i2Bl Energy Sector Management Assistance Progiramme ftvate Power Gneration and Trasmsilon Report No. 137/91 JOINT UNDP I WORLD BANK ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME (ESMAP) PURPOSE The Joint UNDP/Wodld Bank Enegy Sector Management Assistance Programme (ESMAP) was launched in 1983 to complement th Enegy Am ent Proamme, established three years earlier. EMAP'sor ~ purpose was to implement key recommendations of the Ener Assessmet rports and ensure that proppoe investments in the energy sector represented the most efficient use of scarce domestic and exteal siuces. In 1990, an international Commission addressed ESMAP's tole for the 1990s and, noing the vital tole of adeqte and affordable ene in coomic growth, concluded that the Pro eslould intensify its efforts to assist deveoping couties t maage their engy sectors more effectivelv. The Cmmi also recommended that ESMAP concen on makdng long-term efforts in a smaher number of countie The Cmmissions reprt was osed at ESMAP's November 1990 Annual Meeting d prompted an extensive reorgandtion and reorientaton of the Progmmme. Today, iSMAP is conducting Eney Assessments R g pmeinvestment and prefcasibllity work, and providing institutional and policy advice in selected developing counties. nrough these effors, ESMAP aims to assist governments, donors, and poteial investors in identifying, funding, and implementing economically and! envir l d er strategies. GOVERNANCE AND OPERATIONS ESMAP is governed by a Consultative Group (ESMAP CG), composed of representatives of the UNDP ad Worl Bank, the governments and itus providing financial supor and representatives of the recipients of ESMAP's assistance. The ESMAP Co is chaired by the World Bank's Vice President, Opatidons and Sector Policy, and advised by a Technical Advisor Group (TAG) of independent enegy expes that reviews the Progamme's strategic aenda, its work program, and other issues. The Manager of ESMAP, who rports to the World Bank's Vice Prsident, Operans and Sector Policy, administers the Prgmme. The Manager is assisted by a Secretariat, headed by an Executive Secretary, which supports the ESMAP CO and the TAG and is responsible for relations with the dons and for securing fuing fo the Promm's activities. The Mana direc ESMAP's two Divisions: The Strategy and Division advises on selection of countres for assistance, cames out Energy Assesments, relevant programs of technical assistance, and supports the Secretariat on funding issues. The ons Division is rewonsible for formulation of subsectoral stategies, preinvestment work, institutomnal studies, techmcal assistnce, and taining witin the framework of ESMAP's country FUNDING ESMAP is a coopeaive effort supported by the Wodd Bank UNDP md other United Nations agencies, the Eurpean Commuity, Organzation of Ameican Staes (OAS), Latin American Enegy Ornization ( OLAOE), and countries incuding Australia Belgium, Canada, Denmark, Germany, Fmland, Fance, ceand, Irland, Italy, Japan, ds, New Zealand, Norway, Potgal, Sweden, Switzerlmd, the United Kingdom, and the United Stas. FURTHER INFORMATION For fwiher informadon or copies of completed ESMAP reports, contact The Mnar or Th Executive Seta ESMAP ESMAP Consultative Group The World Bank The World Bank 1818 H Stree N.W. 1818 H Steet, N.W. Washington, D.C. 20433 Washington, D.C. 20433 U.SA U.SA BOLIVIA PRIVATE POWER GENERATION AND TRANSMISSION I JANUARY 1992 ESMAP Strategy and Programs Division Energy Sector Management Assistance Progamme (ESMAP) The World Bank Washington, D.C. 20433 FOREWORD On 4 May 1990 a Presidential decree granted Compafiia Boliviana de Energfa Electrica (COBEE) a 40-year license to develop generation resources (and hydro plants in particular) and to operate its existing facilities. The decree Incorporates conditions such as the area covered by the concession and COBEE's obligations vis a vis the government and other power sector institutions. The generation concession fulfills the short-term objectives of the power sector by providing the legal basis for COBEE's continued presence in Bolivia. However, the long-term conditions for achieving public policy goals depend more on the institutional setup and the signals it provides different partes within the system than on the stipuladons of a contract. The purpose of this report is to address these institutional issues within a wider perspective and to propose a strategy for institutional reform. The report was prepared by the joint UNDP/World Bank/Bilateral Aid Energy Sector Management Assistance Program (ESMAP) and is based upon the findings of a mission that visited Bolivia in Jamnary, 1990. v The mission members express their appreciation for the cooperation and hospitality displayed by the Government of Bolivia, COBEE, ENDE, UNDP and the bilateral donor agencies. Funding for the report was provided by the Italian Government through a bilateral contribution to ESMAP, and supplemented by an in-kind contribution from the World Bank. LI the mnslo members were Mesrs. Jayme PomD Carrero, EheW Spcialt ES" anm Fernando Lecaros, consu. Mr. Salvdor Rivera, &wergy Spec,laW asisd in d final prparados of the rport. ACRONYMS COBEE Compaftia Boliviana de Energia Eldctrica (Bolivian Power Co.) COMIBOL Corporacidn Minera de Bolivia (Bolivian Mining Corporation) DINE Direccldn Nacional de Ilectricldad (National Electricity Directorate) ELFEC Empresa de Luz y Puerza de Cochabamba S.A. (Electric Power Company of Cochabamba) ELPEO Empresa de Luz y Fuerz de Oruro (Electric Power Company of Oruro) ENDE Empresa Nacional de Electricidad (National Electric Power Company) ESMAP Energy Sector Management Assistance Programme IDA International Developmnt Association IDB Inter-American Development Bank MEH Ministero de Energda e Hidrocarburos (Ministry of Energy and Hydrocarbons) NEC The National Electricity Counsel OLADE Latin-American Energy Organization PFM Proyecto de Fortalecimiento Municipal (La Paz Municipal Strengthe Project) UNDP United Nations Development Programme YPFB Yacimientos Petrolifferos Fiscales Bolivianos (Bolivian National O Company) ABBREVIATIONS GWh Gigawatt hour kW Kilowatt kWh Kilowatt hour c.i.f. Cost, insurance, freight IlDC Interest during construction MCF Thousand cubic feet MW Megawatt kVA Kilovolt-amper mWh Megawatt hour TWh Terawatt hour V Volts XCHO Eauivalents Currency Unit: Boliviano (Bs) Exchange Rate: 2.97 Bs/US$ (May, 1990) TABLE OF CONTENTS I. EXECUTIVE SUMMARY 1-7 II. BACKGROUND 8 Private Power Transmission and Generation Technical Assistance .............. . 8 The GenerationLicense .................................... 8 The Inrconnection Contract ...... .......................... 10 Power Setor Background ....................................... 12 Macroeconomic Environment ................................ 12 Institutional Stmcture and Legal Framework .......... ............ 12 Generation and Transmission ................................ 14 System Finances ........................................ 16 System Operations ....................................... 16 Conclusions .......................................... 17 m. POWER SECTOR EVALUATION 18 Power Sector Objectives and Policies ............... . 18 Power Sector Performance ... ............. 19 Evaluation ..21 IV. INSTTUTIONAL ANALYSIS 22 Isues .. 22 Options .. . .... ..23 'he Reuatory Agency .............................. 23 Taft ..... ............................. 25 Economic Rents .............................. 26 Income Taxes .............................. 26 MarketStructure .............................. 26 Implementation Strategy ... ............................. 28 V. AGENDA FOR ACTION 31 Short-term Actions .............................. 31 Ihe National Electricity Counsel -NEC ......................... 31 Medium-term Actions .............................. 32 Long-trm Acions ................................ 33 TABLIS Table 1 Sales(GWh), 1988 .................................. 13 Table 2 Mar gn Eectricity Costs .............................. 15 Table 3 Buik Trasfers from ENDE (GWh) ........................ 16 Table 4 Bit Trafers from COBEE to ENDE(GWh) . . 17 Table 5 Action Plan - Cost Estinates ........ . ................... 33 Table 6 Action Plan - Schedule .............-. 34 Table 1.1 Istalled Capacity (1i88) -MW- ........................... 35 Table 1.2 Eectricity Production (1988) -GWb- ........................ 35 Table 1.3 Public Utlity Sales (1987/88)-GWh- ........................ 36 ANNEXES Annex I Generation andTransmission ............................ 35 Annex 2 The Natenal Electrification Plan .......................... 37 Annex 3 Marginal Generadon and Transmission Costs ................... 42 Annex 4 System operations ........... ........................ 44 Annex 5 Electticity Tariffs .........48...--..-.-....... .. 48 List of Completed Activities .49 l- EXCU SUMMARY 1. The "Compftfa Boliviana de Energa Eldctrica* (COBEE) has operated in Bolivia for over sixty years. It Is one of the few surviving private power utilities in Latin America. Its 40-year concessio contract for the generation tsmission and distribution of electricity in the municipality of the La Paz expired in September 1990. 2. In May 1989, ESMAP provided technical assistance to the municipality of the La Paz for renewing the distribution contract. The result of the latter project consisted of recommendations for Implementing control mecnism and insdtutional measures in order to sdmulate an efficient operation of the distribution company. 3. The genration and transmission activities of COBEE require a license; granting these licenses is a responsibility of the Miny of Energy and Hydrocarbons (MEH). whilst licensing for distribution is a responsibility of the municipalities. These certificaton processes are carried out independeady. In Jamuay 1990, at the request of the Bolivian government, an ESMAP mission visited MEH to stdy the terms of COBEE's generation entitement. The mission's suggestions were incorporated to the generon licemsing contract. 4. The process culnatud on 4 May 1990 with a Presidential decree granting COBEE a 40- year license to develop generation resources (and hydro plants in particular) and to operate its existing facilities. The decree Iuwrporates conditions such as the area covered by the concession and COBEE's obligations vis a vis the goverment and other power sector institutions. 5. The ESMAP mission also reviewed the draft of an interconnection contract between COBEE and ENDE Empresa Nacional de Electricidad, the government-owned enterprise in charge of generion and transmission). The suggestions for improvements were incorporated in this contract and the document was signed on 21 June 1990. 6. The generato concession and the interconnecton contract fulfill the short-term objectives of the power sector by providing the legal basis for COBEE's continued presence in Bolivia. However, the long-erm conditions for achieving public policy goals depend more on the institutional setup and the signals it provides different parties wihin the system than on the stipulations of a contract. The purpose of this report is to address these instittional issues within a wider perspective and to propose a strategy for institutional refom Poer Sector Ojcie 7. The objective of the government is to provide a reliable and minimum cost service to electricity users tirough publicly or privately-owned corporations. For analysis purposes, overall power sector objectives were classified as: Effgicienz ArAivs for providing minimum cost service at the supply level and encouraging the economic use of electricity at the demand level. 2 Qualiq of service objctives for assuring the provision of electricity under acceptable conditions of reliability. ndisb which involve the allocation, according to national priorities, of the economic surplus generated by sales of electricity. bPublic finaneog=ves concerning the extent of government-supported financing, resource mobilization altematives and tax policy. 8. Asssing the power sector's performance at present, as well as in the recent past, the following conclusions were drawn: The sector has relatively abundant energy resources which are being developed in a cost efficient manner. The sector provides electricity to its existing users with a reasonable level of continuity. From a wider point of view, coverage continues to be low compared to other Latin American countries. The distribution of economic rents derived from hydroelectric generation is open to question, as the major beneficiaries are only the customers of COBEE in La Paz. (See Par. 14.) The power sector is going through a phase of financial health, after having been supported by the Government through the capitalization of ENDE. It is no longer a drain on public funds. Tariffs do not reflect marginal costs at the consumer level, particularly in the areas served by COBEE. However, before a readjustment can take place, a policy regarding the allocation of rents from COBEE's hydro plants should be formulated and implementd. The current regulatory provisions do not encourage cost-minimizing behavior on the part of the sector's enterprises due to the deficient application of a tariff-setting criterion based upon the rate of retrn on assets. Future generation system expansion is circumscribed to ENDE and COBEE to the exclusion of capital mobilization from other sources. 3 There is a lack of effective government regulation in the sector: the existing regulatory office lacks resources and is unable to monitor, set goals and much less control the sector's institutions. 9. The general conclusion of the assessment is that there are no major problems confronting the power sector in the short run but that institutional rigidities subsist and that they should be addressed (taking advantqae of the sector's current buoyancy) if long run objectives are to be met. 4su,es 10. The issues that were identified in the analysis consist of those relating to the regulatory process, of those related to efficiency (mainly tariffs) and of those related to the allocation of economic rents and tax policy. 11. A basic problem to emerge from the analysis relates to the weakness of the government's presence and the lack of an effective regulatory agency in the power sector to control and enforce tariff policy and to oversee the sector's performance. 12. Efficiency-related issues concern: - Tle structure and level of tariffs perceived by consumers, particularly the gap beween tariffs and marginal costs. - The tariff signal as perceived by producers (i.e. generation as well as distribution companies) and, specifically, the regulatory procedures and rules contained in the Electricity Code. - The, organization for reaching a least cost operation of the system. - The responsibility for developing the least cost expansion plan and the allocation of duties for the execution of specific projects within the plan. 13. Issues related to quality of service and, to a certain extent, to efficiency, concem the assignation of functions to different entities in a rational manner consistent with their activities. For example, ENDE is currently managing both high voltage developments and the provision of service to small isolated communities which should normally be attended to by a local distribution enterprise. 14. Economic distribution issues involve: llTe allocation of economic rents produced by existing inframarginal generation resources owned by COBEE. This issue arises because the average generation cost to COBEE (measured on the basis of the book value of its investments) is significantly (around 60%) below the power system's long run marginal cost. This is due to the use of a very 4 efficient hydro resource (and not to an accouniing problem of asset valuation), coupled to the fact that COBEE's plants have already been considerably depreciated. The need for establishing an unambiguous subsidization policy for low income groups; in the case of Bolivia flail marginal cost pricing (which would ensure demand efficiency by providing the correct economic price signal to users) could lead to large tariff increes which would unduly burden poor consumers. If favoring these groups Is deemed desirable from a social standpoint, the question of subsidy targets and financially feasible subsidy levels should be addresed explicitly (e.g. lifeline rates, rural rates). 15. Public finance issues relate to (a) the generation of funds within the power sector through fiscal measures and (b) to the fact that the sector has depended on government support, particularly In 1987 and 1988, to reach its current financially acceptable situation. The problem consists of avoiding the recurrence of this type of situation and reversing it in order for the power sector to become a source, rather than a desdnation, of public funds. doNm and -StrO 16. An analysis of the issues led to the formulation of a number of alternatives for facing them. These were combined into a coherent strategy to address the institutional problem using a phased approach. 17. The core short-term proposal consists of strengthening the regulatory authority in the sector by activating the National Electricity Commission (NEC). This organization is mentioned in the Electricity Code but it has not been operative: the NEC would be an autonomous body and represented equitably by the several actors involved In the power subsector. It would count on an executive secretary and the services of two independenty contracted advisors. The NEC would consist of a small, well funded and integrated group of professionals: it would be financially and politically independent. Its executive secretry would be accountable to the Commission but not to any one Ministry in particular. NEC's funds would be levied from the power sector itself, following the stipulations contained in the Electricity Code. 18. Within MEM, the organization of a Rural Energy Directorate should be pursued for formulating policy related to service extensions. This organization would also be in charge of coordinatg the execution of specific projects through regional organizations such as the "development corporations" in different deparments. 19. In the institional front, the principal options consist of: shifting from the current mode of cost-based regulation to price regulation whereby electricity companies can increase their rate of return through cost reduction measures as long as they mantain service quality standards. 5 creating the conditions for an organization whereby there is free entry at the generation end (opening up the market to private capital and to cogenerators) and where the interconnection between generators and distributors would be established by a regulated transmission company with dispatch and clearing house functions. 20. With regard to taxes and public finance, electricity enterprises are at present exempt from income taxes. Given that there does not appear to be any fundamental reason for this privilege, it would be desirable to abolish it and to establish the normal income tax rate for corporations. 21. When addressing the problem of economic rents associated with hydro plants, the option to be considered consists of establishing a royalty for the use of hydro facilities. This alternative would channel the rents to the central government without distorting cost-minimizing incentives of the companies in question. 22. The proposed implementation strategy consists of the following elements: (a) Short-Term Actions: - Etablishing the NEC. Initiating the process of tariff reform by revising the rate schedules and adjusting their structure to reflect the composition of marginal costs. Tariff levels would still be based on the current cost-plus rate base systemn. Establishing the functions and attributions of the Rural Energy Directorate within MEH in order to formulate a policy for extending electricity services. (b) Medium-Term Actions: Commissioning, by the NEC, of a feasibility study to analyze the basis for a package of legal measures encompassing the income tax on power sector companies, the shift from cost-based to price-based regulation and the royalty on hydro resources. Commissioning of a tariff/organization study in order: (i) to estimate marginal costs and a tariff system based upon them, (ii) to design in detail a procedure for managing the entrance of new generating enterprises in the system, together with the regulatory requirements and the dispatching requisites, and 6 (iii) to provide a long-tem plan for implementation of a market-oriented organization at the generation level. Reforming the Electricity Code and agreeing with COBEE revision of the Interconnection Contract according to the conclusions of the previous studies. Adjusting the tariff levels in order to reflect marginal costs once the procedure for allocating economic rents has been detewrnined. (This would require a revision of COBEE's concession contract. Since full marginal cost pricing would be introduced as part of a package of measur.s that would include price based regulation, which would allow utilities to reap part of the profits resulting from gains in their overall productivity (see Par. 114), COBEE would have the incentive to agree with the revision of its concession contract.) Implementing institutional and organizational reforms to attract additional enterprises to enter at the supply level, either as generators or cogenerators. (c] Long-Term Actions: These measures would be oriented towards implementing a market-based organization at the dispatch level as well as at the level of developing new generating plants. Such actions would take place once the system has grown substantially beyond its present level of 600MW in installed capacity and they would be based upon the recommendations issuing from the tariff/organization study. Ago"a for Action 23. Chapter 5 of the report presents a detailed summary of short- and medium-term actions to be taken for the implementation of the strategy. The essential short-term elements of this agenda are: - Setting up of NEC by issuing a decree specifying which government organizations will be represented, together with the general functions of the Commission's executive branch and its fiuning. - Appointment of the NEC's Executive Secretary and its advisors. - Structural modifications to tariffs. - Commissioning cf the tariff/organization study together with the legal analysis study. 24. Tbe major medium-term undertaking would consist of the modification to the Electricity Code and the prepartion of a proposal for modifying the Interconnection Contract based upon the results 7 of the tariff/organization and legal studies. This reform would be undertaken directly by NEC with appropriate legal and tecnical advisory/consulting services. 25. Following the reforms to Electricity Code, and particularly the changes to the tariff-setting procedures, a readjustment of tariffs in order to reflect marginal cost levels would be undertaken. 26. The resource requirements for the studies outlined in this report, and to be included in the ESMAP Country Work Program Paper (ECWPP), are: Action Plan - Cost Estimates Tariff/Organization study Consulting Services US$250 000 Local Resources US$ S0 000 Sub-Total US$300 000 Tax Study and Electricity Code Updating Consulting Support US$130 000 Local Legal Services US$ 20 000 Sub-Total US$150 000 Total Resources US$450 000 U. BACKGROUND 27. Tis chapter reviews the objectives of ESMAP's technical assistance to the Miistry of Energy and Hydrocarbons of Bolivia (ME1 regarding the contctual relationship of the government and CompaMa Boliviana de Energfa Eldcrica (COBEE); it also presents background information about the power sector to assit the reader in following the rationale for the recommendations made in the report. 28. The chapter is divided into two sections; the first one illustrate the process of ESMAP's Involvement and its contibutions; the second provides power sector information such as legal and insttional data, together with geeration, tansmission and operations data. Mm Power Tr_mion andGenraton Technica Assisac 29. COBEE is a private utility which generates and distributes energy in La Paz. It oped under the terms of a 40-year contract with the municipality of this city; the contract expired in Ssptember, 1990. ITis event led COBEE to request a generation concession from the government. The latter sought ESMAP's advice in defining the terms of the contract; the mission that visited La Paz for this purpose provided MEH with suggestions for improving the license which were subsequently incorporated into the text The final licene was proclaimed through a Presidential Decree on 4 May 1990. 30. Together with the license, a new interconnection contract was necessary for stipulating the right and obligations of ENDE and COBEE as the major generating enterprises in the system, given hat the previous contract was obsolete and contained a number of ad-hoc clauses hat addressed particular problems of the hypeMnation years. The following subsections provide an overview of both the license and the interconnection contra. 31. The generation contract between COBEE and the government of Bolivia is a means for legalizing the fotmer's operations after the expiration of the contact with the Municipality of La Paz. Accordingly, COBEE applied for a generation concession following the terms stipulated in Bolivia's Electricity Code. 32. In Januy, 1990, the ESMAP mission that visited MEH discussed the terms of the contract, a draft of which was being analyzed at the time. The fo11owing suggestions were made: To make explicit that the concession for development of hydro rerces is not exclusive and that the construction of power plants can be done by ENDE. To make explicit that notwitsnding the latter condition, the concessionaire company is rponsible for executing the power plants according to National Electification Plan priorities if their execution is assigned to it. 9 - The contract should specify that informaton conceming power developments shall be freely interchangeable, i.e. that the results of feasibility or prefeasibility analyses will be furnished to ENDE as central planner for the purpose of determining the desirability of their execution. EThe contract should specify a commitment of the concessionaire to cooperate with ENDE in the departments where it is licensed for the purpose of providing electricity to marginal communities. 33. The license was made official on 4 May 1990 with a decreeV/ which contains the following elements: The Government grants COBEE a 40-year, non-exclusive license to develop hydro resources, to generate and to transmit electricity according to Electricity Code conditions. - The areas which are subject to the development of hydro resources comprise COBEE's existing generation facilities as well as future projects on the Zongo and Miguillas rivers. In order to maintain its concession COBEE must present the feasibility studies for developing tho Miguillas river before December 1995. - Te Gavernment extends a license to conduct activities pertaining to the electricity industry in the La Paz and Oruro Departments as well as in the Bustillos province of the Potosf Department. However, the decree specifies clearly that the distribution activity within the concession area must be negotiated with the Municipalities. COBEE is constrained to supply licensed distribution companies within its concession area. COBEE is constrained to follow the investment priorities set out in the National Electrification Plan by presenting its generation projects to DINE who will decide whether or not to incorporate them in the Plan. The decree establishes explicitly which works will be undertaken by COBEE for the first 5-year period of the concession, i.e. the axtensions of the existing Zongo plants, the 9MW Tiquimani plant, the 28MW Huaji plant and the transmission lines associated with these projects. COBEE is to submit 5-year expansion plans on a yearly basis. 2/ ResolSc0n sWama 207640 of 4 May 1990 10 Fiancing for fuure project is to be sought by COBEE,and MEN agrees to provide uantes similar to those it gan other power sector enterprises. COBEE Is to retain property of its assets after te coimcession contract expires. COBEE's dispatch of its generation facilities is subject to priorities set out by the ENDE National Dispatch Center. COBEE is constrained to agree, with ENDE, on an interconnection contract that will supersede the 1986 agreement. 34. The decree conforms to the objective of providing COBEE with a basis for its continued operation in Bolivia. It also contains the basic obligations concerning compliance with national priorities as set out by the Electrfication Plan and it spells out dispatch responsibilities as well. It incorporated the basic suggestions made during the mission's stay in La Paz. However, the contract should be viewed as an element within more genera power sector policies, particularly as a mens for matining as well as incorporatng additional private capital into the sector, which otherwise would constitute a drain on public resources. For these reasons, the analysis witin this document will extend beyond the narrow scope of the concesion conct and will seek to analyze more general and long-term issues which can provide guiance regarding the institutional development of the power sector. mm lernUQneciontract 35. Transfers of energy between ENDE and COBEE were governed by an interconnection agreement of May, 1986. As shown in Annex 4, this agreement can be considered to be an ad-hoc contract designed for a short time span, until the expiration of COBEE's municipal contract, i.e. for the 1986-1990 period. 36. The contract provided a basic tariff stucture with capacity and energy charges; however, these prices become meaningless because a so-called participation agreement limited ENDE's total billing to a percentage of gross revenues collected by COBEE-La Paz. The percentage in question was equal to ENDE's share in supplying peak demand. 37. The intercomnection contract was also reviewed by the ESMAP mission of January, 1990. Although it is a contract between ENDE and COBEE its endorsement was made a precondition of the concession contract. The new interconnection contract was signed on 21 June 1990; although it is an updat.ag of the older contract mentioned previously, it eliminates the ad-hoc commercial conditions which were incorporated to overcome conmfontations between ENDE and COBEE during the years of economic crisis. 38. Ihe interconnection contract is conceived for the current situation, i.e. a bilateral agreement, rather an a frame of reference for more participant. It establishes (a) the commercial 11 conditions for energy transfers between the two parties; (b) the tariffs together with their structure and the basis for their calculation; and (c) billing conditions. 39. Tariffs are set in US dollars. They are based on a capital cost corresponding to ENDE's last installed gas turbine with a capital recovery factor for a 9% interest rate and a 30-year life. The energy component is based on the cost of natural gas for ENDE of 1US$ per thousand cubic feet. The energy charge is immediately readjustable with any change in the price of natural gas. The capacity charge has a 3-year duration after which it is updated. The tariffs also incorporate a transmission component in the capacity charge and a provision for losses. 40. The interconnection tariff for sales from ENDE to COBEE at the Vinto substation (Oruro) has a capacity charge of US$10.35SkW-month and an energy charge of 1 .4US/lkWh. The energy charge corresponds roughly to the marginal energy cost in the system with a gas price of US$1 per thousand cubic feet. The capacity is roughly equivalent to the incremental capacity cost of the system as calculated by ENDE in 1990. 41. The tariffs are designed for existing conditions, i.e. those in which COBEE is mainly an importer of energy. There is a provision for secondary energy sold by COBEE to ENDE in case there is excess hydro runoff in which case the tariff is 70% of the "normal" tariff. 42. In general terms, the conditions of the interconnection contract provide a sound basis for the operation of the system on a medium-term basis. It will need modifications (a) if the current composition of generation changes, (b) if new enterprises access the generation market or (c) if the power sector is reorganized at the generation level. 43. One of the commercial conditions that is a matter of concern consists in the billing stipulations: 30-day bills are established in US$ which were the origin of disputes between the parties in the high inflation periods. Given that COBEE does not generate foreign exchange and that its tariffs (in local currency) may not be readjusted in the same proportion as the exchange rate, these problems could recur. Furthermore, the contract stipulates that neither of the parties may ration its customers in order to limit its purchases from the other. This is exactly what occurred in the crisis periods and, consequently, a hedging mechanism may be in order for COBEE to be able to reduce its risk under unexpected fluctuations of the exchange rate. 44. The contract establishes an operations committee to take care of all technical matters related to the interconnection and a "Planning Coordination" Committee for analyzing progress on new construction and the need for rescheduling short- and medium-term plans. The interconnection contract has a scheduled duration equal to the concession contract. 45. The observations made to the concession contract are also applicable to the interconnection, namely that the scope of the agreement encompasses the present situation and corrects the problems of previous arrangements but that a longer term perspective is in order for the purpose of 12 visualizing the issues and altenatives open to the system it faced with changes In its institutional structure. Powr Sector Backgrond lMacn)ic nvkmne 46. The Bolivian economy suffered a brutal crisis in the first half of the 1980's. During this period GNP fell at an annual average rate of 2.5% and inflation escalated to hyperinflation, reaching a rate of more than 10,000 % p.a. in 1985. The immediate cause of this depression was a sudden reduction in the inflow of foreign capital, combined with an unfornmate sequence of natura disasters. However, poor investments financed by external capital borrowed in the 1970's, a large and inefficient public sector, poor economic management and extensive and harmful government intervention in the economy contributed decisively to the economic chaos. 47. When the 1985-1989 govnent took office it immediately imposed an austere economic stabilization program, which quickly brought inflation under control; in 1987 inflation was down to 11t% and in 1988 it was 22%, a low figure by Latin American standards. However, Bolivia continues to face serious economic problems and it depends largely on exports of natura gas and minerals (mainly tin and silver) as sources of foreign exchange to service its relatively huge external debt. In 1988 these com- modities represented 83% of total merchandize exports. Terms of trade declined 46% between 1985 and 1988 due to a decline in international prices of tin and hydrocarbons, thereby increasing the current account deficit. After six years of contious decline GDP resumed growth in 1987, but not enough to compensate for the increase in population and consequendy per capita income continued to fall. 48. The future of Bolivia's economy will still be constrained by a large external debt, the concentration of exports on a small number of traditional products, low domestic savings, and limited managerial resources in the public sector. Nevertheless, the present Government has achieved remarkable progress with its economic reforms. If the Government continues to adopt sound economic policies, manages to reschedue the debt service payments and obtains support from international donors, it may be possible to revert the decline in GNP per capita (US$ 570 in 1988) and achieve sustained economic growth, in the order of 4.0 - 4.7 % p.a. Instittiona Structure-an Le 49. The Bolivian power sector is nominally regulated by the Ministry of Energy and Hydrocarbons (MEH) through its electricity sector directorate (Direccidn Nacional de Electricidad - DINE-). The operating functions are divided among the following companies: Empresa Nacional de Electricidad S.A. (ENDE): organized as a corporation, in practice it plays the role of a state utlity. ENDE's shareowners are MEH (80%), YPFB (20%) and, in a very small proportion, COMIBOL. ENDE is principally a generation and 13 transmission company selling in bulk although it has some final customers it serves directy. Compafila Boliviana de Energia Ellica (COBEE) is part of a US corporation (Bolivian Power Co. Ltd-BPCo). It has operated in Bolivia since 1925 and has functioned as both a generation and a distribution company. COBEE has two divisions: the La Paz division with hydro generation facilities totalling 114 MW in the Zongo valley and the Ouro division where It sells power to a number of mining clients and to the Oruro distribution company, ELFEO. ELFEO, in turn, is majority-owned (95%) by COBEE and has a small participation of the municipality and the Oruro development corporation. In the area of La Paz, COBEE serves the city Itself and a number of smaller municipalities. At present, COBEE generates 34 percent of Bolivia's power. Empresa de Luz y Fuerza Electrica de Cochabamba S.A. (ELFEC) serves the municipality of Cochabamba and its surrounding region. It is owned by ENDE, the municipality and the Cochsbamba development corporation. Cooperativa Rural de Electricidad (CRE) is organized as a cooperative and it distributes electricity in the Santa Cruz region. Cooperativa Electrica Sucre S.A. serves the Sucre region. Servicios Electricos Potosf serves the Potosf region. Corporacidn Minera de Bolivia (COMIBOL): the state mining company owns generating equipment and is also a major client connected to the grid in a number of different locations. AMll the latter enterpdrises are part of the interconnected system. Non-interconnected companies include: - Servicios Electricos de Tarija S.A. (SETAR) in the Tarija region. Cooperativa de Servicios Electricos Trinidad Ltda. (COSERELEC) in Trinidad. 50. The relative size of these companies can be visualized by their final customer sales: Table 1: Sates (Ch), 1988 -... OMEE ------ La Pat Oruro ELFEO CRE ELFEC CESSA SEPSA COSERELEC SETAR ENIDE TOTAL awh 461 59 53 382 237 ST 31 11 27 53 1371 X 34 4 4 28 17 4 2 1 2 4 100 Source: ENDE, Resultados de Exptotacf6n 1988. 14 51. From a legal standpoint, the sector is regulated by the Electricity Code. The latter is a presidential decree of July, 1977. It covers the following aspects: concession-related regulations, rights of way, asset valuation, service conditions and tariffs, taxes, and fines and penalties. 52. The Electricity Code's more significant stipulations are: It is mainly oriented towards regulating concessions for electricity generation whenever natural resources are involved, or concessions for distribution of electricity to the general public. It establishes general attributions for the state to intervene in the case of right of way disputes as well as prerogatives and obligations concerning compensation of third parties affected by electricity concessionaire's works. Concession contracts are covered in very general terms concerning their contents, their expiration terms and the circumstances for nullifying them. The value of assets associated to a concession are to be approved by DINE. Asset revaluation due to price fluctuations is contemplated but no specific guidelines are set out. Tariff provisos are spelled out in detail. Tariffs must be approved by DINE. According to the Code, they are supposed to be calculated on a cost recovery basis, including a fixed 9% return on the "Tariff Base". The latter is practically equivalent to the net assets in operation. Since the Electricity Code is inadequate to promote the overall efficiency of the power sector, its revision is recommended as detailed in Chapters IV and V. eneration and Transmission 53. This section contains an overview of (a) the generation and transmission enterprises (ENDE and COBEE) from an operational and financial point of view, and (b) the contents of the National Electrification Plan developed by ENDE. 54. As in many countries, electricity service in Bolivia developed initially on a regional basis and progresaive integration has only taken place since the late 1960's with the creation of ENDE. However, it was only in 1989 that the interconnection with Santa Cruz, with its large gas potential, was put into service. The load center of Tarija in the south remains isolated. 55. In December, 1988 installed capacity in Bolivia was 605MW, of which 50% (301MW) were hydro units; thermal plants consist of gas turbines and diesel units. Annex 1 shows a breakdown of generation capacity. 15 56. Generation of electricity during 1988 was performed by ENDE (52%), by COBEE (34%) and, for its own consumption, by COMIBOL and other companies (12%); the remainder (2%) is generated by other public service companies. 57. Annex 2 presents a summary of the National Electrification 1 lan prepared in 1989 by ENDE with the services of ENEL. The principal resources that were analyzed for being developed in the plan were a number of hydro plants and gas-fired thermal plants (either gas turbines or combined cycle units). 58. Natural gas resources in Bolivia are plentiful. Most production is dedicated to export and a minimum amount is consumed internally. Tle opportunity cost of gas, for the purpose of power sector planning, was set at US$1.0/kCF, equivalent to approximately US$0.96/MBTU (with a heat content of 1045BTU/CF). 59. With these low energy costs (an inefficient unit with a heat rate of 15000BTUl/kWh would have a running cost of only UScl .44/kWh) the resulting expansion plan is characterized by the following choices: a development of gas turbine units, principally in the Santa Cruz region where the lower altitude does not derate the units as much as in other areas of Bolivia. a development of low cost hydro, which consists of a repowering of the COBEE Zongo river plants. a longer term development of hydro (beyond 2000) with the Huaji power plant (28MW), located in the COBEE concession area. 60. Marginal electricity costs at the high voltage level which encompass generation, transmission and substation (transformation) components yield the following values (see Annex 3), based partially upon ENDE calculations: Table 2: Marginal Electricity Costs Energy Costs (USe/kWh) Peak Cost: 1.7 Off-Peak Cost: 1.5 Capacity Costs CUS$/kW-year): Generation 59 Transmission 42.8 Transformation 6.2 Loss Cost 2.2 Source: ENDE and mission estimates. 16 61. Within the plan, COBEE's role would consist mainy of developing hydro resources, stg with the xtensions to its existing plants. These would require an investment on the order of US$22.4 million, including transmission reinforcements. In the transmission area, servicing COBEE would require the present 115kV link to opera at its rated voltage of 220kV. It is not clear as yet whether the cost of substaton equipment required for this purpose, at least at the COBEE end of the line, will be shouldered by COBEE or by ENDE. 62. COBEE reached September, 1990 with no long-term debt, having paid off its IDA loan of 1963 and having canceled its debt with ENDE. The book value of net assets in operation (December 1989) is around 50 million US$. 63. The Bolivian branch of COBEE shows an operating income for 1989 before interest of 4.1 million US$, arximately equal to the 1988 level. This is equivalent to a rate of return on net assets in operation in the 8-9% range. 64. ENDE's fiancial projections are based on an average tariff of 3.6USc/kWh which is appropxiately equal to the system marginal cost level. Its opeting income before interest for 1989 is on the order of 7 million US$. It is expected to increase to around 10.7 million US$ in 1990 with the same tariff level. 65. ENDE's assets are estimated to have reached 289 million US$ In 1990. ENDE's debt has decreased because the government capitalized 107 million US$ in order to strengthen the company fter the financial weakening of the hyperinflation years. ENDE's fiancial indicators are saisfactory and it generated enough innl resources to contribute up to 49% to investment in 1989. The latter figure is not epected to go beneah 23% in the near future. 66. On the whole, system finaces for the major generation companies are expected to show a stable situation which can support the expansion program proposed by ENDE. 67. The network operates as a 2-system interconnection between COBEE and ENDE (see Annex 4). ENDE is the major provider of electricity, as shown in the following table: Table 3: Bulk Transfers from ENDE (GAt) 1987 1988 1969 ELFEC (Cochabe) 243 258 274 CElIA (Sucre) 54 63 66 SEPSA (Potosu) 23 33 38 COmE-La Paz 48 74 90 Cobee-other a 33 65 Sub-TotaL C0EE 56 107 155 CtE (Santa Cruz) 406 430 437 Source: ENDE, Resultados T6cnicos de Explotacl6n, 1988. 17 There are also transfers from COBEE to ENDE during the rainy season: Table 4: Bulk Transfers from COSEE to ENDE (GWh) 1987 1988 1989 22 31 63 Source: ENDE, Resutados TYcnicos de Exptotacion, 1988. In tho La Paz division of COBEE, energy transfers from ENDE showed a peak of 47MW in 1989. SQnluiQm 68. The generation license awarded to COBEE will allow it to continue its operations in Bolivia for the next 40 years. This is to the advantage both of COBEE and of the Boliviar., ower system. On one hand, COBEE retains control on its productive assets and, on the other, the power sector benefits from the services of an enterprise which has proved to be a responsible and competent supplier. The interconnection contract normalizes the commercial and technical relationship between the two companies and will enable a closer cooperation between COBEE and ENDE. 69. The power sector does not face uy outstanding problems, either from a lack of physical resources or from financial constraints. This report will focus on the institutional performance of the sector where its major weaknesses are to be found. m. POWER SECIYR EVALUATION 70. Uhe genation license and the trconnetion contract ahieve the immediate objecdve of provwiding a sound basis for the continued opeation of COBEE in Bolivia. However, fundamental quesdons remain, puticularly concening the structure of the power industry, the incentives perceived by different companies and the role of goverment within the power sector. The purpose of this chapter Is to evaluate the sector's perfmance, to idenify the relevant issues to be addressed, and the need for longer term instiudoonal restucturng. 71. The procedure followed for the eauation consists of (a) defining the power subsector's objectives and policies and (b) confronting them with it performance. PLQr OWbeand iis 72. Power sector goals can be conveniently classified into four categories: Efficiency objectives oriented towards providing service at minimum cost at the supply level and fostering economic choices at the demand level. Qtuality of service and reliability objectives consistent with customer needs and the country's resources. - Distribution objectives whereby the economic surplus generated by sales of electricky is allocaed according to government priorities. - Public finance objectives consistent with the government's economic policies and, specificaly, with the alocaion of public fiuns to power sector instittions. 73. These objectives are rarely made explicit in policy statements and they have been inferred either from basic economic goas or indirectly from stipulations such as the price guidelines for power companies sipulated in the Electricity Code. 74. Efficiency at the investment level involves (a) establishing a least cost expansion plan and (b) executing it according to specifications. Ihe basis for designing a minimum cost plan is a demand forecast which, in tum, will deped on the price signals provided consumers, the relative prices of substitute fuels and overall policy goals, such as service coverage and the penetration of new market. 75. Efficiency at the operaton level is achieved mainly through a minimum cost dispatch, together with measures such as manteance coordination and control of losss. 76. Efficiency at the demad level canot be garanteed due to price distortions. The source of the problem lies in the Electricity Code which stipulates a 9% rate of reurn on asse as the basis for estblishing prices. This condition leads to (a) low prices at the consumer level, pardcularly in COBBE's La Paz division, which encourage waste and () a lack of Incenives for underaing new generation projects and ttractg capital mresu from the private sector. 19 77. Quality of service objectves are related to basic concepts of effectiveness In delivering electicity. Altiough the optmal level of reliability or quality may be open to discussion and may be of a subjectve nture, the quesionbeig addressed involves evaluating whether the sector's service quality is in accordace with Its goals and, If not, whether the problem is efficiency-related, i.e. whether a better service quality could be attained with the same resources. 78. Ihe question of surplus distribution is related principally to the allocation of hydroelectric rents: as natural resources become more scarce, choice sites for electricity production which were initialy developed (such as the COBEE-owned plants) generate profits above the nonral rates of return. These unearned profits are res whose best allocation is not necessarily the first beneficiary, i.e. the owner of the mechanical equipment used for hanssing the hydro resource; the issue revolves around (a) who should benefit from them and (b) the mechanisms for extcting and allocating the rents. 79. Public finance objectives arise in the case of electricity production due to the substantial govemment Involvement in the sector. The debt crisis, together with the recession of the early 80s, led the power sector to resort to public funds for servicing its debts. This destnation of resources drained means from other areas, partivc.larly in the social domain, whose needs are more dependent on public funds due to their intrinsically suibsidized nature. A reersal of this trend is deemed desirable from an overall public finance point of view. Poerm Sector 80. Based upon the stated system goals, the power sector's performance can be evaluated for the purpose of idendfying weakness and areas subject to corrective measures. V. The electricity industry supplies the major urban centers of Bolivia, and does so with reonable condmtity. From an oveal perspective, Bolivia's per capita consumption of electricity is only M4MkWh, compared with a regional average of 11OOkWha/, which ranks it among the three lowest in the Latin America and Caribbean region. Service coverage is on the order of 30%. At present, MEH policies relative to service extnsions consist of supporting them when productive activities can be identified for electricity use. Otherwise, service extensions to villages, and rual electrification in general, are not being coordied at the government level although local and regional development corporations are expected to assume this responsibility. 82. The provision of wider coverage should respond to market forces and should also be a responsibility of government, if only insofar as establishing goals, plans and gathering Information relative to the sector. At present there is no organization taking care effectively of the planning or the implementation aspects of is problem. 83. Power sector plannig is perfrmed by ENDE. The current expansion program, based upon the insllaon of relatively small (20MW) gas turbines together with a hydro complement, poses I/ OLADE, Eu#zjv Stodst, 18. 20 no significan issues or elements of unceaity. ENDE uses appiopriate models and advisory services for the task. 84. Concening project execution, the current short-term decisions consist of assigning thermal plant development to ENDE and having COBEE build new hydro plants for commissioning in the 90s. There are delays in the execudon of other projects such as the interconnection between ENDE and COBEE in La Paz: at present the existng line operates at lSkV and the voltage should be raised to 230kV for serving the peak demand in COBEE's La Paz division. The execution of this project, which consists mainly of intalling substation equipment, has been delayed and may lead to service curtailments. 85. With respect to efficiency at the dispatch level, ENDE coordinates system-wide generation following a straightforward process given the simple cost structure ot available generation resources, and the new interconnection contract addresses the operational issues posed by this structure. However, in the future a more complex generation structure is to be expected, with correspondingly more involved dispatch conditions. 86. Ihe question of the distribution of economic rents is indirecty addressed through tariffs: COBEE's rates for La Paz division customers are based on a 9% allowed rate of return and, given that COBEE's generation plants are both depreciated and low cost, the tariffs in La Paz are about 40% lower than those in other companies. Consequently, the rents are being reaped by La Paz customers through low electricity prices. From an economic point of view, these distorted prices promote inefficient consumption. From a public finance outlook, the question is whether such an allocation is reasonable from a national point of view. 87. The latter traits point out one of the major shortcomings in the present system: current electricity prices vary significantly from one company to another without keeping any relationship to marginal costs. Additionally, neither the metering system nor the tariff structure bear any reflection of the underlying cost structure. 88. The root of the tariff problem lies, in large measure, within the Electricity Code's stipulatiotns: on one hand, regulation is based on controlling the enterprises' rate of return (rate base reguation) which provides no incentives for reducing costs and, on the other, the lack of correlation to marginal costs promotes inefficient consumption, as in the case of the La Paz customers. 89. On the financial front, COBEE's situation is extremely healthy: it has no debt and its assets are in good operading order. ENDE's finances are equally satisfactory since it obtained an injection of government fiuds in 1987 and 1988. ENDE's rate of return on net assets is low (on the order of 3- 4%, gradually increasing to 5-6% in the late 90s). However, ENDE's tariff is in line with marginal costs; the reason for the low rate of retrn lies in its large asset base which results from the relatively large past investments on hydro plants. 90. Concerning the public finance objectives, it can be said that there are at present no guarantees for avoiding the pitfalls of the past where the central govemment had to capitalize ENDE (on 21 the order of US$100 million) In order to mainain its financia health. Under the current situation, investment will still be concentrated in ENDE and the government will continue to bear the risk of its investments. Tbis ftor is at crosapuposes with the government's policy which seeks (a) for the power sector to be selfsustaining, hence avoiding its dependence on the national budget and (b) to incorporate private capital Wto the electricity industry. 91. Despite having subscribed the new generation contract, COBEE's willingness to participate in the power sector and, in particular, to undertake investments should be judged with skepticism: COBEE's return on its marginal investmen tswith current tariffs cannot be,ustified; a possible explanation for the company's behavior lies in the protection of its historical investment, for which the rae of return on assets is atracive as it consiss, for the most part, of depreciated generating plants in good working order. The isue is therefore whether incentives (higher retns for new investments, possibly lower risk) can be put into place to attract willing private capital. COBEE's management has also made explicit statements to the effect that it inends to undertake the building of new plants with (a) low cost loans, hopefully from mutilateral lending agencies and (b) internally-generated income in future years. It is not the intention of COBEE to import capital from its parent company in the United States. 92. A first conclusion of this brief assessment of the power sector is that there do not appear to be any major flaws in the system. A summing up of the situation shows: (a) That Bolivia's power sector does not fice an energy resource availability problem; quite on the contrary, it has relatively abundant sources of low cost energy for the near future. This translates into a low cost, flexible, generation expansion plan. (b) That despite problems in the past, its present financial expectations are reasonably solid. (c) That notwithstanding the frmer positive aspects, the sector could operate more efficiently if appropriate incentives are put in place, such as: - cofrect price sipgals both at the level of bulk deliveries and final consumers. - incentives for utilities to operae efficiently through a modification of the regulatory mechanism (e.g. price regulation instead of rate base regulation). - thW possibility of promoting competition at the generation level in the fiture. 93. The following chapter will examine these aspecs in more detail in order to identify organiztional measures that will encourage the fulfillment of the sector's objectives. 22 IV. INSTITlUTIONAL ANALYSIS 94. Ihe power sector evaluation presented in the last chapter concluded that the main issues in the sector were insd onal in nature. This chapter analyzes the power sector's insdtutions to identify means for providing incentives to improve its performance. It recommends a stronger regulatory agency in the short run, an improved regulatory system in the medium-term, and a balance of regulation and competition in the long run. 95. The analysis proceeds (a) by identifying the Issues to be addressed, (b) by subsequently examining each Issue and oudining options to the problem and finally, (c) by combining the proposed measures into a consistent strategy. 96. The foremost issue to emerge from the previous evaluation is the weakness of the government's presence, either as a regulator of electricity enterprises or as a policy maker. This function is necessary becuse of the power sector's numerous areas of potential market failure, ranging from the allocation of hydro rents to the natb monopolies in transmission and distribution, which require the state's intervention. The present regulatory agency operates with scarce resources and lacks the capability for conducting a dialogue on the same level with the operating companies. Additionally, the need for formulating policy and coordinating actions associated with service extensions is not being attended to at present. 97. The second issue concerns the efficiency of the system and particularly the incentives imbedded within the present pricing rules. Despite the fact that it appears to be competendy planned and operated, the current regulations are such that there is no incentive for the operating companies to minimize costs or losses since the latter can be transferred to consumers via tariffs. 98. In order to generate "efficient demand" levels, prices for electricity should be established in line with marginal costs both in terms of structure and level. The current regulations do nft envision such a policy. 99. Although the sector is no longer dependent on government financing, it does not contribute towards public funds through income taxes. It would appear reasonable for an advanced subsector such as this one to strengthen the government's income. 100. A number of additional issues appear with respect to what can be termed "execution responsibilities". At one extreme there is the question of the execution of the expansion plan, which is strongly linked to the market structure at the generation level; at the other there lies the lack of definition of responsibilities with respect to service extensions which has led to having ENDE, a generation/ transmission company, provide service to small communities at medium voltage. The issue consists of defining responsibilities with respect to the execution of both large, high voltage projects and small, possibly rural, lines and distribution networks. Although the organization and regulation of distribution enterprises requires study in its own right, it lies outside the scope of this analysis which will concentrate on the institutional aspects of generation and transmission. 23 101. The following sections present a more detailed discussion of the issues identified beforehand, together with suggested approaches for taclding them. Th egla=o Agenc 102. At present DINE has, on paper, the power to control utilities' performance through the tariffsetting process. It is endowed primarily with faculties for controlling electricity supply concessions. The Electricity Code does not empower DINE with an explicit mandate to supervise the electricity industry insofar as more ample goals than mere tariff control. As a consequence, these functions have, de facto, been taken over by ENDE. In fact, neither DINE nor MER have enough resources to monitor the sector's performance or control the companies involved in supplying electricity. - It is doubtful whether DINE or MEH will be able to effectively control the conditions contained In COBEE's generation license. ENDE, with its considerable resources appears to be the dominant institution of the power sector; the problem with this situation is that there is a void of control mechanisms, either in the form of market forces or in the form of regulatory mechanisms, that may provide a measure of balances to this company's command of the sector. 103. In a restructuring of the regulatory agency, the following major functions are visualized: * Control of Expansion Plan * Allotment of responsibilities for Expansion Plan execution * Tariff Policy and Supervision O Control of concessionaires' quality of service 104. When the Electricity Code was promulgated, DINE was designed as an independent agency. Subsequently, DINE was practically taklen over by MMH, presumably in order to take advantage of the resources which the Electricity Code allocates to DINE. Consequently, DINE has become a Department of MEH with Insur nle difficulties for attracting qualified personnel due to depressed salary levels. Moreover, DINE's director is in fact a subordinate to the upper levels of the Ministy and is therefore subject to the political pressures of government office. To modify this sitaion, and 24 particularly to attract qualified personnel, DINE's sitaion can be reversed, by wresting it from MEH and creating a strong, independent office. 105. The implementation of this measure calls for practically no new legislative-type measures: at present, DINE's role and resources are defined within the existing Electricity Code (Tide VIII. According to the Electticity Code, DINE's resources originate in duties to be paid by electricity companies per kWh generated. A similar arrangement could be maintained in the future. 106. The Electricity Code also defines the functions of The National Electricity Council, a body composed of representatives from state ministers, from the National Planning Agency, from DINE, from the Mining Corporation (COMIBOL), from ENDE and from the private sector electricity enterprises. Until the present time this council has not been active within the power sector, but its composition, with a diverse and high level representation, shows promise for using it to advantage in a restructuring of the sector. 107. The main proposal for the restructuring of the regulatory agency consists of the following elements: * The National Electricity Council (NEC) would replace DINE and would become the main regulatory agency. X Tne Council would count on the services of an executive secretary appointed by the Minister of Planning and the Minister of Energy and Hydrocarbons for a three year term, with the current attributions of DINE's director. * The principal technical support of the Council would consist of one or two advisors to be hired as independent contractors for fixed periods, without public servant status. X The staffing of the Council would be kept to a minimum and the technical support would be provided either by power sector organizations or by contracting consulting services. This would include legal advisory services. The objective is to establish a small, tightly knit professional group with enough resources to attract qualified personnel and to contract all required consulting support. 108. This proposal differs sharply from DINE's current organization whereby there is a Director appointed by the Ministry of Energy and Hydrocarbons, a legal advisor, and three Departments (Institutional, Tariffs and Admrinistraive) staffed in a conventional manner. The proposed organization would become more independent, would count on greater resources and would be less subject to interference due to the council's composition with representatives from government and the sector. 25 109. For taking care of the extensions of service and electrification policies, MEH is creating the Rural Energ Directorshipl which will fornulate policies for service extensions. The execution of specific project will be delegated to regional entprises, such as the Development Corporations of diffeent departments. Insofar as the power sector is concerned, the principal point to be made is that it has a responsibility for execudng certain projects that are economically justified and financially viable. Otherwise, the funds for projects that require subsidization must be provided elsewhere. 110. With respect to tariffs, the problem can be broken down into consumer-level tariffs and bulk tariffs. The first category corresponds to final users whilst the second applies to transactions between power companies. 111. Consumer-level tariffs should follow the standard marginal-cost prescription with respect to their level and their structure, subject to financial constralnts. 112. Annex 5 shows average tariff levels in different enterprises. A cursory examination of this data shows (a) that the tariff structure does not reflect the cost structure insofar as the distinction between voltage levels is concerned, (b) that peak and off-peak charges to provide the correct cost-related signals are absent from current tariffs and (c) that levels tend to be low (less than 5US¢/kWh for domestic clients) with a strong element of cross-subsidization between 'general' customers and other categories (domestic, industrial). A first corrective measure would consist of adjusting thfe tariff structure to the cost structure, to be followed by a readjustment in levels in order to reach marginal cost values. 113. Bulk tariffs for inter-company transactions would, in principle, reflect marginal generation costs at the entry points to the network, plus a markup to reflect transmission costs at the delivery points. 114. In the application of tariffs based upon marginal costs the proposed option consists of providing efficiency incendves by substituting the present mode of cost-based regulaton for price regulation. Under the existing legisladon, tariffi are based upon the reimbursement of costs plus a predetermined rate of retrn on assets. Under the alternaive of price regulation, consumer tariffs would be set by the regulation agency and the power sector companies would be allowed to earn any rate of return by controlling their oosts, subject to the fulfillment of their licensed obligations. These price restrictions give the companies strong incentves to lift profits by holding down costs. 115. Two exceptional situations should, however, be faced: the first one concems the problem of COBEE and its La Paz customers who are benefitting at present from the hydroelectric rents of the system; the other concerns the problem posed by service extensions into low density areas, together with the rural electrification issue. 41 Direoci& de &el Rwl 26 Econnomic Roo 116. In the case of La Paz, a readjusent of consumer-level tariffs would automatically create a windfall profit for COBEE in the absence of complementary insttutional measures. In order to esfimate the effect of such a reaustment nqutivetem, it can be assumed that COBEE's final tariff in the la Paz division would amount to values comparable to those of other utilides. This would involve an average increase in rates of at least 2USO/kWh for sales in La Paz. Based on sales for the La Paz division of 600GWh, COBEE would perceive a windfall profit of 12MUS$ compared to its current profits of around 4MUS$. Avoiding this situation calls for instituting a royalty whereby "excess" income can be captured. 117. The royalty imposed should be determined by a function of the water inflow in the reservoir, which would not influence the incentives of the concessionaire company. A compromise between simplicity of royalty rules and optimization of the system's energy dispatch should be sought. The revemnes from the royalties would revert to the national or regional treaies and be used according to the respective governments' priorities. Incme Taxis 118. Taxing profits of power sector companies is a way of channelling resources from an advanced sector of the economy to less well-endowed sectors by strengthening public finances. 119. As in most cases of fiscal policy, this raises the problem of income tax control. Following the citeria of keeping a high level of quality within the reguatory agency, the corresponding audits should be contracted with independet accounting firms rather than staffing the NEC with qualified but expensive personnel. 120. 'Me establishment of an income tax and a royalty, requires legal groundwork and should probably pass through Congress. Consequently they should not be seen as short-term measures. 121. Finally, it should be noted that although electricity companies are exempt from income taxes, there are significant VAT and excise taxes on electricity consumption. At present, these taxes add up to around 27% of grs billing. Taxes correspond to (a) a public lighting assessment (7% of gross billing), (b) the VAT tax (9% of gross billing), (c) a "transaction tax' (10% of VAT) and (d) an excise tax amounting to 11% of gross billing. The proposed axation measures (royalties and income taxes) have the advantage of not contributing further to already important distortions of the price signal. Market tchr 122. The effectiveness of measures oriented towards improving the efficiency of the electricity enterprises depends in good measure on the incenti/es embedded within the sector's market structure. A desirable element for accomplishing the efficiency objective consists in promoting competition. This 27 would prvide an element of automatic market regulation and it could also facilitate the incorporation of private capial to the industry. 123. The present organization of the Bolivian power system exhibits the following market stuctre: (a) Two principal generation companies, COBEE and ENDE; the latter dominates the market in the sense that It is the sole purveyor of power to distribution enterprises outside COBEE's distribution area. (b) ENDE is the owner and operator of the interconnection system. (c) A number of distribution companies which purchase their energy from the grid. 124. Both the interconnection (transmission) and distribution functions are natural monopolies where competition cannot be promoted. On the other hand, at the generation level the expansion plan calls for the installation of 20MW units in gas turbines until at least 1995. The exceptions to this rule are two hydro plants to be developed by COBEE. Consequently, not only is the expansion plan flexible, but it can also allow for more than one company to take on the responsibility for a pati;ular gas turbine given the modest size of these unis. Finally, with a development program based on gas turbines, the sunk cost problems, which are usually a source of market failure when seeking to promote competition, can be at least partially avoided given that there is a market for used GTs and that, in extremis, they can be disassembled, sold and installed elsewhere. 125. To take advantage of these factors, the transmission grid interconnecting generators and distriuors must be regulated in order to avoid market manipulation by blocking a generator's access to the distribution market. A similar observation peains to the dispatch and system control functions: these must be performed by a single entity with no links to any particular generator. 126. With regard to the dispatch function, generation would be centrally assigned according to unit merit order. The justification for this approach, as opposed, for example, to bidding procedures, lies in the fact that the current organization with a predomrinntly thermal system (ENDE) and a 100% hydro system (COBEE) does not lend itself to this type of decentralized method, at least in the short run. Within a long-term perspective, the transition to a more market-oriented dispatch could be accomplished once the system has grown both in size and with respect to the number of generating companies. 127. With these considerations, the oudine of a more open generation market takes shape: the construction of new generation units would cease to be limited to ENDE and COBEE and their ownership and operation could be assigned by the regulatory agency to other enterprises. In the long run, the phased withdrawal of their monopoly franchises would add competitive pressures to keep electricity prices low. 28 Self generors could be accommodated within such an open structure which would enable the system to take advantage of cogeneratlon benefits. ENDE and COBEE, as well as new producers, would have access to a cheap source of gas for electricity generation and would be able to achieve a balanced mix of generating capacity. the network and dispatch functions would be exercised by an independent organization; this would require ENDE to divest itself from these assets. a merit order system for dispatching a market with a greater number of companies would be designed. julempentation Stateg 128. The options outlined beforehand contain a substantial number of measures, some of which cn be executed immediately whilst others require more groundwork. ITe purpose of this section is to combine these options into a coherent strategy for activating an institutionla reorganization. The proposed course of action consists of a phased approach based upon short-, medium- and long-term actions. 129. Short-tm measures do not require major changes within the present legal framework of the system. They would consist of (a) Setting up the regulatory agency as an independent organization within the framework of the Electricity Code. (b) Initiating the process of tariff reform by revising the rate schedules in order to reflect the structue of marginal costs, given that the present legislation does not allow full marginal cost pricing. 130. Medlum-ten actons involve two principal areas: a set of legal changes and a number of orgaiation measures. The legal medium-term actions involve: (a) Dealing with the problem of economic rents. (b) Shifting fiom cost-based regulation to price-based regulation. Bringing the income tax regime into conformity with other industrial enterprises. 131. The bulk of these medium-term actions consist of legal reforms which would be designed as a package. The NEC would contact a feasibility study for analyzing the economic and legal basis for settng an income tax on electricity companies and a royalty on hydro developments. The output of this project would consist of a legislative proposal to be submitted to the government and, where necessary, 29 to Congress. The need for the Goverment to agree with COBEE the revision of some of the conditions of COBBE's concession contract and the nerconecton Contract should pose no difficulty, since the package would benefit both the Goverment and COBEE. 132. In relation with the organization and management of the power system, the medium-term objecdves consist of: (a) Adjusting tariffs with the objective of reaching marginal cost levels. (b) Setting up a procedure whereby the property, construction and operation of new generation plants can be assigned to companies other than ENDE or COBEE. (c) Developing an istitutional environment whereby additional enterprises can enter at the supply level, either as generators or cogenerators. In particular, once the problem of economic rents is cleared, the adjustment of tariff levels would take pIae. 133. For implementing these medium-term organization goals, NEC would contract a tariff/organization study wih the following objectives: (a) esdmating marginal costs and designing a tariff system based upon them. (b) proposing a procedure for managing the entrance of new generators to the system, both regarding the regulatory requirements to be imposed on ENDE and the dispatching conditions. (c) providing a long-term plan geared towards the implementation of a market-oriented oraiation. 134. Finally, as part of the medium-term measures, a revision of the Electricity Code would take place In order to support the reforms mentioned before, both in relation to the legislative actions and to the organiation and tariff easures. 135. Ite Implementation of the different actions would proceed by stages: (a) Tariff level adjustme would take place once the problem of economic rents is solved and once the tariff study has produced the required estimates. (b) COBER and ENDE wold agree to reform the Interconnection Contract according to the results of the organization study. The issue as to whether ENDE's transmission and dispatchig functions should be legally separated from its generation function would be addressed by the tariff organization study. 30 (c) Ihe Electricity Code would be reformed based upon the results of the legal groundwork and the tariffl organization study. 136. LontTerm Measures consist of restructuring the sector at the generation and transmission levels following the recommendations issuing from the tariff/organization study. The purpose of these long-term measures would be to introduce dynamic market mechanisms ;' thit system both at the investment and at the operations level. The implementation would take place once the size of the system justifies the benefits of a reorganization with a commercial environment comprising multiple competitive generation enterprises. The medium-term reforms (to the Electricity Code, for example) should take into account the possibility of implementing these long-term measures. 137. It should be emphasized that these long-term measures require the system to grow significantly in terms of installed capacity relative to the current value of 600MW. At present, breaking up the system and therefore jeopardizing the operational continuity enjoyed by COBEE and ENDE, is likely to be inefficient. 138. The previous analysis constitutes an outline for future action on the organization aspects of the Bolivian power system. A number of elements will become better defined with the results of the legal and tariff/ organization studies to be commissioned by NEC. The next chapter presents an estimated timetable of actions for initiating the implementation of t.ese measures. 31 V. AGENDA FOR ACTION 139. The following sections propose an organization plan for implementing the strategy outlifted in the preceding chapter, with particular emphasis on the short- and medium-term measures. Short-ternActions The National Elericity Counsel - NEC 140. The organization of NEC would be executed by means of a decree to be drafted by MEH wt,+h the following provisos: - The National Electricity Council to be organized according to Title VIII of the Electricity Code. The Council's composition; this would require adjustments to reflect changes in cabinet ministries which have taken place since 1977, when the Electricity Code was originally enacted. The council should be an autonomous body and represent equitably the several actors involved in the power sector. The following composition is suggested: The Minister of Energy and Hydrocarbons The Minister of Finance The Director of the National Planning Office One representative from the electricity industry to be appointed by the Minister of Energy and Hydrocarbons Four consumer representatives appointed by associations such as the Chamber of Commerce, the Institute of Engineers, the banking sector, etc. - To minimize political interference, Council member mandates should be staggered and not coincide with Government mandate periods. - The functions of NEC as outlined in the previous chapter. The Managerial branch of NEC, with an Executive Secretary, to be appointed by the Council, and two technical advisors. The technical advisors of NEC to work according to fixed-term, independent contracts. Resources to be levied according to Electricity Code provisions. Staffing to be determined by the Executive Secretary and his advisors, and to be submitted for approval to the Council. 32 141. Once the staff of the NEC Is appointed, it would proceed to put in place a tariff strulture that will reflect that of marginal CO.tS without substantial modifications to existing rate levels. 142. The basic element of the options identified in the institutional analysis is the tariff/organization study. This study, given its scope, should be commissioned by NEC (once it has been established and organized) with the cooperation of the major generation and distribution companies who wouiwl provide the logistic support for the analysis (ENDE, COBEE/ ELFEO, ELFEC, COMIBOL...). 143. Concurrently with the tariff study, CNE would commission an analysis of the legal aspects related to the establishment of an income tax, and the feasible alternatives for capturing the hydro rents of the generation system. 144. Part of the output of these two studies should form a detailed blueprint for a commercial system encompassing: consumer-level tariffs with an adjustment agenda, if necessary, particularly for La Paz rates. - producer-level tariffs that provide marginal ccst signals to existing and potential generators. a tax system, or Its equivalent, for addressing the problem of hydro rents. 145. In parallel with the previous measures, the problems that are being faced by ENDE in maintaining installations in rural townships should be addressed, as suggested in the previous chapter, by strengthening MER and setting up an organization within the Ministry for the purpose of providing support to these communities. Medium-term Actions 146. Ihe reform study of the Electricity Code would be initiated in the later stages of the tariff/organization study as one of the core medium-term activities, in order to allow a new legal frame of reference for reorganizing the system in the following areas: Procedures and requirements to be followed for allowing the development of generation plants by companies other than ENDE or COBEE. The change from cost-based regulation to price regulation based upon marginal costs. 147. The reform of the Electricity Code would be undertaken by the NEC with the support of appropriate legal and tecnical advisory services. 33 148. In parallel with the reform of the Electicity Code, a modification of the Interconnection Contract would tak place for accommodating the incorporation of new generating companies. This element would be oriented towards developing and institutionalizing the methods for least cost dispatch to be followed in the future. 149. NEC would readjust price levels according to the recommendations of the tariff study and would do so by setting in motion the alterngive of price regulation. 150. Depending on the results of the tariff/organization study, institutional changes would be enforced, such as the separation between the generation, interconnection and dispatching activities of ENDE. Loa:=er Acton 151. As stated before the purpose of long-term actions would be to introduce dynamic market mechanisms in the system both at the investment and at the operations level. The implemention would take place once the size of the system justifies the benefits of a reorganization with a commercial environment comprising multiple competitive generation enterprises. Major institional changes, such as those outlined in Chapter 3 for the purpose of conforming a power pool or organizing a separate Interconnection entity, are only feasible once the major elements required by such an organization are in place, namely the decentralized generation option. Action Plan 152. Estimation of resources required for implementing short- and medium-term actions: IAWb : Action Plan - Cost Estimates Tariff/Organzation study Consulting Services US$250 000 Local Resources US$ 50 000 Sub-Total US$300 000 Tax Study and Electricity Code Updating Conswlting Support US$130 000 Loca Legal Services US$ 20 000 Sub-Total US$150 000 Total Resources US$450 000 34 153. Approximate time schedule for the recommended plan of action. Table 6: Action Plan - Schedule onth 1 2 3 4 5 6 7 8 9 10 11 12 Organization of NEC XXX XXX Tariff Structure Modifications: Analysis xxx xXX Implementation XXX XXX Tariff/Organization study Terms of Reference XXX XXX Execution XXX XXX XXXX XXX XXX XXX XXX Legal Study XXX XXX XXX XXX 13 14 15 16 17 18 19 20 21 22 23 24 Tariff/organiation study XXX XXX XXX Tariff Level Adjustment XXX XXX XXX XXX XXX XXX Electricity Code Revisions XXX XXX XXX XXX XXX XXX XXX Interconnection Contract Revfsion X)X XXX XXX XXX XXX 35 ANNEX 1 Page 1 of 2 GENERATION AND TRANSMISSION 1. Electricity in Bolivia is provided through the Central Interconnected System (Sistema Nacional Interconectado or SN!) and a number of Isolated Systems together with non-utility generators. Until 1988 the SNI was structured roughly along a North-South axis (La Paz-Oruro and Cochabamba- Potoso; since 1989 the SNI also incorporated Santa Cruz. The SNI encompasses generating stations of ENDE (Corani, Santa Isabel, Karachipampa and Aranjuez), of COBEE-BPC (Zongo and Miguilla) and of COMIBOL (Rio Yura, Rea Rea, Chaquiri and Lupi Lupi). 2. Installed capacity in the country as of December, 1988 was 605MW (301MW hydro and 304MW thermal). Thermal units are either diesel or natural gas-driven turbines. Table 1.1 shows the corresponding breakdown. Table 1.1 Installed Capacity (1988) -MW- Hydro Thermal Total X ENDE 126 192 318 53 CO8EE-BPC 142 142 23 Other Utilities 8.5 28 37 6 Non-Utilities 24 84 108 18 Total 301 304 605 o50 50 3. Production of Electricity in Bolivia during 1988 is shown in the following table: Table 1.2 Electricity Production (1988) -GWh- Hydro Thermal Total X ENDE 500 476 975 52 COSEE-BPC 638 . 638 34 Other Utitities 6 30 36 2 Non-UtiltitIes 106 113 218 12 Total 1249 618 1867 X 67 33 36 ANNE!X I Page 2 of 2 4. Most of ENDE's production is sold in bulk to distributing companies. Retail level sales for 1987/88 were: Table 1.3 Public Utility Sales (1987/88) -GUh- 1987 1988 X Growth COSEE-BPC 440 460 4.5 CRE (santa Cruz) 363 382 5.1 ELFEC (Cochabamba) 214 237 10.7 CESSA (Sucre) S0 57 14.7 ELFEO (Oruro) 50 53 7.3 SEPSA (Potosi) 21 31 17.1 SETAR (Tarije, Isolated system) 27 27 0.1 COSERELEC (Trinidad, 1solated system) 11 11 4.1 TOTAL 1176 1259 6.5 EWDE Direct Sales 68 53 .22 Other COBEE Sales 50 59 18 TOTAL 1295 1371 5.9 COBEE is Bolivia's largest retailer of electricity and its second-largest generator. S. The Bolivian interconnected system has a radial appearance, centered roughly around Oruro with three arms leading to La Paz (200 kIn), Potosf (250 km) and Santa Cruz (more than 400 km from Onruo). Voltages used for transmission are 115kV except for a 200-plus km line leading to Santa Cruz (San Jos-Huaracachi) which operates at 230kV. Additionally, the link to La Paz (Vinto-Kenko, 201km) is built for 230kV although it operates at present at 115kV. All of the trunk network is owned and operated by ENDE. 6. The system can be described as being geographically dispersed with a balanced generation structure near the main demand centers and relatively weak interconnection links which accomplish energy interchange functions. 7. Hydro generation stations date from 1909 (the Achachicala hydro station in La Paz) until 1983 (last unit of Santa Isabel in Cochabamba). Thermal units date from 1971 until 1988 (Santa Cruz). All generating stations operate normally with the exception of the older thermal units. 37 ANNEIX 2 Page 1 of 5 THE NATIONAL ELECTRIFICATION PLAN 1. Between 1968 and 1988, per capita consumption of electricity in Bolivia increased from lS2kWh to 250kWh1year (2.5% pet annum). Installed capacitY within the country trebled from 222MW to 605MW (5% per anmum). However, most growth took place before 1980: around this year Bolivia entered a period of recession which, although common to many Latin American economies, was particularly vicious due to the low price of metals and the consequent losses in the mining industry, the country's traditional economic backbone. Generation in the SIN only grew 10% between 1980 and 1985 (Oess than 2% per annum). 2. The country's power systems, which operated in isolation until the late 1960s, were progressively integrated between 1967 and 1989. The National Inteconnected System (Sistema Interconectado Nacional -SIN-) now covers 85% of the national market, including the cities of La Paz, Oruro, Co3hbamba, PotosI, Sucre and Sant Cruz as well as mining and rural areas. The remainder of the market is supplied by isolated systems centered around smailer cities or mining centers. 3. Planning for generation and transmission is performed by Empresa Nacional de Electicidad (ENDE) and it covers the interconnected system as well as the major isolated systems. The crrent plan was executed by the Italian company ENEL with the cooperation of ENDE personnel as well as input from the Ministry of Energy and Hydrocarbons, the National Electricity Directorate (DINE), the Ministry of Planning and Coordination and Yacimientos Petrolfferos Fiscales Bolivianos (YPFB). The plan was prepared between February 1988 and June 1989. 4. Objectives of the National Electrification Plan are: - To obtain demand projections for the interconnected system. - To identify and update candidate generation projects for supplying the system. - To establish the rininum cost generation and transmission expansion plan for the interconnected system. - To define the medium-term (1989-1995) expansion program for its financing, execution and the assignment of investment responsibilities among the sector's enterprises. 38 ANNEX 2 Page 2 of 5 To establish strategic objectives for system expansion regarding the coverage of the ilnterconnected grid, its basic long-term configuration and the order of priority in the development of primary energy resouraes. To formulate a preinvestment plan for a medium term program of engineering studies (viz. geological surveys, hydrological analyses) needed to confirm the long term plans. To specify 1,asic standardization practices, particularly regarding new equipment. To formulate a strategy for adjusting the plan to changing conditions. To train ENDE personnel and to foster better energy planning systems in Bolivia. 5. As noted before, demand growth has gone through two distinct phases: a period of relatively high growth (1966-77) and a decade of stagnation and, in some years, of decline, due to a depression within the mining industry (1977-1987). This was particularly notorious on a regional basis: whereas the eastern subsystem of Santa Cruz grew at rates of 15% per annum, the northern and, particularly, the central subsystem (which covers the principal mining region in the country), grew at only 3.8% and 1.6% per annum, respectively. 6. The Plan developed demand estimates based upon a projected growth rate of 5.8% per annum for 1988-2000 and 6.1% per annum for 2001-2010. The underlying assumptions are a population growth rate of 2.8% in the first period and 2.6% in the second, together with GNP growth rates of 3.4% and 3.89%, respectively. These values are subject to considerable uncertainty given Bolivia's economy traditional dependence on mining, although the development of natural gas resources and their export has recently provided a much-needed element of diversification and a source of stability. Natura Resources 7. Natural gas is the main hydrocarbon resource of Bolivia. Reserves are estimated to be on the order of 5.3 1012 cubic feet (5.3TCF). Gas production has been in the range of 450-500 millions of cubic feet per day (450-S500MCFD); around half of this amount is exported to Argentina and 45% is reinjected. Only 5% is consumed intenally and the power sector has been the principal customer. 39 ANNEX 2 Page 3 of 5 8. The principal gas fields lie in the departments of Santa Cruz, Chuquisaca and Tarija. A network of gas p!pelines (2840km) connects the areas of production with the cities of La Paz, Oruro, Cochabamba, Santa Cruz, Sucre, Potosi, Tarija in addition to the pipeline that supplies Argentina (525km). Furthermore, a 575km pipeline for exports to Brazil is to be put into service in 1992. Consequently, gas for electricity generation is available in the main demand centers of the country and access to it is limited only by pipeline capacities. 9. Despitellas availability, practical limitations to electricity production with gas units appear in the form of higher investment costs due to unit derating becase of altitude constraints. For example, a 33.5MW-rated unit in Santa Cruz (440m above sea level) will generate 30MW whereas the same unit in La Paz (3400m above sea level) will only generate 20MW. 10. For the purpose of economic evaluation, gas costs were estimated at lUS$/kCF for fuel with a 1045BTU/CF content. Transportation costs were estimated to be US$0. 10/kCF in existing pipe- lines. Marginal transportation costs to Cochabamba, Oruro and La Paz with increased pipeline capacity were assessed at 1.6US$/kCF, 2.4US$/kCF and 2.8US$/kCF (at January'88 price levels), respectively. i1. Unit capital costs for gas plants were taken to be US$377IkW (per rated kW) for 22.3MW units dropping to 305US$ for 89MW units; heat rates were assumed to be 3879kcal/kWh for the former and 3490kcal/kWh for the latter. Combined cycle units (75-80MW) were taken into account as possible candidate power plants with costs on the order of 533US$ per rated kW. 12. Hydro resources are estimated to have a potential of 18000MW with an annual output of 90W0OOGWh. At present, only 297MW have been developed. The expansion plan took into account 14 developments totalling 1463MW of which 4 have prefeasibility studies, 5 have feasibility studies, and 5 are at the design stage. U1it costs range from 800-900US$/kW for expansions of existing power stations to 2000-3000US$IkW for 8 of the candidate plants. Expansion Plan Results 13. With the cost of gas noted above, variable generation costs of gas turbine units are on the order of 1.4USc/kWh or less. 14. The result of the analysis is that future expansion takes place practically with an all-gas development. The only hydro plants to be developed are the extensions to the Zongo power plants (20MW) and the Ruaji (28MW) hydro plant. This strategy, based as it is on small units with short lead times, allows the system to adapt its generation to demand in case the latter experiences important fluctuations. 40 ANEX2 Page 4 of 5 15. Given that there have been delays in negotiating the concession contract for COBEE, it is unlikely that the extensions to the Zongo power plants can be executed as inally planned. The prest power epasion program was therefore adapted to the current sitation with the following projects: Orfignal Plan Prsent Plan 1990 1x20 S OT Santa Cruz 1991 WO2KU OT Cochabamba 1x2CNW ST Cochabamba 2x201W OT Cochabamba 1992 lxZONW GT Cochabauba lxCWO GT Cochabamba lx20WW Gt Santa Cruz 1993 Ix20ff GT Santa Cruz 1x32.SNW GT Santa Cruz 20.4i Zono Hydrol 1994 Wx20KN OT Santa Cruz 1x2WO CT Sucre 'in sveral power plants. Sources EDE. 16. Becase of the genention delays, the tansmission plans for 1990-1995 at the l15kV level are: 990 Valle Nermoso-Corani 115kV, 47km 1991 ---- 1992 Vinto and Senkata 230kV substations (2x9ONVA) Vinto-Valle Nernwso 115kV, 153kD 41 ANNE 2 Page 5 of 5 17. For COBEE's main load center, the energy balance for the northern subsystem shows the following figures: Energy and Capacity Belance: Northern Susystam 1990 1991 199 1993 1994 1995 Generatfion: Get 564 56 5 564 64 56 4S Nu 9B 98 98 96 98 98 GWh 512 S81 640 686 734 783 NM 147 160 174 184 195 206 Balance Gt b 52 -18 -76 -123 -171 -219 MW -49 -62 -76 -86 -97 -108 Source: EWIDE. 18. With a single 115kV link between the generaion centers and the northern subsystem, peak deficits are exp to ocur between 1991 and 1992 when the 23OkV substations are expected to be in operation. The actual amount of rationing that may take place In La Paz is difficult to estimat, but setting an upper limit of about 5OMW on the asfer capacity of the exiting 1l5kV link means that in 1991 and 1992 shortages may be on the order of 10-20MW. 42 ANNEX 3 Page 1 of 2 MARGINAL GENERATION AND TRANSMISSION COSTS ILcr=erX Costs 1. ENDE performed an incremental cost calculation based upon the information of the readjusted generation and transmission plan (rables 3.1, 3.2, 3.3). The results obtained by ENDE show the following values: Incremental Fixed Costs: 1.O06use/kWh incremental VarIable Costs: 1.955USt/kWh Total 2.961US*/kUh Fixed costs Include investment costs and fixed O&M. Variable costs include fuel costs and variable O&M. Costs are discouned with a 12% annual rate. All costs are expressed at constant Jan'88 price levels. 2. Incremental transmission costs estimated by ENDE over the 1989-1990 period are: Capital Costs (Present Value): 48.4NUS$ Fixed O&N (Present Value): 15.7HUS$ 115kV Demand Increments (Present Value): 1497MU Annual IncrementaL Cost 42.8us$/ku 3. Similarly, transformation costs are given by Capital Costs (Present Value): 5.8NUS$ Fixed 011 (Present Value): 3.5MUSS 115kV Demand Increments (Present Value): 1497MW Annual Incremental Cost 6.2US$/kW Marginal Cost 4. The incremental cost approach is adequate for transmission and transformation costs where lumpiness of investments precludes a strict marginal cost approach. However, at the generation level, an examination of short run costs provides insight into how the system operates and how it uses its resources. In the case of the SIN, an economic dispatch of the system should seek to load economical, low heat rate, units first and use the high heat rate units during peak periods. 43 ANNEX 3 Page 2 of 2 5. An estimate of these marginal costs, using the gas cost of IUS$/kCF and an energy content of 1045BTU/CF, yields the following values: Peak CostS correspond to gas units with heat rates on the order of 16000BTU/kWh, or around I.5US¢lkWh. Adding 0.16USc for variable O&M yields 1.7USO/kWh. Off-peak costs correspond to gas units with heat rates of 13500BTU/kWh, or around 1.3USO/kWh which yields 1 .5USOkWh when variable O&M is included. 6. Peak capacity costs correspond to an extra kilowatt generated in a gas turbine. The problem is where this incremental kilowatt is located, given the derating of generating units according to their geographical location and their altitude of operation. The tradeoff lies between incurring transmission expenses or saving on transmission and incurring extra capital expenses for a more powerful, but derated, turbine (together with possible gas pipeline costs). 7. The Electrification Plan chooses an expansion program where most gas turbines are installed in Santa Cruz, where the cost is lowest. The exceptions are 3 units in Cochabamba, originally planned for 1992 and 1993, and 3 units in Sucre in 1996 and 1998. However, if a marginal demand for capacity appers in any part of the system, the lowest cost alternative for serving it would consist of insalling new units in Santa Cruz. 8. Gas Turbine costs in Santa Cruz are on the order of 400US$/kW with 20-40MW units. Fixed annual O&M costs are assumed to be around US$5/kW. With a 20-year life and a 12% discount rate, the marginal capacity cost would amount to US$591kW-year. Reference Bulk Deliverv Price 9. With the values calculated beforehand, the delivery of energy at the bulk level (i.e. 69kV busbars) would have the following components: - Energy Costs (Use/kWh): Peak Off-Peak Generation 1.? 1.5 Transmission Loss (3.7X) 0.06 0.06 Delivery Cost 1.6 1.6 - Capacity Costs (usS/kw-year) Generation 59 Transmission Loss(3.7X) 2.2 Transmission Cost 42.8 Transformation Cost 6.2 Oelivery Cost 110.2 44 ANNERX4 Page 1 of 4 SYSTEM OPERATIONS 1. Bulksales take place between ENDE and distribung companies and between ENDE and COBEE. B lk sales In 1987-89 had the following aspe: OW lulk Tranfers tram ENDE 1967 1988 1989 ELFEC (Cchahuro) 243 258 274 CESSA (Sucre) 54 63 SEPSA (Potost) 23 33 38 COSEE-La Paz 48 74 90 cae-other 8 33 65 STottl COSEE 56 107 155 CRE (Santa Cruz) 406 430 437 GU Bulk Trasfers from CODEE to ENDE 22 31 63 In the La Paz diision of COBEE, energy transfes from ENDE showed a peak of 47MW in 1989. CnmmerWa Condidons 2. Ihe exsting inerchange ageme between ENDE and COBEE dates from May, 1986 and It was subsequendy refomed in June, 1988. Is main poviso stipulates that paymets to ENDE must keep a direct relaonship with ENDE's paicipation in the supply of demand to COBEE-La Paz. This is intpreted wit the agreemet in the sense that the ratio of Contracted Demand plus Reserve Capacity to Guaranteed COBEE Capacity plus Conacted Demand plus Reserve Capacity should equal approximately the ratio of ENDE's invoice to COBEE's total billing. 3. For reference purposes, the agreement establishes a tariff which consists of a fixed monthly charge, demand charges for reserve capacity, for contrad demand and for "additional capacity", and an energy charge. The fixed charge corresponds to an amorzation quota of a debt for previous engy im by COBEE: Nay 1986 June 198 Fixed Monthly charge: US$35000 UfS30 Cpcity Charges CUSI-month) Reserve Cacity 6.25 6.25 Cantrawted Capacity 13.50 9.78 Additinal Capacty 13.50 4.89 Energy Charpe: USal.0/Wi UkI .0/kW 45 ANNEX 4 Page 2 of 4 Deliveries from COBEE to ENDE are priced at 0.7USO/kWh, without a capacity charge. The average price charged COBBE by ENDE in La Paz for 1989 was 4.9USO/kWh, with a wide variation (e.g. 9.2US¢/kWh in December, 1989 with a delivery load factor of only 18%). 4. The latter tariffs are specifically for Interchange at the Kenko substation, i.e. for energy supplied to La Paz. Different rates are applied by ENDE for delivery to COBEE at other points (viz. the Vinto and Catavi substations). 5. The present rates can be compared with the marginal cost estimates based upon the 1989 expansion plan: Energy Costs (USe/klh) Peak 1.7 Off-Peak 1.5 Capacity Cost: 110 IJSIk'd-year (USS9.2/kU-month) Compared to marginal costs, the energy charge appears to be too low whereas the capacity charge is only slightly higher. If the fixed charge is excluded, ENDE is probably incurring a nominal loss on its sales to COBEE. 6. The 1986 agreement has a number of serious shortcomings, of which possibly the most important is the absence of information conveyed by the tariff structure given the "participation" clause with respect to COBEE's billing. To understand the reason for this peculiar proviso, it is worthwhile recalling the economic conditions of early 1986: during the previous year, Bolivia had withstood an extended period of hyperinflation and therefore there was a deterioration in the operation of any enterprise which, because of the industry's characteristics, had to extend any kind of extended payment to its cstomers. Such was the case of COBEE: rates that at the beginning of one month were adequate to cover expenses proved to be woefully insufficient by the end of the period. Additionally, ENDE's invoices were denominated in dollars and therefore retained their value. Consequently, COBEE found itself in the position of being utterly incapable of keeping up to date on its payments. The upshot of this was that the interconnection with ENDE was opened for an extended period until the economic situation stabilized. Ibis explains the fixed charge (which was the result of a negotiated transaction to compensate ENDE for energy delivered during the aforesaid period) as well as the participation clause which operates as a risk-sharing mechanism between buyer and seller when circumstances arise (such as brusque devaluations) that impede the buyer from honoring the contract. 7. Another aspect of the contract that is questionable is the lack of time of day information, i.e. the absence of peak and off-peak rates for both energy and capacity given that at the high voltage level all these measurements are feasible. 46 ANNE 4 Page 3 of 4 8. TechnIcal provisos of the exis Inteowmection agreement are very general: - a voltage-regulaton condition at the Interoonnection bus is spelled out, but the responsibility for controlling it is not assigned. - tife-line ntrchange control which is assigned to COBEE while frequency control is assigned to ENDE. This type of control cannot fanction adequately: tie line load and frequency control should be supervised by the same enterprise. - provis by which the participants agree to refrain from rationing their customers with the purpose of limiting purchases. - a sdpulation by which transmission maneuvers are to be coordinated by the two systems. B= Daft OfNohfi____inCM 9. Following Is an oudine of the interconnection contract draft prepared by ENDE: The contract governs power interchange with COBEE-La Paz. The delivery points correspond to the Kenko substation (115kV) until the 230kV Senkata substation is put into service. Two types of capacity are defined: a base contracted capacity (contracted with a 3-year advance) and an additional" capacity. The latter consists of capacity in excess of contracted capacity, agreed to on a yearly basis. Rates for energy and capacity are: Contracted Capacfty: 1OUSM/kW-month Additional Capotfty: Peak (1800-2200h): 12.SUS$IkWd-month Off-Peak: 7.5SI;/k-month Enmtg Charge: 1.5US1/klah mhe Contract includs an adjustent clause as a function of dwee factors: a) the U.S. Industi goods index (weight=0.5), b) the purchase price of natural gas (weight=0.19) and c) the Bolii consumer price index (weight=0.31). Technica supply conditions for voltage and fiequency control. 47 ANNEX4 Page 4 of 4 Provisiors for limittions of responsibility in cases of Acts of God. Payment conditions with defat penalties. Guartes: acoording to the contract, COBEB's collection would be held in escrow by a local bank. Masement point, equipment, precision conditions. Organization of an operations committee. Maintece provisions. Arbitation conditions. 48 ANNEX 5 Page 1 of 1 ELECTRICITY TARIFFS 1. Electricity tariffs in Bolivia are authorized by DINE on the basis of studies performed pursuant to petitons from the power companies. Structures and levels differ from one company to another. The average levels for different categories of consumers ae given as follows: Electricity Tarfffs (USc/kdh) Distribution Industrial Nining Comanes COEE Clients Coqnanies ENDO tariffs 2.83 4.06 4.29 4.54 Domestic General industrial Mining COME-La Paz 2.80 5.25 2.93 8.09 COEE-Oruro 4.70 4.21 SLFEO (Oruro) 2.61 5.74 2.86 ELFEC tCochaaAss) 4.62 9.58 4.85 3.98 SEPA (Potosf) 4.66 9.06 5.87 ESIA (sucre) 3.88 10.79 8.40 CRE (Santa Cruz) 4.13 9.29 5.42 COSERELEC (Trinida') 10.92 21.83 12.27 llsolated system Source: DINE. 49 ENERGY SECTOR,M&NAGEMDN. ASSIANCE PROGRAMME COETED ACTViIES Como Acspy Darte Number SUB-SAHARAN AFRICA (AR) Afirica Regial Anopho Africa Household Ener Workhp 07188 08S/88 Reoa Pow Seia on Reduing Eletc Power System Lss in Africa 08/88 087/88 lsitonu Evaluaion of BOL 02/89 098189 Biomass Maing Regnal Wokbops 05189 - Fnco Houshold Ener Workshop 08189 103/89 nterfiican Eetrical Engiering Cllge: Proposal for Short- md Loog-Tom Developtneo 03/90 112/90 _io,um Amoment and Mqqag 03/90 - Angola 05e, A _t OS/89 4708-ANG Power Rehabilitation and Tecbnical Asoot10191 142/91 Benin 8W e- 06/85 5222-BEN BotsBa EnerAgy. 09/84 4998-BT Pump Elecficatm PrefsiiWt Study 01/86 047/86 Review of Electrici Sevice Connection Policy 07/87 071/87 TuH Blck Farm. Electrification Study 07/87 072/87 Household Eerg sses Study 02/88 - Urbon Houa stiehold EuVbat Study 05191 132191 Bhlia Faso Esy Am_ment 01/86 5730-BUR Teft.o Acisbm _ Pro8re. 03/86 052/86 Ura Household Enagy Strateg Study 06/91 134/91 Bwundi neAryt 06/82 3778-BU Pdroleum tsuy Maxu_semt 01/84 O1V84 S-o Report 02/84 011/84 p _mtmbm of Eeg Proet for the Fourdh Friv-Year Plan (1983-1987) 05/85 036/85 Imved Cbhrcoal Cookstove Stey 09/85 042/85 Peot Utilization Proect 11/85 046/85 EY Am t 01/92 9215-BU Cape Verde Energy Am t 08/84 5073-CV Houehold Ener Shtzegy Study 02/90 110/90 Como rO A _t 01/88 7104-COM CGopgo Energy AsU01/8 6420-COB Power Developmaet Plan 03/90 106/90 C8t d'voie EneAgy A 04/85 5250-IVC Imp1vd Bionss Utilizaton 04/87 069/87 Power Systm Efficiecy Study 12/87 - Power Sector Efficiency Study (French) 02/92 141/91 Ethiopia nergyAm 07/84 4741-ET PDw System Efficincy Study 10/85 045/8S AgicultA Reidue Biquoeg Pilot Project 12/86 062/86 Bagss Study 12/86 063/86 Cooking Effidcny Projct 12/87 - 50 Coewy AclvW'y Date Number Gabon Emnerg Assessment 07/88 6915GA The Gambia Egy Assessment 11/83 4743-GM Solar Water Heating Retrofit Project 02/85 030/85 Solar Photovoltaic Applications 03/85 032/85 Petroleum Supply Management Assistance 04/85 035/85 Ghana nergy Anm t 11/86 6234-GH Enetgy Rationalization in the Industrial Sector 06/88 084/88 Sawmill Residues Utilization Study 11/88 074/87 Guinea Energy Assent 11/86 6137-GUI Guinea-Bissau Eergy Aessmt 08/84 5083-GUB Recommended Technical Assistance Projects 04/85 033/85 Mmagement Options for the Electrc Power and Water Supply Subsectors 02/90 100/90 Power and Water liustittional Rethiuturing (Ftench) 04/91 118/91 Kenya Energy A_ sent 05/82 3800-KE Power System Efficiency Study 03/84 014/84 Status Report 05/84 016/84 Coal Conversion Action Plan 02/87 - Solar Water Heating Study 02/87 066/87 Pei-Urban Woodfuel Development 10/87 076/87 Power Master Plan 11/87 - Lesotho Energy Asessment 01/84 4676-LSO Liberia Energy Asmssent 12184 5279-LBR Recommended Teebnical Assistance Prqects 06/85 038/85 Power System Efficiency Study 12/87 081/87 Madagascar EerVy A _ssmet 01/87 5700-MAG Power System Efficiency Study 12/87 075/87 Malawi Energy Assessm t 08/82 3903-MAL Technical Assistance to Improve the Efficiency of Fuelwood Use in the Tobacco Industry 11/83 009/83 Stms Report 01/84 013/84 Mali Energy Asment (French) 11/91 8423-MU Islamic Republic of Mauritania Energy Assessment 0';85 5224-MAU Household Energy Strategy Study 07/90 123/90 Mauritius Eny Assessment 12/81 3510-MAS Stats Report 10/83 008/83 Power System Efficiency Audit 05/87 070/87 Baas Power Potential 10/87 077/87 Mozmbique Energy Assesent 01/87 6128-MOZ Household Electricity Utilization Study 03/90 113/90 Niger Energy Amsment 05/84 4642-NIR Status Report 02/86 051/86 Improved Stoves Project 12/87 080/87 Household Energy Conservation and Substitution 01/88 082/88 Nigera Ener A 08/83 4440-UNI Rwanda Energy A t 06/82 3779-RW Energy em t (English and French) 07/91 8017-RW Status Report 05/14 017/84 nmproved Charcoal Cookstove Strategy 08/86 059/86 Impved Cal Production Techniques 02/87 065/87 S1 Conby A dlvy D1e Nambr Rwand. Commercialization of Improved Clwcoal Stove ad Caboniztion Tecbiques Mid-Term Proges Report 12t91 141/91 SADCC SADCC Regional Sector: Regional Capcty-Buidn Prorm for Energy Suveys and Policy Analyoss 11/91 - Sao Tome and Principe Energy Assmt 10/85 5803-SP Senegal Eneynt 07/83 4182-SE Stau Report 10/84 025/84 Induwtrial ergy Conservation Study 05/85 037/85 Prepartoy Asistane for Donor MeetI 04/86 056/86 Urban Household Eny Sftategy 02/89 096/89 Seychelles Energy A _t 01/84 4693-SEY Eleric Power System Efficiency Study 08/84 021/84 Serm Leone ElB Assessment 10/87 6597-SL Somaia Eney A t 12/85 5796-SO Sudan Mnagement Asdstance to the Ministry of Eney and Mining 05/83 003/83 Energy A 07/83 4511-SU Power System Efficiency Study 06/84 018/84 s Report 11/84 026/84 Wood Energy/Festy Feasibility 07/87 073/87 Swaziand Energy Ass8ssment OQI7 6262-SW Tanzania Ene Ar 11/84 4969-TA Peri-Urbn Woodftues Faeibility Study 08/88 086/88 Tobacco Curng Efficiency Study 05/89 102/89 Remote Sening and Mapping of Woodlands 06/90 - Industrial Energy Efficiency Tecal Assist 08/90 122/90 Togo EnAergyA_t 06/85 5221-TO Wood Recovery in the Nangbeto Lake 04/86 05S186 Power Efficiency Improvement 12/87 078/87 Upnda Energy Assesst 07/83 4453-UG Status Report 08/84 020/84 Ilnsitutional Review of the Energy Sector 01/85 029/8S Energy Efficiency in Tobacco Curing Industry 02/86 049/86 Fuwood/Forestry Feasibility Study 03/86 053/86 Power System Efficiency Study 12/88 092/88 Energy Efficiency IXmrovement in the Brick and Tile Indy 02/89 097/89 Tobacco Curing Pilot Project 03/89 UNDP Tonninal Repr Zare Enery Assement 5/86 5837-ZR Zambia Energy As t 01/83 4110-ZA Status Report 08/85 039/85 Enr Sector IstitutionalReview 11/86 060/86 Power Subsector Efficiency Study 02/89 093/88 Ener Strategy Study 02/89 094/88 Urban Household Energy Stategy Study 08/90 121/90 Zimbabwe Energy 06/82 3765-ZIM Power System Efficiency Study 06/83 005/83 Status Report 08/84 019/84 Power Sector Maagemnt Asistn e Projct 04/85 034/85 Ptaroleum Management Asistco 12/89 109/89 52 Couay AdlO Dae Namber Zimbabwe Power Sector Mngement stituton Bu iding 09/89 - Carcol UtiliHafion Prufeasibility Study 06/90 119/90 Integrated Energy Strategy Evalustian 01/92 8768-ZIM EAF ASIA AND PACIFIC (ERA) Asia Regional Pacific HILshd and Rual Eergy Semina 11/90 - China County-Level Ruad EneWrgy At 05189 101/89 Fuelwood Foesty Preinvestmmnt Study 12/89 105/89 Fiji Ene8 Aryt 06/83 4462-PIJ be s Asmt 11/81 3543-IND Statul1 Repxgt 09/84 022/84 Power Generaidon Efficiency Study 02/86 OS0/86 Energy Efficiency in the Brick, Tile and Lime Industies 04/87 067/87 Diesel G ating Pan Efficiency Study 12/88 095/88 Utban Houseold Emr Stategy Study 02/90 107/90 Biomass Gasifier Preinvedment Study Vol.. I & I 12/90 124/90 Malaysia Sabah Power System Efficiency Study 03/87 068/87 Onhs UMintflion Stud,g 09/91 9645-MA Myanr Energy Ams#ment 06/85 5416-BA Papua Nenw Guinea Energy Amment 06/82 3882-PNG Status Riepit 07/83 006/83 Energy Strtegy Ppe - - Institutiona Review in the Energy Sector 10184 023/84 Power Tariff Study 10/84 024/84 Sol0aomn blands, EnetRY AmmeSSnYt 06/83 4404-SOL South Pacific PetUoleum Ttanspott in the South Pacific 05/86 - Thailand EneY Assment 09/85 5793-TH Rurna Energy Isues and Options 09/85 044/85 Accelerated Dissemination of Impoved StOves and Charcoal Kilns 09/87 079/87 Northeast Region Vilage Forstry and WoodfUiUs Preinvestment Study 02/88 083/88 bImact of Lower Oi Pices 08/88 - Coal Development and UtiliuBton Study 10/89 - TOnga Ehug Aussrt 06/85 5498-TON Vanuatu EleV ALessment 06/85 5577-VA WeSXfn SamoDa En1ergy AuuessrDsnt 06/85 S497-WSO SOUTH ASI (SAS) Bangadeh Energ Ay 10182 3873-BD Priority Invedment Program 05/83 002/83 Stabus Report 04/84 015/84 Power System Efficiency Study 02/85 031/85 Small Scale Uses of Gas Pefasibility Study 12/88 - 53 Conun AdcIi Date Nwmber India Oprtunities for Commercialiation of Nonconventional Energy Systems 11/88 091/88 Maharastra Bagass Enaergy Efficiency Ptoject 05191 120/91 Mini-Hydro Development on Ifrigation Dams and Can Drops Vols. 1, 1 and m 07/91 139/91 Nepal Enfrgy Assessment 08/83 4474-NEP Status Report 01/85 028/84 Pakistan Household Energy At 05/88 - A_mmmt of Photovoltaic Progams, Applications, and Markets 10/89 103/89 Sri Lanka Energy Asssment 05/82 3792-CE Power System Loss Reduction Study 07/83 007/83 status Report 01/84 010/84 Industr Energy Conservation Study 03/86 054/86 EUROPE AND CENTRAL ASIA (ECA) Portl Energy A _ssment 04/84 4824-PO Turkey Energy Assssment 03/83 3877-TU MIDDLE EAST AND NORTH AFRICA (MNA) Morocco Eergy Assment 03/84 4157-MOR Status Report 01/86 048/86 Syria Energy Assessmet 05/86 5822-SYR Electric Power Efficiency Study 09/88 089/88 Energy Efficiency Improvement in the Cement Sector 04/89 099/89 Energy Efficiency Improvement in the Pertlizer Sector 06/90 115/90 Tunisia Fuel Substitution 03/90 - Yemen Energy Assment 12/84 4892-YAR Energy Investment Priorities 02/87 6376-YAR Household Energy Strategy Study Phase 1 03/91 126/91 LATIN AMICA AND THE CAR1BBEAN (LAC) LAC Regional Regional Seminar on Electrc Power System Loss Reduction in the Caribbean 07/89 - Bolivia Energy Assessment 04/83 4213-BO National Energy Plan 12/87 - National Energy Plan (Spanish) 08/91 131/91 La Paz Private Power Technical Assistance 11/90 111/90 Natual Gas Distibution: Economics and Regulation 01/92 125/92 Prefeasibility Evaluation Rural Electification and Demand Ass_sment 04/91 129/91 Chile Energy Sector Review 08/88 7129-CH Colombia Energy Strategy Paper 12/86 - Costa Rica Energy Assessment 01/84 4655-CR Recommended Technical Assistance Projects 11/84 027/84 Forest Residues Utilization Study 02/90 108/90 54 Cowa1ty Ae ty DIi Numbr Dominican Emsy AmmmeIt 05/91 8234-DO Republic Ecuador E Aessmnt Iva$C12/85 5865-BC yneW Sttd Phato I 07/88 - Bney SftatW 04/91 - Haiti Ass 06182 3672-HA Statu Report 08/8S 041/85 Honduras EnergyA et 08/87 6476-HO Petroleum Supply Manaemet 03/91 128/91 Jamaica EnryAssesmeat 04/85 5466-3M Petroleum Procrement, Refining, and Distribution Stdy 11/86 061/86 Eeg Efficiency Building Code Phas I 03/88 - Energy Efficiency Standard and Labels Phas I 03/88 - Magemet Iormaton System Phase I 03/88 - Charcoal Production Project 09/88 090/88 FDCO Sawmill Residues Utilization Study 09/88 088/88 Mexico Improved Cbarcoal Production Within Forest Maagemet for the State of Veacruz 08/91 138/91 Panama Power System Efficiency Study 06/83 004/83 Paraguay ne Assement 10/84 514S-PA Recommended Tecbnical Assistanco Projects 09/85 - Status Rexort 09/8S 043/8S Peru 13e A _essment 01/84 4677-PE Status Report 08/85 040/85 Proposal for a Stove Dissemination Program in the Sierra 02/87 064/87 EyeW StgUsy 12/90 - Saint Lucia Elgy A _sment 09/84 Slll-SLU St Vincent and the Grenadines Enegy Asmnt 09/84 5103-STV Trinidad and Tobago Energsy A _ 12/85 5930-TR GLOBAL Energy End Use Efficien: Research and Srategy 11/89 - Guidelines for Utility Customer Management and Meteing (English and Spanish) 07/91 - Women and Energy-A Resource Guide Th International Network: Policies and Experienc 04/90 - Ams_ment of Pesonal Computer Models for Energy Planing in Developing Countries 10/91 -