Private Power Utilities (BSES) Project
Report No: ; Type: Report/Evaluation Memorandum ; Country: India; Region: South Asia; Sector: Thermal; Major Sector: Electric Power & Other Energy;
                                                               ProjectID: P009993


  The India Private Power Utilities (BSES) Project, supported by Loan 3344-IN for US$200 million, was
  approved in FY91. The loan was closed on May 15, 1997, six months behind schedule, with US$5 million
  remaining undisbursed and canceled. IFC provided US$50 million equivalent cofinancing. The
  Implementation Completion Report (ICR) was prepared by the South Asia Regional Office, with an
  appendix contributed by the Borrower, BSES.

      The project’s objectives were to: (i) support the government’s policy of increasing private sector
  participation in the supply of power; (ii) support BSES’s transformation from a distribution company to
  an integrated power utility with responsibility for generation, transmission and distribution and; (iii) help
  BSES meet the growing electricity demand of the Mumbai area of Bombay. The project components
  included: (a) a 2 x 250 coal fired power plant; (b) 105 km of 220 kV transmission lines and associated
  receiving substations and; (c) the strengthening and extending of BSES’s 33 and 11 kV sub-transmission
  and distribution system.

      The project’s physical and institutional objectives were fully met. The physical facilities were built
  and are operating efficiently, BSES is now a full-fledged integrated utility, and the high quality of services
  to BSES customers has been maintained. In addition, with the reduction of share holdings of quasi-
  governmental financial institutions from 65 percent to 35 percent, BSES has become a majority owned
  private company. Furthermore, with the experience gained during the implementation of the project, and
  the strong support it received from the international and Indian financial markets for its convertible
  debentures and other financial instruments issued in 1991, 1994 and 1996, BSES is now expanding its
  operations in the power sector to other parts of India, further strengthening private sector participation in
  the sector. The ICR estimates that the internal economic rate of return (IERR) for the project is about
  15.7 percent (up from 13.3 percent at appraisal), before taking into account consumer surplus.

      Consistent with the ICR, the Operations Evaluation Department (OED) rates project outcome as
  highly satisfactory, sustainability as likely, institutional development impact as substantial, and Bank
  performance as highly satisfactory.

      The main lesson from this project is that if priority is given to timely evaluation of bids, the project
  implementation period can be substantially reduced. In this case evaluation of the bids for the main plant
  equipment package was completed in only 3.5 months. The employment of experienced international
  consultants for design review, bid review and construction supervision can help minimize the overall
  implementation costs of large investment projects.

          The ICR is satisfactory. No audit is planned.