Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 9014

PROJECT COMPLETION REPORT

SUDAN

THIRD POWER PROJECT(CREDIT 1006-SU)

SEPTEMBER 19, 1990

-gy Operations Divisionit II)ffice

tricted distribution and may be used by recipients only in the performance ofcontents may not otherwise be disclosed without World Bank authorization.

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WEIGHTS AND MEASURES

1 meter (m) = 3.28 feet1 square meter (m2 ) = 10.75 square feet1 kilometer (km) = 0.621 miles1 square kilometer (km2) = 0.386 square miles1 cubic meter (m3 ) = 35.3 cubic meter1 kilovolt (kV) = 1000 volts1 kilowatt (kW) = 1000 watts1 kilowatt hour (kWh) 1000 watt hours1 megawatt (MW) = 1000 kilowatts1 gigawatt hour (GWh) = 1 million kilowatt hours1 megavolt ampere (MWA) = 1 kilovolt ampere

GLOSSARY AND ABBREVIATIONS

AGP - Sir Alexander Gibb & Partners (UK)BMZ - (Bundesministerium fuer Wirtschaftliche

Zusammenarbeit) Ministry of Economic Cooperation(FRG)

BNG - Blue Nile GridEM - Executive ManagerESB - Electricity Supply Board (Ireland)KfW - Kreditanstalt fuer Wiederaufbau (FGR)LDC - Load Despatch CenterLI - Lahmeyer InternationalLSD - Sudanese PoundsLSTG - Pour4 SterlingMML - Merz & McLellan (UK)NEC - National Electricity CorporationODA - Overseas Development Administration (UK)PEWC - Public Electricity and Water CorporationPD - Project DirectorPM - Project ManagerP/S - Power StationSAR - Staff Appraisal ReportSRC - Sudan Railways CorporationS/S - Substation

FOR OMCIAL USE ONLYTH( WORLD BlANK

Washington DC 20433USA

Otlce of Dietn-"WalO1K nU D,.tw.Cafw n0ppotrwis Ivakiatrnn

September 19, 1990

MEMORANDUM TO THE EXECUTIVE DIRECTCRS AND THE PRESIDENT

SUBJECT: Project Completion Report on SudanThird Power Project (Credit 1006-SU)

Attached, for information, is a copy of a report entitled "ProjectCompletion Report on Sudan - Third Power Project (Credit 1006-SU)" prepared bythe Africa Regional Office with Part II of the report contributed by theBorrower. No audit of this project has been made by the Operations EvaluationDepartment at this time.

Attachment

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

SUDAN FOR OFFICIAL USE ONLY

THIRD POWER PROJECT(CREDIT 1006-SU)

PROJECT COMPLETION REPORT

TABLE OF CONTENTS

Page No.

PREFACE .......................... . iEVALUATION SUMMARY . . . . . . . . . . . . . . . . . . . . . ii

PART I

1. PROJECT IDENTITY . . . . . . . . . . . . . . . . . 1

2. BACKGROUND 1

3. PROJECT OBJECTIVES AND DESCRIPTION . . . . . . . . 2- Project Objectives . . . . . . . . . . . . . . . 2- Project Description . . . . . . . . . . . . . . 2

4. PROJECT DESIGN AND ORGANIZATION . . . . . . . . . . 5

5. PROJECT IMPLEMENTATION . . . . . . . . . . . . . . 6- Project Execution and Implementation . . . . . . 7- Project Costs . . . . . . . . . . . . . . . . . 8- Allocation of Credit Proceeds . . . . . . . . . 8

6. PROJECT RESULTS .... . . . . .. . . . . . . . . 8- Operational and Physical Results . . . . . . . . 8- Economic Return . . . . . . . . . . . . . . . . 9- Financial Performance . . . . . . . . . . . . . 10- Billing and Collection . . . . . . . . . . . . . 11- Accounting and Audit . . . . . . . . . . . . . . 12

7. PROJECT SUSTAINABILITY . . . . . . . . . . . . . . 12

8. BANK PERFORMANCE 13

9. BORROWER PERFORMANCE . . . . . . . . . . . . . . . 13

10. PROJECT RELATIONSHIP . . . . . . . . . . . . . . . 13

11. CONSULTING SERVICES .14- Staff Development and Training . . . . . . . . . 14

12. PROJECT DOCUMENTATION AND REPORTING . . . . . . . . 14

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

'.able of Contents (Cont'd)

Page No.

PART II

Retrospective Assessment of Project Implementation from theBorrower's Perspective . . . . . . . . . . . . . . . . . . . . 16

PART III

1. KEY PROJECT DATA . . . . . . . . . . . . . . . . . . . . . 17

2. PROJECT DATES . . . . . . . . . . . . . . . . . . . . . . . 19- Cumulative Disbursements . . . . . . . . . . . . . . . . 19- Staff Input . . . . . . . . . . . . . . . . . . . . . . 19

3. MISSION DATA ............................................. 20

4. SCHEDULE OF DISBURSEMENTS . . . . . . . . . . . . . . . . . 21

5. PROJECT COST ESTIMATE . . . . . . . . . . . . . . . . . . . 22

6. COMPLIANCE WITH COVENANTS . . . . . . . . . . . . . . . . . 23

7. FINANCIAL STATEMENTS (FY83-86) . . . . . . . . . . . . . . 24

i

SUDAN THIRD POWER PROJEC"'

(CREDIT 1006-SU.

IAOJECT COMPLETION REPORT

PREFACE

1. This report covers the Third Power Project in Sudan supported by Credit1006-SU. The credit US$65.0 million equivalent to the Republic of Sudan wasapproved on April 17, 1980, became effective on August 14, 1980 aald was closedon December 31, 1987 after allowing two extensions of one year each(originally closing date was December 31, 1985). Disbursements continueduntil September 30, 1988 to allow payment of all pending iteus. A balance ofUS$45,541.79 in the credit was cancelled on October 28, 1988.

2. Parts I and III were prepared by Bank staff, basei on informatiunavailable in the projects files and the project complet...on report prepared bythe National Electricity Corporation, the credit beneficiary.

3. The Beneficiary reviewed the first draft of this PCR and their commentsare reflected accordingly. The Beneficiary prepared a Final Completion Reportwhich in many respects is comprehensive and detailed and contai s some or thetopics that need to be covered under Part II of the new PCR format. In orderto avoid further delay in submission of this report, we have completed Parts Iand III as required. We requested the Beneficiary, several months ago, toprepare Part II according to OED's guidelines, however, they did not reply toour request and we do not expect them to do so.

ii

SUDAN THIRD POWER PROJECT

(CREDIT 1006-SU)

PROJECT COMPLETION REPORT

EVALUATION SUMMARY

Background

1. The project was conceptualized when the Bank made its first loan (Loan522-SU for US$19 million) to Public Electricity and Water Corporation (PEWC)in 1968 to finance the Power I Project which consisted of the installation offirst of three 30-MW generating sets et the Roseires Dam, a 15-MW gas turbineat Khartoum, construction of 220 kV and 110 kV transmission lines and theinstallation of associated substation facilities. The Roseires Power Stationhas been in operation since 1971. The second credit of US$23 million to thepower utility (Credit 564-SU) was approved in 1975 to help finance anexpansion program and to provide funds for consultants in carrying out studiesof projects required for future power development in the Sudan. These studieswere prepared by Sir Alexander Gibb and Partners and Merz and McLellan of theUK which, included a power demand forecast and investigation of probable sitesfor hydroelectric development. Upon completion of these studies, PEWCprepared a power demand forecast for the period 1977/1978 to '085/86 byaggregating forecasts for individual consumer loads based upon consumerapplications for supply. The results of the analysis were discussed withgovernment ministries, corporations, industrial and other large consumers.The forecast indicated that after completion of the oagoing Power II Project,a further addition to generating capacity would be nezded in the Blue Nilesystem by 1981 providing a basis for the Power III Project. The project wasdesigned to include phase one of the Sudan's Blue Nile Grid (BNG) DevelopmentProgram (1978-1986)2.

2. The power development strategy of the government of Sudan was toconcentrate on increasing and improving the power system capacity f the BlueNile Grid, which provides most of the nation's electricity supply.Furthermore, the sector was required to supply vitally needed energy for pumpsand machinery in the major irrigation schemes, where the country's principalexport crops (long and medium staple cotton, as well as groundnuts) are grown,

The BNG system comprises the generating and transmission facilities located alongthe Blue Nile River to supply electricity to the city of Khartoum and surroundingareas, as well as Sennar, Damazin, Wad Medani, assea Heissa, Es Suki, Singa andother individual centers and to various irrigation schemes.

2 The BNG development program has been grouped into three implementation parts andthe first stage (the proposed Third Power Project) comprised: (a) installation of6xlO MW diesel generating units at the existing Burri thermal stationl (b)reinforcement of the existing Burri-Khartoum North 33-kV transmission circuits;(c) addition of the 5th hydro-generator (40 MW) at Roseires hydro-electricstation; (d) stringing of the second 220-kV transmission circuit between Sennarjunction and Kilo X substations; (e) training program; and (f) engineering for theproject and part of the second stage of the BNG Development Program. The projectwas financed from proceeds of IDA credit, Overseas Development Administration (ODAof UK) and the German Ministry of Economic Cooperation (BMZ) grants.

iii

and for agriculture based industries. Without assured supplies of power,these schemes would not be able to function and Sudan could be deprived of itsmain sourue of f-reign exchange. It is in this framework that IDA'sassistance to -the power sector was designed.

Project Obiectives and Description

3, The principal objective of the project was to provide additionalgenerating capacity and transmission extension facilities to meet the growingdemand of BNG at least cost. The project also provided for strengthening ofPEWC's organization and imptoving its operations through management and stafftraining programs and reform of tariff policies.

4. As indicated in paras. 3.01-3.03, the project included: (i) addition ofhydro units at Roseirvs hydroelectric station; (ii) reinforcement oftransmission circuits; (iii) extension and installation of additionalgenerating capacity at two other power stations; (iv) stringing oftransmission circuits; and (v) technical assistance and training inmanagement, accounting, development planning and operations.

Project Implementation

5. The early stages of project implementation were marked by severeeconomic difficulties in Sudan: currency devaluations; increasing domesticprices; and shortages of many essential commodities e.g. petrol and fuel,cement and other building materials which caused delays in the execution ofthe work. As a result, commissioning of the Roseires (Sets No. 5 & 6), Burri(Units 1,2,3, & 4) and Khartoum North (Units No. 1 & 2) Power Stations whichwere scheduled to be commissioned between 1982 and 1984 took place between1984 and 1985.

6. The other major objective of institutional strengthening was carried outby engaging consultants. The assistance provided by consultants during theimplementation period of the project helped NEC in the identification ofcritical operational and management weaknesses. Two consulting firms providedassistance in technical and management areas through: (a) introduction ofbetter operating systems to reduce energy losses; (b) preparation of tariffstudy; (c) development of a management information system; (d) implementationof programs to improve billing and collection: and (e) assistance infacilitating the use of computer. Another firm assisted in the implementationof programs to improve accounting systems and initiation of manpower trainingprograms.

7. Although most of the issues identified were addressed, NEC was not ableto implement fully the recommendations of the consultants. For example,Government often delayed approval of required tariff adjustments whichhampered the Beneficiary's ability to attain satisfactory financialperformance. Government policies also kept salaries at a non-competitivelevel which caused departure of many assential excellent technical andfinancial staff.

iv

inclusions. Findings and Lessons to be Learned

The main findings and lessons learned are:

(a) During project preparation, the following implementation problemsshould have been identified and adequate provision made to dealwith them:

- inadequacy of roads and bridges to transportequipment (para. 5.07);

- the need to carry out pipeline laying works around the cropproduction season (para. 5.08); and

- the need to ensure that detailed description of all projectcomponents and/or sub-components are completely discussedwith the donors and their sources of financing clearlyidentified (para. 5.02).

(b) IDA should have been more aggressive in communicating toGovernment the need for timely implementation of tariffadjustments both as part of its "project sector" dialogue and"country economic" dialogue. It silould also have pursued moreactively efforts to link improved financial and managerialperformance so as to be able to retain talented staff. It must berecognized, however, that it was quite difficult for governmentand public enterprises to compete against the salaries thenoffered in the Gulf States;

(c) In the design of the project, sufficient emphasis was not placedand resources allocated for institution building activities; and

(d) Future power lending operations, country economic dialogue, andcomplementary projects should endeavor to address more firmly theissue of complete autonomy for NEC so that it would be able toadopt policies needed to:

- attract and retain highly qualified and skilled staff;

- implement more effectively specific recommendations forimproving management and other operating systems; and

- adjust tariffs whenever necessary so as to ensure thesustainability of NEC as an institution.

The main objective of the project to enhance power system capability haseen achieved. The project doubled generation capacity by adding 186 MW tohe available firm capacity of about 180 MW to enable NEC power system toperate on a larger and more reliable scale. Despite some delays in projectmplementation the time spent in completion of physical components is notxcessive considering the major difficulties and obstacles, mostly unforseent project appraisal, which were encountered in project execution.

SUDAN

THIRD POWER PROJECT

CREDIT 1006-SU

PROJECT COMPLETIGN REPORT

PART I

1. Proiect Identity:

Name = Third Power ProjectCredit No. = 1006-SURVP Unit = Africa RegionCountry = Sud&nSector = Industry and EnergySubsector = Power

2. Background

2.01 Power operations in Sudan are carried out by the NationalElectricity Corporation (NEC). 3/ NEC is responsible for constructing andoperating power generation and transmission facilities connected tc the BlueNile Grid and in che Eastern areas, distributing power in Khartoum area,supplying power to the regional organizations, 4/ establishing power supplytariffs, ensuring technical uniformity throughout the Sudan, and providingtechnical services and training to the regional electricity organizations.

2.02 The Power III project emerged from consultants' studies financedunder the previous Bank Group lending operation for power development in theSudan (Credit 564-SU, June, 1975) 5/. Among the conclusions of the reportwere: (a) the demand could be expected to rise from 670 GWh and 126 MW peak in1978 to 1710 GWh and 324 MW peak in 1986; and (b) the recommended additionalplant would increase the installed available power capacity from 216 MW inJanuary 1980 to 436 MW at the end of 1986.

2.03 The economy of Sudan is predominantly based an agriculture and theindustry is mostly related to the latter. The bulk of Sudan's export earningsis derived from agriculture (cotton and groundnuts), within which irrigation

3/ Power and water supply operations used to be carried . by PEWC, the originalbeneficiary of Credit 100B-SU. In mid-1982, PEWC was split up into the NationalElectricity Corporation (NEC), the Khartoum Water Authority, and a number ofregional organizations.

4/ The remainder of NEC's operations consist of a number of isolated stations inother areas. The largest of these installations are at Atbara, Port Sudan andKhasm El Girba. These are run by regional organizations. More recently, however,Government has proposed to put all regional organizations under the control ofNEC.

The project Included installation of a 42-MW fourth generating unit at Roseireshydroelectric P/S, installation of 16-MW diesel generating capacity at Burri andthroe generating units each rated 6 MW, installation of five generating units eachrated 1 MW at Juba D/S.

is the most important subsector. The introduction of improv3d and moderntechnology, which includes electrification of irrigation projects, among otherthings, helps to increase the agricultural output. Expansion under Power IIIProject of the existing BNG generating and transmission/distributionfacilities provided the needed energy for agricultural and agro-industrialprojects.

2.04 During the late 70's, a large number of industrial and agriculturalprojects had been initiated in the BNG area. The energy requirements of thesenew projects, the planned expansion of existing projects, and the increasingpower demand by residential and commercial customers were the basis forplanning the BNG DPvelopment Program (see footncte 2, page iv). Thedevelopment program was estimated to require a total investment of US$339million with foreign exchange component estimated at US$273 million. In orderto facilitate the financing of the considerable foreign exchange expenditures,BNG Development Program was divided into two parts: the Power III Project tobe financed from the proceeds of IDA credit, the Overseas DevelopmenwAdministration (ODA of UK) and the German Ministry of Economic Cooperationgrants and a future project, for which it was envisaged that financingcommitments would be required to be secured during the first half of 1982.

3. Project Objectives and Description

3~.01 Project Objectives: The main objectives of the project were to:

(a)provide additional generating capacity and transmissionextension facilities to meet the growing demand of BNG atleast cost;

(b)improve and strengthen NEC's organization and operationqthrough technical assistance and comprehensive managementand staff training programs; and

(c)undertake reforms in tariff policies.

3.02 Project Description: At appraisal, the project comprised thefollowing:

IDA Financing:

(a)Addition of fifth and sixth hydrogenerators and embeddedparts of Unit 7 at Roseires including:

- engineering, supply, erection, commissioning andmaintenance of Roseires hydrogenerator units 5 and6 comprising of a vertical shaft Kaplan turbinesimilar to the four existing turbines; a vezticalshaft, salient pole synchronous generator rated atabout 40 MW (43 MVA, 0.9 P.F.), with generationvoltage of 11 kV, complete with excitationequipment; gates and penstock to suit existingstructure, civil works; switchgears, protection and

cabling; ar.d installation of embedded parts 6/ ofUnit No. 7.

(b)Reinforcement of the existing 33-kV transmission circuitbetween Burri and Khartoum North substations which includesthe following works:

- site investigations, load flow, short circuit andstability studies.

- installation of two circuits, each of about 4 kmlong using 3 core aluminum conductors oil-filledcable connecting Burri and Khartoum Northsubstations.

- installation of 33-kv switchgears (9 switches) andbusbar extensions at Burri and Khartoum Northsubstations to connect the diesel generating unitsat Burri to the existing transmission network.

(c)Extension of existing Kiartoum North substation whichincludes:

- installation of llO-kV switchgear (5 switches) andbusbar extensions to connect the proposed new steamgenerating units to the existing transmissionnetwork.

- replacement of two existing 30 MVA, 110/33-kV step-up power transformers by two 60 MVA, 110/33-kV newtransformers.

KfW Financing:

(d)Stringing of the second 220-kJ transmission circu..t betweenSennar Junction and Kilo X substations which inc'ades:

- site investigations, load flow, short circuit andstability tests.

- stringing of the second 220-kV circuit overheadconductor over a distance of approximately 270 kmsbetween Sennar Junction and Kilo X substationsusing existing galvanized steel towers.

i/ The embedded parts of Unit 7 (mainly construction of penstock and control gate)were Included under Power III to enable all concrete works to be completed in oneoperation, leaving only the mechanical erection and cabling of the unit to becarried out under the next project. Furthermore, the cost of the embedded partsis relatively small compared to the total project cost.

- nstallation of lx55-MVA-220/110-kV and lx40-MVA-220/110-kV transformers at Sennar Junction andMeringan substations, respectively.

- installation of additional 220-kV. 110kV and 11-kVswitchgears (15 switches) and busbar extensions atRoseires, Sennar Junction, Meringan and Kilo Xsubstations.

- installation of 1 x 100 MVA-220/11-kV step-uptransformer at Roseires substation.

- installation of reactor banks, each 15 MVAR, atRoseires, Sennar Junction and Meringan substations.

ODA Financing:

(e)Additional diesel units at Burri thermal power plant whichinclude the following works:

- engineering, supply, erection, commissioning andmaintenance of about 40-MW total capacity of dieselengine-driven generating sets and associatedequipment at Burri thermal power plant andinstallation of step-up power transformers,switchgears, cabling and protection cubicles.

(f)Installation of a steam turbine plant between the existingKhartoum North substation and the right bank of the BlueNile which comprises the following works:

- engineering, supply, erection, commissioning andmaintenance of about 60 MW capacity of oil-firedboiler plant and steam turbine-driren generatingplant at a new site in Khartoum North;

- installation of 2 oil fired boilers, steamturbines, generators, cooling towers, watertreatment facilities, fuel handling and storagefacilities, auxiliary services, switchgears,cabling, and protection cubicles.

IDA Financing:

(g)Training program for top and middle management and alllevels of technical staff including:

- a comprehensive training program covering therequirements of all technical staff (from engineerto craftsman).

- extension of existing training facilities(including addition of workshops, laboratory,

lecture rooms and electrical and mechanicaltraining equipment).

3.03 During project implementation, it was realized that in order tomaximize generation capacity and efficiently utilize all existing powersystems, rehabilitation of existing plants was needed. Thus, the followingadditional components were added to the project: (a) rehabilitation of JetsNo. 1, 2, 3 at Roseires power station; (b) uprating, rehabilitation andextension of the 33 kV Burri substation (including consultancy services forBurri Power Station extension); and (c) construction of a 110 kV overhead linebetween Khartoum North power station and Kuku substation. On April 18, 1984,the credit was also amended at the request of the Government of Sudan to usethe proceeds from the credit for the completion of the Juba power stationwhich was originally included under the Power II Project but could not becompleted due to lack of funds. Another addition included the refurbishingand extension of existing telecommunication system and establishment of amodern and adequate load despatch center which was not explicitly mentioned inthe project description but was intended to be associated with the 220 kVtransmission extension.

4. Project Design and Orgarization

4.01 The project was designed to support the objectives described inpara. 3.01. It was formulated in the context of the PEWC's least costdevelopment plan and the specific components of the project were based on aHydro/Thermal Generation Program to meet the electricity requirements of theBNG area. Project planning to enable future expansion, was made possible withthe help of consultants (para. 2.02). Furthermore, the urgent need forproviding additional generating capacity and transmission extension facilitieswas clear to everybody concerned, and all parties involved agreed on theimplementation of the physical aspect of the project.

4.02 The scope of the project was modified during the implementation(para. 3.03) and on the institutional aspect, the Bank's intention to improveand strengthen NEC's operations was not completely achieved because NEC wasnot sufficiently autonomous to carry out consultants recommendations and tosustain financial stability (para. 7.03).

4.03 The roles and responsibilities of NEC and agencies responsible forthe project were clearly defined and understood at the early stages ofimplementation. Also, to facilitate coordination of project activities andensure smooth implementation, a task force with a Project Director (PD) wascreated. However, in late 1984 the operation of the task force wasinterrupted when the PD was appointed as Director General of NEC. Because ofincreased responsibilities, the incumbent could not devote sufficient time toproject implementation which resulted ir) the loss of effective control ofmonitoring of the project. The situation further deteriorated when theDirector General resigned his position. To prevent the situation getting outof control, the financing agencies mobilized external technical assistance toimprove the structure and operations of the task force. The task force wasreorganized into a simple and flexible structure with clear lines ofresponsibility which was composed of: (a) a Project Director (PD) assisted byan Executive Manager (EM) responsible for all project development matters

particularly those related to technical and financial aspects; and (b) at thelower level, Project Managers (PM's) for each of the major componentsresponsible for all routine matters concerning contracts, administrativeprocedures and technical issues affecting the project. In retrospect,monitoring systems designed by the task force proved to be very effective andalthough problems occurred throughout the implementation period, most of thesedifficulties were satisfactorily resolved.

5. Project Implementation

5.01 The credit became effective on August 14, 1960, with the preparationof tenders for international competition, in accordance with the guidelinesfor procurement of the financing agencies, the only restriction being dictatedby the regulations of ODA, that prescribed contracts to be awarded to Britishfirms only.

5.02 During appraisal, physical risks associated with the project wereconsidered negligible since most of the works involved were extensions andadditions to existing power generating plants. However, the risk associatedwith institutional and management weaknesses was correctly identified andrealistic because the institutional objective of the project was notcompletely achieved.

3.03 However, the risk perceived during appraisal with respect topossible delays in tender evaluations and in opening of letters of credit forsupply of equipment and materials was minimized when the Government and theBank of Sudan agreed to streamline the procedures for processing letters ofcredit. Furthermore, exemption from custom duties on all goods to be importedfor the Power III Project was granted. This facilitated the flow of essentialgoods and supplies needed by the project. Overall, the improved proceduresexpedited procurement for goods and civil works. The average time from tenderissuance to award of contract averaged about 8.5 months. On the basis ofprocurement methods used which were primarily international competitivebidding, this can be considered acceptable in view of the other unforseenbottlenecks caused by the difficult country conditions at the time. Thecontract award dates for the major components (Burri Diesel Plant, RoseiresPower Station and Khartoum North Steam Power Station) were within 2-3 monthsof appraisal estimates. The longest delay occurred in the procurement of theTelecommunications and Load Despatch Center (LDC) because this component andits financing arrangements which should have been clearly identified were notexplicitly mentioned in the project documents. This component was intended tobe a part of the 220 kV transmission line extension and financed from theKreditanstalt fuer Wiederaufbau (KfW) grant. The problem occurred when KfWdeclared that since the LDC was not clearly identified at appraisal it neededa complete reappraisal. After lengthy discussions between NEC, IDA and KfWthe latter waived this requirement and provided USS 5.5 million to finance ascaled down communication center.

5.03 The early stages of project implementation were influenced by severeeconomic hardship in the country. In addition to several devaluations,steadily increasing domestic prices, lack of electricity supply and prolongedshortages of basic commodities were experienced. In particular, the shortagesof petrol and fuel, as well as of cement and other building materials,

seriously affected scheduling and in some cases completion of civil works.However, the sizeable quantities of fuel needed for commissioning the thermalpower station were made available ir time through the cooperation and supportof the authorities in charge of its distribution and this prevented furtherdelays in commissioning of the power plants. Also to avoid potential delaysin movement of equipment and goods, governme-it authorities gave the projectpriority in using rail wagons and engines to transport fuel. Other measuresto avoid delivery delays included extensive use of truck convoys fortransporting large pieces of equipment along the new road from Port Sudan toKhartoum, via Kassala and Wad Medani.

5.04 Project Execution and Implementation. As indicated in para. 4.02the formation of the task force facilitated execution of civil works.However, some generic problems affected project execution. These includedtechnical. disputes between contractors and subcontractors and inadequatesupply of manpower. In addition to the difficulties generally affectingseveral components, specific problems were encountered as mentioned in thefollowing paragraphs:

5.05 The implementation of the Roseires Hydro Power Station Extensionwhich included the addition of two hydrogenerators (Set Nos. 5 and 6), and theembedded parts of Set No. 7 7/, the last that could be accomodated in thepowerhouse, was relatively smooth but difficulties occi'rred at the start ofconstruction process due to delays in mobilization, poor quality ofconstruction materials (sand and gravel) and difficulties in procuring andtransporting cement. For work associated with Set No. 7, NEC could not makethe site available in time, due to difficulties in cleaning the gatewell froma heavy siltation 14 m deep. As a result of this unforseen problem, work atthe power house was delayed and additional expenses were incurred.

5.06 Completion of the Burri Diesel Power Station Extension works weredelayed and suffered some cost increase because overland transport of the four10-MW diesel engines, which weighed 250 tons (364 tons including the trailers,headers and beams) was not considered safe across several bridges between fromPort Sudan and Khartoum, particularly the one across the Blue Nile at WadMedani which could not hold the weight of the engines. After a few months ofintense consultation, a proposal for reinforcing the bridges was submitted bythe contractor and approved by authorities concerned and ODA, the financingagency for this component agreed to finance the additional costs ofreinforcement. However, pending the resolution of this, the work at the sitecame to a standstill. When this problem was finally resolved, the contractorhad partially demobilized by letting labour go and removed some of theconstruction equipment. Also, unable to cope with these difficulties, thecontractor could not maintain control over his work program and resorted tostop-gap measures which resulted in defective works. Although penalties forthe defective works were assessed against the contractor, the Project Directorsuspended the application of penalties in the light of the contractor'sfinancial difficulties. This helped the contractor proceed with its scheduledprogram of works but it did not prevent the eventual financial failure of the

7/ The completion of Set No. 7 is currently being undertaken under the PowerRehabilitation Project, with the financial assistance of EIB (European InvestmentBank).

- 8 -

contractor. The contractor's business was put into receivership but he wasable to complete the various works against a payment of LSD 225,000 by ODA.

5.07 Implementation of Khartoum North Steam Power Station component whichwas delayed by about two years because of installation of overland pipelineacross privately owned agricultural land had to be scheduled around the cropseason in order to minimize the impact on crops and irrigation schemes.

5.08 Annex 1 in Part III shows a comparison between appraisal estimatesand actual completion dates for the various components of the project.Overall project completion was about 16 months later than appraisal estimates.

5.09 Project Costs. The total final project cost, in terms of USSequivalent, was US$245 million, virtually identical to the appraisal estimate($244.7 million). The available credits in foreign currency were fullyutilized and the IDA credit and KfW grant were not exceeded. Within theirlimits, it was even possible to rehabilitate and expand power plants not inthe original scope of the project description (para. 3.03). A detailedcomparison of these costs is given in Annex 5. Conversion of project costs toUS$ equivalent was made each quarter, using the official rates of exchangepublished by the Bank of Sudan at the end of the period. During theimplementation period between 1981 to 1988 the official rate of exchange ofthe Sudanese Pounds dropped from 0.500 to a US$ to 4.545 to a US$. Actualdisbursements from the credit amounted to US$64.96 million which is equivalentto approximately 22 percent of the total project financing.

5.10 Allocation of Credit Proceeds. The original estimate ofdisbursements and the actual disbursements of Credit 1006-SU are given inAnnex 2. Disbursements significantly lagged the appraisal estimates due tostart-up and procurement delays as indicated in paras. 5.05 - 5.07. Actualcosts remained largely within the budgetary estimates. The credit was amendedat the request of the Government to use the proceeds from the credit for thecompletion of the Juba Power Station (see para. 3.03). The original expirydate of the IDA credit was December 31, 1985. Shortly before that date, arequest for extension was submitted to the World Bank, and the credit wasextended until December 31, 1986 to carry out and complete the variouscomponents of the project. Unfortunately, more time was needed since tenderswere delayed and it was evident that disbursements would extend beyond theperiod, a subsequent extension of 12 months (i.e. from December 31, 1986 toDecember 31, 1987) was granted by IDA on November 17, 1986.

6. Project Results

6.01 Operational and Physical Results. The physical targets andindicators of the project as planned and achieved are shown in Annex 1.B ofPart III. The schedule showed variances between planned and actual completiondates due to specific problems encountered during implementation (paras. 5.05- 5.07) and the final operating and financial results were not fullysatisfactory (paras. 6.07 - 6.11).

6.02 Commissioning of the plant which was carried out in coordinationwith the Operation Department of NEC was also not completely uneventful(paras. 6.02 and 6.03). Commercial operations of various components of the

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project commenced between 1983 to 1985. NEC greatly improved its publicrelations by informing consumers in advance of the power interruptions andexplaining the reasons for curtailment of power supply. This resulted in theconsumers' greater understanding and acceptance of power outages. In March1984, NEC formed a National Committee for Rational Utilization of Power. Thecommittee consisted of 36 members including three state ministers (energy,irrigation, industry), representatives of trade unions and representatives ofresidential and other consumers to review the availability of power supply andtake decisions on load shedding. Different programs for load shedding wereimplemented whereby power cuts to different categories of consumers duringspecified periods of the day were enforced. One of the measures enforced wasthe prohibition on the use of air conditioners in offices and homes. Thisprohibition, however, was lifted in May 1984 because of the improved riverflow position, and the new hydro and thermal capacity added in the second halfof FY84 which improved the power supply position of the BNG system.

6.03 Some operational problems were experienced shortly after pre-commissioning of Unit No. 4 at Burri power station. It was discovered thatthe power station did not have adequate cooling system capacity which causedthe plant output to fall by about 20Z. An additional cooling cell was addedwhich enabled all units to reach their full output of 10 MW each. Otherproblems were related to frequent tripping of lubricating oil pumps andreplacement of exhaust valves every 2,500 hours instead of the designed 6,000hours. The manufacturer was subsequently asked to supply extra cages andvalves free of cost. A major fire also occurred on June 20, 1985 which causedthe four sets to shut down. An investigation was carried out by theengineering consultants (Lahmeyer) in conjunction with an expert from KhartoumUniversity and NEC staff. They established that the fire was caused by faultyswitchgear and protective devices. In order to avoid recurrence of similarfaults, the station switchgears and protective devices were modified.

6.04 The performance of the two 30-MW units at the Khartoum North SteamPower Plan in comparison has been good. The units' loading is satisfactory,sufficiently flexible, and no major operational problems have beenexperienced. The plant's instrumentation is very sophisticated and complex,but operational staff and management have been well trained and are capable ofrunning all installations. However, during the early stages of operation, theplant fuel supply was hampered by insufficient railway freight cars (aboutone-third of fuel-oil is transported by rail). To overcome this problem atransport plan was drawn up by Sudan Railways Corporation (SRC) and prioritywas given to transporting by rail fuel urgently needed by the power plants.Freight cars were also modified to facilitate unloading of oil during thewinter period when the fuel requirements are at their peak.

6.05 Economic Return. The project was originally justified on the basisthat it represented by far the most economic means for meeting the additionalgenerating capacity to meet the growing demand of the Blue Nile Grid. Atappraisal it was estimated that the program would provide approximately 16Zeconomic return. Economic rate of return estimates in the SAR were based onshadow pricing of costs and benefits whereas a reestimation would need to bebased on willingness to pay principles, consistent with the evolution ofmethodology in the sector but requiring considerable analytical efforts.However, since actual project costs were nearly identical to the SAR

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estimates, it is likely that the current economic rate of return will be atleast as high as the one estimated in the SAR. Under the circumstances, itwas felt that a full recalculation of the economic rate of return would yieldcomparatively little additional insight and therefore has not been carriedout. The actual economic return has not been calculated by NEC. However, NECachieved an average financial rate of return of about 7% which is below theopportunity cost of capital estimated at 10%. This unsatisfactory yield isthe result of poor financial performance which are explained in the succeedingparagraphs.

6.06 Financial Performance. Appraisal estimates and actual auditedIncome Statements, Funds Flow Statements and Balance Sheets of the National.Electricity Corporation (NEC) covering the years FY83 through FY86 are givenin Annex 7.

6.07 The following table shows the percentage variations in actualfinancial performance of NEC compared with the appraisal estimates:

1983 1984 1985 1986

Electricity Sales (GWh) -52Z -50% -40Z -34%Average Tariff Levels 47Z 118Z 186Z 173%Operating Revenues -30Z 16% 65Z 81%Operating Expenses (excl. depreciation) 16% 152 0% 18XOperating Income (excl. depreciation) -90% -18% 179Z 196Z

6.08 The financial results of NEC were disappointing. Electricity saleswere much lower than estimated at appraisal due to delays in completion ofphysical components and high non-technical energy losses. Operating expenseson the other hand were higher than estimates mainly due to high inflation anddevaluation of the Sudanese pound. Operating income in FY83 was lower thanappraisal estimates due to lack of adequate tariff adjustment during theperiod. Operating income between FY84 to FY86 was higher because of increasesin tariffs of 2002 in two equal steps between April and December 1, 1984.NEC's rate of return on net assets di-ring FY82 and FY84 was less than 8% asrequired by the credit covenant (the rate of return requirement was revised inApril 1986 to 9% when the Power Rehabilitation Project became effective).However, in FY85 and FY86, the rate of return at 14.7% and 12.7% respectivelywas adequate.

6.09 A comparison of actual and appraisal estimates of the sources andapplications of funds covering the period FY83-86 is shown below:

(LSD millions) 2Appraisal Actual Appraisal Actual

Sources of Funds

Internal Cash Generation 168.7 273.1 41.5Z 30.6ZLess: Debt Service 108.3 131.1 26.6% 14.7%

Interest on Equity - 66.9 0.0% 7.5ZNet Internal Cash 277.0 471.1 68.1% 52.81

r

- 12. -

Consumer Deposits 0.8 0.9 0.2Z 0.1XLoans 128.8 387.8 31.7Z 43.5ZGrants 0.0 32.6 O.OZ 3.72Total Sources of Funds 406.6 892.4 100.OZ 100.02

Application of Funds

Construction Expenditures 143.6 485.0 35.32 54.32Increase in Working Capital 33.4 23.1 8.2Z 2.52Balance to finance 229.6 430.5 31.9% 48.22Total Application of Funds 406.6 892.4 100.0Z 100.02

6.10 Net internal cash generation provided about 53Z of total financingrequirements for the FY83-86 period compared with 682 estimated at appraisal.NEC financed most of its operational and capital expenditures through loansand grants from the Government which accounted for 432 and 3.7Z respectivelyof the total financing requirements. The increase in working capital duringthe period is due to the increase in accounts receivables and inventoriesamounting to Lsd 94.3 million.

6.11 NEC's average debt/equity ratio of 46/54 for the same period wasconsistent with appraisal estimates.

6.12 Billing and Collection. NEC continued to have serious problems inconsumer billing and collections. At one time while accounting recordsindicated about 230,000 customers, the number of live, billable customers onNEC's computer files was only about 150,000. Staffing constraints, shortageof computer stationary, and equipment breakdown curtailed its ability toundertake efficient billing and collection activities. In 1984, after tenyears of efforts at computerized consumer accounts, NEC decided to revert tomanual billing and consumer accounts. This action was prompted by a realisticassessment of the situation and was considered the most sensible short-termsolution to the problem. NEC claimed that this had improved their collectionperformance but based on the financial statement for the period beginning July1982 to June 1986 accounts receivables averaged more than 12 months of sales.More recently, however, NEC made some progress in its billing and collectionoperations through the formation of a special team headed by a Senior Directorto handle exclusively collection activities with the goal of reducing accountsreceivable. It has also acknowledged IDA's advice regarding the opening ofadditional collection centers. These action programs are being monitored veryclosely by IDA and NEC agreed to provide regular progress reports.

6.13 The accounts receivable from government agencies constituted asubstantial proportion of all arrears. Before 1985, NEC owed large amounts tothe Government which paid oil companies the cost of fuel oil purchased by NEC.NEC settled these obligations by debiting Government's accounts receivablesfor their unpaid electricity bills. This arrangement was discontinued inDecember 1984 when an agreement was reached between NEC and the Government tosettle in cash all receivables and payables. In 1987 major government arrearswere finally cleared. Unfortunately, this practice was reinstituted duringthe last few years. On IDA's advice, NEC is currently discussing with theMinistry of Finance various proposals to deal with this problem.

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6.14 Accounting and Audit. NEC has appropriate financial accounting andcontrol procedures but these have not been effectively implemented because oflack of adequate systems and modern technology for implementing them. Inparticular, a comprehensive and efficient system to record assets was missingand the computer system had limited capacity to handle the volume oftransactions required to be processed daily. In order to address theproblems, consultants were engaged to assist NEC in dev '.oping modernaccounting systems, standards and procedures as well as to provide on the jobtraining to staff in the Finance Directorate. To supplement the consultantswork already completed, additional technical support is needed to sustainsatisfactory implementation of the systems introduced, and further developmentis necessary in streamlining NEC's budgetting and costing systems.

6.15 NEC's deficiciency in its accounting operations has also resulted inchronic delays in preparation of final accounts and delays in submission ofaudited statements. Audited accounts for FY83 were received in May 1985,while the audited accounts for FY84, FY85 and FY86 were received in March1987.

6.16 The project had no major enviro nental impact since it mainlyinvolved additions and reinforcements to existing hydroelectric anddiesel/fuel oil power stations.

7. Project Sustainability

7.01 Power projects have a certain amount of built-in sustainabilitybecause, under normal conditions, demand for power tend to increase, or atworst to remain stable. The reasons for this include the need to providepower supply for industrial produiction and irrigation projects and thenecessity for maintaining and rehabilitating existing installations to keeppower generation at a reliable level. The obvious risk of sustainability isineffective management of NEC due to internal weaknesses and excessivedependence on government. NEC's lack of complete autonomy limits NEC'sability to generate sufficient revenue and pursue a profitable operationbecause very often tariff adjustments and payments for electricity are delayedby the Government. IDA, therefore, in addition to providing assistance forenchancing power systems should continue to provide assistance forinstitutional reforms to make NEC an efficient and effective organization.

7.02 Despite various obstacles, however, the main objective of providingadditional generating capacity and transmission extension facilities to meetthe growing demand of BNG has been achieved. The Power III Projectconsiderably improved the power system's capability to operate on a larger andmore reliable scale. Implementation of the project, however, represents onlyone stage in the development of the power sector operations in Sudan. Withdemand continuing to increase, other programs have been prepared andimplemented for adding new capacity and enhancing the reliability of thesystem. These programs are now being implemented under the existing PowerRehabiliation and Power IV projects.

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8. Bank Performance

8.01 Overall, IDA maintained fairly good working relations with theBorrower and the Beneficiary during credit processing and projectimplementation. In 1981 IDA, together with the other donors recommended andsucceeded in the creation of an autonomous Project Management Unit for thepurpose of handling exclusively the day-to-day operations of the project andserve as a focal communication point for project related issues. Thisresulted in tremendous improvement in project monitoring capability by NEC(para. 4.01).

8.02 IDA's participation in this sector made it possible for Sudan todevelop and implement the least cost project for meeting the expanding powerrequirements of industrial and agricultural consumers. Compared to the largephysical infrastructure provided under the project, however, there wasconsiderably less emphasis on institution building activities. Although IDAinsisted on adequate usage of consultants in improving and strengthening ofNEC's organization and operation envisaged under the project, this objectivewas not completely achieved due partly to operational difficulties (paras 6.11- 6.14) encountered during project implementation period. The project wasjointly supervised with Power II Project approximately twice a year beginningAugust 1980 and between 1987 and 1988 with Power Rehab and Power IV Projects(Annex 3 in Part III gives details of the supervision missions). Thesupervision missions were timely and teams composed of a Power Engineer andFinancial Analyst regularly visited Sudan.

8.03 In order to overcome these implementation problems in the future,IDA needs to ensure that NEC has sufficient authority to carry out therecommendations by consultants in improving its financial and organizationaloperations and appropriate resources exist at the institution. Currently,steps are being taken under the on-going projects (Power Rehabilitation andPower IV) and within the framework of IDA's efforts to improve public sectormanagement and operations in Sudan.

9. Borrower's Performance

9.01 Government was the Borrower and NEC was the implementing agency.The status of compliance with the conditions of the Credit and ProjectAgreements is indicated in Annex 6. NEC's project performance wassatisfactory except for: (i) the implemention of comprehensive financialmanagement and accounting systems; (ii) the revaluation of assets and theapplication of a plan for periodic revaluation and systematized assetsamortization procedures; (iii) the reduction of overdue accounts; and (iv) thedelays in submission of audited financial statements. As already notedearlier, the support needed by NEC in overcoming these difficulties wasinadequate due to lack of skilled manpower to execute these programs.

10. Project Relationship. IDA relationship with Government and NEC onthe project has been good. Adequate liaison and communication with theGovernment and NEC established under previous operations was maintained underthe project. Coordination with other donors and contributing agencies wasgood.

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11. Consulting Services

11.01 Various consultants initiated programs for improving NEC's operatingperformance through reduction of energy losses, revision of tariffs,development of a management information system, implementation of systems tofacilitate billing and collection procedures, and introduction to the use ofcomputers. Consultants hired to improve NEC's accounting operations weresuccessful in introducing computerized systems (payroll, stores accounting,general ledger accounts, capital expenditures) and developed and implementedsuitable manpower development and training programs. Simultaneously, in aneffort to rationalize staffing levels, NEC computerized essential employeedata. This program was designed to place qualified staff in jobs commensuratewith their particular skills. All of these activities provided NEC with thetools necessary to cope with its technical and financial managementdeficiencies and ultimately improve its operations. The implementation ofthese technical assistance programs, however, was not sustained because ofpersistent institutional problems such as: (a) lack of qualified technical andprofessional staff; (b) high departure rate of engineers and technicians wholeft for many times more attractive employment opportunities in the MiddleEast; (c) poorly motivated personnel; and (d) lack of sufficient managementcontrol of operations.

11.02 Staff Development and Training. NEC established a relationship withthe University of Khartoum and the Polytechnic for provision of technicaltraining and has been using various local institutions for management andbusiness administration training. Furthermore, in response to the Leed topursue a comprehensive training and development plan for its technical andmanagerial staff, NEC employed the s-rvices of consultants who provided acomprehensive training program covering the requirements of technical stafffrom engineers to craftsmen and extension of existing training facilities.Training activities in the power subsector have also been implemented throughforeign institutions and consultants. NEC staff were sent to Ireland(Electricity Supply Board) for theoretical courses and to the U.K. (plantmanufacturers) for practical courses. Unfortunately, because of the delays incompletion of the power station, the returning trainees found themselvesunable to immediately apply their enhanced skills on the job. In the end manytrainees frustrated with the situation left with a considerable loss to NEC.To fill in the gap, ODA financed an expatriate power station manager and somespecialized operating personnel.

12. Project Documentation and Reporting

12.01 The Development Credit and Project Agreements were adequate forachieving project obiectives in the area of power sector development. As theproject evolved, project documents were revised. In particular, newcomponents (para. 3.03) were added which were considered vital to maximizingpower generation, alleviating power distribution difficulties, improvingquality of supply and services, and reducing excessive power losses. Theadditional components were added within the original scope and objectives ofthe project.

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12.02 Quarterly progress reports were received on a relatively timelybasis and usually came together with the consultants reports. The formerreported on progress of project activitieL; and problems associated withproject implementation and the latter, prepared by consultants, reported onstatus of works at the Burri power station. Financial reporting by theinstitution, however, had been unsatisfactory. This problem was caused bythe loss of a considerable proportion of NEC's experienced accounts staff tothe Middle East during FY81. The delay in prep.-ation of timely financialstatements was also the result of the separation of electricity and watersupply operations because additional work was needed to properly establishexclusive accounts for NEC.

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PART II

SUDAN

THIRD POWER PROJECT(Credit 1006-SU)

PROJECT COMPLETION REPORT

The Beneficiary was requested to prepare this section of the report a fewmonths ago but this has not yet been received. However, NEC has prepared afinal completion report and below is the conclusion portion of their report:

Conclusion

After ten years of a life particularly rich in events, sometimes quitedramatic, several conclusions could be drawn from the completion of anambitious undertaking like the Power III Project, depending on the point ofview from which its developments were watched and lived.

Instead of entering into a detailed list of comments on the particular aspectsof the Project implementation, the conclusions of this report are deliberatelylimited to a few essential facts, that can cast full light of the importanceof this achievement.

- The Project has added a total nomical capacity of 186 MW to theavailable firm capacity of about 180 MW of the existing NEC system,thereby doubling its geneiation capability.

- The generation capacity of the NEC grid could be doubled in a period offour years, which can be considered quite reasonable under anystandards, if one accounts for the difficulties and obstacles of anysort that had to be overcome in the hard environment of thisimplementation, this can be qualified as a successful achievement. Ofcourse, it could never be question to keep the original time schedule,established under heavy political pressure with extremely tight andunreasonable targets.

The available credits in foreign currency were fully utilized, but notexceeded, at least for the IDA loan and the KfW grant. Within theirlimits it was even possible to rehabilitate and expand much plant thatoriginally could not be considered for improvement. Against the LSTG 71million available from the ODA grant at the beginning of the Projectimplementation, the financial requirements were finally estimated atLSTG 79 million. The extra amount had to cover such exceptional events,like e.g. the special road transport of extremely heavy diesel enginesand the consequences of the bankruptcy of a Contractor.

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PART III

SUDAN

THIRD POWER PROJECT(Credit 1006-SU)

PROJECT COMPLETION REPORT

BASIC DATA SHEET

KEY PROJECT DATA

Original/ ActualAppraisal as Z of Apr

Item Estimate Actual Est

Total Project Cost (US$ million) 244.7 245.1 100.0X

Credit Amount (US$ million) 65.0 64.9 99.92Date physical components completed

Roseires P/S Unit 5 07/83 01/84Roseires P/S Unit 6 12/83 07/84Burri Diesel Plant (4 x 10 MW)Unit No. 1 12/82 11/83Unit No. 2 01/83 05/84Unit No. 3 02/83 03/84Unit No. 4 03/83 11/84Khartoum North Steam Station (2 x 30 MW)

Unit No. 1 06/83 05/85Unit No. 2 03/83 03/85

33 kV tie line, Burri P/S, Kuku S/S 05/82 03/84110 kV tie link, K.N. P/S-Kuku S/S 08/82 02/84220 kV Transmission extension 10/83 10/84Extension of 33 kV busbars at K.N,

Burri & Kuku S/S 03/87Rehab of load dispatch center 07/86 10/86Extension of telecoms facilities 09/85 02/86Training Center Buildings 07/83Rehab of Roseires No. 1, 2 & 3

Unit No. 3 - 06/85Unit No. 2 - 06/86Unit No. 1 - 06/87

Rehab of units 1. 2, 3 at Juba D/S - 07/86

Proportion completed by date 1ooZ looz

Economic Rate of Return 16Z

Institutional Performance Mixed

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Proiect Monitoring Guidelines

CommissioningDescription Target Dates Actual

- Burri Diesel Plant Aug - Dec 1982 Nov 83 - Jun 84

- Roseires Power Station

Unit No. 5 Jul 1983 Jan 1984

Unit No. 6 Dec 1983 Jul 1984

- Khartoum North Steam Power Plant Mar - Aug 19b3 M'ar - May 1985

Financial and Other Indicators

a) Rate of return on average revalued net fixed assets in operation,adequacy of tariffs and progress of implementation of costreflecting tariffs.

Result: NEC's rate of return on net assets during FY83 and FY84was less than 8% while in FY85 and FY86 the rate of return was at14.7Z and 12.7Z respectively. Tariffs were not adequate in FY83,however because of the tariff adjustment undertaken in April andDecember 1984, NEC was able to improve its revenue position duringFY84 to FY86.

b) Billing and collection of revenue progress in reducing accountsreceivable to 352 of sales by June 30, 1980 and at the end of eachsubsequent year to 30?, 252, 202, and 17Z respectively.

Result: Year Z of Sales

1983 12821984 11521985 8821986 552

C) Project cost estimate revisions and changes in financing plan forquarterly review.

Result: Project costs were adequately monitored.

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Project Dates

First mentioned in file May 1977

Negotiations September 5-11, 1979

Board Approval April 17, 1980

Credit Agreement date April 24, 1980

Effectiveness August 14, 1980

Closing Date December 31, 1985 - OriginalDecember 31, 1987 - Actual

Final Disbursement Date September 30, 1988

Cumulative Disbursements

1980 1981 1982 1983 1984 1985 1986 1987 1988

Appraisal Estimate 1.0 7.0 29.0 51.0 61.0 64.0 65.0(US$ million)

Actual (US$ million) 9.8 24.2 32.9 40.3 46.1 54.0 62.6 64.9

Actual as 2 ofAppraisal Estimate (Z) 140 83 65 66 72 83 96 99

Staff Input (Staffweeks)Stage of

Project Cycle 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

ThroughAppraisal 15.0

AppraisalThrough Board 27.0

Board ThroughEffectiveness

Supervision 8/ 14.0 16.0 16.0 18.6 20.1 11.9 6.4 11.0 7.4Total SW's 15.0 27.0 14.0 16.0 16.0 18.6 20.1 11.9 6.4 11.0 7.4

P=== ==3S ===0 ==wh=hr 3o-g A=== p3= = pr3j3==s=

!/ Sup.r,is.d with other on-going power pro3ects.

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Mission Data

DaysStage of Month/ No. of in Specialization Per#. Types ofProject Cycle Year Persons Field Represented Rating Problems

Through Appraisal

-Preappraisal Feb 78 3 10 a/ Power EngineersFinancial Analyst

-Appraisal Sep 78 2 34 a/ Power EngineerFinancial Analyst

Appraisalthrough Board Jun 79 2 7 */ Power Engineer

Financial Analyst

Board ApprovalthroughEffectiveness

Supervision Aug 80 1 10 Power Engineer 2

Dec 80 1 9 Financial Analyst 2

Apr 81 1 8 Power Engineer 2 Procurement

Sep 81 2 10 Power Engineer 3 Managerial/Financial Analyst Financial

May 82 2 15 Poser Engineer 3 ProcurementFinancial Analyst

Dec 82 2 13 Power Engineer 3

Oct 83 1 9 Power Engineer 3 Managerial/Financial/Political

Jun 84 2 15 Power Engineer 2 Technical/Financial Analyst Financial/

Managerial

Jun 86 3 11 Power Engineers 2 Manageritl/Financial Analyst Financial

Dec 86 1 8 Power Engineer 2

Jun 88 1 30 b/ Operations Analyst

Sep 87 3 21 c/ Power Engineer 1Consultant

Oct 88 2 10 c/ Financial AnalystPower Engineer

a/ Project appraised in conjunction with the suporvision of Power II Project.b/ Project supervised in conjunction with supervision of manpower components

of Power Rehabilitation Project.S/ Supervised simultaneously with other power projects (Power Rehabilation and

Power IV Projects).

Performance Rating Status: 1 - Problem free or minor problems2 - Moderate Problems3 - Major Problems

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SUDAN POWER III PROJECT (Credit 1006-SU)Schedule of Disbursements

(US3 Millions)

Appraisal Actual Actual as % of Apr.Quarter Ending Estimate Disbursements Estimate

Jun. 30, 1980 1.0

Sep. a0, 1980 2.0Dec. 81, 1980 3.0Mar. 31, 1981 4.0Jun. 30, 1981 7.0

Sep. 30, 1981 12.0 6.2 62%Dec. 31, 1981 17.0 9.8 67%Mar. 31, 1982 23.0 13.0 65%Jun. 30, 1982 29.0 18.6 57%

Sep. 30, 1982 36.0 19.2 66%Dec. 31, 1982 41.0 24.2 69%Mar. 31, 1983 46.0 27.2 59%Jun. 30, 1983 51.0 30.8 80%

Sep. 30, 1983 66.0 32.0 68%Dec. 31, 1983 68.0 32.9 57%Mar. 31, 1984 80.0 34.6 68%Jun. 30, 1984 61.0 38.8 80%

Sep. 30, 1984 62.0 38.4 62%Dec. 31, 1984 83.0 40.3 64%Mar. 31, 1986 63.6 41.8 88%Jun. 30, 1985 64.0 43.6 68%

Sep. 30, 1986 64.6 44.7 89%Dec. 31, 1985 65.0 46.1 71%Mar. 31, 1986 48.0Jun. 30, 1988 49.9

Sep. 30, 1988 61.7Dec. 31, 1988 64.1Mar. 31, 1987 69.3Jun. 30, 1987 60.5

Sep. 30, 1987 61.4Dec. 31, 1987 62.6Mar. 31, 1988 82.7Jun. 30, 1988 63.0

Sep. 30, 1988 64.8Oct. 26, 1988 9/

V/ Closed on September 30, 1988 and the undisbursed amount of US146,641.79 cancelled.

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SUDAN POWER III PROJECT(Credit 1006-SU)

Project Cost Estimate(US$ Thousands)

---Appraisal Estimate ---- ----Current Estimate---Local Foreign Total Local Foregin Total

Description

A. Project Works

(i) Roseires No. 6, 6 and 7 Units 5258 29864 34912 8381 30498 33877

(ii) Sennar-Kilo X - 2nd 220 Kv Circuit 6378 12174 17662 4898 26318 31016

(lii) Burrn Diesel Station a336 27874 30820 2694 41887 44581

(iv) Refinforcement 33-kV CircuitBurrl-Khartoum North 376 1928 2304 2089 9309 11398

(v) Khartoum North Steam Plant 10064 50474 60638 10166 78274 88429

(vi) Khartoum North Substation Ext. 452 1764 2216 1318 1318

(vii) Engineering A Site Supervision 904 7328 8232 2146 20992 23137

25768 130806 156574 25480 207276 233756Management A Staff TrainingFacilitios 2800 4780 7680 8261 3041 11302

Physical Contingencies 5864 16470 20034

Price Increases 16664 43888 60562

Total 47896 195944 244740 34741 210317 246068

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SUDAN POWER III PROJECT (Credit 1008-SU)

------------------------------------------------------------ __-------------

Compliance with Major Covenants I Status

Section 3.01, para. (i) requires NEC to I Operation and maintenanceoperate and maintain its plant ... in l procedures are poor and theyaccordance with appropriate engineering a *re further hindered by astandards. lack of foreign exchange to

I import spare parts.

…------------------------------------- - I-…-- ------------------------------Section 3.03. PEWC shall not employ l NEC now has a ratio of 34:1additional unskilled staff until it has lachieved a ratio of active meters to |employees of at least 40:1 I

…------------------------------------- - I-…-- ------------------------------Section 4.02. PEWC shall have its accounts I Audited accounts for FY83audited and submit audit accounts within l received in May 1985, whilesix months after the end of the financial I those for FY84, FY86 andyear (amended under Power IV Project l FY88 in March 1987. FY87to eight months for FY87 accounts). audited accounts were

provided in July 1989.

…------------------------------------------ I…_____________________________Section 4.04. Rate of Return requirement l FY82 is 2%; FY83 is -6.8X;for electricity not less that 8%O. FY84 is 6.5%; FY86 is 14.7%;(This was amended to 9% under Power Rehab a and FY88 is 12.7%;and to 20% internal contribution to l Non compliance in FY82 wasinvestment for FY88 and to 10% rate of l mainly due to devaluation ofreturn thereafter under Power IV.) l currency and major repair

l works. Non compliance inl FY83 and FY84 was primarilyl due to large revaluationincreases.

…-------------------------------------------I…-----------------------------Section 4.06. Debt service coverage l In compliancerequirement is 1.5 6

…-------------------------------------------I…-----------------------------

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e ~SMA

r,at± vm L~ Stamn

Fo tia Yews &Aim Jm 3D. 1931986

-19 83~ 90 --986-Appralsal mMte App-l t A l Hid ppal Rav1d

Sals in GIh

chnima 77.0 146.5 85.0 46.0 94.0 60.0 10. 73.0TmEtrisaL 403.0 27L6 54L0 339.0 606.0 44L0 679.0 53.0

tic 297.0 281.1 315.0 262.0 335.0 34L0 356.0 41.0AricA=m 25. 0 ZL6 260.0 69.0 307.0 90.0 338L0 109.0Otbw b/ 306.0 37.3 326.0 55.0 340.0 n.o 35o.0 85.0

ToiL fl7-Is 157.0 77IT TO= iw= MO 1(ES£i Mf11m)

arda l 3.8 3.9 4.2 7.0 4.7 LL8 5.1 15.7Iz&tr*la 16.0 17.2 2L5 37.3 24.1 65.3 V.0 664Icuntc 1L2 2.4 19.3 3L6 20.5 59.0 2L.8 73hpiie21twa 9.4 L2 10.4 7.5 114 1L4 12.5 15.2t b/ 189 1.5 2.1 5.3 2L0 12.4 2L9 l62

Tot~. SaI Bavam =4~ 753 -=T M1T Tf.g ET aXrw 0.7 3.0 0.8 1.4 0.9 4.7 0.9 4.5Tariff Is_ Y/ 0.0 0.0 3.0 0.0 17.1 0.0 3L9 50

Total 67.1 47.2 9. 92.1 99.7 1=6 1^.1 Zo3

Fuel 20.5 19.7 28.5 26.0 33*6 1L2 4L0 389int. - c L7 2.4 2.0 3.7 2.3 8.0 2.8 12.0

0tbw Go, 1 & DIa 10.7 14.0 1W23 16.7 14.2 2Z.0 163 26.0- rd ad- 9.0 11.9 10.9 15.0 12.8 17.5 16.2 7.2

A4mfMg=~tjCn 5.4 8.2 6.3 100 7.2 1L5 84 20.8Tam 0.0 0.0 0.0 0.0 6.2 0.0 14.5

lbt1 _.3 o -.2 7-3-. 8 M m z 2 2

(apent i 19.8 9.0 19.3 20.T 234 S3.4 2L9 106L4Incmt a CUI 0.0 13.2 0.0 13.2 0.0 153 0.0 25.2

la c Iab 19.8 -21.2 19.3 7.5 23.4 6.1L 2L9 8L2_e Jm I5.8 2.2 1.6 2.8 19.1 20.9 18.8 46.3

hlst 1a14.0 -24.4 7.7 4.7 4.3 U .2 101 34.9

km. h- -£SiM~ 0.0ow 0.072 0.051 0.118 0.09 0.164 0.070 0.191

Ron of latm s10.0 -. 6 L1 5.5 8.2 14.7 83 12

7-W-m mi Hm a fzcu vwhau =m- -t m m .CO/M &"P rd In q sa1 mon ma to'am W camn lrger t Of MC.Am izmm of 211 in twiffs w fr 1, 1984 Sads 1 eCtad 1n b L

- 25 -

SMAN

Natioal Electricity Corporatoa

9S: ative Ftrds F1lo Statt

For the Years X JUi 30, 1983-1986(ESd Million)

-1983--- 1984- 1985- -1986---Appraisal IJadtite Appraisal Unaidite Appraisal RevisW Appraisal ReaisedEstimt Actual Fatzme Acal Estimate Estimte EstIte Estimate

Internal Sources

Operatr Io -Water 5.3 0.0 4.9 0.0 2.5 0.0 3.2 0.0- Electric. 19.8 -9.0 19.3 20.7 23.4 83.4 28.9 106.4

lDepredaton 11.4 11.9 13.6 15.0 16.1 17.5 20.3 27.2Total 36.5 2.9 37.8 35.t 42. 100.9 52.4 133.

Increase in Working Capital 13.2 -11.6 10.9 -13.1 5.7 45.1 16.6 -9.0Debt Service 20.2 23.9 25.1 8.8 31.1 29.6 31.9 68.8Interest on Equity Capital 13.2 13.2 15.3 25.2

Total V.T ;5 W 60 tI 36.8 90.0 48.5 85.0

Net h,ailable fatOperatlcn 3.1 -22.6 1.8 26.8 5.2 10.9 3.9 48.6

G@s=ontt R uims

P?mr III Project 30.8 76.4 11.3 4.1 0.8Other 26.3 15.1 31.2 24.2 14.8

Total m m 37s 91.5 .5 U5 80.7 28.3 112.8 15.7 200.0

Bel to Ftnuoe 54.0 114.1 40.7 53.9 23.1 101.9 11.8 151.4

FicAd b

Co Deposits 0.2 0.2 0.2 0.1 0.2 0.3 0.2 0.3loans 53.8 98.0 40.5 37.1 22.9 101.6 11.6 151.1Grants 0.0 15.9 0.0 16.7 0.0 0.0 0.0 0.0

Total 11 T4.1 T. 53.9 23-.1 101. 9 11.8 151.4

Debt ServlAc Caerap 1.8 0.1 1.5 4.1 1.4 3.4 1.6 1.9

SUDAN

National Eletricity Corporatimx

2Wrative Balwice Steets as on June 30, 1983-1986

(LSd RDLIMT-

-19833- -194- -198a5-- -1986-APPraisal Unauiltal Appraisal Unauiitel Appraisal Pevised Appraial PeviseEstiate Actual Estimate Actual Estimte EsLimte Estimrce Estimate

AStSEr

Plant in Operation 380.5 456.0 453.7 581.8 535.5 907.8 676.8 1,253.9Less: Depreciation 112.9 132.0 134.4 150.0 159.9 2D6.2 191.3 280.8

ibt Plant 267.6 324.0 319.3 431.8 375.6 701.7 485.5 973.1

Wbdk in Progress 109.6 179.0 114.2 157.2 95.7 134.6 11.5 228.3

QCrent Asets:Cash sd Banks 44.7 -4.9 53.0 -6.2 52.1 -64.3 5&3 -45.8Accounts RecPAvable 17.1 56.7 17.5 104.7 21.5 [37.1 27.1 115.5Iaventories 15.2 27.2 18. 23.6 21.5 45.4 27.1 62.7Other Accounts a/ 57.4 57.6 50.0 40.0Other 8.6 2.8 9.0 0.4 9.5 4.0 10.0 4.5

Total 85. 1T 97. I;r 11Z1 172; 122Y 177;

Total Assets 462.8 642.2 531.1 769.1 575.9 1,008.5 619.5 1,378.4

LLABELITIES

EquityCapital 34.4 11.2 34.4 11.2 34.4 11.2 34.4 11.2

etasned aEarninp 105.3 -4.7 117.5 3.0 123.7 50.2 136.0 85.1Grants 25.2 60.7 25.2 77.4 25.2 77.4 25.2 77.4ReveiLj titn Reserve 97.8 196.4 116.5 213.8 138.9 365.8 165.2 558.1

Total NET =266 MET -MY.7 I=522 W04. 360 731T5

aIgafenrm Debt 186.3 276.3 222.4 3D7.3 237.2 400.2 240.8 528.8Grnsu mDeposits 1.9 1.7 2.1 1.8 2.3 2,1 2.5 2.4

Ozantc Ltabilities:Aco,ms Payable 11.9 21.9 13.0 32.1 14.1 36.3 15.4 50.2

hiterest Payablean Qapital 26.5 39.6 15.3 25.2

Othr b/ 0.0 52.2 0.0 82.9 0.0 50.0 0.0 40.0Total IT7 Tf. 135 T 4-.i To16 T 5-.4 115.4

Total [AablI Iti 619.5 642.2 531.1 769.1 575.? 1,0085 377.2 1,378.4

(irest Ratio 7.2 1.4 7.5 1.2 7.4 1.7 6.6 1.5Receivablm-IDys 133 438 122 415 122 304 162 182Dt/Equity Ratlo 41/59 51/49 43/57 50/50 42/58 44/56 37/63 42/58

a/ Otht awre awts cprise the amits due to NEC by the renal electriciLy qacim forcmutructinand otehr wst performd by tEC.

b/ Otter lrret IabIlIti cprise mainly amtuns in respet of NEC bills (princpally for fuel oil)