World Bank Document ...... Rehabilitation and uprating of ten turbo generator units and their associated gates, structural repairs to the power house, dam and dam gates at the Owen

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  • Document of

    The World Bank

    FOR OFFICIAL USE ONLY

    Report No. 15194

    PROJECT COMPLETION REPORT

    UGANDA

    SECOND POWER PROJECT(CREDIT 1560-UG)

    DECEMBER 26, 1995

    Energy and Infrastructure Operations DivisionEastern Africa DepartmentAfrica Regional Office

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

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  • Currency Equivalents

    Currency Unit = Ugandan Shilling (USh)

    US$ to UShAppraisal year (1984): 5.2Actual (yearly average)1985 6.71986 14.01987 42.81988 106.11989 223.11990 428.91991 734.01992 1,133.81993 1,195.0

    Currency Unit = SDRUSh to SDR (end of year)1985 15.41987 85.11989 486.21991 1,308.81993 1,552.3

    USS to SDR (yearly average)1985 1.09841987 1.29311989 1.28181991 1.36821993 1.3963

    Abbreviations

    AfJDB African Development BankCDC Commonwealth Development CorporationCIDA Canadian International Develop ment AgencyESMAP Joint UNDP/World Bank Energy Sector Management Assistance ProgramGSMD Geological Survey and Mines Department, Ministry of Lands, Mineral and Water ResourcesGWh Giga Watt hour (million kWh)IBRD International Bank for Reconstruction and DevelopmentICB International Competitive BiddingIDA International Development AssociationIRR Internal Rate of ReturnJICA Japanese International Cooperation AgencykW Kilo WattkWh Kilo Watt hourLRMC Long Run Marginal CostMPPT Ministry of Power, Posts and TelecommunicationsMNR Ministry of Natural ResourcesMW Mega Watt (thousand kW)NDF Nordic Development FundNORAD Norwegian Agency for Development CooperationODA Overseas Development Administration (UK)PCR Project Completion ReportPLC Power Line CarrierSCADA System Control and Data AcquisitionSDR Special Drawing RightsUEB Uganda Electricity Board

    Fiscal Year

    January 1- December 31

  • FOR OFFICIAL USE ONLYTHE WORLD BANK

    Washington, D.C. 20433U.S.A.

    Office of Director-GeneralOperations Evaluation

    December 26, 1995

    MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

    SUBJECT: Project Completion Report on UgandaSecond Power Project (Credit 1560-UG)

    Attached is the Project Completion Report (PCR) on the UJganda: Second Power project (Credit1560-UG, approved in FY85), prepared by the Africa Regional Office. The Borrower provided Part 11.Comments by the co-financiers were considered in the PCR.

    The project's main objective was to assist Uganda's economic recovery initiated in the early 1980sby improving electricity supply from the Uganda Electricity Board (UEB). Sector objectives were torehabilitate UEB's power system and strengthen its operational capability and the government's energyplanning capacity.

    The project rehabilitated part of the Owen Falls hydroelectric plant and refurbished thetransmission and distribution network. In Kampala, the rehabilitation works went beyond the originalproject design. It also helped the Energy Department plan for a forest plantation inventory (later done bythe Ministry of Agriculture) and conduct a household energy survey. Studies on tariffs, billing, generationand distribution planning were carried out and part of their recommendationis implemented. UEB wasreorganized, its staff trained, and tariffs increased. But poor collection of bills, overstaffing and lowproductivity still mar its performance.

    The project cost is estimated at US$I 13.4 million, including rehabilitation works to be completedby 1997 with financing from the Overseas Development Administration. IDA financed US$40.2 millionand succeeded in mobilizing US$68.3 million from four co-financiers and suppliers credits.

    IDA's performance was satisfactory: frequent supervision missions, acceptance ofjustified clhaigesto project scope, and reallocation of credit funds helped project execution. Borrower's perfornance wasmarginally satisfactory, best towards the end of the project, when UEB implemented most of the physicalcomponents-not as good all along in the areas of power sales and financial management.

    The project outcome is rated as satisfactory mainly because of its physical achievements. Itssustainability is rated as likely because UEB already initiated measures to commercialize its operationsunder the IDA Third Power project. Its institutional development is rated as moderate.

    The PCR presents a satisfactory account of project implementation and results.

    No audit is planned.

    Attachment

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

  • I

  • FOR OFFICIAL USE ONLY

    I

    Contents

    Preface.3Evaluation Summary.5

    PART 1: PROJECT EVALUATION FROM THE BANK'S PERSPECTIVE.9

    Project Background.9Project Design and Implementation.11Project Objectives and Description.13Project Implementation.15Disbursements.19Procurement.21Project Results.23Project Sustainability.27Bank and Borrower Performance.29Project Relationship.31Project Reporting.33Lessons Learned.35

    PART II: PROJECT EVALUATION FROM TIlE BORROWER'S PERSPECTIVE.39

    Annex 1: Other UEB contracts Under Second Power Project.49Annex 2: Uganda Electricity Board Units Generated.51Annex 3 Project Cost at Completion as of 30 June 1994.53

    PART III: STATISTICAL AND OTHER PROJECT INFORMATION.59

    Table 1: Related Bank Group Loans and Credits..61Table 2: Project Timetable..62Table 3: Credit Disbursements..63Table 4: Project Implementation..64

    4.1 Contract Completion Dates.644.2 Studies.654.3 Comparison of UEB's Selected Indicators.66

    Table 5: Project Costs and Financing..675.1 Project Costs: Comparison of SAR Estimates and Actual Costs.675.2 Project Financing.675.3 IDA Disbursements.68

    Table 6: Economic Impact..69Table 7: Status of Compliance with Major Covenants..70Table 8: Use of Bank Resources.72

    8.1 Bank Resources: Staff Inputs.728.2 Bank Resources: Missions.73

    Table 9: UEB's Balance Sheet..75Table 10: UEB's Income Statement..76Table 11: UEB's Funds Flow Statements..77

    document has a restricted distribution and may be used by recipients only in the performance of theirI official duties. Its contents may not otherwise be disclosed wiihout World Bank authorization. I

  • 3

    Preface

    This is the Project Completion Report for the Second Power Project in Uganda, forwhich Credit No. 1560-UG in the amount of SDR 29.5 million (US$ 40.2 million equivalent)was approved on March 19, 1985 and made effective on June 26, 1986.

    The Credit was closed on December 31, 1993, compared with the original closing date ofJune 30, 1990. The Credit was fully disbursed and the last disbursement took place on April 20,1994.Co-financing for the project was provided in the form of a CDC loan to UEB of Pound Sterling9.6 million, and an ODA grant of Pound Sterling 9.34 million. ODA later increased the grant toabout Pound Sterling 30 million to cover additional rehabilitation costs at the Owen Fallshydropower station.

    Parts I and III of the PCR were prepared by the Energy and Infrastructure OperationsDivision of the Eastern Africa Department. Part II was prepared by the Borrower (the UgandaElectricity Board and the Ministry of Natural Resources).

    Preparation of the PCR was begun during the Bank's final supervision/completionmission on June 21-28, 1994. It is based, inter alia, on the Staff Appraisal Report, theDevelopment Credit and Project Agreements, supervision reports, correspondence between theBank and the Borrower, and internal Bank memoranda. The Borrower submitted its first draft ofPart II in June, 1994, and the final report in November 1994. Parts I and III were sent to theBorrower and the cofinanciers for comments on March 2, 1995. Comments were received fromthe Borrower on March 21,1995, and from ODA on Mach 16, 1995. CDC communicated itsresponse on March 17, 1995.

  • 5

    Evaluation Summary

    Introduction

    The Second Power Project was the Bank's first operation in Uganda's energy sector inmore than twenty years. The operation was preceded by an energy sector review carried out bythe Joint UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP). Itprovided much of the underpinnings for the project, while detailed project design was based onan engineering study by independent consultants. At the time of appraisal, the political situationin Uganda was unstable, and power sector facilities were in a very poor condition owing toneglected maintenance during the preceding years of unrest. The Second Power Project wasdesigned to support the Government's recovery program, which had as its basic objective therehabilitation of the productive sectors and the improvement of existing productive capacities.

    Project Objectives and Description

    The primary objective of the project was to prevent the development of a bottleneck inpower supplies that would hinder economic recovery in the medium term, through the upgradeand rehabilitation of existing generation, transmission and distribution facilities. The projectalso a