the possibilities for providing port andonshore facilities, and for augmenting the shrimping fleet will be studied andBank financial assistance made available if justified.

20. In continuation of its present plans for the development of power in thecountry, the Government is applying for assistance to the UNDP for a survey ofGuyana's hydropower potential; the Bank is likely to act as executing agency forthe study. At the same time, UNDP is financing a study of the Kabalebo HydropowerProject (with the Bank as executing agency) in adjacent Surinam which, if foundfeasible, could provide an alternative source of power for Guyana's requirements.

21. A second highway project is being prepared under tha first IDA highwaycredit which provides for a national transport plan, feasibility studies ofabout 200 miles and detailed engineering of 100 miles of roads. A forthcomingUNESCO mission report is expected to provide the basis for a second educationproject.

22. Guyafia is in the process of a major reorientation of its social andeconomic structures. The Government has fornulated a new socio-economicthrust aimed at bringing about more meaningful local participation in theexploitation of the country's natural resources, minimizing unemployment, andextending the benefits of development to wider sections of the population.The country's development prospects, however, are still very much dependenton foreign aid. Further, Guyana's limited export growth potential, extensivepoverty within the country, and the Government's plans for a more active rolein the economy combined with reasonably good policies and performance in thepast, justify the continuance of much of the external assistance on concessionaryt'erms. Of the Bank Group iending to date, over 40 percent has been in IDAcredits. On the other hand, the present per capita income of Guyana (US$370; 1970)places it 'on the borderlin'e of IDA eligibility, and the low debt service burdenmakes it eligible for considerable borrowing on conventional terms. Our futurelending to Ghyana is therefore visualized to continue as a hard Bank/IDA blend.

PART III - TKE POWER SECTOR IN GUYANA

23. All geherating facilities are thermal except for one small government-owned hydiroelectric plant. Although a UNDP-financed studv in 1967 identifiedand reviewed a few specific major hydroelectric sites, the large minimum economicsi'ze 'df the facilities to be constructed at these sitesdprecludes their develop-ment for the present. However, the Government still wishes to exploit its hydro-electric power resources and is consi'deing undertaking a hydroelectric surveyon a c'ountry-wide basis (Paragraph 20). Guyana has 'no petroleum deposits andmust therefore import fuel oil for its thermal plants. The only indigenous sourceis bagasse, a sugar-cane residue, which is used as fuel at the sugar estate plants.

2'4. Historically, Guyana's power supply has developed as a number of separatesystems. 'Over the years) in the absence of a national electricity supply, manyprivate generating plants were established to supply sugar estates, bauxite-miningoperations, rice mills and population centers. This evolution of the power sectoras a number of separate systems established by industries and municipalities hasresulted in the systems having diffePent operating characteristics. Some of thesesystems use 50 Hz and a customer's voltage of 240 volts, soue 50 Hz and 115 volts,and others 60 Hz and 115 volts. The use of two frequencies is inefficient in theutilization of resources anid inhibits integration.

25. The principal power producers in the country are now: Guyana ElectricityCorporation's Georgetown, Onverwaagt, Anna Regina and Bartica systems (GEC: installedcapacity of 43 MW), Guyana Bauxite Ltd. (GUYBAU: 31 MW), Bookers Sugar Estates Ltd.(Bookers: 16 MW), Reynolds Guyana Mines Company Ltd. (Reynolds: 7 MW) and the Cityof New Amsterdam (New Amsterdam: 5 MW). All the GEC systems operate at the frequencyof 56 Hz whereas the GU'YBAU, New Amsterdam and Reynolds sytems and almost all otherpower producers, except for Bookers, operate at a frequency of 60 Hz.

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26. In 1971 the Government of Guyana enacted legislation to standardizethe frequency at 60 Hz. Its objective was to facilitate national and inter-national interconnection (Guyana's neighbors Venezuela, Surinam and Brazil usea 60 Hz frequency) so as to achieve investment savings in the power sector,and open the way for development of hydroelectric sites. This legislationforms the basis for the GEC frequency conversion program which constitutes amajor element in the proposed project.

27. In the past there has been little central coordination between thevarious public and private entities within the power sector. However, theproposed project will assist GEC to carry out its statutory responsibilitiesfor the development and supply of electricity and should contribute significantlyto achieving a more rational and efficient power sector.

PART IV - THE PROJECT

28. The project was appraised in November/December 1971, and subsequentlyreappraised in May/June 1972 due to substantial modifications of load forecastsand revenue projections. Negotiations for the proposed loan-were held inWashington in October 1972. The Government was represented by Messrs. Wim tonKing, Secretary to the Treasury, D. yankana, Permanent Secretary, Departmentof Public Corporations and Secretary to Guyana State Corporation (GUYSTAC),B. Pollard, Chief Parliamentary Counsel, and P. Mittelholzer, First Secretary,Embassy of Guyana. The Borrower was represented by Messrs. D.I.G. Thompson,General Manager, Guyana Electricity Corporation (GEC) and W. Haynes, ChiefAccountant (GEC).

29. A report entitled "Appraisal of a Generation, Transmission and Fre-quency Conversion Project - Guyana Electricity Corporation - Guyana" (No. PU-103a datDecember 18, 1972) is being circulated separately to the Executive Directors.The main features of the loan and the project are summarized in Annex III.

The Borrower

30. The proposed Bank loan would be made to the Guyana Electricity Cor-poration (GEC) with a government guarantee. GEC is a fully government-ownedcorporation established by legislation in 1957, with responsibility for publicelectricity supply within the designated areas, and for advising the Governmenton generation, transmission and distribution matters. The Government exercisesits control over GEC through the Guyana State Corporation (GUYSTAC), a publiccorporation which the Government established in 1971 to supervise, control,coordinate and hold the State interest in a number of public corporations.During the negotiations, GUYSTAC agreed to use its powers to enable GEC tofulfill its obligations to the Bank under the proposed loan agreement.

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31. In addition to the proposed Bank loan to GEC, the Canadian InternationalDevelopment Agency (CIDA) and the U.K. Overseas Development Adminis ration (ODA)have agreed to make loans to the Government under parallel financinlj arrangementsfor the purposes of the project (Paragraph 40).

GEC Organization and Management

32. GEC has already established a planning and construction dirision withinits structural organization and will maintain this division with arrangements satis-factory to the Bank. GEC is reasonably well managed at present, though thereis still a shortage of experienced management and technical personnuil. A manage-ment training program for GEC's senior personnel has been included :.n the proposedproject to improve the calibre of management within GEC; and during negotiationsGEC agreed to engage consultants satisfactory to the Bank for this purpose. In-dependently of the present project, CIDA will provide training on a grant basisfor GEC's technical personnel.

33. GEC has engaged the Shawinigan Engineering Company Ltd. as consultantsfor the design, construction, supervision, procurement and managementt of the project(including the ODA and CIDA-financed portions) and to advise on the remainder ofthe power development program. This consulting firm will also trai)t GEC's engineer-ing personnel and utilize them in the project work. During negotia.ions, GEC agreedto retain engineering consultants satisfactory to the Bank throughoutt the designand construction of the project.

Project Description

34. The proposed project provides for the interconnection and !oordinationof the principal systems in Guyana, that is, GEC, GUYBAU and New Am;nterdam, includ-ing additional generating capacity to meet estimated demand increaso for the inter-connected systems, extending electricity supply to the east coast a.ea and standardiz-ing the interconnected system at 60 Hz. GEC has signed power suppl,,!/interchangeagreements with GWYBAU and New Amsterdam.

35. To interconnect GEC's Georgetown and Onverwaagt systems wiqh GUYBAU andNetiAmsterdam, about 185 miles of 69 kV, 60 Hz transmission system irould beconstructed to start operation in 1973-74. Approximately 20 MW of f:requencyconverter capacity would be installed in 1974 in order to connect thte 50 Hzsteam generation at Georgetown, for which conversion is not economioal, to the60 Hz system. Another 10 MW of frequency converters would be added in 1976.The frequency converters would also provide for progressive frequen,y conversionof GEC's Georgetown and Onverwaagt systems, and permit their interconnection tothe GUYBAU and New Amsterdam systems at 60 Hz. The project include, the con-version of customer's equipment in the Georgetown, Anna Regina and (nverwaagtareas. Since the frequency conversion will require particular atte3ition fromthe standpoint of coordination and logistics, it was agreed during ~iegotiationsthat GEC would prepare a master plan for frequency conversion withi.i nine monthsof the loan signing.

36. To meet the anticipated demand increase of the interconnected systems,additional generating capacity will be needed. The project provides for theinstallation of about 36 MW of diesel generation to supply this increased load.The diesels will be installed in two plants located on the Demerara and Berbicerivers, which will facilitate fuel delivery and provide a source of coolingwater. The project will include the provision of distribution facilities inthe new service areas, in addition to those being self-financed by GEC. Theproject has no adverse environmental effects.

37. The project would constitute the major part of GEC's 1972-76 powerdevelopment program. The latter includes, in addition to the project, theinstallation of 19 MW of small diesel units and the extension of GEC's distri-bution system. During negotiations GEC agreed to the construction of thedistribution facilities planned for the 1972-76 program in time to have themin operation when the new generating facilities under the project are completed.

Project Justification

38. Due to uncertainties about frequency standardization, and to the factthat a hydroelectric survey has still to be made, until recently no long-termpower development program had been prepared in Guyana. The proposed projectrepresents the first Bank involvement in power in the country, and will providea basis for the formulation of a long-term program after the hydroelectricpotential is known. The interconnection of the principal power systems inGuyana would result in substantial economies by reducing required reservecapacity, as compared to the continued development of isolated systems, andby the introduction of larger units with lower per unit costs. The use ofresidual oil-fuel diesels, as proposed in the project, will lead to substantialsavings in fuel costs, and continuity of service will be improved by coordinatingoutages for the maintenance of plants. The interconnection of the systems,with frequency standardization and the installation of residual oil-burningdiesel generating plant, is the least cost solution at any rate of interestless than 20 percent.

39. A conservative estimate of the rate of return on the project, con-sisting of generation, transmission and distribution expansion and thefrequency conversion of the GEC system, is 16.5 percent. In this calculation,the stream of costs includes capital and operating costs (taking into accountfuel cost savings at existing plant but excluding taxes and depreciation).Shadow pricing was not considered necessary for foreign exchange or locallabor costs. The stream of benefits consists of the increase in GEC revenuesfrom sales attributable to the project. Raising or lowering attributablerevenues by 15 percent would provide rate of return estimates of 20.5 percentand 12.5 percent respectively.

- 12-

Project Cost and Financing Plan

h0. External Financin4 - The total cost of the project is estimated to be$23.1 million of which $16.4 million will comprise foreign exchange costs. TheCanadian International Development Agency (CInA) and the U.K. Overseas Develop-ment Administration (ODAE have agreed to participate with the Bank in parallelfinancing of the project. The Bank loan of $6.0 million represents 26 percentof the total project cost and would finance the direct foreign exchange costsof about 30 KW of frequency converters, a 13.8 kV distribution program, materialfor the conversion of customers' equipment to 60 Hz, project engineering anda management training program. It would also include $1.1 million of interestand other charges during construction on the Bank loan. ODA wil make availableLStg.3.1 million (about US$7.5 million equivalent of which about $6.4 million wouldbe for equipment imported from the U.K. and $1.1 million for associated localcurrency expenditures). The ODA loan would finance the 36 MW of diesel generatorsand the conversion of small diesels. The CIDA loan of Can$4.0 million (aboutUS$4.0 million equivalent) would finance the procurement of equipment from Canadafor the 60 kV transmission lines, substations, a river crossing and the conversionof utility equipment. In addition, CIDA is prepared to make available a $200,000grant for the training of GE:C's technical personel in Canada. The CIDA and ODAloans would be made to the Government. The ODA loan would be for 25 years, in-cluding a 4-year grace period, with interest at 3 perce•t; the CIDA loan would beI'-or 50 years, including a 10-year grace period at no interest. The Government ofGuyana would on-lend these amounts to GEC at 6.2 percent initerest,fcr 25 years,including a h-year grace period. The on-lending rate has been set by the Govern-ment below its usual lending rate of 8 percent to public entities having regardto the non-revenue earning nature of certain project items (for example, customers'equipment. eonversion). The Government will charge GEC a guarantee fee of one percenton the outstanding balance of the Bank loan.

Domestic Financing

41. GEC's financial situation, which was weak for many years, has beensatisfactory since 1969 when, duiing the caarsae oa the Comone*alth Develojt2intCorporation's (CDC) association with GEC, rates were raised and the tariffstructure iTrproved.

42. -- eEo's financing requirements for its 1972-76 investment program, whichare not covered by the Bank/CIDA/ODA loans, will be provided by internal cashgeneration, domestic bank loans and a government loan. The Government has additionallyagreed to make arrangements to meet any shortfall in (lC's finances so that the pro-ject will be conmpleted as planned. The internal cash generation assumed in thefinancing plan will probably require increases in tariffs of some 10 percent in1974 and 6 percent in 1976. After taking into account domestic bank loans alreadynegotiated, the remaining amount of the financial gap to be bridged by the governmentloan is expected to build up to a peak of $2.9 million by the end of 1975. Thegovernment loan would be for 20 years, including a grace period of 8 years, at8 percent interest.

- 13 -

43. During negotiations GEC agreed that, having regard to operating andother expenses it would take such action in respect of tariffs so as to earnnot less than a 10 percent return on investment throughout thie life of theproposed loan.

4L. The Government will continue to exempt GEC fran a 10 percent importduty, which would otherwise be levied on imported material and equipmentw forthe 1972-76 development program. The Government has agreed that in the eventof a change in GEC's import duty status it will make good any resultingfinancial shortfalls by an equity contribution to COC.

45. Annual debt service coverage by internal sources is expected to bearound 2.3 during the pe4od 1972-76, but coverage is expected to be reducedsubstantially shortly thereafter due to the start of the bulk of the amortiza-tion repayments. GEC has agreed that during the life of the loan it will notincur debt other than for carrying out the program, unless net revenues of theprevious consecutive 12-month period cover the mnaxium debt service of anysubsequent year 1.5 times.

Procurement

46. Procurement of equipment and material to be financed under the Bankloan would be on the basis of internazional competitive bidding in accordancewith the Bank's Guidelines for procurement, with the exception of the materialrequired for the conversion of customers' equipment. The latter is not suitedto competitive bidding due to the variety of items involved and the need tomatch existing equipment; the equipment in this category would therefcre beprocured on a negotiated basis satisfactory to the Bank; the value of theequipment in question is not expected to exceed $400,000 equivalent in theaggregate. Guyana would be unable to supply domestically the goods to befinanced from the Bank loan; therefore, the question of preference for domesticsupplies does not arise. Since GEC is exempt from import duty on equipment andmaterial imported for its 1972-76 cnnstracticn program, preferences under theCaribbean Free Trade Association will also not be applicable. Engineering ofthe project has been started by consultants in order to meet the installationschedules; it is proposed that the foreign exchange costs of these servicesincurred between December 1971 and mid-January 1973, and estimated at $750,000,should be financed retroactively from the loan proceeds. Estimated annualdisbursements of the loan are given in Annex III to this report. Any fundsremaining aidisbursed on conpletion of the projecL woald be cancelled unlessneeded for concurrent work related to the project and/or feasibility studLesfor further power investment approved by the Bank.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

47. As explained in paragraph 30, Guyana has established a corporatian(Guyana State Corporation) to hold on its behalf the interest of Guyana in somecorporate bodies wholly owned by Guyana. Guyana State Corporation has beengiven certain powers of supervision and control over such other corporate bodies,including the power to give to them general or special directions in respect ofmatters relating to their personnel, finance, management and organization. Inview of this it is proposed that an agreement be entered into with Guyana StateCorporation providing, inter alia, that the said powers of supervision and controlwill be exercised in such a manner as to ensure that GEC performs all its obliga-tions under the Loan Agreement.

48. The draft Loan Agreement between the Bank and Guyana ElectricityCorporation, the draft Guarantee Agreement between Guyana and the Bank, thedraft GUYSTAC Agreement between the Bank and Guyana State Corporation, the Reportof the Committee provided for in Article III, Section 4 (iii) of the Articles ofAgreement and the text of a resolution approving the proposed loan are beingdistributed to the Executive Directors separately.

49. In 1968, GEC received a loan for bStg.400,000 from the CommonwealthDevelopment Corporation (CDC) which was secured by a floating charge on all ofGEC's assets. In order for the proposed loan to rank pari passu with CDC's, pro-vision has been made in the draft Loan Agreement (Sectiocn 5.01iJfor the creation ofa similar charge in favor of the Bank.

50. The execution of the GUYSTAC Agreement, the agreements providing forthe loans to Guyana from the U.K. and Canada, and for the relending of theproceeds of such loans by Guyana to GEC, and the creation of the above-mentionedcharge, are additional conditions of effectiveness.

51. I am satisfied that the proposed loan would comply with the Articlesof Agreement of the Bank.

PART VI - RECOMMENDATION

52. I recommend that the Executive Directors approve the proposed loan.

Robert S. McNamaraPresident

Attachments

A?Th41X IPags I of 2

COtP.itY DATA .- OUY41A

2 2AREAs 214,970 in POPUMIATTI: 732 thousands (19Th) DflFSNT7C 3.0 persons per 1s2

Rate of arowth: 2.5% (annual average 1961-70) 133 persons per ion ofcultivated land

POPULATIQT CHARACTTISfICS1 HEALTUsCude firth 'lata (pa' 1,000)(960-?74) - 25.6 (1970) Population per plvsician 4l,350 inhabitants 41969)Oaude Death Rate (per 1,000)(1960-70) - L.6 (1970) Population per hospital bed 200 inhabitants (1967)Infant mortality (por 1,000 live births) - 38.3

lNCON DISTRMUPIWl IV/A DIS7MMON OF LAND QOaHUls : V/A

ACCESS TO POTJBLE UAJA& (% of population) AC0ESS T0 ESCTRICITY C1 of population)Urban - 96.5 percens (L969) >/ARural - 36.5 percent (1969) NA,

lUTSTI}lIs (WP PER CAPMA: EDUCATION:Calorie intake as % of requirements - U/A UJ5$370 3970) Adult literacy rate - 83 percent (1960)Par capita protein intake - N/A Primary school enrollment (%) - 70 percent (1970)

LIRSS KATIONAL PRODUCT 1971 ANULRAE OP GRO C constant prices)(In US$ mn) ,_I60-65 V65-70-- 1971

031? at market prices 2o9 u10. n.s. 5.6 3.4Gross Inve:3Lent 52 19.3 n.a. 4.3 -9.7Gross llation-al Savings l4 16.- - -COrron' Account Balance -6 2.2 - - -3xports of Goods, UI3 1/ 162 60.2 n.a. 4.5 6.3iporLs of Goods, LIFS I/ 170 63.2 n.a. - .7 -1.B

otrr'jc b;mR FW.Z_ A:iD 1971 1971 1971Pr;rcWtrn Value .$d,einl nlbor Force Valua Added per W'orker

U3TTtin.~ SIn°n. 2L (1) % of national averageAGriculLure 53.- 2=7 n.s. n.a. n.a. n.a.Industry 97.6 39.1 n n aServi ces 92.3 39.5

Total 250.4 100.0 U C

Oeneral Governnant Central GoverrnentiunezrT ~FINACE %of GDP ?. A4 Of GD?p

9f71 1968-7 1 1911 196d-70Current Receipts .. .. .. 125.2 22.5 22.7Current Eqenditura .. 128.6 22.7 20.5Current Surplus -5.0 9.7 2.3Capital Expenditures . .0 9.7 9.0Erternal Assistance (net) .. .. .. 21.7 3.8 3.6

REX. CEITDrr ASJD PRICES 1965 969 1971 1971 1972llion S$outstandi end p7riod5)

money and Quasi hbney 101.6 151.7 i 6 2 .0 188g s 172.9 205.7Bankc Credit to Public Sector 17.4 45.8 50.8 69.4 68.5 83.6Bank Credit to Private Sector 31.0 68.6 81.4 86,0 86.8 86.7

(Percentages or index Huntbera)ytney and Quasi }inay as % of CD? 21.8 30.C 30.3 33.3Consumer Price Indox(1963 - 100) 103.0 113.1 116.9 119.3 118.5 122.3

Annual percentage changos in:Consumer Price Index 2.2 1.4 2.2 2.0Dank credit to PubUc Sector N/A hO.5 10.9 36.6Barnc credit to Private Sector N/A 19.1 18.7 5.6

/ The rates of growth relate to cwrchandiae in current US$.

not avanlable,ot applicable

AMMEX Iiage 2 of 2

COUUTRY DATA - 0UYIA1A

BAIANCE OF PAYM3[TS MERCKVIDISE EXPCfTS (AVERAGE 1967-71)

1969 1970 197 U$ Mln. %(HliMons U $ 5---

$porta of Ooods 123.8 ' 129.0 137.1 Sugar, rum, molasaes W4.0 32.6Isq9ti p1f Goodsa 117.2 133.1 130.7 Alumlina 21.4 15.6Nohfactor Ser4ices (net) 1-07 Bauxite 46.2 32.7Resfce Gap, ~ (deficit. " -) < 3 .4 Rice 9.6 7.1

I '' Shriip 4.2 3.1Int eartems t t , (net ) -19.4 16-5 ,.15.6 Timber 1.9 1' 4WrerRemittancea 0.0 0.Q '.0 Ail other cosmodities 7.8 5.8,O0thir Factor ,Pa meantsz (net) 1.6 1:6 i: T(A ' 135.0 10.Nat Transfora -16 ,o.8 2Milance on Current Agqo,uat - 20 L3 T 1EXTNAL DEBT; DECr3BER 31. 1971

Direct Foreig Investmeqt 7.7 6.1 -4.0 Uo$ Min.Net MLT Bcrrowidg * 8.6 10.1 14.8

i6biiab aements (11.5 (1) (16 5) PLblic Debt, inel. guaranteed 79.1iSurSiation ?~on.~(-2.9G (-2.3) (17:wuarant6ed Private Debt n.a.

STot.al oubttnding & Disbursed -^Capitli1 Grants 2.0 10.6 0.2 'Oth' C~ajitai (not) -4s.0 'O. 4.6 DEBT SERVICE RATIO for 1971

Othcr Items n.i.a. ~~~-4. 1.'8 41.6 % Increa3e in R,v, t) 4- ,

Pablic Debt, irncl. guaranteed 3.2r3as Reaserves (end year) .. .. iln-Guaranteed Privat< Debt n.a.

Net Reservea Oen4 year) 2E.8 21-3 32.5 Total oijtstanding & Disb=rsed

RAT4 OF EXCCIVGE )W.!D/IM- LrEIDG (Oct. 31. 1972) (ftillon U=oS)

TILeao: -1971 IBRD IDAUoKj00O- G> .0 0i.oo Z4S o.5 ,Outstanding & Disbu,rsed .35456 0.733

.1 I ~~~~~~~~ I ~~~Undisbursed 9.7[63 0.8j5Since - 1971 Outstanding incl.US$l.OO-" GS2.13 Undiabursed 13.299 9.551

1/ Ratio of Debt ServicetodE#ort- fGobdand NofcSeices4 .Z The Guyana dollar is cuirent y foatib'g. '

not available.,, . ,,, ~~~~~~~~~~~~~~~~~~Doombr 18, 1972

ANNEX IIPage 1 of R

STATUS OF BANK GROUP OPERATIONS IN GUYANA

A. Statement of Bank Loans and IDA Credits (as at October 31, 1972)

Loan orCredit (US$ million)No. Year Borrower Prose Amount (less cancellation)

Undis -Bank IDA bursed

559 1968 Guyana Sea Defence I 5.0 - 1.7583) 1969 Guyana Education 2.9 - 2.8139) - 2.9 2.3221 1970 Guyana Livestock - 2.2 2.1765 1971 Guyana Sea Defence II 5.4 - 5.23012/ 1972 Guyana Highway - 44

Total (net of cancellations) 13.3 9.5 18.5of which has been repaid - -

Total now outstanding 13.3 9.5

Amount sold 0.1of which has been repaid - 0.1

Total now held by Bank and IDA 13.2 9.5

Total undisbursed 9.7 8.8 18.5

/ Effective as of November 15, 1972

NOTE: This table does not include a $0.9 million loan to British Guiana whichhas been repaid in full.

B. Projects in Execution

$5.0 million Loan of September 27, 1968, for Sea Defence (Ln. 559)

All project items (except for part of the survey equipment costing lessthan $100,000) are under contract, and disbursements should be completed beforethe end of 1973. Construction is proceeding satisfactorily on the East CoastDemerara sea wall. Total project costs are estimated at $8.5 million, of whichthe foreign exchange component will be about $5.7 million, resulting in a costoverrun totaling $1.0 million. The Government intends meeting the cost overruns.Since benefit increases have been approximately parallel to cost increases, theeconomic rate of return of the project has not been seriously affected.

ANNE IIPage 2 of 2

$5.4 million Loan of June 24, 1971,for Sea Defence (Ln. 765)

The Georgetown Sea Defence Project is at a critical stage. When thetenders for civil works were opened on July 6, 1972, only two bids were received,of which the lower was more than twice the amount estimated by the appraisalmission. After consultation among the Government,the Bank, and the consultants,it was decided to reject both bids, and the consultants were asked to discusswith both bidders a more acceptable price. Discussions are still going on.The res'it could be a revised version of the project which would eliminateall items that dculd be postponed for later construction by force account.F'rthermore, the Government is studying the possibility of constructing the entireworks through force account. A decision on the project will be taken after theconsultants' findings and Government's report have been received.

$2.9 mi8llion Loan and $2.9 million Credit of January 31, 1969, for Education(Ln. 503 and Cr.. 139)'

Con§truction of the teacherst training college has been started, andis expected to be completed by July 31, 1973, some 15 months behind the appraisalschedule, the major causes of delay have been in the selection of consultants,award of construction contract, and adverse weather conditions during constructionstart-up. A contract for the construction of the multilateral schools has recentlybeen awarded, construction has not yet started, but is expected to be completed byApril 1975, about 18 months behind the appraisal schedule, and four months beyondthe present closing date of December 31, 1974. Signature of the constructioncontract was delayed due largely to prolonged discussions between the lowest bidder,Guyana Bu-ilders Consortium Cooperative Society Limited and Taylor Woodrow (Int.) Ltd.for the provision of expert management and procarement consulting services. Theanticipated d6lay in completion of all project construction is expected to resultin cost increases of about eight percent. The Government intends meeting the costoverruns. In spite of these cost increases, the project is still consideredworthwhile.

$2.2 million.Credit of November 27, 1970,. for Livestock Development (Cr. 221)

The Credit became effective on September 15, 1971, but disbursementshave been minimal. However, steady progress has been made towards getting theon-lending program operative. The first on-ranch loan has been made, and twocooperative groups have their programs at an advanced stage of planning.

$4.4 million Credit of, April 26, 1972, for a Highway Project (Cr. 301)

The Credit, after its date of effectiveness had been postponed twice,wa's declared effective on November 15, 1972, after UNDP assurances had beenobtained on the financing of -$'1.2 million for technical assistance for transportplanning, a management 'study of the Ministry of Works and Communications, androad feasibility studies. The transport planning technical assistance and themanagement study are 'expected to start shortly.

ANNEX IIIPage 1 of 3

GUYANA - POWER PROJECT

Loan and Project Summary

Borrower: Guyana Electricity Corporation (GEC)

Guarantor: Guyana

Amount: US$6.0 million equivalent in various currencies.

Terms: Payable in 20 years including a 4-year period of graceat 7-1/4 percent interest per annum.

Project Description: The project consists of about 36 MW of diesel generation,a new 69 kV transmission system, frequency conversionfacilities and engineering and training services. Theproposed Bank loan of $6.0 million equivalent would financethe direct foreign exchange costs of frequency converters,distribution facilities, material for the conversion ofcustomer's equipment, engineering services, training servicesand interest on the Bank loan during construction. TheGovernment of Guyana has requested loans of LStg.3.1 million(about US$7.5 million equivalent) and Can.$4.0 million (aboutUS$40. million equivalent) from the United Kingdom OverseasDevelopment Administration (ODA) and the Canadian InternationalDevelopment Agency (CIDA) respectively, to complete the financ-ing of the foreign exchange requirement of the project.

Estimated Cost andFinancing Plan: The financing plan for GEC's 1972-76 power development program

together with the total estimated cost of the project and theBank/CIDA/ODA understanding on the apportionment of itsfinancing are summarized below:

(0 0 0 's of US$)Local Foreign Total

Source of Funds

Internal Cash Generation(niet of debt service except intereston Bank loan during construction; netof management training expenses) 13,350 13,350

Borrowings

Proposed IBRD loan 6,000 6,oooProposed UK loan 76500 7,500Proposed CIDA loan 4,000 4,ouoProposed Government loan 2,900 2,900Bank of Baroda 900 900

17,150 17,500 34,650

ANNEX IIIPage 2 of 3

(QQOPs of US,$)Local Foreign Total

Application of FundsIBRD/MK/M-DA-Project

Foreign Cos.ts IBRD.Financed

30 MW frequency converters 173 1 ,771 1 ,94413.8 kV distribution facilities 302 355 657Conversion of customdrsi equip-

ment 1,743 379 2,122Project engineering 658 i,681 20339Physical contingencies 322. 378 700Price contingenci{s 202 234 436Management training prog'ram - o_. i 100

3,400 4,898 8,298Interest 'du'ring constiUcttibhon Bank loan ,, , 102 1 Q,02

Sub-Total 3,400 6,000 95400

For,igh and Lo. aCQUK FiVnbrd

36 MW of diesel g rato'r 850 5,270 6)120Conversion of small diesels 100 350 450Physical conti'ngencie's 95 530 625P.ri6e ecdntingencies -55 -2 3Q5

:Su5b-Total 1,100 6, 400 7,500

FPO;ign. CoQtss dA.F-inanc.ed

'69 kv transisision lihes 1,317 991 2-30869 *kV bubstAtions, 396 2,019 2,4156' kV river cro'ss'ing 169 202 371Conversion oi utility equi`pment 25 103 128Phyisical contingeici'es 154 420 5j4Price conting6ncie's 89. 265 , 34

Sub-total 2,150 4,000 6,150

To Ia 'IBPU3JKR/U IA Project 6,650 1 6,400 23,050

O't,h,e' ProjcXt.DeveBop3eJ n

)ne'ration 2,864t''raiismissioh - - 1,548Distsribultrion _ _ 4,888

`Sib-totai - 9,300

'Net tChAnge in' -W-r1,i:n pitUal 2,300

,T.O -T^Ak, AP.P.,CATI.1 Ei34,65,0

ANNEX IIIPage 3 of 3

EstimatedDisbursements: US$ million

FY1973 FY1974 FY1975 FY1976 FY19772.1 1.8 0.7 1.2 0.2

ProcurementArrangements: Except for imported material and equipment required for

customers' fre4uancy conversion work, estimated to costin the aggregate an equivalent of US$400,000, which wouldbe procured on a negotiated basis satisfactory to the Bank,the balance of the material and equipment for the Bank-financed part of the project would be procured on the basisof international competitive bidding in accordance with theBank's Guidelines for Procurement.

Consultants: GEC has engaged the Shawinigan Engineering Company Limited(Shawinigan), a Canadian firn, as its engineering consultantfor the design, construction, supervision, procurement andmanagement of the project (including the UK and CIDA-financedportions). GEC will employ consultants for formulating andimplementing a training program for its senior managementpersonnel.

Rate of Return: The rate of return is estimated to be 16.5 percent.

Appraisal Report: Report No. PU-103a dated December 18, 1972

I B R D -3936R>e>q _2 ~~~~~~~~~~~~~~~~NOVEMBhER 1972

.- A8ARUx '- rGUYANA8-r/Qw 41 > \ FI RST POWER PROJECT

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IBRD-3917R INOVEMBER 1972

GUYANA

POWER SYSTEM ARRANGEMENTSA t/antlic AFTER PROJECT COMPLETION

0, I |Anna Regina r 250 cycles2.0 MW 60 cycles

ul 0SEQUI7 O C e a n | * * GenerationEJSEQUIB 0 c e a n *4 Frequency converter

Wakenaam D Submarine cableWakenaam VA Transformer

/ 1 /^2.0 MW International boundary

Ruimveldt ° 10 20 302.OMWI I

Versai> ~> )f-tingston 30MW MILES

8/7M s/ Vratieeorgetown 0 10 20 30 40 50

KILOMETERS

0 DEMERARA

tGs (%1 //Garden of )d nOnverwaagt

< )¢ ~~~EAST / \DEMERARA c\

1 .0 M\i\ ( BE 4I.5 Mt)0.M W

ENEL 5AMr of\arentyne

NXf Linden ( f RotteSdorn\

J,Guybau,J ) // }t 3~~30.5 MW - CORENTYN,E .

reoofm opUE Area> of mapSURINAM

C LOMBIA 2. R. GUIANA eynolds Mine

ECUA<. UY. NA 27M

PER BRAZIL

.BOLI V I A?

C HIL 1E 'NPARAGUAYf ;)

The boundaries shown on this ma do notimply endorsement or acceptance by the

GUAY | ! \/ World Bank and its affiliate&

. AR GE NTINt_Iz