Docoes Of The World Bank FOR OMCUIL USE ONLY A/.v - ~ oa9 RK' Report No. P-4302-PAKC REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO ustgo.o MILLION TO THE WATER AND POWER DEVELOPMENT AUTHORITY WITH THE GUARANTEE OF THE ISLAMIC REPUBLIC OF PAKISTAN FOR A KOT ADDU COMBINED CYCLE POWER PROJECT May 5, 1986 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 EQUIVALENT Currency Unit = Pakistan Rupees (Rs) Rupee 1. = Paisa 100 Rupee 1 = US$0.0625 US$1. = PRs 16.0 ABBREVIATIONS ADB - Asian Development Bank AEB - Area Electricity Board AG - Auditor General CDWP - Central Development Working Party CIDA - Canadian International Development Agency CIP - Core Investment Program ECC - Economic Coordination Coummittee ECNEC - Executive Committee of the National Economic Council ERWG Energy Review Working Group ESL - Energy Sector Loan GOP - Government of Pakistan HSD - High Speed Diesel ICB - International Competitive Bidding KESC - Karachi Electric Supply Corporation, Ltd. LCB - Local Competitive Bidding LRMC - Long-Run Marginal Cost MPD - Ministry of Planning and Development MPNR - Ministry of Petroleum and Natural Resources NEPC - National Energy Policy Committee OGDC - Oil and Gas Development Corporation PARCO - Pakistan Arab Company PMDC - Pakistan Mineral Development Zz'rporation PSO - Pakistan State Oil Company SGC - Southern Gas Company SNGPL - Sui Northern Gas Pipeline Ltd. USAID - United States Agency for International Development UNDP - United Nations Development Program WAPDA - Water and Power Development Authority GOP AND WAPDA's FISCAL YEAR (FY) July 1 - June 30 FOR OFICAL USE ONLY IOT ADDU COMBINED CYCLE POWEL PROJECT LOAN AND PROJECT SUMMARY Borrower: Water and Power Development Authority (WAPDA) Guarantor: Islamic Republic of Pakistan Amount: US$90.0 million equivalent Terms: Repayable in 20 years, including five years of grace, at the standard variable interest rate. Project The main objectives of the proposed project are to Description: assist WAPDA in meeting the electricity demand in the country by adding 200 MW of thermal capacity while improving the fuel efficiency of the combustion turbines at Kot Addu. The proposed project involves the conversion of two 100 NW and two 125 MW combustion turbines under construction at Kot Addu into combined cycle units with the addition of four heat recovery boilers and two steam turbo-generators of about 100 MU each as well as the associated transmission system for connection to WAPDA's national grid. The station is expected to operate on high speed diesel oil; however, provision is being made for the use of alternate fuel (gas, furnace oil, crude oil) if and when this is available. The fuel will be supplied through an existing pipeline from Karachi to Gujrat, which would be extended to Kot Addu with a 30 km spur pipeline by the Pakistan State Oil Company, the fuel supply company. There are no unusual risks foreseen for the implementation and operation of the proposed project. WAPDA is experienced in the design and construction of generation and transmission facilities but will receive assistance from consultants in relation to the combined cycle units, as these represent a new technology for both WAPDA and Pakistan. Thi docment hs a rstcedditbutkn and my be used by recdints only in t perfomannce of tei ockicl duties.Its contents nmy not otherw be dislsed wihout Wodd Bnk authoniubon -ii- Local Foreitu Total -- --- (USS million) Estimated Cost: . Preliminary and Civil Works 12.5 - 12.5 Power Station Equipment 28.4 56.1 84.5 Transmission Equipment 1.6 3.8 5.4 Erection 9.7 4.4 14.1 Consultancy - 1.4 1.4 Engineering and Administration 4.8 _ 4.8 Total Base Cost 57.0 65.7 122.7 Physical Contingencies 7.6 5.5 13.1 Price Contingencies 20.8 18.8 39.6 Total Project Cost 85.4 90.0 175.4 Interest During Construction _ 12.4 12.4 Total Financing Required 85.4 102.4 187.8 z m Financing Plan: IBRD - 90.0 90.0 WAPDA 75.1 - 75.1 GOP 10.3 12.4 22.7 Total 85.4 102.4 187.8 mm - Estimated Disbursements: IBRD FY87 FY88 FY89 FY90 FY91 --US$ million Annual 3.2 16.0 35.0 25.8 10.0 Cimulative 3.2 19.2 54.2 80.0 90.0 Rate of Return: 15.2Z Appraisal Report: No. 6020-PAK (April 28, 1986) Maw: IBRD 19384 1J Including local duties and taxes of US$36.0 million. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS 0ON A PROPOSED LOAN TO THE 'WAIER AND POWER DEVELOPMENT AUTEORITY WITE THE GUARANTEE OF THE ISLAMIC REPUBLIC OF PAKISTAN FOR A KOT ADDU COMBINED CYCLE POWER PROJECT 1. I submit the following report and recommendation on a proposed loan to the Water and Power Development Authority (RAPDA) with the guaran- tee of the Islamic Republic of Pakistan for the equivalent of US$90 mil- lion to help finance a Kot Addu Combined Cycle Power Project. The loan would have a term of 20 years, including five years of grace, at the standard variable interest rate. PART I - THE ECONDOY Ij 2. The most recent economic report, "Pakistan: Economic and Social Development Prospects" (No. 5962-PAK, dated February 18, 1986), was dis- tributed to the Executive Directors on March 3, 1986. 3. Economic growth rebounded strongly in FY85 after the slowdown in the previous year. Assisted by a strong recovery in the agricultural sector, real GDP increased by 8.4%, compared to 3.5% in FY84. Value added in agriculture grew by 9.9% and in manufacturing by 8.6%. Both fixed investment and private investment rose by about 12%. Improved availability of agricultural commodities helped to reduce the rate of inflation to 7.5% from 8.4% in FY84. On the other hand, the budget deteriorated markedly, national savings decreased, and the balance of payments came under pressure. Government current revenues fell short of the budgeted amount while expenditures substantially exceeded the budgeted amounts. As a result, government borrowing from the domestic banking system increased from 1.9% of GDP in FY84 to 3.9Z of GDP. Reflecting largely the sharp drop in public savings, national savings fell from 12.8Z to 11.2Z of GNP. Although the imediate growth prospects are good, budgetary and balance of payments developments will need to be carefully watched. 4. The balance of payments deteriorated in FY85. The current account deficit stoot at US$1.6 billion, compared to US$1 billion in FY84. Lower exports and remittances were the main contributing factors. Exports declined by 7.3% as the country's major exports, cotton and rice, suffered the effects of lower prices and lower volumes, respectively. Furthermore, remittances declined for the second successive year, falling by 10.6% in FY85. According to recent projections, net migration is expected to decline and thus remittances will be lower over the medium term. As a result of the higher current deficit and low net capital flows, the reserve drawdown reached US$960 million. Gross official gold and foreign .1 Parts I and II are substantially the same as those in the President's Report for the "Sixth Agricultural Development Bank Project" (Report No. P-4299-PAK dated May 1, 1986). -2- exchange reserves were US$1.2 billion at the end of FY85, which was equiv- alent to 2 months of imports of goods and services. 5. The process of gradually eliminating interest rates from the economy, initiated in 1980, was completed in July 1985. All transactions are now based on new financing modes consistent with Islamic principles. Existing interest-based comuitments have been honored and transactions with foreign governments and financial institutions are not affected. It is too early to determine with any certainty the potential costs of Islamization. Undoubtedly, the operation of the new system will initially involve some costs, but whether long-run efficiency will be affected will depend on how the system is applied. To date, the Government has proceeded cautiously, and new financing modes have been applied flexibly and developments monitored closely. 6. The strong recovery in GDP growth in FY85 meant that the overall growth ratio achieved in the first two years of the Sixth Plan was consis- tent with the improved performance achieved during the Fifth Plan period (FY79-83). Growth in national output (6.5Z), agriculture (4.2Z), manufac- turing (10.4Z), exports (11Z), and private investment (6.7Z), though below Sixth Plan targets, was well above the rates achieved during FY70-78 and very respectable compared with the growth rates of other developing countries. Growth during this period-coupled with increased remittances- -benefited large segments of the population. Performance improved despite a number of adverse factors: (a) a world recession; (b) a 30Z decline in the external terms of trade after 1979; and (c) the Afghanistan crisis with its attendant expenditures for increased defense and refugee assistance. 7. Fiscal performance and the balance of payments improved sig- nificantly during the Fifth Plan. The overall budget deficit and Covernment bank borrowing, which in FY79 stood at 8.8Z and 4.3Z of GDP respectively, fell to 6.4Z and 1.7Z by FY83. As the levels of Government borrowing from banks dropped and overall credit expansion was restrained, the growth of the money supply slowed down and inflationary pressures lessened; inflation dropped from 8% to 5% by the end of the Plan period. The improved fiscal performance was largely the result of expenditure restraint rather than better revenue performance. Real expansion in current expenditures on economic and social services barely kept pace with population growth, and development expenditures declined relative to GDP. Covernment revenues remained constant at 16% of GDP, and public savings, having risen in the first half of the Plan period from 1% to 3.8% of GNP, dropped to 1.6% by FY83. Assisted by remittances, but also strong export growth, the current account deficit fell from 5Z of GNP to 2% by the end of the Plan Period. Gross reserves increased from 3.5 to 4.5 months of imports of goods and services. 8. In addition to improving economic management through fiscal and monetary policies, the Government took measures to improve performance in -3- the coumodity-producing sectors. In agriculture, all major crops reached record output levels, with wheat and sugar achieving self-sufficiency. Subsidies on pesticides were virtually eliminated, while fertilizer prices were raised to reduce the subsidy burden. Crop procurement prices were adjusted to bring them closer to world prices. Provincial allocations for operations and maintenance in irrigation were increased, along with water charges. Encouraged by improved policies and incentives, private manufac- turing investment grew by 10.9% per annum. Areas open to the private sector were widened, most agricultural processing units were denationalized, and sanctioning limits increased. A flexible exchange rate policy adopted in 1982 was instrumental in stimulating manufactured exports, while import liberalization increased the availability of raw materials and capital goods. In energy, measures were taken to accelerate the development of domestic resources, rationalize prices, and improve policy formulation and energy planning capabilities. 9. The developments in Pakistan's economy since FY78 represent wel- come steps toward the solution of problems that are essentially structural and long-term in nature. Nevertheless, further wide-ranging measures must be introduced to address structural issues. Pakistan's long-term growth prospects depend on the resolution of two such issues: (a) the need to increase the level and erficiency of public investment; and (b) the need to encourage export expansion and efficient import substitution. If Pakistan is to sustain high economic growth, it must make major infrastructure investments, upgrade existing facilities, and strengthen its neglected social base. The last has fared badly as a result of resource constraints, as is reflected in Pakistan's social indicators, which lag seriously behind those of other developing countries at com- parable levels of development. It will not be possible to increase public investment and recurrent allocations without a major domestic resource mobilization effort. Although Pakistan should give priority to reforming indirect taxation through a broad-based sales tax, it should also rely more on user charges, should curtail subsidies, and increase self- financing by public enterprises. Given the continuing constrained outlook for official assistance and the likelihood of lower remittance flows, sustained improvements in both export expansion and efficient import substitution will be necessary to support high growth with sustainable external capital requirements. If trade performance is to be improved, structural adjustment must be continued and strengthened in the key sec- tors of agriculture, industry, and energy. Both agriculture and industry have considerable potential for increased exports and some degree of efficient import substitution. In energy, the accelerated development of Pakistan's under-exploited resources can contribute considerably to the reduction of energy imports. 10. In agriculture, high growth has been largely the result of increased acreage; yet average yields remain low by world standards and by those of progressive farmers within Pakistan. Before agricultural produc- tivity and diversification can be increased, institutional support must be -4- strengthened, appropriate pricing policies must be put in place, and the core investment program identified and implemented. More effective institutional support should be sought through improvements in the quality and quantity of services to farmers. In particular, strengthening the seed program requires more efficient seed multiplication and dissemination, increased efficiency in public sector plants, and a greater role for the private sector. The delivery of agricultural credit also needs to be improved to ensure that it actually reaches small farmers and tenants, whose credit needs are greatest. Furthermore, marketing costs need to be reduced and research and extension services strengthened. Agricultural pricing policies should create appropriate incentives to farmers, while minimizing subsidies. Hulticrop approaches to pricing should complement the single-crop, cost-of-production approach currently used. Finally, a core investment program in agriculture and water is needed to reduce the possibility of distortions in investment priorities. Low cost programs that yield quick returns should be emphasized along with critical infrastructure investments that raise farm productivity. Greater emphasis on the complementarity of investment programs, especially between agriculture and water, would ensure that priority is accorded to programs that increase agricultural productivity rather than merely augment the supply of physical infrastructure. 11. Despite fairly rapid industrial growth accompanied at times by rapid expansion of manufactured exports in recent years, there are a number of issues the Government must address if this performance is to be sustained. High levels of protection have led to high cost, low quality domestic production both by raising input prices and by reducing the demand for new technology to raise productivity and improve product quality. If Pakistan is to increase and diversify its manufactured export base and encourage efficient import substitution, industrial incentives must be rationalized to reduce both the level and dispersion of effective protection rates. The objective here is to increase the efficiency of the industrial sector by exposing protected producers to greater foreign competition and to reduce the anti-export bias inherent in the present incentives. In addition, the Government should reform the regulations affecting investment sanctioning and cost-plus pricing in order to improve competition among domestic firms. It should limit sanctioning to a few cases of strategic importance, leaving most investment decisions to the private sector, which is better able to assess investment opportunities. Cost-plus pricing arrangements with a number of key private and public manufacturing enterprises, which provide insufficient incentives to mini- mize costs or allocate capital efficiently, should be replaced by market- oriented approaches, which better reflect supply/demand conditions and provide adequate incentives for reinvestment and operational efficiency. 12. Issues that needed to be and are being addressed in the energy sector pertain to three broad areas: (a) investment and development; (b) pricing; (c) institutional strengthening. In the power subsector, the Government has formulated a least-cost development plan for the period -5- 1986-2005 and has outlined a core investment program of Rs 30 billion consisting of high priority projects to be implemented during FY86 to FY88. Given the likelihood of domestic resource constraints and persist- ent power shortages, the Government is also undertaking a number of measures including tariff increases to ensure that a large portion of this investment program would be financed from WAPDA's self-generated resources. The gas producer pricing formula for new discoveries has been adjusted to provide adequate incentives to attract private sector exploration. Because consumer gas prices were kept artificially low to encourage the substitution of gas for imported oil, relative prices became distorted and the use of gas uneconomic. Since 1982, the Government policy has been to progressively increase consumer prices of gas in order to reach two-thirds of fuel oil parity by 1988; the FY86 budget increased the average gas price by over 50Z. Assisted by domestic price increases and lower international prices for fuel oil, the Government's target has been realized. The Government should continue the policy of gradually adjusting gas prices with a view to reaching full parity as early as possible. Electricity tariffs, which are currently below the long-run marginal cost, should be adjusted to reflect this cost, not only to ensure the efficient use of electricity and encourage energy conservation, but also to mobilize the substantial additional funds required by the power investment program. Finally, the Government should consider increasing the autonomy of public enterprises in the energy sector to improve their efficiency and should continue to strengthen energy planning and policy coordination. 13. The Sixth Five-Year Plan (FY83-88) articulates a pragmatic strategy for Pakistan's continued rapid development that includes an expanded role for the private sector, increased public development expenditures, and increased allocations for energy, agriculture, irrigation, and the social sectors. Although the size and composition of the Plan are appropriate, development expenditures during the first two years of the Plan have been 8.5Z lower than the amounts projected because of insufficient domestic resources. Although this would not appear overly large, the way in which sectoral shortfalls have been distributed con- tradicts Plan priorities. Education, energy, health, and agriculture have received considerably lower allocations than called for in the Plan. Furthermore, without a predefined core investment program, there is a tendency to distribute shortfalls evenly over a large number of projects within a sector; thus too many projects have been initiated, and projects that should receive priority are underfunded. To address this issue, the Government has re-introduced a Three-Year Priority Investment Program (FY86-88). The Government has emphasized that the adoption of a rolling medium-term program does not mean that plan strategies and priorities are being revised, or that shortfalls are considered inevitable. The program will merely identify sectoral core investment programs to be given priority in annual plans. If priority investments, especially in key areas, could be protected, the public investment program would become more effective and its priorities would be sharpened. -6- 14. The improved performance and policy framework of the Fifth Plan, which the Government intends to continue during the Sixth Plan, have improved Pakistan's creditworthiness for a blend of Bank and IDA borrowing and commercial borrowing. At the end of 1984, Pakistan's external public debt (excluding the undisbursed pipeline) stood at US$9.9 billion, of which US$4.6 billion was owed to bilateral members of the Pakistan consortium, US$1.2 billion to OPEC, US$2.3 billion to multilateral agencies, and the balance to other bilateral and private lenders. At the same time, the Bank Group's share in Pakistan's external public indebted- ness was 16.2Z, and in external debt service it was 8.0%. According to Bank projections, if recent policy improvements are sustained and struc- tural issues addressed, Pakistan's debt service will remain about 20% during the remainder of the 1980s, even with somewhat higher levels of commercial borrowing. PART II - BANK GROUP OPERATIONS IN PAKISTAN 15. As of March 31, 1986, the cumulative total of Bank/IDA commitments to Pakistan (exclusive of Loans and Credits or portions thereof that were disbursed in the former East Pakistan) amounted to approximately US$4.0 billion, and IFC's investments totalled $239.9 million. (Annex II con- tains a summary Statement of Bank loans, IDA credits, and IFC investments.) 16. During its long association with Pakistan, the Bank Group has been involved in most sectors of the econcmy. For example, it has participated with other donors, over a 25-year period, in a major program of works to develop the water resources of the Indus Basin. Approximately 30% of total Bank/IDA commitments to Pakistan have been for agriculture and irrigation; 28Z for industry, including import program credits; 18% for transport, telecommunications, and public utility services; 14% for energy, including power, gas pipelines, and petroleum; 5Z for social programs in education, population, and urban development; and 52 for structural adjustment lending and technical assistance. 17. Currently, the Bank's assistance strategy is primarily to support the Government of Pakistan's efforts to formulate and implement policy reforms in three sectors--energy, industry, and agriculture--which shape the structural adjustment of the economy. To ensure that the gains from adjustment are sustained in the long term and shared more broadly, the strategy also includes investments in physical infrastructure and the social sectors (education, population, etc.) that have been neglected in Pakistan's development efforts. If this strategy is to succeed, the full range of traditional instruments of Bank support must be flexibly deployed--from sector work and active policy dialogue, to policy- and project-based lending, technical assistance and aid coordination. The Bank Group's lending program comprises two components, the larger of which supports specific high-priority investments in productive sectors and -7- physical and social infrastructure. The smaller but nonetheless strategic component focuses on policy reforms in the key sectors of agriculture, industry, and energy and relies heavily on high-quality economic and sector work. The program includes a series of technical assistance credits to finance studies and formulate action programs for policy reform. The experience with the first of these has been extremely positive. In addition, through its annual Country Economic Memorandum, the Bank Group tries to foster greater understanding on the part of Consortium members of the Government's structural adjustment program and aid requirements. This effort, coupled with increased cofinancing, should enhance the policy relevance and effectiveness of other official aid and help attract additional resources to Pakistan from nonconcessional sources. 18. Historically, the Bank Group has placed special emphasis on lend- ing for agriculture, which is the mainstay of Pakistan's economy. The Bank and the Government have agreed that the main objective of the agricultural strategy and, consequently, lending to the sector should be to increase agricultural productivity through improvements in the efficiency of the irrigation system and supporting agricultural services. Among the issues being addressed are: the balance between short-gestation projects and projects with a longer-term focus, rationalization of input and output prices, marketing, improvements in operation and maintenance, cost recovery, and a wider role for the private sector. Projects in the sector have ranged from irrigation/drainage to agricultural inputs, research, and extension and have included institution-building components. Overall, progress in agriculture has been satisfactory. 19. In industry, the strategy has two complementary aspects: to strengthen and broaden the structural adjustment in Pakistan's industrial sector and to support the Government's efforts to revitalize the private sector through industrial financing. The industrial reform program has been designed to improve the competitiveness of the sector with a view to promoting export expansion and import substitution. Issues being addressed include trade and industrial incentives, deregulation, efficiency of public enterprises, pricing decontrol, and improvements in the credit delivery system. Lines of credit extended to development finance institutions and other financial intermediaries have been mainly for the private sector. Direct lending for industry has also included assistance to three large fertilizer plante aad a refinery engineering loan. IFC's investments in 18 Pakistan enterprises were by way of loans (US$228.6 million) and equity participation (US$11.3 million). Although individual operations have generally achie;'ed their objectives, the agenda for overall industrial reform remains formidab-le. 20. As a result of the progress under the Structural Adjustment Loan (SAL) in 1981/82 and the Energy Sectcr Loan in 1985, our lending program in energy is expanding rapidly. The overall objective here is to expand the domestic supply from all energy subsectors and simultaneously increase -8- the efficiency of energy use through appropriate pricing, conservation, and other methods of managing demand. No less central have been the efforts to strengthen key institutions in the sector. In power, the Bank has helped both the Karachi Electric Supply Corporation (KESC) and the Water and Power Development Authority (WAPDA) to finance their power generation and transmission programs. The construction of the Mangla and Tarbela dams under the Indus Basin Development Program, in which the Bank played a leadership role, has also assisted in achieving the objectives of the sector strategy. In oil and gas, the Bank has financed a sound exploration and development program and has assisted in developing the extensive gas transmission system. Smaller efforts, involving mainly engineering studies and technical assistance, have been undertaken to support coal exploration, energy audits, and oil refining. Despite much progress, however, the Bank will need to continue participating in institution building and help the Government mobilize adequate funds for energy investments through tariffs, co-financing, and greater private sector participation. 21. Bank Group lending for transport and communications has focused both on new capital investments and on improving the efficiency of exist- ing assets. Efforts have also been made to strengthen the institutions responsible for these services, especially the Karachi Port Trust, Pakistan Railways, the Telephone and Telegraph Department and federal and provincial highway agencies. However, inadequate transFort infrastructure is now considered to be critical constraint to overall growth, in large measure because infrastructure stock has run down. Thus, the balance between new investments and the efficient operation and maintenance of existing investments needs greater attention. 22. With an overall literacy rate of only 24%, a population growth rate of about 3.1%, and rapid urbanization, Pakistan faces an equally formidable development agenda in the social sector. The Bank has sup- ported the Government's programs in education through five credits designed to upgrade primary, post-secondary, and higher technical and agricultural education as well as middle-level training of primary teachers and agricultural extension agents. The focus has been and will continue to be on the lower end of the education spectrum (primary, technical, and nonformal education). A first population project designed to expand the demand for population control services was approved in FY83. Furthermore, the Bank has financed four projects in the urban and water supply sector. Besides providing uLban services, these operations are designed to improve local resource mobilization and cost recovery; plan- ning and efficiency of resource utilization; and urban management, espe- cially at the provincial and municipal levels. 23. In addition to the above, policy-based lending was pursued through the SAL and an Energy Sector Loan mentioned in para. 20. The SAL program introduced a number of significant reforms in government development planning and in policies and programs in the agriculture, energy, and -9- industrial sectors; by the time the loan was fully disbursed at the end of FY83, significant progress had been achieved in the above areas. The ESL supports the Government reform program for the energy sector and assists in the implementation of a core investment program for the sector. Continuing support for the structural adjustment process is envisioned under other sector loans in the next few years. 24. In general, disbursements have been satisfactory. Some projects have experienced initial delays owing to protracted government procedures for project approval (but these problems are now being addressed), and the procuremeDt of goods and services. Rapid turnover of managerial and technical staff, partly due to migration to the Middle East and partly to budgetary constraints, has also been a problem in some projects. 25. A number of operations are currently being prepared or appraised. These include projects for power transmission, generation, and conservation; oil and gas exploration and development; coal development; lines of credit for industrial financing for the private sector, and for industrial subsector restructuring, balancing, and modernization; irrigation/drainage, and agricultural inputs and services; highway con- struction and maintenance; primary and informal education; urban develop- ment and water supply. Sector loans that would support further structural adjustment in industry, agriculture and transportation are being discussed with the Government. Where successful, such loans would provide a policy umbrella for projects in those sectors. To help the Government finance agricultural and other high-priority projects having low foreign exchange component, the Bank Group is financing some local expenditures on a case- by-case basis. 26. Economic and sector work provides the basis for the continuing dialogue between the Bank Group and the Government of Pakistan on develop- ment strategy, the sector and project lending strategy and operations, and the coordination of external assistance within the Pakistan Consortium. The work program emphasizes resource mobilization, structural adjustment in the three key sectors, and the development of the physical and social infrastructure. PART III - THE ENERGY SECTOR AND POWER SUBSECTOR ENERGY SECTOR Strategy for the Development of the Energy Sector 27. Pakistan's commercially exploitable domestic energy resources consist, in order of importance, of hydropower, natural gas, oil and coal. In addition, the country has a large base of renewable energy in the form of agriculture and animal wastes, and solar energy. The hydropower * ~~~~~~-10- potential is estimated at about 30,000 MM, of which only 2,897 MS has been developed and another 1,928 MS is under construction or at an advanced stage of preparation. In addition, 3,600 MW will be added if the proposed site at Kalabagh is fully developed. Natural gas is Pakistan's main commercially exploitable hydrocarbon resource with known proven and prob- able reserves estimated at about 340 million tons of oil equivalent (toe). Proven and probable reserves of oil are estimated at about 58 million tons. Consequently, the prospects are good for increasing the supply of domestic hydrocarbons; however, this would only be achieved by increasing the private sector's participation in exploration to reduce the risk borne by the Government of Pakistan (GOP). Coal and lignite reserves are estimated at about 900 million tons of which only 175 million tons are proven. GOP has outlined a systematic program for the formulation of a comprehensive coal exploration strategy to determine the reserves where further assessment is justified. The first phase of the program would be carried out in 1987 and 1988. GOP is also assessing, under the United States Agency for International Development (USAID) financing, the poten- tial for stimulating increased private sector involvement in coal produc- tion using the reserves at Lakhra as a model. If the results at Lakhra are favorable, the same model could be applied to other promising reserves. By and large, the development of Pakistan's domestic energy resources has progressed at a substantially slower pace than is warranted mainly because of financial constraints. As a result, the country's dependence on imported energy increased which contributed to the rapid growth of imports and external payments deficits. 28. In recognition of the possible adverse impact on the economy of sustained growth in the demand for energy and increased dependence on imported energy, the Fifth Five-Year Plan (FY79-FY83) emphasized the accelerated development of domestic energy resources and rationalization of consumption. However, the plan targets were not achieved. In address- ing the set-backs experienced in achieving the energy targets of the Fifth Plan, GOP included the energy sector among the high priority sectors 1/ in the Sixth Five-Year Plan (FY84-FY88) by increasing its share of the resources and by taking several important policy initiatives. Despite these actions, however, it became evident during the first two years of the Plan that supply targets were not lik2ly to be fully achieved. The shortfall in achieving the targets of the Fifth Plan and the likely short- fall with regard to those of the Sixth Plan were mainly due to: (a) the shortage of financial resources, precipitated mainly by the underpricing of natural gas and electricity which in turn stimulated consumption and resulted in severe and frequent supply interruptions, and (b) the absence of a system for setting priorities in investment and for mobilizing resources for their implementation. As a result, the development of primary and secondary energy progressed in a piecemeal fashion, dictated 1/ The others are agriculture and industry. -11- priirily by the availability of financial resources, causing persistent gaps between actual and planned investments. 29. The lack of progress under previous Plans, the setbacks ezperienced in the implementation of the investment program for the energy sector during the first two years of the Sizth Plan, and the likelihood that resource constraints would continue into the imediate future prompted GOP to formulate a comprehensive development strategy to address the major sectoral issues. The strategy was formulated in 1985 in col- laboration with the Bank, under the Energy Sector Loan (ESL) (Loan 2552-PAK). It involves a two-pronged approach. The first focuses on minimizing the shortfalls in energy during the remaining three years (7Y86-FY88) of the current Plan period and on ensuring that investments needed for the Seventh Five-Year Plan are identified; the second calls for studies to outline the framework for the integrated development of the sector during the Seventh and Eighth Plan periods. The actions and studies under the energy development strategy are categorized under three headings: (i) investment and development; (ii) pricing and demand management; and (iii) institutional development. Under the ESL, the issues relating to these have been identified, a plan of action to address them has been outlined, and target dates for specific actions have been set. 30. Investment and Development. The first element of the strategy formulated for the sector was to revise the supply targets of the Sixth Plan and outline a Core Investment Program that covers the remaining three years (FY86-FY88) of the Plan. The core program for power covers the ongoing projects needed to achieve the revised supply targets and projects to be initiated during the remainder of the Sixth Plan to ensure smooth transition to the Seventh Plan. Moreover, the core investment program for power calls for predetermined yearly financial allocations distributed among generation, transmission and distribution to balance the development of the subsector. In the oil and gas subsector, the core program involves for the Oil and Gas Development Corporation (OGDC) an annual program of exploration, development of specific low risk gas and oil prone areas, and the allocation of a yearly budget by GOP to implement the program. In addition, a program parallel to that of OGDC was outlined involving the development of fields suitable for attracting risk capital through joint ventures. A new gas producer price formula was introduced under ESL to stimulate the interest of the international oil firms in undertaking exploration drilling in Pakistan. 31. The financial requirements of the care investment program amount to about Rs 50 billion (US$3.2 billion) of which Rs 36.5 billion (US$2.3 billion) would be absorbed by the power subsector; Rs 12.8 biLlion (US$0.8 billion) by the petroleum subsector; Rs 0.4 billion (US$24 million) by the coal subsector; and Rs 0.25 billion (US$17 million) for energy planning and conservation activities. To finance the core investment program, the Government would contribute Rs 8.7 billion (US$0.6 billion) from the -12- Annual Development Plan and the contribution of the entities from their internally-generated funds would amount to Rs 14.7 billion (US$0.9 billion). The remaining Rs 26.4 billion (US$1.7 billion) would be in the form of loans, grants and suppliers' credits, the bulk of which have been secured. 32. Resource Mobilization and Demand Management. The petroleum products subsector continues to be a net contributor to the resources of GOP. In December 1985, the weighted average domestic price of petroleum products was at 148% of the border price, US$287/toe compared to US$194/toe. Under the prevailing price structure, prices of all petroleum products are above their respective border prices, with the exception of fuel oil which is below its border price by about US$39/toe. The price of natural gas, by contrast, is low relative to the prices of competing petroleum products, reflecting GOP's decision to buffer the economy from the adverse impact of the higher cost of imported energy. This stimulated demand and by 1981 supply constraints started to emerge. Accordingly, under SAL I (Loan 2166-PAK/Credit 1255-PAK) GOP decided to increase the price of gas to reach two-thirds the border price of fuel oil by FY88. The same policy was reiterated under the ESL. In implementing the gas pricing policy, the weighted average domestic price of gas was increased since 1981 at an average annual rate of 30X. As a result, in December 1985, the weighted average price of gas was about 65Z of the border price of fuel oil, i.e., US$96/toe compared to US$147/toe. In addition, a new producer price for natural gas was introduced linking the price of new gas to the border price of fuel oil less a discount to be determined on a field-by-field basis. This formula would provide added incentives for the international petroleum firms to increase their exploration activities in high-risk gas prone areas. 33. As regards electricity, the average revenue, including fuel surcharge, in FY85 was 64 paisa/kWh for WAPDA, representing about 60Z of the average long-run marginal cost (LRMC) of 110 paisa/KWh. Despite the divergence between the average revenue and LRMC, WAPDA has been able to finance more than 40% of its investment program from internally generated revenues because actual investments in the past have amounted to only about 50% of the planned investment. In order to ensure that actual and planned investments do not diverge, GOP and WAPDA agreed under the ESL to undertake all necessary measures including tariff increases and annual allocations from the budget to ensure that the core investment program is financed. Electricity tariffs which had changed very little since November 1981 were increased from July 1, 1985 by 10% across the board for all consumers. Based on the Bank's forecast, the implementation of WAPDA's investment program for the period FY87-FY94 would require annual real increases in tariffs of about BZ for the next eight years. The forecasts further show that tariffs will need to be increased by about 11% on July 1, 1986 in order for WAPDA to cover 40% of its core investment program for FY87 from internal sources. -13- 34. Regarding the collection, storage and retrieval of data on the power system, WAPDA has recruited Argonne Laboratories in the USA, under financing from United Nations Development Program (UNDP), to design a new system. Concurrently, WAPDA assisted by consultants under financing from USAID has initiated a load research and management study to comp.le detailed information on the pattern (extent, duration, load factors, etc.) of electricity consumption by the various consumer categories. The data base study is expected to be completed by December 1986, and the load management study by September 1987. These would provide the inputs needed for restructuring electricity tariffs in Pakistan. In the interim WAPDA is assessing the impact on consumers of introducing a fuel surcharge in the tariff for the low voltage consumers, which it plans to introduce in FY87. 35. Institutional Responsibilities and Development. Three ministries share the responsibility for supervising the operational entities and agencies involved in the energy sector. These are the Ministry of Petroleum and Natural Resources (MPNR), the Ministry of Water and Power (MWP), and the Ministry of Production (MINPRO). In addition, the Energy Division of the Ministry of Planning and Development (MPD) has respon- sibility for energy planning. Operational responsibilities in the sector are vested in a large number of entities and agencies in both the public and the private sectors. All these entities and agencies come under the jurisdiction of MPNR, except three state organizations engaged in oil refining or petrochemicals, the two electricity supply organizations, and the Appropriate Technology Development Corporation. Nuclear energy comes under the office of the Prime Minister. Coordination between the minis- tries on energy matters is secured through a number of committees, namely, the National Energy Policy Committee (NEPC), the Energy Review Working Group (ERWG), the Economic Coordination Committee (ECC), the Executive Comuittee of the National Economic Council (ECNEC), and the Central Development Working Party (CDWP). NEPC is responsible for the formulation of GOP's overall energy policy. ERWG performs the functions of inter- ministerial coordination as well as monitors the status of on-going projects in the public sector and endeavors to remove the operational bottlenecks. The review of the financial plans of the sector and the approval of energy pricing proposals are under the jurisdiction of ECC. ECNEC and CDWP review and approve major proposals and projects in the energy sector, as in other sectors. 36. The main issue concerning the organization of the energy sector is the multiplicity of ministries and committees responsible for planning, coordinating and monitoring the performance of the public and private enterprises involved in the production, transport and delivery of energy products. This division of responsibility spreads the scarce human resources, particularly at the technical level, among a large number of public agencies resulting in reduced effectiveness of each agency. Recently, GOP under ESL created in MPD an energy planning cell (ENERPLAN) with USAID financing, and an energy conservation unit (ENERCON) with joint -14- USAID and Bank financing. ENERPLAN is mandated to collect, compile and analyze on an on-going basis all relevant data on the energy sector and integrate them with the country's annual, five-year and long-term develop- ment plans to enable GOP to identify priorities and evaluate resource requirements to support effective policy formulation and investment Dlanning. ENERPLAN would be staffed by Pakistani personnel who will be assisted during the first four years by consultants financed by USAID. ENERCON would serve as the focal point for all conservation activities and its main responsibilities will be to plan energy conservation actions, formulate policy guidelines, develop a data base, support training activities and private research, undertake development and demonstration as well as public information activities, and monitor the implementation of conservation programs of various public and private entities. It would formulate a comprehensive national energy conservation program by the end of 1986. The long-term consultants for the ENERCON project are expected to start their work in mid-1986. Various options are being examined in order to improve the efficiency of and mobilize additional resources for the subsector. POWER SUBSECTOR Organization of WAPDA and the Power Subsector 37. WAPDA and KESC are the two organizations primarily responsible for the generation, transmission and distribution of electricity in Pakistan. WAPDA, the borrower of the proposed loan, is a well run and competent semi-autonomous agency established in 1958 to coordinate the development of Pakistan's water and power resources. It is divided into two largely independent 'wings', one for power and the other for water. The Power Wing is responsible for the construction and operation of power generation, transmission and distribution facilities throughout the country, except for a small area, including Karachi and its surroundings, which is served by KESC, a private utility. 38. Under the ESL, GOP has agreed to review alternative ways of reor- ganizing the power subsector to make it more efficient and more responsive to the changing conditions. GOP is examining the legal implications of assigning to W/APDA the responsibility for generation and high voltage transmission of electricity for the entire country. This is expected to result in improved planning and integration of the WAPDA and KESC systems. In view of the overstaffing of the Distribution Department and the high employee-consumer ratio, WAPDA's distribution function is being reor- ganized and the policies, procedures and methods are being modernized. The creation of a new decentralized Power Distribution Authority for the distribution of electricity through autonomoas and semi-autonomous com- panies and entities is being assessed by consultants appointed by WAPDA under USAID financing. In August 1985, GOP appointed a National Deregulation Commission which is headed by the Governor of the State Bank of Pakistan. One of the objectives of this commission is to outline a -15- strategy for increasing private sector involvement in power distribution. Moreover, the Economic Co-ordinating Committee of the Cabinet approved in September 1985 a charter of terms and conditions under which the private sector would be invited to participate in power generation in the context of the agreed medium and long-term plans. A detailed framework for the remuneration of potential private firms involved in the supply of power in Pakistan is currently being formulated. Existing Facilities and Load Management Measures 39. In June 1985, WAPDA's total installed generating capacity was 4,339 MW, of which 2,897 MW (67%) was hydro and 1,442 MW (33%) was thermal. The maximum potential output of the existing hydro stations amounts to about 3,100 MW when all the reservoirs are full. This poten- tial drops to slightly less than 1,000 MW during the dry season; the shortfall is made up from thermal generation. According to WAPDA, the shortfall between demand and the generation capabiLity of its system, estimated at about 1,000 MW in January 1985 and about 1,200 MW in June 1985, is expected to continue well into the 1990s. Power Planning 40. GOP and WAPDA have realized that the investments in the power sector need to be increased and rationalized with a view to meeting the future demand at least cost. To achieve this objective, assistance has been provided by the Bank in the last two years to develop WAPDA's in- house capability for power system planning. In view of the importance of setting priorities and earmarking resources to meet the forecast demand for electricity at least cost to the economy, WAPDA with Bank financing has initiated a study to formulate a national least-cost plan for the power subsector; it plans to complete the study and review its results with the Bank by December 31, 1986. This study incorporating recent developments in the sub-sector is being undertaken by Argonne National Laboratories, which under financing from UNDP with the Bank as the execut- ing agency, has already assisted WAPDA in formulating an interim least- cost program for the development of generation facilities. Argonne, under the auspices of the International Atomic Energy Agency, has also trained WAPDA's staff in the use of the Wien Automatic System Planning (WASP III) computer model and in early 1985 successfully installed that model on WAPDA's computer. This would enable WAPDA's sta'f to revise the soon-to- be-completed national least-cost plan, as and when needed. incorporating updated information on the operation of the subsector including hydrology, water management and pattern of electricity consumption. -16- WAPDA's Development Program 41. WAPDA plans to more than double its installed generation capacity from 4,339 KW to over 9,416 MW by 1993. This will involve the commission- ingNof about 3,000 MW of generating capacity now under construction and the development of three major power complexes: (i) a hydropower complex in the north including the development of three sites on the Indus River -- at Kalabagh, and later at Basha and Dasu; (ii) a complex based on imported coal in the south near Karachi; and (iii) between these, thermal capacities at Jamshoro based on fuel oil, and at Lakhra based on domestic coal. This expansion will be supported through the fuller exploitation of Pakistan's energy resources. 42. The concentration of major hydro-electric generation facilities in the north and thermal facilities and load demand in the center and south requires the long distance bulk transmission of electricity. To ensure continued efficient power transmission, WAPDA plans to construct over 2,000 km of additionaL extra-high voltage (500 kV) lines in this period. In addition, the 220 kV network and sub-transmission systems are being expanded (under the Fourth WAPDA Project) to ensure coordinated and integrated development with the expanded extra-high voltage and distribu- tion systems. These actions will also serve to reduce system loqses which in FY85 was estimated at about 27X of gross generation. WAPDA has initiated a study with the assistance of consultants financed by USAID to prepare detailed work and investment programs to achieve a reasonable and attainable target of loss reduction. The study is expected to be com- pleted by June 30, 1986. In the area of distribution and rural elec- trification, consultants financed by USAID are preparing a comprehensive Master Plan for a Power Distribution System, which is focusing on the organization of distribution, analysis of energy loss, criteria for selecting feeders for rehabilitation, efficient distribution expansion and practices, load management, voltage regulation and service reliability; this study to be completed in March 1986 (along with the study of system losses) would serve as a basis for identifying the transmission and dis- tribution components of the core investment program and for selecting projects suitable for external financing. The Bank Group Strategy and Involvement 43. The Bank concurs with the development strategy outlined by GOP and specified under the ESL, which provides the policy umbrella for Bank activities in the sector. Consequently, the Bank continues to support the policies initiated under ESL, and the allocation of resources for specific projects included in the core investment program. In the area of primary energy production, the Bank wouLd support the implementation of a com- prehensive plan for the exploration and development of oil and gas and coal. In addition, the Bank would support an investment program aimed at the substitution of lower value for higher value products, particularly imported coal for gas in power generation and the release of gas for use -1 7- by industry and households as a substitute for imported petroleum products. As for the hydroelectric potential, emphasib would be or. the formulation of a least cost plan, and on the extensiun of techpicaL and financial support for the development of high priority schemes. Efforts would also be directed toward retrofitting and restructuring the refinery subsector, as well as the rationalization of the infrastructure for the transport of liquid hydrocarbons and gas. The Bank would also support the formulation of plans for bringing domestic prices of energy products at least to parity with their respective cost to the economy as a means of rationalizing consumption and mobilizing resources for GOP, as well as plans for investing in rehabilitation and retrofitting in major energy consuming industries, such as oil refineries, fertilizers, cement, etc. In the power subsector, the Bank has directed its efforts to strengthening WAPDA's management and technical capabilities. WAPDA has improved its overall financial operations by developing modern accounting and commer- cial systems. The Bank would continue supporting the institution building measures already undertaken by WAPDA, including the strengthening of its technical capability in formulating a least cost plan for the development of the power subsector. 44. The Bank Group involvement in Pakistan's energy sector started in 1955 with a Loan to KESC for the construction of a thermal power station. Since then, it has assisted in financing projects in all energy subsectors. In the power subsector, the Bank has participated in the Indus Basin Development Projects, which include the hydrogeneration developments at Mangla and Tarbela. A series of four credits/loans were made to KESC between 1955 and 1967 for the development of its generation capacity. Since 1970, the Bank has been more directly involved in GOP's program for strengthening the power transmission and distribution networks, for which five credits/loans were made to WAPDA. The first (Credit 213-PAK) of US$23 million, made in 1970, covered the cost of upgrading the capacity of the transmission network. A second operation, a Third Window loan (Loan 1208T-PAK) of US$50 million, subsequently reduced by US$15 million due to savings achieved under international competitive bidding, was made in 1975 to finance the development of part of the 500-kV transmission system to connect the hydro resources of the north with the thermal generation in the center and south to provide the most economic means of supplying power throughout the country. A third operation (Loan 968-PAK) in the amount of US$45 million was made to cover four years of WAPDA's program for the development of the secondary transmission system (FY79-FY83), involving the erection of about 4,345 km of single and double circuit lines and the construction, expansion and conversion of 216 substations. Implementation of this Project which has progressed satis- factorily has now been completed. 45. The Project Performance Audit Report (PPAR) dated April 6, 1981 for the first project (Credit 213-PAK) noted that, although the project was successfully completed, there was a delay of about five years in project completion because of WAPDA's inexperience in bid evaluation, in -18- procurement and in contract management; further, in an unsettled atmos- phere fraught with political and social proolems WAPDA was understandably slow to accept new management concepts. However, the PPAR dated December 26, 1985 for the second project (Loan 1208-PAK) noted that the project was satisfactorily implemented at a substantially (37%) lower cost than originally estimated and with a delay of onLy about 14 months in project completion. While this represents significant improvements in WAPDA's financial, operational, project and overali management capability, some fundamental problems remain which are being addressed under the Fourth and Fifth Power Projects and the Energy Sector Loan. 46. In FY85, four loans to the sector amounting to a total of US$433 million were approved by the Bank. The Fourth WAPDA Power Project (Loan 2499-PAK) for an amount of US$100 million covers the construction of a total of about 3,890 km of transmission lines, and 227 substations including expansion of 86 substations of the subtransmission system over the period FY86-FY90. The Fifth WAPDA Power Project (Loan 2556-PAK) for an amount of US$100 million would assist WAPDA in the installation of about 1,100 km of 500-kV transmission line between Lahore and Jamshoro and new 500-kV substations at Lahore and Sahiwal, and the extension and reinforcement of existing 500-kV substations at Multan, Guddu, Dadu and Jamshoro. The Bank agreed to support GOP in restructuring the sector with the Energy Sector Loan (Loan 2552-PAK) for an amount of US$178 million. In the area of petroleum exploration and development, the Bank approved a Petroleum Resources Joint Venture Project (Loan 2553-PAK) for an amount of US$55 million with a view to financing the Government's and OGDC's share of foreign exchange commitments under existing joint ventures with private sector operators in Badin and North Potwar blocks and new joint ventures to be firmed up during the next three years. 47. Within the above framework, Bank assistance in the power subsector focuses mainly on: the reorganization of the subsector to optimize the use of scarce financial and technical resources; the strengthening of WAPDA's managerial and technical capabilities and the improvement of overall financial operations; the formulation of a least-cost power development plan for the medium and long term and the implementation of high-priority activities; the coordination of the policies and programs for primary energy development with those for power generation; the increased utilization of available local energy resources or lower cost imported fuel for power generation; and financial and related support for projects aimed at improving the use of existing generation facilities, reducing energy losses, implementing load management programs, etc., in order to reduce the energy shortfall. The proposed project, which is part of the core investment program for the power subsector, is consistent with the policy framework established under the ESL and with the objectives stated above. -19- PART IV - THE PROJECT 48. The proposed project was prepared by WAPDA. The project was appraised in September/October, 1985. Negotiations were held in Washington, D.C. from March 24 to March 26, 1986; the delegation from Pakistan was led by Mr. Mohammad Akram Xhan, Additional Secretary, Ministry of Water and Power. A Staff Appraisal Report, entitled "Pakistan: Kot Addu Combined Cycle Power Project" (Report No. 6020-PAK), dated April 28, 1986 is being circulated to the Executive Directors. A supplementary project data sheet is attached as Annex III. Additional conditions of loan effectiveness would include: (i) approval by the Executive Comittee of the Pakistan National Economic Council (ECNEC) of the PC-1 document 1/ for the project; (ii) the announcement of a tariff increase effective July 1, 1986 which would enable WAPDA to generate internally at least 402 of its FY87 capital investment requirements; (iii) substantial reduction in Government arrears owed to VAPDA; and (iv) the confirmation by GOP that a contract for the construction of the Nahmood Kot to Kot Addu fuel pipeline has been signed. Rationale for Bank Involvement 49. Shortage of power remains a binding constraint on Pakistan's development, and is the short- and medium-term focus of Bank activities in the energy sector. Under the Energy Sector Loan (Loan 2552-PAR) which established a framework for eliminating the continuing energy shortfall at least cost to the ecGnomy and assisted the Government of Pakistan in formulating a strategy for the development of energy sector as a whole, the Bank has encouraged the adoption of policies and the implementation of projects to increase the efficiency of energy generation. The continua- tion of this support provides the rationale for continued Bank involvement. Project Objectives 50. The proposed project would improve the efficiency of power gener- ation at the Kot Addu power station by providing 50X more power per unit of fuel consumed and would assist in meeting future energy demand at least cost to the economy, consistent with the general objectives set by the GOP for the energy sector. More specifically, it would add, by the end of 1990, about 200 MW to the Kot Addu station's and to WAPDA's generating capacity, thus contributing to a reduction of the energy shortage expected to continue into the mid-19909. Finally, it would support the introduc- tion of combined cycle technology for power generation in Pakistan. 1/ A PC-l (Planning Comission Proforma #1) is an internal Government project appraisal document necessary for the Government of Pakistan project approval procedtures. -20- Project Description 51. The proposed project would include: (a) the installation of four heat recovery boilers to be connected to two 100 NW and two 125 MW combustion turbines currently under construction at Kot Addu and two steam turbo-generators of about 100 MW each, together with the associated high- voltage transformers, cooling water supply and auxiliary facilities; (b) the construction of about 104 km of 220-kV transmission lines from Kot Addu to Multan and the addition of connec'ing bays at these grid substations; and (c) consulting services for the preparation of specifications of equipment, bidding documents, evaluation of bids, finalization of designs, and supervision of erection and testing of the combined cycle units. 52. The power generation station at Kot Addu would operate on high speed diesel oil which will be supplied through a 30 km spur pipeline from the terminal station (at Mahmood Kot near Multan) of the Karachi-Mahmood Kot pipeline. The confirmation by GOP that a contract for the construc- tion of the pipeline has been signed would be a condition of effectiveness of the proposed loan. No environmental problems are expected from the operation of the power station at full capacity or from the transportation of fuel for its operation. Project Implementation and Monitoring 53. The project would be executed by WAPDA, which has acquired exten- sive experience in the installation and operation of thermal power sta- tions using steam units and combustion turbines, and associated high voltage transmission systems. However, since the combined cycle technol- ogy is new to Pakistan - the first such station is under construction at Guddu with cofinancing from ADB and USAID - WAPDA has retained con- sultants with experience in this field to assist in the preparation of equipment specifications and bidding documents, the evaluation of bids, the finalization of the design proposed by the selected bidder, and the supervision of the manufacture, erection, testing and commissioning of the equipment. 54. WAPDA has established a project unit solely responsible for the implementation of the proposed project in order to ensure prompt decision- making and effective coordination. Construction would be conducted and supervised by resident engineers assisted by consultants. WAPDA, which will be responsible for the training of staff to operate the facilities, -21- has already started a training program for the operation and maintenance of combustion turbines and steam units at its training center at Faisalabad. Training for the operation and maintenance of the combined cycle equipment will be provided by the equipment contractor. WAPDA will submit quarterly reports covering the work of the consultants, and physi- cal progress. costs, disbursements, and administrative aspects of the proposed project. Annual financial and administrative reports will also be submitted. Project Cost 55. Total project costs including price and physical contingencies (US$53 million) and taxes and customs duties (US$36 million) are estimated at about US$175 million. When interest during construction (US$12 million) is added, the total financing required is estimated at about US$188 million of which about US$102 million (55%) would be in foreign exchange. These estimates are based on December 1985 prices. Physical contingencies, estimated at 7% for equipment and materials and 14X for erection services, would amount to 10.7% of the base cost of the proposed project. Escalation of foreign costs is projected at 3.25Z for FY86, 7Z for FY87, 7.25% for FY88, 7.6% for FY89 and FY90, and 6Z for FY91, while escalation of local costs is estimated at 10% for FY86, 8.5% for FY87, and 7.5% annually for FY88 through FY90, and 6% for FY91, amounting to a total price escalation of 29.2Z of the base cost plus physical contingencies. Project Financing 56. The proposed loan of US$90 million would be made to WAPDA and guaranteed by the GOP; it would finance 88% of the total foreign exchange requirements of US$102.4 million or 59Z of total project costs net of taxes and duties. GOP would provide US$12.4 million in foreign exchange to cover interest during construction and US$10.3 million in the form of a Rupee loan; the remaining US$75.1 million of the local cost requirement of US$85.4 million would be financed from WAPDA's own internal resources. -22- Procurement 57. The following are the procurement arrangements: PROCUREMENT ARRANGEMENTS (US$ million) /a Project Element Procurement Method lb I. Power Station ICB LCB Other Total Preliminary and Civil Works 18.1 18.1 Main Electromechanical 133.4 133.4 Equipment (81.5) (81.5) Auxiliary Electromechanical 2.3 3.3 5.6 Equipment (1.8) (1.8) II. Transmission Lines and Substations Civil Works & Erection 3.5 3.5 Equipment 6.9 6.9 (4.7) (4.7) III. Consulting Services and 2.0 2.0 Technical Assistance (2.0) (2.0) IV. Engineering and Administration 5.9 5.9 Total 142.6 24.9 7.9 175.4 (88.0) (2.0) (90.0) /a Figures in parentheses indicate the amount to be financed by the Bank. 7i ICB: International Competitive Bidding LCB: Local Competitive Bidding Other: Direct negotiation or not subject to commercial procurement (e.g., land acquisition, owner expenses.) 58. All contracts financed under the proposed loan for the supply and installation of equipment would be awarded on the basis of international competitive bidding (ICB) in accordance with Bank guidelines; local -23- manufacturers competing for the supply ot goods under ICB would be allowed a 15Z preference or the applicable duty, whichever is lower. As a result, about 81Z of works, goods and services for the proposed project would be procured through ICB. Bidding documents and reco m_ndations for the award of individual contracts exceeding the equivalent of US$1,000,000 would be subject to prior review and approval by the Bank. Consultants for project engineering, training and technical assistance would be selected and employed in accordance with Bank guidelines. Disbursement 59. The proceeds of the loan would be disbursed over a five year period. This schedule is faster than the standard disbursement profile for thermal generation projects Bank-wide, i.e., five years versus eight; no standard profile is available for thermal generation projects in Pakistan. However, the proposed disbursement schedule is reasonable given: (a) the shorter time required for the manufacture and installation of equipment for conversion to combined cycle operation compared to larger coal-fired stations which feature significantly in the standard profile; and (b) the conversion to combined cycle involving the retrofitting of a station where all infrastrrctural facilities are nearly complete. The faster disbursement schedule also reflects world-wide experience in com- bined cycle construction, WAPDA's project implementation capabilities which have been significantly strengthened under previous Bank and other externally supported projects, and the advanced stage of project preparation. 60. Disbursements would be made against 100X of the CIF cost of directly imported goods, 100% of the ex-factory cost of locally manufac- tured goods, and 100Z of the foreign costs of consultants' services. The Bank has agreed to provide retroactive financing of up to US$ 500,000 to cover expenditures incurred for consultants' services after December 1, 1985 and prior to the signing of the loan. WAPDA'S Financial Position 61. The financial performance of WAPDA's Power Wing improved con- siderably after 1979. During the FY80-84 period both the ratio of current assets to current liabilities and the coverage of debt service from inter- nally generated revenues were satisfactory. Provisional figures for FY85 indicate that performance was generally satisfactory and the overall position remained sound. Furthermore, the actions required to meet the financial performance covenants were being pursued. At the end of FY85, WAPDA's capitalization showed a debt/equity ratio of 50:50 compared to a ratio of 61:39 in FY79. During the five-year period FY81-85, WAPDA has been able to finance an average of about 60Z of its annual capital invest- ments from internal cash generation corresponding to an average rate of return of 16% on histo.ically-valued net assets in operation or 8X on proforma revalued assets. The high level of self-financing was achieved -24- primarily because actual investment amounted to only about 50Z of planned investment. To address this shortcoming, a number of agreements were made with GOP and WAPDA under the Fourth Power Project (Loan 2499-PAX) and the Energy Sector Loan (Loan 2552-PAK). First, a FY86-88 core investment program for WAPDA amounting to Rs 30 billion (US$2.0 billion) was agreed with WAPDA/COP; a comparable CIP of Rs 39 billion has now been agreed for FY87-89. Second, all necessary measures, including tariff increases and annual allocations from the budget, would be taken to ensure that the program is financed. Third, 40X of the agreed investment program would be financed each year from IAPDA's internal cash generation. Fourth, start- ing in FY89, the basis for determining the internal cash generation requirements would be changed from the current retrospective basis to a prospective basis. The announcement of a tariff increase effective July 1, 1986 to enable WAPDA to generate internally at least 401 of its FY87 capital investment requirements would be a condition of effectiveness of the loan. 62. Between FY85 and FY93, gross fixed assets are projected to grow from about Rs 35 billion to about Rs 150 billion, and equity from about Rs 19 billion to over Rs 67 billion; retained earnings are expected to account for 85% of the increase in equity. Over the same period, long- term debt is forecast to increase five fold from about Rs 19 billion to about Rs 99 billion resulting in a projected debt/equity ratio of 59:41 in FY93, which is reasonable for an electric utility. The coverage of debt service by internal cash generation and the ratio of current assets to current liabilities would be satisfactory during this period. Nevertheless, the debt servicing capacity of WAPDA would continue to be monitored. Therefore, the debt limitation covenant, agreed under the Fourth WAPDA Project, is retained for this project to ensure that WAPDA would consult the Bank should it seek to incur new debt that would result in internal cash generation (before debt service and payment to GOP) falling below 1.5 times the debt service requirement. Financial/Commercial Operations 63. WAPDA continues to make satisfactory progress in streamlining and strengthening its financial and commercial operations and in establishing modern accounting and commercial systems; however, there is still room for improving its performance. A critical constraint, especially in the accounting department, has been the shortage of qualified staff to fill key positions. In an effort to strengthen this department, new Accounting Service Rules have been drafted, which in contrast to the existing rules would permit the recruitment of qualified financial personnel from outside the Authority to fill middle and higher level financial positions; these new draft rules are being reviewed for presentation to the Authority for approval. Further, the institution-building work being carried out by WAPDA under Bank-financed projects is being complemented with substantial support under USAID's Power Distribution Project which is providing tech- nical assistance and training on a large scale and over a broad range. -25- Government Arrears 64. Under the Fourth WAPDA Project (Ln. 2499-PAK), the GOP agreed to settle all Government arrears owing to WAPDA on June 30, 1985 by not later than December 31, 1985 and that all future electricity bills would be paid by all government agencies and departments within three months of the receipt of such bills. Despite concerted efforts, GOP has not been able to comply with this covenant. GOP and WAPDA have informed the Bank that the concerned departments are withholding payment of the entire bill because of disputes in some portion of the bills. The Bank has also been informed that since approximately 20% of the amount billed is under dispute, GOP has directed all departments and agencies in arrears to pay all uncontested arrears (approximately 80% of the outstandings) to WAPDA by March 31, 1986. Furthermore, the Finance Ministry has authorized deduction of appropriate amounts at the budgetary source, if the uncon- tested arrears are not paid, in order to clear arrears within three months of the receipt of bills by the beginning of FY87. It is therefore expected that arrears owed to WAPDA by Government departments and agencies will be substantially reduced. Such a reduction is a condition of effectiveness. Audit and Insurance 65. WAPDA's internal audit system needs to be improved and strengthened so that it can fulfill its role as a key and reliable manage- ment tool. Consequently, as agreed under the Fourth WAPDA Project, con- sultants financed by USAID have been engaged to develop a modern internal audit system. 66. The external audit function is performed by the Auditor General of the Government of Pakistan; this arrangement will continue until the new internal audit system is installed and the new accounting system is fully operational so that an informed judgement may be made on the quality of this audit. While the Bank has agreed to this arrangement, it monitors it constantly and has reserved the right to request, should any problems ar:.se, an independent audit satisfactory to it. 67. With respect to insurance, WAPDA operates a self-insurance scheme that is administered independently by a Board of Management with the assistance of actuarial consultants. The Bank has reviewed these insurance arrangements and found them acceptable. Sales 68. Electricity sales by WAPDA have been buoyant, and for the ten year period (FY76-FY85) sales growth has averaged just over 1ll annually. This increase was due to the rising demand for electricity by the industrial sector where growth of real output was significant; strong household and -26- commercial demand fuelled by workers' remittances from the Gulf States; and the decline in electricity tariffs in real terms. The annual growth of sales over the next ten years (FY86-FY95) is projected somewhat lower at about 92, reflecting supply constraints, projected increases in real tariffs and successful conservation efforts. This forecast is used as the basis for assessine projects benefits. Benefits 69. The economic rate of return on the proposed Project is 15.2% based on the measurable costs and benefits. The measurable costs include: (a) the investment in the combined cycle equipment and in the pipeline con- necting the existing pipeline to the power station at Kot Addu; (b) opera- tion and maintenance costs assumed at about 5Z of the capital cost of the equipment; and (c) the average incremental cost for transmission and distribution of about Rs 0.04/kHH. The costs associated with the combus- tion turbines currently being built at Kot Addu are considered sunk and, consequently, are not included in calculation. The measurable benefits include the revenues associated with the incremental sales attributable to the extra generation that would be provided by the combined cycle equipment. The return on the investment is high reflecting the fact that the proposed project was designed to take advantage of investment deci- sions already made by generating extra power using the same amount of fuel as was otherwise planned. Risks 70. The proposed project presents no unusual risks since the installa- tion of combined cycle units requires limited ivil works and little assembly on site. Normal risks associated with fires, explosions, etc. would be covered by the contractors during construction and by WAPDA, after commissioning, through it own insurance arrangements. PART V - RECOMMENDATION 71. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank, and I recommend that the Executive Directors approve the proposed loan. A. W. Clausen President Attachments Date: May 5, 1986 -27- Annex 1 T S LA . I 3A Page 1 of 6 PAKtSrAN - SOCXAL INDICATORS DATA SmelT IPAKSTAN REFERENCE GUloPS (WgIGlIrED AVERAGES) /A MOST CHoST ECENT ESTSKATE) lb z1970L RECENT LOW INCOM0 IDDLE TNcoE 196OLb 1970 Ee57UTiMASb ASIA * FACIFIC ASIA 4 PACIFIC ADJUSTED ENROLINENT RATIOS P1UZMAT TOTAL 30.0 40-0 44.0 92.6 100.7 MALZ 46.0 57.0 57.0 105.5 104.4 FL3AL1 13.0 22.0 31.0 79.3 97.2 SEUNDARYs TOTAL 11.0 13.0 14.0 31.3 47.8 IAZ 18.0 20.0 20.0 40.a 50.6 FENALE 3.0 5.0 8.0 21.9 44.6 VoCATIOlIAL CZ Ot SECIDAKY) 1.0 1.5 1.7 3.2 18.4 ruPrd-TuAR RATIO PRIMA 39.0 41.0 36.0 36.0 30.4 sECOND 24.0 20.0 18.0 17.4 22.2 PASSENGER CARS/THOUSAND POP 1.5 2.6 3.4 LK 0.9 10.1 RADIO RECEIVERS/TBOSAND PO 6.0 17.1 74.6 129.8 172.9 TV E POP .. 1.6 11.5 19.8 58.5 KEUSAPER (DAILT GENERAL INTEREST") CRaJLATIoI PEI T1USAND POPUZATON 13.2 .. 19.4 25.7 65.3 C UIN ANIUAL ATENDANC/CAPITA 1.7 3.0 II 2.2 /c 6.0 3.4 TOTAL LABO FORCE (noUS) 14448.0 17364.0 25325.0 PmEALz (PERCEN) 8.S 9.3 10.6 33.2 33.6 AGRCULSURZ (PERcENT) 61.0 59.0 57.0 69.6 52.2 DUSTRY (PECENT) 18.0 19.0 20.0 15.8 17.9 PARTICIPATION RATE (PERCENT) TOTAL 31.5 28.7 28.2 41.9 38.9 MALZ 55.2 50.4 48.3 53.6 50.5 FEKALE 5.7 5.5 6.3 29.1 Z6.8 SCOIfC DEPENDENCY RAIO 1.5 1.7 1.7 1.0 1.1 *^"3X D XS_EE10 PERCENT OF PRIVATE INCME DcEGEVED BY HIGHEST 5Z OF RWSENOLDS 20.3 Jk 17.8 WcHEST 20 OF HOUSEHOLDS 45.3 Tk7 41.8 .. .. 48.O LOUWSr 202 OF HSEOLDS 6.4 Tk 8.0 .. .. 6.4 LOWEST 4n OF HUSEOWLDS 17.5 7i 20.2 .. .. 15.5 ESTIumATD ABSOLUE POVERTY INCME LEVL CUSs PER CAPIA) URBAN .. 68.0 /I 176.0 /c 133.9 URAL .. 47.07r 122.07oT 111.6 151.9 ESTDIATED EATIVE PovERTY INcoE LEVEL (u5 PER CAPITA) VURBA .. 34.0 /S 88.0 Ic .. 177.9 RURAL .. 22.0 7?i 5s.o 7T 61.7 164.7 ESTMATD POP. aBLOu ABsoLUTE POVERTY DICOME LEVEL (2) URBAN .. 42.0 /S 32.0 /c 43.8 23.5 IDEAL .. 43.0 7i 29.0 7T 51.7 37.8 .NO AVAILABLE NOT APPLICAL N OT E S -/ The group awerae for *ech lndicator are population-VeIghted arSth_tlc mean.. Coverage of countries inog the Indicator depends an availability of data and Isn not uniform. lb Unlees otberwlse noted. "Data for 1960" refer to any year between 1959 and 1961; "Data for 1970" between 1969 and 1971; and data for 'Moot Recant Estimate" between 1981 and 1983. /c 1979; /d 1968; 1. 1977; If If regltered. not all practesing in the country; /1i 1980; /h 1973; /I 1972r; 11 194.8 .JUNE, 1985 -28- Annex 1 T A b L F A Page 2 of 6 P43(157 - SOL mNdCAOmB DATA game PAKISTAN UnC Gom (wEITED AV£A0) lSlT (MST UNW TLHAT) lb ItL LWi b LUtH NICOLE rNCfl IS. (UHI 197UUb suTrAb abl6 YrAaFlC ASIA * rACIFIL AR.(T_AIID Sll. El) TOTAL 803.9 BU3.9 03B.. AGRICULTUAL 227.5 243.3 253.0 GVP MR CUITA (3 .. .. 39D.0 27U.) Iull.I nCT CNSUIMPTION MM CAPITA CKILOOS-MS OF OIL EQUIVALENT) 9e.0 £39.0 179.0 253.1 300.5 vOnUon A VITAL STAT esIC POPULATlON,KIlnYEAR (TDL'SAIDS) 435851.0 60449.0 89729.O URBaN POPULAT0oS (: UF TOTAL) 22.1 24.9 29.1 22.3 35.9 POPULATION PWECTIONS POPULATIO In TAR 2000 CHILL) 133.1 STATIONAN POLATION (MILL) 330.0 POPULATION ICKElUTU 1.9 POPULATION DENSITY PER sq. I. 57.0 75.2 111.6 173A 386.Y PE SO. IRL. ASRI. LAND 201.5 248.4 344.4 333.3 1591.2 POPULATION ArE STRUCTURE CI) 0-14 U S 43.6 '.2 43.7 36.3 a.2 35-64 Tts 3l.8 50.5 13.2 39.4 37.7 65 AND AOE 4.3 3.1 2.A 6.3 3.S POPULATION CR01I71 lATh CI) TOTAL 2.3 2.s 3.0 2.U 1.3 URBAN & i 4.0 4.4 4.1 4.1 CRUDE BIRTH PATE (PER TB0US) 48.6 46.6 42.0 27.5 3U.1 CRUDE DEADI RATE (P TIUS) 23.5 19.4 14.9 10.2 V.4 CROSS IR0OUCTXON tATE 3.4 3.4 2.8 1.7 1.9 rANELY PLANwS. ACCEPTORS. ANNUAL (TROUS) .. 1908.1 1244. It USERS (7 OF MARRIED WOMEN) .. 6.0 Id 14.3 49.4 5.5 FM AND mora( INDEX OF FOD PRto. PER CAPITA (1969-71-I1O) 89.0 102.0 107.0 116.0 124.4 PER CAPITA SUPPLY OF CALORIES (S OF REQUIdIHENTS) 77.0 95.0 IU4.0 16.3 115.7 PROTEINS (CGRA6 PQ DAY) 53.0 58.0 61.0 60.1 60.3 OF WNICK ANIMAL AND PULSE 23.0 22.0 20.0 I1 14.4 14.1 C1t1D (ACES 1-4) DEATH RATE 2&.9 21.1 10.0 7.3 7.2 LIFE EXPECT. AT IRTN (YEARS) 43.1 *6.0 50.2 bO.5 bU.b INFaNT MM. RATE (PER ThmOS) 161.3 143.0 119.0 b9.2 44.9 ACCESS TO S9FE WATER (traP) TOTAL .. 21.0 34.b &a.2 *b.u URAN .. 77.0 72.0 77.2 57.b RMRAL .. 4.0 20.0 34.6 37.1 ACCESS TO EXICRETA DISPOSAL (2 OF OPULATION) TOTAL 3.0 13.1 7.8 3X.1 URBAN .. 13.0 2.0 Z8.8 52.9 RURAL .. .. 2.0 3.5 44.7 POPULATION PER PHTYSCIA 5400.0 4300.0 ft 3480.0 3318.0 7751.7 POP. PEA NURSINC PERSON 38110.0 1ns0o.o 7T 5820.0 4690.7 2464.8 POP. PER HOSPITAL BED TOTAL 1790.0 1.60.0 1560.0 lc 1039.2 1112.1 URSAN 310.0 630.0 710.0 7- 299.1 631.4 RURAL 22350.0 12480.0 liibu.O 7; 6025.2 2596.9 ADtISSIONS PC HOSPITAL RE0 .. .. .. 52.3 41.1 AVERAGE SI1E OF NUSE1OLO TOTAL 5.4 5.3 b.1 Ic URBaN 5.b .5 0.4 Ic. RURAL 3.' 5.2 b__ t. AVEYAGE NO. OF PERSONSfR300K TOTAL 3.1 2.8 In URA 3.1 2.7 7W RURAL 3.1 2. lb PERCENTACE OF DWELLINCS WITH ELECT. TUTAL .. 17.9 Ih URBA .. 54.4 Ih. RURAL .. *.97. -29- ANNEX I page 3 of 6 DunmONS OF SOCAL. INDICATORS NUt Alhough d_ edatar drawn from soueaguierallyjadlpd the moat autbnti nd sAlfble, it sould also be noted that they may nmt be mienamaonally compuable bme of the lIck of tandaubed dleitos and conept usd by different countes mu collecung the data. The datm are. nonethkue usful to decribe orderofmgOput indicatetrends ad charac mnin major differec bete countnm. The re roupsa(I)thesamomumygupofthebjoc country and (2) coumry group with somewhat geaveragecomethan te coumtry group of the cowattY(eocpt for -High Incoe Oil Eapote group whew "Middle Income NrthAfri and Middle EEst ischosen beaue ofstronr oioe.d.atw llities) to the seeam roup data tbe averags ase population weigbhted arithmetic m-us for each indiator and shown only when majonty ortbe comutric in a group ha dat for that indicaor. Sinm the coverage ofcmoies among the indicaton depends on the avrdtablity of data and is not unione. cautin mut be exeied in ting avea one indicuor to another These avcraes a only useful i companng tie vlue oone indicator ala time among the comtry and re gro. AREA (thousand sq.km.) Crud Bik Rate (per tksazd-Number of live births in the year Tol-Total surface area comprising land are and inland waters; per thousand of mid-year population; 1960. 1970. and 1983 data. 1960. 1970 and 1983 data. Cruk Detk Rate (per tkamnd)-Number of deaths in the year Apieamlwal-Estiinate of agricultural area used temporarily or per thousand of mid-year population; 1960. 1970. and 1983 data. permnently for crops. pastureL market and kitchen prdens or to CGrss R eproa Rate-Averge number of daughters a wommn lie rallow. 1960. 1970 and 1982 data. will bear in her normal reproductive period if she experiences present age-specific fertility rates; usually five-year averages ending (NP PER CAPITA (USS)-GNP per capita estimates at current in 1960. 1970. and 1983. market price. calculated by same conversion method as World si P&ulr-Acer$s. Asua (rkamraniir-Annual num- Reek Atlas (1981-83 basis); 1983 data. ber of acceptors of birth-control devices under auspices of national ENERGY CONSUMPIlON PER CAPITA-Annual apparent farnily planmng program. consumption of commercial primary energy (coal and lignite. FUam1y Plawalia-Users (pert m fserfkd aen)-The percen- petroleum, natural gas and hydro-. nuclear and geothermal clec- tage of married women of child-bearing age who are practicing or tricity) in kilograms of oil equivalent per capita; 1960. 1970. and whose husbands are practicing any form of contraception. Women 1982 data. of child-bearing age are generally women aged 1549. although for some countries contraceptive usage is measured for other age POPULATnON AND VITAL STATISTICS groups. Ibra FlpxSar Mid. Ye-r Y tew (ea.ss)-As of July 1: 1960. 1970. FOOD AND NUTRION and 1983 data. gInx of Food Prodat.n Per Capi (1969-l 0 lOO) -Index of per u,rb_ Popadwbw (erc ef reatl)-Ratio of urban to total capita annual production of aN food commodities. Production population; different definitions of urban areas may affect compar- excludes animal feed and seed for agriculture. Food commodities ability of data among countries; 1960. 1970. and 1983 data. include primary commodities (e.g. esuprcane instead of sugar) - # _ PI'eton which are edible and contain nutrients (e.g. coffee and tea are fopslatin in year 2000-The projection of population for 2000. excluded); they comprise cereals. root crops. pulss. oil sceds. made for each economy separately. Starting with information on vegetables, fruits. nuts. sugarcane and sugar beets. livestock. and total population by age and sex, fertility rates, mortality rates. and livestock products. Aggregate production of each country is based international mnigration in the base year 1980. thces parameters on national average producer price weights; 1961-65. 1970. and were projected at five-year intervals on the basis of generalized 1982 data. assumptions until the population became stationary. Pr Caita ispy of Calorier (peent ofreqsirensearsj-Comput- Statinary population-Is one in which age- and sex-specific mor- ed from calorie equivalent of net food supplies available in country tality rates have not changed over a long period. while age-specific per capita per day. Available supplies comprise domestic produc- fertility rates have simultaneously remained at replacement level tion. imports less exports. and changes in stock. Net supplies (net reproduction rate- I). In such a population. the birth rate is exclude animal feed. seeds for use in agriculture. quantites used in constnt and equal to the death rate. the age structure is also food processing. and losses in distribution. Requirements were constant and the growth rate is zero. The stationary population estimated by FAO based on physiological needs ror normal activity size was estimated on the basis of the projected characteristics of and health considering environmental temperature. body weights. the population in the year 2000. and the rate of decline of fertility age and sex distribution of population. and allowing 10 percent for rate to replacement level. waste at household level. 1961. 1970 and 1982 data. Population Momentum-ls the tendency for population growth to Per Caj'ka Supply of Proein (gro per dafy)-Protein content of continue beyond the time that replacement-level fertiity has been per capita net supply of food per day. Net supply of food is defined achieved; that is. even after the net reproduction rate has reached as above. Requirements for all countnes established by USDA unity. The momentum of a population in the year r is measured as provide for minimum allowances of 60 grams or total proteon per a ratio or the ultimate stationary population to the population in day and 20 grams of animal and pulse protein. of which 10 grams the year r. given the assumption that fertilty remains at replace- should be animal protein. These standards are lower than those of ment klvd from year t onward. 1985 data. 75 grams of total protein and 23 grams of animal protein as an pi.ku Desi-,y average for the world. proposed by FAO in the Third World Food Per sq.kan.-Mid-year population per square kilometer (100 hec- Supply; 1961. 1970 and 1982 data. tas) of total area; 1960. 1970. and 1983 data. Per Capitas otveu Supply Fom Am oS ei and Nbc-Protein supply Per sqkm. agricaduhral land-Computed as above for agncultural of food derived from animals and pulses in grams per day; 1961-65. land only. 1960, 1970. and 1982 data. 1970 and 1977 data. Populcia. Age Seruetre (percene)-Children (0-14 years). work- Chid (ages 1-l DeatA Rare (per tkoasamd)-N umber of deaths of ing age (l5-64 years). and retired (65 years and over) as percentage children aged 1-4 years per thousand children in the same age of mnid-yer population; 1960. 1970, and 1983 data. group in a given year For most developing countries data derived P1palatiaa Growth Rae (prcem-totaL-Annual growth rates of from hfe tables: 1960. 1970 and 1983 data. total mid-year population for 1950-60. 1960-70. and 1970-83 HEALTH Aspalsi.ir Growt Rare (pereent)rj-whn-Annual growth rates Le Expetancy at Birth (years-Number of years a newborn of urban population for 1950-60. 1960-70. and 1970-83 data. infant would live if prevailing patterns of mortality for all people -30- ANN I page 4 of 6 at the time of of its birth were to stay the same throughout its life; Aapreacher /rtio - primry. and secondaru-Total students en- 1960. 1970 and 1933 data. rolled in primary and seconday leveb divided by numbes of Infaw Movet Rae (per t*asaad1)-Number of infants who die teachers in the corresponding vels. before reaching one year of age per thouand live births in a given year; 1960, 1970 and 1933 data. CONSUMPTlON Acces a. SAO* Wde (pureeO qf pepdaleuj-tEItaL d1b11, md Pasgr Can (pr shumd pepubdenj-Passenger cars com- runal-Number of people (total, urban, and rural) with reasonable prim motor cars sating les than eight persons; excludes ambul- accss to safe water supply (includes treated surface waten or anca. henrses and military vehicles. untrted but uncontaminated wter such as that from protected Rilbo RecWvr (per themd pepularle)-Ail types of receiver borehole sppngs and snitary wells) as percentages of their respec- for radio broadcasts to general public per thousand of population; tve populauons. In an urban area a public fountin or standpost excludes un-licensed receivers in countrie and in years when located not more than 200 meters from a house may be considered registration of radio sets was in effect; data for recent yean may as being within reasonable access of that house. In rural areas not be comparable since most countries abolished licensing. resnable acces would imply that the houewife or members of the houselhold do not have to spend a disproportionate part of the day tv gram lper thouandpopulatio;V rexcluvs unor brondcase in fetching the ramily s water needs. to genral public per thousand population; excludes unlixrusd TV ine reching the f Ditily's water neds ppreceivers in countries and in years when registration of TV sets was Access ro Excreta Disposa (pefrent of popxAstaxi)-4omal, urban, in effec. and rural--Number of people (total, urban, and rural) served by exscreta disposal as percentages of their respective populations. Newspw Circulto (per 'hem -Sdhpepuaile.-Shows the aver- Excteta disposal may indude the collection and disposal. with or age cirulatiton of "daily geneal interest newspaper." defined a a without treatment. of human excreta and waste-water by water- periodical publication devoted primarily to recording general news. borne systems or the us- of pit privies and similar installations. It is considered to be "daily' if it appears at least four times a week. Popudatian per Physiian - - Pbpulation divided by number of prac- C in.. Annua Attendae per Cita per Yea-Based on the tising physicians qualifiel from a medical school at university level. number of tickets sold during the year. including admissions to Populaion per Nursin Person- Pbpulation divided by number of drive-in cinemas and mobile units. practicing male and femna graduate nurses. assistant nurses. practical nurses and nursing auxiliaries. LUOR FORCE Populacer HoPser oi Bed-luralban ad ra-population Total Labo Foe (thousaidu)-Economically active persons. in- (total. urban. and rural) divided by their respective number of cluding armed forces and unemployed but excluding housewives. students. etc.. covering population of all ages. Definitions in hospital beds available in public and pnvate. general and specialized vrus cou enot coparabk 16 a 97 ands. data. hospitals and rehabiltation centen. Hospitals are establishments vanous countries are not compambk 1960.1970 and 1983 data. permanently staffed by ai least one physican. Establishments prov- Fnamk le(percmnt-Female labor force as percentage of total labor iding principally custodial care are not included. Rural hospitals. force. however. include health and medical e".. *; not pernanently staffed Agriculture (percentJ-Labor force in fanming, forestry, hunting by a physician (but by a medical assistant. nurse. midwife. etc.) and fishing as percentage of total labor force; 1960. 1970 and 1980 which offer in-patient accommnodation and provide a limnited range data of medical facilities. Indury (percearn-Labor force in mining. construction. manu- A dlussieu pe Hospirtl Bed-Total number of admissions to or facturing and electricity. water and gas as percentage of total labor discharges from hospitals divided by the number of beds. force: 1960. 1970 and 1980 data. Awrieaiem Rat (percemui-eeea( make, audjm&mk,ricipation HOUSING or activity rates are computed as total. umale and female labor force Av-rage Size of HoMweld (persons pa bouseohedi,-af. uba, as percentages of totaL male and female population of all ages andnral-A houshold consists of a group of individuals who share respectively; 1960. 1970. and 1983 data. These are based on ILO's living quarters and their main meals. A boarder or lodger may or participation rates rflecting age-sex structure ofthe population. and may not be included in the household for statistical purposes. long time trend. A few estimates are from national sources. Average Number of Person per Roont-toel, urla. and rural- Econoniic Dependeny Ratio-Ratio of population under 15. and Average number of perns per room in all urban. and rural 65 and over. to the working age population (those aged 15-64). occupied conventional dwellings. respectively. Dwellings exdude non-permanent structures and unoccupied parts. INCOME DISTRIBUTION Percenrage of Dwelings with mair l n rural- P,erentage of Total Dipoal lac.. (bet 1 cas ad kInd)- Conventional dwellings vwth eecicity in living quarters as pcrcen- Accruing to percentile groups of households ranked by total house- tagc of total. urban. and rural dwellings respectivelyv hold income. EDUCATION POVERTY TARGET GROUPS .44usred EorobeUnt Ratios The following estimates are very approximate measures of poverty Prunarr school - orel. male and frmale--Gross total. mae and lvels, and should be interpreted with considerable caution. femnale enrollment of all ages at the primary level as percentages of Esri_aed Abslue Povery l1cew Lee (USl per capia)-arbau respective primary school-agc populations While many countries and rural-Absolute poverty income kvel is that income level consider pnmarv school age to be 6-11 years. others do not. The below which a minimal nutritionally adequate diet plus essential differences in counmrv practice in the ages and duration of school non-food requirements is not affordable. are reflected in the ratios given For some countries with universal Estimaed Relaie Poverty Im e Lewvd e USS per acpis)-cban education, gross enrollment may exceed 100 percent since some and rural--Rural relative poverty income level is one-third of pupils are below or above the country's standard pnmary-school average per capita personal income of the country. Urban levd is age. derived from the rural level with adjustment for higher cost of Secondiry school - total. mae and fiemale-Computed as above: living in urban areas. secondary education requires at least four vears of approved pn- Esnsated Populaie Below Absolute Povery cew Leed (per- marv instruction; p-ovides general. vocational or teacher training ceat-urban ad rural- Percent or population (urban and rural instructions for pupils usually of 12 to 17 years of age: correspond- who are -absolute poor." ence courses are generally excluded. Vocational Enrollnirn (percent of secondarij --Vocational institu- Comparative Analysis and Data Division tons include technical. industrial. or othcr programs which operate Economic Analysis and Projections Department independently or as deparnments of secondary institutions. June 1985 -31- Pag 5 oi 6 Cl t n2 c D1963, 31310 I. n L1 millZ 16170-1247l 1 7-ZIMIIL M1S12 ISB2U I5M3 19418I Wiat market Price. 33.49 100.0 3.5 7.1 4.3 7.4 4.2 7.1 Caee dimetic iuveetweet 5.41 16.2 -5.5 4.1 16.5 9.6 3.4 10.2 ~oe matiousl mviug 3.74 11.2 -2.1 6.7 6.9 24.9 4.5 4.9 cOm_t accoet baleane -1.65 -4.9 . . Iepont of pods, N1IP 3.24 9.7 -3.5 7.3 -5.6 27.5 -3.2 -1.2 luote of goods, 7.76 23.2 -7.1 5.5 0.7 1.1 22.0 7.1 GM, LAMPCKA OUPUT. ua = cU2/83 Valu Added .LIhrF V. e la lNlUh .1i 111Am JL Au JL Agriculture 6,606 24 14.1 51 469 47 X_dstrYj 7.9 29 5.2 19 1,536 153 lerices 1303 _1 La i 1-Z& 1: Total/Avere 27,678 100 27.6 100 1.003 100 Cutrl _aevnt /a Wdrml _ovtm (sh billieo) 2 o COF ( 41 a 1885 a 1 1"0MSI1-1"W5 1 = 1 51-1"185 Currot reeLptc 77.3 16.2 16.5 61.0 12.6 125 C-rrent eXPediture. flj 1 1 7. A. 0 ILA curet eurplue -14.6 -3.0 -1.2 -10.0 -2.1 -0.5 Capital peditures & 39.1 8.2 6.9 33.5 7.0 7.6 Externl ammieteoce (met) 14.6 3.1 3.5 1.8 3.1 3.5 MutT. C*IT AND PRICES 1975176 1976177 197717 17817 1970 81 IM1102 1m2u8 19mU34u 194 (te billla) No7y and qaci wommy L 41.6 51.7 63.7 76.6 94 106.6 116.5 146.0 163.3 132.6 lek credit to public sector 2S.1 36.6 43.5 54.9 61.8 70.9 79.7 95.5 105.6 126.6 lek credit to private sector 17.8 23.0 26.5 30.5 36.2 42.1 51.8 62.8 78.3 92.2 (percenae or linden ar) iMoey nd quei smny as Z of CD3 31.5 34.6 36.7 39.0 38.3 37.0 35.1 40.1 38.7 38.2 C"_omr price inde (l109f70.100) 229.4 256.7 277.0 295.6 331.9 375.4 403.9 413.1 462.0 479.3 Au_1l percentag chlnpe in: Comemr price index 8.6 11.9 7.9 6.7 123 13.1 7.6 3.5 10.5 3.7 lak credit to public mctor 32.5 36.2 18.8 26.2 12.6 14.7 12.4 19.6 10.6 21.S Nek credit to private sector 11.2 29.2 15.2 15.1 15L7 18.2 21.0 21.2 26.7 17.0 LI lamed an wVrld lek Atee ntbodology and calculated at m aveage of 196042 prices and euraue rates. All other converSiOS to dollre in thie table are at theverape encbeeg rate prevailin durin the period covered. jc rvisionalL k Projection for 19U3/86 Doea not include elap1oyed labor fore. jj Includes maufacturing. cg. etruction ad electricity and ee. L Ccmeolidated revene em expenditure. of Federal MA Provincdl Co_erments (excluding Federal-Povincial Coernment treaf er). . ieed budgt data. La 3xcludin Principal repaYemts of foreiga 1-a. Capital expeeitue ae defind in gevezAneut budtet includ certain curreot _zpmdituree albo. Not applicable. Not awailabLe. J _nay 1986 -32- Paw. 6 of 6 UAuCx or IlTUtr BEUIITS (AVUACIU 19m16-19Ut=S 1980181 198111|2 1932183 1963/U4 1934185 us$ million z (VB3 million) Exports of goods, Ws 3,401 3.052 3.416 3.,39 3.2U Raw Cotton 293.1 1L.5 lport. of Bodmb. m 6,466 j,il7 6458 7 ffo 7.028 Cotton yarn 225.6 J.7 Remource ap (deficit - -) -3,005 -3,627 -3,172 -3.619 -3.787 Cotton cloth 292.6 11.3 lice 377.8 14.6 Intenet pqsmets -357 -453 -421 -477 -462 All other ce_oditio 1J3919 5L9 Worker.' r_itttneee 2.097 2,224 2,687 2.737 2.400 Totel 2,561.4 100.0 Otbhr factor paymnts (net) 274 321 195 359 19S net tramfore Ralance on curren account -991 -1,535 -551 -1.000 -1.651 UTIUL DEW, DZCEBt 1982 Direct foreig to ent . .. .. . . Net XLT borrowing Us$ milli Disbursementa 956 1,102 1,301 1.241 1.219 Amortieation -516 -492 --=JR .569 -65o Public debt. including guranteed 9.95129 Sub-total 440 610 915 679 561 Vo-guaramnte.d private debt - Trnectione ith D'DW 31i 358 413 -1 -64 Total outstanding and diebureed 9.952L9 Other items n.i. eiS 546 31B 285 142 69 Increase in resve (- -310 249 -1,102 10 -1,085 DIST S31c1C RATIO 101 1981/82 k Grose reserves (end year)Ia 1.058 W09 1,911 1.731 6U I Petrolem importa LL 1,535 1.710 1,610 1.423 1.425 Public debt. including guaranteed 19.7 Petrolem mparte Li 126 194 77 40 34 Non-guaranteed privato debt Total 19.7 RATE 0C 1uCWaJ IN3IIDA LDNUC t(Decmber 19832) (S million) Throus Way 11. 1S72 Fro May 12 1972-lab. 15. 1973 l M S551 - R. 4.7619 05S1 - Ra 11.00 Outetanding end diabured 357.4 1,256.2 RB I - US30.21 Ra I - uss0.09 Undiabureed 242.9 6178 Outetandin including undisbureed 600.3 1,874.6 Fro Feb. 16. 1973-Jan. 7, 1982 From July 1981-June 1982 1I From July 1982-Juse 1983 lj From July 1983-Jue 1984 /1L Pro July 1984-Jnme 1985 us1 I - R. 9.90 USSI - Rs 10.55 0SS1 - Re 12.75 SSI - Rs 13.50 USSI - as 15.27 as 1 - SSC.10 Rs I - USSQ.095 Rs 1 - DSS0.078 Rs I - UBSO.074 Rs I - es40.065 & Provisional :b Monetary taitiet of Pakistan have been fully adjusted for demonetized notes. devaluation and revalution of the rupee. etc. * frs. June 30, 1975. Data for 1974/75 from State Bank aources are not strictly comparable with DIV amtinetes for earlier yars. is Including Truat Fund. Id Including net sbart-tem borrowing and errors and aismaons. La Excluding gold reserves of about 1.B million troy ounces. Li Cnrde and derivativee. g lloe-uaranteed private debt service is negligible. lb Ratio of actual debt service to exports of goods. non-factor nrvicee and vorker' remittancees; debt servica does not include short-term or IFP chargee Li Effective Janury S 1982, the rupee is to be managed with reference to a weighted beaket of currencies. The average ezchange rate sbown is wim-a-via USS for the period shown. Not available. Jaury 1986 -33- AMn II Page 1 STATUS OF MANK GROUP OPERATIONB IN PAKISTAN A. STATEMNT F OPM LOANS AND IDA CREDITS (as of March 31. 1986) /c_ A Lk (Us$ million) Lomn/ (Amount net of cacellationm) Credit Fiscal Undis- Number Yeax Prpuaoe ink ID buried 104 loans and credita fully disbursed 813.4 1,145.15lf 1366T 1977 Punjab Livestock Development - - 2.1 754 1978 Salinity Control & Reclamation - 70.0 66.1 877 1979 Salinity Control A Reel. (Mardan) - 60.0 47.2 968 1980 Third WAPDA Pover - 45.0 2.3 974 1980 Third Highway - 50.0 10.4 1109/c 1981 Vocational Training - 25.0 7.0 1157lc 19L1 Grain Storage - 32.0 14.B 11S8Jc 1981 Agricultural Research - 24.0 14.7 1163/c 1981 On-Farm Water MNagement - 41.0 11.7 1186/c 1982 Industrial Development (IDMP II) - 30.0 2.8 2122 1982 Fourth Telecommunication 40.0 - 9.3 2172 19S2 Fertilizer Industry Rehabilitation 38.5 - 17.1 2247 1983 Reservoir Maintenance Facilities 10.2 - 10.0 2305 1983 Agricultural Dev. (ADMP V) 10.0 - 5.4 2324 1983 Fifth Sui Northern Gas Pipelines 43.0 - 32.7 1239kc 1982 Irrigation Systems Rehabilitation - 40.0 19.8 1243/e 1982 Baluchistan Minor Irrig. & Agr. - 14.0 11.4 1256k 1982 Technical Assistance - 7.0 2.5 1278kc 1982 Eleventh Railway Project - 50.0 35.2 1348ke 1963 Lehore Urban Development - 16.0 15.5 1350kc 1983 Population - 18.0 13.2 1355kc 1983 Coal Engineering - 7.0 5.9 1374kc 1983 Karachi Water Supply - 25.0 19.4 1375/C 1963 Fourth Drainage - 65.0 66.3 1380kc 1983 Agricultural Development CADBP V) - 47.8 5.1 2218 1983 Refinery Engineering Project 12.0 - 8.4 2351 1984 Petroleum Exploration 51.5 - 36.5 2374 1984 Second Toot Oil and Gas Development 30.0 - 18.3 2380 1984 Industrial Investment Credit 50.0 - 41.7 1439k 1984 Industrial Investment Credit - 50.0 36.0 146Ilc 1984 Integrated Rill Farming Development - 21.0 22.4 1480/c 1984 Second Technical Assistance - 7.0 7.0 1487/c 1984 Comeand Water Management - 46.5 47.1 1499kc 1984 Second Small Industries - 50.0 39.5 15321c 1985 Left Bank Outfall Drain - Stage 1 - 150.0 168.0 1533kc 1985 Baluchistan Agricultural Extension - 8.3 8.6 2499 1985 Fourtb WAPDA Pover 100.0 - 100.0 1602/c 1985 Second Primary Education - 52.5 56.8 1603kc 1985 Second On-Farm Water Management - 34.5 39.6 2552 1985 Energy Sector Loan 178.0 - 177.9 2553 1985 Petroleum Resources Joint Venture 55.0 - 39.4 2556 1985 Fifth VAPDA Pover 100.0 - 100.0 2648/d 1986 Industrial Investment Credit 148.0 148.0 16464/ 1986 Industrial Investmnt Credit 2.0 2.0 1652/d 1986 Karachi Special Development 70.0 70.0 Total 1,679.6 2,303.8 1,615.1 of vhich has been repaid 519.7 49.3 Total nov outstanding 1,159.9 2,254.5 Amount sold 30.0 of which hba been repaid 23f9 6. Total nov held by ank and IDA: 1J153.8 2 254.5 Total undisbureed 746.8 868.3 1.615.1 /a The status of the projects listed in Part A is described in a separate report on all Bank/IDA financial projects in execution, which is updated twice yearly and circulated to the Elxecutive Directors on April 30 and October 31. Lb Excludes the disbursed portion of loans and credits wholly or partly for pro- jects in the former East Pakistan which have nov been taken over by Bangladesh. /c IDA Credits under the 6th and 7th Replenishment are denominted in SDRs. The principal and non-effective Credits are shown in USS equivalent at the time of negotiations. Disbursed unts are computed at the exchange rate applicable on the transaction dates. Undisbursed mounts are valued at the exchange rate applicable an the dete of this statement. /d Not yet effective. -34- AMInE II Page 2 B. STATIZE IT OF INC IUYSTNTS (as of March 31. 1986) Fiscal Acount In US$ Million Year Obl&mx Type of susiness los Kauitv Total 1958 Steel Corp of Rolled Steel Pakistan Ltd. Products 0.63 - 0.63 1959 Adaujee Industries Ltd. Teztiles 0.75 - 0.75 1962- Gharibwal Cement 1965 Industries Ltd. Cement 5.25 0.42 5.67 1963- PICIC Develop mt 1969- Fiancin - 0.52 0.52 1975 1965 Crescent Jute 5 Products Teztiles 1.84 0.11 1.95 1965- 1980- Packages Ltd. Paper Products 19.25 0.84 20.09 1982 1967- Pakistan Paper 1976 Corp Ltd. Paper 5.38 2.02 7.40 1969 Davood Hercules Chemicals Ltd. Fertilixers 1.00 2.92 3.92 1979 Milkpak Ltd. Food and Food Procesing 2.40 0.36 2.76 1979 Pakistan Oilfields Ltd. and Attock Chemicals and Refinery Ltd. Petrocehmicals 29.00 2.04 31.04 1980 Fauji Foundation Wbven Polypropy- lene bags 1.78 - 1.78 1980 Predier JBord Mills Ltd. Particle Board 2.70 - 2.70 1981 Babib Arkady Food and Food Processing 3.15 0.16 3.31 1982 Asbestos Cement 4.02 - 4.02 1983 Pakistan Petroleum Chemical and Ltd. Petrochemicals 102.16 1.56 103.72 1985 National Dew. Money and Leasing Corp. Capital Market. 4.64 0.37 5.01 1986 Mari Gas Chemicals and Petrochemicals 44.63 - 44.63 Total Gross Commitments 228.58 11.32 239.90 Less: Cancellations, Terminations, Repayments and Sales 165I0Q 0.38 165.47 Total Comitments Now leld by IFC 63.49 10.94 74.43 Undisbursed (including participants) 49.88 0.51 50.39 -35- Annex III PAKISTAN XOT ADDM CONBINED CYCLE POWER PROJECT SuguleMentary Prgiect Data Sheet Section I: Timetable of Key Events (a) Tine taken to prepare the project: Four months. (b) Agency which prepared the project: WAPDA. (c) Date of first presentation to the BDank, and date of the first Bank mission to consider the project: September 1985; September 1985. Sd) Date of departure of Appraisal Mission: September 20, 1985. Ce) Date of completion of negotiations: March 26, 1986 Cf) Planned date of effectiveness: September 1986 Section II: Special Bank Implementation Actions: None Section III: Special Conditions: None The following would be additional conditions of effectiveness: (i) approval by the Executive Committee of the Pakistan National Economic Council (ECNEC) of the PC-1 document for the project (para 48); (ii) the announcement of a tariff increase effective July 1, 1986 vhich would enable WAPDA to generate internally at least 40% of its FY87 capital investment requirements (para 61); (iii) substantial reduction in Government arrears owed to WAPDA (para 64); and (iv) the confirmation by GOP that a contract for the construction of the Mabmood Kot to Kot Addu fuel pipeline has been signed (para 52). LAHORE RING u s /, ~ CHINA mmh.w % b t SHAm KAKu Area of Map~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~imam m w~ ai Z AFOPANISTAN asmYSW VW bm"W* ~~~~ILAKHPAAKITA ROAD of ICLASAI NISI4ATLAHAPATA It b TaN.wA#ulrjn - *Q~~~~~~~~~~~~~~~~~~~~~~~~~MtoL CHINI %~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~LA J~151LIIA ROA RAG" 20 - ~~~~~~~~~~~~~~~~~~~ BAN~~~~~~~~U:1[ ISH- -30 Ou hA YJI -s KOT / H ( KOTADDUCOMBINED 4 tI"ZDAR < @ 9 /' \ ,_._.i CYCLE POWER PROJECT O \Es Pi KXUR ° j -'/ Main Power Stations and Transmission Lines 0~~~~~~~~~~ t ° /y1 k 1S/ / ~~~~~~~~~~~~UNDER / /r~~~~~~~~~~ KO ADDr CONSTUCION4h45hPOOED HIZA SH/ / |/O PWRAOE / ^, v / / v ! EXIST_Nl PLANE PRJCYCL PO E PROJECT , ) DAOU| 1. - -- ___ _ ~~~~~~~~~~~~~~~~~~~~~~TRANSMISSION tINES: \t1- A \ ~~~- ' 46l12 W 26- \xt 1 s n § GRID STATIONS 4R \ 2 \ > ' J * ~~~~~~~~~~~~~~~~~~~~~~~~~~EXTENS9ONS OF EXISTING 500 kY OR POWER POWERAOADIPOWER STATIONS EXISTING PLANNED PROJECTSOROPROJTCT ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. ...tM. 66/13 kV.tHRA -26' GRID /t« ~ \ . STEAM N OM,INE W YCLE A- r y . INTERNATIONAL BOUNDARIES 5 0~~~~~~~~LKH 2 _ 100, , J o zo 200 MILES _1 66_ ' (J 70 7