Ninth power project
Report No: ; Type: Report/Evaluation Memorandum ; Country: Sri Lanka; Region: South Asia; Sector: Distribution & Transmission; Major Sector:
                                           Electric Power & Other Energy; ProjectID: P010271


December 29, 1995

Sri Lanka: Ninth Power Project (Credit 1736-CE)

The implementation Completion Report (ICR) for the Sri Lanka Ninth Power project (Credit 1736-CE, approved in
FY87) was prepared by the South Asia Regional Office. An IDA credit in the amount of US$52.0 million
equivalent was approved in FY86. The credit was closed on June 30, 1994, two years behind the original schedule.
About US$46.1 million under the credit was disbursed and the balance of about US$14.7 million equivalent was
canceled at the time of closing. Cofinancing was provided by the Overseas Development Administration of the
United Kingdom. The Borrower's comments are in general agreement with the ICR.

The principal objectives of the project were to: (i) improve the reliability and quality of the power supply; (ii)
reduce technical losses; (iii) extend and reinforce the distribution system; and (iv) improve Ceylon Electricity
Board's (CEB's) capability to construct and maintain its distribution system. The project consisted of the following
components: (a) an investment program that included the construction of about 950 km of medium voltage
distribution lines, and extension and rehabilitation of low voltage distribution networks in Colombo and elsewhere
in Sri Lanka; and (b) consulting services for detailed engineering, project management, staff training, and
preparation of a distribution master plan.

The results of the project have been mixed. The extent to which the reliability and quality of the power supply has
improved is impossible to determine from the ICR, as it provides no information about the level of these variables,
before or after the project. The CEB's technical losses have increased rather than fallen, from 16.4 percent in FY85
to 17.8 percent in FY93. The extension and reinforcement of the distribution system has been substantially
achieved. The financial performance of the CEB has been poor, and several financial covenants were not achieved.
Finally, the ICR estimates the economic rate of return of CEB's investment program at 10 percent, slightly higher
than the appraisal estimate of 9 percent.

While the ICR has rated the project outcome as satisfactory, the available evidence does not adequately support this
and a marginally satisfactory rating is more appropriate. The ICR has rated the achievement of institutional
development objectives as substantial because CEB's capacity to plan, design, construct and maintain distribution
facilities has been enhanced. However, in view of the fact that the physical implementation of the project is running
four years behind schedule due in part to factors under CEB control, and since accounts receivable and power losses
remain high, rating institutional development as moderate is more appropriate. The sustainability of the project is
rated as likely, in agreement with the ICR, on the expectation that two follow-up projects approved by IDA to
further strengthen the CEB's transmission and distribution system will be successful. The Bank's performance has
been satisfactory.

The ICR is good, as it provides a well-written summary of the implementation of the project, supported by extensive
statistical information, and draws the appropriate lessons.

No audit is planned.