Document of

The World Bank

FOR OFFICIAL USE ONLY

cg. 150c7- TOJ

Report No. 4839--BEN/TO

STAFF APPRAISAL REPORT

PEOPLE'S REPUBLIC OF BENIN

REPUBLIC OF TOGO

NANGBETO HYDROELECTRIC PROJECT

June 1, 1984

Western Africa Projects DepartmentEnergy Division

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

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CURRENCY EQUIVALENTS

Currency Unit - Franc CFA (FCFA) I/US$ 1.00 - FOFA 418?CFA 1 - US$ 0.00239FCFA 1,000 - US$ 2.39

ABBREVIATIONS AND ACRONYMS

AfDB - African Development BankBADEA - Banque Arabe pour le Developpement Economique en AfriqueCCCE - Caisse Centrale de Coop6ration EconomiqueCEB - Communaute Electrique du B'eninCEET - Compagnie Energie Electrique du TogoCIDA - Canadian Interr.ational Development AgencyCIMAO - Societ'e des Ciments de l'Afrique de l'OuestCTL - Centrag.e Thermique de LomeEdFI - Electricite de France InternationalESIE - Ecole Superieure Interafricaine d'ElectriciteFAC - Fonds d'Aide et de CooperationKfW - Kreditanstalt fUr WiederaufbauOPEC - Organization of the Petroleum Exporting CountriesOTP - Office Togolais des PhosphatesSBEE - Societe Beninoise d'Electricite et d'EauSNI - Societe Nationale d'InvestissementSNS - Societe Nationale de SiderurgieUNDP - United Nations Development ProgramUPDEA - Union des Producteurs, Transporteurs et Distributeurs

d'Energie Electrique d'AfriqueVRA - Volta River AuthorityWAPSI - West Africa Power System Interconnection

MEASURES AND EQUIVALENTS

One kilovolt (kV) - 1,000 VoltsOne megawatt (MW) - 1,000 Kilowatts (kW)One gigawatt Hour (GWh) - 1 million kilowatt hours (kWh)One barrel (bbl) - 0.16 cubic meters

One ton of oil equivalent (toe) - about 7 bbl of crude oil.

FISCAL YEARS

CEB January 1 to December 31CEET October 1 to September 30SBEE January 1 to December 31

1/ The Franc CFA is tied to the French Franc (FF) in the rati^ of FF 1to FCFA 50. The French Franc is currently floating. A rate ofUS$1 = FCFA 392 was used in this report.

FOR OFFICIAL USE ONLY

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

STAFF APPRAISAL REPORT

TABLE OF CONTENTS

Page Nos.

DOCUMENTS IN PROJECT FILE ........................ o.^ ....... i

CREDIT AND PROJECT SUMNARY .... ....................... iV

I. THE ENERGY AND POWER SECTORS 1. .

ENERGY SECTOR. ... .......... 1

A. Energy Resources .............. 1B. Energy Supply and Consumption 1C. Energy Pricing .3 .............. .3

POWER SECTOR . .......... ................... 3

D. Sector Organization ........... *.. ... 3E. E3xisting Electricity Supply Facilities 3F. Access to Electricity Service and Consumption 60. Future Load Growth and Power System Expansion

in Benin-Togo and other Countries of the Region ... 7H. Government Policy and Strategy .9

I. Power Sector Investtment Programs . ... .......... 10J. Bank Group Strategy and Rationale for Involvement. 11

II. THE BORROWERS AND THE EXECUTING AGENCIES . ......... 11

A. Lending Arrangement' .......... ................. 11B. Communaute Electrique du Benin (CEB) ..... 12

1. Status and Organization .. 122. Sector Co-ordination ...... ....... *.. ,. 133. Management and Staffing .... 144. Training ........... , 15

This report i s based on the findings of an IDA appraisal mission inMarch/April 1983 comprising Messrs. H. Wieseman (Senior Power Engineer), C.Sigwalt (Financial Analyst), D. Anderson (Senior Economist), and C. Vuyleteke(Lawyer). MesBrs. R. Goodland (Environmental Specialist), B. Dahlborg(Training Specialist) and M. Wilton (Senior Economist) also contributed to thereport, based on their separate visits to Benin and Togo. Ms. M. Chung ICongprovided secretarial assistance for the report.

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

Table of Contents (Cont'd)Page Nos.

C. Compagnie Energie Electrique du Togo (CEET) ....... 16D. Societe B&ninoiee d'Electricite et d'Eau (SBEE) *.. 17E. Financial/Operational Results ....... 18P. Accounting and Audit Arrangements .... ............. 18G. lIsurance ................. 19

III. THE PROJECT ............... *..... *aaa. ... .. *...a........ 20

A. Background ............... ... a..*. 20B. Project Objecti7es ....... a.. a....... a*a 21C. Project Description *............. ..... a 21D. Project Cost ............... @ 22E. Project Financing aa..aa. aaa................. *a a a a a ****aa** a a 23F. Co-ordination with Co-financiers .................. 24G. Project Implementation ............................ 24H. Procurement ... ...... ..... ... . ..... .. . . . 26I. Disbu-3ements aa*a.....a..a... aa...a..a...a...*..a*..a..........a....... 27J. Environmental and Resettlement Aspects ............ 29K. Project Monitoring and Reporting ........ .. ......... 30

IV. FINANCIAL ANALYSIS .............. .a* ...... aa ...... .. a a a . 30

A. Past Finances and Present Financial Position ...... 30B. Billing and Collection ............................ 33C. Tariffs ............ a a....... 34

1. Present Arrangements . ......... 342. Tariff Studies .. . ................... . 353. Future Tariffs .............. ................ 35

D. Financiug Plans ... .... . ... a. .. * * a a * .. a ..... a. ... 37ES. Future Finances. ............... ........... 38

V. ECONOMIC JUSTIFICATION ............................... 39

A. Demand Forecasts . .............. * 39B. Service to be provided by the Project ... ...... 40C. Alternative Sources of Power and Energy ... *...... 43D. Least Cost Solution and Equalizing Discount Rate

for the Project .......... a...... 44E- Other Benefits from Project *aaaaaaaa........ 46F. Economic Rate of Return ............ , 47G. Project Risks a a ......................................... 47

VI. AGREEMENTS REACHED AND RECOMMENDATION ................. 47

A. Agreements a a a.......... ...... a a....... 47B. Conditions of Effectiveness ....................... 48C. Recommendation .... ......... ...... 48

ANNEXES Page mose.

1-1 Hydro Electric Potential .......................... 491-2 Bleotricity Consumption (1960-1982) and

Forecast Growth Rates (1982-1995) ................... 501-3 Investme-it Plans: CEB-CEET-SBEE ...................... 51

2-1 CEB Organization Chart ................... .. 542-2 CEB-CEET-SBEE Co-ordination ................... ...... 552-3 CENT Organization Chart .... .......................... 562-4 SBEE Organization Chart ....................... . 57

3-1 Project Description .......................... *..-.. .. 583- 2 C ost Esat imat es ... 9.a. .a. . *. 0a. 0. 0. . , 0 . 623-3 Finanoing SourceeB ............................. 653-4 Construction Schedule * *** *4* * * ** ....... .......... 663-5 Project Management Arrangements ......... .......... ,. 673-6 Procurement Arrangements ............................. 693-7 Environmental Management ............................. 70

4-1 CEB - Income, Funds Flow, Balance Sheets (FY 78-82) .. 734-2 CENT - Income, Funds Flow, Balance Sheets (FY 78-82) .. 764-3 SBEE - Income, Funds Flow, Balance Sheets (FY 78-82) .. 794-4. Existing Tariffs: CEB-CEET-SBEE ....................... 824-5 Funds Flow Statements - CEB, CEET, SBEE (FY 83-89) .... 874-6 Iacoue Statements - CEB, CEET, SBEE (FY 83-89) ........ 904-7 Balance Sheets - CEB, CEET, SBEE (FY 83-89) ........... 934-8 Assumptions for Financial Projections ................. 96

5-1 Current (1982) and Forecast Energy Demandin Benin and Togo . .............. 100

5-2 Cost assumptions for Diesel Alternativeand Present Worth Calculations ......... 101

XAPS: IERD 16534 - Ivory Coast-Ghana-Togo-Benin-Nigeria:Electricity Interconnection Study

IBRD 17684 - Benin/Togo Electric System

BEN IN-TOGO

NANGBETO HYDROELECTRIC PROJEC?

DOCUMENTS CONTAINED IN THE PROJECT FILE

A. Selected Docizentes, Reports and Studies on Subsector File Code Nos.

Al. Iegal Dw=erts

CEB - Accozd Interrational et Code Daho-Togolais )de 2.'Electrcite - July Zr7, 108. )

B1) - Ord4nnance No. 73-13 du 7 feevAier 1973 portant cr6ation de Ia )Societe Dahom6eme d' Electricitre et d ' hsu

- Ozdranance No. 74-2 du ll wars 1974 portant Statuts de 1a )Socite Dahoma me d'Mectricit et d'bu. )

TWGO - Ordcnnane No. 63-12 du 20 marns 1963 portant oi6ation de la )Compie Eniegie Electrique du Togo. )

- Drcret No. 63-152 du 11 deoembre 1963 portant apo1bation des ) 220.136 (A)t-9Statuts de la Compadie Baezgie ElectrLque du Tbgo. )

- D&wot No. 8D-161 du 28 mai 198D portant dAfixxtion des )attibutions et ozenisation du Ximstere de I' dustrie et )des Soc!iUs d'Etat. )

- Loi organique No. 82-5 du 16 juin 19E rlative aUx Societs )d' Bc,u=jie Mixte.)

- Loi oganLque lo. 82-6 du 16 Juin l982 relative eux SocIt6s )d' Etat et Etablisrments Pablics a carstere 'econique. )

- I6cret No. 82-177 du 30 jutn 192 portant application des )leis ogweniques relatives eux Soci6t&s d'Etat, Etabismants )Publics a cazact6re eoonaaique et aux SocLCets d'hB-onmie ite. )

A.2. Audit eports

CEB - Rapport aur le Etats Pinarciers pour 1'Exercice clos le )bgo-= Y. Audit 19B1313 dxeCbre 1981 - Coopers & Iybrznd - MEW 1982. )

CM$2 - Rapport sur lee EtatB Pinaiiets pour. 'Ekercice clos le) Tbgo-E Y. Audit 198130 septembre 1961 - Coopers & Iybmnd - Septematr 1932. )

S3E - Rapport Eur lea Etats Finaers pour l'Exeraice c10s le) N/A30 juin 1981 - Coopers & ILrbrsnd - Ju~y 1982. )

A3. Organisational Studie

CEB - Etude OrgseAsationnale et Pbjaci%er - HRyo Quebec ) 127.552 (H)Intlerntional - Augst 19983.

CEM7 - Etude OrganisationrmLle et Fuiarnzie - H3y, Quebec ) 1s7.5C (G)Internatiowl - Augwt 1983. )

SBE _ Etude Orgazusat.ionnreA - Hydro Quebec Intenationa1 - May 19. 123.492 (E)

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Docuinents contained in tin Project l'ile (Coit'd) 'ile Code

W. Tariff Studies

CEB - Etude Taxifaire, Rapport Provisoire - EDF DAS1CO - Karch 198. 127.951 (A)CEE - Etude de Tarification de l'E)exgie Electrique - EDF 127.121 (C)

International - June 1953.SBEE - Etude de Tarification de L'E:nergie Electrique, Rapport Prvisoire - N/A

EDF International - July 1933.

A5. T-9ydro Inventory arnd Mter Plans

CEB - Etude d'tnventaire des Ressouros H{y&o5lectriques Poterntielles ) 127.760du Togo et du Benin et Plan Direecteur de De)e1oppemeret de la ) ( , T, L, i)Prodiuction et du Tranpoxt, Blapports Provisoire - Sir Alexarier)Gibb/Tractionel - December 1982 - September 19F3. )

CET - Master Plan, Distiribution Network, ljore-Traotl.oneL (Augt 1983). N/ASME - Mater Plan, Distribution Nelodk, Cotonou-Tract-ioel (A4gwt 19835). N/A

B. Selected Reports and Studies Relating tX tB Project

B1. COrganisation de la Mitrise d'Ouvrage - C B (October 1985). 2.136 (B3)B2. Etude de Pr'efactibilite de 1'Amnnegewnt du Fleuve Mono - Synt'nres

Peliminaire (OCtober 1975); N/ARapport de Mise a Jour (January 1976) 123.156and Caxrgage de Reeberches sar le termin pour 1'Etude de Factibilite(June 1977) - Electroconsult. N/A

B3. Programne d'Approvisionnemmnt de CEB en Enemgie Electrique -Electroconsult/SofreLec - 1977-78. N/A

B4. Electrowatt/Sogreah- Amenagment du :leuve Mono Site Nangbeto - Rapport Jnterxtnaire

de l'Etude de Factibilitg -6 volumes (1979), Tables, RhglIsh ve sion; 122.824 (L) (M)

- 3yn1ese GCoolugique et G&otechnique, Progrmne deTrav&ax de ReconnE 2anoe (Spring 1979); 122.8D4 (P)

- Note Conpni5ntaire au Rapport Intgrnmaize (0g79/8&); 122.824 (Q)- Xapport Final (Msy 198)) - 7 volumes; 122.804 (R + S)- Addenidum eu Rapport Final (Septemner 198)); 122.8D4 (T)- Final Report (ftelish version) 2 volumes (May ]MS); 122.-84 (U)- Incidence d'une variation des prix d'ordre sur le shoQx du typ

du berzige pr:ncipal (March 1981); 123. 723 (C)- Rapport d'Avant Projet concernant le reca3ment

des populations (April 1981); 1t2.723 (n)- Actualimation du Taux de Rentabilite Inteme de l'Aranagement

IHydro-Electrique de Nangbeto (July 1981); 1i3.Z23 (B)- Etude d'une Variante en Ehrochement pour

le Barnage Principal (July 1981); 123.723 (F)- Final Desiga (English in August 1981) 2 volunes; 125.723 (H)- Rapport d'EsaEis sur Modele Rgeuit de la Solution

"Contreforts (Deember 1.981, Narch 1982); 125.723 (J)- Rapport G6otechnique, G6ologiqus et Plan

(September 24, 1982) 3 volunes; 125.723 (L)- ActuaLisation du coet de Construction des Ouvrages (October 1982); 125.723 (M)

- iii -

Dooments otained in tle Project File (Cont'd) File Code

- AottA List$ion du Tatx de RentabiMit6 Interme de l'Rn6naemgentde Nangbeto (January 1963); 125.723 (N)

- Oranisation de la Raltrise d'Ov±age et la Stmc1zaned'Exploitat.i4n de 1'Amiagenent (April 9E3); 125.723 (0)

- Avant Projet Dgtai.le des Lots Noe. 2 et 3 (April 1933) 2 volumes; 125.723 (P)- Avant Projet DEtesill du Lot No. 1 - Doe. 126 319 (4-5), )- I - Note Desoriptive et tnformative (ApriLI 1983) ) 126.319 (L)

II - Note Just.ifictive (Apzil 1983); 5- Amgnaaement Hydr electrique de Nangbeto - D]siEer d'Appel d'Offres

Lot 1: Travax de G&iie CiviL (June 193), 125.319Lot 2: Equipernent Electxo'ecaniqtie dut Barzage et de la Centxale, 126.317Lot 3 Transforiateauzs, Postes et Lignes 261W Nangbeto-Mosmhagau; 125.318

- Doesier d'Appel d'Offrw - Adderdum No. 1 et N/A- Adderdum No. 2 126.319 (N)

au Lot 1 Dmsaier d'Appel d'Offres.

C. Selected Working Pa_ers

Cl. Conputer pruntouzts - Nangbeto Projeet Cost Tables,- Nangbeto F.inandeLng Sources (NAF13S),- Past Fuinams (ACrCEB, ACrCEE, ACTSBEE), ) 22.136 (C)- Pinancial ProjeatLons (FINPRO CO, GE', SM),)- Debt Data (DEr CEB, CEET, SEEE).

C2. Bank Offiee Memorenda

- Review of Desiga Doumnents (Majteryi, Aug;t '5, l982) (Togo - Cr 1189/1190,corr. vol. XI by date)

- Review of Project Outpunt (Wilton, Jartary 3, 1983), (Togo - Nangbeto ILydxo,corr. vol. I by date)

- Wangbeto (Ande'san, January 24, L9F3). N/A

WAPEDJune 1984

- iv -

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

CREDIT AND PROJECT SUMMARY

Borrowers: People's Republic of Benin; Republic of Togo

Beneficiaries: Communaute Electrique du Benin (CRB)Compagnie Energie Electrique du Togo (CEET)Societe Beninoise d'Electricite et d'Eau (SBEE)

Amounts: SDRs 14.1 million (US$15 million equivalent) to eachcountry.

Terms: Standard

Relending Terms: The two Governments would relend to CEB US$18.6 millionequivalent of the credits at the prevailing Bank interestrate for 24 years including 4 years of grace; CEB wouldbear the foreign exchange risk. The remaining amount wouldbe made available to the three power entities in the formof grant as follows:

(L) CEB (US$8.6 million) to finance theenvironmental/health components, studies, technicalassistance and training; and

(ii) CEET/SBEE (US$1.4 million each) to finance technicalassistance and training.

Co-lenders: A consortium of co-financiers would provide about US$84million equivalent toward project costs.

Project The proposed project would:Description:

(i) help to minimize the long-term cost of electricitysupply in Benin and Togo;

(ii) provide hydropower (63 SW) and energy (about 150 GWhannually) to help meet increased demand forelectricity and reduce fuel costs, and improve CEB'sinterconnected system operation;

(iii) strengthen power sector institutions in bothcountries and, in particular, CEB's co-ordinatingrole and the sectors' capability in planning,engineering, management and financial operations;and

(iv) improve sector efficiency through a joint trainingprogram.

The proposed project comprises: (a) the Nangbetohydroelectric development, and associated transmission,together with related engineering and other services; (b)hydro feasibility and other studies; (c) tec';iicalassistance; and (d) traininBg

There are no unusual physical or technical risks ineonstructing the proposed hydroelectric facilities. Thepolitical risk arising from the binational nature of thepropoeed project is minimal beoause of the history of co-operation, through the establishment of CEB, in the powersectors of Benin and Togo.

Estimated Cost: a/US$ Million Equivalent

Local Foreign Total

Hydroelectric development 6.2 58.3 64.5Transmission 1.8 10.4 12.2Resettlement and Environment 4.8 5.6 10.4Engineering and Project Management 2.0 8.3 10.3Studies 0.1 1.3 1.4.Technical Assistance 0.3 2.1 2.4Training 0.2 2.4 2.6Base Cost 15.4 88.4 103.8Contingencies: Physical 1.3 6.2 7.5

: Price 2.0 13.7 15.7

Total Pl-oject Cost 18.7 108.3 127.0Interest during construction 1.9 10.7 12.6

Total Financing Required 20.6 119.0 139.6

Financing Plan:Local Foreign Total

^-CUS$ Million) …- -

IDA 0.1 29.9 30.0Co-financiers 5.4 78.3 83.7CEB 15.1 l0.e b/ 25.9

20.6 119.0 139.6

a/ Project expenditures are exempt from taxes and duties.b/ Interest during construction.

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Estimated Disbursemente:

IDA FY 85 86 87 88 89

Annual 7.6 9.4 8.0 3.0 2.0Cumulative 7.6 17.0 25.0 28.0 30.0

Rate of Return:

The equalizing disoount rate, when Vangbeto is compared to the next best(thermall) alternative is aboiut 14%. The rate of return, based on the realeconomic cost of capital and projected tariffs, is about 10%.

Appraisal Report: No. 4839-BEN/TO

M(ape: IBRD 16534 - West Africa Electricity Interconnection Study.IBPD 17684 - Benin/Togo Electric System.

WAPEGJune 1984

I. THE ENERGY AND POWER SECTORS

ENERGY SECTOR

A. Energy Resources

1.01 The energy resources of Benin and Togo comprise mainly fuelwood,hydroelectric potential and hydrocarbon deposits. Neither country has anyknown deponits of coal. In Benin about 60% and in Togo about 40% of the landis covered by forest or wooded savannah, but in both countries regionalimE,alanaes in the demand and supply of fuelwood have developed. Inparticular, the southern regions have suffered serious deforeotati n. Thecommercial production of fuelvood could amount to some 8 million m per yearin Benin and about half that amount in Togo. In both countries significantamounts -of biomass are available to substitute for and complement fuelwoodsupplies.

1.02 The two countries have significe t hydroelectric potential. Twelvesites, with an estimated annual output o0 1,380 GWh, have been identified asjustifying further stady (Annex -I). The proposed Nangbeto project would bethe first step towards developing this potential. The Government of Benin(GOB) is exploiting currently the Seme oil field, discovered in 1968.Production started late 1982 and recoverable reserves are estimated at about22 million barrels, with production expected to peak at 12,000 barrels per dayin 1985. All crude oil is exported as there are no refining facilities inBenin. Further onshore and offshore exploration for oil and gas is underwaywith Bank Group finantial assistance 1/. Togo is known to have hydrocarbondeposits offshor6 in a sedimentary basin ertending westwards into Ghana andeastwarde towards Benin-Nigeria. The Government of Togo (GOT) recently signedan agreement for the exploration of its entire offshore area and seismic workhas started.

B. lhergy Supply and Consumption

1.03 Energy balances in 1982 for both Benin and Togo are set out in thefollowing table. Energy consumption in both countries consists predominantlyof fuelwood and agricultural residues -- 89% of total consumption in Benin and61% in Togo. Most of the remainder (9% of energy consumption in Benin and 30%in Togo) consists of petroleum products; charcoal and electricity account forno more than 2% of energy consumption in Benin and 9% in Togo. All petroleumproducts and most electricity are currently imported. In Benin, thewideepread illicit entry of petroleum products from Nigeria is estimated toamount to at least 20% of recorded consumption.

1/ Technical Assistance Project in the Petroleum Sector (Credit 1207-BEN of January 1982).

- 2 -

Benin-Togo: hergy Balances (19)(7housmrs of tons of oil equvalsnt)

Primar;ny Fkc'r Eheir Products Tota

Fuelwood AgriLultural Charcoal Petroleum ElectrcittyResidues Prdiucts

Benin Togo Bsninn Togo Bnin Togo Benin Togo 139nin Togo Bazin Too

Gross Supply:Domestic 868 431 48 52 - - _ _ _ 91.6 483Inports - - - - 2Z7 254 13 29 240 28Ies ExportB - - - - - - (139) (42) - - (159) (42)Subtota1 968 431 48 52 - _ 88 212 13 29 1,017 724

Convemions of Gross SupplY (33) (68) - - 33 68 (4) (6) 4 6 - -Losses - - - - (22) (3) - - (6) (7) (25) (42)'Net sapp2Y for end ue 835 363 48 52 11 33 84 3)6 '1 23 989 682

=- = = = == == == 55= =-= == = =

Consumption:Households 823 343 48 50 11 33 17 15 5 6 904 447Tzmnsport - - - - - - 39 74 - - 39 74COmmeri anc Goverment 12 2) - - - - 1 - 2 6 15 2Industry - - - 2 - - 27 117 4 16 31 135

Total 835 363 48 52 11 33 84 206 11 2B 989 62= -e== a a== == -- = == = =

1.04 The se¢toral pattern of Commercial energy consUmption in the twocountries is as follows:

Benin-Togo: Consumption of Commercial Energy by Sector

Petroleum Products Electricity TotalSector Benin Togo Benin Togo Benin Togo

r - % T % -r-rIndustry 32 57 36 58 33 57Transport 47 36 - - 41 32Household 20 7 46 21 23 9Commerce and Government 1 - 18 21 3 2

Total 100 100 100 100 100 100=== Excluding fu===ood an= charcoa=== ===

a! EXClUding fUe1WOOd and charcoal which is wholly COnsUmed by hOUsehOldS.

-3-

C. Energy Pricing

1.05 In Benin, retail prices of petroleum products are set at a level highenough to cover importation and distribution costs. However, Nigeria'ssubstantially lower prices, and the extensive open border between the twocountries limit Benin's capacity to appiy independent petroleum pricingsuccessfully. In Togo, the prices of petroleum products fully reflect thecost of imports. Until recently electricity tariffs in both Benin and Togowere low (between USO 8-9/kWh) as a result of the low cost imports from theVolta River Authority (VRA) in Ghana. They were set in the mid-sixties tocover the cost of electricity production by diesel units but remainedunchanged until recently. Tariff increases in both countries in 1981 and 1983were insufficient to overcome the serious financial difficulties of thenational power entities. Following the reduced availability of electricityfrom Ghana from December 1983 1/, tariffs have been increased by 80% in Benin(to about US15kWh) and by 25r-in Togo (to about US11/kWh) to offset the muchhigher cost by thermal generation. Further action on electricity tariffs hasbeen agreed under the proposed project (para. 4.09).

POWER SECTOR

D. Sector Organizati-on

1.06 The power sector is the responsibility of the Ministry of Industry,Mines and Energy in Benin and the Miniat-y of Public Worke, Mines, Energy andWater Resources in Togo. Since 1968, the power sectors of Benin and Togo havebeen associated through the establishment of a bi-national entity, theCommunaute Electrique du Benin (CEB), which has its head office in Lom'. CEBsupplies electricity in bulk, mainly to the two national power utilities -Societe Beninoise d'Electricite et d'Eau (SBEE), established in 1973, andCompagnie d'Energie Electrique du Togo (CEET), established in 1963. They areresponsible for most of the retail distribution of electricity. Both SBEE andCEET retain some generating plant for stand-by purposes or to supply isolatedcenters. SBEE is also responsible for urban water supply in Benin. Thesearrangements are descTibed in detail in Chapter II.

E. Existing Electricity Supply Facilities

1.07 More than 90% of electricity consumed in Benin and Togo was, untilrecently, 1/ supplied by VRA, the remainder from local diesel plants. Inaccordance with a contract first entered into in 1969 with GOB and GOT, VRA

1/ Since December 1983 YEA has reduced the supply of electricity toCEB by 50% because of the severe drought.

- 4 -

has guaranteed to supply CEB, under normal operating and average hydrologicalconditions, a maximum of 67 MW with an average of about 335 GWh 1/ annuallyfrom its hydroelectric plants, Akosombo and Kpong, until 1996. This contractbecame effective in January 1973 and provides for a revision of the cost ofsupply to CEB every three years. The current rate is US2.5/kWh. The supplyof electricity by CEB to CEET and SBEE is governed by contracts made in May1973. CEB owns and operates the 161 kV transmission system in Benin and Togoand supplies electricity to Togo at 20 kV and to Benin at 15 kV. CEB'stransmission system consists of:

(i) a 161 kV double circuit line (168 km long) itaking Lome,Mome-Hagou and Cotonou to Ghana's YRA syetezn;

(ii) three substations - Lome (161/20 kV-32 MVA), Mome-Hagou(161/63 kV-30 MVA), and Cotonou-Vedoko (161/15 kV-32 MVA);and

(iii) two 63 kV lines (totalling 34 km) connecting secondary citiesand industrial plants.

1.08 Until recently, CEB sold power to a number of large industrialcustomers in Togo, including the Office Togolais des Phosphates (OTP) and theSoci'et'e Nationale de Sid6rurgie (SNS). This responsibility was transferred toCEET in the Ball of 1982 and CEB's only remaining industrial customer isSociete des Cimlents de l'Afrique de l'Ouest (CIMAO), a regional cement companylocated near Tabligbo in Togo. CEB is fairly well run and provides a reliableservice; until recently interruptions of supplies from VRA were rare andusually brief and this haa minimized the need for standby diesel generation.

1.09 In Benin, SBEE operates diesel plants of 15.1 MW capacity in the,otonou area and a total of 6.3 KW in ten provincial centers. Tv dieselunits of 8 MW each will be commissioned in 1984 in the Cotonou aria. In theinterconnected coastal zone SBEE's diesels serve as stand-by when supply fromCEB is interrupted. In addition to the public power supply, there is a totalof 3.1 NW of self-generation in Benin with 14.4 MW being added at a sugarrefinery at Save. SBEE uses a 15 kV primary distribution voltage inestablished load centers, but does not have a consistent policy with respectto voltage levels for new load centers. The distribution network comprisea 5km of 20 kV lines, 345 km of 15 kV lines ana 517 km of 220/380 V lines. Thecontinuity of supply to SBEE from the CEB system is good but, as SBEE is atthe end of the line, the supply is subioct to large voltage fluctuations.Power supply in the inland load centers is well run.

1.10 In Togo, the main generating facilities are operated by CEET and OTP,and the Centrale niiermique de Lom'e (CTL). CEET operates three diesels in Lomewith an installed capacity of 17.r MW for stand-by and peak load generationand a 1.4 NW hydrostation at Kpalim'e. CEET has about 12 NW of diesels inseven provincial centers. The small inland diesel units in Togo do not

1/ In fact VRA has supplied considerably more in recent years (521 OWhin 1982).

provide reliable service because of inadequate preventive maintenance, longrepair times, unit controls unsuitable for parallel operation and a generallack of planning at CEET. OTP's phosphate plant operated captive dieselsuntil 1978-79 when it was connected to the CEB system. The 15 MW diesel plantnow provides stand-by; the units cannot be operated in parallel with CEB'ssystem because their controls have not been adapted for such operation. Theonly other significant self-generation (2 MW of diesels) is at the Togotextile dill in Lama-Kara. CEET has standardized on a 20 kV primarydistribution voltage; existing 5.5 kV lines, mainly in the interior, are beingconverted. The distribution network comprises 630 km of 20 kV lines, 37 km of5.5 kV lines and 800 km of 220/380 V lines.

1.11 GOT financed the CTL plant near Lome harbour in order to provide afirm electricity supply to its then planned SociWte Nationale de Sid6rurgie(SNS) 1/ and to reduce the country's almost total dependence on importedelectricity. The plant design provides for four 10 MW diesel units and acombined cycle plant containing two 25 MW gas turbines and a 28 MW heatrecovery steam unit. The gas turbines are operational but commissioning ofthe diesel plant was delayed following a fire in the control room in early198^2 The diesel units will be commissioned in May 1984. The CTL thermalplant is owned by SNS while another Togolese entity, Soeiete Nationaled'rnvestissement (SNI), is responsible for the plant's debt service.

1.12 As the CTL plant is connected to the CEB system by a double-circuit161 kV transmission line, it is an integral part of the interconnected systp-iservicing Benin and Togo. CTL will supply increasing thermal generation tothe system in future. Consequently, plant operations should be properlycoordinated within the system under the clear direction of CEB, which Eshouldbe responsible for load dispatch (para. 2.09). As CEB has no experience inthe operation of thermal plants and will be heavily involved wish the Nangbetoproject, the responsibility for operating and managing the CTL plant has beentransferred to the more experienced CEET.

1.13 CTL was built to serve perceived Togolese interests, under financialarranRgements, the consequences of which neither GOB or CEB is willing tobear. Consequently, ownership of CTL should remain with Togo and logically'with CEET, the national power entity. A transfer of the ownership of CTL toCEET would require an analysis of and agreement upon the financial terms ofsuch transfer and such a study, financed under the ongoing Engineering andTechnical Assistance Project (Credit 1190-TO) is underway. The study includesthe issue of pricing of the output from the CTL plant, as well as from allother power plants in Benin and Togo which are connected to the CEB system(para. 2.04). Satisfactory arrangements to implement the recommendations ofthe study would be required as a condition of credit effectiveness.

1/ SNS has an arc furnace of 5 MW and a rolling mill of 4 MW, andadditional auxiliary load.

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F. Access to Electricity Service and Consumption

1.14 Electricity supply in Benin in 1960 was limited to Cotonou, PortoNovo and Parakou. Today, Cotonou, Porto Novo, Lokossa, Ouidah, Godomey,Abomey-Calavi and Onigbolo are supplied from CEB's coastal system. SBEE haselectrified seven small towns in the four southern provinces and four townsfurther north. The total number of customers at the end of FY 82 wasestimated at 30,10D of whioh about 28,200 were residential; the latter isequivalent to about 4-5% of the population. Access to electricity in theareas covered by the interconnected system is about 29%. In Togo, until 1963,Lome and the ooastal town of Aneho were the only centers with publicelectricity supply. By 1970, service had been extended to Kpalim6, Atakpam6,Sokod6, Lama-Kara and Dapaong, and in recent years nine additional towns havebeen electrified through either connection to the ooastal eystem or thedevelopment of a secondary isolated system around Lama-Kara. The total numberof residential customers at the end of FY 82 was 30,600 equivalent to about 5%of the population. In the larger urban centers the proportion of populationserved is about 28%. The towns with electricity supply in both countries areshown on IERD Map 17684.

1.15 The growth in demand for electricity in both countries has beenvigorous over the past 10 years, averaging about 13% annually in Benin and 18%annually in Togo. However, more recently, economic recession and, possibly,increases in tariffs, have reduced this rate of growth. The historical growthof electricity consumption since 1960 in the two countries is detailed inAnnex 1-2; information for the earlier years is incomplete as reliablestatistics are not available. Electricity supply and consumption in 1982 inBenin and in Togo was as follows:

Benin-Togo: Electricity Supply and Consumption (1982)

Benin Togo TotalGvh Percentage GWh Percentage GWh Percentage

Supply: aCEB Imports a _ _ _ _ 521 98Less losses - - 26 5

151 go90 I -94 495 93Thermal generation 16 10 22 6 38 7

Total Supply 167 100 366 100 533 100

Less losses/ 30 30 60

Saleo 137 336 473

Consumption:Domestic (LV) 74 54 95 28 169 36Commercial (MY) 49 36 106 32 155 33In,.ustrial (HV) 14 10 135 40 149 31

Total 137 100 336 100 473 100

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a/ All imports of electricity' are handled by CEB for subsequent transferto the national entities.

b/ Includes 135 GWh supplied by COE directly to large industrialcustoDlers (OTP, SNS and CIMAO).

c/ Distribution system losses, theft and other unaccounted lossesestimated at 18% in Beain and .3% in Togo, but only 8% when includingindustrial customers supplied L r CEB.

G. Future Load Growth and Power Systems Expansion in Benin-Togo andOther Countries of the Region

1.16 Between 1982 and 1990 load growth is estimated to average 7% annuallyin Togo and 11% in Benin. These forecasts are low compared with historicaltrends but reflect the expected influence on 3amand of much higher tariffs andonly modest growth of incomes (Annex 1-2) Annual energy requirements after1995 will reach 1,500 to 2,000 OWh, of which Nangbeto, the only hydro stationplanned at present, would supply 150 GWh. To meet demand from the 1990'sonwards the major options would be new oil-fired generation, hydro development(additional to Nangbeto) and electricity imports. In response to the need tominimize future dependence on petroleum fuels, Bank-aBsistance is alreadybeing directed towards surveying indigenous hydro resources of Benin and Togo,and evaluation of regional resources within the framework of aninterconnection study.

1.17 IDA financing for preparation of the Nangbeto project I/ includedan inventory of hydroelectric resources of Benin and Togo, seven pre-feasibility studies of sites selected from the inventory, and a master plan ofpower development to the year 2003 based on consideration of the resourcesstudied to pre-feasibility level. The inventory confirmed that Nangbeto isthe economically most attractive hydro project. Elsewhere, the most importantdevelopment prospects are the lower reaches of the Mono River in Togo and theOuemne River in Benin. The seven pre-feasibility- studies include two sites onthe Mono River downstream of Nangbeto and three sites on the Oueme River.Since, in each basin, most annual runoff occurs during a four-month period,regulation requires large storage volumes that would add significantly to thecost of dependable hydro electricity. The two Miono River sites (which wouldbenefit from the Nangbeto storage upstream) and two Ou6me sites, appear to bethe only hydro power sources having a cost advantage over diesel generation.All four sites are included in a draft master plan of development in ascenario of rising fuel prices. If fuel prices were to remain at currentlevels (in real terms), only one of the four sites would appear economic andwould be developed. The consultants' recommendations are under review by thethree power entities and the Bank.

1/ Power Engineering and Technical Assistance Project (Credits 1189-BEN/1190-TO of January 1982).

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1.18 The establishment of a strong interconnection in the region has beenpromoted by the Union des Producteurs, Transporteurs et Distributeursd'Energie Electrique d'Afrique (UPDEA) and, in particular, by CEJ. The BankGroup has encouraged this initiative through its relt.tionships with the powerentities concerned, has offered advice and has reviewed the various reports sofar produced. A West Africa Power System Interconnection (WAPSI) shown on MapIBRD 16534 would link the power systems of Nigeria, Benin, Togo, and Ghana byan extra high voltage (EHV) transmission line (330 kV) from the Nigeria-Beninborder to the Akosombo power station in Ghana. Since Ghana and Ivory Coastare already tied by an existing 220/160 kV high voltage liae, the Ivory Coastsystem would also be part of any future interconnected system. In 1983, aDanish/Swedish consortiua was retained to prepare pre-feasibility andfeasibility studies, all to be completed in 1984. The work is financed byScandinavian grant aid. The African Development Bank (AfDB) is the executingagency and CEB supervises the study.

1 .1 9 Interconnection may be eonsidered for one or more of the followingreasons:

(i) sharing of capacity and energy reserves in the event oftemporary shortages;

(ii) transferring of low cost energy from utilities havingtemporary surpluses to others generating energy at highercosts; and

(iii) timing of major investments for optimum benefit of theinterconnected region.

The nature of the power systems and resource base suggests that many of theenumerated advantages can be realized. Ghana and Ivory Coast are large hydroproducers, while Nigeria is heading for large scale development of gas-firedthermal generation. Future interchanges night consist of excess hydrocapacity for off peak thermal energy, and seasonal excess hydro energy inexchange for thermal energy in dry periods. Another possibility isoptimization of capacity usfe by taking advantage of peak load diversity.Because utilities wish to retain a degree of independence, and the solution ofadministrative complexities takes time, benefits are likely to be realized insuccessive stages of cooperation. CEB, being strategically placed among thelarge power producing countries (Ivory Coast-Ghana. Nigeria), would be in afavored position to contract for part of the transfers over theinterconnection for supply to Benin and Togo.

1.20 Although supplies from a future regional EHV system are likely to bemore attractive than ary hydro development within Benin and Togo, GOB and GOTwould not wish to become wholly dependent on imported power. furthermore, theimplementation of WAPSI requires the solution of technical, financial,contractual and operational problems among four systems. Meanwhile, Benin andTogo face rapidly rising fuel costs for power generation unless they proceedwith a minimum program of hydro development that is economically justified.The four priority sites noted in para. 1.17 could increase the indigenouspower supply of Benin and Togo by about 700 GWh. The extent of actualconstruction would depend on progress of VAPSI. Keeping plann.ing options open

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requires continuing preparation of future projects, to be financed under theproposed project. This projaet coaponent would comprise:

(i) a survey of the Mono River between Nangbeto and Adjarala tofind the optimum div.ision of head between Adjarala and theinternediate Tetetou site;

(ii) a similar survey of the Ougmg River to find the optimumdivision of head and to define priorities for futurefeasibility studies; and

(iii) a feasibility stady of the Adjarala project, downstream ofNangbeto on the Kono River, followed by engineering toprepare bid documents.

1.21 The development of electricity supply outside the coastal region islikely to remain costly. The hydro power surveys and two pre-feasibilitystudies have not identified sites that would compete with diesel generation atpresent fuel prices. Low load density limits the possibilities of centralizedthermal supplies to the zones of Lama-Kara in Togo and Parakou in Benin wheresecondar- systems are developing. Eventually, these sub-systems will beconnected to the coastal grid, but the timing depends on load levels and theextent of future hydro development.

H. Government Policy and Strategy

1.22 An econoxically acceptable expansion program for the power sectors ofBenin and Togo can be realized only through international co-operation.Future expansion must be secured by a combination of additional imports, thedevelopment of indigenous hydro resources and thermal generation. GOB and GOTare keenly interested in hydro development, and have strongly supported thepreparation of the Nangbeto project as a binational effort. However, asatisfactory policy for the power sector has not emerged because of thecommunications gap between CEB and the national power entities in bothcountries. CEB, by virtue of its statute, was supposed to take the lead inthe formulation of policy. The intentionB behind the 1968 Treaty (para. 2.02)were pOssibly overambitious and, as it became clear that CEB was not takingthe lead, CEET and SYEE inereasingly pursued independent actions in theplanning and construction of new facilities, in finance and in tariffs, thattended to isolate CEB from the sector problems. The preparations for theconstruction of Nangbeto have drawn CEB back onto center stage but thecommunication problems remain and inhibit integrated policy formulation. Inother respects CEB has operated rather successfully. Low-cost bulk supply forBenin and Togo was arranged under a long-term contraot with YEA, and thefeasibility study of WAPSI is underway -- which should further help tominimize the cost of electricity supply to the Ivory Coast, Ghana, Togo, Beninand Nigeria -- with completion scheduled for 1984. However, theseachievements are undermined by lack of coordination between CEB and the twonational power entities. The proposed project would addreso these issues(paras. 2.04 to 2.06).

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I. Power Sector Investment Programs

1.23 In their respective FYs 83 through 89 planned investment in the powersectors or 'Benin and Togo, including CEB, would amount to US$ 368 millioaequivalent of which the proposed Nangbeto project represents 35%. Sectorinvestment plans are summarized in the following table and are set out indetail in Annex 1-3. The investment program through 1989 is broadlyconsistenrt with sector objectives and the master plan will provide the basisfor its future updating. SpeciTic investments would require justificationfollowing adoption of the master plans for generation, transmission anddistribution and should be reviewed at the appropriate time by the proposedsector co-ordinating machinery (para. 2.05).

Benin-Togo: Power Sector Investment FY& 83-89

(in current prices)

CEB 4/ viCELT~~~~~~~~~~~~~~~~~~~~- S--Bni; - T o t a

CFA niUion. - FCFA Millin - MiThio ltuivalent Permrtge

Nangbeto Project 48,688 548 548 49,78 127.0 35Otker Generation 16,910 9,649 2,860 29,419 75.0 20T2wemisioni arsl Di8stri-butin Wozlm 13,600 14,014 20,9D9 48,523 123.8 34.OtbLr enditure 1,575 2,412 1,276 5,263 13.4 4IDC 6,214 2,888 2,175 11,277 23.8 7

Totel 86,987 29,511 27,768 144,266 368.0 100

a! Excludes PCPA 8,415 million water supply works for which S;BE isrespoasible.

1.24 CEB's program, in addition to the proposed project, includes thereinforcement of 161 kV supplies to CEET and SBEE load centers from theinterconnected system and a possible 330 kV interconnection between VEA, OBBand NEPA after 1987. CEB also plans a 161 kV line Nangbeto-Atakpam6 whileCFIET, on the other hand, has sought OCCE funding for a 66/33 kVsubtransmission ring to supply the towns and areas near Notse, Kpalime andAtakpam'e from the interconnected system in the south and is preparing acorresponding project. The proposed sector co-ordinating machinery (para.2.05) would be expected to coordinate the preparation and execution of CEB's161 kV line and CEET's subtransmission project. Furthermore, DEB agreed atnegotiations to consult with IDA annually on its investment program.

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J. Bank Group Strategy and Rationale for Involvement

1.25 Bank Group involvement in the power sectors of Benin and Togo aims atassisting the authorities to reduce the cost of electricity supply and meetreasonable demand while, at the same time, reducing the demand imposed by thesector on government resources. The Bank Group role is related to, andconsistent with, that for the West Africa region and is essentiallycatalytic. These aims would be pursued by a strategy of:

(a) improved sector efficiency, by way of strengthening existingpower entities, technical assistance and training;

(b) the development of indigenous hydro resources;

(a) the promotion of regional interconnection of power andenergy; and

(d) conservatioa measures, including economic pricing ofelectricity.

Without the Bank Group initiative it is unlikely that those aims would beachieved satisfactorily, as other sector aid is predominantly of a bilateralnature; furthermore, the Bank Group has, at GOB/GOT request, acted as co-ordinating agency for the substantial co-financing needed for the proposedproject (para. 3.13).

1.26 The strengthening of CEB is crucial to the above strategy and, inparticular, improved co-ordination and co-operation in sector planning andoperations. Furthermore, the viability of WAPSI may well depend on CBB'srole. The Bank Group has tried to strengthen CBB's position by choosing it asexecuting agency for the studies to prepare the Nangbeto project, financedunder the Power Engineering and Technical Assistance Project (Credits 1189-BEN/1190-TO). The project was also designed to further the above objectivesthrough a study of the longer-term power sector requirements comprising ahydro power resource inventory, pre-feasibility studies of selected inventorysites and master plans of generation/transmission and distribubion systemsdevelopment in Cotonou and lomue. To assist the institutional strengthening ofall three sector entities, IDA also financed studies of their organization,managemeat, training needs, and finance/tariff policies. The various studieshave been oompleted and provide the basis for further involvement under theproposed project. Assistanee would comprise a mix of institu'tional support,particularly to strengthen CEE, and limited financing of capital investment.

II. THE BORROWERS AND THE EXBCUTING AGENCIES

A. Lending Arrangements

2.01 The People's Republic of Benin and the Republic of Togo would be theborrowers (US$ 15 million equivalent each) of the proposed IDA Credits. Thebeneficiaries and executing agencies would be CEB and, to a lesser degree,CEET and SBEE. The credits would be made available to the three entities in

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accordance with arrangements described in para. 3.10.

B. Oommunaut6 Electrique du B6nin (CEB)

1. Status and Organization

2.02 CEB was established by Benin and Togo in 1968 under the "AccordInternational et Code Benino-Togolais de l'Electricite" (the Treaty). Ttsbinational nature is unique in West Africa. CEB was granted a monopoly of thegeneration and transmission of electricity from all installations built inBenin and Togo after the Treaty. CEB's powers and extensiveregulatory rights extend to:

(i) the regulation of generation, transmission anddistribution of electricity;

(ii) tariff fixing;

(iii) licensing captive plant in excess of 100 kVA;

(iv) the right to conduct negotiations concerninginterconnection with other countries;

(v) planning and implementing electrification -i thetwo countries; and

(vi) operating a training center for the benefit ofthe power sectors in both countries.

2.03 CEB's organization is shown in Annex 2-t; it is three-tiered and compriess:

(i) The "Haut Conseil Interltatique de la Communaute"(HCIC). It is composed of eight members ofministerial rank, four from each Government ofwhom two act as coneurrent presidents, and meetaat least once a year to determine and monitorCEB's broad policy.

(ii) The "Haute Autorite" (HA) -- equivalent to aBoard of Directors -- composed of ten members(five from each country) nominated by the twoGovernments and appointed by the HCIC. Itestablishes the broad lines of action ontechnical and commercial matters for the GeneralManager and oversees his management; it alsoproposes investments, for review and agreement bythe HCIC.

(iii) The General Manager appointed by the HCIC afternomination by the HA, who is responsible for theday-to-day management of CEB.

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2. Sector Co-ordination

2.04 Despite its extensive legal powers, CEB's role has been largelyrestricted so far to the wholesale supply of electricity; since 1972, CEB hasbeen purchasing electricity from VRA for sale to the two national entities.CEB has not exercised its monopoly powers over new generation and thus newdiesel plants have been constructed in recent years in Lom'e and Cotonou by therLational entities. NXor did CEB exercise its liceasing rights in respect ofthe CTL plant. Instead of integrating facilities and services under CEB, CEETand SBEE have followed increasingly independent policies with re3pect tosector organization, planning, training and tariffs. At this stage it wouldbe counter productive to seek either to amernd the Treaty or to transferexisting thermal plants to CEB. The two governments are presently opposed tothis, largely for reasons of national security, and CEB is not staffed for thetask. However, the governments of Benin and Togo agreed at negotiations toreaffirm CEB's e2clusive rights particularly with respect to:

(i) the development of all hydropower facilities in Benin andTogo;

(ii) the interchange of electricity with neighboring countries;

(iii) the supply to CEET and SBEE of electricity from its own plantor from interconnections with neighboring countries; and

(iv) the dispatching of, and accounting for, electricity from allpower plants in Benin and Togo ihiih are connected to the CF,Bsystem.

2.05 The Treaty provides for consultation and authorization mechanisms inthe field of long-term planning, tariff setting and investments in generationfacilities. While such provisions have not been fully implemented in thepast, cooperation to implement these requirements has been strengthenedrecently. Assurances have been obtained from both Governments and CEB thatadherence to the provisions of the Treaty will continue to be implemented.The ten members of the HA are appointed on the basis of their competence infinancial and economic management, electricity and public works, trade,industry, planning and social affairs. Traditionally, the directors generalof SBEE and CEET were members of the HA and an assurance has been obtained atnegotiations from bot:L Governments that the two national entities would at alltimes be represented on the HA. To further develop effective coordination oftheir activities, CEB, SBEE and CEET have recently created:

(i) a Permanent Coordinating Committee (POC) of the three GeneralManagers, meeting at least monthly to discuss policies andprepare major proposals for joint eubmission to the HA; and

(ii) working level committees of the FCC for power sector planningand investments, operations, finance and training, and whichwould support the PCC.

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2.06 The proposed co-ordinating arrangements are detailed in Annex 2-2.Furthermore, to ezfure optimal operation of the CEB interconnected system,Togo and Benin agreed during negotiations, to assign full authority to CEB fordispatching electricity in the most economical fashion. This dispatchingshould encompass the production and transmission of eleotricity from allgenerating stations in Togo and Benin connected to the CEB system and of powerimports/exports at the Togo-Ghana border.

3. Mpanaemeat and Staffir2g

2.07 CEB has a small staff of 186 employees (about 10% of power sectoremployees in Benin and Togo) including 10 professionals and 36technician/supervisors, three quarters of whom are concerned with theoperation and maintoiance of the transm4ssion system. CEB laoke the structureand staff to carry out sustained power system planning and related studies. tomanage power exchanges and load dispatch beyond the present primitive leveland to undertake major new projects such as ?1angbeto and WAPSI. CEBcommissioned a study,financed under Credits 1189-BEN/1190-TO 1/ to advise onimprovements to its organization, management and related training. Theconsultant's report confirmed that CEB's organization is adequate foroperating a transmission system of a limited size, but is inadequately staffedeither to fulfil the role of coordinating body for the power sectors in Beninand Togo or to undertake major new projects. The consultants reportrecommends that the existing organization of CEB be reinforced over the mediumterm by:

(i) establishing a project management unit for Nangbeto;

(ii) forming separate planning and engineering divisions ; theplanning division would undertake power resource surveys,load forecasting, generation and transmission planning andpower system operation studies while the engineering divisionwould prepare project studies, handle procurement andsupervise cona truction;

(iii) establishing a standards and methods division under thetechnical departrernt, to streamline operations andmaintenance procedures;

(iv) improving financial management;

(v) recruiting a higher proportion of p.rofessional and technicalstaff; 'and

(vi) expanding training activities of CEB's training center forboth high level staff and skilled workers.

1/ CEB: "Etude Organisatioanelle et Financi'e"e, by Hydro Qu6becInternational, August 1983.

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2.08 These recommendations are sound and C3B should be strenghhered assoon as possible. In particular, the planning division should be maderesponsible for co-ordination of the WAPSI studies. CEB will need substantialassistance from expatriate personnel and training fellowships for its staff ifthese organizational improvements are to be achieved in the medium-term; andsuch components are included under the proposed project. During negotiations,it was agreed that CEB would, after consultation with IDA, carry out a programto strengthen its management.

2.09 The consultants did not address all CEB operating needs. A loaddispatch ceater is needed for the future coordinated operation o±' the exio,tingthermal plants owned by CEET, SBEE and CTL erid of the VRA Interconnectioa;the establishment of a load dispatch .enter would be studied under theproposed project. The study would be co-ot.dinated with the ongoing WA.PSIstudies to avoid any duplication. CEB's future ownership of generatingstations requires the addition of a division to operate CEB's power stationsand the proposed project includes the necessary training fo; CEB staff inhydra station operations. CEB's central manpower planning and trainingfunction needs to be strengthened beyond the proposals of the consultants and,the proposed project makes provision for this.

2.10 CEB has a statutory obligation to meet sectoral training needs inBeain and Togo and should take a more active role in future. There arepresently shortages of qualified, experienced staff in all three entities.Special management and other skills will be required both during theconstruction of the proposed Nangbeto project and for CEB's extended futureresponsibilities. CEB should thus be responsible under the proposed projectfor carrying out an enlarged sector training and upgrading program for anumber of personnel categories, while CEET and SBEE would intensify on-the-jobtraining and those minor upgrading programs which are best decentralized.Each entity should establish a basic manpower planning capability.

4. Training

2.11 Under the Treaty, CEB is responsible for training staff of all threeentities and, for this purpose, operates a training center at Abomey-Calavi,outside Cotonou in Benin. The CEB training center runs a fixed type of 3-yearcourse for electrical and mechanical technicians but, contrary to originalintentions, provides no short upgrading courses or training for skilledworkers. The center is well equipped but is understaffed and, due to itsremote location, its capacity is limited by the small number of boardingplaces. The most serious issue, however, is the lack of consultation betweenCEB, CEET and SBEE regarding the optimum utilization of the center, and CEB'slimited capacity for diversifying and developing the center's activities.There is scope for expanding the center, provided the above fundamentalproblems can be resolved. Even if this is achieved, however, there willalways be some training needs that cannot economically and effectively be metby the center, notably short in-service courses and on-the-job training.There is, therefore, a need to expand the Abomey-Calavi center and, at thesame time, to assist CEET and SBEE in establishing a capability to plan andimplement training programs. The proposed project would provide for lothforms of development through technical assistance and the supply of equipmentfor training for all three entities and, secondly, for the expansion ofbuildings at the CEB center.

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C. Compagnie Energie Electrigue de Togo (CEET)

2.12 CEET was formed in 1963 as a limited liability company wholly ownedby GOT, with an option of up to 30% private participation but no interest hasemerged yet. Its purpose is defined as the generation, transmission anddistritution of electricity in Togo. CEET is unable to function as anautonomous power utility as GOT exercises rigid controls 1/ over it as it doesover other state-owned and mixed enterprises. In particular, it is unable tooffer salaries attractive enough to retain competent, experienced staff. Toachieve adequate autonomy would require a revision of the law relating topublic enterprises in Togo, prior to revising CEET's statute; this issue willbe addressed in the broader context of a possible public enterprise project.

2.13 CEET's policy is determined by a Board chaired by a President who isDirector General of Societe Nationale d'Investissement (SNI). The other Boardmembers represent the Ministers of Energy, Finance, Planning and the Interior,the Armed Forces (2 members), Chamber of Commerce and the CEET staff. GOTalso appoints a representative (Commissaire) to attend all Board meetings toensure that decisions are not contrary to the national interest. The presentorganization of CEET, shown on Annex 2-3 is inadequate to serve futureneeds. CEET is expected to increase its thermal generation from the dieselsat Lom'e to meet demand in the coastal system and possibly to take overoperational responsibility for CTL. Transmission will also increase inimportance, as CEET is planning to build 66 kV lines to expand theinterconnected system and to connect isolated centers. A reorganization ofCEET operations along functional lines, rather than by geographic region as atpresent is urgently needed. An organizational study by consultants 2/identified other areas where CEST needs to be strengthened, especially inplanning, standardization, maintenance procedures, management of inventories,statistics, budgeting and accounting. While the main thrust of the proposedproject is to strengthen CEB's role in the sector, a start would be made onthe elimination of the weakness identified in the two national entitiesthrough technical assistance and training. The most urgent requirements arein th3 area of data processing support and training, and appropriate provisionis included in the proposed project.

2.14 In 1982, CEET's staff was composed of 29 professionals, 140technicians/supervisors, and 866 workers. Personnel policies and workingconditions are governed by Decret No. 1290 of December 26, 1977. The numberof professionals and supervisory staff is low, and many positions at the levelof head of a section or subsection are vacant. At the worker level there isovermanning, which CEET is trying to rectify by natural attrition while thecapabilities of the remaining personnel are being upgraded.

1/ "Loi Orgaaique No. 82-6" (June 16, 1982) and "Decret d'ApplicationNo. 82-177" (June 30, 1982), both pertaining to State and para-publicenterprises.

2/ CEET: "Etude Organisationnelle et Financiere" by Hydro Qu6becInternational, August 1983.

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2.15 An important weakness in CEET's organization is the lack of anysystematic assessment of manpower requirements and planning of trainingactivities whether in or out of house. The project would assist theestablishment of a basic capability for such planning to be carried out inclose collaboration with CBET's personnel and training sections throughlimited teehnioal assistanee and fellowships. CEET is justifiably planning toprovide in-house training, especially on-the-job training and short coursesand seminars. To assure the supply of engineers, CEET has sent nine studentsto the five-year course at the Ecole Zipe'rieure lnterafricaine d'Electricite(ESIE) in Abidjan. The project would fInance fellowships to allow moreengineering students to be trained at ESIE or other engineering schools, inorder to ensure the supply of engineers in the future.

D. Societg Beninoise d'Electricit6 et d'Bau (SBEE)

2.16 SBEE WaB formed originally as the "Soci'et Dahom'enne d'Electricit6et d'Eau" in 1973 and, except for general rules governing the relationsbetween the Government and parastatal enterprises, the entity enjoys a largemeasure of managerial autonomy. SBEE's purpose is defined as the generation,transmission, and distribution of electric power, as well as water supply andwaste water disposal, throughout Benin. It is charged with execution ofGovernment policy concerning development of water resources and it also hasresponsibility for research in the utilization of energy- resources.

2.17 SBEV's policy is determined by a Board of eleven members; sevenmembers represent the Ministries of Public Works, Eeonomy, Planning, Finance,Energy, Labor and Public Health and another three represent the Legislative orConsultative Assembly, the Chamber of Commerce and Industry and SBEE staff.The eleventh member is a Government-appointed Commissaire. The Chairman,chosen from amongst the Board members, is appointed by the Government afternomination by the Ministry of Industry, Mines and Energy. SBEE's DirectorGeneral is also nominated by the Minister and appointed by the Government; hehas full administrative powers except those reserred for the Board and theCommissaire.

2.18 SBEE management conducts the daily affairs of the company withoutnotable interference, except ia the important areas of tariff fixing and staffrecruitment and remuneration policy, which are the direct responsibility ofGOB. This laek of adequate autonomy in these respects is a country-wideproblem which should be addressed in the context of the proposed publicenterprise project. The combination of electric power and water supply in oneentity is not altogether desirable, but separation of the two activities atthis juncture would be premature. However, SBEE's accounting arrangementsshould be modified to enable the costs of the two activities to be clearlyidentified and respective financial objectives defined and attained. Theongoing Cotonou Water/Sanitation Engineering Project (Credit 1171-BEN of June1981) includes a study of SBEE's present accounting systems and assistance toimplement the necessary changes, including staff training.

2.19 SBEE's existing organization is set out in Annex 2-4. There areseparate planning directorates for electricity and water services and separatetechnical operations sections at provincial directorate level. However,

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common services such as meter readings, billings, and collection activitiesare combined. SBEE's organization structure was reviewed by consultants 1/who made a series of recommendations which are under consideration by SBEE.As for CEET (para. 2.13), the proposed project would seek to make a start onstrengthening SBEE. In particular, it would finance limited technicalassistance to SBEE in the field of data processing, and training.

2.20 As in the case for CEET, SBEE is overstaffed at the lower levels ofskill and responsibility while the number of professional andsupervisory/technical-level staff is insufficient. SBEE has only 19professionals and 60 technicians/supervisors, as against 1,038 worker-levelstaff. Staffing problems are again exacerbated by the absence of training atlower levels and the lack of appropriate division of work and delegation ofauthority within and between levels. Supervisory/technician-level staff aretrained almoet exclusively as technicians and not as managers. Consequently,professional staff are ;nvolved with much routine administration and areunable to devote sufficient time to managing the entity. Competent middle-level personnel are kepG busy doing the technical work, such as equipmentrepair, while the largely untrained manual workers do little other than themost menial tasks.

2.21 SBER apparently has no explicit strategy for dealing with thesestaffing and training problems. The proposed project includes fellowships forSBEE to develop a basic capability in manpower plamring and training, andsubstantial on-the-job training in thos6 skills that are better provided in-house than at the CEB training center.

E. Financial/Operational Results

2.22 CEB's, CEET's and SBEE's financial/operational results over the pastfew years are reviewed in paras. 4.01 to 4.03.

F. Accounting and Audit Arrangements

2.23 CEB's accounting system, while broadly satisfactory, has two mainweaknesses in that there is no adequata system of accounting for majorprojects and CEB's financial position can be established only at the financialyear-end. The accounts for FY 81 were reviewed by external auditors, whosereport disclosed no major criticisms but recommended improvements to theaccounting systems and proeedures. These are currently being implementedwhile CEB's finance staffing would be strengthened under the proposed project(para. 3.15).

2.24 CEET's accounting system is inadequate and defective, impairingefficient financial management. The accounts for FY 81 were reviewed byexternal auditors, whose report states that existing accounting procedures are

1/ "SBEE: Etude Organisationnelle" by Hydro Qu6ebec International,May 1983.

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inadequate and, where they exist, are not properly implemented. Furthermore,there is a lack of communication and harmonization between the variousaccounting and administrative departments. The auditors were unable toexpress a firm opinion on the financial state of CHET, as the audit was only astart of the process of establishing reliable accounts. CEET has started toimplement the recommendations made by the auditors to strengthen accountingsystems and procedures. A sustained effort over several years is required toestablish a sound accounting zystem and satisfactory financial reporting.

2.25 SBEE's accounting system is complicated because there is nosystematic separation of the electricity and water supply operations. Theaceounts for PY 81 were reviewed by external auditors. However, their reportis qualified because at the time of audit (end FY 82), SBEE's FY 81 accountswere incomplete. Because of this and other defects in the accounting recordsthe auditors were unable to express an opinion on the state of SBEE's financesas of end FY 81. They did, however, make numerous recommendations forimproving SBEE's accounting systems and procedures, including the w'paratiouof the accounts of electricity and water operations, and budgetingprocedures. The present state of affairs seriously impairs SBE's financialmanagement. SBEE has started to take remedial action and has recruited tonaccountants to bring accounting records up to date. A sustained effort, overseveral years, is required to establish an accounting system that can providetimely and reliable information for SBEE's management. Coatinuity of externalassistance is essential.

2.26 IDA has requested an audit of the PYs 82 and 83 accounts of the threeentities; the certified accounts and the auditor's reports would be submittedto IDA by CEB and CEET not later than July 15, 1984 and by SBEE not later thanSeptember 30, 1984. Thereafter, each of the three entities would:

(i) have its accounts audited annually by independent auditorssatisfactory to IDA; and

(ii) submit to IDA its audited accounts, and the auditors' reportthereon, within six months of its fiscal year-end.

Furthenmore, from PY 86 onwards, SBEE would maintain separate accounts forelectricity and water supply.

G. Insurance

2.27 Present insurance arrangements for power stations and associatedtransmission and distribution facilities are satisfactory. All three entitiesmaintain adequate comprehensive insurance coverage against risks -- civilliability, fire, explosion and electrical faults -- appropriate to eleotricityundertakings; vehicles are adequately insured.

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11I. THE PROJECT

A. Background

3.01 The hydropower potential of the Mono river was first studied in 1964-67 by a consortium of consultants under a UNDP-financed contract. Aprefeasibility report was prepared on a multipurpose project for powerproduction (based on an installed capacity of 30 MW at Nangbeto), floodcontrol and irrigation downstream in Benin and Togo. The project was judgedpremature, as at that time the small demand for electricity in both countriescould be met more economically by imports from Ghana's new Akosombo powerplant, firmed up by local diesels. Between 1975-77 the prefeasibility studywas updated by Electroconsult (Italy), with UNDP financing, taking intoaccount the large fuel cost increases from 1973 and using additionalhydrological data. Their report recommended the installation of two 30 KWunits at Nangbeto.

3.02 A feasibility study of the proposed power plant, and associatedtransmission, was undertaken between. 1978-80 by a consulting Consortium ofEleetrowatt/Sogreab (Switzerland/Franee), with financing by UNDP and with IDAas the executing agency. The results of the study were discussed by potentialco-financiers in June 1980 and it was agreed that, at an estimated cost ofabout US$ 120 million, power from Vangbeto offered a lower cost alternativethan thermal power in helping to meet future electricity demand in Benin andTogo. Consequently, IDA and Bonds d'Aide et de Cooperation (FAC) agreed tofinance detailed engineering studies and the preparation of bidding documentsfor the project. The above Consortium was appointed by CEB to undertake thesetasks.

3.03 At Bank Group request, CEB appointed a Panel comprising independentexperts in geology, civil engineering and electrical engineering, to reviewthe feasibility and other studies of the Consortium and, in particular, thedesign of the proposed dam. Following a suggestion by that Panel, theConsortium undertook additional studies of a rockfill dam in 1981-82, as analternative to the buttress dam proposed by the Consortium, in order to reduceconcrete needs and better utilize site geology. Bids were called for bothtypes of dam structure and, folloving evaluation, the rockfill alternative hasbeen selected.

3.04 A hydro inventory prepared by Sir Alexander Gibb andPartners/Tractionel (United Kingdom/Belgium) confirmed Nangbeto as the mosteconomical site for a first hydropower development. The plan to connectNangbeto to CEB's existing Mo=6-Hagou substation, near Tabligbo in Togo, by asingle circuit 161 kV transmission line is adequate as Nangbeto will beoperated as a peaking/intermediate load plant.

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B. Project Objectives

3.05 The Hangbeto power projeot would:

(a) help minimize the long-term cost of electricity supply in Beninand Togo;

(b) supply hydro power (installed capacity of 63 MW. firm power of45 MW) and energy (about 150 GWh annually) to help meet theestimated increase in demand for electricity and reduce fuelcosts;

(c) improve CEB's interconnected system operation;

(d) strengthen the power sector institutions in both countries -and, in particular, the co-ordinating role of CEB, and to assistthem in developing a capability in planning, engineering andfinancial control; and

(e) improve sector efficiency in financial, technical and projectplanning management through a joint training program.

C. Projeet Description

3.06 The proposed project consists of the following componeate. Adetailed description is provided in Annex 3-1 and the physical components areshown on Map IERD 17684.

(a) Hydroelectric development at Nangbeto about 35 km southeact ofAtakpam'e on the Mono River in Togo, the main components of whichare:

(i) a 40 m high dam with a total length of about 5 kmoontaining a center portion of rockfill design;

(ii) a spillway capable of passing 3,700 m3/s and bottomoutlets for 350 m3 s;

(iii) a power house in the river bed at the toe of the dam, withtwo 31.5 MW Kaplan turbines, for an operating head of 17 to31 m, including auxiliaries, and two 36 MNA powertransformers;

(iv) a 161 kY transmission line of about 110 km to connect theplant to the existing network;

(v) related project management and engineering services(para. 3.15);

(vi) related population resettlement and compensation; and

(vii) environmental and health protection studies and anenvironmental protection program (para. 3.21);

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(b) Power sector atudies comprisiLng surveys of two stretches of thletoao and Ougms Rivers, a feasibility study of the Adjaralaproject on the Mono River (para. 1.20), and a study of a Loaddispatching system for Benin and Togo (para. 2.09); and

(c) Technical assistance mainly in the field oi' organization andmanagement, and training programs for CEB, CEET and SIBEP.

D. Project Cost

3.07 The estimated cost of the project, including provision for physicalazd price contingencies - but excluding interest during construction, isUS$127 million equivalent, as suminarized in the table below. The foreignexehange cost of US$ 108.3 million equivalent represents 85% of the projeetcost. Full details of the projeot cost are givea in Annex 3-2. Theresettlement component of the project is described in Annex 3-7.

Sumwy Project Cost

1briesl % ofB01ion DOFA US liillion Equiv. as % of Base

Nangbeto lEE Dev. & Tmm.Ci¶l WoxI9 1.69 15.21 16.90 4.3 3B.8 43.1 90 41viLpmen* 0.75 7.64 8.39 1.9 19.5 21.4 91 21TrwstissLon 0.71 4.-CJ 4.78 1..8 10.4 12.2 35 12Reset. &: EmrDeXt 1.88 2.20 4.03 4.8 5.6 10.4- 54 10Eqg. & Acbi:ihistration 0.78 3.25 4.03 2.0 8.3 10.3 81 10

Sib-Potal 581 3 14.8 974

Studies 0.0 0.51 0.55 0.1 1.3 1.4 95 1Tbi5cEa Asawitetaa Q.CB 0.86 0.94 0.3 2.1 24 92 2

eraiing 0.12 0.9) 1.02 0.2 2.4 2.6 88 3TotEL Base Cost 6.05 6 154 a4 1038 s ' tOD

Contingewie: thical 0.51 2.43 2.94 1.3 6.2 7.5 3 7: Prio 0.78 5.37 6.15 2.0 13.7 15.7 87 15

Total Projewt Cost 7.34. 4. 44 49.78 18.7 T 1(.3 121.0 *

Iaterxt during coatructim. 0.74 4.a2 494 1.9 10.7 12.6 ei 12

Total Yinan,ing leq4red 8.CS 46.64 54-72 a0.6 119.0 139.6 85es::==- s _

3.08 Project cost estimates for civil works, equipment aad transmiasionbased on bids received by CEB in December 1983. Local curreacy costs excludeindirect foreign costs. Resettlement costs are based on GOT's detail surveyreport at end 1983 prices; the project cost includes a provision of US$5miLlion to cover environmental and health components, including any necessary

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deforestation. All labor costs, the Cost of land, resettlenent, andcompensation are assumed to be local c0sts. CEB is exempt from all taxes anddutieB in Beriin and Togo.

3.09 The project cost includes physical contingencies at 10% for civilworks, 5% for equipment, and 15% for the resettlement/environmental component;these percentages are reasonable. Price escalation has been included at ratesof 7.5% during 1984, 7% during 1985 and 6% after 1985. The foreign cost ofengineering services is based on 625 man-months. Poreign Cost of expatriateadvisers, technical assistance/training personnel and sector studies is basedupon ourreatly prevailing rates.

E. Project Financing

3.10 IDA Credits of US$ 15 million equivalent each to GOB and GOT areproposed; they would finance about 21% of the project cost. Retroactivefinancing of expenditures amounting to US$ 0.6 million, not covered under theongoing Power Engineering and Technical Assistance Credits (1189-BEN/1190-TO),and incurred after July 1, 1983 is recommended. Substantial co-financing hasbeen arranged. Details of sources of finance for the project, based onagreements reached at the recent (Yebruary 1984) co-financiers' meeting, areset out in Amnex 3-3 and are smuarized in the table below.

3.11 It is proposed that EDA should finance a part of the cost of civilworks, resettlement and environmental programs, engineering and administrationand most of the cost of studies, technical assistance and training. About 19%

of the project costs (US$ 25.9 mnillion) would be covered by CEB's internallygenerated fu.nds. (Details of COB's contribution are discussed in para. 4.12).GO3/GOT would assume responsibility for any cost overruns. Effectiveness ofall co-financing is a condition of effectiveness of the proposed IDA credits.

Project Financing Plan

Leading TermsUS$ million Equivalent Interest Maturity (in years)

IDA 30.0 - 50 of which 10 graceKUWAIT YUND 20.0 4.0 25 " " 5 graceOPEC 8.0 - 20 " 5 graceBADEA 10.0 6.5 16 " " 4 graceAfDB 6.9 10.5 20 " " 5 graceKfW 16.6 None : Grant-in-AidCCCE 10.7 5.0 20 of which 5 graceCIDA 9.2 None : Grant-in-AidPAC 1.5 None : Grant-in-AidU!DP 0.8 None : Grant-in-AidCEB 25.9

Total financing 139.65-2===s

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3.12 Of the IDA Credits, US$18.6 million would be relent by GOB and GOT toCEB for 24 years including four years of grace at the IERD rate prevailing atthe time of Board approval. CEB would bear the foreign exobange risk on thisamount. The remaining amount of the credits would be made avaiLable to thethree power entities as follows:

(a) CEB (US$8.6 million) to finance environmental/heaLthcomponents, studies, technical assistance and trainimg;and

(b) CEET/SBEE (US$1.4 million each) to finance technicalassistance and training.

Except for IDA and BADEA (1.5% interest rate mark-up) onlending terms fronGOT/GOB to CEB would be the same as those from the lending agencies toGOT/GOB.

F. Coordination with Co-financiemr

3.13 At the request of GOB and GOT, IDA has taken the lead in coordinatingco-financing for the proposed project. Co-financiers meetings were held in1980, 1981 and 1983 and, following the last of those meetings, the pxoject wasappraised simultaneously by IDAA staff and officials of MADEL and OCCE; AfDBwas also represented. KfW and the Kuwait Yund have since appraised theproject, A further co-financiers meeting was held in February 1984 to agreeoa the fiaal financing plan after evaluation of the bids for the ciril works,eq.uipnent and transmission.

G. Project Implementation

3.14 The Nangbeto hydro power station is planned for completion by mid-1987 and for full operation from early 1988, following the wet season. Theconstruction schedule for the project is set out in Annex 3-4 and isrealistic, assuming the timely award of the civil wo-rks-onTract, presentlyassumed for June/July, 1984..

3.15 Project Management would be CEB's responsibility. Hitherto, CEB hasno experience of handling this type of project and CEB's organization andmanagement would require considerable strengtheening and support to 8upervi9eproject implementation and, subsequeatly, to operate the hydro power stationsatisfactorily. CEB has made the following arrangements for projectmanagement, which are satisfactory to IDA and the co-financiers. Anorganization chart of these arrangements is set out in Annex 3-5:

(a) a Project Unit headed by a Project Director directlyresponsible to CEB's Director-General; the Jnit consistsof three divisions responsible for:

(i) project administration/finance;

(ii) project engineering and technical matters; and

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(iii) environmental and health programs (para. 3.21).

A competent local Project Director and sufficient otherlocal staff with appropriate experience have beenappointel.

(b) Three full-time Advisors to the Project Unit, forfinancial and technical aspects of the project and for theenvironmental programs. CEB's proposals for hiring theadvisors are satisfactory.

(c) Consultant Engineers -- CEB has retainedElectrowatt/Sogreah, who prepared the detailedengineering, for the technical supervision of the projectunder terms and conditions satisfaotory to IDA; and

(d) a Panel of Independent Experts to review progrese of theproject periodically and to advise CEB oa constrlctioaissues and problems with particular emphasis on damsafety; the present Advisory Board has been retained forthis purpose.

3.16 The scope and terms of referenee for power sector studies, technicalassistance and training servies under the proposed project were discussedduring negotiations. Any consultants and advisors for such services to befinanced by ID& would be selected in accordance with IDA Guidelines.

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H. Procurement

3.17 The procurement arrangements for the proposed project are summarizedbelow and set out in detail in Annex 3-6.

Amounts and Methods of Procurement a/~ ~ (US$ Millions)

TotalI5B LCB Other Cost

A. Nangbeto DevelopmentCivil Works 55.3 55,3

(11.7) (11.7)Equipment 26.5 26.5Transmission 14.8 b/ 14.8Resettlement & Environment 11.8 11.8

(5.8) (5.8)Engineering & Administration 12.2 12.2

(6.9) (6.9)B. Power Sector Studies 1.4 1.4

(1.4) (1.4)C. Technical Assistance P,4 2.4

(2.1) (2.1)D. Training 2.6 2.6

IZ ~(2.1) (2.1)55.3 1,.8 59.9 127.0(11.7) (5.8) (12.5) (30.0)

a! Figures in brackets represent proposed IDA financing.

b/ Award of the contract for transmission lines (not financed by IDA) willbe based on the lowest evaluated bid, takinig into account the financialterms offered in the bids.

3.18 CEB invited bids on July 28, 1983, for three contracts comprisingcivil works, machinery and equipment and transmission works from 1'requalifiedbidders under international competitive arrangements. Bid documenbt andbidder prequalification for the civil works were carried out in accordancewith IDA Guidelines and were approved by the co-leAders. Bidding formachinery and equipment and transmission works was in accordance with theguidelines of prospective co-financiers. Public bid opening took place onDecember 14, 1983 and contracts for all three lots are under negotiation. Thecivil works are on the critical path for project implementation and, in orderto ensure timely plant commissioning, the contract should be awarded by mid-July 1984. Consultants evaluated properly all bids and recommended the lowestbidder for the civil works contract. CEB approved this recommendation, whichretains the rockfill dam alternative. IDA reviewed the evaluation and has noobjection to CEB's proposed award. Resettlement and environmental componentswould be procured in accordance with local competitive bidding procedures,which are satisfactory to IDA. Goods and services required for tho technicalassistance and training components would be procured on the basis ofquotations from at least three suppliers. All IDA-financed contracts for

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amounts over US$ 300,000 equivalent would be subject to prior review.

I, Disbursements

3.19 The proposed IDA Credits would be disbursed (pari pasu with 50% eachfrom the Credits to Benin and Togo) against the project oomponents sbownbelow:

Disbursement Categories of IDA Credits

Pereentage of ExpendituresCategory Amounts Pinanced by the IDA Credits

(US$ million)

A. 1angbeto DevelopmentCivil Works 10.5 22%Resettlement & Environment 5.2 48%Engineering & Administration 6.2 68%

Sab-Total 2-1. q

B. Power Seetor Studies 1.5 100%

C. Teohnical Aesistance tot CEB 0.1> 100% of foreign costCEET 0.7 100% of foreign costSBEE 0.7 100% of foreign cost

Sub-Total 1.9

Training for: CEB 0.6 80% of foreign costCOET 0.6 100% of foreign costSBEB 0.7 100% of foreign cost

Sub-Total 1.9

D. Unalloeated 3.0

Total 30.0- umZ

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3.20 The following table shows the estimated disbursements of the proposedCredits:

Dicb.awment Scedule for IDA Credits

sectbrImA Regioa

Fisal Year Daling Cueulativi Plrowleaid Quarter Quarter C0]ative Per t Per3nta

30FM I 1.0 1.0 3 £ 3 stinmated Project

II 2.6 e/ 3.6 12 2 D,'sbursement AIII 2.1 5.7 19 - ProfileIV 1.9 7.6 25 14

FLa I 1.4 9.0 30 - 20II 3.0 12.0 40 29III 2.5 14.5 48 / SectorIV 2.5 17.0 57 43 / Regional

/ Piof ile1 I 2.0 19.0 63 _

II 2.0 21.0 70 57 10III 2.0 23.0 77 IIV 2.0 25.0 83 69 /

ins I 1.0 as.o 86 -/II 1.0 27.C, 9) 79III 0.5 27.5 92 - -t

IV 0.5 .3.0 93 87 85 86 87 88 89

" I 1.0 29.0 9 _II l.0 30.0 100 93

a/ Includes 15% advance payment on the construction contract and 10% advancepayments on the construction supervision, project management unit andTechnical Assistance contracte, and the recommended retroactive financingof about US$0.6 million equivalent.

The closing date for the IDA Credits would be June 30, 1989 to allowsuffioient time for the payment of final expenditures on technical assistanceand training services and of retention monies, following the expectedcommissioning of the second Nangbeto unit during July 1987. It is expectedthat disbursements will proceed more quickly than indioated by the West AfricaPower Sector profile (March 1984). Both the Consultants and the Panel ofIndependent Experts confirmed that the project can be completed as 8cheduledand, in view of the advanced status of procurement, this appeara reasonable.Furthermore, experience Ln the Region unler similar conditions, e.g. Tsabo andBuyo in Ivory Coast, iadicate that such lrojects can be completed on time.Any funds reemining undisbursed after project oompletion would be cancelled.

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J. Environmental and Resettlement Aspects

3.21 During appraisal, an agreement in principle was reached with CEB andthe relevant Togolese authorities on the need for programs and timetables forenvironmental protection and resettlement arising from the proposed project.Resettlement involves fewer than 8,000 people, at present located in 34vilLages. During negotiations GOT confirmed its agreemeuit to prepare andimplement programs covering the relocation and compensation of population andenvironmental and health protection in the project area. Furthermore, termsof reference for the studies to be undertaken to develop detailed proposals,which would be submitted for IDA review no later than December 31, 1985, wereagreed at negotiations. A detailed program satisfactory to both GOT and IDAwould be prepared by June 30, 1986. The nain features of the studies areoutlined below and shown in more detail in Annex 3-7. CEB would integrate aspecial environmental group into the project management unit to implementthese programs:

(i) health control programs for schistosomiasis,malaria, onchocerciasis and Guinea worm disease;

(ii) a program for the selective removal of vegetationcover to ensure adequate water quality, taking intoacCount of potential salt intrusion and of vt1har

downstream effects;

(iii) the possible use of the reservoir for fish productionand recommendations for the necessary pre-impoundingpreparation of the reservoir;

(iv) a program to mitigate the impact of the project onaffected people, taking into account socio-culturalfactors; and

(v) a program to take care of the rare and endangered anddangerous animals which may be affected by the project.

3.22 The pea%ing/medium load type operation of Nangbeto is not expected tohave any significant adverse effect downstream. The increased Mono river flowditring the dry season, as a result of the project, would mitigate the currentproblems of saltwater intrusion into flood recession agriculture areas in suchseasons. These areas are relatively small and located near Lokossa in Bevinabout 100 km downstream of 'iangbeto. During the wet season the dam would beoperated in such a way as to maintain adequate water level downstream.Agriculture in the lower Mono Valley is predominantly rainfed so that a moreregular supply of water could be beneficial if correctly exploited. AMasterplan Study (by Electroconsult/Louis Berger International) for Hydro-Agricultural Development of the Lower Mono River Valley, due for completion inlate 1984, has begun to analysetthis possibility. AfDB is financing thisstudy and CEB is the executing agency. Further analysis of the Masterplan andother proposals would be conducted by CEB.

3.23 While the lower part of the Mono river, downstream of Nangbeto, formsthe border of Benin and Togo, a formal agreement between the two countries ondownstream effects of the project is not required as both Governments will

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Lgree in the IDA Credit Agreements to oause CEB to carry out the projeot.

K. Project Monitoring and Reporting

3.24 Detailed monitoring and reporting requirements were discussed duringnegotiations. In particular, CEB should submit to IDA detailed quarterlyprogress reports of project execution (including resettlement andenvironmental matters) and copies of all reports submitted by their variousconsultants and the Board of Experts. In addition, all three entities shouldsubmit quarterly reports regarding:

(i) the progress of technioal assistance and training under theproposed project; and

(ii) the control of accounts receivable.

3.25 CEB agreed during negotiations to ensure satisfactory arrangementsfor the annual inspection of the Nangbeto dam and appurtenances and, to thisend will submit its proposals for IDA review no later than one year prior tocompletion.

IV. FINANCIAL ANALYSIS

A. Past Finances and Present Financial Position of CEB, CEET and SBEE

4.01 From FY 78 to FY 82 1/, sales of electricity grew at an average of24%, 16% and 27% respectively for CEB, CEET and SBEE, with the benefit ofinexpensive electricity imports from VRA. CEET's and SBEE's sales in theirrespective isolated load centers have grown even faster than average. Costsin these centers have soared becalise they are supplied by small diesel plantsand this threatens the financial viability of CEET and SBEE. IncomeStatements, Funds Flow Statemonts and Balance Sheets for FY 78 to FY 82 forthe three entities are given in Alunexes 4-1 to 4-3 and are summarized in the

following tables. CEB's income has steadily increased over the period; exceptduring FT 78, tariffs have been -egularly adjusted to reflect increases of thecost of imports from VRA. CEET showed operating deficits until FY 80, becausethe average tariff was frozen at about FCFA 19/kWh ($0.048/kWh). CEET'sfinaneial position has improved somewhat following average tariff increases of30% in FY 81 and 20% in FY 82. Although SBEE made operating surpluses untilFY 81, they declined steadily, as tariffs were frozen at about FOFA 21/kWh($0.054/kWh). An average increase of 40% in FY 82 came too late to prevent anoperating deficit of FCFA 500 million ($1.3 million) in that year.

1/ The fiscal years are: CEB January 1 to December 31, CEEt' Qetober Ito September 30, and SBEE January 1 to December 31.

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Past Earnings, Yinaucinag Perf rmance and Capitalisationof CHE, CEET and SBEE

(in FCOA Million)

--------------- CE:B --_________ ----A. Past Earnings

FY 78 79 80 81 82

Sales (Gmh) 212 290 427 457 495Tariff (FCFA/kWh) 4.4 5.5 5.7 7.5 11.5Total Revenue 965 1,637 2,458 3,504 5,799Operating Expenses

ineluding Interest 998 1,527 2,189 3,041 4,877

Net Surpluts/Deficit (33) 110 269 463 922=2== =_,=, =c_= =c== = == =

Operating Ratio (%) 103 93 89 87 79Rate of Return on

unrevalued NFA (%) (1.6) 4.2 8.7 17.5 31.3

CEB's past earnings have evolved satisfaotorily.

FY78 79 so 81 82 78 79 O 81 82

Sales (Gi) 110 124 151 184 2)1 52 8) 92 106 137Tarfff (FFAAhWh) 18.7 19.5 18.8 25.1 31.2 19.7 22.6 22.4 21.2 31.0Total Revems 2,704 3,1(CB 3,581 5,29D 7,729 1,611 2,526 3,070 4,380 5,9720perting bqpensesincluding Interest 3,727 3,304 3,944 4,859 6,622 1,496 2,10B 2,814 4,239 6,475

Net Sutlus/Deficit (1,C23) (196) (363) 431 1 ,107 115 418 Z6 141 (5C3)

Operating Ptio (%) 131 96 104 87 84 91 80 88 93 105Rate of Retumn

uutvalued NRA (%) (37.3) 3.8 (2.8) 11.5 21.0 5.4 14.0 8.7 5.6 (6.4)

CEET's earnings, following operating deficits in FYe 78-80, improved in FYS 81and 82 as a result of tariff increases.

SBEE's earnings have gradually deteriorated and the FY 82 operating deficitcould not be prevented by the tariff increase.

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B. = Per*o=ans of QEB. CrI and S]E:

Pleiod FVS7-tX

5B ~-- E--- -- S

FRA Equdvalent OPFA Hqulvalenlt FOFA iqvatmiicm u if4 % KW4i us$s Nifo % winii us mifljsc %

Capital EXprdi4A.re 4,653 12.0 68 6,247 15.9 165 8,58 21.9 89Inc;e in *iring Capital 2,19B 5.6 32 -2,463 -6.3 -65 1,040 2.7 11

Total Reqixements 6,M1 17.6 100 3,7% 9.6 100 9,628 24.6 100-U - ms St"

Interml Cah Genemtion 2,322 6.0 34 3,87 9.7 101 3,6M 9.3 3B&rx"rs 3,567 9.1 52 2,251 5.7 9 3,996 10.2 41Equity 992 2.5 14 -2,284 -5.8 -60 1,9$ 5.1 21

Total Sou&=es of Funds 6,881 17.6 1OD 3,784 9.6 100 9,628 24.6 100_u = # m _ Eta"

CEB' overall financing performance for the period FY78-82 was satisfaotoVy.

CEET's financing performance for the period uuder consideration, notwithstanding theuncertainties of the data available appears unsatisfactory as a result of:

(i) a decrease in working capital: liquidity problems have led to largeincreases of current liabilities; and

(ii) a progressive decapitalization of the entity, in part the result ofoperati-ig losses (as of end FY82, net equity was FCOA 94 million,made up of capital and "subvertions d"equipement" for FCFA 2,064million, less accummulated losses of FCFA 1,970 million) and in partof a change in accounting procedures concerning consumerscontributions in FY82; as a result, they are no longer treated aspart of equity.

SBEE's overall financing performance (covering water and power activities) for theperiod under consideration was satisfactory.

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C. Capitaition as of end FY82:

-- _- 53EB CIE S

Exiivale.nt Ekuiva2ent ErixtvalmtFCFA XIllion U3 Million ?A ZIllwn 1X$ [lliUon PCFA Millnwa t f M-llion

Net Fixed AssetBin Opeation 4,849 12.3 6,054 15.4 6,633 16.9

Work in Prog,ts 1,121 2.9 278 0.7 1, 0 3.85,9W7 15.2 6,332 16.1 8,133 23.7

Current Assets 4,19 3,890 4,83Less Curnt Liabili.tie 1,241 2,957 7.5 5,155 -1,265 -3.2 2,650 2,173 5.5

Net Assets 8,927 22.7 5,f67 12.9 10,306 26.2

Represented by:Equity 3,542 9.0 94 0.2 3,601 9.2Lodg nm Debt 5 35 13.7 2,504 64 4,052 10.2Camuners Contributions - - 2,469 6.3 2,673 6.8

Total 8,927 22.7 5,067 12.9 10,306 26.2

Debt service coveirge 3.0 5.6 2.0Debt/Equity xatio a/ 60:40 50:50 39:61Auxent iatio 34 0.8 1 .8

a/ For CEET and SBES, equity includes consumers contributionas.

CEB's oapitalization as of end FY82 was satisfactory.

CEET's capitalization as of end FY82 was unsatisfactory, due mainly to thehuge current liabilities, and weak equity, basis referred to above.

SBES's overall capitalization (water and power activities combined) as of endFY82 was reasonably satisfactory.

B. Billing and Collection

4.02 CEB's billings are monthly and accounts receivable, as of end FY 82,represented about six months' revenues. This unreasonably high level is dueto the poor payment record of its tain customers, CEET and SBEE. Most ofCEET's billings are monthly and receivables as of end FY 82 represented overfive months' revenues, mostly from government and state enterprises. SBEE'sbillings are monthly for medium voltage and bi-monthly for low voltagecustomers; receivables as of end FY 82 represented over nine months' revenues,moBtly from government and state companies. Improved performance in thesettlement of bills by governments and public entities to CEET and SBEE isurgently required; this, in turn, would improve the settlement of CEB'sbillings to CEET and SBEE. GOB and GOT have submitted plans to reduce thelevel of public sector receivables to CEET and SEES to no more than the

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equivalent of three months' billings within a three-year period. Furthermore,GOB and GOT agreed at negotiations to ensure that:

(i) the annual budgets of government departments and publicentities include sufficient provision to cover the cost oftheir annual consumption of electricity; and

(ii) all future electricity bills are paid within three months frompresentation.

4.05 While CEET's and SBEE's present position of receivables from privatecustomers is satisfactory, CEET and SBEE agreed during negotiations:

(i) to ensure that credit to their private customers will notexceed three nonths' billings; and

(ii) to settle CEB's bills within three months from presentation;

Similarly, CEB agreed to ensure that credit to its customers will not exceedthree months' billings.

C. Tariffs

1. Present Arrangements

4.04 About 93% of total electricity demand in Benin and Togo is met byCEB's imports from Ghana. The CEB-VRA contract reflects the cost structure ofhydro power, characterized by hLgh fixed charges and a low incremental cost.CEP purchases from VRA are determined by a three-part tariff and CEB's tariffsfor sales to CEETP and SBEE have a similar structure; full details of existingtariffs are set out in Annex 4-4. CEB's purchase cost is about IJS02.5/kWh andits average reveaue US05/kWh. Despite price adjustments every three yearssince 1973, the average costs to CEB and hence to its wholesale customers arestill most attractive; the fuel costs alone of diesel-generated eleetric&.tyare at least US05 .5/kWh.

4.05 The low cost of electricity purchases from CEB resulted in lowtariffs to consumers in Benin and Togo; between 1967 and 1981 CEET and SBEEtariffs remained unchanEid. Originally based on the cost of dieselgeneration, the 1967 tariff levels were sufficient to cover the lower coats ofimports from VRA for a number of years. Eventually, the financial position ofboth CEET and SBEE deteriorated to a position where tariff increases becameoverdue (para. 4.01). In both countries, tariff increases were made between1981 and 1983 as a result of which average tariffs became equivalent to aboutUS¢8/kWh, which Was well below the level in most other West Afrieaacountries 1/. Following the reduction in December 1983 by VRA of its suppliesto CEB, both CEET aad SBEE have been forced to generate more electricity fromtheir diesel plants. To compensate for the higher fuel costs involved GOT and

1/ Ivory Coast: US412/kWh, Senegal: US014/kWh, Upper Volta: US¢l9/kWh.

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GOB have allowed tariff increases, as from beginning 1984, of respectively 25and 80%. Average tariffs are now about FCFA 42/kWh (US010.7/kWh) for CEET andFCFA 57/kWh (US014.5/kWh) for SBEE.

4.06 Present tariff structures in both Beain and Togo date from the mid-1960s at which time atl electricity was generated by diesel plants. In Beninthe low-voltage tariff is oomplex, difficult to administer and riot conduciveto economizing on peak demand. The medium-voltage tariff, althbough betterstructured than in Togo, provides no incentive to save energy at peak time.Togo's present tariff structure is also condu¢ive to energy waste. With flator almost flat rates, low-voltage customers have no incentive to Bave energyat peak time. In the mediuz-voltage category, both low dezand charge and auniform energy charge encourage inefficient use of capacity. Both Benin andTogo apply a uniform natioaal tariff as a matter of policy. Since supply tothe coastal regions (93% of the total demand) is relatively cheap, excessrevenue must subsidize the inland load centers accounting for the remaining 7%of demand. Electrieity supply in the interior (by small high-speed dieselsusing gas oil that must be transported over long distances) is extremelycostly. Since growth rates are higher than on the coast, eross-uMsidizationis bound to increasingly affect the aatioaal tariff levels.

2. Tariff Studies

4.07 The ongoing Power Engineering and Technieal Assistance Project(Credit 1189-BREN/1190-TO) made pr*vision for a review of the tariffs of thethree entities, which was carried out by Electricit& de Franee (EdF). Thestudy of CEB's sales tariffs was completed in May 1982 and provided input totheir studies of CEET and SBEE tariffs, which were completed an mid-1983. Thestudies confirmed the inadequacies of both the tariff structures and levelsthen ia existence; EdF recommeaded a tariff structure based on raarginal costswhile maintaining uniformity of tariffs within each country. The estimatedmarginal cost for CEB in early 1982 terms was PCFA 21.3/kWh (aboutUS05.4/kWh), for CEET FCFA 31.1/kWh (US07.9/kWh) and for SBEE FCFA 29.2/kWh(US07.4/kWh) .

4.08 The tariff studies were based on the assumption that the supply ofrelatively low-cost imports from VRA would eontinue. As of December 1, 1983,however, VRA reduced its supply to CEB by half as a result of the laek ofwater in Ghana's Akosombo reservoir. The duration of this curtailment is notknown at this stage, as it depends on future rainfall and the replenishment ofthe reservoir. The results of the tariff atudies are uader review by thethree entities and their govermments but are largely overtaken by the aboveevents. The tariff studies will be updated and, thereafter, the authoritieshave agreed, in principle, to introduce marginal cost-based tariff strueturesfrom FY87 onwards. Tariff levels, on the other hand, would be determined inaccordance with the financial requirements of the three entities.

*. Future Tariffs

4.09 To oomplement the above tariff structure modificatioms and to ensurea oatisfactory future financial performance of the three entities, thefollowing agreements have been obtained at negotiations:

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(a) For CEB, a tariff increase of about 25% to be introdueed as ofJanuary 1, 1985. As part of project supervision, theAssociation would seek confirmation that the necessary actioashave been taken by CEB to enable this tariff increase. Theaverage tariff would thus be increased from FOFA 20/kWh(US05/kWh) to FCFA 25/kWh (US06.4/kWh). Subsequaently, andbeginning as of FY 85, tariffs would be adjusted annually toensure for FY 85 through FY 87 -- the aNangbeto constructionperiod -- an overall contribution to investment of about23%. The covenant specifies a contribution to investment,based on a three-year average, of 24% in FY 84, 13% in FY 85,14% in FY 86 and 45% from FY 87 onwards. For the purpose ofthe covenant, the annual contribution is defined aB internalcash generation of year N divided by one third of the total ofcapital investments of year IN-1, N and N+1. Internal cashgeneration is defined as the difference between: (a) netrevenue before depreciation and interest; and (b) the sum ofinterest, debt repayment and any increase in working eapitalother than cash.

(b) For CEET, a tariff increase of about 38% to be introduced asof January 1, 1985. AB part of project supervision, theAssociation would seek confirmation that the necessary actionshave been taken by GOT to enable this tariff increase. Theaverage tariff would thus be iacreased from ICPA 42/kWh(US01O.7/k'Wh) to FCFA 57-9/kWh (US014-8/kWh). SubseqUently,and beginning as of FY 85, tariffs would be adjusted annuallyto produce a contribution to investment of not loes than 45%in FYs 85-87 defined as for CEB. This would enaiuresatisfactory debt service coverage, operating, debt/equity andcurrent ratios for FY 85 through FY 87, and eliminate bankoverdrafts by FY 86.

(c) For SBEE, beginning as of FY 85, tariffs would be adjustedannually to produce a contribution to investmeat of not lessthan 45% in FYs 85-87 defined as for CEB and CEET. This wouldensure satisfactory debt service coverage, operating,debt/equity and current ratios for FY 85 through FY 87.Furthermore, SBEE would ensure that any surplus fromelectricity operations is not used to subsidize water supply.

(d) Duriag projeot implementation, CEB, CEET and SBEE would set,in consultation with IDA, appropriate rate of return targets(as from FY 88), based on average currently valued net fixedassets in operation in substitution for the above csshgeneration targets. At present, assets are recorded athistoric costs. As CEB is a recently established entity,revaluation of its existing fixed assets, which are smallcompared to those envisaged in the proposed project, would berelatively straightforward. The task of revaluing the fixedassets of CEET and SBEE would be more difficult, given therange and age of their existing facilities. Rowever, SBEE hascommissioned an inventory of its assets. A similar exercisewould be needed for CEBT.

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D. Financing PlaRne

4.10 Investment plans for CEB, CENT and SBEE are Bhown in Annex 1-3.Their estimated investment requirements and sources of funds through PY 87,the period covered by the proposed project, are summarized below, with detailsgiven in the Funds Flow Statements in Anmex 4-5.

Fuoia g PFaw for CEB ard) CM Ohsrand SBE (FPYf87)

CEB - _- S~ --

FCFA US$ FCFA US$ CFOA us$BlLiR Millin % BIlion Million % Billon Milli< %

RequLrewnets

azgbeto Projet 50.9 129.6 87 0.5 1.3 4 0.5 1.3 3Otber 7.4 18.9 13 11.7 29.9 96 17.2 / 43.9 97Total CapitaL &Bedixtuae(iluding IDC) 5B.3 148.7 100 12.2 31.2 100 17.7 45.2 10

Finncd by

nternal Cash Gene=4ta 17.0 43.4 29 8.2 20.9 67 12.7 32.5 72Lem WoxkiiagCapita I -0.5 -1.2 -1 5.5 14.0 44 0.8 2.0 4Less Debt Servie 3.7 9.4 6 1.3 3.3 11 2.1 5.4 12Contribution_VInveetmsnt Y 13.8 35.2 24 1.4 3.6 12 9.8 25.1 56

IDA Creit 1189E-BWN/1190-1T 0.8 2.0 1 - - - - - -Proposed IDA Credit 7.3 18.6 12 - - - - -

other Borxovii 22.5 57.5 39 10.3 26.3 84 5.0 12.7 29

Totai Borowilngs 30.6 78.1 52 10.3 26.3 84 5.0 12.7 29!kuty Contxibixn 13.9 35.4 24 0.5 1.3 4 2.9 7.4 15

Total Capital Souxns 5.3 148.7 100 12.2 31.2 100 17.7 45.2 100

a/ Including water supply investments of FCFA 4.6 billion.

bI Including variation in cash.

o/ Excluding variation in cash, the contribution to inves tment would be23% for CEB, 46% for CEET and 57% for SBEE.

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4.11 For the proposed project GOB and GOT would be the borrowers of IDAcredits of US$ 15 million each. An additioaal US$ 83.7 million of the proposedproject would be financed by other donors and suppliers credits (para. 3.10).

4.12 No further borrowvigs wouLd be needed by 0EB to finance the balanceof its investment program. Further borrowings would be needed to finanoe thebalante of CEBT and SBEE investment programs: US$26.3 million for CEST andUS$12.7 million for SBEE. The two national entities should not encountermajor difficulties in raising these funids. CEB's internal cash generationwould be about US$43 million or 29% of requirements; this would besatisfactory-. Equity contributions from GOT to CEST would be about US$1million, providiag 4% of total requirements. CEET's internal cash geaerationwould provide about US$21 milLion or 67% of requirements; this would besatisfactory. Equity contributions from GOB to SBEB (to finance essentiallywater facilities) would be about US$7 million, providing 15% of totalrequirements . SBEE 8 internal cash gemeration would be about US$32 million or72% of its investmeat requirements; this would be satisfactory.

E. Future Finances

4.13 With the above measures, the three entities would show an improvingfinancial position and performance during the period FY 84 to EY 87. Toprotect futuire financial viability of the three entities, a debt liLmitationcovenaat would be applied whereby CEB, CET and SBEE would not incur new debtwithout comsulting IDA unless their expeoted future internal cash generationis at least 1.5 times future debt service, including in respect of theproposed borrowings. CEB's, CEET's and SBBE's forecast InLcome Statements andBalance Sheets for FY 83 to PY 89 are given in Annexes 4-6 and 4-7 with theassumptioa.s used given in Annex 4-8. Salieit aspects of CEB's, CEET's andSBEE's future finances in this period are as follows:

Salient Aopects of Future Finanoes of CEB (FY84-88)(Ln FCFA billion, unless stted otherwise)

FY 84 85 86 87 88

Sales (GWh) 242 242 242 507 646'Tariff, in FCIA/kWh 20.2 25.0 31.0 34.0 37.0!Pot. oper. revenues 5.0 6.1 7.6 17.3 24.0'Tot. oper. expeases 4.0 4.8 5.4 10.2 12.2Net income 0.4 0.8 1.7 6.6 10.2Cperating ratio 81 79 71 59 51Mebt-equity ratio 35:65 46:54 49:51 46:54 43:57Debt serv. coverage 2.1 2.6 3.7 10.2 5.9Current Ratio 4.6 2.7 2.0 3.7 7.4CI a/ 24 13 14 45 70HOR b/ 7 9 14 17 17

a/ The Contribution to Investments (CI) is computed on a three-yearaverage basis.

b/ The rate of return (ROR) is computed on currently' valued averagenet fixed aBsets in operation.

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Salient Asp3ects of F v Finano P of CEET az1 SME (FY85-,88)(il ERA mAalUoit, unlei s6ated otb1wise)

N - -- SBEE

_ 6 86 87 83 _ 86 87 88

Sales (MW) 215 229 243 292 15 192 JS5 2:5Tariff, in ICFA/dkh 57.9 59.0 61.7 65.0 58.5 59.1 60.0 66.0Total Operating reveru 13.4 14.5 16.1 2:.2 13.8 15.1 16.6 20.7Total Opeimt4l expenes 11.4 13.4 15.3 19.2 12.7 14.8 15.7 18.3Net inoorie a" 1.8 0.9 0.6 0.9 0.8 - 0.6 2.3Opeistit getio 85 92 95 95 92 98 95 88Debt-equity ratio 73:27 74:26 78:22 ):.20 50:50 46:54 44:56 39:61Debt senrice coveng 6.5 5.1 5.0 6.5 5.1 5.0 6.7 8.40u.n" Ratio 2.2 3.4 2.9 2.4 5.2 5.4 5.4 7.9CI b/ 57 40 36 45 41 49 ic2 175CI Pe - - - - 57 66 131 181

32 15 8 7 8 2 5 13

a/ Water and power activities combined for SBEE.

b/ The Contribution to Investments (CI) is computed on a three-year averagebasis, including water and power investments.

!/ CI is computed on the three-year average basis of power investments only.

d/ The rate of return (ROR) is computed on historically valued average netfixed assets in operation.

V. ECONOKIC JUSTIFICATION

A. Demand Forecasts

5.01 Over the period 1972-1982 the demand on CEET's system grew at 17.8%per year, excluding large consumers, and on SBEE's system at 13.2% per year,leading to an average of 15.9% per year on CEB's interconnected system. Thesehigh rates of growth were sustained on both low and medium voltage networkseven during the recent recessionary period, from 1978-82. TnL the two yearperiod 1980-82 alone, the demand increased by 36% on the LV networks and by41% on the MV networks, indicating a remarkably persistent demand from thesmaller and medium sized consumers. This is typical of developing countrieswith still low levels of electrification. Including large industrialconsumers, the overall demand growth rate for the two countries wasapproximately 20% over the period 1972-82.

5.02 It is unlikely, however, that such growth rates will be sustained inthe future. Firetly, several of the large demands (steel, textiles, cement,

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hotels) are associated with projects having significant excess capacity andpoor rates of return. While the demands from some activities may increasewith capacity utilization, demands from others may decline. Some new demandsmay arise from a textile factory and a clinker plant in Benin, and fromexisting large industries in Togo, but they are small compared with presentlevels. Secondly, the high rate of growth of demand on the low and mediumvoltage networks originated principally from domestic consumers, smallartisans and commercial users, who were all served at low tariff levelsthroughout the 1970s and early 1980s. The higher tariffe already introducedand further increases under the proposed project are expected to dampen therate of growth in demand, though the underlying trends remain strong.

5.03 An analysis of historical trends in the demand for electricity is setout in Annex 1-2. Annex 5-1 gives details of the forecasts through 1989.They are unavoidably uncertain but, as can be seen, conservative; the overallprojected growth rate of 9.1% being well below historical trends.

B. Service to be provided by the Project

5.04. The following table compares the MW demand requirements of the twosystems with installed capacity, available capacity (i.e. installed capacityless allowances for outages) and the capacity available from YRA and Nangbeto.

KW Demand and Generation Capacity

1983 a/ 1984 a! 1985 1986 1987 1988 1989 1990

Peak Demand Requirements, MW: b/(1) 115 103 107 112 134 154 177 188

Installed Capacity, KW, of units presently on system or under eonstruotion:

- SBEE 15 31 31 31 31 31 31 31- CEET 17 17 17 17 17 17 17 17- CTL - Diesels 40 40 40 40 40 40 40 40

-G/Ts 49 49 49 49 49 49 49 49(2) Total 121 137 137 137 137 137 137 17(3) of which available c/ 52 91 d/ 91 91 91 91 91 91VRA contracts e/ 67 67 67 67 67 67 67 67

-15 158 T5 158 T 158 158 158Nangbeto: Firm Power - _- - 45 45 45

(4) Total Available Capacity 119 158 158 158 158 203 203 203==Q C = C

a/ Estimates.b/ Demand forecast plus 15% allowance for demand uncertainties.c/ Assumes availabi2ity of 70% for diesels and 60% for gas turbines.d/ Assumes the diesel.s at CTL will be available this year.

/ Assumes 100% current contracted power available at peak.

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The demand on the system is shown to decline this year and, through 1986, tobe below historical levels; this allows for load shedding from VRA, on aocountof the water shortages in Akosombo and Kpong.

5.05 The following table provides a corresponding statement of energyDalances on CEB's systen, in terms of GWh/year.

Energy Demand and Supply

1984 1985 1986 1987 1988 1989 1990

Demand, GWh/year

- SB3E 199 209 219 234 268 322 386- CEET 247 256 271 287 344 356 368- CIMAO 23 23 23 90 90 90 90- HV losses 10 10 10 21 27 27 27

(1) Total 479 498 523 632 729 795 871

Supplies, GWh/year

(2) VRA 252 252 252 528 528 528 328(3) Domestic Generation

(1)-(2) 227 246 271 104 201 267 343

(4) Supplies theoretically available from diesel units currently installed orunder construction: a/

- SBEE 190 190 190 190 190 190 190- CEET 104 104 104 104 104 104 104- OTL - Diesels 120 b/ 245 245 245 245 245 245

Total 414 539 539 539 539 539 539

a/ Assuming 70% year round availability.b/ Assuming 70% availability in the second half of this year.

Again, the energy demand forecasts over the period 1984-86 are lower thanhistorical levels on accou1nt of the power costs associated with the watershortages in Ghana's reservoirs.

5.06 The main point that emerges from these tables is that the system isalways capacity coastrained - assuaing VRA is in a position to meet asignificant proportion of the energy demands on CEXB' system. As can be seen,the theoretical energy available from exioting and new plant on the systemwould compare favorably with energy demands - e.g. it is around 414 GWhcurrently compared with a demand of 479 GWh, so that even with a substantial

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decline in supplies from VRA (as is happening on account of current watershortages in Volta Lake), COB should be able to call on local dieselgenerators once they have been rehabilitated from the fire damage at CTL.However, the demand for energy is expeoted to rise to 652 GWh by 1987 and 871GWh by 1990, so that, even assuming a restoration of supplies from VRA to 528GWh per year, an increasing reliance on local, generation is foreseen. Theabove analysis assumes that, once water levels are restored, VRA wouldcontinue to meet energy demands at the same rate as they did historically;otherwise, local generation would necessarily be higher than shown.

5.07 The above table also shows that, even in dry years, when Nangbeto'sGW1 output aay fall to around 10% of average levels, the local thermal plant,supported by exchanges from VRA, should be able to meet demand. For example,in 1990 the theoretical energy available from CEB's own generators, ineludingNangbeto, will be around 790 GWh, about 80 GWh below projected demand. IfNangbeto's output were to fall by 135 GWh, owing to abnormally poor rainfalls,about 215 GWh would be needed from interconnection, which is less than the 252GWh being supplied by VRA in the present drought. Interconnection withNigeria, under the proposed WAPSI project should provide further backup and,in addition, enable VRA. to supply at the full contracted levels; this isbecause VRA would have access to low-cost, off-peak thermal energy fromNigeria, and which would reduce the draw-down of the reservoirs during theseperiods.

5.08 It follows that it is appropriate to compare the energy benefits ofNangbeto with its alternatives under average water flow conditions. Since thesystem is capacity constrained, however, it is necessary to compare thscapacity benefits under dry year conditions, since the ricks of energy notbeing available in such years are low, for the reasons just noted, while therisks of power not being available during times of peak demand are high.Simulation studies, using historical vater flow reeords, show that the firm(dry year) power of Nangbeto is expected to be 45 MW at system peak. There isnaturally some uncertainty as to the precise value of this figure because ofthe erratic nature of rainfalls in the region. However, it was derivedignoring the proposed interconnection. project, which by appropriate use ofcontingency exchanges should enable the operators to avoid having to draw downthe reservoir to absolute minimum levels. There is, in other words, acomplementarity between Naugbeto and interconnection which would enhanceNanagbeto's "firm power". The 45 K4W, assuming the system is operatedsatisfactorily, is considered sustainable.

5.09 Turning to KlW capacity requirements, the table in para 5.04 showsthat, once the diesels at CTL are rehabilitated, there should be sufficientcapacity on the system to meet peak demand up to 1988; in the following year,the peak demand Is forecast to be 177 MW, of which up to 91 IW eould besupplied froma local diesel and thermal plant, and the balance of 86 KW fromNangbeto and interconnection. The power capacity deficit is expected toincrease continuously thereafter, at which time further support will be neededfromr WAPSI, the installation of additional local generators, or both.

5.10 Although the forecasts are believed to be conservative (as one mightinfer fromn the trends discussed in para. 5.01 and the forecasts used), theqLention arises, what if the demand growth was lower? The forecastscorrespond approximately to a 40% decline in the rate of growth of demand,

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from 16% per year to 9%. If the decline were greater the requirement for newavailable capacity in 1989 and 1990 would slip conoeivably by two to threeyears. This means that, with Nangbeto, there would be some surplus powercapacity on the system; with the dlesel alternative, the introduction of somegenerators could be postponed, making a savings on capital costs possible.(This possibility is considered in the economic analysiL below, para. 5.18).The energy output of Nangbeto would be fully absorbed however, since otherwiseit would be necessary to generate the 148 GWh by diesels or gas turbines.This can be seen from the energy balance table in para. 5.05, in which (onconservative assumptions) 267 GWh of domeatic generation is estimated to berequired in 1989, and 343 GWh in 1990, o: over twice the amount that Nangbetoalone oould supply. In sum, therefore, with J.ower rates of growth of demand,the full energy output of Nangbeto would be absorbed on the system, though thepower capacity would not be fully utilized until three years after start-up in1988.

C. Alternative Sources of Power and Ene"A

5.11 The question is now addressed, whai; are the alternatives to providingthe energy and firm power that is expected from Nangbeto? For the presentplanning horizons, up to the early 1990s, the mission considered two:interconnection with other countries, and local diesel generation.

5.12 Interconnection with YRA has so far supplied most of the power andenergy requirements of CEB's syztem and, with proper planning, is likely to doso in the near future. The present contract between YEA and CBB is for up to67 MW, though in recent years VRA has supplied more than this, as indicated inthe following table.

Transfers of Energy and Power from VRA to CEB, 1973-1982

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982

Energy, GWh/year.S/ 97 128 137 155 189 217 299 440 472 495

Power (Max. MW atYA Terminals) 20 25 25 28 33 38 56 78 78 86

a/ Figures exolude losses on HV lines.

Considering that the cost of energy from YRA is less than one third of that ofthe fuol costs of local diesel generation, very considerable benefits aecrueto Togc/ and Benin from the tie line.

5.13 The transfers in 1982 were, however, near the capacity of the line.Furthermore, Ghana is experiencing serious shortages of energy in the largereservoirs at Akosombo and Kpong (the former now being below its operatingrule curve) from which CEB is supplied, and are having to disconnect load.For this reason it is difficuilt to see VRA supplying more than about 500 GWhper year unless their energy supplies were increased further.

- 44 -

5.14 The difficulties being faced by VRA and, ultimately, CEB, are onlyone reason why interconneetion is being sought between countries in theregion, and is being promoted by the Bank in collaboration with the region'sutilities and the African Development Bank. Feasibility studies are now inprogress, and the aim is to introduce the project in the late 1980s. Theother reason is that the neighboring utility in Nigeria, NEPA, is also facingchronic power capacity shortages on its mixed hydro-thermal system; it doesnot, however, have energy shortages (even in dry years) on account of the low-energy-cost thermal plant on the system. The situation is thus as follows:VRA (and also EECI in Ivory Coast) have good margins of reserve power eapacityon their hydro plant, but in dry years, are short of water energy to utilizeit fully; NEPA, on the other hand, is short of capacity but not of energy.Interconnection would therefore make possible a mutually beneficialarrangement of contingency power and energy exchanges between the threecountries. Further analysis shows that low-cost, off-peak thermal energycould be stored in the very large reservoirs at Akosombo and in Ivory Coast,lowering energy costs all round for all three countries. By being tied intothis interconnection, CEB could benefit in both respects: more reliablesupplies of power and energy (contingency exchanges) and, in the longer term,cheaper power and energy.

5.15 Realistically, the first benefits to aim for are improvements inreliability through contingency exchanges. Over the longer term, onceconfidence in the system has developed and the operational problems arisingfrom transfers among the five countries have been mastered, firm power andenergy transfers can be planned for, leading to significant savings in powerand energy costs. As noted, Bank staff have been heavily involved indiscussions with ADB and the utilities to move the interconnection projectahead.

5.16 It is nevertheless clear that, assuming good progress with the WAPSIproject, new capacity will be required by CEB if power shortages are to beavoided in Togo and Benin. As often happens in electric power systems, it isnecessary to draw on different sources of capacity and energy for technicaland economic reasons - thermal, hydro (depending on cost) and interconnectionwith other utilities. Power and energy requirements would have to be met bylocal generation: either thermal, or with a combination of thermal generationand Nangbeto (as shown in the second scenario). Hence, the question to beaddressed is whether Nangbeto has a lower cost than the thermal generation itwould displace.

D. Least Cost Solution and Equalizing Diseount Rate for the Project

5.17 The best thermal alternative to Nangbeto would be diesel generationhaving an available capacity of 45 MW (the firm power of Nangbeto). Bothslow-speed and medium-speed diesels were considered in the analysis, with theeconomics slightly favoring the latter; slow-speeds were preferred, however,on account of their greater reliability. Allowing for an availability of 70%,64 MW of diesels would have to be installed. Following the projections shownin the table to para. 5.04, the diesels are phased in gradually over a four-year period, beginning 1989. The cost comparisons and details on fuel pricesand capital costs are set out in Annex 5-2, and summarized below.

- 45 -

Comparison of Costs of Nangbeto with Diesel Alternatives a/(US$ Million)

Slow SpeedNangbeto Diesels Difference

Present Worth of Costs: b/

Capital 110.1 (107.3) 97.0 13.1Fuel and Maintenance 5.7 ( 5.5) 87.1 -81.4

Total 115.8 (112.8) 184.1 -68.3

Equalizing Discount Rate % 13.9 (14.1)

a/ The estimates in brackets correspond to a shadow exchange rate equal to1.2 times the actual exchange rate on which the cost estimates were based;they are provided as part of the sensitivity analysis.

b/ Referred to year of commissioning.

Based on the latest estimates, the present worth of the costs of Nangbeto areabout US$68 million less than those of slow-speed diesels. The equalizingdiscount rate is about 14%.

5.18 There are several sources of uncertainty in the above estimates,principally in the fuel prices for the diesel alternative, the expected energyavailability and firm capacity of Nangbeto, and the difference in capitalcosts between Nangbeto and the diesels. Consider each in turn.

5.19 The fuel prices used in the analysis correspond to a price of crude(in 1983 prices) of US$30 per barrel in 1988, only slightly above currentlevels, rising thereafter at roughly 4% per year up to 1995 corresponding toan expected recovery in the world demand for oil. These are the latestestimates of the Bank's staff. Allowing for uncertainties in the oil priceforecasts, the present worth of fuel costs is not known better than to within+10% of the values used for the above estimates.

5.20 As noted earlier, the 45 MW figure for firm capacity would be subjectto quite a large margin of uncertainty if CEB were operated as an isolatedsystem. With the current and proposed interconnections with neighboringcountries, however, this figure should hold. The energy inflows, however, arehighly variable between years. The average of 148 GWh is based on a 27 yearrecord; but the standard deviation of the inflows, owing to the largefluctuations on annual rainfalls, is 85 GWh. It follows frorm this (applyingstandard statistical formulae) that the mean energy is not known better thanto within approximately + 33 GWh, or + 22% of the actual estimated mean.(This range is slightly over-estimated because it includes two years whenextremely high rainfalls would have led to spilling; allowing for spilling

- 46 -

would slightly narrow the range).

5.21 Differences in the capital costs between Nangbeto and the dieselalternatives are also uncertain. The current economic conditions in theindustrialized countries have already lowered the bids on Nangbeto; the samefactors also would work in favor of the diesels. On the other hand, althoughan availability figure of 0.7 was taken for the diesels, historically,availabilities have been lower. While such factors favor Nangbeto, however,they have to be set against the possibilities of construction delays on theNangbeto dam, and the possibility of demand being yet lower than projected.In the latter event, the diesels could be matched more closely to demandgrowth, saving about 10 NW of capacity for three years, which is worth US$ 4.7million. For purposes of sensitivity analysis, a 15% increase in thedifference in capital costs has been considered. The table above also showsthe effect of a 20% increase in the ratio of the shadow exchange rate to theactual exchange rate (taken to be unity in the base case).

5.22 The above uncertainties have been combined statistically usingstandard formulae. This procedure is recommended in order to avoid animproper concentration on extreme, and improbable cases, such as alluncertainties simultaneously acting (to their own extremes) in one directiononly. The calculations showed that the equalizing discount rate is not knownbetter within minus 29% to plus 28%, say + 28%. Applying this to the basicestimate gives an expected equalizing discount rate of 14.1%, with a range of10.2% to 18.0%. The effects of the proposed project on downstream recessionagriculture are difficult to assess but are unlikely to have a significantlyadverse impact. At worst, the possible loss Of about 6,500 hectarei of land,when the dam is operational, would reduce the equalizing discount rate by 2%at most, to about 12%. Such wide ranges are an inevitable consequence,principally, of the world wide uncertainty in fuel oil prices and of theuncertainties in rainfalls in the region. It can be seen, however, that thereis a reasonable margin in the expected returns to provide for suchcontingencies.

E. Other Benefits from Project

5.23 Several additional indirect benefits arising from the project havenot been quantified:

(i) enhanced feasibility of two recently identified downstreamsites for hydro power stations as a result of the regulateddischarges at the Nangbeto dam;

(ii) fishing;

(iii) reduced flood damage and river bank erosion;

(iv) provision of a new crossing of the Mono river, using theNangbeto dam, and an improved road between Atakpame and Agounain Benin to the Nangbeto site; and

(v) creation of jobs during Nangbeto construction;

- 47 -

F. Economic Rate of Return.

5.24 Under the project it is proposed to raise tariffs at all voltagelevels to reflect the rising real costs of electricity supply on CEB's systemand the distribution networks of CEET and SBEE. It is proposed to double theaverage bulk supply tariff in real terms, from FOFA 15.5/kWh in 1983 to FOFA31/kWh in 1989. Applying these tariffs to the 148 GWh annual generation fromNangbeto, gives an annual gross revenue of FOFA 4.6 billion (US$11.8 million)per year, as compared with annual costs of US$ 11.7 million per year for theproject. The economic rate of retura, based on these tariffs, is 10.2%. Thisrate of return demonstrates that the average level of tariffs would besufficient to cover the economic costs of the project and also that theproject is economically justified. The rate of return for the dieselalternative, at the above tariffs, would be 3.2%, reflecting the fact thattariffs would have to be raised even further than proposed in this report tomeet the higher costs of the diesels.

G. Project Risks

5.25 Nangbeto would be the first generating plant ever to be built by CEB,and the first sizable hydroelectric station in Togo; its construction does notpose any unusual engineering risks. To ensure competent and timely execution,CEB's institutional arrangements would be strengthened by the creation of aproject management unit. CEB may have difficulties in engaging and retainingcompetent professional staff; a program of technioal assistance and trainingwould assist CEB in overcoming staffing difficulties.

5.26 The economic risk to the project due to delay in completion or a fallin international fuel prices is not too high: this is evident - by theadequate margin of the equalizing discount rate above the min.mum acceptablerate (10%). Furthermore, the market forecasts are conservative and ancillarybenefits resulting from the project, not readily quantifiable, were not takeniato accourt ixn the economic evaluation.

VI. AGREEMENTS REACHED AND RECOMMENDATION

A. Agreements

6.01 During negotiations the following agreements were obtained:

(a) annual consultation on CEB's investment program (para. 1.24);

(b) reaffirmation of CEB's exclusive rights and sector co-ordination (paras. 2.04/2.06);

(c) strengthening of CEB management (para. 2.08);

(d) separate electricity supply accounts for SBEE and auditingarrangements for the three entities (para. 2.26);

(a) onlending arrangements (para. 3.12);

- 48 -

(f) project management arrangements (para. 3.15);

(g) environmental management (para. 3.21);

(h) annual dam safety inspection (para. 3.25);

(i) adequate GOB/GOT funds to meet electrioity bills and level ofaccounts receivable for the three entities (paras. 4.02/4.03);

Ci) future tariffs and earnings (para. 4.09); and

(k) debt limitation (para. 4.13).

B. Conditions of Effectiveness

6.02 The following are conditions of credit effectiveness:

(a) future arrangements for CTL operation and pricing of output(para. 1.13); and

(b) fulfillment of effectiveness conditions for all co-financiers(para. 3.11).

C. Recommendation

6.03 The proposed project is suitable for IDA Credits to GOB and GOT ofUS$15 million respectively.

WAPEGJune 1984

- 49 - ANNEX 1-1

BENIN-TOGO

Vag3ETO UIYDROELECTR1C PROJECT

i YWROELECTRIC POTENTIAL a/

River Dan Site b/ Installed Average Cost of Coustruction AnuualBasin Capacity Annual Total US$/ Cost of

Energy (US$ kW. Generation(MW) (GWh) million) Installed (USi/kWh)

Mono 10 (Nangbeto) 63 148 89 1412 9.312 (Tltltou) 2b 115 76 3167 10.2 C/16 (Adjarala) 40 159 71 1775 6.6 c/

(Sub-total) 127 422 227

Oulms 20A (KEtou) 72 272 201 2794 11,524 (OlougbS) 42 133 120 2857 13.825A (Assant6) 36 160 166 460- 15.834A (Bdterou) 30 120 145 1900 14.4

(sub-total) 180 685 632

Ott 28 (Oti LUS) 6 23 32 5333 16.829 (Tchalga) 20 86 84 4200 15.037 (Keran VIII) 13 51 64 4923 15.049 (Batchanga) 15 36 45 3028 18.9

(Sub-total) 54 196 225

Miger 55 (Dyodyonga) 26 77 35 1346 5.4 dJ

(Sub-total) 26 77 35

TOTAL 387 1380 1119

a/ Other sites - with a pocentimL of 630 P1W and 11ZO GTWh annually - have been identifiedbut their ranking does not justify further study at this time.

b/ Dam site references are to site identification numbers in hydro-inventory studies(below).

c/ Output and unit cost include downstream effect of Nangbeto storage.

d/ Located on the border with the Republic of Niger.

Sources: Studies performed bv consultants Sir Alexander Gibb & Partners andTractionel S.4. in 1982-1983; Sangbeto is based on the more dicaLledengineering prepared by Electrowatt/Sogreah for the proposed project.

WAPEGNovember 13, 1983

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

ELECTRICITY CONSUMPTION (1960-1982) AND FORECAST GROWTH RATES (1982-1995)

Total Togo: Large Benin:CEET SBEE SBEE & Consumers

Year LV MV7 Total LV MV Total CEET CIMAO OTP SNS "OLO

A. Historical Consumption (GWh) 1/

1%60 4.21966 12.01972 39.1 34.6 73.71973 51.5 41.2 92.7

1974 61.1 46.2 102.31975 68.3 49.4 117.71976 2/ 55.41977 49.4 2/ 65.11978 59.9 50.2 110.1 75.5 185.6

1979 70.6 53.3 123.9 84.3 208.2 0.8 36.4 31 9.9 -

1980 76.0 75.2 151.2 91.1 242.2 43.9 74.7 12.1 -

1981 85.4 98.6 184.0 64.0 41.5 105.5 289.5 45.9 69.3 11.6 -

1982 4/ (95.3) (106.0) 201.3 (120.0) (321,3) 59.5 63.3 3/ 11.6 14.0 °

B. Historical Growth Rates of Consumption on CEET and SBER Systems (7. per year)

1960-72 - - 20.4 - - - -

1972-82 - - 17.8 - - 13.2 15.9

1978-82 15.0 5/ 20.6 16.3 16.1 51 - 13.0 14.7

C. Estimated Future Growth Rates of Consumption on CEET and SBEE Systems (7% per year)

19$2-90 7.2 7.2 7.2 11.7 9.1

1/ Gaps indicate information not readily available.2t Faulty measuremeats of GWh in these years.

3! Some geueratiou provided by auto-generators.4I Figures in paremnteses represent most recent estimates.51 The figures refer to the growth rate of the nuumber of rustomers. (Average consumption per customers.

on the LV networks in Togo and Benin iS aro,und 2000 KWhJyear.)

WAPEGNovember 13, 1983

BENIIN-TOG0

RANGBET0 HYDROELECTRIC PROJECT

B- Investmene Plan - FCPA Million (Current)

Fy 83 84 85 86 87 88 89 Total

Nangbeto 2/ 294 6,375 13,027 14,435 13,024 1,533 48,688AdAiarala 750 5,170 10,990 16,910161 kV network

Transformers 75 200 175 100 300 850Sub-Stations Bohicon 100 200 50 350

Atakpame 100 200 50 350Onigbolo 100 200 100 400

Lines Nangbeto-Bohicon 300 900 300 1,500Nangbeto-AtakpBe 150 400 150 700

Onigbolo-Bohicon 400 1,200 400 2,000330 kV network S/Station Mom; Hagou 150 400 550Sakete and Dispatching 400 700 1,100Lines 1,300 2,700 1,800 5,800Headquarters 300 600 300 1,200Miscellaneous 75 100 100 100 375

S(Tgtal excluding Nangbeto 75 575 1,525 2,100 3,200 9,920 14,690 32,085

Total including langieto 369 6,950 14,552 16,535 16,224 11,453 14,690 80,773

IDO 95 235 588 1,294 1,920 1,172 910 6,214

Grand Total 464 7,185 15,140 17,829 l8,144 12,625 15,600 86,987

Of which Nangbeto 294 6,610 13,615 15,729 14,944 2,435 53,627

1/ excluding TA and Training for CEET and SBEE.°

WAPEGMarc~h 20, ?ig84

BENIN-TOGO

NANzBETO HYDROELECTRIC PROJECT

CEET - Investment Plan - FCFA million (current)

FY 83 84 85 86 87 88 89 Total

Nangbeto, TA and Training 137 137 137 137 548Interconnected Zone

66 kV network 2,147 1,009 2,208 5,36420 kV network 385 544 596 1,028 1,019 595 4,167

Distribution 165 179 195 197 384 249 269 1,638Sub Total 550 2,870 791 2,234 1,403 644 2,477 11,169

Non Interconnected ZoneKara diesel plant 166 450 61666kV network 1,250 920 2,170

Medium voltage network 359 133 492

Distribution 183 183 1

CT PoC- _ 4,324 4,709 - 9,033 bSub Total 166 809 316 1,250 4,324 4,709 920 12,494

Others 133 312 1,492 475 2,412

Total 716 3,816 1,377 3,621 6,176 7,045 3,872 26,623

IDC 90 207 322 555 837 877 2,888

Grand Total 716 3,906 1,584 3,943 6,731 7,882 4,749 29,511

WAPEGMay 3,1984

0h 1

BIN-T Ox

NANGBETO HMDROELECTRIC PROJECT

SBEE Investment Plan - FCFA million (current)

FY 83 84 85 86 87 88 89 Total

Nangbeto, TA and Training 137 137 137 137 548ElectricityExt. network coastal zone 110 780 1,320 2,210Ext. network other zones 55 180 264 286 312 676 728 2,501Generation Cotonou 2xS MW 2,200 2,200Generation Parakou 2MW 600 660Rural Electri. 35 townships 110 3,600 3,960 2,660 1,560 1,690 1,82015,600Other 55 60 66 72 78 85 182 598S!Total 2,530 5,280 5,610 3,218 1,950 2,451 2,73023,769Water 1,705 1,902 2,046 2,487 62 67 146 8,415OthersHeadquarters 110 240 396 746Concrete poles factory 77 36 113Data processing 132 72 78 282Miscellaneous 36 40 43 16 135S/Total 187 312 568 1l5 94 1,276

Total 4,422 7,631 8,361 5,957 2,243 2,518 2,87634,008IDC 200 100 300 425 450 450 250 2,175

Grand Total 4,622 7,731 8,661 6,382 2,693 2,968 3,12636,183

MarPE KMarch 20, 1984XM

U,

- 54 -

ANNEX 2-1

BEN IN-TOGO

NANGBETO HYDROELECTRIC PROJECTCEB - Organization Chart

Haut Consell ]Inter6tatique

'II"Haute

Autodtl

|Genrval| Managers l

Administration | Technlcal lil Studles &io

Department | ocr et L| Deparrnnt l

Administration Accounting Economic DivRslon Division TralningDivision Division Divislon Dvogo Benin Center

World Bank-25083

WAPEG

November 17, 1983

BENJIN-TOGO

NANGBETO MROELECIC PROJECT

CE ^ CET - SURE Coordinatioa

GOVE OF GO OFTOCO DENIM

|FmiffSAtY OF |mxSW of J|TITELLE _. TUlisEllL . we

l . _ I~~~~NTERUTATI4DE

r - -- G i | ~~~~~~DIRE(:TEUR-GENERAL. 1 { D-G

l | tERET llCEB SBE

L~~~~~~~~ - £

Pj:MH COO1HIATING CNMTR (PC)

L1 WORKING COMITEES

- OPERATIONS- FINANICE- PLANNING

WA4PEGNzovember 17, 1983

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECTCEET - Organizaffon Chatt

N~ve~bI 17, 183

< ;=; _~~~~~~~~~~~acf

Gerou_ Lneto Technkx_ A _i _

rs 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~nexACf

{EF1 H 3 ~~~~~~~~~~~~~etem I m

ENuvente 17, t9t

BENIN-TOGO

NANGBETO HYDROELECIRIC PO-JECTSBE - Organization Chad

Dectorf D otr d Dictor of Dietorof dkectorOf Ddcor of_ Oem _ lect Wate AftlnisWhlon _ a_ko*_ Firflnce

|~~~~~~~Sii Sues | lml-} dinstrlln | |lo3sn Acontn CM WCAICDep|rtment

Maintenance VA)dCs ~~Woikseonw PurhhcIrg Budget

intemi ~ ~ anet

H.~~~~~~~~~~~~~~~~~~~'c::1 H14 X 4_1

bksd Bm*-25O8WAPEG

Aovember 17, 1983

- 58 -

ANNEX 3-1(Page 1 of 4)

BENIN-fOGO

NANGBETO HYDROELECTRIC PROJECT

PROJECT DESCRIPTION

A. Hydroelectric Development at Nangbeto

1. The Nangbeto dam site is on the Mono river in To fo, 160 km upriverfrom the Atlantic Coast. The catchment area is 15,680 km . (The Mono riveris 530 km long, the last 80 km before it flows into the Gulf of Beninconstitute the border between Togo and Benin). The site is the only place fora dam where a reservoir of sufficient volume to regulate the Mono river flowis possible. Nangbeto would enable the progreasive development of about42,000 ha of irrigated agricultural land in Togo and Benin and provide forflood control and also river flow regulation for two additional futuredownstream hydropower plants (Tetetou - 28 NW; Adjarala - 34 MW) allowing fora total electricity generation to about 360 GWh yearly on the Mono river.

2. The main physical characteristics of the Nangbeto dam and reservoirare as follows:

Maximum dam height: 40 mWater head maximum: 31 m

minimum: 17 m

Annual mean flow 1/: 84.8 m3 /0Annual mean in flow 1/: 2,673 x 106 m3

Reservoir live storage: 1,465 x 1o6 m3

Installed capacity: 63 MWFirm power output during

annual peak period: 45 MWAverage annual energy: 148 GWh

The center portion (about 500 m long) of the dam (in the river bed) would beof the rock fill dam type, incorporating the river intakes. The center damportion would include a spillway to pass about 3,700 m3/s and the bottomoutlets for about 350 m3/s each. Earthfill lateral dykes of 4.4 km and amaximum height of 18 m would complete the dam.

3. The powerhouse would have an installed capacity of two x 31.5 MW,including power transformers, station auxiliaries, control facilities and beconnected by 161 kV circuits to the Nangbeto substation located downstream.

1/ Based on 27 years' history (1952-1979).

- 59 -

A]NIX 3 -1(page 2 of 4)

B. Technical Assistance and Training

4. The project would finance technical assistance and training forseveral purposes:

(a) to assist CEB in managing the construction of the NangbetoHydroelectric complex and associated plant, and in initialoperation and training of operators and maiatenance personnel.for the hydro station;

(b) to assist CEB in:

(i) undertaking new functions (data processing) or improvingexisting functions related to CEB's expanding role inthe subsector; and

(ii) improving and expanding the CEB training center;

(c) to assist CEET in the fields of data processing and training;and

(d) to assist SBEE in the fields of data processing and training.

The attached table shows costs for each item. Details on each component areprovided below.

C. Assistance to CEB for the hydroelectric complex

5. The technical assistance team consists of a financial advisor and atechnical advisor for construction management during 55 months, and a hydropower station operation and maintenance expert for 12 months. Training willbe proviced on-tbe-job and through fellowships for twelve CEB employeesincluding two electrical engineers, one electronics/control/protectionengineer, eight technicians (two civil engineering, two mechanical, fourelectrical/electronics) and one operations superintendent.

D. Other Assistance to CEB

6. The main part of this item would finance technical assistance andfellowships to enable CEB, on the one hand, tv undertake new functions such aedata processing, setting up a load dispatching center and to improre financialmanagement, and on the other hand, to expand and improve CEB-managed trainingfor all three entities in the subeector. Additional buildi4gs and equipmentfor the CEB training center would also be financed.

- 60 -

ANNE3X 3-1(Page 3 of 4)

E. Assistance to CEET and SBEE

7. For each of the national entities, this item would finance mainlytechnical assistance to improve daily operations (diesel power stationoperation, distribution system maintenance) and at the same time provide on-the-job training for national staff. Fellowships and limited trainingequipment (tools) would be provided to enable each entity to supplement thetraining provided by the CEB training center, and to train and upgradeengineers and other higher level staff through courses abroad.

Costs of Technical Assistance and Training(Thousand Dollars)

Item cost (Us$ 000's)Total Foreign

(a) Assistance to CEB specificallyfor Nangbeto Hydro:

- technical Assistance 1,300 1,000.- fellowships 200 200

Subtotal 1,500 1,200.

(b) CEB TA Training Center 450 400Computer hard/software 50 50Audits 100 100Organization/Nanagement 100 50Sub-Total 700 600

Training Preliminary Studies 55 50Study of training center extension 55 50Building 290 250Training material 350 350Scholarships 350 300Sub-Total 1,100 1,000

- 61 -

ANIiEX 3-1(Page 4 of 4)

Item Cost (US$ 000'sTotal Foreign

(c) C!ET Ti Computer hard/software 715 615Audits 100 100Organization/Manpower planning 85 85Sub-Total 900 800

Training Scholarships 250 200ESIE 450 400Sub-Total 700 600

Total CEET 1,600 1,400

(d) SBEE TA Computer hard/software 700 600Audits 100 100Sub-Total 800 700

Training Operating personnel 360 340Administration and Finance 70 60Scholarships for Management 120 100Scholarships for technical personnel 250 200Sub-Total 800 700

Total SBEE 1,600 1,400

(Cost US$ 000's) IDATotal Cost (TA and Training) Total Foreign Financing

(a) Technical Assistance 1,300 1,000Training 200 200 -

(b) Technical Assistance 700 600 600Training 1,100 1,000 800

(c) Technical Assistance 900 800 800Training 800 700 700

(d) Technical Assistance 800 700 700Training 800 700 700

6,500 5,600 4,200

Of which: Technical Assistance 3,700 3,100 2,100Training 2,800 2,500 2,100

WA.PEG!4my 15, 1984

Si nIN/TO6O

NAHO6ETO HYDROELECTRIC PROJECT

COST ESTIMATES (US$ THOUSAOS)BASELiNE -- TOTAL

PRIOR 1983 19S4 * 1985 1986 1987 1998 Z OFBID To -------- LIE BASELOTS 1963 SEMtS SE 2 SM I SH 2 SYt I Sw 2 S: S MS E2 S I SEN 2 SEX I SE 2 TOTAL COST

* .IANGSETV HE PEY&TRANS.

A.CZVIL UOnKs 1 0 0 0 0 6459 4614 6734 4007 4974 6186 6601 S337 0 43062 41.46D.EQUIPHENT IJ

l.TVRBIHES S(L-t a 0 0 0 463 778 900 223 1776 709 199 588 0 5638 5.432.GEHERATORS S/L-2 0 0 0 0 304 456 759 0 1063 555 586 o 0 .7Z7 3.5?3-GATE(SVALVES S/L-3 0 0 0 0 717 1135 1527 1571 228 1276 S30 0 0 9043 8.714.fIXECH EOUIP SJL-4 0 0 0 0 21t 0 328 347 S2J 9SJ S02 0 0 3069 2.95

SUrTOTAL i.e. 0 0 0 0 1703 2369 . 3SIS 2343 5644 3493 1819 S8S 0 21474 20.67

C.161MV AS9.TRANS 11ZI TRANS;ORXERS SIL-1 0 0 a 0 171 40 Jo05 0 34 0 0 0 0 720 0.692.SUS-HANGlfONE SIL-2 0 0 0 0 828 719 706 732 49S J48 397 0 0 4025 3.873. L 't-NAN61/HOE SIL-3 0 0 0 0 312 747 719 2392 1452 1472 373 9 0 7466 7. 1?

SUBTOTAL lC. 0 0 0 0 *311 1675 *S30 J*24 1981 1620 771 0 0 12211 11.76

D.RESET. S ENVIROFIEHTJ.fElOC.IC01PEffSATZONf 0 0 0 0 709 709 S53 853 645 645 0 0 0 4412 4.232.SYJOIESIDSFOREST'H 0 0 429 857 857 857 857 857 8S7 429 0 0 0 6000 S.7

S8BTOTAL 1.D. 0 0 42? e57 1566 1566 1710 J7J0 1502 1073 0 0 0 10412 10.02 M

(E.EN. & AePt3NsSRATONI.CESBCPAITRE P'OV&'.) 0 0 154 235 235 235 23s 23s 23s 235 235 0 0 2037 1.962.TAS TO CEO 0 0 10? *09 l0? 109 109 109 109 109 109 109 109 5204 1.163.CONSULT. ENGINEERINO 0 0 0 0 J259 IJ29 10OS 1091 848 726 386 54 27 6625 6.304.COQSULT. BOARo 0 0 29 0 29 29 29 29 29 0 0 0 200 o.J95.TRO CEBINAN.STAPF 0 0 0 0 0 0 0 0 0 0oo 1oo 0 0 200 0.19

SUBTOTAL I.E. 0 0 WP2 373 1604 1502 1470 1465 1222 1199 830 163 1.6 10266 9.89

SUBTOTAL I 0 0 721 1230 12642 11926 14968 12646 15277 15-57 10220 2088 136 97425 93.80

2.ASSZJTAXCE IC POJ1ER SECTOR -

A.STUVIESt HYORosITE,oPhPATCHING 0 0 0 0 2s8 288 288 288 . 288 a 0 0 0 440 1.39

S.TECrAICAL ASSiSrANCE e 0 0 0 300 300 3 300 300 3 300 300 0 2402 2.31C.TRAINING 0 0 0 0 325 325 32S 325 325 325 325 325 0 2598 2.50

SUSTGTR(. z a 0 0 0 9J3 913 913 913 913 625 625 625 o 6~ 6.20

rOTAL BASE COST 0 C 721 1230 13555 1283? JS88J 13561 16165 16197 10845 2713 136 t03865 100.00iOEC.03 PRICES) omens *s ,.' ..-. .... e. ..... ..... a- sees. -s..

CONTINGENCZESgPHYSICAL 0 l 3 17 1046 91o 1181 928 1072 1261 865 174 2 i47a 7.20SPRiSE 0 0 1s 31 1151 1370 Aim9 2950 2965 2625 2270 190 202 15658 15.0 ,~~~_______- - -.- -- …

SU98OTAL CONTINGENCIES 0 0 28 49 2*97 2280 3070 3878 4037 3085 J34 364 21O 23*45 22.27 aQ [

TOTAL PROJECr COST 0 0 749 1279 15"5 151*9 19951 17439 20222 209? 1390* 3 347 127000,,,e ,,,,,, ssse- sense sass. s..,eeC sw.ass ue.ss. tn eae ses

WAPECMay 14, 1984

8[HIN/TDOfO

ANBIEIJTO HYVROEIECTRIC PROJECT

COST ESTIMATES (US# THOUSNSBASELINE - LOCAL

PRIOR 19S3 1984 98S 1986 1987 1988 2 OFBID TO ---- --- LINE BASE

for t9863 SEff I5 SEN 2 l I SEn 2 SCM 1 SEM 2 SEn'1 8EM2 SE6 I SE6 2 SEI I SE£ 2 TOTAL C097

I.NARGRETO HE DEV&7RAHS.A.CXIVIL ORKS 1 646 461 673 401 4Y2 819 680 134 4306 27.?28.EQUIPMElNT II

J.TJJRRiPJES S/L-1 37 62 72 18 142 57 26 47 451 2.922.CEHERATORS SIL-2 33 S0 .84 0 117 61 65 - 410 2.t63.6ATES/VALVES SIL-3 65 *22 137 141 206 116 49 624 5.2B4.E/6ECH EQUIP SfL-4 20 J0 49 47 86 45 276 2.79

SUBTOTAL I-B. 0 0 0 0 1S5 215 322 209 511 3t9 174 47 0 1951 12.63

C.161HV ASS.TRAHS 2111.TRANSfORHERS SIL-I 3 5 2 1 14 0.092.SUB-NANG/IOWE S/6-2 166 144 141 146 99 3S 70 805 5.223.LifE-HANGI/OME S/L-3 41 97 94 311 189 191 49 971 6,29

SUBTOTAL l.C. o 0 0 0 20s 249 237 457 289 221 128 0 0 1789 11.60

D.RESET, 6 ENVIROHMENT

1.RiLOC./COMPENSATIOH 609 609 732 732 354 554 3791 24.582.STUDtESIDEFOREST' 71 143 143 143 143 143 143 71 1o0o 6.46

SUBTOTAL I.D. 0 0 71 14J 751 752 875 875 697 625 0 0 0 4791 31.06

E.ENG. 8 ADH1NlSTRATIOHi.CESrHAITRE D'OUW.J 154 154 154 254 154 S54 154 154 154 1389 9.00 tZ.FATM TO CES 25 25 25 25 25 25 25 25 25 25 25 279 1.80 3.3. c2'.IIJLT..ENG1HEEsrIO 54 49 47 46 36 31 16 2 1 28. 1.83 14.C0ONULT. BOA0D 0 0.00S.TPG CESINANG.STAFF 0 0.00

.-VSr0T4L i.E. Q 0 I8O ISo 233 226 227 226 216 210 9 28 26 1949 12.63

SL9T)1AL I 0 0 251 322 19%4 1905 2334 226a 2205 2194 IJ1 208 26 Z4786 95.85

z. AssSri4C6 TO POllER SECTORA. 7 1Pi~c : H7 IOELSTE, 10 09

PIsPATCHZHO 28 28 28 28 .78 240 O.?8.IECHMICAL ASSISTANCE 30 30 30 30 30 30 30 30 240 1.56C.1RAINING 32 3z 32 32 32 32 32 32 260 1.6B

:-VSTO.rAL 2 0 0 0 0 91 91 9 91 91 63 63 63 0 640 4.25

TOTAL EASE COST 0 0 251 322 2085 1?" 2425 2258 2296 22S7 1240 271 26 15426 100.00iVEC.03 FRICE.) .g.….. . ..... .. a.. ... .. =SC== ==

COmTNHCENCJES:PHYSICAL 0 0 9 9 168 175 219 197 165 204 94 17 1 £298 8.41sZPdcE 0 0 5 7 84 113 45 301 388 417 47Z 20 22 1973 12.79

SUBTOTAL CONTIMGENCIES 0 0 14 16 272 287 364 498 572 621 565 37 24 3270 21.20 p OQ z

TOTAL LOCAL COST 0 0 265 338 2357 2282 2799 2756 2868 2870 S805 308 50 18697 y X. . . . . . N. nags... ..... g....u.s... ..... =.....

WAPEG

Dlay 14, 1984 4.

BENlaTTOGO

NAMOBETO hYDROELECTAIC PROJECT

COST ESTIMATES WS$ THOUSANOS1BASELItN - FOREIGN

PRIOR t993 1984 1J98 1996 1987 Ivs z Of

BID TO - - _JffF 8dSE

(GTE4 1983 SEN I SEM 2 SEll I SEn 2 SEl I SEn 2 SEn5 SEn 2 SEP I SEff2 SEX I SEX 2 TOTAL CDOST

1.HANOCETO HE DEV&TRAHS.A.CI/VL UORAS I 5814 4152 6061 3606 4432 7368 6121 203 38756 43.82

B.EOUIPHENT IJ1.TUfII8NES SIL-.' 4Z6 716 628 207 1634 652 l6i 541 5167 5.872.0OErERATORS SIL-2 270 406 676 946 494 523 3315 3.75

3.GATES/IALVES SIL-3 652 1033 1390 1430 2079 1163 492 8226 9.30

4.9HElCH EOIIP S/L-4 199 0 299 498 474 B66 457 2792 3.26

SUBTOTAL 1.8. 0 0 0 0 1540 2154 3093 2135 5S33 3174 1645 541 0 19523 22.08

C.161MV ASS.TRANS 1Il1.7RANSFORMERS SIL-1 168 402 103 0 33 0 0 706 0.80

2.SUB-NANGfIOME S/L-2 663 575 S65 566 396 It8 3J8 3220 3.64

.7. LnE- MNIMG/OE S/L-3 271 650 626 2002 1263 1282 325 6496 7.34

sLBTorAL I.C. 0 0 0 0 1102 1626 1294 2667 1692 1399 643 0 0 10421 z-.78

o.RESET. 6 ENVIRONHENTJ.REOCL.1C0ffPCHSATZOM zoo 99 120 120 91 91 621 0.70

2.STUDtESJDEFOREST'N 357 714 714 714 714 714 714 3S7 5000 5.65

SUrOTOAL :.0. 0 0 357 714 614 81l a 35 685 605 448 0 0 0 621 6.36

1.2MG. 5 ADntNJs7RATZONJ.CES(MAITRE D'OUV.) 81 B3 81 81 of 81 81 o1 648 0.73

2.TAS TO CEB 64 84 64 84 84 et 64 864 4 64 84 926 1.05

3.CONsucr.EazmNEERINw 1205 1002 fO50 1045 812 695 369- S2 26 6343 7.17

4.CONSULT. BOARD 29 29 29 29 29 29 200 0.23

S.rR6 CESiNAJEG.STAFF 100 1oo 200 0.23

SUBTOTAL I.E. 0 0 t13 194 1371 *275 t252 1,36 1006 969 634 136 ItO 8317 9..o

suToT^AL 1 0 0 470 9O0 10648 10021 12634 J0400 13067 13379 9043 1880 110 82639 93.44

L.ASSISTANCE TO POUER SECTORA.STUIES: HYPROSItE,

0lSPArTCHzm 260 260 260 260 260 1300 1.47

6.TECftMICAL ASSISTANCE 270 270 270 270 270 270 270 270 2162 2.44

C.YRAZMnztI 292 292 292 292 292 292 292 292 2338 2.64

SUBTOTAL 2 0 0 0 0 623 823 823 823 823 363 565 563 0 s9o0 6.36

tOTAL BASE COST 0 0 470 9O0 11470 10943 Z3456 11303 13890 13940 9605 2443 110 88439 100.00

tOEC.83 PRICES) .s..... *---- s.- *-.-. W.... sanon MSn.* Z5- asaaw a...a atnc= saw.S 8855 *ZSSS &*=&=

COlNTINGEKCIEStPHYSICAL 0 0 4 8 886 735 963 31 8867 1037 772 V7 7 6179 6.ss

iPRECE 0 0 20 2 1o6@ 1256 £744 646 2577 2206 1SOO 170 180 J3J66 15.47

SuaTOTAL CONTINGENCIES 0 0 14 33 1925 1993 2706 3380 346S J264 2571 327 187 19865 n- 46

rTrAL foRec1G cosr 0 0 464 941 133P6 12937 16162 1462 17354 1720S 12177 2769 297 109303 W5 :

. ... .. . . . ... ..... ..... ..... ..... ..... ..... ..... .... .... s X

WAPEGMay 14, 1964

- 65 -ANNEX 3-3

BEN IN -TOGO

NANlGBETO UYDROELECTRIC PROJECT

FINANCING SOURCES

IML DU M CM AM AM OD5 LAC - W

M11 IC 5.5 1.0 4 - 4.5la 4. lI d 17.0 6.0 0W.0 3. -

5I ~ .5 11.1 ¶80 8.0 100 5.1 4.5WtpUt ~ I &. L - . . . . 1.5 0.0 - - -

K 7A2 _ , , _ , -5. 9.t ,Tr 65 - . _ _ . 146 9.9 - - -

? _,mstin4 it 2.2 - . . - * - 1.2 - 1.0

K t 12,6 - . . . 8 04 . ' _ _In 14.8 - . . . 36 * 0 9.2 - . 14

bs.dr/Mw¶z_ IC 64 . - - . . . - . - ' 6.

PC 5.5 saTp I11.8 5.6

CM AMI~.1.mudi w 1.5) - I. . -- -

I 0.7 0.7 . - . . - - -

Sf 24 0.7 - . . * - . - 1 4ts

est ~ ~ I 0.3c . . . . . . _ . 0.5 o n. I -C - . -_ 1 t

if 1.5 .- .

OuUtv WJaH IC 0.5 . _ , , 0

K 8.0 6.0 2.0 . * * * * * *IT 8.3 64 24 - - - - - . 0.5

-u&1r US4IC--- K 04 0.2 . _ . , , , ,

T 04 04 - _ . , , , -

0Z7 ainUt - . - _ . _ - - . . _

K 04 . - _- . .- -

-I 0 _ - - - .. OS9 - -

::J 4L1 C Ut8* a.1 1.0 _ - - 1.5 0.8 ¶4 04 15.m f(e.5 4.4 19.0 8.0 10.0 6.9 ¶5.1 9.9 8.0 1I . -

Tf 10.6 4.4 MA 8.0 10.0 6.9 t6., 10.7 9.4 1.5 * ¶5

Sbllm IC 0.1 0.1 _ - -_ _ -0 * _

la 1. 14. -In 14 14 4 _ _ _ _ _ , _

0 U ?t 0.1 - - . - - - 0- 1 -

;1 b.6 04 . - - - - -

Tr 0.7 06 - . - _ - . - - 0.1

am ?ms1 I 0.t - _ . _ _ _ . - - 0.1 r

tt ID0 0.8 - * - _ - - - - 04 -

30 1.1 0oa , , , , , , , 004

CM ImI u.1 . . - _ . - 0 .

I 0.8 0.. . - - _ - - -

Tf 0.9 0A _ . - - ^ - - 0.1

CMToa S1 0.1 - . _ . _ . . _

K 04 0.6 - - -_ -_ .

SS 0.7 OA . . _ . _ . . _ 0.1

~ 51 0 o.1 _ . . - . - - - - 0.1 -PC 0.7 0.7 , , _ , _ _ _ ,

St 0.t5t 04 - - - - - -0 081 a

S 1zaIm 25t 0.1 - . - - - - - ' 0. °- -

K 0.? 0.1 - - -OA0. 0.? 0.1 -

S3lV? 2 Le 0.7 0.1 . - -go 5.7 9-5 - - . . - - 0 -11 6.4 5.6 - - - - - -

I= IC 2 V.8 0.1 14to - - 1.5 0.8 2 0.3 04 1.,Fe tl.t2 29.9 194 8.0 10.0 6.9 15.1 9.9 64 1.2 0J

VP ¶27t 310t m 804 t04 6.4 16.6 10.7 9.2 1.5 0.8 15.

I0 Ut - - ^ - - - - - 1A0

1t 12.6 . G- A - --24

CuAmt L U: 3O6 0.1 1 4. - 1.5 0.8 t4 0.1 04 19.1

ye 19.0 29.9 194 8.0 t0o 6.9 t1. 9.9 9.0 t.2 0o2 i6Tr t15.6 104 X).0 0.0 t00 6.9 16.6 10.7 9.2 1.5 04 25.9

WAPEGMay 15, 1984

BENItI TOGO

NANGBETO HYDROELECTRIC FROJECT

CONSTRUCTION SCHEDULE

CALEMMKIN 3~ Iia ~ a 4wee1 4 (MID3S SNmm J~~~~~~~~LIA

s ~~~~ ~~~~Ii.PtesE PtAS SPiASE

"tffi a=s~ft[ Ig bJ &.oI I,m. If" *lru S

Iafl *zcwd

=cows a & ia""110O-i

1¶A Silo ~iocosli --- -- --- --

soa "J I *a - -.

CIGUES LAITCUIM rtgLSU ii3 -£1tM

d.L"09-5 p4sin.- -4

all ' p43 so4

November 10, 1983

DEN IN-Toco

NANCGETO UYDROLECTRIC PROJeCT

PROJECT MANAGEMENT ARRANGEMENTS

(Maitre de I'Ouvriage)

COMITE DE SUIVI DIRECTEU4R GEN'ERAL

DE LA H. A CEB

'MCITE DES EXPERTS0 CSEI LINTERMATrONAN JURIDW

SECIlE ARIAT CMI&OAL 1LPPW LOit%TIaI DIREaEUR CU PROJEI

Et,,Lo'E A141hlSTIF__2 SECfE tAIRES

Z PLAS TOhI5

2 ChAUFFEURS

-1

S.ClION ENVION-I ENTODiV1C1Ci ADI4. IET FIKAI#CEAE DIVISIon TEC£ItUQUE. REI fUCASE tEN ET DESOISEHET

I CnEF DE DIVSOW- EXPERT I c-iLr DIVISION EXERT pa- CQJEF SECTION

s FiHt.ICIER C - w£eEu e.1 GEU ELECIRlC. CLB *R6 ACaOECcStE Q

2 COl-oPTAICLES I ING. GENIE CIVI. C ED I AGENT DE SANTE Q

II ASSISTANT A ILA FORI-AT I I AGENT EAUX El FO WT

f 1 A L EXPLOaTAYt4 EXP- IA ¶AlENl HIIST. MNT. D, 1 INU-- GI.WE CIVIL.D- . I AGENT W IDEVEL- RURAL 01 It4- ELECTIo WCANICIEN

IJGENIEUR CC.EILU.o

WAPEr( |EtlREF I; IRUE

November 17, 1933

tn X4

l o~~~~c

N ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ------

co f :0 | f

=S~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ - -- --- -- E-l,4

z ___._________________-_--_____________ _. __

3zi+bXDaO Qg4oSr{¢igib.1waO^c"fi

|~~~~~~~~ Fa - - - - -f -w - al -i - -} -z -£S

0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

_ 69 _

ANNEX 3-6

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

PROCUREMENT ARRANGEMENTS

The principal components of the proposed project will be procured asfollows:

Bid Lot Amount Expected ProcurementItem Number (US$ Million) Type of Arrangements

Financing

Civil Works a/ 1 55.3 IDA/Joint ICB

Electrical andMechanical Equipment b/ 2 26.5 ) International

) Parallel CompetitionTransmission Lines b/ )and Substations 3 14.8 )

Resettlement/Environment 11.8 IDA IDA/local

CEB Administration 2.2 IDA IDA/local

TA Experts 1.3 FAC FAC

Consulting Engineer 8.3 IDA/Kuwait IDA

Consulting Board 0.2 IDA IDA

CEB Training 0.2 FAC FAC

Studies 1.4 IDA IDA

TA and Training 5.0 IDA/UNDP IDA/UNDPTotal 127.0

a/ Bidders were prequalified and are satisfr tory to ILDA. CEB launchedICB in July 1983. Bids were received on December 13, 1983. Co-financingagencies accepted IDA Guidelines for procuremen-t and will finance thecivil works contract jointly with IDA.

b/ Bidders were prequalified and CEB launched an international competitionaccording to the Guidelines of the expected co-financing agencies inJune 1983. Bids were opened on December 14, 1983. KfW, CCCE2 and CIDAfinancing of these contracts has been secured, as well as additionalfinancing from AfDB.

WAPEGMarch 20, 1984.

- 70 -

ANNEX 3-7(Page I of 3)

BE:NIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

ENVIRONMENTAL KANAGEMENT

Resettlement

1. The plans for aotio:. on Environmental Management, formulated duringproject preparation and appraisal concern the environmental and resettlementaspects of the Nangbeto Hydroelectric project. They are consonant with thepolicies r,td recommendations of IDA; CEB and representatives of the TogoleseauthoriL.Les have agreed to implement them. The understandings below wereconfirmed during negotiations.

2. The about 34 villages, (less than 8,000 people according toestimates), to be relocated, now are excessively remote from fresh water (atan average of several kilometers). The resettlement plans are as alvanced asneeded at this stage of project execution. Puture provision of permanentwells, basic infrastructure, improved design wood-burning stoves and cookerand health serviees will ensure that the new villages are greatly preferableto the existing ones. Bilharzia snails will be kept out of the reservoir.The project would provide other ancillary benefits to the relocated people(such as fishing, roads, and water supply). An updating of the detailedresettlement program should be provided by no later than December 31, 1985.C0B should create a group in the project management unit to deal withresettlement throughout project implementation. The detailed work onresettlement should start one month after credit signing and continuze for atleast three years after reservoir filling. CEB's policy (acceptable to IDA)is that the quality of life after resettlement ahould at least be equal tothat before reloeation. Irrigation and recession or draw down agriculture,manual or pedal water well pumps, improved design stoves, wood charcoal andfishery teohnology will be addressed in the updating.

Health

3. Since the project will inorease the risks of both types ofschistosomiasti (Sohistosoma hematobium and S. mansoni) which ocour in theregion at a low level at present, CEB will mount a control program (includinganail surveillance, vector habitat destruction, health screening and educationof villagers and employees, waterweed control and reservoir access). Theoutline of the respective program and design should be received by IDA withinthree months of Credit signing. (Note: Schistosomiasis increased from 2%before resetvoir filling to 80% after filling the Volta Akosombo reservoir inn'arby Ghana according to one study cited by the Chief Medical Officer of theVolta River Authority, Dr. Lionel Durban, February 1983. Early action on thisitem by the responsible authorities in Togo are extremely important).

- 71 -

ANNEX 3-7TPage 2 of 3)

4. Since both malaria and onchocerciasis are lightly endemic in theregion, control programs should also be started before the start ofconstruction.

5. Guinea Worm disease (Vera de Guin6e, Dracontiasis or Dracunculiasis),alrledy present in the area, was the major health concern expressed to IDA byCEB_'. The ereation of the Nangbeto reservoir will increase the risk ofGuinea Worm, to a certain extent. The disease should be controlled byeffectively preventing infected people from contaminating the water (i.e. theyshould not stand in water) and abolition of wet step wells, filtration ofwater to exclude the fleas, and boiling or chemical sterilization of watersupplies. Existing chemotherapeuties should be held in readiness.

Biota

6. Fish in the Mono river already provides much protein in the projectarea and would increase in the Nangbeto reservoir if pr'Jperly managed. CEBwould exploit this possibility and should undertake necessary pre-impoundmentpreparation, e.g. using fishing lanes, keeping in mind that fish production inthe Volta reservoir has now exceeded Ghana's marine harvest, providing aprincipal source of protein for the whole country. Mainly the resettledcommunities would be the beneficiaries.

7. Since dangerous animals (Green Mamba, Puff Adder, Horned Adder,Pythons, etc.), nuisance species (disease vector water weeds) and rare orendangered epecies (e.g., hippopotamus living just below the site) will beaffected by the project, CEB should send IDA an environmental managementaction plan at least two years before reservoir filling starts.

1/ The disease is caused by large (ca. 1 m.) nematode worms(Dracunculus medinensis) infecting mainly the skin, often of the lowerleg or foot, causing large burning blisters, fever, urticaria, nausea,dyspnea, etc. This debilitating infection severely impairs productivityand heightens the risk of sequelae (bacteria, etc.) f Infection occurewhen people drink water containing a fresh water flea (Cyclops, acopepod crustacean) which contains the larval worm. The larval wormsleave the Water Flea in the human gut and migrate through the viscera,become adult worms and roach subcutaneous tissue. The adult worm shedslarvae fri.,m the burst blister. These larvae survive up to three weeksin water where they are ingested by a Wat, Flea.

72 -

AINNEX 3-7)(Page 3 of 3)

Water Quality

8. The reservoir and downstream will be monitored by CEB for the qualityof water. CEB would establish the need for selective clearing of vegetationto maintain adequate water quality 1/. Valuable trees would be salvagedwhile others would be charcoaled. The potential for expansion of the saltwedge upstream during reservoir filling will be addressed.

Coordination

9. CEB should create and maintain a coordination unit for environmentalmanagement in order to implement the environmental programs. This unit wouldfunction from Credit signing throughout the implementation of the projeet.

WAPE(;May 15, 1984

1/ The study on the site (by Electrovatt/Sogreah) started on March 15,1984.

--73 - ANNEX 4-1

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

CEB - INCOME STATEMENTS (FY78 - FY82)

CEB-INCOMlE STATEWENTS 78 79 80 81 82FCFA MILLION

ENERGY SALES IN G8H 212,0 290.0 427.0 457.0 495.0AVERAGE PRICE IN FCFA/KW4 4,4 Ft'5 5.7 7,5 11.5

ENERGY REVENUE 931.0 1606.0 2431.0 3423.0 5719.0OTHER OP.REVENUE 34.0 31.0 27.0 81.0 80.0

TOTAL REVENUES 965.0 1637.0 2458.0 3504.0 5799.0

POWER PURCHASE VRA 584.0 936.0 1500.0 1916.0 3818.0POWER PURCHASE CTL 12,00 332.0PERNNEL 137.0 149.0 171.0 197.0 233.0OTHER OP.EXPENSES 104.0 171,0 125.0 247.0 210.0PROVISIONS 173,0 27140 273.0 289.0 311.0

TOTAL W.EXPENSES 998.0 152 .0 2189.0 2981.0 4572.0

OERATINS ICWO:E -33.0 110.0 269.0 523.0 1227.0

INTEREST 60,0 30S.0

NET INCOME -33.0 110.0 269.0 463.0 922,0

OPERATING RATIO 103.4 93.3 89.1 86.8 78.8

ROR -1.6 !.2 8.7 17,5 31.3

WAPEGOctober 31, 1983

- 74 -

ANNEX 4-1(Page 2 of 3)

3ENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

CEB - FUNDS FLO'W STATEMENTS (FY78 - FY82)

CEB-FUIIS FLOW STATEMENTS 78 79 80 8. 82

FCFA MILLION

OPERATING INCDHE -33.0 110,0 269.0 523.0 1227.0DEPRECIATION -37.0 186.0 185.0 232.0 311.0

TOTAL INTERNAL FUNDS -70.0 296.0 454,0 755.0 1538.0

*-A.WIJRIING CPITAL -13.0 337.0 471.0 -257.0 1240.0INTERST 60.0 305.0PRINCIPAL 27.0 27.0 27.0 205.0

TOT,OP.REUtIREliENTS -13.0 364.0 498.0 -170.0 1750.0

NICs -57,0 -68.0 -44.0 925.0 -212.0

CAPITAL EXPEND! (LRE 102.0 1106.90 10.0 2932.0 533,0

BALANCE 159.0 1174.0 54.0 2007.0 745.0FINCED BYBORROIiNGS 386,0 481.0 -26.0 2429,0 297,0EQUITY 39.0 464.0 82.0 363.0 44,0

TOTAL CAP.SOURMS 425.0 945.0 56.0 2720 341,0

CASH VARIATION 266.0 -229,0 2.0 785.0 -404.0

CASH BEGIN YEAR 501.0 767.0 538.0 540.0 1325.0CASH END YEAR 767.0 538.0 540#0 1325.0 921,0

NICS 31.5

DEBT SERVICE CWERAGE 14.1 20.1 9.3 3.0

WAPEGOctober 31, 1983

- 75 -ANNEX 4-1

(Page 3 of 3)

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

CEB - BALANCE SHEETS (FY78 - FY82)

CEB-BALANCE SHEETS 78 79 80 81 82FCFA MILLION

GMOSS FA IN OPERATION 2514.0 3809.0 3826.0 4044.0 6224.0LESS DEPRECIATION 461.0 647.0 832.0 1064.0 1375.0

NET FA IN OPERATION 2053.0 3162.0 2994.0 2980.0 4849.0VORK IN PROGRESS 250.0 61.0 54.0 276B.0 1121.0

TOTAL FIXED ASSETS 2303.0 3223.0 3048.0 5748.0 5970.0

CURREPT ASSETSCAMH 767.0 538.0 540.0 1325.0 921.0INVENTORIES 1.0 6.0 54.0 57.0ACCOUNTS RECEIVABLE 36740 925.0 1561.0 1956.0 2860,0-OTHWRs- - - -29 -- 76 "-- 46.0

TOTAL CRRENT ASSETS 1212.0 1505.0 2376.0 3496.0 4198.0

TOTAL ASSETS 3515.0 4728.0 5424,0 9244,0 10168.0

EQUITY 461.0 925.0 1007.0 1370.0 1414.0RETAINED EARNINGS 364.0 474.0 743U. 1206,0 2128,0

TOTAL EQUITY 825.0 139.0 1750.0 2576.0 3542.0

LONG TERM DEBT 2490.0 2944.0 2891.0 5293.0 5385.0CURRENT LIABILITIES 200.0 385.0 783,0 1375,0 1241,0

TOTAL LIABILITIES 3515,0 4728,0 5424,0 9244.0 10168,0

DEBT/DEBTiEGUITY 75,1 67N8 62,3 67.3 60.3EGUITY/DEBT+EGUITY 24.9 32.2 37.7 32.7 39.7

CRRENT RATIO 6.1 3,9 3.0 2.5 3.4

WAPEGOctober 31, 1983

- 76 -ANN'ZX 4-2

(Pag, 1 of 3)

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

CEET - INCOME STATEMENTS (FY78 - FY82)

CEET-INGotE SYATEHNTS 78 79 30 81 82FCFA MILLION

ENER6Y SALES IN GIIH 110.0 124.0 151.0 184.0 201,0AJRE PRICE IN FCFA/KH 18.7 19,5 18.8 25.1 31.2

ENERGY REVENUE 2052.0 2418.0 2840.0 4619.0 6279,0OTHER OP REVENUE 652.0 690,0 741.0 671.0 145100

TOTAL REVENUES 27040 3108.0 3581.0 5290.0 7729.0

FtUEL 206,0 308.0 569.0 681.0 1058,0PO-ER PURCIA CEB 568.0 731.0 909,0 1586.0 2432.0KATERIALS 1514,0 408.0 499.0 451.0 808.oPERSONL 608.0 681.0 782.0 781.0 932,0TAXES 140.0 179.0 139.0 168.0 194.0SERVICES 182,0 200,0 241*0 286,0 290.0TRSPRT 70.0 46,0 27.0 21.0 74.0OTHER tP.EXPENSES 57.0 67.0 82.0 ill.O 119.0PROVISIONS 195.0 352.0 478.0 507.0 543.0

TOTAL OP.EXPENSES 3540.0 2972,0 3726.0 4592.0 6450.0

OPERATING I7NaJIE -836.0 136.0 -145.0 68.0 1279.0

INTEREST 187.0 332.0 218.0 267.0 172,0

NET INCWIE -1023.0 -196.0 -363.0 431.0 1107.0

DPERATINO RATIO 130.9 95.6 104,0 96.8 03#5

ROR -37,3 3.8 -2.8 11.5 21.0

WAPEGOctober 31, 1983

- 77 -

ANNEX 4-2(Page 2 of 3)

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

CEET - FUNDS FLOW STATEMENTS (FY78 - FY82)

CEET-FUIN5 FLOW STATEMENTS 78 79 80 81 82FCFA MILLION

9PERATING INCOME -836.0 136.0 -145.0 68.0 1279.0DEPRECIATION 168.0 352,0 478.0 453.0 565.0CfLSUJERS CIONTRIBUTIONS 2469.0

TOTAL INTERNAL FUMNS -668.0 488.0 333.0 1151.0 4313.0

VARR.ORKINS CAPITAL 520.0 53.0 -38830 -761.0 -2672.0INlER£ST 187.0 332,0 218.0 267.0 172.0PRINCIPAL 7.0 25.0 266.0 155.0 151.0

TOT.OP.REQUIREHENTS 714.0 410.0 96.0 -339.0 -2349.0

NICS -1382,0 78.0 237,0 1490.0 6662.0

CAPITAL EXPENDITtRE 2605.0 2074.0 515.0 697.0 356.0

BALANCi 3987.0 1996,0 278.0 -793.0 -6306.0FINANCED BYBORROUINGS 2383.0 30.0 187.0 -67.0 -302.0EQUITY 1757.0 1917.0 66.0 -692.0 -5332.0

TOTAL CAP.SMURCES 4140.0 1947.0 253.0 -759.0 -5634.0

CASH VARIATION 153.0 -49.0 -25.0 34.0 672.0

CMSM BEGIN YEAR -368.0 -215.0 -264.0 -289.0 -255.0CASH END YEAR -215.0 -264.0 -289,0 -255.0 417.0

NIce -53.1 3.8 46.0 213.8 1871.3

DEBT SERVICE CONERAGE -3.3 1.4 0.7 2. 5.6

WAPEGOctober 31, 1983

- 78 -ANNEX 4-2

(Page 3 of 3)

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

CEET - BALANCE SHEETS (FY78 - FY82)

CEET-BALANCE SEETS 7 79 80 81 82FCFA MILLION

GROSS FA IN OPERATION 4269.0 6472.0 8378.0 9020.0 9485.0LESS DEPRECIATION 1583.0 1935.0 2413.0 286660 3431.0

NET FA IN OPERATION 2686.0 4537.0 5965.0 6154.0 6054.0VWOK IN PROGRESS 1852,0 1723.0 332.0 387,0 278.0

TOTAL FIXED AMOES 4538.0 6260.0 6297,0 6541.0 6332.0

CURNT ASSETSCASH 117,0 100.0 175.0 92.0 417.0INU1ENTRIES 1772.0 1772.0 2011.0 1272.0 644.0ACCOUfTS RECEIVABL 1486.0 1784.0 1880 2847,0 2729.0OTHS 271,0 222.0 198.0 605.0 100.0

TOTAL CWRRENT ASSETS 3646.0 3878,0 4269.0 4816,0 3890.0

TOTAL ASSES 8184,0 10138.0 10566,0 11357.0 10222.0

EQUITY 3156.0 4877.0 4580.0 4319.0 94.0LONG TERM DEBT 3253,0 3258.0 3179.0 2957.0 2504.0CERRENT LIABILITIES 1443.0 1639.0 2343.0 37340o 5155.0DMAN Oew T 332.0 364.0 464.0 347.0CONSItR CONTRIBUTIONS 2469,0

TOTAL LIABILITIES 8184.0 10138.0 10566,0 11357.0 10222.0

DEBT/DEBTlEGUITY 50.8 40.0 41.0 40.6 96.4EGUITY/DEBTtEGUITY 49.2 60.0 59.0 59.4 3.6

ClRRENT RATIO 2.5 2.4 1.8 1,3 0.8

WAPEGOctober 31, 1983

- 79 -

ANNEX 4-3(Page 1 of 3)

BEN IN-TOGO

NANGBETO HYDROELECTRIC PROJECT

SBEE - INCOME STATEMENTS (FY78 - FY82)

SBEE-INC0!E STATEfiENTS 78 79 80 81 82FtFA IIILLIGI

ENERtY SALES IN GON 52.0 80s0 92.0 106.0 137,0MUERM3E PRI:E IN FCFAAH 19.7 22.6 22.4 21.2 31.0

£lER6Y REVENUE 1026.0 1811,0 2058.0 2245.0 4249.0WATER REVJENE 146.0 192.0 350.0 504.0 723.00tHER WP,REVENUE 439.0 523.0 662.0 1e31.0 1000.0

TOTAL REUEMJS 1611.0 2526.0 3070.0 4380.0 5972.0

FUEL 1450* 206.0 322,0 471.0 900.0POIER PURCI4SE CEO 339,0 422,0 510.0 660.0 1887.0PERSOIEL 327,0 370,0 427,0 522.0 630.0IATERIALS 195.0 197,0 215,0 925.0 1250.0SERWICES-TRANSP 47.0 34,0 30.0 30.0 262.0OT5jR UP.EXPENSES 180.0 73.0 220.0 488.0 280.0

PROVISIOi4S 227.0 724.0 986.0 973,0 1035,0

TTAL 0P.EXPENSES 1460*0 2026.0 2710*0 4069.0 6244.0

WPERATING INCO0E 151.0 500,0 360.0 311.0 -272.0

INRST 36,0 82.0 104.0 170,0 231.0

NET IN1N 115.0 418.0 256.0 141.0 -503,0

OPERATING RATIO 90.6 80.2 08.3 92.9 104.6

ROR 5.4 14.0 8.7 5,6 -6,4

WAPEGOctober 31, 1983

- 80 -ANNEX 4-3

(Page 2 of 3)

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

SBEE - FUNDS FLOW STATEMENTS (FY78 - FY82)

B-EEFUNDS FLOW STATEMENTS 78 79 80 81 82FCFA MILLION

OPERATING INCOME 151.0 SOOO g60.0 311.0 -271,0DEPRECIATION 214.0 518.0 .81.0 884,0 1035,0COSWRS CONTRIBUTIONS 309.0 352.0 333.0 -1.0 200.0

TOTAL INTERNAL FUNS 674.0 1370.0 1274,0 11?4.0 963,0

VARJIORKING CAPITAL 28.0 1134*0 -159.0 -108540 1101.0INTEREST 36.0 82.0 104.0 170.0 231.0CONTRIB.TO STATE 115.0 418,0 256,0 141*0PRINCIPAL 20.0 45.0 50.0 150.0

TOT.OP,REQUJIREMENTS 17?.0 1654.0 246c0 -724.0 1482.0

NICS 495.0 -284.0 1028.0 1918*0 -519.0

CAPITAL E)PENDITURE 1235.0 832.0 824.0 4157.0 1540.0

BANCE 740.0 1116.0 -204.0 2239.0 205.90FINACED BYBoRWINGS 631.0 671.0 -160.0 844.0 ?000.0EQUITY 25,0 236.0 186,0 1538.0

TOTAL CAP#.b3lES 656.0 907.0 26.0 2382.0 2000.0

CASH VARIATION -84.0 -209.0 230,0 143.0 -59.0

CASH BEGIN YEAR 173.0 89.0 -120.0 110.0 25-,.0CASH END YEA 89.0 -120.0 110.0 253.0 194.0

NICS 40.1 -34.1 124.8 46.1 -33.7

EBT SERICE COVE 10.5 12,0 9.0 5.8 2.0

WAPEGOctober 31, 1983

- 81 -

ANNEX 4-3(Page 3 of 3)

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

SBEE - BALANCE SHEETS (FY78 - FY82)

SWE-BALANCE SHEETS 78 79 80 81 82FCtA MILLIN

GROSS FA IN OPERATION 5696.0 7298.0 7957.0 11600.0 12319.0LESS DEPRECIATION 2668.0 3186.0 3767.0 4651.0 5686.0

NET FA IN OPERATION 3028.0 4112.0 4190.0 6949.0 6633,0WORK IN RORESS 770.0 165.0 679.0 1500.0

TOTAL FIXED ASSETS 3798.0 4112.0 4355.0 7628.0 8133.0

CURRENT ASSETS-CASH--- - 89.0) 110.0 ----2530 194.0

INVENTORIES 417.0 519.0 555.0 576.0 595.0AMOUNTS RECEIVABLE 1526.0 2632.0 3282.0 2888.0 3824,0OTHES 242.0 554.0 442.0 201.0 210.0

TOTAL CltRElT AMSETS 2274.0 3705.0 4389.0 3918.0 4823.0

TOTAL ASSETS 6072.0 7817,0 8744.0 11546,0 12956.0

EQUJITY 2144.0 2380.0 2566.0 4104.0 3601.0LOWN TERM PUT 942.0 1593.0 1388.0 2182,0 4032.0CURRENT LIABILITIES 1197.0 1583.0 2316.0 2787.0 2650.0BANK OVERDRAFT 120.0CONSIUERS CONTRIBUTIONS 1789,0 2141.0 2474.0 2473.0 2673.0

TOTAL LIABILITIES 6072.0 7817.0 8744.0 11546.0 12956t0

DEBT/DEBT+EGUITY 30.5 40.1 35.1 34.7 52.8EOUITY/DEBT+EGUITY 69.5 59.9 64.9 65.3 47,2

CURRENT RATIO 1.9 2.3 1.9 1.4 1.8

WAPEGOctober 31, 1983

- 82 -

ANNEX 4-4(Page 1 of 5)

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

CEB - Existing Tariffs

1. Purchases from VRA

Fixed Charge US $ 24,500 per monthDemand Charge US $ 6.35 / kW/monthEnergy Charge US $ 0.0115 I kWh

2. Sales to CIMAO

Fixed Charge FCYA 25,865,000 per monthDemand Charge US $ 6.92 1 - (cos 0 - 0.9) per kVA/monthEnergy Charge LS $ 0.0146 / kWh

3. Sales to SBEE

Pixed Charge US $ 16,667 per monthDemand Charge US $ 8.52 / kVA/monthEnergy Charge US $ 0.0127 / kWh

4. Sales to CEET

4.1 At the Lome-A Substation

Fixed Charge US $ 16,667 per monthDemand Charge US $ 8.52 / kVA/monthEnergy Charge US $ 0.0127 / kWh

4.2 At the Lome-SNS Substation

Fixed Charge US $ 5,600 per monthDemand Charge US $ 7.62 / kVA/monthEnLergy Charge US $ 0.0148 / kWh

4.3 At the Tabligbo Substation

Demand Charge US $ 8.52 /kVA/monthEnergy Charge US $ 0.0127 / kWh

WAPEGMarch 15, 1984

- 83 --

AINTEX 4-4(Page 2 of 5)

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

CEET - Existing Tariffs

1. Low Voltage

1.1 ResidentialUp to 100 kWh/month FCFA 50/kWhFrom 101 to 200 kWh/Month FCFA 46/kWhAbove 200 kWh/month FCFA 44/kwh

1.2 CommercialUp to 100 kWh/month FCFA 46/kWhFrom 101 to 200 kWh/month FCPA 44/kWhAbove 200 kWh/month FCFA 42/kWh

1.3 Public LightingO3ne single block FCFA 44/kWh

2. Medium Voltage

2.1 Power Subscribed < 500 kVAYearly fired charge: FCFA 15,000 per kVA subscribed.Energy Chargefrom 18 h to 25 h FOFA 47/kWhfrom 06 h to 18 h ECRA 36/kWhfrom 23 h to 06 h FCFA 32/kWh

Additional Tax forLighting FCFA 12/kWh

2.2. Power Subscribed a 500 IcVAYearly fixed charge: FCFA 15,000 per kVA subscribed.Energy Chargefrom 18 h to 23 h FCFA 45/kWhfrom 06 h to 18 h FCPA 34/kWh 1/from 23 h to 06 h FCFA 32/kWh 1/

3. Societe Nationale de Sid9rurgie (SNS)Fixed Charge US $ 5,600 per monthDemand Charge US $ 7.62 / kVA/monthEnergy Charge US $ 0.0148 / kWhAdditional Energy

Charge FCFA 2.0/kWh

1/ Off-peak tariff applicable only to consumers with more than 200 hours of

- 84 -

AITNEX 4-4(Page 3 of 5)

Note. billing and collection for Fixed, Demand and Energy charges aretemporarily made by CEB on behalf of CEET.

4. Office Togolais des Phosphates (OTP)Fixed Charge FCFA 13,380,000 per monthDemand Charge US $ 6.92 1 - (coo 0 - 0.8) per kVA/monthEnergy Onarge US $ 0.0146 / kWhAdditional EnergyCharge FCFA 2.0/kWh

Note: billing and collection for Fixed, Demand and Energy charges aretemporarily made by CEB on behalf of CEET.

5. Meter Rent and DepositsA charge for meter rent and an advance deposit are payable by allconsumers. A charge for meter maintenance is payable by mediumveltage consumers.

WAPEGMay 15, 1984

- 85 -

ANNEX 4-4(Page 4 of 5)

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

SBEE - Existing Tariffs

1. Low Voltage

1.1 Commercial LightingUp to 20 kWh/month FCFA 67/kWhAbove 20 kWh/month FCFA 75/kWh

1 - ResidentialFirst Block FCFA 50/kWhSee.ond Bloc' FCFA 55/kWhThird Block FCFA 73/kWhFourth Block FCFA 68/kWh

Definition of Blocks:first : up to 20 kWh/monthsecond: (t5 x r) - 20third : (15 x n) / 2fourth: beyond(n being the number of rooms of the household)

1.3 Small IndustryO'e single block FCFA 58/kWh

1.4 Residential and A1r-ConditioningFirst Block FCFA 67/kWhSecond Block FCFA 73/kWhThird Block FCFA 68/kWhFourth Block FCFA 62/kWh

Definition of Blocks:first : up to 20-kWh/monthsecond: (15 x n) - 20third : 100 P - (15 x n)fourth: beyond/a being the zwVL'er of rooms of the household and P the powersubscribed in kW)

1.5 Air-ConditioningOne single block FCFA 62/kWh

1.6 Public LightingOne single block FCFA 60/kWh

86 -

AMEX 4-4(Page 5 of 5)

2. Medium VoltageFixed Charge FCFA 2,000/kVA/monthEnergy Charge ?CFA 35/kWh

3. Onigbolo (Cement Plant)Fixed Charge FCFA 48,950,000 per monthDemand Charge US $ 7.62 1 - (cos 0 - 0.9) per kW/monthEnergy Charge US $ 0.015/kWh

4. Meter Rent and DepositsA charge for meter rent and an advance deposit are payable by allconsumers.

WAPEGMarch 21, 1984

- 87 ANNJEX 4-5(Page i of 3)

BEN IN-TOGO

NANGBETO iYDROELECTRIC PROJECT

CEB

FPINANCXAL FORECASTS 1983-1989

FEIJNS FLOW STATEMENT

(FCFA Million)

1913 1934 19" 5 1966 1987 1M 8 1989 TMTALINTERNAL SNUBCE

lUAT1NB INCOKE 160 942 1304 2101 7096 11720 13947 387"6IuATION 396 n 88 1107 i249 2195 2427 2611 11463

TOAL INTERNAL.- FllS 2502 1930 2411 3400 9281 14147 16155 50229

WEt;N^AL- FEWZREeIsI

IIICREASEVCREASE- GIIINI W IAL -429 -07 -290 185 1114 940 448 SIU1INTEREST CP4RGED

.- U'PATION8 305 563 528 489 U6 1473 2254 6058MOT E?YN 400 350 386 424 467 932 1745 4704

TMAL OPATIONAL- R RE9 IS 276 106 624 1098 2027 35 4447 11923

- AVILIE FOR- IUESTNENT 2226 1824 1787 2302 7254 10802 12111 38306

CAPITAL INIJESTElt

TOTAL CCnSt ICIN 369 6950 1452 1Ism 16224 11453 14690 807INTERESt WRING- CONSTMTION 95 235 588 1294 120 1172 910 6214

T0AL CAITAL- INlSTHENT 464 7185 15140 1782t 18144 1262 150 8697

ILCE TO EE- FI*-DWI -1762 S51 1353 1527 10890 1823 3499 4881

FINECD SY

DOIR9YIN65 150 3331 9107 10108 8108 8000 13000 52162ESJITY 0 1243 3017 4616 5010 500 0 1486

TOTAL CAPITAL- SOURCES so0 4574 12124 147M4 13118 8500 13000 66548

C INCREAW- ECEASE 2270 -787 -1229 *803 222B 6677 9511 17867

CASt T 8EGIING- C YEAR 921 3191 2404 1175 372 2600 9277 921CM AT YEAR END 3191 2404 1175 372 2600 9277 1878 18788

ANMM DEOT SE)ICE* COVERA& 3.5 2.1 2.6 3.7 10.2 So 4.1 4.7NOWI CONTON- TO COHp'RJCtI4 479.7 25.4 11.9 12.9 40.0 85.6 77.6 44.0- I VYA ATERAGE S (FT 81.6 24.0 13.4 13,5 44.8 69.9 123.3- 3 TEAR AVERAGE X IP) 0.0 000 25,6 14,7 22.2 41.9 65.1

WAPECMay 15, 1984

- 88 - ANNEX 4-5

BENIN-TOGO (Page 2 of 3)NANGBETO HiDROELECTI1C PROJECT

CEET

FINTACIAL FORECASTS 1983-1989

FUNDS FLOW STATEKENT

(FCFA Million)

I13 1914 198 Mu 1967 1918 199 TOYLINTW Sku- OF FMDSOIRATING I11E -821 1610 1966 1081 774 9m 1185 6790IlERECIATIO4N 637 S71 965 1183 1313 2008 2258 9305CUi4SNES ONYTIIS 232 221 271 2M3 316 341 368 2072

TOTAL IN7ERI4L- fWDS 44 273T2 3202 2557 2473 3349 3S11 18167

OFIRTIONL- R EHRENTS

INOlESE/DECREASE- IIONL CAPITAL 6048 -234S S74 487 -1'6 5 946 5919INTEREST CHAlRGED- OPERATIONS 220 210 10 170 150 120 270 1330DDT REPAYENt 100 170 260 270 280 340 487 1907

TOTAL OPERATIONAL- IREJIENTS 68 -196 1424 m 234 465 1703 9156

INTERHAL FUNDS- AVAILABLE FOR

IINEST4EHT -6324 4697 178 1670 223t 2883 2108 9011

CAITAL IH\ ESTENT

TOTAL CONSTRUCTION 716 3816 1377 3621 6174 7045 3872 2623WITEREST 1RIN6-coNstIWCTlo 0 90 207 322 155 837 877 2888

TOTAL CAPITAL- INtESTtEHT 716 3906 154 3943 6731 7882 4749 29511

ALANCE 10 RE- FINANCED 7040 -79S -194 2313 44 4999 2641 20500

FINAWCED BY

iORIWIGS 0 3683 1072 3472 5772 500 3300 22799EQUITY 0 54 165 165 165 0 0 549

TOTAL CAPITAL-s0Uces 0 3737 1237 36U7 5937 5500 3300 23348

CAM IICREASE/- DECREASE -7040 529 1431 1324 1445 501 659 2848

cSm AT BEGNNING- Of WEAR 417 -623 -2095 -664 60 2105 2606 417CASH Al YEAR ED -6623 -2095 -664 60 2105 2606 3265 3265

ANNL DE8T SERVICE- COVERAGE -0.6 6.5 6.5 5.1 5.0 6.5 4.5 5.0ANJAL CoNrP.N- T0 CONSTRUCTION -993.2 120.3 112.2 41.3 33.3 36.6 44.4 30.5- 3 ER AVERiGE S (fl -372.4 227.1 56.6 39.9 36.2 44.7 38.6- 3 TEAR AtERA tPI 0.0 0.0 2.4 E5.9 46.1 36.4 37.3

WAPEGMay 15, 1984

- 9- ANNEX 4-5

BENCN-TOCQ (Page 3 of 3)

NANGSBETO IIYBROELECTR1C PROJECT

SBEE

FINAh'CIAL FORECASTS 1983-1989

FUNDS FLOW STAIEMENT

(FCFA MULLLam)

3 1914 1985 1986 1987 198 198 TTAL

-W RNDSOPERATING IHWHE -841 2135 1090 288 8 24 44?7 10432IDECIATION 1407 1982 2751 3253 as" 3812 4090 20726COSW2EfRS CONTINS 220 242 266 293 322 354 320 2017

TOTAL INTUE.- FMAS 798 459 4107 3834 4806 6644 87 33375

OPERTIONAL- REOUIRENENTB

IRMSEASE/DCCREASE- V0R%ING WITAL -88 1433 209 239 24 766 1207 292INTEREST CAIMAED- wlERATIONS 362 345 317 277 238 196 351 208m3r REPAYiEaT 168 273 430 430 430 555 708 294

TOTAL OPERATIONAL- REOUIREMs -35 2051 956 946 692 1517 2266 072

iNTERJEAL FUNDS- AVAILABL FOR-IN STI4NT 1144 2306 3151 2888 4114 5127 6571 25303

CAPITAL INWESTPEWT

TOTAL CONSTRUCTION 442 7631 861 5957 2243 2518 2876 34003INTEREST DURING- CONSTRUCTION 200 t0o 300 425 450 450 250 2175

TOTAL CAITAL-1"ESTNEt! 4622 7731 8661 6382 2693 2968 3126 36183

AMCE TO BE- FINNCED 3478 5423 5510 3494 -1421 -2159 -3445 108

FINACED 18Y

BorROVINos 0 4000 4000 1000 0 0 0 9000EQUITY 6000 54 165 2580 165 0 0 W964

OTAL CAPITAL- SOURCES 6000 4054 4165 3580 165 0 0 17964

CASH INCREASE/- IECREASE 2522 -1369 -1345 86 1586 2159 3445 7084

CAI AT BEGINNING- OF YEAR 194 2716 1347 2 8e 1674 3833 194tAST At YEAR ENI 2716 1347 2 9S 1674 3833 7278 727

AIHJAL DEST SERICE- COWRA6E 1.1 6.7 5.1 5.0 6.7 8.4 8.0 6.2ANL CONTB* T0 CONSTRtJTION 24.8 29.9 36.4 4-.3 152-8 172.7 210.2 69.9- 3 YEAR AVIRACE Z t') 24,7 33.0 41.5 4898 102.5 175.0 :;1.1- 3 YEAR AVERAGE 1 IP) 0.0 0.0 31.4 36.7 57.2 100.7 179.9

WAPEGtdy 15, 1984

90 ANNEX 4-6(Page 1 of 3)

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

CEB

FINANCIAL FORECASTS 1983-1989

INCOME STATEMENT

(FCFA Killion)

1983 1984 1985 1986 1987 1988 1989SAL£S INCRES Z -4.44 -48.84 0.00 0.00 109,50 27.42 0.46LESRGY SALES(6WH) 473 242 242 242 507 646 649

AVE PRIcEIWIH 15,4968 20.2479 25.0000 30.9917 34.0039 36,9969 41.9877

ENRGY REVENUE 7330 4900 6050 7500 17240 23900 27250OTtER OPREI. 80 80 50 52 55 59 61

TOTAL REUENUES 7410 4980 6100 7552 17m95 23958 27311

OPERATING EXPESES

.FUELI 0 0 0 0 0 0 0FUEL'ULXPIOIER 0 0 0 0 0 0 0

PURCHASE VRA 4388 2470 3049 3452 7234 8501 9293PURCASE CTL 0 0 0 0 0 0PERSONNEL 300 330 370 410 460 640 720.OTHER GPsEXP* 220 250 270 290 320 670 740OPERATIONS 4908 3050 3689 4152 8014 9811 10'53DEPRECIATION 896 988 1107 i249 2185 2427 2611

TOTAL EXPENSES 5804 4038 4796 5401 10199 12238 13361

OPERATING INCOME 1606 942 1304 2151 7096 li720 13947

NET INCOME BEFOE- INTEREST 1606 942 1304 2151 7096 11720 13947

INTEREST 400 798 1116 1783 2366 2645 3164IDC 95 235 588 1294 1920 1172 910

- CNRMD OPERATIONS 305 563 528 489 446 1473 2254

NET INCE 1301 379 776 1662 6650 10247 11693

RETAIED ERNINS 1301 379 776 1662 6650 10247 11693

RATE BASE 12716 13565 14250 15246 41693 70388 74792RATE WF RETURN 2 12.6 6.9 9.2 14.1 17.0 16.7 18.6OPERATING RATIO Z 78.3 81.1 78.6 71.5 W9.0 51s1 48.9

WAPEGMay 15. 1984

91 - ANNEX 4-6

BENIN-TOGO_ (Page 2 of 3)

NANGBETO HYDROELECTRIC PROJECT

CEET

FflNANCrAL FORECASTS 1982-1989

INCOME STATEMENT

(FCFA milliorn)

1983 1984 1985 1986 1987 1988 1989SA1SE INCREASE 2 0.00 2.49 4.37 651 6.11 20.16 3,77ENERGY SALES(OWN) 201 206 215 229 243 292 303AVE PRICE/IWN 35.3831 40.0000 57,9070 58,9520 61.7284 65.0685 70.9571

ENERGY REVENUE 7112 8240 12450 13500 15000 19000 21500OTHER GP.REV. 757 3375 916 994 1078 1169 1269

TOTAL REVENUES 7869 11615 13366 14494 16078 20169 22769

OPERATING EXPENSES

FUEL 1 1056 3663 4057 4873 3112 1530 3930FUElIBULK FMlER 1056 3663 4057 4973 3112 1530 3930

PURCNASE CED 4278 2445 3046 3776 6960 11507 10975MATERIAL 06 1006 1t16 1228 1350 1472 1605PERSONEL 920 1000 1100 1155 1213 1273 1337TAXhs 340 420 470 503 538 576 616SERVICES 335 356 378 402 427 455 482TRANSPORT 74 81 90 99 t10 121 134OTHER OP.EXP. 148 163 178 194 211 22R 247OPERATIONS 7001 5471 6378 7357 10809 15632 153I6DEPRECIATION 637 871 965 1183 1383 2008 2258

TOTAL EXPENSES 8694 10005 11400 13413 15304 19170 21584

OPERATINS INCOE -825 1610 1966 1081 774 m9 1185

MET IMCONE BEFORE- INTEREST -825 1610 1966 1081 774 m9 1185

INTEREST 220 300 397 492 705 957 1147IDC 0 90 207 322 555 837 877

- CFRSD OPERATIONS 220 210 19 170 150 120 270

MET INCONE -1045 1400 1776 911 624 879 915

RETAINED EARNIHNS -1045 1400 1776 911 624 879 %15

RAtE BASE 3500 4730 6176 7320 9082 13659 18171RATE OF RETURN 2 -23,6 34.0 31.8 14.8 8.5 7.3 6.5W'ERATING RAT!" 2 110.5 96.1 85.3 92.5 95,2 9550 94.9

WAPEGMay 15, 1964

-- 92ANNEX 4-6

BENIN-TOCO (Page 3 of 3)

NANGBETO HYDROLLECTRIC PROJECT

SBEE

FINANCTAL FORECASTS 1983-1989

INCOME STATEMENT

(FCFA Million)

19S3 1984 1985 1986 1987 1988 1989SAES INRASE 2 5.84 20.00 5.17 4.92 6.77 14,63 20,43aER6Y SALES0G0H) 145 174 183 192 205 235 2t3AVE PRICE/KUH 31.0000 57,0690 58,5246 59i1146 60.0000 66.0000 73.0035

ENRY REVENUE 4495 9930 10710 11350 12300 15510 20660WATER REVENUE 938 1230 1500 1980 2310 3025 3751OTHER VP,lEVU 1200 1600 1600 1800 2000 2200 2400

TMTAL REVENES 6633 12560 13810 15130 16610 20735 26811

0PERATIND EXPENES

fUL. I 1000 3780 4484 5248 11SW 1392 1664FUE/JBUK P0YER 1000 3780 4484 5248 1144 1392 1664

PURASE MED 2356 1843 2275 2821 7072 9843 12180PERSNNEL 705 795 1080 1320 1540 1800 1920MATERIAL 1500 1600 1700 1750 1800 1850 1900SEWICES-TRASP 204 100 80 75 150 1S0 200OITER OP.EXP, 300 325 350 375 400 410 430OPERATIONS 5065 4663 5485 6341 10982 13053 16630DE CIATION 1409 1982 2751 3253 3599 3842 4090

TOTAL EXPSES 7474 10425 12720 14842 15725 18287 22384

OWATIN INCORE -841 2135 1090 288 885 2448 4427

?NXMfE FRE BEFE- INTEREST -841 2135 1090 288 885 2448 4427

INTEREST 562 445 617 702 688 646 601JOC 200 100 300 425 450 450 250

-CHRD OERMATIONS 362 345 317 277 238 196 351

1UT ZNCOHE -1203 1790 773 11 447 2252 4076

RETAINED EANINBS -1203 1790 773 11 647 2252 4076

RATE tASE 5276 8710 13796 17906 19102 18469 17016RATE OF BETURN 2 -15.9 24.5 7.9 1.6 4,6 13.3 26.0OPERATIIG RATIO Z 112.7 83.0 92.1 98.1 94.7 88.2 83.5

WAPECMay 15, 1984

- 93 -BENIN-TOCO ANNE( 4-7

NANOSETO HYDlllo11j,CTkjc p1(.jECT (Page 1 of 3)

CEB

FINANCIAL FORECASTS 1983-1969

BALANCE SHEETS

(FCFA ML1llion)

1911 1934 1985 1996 l9 1988 1919

AS

FIXED ASSETS

PLNT 1IN SERVICE 17918 19762 22145 24974 79472 88240 94934LESS' DEPRECIATLON 4608 5942 746! 9162 11897 15038 18551

OPERATING PFWT 13310 13820 14680 15812 67575 73202 76393

Rl ZN PROGRESS 472 7157 21297 37626 2770 11395 25595

42MRET ASSETS

CASh 3191 7404 1175 372 2600 9277 18788INVENTORIES 60 63 6b 69 72 76 80RECEIVABLES 2419 1225 1029 1275 2931 4063 U33OM MER UR.ASSETS 378 397 4t7 438 459 482 507

TOTAL 6048 4089 268 2154 6062 1388 2400C

TOTAL AETS 1930 2.506 364 55592 76407 98495 125986

EQUITY AKD- LIABILITIES

EQUIITY

-- MIY IK-APITAL 1414 2657 5674 10290 15300 15800 13800RETAINED EMNIINIS 3429 3808 4584 6246 12896 23143 34836REVALUATION RESRVE 8244 92 10209 11090 12038 16092 20484

TOTAL EOUITY 3i087 15707 2067 27626 4023i 55O3 71120

LONS tERN DEBT

DOT DUE 5493 8474 17195 26879 34520 418 52843

- LIABILtITES

PAYA3ES 125 885 1002 1087 1653 1872 2023

TOTAL t250 98 1002 1087 1653 1872 2023

TOTAL EOUITYI AND- LIABILITIES 190 25066 38664 55592 76407 98495 12596

:====22=S2:tC 5f=Z* P;5 35 SS= 33..... =: .. e=:..2t t=S== :=2:

AVE GROSS LANT-/CSMSR(IH FCFA) 0.0 0.0 0.0 0.0 0.0 0.0 0.0-/GW4 (TH FCFA) 35389.0 7785t.0 86582.0 97351.0 103003.0 '19808.0 141120.0INCREASE IN- GROSS PNANT S 7.2 2.8 S.1 6.8 212.2 5.0 1*4DEBT I OF- DEBIT EOUITY 29.6 35.0 45.7 49.3 46.2 43.0 42.6CURRENT RATIO 4.8 4.6 2.7 2.0 J.7 7.4 11.-NV INSTIiLL. 0 0 0 0 63 63RSS PLANT

-/tF (IN FCFA) 0.0 0.0 0.0 040 0.0 1400.6 136.9

WAPEIKLty 7 5, 1 q8S

8EiilW- o9O ANNEX 4-7BEWIW-'TL)Gt) (a Pge 2 ~of 3)

NANGBETO HYDROELECTRIC PROJECT

CEET

FINANCIAL FORECASTS 1983-1989

BALAiNCE SHeETS

(FCFA M14 Iion )In3 191 1U 1996 197 19 1m

MST1

F1x3 ASSETS

nT INI SRICE 1015 13935 15435 18935 22135 321A5 36135LESuwSI W MECX0TIZ/ 4068 4939 2904 7087 8470 10478 12736

WERTIlU PANT 6117 8996 9531 11848 13665 21657 23399

mIIMI INI PIOGRI?S 294 450 534 977 451 23S0 3139

cUSN ASSEtS

CRSH 0 0 0 660 2105 2606 3265IMENTORIES 664 993 1030 1728 2250 2677 3260ECEIMAILES 5690 2472 3113 3375 3750 4750 .375imER W.ASSEtS 100 106 112 119 124 134 142

T0tAL 6454 3561 4255 5982 9231 1t167 12042

TOTAL AMs$tS 12865 13007 14320 18707 26404 34214 39589

- LIAILITIES

EUUITT

Pftfl- PITAL. 2064 2118 2283 2448 2613 2613 2613RETAIKE EARNINGS -3015 -1615 161 1072 1696 2575 3490

TOTAL EMUITY -9:l 503 2444 3520 430? 518 6103

w saN tEms D£BT

yT ItE 2404 5917 6729 9931 15423 20583 23396

* LIAsILITIES

PATADlES 2088 1540 1260 1740 2940 4270 4540S1 eIErWRIITT 6623 2095 664 0 0 0 0

TOtM. 8711 3635 1924 1740 2940 4270 4540

CeHSIUERS CONTIKS 2701 2952 3223 3516 3832 4173 4541

TOTAL EQUITY AMD- LIAKILITIES 12865 13007 14320 18707 26404 34214 39580

NO OF COISUIsERS 35410 38730 42070 45650 49720 53690 58130AYE CROSS ?INT-/CSR(TH FCFA) 277.0 311.0 349.0 376.0 413.0 505.0 587.0-GI (TIN FCFA) 48930.0 58153.0 68302.0 75043.0 9s506.0 929$8.0 112656.0imCREsSE IN1- GRCS PLAHT 2 7.4 36.8 10.8 22.? 16.9 45.2 12.4

rT I OF- DESt + EUUITY 165.5 92.2 73.4 73.8 78.2 79.9 79.3CURNEMN RATIO 0,7 1.0 2.2 3.4 2.9 2.4 2.7W IZkSTALLED 34 34 34 34 34 34 43

GROEs PLAINT-/KU (TI FCFA) 299.6 409.9 454t0 556.9 651.0 945.1 840.3

WAVe'May t5, 1964

- 95 -

BEN 9N-TOCO ANNEX 4-7BENIN-TOGO k~Page 3 of 3)NANOBETO IIYDP.O¢ELECTR_C PROJECT

SBEE

FINANCtAL FORECASTS 1983-1989

BALANCE MHEMTS

(FCF& Millilon)

am3 934 ns5 tS,. 1987 in s S

~SSET9

lN IN SERVIC! 16580 23041 3193 37823 41853 44673 47553LESS: OUIECIATIOJ 7095 S077 I2823 15081 18680 22522 26612

WUATINO KnrT 9485 13964 20165 22742 23173 22151 20941

Wm 122, S0 1861 3131 2840 33q2 2055 2203 2449

DoRwNt ASSEtS

CAlN 2716 1347 2 is 1674 3833 7278INWNt12RIES 714 839 963 1097 1250 1390 1580RECEIVAILES 2248 2483 2142 2270 2460 3102 4132DAMRt ASSEt 1 231 254 280 307 8 372 409

TOTAL 190 4923 337 3762 5M 8697 139

1011L ASSETS 1725i 22018 26392 2S896 30950 33051 36789

EQUITlY ANDLILIITIES

.____EQ:tUITY

PAID I CAPITAL 10025 10079 10244 12824 129 12989 1298'RETAINED EARIHS -1627 163 936 N47 15N4 3846 7922

MTAL EQUITY 8398 10242 11180 13771 14583 16835 20911

LONG TERN DOT

MIT aIx 3864 7591 1t161 11731 11301 10746 10038

- LIDILITIES

PAYAILES 2100 1050 650 700 1050 3100 1150

TO0TAL 2100 1050 650 700 1050 1100 1150

CONSUI0 COPtITS 2893 3135 3401 3694 4016 4370 4690

TOTAL P101Y AND- LIaILITIES 17255 22018 26392 29896 30950 33051 36789

NO OF COHSZERS 42000 50000 60000 72000 B7000 104000 12500MAE MS PLANT-/CSIIRCItH FCiA 344,0 396,0 458.0 484,0 457.0 415.0 368.0-/1OH (IN FCFAI "9648.0 113850,0 150366.0 161912.0 194331.0 184097.0 162943.0INcREASE tN- GROSS PLANT S 34.6 39.0 38.9 18.2 10.7 6.7 6.4MY I OF- ODET f EQUITY 31.5 4246 50.0 46.0 43.7 39.0 32.4WJRE2T RATIO 2.8 4.7 5.2 5.4 5.4 7.9 11.7

N INSTALLED 43 43 45 45 45 45 45

GROSS PUNT-Ikv (tN FCVA) 395.6 535.8 711.0 840.1 930.1 92.7 1056.?

WAL'EU;M:Iy 15, 1984

- 96 -

ANNEX 4-8(Page 1 of 4)

BENIN/TOGO

NANGBETO HYDROELECTRIC PROJECT

ASSUMPTIONS FOR FINANCIAL PROJECTIONS

A. Income Statements

1. The table below shows projected purchases, generation, losses andsales as well as the cost of purchases.

CBB - Purchases, geteration, losses and sales of electricity

FY 84 85 86 87 88 89

CEBPurchases VRA 252 252 252 528 528 528Generation Nangbeto - - - - 145 148Total, in GWh 252 252 252 528 673 676

Losses, in GWh 10 10 10 21 27 27

Sales, in GWh 242 242 242 507 646 649

GWh purchased from VRA 252 252 252 528 528 528Av. price in $/kWh 0.025 0.031 0.035 0.035 0.041 0.045Av. price in FCFA/kWh 9.8 12.1 13.7 13.7 16.1 17.6Purchases in FCFAmillion 2,470 3,049 3,452 7,234 8,501 9,293

2. The table below shows CEBT's projected purchases, generation, lossesand sales as well as the cost of purchases.

CEET - Purchases, generation, losses and sales of electricity

FY 84 85 86 87 88 89

CEETPurchases CEB 128 128 128 209 317 269Own generation 119 128 143 78 27 87Total, in GWh 247 256 271 287 344 356

Losses, in GTh 41 41 42 44 52 53Percent losses 17 16 15 15 15 15

Sales, in GWh 206 215 229 243 292 303

GWh purchased from CEB 128 128 128 209 317 269Average price in FCFA/kWh 19.1 23.8 29.5 33.3 36.3 40.8Purchases in FCFAmillion 2,445 3,046 3,776 6,96011,507 10,975

- 97 -

ANNEX 4-8(Page 2 of 4)

3. The table below shows SBEE's projected purchases, generation, lol:oesand sales of electricity, as well as sales of water and the relating revenue,and the cost of purchases of electricity.

SBEE - Purchases, generation, losses and sales of electricity andsales of water.

FY 84 85 86 87 88 89

SBEIE

Purchases CEB 91 91 91 208 239 290Own generation 108 118 128 26 29 32Total, in GWh 199 209 219 234 268 322

Losses, in GWh 25 26 27 29 33 39Percent losses 13 13 12 12 12 12

Sales, in GWh 174 183 192 205 235 283

GWh purchased from CEB 91 91 91 208 239 290Av. price in FCFA/kWh 20 25 31 34 37 42Purchases in PCFA

million 1,843 2,275 2,821 7,072 8,843 12,180

Water sales, M3 million 12.3 15 Is 2i 25 31Av. price in FCFA/M' 100 100 110 110 121 121Water revenue, FCFA

million 1,230 1,500 1,980 2,310 3,025 3,751

- 98 -

ANNEX 4-8(Page 3 of 4)

4. The following assumptions bave been made:

(a) In order to meet the requirements of their financing plans, CEB's, C3ET'sand SBEE's average tariffs have been assumed to increase as follows fromFY 84 to FY 89 (in percent):

CEB: 107%CEET: 78% *SBEE: 28%

(b) Other revenues are projected as a function of the growth of sales andconsumers, and of the inflation factor in each country.

(c) CEET's and SBEE's fuel consumptions are computed on the forecast thermalgeneration needs year by year. Specific consumptions are between 0.3 and 0.41/kWh of fuel oil. Gas oil in Togo is priced at about 106 PCFA/I and fuel oilis priced at about 87 FCYA/1 in Togo and 110 FCFA/l in Benin, plus inflation,pluz 2% on top of inflation. Capital costs of CTL have not been taken intoaccount at this stage.

(d) Personnel expenses are assumed to grow at about 15% per year for CEB CEPTand SBEE.

(e) Materials, services and other expenses are projected in proportion tosales and the value of gross fixed assets.

(f) Depreciation is based on forecast amounts for each class of fixed assetsusing usual lifetimes, e.g. 50 years for hydro schemes, 20 to 30 years fortransmission, 16 years for distribution, 4 to 10 years for equipment and 3years for cars.

(g) Interest on past loans is as computed by CEB, COET and SBEE. For theNangbeto Project, an average weighted rate of about 6% has been computed forCEB, based on the terms of financing sources. For CBET's and SBEE's loans,interest is forecast at 5% with repayment over 15 years following five yearsgrace.

(h) Inflation coefficients applied in PY 84-89 are as follows, in percent:

Nangbeto (foreign and local comaponents): 7.5, 7, 6, 6, 6, 6TOGO : 11, 11, 10, 10, 9, 9BENIN : 10, 9, 9, 9, 8, 8

-99 -

ANNEX 4-8(Page 4 of 4)

B. Funds Flow Statements and Balance Sheets

CEET's and SBEE's consumers contributionr are assumed as a function of revenueper customer and the growth in the number of customers each year.Current liabilities and other current assets grow more or less in line withinflation.

CEB'e, CEET's and SBEE's accounts receivable in FY 83 are based onrespectively 4, 10 and 6 months' sales revenues, and on 2 to 3 months' salesrevenues as of FY84 onward.

Expressed as a percentage rO Fixed Assets in operation, CEB's, CEET' s andSBEE's inventories are com,ated at an average of about respectively 1, 6 and4%.

A Government contribution of FCFA 549 million (US$1.4 million equivalent) isforecast for CEET, and SBEE expects contributions of FCFA 8,964 million(US$22.9 million equivalent). For CEB, a contribution of FOYA 14,386 million(US$36.7 million equivalent) is expected, GOT and GOB passing on to CEB thecontributions from KFW, CIDA, FAC and UNDP as equity, as well as part of IDA'scontribution.

CEB's past fixed assets have been revalued by applying an average -evaluationfactor of 2.5. Revaluation as from FY 83 is based on following indices:FY 83: 8%, FY 84: 7.5%, FY 85: 7%, FY 86 onward: 6%.

WAPEGNay 15, 1984

- 100 -

ANNEX 5-1

BENIN-MODQ

NANGBEM HYDtrELECRIC PRO=

CURRENT (1982) AND FORECAST BMWERG DEMAND (GWh)

82 83 84 85 86 87 88 89

CEB Purchases VRA 521 493 252 252 252 528 528 528Generation Nangbeto - - - - - - 145 148

Total 521 493 252 252 252 528 673 676

Lossee 26 20 10 10 10 21 27 27Percent Losses 5 4 4 4 4 4 4 4

Sales, Total 495 473 242 242 242 507 646 649of which to:

CEET a/ 281 246 123 128 128 209 317 269CIMAO 63 75 23 23 23 90 90 90SBEE 151 152 91 91 91 208 239 290

CEET Purchases CEB 209 222 128 128 128 209 317 269Own generation 22 23 119 128 143 78 27 87

Total 231 245 247 256 271 287 344 356

Losses 30 44 41 41 42 44 52 53Percent losses 13 18 17 16 15 15 15 15

Sales 201 201 206 215 229 243 292 303

SBEE Purchases CEB 151 152 91 91 91 208 239 290Own generation 16 18 108 118 128 26 29 32

Total 167 170 199 209 219 234 268 322

Losses 30 25 25 26 27 29 33 39Percent losses 18 15 13 13 12 12 12 12

Sales 137 145 174 183 192 205 235 283

a/ Including OTP and SNS.

WAPEGMarch 1984

- 101 -ANqEX5-2

(Page 1 of 2)

BE=N-TOGO

RLG3ET0 YDMROELECTRIC PROJEC?

COST ASSUMPTIONS FOR DIESEL ALTERNATIVE

item and Unit 19ES /988price of Crude (1983 prices)., $/barrel 7 6 30.0

Fuel 0i1 Costs for Slow Speed DieseLs:Price Ratio: Bunker C/Crude 0.67 0.7Price Bunker C (1983 prices), S/tonne 123.9 140.7P remiu for Heavy Fuel Oils for Diesel 7.0 10.0

130.9 IS0.7

Ratio: c.i.f. Lomdtf.o.b. Rotterdam 1.2 1.2Cost of Heavy Fuel for S.S. Diesels 157.1 180.8Ratio: Dlscounted Average Price/Price in 1986- 1.16. 1.16Discouneed Average Costs of Heaviy Fuel

for S.S. Diesels - 209.7

ruell Coivsumption, tonzes/GWh (inel. lubricants) 212

Annual Generation, Ch/ye`1 144

Haintenance Costs. ($year) 2.3

Unit Capital Costs of Diesels, StXS (20 year lifetizie) 1200

'Local Transmission storage tanks plus 2 monthsfuel storage, $/a 3.0

.Sources: Fuel prices provided by Economic Manysis and Projections Departrnenc(July 19;13 estizates)

11 1985 data are shotrn in the upper half of the table for comparison.2T Fuel prices aru expected to increase at 3/ per year from the 1958

base figure up to 1990, 4 per year from 1990 to 95, and 2% per yearafterwards. Tne dtszounted overage is based on dLscount factots oflOS oVer 50 years.

Xt Na;sg,beco %nuLd Scnernte 148 CWh. less 3f. loases Cor transnissiov.

WAPEGDecember 9, 1983

- 102 - ANNEX 5-2.

(Page 2 of 2)

BENIN-TOGO

NANGBETO HYDROELECTRIC PROJECT

PRESENT WORTH CALCULATIONS L/

Slow SpeedNangbeto Diesels ^

Capital Cost, $m 96.4 (93.9) 79.8IDC (at 10%) $m 13.7 (13.4) 4.0

(1) Total 110.1 (107.3) 83.8

(2) Capital Recovery Factor 0.101 0.117

(3) Annual Capital Costs, $m 11.1 (10.8) 9.8

(4) Annual Maintenance Costs, $m 0.6 2.4

(5) Discounted Average Annual FuelCosts, $m 0.0 6.4

(6) Total Annual Costs (3 + 4 + 5) $m 11.7 (11.4) 18.6

(7) Present Worth of Costs ((6)/0.l1l)$m 115.8 (112.8) 184.1

(8) Equalizing Discount Rate 3/% - 13.9 (14.1)

1/ Referred to year when Nangbeto would commenc operations (1988).2/ The figures in brackets correspond to a standard conversion factor of 1.2 being

applied to Nangbeto's local cost component, which is 15% of total cost.3/ Based on the following time streams of costs ($m).

Year 1 2 3 4 5 6 7 54

Nangbeto -14.2 -25.6 -34.3 -22.1 -0.6 -0.6 -0.6 ... 0.6Slow SpeedDiesels:Running - 0.0 0.0 0.0 0.0 0.9 8.8 8.8 .. 8.8Capital - 0.0 0.0 0.0 22.5 22.5 22.5 22.5 .. 0.0

The capital cost figures for the diesels (of $90.0m) are the present values,allowing for replacement, and equal the annual capital costs shown in line (3)of the table, but recomputed at a CRF corresponding to the EDR (which at13.9% comes to 0.15, divided by the capital recovery factor for 50 years, alsorecomputed at the EDR (which at 13.9% comes to 0.139). They also assume thatthe diesels could be phased in over a four-year period, with the mid-point ofexpenditures being in the second year after Nangbeto is commissioned.

WAPEGDecember 9, 1983

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