pNo. L-&G b

RESTW;CTED

This report is restricted to use within the Bank.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

THE

SEYHAN RrVER MULTIPURPOSE PROTECT

IN'

TURKEY

April* 1952

Loan DepartmentPLEASE RETURN TO RrPORTS DESK

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CONVERSION RATES FOR TURKISH CURRENCY

us $1 TL 2.825TL 1 US $0.354TL 1,000,000 - US $353,9821 kurus = 1/100 TL =US $0.0035

THE SElri`N ?IJV-.P , :.T?UPOSE PROJECT

IThDEX

Page

Perspective of Proposed Seyhan Dam ................. Frontispiece

Summary and Conclusions ...................... Preface

I. Purpose and Scope of Report ....... ................... 1

II. Description of the Project ........................, 1

III. Streamflow Data on the Seyhan River *.............. ,

IV. Fcundation Conditions for the Dam ......... 4........ h

V. Estimated Cost of the Project .. '****ft****....* * 5

VI. Schedules of Construction and Expenditures , . 7

V:II. Allocation of Costs to the .Aultipurpose Aspectsof the Project **ftft**ft*****ft*ft*.ft.ft.*.ftft*...... 8

VIII. lIanagement ............ . , , , . . . . *..... 10

IX, Justification of the Project .............,........., ,2.

X. Revenues, Expenses and Net Earnings ................ 16

XI. Recommendations *so***.......... 21

APPENDICES

Table I Estimated Electric Power Consumption in Seyhan PowerDistribution Area

Table II Cukurova Po;er Utility Company, Estimates of Revenue andOperating Jxpenses

Table III Irrigation Phase of Project, Income and Operating Expenses

Table IV Income, Expenses, and Net Returns from Operation of lulti-purpose Project

Table V Economic Benefits of iultipurpose Projeot

Sketch Mrp of Adana Region

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SU2 ARY ANJD CONCLUSIONS

The proposal submitted by the Government of Turkey as a basis of aBarik loan involves the construction of a dam across the Seyhan River nearAdana, a hydroelectric pols:er-generating plant, and a power transmission system.These works are the predominant part of a comprehensive development Project toprovide flood protection, irrigation, and electric power in the Adana plain.The total cost of this Project is the equivalent of about $67 million, of whichabout $1O.5 million has been spent to date. The phase of this Project presentedfor Bank financing amounts to approxirately $36 million, and the Bank is beingasled to provide the foreign exchange costs of this phase, $25.2 million.Construction will begin in the mid-year months of 1952 and will be completedby mid-year 1956. The irrigation canals will be constructed after the comple-.tion of the dam and appurtenances to be financed by the proposed loan.

1. The site selected for the proposed dam and the type of structuredesigned both seem suitable, considering existing conditions.

2. The foundation conditions of the proposed dam are poor and extra-ordinary precautions were necessary in the design and specifications to pro-vide a seal to minimize leakage. An independent appraisal by a board ofcorsultants, experienced in this type of construction, recommended the designfeatures which vrere adopted in the final design prepared by the InternationalEngineering Company.

3. The prograni furnished the Bank by the Turkish Government indicatesthat the remaining phases of the Project will be carried to completion.

4, A multipurpose dain of this nature requires exceptionally competentmanagement, both during construction to assure ccerdination of its severalaspects and in subsequent years to assure proper control and use of the waterresources, and to safeguard a valuable property.

5. The managerial and financial policy fixed by Cabinet decree seemsbasically sound. It establishes the power facilities as a profit makingenterprise, the irrigation operations as a non-profit and largely self-support-ing service, and the flood control service as a governmental financial respon-sibility.

6. The estimates of power use included in this report wrere supplied bythe Turkish Government and no independent check was attempted. They appear tobe optimistic but could be substantially discounted without seriously affect-ing the justification of the Project for multipurpose operation. It is probablethat full use vill be made of the povier and water from the Project, althoughnot within the time period predicted by the Government.

7. The viorks to be financed by the Bank require from the outset theservices of an engineering organization experienced in this type of constructionto complete working drawings, advise in the award of contracts, and to superviseconstruction for compliance vwith plans and specifications.

8. Similarly, these works require the selection of a contractor withexperience in building this type of structure, in order to assure experiencedworkmanship in carrying out plans and specifications.

9. Cost estimates are believed to be conservative and adequate toprovide for the construction costs of facilities included in the project.

10. Although a four-year construction program is conten:lated by theGovernment, a three-year construction schedule may be desirable from the stand-point of economy and to provide the benefits of the project at the earliestfeasible date. Invitations for alternate bids for the shorter constructionperiod would indicate its practicability,,

11. From a technical and business viewpoint.the Project seems anappropriate one for consideration by.the Bank for a loan.

THE SEYHAiN RITVR !1ULTIPURPKSE PROJECTIN T1UPJIY

I. Purpose and Scope of this Report

This report presents an appraisal of the Seyhan River project whichhas been submitted by the Government of Turkey as the basis for a loan from theBank. The analysis of the technical and business aspects of the Project is arevision of an earlier report dated April 13, 1950. The scope of the projectfor which a loan is requested has been revised, earlier cost estimates havebeen adjusted and supporting information brought up to date.

This report is based on a detailed investigation of the project byMr. J.R. deFargues, Engineering Consultant to the Bank, on engineering studiesand designs prepared for the Government of Turkey by the International Engineer-ing Company, Inc. of San Francisco, California, and on recent data and informa-tion supplied by the Government of Turkey. The investigation of the Project hasbeen quite complete and comprehensive. It provides the necessary informationfor considering the Project as a basis for a loan to Turkey.

Principal features of the Project are presented in this report,along with detailed estimated costs and probable earnings. Conclusions arestated as to the basis on which a loan for the Project might be considered.

II. Description of the Project

The Project is a multipurpose development involving the -

construction of a dam across the Seyhan River near Adana, a hydroelectricpovier generating plant, a power transmission system, flood contrel and irriga-tion works. The direct benefits of the development rill be comfined to theAdana plain in Southern Turkey. This plain is triangular in shape wIith a baseon the i•editerranean coast of about 80 kilometers, having sides about 65 kilo-meters long terminating at the city of hdana. The plain is actually a deltaformed by three rivers and contains some of the best agricultural land inTurkey. The cities of Adana, Tarsus and iJersin located in this area areimportant industrial centers. The proposed location of the dam is at theonly site available for a dam on the Seyhan, if adequate reservoir capacityis to be obtained and if all its tributaries are to be controlled, and hencethe site must be utilized in spite of poor fcundation conditions.

The Seyhan dam, regulating the dovmstream -flow of the Seyhan River,will- serve three purposes, namely, flood control, irrigation and power genera-tion. The need of flood protection for the Adana plain has been recognizedfor centuries, Irrigation has also become a necessity to increase the agri-cultural productivity of the plain and to permit the raising of additional andmore valuable crops. Industries for processing agricultural products of theregion would need cheap and abundant electric power. All these considerationsled to the multipurpose development of vrhich the proposed dam is the pre-dominant feature.

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This comprehensive plan of development is the outcome of an evalua-tion of numerous alternative development possibilities which were investigated.The proposed system of irrigation for the area provides for the utilization ofalmost the entire dependable flowv of the headvwater streams and for the irriga-tion of the maximum area of the most suitable lands that can be served.' Storagefor poa,'rer and the appurtenant structures are planned to obtain the ma=Snumgenerat'ion of electricity practicable from the vwater released from the reservoir.'Storage for flood control will result in an appreciable reduction in the floodpeak and levees are designed to carry the outflow.

Stages of Construction

Construction of the comprehensive development is planned Ln foursuccessive stages. Included in Stage I are the flood control wrorks pre-viously started and rhich vrill be completed at the end of 1952, and a portionof the irrigation system.

Construction of wrorks included in Stage II, scheduled to start in1952, is now under consideration for Bank financing. The dam and power featureswill be constructed in this stage.

Stage III construction consists of the completion of the irrigationsystem. Expansion of the irrigation system will be started right after the damis built and wrill be completed in 1961. Stage IV is contemplated to occur after1965. It will include the third generating unit which vwould be installed wrhenthe demand for electric power exceeds the capacity of the presently projectedtwo generators and the expansion of substations, particularly to serve thecontemplated grovwth of the industrial load. A second transmission circuit is alsoincluded in this category.

Phase of Project Proposed for Bank Financing

It is now proposed that a loan be considered for Stage II of theProject, limited to the dan and povwer facilities. The structure will comprisean earth dam vith an integral power plant, and a flood spillway. The dam, writhits crest 70 meters above sea level, vrill have a height of 57 meters or 187 feetfrom its base and of approximately 50 meters or 16L4 feet above bottom of riverbed, and a length of 1,568 meters (5,144 feet). Excavation of about 3 millioncubic meters is required for stripping the foundation of overburden and a fillcontaining about L-l/3 million cubic meters is required for the body oi the dam.Suitable materials in adequate quantities are available at the dam site. Excava-tion, of all classes involved in stripping,, fills, channels, etc., will total morethan 10 million cubic meters. An 85-meter spillwvay for flood release, eciuipped vwithtainter gates,, will be built in the right side of the dam and v*ill have a capacity ofabout 5,000 cubic meters per second. The storage capacity of the reservoir to becreated by the dam is estimated at l1,450 million cubic meters (approximately1,176,000 acre feet), with a useful storage of 575 million cubic meters (approximate-ly 466,0oo acre feet). The reservoir area at spillvway elevation totals approximately4,9500 hectares,

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The intake of the hydroelectric installation is through a conduitbuilt through the center of the dam, on the downstream end of vihich areprovided valves to each of two turbines and additional valves for releasingwater directly for irrigation if the amount passing through the turbines isinadequate. A steel surge tank will be provided on this conduit betwreen thedam and powver house.

The power house will be of the outdoor type located on the down-stream toe of the dam. Station equinment will consist initially of two 18,000kilovatt Francis-type vertical units of 50 cycle frequency operating at 803povwer factor and 13,600 volts. These generators are designed to operate at aspeed of 136 rpm at a head of 105 feet. Space is provided for a third generatc2runit which may be added at a later date. The step-up substation at the powerhouse vwill consist of two banks of single phase transformer3, each designed tooperate in conjunction w%ith one generating unit. The switchgeur and otherauxiliary equipment will be conventional, This station rill step up thevoltage from 13,800 to 66,000 requirecd for transmission. Thie Project includesa 66,000 volt transmission line about 80 kilometers long from its switchyardto three step-down substations at Adana, T'arsus, and Mersin. The transmissioxnline wvill be a double circuit steel tower line, but only one povwer circuitwill be installed initially. The substations vwill be of 5,000 kva capacityand vill step down the voltage from 66 kv to 13.8 kv for local distribution.

Additional Phases of Project Not Included for Bank Financing

The dam wvill provide flood storage and dowvnstream regulation ofriver flow against excessive flood peaks. During the vwet season fromNovember 1 to April 1 the reservoir will be kept at a pool elevation of61 meters, or returned to this level following heavy rains as soon as practic-able, by regulated releases.- To provide adequate flood protection to the Adanaplain a supplementary system of levees is required, not only on the SeyhanRiver but on the Berdan and Ceyhan Rivers as well.

These flood control levees are practically ccmpleted. A total of$4,408,264 has been spent thus far on these works, and the estimated cost ofcompletion is $357,1h2. Present schedules call for completion by the end of1952. The levees on either side of the Seyhan start just dovmstream from thecity of Adana and extend to the ,Jediterranean Sea, a distance of approximately50 kilometers (see sketch map in Appendix). Levees are also constructed alongthe Berdan and the right bank of the Ceyhan, and these, together with thecollection canals along the foothills above the Adana plain, will functionas a part of the flood control system to protect the plain. These works willafford protection against floods of up to 1,250 cubic meters per second. Inthe unregulated river, flood discharges exceeding this amount occurred seventimes during the 20 year period from 1927 to 1948.- The study of these flooddata by the International Engineering Com,any indicated that discharges fromthe proposed Seyhan reservoir during these floods wrould not have exceeded800 cubic meters per second, a volume well vithin the range of protectionprovided by the levees. The provision of additional protection by levees forflood releases greater than 1,250 cubic meters per second is not considered tobe justifiable,

The irrigation works in this project are physically separate from thedam and power development. The Turkish Gavernment has already constructed a

diversion weir on the Seyhan River 3 km above Adana or 5 km below the pro-posed dam site, a main canal on each of the trio banks of the Seyhan River anda system of secondary and tertiary canals on the right bank,which provides adistribution system for an area about 17,150 hectares, The expansion of theirrigation system, which wrill be started immediately after the completion ofthe dam, vill be carried out according to a construction program showm belqw.,and v!ill be completed in 1961.

Schedule for Expansion of Irri. ation System

Year Area in Heoctares

1952 17,1501956 57,6001957 72,0001958 86,4001959 115,2001960 129,6001961 14 ,000

The plan of the existing and proposed irrigation system is shovmon the sketch map included in the Appendix.

As mentioned before, the power facilities will be expanded after 1965.

III. Streamflovr Data on the Seyhan River

Flow records are available for the Seyhan River at Adana datingfrom 1927. These records shov; a minimum flow of 36 cubic meters per secondand a minimum annual average of about 80 cubic meters per second. Based onstream flow data of record and on the seasonal drawdovwn required in theoperation of the reservoir for flood control and irrigation, the minimumfirm po-wer which vwould be available at 100% load factor 100% of the timewould be approximately 12,000 kw or firm poNwer of 23,000 kw will be avail-able 95,% of the time,which would permit a production of 202 million kwh peryear. 'iater for an additional 82 million kwh as secondary power wll beavailable during the flood season and the period of drawdown. The installa-tion of two 15,000 kw units appears, therefore, to be fully justified on thebasis of water availability and is necessary to meet expected peak loads onthe system.

The amount of silt carried by the Seyhan River has been studied inconsiderable detail, since this is recognized as a serious problem in connec-tion vith reservoir design. Thse amount of silt carried by the river isunusually high even in times of low water. However, in viei of the largevolume of dead storage in the proposed reservoir, it is estimated that thereservoir could function normally for more than 200 years even assuming anaccumulation of silt at the rate of 3 million cubic meters per year.. Theseca:Lculations indicate that the reservoir would have a sufficiently long spanof life to justify its construction from the standpoint of silting.

IV. Foundation Conditions for the Dam

It has been pointed out that there is only one site available fora dam on the Seyhan River which will provide adequate reservoir capacity for

this Project. Unfortunatelyp the foundation conditions on this site arepoor. The basic formation is a miocene blue clay which is covered vwithsuccessive layers of conglomerate, red clay and alluvial deposits. The depthof overlay on the impervious miocene clay approximates 36 meters. The con-glomerate is a mass of cemented and partly cemented coarse and fine material,and incorporates boulders, coarse gravel and sand, with lime as the bindingmaterial. The practical interpretation of the geologist exploring the founda-tion conditions at the dam site was that the cementation of the conrlomeratebelovw the alluvial area near the river bed is very weak or even non-existent.in the flanks the cementation is more uniformly developed4 It vras theseconditions which led the International Engineering Company in its design ofthe dam to provide for foundation excavation to be extended to sound con-glomerate, and below this, for a core trench along the center line of the damextending into the miocene clay so as to provide an impervious seal tied intothis stable material.

D-e to the nature of the foundation conditions and the t7;-,De ofmaterials available for building the dam, unusual precautions have beentaken in the design to provide for drainage and to prevent landslidesi Onthe basis of curvent estim.ates, 3 million cubic meters must be excavated toprovide a base for the dam. Howtever this is by no means a firm calculation.An overrun is more likely than an underrun in the estimated quantity of ex-cavated material.

The engineering data on the vworks under consideration by the Baikwere revievwed in the planning stage by a Board of Consultants comprised ofLessrs. John S. Cotton, John L. Savage and Karl Terzaghi. In this Daord'6formal report, dated November 5, 1949, the conclusion -was reached that thedam could be safely constructed at the proposed site provided certain featuresof the dam were redesigned. Such modifications were made by the projectengineers in their final designs. The Board's report particularly dealt withfoundation problems, stability of the structure, and provision against seepage.In the circumstances, it is essential that the Project have the services ofan experienced engineering organization to prescribe and check compliance withthe plans and specifications during construction. Furthermore, a highlycompetent contractor must be secured on this job so as to assure a carefulselection of materials and their proper placement. This point is funda-mentally important.

There is little question that suf4icient materials for constructingthe dam are available in the immediate areas Large deposits of red clay suit-able for use in the core -f the dam exist on the left bank of the river andby classifying the conglomerate which Will be removed in the ecmavation forthe foundation, sufficient coarse material of proper quality can be obtained.

V. Estimated Cost of the Project

The International Engineering Company has submitted an estinatedated January 24, 1950, covering the eouipment and construction work requiredfor the dam, power station, transmission lines, and substations. This estimateis admittedly out of date. The Company would charge a fee of $50,000 to makea detailed revision of the estimate at present day pricesd It has, however,made a calculation of the increased costs and this revised estimate is givenbelow.

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In the opinion of the Bank's engineering staff, it would seemprudent to include in the estimate an allowance for contingencies of 10%of the foreign exchange costs and to allorw for an increase of 20%o on itemssubject to escalation such as turbines, generators, fabricated steelstructures, etc. Allo-;.ance for these items is included in the revisedestimate given belowv.

Estimated Cost of Stage II of -:',ultipurpose t-roject included in Proposed Bank Loan

(in thousands of US dollars or equivalent)

Item Foreign Exchange Local Total'Su Nr7Zru-rope-nTotal Currencychases Purchases

Purchase of land and high-wayrelocation 580 580 3,191 3,771

Construction 6quipnent 2,593 1,668 4,261 - 4,261

Dam materials, supplies andconstruction 3,918 6,187 10,105 6,028 16,133

Electrical generating ecuipmentand transmission facilities 443 4,321 4,764 1,228 5J,992

Engineer's and contractor's fees 2,531 - 2,531 192 2,723

Sub-total 9,485 12,756 22,241 10,639 32,880

Allowrance for contingencies,10% on foreign exchange 9L8 1,276 2,22 - 2,224

Allowance for escalation, 20% onselected fabricated items 272 463 735 - 735

Grand Total 10,705 14J495 25,200 10,639 35,839

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Interest during construction is not being rev'uested as a componentof the cost of the works to be financed by the Bank%, The total cost ofStage II of the Project, x;ith interest included, and the net cost after adjust-ment for salvage of equipment is slhovwn below in US dollars or equivalent:

Cost of 'works submitted for Bank financing US$ 35,839,000Interest during construction 2,361,000

Sub-total (funds required) 4 36,20600Equipment salvage value 1,277,000

Net cost (investment) 1 36,923,000

The cost estimatps of equipment and supplies are based largely onU.S, prices. It is probable, hovrever, that many of the equipment and materialsitems may be purchased in Europe. H;ence savings are not unlikely.Suitable and dependable construction ec.ripment to withstand more than24 months intensive use will be required. The process of procuring principalitems of this equipment vwill require from 8 to 12 months, depending upon whetherpriority ratings are applied. The Turkish Government desires to ownn the equip-ment at the end of the Seyhan job so that it wiill be available in the countryfor additional heavy embanlc.ent work. On a current basis, the item of construc-tion equipment vwill probably run about $h.26 million. It is estimated that theequipment will have a salvage value at the end of the job of wl,277,0O0.

VI. Schedules of Construction and Expenditures

As presently planned, the Turkish Government contemplates comple-tion of the dam and power installation in four years. It is contemplated,however, that alternate bids vill be invited for completion in three years,provided procurement schedules for the construction plant and for the construc-tion equipment items have progressed to the point of assuring deliveries intime to utilize the full construction season of 1953. Such initial work asproviding the access road and construction camp and plant, procuring equipment,preparation of final designs, etc, will begin about mid-year of 1952. Basedon the four-year schedule, actual work on the dam wvill begin after the end ofthe flood season in !~ay 1953 and the embankment work will be completed by theend of 1955. Power generation should begin by February of 1956 and finalinstallations and clean-up should be completed by mid-year of 1956.

Four-Year Construction Program

Srieted It52i 2 1953 1954 195

Access roads and oonstruction camp xStripping foundation (first stage)Embankment XXX xTransmission lines and substations xxxxxaPower generation xxxxxxFinal clean-up LXX

A schedule of currency requirements by years is indicated in thefollcwimg table for the four-year construc~tion schedule:

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Estimated annual Expenditures, Stage II(in thousands of US dollars or equivalent)

First Year Second Year Third Year Fourth Year Total1952-3 1953-h l954-5 l955-6

Foreign Currency

Expenditures 6,35o 7x7.50 6Y860 4,260 25,200Interest duringconstruction 302 770 1YO89 - 2,161

Local Currency

R)xpenditures 1,000 4,000 4,OCO 1,639 10,639Interest during

construction - - 200 - 200

Totals 7,652 12,J20 12,129 5,899 38,200

No interest on local currency expenditures is shownm for the firsttwo years because the Government presently contemplates that these funds wMllbe provided from budgetary sources, on which interest will not be charged(see Section X below). Interest during fourth year of construction period isconsidered an operating expense.

II.. Allocation of Costs to the liultipurpose Aspects of the Project

The estimated cost of the several stages of construction of thecomprehensive Project is as follows:

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Estimated Cost of Full 1ultipurpose Proiect(in US doliars or equivalent)

Foreign Local TotalCurrency Currency

Stage I

Irrigation worfis completed to date 5,811,161Flood control works completed to date 4,402,264Reouired for completion flood controlworks, 1952 357,142

Total 10,576, 567-

Stage II

Irrigation features 5,877,656 2,543,8'1 8,421,66-,Flood control features 5,877,056 2,1,.3,810 2L?l,6,

Povwer features 15,605,267 4,474,330 20,079,607

Total 27,361,000 9,562,000 36,923,000

Stages III and IV2/

Irrigation Features 3,493,000 13,711,000 17,204,000Power Features 2,472,600 - 2,472,600

Total 5,965,600 13 1711,000 19,676,000

Grand Total 33,326,600 33,8499,567 67,176,167.

In this project the allocation of investment for the dan andappurtenances between the three functions of the Project wras simply made.The allocation method wias specified by a Cabinet decree of February 18, 1952Jand consisted of identification of the cost of the power ins'allations, asseparately chargeable to power, and of consideration of the remaining costsof the dam structure as common to flood control, irrigation and povwer, viithan equal share allocated to each. Thus of the total cost of Oita-je II of"36,923,000, the separate power facilities were estimated to cost Si1,658,o0O,and the remaining cost of ,25,265,000 vwas divided ecually amaonr the threefunctional purposes. The costs of the separate flood control and irrigationvrorks comprising the multipurpose Project were included in the totals charge-able to the various functions of the comprehensive multipurpose project. Thetotals thus determined (and shovm below) are used in this report in estimatingfixed charges.

1/ Scme expenditures for Stage I required foreign currency, but were financedfrom domestic resources. No breakdown between foreign and local currencyexpenditures is available.

Funds for the second transmission circuit, referred tc on page .3, are, not^included.

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Estimated Cost of L.ultipurpose Project, by Function(in US dAollars or eqjuivalent)

IrrLi-ation Flood Control Power Total

Stage I 5,811161 h,765,L4O6 - 10.,576,567

Stage II 8,y21,666 E,421,667 20,079,667 36,?23,cooStages III and IV 17,,20 ,c00 _ 2 272,600 19,676,600

Total 31,436,827 13,187,073 22,552,267 67,176,167

VIII. L.anagement

The construction oi hydraulic wvorks in Turkey is noi; hmndied chieflyby the Linistry of Public .orks,which has a large technical Stb&± cn:l anexperienced admznistrative organization. The existinC irrigation and floodcontrol works in the Seyhan Valley included under Stage I were constructed bythe Mlinistry.

The construction of the dam, reservoir and power facilities underStage II will aLso be a responsibility of the li.nistiy. The services of aConsulting engineering firm will be secured to assist with the technlial phasesof the construction. Construction contracts will be negotiated with e:..periencedcontractors, and international competition will be invited. The qualificationsof the consulting engineering firm and the terms of its responsibilities shouldbe subject to Bank approval. Similarly the bank should require that t'e generalcontractors meet certain standards of qualification, in order to as2ure competen;*rorknanship.

The policy of the Turkish Government, set forth in a Cabinet decree,provides that flood control and irrigation services will be a governmentalresponsibility. For this reason, it is planned that the irrigation systemx andthe flood control structures and the dam itself .ill, after construction,remain under the control and administration of the Government and be operatedby a "State hater .orks Adimnistration" to be estab'lished urder the inistryof Public wiorks to construct and operate all varieties of hydro installaticns.(The Bill to establish this Administration is now before the Grand .>ational

Assembly.) Horwever, it has been found desirable to form a corporation to whichthe poemr-generating and transmission facilities will be licensed for opera-.tion. Both the Government and private capital will share in the eqzity of t'iscorporation, the Cukurova Power Utility Company, vwith the majority stock beingheld by the private stockholders. The franchise granted th-1e corpjoration willbe for a term of 49 years and T.11 authorize the transmission anuL sale of po;erto municipalities, and to industrial consumers iiho use niore thlan ~5O0 kilowatts.Rates for electric power will be fixed, in accordance .,ith the *rovisions ofthis license, in such manncr as' to enable the utility cof.l;any to earn revenueslarge enough to mect the annual operation, administration and maintenanceexpenses, replacement reserves, charge for wiater, special reserve for amortiza-tion and taxes and to distribute a dividend to stockholders. To cover theone-third of the cost of the dam allocated to powor, estimated as .: 8,421,667,the corporation rill be charged for vwater use thrcugh an assessnent of 1.5 kuru.eper kwih (O.52 cents) on power sold to custcmers.from-1956 to 1965 and 1 kuru3(0,35 cents) afterwards

The assets to be transfer-'ed to the mixed power utility corporationwill consist of the instal.ltions of the Project which serve exclusivelyr togenerate and transmit clectric povier., The capital of t'e corporation wl el beequal to the cost of the e:.clusively power features of the project plus aboutTL 2 million for operating purposes, the total currently estimated at TL 30million. Of this amount TL 16 million has been allocated to private capital, an:'and subscriptions of this amount are nowv being received.. The initial capitalof the corporation wvill be TL 16 million. l'Ohen this has been subscribed, th-ecompany will become a le-al entity. Subscribers wiill pay in 25,. of the a.:ountsubscribed at the founding of the corporation, and will pay in an a`litionalone-fourth annually for three y,ears to complete their subscriptions.. Of theTL 16 million capital, the corporation vjill transfer TL 14 million to theGovernment during the period of construction on account of install>tions whichwill ultimately be transferred to the corporation. it the > ination ofconstruction, the capital of the corporation will be cre.-.ei tc. ''- 30 million,and "iL 14 million of stocks ;rill be delivered to the _tibank- acting on behalfof the Treasury in return for the Goverm.entts outlays for the -..orrcr installa-tions. The Etibank is a state-owined bank enCaged, amnong other thu-.gs,. inbuilding and operating power projects, and is authiorized by its statutes toparticipate in this kind of corporation.

The exact value of the power installations to be turned over to thecorporation will be fixed wvhen construction is completed. Should that value oegreater than the amount estimated, the capital of the corporation vYill beincreased accordingly. T'he Govern.ment hopes to be able to r,ile up) tho dIff-.erencefrom private subscriptions, in order Qo naintain private cf.;in i,> of t.e conpaq

IX. Justification of the Project

Justification of this ,'roject is based on three principal considera-tions: (1) savings resulting from the prevention of flood damage on the Adanaplain; (2) increased agricultural production resulting from irrigation, a partof w-Aich can be exported; and (3) production of electric power.

Flood Control Benefits

The Adana plain is the second most prod'uctive a-ricultural area 'nTurkiey and its contribution to the countryrts economy, can be greatly enhancedby its protection from floods and the availability of irrigation water. 'Urnderpresernt conditions the winter wiheat crop is frequently .lamaged, in de-reesvarying aith flood intensities. Knowing that floods are practicall;r assured,the peasants refuse to plant cotton before I..ay lst, *which runs tle harvest intothe next rainy season so that the yield is decreased by Jiscelorztion and damage.

The annual flood control benefits of the project are both direct andindirect. The measure of the direct benefit is the average annual loss whichno,r occurs because of floods. This .-s -sti-nated by thlC Govc-rnm,entby taking a 100-year period, and calculating from knoim records hlolJ many :lcodstould occur, hotr large they would be, the damage caused by each, and taking anaverage. Thus it vras calculated that in 100 years four floods of 2100 cUDicmeters per second (cms) or more may be expected. Two of these would be 2300 cmsor more and of these tvwo, one will be 2500 cms or more. Proceeding in thismanner, the follovwing figures are derived.

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Estimated -lood Damage

Seyhan discharge frequency in Damage at each Total danlage inrate, cubic meters 100 years discharge rate, 100 years, ILper second TL

2500 1 10 , c00 o00 10,50o,oo2300 - 2500 1 9,900,000 9,900,0002100 - 2300 2 9,900,000 l8,4oo,ooo1800 - 2100 6 8,Loo,ooo 50,Loo,coo1550 - 1800 10 7,700,000 77,0O0,000950 - 1550 80 6,000,000 L8o,oco,Joo

T o t a 1 646,200,000

The average annual direct flood damage i as calcuilated as onehundredth of this total, or iL 6,462,000, about $2,310,00). ii,e indirectdamages such as disruption of traffic, sickiness, and ocasicnally loss oflife, vwhich cannot be accurately assessed, were estilati c.t 'I, oi thedirect losses or dM62,000. Thus the total annual flood control benefitsto the Turkish economy could be estimated at approxirately .,2,772,000. Noestimate can yet be made of the e.pected increased tax revenues resultingfrom upward revaluation of land values attributable to flood control services.

Irrigation benefits

The principal crops raised on the .'dana plain are wh.eat and cotton.The average area planted in each crop in the recent past has beer, about equal,although cotton novw predominates, and comprisestogether about 90; of the agri-cultural lands. Cereal production in the area represents only about 0.9'0 ofthe total production of lurkey, while about 30', of all the cotton )roductvionof the country occurs in the .dana plain.

The Seyhan project vill provide gravity irrigation to a total of14",000 hectares, and about 95' of this would be cultivable. Of this area17,150 hectares are presently irrigated. The needs for irri7'ation areextremely variable from one year to another. Past exsperience indicates thatabout 10" of the acreage recquired irrigation in a wet year, or about $0< ofthe time, and under' such conditions the demand for water may be very limited.The requ-rements for irrigation for an average year can be provided from theSeyhan River without reservoir storage. But the availability of irrigaticnwill provide insurance against dry years and viill permit summer cropping asvrell as cultivation of nevr and more valuable crops. Irrigation for instancewill enable farmers to sow the area ULth a summer crop likle esi..e;, and acreageof this crop is expected to increase greatly. Like-rise citrus groves and truckcrops depend on a reliable vwater sup ly throughout the summer. The assuranceof timely cultivation and the opportunity for crop diversification will begreatly beneficial to the entire area.

Despite the recent predaninance of cotton, it is likely that in thelong run there ivill be a crop rotation in which cotton acreage equals theareas under winter crops. A new cropping pattern has therefore been assurmedin which cottons vrheat and sesame are sown in equal areas of about 60,000 hectareeach, and about 7,000 hectares each devoted to citrus and truck farming. Based

- 13 -

on this pattern of cultivation - on the basis of available information onimproved yieldas under irrigation- tne increase in farming profit for the entireAdana plain has been calculated and' is shown in the follo-ring tabulation. In

-calculating tlhe incremrnt of profit, it has been recognized that adequately wetyears for some crops occur 50' of tle tin-ie and hence credit has been taken foronly half the added profit in the cases of wheat and cotton.

Estimated Increase in Crop Value and in FarmingProfit Iesu nTt Dr-, Trri7Fation

Increase Price Value Increase in cost Added profitCrop in yields added of production

-(kg/ha) (m7Wz na) ha ((L/ha)

Cotton lint 290 2.0 580Cotton seed 325 0.2 65Total cotton farmvalue, 75jO of seedand lint 480 160 320',heat 3Lo o'.2C 95 30 65Sesame 420 o.6 252 100 152Citrus fruits 2200 3.0 6600 Lo4o 2600Truck gardens - 4500 3500 1000

Total area Added Net added Total addedCrop sown profit profit profit

(ha) (TL/ha) (million 1 X )

Cotton 60,000 320 160 9.6'.heat 60,000 65 32.5 2.0Sesame 60,ooo 152 152 9.1Citrus fruits 7,000 2600 2600 2W.2Truck gardens 7,000 1000 1000 7.0

Total 194,000 45.9

Thus the total increased annual profits of TL h6 h,illion indicatea return of TL 237 (;Q8h) per hectare of area cropped, or a return of TL 336(118) per hectare of cultivable land served with irrigation. It should bepointed out that the total investment allocated to irrigation (,31,437,000)results in a capital cost per hectare for the 144,000 hectares served ofapproximately ¢9.218 per hectare; 'This investment seems to be iiell justifiedby the potential net average annual gain of 4118 per hectare rlro; ing out ofirrigation use.

The estimated increases in yields and in profit to the farmer wrillreadily permit pa-,mont for irrigation service at a r%to to support allcosts allocated to chis feature of the Project. The net profit to the farmerwill be sufficient to encourage irrigation and will permit urgently needed

1/ From 160 kg per hectare to 450 kg per hectare of cotton lint, and from' 297 kg per hectare to 621 kg per hectare of cotton seed,

- 1L -

improvements in farming methods and the modernization of farms. The Govern-ment has established three experrment stations in the adana plain to conductresearch and demonstrations for the peasants, on correct met:cds of irrigation.Additional demonstrations are being carried out in a nimber of villages onselected farms to acquaint farners vith good irrigation practices.

Electric Povrer Benefits

The area to be served by this pro3ect is short on electric power.At present electric power in the region is generatled in the three munici,al-plants of Adana, Jersin and Tarsus and in t;welve industrial plants. In addi-tion to the electric power used, about 50 industrial establishraents are usingmechanical pov.mlr. The installed capacities serving the region total 3,171 kvof electric generating capacity and mechanical porer of the equiv:alent capacst:tof approximately 8,000 kw. Generally speaking, these simall pover plants areexpensive to operate because of the high costs of fuel and because of the lowmechanical efficiency resulting from the use of worn equipment.

Electric power consumed in the region in 1951 totalled 24,721,9g6 6&.This represented an increase in use over 1950 of approximately 14h.The increase the previous year had been 8%. These increases have bern realizeddespite undependable service, high rates, and other factors limiting the -se ofelectricity.

(a) Industrial Use

The industries in the Seyhan Valley and adjoining areas are prLmarilyengaged in. processing and packing aZ ricultural r-roducts and ccnverting thoseproducts into finished goodls. The -rincipal i-ndustrial activities consist ofginning cotton, extracting and refining cotton seed oil, producing soac, spinn-ing yarn, weaving textiles, packing citrus fruits and manufactu:'ing packing case.A number of small plants are engaged in the manufacture of hard,iare, agriclulturi<implements, leather productsar.d foindry vrork and in the repair of tractors, agri-cultural machinery and transportation vehicles. She industry of the area isto a large extent concentrated in the cities of kdana, Tarsus and .Uersin al-though a few agricultural processing plants are located in tne other srallertowns of the Seyhan Valley, such as Ceyhan and Yenice.

The present level of inrdustrial development of the area is far belo-,the desirable requirements and there are good opportunities for future exnan-sion. A logical and effective development of industry can begin wiith theexpansion and increase in number of plants which are processing agriculturalproducts, spinning yarn and veaving cotton textiles. The Turkish representa-tives recognize that new industries and expansions of existing processir1gindlustries require large additional investments of capital, which is reportedlyavailable in the region and country. The new agricultural and power resourcesof the Seyhan valley provided by the Seyhan project and the adequate supply oflabor in this area offer a strong base for futlre industrial development.On the basis of these assumptions the Turkish Goverrnment estimatesthat industrial power requirements vill amount to 125 million kwh in 1965.

(b) Domestic use

At present the use of electricity in homes is largely li.wiited tolJighting and radio operation, Furthermore, in the three urban centers of

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kdana, I5ersin and Tarsus, less than one th-rd of the houses are wfired forelectricity.

ULiost of the cormunities in the Sevhan Valley power market area, withthe exception of these centers, consist of small tovms, large and sm-iall villages,and farms. The high tension transmission line leading from Adana to ;hersinwrill run near important agricultural trading centers, -hose combi^ed populationrepresents about 40' of the population of the area. In these rural &re-s, only-kerosene lamps are used for illumination purposes and considering that one kv4hof energy in the form of lighting as produced by a kerosene lam-p costs about0.90 TL, considerable shift to electric power in the rural districts is predicted.

The Turkish Goverrment predicts that the average consumrtion ofelectricity will increase to an average of 70 k;h per capita per year forresidential use in urban centers by 1965, a figure comparable to present ccn-sumption in Istanbul and Ankara. This consumption vrould amount, n-ith a totalestimated urban population of 30L,000 in the area in 1965, to 21,300,0O kv-hof electrical energy per year, not including the possible rural corsumption.

(c) Governmental and Municipal use

Little electric powier is nowr used for vrater su-,ly,% r9oses, andpractically none is used for sanitary installations. On tho sthV2r hand,hygienic requirements together irith the fact that ve,, .igh tz-nr-r. Vuresprevail during summers, make desirable a much higher consumption o; vaterthan is at present consumed in this area, which will considerably i ncrease thepumping requirements of urban centers. Street lighting is also inadequate atthe present time, and should appreciably increase if a dependable and reason-ably cheap power supply were available. Included in the requirements forgovernmental use are the requirements of the new port facilities at Lersin andfor the neww airfields now under construction in the area.

Viith all factors considered, it is estinated that municipal andgovernment uses in 1965 will constitute, including the lighting of governmentand municipal buildings, street lighting and the use of power for pumpingstations, about 5, of the total use of electricity, and will aqcount forapproximately 7,8202000 kvih.

Based on the foregoing assumptions and forecasts, povwer use in theregion would reach 154,000,000 kwh in l965, as follows:

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Probable Power Requirement in 1965_~~~~~~~~~~~~

1. Industrial useCotton ginning 20,000,00Cotton textile manufacturing 6oSeed oil processing 20,000,000Food canning, refrigeration, andother related small industries 8,0co,ooo

Cement manufacture 12,000, 000Small auxiliary industries such asfoundries, repair shops etc. 4,880,000

Sub-total 124,630,000

2. Domestic use 21,300,000

3. Governmental and municipal uses, in-cluding street lighting and pumping 7,820po00

Total 154,000,000

when distribution losses are taken into account, gross generation of approxi-mately 164 million kwh would be required to serve the above requirements.This compares lith a potential annual power production available from thefroject of approximately 200 million kic:h from two generators and of ultirately284 million kwh when the third generator is added. The forecast of pover con-sumption has been tabulated for the period 1951 through 1965 and is attachedas Table I of the appendices of this report.

The anticipated benefits to the area from irrigation and power maynot develop as rapidly as predicted. Certainly a rise in ircome and in thestandard of living wvill need to precede increased domestic po;er use to theextent contemplated. The industrial and agricultural expansion foreseen in-evitably wtould be accorpanied by a rise in income, which wold facilitate thepurchase of appliances. it is recognized that the forecasts o-f 2owuer use areoptimistic. But even if the estimates of use are not achieved to the degreeor by the time anticipated, the validity of the Project would not be seriouslyaffected, for their ultimate realization may be expected particularly if a con-structive and diligent educational campaign is conducted to acquaint prospectiveusers with potential benefits.

X. Revenues, Expenses, and Net Earnings

Revenues fram the Project will accrue from sales of electric powerand irrigation vwater. The Cukurova PoFwer Utility Compang wiill operate thepower facilities as a private enterprise, and besides carrying its operatingcosts and debt service, vrill return a profit to the stoc!holders. The State'iater 'iorks Administration will operate the irrigation facilities on a brepl"-even basis, with rates fixed annually to cover expenses, including foreigndebt service. Interest on local currency expenditures is not included as anexpense. The flood control works w7ill be operated by the State 1,7ater '.orksAdministration as an expense of the Government .

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Povrer Revenues

The averag,e vrholesale rates to be charged for pcw-nr r1uring the firstten years of operation have been estirzated as follows:

Expected Average ,nholesale Fates for Seyhan Powrer

Year Rate TL/kwvh Equivalent cents/kwh

1956 0.08 2 -61957 0.075 2.45195,8 0.075 2.4519,59 0.070 2.451960o 0.070 2.45196,1 0.060 2.11962 0.060 2.11963 0oo50 1.75106h 0.050 1.751965 0.050 1,75

The above rates compare with the oresent cost of production per kw-;hin the Adana, Uersin and Tarsus miunicipal plants of TL 0.131, 'L 0.185, andTL 0.261 (or h.59, 6.4S and 9.14 cents) respectively. The average retail priceof electric power in the Adana plain in 1951, including taxes, -wras TL 0.20(7 cents) per lkwh, and even at that high rate the demand exceeded the supply.-

Irrigation Revenues

The bill creating the sitate ';ater i.orks Administration establishesthe policy to be follo;r'ed in fixing annual rates for irrir-tion service andfor provision of debt service payment. The rates vary for t'ne period ofconstruction, the neriod of initial operation wvhlch is not tv exceed the nextfollowing ten years, and for the period of full operation thereafter. Fundsadvanced by the Goverment for construction of the irrigation features of theproject vrill not bear interest but till be repaid to the Treasury in the periodof full operation. R.epayment vrill be made in 35 equal annuai. installments be-ginning not later than 10 years after completion of the irrigation facilities,estimated for 1961.

1/ The present retail electric rato structure and per capits consurpftior. inthe Adana plain is as follows;

Adana Mersir TarsusTL Cents TL C.nts L Cents

Domestic rate, kwrh 0.30 10.5 0oh0 o 1.0 0.35 12.25Industrial rate, kwh 0.16 5.6 0.23 5.1 0.175 6.13Street lighting, kwh 0.16 5.6 0.255 8.9 0.175 6.13Annual average consumptionper capita, kwh 87 40 18

- 18 -

Tent<ative opOrltion and maintenance charges during the full ope'rsitionperiod wiill be determined each year by dividing the total operaticn costs ofthe previous year by the irrigated area. Rates viwill be fixed an-nually icrvarious crops, so that the irrigation operations will be conducted on a break-even basis. At the end of each year the operation charges will be determinedaccording to actual expenses incurred for that year, and the farmers will bedebited and credited accordingly.

Based upon the foregoing principles the idinistry of Public Viorksestimates that charges for irrigation water will be appro,tdmately as followis:

Proposed Average irrigation Rates

Year TL per hectare EquivalentUS4 per acre

19516 1T.0 2.571957 18.5 2.641958 22.5 3.2219,59 22.5 3.221960 25.0 3.571961 25.o 3.571962 25.0 3.571963 25.0 3.571964 25.0 3.571965 25.0 3. 571966 and thereafter 32.4 4.63

These rates will be somewhat higher, on the average, than thoseprevailing in Turkey at the present time. The prevailing irrigation ratesnowi in effect are as follows:

TL per hectare Irrigated land use

Uheat 10.00 3.9%7Cotton 15.00 69.7%Truck 45.00 13.2%Citrus 25.00 13.2%

100 .0%

The weighted average present rate based on the above crop rates and theirrigated land use is TL 20.1 (.v2.87) per hectare. The Talrkish officialsbelieve that farmers will readily pay the anticipated rates in vievw of thoavailability of an adequate and dependable supply of irrigation water.Certainly this can be accepted if it is assumed that agricultural priceswill retain a good relative position.

It seems likely that the irrigation charges predicted by theGovernment on the basis of preliminary estirates of the cost of construc-tion of the ,?roject l-ill be somerwhat inadequate to meet maintcnance and opera-tion charges and vrill need to be slightly increased as indicated on page 20~Since the operation is set up by law on a break-even basis, a variation in rateswrlll not affect other features of the multipurpose .roject.

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Flood Control

Flood protection vworks are undertaken by the Government as a publicservice and capital costs allocated to this function of thel;roject are notsubject to repayment from direct revenues. No direct revenues will derivefrom flood control services and all expenses of flood control features of theSeyhan -Project v,ill be borne by the Government.

COperation and :.aintenance Costs

The working capital for the operation and maintenance of the irriga-tion and flood control features of the Seyhan Project vwill be secured from theNational Budget by the State .ater luorks Administration as provided .in theBlill. Operation and maintenance costs of power facilities will be paid fromrevenues of the Cukurova Power Utility Company.

The operation, maintenance, and administrative costs of the variousfeatures of the Project have been estimated as follows;

i. Dam and reservoir: Annual operation and maintenance cost of damis estimated at about 0.5X0 of its cost or approximately "126,000. Thisexpense is allocated equally to flood control, powrer and irriZ.-tJone

ii. Power features; Annual operation and maintenunce ccst of thepower house, transmission lines and substations, includin, a`ministrative andgeneral expenses of the Cukurova Power Utility Company (on the basis of anorganization chart and materials budget furnished by the Government), is esti-mated at 4'357,000 (approximately TL 1,000,000) at the beginning of operationin 1956. For the following years a 5% annual increase vwas assumed. Thus forthe first ten years the annual average operation and maintenance costs of theexclusively power features amount to approximately $449.,000.

±i4. Irrigation features: Annual operation and maintenance cost of theirrigation systm is based on tho cxperiencn in maintaining .xissting systr-msi.n Turkey. Present costs approximate TL 10 per hectare (.il.42 per acre)..

iv. Flood control features: Annual operation and maintenance cost o,flood control features is estimated at approximately 2% of the constructioncost or $100,000.

Based on the foregoing computations the summary of annual opera-tion and maintenance costs is as follows:

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Estimated Operation and llaintenance Costs(in US3 dollars or equivalent)

L1956 ,Xvorage 1956-65

Po'ier features

Dam and reservoir 42,000 42,000Power facilities 357,000 Lh9,Coo

Sub Total 399,000 491,000

Irrigation features

Dam and reservoir 42,000 42,000Irrigation facilities 74,000 311,000

Sub Total 116,000 353,000

Flood control features

Dam and reservoir L2,000 O2,000Levees 100,000 100,000

Sub Total 1L2,000 142,000

Grand Total 657,o00 986,000

Tables II and III attached as ap,Dendices respectively shovw tr.eincome and expense and net revenue estimates for the power and irrigationoperations. Table II indicates that the Cukurova Powfer Utilityiv Cor any, underits license, from the outset can be expected to meet all o)er.uting expenses,payments to the Government for water rights and taxes and, in aClddition, accruea substantial annual net profit. The Government will slare in t!ese netprofits, as a receiver of l/30ths of the capital stock of the ccm;any, o..corporation taxes amounting to 10%O, of net profits and of inc)Jme tax to theextent of 15% of dividends distributed to private shareholders.

Table III presents an expense and income'statement of the irriga-tion portion of the multipurpose rroject. Incone in the table io basedon the scale of irrigation rates quoted in this report. The proposed lawgoverning the irrigation-operations specifies that rates salal be fixed arLnuall'-to..-yield revenues sufficient to enable the operations to approximate, on theaverage, a break eTen level. Annual charges for irrigation -w-ill be as5essedon the basis of land and crops serviced, irrespective of annual wrater use. Theannual collections vill not depend on the dryness of the season and thereforevwill not fluctuate as between wet and dry years. Basel on tIhe areas ascumei tobe serviced, the Table indicates a gross income for the ten -,ears 1956-65 in-clusive of '7,444L,000 and an accumulated net deficit of $392,000d thereby ,ndicaing that rates would need to average about 5% higher than those assumed if theoperation is to break even by 1965.

Table IV presents the cost of the multipurpose' project to theGovernment and shovrs the estimated annual amounts of the subsidy to be met

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by the Treasury. In this Table the net costs, or profits, from the floodcontrol, irrigation and pov:er operations are shown in sum,mary. In the powveroperations, credit is taken for direct payments by the Cukurova Povwer UtilityComupany for water rights, for the Goverument's share of its net earnings andfor taxes. The annual debt service expense of the Treasury for the foreignexchange component of the po;;er and flood control investments is included aserp-nse, as are the operation and maintenance costs of flood control services.1'jhile it may be debatable, interest assumed at 5% on the local funds investedin flood control, power (except the private equity) and irrigaticn facil-tiesis showvn as a Treasury expense although it is recognized that these capitalcosts, at least in part, may be met from current taxes. No credit is sh'om asincome to the Treasury for tax income resulting from increared property valuesat-tributable to irrigation and flood control, or for other increased taxreceipts attributable to beneficial developments resulting from the project.Colum-n (7)of the table therefore purports to show the annual burden on theGovernment to make the development possible and to operate and maintain it.

Table V represents an effort to compare the annual costs incurredas a result of the existence of the iroject wiith the direct benefits expectedto derive from the Project. As in Table IV, there appears no basis for cal-culating the indirect benefits from the use of the povwer in the region, norfor calculating the cost of obtaining such benefits. Nonetheless the calcula-tions made in the Table would seem to yield a conservative estimate of thedirect economic benefits obtained, Given these limitations, Table V indicatesthat the net excess of benefits over costs would be approximately $11 millionupon completion of the irrigation system in 1961 and would rise to approximately-$17 million by 1965, and indicates the worthwhileness of the Project to theeconomy of the country.

XI. Recommendations

From a technical and business viewpoint the proposed Project seemsapzropriate for Bank financing. Howevery appraisal of the Project indicatesthat the following conditions should be required of the Turkish V`overnzent ifthe Bank decides to grant a loan for the Project.

1. That the consulting engineer engaged by the Borrower to orepareplans and specifications and to supervise the construction of the Project, andthe scope of the duties which he is to perform be satisfactory to the 3ank;

2. That the quali,ications for the principal contractors be satis-factory to the Bank as a prerequisite for participation in international biddingand

3. That, although construction schedules are now set up for a fouryea,r construction Deriod for the Project, the Turkish Government should makeits best efforts to invite alternate bids for completion in a shorter pertodin order to test the feasibility and economy of a shorter construction schedule.

Neil Bass

April 28, 1952

FSTIDAAT-FP ET,RCTRTC PCOWER COWSD1P7rCRl= SGYHkN POTWSER DISTRIDUTION ARr-A 1/(in thousanls of kwh)

Power supuliedc Potwer Produced and Con- Seyhan Power Net Total Total of Electricalto Industrial sumed by Industries Supnlied dir- Electrical and 14echanical .ower

Government Users by Mounici- Mechanical e.ctly to Indus- Power Produced to serve

Dcmestic & Municipal Street pal Powzer Plants Electric kwh tries using Consumption area

Year Use Buildings Lighting Pow%r _suivalent ever 5C0 kw(1t 25 (3) _ ~~~ ~~(4) ()(6) (7 W _ 9_(C

i946 1,321 286 386 5,730 9,549 17,272 -

1947 1,710 284 497 5,316 10,682 * 18,4891948 1,767 293 568 4,429 11,161 13,890 18,217 *

1949 1,930 730 674 5,755 11,018 * 20,1C9 *

1950. 2,613 380 801 6,902 11,030 21,727 *

1951 3,263 392 839 6,128 14,100 14,400 24,722 40,716

1952 3,769 426 880 6,766 15,900 16,260 27,741 L45,760O

1953 4,300 458 930 7,468 17,144 17,200 30,300 49,5 ;l,

1954 4,875 490 980 8,287 21,179. 15,200 35,811 53,279

1955 5,410 522 1,040 9.225 23,803 15,000 40,0CO 57, (31956 6,100 565 1,110 16,695 16,000 lt633C 44,0C0 63,530

1957 7,070 621 1,200 28,975 10,234 16,900 54,766 69,534

1958 8,480o 710 1,370 36,060 3,900 17,48C 64,100 73,48C

1959 10,050 802 1,550 43,580 18,C18 74,000 80,618

1960 11,920 912 1,770 46,500 19,898 81,C00 87,898

1961 13,970 1,034 1,950 48,430 25,616 91,000 98,516

1962 .16,080 1,256 2,080 51,765 31,819 103,000 111,019

1963 17,910 1,378 2,180 54,630 41,902 118,000 126,502

i.964 19,680 1,509 2,290 .56,845 54,676 135,000 143,976

1965 21,300 1,620 2,400 60,40o .68,280 154,000 163,780

' Data not available,

/ During 1951 tc 1955 inclusive estimates are based on production of existing municipal and industrial plants. From 1956 to 1958 inclusive, power

requirements are met by Seyhan plant, municipal generation ceases, and change-over from mechanical to electric pcwer by industries gradually

takes place. After 1959 total power requirements are supplied by Seyhan dam,

2/ Entire production assumed to be electrical after 1958. Total prcduction includes estimated transmission losses.

TABLE II

CtT]RCUVA POJWER _TIITY CCM.AXY

ESTDIAATWS OF RFV-1JUE AID OP.4:R iTLG EPXTiSES(in thousands of US dollars)

Power Net Revenue LegalSales Operation Income Special b-fore taxes, Reserve Netkwh Main. & Replacement Water Total less Reserve reserves & Cornoration and Earnings

Year (Oco) Income Admin, Reserve Rights Expenses Rxpenses Fund bonuses Taxes Bonuses(1) (2) (-) .() (s) (6) (7) (8) (9) (lj. (11) (12) (1,)

1956 47,530 1,346 357 177 252 7866 56o 223 337 34 30 2731957 59,300 1,575 375 17? 315 867 7C8 223 485 49 44 3921958 69,58o 1,847 394 177 369 940 907 223 684 68 62 5541959 80,618 1,998 413 177 428 1,018 980 223 757 76 63 613196C 87.893 2,178 434 177 467 1,C78 1,1°° 223 877 88 79 7101961 98,516 2,092 456 177 523 1,156 936 223 713 71 64 5781962 111,019 2,359 478 177 589 1,744 1,015 223 792 79 71 6421963 126,502 2,239 502 177 672 1,351 888 223 665 67 6o 5381964 143,976 2,548 527 177 764 1,468 1,080 223 857 86 77 6941965 163,780 2,899 554 177 870 1,601 1,298 223 1,C75 108 97 870

(4) Based on estimates for administrative organization, lsbor and materials; increases 5,-, each year.

(5) Investment of $11,658,000 on sinking fund basis: power house investment of $1,342,000 at 50-year life; other facilities of 910,316,000 at30-year life = $176,697.

(9) Equal installmnents of company capital over 45 year period under license of 49 years, 14/30 of this fund to be transferred to the Governmentnot later than the termination of license.

(11) 10)k tax on net operating revenue as provided by Turkish law.

(12) 5o of net profit must be held as a reserve in government bonds; the 'crrmercial Code and Statutes of the company provide for annual bonus todirectors and staff, estimated here at 5>.

TABILE III

IRRIGATIO11 PHASE OF PROJECT

E_-1COi, AND OPr .RiT rjG E'';P1SE!

(in thousands of US dollars)

Gross Area Net Area Repayments to Operation

provided with serviced by Debt Service Treasury of local Maintenance Accumulated

distribution irrigation on Foreign currency invest- and Admin. Total Aet deficit or

Year (hectares) (hectares) Exchange ment costs zxpenses Income Income surp)lus

(1) (2) (3) (4) (5) (6) (7) (8) (9) (IC)

1956 57,600 21,000 437 116 553 134 - 419 - 419

1957 72,000 40,300 437 186 623 264 - 359 - 778

1958 86,400 60,500 437 256 693 485 - 208 _ 986

1959 115,200 80,600 437 327 764 642 - 122 1,108

1960 129,600 9O,700 437 363 800 803 j 3 -1,105

1961 144,00O 95,800 437 - 381 818 847 i 29 - 1,076

1962 144,000 108,000 437 - 424 861 956 2 95 - 981

1963 144,000 115,200 437 - 450 887 1,019 1 132 - 849

1964 144,000 129,600 437 _ 5C1 938 1,147 7t 2C9 - 640

1965 144,000 136,800 437 526 963 1,211 2 248 - 392

(3) About 95p of the gross area provided with distribution ultimately will be serviced as croplands.

(4) Foreign exchange of Stage II chargeable to irrigation is $5,773,192; on basis of 4-3/4%o interest for 21 yen.rs, annual payments equal $437,460.

(5) Under terms of government bill, repayments to the Treasury of local funds advanced for irrigation portion of Project will be repaid in 35 equal

annual installments beginning not later than 10 years after completion in 1961, the irrigation rate being increased if necessary to provide

for repayment. No repayment is assumed in the period 1956 to 1965.

(8) (9) (10) '.ater rates are to be computed annually between 1956 and 1965 to pay debt service on foreign loan and operation and maintenance costs

on an apnroximate break-even basis. See page 20 of text.

TAB3LE, IV

COST OF MiULTIPURPOS' PPOJFCT TO T-, GOV MNEflT(in thousands of US dollars)

Year Treasury Outlay Let Returns Yet Returns Net Cost to Iv:uted Gross Subsidy

for Nleod Control from Irrigation from Power the Treasury Interczt the Government

(2) (3) (4) ..... 6) ___

1956 - 575 -419 - 541 - 1,539 _ 868 - 2,4C7

1957 - 579 - 359 - 399 - 1,337 - 980 - 2,317

1958 -579 -208 - 239 - 1,o26 -1,C93 - 2,119

1959 -579 - 122 - 140 - 841 -1,205 - 2,046

1960 -579 4 3 - 3? - 613 -1,318 - 1,931

1961 -579 4 29 - 69 - 619 - 1,430 - 2,C49

1962 -579 4 95 4 39 - 445 - 1,430 - 1,875

1963 -579 ./132 4 55 - 392 _ 1,430 - 1,882

1964 - 579 ./209 4229 - 141 - 1,430 - 1,571

1965 - 579 4248 4 47? f l,l - 1,430 - ,,289

(2) Operation and maintenance cost ($142,000) plius debt service on foreign loan on 1/3 dam structure (S437,000).

(3) Taken from Table III, column (9). Irri-,aticn service ultim,rately% becomes a Eres-!-even crpertion.

(4) Receipts from water rights. plus taxes, plus GovernmentFsJ413O share of net earnings and of special reserves,

less maintenance cost of 1/3 dam and less debt service on portion of foreign loan allocated to power,

(5) Sum of columns (2), (3) and (4).

(6) 50 interest on the total of local funds invested in -reroject except the TI 14 million of private capital.

(7) Beginning not later than 1971 (probably in 1966) the subsidy by the Government will be reduced annually by an

amount of $730,256 for 35 years, by repayments of local currency investment in irrigation facilities,

TA:BLE V

EC0N5011C B0IM'FITS 0' JLULTIPURJPCIO? PROJECT(in thousands of US dollars)

Actual

Value Flood Increa7ed Operation Operation Operation Cperation Service -nlof Control Valuo of Total ar.d and and and on Lrntutedc

Power Savings Crops Value Maintenance Mnintenance Maintenance Maintenance Foreign Interest

Year Sold Dam Levees Irrigation of Power Loan zn 1ccal Totel 'etCanals Facilities 0urroncy Costs

Inves tnent

-W) (2) _0) (4) (S) (6) (7) 8 (9) (ic) (11) (1?) (1:1 )

1956 1,346 2,772 2,478 6,596 126 100 74 357 1,909 1,115 3,681 2,955

1957 1,575 2,772 4,758 8,925 126 100 144 375 1,909 1,227 3,881 5,C-.4

1958 1,847 2,772 7,137 li,,s6 126 100 214 394 1,909 1,340 4,083 7,673

1959 1,998 2,772 9,516 14,286 126 100 285 413 1,909 1,452 4,285 10,C1

1960 2,178 2,772 10,705 15,655 126 100 321 434 1,9C9 1,565 4,455 I1,2CG

1961 2,092 2,772 11,300 16,164 126 100 339 456 1,9C9 1,677 4,607 11,53?

1962 2,359 2,772 12,834 17,965 126 100 382 .478 1,909 1,677 4,672 1X?931963 2,239 2,772 13,594 18,605 126 100 4C8 502 1,9C9 1,67? 4,727 1D,8U3

1964 2,548 2,772 15,222 20,542 126 100 459 5?7 1,909 1,677 4,798 15, 44

1965 2,899 2,772 16,142 21,813 126 100 484 554 1,909 1,677 4,850 14,963

(2) Gross wholesale income.

(3) See pageos 11 and 12 of text for method of estimating flood control benefits.

(4) lased on area actually irrigated by years. *Peneits lbased on -Tr lu.tion on rages 12.4 of text,

(11) Includes interest on private capital in Cukurova Power Utility Comnany.

EXIS rTNA/6

// MOU*1iNTAIN / MOUNTAINS ~~~~~~~~~~~SEYHAN RIVER DAM

LAND SUBJECT TO OVERFLOW

RIVERS

IRRIGATION SYSTEM .....

DRAINAGE SYSTEM

LEVEES.......................... COLLECTION CANALS

------ A A IRRIGATION SYSTEM

DRAINAGE SYSTEM/

MERSIN~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I I V MILES i'

MERSIN C K \ >OMETERSADN VALE IRRI /ATION SYSTEM