Document of

The World Bank

FOR OMCAL USE ONLY

Report No. P-3652Z-I

REPORT AND RECO?tEDATION

OF TEE

PRESIDENT OF THE

INTERATIONAL DE OPMET ASSOCITION

TO THEE

EXECUTIVE DIRECTORS

ON A PROPOSED CREDIT

OF SDR 7.2 MILLION

TO

THE BEPUBLIC OF NIGER

FOR A

POWER ENGINEERING AND TECHNICAL ASSISTANCE PROJECT

July 2, 1984

do dcuamet h. restricted disibution ad may be used by recipients only in the pedfonance oftheir official duties. Its eontents omy not Otherwise be disclosed without World Bak authorization.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CUERENCY EQUIVALENTS

Currency UnLit CFAP l/US$ 1.00 CFAP 392ClAF 1,000 = USS 2.55USS 1.00 = SDR 0.96

FISCAL YEAR

Government of Niger - October 1 - September 30NIGELEC January 1 - December 31

ABBREVIATIONS AND ACRONYIS

AEK - Autoritt du Barrage de KandadjiCCCE - Caisse Centrale de Cooperation EconomiquecmES - Centre de retiers de l'Electricite et de 1'Eau-ESIE - Ecole Superieure Interafrecaine d'Electricit'eFIPEC - Piduciaire Paris Expertise ComptableGON - Government of NigerGwh - gigawatt hourIDA - International Development AssociationKfW - Kreditanstalt fUr WiederaufbaukWh - kilowatt hourLRNC - Long Run Narginal CostMEI - Ministere des Nines et Industr_esNTP - Ninistere des Travaux Publics et de l'UrbanismeNEPA - National Electric Pover AuthorityNIGELEC - Soc-ete Nig-reenne d'ElectricitePPF - Project Preparation FacilityPSN - Power Sector MemorandumSONICHAR - Societe Nig6rienne de Charbon

l1 The CF4 Franc (CFAF) ss tied to the French Franc (FF) in the ratioof FT I to CFAF 50. The French Franc -s currently floatJng.

FOR OMFFCIL USE ONLYREPUBLIC OF NIGER

PRESIDERT' S REPORT

POWER ENGINEERING AND TECHNICAL ASSISTANCE PROJECT

Table of GPatents

Page No.Credit and Project Summary ....................... .....* .. i

I. THE ECONOMY .................... l.-.9................ Background * Economic Achievements in the Seventies 2The Early Eighties and the Uranium Crisis .... 3

Public Finance 3Balance of Payments and Debt 3

Niger's Reaction to the Crisis .................. 4Struictural Adjustment 5.................... ...... 5Niger's Future Development Prospects ............ 6

II. WORLD BANK OPERATIONS IN NIGER ....................... 7

III. THE ENERGY AND POWER SECTOR ...............*9**........ 8A. Energy sector ....... ... ................. 8B. Power Sector .............................. 10

Power Supply and Demand ...................... 10

Power Sector Organization .................... 11Existing Facilities ............... ...... .... 12

Sector Development and Planning ............. . 13NIGELEC Organization, Menpower and Training .. 15Tariffs *..* ............................... 16NIGELEC Finances .... .......... ....... 17

Background .............................. 17

Past Financial Performance ............... 17Present Financial Position .............. 18Future Finances ... .. o.. ....... ........... 19

Accounting and Audit ........... ....... ....... 20

Sector Development and Rationale forBank Involvement ...... .............. ...... 20

IV. THE PROJECT ........... **..Owe .... 21

* Background *******............*......**... 21Project Objectives .................... .... ...... 21

Project Description ...... ... ... ....... ... .. ... .. 22

Project Cost and Financing Agreements ........... 22Project Implementation and Monitoring ........... 23Procurement .... *o .............................. 24

Disbursement ...... o.. o.* ** ..*..* **** ***o ... o *** 24

Project Benefits and Risks ......... .............. 25

V. LEGAL INSTRUE3NTS AND AUTHORITY '...'' .............. 25

VI. RECOMMENDATION ***................ *... RECOMMENDA*.ION 26

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties Its contents may not otherwise be disclosed without World Bank authorization.

Table of Contents (Cont'd) Page No.

ANNXES

I. Niger Social Indicators Data Sheet ................... 27

II. Status of Bank Group Operations in Niger ............. 32

III. Supplementary Project Data Sheet ...... 0.............. 34

IV. NIGELEC' Income Statements Funds FlowStatements and Balance Sheets: 1979-1987 *........ 36

V. Project Timetable ....... .*.**********.**... ....... 39

VI. Disbursement Schedule ........ ..... *..... .......... 40

VII. Selected Documents and Data availablein the Project File .......... * .................. 41

NAP Niger Energy Resources and Infrastructure in 1982(IBD Nap No. 17253)

REPUBLIC OF NIGER

POWER ENGINEERING AND TECHNICAL ASSISTANCE PROJECT

Credit and Project Summary

Borrover: Republic of Niger

Beneficiary: Societe Nigerienne d'Blectricite (NIGELEC)

Amount: SDR 7.2 million (US$ 7.5 million)

Terms: Standard

Relending Terms: The Government of Niger would pass on an amountequivalent to US$ 1.9 million to NIGELEC in the formof equity. The Government would on-lend the remainingUS$ 5.6 million to NIGELEC for 20 years, including a 5year grace period, at an interest rate of 10.08% pa.The foreign exchange risk on the amount re-lent wouldbe borne by NIGMELC.

Project Description: The proposed project would assist Government to definea least-cost long-term program of power developmentand to improve the organization and management of thepower sector. The project would also help NIGELECimprove its internal organization, nanpower planning,training, financial management, and its distributionsystem. The project would provide for:

(a) a pover planning study to devise the least-costprogram of system development, engineering forpreparation of bid documents for the next powerproject in the program, and technical assistancein the supervision of these studies;

(b) a study of future sector organization;

(c) a study of NIGELEC's internal organization,management, and manpower requirements;

(d) training of NIGELEC engineers and technicians;

(e) a study of NIGELEC's tariff based on long-runmarginal cost principles; and

(f) equipment to rehabilitate and improve theoperational efficiency of part of NIGELEC'sdistribution system.

- ii -

Benefits and Risks: No significant technical risks are associated withproject implementation. The expected benefits of theproject are: definition of future power development,streamlined sector organization and utilitymanagement, and improved efficiency of the electricaldistribution system.

Project Costs

The proposed project is estimated to cost US$ 7.9 million, includingforeign costs of US$ 6.9 million, and excluding taxes and duties. TheGovernment of Niger plans to exempt imported goods and services from taxes andduties, and to assume responsibility for all taxes on locally supplied goodsand services. The breakdown of the project cost estimate follows:

- iii -

Nillicn of US$ -----Local Foreign Total

1. Power PlanningPower Planning Study 0.15 1.45 1.60Engineering for preparation of bid

documents for next Power Project 0.19 1.27 1.46Planning Specialist 0.02 0.05 0.07

Subtotal 0.36 2.77 3.13

- 2. Sector Institutions Study 0.01 0.10 0.11

3. Study of NIGELEC Organization, Management,and Manpower Requirements 0.05 0.17 0.22

4. Training 0.04 0.77 0.81

5. Tariff Study 0.03 0.14 0.17

6. Distribution equipment 0.27 1.70 1.97

7. Base Cost 0.76 5.65 6.41

8. ContingenciesPhysical 0.04 0.28 0.32Price 0.18 0.99 1.17

9. Total Project Cost a/ 0.98 6.92 7.90

Financing Plan b/

Millions of US$ -Local Foreign Total

IDA 0.58 6.92 7.50Government and NIGELEC 0.40 - 0.40

Total 0.98 6.92 7.90

a/ Including up to US$ 1.0 million to be financed under the ProjectPreparation Facility.

b/ The proportion of IDA financing forms part of the Special Action Programin Niger.

- iv -

Estimated Disbursements (US$ million equivalent)

IDA FY84 FY85 FY86 FY87

Annual 0.7 a/ 2.9 2.5 1.4

Cumulative 0.7 3.6 6.1 7.5

Rate of Return: Not Applicable

Staff Appraisal Report: None

Map: 17253

a/ Including reimbursement of PPF advances.

INTEI. ATIONAL DEVELOPMENT ASSOCIATION

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

CREDIT TO THE REPUBLIC OF NIGER FORA POWER ENGINEERING AND TECHNICAL ASSISTANCE PROJECT

* 1*. I submit the following report and recommendation on a proposed devel-opment credit for the equivalent of SDR 7.2 million (US$7.5 million equivalent)on standard IDA terms to the Republic of Niger to help finance a proposed PowerEngineering and Technical Assistance Project.

PART I - THE ECONOMY 1/

2. A report entitled "Economic Memorandum: Niger" (No. 11092-NIR) wasdistributed to the Executive Directors on May 13, 1976. An economic missionvisited Niger in July 1983 in connection with an IMF Standby mission, and themain findings of the mission are incorporated in the following paragraphs.These findings were subsequently updated by a mission in December 1983. Annex Icontains updated country data.

Background

3. With its 1.27 million km2 of land, Niger is about 2.5 times the sizeof France. Niger is a landlocked country, and its closest access to the sea isabout 600 km from Niger's southern border. Nearly 90% of the total populationis concentrated in a thin band along the southern border. Only 12% of the landis considered arable, and only 2.5% is actually under cultivation. Rainfall islimited (350-750 mm) and often irregular, and soil fertility is low and de-clining due to its intensive use. The total population was estimated at 5.7million in 1982 and is growing at about 3.1% per annum. Per capita income wasestimated at US$310 in 1982. Niger's social indicators are among the lowest inthe world. Life expectancy at birth, which is only 43 years, is low even byAfrican standards. The adult literacy rate is only 8% and the primaryenrollment ratio only 23%.

4. Niger belongs to the West African Monetary Union which Irovides itsmembers with a common currency (the CFA Franc) fully convertible into FrenchFrancs. The full convertibility of the CFA Franc and the liberal foreign tradepolicies pursued by the Monetary Union members have kept the Nigerien economyvery open in the past. This openness was further strengthened by the verystrong trade links that have always existed between Niger and i.s neighbors,particularly Nigeria. Another particularly important characteristic of the

1/ This section is substantially unchanged from the President's Reportfor the Economic and Financial Management Improvement Project (ReportNo. P-3657-NIR).

- 2 -

Monetary Union is the strong discipline imposed over monetary and fiscalpolicies of the member countries, in return for the guaranteed convertibilityof the currency. As is generally the case in open economies, exceasive creditexpansion quickly leads to increased imports, balance of payments deficits, anda loss of foreign reserves. This being recognized by the Union membercountries, their common Central Bank is empowered with strong controls overdomestic credit ceilings.

5. Like other Sahelian economies, Niger's is dominated by subsistenceagricultural activities with millet and sorghum accounting for 80% of thecultivated area. Livestock is also an important source of income for a largesegment of the population and is one of the country's major export commodi-ties. Despite its meager agricultural resource base, Niger has traditionallybeen self-sufficient in food production except during the Sahellan drought inthe early 1970s. The discevery of large uranium deposits in the late sixtiesand their development, propelled the mining sector into an important positionin Niger's economy. The sector is now the country'e principal foreign exchangeearner and an important source of government revenues.

Economic Development in the Seventies

6. Dur4ng the past decade Niger went from a period of despair to a periodof almost unlimited hope for the future. Between 1970 and 1975 Nigerexperienced one of the severest and longest droughts of its history. Itslivestock herd was decimated, and food production declined dramatically. Atthe height of the drought in 1974/75, Niger registered a food grain deficit ofnearly one million tons. Real per capita GDP declined at an average annualrate of 0.5% during the first half of the decade. On the expenditure side,per capita consumption declined by 6% per annum although gross domesticinvestment grew at a modest annual rate of 3.2% with the help of increasingforeign aid. Uranium production and export began in early 1971, but theimpact of the sector on the national economy was only moderate in the firsthalf of the seventies as prices were stable.

7. During the second half of the decade, Niger's fortune improveddramatically. More favorable climatic conditions allowed an acceleratedrecovery of the agricultural sector. With intensive government programs theNigerien livestock herd was rapidly reconstituted. Food production steadilyincreased and by 1979 Niger was once again self-sufficient and even managed toshow a substantial surplus. Moreover, the uranium sector experienced a boom.By 1977, uranium exports accounted for 53% of total exports of goods end non-factor services, end that share increased to 70% at the end of the decade. Asuranium prices and quantities exported increased rapidly, Niger's total exportreceipts increased from CFAF 12 billion in 1975 to CFAF 85 billion in 1979.The contribution of the sector to public revenues followed the same trend.The share of uranium in total government revenues increased steadily from 18%in 1975 to an all time high of 46% in 1979. Government uranium revenues grewfrom CFAF 4 billion to CFAF 25 billion in the same period. As a result of thegood performance of agriculture and mining sectors, real GDP grew at anaverage annual rate of 7.2%; per capita consumption grew at an annual rate of4.5% and gross domestic -nvestment at an average rate of 16.7%.

8. On balance, therefore, Niger's economic performance during the 1970swas very good, particularly by Sahelian standards. This was due in large part

to the sound economic policies of the Government which encouraged a rationaluse of foreign a±d and export earn±ngs, and which limited pricing and otherpolicy distortions that are common among other West African countriea.

The Early Eighties and the Uranium Crisis

9. The decade of the eighties 3tarted with serious signs pointing to along lasting crisis for the uranium sector. Between 1979 and 1982 real pricesof uranium exporta fell by more than 50%. Uranium export earnings stagnatedat around CFA? 95 billion and uranium revenues declined sharply from CPAF 25billion in 1979 to CFAF 13 billion in 1982. During the same three years,agricultural production also deteriorated. Unfavorable climatic conditionsforced Niger once again to supplement its food production by increasing quan-tities of grain imports. Food grain deficits in 1981, 1982 and 1983 reachedabout 100,000 tons per year. During 1983, in particular, the country experi-enced a serious drought. As a result of these developments, real GDP stag-nated in 1981 and 1982 and declined by nearly 3% in 1V83.

10. Public Finance. Unfortunately the serious slowdown in economicactivity was not followed by an equal slowdown in Niger's public expendi-tures. The lack of clear signals from the uranium market experts left theNigerien authorities uncertain about the future of the sector. Expecting aquick recovery of uranium prices, the Government continued to implement itsambitious Five-Year Development Plan by increasingly relying on foreignborrowing to finance the public investment expenditures. It was not until1982 that action was initiated to adjust to the reduced export and revenueprospects.

11. As the uranium boom came to an end in 1980, overall Government reve-nues stagnated in 1981 and 1982 at a level of CFAF 75 billion and even de-clined in 1983 to 0FAF 72 billion. Meanwhile, overall Government expenditurescontinued to grow rapidly, increasing from CFAF 124 billion in 1979 to a levelof CFAF 173 billion in 1982. This was not only the result of the Government'saggressive investment strategy but also due to the unsatisfactory financialperformance of the parastatal sector which had expanded rapidly during thelate 1970s. Poor management and frequently uneconomic government policies andregulations led to large operating losses in many public enterprises, addingan additional burden to the government budget. The overall government deficitlncreased from CFAF 65 billion in 1979 to CFAF 103 billion in 1982, requiringprogressively higher levels of borrowing which, in turn, created a severe pub-lic debt burden. Public debt service as a percentage of Government revenues:ncreased from 2% in 1979 to 20% in 1982.

12. Balance of Payments and Debt. The heavy investments in equipment andinfrastructure associated with the opening of a second uranium mine and theimplementation of a large public investment program resulted in increasingcurrent account deficits for Niger's balance of payments, in particular afterthe uranium exports started to stagnate and agricultural imports increasedduring 1980-82. The financing of this growing deficit forced the country toaccumulate a heavy foreign debt which reached CFAF 296 billion in 1983.

13. Although official development assistance to Niger more than doubledbetween 1977 and 1981, nearly 50% of its foreign debt was contr^-ted on com-mercial terms. As a result, debt service payments increased d±. atically from

- 4 -

$9 million in 1977 to $1s0 million in 1983, equivalent to 11% and 46% of thecountry's exports of goods and services, respectively. This ratio is expectedto continue to increase rapidly during the next two years.

Niger's Reaction to the Crisis

14. Faced with the rapid deterioration of the country's economic and fi-nancial situation, Niger's Head of State instructed his Government in 1982 to(a) introduce urgent austerity measures in the 1982/83 budget and (b) preparea consolidation program for 1983/84 and 1984/85 aimed at restoring balance tothe financial situation of the public sector. Subsequently, in 1983, a numberof changes in the Government's organizational structure were made whichstrengthened the Ministries of Plan and Finance and gave the Prime Ministeroverall responsibility for the economic and financial management of thecountry.

15. A strict auaterity program was implemented in 1982/83. Governmentwages and salaries were frozen at the level of the previous year. Some bene-fits provided to high school students were discontinued, and government pur-chases of goods and services were severely controlled. Most importantly, pub-lic investment expenditures were reduced by 21% and a tighter control onforeign borrowing was imposed. As a result of these measures, the Governmentoverall deficit was stabilized at the previous year's level, despite a 33%increase in public debt service payments. The measures also had a favorableeffect on the balance of payments by reducing the trade and current accountdeficits by 50% and 40%, respectively. However, Niger's economy remaineddepressed during 1983 due to the continuing sluggish performance of the urani-um sector and the low level of agricultural production as a result of thesevere drought.

16. During 1983, the Nigerien Government prepared, with the assist_ace ofthe World Bank, a two-year consolidation program for the period of 1983-85 tohelp the domestic economy adjust further to current financial constraints. Thefirst phase of this program (1983/84), which is supported by an IMP StandbyArrangement of SDR 18 million and a C?F of SDR 12 million, calls for a 35%reduction in the overall government budgetary deficit and a further 25% reduc-tion in the current account deficit of the balance of payments. To achievethese objectives, the Government is committed to: (a) implement a fiscalreform program and improve tax collections; (b) limit the growth of currentexpenditures to 5%; (c) initiate measures to stabilize the financial situationof seven major public enterprises; (d) reduce public investment expendituresby nearly 40%; and (e) reschedule the public debt due in 1984. The Paris Clubmet in November 1983 and approved Niger's request for a rescheduling of itsofficial debt. The Government is currently preparing for debt reschedulingnegotiations with the country's -rivate creditors later in 1984.

17. As for the second phase of the consolidation program, the Governmentis scheduled to start discussions on a new IMF program for 1984/85 in July.In addition, it has requested the assistance of the World Bank to formulate amedium-term program of structural reform to lay a sounder foundation foreconomic growth and development in the future.

-5-

Structural Adjustment

18. The resources needed for the development of Niger -- humrn andfinancial, domestic and foreign, public and private -- are likely to remainseverely constrained during the remainder of this decade and beyond. Majorchanges in domestic policies focused on increasing the efficiency with whichthese scarce resources are used are, therefore, critical if a significantturn-around in Niger's growth prospects is to be achieved. Broadly, thisinvolves a reduction of distortions in the structure of economic incentives inthe country as well as improvement in the allocation of public resources.

19. The structure of prices in Niger is considerably less distorted thanin many of its neighboring countries because of the relative openness of theeconowy. Ptrces of agricultural inputs and outputs, for example are broadlyin line with world markets as are energy pr;ces. However, the overall incen-tives structure has favored a rapid expansion of the public 3ector to thedetr-ment of private initiative. A large number of parastatals have beenestablished to enable the Government to intervene directly in the domesticeconomy-. But the efficiency of the public enterprises has generally been lov.In agriculture, in particular. parastatal organizations have become bothhighly costly and inefficient in providing input supply services and marketingoutlets to farmers and greater private sector involvement is needed to enablethe sector to fulfill --its leading role in the country's long-term development.Similar problems exist in other key sectors of the ecoumy. A major reform ofthe parastatal sector, -ts policies and its institutional framework, is thusan important component of the structural adjustment program.

20. Also, Niger's current industrial incentives system has considerableshortcomings. Industrial promotion policies, together with the trade regime,have favored activ-t-es which are not necessarily in line with the comparativeadvantage of the country and have resulted in an inefficient use of cap-taland only limited employment opportunities. Also, the allocation and admin-istration of industrial incentives has, de facto, d-scr;minated against smalland medium-scale industry development and have given the Government excessivecontrol over private investment decisions.

21. In general, the Government will need to focus its scarce financialresources and administrative capacity on only a limnited and selective set ofproduction growth and poverty alleviation problems for which market forcesalone would be insufficient. Moreover, much more efficient allocation ofbudgetary resources will need to be achieved through improved planning/pro-gramming procedures to ensure that existing development projects are morefully ut-l-ized and maintained, and that new investments are only commencedwhen they are of the highest priority. Bes-des taxation, public resourcemobilization must also be improved through the introduction of new costrecovery mechanisms. Finally, the Government will need to restructure itslarge accumulated debt, which threatens to jeopardize the country's futureeconomic and soc-al development.

22. The Government of Niger fully recognizes the need for a program ofstructural reform if the country is to have any hope of maintaining a minimumlevel of development momentum. However, the formulation and implementation ofthe necessary policy changes will take considerable time and will require highlevels of external technical and financial assistance. An Econoric and Finan-

- 6 -

cial Management Improvement Project, which was recently approved by theExecutive Directors, constitutes a first step in this process. Besides thestrengthening of country's pr-lic adzinistration, the Project will assist theGovernment in defining a medium-term adjustment program to complement itsshort-term stabilization efforts.

Niger's Future Development Prospects

23. Whereas structural adjustment is essential in Niger to permit theeconomy to realize its productive potenial, it is, in itself, not a sufficientcondition to achieve sustainable long-term growth. A concerted developmenteffort is required to reduce the country's severe real resource constraintsand expand the production base of the economy. Primarily, this w11 involvefurther development of the agricultural sector and, to a lesser extent, of theenergy and mining sectors. It also requires the accelerated development ofNiger's human resources in combination Ywth an active program to slow popula-tion growth.

24. Vith the fundamental change in its economic outlook as a result ofthe downturn of the uranium sector, Niger will, once again, have to rely pri-marily on its lIm4ted agricultural resources for its economic development inthe medium term. However, the future of its agriculture is uncertain. Pastincreases in production were achieved through more intensive use of bettersoils and greater use of marginal lands. Continuation of these practicesworld severely reduce aoil fertility over time. The maintenance of food self-suffYciency in the eighties and beyond can only be achieved through gradualimprovements in yields on lands that are already under cultivation. Givenpast low levels of investment in human resources and the limited state of theexisting agricultural technology suited to Niger's conditions, the neededimprovements will be very difficult to achieve without major and continuingsupport from the international community. Also, support for greater use ofmodern agricultural inputs, the development of sma1 l scale irrigation schemes,and applied research will bie cracial to the future development of Niger'sagriculture.

25. Other development potential might exist in (non-uranium) mining andenergy. Limited geological surveys and exploration have produced mixedresults. An important coal deposit of apparently good quality was identifiedin 1983, but the landlocked position of Niger and the transportation cost foreven the local market casts serious doubt over the economic viability of thedevelopment of the coal deposit. Probably more promising is the ongoing oilexploration which may have identified a small oil reserve that could in timereduce Niger"s oil import bill. More efforts and better plann-ng of geogicalsurveys and exploration will be needed to have a better assessment of energyand mining development potential.

26. Efficient use of these potential resources will require furtherdevelopment of the education system. Primary education will need to beexpanded as rapidly as feasible, and professional and vocational trainingdesigned to meet the specific needs Df the Nigerien economy will need to bemade available to develop humra capital as a productive resource and reducethe country's skilled manpoder conatraints. However, the -ncreasing scarcityof public revenues will require original solutions to the financing of suchhuman resources development. On the other hand, the current rate of popula-

-7-

t-on growth of 3.1% per year means that the economy would have to devote anincreasing share of its resources just to maintain existing low levels ofincome. Consequently, reduction of the population growth must accompany thedevelopment program.

PART II - WORLD BANK OPERATIONS IN NIGER 1/

27. Twenty-four IDA credits have so far been approved for Niger, totalingUSS225.9 million. Annex II contains a simmary statement of these credits asof March 31, 1984. Eight credits have been for the rural sector (droughtrelief, rural development, forestry, irrigation and livestock), and five forroads, primarily aimed at upgrading the main and feeder road networks. Thenine other credits covered telecommunication, education, and industrialdevelopment, and economic and fianwcial management suprort to the Government.

28. The Bank's operational strategy in Niger is two-fold: to assist thecountry in the formulation and implementation of appropriate adjustment pro-grams for the short- and medium-tern future; and to address the country t slong-term growth and development issues. Paced with the severe financialcrisis in 1982, the Government of Niger has increasingly turned to the Bank --

and to the IMF -- for technical and financial assistance in the preparation ofappropriate policy responses. This has led to a rapid expansion of the BankVsdialogue with the country on macro-economic and sectoral policy issues duringthe last two years, both separately and in conjunction with project lending.

29. Lending operations have supported Niger's long-term development byemphasizing productive investment and institutional reform, particularly inthe agricultural sector. Here, the severity of natural constraints and thepresent state of technical knowledge made development slow and difficult.However, experience with ongoirF projects has demonstrated that potential doesexist. Bank Group lending has supported projects to increase productionthrough gradual development of irrigation potential, provision of services topast.oralists, and crop-livestock integration. Future lending in the sectorwill continue in these directions, while seeklng especially to improvetechnical packages, lover irrigation costs and introduce smaller-scale,grassroots-initiated development projects. Other sectors that will continueto be the focus of Bank Group operations will be human resources (health andeducation), water supply, energy and transportation. Finally, depending onthe success of the Nigerien Government's efforts to define and implement aprogram of broad policy reform, Bank Group lending in FY86 or FY87 couldinclude other forms of non-project lending such as sectoral or structuraladjustment type operations.

30. Niger's performance in project implementation and disbursement has in

1/ This section is substantially unchanged from the President's Reportfor the Economic and Financial Management Improvement Project (ReportNo. P-3657-NIR).

-8-

general been quite satisfactory, particularly in light of the environmental,institutional, and managerial constraints within the country. However, due tothe current slump in the world economy, the country is having difficulty meet-ing counterpart financing requirements which during the uranium boom were setat levels of 20-30% of total project costs. In view of the determined stepswhich the Government is taking to resolve 4ts financial difficulties, IDA has,under its Special Action Program, introduced increased cost sharing arrange-ments for new, as well as ongoing projects and, where necessary, introducedrevolving funds to pre-finance project expenditures. The proposed projectincludes the former feature -- 95% IDA financing of project costs and a re-volving fund.

PART III - THE ENERGY AND POWER SECTOR

A. Energy Sector

31. In 1981, total energy supplied to Niger was equivalent to 1,032,000tons of oil, or 180 kg/capita. Table 1 shovs energy supply, conversions, andend use by sectors of the economy. Puelvood accounted for about 80% of grosssupply, and domestic coal contributed 1.5%. The remainder was imported in theform of petroleum productB and electricity. Households consumed over threequarters of total energy, virtually all in the form of fuelvood for cooking.The transportation sector used almost half of the petroleum products; in-dustry, mining and households consumed the rest. The low level of developmentof the electric power subsector is illustreted by its low share in total netsupply (2.3%) and a consumption per capita of only 50 kWh in 1981. Estimatedaverage growth rates over the period 1976-1982 (including years of vigorouseconomic growth and subsequent recession) are: fuelwood 2.8% (tracking pop-'ulation growth), comercial energy in the modern sector 14.7%, total energy4.6%.

-9-

TABLE 1

Niger Energy Balance 1981(thousands of tons of oil equivalent)

Primary Energy Energy Products

Coal Fuelwood Petroleum Electricity TotalProducts

Gross SupplyDomestic 15 840 855Imports 164 10 174Re-exports (uplift) -1B -18

Subtotal 15 840 146 10 1,011

Conversions -15 5 -10-30 10 -20

Electrical DistributionLosses -3 -3

Net supply for end use - 840 116 22 978

ConsumptionHouseholds 743 5 5 753Transport 56 - 56Industry/Cc.mmerce 97 37 8 142Mining - 18 9 27

TOTAL 840 116 92 978

32. The level and structure of petroleum product prices provide the rightsignals for efficient energy use. Electricity tariffs (revised on October 1,1983) are based on marginal costs of an all-diesel inr'-atent program to 1990.The current structure is adequate for the medium term, and ltinger term tariffissues will be examined as part of the proposed project. Despite scarcity offuelwood, its prices are well below economic costs that include cost of eitherreafforestation or desertification. The second IDA-assisted forestry project(Credit NIR-226) includes financing of studies covering organization of fuelwoodmarkets, stumpage fees and pricing.

33. Except for uranium (which in the foreseeable future cannot be trans-formed into energy for domestic use), Niger's energy resources (see Map 17253)are limited. Three-quarters of its territory ia desert, and less than 2% iscovered by natural forest. In the north-central desert, near Anou-Araren, coalreserves total 9.4 million tons. Elsewhere in the desert regiou, coal andlignite deposits have been identified, but not sufficiently explored. Smallquantities of petroleum that have been discovered north of Lake Chad, are beingfurther evaluated. In the southwestern part of Niger, which forms part of theNiger River Basin, an estimated 1,330 GWh of average annual generation could bedeveloped at three hydro sites. An Energy Assessment Mission which visitedNiger in October 1982 identified three major issues:

- 10 -

(1) Puelvood shortage. Niger's meager fueiwood resources willcontinue to provide up to four-fifths of the country's grossenergy supply, mostly for cooking. Overexploitation of f)restshas made desertification the most pressing energy problem.Possible solutions are the introduction of more efficientwoodstoves and/or replacement of fuelvood by commercial fuels,which might be domestic coal, lignite, or imported kerosene.

(2) Containment of Energy Import Costs. Riger's commercial needs forenergy other than fuelvood, which are growing much faster thanthe economy, were fully supplied by imports until 1981. Sincethen, the substitution of domestic coal at Anou-Araren for gas-oil as a fuel for power generation has resulted in savings of theorder of 26,000 tons of oil per year. This temporary reductionof imports is likely to be offset within two or three years bygrowth of other requirements for petroleum fuels.

(3) Development of the Electric Power Subsector. The main problem isfuture supply of the Niger Valley, where transmission capacityimposes a ceiling on imports from Nigeria that will be reachedaround 1990, while fuel costs for diesel generation will riserapidly. Planning has been hampered by dispersedresponsibilities among pover sector entities and institutionalweaknesses.

B. Power Sector

Power Supply and Demand

34. The electric power sector in Niger has progressed rapidly over the last20 years, from a small beginning in the early 1960's to a reasonably wellorganized supply system. During this period the economic development of thecountry was to a large extent stimulated by the exploitation of uranium oredeposits near Arlit (see Nap 17253). The consequences for the power sector werean immediate requirement for electrical energy in the mining enclave and,because of the spinoff effects of the mining boom in other sectors, repid growthof demand in the populated regions of the Niger Valley (including the capitalNiamey), and along the southern border with Nigeria. In 1982 the totalelectrical energy requirement was 271 GWh, of which 51% was used in the NigerValley, 35% in the uranium mining enclave, and 14% in the remaining secondaryload centers. The nu=ber of low-voltage customers (mostly residential) reached39,600 at the end of 19982. In urban areas, the percentage of population havingelectric power service varies from 24% to 31%, but only 3.3% of the totalpopulation has access to electricity. Outside the uranium mining district, thesectoral distribution of electricity consumption is as follows (1981 data):

Households 36%Public administration 25%Large industry 21%Small industry and commerce 11%Miscellaneous 7%

TOTAL 100%

Electricity supply in Niger is a state monopoly that has been delegated to threeentities: Societe Nigerienne d'Electricite - WIGELEC, Soctkte Nig4rienne deCharbon - SONICHAR, and A:torite du Barrage de Kandadji - ABK.

Power Sector Organization

35. NIGELEC, incorporated in 1968, operates state-owned paver system assetsin urban centers of Niger as concessions. Under the concession system, a publicutility company is granted a license for a fixed number of years, to take over,construct and operate all facilities required, to levy agreed tariffs, and to-recover its capital at the end of the concession period. Several major cate-gories of assets - for exanple, hydropower installations and the entire trans-mission network, including substations and meters - are regarded as the propertyof the State and must be returned or made good by the company when its conces-sion expires; even if it has financed all, or part, of their cost. The conces-sionaire, like most public enterprises in francophone countries, is under the'tutelle" of more than one Ministry for technical and financial matters, anddoes not usually have control over planning in the sector. It is not uncommonunder the concession system for the Government to construct hydroelectric worksthrough a Ministry different from those exercising the 'tutelle' and then handthem over to the concessionaire for operation and maintenance. The principalbenefit claimed for the system is the participation of private capital in afield of public monopoly, ensuring commercial and efficient operation while theState in various degrees retains a measure of ownership and control. HoveverJwhere Government has a controlling interest, concessionaires are little morethan managing agents, and their autonomy has been eroded.

36. In Niger, the State holds 95% of NIGELEC'3 shares; the remaining 5% isowned by state agencies, three municipalities and the french Caisse Centrale deCooporation Economique (CCCE). Two ministries exercise supervision: Xinisteredes Travaux Publics (ITP) is responsible for technical regulation and cortrol ofthe concessions; Ministere des Nines et Industries (MKI), represents the Stateas majority shareholder on NIGELEC'S Board and supervises financial manage-ment. The State takeover of NIGELEC has made the concession system an anachro-nism, because the basic aim of attracting private investment no longerapplies. The disadvantage is evident especially in power planning, where res-ponsibilities are blurred. Wiat2in the concessions, NIGELEC may extend serviceas its financial means permit, but it has no formal obligation to do so.Elsewhere, in new secondary load centers, NTP pays for 4 i"tial iJ.-ostment inelectrification and then transfers the facilities to NIGELEC as a new conces-sion. Besides supplying electric power in urban centers covered by concessionagreements, NIGELEC operates water supply systems in these load centers as agentfor Government. For this service it receives an agreed re4muneration. NIGELECsupplies water of satisfactory quality and it has sufficient expertise to keepwater supply equipment in working order. Although separate accounts are keptfor the water supply and electricity departments, deficits of water supply tendto be covered by electricity revenues until Government settles the wateraccount. Problems of the water supply sector, including their relation to thepower sector, are being addressed in an ongoing project financed by Credit 1309-NI.

37. SONICHAR was formed in 1978 for the purpose of building and operating acoal mine and power plant in the Agades Region. The main shareholders are: GON(63%), the uranium mines (16%), the Islamic Development Dank (17%), and NIGELEC

- 12 -

(0.5%). Until 1981, the uranium industry in the north central part of thecountry met its own pover needs by captive diesel generating plants. Followingthe discovery of a small coal deposit in the Region (9.4 million tons), the^o°rernment of Niger (GON) planned a 32 NW coal-fired plant (about 800 km fromNiamey and 180 km from the m.nes) to substitute a domestic energy resource forimported petroleum fuels used by the existing diesel plants, and to supplyfuture mines. SONICHAR implemented the mining and power generation componentsOf the project, and NIGELEC built the main transmission facilities. SONICHARsells its net generation to NIGELEC for transmission and distribution to theuranium mines and to the cities of Arlit and Agadez.

38. The Autorite du Barrage de Kandadji (ABK), established in 1980, is anautonomous agency, reporting directly to the President of Niger, in charge ofPreparation and eventual implementation of the Kandadji Hydroelectric Projectand related irrigation developments. Current ABK activities comprise surveys,mapping, engineering, agricultural and socio-economic studies.

39. The main sector organization problems are:

(1) The concession system, which is conducive to divided ownership ofpower assets and operating responsibilities, and consequently tofragmented power sector planning;

(2) The ambiguous role of ABK an hydro power planner and nationaldevelopsent agency; and

(3) The coobination of power and water supply of urban centers withinNIGELEC, which in practice has led to support of water supplyoperations by revenues from electricity sales.

The proposed credit includes financing for a sector organization study whichwill review the concession system and, within that context, the roles andreaponsibilities of the different agencies.

40. Under an Economic and Financial Management Improvement Projset that wasrecently presented to the Executive Directors, a review of selected parastatalenterprises (including NIGELEC) has commenced with the objective of redefiningthe state role in economic activities and identifying institutional reforms.Conclusions affecting the power sector will be reviewed in conjunction with therecommendations of the sector organization study under the proposed project.During negotiations, GOO agreed to review these recommendations with IDA uponcompletion of both studies, and to agree on a timetable for a program of actionnot later than June 30, 1986 (Credit Agreement - Section 3.03).

Exisin Faiiis

41. Because of sparse population and large distances, there is no nationalpower sYstem. NIGELEC supplies the Niger Valley from a small system comprisinga generating station at Niamey (two 12 NW gas turbines and four 3 NW dieselsets, total 36 4W), and transmission lines Niamey-Tilabery (66 kY) and Niamey-Birni, Kebbi (132 kV), the latter connecting Niger and Nigeria (para. 42). Inthe north-central desert enclave, a secondary system consists of the SONICHAR-owned coal fired plant at Anou-Araren (32 MN), and NIGELEC-owned transmissionand distribution facilities. NIGELEC 1purchases SOiICHAR's output and deliversthe power via a 132 kV transmission line to two uranium mines at Arlit and ad-jacent townsites, and via a 20 kV line to Agades.

- 13 -

42. In 1976, the power systems of Niger and Nigeria were linked by a 132 kVtransmission line Niamey-Birnin Kebbi (264 km). Since then, Lossa, Tilabery andDosso have been connected to the emerging Niger Valley system- The contractwith Nigeria provides for import of up to 30 NW of non-firm power until 1996.The price (US$0.03/kWh), which is renegotiable every five years, has so farstayed well below the cost of electricity generated by use of petroleum fuel(fuel cost alone is US$0.10/kWh). Niger is importing the maximum possible quan-tity of energy while the local power plant in Niamey serves as standby in caseof interruption of supply over the interconnection. In recent years, over 90%of the Niger Valle7r electrical energy needs have been supplied from Nigeria,with a consequent large saving in fuel expenses. However, as line outages maylast one or two weeks, full standby capacity in Niger must be provided.

43. Although NIGELEC provides reasonably reliable service, distributionoperations are plagued by many technical and administrative weaknesses. In theNiger Valley system, a distribution maste- plan for Niamey, prepared in 1978,has served as a guide to planning, but financial limitations permitted onlypartial implementation. Because of excessive line losses and voltage drops,restructuring of the network around the new GOudel generating station northwestof Niamey is urgent. Elsewhere in the country, NIGELEC serves eighteen isolatedtowns and villages from small diesel installations totalling 13 MW, and asso-ciated distribution systems. Loads in these centres are small, but growingrapidly and accounting for a significant share of gas oil consumption. Wherefeasible, existing load centres and new ones, such as Say and Kollo (para. 45),should be connected to the Niger Valley system to minimize fuel consumption.

Sector Development and Planning

44. The SONICHAR steam-electric plant at Anou Araren was built to supplypower to four uranium mines, at a time that only two were in operation. Con-d-tions in the world uranium market make it unlikely that new mines in Nigerwill be opened in the foreseeable future- Therefore, adequate power supply inthe Agadez-Arlit system is assured for many years, and planning should focus onthe Niger Valley.

45. NIGELEC's short-term expansion aims at maintaining sufficient standbythermal capacity to cover the peak demand, while taking maximum advantage of thecontract with Nigeria's National Electric P'over Authority (NEPA) to importenergy and to save fuel expenses. Table 2 shows development of the Niger Valleyload since 1978, planned generating plant additions to 1990, and the outlook forload growth to the year 2000. At Goudel, northwest of Niame3y, a new dieselgenerating station will be built with CCCE financing; the first 12 KW set isscheduled for commissioning in 1985. A second and possibly a third unit mayfollow befor9 1990. Since the transfer capacity of the interconnection withNigeria (40 NW) imposes an energy import ceiling that will be approached in thesame period, thermal generation requirements will increase rapidly. The onlyplanned transmission expansion is a 60 km, 66 kY line Niamey-Say with two step-down substations to supply Kollo and Say, to be completed in 1985 with financingby the Government of Belgium. The proposed credit includes financing for rehab-ilitat-on and selective strengthening of the distribution system in Niamey, sayand Kollo. The investments proposed by NIGELEC complement the works already inprogress with other external financing- Since the proposed additions are com-ponents of a much larger system, specific calculations of the returns on theinvestments are not possible. However, loss reductions and fuel cost savingsare expected to result in rapid recovery of capital costs.

- 14 -

TABLE 2

Niger - Power Balance Niger Valley System

Installed Peak Energy b/ PeakYear System Additions Capacity Load b/ Balance a/

NW MW GlWh Mw

1978 12 17.2 75 - 51979 12 21.5 87 - 91980 24 27.6 108 - 41981 24 29.8 121 - 61982 24 36 139 -121983 Existing: Diesel

4 x 3 - 12Gas turbines2 x 12 - 24 36 33 144 + 3

1984 36 37 145 - 11985 Goudel 1 - 12 KW 48 41 163 + 71986 48 42 167 + 61987 Goudel 2 - 12 MV 60 46 180 +141988 60 49 195 +111989 60 54 212 + 61990 c! 60 58 230 + 2

2000 152 600

a/ Excluding up to 40 XW non-firm supply from Nigeria.

b/ 1978-1982 recorded, 1983-1990 projected.

ci Unless a hydro plant is commissioned in 1990, a third diesel unitat Goudel will be required.

46. The prospect of rising prices of petroleum products and importedenergy, as well as considerations of energy security, have led GON to examinethe development of indigenous hydroelectric resources. Niger's main water re-source is the Niger River, which traverses the extreme southwestern part of thecountry. Three hydro sites in the Niger Basin have been identified:

Average Annual InstalledRiver Site Output Capacity

GWh NW

Niger Kandadji 700 125Niger "W" 550 105Mekrou Dyodyonga 82 26

- 15 -

Kandadji is the only project studied to technical feasibility level. Since thestudy did not consider other hydro alternatives and ignoreN' the interconnectionwith Nigeria altogether, the economic justification of Kandadji remains indoubt. Concentration of study effort on a single project, rather than on anoptimum sequence of investments, has resulted in uncertainty about the directionof loil-term power development and the role of sector institutions. Theproposend credit includes finanding for a planning study to take account of allplanning options, including strengthening of international intorconnections. Italso provides finanoing to cover engineering for preparation of bid documentsfor the power project identified in the least-cost sequence as the next stop insystem development.

NIGELEC Organization, Manpower and Training

47. NIGELEC power operations are organized along simple functional linesunder two directorates of Generation/Transmission and Administration/Pinance,and a Distribution Department that is also responsible for the isolated loadcentres. The company has a skeleton planning group and a data center, bothreporting directly to the general manager. Powers of the general manager andthe responsibilities of Directorates and Departments have been defined initiallyat the corporate level, and later for the distribution and customer managementservices in Niamey. Other organization units are still ill-defined; the resultis overstaffing in terms of numbers and underutilization of scarce skills. Itis especially important to continue and complete the organization of generationand transmission to ensure coordinated operation of Goudel and Niamey II, as of1985, to operate a future load dispatch center and eventually to plan andoperate a mixed hydro-thermal power system.

48. Although NIGELEC employs about 1,000 people, the company has a seriousshortage of suitably trained managerial, technical and administrative per-sonnel. Management depends on 12 Nigerien professionals (occupying eight tech-nical and four administrative posts) and about 70 technician-level staff who arenot suitably trained as supervisors. External technical assistance comprisesseven specialists (most on short-term assignments) who cannot provide continuityto management assistance and do not have enough time left for training. Thesupply of power engineers is expected to improve in the next few years, becauseNiger has fourteen students in training at the Ecole Superieure Interafricained'Electricite (ESIE) in Abidjan, an institute specializing in training of powerutility engineers. In-house, NIGELEC operates a Centre de Metiers de 2'Elec-

* tricite et de l'Eau (CMEE) that trains personnel in a variety of technical andadministrative skills (diesel plant operators, electricians, bookkeepers,supervisors of secondary load centers, etc.). Since 1973, CMEE has trainedabout 160 people for NIGELEC, and about 110 for SONICHAR, but present operationis hampered by shortage of operating funds, teachers, classrooms, and equip-ment. The training program cannot be integrated with personnel requirements aslong as the latter are not defined by corporate planning.

49. The proposed credit includes firancing fQr a study to define NIGELEC'sfuture organization structure, to assess manpower needs, and to develop trainingprograms aimed at supplying those needs. Since CCCE finances the Goudel powerstation under construction, CCCE also has an interest in improving NIGELEC'sorganization, staffing, and training. As the diagnoses of NIGELEC's situationby IDA and CCCE are similar, an informal understanding has been reached on atask division. Through the Goudel credit, CCCE will finance the first stage ofthe study, oriented towards xedium-term organization needs during the period of

- 16 _

thermal generation expansion up to 1990. Any additional organization andmanpower studios, related to long-term system devealopment, would be finanoed byIDA under the proposed credit. Terma of reference for the CCCE-f4nanced studywill be reviewed by IDA. CCCE will keep IDA informed of progress and results toensure continuity of eventual further assistance to NIGELEC, if possible by thesame consultant. The implement4tion of training in specific technical skillamuot await the outcome of the study. However, from the diagnosis of the presentsituation, it is already clear that available talents are not effectively usedbecause supervisors do not know how to organize work and instill aocount-ability. The proposed credit includes financing of training seminars insupervision skills during the final atage of the manpower survey. Furthermore,it is proposed to support the training of future power engineers by providingscholarships enabling 14 studenta to pursue or complete their studies at ESIEover a three-year period.

Tariffs_

50. From 1956 to October 1983, NIGELEC's tariff structure remainedunchanged, while the level was revised only three times (1974, 1977 and 19B0).Due to power imports from Nigeria since 1976, operating costs in Niamey arerelatively low, and its consumers subsidize service to isolated load centerswhere fuel costs add significantly to the cost of operating diesel plants.Rising costs, general inflation and growing debt service charges siace the endof 1980 have eroded the financial position of NIGELEC (paras 54-55). In 1982,MTP commissioned a tariff study, financed by the Kreditanstalt fur Wiederaufbau(KfW) that.was completed in December 1982. The study derived a new tariffstructure based on LRXC principles, a tariff level for 1983, and an indexingmechan4sm to adjust tariffs corresponding to fixed cost (capital-related) andvariable cost (fuel and purchased energy) components of the tariff structure.By Decree of September 23, 1983. the Government authorized the new structure andincreased rates to take effect on October 1, 1983. The Decree also stipulatesthat future increases are to be related to NIGELEC's fixed and variable costs.The new low-voltage tariff replaces declining block rates by a twolparttariff. The new medium-voltage tariff features significant increases of ratesfor contracted power and the introduction of fixed charges. Since the energyrate at peak hours is based on costs incurred during the air-conditioning season(March to October), the revised rate structure should provide customers with astrong incentive to conserve energy at that time. The new tariff w-ll increaseNIGELEC's average revenue per kilowatthour by an estimated 26% to FCPA 54 (US$0.14)

51. Since 1981, NIGELEC has been responsible for the supply of power to theuranium pines by purchasing bulk power from SONICHAR which owns the coal-firedpower plant. As less than half of the capacity can be absorbed by the market,-electric power is being generated at a high cost that is passed on by charging aspecial tariff to the uranium mines. The buying and selling prices are fixedannually by agreements among SONICHAR, NIGELEC, and the uranium miningcompanies. At the end of 1982 NIGELEC's purchase eost was CFAF 75 (US$0.19)/kWh and its selling price to the mines CFAF 83 (US$ 0.21)/kWh. NIGELEC'spresent markup on energy purchased from SONICHAR covers costs o: NIGELEC'swholesale supply in the Agadez-Arlit system. However, since the retail tariffsto the towne of Agadez and Arlit are fixed by the national schedule, sales tocustomers other than the mines are a source of loss to NIGELEC.

- 17 -

52. LRMC cnalyses of the MTP study of 1982 are based on system expansion to1990, tncluding at that time a thirl and fourth diesel unit at Coudel, butexcluding investments in additions to be commissioned after 1990. Hence thereaults are useful mainly to support tnterim measurea. The proposed projectincludes financing for a comprehensive tariff review after completion of theplanning 5t'.dy, to take into account the long-term least cost expansion program,and the implications for NIGELEC of future SONICHAR operations. Duringnegotiations, GON agreed to discuss with IDA the recommendations arising fromthe study, and to agree on a plan of action by December 31, 1986 (CreditAgreement - Section 3.03).

NIGELEC's Finances

Background

53. Financial information on NIGELEC is neither up to date nor completelyreliable. Tardy compilation of statistics, staff shortages and deficientaccounting systems are contributing factors. W_th financing provided under theWater Supply Project (Credit 1309-NIR), NIGELEC has retained Fiduclaire ParisExpertise Comptable (FIPEC) (i) to examine the 1981 accounts and to advise onimprovement of accounting systems; and (ii) to audit the 1982 accounts. In July1983 FIPEC's report on the first phase became available and provided unauditedinformation covering the years 1979-1981. The audit of 1982 accounts began inSeptember 19B3 and draft accounts for 1982 became available recently. The auditreport has not yet been received but will be available in the near future. Toassess NIGELEC's financial situation, NIGELEC and IDA staff have prepared incomestatements, funds flow statements and balance sheets for the period 1983 through1987 using forecasts of income and expenditure, investments and borrowingsprepared by NIGELEC, and estimates of current assets and liabilities prepared bythe staff in cooperation with NIGELEC. Income statements, funds flow statementsand balance sheets for 1979-1987 are shown in Annex IV.

Past Financial Performance (1979-1981)

54. NIGELEC performed relatively well during the four years ended December,1982. Rates of return on historically valued net fixed assets in operationexceeded 10% in both 1980 and 1981 while the contribution to investment frominternal cash generation averaged 32% over the four year period. Sales growthaveraging 17% (excluding the mines), and a tariff increase of about 50% inOctober 1980 contributed to NIGELEC's performance. Inflation, rising costs anddelayed tariff increases which were eventually implemented in October, 1983,contributed to poor performance in 1982 when an operating deficit was sufferedand the rate of return on average historical net fixed assets was negative.Despite this situation, NIGELEC's management reduced operating expenses,improved collections and reduced stocks by instituting rigid controls which theyexpect to continue for future years. In 1982, despite the poor operatingperformance, NIGELEC generated 59% of construction expenses partially fundedfrom delayed payment of creditors. Year-to-year comparisons are not possiblebecause of the following changes in NIGELEC's operations and accounting rulesduring the period:

(a) As of mid-1981, NIGELEC began to purchase and sell SONICHAR powerwith corresponding large increases of revenues and operatingexpenses.

- 18 -

(b) NIGELEC changed accounting procedures as of January 1, 1982,simplifying asset accounts and depreciation rules.

55. During 1979-82, 51% of total construction expenditures was borrowed and34% financed by internal cash generation. Government grants provided 10% ofcapital requirements and the balance (4%) at the end of 1982 was met fromoverdraft. Collections for electricity were unsatisfactory, receivables beingequivalent to six months' billing. Electricity operations also subsidizedNIGELEC's water supply operations to the extent of CFAF 2.3 billion (US$5.8million) by the end of 1982. While NIGELEC's operating ratio improved to 90% in1983 its liquidity was poor at the end of 1982, the current ratio being 1.0;bills due to suppliers and others were 56% of cash operating expenses, implyingthat payment was being delayed, and the net cash position was overdrawn by CFAF1060 million (US$2.7 million).

Present Financial Position

56. While NIGELEC's electricity sales in early 1982 continued vigorouslywith the completion of several large public buildings having large air con-ditioning loads, the deepening recession and austerity measures by GON(including an effective energy conservation program) resulted subsequently instagnating sales to NIGELEC's traditional customers, to a level of about 178 GWhat the end of 1983. Sales to the mines are assumed to stabilize at 88 GWh peryear. Sluggish sales, ristug costs and an inadequate tariff level until October1, 1983, contributed to an estimated operating deficit for 1982, of CPA? 130million (US$332,000). An operating surplus of CFAF 1485 million (US$3.8million) is estimated for 1983 arising from the measures taken to reduceexpenses, increased tariffs and a mark-up of 6% on SONICHAR bulk prices forsales to the mines. At end 1983 both the current ratio (1.0) and debt servicecoverage (1.2) are estimated to be inadequate. The major reason for costincreases was the approximate tripling of NEPA's sales price of electricity toNiger from CFAF 3.8 (USil.0) in 1981 to CFAF 10.0 (USd2.6) for 1982 andfollowing years. Agreement between Niger and Nigeria on new prices for the nextfive years (1982-1986) was reached during 1982, but neither Government hasratified the accord. NEPA continues to bill NIGELEC at the old rates with thestipulation that invoices are subject to retroactive adjustment-1/

57. GON authorized a tariff increase effective October 1, 1983, that isestimated to raise revenue per kWh sold by 26%. Early in 1983, CCCE made a loanof CFAF 5.0 billion (US$12.7 million) to GON to cover amounts due to publicenterprises including CFAF 2.0 billion (US$5.1 million) for NIGELEC. The latteramount was used to pay off most of the water supply subsidies accumulated to theend of 1981 but large deficits in the Water Operations in 1982 and 1983 haveincreased the arrears to CFAF 2.1 billion (US$5.4 million) at the end of 1983.While NIGELEC's operating ratio improved in 1983 to 90%, its liquidity remainedprecarious: at end-1983 both the current ratio (1.0) and debt service coverage(1.2) were inadequate; the estimated ratio of receivables to revenues was still50% with short term bank borrowings of CFAF 1.7 billion (US$4.2 million).

1/ Financial projections from 1982 onwards are based on the negotiated newNEPA tariff.

- 19 -

Future Finances (1984-1987)

58. Project-ons of NIGFLEC's financial pos-tion through 1987 have beenprepared on the assumption. that the power sector should not be dependent onGON's limited resources, but should as far as possible borrow to financeinvestment and should provide the balance of investment, working capital and anyother requirement from internal cash generation. NIGELEC should reach such aposition by about 1987, when the construction of a new source of supply isexpected to make major financial demands on the entity. Sales to customersother than the mines are proJected to grow at an average 8% per year, to reach241 GWh in 1987; sales to the mines would remain stable at 88 Gwh. The recentlyintroduced tariff should improve the financial performance and NIGELEC shouldhave an operating surplus of CFAF 2854 million (US37.2 million) -n 1984.Pending the outcome of the long-term planning study and agreement on adevelopment program for the sector (which would require a review of NIGELEC'sfinancial objectives), tariffs should be fixed for 1985 and subsequent years tocover operating costs, debt serv-ce, working capital (excluding cash) andprovide a 'reasonable" annual contribution to investment from internal cashgeneration (Credit Agreement - Section 3.02 and Project Agreement - Section4.03). The contribution to investment will be defined each year before the endof September, based on a minimm percentage of 35% of the average of theprev-ous, current and following years' investment expenditures.

59. F_nancial forecasts assume for customers other than the mines, tariffincreases of 5% -n 1985 and 7% in 1986. The future mine tariff depends mainlyon SONICHAR'S costs. Since NIGELEC's financial position Is only affected by themarkup, the existing differential between purchase cost and selling price isretained in the projections. The resulting financing position of NIGELEC for1984-1987 would be as follows:

Financing Plan 1983-1987

CFAF uSS Percentage

Internal Funds 27,520 70.2 105

Less: Debt Serviceand Workitng Cap-tal 16,189 41.3 62

Contribution to Investment 11,331 28.9 43

Borrowings 12,720 32.4 48

Equity: IDA Credit (Part) 739 1.9 3Government 1,450 3.7 6

Total Investment 26,240 66.9 100.0

This financing plan shows that 57% of capital investment would require externalfinancing, composed of 48% borrowings and 9% equity transfers by Government.The high contribution to -nvestment (43%), compared to an estimated localcontent of 20% of the capital -nvestment program, suggests that NIG&FLEC shouldbe able to -ncrease its borrowings, thereby reducing the burden on existingconsumers. Despite the brief forecast period, there are major uncertainties in

- 20 -

the ffnancing plan insofar as -t depends on factors outside NIGELEC's control,notably the trenad in petroleum fuel prices, the cost of imported electric power-when the current (unratified) agreement expires in October 1986, and the rate ofrepayment of Government arrears. Each year, before the end of September, theforecast for the following year -will be reviewed, and agreement reached ontariff - or other adjustments necessary to fulfil the covenant. Assurances tothis effect were obtained at negotiations (Credit Agreement - Section 3.02, andProject Agreement - Sect-ion 4.03).

60. During negotiations, the financing plan for NIGELEC covering the period1983-1987 was discussed with GON and NIGELEC, focussing on the following issues:

(a) the need to improve liquidity by reducing the delay in payment ofreceivables from Government, Government agencies. municipalitiesand other consumers from an estimated six months, *to within fourmonths of billing ani to eliminate the arrears in payment of watersubventions. Government and NIGELEC will submit a plan to achievethese objectives as a condition of Cred-t effectiveness (CreditAgreement - Sections 3.05 and 5.01 and Project Agreement - Section4.04);

(b) adequate provision for cost of electricity consumption in budgetsor GON and state-controlled agenc-es and enterprises (CreditAgreement - Section 3.05);

(c) settlement of payables (particularly for fuel supplies), possiblyby offsetting debts against receivables from state enterpr_ses;this matter is under review within the framework of the para-statal enterprises study (Credit Agreement - Section 3.03); and

(d) the pos-bility of increasing proposed borrowings for the capitalinvestment program (para. 58).

Accounting and Audit

61. The first external audit covering NIGELEC's 19B2 accounts has beencarried out in conformity with an agreement uwder the ongoing Water SupplyProject (Credit 1309-NIR). Under the proposed project, agreement would bereached that NIGELEC's accounts will be audited annually in future byindependent auditors acceptable to IDA, and whose report would be subr. 1 tted toIDA within eight months of the fiscal year-end for the first two years ofProject execution and within six months thereafter. (Project Agreement - Section4.02).

Sector Development and Rationale for Bank Involvement

62. Stimulated by the uranium boom between 1975 and 1980, Niger's economyexpanded rapidly, and so did the power sector with energy imports from Nigeriaincreasing the short-term supply. Long-term planning remained ill-defined, andthe resulting uncertainty has been detrimental to institutional development andinvestment plann-ng. IDA involvement can be justified on two grounds. First,the RBnk Group is well-equipped to manage the required broad-based technicalassistance. Secondly, other lending agencies, reluctant to act alone, arelooking for Bank leadership. The long-term objectives of the Bank Group are:

- 21 -

(a) reducing the cost of electrical energy by development of economicallyattractive indigenous hydro power, strengthening of the interconnectior. withNigeria, reduction of losses and generally improving sector efficiency; (b)promoting the development of a national power sector entity with an appropriatedegree of managerial and financial autonomy and accountability; and (c)efficient pricing and resource mobilization. The proposed credit would be theAssociation's first operation in the Niger power sector.

PART IV - THE PROJECT

Background

63. Towards the end of 1980, GON solicited Bank support for the KandadjiHydroelectric Project, then prepared to feasibility stage. IDA's examination ofthe Project during 1981 and 1982, in conjunction with other hydro sites andincreased power imports, indicated the need for comprehensive information onNiger's power sector. The concept of the proposed project emerged from a sectorsurvey mission of Narch 1982, which identified technical assistance needs inthree major areas: long-term pover planning, institution building andstrengthening of NIGELEC's distribution operations. In subsequent discussionswith GON, the Bank Group agreed to finance a power planning study. A projectappraisal mission visited Niger in March 1983 to define the scope of the powerplnnning study and other components of the proposed project. Negotiations wereheld in Washington in Nay, 1984 with the Nigerian Delegation led by Dr. AnnouNahamane, Minister of State for Planning. There is no Staff Appraisal Report.Annex III contains supplementary project data.

Project Objectives

64. The objectives of the proposed project are.

(a) Accelerating the decision on the direction of future powerdevelopment in Niger, specifically by defining an optimal sequenceof investments in electric power generation and transmission;

(b) Strengthening of the power sector's organization, planningcapabilities and financial performance;

(c) Improving system efficiency by rehabilitation and selectivereinforcement of the distribution system; and

(d) Training.

- 22 -

Project Dess-ription

D5. The ProJect comprises the following components:

(a) Power Planning (para. 46)

(i) a study of the power needs in the iuger Valley to the year2020 and of selected secondary load centers to 1990;

(i:) engineering for preparation of bid documents for the firstpover project in the least-cost development sequencedefined by the plann-ng study, and accepted forimplementation by GON and IDA; and

(iii) services of a planning engineer to assist NIGELEC in thesupervision of the planning study (a)(i), from evaluationof consultants proposals to approval of the final report.

(b) Sector Institutions (para. 39). A study of the present and futureorganization of the sector, including a review of the concessionsystem and of the relationship between NIGELEC and GON.

(c) NIGELEC (paras. 49-50). A study of NIGELEC's longer term internalorganization, management, and manpower requirements 1/; and

(d) Training (para. 49)

C i) Training of NIGELEC technicians that are to fillsupervisory positions, in organization and managementskills; and

(ii) Provision of scholarships for training future NIGELECpower engineers at ESIE (42 student-years).

(e) Tariffs (para. 52). A tariff study based on long-run marginalcosts, upon completion of the power planning study;

(f) Distribution (para. 43). Provision of cables for primary andsecondary distribution, transformers, and meters.

Project Cost and Financing Agreements

66. The total cost of the project is estimated at USS7.9 million equiva-lent, excluding taxes and duties, with a foreign exchange component of US$6.9million. GON plans to exempt the project from any local taxes and duties. Costestimates are based on July 1983 prices, with 5% added for physical contingen-cies. Price contingencies are based on the following inflation rates: 1983 -8.0%; 1984 - 7.5%; 1985 - 7.0%; 1986 and 1987 - 6.0%. In view of the presentdifficult financial position of GON, and the firm action it is taking to copewith the s-ituation, the proposed IDA cred't of US$7.5 million equivalent would

1/ This component will be coordinated with the program financed by CCCE todefine NIGELEC's manpower needs over the near term (para. 49).

- 23-

finance 95% of the total cost of the proposed project, corresponding to 100% offoreign exchange costs, and 59% of local costs. The remaining 5% of totalproject costs would be financed by the Government.

67. The proceeds of the proposed IDA credit would be passed by GON toNIGBLEC as follows:

(a) USS1.9 million equivalent, applied to consulting services for thepower planning and sector organization studies, would be passed onas Government equity to NIGELEC (Credit Agreement - Section3.01). These funds would be used to examine aspects of the powersector for which GON is responsible under the rules of theconcession system. An equity transfer rather than a loan toNIGELEC recognizes the existing legal situation as well asanticipate institutional reforms.

(b) US$1.9 million equivalent, applied to engineering for preparationof bid documents for the next power project identified by theleast-cost development program, would be on-lent to the entity(expected to be NIGELEC) that will carry out and operate thefacility, on standard Bank terms (maturity 20 years, including afive-year grace period, at an annual interest rate of 10.08%;Credit Agreement - Section 3.01). The designated entity wouldbear the foreign exchange risk. Disbursement of these funds wouldbe subject to agreement between GON and IDA on choice of projectand designation of owner (Credit Agreement - Section 3.04); and

Cc) US$3.7 million equivalent, applied to consulting services forfinancial, internal organization and manpower studies, training,and financing of distribution equiplent, being of direct benefitto a revenue-earning entity, would be on-lent to NIGELEC on stan-dard Bank terms (maturity 20 years, including a five-year graceperiod, at an annual interest rate of 10.08%). NIGELEC would bearthe foreign exchange risk (Credit Agreement - Section 3.01).

The execution of a subsidiary agreement between Government and NIGEILC, coveringGON onlending, would be a condition of credit effectiveness (Credit Agreement -Section 5.01).

68. In order to allow (i) start up of the sector organization study inparallel with the ongoing study of parastatal enterprises (para. 40); and (ii)an early start to the power planning study, which includes field investigationsthat can only be completed during the low flow season of the Niger River, GONrequested and obtained in July 1983 an advance of USS1.0 million under theProject Preparation Facility (PPF) to finance the initial phase of the powerplanning study, and the sector organization study.

Project Implementation and Monitoring

69. NIGELEC would be responsible for the implementation of the proposedproject, and receive technical assistance in the supervision of the power plan-ning study to be carried out by a consulting firm. Annex V shows the projecttimetable; project completion is expected for June 30, 1988. For the planningand sector organization studies, NIGELEC would be executing agent of the

- 24 -

Ministry of Nines and Industry. A planning engineer to assist NIGELEC has beencontracted. Terms of reference for the power planning stuty have been agreedupon, proposals by five consulting firms have been evaluated and a contract witha consultant accepted by IDA was signed in December 1983. The planning studycommenced in February 1984. GON has agreed on the terms of reference for thesector organization study proposed by IDA, and has suggested a consultantacceptable to IDA. '

70. During negotiations, assurances were obtained that NIGELEC will submitto IDA:

(a) quarterly reports within 60 days of the end of each calendarquarter providing information on progress of the project, commentson problems (for example, procurement, disbursement, scheduling)and action recommended or taken; the reports will also include theamount of receivables in arrears and the scheduled reductionthereof; (Project Agreement - Section 2.05);

(b) copies of consultants' reports on studies finaced under theproposed credit; (Project Agreement - Section 2.05); and

Cc) a project completion report within six months of implementation ofall project components (Project Agreement - Section 2.05).

Procurement

71. Consulting services are being obtained in accordance with World BankGuidelines. Distribution equipment totalling US$ 2.1 million includingcontingencies would be procured through international competitive bidding (ICB)procedures in accordance with World Bank Guidelines. All bidding packages overUSS150,000 for goods would be subject to tne Association'& prior review ofprocurement documentation resulting in a coverage of abcut 90% of goodscontracts. Ihe remainder would be subject to random poL.t review by theAssociation after contract award. All equipment would be installed for accountof NIGELEC.

Disbursement

72. The proposed credit would be disbursed to cover:

(a) 100% of costs of consulting services for studies and technicalassistance (US$1.2 million);

(b) 100% of foreign costs of distribution equipment (US$1.7 million);

(c) 100% of foreign costs and about 40% of local costs of detailedengineering for preparation of bid documents for the next poverproject in the expansion program (USS1.4 million);

(d) 100% of foreign costs of training (US$0.8 million);

- 25 -

(e) refunding of the project preparation advance (up to US$1.0million); and

(f) unallocated (US$1.4 million).

Since the project is a composite of heterogeneous parts, the estimateddisbursements (Annex VI) are not derived from existing profiles but from othersimilar projects. To allow sufficient time for submission of final invoices andpayment of retention money, a closing date of December 31, 1988, is set.

Project Benefits and Risks

73. Fragmented responsibilities for the power sector have resulted in lackof sound long-term power planning and uncertainty about future investmentrequirements. The project would fill the planning gap and pave the way forinstitutional reforms that would define future responsibilities for sectordevelopment. Organization, management and training problems within NIGELECwould also be addressed. Financing of a small package of distribution equipmentwill improve the efficiency of the Niger Valley system operations. Nosignificant technical risks are associated with project execution. Terms ofreference for studies have been detailed in close cooperation w-th GON and othersector agencies to ensure that they meet project objectives. Continuing GONsupport -s expected in the implementation of study recommendations.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

74. The Development Credit Agreemient between the Republic of Niger and theAssociation, the Project Agreement between NIGELEC and the Association, and theRecommendation of the Committee provided for in Article V, Section l(d) of theArticles of Agreement of the Association, are being distributed separately tothe Executive Directors.

75. Special conditions of the project are noted in Section III of AnnexIII. They include the following conditions of Credit effectiveness: (i) thesigning of a subsidiary agreement between Government and NIGELEC covering GONtransfer of the proceeds, from the Credit to NIGELEC as equity and onlending;and (ii) provision to IDA of plans to reduce the delay in payment of receivablesfrom Government, Government agencies, municipalities and other consumers towithin four months of billing.

76. I am sat-isfied that the proposed Credit would comply with the Articlesof Agreement of the Association.

- 26 -

PART VI - RECONMENDATION

77. I recommend that the Executive Directors approve the proposed Credit.

A.W. ClausenPresident

Attachments

July 2, 1984Washington, D.C.

27 ~~~~~~~Annex IPage 1 of 5

NICER - SOCIAL INDICATOS DATA SlIELTSICER REVELENCE GROUPS (IEILGTNO AVERAGES) la

MOST (MOST RECENT ESTIMATE) lb -

6 RFCE b L INU[COME HIDDLE[S7Tco19bu~ 9,./-190 rSTImIATS- AFRLCA S. OF SAHARA AFRICA S. OF SMIIARA

AREA (TOUSAND SQ. N)TOTAL 1e7.0 1267.0 1267.0.I6SLWL1IRAL 127.2 11.0 130.2

GOP CAt TA (UM) t-130.0 I0.U 330.0 254.b 1147.9

ENEY WSUWIOU FE CArITA(IILUbRKAMS uf CUAL EUEIVALEhT) 5.0 24.0 54.U 79.5 724.2

rafjIsLnON SD VLIT STATITICSFPUILATL0.HID-YLEAA (tlI0S.ANhS) Zd70.0 4000.0 5704.0

URdAN PUPULAFIOJ (; OF IOTAL) 5.8 6.4 13.d 19.5 25.5

ruVULeTIuIu PROJECrtOCSPOWULATIUi IS YEAR 2000 LILL) 10.SSTATIUAAAY POPULATION (MILL) 41.4YEltA STATIrOAY PUP. IIACSED 2155

mruULA,TEW 1 ESITtrEKt i. ci. 2.1 3.2 4.4 29.5 56.5EL s.). so. ACRI. LASS 2Z.0 3U.d 42.5 94.1 I]l.8

vorULATIuO 9E STRUCrURE (t)0-L! YRS 44.8 46.3 4b.8 45.U 45.9

I'-64 YRS 52.7 5l.1 S.7 52.1 51.2b5 AND AUVEC 2.b 2.0 2.5 2.9 2.3

1*uruLTLtl buIIJTUr RArE (Z)rO-AL 2.3 3.3 3.Z 2.5 2.4CRESX 4.1 7.0 7.2 6.2 5.3

c.LUIIE dAlT. RATE (PES T113S) 51.9 50.7 51.5 47.9 47.bCKRU1: 1RATII SLATE (PEt TOWS) 2b.d 23.8 Z0.2 L9.2 15.2CRitSS R irWgULTIUJ; CTIi 3.5 3.5 3.4 3.2 3.2

i-xIILY PLA.NIZC.IcEPros. A'SUAL (TiSius)U;SasS (. ur .UAAIE UEN) .. ..

FooD AMID ununo

Ila"3 UF FUOD PROD. PEK CAPITA(1509-7I.I530) 112.0 96.V a9.U 87.d 95.7

PNs CA'rIA SUPPLY OFCAtSUKIES (Z UF RaJUSULlE?E&TS) 101.U U9.0 92.u W8.0 97.1rPurFt lhS (CLAfs PSe DAY) 65.0 57.0 65.0 51.2 5b.U:F wIlCII ANI0AL AND PULSE 2u.u 19.0 2b.UI/c 1.1 . 17.2

CdLLD) ((AS 1-4) u£ATH RATE 44.r Jo.' 34.8 25.7 23.o

HFALT.9LIFE axrEcr. ar BIRTH (YEARS) 37.2 44,

544.5 47.4 51.9

INFANT MIrT. RATE (PER TROUS) 191.2 171.3 143.4 126.5 117.6

aCCESS To SAFE MATER (ZPOP)rOTAL -- 20.0 27.0/d 24.7 25.4L;RA .. 31.0 3s.d7fl 56.s 70rS

aU;RAL , 19.0 2e.07;i 18.3 12.3

ACC'S^S ru EACKETA 11SPuSAL(Z .A PoFLLATtOX)

TUrAL .. I,u l.u/d ZJ.1knsZ .. 1J.0 3e.d7i bS_7

KLC;AL .. 3.07i 2119

rurGL%rLY.c PEA FdYSLCIAa 52170.1( 5UOu.0 3S79U.t,/e 27ss2u0.b 1215.6PUP. PeA ;URSISC IRSONI 5Ub4.0lf 70Zu.0 46504J.Of 34se.' 2292.0-Jr._ PSK 1aStITAL SE

rUIAL 2210.0 Z220.U 1430.U/d 1i16.2 1075.CHL;AX .. 36u.0 420.073 3UU.6 4*2.3NCKAL .. 4230.0 z020.0d 3177.5 392t.. 7

AnxIShsId:S PlEt d4SYITAL MW lu.&L& J4.7/h

HDUISIIICAVUSACE SIZE UF dWUSEIIDLD

T5115L .. .. . ..

KSLIIL,L .. .. ..

.VwSAGE N:. OF rtstsUs/tuoVITAL

bRKAL .. .-

.ACs6SS m ELSECT. (4 OF UkLb.LLILCS)TOTAL . ..

tAL WO .. * - ---

-28 - Annex 1Page 2 of 5

NICER - SOCIAL IIIIflCATOSC AATA SHIRNI109 NESI OIW510IITCN AVIUACI8 LI.MIT (Hun REESET 1571110f) Ar

ZST,.KAFRIC S.OF A AAFR£1C1A 3. orSAARto at 1 97A ZUC" UIL A. _8"CA S. or

ALJUSTDU £ROLLNET MlIUSPRIMAY I TOTAL. 3.0 14.0 21.O/r 63.9 97.2

HALE 7.U 1.U 29 73. 103 1FIMALK 342 9.U 17.0 31.0

sgcUw.AY, TUrAL 0.3 1.J 4.Ofr 12.5 11.2HALE 0.5 2.D 5Ag 16.7 23.5FINAL 0.1 1.0 2

1.O 1.1 14.2

VOCATIONAL (A OV bWIONOSY) 4.3 2.7 1.340 7.3 3.2

WPtIL-TACII IIATIOPRIMAY 43J0t 39.U *1.O/c 4.4 412.9MECONOASI 11.OZL 20.U 26. OJa 25.1 23.7

ADULT LlTCUACT MATN CZ) D.9 .. 9.S 36.3 37.1

PASSENGEr CUS/TIOUSAND POP 0.3 1.4 2 3.3 1O.6RADIO SCLIVIRS/TIUSAND POP J.3 36.2 45. 45.3 97.6TV R=ECELVS/TlWgUSAD 10 .. *- 0.9 2.2 16.6NeWsPAPER ("AILY GENCUALLEIMESTI) CIRULATlONPea TSIUSAND POPULATlON u.3 U.5 o.ble 4.7 18.2

CINQA AJtUAL ArITEDANCE/CAPITA .. 0.2 ,. 1.0 0.6

LASlOICZTOTAL flOa LlPue (THOUS) 946.0 1276.U 1772.U

FeNALE (PECENT) 9.u 9.7 l0.1 34.5 36.1AGRICULTURE (PEAMT) 95.U 9J.U 91.0 70.9 10.6LiouSTRY (PCnCUT2 1.0 2.U 3.0 9.4 1L.3

PAIrLCtL?AXu1 IAT; (PERCENT)TUTAL 32.9 31.6 31.1 40.9 37.0.- bLa 2 538.1 56.0 53.0 47.1FEALe 5.9 6.1 6.2 26.9 27.0

ECOunLXC DE*EOuENCY RATIO 1.4 1.5 1.0 1.2 1.3

PERCC.T of PIIVATE IRCUŽIEIL-£LVED BY

iI41EST 54 OF ILOUSEIOLDS ..'ltdEfl 2512 or iOUSEHOLDSLOWEST 20 OUSOS .. OF .....LOWEST 404 Uf nOUSLIOWLS ..

i5TINATtD A450LUDE POVERTY ISCONrLEVEL (USS PER CAPITA)

URBAN .. .. 133.0/c 165.9 534.2dURAL .. .. 63.0717 87.4 253.9

ESTiIATeI RELATIVE POVERTY ISCOnELCVEL (USB PEA CQITA)

URBAN .. .. 133 .01 1OO.8 491.5awU.L .. .. S3.07 4.0 L6 18.L

ESTLMATE:D POP. BtLOW ABSOLUTEPuVESI ICO,g LEVEl. (4)

UIAS .. .. .. 39.5kJRAL .. .. 35.01 6.0..

, 0I AVAILABLL* ?r APPLICABLE

y greS

/a The group 4v rages for each IndiLcatr are populatlon-iLghted arithmetic anse. Coverage of countrles amo theindicators depends on steilability of data end Is not uniform.

lb Unless otherwise aoted, -Data for 1960 refer to any year between 1959 and 1961; 'DOat for 1970' between 1969 and1971. And 4ata for %ost aecent LstimateC between 1979 and 1981.

Ie 1977: /d 1976; 1. 1978; If 1962: /& 1964; lh 1966; /i 1975.

*ay 1983

- 29 - Annex 1Page3 of 5

*FIMITIUI OF emIa IMtICAytP

meet. Sltbasa S. dat. .1. dra Ire A-I.tws tset J.do the aset metb.-tett.e sa rtf Ie it theid .1- heited shee tier may eelb ha tevvu..= 1i-repel. her-s . it. 1ath .1 u-aad-dim 4.1 It.tslat ted r-ept. vesd by dilrIeelirevutilse. 9 t relituilb.th date. the date art, ti-h-atre. eai .1

d 'ar...iers etetas tedir-i teaS., .. d -are s.aim 4tit1..ee ett.- v-melitea.

*etrl...ntyIerp tar ( 51) thr...m lil, t-hP.rt.r. grabi tirs 1 -idlliehrSat.aS tidal - a. bea., m. .1. IsseeS cisat- er ai-istioval ofg-mt ha aelytt I-1'I P teesa.ti.te .g.lat .. stt ISrs Ft dIpd.- A. thde w.RAttbtt poP SessiS et.e.- . .sthetettl.d I. tietttt anr.g cI tmirs all eathe.*I~ a4e*attu eve .sttp ab. .1 .rhre h s,e. l atst.i at e sse b str-erairr-e. -- .r MIp-.-- athCiead t. . -as. 1 -Pm..Ilattse.eri. T-twtMITMetl -I ftp.i.tt.divide by. tr- at ueiei. l

tS&ilthsdt- ldt. essii.r bitt.) yv .a ft.gatssdt.tded be .. Amar etptetet

terD crpt pe.tttnt ftrbI td ktrhu e1de - tbi. tll- tie, toitt-asetlstertilsa Iit -ae Puttistiet er Mopiet -d .M.tP. tibastad 1, MAPupetrte ttstst

t3V!ttPt1aiII~tt - cr percapit setMate. at -eI et aset Wpik. ASveiabta te P1itir as pleat. AParal a.1 tytetatad e.pttul sadrILeseaMt su= rea`t -utes, a. bl W id e sc (til-It hatt.) rah titat -ees.e.. lbeptiat.ar eu- hi.e ptmua-th, tiet1eIWo,n lita. .d tilt dna.. by . e ase etl. laeteblteh-.t. l.rtttdull prt1ttpeilp rottadlal

teeer ted etswlad. twist tapittele. heettr. tee6 hiealth eadisc n rylt. rEt cotta - beet spa. -I cesepttso .1 teret .. Ioa eeeI.1 sM peivastltt etattad hl C tleptet:atlahs urittat l.

yrtsap .aruy lmtt .. Rtact.. Pe-e .tr . Itte a. sad bydre. teeterI. a.ttat t-ore eldeet., *te.l hr titer trp1-Itttet .U.2 seslt estdt .15e.bvs esutty . htagre- citetetves. per ant. paid. * itmitd rates admeditl tetiti.lu tatlea teet

hitita.. .ea orrrl imptti. sad aslest aedetriy etr.piwOLiiytm MDS VITAL FrAyTStlci t.tate bepitale ae Itioeda May etide tetas.

Teesttlilsppe~id-ter(. -- td. - ha tr wly tIs till. tit0 sad 11W Wlttcc Ittttb - T.tal ee .t edeeetee- ti S.e lsbrrgeeie imeytteta: dtvtde S1;d by ttmb.ue atI bt.

ab. Et, Pe2tt Hle.rraet I.I1: tta I . - ailsatF.ta1.to total1 papalettI* diP ferset daltulttse .1 vitae urea. -l~~~~~~~ eFt.rt reiparlaltty 1 data maittll

9.-20 C_tere. Ictat rjtem . UeeS IS te sta.4 cat. -nt.. £ erd-.r m tulue map .ima tt ha mtdad ttt.i "Up "..ttttebja wta Sm asd that. eertatt as iMittlity the hee.hetd foi M.tt.ttr.i pertpu...

.capta ter= lte. tAd set. Istti P - .p.ta . Xtbtiao et 71.1 dwtlategt raPtettlet. B-illept. .eeie Lea.p..t t-tere adioan. Ti perseet. tee trt tilt nttat. hen W thin level steers p.tti.

seeet~ asite I iattlty ac.td.ad Is te.. cie -as pvc racily AI.. t. tlerrttl Cefet. d ltb -ttl rat. as -ittaPt-iam erm.teec lio ee-tr I. the _"atta ec et thee at. Cuntta d all eu .tt' oFettyt ttctlt i Mrtr -Pea.tg

eebt.tlee f .tealttyasd .Stelitty trasa tar Prejarlat Purpmc at tetel, M...t aS r_lttl.t re1. . p.ttleiy.ittttsur espelacte 1- itatutlusaippm ata ther t. at a-utit

aStotar bitte -tts. ; ill. I. abteva etely sitar1 ietttttp.atet reee -th t Lsavrte T.-i of tit d-trpay ecte rate. lty A rti1ai'eilit . el.-Ceettiul sftl

ta1sit .esrtlo ad 0rpsc.ttt trty htttt.r ac Iat. l 1-1 M at the ptlcr!t. l -G a..I. iattage admeeettptpuaui tIes. - etttettd at the bawl, . th rrjtI.sd. tera-te- prter, usahe-a-c. pupatetlaca tonally _L. d.e tbttdr msar b-Itils,. at Itsm pdaylatla. t the psi 211li. si the ruts v dtett..1 siears. bet adjtuc In dttiqrtt lmotla at prtcar adeetiet f.r

Terta tsomplet treld-l. ertr etettv-aey her tat peil. are1 ha.mycte the- - .tfttl u 1 too aVae.papetatiattie. wiltha reache. letasar ree paess Ictu mats -s f.a te C.ptt. at0- aei .e e

fras -Hd-arpe. uset pe Usate -le- tI1e bettalin .1 pta.t'. a--ere. eatatostee -, tyr uee tIa., u lVrel t

tetara:lit ISMi. aS tilt data. pepkie cath1 ad 12 tc IF year.viasere.tdee treaeel- il),lt-sa1 tti L-dta -lieeatt. fI .W_aIIVen teeto4.e.tofmrarv- ttelititte

paptata; tllo. tilt, al litw deto P.-1-teee ra.1-to - nmer .ns !Mraa - Thea) utttdtt. eatlt iPapaltleeCrethbe. Eeret - att bevel gret raedol tucI mi-pie a aae tride ishielat-herem ehrti h r

peer "oL.ttut It, liSle-It., li60-PC. .ad riOt1-at. rmamdtul ate, -..peo.tatuCml - eteret rau-baigrabri i arI. Svt t -tr , rf rte ... eet) -. ut.rtur. apdtt (abl t- tas taed at)a

Crvda 11th inet lPer uhett) - aa Ive hIrtla P.t tiatiWd ci mi- Osiuyear paptette lies il, tadj Ai-t eats. pme.- 1 1-- t -atl-el

Crvd.heathtate ur ttataud - "e. srh.e.laaido t-.e htvu Care Lkvr theota eP--att.) Ple.r ra. etpc mArpeett- t ithO.ii.t.,ste tutu data. ttrttetly a.ee ih uni;ectesliee era

tie.teredurte el. arVaa .hewFI agtvtesa ad It hear eI'd LIttery ttht lee.Lher atta ierfl.clve ier ,- luseng.enpaet e-pett el sctetle lhe0atsvd rmeaiateat17 -- I rp, tmee. for edi

ieitttty re-u; eatly t.e-ytt avrage adeesit tis, tie, asIruadacut u eecai pailt -1t theaFad i puplatle reeldet eliet~~~~~~ itretas ~~~~~~~iieetn I et,atra as it pare7 S edw -te -uratt al redl

eel married Ce Iv .-ma ate.sSu,. .rie -it-it. Crrt.att .ia.t t -Tim th 1nru

ttaj eri wa. n itee , isteriitit etttpir. dletd -eirte

,--I -4 ., ._[~~~~~~~~~~M 1~t he daly"it appan at I-ec rear tic. eelice ae tv tetstd yea heat.. Cttlse catpeasr gC.". (..R. Civsats atse r(cte tr Year. - 1seed at th Vtse ml

data. lame ftl~~~~~~~~~~~~~~~~~~~~~~vici.

aerseataleotI et l- .:loa mre. vtai W. ccr e ta"IIpita n sr.5,5.tpee hat -v-mI. ug Iwaavln. tdu. ec. .rday.gealabe tpplat Seeu beetle prdati. . tpart. ltvvpetlstit oP0 uSRIm.btote Is& rt.eatrea. a

aeeot a raet u tck ccat; n itd soteal-its. etedo, Ocaparble;alilt, ltas tiat datait Vttr .sited prcatt~oiSIe, te l.tt.ta Vtl trre ehLabor lur a. per-etam or tael lborM tese

artty. healthetIits iteet tt.te bodM ile etlgc euteee taud leher Ib ere: 1910, lit0 tad 3Ii data.

at h.inhelhi: til-I, llt od INt0 dat. red retety-rrtd eatper-eAW f -t t tallbor tor.; till,

F 'ap;y-tIt5: a.-tur4ye ist -daitid . W'a -P... r 1ttentl - at -" reI ueI e. idimi urtea tate.eol.estcatar al es tt-rtet raabltm e-p itit pees.d. I. teetv1rss-rerptda aa.vl. at cue.- -ae eaaleces at0 tree ad .t.l pr-teu yet dup atd It ure at r_ima Mi eeoeane tee. ci."as keats ppmAttwe.t all1 aterrvey

peltPI.I. prtes rvi so1t ure. elstl he aes pt-tr.. lima LIlt, lil0, cud till deco Tei are hae a.M - LD. peitteptutwo ratettatdrdt m ise the,that.elis Sirue ut toist Prrtetel2treetrteesv. utieter.f LIr WpopIatatte s.d t-S, tie -sis. a'eltdpetl aataraeI., -v. -rId, __-ee ye rae i e .tmt c ttra t-"-.tL tre

Ther taidaeltocp;tltl, til s.d tilt date. tratttr chseler aeto - at ciseal.tatr Ii as IS ee us det -ieatmt.a et ...F v iF epee day tl-IS ,tl as iii S=

c Ftre dat drleiirtlf ete;te -eesdtl data Iteehot-at..P-

at ttte tit.utao ll dte etodheteerret"ttII..leab. at tt

ciu t1s. L.--trrctta l-.r,Mltal-ume ra uV0- .S rvat- erl le 7t Fd.tc itrt et a ete ritmu I- tzro er. hoelI,iai,sd el)wihr_t_the rem t af S edat

etra -ter v peete tota, vile, ta rrs)eredh -errudtepeesl -11 F -e peeette-e u thirropret peeatet rtrtce deupuetB--i9.1

- 30 - Annex 1Page 4 f 5

CRf WA - HME

M P R.3IN1211 iUS

mm SM A PM= N 1w- AMIUAL D0 C9IP 0 I (%. 1Wl4 1972 a=)

UN Y1llim % 1972 - O 19S - F2

UP at llulit Pdom 1,405.0 100.0 3.0 - 2.0ame DometU bwswnKt m37.5 24.0 7.5an" htf1U1 saving 164.6 12.0 - -

Camt Joeat ELI= - 172.9 12.0 - -Zworb of Coca. D 426.3 30.0 5.8 - 15.27Mrb of Good. 38 8.6 43.0 6.1 - 15.1

aQM LMMY AND

Vau Addd (Yator Cost)TAKE m AID ~ s$malm

A4iu1tur 4D 32.04inw 156 10.0

Su-iAM 559 )B0

TM 1,503 100.0

- z

Ccutnil Oovemt(CMF Blum) of GW

-197wJ1975 1979/1ED 1931/19M2 1s15 1D 1992

currant V 2.4 74.7 jO.1 13.4 17.0 14.0of widi undim (2.5) (17.5) (12.5) (1.5) 4.0 3.0

tEmenditurs 17.5 48.3 56.9 10.5 11.0 12.0Ca FtSIac 4.9 Z.T4 13.2 2.9 73 3.

041tte bpindibn 1.9 58.9 78.9 1.1 14.0 16.0Ote .. Am..t.m.OV0 IazEe 3.0 -32.5 -65.7 1. 8.0 10

MMEY, MI= AND PIMS

1971 1972 1973 1974 1975 1976 1977 1978 1979 19 19B1 199.-CA-mF l t i of Yar)

1y ad Quasi 0 12.1 12.9 15.5 2.3 22.3 29.3 37.2 54.2 64.7 77.9 94.1 83.0Ba medit to Piiblic SctDr -2.3 -3.5 -3.4 -7.2 -11.5 -12.3 -16.4 -11.9 -18.1 -7.5 -3.0 15.5hrk cadit to Private Swtor 9.7 10.7 12.5 21.0 28-5 2.6 32.7 54.2 75.5 {sa 10o.9 112.7

PECITM at lEE NU33

GC1iw Price Ltex (1970 - IOD) 104.2 114.4 1278 132.1 144.1 178.1 219.2 241.6 259.2 285.9 351.4 39.3hmul persotap cbm7gm I:

Gtnezul Prioe Idex 9.8 11.7 3.4 9.1 23.6 23.0 10.2 7.3 10.3 22.9 12.0hrk cndit to Public SectorBukc credit to Privte Sector . 10.3 16.8 6.O 35.7 0.4 14.3 65.7 37.5 17.6 13.6 11.7

Stff atistesNot aplicaabLe

- 31 - Annex IPage 5 of 5

0mW DIl - NCIU

MIM13 P IQIS UAID CAPTL KM(n =1lUu of curnt I")

BAIA CF PAS 1975 t91 1992 mNDiZE RRaID: (hla AvenEe: t19SD12)

elporta of Good., 35 167.8 660.2 426.3 lB mtuImi %inf of, Gold9 Ms26.5 927.1 608.6* t * _) 5 Z.9 -1p.5 Icvwtodc 73.4 16.0

Uiwdus 561.2 79.0ou 22.0 5.0

*Interet Iint (net) -10.7 -55.8 -73-3 AL i456.6 100.0Vorlare' RI ittioie -18.7 -7j.5 -24.4Oftr Fwtor mm (nt) .0 - _ EI lN l 31, 19S2Net rawfers 77.1 99-1477.1

af Qaiwrt Aoouatb 8.0 -258.8 -172.9 Pablic Debt, lwauing pannteSd 6)5.4Im-.u,aintd Private Debt 1;D.7Toa1 out1aodzi and diAbrsed 724.1

DLrect Foleipn Inat t (not) 15.8 - -Net KW 1w_.t 17.0 190-.3 27.8 D S V(S RATM for 193

- Dabirmb (t18.8) - - Public Debt, In6alilg g,iiut.d 26- Ue~,in.ab (1.5) esd- -Ji-Guarantel Private Debt 12

btabl aut 1ing -d dishmed 39Oter Item t/ -19.8 77.6 84.7

Unym iaoiiig, hoist 17, 193Oege in Phere (ml of year) 5.0 -9.1 460.4Pbrzu1. Deervs (aid of year) 51.4 1.5.9 29.6 Oatatwlig nd disbued 102.5Pul and Palated MIterials 12.8 8D 10.0 lblltud 10.0

a % of Iqiorte OkibtbtmdIi inmbad1n tuibhed 210.5

RAME aF ElZHAA

1971 Ii-00 - CA 277.031972 IB1.W - CMAF 252.211973 11 .0= - CFAF 222.701974 = X0 - CFAF 240.501915 UM1.0 = CPAF 214.321976 U;SI.O - CFAF 245.0197 Ul1.OD - CPAF 245.00198 UI .00 - CFIA 22D.1979 IBII.00 - CFAP 212.721960 lB.0 - CFAP 211.3019B1 USS1 .00 - CPAPF 27.731932 llSSIOO - CPA? 3862

1/ Incbxling ermrs wi Cmmiax.

* Staff estimits

- 32 -

ANNEX 2Page 1 of 2

REPUBLIC OP NIGER

POWER ENGINERING AND TECHNICAL ASSISTANCE PROJECT

STATUS OF BANK GROUP OPERATIONS IN NIGER

A. STATEMENT OF IDA CREDITS a/(as of March 31, 1984)

Borrower: Republic of Niger

US$ MillionCredit Fiscal Amount (less cancellatio) d/Number. Year Purpose IDA b/ c/ Undisbursed

Twelve credits fully disbursed 47.2 -

612 1976 Third Highway 15.6 0.6851 1978 Irrigation 15.0 0.0885 1979 Livestock 12.0 5.8886 1979 Feeder Roads 10.0 2.7967 1979 Dosso Agricultural Dvt. 20.0 18.21026 1980 Second Maradi Rural Dvt. 16.7 11.91151 1981 Education 21.5 13.31225 1982 Industrial Development 16.0 11.51226 1982 Second Forestry 10.1 7.81309 1983 Water Supply 6.5 6.41394 1983 Fourth Highway 23.6 23.3

Total 214.2 101.5of which has been repaid (2.9)

Total now outstandingand held by IDA 211.3

Total undisbursead 101.5

a! The status of the projects listed in Part A is described in a separatereport on all Bank/IDA f4nancial projects in execution, which is updatedtwice yearly and circulated to the Executive Directors on April 30 and6etober 31.

b/ Prior to exchange adjustments.c/ Computed at the rate of the approval dates.d/ Computed at the March 31, 1984 rate of US$1.0642 - I SDR

- 33 -

ANMN 2P2,a 2 of 2

B. STATMT OF IPC INVESTMENT AS OF MARCH 31, 1984

Loan Amount¶Nuaber Year Borrower Parpose of Loan Equity Undisbursed

UTJS$ 1 ilion

619-NIH 1982 Les Noulins Flourmill 2.22 0.33 1.84du Sahel S.A.(IDS)

- 34 -

ANNE 3Page 1 of 2

REPUBLIC OF NIGER

POWER ENGINEERING AND TECHNICAL ASSISTANCE PROJECT

Supplementary Project Data Sheet

Section I

(a) ProJect first presented to IDA November 1982(b) Agency which prepared the project MNI/NIGMEC/IDA(c) Time taken to prepare the project Four months(d) Departure of Appraisal Mission March 1983(e) Completion of negotiations Nay 27, 1984(f) Planned date of effectiveness October 24, 1984

Section II: Special IDA Implementation Action

None

Section III: Special Conditions

Ca) After review of the recommendations of the power sector organizationstudy, in conjunction with the conclusions of the study of para-statal enterprises, a timetable for a program of action will beagreed upon by GON and IDA by June 30, 1986 (para. 40);

(b) After review of the tariff study, a program of implementation ofthe recommendations, as agreed between GON and IDA, would beprepared by December 31, 1986 (para. 52);;

(c) Government to authorize tariff increases in 1985 and subsequentyears adequate to cover operating costs, debt service, workingcapital and provide a reasonable contribution to investmentesDenditures, until the long-term development program is defined(paras. 58 and 59);

(d) Government and Government agencies to make appropriate budgetallocations to meet their electricity bills (para. 60);

(e) Upon conclusion of the study of parastatal enterprises, Governmentto arrange the settlement of JIGELEC's accounts with otherparastatal entities (para. 60);

(f) Government to transfer to NIGELEC, on an equity basls, US$1.9million equivalent from the proceeds of the proposed Credit (para.67);

- 35 -

AJ= 3Page 2 of 2

(g) Government to extend to NIGMELC US$5.6 million equivalent from theproceeds of the proposed Credit on standard Bank terms (para. 67);and

(h) Disbursement of funds for engineering for preparation of biddocuments for the next power project is subject to agreement betweenGON and IDA on choice of project and designation of entity that willcarry out and operate the future project (para. 67).

Conditions of Effectiveness

(a) Signing of the subsidiary loan agreement between GON and NIGELEC(para. 67);

(b) Government has taken the necessary steps to transfer USS1.9 millionequivalent on an equity basis to NIGELEC (pars. 67);

(c) Government has provided the Association with a satisfactory plan toreduce its arrears to NIGELEC to the total of the previous fourtonths' billing (para. 60); and

{d) NIGELEC has provided the Association with a satisfactory plan forreducing its receivables to the total of the previous four months'billing (para. 60).

RHIPUBLIC OF NIGER

POWRR ENO[NEER[NO AND TECHINrCAL ASSISTANCE PROJRCT

HIGCEEC: Income Statements 1979-1987(Millions of FOPA)

Actual ab b/ _ Forecast c/

Years gnded Decembor 31 1979 l980 1981 1982 1983 1984 1985 1986 1987

Oaw Sales 91 130 189 230 263 271 297 302 329Average Price/kWh (FCFA) 28.4 32.6 44.5 42.3 59.4 68.6 72.5 79.1 93.5

Energy Revenue 2581 4226 8530 9722 15628 18592 21560 23901 30782Rechargeable Works 745 1300 1137 998 869 860 800 900 1000Other Revenue 437 403 437 829 769 845 750 830 800Coats Reallocated 750 1097 1673 793 -- -_ __ _ __

Total Revenues 4513 7026 11777 12342 17266 20297 23110 25631 32582... .... "soon Mason ..... Masan ..... 5 MM5... ..... U.

Operating ExpensesGas-Oil 892 1192 1478 1875 1798 2018 3329 3991 6301Bulk Purchase-SONICHAR - - 2283 3065 7631 8800 9836 11027 12284Bulk Purchase - NUPA 383 470 447 387 1454 1495 1500 1500 2250Haterlala 970 1338 1382 1947 1510 1572 1600 1950 2200 cPersonnel 702 926 984 712 763 810 900 950 1000 Other Costs 1069 1559 1919 1279 1279 1305 1260 1270 1490Depreciation A Provisionr d/ 422 642 2023 3041 1161 1262 1950 2073 31c8Taxes 167 __3 262 166 185 181 200 220 240Total Expenses 4605 6380 10778 12472 15781 17443 20575 22981 28673

Operating Income (loss) -92 646 99 -130 1485 2854 2535 2650 3709

Interest 172 562 931 715 657 651 720 976 1039Interest During Construction 135 -35 562 142

- Charged Operations 172 562 931 .715 657 516 385 414 897

Not Income -264 84 68 -845 828 2338 2150 2236 2812

Rate Base (Historic) 6242 8818 10804 10933 10178 12772 15063 17523Rate of Enturn % 10.3 11.3 -1.2 13.6 28.0 19.8 17.6 21.2Operating Ratio % 102.0 90.8 91.5 101.1 90.3 85.0 88.2 88.a 87.9

j/ FIP00's report of July 1983./ Draft 1982 aceounts./ NIGELEC forecasts and statf estimates.

/ Provisions are Included only for historical figures.

WAPEGKay 1984

.,~~~~~~~~~~~~~~~~~~~~~~~~~ . * .

REPUBLIC OF NIOER

POWER ENGINEERINO AND TECHNICAL ASSISTANCE PROJECT

Funds Flow Statements 1979-1987Ntilions of UCPA)

Actual i/ b/ _ Foreceat c/Total

Years Ended December 2 1 j7 1980 1981 1982 1983 84Bj 1985 1986 1987 1283-8Inteinal Fund.operating Income (Deficit) -92 646 999 -130 1485 2854 2535 2650 3709 13233Depreoiation & Provleionu 422 642 1629 I003 1161 1262 1950 2073 3106 9554Consumers Oontributions 587 1236 536 380 869 860 800 900 1000 4429Conaumera Deposits 34 _ 6 40 4. 44 60 60 70 70 304

Total Internal Funds 951 25O- 3204 12-98 3559 5036 5345 5693 7887 27520

ODerating RequirementeWorking Capital Inoresee

(Decreaae) -122 1340 150 -2211 213 -919 342 987 3509 4132Interest 172 562 931 715 657 516 385 414 897 2869Debt Repayment 155 115 434 1352 1522 1364 1449 1088 751 6174Other .7 ~-123 -_

Total Operating Requirements 278 2 1392 -144 2392 61 - 9 27 2489 5157 13175

Available for Investment 673 518 1812 1442 1167 4075 3169 3204 2730 14345

CapiLtl InvestmentConstruction 3496 5228 2673 2447 1969 6285 7090 6820 2902 25066 1Iaterest during Construction 135 _.5 562 142 ll74 wTotal Investment 346W 5228 - 2 2 1 64-20 75 382 044 26240

Balance to Be Financed 2823 4710 861 1005 802 4345 4256 4178 314 1'895

Financed ByBorrowings 2275 2728 1113 915 100 3336 4208 4440 636 12720State Grant. A Subventions 66 1025 176 29 100 1536 553 --_ 2189Total Exter.al Sources 234t 3753 I289 944 200 4872 4161 4440 616 14909

Funds Surplus (Deficit) -482 -957 428 -61 -602 2527 505 262 322 3014

Funds at Beginning of the Year 12 -470 -1427 -999 -1060 -1662 865 1370 1632 -1060Funds at end of the Year -470 -1427 -999 -1060 -1662 865 1370 1632 1954 1954

Annual Contribution toConstruction % 19.3 9.9 67.8 58.9 59.3 63.5 42.7 43.4 89.7 54.7

Three Year Averege % -. 13.6 52.5 61.0 32.3 77.3 44.8 53.8 78.6 --

Annual Debt Service Coverage 1.0 1.9 1.9 0.4 1.2 2.2 2.4 3.1 4.1 2.5

1 YIPEC a report of July, 1983.b/ Draft 1982 accounts.

S/ Staff estimates.

VAPEOMay 1984 W

RRPUCLIC OF NMGER

POWKR ENOINIERING AND ''ECHWICAL ASSISTANCE PROJECT

Balance Sheeta 1979-1967(Millions of FCOA)

Actual a/ b/ _ Forecast c/

Years gnded December 31 1979 1980 1981 1982 1983 1984 1985 1966 1987Assets

Fixed AasetsPlant in 8ervlce 9377 13308 19317 21900 22987 24543 33048 34848 45049Loie: Depreciation 1809 2123 4824 5827 6968 8250 10200 12273 15381Operating Plant 75I 11185 14493 160713 15999 16293 22848 22575 29668Work in Progres 2544 3815 428 221 1103 5967 4887 10469 3312

Current AsaetsCash 10 111 320 -- -- 865 1370 1632 1954Inventorieo 1592 1787 1890 1041 1379 1473 1983 2091 2703Receivables 2066 3455 5155 4319 8035 7643 6656 6164 7886Water 9upply Subventionn 992 1600 2283 2351 2100 1700 1450 1200 1000

4660 6953 964P 7711 11514 -11681 11459 11087 13543Other Assets 107 132 182 253 253 253 253 253 253

Total Asaets 14879 22085 24751 24258 28869 34194 39447 44T34 46776==o. .... u.. . . ... urn... urn... Mn1=. w.=u

Equity and LiabilitiesEquity oo

Equity, Reserves antSubventions 7185 8248 7559 7588 7688 9224 9777 9777 9777

Retained Earnings -264 84 68 -845 -17 2321 4471 6707 9519Total Rquity 6921 8332 7113 6743 7671 11545 14248 16484 19296

Long Term DebtDebt Due 2553 5166 5845 5408 3986 5958 8717 12069 11954

Current LiabilitiesPayables 2010 2669 4609 5248 8w40 9061 7992 6371 5996Governqent 241 435 829 852 850 850 850 850 850Customers' Deposits 157 193 233 278 322 382 442 512 5823bnk Overdraft 480 1537 1319 1060 1662 - - _ _

Total Current Liabilities 2888 4834 6990 7438 11674 10293 9284 7753 64 2

Consusera Contributions 2517 3753 4289 4669 5538 6398 7198 8098 9098

Total Equity & Liabilities 14879 22085 24751 24258 28869 34194 39447 44384 46776Uw Minu urn... .Mn ... === mama .. m=. .=mu=

Debt % of Debt + Equity 26.9 38.3 47.2 44-5 34.2 34.0 38.0 42.3 38.3Current Ratio 1.6 1.4 1.4 1.0 1.0 1.1 1.2 1.4 2.1 IV

a/ FIPRO'a report of July, 1983.b/ Draft 1982 accounts.c/ Mission estimates.YAP E1Nay 1984

REPUBLIC OF NIGER

POWER ENGINEERING AND TECHNICAL ASSISTANCE PROJECT

Project Timetable

1983 1984 1985 1986 1987

Li 11111 .LI 33 ILiI2 EI 2 3i4i

POWER PLANNING STUDY 1

SUPERVISION PLANNING STUDY r- -C r-" :

ENGINEERING TO BID DOCUMENTS OF NEXT . _-_=__POWER PROJECT .

INSTITUTIONAL STUDY l_ _

ORGANIZATION, MANAGEMENT ANDMANPOWER STUDY

TRAINING , I -

TARIFF STUDY

SUPPLY OF DISTRIBUTION EQUIPMENT

WAPEGMay 1984

- 40 -

ANNEX 6

REPUBLIC OF NIGER

POWER ENGINEERING AND TECHNICAL ASSISTANCE PROJECT

Disbursement Schedule(US$ millions)

IDA FY and Quarter Quarterly CumulativeDisbursements Disbursements

1985 Q2 2.0 a/ 2.0 a/Q3 1.0 3.0Q4 0.6 3.6

1986 Q1 0.8 4.4Q2 0.7 5.1Q3 0.5 5.6Q4 0.5 6.1

1987 Q1 0.5 6.6Q2 0.7 7.3Q3 0.1 7.4Q4 0.1 7.5

a! Including reimbursement of US$ 1.0 million PPF advances.

- 41 -

ANNEX 7Page 1 of 2

REPUBLIC OF NIGER

POWER ENGINEERING AND TECHNICAL ASSISTANCE PROJECT

Selected Documents ard Data Available in the Project File

File Code: Document 129734 (Index)

A. Selected Reports and Studies on the Sector

A.1 Power Subsector Memorandum 4075-NIR - December 30, 1982.(in English and French).

A.2 Energy Assessment Report."Issues and Options in the Energy Sector" - 4642-NIR.

B. Selected Reports and Studies Relating to the Project

B.1 Niger Commission Energie - Fevrier 1983.Preparation du Plan Interimaire 1984-1935.Fichier des projets.

B.2 Compte-rendu de mission de Nonsieur Clavel (CCCE).Objet - Centrale de Goudel, 20 juillet 1982.

B.3 Audit de NIGELEr - Marche- sur consultation FIPEC, 4 fevrier 1983.

B.4 Analyse financi6re NIGELEC.FIPEC (Fiduciaire Paris Expertise Comptable), juillet 1983.

B.5 Etude de la tarification de 1'electricite au Niger.Ing-enieur Buiro Von Miller, GmbH - December 1982.

B.6 Procbs-Verbal de la R-eunion 22-29 decembre 1982.Tarification energie electrique SONICEAR.(Ministere des Mines et Industries)

B.7 NIGELEC - Cahier de Charges 1952.

B.8 NIGELEC - Statut 1968.

B.9 NIGELEC - Projet de convention et de Cahier de charges, aofit 1982.

B.10 Republique du Niger - Ordonnance 74-31, 15 novembre 1974.(Regime de la production, du transport et de la distributionde l'energie eFlectrique).

B-11 Liste nominative des stagiaires _ormes au CMEE.Sept. 1973 - Sept. 1982 NIGELEC.

- 42 -

ANNEX 7Page 2 of 2

B.12 Compte-rendu de mission de Monsieur Lauliac au Niger(5 au 9 juin 1983), 15 juin 1983.(Document CCCE - Formation).

B.13 Lettre CCCE (Niamey) - NIGELEC, 7 juillet 1983.(Formation).

B.14 Note sur le programme de formation accompagnant V'investissementde Goudel.(Document CCCE - Niamey, 7 f6vrier 1983).

B.15 Developpements Reseaux HT & MT Niamey et environs(NIGELEC, octobre 1983).

C. Selected Working Papers and Studies

C.1 Analysis of NIGELEC Finances.(by Mr. Charles MacNealy, Financial Analysist Consultant toAppraisal Mission, Narch 1983).

C.2 betailed computer print-outs of financial forecasts.

C.3 Assumptions in the financial forecasts.

[ ( js \ ALGERIA >yP Jt ;

3 AI NIGR

rA r / -t

ounr}.4L -Ifrlw-___ o

coa>st(f gy - i, ./ 'Y;A:°' .,ulS-itol G..n.ot

. , C)~~~~~~~~~~~~~~~~

N I G E R

ENERGY RESOURCES ANDINFRASTRUCTURE IN 1982 A./

Uranium Deposi- (Developed)

* Coal Depos I (Developed)

Linite Occurrence lUideveloped)

.2C- I I Active Petroleum Explorol.on Pef mis t j

4- Petroleum Fends

EXISTING 1952 PLANNED TO 1957 POWER PLANTS

*t 0 D-esel I.Gu,GUMW

* Gas Turbine ._ .

* Cool Fired Steam Plant _ - * -

Hydro (Unde. Study) .

TRANSMISSION LINES

330 kv 7-

tr - 6c6kv i ALi6 \

-r __- 20 kv * } 20\

Pawed Roads

Eorth Roads

Tracks

R.vers -

S Deportment Capitoas I - -. - --

-- -- Department Boundories A A *.- ------

Internot.onal Boundories AGADEZ i

( iLONitER, C Sc 1CC 'SC c 2CC 7S .C

MiLES 'CC / T.o.i tA n i .vt/ '

AM A L I 3:-b-

., ;°A=' .. K ..

- I- _i_.- 5 .\ P K

- - ,J a E N I N 9 /~~~~~~~~K--

I ho ro.-,, rO_ O_

'K~~~~~.1b - -o&b&

a '- -. ZINC~~~~~~~~~~~~~~~~~~~~~Kf

* nTo 0r..~UNomPMohP..E . /R

12' VOLTA~- 0 ~ .. ~ N. NIAMEY ~~~~~.<~~4iooo - tX i~~~~~ - - \.MARAD$ -~~~~ I G-

B E N I rj~~~~~~~~~~~~~~~~~~~~

; t- \9', -. IBRD 1/253

L L B Y A A D

//' /

.... ...... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~5...

| r AGAMB Df .C1

*~,-. W- I L

I *n_ n | ~ l i 2 ~ E a rlin rVi .

% ~ ~ ~ ~ - -- C. nn < / c Hb A DC.

Z= 1 ~~~~~~~~-' r 0oo - N ; D .,- ' .

w:~ .a. -o CHAD,n~ _

N I G E R I As | )* -* r.'AMeROONV I