Report No. 528a-HO FILE COPY Appraisal of Sixth Power Project Honduras December 17, 1974 Regional Projects Department Latin America and the Caribbean Regional Office Not for Public Use Document of the International Bank for Reconstruction and Development This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. CURRENCY EQUIVALENTS Currency Unit = Lempira (L) TL1 100 centavos Li us$0.50 Ll,OOO,000 US$500,000 1 centavo 0.5 US˘ US$1 L2 USo = 2 centavos US mill 1 > 0.2 centavo UNITS AND MEASURES kW kilowatt MW megawatt = 1,C000 kW kWh = kilowatt hour GWh = gigawatt hour = 1,000,000 kWh kV = kilovolt kVA = kilo volt-amDere MVA = mega volt-ampere m = meter = 3.28 ft km = kilometer = 0.621 mi km2 = square kilometer 0.386 sq mi m3 = cubic meter = 35.3 cu ft FISCAL YEAR ENEE' s fiscal year ends December 31 ACRONYMS AND ABBREVIATIONS ENEE - Enpresa Nacional de Energia Electrica ENALUF - Empresa Nacional de Luz y Fuerza (Nicaragua) CACM - Central American Common Market CABET - Central American Bank for Economic Integration SANAA - Servicio Autonomo Nacional de Acueductos y Alcantarillados APPRAISAL OF THE SIXTH POWER PROJECT - HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA (ENEE) Table of Contents Pae No. SUMMARY AND CONCLUSIONS 1. INTRODUCTION 1 2. THE SECTOR 2 Energy Resources 2 Electric Power Sector 2 Electricity Consumption 3 Sector Development 3 Isolated System Development 5 3. THE BCRRO'ER 6 Management and Staff 6 Tariffs 6 Auditors 7 )!. THE PROGRAM AND PROJECT 8 Program through 1902 8 Description of the Project 8 Estimated Cost and Financing 9 Engineering 11 Project Execution 12 Procurement and Disbursement 12 Environment 13 Employment 13 Project Risks 13 5. JUSTIFICATICN OF THE PROJECT 14 General 14 Demand and Sales Forecast 14 Least-cost Solution 14 Return on Project Investment 15 6. FINANCE 16 Introduction 16 Earnings Record and Financial Position 16 Overdue Receivables 16 Financing Plan 17 Tariff Increases and Future Earnings and Financial Position* 19 7. AGREEMENTS REACHED AND RECOMMENDATIONS 20 This report was prepared by John E. Graves and Helmut Wleseman. LIST OF ANNEXES 1. Details of Bank/IDA Power Lending to ENEE 2. Main System Peak Load and Installed Continuous Capacity 3. Energy Sales, Generation, Maximum Demand and Firm Capability 4. Performance Indicators 5. Retail Power Rates 6. Rio Lindo Hydroelectric Plant Extension 7. Estimated Cost of Project 8. Estimated Schedule of Loan Disbursements 9. Projection of Energy Sales . 10. Comparison of Alternative Power Projects 11. Return on Investment 12. Actual and Forecast Income Statements 1971-79 13. Actual and Forecast Balance Sheet at Year-end 1971-79 14. Actual and Forecast Key Financial Ratios 15. Long-term Debt at December 31, 1973 16. Forecast Sources and Applications of Funds 1974-79 Map 3745-R2 - ENEE Main Power System Map 11219 -Final Stage of Lake Yojoa-Rio Lindo Hydroelectric Power Development APPRAISAL OF THE SIXTH POWER FROJECT - HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA (ENEE) SUMMARY AND CONCLUSIONS i. This report appraises the sixth power project of the Ehpresa Nacional de Energia Electrica (ENEE) of Honduras, which has requested Bank assistance in its financing. ii. Since 1959 the Bank/IDA has provided major financial assistance to Honduran power development through five loans and two credits totaling US$45 million for five ENEE power projects. The first three projects have been completed successfully, and completion of the fourth is expected by year-end 1974, a year behind schedule. Completion of transmission lines in the fifth project will be delayed by at least a year because of delays in completing negotiations between ENEE and the Nicaraguan utility and a potential major customer. iii. ENEE is a government-owned company responsible for the development and operation of power facilities in Honduras. Its total installed capacity - predominantly hydro but also including diesel plants and gas turbines - is 146 MW. This represents almost all of the country's total capacity available for public power supply. Funds from previous loan/credits for training assistance have imprcoved the capability of ENEE's staff; further improvement is still necessary. iv. The June 1972 appraisal report of ENEE's fifth project indicated that the next project would be the 450-500 MW El Cajon hydroelectric develop- ment, to be completed in 1978, which would utilize part of Honduras' large hydro electric potential to satisfy the country's own requirements and trans- mit excess generation to Nicaragua, which has few economic hydro sites. How- ever, the El Cajon feasibility study (completed in 1973) recommended that completion of El Cajon would be more economic in the mid-1980s instead of 1978. v. The sixth project's principal component is the 2 x 20 MW (with peak- ing capability to 46 MW) extension of the Rio Lindc hydroelectric plant, the third stage of the Lake Yojoa-Rio Lindo hydro development. It will cover the countryts electricity needs through 1979, but Honduras would then have to im- port power and energy from Nicaragua untilfirst stage completion of El Cajon, now assumed to be 1982. The project also includes ENEEts distribution system improvements for 1975-78, rural electrification, studies and training. vi. The project, whose expected completion date is year-end 1978, is estimated to cost US$60.0 million with a US$45.0 million foreign component. The proposed Bank loan of US$35 million would finance about 78% of its foreign cost. Loans from the Central American Bank for Economic Integration would provide the rest of the foreign and some local currency. ENEE would finance the remaining local currency component from government contributions for rural electrification and its own net internal cash generation. - ii - vii. ENEE's staff will carry out the design and construction super- vision of the project's components for which they have experience, namely the distribution improvements and rural electrification. Consulting engineers will perform these duties for the hydro plant extension and will do the studies. vii. Procurement of Bank-financed project components would be in accordance with the Bank's guidelines. Retroactive financing of US$500,000 is required to finance engineering of the Rio Lindo extension. ix. The Rio Lindo extension is the least-cost solution for meeting Honduras' electricity needs for discount rates of up to 20%. The rate of return on the project investment is estimated to be at least 22%. x. With a tariff increase to raise overall revenues by about 25% to be in effect on February 1, 1975, ENEE's earnings and financial position are expected to remain satisfactory. xi. The project would form a suitable basis for a US$35 million Bank loan with a term of 25 years including !i years of grace. The loan would be made to ENEE and guaranteed by the Republic of Honduras. APPRAISAL CF THE SIXTH POWER PROJECT - HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA (ENEE) 1. INTRODUCTION 1.01 This report appraises-the sixth power project in Honduras, for which the Empresa Nacional de Energia Electrica (ENEE) has sought Bank assistance. 1.02 The project includes the 2 x 20 MW (with peaking capability of 2 x 23 PMW) extension of the Rio Lindo hydroelectric plant, the third stage of the Lake Yojoa-Rio Lindo hydro development. It also includes ENEE's distribution system improvements for 1975-78, facilities to extend the electrical services to rural areas, studies of future projects and staff training. The project's estimated cost is US$60.0 million, including a foreign exchange component of US$45.0 million. 1.03 The sixth project represents a continuation of schemes carried out under five previous Bank/IDA lending operations totaling US$45 million for power development in Honduras as detailedin Annex 1. The first three projects, which included the initial two stages of the Yojoa-Rio Lindo development, have been completed successfully. The fourth project is practically completed, albeit with delays of about one, year caused by re- visions in the design layout of transmission works and late deliveries of major project components. in the fifth project,_completion of the Honduras- Nicaragua interconnection line will be delayed by about one year because of delays in negotiation of a contract (signed in May 1973) with Enpresa Nacional de Luz y Fuerza (ENALTUF), the Nicaraguan utility. The extension of service to the Aguan Valley will be delayed by at least a year because of delays in negotiations with the principal potential customer in the valley, Standard Fruit. Other elements of the fifth project (extensions to new areas, the 26 MW La Ceiba diesel plant, consulting services and training) have either been completed or are proceeding on schedule. 1.04 The proposed Bank loan of US$35 million would cover about 78% of the projectts foreign cost and would be made to ENEE, a government-owned company responsible for development and operation of electric power facili- ties in Honduras. The Central American Bank for Economic Integration (CABEI) would provide the remaining foreign and some local currency. ENEE's net cash generation and government contributions for rural electrification would meet the project's remaining local currency requirements. 1.05 This report is based on a feasibility study of the Rio Lindo extension prepared by Harza Engineering International of the United States and on the findings of an appraisal mission composed of Messrs. John E. Graves and Helmut Wieseman, which visited Honduras in April/May 1974. - 2 - 2. THE SECTOR Energy Resources 2.01 Studies of Honduras' fossil fuel and geothermal supply base have just begun. There are some indications of natural gas, oil and low-grade coal deposits. Minor oil discoveries have been made, but commercial via- bility of deposits has not been established. The government recently re- quested a UNDP reconnaissance mission to undertake a study of the country's geothermal potential, concentrated in the Pacific zone. 2.02 Honduras' hydroelectric potential is large. A 1967 hydro survey of western and central Honduras by Harza identified the best potential sites for future development. ENEE's present plans (see paragraphs 2.09-14) in- clude development of the most promising schemes identified in that survey. Harza is now conducting a similar survey of hydro resources in eastern Honduras, financed by Loan 841-HO, which is scheduled for completion in 1976. Electric Power Sector 2.03 Already the dominant sector entity, ENEE is further increasing its scope of operations by absorbing privately- or municipally-owned utilities, extending its service to villages previously without public electricity supply, and replacing captive generation of large industrial installations. In 1973 it produced about 83% of the country's public-service electricity generation. GWh % ENEE generation - hydro 330 74 - thermal 40 9 Total ENEE 370 _F3 Other utilities 75 17 Total 17 l0 2.04 ENEEwill produce at least 95% of Honduras' public-service genera- tion in 1974 and future years, because it acquired the La Ceiba di stribution system from Standard Fruit in 1973 and began in 1973-74 to supply bulk electri- city to the distribution systems in Tela and Progreso, which are owned by a United Fruit subsidiary. The fruit companies have placed their old, inefficient diesel generators in those cities on standby. Only a few small rural munici- pally-owned utilities remain to be absorbed by ENEE. Increased electricity supplies from ENEE to the Mochito mines and Bijao cement plant in 1973-74 have enabled those industries to place their captive diesel plants, the largest in the country, on standby. 2.05 Annex 2 shows ENEE's installed generating capacity of 140 MW in six power plants (2 hydro, 2 diesel and 2 gas turbines) in its main system, inter- connected by about 600 km of 138 kV and 69 kV lines. In addition, ENEE has approximately 6 MW installed in eight isolated diesel stations. The hydro facilities have annual storage which allows a high annual plant factor of over 60%. As shown on Map 3745-R2 and detailed in. Annex 1, ENEE currently is constructing transmission lines to extend its main system to all principal cities in Honduras and interconnect it with the Nicaraguan system. No further transmission lineE will be needed until completion of the next generating development. -3- 2.06 In 1971 ENEE established a rural electrification program, which established priorities for extending service to 23 rural areas presently with limited or no public electricity supply. From the 23 areas, ENEE selected six zones with the best potential market and located closest to its existing facilities for inclusion in the first phase of the program. Using funds from the fourth and fifth project loan/credits, ENEE has com- pleted 34 kV lines to and distribution facilities in the Comayagua and Tamara valleys, and similar works are under way to serve towns near La Ceiba, Tela, Puerto Cortes and in the southern zone. With government con- tributions (see paragraph 6.08) and funds from the proposed loan, the utili- ty would continue this work. Electricity Consumption 2.07 As shown in Annex 3, electricity production in Honduras has almost doubled in the last five years. However, annual generation of about 150 kWh per capita remains low, even in comparison with other Central American countries, where annual per capita generation ranges from 145 to 700 kkh. 2.08 While ENEE has almost tripled its number of customers in the past ten years, public electricity supply is still available to only about 18% of the country's population. ENEE's load is primarily conmmrcial-industrial, as shown in the table below. ENEEts high annual load factor (62%) is ex- plained by the large proportion of sales to industrial customers. Annual Sales Number of _ 1973- - _ Est. 1979 -- customers % of % of 1973 G_n total Gkh total Residential 60,900 77.3 23.6 190.5 26.4 Commercial 9,230 50.9 15.5 103.7 14.4 Industrial 1,100 96.7 29.5 221.4 30.8 Bulk industrial 35 84.0 25.6 160.2 22.2 Government 1,000 12.6 - 3.8 28.0 3.9 Other 35 6.6 2.0 16.8 2.3 72,300 328.1 100.0 720.6 100.0 With the rural extensions and distribution works underway and included in the project, ENEE intends to provide service to 126,500 customers by the end of the project period, making public electricity supply available to about 3C% of the population. Average annual kWi sales per connection (excluding bulk sales to large industrialcustomers) are expected to increase from 3,370 in 1973 to 3,930 in 1978. Expected year-by-year progress in achieving these goals is shown in Annex 4. Sector Development 2.09 Thefifthpower project appraisal report (No. PU-90a, June 2, 1972) indicated that ENEE's probable next project would be the El Cajon hydroelectric plant, with capacity then estimated at 450 MW, to be in operation by year-end 1978 to supply the incremental requirements of both Honduras and Nicaragua. However, the project feasibility study (completed by Motor-Columbus of Switzer- land in 1973)concluded that it would be more economic to complete a slightly -4- larger - about 500 MW - version of El Cajon in the mid-1980s. After review of the Motor-Columbus study by the Comite Consultivo de Obras Hidraulicas of Mexico, ENEE's board decided in November 1974 to proceed with the first (300 MW) stage of El Cajon, and the utility has requested the Bank and the Inter-American Development Bank to participate in its financing. ENEE has also begun to seek commitments from Guatemala and Nicaragua to buy electricity produced at El Cajon. 2.10 Because of the postponement of El Cajon, ENEE now intends to meet its incremental requirement for 1978-79 with the 40 MW extension of the Rio Lindo hydro plant, which is the principal component of the proposed project (see chapter 4). ENEE and ENALUF will use the interconnection line for transferring surplus energy on a short-term basis and emergency power between their two systems, thus reducing overall reserve requirements (Annex 2). The interconnection line would also provide reserves for Honduras in case of ex- tremely dry years or delays in completion of the Rio Lindo extension. Upon completion of El Cajon, ENEE would sell ENALUF large blocks of power and energy through 1985, replacing thermal energy in Nicaragua. 2.11 Subject to its final decision on El Cajon, ENEE now plans to meet its future demands with the following hydro developments: Mw Operation (about) planned for El Cajon (first stage) on Rio Humuya 300 1982 El Remolino on Rio Humuya 120 1989 Naranjito on Rio Jicatuyo or thermal 100 1991 ENEE studied various alternative sequences of completion for these three developments (using pre-feasibility cost estimates for the last two) to de- termine that the order of installation shown above is the least-cost solution for discount rates of up to about 15%. 2.12 The first stage of El Cajon would have foer units of about 74 MW each and a concrete arch dam 200 m high; including price escalation and associated 230 kV transmission but without interest during construction the development would cost about US$254 million, based on feasibility level design. 2.13 The 120 MW Remolino project, downstream from El Cajon, would be the most likely hydro project after the first stage of El Cajon. Since no feasi- bility work has yet been done on Remolino, the proposed loan includes funds for its full feasibility study. If the survey of eastern Honduras (paragraph 2.02) indicates that a more economic development exists in that region, a feasibility study of the eastern project would be substituted for Remolino. The second and final stage of El Cajon which would add only peaking capacity might be undertaken in the 1990s. 2.14 Arranging financing for El Cajon (both foreign- and local-cost com- ponents) may be difficult because of its large size, even though it has been shown to be the most economic next development in the Honduras-Nicaragua inter- connected system. In case of difficulty in obtaining finance for El Cajon, ENEE plans on building the smaller Naranjito project, whose feasibility study has been prepared by Motor-Columbus, as an alternative next step, even though Naranjito is less economic. 2.15 The Bank has proposed a UNDP-financed study, with itself and CABEI acting as executing agency, to analyze the feasibility of inter- connected power system development in Central America. It is expected that future ENEE development would be coordinated with other utilities in the region once completion of such a study has laid the groundwork for further interconnection of electric systems in the region. Isolated System Development 2.16 Many of ENEE's isolated systems are unlikely to be connected to the main system soon because of their small size and remote location. Re- cent increases in the cost of diesel fuel have improved the possibilities of economic development of small hydroelectric sites, including works abandoned by ENEE's predecessor, known to exist near certain of the isolated systems. Construction of facilities to improve electricity supply to customers in isolated areas would be part of the second phase of ENEE's rural electrification program (paragraph 2.06), which concentrates on poten- tially good markets in more remote regions of the country. The proposed loan therefore includes funds for such studies, to be carried out by foreign engineers who would work with and train ENEE engineers to make similar studies in the future. - 6- 3. THE BCRROWER Management and Staff 3.01 The proposed loan would be made to ENEE, an autonomous government- owned corporation established in 1957 for the development and operation of power facilities in the country. ENEE is governed by a five-member Board of Directors, including the Ministers of Natural Resources and Communications and Transport and representatives of the Planning Council, the National Development Bank and the private sector. The Board appoints ENEE's general manager, who is responsible for all managerial and administrative activities. The present general manager, a civil engineer, has served in that capacity since August 1971 and is performing his duties capably. 3.02 ENEE's general manager is assisted directly by an assistant manager for power, responsible for all engineering, planning and operations, and by a director of administrative services, responsible for accounting, purchasing, legal, treasury and personnel functions. These individuals and their senior assistants are capable. 3.03 Until the late 1960s, ENEE's engineering staff was quite weak. Using funds from the fourth and fifth project loan/credits, ENEE has hired expatriate engineers to assist and train its staff and sent key staff members to foreign utilities and engineering consulting firms for training related to specific tasks. While the utility's technical capability has improved signif- icantly, further training is necessary; funds from the proposed loan would assist this effort (see paragraph 4.04). 3.04 Progress in achieving administrative efficiency has been slower, however. Until implementation of a computerized system in 1973, customer billing and collection was inefficient and slow; this is now improving. ENEE's management consultants (R. W. Beck of the US) are now developing computer- based systems for inventory control, payroll and budget applications, using fifth power project funds. Further improvement will be needed in implement- ing effective budget control, and proposed loan funds are provided for that purpose. 3.05 ENEE employs about 1,600 people, of Whom about 300 are engaged in construction or hydrologic measurement. As a result of management's policy of limiting hiring, ENEE's customer-to-employee ratio has improved from 55:1 in 1972 to about 67:1 in 1974 (based on 87,000 customers and 1,300 operations-related employees). This ratio is expected to continue to improve to 84:1 by 1978 (see Annex 4), which is reasonable. Tariffs 3.06 The law establishing ENEE gives the utility the right to set its own tariffs, which are summarized in Annex 5 (exclusive of adjustments in late 1974). The tariffs have not changed substantially since 1964 and are no longer sufficient in view of increases in ENEE's fuel expenses and other costs of doing business. At the Bankts suggestion, ENEE hired R. W. Beck to design fuel adjustment clauses to be included in its tariff schedules, to revalue its net fixed assets and propose an overall tariff increase to earn a fair return on revalued assets (see paragraph 6.12). Beck found: that -7- ENEE required a tariff increase sufficiently high to increase overall re- venues by about 25%; and that most of the impact of the increase should fall on large industrial customers -whose average rates are expected to in- crease by as much as 50%. A fuel adjustment clause and tariff increases (paragraph 6.12), substantially as proposed by Beck but to go into effect not later than February 1, 1975, has recently been approved. 3.07 Earlier this year, most other Central American utilities put into effect higher tariff increases, so that the spread between ENEE's tariffs, which were the highest in the region through 1973, and those of neighboring utilities will decrease. 3.08 To ensure that ENEE's tariffs promote in the future the most economic pattern of energy consumption, ENEE's rate structure should be reviewed. The review should consider: interruptible sales of off-peak * power and energy to large customers, which would better utilize ENEE's facilities; and changes in tariff structure to increase sales in newly- electrified villages where customer response has been low. Any losses in revenue from tariff-structure changes could be offset by increasing charges to higher-income customers. The proposed loan includes funds for such studies with terms of reference satisfactory to the Bank. Auditors 3.09 ENEE's accounts are audited by Price Waterhouse, which is satis- factory. The proposed loan agreement repeats existing covenants whereby ENEE agrees to have an accounting firm acceptable to the Bank audit it and transmit the auditorts full report to the Bank within four months of the end of each fiscal year. -8- 4. THE PROGRAM AND PROJECT Program through 1982 4.01 ENEE's program through 1982 includes: a. completion of transmission and rural electrification works in- cluded in the fourth and fifth projects, as detailed in Annex 1 and paragraphs 2.05-06; b. completion of 1974-75 distribution works not included in the fourth and fifth projects, mostly in Tegucigalpa and San Pedro Sula; c. the sixth power project, including the 2 x 20 MW Rio Lindo hydro plant extension, described below; d. construction of the 300 MW El Cajon hydroelectric development (paragraphs 2.09-12), or the smaller Naranjito hydro project (paragraph 2.14); and e. future distribution works not included in the sixth project. Description of the Project 4.02 The sixth power project consist of: a. the 2 x 20 NW (with peaking capablity of 46 MW) extension to the Rio Lindo hydro plant, including four dams to divert three rivers in the Lake Yojoa area and construction of a new pipeline and pen- stock (see Annex 6) as well as engineering and construction super- vision of the works; b. transmission/distribution system improvements and extension of electricity supply to rural areas not presently served for the four-year period 1975-78 (paragraph 4.03); c. materials and equipment needed for system repairs and rehabilita- tion resulting from damages caused by Hurricane Fifi in September 1974; d. studies of possible future projects (paragraphs 2.13 and 2.16), administrative improvements (paragraph 3.04) and tariffs (para- graph 3.08); and e. training of ENEE's professional staff (paragraph 4.04). 4.03 The transmission/distribution system improvements include: a mobile 138 kV substation of about 251MVA capacity, a 138/13.8 kV-25 MVA substation in the San Pedro Sula area, as well as primary (13.8 kV) and secondary lines, trans- formers and meters needed to satisfy increased requirements from existing customers and to provide electricity supply to new customers in the cities ENEE serves. ENEE requires a 138 kV mobile substation to restore service quickly to areas affected by system outages. It now has no such equipment although its transmission system, formerly mostly 69 kV, is now primarily 138 kV. Extension of supply to new areas will follow the pattern begun in the -9- fourth and fifth projects (paragraph 2.06), in which ENEE builds 34 kV lines to and installs distribution facilities in villages where the government has recently invested in other infrastructure; ENEE has agreed to provide the Bank with satisfactory economic justification for the selected service ex- tensions before proceeding with them. 4.04 The training component of the project focuses on development of the following staff: a. top level managers, who will attend courses and seminars designed for public utility personnel at universities and other institutions overseas. Upon return, they would give in-house seminars and courses on their subjects; b. supervisory personnel (including recent university graduates), who will be instructed in modern practices of design, engineering, construction, operation, and maintenance of distribution, trans- mission and generation equipment. This training will be at a facility which ENEE plans to set up at the Canaveral plant (with expatriate training staff initially) and at foreign utilities and equipment suppliers: and c. technical. personnel, who will be trained in operating and maintain- ing interconnected systems in preparation for the Honduras-Nicaragua interconnection, scheduled for initial operation in early 1976. The training would take place at equipment suppliers and public utilities (probably in Mexico, Puerto Rico, France and Central America) where ENEE staff has previously received excellent technical training. As part of the next project, ENEE intends to establish a permanent training facility for all levels of personnel, substituting Honduran training staff for expatriate. Training to be carried out under this program would be coordinated with Honduras' Instituto Nacional de Formacion Profesional and would be made available to other companies or agencies requiring the specialized skills to be provided. Estimated Cost and Financing 4.o5 The project's estimated cost totals US$60.0 million with a uS$450. million foreign component. The costs are summarized below and detailed in Annex 7. - 10 - millions of lempiras millions of US$ Local Foreign Total Local Foreign Total River diversions and Rio Lindo plant extension: River diversions: Rio Lindo 0.33 0.56 0.89 0.17 0.28 0.45 Rio Varsovia 1.55 2.10 3.65 0.77 1.05 1.82 La Pita dam 0.37 0.47 o.84 0.18 0.24 0.42 Rio Yure 3.76 5.38 9.14 1.88 2.69 4.57 Power plant structure 1.24 1.67 2.91 0.62 o.84 1.46 Tailrace widening 0.14 0.27 0.41 0.07 0.14 0.21 Total civil works 7.39 10.45 11787 4 3.9 T7772 893 Pipeline/penstock/surge tank 3.28 17.28 20.56 1.64 8.64 10.28 Mechanical, electrical equip.l.26 8.51 9.77 0.63 4.24 4.87 Land and land rights 0.08 - 0.08 0.04 - 0.04 Total Rio Lindo 12.01 36.24 4825 6.00 1F 182 Equipment and materials for hurricane rehabilitation - o.60 0.60 - 0.30 0.30 Mobile substation - 1.00 1.00 - 0.50 0.50 Distribution system expansion 5.85 11.53 17.38 2.93 5.76 8.69 Rural electrification 1.61 2.34 3.95 O.8 1.17 1.98 Studies 0.62 1.80 2.42 0.31 0.90 1.21 Training o.4o 0.90 1.30 0.20 0.45 0.65 Engineering, supervision, administration 1.36 5.26 6.62 o.68 2.63 3.31 Total base cost estimate 21.85 59.67 6IT32 10.93 29.53 40.76 Physical contingencies 2.12 5.60 7.72 1.06 2.80 3.86 Price contingencies 6.o6 16.14 22.20 3.03 8.07 11.10 Interest during construction - 8.59 8.59 - 4.30 4.30 Total 30.03 90.00 120.03 15.02 45.00 60.02 4.o6 Harza estimated the cost of the Rio Lindo extension and ENEE, the distribution improvements, based on end-1973 prices, which the appraisal mission adjusted to fourth-quarter 1974. Price contingencies for both local and foreign price inflation were computed on all project components except studies and training using the following annual inflation rates: Equipment Civil WNrks 1975 12 15 1976 9 12 1977 6 10 1978 6 10 1979 6 10 The unit cost of the Rio Lindo extension, US$640/kW of peaking capability (ex- cluding price contingencies), is acceptable in view of its 248 GWh of additional annual hydroenergy production. 4.07 The foreign cost of the project would be financed as follows: * ~~~~~~~- 11 - millions of US$$ Govt/ IBRD CABEI ENEE Total River diversions and Rio Lindo plant extension: River diversions: Rio Lindo 0.28 0.28 Rio Varsovia 1.05 1.05 La Pita dam 0.24 0.24 Rio Yure 2.69 2.69 Power plant structure 0.84 o.84 Tailrace widening 0.14 0.14 Total civil works 4.96 0-28 5.24 Pipeline/penstock/surge tank 8.64 8.64 Mechanical, electrical equipment 4.24 I4.24 Total Rio Lindo 17.84 02 - 18.12 Equipment and materials for hurricane rehabilitation 0.30 0.30 Mobile substation 0.50 0.50 Distribution system expansion 5.76 5.76 Rural electrification o.60 0.57 1.17 Studies 0.90 0.90 Training 0.45 0.45 Engineering, supervision, administration 1.88 0.75 2.63 Total base cost estimate 22.47 679 0.57 9 Physical contingencies 2.41 0.39 2.80 Price contingencies 5.97 2.10 8.07 Interest during construction 4.15 0.15 4.30 Total 35.00 9. 2 0.72 45.00 CABEI would also provide local financing of US$0.8 million equivalent for con- structing the Rio Lindo diversion and engineering services provided by a local firm (Honconsult) for the Rio Lindo extension. Engineering 4.08 ENEE contracted in April 1974 with Harza, which served as consultant for the first two stages of the Yojoa-Rio Lindo development, for the design, engineering, procurement and construction supervision of the diversions of the Rios Lindo, Yure and Varsovia and of the Rio Lindo plant extension. Under Harza's overall responsibility, Honconsult is designing and supervising con- struction of the Rio Lindo diversion, already underway, and the Yure and Varsovia diversion canals. As in the fifth project, ENEE's staff will design, engineer and supervise construction of all distribution system improvements; the utility intends to use an individual consultant on the San Pedro Sula substation. Consultants acceptable to the Bank would be engaged for studies of possible future projects, administrative improvements and tariffs. - 12 - Project Execution 4.09 A local contracting firm has already begun construction of the Rio Lindo diversion. ENEE intends to award contracts for the rest of the project in the following manner: a. a "supply and erect" contract for the pipeline, penstock, surge tank, and accessories; b. a single general contract (with possible participation of local firms as subcontractors) for the Yure and Varsovia diversions, the La Pita dam, pipeline, penstock and surge tank foundations, powerhouse construction, tailrace widening, and installation of major equipment, under supervision of factory representatives; and c. individual supply contracts for other generating and distribution equipment. 4.10 Completion of various river diversions is scheduled as indicated in Annex 6, and the Rio Lindo extension is expected to be commissioned by June 30, 1978. The estimated project completion date is December 31, 1978. Performance indicators showing the expected achievement during the project period are shown in Annex 4. Procurement and Disbursement 4.11 All contracts for Bank-financed civil works, plant and equipment would be awarded following international competitive bidding in accordance with the Bank's Guidelines for Procurement. 4.1l2 Honduras has effectively withdraw from the Central American Common Market, so that regional preferences will not apply. As none of the items financed by the Bank loan are produced locally, the question of preference for local manufacturers does not arise. 4.13 Disbursements from the loan account would be made for: a. the foreign-currency cost of: the "supply and erect" contract for pipeline, penstock, surge tank and accessories; studies and training; and the portions of Harza's contract dealing with final construction design and engineering and construction supervision; b. the cif cost of equipment and materials including foreign-currency cost of factory representatives to supervise erection, as appropriate; c. 55% of the total cost of the general contract, representing the estimated foreign cost component; and d. interest on the Bank loan through July 31, 1978, the estimated completion date of the hydro plant extension. - 13 - 4.14 Except for engineering, no contracts would be awarded before loan approval. To meet completion dates for the various elements of the hydro scheme, retroactive financing of up to US$5OO,O0O is recommended for engineer- ing services provided after March 1, 1974. Estimated loan disbursements are shown in Annex 8. Any undisbursed funds upon completing the project should be cancelled. Environment 4.15 The river diversion scheme will raise Lake Yojoats maximum level by about one meter and create two small reservoirs. The land to be inundated is practically uninhabited; ENEE has agreed to submit to the Bank, within six months of the date of the loan agreement, plans for the resettlement and em- ployment of the few (about ten) families living in that area, and to put such plans into effect in a manner satisfactory to the Bank. Diversion of the Rio Lindo will reduce water flow over the scenic rapids near the village of Rio Lindo by about 50% in the dry season but without serious visual effect. The population living downstream from diversions of the Rios Varsovia and Lindo will continue to obtain sufficient water for domestic use from other tribu- taries which flow into the rivers. To avoid sediment accumulations in the reservoirs and canals, the government has agreed to enforce under existing legislation soil conservation measures and control of logging operations in the area. 4.16 ENEE agreed: to provide the Bank by June 30, 1977 a program for periodic inspection of the La Pita, Varsovia and Yure dams and associated structures; and to carry out an inspection program of those dams satisfactory to the Bank. Employment 4.17 Project construction will create employment opportunities for about 800 workers for a three-year period. Operation of the Rio Lindo extension will provide about 20 permanent jobs. Project Risks 4.18 The project's critical element in terms of both price and construc- tion period is the pipeline/penstock. While the price contingencies (which are slightly higher than those generally used for projects of this nature) and construction period assumed in the appraisal appear sufficient now, further accelerated worldwide demand for steel could result in project delays and cost increases. - 14 - 5. JUSTIFICATION OF THE PROJECT General 5.01 The purpose of the project is to meet from local hydro resources Honduras' growing demand for power and energy and thereby reduce imports of fuel or thermally-generated electricity. Under the project, installed capacity will increase from 144 to 184 MW (28%) and average hydro year energy production from 408 to 656 GSh (61%). The project will provide electricity service to 300,000 additional people in Honduras. Demand and Sales Forecast 5.02 With the incorporation of new areas (paragraph 2.04), ENEE's sales are expected to grow about 32% in 1974. Thereafter, until9s0, ENEE's main-system and total sales are expected to increase about 11% annually. The forecast, which is shown in Annex 9, is based on ENEE's prediction of bulk sales after consultation with large and medium-sized industrial con- sumers and of area trends established by ENEE's continuing observation. Because of their uncertain timing, energy sales to the fruit companies for irrigation pumping have not been included in the forecast. ENEE sales grew at about 13% annually during 1969-73 while it was taking over service to many new areas, which will not be the case after 1974, and the projected rate of increase of 11% is therefore reasonable. 5.03 Changes in the distribution of total sales by consumer category are shown in paragraph 2.08, which indicates that from 1973 to 1979 residential sales are expected to grow annually 16% on average; commercial sales 13%; industrial sales 14.8%; bulk industrial sales 11.5%; and government and other sales 15%. On this basis, the project will benefit residential and medium- sized industrial consumers somewhat more than commercial and bulk users. Unsatisfied demand for residential use will be reduced significantly as ENEE expects, mainly because of the proposed project, to increase the proportion of the population with access to electric service from the present 18% to about 30% by 1980. 5.04 Wilth various river diversions completed in 1975-76 (Annex 6), hydro generation at existing Canaveral and Rio Lindo units will increase by about 200 GWh even before the two new Rio Lindo units are in operation in mid-1978, resulting in fuel cost savings of about US$2.0 million. After 1979, and until completion of the next hydro project, ENEE will have to cover the increase in energy requirements with thermal power and imports from Nicaragua. Least-cost Solution 5.05 To determine the least-cost solution to Honduras' electricity needs Harza first selected the least-cost alternatives among the various possible river diversions and extensions to Canaveral and Rio Lindo power plants and then compared the selected project with the least-cost thermal alternative, a diesel installation of about 40 MW, as detailed in Annex 10. It found that the hydro works included in the project were the least-cost solution for discount rates up to about 20%. - 15 - 5.o6 To verify Harza's determinations, the hydro alternative has been divided into two parts: (i) the portion of the river diversion sufficient to provide additional water for generation of about 100 GWh/year using exist- ing penstock and generating facilities, and (ii) the new pipeline/penstock, power plant extension and remaining river diversions needed to supply ENEE's capacity requirements through 1980 and the balance of its energy require- ments. As shown in Annex 10, part (i) is the least-cost solution for provid- ing additional generation for discount rates of up to at least 50%, and part (ii) is the least-cost solution for meeting ENEE's additional requirements for discount rates of up to about 12%, both when compared to the least-cost thermal alternative. This analysis therefore confirms that carried out by Harza for the project as a whole. Return on Project Investment 5.07 The rate of return on the project - defined as the discount rate which equalizes the stream of expected revenues attributable to the project with its costs - is 22.3%, as shown in Annex 11. While these calculations do notreflect price inflation beyond 1974 in the projectts capital or operating costs, it is expected that revenues would be increased to offset any future inflation-related cost increases. The economic rate of return is undoubtedly higher because the electricity rates used in the computations do not adequately measure the full benefits to customers. - 16 - 6. FINANCE Introduction 6.01 ENEE maintained a high rate of return - from 10 to 16% on an original-cost rate base - from 1966-73. Because of recent worldwide and Honduran price inflation, its rate base is now undervalued; the 1975 tariff in- crease (paragraph 3.06), is expected to enable ENEE to earn a 10% return on its revalued rate base during the project period. ENEE's low contri- bution-to-expansion ratio for the project period and high debt/equity ratio at the end of the period reflect large borrowings necessary for construction of the next project, the very large El Cajon hydroelectric development, rather thanpoor financial performance. Were it not for El Cajon, all of the utility's financial indicators would be satisfactory throughout the project period. Earnings Record and Financial Position 6.02 ENEE has had a high rate of growth in net utility plant, revenues and operating income, which have increased by 150%, 90% and 75% respectively in the five-year period through 1973. Its annual rate of return on rate base (net utility plant in service), which had been as high as 16% in 1969-70, decreased to the 10-11% level in 1971-73. Despite its high earnings, the utility has had to borrow heavily in the five-year period to finance new investments in plant, so that its debt/equity ratio has increased from 50/50 to 59/41. Its 1971-73 income statements, balance sheets and key financial ratios, are shown in Annexes 12, 13 and 14, respectively. 6.03 The Bank is ENEE's largest creditor; together with loans received from the government to pass on the proceeds of IDA credits, IBRD accounts for approximately 70% of ENEE's long-term debt at year-end 1973. ENEE has also borrowed from CABEI, the US Agency for International Development and Honduras' Central Bank. Details of ENEE's outstanding debt at the end of 1973 and fore- cast debt service are included in Annex 15. 6.04 ENEE's books of account have been maintained at originally recorded values, adjusted only to reflect the effect of worldwide currency realign- ments since 1971 on its indebtedness and fixed assets. During appraisal, ENEE management agreed with the Bank mission that its rate base was undervalued since it did not reflect recent inflationary trends. The utility subsequently hired R. W. Beck to estimate the current value of its rate base. Based primarily on construction price indices applicable to the types of plant involved, Beck has determined that the rate base value should be increased by about 50%. To avoid possible confusion in future rate determinations, ENEE has agreed to re- flect this and any future asset revaluations in its books of account and financial statements. Overdue Receivables 6.05 As a result of negotiations on Loan 841-HO, the government indicated in a supplemental letter its intention to pay to ENEE a total of L1.8 (US$0.9) million, respresenting outstanding electricity bills and other receivables, over the five-year period 1972-76. It has paid about half the originally outstanding amount. - 17 - 6.o6 The only substantial receivable remaining under discussion is that of Servicio'Aiutonomo Nacional de Acueductos y Alcantarillados (SANAA), the government water-supply agency, which owed ENEE L370,000 (US$185,000) at the end of 1973. ENEE had for many years used SANAA water for two small hydro- electric plants near Tegucigalpa but declined to pay what it considered to be exorbitant charges for use of the water for electricity generation; SANAA, in turn, never paid electricity bills to ENEE. The generating plants were retired from service in 1970 and 1973, so that SANAA's only remaining reason for not paying ENEE is its lack of funds. ENEE has undertaken negotiations with SANAA-so that each agency would release its obligations for charges against the other prior to 1974. Since SANAA's financial condition is not expected to improve in the foreseeable future, the government has agreed to pay or cause to be paid SANAA's 1974 bills by year-end 1975 and its future bills, within two months of the billing date. Financing Plan 6.07 During the five-year project period 1974-78, net internal cash generation will finance about 14% of ENEE's construction program plus addi- tions to working capital. This internal contribution is low because the pro- gram includes about half of El Cajon's construction period. The con- struction program's size - L527 (US$263) million - is enormous in compari- son with ENEEs present size - its 1973 rate base (valued at historical cost) was L107 (US$53) million. Substitution of the alternative Naranjito hydro development in place of El Cajon would decrease the anount of construction spending to the extent that net internal cash generation would pay for about 30% of the program . 6.08 Except for government contributions for rural electrification (representing the differential between the debt service ENEE pays to the government and the government pays to IDA on Credit 201-HO), it is assumed that the remaining 86% of the funds requirements would be met by borrowing. While ENEE intends to request equity contributions from the government in lieu of loans to cover part of El Cajon's local cost, a final decision has yet to be taken on this request. The financing plan also assumes the reinvestment of all net income; as it has in past lending operations, ENEE has agreed to retain all its earnings during the project period for investment in new facili- ties. The following table presents a summary financing plan, details of which are shown in the projected funds statement (Annex 16). - 18 - Financing Plan 1974-78 - - millions - - Lempiras US$ Percentages Requirements of funds Construction program (incl. interest during construction): Existing projects 42-7 21.4 8 Sixth project* 116.2 58.1 22 El Cajon (half of construction period) 361.1 180.5 69 Total construction 7520. 260.0 9 Increase in working capital 7.1 3,5 1 Total requirements 527.1 263.5 100 Sources of funds Net income before interest plus depreciation 157.5 78.7 Less debt service (excl. interest during construction) 84.o 42.0 Net internal cash generation 376 7 14 Government contributions 1.2 0.6 - Borrowings: Existing loans 31.9 15.9 Proposed loans - IBRD* 66.7 33.4 - CABEI 20.2 10.1 Future loans for El Cajon 333.6 166.8 Total borrowings 2526. 77F.2 86 Total sources 527.1 263.5 100 * Project disbursements of L3.8 (US$1.9) million and loan withdrawals of L3.3 (US$1.6) million are expected in early 1979. 6.09 The proposed Bank loan would be made to ENEE for a term of 25 years, including 41 years of grace, at the current Bank interest rate (assumed to be 8%). It would be guaranteed by the Republic of Honduras. 6.10 ENEE has completed arrangements with CABEI for two loans: a 15-year loan (including two years of grace) at 8% annual interest for US$400,000 to finance construction of the Rio Lindo diversion; and a 7-year loan (including two years of grace) at 6% annual interest for US$1.4 million to finance engineer- ing and contract document preparation for the Yojoa-Rio Lindo extension. It has applied to CABEI for the remaining US$8.3 million of financing for the foreign cost of the distribution works. CABEI, which financed similar works for ENEE in 1974, has declared the loan eligible for financing. 6.11 The utility has requested the Bank to take the lead in arranging a coordinated financing package for the El Cajon project and to be a major participant in that package. - 19 - Tariff Increases and Future Earnings and Financial Position 6.12 ENEE's consultants (R. W. Beck) originally proposed tariff in- creases which would increase its overall revenues by 25% to be effective October 1, 1974. Because of the psychological impact of Hurricane Fifi, effectiveness of the recommended tariff increases and fuel adjustment clause was delayed four months. While ENEE's rate of return will be only about 7.5% in 1974, it would increase to 10-11% for the remaining years of the project period (assuming no further rate base revaluations) and would therefore be satisfactory. Existing covenants providing for tariff adjustments to yield at least a 10% return on ENEE's rate base, valued or revalued satis- factorily, have been repeated in the proposed loan agreement. 6.13 In agreements relating to the fourth power project, ENEE and the government agreed not to adjust electricity tariffs from then-existing levels until completion of the project without the Bank/IDA's consent. At ENEE's request, a similar covenant was not included in agreements relating to the fifth project because of potential problems in their ratification by the now defunct Honduran congress. Because of ENEE's need for sufficient cash, even somewhat above the 10% rate of return level, to complete the sixth project successfully, a clause has been included in the proposed loan agreement re- quiring the utility not to reduce tariffs from their increased levels (para- graph 6.12) during the project period, 6.14 Wiile ENEE's rate of return (paragraph 6.12), debt-service coverage and current ratio are expected to be satisfactory with the 25% tariff increase, its debt/equity ratio will increase from 42/58 at year-end 1974 to 75/25 in 1979. This reflects the substantial borrowing to be undertaken for El Cajon, offset only in small part by increases in equity resulting from the 1974 re- valuation of assets. (If ENEE did not proceed with El Cajon and undertake Naranjito as its next project instead, its debt/equity ratio would rise to only about 50/50 by 1979). Government contributions to ENEE's equity in lieu of loans for most of El Cajon's local cost would improve the utility's capital structure; this should be taken up during appraisal of the El Cajon project. Forecast income statements, balance sheets and key financial ratios are shown in Annexes 12, 13 and 14. 6.15 The debt-service test included in existing loan agreements, whereby ENEE will not incur long-term debt without the Bank's approval unless its most recent 12-month internal cash generation is at least 1.4 times its maxi- mum debt service for any succeeding fiscal year, has been repeated in the proposed loan agreement. The financing plan includes borrowings for the start of the next stage of ENEE's expansion program which would have to be contracted in 1975. Because ENEE's future debt service will increase sharply, Bank approval for those borrowings is expected to be necessary. - 20 - 7. AGREEMENTS REACHED AND RECOMMENDATIONS 7.01 In agreements related to the proposed loan, the following covenants have been repeated: a. appointment of auditors and submission of audit reports (paragraph 3.09); b. retention of earnings (paragraph 6.08); c. rate of return (paragraph 6.12); and d. debt service coverage test (paragraph 6.15); ENEE has agreed to: a. provide the Bank with satisfactory economic justification for service extensions to new areas (paragraph 4.03); b. relocate the population affected by the reservoirs (paragraph 4.15); c. provide and carry out a dam inspection and maintenance program (paragraph 4.16); d. reflect asset revaluations in its books of account (paragraph 6.O4); and e, not reduce tariffs without Bank approval (paragraph 6.13); and the government has agreed to: a. enforce existing legislation on soil conservation and logging control (paragraph 4.15); and b. pay or cause SANAA's electricity bills to be paid on a current basis (paragraph 6.06). 7.02 With the above assurances, the project constitutes a suitable basis for a Bank loan of US$35 million for a term of 25 years including 4˝ years of grace. December 17, 1974 APPRAISAL OF SIXTH POWER PROJECT - HONDTRAS EMPRESA NACIONAL DE ENERGIA ELECTRICA (ENEE) DETAILS OF BANK/IDA POWER LENDING TO ENEE Loan/Credit Project Number Date Amount Name Principal components 7Tn US$ millions) 226-HO 1959 1.45 Interim Power 2.5 MW diesel generating plant in Tegucigalpa; distribution facilities 261-Ho 1960 8.80 Canaveral 30 MW Canaveral hydro station, the first stage in the Lake Hydroelectric Yojoa-Rio Lindo hydroelectric development 541-HO/ 1968 7.5'0/ Rio Lindo 46 MW Rio Lindo hydro station, the second stage of the Yojoa- 116-HO 4.00 Hydroelectric Rio Lindo hydro development 692-HO/ 1970 5,50/ Fourth Power 15 NW gas turbine near Tegucigalpa; about 330 km of 138 and 201-HO 5.50 69 kV transmission lines and substations with total capacity of about 220 MVA to link the northern cities of Progreso, Tela and La Ceiba to ENEE's main system and reinforce existing system links to San Pedro Sula and Puerto Cortes; and 220 km of 34 kV lines and 30 MVA of transformer capacity to provide electric service to rural areas. 841-Ho 1972 12.30 Fifth Power 26 NW diesel generating plant in La Ceiba; a 150 km 230 kV transmission line from Tegucialpa to the Nicaraguan border and related substation equipment to establish an interconnection between the two countries' electric systems and link Honduras' southern district to ENEE's main system: 47 km of 138 kV line to extend ENEE' s main system from La Ceiba to the Aguan valley; and 15 km of 34 kV lines to rural areas. September 1974 H APPRAISAL OR SIXTH POWER PROJECT - HONDURAS EMRESA SNACIONAL DE ENERG-A ELECTRI01 (ENEE) MAIN SYSTEM PEAK LOAD AND NSTALLED OONTINUOUS CAPACITY (in MW) 2973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 19835 Peak oad/ 64 90 100 116 129 143 158 174 193 215/ 238 1/ 264 / 294 1/ 1/ 425 i,/ 420 2/ 416 4/ 414 Csneveral2/ 30 30 30 30 30 30 30 30 30 30 30 30 30 - Rio Lindo T / 46 46 46 46 46 46 46 46 46 46 46 46 46 Rio Lindo II/ - - - - - 46 46 46 46 46 46 46 46 E1CaJon - - _ - _ _ _ _ - 296 296 296 296 Subtotal Hydro 1 22 1 7W =22 17W 7 W 722W2¶7 122W Santa Fe 10 10 10 10 10 10 10 10 10 10 10 10 10 La Ceiba - 26 26 26 26 26 26 26 26 26 26 26 26 San Loren.oo/ -4 Subtota. Diesel =3 - -0v-0- -sr -7W Gas Turbines La Puerta 15 15 15 15 15 15 15 15 15 15 25 15 15 Miraflores 13 13 13 13 13 13 13 13 13 13 13 13 13 Subtotal Gas Turbines 7 2 2 =2 2W 2W TOTAL CAPACITY 114 140 140 144 144 190 1- 186 486 486 486 Parchase from Nicaragua - - - 5/ 5/ S/ 5/ 5 5 9 15 TOTAL CAPACITY AND PURCHASE 114 140 140 144 144 199 190 195 L16 48f 486 486 486 Resere. MW 50 50 40 28 15 47 32 21 23 61 56 70 72 %of Peak load 78 56 4o 24 12 33 20 12 12 14 16 17 07 E/ ExcIudes froit co-mpny irrligation, pumping load and Aguan Volley and Nicorags-. / Includes fruit company irrigation, pumping load, Aguan Valley and Nicaragua. 3/ Cannvesal snd Rio Lindo continuous capacity is equal to capability shown in Anne. 2. Son Loreooc diesel units, now supply kNEE's southern system, to be connected to noin system chec Honduras- Nicaragua int-rconnection line is completed. Depending on its availObility and price, it is likely that ENEE would purchase power from ENALYF before uning Son L-renco plant,or gas turbines. - / Av-ilnble power to/from Niosragus depends on p-c-rogrm d eaergy int-rcharnge to be agreed cn periodi-lly by RNEI and ENALIIF. 9 Minimum purchase from ENALUF. August 1974 Reyised Oecember 1974 I UN H H,14 H * D 0 0 O' ! ° H- 0. - - N H C ON ON 4 . !O H H o ,,N H, 0 0 0 ,10 H ~ ~ ~ ~~ ~~~ H H.lO 2 ~ ~ ~ ~~~ H ON H H H H 0.4>F S IS H C ,-NN~i 84 N 0. 00. H9 0. °0- H.N e ° 00 0 4 H H H .4 D H 4 COON 0 H HO' H H4 H~ ~ ~ H1 H HO O O Hi *O. S~ ~ 0; H H I N \ H .4X H N0 H .4 N COU 0 04~~ ~ ~ .0 ON C 00 H C H CC}~~ ~ H H ON H 4Q 0 0oz U , 2 S X 4 E a X E a 4 2 i C S ANNEX 4 APPRAISAL OF SIXTH POWER PROJECT - HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA (ENEE) PERFORMANCE INDICATORS 1974 1975 1976 1977 1978 Market penetration indicators: Percent of total population with access to public electricity supply 19 21 24 27 30 Number of new villages served 6 2 6 6 6 Number of customers: Added during year 14,500 8,800 10,700 10,000 10,000 At end of year 87,000 95,800 106,500 116,500 126,500 Annual increase in energy Sales - % Retail 23 14 14 13 12 Bulk 64 7 2 3 2 Average energy sales per connection: Retail - in kWa 3,460 3,570 3,660 3,790 3,930 Efficiency indicators: Employees: Operating 1,300 1,354 1,406 1,450 1,506 Construction and studies 310 320 330 340 350 Total 1,610 1,674 1,736 1,790 1,856 Total customers per operating employee 67 71 76 80 84 Financial indicators: Rate of return on fully revalued average rate base - % 8.3 10.9 11.4 10.2 10.3 Debt service coverage, excl. interest during construction 1.6 1.7 2.1 2.3 2.4 Debt/equity ratio with equity adjusted to reflect full revaluations 41/59 41/59 55/45 64/36 70/30 September 1974 APPRAISAL OF SIXTH POWER PROJECT - HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA (ENEE) RETAIL POWER RATES (in lempiras per kWh, kW, or month, as applicable) Tariff Main and southern systems Isolated systems A Residential (main system) first 20 kWh .175 first 15 kWh .233 Residential and commercial next 80 kWh .12 next 85 kWh .18 (isolated systems) next 200 kWh .09 next 200 kWh .16 next 200 kWh .08 next 200 kWh .15 excess kWh over 500 .07 excess kWh over 500 .14 minimum 3.50 minimum 3.50 meter rental 0.50 meter rental 0.50 Sample bills: 90 kWh monthly 11.90 17.00 550 kWh monthly 50.60 87.80 B General (main system) first 20 kWh .175 first 250 kWh 0.14 Industrial(isolated systems) next 80 kWh .12 next 750 kWh 0.12 next 900 kWh .10 excess kWh over 1,000 0.10 next 4,000 kWh .09 next 5,000 kWh .07 excess kWh above 10,000 .o6 minimum: single phase 3.50 minimum 35.00 three phase 15.00 meter rentali single phase 0.50 three phase 1.00 Sample bill: 5,200 kWh monthly 477.10 545.00 C Large industrial first 20,000 kWh .05 next 100,000 kWh .04 excess kWh above 120,000 .03 minimum bill, excluding demand charge 1000.00 demand charge,per kW 4.00 Notes: 1. Tariffs do not include effect of overall 25% increase to be effective February 1, 1975. 2. Sample bills do not include meter rental. August 1974 Revised December 1974 ANNEx 6 Page 1 of 3 pages APPRAISAL OF SIXTH POWER PROJECT - HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA (ENEE) Rio Lindo Hydroelectric Plant Extension 1. The Rio Lindo extension will be the third stage of the Canaveral-Rio Lindo hydropower development: Average Annual Annual Maximum Energy-GWh Capacity IBRD/DA Operation Power Capacity (before)After Factor After Loan/Credit Date Plant mw Stage III Stage III 261-Ho 1964 Canaveral 30 (14l) 166 63 541AA6-HO 1971 Rio Lindo I 46 (294) 245 61 Proposed 1978 Rio Lindo II 16 - 25 61 Total 122 656 61 2. The capacity factor of the extension and of the complex will be about 61%. Through the increased inflow (of about 50%) to Lake Tojoa from the river diversions, energy production at Canaveral will be increased without additional capacity, as its present capacity factor is only about 43%. River Diversions 3. As shown on Map I1219, the Yure and Varsovia rivers will be diverted into Lake Yojoa, the small La Pita dam will control outflows from the lake, and the Rio Lindo will be diverted into the tailrace of the Canaveral plant. 4. Construction details of the main civil works are listed on page 3 of this annex and summarized as follows: - Rio Yhre: 50 m high earthfill dam and 1.9 km canal to be completed by mid-1976; in view of a possible fault along the river valley, soil testing and drilling to establish the best dam axis alignment is underway. - Rio Varsovia: 30 m high rock fill dam with gravity center section spillway, 2.4 km canal and 300 m tunnel to be completed by mid-1976; no known geological fault. - La Pita: 9 m high earthfill dam. - Rio Lindo: 9 m high earthfill dam, 450 m long concrete conduit to be completed by mid-1975 ANNEX 6 Page 2 of 3 pages 5. None of the structures of the diversion scheme is of unusual de- sign; based on available soil test borings, foundation conditions have been judged to be satisfactory; construction materials are available near the four proposed dam sites; and all works are in a seismically inactive area. Pipeline and Penstock 6. The Rio Lindo extension will use some of the facilities of Stage I and II. It will take its water supply (derived from Lake Yojoa and the Rio Lindo diversion) from the Canaveral tailrace through an existing pipeline, regulating reservoir, tunnel and bifurcation to the two new Rio Lindo units. The new pipeline and penstock (which will start at the bifuracation) will be all welded, corrosion-protected by paint, mounted on reinforced concrete saddles, and use: a penstock shut-off valve near the bifurcation, longitudinal expansion joints,and concrete thrust and anchor blocks at directional changes. The penstock will taper from 2.4 to 1.95 m diameter. A penstock shut-off valve will be added to the existing penstock. Installation is to be completed by about mid-1977. Mechanical and Electrical Equipment 7. The new units at the Rio Lindo plant will have Pelton turbines for about 390 m net head with nominal 20 MW generators and 24 MVA transformers of the same size and type as the initial units No. 1 and 2. The powerhouse will be extended by two bays for the installation of the two new units using the existing crane, erection bay and station auxiliaries. The tailrace channel, downstream of the power plant, will be widened for the increased discharges. The expected commissioning date for the plant extension is June 30, 1978. 8. The Rio Lindo switchyard will be extended to connect the two new units to the existing 138 kV transmission lines to Canaveral, San Pedro Sula and Tegucigalpa. With the additions included in the fourth and fifth projects and the new 25 MVA 138/13.8 kV substation in San Pedro Sula area, 138 kV mobile substation of about 25 MVA and distribution system extension of the proposed project, these transmission lines and the system in general will be adequate to receive and distribute the maximum Canaveral-Rio Lindo generation capacity of 122 MW. (00~~~~~~~~~~~~ C - ~~~~~~~~~0 F4 t, g~~~~~~~~~~~~~~~~~~~~4 E X 2 2 ~ ~ ~ w s w W B ˘ py :! Ho 4, H ~0 ~0 0 ~0 00 00 0 O 0~~ ~ ~~~~~~~~~ ˘ ~ o H 4, 0' H H 0' H~~~~~~~~~~~~~~~ o - - 0 >i b 't fl 0 0 0 Pg8O~2osf .! 0 ~~~~ 1 4, 0 0- e I ' gaw t' 3a,, - a 3w0 0' 0 0 0e - H - 0 HoW! V~~ ~ 0--- 00 0 i P 005 1 I) 4 4,0 3F wq, ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4 H 00 o~~~ ~~~ g a 4, -, a. * 1 . 5 4 4, 0 4 saFad~~~~~~~~~~~~~~~~ 0 4,E S g ~ ~ ~ ~ ~ ~ r xa0 ,, H ( APPRAISAL OF SIXTH POWER PROJECT - HONDURAS A1EX 7 EM4PRESA NACIONAL DE EtERGIA ELECTRICA (ENEE) ESTIMATED COST OF PROJECT Lenpiras (thousands) us$ (timsand.) Local Fore gn Total Local Foreign Total A. IBRD Financed 1. Rio Lind. Hydro Plant Expansion a Penstock with surge tank 3,281 17,278 20,559 622 836 1,459 4. Power plant strctore 1,244 1,672 2,916 6271 137 1,28 c.Tailrace 141 274 415 7 3 d. Turbines and generators 782 7.3.28 7,910 391 3,564 3,955 e. Trascfoeser6 40 305 345 20 152 172 f. Accessory slectrical eqaipnent 144 431 575 72 216 288 g. Misc. power plant equipment 138 253 391 69 127 196 h. Switchyard extension 150 386 536 75 193 268 8ub-total 5,920 27.727 33647 2960 13,86 16,824 2. Rio Varsovia Diversion a. Rockfill da section 95 186 281 48 93 141 bt Gravity dam se tion with spillwaY 745 1,095 1,840 373 547 920 c. Canal and tunnel 705 820 1.525 S32 410 762 Sub-tstal 1,545 2,101 3,646 772 1,051 1,823 3. Rio La Pita Dan a. Erthifill dam 35 58 93 18 29 47 b. Spillway 332 414 746 166 207 373 Sub-total 367 472 839 184 236 420 4. Eti Yure Diversion a. Earthfill dan 1,442 2,123 3,565 721 1,o06 1,782 b. Spillway 1,148 1,953 3,101 574 976 1,550 c ..anl 1,167 1.305 2.472 583 653 1,236 Sub-total 3.757 5,381 9.138 1,878 2,690 4,568 5. Engineering, Supervisios, Admdniastation 1,080 3,758 4,838 540 1,879 2.419 Sub-total 1 to 5 12,659 3 9 6.334 19,720 26,054 6. Land and Land Rights 86 - 86 43 - 43 7. Rural Electrification 1,169 1,200 2,369 S85 600 1,185 8. Esuinment and naterials for hurricane rehabilitation - 600 600 - 300 300 9. 138 kV sobile aubstation - 1,000 1,000 - 500 500 10. Base Co-t Estinate (IBRD Portion) 13,924 42.239 56,163 6,962 21,120 28,082 11. Physical Contingencies (11.8%) 1,795 4,820 6,617 897 2,411 3,308 12. Price Contingencies (28,3%) 47-7 a2. 0i0 eCoipnEnt L~ 94- 472 472 b. tO cquivporke s 3,887 1i4672 14,559 1,944 5,336 7,280 On engneering 356 329 685 178 164 342 3ub-total 4.243 11,945 16, 188 2,122 5,972 8,o94 13. Studies 620 1,800 2,420 310 q00 1,210 14. Training 400 900 1,300 200 450 650 15. Interest and Other Charges turing Construction - 8,294 8,294 - 4,147 4,147 16. Total Erpected tot of IBRD Financed Portion 20,982 70.000 _ 1o)491 35,000 45,491 R, CASEI Financed 1. Rio Lndo Diversion 330 563 893 165 282 447 2. Etc Undo ineering 280 1,496 1,776 140 748 888 3- ysVSe- Expansi, on l5 - ~785o6 7B4 3. va. x Distribution i575 - 78 s,556 ;0,126 15,682 2,778 5,o63 7,861 a. Dit triuto. 5__556_____ b. Centro Substation (San Pedro Sais) 300 1.400 1,700 150 700 850 Sub-totai 5,856 11,526 1',382 2,928 5,763 8,691 4. Base Cost Estinste (CAREI POrtion) 6,466 13,585 ?0,051 3,233 6,793 10,026 5. Physical Contingencies (5.5%) 327 776 1,103 164 388 552 6. Price Continaensies (30.0%) 1,817 4,198 6,015 908 2,099 3,007 7. Interest Ouring Construction - 300 300 - 150 150 8. Total Eepected Oost of CAREI Financed Portion 8,610 18,859 27,469 4,305 9,430 13,735 C. EIEE Financed 1. Rural Electrification (1975 - 78) 44O 1,142 1,582 220 571 791 0. Toal Expected Cost of Project 30,32 90001 120.033 06 60017 July 1974 Revised Decesiber 1974 ANMEX 8 APPRAISAL OF THE SIXTH POWER PROJECT - HO.NDURAS EMPP2SA NACIONAL DE ENlRGIA ELECTRICA (ENEE) Estimated Schedule of Loan Disbursements Assumptions Loan Approval December 31, 1974 Effective Date March 31, 1975 Closing Date December 31, 1979 IBRD Fiscal Year Cumulative Disbursement and Semester at End of Semester (US$1,000) L974/75 June 30, 1975 761 1975/76 December 31, 1975 2,383 June 30, 1976 8,834 1976/77 December 31, 1976 13,885 June 30, 1977 20,735 1977/78 December 31, 1977 27,369 June 30, 1978 31,617 1978/79 December 31, 1978 33,348 June 30, 1979 35,000 July 1974 Revised December 1974 APPLAISAL OF SZYTB POWERt PROJECT - 1DNDURAr AN= 9 p Page 1 of 2 Pages ENPRs2A NAciow01 DE ENEp3IA EL3oTiTCA (EN8E3 PROJECTION OP ENE113 SALES (Sn Glib) Actual ---Fo r e-at-------- F___ -------- ____ 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 985 MAIN S7STEM 1.- Ceet-al Dittrict 1o4,Opo 119,355 134.903 151.560 170262 91301 214.975 2416o0 071,5o 3 408385,608 433.480 TegevIgalpa 99,300 1,7 i2'67 141!5 3co o59,05o a02,47 054,782 286 630 322,45 6,6 5an Juaeito 399 500 50 6os 666 732 8o5 84 1,072 1,179 1,297 1.427 Cobayaguc 1,652 1,900 2,183 2,506 2,875 3,295 3,773 4,316 4,933 5,633 6,427 7,327 8,345 S guatepeque 1,366 1,608 1,889 2,216 2,548 2,928 3,361 3,855 4,418 5,058 5,786 6,6i3 7,552 Volle do T-ae. 80o 1,680 1,750 1o820 1,900 1,990 2,100 2,220 2,340 2,452 2,570 2,693 2,823 Sn Juan de Fl-ore 21 50 54 58 63 68 73 79 86 93 100 108 117 41 Z-arano - 736 1,525 1,580 1,637 1,696 1,758 1,822 1,889 1,958 2,030 2,105 2,183 Valle de Angeles 192 210 230 252 276 302 331 362 397 435 476 521 571 L. Pa 400 44o 434 532 586 644 702 765 834 909 982 1,060 1,145 Ajorerque 34 83 90 97 105 113 122 132 142 154 166 179 194 Lejesa i 24 58 63 68 73 79 85 92 99 107 116 125 135 Valle de San Antonio 79 189 204 220 238 257 278 300 324 350 378 408 441 San Sebetian 20 48 52 56 60 65 71 76 82 89 96 104 112 lSai - 70 76 82 83 95 103 111 1200 150 143 151 113 Other, 70 76 82 88 95 103 111 120 130 140 151 163 2. - Sne Pedro Sulb District 206.663 269 0 2 313,017 S0,941 38,311 412, 44441 491,003 536,507 5871,3 9 645 1037 San Pedro Sole 1 27,0 144,000 165,072 188 282 213,587 040,401 275,148 310,093 352,891 398,767450,665 Puerto Gortes 8,374 9,379 10,5o4 11,765 13,177 14,758 16,529 18,512 20,734 23,222 26,008 29,129 32,625 Minerel El M-ohito 46,400 58,600 6o,900 63,600 69,350 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 Cen_eto. Sian_ 28,500 48,ooo 48,000 48,000 48,000 48,000 46,000 48,000 48 000 40,0OO 43o 00 46 000 48,0oo E1 Prugre-c 3,799 4,70o7 5,103 5,899 6,808 7,842 9,019 10,354 1i,866 13,573 15,501 17,671 20,110 Sante Barterb - 729 802 882 971 1 068 1,174 1,280 1,395 1,520 1,657 1,806 1,969 lIo N-ueve, Uited Fouti C.. 7,500 20,590 2i,16o 21,740 22,320 220840 23,300 23,770 24,240 24,725 25,219 25,723 26,238 sante Ritt - - 270 308 343 386 421 462 507 555 609 660 715 Guanobias - - 900 900 900 900 900 900 900 900 900 00 900 E1 Hdeb. 671 691 712 703 755 778 801 825 850 876 902 929 957 Coca - 46 104 118 135 152 172 194 218 245 276 306 338 3. I In Ceibe Diatrict - 28 171 37 026 41 137 44 255 47 785 51,443 55,240 59,203 63,509 68,538 73, 52 78,761 te Cettb. - Miuplidad - It 186O 09 50O 30,300 21,60027 38,376 4178494 49,697 la Ceib, - Standard Fauit Co. - 2,850 3,000 3,150 3,300 3,400 3,500 3,600 3,700 3, 800 3,900 4,000 4,100 Tote. - Mnnocipalidad - 2,216 2,5o6 2,817 3,163 3,565 3,993 4,472 5,009 5,610 6,283 7,037 7,881 Tel, Nvevq. - VIated Fruit Co. - 6,813 12,180 12,570 12,970 13,360 13,750 14,130 14,5i2 14,903 15,306 13,719 16,143 In Masica, _ er. Frmciaoea 292 54o 580 620 66o 700 740 780 820 Ko0 900 940 4.-Osolatee letelot _ - - 19.223 21,929 25,022 28 550 32,568 37,148 42,353 48,271 4 970 6 6,563 Choluteca - - - 11,735 13,777 14,167 it 22 0,06 5,709 09,948 34,000 40,368 ,7 0 - L--.ceo - _ 5,021 5,509 6,037 6,611 7,232 7,905 8,632 9,418 10,265 11,179 N-aooc - _ - 858 918 982 1,051 1,124 1,203 1,287 1,377 1,473 1,577 Pespire - - - 228 250 275 303 333 367 400 436 475 513 El Trdcofo - 107 120 135 152 171 191 213 239 263 288 Yagbuare 50 55 61 67 74 82 90 99 106 115 Nbcsigue 57 65 74 84 94 106 120 135 150 i66 M.' co-i - - - 98 112 128 147 167 195 217 246 274 306 El orpus - - - 46 50 56 61 67 73 80 87 94 100 L-'e _ 95 105 117 129 142 156 171 188 203 219 G-noecorl - - 49 54 59 64 70 77 83 90 96 103 Iogeeio lee Piletne- 879 906 ,,,,,951 ,,,,395 ,9 1 .08 ,69 1. 112 1.156 1,203 1.251 TOTAL - MIN . 310,940 416,986 465.184 530.937 587,387 644.319 707.705 778,855 858,899 947,569 1,o47,693 1.159.563 1.285,844 ISOLATEID SYSTEMSL A. - To be irterconaected 04 476 04,006 16,490 :^at. Bbrbar63 La Ceibb M-Muicipalided Lab eib .stbda Fui Co - - - - - - - - - - - - - Tel. M-inSipelided 1,980 - - - - - - _ - - - - - ch.lutece 7 179 8,471 9,979 - - - - - - - - - - sne Loreneo 3,783 4,i6i 4,573 Nuc.une 700 749 801 - - - - - - - - - - erpire 171 188 207 M-arco-i - 37 85 Iogetio L. Piletee - 400 845 B. Other Oyatece 6,373 _2,394 ,333 9,291 10,347 _IL3,33 00L 868 669 16 050 17.935 20.044 40,97 25 038 TrujlSo 630 751 8 9, 519 347 581 '617 W53 739 755 83! '23 Ocotopagee 367 389 412 437 463 491 521 552 585 62o 657 697 738 Santa Roon de Copan 1,281 1,345 1,412 1,483 1,557 1,635 1,717 1,802 1,893 1,987 2,087 2,191 2,300 JUtitClpb 1,i84 0,362 1,563 1,791 2,049 2,340 2,668 3,036 3,449 3,910 4.427 5,003 5.643 DuelS 1,109 0,330 i,569 1,846 2,167 0,339 0,971 3,470 4,o146 4,710 5,473 6,349 7,351 Maron 221 232 0 244 256 269 282 296 311 327 343 360 378 397 L Speranco 322 370 425 487 557 636 726 826 938 1,064 1,204 1,361 1.535 E1 Paraino 859 988 1,134 1,300 1,487 i,698 1,936 2,203 2,502 2,838 3,212 3,630 4,094 Cetatana 300 539 570 6o2 639 677 720 7066 819 874 932 994 i,o60 A"Ep'la 250 268 286 306 328 351 375 401 430 460 492 526 563 San Marcos de Colon 30 24o 254 268 284 301 321 342 365 389 415 443 472 TOTA0, - ISOLATED SYSTEM5 20_849 21,527 24,843 9.291 10,347 11,531 12,868 04,366 16,050 17,935 20,044 oo,401 05,038 G E r E R A L T 3 T A L 331,789 438,513 490,027 54o,228 597.734 655,850 720,573 793.221 874.949 965.504 1.067.737 1,081,968 1,310,882 Au.gut 1974 Page 2 of 2 page5 311ERGY B8EiNEIT5 Aectoal ----------------------- Forecat --------- --------------- MIIIN FYFTEM 1973 1974 1975 1976 1977 1978 1979 1980 1981 1962 1983 1984 1985 1.- Central District 122 407 8 ;_tF 6 252 267 Soc Joancite '458 588 647 712 784 '61 '947 1042 I,i46 1,261 1,387 1,526 1,679 leneysgee 1,836 2,1n1 2,426 2,784 3,194 3,661 4,192 4,796 5,48i 6,259 7,141 8,141 9,272 Sigeatepeque 1,518 1,787 2,099 2,462 2,831 3,253 3,734 4,283 4,909 5,620 6,429 7,348 8,3ql Valle de TGcare 891 1,871 1,949 2,027 2,116 2,216 2,339 2,472 2,6o6 2,731 2,862 2,999 3,11o Sa JaU de Flores 25 59 64 68 74 83 86 93 lot 109 118 127 138 31 zaseoc - 866 1,794 1,898 1,926 1,996 2,068 2,144 2,222 2,324 2,388 2,476 2,568 VaLle de Aegeles 226 247 271 296 329 355 389 426 467 512 560 613 672 L- Pee 444 489 538 591 65i 716 780 850 926 1,010 1,091 1,178 1,272 Ajorecqee 40 98 106 n14 124 2.33 144 152 167 oBi 195 211 228 Lejresuei 28 68 74 So 86 93 100 108 1i6 126 136 147 159 Valle de San Actorio 93 222 240 259 280 302 327 353 381 412 445 48o 519 San Sebstisa 24 56 6i 66 7 76 84 8g 96 105 1L3 122 132 LaGi _ 82 89 96 104 1n2 121 131 141 153 165 178 192 Other- - 82 89 96 104 112 321 131 141 153 165 178 192 2.- San Pedr Bela District 939,14 485.78 362,003 340.363 375,244 407.879 444 oo2 434,907 531.223581.944 6 7 17t 776.52 2ae Padre Bela ~~~~~~~~13,97 1728 1768 5317 209,328 83738 336 30904 397,378 392,53~7 '43,6 501,23 5 3,3 Poe-te Cotes 9,053 10,139 ni,356 12,719 14,245 15,955 17,869 20,013 22,45 25,1305 28,117 31,491 35,270 8IOcerl E1 Pbchito 46 400 58 600 6o,90o 63,660 69,350 70,000 70 000 70 000 70 000 70, 00 70,000 70,000 70,000 C.sente Bija_ 28500 4 48,08 4 48,ooo 48,000 438000 463,000 43,OCC 48,ooo 48,000 43,000 48 000 43 000 o8,OOO E1 Progreseo 4,149 5,509 6,379 7,374 8,510 9,803 11,274 12,943 14,833 16,966 19,376 22,289 25,138 Ssnta Serhcra - 810 891 980 1,079 1,187 1,304 1,422 1,550 1,689 1,841 2,007 2,188 Lina teTac, UOiltd Frnit Ce, 7,500 20,590 21,16o 21,740 22,320 22,84o 23,300 23,770 24,240 24,725 25,219 25,723 26,238 Santa Rite - - 118 363 404 454 495 543 596 653 716 777 841 GOsrc.hies - - 1,059 1,059 1,059 1,059 1,059 1,059 1,059 1,059 1,059 1,059 1,059 E1 9-6b 706 728 749 772 795 819 843 869 695 922 949 978 1,007 Oron - 54 123 139 158 179 202 228 257 288 325 360 398 3,. Ia Oeiba Dietrict 31,336 40783 45.017 49,053 5,10.3 5,9 61.65. 66 .21 154 76519 _ S Ia Ociha - ItinilcieLiciad _ 728795 228514458 25,882 7250487117357 7297_7 3c0,045 41,4459 _201 49,269 . 2 8 La Ceibh - Bteodurd Frit Co. - 2,850 3 000 3,150 3 300 3,400 3,500 3.600 3.700 3 800 3,900 4,000 4,100 Tale. -?dsnepalidad - 20462 2,784 3,130 3,514 3,961 4,437 499 5,566 6,233 6,981 7,819 8,757 TDeL Thev. - iated Sctt Ce. 6,813 12,180 12,572 12,970 13,366 13,750 14,13 14,512 14,923 15,306 15,7n9 16,243 La Masica. - Ssn Fracisco _ 365 675 725 765 815 865 915 964 i,o14 1,063 1,113 1,162 4,- Chelet.e. District _- - 9,0 26 220 _2 34,4 38,904 44,5 _ 4 Choluteca _ - - 7,388 l20c 21 492 54 Se- lceen - L - 6,512 7,145 7,830 8,575 9,380 10 253 11,196 12,215 13,314 14,499 NBcaee - - _ 923 987 1,056 1,130 1,209 1,293 1,384 1,481 1,584 1,696 Feepire - 253 278 306 337 370 408 444 484 528 570 E1 TriecCe - - - 125 141 159 179 201 225 251 282 309 339 YCegae- 59 65 72 79 87 96 106 116 125 135 Na-igue - - 67 76 87 98 ll 129 i4i 159 176 195 Marcovia - - _ 115 132 151 173 197 224 255 289 323 360 ElCros - - - 54 59 66 71 79 86 94 103 110 n8 Lague - - - 112 124 138 151 167 184 201 222 239 258 GQcccrie - - - 58 63 69 75 83 90 98 i06 113 121 Ingenio La, Piletar - - _9, 6 942 980 1.020 1,.6o 1,102 1,146 1,192 1.240 1,290 TOTAL - -NAIN SYSTEN 343.252 457,107 5si0i88 586.215 650.315 151.378 787.682 868.982 960.433 1.061.792 1.175.837 1.34.129 1 .493 I22LATED SYSTEM8 A.- To be inter.onnected 2 16,833 19,733 Sata Brbhara 7 7 La Ce.ia - MweLeipalldad La Ceiba - Stodard Fruit Ce. - Tela MuciclpaLided 2,266 - - - - - - _ - - - - - Chbluteca 8,446 9,966 11,740 Sac loreac 4,997 5,397 5,931 s acee 753 805 86i - PeapiIe 199 20 230 Maceerie - -4 100 Ingenio Las 7iLetas - 412 871 B.- Other Sy2ter 7,591 8,940 9,918 11n018 12,255 13.646 1212 6,967 18 60 26369 4 TreJilio 573 60c 645 ~~~~~~~~~~~~~~~~729 775o2 9c51,4111llO Oc.tepeque 524 556 589 624 661 701 744 789 836 886 939 996 1,054 Santa, Bos&e AcoCps i,514 1,592 1,669 1,753 1,340 1,933 2,030 2,130 2,238 2,349 2,467 2,592 2 719 Juticalpe 1,320 1,518 1,742 1,997 2,284 236o9 2,974 3,38C5 3,845 4,360 4,935 5,577 6,291 Dali 1,328 1,567 1,846 2.171 2,549 2,987 3,495 4,002 4,760 5,541 6,439 7,469 8,648 lNarclae 260 273 287 301 316 332 348 366 385 404 424 445 467 La spereza 379 435 500 573 655 748 854 972 l,104 1,252 1,416 1,6o0 1,806 E1 Preti 1,011 1,162 1,334 1,529 1,149 1,998 2,278 2,592 2,944 3,331 3,779 4,271 4 816 Cataca:ea 353 634 671 708 752 796 847 904 964 1,028 i,o96 1,169 1 247 A,spla 294 315 336 360 386 413 441 472 506 541 579 619 662 Ban MLcerd.a Colon 35 282 299 315 334 354 378 402 429 458 488 521 555 T,)TAL - I0OLATE SYSTEM 24,824 25,773 29.65i u.013 12.255 13,646 15.212 16.967 18.939 21.135 23,609 26,369 29,445 . E B S R A 1 T 0 7 A I 363.C76 482.880 540,739 397.233 662.970 729.024 802.894 &§2s3 9792.372 1.082.927 1.199.446 1.330.498 1.477.938 Aegost 1974 ANNEX 10 Page 1 of 4 pages APPRAISAL OF SIXTH POWER PROJECT - HONDURAS EI4PRESA NACICNAL DE ENERGIA ELECTRICA (ENEE) 0ONPARISON OF ALTERNATIVE POWER PROJECTS 1. The recommended river diversions and the Rio Iindo plant extension are the result of an economic comparison of several diversion layouts and combinations of capacity additions at the Rio Lindo and Canaveral power plants. Harza analyzed: four layouts each for diversion of the Yure and Varsovia rivers and two for the La Pita dam; Rio Lindo plant extensions of 1 x 20, 1 x 25, 2 x 20 and 2 x 25 MW; and the installation of a third 15 MW unit at Canaveral. The addition of two 20 MW units at Rio Lindo was the 'most economic solution. 2. Harza then compared the selected Rio Lindo extension scheme with the least-cost thermal alternative, which would be the installation of 6 x 6.6 MW medium-speed (400-500 rpm) diesel generating units burning Bunker C oil to be installed near the refinery at Puerto Cortes. Using January 1974 costs of construction, operation and maintenance and the government's official price of L 16 (US$8)/barrel for fuel, Harza determined that the Rio Lindo extension was the lesser-cost alternative for discount rates up to about 20%. 3. ENEE will be able to generate about 100 GWh/year of additional energy by passing water derived from new diversions through existing Canaveral-Rio Lindo facilities. Therefore, the entire extension scheme is theoretically divisible into two parts: the portion of the river diversions which would generate that additional energy; and the pipeline/penstock, new generating units and remaining portion of the diversions needed to meet ENEE's capacity and additional energy requirements. 4. The least-cost thermal means of providing 100 GWh/year would be the installation of 16 MW of medium-speed diesel generating capacity, operating at a plant factor of about 0.71. Based on Harza's estimates, the total construction cost of the river diversions, which would produce 248 GWh/year, at January 1974 prices is L 16.6 million. For comparison with thermal generation, the estimated capital cost of the diversions needed to generate 100 GWh/year in the existing facilities was balanced against costs of the diesel facility, using the assumptions shown on page 3 of this annex. Since the capital costs of the two are of the same order of magnitude, and the river diversion scheme does not entail any fuel costs, it is the lesser-cost method of providing the additional generation for discount rates of up to 50%. 5. The cost of the remaining RiQ Lindo extension facilities was then compared to the least-cost thermal facilities to provide the remaining 148 GWh/year and meet ENEE's total capacity requirement of 40 MW. The thermal facilities selected were 24 MW of medium-speed diesels operating at a 0.71 plant factor and a 16 MW gas turbine, which would be installed at ENEE's ANNEX 10 Page 2 of 4 pages La Puerta substation in San Pedro Sula, already the site of an existing 13 YU gas turbine. As shown on page 4 of this annex, the Rio Lindo extension is the lesser-cost method of meeting ENEE's additional energy and capacity requirements when compared to this thermal alternative for discount rates of up to about 12%. 6. Thus, the entire scheme may be regarded as the least-cost method of meeting Honduras' incremental electricity needs. Cost Streams: Diesel Facilit and River Diversions (thousands of lempiras) 16 MW medium-speed diesel facility costs River diversion costs Year Capital Operating Total Capital Operating Total 1974 1,560 1,560 1,700 1,700 1975 3,120 3,120 3,500 3,500 1976 1,560 1,473 3,033 1,500 33 1,533 1977-2026 2,946 2,946 67 67 1999 1,560 1,560 2000 3,120 3,120 2001 1,560 1,560 Equalizing discount rate: 50% (plus) ASSUlMPTONS Capital cost L 390/W 6,700 Useful life in years 25 50 Operating costs: Annual maintenance- as % of capital cost 2.5% Station heat rate 10,000 BTU/kWh Fuel cost: per barrel L 16.00 P per kWh .0279 m Lubricants: 10% of fuel Cost Streams: Thermal Facilities and Rio Lindo Extension (thousands of lempirasJ Thermal facilities: 24 MW medium-speed diesels at Rio Lindo extension including pipeline/ Puerto Cortes and 16 MW gas turbine at San Pedro Sula penstock and related portion of river diversion Year Capital Operating Total Capital Operating Total Gas Diesel Turbine Variable Fixed 1975 1,000 1,000 1976 2,340 1,360 3,700 15,000 15,000 1977 4,68o 2,720 7,h00 19,000 19,000 1978 2,340 1,360 2,093 185 5,978 9,100 220 9,320 1979-2028 4,185 370 41,555 44o 440 2001 2,340 1,360 3,700 2002 4,68o 2,720 7,4o00 2003 2,340 1,360 3,700 Equalizing discount rate: 12% ASSUMPTIONS Capital cost: 44,100 Diesel L390/kW Gas turbine L370/kW Useful life in years 25 50 Fixed operating costs: Annual maintenance- as % of capital cost 2.5% 1% Variable operating costs for .˘ diesel plant: o Station heat rate 10,000 BTU/kWh Fuel cost: per barrel L 16.00 per k-h .0279 0q Lubricants: 10% of fuel w September 1974 Revised December 1974 ANNEX 11 Page 1 of 2 pages APPRAISAL CF SIXTH POWER PROJECT - HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA (ENEE) RETURN ON PROJECT INVESTMENT 1. The cost and benefit streams for the project investment are shown on page 2 of this annex for the assumed 50-year life of the hydro portion of the project. Construction costs exclude price escalation beyond the fourth quarter of 197h and interest during construction. In estimating the project benefits, it was assumed that the value of the hydro energy supplied to the system would at least equal the difference between they incremental revenue (at rates expected to be in effect beginning early in 1975) and the incremental costs. 2. The rate of return of the project - defined as the discount-rate which equalizes the stream of expected net revenues attributable to the project with its costs - is about 22.3%. This may be regarded as a minimum rate of return, because ENEEIs electricity rates do not adequately measure the full benefits to customers, especially commercial and industrial. Page 2 of 2 pageo o .001. 3 o N 04 ol "i E ~ t s X i 3 '. 0 '0 | ' N 4 t N4 0,0 .004 10 N ''| . t c.. ˘ A Io 04' '0 04. I' | uII. 0>4th o H0 a, o O0 '04 0A. , |HN 11 t ' | - 0' o. 04 , n1S 0 N o: 1 H '' I - 04 I0 0:. C 0'p 0 , : 0' 04 0 j40d 0 ~ H f 0' _:. H qt,4 0 a'. ~' E i X 4n L z . o 1I r 04 H0 '0 P ,0 O O C.0'n o -4C0 C: 04 n .. S* 041= <> e ^ g S4 S404img3 8> t R '-0 04k c I-"2 ' APPRAISAL OF SIXTH POWER PROJECT - HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA (ENEE) ACTUAL,AND FORECAST INCOME STATEMENTS 1971-79 (in thousands of lempiras) - _ - - - - Actual - - - - -- - - - - - - - - - - - - - - - - - - - Forecast - - - - - - - - - - - - - - - - - - 1971 1972 1973 1974 1975 1976 1977 1978 1979 Sales in GWh 251.0 279.0 324.0 417.0 465.2 530.5 587.4 644.4 707.7 Average revenue per kWh (centavos) 7.5 7.6 7.4 7.4 9.7 9.2 9.3 9.5 9.6 Operating revenues 18,887 21,195 24,102 30,915 44,906 48,945 54,869 61,235 68,362 Operating expenses: Depreciation 2,767 3,452 3,787 5,131 5,612 5,887 8,087 8,612 8,837 Fuel - main system ) 13 858 1,695 3,114 4,321 5,169 4,540 4,407 - isolated systems ) ' ) ) 921 2,247 2,074 876 980 1,o96 1,226 Other generating expenses - main system ) 2,597 2 )1 2341,163 1,1487 1,772 1,959 2823,058 - isolated systems) ) 2 479 590 447 502 561 617 Transmission and distribution 1,550 1,684 1,897 1,966 2,454 2,830 3,122 3,454 3,741 Customer accounting and collection 894 944 1,129 1,155 1,470 1,715 1,964 2,229 2,489 Sales promotion 148 126 136 140 171 192 210 232 253 General and administrative 2,056 2,290 2,888 3,045 3 908 4,625 5,299 6.01 6 819 Total 11.342 11,770 13,112 17,021 20,88_ 27,292 29,527 31,477 Net operating income 7,545 9,425 10,990 13,894 24,026 26,280 27,577 31,708 36,915 Other income 200 - 129 232 79 10 140 150 160 170 Net income before interest. 7,7745 9,296 11,222 13,973 5 26,420 231, 37,078 Interest: Total 3,101 3,933 5,569 6,273 9,918 16,436 22,249 33,161 43,848 Charged to construction 976 208 1 328 9 810 7,145 12.926 22,031 29,566 Charged to income 2,125 3,725 4,241 6,234 9,108 9,291 9323 11,130 14,282 Net income 5,620 5,571 6,981 7,739 15,048 17,129 18,404 20,738 22,803 Capital and surplus: At beginning of year 39,488 46,228 51,824 59,414 67,153 82,401 99,872 118,576 139,614 Contributions 1 120 2 6 - 200 342 300 300 300 At end of year 51,824 59, 919,872 5139,614 162,717 August 1974 w Revised November 1974 ANNEX 12 Page 2 of 3 pages ASSUMPTIONS USED IN FORECASTS Sales and Revenues 1. ENEE prepares forecasts of GWh sales detailed by locality and/or large customer, as shown in Annex 9 and described in paragraph 5.02 of the text. The utility estimates revenues from sales in a similar fashion, using a separate average rate per kWh for each locality. The average rate per kWh for the entire utility therefore fluctuates slightly from year to year depending on MENE's assumptions regarding new large customers and differing growth rates of markets in various localities. 2. Forecast revenues reflect an overall 25% increase in electric tariffs effective January 1, 1975. Fuel and Generating Expense 3. Price per Generating Costs Plant Fuel Used Barrel - L per kWh - L San Pedro Sula gas turbine (Miraflores) Light diesel 26.04 o.b697 Tegucigalpa gas turbine Light diesel 29.49 0.0889 Tegucigalpa diesels (Santa Fe) Light diesel 29.49 0.0638 La Ceiba diesels Bunker C 21.62 0.0346 Depreciation 4. Type of Property Annual Rate in % Hydro generating 2.5 Gas turbines 4.0 Diesel generating 5.0 Transmission lines and substations 2.5 Distribution plant 5.0 Vehicles 20.0 General equipment 10.0 Other Operating Expenses 5. ENEE bases its projections of fixed expenses on a detailed historical analysis, using actual data beginning in 1966 to establish cost trends for each account, which corresponds to each generating station, substation, transmission line, and distribution district. It then uses historical cost trends, adjusted for inflation of 4% for 1974-75 and 6% for following years, to estimate expenses for each account. 6. To check its projections, ENEE also develops historical and projected costs per unit of generation, transmission or distribution, as applicable. ANNEX 12 Page 3 of 3 pages For example, transmission operating and maintenance expense are compared for each line of like voltage on a per-km basis; distribution and customer- service expenses, on a per-customer basis; generation expenses, on a KWh and kW basis. Labor-Related Costs 7. The number of employees and related costs follow: Total labor- Number of Ave. salary related costs Year employees (leMpiras) (L x 1000) 1971 1,275 4,229 5,392 1972 1,406 .4,237 5,957 1973 1,616 4,202 6,790 1974 1,610 4,370 7,036 1975 1,674 4,545 7,608 1976 1,736 4,818 8,364 1977 1,790 5,107 9,141 1978 1,856 5,413 10,0h7 1979 1,911 5,738 lo,965 WES has forecast personnel growth at 3% annually, plus personnel needed at new or expanded installations. September 1974 Revised December 1974 APPRAISAL OF SITH POWER PROJECT - HONDURAS EPRSA NACIONAL DE EgERGIA EIECTRICA (EM) ACTUAL AND FoRECAST IALCE SHEET AT YEAS END 1971-79 (in thousands of lempiras) -----Actu-l- - Forecast - - - - - - - - - - - - - - - - - 1971 1972 1973 1974 1975 I976 1977 1978 1979 ASSLTS Utility plant 110,380 121,882 141,111 170,297 193,876 205,408 289,183 311,506 324,107 Less accumulated depreciation 19,035 22,503 26,53 3 37,246 43 133 51,220 a 68 669 Net utility plant in service 138699,379 114,608 363 135630 16,275 237,963 251,6774 Construction work in process 2954 5749 18705 2,56 12 429 121,697 185 941 365,057 546 823 Net utility plant 9 133,313 151,232 1609 283 972 423,94 t16,731 Current assets: Cash and equivalent 417 520 496 1,278 5,656 97 470 486 480 Accounts receivable 5,994 8,440 6,555 7,300 7,500 7,700 8,l00 8,900 9,700 Materials sand supplies 5,958 8,096 6,906 7,300 8,200 8,700 12,20 13,000 13,400 Prepaid expenses 760 555 373 4ao 400 400 400 400 400 Total current assets 13,129 17,113 14,330 78 21,756 16,9 21,170 22,786 23,980 Deferred charges-preinvestment studies 4,499 6,877 7,560 7.560 7.9 102 10530 10,780 10,780 Total assete 111,927 129,616 155,203 175.070 198.805 311079 55604 650297 LIABILITIES AND EQUITY Capital and surplus 4 5ciL.241k 82 401 , 99,87g U1 576 139,614 162 717 Long-term debt 61,799 73,629 91,537 fDZ;517 f&17mD 505,083 Less current portion 4,670 6,013 7 112 9,226 7.514 7,430 7,620 9 148 10,022 Net long-term debt 57,129 67,F61 6t 5 93,29 0 324,108 658,382 Current liabilities: Current portion of long-term debt 4,670 6,013 7,112 9,226 7,514 7,430 7,620 9,148 10,022 Notes and accounts pkyable 1,636 1,179 981 2,0C0 1,200 1,400 1,600 1,800 2,000 Accrued expenses 1,189 1,799 1,962 2,000 2,000 2,000 2,000 2,000 2,000 Customers' deposits 1,075 1,185 1,309 1 400 1,500 600 1,700 1800 1,900 Total current liabilities 8,570 2,176 11,364 4*t, 12_2_ _1 1___6 14,74U 759 Total liabilities and equity 111,927 129,616 155,203 M, _607 8 21 Note: Utility plant at 1973 and future year-ends is shown at original cost adjusted to reflect revaluation Df f6,853 resulting frosi increase in long-term debt attributable to 1971-73 worldwide currency realignments. August 1974 Revised November 1974 APPRAISAL OF SIXTH POWER PROJECT - HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA (ENEE) ACTUAL AND FORECAST KEY FINANCIAL RATIOS (amounts expressed in millions of lempiras) 1971 1972 1973 1974 . 1975 1976 1977 1978 1979 Return on net plant Average net utility plant in operation* 69.3 95.4 107.0 186.6 206.2 216.5 255.7 298.9 306.1 Net operating income* 7.5 9.4 11.0 13.9 22.5 24.8 26.1 30.2 35.4 Percentage return 10.9 9.9 10.3 7.4 10.9 11.4 10.2 10.1 11.6 Debt Times debt service covered by internal cash generation 2.4 1.7 1.7 1.4 1.6 1.9 2.1 2.2 2.0 Debt/equity ratio* 55/45 57/43 59/41 42/58 42/58 54/46 65/35 71/29 75/25 Working capital Working capital at year-end 4.6 7.4 3.0 1.7 9.5 4.5 8.3 8.o 8.1 Current ratio (to 1.0) 1.5 1.7 1.3 1.1 1.8 1.4 1.6 1.5 1.5 Depreciation As a percentage of average gross utility plant* 3.2 3.0 2.9 3.1 2.9 2.8 3.1 2.8 2.8 * Utility plant and equity have been adjusted to reflect asset revaluation of about 50% in 1974, and net operating income to reflect increased depreciation provisions on the revalued plant. August 1974 Revised November 1974 HJ ANNEX 15 Page 1 of 2 pages APPRAISAL OF SIXTH POWER PROJECT - HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA (ENEE) LONGLTERM DEBT AT DECEMBER 31, 1973 (in thousands of lempiras) Annual Balance Final Interest Excl. Current Maturity Rate - % Currency Portion IBRD/IDA: IBRD 261-HO 1985 6 Various 11,359 541-HO 1993 6.25 Various 13,890 692-Ho 1990 7 Various 3,972 841-HO 1996 7.25 Various 9,281 IDA 116-HO 1993 6.25 Various 7,410 201-HO 1990 7 Various 10 503 Total IBRD/IDA CABEI: Loan 182 1977 6 and 8 Various 557 3-238 1977 5.75 Various 2,843 Total CABEI 3,400 Banco Central de Honduras: Loans for Canaveral expansion, San Pedro Sula, Choluteca acquisition and improvements 1975 7 Lempiras 334 Yojoa-Rio Lindo second stage 1981 7.5 Lempiras 4,686 1972 bonds 1984 7 Lempiras 2,417 1973 bonds 1985 7 Lempiras 4 250 Total Banco Central 11,67 USAID Loan 137 1987 3.5 US$ 3,875 Standard Fruit Company 1979 - US$ 320 Banco Municipal Autonomo 1981 7 Lempiras 29 Various contractors - to be paid from proceeds of long-term loans and credits Various 2,173 Provision for revaluation of foreign currencies Various 6,526 Total 84,425 August 1974 ESTIMATED DEBT SERVICE 1974-79 ANNEX 15 (in thousands of lempiras) Page 2 of 2 pages 1974 1975 1976 1977 1978 1979 AMORTIZAIOON Existing loans: IBRD - 226-Ho 458 - - - - - 261-Ho 751 795 845 897 952 1,008 541-Ho 488 513 550 588 626 663 692-Ho 181 391 410 448 467 505 841-Ho - - 273 575 624 673 IDA - 116-Ho 255 267 279 303 328 340 201-HO 564 1,093 1 071 1 025 1,003 957 Total IBRD/IDA 2,697 3,059 3,836, CABEI - 3-182-0 222 222 222 113 - - 3-238-0 700 700 700 - _ - 3-238-1 775 775 775 387 _ - 0051 - - 280 590 640 6go Total CABEI 1,697 1,697 1,977 1,090 640 690 USAID 137-522-A-003 243 252 261 270 280 289 Central Bank of Honduras: Bonds and loans 1,107 3,600 919 994 1,075 1,162 Municipal Autonomous Bank 18 18 18 18 18 18 First Rational City Bank 1,350 600 6o0 6o0 600 600 Total existing 7,112 9,226 7,203 6,808 6,613 6,905 Proposed loans: IBRD - - - - - 728 CABEI loans 66- and 67-FCIE _ _ 311 622 622 622 CABEI distribution loans _ _ - - 385 Total proposed _ _ 311 622 1,007 2,243 Total amortization 7,112 9226 7,514 7,430 7620 8 INTEREST CHARGED TO INCOME Existing loans: IBRD - 226-Ho 21 - - - - - 261-Ho 720 666 617 566 511 452 541-Ho 1,093 1,600 1,551 1,500 1,444 1,385 692-ND 635 919 883 845 804 761 841-H0 791 1,524 1,859 2,122 2,o69 2,011 IDA - 116-Ho 588 699 678 656 632 605 201-HO 159 1,617 1 403 1 261 1 126 993 Total IBRD/IDA 7007 7,025 6,991 6950 CABEI - 3-182 44 30 17 3 - - 3-238-0 171 107 44 - - - 3-238-1 411 280 150 26 - 0051 167 369 433 343 252 160 Total CABEI 793 786 372 252 TO USAID 137-522-A-003 144 136 127 118 108 98 Central Bank of Honduras: Bonds and loans 1,050 883 768 613 533 445 Municipal Autonomous Bank 8 8 8 8 8 8 First National City Bank PI 270 210 150 0 Total existing 6,234 9,108 8,748 8,211 7,577 6,948 Proposed loans: IBRD - - - - 2.095 5,534 CABEI loans 66- and 67-FCIE - - 143 184 145 107 CABEI distribution loans - - 4oo 928 1,313 1 693 Total proposed -_ _ 1,112 3,553 Total interest charged to income 6,274 9,108 9,291 9,323 11,130 14,282 INTEREST CHARGED TO CONSTRUCTION Proposed loans: IBRD - 629 1,601 3,349 2,715 - CABEI - Rio Lindo loan 39 181 80 - Total proposed 39 T681 0 3,349 2,715 Future loans: El Cajon - foreign currency - - 4,544 6,303 12,780 18,868 El Cajon - local currency 920 3,274 5 10,698 Total future 5,464 9,577 9,1 29,566 Total interest charged to construction 39 810 7,145 12926 - - 2'9,566 Total interest 6,273 9,918 16,436 22,249 33,161 43,848 August 1974 Revised November 1974 APPRAISAl OF SIXTH POWER PROJECT - HONDURAS EMPRESA NACIONAL nE ENERGTA ELECTIRICA (ETTiE) FORECAST SOURCES AND APPLICATIONS OF FUNDS 1974-79 (in thousands of lempir-.) Total 1974 1975 1976 1977 1978 1974-78 1979 SOURCES OF FUNDS Internal cash generation: lRet incoac before interest 13,973 24,156 26,420 27,727 31,868 124,144 37,085 Depreciation 5 131 5 612 5,887 8 087 8,612 33,329 8,837 Total 1-9,10 32,307 45,922 Debt service: Interest charged to income 6,234 9,108 9,291 9,323 11,130 45,086 14,282 Amnortization 7.112 9 226 7 514 7 430 7.620 38 902 y,148 Total 13,346 16,753 18,750 23,430 Net internal cash generation 5,758 11,434 15,502 19,061 21,730 73,485 22,492 Borrowings: ENoating oans: Citibank 3,OO - - - 3,000 - UBRD 692-Ho 6,600 1,342 - _ _ 7,942 _ IBRn 841-H0 3,992 7,506 3,048 706 - 15,252 - CAREI 2,700 3,000 - - - 5 700 - Total existing 89 370 Proposed oane: IBRD _ 4,765 23,005 26,968 11,959 66 697 3,303 CABEI - Rio Lindo expansion 1,800 1.800 - - - 3,600 - CABEI - distribution - - 5 000 6 600 5l0.0 16.600 Total proposed 1T800 85E 28,005 16,959 86,897 8,303 Future loans: El Cajom - foreign currency - - 47,044 60,403 115,48o 222,927 103,468 El Cajon - local currency 23,920 38,274 43536 110.730 6o,698 Total futue- - 164,016 Total borrowings 18,092 18,413 102,017 132,951 180,975 452,448 172,469 l.overneent contributions - roral e1eetrifi;ati,n - 200 342 300 300 1,142 300 Total sources of foads 23.850 _00247 1178615 1 APPLICATIONS OF FUNDS Construction program: ENioting projects: Fourth project 10,055 1,900 - - _ 11,955 Fifth project 5,240 9,506 4,448 1,330 _ 20,524 Distribution Iproement 5 186 5 000 - 10 186 Total existing projects 20,481 16 1,330 _ Sixth power project: Yojoa-Rio Lndo expansion 2,530 4,450 28,123 28,938 9,839 73,880 3,788 Distributien iaps'oveents - - 7,400 9,500 7,600 24,500 - Rural electrification - 1,173 984 925 869 3,951 Hurricane rehabilitati-a and mobile substation - 600 1,000 - - 1,600 Studies and tratiotg - 430 2,220 820 250 3 /20 Sub-totel 3,653 3 9,727 4 0,183 18,558 10 1 =7B8 Interest during construction - ITBD _ 629 1,601 3,349 2,715 8,294 -CABES 39 181 80 - - 300 - Total sixth power project 2,56 7,463 41,403 43,532 21,273 116,245 3,788 Fut.re projects: El Cajon - excluding interest - _ 71,700 93,900 161,100 326,700 152,200 - in-erest during construction - - 5 464 9-577 19 316 34 357 29 566 Total El Cajon _ _ 77,4 103 477 180 416 361,057 Distribution and rural electrification - - - - - - 8,813 Total future - - 77,164 0 180,416 361,057 190,579 Total conatruction program 23,050 23,869 123,020 148,339 201,689 519,967 194,367 Increase in xork-ig capital: Other than cash 18 1,800 400 3,600 1,300 7,118 900 Cash 782 4,378 - 5,559 373 16 - 10 - 6 Total increase in working capital 80- 7 ____ 7188 og4 Total applications 23,350 30,047 117,861 152,312 203,005 527,075 195,26i Cash at beginning of year 496 1,278 5,656 97 470 486 Cash at end of year 1,278 5,656 97 470 486 480 August 1974 NoseNber 1974 c. IBRO-3745R2 c 0- N~~~~~~~~~I 0~~~~~~~~~~~~~~~...... o~~~~~~~~~~~~~~~~~~~~~~~~~V ........... ~~ ~ 4 IBRD 11219 880 . SEPTEMBER 1-74 HONDURAS EMPRESA NACIONAL DE ENERGIA ELECTRICA Oc- n (ENEE) FINAL STAGE OF LAKE YOJOA-RIO LINDO < HONDURAS HYDROELECTRIC POWER DEVELOPMENT NICARA A et.} PANAMA EXISTING PROJECT *H MH Hydro Power Stations - Canal, Tunnel, Pipeline or Penstock The boundaries shoon on this snp do not Dams imply endorsement or a"ceptance by the Control Structure W_nd Bank and its affiiate FUTURE oN Major Potential Hydro Sites ELREMO L INO i^,> 3"e. Fr-irdo Power S~ttlron ~ rizl e,. !i ding 7f W\ . 'Zs˘ +.Seel Penr6ockPipehlz t EL CAJO6N 0~~~~~~~~~~~~~~~~~~~5 -15° RIO Ji"cc"ao ~ > >46 MW 15°-- Ro Lindo Dom,L 30> MWRio Yure Dam, Spillway ,_ Rlikv and Dm and Diversion Canal ~ Diversion Pipeline g Zake | = ~ t' f Rio Varsovia Dam, Spillway, Control Structure and Diversion Canal with Tunnel o0 La Pita Dom > i~~~~~r Spillway I )S o 10 20 30 40 50 ! I I I I KILOMETERS I 880