Document of The World Bank FILE cop y FOR OFFICIAL USE ONLY Report No. 2938b-CO STAFF APPRAISAL REPORT COLOMBIA GUADALUPE IV HYDRO POWER PROJECT May 16, 1980 Projects Department Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit = Colombian Peso (Col$) Col$1 100 Centavos (ctv) Col$42.06 (1979 appraisal assumption of average) = US$1 Col$1,000 = US$23.78 (1979 average) Col$1,000,000 (MCol$) = US$23,776 (1979 average) MUS$1 = US$1,000,000 WEIGHTS AND MEASURES 1 meter (m) 2 3.281 feet (ft) 2 '1 square kilometer (km ) = 0.386 square mile (mi ) 1 cubic meter (m3) = 35.315 cubic feet (ft3) = 264.2 gallons (gal) = 6.290 barrels (bbl) 1 kilogram (kg) = 2.206 pounds (lb) 1 ton (t;metric;1,000 kg) = 1.100 short tons (sh. tons) 1 kilowatt (kW) = 1,000 Watts (103 W) 1 Megawatt (MW) = 1,000 kW (10 kW = 106 W) 1 Gigawatt (GW) = 1,000 MW (106 kW = 109 W) 1 kilowatt-hour (kWh) = 1,000 Watt-hours (103 Wh) - 830.3 kilocalories (kcal) 1 Gigawatt-hour (GWh) = 1,000,000 kWh (106 kWh) 1 Terawatt-hour (TWh) = 1,000 GWh (109 kWh) 1 kilovolt (kV) = 1,000 Volts (V) 1 kilovolt ampere (kVA) = 1,000 Volt amperes (103 VA) 1 Megavolt ampere (MVA) = 1,000 kVA (100 VA) 1 Megavolt ampere re- = 1 Megavolt ampere reactive active (MVAr) power (cos 0 = 00) 1 kilocalorie (kcal) = 3,968 British thermal units (Btu) 1 Hertz (Hz) = 1 cycle/second ... per ..;. ..per second ......../ .;s .per hour; ... per day; = . ./h; /d ... per inonth; ... per year =m. ... /a GLOSSARY OF ABBREVIATIONS EPM = Empresas Publicas de Medellin ISA = Interconexi6n Electrica S. A. EEEB = Empresa de Energia Electrica de Bogota EMCALI = Empresas Municipales de Cali CHEC = Central Hidroelectrica de Caldas CHIDRAL = Central Hidroelectrica del Rio Anchicaya S. A. CORELCA = Corporaci6n Electrica de la Costa Atlantica CVC = Corporaci6n Aut6noma Regional en el Valle del Rio Cauca ICEL = Instituto Colombiano de Energia Electrica NPD = National Planning Department 2-T - Junta Nacional de Tarifas FONADE = Fondo Nacional de Desarrollo JDB = Inter-American Development Bank KfW = Kreditanstalt fuir Wiederafbau Fiscal Year = Calendar Year FOR OFFICIAL USE ONLY COLOMBIA EMPRESSA PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT TABLE OF CONTENTS Page No. Energy Resources ...... .......................... . .................... . 1 Sector Organization .............................. ................ 3 Regulation, Planning and Coordination ............................ 4 -Present Developments .... .................... .. ........................ 6 World Bank Participation in the Sector .. ............ . ............ 7 Power Market and Supply .......................................... 8 Interconnected System Forecasts ..................... * ............ 11 Demand and Energy . ..... ... * ...** ........... * ......... . . .............. . 11 Supply .................................................................. 11 Rural Electrification ................................................. ....... 11 Sector Investment Program and Studies .............. .............. 12 Finances and Tariff ............... 0................. ............................. 13 Constraints on Sector Development ......... .................. O.. 14 2. THE BORROWER .......................................... ........... 16 General .......................................................... 16 Previous Bank Lending . ... ... . ............ ... ......... .. .. ......... 16 Organization ..................................................... 16 Personnel ......................................................... 17 Training ........................................... 0 ............ ............ 18 Accounting and Auditing . ............. . ...................... ...... 18 Billing and Collections ......... .......... .. ......................... 18 Insurance ................................................................... 19 Tarif f and Rates ................................................... ............ 19 3. EPM's MARKET .................................................................. 21 Supply Area, Access to Electricity ........ ....................... 21 Historic Development .............................................................. 21 Captive Plant ............................................................... 22 Forecasts ..................................................... ............ 22 This report is based on the finding of an appraisal mission, which visited Colombia during November/December 1979, comprising Messrs. W.F. Kuipper, M. Linder and J. Gorrio'. This document has a restricted distribution and may be used by recipients only in the performance of their omcial duties. Its contents may not otherwise be disclosed without World Bank authorization. Table of Contents (Cont'd) Page No. 4. THE PROGRAM AND TBE PROJECT ..................................... 25 The Program ........ 25 The Project ...................................................... 25 Objectives ................................................. 25 Description ....... 26 Cost ....................................................... 27 Financing ................................................... 28 Engineering Studies . ......... 28 Training ................................................... 28 Guadalupe IV ............................................... 28 Transmission, Distribution ................................. 29 Control Center ................ .................... .......... 30 Training ................. .................. ................ 30 Execution ..... 31 Implementation Schedule . ........... . . . ......... . 31 Procurement ... .................. ....................... .. 31 Disbursements .............................................. 31 Environmental Aspects ..................................... 31 Project Risk ............................................... 32 Project File .... ........ 32 5. FINANCE .................................. ....................... 33 Summary ............................................. ............ 33 Consolidated Financial Performance .............................. 33 Earning History ................................................. 34 Rate Base ................................................................... 34 Tariff Structure ................................................ 35 Financial Structure ............................................. 35 Investment and Financing Plans .................................. 35 Liability Reserves .............................................. 38 Future Finances ................................................. 38 Negative Pledge ................................................. 40 Fund Utilization Limitation ............. ....... .. ............... 40 Investment Limitation ........................................... 40 EPM's Tariffs Requirements ...................................... 40 6. ECONOMIC ANALYSIS ............................................... 41 Least Cost Solution ....... ............... ....................... 41 Return on Investment ...................... ...................... 41 7. AGREEMENTS REACHED AND RECOMMENDATION ........... .. .............. 43 During Negotiations ....... ............... ....................... 43 Conditions of Effectiveness ....................... 45 Recommendation ......................... ......................... 45 Table of Contents (Cont'd) Page No. ANNEXES 1.1 IBRD Power Loans ....... .................................... 46 1.2 The National Generation Development Program 1979-1985 ...... 47 2.1 EPM-Organizational Chart ...... ............................. 48 3.1 Consumption and Supply Data 1975-1986 .... .................. 49 4.1 1979-1986 Investment Program Cost Estimate ............. .... 50 4.2 Project Cost Estimate ...... ................................ 51 4.3 Project Implementation Schedule ............................ 52 4.4 Loan Disbursement Schedule ................................. 54 4.5 Contents of Project File ...... ............................. 55 5.1 Historic Financial Statements ..... ......................... 57 5.2 Summary of Projected Financial Performance 1980-1984 of Telephone, and Water and Sewerage Departments .............. 58 5.3 Schedule of Existing and Proposed Debt ..................... 59 5.4 Actual and Forecast Income Statements ...................... 60 5.5 Sources and Applications of Funds .......................... 61 5.6 Actual and Forecast Balance Sheets ......................... 62 5.7 Forecast Performance and Financial Indicators . . 63 5.8 Forecast Loans Disbursement Statement ...................... 64 5.9 Forecast Debt Amortization Statement .......... .. ........... 65 5.10 Forecast Interest Charges .................................. 66 6.1 Rate of Return on Development Program .................. .... 67 MAPS Main Generation and Transmission System IBRD 14880 Transmission System of Antioquia IBRD 14882 COLOMBIA EMPRESAS PUBLICAS DE NEDELLIN GUADALUPE IV HYDRO POWER PROJECT 1. THE SECTOR Energy Resources 1.01 Colombia's main indigenous commercial energy resources are hydro- power, coal, gas and oil. Potential hydropower appears to be the most promising at some 100 GW of capacity and 250-300 TWh of annual energy capability, as shown by the preliminary investigations made by the Govern- ment. Colombia is also endowed with very large coal and gas deposits. Over 1970-77 crude oil output declined at an average rate of 6.5%/a. Over the same period, consumption of petroleum products increased by 5.5%/a. As a result, Colombia, since 1977, is a net importer of crude oil and pros- pects are for imports to rise sharply in the early 1980s unless additional reserves are discovered and developed quickly. Measures are being taken to deal with this problem and to develop alternative energy sources. In the case of coal, there have been various obstacles to more adequate utilization of the existing potential: low prices compared with those prevailing on inter- national markets, the competition of low-priced petroleum, fragmentation of production among a large number of very small mines with low output and productivity levels, and lack of efficient marketing and transport infrast- ructure. However, the Government is currently taking action to address these problems (1.03). With respect to natural gas, a previous decline in known reserves and output has been dramatically reversed with the discovery of large depos 1s ie the Atlantic Coast region. These reserves (estimated at over 5 x 10 ft ) will provide energy and petrochemical feedstock to this rapidly industrializing region. 1.02 Production of primary energy during 1965-77 (see table next page) has not kept pace with overall economic expansion. It incre2sed only 3.6%/a during 1965-7y, when it reached its peak at 690 x 10 . Btu, and then declined to 637 x 10 Btu in 1977, mainly due to falling crude oil output. In contrast to the declining energy output, final energy consumption grew by 8.9%/a during 1965-70, and 8.5%/a during 1971-73, when economic growth was high and energy prices declined sharply in real terms. During 1974-77, the economic downturn and increase in real energy prices had a dampening effect on consumption, which now has settled at a growth of about 4.5%/a compared with a GDP growth of some 6%/a in recent years. 1.03 The Government's development strategy is aimed at achieving a more favorable balance between domestic energy supply and use, by increased utilization of domestic sources which are in abundant supply, i.e. hydro- power, natural gas and coal. The Government is planning a large-scale develop- ment of high grade coal deposits for export to help offset oil imports by -2- COLOMBIA Energy Output and Consumption --------------------Primary Energy Output /1; /2…-------------- 1965 1970 1978 Heat Heat Heat Equiva- Equiva- Equiva- lent /3 lent /3 lent /3 Unit Quantity 10 Btu Quantity 10 Btu Quantity 10 Btu Hydro power GWh 3,649 38.3 6,212 65.2 11,981 125.8 Crude oil 10 bbl 73.2 410.0 80.1 448.3 47.8 267.1 Natural gas 109ft3 65.7 65.7 105.0 105.0 135.5 135.5 Coal 106t 2,230 64.0 2,500 71.7 4,225 121.2 Total 578.0 690.2 650.2 -------------------…Final Energy Consumption /1; /2------------ 1965 1970 1978 Heat Heat Heat Equiva- Equiva- Equiva- lent /3 lent /3 lent /3 Unit Quantity 10 Btu Quantity 10 Btu Quantity 10 Btu Electricity GWh 4,790 50.3 7,538 79.1 13,972 146.7 Petroleum 6 Product 10 bbl 23.5 131.6 33.8 189.3 46.5 260.4 9 3 Natural gas 10 ft 12.1 12.1 84.8 84.8 110.3 110.3 Coal 106t 2,700 76.9 2,100 61.6 3,850 110.5 Total 270.9 415.0 627.9 /1 Fire wood and other plant fuel (e.g. bagasse) is an important source of energy in Colombia, but its use has not been quantified. /2 The difference between primary energy output and final energy consumption, expressed in heat equivalent, constitutes the approximate sum of total losses and exports. /3 Calculated at: 11,500 Btu/kWh for power, 5.6 MBtu/bbl for oil and its products, 1 MBtu/103ft3 for gas and its products and 28.69 MBtu/t for coal and coke. - 3 - high priority to developing for export the thermal coal deposits at El Cerrejon (reserves 600 Mt and production target 10 Mt/a) near Riohacha in the department of La Guajira on the Atlantic Coast under CARBOCOL's responsibility in coopera- tion with foreign investment. The Government also intends to step up surveys of identified coal fields in the departments of Santander and Antioquia and to study the feasibility of using low grade coal for firing large thermal plants required in the early nineties when potential hydro sites are expected to be increasingly more costly to develop (1.27). Small private firms which own coal mines are pursuing plans to expand output in order to supply fuel for heat intensive industrial processes and both in-plant and public power generation. In order to expand potentially viable mines, a well-coordinated Government program is needed to provide a more rational price structure, improvements in mine safety, credit facilities and support for marketing and infrastructure. Such a program would need substantial technical and capital assistance from abroad. The Bank has been providing guidance to the Government in the prepara- tion of a proposed coal engineering project, which was pre-appraised in February 1980, and of the proposed El Cerrejon Project. 1.04 In the hydrocarbon sector, the Government has taken action to stimulate investment in exploration and field development, which had declined after 1971 because the prices paid to the producers for domestic sales were below economic value. Currently, the prices paid for oil produced by increasing yields from existing fields and from new fields have been raised, the latter now being close to world market levels, and the discriminatory exchange rate for petroleum has been eliminated. Moreover the Government is encouraging foreign participation in exploration and development on the basis of association contracts with ECOPETROL (the Government oil agency). As a result, interest among foreign petroleum companies to expand or start operations in Colombia has been intensi- fied and an upturn in exploration has taken place. A Bank petroleum project is being considered for secondary oil recovery, surveys and follow-up dis- coveries. 1.05 Plans are underway to explore the country's uranium potential and the Government has contracted with the French Minatome group for such exploration. The development of any uranium potential that might exist would provide the country with another long-term energy option. Sector Organization 1.06 Electricity is the fastest growing form of energy use in Colombia; its share in overall energy consumption has grown from 14% in 1960 to 23% in 1978. This process has been assisted by the gradual consolidation of isolated facilities into regional systems and the interconnection of these systems to facilitate development of Colombia's low-cost hydro resources. The main systems are the Central System, covering the interior and the Pacific coast, and the Atlantic (or Northern) system covering the northern part of the country. The proposed EPM project is located in the Central System. Also located in the Central System are the Mesitas (1628-CO) and San Carlos I and II hydro projects (1582-CO and 1725-CO) for which Bank loans totalling MUS$282 were approved in 1978 and 1979 (Annex 1.1). By 1982/83 a national grid will have been established with the completion of a 500-kV line interconnect- ing the Atlantic and the Central systems, for which a Bank loan of MUS$50 (1583-CO) was approved in 1978. - 4 - 1.07 Public electricity service is presently provided by: (a) municipally-owned companies, independent of the Central Government, of which the largest are Empresa de Energia Electrica de Bogota (EEEB), Empresas Publicas de Medellin (EPM), and Empresas Municipales de Cali (EMCALI); (b) national enterprises such as Instituto Colombiano de Energia Electrica (ICEL), and Corporacion Autonoma Regional del Cauca (CVC), and the Corporacion Electrica de la Costa Atlantica (CORELCA); (c) a large number of local subsidiaries of ICEL, CORELCA and CVC 1/; and (d) a generating and transmission company, Interconexion Electrica S.A. (ISA), the shareholders of which are EEEB, EPM, CVC, ICEL and CORELCA. 1.08 Colombia has a number of public entities known as Regional Autonomous Corporations with a range of functions related to development of the regions under their jurisdiction, including legal capacity to generate, transmit and distribute electricity. CVC is the largest of these entities. The Ministry of Mines and Energy owns part of the sector directly through ICEL and CORELCA. EEEB and EPM, currently the largest utilities, are controlled by autonomous municipal governments. CVC reports to the National Planning Department (NPD) as do some other regional development corporations. ISA was established in 1967 to provide a rational framework for sector development by interconnecting the systems of its shareholders, thus creating a national grid capable of sustaining large hydroelectric developments. By pooling their financial resources through ISA (under the recent Bank loans mentioned above in 1.06), its shareholders have been able to undertake much larger and more economical projects than would have been feasible under the previous arrange- ments for independent growth. Regulation, Planning and Coordination 1.09 The Ministry of Mines and Energy is charged with formulating a national policy for the generation, transmission and distribution of electricity although it shares responsibility with the National Planning Department (NPD) in defining investment priorities. The Ministry, which is responsible for coordinating and supervising power sector planning, discharges its functions through its Electric Energy Division. This division is small and does not have the powers assigned to similar agencies in other countries (issuance of licenses, regula- tion of tariffs, approval of expansion programs) to enforce its policies and programs. Public utility retail tariffs (including those for electricity) are regulated by the Junta Nacional de Tarifas de Servicios Publicos (JNT) which forms part of the NPD. JNT has customarily approved requests from the companies for rate increases, but utilities are free to set tariffs at levels lower than those approved by the Junta and have done so in the past. EPM (as decided by the Municipal Council) did so during the past year by decreasing the allowed 1/ In most cases, the ownership of these subsidiaries is shared with local Governments. monthly increase of 2.2% to 1.5% for residential consumers and 1.8% for all other consumers (2.12). Although the Government cannot enforce its policies directly on the municipally controlled power companies, a mechanism for reaching agreement on major issues affecting the sector is provided by ISA, in which the Government has a major although not controlling intere--. 1.10 Sector planning and coordination have improved markedly in recent years, as illustrated by the following: (a) in line with its bylaws, ISA defines the generation and transmission expansion program for the interconnected system. On the basis of studies carried out by it and its shareholders, ISA executes simulation studies and ranks plant in order of economic merit. After approval by its Board, this becomes the national expansion program. The bylaws specify that all plants requiring a joint effort of all its shareholders be constructed, owned and operated by ISA. Plants of regional interest may be built by one or several shareholders, subject to ISA's approval of such regional plants. Under these arrangements, ISA is, in effect, responsible for an important part of sector regulation and planning; only a small number of minor utilities which do not participate directly in ISA and the national enterprises, other than CVC, are not covered by its decisions. Voting arrange- ments in ISA have been restructured to require the concurrence of four of its five major shareholders in all important decisions, thus protecting the interests of the municipal utilities and encouraging a positive participation in its deliberations; (b) as part of the San Carlos I loan, ISA and its shareholders agreed to prepare and present to the Government and the Bank for comments by December 31, 1979, a Power Sector Development Master Plan. This plan is to cover the period 1980-1990 in detail and 1991-2000 in general terms and consolidate the programs for generation and transmission expansion. Similarly, ISA's shareholders undertook, under the coordination of the Ministry of Mines and Energy, to prepare and present, as part of ISA's Master Plan, to the Government and the Bank for comments by December 31, 1979, a 1980-2000 Sector Development Master Plan for Distribution consolidating all existing and future programs for distribution and covering the period 1980-1985 in detail. 1/ Overall, the Master Plan is expected 1/ The generation master plan has suffered a delay of at least 6 months. Moreover, it has become apparent that completion of the distribution study will be delayed considerably, until end-1980. No Government action has been taken to coordinate the study and no information has reached the Bank from ICEL and CVC as to study progress. ISA, however, is engaging consultants for coordinating the execution of the study and the presenta- tion of a single report. CORELCA is expected to have soon a draft report available. EPM's part of the study will not be completed before mid-1980 and EEEB will have the study executed by the same consultants to be engaged under the recently approved Distribution Project; it would be completed by end-1980. -6- to provide a valuable framework for long-range decisions on sector-financing, pricing and rural electrification which have in the past been based on partial and uncoordinated information; (c) as agreed under the San Carlos I loan, a tariff study based on marginal costing is underway covering the most important supply areas in the country. With Bank guidance, this study is being carried out through a committee in which experts from the Govern- ment, ISA and its shareholders participate; (d) also under the aegis of San Carlos I, a study is being executed by consultants to assess the extent and causes of losses in the main power systems down to the level of distribution with the objective of identifying and carrying out actions which would minimize such losses; and (e) as agreed under the San Carlos II loan, a study on a uniform system of accounts and financial planning for the sector will be carried out by consultants with full time participation by at least one professional from ISA and each of its shareholders. Present Developments 1.11 In recognition of the power sector's important role in Colombia's development process, in the mid-1970s the Government and the main power companies established a framework, the "Sochagota" Agreement, for orderly and efficient sector expansion. To enable equitable sharing among the regions of the financial burden of the large investments contemplated, to foster least-cost development of high priority generating plants, and to assure that adequate supply from these plants would reach all regions, the Agreement envisaged that ISA would be responsible for planning, building and owning all plants of national interest. Since then, ISA has functioned on this basis. However, in 1979, the shareholders of ISA expressed reservations about the concentration of almost 70% of planned expansion in generating facilities through 1985 in the national company and the associated loss of parity among themselves in relative generating capacity. Another worrisome aspect was that ISA's construction capacity is nearly fully committed over the next few years with works in progress (1,910 MW of hydro plant, numerous 230-kV lines and a 500-kV line). These reservations have given rise to a proposal that the four plants in ISA's 1980-85 Investment Program (Betania 500 MW, Guavio 1,000 MW, Playas 240 MW and Urra 1,000 MW) be constructed, owned and operated by individual shareholders. Although these plants represent less than 1% of the hydroelectric resources that Colombia will develop over the next 20-30 years, the Government and the Bank feel that a sound pattern of development and use of the country's electric energy resources should be maintained. In accordance with this view, the Government has confirmed in principle that (a) ISA would have ownership of a substantial portion of total sector capacity sufficient to enable it to function effectively as the planning, coordinating and future dispatch agency for the national system, (b) the regions would continue to share, through investments in ISA, in the cost and benefits of relatively - 7 - low-cost hydro-electric resources, which are geographically concentrated in only a few regions, and (c) viable financing plans would precede the under- taking of any major plant investments. The Bank has been working closely with the Government and the companies in defining the specific long-term arrange- ments that would enable Colombia to make further progress along the lines reflected in the Sochagota Agreement, while taking due account of the realities attendant upon the heavy investments planned. It is expected that such arrangements would be formalized shortly. 1.12 Another matter under discussion between the Government and the Bank is the rapid growth in overdue payments to ISA by the largely rural-based ICEL, which depends in part upon national budgetary resources to meet its financial obligations to ISA (1.34). The Govenment realizes that, if not resolved, this problem could constrain the sector's development capacity. Thus, in seeking means to overcome it, it is considering the establishment of an Electricity Development Fund to finance the sector's expansion (a surtax on electricity use would be the principal source of revenues of the Fund). World Bank Participation in the Sector 1.13 Since 1950, the Bank has made 23 loans to Colombia's power sector, totalling US$769 million (Annex 1.1). In addition, the Bank is currently supporting rural electrification under the Integrated Rural Development Project (1532-CO, 1977). 1.14 Between 1973 and 1978 the Bank was unable to participate in sector development through lending because of institutional and financial difficulties. The municipal utilities were reluctant to relinquish their independent role in generation and also experienced severe financial constraints (because of the Government's reluctance to press for rate increases under inflationary condi- tions) which reduced the availability of funds to ISA. Decisions on system expansion required protracted negotiations among the shareholders and the Government. These negotiations were further complicated by the original shareholders' reluctance to allow the incorporation of CORELCA into ISA. Throughout these negotiations, the Bank continued to support the concept of centralized planning, construction and operation of the national grid and resisted proposals that would weaken ISA. Because of the time required by the shareholders to arrive at decisions on these fundamental issues, Bank consideration of San Carlos I, the 500-kV Interconnection and EEEB's Mesitas hydroelectric project, all of them urgently needed to avoid power rationing in Colombia, suffered considerable delays. A solution finally evolved after extensive discussions between the Bank, the Government and the shareholders, and four loans were made in 1978 and 1979 (1.06) and one in 1980 (Bogota Distribution, 1807-CO). 1.15 Overall Bank operations through 1970 have been reviewed by the Operations Evaluation Department (OED) in 2 reports 1/, which concluded that Bank financing had been successful in assisting the power companies to develop 1/ "Operations Evaluation Report: Electric Power" (Report No. Z-17, dated March 10, 1972) and "Bank Operations in Colombia - An Evaluation" (Report No. Z-18 dated May 25, 1972). hydroelectric plants at lower unit cost than they otherwise would have been able to do. This permitted greater urban coverage as well as cheaper and more reliable electricity supply to industry. OED also commended Bank efforts in the establishment of the central interconnected system which facilitated further power sector development. In addition, OED identified as important considerations for possible future loans in the Colombian power sector: the need to give greater attention to power distribution; the need for improvement of financial recording and financial planning capabilities; and the need to give more attention to public utility tariff structures. 1.16 OED additionally reviewed 4 other projects 1/. The most recent report (575-CO/681-CO), which pertains to ISA, concludes that the projects underwent engineering, physical, financial and institutional difficulties. The estimation of operational and investment requirements for an institution so financially dependent as ISA, without provision for price contingencies in an inflationary environment led to severe financial difficulties. The shareholders had to redefine their role in the sector and, in the process, execution of the projects was delayed although they were successfully imple- mented. The experience gained under these projects has had a considerable impact on the shaping of Bank policy for further lending in Colombia. Adequate provisions for price contingencies have been introduced; local financing is being secured through long-term financial commitments of the shareholders to ISA; improved financial planning was instituted by ISA and its shareholders, as well as continuous monitoring of their financial performance. 1.17 The recent developments in the sector (1.10) indicate that a rea- sonable balance between regional and national interest would be maintained, thus providing a sound basis for continued Bank participation. The further objectives are in general: coordinated sector planning, efficient organization and operation, and sound financial management; within the general scope of these objectives, specific attention in the short term should be given to: least-cost operations, rational urban and rural distribution developments, improvement in financial recording and financial planning capabilities and development of adequate tariff structures and levels based on common concepts throughout the country. Power Market and Supply 1.18 Sector. In 1978 electricity requirements in Colombia totalled about 17.4 TWh. Electricity generation increased by an average of 9.5%/a over the period 1960-70 and about 9.7% on average until the end of 1978. Per 1/ - Third Medellin Power Project - Loan 639-CO (1964; Report No. 450, May 24, 1974). - Third (EEEB) Power Expansion Program - Loan 537-CO (1968; Report No. 536, June 29, 1977). - Power Interconnection Project (1968) Loan 575-CO and Chivor Hydroelectric Project (1970), Loan 681-CO (Report No. 2720, October 29, 1979). - 9 - capita electricity generation was about 667 kWh/a, which is below the average for Latin America (about 780). Installed capacity at the end of 1978 was 3,930 MW, including self-production. Hydro stations accounted for 69% of total energy generation. The following table summarizes installed capacity and energy generated in Colombia in 1978: Public Service Self-Producers Total MW % GWh % MW % GWh % MW % GWh Hydro, Subtotal 2,642 67 11,893 69 20 1 88 - 2,662 68 11,981 69 Steam 717 18 2,928 17 162 4 851 5 879 22 3,779 22 Gas Turbine 285 7 1,191 7 39 1 188 1 324 8 1,379 8 Diesel 43 1 115 1 22 1 96 - 65 2 211 1 Thermal, Subtotal 1,045 26 4,234 25 223 6 1,135 6 1,268 32 5,369 31 Total 3,687 93 16,127 94 243 7 1,223 6 3,930 100 17,350 100 Public utilities accounted for 94% of total electricity supply; the rest was provided by self-production. EEEB generated 18%, EPM 19%, CORELCA 14%, CVC 12%, CEL 13%, and ISA 18% of total supply. Self-suppliers (mainly oil refineries, petro-chemical plants, steel mills and cement works) owned 6.2% of the country's installed capacity; most of these plants are also connected to the public electricity service. The public-service labor force totalled 13,445 at the end of 1977 when installed capacity was 3,552 MW, including 6,690 manual workers; this gave ratios of 262 kW/employee and 162 subscribers/employee for that year. 1.19 Colombia has about 2.3 million electricity subscribers with an average of 7 beneficiaries per subscriber in an estimated total population of 25.2 million; 88% of these subscribers are residential, and electricity service reaches 62% of the population. Studies by the Bank's Development Policy Staff indicate that Colombia has been able to provide electricity service to a very high proportion of its urban population (with the connection rate exceeding 90% in the larger cities). However, only 36% of the families in small towns (500-2,500 inhabitants) and 16% of other rural families had service in 1976. Of the electrified municipalities, about 90% have continuous service, while the remaining have service only during certain hours of the day. In many towns the quality of the service is unsatisfactory because of lack of funds which results in poor of maintenance (and large arrears in payments to the supply companies). - 10 - 1.20 Residential consumers were responsible for the largest share of electricity sale-s by the public utilities in 1978, followed by industry 1/: Sales Clients Category GWh % No. % Residential 5,725 44.4 2,047,352 87.8 Industrial 4,131 32.1 28,730 1.2 Commercial 1,741 13.5 224,750 9.9 Others 1,274 10.0 25,979 1.1 Total 12,871 100.0 2,331,811 100.0 1/ Source: ISA 1.21 In the interconnected system, the 1972 and 1978 market statistics for ISA's shareholders are as follows: Average Annual Growth 1972 1978 % Gross Generation (GWh) 9,380 16,127 9.5 Maximum Demand (MW) 1,810 2,994 8.8 Total Sales (GWh) 7,600 12,871 9.2 Of which consumption precentages: Residential 39% 44% 11.5 Commercial 12% 14% 10.8 Industrial 35% 32% 7.8 Others 14% 10% 3.3 Losses 1/ 19% 20% 1/ Includes station use, transmission and distribution losses, and thefts. During 1972-78 gross production of electricity increased at an annual average rate of about 9.5% compared with a GNP growth rate of 6%. Growth of sales, which averaged 9.2%/a, varied from 7.7%/a for the EPM system to 11.2% for ICEL's system. Apart from an upward trend in the share of residential consump- tion, the pattern of supply and demand has not changed materially; the share of each system in the market has hardly varied. Commerce and industry together had practically the same share in 1978 as in 1972. The main change is the increase of the share of residential consumption by 5 percentage points while "others" declined by 4 percentage points. EMP's historical growth is shown in paragraph 3.02. - 11 - Interconnected System Forecasts 1.22 Demand and Energy. Projected 1979-85 demand and gross energy requirements are based on ISA and its shareholders' analysis of past con- sumption and on a study of the correlation between power sector growth and growth of GNP. Gross energy requirements in the interconnected system are expected to increase at an average annual rate of about 10.8%. Coincident YEAR EEEB EPM CVC ICEL CORELCA Total Maximum Demand ------------------TWh------------------------ MW 1978 4.4 3.7 2.3 3.2 2.5 16.1 2,994 1980 5.3 4.5 2.8 4.8 2.9 20.3 3,908 1983 7.1 5.7 3.6 6.2 4.7 27.3 5,628 1985 8.6 6.7 4.3 7.3 6.2 33.1 6,412 1.23 Supply. In order to meet forecast requirements for the inter- connected system, an additional 4,261 MW (Annex 1.2) is planned to be added by 1985 to the 1978 capacity of 3,687 as follows: 1978 1980 1983 1985 Requirements Maximum demand (MW) 2,994 3,908 5,268 6,412 Gross generation (TWh) 16.1 20.3 27.3 33.1 % Hydro 72 69 66 71 % Thermal 28 31 34 29 Effective Capacities (MW) 3,687 4,899 7,106 7,948 % Hydro 72 70 76 75 % Thermal 28 30 24 25 Rural Electrification 1.24 About 36% of the population lives in areas classified as rural. Although most of the rural villages with electricity service are close to the urban centers, connection density is modest (1.19). The lack of comprehensive data with respect to ongoing and expected rural electrification efforts is expected to be remedied through preparation of the Master Plan (1.10). 1.25 Nevertheless, substantial rural electrification programs are currently underway in a number of regions in the country. Among the most important are: (a) the ongoing electrification subproject of an Integrated Rural Development Program supported by IDB, Canadian International Development Agency and Bank financing (Loan 1352-CO) through which an estimated 15,000 rural families will acquire electricity service; - 12 - (b) the electrification program in the department of Choco financed by the Netherlands Government; (c) the electrification program in the coffee-growing areas, financed by coffee sector resources; and (d) a recently approved IDB rural electrification project for ICEL which will provide service to about 130,000 households by 1982. Sector Investment Program and Studies 1.26 The total 1978-85 investment program of ISA and its shareholders (except for ICEL for which reliable information is not available), excluding interest during construction in mid 1979 was estimated to amount to about Col$340 billion in current prices (about US$4.2 billion in mid-1979 prices), with a foreign component of about 60%. Of the total, 65% pertains to ISA, 16% to EEEB, 9% to CORELCA, 7% to EPM and 3% to CVC. 11 Some 70-75% of total investments would pertain to generation, which is extremely high (a range of some 40-60% would be the norm). Because the new generating capacity would be of little use without a network path to the consumers, upward adjustments in investments for subtransmission and distribution can be expected and it is therefore probable that the estimated cost of Col$340 billion is understated. The Master Plan for power development being prepared by ISA and its share- holders (1.10) is expected to provide a basis for firmer total investment estimates. ISA is now regularly updating its study of economic ranking of projects which indicates that the 1984-88 portion of this program, on which decisions still have to be taken (the program up to 1984 is being executed), would be the least-cost alternative for system expansion. 1.27 The introduction of large thermal plant later in the century is expected to play an important role in ISA's planning for the sector in the next few years (lead time for mine development and power station construction may aggregate some 10 years). Even the large hydro potential of some 100 GW (1.01) would be completely utilized by about year 2020 and the use of the country's large coal reserves for firing of thermal plant may become more economic than hydro well before that time. The Government is aware of this scenario 2/ and the Government agencies involved together with the Bank, are addressing it. It is expected that the Government will survey, inter alia, two areas in relation to coal for domestic use: Tasajero in North Santander and Bolombolo in Antioquia. The use of coal for thermal plant firing and the substitution of coal for oil would be the primary objectives. 1/ This was prior to the discussion of plant ownership reallocation (1.11); no revised estimate is available awaiting formal arrangements for plant allocation. 2/ Disponibilidad de capacidad hidroelectrica y su influencia en la generacion termica en el futuro (Departamento Nacional de Planeacion, noviembre 1978). - 1 3 - 1.28 The generation investment program is imposing a heavy financial burden on ISA and its shareholders. To ensure that only sound projects are undertaken, assurances have been obtained under the San Carlos loans that except for plants in the agreed National Expansion Program, ISA and its shareholders would not undertake construction of any generating plants of more than 200 MW (ISA) and 100 MW (shareholders) capacity prior to completion of San Carlos unless satisfactory evidence has been presented to the Bank that it is economically justified and that adequate financing is available to carry it out without jeopardizing the project. Finances and Tariffs 1.29 Except for EEEB and EPM, which have histories of adequate cash generation, the power sector has relied heavily on borrowings and budgetary contributions to finance its investments. EEEB and EPM operate low-cost systems and cover the most affluent markets in the country; they have, therefore, been able to finance their investments with an appropriate balance of borrowings and cash generation while charging relatively low rates. Because there has been no mechanism to obtain financial transfers within the sector from the more affluent areas to the less affluent, CVC, ICEL and CORELCA, which operate high-cost systems in lower income areas than EEEB and EPM, have had to rely on budgetary contributions from the Government and subsidies. In recent years, however, the opportunity of sharing in low-cost investments through ISA has provided an indirect transfer mechanism. 1.30 Over most of 1971-77 rate adjustments lagged considerably behind yearly inflation. The developments were the followings: Average rates Average Average rates at 1970 at current prices 1/ inflation 2/ constant prices Year Col$/kWh %Change % Col$/kWh 1970 0.202 - - 0.202 1971 0.205 1.6 11.8 0.183 1972 0.220 7.1 13.8 0.173 1973 0.243 10.2 22.0 0.153 1974 0.277 14.2 25.0 0.143 1975 0.355 28.2 23.6 0.148 1976 0.423 19.2 20.0 0.147 1977 0.665 57.2 29.0 0.179 1/ For the relevant information on EPM see paragraph 2.13. 2/ On the basis of the consumer price index. The positive trend in rate setting which began in 1977 is expected to continue as a result of the agreements reached under the San Carlos I and II, Mesitas and the Bogota distribution loans and under the proposed loan to EPM. In view of the importance to economic growth of adequate electricity service, the Government has adopted a policy calling for adequate rates in order to ensure that the sector generates internally a reasonable portion of the funds required. - 14 - 1.31 In view of the considerable imbalances that exist in the structure of tariffs and rates in the power sector, the Government and ISA's shareholders are executing under San Carlos I (Loan 1582-CO) a country-wide tariff study with a view toward assessing the cost of supply to each consumer category (1.10). The study has suffered delays because of the time necessary for the Colombians, who are carrying out the study, to become familiar with the principles of marginal costing. On the basis of preliminary findings, a successful seminar on electricity pricing in Latin America (75 participants representing 21 countries and 3 international institutions) was held in Medellin in October/November 1979, under the aegis of the Bank. The basic study is now expected to be completed by about September 1980. Constraints on Sector Development 1.32 In the past, the large number of entities associated with the power sector, the lack of adequate regulation, coordination and planning at the national level and low electricity rates constrained the sector's ability to make rational use of Colombia's abundant hydroelectric resources. The regionalized nature of the sector, reflecting the political and economic decentralization of Colombia, engendered difficulties in coordinating invest- ment allocation; decisions were made on a local basis without due regard to overall country planning for power development. This situation together with the lack of funds, resulted in recurring power shortages. The most recent developments (1.11) highlight the difficulties of effecting basic changes in a strong historical pattern in response to the requirements of an increasingly sophisticated and rapidly developing economic situation. 1.33 The successful long-term execution of Colombia's power development is contingent upon the availability of sufficient cash generation by the individual entities, and domestic and external sources of financing. Detailed discussions on this subject are the focus of considerable Government attention at this time. The dimensions of this are further enlarged by the sector's organization, which has precluded the usual practice of channeling resources within the sector from well-developed urban markets to support service in the poorer regions of the country, particularly rural areas (1.29), except indi- rectly by investments of the shareholders in ISA's generating and transmission plant which may provide supply to these areas. 1.34 ICEL's financial requirements have grown at a much more rapid pace than its capabilities. The problem derives mainly from overdue accounts for electricity purchased from ISA by ICEL's subsidiaries some of which do not have the capacity to pay due to high operating cost and/or insufficient rates. A smaller portion of arrears is related to investment contributions to ISA, which are covered by national budgetary allocation The arrears are a matter of serious concern to the Government, ISA and the other shareholders. To date ISA's construction program appears not to have been affected but if arrears would continue to accumulate, ISA's program may be slowed, which would affect all the shareholder's ability to meet electricity requirements. In addition to the immediate corrective action under consideration by the Colombian authorities (1.12), a long-term solution is being sought by the Government and the Bank, which would form part of the arrangements to be made under the proposed Guavio hydro power project, taking also into account ICEL's proposal to finance in part the Betania hydro plant. - 15 - 1.35 The Government has recently taken a number of positive measures to address the sector's institutional constraints. In 1975, it eliminated the jurisdictional overlap between ICEL and CORELCA on the Atlantic Coast by transferring control over the electricity distribution companies in that region to CORELCA. Another positive measure was the reorientation of ICEL, which basically is responsible for electricity development in rural and semi-rural areas, where the Government will continue to subsidize the service since ICEL cannot be financially self-supporting in those areas. 1.36 With the addition of CORELCA as an ISA shareholder, most of the sector is represented directly or indirectly in ISA's Board and coordination of power sector planning in Colombia has improved. ISA's effectiveness in maintaining this coordination, however, will depend on its ability to sustain a sound consensus among its shareholders. - 16 - 2. THE BORROWER General 2.01 In 1955 the Government of Colombia authorized the municipality of Medellin to organize Medellin's municipal services as administratively autono- mous units, with the objective of providing energy, telephone, water and sewerage services to Medellin, and to other municipalities which requested such provision from Medellin. In its Order No. 58 of 1955, the Medellin municipality established Empresas Publicas de Medellin (EPM)--the autonomous company created in accordance with Decreto 1816 of 1955. All assets related to these public services were transferred from the municipality to EPM. The three branches of EPM are operated as financially independent departments with separate accounts. EPM operates power facilities in Antioquia, and gives electricity service to Medellin and to numerous other adjacent urban and rural areas under the jurisdiction of their respective municipalities and to the Electrificadora de Antioquia, an ICEL subsidiary, in the remaining territory of the province (3.01). Previous Bank Lending 2.02 The Bank has made 4 loans, totalling MUS$135, to EPM for generation (which assisted in financing about three-quarters of EPM's present installed capacity of 779 MW); 250-CO in 1959, 282-CO in 1961, 369-CO in 1964 and 874-CO in 1973. The fourth loan is helping to finance the almost completed expansion of the Guatape hydro facilities, which raised the dam of the Santa Rita reservoir-not only to increase EPM's generation but also to allow optimum design of the downstream San Carlos hydro plant - and added 4 units to the Guatape I power station (financed by loan 369-CO). The Guatape II project has been delayed by about 2 years due to resettlement problems of the village of El Penol, geological difficulties in tunnelling, welding problems in the penstock lining and design problems in the turbine and generators. All of these problems have been resolved and the plant is now being commissioned. In early 1980, the Bank also extended a loan (MUS$44) to EPM for part of its telecommunication program. Organization 2.03 EPM is administered by a 7-member Board of Directors appointed at the same time for a renewable term of 2 years, with the Mayor of Medellin as Chairman. A ruling was passed on October 31, 1979, by the Consejo del Estado, that the Mayor of Medellin (rather than the Mayor and the Municipal Council) has the authority to appoint and dismiss, without limitation as to his prerogatives of doing so, all board members of municipal entities, in- cluding EPM. The ruling became effective in March 1980, and the Mayor is expected to proceed to select new Board members before the term of the present members expires by the end of this year. Prior to this change the municipality dominated EPM's Board and voting in this Board on decisions already taken in the Municipal Council was a mere formality. This has led to some actions which appear not to have been in the best interests of EPM; appropriate tariff actions (2.12, 5.18) and improved investment limitations (5.23), - 17 - are expected to avoid such actions in the future. The existing agreement (874-CO) specifying that a change in EPM's statutes or that new legislation be adopted by the Municipal Council, adversely affecting the management and operations of EPM, would be an event of default, would be repeated for the proposed loan. 2.04 The General Manager who is appointed by the Board and has a term renewable each year, is responsible for EPM's day-to-day management. He oversees directly the. work of (a) four managers, responsible for technical matters, operations, finance and adminstration; (b) the secretary general in charge of legal affairs and archives; and (c) a planning director in charge of planning and coordination. Below the level of the managers, the organization is to the extent possible separated administratively into EMP's 3 branches of utility services: Water and Sewerage, Telephone, and Power. Each branch works fairly independently of the others, and separate financial statements are prepared. EPM's Board of Directors, however, receives a consolidated financial statement for all of EPM's services. EPM's organizational chart is shown in Annex 2.1. 2.05 The organizational arrangements for the power branch are generally satisfactory, except that the financial responsibilities of the Planning Construction and Supervision Divisions appear to be too limited. This is in part due to the computerization in the Financial Department of cost-accounting and financial forecasts, which tend to shift the financial' responsibility from the engineer to the accountant. EPM is aware of the problem and is studying methods to redefine responsibilities more efficiently. Personnel 2.06 EPM, as of December 1979, had 3,618 employees of which about 1,700 pertain to its power branch. Personnel working directly for power numbered 846 (56 in planning and design, 33 in power station construction, 489 in power stations and substation operation, 268 in distribution). In addition, about an equal number of staff can be assumed to work principally for power in finance, administration and general services. By the end of 1979 EPMf had an installed capacity of 979 MW (including Guatape II nearing completion) genera- ting some 4,130 GWh for about 270,000 consumers of electricity. The power station personnel ratio, therefore, is about 2 MW/employee, the overall staff production ratio 2.9 GWh/employee, or 6 employees. for 1,000 connections, which is considered reasonable. Turnover also appears reasonable; in the first 11 months of 1979, 348 people terminated employment, including 27 who retired on pension; on this basis average employment is about 10 years per person. The pay scales appear generally attractive ranging from Col$7,000-8,000/m for the lowest graded workers (US$166-190/m) to Col$16,000-37,000/m (US$380-880/m) for professionals, to which almost 3 months in pay is added in fringe benefits. This does not take into account EMP's contributions toward the retirement plan. Through the 1980s, increase in personnel directly employed in power is estimated at some 300, of which about 130 would be required for plant operation (Guadalupe IV, Playas) and the remaining for transmission and distribution and general power services. The overall manpower efficiency for EPM power service (although expected to remain about equal to the present figures) is difficult to forecast because of common use of financial and administrative personnel by all of EPM's service branches. - 18 - 2.07 EPM's engineering and planning staff is well qualified, is competent and has considerable experience in project management and operation. This would enable it to manage and operate efficiently the considerable expansion of facilities during 1980-86, including the project. EPM's finance and management staff is also generally well qualified and capable. Training 2.08 EPM is constructing a new training center to continue giving courses to administrative and operational personnel of all its branches. Building construction is well advanced and the center is expected to be in operation by end-1980. Regular courses would be given to train new staff and existing staff would receive refresher courses. At present, EPM trains existing and new plant maintenance staff. The 1979 training program resulted in about 950 participants, each obtaining about 60 hours of instruction. The training arrangements are satisfactory. However, EPM's professional staff requires some post-graduate work in highly specialized areas. A training component for this purpose has been included in the loan (4.14). Accounting and Auditing 2.09 EPM's has an accrual accounting system which is appropriate, and tabulations and reporting are carried out effectively with the aid of a small computer. Monthly financial statements and budget reports are available promptly and, apart from minor inconsistencies expected to be eliminated resulting from the st-dy on a uniform system of accounts for the sector (1.10), contain the iiformation necessary for management review. EPM's internal audit is alsc adequate. The auditor is appointed by the Municipal Council of Medellin and reports directly to EPM's Board and the Municipality. The annual internal audit report is issued within three months after the end of the fiscal year. In accordance with agreements reached under loan 874-CO (Guatape II), EPM engaged independent external auditors to audit the accounts of all its operations, and their reports have been acceptable. The existing covenant related to accounting and auditing, including the requirement to submit the audited accounts and the auditors report to the Bank not later than 4 months after end of each fiscal year, would be repeated under the proposed loan but for the time limit which would be extended to 5 months to bring it into line with historic performance. Billing and Collections 2.10 EPM's billing and collection procedures are satisfactory. Billing is computerized and subscribers are billed monthly. Bills become due about ten days after being received by the subscriber. While a consolidated bill for water and sewerage, electricity and telephone services is prepared, the charge for each service is shown separately. If the subscriber does not settle the account within three months, all utility services to the subscriber are disconnected. As a result of this rigid disconnection policy the level of outstanding and overdue accounts is generally low (5.05). - 19 - Insurance 2.11 EPM's power assets were not adequately insured, but it has recently made arrangements satisfactory to the Bank for such insurance. EPM has also expressed its intention to seek expert advice on the insurance of large civil works under construction in relation to the Guadalupe IV project. The existing insurance covenant would be repeated for the proposed loan. Tariff and Rates 2.12 EPM historic costs, particularly capital costs, have been low and as a result, its average rate is one of the lowest in the country, if not in the world: 65.3 centavos/kWh (USq1.65 kWh) at the end of 1978 (estimated to average USJ1.95 in 1979). Under the San Carlos loans, EPHI had obtained the necessary authorization from JNT, and had instituted a 2.2% monthly rate increase in order to reach the agreed rates of return of 7% in 1978, 6% in 1979 and 9% in 1980 and subsequent years. However, in January 1979 EPM's Board decreased the monthly rate increase to 1.5% for residential consumers and to 1.8% for all other consumers, with the intention to raise them again to the level of 2.2%/m after the municipal elections (March 1980). EPM's Board has recently reinstated the 2.2% monthly increase, effective April 1, 1980. Further tariff action is required for EPM to maintain a satisfactory financial position (5.18, 5.19). 2.13 EPM's tariff structure is seriously imbalanced, with residential and block rates (to other municipalities and the ICEL subsidiary - see paragraph 3.01) significantly lower than industrial and commercial ones, and over recent years this gap has been widening. This can be illustrated by comparing average 1973 and 1978 rates, expressed in USc per kWh, after inflating 1973 average rates by the cost of living index (using 1973 as a base) and using the average 1978 rate of exchange: Average Rate Per kWh Increase 1973 1978 (Decrease) US$ c/kWh % Residential 1.40 1.26 (10.0) Commercial 2.39 3.44 43.9 Industry 1.61 2.32 44.1 Block 0.82 0.71 (13.4) Other 1/ 0.82 1.15 40.2 Total 1.46 1.65 13.0 1/ Together representing in 1973: 3.5% of revenue and 6.4% of sales; in 1978: 3.4% of revenue and 4.8% of sales. - 20 - While the cost of supply in low voltage networks, (i.e. largely for supply to households) in general exceeds the cost of supply in the high voltage networks (i.e. to most industrial consumers), industry paid about 15% more than residen- tial consumers in 1973,but 84% more in 1978. Residential rates, in real terms, decreased by 10%, while industrial rates increased by 44%. This increasing imbalance is unsatisfactory, even taking into account that in real terms the overall average rate increased 13% over the period. 2.14 The ongoing tariff study under San Carlos I (1.10) is expected to identify for the main supply centers in Colombia, the marginal cost of supply to the various consumer groups at the various points of supply and in time of the season, week and day. This study is expected to assist the sector and the Government in coming to grips with the problem of unbalanced tariff structures and seeking corrective actions through gradual adjustments. However, the study has suffered delays and is not expected to be completed before September 1980. Awaiting the outcome of the study, EEEB agreed (Loan 1807-CO) to prepare and institute an interim program which would gradually adjust rates during a two year period by apportioning future rate increases among the major categories of consumers in such a way as to gradually reduce the imbalance. Likewise, EPM has agreed to prepare by March 31, 1981, a program satisfactory to the Bank of gradual revisions of its tariff structure and rates for its power services, taking into account the conclusions of the ongoing tariff study and put into effect such program by May 31, 1981. In the event, however that EPM would be unable to prepare such program because of further delays in completing the tariff study, it has agreed to prepare by March 31, 1980, an interim program satisfactory to the Bank, covering the period from May 31, 1981 through May 31, 1983, for the same purpose as the above program and institute such interim program by May 31, 1981. When the tariff study becomes available, EPM would prepare a program as referred to above; this program would replace the interim program. The program would also take into account the income redistribution policies of the government benefitting the lowest- income consumers. - 21 - 3. EPM'S MARKET Supply Area, Access to Electricity 3.01 EPM's statutory service area is the municipality of Medellin. However, service can be given under separate contracts to any area in the Department of Antioquia. Accordingly, EPM supplies directly 15 small municipalities (i.e., it owns the networks in the villages and bills for the service), sells in block to 10 other municipalities having their own distribution services, and sells indirectly (through supply to the Electrificadora de Antioquia, an ICEL subsidiary) to 67 municipalities. Thus, of the 116 municipalities in the province, 92--or about 80%--are directly or indirectly supplied with electri- city by EPM. The total population of Antioqua is estimated at 3.4 million, of which an estimated 2.2 million--or 65%--have access to electricity. EPM supplies directly to about 270,000 consumers of which about 90% is residential. The Electrificadora de Antioquia has about 100,000 consumers. Antioquia accounted for about 22% of national gross electric energy requirements in 1977/78. Historic Development 3.02 The 1975-78 consumption and supply data are shown in Annex 3.1, including the energy EPM purchased from and supplied to ISA. EPM's consumer data for 1968, 1973, 1978 is the following: Annual 1968 1973 1978 Growth Sales GWh % GWh % GWh % % Residential 608 50 980 46 1,346 44 8.3 Commercial 87 7 161 8 225 7 10.0 Industrial 358 29 664 32 893 30 9.6 Block 61 5 164 8 426 14 21.5 Government 18 2 32 1 53 2 11.4 Others 87 7 103 5 92 3 - 1,219 100 2,104 100 3,035 100 9.6 Losses 479 (28) 484 (19) 604 (17) Total requirements EPM 1,698 2,588 3,639 7.9 Supply to (from) ISA - - (454) EPM generation 1,698 2,588 3,185 Maximum demand (MW) 327 505 700 7.9 Number of consumers 140,766 207,450 261,273 6.4 The major change in the consumers' share of the market over the 10-year period was in the block sales to municipalities and the electrificadora, which increased an average of 21.5%/a and accounted for 14% of sales in 1978. Excluding this supply from the comparison indicates that the consumption pattern for the other classes of consumers decreased fractionally for resi- dential consumers and commensurately increased for commerce and industry, - 22 - i.e, the overall pattern remained about the same. The residential consumers showed the lowest growth rate, which is surprising (saturation is not apparent, since 1970 consumption per residential connection increased about 1.6%/a to 475 kWh/m and the number of consumers rose by 6.1%/a) in view of the fact that the rates for these consumers are very low, USi1.26/kWh in 1978 at the then current rate of exchange. The rapid increase in block supply may in part be due to the extremely low rate charged by EPM for this service, in 1978 amount- ing to USiO.71/kWh equivalent. Overall growth in sales during the period was 9.6%/a, but it should be noted that average growth was considerably lower during the last 5 years (7.3%/a) than the previous 5 years (11.5%/a). Growth of total energy requirements and maximum demand was substantially lower due to the decrease in losses from 28% in 1968 to 17% in 1978. Losses, however, are still relatively high for EPM's 100% hydro system (losses, unaccounted for, including thefts, are probably in the order of 7%). This problem is presenty being studied throughout the sector (1.10) and remedial action is expected to be instituted as a result of the study. Gross per capita consumption in EPM's supply area in 1978 was in the order of 1,000 kWh, probably the highest area consumption in the country (in Bogota, annual per capita consumption is in the order of 850 kWh). 3.03 Captive Plant. The total installed self generating capacity in fac- tories in Antioquia is about 70 MW or 10% of EPM's installed capacity. About 35 MW pertains to two large textile factories, 18 MW to two cement plants, 13 MW to a mining company and the remaining to various small factories. Only one of the cement plants and the mining company are not connected to EPM's supply facilities. Supply figures (i.e., GWh for self-use) are not available. 3.04 Forecasts. EPM's sales are expected to grow at an average of 9%/a over 1978-86 and gross energy requirements in its system by 8.5%/a (Annex 3.1). This forecast was prepared essentially on the basis of historic trends. EPM uses simple exponential models for both energy consumption (for the various consumer categories and totals) and demand, deriving trend curves for forecasting requirements through 1986. Because the historic results compared with forecasts made with these simple models were generally in good agreement, EPM did not study alternative models. (However, ISA is presently studying the applicability of socio-economic multi-regression models throughout the sector.) The present forecasts are considered adequate. The following table summarizes the results: - 23 - Annual 1978 1982 1986 Growth Sales GWh % GWh % GWh % Residential 1,346 44 1,808 42 2,406 40 7.5 Commercial 225 7 350 8 511 8 10.8 Industrial 893 30 1,368 31 1,962 33 10.3 Block 426 14 561 13 853 14 9.1 Government 53 2 66 2 79 1 5.1 Others 92 3 183 4 229 4 12.1 3,035 100 4,338 100 6,040 100 9.0 Losses 604 (17) 774 (15) 960 (14) Total requirements EPM 3,639 5,112 7,000 8.5 Supply to (from) ISA (A) (454) 334 896 - EPM generation 3,185 5,446 7,896 12.0 Acquired rights in ISA (B) - 989 2,036 Total Surplus (A) + (B) - 1,323 2,932 Maximum EPM demand (NW) 700 984 1,345 3.05 Residential consumers are expected to continue decreasing slightly their share in the market at about the modest growth rate of the last 5 years (3.02). Commerce and industry would commensurately increase their share of the market at a growth rate of about 10-11%. Because, for as yet unidentified reasons, the rapid increase in block supplies decreased to practically zero in 1979, and no consumer information is available, EPM decided to conservatively assume a 9% annual growth. This appears appropriate in the light of the necessity to adjust the block charges together with all other rates in the near future (2.13). It appears possible (discussions are underway) that EPM will take over several networks from independent municipalities and bill consumers directly because these municipalities are unable to maintain or improve the networks and to pay EPM for the supply. The number of consumers is expected to increase by about 4%/a to about 360,000 by 1986. Total energy requirements would grow less than sales in view of the expected lower losses due to the actions to be taken against thefts (3.02). The load factor is expected to remain about 59% during the period. 3.06 The generation forecast has been based on the average water avail- ability in the rivers on which EPM's plants are located. Additionally, by investing in ISA plant (Chivor, San Carlos, Jaguas) EPM has obtained rights to a portion of the generation capabilities and capacities of these plants. The energy rights are shown in the above table together with the average surplus that could be generated by EPM plant. The total surplus would be available in the interconnected system for sales to other shareholders. For purposes of revenue forecasts, EPM, on the basis of a simulation study prepared by ISA, has made assumptions for the portion of the energy and commensurate capacity surplus that, on average, is expected to be sold in the interconnected system - 24 - as firm and secondary energy during the period to other shareholders which cannot meet their own requirements and depend on ISA and its other shareholders having surpluses (presently only EPM). The total (available 95% of the time) amounts to about 65% of this surplus, which appears conservative. - 25 - 4. THE PROGRAM AND THE PROJECT The Program 4.01 EPM has prepared a power development program for 1980-88, of which the 1980-86 portion is discussed here, to meet gross energy requirements expected to grow at 8.5% from 3,639 GWh in 1978 to 7,000 GWh in 1986 (3.04). The number of consumers would increase from about 270,000 in 1979 to about 360,000 in 1986, at an annual growth rate of 4% (3.05). These growth rates are similar to those experienced in the previous decade. The expansion pertains mainly to the urban area of Medellin and the Aburra valley in which this city is located. Modest expansion is planned in the remaining area of the province of Antioquia (largely the supply area of the Electrificadora de Antioquia, an ICEL subsidiary), mainly in transmission lines and substations. EPM also assists the Electrificadora by constructing some distribution net- works which, upon completion, are transferred to the Electrificadora as an equity contribution, for which it obtains shares in the company. 4.02 EPM's 1980-86 development program (Annex 4.1) excluding contribu- tions to ISA and excluding interest during construction, is estimated to cost MUS$665 at current prices, with a foreign component of MUS$385 (58%). Its main components are: (a) ongoing works in generation, i.e., the almost completed Guatape II hydro plant (Loan 874-CO), a small hydro plant (19 MW) at Ayura, the diversion of 3 small rivers to the Troneras reservoir (the reservoir supplying the Troneras and Guadalupe I-III plants); the Guadalupe IV hydro plant to be financed by the proposed loan and the Playas hydro plant for which construction has not yet started; (b) some ongoing works in transmission and substations and a substantial expansion program to be financed by EPM, from a recently obtained loan of MUS$32 from the Bank of America and by the proposed loan; the latter would also finance special metering equipment; construction and maintenance vehicles; and (c) studies of potential hydro developments in Antioquia, partially financed by FONADE (Loan 971-CO), a transmission network study, and training to be financed by the proposed loan. The Project 4.03 Objectives - The objectives of the project are to assist EPM to meet incremental power requirements in the rapidly expanding urban area of Medellin, expand the supply system to the rural areas (which, inter alia, would allow replacing some costly and unreliable supply from individual diesel plants), and improve reliability of supply in existing networks. The project would also assure completion of EPM's regional control center as part of the dis- patch system in the integrated network. Additionally the objective would be to raise EPM's rates as necessary to ensure sufficient internal cash generation for investment and introduce an adjustment in the rate structure to remove gradually the existing imbalances. - 26 - 4.04 Description - The project comprises: (a) The Guadalupe IV hydro plant. The plant, the construction costs of which is estimated at about MUS$150 (US$700/kW) at current prices, will be located immediately downstream from the existing Troneras (36 MW) hydro plant and the Guadalupe I (25 MW) and Guadalupe III (270 MW) power stations which are hydrologically in parallel, replacing the obsolete Guadalupe II plant. It would operate under a gross head of 417 m, and generate an average of 1,077 GWh/a. It consists of: - infrastructure, including 7.5 km of access roads; - a compensating concrete tanque of 22,000 m , immediately draining into a vertical well, 57 m deep; - the first part, 2.6 km long, of a horizontal (1% incline) concrete lined power tunnel with a diameter of 4.5 m, which leads to a second well, 131 m deep in order to assure ade- quate overburden under a canyon crossing the tunnel; - the second part of the power tunnel, about 3.9 km long with an incline of 0.5%; - a surge tank of the restrictive orifice type near the end of the second part of the power tunnel; - two surface penstocks about 540 m long with a diameter of 2.80/2.60 m; the last part will cross the Guadalupe river and for this purpose be sunk in a trench in the riverbed (for this and the construction of the powerhouse, the river will be diverted through a 350 m long diversion channel); - a surface power station suitable to install 4 turbine generator units of which 3 will be installed initially; - 3 vertical Frances turbines, designed for 22 m /s at 74 MW and 514.3 rpm, each coupled to 71-MW generator at 13.8 kV and a power factor of 0.9; - a substation adjacent to the power station with 2 banks of 3 single phase transformers of 59 MVA each (one bank for 2 turbine-generator units) for stepping up the voltage to 230 kV; (b) EPM's 1982-1984 transmission line development program (which constitutes about 65-70%--expressed in base cost--of EPM's 1980-86 transmission line program) comprising 10 km of single circuit 44-kV lines, 30 km of single circuit and 15 km double circuit 110-kV lines and 93 km of double circuit 230-kV lines; - 27 - (c) expansion of 5 or 6 existing and construction of 4 or 5 new substations (constituting about 35%--expressed in base cost--of EPM's 1980-86 substation program, about 60% of which would be financed by a Bank of America loan), together comprising about 420 MVA in transformer capacity; (d) construction of EPM's control center; (e) the 1982-84 portion of EPM's 1980-86 renovation and expansion program in distribution overhead and underground networks (constituting about 55%--expressed in base cost--of EPM's 1980-86 program), comprising about 129 km of 13.2-kV overhead lines, 41 km of 13.2-kV underground cables, 22 km of 44-kV overhead lines, 111 km LT lines, 11 MVA in distribution transformers and special metering equipment such as a cable fault locator, current sensors (2,900) and power registering meter systems (16), cable laying vehicles (2), pole erecting vehicles (2), three cutting vehicles (1), maintenance vehicles (2), line and cable tools, mobile phones (30) and manhole ventilators (2); and (f) a specialized training program for EPM's professional staff consisting of about 8 scholarships each year during 1981-84 plus special training for the staff of the power planning department. 4.05 Cost - The total cost of the project is estimated at MCol$13,374 (MUS$228.3) including a foreign component of MCol$9,161 (MUS$155.2), equivalent to 68% of total project cost. Project costs, which are shown in detail in Annex 3.2, are summarized as follows: Local Foreign Total Local Foreign Total --------MCol$…--------- _-------MUS$---------- Guadalupe IV hydro station 1,163 2,389 3,552 28.5 58.3 86.7 Transmission lines 127 315 442 3.0 7.5 10.5 Substations 89 423 512 2.1 10.1 12.2 Control Center 14 246 260 0.3 5.9 6.2 Distribution 101 420 521 2.4 10.0 12.4 Special utility equipment - 44 44 - 1.1 1.1 Training 12 34 46 0.3 0.8 1.1 Subtotal 1,506 3,871 5,377 36.5 93.7 130.2 Engineering, administration, study 361 85 446 8.8 2.1 10.9 Contingencies: Physical 279 509 788 6.8 12.1 18.9 Price 2,067 4,696 6,763 21.0 47.3 68.3 Subtotal 2,345 5,213 7,567 28.0 59.6 87.6 Total Project Cost 4,213 9,161 13,374 73.1 155.2 228.3 - 28 - 4.06 The project cost is based on estimated December 1978 prices which, for Guadalupe IV, are based on recent contracts and offers for hydro stations (San Carlos, Janguas) being constructed in Colombia and, for transmission and distribution based on EPM's experience with equipment procurement. The project costs are considered reasonable. EPM is exempt from custom duties on imported goods, and any taxes on procured goods. The physical contin- gencies correspond to the risks intrinsic to the various project components. For Guadalupe IV civil works they vary from 15% (surface work) to 20% (under- ground work) and for equipment between 10% (generators, turbines) and 15% (small equipment, penstock); for the other components of the project they vary from 10% (foreign equipment) to 15% (local equipment and labor). These percentages are considered appropriate in view of the status of design. A price contingency has been added as follows: local cost inflation was assumed to decrease from 26% in 1979 to 15% in 1982 and subsequent years; foreign cost 12% in 1979, 10.5% in 1980, 9% in 1981 and one percentage point lower each year for each subsequent year until 1986. 4.07 Financing - A Bank loan of MUS$125 is proposed for the Guadalupe IV project, representing about 80% of the foreign exchange component of MUS$155.2 (19% of the total cost of EPM's 1980-1986 development program), as follows: MUS$ Guadalupe IV 71.2 Transmission lines 11.2 Substations 15.6 Control Center 10.3 Distribution 13.7 Special utility equipment 1.6 Transmission study 0.2 Training 1.2 125.0 Suppliers credits and external commercial borrowings would finance up to MUS$30.2 of the foreign cost for the Guadalupe IV turbines and generators and the remaining foreign costs, mainly for distribution and transmission, not financed by manufacturers (which were assumed to financed 85% of the cost of equipment to be supplied by them). EPM would finance the local cost (MUS$73.1) from its own resources, mainly internally generated funds. Engineering, Studies, Training 4.08 Guadalupe IV - The feasability study for the hydro plant (June 1979) particularly with respect to plant design, was found to be generally acceptable, except that the tunnel level (second part) was not optimized and the cost estimate could be improved. A rush drilling program was instituted in September 1979 in order to assess the depth of the so called Antioquian batholite, which would allow to locate the second part of the power tunnel in substantially solid rock, thus decreasing requirements for concrete lining of the tunnel. In view of the local geological conditions it - 29 - however, become obvious that the project would suffer a delay of at least half a year if preparation of bid documents would await the results of the drilling. Because of the obvious benefits to the interconnected system of completing the Guadalupe plant as soon as possible (delays in plant comple- tion and in initiating construction of new plants have caused two zostly emergency programs and it appears that even these will not remove the consid- erable risks of curtailments throughout the eighties), it was agreed with EPM (a) to locate the tunnel of the optimum depth - i.e. 50m lower than designed - assuming a completely lined tunnel, (b) to continue the drilling in order to assess whether adjustments will have to be made and (c) to prepare bid docu- ments allowing adjustments to such changes. Because it appears probable that a large section of the tunnel will be in solid rock (decreasing lining cost) the cost estimate is deemed to be sufficiently conservative to allow for some design changes during execution. 4.09 EPM will continue to employ its consultants for the Guadalupe plant, Consultores Tecnicos Ltda y Mejia y Millan Ltda. (Colombia), for final design and supervision. Its contract with EPM is being financed by a FONADE loan of MCol$30. This contract, which terminates in March 1982, is also acceptable to the Bank and the proposed loan would finance the remaining part of the contract once the FONADE funds have been exhausted, which is ex- pected in early 1982. EPM would sign not later than April 30, 1982 a new contract acceptable to the Bank with the same consultants for the continua- tion of their services until completion of Guadalupe IV. The proposed loan would finance this contract. The loan would finance 100% of the foreign cost of foreign consultants and 50% of the local cost of local consultants. The estimated base cost of the services to be financed in part by the loan is MUS$5 in which general cost (surveys, drilling, test, etc.) is estimated at -MUS$1. The consultants are paid on the basis of the cost of all personnel assigned from time to time to the project, including salary costs, social benefits and profit margin. Their present average salaries are about US$1,100/month. It is estimated that some 3,200 m.m. of such services will be required. 4.10 Transmission, Distribution - Under the Guatape II loan (874-CO) EPM, with the assistance of Westinghouse executed a study for the expansion of its sub-transmission and distribution system, particularly with respect to optimum size and location of substations, capacity and length of lines, and standardi- zation of line components and transformers. The results were used by EPM for the design of the network included in its 1980-86 program. The network design is technically simple and follows American standards, except in the underground portion of the network in the center of Medellin where a 3-phase 4-wire 208/110-V system was installed many years ago, and which would be extremely costly to change. Present practices are adequate and will be continued, with emphasis on standardization throughout the network. As in the past, the work will largely be executed by local contractors under supervision of EPM, assisted by consultants, which is satisfactory. It should be noted that EPM itself would construct only about one fifth (some 260 km) of the total required low voltage distribution networks; four-fifths would - as in the past - be constructed by - 30 - developers in accordance with EPM's standards. On completion, these networks are transferred to EPM at no cost for incorporation in EPM's assets. Conse- quently, the cost of such networks (some MUS$8) have not been shown in EPM's investment programs. 4.11 The development of Medellin's network has been from within, i.e., 110-kV lines have been extended following the development of the city in the rather narrow valley. Line and substation congestions are rapidly developing and, although the outline of a 230-kV ring around the city is becoming apparent, no comprehensive study has been made with respect to the future high voltage supply system. During appraisal this was discussed with EPM, and the carrying out of a study of EPM's high voltage transmission system was agreed upon. Consultants would be engaged by December 31, 1981 under acceptable terms and conditions. The cost of this study, which should be completed by September 30, 1982, is estimated at MUS$0.4 of which about half would be financed by the proposed loan. 4.12 Control Center - The basis for the dispatch system in the intercon- nected network was planned by ISA in coordination with its shareholders and with the assistance of consultants (Systems Control of USA in cooperation with Sistecom of Colombia). It envisions the construction of a national dispatch center in Medellin (ISA) and, initially, 3 regional control centers. ISA's dispatch center is in execution, CORELCA has signed the contract for supply and erection and both EEEB and EPM are coordinating the preparation of terms of reference for engineering consultant services for final design, preparation of bid documents and supervision of execution of their respective control centers. The basic concepts for all regional centers are equal, they differ only to the extent required in view of operational requirements and physical differences of plant. In order to realize the full benefits of operating the interconnected system at least cost as soon as possible, EPM has decided to complete its control center, which would be financed by the proposed loan, without delay. It is estimated that already both EEEB's and the EPM's center will lag behind the completion of the ISA and CORELCA centers, by almost 2 years. 4.13 EPM has obtained a loan from FONADE for the relevant consulting services and it would engage the services of consultants for the execution of its control center not later than September 30, 1980 under acceptable terms of reference (already agreed with the Bank). The services would be in 2 phases: (a) final design, preparation and issue of bid documents (April 30, 1981) and award (October 30, 1981), and (b) supervision of execution. 4.14 Training - As is common in the Colombian power sector, EPM's practice is to use local engineering firms to assists its staff as needed for detailed design, procurement, and supervision of construction. Although this has worked reasonably well in the past, ISA and its shareholders have been studying the obvious drawbacks of this system in relation to rapidly growing construc- tion responsibilities: how to adequately supervise in the future performance of consultants while to reducing reliance on outside services where possible. Funds have been included in the most recent loan to ISA (San Carlos II, loan 1725-CO) for specialized graduate training in specific areas required by the sector, such as hydrology, soil and rock mechanics, geomorphology, seismology, energy planning and dispatch, protection and specialized equipment and civil - 31 - works. The proposed loan would complement this effort by financing 8 scholar- ships per year during 1989-84 at a cost of about US$1,200/m each. In addition, the proposed loan would finance the foreign cost of specialized training of the staff in the power planning, which would consist of 3-4 group missions of these professio->als to other public utilities of Latin America and elsewhere to update their expertise. The foreign cost of these missions is estimated at about US$100,000/a each for the same period. The graduate training program would be carried out in coordination with ISA as the latter will execute its study of manpower requirements to identify the areas of required training for its own staff (similar to EPM's) and the programs and resources through which the training can be obtained. Execution 4.15 Implementation Schedule - The implementation schedule, of which the key dates are shown in Attachment 4.3, would be used to monitor project progress during the construction period. The main project component, the Guadalupe IV station is expected to be completed by mid-1984, and transmission and distri- bution components by the end of that year. 4.16 Procurement - Procurement of goods and services to be financed by the proposed loan (other than consulting services and training) would be through international competitive bidding under Bank guidelines for procurement. Colombian manufacturers would receive a preference of 15%, or applicable duties, whichever is lower, for purposes of bid evaluation. The cost estimates assume that local manufacturers would supply conductors, constructional steel, towers and miscellaneous distribution equipment, with an estimated cost of some MUS$10, the ex-factory cost (net of taxes) of which would be financed by the loan. 4.17 Disbursements - Funds from the proposed loan would finance the foreign cost of (a) 52% of total expenditures for the civil works for the Guadalupe IV hydro plant, (b) 100% of foreign expenditures for directly imported equipment and 94% of the ex-factory cost of locally produced materials and equipment, (c) 100% of foreign expenditures for foreign consultants and 50% of local expenditures for local consultants, and (d) 100% of foreign expenditures for training. All disbursements requests would be fully docu- mented. Annex 4.4 shows the estimated loan disbursements. The closing date would be June 30, 1985. Retroactive Financing 4.18 In order to avoid delays in its construction program, EPM may have to award some small contracts prior to loan signing. For this reason retro- active financing is proposed, not exceeding MUS$ 0.5. 4.19 Environmental Aspects - Because the Guadalupe IV hydro plant would use the existing water conveyance system, the environmental impact would be limited to those inherent to the construction of new access roads and the new power station including penstocks. The latter will be founded almost completely - 32 - on residual soil materials which will be more stabilized than it is now through )adequate surface drainage and revegetation of bare portions of the terrain and disturbed sections. Because the power station site is uninhabited and not used for any agricultural purposes, there would be no displacement of people. EPM has carried out previous transmission and distribution projects with due regard to environmental factors. Under the project the 230-kV line will be of a design consistent with minimal effects on land usage. Line routes, for 44 kV and 110 kV have been selected to follow existing rights of way, adjacent to highways and roads, so that clearing of land will be kept to a minimum. 4.20 EPM has a study in execution of the sedimentation of its reser- voirs, the results of which will be made available to the Bank upon completion expected before the end of 1980. Loan 874-CO (Guatape II) provided for the usual dam monitoring which, however, was restricted to the San Rita reservoir and water works. The undertaking would be extended, under the proposed project, to all of EPM's dams and waterworks pertaining to power. 4.21 Project Risk - The Guadalupe IV part of the project is subject to the risks normally associated with civil works in difficult terrain and heavy rain during the wet season, which may cause landslides in disturbed earth and cause temporary work stoppage. However, since the surface work is limited to the compensating tank, the penstock and the power stations (the latter is on a flat piece of terrain, where no land slides can interfere with the works) the physical risks are mainly due to stability problems to be solved for the foliated and steep rocks adjacent to the compensating tank, and for tunneling. Although it has been assumed that the tunnel would be largely constructed in metamorphic rock, the possibility is high that, in effect, some sections will be in the solid rock of the Antioquian batholite (4.08). No undue difficulties are expected. The probable critical path of the project is the completion of the dispatch center; the construction period of 3 years appears tight. 4.22 The procurement and construction schedule for the transmission and distribution facilities is reasonable; no unusual delays are expected. Timely completion of the main components of these facilities will depend largely upon appropriate use of local consultants for assistance on detailed design and procurement activities and upon the ability of local construction firms to maintain schedules. 4.23 Project File - Reference is made to Annex 4.5 for the contents of the Project File. - 33 - 5. FINANCE Summary 5.01 Except for 1974 and 1975, EPM has maintained a satisfactrry financial position through its 21-year relationship with the Bank. The extra-fiscal measures taken under recent agreements with the Bank, including revaluation of assets for monitoring financial performance, have considerably strengthened EPM's financial structure. The investments of EPM's Power Department for the period 1980-1986 are forecast at MCol$60,405, of which MCol$16,228 (27%) correspond to the proposed Guadalupe IV Hydro Power Project. Net internal cash generation would finance MCol$35,940 (60% of total) and the remaining MCol$24,551 (40%), would be covered by loans; the proposed loan amounts to MCol$7,379 (MUS$125). The present financial projections are based on a plan of tariff increases and on external and domestic inflation assumptions. The net operating income with the above plan is expected to produce annual rates of return on fully revalued assets ranging from 8% in 1980 to 16% in 1983 and the company is expected to maintain an adequate financial position throughout the projection period. Consolidated Financial Performance 5.02 EPM's consolidated financial position as well as that of each of its various departments (Power, Telephone, and Water and Sewerage) have been satisfactory. During 1977-1979, the consolidated annual debt service coverage ratio exceeded 2.0. The following table summarizes EMP's consolidated finan- cial performance during this period (Annex 5.1). Fiscal Year Ending December 31: 1977 1978 1979 ----------MCo1$--------- Operating Revenues 2,425.8 2,907.0 4,169.3 Operating Expenses 1,426.2 2,131.7 2,819.9 Operating Income 999.6 775.3 2,369.4 Operating Ratio (%) 59 73 68 Debt/Equity Ratio 57/43 57/43 52/48 Current Ratio 1.4 1.7 1.1 Debt Service Coverage (times) 2.6 2.1 2.3 5.03 The projected flow of funds of each department (Telephone, Water and Sewerage, Power) through 1984 has also been reviewed and, on this basis, EPM's forecast future finances have been found satisfactory; annual debt service coverage for each of these departments will not be less than 1.5 (Annexes 5.2 and 5.7). Each department is operated financially independently of the other. EPM's current projections show that the future development program of each department will not impose any financial constraints on the - 34 - other departments. However, the implications of an eventual deterioration of the financial situation of any department on EPM's overall financial situation as a whole or on the Power Department, have been examined and, where necessary, appropriate covenants have been included in the proposed loan agreement to ensure financial independence (5.19 through 5.24). EPM retains all its profits because statutorily it is not required to pay dividends. Instead, each department pays an annual contribution to the municipality of Medellin based on the following percentages (fixed since 1955) of sales: Power, 4.425%; Telephone, 3.420%; Water; 1.993%; and Sewerage, 2.473%. Since EPM's accounts and budgets are maintained and audited separately for each department, a detailed analysis has been made only for the Power Depart- ment. Unless otherwise indicated, the following paragraphs relate only to the Power Department. Earnings History 5.04 Except for 1974 and 1975 EPM's Power Department has had a history of satisfactory financial performance. Since 1976, its internal cash generation has complemented adequately its financial requirements, fluctuating from 18% in 1976 to 57% in 1979 of its investment needs, including substantial recent contributions to ISA. This may be attributed in large part to the high density of its market and low-cost facilities, given the area's geographic advantages for hydro generation. The balance of the company's investment funds has been obtained through borrowings, generally at reasonable cost; no subsidized government funding has been required. 5.05 Over 1973-1979, EPM's average rate increased in real terms by 13%. Due to a program of fixed monthly increases instituted in 1978, rates are expected to average USU2.28/kWh in 1980. The rate of return achieved in 1978 and estimated for 1979 of 7.6% and 7.8% are higher than covenanted rates of return of 7% and 6%. At the end of 1979, EPM's estimated debt/equity ratio was 36/64, calculated on the basis of revalued assets, and the debt service coverage ratio (including investments in ISA) was 1.6. The company's cash and working capital have been adequate in recent years; the current ratio has exceeded 1.5 since 1976 and reached 3.3 in 1978. On average, accounts receiv- able as a percentage of annual sales has not exceeded 19.2%. Rate Base 5.06 For public accounting purposes, Colombia's public utility regulatory law does not allow full revaluation of fixed assets but only adjustments to match the revaluation of outstanding foreign debt. To reflect international and domestic inflation, a fixed value of EPM's assets and accumulated depre- ciation as of December 31, 1976 was estimated and agreed with the Bank (under loan 1582-CO), to monitor the financial performance of the company. From this date EPM revalues its assets quarterly by the Colombian cost of living index to monitor its rate of return. - 35 - Tariff Structure 5.07 Although EPM's average rate is expected to continue to improve, its tariff structure lacks appropriate balance among various major components. The spread between average residential and average industrial/commercial charges further widened because in 1979 the 2.2% across-the-board monthly rate increases, in effect since 1978, was reduced to 1.5% for residential and 1.8 for all other consumer categories. Reinstatement of the 2.2% became effective in April 1980, and a program of adjustments would be implemented (2.14). Financial Structure 5.08 The extra-fiscal measures taken since the San Carlos loans, including revaluation of assets for monitoring financial performance, have strengthened EPM's financial structure. As of December 31, 1979, the estimated capitaliza- tion of EPM's Power Department was: MCol$ % Capital 43 - Donations 513 2 Accumulated Surplus 4,328 18 Capital Revaluation 10,967 44 Total Equity 15,851 64 Long-Term delt 7,392 30 Pension and Other Liabilities Reserves 662 3 Total Long-Term Liabilities 8,054 33 Current Liabilities 790 3 Total 24,695 100 5.09 The principal creditor of EPM's Power Department is the Bank; in 1979, debt under its first three loans from the Bank amounted to MCol$5,430 equivalent to 73% of total long-term debt. The second largest creditor is Chase Manhattan Bank with 7%, followed by Brown Boveri and KfW with 4% and 3%. The remaining 13% is composed of debt from various local banks. Audited figures for 1978 are given in Annex 5.3 The pension and other liability reserves (noncurrent and contingent liabilities) are estimated at MCol$790 (3% of total capitalization). Investment and Financing Plans 5.10 EPM's 1980-86 investment program, including construction, invest- ments in ISA, interest during construction and requirements for working - 36 - capital, amounts to MCol$60,405, of which MCol$16,228 (27%) correspond to the proposed project. The future Playas hydro power project, assumed to be constructed and owned by EPM in this financial projection (1.11), is the largest component of the investment program, requiring MCol$22,972 (39% of total). The capital and bonds contributions to ISA, regarded as fixed finan- cial obligations, are considered part of EPM's debt service and amount to MCol$6,070 (10% of total). The proposed financing plan for EPM's investment program is summarized on the next page. 5.11 EPM's net internal cash generation would finance MCol$35,940 (60% of total) and the remaining MCol$24,551 (40%) would be covered by loans (Annex 5.5). Of this figure, MCol$178 comes from undisbursed proceeds of existing loans. The proposed loan for the Guadalupe IV Hydro Power Project would amount to MCol$7,379 equivalent, the balance of MCol$2,554 is planned to be covered by: (a) MCol$1,266 as part of the MCol$1,578 loan which EPM contracted with Bank of America in February 1980 to finance part of its investment program, (b) MCol$1,187 from suppliers credits and/or external commercial banks, and (c) MCol$101 in local currency from FONADE. Borrowings required for the Playas project, amounting to MCol$12,782, are assumed to be covered by MCol$9,959 from IDB or other external sources and MCol$2,823 from suppliers credits. 5.12 The remaining MCol$1,658 of required borrowings are planned to be covered by MCol$362 from local banks, government and municipal loans for financing local components of the construction program, MCol$486 from FONADE to finance the cost of studies for future projects and MCol$810 of short term loans through local commercial banks for financing part of the long-term debt service in 1980 and 1981, in order to increase the availability of the local currency requirements. 5.13 It is reasonable to expect that EPM will be able to obtain the financing estimated above in view of its satisfactory financial position, expected tariff increases, and the interest that domestic and external commer- cial lenders are showing in EPM operations. Resulting from the agreements reached under the Bank loan to EEEB for the Bogota Distribution project, and from the San Carlos and 500-kV Interconnection loans, the Government has confirmed that arrangements satisfactory to the Bank will be made to provide the sector as a whole with the additional funds required for the adequate and timely financing of the various projects under execution which include Guadalupe IV. Effectiveness of the proposed loan would be conditional upon receiving evidence that EPM has made satisfactory arrange- ments for financing the balance of its requirements for the period 1980-1982. 5.14 The proposed Bank loan is assumed at an interest rate of 8.25% per year plus a commitment charge of 3/4 of 1% with a repayment period of 17 years including 4 years grace. The terms of other foreign and local borrowing related to the proposed and future projects (Annex 5.3) are in line with the general terms for EPM's current external and domestic borrowings. Disburse- ment and debt service schedules of existing and future loans are given in Annexes 5.8 through 5.10. - 37 - Proposed Financing Plan 1980-1986 (in current prices) REQUIREMENTS OF FUNDS MCol$L/ Percentages MUS$ Construction Program Existing projects 1,793 3 37.6 Guadalupe IV 16,228 27 279.1 Playas 22,972 39 329.7 General Plant 485 1 7.6 Studies 530 1 9.9 Other 10,150 16 133.3 Sub-Total: 52,158 87 797.2 Interest during construction 4,645 8 69.0 Total construction program 56,803 95 866.2 Other investments 282 - 3.2 Increase (Decrease) in Working Capital 3,318 5 53.4 TOTAL REQUIREMENTS 60.405 100 922.8 SOURCES Internal Cash Generation Net income before interest 40,814 67 620.3 Depreciation 15,544 26 236.4 Amortization (Studies and Training) 554 1 8.0 Reserve Accounts 2,567 4 39.7 Gross Internal Cash Generation 59,479 98 904.4 Less: Debt Service (Excluding interest during construction) 17,469 28 269.5 2/ Investments in ISA-_ 6,070 10 101.9 Net Internal Cash Generation 35,940 60 533.0 Borrowings Existing 178 - 3.9 Guadalupe IV: Proposed IBRD 7,379 12 125.0 Other 2,554 4 47.7 Playas 12,782 21 179.5 Other 362 1 7.5 Studies 486 1 8.9 Refinancing 1980-1981 810 1 16.6 Total Borrowings 24,551 40 389.1 Cash Surplus Variation (86) - 0.7 TOTAL SOURCES 60,405 100 922.8 1/ In current Col$ 2/ Regarded as fixed financial obligations. May 8, 1980. - 38 - Liability Reserves 5.15 EPM maintains reserve accounts for its pension and severance liabilities according to Colombian law, and pays directly from these accounts to employees who leave the company. Annual provisions for these reserves are determined from an actuarial study carried out in 1978. Other liability reserves are EPM's self insurance fund, and a yearly reserve of MCol$100 to cover most of the MCol$850 balloon payment of local loans maturing in 1983 (5.20); since estimated cash generation in 1983 is sufficient to cover said balloon payments, this yearly reserve is assumed to be used to make up for 1980-1981 cash shortfalls. The 1980-86 net increase in these reserves amounts to 4% of total financing sources. 5.16 In addition to low-cost housing loans which EPM provides for its employees, individual shares in the severance funds can be used by employees for purchasing residential housing. As required by law, EPM pays interest on the severance reserve in line with rates charged for similar arrange- ments in other companies. Theise arrangements apply to all EPM's departments. Future Finances 5.17 Forecast financial statements for 1980-86 are presented in Annex 5.4 through 5.6. A summary of financial indicators is given below: For Calendar FY's 1980 1981 1982 1983 1984 1985 1986 Operating revenues (MCol$) 4,098 5,803 8,641 10,664 11,745 14,097 18,297 Operating costs (MCol$) 2,394 2,976 3,671 4,508 5,394 7,082 8,433 Operating income (MCol$) 1,704 2,827 4,970 6,156 6,351 7,015 9,864 Operating ratio (%) 58 51 42 42 46 50 46 Rate of Return on Revalued Assets (%) 8.0 10.5 15.5 16.2 12.2 10.2 10.1 Current ratio (times) 1.8 1.7 1.9 1.9 1.9 2.0 1.8 Debt/Equity Ratio (%) 33/67 33/67 34/66 33/67 33/67 32/68 29/71 Debt Service Coverage (times) 1/ 1.5 1.8 1.9 2.2 2.6 2.2 2.4 Accounts Receivable (days) 70 70 70 70 70 70 70 Self Financing ratio (%) 47 45 49 52 57 59 83 1/ Gross internal cash generation divided by: Debt service including interest during construction not financed by loans and investments in ISA. 5.18 Projected revenues provide for the effects of expected local and external inflation (4.06), exchange rate devaluation (increasing from Col$42.06 in 1979 to Col$81.17 per US$ in 1986) and are based on the following tariff program: (a) Reinstatement in April 1980 of the 2.2% monthly rate increase as approved by the JNT and EPM's Board; - 39 - (b) Continuation of the 2.2% monthly rate increase, and one lump increase to achieve rates of return of 9% in 1980, 1/ and 10.5% in 1981, based on the present forecast such lump increase would amount to 10% in June 1981. These increases would reduce EPM's local cash deficits during 1980 through 1982 down to MCol$810 (about iwS$16 - expected to be covered by short-term loans); without these increases local cash deficits would accumulate to MCol$1,900 (about MUS$38). Although EPM's present debt/equity ratio, and repayment potential would allow it to incur most of this debt, this sum is considered excessive for the local capital market which is already hard pressed to finance similar cash shortfalls of the other power sector utilities; (c) Continuation through 1983 of monthly rate increases of up to 2.2%; and (d) Starting in January 1984, the monthly increase could be adjusted downward to give minimum yearly rates of return of 10%. 5.19 EPM has agreed to increase its rates by 10% before June 1981, or take equivalent actions to obtain the same funding in 1981, and continue its monthly rate increase of up to 2.2% through 1983. 5.20 EPM's net operating income with the above plan is expected to produce annual rates of return on fully revalued assets ranging from 8% in 1980 to 16% in 1983 compared with no less than 9% covenanted under the San Carlos loans. 1/ Tie increase comes from additional local cash require- ments resulting from the assumption that EPM, instead of ISA, will construct the Playas Hydro Power Plant, and from balloon payments due in 1982 and 1983 of local loans contracted by EPM during 1977-1978 to refinance the whole of its foreign debt service payments due in those two years 2/. This yearly rates of return covenant would be amended for the proposed loan in order to achieve a minimum of 9% in 1980 3/, 10.5% in 1981, 13% in 1982 and 1983 and 10% in 1984 and thereafter, in line with the present internal cash genera- tion requirements to maintain acceptable levels of debt service coverage, debt/equity and current ratios. The method for calculating the rate of return, and for periodic monitoring and implementing required adjustments of covenanted rates and a debt service coverage ratio of 1.5, agreed under the San Carlos II loan, would be repeated under the proposed loan. 1/ The 1980 rate of return of 8% actually increases to 9% when the 1979 surplus, as covenanted, is carried over to 1980. 2/ This financing operation was carried out to benefit from a low-cost local credit facility provided by the Government to the sector to alleviate the financial burdens of the majority of its utilities. 3/ Including the carry-over from 1979 mentioned in 1/. - 40 - Negative Pledge 5.21 The negative pledge, covenanted under loan 874-CO, whose applica- bility was limited to the assets of EPM's Power Department, would be extended to include EPM's other service departments. As a consequence (i) the covenant under 874-CO regulating debtors to forego rights on EPM's assets would be deleted; (ii) the debt service coverage test of at least 1.5 would be applied to EMP's other departments; and (iii) EPM would, for each of its departments, prepare and furnish to the Bank a yearly report no later than 3 months after the end of EPM's fiscal year, on EPM's financial performance during that year and projected through the following year. Fund Utilization Limitation 5.22 The covenants under loan 874-CO limiting the transfer of funds from the Power to the other departments of EPM and their independent operation would be repeated under this proposed loan. Investment Limitation 5.23 In addition to the limitation covenanted under San Carlos II on investments in generating plants greater than 100 MW (1.28) a covenant would be included in the proposed loan agreement to the effect that, except as the Bank may otherwise agree, EPM would not incur expenditures for investments not included in EPM's 1980-1986 investment program which exceed 1% of revalued net fixed assets in operation 1/, or for investments unrelated to the operations of its three departments. EPM's Tariffs Requirements 5.24 The covenant under loan 874-CO whereby EPM shall establish and maintain adequate tariff levels for each of its service departments and provide reasonable rates of return and contributions toward new capital investments of each department, would be repeated under the proposed loan. 1/ It would not be necessary to place an additional investment limitation on operational investments to be used in common by two or more departments, because (i) of the similar limitation (MUS$2 instead of 1% of revalued net fixed assets in operation) covenanted under the recently Bank approved Fifth Telecommunication Project loan to EPM; and (ii) any investments made by EPM for the common use of its departments, has to be allocated to each department in proportion to said use. - 41 - 6. ECONOMIC ANALYSIS Least Cost Solution 6.01 ISA annually defines the least cost development program ' r the sector 1/, which then becomes the national development program for genera- tion and 500-kV and 230-kV transmission. The Guadalupe IV hydro plant is the next plant in the program to be completed for the interconnected system (followed by Betania, Playas and Guavio). 6.02 EPM's transmission, subtransmission and distribution program, including the related part of the project, was designed on the basis of the 1980-86 load forecast by the Westinghouse Study (4.10) which optimized substation and main. conductor loading using the discounted cash flow method. Since the objective is to provide electric service to some 12,000-14,000 new consumers each year and to improve service coverage and quality through improving and expanding the existing system, reasonable alternatives for the secondary network are limited to EPM's standard design, which is simple and satisfactory. Return on Investment 6.03 The return on investment was calculated as the discount rate equalizing the present values of the streams of benefits and costs associated with EPM's 1979-1986 development program of which the Bank project is a part and cannot be reasonably segregated. The cost streams comprise the capital costs of this program and incremental operational and maintenance cost related to the incre- mental sales associated with the program. These costs were converted to border prices by means of weighted average conversion factors based on conversion factors for individual local cost components (materials, machinery, equipment, labor, consumables etc.). As a proxy for benefits, revenues were used, derived from incremental sales associated with the program and average 1978 rates, adjusted to border prices by the standard conversion factor. 6.04 On this basis, the return on investment is about 7% (Attachment 6.1), compared with the opportunity cost of capital for Colombia, estimated to be 11%. This low rate of return is of little significance as a measure of the economic worth of EPM's program; it only reflects the end 1978 rate level in relation to the cost of the 1980-86 development. However, on the basis of the expected increase in rates of about 50%, calculated on the basis of the present value of revenues derived from forecast sales and the real term annual level of average rates, the return on investment is expected to be 13% (6.05). 6.05 A sensitivity analysis was carried out to measure the impact of major uncertainties underlying the return calculation. The analysis shows the following: 1/ Verificacion y actualizacion del programa de expansion del sistema interconectado, periodo 1984-88; diciembre 1978. - 42 - Rate of Return; Sensitivity -----Change from Base (%)------ - - - - - - -20 -10 Base +10 +25 +50% ----------Rate of Return (%)… Parameters Benefits (Sales or rates) 4.8 6.0 7.2 8.6 10.1 13.4 Capital Cost 9.4 8.2 7.2 6.3 5.3 3.8- Operation and Maintenance 7.7 7.4 7.2 7.0 6.5 6.0 The rate of return is not sensitive to a change in operational cost (including purchases from ISA, which, until 1986, would be rather limited). The sensiti- vity to capital cost changes is modest, i.e. about 1 percentage point per 10% change in costs. The sensitivity of the rate of return to changes in benefits (sales or rates) is about 1.23 percentage point per 10% change in benefits from the base - i.e. the return on investment would be 13% for a real term increase of 50%. - 43 - 7. AGREEMENTS REACHED AND RECOMMENDATION 7.01 Agreements have been reached that: (a) Power tariff and rates would be restructured as follows: (i) preparation of a program, by March 31, 1981, to gradually adjust structure and rates, and putting such program into effect by May 31, 1981 on the basis of the result of the ongoing national tariff study; and (ii) should the ongoing national tariff study be delayed, EPM would submit satisfactory proposals for an interim program for the same purpose as the above program, by March 31, 1981, for implementation by May 31, 1981 through May 31, 1983; should the tariff study become available, EPM would prepare a program as indicated under (i) above; this program would replace the interim program (2.14); (b) EPM would sign, not later than April 30, 1982, a satisfactory contract with the engineering consultants for the Guadalupe IV hydro plant for continuation of their services until plant completion (4.09). (c) EPM would enga,e, not later than December 31, 1981, consultants for carrying o0t a study of development of its high voltage transmission facilities, which would be completed by September 30, 1982, under acceptable terms and conditions (4.11). (d) EPM would engage, not later than September 30, 1980, consultants for final design, issue of bid document, and supervision of construction, of the dispatch center, under acceptable terms of reference (4.13). (e) EPM would execute (in coordination with ISA) a satisfactory training program for professional staff; this training program would be completed by December 31, 1984 (4.14). (f) EPM would increase its rates by 10% before June 1981, or take equivalent actions to obtain the same funding in 1981, and continue its monthly rate increase of up to 2.2% through 1983 (5.19). - 44 - 7.02 Agreements have also been reached that the corresponding pro- visions of Loans 874-CO, 1582-CO (San Carlos I) and 1725-CO (San Carlos II) would be amended as follows: (a) to extend the period for submitting external audit reports from 4 to 5 months (874-CO, Loan Agreement, Section 5.02) (2.09); (b) to extend the dam and waterworks maintenance covenants (874-CO, Loan Agreement Section 4.04(b)), to cover all of EPM's dams and waterworks (4.20); (c) EPM would achieve a rate of return of not less than 9% of 1980, 10.5% in 1981, 13% in 1982 and 1983 and 10% in 1984 and thereafter (1582-CO, 1725-CO, Share- holders' Agreements, Section 5.02(a)) (5.20); (d) to extend the lien covenants, now limited to EPM's power department, to include all other service departments, and as a consequence (i) to delete the covenant regulating debtors to forego rights on EPM's assets (874-CO, Loan Agreement Section 5.03(b) and 5.06) (5.21); (ii) extend the debt service coverage test with a ratio of 1.5, to EPM's other departments (1725-CO Shareholders Agreement, Section 5.11) (5.21); and (iii) no later than 3 months after the end of EPM's fiscal year, EPM would, for each of its departments, furnish to the Bank a report showing EPM's financial per- formance during that year and projected through the following year (874-CO Loan Agreement, Section 5.02) (5.21); and (e) The investment limitation covenant would also include: EPM would seek Bank concurrence before committing itself to capital expenditures (i) not directly related to the operation of any of its departments; and (ii) made or to be made in any one fiscal year (excluding those required for the project, payments to ISA and for the investment program) exceeding 1% of the net current value of its fixed assets in operation (1582-CO, 1725-CO, Shareholders' Agreement, Section 5.01) (5.23). 7.03 The following main provision of Loans 874-CO, 1582-CO and 1725-CO would be repeated. (a) Amendment, etc. of EPM's statutes and adoption of new municipal legislation, adversely affecting EPM, would be an event of default (829-CO, Loan Agreement, Section 8.08) (2.03); (b) Auditing and financial statements (874-CO, Loan Agreement, Section 5.02) (2.09); (c) Insurance against risk (874-CO, Loan Agreement, Section 4.02) (2.11); - 45 - (d) Quarterly review of rates of return and adjustment of rates (1727-Co, Shareholders' Agreement, Section 5.02(b) and (c)) (5.20); (e) Debt service coverage ratio not less than 1.5 (1725-CO, Shareholders' Agreement, Section 5.11) (5.20); (f) Limitation of transfer of funds from the power to the other departments and their independent operation (874-CO, Loan Agreement, Section 5.01) (5.22); and (g) EPM to establish and maintain for all of its services adequate tariffs and financing (874-CO, Loan Agreement, Section 5.07(a)) (5.24). Conditions of Effectiveness 7.04 Prior to declaring the loan effective, evidence would be available that EPM has made satisfactory arrangements for financing the balance of financial requirements for the period 1980-1982 (5.13). Recommendation 7.05 With the above assurances the project would be suitable for a Bank loan of MUS$125 equivalent to be made to EPM with the guarantee of the Government of Colombia. The loan would have a repayment period of 17 years, including 4 years of grace. May 16, 1980 - 46 - AhNEX 1.1 COLOMBIA EMPAESAS PUBLICAS DE MEDELLIN GUAnALUFE IV HYDRO POWER PROJECT IBRD Power Loaas Borrowers and Year of Loan Amount Loan No. Agreement Project Description (MUSS) GOVERNMENT 1583-CO 1978 500-kV Interconnection (Central System/Atlantic 50.00 System) ISA 575-CO 1968 Central System Interconnection (230 kV trans- 18.00 mission lines and substations) 681-CO 1970 Chivor I project (4 x 125 MW hydro) 52.30 1582-CO 1978 San Carlos I (4 x 155 MW hydro) 126.00 1725-CO 1979 San Carlos II (4 x 155 MW hydro) 72.00 EEEB 246-CO 1960 Laguneta unit 4 (1 x 18.0 MW hydro) 17.60 Salto II units 1 and 2 (2 x 33.0 MW hydro) Zipaquira unit 1 (1 x 33.0 MW thermal) 313-CO 1962 Zipaquira unit 2 (1 x 37.5 MW thermal) 50.00 El Colegio units 1, 2, and 3 (3 x 50.0 MW hydro) 537-CO 1968 El Colegio units 4, 5, and 6 (3 x 50.0 MW hydro) 18.00 Canoas project (1 x 50.0 MW hydro) 1628-CO 1978 Mesitas Hydro (El Paralso 3 x 90 MW; La Guaca 84.00 3 x 110 MW; pumping 3 x 10 MRP: Sesquile dam strengthening) 1807-CO 1980 Bogota Distribution 87.00 EPM 225-CO 1959 Troneras unit 1 (1 x 18.0 MW hydro) 12.00 Guadalupe III units 1 and 2 (2 x 45.0 MW hydro) 282-CO 1961 Troneras uiiit 2 (1 x 18.0 MW hydro) 22.00 Guadalupe III units 3, 4, and 5 (3 x 45.0 MW hydro) 369-Co 1964 Guatape I units 1 and 2 (2 x 66.0 MW hydro)l' 45.00 874-CO 1973 Guatape II units 1, 2, 3, and 4 (4 x 70 MW hydro) 56.00 CVC/CHIDRAL 38-CO 1950 Anchicaya units 1 and 2 (2 x 12.0 MW hydro) 3.53 113-CO 1955 Anchicaya unit 3 (1 x 20.0 MW hydro) 4.50 Yumbo unit 1 (1 x 10.0 MW thermal) 215-CO 1958 Yumbo unit 2 (1 x 10.0 MW thermal) 2.80 255-CO 1960 Yumbo unit 3 (1 x 33.0 MW thermal) 25.00 Calima units 1 and 2 (2 x 30.0 MW hydro) 339-CO 1963 Calima units 3 and 4 (2 x 30.0 MW hydro) 8.80 CHEC 39-CO 1950 La Insula units 1 and 2 (2 x 10.0 MW hydro) 2.60 217-CO 1959 La Esmeralda units 1 and 2 (2 x 13.3 MW hydro) 4.60 LEBRIJA 54-CO 1951 Palmas units 1 and 2 (2 x 4.4 MW hydro) 2.40 ELECTRIBOL 347-CO 1963 Cospique units 2 and 3 (2 x 12.5 MW thermal) 5.00 Total Loan Amount 769.13 1 Subsequently increased to 4 x 70 MW. March 27, 1980 ANNEX 1.2 - 47 - COLOMBIA EMPRESAS PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT The National Generation Development Program 1979 - 1985 Year of 'I Commissioning Entity Location Type-/ Capacity (MW) 2/ 1. Under Construction- 1979 EPM Guatape II H 284 ICEL Insula H 12 1980 CORELCA Barranquilla III/IV S 132 CORELCA Cartagena III S 66 1981 ISA-EEEB Zipaquira (Termozipa) IV S 66 ISA Chivor II H 500 ICEL Paipa III S 66 ISA Chinu GT 100 1982 ISA-EEEB Zipaquira (Termozipa) IV S 66 EPM Ayura H 19 EEEB Mesitas (Loan 1628-CO) H 600 CORELCA Cerrejon I S 157 ISA San Carlos I (Loan 1582-CO) H 620 1983 ISA San Carlos II (Loan 1725-CO) H 620 ISA Calderas H 18 ISA Jaguas H 170 Subtotal 3,496 2. New Projects-/ 1984 ICEL Tasajero S 132 CVC Salvajina H 180 CORELCA Cerrejon II S 150 EPM Guadalupe IV H 213 1985 ICEL Betania H 167 Subtotal 842 Total Additions 4,338 Retirements 77 Total Net Additions 4,261 1/ Plant types: H-Hydro; GT-Gas turbine; S-Steam. 2/ Excludes several diversion works for increasing generation. 3/ Feasibility study completed. May 2, 1980 COLOMBIA EMPRESAS PUBLICAS DE MEDELLIN (EPM) Organization Chart Board of Directors j'General Manage r Manager Manage r Manager ManagerSect Technical Operation Finance Administration Sceary Civil Works Industrial _ Design _ Maintenance _ Treasury _ Relations _Legal Construction ~~Water and 4I titi on j g Sewe rage ] - semati Serices A z0 Installation Telephonest a Methods Electromechanical Power Comrca Hosn _ Design _ Distribution Commerciai Lr _Power Financial es Supervisionrati Programing | Generatiie Power Construction | l Power Insuanc Superviionr Stations | | _ p ~~~~~~~Dispatch Power Generation and Transmission Lines and 1 Substations | g>< World Bank-21291 .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- - 49 - ANNEX 3.1 COLOMBIA EMPRESAS PIBLIGAS DE MEDELLIN GUADALUPE IV EYDRO POWER PROJECT Consumption and Supply Data 1975-1986 ------------Piistoric----------- ----------Forecast----------- ENERGY BALANCE (GWh) 1975 1976 197711 1978 1979 1980 1981 1982 1983 1984 1985 1986 Sales Residential 1,139 1,214 1,157 1,346 1,460 1,567 1,684 1,808 1,942 2,086 2,241 2,406 Commercial 187 198 196 225 265 290 319 350 385 423 464 511 Industrial 710 818 803 893 1,046 1,143 1,250 1,368 1,497 1,638 1,792 1,962 Block 245 290 315 426 417 455 503 561 621 693 772 853 Government 42 51 48 53 57 60 63 66 70 73 77 79 - EPM 28 30 31 32 73 32 34 36 38 40 42 44 Others 68 59 59 60 68 126 139 149 160 167 173 185 Total Sales 2,420 2,660 2,609 3,035 3,386 3,673 3,992 4,338 4,713 5,120 5,561 6,040 Losses, station use 527 582 587 604 653 696 734 774 817 868 910 960 Total EPM energy requirements 2,947 3,242 3,196 3,639 4,039 4,369 4,726 5,112 5,530 5,988 6,471 7,000 Energy Supply Guadalupe I 39 30 8 10 9 9 9 9 9 9 9 9 Guadalupe II 64 71 70 45 70 70 70 70 70 18 - - Guadalupe III 864 1,107 1,080 1,208 1,447 1,447 1,447 1,810 1,810 1,810 1,810 1,810 Troneras 126 151 135 162 218 218 218 273 273 273 273 273 Riogrande 480 502 426 486 475 475 475 475 475 475 475 475 Guatape 1,747 1,735 1,621 1,271 1,875 2,672 2,672 2,672 2,672 2,672 2,672 2,672 Piedras Blancas 13 32 39 3 35 35 35 35 35 35 35 35 Ayura - - - - - - - 102 123 123 123 123 Guadalupe IV - - 539 1,077 1,077 Playas - _ - - - - - 1,422 Total EPM 3,333 3,628 3,379 3,185 4,129 4,926 4,926 5,446 5,467 5,954 6,474 7,896 Import (Export) ISA (A) (386) (386) (183) 454 (90) (557) (200) (334) 63 34 (3) (896) Total System 2,947 3,242 3,196 3,639 4,0392/ 4,369 4,726 5,112 5,530 5,988 6,471 7,000 Rights in ISA (B) - - 243 485 Net surplus (B) - (A) for 426 31 565 565 580 989 1,717 2,036 2,036 2,036 sale in interconnected system - - 655 1,122 780 1,323 1,654 2,002 2,039 2,932 Maximum Demand EFM (MW) 609 607 671 700 776 841 915 984 1,064 1,150 1,244 1,345 Load Factor (X) 55 61 54 59 59 59 59 59 59 59 59 59 CAPACITY BALANCE (lW) Available Capacity Guadalupe I 22 /22 22\ Guadalupe II 10 I 10 10 Guadalupe III 270 270 270 Tronleras 36 >699 699 699 ( 36 36 979 979 979 969 969 969 Riogrande 75 75 75 (Guadalupe Guatape 280) 420 560 II replaced Piedras Blancas 6 K6 6 by Guadalupe Ayurg - ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~IV) Ayura - - - - - - - 19 19 19 19 19 Guadalupe IV - - - - 213 213 213 Flayas - - - - - - - - - - - 240 Total EPM 699 699 699 699 839 979 979 998 998 1,201 1,201 1,441 Rights in ISA: Chivor I - - 80 80 80 80 80 80 80 80 80 80 Chivorl& - -- - - 50 5 50 50 50 50 San Carlos I - - - - - - - 137 137 137 137 137 San Carlos II and Jaguas - - - - - - - - 175 175 175 175 Subtotal - - 80 80 80 80 130 267 442 442 442 442 Total available capacity 699 699 779 779 919 1,059 1,109 1,265 1,440 1,643 1,643 1,883 Plant margin (net surplus over maximum EPM demand available for interconnected system) = Available capacity less maximum demand 90 92 73 (1) 143 218 194 281 376 493 399 538 Plant margin, % of available capacity 13 13 9 0 16 21 17 22 26 30 24 29 1/ Dry year with curtailments 2/ For preliminary final figures see Annex 5.7 May 7, 1980. - 50 - ANNEX 4.1 COLQCSIA EMPRESAS PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT 1979-1986 Investment Proaran Cost Estimate (Millions of current Co1$) Local Cost 1979 1980 1981 1982 1983 1984 1985 1986 Total Generation Guatape II 424 8 - - - - - - 432 Ayura 1 39 95 9 - - - - 144 River diversions 39 683 613 - - 1,335 Guadalupe IV 15 164 696 837 1,069 390 - - 3,171 Playas 22 71 559 693 1,593 2.492 2,776 1,541 9.747 Subtotal 501 965 1,963 1,539 2,662 2,882 2,776 1,541 14,829 Transmission Lines - 11 31 108 190 77 5 6 428 Substations 15 82 100 121 126 73 23 15 555 Control center - 4 8 13 43 28 - - 96 Subtotal 15 97 139 242 359 178 28 21 1,079 Distribution Network - 52 246 147 110 82 108 108 853 Special equipment - - - _- _ _ _ _ Subtotal - 52 246 147 110 82 108 108 853 General Plant 497 36 43 59 53 138 76 67 982 Training - - 5 6 6 7 - - 24 Studies 21 135 109 90 111 52 - - 518 Investments in Electrificadora 49 25 - - - - - - 74 Total local cost 1,083 1,310 2,505 2,074 3,303 3,339 2,988 1,757 18,359 (MUS$305.1) Foreign Cost Generation Guatape II 244 94 - - - - - - 338 Ayura - 31 221 - - - - - 252 River diversion - - - - - - - - - Guadalupe IV - 163 787 2,285 1,569 596 254 - 5,654 Playas 1 18 143 478 1,012 4,362 4,986 2,248 13,248 Subtotal 245 306 1,151 2,763 2,581 4,958 5,240 2,248 19,492 Transmission Lines - 58 21 288 438 41 10 - 856 Substations 19 250 634 350 636 240 22 221 2,372 Control center - 5 8 113 528 79 - - 733 Subtotal 19 313 663 751 1,602 360 32 221 3,961 Distribution Network - 71 124 610 193 98 167 111 1,374 Special equipment - - 21 52 20 - - - 93 Subtotal - 71 145 662 213 98 167 111 1,467 General Plant - - - - - - - - Training - - 12 16 19 21 - - 68 Studies - 16 6 6 5 1 - - 34 Investments in Electrificadora - - - - - - - - - Total foreign cost 264 706 1,977 4,198 4,420 5,438 5,439 2,580 25,022 (MUS$391.4) Total Cost Generation 746 1,271 3,114 4,302 5,243 7,840 8,016 3,789 34,321 Transmission 34 410 802 993 1,961 538 60 242 5,040 Distribution - 123 391 809 323 180 275 219 2,320 General Plant 497 36 43 50 55 138 76 87 982 Training - - 17 22 25 28 - - 92 Studies 21 151 115 96 116 53 - - 552 Investments in Electrificadora 49 25 - - - - _ - 74 Total MCol$ 1,347 2,016 4,482 6,272 7,723 8,777 8,427 4,337 43,381 Rate of Exchange 42.06 45.42 49.96 55.96 62.68 68.32 74.47 81.17 Total MUS$ 32.0 44.4 89.7 112.1 123.2 128.5 113.2 53.4 696.5 April 10, 1980 - 51 - ANNEX 4.2 COLOMBIA EMPRESAS PITBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT Project Cost Estimate 1/ Local Foreign Total Local Foreign Total Coat Cost Cost Cost Coat Cost _ _ _ - - - ClMUS$ Guadalupe IV Hydro Station Infrastructure 106 59 165 2.6 1.4 4.0 Civil works 934 1,029 1,963 22.8 25.1 47.9 Equipment 123 1,301 1,424 3.0 31.8 34.8 Subtotal 1,163 2,389 3,552 28.4 58.3 86.7 Transmission Lines 44 kV (10 km) 3 8 11 0.1 0.2 0.3 110 kV (45 km) 21 46 67 0.5 1.1 1.6 230 kV (93 km) 103 261 364 2.4 6.2 8.6 Subtotal 127 315 442 3.0 7.5 10.5 Substations Rio Negro, expansion, 230/110 kV 13 42 55 0.3 1.0 1.3 Barbosa, expansion, 230/110 kV 22 136 158 0.6 3.2 3.8 Hello, expansion, 110/44/13.2 kV 5 36 41 0.1 0.9 1.0 Colombia, expansion, 110/44/13.2 kV 6 46 52 0.1 1.1 1.2 Cerromatoso, expansion, 110 kV 5 54 59 0.3 1.3 1.6 Las Vegas, new, 110/44/13.2 kV 13 54 67 0.3 1.3 1.6 Villa Hermosa, new, 110/44/13.2 kV 14 8 22 0.1 0.2 0.3 Caucasia, new, 110/44/13.2 kV 6 28 34 0.2 0.6 0.8 Puerto Nare, new, 110/44/13.2 kV 5 19 24 0.1 0.5 0.6 Subtotal 89 423 512 2.1 10.1 12.2 Control Center Building modifications 4 - 4 0.1 - 0.1 Equipment 8 234 242 0.2 5.6 5.8 Erection 2 12 14 - 0.3 0.3 Subtotal 14 246 260 0.3 5.9 6.2 Distribution 1982-1984 Cable ring Medellin Center 19 296 315 0.4 7.0 7.4 Underground cable network 13.2 kV 40 66 106 1.0 1.6 2.6 Overhead network 13.2 kV 15 10 25 0.3 0.3 0.6 Overhead network 44 kV 9 6 15 0.2 0.1 0.3 LT network 16 18 34 0.4 0.4 0.8 Transformers 1 23 24 0.1 0.5 0.6 Special connections 1 1 2 - 0.1 0.1 Subtotal 101 420 521 2.4 10.0 12.4 Various Equipment Special metering - 12 12 - 0.3 0.3 Erection, maintenance equipment - 32 32 - 0.8 0.8 Subtotal - 44 44 - 1.1 1.1 Training 12 34 46 0.3 0.8 1.1 Total Base Cost (1978) 1,506 3,871 5,377 36.5 93.7 130.2 Engineering, Administration Guadalupe IV 260 44 304 6.3 1.1 7.4 Transmission lines, study 29 8 37 0.7 0.2 0.9 Substations 7 - 7 0.2 - 0.2 Control Center 24 33 57 0.6 0.8 1.4 Distribution 41 - 41 1.0 - 1.0 Subtotal 361 85 446 8.8 2.1 10.9 Physical Contingencies 279 509 788 6.8 12.1 18.9 Price Contingencies 2,067 4,696 6,763 21.0 47.3 68.3 TOTAL PROYECT COST 4,213 9,161 13,374 73.1 155.2 228.3 1/ Discrepancies are due to roundings. March 28, 1980 - 52 - ANNEX 4.3 Page 1 of 2 COLOMBIA EMPRESAS PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT Project Implementation Schedule Key Dates Start Complete Issue Contract Construction Construction Item Bids Award or Contract or Contract Guadalupe IV Access roads 12/79 5/80 6/80 1/81 Civil works 7/80 2/81 3/81 10/84 Turbines 9/80 5/81 5/81 10/83 Generators 9/80 5/81 5/81 10/83 Penstocks 7/80 2/81 2/81 10/83 Transmission Lines Group I 12/80 3/81 4/81 2/82 Group II 10/81 1/82 2/82 12/82 Group III 11/82 2/83 3/83 1/84 Substations Group I 8/80 4/81 5/81 11/82 Group II 6/81 2/82 3/82 8/82 Group III 8/82 6/83 7/83 12/84 Control Center 9/81 4/82 5/82 4/84 Distribution Equipment Group I 2/82 7/82 8/82 12/82 Group II 2/84 7/84 8/84 12/84 Group III 10/80 6/81 7/81 12/82 Group IV 5/80 11/80 12/80 5/82 Group V 4/82 11/82 13/82 7/83 Distribution Transformers Group I 2/82 7/82 8/82 12/82 Group II 2/84 7/84 8/84 12/84 Services Transmission study 7/80 12/80 1/81 6/81 Control center 3/80 6/80 7/80 12/84 Training - - 1/81 12/84 53- ANNEX 4.3 Page 2 of 2 NOTE Transmission Lines Group I Ayura-Ancon Sur Group II Miraflores - Anc'on Sur Sub Central - (Castilla-Guayabal) Cerromatoso-Caucasia San Diego (Miraflores-Guayabal) Rionegro-(Guatape-Envigado) Girardota (Barbosa-Central) Guadalupe IV - Barbosa Rionegro 220-Rionegro 110 kV Group III Barbosa (Miraflores-Guatape) Barbosa (Linea No. 5 Guadalupe) Las Vegas (Guayabal-Envigado) Pto. Inmarco-Pto. Nare Villa Hermosa - (Piedras Blancas-Miraflores) Substations Group I Rionegro 220 kV, Rionegro 110 kV, Cerromatoso, Caucasia, 110/44, 44/13.2 kV. Group II Barbosa, Las Vegas I, Bello II, Colombia II, Puerto Nare. Group III Villa Hermosa I. Distribution Equipment Group I Equipment for 1982, 1983 for 44 kV, 13.2 kV and secondary networks. Group II Ditto for 1984 and 1985 for 44 kV, 12.3 kV and secondary networks. Group III Underground cables. Group IV Transformers and equipment for underground network. Group V Other materials for outgoing cables in substations. May 2, 1980 -54- ANNEX 4.4 COLOMBIA EMPRESAS PUBLICAS DE MEDELLIT1 GUADALUPE IV HYDRO POWER PROJECT Loan Disbursement Schedule (MUS$) Assumptions Loan signing: July 1980 Effective Date: October 1980 Closing Date: June 1985 IBRD Fiscal Year Disbursements Cumulative Disbursements and Semester During Semester End of Semester FY81 December 31, 1980 0.7 0.7 June 30, 1981 7.0 7.7 FY82 December 31, 1981 10.3 18.0 June 30, 1982 20.0 38.0 FY83 December 31, 1982 23.5 61.5 June 30, 1983 25.0 86.5 FY84 December 31, 1983 25.5 112.0 June 30, 1984 6.0 118.0 FY85 December 31, 1984 6.0 124.0 June 30, 1985 1.0 125.0 January 17, 1980 - 55 - ANNEX 4.5 Page 1 of 2 COLOMBIA EMPRESAS PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT Contents of Project File 1. Guadalupe, Troneras, Ayura Project Reports (a) Generacion electrica adicional en Guadalupe, Troneras Ayura; Consultores Tecnicos Ltda., Noviembre 1976 (b) Solicitud de credito para el proyecto Guadalupe, Troneras, Ayura, EPM, Mayo 1977 (c) Costo de ampliaciones de subestaciones para el Valle de Aburra 1977-1982, EPM, Mayo 1977 2. Sistema de Generacion (Actual, Proyectos), Junio 1977 3. Distribution Planning Study, Westinghouse, June 1979 4. Guadalupe IV, Factibilidad/Evaluaci6n, June/Sept. 1979 (a) Factibilidad, Consultores Tecnicos Ltda., y Mejia y Millan Ltd., Junio de 1979 (b) Report on technical evaluation, Douglas R. Piteau September 28, 1979 5. Guadalupe IV, Ambiente, Geologia, Generacion en el sistema August/Febr/Dec. 1979 (a) Declaracion del efecto ambiental. del proyecto, EPM 22-79 Agosto de 1979 (b) Estudio geologico, informe preliminar, Geominas Ltd., Febrero de 1979. (c) Generacion, informaci6n adicional, Diciembre 1979 -56 - ANNEX 4.5 Page 2 of 2 6. Guadalupe IV, Informacion General, Nov./Dec. 1979 (a) Generalidades, EPM No. 35-79, Noviembre 1979 (b) Informacion general adicional, EPM No. 47-79, Diciembre 1979 7. Guadalupe IV, Planeacion Transmision 1978/79 (a) Plan decenal de transmision, EPM No. 30-78, Septiembre 1978 (b) Plan de expansion de transmisi6n, EPM No. 37-79, Noviembre 1979 (c) Transmision, informacion adicional, EPM No. 45-79, Diciembre 1979 8. Guadalupe IV, Planeacion Distribuci6n, 1975-79 (a) Poblacion futura para el Valle de Aburra, EPM Julio 1975 (b) Estudio de demanda de energia para el Valle de Aburra 1976-86, ampliaciones de subestaciones, EPM No. 3-7 (A), Marzo 1977 (c) Plan de expansion de distribucion, EPM No. 38-79, Noviembre 1979 (d) Distribucion - Informacion adicional, EPM No. 46-79, Diciembre 1979 9. Guadalupe IV, Electrificacion Rural, EPM No. 39-79, Noviembre 1979 10. Guadalupe IV, Plan de ejecuci6n del Programa Guadalupe IV EPM No. 40-79, Noviembre 1979 11. Metas fisicas de la empresa de energia 1980-1989. EPM No. 32-79, Noviembre 1979 12. Estudio del planeamiento y la operacion del sistema electrico, EPM Agosto 1976 13. Disposici6n para la prestaci6n de los servicios EPM, Noviembre 1974 14. Normas de construcci6n y operacion energia primarias, secundarias y alumbrado publico (no date) 15. Pronosticos de los estados financieros 16. - 18. Working Papers Volumes 1-3. March 28, 1980 COLOMBIA EMpESAS PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT Actual (vy77_FY78) and Provisional (FY79) Historic Financial Statements iMillinn of c,urrent Cull) Power I Telephone . Water and Sewerage I Consolidated EPM For Fiscal Year Ending December 31 1977 1978 1979- 197 7 1978 1979-/ 1977 1978 1979- Income Statements Opetin rvenue 1,508.4 1,787.1 2,736.2 429.4 504.1 589.5 488.0 615.8 843.6 2,425.8 2,907.0 4,169.3 Operting nepns 866.9 1.353 0 18228 259.8 363.5 436.3 299.5 415.2 560.8 1,426.2 2,131.7 2,819.9 Operating income 641.5 434.1 913.4 169.6 140.6 153.2 188.5 200.6 282.8 775.3 2,369.4 Other income (net) 103.4 238.8 284.7 (21.1) (18.0) 26.7 5.1 23.1 (58.3) 87.4 243.8 253.1 Net income after interest . 672.9 .198. 148.5 122.6 179.9 193.6 223.7 224.5 1,087.0 T7,o05h 27 5 Balance Sheets Assets 3 Total net fixed assets- 7,081.5 8,886.4 10,149.4 1,267.9 1,318.4 1,606.4 1,549.7 1,975.4 2,564.3 9,899.1 12,180.2 14,320.1 Corrent assets 1,095.7 1,253.4 1,185.2 221.1 510.3 601.5 213.2 386.2 390.7 1,530.0 2,149.9 2,177.4 Other assets 1,105.8 1.684.8 2,392.5 2.1 3.0 3.0 38.6 53.3 263.6 1,146.5 1,741.1 2 659.9 Total AsSets 92,83.0 11,824.6 13,727.1 1,4911 18317 2,2109 1,80.5 2,414.9 3,218.6 12.0575. 19,152 Liabilities Equity 3,272.9 3,979.4 4,883.6 621.2 753.7 933.6 714.5 1,087.9 1,574.1 4,608.5 5,821.0 7,391.3 Long-term debt 5,022.0 6,620.9 6,846.5 273.5 268.0 300.0 732.6 874.9 1,103.0 6,028.1 7,763.8 8,249.5 Current liabilities 4/ 657.3 732.2 1,335.4 247.4 321.3 354.4 177.5 207.6 256.1 1,082.2 1,261.1 1,945.9 Oth- li.biliti- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1,569.9 Other liabilities 330.8 492.1 661.6 349.0 488.7 622.9 176.9 244.5 285.4 856.7 1225.3 1 Total Liabilities 9 7833.0 11,824.6 037271 ,490.1 1,831.7 2,210.9 1,80 2,414.9 3,2186 12575.6 16 071.2 T07I36. Fumds Flow Statements Sources of Funds Net income before interest 975.8 1,084.8 1,668.7 191.4 166.3 217.0 235.6 269.1 282.8 1,402.8 1,520.2 2,168.5 Depreciation 2/ 146.2 166.4 275.6 78.8 110.5 118.1 52.1 74.1 91.2 277.1 351.0 484.9 Other 69.4 117.8 276.8 28.0 42.6 51.5 38.8 57.4 109.8 136.2 217.8 388.1 Grogs Internal Cash Generation 1,191.4 1,369.0 2.171.1 298.2 319.4 386.8 326.5 400.6 483.8 1,816.1 1 7,089.0 Borrowings 980.0 1,923.9 556.4 36.9 131.2 182.3 247.8 206.7 254.6 1,264.7 2,261.8 993.3 Other 12.7 79.8 - 78.5 103.5 82.7 11.7 159.9 - 102.9 343.2 82.7 Total Sources 2,14.1 3.372.7 2.727.5 413.6 554.1 651.6 586.0 767.2 738.4 7 4 0 41 1 7.5 Applications of Funds Constru-tioe e-pe-ditures 1,404.7 1,971.3 1,472.8 89.9 160.9 381.9 342.2 499.8 602.4 1,836.8 2,632.0 2,457.1 Debt service: Amortizetion 153.7 325.0 517.5 119.7 115.4 137.7 110.9 64.5 104.1 384.3 504.9 759.3 Interest 230.9 411.9 470.6 42.9 43.8 37.1 42.0 45.4 58.3 315.8 501.1 566.0 Total Debt Service 384.6 736.9 988. 162.6 159.2 174.8 152.9 109.9 i62.4 700.1 1,006.0 1 Increase in working capital 194.8 82.8 477.6 161.2 232.9 94.9 88.4 138.0 (26.4) 444.4 453.7 (409.1) Other 200.0 581.7 744.2 (0.1) 1.1 - 2.5 19.5 - 202.4 602.3 744.2 Total Applications . . . 413.6 554.1 651.6 586.0 767.2 738.4 :. 47E94O 4,11/5 Ratio Analysis Operating Ratio 57 76 67 61 72 74 61 67 66 59 73 68 Corrent Ratio 4/ 1.7 1.7 0.9 0.9 1.6 1.7 1.2 1.9 1.5 1.4 .7 1.1 Debt/Equity Ratio 5/ 61/39 62/38 54146 31/69 26/74 24/76 51/49 45/55 41/59 57/43 '.,43 52/48 Debt Service Coverage 3.1 1.8 2.3 1.8 2.0 2.2 2.1 3.6 3.0 2.6 2.1 2.3 1/ Based on EPMs estimates, November-December 1979. 2/ Includes interest charged to operations. s 3/ Revalued per Decree 444/67. 4/ Includes the current portion of teom debt. 5/ Without taking account of full revaluation of fixed assets. May 9, 1980 - 58 - A _MNX 5.2 COLOMBIA EMPRESAS PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT Summary of Projected Financial Performance 1980-1984 1/ of Telephone and Water/Sewerage Departments (Million of current Col$) Fiscal Year Ending Dec. 31 1980 1981 1982 1983 1984 Telephone Department Operating Revenues 913 1.264 1.621 2.114 2.649 Operating Expenses 538 650 889 1.157 1.482 Operating Income 375 614 732 957 1.167 Operating Ratio (%) 59 51 55 55 56 Current Ratio (%) 2/ 1.1 1.0 1.2 0.8 1.1 Debt Service Coverage (times) 3.1 4.3 3.3 4.0 2.1 'Ji Water and Sewerage Department Operating Revenues 1.138.1 1.393.4 1.779.2 2.200.2 2.588.4 Operating Expenses 696.6 844.1 1.057.0 1.303.4 1.548.8 Operating Income 441.5 549.3 722.2 896.8 1.039.6 Operating Ratio (%) 61 61 59 59 60 Current Ratio (%) 1.3 1.0 1.4 0.9 0.8 Debt Service Coverage (times) 4.3 4.4 4.3 5.0 3.2 1/ Based on separate projections prepared by EPM on November /December 1979. 2/ Including the current portion of long-term debt. April 10, 1980 COLOMBIA EMPRESAS PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT Schedule of existing and proposed debt Loan Amount Outstanding (millions of Grace period Amort. Period 1/ Interest Commitment 12/31/1978 Loan Date Currency currency) years-months years- months rate % Fees % MCoI$ OBSERVATIONS LONG-TERM LOANS Foreign Existing IBRD - 225 1959 US$ 12.00 3 9 22 6.0 389.2 1/ Excluding giace period. IBRD - 282 1961 US$ 22.00 4 9 20 5.75 515.7 2/ Interest rate was renegotiated in IBRD - 369 1964 US$ 45.00 5 30 6 5.5 1.826.6 July 1979 at 5/8 over Libor. Brown Boveri 1973 US$ 3.89 4 3 10 7.0 135.7 3/ Consist of 48 different loans from IBRD - 874 1973 US$ 56.00 5 3 20 7.25 1/4 2.208.9 the Goverrnment, financial institution KFW 1974 DM 8.74 4 6 9 6.5 197.0 and commercial banks. Banco Popular 1974 US$ 1.35 3 i 7.0 47.4 4/ Although grace period would be 4 Chase Manhattan Bank 1976 US$ 12.00 2 5 6 1.75+1ibor-2/6/ 403.2 years, under Bank practice the effective Other (suppliers) 59.5 grace period may be up to 6 months 5,783.2 longer. Local Existing 3/ 1.189.2 65/8 for first 2 years. 3/4 thereafter. 6/ Libor was assumed to be 117. throughout the pro3ected period. 7/ For the partial refinancing of the foreign debt service (para.5.12) to Guadalupe IV Loans enable meeting local cash requirements. Proposed IBRD 1980 US$ 125.0 4 4/ 6 12 6 8 1/4 3/4 Bank of America 1980 US$ 25.6 5 5 libor +5/6/ 3/4 & 1/4 Suppliers 1980 US$ 20.4 4 6 7 6 8.5 - Fonade (Studies): Guadalupe TV study 1979 Col$ 35.4 2 6 4 6 18 1.5 Centro de Control 1981 Col$ 35.6 1 6 3 6 24 1.5 Centro de Control 1983 Col$ 54.2 1 6 3 6 24 1.5 Future Loans Ayura and River Diversions bank of America 1980 US$ 6.4 5 5 libor +5/6/ 3/4 & 1/4 Playas International Institutions 1982 US$ 139.9 4 6 15 6 8.0 1 1/4 Suppliers 1983 US$ 39.6 4 6 7 6 8.5 - Fonade (Studies) 1980-81 Col$ 17.3 2 6 4 6 18 1.5 Fonade (Future Studies) 1980-83 Col$ 469.1 1 6 3 6 24 1.5 OTHER LOANS Local Banks 1979 Col$ 17.1 5 Balloon 20 - Municipal valuation 1979 Colt 2.7 - 6 12 - Government 1979 Col$ 150.0 8 8 16 - Municipal Palace Purchase 1979 Col$ 175.8 - 5 24 - Debt refinancing (1980)7/ 1980 Col$ 210.0 2 Balloon 24 - Dabt refinancing (1981)7/ 1981 Col$ 600.0 2 Balloon 24 - April 10, 1980 EMPRESAS PUBLICAS DE MODELLEN GUADALUPE IV HYDRO POWER PROJECT Actoal and Forecast Income Statements 1976 - 1986 (Millions of correct Ccl$) Years endios December 31 -----__ACTUAL------------ ESTIMATE _________-_-_--_----------------FORECA ---------------------------------- OBSERVATIONS 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 Energy salve co- n syetee (GUh) of - 2.626.8 3.034.9 3.385.6 3.673.4 3.992.1 4.337.9 4.712.9 5.119.9 5.561.1 6.039.7 of See Ann.. 3.1 for beeRs of the forec-at. Average tariff (ColI/KWh)b/ - 54.7774 65.3332 81.9665 103.07 141.72 190.54 22T.8 230.20 253.22 278.54 h/ Sec parA.5.18 for proposed plan of rate Decreases. AceraRe tariff (USC/KWh) 1.48 1.65 1.95 2.28 2.84 3.40 3.63 3 37 3.40 3.43 c/ nosed on ISA's forecast ocerogo cocheoge energy rate. Totat teergy soles -coo system (OCo1$) 1.120.1 1.438.9 1.982.8 2.775.1 3.786.2 5.657.6 8.265.4 10.736.0 11.786.1 14.081.9 16.823.1 d/ Baeed on the 1978 .nit co-t of Col$105/installnd kW, esca lated acc.rdcng te local Refllatios. Net sales (Porchases) to (ftoo) e/ Similar to d/, the forecas t was based on the 1978 -nit ISjGWh) I/ 422.90 172.0 ( 472.9) 0 218.0) 557.0 199.5 334.5 ( 63.5) ( 31.0' 2.0 716.0 cost of Col$29/loatalled km of lions. A-P T-ariff -ISA sysoet (Colc/KWh)c/ 19.0 31.3 42.3 20.0 55.0 69.0 110.0 127.0 166.9 177.0 204.0 fl Similar to e./ ad dh/ b ..eed or cI . cat of t oC$31/ln Net Sales (Porchases) c (from)MC1$50 pl I I - .t f M1$15. Th ISA (MCol$) 80.0 53.9 ( 200.1 ) ( 44.0 ) 306.4 137.7 368.0 ( 80.6 )( 51.5 ) 3.5 1.460.6 total dats . a. lated arrordieg to local lnfl tion p- s OPERATING REVENUE g-roth. OPEOATSBO REOSREE hi Seoladee projectod actoary costo, reserve for bed debts~~~~~~~~~~Il.d. pj-td --y t.,f- .d .bt Ecergy oales 1.200.1 1.492.8 1.782.7 2.731.1 4.092.6 5.795.3 8.633.4 10.655.4 11.734.6 14.085.4 18.283.7 sd other coats. The latter projecred similarly as for jI. Other income 10.8 15.6 4.4 5.1 5.8 6.7 7.7 8.8 10.2 11.7 13.5 i/ Bata mere spylled by ISA. Total Opera-ti.g R-e-en 1.210.9 1.508.4 1.787.1 2.736.2 4.098.4 5.802.7 8.641.1 10.664.2 11.744.8 14.097.1 18.297.2 j7 Straight line depreci-tion is need by EPM according tE the flI1aimR rates Roads -md Be's civl worko) 2.041; OPERATING COSTS BRildings and Tranem-ssioc linis 3.36%7 DiRstribatie mm t-krh 3.037.; Snbataticas aed Treefoes-r 4.08%; Generatioc d/ 65.0 79.0 101.6 129.8 156.4 182.9 210.5 246.6 283.7 395.0 454.6 Toolt aed Office Eqoipment 14.28%; Ee-erl eqoipmsnt Trossolcelco e/ ~~~~ ~~~~23.0 253 30.0 38.4 46.,7 94.0 63.2 73.6 0.4 115.2 132.9 am h celcle 20%) Gen.eretinn plant and Bes eqipeset 4.08%. lEstciomtio. f/ 36.7 48.9 90 0 113.6 148.7 147 7 231.8 285.3 354. 439.4 530.0 k/ After renplntiom, non c pitalised etndie a -erti..d General Plast-Operotion i/ 27.2 49.6 54.8 123.7 166.7 198.2 231.5 270.6 316.3 369.7 432.3 Is 5 years. After Training progargms -e c.mplated Ge..rhl Plast-Adcontntrttio h/ 114.7 187.9 299.4 439.1 531.3 648.3 788.3 976.4 1.193.5 1.433.8 1.722.9 their coots arI also amortized is 5 years. National Grid Ch-rReo (ISA) 1T 50.0 35.4 112.0 109.2 130.4 141.4 158.9 103.0 199.0 206.0 229.0 1/ As reqored by EPM'serarttes it is compated at 4.425% Bepreclarton i 289.5 311.7 370.2 569.6 1.039.6 1.299,9 1,574.5 1,916.2 2,339.0 3,341.2 4.034.1 of total energy sales of EPM is ira omss systes. EPM Amortleatios (atodisa acd trainieg) k/ - - - - 6.7 13.0 46.8 80.2 96.5 158.8 152.4 is other-sse tenses apt. Mosinipal Contribution A! 49.6 63.7 85.3 122.8 167.5 250.3 365.7 475.0 521.5 623.1 744 4 =/ Encludvo interest from atort nd mdtdium teen investments Total Oprotoig Cocto 656.5 801.5 1.144.9 1.646.2 2.394.0 2.975.8 3.670.7 4.507,7 5.393.7 7.082.2 8.432,6 of the vdriou- resferves ed short tee cash sorplo,E Operating Income 554.4 706.9 642.2 1.090.0 1.704.4 2.826.9 4.970.4 6.156.5 6.351.1 7.014.9 9.864.6 foreotatioc/dnforestatios oper-tions. The drop is 1981 Other income ol 53.6 112.4 251.2 298.0 280.1 172.6 205.7 728.1 317.1 342.2 481.5 -nflect% the ae of MC1l$200 free thqse re.emves te Other -opn..e. 5.8 9.0 12.4 13.3 12.4 11.4 14,6 14.0 13.9 15.0 21.1 flisomo cash h_ortfalls is 1980. si/ By Etc etartets EPSI is cot reqo1ed to pay dividends, Net income before interest 602.2 810.3 881.0 1.374.7 1.972.1 2.988.1 5.161.5 6.370.6 6.654.: 7.342.1 10.325.0 thos, it retains a11 ita profite. Total iterest 321.0 317.8 589.7 645.6 778.6 1.059.6 1.389.5 1.659.8 1.985.1 2.403.1 2.664.3 LI-s Ineet uig cntuio 819 286.9 177.8 1,75.0 70.4 250.5 -i.4 808.8 1.074.3 830.3 1.108.0. Interest charged to income 239.1 230.9 411.9 475.6 708.2 803.1 887.1 851.0 910.8 1.572.8 1.556.3 Net Income after Interest of 363.1 579.4 469.1 904.1 1.263.9 2.185.0 4.274.4 5.519.6 5.743.5 5.769.3 8.768.7 Moy 9, 1980. COLOUMIA EMPRESAS PURLICAS DR NEDELLIN GUADALUPE IV HYDRO POWER PROJECT Sources and Applications of Funds 1979 - 1986 (Millions of current ColS) Estimated 1979 1980 1981 1982 1983 1984 1985 1986 OBSERVATIONS SOURCES Internal Cash Generation: a/ Net addition to r..eserv for pens.ion and severance liabilities, and self insurance fond. Operating incose 1.374.7 1.072.1 2.988.1 5.161.5 6.370.6 6.654.3 7.342.1 10.325.0 b/ See details of debt terms, conditions and Depreciation 569.6 1.039,6 1.299.9 1.574.0 1.916.2 2.339.0 3.341.2 4.034.1 terv1ce. Annexes 5.3, 5.8 through 5.10. Amortization (Studies and Training) - 6.7 13.0 46.8 80.2 96.5 158.8 152.4 s! As calculated in ISA'- investment progra. Incres.e in reaerve sccounts. A! 226.8 234.6 223.5 264.6 328.0 405.2 498.5 612.5 d/ See forecast loans diabursement in Annex 5.8. Grors Internal Cash Generation 2.171.1 3.253.0 4.524.5 7.046.9 8.695.0 9.495.0 11.340.6 15.124.0 e/ See construction program 1979-1986 in Debt Service ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Annex 4.1. Debt Service ~~~~~~~~~~~~~~~~~~~~~~~~~~~- f/ Includes (it inśrer4tnt in4 the DebrtiService s/elf inaurance reserve; (ii) until 1979, funds Aemortiestion b/ 517.5 545.3 638.3 1.253.3 1.892.5 1.269.7 2.114.8 2.469.7 to cover balloon payments of debt, due in 1983. Interests 473.6 708.2 803.1 887.1 851.0 910.8 1.572.8 1.556.3 The negative value in 1980 reaflect the use of Total Debt Service 988.1 1.253.5 1.441.4 2.140.4 2.743.5 2.180.5 3.687.6 4.026.0 cash shortfalls in 1980; (111) in-eatats in Equity ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Electrificadora de Antioquia. Equity Contributions to ISA of 228.4 911.3 815.2 1.163.8 1.103.4 399.6 592.6 1.083.6 j/ Defined as the u um of current assets (other than cash surplus not required by normal Net Internal Cash Generation 954.6 1.088.2 2.267.9 3.742.7 4.848.1 6.914.9 7.060.4 10.014.4 upeartionb ) .e.s current liabilities exclusive Borrowings d/ relevant footnotes in Annex 5.6. Existing 236.8 1'7.8 - - - - Guadalupe IV:.Proposed IBRD - 31.8 864.3 2.423.1 3.165.3 819.8 74.5 - Other 24.0 431.2 736.2 983.5 112.8 193.1 96.8 - Playss - - - 485.2 1.084.3 4.323.2 4.818.9 2.070.6 Other 295.6 122.7 239.8 - - - - - Studies - 139.0 65.2 142.6 48.4 Refi-ancing 1980-1981 - 210.0 600.0 - - - - _ Total Borrowings 55L4 1.064,7 2.579.3 3.957.0 4.505.0 5.384.5 4.990.2 2.070.6 TOTAL SOURCES 1_511,0 2.152,9 4.847.2 7.699.7 9.353.1 12.299.4 12.050.6 12,085.0 APPLICATIONS Construction Program e- Existing 708.0 855.0 929.0 9.0 - - - - Guadslope IV 49.0 860.0 2.693.0 4.946.0 4.947.0 1.732.0 589.0 461.0 Playss 23.0 89.0 702.0 1.171.0 2.605.0 6.854.0 7.762.0 3.789.0 General Plant 497.0 36.0 43.0 50.0 55.0 138.0 76.0 87.0 Studies 20.8 149.7 115.4 95.5 116.2 53.0 - - Other - - - 200.0 200.0 1.800.0 2.000.0 5.950.0 Sub-Total: 1.297.8 1.989.7 4.482.4 6A,71.5 7.923.2 10.577.0 10.427.0 10.287.0 Interest doring construction 175.0 70.4 250.5 502.4 808.8 1.074.3 830.3 1.108.0 Total construction pr-grsm 1.472.8 2.060.1 4.732.9 6.973.9 8.732.0 11.651.3 11.257.3 11_393.0 Other investments Lf 193.0 ( 141.0) 41.6 50.2 61.2 73.7 88.7 107.3 Sub-Total: 1.665.8 1.919.1 4.774.5 7.024.1 8.793.2 11.725.0 11.346.0 11.502.3 Incresse (Decrease) in Working Capital j ( 477.6) 395.7 231.0 563.4 602.4 385.9 628.6 511.4 TOTAL APPLICATIONS 1,188.2 2,314.8 5,005.5 7.587.5 9.395.6 12±110,9 11.974 6 12=OI_=7 Surplus (Deficit) of foods 322.8 ( 161.9) (158.3) 112.2 (42.5) 188.5 76.0 71.3 Accumulated 322.8 160.9 2.6 114.8 72.3 260.8 336.8 408.1 May 9, 1980 COLOMBIA EMPRESAS PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECr Actual and Forecast Balance Sheets 1976 - 1986 (million. of corrent Cel$) __________HISTORIC---------- EST701AIMA -----------------------------------/…FORECAST-------------------------------- Years ending December 31 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 OBSERVATIONS ASSETS atBased or EPM's internal financia1 etateents Fi-ed Assets b/ of sptocEbse 30, 1979, iEsluding pre;imiuary sales figure for the 3rd quarter of 1979. Gross fiod u-seto in servier 8.044.0 10.476.9 17.814.5 26.030.2 31.518.1 39.006.4 47.440.0 57.609.7 84.460.1 101.568.4 158.474.9 b/ Fo11y rev Lued frets yea r of 9pnditr.e A-cumLuted depreciution 1.779,0 2,623.4 33480.0 5,083.3 7.140,0 9.653,7 12.67567 16,493.2 21,306.2 27.843,5 36,053.6 - ccording to .nu. I chrge i En .nai onal Nst flee6 . aoto Eu service 6,265.0 7,853.5 14,334.5 20,946.5 24.378,1 29,352.7 34,764.3 41,116.5 63,153.9 73.724,9 122.421,3 ces rprior i.dcc for Colombian stokers (test, para..5-) Work in progress 3.148.0 5.131.0 1.664.9 170.5 2.033.3 5.245.6 10.840.1 18.678,3 15.738.3 25.807.9 319.1 c/ Cetelative at rost. T/ Surplus curb net required by the prejected Total Ficed Anoeet 9.413.0 12.934.5 15.999.4 21.117.0 26.411.4 34.598.3 45.604.4 59.794.8 78.892.2 99.532.8 122.740.4 d/ Slev ofopretnoeqh 4Eqoivairet to 30 days of the ysarlyt (1) Bn-stsnt Investnents c/ nxpenditures in local corrency less 107. of the investments ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~yearly in-et-nnts in transmission and distribution; ISA 806.5 1.008.5 1.267.7 1.496.1 2.407.4 3.222.6 4.386.4 5.489.8 5.889.4 6.482.0 7.565.6 (ii) epe.ntions7 eependiture; (1iii) debt servict Other inveltveets 23.7 18.2 198.6 377.6 217.6 235.2 255.4 278.6 305.3 336.0 371.3 sed (iv) net in-satmenta in ISA. Acc-selted rash ourplos d - - - 322.8 1.60.9 2.4 ii4.8 72.3 240.0 336,8 408.1 f/ See as for s/but base.d en 26.5 days. EPM maintaIns Studi.l - - 33.3 54. 1 208.1 345.2 423.7 486.4 478.3 319.5 167.1 these steed-by Conds in interest bearinE dmlly Other 45.8 79.1 185.2 141.9 96.9 96.9 96.9 96.9 96.9 96.9 96.9 sccountn. Total Investmentzs 876.0 1.105.8 1.684.8 2,392.5 30°90.9 3902.5 >.277.7 6.424,0 7.030,7 7.571.2 8.609.0 70 dAysum o total ene grgu ly salesuIntcl i983. sre tI84 grooth is astd at 27, of Bruse generatIon and Current Assete traesonlsioi assets In operation and 3% of gro.s dstrbutic... asts In operatio. Cauh and Benke e/ 149.3 167.4 11.4 99.2 131.2 173.6 199.8 265.0 275.9 305.7 316.2 i/ Other assets include account receivable from Comsited Fends T/ 110.6 373.2 680.7 435.7 347.8 459.9 523.8 690.2 703.0 804.7 826.6 nmployeea end nun energy transartions. Assumed Accountn recelvahlej/ 155.9 274.2 341.8 360.6 786.9 1,114.0 1,459.1 2,047.5 2.250,0 2.701.0 3.506,0 to grew acceding to local inflation p1s an Inventory hI 155.6 151.6 151.6 197.3 377.0 567.0 867,0 1.267,0 1.877.7 2.210.9 3.352.4 additional 2% of real growth. Other i/ 110.5 129.3 67.9 92.4 112.7 134.1 156.9 183.6 214.8 251.3 294.0 N/ Net torka built by urban land developere which arc 129 3 67 9 92 4 1 2 7 i34.1 J1 ~~~~~~~~~~~~~~~~~~incnrporatsd into EPMS 5ases Total Current Assets 681.9 1.095.7 1.253.4 1.185.2 1.755.6 2,448.4 3.40o6. 4,453.3 5.321.4 6.273.6 8.295.2 k/ Includes revaluation of foreign debt due to devluation of the Colowlsian pes.... TOTAL ASSETS 10.970.9 15.186.0 18.937.6 24.694.7 31.257.9 40.949.4 54.288.2 70.672.1 91.244.3 113.377.7 139.644.6 p/ 68 days of in-tat- epaditu ieIn loca. cgurr;nqy vy plus 38 days for investmnt espenditures Re foreign 0QUITY AND LIABILITIES currency. la/ An avrage of 25% of yearly interest hrargs.. Equity n/ 20% of yearly operation L expenditure. acept for nationalI grid charges by 1SA which i. taken at 16.7%. Capital and accunulated aurplun 2.418.3 2.997.7 2.466.8 4.370.9 5.634.8 7.819.8 12.094.2 17.613.8 23.357.3 29.126.6 37.895.3 o/ Operational short-term debt. DoBrtlons i/ 498.7 498.7 498.7 512.7 531.7 556.7 591.3 640.5 707.5 796.3 912.7 - Cepital revaluation 3.159.6 5.679.5 7.126.9 10.967.6 14.843.4 18.886.7 23.311.6 29.217.2 37.139.9 47.378.5 60.370.2 Total Equity 6.076.6 9.175.9 11.092.4 15.851.2 21.009.9 27.263.2 35.997.1 47.471.5 61.204.7 77,301.4 99.178.2 Long-Term Liabilities kj/ Long-tetm debt 4.321.3 5.360.9 6972.4 7.391.8 8.451.0 11.228.7 15.209.0 19.395.4 25.414.0 30.717.3 33.101.2 Pension end other lIability reserves 260.3 330.8 492.1 661.6 832.2 1.030.7 1.260.7 1.539.5 1.877.7 2.287.4 2.783.5 Total Long-teem liabilitiee 4.581.6 5.691.7 7.464.5 8.053.4 9.283.2 12.259.4 16.469.7 20.934.9 27.291.7 33.004.7 35.884.7 Les: Cerrent Materities 153.7 325.0 517.5 545.3 638.3 1.253.3 1,892.0 1,269.7 2.114.8 2.469.7 3.240.7 NBt Long-tees lilbiliti-r 4.427.9 5.366.7 6.947.0 7.508.1 8.644.9 11.006.1 14 577.7 19.665.2 25.176.9 30.935.0 32.644.0 Current lfsbf,ities: Current mstur-itie 153.7 325.0 517.5 545.3 638.3 1.253.3 1.t92.0 1.269.7 2.114.8 2.469.7 3.240.7 Accoonts psyable teceetractors 1/ 71.0 72.3 86.4 360.1 441.3 760.4 973.0 1.238.2 1.255.4 ' 1.188.6 874.1 Interest psycblh r/ 92.0 93.7 112.0 179.8 194.6 263.4 347.4 415.0 496.3 600.8 666.1 Ac.onots pyable-eprration. n/ 149.7 152.4 182.3 250.2 328.9 403.0 501.0 612.5 745.8 890.1 1.059.2 Other current liabilities o/ - - - - - - - - 250.4 392.0 1.982.3 Total Corrent Liebilities 466.4 643.4 898.2 1.335.4 1.603.1 2.680,1 3.713.4 3.535.4 4.862.7 5.541.2 7.822.4 TOTAL EQUITY AND LIABILITIES 10.970.9 15.186.0 18.937.6 24.694,7 31.257.9 40.949.4 54.208,2 70.672.1 91.244.3 113.377.7 139.644.6 Msy 9, 1980 COLOMBIA EMPRESAS PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT Forecast Performance and Financial Indicators -________ACTUAL--------- ESTIMATE ------------------------------FORECAST.------------------------------ 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 Energy (GWh) Gross generation 3.628 3.379 3.185 3.775 4.926 4.926 5.446.5 5.467 5.953.5 6.474.0 7.896.0 Purchases from ISA 54 171 607 464 565 579.5 988.5 1.716.5 2.035.5 2.035.5 2.035.5 Sales to ISA 439 354 1,~ 266 1.121.9 779.4 1.322.6 1.653.3 2.000.7 2.038.3 2.931.5 Total 3.243 3.196 3.639 3.973 4.369.1 4.726.1 5.112.4 5.530.2 5.988.3 6.471.2 7.000.0 Sales without (ISA) (GWh) 2.661 2.610 3.035 3.249 3.673 3.992 4.338 4.713 5.120 5.561 6.040 Losses (% of total) a/ 22 22 20 22 19 18 18 17 17 16 16 Number of customers (000) 243 252 ztl 273 286 298 310 323 335 348 360 Number of employees (000) 1.722 1.693 1.717 1.856 1.918 1.979 2.046 2.124 2.302 2.380 2.445 Customers per employee 141 149 152 147 149 151 152 152 145 146 147 Energy sales per employee (MWh) b/ 1.545 1.542 1.768 1.751 1.915 2.017 2.120 2.219 2.224 2.336 2.470 Rate of Return Operating income _ - 642.2 1.090.0 1.704.4 2.826.9 4.970.4 6.156.5 6.351.1 7.014.9 9.864.6 Revalued net average assets in operation c/ - - 8.480.0 13.976.5 21.612.4 26.865.4 32.058.5 37.940.4 52.135.2 68.439.3 98.073.0 Yearly rate of return - - 7.6 7.8 8.0 10.5 15.5 16.2 12.2 10.2 10.1 Debt Gross cash generation/Debt service + idcd/ 1.6 2.1 1.4 1.6 1.5 1.8 1.9 2.2 2.6 2.2 2.4 + investments in ISA Debt/Equity ratio e/ 45/55 40/60 41/59 36/64 33167 33/67 34/66 33/67 33/67 32/68 29/71 Self Financing ratio (%)_f/ 29 46 24 57 47 45 49 52 57 59 83 Accounts receivable as % of annual sales 12.99 18.36 19.17 13.20 19.17 19.17 19.17 19.17 19.17 19.17 19.17 Current ratio / 2.2 3.4 3.3 1.5 1.8 1.7 1.9 1.9 1.9 2.0 1.8 Depreciation As h of average gross plant in operation - 3.36 2.61 2.59 3.61 3.68 3.64 3.64 3.29 3.59 3.10 a/ Station use, losses, and unaccounted for. b/ Own system. c/ The rate base was estimated as the average net revalued fixed assets in operation using the weighted yearly average of new plants in their year of commissioning and their full value thereafter. This average is not always equal to the accounting average d/ Interest during construction. e/ Total debt and liability reserves as X of total assets/total equity aa X of total assets. T/ Gross internal cash gereration, less debt service, less investments in ISA divided by: total applications of funds including increases in net working capital and excluding inveatmenta in ISA. A' Current assets divided by current liabilities exclusive of the current portion of term debt. May 9, 1980 COLOHBIA EMPRESAS PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT Forecast Loans Disbursement Statement 1979 - 1986 (Millions of current Col$) 1979 1980 1981 1982 1983 1984 1985 1986 TOTAL Existing Loans IBRD 874 236.8 177.8 - - - - - - 414.6 Future Loans Guadalupe IV IBRD - 31.8 864.3 2,423.1 3,165.3 819.8 74.5 - 7,378.8 Bank of America - 363.4 714.4 156.7 31.3 - - - 1,265.8 Suppliers - 63.6 - 805.8 56.4 164.0 96.8 - 1,186.6 Fonade (Studies) 24.0 4.2 21.8 21.0 25.1 29.1 - - 125.2 Sub-Total 24.0 463.0 1,600.5 3,406.6 3,278.1 1,012.9 171.3 - 9,956.4 Playas International Institutions - - - 485.2 754.0 3,267.7 3,739.1 1,713.5 9,959.5 Suppliers - - - - 330.3 1,055.5 1,079.8 357.1 2,822.7 Sub-Total - - - 485.2 1,084.3 4,323.2 4,818.9 2,070.6 12,782.2 Other Bank of America (River Diversion) - 72.7 239.8 - - - - - 312.5 Local Banks 17.1 _ - - - - - - 17.1 Municipal Valuation 2.7 - - - - - - - 2.7 Government 100.0 50.0 - - - - - 150.0 Municipal Palace 175.8 - - - - - - - 175.8 Debt refinancing (1980) - 210.0 - - - - - - 210.0 Debt refinancing (1981) - - 600.0 - - - - - 200.0 Sub-Total 295.6 332.7 839.8 - - - - - 1,068.1 Fonade - Studies - Future Projects - 91.2 139.0 65.2 142.6 48.4 - - 486.4 Total Disbursements 556.4 1,064.7 X,579.3 3,957.0 4,505.0 5,384.5 4,990.2 2,070.6 24,707.7 May 9, 1980 - 65 - ANNEX 5.9 COLOMBIA EMPRESAS PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT Forecast Debt Amortization Statement 1979 - 1986 (Millions of current Col$) 1979 1980 1981 1982 1983 1984 1985 1986 Existing - Foreign Loans IBRD 282 63.8 72.9 84.9 100.3 117.9 136.9 157.9 - IBRD 225 57.3 64.6 76.5 90.3 106.8 124.2 - - IBRD 369-1 47.2 53.8 62.5 73.9 86.5 99.7 114.9 132.7 IBRD 369-2 3.5 3.8 4.8 5.6 6.4 7.3 8.6 9.8 Brown Boveri 4782 Additional 2.6 2.8 3.1 3.4 3.8 4.2 4.5 4.9 Brown Boveri 4782 14.2 15.4 17.0 19.1 21.1 23.1 25.2 27.4 Banco Popular 8.2 8.9 9.8 10.9 12.1 13.3 - - KFW F 195 24.3 26.4 29.2 32.6 36.2 39.5 43.1 47.0 Chase Manhattan Bank 94.2 102.0 112.6 125.8 61.9 - - - IBRD 874 71.0 82.6 105.1 126.2 150.1 177.0 206.7 241.9 Other 59.5 - - - - - - - Sub-Total 445.8 433.2 505.5 588.1 602.8 625.2 560.9 463.7 Existing local loans 53.9 66.2 64.7 350.4 551.1 34.1 22.5 22.5 Total Existing Loans 499.7 499.4 570.2 938.5 1,153.9 659.3 583.4 486.2 Future Loans Guadalupe IV IBRD - - - - - 342.7 731.0 796.7 Bank of America - - - - - - 354.4 386.3 Suppliers - - - - - 91.4 194.9 212.5 Fonade - - 7.1 11.5 16.0 22.8 29.5 18.1 Sub-Total - - 7.1 11.5 16.0 456.9 1,309.8 1,413.6 Playas (International Institutions) - - - - - - 370.7 Other Bank of America (Ayura Diversions) - - - - - - 88.3 96.3 Local Banks - - - - - 17.1 - - Municipal Valuation 0.2 0.4 0.4 0.5 0.5 0.5 0.2 - Government - 10.3 12.0 14.0 16.3 19.0 22.2 25.9 Municipal Palace 17.6 35.2 35.1 35.2 35.1 17.6 - - Debt refinancing (1980) - - - 210.0 - - - - Debt refinancing (1981) - - - - 600.0 - - - Sub-Total 17.8 45.9 47.5 259.7 651.9 54.2 110.7 122.2 Fonade (studies - Future projects) - - 13.5 43.6 70.7 99.3 110.9 77.0 Total Future Loans 17.8 45.9 68.1 214.8 738.6 610.4 1,531.4 1,983.5 Total Amortizations: 517.5 545.3 638.3 1,253.3 1,892.5 1,269.7 2,114.8 2,469.7 May 9, 1980 - 66 - AANNEX 5.10 COLOMBIA EMPRESAS PUBLICAS DE MEDELLIN GUADALUPE IV RYDRO POWER PROJECT Forecast Interest Charges 1979 - 1986 (Millions of current Col$) 1979 1980 1981 1982 1983 1984 1985 1986 A. INTEREST CHARGED TO OPERATIONS Existing - Foreign Loans IBRD 282 28.8 27.0 25.0 22.2 18.1 12.2 4.5 - IBRD 225 22.1 20.0 17.5 14.2 9.5 3.1 - - IBRD 369-1 95.5 100.2 106.9 115.4 123.7 130.4 136.1' 141.3 IBRD 369-2 7.8 8.2 8.8 9.5 10.2 10.7 11.2 11.6 Brown Boveri 4782 Additional 1.7 1.6 1.5 1.4 1.3 1.1 0.8 0.5 Brown Boveri 4782 8.1 7.7 7.3 6.8 6.1 5.1 3.9 2.3 Banco Popular 3.2 2.8 2.4 2.0 1.3 0.5 - - KFW F 195 12.8 12.2 11.5 10.8 9.7 8.2 6.2 3.7 Chase Manhattan Bank 40.8 33.3 24.9 14.6 2.7 - - - IBRD 874 - 196.6 214.9 231.3 246.8 258.7 267.8 275.5 Sub-Total 220.8 409.6 420.7 428.2 426.7 430.0 430.5 434.9 Existing Loans - Local 221.2 211.3 200.5 160.0 87.5 17.5 9.8 5.7 Total Existing Loans 442.0 620.9 621.2 588.2 514.2 447.5 440.3 440.6 Future Loans Guadalupe IV IBRD - - - - 43.9 150.3 677.7 722.4 Bank of America - - 5.0 50.4 100.3 205.0 216.0 186.7 Suppliers - - - - - - 104.3 113.6 Fonade - - - - - - 14.3 7.8 Sub-Total - - 5.0 50.4 144.2 355.3 1,012.3 1,030.5 Other Bank of America (Ayura Diversions) - - - 9.8 47.1 51.4 53.5 47.2 Local Banks 3.1 3.5 3.5 3.5 3.5 0.3 - - Municipal Valuation 0.6 0.7 0.5 0.4 0.3 0.1 0.1 - Government 2.7 23.6 21.9 19.9 17.6 14.5 11.7 8.0 Municipal Palace 22.2 34.5 26.0 17.6 9.1 1.4 - - Debt refinancing (1980) - 25.0 50.0 25.0 - Debt refinancing (1981) - - 72.0 144.0 172.0 - - - Sub-Total 28.6 87.3 253.0 380.0 149.0 67.7 65.3 55.2 Ponade (Studies - Future projects) - - 3.0 28.2 43.8 40.3 54.9 30.0 Total Future Loans 28.6 75.3 165.9 302.8 345.6 463.3 1,132.5 1,115.7 Total Interest Charged to Operations 470.6 708.2 803.1 887.1 851.0 910.8 1,572.8 1,556.3 B. INTEREST DURING CONSTRUCTION Existing Loans IBRD 874 (Guatape II) 172.5 - - - - - - _ Future Loans Guadalupe IV IBRD - 22.7 84.9 218.2 420.0 519.2 44.7 - Bank of America - 22.7 94.9 106.3 75.2 - - Suppliers - 4.6 5.0 39.3 87.8 102.6 7.4 Fonade 2.5 4.9 7.5 11.1 13.6 16.7 - Sub-Total 2.5 54.9 192.3 374.9 596.6 638.5 52.1 Bank of America (Ayura Diversions) - 4.5 23.5 32.2 - - - - International Institutions (Playas) - - - 65.5 171.7 325.2 601.0 849.8 Suppliers (Playas) - - - - 13.8 75.2 177.2 258.2 Sub-Total - 4.5 23.5 97.7 185.5 400.4 778.2 1,108.0 Fonade (Studies for Future projects) - 11.0 34.7 29.8 26.7 35.4 - - Total Interest during construction 175.0 70.4 250.5 502.4 808.8 1,074.3 830.3 1,108.0 May 9, 1980. COLOMBIA EMPRBEUAS PUBLIiCAS DE HEDELLIN GUADALUPE IV 8YDRO POWER PROJECT Rate nf RMturn on Doyslosnent Proarso - …_______________ Capital Cost - …----- Sub Operational Cost Total ---------- Renues ------- ------- Benefits Yer GTrnni.sson General Total Power Purchase Slb totas Cost In 000 Sales to Totsi less N.. Gn-orstion Distribution Plant (see PV) EPM (froI lSA) (see P8) ysvten ISA lsse PV) Coats 1 1979 674 31 389 123 13 221 99 2 1980 956 433 21 126 - 409 - 3 1981 2,086 860 21 129 40 614 - 4 1982 2,778 1,211 21 133 11 836 39 5 1983 2,975 1,425 22 181 174 1,076 39 6 1984 4,221 388 44 174 .J- 1,337 39 7 1985 3,996 163 21 200 168 1,620 - 8 1986 1,680 219 21 393 - 1,927 136 9 1987 5 1 1 l 1 1 31 2009 135 31 32 2010 191 433 33 2011 417 860 34 2012 556 1,211 35 2013 595 1,425 36 2014 844 388 37 2015 799 163 38 2016 336 219 1 1 1 i I 1 48 2026 5 393 1,927 136 --rsnVausUajsefrB--------------------------------------------------__-- ------____ _ Po1,ent V.I... U..dst.d for B-rder Pri-es ______________ Oisasunt Rats 1%) 4 16,601 4,924 618' 22,135 7,147 476 7,623 29,758 35,672 2,348 38,020 8,262 6 13,342 4,356 574 20,272 5,077 437 5,514 25,786 25,413 1,643 27,056 1,270 8 14,207 3,938 350 1B,693 3,797 481 4,198 22,893 19,044 1,211 20,255 - 2,638 10 13,191 3,618 531 17,339 2,963 370 3,333 28,672 14,867 931 13,798 - 4,874 12 12,280 3,362 517 16,159 2,391 340 2,731 18,890 11,992 742 12,734 - 6,156 14 11,465 3,149 506 14,614 1,984 316 2,300 16,914 9,928 609 10,537 - 6,377 16 10,732 2,966 496 14,194 1,683 293 1,976 16,170 8,393 312 8,903 _ 7,265 _______________________________________________________________Present Values, Adjusted for Burder Priuess2 _ ________________ DiBcuont Rate (7,) 4 14,443 3,988 319 18,950 6,314 438 6,942 25,892 32,818 2,160 34,078 9,862 6 13,348 3,528 488 17,364 4,620 402 5,022 22,386 23,380 1,512 24,092 2,586 8 120 3,190 468 1856,0 3,455 369 3,824 19,842 17,520 1,114 18,634 - 1 208 10 11,475 2930 451 143856 2,696 370 3,036 17,892 13,678 856 14,534 - 3 308 12 10,684 2,723 439 13,846 2,176 291 2,476 16,322 11,033 683 11,716 - 4,606 1/ In MillIans of Colonbian Pesos 3I Weighted seerese usneeralun facturs: gesarstlun 0.87 transoission, diatrfbotiss 0.81 general plant 0.85 resulting for uapital cost 0.86 nalco tenans cost 0.91 standsrd (fur pover supplies) 0.92 Janoary 24, 19800 COLOMBIA EMPRESAS PUBLICAS DE MEDELLIN GUADALUPE IV HYDRO POWER PROJECT Rate of Return on Development Program Main Assumptions Capital Cost co See Attachment 4.1 (Generation, Transmission, Distribution); local and foreign cost have been deflated with assumed price increases, as follows: 1979 1980 1981 1982 1983 1984 1985 1986 Local Cost % Price increase 26 20 17 15 15 15 15 15 Deflating factor 0.885 0.722 0.609 0.526 0.475 0.398 0.346 0.301 Foreign Cost % Price increase 12 10.5 9 8 7 7 7 7 Deflating factor 0.943 0.848 0.773 0.713 0.663 0.620 0.579 0.541 Conversion Factors Weighted average for 1979-1986 investment program 0.86 Weighted average for operation and maintenance 0.91 Standard (for sale and purchase of electricity) 0.92 Residual Values Calculated in accordance with sinking fund depreciation for generation (40 years), transmission and distribution (30 years); general plant was assumed to be replaced for 20% every year. January 28, 1980 1979 1980 1981 1982 1983 1984 1985 1986 Sales, Purchases Incremental Sales in EPM System GWh 345 638 957 1,303 1,678 2,085 2,526 3,005 Incremental Purchases from ISA GWh 34 - 103 28 446 421 432 - Incremental Sales normal energy to ISA GWh - 255 - - - - - 348 Incremental Sales of secondary energy to ISA GWh - - - 200 200 200 - - Tariffs 1978 Average in EPM System MCol$/ GWh 0.6413 Purchase from ISA, normal GWh 0.3900 - Sales to ISA, normal GWh 0.3900 Sales to ISA, secondary GWh 0.1950 Operation and Maintenance 0' '0 EPM's forecast incremental total operational cost were deflated using the capital cost delation factors I for local cost. January 28, 1980 >| ___________________________________________________________________ _ IBRD 14880 TUNNEL AND PIPELINE PROFILE INSET "A" , -R 0 Prdo ' o'f anai _e ine7"anj-- L. Es * <0 .Q . For transisso system Csss.nisr Qarnmoi oMta;4 /fJ5 if . _,XC"T"Xj L: E \ K S tE | t uO Gim'dot~~~~~~~~~~~~~~~~~~~~~~~~~ o ~~ COLOMBIA 4E &<--- c 4 X A O Towns 1\@ ~~~~~~~~~~~~~~~~~~~/ | Tren rniss n linesE .Agnsurs MW Posr tio w~~~~~~~~~~~~~~~~~~~~~~~~~ Prosnut omer AstnEh/ at i r p,m A aon INET W'B5'sdss ao Ceit * * Proory rt | nrnpa>Cv.oact substations (nem/estensine)end zflme r Kl GMerEES Ao0r Vo \ Substalion * * O -~~~ 0 sobstations 't -central Zan~~~~~~~~~~~~~~~~~~~~~~~~~~~~Lstret- 0 \.ftos~~~~~10Foiin '~il COLOMBIA N 3drtt 0 ~~~~~MIN EmNs ERTRASMISIO SYTE Prol-t t,on-iss,on bes ~ ~ ~ ~ ~ ~ ~ ~ ~ Trnsisio lnet 411 P,.ject~~~uentes 2.,. aA -EitsgPaetPlt 5 Omnss'h~~~~nsnsassm5s,sn'na3''Ois,ioa' O0,aassEteninn,,,st.ti bn,,sur a~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~,e a' us us' POunne-, Ottompe J~~~G.p. ..e Mt I IBRD 14882 75'30' 75O00' 7,03O' g INSET A 74t0u cah0bLSe 7 APRIL 1980 -7O00 ToWanlS-aame scale as ma55shp 7'00( tc Yarumal S ,U C R E,-..---. Yauml .t-t-'/ 1K 8~~~00 ~~~~~ Cabca ic, basa ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ' ~~~~~~INSETA \><~~~~~~~~~~~~~~~~~~~~~ Sa --55 / au oBrenasrae ) Guadalupe 1V1 C 0 a -; 5 , AN GT a deca 0l Salts 7 San Cr TRANSlupe A NU ANTIOQUIAI, E I. 755.IR 75't30_____________________ 'Mdli = to iaw t-< / \;nmor 230K7430V Caralina E K e ~~~~~~~~~~~~~~~~~~~~~~~To Cr,-omataoso ~. AnconSur; tXnvigado eSS3y / X / ~~~~~~~~~~~~77tTo rorarca 115rm KV Riagrarnde Ri4ogrnd -6-30' P.ertn Berri C0L0 6-30'- Dan Maf,a~~~~o - 0 Mcitena ~~TRANSMISSION SYSTEM OF ANTIOQUIA, ERPM. 9 {Q }20ra cep r. \Project substationsu * New Bello rdotoExtension of exi/s\ting substations Bell n. Prolect transmission lines: "Gucme "'V"en ~~~~~~~- 230 KV MEDELLiN ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~115 KV A~~~~~~~~~~~~~~~~~~~~ 0~~~~~~~~~~~~~~~~~~ Existinig substations Enied a s 1 p Maroralet Existing transmission lines: W ' Rio~~~~ Clarlos / /1 Ancan Sur n Riero 230 KV Torcla 115 KV - ineogro 4.i Substations under construction aldndalPs' Transmission lines under constructionm El corn6 S- Lu s ~ ~ ~ ~ ~ ~ ~ ~ ~ - 500 KV 6-006 Lao Ce74°30' - 230K2 _ua' _ Future sustatIons I I _ _ Piedrq~~~~~~~~~~~~~~~~s 6n 7010 ~~~~~~~~~~~~~~~~~~~~~Future transmission lines: Piedras raLuEsmera/da - ~~~~~~~~~~~~~~~~~~~~~~~230 KV P ~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~115 KV Rio Clara Ii l~~~~~~~~~~~~~~~~~~~itAl I nterconexi6n Electric6 S. A. Rivers Major built-up area fhs,caccha5hh'n" wcr , aasihs_arr,c_ic-/s"1, fiusn5cce,,5KILOMETERSO 5 0 20 30 40 5 on cihs:sed-wshih1:c hc,x,h,- ; -hhah Thoden--c-i,ccec -da,chih lI ¶I : 0 Ton Wif-, s yicgc c,ic ,naichhem chews - tniscwsayx fchaic MILESa so11 20 30Departmental boundary 75530' 75-00' 74'30