Document of The World Bank FOR OFFICIAL USE ONLY Report No. 12862-BEL STAFF APPRAISAL REPORT BELIZE SECOND POWER DEVELOPMENT PROJECT JUNE 13, 1994 Department III Trade, Finance, Industry and Energy Operations Division Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the perfonnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EOUIVALENTS Currency Unit = Belizian Dollar (BZ$) BZ$1.00 = US$0.51 US$1.00 = BZ$1.98 UNITS AND MEASURES 1 kilovolt (kV) = 1,000 volts (V) 1 kilowatt (kW) = 1,000 watts (W) 1 megawatt (MW) = 1,000 kilowatts (kW) 1 kilowatt hour (kWh) = 1,000 watt hours (Wh) 1 gigawatt hour (GWh) = 1,000,000 kilowatt hours (kWh) 1 megavolt ampere (MVA) = 1,000 kilovolt ampere (kVA) 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 1 square kilometer (km2) = 0.386 square mile (sq. mi.) 1 barrel (bbl) = 42 US gallons = 159 liters ABBREVATIONS AND ACRONYMS BEB Belize Electricity Board BEL Belize Electricity Limited BECOL Belize Electrical Company Limited BOT Build, Operate and Transfer BTL Belize Telecommunications Limited CARICOM Caribbean Community CDB Caribbean Development Bank CDC Commonwealth Development Corporation CFE Comisi6n Federal de Electricidad (Mexico) EIB European Investment Bank EMS Energy Management System GDP Gross Domestic Product GOB Government of Belize LPG Liquified Petroleum Gas MEC Ministry of Energy and Communications PIU Project Implementation Unit SCADA Supervisory Control and Data Acquisition System GOVERNMENT OF BELIZE AND BELIZE ELECTRICITY LIMITED FISCAL YEAR April 1 - March 31 FOR OFFICIAL USE ONLY BELIZE SECOND POWER DEVELOPMENT PROJECT (POWER ID STAFF APPRAISAL REPORT Table of Contents Paize NJo. LOAN AND PROJECT SUMMARY ....................... ....................... iv I. THE ECONOMY A. Background ........................... ............................... 1 B. Recent Economic Developments ...................... ....................... 1 C. Development Issues and Growth Prospects ........... .................... 2 D. Sector Lending Strategy ....................................................... 3 II. THE ENERGY SECTOR A. Organization of the Energy Sector. 3 B. Primary Energy Resources. 4 C. Energy Supply and Comsumption. 4 D. Energy Conservation and Demand Management. 7 E. Government's Energy Sector Objectives and Policy. 7 III. THE ELECTRICITY SUB-SECTOR A. Reform of the Power Sector. 8 B. Electricity Demand and Supply. 9 C. Electricity Prices .10 D. Rural Electrification .11 E. Existing Power Sector Facilities .11 F. Electricity Sales and Peak Demand Forecast .12 G. Current Sector Problems and the Second Power Development Project .13 IV. THE BORROWER AND THE BENEFICIARY A. The Borrower . .......................................................... 14 B. Belize Electricity Limited ..................................................... 14 V. THE PROJECT A. Background ........................... ............................... 17 B. Rationale for Continuing Bank Involvement ........... .................... i8 C. Objectives and Description .................................................... 18 This document has a restricted distribution and may be used by recipients only in the performance of ther official duties. Its contents may not otherwise be disclosed without World Bank authorization. l ii D. The Mollejon Hydroelectric Development ............... .................. 19 E. The Mexican Power Supply .................................................. 19 F. Status of Project Preparation ................................................. 20 G. Project Cost Estimate ................................................... 21 H. Project Financing Plan ................................................... 22 1. Project Implementation ................................................... 23 J. Consultant Services ................................................... 23 K. Institutional Strengthening, Training and * Technical Assistance ......................... .......................... 24 L. Procurement ......................... .......................... 25 M. Disbursements ......................... .......................... 26 N. Environmental Considerations ............................................... 27 0. Project Risks ......................... .......................... 28 VI. FINANCIAL ANALYSIS A. BEL's Past Operating Results and Present Financial Position ......... 29 B. Franchise and Purchase Power Agreement for the Mollejon Hydroelectric Plant ................................................. 29 C. Power Purchase Agreement with CFE (Mexico) .......... ............... 30 D. Financial Plan .................. ................................. 31 E. Electricity Rates ...................... ............................. 32 F. Financial Forecast ........................... ........................ 32 G. Project Monitoring .............................. ..................... 33 VII. PROJECT .USTIFICATION AND ECONOMIC ANALYSIS A. General .33 B. Least-Cost Plan .33 C. Economic Analysis .35 VIII. AGREEMENTS AND RECOMMENDATIONS . .37 ANNEXES 2. 1 Petroleum Products Prices in Belize City (June 1993) ........ .......... 41 3.1 BEL's Available and Firm Capacity of Existing Diesel Plants by Location ................................................... 42 3.2 BEL's Sales and Peak Demand Forecast 1994-2004 ......... ............ 43 3.3 BEL's Capacity (Power) and Energy Balances ........... ................ 45 4.1 BEL's Organization Chart ................................................... 48 5.1 Detailed Project Description .................................................. 49 5.2 Mollejon Hydroelectric Plant Characteristics ............ .................. 54 5.3 Mexican Power Supply Tariffs ............................................... 56 5.4 Detailed Project Cost Estimate and Funding Allocation ........ ......... 57 - iii - 5.5 Project's Implementation Plan and Schedule ............. ................. 58 5.6 Project Implementation Unit Organization Chart .......... ............... 60 5.7 TORs Engineering and Project Management Consultant Services ..... 61 5.8 TORs Cost of Service and Tariff Study ................. ................... 74 5.9 Environmental Issues and Summary of Environmental Impact Assessment Studies .............. .................. 80 5.10 TORs Environmental Mitigation at BEL's Existing Diesel Plants ................................................. 84 5.11 TORs Environmental Action Plan and Monitoring .......... ............. 94 5.12 Estimated Loan Disbursement Schedule .................. .................. 98 6.1 BEL's 10 -Year Sales and Generation Forecast and Assumptions ................................................. 99 6.2 BEL's 10-Year Investment Plan ............................................. 100 6.3 BEL's 10-Year Financial Forecast .......................................... 101 6.4 BEL's Key Performance Indicators ......................................... 107 7.1 Cost-Effectiveness Analysis of Project Components ......... ............ 108 7.2 Project Economic Evaluation (NPV and IERR) ........... ............... 112 7.3 Assumptions Used in Economic and Equalizing Discount Rate Analyses ................................................. 113 8.1 Project File ................................................. 115 Map IBRD No. 25745 This report is based on the findings of an appraisal mission that visited Belize January 24 to February 4, 1994. Mission members were Messrs./Mmes. Eduardo Zolezzi (Task Manager), Teresa Serra (Environmental Specialist), and Eric Greenwood (Financial Analyst, Consultant). It also incorporates the findings of earlier preparation work by Ms. Paivi Koljonen (Economist) and Mr. Bekir Onursal (Environmental Specialist). Messrs. Yoshiaki Abe, Krishna Challa and Robert Crown, are respectively the responsible Department Director, Division Chief and Project Advisor. iv BELIZE SECOND POWER DEVELOPMENT PROJECT (POWER II) Loan and Project Summary Borrower: Government of Belize Beneficiarv: Belize Electricity Limited Amount: US$11.5 million equivalent Terms: Repayment over 17 years, including 5 year grace period at the Bank's standard variable interest rate. Relending Terms: 17 years, including 5 year grace period, at the Bank's standard variable interest rate. BEL would bear the interest and the foreign exchange currency pool risk. Project Description: The proposed project would cover BEL's medium-term (1997-2005) power and transmission requirements. The proposed project would comprise: (a) the construction of a 115 kV interconnection transmission system running from the border with Mexico to Belize City; (b) the integration of San Pedro (the major tourist area of the country) to the system; (c) the integration of Dangriga (the principal area of the citrus industry) to the system; (d) a dispatch center, supervisory control, data acquisition and communications for system operations; (e) an environmental mitigation program for the existing diesel plants; and (f) consulting services to assist BEL in engineering and project management, and technical assistance and training. Benefits: The proposed project would result in overall improvement in the generation and supply of electricity that would reduce cost of electricity to consumers and increase reliability and cost-effective of the supply of electricity in Belize. Risks: Apart from the dispatch center and a Supervisory Control and Data Acquisition System, all the other components of the project are standard electric utility facilities with very well known technologies; therefore technology risk during project implementation is very low. During project operation the major risk is BEL's financial performance. If Macal river hydrology is significantly less favorable than expected, obligations under the power purchase contract with Mollejon developers could affect negatively BEL's financial condition in some years. To mitigate this potential risk, contractual provisions allow for a v compensation mechanism ("energy bank") and the elimination of the pay- or-take obligation after the tenth year of operation of Mollejon. Project Cost: (in Millions US$) L.C F.C Total Group 1: 115 kV interconnection to Mexico 0.47 6.15 6.62 Group 2: 115 kV substations and Dangriga connection 0.94 3.59 4.53 Group 3: Submarine cable connection to Ambergris Cay 0.52 5.93 6.45 Group 4: SCADA and communication systems 0.23 2.78 3.01 Group 5: O&M vehicles, equipment and tools 0.00 0.65 0.65 Environmental Mitigation in Diesel Plants 0.00 0.70 0.70 Subtotal 2.16 19.80 21.96 Engineering, Project Management and PIU 0.46 2.07 2.53 Cost of Service and Tariff Study 0.00 0.19 0.19 Diesel Plants Environmental Mitigation Scope Study 0.00 0.18 0.18 Monitoring Implementation of Environmental Action Plan 0.00 0.18 0.18 Training and Technical Assistance 0.00 0.70 0.70 Subtotal 0.46 3.32 3.78 Total Base-Line Cost 2.62 23.12 25.74 Physical Contingencies 0.41 2.31 2.72 Base-Line Cost plus Ph. Contingencies 3.03 25.43 28.46 Price Contingencies 0.15 1.12 1.27 Total Project Cost 3.18 26.55 29.73 Estimated Financial Cost (IDC) 0.00 3.25 3.25 Total Estimated Project Cost 3.18 29.80 32.98 Financing Plan: US$ million I.C L F C oal IBRD 0.0 11.5 11.5 CDB 0.7 6.8 7.5 CDC 1.2 4.0 5.2 EIB 0.0 3.2 3.2 BEL 1 3 4.3 5.6 Total 3.2 29.8 33.0 vi Disbursements: FY95 FY96 FY97 FY9 Annual (US$ million) 2.87 3.45 4.60 0.58 Cumulative (US$ million) 2.87 6.32 10.92 11.50 Cumulative (%) 25 55 95 100 Estimated Economic Rate of Return: 21.7% BELIZE SECOND POWER DEVELOPMENT PROJECT PART I: THE ECONOMY Background 1.1 Belize, located south of Mexico's Yucatan Peninsula on the Caribbean cost of Central America, attained independence from the United Kingdom in September 1981. With a population estimated at 199,000 in 1992, occupying an area of about 22,000 km2, the population density is low, about 9 people per km2. Belize compares well with neighboring Central American and some Caribbean countries in regard to income distribution, education and health. Belize's population is predominantly young (about 50 percent below the age of fifteen) and quite literate. About one- fourth of the population lives in Belize City, the country's largest city. The country is endowed with abundant and fertile land, literate urban labor, proximity to North America and a stable currency (i.e., its exchange rate has been pegged to the US dollar at a fixed rate since 1976), all of which make it attractive to foreign investment. Belize's small, open and private sector led economy is based on agricultural exports and tourism. Belize achieved a per capita GNP of US$2,200 in 1992. 1.2 The country's economy has historically been based primarily on export agriculture. Agriculture accounts for almost one-fifth of GDP. In recent years, however, diversification away from excessive reliance on sugar into other economic activities has been taking place. In 1992, the share of sugar in total exports (goods and non-factor services) fell to 15% from over 409% in 1980. The rest of Belize's agriculture comprises citrus and banana production and fishing, mainly oriented to the export market, and the production of corn, rice, beans, and livestock for domestic consumption. Industry (including construction and electricity) accounts for about one- quarter of GDP. In manufacturing, the major commodities are export oriented: citrus processing and garments. Tourism, which became a major foreign exchange earner during the 1980s, accounts for 25 % of exports; citrus, bananas and fish products currently contribute to 10%, 49% and 5% of exports, respectively. Recent Economic Developments 1.3 Since the mid-1980s, Belize has experienced rapid economic growth in response to good economic management and a favorable external environment. During 1986-90, real GDP growth exceeded 9% per annum on average, with strong contributions from all sectors. Sugar export receipts grew by 80%, production and exports of citrus nearly doubled and exports of bananas tripled. Tourism arrivals more than doubled and receipts tripled. Construction boomed, led by public infrastructure investments and tourism-related construction. This, in turn, boosted trade and transport-related activities. Belize's performance since the mid-1980s contrasts with the economic difficulties the country faced during the early-1980s, a period during which sharp declines in export earnings and government efforts to stimulate the economy through expansionary demand management policies led to domestic and external imbalances. -2 - 1.4 Following the rapid economic expansion of the mid to late 1980s, growth continued at a steady but somewhat lower rate in the early 1990s. In 1991 and 1992, real GDP increased by 5.4% and 5%, respectively. Inflation averaged 4% per year. Domestic imbalances emerged as a result of large increases in the public sector investment program (PSIP) and in public sector wages, and of reduced privatization proceeds. In 1991 and 1992, the overall public sector deficit (after external financing) reached 1.2% and 5% of GDP, respectively. These deficits were financed by the Central Bank, domestic borrowing and commercial loans (suppliers credit). Foreign exchange reserves decreased to 2.1 months of import equivalent at the end of 1992. 1.5 The new administration that took office in June 1993 declared that its immediate priority would be to reestablish a sound fiscal position. New fiscal measures were aimed at sharply reducing the FY93/94 public sector deficit from the projected 8% of GDP. Further fiscal measures to reduce the deficit are expected to be included in the FY94/95 budget. Development Issues and Growth Prospects 1.6 Belize is vulnerable to changes in the global economy. This stems from its dependency on a few export commodities and a high degree of openness, with both exports and imports representing about 60% of GDP. Economic development in industrial countries as well as changes in the demand for specific export commodities impact directly on the Belize economy. However, Belize has been able to reduce its excessive dependency on exports of sugar and to diversify into other agricultural commodities (mainly citrus and bananas, agro-processing and fisheries) and tourism. In 1992, the share of sugar in total exports (goods and non-factor services) had fallen to 15% from over 40% in 1980. Citrus, bananas and fish products currently contributed to 10%, 4% and 5% of exports respectively, while services including tourism and the expenditure of British troops accounted for 25% and 8% of exports, respectively. 1.7 Although the economy is diversifying, Belize still remains exposed to changes in market access for key agricultural export commodities and to fluctuations in commodity prices. About 60% of Belize's sugar exports benefit from preferential trade arrangements with the U.S. sugar quota, the duty-free entry of citrus from Mexico to the U.S. under the North American Free Trade Agreement (NAFTA), and the erosion of preferences in the EU currently accorded to banana producers from the African, Caribbean and Pacific (ACP) countries. The gradual erosion of these arrangements expected over the medium-term underscores the need to further reduce dependency on these main export crops. The withdrawal in a year's time of British troops whose collective expenditures are equivalent to 4% of GDP, will also have a dampening effect on growth. 1.8 The successful completion of the recent GATT rounds is likely to provide significant opportunities for Belize to diversify its exports into nontraditional "niches". Similarly, the new NAFTA agreement can affect Belize's trade patterns as Mexico (a country with which Belize shares a long border) gradually liberalizes its economy and aligns its domestic prices closer to world levels. -3 - Bank Lending Strategy 1.9 Belize's development strategy supported by the Bank, calls for the public sector to concentrate on three broad policy fronts: (i) continuation of prudent fiscal and monetary policies, with particular emphasis on expenditure restraint, to maintain price stability and provide a stable environment for private sector development; (ii) improvement of economic and social infrastructure to eliminate bottlenecks and improve economic efficiency (i.e. urban and rural infrastructure, water and sewerage, electricity and health); and (iii) rationalization of the incentive framework to ensure efficient resource allocation and provide an enabling environment for further export diversification and improvement of the competitiveness of the economy. The proposed Project is consistent with this strategy and would assist in the improvement of Belize's infrastructure. 1.10 Belize has pursued a prudent external debt strategy. It has benefited from grants and concessional loans from bilateral and multilateral sources and, thus, has maintained its debt indicators at low and manageable levels. During the 1980s, grant financing averaged about 4% of GDP. This financing is expected to decline as donors gradually reduce their aid flows to the Caribbean countries. In 1992, medium- and long-term external debt outstanding and disbursed amounted to US$158 million (35% of GDP). Bilateral loans -- largely from the U.K. and the U.S. -- represented about US$70 million; and multilateral loans amounted to about US$590 million -- mainly from the Caribbean Development Bank (CDB) (US$27 million) and IBRD. In 1992, Belize became a member of the Inter-American Development Bank (IDB). Over the medium term, the Government is expected to rely on multilateral and bilateral sources and on moderate amounts of commercial financing and of suppliers credit to finance its investment needs. The Bank's exposure in Belize is low; debt outstanding and disbursed stood at US$19 million in 1992 and IBRD debt service at 1 % of exports of goods and nonfactor services. Belize is considered creditworthy for Bank lending. PART II: THE ENERGY SECTOR Organization of the Energy Sector 2.1 The Ministry of Energy and Communications (MEC) is responsible for formulating the overall energy policy. The Ministry of Natural Resources is responsible for petroleum exploration activities through its Geology and Petroleum Office, while biomass energy issues fall under the jurisdiction of the Forestry Section. Petroleum pricing and importation issues are handled by the Ministry of Trade and Commerce. Under the 1992 Electricity Act, the Minister of Energy and Communications, assisted by a Director General of Electricity Supply, is in charge of all matters concerning electricity supply in Belize. 2.2 At present, Belize Electricity Limited (BEL), a company whose major shareholder is the Government, is the only commercial generator, transmittor and distributor of electricity in Belize. Since BEL's current distribution system does not cover the whole country, captive power generation is common. A private developer is building a hydroelectric power plant on a BOT based arrangement to sell electricity to BEL. - 4 - 2.3 The importation and bulk handling of petroleum products is currently in the hands of Esso. The distribution of petroleum products is undertaken by three local affiliates of international oil companies (Esso, Shell and Texaco). Liquefied Petroleum Gas (LPG) is imported and distributed by private companies under a licensing system. Primary Energy Resources 2.4 Belize's energy resources are limited. The two primary resources are biomass and hydro energy. The biomass resources consist of wood (about 93 percent of Belize's land area is classified as forest) and agricultural residues, mainly bagasse. The hydropower potential of the Macal River only, where the 25 MW hydro plant is being constructed, is estimated at about 60-80 MW. In addition to the Macal River, there are several other rivers that might offer viable hydro power sites. 2.5 Geological studies indicate a good possibility that Belize has deposits of oil and gas, both on-shore and off-shore; estimates range from 19 million barrels to 130 million barrels of oil. Since 1955, 40 wells totalling 250,000 ft have been drilled and about 6,000 line miles of seismic surveys have been conducted by several companies. Presently there are 13 independent companies carrying out oil exploration. Various findings have been reported but so far there have been no reports of discoveries of either oil or gas in commercial quantities. Belize has no known coal resources of commercial quantities. Energy Supply and Consumption 2.6 Petroleum Products. All petroleum products are imported, mainly from the U.S.A and Mexico. Domestic consumption of oil products was about 27,463,000 gallons (650,000 bbl), in 1992. In addition, about 16,830,000 lbs of liquefied petroleum gas (LPG) was imported. The following table gives a breakdown of domestic consumption of petroleum products in 1992. Table 2.1. Domestic Consumption of Petroleum Products in 1992 1/ Product Name | Quantity Unit Gasoline 9,671,000 GaUons Diesel Oil 15,298,000 GaUons Fuel Oil 481,000 Gallons Kerosene/Jet Fuel 1,140,000 Gallons Aviation Spirit 873,000 Gallons TOTAL OIL PRODUCTS 27,463,000 GaUons Liquefied Petroleum Gas (LPG) 16,830,000 Pounds Note: Imports of lubricating oils are not included in the table. Gasoline is unleaded. 1/ Sources: Ministry of Finance, Central Statistical Office. 2.7 Of total diesel oil consumption, about 60 percent (9,184,000 gallons) was used by BEB for electricity generation. Fuel oil was used mainly in the sugar and citrus processing industries for steam production. Official statistics do not provide a breakdown of the usage of petroleum products by economic sector. In order to improve information availability, it is recommended that MEC's Energy Unit start collecting energy end-use data. 2.8 Petroleum Products Prices. Petroleum product prices are controlled by the government, but vary from place to place depending on transportation costs. The Government's objective is to minimize price fluctuations. This is implemented through a stabilization mechanism called "the revenue replacement duty", to compensate for increases and decreases in international prices. Although the Government's policy does not allow subsidy of petroleum product prices, the stabilization mechanism prevents the fluctuations in the international prices to be fully reflected in the pump prices. Annex 2.1 provides the breakdown of petroleum products prices in Belize City as of June 1993, and the prices of LPG in various locations in Belize. BEL imports its fuel requirements directly from Mexico and is not affected by Government petroleum pricing policy. 2.9 Electricity. With the exception of the Corozal/Orange Walk system, which is supplied with electricity from Mexico, Belize relies primarily on individual, isolated diesel generating plants. These plants use imported diesel oil purchased exclusively from Mexico. Belize Electricity Limited (BEL) operates 9 individual electrical systems. In FY93, the combined net electricity generation totalled 139 GWh and sales to about 33,000 customers were 120 GWh. Sales have increased on the average by 12 percent per year in the period FY87-92. Rapid economic growth; rural electrification programs; and connection of industries and hotels, which previously generated their own electricity, to the BEL system have been the main reasons for the high demand growth. This increase contrasts sharply with the low demand increases during the early 1980s. The aggregate peak demand reached about 25 MW in FY93, following increases on average of 13 percent per year during the period FY87-93. According to the 1991 population census, about 70 percent of all households have electricity, but access varies greatly between districts (about 90 percent of households in Belize district have electricity, while the portion is only about 25 percent in the Toledo district in southern Belize 2/.) 2.10 In addition to BEL, electricity is generated by private industries, such as sugar, dairy and citrus processing, and by timber mills, and hotels. It is estimated that there is about 20 MW of privately owned generation capacity, although no reliable data exists on how much electric energy is generated by these captive diesels. Two privately owned small scale hydro plants (150 kW and 60 kW) are in operation. 2.11 Biomass. About 93 percent of Belize's land area is classified as forest. Woodfuel consumption is relatively limited; about 30 percent of households used firewood for cooking in 1991. According to a limited survey conducted in 1982, the average household used about 10 pounds of dry firewood per day. Based on these figures, the total consumption can be estimated at about 40 million pounds of dry firewood per year. Although estimates on the sustainable supply of wood are not available, the limited use of wood for cooking is not considered to 2/ Belize is divided into six administrative districts. - 6 - endanger the forests. Firewood is mostly cut free of cost in the neighborhood of the dwelling. In addition, Belize has biomass resources in the form of sugar cane bagasse, which is mainly used for producing process steam and electricity in the sugar industry. The feasibility of using surplus bagasse for power generation by BEB was studied in 1989 by Canadian International Power Services (CI Power). The study concluded that bagasse generation would be economically attractive to complement the supply in the Corozal/Orage Walk area. The consultants also carried out an evaluation of the feasibility of using wood and sawmill residues for power generation; this option was not considered economic due to the relatively small quantities of residue available. 2.12 Other Renewable Energy. Solar photovoltaic energy is exploited on a very limited scale, mainly in tele- and radio communications, navigation lighting and in tourist attractions far away from BEL's power lines. Solar is also used on a limited scale for water heating. At the privately owned resort on St. George's Caye, wind turbines are used to generate electricity for the resorts' own needs. Occasional wind powered water pumps can also be observed at private farms. Based on the results of the feasibility study mentioned above, neither solar nor wind are economic alternatives for medium or large scale electricity generation. However, the technical and economic feasibility of using solar energy to complement energy supplies, especially in hotels and other tourist developments on the environmentally sensitive barrier islands, should be studied further. 2.13 Energy Consumption by Households. The following table provides a picture of energy consumption by households. Table 2.2. The Main Energy Sources Used by Households for Cooking and Lighting Type of Energy Used by Household for Cooking Cooking 1 Lighting and Lighting % %_| LPG 62 % 1 % Wood 29 % 0 % Kerosene 5 % 29 % Electricity 1 % 67 % Other 3 % 3 % TOTAL 100 % 100 % Source: Ministry of Finance, Central Statistical Office: 1991 Population Census. 2.14 As shown in Table 2.2 above, almost 70 percent of households use electricity for lighting. Nevertheless, electricity is seldom used for cooking. Instead, households prefer LPG since electricity as a cooking thermal energy source is about 3 times more expensive than LPG 3/. Wood for cooking and kerosene for lighting is the combination for most rural households without 3/ Cost of LPG used for cooking is estimated at US$20/GJ, and of electricity at about US$55/GJ. The efficiency of a gas cooker is assumed at 60 percent, and of an electric cooker at 75 percent. access to electricity, the majority of the rural population. The share of households using wood for cooking has decreased from about 40 percent in 1981 to less than 30 percent in 1991. Energy Conservation and Demand Management 2.15 Although energy conservation has not been a high priority policy in Belize's energy sector, high energy prices provide incentive for energy conservation and efficiency. The only demand management effort on the side of the BEL has been the ongoing replacement of low- efficiency street lighting by higher efficiency sodium lamps to reduce peak load. The tariff study to be financed under the proposed project will analyze potential load management options through tariffs. This is a necessary first step before persuing other more specific measures aimed at demand side management in BEL system. Government's Energy Sector Objectives and Policy 2.16 In 1990 the Belize Government established its Development Plan for 1990-1994, setting out an ambitious energy policy aiming to: (a) reduce Belize's dependency on imported energy; (b) develop indigenous energy resources; (c) reduce the cost of energy; (d) provide electricity to rural communities; and (e) secure a reliable and sustainable electricity supply across the country. The following actions in the electricity sub-sector, set out in the plan, have been implemented: (i) granting a franchise to a group of private investors to build, own and operate a run-of-river 25 MW hydro-power plant at the Mollejon site on the Macal river, in order to develop Belize indigenous hydropower (construction of the plant is in progress and commissioning is expected by early 1995); (ii) enactment of the Electricity Act of 1992, restructuring the electricity industry, introducing private participation and competitiveness in the sector; (iii) incorporation of Belize Electricity Limited as the successor company of the state- owned electric utility, BEB, through the public sale of shares and debentures; and (iv) a rural electrification program totalling about BZ$19.2 million during FY91-93 (approximately US$10 million), increasing electrification to more than 80% nation-wide. 2.17 The position of the new Government, that took office in June 1993, is to move forward and improve its policy in the energy sector by: (i) improving the contractual arrangement with the developers of the Mollejon hydroelectric plant; (ii) supporting the proposed Second Power Development Project; and (iii) expanding the electricity imports from Mexico, interconnecting the electrical systems of both coountries. - 8 - 2.18 In the last three years, the previous and the new GOB have moved clearly and strongly in the direction of reform and private participation in the power sector, basically in line with Bank's policy in the sector. Although, the initial public offering of BEL's shares was only partially successful, the present GOB is open to consider additional private participation in BEL. The implementation of the proposed project, combined with the expected improvement of BEL's operations as a commercial corporation, will extend BEL's attractiveness to the private sector. PART III: THE ELECTRICITY SUB-SECTOR Reform of the Power Sector 3.1 The Belize power sector was reformed in 1992 under the Electricity Act of 1992. The new Electricity Act provides for: (a) the regulation and provision of electricity services; (b) the issuing of licenses for the generation, transmission and distribution of electricity; (c) the powers etc. of license holders; (d) transfer of the assets of BEB to a successor company, Belize Electricity Limited (BEL); and (e) miscellaneous other matters dealing with the use of meters, preservation of amenities and fisheries, financial provisions, electricity tariffs, equipment installation, etc. An important feature of the new Electricity Act is the establishment of a mechanism for the granting of licenses authorizing any person or company to generate, transmit or distribute electricity in a specified "authorized area". The new Electricity Act moves away from the exclusive supply rights provided for BEB in the previous Electricity Ordinance, and provides instead an environment for competition under a licensing system. 3.2 Another new feature in the law is the establishment of a high level position, that of Director General for Electricity Supply, to assist the Minister of Energy and Communications in administering the licencing mechanism, enforcing regulations, and participating in all other matters concerning the implementation and application of the Electricity Act. The Director General's main duties are: (1) to ensure that all reasonable demands of electricity are satisfied; (2) to ensure that license holders are able to finance the provision of services they are authorized to carry on; (3) to promote competition in the supply of electricity; (4) to protect the interests of the consumers; (5) to promote efficiency and economy of electricity supply and use; and (6) to control safety regulations and standards. The Director General is also authorized to establish by- laws with respect to electricity supply activities. He is assisted by staff from the Public Services Commission. 3.3 In accordance with the new Electricity Act, the assets and liabilities of the former Belize Electricity Board, a Government agency, were transferred to the Belize Electricity Limited, a private company incorporated under the Companies Act of Belize. The Government granted BEL a 15 year license to generate, transmit and distribute electricity in all the areas where the former BEB operated, covering about 3/4 of the country. 3.4 In August 1992, the Government published a Prospectus offering for sale 49 percent of the shares and all the debentures of BEL to the general public in Belize. The offer was opened - 9 - on October 5, 1992 and closed on January 15, 1993. The general public was only moderately interested in investing in BEL, however. As a result, only 37.5 percent of the shares were sold. The remaining 11.5 percent were therefore purchased by the state owned Social Security Board. As the holder of a Special "Golden Share", the Government has the right to appoint two of BEL's Directors, and as long as the Government is the holder of the 'Golden Share" and of at least 25 percent of the issued share capital, it may appoint the Chairman of the Board. Of the current nine directors in the BEL's Board, six have been nominated by the Government. However, three of the Government nominees come from the private sector while one represents BEL employees. 3.5 The Government has indicated that as a policy, during the transition period to a private majority or fully private ownership of BEL, it will deal with its shares in BEL as an investor and not as a manager. It has already made significant progress in restructuring the electricity sector and introduced private participation in the ownership of BEL and in power generation. The Government is currently considering options (see also para. 2.18) to transfer its remaining 51 % shares in BEL to the private sector. This most probably should occur in 1997/1998, when the debentures sold in conjunction with ordinary shares in the first offering can be redeemed or converted into equity, the Mollejon plant will be in operation and the proposed project would be substantially completed. Completion of this expansion program will put BEL on much better footing, improving its revenue position and making for a more attractive private investment candidate. 3.6 The primary objective of the sale of the Government's remaining shares in BEL would be to place the majority of shares in the hands of investors with the experience necessary to successfully manage an electric utility. The interests of Government and the public will be protected through Government retention of the "Golden Share" with rights limited to approval of subsequent sales of shares, and the implementation of the regulatory framework, established in the Electricity Act of 1992, charged with responsibility for monitoring BEL's compliance with service standards as defined in its operating license and the management of transparent electricity pricing setting. Electridty Demand and Supply 3.7 BEL's sales of electricity amounted to 120 GWh in FY93 and was supplied by 124 GWh of own thermal generation and 15 GWh of purchases from Mexico. Electricity sales have increased on the average by 12 percent per year during FY87-93. The coincident (97% coincidence factor) maximum peak increased concurrently at an average yearly rate of 13 percent and was about 25 MW in FY93. The rapid economic growth, rural electrification programs (especially in San Ignacio, Corozal and Dangriga), the promotion of San Pedro as a major tourist center, and connection of industries and hotels which previously generated their own electricity, have been the principal causes for the high sales growth. The recent high sales growth compares favorably with sales growth during the early 1980s of about 5 percent per year. 3.8 Of the total sales of 120 GWh in FY93, 38 percent were to residential consumers, 34 percent to businesses and industries, and the balance to statutory and government offices. The following table summarizes the consumption of electricity by consumer category by BEL's customers. - 10- Table 3.1. Consumption of Electricity by Consumer Category (BEL's Supply) Consumer Category Percent of total electricity used by Percent of customers in respective consumer category each category Residential 36.0 % 83.6 % Business and Industries 41.8 % 13.6 % Statutory Bodies 8.5 % 0.7 % Government of Belize 13.7 % 2.1 % TOTAL 100 % 100% Total Annual Consumption and Number of Customers, FY92 107 MWh 32,995 Source: BEL, December 1993 billing records. 3.9 The average monthly consumption by residential consumers was about 145 kWh, and by business and industrial consumers about 800 kWh, while the statutory bodies and the Government of Belize consumed on the average about 3,000 kWh per month. The relatively low average consumption figures for businesses and industries result mainly from the fact that the larger industries, such as the citrus and sugar companies, have their own generation facilities and are not accounted for in BEL's statistics. Electricity Prices 3.10 Electricity in Belize is expensive compared to most countries in the LAC region, although it should be recognized that the market is very small and too dispersed to take advantage of economies of scale and more efficient generating technologies. BEL's current electricity tariff, in effect since 1989, consists of three increasing blocks: Block Belize Cents US cents 0-70 kWh per month 31 15.5 71-150 kWh 35 17.5 more than 150 kWh 41 20.5 3.11 There is no demand charge or distinction between customer categories. The average revenue per kWh sold was 38 Belize cents in FY92 (equivalent to US cents 19) compared to the average generating cost of about 27 Belize cents. The current tariff rates have provided BEB with a rate of return on (historically valued) net fixed assets of around 10 percent during the recent years. 3.12 As part of the CDB loan in 1980, a tariff study was prepared by consultants in 1982. The study recommended substantial rate increases to meet the financial covenants of the CDB loan. In addition, the study recommended that a separate tariff be established, comprising both an energy and a demand charge, for large industrial customers. The recommendations of the - 11 - study were however never implemented. In view of the future changing structure of supply sources (hydro-power, imports from Mexico and diesel generation), a new tariff study is required. Agreement was reached during negotiations that BEL would furnish to the Bank. not later than March 31, 1995. the Government's and BEL's recommendations based on the results of a tariff study carried out by consultants (Annex 5.8) and that. after consultation with the Bank, would promptly implement such recommendations. The study would analyze the options for tariffs which more effectively reflect the cost of supply, the regulatory requirements, and provide consumers with price signals for efficient use of electricity. 3.13 Regarding the tariff setting and approval process, the 1992 Electricity Act reflects the previous Ordinance with no specific provisions provided for price regulation. The License granted to the BEL sets out only general guidelines for tariff determination, such as: (1) the rates should reflect the cost of generation, transmission and distribution; (2) the Licensee should obtain a reasonable rate of return; and (3) the interest of the customers should be taken into account. In this regard, complementary and subsidiary price regulations to the Electricity Act are required. The Government agreed during negotiations that, by March 31. 1995. it would establish specific regulations to define transparent procedures for tariff setting and approval, acceptable to the Bank. Technical assistance from the proposed project will be used to assist the Government in this matter. Rural Electrification 3.14 Following the arrangement between the Government and the former BEB, BEL undertakes electrification of rural villages on behalf of the Government and receives reimbursement for investment costs. Between September 1989 and May 1993 the Government provided about BZ$26 million for the electrification of 131 villages. 3.15 The policy of the new Government, that took office in July 1993, is to reduce the pace of its financial support in rural electrification due to financial constraints and considering that nation-wide electrification has already reached more than 80%. Existing Power Sector Facilities 3.16 Generation Facilities. At present, BEL operates 12 diesel plants with units varying in size from 100 kW to 3.5 MW. The total available capacity is about 38.3 MW and the firm capacity is estimated at about 27.4 MW. The table in Annex 3.1 summarizes available and firm generating capacity by location. The plants at Belize City and Ladyville, those at Belmopan and San Ignacio, and those at Corozal and Orange Walk are interconnected. The newest additions to the generating capacity are two units at Belize City and two units at Belmopan, commissioned in mid 1993 as part of the Power I project. 3.17 In addition to its own thermal generation, BEL has, since 1990, also purchased small amounts of electricity from the Commission Federal De Electricidad (CFE) in Mexico (about 13.8 GWh in FY92) to supply the Corozal/Orange Walk area. The present contract between BEL and CFE allows continuous purchase of up to 5 MW at 34.5 kV. This supply has been very reliable. - 12 - 3.18 Transmission and Distribution Network. The major distribution voltages in Belize are 6.6 kV, 1 1 kV, 22 and 34.5 kV. The 11 kV distribution voltage is limited to Belmopan. The 34.5 kV voltage in the Corozal/Orange Walk area, constructed as part of the Power I project in 1991, is presently a transmission voltage and an extension of the line interconnecting the Mexican grid to the Belize system at Santa Elena. BEL plans to maintain this line primarily as a sub- transmission when the planned 115 kV national grid system is constructed. The developers of the Mollejon hydroelectric plant are constructing a 115 kV transmission line, as part of their project, from the plant site to Belize City, via Belmopan. This line will be part of the planned national grid. 3.19 BEB's system losses have been high. In 1984, when BEB first introduced loss reduction measures, the total losses were about 26.5 percent of net generation. As a result of the implementation of the Power I project, losses were reduced to some 14 percent in FY91, however, the reduction was not sustained and in FY92 losses increased to about 16 percent. A supplementary program of loss reduction was therefore started in March 1992, based on targets established in consultation with Bank supervision mission. This program has achieved a reduction of losses to about 10.5 percent by December 1993. Electricity Sales and Peak Demand Forecast 3.20 A review of the several existing electricity demand forecasts was carried out by Bank consultants, in cooperation with BEB, in June and November 1992 4/. The forecast was updated in September 1993 to take into account the latest figures of generation and sales for FY93 and the new country economic projections (Bank's most recent GDP growth forecast is 4.4 percent per year during 1994-2004). 3.21 Demand projections have been desegregated, for each load center, into residential, industrial/commercial and street lighting. In the short-term, sales growth will remain strong due to the expected connections to BEL's system of large industries and communities, which currently use their own diesel generation. In the longer-term, after the connections have been made, the sales growth rate is forecast to decline to reflect the historical long-term elasticity of electricity consumption to GDP. For residential demand, the forecast also considers new connections based on an annual population growth of 3 percent and increased access to electricity. Table 3.2 below summarizes the base case forecast and Annex 3.2 provides the detailed forecasts for the different load centers. 4/ BEB prepared forecasts in 1991 as basisfor theirfive year FY92-97 development plan, and BEL revised these projections in 1993 as basisfor its long-term expansion plan. According to BEL's 1993 projections, electricity sales are expected to grow at an annual rate of about 12 percent between 1994-1997. BEL bases itsforecast on the Government 's GDP projections of about 7.4 percent a year and prepares only an aggregated forecastfor each load center. - 13 - Table 3.2 Actual Sales, Generation and System Peak FY90-FY93 and Forecast FY94-FY2004 FISCAL YEARSF ) ANNUAL GROWIl RAMT % 90 92 93'2 94 98 2000 2004 87-93 93-97 97- 93- 2004 2004 CONSUMPTION (GWh) 2004 2004 Residential 29 40 45 50 63 69 84 12.6 7.5 4.9 5.8 Indudrial/Commerciall 52 67 75 85 115 127 154 11.6 9.9 5.1 6.8 Street LiAghting TOTAL (GWh) 81 107 120 135 178 197 238 12.0% 920% 5.0% 6.5% LOSSES (GWh) 14 18 19 20 19 21 25 - - - - % of net generation 15% 14% 14% 13% 10% 10% 10% - - - - NET GENERATION 95 125 139 155 197 218 263 11.4% 7.8% 4.9% 6.0% (G W b) I__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ I__ _ _ _ _ _ _ _ _ _ I__ _ _ _ _ _ _ _ _ _ _ _ SYSTEM PEAK LOAD 15.6 22.7 24.8 28.1 34.7 38.3 46.4 13.4% 7.5% 4.9% 5.9% (MW) 97% coincidence factor "BEL's fiscal yes fromisf- A pri to M-h 2 FY93 aLes estimated from acal sae in April nd December 1993. 3.22 Two demand forecasts for the period FY93-FY2004 have been considered in the evaluation of the technical and economic feasibility of the proposed project: a base case forecast and a low-growth scenario. The base case forecast projects BEL's electricity sales to rise at an average annual rate of 6.5 percent, with a corresponding 5.9 percent annual increase in peak demand. This reflects the expected slowdown in economic growth and a reduction in incorporating new areas to BEL's system, compared to the average annual sales growth in FY87- 93 of about 12 percent. For sensitivity analysis the low-growth scenario has been assumed to be 20% lower than the base case. 3.23 According to the base case forecast, the system peak will increase from 24.8 MW in FY93 to 46.4 MW in FY2004. The corresponding electricity generation will increase from 139 GWh in FY93 to 262 GWh in FY2004. The forecast assumes a reduction in transmission and distribution losses from about 13 percent of net generation in FY96 (including 2.5% estimated transmission system losses in the new 115 kV system) to 10 percent in FY2004. The increase in sales is expected to be particularly strong in Dangriga and San Pedro as a result of the incorporation of existing citrus processing industries (Dangriga) and existing hotels (San Pedro), as well as new developments, such as hotels and a desalination and a sewerage facility in San Pedro. Detailed demand forecast was prepared only for 10 years (up to 2004). From 2005 to 2010 the demand growth was kept equal to the 1997-2004 annual average. Beyond 2010 it is assumed that the demand will grow at 4% per year. Current Sector Problems and Issues and the Second Power Development Project 3.24 There are two major issues in the power sector of Belize. First, electricity is expensive because generation capacity is dispersed in small local systems with relatively high investment - 14 - and production cost requirements (all generation is thermal based and use imported diesel oil). Second, the quality and reliability of electricity supply is low because the small size of the systems cause relatively large voltage and frequency fluctuations, and reserve capacity is limited in each local place (back-up generation cannot be shared). 3.25 Clearly, expansion of electricity generation cannot continue in the same manner as before if Belize wants to adequately address these two issues. World-wide experience has shown that integration and interconnection of electrical systems is the best solution to cope with the problems just mentioned. The Mollejon hydroelectric development and the Second Power Development Project would serve this purpose. 3.26 BEL's generation expansion plan shows that, if the existing isolated systems are not interconnected, new diesel units would be required as early as 1996 in San Pedro (1 MW), followed by 4 MW in Belize City-Ladyville in 1997 and 1.5 MW in Dangriga in 1998. Furthermore, another 22 MW of new units would be required in the medium-term (till year 2004) to cover the expected electricity demand. The studies carried out during preparation of the Second Power Development Project have shown that the interconnection line with Mexico is a better solution than continuing with diesel expansion. This interconnection will provide the Belize power system with a large, reliable and relatively cheap source of electricity supply, and integration of the major load centers, by creating a national trunk transmission system. 3.27 How these new sources are combined to supply the required capacity and energy is shown in the table and charts of Annex 3.3. The table shows the capacity (power) and energy balance for the interconnected system from 1993 to 2004 and the charts illustrate the expected annual dispatch by sources of electricity, a typical montly dispatch (for year 2000), and a typical daily dispatch (for a weekday of January 2000). PART IV: THE BORROWER AND THE BENEFICIARY The Borrower 4.1 The Borrower of the proposed IBRD loan of US$11.5 million equivalent would be the Government of Belize, who would onlend the proceeds of the loan to Belize Electricity Limited on the same terms and conditions (para 6.8). Belize Electricity Limited 4.2 Legal Status and Capital Structure. BEL was incorporated under the Belize Companies Act in October 5, 1992 as a public company empowered to issue shares. BEL has an authorized share capital of BZ$ 100,000,000 comprised of 38,000,000 Ordinary Shares of BZ$2 per share, 12,000,000 Preference Shares of BZ$2 each, and one Special Share (Golden Share) of BZ$1. On January 7, 1993, the Government transferred the assets and liabilities of the BEB to BEL at book value as of March 1992, in return for shares and debentures valued at BZ$57,750,001 as follows: - 15 - BZ$ % of Total 6,930,000 ordinary shares of BZ$2 13,860,000 24 11,191,950 convertible preference shares of BZ$2 each 22,383,900 39 1 Special Rights Redeemable preference share (Special Share) of BZ$1 1 0 282,975 12% convertible debentures of BZ$76 21.506.100 37 Total 57,750,001 100 4.3 In October 1992, the Government offered 49 percent of the Ordinary Shares and all the 12% Convertible Debentures for sale to the general public in Belize in units of BZ$100 consisting of 12 ordinary shares, and one debenture. After the closing of the offering in January 1993, 37.5 percent of the ordinary shares were bought by private interests while the remaining 11.5 percent were sold to the State Social Security Board. The Government retained the Convertible Preference Shares, the Special Rights Preference Shares, and 51 percent of the Ordinary Shares. 4.4 The debentures are convertible at the holders option into Ordinary Shares at any time prior to December 31, 1997 at a ratio of 38 ordinary shares per debenture. The holders may also purchase additional Ordinary Shares for BZ$2 each up to December 31, 1997. BEL's Articles of Association provide that each time Debentures are converted into Ordinary Shares, the same amount of Preference Shares will automatically be converted into Ordinary Shares. 4.5 Organization and Management. Under BEL's Articles of Association, the company is to be managed by a Board of Directors consisting of not less than three and not more than twelve directors. Presently, the Board has nine members; seven, including the Chairman, are nominated by the Government and two represent private sector shareholders. Currently, of the Govermnent nominees, three are private businessmen. The Chairman of BEL is also the Chairman of Belize Telecommunications Limited (BTL), a former Government enterprise successfully privatized in 1988. BEL took over the management and staff of BEB, including the positions of Chief and Deputy Chief Executive Officer. BEL's CEO is a professionally qualified accountant with more than seven years of experience in the power industry. The Deputy Chief Executive Officer is a qualified engineer who has been on BEB's staff for more than 20 years. 4.6 BEL's organizational structure (see Annex 4.1) is satisfactory. In the years prior to its dissolution, BEB's institutional performance considerably improved. Its staff was strengthened by the employment of additional professionally qualified engineers. BEL is a small company and its activities are organized into two principal departments: (i) engineering; and (ii) finance and administration. Each is headed by a general manager who reports to the Chief Executive Officer. In addition, the Manager for Customer Services, the Manager for Data Processing and the Manager for Human Resource Management report directly to the Chief Executive Officer. Twelve District Managers report to three Area Superindendents who report to the General - 16 - Manager F&A. The eight senior officials of BEL are dedicated professionals, many of whom have post graduate degrees in engineering or business administration from overseas universities. 4.7 Staffing and Manpower Development. BEL employs about 394 people of which 14 (e.g. 3.5%) are professionally qualified engineers. The number of customers and MWh sold per employee are, in round figures, 83 and 300 respectively. This profile compares favorably with utilities with similar characteristics in the region. Under IBRD financed Power I Project, the following manpower development and training needs were carried out: seven engineers completed advanced courses in engineering, system operation and maintenance, computerized planning, and business administration; one employee received training as Training Officer; and a number of supervisory level staff completed courses in electrical and mechanical diesel operation and maintenance. As a result, BEL's institutional performance improved considerably. 4.8 The implementation of the proposed Second Power Development Project would require additional skills and qualifications in new areas, such as operation and maintenance of transmission lines and submarine cables, in load dispatching and environmental issues. Additionally, the downscaling of the diesel plants may result in some staff becoming redundant. As part of the project implementation plan, BEL will prepare, and thereafter carry out, a program for the training of staff required to implement, operate and maintain the proposed project, according to an agreed project implementation plan and schedule. The proposed project will finance this training and also training in cost of service calculations and tariffs, another area of increasing importance to BEL. 4.9 Financial Organization and Accounting. BEL produces monthly financial statements which are compared with budgets. BEL's accounting is largely computerized although parts of the system, such as accounts receivable and payroll, are not integrated with the general ledger. A data processing specialist, financed from funds from the IBRD Loan No. 2749 (Power I project), reported inadequacies in BEL's computer systems, including accounting applications, and a pressing need to integrate all BEL's computer systems and to purchase required hardware and software. As part of the project implementation plan, BEL will submit to the Bank and thereafter carry out an action plan for the integration of its data processing systems and the purchase of the required hardware and software, according to an agreed project implementation plan and schedule. EIB is considering financing this program. In an effort to strengthen the company's financial management, BEL appointed a new General Manager for Finance and Administration in June 1993. The new Manager was previously the General Manager for Engineering. He has an MBA, private sector experience, and, prior to his appointment, played a significant role in recent successful efforts to improve BEL's financial and investment planning. 4.10 Billing and Collection. On March 31, 1993, accounts receivable were at a very good level equal to 36 days of sales. The Government has met its agreement under Loan 2749-BEZ to ensure that public sector bills are paid within 60 days. This has been an important factor in keeping receivables at a low level. 4.11 Auditing. The annual financial audits of BEL will be carried out by independent auditors satisfactory to the Bank, who also audited the accounts of BEB. BEL agreed during negotiations that it would engage independent auditors. satisfactory to the Bank. and that BEL's audited - 17 - accounts. including SOE's and the Special Account. will be submitted to the Bank not later than four months after the end of its fiscal year. BEB's past record in this matter has not been fully satisfactory but it has improved in recent years. It is expected that performance will further improve by the recent appointment of a new qualified General Manager for Finance and Administration. 4.12 Income Taxes. Unlike BEB, which as a Government statutory body was exempt from income taxes, BEL has to pay income taxes. The Government has indicated, however, that it will take steps to make sure that BEL will be liable for income taxes on its taxable income only from April 1, 1993 and that, for the first three fiscal years thereafter, BEL will be liable at a 10% rate. The rate will be increased by 5% annually thereafter to a maximum rate of 35%, beginning on April 1, 2000. 35 % level of taxation is standard for private companies in Belize. BEL will also be permited to offset the accumulated losses of BEB against its taxable income. 4.13 Insurance. BEL carries insurance coverage for all its assets in operation, general plants and buildings. Renewal of insurance for transmission and distribution lines and substations is becoming extremely difficult in the Caribbean region due to substantial losses caused by hurricane Andrew. BEL is using its best efforts to secure adequate insurance. BEL is also studying the viability of establishing a reserve fund to deal with this problem. PART V: THE PROJECT Background 5.1 Participation of the Bank in Belize's Power Sector development dates back to 1986 when a US$7.5 million loan (2749-BEZ) was approved to assist in meeting the sector's immediate needs, specially to strengthen institutionally the Belize Electrify Board (BEB) and to reduce the substantial level of distribution losses. The Power I Project was part of BEB's 1987-1993 investment program and comprised five major components, namely: (i) distribution expansion and improvements; (ii) installation of new diesel-electric generating sets; (iii) technical assistance and training; (iv) pre-investment studies; and (v) consultant services for engineering and construction supervision. 5.2 As the Power I Project was on schedule and progressing satisfactorily, the Government and BEB informed the Bank in late 1991 of their interest in having the Bank's financial assistance in developing an interconnection with the Mexican Power System in the State of Quintana Roo. Subsequently the Bank assisted in the preparation of a power project - a Second Power Development Project (Power II) - which would continue the institutional strengthening of Belize's Power Sector and structure its main trunk transmission system around the interconnection with Mexico. The proposed project is part of the medium-term expansion program (1995-2004) of Belize's Power System. - 18 - Rationale for Continued Bank Involvement 5.3 The Power I Project was successfully completed, on schedule, at the end of 1993. The objectives of this project were achieved, both tangible physical works as well as for institutional strengthening. The Govermment of Belize has moved firmly in the direction of economic reform and private participation in government owned enterprises. The electricity sector has been reformed, the private sector is developing a hydroelectric scheme and, as indicated in paragraphs 3.3 to 3.6, the Government has establish BEL as an independent corporation. Furthermore, the Government has already sold part of its interest in BEL to private investors. Necessary conditions for continuing the Bank's support of Belize power sector have been met. The proposed project constitutes a strategic component of the long-term plan to develop an interconnected system that will provide a reliable and economical electricity supply to Belize. Objectives and Description 5.4 The main purpose of the proposed project is to integrate Belize's five major load centers, hitherto isolated, into an integrated national power system and tap new supply sources of relatively cheap electricity. This would be achieved by means of the interconnection with Mexico and the transmission system associated with the 25 MW BOT hydroelectric scheme at Mollejon on the Macal River. When completed, the Belize trunk transmission system will encompass 286 km of 115 kV lines and associated substations, and will tie-in the main populated areas of the country. 5.5 A subsidiary purpose is to continue support of the current re-structuring of the power sector to increase efficiency and expand private investment in the sector. Additionally, the proposed project aims at strengthening BEL through provision of technical assistance and training. 5.6 As agreed with GOB and BEL, the proposed project will consist of eight major components, namely: (i) 136 km, 115 kV interconnection transmission line with Mexico (Group 1); (ii) 115 kV substations and Dangriga connection to the Mollejon line (Group 2); (iii) Interconnection of San Pedro (Ambergris Cay) to the 115 kV transmission from Mexico (Group 3); (iv) Energy Management System (EMS) and Supervisory Control and Data Acquisition (SCADA) and communication systems (Group 4); (v) Operation and Maintenance Vehicles, Equipment and Tools (Group 5); (vi) Environmental Clean Up of BEL's Diesel Power Plants; (vii) Consultant Services for: - 19 - Engineering and Project Management; Cost of Service and Tariff Study; Diesel Plant Environmental Mitigation Study; Monitoring of Implementation of Environmental Action Plan (viii) Training & Technical Assistance A detailed description of the physical components of the proposed project is presented in Annex 5.1. TORs for consultancy services are included in Annexes 5.7, 5.8 and 5.10. The physical components of the Project are illustrated in IBRD Map No. 25745. 5.7 Two other components of the expansion plan are the Mollejon hydroelectric power plant and the expanded power supply from Mexico. These two components will be completed and fully operational when the Second Power Development Project is completed. When all components of the expansion plan are in place, Belize's electricity demand will be covered from three sources, the Mollejon hydroelectric plant, the supply from Mexico and the local diesel units, mainly for peak load and as local generation reserve. The Mollejon Hydroelectric Development 5.8 The Mollejon hydroelectric develpment is a run-of-river 25 MW hydroelectric power plant (three Francis units of 8.4 MW each) at Mollejon in the Macal river (a tributary of the Belize river); its associated 139 km, 115 kV transmission line from the plant site to Belize City; and three intermidiate substations. The average yearly energy production has been estimated at 110 GWh. From historical records, in a dry year, production could be as low as 72 GWh and, in a wet year, as high as 137 GWh. The plant has a small reservoir with a live storage of 845,000 cubic meters for daily regulation. Annex 5.2 shows the basic technical characteristics of the Mollejon plant and the expected power and energy production (derived from 10-year hydrological historical information). 5.9 The Mollejon project is being implemented by a private group of developers under BOT and power purchase agreements with the Government and BEL (price terms and other conditions are explained in paras. 6.4 and 6.5). Construction of the hydroelectric plant and its associated transmission system is underway. Completion of the first unit is expected by December 1994 and all three units will be completed by March 1995. The estimated total cost of the project is US$ 59 million, including about US$ 6 million of financing costs. IFC and CDC will be part of the financing package of Mollejon, once a Master Financial Agreement is signed. Due to the interrelation of Mollejon and the proposed project, IFC and IBRD have work in close coordination during project preparation. The Mexican Power Supply 5.10 The power and energy output of the Mollejon plant is highly variable. To firm up the capacity of Mollejon, and supply additional power and energy for the interconnected system, a key component of the proposed project is a long-term electricity supply contract with Mexico. BEL, with the support of the Government, has pursued actively this matter. The Comision - 20 - Federal de Electricidad (CFE), CFE has answered positively the request of BEL to supply up to 25 MW at 115 kV at the Mexican border. 5.11 Power and energy are presently being purchased from the CFE and being utilized in the Corozal-Orange Walk area. The power is delivered at 34.5 kV. The present contract allows the purchase of up to 5 MW at 34.5 kV. CFE has indicated that this level can be increased to 6 MW without additional installations. In order to effect the larger supply requested by BEL to cover its 10-year demand requirements, the CFE plans to construct a second 115 kV transmission line between CFE's Ticul and Xul Ha Substations. Once that is completed in 1998, CFE will provide BEL with additional 12 MW, for a total of 18 MW. Additional installations would be required to allow BEL to purchase the maximum 25 MW requested. CFE estimates that these installations would be available in 2003 (price terms and other conditions are explained in para. 6.6). Status of Project Preparation 5.12 Project preparation is well advanced. For the transmission components, an electrical system design and cost estimate have been made5/. In addition, a generation dispatch simulation and production costing on the interconnection with Mexico and the supplies to Dangriga and San Pedro_/ have been completed. A line route selection and environmental impact assessment has been carried out for the interconnection with Mexico7/. The final route has been determined as part of the EIA. An economic technical and environmental impact analysis has also been done of the submarine link to Ambergris Cayl/. Work is presently underway on route survey for the 115 kV line to Mexico and the 34.5 kV line to Dangriga. Plan and profile drawings for these lines will be available by December 1994. These drawings will be accompanied by a soils investigation analysis. As a condition for disbursements for the 115 kV transmission line goods and works (Group 1). BEL should have completed all Project transmission line and substation land surveys. identified all rights-of-wav. and completed easements and land acquisition procedures. as required for the first year of Droiect construction. 5.13 BEL will engage a consulting firm to perform final engineering design of the physical components of the Project and provide project management services during implementation. The firm will also carry out the basic designs and specifications for the dispatch center, the Supervisory Control and Data Acquisition System (SCADA) and associated communication 5/ Power II Study for The Belize Electricity Board, prepared by NEI Electric Power Engineering, Inc., Arvada, Colorado, U.S.A., December 1992. 6/ Power II Project - Interconnection Transmission Line to Mexico, Generation Dispatch Simulation and Production Costing, prepared by E. Indacochea and L. Aragon, November 1992. Z/ Belize Power II - 115 kV Mexico Interconnection Transmission Line, Line Environmental Impact Assessment, prepared by CI Power, December 1993. 8/ Power 11 Project: Economic, Technical and Environmental Analysis of 34.5 kV Submarine Cable Link to San Pedro, prepared by ELSAMPROJEKT, Denmark, December 1993. - 21 - system. It is expected that the consulting firm will be engaged by June 1994 and complete its services for final engineering design by January 1995. The services for project management and supervision will start in January 1995 and will extend for a period of approximately 30 months. Project Cost Estimate 5.14 The project cost at December 1993 prices, including physical and price contingencies, and excluding taxes and duties, is estimated at the equivalent of US$29.7 million, of which US$26.5 million (89%) would be the foreign cost. Total financing requirements, including US$3.3 million interest during construction, would be US$33 million. Annex 5.4 shows a detailed cost estimate, while a project cost summary is given in the following table: (in Millions US$) L.C. FC. Total Group 1: 115 kV interconnection to Mexico 0.47 6.15 6.62 Group 2: 115 kV substations and Dangriga connection 0.94 3.59 4.53 Group 3: Submarine cable connection to Ambergris Cay 0.52 5.93 6.45 Group 4: SCADA and communication systems 0.23 2.78 3.01 Group 5: O&M vehicles, equipment and tools 0.00 0.65 0.65 Environmental Mitigation in Diesel Plants 0.00 0.70 0.70 Subtotal 2.16 19.80 21.96 Engineering, Project Management and PIU 0.46 2.07 2.53 Cost of Service and Tariff Study 0.00 0.19 0.19 Diesel Plants Environmental Mitigation Scope Study 0.00 0.18 0.18 Monitoring Implementation of Environmental Action Plan 0.00 0.18 0.18 Training and Technical Assistance 0.00 0.70 0.70 Subtotal 0.46 3.32 3.78 Total Base-Line Cost 2.62 23.12 25.74 Physical Contingencies 0.41 2.31 2.72 Base-Line Cost plus Ph. Contingencies 3.03 25.43 28.46 Price Contingencies 0.15 1.12 1.27 Total Project Cost 3.18 26.55 29.73 Estimated Financial Cost (IDC) 0.00 3.25 3.25 Total Estimated Project Cost 3.18 29.80 32.98 5.15 Engineering and project management costs have been estimated at about 10% of direct project costs plus physical contingencies, which is in line for projects of the nature of the proposed project. Physical contingencies of about 15% have been estimated for local costs, which are essentially labor costs and local transport. For foreign costs, which represent mainly - 22 - materials and equipment, a contingency allowance of about 10% has been added. For price contingencies, a 5 % overall allowance has been considered adequate, given the fact that very little inflationary pressure is foreseen in the next coming years that would affect the construction cost of the proposed project. 5.16 The project cost estimate has been established using prudent cost estimation both for substation equipment and for transmission line construction, as of December 1993. For instance, the 115 kV transmission line single circuit wood pole-mounted has been estimated at US$45,000 per km and for 34.5 kV line at US$25,000 per km. These unit costs are well within recent historical and current cost levels. For substation equipment, the consultants have used pro-forma price quotations and catalog prices, which are generally higher than prices obtained in ICB. On the other hand, the cost for environmental clean up of diesel plants should be considered as a preliminary estimate derived from a general, non-detail, spot checks in the field. An environmental mitigation study (Annex 5.10) will determine detailed scope and costs. Project Financing Plan 5.17 The project financing plan is shown in the table below, and details of the agreed packages are given in Annex 5.4. In this project funding scheme the IBRD loan would be US$11.5 million equivalent, all of it for foreign currency project items. (in Millions US$) Financing Allocation of Funds L.C. F.C. Total IBRD - Foreign cost of Groups 1 and 5 0.0 6.9 6.9 - Diesel Plants Enviromnental Clean Up 0.0 0.8 0.8 - Engineering and Project Management 0.0 2.4 2.4 - Cost of Service and Tariff Study 0.0 0.2 0.2 - Enviromnental Mitigation Scope Study 0.0 0.2 0.2 - Monitoring of Environmental Action Plan 0.0 0.2 0.2 - Training and Technical Assistance .Q& 0.8 .8 Subtotal 0.0 11.5 11.5 CDB - Local and Foreign Costs of Group 3 0.7 6.8 7.5 CDC - Local and Foreign Costs of Group 2 1.2 4.0 5.2 EIB - Foreign Cost of Group 4 0.0 3.2 3.2 BEL - Mexican Supply Investment 0.0 1.1 1.1 - Local Costs of Groups 2 and 4 0.8 0.0 0.8 - Project Implementation Unit (PIU) 0.5 0.0 0.5 - Interest During Construction .0& 3.2 12 Subtotal 1.3 4.3 5.6 Grand Total Funding Provided 3.2 29.8 33.0 - 23 - Project Implementation 5.18 Actual project implementation would start with land surveys and final engineering design early in 1994 and be completed towards mid-1997. The following table sets forth the implementation schedule for the different project components. A Project implementation Gantt chart is shown in Annex 5.5. Project Bidding Process Implementation Tender Documents Contracts Issued Awarded Starts Completed Grop___/ _ --- /_____ 5/___5 12/9----- Group 1 12/94 4/95 5/95 12/96 Group 2 12/94 4/95 5/95 4/97 Group 3 4/95 8/95 9/95 9/96 Group 4 6/95 12/95 2/96 6/97 Group 5 12/94 4/95 5/95 4/96 Environmental Clean Up 6/95 9/95 10/95 10/96 Consultant Services: - Eng. & Project Management 5/94 8/94 8/94 6/97 - Cost of Ser. & Tariff Study 6/94 9/94 9/94 3/95 - Environmental Mitig. Scope 1/95 3/95 3/95 9/95 - Environmental Monitoring 6/94 9/94 9/94 12/96 Training & Tech Assistance 1/95 12/96 5.19 BEL has established a Project Implementation Unit (PIU), properly staffed and funded; and has appointed a Project Coordinator-Manager in charge of the unit, having qualifications and experience satisfactory to the Bank. The Project Coordinator will be accountable to BEL's Chief Executive Officer. Project management, preparation of detailed engineering design, preparation of tender documents, evaluation of bids, supervision of construction and implementation of the environmental mitigation action plan, as well as the project's accounting required for the execution of the physical components of the Project would be performed by the PIU with the assistance of an international consulting firm. Annex 5.6 shows the planned organization chart of the PIU. During negotiations BEL a2reed to maintain during project implementation the PIU properly staffed and funded: and that it would carry out the project according to an agreed implementation plan and schedule (Annex 5.5). 5.20 Project management will require an overall coordination of project engineering design; preparation of bidding documents, bids evaluation and contracting; procurement, storage and handling of materials and equipment for the transmission lines; and supervision of project's works. Construction of project components will be done by competent foreign contractors. Consultant Services 5.21 The proposed project includes consultancy services to be engaged by BEL following the Bank's guidelines and under terms of reference accceptable to the Bank for the following tasks: (i) Engineering design, technical specifications, project management and construction supervision, for an estimated total of about 150 man-months. Terms of reference for the engagement of these consultants appear in Annex 5.7; - 24 - (ii) Cost of service and tariff study, for which about 12 man-months are required. Terms of reference for the engagement of these consultants appear in Annex 5.8; (iii) Clean-up scope study of diesel-electric power stations and supervision of mitigation measures, for which about 12 man-months are required. Terms of reference for the engagement of these consultants appear in Annex 5.10; and (iv) Monitoring of Environmental Action Plan (EAP), for which about 12 man- months are required. Terms of reference for the engagement of these consultants appear in Annex 5.11. Institutional Strengthening, Training and Technical Assistance 5.22 A comprehensive two-year training and technical assistance program would continue the program developed during the Power I Project and would aim at further strengthening BEL's administrative and technical capabilities. Training will be given, inter alia, in the following areas (A specific program will be prepared for this matter; see also paras. 4.7 and 4.8): (i) Operation and Maintenance of high voltage transmission lines and substations. (This program will be prepared in coordination with the suppliers of equipment and the contractors); (ii) System operations and dispatch; (iii) Cost of Service and Tariffs; (iv) Commercialization (meter reading, billing, customer services, etc.); (v) Distribution Planning and Mapping; and (vi) Environmental Impact Evaluation and Monitoring. 5.23 In addition, the following technical assistance, inter alia, will be provided: (i) Electrical System Operation Studies (load flow, short circuit and stability). Consultants will provide and install a PC network analysis software package and train BEL's personnel on its use. (ii) Generation Dispatch and Production Costing Simulation. Consultants will provide and install a PC generation dispatch and production costing simulation package, adapted to BEL's system conditions. Consultants will train BEL's personnel on its use. - 25 - (iii) Consultant will train BEL's personnel in the use of CAD to produce and update engineering drawings, plans, profiles, substations layouts, single-line diagrams, etc. BEL's PC mapping system will be used for this training. 5.24 Technical assistance will also be provided to advice the Government in establishing complementary price regulations to the Electricity Act. Procurement 5.25 A country procurement assessment was carried out in May/June 1993. Although the assessment concluded that the country does not have comprehensive procurement regulations, BEL personnel involved in the Power I Project are knowledgeable on Bank procurement procedures. Additionally, BEL's PIU will be supported by qualified international consultants on all bidding and procurement process. 5.26 The following table summarizes the procurement arrangements for the project: Procurement Method ICB OTHER NBF TOTAL Proiect Items (US$ Million) 115 kV transmission line 3.0 3.0 (3.0) (3.0) Submarine cable, substations, SCADA 9.5 9.5 Operation & Maintenance vehicles and tools' 0.7 0.7 (0.7) (0.7) Works 115 kV transmission line 3.7 1.2 4.9 (3.2) (3.2) Submarine cable, substations, SCADA 6.5 6.5 Environmental clean up of diesel plants 0.8 0.8 (0.8) (0.8) Consultants and Technical Assistance2 Engineering & Project Management 2.4 0.5 2.9 (2.4) (2.4) Cost of Supply and Tariff Study 0.2 0.2 (0.2) (0.2) Environmental Clean-Up Scope Study 0.2 0.2 (0.2) (0.2) Environmental Monitoring 0.2 0.2 (0.2) (0.2) Technical Assistance, Training and Materials 0.8 0.8 (0. 8)3 (0.8) Totals 7.5 4.5 17.7 29.7 (7.0) (4.5) (11.5) Notes: Figures in parenthesea to be financed by the Bank; NBF= Not Bank Financing 1/ Through Limited International Bidding (LIB). 7, Selection of consultants according to Bank guidelines. 3/ Training equipment and materials procured through international and local shopping. - 26 - 5.27 Contracts for the supply and construction of the 115 kV transmission line component of the project, including all necessary civil works, will be procured through International Competitive Bidding (ICB), in accordance with Bank's procurement guidelines. Operation and maintenance vehicles, equipments and tools will be procured through LIB in accordance with Bank guidelines. Both ICB and LIB will use Bank standard bidding documents. 5.28 The environmental clean up of BEL's diesel plants will be procured through international competitive bidding (ICB). Since this component involves a number of jobs of relatively limited scope in widely separated localities, it is foreseen that foreign contractors would need to use as much as possible local subcontractors. 5.29 Consultant services will be contracted following Bank guidelines for selection of consultants. Individual consultants for technical assistance and training will be hired following Bank guidelines for selection of consultants. Small quantities of training materials and equipment which could not be packaged in contracts of US$25,000 or more, and not exceeding an aggregate amount of US$50,000, will be procured through international and local shopping, following Bank procurement guidelines. 5.30 Bank prior review of proposed invitations, award recommendations, and final contracts will be required for: (i) all contracts for works and goods procured under ICB and LIB; and (ii) all contracts for consulting services except those with consulting firms estimated to cost below US$25,000. For consulting services from firms estimated to cost below US$25,000, the Bank will review ex-ante the terms of reference and ex-post, relevant supporting documentation on selective basis during supervision. As a result of these procedures, the Bank's prior review will cover about 95% of the contracts financed by the Bank. Disbursements 5.31 The proceeds of the Bank loan are expected to be disbursed over a four-year period. The disbursement schedule reflects a careful evaluation during project preparation of the intervals needed to perform the different tasks included in the proposed project. Proceeds of the proposed Bank loan would be used to finance: (i) 100% of foreign expenditures for purchase of equipment and materials for the 115 kV Mexico Border-Belize City transmission line, and purchase of vehicles, equipment and tools for transmission system operation and maintenance; (ii) 100% of foreign expenditures for construction works for the 115 kV Mexico Border-Belize City transmission line; (iii) 100% of foreign and local (ex-factory) expenditures for purchase of equipment and materials for (a) environmental clean up at diesel power stations; and (b) training equipment and material; and 85 % of locally procured imported items; (iv) 100% of total expenditures for works for the environmental clean up at diesel power stations; and - 27 - (v) 100% of total expenditures for engineering services, technical assistance and training. Retroactive financing, up to US$500,000, for expenditures incurred after January 31, 1994, for consultancy services necessary for the final detailed engineering design of the project, a tariff study, and technical assistance to GOB for electricity pricing regulations, would be included. 5.32 Disbursement requests would be fully documented except for payments against contracts whose value is less than US$25,000 equivalent. Claims for expenditures of these lesser amounts would be subject to presentation of a statement of expenditures for which the supporting documentation would be kept by the borrower for Bank review, on selective basis, during supervision. A Special Account would be established in the Central Bank of Belize with a deposit of US$750,000, representing three months of estimated expenditures. Periodic replenishment would be made to this special account against withdrawal applications received from BEL and supported by such documents as the Bank would require. The Borrower would be required to have annual audits for the project accounts, Special Account, and withdrawals based on statement of expenditures. The closing date of the loan would be December 31, 1997, six months after estimated completion of the Project. Environmental Considerations 5.33 During project preparation, environmental assessments (EAs) of the 115 kV transmission line and of connection to Ambergris Caye were carried out. In the latter case the study included evaluation of several supply alternatives (i.e., submarine cable crossing, overhead line crossing, expansion of local diesel generation). The submarine cable was the preferred solution from both economic and environmental viewpoits. Consultants concluded that with proper precautions in routing and construction only minimal environmental impact would occur. The right of way for the overland segments will require very limited clearance of trees and bushes. No natural reserves will be affected. For the submarine cable, care will be taken during construction to limit dredging activity and sediment fouling. A study of baseline conditions in the channel between the mainland and Ambergris Caye will be conducted prior to construction (see para. 5.35). Monitoring and evaluation are foreseen during construction (see para. 5.36). Annex 5.9 describes in more detail the environmental issues and the recommendations of the EAs. 5.34 On the basis of land surveys which are underway, a plan to secure land for the ROW and the final siting of substations will be established. BEL will also interact with the appropriate agencies (e.g., Ministries of Tourism and Environment - MTE, Natural Resources - MNR, and Housing and Urban Development - MHUD) to secure the necessary reviews, clearances and licenses, ensuring compatibility of the ROW with other land use development proposals, avoidance of protected areas and sites of archaeological interest, the right to fell trees and clear mangroves as needed. Surveys of the ROW by the Department of Archaeology/MTE and the Forestry Department/MNR will be carried out. 5.35 Baseline data on current patterns and water quality in the San Pedro crossing will be collected during a four-week period through a study to be financed by the CDB. The study will also define a monitoring and evaluation plan for the marine environment in the area of influence - 28 - of the submarine cable and will establish parameters against which monitoring results will be evaluated during construction. 5.36 During the pre-construction phase, an international consulting firm will be employed to prepare an integrated monitoring plan for the project. It will also provide orientation to BEL's Environmental Unit and carry out monitoring and evaluation activities in order to verify contractors' compliance with the environmental safeguards and mitigation measures foreseen in the EIAs and incorporated into tender documents. 5.37 During project preparation, a preliminary evaluation was carried out of enviromnental problems in BEL's major diesel plants. Terms of reference were prepared for a pollution mitigation program to be financed under the proposed project (see Annex 5. 11). Consultants will be employed to carry out environmental audits and design clean-up plans for seven of BEL's thermal power plants (i.e., Belize City, Ladyville, Belmopan, which are expected to provide base- load power, and San Pedro, Dangriga, Corozal and Orange Walk, which are expected to operate on a stand-by basis after implementation of the Second Power Development Project). Project Risks 5.38 There are three types of physical risks that could affect the transmission lines and substations included in the proposed project, namely: hurricanes, salt-fouling of insulation, and corrosion of conductor and line hardware. Due to potential for tropical storms and hurricanes in Belize, a high wind factor will be taken into consideration in all line designs. It has been determined that winds of 240 km per hour (150 mph) with gusts to 265 km per hour (165 mph) will have to be used as the design standard in order to ensure the structural integrity of the lines. Salt fouling of insulation and corrosion of conductor and line hardware are phenomena likely to affect transmission lines and substations sited near the sea coast, particularly if there is a long dry season which allows accumulation of salt on surfaces, as is the case in Belize. A special study will be done on these problems (see Annex 5.7) to minimize their impact on the transmission and substation facilities included in the Project. Design of insulation, selection of conductor and line hardware will be governed by the result of this study. 5.39 The project cost estimate has been established in a prudent manner by reputable consultants, with appropriate contingency allowances, so that there is little risk of cost overruns. The type of facilities included in the project are not subject during implementation to unusual construction risks, on the contrary these are straightforward jobs for which minimal obstacles can be foreseen both with supply of materials and equipment, and with labor. Delays in project execution could arise due to BEL's lack of experience with the type of power facilities included in the project, such as 115 kV transmission lines and substations, and submarine cable. To minimize this risk, provision has been made to engage engineering consultants to assist BEL in the implementation of the proposed project. BEL's staff will also be assisted by Bank's staff in matters related to Bank procedures. 5.40 During project operation the major risk is BEL's financial performance. If expected sales do not materialize, and BEL cannot take the available energy from Mollejon, or Macal river hydrology is less favorable than expected, obligations under the power purchase contract for - 29 - Mollejon could affect negatively BEL financial condition. If this should occur BEL would postpone its planned non-project expending and, if necessary, make temporary use of bank overdraft facilities. PART VI: FINANCIAL ANALYSIS BEL's Past Operating Results and Present Financial Position 6.1 BEL's Sales and Generation forecast and Investment Plan are presented in Annexes 6.1 and 6.2, respectively. BEB and BEL's past and projected 1990-2003 income statements, balance sheets and cash flow statements are presented in Annex 6.3. The assumptions used in the preparation of the financial projections are included also as part of Annex 6.3. 6.2 After being unable to service its debt and sustaining operating losses for many years, BEB's finances began to improve in FY85 as a result of tariff increases, the conversion of debt to equity by Government, lower fuel prices and efficiency improvements. BEB's financial performance has since been good despite a 7.5% tariff reduction in FY89. The growth in kWh sales has been strong and the average annual growth rate between FY89 and FY93 was about 12.8%. Operating costs per kWh sold were about 34 BZ cents in FY93 compared to 38.5 BZ cents in FY85. Rates of return for the five year period FY89 to FY93 range from 3% in 1989 to 10.6%. BEL's 1993 net operating income was BZ$7.6 million compared to BZ$5.0 million in FY92. 6.3 BEL's audited balance sheet at March 31, 1993 is summarized below. BEL's financial position was satisfactory with a debt/equity ratio of 54:46, and a current ratio of 1.4. BZ$ US$ millions millions % ASSETS Net fixed assets 76.78 38.77 76 Construction in Progress 8.57 4.33 8 Current assets 15.95 8.05 16 Total 101.3 51.15 i9 LIABILITIES & EOUITY Equity 41.05 20.73 41 Debentures 21.50 10.85 21 Long-term debt 27.58 13.93 27 Current liabilities 11.17 5.64 11 Total 101.30 51.15 10 - 30 - Franchise and Power Purchase Agreement for the Mollejon Plant 6.4 In April 1991 Government granted a franchise to a joint venture of two US companies to construct and operate a 20 MW run of river hydroelectric plant on the Macal river as well as a 139 kilometer 115 KV transmission line to Belize City, Ladyville and other load centers. The Franchise Agreement provides that, forty years after the commercial operation date of the plant, the ownership of the hydroelectric plant will be transferred to the Government or such parties as the Government may designate. After the construction of the transmission line and associated substations, the Agreement also provides for ownership to be transferred to BEL with a nominal charge of US$1.00. 6.5 A 40 year power purchase agreement, dated April 19, 1991, between BEB (subsequently assigned to BEL) and Belize Electricity Company Limited (BECOL, the company formed by the developers) provides for BEL to pay an annual fixed amount, in equal monthly installments, based on energy equal to 110 GWh in FY1996, 115 GWh in FY1997 and 1998, and 120 GWh up to FY2004, at a rate of 8.75 UScents per kWh. Excess energy is to be purchased at 7 US cents per kWh. After FY2005, the fixed payments will be eliminated and BEL will pay only for the energy actually supplied, on a take-or-pay basis. BEL is to pay the producers for the operation and maintenance of the hydro facilities an amount equal to five percent of its gross electricity revenues from the resale of the energy purchased2/. Under a Guarantee Agreement, the Goverrnent guarantees the timely performance of BEL's obligations. Power Purchase Agreement with Comisi6n Federal de Electricidad (Mexico) 6.6 Under an existing agreement between BEL and Comisi6n Federal de Electricidad (CFE), BEL is entitled to purchase up to 5 MW from CFE. A long-term electricity supply contract providing for larger electricity purchases by BEL is essential for the proposed Power II Project. BEL is negotiating a contract with CFE for the supply of up to 25 MW. CFE has requested that BEL pay US$1.1 million in order to finance the capacity increase of the Mexican facilities necessary to permit this export of electric power to Belize (mainly a transmission link at 115 kV). BEL will finance this investment out of its internally generated funds or through a commercial bank loan. Power supply to Belize would be charged at the CFE tariff for supplies at 35 to 220 kV to its Peninsular region. The current (December 1993) rates for the Mexican supply vary from US$0.032 during base load time to US$0.058 during peak load time (6 p.m to 10 p.m Monday to Saturday), while the monthly peak demand is charged at about US$8.8 per kW (Annex 5.3 shows the structure of the Mexican tariff). The signing of an extended long-term power supply contract with CFE. Mexico. on terms and conditions satisfactory to the Bank. would be a condition for Loan effectiveness. 6.7 Given that BEL's future system demand will be covered mainly by supplies from Mollejon and Mexico, and that the proposed project is only one part of an expansion plan in 91 7he cost of the Mollejon energy, at delivery points in the high voltage substations, is estimated at about USCents 10/kWh (at 0.95 average power factor), including 5% of the present average retail tariff of USCents 19.2/kWh for operation and maintenance, and 3.5% estimated transmission losses. - 31 - which these supplies are an integral part, an additional event of default that would authorize suspension of disbursements of the Loan would be that either BECOL or CFE fails to supply. under the foregoing agreements. the electricity reguired by BEL to meet consumer demand. and BEL is unable to meet the deficiency from either CFE or BECOL or any other source. Financial Plan 6.8 BEL's capital spending and financing plan during the 1995-1998 project disbursement period is as follows: BZ$ US$ Million Million 9G REQUIREMENTS Capital Spending Proposed Project 58.90 29.75 71 Interest during construction _6.43 3.25 8 Total project financing required 65.33 33.00 79 Other 15.29 7.72 19 Working capital 1.81 0.91 2 Total Requirements 82.43 41.63 100 SOURCES Gross Internal Cash Generation 52.88 26.70 64 Less: Debt Service 28.95 14.62 35 Net Internal Cash Generation 23.93 12.08 29 Project Borrowings IBRD 22.77 11.50 28 CDB 14.85 7.50 18 CDC 10.30 5.20 12 EIB 6.34 3.20 8 Total Project Borrowings 54.26 27.40 66 Capital Contributions 3.76 1.89 4 Working Capital 0.48 0.26 1 Total Sources 82.43 41.63 100 6.9 In the financing plan, it has been assumed that the US$11.5 million Bank loan (BZ$ 22.8 million) to the Government (at variable lending rate, over 17 years, including a five year grace period, and equal annual principal payments) will be available to BEL for the same amount and with the same conditions. Execution of a subsidiary loan agreement between the Government and BEL. satisfactory to the Bank. would be a condition for loan effectiveness. 6.10 It has been assumed that the US$5.2 million (BZ$10.3 million) CDC Loan would be made to BEL at an 9.5% interest rate over 10 years, including a grace period of 3 years, with equal annual loan repayments. Subject to prior management approval, CDC expects to conduct its project appraisal in June 1994. Based on this timing, loan approval is expected in July 1994. - 32 - As a condition of effectiveness of the proposed Loan. CDC's Board should have approved a loan to finance the cost of the 115 kV substations and the Dangriga connection components of propQsed project. 6.11 The CDB loan would be for US$7.5 million (BZ$14.8 million) at CDB's standard variable interest rate (currently about 7.5%) with a maturity of 18 years, including 3 years grace period. CDB concluded its appraisal at the same time as the Bank appraisal. Board approval is expected in July 1994. 6.12 The EIB loan would be for US$3.2 million (BZ$6.3 million) at a 3% interest rate with a maturity of 18 years, including a 3 year grace period. EIB appraisal will be conducted in March 1994. Board approval is expected in May 1994. 6.13 An additional event of default that would authorize suspension of disbursements of the Loan would be that the CDB or CDC or EIB loan agreements shall have failed to become effective by March 31. 1995. Electricity Rates 6.14 To help finance its capital spending program during the 95-98 project construction period and maintain a sound financial position, during negotiations it was agreed that BEL would maintain its electricity rates at a level sufficient to earn a rate of return on its average net fixed assets in operation. revalued from time to time when required by the Bank. of not less than 7% in FY96 and thereafter. This would repeat the rate of 7% under Loan 2749-BEZ. It was also agreed that (i) before January 1 of each fiscal year. BEL would furnish to the Bank a preliminary estimate of the rate of return for the current fiscal year and for the next fiscal year and ) if the estimates indicate that BEL would not meet the rate of return reguirements. it will promptly take all necessary measures to meet such reguirements. The Government a2reed to promptly ta-k such measures, as may be reguired, to enable BEL to comply with the foregoing rate of return requirements. Financial Forecast 6.15 As a consequence of the transfer of BEB's assets and liabilities to BEL (para. 4.2) in return for debentures and shares, the revenues from electricity operations will be required to meet additional cash outlays for debenture interest and dividends declared on the preference and ordinary shares as well as income taxes. However, BEL's (formerly BEB) cash flow from operations increased about 2.5 times between FY90 and FY93 as a result of strong sales growth. BEL is expected to be able to finance about 38% of its total investment needs between FY94 and FY98, the project implementation period. The debt service ratio is forecast to stay at or above a strong level of 1.86 during this period. After project completion, BEL is expected to be able to completely finance from internally generated funds a much smaller investment program in the succeeding years to FY2003. 6.16 To protect BEL's financial viability BEL would not incur any new debt (other than for the Project) without the prior approval of the Bank unless its future debt service coverage ratio - 33 - is 1.5 or hi2her. It was also agreed that BEL would not undertake any investments in excess of US$500.000. until completion of the Second Power Development Project. without the approval of the Bank. Project Monitoring 6.17 Project execution would be monitored against target dates as shown in the implementation plan and schedule of Annex 5.5 and BEL's operational. financial and managerial nerformance would be monitored through performance indicators (Annex 6.4). PART VII: PROJECT JUSTIFICATION AND ECONOMIC ANALYSIS General 7.1 The proposed project, which is a follow-up to the recently completed Power I project (Loan No 2749-BEZ) comprises three components: (1) a 136 km, 115 kV overhead transmission line from the Mexican border to Belize City, creating, together with the transmission line from the Mollejon hydro plant currently under construction, a national grid system connecting Belize's main cities; (2) the incorporation of Dangriga load center to the national grid through a 56 km, 34.5 kV overhead transmission line; and (3) the incorporation of San Pedro load center to the national grid through a 21 km, 34.5 kV submarine cable. 7.2 The proposed project would, together with the Mollejon line, interconnect all the main economic centers (95% of total demand) and provide electricity supply which would be more cost-effective, reliable and environmentally clean, than the current system composed of small- scale independent diesel generation in all the load centers. The project would facilitate the continued economic development of Belize by making electricity available to industrial, commercial and residential customers who are willing to pay for it, and by reducing the need for consumers to purchase and operate private power plants. The proposed project would also provide for the clean up of environmental contamination caused by oil spills from existing diesel plants. Additionally, the project would support the Government of Belize's on-going efforts to increase the efficiency of the power sector, evidenced by the privatization of BEL, through technical assistance and studies. The project is considered economically justified and the estimated economic internal rate of return of about 21 percent is not very sensitive to moderate variations in the key economic parameters. The following paragraphs summarize the Bank's economic evaluation of the proposed project. Further details are provided in Annexes 7.1 to 7.3. Least-Cost Plan 7.3 In 1990, BEB's foreign consultants, financed under the Power I Project, studied the feasibility of electricity generation from renewable energy sources. The study concluded that hydroelectric development in the Macal river would result in substantial savings over the continued use of diesel generation in the Belmopan and Belize City systems. The study further found that generation from excess bagasse from the sugar factory in the Corozal/Orange Walk area would be more cost effective than using local diesel generation to supply the Corozal/Orange - 34 - Walk system unless power could be purchased from the Mexican grid. The study finally concluded that generation from other renewable sources, such as solar and wind, is not economically viable at this time. 7.4 Following the study findings, the Corozal and Orange Walk systems were interconnected with Mexico through a 34.5 kV overhead transmission line, financed under the Power I Project, and the Government negotiated a 5 MW supply contract with Mexico. This system has been operating successfully since June 1991. 7.5 Also in line with the study recommendations, the Government pursued the development of the hydroelectric potential of the Macal river by negotiating a BOT contract with a private investor group (see para 5.9). BEB subsequently signed a 40 year take-or-pay power purchase contract with the developers. The transmission line from the Mollejon hydroelectric plant will link the electrical systems of Belmopan and Belize City and initially displace most of the diesel generation required in this area. However, as demand for electricity grows, given the variability of the Mollejon output, the level of diesel generation capacity needed would start increasing soon after the commissioning of the hydroelectric plant at the beginning of 1995. 7.6 During 1992 and 1993 BEB first, and then its successor company BEL, studied, as part of their expansion planning, the technical and economic feasibility of (1) building a 115 kV overhead transmission line from the Mexican border to Belize City, where it would connect to the Mollejon line, creating national interconnected system; (2) incorporating Dangriga to the interconnected system; and (3) incorporating San Pedro to the interconnected system. Analyses carried out by consultants confirmed that expanded electricity imports from Mexico, facilitated by linking the Belize system withn the Mexican grid via a 115 kV transmission line, is the least- cost alternative to firm up the supply from the Mollejon hydroelectric plant and complement the future power and energy requirements of the Belize City-Belmopan systems. The consultants also concluded that the connection of the Dangriga and San Pedro (Ambergris Cay-Island) systems to the national grid, would enable the substitution of diesel generation with cheaper electricity imports from Mexico. 7.7 Egualizing Discount Rate (EDR). The analyses carried out by the Bank, taking account of, inter alia, the Bank's November 1993 crude oil price forecast and the updated project cost estimates, confirmed the consultants' findings. Two alternative schemes to meet the balance between the forecast electricity demand and Mollejon supply were analyzed. The EDR was computed for the proposed interconnection scheme, versus the alternative scheme of expanding local diesel generation. In the interconnection scheme the proposed project would complement the hydro supply in Belize City/Belmopan and create a national grid which would allow BEL to displace diesel generation in Dangriga and San Pedro by imports from Mexico. The results show that the proposed interconnection scheme is the least cost supply expansion alternative for Belize. The equalizing discount rate was calculated at about 18 percent, which is higher than the estimated 12 percent opportunity cost of capital. 7.8 The results show that the production cost of the interconnection alternative is about 30 percent lower, on a net present value basis, than the corresponding cost of the diesel alternative, using a real discount rate of 12 percent (calculated over the period FY95-FY2012). The levelized - 35 - production cost of the interconnection scheme of about 9.6 US cents/kWh compares favorably with the levelized production cost of the local small-scale diesel operation of approximately 12.2 US cents/kWh. Of the 9.6 US cents/kWh, about 8.9 US cents are attributable to the proposed project (3.9 US cents from investments, 4.8 cents from the purchase price, and 0.2 cents from O&M) and the rest to the operating and maintenance of diesels which would be retained mainly for back-up. 7.9 The choice of the proposed interconnection project as the least-cost alternative remains valid over a range of values for key economic parameters. Even the most pessimistic of the cases tested produce EDRs above the 12 percent estimated opportunity cost of capital. For instance: (1) a 20 percent increase in the capital costs of the proposed project combined with a 20 percent increase in the cost of Mexican imports reduces the EDR to 14 percent; and (2) a 20 percent decline in diesel fuel prices reduces the EDR to some 15 percent. 7.10 EDR for Project Components. To find out whether the three project components are justified independently, the equalizing discount rate was calculated for each of them by comparing the proposed project component with the respective diesel expansion alternative. The results are shown in the table below and detailed in Annex 7.1. Table 7.1 Estimated Equalizing Discount Rates Project Component Equilizing Discount Rate (%) 115 kV interconnection line 18.7 % Connection of Dangriga 24.1 % Connection of San Pedro 13.4 % Proposed Project as a Whole 18.0 % Economic Analysis 7.11 Economic Internal Rate of Return (EIRR). The EIRR for the proposed project was estimated at about 22 percent, which is above the estimated 12 percent opportunity cost of capital in Belize. The EIRR was computed on the BEL's entire investment program for the proposed interconnected system (ICS) and covers the fiscal years 1994/95 through 2011/2012. Annex 7.2 provides details of calculations and the assumptions used. 7.12 Project Economic Cost. The economic costs used in the analysis comprise: (1) investments, including physical contingencies, required to meet the incremental demand; (2) incremental cost of operation and maintenance of generation, transmission and distribution facilities; and (3) the cost of electricity purchased from Mexico. Since the proposed project would also substitute for more expensive diesel generation, the project economic costs have been adjusted for the corresponding cost savings. - 36 - 7.13 Project Economic Benefits. The measurable economic benefits of the proposed project stem from increased energy sales in the ICS made possible by the proposed investments. The incremental energy demand served is valued using the current tariffs as a proxy for the consumers willingness to pay for electricity. Additionally, the proposed project would result in some benefits which are difficult to quantify and which the economic analysis consequently does not include. These benefits include the reduced environmental hazards related to the transportation, handling and combustion of diesel fuel. This is particularly the case in the ecologically sensitive Ambergis Caye Island (San Pedro) with its adjacent coral reef, protected wildlife areas, and developing eco-tourism. Furthermore, the project would also help increase the reliability and quality of supply by interconnecting the major load centers via a national grid, hence reducing the additional costs of self-generation, which is currently common among the large consumers, many of which are export oriented agro-processing industries. 7.14 Sensitivity Analysis. The sensitivity of the EIRR was tested for the following four alternative cases: (1) 20 percent increase in the capital cost of BEL's investment program for the ICS; (2) 20 percent increase in the price of electricity purchased from Mexico; (3) 20 percent decrease in the cost of diesel fuel; (4) 20 percent decrease in energy demand forecast; and (5) 20 percent increase in the capital cost of BEL's investment program coupled with a 20 percent increase in the cost of electricity imports. The following table illustrates the results: Table 7.2 Estimated Economic Internal Rate of Return Sensitivity Case EIRR (%) Base Case 21.7 % 20% increase in investment costs 18.6 % 20% increase in Mexican supply price 19.8 % 20% decrease in diesel fuel prices 20.9 % 20% decrease in annual energy sales 17.0 % 20% increase in investment costs and 16.9 % 20% increase in Mexican supply price 7.15 The results indicate that modest changes in the assumptions do not have a significant impact on project economics. The results are most sensitive to assumptions of energy sales growth, however, the project economics would still be acceptable even if the annual sales growth declined by 40 percent (from the forecast 4.8 percent to 2.9 percent). Thus the conclusion that the proposed project is justified remains valid even under less favorable conditions. - 37 - PART VIII: AGREEMENTS REACED AND RECOMMENDATIONS 8.1 During negotiations the Government and BEL agreed on the following: The Government would: (i) enact, by March 31, 1995, specific regulations in accordance with the Electricity Act of 1992 and satisfactory to the Bank, that define transparent procedures for electricity tariff setting and approval (para. 3.12); and (ii) promptly take all measures as may be required to enable BEL to comply with the rate of return requirements of the Project (para. 6.14); BEL would: (iii) employ consultants to carry out a tariff study on terms of reference agreed with the Bank, and not later than March 31, 1995, furnish to the Bank the Government's and BEL's recommendations based on the results of this study, and after consultation with the Bank, promptly implement such recommendations (para. 3.1 1); (iv) engage independent auditors satisfactory to the Bank and submit BEL's audited accounts, including SOE's and the Special Account, to the Bank not later than four months after the end of its fiscal year (para. 4.11); (v) maintain the Project Implementation Unit properly staffed and funded; (para. 5.19) (vi) carry out the project according to an agreed implementation plan and schedule (5.19); (vii) maintain its tariffs at a level sufficient to earn a rate of return on its average net fixed assets in operation, revalued from time to time when required by the Bank, of not less than 7 % for FY96 and thereafter (para. 6.14); (viii) furnish the Bank before January 1 of each fiscal year with a preliminary estimate of the rate of return for the current fiscal year and for the following fiscal year and, if the estimates indicate that BEL will not meet the rate of return requirements, will promptly take all necessary measures to meet such requirements (para. 6.14); (ix) not incur any new debt (other than for the Project) without the prior approval of the Bank unless its future debt service coverage ratio is 1.5 or higher (para. 6.16); and - 38 - (x) not undertake any investment in excess of US$500,000 without the approval of the Bank, until after completion of the Second Power Development Project, (para. 6.16). 8.2 Conditions of effectiveness of the proposed loan would be that: (i) BEL has signed an extended long-term power supply contract with the Comision Federal de Electricidad (CFE), Mexico, on terms and conditions satisfactory to the Bank (para 6.6); (ii) a satisfactory subsidiary loan agreement has been executed between the Government and BEL (para 6.9); and (iii) CDC's Board should have approved a loan to finance the cost of the 115 kV substations and the Dangriga connection components of the proposed project (para 6.10). 8.3 As a condition for disbursements for Group 1 - 115 kV Transmission Line goods and works, BEL should have completed all Project transmission lines and substations land surveys, identified all right-of-ways, and completed easements and land acquititon procedures, as required for the first year of project construction (para 5.12); 8.4 An additional event of default that would authorize suspension of disbursements of the Loan would be that either BECOL or CFE fails to supply, under the agreements referred to in paras. 6.5 and 8.2 (i), the electricity required by BEL to meet consumer demand, and BEL is unable to meet the deficiency from either CFE or BECOL or any other source (para. 6.7). 8.5 An additional event of default that would authorize suspension of disbursements of the Loan would be that the CDB or CDC or EIB loan agreements shall have failed to become effective by March 31, 1995 (para. 6.13). 8.6 With the above agreements, the proposed project would be suitable for the Bank loan of US$11.5 million equivalent. 8.7 The documentation employed to process the Project and to prepare this report is listed in Annex 8.1. - 39 - ANNEXES 2.1 Petroleum Products Prices in Belize City (June 1993) 3.1 BEL's Available and Firm Capacity of Existing Diesel Plants by Location 3.2 BEL's Sales and Peak Demand Forecast 1994-2004 3.3 BEL's Capacity (Power) and Energy Balances 4.1 BEL's Organization Chart 5.1 Detailed Project Description 5.2 Mollejon Hydroelectric Plant Characteristics 5.3 Mexican Power Supply Tariffs 5.4 Detailed Project Cost Estimate and Funding Allocation 5.5 Project Implementation Plan and Schedule 5.6 Project Implementation Unit Organization Chart 5.7 TORs Engineering and Project Management Consultant Services 5.8 TORs Cost of Service and Tariff Study 5.9 Environmental Issues and Summary Environmental Impact Assessment Studies 5.10 TORs Environmental Mitigation at BEL's Existing Diesel Plants 5.11 TORs Environmental Action Plan and Monitoring 5.12 Estimated Loan Disbursement Schedule 6.1 BEL's 10 -Year Sales and Generation Forecast and Assumptions 6.2 BEL's 10-Year Investment Plan 6.3 BEL's 10-Year Financial Forecast 6.4 BEL's Key Performance Indicators 7.1 Cost-Effectiveness Analysis of Project Components - 40 - 7.2 Project Economic Evaluation (NPV and EIRR) 7.3 Assumptions Used in Economic and Equalizing Discount Rate Analyses 8.1 Project File - 41 - Annex 2.1 BELIZE SECOND POWER DEVELOPMENT PROJECT Petroleum Products Prices in Belize City in June 1993 Premium Regular Diesel Kerosene FOB price (US$/gal) 0.6141 0.5839 0.6436 0.6719 Freight 0.0610 0.0612 0.0696 0.0660 Marine Insurance 0.0004 0.0004 0.0004 0.0004 CIF Price (US$/gal) 0.6755 0.6455 0.7135 0.7383 CIF price BzS/gallon 1.3628 1.3023 1.4395 1.4895 Government Charges: Port Duties 0.0173 0.0169 0.0199 0.0190 Foreign Exchange Tax 0.0169 0.0161 0.0178 0.0185 Stamp Duty 0.1616 0.1544 0.1710 0.0000 Import Duty 0.4496 0.4496 0.2665 0.0000 Revenue Replacement Duty 1.7618 1.7707 0.3153 0.1796 Total Government Charges 2.4072 2.4077 0.7905 0.2171 Esso's charges Handling 0.1300 0.1300 0.1300 0.1300 Delivery 0.0500 0.0500 0.0400 0.0400 Gross margin 0.3300 0.3200 0.2800 0.2334 Total Esso 0.5100 0.5000 0.4500 0.4034 Commercial Charges: Gross Margin 0.3500 0.3100 0.2800 0.3300 Total 0.3500 0.3100 0.2800 0.3300 Government Controlled Pump price 4.6300 4.5200 2.9600 2.4400 Note: According to the Ministry of Finance, the FOB prices are based on Esso's actual purchase prices for each shipment. BEB is exempt from import taxes. Industries may obtain a partial exemption from import taxes. The maximum retail prices for LPG are fixed by the government, and vary, due to transportation cost, from 43.50 BZ$ (Corozal Town) to 56.50 BZ$ (Punta Gorda Town) per 100 lbs cylinder (in October 1992). These prices include a stamp duty of 10 percent of the import value and an import duty of 3 Belize cents per pound. The current world market bulk price for LPG is around US$0.12 per kilogram. The Belizian price of about US$0.48 per kilogram (in Corozal Town, including taxes) should guarantee at least a reasonable margin for handling, delivery and other commercial fees. - 42 - Annex 3.1 BELIZE SECOND POWER DEVELOPMENT PROJECT BEL's Available and Firm Capacity of Diesel Plants by Location in 1993 [ Plant Available Finn capacity ' Comments Capacity MW 1. Belize City 13.0 13.9 10 units, for the including 3 Belize/Ladyville mobile units in system Belize City and 1 in Ladyville 2. Ladyville 7.2 3. Belmopan 4.2 3.9 5 units in for the Belmopan and Belmopan/San 2 units in San Ignacio system Ignacio |4. San Ignacio 1.0. 5. Dangrida 2.7 1.7 6 units, including 2 mobile unit 6. Corozal 1.3 3.9 2 units at for the Corozal and 4 Corozal/Orange units at Orange Walk System Walk (all stand- by) 7. Orange Walk 2.6 8. San Pedro 3.2 2.0 4 units 9. Punta Gorda 1.1 0.8 6 units 10. Caye Caulker 0.3 0.2 3 units 11. Independence 1.3 0.7 4 units, including one mobile unit 12. Sarteneja 0.4 0.3 3 units TOTAL 38.3 27.4 49 units F) irm capacity for the arger systems a defined as the total available capacity less the capacity of the two largest units; for the smaller systems the firm capacity is the total available capacity less the capacity of the largest unit. Annex 3.2 Page I of 2 BELIZE SECOND POWER DEVELOPMENT PROJECT BEL's Sales (MWh) and Peak Demand (MW) Forecast 1994-2004 Planned Interconnected System ESTIMATE FORECAST ---> 91192 92193 93194 94195 95/96 96197 97/98 98199 99/2000 2000/1 1/2 213 3/4 BELIZE CITY SYSTEM Residential 22.705 24,831 27,050 28,691 30,140 31,617 32.957 34,228 35,421 36,779 38,186 39.643 41.343 Commorcial 42,166 45,590 49,186 53,441 58,536 60.570 63,310 65,868 68,526 71.326 74,251 77.315 80.545 TololSoles 64,871 70.421 76,237 82,132 88,676 92.187 96,267 100.096 103,947 108,105 112.438 116,958 121,888 NotGeneration 76.430 83,732 89,270 94,405 100,768 103,581 106,964 111,218 115,497 120,117 124,931 129,963 135,431 BELMOPAN SYSTEM Residential 5,862 6.838 7.973 8,562 9,212 9,896 10.623 11.383 12,177 12,974 13,806 14.674 15.634 Commercial 9.239 10,650 12,798 13,625 14,646 15,622 16.525 17.477 18,481 19,532 20.642 21.815 23.066 Total Sales 15,101 17,488 20,771 22,188 23,858 25,519 27.148 28,060 30,657 32,506 34,448 36,489 38,699 Not Generation 16,853 19.283 22,900 24,382 26,218 28,042 29,833 31.714 33,689 35.720 37,855 40,098 42.527 COROZALIORANGE WALK SYSTEM Residential 6,544 7.676 8.455 9,038 9,588 10,102 10,634 11,182 11,691 12,216 12,757 13,315 13,922 Commercial 6,778 7,734 9,289 10,374 11,400 12,156 12.941 13,824 14,847 16,206 17.029 17.904 18,843 TotalSulos 13,322 15.410 17,744 19,412 20,988 22.258 23,575 25,006 26,538 28,422 29,787 31,219 32.765 Net Goneration 16,057 18,037 20,164 21,569 23,319 24,731 26.194 27,785 29,486 31.580 33.096 34,688 36,405 DANGRIGA SYSTEM Residential 1.620 2,045 2.356 2,563 2,811 3,075 3,356 3.653 3,966 4,229 4,504 4.794 5.089 Commercial 1.900 2,314 3,662 4.068 4,333 5,461 5.951 6.320 6,718 7,131 7.577 8,061 8,584 TbtalSalos 3,520 4,359 6,019 6,631 7,144 8.535 9,307 9,974 10,684 11,359 12,082 12.855 13.674 Not Genarotion 4,068 5,003 6,839 7,450 7.938 9,484 10,341 11.082 11,871 12,622 13,424 14.283 15,193 SAN PEDRO SYSTEM Rosidentiel 1.105 1,291 1,354 1,417 1,482 1,549 1,616 1,684 1,754 1,825 1.897 1,970 2,048 Commorcial 4,556 - 5,244 6,492 7.854 9,210 9,884 10,558 11,232 11,907 12,581 13,255 13,930 14,604 Total Solos 5,661 6,535 7.846 9,271 10,692 11,432 12,174 12,917 13,661 14,406 15,152 15,900 16,652 Not Gencietion 8,582 7,185 8,622 10,188 11,749 12,563 13,378 14,194 15,012 15,831 16,651 17,472 18.299 GRID TOTALS Sales MWh 102,475 114,213 128.616 139,634 151,358 159,931 168.471 176,852 185.487 194,798 203,906 213,421 223,678 Not Generation MWh 119.990 133,240 147.795 157,994 169,992 178,401 186.710 195,992 205.555 215.869 225.956 236,494 247.855 System Peak MW 22 23 26 28 30 31 32 34 30 38 39 41 43 197% coincidence factor) Annex 3.2 Page 2 of 2 BELIZE SECOND POWER DEVELOPMENT PROJECT BEL's Sales (MWh) and Peak Demand (MW) Forecast 1994-2004 Isolated Systems ESTIMATE FORECAST -----> 91/92 92/93 93/94 94/95 95/96 96197 97/98 98/99 99/2000 200011 1/2 2/3 3/4 INDEPENDENCE Residential 352 520 651 696 745 797 837 879 923 969 1,018 1.068 1,122 Commercial 511 754 945 1,011 1,082 1,158 1,215 1,276 1,340 1.407 1,477 1,551 1,629 Total Salas 863 1,274 1,595 1.707 1.82:7 1,955 2,052 2,155 2,263 2,377 2,495 2,620 2,751 Not Geneestion 897 1.300 1.628 1,742 1,864 1.995 2,094 2,199 2,309 2,425 2,546 2.673 2,807 SARTENEJA lResidential 133 204 266 282 299 318 333 350 368 306 405 425 446 Commercial 50 77 100 106 112 119 125 131 138 145 152 16O 168 TotolSalos 183 281 367 308 412 437 459 481 506 531 558 585 614 Not Genewation 198 286 374 396 420 446 468 491 516 542 569 597 627 CAYE CAULKER Rosidential 436 512 589 678 779 896 977 1,065 1,160 1,265 1,379 1,503 1,638 Commercial 335 394 453 521 599 688 750 818 892 972 1,059 1,155 1,259 Total Sales 771 906 1,042 1,198 1.378 1,585 1,727 1,883 2,052 2,237 2,438 2,657 2,897 Net Generation 835 934 1,074 1,235 1,420 1.634 1,781 1,941 2,116 2,306 2,513 2,740 2.986 PUNTA GORDA Residential 672 803 966 1,099 1.249 1,399 1,519 1.625 1,739 1,861 1,991 2,130 2,279 Commercial 1,792 2,140 2,577 2,930 3.330 3,730 4,050 4,334 4,637 4,962 5,308 5,680 6,078 Total Sales 2,464 2,943 3,544 4,028 4,579 5,129 5,568 5,959 6,375 6,822 7,299 7,811 8,357 Nat Generation 2,677 3,416 4,027 4,501 5,032 5,636 6,119 6,548 7,006 7,497 8,021 8,583 9,184 TOTALS FOR ISOLATED CENTERS Sales MWh 4.281 5,404 6,548 7,322 8,195 9,105 9,806 10,470 11,196 11,967 12,790 13,673 14,619 Nat Genoralion MWh 4,607 6.936 7,103 7,874 8,736 9,710 10.462 11,179 11,947 12,770 13,649 14,593 15,604 Coincident Peak MW 1.0 1.6 1.7 1.8 2.0 2.1 2.3 2.4 2.6 2.7 2.8 3.0 3.2 197 % coincidence lactor) - 45 - Annex 3.3 Page 1 of 3 BELIZE SECOND POWER DEVELOPMENT PROJECT BEL's Capacity (Power) and Energy Balances BEL's Capacity (Power) Balance FY93-FY2004 (MW) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Peak Demand 24.8 28.1 29.6 31.6 33.2 34.7 36.5 38.3 40.3 42.2 44.2 46.4 MW (Base Case) Diesel Units 21 23.6 3 4.9 4.8 5.8 7 8 9.1 10 10.6 12.2 Hydro 21.8 21.8 21.8 21.8 21.8 21.8 21.8 21.8 21.8 21.8 Imports from 4 4.5 4.8 4.9 6.6 7.1 7.7 8.5 9.4 10.4 11.8 12.4 MexicoII TOTAL 24.8 28.1 30 31.6 33 34.7 37 38.3 40.3 42.2 44.2 46.4 Available Capacity 43.3 43.3 55.1 80.1 80.1 76.9 76.9 76.9 76.9 76.9 76.1 76.1 MW Capacity Reserve 8.5 5.2 25.5 23.5 46.9 45.4 40.4 38.6 36.6 34.7 31.9 29.7 MW Notes: Imports fron - are to CorozaVOmnge walk area on7ly. After 1994, capacity reserve during dry seasons is about 16 MW lower than shown in table. Energy Balance FY93-FY2004 (GWh) 1993 11994 11995 1996 11997_ 1998 I 1999 j 2000 2001 2002 2003 12004 Generation 139.2 155 166 179 188.1 197.2 207.2 217.5 228.6 239.6 251.1 263.5 requirement GWh (Base Case) _ _______ Diesel Units 121.2 135 61.5 22.5 24.8 27.1 29.2 31.1 33.2 35.4 37.6 39.9 Hydro Purchases 82.8 100 101.5 102.6 103.8 105 106 107 107.6 108.2 Imports from 18 20 21.7 56.5 61.8 67.5 74.2 81.4 89.4 97.3 105.9 115.4 Mexico TOTAL 139.2 155 166 179 188.1 197.2 207.2 217.5 |228.6 239.6 251.1 263.5 Note: Imports fro Mexico Y9-96 are to CorozaUOrange Walk area only. -46 - Annex 3.3 Page 2 of 3 WEP D ANNUAL DISPAJH BY SOUR1CE 300- 2500 200 _-; l 1 15D 100- 50 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 EXFECfED MONTHLY DISPATH 2000 20 -i C8 MM APR MA 1 2 - 2 _ - _ ARMAY AIN J1I AUJG ST? OCT NOV DEC JAN FEB WAR - 47 - Annex 3.3 Page 3 of 3 TYPICAL DAILY DISPATCH - JAN.2000 40- [_- 35 - THERM. 30 -MEXICOI 25- HYDRO 20- 15- 10- 5- Hrs - 48 - Annex 4.1 BELIZE SECOND POWER DEVELOPMENT PROJECT Belize Electricity Limited Organization Structure |of En rpy Ce_iunic Calions Director EltecricitV Elec Sotot Otbwr A s onactod bV the Bel ize Insweter Iswstor wrl (E,1ctir3icityI;;9t,I992 Sar *(Is.1 of 52) ... .. _ ................................................... p...... ............... ..................... Belicz Electricitg Limited I ir. te.re' of IIncotrpora ted Oto. "' I992 Ei bu of Sect ionI5 of the IEL Articils Elc trielt of Associotion provides for Limited director(s) to be appoint d to executive offices. ,. . . . . . .. . . . . . . .. . . . . ._. . . . . . . ................. . . . . . . . . . . . . . . . . . . . . . . CEO PreIentS oranizational structure El retr i e i tf of Ieflze Electricity Board. ElecrciyIntendeid fr initial Limited implementation for BEL. Executive Seretary X | ~~Execat i vr General Mlanager G aenera I nager Engineering Finance A Aministrat ion Traninission Plannint Production sman leseurees Chief Distriet Custmer Data d Engineer Engineer A Adblaistration Accountnt MAnagers Services Processing Distribmtion hMagr Manager MAnager Manragr - 49 - Annex 5.1 Page 1 of 5 BELIZE SECOND POWER DEVELOPMENT PROJECT Detailed Project Description Introduction and Background 1. The Belize Second Power Development Project involves the implementation of a 115 kV transmission line from the border of Mexico to Belize City, its associated substations and the establishment of an integrated power system that will interconnect the main load centers and the electric generating sources of the Country. The Project will also incorporate the Dangriga area by means of a 56 km (35 miles) long 34.5 kV subtransmission line as well as the Ambergris Cay (San Pedro) through a 35 km (21.5 miles) long mainland overhead transmission line, a submarine cable section and an inland overhead line connection to the San Pedro power plant. 2. The 115 kV transmission line from Mexico, to be constructed under the proposed project, will be interconnected with the 115 kV transmission line from the Mollejon hydroelectric plant to Belize City, under construction. The Mollejon Hydroelectric Plant on the Macal River (25 MW run-of-river) is being built by a private consortium (Belize Electricity Company Ltd. - BECOL) on a BOT (build, operate and transfer) basis. Commercial operation is expected to start in December 1994. The 115 kV Mollejon transmission system is also being built by BECOL and ownership will be transferred to BEL after construction. BEL has undertaken to purchase, on a take-or-pay basis, 120 GVAh per year, on average, from the Mollejon hydroelectric plant. 3. Since the Mollejon hydroplant is a run-of-river plant with only very limited storage, the power and energy outputs of the plant will be very variable from dry to wet seasons and from year to year. The required power and energy complement to serve the demand would be met by imports from Mexico and BEL's own diesel-electric generation. The integrated 115 kV trunk transmission system would extend 286 km from the Xu La substation in Mexico to the Mollejon power plant substation. Physical Scope of the Project 4. The proposed project comprises the following facilities: Transmission Lines: 115 kv single-circuit transmission line, 136.5 km (85.5 miles) long from Mexican border to km 13.5 Western Highway Substation. - 50 - Annex 5.1 Page 2 of 5 This line will be built on wood H-frame poles using a conductor equivalent to 477 MCM ACSR, which is similar to the Mollejon transmission line. Construction standards of the US Rural Electrification Administration (REA) will be used and the design will be made for winds speeds of 240 km per hour (150 mph) with gusts to 265 km per hour (165 mph). Special precaution will be taken to ensure against insulators fouling by salt fog and corrosion of conductor and line hardware caused by proximity to the seashore. Protection of the line will be done by high-speed distance relaying for single-phase tripping of breakers at both ends of the line. 34.5 kV overhead subtransmission line 56 km (35 miles) long from km 48 Western Highway to Dangriga. This line will be fed from a substation on the 115 kV line from Mollejon to Belize City. 34.5 overhead substransmission line 8 km (5 miles) long from km 48.3 of the Old Northern Highway to the coast. This line will be fed from a substation located at Maskall on the 115 kV transmission line from Mexico. 34.5 kV submarine cable section of 21 km (13 miles) long from the coast to a substation located south of San Pedro on Ambergris Cay. The submarine cable will traverse an area of moderate to low depths, and constitutes the middle section of the Ambergris Cay connection to the trunk transmission system. 34.5 kV overhead subtransmission line 5.6 km (3.5 miles) long from the substation south of Ambergris Cay to the San Pedro power plant. This line constitute the final section of the Ambergris Cay feed system. 115/34.5 kV, 7.5/9.5-10.5 MVA transformer substation will feed the Dangriga subtransmission line. 34.5/22 kV, 5/6.25-7 MVA auto-transformer substation at Dangriga. 115/34.5 kV, 7.5/9.5-10.5 MVA transformer substation at Maskall to feed the Ambergris Cay subtransmission connection. 34.5/22 kV, 10.5 MVA transformer substation at Ambergris Cay substation. 115 kV switching substation at the Mexican Border. - 51 - Annex S. 1 Page 3 of 5 115/34.5 kV, 7.5/9.5-10.5 MVA transformer substation at Buena Vista km 120 of the Northern Highway. Two 115 kV circuit bays at km 13.5 of the Western Highway substation. Tbis substation is being constructed by BECOL as part of its commitment with BEL. Supervisory Control and Data Acquisition System BEL will construct a Central Dispatch Center with supervisory control and data adquisition facilities (SCADA system), capable of generation control, frequency control, active and reactive power flow control, data adquisition, basic state estimation and fault recording and location. The SCADA system will be capable of economic dispatch of local generation and supply from Mexico. SCADA features will be installed in all dispachable generating stations and main substations. An adequate telecommunication system will be set up to carry protection signals, data and voice communications. Environmental Mitigation in BEL's Diesel Plants Consistent with BEL's environmnental stewardship, BEL is seeking to conduct various environmental activities associated with seven of its power plants, with the assistance of a foreign contractor. These are the Belize City, Ladyville, Belmopan, San Pedro, Dangriga, Corozal, and Orange Walk Power Plants. With the implementation of the Second Power Development Project, the Belize City, Ladyville, and Belmopan Power Plants are expected to provide peak-load power; and the remaining four power plants are expected to supply stand-by power. The following is the scope of services expected from this component of the project: * Task 1 - Spill Prevention, Control, and Countermeasure * Task 2 - Noise Pollution Control * Task 3 - Mitigation of Smoke Emissions * Task 4 - Remedial Investigation and Planning for Decontamination of soil More details of the expected services for the environmental mitigation can be found in Annex 5.10. ~4j.... ,0: l I tb : tlS.ssROWO 0 th~~~~~~~~:0 )~~~~~~~~~~~~~~~~~~~~~~~( m m z _ C.,'~~~~~~~~~~~~~~~~~~~~~C I- IL~~~~~ - 53 - Annex 5.1 Page 5 of 5 Attachment II m CZ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ 11 I 0,o = a , 1I- I , , . , * J , i I~IatZ - La I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~O .a ---…---- --, - --- I 'a{} S_ _ * t _ ~~~~~~~II ! ---------- ------ --------------- --------- i , . ,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I,( a~~~~~~~~~~~~~~~~~~~~~~~~~~~ a I.a I a -- - - - - -- - - - - - -- - - BELIZE ELECTRa CITY LaIITED d ! K Do i 115KV TRANSMISSION LINE fob ft 212 PROPOSED ONE-LINE DIAGRAM Date u.., - 54 - Annex 5.2 Page 1 of 2 BELIZE SECOND POWER DEVELOPMENT PROJECT Mollejon Hydroelectric Power Plant Technical Characteristics PARAMETER MAGNITUDE UNITS COMMENTS Installed Capacity 3x8.4 MW Total 25 MW Gross head 122.0 m Net head 112.0 m friction and entrance losses Powerhouse Design Flow 3x8.475 m3/s Efficiencies: Turbine 93.2 % Generator 97.0 % Transformer 99.0 % Plant availability 98.0 % (assumed) Production: Power/cubic meter/s 993.2 kW/cumec Energy/cubic meter 0.276 kWh/m3 Daily Storage: Live storage 845,000 m3 Equivalent peak energy 235.2 MWh Mean peak power 23.5 MW based on 10 hours peak Implementation schedule: First Unit Oct. 94 Second Unit Jan. 94 . Third Unit Apr. 94 Source : Belize Electricity Board - 55 - Annex 5.2 Page 2 of 2 BELIZE SECOND POWER DEVELOPMENT PROJECT Mollejon Hydroelectric Power Plant Expected Average Monthly Power and Energy Production MONTHLY NEAN PO4ER (NU) JAN. FEB. MAR. APR. MAY. JUN. JUL. AUG. SEP. OCT. NOV. DEC. AVG. 1981 12.64 25.20 25.20 21.93 23.38 10.45 7.35 1982 6.51 6.61 6.38 4.42 3.88 11.01 13.62 12.87 14.06 11.98 4.01 6.34 8.47 1983 3.55 3.55 4.29 7.33 12.26 8.53 18.76 18.07 18.93 23.71 21.61 6.66 12.27 1984 16.79 15.14 7.29 4.00 5.71 15.62 17.38 19.19 24.27 16.62 16.20 14.58 14.40 1985 15.83 9.24 7.30 7.93 5.12 5.36 6.96 17.05 6.91 16.63 24.58 17.00 11.66 1986 16.61 16.08 16.72 17.27 7.79 21.12 21.75 16.08 18.19 14.91 14.40 6.86 15.65 1987 5.25 4.78 4.64 3.64 3.60 7.02 16.24 13.67 15.92 8.53 7.95 7.57 8.24 1988 20.07 9.65 5.87 4.76 3.80 13.09 11.24 17.50 17.69 14.30 20.43 16.26 12.89 1989 11.96 10.38 6.17 5.35 3.91 9.63 9.47 9.79 12.33 21.16 21.21 22.01 11.95 1990 24.29 15.78 13.29 7.37 6.44 13.54 19.83 12.10 14.45 14.00 21.91 20.32 15.28 1991 25.20 24.51 11.31 5.16 5.36 11.66 15.03 8.81 12.12 19.84 9.27 25.20 14.45 1992 22.05 13.31 8.55 7.74 5.71 AVG. 15.28 11.73 8.35 6.82 5.78 11.66 15.03 14.51 15.48 16.17 16.16 14.28 12.60 NONTHLY ENERGY PRODUCTION (GUM) JAN. FEB. MAR. APR. MAY. JUN. JUL. AUG. SEP. OCT. NOV. DEC. TOTAL YEAR 1981 9.10 18.75 18.75 15.79 17.39 7.52 5.47 1982 4.85 4.44 4.74 3.18 2.89 7.93 10.14 9.57 10.12 8.91 2.89 4.72 74.38 1983 2.64 2.38 3.19 5.27 9.12 6.14 13.96 13.45 13.63 17.64 15.56 4.96 107.94 1984 12.50 10.18 5.43 2.88 4.25 11.25 12.93 14.28 17.47 12.36 11.66 10.85 126.03 1985 11.78 6.21 5.43 5.71 3.81 3.86 5.18 12.68 4.97 12.37 17.69 12.65 102.34 1986 12.36 10.81 12.44 12.44 5.80 15.20 16.18 11.96 13.10 11.10 10.36 5.10 136.84 1987 3.91 3.21 3.45 2.62 2.68 5.05 12.08 10.17 11.46 6.35 5.73 5.64 72.35 1988 14.93 6.48 4.37 3.43 2.83 9.43 8.36 13.02 12.73 10.64 14.71 12.09 113.04 1989 8.90 6.98 4.59 3.85 2.91 6.93 7.05 7.28 8.88 15.75 15.27 16.38 104.75 1990 18.07 10.60 9.89 5.31 4.79 9.75 14.75 9.00 10.40 10.41 15.78 15.12 133.87 1991 18.75 16.47 8.41 3.72 3.99 8.39 11.18 6.55 8.73 14.76 6.67 18.75 126.37 1992 16.41 8.94 6.36 5.57 4.25 AVG. 11.37 7.88 6.21 4.91 4.30 8.39 11.18 10.80 11.15 12.03 11.63 10.62 109.79 - 56 - Annex 5.3 BELIZE SECOND POWER DEVELOPMENT PROJECT Mexican Power Supply Tariffs Applicable to 115 kV Supply REGION: Peninsular (Yucatan peninsula) CHARGES: Item Mexican Equiv. Pesos U.S.$ kW monthly peak demand 27,763.00 8.8330 kWh consumption at peak hour 181.04 0.0576 kWh consumption at base hour 100.77 0.0320 GENERAL CONDITIONSt 1. Charges to be paid monthly. 2. Peak hours : 18 to 22 hours from monday to saturday. 3. Minimum monthly charge: 20 times the peak demand tariff; applicable only when monthly charges are below 20 * 8.833, equivalent to USS 176.66/month. 4. Peak demand is charged to the maximum demand at peak hour plus 1/5 the difference between the maximum at base hour and maximum at peak hour, if these difference is grater than zero. 5. Penalty for Power factor less than 90% (lag) 3/5 ( (90/PF) - 1) x 100. no more than 120.0% 6. Discount for Power Factor over 90% 1/4 ( 1 - (90/PF)) x 100. no more than 2.5% Note: Exchange rate 3143.20 Mex.pesos/US$ Source: Secretaria de Hacienda y Cr6dito Pfiblico de Mexico. Acuerdo de ajuste y restructuracifn Tarifaria para el suministro y venta de energia el6ctrica. Oct. 1992. - 57 - Amex 5. BELIZE SECOND POWER DEVELOPMENT PROJECT Detailed Project Cost Estimate and Funding Allocation (in thousands US$) PRn ~IFT nfl4rRIPTIflIU PRn IIrrT rnAT P11APAsFl O INrII: P1 N ____________________________I oAlA F:ORFIGN TOTAl IRRn CDR CDC FRR RR GROUP I 115 KV MEX-BELIQE CITY LINE, B4 MILES 320 5,050 5,370 5.050 320 LINE SURVEY FOR 115 KV LINE TO MEXICO 150 150 150 INVESTMENT CONTRIBUTION TO MEXICAN SIDE 1,100 1,100 1,100 TOTAL GROUP I 470 8,150 8,820 5,050 1,570 GROUP 11 DANGRIGA 115-34.5 KV SUBSTATION 127 710 938 H38 DANGRIGA 34.5 KV LINE, 35 MILES 527 700 1,227 1,227 DANGRIGA 34.5-22 KV SUBSTATION e9 552 821 821 MEXICAN BORDER SWITCH 31 231 282 282 BUENA VISTA 115-34.5 KV SUBSTATION 128 904 1,029 1,028 WEST SUBSTATION 115 KV ADDITION el 493 554 554 TOTAL GROUP 11 940 3,590 4,531 4,531 GROUP III MASKALL-COAST 34.5 KV LINE, s MILES 38 113 150 150 34.5 KV SUBMARINE CABLE TO SPO, 13 MILES 223 4,222 4,445 4,445 34.5 KV LINE TO SPO SUBSTATION 44 78 123 123 SPO 34.5-22 KV SUBSTATION 93 817 709 709 SAN PEDRO TAP 115-34.5 KV SUBSTATION 124 897 1,022 1,022 TOTAL GROUP III 522 5,927 6.44B 8,448 GROUP IV BELIZE CITY DISPATCH CENTER, 38oo SO F 148 184 312 184 148 COMMUNCATIONS INTERFACE 1,489 1,489 1,489 SCADA SYSTEM 92 1,152 1,234 1,152 92 TOTAL GROUP IV 230 2,785 3,015 2,785 230 GROUP V OPERATIONS, MAINT., VEHICLES, EQPT & TOOLS 5o0 850 850 ENVIRONMENTAL CLEAN UP OF DIESEL PLANTS 700 700 700 SUB-TOTAL 2.182 19,902 21,984 e,400 8,449 4,531 2,785 1,900 & PRNOJECTITM GENT, STUDIES, FRA HMCAL AS IS ANC ENGINEERING AND TECHMCAL STUDIES 230 932 1,le2 932 230 SUPERVISION AND PROJECT MANAGEMENT 230 1,138 1.389 1,138 230 TARIFF STUDY 192 182 182 CLEAN-UP- STUDY 192 192 192 ENVIRONMENTAL MONTORING OF EAP 192 192 192 TRAIMNG AND TECHNICAL ASSISTANCE 700 700 700 TOTAL CONSULTANTS, STUDIES, ETC. 480 3,310 3,778 3,318 480 BASE COST 2.822 23,119 25,740 9,718 6.449 4,531 2,785 2.2e0 PHYSICAL CONTINGENCIES 410 2,310 2,720 972 788 547 278 135 SUB-TOTAL 3,032 25,429 29,480 10,898 7,23e 5,079 3,0e3 2,395 PRICE CONTINGENCIES 151 1,119 1,270 534 249 135 110 242 TOTAL PROJECT COST 3,183 2e,547 29,730 11,222 7,4S5 5,212 3,173 2,837 FEES AND INTEREST DURING CONSTRUCTION 3 7Ro 3 _ _) GRAND TOTAL ESTIMATED PROJECT COSTS 3 193 29.797 32 sBO 11 227 7 485 5.712 3173 5997 - 58 - Annex 5.5 Page 1 of 2 BELIZE SECOND POWER DEVELOPMENT PROJECT PROJECT IMPLEMENTATION PLAN AND SCHEDULE Project Implementation Plan Execution Milestones' Activity Responsability Start End 1. Environmental Impact Assessment approval BEL/MTE 1/94 9/94 2. Lines and substations land surveys BEL 6/94 3/95 3. Land easements/purchase process BEL/MNR 6/94 3/95 4. Establishment and operation of BEL's Environrmental Unit BEL 6/94 6/97 5. Establishment of electricity pricing regulations MEC/Consultants 10/94 3/95 6. Cost of Service and Tariff Study BEL/Consultants 9/94 3/95 7. Project detail engineering design BEL/Consultants 9/94 3/95 8. Establishment of a training program BEL 11/94 1/95 9. Data processing integration plan BEL/Consultants 9/94 1/95 10. Implementation of training program Consultants 4/95 3/97 11. Establishment of a technical assistance program BEL/Consultants 2/95 3/95 12. Implementation of technical assistance Consultants 4/95 3/96 13. Environmental monitoring plan BEL/Consultants 9/94 1/95 14. Environmental mitigation scope study Consultants 3/95 9/95 15. Monitoring of environmental action plan BEL/Consultants 2/95 6/97 16. Data processing integration BEL/Consultants 4/95 3/96 17. Bidding, procurement, construction and supervision of physical project components2 BEL/Consultants 3/95 6/97 Notes: MTE = Ministry of Tourism and the Environment; MNR = Ministry of Natural Resources. MC = Ministry of Energy and Communications. 1/ Both, start and end dates will be monitored. 2/ Details included in the project implementation schedule. Annex 5.5 Page 2 of 2 BELIZE SECOND POWER DEVELOPMENT PROJECT Project Implemnentation Schedule I O-, Ip Iv 1.eo.h.KV.o __ __ . 4.4'... - Edding 4 .l, ...n Aro... o C,w It 5i Sb.tt.-n Wn Li-I RoW. S.Olenlo. S.oeYbg _O Co..*l ,,.otioo zm e l| s __ _ _ _ _ _ _ _ _ i_ _ __ ____ _ __ _ _ ._ I I(1.o. IN &.b.t.iok.. Lk... Sub-k.* Cob __________ I FR . S.olion. Sur_ yv 13 t.92i n nd VWdd_ i 14 Eq.d__p 4 4 _ Is Coootn.oIIo le - IV SCADA _ C=..U- ' I_ ____.nlo __________________ le rI-d.. Wd n i _ 20 0w V O&M Vt1*... qp. ond Too. 21 Bdt 22 P~o-oo... 23 Ent- d g _ 14 E96 A EN*t -- 25 C-nstnjve -k. _ lf23 ts I S CADA1 __ _ _ _ __ _ _ _ _ __ _ _ _ _ ___ ___ ___ ___ ___ ___ ___ __ 26 7 oi w dlon oy ond .. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 27 SIodi.. 7,oln&. & T-h.op* Aoo.I.k.tIS 20 E. -onnl Mitbo - N.7.Gow1-d *nd nowd u p - 60 - Annex 5.6 SECOND POWER DEVELOPMENT PROJECT IMPLEMENTATION UNIT Project Implementation Unit Organization Chart BEL Chief Executive Off icer Project Coordinator Engineering EnvirormentaL & Spervisin Advisry ConmuLtants Co ittee for San Pedro tUnits Unit - Transmission Lines t PoLution Mitigation - Substations Envirorinentat Monitoring - Submarine Cobea -SCADA & Communications - 61 - Annex 5.7 Page 1 of 10 BELIZE SECOND POWER DEVELOPMENT PROJECT ENGINEERING AND PROJECT MANAGEMENT CONSULTANT SERVICES Terms of Reference Background 1. BEL currently operates nine isolated electrical systems, all of them supplied by diesel thermal units. The total installed capacity is 42 MW. In FY92 the combined demand of all the nine centers was about 23 MW, with sales of about 107 GWh. Two of the electrical systems were interconnected in 1991 (Corozal and Orange Walk load centers), and are supplied from Mexico through a 34.5 kV line, from Chetumal in the Yucatan Peninsular. 2. With the objective of diversifying the sources of electricity supply, the Government of Belize and BEL signed an agreement with a private consortium, the Belize Electricity Company Ltd (BECOL), to construct and operate a 25 MW run-of-river hydropower plant at the Mollejon site in the Macal River. The hydro plant will be connected to the BEL distribution systems at Belmopan and Belize City by a 115 KV transmission line. Construction of the plant and the transmission line started in January 1993 and it is expected to be completed by the end of 1994. 3. As a further means of diversification, the BEL is planning to interconnect its electrical system with the Mexican system through the construction of an 84 mile 115 kV transmission line from Chetumal in Mexico through the Corozal/Orange Walk system, to Belize City, where it will join the transmission line coming from the Mollejon hydro station. The planned interconnection would thus form the basic structure of a national grid linking the main load centers of Belize. Additionally, BEL is planning to link the load centers at Dangrida and San Pedro (Ambergris Cay) to the grid, thereby extending the national system to comprise all the major load centers of the country (Corozal/Orange Walk, Belize City/Ladyville, Belmopan/San Ignacio, Dangrida and San Pedro). The San Pedro load center is planned to be interconnected through a 13 mile 34.5 kV submarine cable between the mainland and the Ambergris Cay-island. This transmission system and links, and the associated Supervisory Control, Data Acquisition (SCADA) and Dispatch Center is known as the Second Power Development Project. A detailed project description, a project map and one-line diagram are included in Annex 5.1. 4. Basic engineering, cost estimates, environmental assessment, route selection, economic evaluations, and other technical studies of the project have already being carried out. BEL has contracted field surveys to establish the plan and profile of the 115 kV interconnecting line and the 34.5 kV Dangriga line; it is expected that this work would be finished by December 1994. - 62 - Amex 5.7 Page 2 of 13 5. The World Bank, the Caribbean Development Bank, the Commonwealth Development Corporation and the Europen Investment Bank are in the process of project preparation for the approval of loans to partially finance the Second Power Development Project. Objective 6. Consulting services are required to assist BEL in: (i) final engineering design of transmission lines, substations, submarine cable and SCADA and communication systems and preparation of technical specifications; (ii) carry out specialized technical studies; (iii) preparation of bidding documents and assistance in bids evaluation, selection and contracting; (iv) assistance in supervising construction, erection and project management; and (v) inspection of manufacturing equipment and materials. Basic Information and Studies 7. BEL has conducted a series of studies and analysis of the Power II Project. The Consultant should use this information as the basis for his work and in developing its recommendations. The following documentation, inter alia, is or will be available: (i) "Power II Study for the Belize Electricity Board", NEI Electric Power Engineering (U.S.A.), November 1992, and subsequent revisions. (ii) "Power II Project - Interconnection Transmission Line to Mexico - Generation Dispatch Simulation and Production Costing", E. Indacochea and I. Aragon, Consultants, November 1992. (iii) "Power II Project - Supplement to the Communication Alternatives Assessment", Macro Corp. (U.S.A.), September 1993. (iv) "Belize Power II Project - 115 kV Mexico Interconnection Transmission Line - Environmental Impact Assessment", CI Power (Canada), December 1993. (v) "Power II Project - Economic, Technical and Environmental Assessment - Electricity Supply to Ambergris Cay (San Pedro)", ElsamProjekt (Denmark), December 1993. (vi) "Power II Project - Economic Evaluation", E. Indacochea and I. Aragon, Consultants, December 1993. - 63 - Annex 5.7 Page 3 of 13 (vii) "Line Route Survey - 115 kV Interconnection Transmission Line to Mexico' (including soils identification and analysis). Survey will be completed by June 1994. (viii) "Line Route Survey - 34.5 kV Transmission Line to Dangriga" (including soils identification and analysis). Survey will be completed by June 1994. Scope of Work 8. Considering the overall project schedule, the services to be provided by the Consultant have been divided in two phases, as follows: Phase 1: Studies and Engineering Phase 2: Project Management and Construction Supervision PHASE 1: Studies and Eneineering 9. The studies mentioned in paragraph 7 above have determined the basic engineering design conditions and specifications for all project components (ine and submarine cable routing, conductors selection, supporting structures, insulation, line hardware, substations layouts, basic electric and mechanical specifications of materials and transformer and switching equipment, single-line diagrams, basic operating conditions, etc.). The Consultant should use all this information in carrying out the final engineering design of the project. 10. The following activities, inter alia, are expected to be carried out by the Consultant (this list of activities is indicative only, the Consultant shall use its experience and knowledge as well as international recognized best practices in carrying out its work): A. Transmission Lines (i) Selection of type and section of line conductors and earth wires (ii) Selection of type and characteristics of line insulation and hardware (iii) Selection of type of supporting line structures and preliminary structure spotting along line routes (iv) Determination of transmission line standards and specifications for materials and construction (v) Electrical and mechanical design of the transmission lines - 64 - Annex 5.7 Page 4 of 13 (vi) Preparation of transmission line plan and profile drawings (vii) Preparation of technical specifications for procurement of equipment and materials and for transmission line construction (viii) Preparation of detail cost estimates B. Submarine Cable (i) Selection of type and section(s) of cable (ii) Determination of cable standards and specification (iii) Final route selection and detail see bottom (depth) survey (iv) Preparation of plan and profile drawings (v) Preparation of technical specifications for procurement and installation of submarine cable (vi) Preparation of cost estimates C. Substation (i) Selection of final sites (ii) Preparation of final substation layouts and single-line diagrams (iii) Civil engineering designs (iv) Specification of power transformers (nominal capacity, voltage relation(s), voltage regulation, insulation, refrigeration, etc.) (v) Specification of switching equipment (circuit breakers, switches, lightning arresters, etc.) (vi) Design and specifications of busbars and structures (vii) Specification of low voltage equipment, switchgear and power supply (viii) Specification of transmission line and substation relay protection - 65 - Annex 5.7 Page 5 of 13 (ix) Preparation of technical specifications for procurement of equipment, installation and erection of substations (x) Preparation of detail cost estimates Dv Dispatch Center, SCADA and Communication Systems In designing and specifying the dispatch center, the SCADA and the communication systems, the Consultant should take into consideration the limited size and complexity of BEL's generation and transmission system. Simplicity and cost-effectiveness should be the main goals. The use of PC workstations and networks, and standard software, should be seriously considered. (i) Selection of final site for the dispatch center (ii) Civil engineering design of the dispatch center, including electromechanical services (iii) Definition of functional specifications of dispatch and SCADA systems (iv) Determination of software requirements for dispatch and SCADA (v) Selection and specification of computer system(s) (vi) Specification of Remote Terminal Units (RTU's) (vii) Selection and specification of the communication system(s) (enough capacity for data transmission, protection signaling and voice communication) (viii) Preparation of technical specifications for procurement of equipment, software and installation for the dispatch and SCADA, and communication systems (ix) Preparation of detail cost estimates E. Specialized Technical Studies In order to complement the work of the Consultant in engineering design and provide the technical basis for the selection and specification of major and critical equipment and materials for the Project, the Consultant will carry out three specialized technical studies in (i) Reactive Power Compensation and Voltage Control; (ii) Insulation and Corrosion; and (iii) Relay Protection. Attachment I describes the purpose, scope of work and output of each study. - 66 - Annex 5.7 Page 6 of 13 The Consultant will prepare a report for each one of the studies, documenting the work done, the analysis carried out, the results obtained, the main findings and the conclusions and recommendations. PHASE 2: Construction Supervision and Project Management 11. During project execution the Consultant will provide full time on-site support and assistance to the Project Implementation Unit (PIU) in construction supervision and project control and management. The Consultant's permanent team will be constituted by a Project Manager and a Supervision Engineer. Short term support in specialized areas Oike the submarine cable) and equipment and materials manufacturing inspection will also be required as needed. 12. The main activities foreseen are, but not limited to, the following: (i) Preparation of bidding documents for procurement of materials and equipment, and the construction and erection of transmission lines, substations, submarine cable, and SCADA and communication systems (ii) Preparation of work plans and schedules, including timing of tendering, evaluation of bids, negotiation and contracting, delivery of equipment and materials, construction, testing and commissioning (iii) Assistance in bid evaluations, selection, negotiation and contracting (iv) Assistance in supervision of construction, project control and monitoring contractors performance (v) Preparation of project implementation progress reports (vi) Review of construction drawings and designs, and reports prepared by contractors (vii) Review as built drawings prepared by contractors (viii) Assistance, as required, in specialized technical areas during project construction (ix) Inspection, as required, of manufacturing equipment and materials - 67 - Annex 5.7 Page 7 of 13 Consultant Inputs 13. The services provided by the Consultant will be carried out over an estimated period of 36 months. Phase 1 will be carried out for a period of about 6-9 months (with activities of part D perhaps extending to 12 months). According to the project implementation schedule, the supervision and project management (Phase 2) will extent for about 30 months. Additionally, about 15 man-months of part-time consultancy will be required for manufacturing inspection and advise in specialized (submarine cable, SCADA and communication systems, etc.) areas, during project construction. 14. An indicative distribution of man-months per Phase follows: Phase 1: 70 man-months Phase 2: 80 man-months Therefore, approximately 150 man-months of consultancy services will be required. 15. BEL will provide the following facilities to the Consultant: (i) Permanent office space and furniture for Consultant's personnel. (ii) Desktop computers and office equipment (The Consultant will indicate in its proposal the list of recommended equipment to carry out its work. Laptop computers should be provided by the Consultant, if required.) (iii) Two motor vehicles. (iv) Dedicated office and support personnel (the Consultant will indicate in its proposal the requirements of local office and support personnel for the project. This personnel will be part of the PIU organization). Technical Proposal 16. The documentation to be presented by the Consultant should be sufficient to allow BEL an objective evaluation of the Consultant's capabilities and experience to carry out the requested services in a professional and efficient way. Experience in engineering design and project supervision and management in recent similar assignments of the key personnel proposed by the Consultant is of primary importance. Availability and working experience on modern information technology methods and tools by the Consultant will be appreciated in the evaluation. Experience in procurement procedures and sample bidding documents used in projects financed by the World Bank will also be considered in the technical evaluation. - 68 - Annex 5.7 Page 8 of 13 17. The evaluation of the Consultant's experience will be based primarily on similar 22 to 138 kV transmission line and substation projects, submarine cables, small scale SCADA and communication systems, electrical network systems studies, construction supervision and project management, and manufacturing inspection and testing; preferable in Latin America and Caribbean countries, carried out by the Consultant in the last five years. The Consultant's proposed personnel experience will be based only in the last ten years experience in similar projects and will be limited to: For Phase 1: (a) Chief Project Engineer (b) Submarine cable specialist, in charge of part B (c) SCADA and Communication Systems specialist, in charge of part D (d) Power Systems Engineer, in charge of part E (e) A maximum of other three professionals working more than 50% of their time in the project For Phase 2: (f) Supervision Project Manager (SPM) (g) Supervision Engineer, assistant to the SPM (h) Three inspection engineers; in the areas of submarine cable installation (could be same person as in b above), SCADA and communication systems (could be the same person as in c above), and transmission lines and substations materials and equipment 18. The technical proposal will contain separate sections for each one of the two Phases; describing in detail, inter alia, the following: (i) the proposed organization of the work, work program, time schedule and activities-time-personnel participation matrix; (ii) engineering design standards, methods, techniques and tools to be used; (iii) the methods and procedures to be used in carrying out the technical studies; (iv) technical specifications extracts and examples of similar projects; (v) examples or extracts of technical specification documents of submarine cables and small EMS, SCADA and communication systems; (vi) examples or extracts of bidding documents of similar projects; (vii) project management and control methods, techniques and tools to be used; (viii) equipment and materials testing and inspection protocols examples of similar projects; (ix) project supervision reporting examples of similar projects; and (x) any other relevant technical information of similar projects carried out by the Consultant. - 69 - Annex 5.7 Page 9 of 13 Economic Proposal 19. Although price will not be a factor in the selection of the Consultant, the estimated human resources requirements, as indicated in paragraph 14, should be taken as a reference in the preparation of the economic proposal. The technical and economic proposals should be presented in separate packages (envelopes). The Consultant should divide its costs in two basic components, professional fees and expenses. The professional fees can be assigned by category but only monthly (for long-term) and weekly (for short-term, less than three months assignments) fees will be allowed. To obtain the total professional fees the Consultant should applying the per unit fees to the activities-time-personnel participation matrix, mentioned in paragraph 18-i. If required by BEL, the Consultant should provide the breakdown of the professional fees. 20. The expenses will be divided into three basic components: (i) travel expenses; (ii) living expenses; and (iii) other or miscellaneous. The Consultant will estimate the number of round-trip tickets and other travel required for each person; these expenses will be reimbursed by BEL against documentation. Living expenses will be paid on fixed rate basis. Consultant's personnel staying in Belize for periods of three or more months (long-term assignments) will be paid US$3,000/month. Personnel staying in Belize for periods of less than three months will be paid US$150/day. BEL will recognize the Consultant a monthly fixed amount of US$250 for miscellaneous expenses (communications, printing, copying, etc.); any other extraordinary expense will be reimbursed against documentation. 21. The costs mentioned in paragraphs 19 and 20 should be presented separate for each one of the Phases of the scope of work. All applicable conditions and form of payment of the services for each one of the Phases should be clearly indicated in the economic proposal. Contract Award 22. Contract(s) will be awarded for the two Phases to a single consulting company or Phase 1 to one company and Phase 2 to another company; or only Phase 1 could be awarded. Reporting and Documents 23. The Consultant will be responsible of producing all technical and contractual documentation for the project (specifications, bidding, procurement and contractual documents, drawings, maps, layouts, electrical schemes, computer studies results, studies reports, inspection reports, et.). During project implementation a supervision report should be prepared every quarter, including reporting on the physical, financial and economic status and progress of all components of the project. 24. The Consultant will keep and maintain a complete project file, including all reports prepared by the contractors; as-built drawings, maps, schemes, etc. prepared by the contractors; operating and maintenance manuals prepared by the contractors and equipment suppliers; design - 70 - Annex 5.7 Page 10 of 10 manuals, standards, specifications, etc.; a photographic album recording all stages of project implementation; and any other pertinent document related to the project. - 71 - Annex 5.7 Page 11 of 13 Attachment I SPECIALIZED TECHNICAL STUDIES A. Reactive Power Compensation and Voltage Control Purpose of the Study 1. The study to be carried out by the consultants should determine the required reactive power comensation equipment to maintain stable voltaje conditions along the 115 and 34.5 kV transmission system of the Second Power Development Project, as well as the method to be employed in controlling this equipment. Scope of Work 2. The tasks envisaged in this reactive power compensation study are the following: i) Establish the light loading and the peak loading conditions on the transmission system for a 15 year horizon using the medium and the high demand scenarios; ii) Determine the voltage profiles along the transmission system for the conditions developped above; iii) Examine the various alternatives to maintain voltage level at all points of the transmission system within a band of plus/minus 5% of rated voltage; and iv) Device the control system to switch on/off the capacitor banks and reactances incorporate in the transmission system in order to effect proper reactive power compensation. The control system should be designed to make use of the SCADA system which will be implemented in the project. The design of the control system should permit manual and programmed switching of reactive power compensation devices. Output of the Study 3. The results of the studies indicated above, should be used by the consultants in the preparation of the following documents: a) The electric design of the reactive power compensation schemes for each substation of the transmission system; b) The reactive power compensation control system design for programmed switching of reactive power compensation devices; and - 72 - Annex 5.7 Page 12 of 13 c) Technical specifications for the reactive power compensation equipment and its control system. B. Insulation and Corrotion Purpose of the Study 4. The study to be carried by the consultant aims to establish the insulation level and physical characteristics of the insulator units required for the 115 kV interconnection transmission line to Mexico and for the associated substations, considering the proximity of these facilities to the seashore and the likely fouling of insulation by salt fog or/and salt deposits. In addition, the study should determine the type of conductor to use in the transmission system to avoid corrosion problems associated with salt fog or/and salt deposits. The transmission line route will approach the seashore at distances of less than 50 km. Scooe of Work 5. The tasks envisaged for the consultants are the following: i) Determine the severity of insulation fouling during the dry season and its impact on the level of insulation to be provided on the transmission line and on the associated substations; ii) Prepare an insulation coordination scheme for the transmission line and substations using data gathered from above and the isoceuranic level in the area which the transmission line traverses, as well as for the locations of the associated substations; iii) Establish the physical characteristics of the insulators and associated hardware. This task shall include indication about insulator skirts shape and diameter, method of attachment (ball and socket, or bolt and clevis) in order to prevent salt collecting on cavities; and thickness of galvanizing on insulators metal elements and on line hardware; iv) Establish the physical characteristics of electrical apparatus' insulation at all substations, and busbars insulation requirements; v) Determine the type of conductor to use in order to minimize corrosion effects that could cause rupture of conductor or high corona losses. - 73 - Annex 5.7 Page 13 of 13 Output of the Study 6. The results of the study indicated above, should be used by the consultants in the preparation of the following documents: a) Technical specifications for insulators and line hardware; b) Technical specifications for apparatus insulators; and c) Technical specifications for line conductors and associated hardware. C. Relay Protection Purpose of the Study 7. The study to be carried by the consultant aims to establish the best protection scheme for the 115 kV interconnection transmission line to Mexico and for the associated substations, the link to San Pedro (Ambergris Cay) and the line to Dangriga. The consultant should also examine the coordination between the protection scheme for the Second Power Development Project and that of the transmission system for the Mollejon hydroelectric plant. Scope of Work 8. The tasks envisaged for the consultants are the following: i) Carry out a complete short circuit study under various load and generating conditions of the sytem; ii) Determine the higher and lower levels of short circuit currents in all major power plants and substations under single, double and three-phase short circuits; iii) Determine the best scheme of primary and back-up relay protection for the transmission lines, cables and substations; and iv) Determine the necessary relay coordination for the system. Output of the Study 9. The results of the study indicated above, should be used by the consultants in the preparation of the technical specifications for the relay protection system for the line and substations of the Second Power Development Project. - 74 - Annex 5.8 Page 1 of 6 BELIZE SECOND POWER DEVELOPMENT PROJECT COST OF SERVICE AND TARIFF STUDY Terms of Reference BACKGROUND 1. The current electricity tariff of the Belize Electricity Limited (BEL), in effect since 1989, consists of three increasing blocks which apply to all consumers in the country: Block Belize cents/kWh US cents/kWh 0-70 kWh/month 31 15.5 71-150 kWh/month 35 17.5 more than 150 kWh/month 41 20.5 2. Neither demand charges nor service fees are levied in addition to the above rates. In FY921/ the average revenue per kWh sold was 38 Belize cents (equivalent to about US$0.19) compared to the average generating cost of about 27 Belize cents. 3. BEL currently operates nine isolated electrical systems, all of them supplied by diesel thermal units. The total installed capacity is 42 MW 2/. In FY92 the combined demand of all the nine centers was about 23 MW, with sales of about 107 GWh. One of the electrical systems, the in 1991 interconnected Corozal/Orange Walk system, is supplied from the Mexican grid through Chetumal in the Yucatan Peninsular. 4. With the objective of diversifying the sources of electricity supply, the Government of Belize and BEL signed an agreement with a private consortium the Belize Electricity Company Ltd (BECOL) to construct and operate a 25 MW run-of-river hydropower plant at the Mollojon site in the Macal River. The hydro plant will be connected to the BEL distribution systems at Belmopan and Belize City by a 115 KV transmission line to be constructed by BECOL. All the power generated by the Mollejon plant will be sold to BEL on a pay-or-take basis. I/ BEL's fiscal year is from April to March. 2/ Totalfirm capacity is 26.5 MW. - 75 - Annex 5.8 Page 2 of 6 5. As a further means of diversification, the BEL is planning to interconnect its electrical system with the Mexican system through the construction of an 84 mile 115 kV transmission line from Chetumal in Mexico through the Corozal/Orange Walk system, to Belize City, where it will join the transmission line coming from the Mollojon hydro station. The planned interconnection would thus form the basic structure of a national grid linking the main load centers of Belize. Additionally, BEL is planning to interconnect the load centers at Dangrida and San Pedro to the grid, thereby extending the national grid to comprise all the larger load centers (Corozal/Orange Walk, Belize City, Belmopan, Dangrida and San Pedro). The San Pedro load center is planned to be interconnected through a 13 mile 34.5 kV submarine cable between the mainland and the Ambergis Caye-island. 6. The World Bank, the Caribbean Development Bank and the Commonwtlth Development Corporation are considering to contribute to the financing of the Mexican interconnection as well as of the Dangrida and San Pedro connections. 7. The power purchase agreement between BEL and BECOL stipulates a base price of US$0.0875 per kVAh for a supply up to 120 GVAh, which is the minimum supply guaranteed by BECOL. For purchases above 120 GVAh, the unit price will be US$0.07 per kVAh. The official tariff system for the Mexican peninsular region, which will apply to purchases by the BEL, will have different rates for base and peak energy, charges for maximum demand, and will also include power factor penalty surcharges resp. power factor premium discount. The current (December 1993) rates for the Mexican supply vary from US$0.032 during base load time to US$0.058 during peak load time (6 p.m to 10 p.m Monday to Saturday), while the monthly peak demand is charged at about US$8.8 per kW. 8. In view of the planned changes in the supply options the current tariff structure appears inadequate. Especially the following issues need to be addressed: (1) the tariff does not follow the structure of the costs of future supply; (2) the tariff does not provide customers with adequate signals for efficient use of electricity in particular since rates do not reflect peak and off peak supply costs; (3) generation costs are expected to change when BEL moves from a purely thermal system toward a more diversified system including purchases from the Mollejon hydro-plant and from Mexico. STUDY OBJECTIVE 9. The objective of the tariff study is to provide the Belize Electricity Limited (BEL) with an efficient rate structure for all categories of customers. The rate structure should reflect the costs of supply and provide incentives for the efficient use of electricity within the financial and operating constraints of the BEL. Additionally, the BEL staff will be given an opportunity to learn utility ratemaking in practice through participation in the tariff study. - 76 - Annex 5.8 Page 3 of 6 SCOPE OF WORK 10. The Consultant shall carry out the following: A. Analysis of current and future electricity demand (1) Analysis of current demand of existing customers including: - number of customers per block of consumption - sales per block of consumption - customer load shapes, seasonality of demand and peak demand - power factors - billing frequency analysis - impact of income of residential customers on electricity consumption (2) Analysis of sales and demand forecasts per block of consumption I/ (3) Analysis of the potential of connecting customers with captive generators to the BEL system and the possibility of purchasing any excess generation from these generators. (4) Analysis of system load profile and coincidence factors (5) Analysis of demand-side-management potential by consumer category B. Cost of Service Computation The cost of service computation will be based on the estimated long-run marginal cost of the optimal 10-year expansion plan of the interconnected system. (1) Production costing for the planned interconnected system (2) Estimation of peak and off peak energy and capacity generating costs and seasonal and geographical variations of generation costs (3) Analysis of transmission investment program and transmission capacity and O&M costs (4) Analysis of distribution investment cost and distribution O&M costs The consutant is not required to produce new forecasts unless his/her analyisis indicates a substantial differencefrom the existingforecasts. The consultant should however, as indicated in item D(7), analyze the impact of proposed tariff change on demand projections. - 77 - Annex 5.8 Page 4 of 6 (5) Analysis of customer connection costs (6) Analysis of administrative, overhead and other costs (7) Distribution of costs by consumer blocks C. Determination of a theoretical optimal rate structure based on A and B above D. Financial simulations based on the current and on the theoretical rate structure, and BEL's financial objectives (1) Review of established tariff setting principles in Belize (2) Analysis of BEL's financial objectives and covenants (3) Analysis of existing rate structure and discussion of main issues (4) Analysis of BEL revenue requirements (5) Presentation of the financial simulations based on the theoretical rate structure (6) Revenue requirements reconciliation (7) Analysis of the impact of proposed tariff change on various blocks of consumption and likely consequential adjustments to demand projections E. Recommendations for an efficient rate structure (1) Discussion of constraints to be taken into account when designing the new rate structure including: - metering problems - country-wide uniformity - promotion of efficient use of electricity and conservation - competitiveness of Belize's industries - impacts on low income households - simplicity (2) Proposals for an efficient rate structure and/or menu of optional rates taking into account the revenue requirements, the identified constraints and economic efficiency objectives - 78 - Annex 5.8 Page 5 of 6 F. Recommendations for an implementation strategy and adjustment mechanisms (1) Time frame for implementation (2) Required customer information campaigns (3) Investment requirements, such as meters and telecommunication equipment (4) Fuel and inflation clauses G. Provide BEL with the necessary methodology, data base elements and software in order to update the tariff calculations according to changes in circumstances REPORTING 11. The following reports, all in English, will be submitted by the Consultant to the Belize Electricity Limited (BEL) and the World Bank. The reports will be reviewed by the BEL and the World Bank. (1) Interim Report. This report will comprise items A, B and C of the terms of reference and will be submitted within three months after commencement of the study; (2) Draft Final Report. This report will detail the consultants' findings and recommendations on items A, B, C, D, E and F of the terms of reference and will incorporate all revisions required on the interim report. It will be submitted within three months from the commencement of phase two; and (3) Final Regpo. This report will incorporate all revisions required by the BEL and the World Bank on the draft final report. It will also provide the documentation required in accordance with item G of the terms of reference. The final report will be submitted within two weeks from the receipt of comments on the draft final report. CONSULTANCY INPUTS 12. The study will be carried out over a period of eight months. It is estimated that a total of 10 man-months of international consultancy inputs will be required. The study will be carried out in two phases; Phase one will comprise items A, B and C, and should result in an interim report to be completed within three months from the initiation of the study. Comments on the interim report will be provided within two weeks of its submission to BEL. Phase two will - 79 - Annex 5.8 Page 6 of 6 comprise items D, E, and F, and should result in a draft final report to be completed within three months following the receipt by the consultants of the comments on the phase one report. Comments on the draft final report will be provided within a month of its submission to BEL. Upon receipt of comments on the draft final report the consultant should finalize the report within two weeks. The final report should incorporate item G of the terms of reference. BEL will provide the following facilities to assist carrying out of the study: (1) Suitable counterpart staff; (2) Data collection assistance (BEL will provide the results of a load research measuring campaign to be carried out separately); (2) Office space during field work in Belize; and (3) Vehicles including drivers for field work. 13. It is estimated that during each phase, the consultant will spend between one and three weeks in Belize for data collection, analysis, and discussions. The consultant should indicate prior to the field work, on the basis of his/her experience with similar studies, what operational support he/she expects from BEL to collect relevant information. SUBMISSION OF PROPOSAL 14. The Consultant should submit a proposal stating his/her rates, all applicable conditions, and a brief description of the work steps and proposed methodology to fulfill the terms of reference. The proposal should contain information on the Consultant's professional experience including university degrees and dates for each professional member participating in the study, and experience in similar studies together with a summary of their objectives, scope and results. The economic proposal and the consultants' stated experience in similar studies will be the basis of negotiation between the BEL and the Consultant. - 80 - Annex 5.9 Page 1 of 4 BELIZE SECOND POWER DEVELOPMENT PROJECT Environmental Issues and Summary of Environmental Impact Assessment Studies Legal, Institutional and Policy Framework 1. Over the past years, the GOB has been making a very significant effort to create legislation and to develop or strengthen its institutional framework and capacity to promote environmentally sustainable development in the country. Since its creation in 1989, the Ministry of Tourism and the Environment (MTE) has conducted the preparation of a Policy and Strategy Statement (1992). An Environmental Protection Act was enacted in 1993 enabling it to enforce environmental standards and guidelines for environmental assessment of projects. While specific legislation is generally in place for natural resource management (e.g., the National Park System Act, the Forest Reserve Act, the Fisheries Ordinance), detailed regulations for air, water and soil pollution are not yet available. Review and enforcement capabilities are still weak. 2. The GOB is being supported in this effort by several international programs and agencies. The ODA acts as the lead agency in the Tropical Forestry Action Plan of Belize. This is a five- year program which began in 1991 and comprises improvement of land use planning and forest management. The program includes redefinition of boundaries of the country's reserved areas, the installation of a geographic information system, training and institutional strengthening. Under the Natural Resource Management and Protection Project (NARMAP), USAID is providing technical assistance to help develop the monitoring, assessment, and enforcement capabilities of the GOB. The project comprises promotion of sustainable agricultural production methods and forestry development, in conjunction with ODA's efforts. UNDP through the global Environmental Facility (GEF) has been providing support to the Coastal Zone Management Committee. The World Bank's Country Assistance Strategy foresees help in preparation of a National Environmental Action Plan. 3. Non-governmental organizations, both local and international, have had a very active role both in implementing environmental programs, such as the management of forest reserves, and in discussing proposed guidelines and major specific development projects for the country. Second Power Development Project: Environmental and Social Issues 4. The EA process: Because of Belize's singular natural characteristics and its privileged coastal resources, special care was taken by BEL and the Bank, in preparing the Power II Project, to ensure full consideration of existing environmental legislation in the country, observance of Bank guidelines, and best international practice in dealing with potential environmental and social project impacts. Although the project was rated as category "B" by the - 81 - Annex 5.9 Page 2 of 4 Bank, full environmental assessments (EAs) were conducted for the Mexican 115 kV Inteconnection and for the 34.5 kV San Pedro connection servicing Ambergris Caye. The EAs were conducted by international consultants, who, in both cases, worked with a Belizean NGO during preparation of the baseline studies. In accordance with Bank guidelines, public consultations were carried out: first, a scoping session was held in December 1992 to discuss the proposed terms of reference of the EAs; second, two public forums were convened in December 1993 to discuss findings of the studies. BEL's management has demonstrated great commitment to obtaining effective participation of potentially affected or interested people throughout the EA process. The public forums, originally to be held in Belize City, as was the scoping session, were postponed and transferred to locations along the future transmission line routes, in order to facilitate participation and allow more time for examination of the EA drafts. 5. The Mexican Interconnection: For this line (137 km; 30 meter right-of-way), two alternatives were assessed. (Minor variations along the proposed corridors were also explored but dropped.) The impacts associated with construction and operation of either of the two main alternatives are expected to be low and there is negligible difference between them in terms of factors such as disruption of existing settlements, disturbance of cultivated lands, disturbance to critical wildlife habitats and sanctuaries, visual impact, avoidance of road and stream crossings, and use of existing rights-of-way. Resettlement will not be required in either case. The transmission line alignment along the Old Northern Highway is favored over its alternative, above all, because it facilitates the extension of the transmission grid to Ambergris Caye. In the preferred solution, medium or moderate impacts may occur as a result of vegetation clearing, use of sensitive terrain (e.g., steep slopes at river crossings) and visual presence near towns. Impacts to human settlements, agricultural practices, critical wildlife habitat, sites of archaeological interest, and human health and safety are all rated as low. 6. The Dangriga Line: A formal environmental assessment was not required given the general alignment and physical characteristics of the line, i.e. a single-pole structures, medium voltage, requiring a 10 meter ROW, routed predominantly along existing roadways and areas which have been substantially disturbed by previous projects and agriculture. Guidelines and proposed mitigation measures prepared for the Mexican Interconnection will be followed in the case of this component. 7. Supply of San Pedro: Given the very special natural resources of Ambergris Caye, with the Hol Chan Marine Reserve at its southern tip, Belize's unique barrier reef along its full extension on the east (Gulf of Mexico) side, and mangrove along the west (continent) side of the island, the electricity supply expansion proposal for the caye underwent a thorough consideration of alternatives from economic, technical, social and environmental standpoints. Power market growth projections were revised, taking into consideration the different plans for future deevelopment of the island which have been proposed by different agencies (e.g., UNDP). Five supply alternatives were considered: (a) expansion of existing plant; (b) new plant at new site; (c) submarine cable crossing; (d) overhead crossing; and (e) combination of the two previous ones. Within the scope of this overall feasibility study, an assessment of the potential impacts - 82 - Annex 5.9 Page 3 of 4 of these supply alternatives was conducted, including identification of mitigation costs and residual impacts for which feasible solutions are not available. The overall optimal solution was found to be the submarine cable crossing. Although requiring slightly greater initial investment, it was assessed as having the lowest production (O&M) costs, being the most reliable source of supply, and having the smallest residual environmental costs in the long term. In the short term, i.e., during the construction phase, some sediment fouling is to be expected with possible negative but largely reversible effect on the marine environment. These were assessed to be less serious than impacts on bird fauna, risks of collision by ships and airplanes, and aesthetic impacts arising from the second-best alternative, the overhead crossing. (Other alternatives, such as wind and solar power, were also investigated but were not found to be advantageous as compared to conventional electricity supply.) Environmental Action Plans 8. Environmental protection, avoidance and reclamation measures have been recommended in the EAs of both components. General procedures to be incorporated into the bidding documents for contractors have been proposed for the preconstruction, construction and clean-up phase. Procedures for monitoring and maintenance are also recommended in the EAs. Design of detailed mitigation measures and of a monitoring plan will be prepared according to guidelines, cost estimates and schedules established in the EAP, while detailed engineering, final route alignment, and a land survey of the right-of-way are carried out over the coming months. During this period, a survey of the proposed ROW as regards possible interference with archaeological sites will be carried out by the Department of Archaeology/Ministry of Tourism and the Environment. Minor modifications in positioning and spacing of poles may be expected so as to avoid unexplored or partially explored sites of archaeological interest along the route. Although easement is foreseen as the predominant approach to formation of the ROW, a land acquisition program is to be prepared, comprising valuation of fixed assets and agricultural production and payments of compensation, to be negotiated or fixed in accordance with Belizean legislation (the Electricity Act, the Crown Lands Ordinance and procedures and guidelines established by the Lands and Surveys Department/Ministry of Natural Resources for valuation of propety losses, as applicable). 9. In the case of the submarine crossing to Ambergris Caye, specifications to tenders will require minimization of fouling effects from dredging. To supplement current knowledge of wind and current patterns, a data collection program has been designed. Its implementation is to be initiated as soon as possible, prior to detailed project design and construction specifications. Results will also provide information to define a monitoring plan to be used during the construction phase as a controling mechanism. 10. During project preparation, a preliminary evaluation was carried out of environmental management problems pertaining to Belize's principal diesel power stations. Fires and oil spills have ocurred in several of these in recent years. Terms of reference were prepared for a pollution mitigation program to be financed under the proposed project, covering the following - 83 - Aneex 5.9 Page 4 of 4 issues: spill prevention, control, and countermeasures; noise pollution; smoke emission control; remediation of contaminated areas; and training for BEL staff. Terms of reference are included in Annex 5.10. Strengthening of BEL 11. An environmental team will be created within BEL's Project Implementation Unit. In the short term, this team will ensure that all mitigation measures recommended in the EAs are incorporated into the final project design and bidding documents for the transmission lines, and that these are followed during project implementation. It will liase with government and non- governmental personnel regarding environmental issues. It will also be responsible for supervising and providing support for preparation by consultants of clean-up plans for existing diesel plants. In the long term, the presence of the team will enhance BEL's capability for developing and implementing environmentally sustainable projects, developing environmental policies, guidelines and standards for all of BEL's activities. It will also negotiate proposed regulations as they are developed by the GOB and ensure compliance by BEL once they are approved. The unit will be staffed with one natural resource management specialists and one BEL engineer, to be trained in industrial health and safety practices and procedures. Both will be trained in EIA assessment and monitoring. 12. An international consultant will be contracted to supervise final design of mitigation measures, tender documents, and the monitoring plan during the preconstruction and early construction phase. Monitoring of compliance with the EAP will be carried out by local consultants or NGOs. The supervisor of the environmental staff will report to the Project Coordinator. A training program for the environmental staff and for the local consultants/NGOs encharged with the environmental monitoring will be carried out during project implementation by the international consultant. TORs for contracting this services are included in Annex 5. 11. 13. To support the implementation of the submarine cable connection to Ambergris Cay, it is recommended that a small, ad-hoc, Environmental Advisory Committee be formed to advise on mitigation and monitoring plans, on their implementation, as well as on suitable courses of action in face of unforeseen circumstances which may arise during project implementation. It is recommended that this committee include the following persons: the Project Coordinator, a representative from the Ministry of the Environment/Department of Environment, a representative from the National Social and Economic Council, a representative from the Coastal Zone Management Committee, and a representative from the town of San Pedro, an a marine resource/ETA specialist (preferably an international consultant). The commmittee should meet regularly through project implementation. The organization chart in Annex 5.6 illustrates the relationship between the environmental unit, BEL's organization, the Ambergris Cay Advisory Committee and the Project Implementation Unit. - 84 - Annex 5.1 Page 1 of 10 BELIZE SECOND POWER DEVELOPMENT PROJECT ENVIRONMENTAL MITIGATION AT BELIZE ELECTRICITY LIMITED'S POWER PLANTS Terms of Reference Introduction 1. The Development Plan of the Government of Belize for 1990-1994 sets out an ambitious energy policy aiming at reducing Belize's dependency on imported energy, increase the efficiency of energy use, provide electricity to rural communities, and secure a reliable and sustainable electricity supply across the country. The Government's strategy in the power sector for implementing these objectives include rural electrification, construction of a new hydroelectric plant, expansion of electricity imports from Mexico, and construction of new electrical transmission lines. This strategy will alter some of the current functions of the power plants operated by Belize Electricity Limited (BEL). 2. Consistent with BEL's environmental stewardship, BEL is seeking the services of a qualified consulting firm to conduct various environmental activities associated with seven of its power plants. These are the Belize City, Ladyville, Belmopan, San Pedro, Dangriga, Corozal, and Orange Walk Power Plants (please see Attachment A for background information about these power plants). With the implementation of the Government strategy in the power sector, the Belize City, Ladyville, and Belmopan Power Plants are expected to provide peak-load power; and the remaining four power plants are expected to supply stand-by power. 3. This Terms of Reference gives the background, scope of services, and description of deliverables expected from this project, which will consist of the following five tasks: * Task 1 - Spill Prevention, Control, and Countermeasure (SPCC) Plan * Task 2 - Noise Pollution Control * Task 3 - Mitigation of Smoke Emissions * Task 4 - Remedial Investigation and Planning for Decontamination of soil * Task 5 - Environmental Training of the BEL Employees - 85 - AMnex 510 Page 2 of 10 TASK 1 - Spill Prevention, Control, and Countermeasure (SPCC) Plan: 4. Backgound: A preliminary survey of seven BEL power plants was conducted to identify the environmental issues associated with spill prevention and control, and waste management. This survey has revealed a need for upgrading the existing facilities and improve the current operating procedures. More specifically, the areas listed below were identified for improvement Belize Power Plant: (i) Vehicle filling station, (ii) tank-truck unloading station, (iii) vehicle maintenance station, (iv) fuel storage, (v) lube oil storage, (vi) waste oil handling, and (vii) drum storage. Ladyville Power Plant: (i) Tank-truck unloading station, (ii) fuel storage, (iii) waste oil handling, and (iv) drum storage. Belmopan Power Plant: (i) Tank-truck unloading station, (ii) fuel storage, (iii) waste oil handling, and (iv) wastewater discharge. San Pedro Power Plant: (i) Fuel storage, (ii) lube oil storage, and (iii) waste oil handling. Dangriga Power Plant: (i) Fuel storage, (ii) waste oil handling, and (iii) parts cleaning. Corozal Power Plant: Fuel storage. Orange Walk Power Plant: Fuel storage. 5. S e O. f Work: The consultant will conduct a thorough survey of the seven power plants to evaluate: (i) designs of existing structures and (ii) current operating procedures that may cause environmental discharges (e.g., spills). The scope of this investigation will not be limited to the issues identified in the preliminary survey, but will be more comprehensive. Based on this investigation, the consultant will identify specific areas where environmental discharges occur and prescribe measures for preventing, controlling, and countermeasuring these discharges. These measures may include improvements of existing designs (e.g., paving of an earthen area with concrete), new designs (e.g., diking), or changes in operating procedures (e.g., improved waste drum handling procedures). The consultant will estimate costs associated with each recommended measure. For measures which involve improved or new designs, the consultant will provide all engineering designs for construction. These designs will be compatible with the international standards. 6. The consultant will prepare a SPCC Plan for each of the seven power plants with emphasis given to the Belize City, Ladyville, Belmopan, and San Pedro Power Plants. The SPCC Plan will prescribe measures to prevent and control spills, including designs - 86 - Annex 5.10 Page 3 of 10 (e.g., design of drum storage area) and operating procedures (e.g., procedures for loading and unloading of tanks), identification of responsible facility personnel, inspection, and housekeeping. The consultant will also prescribe spill countermeasures, including initial response procedures, waste containment and disposal, safety considerations, personnel training, notification sequence, arrangement with local authorities, and emergency procedures. 7. Deliverables: The consultant will prepare and submit the following deliverables to BEL. Each deliverable will be finalized by the consultant following review and comment by BEL. a. The consultant will prepare a report, which includes detailed descriptions of proposed measures for spill prevention and control, and waste management; and engineering designs of measures which involve structural changes or new structures along with costs of these measures. The report will also include information on the existing designs or procedures as a reference. b. The consultant will prepare a SPCC Plan, which includes all the necessary design criteria and operating procedures for preventing spills, and additional procedures to control and countermeasure spills. This Plan will be BEL's base document for the training of its facility personnel in SPCC procedures. The Plan will also be used as a practical document for prevention, control, and countermeasure of spills at BEL's power plants. 8. Schedule: The schedule for Task I will be as follows: - Submittal of the Draft Report: 2.0 months after project start - Review Period by BEL: 0.5 month - Submittal of the Final Report: 3.0 months after project start - Submittal of Draft SPCC Plan: 4.5 months after project start - Review Period by BEL: 0.5 month - Submittal of Final SPCC Plan: 5.0 months after project start. TASK 2 - Noise Pollution Control: 9. Background: Noise levels at work place have been a source of complaints by some BEL employees. In addition, BEL received complaints on the noise levels emanating from a few BEL power plants by some members of the local community. For example, noise levels from the Belize Power Plant have been a source of complaints by the newer members of the community. Near the Belmopan Plant, some complaints have been received from a furniture manufacturing facility (located about 50 meters from the plant; there are no residences nearby the plant area). However, no complaints have been received for the San Pedro Power Plant, although this plant is located in a residential area. To-date, no noise monitoring has been conducted for any of the BEL plants. - 87 - Annex 5.1 Page 4 of 10 10. Scope of Work: The consultant will monitor the noise levels within the plant sites (i.e., work places) of the Belize City, Ladyville, and Belmopan Power Plants. In addition, the consultant will monitor day time and night time noise levels at receptor points near the Belize City, Belmopan, and San Pedro Power Plants. If the noise levels are found to be above the World Bank guidelines or other international standards, then the consultant will identify mitigatory measures through an alternatives evaluation study, and provide costs of these measures. Selection of these measures should consider BEL's future business plans (e.g., the San Pedro Power Plant is to provide only stand-by power). 11. Deliverables: The consultant will prepare and submit to BEL a report which will contain the results of the noise monitoring studies (along with the description of the methodology, equipment, and data), evaluation of alternatives, and recommendations for mitigatory measures and costs. The report will also include the backup information for all cost estimates. 12. Schedule: The consultant will submit to BEL the draft report for Task 2 two months after start of the project. The consultant will finalize the draft report two weeks after receipt of BEL's comments. TASK 3 - Mitigation of Smoke Emissions: 13. Background: Flue gases from the Belize City Power Plant are emitted to the atmosphere about 10 meters above the ground level through a stack located south of the Power Station. Smoke in these emissions is visible by a naked eye and is a source of complaints by community members located about 50 meters southeast of the plant. 14. Scope of Work: The consultant will monitor smoke emissions from the Belize Power Plant at discharge and receptor locations. If the levels are found above the international standards, alternative mitigatory measures should be evaluated (with respect to such criteria as effectiveness, implementability, and costs) and recommended solutions should be prescribed. 15. Deliverables: The consultant will prepare and submit to BEL a report which will contain the results of the smoke emission monitoring studies (along with the description of the methodology, equipment, and data), evaluation of alternatives, and recommendations for mitigatory measures. 16. Schedule: The consultant will submit to BEL the draft report for Task 3 two months after start of the project. The consultant will finalize the draft report two weeks after receipt of BEL's comments. - 88 - Annex 5.10 Page 5 of 10 TASK 4 - Remedial Investigation and Planning for Decontamination: 17. Background: Contamination of soil by petroleum products has been identified at the Belize City, Ladyville, Belmopan, San Pedro, and Dangriga Power Plants. At the Belize Power Plant, soil contamination can be observed at: (i) the vehicle maintenance area and discharge canals from this area, and (ii) the waste oil storage area (which is saturated with oil). At the Ladyville Power Plant, the water phase from an oil-water separation well discharges to an area, where it accumulates oily materials, and possibly drains to the Belize River. In addition, some soil contamination can be observed by the fuel and drum storage areas. At the Belmopan Power Plant, about 60 m2 of an adjacent lot (which is also owned by BEL) to the plant property are contaminated with oily wastes from the plant. As it rains, this contamination drains to the creek. In addition, soil contamination can be observed at the waste oil storage area, which contains about 20 waste oil drums. Oil from these spills wash away after rain storms and drain into a creek. At the San Pedro Power Plant, about 15 in2 of soil are contaminated in the waste storage area. At the Dangriga Power Plant, the fuel storage area (which has a gravel base) is contaminated with oil. In addition, about 40 rn2 area of the adjacent lot west of the plant site (which is also owned by BEL) is contaminated by oil. Furthermore, about 120 m2 of the parts cleaning area of the Dangriga Power Plant and about 50 m2 area of the adjacent lot are contaminated with oil. 18. In addition, for many years, the portion of the Belize River Creek and associated lagoon southeast of the Belize City Power Plant site have been used for the disposal of various plant waste materials, including waste oils, used filters, and empty drums. A portion of this contaminated area south of the Belize Refrigeration Limited, covering an area of about 2,000 m2, is filled with dirt at a depth of 1.2 m. This area is separated from the Belize River Creek and lagoon areas by means of wooden pilings, although this separation may not prevent flow of oil from the fill area to the adjacent surface waters. The remaining portion of the surface waters southeast of the plant is heavily contaminated (a very rough estimate of this area is 6,000 rn2, with an average depth of about 1.2 m). This contamination is likely to cause health risk to the members of the community, especially to those who live in the surrounding areas of the lagoon. 19. Scope of Work: The consultant will prepare remedial plans for the decontamination of soils at the Belize City, Ladyville, Belmopan Power, San Pedro, and Dangriga Power Plants. In addition, the consultant will prepare remedial plans for the mitigation of the contamination caused by the Belize City Power Plant to the surrounding surface water bodies, soils and sediments. Furthermore, the consultant will investigate the potential of seepage from the Belize City Power Plant's fill area to the surface water bodies; and if found to be the case, the consultant will prepare a mitigation plan through evaluation of alternative measures. 20. The consultant will first prepare a Work Plan, which will describe the existing conditions, a statement of objectives, and plans for the field investigation efforts. The Work Plan will include a list of analyses to be performed and a description of the sampling, sample preservation, - 89 - Annex 5.10 Page 6 of 10 and analytical techniques to be used. The Work Plan will also include health and safety procedure to be followed by team personnel involved in field investigations 21. During field investigations, the consultant will obtain representative samples of soil, water, and sediments for physical examination and chemical analyses necessary to fully characterize the extent of contamination. Sampling and analyses will be performed using techniques outlined in the Work Plan by trained personnel. 22. The consultant, in cooperation with BEL, will develop the cleanup criteria for the contaminated areas. These criteria will be compatible with international standards. The consultant will then identify and screen remedial technologies based on the following criteria: a. Effectiveness: How effective is the selected technology in reducing the pollutant concentrations to the target levels? Has the technology been commercially used at other similar sites? Are there adverse environmental impacts associated with the technology? b. Implementability: Is the remedial technology easily implementable in Belize? c. Costs: Is the remedial technology relatively inexpensive? 23. The consultant will prepare remedial plans for the remediation of the contaminated surface water bodies, soils, and sediments; and, if necessary, for the fill area as well. The remedial plans should include inter alia: extent of contamination at the sites, identification and screening of remedial technologies, and the recommended remedial measures along with their costs and implementation schedules. The remedial plans will include Executive Summaries and will be appended with supporting information such as the Work Plan and field data. The remedial plan should also prescribe the recommended disposal method for wastes generated from remedial measures. 24 Deliverables: The consultant will prepare and submit the following deliverables to BEL. Each deliverable will be finalized by the consultant following review and comment by BEL: a. Work Plan b. Field Investigations Report(s). These reports will include results of field investigations at the Belize City, Ladyville, and Belmopan Power Plants as well as the Belize River Creek and associated lagoon and the fill area by the Belize City Power Plant. The reports will include the background, environmental setting, methodology, extent of contamination, contaminant characteristics, and potential receptors. Supporting documentation such as analytical results, maps, drawings, etc. will be appended as appropriate. - 90 - Annex 5.10 Page 7 of 10 c. Remedial Plans: For each contaminated area, the consultant will prepare a remedial plan. Each plan will include remedial objectives, identification and screening of remedial technologies, and a detailed remedial plan. The initial section of each plan will be an Executive Summary, which outlines the remedial objectives and highlights the conclusions. Each plan will also include descriptions, designs, environmental impacts, monitoring requirements, implementation schedules, and cost estimates for the recommended remedial measures, including transportation and disposal requirements and costs. Supporting documentation such as bases for cost estimates, preliminary equipment lists, and technical support documentation will be appended as appropriate. 25. Schedule: The schedule for Task 4 will be as follows: a. The consultant will submit the Work Plan for Task 4 to BEL within two weeks after start of the project. The Work Plan will be finalized within one week after receipt of BEL's comments. b. The consultant will submit to BEL all Field Investigation Reports within four months after start of the project. The Reports will be finalized within two weeks after receipt of BEL's comments. c. The consultant will submit to BEL all Remedial Plans within six months after start of the project. The Plans will be finalized within two weeks after receipt of BEL's comments. TASK 5 - Environmental Training of BEL Employees: 26. Background: To-date no environmental training has been provided to the BEL employees. However, along with the environmental mitigatory measures to be implemented under this project, a new phase will be initiated at BEL. These mitigatory measures will also be complemented with a training program aimed at protecting the health and safety of BEL employees and the environment. 27. Scope of Work: The consultant will train the BEL employees in the areas of SPCC and industrial hygiene. The consultant will use the SPCC Plan as the base material for the SPCC training. With respect to industrial hygiene, the consultant will conduct a survey of the BEL power plants to review the existing work conditions (e.g., temperature, noise levels, availability of industrial hygiene facilities) and industrial hygiene procedures (e.g., use of personal protection equipment by BEL employees), identify deficiencies, and prescribe solutions. The consultant will include these findings in a report, which he will discuss with the BEL management. Subsequently, the consultant will design the training program, which he will discuss again with - 91 - Annex 5.10 Page 8 of 10 the BEL management. The participants to this program will include BEL personnel from BEL headquarters in Belize City and managers and operators from various BEL power plants. The consultant will deliver the training program in Belize. 28. Deliverables: The following deliverables are to be provided to BEL by the consultant: a. The Industrial Hygiene Report that the consultant will discuss with the BEL management. b. The Outline of the Training Program, which the consultant will discuss with the BEL management. C. Delivery of the Training Program to the selected BEL employees. Each participant will receive a hard copy of the training material and a certificate for the Training Program. 29. Schedule: The schedule for Task 5 will be as follows: a. The consultant will submit to BEL the Industrial Hygiene Report within two months after start of the project. The Report will be finalized within two weeks after receipt of BEL's comments. b. The Outline of the Training Program will be submitted to BEL within 5.5 months after start of the project. The Outline will be finalized within one week of this submittal through discussions with BEL representatives. C. The training program will be delivered to the selected BEL employees within 6.5 months after start of the project. Duration of the training program is expected to be two days. SUBMISSION OF PROPOSAL 30. The Consultant should submit a proposal stating his/her rates, all applicable conditions, and a brief description of the work steps and proposed methodology to fulfill the terms of reference. The proposal should contain information on the Consultant's professional experience including university degrees and dates for each professional member participating in the study, and experience in similar studies together with a summary of their objectives, scope and results. The economic proposal and the consultants' stated experience in similar studies will be the basis of negotiation between the BEL and the Consultant. - 92 - Annex 5.1 Page 9 of 10 Attachment I POWER GENERATING STATIONS OF BEL 1. Belize City Power Plant: The Belize City Power Plant, commissioned in 1957, is located in a residential area near Belize City, by the Belize River Creek and associated lagoon. The Power Plant has a total of 14.45 MW generating capacity, of which 10.45 MW is provided by four base-load diesel engines and 4.05 MW by three stand-by diesel engines. The power plant receives approximately 340,000 gallons/month of diesel fuel oil imported by tank- trucks from Mexico. The fuel is first transferred to three above-ground storage tanks, and then to either the Belize City Power Plant or the barges for shipment to the San Pedro Power Plant or Caye Caulker Power Plant, both located at the cayes. The fuel oil has the following characteristics: Sulfur: 0.48 % (by weight) Specific Gravity: 0.843 Ash: 0.0 % (by weight) Heating Value: Value not available. 2. Ladyville Power Plant: The Ladyville Power Plant, commissioned in the early 1970s, is located near Ladyville. The nearest facility is the Belize International Airport, which is approximately 300 m away. The Belize River flows close to the Power Plant. The Power Plant has a total of 6.1 MW generating capacity provided by two diesel engines. The Plant uses about 170,000 gallons/month of diesel oil imported by truck from Mexico. 3. Belmopan Power Plant: The Belmopan Power Plant, located in Belmopan, was commissioned in 1972 and expanded first in 1977 and then in March 1993. The nearest facility to the Power Plant, a furniture manufacturer, is located about 50 m. away. A creek flows near the Power Plant. The Power Plant has a total of 5.98 MW generating capacity, of which 4.90 MW is provided by six base-load diesel engines and 1.08 MW by a stand-by diesel engine. The Power uses about 90,000 gallons/month of diesel oil imported by truck from Mexico. 4. San Pedro Power Plant: The San Pedro Power Plant, commissioned in 1978, is located in a highly residential area of the City of San Pedro at Ambergris Caye. The Power Plant has a total of 3.2 MW generating capacity provided by four diesel engines. The Power Plant uses about 54,000 gallons/month of diesel oil imported by truck from Mexico and transported to Ambergris Caye by barge from Belize City. The fuel, unloaded at the barge terminal at a rate of 6 to 10 hours, is conveyed to the San Pedro Power Plant by pipeline. 5. Dangriga Power Plant: The Dangriga Power Plant, commissioned in 1965, is located near Dangriga. The nearest resident to the Power Plant is located about 40 m away. There are no nearby surface waters. The Power Plant has a total of 2.3 MW generating capacity, of which 1.2 MW is provided by 5 base-load diesel engines and 1.1 MW by a stand-by diesel engine. The Power Plant uses about 39,000 gallons/month of diesel oil imported by truck from Mexico. - 93 - Annex 5.10 Page 10 of 10 6. Corozal Power Plant: The Corozal Power Plant, located near Corozal, was commissioned in early 1960s and operated to provide base-load power until 1982, when the import of electricity from Mexico was initiated. Since 1982, the power plant has been operating to provide standby power (about once or twice a month, each time for about 30 minutes). In addition, the diesel engines are operated for about 15 minutes to ensure their reliability. The Corozal Power Plant has a total generating capacity of 1.2 MW (total rated capacity is 1.42 MW) with its two identical diesel engines. The Power Plant uses about 1,000 gallons/year of diesel oil imported by truck from Mexico. 7. Orange Walk Power Plant: The Orange Walk Power Plant, located near Orange Walk, was commissioned in 1967 and operated to provide base-load power until June 1991. Since June 1991, the power plant has been operating to provide standby power (about once or twice a month, each time for about 30 minutes). In addition, the diesel engines are operated for about 15 minutes to ensure their reliability. The Orange Walk Power Plant has a total generating capacity of 2.6 MW with its four identical diesel engines. The Power Plant uses about 1,000 gallons/year of diesel oil imported by truck from Mexico. - 94 - Annex 5. 11 Page 1 of 4 BELIZE SECOND POWER DEVELOPMENT PROJECT MONITORING AND EVALUATION OF ENVIRONMENTAL IMPACTS Terms of Reference Background 1. The Second Power Development Project, to be undertaken by Belize Electricity Limited (BEL) with financing from the World Bank, the Caribbean Development Bank (CDB), and the Commonwealth Developmnent Corporation (CDC), comprises a 1 15-kV interconnection from the Mexican border to Belize City (85.5 miles), and 35-kV lines to Dangriga (35 miles) and to San Pedro, on Ambergris Caye (22 miles). The latter transmission line will be composed of three segments: a 5-mile overhead section, from Maskall on the Mexican interconnection to the coast; a 13.3-mile submarine crossing from the mainland to Ambergris Caye; and a 3.5-mile overhead section, from the west coast of Ambergris to the town of San Pedro. (See figure.) 2. During project preparation, environmental assessments of the interconnection to Mexico and of the tap to Ambergris Caye were carried out. The studies concluded that, with proper precautions in routing and construction, environmental impact should be minimal. During the detailed engineering phase, two additional environmental planning activities will take place: (a) a study financed by CDB will provide baseline data and will propose a monitoring and evaluation plan for the area of influence of the Ambergris submarine cable; and (b) the Environmental Unit to be created by BEL will be responsible for preparing a Monitoring and Evaluation (M&E) Plan for the project, comprising: (i) a Project Implementation Manual (based on environmental safeguards and mitigation measures recommended in the EAs); and (ii) a Monitoring and Evaluation Manual providing guidelines for routine inspection of project sites and of contractors' compliance with the project implementation manual. Objective Annex 5. 11 - 95 - Annex 5.11 Page 2 of 4 Objective 3. BEL is seeking the services of qualified consultants to be employed during the pre- construction and construction phases to undertake the following tasks: (a) help the Environmental Unit (EU) prepare the Project Implementation and the M&E manuals for the project components not covered by the CDB study; (b) train the EU to carry out M&E of construction of the Mexican interconnection and the Dangriga and Ambergris lines; (c) assist BEL in ensuring due consideration of environmental issues during preparation of detailed engineering studies and in supervising and carrying out M&E activities; and (d) prepare a post-construction environmental impact report. Basic Information and Studies 4. The Environmental Assessments carried out for the Mexican Inconnection (Canadian Power International/Monenco/Agra) and the Ambergris Caye Electricity Supply (Danish Power Consultants/Elsamprojekt A/S) constitute the basic references for the Monitoring and Evaluation Plan to be developed under this contract. Other references are the technical and economic analyses of the Power II Project, the environmental legislation of Belize and environmental guidelines of the financing agencies. Scope of Work Task 1: Preparation of the Monitoring and Evaluation Plan 5. The consultants will prepare a Monitoring and Evaluation (M&E) Plan, to be applied during the construction and operation phases of the Power II Project to all transmission line segments, including the Dangriga tap. The plan should be based on recommendations of the environmental assessments of the Mexican Interconnection and of the supply alternatives for Ambergris. (It should also incorporate or complement the proposed M&E plan for the Ambergris channel, to be financed by CDB.) The plan should comprise: (a) a Project Implementation Manual, consolidating and complementing, where appropriate, the recommendations contained in the EAs for environmental safeguarding and protection of natural environments, population settlements, and cultural heritage, to be carried out by contractors and operations and maintenance teams; and - 96 - Annex 5. 11 Page 3 of 4 (b) an M&E Manual, comprising guidelines and detailed instructions for the routine M&E activities to be carried out by BEL during the construction and operation phases, including critical issues and locations to be inspected; frequency of site inspections; appropriate indicators against which to measure compliance; and reporting. 6. These manuals should provide clear, objective instructions for project implementation and operation. The schedule for preparation of the Project Implementation Manual should be as follows: draft 1 month after project start review 0.5 month final report 2 months after project start 7. Preparation of Monitoring and Evaluation Plan should be as follows: draft 3 months after project start review 0.5 month final report 4 months after project start Task 2: Training of BEL's Environmental Unit 8. The consultants will prepare and carry out a small (two-week) training program for BEL's Environmental Unit and for staff in other units involved in design, construction and operation of the Power II transmission system. This program should cover two modules: (a) For a wider public, including the above-mentioned staff and possibly staff from the Ministry of the Environment and other agencies of the Government of Belize, an introduction and overview of: (i) the role of EA during the project cycle (emphasizing issues pertinent to the types of facilities typical of BEL's system); (ii) the Power II Project: Environmental impacts foreseen and proposed mitigation measures; and (iii) the M&E program for the land-based and submarine segments. (b) For staff to be directly involved in project implementation, the first module would be followed by instruction on data collection, use of instruments, preparation of reports. This module should be integrated to training proposed to prepare BEL staff to conduct M&E for the Ambergris crossing. - 97 - Annex 5.11 Page 4 of 4 Task 3: Technical assistance to BEL during the detailed engineering and construction phases 9. During the detailed engineering phase, consultants will assist BEL, as needed, in reviewing engineering designs and tender documents to ensure due incorporation of environmental safeguards and mitigation measures, especially with respect to final routing of the lines. During construction, consultants will assist BEL in all issues pertaining to environmental M&E of the Power II Project. Periodic visits and project reviews should be carried out by consultants every three months. Task 4: Preparation of a post-construction environmental impact report 10. Upon conclusion of the project, consultants will prepare a brief report informing the environmental impacts of the project 'as built", the effectiveness of the mitigation measures which were carried out, and the residual impacts observed. The schedule for this task would be as follows draft 1 month after end of construction review 0.5 month final report 2 months after end construction Submission of proposal 11. The consultant should submit a proposal comprising a brief description of the methodology proposed to fulfill each task of the terms of reference. Rates and professional qualifications of all proposed participants should be presented. - 98 - Annex 5.12 BELIZE SECOND POWER DEVELOPMENT PROJECT Estimated Loan Disbursement Schedule Assumptions Loan Signing: July 1994 Effective Date: September 1994 Closing Date: December 1997 Disbursement Cumulative Disbursements IBRD Fiscal Year During Semester at End of Semester and Semester US$ Million US$ Million 1995 December 31, 1994 1.15 * 1.15 10 June 30, 1995 1.15 2.30 20 1996 December 31, 1995 1.72 4.02 35 June 30, 1996 2.30 6.32 55 1997 December 31, 1996 2.30 8.62 75 June 30, 1997 2.30 10.92 95 1998 December 31, 1997 0.58 11.50 100 * Special Account (3 months of estimated expenditures) and reimbursement of Retroactive Financing (US$0.5 million) Annex 6.1 BELIZE SECOND POWER DEVELOPMENT PROJECT BEL's 10-Year Sales and Generation Forecast and Assumptions ......- -- - ACTUAL -- ----- --------- ------ | ESTIMATED --------- ----------------- --------- ------------- --- FORECAST -. -- ---- . - . . ... |YEAR ENDEDMARCH31 1990 1991 1992 1993 | 1994 1995 199S 1997 1998 1999 2000 2001 2002 2(51 | 2004 GENERATION (Gwh) BEL Net Generation 95,334 108,008 109.437 121,167 132,570 140,888 54,529 14,b51 15,676 18,642 17,748 18.821 19,777 21 154 38 856 MOllepoi Puichases (including Transrnisson Lo ses) 0 0 9880 103.80 104.700 105,900 1068800 107,800 108,300 108 800 109.0UO Meucan Purchases (including ransmiss,on los es) 15.160 18.179 22,000 25.000 27,000 73.400 80.500 88,500 97,000 106,500 115.800 125.600 105.510 Total MWH Sent Out 95,334 106,008 124,597 139,346 154.870 165888 18029 191.651 200,876 211,042 221.548 232,721 243.877 255.554 253,366 SALES (MWH) Cornnmercal & Indus.tnal 48.381 53.491 80.580 66403 75.132 82,520 91.331 97,014 102.641 108,090 113,921 120.329 126.453 132 89B 139266i Averag CAl Tanf (BZc/Kwh) Residental 29,212 33.942 39.429 44928 49,635 53.026 58,306 59,649 62.852 86,049 69.198 72.377 75.813 79330 A3.193 Average t9es Tarif (1ZC/KWh) Sheet Lghting 3.738 5.383 6.747 8494 10,396 11,410 11.918 12.374 12.764 13.178 13.537 13.878 14.240 14606 15,306 Average St L.ght Tarffh (8ZdlKwh) Total Sales 61,311 92,816 106,756 119,823 135,163 146,956 159.553 169,037 176.277 187,314 196,656 206,585 213.506 226,894 237,765 % Transmission Losses 1.50% 2.00% 200% 2 00% 200% 2 00% 2 00% 2 00% 2 00% Transmission Losses 0 2,072 2.094 2,118 2,138 2,152 2,186 2.176 2.500 Dislnb.bon Losses 14.023 15.192 17.841 19.523 19.708 18,913 19.176 20.543 20.504 21,610 22,756 23.985 25.205 26,484 13,100 Is Dsntbubon Losses 14 71% 1407% 1432% 1401% 1272% 11 40% 1073% 1092% 1040% 1043% 1046% 1050% 1053% 1056% 522% Dernaid 16 17 23 26 29 31 33 34 36 38 39 41 43 46 48 lio df Cuslonmers Residental 21,726 23,887 26.600 29.193 34.732 37,917 41,153 44.484 47,834 51.230 54.679 58,232 61.944 65.770 68,921 No of Customers. Total 26,023 28.560 31.806 34.903 39,492 42.797 46,168 49.634 53.119 56,650 60,234 83.922 67,769 71 730 75,167 Increase mn Custoners 3.07 4,589 3,305 3,371 3,467 3,485 3,532 3,583 3.689 3.847 3.960 3.437 Fuel Requirements 9,973 10,573 4,093 1,100 1.177 1,249 1,332 1,398 1,484 1.588 2.916 Fuel Escalation 250% 2 50% 3 00% 3 00% 300% 3 00% 3 00% 3 00% 3 00% 3 00% 300% Fuel Price 1 59 1 63 1 87 1 72 1.77 1 83 1 M 1 94 1 99 2 05 2 12 Desel O&M 2.344 2.654 3,935 3,098 3.395 3,700 1,432 385 412 437 468 489 519 556 1 022 Desel O&M pef KWH GENERATED 0 0246 0 0246 0 0360 0 0255 0 0255 0,0255 0.0255 0 0255 0.0255 0 0255 0 0255 00255 0 0255 0 0255 0 0255 TADOLM 1.530 1,743 1.243 1,287 1,431 1,575 1,859 2,033 2,190 2,368 2.553 2,757 2.970 3,199 3.295 T&D O&MPERKWHSOLD 0 0188 00188 00116 00107 00106 00107 00117 00120 00123 00126 00130 00133 00137 00141 00139 INFLATION RATE 2 80% 2 B0 2 80% 2.80% 2 80% 2 80% 2 80% 2 80% 2 8% 2 80% CumnubatintblionfbtacIor 1 10280 1.0568 10864 1 1168 11481 1 1802 12133 12472 12821 13180 Hydro Equsranl Pnce per Kwh at purchase point 0.2144 02137 0.2118 0.2178 02158 0.2141 02128 02115 0 1942 Mevan Prce pei KWH at purchase pont 0 1121 01298 0 128 0 1322 0.1359 00952 0 1007 01049 0 1091 01126 0 1162 0 1203 0 1234 Diesel Fuel and OAM Cost per Kwh 0180 01715 01587 01485 01515 0 1554 01593 0.1633 0.1674 01716 0.1780 01805 01851 01899 01948 Mdblcion BasseEnergy Purchases 114000 114000 114,000 114,000 114.000 114.000 114.000 114,000 114.000 Motlejon Poner Actually Taken at Purchase Pt fi dacochea Report) 98,680 100.780 103,870 105,150 108,260 107.220 108,000 108.610 108,610 MoflejOn Power Paid fr and not taken 15,320 13,220 10.130 8.850 7,740 6.,780 8,000 5390 5,390 Contuactbd Energy Price SUS 0.0875 0 0875 00875 0.0875 0 0875 0 08B75 0 0875 0 0875 0 0875 Murcan Purchases At Purchase Pt. (lndacochea epol) 27,000 54.010 868.200 71,760 78.700 85.190 91,38 0 97.700 103.400 EuPecled value US57KWH Ior Mexacn Power bet re inlabon (ndacochea Report) 0 0438 0 0451 0 0457 0.0482 0 0464 0 0468 0 0469 0 0468 Annex 6.2 BELIZE SECOND POWER DEVELOPMENT PROJECT BEL's 10-Year Investment Plan A ,, ,_ CTUAL -------- -------- ESTItMTED |------------ -------------- -- ----- ----- KAEC.6ST ------- ---- --- --------------- YEAR E4DED RH 31 1990 1991 1992 1003 1094 1095 100 1997 1998 1ss 2000 2001 2002 -oc A No a General Plant Buildings 111 577 82 746 20 50 100 50 100 50 10 50 oo '1 '00 kllornlalion & 04f. Systems 33 300 500 3m 150 100 50 100 50 IOU 50 Vehicles 352 42 942 229 0 25 25 25 25 25 25 25 25 275 Othe 172 203 311 355 503 25 25 25 25 25 25 25 25 ?5 ?, Sub4otal 635 822 1.335 1330 736 40 65 400 300 200 200 200 20 2700 GENERATION P lit Qkukdn) 0 0 0 50 50 50 50 50 50 50 50 50 50 Gen"ng Sets 3.000 6.407 875 law Major Spare Pas 1.707 0 8.087 0 0 50 50 50 50 50 50 so 50 -A) so Equpment, Tools & Vehicls 262 50 100 50 100 50 100 50 100 so 100 Sub-total 1707 3mo 12564 8175 2082 150 200 150 200 150 20D 150 2¶5 2o00 TRANSIUSSION POWER I PROJECT 4.e51 4.136 1.873 3.363 0 0 0 0 0 0 POWER U PROJECT 0 8m8D 32.8ea 10.922 2.263 Be Compoet 646 1.106 732 lie USS1. 1tM yesnt In Mexico 733 733 733 34.5 & 22 Kv Line Substons Sln Pedro Connection ng h C4fw O er 34.5 & 22 KV Wm & Subs 4033 613 7132 0 100 994 i6o 5s3 556 72 644 668 732 1.262 1 262 Equmnt. Tools & Vehicles 0 220 220 240 240 270 270 270 345 345 345 Inteest OuiwigC"On uct 973 1.556 342 0 746 2.108 3,510 4 0 0 0 0 o_ 0 Sub- TotaI 0,857 11,827 9.005 3.705 100 11,266 37.746 16.673 3.913 we 914 058 1.077 1,607 1,60. DISTRUTMOtN PflnY 642 524 468 724 6o0 424 506 367 460 514 495 497 s50 503 503 Seconda 1285 1047 036 1449 1213 840 1015 734 979 1028 on 05 1000 1006 1006 Custorre Connectons 642 524 468 724 6a6 424 s50 367 480 514 405 497 500 503 503 Equipment, Tools & Veiles 833 572 220 220 240 240 270 270 270 345 345 345 Sub - Total 25s0 2005 1672 3.730 2.997 1,018 2X250 1,709 2,197 2.326 2.249 2.250 2.345 2.357 2.357 OTHER 0 Tranwig & Tech. Ass. 0 0 0 100 1° 100 100 100 100 100 100 100 100 Enrgnen Se.ices 0 0 150 50 50 50 50 50 so 50 50 so so Environmental Miigation 0 0 50 so 50 50 50 50 50 Sudies 0 0 100 50 50 so so 50 50 50 50 so 50 Sub - Total 0 0 0 0 250 250 250 250 250 250 250 250 250 250 250 TOTAL 14768 17,743 24,776 9.840 .165 13.964 41,096 19,162 6.600 3,922 3,813 3.817 4.072 4.564 4,614 Annex 6.3 Page I of 6 BELIZE SECOND POWER DEVELOPMENT PROJECT BEL's 10-Year Financial Forecast - Balance Sheets ............. . ------- ACTUAL ... . .-ESTIMATED ----------- - - - --- -- -------- ------- ---...... FORECAST -.j-- -----.- ------- ............... |ASAT MARCH31 1990 1991 1992 1993 1994 1995 1998 1997 1998 1999 2000 2001 2002 2003 (Y14 ASSETS G,oss Plant 47,618 58,807 98.107 113,310 128.494 130.518 134.798 201,183 207,788 211.581 215.453 219.243 223,253 227.54l 2172!,9 Less Dep,aCtw.n 24,919 27.498 31.711 38.534 42.185 48.028 54,088 83.077 72,390 81,881 91.557 101,412 111,459 I21.7(61 132.169 Book Value 22,697 31.311 68,395 76.777 84,309 82,493 80,730 138,108 135,399 129,680 123,897 117,831 111,794 105.840 99.991 Work,n Ptogrrss 24.384 28.807 14.132 8.5687 1.549 11.508 48,323 1,122 1.377 1.528 1,446 1.474 1.539 1 809 1.809 NET FIXED ASSETS 47,081 60,118 80.527 85,344 85.858 94.001 129,053 139,228 136,775 131,208 125,343 119,305 113.332 107,649 'J1 8 ;9 GOODWILL 208 197 188 175 164 153 142 131 120 109 981 87 CURRENT ASSETS C.sh 2.335 2,873 1.930 911 2,963 48693 1.597 3.565 5,524 7.147 5,968 5,413 5.208 4.822 3681 Accounts ReCer"be 2,879 3.299 4,028 4.557 5,129 5.507 8,015 8.396 8,790 7,111 7,356 7.593 7,886 8.142 8.179 InuOntOI.es 12,059 12.915 11,362 10,278 9,736 9.238 8.736 8.238 7,736 8.333 8.976 9.650 10,374 11,163 12836 TOTAL CURRENT ASSETS 17.073 19,087 17,319 15,747 17,828 19,435 18.348 18.197 20,049 22.591 22.299 22,i57 23.448 24,127 24696 TOTAL ASSETS 64,154 79,205 97,848 101,296 103,882 113,622 145,578 157,589 156.977 153.938 147.773 142.082 138,889 131,874 126,563 LIABILITIES AND EQUITY CAPITAL AND RESERVE 48,261 51,811 60,225 ACCUMULATED SURPLUS (DEFICrM) (8.269) (5 930) (2,893) 4,805 8,995 13.316 14,904 18.571 18.941 19,641 18,710 18,017 17.362 18.798 16 285 REVALUATION RESERVE PREFERENCE SHARES 22,384 22,384 22,384 22,384 22,384 22,384 22,384 22,384 22,384 22.364 22,384 22,384 STiARE CAPITAL ORDINARY SHARE 13,860 13,860 13.880 13.860 13.860 13.860 13.860 13,860 13,860 13,860 13,860 13,860 CAPITAL CONTRIBUnTONS 839 1.756 2,731 3.706 4,850 5.971 7,129 8,328 9,569 10815 TOTAL EOUrIY 37,992 45,881 57,532 41,049 45,239 50,400 52,W5 57,546 58,951 60,735 60,925 61,390 81,934 62.810 63,344 LONG TERM DEBT 17.831 24,264 29.180 27,575 24.228 28,123 57,300 63,409 80,159 53,203 48,420 40.023 33.827 27,258 23,515 CONVERnBLE DEBENTURES 21,508 21,508 21.506 21,508 21,506 21,508 21.508 21,508 21,509 21,508 21,506 21 506 CURRENT LABILmES ACCOUNTS PAYABLE 5,306 4,284 5,244 4.223 4,961 5,471 6.602 8,420 8,679 7.092 7.412 7,749 8,108 8,501 8,575 CONSUMER DEPOSITS 1,521 1,862 2,230 2,739 3.099 3,358 3.623 3,895 4,188 4.448 4.727 5.018 5.318 5.829 5899 BANK OVERDRAFTS 747 910 209 CURRENT MATURInES OF L T D 957 2,003 3,452 4,205 4,851 4,783 3.041 4,813 5,513 8,955 6,783 8,396 8.398 8.368 3 743 TOTAL CURRENT LIABILInES 8,531 9.080 11,135 11,187 12,911 13,593 13,868 15,128 16,381 18,493 18,923 19,162 19,822 20,499 18,217 TOTAL LIABILITIES AND EQUITY 84;154 79,205 97,848 101,297 103.882 113,522 145,577 157,589 158,977 153,938 147,773 142.001 138.889 131,873 126,582 Annex 6.3 Page 2 of 6 BELIZE SECOND POWER DEVELOPMENT PROJECT BEL's 10-Year Financial Forecast - Income Statements ACTUAI- - -- ESTIMATED I - ----- -- -- - ------ - ------- ------------------ FORECAST ...........------.--.-------|- IYEAR ENDED MARCH31 1990 1991 1992 1993 1994 1995 199 1997 1998 1999 2000 2001 2002 GENERATION (Gwh) DEL Net Gene,.t,on 95.334 108,008 109.437 121,167 132.870 140,868 54.529 14,651 15,676 18.642 17.748 18.621 19.777 ?1 151 U 8W6 Motlejon PUchases 0 0 0 0 0 0 98.680 103.600 104,700 *05W0 108,800 107,6w 108,300 11,800) t19.000 Me--cn P.,cha-s 0 0 15.160 18,179 22,000 25,000 27.000 73,400 80,5G0 88,5C 97,000 106,500) 1 1 5, 125.600 05.510 TOtalGen.,.tOn and PU-oh-e (S-nt OI) 95,334 108,008 124,597 139,346 154,870 165,868 180.209 191,651 200,876 211,042 221,548 232,721 243.877 255 554 253,366 SALES (MWH) 81,456 93.095 106.978 119,823 135,163 146,956 159.553 169.037 178.277 187.314 195.858 206,585 216.506 2260894 237.765 Co-e-Ca & Indd.IntI 48,231 53.491 60.580 66.403 75,132 82.520 91.331 07.014 102.641 108,090 113.921 120.329 126453 132,698 139,266 Ave,ag. C4l Tw8l (BzclKWh) 41 41 41 41 .1 41 41 41 42 41 41 40 40 39 38 R..Sd.nt,al 29.357 34.221 39.651 44.926 49,635 53,026 58,306 59.649 62.852 66.049 69.1W8 72.377 75,813 79.390 83,193 A-er,ge Res T.,d1 (BZcfKlV4,) 3.4 33 34 34 34 34 34 34 35 34 34 33 33 33 31 Stest Lightung 3.738 5,383 8,747 8.494 10,396 11,410 11,916 12,374 12,784 13.178 13,537 13.878 14.240 14,606 15306 Ave,age St Lght T.,l4f (BZCIKWh) 41 41 41 41 41 41 41 41 42 41 41 40 40 3 0 38 A-e,.ge Tanf (aZc/Kwh) 33.67 33 35 3358 33 65 38 46 38 51 38 74 38 89 39 14 39.01 38 44 37 77 37 34 32 6. 35 35 Electricity Sates IN B2T Commer,rat & Indus-rIAI 19.628 21.931 24.838 27.225 30,804 33,833 37.618 40.110 42.709 44.832 46,551 48,304 50.174 52.077 52,313 ReS.denII3a 9.885 11.411 13.313 15.119 16.919 18,075 19.282 20.504 21,743 22.776 23,509 24,156 25.010 25,865 25,982 St,etI tghtrg 1.533 2.207 2,766 3.483 4.262 4.678 4.908 5.116 5.320 5,465 5,531 5,571 5,650 5.724 5.750 Other Revenue 343 1,514 1.016 2.413 1,499 839 917 975 1,035 1,084 1,121 1,157 1,199 1.241 1,247 TOTAL OPERATING REVENUE 31.589 37,063 41.933 48,239 53.485 57,426 62.724 66,705 70.80 74.157 76.713 79,189 82,033 84,907 85.291 OPERATING EXPENSES FUEL 13.480 15.872 13,431 14.894 16,741 18.192 7,253 2.007 2,212 2.419 2,657 2.871 3,141 3.461 6,547 SALARIES AND WAGES 6,682 7,369 7,826 9,973 10,561 11,353 11,353 11,671 11,W98 12.580 13,186 13.818 14,471 15,152 15859 OPERATIONS AND MAINTENANCE 3.874 4,397 5.178 4.383 4,089 5.275 3,292 2,418 2,602 2,803 3.019 3.248 3,489 3.755 4318 OTHER 2,579 3,559 4,379 3,975 3,942 4,052 4,052 4,166 4,282 4,402 4.526 4.652 4.783 4.917 5,054 ElectricIty Purchases MerCO 0 664 1,898 2,338 2,829 3.215 3,870 68985 8.109 9.287 10.578 11,991 13,461 15,105 13.017 Mole-Ion 0 0 0 0 0 0 21.161 22,139 22,174 23,066 23.053 23,032 23,022 23.006 21.164 Othe, DEPRECLATION 3.222 2,764 4,387 5,066 5,662 5,852 8,054 9,019 9.324 9,502 9,687 9,868 10,058 10.258 10,474 TOTAL OPERATING EXPENSES 29,837 34,625 38,880 40.629 43,824 47,940 58,835 58,405 80,701 84,059 68,705 89,475 72.422 75,853 78,433 NET INCOME BEFORE INTEREST 1,752 2,438 5,053 7,610 9,661 9,486 5,889 8,301 10.106 10.098 10,008 9,714 9,810 9,254 8.559 LESS INT CHARGED TO OPERATIONS (335) (161) (1,919) (2,320) (2,774) (2,341) (1,920) (1,534) (5,083) (4,755) (4,297) (3,713) (3,185) (2,873) (2.166) LESS INT ON CONVERTIBLE DEBENTURES 0 0 0 (537) (2.581) (2,581) (2,581) (2,581) (2.581) (2,581) (2,581) (2.581) (2.581) (2.581) (2,581) PLUS LNT ON SHORT TERM INVESTMENTS 141 62 103 52 50 237 375 128 285 587 717 767 723 707 876 NET INCOME BEFORE TAXES 1,558 2,339 3,237 4.805 4,356 4.801 1,784 4,314 2,727 3.349 3,846 4,188 4,568 4,706 4,787 IiCCIME TAX 0 0 0 0 166 480 176 647 545 837 1,154 1,256 1.599 1,647 1,676 NETINCOMEAFTERTAXES 1,558 2,339 3,237 4,805 4,190 4,321 1,588 3,667 2,182 2,512 2, 2,92 2,869 3,059 3,111 DVIDENDS 0 0 0 0 0 0 0 0 1,812 1,812 3,824 3,824 3,624 3,624 3.824 Eamrngs per Sher ,SaC Issued Sha,.5 18,122 0.27 0 23 0 24 0 09 0 20 012 0.14 0.15 016 016 017 0 17 Ean-s per Share FuIt DrIuled Fully DbAed 28,875 0.19 0.23 024 014 022 016 018 018 019 019 020 020 Drrdends Per share S000 S0.00 S000 S000 S0.00 5010 9010 $020 S020 S020 S020 S020 D-.dend Return o pat vtale 000% 0 00% 0 00% 0,00% 0 00% 5 00% 500% 10 D0% 1000% 10 00% 10 00% 10 OD% Annex 6.3 Page 3 of 6 BELIZE SECOND POWER DEVELOPMENT PROJECT BEL's 10-Year Financial Forecast - Statements of Cash Flows * ~~~~~~~ - I ~~~~~~~~~~ACTUAL - --------------| ESTIMATED I----------------------=---- .... ......... ..... ... ............ -- FOECS ------. -------- ----- - ---F R C S --------- ----------- - ---I -------- |YEARENDED MARCH 31 I 1990 1991 1992 1993 1994 1995 1998 1997 1998 1999 2000 2001 2002 2003 2004 Sources INTERNAL SOURCES NET INCOME BEFORE INTEREST 1.752 2.438 5,053 7,610 9,961 9,486 5,889 8.301 10.108 10,098 10,008 9.714 9.610 9.254 8.859 ADO DEPRECIATION 3,222 2764 4,367 5,068 5,682 5.852 6,054 9,019 9,324 9,502 9,687 9.898 10,056 10.258 10.474 Inte,est Irnome 141 82 103 52 50 237 375 128 285 587 717 767 723 707 876 LESSINCOMETAXES 0 0 0 0 166 480 176 647 545 837 1.154 1,256 1.599 1,647 1.76 LESS INT ON EXP BONDS 0 0 0 (537) (2,581) (2.581) (2.581) (2,581) (2,581) (2,581) (2.581) (2,581) (2.581) (2,581) (2.581) GROSSINTERNALCASHOENERATION 5,115 5,264 9,523 12,191 12,626 12,514 9,561 14,219 16.589 16,769 16,876 16,511 16,209 15,991 15,752 DEBT SERVICE 678 1,620 3,474 7,537 7,580 7,192 6.883 5.175 9,898 10,268 11,253 10,497 9.581 9.070 8,535 NET INTERNAL CASH OENERATION 4,437 3,644 8,049 4,854 5,046 5.322 2.878 9.044 68,693 0.501 5.423 0,014 8.828 0,921 7.217 BORROWINGS Powed I Poject 5.824 5.892 1,873 3,363 302 0 0 0 0 0 0 0 0 0 0 REP OF CHINA 0 3,000 0 0 0 0 0 0 0 0 0 0 0 0 0 ASHWORTH OVERSEAS LTD 0 0 6,497 0 0 0 0 0 0 0 0 0 0 0 0 POWER 2 PROJECT . IBRO (9,551) 0 0 0 0 5.500 9,688 5.473 2.263 0 (0) 0 0 0 (0) POWER 2 PROJECT CDB 0 12,781 2.189 0 POWER 2 PROJECT . CDC 3.180 5,229 2.035 0 POWER 2 PROJECT . EIB 0 5,122 1,224 0 OTHER 0 0 0 771 1,800 0 0 0 0 0 0 0 0 0 0 Government TOTAL BORROWINOS (3.727) 8,692 8,370 4,134 2,102 8,660 32,818 10.922 2.263 0 (0) 0 0 0 (0) CAPITAL CONTRBUTIONS 839 917 975 1,035 1.084 1.121 1,157 1,199 1,241 1,247 RURAL ELECTRIFICATION 3.165 5.950 5,899 DEBT SERVICING 0 1,542 2.715 TOTAL SOURCES 3.875 19,828 22.833 8.787 7,148 14,822 36,614 20.941 9.991 7.585 6.544 7,172 7.827 8.162 8,464 APPLICATIONS ConstOuc,on Requnfements Power I 4,851 4,136 1.873 3,383 302 BELIZE POWER 2 PROJECT 0 9,308 34,658 12,387 3,113 0 0 0 0 0 0 Genw.89on Tcansmiss-on Dlstnbuhon Othef 8.944 12,051 22,903 5.934 6,185 3,932 4,330 3.285 3,743 3.922 3,813 3,817 4,072 4.584 4 614 I D C - BELIZE POWER 2 PROJECT 973 1.556 0 342 748 2,108 3,510 4 0 0 0 0 0 0 TOTAL 14.768 17,743 24,778 9,639 6,185 13.984 41,098 19,182 8.880 3,922 3.813 3,817 4,072 4.5U4 4.814 40N-CASH WORKING CAPITAL (1,789) 1.994 (1,452) 167 (1,069) (892) (1,387) (209) (839) 227 287 285 336 360 1,387 Loss on Exchange tOTALAPPLICATIONS 12.979 19,737 23,324 9,806 5.096 13,092 39.709 18.973 8.221 4,149 4.100 4,102 4,408 4,924 5.981 NCREASE (DECREASE) IN CASH (1.019) 2,052 1,730 (3,096) 1.968 3,771 3.438 2,445 3.070 3,419 3.238 2,483 ASH AT BEGINNING 4.578 2.335 2.873 1,930 911 2.963 4.893 1,597 3.585 5,524 7,147 5,968 5,413 5,208 4,822 .ASH BelomeO,nndend% 2.335 2.873 1, 930 911 2,963 4,893 1.597 3.565 7,336 8,959 9.592 9,037 8.832 8,446 -7305 3ividends 0 0 0 0 0 1,812 1,812 3,824 3,624 83,624 3,24 3,624 :ASH AT END 2335 2873 1930 911 2963 4693 1597 3565 5524 7147 5968 5413 5208 4822 3681 - 104- Annex 6.3 Page 4 of 6 NOTES AND ASSUMPTIONS FOR FINANCIAL PROJECTIONS BALANCE SHEETS Fixed Assets Fixed assets are at cost less depreciation. Work in Progress Capital expenditures are included in fixed assets in operation as follows: (i) Fifty percent (50%) of transmission and distribution expenditures are capitalized in the year the expense is incurred and the remaining fifty percent inthe following year. (ii) Second Power Development Project expenditures are substantially capitalized in FY97. The final costs in FY98 are capitalized in that year. (iii) All other capital expenditures are capitalized in the year the expense is incurred. Accounts Receivable Accounts receivable are calculated at the equivalent of 35 days sales. Inventories As a consequence of the decline in power generation by BEL and the increase in power purchases, inventories are assumed to decline by BZ$500,000 annually until 1999 and then to follow the ratio of inventories to operation and maintenance expenditures. Accounts Payable Payables are projected at 13% of operating expenses, excluding depreciation. Consumer Deposits Consumer deposits are projected to increase proportionally with the increase in customers connections. Share Capital BEL's issued and fully paid share capital consists of 6,930,000 ordinary shares of BZ$2 each and 11,191,950 convertible redemable preference shares of BZ$2 each. The preference shares rank equally with the ordinary shares with regard to cash dividends paid by BEL. Capital Contributions From FY95, capital contributions are projected at 1.5% of electricity sales. - 105 - Annex 6.3 Page 5 of 6 INCOME STATEMENTS Generation and Sales Forecast The generation and sales forecast are detailled in Annex 3.3. Other Revenue This is projected as 1.5% of electricity sales based on past experience. Fuel Fuel consumption is proportional to BEL's net generation. Fuel prices has been assumed to increase by 2.5% annully until 1995 and by 3% thereafter. Salaries and Wages Salaries and wages are kept constant in 1994 and 1995, and increased thereafter in proportion to the number of persons employed. Operation and Maintenance (O&M) Diesel related O&M has been adjusted proportional to changes in diesel generation. Other O&M components have been increased in proportion to sales. Mexican Electricity Purchases The expense is based on the tariff schedule shown in Annex 5.3. Purchases from Mollejon Hydroelectric Plant It has been assumed that under the terms of the purchase contract, BEL will be required to pay for 110 GWh in FY96, 115 GWh in FY97 and 120 GWh in FY98 up to the end of the projection period in FY2003, at a rate of 0.0875 US$/kWh. In addition BEL would be required to pay 5% of revenues from energy sold from Mollejon purchases. Depreciation Depreciation has been calculated at an annual rate of 4.45% of gross fixed assets, based on past experience. Income Taxes Income taxes are calculated at 10% of taxable income in FY94, 95 and 96, 15% in FY97, 20% in FY98, 25% in FY99, 30% in FY2000 and 35% in FY2001 and thereafter. The accumulated losses of BEB will be offset againts BEL's taxable income. Dividends Dividends on ordinary and preference shares are assumed at 10 BZ cents per share in FY98 and FY99 and 20 BZ cents thereafter. - 106- Annex 6.3 Page 6 of 6 CASH FLOW PROJECTIONS Second Power Development Project Loans are assumed to be on the following terms: Amount Terms Int Grace In millions of Years % Period Source US $ BZ $ Years IBRD 11.50 22.77 17 7.5 4 CDC 5.20 10.30 10 9.5 3 CDB 7.50 14.85 17 7.5 3 EIB 3.20 6.14 18 3 3 Exchange Rates The US$ and BZ$ exchange rates used are: selling rate 1 US$ = 2.015 BZ$ and buying rate BZ$1.9825 = 1 US$. Annex 6.4 BELIZE SECOND POWER DEVELOPMENT PROJECT BEL's Key Perrormance Indicators _---__ ACTUAL -- _ ESTIMATED -- - --- ------ FORECAST .-.... . . . ..... 1990 1991 1992 1993 1994 1995 1998 1997 1998 1999 2000 201 2002 3 L 2004 MARKET GWh Sold - Total -Con,erials Industrial 48.361 53,491 90.580 88,403 75.132 82,520 91.331 97,014 102,841 108,090 113.921 120.329 128,453 132.898 139.266 *Resfeb.l 29,212 33.942 39.429 44,926 49835 53028 58,306 59,849 82.852 8e.049 89,198 72.377 75.813 79.390 83.193 *Stmeto LghIing 3,738 5.383 8,747 8.494 10.398 11.410 11.918 12.374 12,7U4 13,178 13.537 13,878 14.240 149606 15,306 Avg No ofCusorners -TotalCOO) 28.023 28,580 31,808 34,903 39.492 42,797 48,188 49,834 53.119 58,650 60.234 83,922 87.789 71.730 75.167 -Residen4bl 21,728 23,887 28,900 29.193 34.732 37,917 41,153 44.484 47,834 51.230 54,879 58,232 "1.944 65.770 68,921 EFFICIENIs Y Number ciLployees 380 385 483 507 511 511 500 500 500 510 520 530 540 550 580 CustomeriVEmp syee, 88 74 68 89 77 84 92 99 108 Ill 11t 121 125 130 134 Mwh sckIdE,npyee 214 241 221 238 265 288 319 338 357 387 378 390 401 413 425 LossesC1%netgeneration) 1471% 1407% 14 32% 1401% 1272% 1140% 1073% 1014% 958% 958% 957% 957% 956% 956% 522% Avg ThermalGeneratng Efficienncy KwJSGGa 1313 13.37 1348 1359 1359 1359 1359 1359 13.59 1359 13.59 1359 1359 1359 1359 FINANCtAL INDICATORS RateofRetunm 795 9.03 1034 1063 1179 1080 701 7.01 701 702 702 705 704 708 706 Curren4 Raio 2 00 2 11 1 58 1 41 1 38 1.43 1 18 1 20 1 23 1.22 1.18 118 118 118 1 36 Long Temm Debt a dof total assets 28 97 3318 33 35 31 37 27 99 28 94 41 88 43 29 41 84 39 08 38 00 32 87 29 24 25 50 21 53 Debt4emceratio 754 325 274 155 203 217 184 337 1.99 197 181 194 213 223 234 Recetvubles (days) 30 98 32 49 35 06 34 48 35 00 35 00 35 00 35 00 35 00 35 00 35 00 35 00 35 00 35 00 35 00 Se8 Fi-ncmg ratio 0 30 0 21 0 24 0 48 0 82 0 38 0 07 0 47 0 98 1688 1 42 1 58 1 83 1 52 1 56 Nonmal TarTf Inclese (%) 0 00% 0 48% 0.38% 0 64% -0 32% 1 48% .1 76% .1.16% .1 24% 4 14% STRUCTURE OF OPERATING EXPENSES Fuel 4518 4584 3842 3868 38320 3795 1276 344 3U4 378 398 413 434 457 857 Salaries 8 Wages 22 40 21 28 21 22 24 55 2410 23 688 198 19.98 19 77 19.4 19 77. 19W8 19,98 2003 20 75 PurchasesnonMe,ico 000 1.92 4.81 575 8U4 8.71 848 11.98 1338 14.50 1588 1726 18.59 1997 1703 Purhaselron. Mollejon 000 0.00 000 000 000 000 3723 3791 3853 3801 3458 3315 3179 30.41 2769 Opwalron& Mlntenance 12 98 12 70 14 04 10 79 9 33 11.00 5 79 4.14 4 29 4 38 4 53 4 67 4 82 4 95 5 65 Depresiticn 1080 798 1184 1247 1292 1221 1085 15.44 1538 14.83 1452 14.20 1388 1358 1370 Othr 8U84 10.28 1187 978 900 8.45 713 713 7.08 8.87 878 8.70 890 850 881 Revenues per KWH sold 0.38H5 0.3993 0.3928 0.4026 0.3957 0.3908 0.3931 0.3946 0.3972 0.3S59 0.3901 0.3833 0.378s 0.3742 0.3387 Salartesandwagaaperkwhsold .0.0822 0.0794 00733 00832 0.0781 00773 0.0712 0.0890 0.0873 00872 0.0871 00389 00888 00688 00687 Fuelpe kwhsold 01858 0.1710 01258 01243 01239 01238 0.0455 0.0119 00124 0.0129 0.0135 00139 00145 00153 00275 OperationsmndMaiLtenanceprrkwh sold 0.0478 00474 0.0485 00368 00303 00359 00205 00143 0.0148 0.0150 00154 0.0157 00161 00185 00182 08. espensrs pe kwlu sold 00317 0.0383 0.0410 00332 00292 00278 0.0254 0.0248 0.0240 0.0235 0.0230 00225 00221 00217 00213 PurchasedpowwperKKh sold 00000 0.0072 0.0159 0,0195 0.0206 0.0219 0.1558 0.1723 0.1899 0.1727 0.1710 01895 0,1885 01880 01438 DOpIcCison Pe Kwsh4old 0 0398 0 0298 00400 00423 0.0419 0.0398 0.0379 0.0534 . 00523 0.0507 0.0493 0.0478 0.0484 00452 00441 TobtEl Eapenh. per KWH Sold 0.366 0.J373 0.3455 0.3391 0.3242 0.3262 0.3562 0.3455 0.3405 0e5420 0.3392 0.3363 0.3345 0.3334 0.3215 Operatng Margin 0.0215 0.0263 0.0473 0.0635 0.0715 0.0845 0.0369 0.0491 0.0567 0.0539 0.0509 0.0470 0.0444 0.0408 0.0373 - 108 - Annex 7.1 Page 1 of 4 BELIZE SECOND POWER DEVELOPMENT PROJECT Cost-Effectiveness Analysis of Project Components Method 1. The Bank's evaluation of the cost effectiveness of the proposed project was carried out using local diesel generation expansion as the reference expansion plan. The proposed project was evaluated first as a unity, comprising all three components. Thereafter, each of the three major physical components (i.e. the 115 kV interconnecting line from Mexico to Belize City; the Dangriga connection to the system; and the San Pedro connection to the system) were evaluated independently to find out their cost effectiveness, following the same methodology as used for the proposed project as a whole. 2. The economic comparison of the proposed project, and the next best expansion alternative comprising diesel generation, were carried out by calculating the present value in FY 1994/95 of annual economic costs through the year 2012. It was considered unreliable to extend the analysis beyond that period, and in any case, an extension would only have a marginal impact on the results. The remaining economic life of the investments was taken into account by residual values. Economic costs were defined as incremental investments, operating and maintenance of generation and transmission facilities, fuel, and the cost of electricity imports from Mexico. The table at the end of this annex provides a summary of the available capacity and generation in the two alternatives, and also the cost streams and the calculated ecualizing discount rates (EDR) for each project component. Annex 7.2 provides the assumptions used in the analysis. The following paragraphs provide details of the evaluation of the three project components. 115 kV Transmission Line from Mexico to Belize City 3. Belize City is the commercial center of Belize, whereas Belmopan is its administrative capital. In the year 1997, the Mollejon hydro plant would, under average hydrology, provide about 80 percent of the energy needs of the Belmopan and Belize City systems. In 2005 the Mollejon plant would cover only about 55 percent of the demand. Additionally, the Mollejon supply would need to be complemented with other sources during dry seasons when its capacity is limited. 4. The economic evaluation of this project component was carried out by comparing the present values of the economic costs of the proposed Mexican interconnection and the alternative diesel expansion program to meet the balance between the forecast demand and the hydro supply. The results show that the proposed interconnection is the least-cost alternative to meet the additional energy and power demands of the Belmopan/Belize City systems. The equalizing discount rate was calculated at 19 percent. - 109 - Annex 7.1 Page 2 of 4 Connection of Dangriga to the Grid 5. Dangriga is located south of Belize City in the heart of Belize's citrus and banana district. The sales growth in Dangriga is expected to be strong due to, inter alia, the incorporation to the BEL system of the large citrus companies, which currently operate their own generation. As a result, BEL would need to expand the generation capacity of the Dangriga power plant to meet the energy, power and reliability requirements. 6. The economic evaluation of the Dangriga connection was made by comparing the present values of the incremental economic costs of the proposed scheme (a tap 34.5 kV overhead transmission line from the Mollejon transmission line), with the economic costs of the alternative in which BEL would install new local small-scale diesel units to meet incremental loads and to increase supply reliabilityl/. Comparison of the present value of the costs of these two alternatives shows that the proposed interconnection would be cost-effective, resulting in a calculated equalizing discount rate of about 23 percent. On a net present value basis, the interconnection would lower the production costs by almost 50 percent compared to local diesel generation. Connection of San Pedro to the Grid 7. Located on the Ambergis Cay-Island, San Pedro is Belize's major tourist center. The major electricity consumers in San Pedro comprise small and medium size hotels, resorts and tourist related service enterprises. BEL has during the past years increased its generation capacity in San Pedro in order to facilitate for existing hotels to switch from private generation to BEL supply, and also to supply new tourist service businesses. The current power plant is located in the center of the town and it is very difficult to expand it at the current location. To able to increase diesel capacity, BEL would need to build a new power plant on a new site. According to BEL a new site can be found, but due to the tourist development potential of the island, BEL would most likely have to pay a substantial compensation for the land. 8. The EDR for the proposed incorporation of San Pedro into the national grid, via a 34.5 kV, 13.3 mile submarine cable, versus the continued use of diesels was calculated at about 14 percent2/. This project component is sensitive to variations in assumptions regarding the key 1/ The incremental cost of the proposed Dangriga connection comprise: (1) investment in and operation of the 34.5 kV transmission system; and (2) energy purchased from the interconnected system. Additionally, it is assumed that BEL will maintain the existing diesel units as a local emergency capacity reserve. 21 7he proposed San Pedro connection to the national grid will result in thefollowing incremental costs: (1) investment in and operation of an 34.5 kV transmission system (overhead lines, submarine cable section and substations); (2) energy purchase from the interconnected system; and (3) operation and maintenance of existing diesel unitsfor emergencies. - 110 - Annex 7.1 Page 3 of 4 economic parameters. Any of the following sensitivity cases would reduce the equalizing discount rate to about 12 percent: (1) a 20 percent increase in project investment cost; (2) a 20 percent increase in the Mexican tariff; (3) 20 percent decline in annual sales growth; and (4) 20 percent decline in diesel prices. However, the proposed project would help Belize to improve the environmental quality of San Pedro by eliminating the burning of diesel oil in close proximity to hotels and residential areas, and reduce the risk of oil spills at sea during transportation in an environmentally sensitive area. The submarine cable would also provide a reliable electric link to San Pedro. Annex 7.1 Page 4 of 4 SECOND POWER DEVELOPMENT PROJECT Cost-Effectiveness Analysis Comparison or Interconnections with Diesel Alternatives Fiwal Year Residual 1995 1996 1997 I18 1999 2000 2001 2002 2003 2004 2005 2006-> 2012 Value Forecast Energy Sales + Distribution Losses GWh 0 0 0 55 62 70 78 87 96 106 116 126 201 Grid system peak MW 28 30 31 32 34 36 38 39 41 43 45 46 58 Available firm hydro cvopity MW I1 II 11 It 1 I I I I I 11 Il 11 1I 11 Existing Mexico to Corozal link MW 5 5 5 5 5 5 5 5 5 5 5 5 5 Peak c pacity to be supplied MW 0 0 0 16 18 20 22 23 25 27 29 30 42 Energy to be supplied GWh (demand forecast - hydro supply inc distribution lsses) 0 0 0 55 62 70 78 87 96 106 116 126 201 DIESEL ALTERNATIVE Available Capacity MW Diesel MW 29 27 27 26 23 29 27 28 30 32 34 36 48 Genestlon (ind system loss) GWh Diescl Generation GWh 0 0 0 56 64 72 81 90 99 109 119 130 207 Investment, Fuel, and O&M Costs Total Cost Belize/Belmopan US$ '000 0 0 0 3,540 3,663 5,255 5.777 6,321 7,194 8,110 9,494 10,605 17,481 0 Toal Cost San Pedro USS '000 0 0 0 1,602 1,668 1,874 1,949 2,219 2,294 2.516 2,584 2,679 3,895 0 Total Cost Dangriga USS '000 0 0 0 1.190 1,245 1,768 1,634 1,701 1,953 2.028 2,047 2,321 3,393 0 Total Cost Diesel Altcrnative USS '000 0 0 0 6,331 6,576 8,898 9,360 10,241 11,441 12,654 14,126 15,605 24.768 0 INTERCONNECTION AvaIlsble Capadty MW Diccl MW 29 27 27 24 21 21 19 19 18 17 13 10 5 Mexico MW 0 0 0 25 25 25 25 25 25 25 25 40 40 Ense Supply Mix (mci system losses) GWh Dieel GcnerationGWh 0 0 0 1 1 1 1 2 2 2 2 2 3 Purchase from Mexico GWh 0 0 0 55 62 70 79 87 96 106 116 126 202 Investnent, Power Import, O&M and Fuel Costs Total Cost Belizc/Helmopan USS '000 2,891 8,296 2,749 3,429 2,257 2,576 2,905 3,250 3,594 3,968 4,295 4,636 8,282 (5.957) Total Cost San Pedro US$ '000 942 4.934 1,796 1'357 807 847 887 927 967 1,002 1,051 1,103 1,450 (6,943) Total Cost Dangriga US$ '000 555 2,239 424 758 623 662 658 698 740 784 836 892 1,309 (1,902) Total Cost of Interconnection Alt. US$'000 4,388 15,469 4,970 5,545 3,686 4,084 4,450 4,874 5,301 5,754 6,182 6,631 11,040 (14.802) DIFFERENTIALCASH FLOW (Interconnction-Dicsl) '000 US$ 4,388 15,469 4,970 (787) (2,889) (4,814) (4,909) (5,367) (6,140) (6.900) (7,943) (8,974) (13,727) (14,802) ACCUMULATED CASH FLOW'ODO USS 19,857 24,826 24,040 21,150 16,336 11,427 6,060 (80) (6,981) (14,924) (23,898) (95,268) (110,071) Equalizing Discount Rate (EDR) 18.0% US cents/kwh Present Valuc of Costs USS '000 0 12 % Production Cost Diescl Alterngtive 12.17 58,773 Production Cost Interconnecsion. 9.63 46,534 SENSlITVITY ANALYSIS: EDRs FOR INDIVIDUAL SCHEMES (BASE CASE): EDR Investment Cost +20% 15.4% 115 kV transmission line frro Mexico to Belizc City 18.7% Mexican pricr +20 % 15.8% Interconnction of Dangriga 23.4% Annual sales growth -20 % 15.1% Interconnection of San Pedro (Ambergis Cayc lslad) 13.8% Diesel price -20 % 15.3% Investment cost & Mexican price +20 % 13.5% Annex 7.2 BELIZE SECOND POWER DEVELOPMENT PROJECT Project Economic Evaluation (NPV and EIRR) Benefits Investrnet Costs Incremental O&M Costs Cost Savings Cost of diesd oi Cost of diesel oi Diesel fuel Sales Sales Incremental Unit Total Power 11 Distribution Other Mexican O&M O&M investment investrnmt investment & Toal Net Without With Benefit Benefits Project Investrnent Impors Power 11 Other & O&M & O&M O&M cost Incrneanta Cash the project the project Sales Without With savings Costs Flow the project the project FY MWh MWh MWh BZc/kWh '000 BZS '000 BZS '000 BZS '000 BZS '000 BZS '000 HZ '000 BZ '000 HZS '000 BZS '000 BZS '000 BZS '000 BZS 93/94 128616 94/95 139634 8s77 8,m (8,777) 95/96 151358 30936 30,936 (30,936) 96/97 159931 10758 1488 1155 13,401 (13,401) 97/98 159931 168471 8,540 38.5 3,284 2628 1859 1097 5395 531 78 13071 112 -12959 (1,372) 4,656 98/99 159931 176852 16,921 38.5 6,508 1913 1107 6219 531 157 13511 112 -13399 (3,472) 9,980 99/00 159931 185487 25,556 38.5 9,829 1797 1050 7151 531 232 7056 124 -6932 3,829 6,000 00/01 159931 194798 34,867 38.5 13,410 1754 1016 8216 531 305 12776 124 -12652 (830) 14,240 01/02 159931 203906 43,975 38.5 16,913 1769 1114 9129 531 380 7056 124 -6932 5,992 10,920 02/03 159931 213421 53,490 38.5 20,572 1728 1434 10146 531 461 8816 248 -8568 5,732 14,840 03/04 159931 223678 63,747 38.5 24,517 1679 1429 11271 531 540 11236 248 -10988 4,462 20,055 04/05 159931 234091 74,160 38.5 28,522 1627 1386 12427 531 616 13808 245 -13563 3,024 25,498 05/06 159931 244391 84,460 38.5 32,483 1627 1386 13593 531 693 14468 245 -14223 3,607 28,876 06/07 159931 255144 95,213 38.5 36,619 1627 1386 14868 531 770 16008 245 -15763 3,418 33,201 07/08 159931 266370 106,439 38.5 40,936 1627 1386 16241 531 846 18648 4768 -13881 6,751 34,185 08/09 159931 278090 118,159 38.5 45,444 1627 1386 17671 531 923 6988 368 -6621 15,518 29,926 09/10 159931 290326 130,395 38.5 50,150 1627 1386 19174 531 999 6988 368 -6621 17,097 33,053 10/11 159931 303101 143,170 38.5 55,063 1627 1386 20755 531 1076 6988 368 -6621 18,754 36,309 11/12 159931 316437 156,506 38.5 60,192 (29,604) -10050 -6743 22396 531 1076 -25239 -3468 21771 (624) 60,816 PVs @12% 146,961 58,919 45,686 Economic Interal Rate of Return (EIRR): 21.7% NPV @12%: 45,686 Sensitivity Analysis EIRR Investm,ent cost + 20 % 18.6% Mexican price + 20 % 19.8% Diesel fuel cost - 20% 20.9% Annual energy sales growth - 20% 17.0% Investment cost & Mexican price + 20 % 16.9% Notes: Econonsic cosb in constant 1994 BZt Sales: enetu sales in the interconected System (Belize City, Behnopan, Corozal, Dangeigs and San Pedro) Unit Beneft BEL's FY94 average tariff rate per kWh Investsents: BEL's investsent promgrn excl studies and TA. ICS only. Investmnmt cost incuhides physical contingecies but not price contingencies. - 113 - Annex 7.3 Page 1 of 2 BELIZE SECOND POWER DEVELOPMENT PROJECT Assumptions Used in Economic and Equilizing Discount Rate Analyses Assumptions The following were the major assumptions used in the economic evaluation of the Project: (a) Discount Rate: 12% (b) Economic Life Diesel sets: 15 years Transmission lines (wood poles): 20 years Substations: 25 years Submarine cable: 40 years SCADA: 15 years (c) Mexican Electricity Price Base energy: 0.032 US$/kWh Peak energy: 0.0576 US$/kWh Capacity charge: 8.833 US$/kW/month (d) Mollejon Energy Price 0.0875 US$/kWh (e) Operation and Maintenance Costs Fixed existing diesels: 40 US$/kW/year Fixed new diesels: 20 US$/kW/year Variable exist. diesels: 0.04 US$/kWh Variable new diesels: 0.02 US$/kWh Fixed transmission system: 1% of cummul. invest. costs/yr Annual distribution: 3% of cummul. invest. costs/yr Other investments: 2% of cummul. invest. costs/yr Diesel fuel consumption: 260-290 gr/kWh (f) System Losses Transmission energy losses: 2% Transmission power losses: 2% Diesel auxiliary losses: 3% (g) Diesel Plants Investment Cost 1,100-1,200 US$/kW of output installed (I to 4 MW units) - 114 - Annex 7.3 Page 2 of 2 (h) Physical Contingencies 5% (i) Economic Cost of Diesel Fuel (Based on WB crude oil projections, November 2, 1993) Crude oil (1994): 16.7 US$/bbl 0.1 1 US$/litre No. 2 Diesel (crude oil price x 1.3): 0.14 US$/litre Transp. & handling: 0.024.04 US$/litre CIF price 0.16-0.18 US$/litre (j) Economic Cos in constant 1993 US$ - 115 - Annex 8.1 Page 1 of 2 BELIZE SECOND POWER DEVELOPMENT PROJECT Project File A. Selected Reports on the Economy of Belize Belize, Country Economic Memorandum (IBRD Report No. 10403-BEL) Belize Country Assistance Strategy (in preparation) B. Selected Papers on the Belize's Power Sector - Electricity Act 1992 (No. 13, August of 1992) - Memorandum of Association of Belize Electricity Limited (BEL) - BEL Certificate of Incorporation - Articles of Association of BEL - BEL's License under Electricity Law, including the Authorized Area - BEL, Prospectus: Offer for Sale Relating to Shares and Debentures, October 1992 - BEB's Five Year Investment Plan, June 1992 C. Selected Documents on the Mollejon Hydroelectric Development Project - Macal River Hydroelectric Development Feasibility Study, prepared by CI Power Services Inc, February 1992 - Report by Mr. A. Stevens (Consultant) on sediment yield in the Macal River - Report by Mr. A. Stevens (Consultant) on hydrology of the Macal River and energy production at the Mollejon hydrolectric project - Review by Mr. A. Posada (Consultant) of the Feasibility Study the Mollejon hydroelectric project - Franchise Agreement Mollejon Hydrolectric Project - Joint Development Agreement Mollejon Hydroelectric Project - Power Purchase Agreement between BEB and Belize Electricity Limited Company, Ltd. (BECOL) - Guaranty Agreement related to Mollejon Power Purchase Agreement - Legal Opinions on above by Belize's Solicitor General - IFC Report on Mollejon Hydropower Plant D. Selected Reports on Power II Project Renewable Energy Study, CI Power Services, Inc., March 1990 System Load and Transmission Study, S&J Consultants, P.C., February 1992 - 116- Annex 8.1 Page 2 of 2 Transmission System Study, Electricas Reunidas de Zaragoza S.A., June 1992 Power II Study for BEB, NEI Electric Power Engineering, Inc, December 1992 Power II Project, Interconnection Transmission Line to Mexico, Generation Dispatch, Simulation and Production Costing, by E. Indacochea and I. Arag6n (consultants), November 1992 Power II Project, Supplement to the Communication Alternatives Assessment, Macro Corp., September 1993 Belize Power II Project, 115 kV Mexico Interconnection Transmission Line, Environmental Impact Assessment, CI Power Services, Inc., December 1993 Power II Project, Economic, Technical and Environmental Assessment, Electricity Supply to Ambergris Cay (San Pedro), ElsamProjekt A/S, December 1993 Power II Project, Final Economic Analysis of Alternatives, by E. Indacochea and I. Aragon (consultants), December 1993 Back-to-Office Report, Identification Mission, by E. Zolezzi (LA3TF), July 10, 1992 Back-to-Office Report, Preparation Mission, by E. Zolezzi, December 15, 1992 Back-to-Office Report, Preparation Mission, by E. Zolezzi, June 25, 1993 Back-to-Office Report, Pre-Apprisal Mission, by E. 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