F lIE C OPY Document of C~~~~IRCULATING COPYFILE COPY Document of TO BE RETURNED TO

The World BankFOR OFFICIAL USE ONLY

Report No. P-1786a-HA

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED DEVELOPMENT CREDIT

TO THE

REPUBLIC OF HAITI

FOR A

FIRST POWER PROJECT

June 3, 1976

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

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Currency Equivalents

Currency Unit Gourde (G)US$1 G5.00

G1 US$0.20G1 Million US$200,000

Fiscal Year

October 1 - September 30

Units and Measures

GWh Gigawatt hour = 1 million kWhkWh 3 kilowatt hourkm kilometer 0.62 milekW kilowattMW Megawatt 1,000 kWkV kilovolt

Abbreviations and Acronyms

EdH Electricite d'HaitiSOFRELE - Societe Francaise d'Etudes et de

Realisation d'Equipements Electriques

FOR OFFICIAL USE ONLY

INTERNATIONAL DEVEWPMENT ASSOCIATION

REPOIT AND RECOMMENDATION OF THE PRESIDENT TOTHE EXECUIIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT

TO THE REPUBLIC OF HAITIFOR A FIRST POWER PROJECT

1. I submit the following report and recommendation on a proposeddevelopment credit uo the Republic of Haiti for the equivalent of US$16million on standard IDA terms to help finance a first power project. Thecredit would be onleht by the Government to Electricite d'Haiti (EdH) at aninterest rate of 8.85 percent with a repayment period of 25 years, includinga grace period of two years.

PART I - THE ECONCMY

2. The most recent economic report on Haiti, Report No. 410-HAentitled "Current Economic Position and Prospects of Haiti" was issued onApril 18, 1974. A Bank Economic Mission visited Haiti during March/April ofthis year and is currently preparing a new report. Updated social and econo-mic data are presented in Annex I.

3. Haiti is one of the poorest nations in the world, and the onlycountry in the Western Hiemisphere included in the U.N. list of 25 leastdeveloped nations. GNP per capita in 1975 stood at about US$170. An infantmortality rate of about 150 per thousand live births, an average life expec-tancy of 48 years, low nutrition and sanitation standards (malnutrition andgastro-enteric diseases account for over half the deaths in the country) andan adult literacy rate of about 20 percent characterize the depressed livingstandards of the population.

4. The country's natural resources are limited. Of the country'stotal area, only about 1.5 percent is well suited to agriculture althoughtwice as much is actually under cultivation. The remaining 70 percent istoo arid and steep for cultivation. The average density of population isnearly 500 per square kilometer of arable land, one of the highest in theworld. In addition, much of the country suffers from frequent hurricanes,floods and droughts. Krnown mineral resources are modest, consisting ofbauxite, copper and ligrnite. There is, nevertheless, scope for expansion of.agricultural output thrcugh improvement of presently low levels of product-ivity. The country's proximity to the U.S. market, and the availability ofabundant labor provide the basis for industrial development while Haiti'sstriking scenery and distinctive culture offer a potential for tourism.

5. Economic growth and social progress have been hampered by periodsof political instability which did not permit the development of an adequatetechnical and physical infrastructure. Inadequate maintenance reduced theefficiency of the limited irrigation network. The lack of an adequate trans-port infrastructure and its poor maintenance hampered the development ofcommercial agriculture. Power generation capacity is also well below theLatin American average.

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

6. In marked contrast to the previous decade when the economy stagnated,Haiti enjoyed some growth in 1968-74. Expansion of small-scale manufacturingand assembly operations, tourism and construction led to real average annualincreases of GDP of about 3.6 percent while population grew at an estimatedannual rate of 1.7 percent. These activities contributed noticeably to improv-ing economic conditions in Port-au-Prince. Employment in assembly operations,for example, increased from 10,000 in 1971 to 20,000 in 1974. Agriculture,however, which employ- 80 percent of Haiti's population and accounts for abouthalf of GDP and about 60 percent of merchandise exports has as yet shown littledynamism. Progress in agriculture will require the adoption of improved pro-duction techniques and provision of greater incentives to farmers, as well asthe improvement of transport facilities.

7. In 1975, GDP growth fell to 1.2 percent. Agricultural output stagnatedmainly as a result of a severe drought which affected the northwestern part ofthe country. Moreover, adverse economic conditions in the United States broughtabout declines in exports of mining products, in orders for products of the lightassembly industry as well as in industrial investment. Construction activityalso slowed down significantly.

8. In the past three years the Government has adopted several measures toencourage agricultural production. In 1973 the specific tax on coffee which,by absorbing a large share of export proceeds, weakened producer incentiveswhen international prices were low, was replaced by a progressive ad valoremlevy. In 1974 a nationwide five-year coffee production program was initiatedwith the support of AID to provide small farmers with a package of technology,credit, fertilizer and training. A substantial increase of the prices paid tofarmers for sugar cane and to the mills for sugar production was approved. Theexport tax on sugar was lowered from its previous rate which was as high as 80percent at the margin. The tax on agricultural products marketed domestically,levied each time a commodity changed hands, was eliminated. In addition tothese measures, the Government intends to launch during the next two years impor-tant investments in the agricultural sector. The projects, which are to belocated in different regions of the country, are designed to increase the levelof income and employment of the rural population.

9. The Government is carrying out an important investment program inwhich the provision of the country with infrastructure facilities, essential tothe development of the directly productive sectors, occupies a central place.Public investment has grown at about 46 percent in real terms during 1975. Inthe area of Port-au-Prince, projects are underway to expand and improve portfacilities and the water supply system. Major roads linking the northern andsouthern regions of the country are being reconstructed. The Five-Year Develop-ment Plan (1977-81) that the authorities are currently preparing is expected tostress regional development. In addition to projects directly concerned withincreasing agricultural production, the Plan envisages the extension of health,sanitation and education services to the rural population. Development expen-ditures would increase from about US$37 million per year in 1973-75 to aboutUS$66 million per year in 1977-81.

10. The successful execution of such a program will require a substan-tial increase in the flow of external assistance. In the period 1973-75 netexternal lending financed only about 17.4 percent of development expenditures.Official grants and private donations financed the equivalent of 36.9 percent.The remaining was financed to the extent of 26.6 percent by public savings and19. 1 percent by internal borrowing. On the basis of disbursements of alreadycommitted loans and of likely future annual commitment levels of US$45-Us$5Omillion, it is expected that net disbursements from official lending agencieswill finance about 52 percent of development expenditures in the period 1977-81.Capital investment g:cants from bilateral agencies are expected to finance 8 per-cent of development expenditures. Other official grants and private donationsare expected to continue to represent an important, albeit declining, share ofdevelopment expenditures (about 27 percent). Public savings would finance theremaining 13 percent.

11. Earmarking of tax revenues to finance public investment expendituresas well as the operations of autonomous institutions has acquired increasedimportance in Haiti during recent years. Earmarking has taken place at theexpense of the Central Government Operating Budget and led to a decline in realterms since 1971 of Central Goverrment current expenditures. This has, in turn,impeded badly needed improvements in the quality of public services. Earmark-ing has also reduced the relative importance of the Central Government Budgetas an instrument for the allocation and control of public sector revenues.The Government has initiated a detailed analysis of the origin and destinationof earmarked accounts which could provide a better insight into the economicnature of public sector revenues and expenditures and the basis for a reformof the budgetary system.

12. The growth of public savings will in the future be constrained by theneed to substantially increase current expenditures in order to upgrade thequality of public administration and to meet sharply rising operating expendi-tures generated by new development projects in agriculture, education, health,road maintenance and other sectors. In view of this constraint and because ofthe extreme poverty of th,s country, its fragile balance of payments and thesevere limits to raising additional fiscal resources - taxes represent alreadyabout 12 percent of GDP, no mean achievement for a country as poor as Haiti -the successful execution of the development plan will require external financingcovering a high share of the cost of development projects, including somefinancing of local costs.

13. Haiti's balance of payments deteriorated in 1974 and 1975. Thedeterioration in 1974 was largely explained by higher import prices. In 1975the volume of bauxite, siEal and essential oils exports declined mainly as aresult of the world recession. Food imports increased sharply partly as aresult of the effects of a drought which reduced domestic production. In addi-tion, substantial payments were made to finance public investment in the tele-communication sector. As of September 30, 1975, end of the Haitian Fiscal Year,net international reserves of the National Bank as well as those of the consoli-dated banking system were negative on the order of US$4 43 million and US$24million respectively, while gross reserves of the banking system were only

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US$12.8 million. However, the situation improved in the last five months,with an addition of US$9.2 million to the reserves. Net reserves of theNational Bank were at US$4.9 million as of February 28, 1976.

14. At the Haitian Government's request, a high level Joint ConsultativeCommittee was established in January 1976. It includes representatives of theHaitian Government as well as of multilateral and bilateral agencies activelyproviding assistance to Haiti. The Committee's role is to coordinate foreignassistance, both fin' ncial and technical. As one of its major functions, theCommittee,which should convene every six months, is to assess the availabilityof counterpart funds for investment projects financed by external officialagencies, both required and likely to be available. The Committee will thusbe in a position of making recommendations to the Haitian Government on measuresto be taken in order to ensure that public savings are adequate to meet the localfinancing requirement.

15. Haiti's resource gap is expected to continue to widen in the mediumterm, reflecting the import requirements associated with the Government'sinvestment program. There has been relatively little net foreign borrowingin the last decade and the debt service ratio is relatively low (6.3 percentin 1975). Nevertheless, the balance of payments is likely to constitute aconstraint to economic development in view of the limited growth prospects ofHaiti's agricultural exports, and because export diversification through thedevelopment of manufacturing and tourism, is still at an early stage. In viewof the country's poverty and the dependence of its balance of payments on worlddemand for a few commodities, Haiti will continue to require external assistanceon concessionary terms for a long time if it is to achieve a significant improve-ment in the standard of living of its population.

PART II - BANK GRCUP OPERATIONS IN HAITI

16. The Bank Group has had five operations in Haiti. A US$2.6 millionBank loan (lhl-HA) was made in 1956 for highway rehabilitation and a US$350,000IDA credit (32-HA) was made in 1962 for highway maintenance. Two IDA credits -US$10 million (478-HA, Third Highway Project) in 1974 and US$20 million (556-HA,Fourth Highway Project) in 1975 - were made to Haiti for reconstruction of theNorthern Road. In February 1976, a credit of US$5.5 million was made for aFirst Education Project. Execution of the Third and Fourth Highway Projects ismaking good progress, with disbursements ahead of appraisal estimates. TheProject Unit for the Education Project is already established; the credit wasdeclared effective on May 20, 1976. Annex II contains a summary statement ofthe Bank loan and IDA credits as of April 30, 1976 and notes on the executionof ongoing projects.

17. The Government organizes twice yearly meetings to coordinate assistancegiven to the transport sector by the various aid agencies. USAID is financingpurchase of road maintenance equipment, supplying technical assistance for amaintenance training program and financing improvement of feeder roads. IDB is

financing construction of the Southern Road and expansion of the port ofPort-au-Prince. France is financing construction of the road linking thesouth coast city of Jacmel to the Southern Road and is providing assistanceto improve facilities at provincial airports. UNDP is financing the tech-nical assistance comporent of the Third Highway Project (with the Bank asexecuting agency) including training of local contractors in administration,engineering and management as well as a study of Haiti's transport sectorwhich is expected to recommend future investment priorities.

18. IDB, Canada, France, and IDA are cooperating closely with theGovernment in projects aimed at meeting the most urgent needs in the educationsector. IDB has lent for agricultural education and is providing technicalassistance for the preparation of a rural primary education project. Canadais supporting a technical education project in Port-au-Prince and France isproviding technical assistance for a new National Pedagogical Institute andteachers for technical and vocational schools. The recently approved IDAproject is designed to begin to meet some of the highest priority needs forrevision of primary school curricula, expansion of educational opportunitiesin rural areas, upgrading of teacher qualifications, and support for adultliteracy programs.

19. Aid agencies are also supporting other sectors of the Government'sdevelopment program. IDB has made loans for agricultural and industrial credit,and improvement in Port-au-Prince's water supply. It is providing assistanceto the Government for the preparation of integrated rural development projects.USAID has given assistance for Haiti's malaria eradication program, for commu-nity development and for modernization of the production and marketing of coffee.Canada is supporting a rural development project in the southern peninsula andhas undertaken a survey of Haiti's water resources for both irrigation and powerpotential. The Federal Republic of Germany is providing financial and technicalassistance for regional development in the Gonaives Plain. UNDP is financing anumber of programs including a survey of Haiti's mineral resources, technicalassistance through UN agencies in education and rural development, and foodrelief. Of special significance to Haiti's development in education, healthand agricultural services, are the many and varied programs of the voluntaryagencies.

Table 1: LOAN COMMITMENTS TO HAITI, 1966-75(US$ million)

IDA IDB Bilateral

Agriculture - 0.7 6.0Industrial Credit - 1.1 -Transport 30.0 64.7 3.2Education 5.5 1.3 -Water and Sewerage - 7.4 -

ITl1AL 75. 2 9.2

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20. Prospective IDA lending operations in Haiti take into account ourpresent knowledge of Haiti's development needs and the ongoing and plannedroles of other official lending agencies. As regards transportation, a highpriority sector in which IDA is already playing a major role, selection offuture transportation projects for financing by IDA would take into accountthe recommendations of the transport study mentioned in paragraph 17 which isexpected to be completed in July 1976.

21. The Government financed construction, in the late 1960's, of thePeligre hydroelectr;-: plant to supply power to Port-au-Prince. Since theplant, assuring stuady supply of electricity, became operational in 1971, Haitihas attracted a number of labor-intensive assembly plants. The growth indemand for power has been such that serious power shortages are expected by1977 unless additional diesel electric plants are installed by then. InFebruary 1975 the Government-owned power company, Electricite d'Haiti (EdH),engaged consultants to prepare the proposed project which would increase thegenerating capacity and distribution system for Port-au-Prince. In order toinvestigate long-range solutions to the supply of Haiti's national power needsby maximizing the use of Haiti's own sources of energy, UNDP is financing anational power sector pre-investment study for which the Bank is executing agency.Consultants began field work i4n January 1976. Their assignment includes astudy of the potential use of Haiti's deposits of lignite as fuel for thermalelectric plants. The consultants, in their overall national study, will alsoevaluate the recommendations for potential hydropower plants which are beingmade by the ongoing survey of Haiti's water resources sponsored by CIDA. Thisstudy is expected to identify high priority projects which, together with thefollow-up power proJect for Port-au-Prince (see paragraph 57), could be suitablefor financing by IDA and other official lending agencies.

22. An IDB/FAO/IBRD agricultural survey mission identified in mid-1973several key regions for agricultural development. As a result of that study,the Government asked IDA to support a rural development project in the NorthernPlain, a densely populated region with considerable agricultural potential.An FAQ Cooperative Program mission visited the region in January/February 1975identifying potential project items, namely, agricultural credit, production ofimproved seeds, extension services, education and health services, access roads,drainage and rehabilitation of irrigation works. The project was appraised inApril-May 1976 and is scheduled for presentation to the Executive Directorsearly next year.

23. WHO/PAHO, with UNDP financing, is undertaking the preparation of awater supply project in provincial towns for which the Government has requestedIDA financing. The project, besides improving and extending existing watersystems, would strengthen the technical and administrative capabilities of theServices Hydrauliques, which in the future is expected to be a key agency inexpanding water services in rural areas.

24. The Bank Group's share in Haiti's publicly-guaranteed external debtoutstanding and disbursed amounted to about 13 percent at the end of 1975.The Bank Group's share of external public debt service during 1975 was about0.5 percent. Its share of outstanding publicly-guaranteed external debt wouldrise to about 30 percent by 1980; its share of external public debt servicewould be of the order of 7 percent.

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25. There have been no IFC operations in Haiti to date but severalexploratory missions have recently visited the country.

PART III - THE POWER SECTOR

Energy Resources

26. Haiti's known energy resources are scarce. There are several knowndeposits of lignite out Little is known of their size, facility for mining or theirsuitability for generation of electricity or as a domestic and industrial fuel.In January 1976, consultants began a study of several of the lignite deposits aspart of the larger UNDP-rinanced power sector pre-investment study. Should ligniteprove to be a feasible source of energy for both generation of electricity andas a domestic fuel, important benefits could be realized in reducing the country'sdependence on imported fuel as well as reducing consumption of locally producedcharcoal which is leading to depletion of Haiti's few remaining forests. Theconsultant's report on the potential uses of lignite is expected by the end of1976. Identification of Haiti's hydroelectric potential is being carried outunder the CIDA-sponsored study. There are no known geothermal sources. Explo-rations are underway to identify exploitable deposits of petroleum. The mainsource of commercial energy is imported refined petroleum products.

Supply of Power

27. Port-au-Prince has had access to a regular supply of electricity sincethe Peligre hydroelectric project came on line in 1971. This has made the recentrapid growth of assembly industries possible but, because of current short supply,a number of local industries have not been able to obtain connections to thepower system. Several provincial towns also have public electricity. Only one-fourth of the Port-au-Prince households have access to electricity although theyaccount for 96 percent of the approximately 27,000 households in all of Haitithat have electricity. National per capita electricity consumption was 28 kW~hin 197h (32 kWh without allowance for losses in grids), compared to 150 kWh inHonduras and 190 kWh in Ivory Coast. In the Port-au-Prince area, industrialconsumers account for 44 percent of electricity consumption while residentialconsumers account for 33 percent, commercial consumers 10 percent, public light-ing 6 percent and other users for 7 percent.

28. Metropolitan Port-au-Prince: Until the Peligre hydropower plant cameon line, the Port-au-Prinj,e system was supplied only by a diesel power plantwith nominal capacity of L7 MW. The capacity of this old plant (12 machines,average age 28 years) is 'low 14 MW (3 MW capacity having been taken to provin-cial towns), but its present condition permits production of a base load of only5.4 MW and of about 7.8 HW for peaking purposes.

29. The Peligre dam, 54 km north-east of Port-au-Prince, was first builtin the mid-1950's for flood control and irrigation of the Artibonite Valley. Inthe 1960's its use was modified to include generation of power for Port-au-Princeand the first generator wals put into service in 1971. Two more generators were

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commissioned in April 1972 and January 1974. Each generator has a nominalcapacity of 15.7 MW resulting in a total plant capacity of 47.1 MW. Theaverage generating capacity of the plant is 172.5 GWh in the rainy seasonand 66 to 72 GWh in the dry season.

30. Rest of the Country: Isolated diesel plants and a small hydroplant (at Jacmel) for 8 total capacity of 9.5 MW serve 10 provincial towns.Captive power plants operated by some major industries (mainly cement andsugar mills) have a ̂ ombined capacity of 17 MW.

Power Sector Organization

31. In 1971, the Government-owned power company, Electricite d'Haiti(EdH), was established to take over the new Peligre hydroelectric plant anda privately-owned power company serving Port-au-Prince whose concession hadexpired. According to its charter, EdH is also responsible for the develop-ment and distribution of electric power throughout the country. It hasrecently assumed nominal control of practically all public service electricpower facilities in the country.

32. Authority to regulate the power sector is vested in the President ofthe Republic and exercised through key government ministers who form, the Boardof Directors of EdH. The Minister of Public Works is chairman of the Board.There is no separate tariff regulatory commission. The basic law creating EdHstates that tariffs. investment programs and borrowings must be approved bythe President of the Republic. These procedures have been satisfactory in thepast.

33. When the Haitian cabinet was reorganized in March 1976, EdH'sDirector General was replaced. The new Director General is EdH's formerTechnical Manager; his replacement as Technical Manager is an engineer withmany years of experience in EdH. The Director General is also assisted by anAdministrative Manager with responsibility for the financial and administrativedepartments. Besides maintaining staff, with qualifications acceptable to IDA,in these key positions, EdH would appoint, not later than July 31, 1976, atraining officer, a system planning officer and two assistants for budgetingand financial planning (Section 3.01(b) of the draft Project Agreement). Tostrengthen management and technical skills, EdH is undertaking training prog-rams in Haiti and abroad (see paragraphs 45 and 46). The Govern-ment will amendEdHIs basic law to effect recent changes in the company's organization, espe-cially in creating the position of Technical Manager (Section 4.04 of the draftCredit Agreement).

34. The Government does not yet have a rural electrification policy.The Federal Republic of Germany is financing a small 2.5 MW hydro plant tosupply energy for irrigation purposes in the Artibonite-Gonaives area andfor supplying public services to the town of Gonaives. Plans for generalelectrification of towns and larger villages will be formulated on the basisof recommendations to be made by the ongoing power sector pre-investment study.

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External Aid and Planning

35. Besides the Gsrman assistance mentioned above for a small hydroplant, there has been no lending from official development agencies for thepower sector. In 1972, UNDP financed technical assistance supplied by theUnited Nations Office of Technical Cooperation to undertake a preliminarysurvey of Haiti's elect:'icity needs and to make reco.niendations for futureinvestments. By 1974, it had become evident that with the rapid increase indemand for electricity, Port-au-Prince would not be able to wait for construc-tion of hydro or lignite-fired plants, should they prove feasible, and that aninterim diesel plant would be needed to avoid serious shortages occurring by1977. The Government hired consultants (SOFRELEC/France) to prepare the pro-ject under consideration. At the same time, the Government requested UNDPfinancing (and Bank assistance as executing agency) to hire consultants(SOFREIE/France) to make a national power sector pre-investment study whichwould investigate the possible uses of lignite and incorporate the findings ofthe CIDA-sponsored study of Haiti's hydraulic resources. The consultants willprepare a program for pcower generation and transmission for the period 1982-95on the basis of the lignite and hydro studies and of countrywide projectionsof future power demand.

Constraints on Sector Development

36. The major constraints to sector development are: (a) lack ofcoordination among the Government, EdH and the private sector; (b) lack ofsufficient skilled manpower; and (c) inadequate financial resources. Notwith-standing the fact that EdH has been charged with the responsibility for nationaldevelopment of the power sector, installation of equipment still continues inthe provinces without the benefit of a master plan or of central control. Asa first step towards the coordinated development of the sector, the Governmenthas given assurances that future investments in the power sector would be madeaccording to a plan, acceptable to the Association, taking into account therecommendations of the ongoing sector study, which is to be completed bySeptember 30, 1977 (Section 4.01(a) of the draft Credit Agreement). Any invest-ments to be undertaken between credit signing and completion of the project,requiring outlays in excess of US$1.5 million in any one year, would be inagreement with the Association (Section h.02 of the draft Credit Agreement).Investments made after project completion and exceeding US$2 million would bein accordance with the ilnvestment plan and would be undertaken after consulta-tion with IDA (Secticn 4.Ol(b) of the draft Credit Agreement).

37. The UNDP-financed sector study includes a component for the trainingof eight mechanical and electrical engineers, two engineers in system planningand of two graduate accountants in budgeting and control procedures. The pro-ject under consideration includes a program for the training of EdH staff inthe use of a new accounting system designed by the consultants and the creationof an EdH center for the continuous training of electricians and mechanics.

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38. Despite relatively high tariffs in the past, EdH has been unableto generate adequate financial resources because of high levels of lossesand theft (see para. 53 below). The Government and SdH have agreed toimplement new tariff structures and levels. With these increased revenues,a reduction of losses in the transmission/distribution facilities and measuresto curb theft of electricity, EdH is expected to generate internally a majorpart of the local funds required for its long-term expansion programs (seeparagraphs 54 and 56).

DA Strategy

39. The long-term IDA strategy is to (a) assist formulation of anational power development plan; (b) help Haiti develop the power sector byusing, to the maximum extent feasible, the country's own energy resources;and (c) assist EdH to become an efficient and financially sound nationalpower company. In the short term and while beginning the long-range programin institution-building and planning, IDA would help finance additional gene-rating capacity and transmission facilities to supply the growing power demandof the metropolitan Port-au-Prince area.

PART IV - THE PROJECT

40. The project was identified by an IDA mission to Haiti in August1974. It was prepared by consultants (SOFRELEC/France) and appraised by IDAin November 1975. Post-appraisal missions visited Haiti in January andFebruary,1976, to discuss project-related issues and to outline implementationprocedures. Negotiations for the proposed credit were held in Washington fromMay 3 to 6, 1976. The Haitian delegation was headed by Mr. Antonio Andre,Minister of Commerce and Industry and Mr. Fernand Laurin, Minister of PublicWorks and Chairman of the Board of EdH. A report entitled "Appraisal of FirstPower Project - Haiti" (No.1052a-HA dated May 24, 1976) is being distributedseparately. The main features of the credit and project are summarized inAnnex III.

Project Cbjectives and Description

41. As the above assessment of power sector problems indicates, there.is an urgent need not only to increase the supply of electric power, but alsoto strengthen secto: management, planning and financial capabilities. Tosupport these objectives, the proposed first IDA power project is designed to:

(1) increase the supply of electric power in the Port-au-Princearea;

(2) help EdH become an efficient, financially independent nationalelectric company by strengthening management and technicalcapabilities and by reducing electricity losses;

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(3) make electricity accessible to a larger number of poorhousehoLds by applying a new tariff structure;

(4) assist formulation of a national power development plan.

42. The project would consist of:

(1) A medium-speed diesel engine power plant with a capacityof a' out 21 MW;

(2) Related transmission and distribution facilities;

(3) Rehabilitation of existing transmission/distribution networks;

(4) Improvem,ents to obtain higher security of the transmission lineinterconnecting the Peligre power station with Port-au-Prince;

(5) Construction and equipping of a training center;

(6) Technical assistance for project engineering and supervisionand for training of EdH personnel.

43. Generation, transmission and distribution: The 21 MW diesel powerplant would be composed of two units of about 3 MW each, and two units of 7.5 JAWeach. Basic fuel would be fuel oil (Bunker C) with some diesel oil for start-upand stopping. The plant would be built near the industrial park where most ofthe new assembly industries are locating. The first units are expected to bein service by March 1977 - to complement the reduced output of the Peligre hydro-hydropower plant during the dry season - with all units operating by the end of1977. The first sectioans of the transmission line which will eventually ringPort-au-Prince would be built under the project. Existing transmission lineswould be adapted to carry increased loads. Distribution lines would be extendedwhere required and new substations built at key locations. The security of thetransmission system from the Peligre hydropower plant would be increased bybetter grounding of towers, improvement of control systems and installation ofan insulating transformer to protect the hydro generators from faults in thelocal system. Circuit breakers in the existing diesel plant would also bereplaced.

44. Technical AssiLatance: Consultants (SOFREIEC/France) are assistingEdH in engineering, preparation of bid documents and evaluation of bid propo-sals. Their selection and terms of reference are acceptable to the Association.They will inspect fabrication of equipment and supervise installation of equip-ment and construction oi the power plant, substations and transmission/distri-bution lines. The consLltants will also carry out a training program. Thecost of these consultant services (about 160 man/months) is about US$5,450 perman/month, which is considered reasonable for this work.

45. Training: Lack of adequately trained staff has led to poor main-tenance of EdH's equipme!nt and distribution system, and a lack of planning andbudgeting. To train ne% staff and to upgrade the skills of present EdH person-nel, a comprehensive training program has been agreed upon with EdH and other

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aid agencies. Under the UNlDP-financed ongoing power sector pre-investmentstudy, engineers will be trained abroad and in Haiti (by the consultants) indiesel and hydropower plant operations and in maintenance of the transmission/distribution system. Other engineers would be trained in planning and,together with accountants, would be instructed in preparing budgets. Techni-cians will be trained in 1976-77 at Port-au-Prince's new vocational trainingcenter sponsored by UNDP/ILO and France. The proposed credit would financetraining in EdH's nev accounting system and in budgeting and control procedures.

46. The proposed credit would also finance construction and equipping ofa small permanent training center for EdH personnel. Cost of the center, withequipment, is estimated at US$150,000. The training center would be directedby a qualified Haitian responsible to the Technical Manager. Besides upgradingpresent EdH personnel, the center would give practical training to new EdHrecruits who are expected to come mainly from among the graduates of a tech-nical secondary school supported by CIDA.

Project Cost and Financing

47. The total cost of the project, net of duties and taxes, is estimatedat about US$18 million. (Details of project cost are given in Annex III). Ofthis anount, the Government would provide US$2 million as an equity contributionto EdH. The proposed credit of US$16 million (89 percent of total project cost)would finance the import component of the project of about US$15 million andUS$1 million of local costs. The proposed cost sharing by IDA is recom-mended in the light of EdH's tight financial situation (see paragraph 53) andof the severe constraints on the Government's ability to increase its savings(see paragraph 12). The credit, which would be on standard IDA terms, wouldbe onlent by the Government to EdH at the interest rate of 8.85 percent witha repayment period of 25 years, including a grace period of two years (Section3.01(b) of the draft Credit Agreement). Interest due the Government by EdH wouldbe capitalized during the construction period.

Project Execution

4b. EdH would be responsible for the execution of the project which wouldbe carried out in accordance with procedures outlined in the draft Project Agree-ment between the Association and EdH. A project implementation schedule wasagreed upon during negotiations.

49. Procurement: The diesel power plant would be contracted on a furnish-and-install (turn-key) basis. Construction of high-tension (69 and 115 kV)transmission lines and substations would be carried out by qualified contractors.All major contracts for equipment and works would be awarded following interna-tional competitive bidding in accordance with IDA Guidelines for Procurement.Equipment, valued at about US$200,000, needed to complement existing equipment,would be procured from original suppliers; the order for training equipment(costing about US$100,000) is too specialized to warrant general internationalcompetitive bidding procedures and would be purchased on the basis of pricequotations from at least three suppliers.

- 13 -

50. Disbursements: Withdrawals from the credit account would be madefor: (a) 100 percent of foreign expenditures or 90 percent of total expendi-tures (with the exception of purchase of land) for the power station; (b) 100percent of foreign expenditures or 85 percent of total expenditures fortransmission/distribution and other works; and (c) 100 percent of foreignexpenditures for other equipment and materials, and for consultant services.The credit would be disbursed over a period of about two years. A scheduleof estimated disbursements is given in Annex III.

51. Retroactive Financing: Because of the urgency of having additionalgenerating capacity installed as soon as possible, EdH engaged consultantsacceptable to IDA, in Flebruary 1975, for project preparation, engineering andprocurement. In order to permit construction to begin in time to avoid majorpower rationing during the 1977 dry season, international competitive biddingfor the generating plant was initiated in consultation with IDA in December1975. Bids were received on February 13, 1976 and on May 7, 1976, with theconcurrence of IDA, EdH issued a letter of intent, valid for 30 days, to thelowest evaluated bidder, a consortium headed by Brown Boveri (Germany). Thisschedule would permit operation of the first generators by March 1977, themiddle of the dry season. Retroactive financing not exceeding US$1.12 millionis recommended for expenditures undertaken from February 1, 1975 against paymentfor consultant services (US$500,000) and downpayments for generating equipment(us$620,000).

Environment

52. The location of the proposed diesel power plant in the industrialsection of Port-au-Prirnce removes it from existing or planned residentialdevelopments. Specifications, acceptable to IDA, on maximum sulfur dioxideemission, noise level and thermal pollution are to be included in the contractdocuments and are expected to keep to a minimum any detrimental effects tothe environment. EdH, with the help of consultants, would route new trans-mission lines so as to minimize unsightly impact or destruction of vegetation.

Financial Aspects

53. EdH's financial performance has been unsatisfactory. This is duemainly to three causes. Firstly, the level of losses of electricity (about32 percent of net generation) is high, both in absolute terms for Haiti'scompact system and ..n comparison to other countries at a similar stage ofdevelopment. The project will reduce losses by improving transmission anddistribution facilities. The Government has also passed special legislationdeclaring theft of electricity - due to illegal connections and metertampering - a criminal offense and EdH expects to reduce these losses bysystematic inspections of connections. Progress in reduction of losses wouldbe monitored against targets established in consultation with the Association(Section 3.02 of the draft Project Agreement). A second cause of poor finan-cial condition was the non-payment of electricity bills by the Government andautonomous agencies. The Government has given assurances that it will under-take all measures necessary to ensure that electricity bills owed EdH are

- 14 -

settled and paid in time under arrangements satisfactory to the Association(Section 4.05 of the draft Credit Agreement). Thirdly, debt service onsupplier's credits incurred for the construction of the Peligre dam, thoughshared by the Governnent, was a heavy burden for the new company. Most ofEdH1's debts for Peligre will be fully repaid by the end of 1978. For theabove reasons, EdH has had to borrow every year from the National Bank(current overdraft is US$3.4 million). Action to reduce electricity losses andto settle overdue receivables as well as adoption of a slightly higher tariff(see below) would improve the financial position of EdH. EdH would not incurlong-term debts(12 ,nonths or more) without prior approval of IDA, unless it isable to meet a 1.5 debt service test (Section 4.05(a) of the draft ProjectAgreement). It would not incur short-term debts (less than 12 months) exceed-ing one-sixth of its annual cash operating expenses without prior approval ofIDA (Section 4.05(b) of the draft Project Agreement).

54. Tariffs: The present electricity tariffs were put into effect somethirty years ago by the private power company which served Port-au-Princeuntil 1971. EdH retained these tariffs with an inequitable structure conduciveto wasteful consumption. On the basis of studies undertaken by the consultantswho prepared the project and who are also carrying out the UNDP-financed powersector study (paragraph 35), EdH will restructure the tariff schedule to makeelectricity more accessible to the small consumer. To permit EdH to attainrates of return on its revalued rate base increasing from 5 percent in 1976to 8 percent by 1961 and thereafter, moderate tariff increases would be needed.New tariffs to come into effect on October 1, 1976 would result in about a10 percent increase on the average over existing tariff levels. Furthertariff adjustments will be made as necessary to achieve the agreed rates ofreturn (Section 4.03 of the draft Credit Agreement and Section 4.03 of thedraft Project Agreement). EdH has agreed to revalue its assets annually,using a methodology acceptable to IDA (Section 4.04 of the draft ProjectAgreement).

55. New accounting procedures are being introduced by EdH, under thesupervision of consultants. These procedures are expected to speed up bill-ings and collections, simplify accounting controls and make information requiredfor planning and budgeting more accessible. EdH accounts would be auditedannually by independent auditors acceptable to IDA (Section 4.02 of the draftProject Agreement).

56. Financing Plan: Over the 1976-78 construction period of the proposedproject, EdH's total capital requirements will be about US$39.6 million. AboutUS$18 million of this amount would be for the proposed project and US$6.7 mil-lion would be the initial disbursement in 1978 for additional diesel units andtransmission and distribution works. The remainder of investments for thisperiod would be for system expansions in the provinces (US$10 million) and forworking capital increases and interest during construction (US$4.9 million).Twenty-three percent of these investment funds (about US$9.4 million) areexpected to be generated by EdH itself, including customer contributions(after payment of debt service), 45 percent from proceeds of the proposed IDA

- 15 -

credit and capitalized interest (Us$17.8 million), 8 percent from theFederal Republic of Germany (US$3.1 million), 17 percent from as yet un-determined foreign sources (US$6.5 million) and 7 percent (US$2.8 million)from government contributions. The (overnment contributions would be par-tially offset by EdH's repayoments of overdrafts to the National Bank.

Justification of the Project

57. Demand and Generation Forecast: Projections for power demand andgeneration for Port au.-Prince have been made by the consultants through 1990.These projections take into consideration an expected reduction in electricitylosses from the present 32 percent of total net generation to 16 percent by1982 through enforcement of the new anti-theft legislation and improvement ofthe distribution systemi. The forecast assumes an average annual increase ofgeneration of 12.5 percent from 1975 through 1982 and 6.8 percent from 1983through 1990 with corresponding annual growth rates of sales to be 15.3 per-cent and 6.8 percent. The proposed new tariff structures may cause mnajorchanges in demand patterns by lowering tariffs for small residential consumersand by raising them for large consumers and, given the small base from whichthe industrial sector has expanded since 1968, it is particularly difficult toanticipate the level of industrial growth. Though present forecasts indicatea need for additional diesel plant and transmission/distribution facilities tobe built in 1978, demand patterns will be closely monitored in order to ascer-tain more precisely the need for future power investments (Section 3.05 of thedraft Project Agreement). For the short term it is clear that there is animmediate need for additional generating capacity, as loads totalling 14 MWare already awaiting connection and, even without connecting these loads, therewould be power shortages in the 1977 dry season. The new generating plant wouldbecome fully operational toward the end of 1977.

58. Least Cost Solution: In a study by the consultants comparing(1) medium-speed diesel engine plants, (2) gas turbine engine plants, and(3) a combination of gas turbine and steam plants, the medium-speed dieselengines were found to be the least cost solution for discount rates of up to20 percent. The transmission works selected for the proposed project werethe least cost solution for discount rates of up to 35 percent.

59. Return on Investment: The economic rate of return of the projectwould be about 16 perceit. Sensitivity analysis shows that the rate of returnwould be 14 percent if Lnvestment and operating costs were assumed to rise by10 percent. The benefits of the project were taken as revenues accruing fromsales of additional electricity at recommended tariff levels which would re-flect the marginal cost of electricity supply. This understates the totaleconomic benefits of the project because indirect benefits resulting from theproject are not quantified in the benefit stream. To the extent that they arenot included in tariffs, these indirect benefits include the social benefitsfrom greater access to electricity for the u-rban poor and greater employmentpossibilities resulting from increased industrial and agricultural productionmade possible by the project.

- 16 -

Project Risks

60. EdH could encounter difficulties in the execution of the projectsince it lacks construction experience and has few qualified engineers on itsstaff. To minimize this risk and to train Haitian staff for execution offuture projects, the consultants who prepared the project would also super-vise its execution together with EdH personnel.

PART V - LBEAL INSTRUMENTS AND AUTHORITY

61. The draft Development Credit Agreement between the Republic ofHaiti and the Association, the draft Project Agreement between the Associationand Electricite d'Haiti, the Recommendation of the Committee provided for inArticle V, Section l(d), of the Articles of Agreement and the text of a draftresolution approving the proposed credit are being distributed to the ExecutiveDirectors separately.

62. The draft Credit Agreement and the draft Project Agreement conformto the normal pattern for credits for power projects. Features of specialinterest of the draft Development Credit and Project Agreements are referredto in paragraphs 33, 36, 47, 53, 54, 55 and 57.

63. I am satisfied that the proposed credit would comply with theArticles of Agreement of the Association.

PART VI - RECOMMENDATION

64. I recommend that the Executive Directors approve the proposedcredit.

Robert S. McNamaraPresident

Attachments

June 3, 1976

ASNZX IPage 1 of 4 pagea

TABLE 36HAITT SOCIAL IKDICATORS DATA SHEET

LAND AREA (THOU K2) ........ !............. --------------w-- HAITI REFERENCE COUNTRIES (1970)TOTAL 27.8 HOST RECENTAGRIC . 1960 1970 ESTIMATE CAMEROON HONoUaAs IVORY COAST **

GNP PER CAPITA (US5) 90.0 110.0 130.0 210.0 270.0 3Z0.0

POPULATION AND VITAL STATISTICS___________________.___________

POPULATION (MID-YR. MILLION) 3.6 4.2 4.5 5.8 2.5 5.4

POPULATION DENSITYPER SQUARE KM. 129.0 151.0 162.0 12.0 22.0 16.0

PER SO. KN. AGRICULTURAL LANO .. .. .. ..

VITAL STATISTICSCRUOE BIRTH RATE PER THOUSAND 39 9 37.6 CR 42.1 51.5 46.1CRUDE DEATH RATE PER THOUSAND 21.8 17 8 23.9 19.1 23.3

INFANT MORTALITY RATE (7THLU) 200.0 /a ,. 150.0LIFE EXPECTANCY AT BIRTH (YrS) 41.9 46.6 47.7 39.7 47.3 39.7

GROSS REPRODUCTION RATE .. 3.0 3.0 2.7 3.4 3.1

POPULATION GROWTH RATE (Z)TOTAL 1.5 1.6 1.8 2.0 2.7 s.4La,URBAN 3.6 3.9 3.5 6.0 7.9 7.5 /a

URBAN POPULATION CZ OF TOTAL) 15.0 18.7 19.0 20.0 32.0 28.0

AGE STRUCTURE (PERCENT)0 tO 14 YEARS 42.0 41.5 42. 5L 43.0 46.7 42.4

1s ro 64 YEARS 54.9 54.0 53. 2 54.0 50.9 54.965 YEARS ANO OVER 3.1 A.5 4.3 3.0 2.4 2.7

AGE DEPENOENCY RATIO 0.8 0.9 0.9 0.9 0.0 0.8

ECONOMIC DEPENDENCY RATIO 0.?7 A 0.7 /a .. 1.2 l.5/a a.s

FAMILY PLANNINGACCEPTORS (CUHULATIVE. THOU) .. .. .. .. 20.7

USERS (C OF MARRIED WOMEN) .. .. .. ..

EMPLOYrENT

TOTAL LABOR FORCE (THOUSAND) 2300.0 2800.0 .. 2800.0 800.0 2600.0LAB3R FORCE IN AGRICULTURE (1) 83.0 80.0 82.0 65.0 78.0UsEMPLOYED (T OF LABOR FORCE) .. .. .. .. 8.0 9.0

INCOME CISTRIBUTION

I OF PRIVATE INCOME REC D 3Y-HIGHEST 5% OF HOUSEHOLDS .. .. .. .. 32.9 A 28.6 /

HIGHEST 26B OF HOUSEHOLOS .. . .. .. 65.3 58.b 5

L3WEST 20% OF HOUSEHOLDS .. .. .. .. 1.6 3.9 e

LOWEST 40S OF HOUSEHOLOS .. .. .. .. 6.4A7 10.6 j

ODSTRIBUTION OF LAND OANERSHIP

t OWNED BY TOP IO OF OWNERS .. .. .. .. 57.3

S OWNEO BY SMALLEST 10% OWNERS .. .. .. .. 0.5

HEALTH ANO NUTRITION

POPULATION PER PHYSICIAN 10600.0 13210.0 12310.0 25960.0 37O0.OZC L2140.0POPULATION PER NURSING PERSON 9220.0/c 7460.0 b 2470.0 .. 2480. 0 _d

POPULATION PER HOSPITAL RED 1790.0 1370.0 .. 480.0 570.0 680.0 /d

PER CAPITA SUPPLY OF -CALORIES (I OF REQUIREMENTS) B1.0 76.0 77.0 96.0 96.0 108.0PROTEIN (GRAMS PER DAY) 40.0 39.0 39.0 59.0 58.0 60.0

-OF WHICH ANIMAL AND PULSE .. 18.0 23.0/ 2Z.0 18.0 /

CEATH RATE A/YHOU) AGES 1-4 27.0 33.0 .. .. 10.0

EDUCAT ION

ADJUSTED ENROLLMENT RATIOPRIMARY SCHOOL 38.0 40.0 d 41.0A 108.0 86.0 /d 76.0

SECONOARY SCHOOL 3.0 L 4.0 * 9.o b io.o 7 T 10 L YEARS OF SCHOOLING PROVIDEO

(FIRST AND SBCOND LEVEL) 13.0 13.0 03.0 14.0 /k 12.0 13.0VOCATIONAL ENROLLMENT(1 OF SECONDARY) 21.0 19.0 .. 22.0 08.0 7.0

ADULT LITERACY RATE (1) I0.0 20.0 .. .. 45.0 2 0.0

HOUSING

PERSONS PER ROO (AVERAGE) .. .. .. ..

OCCUPIEO DWELLINGS WITHOUTPIPED WATER (C) .. .. ..

ACCESS TO ELECTRICITY(l OF ALL DWELLINGS) .. . ..

RURAL OWELLTNGS CONNECTEDTO ELECTRICITY (2) .. .. .. ..

CONSUMPTION

RADIO RECEIVERS (PER THOU POP) 5.0 17.0 17.0 36.0 57.0 17.0PASSENGER CARS (PER THOU POP) 2.0 3.0 3.0 6.0 s.0 11.0ELECTRICITY (KAN/YR PER CAP) 25.0 28.o 32.0 $ 201.0 127. 0 120 0NECSPRINT (1G/YR PER CAP) 0.1 0. 0. .. 1.0 0. 2

SEE NOTES AND DEFINITIONS ON REVERSE

ANNEX IPage 2 of 4 pages

NOTES

Unins. otherwise noted, data for 1960 refer no any year hetwern 1959 and 1961, for 1970 berwee 1963 and 1970, end for Moat Iloneo E-icvat betwee 1971and 1973.

* The Ivory Coast has bacoa- leo,tedasn ojn lva ootry for Haieti sis both o ...etries have a similar noltoran baokgr..od aed the Ivory toastLh. as sonooded le chtvle a igh rat of enosevin rowth.

HAITI 1960 Ia 1962, lb Ratio of ppaiatnne under 15 and 65 and over to total labor foon In T1llodieg eidwi-e; ld 7-12 and13-19 Years of .ag ro pertlveiy.

19760 / Ratio of Ppnplatiaa under 15 and 65 and over to total labor form., /b Tonloding nidwva and -nnietan. eees I 1966.Id 7-12 snd 13-18 years of age respenLi_voy.

MOST RECENT ESTNIATE' Ia 1974, /b 7-12 yearn nf age.

CAMIEROON 1970 I 1964-66, lb 12-18 years of age, In 13 Years for East Caneoo.-

HONDURAS 1970 I Ratio of .populatimne nder 15 and 65 and ove to total labor forte, lb 1967-68. In Registerd, sot all prantioieg is rhoonuanry, /d 7-12 and 13-19 yearn of age respentiv-ly.

WVORE COAST 1970 I 1965-1970, b Ratio of ppolation aeder 15 and 69 and oven to total laborfot In .o- rolipient, Id foooraa,etonly, /a 1964_66, If 12-18 yearn of age, /R Dne so Iaeigratioe, the growth rate in higber thas the rate of eatrora

R6, may 20, 1976

DEFINITIONS OP SOCIAL INDICATOSI1

Land Arl, (thou _ns) Populatinene eurnigprn Population divided by oscbhr af prooti-Total1 Tona an..n area...-ri land area aned inand waes ol I d _..Ed.teaed female urses, eified"

Agi.-Most reoeant siaeof agriouIturalI areaossed tampnrn rily or .orses , and asiliaty personne with trainig orepeisapormaeetly for oraps, panture-, macbet b kitobee gardese or tIn i Population per hnupital bed -Populatio diided by eniber of hospital

fallow. he~~~~~~~~~~~~~~bda avalable in puhIto aed private gene.ral aed uproinli-d houpito1and rehahilittatin nete trs; ..erIodes -rieg biase asd establiubhmets

foP per napt US0$) - GNP per o"pita astioates at ..arbat prices, calou- for ustadial a nd prevetive rare.lated bysae saersin method as World Rash Atlas (1972-74 basis). Pee nait snoy of ra~lonien (% of renuirmea,tul - Couputod brow

enrgyt equ.ivl ent of net food pp'lie ava_ilable isncon,try per napitaPonaio n italsei ut per day, aviacaspplies n-pris- domasit pro -nlo, irports Irss

,Popultio (nsd-yr. million) -Au of July firnt if nor avilabla, onports, and ohanges in sutk, nor suppli en ounldo oniol feed, seodu_avrogo of two end-year estinates. qaa..itie- us-d in food pro...oufIg and Ios-es In dintribotion, raqore-

vents were .uti-satd by PA0 base d on pbyutlogioal seeds for noesIPseulation density -per uqoare In- Mid-year pops.iacio per uquore ktlo- notivuty and health considering enviroonen ta1 teoperature, body weights,moter (100 hoas) af notal areas, age aadsen distrlhbtinn of population, and al11uieg 107. for waste

Populaion denity -per square o of ageic. 1aed - Computed .10 bav- for at househod 1-vo.agiutr liand only. Par -apit su-pply of protedin (ugao per day) - Protein vonieni of per

oapitatnet supply of fod e day, net supply of fond is defined asvital statistics above, requiremets for all c .u.tries established by US0A EnonuitCrude birth rateper thousae - iAua.. IveI births, Per thousa, of mid- R..searoh Servioes provide far a minimum allmce af 60 grass of

year pplton oa-er rnithnatft averges adiag in 190( aaul IW0, toial protein per day, and 20 grams of asimal and pulse protein, ofandfir-yer aeraa edig is 1975 for meat e'aeat estimate. which 10 grams should be a.nial protein, ihese tanadsae loe

Crado death rte pert ..ead - AunoaI deaths per thousand of mid-year rhaa thoue of 75 grans of total proteim aad 23 gram of animal proteinpopulation; ten-year aritiseetie aarge eding in 1960 and 1970, and an an average for the world, propou-d by FAO in the Third World Fandfive-year avrage endliag in 1975 for most recent eatimats. SurvY.

in fantmortality rate (/thofl - Anesa.l deathu of infants snder one Year Propt rfbspl rmaia n us Protein sapply of foodof ag perc thoauand live births, derived fran anol and paRses In grams pe day.

tIf._; eetaocy at birth fyrs) - Averago sumbor of yearu of litf remain- Deatb ra2te i/thou) noes 1-h - AnnualI deaths per thonsand in age grouplag at birth, osual1y five-yea veae ending In 1960, 1970 and 1-4 years, is ohildren in this age graop, suggestedass indiontar oi1975 for develping n-teries, mInstrition.

Crone reprodution rote - Averge number of livedaughters a osa illbearishr normal.rprodotive per iod if she onporienoon preses r age- Edaoa.tion

pefi frti'tity rates, usually fiv-year av.rag-s ending is 1960, Adlsated e-ro-ient ra lah epimar nhool - EnraIlmet of all agesa1970 ad 1975 for devlping cnoutrie.prntg afriry nhi-e poplation; i-claden ohildren aged

Popn1ation growth earn 1) - tatal - Compood anua growth rates of mid- 6-11 years but adjuted far differest lengths of pr-ryoduiotio,year popaILaio for 1950-60, 19601-70, and 1970 to most recen.t year. for eaumtries with movra dunatson, enrollment may ea.ed 1002

Poaaingoth ra te (2-uban - Computed like growth rate of totl. ince some papils are below or above the offiolal sohoolIgepopulation, different defisitions of srba areas mop affent nonpara- Adlunted meroliment ratia -seoandars sohool - Computed as above;biliryofdta amog omaris.seodary edar..tion requires at least foar years of approved primary

Erhan. oneplation C% of total) - Ratia of orbam in total population; instruction; provides gemeral, v-ntional ar teah-r trainingdifferent definitions ni arba areas may affeor o-parbility of data instrsotion for pupils of 12 to 17 years of age; o-r-opond-nreamn ononfrie..nnua.r generally ..moloded.

Age structure (portent) -Children (0-14 Years) * worhig-age (15-64 years), YVear of arhoalieg provided (first and aeond levels) - Tetal Years ofand retired (65 years and ovr) as peroontagas of mid-year popolation. scheal ig, at se..ondary level, vonationaI ins trantion may he par-

Ag eednyratia - Ratio of papelatin under 15 aod 65 and over no tially or npletely eldedA dpn..thase of ages 15 throngh 64. Vonationa1 enrollment (of seooadary) - Vocational institutiomo,

ic...-I. depend-ny ratio - gRbti of population oder 15 and 65 and over imolade teohnina1, imduutrial or other program which operateto the labor forne in age group of 1'-64 years. independently or as deparononta of ueoondary institutions,

Pemily planing - anoeeors (rumlaIoc the') - C-Insltive niashr of Adult literacy rate()- Literate adults (able to read and write) asacceyptors of bit-cotrl evre under a..pioes of national family peroen tRag of total adult .paplation aed iS yers amd over.plamning progron: .i.e iaoeption.

Pamily planning- usrs of marred womn) - Percetages of married HassuIngwomen af ohild-bearsng age (15-44 years) who use birth-rontro1 devires Persona perroom (ave-rae) -Average somber of per...s Per room into all maried wmen is some age gronp. _nePied covetional dwellings in urban areas; dwelligs emelude

E.pl.y-.t ~~~~~~~~~~~~~~~~On-permanent ut-uturen nd smncpied)parts.Pasplaymant Ottupie~~~~~~~d_dwllng wihout pined wter (2) - Orcapied ...avention1Total labor farce (thousan d) - Emonuically active persons, icnlding dweligs in sRrbts and rural areas without inside or outside piped

armed fames and unemployed bot e..Itdladig housewives students, Ott, water facilities as peroentage of all oncpied dwellings.dafisitioma io various countries are not oumparable. Access to lcrct (% of all dwellings) - Conventiona dwellings

Labor force in agriculture()- Agricaltural labrfor mie (is farming, with el.eotrigityin1lvng quarters as percent of total dwellings inforestry,(.hoIntg and fishing) as percentage of total la bor force. urbam and rara1 area..iv

Unemplaynd (2 of labor Porno) - Unemployed are usualy defined a Rara1 dwellings connecte.d ta ele-trielty()- Computed as babv forporsons who are able and williug to tabe a Job, out of a Jab onarura dwellings only.given day, remained our of a Job, and see king work for a spenifiedminimn- period not emneeding one week; may not be comparable between conamPtioncountrien dua to ldifferent definitions of onepleynd and -onroef0 Radim eevr (-ethu Pa) - All types of r-nivers for radio broad-data, e.g., -emlymet office statistics, sample survys, compulsory css to general puhlio Per thousa,nd of papolation, encldes

ouaplo5sant imauranee. onlicesned receivers in tonatries and in years when registration, ofradio nets was in effect, darn for recent years may eat be comparableleI-se distribution Percentage of private income (both is cah and siere most ountries abolished licensig.

hind) received by riobest 52, rieh-tr 202, panrese 202, and poorest Passenger c.ar(prb pp)- Pseger oars comprise sorer oars402 o huoehoRds- seating less than eight persons; encludes anbulan-es hearses and

military vehcles.Diotributios of land owse-hip - Peroentages of land ownd by wealthiest Ele-trnloty (hwhyr per cap) - Annual consumption, of induatria1, con-

102 and poorest 102. of land ownrs nercie1, public and private electnioty in hilewatt hours per oopita;gene rally based onprdtion data, without alwnefar Il.s.es in

Health and Nutrition g~~~~~~~~rids but a1llawing for iports and emparta of electricity.Popu:latio per physician - Population divided.by nunber of pranticing Newsprint (hg/yr per cap) - Per eapita annual --suPtion in kilograms

phyaioian qualified from a mdioalchoo at aniv-rsiry level, .etimated from domestic Production Plus net imPmrts of newprist.

ANNEX I

Page 3 of 4 pages

ECONOMIC INDICATORS V1

GROSS NATIONAL PRODUCT IN 1975 b' ANNUAL RATE OF GROWTH (%, constant prices)

US$ Mln. % 1960 -67 1967 -72 1972-1975 ff

GNP at Market Prices 921.1 100.0 0.1 3.0 2.4Gross Domestic Investment 98.0 10.6 -3.0 18.5 12.5Gross National Saving 46.6 5.1 -26.0 46.o -43.0

Current Account Balance -16.4 1.8Exports of Goods, NFS 106.0 11.5 -4.7 9.3 -8.6Imports of Goods, NFS 155.7 16.9 2.9 6.8 8.8

OUTPUT, LABOR FORCE ANDPEODUCTIVITY IN 1975 g

Value Added Labor Force V. A. Per WorkerCln. % ~~~~~~~Mln. % U f

Agriculture 389.3 42.2Industry 169.7 18.4Services 365.'; 39.4Unallocated . .

GDP Total/Average Q .22 100.0 .. 100.0

GOVERNMEN FINANCEGlener al Government VCentral Oovernment

Mlni.)O GOP ( Mln.) %o GDP

1N975, 1975 19 74175 1977 197 197 -4 19

Current Receipts 555y. 12.0 11.7 475.4 10. 3 9.8

Current Expenditure 526.2 11.4 11.2 4t.6.2 9.7 9.3

Current Surplus 22r---O-.-6 -- Ts ce7ae2 o d u6Capital Expenditures % 220.1 4.8 4.1 220.1 14.8 4External Assistance (net)y 158.0 3.4 2.4 158.0 j 3.4 I' 2.14

MONEY, CREDIT and PRICES 1969 1970 1971 19372 1973 1974 1975

(Ellion G. outstanding end periodf-

Money and Quaai Money 178.6 193.4 246.4 311.3 391.5 467.7 478.5

Bank credit to Public Sector 193.1 189.2 202.5 215.3 214.7 331.6 415.4

Bank Credit to Private Sector 59.4 65.3 78.5 92.1 170.6 310.6 451.3

(Percentages or Index Numsbers)

MoneY and Quasi Money as % of GDP 8.2 8.4 9.1 10.5 12.5 12.8 10.4General Price Index (1963 100) 119.0 123.2 128.9 135.6 162.7 186.9 219.6

Annual percentage changes inGeneral Price index 4.9 3.5 4.6 5.2 20.0 nt.9 17.5Bank credit to Public Sector 13.6 -2.1 7.0 5.4 13.7 35.5 25.3Bank credit to Private Sector 5.7 9.9 20.2 19.6 85.2 82.0 45.3

NOTEt All conversions to dollars in this table are at the average exchange rate prevailing dturing the periodcovered.

/Dat-a refer to fiscal years ending September 30

JIncludes current expenditures associated with development projects

~/Net loans and grants

IVGeneral Government

t Preliminary

y Estimate

not availablenot applicable

ANNEX I

Page 4 of 4pages

TRADE PAYMENTS AND CAPITAL FWWS 2

BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1973-75)

1973 1974 1975 US $ Mln %(Millions US $) Coffee 21.0 31.0

Exports of Goods, NFS 71.7 93.0 106.0 Sugar 4.5 6.6Imports of Goods, NFS 95.7 134-9 155.7 Essential Oils 5.4 8.o

Resource Gap (deficit = -) -24.0 -41.9 Beef 1 2

Interest Payments (net) -o.6 -o.6 -0.5 Bauxite 7.9 11.8Handicrafts 17.5 25.9

Other Factor Payments (net) -3.8 -5.3 -6.3Net Transfers 19.1 26.9 40.1 All other commodities 7.0 10.2Balance on Current Account -9,3 -20.9 -16X4 Total 67.7 100.0

Direct Foreign Investment 7.0 7.9 2.6 EXTERNAL DEBT, DECEMBER 31, 1975Net MLT Borrowing

Disbursements 3.2 8.4 24.8 US $ MlnAmortization -6.0 .8 -6.2Subtotal -28 3. - 6 Public Debt, incl. guaranteed 81.0

Non-Guaranteed Private DebtTotal outstanding & Disbursed 81.0

Other items n.e.i 3. -10.1 -28.3Increase in Reserves (+) -1.5 -19.5 -23.5 DEBT SERVICE RATIO for 1975 2

Gross Reservesr 20.7 14.7 12.8Net Reserves / 18.9 -o.6 -24.1 Public Debt. incl. guaranteed 6.3

Non-Guaranteed Private DebtFuel and Related Materials Total outstanding & Disbursed

Imports 4.3 12.4 11.2

Exports - -

IBRD/IDA LENDING, March 31. 1976 (Million US $)

IBRDl IDARATE OF EXCHANGE _

Outstanding & Disbursed - 12.8Undisbursed - 17.6

G 1.00 US $ 0.20 Outstanding incl. Undisbursed - 30.4

/ Data refer to fiscal years ending September 30

/ Ratio of Debt Service to Exports of Goods and Non-Factor Services

/ September 30 , , not available

not applicable

Country Programs ILatin America and the CaribbeanRegional OfficeMay 13, 1976

A.NEX IIPage 1 of 2

THE STATUS OF BANK BROUP OPERATIONS IN HAITI

A. STATEMENT OF BANK LCANS AND IDA CREDITS (as of April 30, 1976)

Loan or US$ millionCredit Amount (less cancellations)Number Year Borrower Purpose Bank IDA Undisbursed

One loan (1956) and one credit (1962),both fully disbursed. 2.6 0.35 -

h78-HA 1974 Rep.of Haiti Highway 10.00 2.9556-HA 1975 Rep.of Haiti Highway 20.00 13.4618-HA 1976 Rep.of Haiti Education 5.50 5.5

Total 2.6 35.85of which has been repaid 2.6 .01

Total now outstanding Nil 35.84

Amount sold 0.4of which has been repaid o.4

Total now held by Bank and IDA - 35.84 /

Total undisbursed 21.8

B. STATEMENT OF IFC INVESTMENTS (as of April 30, 1976)

No IFC investments have been made in Haiti.

C. PROJECTS IN EXECUTION _

CREDIT 478: THIRLD HIGHWAY PROJECT; US$10 MILLION CREDIT OF JUNE 6. 1974;

EFFECTIVE DATE: SEPTEMBER 9. 1 97l- CLOSING DATE: DECEMBER 31,197

Construction of the Third Highway Project, as amended by the ExecutiveDirectors on October 29, 1974, is about three-fourths completed. The Estere bridge

1/ Prior to exchange adjustments.

2/ These notes are designed to inform the Executive Directors regarding the progressof projects/investments in execution, and in particular to report any problemswhich are being encountered, and the action being taken to remedy them. Theyshould be read in this sense, and with the understanding that they do notpurport to present a balanced eveluation of strengths and weaknesses in projectexecution.

ANNEX IIPage 2 of 2

reconstruction, begun prior to credit signing, was completed in December 1974.

Earth works envisaged under the project are substantially completed and paving

has begun. Disbursements are ahead of estimates at the time of appraisal.

Consultants have begun training of local civil works contractors.

CREDIT 556: FDURTH HIGHWAY PROJECT: US$20 MILLION CREDIT OF JUNE 11, 1975;

EFFECTIVE DATE: OCTOBER 8, 1975; CLDSING DATE: DECEMBER 31, 1978

Contracts for 90 percent of the works under the Fourth Highway project have

been let and execution, which is on schedule, is about one-third completed.

CREDIT 618: FIRST EDUCATION PROJECT: US$5.5 MILLION CREDIT OF FEBRUARY 27,1976; EFFECTIVE DATE: MAY 20, 1976; CLOSING DATE: JUNE 30, 1980

Project Unit established; one-third of school sites selected.

ANNEX IIIPage 1 of 2

HAITI: FIRST POWER PROJECTCREDIT AND PROJECT SUMMARY

Borrower: The Republic of Haiti

Amount: US$16.0 million equivalent

Terms: Standard IDA terms

Relending Terms: The Government would relend the proceeds of the IDA creditto EdH for a period of 25 years, including 2 yearsof grace, at the interest rate of 8.85 percent.

Project Description: Construction and equipping of a medium-speed diesel enginepower station with a capacity of about 21 MW, a trainingcenter, and transmission and distribution works of:(i) 21 km single-circuit 69 kV transmission line; (ii) 5.4 kmof double circuit 115 kV transmission line; (iii) extensionof an existing 115 kV substation and construction of new115/69/12.47 kV and 69/4.16 kV substations; (iv) extensionand rehabilitation of existing transmission and distributionnetwrorks; and (v) improvements to the security of the exist-ing transmission system between the Peligre hydropowerstation and Port-au-Prince. Technical assistance for engi-neering and supervision and for training of EdH personnel.

Estimated Cost: The estimated total cost of the project is US$18.0 millionequivalent, with a foreign exchange component of aboutUS$1.5.0 million

US$ (thousands) Percent ofLocal Foreign Total Total

Power Station 1,830 8,382 10,212 57

Transmission/distribution 770 3,897 4,667 26and other works

Engineering and supervision - 930 930 5

Training - 43 43 -

Base Cost Estimate 2,600 13,252 15,852 88

Contingencies

(i) Physical 1/ 223 1,157 1,380 8(ii) Price 2/ 118 682 800 4

2,9941 15,O9l 18032 100

8% on power station; 10% on the rest of project components.2/ None on power station (firm price contract); 9% in 1976, 8% in 1977-78 on

the rest of project components.

ANNEX IIIPage 2 of 2

Financing Plan: IDA - US$16.0 million equivalentGovernment - US$2.0 million equivalent

Estimated IDA Fiscal Year (US$ Millions)Disbursements: 1976-77 1977-78 1978-79

Annual 10.3 4.6 1,1Cumulative 10.3 14.9 16.0

Procurement: Contracts for most of the equipment and for con-struction of the diesel power plant, substationsand transmission lines would be awarded followinginternational competitive bidding in accordance withBank/IDA Guidelines for Procurement. Equipment,valued at about US$200,000, needed to complementexisting equipment, would be procured from originalsuppliers; training equipment, costing about US$100,000would be purchased on the basis of price quotationsfrom at least three suppliers.

RetroactiveFinancing: Retroactive financing not exceeding US$1.12 million

is recommended for expenditures made from February 1,1975 against payment for consultant services anddownpayment for generating equipment.

TechnicalAssistance: Consultants (SOFRELEC/France) have been hired for

engineering and supervision and for training of EdHpersonnel. The cost of these consultant services(about 160 man/months) is about US$5,450 per man/month.

Rate of Return: 16 percent.

Appraisal Report: Report No. 1052a-HA dated May 24, 1976.

_IBRD- 12154

USAB odj DUVA-05ER VILLE MAY 1976oJ OCcE.v 1 18kAN

o . z . / I & & 12X4 M~~~~~~VA 6CROIX DES MISSIONSA I §rg L _J >..½ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~HAITI

PURERUIC APPRAISAL OF POWER PROJECT4Ws HAITIt PEL, e LS - &7 _IG IE ELECTRICITE D'HAITI (EdH)

JAMAICA S~. ._0/ + CROIX DES BOUQUETS PORT-AU-PRINCE ELECTRIC SYSTEM

Cd l7i X ', 5A1 Project Future Existing

-2O, 74 OF 72? to --

-20..----< 2

4ct/ r/ - Au- PrI n c e NE OWER STATION j - - Power Station

P < HAITI J UNITS LARG' E UNITSf t n~ PEL 16RE I F-- F )

is. I .. 1Substation 3 lN~~~~~~~~~~~~~~~~~~~~~~~~ L30

*Transmission Lines -

~~~~~JPOJECT STCATION P OI N - J 69h- NIL

ILO LEOGANE kv 47 v Porrt-Au-Prince M etropolitan AreaI~~~~~~~

*L____\\_ I I I . -MAS-opiy oso,n,n o -r-InpTo by TAo E L T PETIONVILLE, KENSKOFF

WorstB- da,doffi-booo PLACE GEFFRARD 'TO HAUT DELMAS

> \\62 hv 2 x4~~~~~~~~~~~MVAIe i 2xMA^ /.

-IW30 2x2 VA ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~18030'

\ 0~~~~~~~~~~~~~~ _ a~~~~~~~,EITN DISL PTt MORllOMTRS1

_\ 'POWER STATION 690 kv': 69PhvETIONVILLE\ 63kv FEUILLES | TIN L

\~~~~~~~~~~~~~~~~~~~~~~~- - . 69kIv

TO LEOGANE 1 7k

2x4MVA 4.5 m2.6 km L_ j APPROXIMATE SCALE

~~~~~~~ * ~~~~~~~~~~~~~~~12 47 kv Transmission Line to be Tronstormed To 69 kv

72045' 42°45'I I ' ' : _