DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTINTERNATIONAL DEVELOPMENT ASSOCIATION

Not For PubLc Use FILE COPY

Report No. 95a-JO

JORDAN

FIRST POWER PROJECT

APPRAISAL OF THE HUSSEIN THERMAL POWER PROJECT

JORDAN ELECTRICITY AUTHORITY

May 3, 1973

Europe , Middle East and North Africa Projects DepartmentPublic Utilities Division

This report was prepared for official use only by the Bank Group. It may not be published, quotedor cited without Bank Group authorization.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 = 0.32144 Jordan Dinars1 Jordan Dinar = US$3.11 Jordan Dinar 1,000 fils1,000,000 Jordanian Dinars = US$3,100,0001 Jordan Dinar - 1 1.16 (sterling)

Abbreviations and Acronyms

kW = kilowatt = 1,000 wattMW = Megawatt = 1,000 kilowattkWh = kilowatt hour = 1,000 watt hourGT4i = Gigawatt hour = 1,000,000 kWhkV = kilovolt 1,000 voltkVA = kilovolt ampere 1,000 volt ampereMVA = Megavolt ampere 1,000 kilovolt amperekm = kilometer 0.621 milekm2 = square kilometer = 0.3861 square milepsi = lbs. per square inch = 0.07031 technical atmosphereBTU = British Thermal Unit = 0.252 k¢alOF = degrees Fahrenheitrpm = revolutions per minuteHz = Hertz - cycles per second

JEA = Jordan Electricity AuthorityIDECO = Irbid District Electricity CompanyJEPCO = Jordanian Electricity Power CompanyUSAID = US Agency for International DevelopmentUK = United KingdomNRA = National Resources Authority

JEA's Financial Year = Calendar Year

JORDAN

First Power ProjectAppraisal of the Hussein Thermal Power Project

Jordan Electricity Authority

Table of Contents

Page No.

SUMMSARY AND CONCLUSION ....... .................. i

1. INTRODUCTION ................ ......................... 1

2. THE POWER SECTOR ....... .............................. 2

General ....................... 2Energy Resources ...... .......................... 3Characteristics of the Sector .................. . 3Jordanian Electricity Power Company ............. 4Irbid District Electricity Company .. ............ 5Future Developments ............................. 5Regulation of the Power Sector . 6Tariffs ......................................... 7

3. THE BENEFICIARY ...................................... 7

Organization and Management .. ................... 8Staffing ........ ............................. 8Training .................................. ..... 9

4. THE PROJECT ............................................ 10

Description ....... .......................... S... 10Estimated Cost ...... ............................ 10Basis for Estimates ... .................... ... .. 11Status of Engineering and Construction ......... o 12Associated Transmission Lines ................ ... 12Procurement and Disbursements ... 12Environment ....... .............................. 13

5. JUSTIFICATION ...... .... o....... 13

Forecast of Sales and Demand o..oo ........ 13Comparison of Alternatives ..... o...... 14Gas Turbine Plant .................. 15

TABLE OF CONTENTS (Cont'd)

6. FINANCIAL ASPECTS ............................... 16

Past Operations and Present Financial Position.. 16Accounting Staff ....... ........................ 16Auditing ..................... 17Insurance ...................................... 17Financing Plan 1972-1979 ..... .................. 17Operating Future ...... ......................... 19Future Balance Sheets .. . 20

7. AGREEMENTS REACHED AND RECOMMENDATIONS , ... . 20

List of Annexes

1. Jordan; Existing Generating Plant2. The Histories of JEPCO and IDECO: Development Programs3. JEPCO; Historic and Forecast Sales (GWh) per Consumer Category4. JEPCO; Historic and Forecast Number of Consumers, GWh Generated,

Purchased and Sold; Installed and Firm Capacity5. IDECO; Historic and Forecast Sales (GWh) per Consumer Category6. IDECO; Historic and Forecast Number of Consumers, GWh Generated

and Sold; Installed and Firm Capacity7. JEPCO; Plant Availability8. Jordan; Electric Power Rates9. Description of Project10. Project Cost Estimate11. Schedule of Estimated Disbursements12. JEA/JEPCO System Forecasts for Retail and Bulk Sales, Losses,

Generation, Maximum Demand, Available and Firm Capacity13. Justification of Proposed Project14. Major Assumptions for Financial Forecast15. Income Statements 1969-197916. Balance Sheets 1969-197917. Sources and Applications of Funds 1971-197918. JEPCO Financial Situation

Map

This report was prepared by Messrs. W.F. Kupper and A.J.D. Hutchins basedon their findings during a mission to Jordan in November/December 1972.

JORDAN

FIRST POWER PROJECT

Appraisal of the Hussein Thermal Power ProjectJordan Electricity Authority

Summary and Conclusions

i. This report covers the appraisal of the Hussein Thermal Power Projectof the Jordan Electricity Authority (JEA), the Government entity establishedin 1967 to provide for coordinated development of the power sector. JEA hasrequested assistance from the Association and Kuwait Fund for Arab EconomicDevelopment (Kuwait Fund) in jointly financing the project.

ii. The project comprises a thermal power station, located at Zarqaabout 42 km northeast of Amman, the capital of Jordan, with two 33 MW steam-electric units, and a 12-MW gas turbine to provide urgently needed interimcapacity. Consultant services for management and studies to assist JEA inreorganizing and enlarging its establishment would also be included.

iii. The cost of the project is estimated to be US$24.7 million, of whichthe foreign exchange cost is US$20.4 million equivalent. The foreign costwould be financed by an IDA Credit of US$10.2 million and a Kuwait Fund Loanfor an equal amount. Both the credit and the loan would be made to theJordanian Government and relent to JEA on conventional terms commensuratewith Bank (7-1/4%) and Kuwait Fund (6%) practices. The local cost of theproject and related works would be covered by funds from the Government,which would capitalize these as equity contributions as well as the existingGovernment loans for JEA's preliminary expenses.

iv. During the construction of the project, JEA would also undertaketo construct a transmission system essential for the transfer of bulk powerfrom Zarqa to Amman, estimated to cost about US$5.5 million (US$4 million inforeign exchange). The Government is seeking bilateral assistance for fi-nancing this system. If such bilateral assistance should not be forthcomingit would make other arrangements for financing, acceptable to IDA, to providethe necessary funds to complete the system prior to commissioning of thesteam-electric plant.

v. The electricity sector of Jordan is presently not well planned ororganized, is divided between two major regional concessions and many smalllocal entities and service is rather unreliable. An important objective ofthe proposed Credit is therefore to achieve an economical and reliable serviceby encouraging the Government to organize JEA as a truly autonomous Govern-ment entity responsible for all major generation and overall planning.

vi. Initially, JEA will supply power in bulk solely to the JordanianElectricity Power Company (JEPCO), which operates 3 diesel power stations

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and distributes electricity in the Amman concession area. An extension ofthe bulk supply to the Irbid District Power Company (IDECO), which operatesdiesel stations and distributes power in the Irbid concession area, shouldbe justified by 1978/79.

vii. JEPCO's load growth averaged some 13% annually between 1963 and1969, but in 1970 came to a virtual standstill due to the civil disturbances.There is a great deal of pent-up demand in Jordan but future load growthwill depend on the political and economic stability of the area. For thisreason three alternative load growth patterns have been considered viz: low,probable, and high. The probable growth rate of sales is 13-15% until theend of this decade.

viii. Power development in Jordan has been on the basis of diesel genera-tion and the country has no significant sources of hydro power that can bereadily developed. The alternative to continued diesel development is there-fore steam. For this reason, the project, which comprises an all-steam de-velopment, was compared with continued diesel development up to 100 NW in newcapacity followed by steam. The equalizing discount rate, reflecting therange of uncertainties up to which the all-steam development would be moreeconomic than a diesel steam development, ranges between 9% and 15.3% and isabout 13.5% for the most probable growth rate.

ix. Although the equalizing discount rate is highly sensitive to thegrowth rate of demand, it is relatively insensitive to the actual timing ofthe changeover to steam. The sector is presently served by a multiplicity ofrelatively small diesel units and to delay this change would (i) increase thephysical difficulties of operating an ever growing number of diesels, (ii) in-creasingly raise the capital requirements for the changeover to steam, and(iii) make more and more diesel capacity obsolete at the time of the changebecause not more than about 50% of all diesel plant available at that timewould be required as a reserve. The Association, therefore, concurs withthe Government's decision to move ahead with a steam development at thistime.

x. The installation of an intermediate gas turbine, to meet peakingand standby requirement in 1974 and 1975 is justified because the cost tothe economy of failing to install intermediate plant would exceed the costof the gas turbine (estimated at US$2.2 million) by at least 10%.

xi. The financial forecast indicates that JEA, as well as its onlyconsumer, JEPCO, should be able to maintain a satisfactory financial posi-tion after the project goes into operation.

xii. Procurement is following the Bank Group's Guidelines, and bids havebeen received for major equipment. The project is expected to be completedby early 1977.

xiii. In view of the agreement reached with the Government and JEA as setforth in Section 7, the proposed project would constitute a suitable basisfor an IDA Credit of US$10.2 million equivalent to be relent to J.E.A. by theGovernment at 7-1/4% interest and repayed over a period of 25 years, includinga grace period of 3-1/2 years.

JORDAN

Appraisal of the Hussein Thermal Power Project

of the Jordan Electricity Authority

1. Introduction

1.01 The Government of Jordan has requested the International DevelopmentAssociation (IDA) and the Kuwait Fund for Arab Economic Development (KuwaitFund) to jointly assist in financing a project comprising a 66-MW steam-electric plant and a 12-MW gas turbine to be located at Zarqa near Amman, thecapital of Jordan. A credit of US$10.2 million is proposed to cover 50% ofthe foreign exchange cost of the project, the total cost of which is aboutUS$24.7 million. A Kuwait Fund loan would finance the remaining 502 of theforeign exchange cost. The Government would relend the proceeds from theIDA credit and the Kuwait Fund loan to the Jordan Electricity Authority (JEA),a Government-owned entity, for a period of 25 years, including grace periodsof 3-1/2 and 5 years respectively. Disbursements from the proposed IDA creditand the Kuwait Fund loan would be made on a 50/50 basis after both loansbecame effective. Neither the Bank nor IDA has previously lent for powerin Jordan.

1.02 The project first came to the attention of IDA in 1969 when theGovernment requested IDA's assistance in financing the proposed steam station.The Government had previously obtained the assistance of the US Agency forInternational Development (USAID) in financing a feasibility study for instal-lation of a large thermal power station at Zarqa; it was to be designed tooperate in conjunction with a proposed hydroelectric power station at Shunehon the Yarmouk River in north Jordan and a 132-kV transmission system inter-connecting Amman, Jerusalem, Nablus and Irbid. The Jordan ElectricityAuthority (JEA) was established in 1967 to construct and operate these facil-ities. These plans had to be modified because of the June 1967 war, and theconsultants who were preparing the feasibility study were instructed to takeinto account the occupation of the West Bank and omit from the considerationthe hydroelectric potential at Shuneh. Parallel with this change the Govern-ment had instructed Messrs. Preece, Cardew and Rider, of the United Kingdom(U.K.), who had prepared the original report on the associated 132-kV trans-mission requirements, to modify their study accordingly.

1.03 On the basis of these revised studies, the project was firstappraised by Messrs. A.E. Bailey and F. Rydell in June 1971 shortly afterthe civil disturbances which occurred at the end of 1970. The effect ofthese disturbances on development and consequently on the electricity marketwas at that time still highly uncertain and the Association concluded thatconstruction of the thermal plant at Zarqa would not be the most economical

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use of resources to meet Jordan's immediate power requirements. However,by the middle of 1972 it appeared that the market had recovered and that asustained high growth rate of demand for electricity could be expected. InOctober 1972 the Government requested IDA and the Kuwait Fund to reappraisethe project.

1.04 This report is based on an updated feasibility study prepared bythe Kuljian Corporation (Kuljian) of the USA, JEA's consultants for theproject, information supplied by JEA and the Jordanian Electricity Company(JEPCO) of Amman during an appraisal by Messrs. W.F. Kiipper and A.J.D.Hutchins, who visited Jordan in November/December 1972.

2. THE POWER SECTOR

General

2.01 The Hashemite Kingdom of Jordan is divided by the Jordan River intotwo main areas -- the agriculturally oriented West Bank and the more econom-ically diversified East Bank. As the West Bank has been under Israeli occu-pation since June 1967, this report confines the study area to the East Bank,2which comprises some 91,000 km2 of the country's total land area of 97,000 kmThe population of the East Bank, now estimated to be 1.7 million, includesabout 700,000 people who live in cities and towns of more than 2,000 inhab-itants and over 500,000 displaced persons living in refugee camps.

2.02 Most of Jordan's East Bank population is concentrated in the Northernpart, in an area of about 7,500 km2. Development has been confined almost en-tirely to this area apart from a small area around Aqaba in the south, Jordan'sonly outlet to the sea.

2.03 The best aRricultural area in the East Bank region is the floor ofthe Jordan Valley where citrus fruits and bananas are grown. East of thisvalley the terrain rises toward the fringe of the desert. The Irbid areain the north produces wheat and other grain crops. Phosphate rock, quarriedfrom one of the world's richest deposits, is the principal developed resourceof the East Bank region.

2.04 Before the Arab-Israeli war in June 1967, buoyant growth took placein all sectors. The war interrupted these favorable trends but the Governmenttook action to alleviate the difficulties from the war and its aftermath andgrowth returned rapidly to the pre-1967 trend. Civil disturbances in thesecond half of 1970, however, brought the economy virtually to a standstilland power service was interrupted in the Amman area for some time. Since1970 the Government's actions have helped substantially to restore a confi-dent investment climate. As a consequence, present demand for power is wellabove past trends.

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Energy Resources

2.05 Jordan has few natural energy resources. There are no coal depositsnor any known deposits of oil. The only indigenous energy resources are (a)a small hydro-power potential of about 5 21W, on the Zarqa River, which isassociated with an irrigation program for the Jordan Valley where constructionof a dam has been started but the execution of the power component has notyet been considered, and (b) a hydro-power potential of about 46 MW at Shunehon the Yarmuk River in North Jordan. A feasibility study on the latterproject (hydro-electric and irrigation) was carried out by Energoprojekt ofYugoslavia and work had commenced, but the project had to be abandoned inJune 1967 when Israel occupied the opposite bank of the river.

2.06 Oil is the main source of commercial energy and is imported underan agreement with the Trans-Arabian Pipeline Company (Tapline) for the tran-sit of oil from Saudi Arabia through Jordan to the Mediterranean. The oilis conveyed by pipe from Tapline to the Jordan Refinery, located at Zarqa,in which the Government has a majority shareholding. The diesel stationsuse mainly residual fuel oil although they also use some gas oil. Both aresupplied by the refinery in road tankers throug out the country at a fixedbase price equivalent to about 58.0 US cents/10 BTU (about $23.00/ton) forresidual oil and US$1.26/106 BTU (about US$54.28/ton) for gas oil. Oncontracts for larger supplies a small discount is granted, for the powercompany in Amman this amounts to about 5% for residual oil and 2% on gas oil.

Characteristics of the Sector

2.07 Power supply in Jordan is generally on a local basis, not well plannedor organized and rather unreliable. Most of the plants are small, catering tosmall communities and to private industry. The generating facilities are inmost cases derated due to cooling problems and are badly maintained. Annex 1gives available data on power installations in the country. The rated distribu-tion voltage throughout the country is 220/380 V, three-phase, four wire, at50 Hz.

2.08 In Northern Jordan where almost the entire population of the EastBank lives, public electricity supplies are provided by JEPCO (Amman) and theIrbid District Electricity Company (IDECO), both Jordanian private sectorcompanies, in their respective concession areas. The number of consumerssupplied by these two companies as of January 1, 1973, was about 96,600, ofwhom 73,800 or 76% were supplied by JEPCO and 22,800 or 24% by IDECO. JEPCOsupplies the area with the greatest growth potential, including the capitalcity of Amman and the Zarqa industrial area. The area supplied by IDECO ismainly agriculturally oriented. Under the terms of their concessions, thecompanies have been extending their respective 33-kV networks during the pastfew years to supply outlying towns and villages (see Annex 2). The existingfacilities of both companies are discussed below (2.12 through 2.15).

2.09 In South Jordan, electricity supply is provided by isolated under-takings, the largest public one being the Aqaba Port Authority which supplies

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a peak demand of about 3 MW. The Jordan Phosphate Company, which has a loadof some 5 MW, generates its own requirements near its mine at Al Hasa.

2.1() Private power capacity operating in the Amman area (Annex 1) isestimated to be about the same as JEPCO's total installed capacity. Thelargest private plants are the Jordan Cement Company (14 MW), about 20 kmsouth-west of Amman, and the refinery at Zarqa (4.3 MW). There are a numberof small private plants, some of which are used for emergency standby only.In the Jordan Valley there are about 200 small pumping stations, all operatedby small individual diesels, aggregating at least 1,500 kW.

2.11 Statistics for JEPCO's and IDECO electricity generation and supplyas shown in Annexes 3 through 6 can be summarized as follows for the 4 years1967-1972:

-- JEPCO ----- ----------IDECO---------

1969 1970 1971 1972 1969 1970 1971 1972

Generation (GWh) 123 120 134 158 8.5 8.9 12.0 14.5Sales (GWh) 102 101 113 135 6.7 6.9 8.8 11.5Demand (MW) 28 30 31 35 2.7 2.9 4.0 4.6Installed Capacity (MW) 47 47 47 47 3.3 3.3 5.1 5.1Available Capacity (MW) 37 32 32 36 2.9 2.9 4.6 4.6System load factor 50 46 49 52 36 35 34 36Growthi in sales (%) 16 -1 12/1 19 13 3 35 31

/1 Would have been some 20-25% including refinery (see below).

The effects of the 1970 civil disturbances on the power market are clearlyvisible in the above table, particularly for JEPCO which, even during 1971,had not yet returned to its average growth rate in sales of some 13%. In1971, the situation was further aggravated for JEPCO when the refinery in-stalled its own 4.8 M1 of plant to provide the reliability of supply necessaryfor its operating requirements. But for the loss of this 12 GWh load, saleswould have increased some 20-25% in that year. The two major private industriesin the JFPCO area --- the Jordan Cement Company and the Jordan Oil Refinery --now privately generate some 75 GWh annually (equal to 60% of JEPCO's estimated1972 sales) at an aggregate maximum demand of some 10 MW (equal to 33% ofJEPCO's 1971 demand). The rapid growth of IDECO's sales in 1971.and 1972 wasdue mainly to extension of the 33-kV system to new areas and areas where therewere existing loads supplied from private plants.

Jordanian Electricity Power Company

2.12 JEPCO operates 3 diesel stations in the Amman area (Annex 7):

(a) the base loaded Marqa station near Amman has 8 units originallyaggregating about 35 WN in capacity now derated to 27 4W;

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(b) the Abdali station at Zarqa comprises 6 units, originallyaggregating 5.8 MW now derated to 4.5 NW; and

(c) the Ras-al-Ain power station in Amman, the oldest of the threestations, with 10 units, derated from about 5.3 MW to 4.4 MW.

JEPCO also operates an isolated undertaking at Madaba, southwest of Amman, towhich 2 small Abdali units will be transferred as soon as a new 6-NW;diesel unit enters service in the Marqa station. The Abdali and Ras-al-Ainpower stations are scheduled to be retired and sold when the proposed newZarqa power station is commissioned.

2.13 Transmission and distribution follows the European pattern: poweris transmitted at 33 kV and subtransmitted at 6.6 kV, except in Zarqa, wherethe intermediate voltage is 10 kV. The distribution voltage is 220/380V.JEPCO's supply network comprises some 200 km of 33-kV and 6.6-kV lines andabout 130 km of 6.6-kV underground cable.

Irbid District Electricity Company

2.14 IDE00 operates a diesel station in Irbid and some small diesel sta-tions aggregating some 670 kW (derated to 500 kW) in townships that are con-nected to the 33-kV network. It also operates one small isolated undertaking(North Shunah) in the Jordan Valley and a second is under construction atEl-Mashari. The Irbid power station comprises 6 units totaling 4.4 NW deratedto 4 MW.

2.15 IDECO transmits power at 33 kV and 6.6 kV (partly underground cable),distributing at 220/380 V, 50 Hz. It presently operates some 150 km of 33-kVlines and 42 km of 6.6-kV lines and underground cables.

Future Developments

2.16 In addition to the proposed project, JEA proposes to construct a40 km long double circuit 132-kV transmission line to Amman with a step-upsubstation at Zarqa and 2 step-down substations in Amman (at Marqa, and atBayader somewhat east of the city), with provisions for future extensions toform a ring main for Amman.

2.17 JEPCO is executing its 1971-1975 development program (Annex 2) underwhich three 6-NW diesel units are scheduled for commissioning before the endof 1973. IDECO, with U.K. financial assistance is continuing to expand its33-kV system and expects to complete a new diesel station with three 2.8-MWdiesel units by the end of 1974.

2.18 Demand is expected to exceed JEPCO's firm capacity by 1974 and JEAwould meet JEPCO's peaking requirements for 1974 and 1975 with the gas turbineproposed for financing under this credit. In early 1976 the Hussein stationwould meet all of JEPCO's requirements and, under a special contract with JEA

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(see 6.11), JEPCO would operate its Marqa power station as directed by JEA,

mainly for peaking and standby purposes. By about 1978 a third 33-MW unit

will probably be required in the Hussein station and by that time the connec-

tion of the Irbid system to the JEA system may also be justified.

2.19 The Government recently announced its 3 year Rehabilitation andDevelopment Plan for the Jordan Valley (see Annex 2). The power facilitieswould be supplied from IDECO's system in the north and from JEPCO's system

in the south. The estimated load, increasing from 6.5 MW in 1975 to 16 MW

by 1980, has not been taken into account in JEPCO's and IDECO's load forecastsuntil firmer information is available on the execution of the Plan. The in-creased demand for power in the Jordan Valley will depend on progress inimplementing the Plan and the extent to which the forecast influx of popula-

tion is achieved. It has not been included in the justification of the IDA

project.

2.20 The power sector is the responsibility of the Ministry of National

Economy (which has a small Electricity Department) and is governed by a num-

ber of concession contracts and licenses, and the Jordan Electricity Law of1967 which created JEA. Concurrently with the preparation of the JEA law aGeneral Electricity Law was prepared which, however, was never promulgatedin the aftermath of the 1967 war.

2.21 During the appraisal the subject of the desirability of regulatingthe sector within the framework of a General Electricity Law, and of particu-lar problems arising from the JEA law (see 6.09 and 6.12), were discussed withthe Government and during negotiations the Government undertook to:

(a) review the JEA law and propose appropriate legislativeaction for amending this law so as to allow JEA to developinto an autonomous agency, subject only to the directionof the Minister of National Economy in respect to specifiedmatters of sufficient general importance to merit Ministerialdecisions;

(b) initiate appropriate legislative action and present bySeptember 30, 1974, its proposals to the Legislature forenactment of a General Electricity Law to regulate thepower sector; such law to set out the principles and basicrequirements for, inter alia, generation, transmission anddistribution of power (including concessions and licenses),tariffs, easements, inspection and testing, a unifiedaccounting system, the collection of statistics and thepreparation of technical information;

(c) make available to the Association its proposals for thesaid Law sufficiently in advance for the Association'scomment; and

(d) formulate such regulations or bylaws as may be necessary toachieve the objectives of said Law including the delegation

to JEA of regulatory functions of a technical nature.

Tariffs

2.22 As outlined in Annex S a simple and uniform tariff structure prevailsthroughout the country, comprising block rates only, which presently appearadequate to aclhieve the required level of revenue. However, consultants forboth JEPCO and I1frlO have recommended that the tariffs be modernized by theintroduction of special industrial two part tariffs which should also relateto supply voltage. The Association shares this view, but agrees with the Gov-ernment that the appropriate time for such a study would be at the end of 1973,or early 1974, when the effects of IDECO's new power station on its costs, andthe implications of JEA's supplies to JEPCO from the new Zarqa thermal plant,can be assessed on a firmer basis than at present. For this reason the pro-posed credit includes a study to rnake recommendations to the Government notlater than D)ecember 31, 1974 for JEA's future bulk sales tariff and for amodern retail tariff structure including in both cases the provision of afuel price adjustment clause (see 6.13) which could be-implemented through-out the country. The achievement of a broadly comparable and reasonable rateof return for JEA and the retail distributor's supplied by JEA should remainthe basic objective of any future decisions on the wholesale and retail levelsof electricity tariffs in Jordan. JEA has agreed that this study will be madeby consultants acceptable to IDA under terms of reference acceptable to theAssociation.

3. THE BENEFICIARY

3.01 The Jordan Electricity Authority was established in 1967 with theenactment of the Jordan Electricity Authority Law No. 21, to provide for co-ordinated development of the power sector and the country's power resources.Before the Authority came into being an Implementation Committee was estab-lished to appoint consultants and a nucleus JEA staff and to deal with allinterim matters. The Authority is responsible to the Ministry of NationalEconomy, to ensure efficient operation of the power sector.

3.02 JEA's principal functions under Law 21 are (a) to establish generat-ing and transmission facilities to supply energy in bulk to other undertakingswhose systems are connected to the JEA system; (b) to manage and operate anyundertaking transferred to or acquired by JEA and (c) to develop a supply ofelectricity in areas where there is an economic demand and which are not withinthe concession area of supply of other undertakings. Existing power stationsmay be designated by JEA as "selected power stations" and will then operateunder JEA's direction. Subject to Cabinet approval these "selected powerstations" may either be purchased by agreement with the owners, or acquiredby Government direction, or the energy produced may be bought by JEA at acost sufficient to cover the owner's related operating costs. Under the lawJEA may require that power stations connected to the system but not designatedas "selected power stations" and not considered to be economically justifiedfor continued generation, cease operation. Under Law 21 JEA may also purchaseany of the other electricity undertakings in Jordan by agreement with theowners subject to the Cabinet's consent.

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3.03 Under the 1964-1970 Economic Development plan, JEA planned to con-

struct an 88-MW thermal power station at Zarqa, a 46-MW hydro-electric gen-

erating station at Shuneh, and a 132-kV transmission system interconnecting

Zarqa with Amman, Jerusalem, Nablus and Irbid. This program had to be deferred

following the June 1967 war, so JEA has not yet operated as an electricity

supply undertaking although it has supervised the expansion of generation

facilities and the 33-kV distribution networks in the Armman and Irbid con-

cession areas (see 2.17).

3.04 The only major noncurrent assets of JEA are at present (a) a plant

for the manufacture of concrete poles financed by a UK loan and built in 1967mainly to manufacture poles for JEA's transmission program and for JEPCO's

and IDECO's distribution programs, and (b) its construction loans to IDECOand JEPCO (see 6.02).

Organization and M1anagement

3.05 Because of JEA's limited activities, the Economic Security Com-

mittee resolved in August 1967 that the Implementation Committee should

continue to assume the powers and duties of the Board of Directors for the

time being. On August 8, 1972 this arrangement was terminated when theCabinet appointed JFA's first Board of Directors in accordance with theAuthority Law, comprising a Chairman, who is the Minister of NationalEconomy; a Vice-Chairman and 6 other members, who presently include JEPCO's

General Manager, the President of the Amman Chamber of Commerce, and JEA'sGeneral Manager.

Staffing

3.06 Again because of JEAts limited activities so far, its organization

and staff have not expanded as originally envisaged. The present staff ofJEA only numbers about 60, all Jordanian, of whom 30 work in the concrete

pole manufacturing plant. The remaining 30 who work in the headquarters

establishment include the General Manager, 3 Engineers and a Chief Accoun-tant. All new works financed by the UK loans are designed and supervised

by JEPCO's or IDECO's consultants in conjunction with JEA's engineers and

constructed by contractors.

3.07 The present management and staff, with the assistance of consultants,

are competent to operate JEA within its present limited responsibilities, but

the additional responsibilities that will result from the implementation of

the Project call for a complete reorganization and substantial enlargement

of its establishment. The General Manager is a competent executive but willneed management consultants to advise him in the enlarged undertaking. JEA

is aware of the particular difficulties and during negotiations covenantedthat:

(a) the position of its General tanager, Chief Engineer, ChiefAccountant and Superintendent in charge of the HusseinPower Station at all times will be filled by qualified and

9

experienced persons; it will consuilt with the Associationregarding appointments to the post of General Manager,and inform the Association of the names and qualificationsof individuals filling the remaining posts and prospectiveappointments to such posts;

(b) at all times, it will maintain its salary scales at levelsadequate to ensure the employment of competent staff insufficient numbers; and

(c) to appoint management consultants not later than April 1,1974 with terms of reference and on conditions satis-factory to IDA to advise on the organizational changesnecessary for operation of the project, and consultfrom time to time with IDA on actions it proposes totake on the consultant's recommendations.

3.08 During the appraisal a preliminary recruiting program and stafforganization were discussed with JEA and Kuljian. A number of key personnelwill have to be recruited and their training started before the completionof the study by the management consultants, and JEA has agreed that detailedproposals for a preliminary organization, remuneration schedules, and recruit-ment and training programs will be completed and presented to IDA prior toSeptember 30, 1973 together with the relevant cost estimates.

Training

3.09 JEA has contracted with its consultants to train senior supervisorystaff for the power station and to provide experienced expatriate supervisorystaff for the first 12 months of operation after the Zarqa plant is commis-sioned. It is anticipated that with the availability of Zarqa's power, JEPCO'sRas-Al-Ain and the Zarqa diesel power stations will be closed down. This andthe reorganization of JEPCO's Marqa power station for two-shift and latersingle-shift operation will make redundant enough skilled labor and juniorpower station operating staff to fill most of the appointments for the newZarqa power station. The problem will be to ensure that some of this potentialstaff can be released by JEPCO well enough in advance of commissioning thenew plant to ensure that they will get adequate training in the operation ofa steam power station before taking up their new duties. JEPCO does not feelthat this will present insuperable problems.

3.10 There is an adequate number of Jordanian artisans and operatorswith appropriate basic training, either within Jordan or working at powerstations in neighboring Arab countries. There should not be any major pro-blem, therefore, in obtaining junior operational staff suitable for training.

3.11 Because it is expected that part of the extensive training requiredwill be in the factories of manufacturers awvarded the main contracts as wellas in several steam power stations in other Arab countries and in the US, a

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training component has been included in the proposed credit to cover travel-ling, subsistence, and other expenses to be incurred for technical or admin-istrative staff training in countries outside Jordan and not already includedin a consultant's contract.

4. TIE PROJECT

Description

4.01 The project is described in detail in Annex 9. It consists of thefirst stage of a steam-electric power station with two generating units of 33;J each and a gas turbine of about 12 M1i (site rating). The station is to beconstructed adjacent to the Jordan Refinery at Zarqa, some 42 km from Amman.The selection of this site was based on availability of water and proximityto the fuel supply. The ultimate capacity of the station will be largelydetermined by the availability of water but total proved production at theselected site is adequate to sustain a steam power station of at least 200 MWcapacity.

4.02 The electricity sector of Jordan is presently not well planned ororganized, it is divided between two major regional concessions and many smalllocal entities and service is rather unreliable. An important objective ofthe proposed Credit is therefore to achieve an economical and reliable serviceby encouraging the Government to organize JEA as a truly autonomous Govern-ment entity responsible for all major generation and overall planning.

Estimated Cost

4.03 The estimated cost of the project is US$24.7 million equivalent,of which US$20.4 million would be in foreign exchange, based on the parityrate of JD 1 = US$3.1 i.e. after the US dollar devaluation in February 1973.Annex 10 shows the estimated cost of the project which is summarized in thefollowing table:

- *11

Local Foreign Total Local Foreign Total------ JD 1,000 - US$1,000 …-

Steam Electric PlantCivil lWorks 520 450 970 1,612 1,395 3,007Electromechanical. Works 420 4,350 4,770 1,302 13,485 14,787Casturbine Plant 100 680 780 310 2,108 2,418Engineering & Administration 60 350 410 185 1,085 1,270Training - 40 40 - 124 124Studies 20 50 70 62 155 217Contingencies:

(i) Physical 150 350 500 463 1,087 1,550(ii) Price 110 310 420 341 961 1,302

Total Project Cost 1,380 6,580 7,960 4,275 20,400 24 675

Proposed Project Financing US$ ('000)

Proposed IDA Credit 10,200 41Proposed Kuwait Fund Loan 10,200 41Government-Local Funds 4,275 18

24,675 100%

The project represents 56% of JEA's total expected 1972-1979 constructionprogram (see 6.07). Confirmation has been obtained from the Governmentthat the Kuwait Fund Loan will be made available to the Government at 4%repayable over 25 years including a grace period of 5 years and it and theCredit would be relent to JEA at 6% (Kuwait,Fund) and 7-1/4% (credit), re-payable over 25 years including grace periods of 5 years and 3-1/2 yearsrespectively.

Basis for Estimates

4.04 The above estimates have been based on bids received for main con-tracts representing about 65% of the foreign exchange requirements, and onquotations obtained from representative manufacturers. The estimates includea price contingency of about 5% on direct foreign exchange costs and 10% ondirect local cost of equipment and civil works, and about 15% and 6% of directlocal and foreign cost respectively hias been allowed for physical contingencies.The price contingency allowance is considered adequate because of expectedearly signature of fixed price contracts for major equipment on bids alreadyreceived. The foreign exchange estimates also include: provision for man-agement consultants (US$115,000) (paragraph 3.07); the training of staff(US$125,000) (paragraphs 3.11 and 6.04); and a tariff study (US$40,000)(see 2.22).

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Status of Engineering and Construction

4.05 The feasibility study for the project was financed by USAID. The

conditions under which Kuljian was employed are acceptable to the Association

an(d it is intended that they will be retained for the design and supervision

of construction and certain training (paragraph 3.09). They are responsible

for the preparation of bid documents and evaluation of tenders. Bid documents

nave been issued in accordance with IDA procurement guidelines and main con-

Cracts are expected to be placed as soon as the IDA Credit is signed and the

Kuwait loan becomes effective (see 4.08). The target for cominissioning the

first unit is early 1976. This is considered reasonable. During rnegotia-

tions assurances have been obtained that JEA will continue to employ consul-

tants acceptable to IDA for the design and supervision of the project.

Associated Transmission Lines

4.06 During negotiations assurances have also be obtained that JEA will

engage competent consultants for the final design, preparation of bid documents,evaluation of bids and supervision of construction of the 132-kV transmission

system between Zarqa and Amman not forming part of the project, but essentialfor its operation. The Governrment is seeking bilateral financing from the U.K.

for the foreign exchange romponent of this line and a condition of effective-ness of the credit will be that a Credit Agreement is signed between the Gov-ernmenit and the U.K. or other financing arrangements acceptable to the Asso-

ciation are completed, in order to ensure completion of the line prior tocommissioning of the Hussein station.

?rocurement and Disbursements

4.07 All contracts to be financed from the proposed credit (except for

consulting services) would be awarded on the basis of international compe-titive bidding, consistent with the Bank/IDA Guidelines for Procurement.

JEA is exempt from paying import duties. A preference of 15% or customsduty wlhichever is the lesser would be granted to Jordanian manufacturers.Formal agreement to these procedures has been obtained from the Kuwait

Fund.

4.DU2 In order not to delay the execution of the project the Kuwait Fund

has been sent a copy of the IDA draft appraisal report, and has thereby beenable to move ahead with its own lending procedures. It is expected that the

Fund loan will be signed slightly ahead of the IDA credit and that its effec-

tiveness will be conditional on the signing of the IDA Credit. The Fund and

the Association have agreed on the following procedures for disbursements.The Kuwait Fund will disburse 100% of (a) the retroactive cost (not exceedingUS$350,000) of consulting services incurred from February 6, 1972, onward(the date of signing of the relevant contract) and (b) the initial down-payments on major contracts (estimated to be in the order of US$1.8 million)which become payable after Credit signature but prior to its becoming effec-

tive. Thus the Fund, on a temporary basis, will advance the matching foreign

exchange fusnds that would be eligible for reimbursement by IDA as soon as theCredit becomes effective. The advances made by the Fund will be reimbursedby IDA immediately after effectiveness of the Credit upon formal request

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of JEA, including up to US$175,000 (50%) of the above total retroactive pay-ments for consulting services.

4.09 On the basis of the proposed joint 50/50 financing, all requestsfor disbursements together with supporting documents would be sent to bothIDA and the Kuwait Fund, and each institution will authorize disbursementsof its 50% share. Prior to effectiveness of the Credit, the Kuwait Fundwould only pay the temporary advance of 50% after agreement by the Associa-tion. The proceeds of the proposed Credit would finance the CIF cost ofimported equipment, the actual foreign exchange cost of Consultant's serv-ices and overseas training, and an agreed percentage for Civil Works con-tracts. The Kuwait Fund has confirmed that these procedures are acceptable.Should the foreign exchange cost to complete the project be less than esti-mated, any undisbursed amount of the proposed Credit should be reallocatedto consulting services for the next stage of development or if not requiredfor that purpose the undisbursed amount should be cancelled at the closingdate of the Credit. The project is expected to be completed in early 1976;the closing date would be March 31, 1977 to allow for final guaranteepayments.

Environment

4.10 The proposed oil-burning plant would be located some 10 km from thetownship of Zarqa, adjacent to the oil refinery. The surrounding countrysideis largely desert. A 95% effective mechanical precipitator would be installedand no problems with dust emissions or ash disposal are expected. Sufficientspace would be provided to install additional exhaust gas cleaning facilitiesif necessary in the future.

5. JUSTIFICATION

Forecast of Sales and Demand

5.01 JEPCO will be JEA's sole customer for several years after commission-ing of the Zarqa plant and is expected to remain JEA's most important customerthereafter (requiring 80% or more of JEA's output). Since 1963 JEPCO's averagegrowth rate in sales has been 11.7% (Annex 13), which includes the "bad" year1970. JEA's consultants (Kuljian) forecast an annual growth in sales of about20% through 1977 and 15% thereafter until 1990 based on indicators such aspopulation growth, employment and income data and average consumption perhousehold.

5.02 Annexes 3 and 4 (JEPCO) and Annex 12 (JEA) show forecast sales forthe period 1973-1980. They are based on past trends in JEPCO's retail salesexcluding sales to the refinery, but adding estimated future sales to somelarger consumers for which supplies have already been committed. Thus anannual growth rate in retail sales of 14.5% for the period up to 1976 (whenJFA starts operating), and an average of about 12% for 1976-1980 has beenassumed in this report for the financial forecast so as to avoid the possi-bility of overstating JEA's expected revenue. Beyond 1980 the growth rate

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would drop to some 11%, and overall "low" growth rate (see 5.04) would aver-age about 13%. Demand would grow from 36 MW in 1972 to 103 MW in 1980. Annex12 also shows forecasts for generation, losses and available and firm capac-ities.

5.03 For plant scheduling a continuing 14% average annual growth rateIn retail sales has been assumed (see 5.04) as the most likely growth rate.

Comparison of Alternatives

5.04 In Annex 13 a comparison of alternative plant programs has been madeusing three alternative growth rates:

(a) a 'low"' growth rate as used for the financial appraisalof this report,

(b) a 'high-" growth rate based on the estimates of JEA'sconsultants, and

(c) an "intermediate" growth rate of 14% per annum.

5.05 Because no significant hydro resources can be developed in Jordan,there are only two reasonble alternative basic programs: Alternative 1represents the installation of steam plant now, and Alternative 2, thecontinued installation of large diesel units for several years before theinstallation of steam plant. Because a very large number of diesel unitswould be unmanageable (and about two 10 MW sets would have to be installedannually by the end of the decade), a practical limit of 100 MW in new dieselplant has been assumed for Alternative 2. For these alternatives a unit sizeof 33 MWl has been assumed for the first steam plant to be installed, and 1CMW for diesel plant.

5.06 As shown in Annex 13, the discount rates at which the cash flowsfor the basic alternatives equate are sensitive to growth rate; they rangefrom about 9% for the low demand forecast to 15.3% for the high demand fore-cast. The market is expected to develop fairly rapidly in the future (see5.02) with a possible average growth rate of about 14% per annum, and theequalizing discount rate for this most likely (intermediate) forecast isabout 13.5%. Up to these values an all-steam development would be moreeconomic than a diesel/steam development.

5.07 It is further established in Annex 13 that (a) a smaller unit sizeof say 25 'IW for the initial plant for the all-steam development would havea higher cost than the 33 M.4W alternative, (b) a larger unit size (50 MW) forthe initial steam plant in the diesel/steam development would have about equalcost, (c) in any diesel/steam development the total capacity of the steam plantto be Installed should be about equal to the installed diesel capacity avail-able at the time of commissioning of the steam plant, and (d) the equalizingrate hardly varies whether steam plant is installed immediately or after in-stalling a further 20 MW or 50 MW or 100 MW of diesel plant.

5.08 In the light of the above comparisons and in view of the inevitablepractical necessity of changing to steam at some not too distant date, theGovernment's construction of a steam station to meet the projected increasein demand is fully justified. Particular points of consideration in thisrespect are the following:

(a) The logistic problems of operating a growing number ofdiesels in a country with a shortage of highly skilledtechnicians has been more than apparent in Jordan. Theresulting frequent power interruptions has already ledto a proliferation of captive plant installations (see2.11) which over a period of years can be expected toclose down in favor of JEA's supplies once the reliabilityof steam generated public supplies has been established.

(b) Because steam plant, once commissioned, should operate tothe fullest extent possible, the bulk (up to some 50%) ofall diesel plant available in the system at the time ofthe change over to steam, would immediately become ob-solete. Thus any delay in installing steam plant wouldincreasingly raise the capacity of such redundant dieselplant and the financial consequences of the change wouldbecome increasingly severe.

Gas Turbine Plant

5.09 On the basis of the most pessimistic load forecast the demand willexceed the present plant capacity in the two years preceding commissioningof the steam plant early in 1976. Because it is not possible to justify theaddition of interim plant to meet this demand on a basis of its output an at-tempt has been made in Annex 13 to calculate the economic cost of not install-ing it. As shown in the Annex this would exceed the capital cost of the gasturbine by at least 10% and the full savings would probably be appreciablyhigher.

5.10 Having regard to the short time available for manufacture and in-stallation, only diesel or gas turbine plant can be considered as practicalalternatives. Since the plant will operate only at peak demand periods fora period of about two years followed by several years on standby until mostof the presently available diesels have been sold, the amount of energy itwould be required to generate is small. The capital cost is therefore thefactor which determines the selection of the least cost alternative, %.7'ic'in this case would be a gas turbine (see Annex 1 ).

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6. FINANCIAL ASPECTS

Past Operations and Present Financial Position

6.01 JEA's only activities at present are the production of concrete poles(see 3.04) and the supervision of projects financed by U.K. loans and relentby JEA to IDECO and JEPCO (see 2.17). Although JEA anticipates enlarging itspole plant slightly to include other concrete products such as telephone poles,curbstones and fence posts for other industries, it is intended, as in thepast, that all these products will be sold at cost. The pole plant wasclosed for 9 months in 1972 for modification.

6.02 The U.K. credits to the Government were relent by JEA for the con-struction of IDECO's generation and transmission development schemes and forJEPCO1s expansion of generation. These U.K. credits to the Government ofJordan carry no interest, are relent to JEA on the same terms and again re-lent by JEA to IDECO and JEPCO on more exacting terms including interest at4% or 6%. Relending profits are transferred to JEAts capital reserve in com-pliance with its agreement with the Government. Annex 14 gives the detailsof the lending and relending terms of all such loans.

6.03 JEA's actual and forecast income statements and balance sheets,covering the years 1969 through 1979, are shown in Annexes 15 and 16. Thefinancial position at December 31, 1971 is, of course, not representativeof the role JEA is expected to assume in the electricity sector. JEA'snet fixed assets of JD 113,000 mainly comprised the value of the pole plant(JD32,000) and work in progress in expanding this plant. Long term invest-ments (JD 761,000) were the U.K. loans relent to JEPCO (JD 188,000) and toIDECO (JD 573,000). Current assets included a high cash balance of JD483,000 due to the time lag between receiving funds from the Government outof the U.K. loans and disbursing these funds to JEPCO and IDECO, see 6.08;JD 87,000 of this was in fact in transit to JEPCO on 12-31-1971. JEA's netequity was negative (JD 45,000 capital reserve from the proceeds of the re-lending operations less JD 58,000 accumulated losses) and its long term debttotaling JD 1,460,000 was all in respect of loans for relending to JEPCO andIDECO, except for JD 159,000 from the Government to support JEA's net ex-penditure pending its actual operations as public utility.

Accounting Staff

6.04 JEA's accounting staff comprises a chief accountant and two junioraccountants. This is adequate for the present but when JEA starts its cons-truction program and actual operations as a utility company it will not onlyneed additional accounting staff, but all the staff (including the presentemployees) will require training. The management consultants to be employedunder the project (see 3.07) will design the appropriate accounting proceduresand will provide on-the-job training to the accounting staff. They shouldarrange for at least one senior accountant to be sent abroad for a period oftraining with an appropriate utility organization and the foreign exchangecost of this is included in the proposed credit.

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Auditing

6.05 In accordance with Section 44 of the Jordan Electricity AuthorityLaw, the books and accounts are audited annually by auditors appointed bythe Minister. In the past the Minister has appointed the local auditingfirm of Shair, Aweida, Shatara and Ayed. One of the partners of this firm,Mr. Wahib A. Shair, is a UK Chartered Accountant and has carried out JEA'spast annual audits. These auditing arrangements are satisfactory and inde-pendent auditors acceptable to the Association will continue to be appointed.

Insurance

6.06 Insurance coverage is provided thirough private local insurance com-panies operating under Government regulations; in addition, the Governmentguarantees legitimate claims against these companies. JEA's purchases fromabroad are usually covered by insurance provided by the supplier. A reviewof JEA's insurance program indicates adequate protection except in one re-spect: it does not carry third-party public liability coverage other thaninsurance on motor vehicles. At this time, because of JEA's very limitedactivities, this may not present a serious problem, but JEA and the Govern-ment have agreed that, during the project construction period and thereafter,adequate insurance protection will be in force.

JEA's Financing Plan 1972-1979

6.07 Since JEA will only start as an electricity entity when the projectis complete in about 1976, the financing plan covers the period throughl 1979.It therefore covers not only the construction of the project and of Stage Iof the 132-kV transmission line from Zarqa to Amman (1973 through 1976) butalso the third steam unit at Zarqa (1977 through 1979) and iost of the as-sociated strengthening and extension (Stages II and III) of the 132-kV trans-mission system (1977 through 1981). The build up of JEA's fixed asset. willbe financed from borrowing except for (a) the Government loans converted intoequity (see 6.08), and (b) the local costs of the third Zarqa unit with itsassociated transmission line, to be financed by JEA. In addition to ttie proj-ect, which will be financed 82% by IDA and the Kuwait Fund and the remaining18% (JD 1,380,000) by the Government; the associated Stage I of- the 132-kVZarqa/Amman line will also be financed entirely by the Government - JD 1,292,000for foreign exchange (expected to be on-lent from a UK credit) and JD 500,000for loca;l expenditure. Future foreign loans on Bank terms have been assumedfor Zaiqa unit No. 3 and for the second and third stages of the transmissionsyster. (JD 4,083,00 including JD 534,000 interest during construction). Localcurrency costs of the latter expansion will be financed by JEA from internalcash generation. It has been assumed that interest during construction forthese latter project will be included in the future foreign loans. The highlevel of cash shown by 1979 reflects the initial 100% outside financing ofconstruction costs up to 1976. No dividends have been included in reductionof this cash balance in view of the tentative construction plans for theJordan Valley Development and the IDECO-Zarqa 132-kV link, which might bestarted by 1979. These projects have not been included in JEA's forecastconstruction program since their timing is uncertain. Both projects wouldprobably entail a high proportion of JEA financing from its own funds.

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6.08 The Government has agreed that its advances (estimated to totalJD 2,111,000 by 1976) comprising the local expenditures mentioned above onthe project (JD 1,380,000) and on the 132-kV line (JD 500,000), preliminaryexpenses (JD 159,000) (see 6.03) and miscellaneous additional expenditure onloans to IDECO (JD 72,000); will be capitalized as Government equity whenJEA starts to generate power from the Zarqa steam units. Dividends on thisshare capital could provide a flexible and convenient vehicle for transfer-ring funds back to the treasury should JEA in due course generate cash inexcess of its operating and expansion requirements after 1978. The Govern-m.ent and JEA have agreed however that no dividends shall be declared or paidbefore 1979 unless in the opinion of the Association, such a distributionwould not be prejudicial to JEA's requirements for its capital expansion.In summary JEA's financing plan for 1972 through 1979, which is realistic,is as follows:

JEA's Financing Plan for 1972-1979

Program Project(JD 000) % %

Source of Funds

Internal cash generation 8,008Increase in working capital (including cash) (1,317)Debt service payable (5,285)Net Internal Cash Generation 1,406Relending of Undisbursed borrowing

- 12-31-1971 (see 6.03) (535)JEA cash for construction 871 6%Equity issued to Government: 2,111

- Less used for pre 1972 purposes ( 236) 1,875 /1 13% 18%Long term Borrowing for Construction:The Project: - Proposed IDA Credit 3,290 23% 41%

- Proposed Kuwait Fund 3,290 23% 41%Other Construction-Assumed loans:

- 132-kV Zarqa/AmmanLine (see 6.07) 1,292 9%

- Future foreign loans(see 6.07) 3,549 26%

lotal Long Term Borrowing for Construction 11,421 81%Net Sources of Funds available

for construction 14,167

Application of Funds on Construction /2

Sources of Funds

The Project 7,960 56%Other Electricity construction 6,132 44% 100%Polc Factory construction 75Total Application of Funds on Construction 14,167 100%

/1 100% local expenditure on Project (JD 1,375,000) and 132 kV line (JD 500,000)./2 Excluding interest during construction.

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6.09 Section 38(3) of the Jordan Electricity Authority Law states thatthe maximum JEA can borrow shall not be more than JD 10.0 million unlessauthorized by another law. The Government has confirmed that the JEA lawwill be amended to ensure that JEA borrowing are not in conflict with thelaw or the debt limitation covenant.

JEA's Operating Future

6.10 Although JEA is expected to sell small quantities of energy fromthe gas turbine in 1974 and 1975, (see 2.18) JEA's operations as a utilitycompany will not really start unti 1976 with the coming into service of thesteam generating units. During the forecast period through 1979, JEA's onlycustomer will be JEPCO (unless IDECO were to be connected to the JEA systemin 1978/79), and from 1976 JEA will require JEPCO's "selected" Marqa dieselstation (see 3.02) to generate power for standby or for peaking purposes inorder to ensure the most economic overall generation for the system. TheGovernment has agreed that Marqa will be declared a "selected" station whenthe first Zarqa steam turbine unit becomes operational for the sale of power.

6.11 In this report it has been assumed that JEPCO will enter into along-term operating contract (revised periodically according to JEA's esti-mate of the number of shifts per day and level of readiness required) wherebyJEPCO would receive a fixed operating contract price designed to meet all itsfixed costs of running its Marqa station including depreciation, plus a mar-gin of profit equivalent to a 9% return on its average net fixed assets atMarqa. All actual kWh's generated for the system at JEA's request, would bepaid for by JEA at marginal cost only i.e. fuel plus expendable materialsestimated at 2.26 fils/kWh (US cents 0.70). These assumed conditions ofcontract and the principles behind them were discussed with the Government,JEA and JEPCO during the appraisal and no objections were raised. It is acondition of effectiveness of the Credit that, should Marqa not be purchasedor acquired from JEPCO, JEA and JEPCO agree to enter into some such operat-ing contract by not later than June 30, 1975 for the use of JEPCO's Marqastation as a "selected" station and that this contract would be drawn up ina mutually agreed form which would be specified and based on principles ac-ceptable to the Government and the Association. Having agreed to enter intosuch a contract as a condition of effectiveness of the credit, JEA and JEPCOwould then have time to negotiate the precise terms nearer to mid-1975, whenthe actual operating conditions and costs expected for 1976 could be forecastmore accurately. JEA's selling price to JEPCO and JEPCO's retail price willbe determined by tariff regulations which are expected to be promulgated bythe end of 1975 following the completion of the legal and tariff studies(see 2.22).

6.12 Marqa, when declared a "selected station" may be purchased oracquired from JEPCO, or may be operated by JEPCO under JEA's direction.The Government has confirmed that an operating contract between JEA andJEPCO of the type envisaged in 6.11 will not be in conflict with JEA'slaw.

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6.13 All of Jordan's generation is thermal and it would therefore beprudent for wholesale and retail tariffs for electricity to include a fuelprice adjustment clause to protect the financial viability of the operatingcompanies. Under this clause, all increases in the price of residual fueloil above a predetermined base price would automatically be passed on tothe retail distributor and, if appropriate, to the consumers. The Govern-ment agreed to empower the JEA to implement such a fuel adjustment clausenot later than June 30th, 1975, incorporating a base price paid by JEA ofJD 7.5 per ton for residual oil.

6.14 Assuming the type of contract envisaged in 6.11 (including a fuelprice adjustment clause) resulting in an average selling price to JEPCO forelectricity (including any generation at Marqa) of 7.5 fils/kWh (2.3 USc/kWJh),JEA is expected to achieve an annual rate of return in the order of 9% onceits operating pattern settles down (see Annex 15). JEPCO also is expectedto achieve an annual rate of return of 9% by 1979 with the above purchaseprice for electricity for JEA and the proposed operating contract for Marqa(see 6.11). The Government and JEA have agreed that JEA's tariffs will bemaintained at a level high enough to produce an annual rate of return of atleast 9% on average net fixed assets in operation. Although the forecastreturn for 1979 is shown as being lower than this (8.3%), no increase intariffs have been anticipated in the forecast because of the conservativegrowth rate (of about 12% annually) used for the sales estimates; becauseof the lack of an existing organization with historical operating recordsand accounts to provide a firm basis for estimates of future expenditurein 6 years time; and because of the impending tariff study.

JEA's Future Balance Sheets

6.15 JEA's financial position is expected to be sound and its predictedbalance sheets for 1976 through 1979 (Annex 16) reflect the start up and ex-pansion of its major activity as an electricity wholesale supply organization.Whilst the build up of its fixed assets will be financed largely from borrow-ing, JEA has agreed not to incur additional long term debt unless its debtservice in any future year is expected to be covered at least 1.5 times byits internal net cash generation. Net current assets reflect the expectedstart up of activity by JEA and the supply of the initial inventory supportby the main construction contractors. JEA's Debt/Equity ratio is shown asbeing in the region of 81:14 by 1979, but this would be 77:23 if the relentdebt were excluded.

7. AGREEMENTS RkEACHED AND RECOMMENDATIONS

7.01 During negotiations, the Government agreed:

(a) to review JEA law and propose appropriate legislativeaction for amending this law so as to allow JEA todevelop in an autonomous agency (see 2.21);

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(b) to initiate legislative action and present by September 30,1974, its proposals to the Legislature for enactment of aGeneral Electricity Law to regulate the power sector; theproposals for said Law will be made available to the Asso-ciation in time for comments; to achieve the objectives ofthis Law, such regulations or bylaws will be formulatedas may be necessary and regulatory functions of a technicalnature will be delegated to JEA (see 2.21);

(c) to prohibit the declaration or payment of dividends byJEA before January 1, 1979, unless in the opinion of theAssociation such distribution would not be prejudicial toJEA's requirements for financing its expansion program(see 6.07);

(d) to convert into equity all JEA's preliminary expendituresfinanced by the Government prior to commissioning of theHussein station (see 6.08); and

(e) empower JEA, not later than June 30, 1975, to implementa fuel adjustment clause to cover additional operatingexpenses resulting from variations in the price paid byJEA for residual oil above a base price of JD 7.5 perton (see 6.13).

7.02 During negotiations, the following was agreed with the Governmentand JEA:

(a) to set and maintain tariffs to provide a rate of returnof not less than 9% (see 6.14); and

(b) that JEA will not incur additional long term debt unlessits debt service in any future year is expected to becovered at least 1.5 times by its net cash generation(see 6.15).

7.03 During negotiations, JEA agreed:

(a) to engage consultants for a tariff study in time for themto make recommendations to the Government by not later thanDecember 31, 1974 (see 2.22);

(b) to consult with the Association regarding appointmentsto the post of General Manager, to inform the Associa-tion concerning prospective appointments of other chiefofficers, and to maintain its salary scales at levelsadequate to ensure employment of competent staff(see 3.07);

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(c) to present to the Association prior to September 30, 1973its detailed proposals for a preliminary organization, re-numberation schedules, and recruitment and training programs(see 3.08);

(d) employ consultants acceptable to the Association for thedesign and supervision of the project, and of the 132-kV trans-mission system between Zarqa and Amman (see 4.05 and 4.06);

(e) employ outside auditors acceptable to the Association(see 6.05); and

(f) to adequately insure its assets (see 6.06).

7.04 During negotiations, the following events were agreed as conditionsof effectiveness:

(a) the signing of a bilateral agreement with the UK, or ofother arrangements acceptable to the Association, forfinancing of the 132-kV system between Zarqa and Amman(see 4.06);

(b) that the Kuwait Loan Agreement has, or will concurrentlywith the credit agreement, become fully effective (see4.09); and

(c) that, unless JFA shall have acquired Marqa, JEA will con-clude a basic agreement with JEPCO for the operation ofMarqa committing both parties to conclude a final con-tract not later than June 30, 1975 (see 6.11).

7.05 On the basis of the foregoing, the project is suitable for a Creditof US$10.2 million equivalent to be relent to JEA by the Government at 7-1/4%interest for a period of 25 years including a grace period of 3.5 years.

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reft =-L SOWU I, 950 (1S w4ta) 12 Lister

nwety et O o_sti 670 (8 dit.) 5a mmTV md 3-ad"Wa.tg 2,330 (5 mit.) l--rhri (und.r 700 (1 =it)

s tDd bdevtirw 2 330 (S lit ) c~~~~~~~~~~~~~~~~~~~~~~~~~~~~~o.ntruetia,n(Arport 380 (5 =its)

llnpitl. 360 (5 =it.) W.ai l-Yabois 100 (3 mit.)

IfrLgns.m .nd Sl0g. 270 (3 ±t-) Delr All& 50 (2 anit.)

C_w come h10 (6 wit) El.K..Mh 60 (2 -its)6,1.00

CIMMMMt 0&c7 14,3J000 (7 u )mits)yate R4EPlng 5,660 (20 xt wor ) oth 20h0 200 (3 ,mit.)

bflnJy 4.800 (2 mite) PrivteA msrolt. TonbAt Cet-r 80 (3 -its)At_ C_ ~~~~3,601 (I. mit. or ma.

amn WU1. l.Sl (9 unit-) -. in -. t-

No.rther Arem M Irigati adPotoble mte. 1 (175 ait.)

n00o T1bid 600 D.atsSon.therns Jor~.

60D D-0.

600 D.stl

K..,k 510 (3 -nit.)50a SIM

22200 130 ({4 onrt,)1,040 Allen

Al C-r 50 (2 -nit.)1,4a Allen

Ai.y 603 ( 2 cinit.)hPfr-q 3/ 170 MASy-

Al ftsar 144 (3 -nit.)120 0N1

Thfil.h 460 (5 unit-)

22dh MaohM 70 (2 -it.)brarsh 37 100 MAN022an 456 (4 -it.)

go M60M

h2.Jil Shibak 46 (4 -nit.)El-ShaJ.' r-/4 55 12.1Prinat.

40 Meynedes

20 Mrcedes Jordxa Fhpbt.K 4Cp. - Al H.0 5,735 (11 UDit.)r fer Ansed 4' 40 sM1

s ront, Aqab. FPrtAuthority 3,8W0 (7 units)

Sano l-Rucso.n 3 4LiI MWM

oPpin t Nntional Resource A,thority) 3,200 12 tOil3)

1' The total e-tiqted in-talled mpCilty in E Ot-fank Jor-Sa an lsted hern a-orts to-tie lin MW; due to la-k f nafs1,isl this nu-her cotn tt'tt h a ro 6beStimate only7' or detaIls fP 10.17 Plant see Anner 7

7 lsn recejorri ' lk eupply rm IDlFC- :u'eco'-o-re :' Itte 1131 s ystra ta 1973774

r-o 7,

ANNEX 2Page 1 of 3 pages

JORDAN

The Histories of JEPCO and IDECODevelopment Programs

1. Electricity is distributed in Eastern North Jordan, the area whichwill be supplied by the Project, by JEPCO and IDECO in their respectiveConcession Areas. The composition, history and future developments of thesecompanies are described below:

The Jordan Electricity Power Company Limited

2. Prior to 1947 several small electric power companies were independentlyoperating in the Amman area. The Government decided at that time that theactivities of these companies should be unified and on August 14, 1947 theTransjordan Electric Power Company Limited was established, with paid upcapital of JD 121,900 to take over these small enterprises. At the same timethe Transjordan Electric Power Company was granted a concession by the Govern-ment which licensed the new company to generate, transmit and distributeelectrical energy in the area specified by the concession for a period of60 years after which the concession could be reviewed or the assets could bepurchased by the Government. The paid up capital was increased to JD 250,000in 1955.

3. As of January 1, 1963 the Transjordan Electric Power Company Limitedmerged with the jordan Central Electric Company which supplied the Zarqaconcession area, and the new company was named the Jordanian ElectricityPower Company Limited. The combined concession, covering the areas suppliedby the previous two companies, was established by law as published in theOfficial Gazette No. 1651 dated November 22, 1962. The authorized capitalof the new company was JD 2,500,000, of which JD 2,040,000 was paid up.Authorized capital was later increased to JD 3,000,000 with JD 2,717,975 paidup. The nominal value of a share is one Jordan Dinar. The Company presentlyis owned by 6,572 shareholders and the distribution of shares is shown in thefollowing table:

Shareholders No. of Shares 7

a. Municipalities 232,670 8.6

b. Government 33,528 1.2

c. Company 145,766 5.4

d. Private Sector 2,306,011 84.8

Total 2,717,975 100.0

ANNEX 2Page 2 of 3 pages

4. The Board of Directors of JEPCO comprises eleven members, two of

whom are representatives of the Government and the Municipality of Amman

respectively. Total staff is about 800 employees.

JEPCO's Expansion Program

5. JEPCO is presently executing a 5-year development plan (1971-1975)

for the expansion of its own generation, transmission and distribution facil-

ities, pending the commissioning of bulk supplies from JEA's Zarqa station.

A UK loan of JD 3.1 million has been made, through JEA, towards the cost of

this program, which includes 3 diesel units of 6-MW site rating presently being

installed. JEPCO's transmission/distribution program orovides for extending

its 33-kV network and includes a routine expenditure of some JD 500,000

annually to develop the company's 220/380-V network. The latter financial

provisions appear adequate to meet the increases in power requirements

during the period. It is expected that JEPCO's demand will exceed its firm

capacity in generating plant by 1974. JEA, by means of the gasturbine proposed

for financing from the credit is expected to meet these requirements. It

appears likely that JEPCO's older diesels in the Marqa station can be sold

to municipal undertakings, so that the three newer diesels (18 MW) together

with the gasturbine (12 MW) will comprise the necessary reserve for the Zarqa

station by about 1978 to meet JEPCO's requirements as well as those for IDECO

(see below). A further extension of the transmissions system would also be

required by that time.

Irbid District Electricity Company

6. The companv was established as a private company in Irbid in 1957

under the name of Ajlun District Power Company. Irbid power station was

acquired in 1961 and the company was converted into a public company with an

authorized capital of JD 1,000,000. The name was changed to the Irbid District

Electricity Company. The Company was granted the present concession under

Law No. 1 dated 23 of January 1961 (as published in the Official Gazette No.

1535 dated February 16, 1961). The concession is for a period of 50 years,

after which it can be renewed or the assets may be purchased by the Govern-

ment.

7. From 1962 onward IDECO has been acquiring smaller municipal under-

takins, a process that has been accelerated since 1968 when the company

obtained its first UK loan for expanding its transmission and distribution

system (see 9 below).

8. The authorized capital of IDECO is still JD 1,000,000 of which

JD 757,165 has been paid up. The nominal value of a share is one Jordan

Dinar and the distribution of shares as of December 31, 1971 is shown in the

following table:

ANNEX 2Page 3 of 3 pages

Shareholders No. of Shares _

a. Municipalities 306,082 40.4

b. Government 178,852 23.6

c. Private Sector 272_231 36.0

Total 757,165 100.0

IDECO's Expansion Program

9. IDECO, which recently completed its Stage I'.transmissior andgeneration program with the assistance of JD 360,000 (equivalent) UK financ-ing, obtained two further UK loans through JEA of the equivalent of JD 300,000and JD 750,000 respectively toward expansion. The first loan covered theinstallation of two 1 MW diesel units in the existing station and the exten-sion of the 33-kV system by about 120 km. The second loan covered further33-kV extensions and the third construction of a new power station at Irbidwith three 2.8-M; diesel units. These works are expected to be completedby the end of 1974. NRA's pumping stations (see paragraph 2.10) will all beconnected to the IDECO system for supply during off-peak hours, as scoa assufficient capacity is available. IDECO's major construction is supervisedby JEA. Additionally, IDECO is budgeting an annual expenditure of some JD120,000 for expansion of its 220/380-V facilities. IDECO plans to installtwo additional 3-MT generating units prior to 1978. By that time, or earlyin 1979, the construction of a 90 km long 132-kV transmission line from Zarqato Irbid may well be justified.

Jordan Valley Rehabilitation and Development Plan

10. The Government recently announcecl its 3 year Rehabilitation andDevelopment Plan of the Jordan Valley. This plan envisages the migration ofsome 100,000 persons to the Jordan valley by 1980 to participate in theplanned agricultural and environmental improvements of the valley. Towardsthe achievement of this aim, the Plan includes a power development projectcomprising a 33-kV line along the valley (200 km including feeders and spurs)and distribution networks for the expansion of existing townships, for newsettlements and for the pumping of irrigation and drinking water. The linewould be supplied in the north from the IDECO system and in the south fromthe JEPCO system. Demand is expected to grow from about 6.5 1TW in 1975 to16 M; in 1980, including an off peak load for pumping of 2.3 - 3.6 MW. Thedemand for power will, however, be entirely subject to progress made inimplementing the Plan and to the extent that the proposed influx of populationis achieved. For this reason this estimated load has not yet been takeninto account in JEPCO's or IDECO's load forecasts until firmer information isavailable on the execution of the Plan.

NOA

h-Idn Tberl lfer Froet

JwdSotiric J . o Po Ce n r y

Hitoric *waa 8.e )10 Xr CoS.Mer C.t.go,y

?..Pit'". schoola,

% Cro_erci. S 2 Plc__ of t S stre t

Yer Dr.tic Incnrse sod cr..e Indowtry MNncrC blohip 1fe Ff.g Inet,e lightdng Th-r,... Tnt.I T e

OCovrr_rat end Ch.rity

1963 -- 1.6 7.7 23.5 2.8 3.4 1.1 50.1

8 15.0 29.3 8.9 15.5 25.6 8.9 3.2 14.2 3.5 2.9 1.2 9.0 57.4 14.6

5 17.8 18.6 9.5 6.7 27.8 8.5 3.2 - 3.7 5.7 1.3 8.3 63.3 10.3

6 21.1 18.5 10.2 8.4 30.4 9.3 3.4 17.9 3.9 5.4 1.9 46.1 70.9 11.9

7 23.7 12.2 11.4 10.7 33.0 8.6 4.2 7.7 3.4 _ 12.8 2.3 21.0 78.0 10.0

8 28.3 19'4 13.7 20.0 5.1 6.4. 4.8 14.2 3.5 3.0 2.8 21.7 88.2 13.1

9 33.9 19.9 16.7 22.0 39 12.2 5.7 18.7 3.2 8.6 3.3 17.8 102.2 15.8

1970 34.0 0.3 17.0 1.8 34.6 - 12.2 9.1 59.6 3.5 9.4 2 9 - 12.1 lOi.1 I 1.1

1 40.2 18.2 19.9 17.0 31.9 7.8 13.2 46.1 3.9 11.4 3.8 31 n 112.9 11.7

2 47.4 17.9 24.2 21.6 33.3 4,4 20.1 52.3 4.9 25.6 4.5 I.13 134.7 19.3

* E=ldi.g 1970 183 16.7 9.4 37.8 4.2 18.R 18.3

TiDterV*ti7g 1971 Ib.7 14m9.3 37.8 4.2 14.9 14.9

1973 53 26 44 l1 46 5 151

4 60 29 57 21 4 6 1785 68 32 65 23 8 8 201

6 77 36 70 27 4 9 274

7 88 l0 76 31 1. 1.1 2518 120 Il6 82 36 8 13 28279 110 51 89 41 1 14 317

198o 132 57 98 47 4 17 356

Aep fore-.trowtb rnte 1972-1980 13,7 11.3 14.4 14,4 11.2 18.1 1.'9

E Thclodng the WefInery in Zrcqe, ehih por.h-d

.hoot 13 .h 08anuYll. It i-t.eUd It. OK

ge.er,ti.g plnt in 1970, redoclg puroh..e to

ebout 25t; n-rch- fror the period 1963-1971

hbv- bcen deducted to c lclto the grwthr te

of .el other consxnlr. nd of totel sW-le.

Apoil 9, 1973

JORDAN

hussein Thermal Power Project

Jordanian !lectric er CanyHistoric and Forecast Number of Consumers, GWh (}enerated, Purchased and So d, Installed and Firm Capacity, M.ximum Demand

DeratedNumber Generation Purchased Sales Maximum Load Side rated Available Reserve Firm

Year of Consumers ONf from JFA CWh Demand facto- Installed Installed (derated) CapacityGWh Nl Capacity Cspacity

Historic1963 29,956 57. 4 50.1 15.0 43.5 18 17 3 14

4 33,695 66.o 57.4 114.6 51.5 18 17 3 145 37,536 72.8 63.3 15.7 53.0 22 20 5 156 41,564 81.7 70.9 17.9 52.0 27 22 5 177 46,o80 91.6 77.9 20.4 51.5 38 30 5.5 24.58 50,662 104.4 88.1 22.9 52.0 47 37 5.5 31.59 56,738 122.7 102.2 27.8 50.5 47 37 5.5 31.5

1970 61,116 119.9 101.1 29.8 46.o 47 32 1/ 5.5 26.51 ~~~~~~66,683 133.8 112.9 ~ 1. 149. 14 3/55 26.5;

2 73,833 157.9 1314.7 341 9 51.6 448 32 5 324

Forecast1973 77,800 178 150 41 49.5 66 I/ 53 6 47.0

4 84,ooo 206 3 177 48 50.0 66 53 -5/ 53 5/5 90,700 226 12 200 54 50.0 66 53 -- 53 -6 938,000 265 223 60 J 50.5 53 145 - 47 105,800 294 250 66 51.0 49 41 - 458 114,300 327 281 72 51.5 53 41 - 459 173,400 368 316 82 51.5 53 41 - 45

1980 133,300 4ip 355 91 51.5 45 37 - 45

/ Crossley 4 MW Mirqa crankshaft brokenC/ Crossley 4 MW Marqa repaired; for available plant see Annex 7

3/ Three 6 Mf (site rating) units added;Zarqa # 1,2 transferredRes &I Ain and Zarqa power stationsassumed retired (13 ?G installed, .9 W effective)

5/ Gasturbine JEA assumed in operationSee Annex 12 for system capacity

6/ From 1976 onvard: 9ubstati-o simum demandand load factor

April 9, 1973

Hussein Thernmal Power Project

Irbid District Electric ComyHistoric an. M UorMcStles (aw ) per Consixer Category

Hospitals,

Comnerical schools, Places Stret -

Dom1etic Increase and Increase Industry Increae of Worship Iacrease lighting Increase Total

Government and Charities

Historic

1968 3.36 0.71 1.01 0.21 o.65 5.94

9 3.73 10.9 0.87 22.5 1.21 19.7 o.24 13.4 o.67 3.9 6.72 13.1

1970 I 3.76 0.8 0.87 - 1.30 7.5 0.30 27.6 0.70 4.3 0.93 3.1

1 Y. 4.89 30.2 0.96 10.3 1.45 11.5 0.35 16.7 1.10 57.0 8.75 26.3

P_ 6.77 38.4 1.39 44.8 1.57 8.3 0.39 ii.4 1.34 21.8 11.4k 30.5

1973 Forec&s 8.6 1.5 1.7 o.6 1.5 13.9

4 11.7 1.8 8.7 0.7 1.8 24.7

5 12.0 2.1 12.04 0.9 2.1 29.1

6 14.3 2.3 17.0 f 1.0 2.4 37.0

7 16.7 2.7 17.9 1.1 2.6 41.0

8 20.5 3.1 18.5 1.2 2.7 46.o

9 25.9 3.6 19.5 1.3 2.8 53.1

980 29.9 4.1 20.7 1.4 2.9 59.0

Aver Forecast Growth Lte 1972-1980 20 14 38 17 10 23

Isolated undertakings int-rconnected in 1971 and 1972

1 Of f-peak pumping loads added

Auril 9, 1973

JK5.AN

Hussein Thermal Power P-oject

Irbid District Electric ConyLjistoric and Forecast Number of wons=rs, Generated and Sold, Installed and Firm Capacity

Number of Generation Sales b bxim Installed Reserve FiroYear Consumers GWh GWh Increase Demand Capacity Capacity

Historic

1968 11,859 7.5 5.93 2.6 3.3 0.3 3.09 13,153 8.5 6.71 13.1 2.7 3.3 0.3 3.0

1970 15,184 8.9 6.93 3.1 2.9 3.3 0.3 3.01 18,812 12.0 8.75 26.3 4.0 4.7 1.0 3.72 22,800 14.5 11.5 3.2 4.6 4.7 1.0 3.7

Forecast1973 27,000 16 14 15 4.9 4.9 1.0 3.9

4 31,000 29 25 1/ 79 6.3 13.5 3.0 10.55 35,000 37 291/ 20 7.8 13.5 3.0 10.56 39,000 43 37 i/ 28 9.5 18.5 5.0 13.57 43,000 48 41 11 U.0 18.0 5.0 13.0a 47,000 54 46 12 12.6 21.0 5.0 16.09 51,000 62 52 13 14.4 21.0 5.0 16.0 i/

1980 55,0G0 70 59 13 16.0 21.0 5.0 16.0

Pumping load (off peak) added in 1974, requiring 7 GWh in 1975 and 10 GWb in 1976The systeu will probably be connected to the FTEA system by 1978/79

April 9, 1973

iS~~~~~~~~~~~~~~~~~At 7

g Rs 0%

X ~ ~ ~ ~ - r

r a

H HH

o~~~~.~4 te

R~~~~~ g Z

r ~~~~~~~$4Z? ~ ~ ~ r 0. 4

+ i 4 . 4 .

zo~~~~~~~ 01 . 0' 4C 44*4 tg

C I t<H .g 4 S BD E v 444e

Hj.W4 441.O.tflC. N NY N x@ 08iIZ ; SJ 'J'. 0-c Q -'X= '4*4'O0444lH

'¶ .4HEH. .4. H .44 '.4-HEt;R%oo

+|;CEooz-MSsU* iCZ N > Uo - mA

I H ,dc 4O4'%o

:1~~~~~~~~~~~ b0c

X Q "Z 3 c3 t vX vEgrborot i@0

44N 4 )4)44t.4. 4 44 4r

ANNEX 8Page 1 of 2 pages

JORDAN

Electric Power Rates

1. JEA's Laws (and the draft Electricity Law of 1966) require that theprices to be charged by tndertakings shall be in accordance with such tariffsas they may fix from time to time, with the approval of the Cabinet on therecommendation of the Minister. No specific concepts or regulations, are setforth, however, for the defiritions of costs, rate base, rate of return, etc.

2. In practice a single and simple uniform tariff structure prevailsin the cotntry, comprising block rates only. On a monthly basis they arethe following for the two most important companies (in fils (0.31 USO) per

JEPCO Fils/kWh USW/kWh

First 50 kWh 30 9.3Next 2450 kWh 15 4.6Over 2500 kWh 11 3.4

IDECO

First 50 kWh 40 12.4Next 50 kWh 25 7.7Next 900 kWh 20 6.2Over 1000 kWh 15 4.6

3. Special contracts are allowed at lower prices and normally thistakes the form of a discount. In the case of JEPCO, employees have a 75%discount and institutions considered socially important (churches, hospitals,schools, charity) 25%. For streetlighting, under a special contract, theoriginal discount was 30%. Each year, however, this increases by 5% and thepresent situation in Amman, is that within 4 years streetlighting supplyand replacements will be fully subsidized by other consumers, the municipalityfinancing the extensions. In 1970, about 12% of all of JEPCO's supply wasat a discount, constituting about 6.3% of revenue. Similar discounts existsin Irbid where, however, the discount for streetlighting increase 10%annually but is limited to a maximum of 60%. Some larger industrial consumershave a special contract setting the highest block rate at 12 fils/ kWh.

4. As a condition for lending JEA required JEPCO to have its tariffsstudied by an acceptable consultant, to investigate if they could be reduced.The company's costs were to be analysed and recommendations were to be madefor any promotional activities to be initiated, including setting up acommercial section. The study was completed by Kennedy and Donkin of theUK in May 1972.

ANNEX 8Page 2 of 2 pages

5. The consultants reached the following main conclusions:

(a) the present block tariff is still most appropriate for the presentsituation; no change is recommended at present in pattern, sizesof the blocks or in prices within these blocks. The tariff shouldbe studied again, however, within 2-3 years when all the aspectsof the future JEA generation and supply are better known.

(b) the company's target should be the allocation of an amount equal toabout 3% of net fixed asset value for internal financing of projectseven if dividend target payments (of 10% per share, presentlyequivalent to about 8% of net fixed assets in operation) were tosuffer.

(c) the promotional aspect in the present tariff is appropriate forthe domestic sector; some meter equipment should be installedfor JEPCO's larger consumers in order to study the viability ofinstalling maximum demand meter equipment and to frame an appro-priate industrial tariff (in 1970 there were 6 "large" consumerswith an installed capacity of 800-1000 kW or more and 65 "medium"consumers with an installed capacity of 75-90 kW to 800-1000 kW,some operating during the peak and some operating outside the peak);when making a decision on the tariff, a distinction could bemade between high voltage and low voltage supply.

(d) the present lowest blockrate of 11 fils/kWh appears slightly belowpresent fixed and variable charges (i.e., well above marginal shortterm cost of supply in the order of 5-6 fils/kWh).

6. Preece Cardew and Rider in their report, dated November 1969, onthe development of electrical supplies in the Irbid district and the organiza-tion of IDECO, express the opinion that the situation calls for a thoroughstudy of the possibilities for introducing new forms of tariffs. Nothinghas been done however in this respect, except that IDECO introduced a specialoff-peak rate for water pumping at 8 fils/kWh, as recommended by the consult-ants, in order to attract the considerable NRA demand. With this IDECO expectsto increase its load factor from the present 35% to some 55%.

7. No provision has been made in the Electricity laws for a fuelprice surcharge adjustment to be passed on to consumers through the retailtariffs. In view of internationally rising fuel prices the implementation ofa fuel price surcharge appears appropriate.

ANNEX 9Page 1 of 2 pages

JORDAN

JORDAN ELECTRICITY AUTHORITY

Description of the Project

The proposed new thermal electric power station will be constructedat Zarqa which is some 42 km. northeast of Amman. It will be located adjacentto and just east of the Jordan Refinery in an area which is presently unusedfor any purpose. This site was chosen because of the existing access facil-ities, an adequate supply of water, proximity to the source of fuel with conse-quent savings in cost, and its remoteness from urban areas. The capacity ofthe power station will be 66 MW initially, but site facilities are adequatefor the ultimate development of a power station of several hundred megawatts.

The generating plant will consist of two standard 33 MW turbo-alternator sets and boilers, together with all ancilliary equipment, switch-gear, etc. The turbines will be designed to operate with steam conditionsof 850 psi and 900°F. The generators will operate at 3,000 rpm. Each willbe hydrogen cooled and rated at 38,825 kVA; 33,000 kW at 0.85 power factorand will generate at 13,800 volts, 50 cycles, 3 phase.

The boilers will be of the outdoor multi-drum pressurized type withprovision of combustion air by forced draft fans. They will be designed toburn local residual fuel oil and will be rated at 320,000 lbs. per hour at900F with final feed water temperature of 395°F. The firing isle of theboilers will be incorporated in the building housing the turbo generators andauxiliary equipment. This will be an economically designed building ofsteel frame construction with provision also for housing the low voltage switch-gear, the water treatment plant, offices and other ancilliary facilities.

Fuel will be supplied by pipeline to daily service tanks from theadjacent oil refinery. Water for boiler-make up, cooling and other purposeswill be available from wells on the site. Eight wells have been drilled ofwhich five are productive with a total capacity of 1,800 gallons per minute.In order to conserve water a multi-cell mechanical draft, closed circuit, drytype cooling tower will be installed to serve both units.

Each generator will be connected to a 13.8/132-kV step-up trans-former and the 132-kV substation will be an outdoor type structure with openbuses. All the net power generated will be fed into JEPCO's distributionsystem network via a double circuit 132-kV transmission line which is notpart of the Project.

Although, except for a mechanical precipitator of 95% efficiency,no means of cleaning exhaust gases would be installed, sufficient space willbe provided to install such facilities if they are necessary in the future.

ANNEX 9Page 2 of 2 pages

The gasturbine will be of the standard industrial packaged typerated about 15 MW at sea level (12-13 MW at the Amman/Zarqa elevation). Acubicle type substation will be provided to connect the unit for about 1 1/2years to the 33-kV subtransmission system (either near JEPCO's Marqa stationor near the refinery at Zarqa) until the Zarqa plant is commissioned. Thenthe gasturbine unit will be permanently installed adjacent to this station.

JOPDAN

Hussein Thermal Power ProjectJordan Electricity Authority

ProJect=Cost EstimateJ1 = S3.i

Local Foreign Total Local Foreign Total

A Steam-Electric Plant1. CIvil Works

Land and access roads 160 - 160 496 - 496Btuildings and foundations 330 290 620 1,023 899 1,922Wells, water and oil piping,yard facilities, labora-tory and work shop equip-ment 30 100 90 93 496 589

520 T5 970 1,612 1,395 3,007

2. Electro-Mechanical WorksBoiler plant 260 1,970 2,930 806 6,107 6,913TI,rbine-generating plant 50 1,100 1,150 155 3,410 3,565Pry condensers 70 610 680 217 1,891 9,108Electrical plant 40 550 590 124 1,705 1,829Spares - 120 120 - 372 372

420 4,350 ,770 302 13,48 14,7b7

Total A 0 4,oO 5,740 1 4o 17,794

B Gas Turbine PlantGas turbine including sub-station 100 680 780 310 2,108 2,418

C Engineering and Administration 60 350 410 185 1,085 1,270

D Training - 40 40 - 124 124

E StudiesManagement study and tariffstudy 20 50 70 62 155 217

Total B-E 180 1,120 1,300 557 3,472 4,o09

Suibtotal Direct Cost (A-E) 1,1 20 57,00 3,471 21,823

F ContingenciesPhysical15% local cost 6% foreign cost 150 350 500 463 1,087 1,550Price10% local cost 5% foreign cost 110 310 420 341 961 1 302subtotal contingencies (F) 2760 2, 920 H02 2,M l

Project Cost 1,320 6,580 7,960 4,275 20,400 24,675

April 16, 1973

ANMX 11JORDAN

Hussein Thermal Power Project

Jordan Electricity AuthorityThermal Power Project

Schedule oF Estimated Disbursements

DisbursementsTotal Goods and Services Kuwait Fund Loan IDA Credit

TDA Fiscal Year and Cumulative % Cumulative % Cumulative %Quarter Undisbursed Undisbursed Undisbursed

1972/73 -------------------- us $1,000 Equivalent ---------------------------March 31, 1973June 30, 1973 1,800 91 900 9J (9001") -

1973/1974September 30, 1973 2,200 89 1,100 89 1,100 8YDecember 31, 1973 2,500 88 1,250 88 1,250 8March 31, 1974 2,700 87 1,350 87 1,550 8June 30, 1974 8,200 79 4,100 79 4,100 79

1974/1975September 30, 1974 8,500 58 4 ,250 58 4,250 58December 31, 1974 11,000 46 5,500 46 5,500 46March 31, 1975 13,300 35 6,650 35 6,650 35June 30, 1975 15,200 25 7,600 25 7,600 25

1975/1976,eptember 30, 1975 15,400 25 7,700 25 7,700 29December 31, 1975 16,600 19 8,300 19 8,300 1gMarch 31, 1976 18,500 9 9,250 9 9,250 9Juine 30, 1976 18,600 9 9,300 9 9,300 9

1976/1977>,fptiember 30, 1976 18,700 8 9,350 8 9,350 8December 31, 1976 18,800 8 9,400 8 9,400 8March 31, 1977 20,400 - 10,200 - 10,200 -June 30, 1977

/ Kuwait Fund temnnorary advance to be reimbursed by IDA after credit effectiveness.

April 16, 1973

JOIIDAN

Hussein Thermal Power Project

JEA/tPFCO lyste% 7orecasts for Retail Sales, Losses, Generation, Maximum nemand,Available and Firm Capacity

JFPCO To'al :otal JEA JFPRO System System JEA Bulk System Reserve FirmRetail osste. Syster Generation Creneration Maximum Load Sales to Available Capacity CapacitySales Losses Geaneration Demand Factor JEPCC Ca acityGWh 7Mb GWi 2Gh Th C.Whb MY GUh MNW

1973 151 2 n 171 179 41 49.5 53 6 474 178 32 210 3 207 48 50.0 3 65 12 535 201 38 237 12 227 s4 50.0 12 65 12 536 224 50 274 17<, 90 Q3! 63 49.5 265 Lb/ 123 33 907 251 7 308 24s 61 70 90.0 294 118 33 858 282 o4 346 325 1p 77 51.0 327 118 33 859 317 72 3P9 349 4? 91 48.5 368 151 33 118

1980 356 50 43<0 34 103 48.5 412 148 33 115

See Annex 7 for JEPCO's available capacityincluding the 3x6 MW diesel capacityto be commissioned in 1973

2/ JEA's 12 NU Casturbine plant assuned in operation at the end of 1974

/ JEA's 2x33 Mi Steam - electric slation at Garqa assumedin operation in early 1976

I / From 1976 onward JF.FCO's generation will be on b,ehalfand for the account of JEA.

4/ Irbid assumed connected to the system in early 1978, whenalso the third 33 Mi unit is assumed inopera'ion in the 7arqa Station.

A!ril 9, 1973

ANNEX 13Page 1 of 10 pages

JORDAN

Jordan Electricity AuthorityHussein Thermal Project

Justification of the Proposed IDA Project

This Annex is in 4 parts

A. Forecast of Sales and Demand

13. Assumptions for Scheduling of Plant and Cost Estimates

C. Definition of Basic Alternative development Schemes 1 and 2

D. Sensitivity and optimization analysis with respect to:

- Growqth in Demand

- Selection of steam-electric unit sizes

- Selection of intermediate type of plant

- Variations in prices and costs

Note

The preparation of this annex predates the February 17, 1973 dollar devalua-tion as well as the recent extraordinary bid price increases for thermal plant.However, the annex has not been amended, because the conclusions are inalf-fected by the change in dollar value from US$2.8 to US$3.1 per unit of localcurrency, because both the foreign and local currency component vary in thesame ratio, while it may be assumed that prices for diesel and steam planthave increased in equal ratio.

Attachments

1. JEPCO: Historic Demand, Ceneration, and Sales per Consumer Category2. Assumptions for Generation and Demand for Scheduling of Plant3. Assumptions for Cost Estimates for Comparison of Alternatives4.1 Cost Streams for Basic (Intermediate Demand Forecast) Steam (Alternative 1)

and Diesel/Steam (Alternative 2) Development Programs.2 Net Cost Streams and Present Values of Basic, Alternative 1 and Alterna-

tive 2/Programs Development.3 Net Cost Streams and Present Values of Low Demand Steam (Alternative

1A) and Diesel/Steam (Alternative 2A) Development Programs.4 Net Cost Streams and Present Values of High Demand Steam (Alternative

1B) and Diesel/Steam (Alternative 2B) Development Programs5. Cost Streams and Present Values of Basic Steam Development with Smaller

Unit Sizes (Alternative 1C)6. Cost Streams and Present Values of Basic Diesel/Steam Development with

Larger Unit Sizes (Alternative 2C)

ANNEX 13Page 2 of 10 pages

7.1 Comparison of Alternative Generation Developments.2 Sensitivity of the Equalizing Discount Rate to Growthrate, and Costs

(for Intermediate Demand Forecast)

A. Forecast of Sales and Demand

1. JEPCO, the company supplying Amman and surroundings will be JEA'ssole customer for several years after commissioning of the Zarqa plant, andis exnected to remain JEA's most important customer (requiring 80% or moreof JEA's output) for the rest of the century. Consequently JEPCO's forecastsales and demand are the most important parameters for JFA's expansion program.

2. Historical data for maximum demand (MW), sales (GWh) for each ofthe consumer categories, and generation (GWh) in JEPCO's system are shown inAttachment 1. In 1962/63 JEPCO merged with the company supplying the Zareaarea and from January 1, 1q63, the above data was consolidated.

3. Two important events have distorted the 1970 supply, and to alesser degree those of 1971: (i) civil disturbances in the later part of1970 virtually brought economic activity to a halt (even the Amman powersupply was completely shut down for some time), and (ii) early in 1970 therefinery in Zarqa, JEPCO's largest consumer (some 13 GWh annually), installedits owm Plant because of increased power requirements and because it wishedto increase reliability of supply.

4. The Amman/Zaroa area has suffered frequent power shortages and inconsequence substantial capacity in captive plant has been installed. A pre-liminary survey by JEA (which has not, however, as yet located many of thesmaller plants) shows that a capacity aggregating about 6.4 MW has been in-stalled for standby services, most of which appear normal for the type of con-sumer (see Annex 1), and that about 30 '11W is in regular service. The cementfactory in consultation with JEA is studying the possibility of interconnect-ing its plant with JEA's system in 1976 so as to make use of public supplyfor its extensions, estimated to require 10-12 MW. Whether or not this companywill decide in favor of JEA supply is not expected to be known for same time.It appears likely that some 10 MW of other captive plant could phase outgradually if adequate and dependable public supply were available. In viewof the difficulties of estimating the gradual return of captive plant topublic supply, such return has not been included specifically in the forecasts.

5. Taking into account the most recent data available up to September1972, JPA's consultants for the prolect, Kuljian of Philadelphia, have re-centlv prepared revised market estimates for the period 1972 through 1990 onthe basis of their May 1971 report: "Eastern North Jordan Electric FacilitiesPower Study". They used statistics on population growth, particularly inthe Amman area, utilization of appliances, average consumption per household,employment (lata, income, and similar indicators, concluding that the growthrate for tle next dacade can be expected to he high. The consultant forecastis shown in the right hand columns of Attachment 2 (Tigh Forecast). Comparedwith 1971 demand would grow an average of about 20% in the next 5 years anduntil 1990 average growth rate would be some 15% in generation and 14% indemand .

ANNEX 13Page 3 of 10 pages

6. Although the consultant's forecast may be achieved by actualdevelopment, the probability of this achievement appears small because politicalstability in the area could be jeopardized again, as it has been in the past,and any prediction that the growthrate of the economy will return to itspre-1970 level would be somewhat premature at this juncture. The growthrateof electricity supplies must be somewhat uncertain and because JEA's financialdevelopment will only start with the operation of the Zarqa station it appearsappropriate to estimate future sales conservatively to avoid any optimisticevaluation of the company's financial viability. As shown in Attachment 1,the growthtrend (calculated by means of the least squares method) for theperiod 1963-1971 has been 11.7% which includes the "bad" year 1970. Usingthe average of this trend and the 1962-1969 trend (i.e. 12.3%), and addingonly those new important customers for whom connections have been committed,the following sales development is obtained:

1971 1972 1973 1974 1975 1976

Trend in Sales 112.9 130 146 164 184 207Steelmill 3 9 9 9Medical University 2.5 5 5Pumping 1 1.5 2 2

112.9 130 150 177 200 223Growthrate % 15 15.5 18 13 11.5Average Growthrate % --------- 14.5 --------------------------

7. In order to assess scnsitivity to growthrate, both a "high" anda "low" growthrate were assumed. The first - the consultant's forecast - hasbeen discussed above in 5. The second, "low" forecast, as shown in the lefthand columns of Attachment 2, is based on the above forecast, assuming thatIDECO would be connected at the end of 1978 or early 1979 and that sales toIDECO would be some 20-25 GWh only, which is about 50% of the estimate of itsconsultants. It is highly probable that this conservative estimate of IDECO'ssales will be exceeded. The overall growthrate would reduce to some 11-11.5%by 1990. This low forecast shows an average growth rate of 13% in generationand 12.5% in demand.

8. In view of the uncertainties in Jordan a reasonable choice for aforecast of generation and demand to be used for basic scheduling of plantand for sensitivity calculations, would lie midway (i.e. at 14%) between thelow and the high forecast provided this does not lead to a forecast exceedingpast trends, taking into account (a) the "background" growth of industry,i,e. the growth trend excluding supplies to the refinery and (b) interpolatingfor the "bad" year 1970. In Annex 3 this trend is shown to be at least 15%if 1970 is ommitted from consideration as 18% trend is shown, i.e. above theintermediate growth rate, and the market is expected to develop fairly rapidlyin the future at a sustained high growth rate of some 14%.

9. Maximum demand has not been used to assess trends. JEPCO, in thepast, went through several periods of power shortages and has been suppres-sing voltage accordingly. Sales and generation of energy, of course, have

ANNEX 13Page 4 of 10 pages

been less effected and can be considered more reliable parameters for asses-sing trends than demand. As a consequence of suppressed demand, the loadfactor must have been rather erratic as, indeed, is shown in Attachment 1.

0O. JEPCO's sales are rapidly returning to the normal "background"trend after excluding past supplies to the refinery. In 1971 growth wasstill some 13 GWh below this trend, but the quick recovery is illustratedI- the fact that 1973 sales rate 19.3% compared with 11.7% in 1972. On ashort term basis, the 196911970 trend of some 14.5%, after discarding theeffects of the disturbances, is clearly continuing.

B. Assumptions for Scheduling of Plant and Cost Estimates

1. The consultants, on the basis of their forecast, have compared an"all-diesel" development with an "all-steam" development, showing the all-steam development to be justified for discount rates up to at least 15%.Sensitivity to a lower forecast was, however, not investigated and thehypothetical installation of hundreds of 1MW's in diesel plant is clearlyimpossible for practical engineering reasons. In the present study, theinstallation of new diesel plant (including 18 MW to be commissioned in 1973)is assumed to be restricted to 100 MW then to be followed by steam. Thisalternative is designated as "Diesel/Steam" development, except for inter-mediate capacity which ma- comprise either diesel or gasturbine plant.

2. To replace the diesels in Alternative 2 by gas turbines would notbe a practical alternative, At the assumed fuel oil price (industrial dieseloil) of JD 9/ton (US$2,520/ton) and annual operation of 5,000 hours or more,a comparison has shown that cost of operating gas turbine plant would behigher than cost of operating diesel plant (i.e. the equalizing discount ratesdiscussed below would increase, favoring the steam development still more).in fact, it has been shown that capital cost per effective kW of gas turbineplant should at least by US$100 below the capital cost per kW of diesel plantin order to reach similar equalizing discount rates. This is mainly due tothe fact the A'mnan/Zarqa elevation requires gas turbine to be derated by about20%, compared with a maximum of 5% for diesel plant.

Available Capacities

3. Annex 4 shows JEPCO's power stations site rating and available(derated) capacities for each unit, retirements and total available capacityln each year except for the three 6 MW units, presently being installed. Itis assumed that the existing diesels in JEPCO's Marqa station cannot bereconditioned in any substantial degree at reasonable cost. The station'scooling system, using well water and heat exchangers, would have to becompletely redesigned and replaced by radiator cooling to avoid scaling.Several diesels would have to be practically rebuilt to bring them up to siterated capacity, (if indeed this could be done at all - two of them, for in-stance, have piston seizure above 75% load), or would have to be repositionedon their foundations, which have cracked or deteriorated under the bedplates.

ANNEX 13Page 5 of 10 pages

Any attempted reconditioning would almost certainly cause a long period ofload repression because reserve capacity in the 2 years prior to the commis-sioning of the Zarqa station does not exceed the larges unit (G MW). Theestimated cost of reconditioning would be in the order of US$1 million, whichwould be about the same as the cost of replacing with new plant the estimated5 MW gain in capacity resulting from reconditioning.

Assumptions for Cost Estimates

4. The relevant assumptions are shown in Attachment 3.

C. Definition of Basic Alternative DevelopmentSchemes 1 & 2

1. Two basic alternatives were compared first

Alternative 1: All-steam development with 33 MW initial unit size

Alternative 2: Diesel/steam development with 10 MW diesel unit sizeand 33 MW initial steam unit size.

2. Attachment 4 page 1 shows, for both alternatives, plant to 'le com-missioned in the relevant years to meet requirements of demand and generation,taking into account the phasing out of JEPCO's old plant (as shown in Annex 4)and subsequent retirement of the newer diesels at the end of their 15-yeareconomic life. Annual capital expenditures, fuel cost and operating cost,based on the assumptions set forth in Attachment 3, are shown separately fordiesel and for steam for purposes of a sensitivity analyses. In view of itscomplexity, the analysis has been simplified by using "net values". Attach-ment 4 page 2 shows these net values, as well as the net present values cal-culated for discount rates ranging from 9-19%. Residual values were takeninto account by multiplying each annual capital expenditure by a discountfactor representing the unamortized portion of that expenditure in the yearthe streams are cut off. It should be noted that a negative sign indicatesthat Alternative 1 has lower costs than Alternative 2.

3. Attachment 4 page 2 demonstrates that the net present values of fuelcosts at the various discount rates are small compared with the overall netpresent values, which means that for a variation in unit size (for optimizationof the development), the impact of increased or decreased efficiency willalso be small and can be discarded.

4. Up to an equalizing discount rate of 13.6% the steam developmentwould be more economic than a steam/diesel development, at the intermediate(and most likely) forecast. Because the opportunity cost of capital in Jordanmay be in the same order (12-15%) and the equalizing discount rate is highlysensitive to actual growthrate (see Dl below), it could be argued the projectmight seem to be marginal. This, of course, is only to be expected, becausethe project wi]l add 7 NW (including the gasturbine) to the 1975 capacity of

ANNEX 13Page 6 of 10 pages

some 65 IV (derated in fact to only some 55 MW) when maximum demand willbe in the order of 60 NW. However, at any time in the foreseeable future,the ad,lition of steam plant instead of further diesel plant must also seemmarginal (see D 5 below) for the following reasons: (i) The equalizing dis-count rates are insensitive to the timing of actual change-over to steam(except in the case of a sustained high growthrate) because the steam capacityto be installed would always have to be of the same order as the total dieselcapacity already available, since steam plant once commissioned should eitheroperate at its full capacity or not at all. A combination of diesel andsteam would not solve this basic problem of lumpiness (and consequently ofreserve requirement); (ii) the bulk of the existing diesel capacity becomesobsolete the moment steam plant is commissioned, since only about 50% of thecapacity is initially required as a reserve for the steam plant. For peakingpurposes only about half of this 50% would appear to be ample.

5. The Government decision to move ahead with the conversion to steamis based on the following practical and financial considerations; (i) Theever increasing difficulties of operating a growing number of diesel units,when Jordanian performance in this respect has been bad in the past due mainlyto the lack of highly skilled technicians which will become worse as the num-ber required increases in geometric progression. (ii) the additional coststhat would be incurred in the period 1978-1988, if further diesel capacity upto 100 MW were to be installed; this additional cost arising out of thechanged generation development pattern would be in the order of US$15 million(see Attachment 4 page 1); because the whole country may be interconnectedaround 1980, it appears highly unlikely that any market could be found todispose of the surplus large diesels at a realistic price; and (iii) the needto have a more reliable source of public electrical supply to stop the waste-ful installation of private plants in industry.

D. Sensitivity and Optimization Analysis

Growth in Demand

1. The sensitivity of the equalizing discount rate (i.e. the presentvalues of total costs) to growth in demand can only be assessed by schedulingplant in accordance with assumed changes in growth rates. Two additionalcomputations have been made, the first for the low demand forecast (Alterna-tives 1A and 2A) and the second for the high demand forecast (Alternative 1Band 2B), as shown in Attachment 4 page 3 and page 4 (for netted values).The equalizing discount rates, up to which the steam development would be theleast cost alternative are: 9.1% for the low demand forecast, 15.3% for thehigh demand forecast, as compared with 13.6% for the intermediate demand fore-cast (see C 4). Attachment 7 page 1 shows the relevant net present valuegraphs. It appears justified to assume the high probability of the equalizingdiscount rate to exceed 13.5% because (a) the benefits to the economy of in-creased service quality are not included in the calculations since they areunquantifiable in Jordan, (a) the probability of sustaining the "intermediate"growth rate is high (see 8 above), and (c) the equalizing discount rate in-creases more than linear with an increase in growth rate.

ANNEX 13Page 7 of 10 pages

Selection of Steam-Electric Unit Size

2. The following procedure was applied to select the optimum steamunit size. Capital cost streams were calculated of the alternative smallerand larger unit sizes necessary to meet the intermediate forecast demand.These streams replaced the original capital costs streams in Alternative 1 orAlternative 2 respectively and the new equalizing discount rates were calcula-ted. This assumes that operating costs, including fuel, do not vary. Theresulting error will be negligable because the sensitivity to variations inefficiency is small as concluded in C 3 above, and 0 & M cost are basicallythe same.

3. For Alternative 1 a sequence of 33, 66 and 100 MW had been assumed,and Alternative 1C was set up by assuming a sequence of 25, 50, 75 and 125 1W.Alternative 2 was not varied (obviously a 25 MW initial steam set would betoo small for this alternative, with demand increasing some 15 MW annuallyby the end of the decade). Attachment 5 shows the relevant cost streams andin order to simplify computations, the net present value of total costs wascalculated for a discount rate of 13% only. Because total net present valueincreases considerably compared with Alternative 1/Alternative 2, the equaliz-ing discount rate decreases accordingly, and the smaller unit size should berejected.

4. Attachment 6 shows a further study, in which the 33, 66 and 100 NWsequence in the diesel/steam development is replaced by the sequence 50, 100and 200 MW to form Alternative 2C. The equalizing discount rate is 13.5%i.e. practically equal to the equalizing discount rate of Alternative 1/Alter-native 2. A further effort was made to investigate whether this developmentcould be optimized slightly be removing the 10 MI diesel unit scheduled foroperation in 1989 (or conceivably one more in 1988). This advances thesecond 50 MW unit and other future units by one year. For this reason Alter-native 2D was set up and compared with Alternative 1 (all steam development)and computed. The results, expressed in net present values, are shown in anote on Attachment 6. The equalizing discount rate decreases from 13.5% forAlternative 1/Alternative 2C to 13.1% for Alternative 1/Alternative 2D,slightly below the 13.6% equalizing discount rate shown for Alternative 1/Alternative 2. This is well within the range of uncertainties and for thisreason, economically, Alternative 2, 2C and 2D should be considered to bepractically equivalent.

5. Of course, should it be decided to go ahead with a diesel/steamdevelopment, a future study should refine the calculation in the light of thethen prevailing conditions, but on the basis of the present study it is con-cluded with regard to the unit size that: For an all-steam development theinitial plant should be of a capacity of 2 x 33 MW; this is about equal orslightly below the total capacity of diesel plant available at the time ofcommissioning of the steam plant. Similarly, for a diesel/steam development,the initial steam plant (following the diesels) should be of a capacity ofabout 2 x 50 MW; again about equal to the total capacity in diesel plantavailable at that time.

6. Because the alternative developments are some 100 NW in dieselcapacity "apart" and a change in this capacity (one 10 MW diesel was already

ANNEX 13Page 8 of 10 pages

removed and a second may conceivably also be removed) does not appear tomodify the equalizing discount rate in any appreciable amount, the conclusionmay be drawn that since a change over to steam plant is necessary at somefuture time, then:

- at whatever time in the future it is decided to change fromdiesel generation to steam generation, steam capacity to beinstalled should be about equal to the diesel capacity availableat the time of conversion;

- any such development can be expected to appear relativelymarginal because this is inherent in a complete technologicalchange, and

- delay in the changeover to steam will cause higher financialrequirements and will make more diesel capacity obsolete atthe time of the change;

- therefore it is prudent to make the change to steam plant with-out further delay.

Selection of intermediate type of plant

7. A comparison of alternative gasturbine and diesel plant is un-necessary. In the case of Jordan the gasturbine plant having the lowestcapital cost, is the least cost alternative any discount rate because tnisplant is not expected, except in 1974/75, to generate any appreciable amountof energy for several years. In fact, any intermediate plant, whether dieselor gasturbMne, will be redundant after steam plant is commissioned, becausesufficiont capacity is at present available to provide full reserve for oneof the Ziarqa steam units as well as peaking service. The gasturbine should,therefote, be justified by assessing the impact on the economy of not instal-ling it.

8. Because the total longterm benefits foregone by the economy at-tributaK1e to not installing such plant cannot be quantified from the dataavailable in Jordan, a practical short term cost/benefit ratio has beencalculated. The main consequence of not installing interim plant would bethat for about 2 years up to 6 MW of demand would have to be suppressed (10%of demand in 1975) if no reserve capacity is allowed, and up to 12 MW (20% ofdemand) if reserve capacity is taken into account. In view of the conditionof existing diesel plant, repeated suppression of demand of up to 12 MW ishighly probable. Any unforseen delays in the completion of the Zarqa plantwould further aggrevate the situation.

9. The following short term consequences are quantifiable:

a) By 1975 the refinery at Zarqa expects either to install athird unit (a steam-electric unit with a capacity of at least

ANNEX 13Page 9 of 10 pages

2.4 MW), or to increase its supply from JEPCO. It is understoodthat, if a gasturbine in Zarqa is not installed, the refinerywill erect its own plant at an estimated cost of about US$1million.

b) As soon as the Zarqa plant is commissioned, JEPCO intends tosell its older diesels to other power entities. The marketfor such plant appears ample, for instance it is highly likelythat IDECO will require further generating plant by 1976/77.Purchasing this plant from JEPCO will save those entitiesabout US$200 - per kW in imported plant cost. It is difficultto estimate the savings, but assuming that about 6 IMW in dieselcapacity (50% of the gasturbine capacity) can be bought secondhand from JEPCO, the buyers are likely to save not less thanabout US$0.5 million. Reconditioning costs are reflected inthis difference.

c) Without doubt, under conditions of continued suppression ofdemand and reluctance to connect new customers, captive plantcapacity can be expected to increase by several megawatts ata minimum cost of US$0.5 million,

d) Suppression of demand will affect JEPCO's revenue adversely.Net revenue per klWh for this company is about 8.6 fils/kWh(US6 2.4/kWh) and assuming that suppression would amount onlyto 2% in generation during 1974/75, or about 8 CWh, the netrevenue forgone would total about US$200,000.

e) The minimum total financial consequences as outlined above,aggregates US$2.2 million, which is 10% in excess of the cost ofthe gasturbine plant of US$2 million. The total benefit tothe economy, could it be quantified, is likely to be consider-ably higher. Thus the gas turbine is the least cost alterna-tive means of meeting the intermediate power requirements.

Variations in Prices and Costs

10. Attachment 7 page 2 gives a graphical representation of the sensi-tivity of the equalizing discount rate to growth rate, and to all cost factorsfor the intermediate demand forecasts, which can be summarized as follows:

a) Sensitivity to growth rate is high, (see D1) but the equali-zing discount rate increases somewhat more than linear with anincrease in growth rate.

b) Although the equalizing discount rate is rather sensitive toeither variations in diesel or in steam plant construction

ANNEX 13Page 10 of 10 pages

costs, sensitivity to overall changes in construction cost forgenerating plant (say up to 10-15%) is small.

c) The equalizing discount rate is rather sensitive to the as-sumptions made for either diesel or steam efficiencies. Becausethe basic assumptions made for both diesel and steam were aboutequally conservative, sensitivity to variations in efficienciesshould be measured more or less simultaneously for diesel andsteam. This would be equivalent to changing fuel oil pricesand from the relevant graph (which assumes increases rangingfrom 10-50%) and it is concluded that the sensitivity of theequalizing discount rate to a change in overall efficiency,or fuel oil prices, is practically nil.

d) The equalizing discount rate is not very sensitive to changesin diesel operating and maintenance costs (excluding fuel) andeven less so for steam. The sensitivity to changes in the over-all 0 & M is small, but this has little significance becauseeither a steam or diesel development will be selected; in thisrespect steam shows a preference due to its lower sensitivity.

JORDAN

Zaroa Thermal Power Project

Jordanian EL ectric Power CompanyHistoric Demand, Generation, and Sales per Consinier Category

GenerationComnmercial

Demand Domestic and .Government Industrial Hospitals Broadcasting Streetlighting Total LoadSales Sales Sales Schools, etc. Sales Sales Sales Factor

MS - G GWh GWh GWh GWh G GWh GWh %

1963 15.0 57.4 11.6 7.7 23.5 2.8 3.4 1.1 50.1 43.54 14.6 66.o 15.0 8.9 25.6 3.2 3.5 1.2 57.4 51.55 15.7 72.8 17.8 9.5 27.8 3.2 3.7 1.3 63.3 53.06 17.9 81.7 21.1 10.2 30.4 3.4 3.9 1.9 70.9 52.07 20.4 91.6 23.7 11.4 33.0 4.2 3.4 2.3 78.0 51.58 22.9 104.4 28.3 13.7 35.1 4.8 3.5 2.8 88.2 52.09 27.8 122.7 33.9 16.7 39.4 5.7 3.2 3.3 102.2 50.0

1970 29.8 119.9 34.o 17.0 34.6 9.1 3.5 2.9 101.1 46.o1 31.1 133.8 40.2 19.9 31.9 13.2 3.9 3.8 112.9 49.02 35.2 / 979

'rowthtrend f

1963-1971 lo.8 14.i 12.7 2.5 34.7 1.3 14.1 12.31963-1969 13.0 18.5 15.5 9.2 12.2 -1.2 20.5 13.0

/ September 1972Period January - September, 1972

3 ~4

January 31, 1973

JORDAN

Zarqa Thermal Power ProjectJEA/JErCO Interconnected System

Assumptions for Forecast Generation and Demandfor Scheduling of Plant

Low Forecast High Forecast

Generation Growthrate Loadfactor Demand Generation Growthrate Loadfactor Demand

GWh % % MW GWh % % MW1972 154 15.5 49 36 166 21 49 5 38

3 178 17 5 49.5 41 201 19 50 464 209 14 50 48 239 20. 50 555 238 14 50 54 288 51 646 273 11.5 49.5 62 336 16.5 51 757 307 12.5 50 69 401 19.5 52 888 345 181 51 76 469 18 52 1039 407 12 51.5 91 555 18 53 103

1980 455 13 48.5 103 638 15 53 1371 515 12.5 51.5 114 740 13 54 1572 580 10.5 52 127 840 14 54 1773 640 n 52 141 950 12 55 1984 710 12 52 156 1060 12 55 2205 800 1.5 52.5 174 1190 12 56 2426 890 10 52.5 193 1290 10 56 2647 980 12 52.5 214 1430 9105 57 2878 1100 53 237 15612 57 3139 1220 11 53 263 1700 57 341

1990 1360 11.5 292 1866 9 57 372 14

Increasingto 5803 I

by the yearAverage 2000Growthrate (%) 13 13 15 14

1/ Irbid connected to the systems.

January 31, 1973

ANNEX 13ATTACHMENT 3Page j1otW 4pages

JORDAN

Jordan Electricity AuthorityAssumptions for Cost Estimates for

Comparison of Alternatives

Assumptions for Capital Costs

The following assumptions were made for capital cost of plant per kW:

Diesel

1. 6 MW, first unit $200; subsequent units $1832. 10 MW, first unit $225; subsequent units $195

Steam

3. 2 x 25 MW, $275; subsequent units $2954. 2 x 33 MW, $235; subsequent units $2555. 2 x 50 MI, $195; subsequent units $2106. 66 MW, $195 (added to existing station)7. 75 MI, $170 (added to existing station)S. 100 IW, $160 (added to existing station)9. 125 MW, $155 (added to existing station)10. 150 MW, $150 (added to existing station)11. 200 MW, $140 (added to existing station)

Casturbine

12. 15 MW, $130 (site rating 12-13 MW)

The above prices have been based on (i) Kuljian information, obtained fromrepresentative manufacturers, (ii) Kuljian's estimate for 33 MW steam plant,(iii) recent bids for Guatemala for 50 MW and 66 MW steam plant, (iv) con-tract prices for JPECO's 3 x 6 MW diesel plant, (v) recent bids for dieselplant in Honduras, (vi) consultant (Preece, Cardew and Rider) estimates for10 IM diesel units.

Assumption for Fuel Costs

4. Prices in Jordan are the following:

ANNEX 13 ,ATTACHMENT BPage 2 of 4 pages

Residual oil

Ex-refinery Zarqa6.5 JD/metric ton = $18.20/t

or 106BTU = 45.9 USi

Base Price (delivered) for the Whole of the Country

7.4 JD/metric ton = $20.72/tor 106BTU = 52.2 USO

Price for JEPCO (Amman)7.0 JD/metric ton = $19.60/t

or 106BTU = 49.4 US4

No taxes or duties are levied for residual oil: for JEPCO the priceincludes transportation.

Diesel oil

The excise tax included in the prices is

1.5 fils/liter = 0.42 USE/liter

Because the tax is small and only a limited amount of diesel fuel isrequired for starting diesels normally operating on residual oil, thetax was not removed for calculating fuel cost.

Ex-refinery Zarga

16.16 JD/metric ton = $45.25/tor 106BTU = 105 USI

Base Price (delivered) for the Whole of the Country

17.6 JD/metric ton = 49.28/tor 106BTU = 114 US4

Price for JEPCO (Amman)

16.4 JD/metric ton = $45.92/tor 106BTU = 107 US4

This price includes transportation.

Future Price for JEA

Assuming that industrial diesel oil will be made available:

9 JD/metric ton = $25.20/t

ANNEX 13ATTACHMIENT 3Page 3 of 4 pages

Fuel Costs for new Diesel PlantMarga

JD2100/GWh = $5900/GWh (10,100BTU including diesel oil for starting)

Zarqa

JD1900/GWh = $5300/GIWh (10,100 BTU, ditto)

Steam Plant (at Zarga)

Unit size JD/GWH US$/GWh AverageMW BTU/kWh

25 2,300 6,430 14,00033 2,230 5,960 13,00050 2,000 5,600 12,20066 1,900 5,330 11,600100 1,800 5,040 11,000200 1,700 4,760 10,500

Gasturbine (at Zarga)

JD3,390/GWh = $9,500/GWh (16,000 BTU/kWh, 60% load factor)

Assumptions for Spares and Special Maintenance

Diesel Plant

For the period 1973-1975 the appraisal estimates are used, reflectingJEPCO's historic costs. From 1976 onward: JD420/GWh - US$1,175/GWh.

Steam Plant

For the period 1976-1980 the appraisal estimates are used.

For the period beyond 198015% of fuel costs, which included salary and wages (see below).

Assumption for Salaries and Wages

Diesel Plant

For the period 1972-1980 JEPCO's records were used to assess manpowerrequirements and salaries and wages.

Beyond 1980:JD720/GWh = $2000/GEh

ANNEX 13ATTACHMENT 3Page 4 of 4 pages

However, because the bulk of the diesel plant would rapidly becomeobsolete after commissioning of steam plant staff reductions are assumedcommensurate with the phasing out and retirement of diesel plant.

Steam Plant

For the period through 1980 the appraisal estimates were used (based onforecast staffing of the Zarqa plant and JEA's renumeration schedules),

Beyond 1980:

15% of fuel cost, including spares and special maintenance byforeign contractors; a comparison with the consultant estimates(of 0.375 fils/kWh - 1 US mil/kWh) shows this 0 & M cost tobe about equivalent.

Assumptions for Escalation and Shadow Pricing

All prices are assumed at the 1972 price levels, without escalationand the then ruling rate of exchange (1JD = 2.8 US$) was assumed toreflect the cost of foreign exchange in cost of local money. Fuelprices appear rather low in comparison with the present internationalprices and for this reason are assumed to reflect actual cost inlocal money. Because the number of unskilled labor employed in theZarqa station will be small, no shadow pricing of salaries and wageswas applied.

ZMrNa Th.ronJ Power Project

Jordan Eleclticity A thoerityComparison of 1.ic Gtea. and Plieel/stecm Alternatives

Cost St.reamo

~--------------------------------------Alternative 1, Pasic 9team Development ------------------------------- _------------------ - Aleernative , Dleel/tem eeopet -----

MAixmlr. Ge.eration Plant -- Capital Expeodit-re --__-_F-uel Cost------ ------- 0 & M Coot ----- Total PInt -Capital Expendituree-- - et Coots-(1 - P M wto 0

Year bemoz0 t *h Co,2Mi-ooed Diesel 2te4 Tot4l Diesel Stem Tal ieel ea Total toots C omored lissl Otewa lqtol Ojenel S eam loinS Pinoel ''ewe 0o r

- - MU ______ ______,________________________IID71 __--___ _---__-______________________________ M-------------------1----------------3

-------------------- _____________-_-__-_-___

1972 37 i(o 1,120 1,120 46 I60 1,680 1,120 1,120 S60 S6o 1,rO

3 43 10 3x6

1,180 1,180 630 630 1,810 3 o 6;/ I,l80 1,180 230 f30 1 213

4 '2 22S 200 2,300 2,500 1,380 1,380 690 690 4,570 630 630 1,380 1,390 690 690 00

5 59 2K.3,i/ 2 a fi 1,800 6,200 8,000 1,630 1,630 720 40 760 10,390 30 10 5,350 5,350 1,850 1,850 870 8'o 8,0-3

6 63 335 2 a 33 300 6,650 6,950 600 1,140 1,740 590 110 '700 9,390 2 x 10 4,020 - 4,020 1,560 1,560 990 990 t',S70

78 35s 46850 46850 420 1,640 2,060 320 270 590 7,500 10 2,200 1,250 3,450 1,800 1,800 1,130 30 ' 0

e o 90 435 33 4,150 3,150 240 2,140 2,380 300 330 630 7,160 10 2,000 4,600 6,600 2,070 2,070 1,2S0 1'233 0 25 0

9 105 4'1 5,9-0 5,950 270 2,560 2,830 330 400 730 9,510 33 + 10 1,800 6,250 8,050 1,670 890 2,360 1,0'0 100 1,177 11 t

1980 120 545 33 7,300 7,500 30 3,220 3,250 330 480 810 11 560 33 200 5,050 5,250 950 2,150 3,200 913 150 l 0<' 5 '10

1 135 625 6f 6,700 6,700 30 3,610 3,640 250 540 '90 11,130 5,500 5,100 1,030 2,560 3,593 3RO ?70 1,O 200 ' rr

2 152 710 5,70t 5,700 30 3,920 3,3o0 ?00 530 730 10,1,40 33 6,230 6,0 900 3,270 4,1:o oOO 340 ,?, 1 1,

3 170 795 (6 4,100 4,102 3(1 no 473 x,30) 1';0 (.° 179 3},193 3i 5,500 5,500 1,090 3,S70 1,.00 3 33 IL 1

4 1o' 33s 1,100 I 0 4,77 3 100 "l0 'l o10 6,710 ,,IO00 5,50o 05 4,170 S,1'0 '4 33 1 41 4 5 i)

5 2,-2 3f 5 1,1()0 1 ,Yo 30 5,3')0 3,,4:u1 30 110O 11(0 7,900 66 7,800 5,3 4o 7'10 4,970 5,740 ('03 753

f6. 1,0,0 4,(400 4,(00 30 %,3(0 3,330 'O 000 '140 11,530 5,700 3,300 460 3,710 6,130 S10 303 3,11 1'

7 220 1, 05 66 / ,00 3 ,500 30 f3,390 0,`50 50 10o 1,030 14,000 66 3,8 803,600 50 7,100 (.40 470 000 11,4 3 i. 2

8 27S 7,500 7,500 7, 70 7,Z70 1,093 1,030 13,800 8,100 8,100 50 7,300 7,3S0 4?0 1,120 31'7 2 *1'

9 3.0 I,30O 100 8,000 8,000 7,810 7,3310 1,170 1,170 1f,9410 66 12,900 1,00 'I0 so 070 a,1O 170 1,2lo 1,3 -, I)

1397 733 3,11fo0 8,o 3,000 8,480 8,48)0 ]1.20 1,210 17,750 100 13,100 13,100 S0 8,580 81,30 270 1.:" ),!

I ,00 130 8,000 8,000 9,330 9,130 1,1,00 1,40n 18,730 100 9,(110 9 9,600 33 ),4,0 3, 1,0 709 1 L )01 ,

2 03 1,30o H8,000 33,000 10,740 111,'3I,0 N, 30 1,5401) 19,801 8,000 3,0ooo 2 10,320 10.310 110 iI''n 1.0 0.)

3 430 2,"10 100 5,60)) 5,10(1 11, 34 1I, 14.) 1,700 1, 1( 3 I ,40 100 3,01A0 i, (O) 11,340 11, 3i40 1,il 1, "0) I .i

4 500 2, 43 1 ,40(3 1,0)) 12,2'30 ]1,30 1 8Ito I,883) 13,010 JO/ ,,0 VI C, 2(00 1',3530 17,3530 1,'0 1,-"; e, 9

5 5"2 2,7'10 2Poo!/ _ 117 03 1,00 I0

I' la-t is co=mo7 to boFt alterratie developments and has not been included in the capital expenditures.

2/ To reflect reduced station requirealnta appropriate red-ction in generation, up to 4 wan allowed for the diesel/stem alternative for the period 1975 throu-h 1980

JAnuary 31, 1973

JOSSAlI

Zarga Th, rrrl Fo;ur Pro.;.!ct

Jordan Electricity AuthorityComparison of Basic Steam and Diesel/Stean Alternatives

Net Cost Streans and Present ValuesUJS$103

Residual Values ---- Capital Expenditures--- --------- Fuel'Costs --- ------- 0 & M Costs--- --- -------- Total Costs-Diesel Steam Total Diesel Steam Total Diesel Steam . Total Diesel Steal Total Diesel Steam Totul

1974 - 430 2,300 1,870 0 0 0 0 0 0 - 430 2,300 l5 -3,550 6,200 2,650 _ 220 0 -220 -120 40 - 80 -3,890 6,240 2, 1

6 -3,720 6 650 2 930 _ 960 1,140 180 -400 110 -290 -5,080 7,900 2,5207 -2.200 36,650 :1,380 1,640 260 _810 270 -540 -4,390 5,510 1,'28 _2,000 - 450 -2,450 -1,830 2,140 310 -950 330 -620 -4,780 2,020 -2,'509 -1,800 - 300 _2,100 -1,400 1,670 270 _740 300 -440 -3,940 1,670 -2,s-7

1980 - 200 2,450 2,250 - 920 1,070 150 _580 330 -250 -1,700 3,850 2,15701 1,200 1,200 -1,000 1,050 50 -680 270 -410 -1,680 2,520 -4n2 - 550 - 550 - 870 700 -170 -700 250 -45o -1,570 400 -1,1703 .1,400 _1,400 -1,000 700 _300 _780 110 _f70 -1,750 - 590 -2, 3704 -4,400 -4,1409 - 950 600 -350 _620 80 -54o -1,570 -3,7?0 -5,?905 -4,100 -4,100 - 740 420 -320 -570 60 -510 -1,310 -3,f20 _L,-1")6 .1,100 -1,100 _ 450 250 -200 _460 30 -430 - 910 - 820 -1.730

7 700 700 .20 - 90 -110 _420 -10 -430 - 440 6O0 Ir.08 - 600 - 600 _ 50 - 30 - 80 .420 -10 -430 - 470 - 640 -1,1!09 .4,900 -4,900 - 50 - 260 -310 -370 - 40 -410 - 420 -5,200' _s,t:-0

1990 _5,100 -5,100 - 50 - 100 -150 -270 - 20 -290 - 320 -5,220 -_,t401 -1,600 -1,600 - 50 _ 70 -120 _220 - 10 -230 - 270 -1,680 -1,9'02 .90 __ 50_ - 50 _ 80 -130 -170 -170 _ 220 - 80 - 393

-13,900 -1,1400 -15,300

present _Values=s-yurt Pate

9 160 1,860 2,020 -11,222 10,249 1,047 .7,192 7,050 -142 .4,820 1,330 -3,490 -23,074 20,489 -2, S610 150 1,520 1,670 -10,981 10 -i3 1,442 -6,84i 6,751 - 90 -4,529 1,270 -3,259 -22,201 20,294 - 1,90'11 130 1,26O 1, 30 -10,749 11,163 1,804 -6,469 6,415 - 54 -4,264 1,213 -3,051 .21,352 20,051 - 1,30112 120 1,030 1,110o -10,525 11,500 2,125 -6,212 6,202 - 10 -4 021 1,159 -2,862 -20,638 19,891 - 71713 lOo 840 940 -10,309 11,775 2,406 _5,929 5,952 23 -3,798 1,107 -2,691 -19,936 19,6'74 - f2(34 9n r"9 ' 7I` -10,102 11,996 2,(./4 -5,66(5 5,714 49o -3,214 1,062 -2,S32 -19,271 19,462 l-1IS !3 On 660 9,4K0l 12,1/,I .3 -5,4019 5,40 7 -3 ' 1,018 -2,387 -18,61ls 19,2.01I 3 K° k l.o - 4;u: 12.400 3,3147 .11,171 2,o07 '16 -3,0'(0 9'31 -2 1314 -17,1403 114,0:K 1 '+

174 ,o 2-tn 1'0 _ .4,1,11 1:9,2:0zl l,tfJ0 -4,t/ Is,jo 10 -_:'(14 81 -1 ').' -1(.4'' 18,363f 1.1,

Equalizing Di3scoumt Rate 13.1

s.arar '31, 1173

--Vl,,2;

.,~

JO8tDAN

Zargja Tner-mal Power Project

Jordan Electricity AuthorityComparison of Steam Alternative 1 A and Dliesel/Steam Alternative 2 A

for LUw eiMan ForecastNet Cost Streams and Present Values

Us$105

Plant Co=sissioned ---- Capital Expenditures -------- Fuel Costs ---------- 0 & M Costs --------- Total Costs ----Alt. IA Alt-. 2A Diesel Steam Total Diesel Steam Total Diesel Steam Total Diesel Steam Total

19723 3 x6 3 .614 - 1430 2,300 1,870 0 0 0 14o 140 - 1430 2,3140 1,9105 2 x6 3 x10 - 3,350 6,200 2,850 0 0 - 60 110 50 -3,141o 6,310 2,9006 2 x33 10 - 2,120 5,1400 3,280 - 860 1,010 150 - 250 150 - 100 -3,230 6,560 3,3307 10 - 2,000 2,850 850 - 1,220 1,414o 220 - 630 190 -14140 -3,850 14,480 6308 10 - 2,200 1,050 - 1,150 - 1,620 1,920 300 - 750 270 -1480 - 14,570 3,2140 - 1,3309 33 2 x10 - 3,1400 -2,050 - 5,1450 - 1,800 2,150 350 - 900 300 -600 -6,100 1400 -5,700

1960 2 x33 - 400 -1,150 -1,550 -1,190 1,149o 300 - 500 240 -260 - 2,090 58o -1,5101 33 1,750 1,750 - 603 890 210 -1420 230 -190 -1,100 2,870o 1,7702 2,150 2,150 - 810 1,010 200 - 1470 250 - 220 -1,280 3,410 2,1303 66 33 1,650 1,650 - 4140 14140 0 -1400 270 -130 - 8140 2,360 1,52014 1,1450 1,1450 - 580 400 - 180 -1430 260 -170 -1,010 2,110 1,100

5 916 33 - 500 - 500 - 530 180 -350 -1420 20 -1400 950 - 300 -1,2506 -4,400 -14,1400 -480 70 -1410 - 310 0 -310 -790 -4,330 -5,120*

7 U~~~6 -4,100 -14,100 - 420 10 -1410 - 19O - 70 -260 610 -4,160 -14,7708 66 66 -400 - 4oo -110 - 230 - 340 - 120 - 60 -180 -230 -690 -9209 - 600 - 600 210 100 - 110 - 100 - 10 -110 - 310 - 510 - 820

1990 los 66 -2,500 -2,500 - 300 - 300 - 50 - 50 -2,850 -2,8501 100 -1,100 - 1,100 - 360 - 360 - 50 - 50 -1,510 -1,5102 100 -2,400 -2,1400 - 360 - 360 - lo - 60 -2,9203 100 -4,000 -14,000 - 230 - 220 - 50 - 50 14,28014 100 100 - -~• -- Lf2 - 110 -110 - 0 -, 0 -1,710

-13,900 0 -13,900

Present V.aluesDiscouant -Fesld-~1 al~IsRate ~) Diesel Si>eam

7 -i2i1 -1,1414 9,997 1,028 - 7,2146 7, 287 141 - 3,806, 1,1466 - 2',3140 - 22,1466 21,195 -,78 - 1,979 - 11,120 10,572 1,1431 - 6,871 7,003 1-32 - 3,593 1,1405, - 2',188 - 21,5814 20,9959

-1 - 1,591 ~~~~~- 10,R39 11,032 1, 787 - 6,5,23 6,730 27- 3,39 136 - 2,00 2075 20,702 19 - 1,[~~~~~~7 - 10,570 11,396 2,113 - 6,200 6,1469 269 - 3.215 1,291L - 1,9214 - 19,9859 20,14~311 - 1,9-9 ~~~~~-1 19,511 11,690 2,1409 - 5,900 6,219 319 - 3,0l17 1,79 - 1,908 - 19,258 20,213

12 -- io9 10,04 11,897 2,672 - 5,621 5,980 359 - 2,891 1,199 - 1,702 - 18,576 19,905 1,q2 913 - h79 - (,328 12,060 2,910 - 5,361 5,752 392 - 2,747 1,1i42 - 1,605 - 17,935 19,632 1, 97

Equalizing Discount Tate 0.

I

JORDAN

Zar a Thermal Pow-r Proe,ect

Jordan Electricity AuthorityComparison of Steam Alternative I14 and Diesel/S,team Alternative 2 B

for High Demand ForecastNet Costs Streams an4 Present Values

Us$10-

Plant Comnissioned ---- Capital Expenditures---- Fuel Costs ------- --- 0 & C Oosts -------- ------- Total Costs---------Alt. TF' Alt. `RB Diesel I:team Total Diesel Steam Total Diesel Steam Total Diesel Steail Toto l

19723 3 x

63 x6

4 - 630 2,300 1,670 0 0 0 0 40 - 40 - 630 2,340 1,7105 2 x 6 4 x 10 - 4,950 7,450 2,500 120 0 120 - 180 110 - 70 - 5,010 7,560 2,5506 2 x 33 10 - 2,520 6,450 3,930 - 990 1,190 200 - 460 380' - 80 - 3,970 8,020 4,0507 33 2 x 10 - 3,600 - 450 - 4,050 - 1,480 1,790 310 - 930 270 - 660 -6,010 1,610 - 4,4oo8 2 x 33+10 - 2,000 -1,150 - 3,150 - 1,220 1,580 360 - 750 350 - 400 -3,970 780 - 3,1909 33 - 200 1,750 1,550 - 1,300 1,590 290 - 720 180 - 540 - 2,220 3,520 1,300

1930 2,600 2,600 - 690 890 200 - 170 0 - 170 - 860 3,490 2,6301 66 33 750 750 - 670 750 80 - 400 110 - 290 -1,070 1,610 5402 66 33 -3,200 - 3,200 - 390 230 -160 - 370 30 - 340 - 760 -2,940 -3,7003 U -3,900 - 3,900 - 530 130 - 400 - 420 20 - 400 - 950 -3,750 -4,7034 -1,100 - 1,100 - 320 - 60 - 380 - 370 0 - 370 - 690 -1,160 -1,8505 66 f6 0 0 - 490 - 320 - 8o0 - 410 30 - 380 - 890 - 290 -1,1806 700 700 - 220 - 220 - 200 - 20 - 220 - 200 460 2607 1,800 1,800 - 220 - 220 - 100 - 30 - 130 - 100 1,550 1,450a 100. 6f 1 1,500 _,5o 440 - 440 100 - 60 _ 160 - 100 1,000 9009 -1,900 - 1,900 - 430 - 430 - 50 - 60 - 110 - 50 -2,390 - 2,440

1990 100 100 -6,4oo - 6,40oo 400 _ - 400 - 6o 60 - 6,86o - 6,86o1 100 -5,600 - 5,600 - 340 - 340 - 10 - 10 -5,950 - 5, 9 R0-2 100 1()0 _1-O0 - 1600 - 50 - 50 - 70 - 70 -1,720 - 1,720

-13,903 0 -13,900

Present Values1iIsco-rnt -Residual V'amles-TBate (5 ) Mesel S.t eam

11 4 3 - 11,."3 10,Y,1 31" - h,686 11,672 - II, - 3,122 1,002 P -, 10,007 17, 1 )0 - 1,'1l12 4 I I, oo, 10,8)1y )I(s - l4o )l,Y1 1 _ ',0 00 -- ,000 - fl,47 1 1711 1 - 1, 13 3 3 - 1_,814 1 ,o017 913 _ 4,307 4,1131 l1'l - ' 8114 981 - , 006 _ 17,0*7 17,113 _14 3 I¼ - 11,:'9 11, I2,0 1,171 - 1,13h 4 ,312 177 - 2,733 '137 - 1 ,7f - ]7,1,(94 17,01,6 - 441i15 2 )4, - 10,14;0 11,42() 1,401 - 3, 972 4,19(.' 22II - w,100 '10 - I,704 - 17,040 l 1 _ .16 2 qlj 10,-74. 1I , '4; I,1l1 - 3,8108 41,001 263 - ,-, 5 Pt - l,i0 - 1Q,07 l,, 17 2 I - 10nlo Io 11,013 1,70 - 73 3, 9(" 96,fi - ,\i8 - (, i-19 1",/3418 2 *- T,99 ,-1,1i93 1, 9/7 33 , 3320 - I - ,R0 1/1,-32 8

Eqitalizing Piscount Ptte 15.3'

jan_ar:. 31, 13'3

J()DAN

Zarga Thermal Pou"r Project

Jordan Electricity AuthorityCoevarison of Basic Stoam Develoineni with Smaller Unit Sizes (Alternative 1C)

with Basic Diesel/Steam Develomnt (Alternative 2)Cost Streams and Present Values at 1 discount rate)

Plant Co B0ssts e -------- Capital Expenditures (US$103) -iA C Alt. Alternative IC Alternative 27 Netted Capitel Expenditures (US$103)------- f-------- Dieel Steam Diesel1 Sfesese l Ssel Steam Total

19723 3x63/ 3x6

3/

4 200 2,050 630 - 430 2,050 1,6205 2 x 6 3 x 10 1,800 6,600 5,350 -3,550 6,600 3,0506 2 x 25 2 x 10 300 7,810 4,020 - 3,720 7,810 4,090 At discount rate of 13,7 25 10 5,090 2,200 1,250 - 2,200 3,840 1,640 Present value of netted total8 10 3,750 2,000 4,600 - 2,000 - 850 - 2,850 capital expenditures9 25 33 + 10 4,200 2,000 6,250 -1,800 - 2,050 - 3,850 Residual value of netted diesel plant/ 130

1980 33 6,550 1,800 5,050 - 200 1,500 1,300 Residual value of netted steam plant - 9011 50 7,800 200 5,500 2,300 2,3002 50 33 6,300 6,250 50 50 Capital net present vaire 4,4513 33 5,300 5,500 - 200 - 200 Fuel net present valuee- - S544 50 3,600 5,500 - 1,900 - 1,900 0 & M net present valuev/ - 3,0515 66 3,000 5,800 - 2,800 - 2,800 Total net present value of cost for6 7,000 5,700 1,300 1,300 Alternative 1C less Alternative 2 1,3467 75 66 9,600 5,800 3,800 3,800 Ditto Alternative 1 less Alternative 2 - 2628 75 7,700 8,100 - 400 - 400 Present value, increase of Alternative 1C -9 66 6,400 12,900 - 6,500 - 6,500 less Alternative I:

1990 75 100 7,400 13,100 - 5,700 - 5,7001 100 9,100 9, 600 - 500 - 5002 125 9,700 8,000 1,700 1,'7003 100 9,1700 5,400 14,100 4,1004 125 6,800 1,600 5,200 5,?005 4/ 200,46 2004/ 20J

6 2000,30 135,4r50 371700 llG00 0 - 13,00 ),0 5, 110

I'/.ee Attachment 4 pa.e 12/ ee Attac;cent 4 pac,e 2

r(t=Oaouss o I 7-h schemes a-sd therefore excludedC7 Oornsieere Ion=or. to both schelees and therefore excluded;. to compensate for the slight benefit caused by this to Alternative ;, the19)3 pavenl f'or t'.e last 125 !.I,W uinit in Alten-ative 1C was also osemitted.

'~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| |-7

0241012

Zarta Thereral Power Project Net Present '.'ae

Jordan ilectricitY AutloritvComparison. of Bas3ic Steaml DOv.10"m" t (Alternative 1) with Basic Diesel/8tetn DeveoPntent lg i,

with larrer tDit stites iilltsrRStt1ve 2CiCost Streams and Present Vallue, Capital Cost L, 58P 410

VPeolduoi ValueDiesel 100 Ccl

--Cpital Expendit-res (ILI$103) -__- Netted Capital Eapendtl-res (Ir$1i03) p di elC lust e Steam -,3 - ,1'

Tlerit6tstloned Alternisbve 1 ASternatise .C Diesel Steam 2 1 --O a M Cool - 2Tot1 .2'All j20 Alt. 5 Die.sl Steam Diesel Stean - 5,0

Net Present 'Imbue - 220 2231972 3 - 63/ 3 - Equalizing Discount Este 13,54

3mb.4

3?62' 200 2,300 630 - 430 2,300 1,8705 2 C 3 e lo 1,300 6,200 5,350 - 3,550 6,200 2,650 NA6 2 x 33 I x 10 300 6,hto 4,020 - 3,720 6,650 2,930 An effort was ,ale to optimiEe *litrs.tioe 2C by rooovir.g the 191 Nt V5)7 If, 4,85o 2,200 1,400 - 2,200 3,240 1,250 diesel set; this alv,,anes by one year: the tO IN 19tl :c:1', the C3 As8 33 1a 4,150 2,O?O 5,4iw ?-200 - 1,250 - 3,250 unit, the 100 M5I 1959 unit, snd tle 100 lOO IP?2 I nIAt, res'irg U-.:

9 50410 5,950 1,300 7,300 - 1,00 - 1,350 - 3,1501930 33 50 7,500 200 6,oo0 - ?00 1,500 1,300 lIet ?resent '.al.es QS'_

1 66< 6,7oo 5,100 1,6o0 1,603 a- hls-on- Po-.

2 5,700 3,609 2,100 2,1003 66 50 4,100 2,To6 1,400 1,400 13e.4 1,100 1,20o - 3,100 - 3,1005 50 1,700 6,000 _ 4,,30 - 4,300 Capital Cost 4.,55V 1, 1

4,6cc 9,920 - 5,300 - 5,300 Rsid,al V'alue Vise.1 2f o

7 ff 100 i:,509 12 000 5,500 _ 5,500 2Resid-I Value Steam - 1,943r1' tO) 7,'ON . 300 300 /,5,elCd,mt SI

R 100 1249 C ,rv 1,.(00 P.,1,0( i.,hoot tils 9 MCro::l -M- -_

1 1()4 I','YsI (YII( )11, +4 1, I/tl,

.' IVO I')') 0j4 T,iAti 1ito 5',} iXio !,,V, W-160 -151-

t o , ef,ex' s -,,) J,etf.) eCd

57cc30 ll?,i55 14:,tOO t93It5,I - 13,300o 30'0:0f 24,800x

2/< Pee .'':sc ct V raU-3/ Cu.roto 'o 25C. 6rcc)encs a-ti rtuereftiro emuliried

oirc lore I )e.us V0' SCtr.,r- at", tcruiu,rt e-ocllused; t.0 C-oon..e I'r lfihe sli,ht benefit CsO-ed by this t.o.11 pu-sy t Vl'', Ian I-t )0 oU -it in Altern-utii-cc I atom osristted.

.u h2c 2.r * I 'c

JORDAN

Jordan Electricity Authority

Zarqa Thermal Power Project

COMPARISON OF ALT RNATIVE GENERATION DEVELOPMENTS

The Diesel/Steam development is ossumed at zero present

value for all discount rates and its 'curvel therefore lies inthe horizontal axes. The curves for the All-Steam developmentsfor the three demand forecasts are shown relative to this axes

ALL-STEAM DEVELOPMENTS CURVES

…____._ I Low Demand Forecast (Alternative IA)

2 Intermediate Forecast (Alternative I)

- 3 High Demand Forecast (Alternative I 8)

+2.5Net Present Value

-+2.0 $US -

+1.5 " -

.+1.02

Discount Rate,% 151/

6 10 14 16 1 819 2021

-0.5DIESEL/STEAM DEVELOPMENTS

-1.0 ALL FORECASTS(Horizontol Axes)

-1.5 /5-2.0

-30 1~~~9. % 1: .6% 15.3%3 9~1~ EquaIlzing Discount Rates

WYo,Id Bank - 7420

Jerinar X31. 1973

CONPARISON Of ALTERNATIVE SENERATINO DEVELOPMENTS

Sensitivity of the Equalizing Discount Rate

to Growtrote /

and Costs (for Intermnediate Demand Forecost)

17-

11 / ; l~~~~~~~~*imdt d GrOpIh)

7 Growthrot 1972-1990 UO

O 11 ~~ ~ ~~~~~14 15

j troations and M4aint@ngnci Costs

4 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~~ - overall

_ I i -4 - - Itw_I I I t S i I I I I I I I I .

II - ~~~~~~~~~~~~~~~~Steam

C IT-arrJ-tilny eras

-3 Ios,1._ -I I I I I I I I | I .1Steam

w _ _

-14 -12 -1,0 -a - - -4 + *4 .4 .*0 .12 .14

Cost Vo,aitions V,,ii Sh^.'42I

Ji,-y 1 1l 1' 73

ANNEX 14Page 1 of 4 pages

MAJOR ASSUMPTIONS FOR FINANCIAL FORECASTS(JD Thousands)

JEA

Balance Sheet (JD Thousands)

1. Additions to Fixed Assets 1974- Gasturbine unit 714Studies 74

1976- Steam units Nos. 1 & 2 6,315- 132 kV Stage I 1,898 8,213

1977- Balance Steam Units 4291979- Steam Unit No. 3 2,931

2. Depreciation rates - Steam Units 3-1/2%- 132 kV Transmission System 3-1/3%- Gas Turbine 5 %- Studies 15 %

3. Work-in-Progress 1979- 132 kV Stages II&III 1,913

4. Long Term Investments - Disbursements of Government loanswhich are relent to IDECO & JEPCOon the following terms:

IDECO Stage I - 1970 - 4% - 10 years (incl. 3 years grace) 641JEPCO -12/1970- 6% - 15 years (incl. 3 years grace) 3,100IDECO Stage II - 1971 - 6% - 10 years (incl. 6 years grace) 393IDECO Stage III- 1973 - 6% - 15 years (incl. 3 years grace) 750

5. a) Accounts Receivable - Both one month billings for powerb) Accounts Payable - sold to and maintenance contract

with JEPCO

6. Inventories - Increases due to initial stocks forasset additions estimated

7. Capital - Stock 1976 Converted Government advances:

- Local Expenditure Project 1,380- Local Expenditure 132-kV Stage I 500- Additional cost IDECO I 72- Working capital through 1971 159 2,111

ANNEX 14Page 2 of 4 pages

Balance Sheet (JD Thousands)

8. Capital Reserve - Interest received from relendingto JEPCO and IDECO amounts borrowedat Nil interest from theGovernment

9. Long term borrowing terms:

Inter- IncludingDate From est % Years Grace

a) Project - 9/1973 IDA 7 1/4 25 3 1/2 3,290b) Project - 4/1973 Kuwait

Fund 6 15 3 1/2 3,290c) 132 kV Stage I -12/1973 U.K.-

O.D.A. 6 15 2 1,292d) Steam Unit No.3

& 132 kV StagesII and III - 9/1976 Future

ForeignLoan 7 1/4 20 4 5,600

e) Relending:IDECO I - 1970 Ex UK-ODA Nil 18 3 641

f) Relending:JEPCO -12/1970 Ex UK-ODA Nil 15 6 3,100

g) IDECO II - 1971 Ex UK-ODA Nil 18 6 393h) Relending:

IDECO III - 1973 Ex UK-ODA Nil 18 3 750

Income Statement

10. Units Generated - Estimated to meet demand with Zarqa orMarqa loading according to mostefficient generation. Marqa purchasedfrom JEPCO at marginal (variable) costof fils/kWh 2.26 (US cts. 0.70)

11. Units Sold - Assummed price to JEPCO fils/kWh 7.50 (USU2.3)- Assumed growth rate from 1976 of 11.6% annually

12. Fuel - Delivered Zarqa JD 6.5 metric ton, 18,000BTU/kWh.

Other Expenses - Salaries & wages per JEA recruiting plan &scales.

13. JEPCO Maintenance - Based on JEPCO's historic maintenance costs.

14. Pole Manufacturing - Assumed to be charged out at cost.

15. Income & Social Tax- JEA is exempt from taxes and customs duties.

ANNEX 14Page 3 of 4 pages

JEPCO

Balance Sheet

16. Additions to Fixed - Annual expansion of network 500Assets - Annual miscellaneous 10

- 1974 3x6 MW diesel generating units(UK-ODA) 1,900

- 1976 Transmission & Distribution program(UK-ODA) 2,010

17. Depreciation rates - Diesel generators 7%- LT Network 5%- Vehicles 15%- Buildings 2%

18. Accounts Receivable - Consumers reduced from 18% (66 days)to 15% (55 days) due to improvedprocedures started in 1972. For JEA1 month (see 5(b)).

19. Inventories - Historical level about 7% of grossfixed assets

20. Accounts Payable - 30% of local construction, 25% Fuel- Tender deposits & miscellaneous each

average: 100

21. Income & Social Tax - 38 1/2% of surplus

22. Dividends payable - Maximum 10% of nominal stock value 300

23. Legal Reserve - 10% of surplus before tax included in"Reserve"

24. Consumer's Deposits - Returnable without interest. 14% ofElectricity Revenue

25. Long term borrowingterms: - US-AID 5-3/4% - 10 years (completed

1970) 4281969 - Municipality 5 1/2% - 10 years 4012/70 - UK-ODA

(through JEA)6% - 15 years (3 yearsgrace) 3,100

ANNEX 14Page 4 of 4 pages

Income Statement

26. Sales Revenue - Forecast sales at present tariff(average 16 filsJkWh or USJ4.9)

27. Other Revenue - Street lighting maintenance reducedto Nil by 1975

.8. JEA Maintenance - Marqa fixed costs plus 9% on Marqaaverage net fixed assets in operation(see Annex 18 page 5). Only fuel andspare parts have been included as variablecost of generation.

29. Generation Fuel - Delivered Marqa at JD7 per Metric Tonand 10,000 BTU/kWh of estimated generation

30. Purchased Power - From JEA at 7.5 fils/kWh (US42.3)

31. Salaries & Wages - Annual escalation 8%, additional 5% numbers.

ANREX 19

Zeroa s Fowr Pro eot

JD Thousands

JD.1 * t$3.1

Year ending December 31nt 1969 1970 1971 1972 1973 197 1975 1976 1977 1978 1979

-------- tl--------------------------------Etited ------------- __-_____-______

JEA Units generated Zarqa (GWhb) - - 3 12 175 245 325 345JEA Urnits generated JEPZO (GWhb) _- _2_ _ 62 20 43

Total Units generated (GWhei) _3 12 273 307 345 388

Units sold (GWha) , 3 12 265 294 327 368Average price of sales fils/kWh _ 7. 50 7. 50 7.50 7.50 7.50 7.90

LE eta/kWh - - - - 2.1 2.1 2 1 2.1 2.1 2.1Averege operating cost of sOles fMs/kcWh _ _ _ _ - - 5.70 5.18 5.09 5.10Oper ting Revenue

IieT elect-ricity - 23 90 1,9P3 2,205 2,452 2,760OXher operating revenue - - - - -

Total Operating Rev nre _ _ _ _ 2,205 2,452 2,760

Geni.Lrtoion-*pel . , _ _ 14 55 372 486 679 720JEECO PNrchaaes of GWVh - - 222 140 46 97

JFFCO h^intenance _ - 442 380 386 393

Generation - Other _ _ _ 15 40 52 69 98 104Trsns,mis lon - - - - - - - 23 30 35 37

Ad-inistrstion and Sundry 12 13 16 30 34 45 73 65 67 71 73Depreciation 1 1 1 1 1 51 51 364 381 381 484

Total Operating ExPen 13 14 17 31 35 125 219 1,543 1,553 1,696 1,908

Net operating Surplus (Tos) (13) (14) (17) (31) ( 35) (102) (129) 448 652 756 852Pole Mnufacturing(Los) / _ ( 5) - - - - - - -

Interest Receivable 0" Rielending 2 2 1 54 154 23 2 225 206 182 159,et Income betore Interest (aT) (-) (IT) 71 lOr __ S I 81

Interrt Payable - - - 50 T 39 75 5 692 7621oss Charged to Construction O(5) (186) (a) (10) (_89) (194) ( 241)'Set Interest Charges - - 5 - - - 46 497 5219% on marq, Average Net Fixed Assets / -_ _ 161 146 134 127

Total Interest and return on bhrqa _ -_ 626 643 632 648

Surplus *or loss) after Interest (L3j (12) (21) 101 21 306 36

Appr*prictionof Su 1 a8iC a p9iserve . _ 54 154 203 223 225 206 182 159

Tegal Reserve _ _ _ _ _ - 12

Salane to General Resere-a (11) (12) (21) (31) (35 (102) (129) (178) 9 124 192

Average Net Electricity Fixed Assets in Operation - - - - - - 5,050 9,372 9,228 10,261Operating Rate of return % 4 _ _ _ _ _ 8.9 7.0 8.2 8.3

z/ 1971 incorporates a write down of poles in stock not charged to ID1CO. Depreciation van JD 8,000. In all other yearspoles are eharged at cost including depreciation 1972/1975 of JD 10,000 and 1976/1979 of JD 14,000.

Since JEA will be using Marqa as its standby and peaking station, the return on larqa's average net fixed assetspaid to JEECO hea been included with JEA'S Interest payable.

Under JEA's agreeent with the Goverment, all not proceeds of its relending activities to JEPZO and ID2COmust be appropriated to Capital Reserve.

j/ Although 1979 is about 8% below the required 9% rate of return, the deficit could well be because of the.onservative 11.6% sales grovth end cost estimates assumed.

April 1973

JOMN

Za TherMl lover Pro lct ANNEX 16

XorSc El ctrioi%y Authorit (LEA

jM .S$3.1

As of December 31et 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

------- Actual ------- ---- ---- Estimated --------------------------------

ASSETS

ectrAcity t in Gperaticn 8 8 11 11 11 884 884 9,799 10,274 10,274 313'20-NetAneePtrinets in Operation 4 5 6 _ R 7 8 ; on; i 5 o 4855 1,21720De9r~~~ol&tiou -~~~~- -7 9 .. 3 9419 ___-Ne. 2)lstricity Ass-tt ifr _P__t- t _ ___ 935 __ ___ ____

Pole Manuf eture Fixed Assets 99 102 103 128 128 128 128 178 178 178 178-Less Depreciation 6 13 21 e 1 51 61 75 8 103 117-Net Pole Manufacture Fixed Assets 1 o m 7E 7b

Electricity Work in Progrees 25 25 26 48 1,023 4,472 8,012 91 1,712 3,919 1,9.3

Totu! Fixed Assets 122 117 113 149 1,113 5,374 8,853 9,519 11,220 13,032 13,459

jS rnIPsC ot - 188 L,216 1,761 2,158 2,481 2,326 2,068 1,810 1,552IDECO2 Stage I Conetruction 209 497 561 - - _ _ _ -

Stage ri ClnsiautCtion - 2 12 -St=e III C-otru-tion _ _ _

1DCO: Stage I Long-term lon - - - 641 584 527 470 341 284 227 170Stage II Long-tarm loan - - - 260 393 393 393 393 371 327 283Stage III Long-term loan 9- 72 712 Ml3 750 6e7 624 561 498

Potal long Tern Investment 209 499 761 2,196 3,45°0 3.13 409 3,747 3,347 2,925 2,503

Net Current AssetsCurrent Aseta:

CaSh 403 131 463 270 101 379 452 819 1,075 1,253 1,790Account, Receivable - JETCC - - - _ _ - 10 165 180 205 230Terentortes - electricity _ _ _ _ _ _ _ 120 120 120 1502p-50, Materials, WIP - Poles 18 11 14 15 15 15 15 15 15 15 15stocks - finished poles - 30 70 5 5 5 5 5 5 5 5Debtors, accruals, advsnces, etc. 1 4 28 5 25 25 25 25 28 15 LOSubtotal Current Assets 422 176 595 295 146 424 507 1.149 1.415 i.~1 2.160

Current Lisbilities 550 1105 () 1 (120)A. counte payable, etc () (lS (22 (25) ( 5) (30) (50) (m 2 S E

Subtotal Cereent liabilitie (45) (42) (22) (25) ( L5 (O) (LO) ( 110) ( 9) ( 120) (120)

1et Current As-eto 377 134 573 270 141 394 457 1203j 1.32Q 1.493 2.040

TOTAL ASOETS 708 750 1,447 2.615 4,701. 9581 13.404 4 3 158 (7

EQ,UITY AlND J02NG TERMS DEbT-NeApitND LOt NoveRMDE)B / - - - - 2,111 2,111 2,111 2,111

Accrued Surplus (deficit) at start of year 14) 25) (37 (58) ( 89t (124) (226) (355) (533) (524) (400)Surplus (defIcit) for year 11) (12 (21) (31) ( 9s) (102) (129) (178) 9 124 192Capital Feserve 17 27 45 99 253 456 679 904 1,110 1,292 1,451ogcal Reserve _- _ _ _ _ -

Total Equilty (8) () ( 13) 10 129 23Q 324 242L 2,97 3.,03 312)ilon TerM DebtNrAli60al ilenuiug Council

troposed jIn. Crdit - - - _ 403 1,774 2,677 3,032 3,223 3,149 3,068Proposed Kuwait Fund Loan - - - - 403 1,774 2,677 3,032 3,290 3,197 3,998Project -ocal F-und and Interest _ - 5 158 141 519 1,194 _ _ _ _

Subtotal Project finance _ 5 158 947 4,067 6,548 6,064 6,513 6,346 6,166Assan/Zarqs LocaI Fu2ds !/ _ _ _ 268 481 - - . -Auned UK los- Traurn Iu o li - - - 748 1,225 1,192 1,092 992 8921IDEC Stage I /I g 597 618 641 1 603 565 527 417 379 341 303JE}CO Developnent Program / - - 566 1,216 1,761 2,416 2,997 3,000 2,800 2,600 2,400A-saOosO Suture Foreign Loans.

-Stea Plant No, 3 and 132 kV TI end III - - - - - 70 1,422 3,280 4,083:TDECO Stage II 8/ 69 260 393 393 393 393 360 327 294-IDEC0 Stage IIIT / - - - 171 712 735 750 687 624 561 498

Government AdVnce for perati-g Exenses 119 142 19 1 15 159 359 - - -

Total Lone TerDebt 716 760 1,460 2,605 4,575 9,351 lbORO 11,123 13.190 14,447 14.636

TOTAL EQUrTY ANID La1G TkR DEBT 708 750 1.44 2615 4,704 9,581 13,404 14,305 15,887 1 1,

Debt/Equity Satio 100:0 10010 lOOtO 100:0 97:3 90,2 98,2 83.17 83.17 83:17 81,19Excluding Boroving for.Relending Onlay

xcuding Dort ror um rucisg 1 9 142 164 317 1,106 5,242 8,413 7,356 9,057 10,648 11,171Debt/Equity Pail 75:25 77: 23 78 22 77!23

SGovesrnaet adv-nces coneerted to capital in 1976 osprise Local Costs Proj"t (JD 1,380,000)lasqa/Aran Stage I (JD 500,000) IDECO Stage I additions (JD 72,000) emd operating subsidy (JD 159,000).

2/ Foreign loans Sect to. Govrc ent end relent to bexefiotarias though JSA

Apri1 1973

JORDAN

Z.ro. Th-i Powe Protect A800 07

1971 197 1973 1974 1975 1976 3897 197 1979 1972-1I 1 -2n...

Actua -- --- -- - -- -- -- - -- - -- - -- -- - -- -- - -- -

le Oolt, Su-plu lose (17) (31) (35) (98) (i25) 477 683 787 883loorstiotlo.- 1 1 ~ ~ ~ ~~ ~ ~~~ ~ ~~~~ ~~~~ ~~~ 1 .7 '47 32 310 3 13

Pole 0.2tu.faclu-too Sorplue (lose) 73) - - -~~~TP -5) 5 - I-anDepowetetlot ,~~~~~~~~~~~~~~~~~. 38~~~L la. ia. ta

79888o4 8~~~~~~~~~~~~~~~~~~~~~~LO 1 L 1 4 1

87 01 48 89 iII 139 tO,o 13 o 8 81

7?9 7

Ioo,ologe - 22 19 17 19 12 10 A1 193"togctt - 10~~~~~~~~~~~~~~~~~~i 19 23 23 23 23 21 18 168

12ogrllt - 2 ~~~ ~ ~~~ ~~~ ~ ~~~ ~ ~ ~~~~~24. 63 I, 43 3 J35 j 262

LAIL ot OdrotOtwotl9 51, 154 283 223 225 206 182 119 1.406

- - ~ ~ ~~~~- 258 258 258 258 158 298 1,518

77970 Se.8e I 57 57 37 179 57 57 57 471ttwstw ~~~~~~~~~~~~~~~~~~~~~~~~ - 22 ~~~~~~~~~~~~~~~~ 44 614 110

Oteow 002 - - - - - ~~~ ~~~ ~~~ ~~~ ~~~~~~~~~~~~~~~~~63 63 _63 63 25

Total lost _,1tOttoseosl 7 315 915 650 40 22 1422 2.981

1 t-1eOa Ce., 6ee-to 3 187 4(37 470 1.0 1.653 L2L 191 o8 9oE.quIt CapItolU .ltud tulur,en - - -2,111 -1

28 3%9 8

T8j837o 1 Vt -- 1483 1.371 893 355 258B 3,29841- red 1.01 >, 403 1,371 983 3935 258 - - 3290 61%

(soocrotoctxt-tot.1ror0, 1 113 ~~~~~~~~~~i( 332u 675 _86 - - 1.:375

7,1-total Iroott Iloanriog ~ ~ ~~~~ ~~~~~5 153 789 3,120 2,1481 996 016 - - 79955

rjtw I. P,tdw Zor-/-, 132 69 lIte Stop I - - - 7148 177 67 - - - 1,292rlovwrnent-loaO Thuts Zaro/As.o132 13 Stage T 268 21 19

.19127 Osowioostoot. ~~~~ ~~~~ ~~~~566 653 565 6s5 980 183 - ,34

71-120o slog. .Ta,oletad dOwrtttlbt]. Oo UK Credit 23 - - - - - - - - -

9910 Sage 0 )Traeooe,oo, ad diwtributlo: E. UKo Croot 89 171 133 - - - - - - 38421-OOTt.ge 10 (SesrtlC-it11ro1 - 171 911 23 11 5 750

-00, 0St0.300 137 lv k,o, It 0, 00H-I- 78 1,398 1,918 803 4,o83Ooostet,tadot.- co 08057Ito' woece1 - - - - - -

To!&! tong-twOs -otoI- 700 i,i45 4 3,3(14 3,767 1,1159 ,6 1.859 803 0768 81% 3

tl.,ee 2-o, ~ 7110OCktal1 )O-Otdloooe-( (87) 90 48 25 in (95) (25) 5 (70) (,i')

Ito -81cc 1 22 925 3.128 2,1481 896 516 - - 7,9680885328 k cot,,1t k zraooo tg I - ,oi6 690 86 - - - 1,792

Stoso Piat,t Oxtwtelo,t toolt no. 7 - - - - - - 788 1.379 581. 2,694~~~~~~~76; 1,37 56 ~ 2 69

2co3elc1oint1220ti0,o 1 25 -6 - 90 - 7164Ooi/ooo13: tLo 'o,t e. I 13 73 Mo18 .4

Total 201 SlowO Oswwt Foto,,eloow 7 1,7 929 ~~~~~~~~~~14,136 3,171 1,156 2,9300 13 76 1,17 10

09970 tsoeoooetoot i~~ ~~~~~~~ ~~~~~88 1.028 569 655 581 103 - - - 2,9'1212970 37 I0I 13 2418 133 - - - -- - 38170197I Stage 007 - 72 3(2 3 32 - - 750

Total 0toewtwwo~~~~~~~<e (toete) 2~~~~62 1,435 9,11 69 96 13 4 ,123

737092oo oOoatee lot ooeratt,oooOosws tpiloali-d - -- 159 - 5WM L- kwo-.2-A01C )20o7-) - - - 7 71 8 2

-Ostl.o) -swO) - - 93 99 190

.- 770 locr- t kod., wto. opitaliewo 1 ,952 - - - 1,957

- 32 0, Li-es stage I (UK)- - - - - 108 193 I 10 000 680ho-O0,Slgw I 38s 38 !8 38 38 38 38 266-297 Noowopewt - - . - - 108 200 200 88 700

- 009757agg 00- - 31 33 33 99- 179.0 SIege 07I- - - 63 633 63 63 25

- 3towo St0.0 rowni0 - -d III-

7,-Itotel 8,ortlwatloc 2~~ ~ ~~~ ~~~ ~~~~~~~~~~~38 38 34 2,12 90 61 1 4,2142

0I as 0 ude crJe-t) - - 0 91 179 220 237 241 234 0,228

-Iool 108i oos 28 73 135 173 192 195 390 978- ocl Foods (ooJeot) - - - - -- - - - --1328'" ttwget)0000'o7 ) - - - 22 59 72 68 62 56 339-Stw- Lont oo3,i19o6k00t.... 1,1 -d - - - - 13 89 194 282 575

lout 0 aqe tswo .id to 28970 -- 61 14.6 134 127 568

1,itotel Ontereot - - 58 i86 369 636 732 826 89 3,688

7otai 0017 S.~~~~~~~~~~~~~~9tw - - 00~~~~~~~6 286 18 3,008 1,33 41,17 1,503 2, 930

7 .ota OiOalt 267 i,1,82 2,326 5,038 4,1t1 6,389 3.2140 3,618o 2,81 26,220

(or usurooso) nO 05,9 ~~~~ ~~~~~~350 ) 213) 16) 3 2 2) .34 08 3(3 167

70-9, AM0tCATTM771 1.269 2.155 1.316 - 6,47 43 0740

Gos ak tatpo-o 131 683 270 101 379 652 819 1,379 1,25 483->oes.'-.ou

1oo172 1~~ ~ ~~~~ ~~~ ~ ~~~83 270 101 379 4112 819 1,075 0,253 1,750 1.710

ttteTIttttteFtrd Ty rtrol aCO,h -etraiow - - 0.1 '8 1.3 1.6/ i.14 1.6 ro .s

to 0 0019 000 son stepl.n osolos(9 500

3/ 00 180 orc0togIss ror -01truttl, edoiw 21 3.588,000 (r""et t0 3278alO 1929 t218100 oorod190eqiywO 1 3,00ItretI te

41 1376 7017 Os-olt Totosg -Icsd-w o -I..ece bOo~ 0014 (80 159,09 ad J11 1,1, -)md "tonrst s-iri osotr-tis1i_11300 it 0it 00. 3 00_ (Jr 1000) iea . o-s debt ew-olowe. of 9273,80

1377, 1,170 ao 1979 -olod blo-se -Ou -t-ol 0erc e -0 004 -o 3 ao.d Oa.o/0o wot-w 00 -5t 00M iolaesoolw)o 37 9,000, 21 194,00 ki1d 39 241,-0 repolol eioth lay Iso loood to,Ol 00.1 of oootr.ttofo aoitt

8i 00050 r7000, Total itoteret d-rto ooertOo ol.-.o IM7 531,00

0,1 0373

ANNEX 18Page 1 of 6 pages

JEPCO FINANCIAL SITUATION

Fixed Assets and Longterm Debt

1. JEPCO's actual financial situation at 12-31-1971 was sound as shownby its Balance Sheet on Page 3 of this Annex. The JD 4.1 million in netfixed assets mainly represented the balance of the original cost of its threediesel electric generating stations at Ras-al-Ain (built 1948) Zarqa (built1958) and Marqa (first unit 1962), plus its distribution networks in andaround Amman and some 330 km. of 33 kV and 6.6 kV transmission. From 1968to 1971 little construction took place due to financial constraints and whatwas achieved was mainly self financed with the help of (continuing) shortterm borrowing from the local bank. The only recent long term borrowing wasin 1969, when the municipality lent JEPCO JD 40,000 at 5 1/2% over 10 yearsplus 2 years grace period for the construction of additional street lighting.In 1971, however, JEPCO started on a 5-year construction program financed bya JD 3.1 million (E 3.6 million) U.K. loan to the Government and relent(via JEA) to JEPCO at 6% over 15 years including a 3-year grace period (see2.17). JD 1.1 million of this was for 3x6 MW diesel generating sets atMarqa (presently under construction) and the remaining JD 2.0 million for33 kV transmission. JEPCO's only other long term debt is the JD 428,000balance remaining outstanding from a US-AID credit made in 1961 for distri-bution.

Equity

2. On 31-12-1971, JD 2.7 million was paid up out of JEPCO's autho-rized nominal capital of JD 3 million which is expected to be fully paid in1972. Only 10% of its shares were held by the government or municipalities,the remainder being private holdings. Total equity of JD 3.6 million in1971 (including undistributed surplus and reserved of JD 0.9 million) isexpected to increase to JD 6.1 million by 1979 despite the annual distri-bution of dividends at their maximum permitted level of 10% of nominalshares capital. JEPCO's debt/equity ratio was 5:95 in 1971 and is onlyexpected to reach 29:71 in 1975 before declining again to 17:83 by 1979.

Current Assets

3. By 1971 JEPCO's current assets and current liabilities werevirtually in balance with its overdraft reduced to JD 179,000, but withits consumer accounts receivable at an abnormally high level of JD 244,000(equivalent to 66 days billings); partly the aftermath of the late 1970disturbances. JEPCO has improved its procedures and expects shortly toreduce consumer outstandings to about 15% of sales or the equivalent of55 days billings, which would be an acceptable level.

ANNEX 18Page 2 of 6 pages

Income Statements

4. JEPCO's income statements (Page 4 of this Annex) show that thesetariffs, which average 16 fils/kWh overall, are adequate. In 1971 the rateof return was 11.7% and this is expected to increase to about 14% by 1974.With the advent of JEA's Zarqa power station, JEPCO's rate of return isexpected to drop to about 8% in 1976 and 1977 before climbing to about 9%to 10% by 1979. In estimating JEPCO's expenditure and income the contractswith JEA described in paragraph 6.11 of the report have been assumed withan unchanged average retail tariff level of 16 fils/kWh (USd4.9). Othermajor financial assumptions are shown in Annex 14.

Estimated Generation Costs - Marqa

5. The estimations of the amounts to be paid to JEPCO by JEA as aresult of the Marqa maintenance contract are based on JEPCO's estimatedcosts of running this station plus a return of 9% on Marqa's average netfixed assets. Page 5 of this Annex shows JEPCO's actual generation costsfor 1969 through 1971 and the estimates for Marqa from 1972. All expend-iture has been included as "fixed costs" except for fuel, spares and materials,which have been treated as "variable" and comprise the marginal cost paidby JEA for kWh's generated at Marqa. The fixed cost includes all directsalaries and wages, depreciation and 20% of general administrative overheadswhich is considered a reasonable allocation for the cost of administeringMarqa as a standby or peaking station.

Sources and Applications of Funds

6. JEPCO's future construction program through 1979 is shown inits Sources and Applications (Page 6 of this Annex) and comprises generalextensions and reinforcements of its distribution network costing aboutJD 500,000 annually. This will be additional to the cost of the 3 dieselunits and 33 kV lines mentioned in 1 above and to miscellaneous items suchas vehicles and office equipment, etc. Debt service on its 3 long termloans (US-AID, municipality and JEA) average about JD 400,000 annually from1974 reducing to JD 360,000 by 1979. Debt service is covered at least 2.5times by net cash generation.

ZaP ThIl Poir Pojet ANltX 18NjeT~ 6 pages

The JrO*ia rictslwP.r C Ltd. (J2EOO)

JD t }3 .1.

969 1970 172 1973 1974 1975 1976 1977 1978 1979

-. Actuel ----- --- -------------------- Estimted -----------------------------------

ASSETSAFxedAasets in Operation 5,324 5,901 6,238 6, 7,i8 8,848 9,454 11,974 12,4483 12,993 13,542Less Depreciation 1508 1811 24 4 4 8Net Fixed Assets in Operation .b 4,79I +74 +77,7Work-in-Progress - I 4 1.220 1.766 1.331 i 6 7 7 8

Total Net Fixed Assets in Operjtion 3L.16 400 4109 W3 6,121 6,936 7a664 7,797 7,757 7 7,717

ton Term InvesttentsTnv6~e8tofT liaited Companies 194 196 200 202 204 206 208 210 212 214 216Provident Wvnd Snv5stmnts 76 76 76 76 76 76 76 76 76 76 76Provident Fund Etplovees Housing Loana 14 14 14 14 14 14 14 14 14 14 14

T,utal Long Tie, InvaYtrents 284 286 2 9 296 298 300 302 304 306

Net Current AssetsC5, '' 74 50 244 270 394 361 500 44 43 148 344A-noonts ?eneivable Consomera 226 236 330 320 360 425 480 540 500 680 760Ancoonts Re-elv-ble JZ2A - - 0- 50 50 50Accounots Receivable Others 4485 289 420 400 400 400 400 450 470 500 550Tnventor,es 389 422 422 460 u40 590 620 700 740 780 8o0Other debit bainoes 57 140 2 40 40 40 40 40 40 40 40

So -total C,rrent Asseta 1,231 1.037 1,448 140 1,684 1816 2o40 1,844 1.943 2.198 2.544

C .r.ent Liabiliti-sAncounTP3iy-i e ( 831) (833) (664) (535) 550 (565) (590) ( 670) (670) ( 680o (720)Aiz-Oee inOccn T5 50d Socill Tex ( 179) (230) (337) (281 353 (416) (470) ( 262) (296) ( 357 (423)1i'xaend. Pkvable in Cash ( 263) (156) (2 (30) 300 (300) (300) ( 300) (300) ( 300) (300)I T%orar, nk Cverdrfts (498) (451) (179) (- - _ ( () ) (-- -) ((- - _) (_-)

2&ntotsl Cnrre' Tliabilities (1.791) (1.670) (1.451) (1.216) (1,203) (1.281) (1,360) (1,232) (1,266) (1,337) (1,443)

otal llet trrten Aos.t. ( 560) (633) ( 3) 374 481 535 680 612 677 861 1,101

T02'AL ASsIPrs .40 374 14.39 6,oo3 6 7,767 8,*2 8.709 8,736 8,872 9,124

FUr AND) 1)157 TERM DlEPT

2,578 2,601 2,718 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000ltock Dividend Declared 104 - - - -lAvoonulmtsd 9-irplus at Start 4 29 10 142 217 381 639 967 1,019 1,114 1,2927 nrplus rr Year after Appropriations 25 ( 19) 132 75 164 258 328 52 95 178 266R.Tservn 349 415 501 589 750 858 980 1,048 1,125 1,218 1,328rebalil ttoir- Grant 1/ - - 2114 214 214 212 214 214 214 214 214reriud "n Capital Stock 19 6 15 70 - - - -

TiWAI .QriTY 2,975 3,136 3 40 4,345 I 4,711 5,161 5,281 5,453 5,724 6,0

f,bmbl.Divhlitios:200 226 259 291 336 396 448 499 560 629 707ytt-er-e ,rnployees irdenity 64 80 80 80 80 80 80 80 80 80 80Reseroc r'on pronident fond 195 234 242 282 322 362 402 442 1482 522 562

Reservo Con medical fond - - 5 16 28 40 54 69 85 103 123

Octal Peferred liabilitiea 459 540 586 66 766 878 984 1,090 1,207 1,334 1,472

Tlr Debt

da=an It-niolpality 26 40 32 28 24 20 16 12 8 4JEA (Ex UJK F,nda) . - 188 1,216 1,761 2,158 2,481 2,326 2,066 1,810 1,5,2

T'otal rong Term Debt 106 67 220 1,244 1,785 2,178 2.497 2,338 2,076 1,814 1,552

TOTAL EQ4UITY AND LO3 TERM DEBT 35140 1_71 r__ _ 7,767 8.642 8,709 8,136 8,872 9,24

Debt: Equity Ratio 3:97 2:98 5:95 20:80 26:74 28:72 29:71 27:73 24:76 20:80 17:83

j This grsont vaa frcm U. . and lebanee sources toards rehabilitatingthose assets diamged during the 1970 distmrbanceg.

Ja4u&ry 31, 1973

J09DII Ap 18

lemo. 1r11 Pwr PJe_Ptet pgeos

7be Jordani Ieetrig Pawer Co Ltd. (J1PO)

JM2 - 39*3.1l

Year Ihdd NDetbr 31st 1969 1970 ifl 1972 19T3 aP 1975 1976 1977 1978 1979

----------- ACtu ----------- __ -------------- titd ---- ___-_-- _____-----_______---______

Units tenerated - GWhl 122.7 119.9 133.8 154 178 206 226 98 62 20 43tnhit Pur-h.esd fr JEA W-hI - - - - - 3 12 167 232 307 325

Total _Ths onerated/urohabed 122.7 119.9 133.8 154 178 209 238 265 294 327 368

Units Sold -GWhs 102.2 101.1 112.9 130 150 177 200 223 250 281 316Average Sales Fries (file/ld ) i6,o 16.0 17.5 3/ 16.0 16.o 16.0 i6.o 16.0 16.0 i6.o 16.0LAss9 I 17% 16% 16% 15 16% 16% 16% 19% 15% 14% 14%Averag- urohaoe PriNe ( fIlkWh) - 75 7 5 7 5 75 7.5 7.5

Sole f rI-tr ty 16 1,622 1,976 2,080 2,400 2,83 3,200 3,568 4 °6°1 66 o70Reter reels 4~ ~ ~~~ ~~~ ~~~ ~~~ ~~~5 44 39 42 44 48 53 37 61 6 70

Rthev opratlo6 rvenue 6 10 12 7 7 6 6 5 5 5 5A _Ints nroe and ply en et _ _ - 825 666 566 617

Total Op,nrtlng Revenue 1.691 1,676 2.027 2,129 2,451 2,886 3,259 4.455 4 732 5 133 5 748

bnpedItureIii e-tT u l 373 299 317 385 428 478 528 207 131 43 91

- ether 161 160 173 201 225 242 255 211 116 105 118Puvthoiod poerr _ - - _ _ 23 90 1,988 2,205 2,452 2,760Tvnadeosstee 5 9 10 11 12 13 14 15 16 17 18lietributlen 91 169 165 186 210 237 268 303 342 387 437AdednSstrtttIo 232 245 259 287 319 354 393 436 484 538 597Prooiebon for lndsetty 16 16 - - - -9-Provision ?or invoos and -ovil tea 157 189 302 281 353 416 470 262 296 357 423UVpr-vati-on 272 305 322 340 360 410 460 480 550 560 540

Total Opera6ting 1.313 1,392 352s2 1.691 L,207 2.173 2,478 3902 440 4,459 4,984

list ooeraro t u8grp 378 284 479 438 544 713 7t. 553 592 674 764hii incoTneot_ntS 1 1 112 12 12 12 12 1313

Otht iurplus before Intert 391 23 488 435 535 735 73 533 683 17 7

L..e I_ Y:t Pb1g 7 5 5 44 90 U9 140 145 133 ii6 101res ch r6 d o conetr etion _ - ~ ~ ~~ ~ ~~ ~ ~~~ ~~~~~~~- 42 89 60 --7

set Interest 7 .2.5 2 2 1 5 4133 il 10_

Ne t 291u0 384 290 483 448 555 666 750 420 472 571 676

lIvId;ndiA oTflir 283 260 271 300 300 300 300 320 300 300 300Legal resrve te. 55 4g 00 73 91 108 122 60 77 93 112otbnr (serident fund Ado ) 21 -U,appropriateid Srplu f-or yer 3: ( TVY . 7 ' i r 1 I'73 2Z

Aver ge Net FiXd Assets in UPeratio 3,720 3,953 4,097 4,111 4,236 4,980 5,678 6.751 7,710 7,620 7,534Unts of Return 10.2 7.2 11.7 10.6 12.8 14.3 13.7 8.2 7.7 8.8 10.1

Ut i. ass.ud that fr 1976 *U jIPCo gne_tise i_ p id for by JEI at _rginal -ost

/ 1971 sle, In-lude the settle_et of a disput oith the Cd refboey. ExCtiodg thisthe aerage -eli be 16.1 fil/kbwh.

January 31, 1973

JORDAN

Zarge Thernal Power ProJect AN= 18

The Jordanian Electric Paer Cow Ltd. (JZPCO) f 6 pagesEstimation of Generation CtA

JD Thousands

JDI *tL43.1

V - Variable Cost Asunmed "a designatedr- Fixed Cost "

5Seleoted Station"

176 1977 1979

-------- Estimated ------

GWh Generated 98 62 20Salaries: "a 1/ V

Ras al tin 7 - -Zarma - - -

Total Salaries and ;4e6 170 90 95 100

STi4T6OD GQfATION COSTS

F Salarise and Waes 170 90 95 100V Fuel, Labe and consumables 2/ 207 131 s43 91V Spare parts and mLaterials - 15 9 3 6F Other (Insurance, Medical, etc.) 26 17 7 12

Total Oeneration Costs before depreciation 418 247 148 209

F Depreciation (Ghseration) 202 202 202 161F Share of Admin. Expenses (20%) 87 97 108 120

Total Generation Costs for Allocation 707 56 458 490

Average Variable Cost fils/kWh 2.26 2.26 2.0 2.26

V VARIABLE COST-F.usl(Aae d fuel price clauwe) 207 131 43 91

Materials and Spare parts 15 9

Total Variable Cost (V) 222 140 46 97

ESTIMATED ALLOCATION FOR nAR CONTRACT

F FI1D COSTSlh7a-7Sslaries and Wagea & Enginsere 163 90 95 100

- Other 16 17 7 12- Oe7rheada 87 97 108 12I- Depreciation 176 176 176 161

Subtotal Marca Fixed Coatse 4b2 380 386 393

Ras al Aint Salaries and lWges - - - -

-Other-Overheade-Depreciation -

iarqa - Salaries anOc Weps 7- Other 10- Overheads - - -- Depreciation 26 26 26

Total Fixed Cost (F) &IAL 406 b12 393

Total neration Coat (F.V) 707 546 58 490

0Bss Fixed Assets 2722 2722 2722 2722Less Depreciation 1019 1189 1267 1345Net Fixed Assets I 7131 Il5 I3 7Average Not Fixed Assets

Return 0 9% on Average Not Fixed Assets 161 146 134 127Marqa Fixed Coat (as above) 442 380 3 3

Total JEA Maintenance Contract 603 526 520 520

JEA Variable Charges 222 140 46 9

Total Cost Of JEA Purchase 825 666 5 617

1/ Includea foreign engineers.

2/ Fael, lube and consumable estimated at fils/kit 2.1.1971 average with all stations operating inefficientelderly machines was fils/kWh 2.37.

lanuary 31, 1973

All8 18rF5ig or 6 Pag$

JauZW Tbhal Poawr Prejact

711 Jordanian Elactrc r ny Ltd. )Sos.rsea ond ArsnIisatisns o.f Panda 15171.1979

JO ThOWnO

3m .Wu$3,12

1971 1972 i g 1974 1975 8 1 1Z97!9 i

Attuoal - …b-e…------------------- trtld…

T rplua before interest 488 450 556 725 793 565 605 687 777Deprecistloo 322 34° 3bO 410 460 480irternal Cash Ceneration 010 12 iJj 252AiA22i*EzAAj5 1I2 g 1.247 1,3I

TPA INx tlg funds) j 1.028 545 6SS 3 03

Total Log-ten borrowing 188 1.028 54 655 581 1 _ -

Other SooroesCapital atoch i-sue 13 282 -Capital ahook pren ius 15 70 - - - ---Consumers' deposits 33 32 45 60 52 51 61 69 78Decrease or (boorsase) in rorkiag osphtal excledig ceh (337) (380) 17 (87) ( 6) (388) (66) ( 79) (44)

I coreate (deorsase) In Pro-ids-t, Medical Fand. 13 51 52 52 SL 55 56 58 6O

Total Other Sources (263) 55 11'. 25 100 (282) 51 48 94

TOTAL C3o0TLiESS 1;575 1,815 1,934 866 1,2o6 1,295 1,1.1

o r-tetion (eoluding lateret)17 --FW-ion _ 1,090

F acersission and dletr'bution, vehloles, etc. 337 310 509 510 509 2,520 509 510 549Workln-p-rogre.s 4 1.216 546 ( 435) & (1,907) 1 1

local Construc3on 41 1.526 1.055 1,165 1.091 613 510 2120 2ftc,l Tertite

3)Acrtieetin - IMtCI29 - - - - ---AinalsuKtiFPdlity 8 4 ; 4 4 ; 4 4 4

001 (so ox Ul: d) - __ _ 258 258 258 28 259 258

3hubtotal Amortiati-o3 4 4 262 262 262 262 262 262

Interest JMAI 1 - -Ai= anthatelpalIty 4 2 1 1 1 1 1. -ADA (so Cit stied,) - 42 89 1 3 9 144 132 116 101

Sulbtotal Caterest 5 44 90 ia9 140 145 133 116 10

Total Debt Service 40 48 94 381 402 407 395 378

tI.cell.o..us ApplictionCocest.ante 4 2 2 2 2 2 2 2 2Tash ividenda paid 156 271 2p 3 22! 300 3 10 3

Tota.l Mlsoell-ojeo Apulioationsi 160 273 302 302 302 32 302 302 302

Subtotal ApplIcations 541 1,847 1,451 I,849 1,795 1,322 1,207 1,190 1,215

Inoresae (decrease) In Cash 194 26 124 ( 33) 139 ( 456) (1) 15 196

TOTAL APPLICATIICYS 735 1.873 1575 1.815 866 1.206 1.295 1.411

Lath at start of year 50 244 270 394 361 500 44 43 148Cah traend olyear 244 270 394 361 500 44 43 148 344

Times Dett Service covered by Internal Ceab Geniration 20.2 16.5 9.7 3.0 3.1 2.6 2.9 3.3 3.6

Janary 31, 1973

IBRD -10290R. / (' 39'0/

APRIL 1973

I'No35Tho e . I To Sawascus S Y R I A

/>_ E 11y~~~~~~~

I Q SaHit;Vyo/ )Zr;7-1 hlehem / /ouwelma ,vfadaba rlasr el Kharana ~

ToG z CTo 0 Dei,Ao ! ',

/tHebrot~~~~~~~~~~~~~~~~~~~~~~~~Mt~ >' _ s

To~~ *Dei AiyO

-32- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~320-

El Azraq

)t IS- M.au El MHsmqq.r / -

7 -- -- - SAUDI

-~~~ aObaQ . ~~~~~~MAIN POWER SYSTEMS

EXISTING AND FUTURE POWER LINES AND STATIONS

Wi ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~* IDA Fincinced Hussein Thermal Power Station

* Diesel Power Stition

. T,f;ehO yf < 33 kV Overhead Lines

Existing

… - - - - - Under Construction

I 1<.-n-.--oUe- Future

/- -RHr;',132 kV Overhead Line to be Constructed for Protect

: .---;: -132 kV Overhead Line - Future

o Cities, Towns and VillagesQ, { ~~~~Shaubak I - National Highways

Second Class Roads - /

…t - - - Other Roads

/ Wada Mu- - - RailwaysTruce Line, 1948 /

- Ma'an- - International Boundaries

-Waidis

u- Mdflats and Wadi Beds /Risers

-300 300

/ guwe/ira ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ VEDST~~~~~brieeeASNeA& 4 <

WDO / SPA Mi- > AiQ

rV~ ~ ~ ~~~~~ 10 l 20 30 40 S0 60 70 D

|- r4 0>

0 10 20 30 40 0 0 0 I J 5 _ 5 -N

0 ; -, MILES

~~~~ j .. ,, ~~~~~~~~~~~~~~~~~~~~~~~~~~, ~ ~ ~~-AA*B1 ARABIA

O t~~~~~~~~~~~~~~~ / 35 /,iii,dr,iii rwa4!,i,,- Si ftO Ree!isel

fi~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~h I /' T/ '/1z/i* ":>al 1l1/s1l/1l hil>l tE1*$t.-.

f -3E<7, / lill/)l; c;1ld(ll still;lit ,1e uz c c/1>ullc s h1 the r. ........ r A -p- r- I