L nf'I-J { : --X '5

DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Not For Public Use

Report No. P-1395-MA

REPORT AND RECOMMENDATION

OF THE

PRESIDENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

TO THE

NATIONAL ELECTRICITY BOARD

OF THE STATES-OF MALAYA

WITH THE GUARANTEE OF MALAYSIA

FOR A

SIXTH POWER PROJECT

June 24, 1974

This report was prepared for official use only by the Bank Group. It may not be published, quoted |or cited without Bank Group authorization. The Bank Group does not accept responsibility for the |accuracy or completeness of the report.

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CURRENCY EQUIVALENTS

Currency Unit = Malaysian Dollar (M$)US$1 =M$ 2.37 1/M$ 1 us$x.42M$ 1,000 = US$421M$ 1,000,000 = US$421,940

FISCAL YEAR

January 1 to December 31

1/ Rate used in the Appraisal Report. Since June 21,1973, the Malaysian dollar-has floated at approx-imately this rate in relation to the US dollar;the previous rate was M$20 54.= US$1.00.

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN

TO THE NATIONAL ELECTRICITY BOARDOF THE STATES OF MALAYA

WITH THE GUARANTEE OF MALAYSIAFOR A SIXTH POWER PROJECT

1. I submit the following report and recommendation on a proposedloan to the National Electricity Board of the States of Malaya (NEB) withthe Guarantee of Malaysia for the equivalent of US$45.0 million to helpfinance a sixth power project. The loan would have a term of 20 years

including 5 years of grace with interest at 7-1/4 percent per annum.

PART I - THE ECONOMY

2. The latest economic report (No.217-MA) was circulated to theExecutive Directors in August, 1973. An annual economic mission visitedMalaysia in January/February 1974, and its report will be circulated in

due course. Country data for Malaysia are included as Annex I.

3. With a per capita GNP of about US$400 (1971), Malaysia is one of

the most prosperous developing countries in Southeast Asia. The economy

has maintained fairly high rates of real growth, the GNP growing at an

average of about 6 percent a year during the last decade, with an increaseto 6.5 percent forecast for the first half of the 1970's. Exports, which

account for over 40 percent of GNP, have been growing at 4 to 5 percent a

year. The country's balance of payments position is sound. There are few

foreign exchange controls and external reserves are equal to eight months'imports.

4. Malaysia has significantly diversified its exports in the lastfew years. Whereas in 1961 nearly 50 percent of merchandise export earningswas derived from rubber, in the last few years only about one-third origin-ated from this source. Timber and palm oil exports have risen substantially,in 1973 representing an estimated 14 percent of merchandise exports. Thistrend is expected to continue.

5. It is too early to forecast with any precision how the world-wide

energy problems will affect the Malaysian economy, but it is unlikely that

Malaysia will suffer a shortage. In 1973 Malaysia's production of crude

petroleum was about 100,000 barrels per day, or 4.5 million long tonsduring the year, and in about four years is expected to increase five-fold.In 1973 Malaysia was still a net importer of petroleum products, at a net

cost of about US$40 million; however, based on present production and con-sumption trends, Malaysia is expected to become a net exporter of petroleumby 1977. Substantial reserves of natural gas have been found which in thenext few years will become an important foreign exchange earner. Malaysia's

hydroelectric potential is fairly large and detailed investigations of known

possible sites are being accelerated.

6. Agriculture has accounted for about 30 percent of the country'sGDP and about 50 percent of employment but the manufacturing sector ismaking an increasingly important contribution. During the Second MalaysiaPlan (SMP) period (1971-75), agricultural growth is expected to averageabout 8.5 percent, while the projected growth rate for the manufacturingsector is 14 percent. The manufacturing sector now accounts for 15 percentof GDP, about 22 percent of merchandise exports, and employs 10 percent ofthe working population.

7. Although Malaysia achieved satisfactory rates of growth of pro-duction during the 1960's, a decline of 20 percent in the terms of tradereduced real income growth from 6 to about 4.5 percent per annum, result-ing in a less than 2 percent increase in per capita income. This trendcontinued into the early years of the present decade. However, during 1973a boom in export prices improved the terms of trade, boosting real GNP byabout 10 percent, and leading to a real per capita income growth of 7 to8 percent.

8. Population growth rates will remain high for some time, around2.7 percent per annum, accompanied by a growth in the labor force of about3.3 percent per annum, but Malaysia's physical resources and employmentpotential are great. The Second Malaysia Plan (SMP) projects an averageannual increase in employment of 3.4 percent accompanied by a reductionin underemployment. In the longer term, over the next two decades, Malaysiaexpects to reduce the unemployment rate from 7.5 to 4 percent. During thisperiod, the percentage of the labor force employed in agriculture is ex-pected to drop from about 50 percent to 33 percent, and the percentage em-ployed in manufacturing is expected to more than double, rising to 24 percent.

9. During the last several years the Government's long-term plan-ning has concentrated on the problem of reducing the economic disparitybetween the Malays, who account for a little over half the population, andnon-Malays, who are predominantly Chinese. Over the next 20 years the NewEconomic Policy, as it is called, aims to eradicate poverty and to restruc-ture society so that the present identification of race with economic activ-ity will eventually be eliminated. The basic outlines of the policy aresound and allow for continued growth for each of the principal ethnic groupswhile at the same time enlarging economic opportunities for Malays. The SMPseeks to support these two objectives by encouraging economic growth.

10. The SMP also reflects the Government's choice of a more vigorousrole for the public sector in the country's development effort. The revisedplan proposed an allocation of US$4 billion for public development expendi-tures, twice the level under the first plan. The public sector's planningand implementation capacity has been expanded, although several planningand operating agencies still suffer from substantial manpower shortages.The improvement in the Government's capacity to prepare and execute proj-ects resulted in expenditures during the first three years of the planperiod that already exceeded the original plan allocation. The revisedplan levels anticipate a further strengthening of project identificationand implementation in the public sector. Most of the increased allocation

is earmarked to support the New Economic Policy, including among otheritems (i) the expansion of the land settlement programs to provide employ-ment opportunities, (ii) increased support to the manufacturing sector todiversify the economy and to provide increased employment in higher incomejobs, and (iii) the provision of training and education to upgrade the jobopportunities of the low-income groups.

11. During the first three years of the Second Malaysia Plan, 1971-73,total public sector development expenditures amounted to about US$2.2 bil-lion, of which 50 percent was financed by net domestic borrowing and 16 per-cent by net foreign borrowing. The balance was financed largely by currentsurpluses. The Bank has provided slightly less than 40 percent of the for-eign loan commitments; bilateral aid, mainly from the United Kingdom, otherCommonwealth countries, Germany, Japan, and loans from the Asian DevelopmentBank, provided the rest. Domestic financing resources for the remainingtwo years of the SMP are considered adequate. Gcvernment revenues are satis-factory, accounting in 1972 for 22 percent of GNFo In addition, the Govern-ment can readily borrow substantial amounts from domestic resources, notablyfrom the Government Employees' Provident Fund. The estimated external netinflow requirements of public medium- and long-term loans will amount toabout US$190 million. New foreign loan commitmernts are expected to comefrom the same sources with a significant increzae in Japanese lending. Newcommitments from the Bank are expected to remain at about 40 percent of thetotal. This level of foreign borrowing is well within Malaysia's debt-serv-icing capacity. Debt service obligations at present are about 3.5 percentof exports of goods and non-factor services and are estimated not to exceed8 percent during the late 1970's. The Bank's share in Malaysia's debt serv-ice payments is 22 percent and is expected to increase to about 25 percentby the end of 1978.

PART II - BANK GROUP OPERATIONS IN MALAYSIA

12. The Bank has made 26 loans to Malaysia for projects in education,population, agriculture, forestry, industrial finance, power, water supply,telecommunications, ports, railways, roads and urban transport. Althoughin a few cases disbursements were slow, the execution of these projects hasgenerally been satisfactory. As of April 30, 1974 the loans to Malaysiaheld by the Bank amounted to US$348.5 million. In addition, the Bank madea loan in 1965 to the Public Utilities Board, Singapore (Loan 405-MA),guaranteed by Malaysia, to finance the Johore River Project. The amountheld by the Bank under that loan is US$5.2 million. Seven loans are fullydisbursed. Annex II contains a summary statement of Bank loans and IFCinvestments as of April 30, 1974 and notes on the execution of on-goingprojects.

13. Bank assistance to Malaysia is intended to support the Govern-ment's efforts within the framework of the New Economic Policy to redressimbalances in rural and urban incomes, to create employment for the urban

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unemployed, and to reduce rural underemployment. Since Malaysia's agricul-

tural development programs, including land development, irrigation and agri-

cultural credit, provide the most effective Government instruments for tackling

unemployment and income imbalances, the Bank will continue to give financial

support to these programs. So far, the Bank has made three loans for land

settlement projects in the Jengka Triangle area where about 100,000 acres of

land are being developed and about 10,000 smallholders are being settled and

one loan for land settlement in the State of Johore where about 4,500 fami-

lies will be settled. The Bank has also made two loans for irrigation, one

for the Muda Irrigation Project (Loan 434-MA) and another for the Kemubu

Irrigation Project (Loan 500-MA) both projects assisting low income rice

growers. In addition, the Bank will continue to assist Malaysia in the

critical fields of education to increase educational opportunities for the

rural poor. Also, the Bank will continue to assist in the financingof infrastructure development that will improve conditions in the urbanareas and help support manufacturing. The Bank has helped the Government

to prepare projects either in the course of its lending operations or

by acting as Executing Agency for UNDP-financed studies. The Bank has

also helped to strengthen public agencies responsible for carrying outimportant parts of Malaysia's investment program. We will continue this

policy, which will be reflected in the loans to be presented to the Executive

Directors in the next year or so. These loans would be for projects involv-

ing agricultural development, agricultural credit, agricultural research,

public utilities and infrastructure development. In agriculture, where the

foreign exchange content of projects is often small, the Bank will continue

to cover a portion of local costs.

14. IFC has been active in Malaysia since 1963 and has made five

investments totalling US$8.7 million (Annex II). The total commitments

under those investments held by IFC as of April 30, 1974 amounted to

US$4.5 million. The Corporation has under preliminary consideration a

wood processing and a pulp and paper project.

PART III - ELECTRIC POWER IN MALAYSIA

The Sector

15. Demand for electric power has been growing on the average by about

14 percent annually over the last 10 years. Industry and mining were thelargest users in 1973, followed by commercial and residential demand. Power

is supplied principally by autonomous government-owned entities, the largest

being the National Electricity Board (NEB). NEB serves Peninsular Malaysia

with the exception of part of the State of Perak, which is supplied by the

privately-owned Perak River Hydroelectric Power Company (PRHE), and of Penang,

which is supplied by a municipally-owned plant. The Sabah Electricity Board

and the Sarawak Electricity Supply Corporation supply the two states on the

island of Borneo. Total capacity installed by these entities at present is

as follows:

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Entity Installed Capacity (MW)

NEB 845.0PRHE 142.5Penang City Council 43.3Sabah Electricity Board 88.6Sarawak Electricity

Corporation 54.0

Total 1,173.4

In addition, there was a total of about 25.5 MW in about 126 diesel plantsowned by small electric companies, which supply power to customers on alicensed basis, and of about 19 MW of small privately owned diesel units.

16. The power market served by NEB has grown steadily in the pastwith a 16 percent average annual increase in total sales from FY1963through 1969, 12 percent in FY1970, 10 percent in FY1971, 15 percent inFY1972, and 14 percent in FY1973. Energy sales for the next ten yearsare expected to increase at an average of around 13 percent per annum,starting with a 20 percent growth rate in FY1974 and then graduallylevelling off to 10 percent by FY1983.

17. PRHE, incorporated in the United Kingdom, operates under a con-cession granted by the State of Perak in 1926 for a term of 80 years. TheGovernment has decided to exercise its right of take over under the con-cession agreement and NEB is expected to acquire the company's assets inNovember 1976. The Penang City Council operates the electricity systemfor the island of Penang under special provisions of the Electricity Actof 1949. The system is interconnected with the NEB system. No furthergenerating units will be added by PRHE or Penang and demand will in thefuture be met by bulk purchases from NEB. Thus, only NEB will providegeneration plant capacity in Peninsular Malaysia in future and will supplythe entire Peninsula except for minor licensed plants.

18. NEB's total generating capacity of 845 MW consists of about 265 MWof hydroelectric plant, 540 MW of steam plant, and 40 MW of diesel plant.NEB's present expansion program includes the completion of Stage III (3 x120 MW) of the Port Dickson Thermal Power Station; the construction of theTemengor Hydroelectric Plant with the initial installation of 2 x 87 MWgenerating units to be commissioned in early 1978 and the installation oftwo further 87 MW units at a later date; the installation of 3 x 120 MWadditional units at the Prai Thermal Power Station to be brought into serv-ice during 1979-81.

19. NEB's interconnected system covers most of the western side ofPeninsular Malaysia. Links to Kuantan, Kota Bahru and Kuala Trengganu onthe east coast will be completed between 1975 and 1980 when the entirepeninsula will be interconnected (see map). A rural electrification pro-gram which started in 1957 is being accelerated under the Second Malaysia

Plan (1971-75), at the end of which over 3,000 villages with about 240,000customers are expected to be served. Finance for the program is providedone-third each by the Federal Government, the appropriate state government,and NEB. Project costs for calculating Government and state contributionsinclude expected operating losses for the first seven years. The programis small relative to NEB's overall operations, and has no significant influ-ence oni NEB's financial position.

20. NEB's development program is based on a system study in which anumber of alternative sequences of generation, transmission, and distribu-tion were compared. The study was carried out by consultants, Preece,Cardew, and Rider (PCR), a British firm, in cooperation with ShawiniganEngineering Company (SHENCO), a Canadian firm. A further study is now beingundertaken to define system development after 1981, taking into account ex-pected higher fuel costs for thermal stations and the results of ongoingstudies on potential hydro sites. SHENCO also prepared studies on theBersia and Kenering hydroelectric projects, downstream from Temengor onthe Perak River. The Snowy Mountains Hydroelectric Authority (Australia)completed a pre-investment study in 1969 on the Pergau hydroelectric scheme;a group of Russian engineers is carrying out a study of the Sungai Tembelingscheme; and a study of the combined flood control and power development proj-ect of the Trengganu River is being planned.

21. NEB has received a total of about US$140 million in five Bankloans since 1958, which will have helped, on the completion of current Bankfinanced projects to finance 1,010 MW generating plant additions and asso-ciated transmission lines. The projects under the first four loans have beencompleted and are operating very well. Under the fifth loan, for the thirdstage of the Port Dickson station and transmission facilities, delays inthe manufacture and delivery of equipment have occurred, and the commission-ing date for the first unit is now expected to be early 1976 about 22 monthsbehind the original schedule. The systems in both Sarawak and Sabah arebeing assisted by ADB loans.

The National Electricity Board

22. The National Electricity Board, which was established in 1949by the Government under the provisions of the Electricity Act enacted that-ear i.5 a financially sound, well-organized, and well-operated utility.

. both a regulatory and operating agency charged with operation of theelectric installations under its jurisdiction and the establishment of suchnew facilities as may be required. It regulates the production and use ofelectric energy in Peninsular Malaysia and grants licenses for the installa-tionI and operation of independent electricity works to be used for publicor private purposes. The Board of Directors are appointed by the Ministerof Works and Power, subject to terms and conditions he may determine. TheBoard is headed by a chairman and a deputy chairman, who is also generalmanager. The management structure has recently been reorganized with theprincipal changes affecting the middle-management level.

-7 -

23. NEB has a comprehensive staff training program which is run byits own Education and Training Department. Since 1960, 362 engineeringscholarships have been sponsored at overseas universities, mostly inAustralia and UK; of these, 132 have so far graduated and returned toMalaysia. In addition to scholarships at the college level, NEB has anapprenticeship scheme for technical staff, and a training center is beingplanned on a 200-acre site at Bangi next to the Public Works Department'sproposed training center. In-house courses are run to train supervisorsand others in modern techniques of supervision and methods of work. Seniorpersonnel attend overseas seminars, and others are sent abroad for post-graduate study.

24. NEB has the power to fix tariffs without reference to any otherauthority. In practice, the Minister of Works and Power is consulted andhe has the right to give directions of a general character not inconsistentwith the provisions of the Act. These provide that total revenues must besufficient to meet total costs, including depreciation and interest. Thisis regarded as determining the minimum level of tariffs. NEB's statedpolicy is to produce a return on its average net fixed assets in operationof at least 8 percent-per annum and to finance at least 40 percent ofconstruction costs out of internal resources. The commitment to earn a rateof return of at least 8 percent has been incorporated in the Bank loanagreement (see Section 5.05).

25. NEB's financial position has been sound. Since FY1966 the rateof return on reasonably valued average net fixed assets in operation hasvaried between 8.8 percent (1969) and 11 percent (1967); the rate of returnwas 12.1 percent in FY1973. Local construction costs have been wholly metfrom internal cash generation since 1966 as were portions of the foreigncosts, together aggregating about 60 percent of total investment in plantand facilities. Debt service coverage on an annual basis was 2.6 times(1973). The debt/equity ratio improved from 61/39 in FY1966 to 45/55 inFY1973, indicating a satisfactory capital structure; the current ratio inFY1973 was an adequate 1.6.

26. NEB has recently decided to enter into joint ventures for themanufacture of electrical equipment such as electric meters, cables, trans-formers and switchgear for which NEB would be 'the main customer in the earlyyears. Day-to-day management would be provided by the foreign partner. Theproposals are at a preliminary stage, but NEB is expected to provide abouthalf the total investment required which is estimated at a maximum of US$11million equivalent. It is small in relation to NEB's overall program andwell within its capability. The loan agreement contains a covenant

(Section 5.08) providing for the Bank's concurrence to any industrial

participation by NEB, whether in the form of equity, loans or otherwise,

when such participations exceed US$11 million equivalent in aggregate.

PART IV - THE PROJECT

Hlis tory

27. The proposed project is part of the Temengor Hydroelectric Schemeon the upper Perak River in the State of Perak. The feasibility studies forthis scheme were carried out by SHENCO and financed by Canadian bilateralassistance. The scheme comprises a hydroelectric station and transmissionlines. The hydro station, estimated to cost US$101 million, consists ofa rock-filled dam approximately 375 feet high which will create a reservoirof 4.6 million acre-feet, a Dower intake leading to four power tunnels andoenstocks, and an outdoor powerhouse containing four 87 t. turbogeneratingunits of which two wlll be installed initially and two at a later date. Theaverage annual output of the station will be about 908 million kwh. Also,there will be substantial flood control and downstream irrigation benefits.The access road has already been completed and the main civil works contracthas been awarded to a Japanese contractor. Most of the financing for thedam and power station has been obtained from bilateral agencies. Theproposed project forms the second part of the schere and consists of thetransmission lines and the substations. Tt was appraised in October 1973.Loan negotiations with NFB and the Government were held in Mlay 1974. TheMalaysian team was led by Mr. Yahaya bin Abdul Wahab, Under-Secretary(Finance) of the Ministry of Finance. A loan and project summary is includedin Annex III. The Appraisal Report 347a-MA dated June 20, 1974 is being

circulated separately.

Description

28. The proposed project will transmit the power output of Temengorto the major load centers of NEB's interconnected network. About 132.5miles of 275 kV lines and associated stations would be built to link upTemengor with NEB's system at Papan and extend the main system southwardfrom Port Dickson (see map). In order to transmit power generated byTemengor to the ultimate consumers, the associated transmission and dis-tribution system under 275 kV will have to be extended. Six lines of atotal length of 178 miles together with terminal equipment will be includedin the project. In addition, the project also includes the establishmentof a control and load dispatching center and consulting services.

29. The Temengor-Papan transmission lines and substations will inter-connect the Temengor power station with the western network by means of adouble circuit of 275 kV transmission lines with duplex 300 ml ACSR conductorsterminating at Papan. The route length will be approximately 94 miles. ThePort Dickson-Malacca transmission lines and substations will form part ofthe link between the central and the southern networks. Design will be thesame as above but the line will be operated initially at 132 kY. The routelength will be approximately 38.5 miles.

-9-

Cost and Financing

30. The total cost of the proposed project is estimated at US$68.5million. This estimate is based on known costs of similar works completedor being constructed under previous Bank loans, after allowing for increasesin materials and equipment costs and field conditions. Physical contingen-cies of about 10 percent for overhead lines and 7 percent for substationsare considered adequate. Price contingencies of 11 percent for 1975, 7.5percent for 1976 through 1979 have been included to cover price escalationduring construction.

31. The proposed Bank loan of US$45 million equivalent would cover theforeign exchange component or about 66 percent of total project cost. Thebalance of US$23.5 million equivalent (34 percent) for local costs would befinanced by NEB from retained earnings. The project represents 10 percentof NEB's 1974-80 capital expenditure program.

32. The Bank contribution to the financing of the integrated TemengorHydroelectric scheme amounts to about 27 percent of the total cost ofUS$169.5 million. The total cost of the dam and power station componentsis estimated at US$101 million. Finances for a major part of this schemehas been arranged as follows: a loan from the Japanese Overseas EconomicCooperation Fund (OECF) of US$48 million equivalent (3-1/4 percent for 20years including 7 years of grace) covering the foreign and part of thelocal cost of civil works; a loan of US$12 million equivalent (7-1/2 percentfor 23 years including 5 years of grace) from the British CommonwealthDevelopment Corporation (CDC) to cover local costs, and a loan from theCanadian International Development Agency (CIDA) of US$3 million equivalent(3 percent for 30 years including 5 years of grace) to cover engineeringand supervision costs. Electrical and mechanical equipment with a cost ofUS$14 million equivalent is expected to be financed through suppliers'credits. The rest of the financing is expected to come from internal cashgeneration.

Implementation

33. NFB will be responsible for the implementation of the project.The consultants (PCR) have completed engineering studies and specificationsfor the 275 kV lines. Tenders have been called and awards will be made latein 1974. Manufacture, construction, and commissioning will take about 33months. Completion is scheduled for 1977 to coordinate with the targetcommissioning date of the first Temengor generating unit. PCR is responsiblefor the preparation of bidding documents and supervision of construction.Construction will be by contractors.

Procurement and Disbursement

34. The equipment and materials to be financed under the proposed loanwould be procured through international competitive bidding in accordancewith the Bank's Procurement Guidelines, with the exception of the line pro-tection system which will be procured from manufacturers whose products have

- 10 -

given proven performance (about US$35,000). The latter equipment is of a

sophisticated natture, and the characteristics are very specific. Local manu-

facturers would be allowed a margin of preference of 15 percent or the actual

customs duty, whichever is lower.

35. Disbursement would be made against (i) 100 percent of the c.i.f.

cost of imported equipment; (ii) 100 percent of ex-factory cost of equipment

manufactured locally; (iii) 70 percent of equipment procured locally but

manufactured abroad; and (iv) 100 percent of the foreign exchange cost of

constulting services. Local manufacturers do not appear likely to be success-

ful in bidding for contracts financed under the loan but to the extent they

are, some financing of local expenditures would be involved.

Justification

36. Consultants' studies of the generation and transmission expansion

have demonstrated that the sequence of development proposed is the least

cost solution to meet the load requirement up to 1981. It includes the

Temengor Hydroelectric Development, the Prai Thermal Power Station extension,

and the associated transmission facilities. The transmission lines proposedare the only possible ways of transmitting the power generated from the

Temengor and Port Dickson plants to the major load centers. The proposed

sequence of development (including generation and transmission) was found

preferable to any other sequence at discount rates up to 13 percent.

37. It is not possible at this stage to determine the detailed

implication of future fuel oil availability and price increases, particu-

larly on system expansion, demand, and financial forecasts. However, since

the scheme consists of the development of hydroelectric energy, its justi-

fication cannot be adversely affected.

Financial Forecasts

38. Projections of future revenues have been made on the basis of

the forecast average annual sales growth of about 14 percent up to 1980.

Operating expenses are forecast to increase at an average growth rate of

23 percent. Thus, contributions to construction are not expected to

continue at the high level of 60 percent achieved in the past, and will

-robabl-y be about 46 percent for the period FY1974 through 1980. However,

this will be sufficient to meet local costs and to provide adequate work-

ing capital.

39. Except for 1974 when fuel surcharges will not apply, the rate of

return on average net fixed assets in operation is estimated to be lowest

in 1979 (9.4 percent); for all other years through 1980 it is estimated to

exceed 11 percent. The capital structure will remain satisfactory through-

out the forecast period. Cash generation will cover requirements and

enable NEB to maintain an acceptable debt/equity ratio of about 46/54. The

current operating ratio is expected to increase from 67 percent in 1973

to 80 percent in 1980. Debt service coverage on an annual basis will be

greater than 2.0 times during the period.

40. The Government, as part of its policy to combat inflation, haskept electricity tariffs including fuel surcharges, at the levels thatprevailed hefore the fuel crisis. The position will be reviewed later inthe year and a decision will be taken whether to pass on fuel price increasesto consumers. If NEB earns the minimum 8 percent rate of return stipulatedin the Bank loan agreement, a finance gap of about M$ 270 million in FY1975through FY1980 would result. This gap would be covered by the Government.

PART V - LEGAL INSTRUMENTS ANT) AUTHIORITY

41. The draft Loan Agreement between the Bank and the NationalElectricity Board, the draft Guarantee Agreement between Malaysia and theBank, the report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement, and the text of the draft Resolutionapproving the proposed loan are being distributed to the Executive Directorsseparately. The draft Loan Agreement conforms to the normal pattern forloans for electric power projects.

42. I am satisfied that the proposed loan complies with the Articlesof Agreement of the Bank.

PART VT - RECOMMFNDATIONS

43. I recommend that the Executive Directors approve the proposed loan.

Robert S. McNamaraPresident

Washington, D. C.June 24, 1974

PasIe 1of 3

wnyr DAT - niLLSIThi

329.T9 10.2:9m. (u.id-1fl0)ai

SMIAL INMCATOS R~~~eference, Countries

ritks of CQua Poru

aC PR t 0Mb MM (ATLAS DamS) A 380 110 390 149

DD~MPkcCSWWUith rout (por Uteusand) i 4 32 /2928 1 /..pQmf dtash rots (par thousan) 10 7 J L a 14 -A

Infuit mortality rats (pW thouced live births) L Zi. -- A 5:i/LiLa axpoteny at birth (years) 5 6

Orsons rewodostien rtatsft 2.a 2.1 2.2 2.5/4Pop.iatioa p-ebitt rat 2.9 3.1 24. 2.9 2 .8/Pepaltlos IFt rats .. .ba. 2.5/ 3A .6~

lie sructara (porcant) 4/L 1 '-10100-s ,.53.-., & , 4575

Urban population as preront of total ?2 /4.3. Laos, - 61 /j 52 L&I.tally placclingi W. of ,,ewr amwarrid (tona) 220 A0; 9-

YRUMzrn~ forms (thousands) 2,300 /4 3,200 /4 4,100 LX 4,600 Ly3100Paersntuso employedi in agiculture 56Li 145/ 52 . 4Por-ontaRb unrspopl d 6 /4is 8/ 21 U 1

PRcV n of str- Incomes reolved by hjigesrt 5% 20 /q ~ 28 19 t.sernt of national inoo raoeivad by highest 20% 1414 i4: 55 146

Pecn fntiona inoca reasived by lcacat 20% 7/, ~ 1 1Percent of national inomm reecivcd by ioiest 60% 18s 12 17 L,

% owed by asaflst 10% of Owners ,-. -- 0.1

W= AND NUTRION%P`-0'G1T=--P`sV-3;16ViaiaM6,500 /.a. 1,100 4 3,690 /4 3,1700 1,920/

Popotation par nursig ura 1,520 T~PS 880 1,460 6, 170 /4 70 OPeptotatiec par hospital bad Ž90 /y 330 33DO S 2,980 Lasa /4Per iapits calorie sfupply asSeto requiroanta /5102 /vat 914 cL~ 102 4 111 3Per uapito protein supply, tota (pmac per day) L6 5. /-a 19 4an- 11049 68 5

Of t.lcb, animal ted palsm 22 /vab 20 ac 16 4,d 31Dast, rsot 1-3. yearse 6 3

iW a k primary school anrolleant ratio 80 /j, 90 89 98 24lAdj.. clad 17 scomary school enrollment ratio 12 /es 29 &31 a 50AlalIsarI of a itoolis iproidad, first and aseond level 1 11 12 12 Lvocational omollat as % of gee. school arolimlt 5 /4 3 42 16iiJAsdalt litearacy rats At be L 89 LaaI - 73

SPE o. of prerns pr a o (urbsn) .. i .1.6Z --Pere out of occupied urlts without piped water ;I--.. - - --Acoess to electricity (aes o total psscflttioo) .-Percen~t of ftral population camzootd to elaotrIcietj .- .

rocalvrs. par 1000 popaletion 37 41 /4 39 /4 103 /4 1314Pts SsIgr euar per 1000 population is4 214 7 3 /47tilectric pevar eant1osi (kdt P.C.) 20 310/06;83/ 372MacPrint ooempvt±o p.c. kg par year 0.5 3.7 1.1 1.7 /4 3.3

07=s, hieurse rofor either to lbs latest periods or to account of an;riromatal tbrtne td Noa".te andthe latest "arn. Latest periods rotar io princilpi to distribution by a"ge a sea Of oational popAlations.

us v 1956-60ato 1966-70; the latest yoars i0p win- P, Protein stecdarde (raqeirsante) for All camttle as astb-oilp ten I96 and 1I0. tithed by SRI toaste Research Darwin peovida for a miinim

r4 ho Per Cepit CLIP eatimata is at market pricesa for tilovansa of 60 p-am of total protsio par day, tod 20 grow ofYears other than 1960,* ealolatad by the sass conversieon animal WAr pois Protato, of which 20 p4M-me acd ba animaltao)aique as thu 1902 abrld Bonk Atlas. protein. Themesatedards arm *umuot lmee tous those Of 75Avezage numbor of dwaAtwre par seas of ruproducoUs gramas of total protein aS 23 puma of anima protein As anam. avrarag for the vacrid, proposed by PAD is the Third arIAled

4 Population guwib rates am' for the dacades 5

,A4ij inSuvy1564 and 1970. LL Sme atedos bavs suggested that crude Seoth rates of cilddren

& Ratio of 'cider 15 anti 65 and over Wg brackets to apc 1 through 4 nay ho used as a fiut appc.izatiaion Ind ofthosa in lahor forts braLcket of eaps 15 throunjh 614. calnutrittios.no11 mfroeruto utaodarda represent pbtwmologLcal ta- Li Psreontev o srollad of sorrusoeding pepelatiou of stool amquir,mmots for serall actIvitj and health, tahong as definesd foir eachob 00try.

Q., et KI Xaayis; /4 l"-7; IC Psuludlep. Thdisr, Throbpoe loTItion ertlimted at. 100,830 In 1961, dtaint ncludsd on up-andadutmeect for under-rcgiatostion; /A 1965-70j UN tn-tsituata; /a 19681 /A 1M969 /4 1

94671 /4 1961-72, icoluds

cc,imlast of migrants of jungle tribes; a4 1.972 Census neutuflt; /4 Capitahle of districts and thosa populated centers1ti. -noh urba hareoterietinaso streets. piasas, water tupply systoms. -ovragea ystono, .lectric lights, ate.,

Ie uding Indian Jungle population and icoludas adJustment for undor-etmmsrattonn a4 1962.-69, La Ratio of popultionna ,r I5 ant 65 and ores to total labor forest 4l taestt.od roso Aith po`uation of 10,000 or more; I 1962;~ h;aoyuant in egnicluro c00 a percectLac of tat-Lieaployom-t; /4 1957-58, /4 L rtusobhlds; la1969-70; LI, 19 70-71;

Ectnriaioofy actlve population; /4 Federation of Malaya; a 19(a; /4 Incauding assistant nurses and aidelvas;191;i a Including midwives,c; Qoverrnant only; /lo. 1961463; /as, 196l&i~ /44 Tentative data; /4j 1955;In, ludes averaegostudotate && Data for vocational 6duoa,ion mftor to tochnical institutes attached to tns Ministry ofSb cation only; /4& Includlng sonming shoolaj &L 1964; L._' 15 years and over; /4 Urban sod rural.

R2 MAY 16, 19714

Page 2 of 3 pages

ECONOMIIC INDICATORS

GROSS NATIONAL PRODUCT IN 1972 (Provisional) ANNUAL RATE OF GRO'TH (%, constant prices)

US Mln. % 1960 -65 1965 -70 1972

GaP at Market Prices 4,678 100.0 6.9 5.6 5.2Gross Domestic Investment 960 18.3 9.4 7.7 11.1Gross National Saving 732 16.5 11.8 7.9 13.1Current Account Balance -228 t oExports of Goods, NFS 1,8i6 43.0 4.1 6.5 2.4Imports of Goods, NFS 1,886 4.1.4 3.3 5.7 -0.5

OUTPUT, LABOR FORCE ANDPRODUCTIVITY IN 1970

Value Added LaDor Force-V V. A. Per WorkerUS$ Mln. _ Mln. US $ %

Agriculture 823 29.7 1.5 46.9 549 54.4Industry 760 27.5 0.5 15.6 1,520 149.5Services 1,184 42.8 1.0 31.3 1,184 116.4Unallocated 0.2 6.2

Total/Average2,767 100.0 3.2 lOO.O 1,017 1OO.0

GOVERNMENT FINANCEGeneral Government Central Government_

(M$ Mln.) _ %_o GDP (M % of GOD1972 1972 197-22 _70-72

Current Receipts 3,482 26.4 25.1 2,920 22.1 20.8Current Expenditure 3,529 26.7 23.4 3,068 23.2 20.5Current Surplus --1f7 1.T t J 3Capital Expenditures 1,498 11.4 9.8 1,223 a/ 9.3 8.1External Assistance (net) 381 2.9 2.1 372 2.8 2.0

Jan. Jan.MONEY, CREDIT and PRICES 1969 1970 1971 1972 1972 19?3

(Milion outstanding end periodT

Money and Quasi Money 3,724 4,130 4,666 5,771 4,793 5,996Bank credit to Public Sector 909 833 1,045 1,156 1,071 1,077Bank Credit to Private Sector 1,841 2,246 2,572 3,044 2,641 3,229

(Percentages or Index Numbers)

Money and Quasi Money as % of GDP 33.1 35.0 37.6 43.7General Price Index (1967 . 100) b/ 99.4 101.3 102.9 107.8Annual percentage changes ins

General Price Index - 0.4 1.9 1.6 4.8Bank credit to Public Sector 6.4 -8.4 25.5 10.6 43.1 0.6Bank credit to Private Sector 9.0 21.9 14.6 18.4 12.4 22.3

NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during the periodcovered.

a, Includes M$Lt22 of net Goverrment lending.9/ Peninsular Malaysia only.

not ayailablenot applicable

ANNE I$RADS PAXD2 =TS AND CAPITAL FLOWS Page 3 of 3 pages

BALA'NCE CF PAYMENTS MERCBANDISE EXPORTS (AVERAGE 1970-72)

1970 1971 19 7 297l US $ ln %(Millions US $) Rubber 500 29.8

Tin 318 1B.9Ex?orts of Goods, NFS 1,772 1,717 . 1,811 Timber 287 17.1-cports of Goods, NFS 1,60oa. 1,646 1.846 Pai 011 113 6.7

Resource Gap (deficit c _) n 71 35 Petroleum 90 5.1422.1

Interest Payments (net) -21 -23 -26 All other commodities 372Workers' Rcmittances .. 26 Total 1660 100,0Other Factor Payuents (net) -49 -51 -84Net Transfors -60 -55 -56 EXTERNAL DEBT, DECEMBER 31. 1972Balance on Current Account 41 --20

US 2 MlDirect Foreign Investment 52 52 6L Net MIT Borrowing Public Debt, incl. guaranteed 672 C

Disb-urzemcnts 42 145 210 Non-Guaranteed Private DebtAmort_zation 4 21 26 Total outstanding & DisbursedSubtotal -1 124 h

Capital Grants 13 15 14 DEBT SERVICE RATIO for 19°.74Other Capital (net) -n -77 -15Other iLen:s n.e.i _lCl --16 UlmIncreas; in Reserves (+) 40 61 54 Public Debt. incl. guaranteed

Non-Guaranteed Private DabL -Gross Reserves (end year) 846 907 1,029 Total outstanding & DisbursedNet Reserves (end year) 819 902 1,027

MMIIDA LO I.An l9 1 971 Oftl3.in US$ )

FtLel and Related Materiale IBED IDA

kTortB of Goods, NFS 1,772 1,717 1811 Outatandlng & Diabuwoed 238.9of which: Petroleum 117 162 Ill Unnd±burued 157.4

Outatanding incl. Undisburged 3963Impmrts of Goods, NFS 1,601 1,646 1,846

Lf vhich: Petroleum 167 185 138

R&TE OF EXCHANGE

Through 1971

US$1.00 - M$3.06Ms 1.00 - US*D,33

From 1972 through February 13. 1973

US$1.09 - M$2.82K $1.00 - US$0.35

Fr. February l3 - Jume 21. 1973

US$1.00 - I¢2.54M4 1.00 - US$0.39

Cbmrgtly floating - am of January 1974

US$I.oo - ms 2.37Ns 1.99 - US042

kEabmnge rates useds US$1.00 - Ms2.82Ratio of Debt Service to tpcrta Of Goods and Ncn-FPator Services.

not available* not app±oable

ANNEX _IPage 1 of 6

THE STATUS OF BAkIK GROUP OPERATIONS IN MALAYSIA

A. STATEMENT OF BANK LOMS (AS AT APRIL 30, 1974)

US$ MillionLoan Amount (less Cancellations)

Number Year Borrower Purpose Bank Undisbursed

Eight loans fully disbursed 183.2 /a533 1968 Government of Malaysia Land Settlement 14.0 1.6561 1968 Government of Malaysia Water Supply 3.6 0.2599 1969 Government of Malaysia Education 8.8 6.1672 1970 Government of Malaysia Land Settlement 13.0 5.9673 1970 Government of Malaysia Forestry 8.5 0.4700 1970 National Electricity

Board Electric Power 20.0 12.5

753 1971 Government of Malaysia Telecommunications 18.7 16.6

774 1971 Sabah Ports Authority Ports 16.1 9.8

799 1972 Malayan RailwayAdministration Railroad 16.0 12.5

810 1972 Government of Malaysia Education 15.5 15.5

851 1972 Government of Malaysia Urban Transport 16.0 14.2

880 1973 Government of Malaysia Population 5.0 5.0

885 1973 Government of Malaysia Land Settlement 25.0 24.1

908 1973 Government of Maliaysia Water Supply 13.5 13.5

931 1973 Government of Malaysia Highway 19.5 19.5

Total 396.4of which has been repaid 39.9

Total now outstanding lb 356.5Amount sold 17.3

of which has been repaid- 9.3 8.0Total now held by Bank /c 348.5

/a In addition, Malaysia is Guarantor for Loan 405-MA of February 26, 1965to the Public Utilities Board in Singapore (amount being held by theBank at April 30, 1974 - US$5.2 million).

/b In addition, the following loans were approved but were not effectiveas of April 30, 1974: Loans 967, Land Settlement $40.0 million;973 Agricultural Development, $45.0 million: and 974 Education,$19.0 million. Loan 967 has since become effective.

/c Prior to exchange adjustments.

ANNEX IIPage 2 of 6

B. STATEMENT OF IFC INVESTMENTS (AS AT APRIL 30, 1974)

Type of Amount in US$ MillionYear Business Loan Equity Total

1963 Malaysian industrial Industrial Finance - 1.94 1.94Development FinanceLtd. (,N9DF)

1966 Tasek Cement Ltd. Cement 1.28 0.28 1.56

1967 Malayawata Steel Ltd. Steel 2.45 1.01 3.46

1969 Malayawata Steel Ltd. Steel - 0.23 0.23

1969 India-MalaysiaTextiles Ltd. Textiles 1.25 0.25 1.50

Total gross commitments 4.98 3.71 8.69

less: cancellations, terminations,repayments and sales 3.03 1.18 4.21

Total commitments now held by IFC 1.95 2.53 4.48

Total undisbursed _ - -

ASNUEX IIPage 3 of 6

C. PROJECTS IN EXECUTION-1/

Loan No. 533 Jengka Triangle Project; US$14.0 Million Loan ofApril 17, 1968; Closing Date: December 31, 1975

Loan No. 672 Second Jengka Triangle Land Settlement Project; US$13.0Million Loan of May 20, 1970; Closing Date: Xay 31, 1977

Loan No. 885 Third Jengka Triangle Land Settlement Project; US$25.0Million Loan of March 30, 1973; Closing Date: December 31, 1981

The projects consist tf the clearing of forest, the planting of62,000 acres of oil palms and 3!;,000 acres of rubber and the settlement of10,000 families in the Jengka Triangle (State of Pahang). The Federal LandDevelopment Authority (FELDA), responsible for the execution of the project,operates efficiently and its standard of planting and maintenance is high.The first project (533-MA) has been completed. Cost overruns are estimatedto have been about US$5 million or 20 percent of appraisal cost estimates,of which about US$3 million is due to the US$ devaluation. The Second JengkaProject (672-MA) is also mostly completed. But, due to timber shortages,the housing program is somewhat behind schedule. Cost overruns are estimatedat about US$3.5 million or 10 percent of appraisal cost estimates of whichabout US$3 million is due to the US dollar devaluation. In terms of economicviability, improved prospects for palm oil and rubber prices have fullycompensated for cost overruns on both projects. The Third Jengka projectis proceeding satisfactorily and is somewhat ahead of schedule.

Loan No. 673 Jen&ka Forestry Project; US$8.5 Million Loan of May 20,1970; Closing Date: June 30, 1974

Implementation of the project, consisting of a highly complexintegrated forestry products industry established in the Jengka Triangle,suffered because of management and technical problems, which were bothtraced to the lack of previous experience of this kind in Malaysia. How-ever, corrective steps were taken and performance, both managerial andfinancial, has since been satisfactory. No postponement of the ClosingDate is presently expected.

1/ These notes are designed to inform the Executive Directors regardingthe progress of projects in execution, and in particular to reportany problems which are being encountered, and the action being takento remedy them. They should be read in this sense, and with theunderstanding that they do not purport to present a balanced eval-uation of strengths and weaknesses in project execution.

ANNEX IIPage 4 of 6

Loan No. 700 Fifth Power Project; US$20.0 Million Loan ofJuly 16, 1970; Closing Date: January 31, 1975

Implementation of the project consisting of extensions to existing

thermal plants of the National Electricity Board system were delayed because

of manufacturers' delays, particularly in supplying structural steels and

turbo-alternators. The Closing Date of this loan will have to be extended.

Loan No. 753 Second Telecommuurications Project; US$18.7 Million Loanof June 21, 1971; Closing Date: June 30, I976

The project includes facilities and equipment to improve the do-

mestic and international telecommunications systems. Implementation hasbeen delayed but better progress is now being made and there are reasonable

prospects that the project will be completed on schedule.

Loan No. 561 Kuala Lumpur Water Supply Project; US$3.6 Million Loanof September 27, 1968; Closing Date: September 1, 1974

Loan No. 908 Second Kuala Lumpur Water Supply Project; US$13.5 MillionLoan of June 14, 1973; Closing Date: June 3G, 1978

The projects consist of the improvement and expansion of water

supply facilities in the Kuala Lumpur area. Implementation of the first

project had been delayed because the main civil works contract had to be

retendered following the death of the main contractor and the liquidation

of his firm. Costs were within the original estimates and work has beencompleted. However, the Closing Date had to be postponed for a second timeto September 1, 1974 to allow for the payment of retention monies. The

original Closing Date was September 1, 1972. Tenders for certain parts ofthe second project have been awarded and site investigations for the pro-

posed dam are now completed.

Loan No. 599 Education Project; US$8.8 Million Loan ofMay 23, 1969; Closing Date: December 31, 1974

The project will provide in 21 new schools about 11,000 student

places, of which about 2,500 will be in Sabah and Sarawak for secondary

education and teachers training and about 8,500, mainly in PeninsularMalaysia, for vocational, technical and agricultural education. Project

implementation generally is about six months behind schedule, due to somesiting problems and to staff shortages in the Public Works Department which

delayed preparatory design nrocesses, but is now progressing well. All but

one of the 21 project institutions should be completed by end 1974. A start

on the construction of the remaining project item, one of the three agricul-tural schools in Peninsular Malaysia, was considerably delayed by difficulties

in obtaining a suitable site. Although the site is now acquired and con-

struction has already begun, the Closing Date will require postponement.

A1iNEX IIPage 5 of 6

Loan No. 810 Second Education Project; US$15.5 Million Loan ofApril 5, 1972; Closing Date: December 31, 1977

Under this project the expansion of technical and vocationaleducation in Malaysia, started under the first project, will be continuedby the construction of 8 schools, providing 4,700 student places, and bythe establishment at the University of Penang of science schools providingabout 2,600 student places. The project includes also the establishment ofan educational center which will provide a curricula improvement course forteachers and the provision of educational television which is expected toserve some 500,000 primary and secondary students. Progress is generallysatisfactory.

Loan No. 774 Sabah Ports Project; US$16.1 Million Loan ofJune 30, 1971; Closing Date: June 30.L 1975

The project consists of the construction of new ports at KotaKinabalu and Sandakan in the State of Sabah. Construction is behind sched-ule, initially due to mobilization delays caused by the seamen's strike inJapan and the staffing difficulties arising as a result of the projectmanager's death and more recently due to difficulties in the supply of rawmaterials.

Loan No. 799 Railway Project; US$16.0 Million Loan ofFebruary 11, 1972; Closing Date: December 31, 1975

The project includes mainly equipment and works for a dieseliza-tion program of the Malayan Railways (MR). Implementation is behind sched-ule by about one year because of the Railways' management problems and itsinitial unfamiliarity with the Bankts procurement procedures, MR is in theprocess of hireing consultants to help at in improving its management.

Loan No. 851 Kuala Lumpur Urban Transport Project; US$16.0 MillionLoan of July 20, 1972; Closing Date: A&ril 30, 1977

The project is designed to improve access to Kuala Lumpur fromthe adjacent town of Petaling Jaya. Project implementation is behindschedule mainly because of the management problems of the main contractor.The Government and the contractor are expected to take remedial measuresshortly.

Loan No. 880 Population Project; US$5.0 Million Loan of February 9,1973; Closing Date: September 30, 1978

The project is designed to assist Malaysia in achieving lowbirth and population growth rates and thus to contribute to an increasein per capita income growth and in the long run to ease the unemploymentproblem. The United Nations Fund for Population Activities (UNFPA) isproviding US$4.3 million in the form of a grant to finance certain compo-nents of the project. Progress is satisfactory after initial difficultiesin coordinating activities of the Government agencies involved, which hasdelayed loan dibursement.

AMNEX IIPage 6 of 6

Loan No. 931 Second Highway Project; US$19.5 MillionLoan of August 22, 1973; Closing Date: March 31, 1977

The project consists of construction and improvement of PeninsularMalaysia's main north-south highway and also includes various studies. Proj-ect :.mplementation is proceeding satisfactorily.

Loan No. 967 Johore Land Settlement Project; US$40.0 MillionLoan of February- 27, 1974; Closing Date: June LtO. 1980

This loan became effective on April 18 and the project is onschedule.

Loan No. 973 Western Johore Agricultural Development ProJect;Loan ofApril 5, 1974; Closing Date: June 30, 1980

The project consists of construction and improvement of drainagefacilities over about 330,000 acres of land in the Western part of the Stateof Johore. The project also includes an extensive agricultural developmentprogram including changes in cropping patterns, introduction of new agro-nomic techniques and provision of agricultural supporting services. Theloan was signed on April 5, 1974. It is not yet effective.

Loan No. 974 Third Education Project; Loan of April 5, 1974;Closing Date: December 31, 1980

The project consists of the following: (i) seven secondary schools,(ii) four teacher training colleges, (iii) one polytechnic, (iv) one juniorcollege, and (v) educational television and radio. The loan was signed onApril 5, 1974. It is not yet effective.

ANNEX IIIPage 1 of 2

MALAYSIA

SIXTH POWER PROJECT

Loan and Project Summary

Borrower: National Electricity Board

Guarantor: Malaysia

Amount: US$45.0 million

Terms: 20 years including 5 years of grace withinterest at 7-1/4 percent per annum

Project Description: The project consists of:

(1) Construction and installation of about132.5 miles of 275 kV lines and associatedsubstations to link up the Temengor Hydro-electric Scheme with NEB's system at Papanand to extend the main system southwardfrom Port Dickson to Malacca;

(2) Extension of associated transmission anddistribution system under 275 kV;

(3) Establishment of control and load dispatchingcenter; and

(4) Provision of consulting services.

ANNEX IIIPage 2 of 2

Estimated Cost: US$ MillionLocal Foreign Total

1. 275 kV Transmission Linesand Substations(i) Temengor-Papan 10.7 17.8 28.5

(ii) Port Dickson-Malacca 3.6 6.7 10.3

Subtotal 14.3 24.5 38.8

2. Associated Transmission andDistribution Sytem 6.9 16.5 23.4

3. Control and Load DispatchingCenter 2.0 3.5 5.5

4. Consulting Services 0.3 0.5 0.8

TOTAL pROJECT COST 23.5 45.0 68.5

Financing: US$ Million

Bank Loan 45.0

NEB Funds 23.5

TOTAL 68.5

Estimated Disbursements: US$ Million

Bank FY 1975 1976 1977 1978 1979

Annual 11.0 13.0 15.7 4.4 0.9

Cumulative 11.0 24.0 39.7 44.1 45.0

ProcurementArrangements: International bidding in accordance with the Bank's

"Guidelines for Procuremenit" except for protection

equipment (US$35,000). Local manufacturers would

be allowed a margin of preference of 15 percent

or the actual. customs dtuty, whichever is lower.

Consultants: Preece, Cardew, and Rider (U.K.) will be responsiblefor preparation of bidding documents and supervi-

sion of ccnstruction.

Rate of Return: The project is the least cost alternative at

discount rates up to 13 percent.

Appraisal Report: Report No. 347a-rMA date(d June 20, 1974.

I BRD 10866lee'~-zdo12 -:0,0 lo JANUARY 1574

4 MALAYSI-A

-NATIONAL ELECTRICITY' BOARD- I H A I L A NDSIXTH POWER PROJECT

HYDRO THERMAL< El BELOW60MW EXISTING

.6U S,1900 M1W EXISTING

- 't * -\ -= . ,{, r' b_', O 2UNDER CONSTRUCTION

ALOR STAl ) TRAtSMISSION LIN

275 KV EXISTING

S - ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~132 KV EXISTING

_____66 KV EXISTING-~~~~~~~~~~~ ~~~~~275 KY UNDER CONSTRUCTION

_____275 KV PROGPOSED PROJECT- A ~~~~~~~~~~~~~~~~~~~~~~EXISTING SUBSTATIONS

A ROPOSED SUDSTATIOrNS;. A OIL EN GINE STA-IONS

. 4F04~GQ IKy'AKMANDfN .IDTEMyNGOR I \ \WINDUSTRIAL ZONEShAY WAMOIN OTEMENGOR I . ~~~~~~~~~~~~~~STATE BOUNDARIES

"^.v 'l , .>t F<. $ \ KUALA TRENGGANU INTERNATIONAL BOUNDARIES

PA PIT eL ' / !b .W ,-

60' | isnrw w;t ;&HENDEROH C .6

4~ ~~~~~TPN rJK -' .o' V. -1 DUSN M V .-BlSC ML t h KLOETeS . =- .- - .PAPON 20O' 0 4;

-.? . U gf n vI NWNM[X/ EMMVPPER TELOM .- . '- -Kt - - - f - R I ILOMETRS

40 ~~~~~~~~~~~~~~~~~ROBINSON FALLS4

,,~~~~. > CONNAtJGLRD A' / KUALA LUPUR SOU'T ih~ N~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

.41 .\ .' '

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