Foreword This report has been prepared by ESh4AP consultant Mr. Lorenzo Rivera from - ENEL (Ente Nazionale per I'Energia Elettrica Italy), during an ESMAP mission to Angola from January 23 to February 23, 1990. The mission consisted of Messrs Michel Del Buono, Mission Leader; Kurt F. Schenk, Power Specialist, Deputy Mission Leader; Ms. E. Battaghi, Ecommist; Messrs. J. Baptists, Power Engineer/Economist; C. Alves da Cruz and C Feneira da Silva, Hydro Plant Specialists; C. Madureira, Power Systems Planner; P. Bernardin, Accounting, Organizational and Institutional Expert; L Rivera, Financial Analysis; G. Selleri, Hydro Plant Planning and Construction Expert; A. Corsini, Thermal Generation and Transmission Line Expert; G. Brambilla and M. Scarfi', Electric Distribution Experts; Ms. M. Kronen, Environmental Expert. The report provides an economic and financial analysis of Angola's Electric Power Sector. Recommendations .are given for its improvement, centering on technical assistance and emphasizing manpower training. The 1990 mission was followed by another ESMAP mission in early June 1991 which reviewed and revised many of the conclusions and recommendations of the 1990 mission in the light of the recent peace agreement of May 1991. The cooperation by the Government of Angola, particularly the Secretariat of Energy and Water (formerly the M inistry of Energy and Petroleum); the electric utilities ENE, SONEFE, EDEL and CELB (now incorporated within ENE); and GAMEK, in charge of the development of the River Kwanza, is gratefully acknowledged. Funding for this project has been provided by UNDP (United Nations Development Program) and SIDA (Swedish International Development Agency). The Blue Cover Report entitled: "Angola: Power Rehabllitation and Technical Assistance -Priorities for Investment and Technical Assistance in the Electric Power Sector", was published in October 1991. AND MAIN RECOMMENDATIONS 1JNTRODU~ON Pag. 1 L l lntrduaion 12 Overall Economic and F m d a l Results of the Angolan Electric Power Utilities 13 Tariff Adjustments 1 .4 Investments I 15 statement of Account Preparation and Presentation . 1 - 6 Training of Utility Managers Their Awareness of Economic and F m d a l Accounting Problems 1. Budget RccommenQtions 7SpuX~c 1.8Management Accounting 1 .9 Investments Plan 1 .10 State Treasury Payment ( O r w e n t o Geral do Estado) 1.11 Legal Adjustments and the Delegation of Power to Electric Power Utilities 2.GENERAL LEGAL AND ECONOMIC CONDITIONS Pa& 16 21 Lgal Outline of Angolan F i i s and Their Modus Opcrandi pag. 16 2.2 Economic and Financial Relations with Foreign Countries Pag- 19 23 Economic and F i n a d Impact of the R d g m e n t of the Kwanra Exchange Rate P% 22 24 Treasury Problems and the Intervention of the o r w e n t o Geral do Estado in the Eltaric Sector pag. 25 33ORECASTlNG OF ELECX'RIC POWER DEMANDS 3 .1 The Current Situation 32 Structure and Analysis of the Electric Power Demand 33 h a n d Development 4XCONOMIC AND FINANCIAL SITUATION OF ANGOLAN ELECI'RIC POWER UTILITIES 4.1 SONEFE 4.1.1 General Information 4.12 P e r s o d 4.13 Profit and LOSS Account 4.1.4 Statemcllt of Aycts and Liabies 4-15 SONEFE Profit and Lass Account Adjustment and Determining Balance Tariffs 4.1.6 Foreign Currency Dcbt 4.1.7 Investments 4 2 ENE 4 2 1 General Information 4.22 Persome1 4.23 Profit and Loss Account 4 2 4 Statement of Avcts and Liabilities 4 2 3 ENE Profit and Loss Account Adjustment and Determining Balance Tariffs 4 2 6 Tariff Structure 4 2 7 Investments 4 3 EDEL 43.1 General Information 4 3 2 Personnel 4 3 3 Economic Situation 43.4 Statement of Assets and Liabilities 4 3 5 Cash Deficit and the Intcmntion of the 'Orqarnento Geral do Estadog 43.6 EDEL Profit and LOSS A-unt Adj-ent and Determining Balana Tariffs 43.7 Structure of the Foreign Debt 43.8 Investments S.THE CAPANDA HYDROELECI'RIC PROJEm 5.1 Cost of the Project and Investment Program 52 Frnancing the Investment 5 3 Estimate of the CAPANDA Production Costs L.INTRODUTION AND MAIN SUGGESTTONS 1.1 Introduction The present report has been put together by the consultant Lorenzo Rivera for the World Bank and its aim is to examhe the economic and financial problems and alternatives in the Angolan electric sector. The consultant visited e g o l a from January 26th to February 23rd, 1990. The people, bodies and firms he contacted are listed in Annex number 1. The meetings with the above were held with Mr Pieuo Bernardin. A part of the elaboration of the basic accounting and financial data supplied by the firms visited was carried out in collaboration with Mr Bernardin. The demand development 'forecasts have been agreed upon by the other technical members of the Mission, and particularly during the meeting held on April 3rd in Porto (Portugal). ome of the main recommendations are the result of considerations made together with Mr Pietro .Bemardin: there rpight therefore be repetitions, which are to be considered completely involuntary. The aims set for the following report are the following: a) giving an outline of the overall economic situation of the Angolan electric sector and examining its impact on the Angolan economy as a whole, the overall State Balance and the economic and financial relations with foreign countries; b) studying the current demand for electric power and undertaking an analysis of the evolution over a period of time. Undertaking a comparison and demand structure and its -. outlining a forecast of demand development, thus sketching the relative scenarios; c) undertaking specific economic and financial analyses of the Angolan electric power utilities and determining the relative conditions for stability, bearing in mind the development programs and possible changes in the current economic context; d) giving an outline of the legal and economic framework within which !he Angolan companies operate and their future prospects, bearing in mind the economic recovery program announced by the Angolan government; e) formuiating recommendations: 1) on tariff policies; 2) on investment policies; 3) on possible organizational and instihtional modifications, both in reference to individual companies and to the overall state of affairs; f) evaluating the economic and financial situation of the Capanda project and estimating the production costs according to the different scenarios formulated. 1 3 The Overall Economic and Financial Results of the Electric Power Utilities On the basis of information received from the power utilities visited, it has been possible to reconstruct a series of accounting data that will be discussed in the appropriate chapters on the economic and financid situation of each of the elecuic power utilities. A consoiidated synthesis or the profits and ioss accounts oi the Angolan electric power utilities based on the revenue and cost factors estimated for the 1989 fiscal year has given the following prospectus: Tab. 13.a - Consolidated profit and loss account of the Angolan electric power utilities for 1989 based on the accounting figures of the utilities. (in millions of Kwanzas) ENE CELB SONEFE EDEL TOTAL f TOTAL REVENUE 3 05 ESTIMATED COSTS OF THE UTILITIES 1st RESULT ADDED COSTS TOTAL COST ESTIMATED BY MISSION RESULT The figures relating to the 1st result are derived from an evaluation of the Mission based on some elements relative to the 1988 fiscal year supplied by the utilities and obtained by extrapolating, and approximating, some cost and revenue elements, which were supplied by the utilities or, in some cases, estimated. These figures demonstrate an overall revenue of approximately 1.5 biIlion Kz,a 1st total of costs of 2.0 billion Kz with a consequent consolidated loss of 500 million Kz for the entire : :, 1 ,\ -- elecuic sector. A more rigorous analysis of these data, developed in Chapter 4 of the Report for each individual utility, has allowed for a rectification and integration of the costs that had not been correctly evaluated by the electric firms. These results are summarized in Table 1.2.1. . The additional costs estimated by the Mission are for a total of 1 billion F,z for the .electricpower utilities put together for the ,1989 fiscal year, such that the minimum estimated i economic deficit is no longer 500 million Kz, but 1,500 million Kz. The results obtained are confirmation of the analyses undertaken by the preceding / World Bank Missions. The financial situation of the Angolan electric power utilities analyzed by the preceding World Bank Mission had in fact approached the problem from the point of view of the balance of cash on hand. The data collected for 1986 supplied an overall negative cash on hand result: minus 1,138 million Kz, of which 700 million Kz were attributable to capital account expenditure, thus giving a net running expenses deficit of approximately 400 million Kr This 1986 figure is slightly lower than the one extrapolated for 1989, which is equal to approximately 500 million Kz: these figures are therefore to be considered as reliable. The current Mission's approach includes, for its own evaluation, some economic elements which it is not possible to take into consideration in a cash-flow approach. See, in reference to this, ANG. 7408 - par. 4.51 - 4.52 - 453 and Table 4.4. 13 Tariff Adjustment In order to improve the utilities' economic and financial deficit, it is necessary to effect as soon as possible an initial general adjustment of the average tariffs applied, as in the following prospectus: -. Tab. 13.a - Initial estima'te of the tariffs for an economic and financial balancing of the Angolan electric power utilities in 1989. I I I I I I I I u-n. ( EE I 1 ( 3a I I ! b I I I I I I Total estimated cost 1 d. 1 927 1 275 1 5 ( 1.1 1 I 1 ! Electric power sold 1I a ( u s I I 1 I 30 II sm I I I a l i I I i ! i I I ! ! Average balancing 5.4 1 5,- I i,- 1 2,7 1 iI ! I1 tariffs Revenue: 1 I I I I II 1- from sale o f el. en! ril. i d 937 1.3s / I- other dl. !.2 I I1 I ! 1 . Total revenue I ' z i 1 . Y ~ 1 '*'?27 I 175 I 1.1Lj 1 The resulting average tariff increase in comparison to the average tariffs applied in 1989 is as follows: Tab. 13.b - Increase of average recommended tariffs in comparison to those in force in 1989 ' :..-.- . - I ,+ 2 j., I I :CS~SU~P I Z I I -3riiY 1 I Tariff ! I D i f f e r e n c e I I I I I 1 1989 !recommended K Z / ~ I ! . * \ This initial up-dating is to be considered as the first important step towards having the tariffs remunerate all items. It must be reviewed systematically in either of the following . cases: should there be a difference between costs and revenue at the level of 2-3%; should a . tariff policy linked to the financing of investments be put into prac.,,,, as elucidated in 1.4, below. The other basic and urgent action that must be taken is that of assuring that sums owed ' . the electric power utilities for electric power used be collected. Thew conditions are essentih in order for the utilities to attain economic stability, intended as remuneration of dl productive items both external and internal to the utilities themselves and also to Angola (including, obviously, financial capital), as well as a necessary reconstitution of the physical capital used. As far as the size of the increases and possible repercussions in terms of the reaction of . the consumers is concerned, it is not possible to foresee that there will be a decrease in demand for electric power inasmuch as the cost of kwh is still very low in comparison with other current goods. It is recommended that the current tiered tariff system be totally eradicated everywhere, in that they are in all respects contrary to the economic principles of the current situation (where there is more demand than supply), and in that, in any case, there is no demand-supply ratio based on real monetary values. The analysis of the formation and the initial outline of the allotment of tariffs according to different categories of consumers and different regions is to be found in the chapters referring to the study of the economic and financial situation of the individual utilities. 1.4 Investments -. Accounting omissions have not allowed us to establish the exact amount of definitive annual investments for the Angolan electric power utilities. They can, however, be estimated, for 1989, at around 200 million Kz (US$ 6,7 million), corresponding to 15-20% of the current established turnover of the utilities. This investment rate is without doubt to be considered as modest when compared with the needs of the generating plants and the Angolan distribution grid, but which is paradoxically in keeping with the low turnover of the utilities. The investment rate to be aimed for in the hope of leading the Angolan electric power utilities' tariffs to economic recover are summarized in the following prospectus: Tab. 1.4.a - Possible investment level in the Angolan electric sector for the period 1990- 1995 (excluding CAPANDA). (in millions of Kz) I I I I I 1 .I / TOTAL (1) SCNDE (2) Ex€ l (2) (3) EEL 1 1 1' 1 I !til.M !U..UsS I I 1990 282, i8 90 721 1.501.. 1 4A,5 1 I I 1 I 1 1991 1992 1993 1/ 1 310 Y O I 374 549 543 1 110 120 I1 1 757 810 875 I ( I1 1.616 1.754 1.912 I I 1 47,9 52,- 5636 1 I 1 - - - 1 Minimum hypothesis only generating plants and transport. 2 Estimates. 3 EDEL and SONEFE low voltage and mediurn/high voltage distribution facilities. These values represent the annual totals that the individual Angolan electric power utilities can sustain directly given the following binding conditions: 1 - Allocation of depreciation according to recommendations made in the present Report. 2 - Maintaining electric power losses within the hypothesized limits. - 3 Containing loss on credit within the foreseen limits as an aim -for the individual utilities. 4 - Applying the tariffs suggested in point 13, above. 5 - Systematic and immediate &iff adjustment according to future economic conditions in Angola. The overall annual investment rate for 1990 in the Angolan electric sector could theoretically be established at around 1 5 billion Kz (US$44 million): this total represents approximately 0.75% of the Angolan gross national product, which has been estimated at ; about 200 billion Kz for 1989. This proportional rate can also be found in other countries, whether economically underdeveloped or developed: for example, in Italy, the above rate is equal to 0.7% of the GNP (an approximate investment of 8,000 billion Lire in the electric power sector %opposed to 8,187 thousand billion Lire in the GNP). State inrervention in the form oi cash endowment hinds ior me ENE iltility alone, wouid still be, according to the proposed scheme, rather modest (400 million Kz out of a total of 3,148 million Kz worth of investments over the six-year period). This obviously presupposes, that self-financing will be directly linked to foreign currency financing and that the sources of foreign financing will in fact be accessible. As for the building of generating plants, it is not the aim of this Report to establish a list of priorities, times or the costs involved. In the chapters dedicated to the economic and financial situation of the individual utilities; however, possible scenarios and models are outlined for a more appropriate sensitivity analysis, taking into account the volume of investment considered necessary for the needs of the country's electric power sector. 1 .5 Preparation and Presentation of the Statement of Accounts Accounting results are considered, for more or less all of the utilities visited, as a purely technical factor. The Management of the Utilities does not give formal or official importance to accounting results. Nor are these results habitually made public. Formal documentation is always in the form of tables, inaccurate when not completely missing, and there is apparently no direct involvement of the General Management. Article 14, sub-paragraph (c) of Law number 11/88, however, expkssly states that complete information regarding the company's accounting must be given. We suggest that Management pay more attention to the preparation of their reports on the economic and financial situation of their utilities. The report must include ample. management information and must be presented by March 31st of each year and forwarded to all external State bodies (Ministries, etc.) as well as to all external non-State bodies (Banks, firms,etc.). The Ministerio da Energia e do Petroleo must set guide-lines for these procedures and, if necessary, have them agreed to by the Ministry of Industry in order to extend them to all public (as well as private) firms operating in Angola 1.6 Training of Utility Managers - Their Awareness of Economic and Financial Accounting Problems The Mission has noted during its visits that the higher management levels of the utilities in question are not very interested in the problems of accounting and economic and financial management of the utilities themselves. What is more, we-.have also rioted the limited number of specialists in this field. However, as governmental political guidelines intend to promote management methodology based on classical accounting principles, it is necessary to implement lasting specialization in this field. The Mission considers that it is necessary to stimtrlate a cultural "growth" in as many people as possible in this field, rather than make reconmendations and a put forward a series of "ready-made" answers to specific problems. We recommend that a series of seminars be organized for high level management members of the utilities, such as the Directors and Vice Directors General, Board Members and Managing Directors, ~inancidDirectors, Accounting Managers, with the following program: 1) Introduction to the New National Accounting Plan. 2) Balance Sheets: accounting; description of activities reports; deadlines for ' presentation of report; addressees of report. 3) Records of Depreciable Assets: reconstruction of the historical value of Assets; reconstruction of the value of the Depreciation fund (criterion of life of asset, criterion of useful life left for asset, etc.); revaluation of depreciating assets and the relative Depreciation Funds; standardized application of the above by different utilities. 4) Depreciation: charges and their application with respect to the condition of plants; use of thermoelectric plants (basic, peak and emergency use) and depreciation criteria (temporal, working hours, GWh generated, etc.); importance of determining the value of the depreciation funds for purposes of future allocations. 5) Allocation of Funds for Loss on Credit: size of losses; recovery measures; reduction of number of non-paying consumers; reduction of unbilled items; reduction of illegal connections. 6) Allocations for Currency Exchange Losses: it is imperative to dkcuss this aspect, which will have an ever greater influence on the balance sheets of the utilities. 7) Debit Interest and Other Financial Charges: role of financing; foreign financing; debit interest on plants under construction: The first series of seminars might be organized as 3 or 4 day-long sessions held once a week, and it is suggested that these seminars be repeated annually or every six months, covering the same topics or themes closely-related to the above list. 1.7 Specific Suggestions on Accounting 1 .71 SONEFE must revaluate its fued technical assets, bearing in mind what EDEL has . already done and adopting a coefficient to be agreed upon in conjunction with the Ministry of Finance. SONEFE must increase its depreciation allocations, which ark currently equal to 2% of its fmed assets. The size of the average charge can be estimated at about 4 4 % annually. However, it is necessary that SONEFE undertake an in-depth study, asset by asset, in order to establish the most realistic and prudent technical and economic depreciation rates possible. 1.7.2 ENE must ' see to allocating adequate depreciation rates for the technical and economc liie oi irs pianrs: the 5.7% 01 the vaiue of rne assets entered In the iinanciai statements, estimated by the Mission, is doubtless minimal. ENE must revaluate its fued technical assets in accordance with what EDEL has done and adopting a revaluation coefficient to be agreed upon with the Ministry of Finance. ENE must indicate, in its Profit and Loss Account, the interest on its foreign financial debt. As far as general accounting aspects are concerned, the argument has been covered by another Miision consultant. We would, however, like to repeat, above all in reference to ENE, that realistic values of loss on credit sustained by ENE should be written into the Profit and Loss Account and that the utility should persevere wth all necessary measures, in reference to both private consumers and the Public Adninistration, in order to ensure that the service supplied be paid for. 1.73 The main recommendati6ns for EDEL are the following: 1) increasing the depreciation rate to at least 10% of the value of the assets included in the balance sheets, as opposed to the 5% allocated in 1989; 2) increasing the allocations for loss on credit to an (initial, provisional) value of 20% approximately, to be reduced gradually as the revenue increases, while at the same time continuing with all the necessary promotional, advertising and prize inceritives, as well as cutting off of power to non-paying consumers, in order to promote a greater sense of responsibility in the private consumer. We also suggest that EDEL persevere more diligently with action against the Public Administration should it not respect the contract agreed upon. 18 Management Accounting . We recommend that the three main electric power utilities introduce into their General Accounting a simplified analysis aimed at underlining the operating costs and investments, subdivided according to simplified criteria such as the following: Denomination -. .Resources (labor, materials, etc.) .Sector (type of plant - thermoelectric, hydroelectric, turboelectric, etc.) h p o r t s (expressed in national Kz and foreign currency) This analysis is also to be used to highlight, again in a simplified manner, purchases, consumption and the size of stocks, both with reference to combustible and other materials, both in terms of quantity and value. A consultant is therefor~ecessaq for an estimated 8 months/man. 19 Investment Plan It has often been repeated that the investment plans as they are formulated at the moment are, for technical reasons as well as others, inconsistent, volatile and lacking in clarity. Article 15 of Law number 11/88 does not deal with the number of years to be covered by the plan, nor a revision timetable. We recommend that the Angolan electric power utilities be made to provide a multi- year plan for 5 + 1 years (that is, for the current year + 5 planned years), and that they be obliged to xpdate this plan annuallv and to submit a copy to the appro~riate Ministry, to the Ministry of Finance and to all other appropriate State bodies. The investments plan must be articulated according to what is included in the Management Accounting section, with entries such as the following: Denomination .Type of plant - .Total costs Jntercalated interests .Type and sources of financing , It will be necessary to take on a geneid ianning consultant for an estimated period of 3 months/man. 1.10 Payments made by the State Treasury (Oqamento Geral do Estado) / Currently, the General State Treasury provides for requested payments on behalf of the Angolan electric power utilities, but the result is often unpredictable. Financial relations with the State Balance must be regulated according to less unpredictable and more organic criteria than currently exist. We suggest that a basic outline , establishing the relations between Companies/Utilities and the State be undertaken as follows: each company/utility may open the following accounts with the National Bank: a) Plants Investments Account. a l ) In whole Kwanzas, for payments undertaken within the Country. a2) In convertible Kwanzas, for payments undertaken either abroad or in Angola in foreign currency. b) Operating Costs Account bl) In whole Kwanzas, as above. b2) In convertible Kwanzas, as above. -. For overdrawn accounts there should be a differentiated interest rate for the different types of accounts and the different currencies used: the principle according to which the State should charge for all services it provides for a production sector should be underlined. The current operating costs account must have the characteristics of and regulations governing bank credit openings, and must remain within the levels established for limited bank overdrafts. The intervention of the State Balance in investment accounts must be regulated / according to one of the followng solutions: A, Transfemng at the end of each fiscal period the full payment of treasury advances to the cash endowment fund B. Arranging at the beginning of each fiscal period a credit advance in the form of a cash endowment fund with the National Bank of Angola. This fund's credit volume should be restricted in compliance with the financial resources set aside in the State Balance. 1.11 Legal Modifications and Delegation of Power to the Electric Power Utilities It has been confirmed that in Angola there is a more or less generalized disregard of consumers for the payment of their electricity bills, while it is also evident that there is a lack of legal power and intention on the part of the electric power utilities to apply the necessary measures to dissuade consumers from utilizing the electric resources without paying for them and to proceed with legal action in order to receive payment. The economic recovery of the utilities cannot be obtained if this situation is allowed to continue, or at least to continue at current levels (30% to 40% of bills unpaid ). It would seem that the reason for this is to be ascribed to a political attitude which is more inclined to defend consumers rather than the utilities and which is, however, rather lax on this point. We recommend that the Minister0 da Energia c do Petroleo, along with the Ministry of Finance, the Ministry of the Interior and ,all other bodies directly involved, take immediate legal steps so that the electric power utilities be permanently given back the power to disconnect electric supplies to non-paying consumers and to undertake a ll mewures allowed by the law to recuperate the sums ofponey owed the utilities for the use of electric power. 2. GENERAL LEGAL AND ECONOMIC CONDITION 2.1 Legal outline of Angolan firms and their modus operandi 2.1.1 In 1987, the Angolan government announced a program called "PROGRAMMA DE SAIUEAMENTO ECONOMIC0 E FINANCED20 (SEF)", divided up into the following main points: a. Reduction of the State Budget deficit; b. Adoption of new solutions for financing public companies; c. Restructuring the financial situation of public companies; d. Reforming internal credit policies; e. Restructuring foreign debt; f. Adjustment of controlled prices; g. Adjustment of exchange rate. At the beginning of 1989, the Angolan government approved an economic rehabilitation program (PROGRAMMA DE RECUPERACAO - PRE)': as the first step which had to concretely fix guiding principles for a macroeconomic policy and for sectorial and territorial investments. The main legal dispositions set in this policy are summarized below. 2.1.2 The control of foreign exchange, as far as currency is concerned, was covered by Law number 9/88, which centralized all authorizing procedures in the National Bank of Angola, which looks after alf financial and economic operations undertaken with foreign countries. 2.13 Law number 10/88 defined the legal obligations and the different proprietary systems of Angolan companies. The law reinforces the role of private companies, even when ' their activity is subordinate to strongly binding authorizations, while they are specifically excluded from some activities such as those belonging to the health, transport, military and financing sectors as well as, in particular, from the distribution of electric power. 2.1.4 The Angolan Popular 4ssemblv faed. with Law number 11/88. dated Julv 9th. 1988, the legal, economic, financial and management principles for State-owned companies. The aim is that of rendering concrete the SEF and PRE principles, in reference to State companies, announced by the Angolan government in 1987. This law is important as far as general principles are concerned in that it establishes acceptable rules for economic and financial administration. The following are some of the more important articles of the law: -. Art. 6 Establishes the principle of autonomy from all external structures (excluding law- enforced subordination) in the fields of management, Ellanring and economic profitability of the activity. Art. 9 Allows for self-financinb that can be realized to a maximum level, both for the settlement of loans accrued and for the financing of new investments. Art. 10 Introduces the notion of maximizing profits in respect of the obligations set by current contractual commitments, by respect for the environment and by workers*security. / Art. 13 point B Decrees that it is necessary to increase production via technical, economic and financial means; point C Requires that investments be subordinated to an analysis of their profitability potential for the following: .profitability rate/recovery period/risk factor. point D Introdbces the principle according to which recourse to financing must be proportional to the nature of the activity. point E Establishes the ~rinciple according to which the financial structure must be and remain proportional to the economic development and to the risk factor of the activity undertaken by the enterprise. Art. 15 Decrees the need for a multi-year plan, both for programmed investments and for coverage. Art. 16 Underlines the principle according to which an annual plan must be put together for management purposes. On the applicative level, we must point out that these principles are only reluctantly and slowly adopted, and that they are totally ignored as far as back-doted economic initiatives such as the realization of the CAPANDA plant are concerned. This latter particularly disregards the principles established in Art. 13, point C, above. 2.1.5 With Law number 12/88, dated July 9th, 1988, the ,+ngolan government revalued the role of the market. In fact, even though it defined the Plan as the most important guiding instrument for the Angolan e;onomy, it has given a more important role to the market and the forces that operate in it. The Angolan Plan is consequently based on the allocation of a few objectives such as the level of public spending, tax rates, exchange rates, interest rates, wages variation rates and the controlled prices variation rate. The allocation of resources, essentially the structure and investment level, should be determined by the price mechanism and by market competition. With this, the Angolan Government is attempting to better coordinate the Annual Plan with the State Budget and the Foreign Exchange Rate Budget. 2 2 Foreign Economic and Financial Relations The Angolan economy is characterized by a marked dependence on foreign economies, both in respect of commercial aspects and capital flows. The following table gives some idea of this dependence: (year 1987) GNP .krdmdise Xerchandse Zxternal COUNTRY (inillicxls hprtas% Rcportas% Debit a . : s! -- or' S E P l of GXP of GXP of Gm Source: World Development Report 1989; ANG. 7283 for Angola Considering that not only goods but also services are imported, the relative incidence on the GNP is, for Angola, for 1987, equal to 29%. If we aiso add mid- and long-term capital flows as well as the settlement of short-term foreign financing, we have an average incidence of imports, for the same year, that is equal to 39% of the GNP. This means that for each GNP unit, at least 40% is dependent on foreign impon/export flows. As this is a situation that characterizes for the most part all economic production or consumer entities in Angola, it can be affirmed that the economic system constituted by Angolan fums is an open system that interacts with foreign countries to at least 40-50% of its activity volume. Bearing this high rate of dependence on foreign economies in mind, it is necessary to define the notion of internal Kwanza as the financial flow that directly remunerates an internal Angolan resource such as personnel the purchasing of some base materials such as cemenq petroleum and its derivatives, petroleum gas and certain services. The convertible or external Kwanza is the financial flow that directly remunerates a resource that comes from outside the Angolan territory. As far as the Angolan electric power utilities are concerned, running expenditure is settled in internal Kwanzas for the personnel combustibles and other services, while the purchasing of materials for investments, maintenance, repair etc, as well as technical assistance for repair work are settled for the most part in convertible Kwanzas. As for investments, we can consider that at least 80% is effected in convertible Kwanzas. This brief outline is indispensable for a clear identification of the weak and conditioning , . point in the economic and financial analysis of the electric sector utilities which is developed in the current Report. The basic contradiction jn the Angolan economic system, which has systematically been pointed out by the World Bank Missions, consists in the US $/Angolan Kwanza exchange rate value, where US$1 was fned at 29.92 Kz in 1975. This exchange rate does not reflect the real purchasing power of the Kz in the economic system external to Angola, and a more realistic rate would be about 30 times greater. This discrepancy is of the same nature and order of greatness as the difference between official prices for goods and services that are theoretically available in the country and the prices of goods and services that are actually available on the so-called parallel market or in the different lobbies and/or enclaves (see W.B.ANG. Report - 7283, vol. II, p. 321). The main consequences of this anomaly on the economic and financial analysis of the Angolan electric power utilities are: 1) The depreciation allocated by the Angolan utilities and available as financial flow in national currency, are not directly linkable to the foreign financial capital returns and/or to the financing of new investments with purchases from foreign countries. 2) Interests on foreign debts reckoned on the official exchange rate and debited to the Profit and Loss Account are also not directly linkable to the financial flow necessary for the --. payment of interests. 3) All purchases from foreign sources of materials necessary for the repair and ordinary maintenance of plants, as well as work un:<-*rttn by foreign technicians for consulting work, repairs and assistance are reckoned accordi.ig to the official exchange rate: the relative indKz is correct in accounting terms but it is not financially directly counter-value e ~ p ~ s s e linkable to the purchase of the above from foreign sources. The fixed exchange rate system is, overall, rooted in export products and petroleum in : the GNP and, in 1987, thew represented a total of 94% particular, in refinery products and n of all exports. The movement of foreign financing capital and the relative debt service is thus rooted in and mediated by exports in that the local currency has no international financial market. It is important to underline what has just been said, although it may seem obvious, when, if we want to define in the following Repon the balancing economic and financial conditions for the electric power utilities, we intend to refer to the internal national conditions. Until the exchange rate value for the Kz is realigned according to real value, the link with economic systems external to Angola is based on the availability of foreign currency rendered possible by the Angolan balance of payments. 2 3 Economic and financial impact of the realignment of the Kwanza exchange rate The realignment of the Kwanza exchange rate in reference to the US S is explicitly set out in the SEF plan, even if there are still hesitations and difficulties in realizing it. The main economic and financial effects of this devaluation on Angolan enterprise are sketched below: -. . 23.1 Internal Factors. The cost of personnel, services and products produced in Angola will increase proportionally to the devaluation rate in that such factors are more or less directly linked to the exogenous import flows and, what is more, they will more directly feel the effect deriving from the creation of liquidity (haease of MI and M2). 232 Purchasing from Foreign Economies Factors. The cost of these factors will increase proportionally to the devaluation rate. 233 Foreign Financing. 233.1 Interest Rates. The impact on the cost o f foreign financing is directly proportional to the devaluatiop rate of the Angolan Kwanza. 2332 Effect on Reimbursement of Capital Quota. An example will serve to clarify this point (with devaluation of Kwanza equal to 3 times the value): Original debt 10 mil. US S = 300 MIL KZ before devaluation Reimbursement after 5 years 2 mil US S = 60 MIL =/year before devaluation Original debt 10 mil.US S = 900 MIL KZ after devaluation Reimbursement after 5 years 2 mil.US S = 180 MIL =/year after devaluation Loss (Reimbursement after 5 years) (18060) = 120 MIL KZ/year Reimbursement after 10 years 1rniLUS S = 30 MIL =/year before devaluation Reimbursement after 10 years 1mil.US S = 90MIL K Z / y w after devaluation Loss (Reimbursement after 10 years) (90-30) = 60 MIL KZ/year The repercussions on running expenses of the exchange rate differences on reimbursement of capital quotas following devaluation have a direct and immediate impact. However, the longer the reimbursement period the weaker the effect. 23.4 Internal Financing . 23.4.1 Interest Rates. The impact is rd E rstional monetary terms. It is foreseeable, however, that there will be a large increase i i interest rates to the point of indifference. The overall effect could be almirst proportional to the devaluation rate. 23.442 Reimbursement of Capital Quotas. The effect induced by general price inflation makes it advantageous to reimburse capital quotas in internal currency, in that this reduces the value of the reimbursement in real terms. This effect, what is more, is completely theoretical in that the reimburseAent of financing capital deriving from loans given by Angolan financing institutes for electric power utilities has not been found in any of the electric power utilities visited. 235 Depreciation of Plants. The depreciation calculated by applying the established charges to the historical value of the plants diminishes the value in real terms proportionally to the idation induced. It is therefore necessary to effect a systematic revaluation of the assets and relative depreciation funds and to calculate the depreciation to be allocated on revaluated bases. 23.6 Overall Effect of the Kwanza Devalc-tion. The fore-seeable overall effect of the devaluation of zne Kwanza 1s an increase ln rhe produa~oncost :hat is almost :qua1 to the devaluation rate. The impact is not immediate, but the devaluation will take its effect within a few months. 23.7 Measures to be Undertaken. The main measures are: .Renegotiation of foreign loans in order to try to extend their duration. .Evaluation of the impact on exchange loss. .Evaluation of depreciation on revaluated bases. Evaluation of the increase in the cost'of other factors. .Immediate updating of electric power sales tariffs. .Updating of investment plansfrom the formal point of view as the monetary expression of the cost of plants and works. 2.4 Treasury problems and the intervention of the Orcamento Geral do Estado in the electric sector The Angolan State has iitervened in order to meet the cash-flow needs of the public and private companies with the ORCAMENTO GERAL DO ESTADO (OGE), administered by the ANGOLAN NATIONAL BANK. OGE's intervention in the electric sector during the period ranging from 1983 to 1989 is indicated in Table 2.4.11, where, however, GAMEK, which is responsible for building the Capanda hydroelectric plant, has been excluded. OGE's intervention has been classified according to two criteria: investment account interventions and current outlay expenditure interventions. 80-90% of the investment account interventions can be considered as being effected in foreign currency in that, apart from a few items such as combustibles and cement and except for local manpower (generally unskilled workers), they consist of supplies, materials and loans from outside the Angolan territory. Current outlay expenditure (running expenditure) cbvered by the OGE also have a direct ioreign currency component, but it has not been possible to estaoiish to wnar extenr. OGE's overall interventions in the electric sector are given in detail in Table 2.4.11 and are recapitulated in Table 2.4.a. These are figures deduced from data given by the electric power utilities visited. n the electric sector . Tab. 2.4.a - OGE interventions i (millions of Kz) ! I I I I I? ,.: . ' E A R for investments! for running - expenditure T o t a 1 I 1 1 1983 II . , 957.8 988 ,- I 539.5 i 174.9 364,6 1 1985 I1 I ?.022,3 i 1986 521,- 728.5 I i , L99,3 773.6 1988 670.6 !.168,3 1 1989 i1 3 . 2 I I $77,: 783.L ! j 1 ! I ! I Total i 7.35,3 1 3 .157,7 5.203,5 j I I I ! I - -I - , I - . 2 , ~ xo,- ! , I ! .. . Source: see reference given in tab. 2.4.11 OGE interventions for investments total, for the period ranging from 1983 to 1989.2.846 million Kz and represent 47.4% of the total OGE interventions in the electric sector, Gamek excluded. This intervention implied the following: Mil. Kz % SONEFE 954.8 33.6 ENE 1.819.7 63.9 CELB - - -. TOTAL 2.845,9 100.- It is to be noted that EDEL has made only insignificant interventions in the Luanda distribution grid, which is confirmed by the balance sheet accounts in that there are no foreign debts entered in the EDEL balance sheets. The intervention in the SONEFE investments account corresponds to the State Balance debt service for the years 1983-1989, including capital quota and payment of interest that we suppose have been completely debited to the capital account. There are no debts charged to OGE in the SONEFE balanci sheets as such because, in fact, SONEFE has decided to meet both interest and main reimbursements in national currency. Even if, from an accounting point of view, no SONEFE debt accrued to the State has been listed, from the point of view of the substance of the matter, the OGE intervention must be considered as completely under the responsibility of the State Budget in that it is a payment effected in foreign currency. Financing for SONEFE on the balance sheets are all indicated as coming from abroad; the overall size of the debt and its relative service can be seen in Table 4.1i6.1. As far as ENE is concerned, the OGE investment interventions certainly include debt service for foreign financing and also include OGE direct financing account interventions. It has not been possible to separate these two components because ENE supplied the Mission with a series of non-accounting historical data regarding OGE intervention, without specifying the currency in which the interventions were undertaken. On the other hand, the torai in tne investment account seems excessive and completely unrealistic, and this, too, should be considered as belonging for the most part to the iunning expenditure account. The incidence of OGE investment contributions is, for the period in question, equal to 26% of investments that derive from the State Balance, as can be seen in tab. 2.4.1. This figure could be considered to be within the norm if it were not for the fact that in the period in question no substantial investments for the expansion of the system have been made, but only for its maintenance or rebuilding. OGE current running expenditure interventions for utilities in the electric sector amount to 3,148 million Kz, equal to 526%'of all OGE interventions. This total corresponds to the deficit of available funds in the current running expenditure account for the Angolan electric power utilities, and is subdivided as follows: Millions of Kz % EDEL 1.969,l 653 SONEFE - - ENE 778,7 24,7 w 410,- 13,- Total The figures demonstrate how the cash deficit problem is long-lasting for EDEL, while SONEFE has managed to meet its available funds problems. In fact, most of the OGE interventions in EDEL (for a total of 1,329 million Kz, equal to 76.4% of the total) have been undertaken in order to pay EDEL's debts to SONEFE for the purchase of electric power. -. OGE's interventions in ENE and CELB also bear witness to the fact that these utilities are incapable of attaining economic and financial stability, with the resulting cash-flow deficit problems that have been set out in this Repon. The following data can be examined for a comparison of the incidence of OGE interventions in the current expenditure accounts of the electric sector and the public industrial sector: f Tab. 2.4.b - Incidence of OGE interventions in current expenditure of the electric sector and the industrial manufacturing sector. (Millions of Kz) a. Industrial manufact. sector ' 1.Prof i t Transfer -?6 --I " - 317 ad- - 3 3 " - 2 ,2 2.Subsidies in r u n n i n g -. account 6 3.270 !.$a 1.203 -.-19 138.6 3.Net .subsidies 1.163 2.569 30 :.m --.,,, :-a x,- b . Electric sector 265 231 198 199 2% 17 ,l Includes manufacturing industries under the control of the Ministry of Industry (food industry, light, heavy and mining manufacturing industry). Source: ANG. 7283 vol. I, tab. 4.7, p. 81 and elaborated by the Mission. The incidence of the electric sector on the State's total expenditure is given in tab. 2.4.1 for the years ranging from 1983 to 1988. As for current expenditure, the average incidence during the period in question is equal to 0.7%. which can be considered overall as rather low if it were not for the fact that the electric sector is an industrial production sector and as such should not receive contributions or subsidies as part of its running outlays but should, rather, generate sufficient resources from its management in order to attain economic stability. The resulting cash deficit is, hbwever, part of the economic and financial reality of the Angolan electric power utilities. In fact, we must bear in mind that these utilities have not depreciated their plants, or, if they have, they have done so to a limited extent. They have thus not gone on to the necessary economic reconstruction of the physical capital used. An estimation, even though purely approximate, of the depreciation not undertaken for the electric power utilities for the period ranging from 1983 to 1989 would give the following: EDEL 130 million Kz x 7 years 910 SONEFE 140 million Kz x 7 years 980 ENE 200 million Kz x 7 years 1.400 CELEI 25 million Xz x 7 years 275 Total As well as the above, it is also necessary to bear in mind that the national financial resources used by OGE for the electric sector, which for all of the years in question is equal to 6,000 million &have not been remunerated. The interest lost, calculated at a rate of 8.5% annually, can be estimated at about 2,300 million K z In conclusion, the electric sector presents the following deficit situation for the years ranging from 1983 to 1989: Millions of Kz Treasury for current expenditure 3,158 Lost depreciation . ,3,465 Lost interest 2,300 Total economic deficit The average annual economic deficit for the electric sector would therefore be equal to 1 3 million Kg considered as the minimum estimate. The analysis of the financial situation of the electric power utilities has also been developed using the cash-flow approach of the World Bank Mission of 1987. The results obtained and given in Report ANG-7408 are outlined below: Tab. 2.4.c - Consolidated cash-flow analysis of the Angolan electric power utilities (excluding GAMEK). (in millions of Kz) pEinfl" Items I A'==@ 1985 779.5 - 1988 1 1986 810,7 I1 I I. T O ~ I I -t ~ i c i t flon (total) ' Natianal balance inflow Tmusfer 6 var. of cash i d . Cash deficit (for current expndfture) I 2.737,3 1 1 . . 9 3 5 8 7 1 . , 5 - , 1 1 . . 9 1 4 3 4 8 7 9 . . 5 5 9 .7 ( 1 The average cash deficit value for the current items obtained here are congruent with the first consolidated economic deficit for the electric power utilities, which has probably been . underestimated by about a hundred million Kwanzas and, as has already been said, does not include depreciation, allocations or debt interest for the State Balance. 3. FORECAST OF ELECTRIC POWER D E W D S 3.1 Current Situation / 3.1.1 Electric Power Generated The electric energy generated is shown in tab. 3.1.1 according to geographical regions and in tab 3.1.n according to utility and type of generator. An examination of these Tables underlines the following main points: . The Northern System, administered by SONEFE as far as productibn is concerned, after a period ranging from 1979 to 1985 characterized by variable production rates, began to show an increase in 1986. On average, the 1986-1989 period saw an increase of 5.8% annually, which was met by a greater hydroelectric contribution for 4.8% of the above figure, while the rest was met by thermoelectric production. . The Czntrai System (Looito - Bengueia - 3uarnbo), aamimsterea ~y EEN, increased rather consistently from 1986 to 1988, from 67 GWh in 1985 to 104 in 1988, with an average annual increase of 15%. It must be said, however, that the 1985 production was at its lowest point ever and equal to less than half of the 1982 production (152 GWh). The increase in production is entirely due to the hydro-electric contribution, considering that the thermoelectric production remained at an unvaried 70 GWh per annum £rom 1985 to 1989. -. 1989 production, however, decreased because of a shortage of hydroelectric machinery; this led to an exclusion of some consumers and limits to the s e ~ provided. a 1989 production, however, decreased because of a shortage of hydroelectric machinery; this led to an exclusion of some consumers and limits to the service provided. - .The Southern System (Namibe - Lubango Matala), administered by ENE, also shows an average increase in production of approximately 6% annually, from 58 GWh in 1986 to 64 GWh in 1988. In 1989, production was reduced because of a breakdown of some thermoelectric groups, which led to the exclusion of some consumers and limits to the service provided. Production is basically hydroelectric (Matala plant). ' The Isolated systems/ have production rates of about 20 GWh annually, and demonstrate a certain improvement after the minimum production rate of 1986. .Overall, there is an increase in production from the 705 GWh of 1985 to the 845 GWh of 1989, with an average annual increase of 4.6%, with an increase of 8.6% in 1986 which gradually decreased to the 1989 figure of 03%. Bearing in mind that the central and southern ENE systems were limited in their production capacity in 1989, and assuming that the electric power demand figure for 1987 is valid, we can evaluate that there is an implied increase in demand quantifiable at between 5% and 6% per annum for the whole of Angola from 1986 to 1989. 3.12 Eiecrrlc Power Consumed The final consumption demand for low voltage consumers is estimated. for 1989. at around 500 GWh, while industrial use is little more than 200 GWh. In 1974, with an overall production of 1,029 GWh, there was a medium and high voltage consumption of 588 GWh (see ANG 7408, par. 1.19, p. lo), while the final consumption rate of low voltage consumers was about 250 GWh. From 1974 to 1989, there is therefore a complete inversion in the demand structure, which increases from 30% to 70% for low voltage and decreases from 70% to 30% for medium and high voltage. ' The average pro capita low voltage consumption in Angola has increased from 66 kWh (1986) to 79 kWh (1989), while for the city of Luanda, this figure is equal to 200 kWh per If we refer to the 70,000 low voltage consumers administered by EDEL in the city of Luanda, we have an average consumption .. of 4,838 kWh per consumer in 1988. This consumption seems to be rather high when compared, for example, to the average low voltage consumption in Italy, which is equal to 2,600 kwh per consumer per amurn, or to the 1,480 kWh per consumer per annurn in Algeria in 1988. / The three above-mentioned counuies show the statistics in following consumer/inhabitant/consumptionchart: Inhab. Consumers LV consumpt- Consumer/ Consumer/ Consumpt/ ( .OOO) ( .000) GWh inhab . consumpt inhab. (Z) (kkl) (kTn) Luanda 1 .SO0 7C) 300 I. - I ' 7 1.280 .. 200 hnqola 9 .Ooo :GO 500 , -,J - 3.573 ;-3, .Llger:a 29.000 2.750 L. 980 3.5 :.La6 , L*! Icalia 5'5 - 0 0 0 22.950 50.300 Ll,7 1.51; 1.990 Sources: for Italy and Algeria: UNIPEDE INFORMATION, n. 7, February, 1990. for Angola: ENE, SONEFE and EDEL data, and Mission estimates. Consideag the pro-capita GNF rate for the three countries in question, we have the following comparative situation: / Sources: for Italy and Algeria: World Development Report, 1989. for Angola: Mission estimates. An examination of this last Table demonstrates that the pro capita consumption for each dollar of GNP is, in Angola, 2 .8 times greater than in Algeria and equal to that of Italy. Even if we do not correlate final consumption and the GNF, we can observe that the consumption of 4,280 kwh per consumer per annum in Luanda is about 3 times greater than that of Algeria, just as it is also higher than the average Angolan consumption. In conclusion, it can be said that individual pro capita consumption in Luanda is at a comparable level to that found in countries classified as "uuper/rniddle-income". 3 3 Structure and analysis of the electric power demand 32.1 It is not possible, because of a lack of sufficient data, to undertake a complete historical analysis of the evolution of the electric demand structure. It has, however, been possible to obtain a series of data on the electric power billed for the six-monthly periods of 1987 and 1988 for users of low voltage and those of medium and high voltage (see Table 32.I),with the following results (as a percentage of the billed total): Tab. 3.2.a EDEL - six-monthly billing for 1987 and 1988. --. 1 9 8 7 I 1 9 8 8 I I I Sem. ItsenL II m ., I Sem. n sen. I LV U2.6 X 76 C;Wh 118.7 .. Z.: 73 1 U7.7 I. 78 GWh 160.6 7; [ /I [ Hv I a.7 24 45.4 27 1 45.6 22 37.9 2O I / The increase in the incidence of low voltage consumption that took place in the more recent six-monthly periods depends on the facr that there was an incentive to bill s o as to recover preceding delays in billing. It can reasonably be asserted that the 20% for medium and high voltage and 80% for low voltage are stable for the cunent conditions. This structure relative to the main consumption center in Angola is to be considered anomalous. It, in fact, manifests a strong bias towards the final consumer, leaving the medium and low voltage consumer (which we assume to be an industrial or service consumer) too low a percentage. The reasons for this bias in the demand structure are to be found in the industrial manufacturing production trend, illustrated in the following Table, which experiencpd a slump from 1973 on, reaching a minimum production volume in 1977 equal to 25% o i ;he 1973 figure:, m d which ;hen iiowly m d erratically lncreasea untii, :n :987, ;I reached a level equal to 43% of the 1973 figures. Tab. 32.b - Industrial production and electric production trends in Angola and for the population of the city of Luanda. Xmifachrring industry production r) (tnda) , j a L 1 28 1 57 Total electricity generation 2 ) (m) (index) I I 984 1CO I 1 1 559 33 1 7Y. 78 Puprlatim in blada 3 ) . (nd.m) ~CO 655 898 (index) 1CO I Sources: 1)ANG. 7283, Vol. 1, Tab. 4.5, p. 79. 2) ANG. 7408, Annex 13, Tab. 4 and Mission estimate for 1986 & 1989. 3) Angola to the 1990s. Special Report i.1079 byTony Hodges EIV - Economics Prospects Series andMission estimate. This industrial production index refers to all of Angola: it is also a good estimate of the industrial production trend for the Luanda region.. At the same time, the population of Luanda grew from approximately 500,000 in 1973 to 1,300,000 in 1987, with an increase equal to an average of 7% per annum. ' The same urbanization phenomenon for the population also took place in the other main Angolan cities, as can be evinced from the following prospect: - Tab. 32.c Evolution of inhabitants in some Angolan cities ! 1 ! number o f i n h a b i t a n t s I I b Average a n n u a l i n c r e a s e (%) I ! ! 1970 :1 I 1 9 8 2 ( i iI 1 .-. ;lam I 6.685 I ' 29.9LT 1 - I7 7 --, - I I i i I ! / Source: Angola to the 1990s, p. 37 If we examine the current industrial production level we can observe the following situation - - Tab. 3.2.d Production and utilization capacity in the Angolan manufacturing sector I Sector 23s raUd % . ' e l e i I i capciy~ (A) (n') caraciev (7: of ).af A availaaie capacity i ! rsas 1 1987 1 Source: Mission elaboration of Ministry of Planning data See Tables 32.n and 3.2.m The available industrial capacity is greatly reduced and equal to little more than half the original production capacity of 1973-1974. Even the plants utilization factor is rather modest, situated as it is, for the food sector, at a level equal to 2535% of the production capacity. In the light manufacturing industrial sector, things are not better in that the available production capacity is equal to 57% of the original capacity and the utilization of residual capacity factors are equal to 33% in 1985 and 21% in 1987. It must also be observed that the plants utilization factor shows a downward rather than upward trend. One must, however, not forget that the so-called "self-consumption" phenomenon might be included in these data. This phenomenon seems to,have assumed relevant proportions and has the effect of subtracting a part of the production output from the statistics. In any case, it is possible to argue that there are current limits which preclude a return to the 1974 industrial production levels and namely. . Almost total lack of increase of internal demand in that it is not stimulated by any profit prospects. .The residual production capacity is much reduced then the original level: there are also well-founded doubts on the validity of the 50% datum for residual capacity. This limit would rapidly lead to a saturation of the demand for electric power for industrial purposes. .New industrial production installations (in the food, light and heavy manufacturing and mining industrial sectors) realized by private concerns, can be hypothesized only when the basic conditions (currency, free circulation of capital and persons, peace conditions) have been fully realized. From this point of view, apart from the aspirations of the Authorities, the Mission has not been supplied with a specific installation program for new or other manufacturing industries. Bearing in mind what was said above, the medium and high voltage electric power consumption for 1974 can be set out as follows: GWh (74)= GWh (8'6).TOE (74)/TOE(86) We thus have a consumption of 588 GWh which, considering that losses are equal to 10.7% (as indicated in ANG. 7408, Annex 13, Tab. 4, p. 189), gives an electric power generated for industrial use figure of 658 GWh, equal to 64% of the 1974 total, while for final low voltage use there are 370 GWh, equal to 36% of the total generated electric power of 1974. Admitting that, hypothetically, there is the same distribution of electric power gl..nerationneeds amongst the different systems as for 1989, then we would have the following 1974/1989 comparative situation: , Tab. 32.e - Generation and consumption of electric power in 1974 and 1989 in the Angolan electric systems. 1 !1 Region Year Total I Use I Lou Volt.. P." ,I I '. I Sh ! ! : I ! ! ! ! I I j Total I -%oh L97L ~989 \ i 1.328 343,: ! i 558 LS. j Z.S. r..~. n-s. 36 ! I ! I I ! I SOUTH 1 97 " 32 1 52,5 1 i 1968 i & j 19,"; I ! I ! ! ! ! !, I I [ Isolated L97L j 31 . . i i?,3 ! i& 11,1 ( 36 i I system 1?9? 1 I - 3 ,- ! I j,i j I 0 2 i I 12.5 i I 19 i In this schematic representation, the difference in distribution between medium and high voltage use and low voltage use adopted for the northern system has also been applied to the southern and isolated systems. An ad hoc evaluation of the distribution of electric energy for the central system gives 37% for medium and high voltage, and 63% for low voltage. Bearing in mind the losses between the two distribution levels, we can consider that the 30/70 distribution difference is also valid for the central system. What is more, as far as total generated electric power in the central and southern systems js concerned, we took 1987 and 1988 as examples in that the 1989 production is not representative of electric power demand in the two regions because of defects in the generating systems and not because of a lack of demand for electric power. This situation represents a starting point for the outlining of a development scenario for demands. 3 3 Demand development 33.1 Final low voltage consumption demand The final low voltage consumption demand would seem to be well correlated to the development of t h e urban population. Two cases have been considered for the development of demand in the northern, central and southern systems: - the first assumes as development rate for the population those foreseen by the BEP study of EDEL utilities for the Luanda region, and that is + 53% annually from 1990 to 1995, + 5% annually from 1996 to 2000, + 4.7% annually from 2001 to 2005' and + 3% annually as trend value (INTERMEDIATEscenario). -. - the second assumes a lower development rate, and that is + 4.6% annually from 1990 to 1995, + 3.7% annually from 1996 to 2000, + 3.6% annually from 2001 to 2005 with a trend value of 3% (LOWscenario). Tab. 3 3 . l a - Average development values in the demand for low voltage (%/annum) II LOW .33.2 - Demand for medium and high voltage consumption For the forecast of the industrial consumption development in the northern, central and southern systems, two scenarios have been considered: - the first scenario foresees the rapid attaining of favorable conditions for industrial development (in about 4-5 years) and the attainment of an average annual growth rate of 10% that should last from 1994 to 2005, after which it should maintain a trend value of 7% per annum (INTERMEDIATE scenario). - the second foresees a slow attaining of optimum conditions for industrial development: only around 1997 will an annual development rate of 5% be reached, which will then be held until 1999, after which it will reach a trend value of 7% per m u m only in 2003 (LOW scenario). Tab. 3.3.2.a - Average development values for high voltage demand (%/year) I I SCENP.RIO , I 1990-L995 1 1996-2000 Ii 2001-2005 I/ 2006 I I ! ! I I I - I ! LOW I ( INTERMED. Ii 3 , ~ 6,6 . i I 5,- 9,- I I1 6B6 1" I 7 - ,- i I i i I I I I 1I 9y8 jI I I 3 3 3 - Scenarios As for the demand for the base year (1989), due to technical difficulties, already mentioned above, the thermoelectric groups for the central and southern systems limited their production of electric energy. Because of this, the electric power generated in 1989 is therefore not representative of real demand. We have therefore assumed a value of 119.6 GWh for the central system, with a suppressed demand of (119.6 - 83) = 36.6 GWh, which one supposes will return to normal as the grid gradually returns to its original state. For the southern system, the reference production rate has been assumed at 64.5 GWh with a suppressed demand of (64.5 - 48,9) = 15.6 GWh, For the northern system, howevei, we have assumed the real rate of electric power generated in 1989, which was equal to 695 GWh. On the basis of these hypotheses, three scenarios have been outlined: an INTERMEDIATE scenario, a LOW scenario which foresees separate development possibilities for low voltage demand and medium and high voltage demand (as described in 33.1 and 33.2, above). A third scenario, HIGH, which takes the World Bank Mission's 1987 INTERMEDIATE scenario as a starting point, as per document ANG. 7408, Annex 14, Case number 6. In the third scenario, the demand development is considered in its entirety. The scenarios elaborated are set out in Tables 33.1 (low/medium voltage for the northern system), 3 3 2 (low/me-dium voltage for the central system) and 3 3 3 (low/medium voltage for the southern system). The HIGH scenario is set out in Table 33.4. In Table 3 3 5 (high/medium/low voltage) there are the scenarios for the hypothesis according to which the northern and central systems are linked, in order to be able to evaluate the profitability of the CAPANDA plant should this hypothesis be realized. The Tables are listed below. - Tab. 333.a Average annual development scenarios for total electric power demand in Angola. I I I I i SCENARIO i L99O-~993 ; !906-?000 1 200?-1'30j / 1906-II)L j : ! ' -. .'- . - - . ! i LOW ! - 2 ,7 ! ! - - .. - I i i NTERMED . ;,,. : . - 7 % ; ;,Y - ' i ; H I G H ( 1) North 1 ! . -. 3 . .- -'.J , - , I - - :, 3 . I I . , --,- 3 ,- 1 Centen ! 1-,- ! ! ! , 5.3 1 ! I !I South ! 11,' I I 3 ,- 1 - 1 I 5.3 ! I (1) Intermediare scenario, World Bank Mission. 1987. The resulting total average annual increases for the nonhern, cenual and southern systems are equal to 4.2% for the first five-year period and + 43% for the second five-year period for the LOW hypothesis, and 5.7% for the first five-year period and + 6.3% for the second five-year period for the INTERMEDIATE hypothesis. For the northern system, the development rates for demand are equal to 8.4% and 10.4% for the fint and second five-year periods for the HIGH hypothesis. For the central -. system the same development rates are equal, respectiv;ly, to 14% and 112%, while for the southern system the HIGH hypothesis gives development rates of 11.2% and 8% in the first and second five-year periods respectively. With the development rate adopted for the HIGH scenario, the maximum electric power demand value recorded for 1974 is quickly reached. This value could be considered a natural technical limit to the increase in demand unless transport and distribution facilities are quickly upgraded. However, as the low voltage distribution grid in Luanda and other main Angolan cities has not bgen renewed or upgraded, it can be assumed that we are now in a pre-saturation stage for the distributable supply in the northern region and in the main cities of the center and south of the country. The tariff lever should also be used to check the intensity of final consumption and to parcel its development in reference to the availability of overall electric power for the grid and to industrial consumer demand for medium and high voltage that must be privileged. In the outlined scenarios one must consider, in fact, industrial medium and high voltage demand as a strategic type in that it is linked to Angola's industrial development, while the final low voltage consumer demand should be considered as a final consumer good (service) of a non- strategic type. The current tariff situation does not lead us to believe that the electric power demand will show signs of flexibility. For the periods following 1994-1995, the hypothesized increase in the various scenarios, oscillating between 4 5 % and 8% per annum, are valid only under the condition that peace be established and that the basic problems regarding the legal, economic and financial framework in which entrepreneurs will work and in which the internal market and the internal goods and services demand function are overcome. The overall demand development trend is to be considered as the highest limit. As for the so-called Tsolated systems, it is not easy to foresee that the situation will be much different to that hypothesized for the LOW scenario. The Mission did not undertake any specific territorial analysis for the isolated systems, and can therefore not advance specific hypotheses. 4. ECONOMIC AND FINANCIAL SITUATION OF ANGOLAN ELECTRIC POWER UTILITIES 4.1 SONEFE / 4.1.1 General Information SONEFE is the utility that generates electric power in the northern region of the country and sells to the EDEL utility (for approximately 80% of its total production) and , directly to its own medium and high voltage customers (for the remaining 20%). The generating plants are the hydroelectric plants of CAMBAMBE (2 x 45 MW + 2 x 45 MW) and MABUBAS (2 x 3 MW + 2 x 5.9 MW) and the Luanda turbogas groups (1 x 25 MW + 1 x 31 MW). The consumers it supplies directly are 383 for a total of 115 G m of billed electric power in 1988. The average consumption for the consumers directly supplied by SONEFE is equal to 300,000 KWh/year per consumer. This figure is equal to that of the medium and high voltage consumers supplied by EDEL The figures pertaining to production are available up to 1989 and are relatively reliable, while those pertaining to the amount of billed electric power provoke serious doubts, are erratic and are available only to 1987. It can, however, be estimated thaG in 1988, the electric power billed to consumers was equal to 87% of the electric power generated with a loss of 13%. For 1989, this latter percentage was assumed to be 13.7%. as can be seen in Table 4.1.1.1. The sales structure for 1989 has been assumed to be approximately equal to the 1988 one, that is with 20% supplied to direct consumers and 80% to EDEL. The 1989 production was 95% hydroelectric and 5% thermoelectric from the Luanda turbogas group. The production costs are therefore relatively low if compared to the ENE production costs in that the incidence of the price of combustible in the price of kwh is minimal. The development of production in the SONEFE system was + 92% in 1986,+ 3..4% in 1987, + 4.7% in 1988. The average value for this period is + 5.8% .per . annum. 4.12Personnel SONEFE had 842 empioyees at the end of 1989 which, related to the 695 GWh generated in the same year, gives a coefficient of 12 employees/GWh generated. A comparison with the Italian system demonstrates that this figure is 15 times greater. This difference is to a large extent due to a scaling effect, both in reference to the size of the generating plants and the size of the utility. 4.13 Profit and Loss Account SONEFE produced and officially provided the Balance Sheet accounts up to 31.12.1987. For 1988, SONEFE submitted to the Mission its Trial Balance sheets from which it was possible to deduce the Profit and Loss Account and the Statement of Assets and Liabilities for the years ranging from 1986 to 1989,oudined be!ow: Tab. 4.13.a SONEFE - Profit and Loss Account from 1986 to 1989. (Millions of Kz) Eqmditures . Direct costs, depreclatim . General expenditure, provisions Total expenditures An examination of the Profit and Loss Account establishes how the 1988 fiscal year closed with a loss of 58.6 million Kz, while the preceding fiscal years closed with a profit of 5.1 million Kz (1986) and 26 million Kz (1987). Billed electric power rose rrorn 532 Gwh in 1986 to 569 Gwn in i987 a d to 605 G w n in 1988, while the tariff applied remained unvaried at 053 Kz/kWh. Paradoxically, the overall turnover from 1986 to 1988 tended to decrease because of lower turnover from the other consumer senices. The total expenditure for SONEFE in the three fiscal years increased from 389 million Kz in 1986 to 361.2 million Kz in 1987 and to 4113 million Kz in 1988. SONEFE calculated its depreciation according to the regulations in force which allow for a depreciation fund at predetermined charges and the docation of a calculated quota, at a rate of 3%, on the value of the depreciation fund. The overall quota for the 1988 fiscal year in comparison with the value of the technical fixed assets in the balance sheets is equal to 2%, corresponding to an economic life of 50 years. This value is to be considered as low, bearing in mind the fact that the plants deteriorate much more rapidly when there is a lack of surveillance and maintenance. The interest listed in the Profit and Loss Account corresponds to those in the foreign debt, while there is no financial charge on the cash endowment fund. 4.1.4 Statement of assets a d liabilities SONEFE's statement of assets and liabilities for 1986 to 1988 is given in abbreviated form in Table 4.1.4.1. The fmed assets are written into the balance sheets at their historical value: the relative values went from 3,119 million Kz in 1986 to 3,851 million Kz in 1988, while the depreciation I in 1986 to 2,141 million Kz in 1988. ' fund went from 1,903 million I( The technical fued assets are subdivided into the following main blocks: (d.3) Asset value ( a ) Fund value i b ) ;:.~il.1x2) (7:) . a) ) ; : ( <-;) Thermoelectric plants 38,: 10,3 .-- ~ 2 - : , , -1,- - :8,3 Large distribution grid. 29,3 2,3 13.3 5,; $6,8 Substations 258.2 - - . - i~8,2 2,3 J3.j - / , I - Total fixed assets --3-36.: 100,- -- -.J.2,3 1 7 m,- P 33.1 Source: SONEFE Mapa do fondo de reconstimpo do investimento. Posi~aoem 3 1.12.1988. This table shows that less than half of the technical fixed assets are constituted by hydroelectric plants, while the value of thermoelectric plants is rather consistent at 20%. As for the incidence of the depreciation fund in the gross technical fixed assets, one must grids (50%), while for consider valid the coefficient relative to the transpon and distno~~ion both the hydroelectric and thermoelectric plants it must be considered as low (183%) given the semce period and above all the use of diesel and turbogas groups, which could be set apart for peak period, emergency or basic use, with a consequently very different and sometimes very reduced economic life. Overall, the technical fixed assets are depreciated at a / charge of 33%. As has already been said, the fixed assets are, differently from EDEL, registered at their historical cost. We therefore suggest that SONEFE undertake the revaluation that EDEL has already undertaken for its own technical fixed assets. It is, in fact, to be hoped that the Ministry of Finance will set precise regulations for annual revaluation and that these regulations will be defined nationally to include appropriate indices for these revaluations. As for the liabilities, there are debts for mid- and long-term financing that amounted to 1,278 million Kz up to 31.12.1988, corresponding for the most part to the foreign exchange debt. The cash endowment fund remained unvaried from 1986 to 1988, and is equal to 6GC miilion Kz. The Accumuiated Profits entry inciudes debts whicn, after he narionalization of the utility and the disappearance of creditor companies, are no longer be collected and which have therefore been incorporated in the reserves. SONEFE's statement of assets and liabilities does not indicate, differently from ENE's and EDEL's, debts owed the "Orpnento Generale do Estado". This is due to the fact that sales to EDEL are systematically paid by the OGE, as can be seen in EDEL's statement of assets and liabilities, while there is credit for over 400 million Kz owed SONEFE by remaining clients, and paniculatly public administrations. This amount is equal to one year's turnover. SONEFE therefore seems able to meet its current financial obligations. 4.15 SONEFE profit and loss account adjustment and determining balance tariffs To determine the average balance tariff for SONEFE's 1989 profit and loss account, we followed the three steps listed below: a. Extrapolation of the running costs from 1988 to 1989. This estimate took costs from 4113 million Kz in 1988 to 430 million Kz in 1989,of which 26 million Kz were used for an increase in thermoelectric production, which went from 9.4 Gwh in 1988 to 32.2 Gwh in 1989 (with an incidence on total production that went from 1.4% in 1988 to 5% in 1989), and the remaining 13 million Kz for a readjustment of direct running costs. b. Integration of those SONEFE costs that are considered to be underestimated. The following points were particularly revised: . The depreciation allocated by SONEFE for 1989 at a charge of 2% corresponds to an average life of 50 years: this is to be considered insufficient and we propose that it be increased to 5.6%, which corresponds to an average life of 17 years. It is therefore necessary to add 140 million Kz to the 70 million Kz allocated by SONEFE. . Another loss on credits, equal io 50 million I(z, has also been considered: the amount allocated by SONEFE is not, in fact, sufficient to cover real losses. The losses to be registered are to be attributed for the most part to lack of collection of debts and for the remaining part to problems with billing. The total added costs for 1989 are estimated at 190 million Kz.No interest was calculated on SONEFE's cash endowment fund. c. In the end, the balance tariff for the profit and loss account was determined following a consideration of the hypotheses of an expansion in billed electric power and other running . revenue. The relative results are listed in Table 12.1, along with those for EDEL and ENE. The resulting value is equal to 1I(z/kWh. h Tis tariff seems, in the current conditions, to be sufficient to insure the economic stability of the utility, while are not taken into consideration other important entries such as - (1) a possible devaluation of the Kwanza with the related need to provide allocations for differenas in and loss on the exchange rate; (2) - a possible remuneration of the cash endowment fund; (3) - updating of the tariffs in relation to variations'in the cost of internal factors, as well as the incorporation jind opening of the CAPANDA plant. We must also point out that the overall .loss of electric power, that is, the difference between the amount generated and that billed for 1989, was assumed to be equal to 13.7%. This is an optimistic figure, all things considered. We must also point out that each additional percentage point loss should be translated into a cost increase equal to 0.06 Kz/kWh, under current conditions. 4.1.6 Foreign currency debt Up to 31.121989, this was equal to 863 million Kz Of this figure, 60% is expressed in US $ and 40% in Swedish Koronas. The average interest rate on the debt in US $ is 7.27%, while the rate on Sweaish Koronas is 13%. The debt service for the years from 1990 to 1994 indicates a load that goes from 710 million Kz in 1990 to 89 million Kz in 1994. The debt service situation, both for SONEFE and for ENE, is shown in Table 4.1.6.1. In the hypothesis of the balance of payments being equal, with the tariff adjustment the SONEFE turnover is lifted to 640 million Kz in 1990. The residue of the debt, for such a hypothesis, would weigh upon the 1990 turnover figure at a rate of 37%, and would gradually reduce to 12-15% in 1994. The total for financial charges will be 33 million Kz for 1990, and will decrease to ever lower levels. The incidence of financial charges on the fiscal year accounts can still be considered modest, and this is due to the low interest rate applied to the financial point of view, SONEFE can be considered to debts in Swedish Koronas. ~ r o m be in good health in that, for example, the foreign exchange debt/fixed assets ratio is equal (up to 31.12.1988) to 33%. The current liabilities entry, which is worth 2,141 million Kz as of 31.12.1988, includes uncollectable debts'(to a value of 576 million Kz) owed the utility which are no longer existant and which are to be considered more as part of its resources than as a real debt. Amongst the credit items there is also a financial participation for 254 million Kz which is now no longer collectible. , . In this sense, SONEFE must undertake a reclassification of its statement of assets and liabilities indicating debts and credits, making evident the relative economic counter-items for I profits or exceptional losses. 4.1.7 Investments SONEFE's declared investments in planti for 1989 and planned for the 1990-1990 nvo- year period are given in the annexed table. A summary of the cost situation up to 31.12.1989 and estimated for 1990, 1991 and following years, is given in the following table. Tab. 4.1.7.a SONEFE - Investments as of 31.12.1989 and planned for 1990 and 1991. (in millions of Kwanzas) I 1 I ! i Following ; ! ! I I 1 I Up 1989 I 1.. 1991 I I ).ears , ! ~ o t a jl i . ! I I 1 !. I I i 1 1 - I ! ! I ! -.- . I !Nat.idc,m& 1.3 i 157,3 776-7 i 3 ! I , L , , j I ifmi@ I - I 2 - I 1 592,: I! 377,2 Ij ,.- LO,: ! . _._- -- --8.1 Source: ' SONEFE Plano biennal de investimentos 1990/1991 MAPA I1 Realizapos dos investimentos. The following is an outline of the financial situation: Tab. 4.1.7.b SONEFE - Investment Situation according to currency and state of coverage. (in millions of Kwanzas) / I in national I Total 1 foreign I I 1 Investment expenditure 1 L.558,G - I 1 I 717.7 1I 2.276,l I 1 Total i already financed !(already spent tor nay- c m c y l I 9~114 I 141.5 1 I ?.123,1 I I I I I Remainder to be financed I 375.9 j 1.i52.9 1 I ! I .. I 1 SONEFE ' s resources I 1 1 ' 503 . 1 3 1 I i -- I I I ! 353,: 1 - I ( OGE ~ntervention 3 I I 1 I I I I I I I 1 1'0 - i Other sources i 23.9 j 35,: 1 - --, i I I l investirnentos 1990/1991 Source: SONEFE Plano B i e ~ ade An OGE intervention is expected for 533.1 million Kz in foreign currency, while another 23.9 million Kz in foreign currency are covered by other sources. As for internal sources, the 481 million Kz indicated by SONEFE seem completely unjuSt5ed in that, even if we extrapolate oniy,the calculations made by SONEFE in 1988, the overall economic result is negative. Only with the hypothesis of calculations by SONEFE with tariffs that are able to generate depreciations of 169 Kz and rwenue for 320 million Kz for the two-year period could justify the 480 million Kz. As for the actual investments in the preceding fiscal years, we must observe that there is an 8:10 ratio for the totals indicated in the two-year plan and those actually realized. This depends on the fact that SONEFE, as is also the case for ENE, tends to concentrate all the important investments in the two years of the Biennial Plan. Law 11/88 states, in art 14, that the multi-year plan and the one-year plan are management instruments. We strongly recommend the adoption of aJ4ulti-year plan for periods of at least 5 years. Such a plan must be agreed upon, in reference to duration and form, with the Ministry of Energy and Petroleum as well as with the Ministry for Industry, the Ministry of Finance, with the Angolan National Bank as well as with ENE and EDEL SONEFE's investments for 1988 were equal to 91.7 million Kz, while the estimate for 1989 is for approximately 60 million Kz, as opposed to a total of 600 million Kz listed in the previous investment plan. The enormous discrepancy between fd;reseen investment and investments carried out in a determined period of time depends on the one hand from an overestimation of the possible expenditure, and on the other from organizational dBiculties and drawbacks linked essentially to the necessary foreign currency financing. One need only consider that investments planned for the revising of the Cambambe Plant groups date from I984 and, up to 31.12.1989,33% was realized. We also recommend an extension of management accounting able to supply information on the costs and revenues of the enterprise and on the capitalized cost of investments. For an evaluation of the level of investments to be sustained by SONEFE over the next six-year period, we have formulated a model with the following variation parameters: .Depreciation charges for currently existing SONEFE plants; . Depreciation charges for the CAPANDA plant which is supposed to begin production in 1993; . Duration of refinancing loans for the CAPANDA plant; . Interest rate on SONEFE's total foreign debt; . Two investment levels for the 1990-1995 six-year period: for, respectively, 2,171 million Kz and 4,342 million Kz. , . The results are given in Tables 4.1.7.1 through 4.1.7.XV1, and are summarized in the following: Tab. 4.1.7.c SONEFE Financial Scenarios - 1 i 1 D e p r . nlDepr:n , , I i Duration 'Interest ' i T A R I F F S ! I ( ' v i m !S - L ~ ~ I i I ~ i 2 - pmje 1 q ~t~~ g - 9 ~j 1 .r a t e s i j . i?9(1) 1993 .. I?) 1993 (2) ! I ) : / I ,..) ' (ti) ) : ( [K z I , x:,:5) ! 1 I i I I 1 I I I I I I I I1 i L 2,- 1 3,- j 10 0 1,03 ! 3,13 1 3,1; i i 1 I i i I 11 - I I ; ( i 1 I 1 j 3,- 2,- 1.93 1.72 1 i 1 i I I I 1 * - 6,5 1 I 7,5r, 1 i,53 Ii I 3 L II 3.- 1 ! - 3 - 7 - i I' , 5 - i! a,,5 II 1.01 1,91 5-97 I1 7.93 I1 (1)With investments of 2,171 million Kz from 1990 to 1995. (2) With investments of 4,342 million Kz from 1990 to 1995. The results obtained demonstrate, despite fundamental reservations based on the general economic and financial conditions in Angola compared with foreign economies and, giving these results an "internal-&pacityn significance with resmctions deriving born the size of the State Balance for the allocation of disposable funds in foreign currency or the concession of financing from foreign institutions, how the volume of investments has relatively little influence on the tariff level. These tariffs, in fact, in the first thee-year period before the W A N D A plant begins its production, will remain practically the same at little more than 1 Kz/kWh, while in the following three-year period they will increase at an average rate of 6 Kz cents, equal to less than 1% of the tariff. The tariffs will increase, however, in 1993, when the CAPANDA plant begins production, by 6 Kz/kWh in scenario 4, and by 8 5 Kz/kWh in scenario 1 with an average increase ratio of 7.6 times the 1990 value. Naturally, the average tadffs are sensitive to interest rates, to depreciation rates and to the overall volume of investments, but the range of variation is, however, rather restricted - around + /- 10% of the average tariff. For the sake of simplicity, we have taken the value of 8.0 Kz/kWh as the average SONEFE sales tariff for 1993 (to coincide with the opening of the CAPANDA plant). As for SONEFE's financial requirements, when the CAPANDA plant has begun production, it will be possible to make the following considerations.' The overall financial requirement is of about 4 5 billion Kz per annum (if investments for 1990 to 1995 total 2.7 million Kz), of which 400 million Kz for investments and about 4 billion Kz for repayment of debts. Self-financing is of the order of 1,500 million Kz per annum, while 3 million Kz per annum is the requirement that SONEFE will have to meet via outs~de Einanc~ng.It shouid oe observed that the CAPANDA debt tends to be reduced by about 1 billion Kz per annum. This total constitutes what the State Balance is responsible for each year, and is about 17% of total annual public investments in Angola (see the considerations made in chapter 2.4 and the data in Table 2.4.1). In the scenario of investments for the 1990-1995 six-year period, equal to 4,342 million Kz, the average annual requirement for SONEFE increases by about 400 million K z The net annual requirement for the "Angola" system would then be equal to about 1.5 billion Kz,that is about 25% of total public imestments in Angola for 1988, with the difficulties that would naturally ensue. In conclusion, the level of annuid investments for SONEFE is principally linked with the capacity of the State Balance. In the low investment scenm;~!: (300-350 million Kz per annum), or high investment scenarios (600-700 million Kz pe, annum), these values correspond to what the State (or any owzr external financing body) must assume as its own responsibility. The scenario after W A N D A begins production is, however, much more dramatic, in that one must add another billion Kz to the above requirements as a minimum estimate for the net repayment of debts for the CAPANDA plant. As for an opinion on the lev3 of investments that SONEFE is able to sustain, this is obviously conditioned by a respect for all of the following obligations: 1) depreciation allocations; 2) maintaining loss levels within the established limits; 3) containment of loss on credit within the hypothesized limits; 4) the application of the tariffs recommended and a systematic and immediate updating of the tariffs themselves to the new economic conditions in Angola Investments over the level indicated above, which might be necessary for the reconstruction of damaged or unusable plants (due to war and/or acts of sabotage), should rigorously be transferred as financing charges added to the State Balance via the allocation of endowment funds or rather with reimbursements paid by the State and with the payment of relative interest for possible loans granted by other foreign institutions. 4 2 ENE 42.1 General information. ENE (Empresa Nacional de Electricidade), with its head ofices in Luanda, established with Decree number 24/80, is responsible for the distribution of electric power in the central system, in the southern system and the isolated, non-interconnected centers. -. An exception to the above is the distribution of electric power to the cities of LOBIT0 and BENGUELA in the central system, which is supplied the CELB (Compania Electrica do Lobito e Benguela), as well as other provinces where the distribution is undertaken by local authorities (COMISSARIADOS), even though these use ENE personnel. The ENE situation as of 1989 regarding medium and high voltage and low voltage consumers, and regarding the production for individual regions, grouped according to systems, is outlined in the following table: Tab. 4.2.1.a Consumers and electricity production for ENE, 1989. I I I ! I S y s t e m i kumber of consumers i P r o d u c t. i o n I - - i ! MV/HV : LV ..~-nf!) ! I ! I I ! 1 - 33 3izgL7- ! 12 i ' (18.W) (L) 1 i j . 1 3.223 ! ~g i 12.583 I 1 1 :ZD ! (I)j 3.63 I I I CENTRAL TOTAL SYSTEM 1 i 3.~53 I I 1 !! :iy.cz~ I ! , . I i L .-02 1 - -0 I I 1 L"-s>;cJ ! I -- , 3 S.L16 j I ! SOUTHEFIN TOTAL SYSTEGI ! a,? 1 1 1 T Pa-?,- --3*u.4 I E i ! I 31 - ' /. .* -J - ! ! I 12. 2 C ) 5-35 2-47 !! 1 ,.fix:- . .- - ! 5 m . I I : 1 xc .:a .z: iL?sE i -- - - ~ 3 a I i i ( 3 . 3 L.la3) (3) ; I ! ! Total isolate system 1 29.262 ! 19,; ! I I ! ! I I ! I ZNE total I I 30 ( L ) 1 36.935 I ! zG ,- ! ! Notes: (1) Distribution: CELB. (2) Not known. (3) Distribution: Commissariados. (4) Estimate Source: ENE - Producao de energia electrica A N 0 DE 1989. - -.. The following table is a comparison of sales (electric power billed) between medium/high voltage consumers and low voltage consumers: Tab. 4.2.1.b ENE:direct sales and CELB reselling I 1 I T O T A L S / LV . .. 1 K"IHv ( Direct s a l e s Gwh . 9,5 II 9,j - I Sales t o CELB and CELB r e s e l l i n g Gwh 90,6 1 3,- j I Total s a l e s ~ w h i 103,: 1 62,j ( 37,5 1 l~-1- l- I x 1 - i 2 , j 3;,6 1 I Bearing in mind the larger technical losses in the distribution of low as opposed to medium and high voltage electric power (as well as greater irregular consumption), it can be asserted that, at the production level, the amount destined for final low voltage consumption is 70%, while for medium and high voltage the figure is 30%. With an estimated ENE total in 1988 for electric power distribution of 1655 GWh, there is a specific average consumption per consumer of medium/high voltage equal to 200,000 kWh for the year, and a specific average consumption of 1,730 kWh per annum for low voltage consumers. These figures show unified consumption to be lower by more than a third when compared to those of the northern system (SONEFE - EDEL). As for production, ENE generated 1872 GWh in 1988, equal to 222% of the Angolan total, subdivided into 1042 GWh for the central system (123% of the national total), 63.7 GWh for the southern system (75% of the national total) and 193 GWh for the isolated systems (23% of the national total). In 1989, production fell to about 150 GWh because of problems with the technical generating plants at the Biopio plant in the closing part of the year. Individual figures for the production of hydroelectric as opposed to thermoelectric power'are not known for 1989. 1989 production is not representative of the central system's demand potential. ENE's production was mainly hydroelectric up to 1982. After the Lomaun plant was sabotaged, thermoelectric production represented on average 40% of total production. The overall development of production is variable from 1985 to 1989, with -10.2% in 1985, -1.4% in 1986, + 17.9% in 1987, +7.8% in 1988 and + 1.6% in 1989.' These figures do not so much depend on the erratic demaqd structure, but should also be analyzed in reference to the availability of thermoelectric (gas turbines, diesel groups) and hydroelectric production means in the central, southern and isolated systems. The large discrepancy between generated, distributed and billed electric power derives from different factors, amongst which the imprecision of the metering, non-authorized electric power consumption and erratic billing (with periods in which consumers are not billed immediately and which are recuperated brusquely), which render the figures almost contradictory and not very reliable. 42.2 Personnel The werail number oi people employed by ZNE IS abouc 2,000, oi whicn 260 worlt In Luanda (where there are the central offices and annexed services and where the sale of electric goods is at its highest), and 1,740 distributed in the various provinces of the Angolan temtory. The number of employees per 1,000 consumers is equal to 29, and is the same as that for SONEFE and EDEL put together, which are responsible, in the northern system, for the production and distribution of electric power. -. Overall, work factor productivity is low if compared to more developed systems with larger scale economies, for example the Italian National Electricity Board (ENEL). The Italian index is equal t o about 4 3 employees per 1,000 consumers, that is, a figure which is 7 times better than the Angolan figure. The average cost per employee, for 1989, is about 120,000 Kz, which is slightly less than for EDEL (134,000 Kz per annum) and the same as that for the average employee ~ o s t SONEFE employees (116,000 Kz per annum). 4 2 3 Profit and Loss Account , From the accounting point of view, ENE's situation could be defined as the most precarious and serious: in January 1990, ENE planned to close the 1989 account sheets, for the first time in ENE's history, by mid-1990. ENE, however, has made a significant organizational effort and has therefore been able to provide the Mission with a preview of the final balance sheet covering the period up to November 1989 which includes the direct costs for all regions and the central offices. ENE already has the 1989 figures for the revenue balance sheets pertaining to the central offices, the Cabinda and Moxico provinces, while, for the other provinces, ENE has figures for the first 10 or 11 months of 1989. By appropriate extrapolation, it has been possible to reconstruct the 1989 Profit and Loss Account. For preceding fiscal years, ENE has elaborated a summarized outline for direct costs and revenue for the fiscal years from 1986 on, including the figures for all provinces. On the basis of these summarized figures we have attempted to reconstruct the series of Profit and Loss Accounts from 1986 to 1989, which appear in Table 423.1, and which are summarized, in turn, below. Tab. 4.2.3.a - ENE estimate of the Profit and Loss Account for 1988 and 1989. (in millions of Kz) - I I i Revenue : I .Electric power sales j .Sale of "goods" 1 I 1 I 311 370 I I 275 I1 Total revenue I 582 1 I 580 Expenses : .Salari'es .Other running expenditure .Purchease of "materials" 527 1 337 170 I . Total expenditure I jp7 I i 1st result (goods included) 2nd result (goods excluded) j I Expenses adjustment (depreciation,interest,etcj (185) (225) 2.s. 1 (167) (272) 350 i Adjusted result 1 3.s. 1 (677) Source: ENE documents and Mission estimates Before examining the economic figures, it is necessary to bear in mind that ENE undertakes activities such as purchasing and reselling the most diversified electrical goods for domestic, artisan and light industrial use. The materials are generally purchased abroad through official channels and valued according to official exchange rates. These goods are theoretically put on sale to Angolan citizens, but, in practice, they are only made available to ENE and EDEL personnel, who acquire them at the official price and then resell them on the parallel market at prices that are from 80 to 100 times greater than the original. The cost price for ENE goods must therefore be marked up by 1.6 or 1.7, according to the type of goods, in order to cover handling costs. This analysis of the ENE accounts does not therefore include entries for the revenue and costs for this "non-electric" activity, which is, accc .din5 the ENE managers, destined to disappear. On the basis of the linprocessed figures available, a loss in all examined accounting periods can be seen. Obviously, the cost figures refer to direct costs, and we can therefore apply an adjustment and integration of the same costs in order to attempt to estimate the possible real result for the 1989 fiscal year. However, on the basis of ENEG unprocessed figures, there is a loss of 167 million Kz for 1989 which increases to 272 million Kz if we refer to the electric sector alone. At the present moment, ENE has not yet determined the depreciation for the plants, foreign debit interest or loss on credit. As for the nature of the other costs, we must point out that a significant entry is constituted by thermoelectric combustibles, for which, however, there are no precise figures regarding purchases, supplies or the value or quantity of consumption. As far as this aspect is concerned, we recommend that ENE do everything in its power to organize the necessary minimal management'according to the nationally-established criteria. 42.4 Starement oi asses and iiabiiities a) Fixed assets and depreciation fund. By the end of 1989, ENE had reconstructed an inventory up to 31.12.1988 of its fured assets on a national scale. The evaluation was based on existing documents or on an estimate of the cost value of the asset when it was originally purchased. The consolidation of ENE's fixed assets is given in Table 4.2.4.11, where there is an overall historical value of 3,565.8 million Kz -. The depreciation fund, evaluated according to the lived life of the individual assets, amounts to 2,416.7 million Kz with an overall incidence of 67.6%. The incidence of the depreciation fund on the value of the assets ranges from 82.8% (for civil hydroelectric works), to 97.6% for the substations and to 88.4% for the high and medium voltage lines. These indices are too high in that, in the past, no depreciation was ever effected (at least, since ENE was constituted in 1980), and consequently the residual total to be depreciated is the minimum and there will be no space in the immediately following balance sheets to undertake depreciation. For the thermoelectric plants, the incidence of the depreciation fund is equal to 36%. In this case, the index leaves some leverage for future depreciations even if, bearing in mind the conditions of the assets, it is not thought that it will be possible to complete the depreciation.. As for the annual depreciation rates, there is an overall average charge of 5.796, with a value of 4.06 for the civil hydroelectric works which appears to be correct, while there is an annual charge of 6.94% for the thermoelectric plants, which corresponds to 14.4 production. years, which seems excessive considering the type of thermoelectric plants. We suggest that ENE pay maximum attention to the nature'and production type of thermoelectric plants (basic, peak, emergency) and consequently adopt appropriate depreciation indices so that it will be able to coordinate the years of minimum production foreseen and the period of technical-economic depreciation. Applying the average annual depreciation rate for existing assets up to 31.12.1988 and estimated up to 31.12.1989, we obtain an ailocateci depreciation value equai ro 2W miilion i(z for 1988 and 210 million Kz for 1989, totals that have been used as integrated costs in the ENE Profit and Loss Account for 1989. General do Estado Interventions b) Or~amento The "Orpmento General do Estado" interventions for the years ranging from 1984 to 1989 are indicated in the following table: Tab. 4.2.4.a - OGE Interventions ~ ( i millions of Kz) - Year .-. Invests. Running exps . Ann. t o t a l Cumulative Source: ENE: Proveitos do OGE Of an overall OGE investment of 2,598.4 million Kz,1,817.7 million Kz (equal to 70%) have been used to finance investments, while 780.7 million Kz have been apportioned for running expenditure. This latter total could correspond to a cumulative running loss measured in terms of treasury deficit for running expenditure. The reliability of these figures is however limited, and, what is more, there are no ligures for interventions for the years 1980-1983. c) Foreign Financing Debt As for the foreign financing debt, ENE has provided the Mission with a detailed account of the foreign debt which, as of 31.12.1989, consists of 29 existing loans of which 23 are in US %, 3 in Belgian Francs, 2 in British Pounds and 1 in French Francs. The debt service for the years 1990-1994 is listed in the following table: Tab. 4.2.4.c ENE: Foreign Debt Service as of 31.12.1989 I I ( i n thousands o f USS.1 ( ( i n m i l l i o n s o f Kr 1 I j Y E A R iI ~ r i n c i ~ i Ie interest I Total I 1 T o t a l L I I I I I I Value of US $ for exchange rate in Table 424.111 Source: Mission elaboration of ENE figures. See tab.4.2.4.111 The maximum duration of financing does not go beyond 1994: this financing requires a refinancing, or a payment in foreign currency which ENE can meet without any problems, in relation to the Angolan National Bank's foreign exchange capacities, by effecting depreciations as per above. The debt and debt service situation is shown in Table 4.2.4.111. No interest is charged on moneys put forward by the State Balance. The State provides a free treasury service for ENE. iVe recommend inat inis siruarion be amenaed with one of [he cwo soiut~ons tnat, oi ail possible solutions, might be adopted: A. Transfemng the total for treasury advances from the State Balance to the endowment fund at the end of each fiscal year. This is to be done separately for investments and for running expenditure. B. Arranging at the beginning of each fscal year, with the Angolan National Bank, credit in the form of a loan, -. with the volume limitations deriving from the State Balance limitations, where Ene is able to use this to meet its own needs. In both cases, the principle according to which the State's financial resources are not 9e: borne in mind. Appropriate interest rates should given freely 'to a production sector shoule,. therefore be applied, even if at a reduced ratc, for deficits accrued by the company. a) other asset item. As for other important asset items'such as an inventory of credit to consumers, the situation of stocks, materials, combustibles, electrical goods on sale and debts accrued with suppliers, ENE does not currently hold accounting documents. Evaluations and estimates are currently being undertaken to ascerthn, even at a rudimentary level, these figures. .On the basis of the littie information available, the assets situation has been reconstructed as of 31.121988 and as of 31.12.1989 hypothesizing investments for 1989 of 108 million Kz and depreciations for 210 million K z These are set out in Table 4.2.4.W. 42.5 C profit and loss account adjustment and determining balance tariEEs For determining the average balance tariff for ENE's 1989 Profit and Loss Account, the steps listed below were followed: A. Elimination from the Profit and Loss Account of costs and revenue refemng to the sale to private individuals and the purchase of electrical goods. This operation implies an increase in running losses estimated between 167 and 272 million Kz. There has been no reduction of costs such as those regarding personnel that deal with the management of electrical goods because it does not seem very likely that ENE will reduce its employees that work in the non-electric field (at-. least 30 people). B. Depreciation has been fixed at the value of 210 million Kz, corresponding to a charge of 5.7% of the credit assets, which results from the maximum fiscal depreciation rates ..- currently effectivebeing applied to the value of the different assets as listed by ENE. C. The financial charges are, for 1989, equal to 60 million Kz, obtained by calculating foreign debt interest up to 1989 at the official US S exchange rate. No interest was calculated on debts to the State Balance. D. Loss on credit was evaluated at 60 million Kz: this total corresponds to 7.2% of ENE's turnover for 1989 in th; hypothesis of the adoption of tariffk that will bring the balance of payments to an equal level. These losses are most probably inadequate, but they may be a starting point for an annual up-dating. The adjusted Profit and Loss Account and the relative tariff that will allow the balance to become equal have been listed in Table 13.1.1. The resulting balance tariff value is equal to 5.4 Kz/kWh. This value represents an average figure for the entire utility and for the entire Angolan territory, and has no correlation with the production and distribution costs for individual systems or independent provinces as far as the isolated systems are concerned. In this respect, it is necessary to point out that the Central system up to 1982 was almost entirely based on hydroelectric production. The sabotaging of the bmaun plant in 1983 gave great impetus to thermoelectric production, the costs for which are significantly higher. Reopening the h m a u n hydroelectric groups will have the effect of reducing the production cost of electric power generated in the Central system. In this context of variable production costs (due to the effects of war, or more simply to technical hitches), and with the aim of being able to apply more stable tariffs, we recommend that a special fund be introducted in order to meet the variations in production costs in the change from hydroelectric production to emergency thermoelectric production. ENE itself might undertake an analysis in order to establish the amount to be allocated to this fund. Obviously, before this less important addition is made, ENE must assume an accounting system, even if it is a simplified one, able to supply production and transmission costs, distribution costs and gereral expenditure administrative costs. ENEs production and transmission costs are also important in that they constitute the main wst chapter for CELB,which distributes electric power on behalf of ENE for the cities of Lobito and Benguela In fact, while SONEFEs (essentially hydroelectric) production costs in the northern system are around 1 Kz/kWh, those for ENE's central system, which was 50% thermoelectric and 50% hydroelectric in 1988, are'surely greater. In the southern systems, which are also ENE-run, production costs decrease again, in that they are essentially based on the Matala hydroelectric plant However, as there are no cost surveys for each individual region and system, it is not possible to establish differentiated balance tariffs. We must suggest that ENE keep appropriate figures for industrial costs according to different territories, both for production and transmission and for distribution, with the aim of being able to determine and update when necessary the sales tariffs for electric power. The tariff differences between distinct, interconnected systems and for isolated systems which also include the different transmission and distribution costs are strongly recommended, even if it is possible to introduce compensatory (and resource transference) cost factors from one systems to another for tern;lorary and meta-economic reasons '(e.g. for social, military and temporary promotional reasonsj. This compensation might be realized with the constitution of an appropriate regional fund for levelling the cost/tariff difference for the purpose of having the total for these inter-regional transfers on hand. The relative cost for these allocations is to be added to the tariffs for the regions which have lower production costs and will compensate for the lower revenue from the regions with greater production costs and with sales tariffs that have been opportunely lowered in comparison with those that otherwise cover all costs. / -. This compensatory mechanism might be temporally limited, and the compensations should only be panial so that they will be able to stimulate economic operators to bring the electric power use factor into line with the local territorial cost level. 42.6 Tariff Structure If we take as a reference point the electric power distributed in 1988, the production structure according to means and the average low voltage and medium/high voltage / consumption structure and if we attribute, for the sake of experiment, the value of 1 Kz/KW as tariff differential as opposed to the average balance tariff of 5.4 Kz/kWh, then we have the following situation: Tab. 4.2.6.a ENE tariffs differentiated according to systems ! LQL A L L : i System i En. d i s t r . i Comp. .prod. j iff. ; Aver. ! i 1 1 in 1 d r . e . , , I Tariff Applied . ! I Weight \slue ! ( ! I I I 1 I - ! I I ! j I ! ISOLATED ! 1 I , j - I! LC0 i - ;,-! a 3,- , 1 I CENTRAL l03,2 I( 50,- I 1 30,- / 1 - 3,j ( 1 I SOUTH I ~a,9 i i 103,- i 1 -1 I - 1,- ! The average tariffs that we therefore recommend are, from 1990 on, the following: These tariffs are to be up-dated systematically as the general cost elements (interest rates, depreciation policies, personnel) and local elements vary when these are applicable to the production in any determined fiscal year. Adjustments to temporal variability in cost, due to the difference of production means, hawever, as has been said above, must be compensated for and stabilized via the constitution of an appropriate fund, and the transferring of the relative cost onto the tariff at a regional level, for example for the central reqion, which seems to be the oneswith the most variable type of production. 1 The tariffs for different categories of consumers that are to be applied, in reference to current estimated average consumption rates, are outlined below: Tab. 4.2.6.b ENE - Tariffs according to different categories of consumers (in Kz/kWh) I I i .~oitzge1 consumer i Type 31 System I ! Tzriff. i suoplied j caregory / ; I -,ari'f i ! I ! ' I ! I Residents ! T,:O I i 1 I I ! I I Southern 1 ivN/EV I all I 3,j 1 I . ! I . LOW I resid. 1 j,L ( I I I 1 industry i L.3 i 1 lpubiic ligh.1 ' 2,2 1 " ! ! I ! I Isolated The values calculated above represent an approximate figure, yet they are sufficiently correct and should be applied immediately. The tariffs must then be systematically and immediately up-dated whenever cost variations exceed the 2-3% limit. The immediate implementing of these tariff measures must be done in conjunction with measures that guarantee collection .of bills issued: these two conditions are the basis for an economic and financial recovery of the utility, which aims at, most importantly, the attainment of economic and financial stability, and that is, a correct remuneration for productive, material and financial factor?, as well as an equitable reconstitution of the fned assets employed. The recommended tariffs for ENE only approximately respect the principle according to which the sales cost and the production and distribution costs correspond in the different Angolan regions. This depends on the fact that we are not familiar with the relative costs for each of the regions. What is more, there is a certain, admitted transferring of cost from the central and isolated systems to the southern system, which is, at the moment, most favored as far as current production costs are concerned. The evolution of the central system's production park or the possible interconnection with the northern system will require the implementing of tariff adjustments in order to meet the principle according to which the tariffs applied locally and the relative production, transport and distribtgion costs are made to correspond. As for the size of the recommended increases and the possible repercussions in terms of demand, the economic considerations put forward in 2.4, above, should be borne in mind. According to these, it is not foreseen that there will be any effect on the demand for electric power, in that the price of the kWh is still low in comparison with other current consumer goods. We recommend that the declining blocks tariff system be totally abolished for the entire Angolan territory in that it is in complete opposition to the economic principles of the current situation (where supply exceeds demand), and in any case because there is no supply/demand relationship based on a real values/monetary exchange. ENE has given the Mission some tables, annexed to the present Repon, relative to the investments currently being undenaken and those planned, those financed,and those about to be financed for the central and southern systems and for the various isolated groups. While outlining each of the investments, we reahzed that most of them did not correspond to the indications contained in the tables for totals, costs in foreign currency, financing obtained, year or period in which work w a s planned to begin or, in some cases, the cancelling of investments. Thus, rather than supplying an updated list of works, which would be beyond the limits of the current Repon, we will define the level of overall investments required in order to rebuild and expand the electric system run by ENE. The model below is slightly different to the one put together for SONEFE. The control parameter is constituted by the relationship between the financial debt and the value of the technical fured assets. The results are set out in Tables 4.2.7.1 through 4.2.7.VI1, and are summarized in the following: Tab. 4.2.7.a - ENE - Financial scenarios from 1990 to 1995 I I I Variation 1 Annual I Allocated I Ratiofingncialdebt~ I ~ ~ ~ ~ ~ i n T/O 1 invests. 1 deprec. (% o f [ t o fixed a s s e t s ( annual % ) (% o f turn-over)! f i x e d a s s e t s 1 !' % ] (u. ~ r )1. I 1989 1 :?95 1 I 1 I I I I 10 1 sg I 5,7 35 35 10 II a II 3,7 .. 1 35 The limits to these projected figures have already been expressed in 4.1.7 in reference to SONEFE. With reference to ENE's internal factors, the annual volume of invesunents that might be amsidered as normal va&s from 30% to 40% of the overall turnover. This means, and 400 million Kz for 1990, in the case of a 10% annual billing increase, values between '300 ending with 500-600 million Kz in 1995. In the case of investments within the highest bracket and in order to avoid excessiv/e indebtedness, ENE could apply for a cash endowment fund from the State for about 450 million Kz which represents a modest 14% of the total investments of 3,148 million Kz for the six-year period. The rate of development for the turnover is purely indicative and could be interpreted as a development in demand or as a pure rise in the economic price condition, or rather as any combination of the above two hypotheses. If we attribute the increase in turnover to the demand development we obtain a total of invesunents for the six-year period of 3,150 million Kz in the case of a 10% development rate, and of 2,650 million Kz in the case of a 5% rate. One should bear in mind that the correct average ENE investment level should be iirmted according to the basic conaitions iisted here: 1) depreaation ailocat~onsio a level oi 5.7% per annum of the assets; 2) a respect of the levels of electric power loss within the hypothesized limits; 3) containment of loss on credit within the hypothesized limits; and above all 4) the application of the tariffs recommended in the present Report and a systematic and immediate updating of the tariffs themselves to the new economic conditions in Angola 43.1 General information EDEL is a utility that distributes electric power for the city of Luanda and the surrounding region. It supplies electric power to 67,000 low voltage and ,310 medium/high . , voltage consumers. Billed electrical power for 1988 was for 400 GWh, of which 315 GWh for low voltage consumption and 85 GWh for mefiiumlhigh voltage. Average specific consumption per consumer is 4,700 kWh per m u m for low voltage consumers and 270,000 kwh for medium/high voltage consumers. The specific, average consumption for low voltage consumers is to be considered as high when compared to the average low voltage consumer in Italy, for example, which is equal to 2,600 kwh per annum. One must bear in mind that the number of regular EDEL consumers, equal to 67,000 in a city of 15 million inhabitants, is to all effects anomalous. In fact the physiological number of consumers for a city of this size is in the order of 200,000. In this w e , the specific average consumption per consumer per m u m would be equal to 1,600 kWh, which is still excessive if compared to the pro capita income for Angola, which is 20 times smaller than the Italian figure. of 130,000, which is a The number oi potentiai connections 2 thereiore in the ~ r d e r figure the EDEL managers agree on. 4 3 2 Personnel EDEL has about 1,000 employees, of which 416 are employed in commercial, accounting. personnel management and General Management secretarial activities, and 587 in the distribution field (workersand technicians). The ratio of employees/consumers is of 15:1,000, where 8 are in technical activities and 7 in administrative-commer-cia1 activities. This ratio is rather high, and indicates a low productivity in the work sector. One must, however, bear in mind that there are 50 people employed for social reasons and 52 as security guards. The incidence of the number .of employees per consumers is considered high in relation to the conditions of the plants, which are practically devoid of maintenance, and with a very high number of illegal consumers. 4 3 3 Economic Situation The EDEL turnover, after a period of tariff stability following the declaration of independence, evolved in the period from 1987 to 1988, with the average applied tariffs increasing from 0.91 Kz/kWh to 1.45 Kz/kWh. This was due to the fact that EDEL billed, with the tacit approval of the government, the highest possible tariff in the decreasing scale to all low voltage consumers from the second half of 1988 on, going from an average tariff of 0.87 Kz/kWh in the first six-monthly period to 2.05 Kz/kWh in the second. The turnover thus went from 337 million Kz in 1987 to 402 million Kz in 1988. For 1989, the electrical energy sales turnover is expected to increase again (820'million Kz), in that the highest tariff for low voltage consumers was applied for the entire year, while for medium/high voltage consumers the tariff of 0.93 Kz/kWh continued to be applied. As for EDEL's economic results, Table 433.1 summarizes the Profit and Loss Accounts for the years ranging from 1983 to 1988. These balance sheets underline a loss for the years 1983-1987, while for 1988 EDEL closed with a profit of 42 million Kz. The following are the main observations made: -. .In 1987, for the first time there is a calculation of the depreciation of fued assets for a total of 6 3 million K z In 1988 this allocation was equal to 643 million Kz . In 1988,for the first time there was an allocation for loss on uncollected credits equal to 1082 million Kz,corresponding to 17% of the 1988 turnover. The inclusion of these two cost entries in the Profit and Loss Account is to be considered as positive in that it demonstrates greater sensibility on the part of the EDEL managers for economic concerns as well as demonstrating a compliance with the regulations set out in Law 11/88 dealing with the attaining of economic stability and the financial autonomy of State compmies. 43.4 Statement of assets and liabilities Let us now examine EDEL's statement of assets and liabi-lities for the years ranging from 1986 to 1988, listed, in Table'43.4.1. The main fact to be observed is that there was a revaluation of fued assets undertaken in 1987. Fixed assets increased from 614.7 million Kz as of 31.12.1986 to 1,2643 million Kz as of 31.12.1987. The reason for this higher coefficient is not known in that there are no official indices for price variations in reference to depreciated assets. Overall, this coefficient is 2. The depreciation fund was not established, because of a lack of allocated funds, until 1986. For 1987 and 1988,it assumed a value of 6.3 and 76.6 million Kz,corresponding to the cumulative value of the depreciation funds effected by EDEL in those two years. This is to be considered as positive, in that it allows great leverage for future depreciations. The 1987 active revaluation balance was for the most part transferred to the cash endowment fund and the residue to other reserves. 1987 is also the first year in which a depreciation rate was allocated. This rate was purely symbolic as it was equal to 05% of the value of the assets revalued. In 1988, the depreciation allocation increased and became 45% of the fixed assets. 43.5 Cash deficit and the intervention of the "Orsarnento Geral do Estado" The most important entry in the balance sheet liabilities is constituted by a debt owed the "Orsarnento Geral do Estado" (OGE), that is, to the State Balance. It is 1,535 million Kz as of 31.12.1986, 1,497 million Kz as of 31.12.1987, and 1,639 million Kz as of 31.12.1988. The makeup of this debt is given in the following table: Invest. expenditures Running expenditures II al T o t- intervent I annual ! cumulative I annual ( cumulative I Source: EDEL - Fundo de Custitusao. Of the total interventions for current expenditure from 1978 to 1988, the interventions of payments to SONEFE amounted to 1328.9 million Kz, equal to 76.4% of the total. The interventions for investment expenditure were minimal, considering that their incidence to the end of 1989 was 11.3%. EDEL's debt to OGE is of an indefinite nature in that the State Balance actually performs a treasury service, as any ordinary bank would on a credit account. The main observation, however, is to'be made on the fact that, on such a debt, there is no interest rate appiied by the State Balance, and it is therefore to be considered a free loan to EDEL This situation must definitively be resolved by adopting one of the two solutions / listed below: . A. Transfemng the total for treasury advances from the State Balance to the endowment fund at the end of each fiscal year. This is to be done separately for investments and for running expenditure. B. Arranging at the beginning of each fiscal year,. with the Angolan National Bank, credit in the form of a loan, the size of which is limited according to the'State Balance's capacity, with the possibility that ENE may use this to meet its own needs. In both cases, the principle according to which the State's financial resources are not given freely to a production sector should be borne in mind. Appropriate interest rates should therefore be applied, even if at a reduced rate, for deficik accrued by the company. 43.6 EDEL profit and loss account adjustment and determining balance tariffs To determine the average balance tariff for EDEL's Profit and Loss Account for 1989 we have reconstructed the running balance sheet according to the three following steps:uIPOJ* a Extrapolating and updating .. . the 1988-1989 balance sheets. b. Integrating the underestimated costs or those not taken into consideration by EDEL. We particularly focussed on the following entries: .The depreciation was integrated for a total of 65 million Kz for 1989 so as to increase the average depreciation rate from 5 to 10%. This rate is to be considered as more in keeping with the technical and economic life of the distribution grids under normal conditions. What is more, if surveillance or maintenance is lacking, then the rate can be increased; .The purchasing and consumption of material not accounted for in EDEL's balance sheets, for a total of 120 million Kz, in that they were obtained as donations from foreign countries. This entry corresponds to 10% of the predicted tumbver with the balance tariff and is considered to be accurate; .Loss on credit has been increased by 133 million Kz with the aim of bringing the level of loss on credit in line with the turnover obtained with the balance new tariffs applied in 1989. The overall loss amounts to 21% which can now be considered an attainable goal by the company in the current situation, and EDEL must do everything in its power to reduce it. c. Finally, we determined the balance tariff according to possible hypotheses of demand growth, of loss and other revenues, as can be seen in Table 2.4.1. In Table 2.4.1 we have given a summarized version of the Profit and Loss Account for the three Angolan electric power utilities for 1989 in the hypothesis of balance so as to obtain suitable so-called "balance" tariffs. The individual balance sheets were put together following the procedure described above. The predicted turnover for EDEL is equal to 1,145 million Kz, and is essentially made up of electric power sales (1,080 million Kz). The average balance tariff is therefore equal ro 2.7 Kz/kWh. Bearing in mind EDEL's sales structure (80% low voltage and 20% medium/high voltage) as well as the average prices at which the electric power could be sold (that is, 3 Kz/kWh for low voltage, 15 Kz/kWh for medium voltage), the resulting average tariff is perfectly in line with the Decree dated December 14th, 1989, which fues the maximum prices at which EDEL can sell. This Decree also provides for a revision of the tariffs in relation to the company's effective costs. As for the sales tariff structure in relation to the category of consumer, the following tariffs can be used as a starting point. Tab. 43.6.a Sales tariffs for electric power according to consumers I I uTILITY I REGION SALES / CoqsumRs , I V A ~ S /TARIFF TYPE ZDEL II I I LV 1Residents I 1 1 3.70 1 Sigle " I I I (Industry 2,j I I P u b l i c ligfil 1, J I I 1 I ( MV/HV I All l,J 1 I I 43.7 Foreign Debt Structure There are no foreign financial debts at the moment. 43.8 Investments EDEL amongst other initiatives, plans to invest in the restructuring of pan of its Luanda distribution grid for a total of 17 million US 5. This project is to be realized over two years: 1990/1991. The annual investment predicted, equal to 240 million Kz per annum, corresponds to 22-24% of the foreseen turnover. Without going into the political and financial problems linked to the assigning of the fiiancing for invesrments,an invesriments moaei has been eiaborarea for EDEL,iimiiar io the one elaborated for SONEFE,based on the following parameters: . Depreciation rate. . Purchase price for electric power from SONEFE until the CAPANDA plant begins operating (1 Kz/kWh) and after it has begun operating (8 Kz/kWh). . Interest rate. -. . Profits as percentage of annual investments. As far as investments are concerned, we must bear in mind that the Mission has indicated the following three levels for a restructuring of EDEL's and SONEFE's plants: 43.8.a 1992-1995 investments for low voltage and medium/high voltage distribution for EDEL and SONEFE. (in current currency) I 1I E N T R Y I I 1 I 1 I I 1 / I A64,3 ! 1. P r i o r i t y 2. Building 1 I 15,67b 92,110 2.728,3 1 3. E x t e n s i o n s I I 1 73,7@ 1 2.186,2 1 For our sensitivity survey we previewed the maximum investment level of 5,200 million Kz for the 1990-1995 six-year period. The results, where the financial statement and the Profit and Loss Account are given separately, are given in Table 4.3.8.1 through 4 3 . 8 . x and are summarized below: Tab. 4.3.8.b. Financial Scenarios ! I I 1 Interest I Profit I T a r i f f s (Kz/ki*'h) IScenaric ! Amount ( 1(2) / rate ( 7! ) I (%of 1 9 9 2 I I 1 I 1 I I It is to be observed how the variations of the parameters idluence by +/- 10% the average tariffs up to 1992, that is up to the period in which the CAPANDA plant begins operations. After this, the variations of the parameters influence the average level of the tariffs by + /- 2-3%. The maximum tariff variation is to be expected, obviously, at the precise moment when the CAPANDA plant begins operating. The tariff increases from slightly more than 3 Kz/k Wh to about 11 &/kwh, increasing by 3.4 times. The sensitivity survey we dkied out by varying investments, underlines the little influence that the volume of investments has on the tariff itself, above all after the CAPANDA plant has begun its operations. Self-financing in the various scenarios takes into account a fixed depreciation value of 10% for fixed &sets beyond a profit stated as a percentage of investments to be financed, which varies from 50% to 60%. Recourse to financing that EDEL has to seek abroad oscillates (formally) between 200- 300 million Kz per annum and 800-900 million Kz per annum, depending on the profits established. It must be said that even in this case, as has already been said for SONEFE and ENE, that while EDEL's (formal) requirement is constituted solely by the net recourse to debt (given the difference between the gross recourse to debt and the repayment of debts) and by investments undertaken, for the Angolan system, in fact, the real' financial requirements are represented by the gross requirement need, diminished by possible finances given by foreign bodies. This, and nothing else, constitutes the only real limitation to the Angolan investment policy. As for the volume of investments as seen from the utility's point of view, it is necessary to bear the following main conditions in mind: .Effecting depreciation allocations at a ,level of 10% of the assets listed in the balance sheets; .Maintaining the overall level of loss of electric power to 18% of the electric power purchased; .Containing loss on credit within the hypothesized limit of 22% of billed services; .Containing of all running costs within the current limits without anomalous increase or distortion of costs; Applying tariffs in relations to the desired level of self-financing ; .Systematically and i&ediately updating tariffs according to the new economic conditions as they arise as a consequence of internal factor cost variations (depreciation) and external ones (interest, combustibles, purchase cost for electric power, etc.), as well as updating the Kwanza exchange rate. 5. THE CAPANDA HYDROELECI'RIC PROJECT 5.1 Cost of the project and investment program There are no substantial modifications to be made on the figures collected and processed by the World Bank Mission in 1987. The construction programs, to date, have been respected, while the direct estimated costs have been confirmed by GAMEK to be US$ 1,148 million (1989 currency), of which USS 602 million are already spent (as of 13.12.1989) and US$ 546 million are to be spent by completion in 1994. Interest during the construction period is evaluated at US$ 360 million, of which US$ 140 million up to 1989 and US$ 220 million for the period ranging from 1990 to 1993 and relating to the payment of interest on the foreign debt that will be contracted according to the requirement estimated by GAMEK. The operating costs of the GAMEK company, estimated at US$ 35 million, can be .. of the direct cost. The total direct cost is therefore US$ 1,185 included in the evaluation million while,in addition , if we include interest due, the total cost for the investment is about US$ 1,600 million (in 1989 currency, as stated above). 5 3 Financing the investment The situation for direct costs, interest due, loan repayment, overall bnencial requirement, financial coverage already obtained and financial coverage yet to be found for the CAPANDA project is, up to 1993, givenin Table 52.1, and is summarized below: Tab 5.2.a GAMEK - CAPANDA project - Financial requirement and relative coverage. , (in millions of US $) iI 1 I I 1. I I -- I i REQUIREMENT direct cost debt service j67,2 L17,3 1 1 I 1.180,j 559,L I I I 1 TOTAL REQUIREMENT ! --- 133,i i 9w,j ! :.;~,9 i 1 I i I ! COVERAGE - internal resaurcesi 3 , - 1 152,- ) 33,- I - confirmed foreign! debt ! - foreign loans not! I I I 1 125,2 - yet identified further requirem.. I - ( 1I 168,h L17,2 !I 2?3,6 L17.2 1 i I TOTAL COVERAGE I ! 755,1, I 9%,5 I 1 1.739,9 I An examination of the above table underlines the uncovered 1990-1993 residual financial requirement, which is necessary in order to complete the work, and is USS 417.2 million, 42% of the total requirement. This figure presupposes that the declared coverage s to be considered as effective. USS 75 million of this with foreign loans of USS 168.4 million i should come from a new financing by PETROBRAS, guaranteed by the government, while there is no indication of the possible source for the remaining USS 93.4 million, -. If we add to the above requirement this yet-to-be finalized coverage, the overall requirement increases to US$ 586 million, equal to 19.5% of the total financial requiremefit, for the completion of the CAPANDA project. GAMEK also lists an internal financial covering expressed in DOME Kwanzas for the, equivalent of US$ 50.9 million. This monetary question is also considered in the official ministerial documents, that is as convertible money to be covered by foreign currency. If we were to also include this figure in the requirement, then we would have a total of US$ 636 million, 65% of the total finan~ial requirement. Even if we exclude this figure, expressed in DOME, we have a coverage requirement of USS77 million from 1990 on, while in 1991 this requirement is US$ 200 million, in 1992 US$ 170 million and in 1993 is reduced to US$ 140 million. The average yearly financial requirement of US$ 150 million is the same size as the total public investments for all Angola and represents between 10% and 15% of the total annual investments in the private sector (see ANG 7283, vol. I, p. 40, tab. 32). As for the financial sources, the situation is the following: Tab. 5.2.b GAMEK - Credit Line Situation for the CAPANDA project. (in millions of US $) I 1 iI I * 5 I I 1I Agreed toral I ,Utilifed as 04 yet to be , 1 31/11/1989 1 utilized , ! j COMMENTS I I j - I f I I I II I 1 1 ~~ I 1 201 ! ' 19.j I ! lal,s I ! Existing II Xiz i I I / , ' II' !Cac=~) ! jiS ! -1 ! Existing ! I i I i contra== 1 i a=: 1 ' ~2,; ! 55 I I 3.~0 .r.;la?dcg ! 1,3 .I I I j I~ m L u !I j,? j I j I I ! I I 1 i j ! ?,7 ! ! Zx~sz~ng I , j I ! cgntract : i - ! -- I - i - I -- , w e - - . , -.:,,.-.-,> ' A ! I ! Yon-ex~st.; , . +--,--A .-- d - 2 s ! I - i . , - I c3nt=act I 1 - -7 ,: - -nfornat;on I ! I ! i ; ~ ~ n a v a ~ l a! o i t , I I ! As for the situation as of 31.12.1989, it must be pointed out that, in reference to the financial requirement of US$ 755.4 million (US$ 744.4 million excluding GAMEK costs up to 1989), there is a non-specified financial source of US$ 125.2 million which more or less corresponds to the total interest paid. or which should have been paid, as of 31.12.1989 (USS 1382 million) 5 3 Estimate of the CAPANDA production costs 53.1 Basic Hypotheses The assessment of the economic production costs for the CAPANDA plant is substantially based on the hypotheses that have already been analyred (World Bank Mission, 1987). These costs are summarized below: a Total direct cost of the investment: 1,148.3million Kz, thus set out: 1985: 90.7 million Kz; 1986: 110.7 million Kz; 1987: 180.7 million Kz; 1988: 101.7 million Kz, 1989: 119.2 million Kz; , 1990: 160 million Kz; 1991:222.4 million Kz; 1992: 135.8 million Kz; ' 1993: 24.8 million Kz; 1994: 23 million K z b. Commencement of activity: during 1993.Activity planned to last for 50 years. c. Running and maintenance costs for the plant are assumed to be 1.5% of the direct cost for construction excluding interest due. In fact, for hydroelectric plants with analogous technical characteristics in Italy, the same item is slightly less than 1%. Bearing in mind the unusual nature of the plant and the fact that it is the first large plant, it might be considered prudent to use the rate of 15%, which gives an annual cost of USS17 million. d. Annual production rate is 2,400 GWh, supplied by 4 groups of 130 MW each. e. The CAMBAMBE plant, in the valley below the CAPANDA plant, supplies three different production levels, depending on the availability of water and the power installed in -. . CAMBAMBE: 1st level: 200 G m 2nd level: 500 GWh 3rd level: 780 GWh f. The scenarios are those elaborated and discussed in chapter 3. g. The bringing up-to-date rate is the standard one used for economic evaluations by the World Bank. lo%, 12%and 15%. 5 3 2 The "Interconnectionwith the Central System" Variant A second estimate of the economic cost for the construction of the CAPANDA plant has been attempted for the case in which the northern system is linked with the central system. The following hypotheses were made for this instance: a Cost of link between CAPANDA and cenual system: 70 million US S, thus set out: 1992: USS20 million; 1993: USS33 million; 1994: USS 17 million. b. The LOMAUM and BIOPIO plants begin generating with a production potential of 120 GWh and 30 GWh respectively and satisfy the electric power needs on a priority basis. c. The scenarios are those described for the CAMBAMBE plant, which has three generating levels. 5.33. The marginal long-term costs in the various scenarios and under the various hypotheses are'listed in Tables 533.1 through 5.33.XII, and are listed here for the bringing up-to-date rate of 12%. Tab. 533.a Production costs for the CAPANDA plant (in Kz/kWh, bringing up-to-date rate of 12%) I 1 I I I System supplied I I 1 Scenario , , 2CKlGX-i CAMBAMBE PRODUCTION I 5CQC;;m 1 783G.h i I I I I 1 LOW 5-38 1 8.90 6.95 5,17 I 14.09 9.50 6.36 I 1 1 I I I I I NORTH + 1 LOW 1 5.24' 1 8 3 1 ;2,91 I 1 CENTRAL INTERM. 1 1 6 . 5 7 1 8 , 7 7 1 II I HIGH 1 I j,,l L,37 1I 9 1 I -.:,j? II I i I EI 'E CElB SCNEFE EDEL o3mLlmm I -I kwnE3 I I I .for electricity sales . f o r s e n r i c e s a d o c h n ~ v . ~ 93 Total revem? r I ( 837 927 250 25 275 603 640 I 1 1.W 6 5 ( 1.145 1 1 2.792 195 2.987 1I I 1 1 I 1 I I I ktual operating msts I.Usgessd-es I .Other costs 1 240 337 I 1 1 33 1m - I 126 324 1 L50 678 I1 1.439 I I 1 I Total opera- costs I1 577 I1 133 1 450 I1 828 I1 1.988 I1 I T pldidmy- / 3% 1 I 142 1 I 190 317. I I I 999 I 1 I\ I I I I I I I1 MjuP=irg .interest costs I1 80 I1 n .a. I I I - I I I - I I 80 II I I1 210 I 1 I1 I1 I .Depreciarim I I 1 50 1 UO 65 1 1 I1 j I I .Provision for loss Total ad-kr. costs 1 I I 6 O 3M iI I, X ! I 70 i 252 ,:- 474 ?!I!l I I Total costs after adj. 927 27s I w I I 1 1 -*I 1.145 j 2.981 Units -rated or plfihased (m) 191 62 695 490 . Units billed (m) 155 50 603 403 . Unit b i l l e d M t s gen. (apach.1 Z 81,l n.a. 86.3 81,6 . h,etc. 18.9 . n.a. u,7 18,4 SMers: m, CELB, !XXFE, docrment's & M b ~ i o n estimate. (in ndlliars of Kz) 1 9 8 7 i 1 9 8 8 ENTRY 1 9 8 2 1 9 8 3 1 9 8 4 1 9 8 5 1 9 8 6 a. PuWllc Sector 1.RudxgbpdiKr 2. I ~ N ~ s & 42.330 I 2.798 45.128 / 44.028 4.595 4.623 / 53.459 5.430 58.889 65.a ( 69.U 1/ 68.297 6.066 74.33 1/ 72.851 6.W9 78.m 3. Total for pb. sect. I b. l t a M f e r s 1. marp~. I 8.369 9.309 9.352 12.289 2. I n m e s ~ ~ ~ n t s 1 I 18.&1 1 I 10.646 14.061 12.735 ) 11.575 1 1 7.456 1 1 U.2m I 1 - 3. Total txasfers 27.010 1 18.955 23.41) 1 25.024 16.802 13.036 16.686 I c. Total State BaLBlce 1. w. 2. nm?s- 3. mral Total 67.578 I I I I I I I I I d. l l e c t r i c Sector I I I ! 1 1 (in d l u a m of Xz) Tod 4 : Invert. .*. I : ?m.a. A I - C ? acal .AI : cI I I I I I &X AVW Imm:. ACT. a. 3).2 957.9 174.9 364.6 741.6 280.7 521 .- 207.5 571.3 194.3 &97,7 670.6 1 YK .2 477.2 1 :.:Ma: ,c I Tatdl 1 939.- .I S?9.S ':.Ca,3 28.5 7 . 2 '33:. , i 1 ! 1! Total t ~ ; x n v a t . .kc. .%mling a. i ~ / I ~ Z 112:: S 946.7 1.603.1 2..%9,9 1.47,7 !.810.6 3.278 .4 2.ilc2.- 1.(139.9 0.052 .- 2.539,7 1.680.5 5.220.3 2.9*5,3 3.573 5.a3.7 k i-: : Ex. ' T -m DDxmimcY)" .kwmcN. 2 ) Grinace ssed m .WP- k b c E w i a , i I S3VTC) 3 A D m 3 l l I V I D A m ~ E X CE nTml i' doDnslc and m I / Q e p o r ~ - n. 7 W XG t*cW L) - - - 9 for debc Ln Suiss .F , . 3) 37 lhcreat ! rm -ciq uchue). A ) LuenCe %%mi m EiRL'Cs i~ S-illPI 'Fhmtul d t i m d CYlff p l l C y in elccric pmcr u c c o r " July 19e7. T a 5 1 e 5.i, 5.2, 5.3, 5.4. I I 1984 I I I I I 1 SYSIPI 1982 1983 1985 1986 1987 1988 1989 i 1- (XCh I 1 547.2 578.5 559.7 555.1 I - 3.2 - 0.8 m (XCh I1 151.6 1 1Ol ; I 89.3, 67.1/ 87.11 lOB.5J I 104.2 83,-I I I I I I I I I I - - sxxnEW VAR. (XCh VAR. (I) (I) 11 - /43.4 10.8 -1- I 28.8 48.1 6.2 1 3.5 ( 17.3 51.1 9.5 24.9 52.9 29.8 57.9 24.6)- 61.9 1 4,-1- 63.7 1 20.31 48.9 1 I (XCh I~734I I742,2 ~ , 6 ~ 7 CI I D , 1 ~ 6 7 5 , 1 ~ 7 % , 9 ~ 17 9 6 , 6 ~ 8 2 3 , 3 ~ 8 2 7 , 1 1 - 1- - - 1 VAR. Wh (I) 1, - 29.2 - 4*7 26.3 I 3,6 29.7 ( 1 I - 11.2 16.3 1 j+ 6.1 ( 18.4 1 1 I 3.4 19.3 1 1 I 0.5 18.1 I 1 VAR. (XCh (I) 1 778J-763.8' I a.9 9.9 726.4 u.9 7048 1 45.8 762 n.9 815 1 842.6 I VAR. (%)I 8.7,- 1.9- 4.91- 3,- 8.91 6.21 3.41 0.3) S a ~ o e s :T i l l 1985: 7408 Amexe 13 Tab. 2 Frm 1986 : ZXE & S X E E doammts. o 1989: ! Q : ? ? ? I --- ? 2 u - - . m u a a OI w u o - 03 . r 2 - a S, - n n ? a n ? z -1 u CI rD I P h % m 3 =! 9 E3 S1 u 53 s CC) * V 0 5 W 8 S] N N ' ? 3 9 d '- Y, 0 2 €j I 01 W d I cl 2 s Ej v M 5 u ? g r , . q E % x 2 2 C V d ; I =- n a Dg W Z 3 Q: ? ? N cl 0 h U CC) W cl u " 8 w rn cl 4 "? 4 - I N h h 0 CV CV $ * =" 2 4 hl N g I 0 3 % - SF 8 $ 22- X ; E. q w h - g ' $ s & - U d d cl G u I 0s 0 CC) h( 4 0 *- s - a ? ' - I d 0 h h CV h* I. d '? d h " h - I h lj 8 . w 8 s - 8 s - I, !I r C '9 aD 9 I $ N $4 a d ? h! I s 2 d d =- a I aD 01 n OL I cl '? 9- In 0 CC) h N W 4 I ? '! I- m h d CCI h l g n I 2 3 8 h 2 R ' 8* ! ? s 8 I s o - u - c l cl 3 3 % 5 "i 2- C m " h 2 m o - n S f a 3 CC) f a n CC) Q a c 5 f a u (..\ - f m a - o c 5 a E -. Y CI Y E 33 1@ u 3 - !f 4 9 1" C P :AB.~.~.II-~IVEL DE JTILIZACAO 3A CAPACITADE D:iPONIVE, hA INDb3X;A TRiSiDRnASCIA RAflO A ~ l n i . v i A R E - ANOS 365-1980-1987 V Capaci ta' Utl l i z z a x o n ~ Pro6i.t to I ~ ~ t a l l i t i Di;ponloile w i l i Capa3iti' Dijponlbiie li .lsas ,-, 7 t l .,-1 LerveJa Refriqerint:; Vinho ar m a Ue~iaasferwnt'aoas i1 k c o r e s e esplrituosas K1 Uhisky K1 Viiliqre K1 AiuCar Toh fie lac0 Ton Alcool K1 Farlnna de ailho Ton Farirtaa ae trigo Ton Pa3 Yon kassis alimentares :an Oleo allmentar K1 Cafe ;;rtin Tan Sai comun Ton Conservas d€ f rli:;; Yon Conservas de carnr Ton CO~PC:ZS Ton Frl~ta tScorioa Tcn E::tractoj Tan -- .- ~~ ..ale Ref.: niniskeiro da Industria: kivel de :itili:acao ca capacicaae dise,jn:vc: fia ;nd~jstrla t r a s i o r m a ~ r a nc; ;nc; :e 39E5-1986-398; U tapacidade Producao real Producao real 1 Prod11tor Lnstalada Oisponivt 1 de tapacidade Dlrponivel H 1985 1907 1985 1987 Ttc1dos h2 Cobtrtorrs 111 Fio dr alpdao Ton ca Icar Hi 1 Sa~as I 11 Ttcido plCo1cLocs Ilr Trc~doplEstofo Ilr Cursas e s i r r l a r c s Hi l P w a ~nfantil Iil Frrdas rt litares Un loupa i n t e r i o r HI 1 Lenco~s b Toallus dc rosto 1111 Ptuqas np t a l c a h de c w r o np talcado de lorn S Calcab de plastico S kttrqtntr liqu~do 11 T ~ n t ar s ~ n i l a r r s Ton Colas Ton Vidro n &rr Ton Tabaco u n i p u l a b Ton Fosforos HCX FolhradDs IU Contraplando N k d r r r a strrada rU Napas Ht Encrrados IU Ptr)uo~Cs )It sabao Ton Garrafas C plastico Hi1 Graks d t p l a s t ~ c o Un Sacarla C n f i r Ifi l t o l c b o dr r q u u Un Sacaria C plastico Ton Tub0 P.V.L. Ton Tub0 p o l l t t l l ~ ~ Ion Probrtor injectador 1on Esftroqraf icas H i1 Livros cscolarcs Hi1 Puirica I i q r i r a Ton Pasta d t n t i f r i c i a Ton Vest. des~ortiva a1 1 Colctias Wospi ta lares Un Passaaanar ias ht Abrasrvos Ion P t C s dc pcsca IP Mrosois K1 P o t ~ c i d a sI ~ q u i d o , II Ptsticrdas 1411002 Ton Papc 1 a l n c o Rsa Pev1stas n lI Cordas Oe s ~ s a l Ion ttloqios dcrprrtadorrs 1111 L l a s de vraprr 1111 Italas dc porao Hr 1 h s t a r rscolarrs a1 I C u r t w crmo rcs C u r t w vegetal Ton Ilobiliario O f r d r i r a Un Uasrourar Un Lscovas C dcntts Un ? m d a p/sapatos lon 1 - " 1 1 - " - " - - - " - - 1 " 1 " 1 - " " " - " " " " :nor,. - - - - r r r n s r - q - - - s p - - ------------------ % 5 3 2 S - C Z ; s 5 ? S Z Z t S ; : E ~ ~ h ~ 2 t ~ = 2 - - - - - - - - - " - - " - - " - - - - * * * r : + S I P l * r * = i + i + + - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ------- ::r*+*r:rr -- - - 4 - - - - - 4 - - 4 - - - - - - - - - - - - - - - - - -------------.---------------- J3:::15:::f:5f::f~:.o.C5CoC05 - .- - - .- .- - .- . - 0 - . - - - - - . - . - . - . . - - - - - - - - - - - ............................... * - L - , * * p ~ , e - L - , , - - * - - C 1 C - . - - - . * S E 5 ; ; ; - , , r 9 : z ; ; : ~ ; g t % g ..,. ~ ~ ~ f ~ ~ C C C b l C C . . ~-.ylc:y7?.3yaq::!:rc~qqqqx:~;;~? 1 1 " *-.-..,-LCCIo- - 1 " " " " - " " " " " 1 " " 1 " " ~ ~ - - ~ . ~ " - : ~ ~ > x z t ; ? 3 : : l f z ~ f S t = ~ z r ~ r ~ I : ~ L . . ,# i L? 6 / ,< IS -. = C - : ::: z s I. .. , . #.-- 5E C C C 1 ; F s "' - , CI1C = -. . Xjj :: = . s -C - . ~ -cn - ; -, a n - -h~ h n r . r * r , x = : ~ ; 1 + ~ : : ; ( I ; , ~ ~ : ~ ~ ; ~ E C h .. Y). L- - - . . - T . c r o L . - " b - . ~ . w ~ o ~ - - ~ o ~ ~ ~ * o ~ - * - * r w h m ~ o C ~ o C - n C . = ~ Q a = - _ ~ _ - - ~ = = ~ ~ ~-= = = = = ~ ~ G = ~ = = P h a E h ~h h Z .~n=n= - ~ n ; C G = : I ~ ~ - - n n n - ~ w n ~ > - G K h S c e n a r i c t i svihppo deZZa p r o d u z i o n e d i e n e r g i a (-1 i1 420.2 (2 of C . ) I1 82.- Ymaxv-!X) 1 I - I / D .1. m E L SBIES (-1 337.4 (2 a€ C .2 .) II m2 - v =-X () I Tab. 4.1.3.1 SONIZE - Profit and Loss Account ( t h o u s a n d s of Kz) I T E M S 1 9 8 6 1 9 8 7 1 9 8 8 / ' ( M i l l i o n s of Kz)( I 1 9 8 9 (estimated) I Revenue I I I I I I I . For energy s a l e s . For s e r v i c e s I . From o t h e r s o u r c e s T o t a l revenue ( I I 394.455 I I 387.250 1 I I 352.742 11 I I 360,- I1 I Expenditure iI 1 i I I I . Direct costs .. G e n e r a t i o n .. T r a n s m i s s i o n .. Maintenance i Total d i r e c t costs ( 1 ( 264.353 1i 242.922 I1 I i 1 St ) I I I 1 .. D e p r e c i a t i o n ( 75.541 1i 77.054 I 1 i 1 i j T o t a l d i r e c t c o s t s ( 2 nd ) 1I . General expenditure, 1 o t h e r c o s t s and p r o v i s i o n s 1I . Financial charges I T o t a l costs ( 1') 1 389.341 361.253 ) 411.346 1 450,- 1 I P r e l i m i n a r y somFE Balance 5.114 i 25.997 / (58.604) 1 j I Adjusting c o s t s 1 I1 . D e p r e c i a t i o n ( i n t e g r a t i o n ) . Loss on c r e d i t s ( i n t . on) 1 I . Interests i Total adjusting costs iI Total costs (2") i I i I 1 496.346 I1 ! 610, - i I 1 Adjusted SONEFE Balance I ,I I I )I (143.6041 1 (280.-) I I 1 I Generation I1 (Gvh) Units b i l l e d (hm) Average t a r i f (Kz/kVh) Tab. 4.1. I SONEFE 4 . - Balance sheets I I T E M S ASSETS FIXED ASSETS . EPLOITATIOI.: . WORK I?: PROGRESS I Total fixed assets CURRENT ASSETS STOCK C!EDITORS LOSS (cumulated) TOTAL ASSETS LIARILITIES DEPRECIATION FU!:3 LONG TEk! BORROVIKGS LIABILITIES CAPITAL G=?T RESERVES PROFITS (cumulated) TOTAL LIABILITIES . Yearly depreciation accounted by SONEFE (mill. of Kz) . Percentage of fixed assets riexpl. . Yearly depreciation- calculated with an average life of 25 year (mill. of Kz) Source - - SONEFE - C ~- "Balanqo ~ r a l a n r o r o dn r a y a n " P "Q .e contas" for 1986 and 1987. fnr 19RR s s : Oq 0 0 ; 0 ;9:j q ?:i 4 .=s:= '"" 5:; . , I., -- - - I - : v 1 L L1 0. 7 7 q i ' w 117 0 (I7 o u u 0 . 0 . 0 0 r.I * L 7 117 m L2 U o u 7 o m - % 0 . . 0. L 7 u .o 0. cn u 7 0 - a - 0 U a I Q r - a w U - rn cn W + a C W C 0 I O N a Q a C - Y Z 0 O a rn U S 3r a a n - 0 C W .- z 0.00. m 7 h l ' O h D C 1 . . S O H E f E - S C E N A R I O f I N A N Z I A R 1 0 ( i n m i l i o n i d i LzI ALIQ. L O 1 4 Atill. SONEFE 3.00% DURATA PRESTlTl CAPANOA (ANN1 I 10 ALIQ. NED14 MI!. CAPANDA 2.0% lASSO D l INlfRESSE 10,OOX I Consl~n t ivo ESERCIZI I9 9 0 - 19 9 5 Totale REM8OURSElYNl Of LOANS SONEf E REMIOURSERN1 UF LOAN CAPMOA TOTAL I P P L I C A T l O N S I I S O U R C E S I II INTCRNAL SMiRCES: OEPRLClAllOUS :RETAINfD EARNINGS INlERNIIL SOURCES I1 DISPOSITION I SOURCES TO BE f O U N D TOTAL FINANCIAL NEEDS NET FINANCIAL NEEDS - z I 9 0 a - 0 U a I a 0 W = - U cn - C cn m W W - 0 C C cn I I - O f , W - OC 0- a a C O a cn U - a c n 3 a W '- a C w 7 0 7 0 0 - n o 0.a- r-7 m m - CJ Y C J Y - 7 CJ Y U *7 "7 ' -t c'i T i.7 r-J *-I Cr r-l h O h -9 - Y -n 7 W -0 - - " b? h 0 C J O N " W w - .- W 11 0. 0 CI P . r ? - h '4 0: " 0 0 b? N '$ N Q CI .F CD O N 1 m r . Ln - u u 0 "? .9 0. h 3 rs - - z0 - ? 7 : 0: b-J h 0. 4 h b-l . * 9 r * N- - u u o 0 .? .9 L> -0 4 h - s -. -00 " g 0 b- , 0: In . L-J 4 h 9 u 0- 'p * h m - 5 8 "? .9 % 3 h - 5 - 0 .a c- - " N CJ 0: b-l 4 h M 3 d s - 0. h % Ln -00 2! -0 2 0 % 0- In z N = r) - 0. h 0. s 2O -? 3 Y , N m 0. z 0 e N CP N - h h 0. ! 2 ! = 0.0 0. P 0 % 0. b-l u C1 h r . 9 D I CJ LI-I * "- I r.a-0 0.00. LY '4 \C O. '4 0 0 r d 7 I,> L-J - -0 7 1 . a c- 0 - h a 7 C1 'T CC) L-I C* "7 ' - r ! ct a t w 2 h - 0 - -r 0: 4 LI-I ' m 0: LI-I 0 0 t:x a 0 -.g - 0 . h C . l 22 * 0. CC) I.7 S -0 LI> 7 0 7 0 0 - 0 0 N a - r 0 h .3 u -r r u 7 m a C d - 7 h u- -r m u - ) - m r~ us h n I "7 c. n ) I 0: -a w r- 0 h 3 0 L7 - .Q - 7 C d 7 -0 ru 0 w w h h h LI7 ? CC) -0 - 3 h 0 a - m o w . L -0 7 - h 0 r d U-J - h - 7 0 w -0 m 0 - 0 - m 0. 0 m a 2z.2 a a 3 (I7 0. z LI-J h m .9 ? 0 0 7 u - 3 N 0 Lh s -Q 0 "-I m o m 0 0 - 0 0 - 0 n c a *-I 7 nn "-I 0. 7 - 7 0 0: h 4 W *-I 0.7 Y 7 r 22 h 7 r =? m .- .- - I m o w 0 0 r a 0 rn.9 a - , 0 7 - C d W h-t - n - n *-I *-I 7 aD. "? .Q C: h. "n Y n .9 z h .91=).9 *.to 7 *? 0 0 o 7 0 0 Ins - 0 00.9 o n 0 S *? 0 7 .9 10 Y C) .9 ? ' m e h 7 0 7 n h w h h 0 C.l rJ - 0 n Y N 7 n 0. .9 .- m .- N 9 0 h .9 *-I 0 m .9 Ln 7 r d r. ru 0 0 n Y Y - Ln - t . m . .9 - Y Cd - a n o n *-I Y 0. 0 C.l *-I m .9 n 0. 0 .9 .9 .9 7 l . $ -0 0 - -w "- .C - n 0 - w w t 8 I,? - 0. 0- - Y 0- LIY * 0- F 0. 7 - I 0 m 0 . 0 - 0 . 0 . - 7 F - - N (U e U 0. W V) 0- - W F - 0. 0. - F 0 0- = 1 17 0 = I,- I 3 ,? ? 5 h z Y - 0. rl . I. 0 h a -roe be.- 9 . h 0 L- J b7 - z PI - m a . -n OD PI u CU * h 0 0 0. 0 W L O w L - .-. CU ' -? 0. I.? =? 2 u U M $= CJ I.> I u CJ 0 . P Q - u u 0 0 I * .? 0 I ? h .') - 0 C1 '4 C * - FJ -? - u 0: LO 0 I . L " ? h 1 0 FJ '~ah.4. A.~:TT~T_ S O N E F E - C O N T O E C O H O H I C O ( i n 1 i 1 i o n i di L z I ALIQ. K O I A AHn. SONEFC OURATA P R f S l l l l CAPANDA (ANN1 1 b ALIO. M D I n AM. cnpAm)n Msso 01 INTERESSE 8,501 ENERGIA KN~I T~ llw SOLD 600 AVERAGE TARIF I R I C A V I EMERGIA ALTRI R I C A V I TOTAL1 COST! DIVERS1 SONEFE COSll DIVERS1 CAPMOA I AHHORIMENIO SOllEFE AMORTAHENTO CAPANDA 1 R E I A I N E D EARNINGS 1 ... - 0) > 0 '- CJ -r C? h .Q 0 0. I 0 P 0 PI 50 h s ? 5 q ,.m P O 7 P , I. - "l : , * m . 4 0 - " w l r" u P r 7 C4 ? I n r r 4 r 4 0 Y "- P P =9 u u 'Yd 0 0 YY ? h d o s r 9 5 r u 5 d 0 YY I h ,? 0 *Y CU r m m CJ 4' 4' 'I,Y 0 m u d z C U O CU n d n d . 0 u r w - 7 - ? ' u n I - r 0- . Q A d h "-. P .- 0. I 0 C? P 4' h u u .- 0 0 : , I n 0. '-? - = ," Cf n 0- 1 CU d ' : - 0 . 0 . d h r r d h 0 . 0 . v - m H l-4 - w d 0. h .- 0 d 0 C 2 0 5 g 0 d m 0 "- YY Y P % W 0. - r 0. .- P .Q 0. h .- m h P 2 r 0 .- z.. gd m 0 h . 9 0 YY .- 0. 0 3 &I> h h, S h go * z 5 s s h -r 0. P r t--lF rn I 0 V) = 0 = 3C 0 e C - -VI 0 C a 0 Y = a - 0 VI LD a VI 0 L C e L.. W V I M z I VI 9 W o .- m C a w a s t 5 n a 2 a cn a u e w u O Q - Zo E a Y - o a u m I 2 e c.l - .- UI I a - U 2 VI U I U Q - W 0 a L C 9z a I = = a Id* = u C I . z Si . Y 3C 0 Q W L VI 2 - "l u k & 0 rn 2 CS W w 2 E 0 L 0 a W ?: VI e Y 0 a C VI C II C + I I u I u U z 2 z % Y?! VI - - W d I U I VI VI d 3 a- a a a - Q Q I a a 0 0 C B Q 0 I L m m W VI 5 Z a a 0 c C 5 C Y L I Tab. 4.23.1 E iE - Profit and IDBS k n ~ esthmte U (ln mtllions of Kt) I ITENS - Remu . For electric energy sale-5 . For services a d other rev. . For sale of "matcr',als" I Totale r e w only far electrical a c t i ~ t t i c s . wascs & salaries . Other costs . hxchasc of "materials" . Total expedicure only for electrical activities Preliminary Balance exclldirg "materials" I . kpreciation . Interest on for. am. . Loss on credits rec. Total djustcd msts for electrical activltin . Units generated --G4h . Units hilled @!I . Averqe tariff Kzh54ll Tab. 4.2.4.IV ENE- Balance sheet estimate ASSETS FIXED ASSETS TOTAL ASSETS I LIABILITIES II DEPRECIATIOK FLGI I 1 .I60 DEBT TO O.G.E. TOTAL ASSETS 1 4.149 . Yearlv debreciation rate ( 2 ) (17 years of average life) . Depreciation calculated on fixed assets values (millions of K z ) Interests on debt in foreign currency (millions of S z ) 70,- 90 ,- --- .-hD. P( - N O I#- u 2z Y - - n o 9 N - r N w N m 0 Y I#¶ r d N N 9 U N u h .Q h --nu u N w n I "7 - Y X * N O I? e r 4 . .- n r4 Y-J N (I7 w n N P Cs X .- 5%" C)D.CD u - 2zz U n P N gff" N - - D. - I 0 - d -- - = - m w 0 - r4 \ C 9 \ 0 W . N C C m - d - u I C u a o u - o w n N I 0 - u 0 D I C 0 m s C C E: U rn u u 9 C z V) u a D a -= 9 r 9 Z 0 0 Q L u 0 Z - . O . 0 b . u s = 0 -- \ - W C u u Q E - E C 0 - a LnLn a - w d a L.. V)L.. 0 II 0 u 2 uum d 2 W 0 9 rn o a > a W -.= - 9 0 - ... - = a z c 0 C N u s - U I u 0 LL . 0 . C 0 C C 0 0 - - I C L 0 a W -- n u 2 -J u .-L .- rx n N 0 m U-J 0.p- zg W m--a ...urn ru 0 U hJ - 0. .90.n m m N U-J W U-J - .- .- h .. -0.- W N U-J W 2743 zs .-- W O I Y ) U-J 0 r , u I .- X ZkZ n u2 0 X O O Y ) U-J 0 n 2 is: I - I . . C 5 ' L . . C J - - - - N W D h 0 Y Y O CJ m 0 U-J . I U-l D 2 2 U-J S U-J 7 0 0 9 - N N U-J h s 2s" 0. 0 N - - X .- n C) U h'I C? Y Y O h CJ m 0. h U'I C? W-l 7 0 0 -09 * 0 Y 'I 2 R " I n 2'2 u 0 N N h -0 CJ X m rJ u I . .- C? P E "OZ0 r 0 0 h hI?N I? Y 0 CJ M U'I m zz - N 0- f NO 0. TJ h h O p. 0 - m P -0 CJ m 9 9 CJ CJ m d CJ I? CJ N I ? 4 Y Y O 7 h - - h N -0 U-J Y Y N 2 -0 2 N eeO Y Y CJ 9 .- X - 0 0 . m-0r.I Y N- ,' X h h -0 Y - 0 - 0 0 0.0 0 Y N z 0 -0 I? I? N 0.- n P 3 0 -a I? EX'? .-Y C 7 N 1 . 0 Y P3 - m s 9 Cd CJ CJ 0 0 0 CJ CJ Y Y ! 9 4 -0 0. - r w n N P .-l-l X .- - N 9 -090 Y L-J D 20 XE "" N 0 0 U-l z 113 2Si 0 D 0 - -I d -=- 1 ;:;1 - o m W S E - C C L w m o o t - --- - E U 1 0 r -a= C C I N -- - > 0 " 0 - m * (CI C, - u - - VI 00 0 . a m N e Y 0 C Q 0, - -u a - "ram 0 0 N "R w N 0 C - - N 0 . - 0 I,') 9s- * - 0. 0. - * 0. e -N * ca * rg N r') rY .-- P r - N I N P h 0 n *m zz .- .- 0 . 0 . 0. 0. -- - N hl -- - U P O Q N CY * N Y o . W 0 . - .- - .- - 0 0 - -wC) ca 0 . (CI N - - 0. 0. pi N L') L') 0 rn Q (CI 22 - C. -- 0 0 r- r ;s: o N G 3 '-2 C 0 U - 0 . 1 u C 0 .- U . .L L Y H 0 - a Y mu, 0 I - w o a s I -. I.. c = a s - - I - > 0 .- - - Y 3 " a yl 01 ,O 2 S - dd Y m - -m?l n 0 u- D. 0. h N u 0 C - - - N 0. N -0.m b-I .o b IT , - - P 0. - ' - - -- a-2 u -, '-4 C C1 (Pmo P h m m W Y) -a o h) m m o h 0l rJ l (I , C w CJ U 7 U-l 4 u- u3 0. 0. - D D . . - F - N -a 0 -r 0 0 0 l h 0. CJ I 2 .c 0 l m -0 r.4 C4 z . 3 k D. (, I 0 (I , (, I m h N Y-l U- r2 0 . 0 . - - 0. 0. - - 0 N v a W V, N 0. P - ( m C , Ls ( I h ( l C , I I , N 7 - h O h m C O C N l - - 0. 0. N 0.m- C U h ( I , 9 s N - - -2 0 0 u-l 0 2 3 u-l (, I - C 5 z " = 0 . U n PI O - . C m d - o w - C - 0 -rO r - t4 L W 0 -- I \ I U W W w yl 0) d d u 0 0 . W m o o C =r r u a 0 -a! - a = ' n -- sss .- 11.9 N 0 - N - 0 . h .9.911 '0 0 0 0 N W N h "7 N 0 . CJ 79 N *-a P h 0 . * 0 0 ' -4 . "-a 9 . S - .9 0 r4 . . . 0 9 9. . z C N N O sz .9 -4 P - .- - w h - P O P u. ) X X .- * P h 22 I - .- u U7 0 h P . 9 0 C-a -r 0 .- u - 7 . 9 N h 0 7 cP -3 X 53s C 0 u m o o L > r-1 - =-. -a= a . . , 0 D Tab. 4.3.3.1 -Profits a d ZPsses Aannrt (aaEsand of Kz) 1 1 1 1 I 1 - - . for ITEMS Mrlpd rnit 1 1983 45.790 1 1984 111.166 1 1985 36.255 1 ( 1986 32.787 ' I 1 1I 1987 l3.790 ( 1988 107.842 1 I . 1174.8% 474.9U I.-- I Total- 1 ( 1I 2U.104 260.894 1 2 l 9 8 9 8 . . 2 0 5 6 4 8 1I 2 3 7 1 0 4 . . O 2 b % l 1I 286.414 319.201 1I 49.183 354.867 1 52374 635.029 I . Otkr aosts i 7.638 14-569 18.406 9.370 I I -- 1 .TatalfYpe=hgaosts 350.370 366.227 .EhVisicm for loss - - mAU - - 37-559 --~1 - - - - .. 32.845 - 1.552 332 I I I 1 st ~ o t a cnsts ( 383.215 1 X.227 1 3Zl.W 1 477.891 p~ddbaqm- (122.321) (66.973) (7-668) (m.690) M d i q asts I 1 i j I j T).m lZO.ml , (.-dmdta Y).im 15.m X).m - Dep- 45.m I roam I 35.000 1 a w I a.m I - - .I11B6 alCLedits U.045 % 14 . 3 15.715 l5.W 17 -743 - 1 1 I - ** -=j.) ( Total a x ~ t(after d 88.045 471 6 9.% 3 436.190 40e.679 I a0m . 428.851 82.74 478-994 3 1 1Xm I 712.693 Balarre (after adj.) (2l0.336) (W.936) (88.383) (109.650) (124.127) (77.w) I I h i r s sold ((MI) Average m5ff (Kzmh) I as. as. ( I 1 as. as. I n.6. I as. h . 337,4 0,906 401.9 1,45 L We-: EEL - rsape anqmatIw & resulradas. Tab. 43.4.1 EDEL - sheers - ( af rlz) Yearly d ep- (dJuaEi of &) -by IIEL L L O C Y Y 0 U YY Q h - 0 'Or' z-00 W b Y r ? . 'J L r - l U P YI YY Y h -0 '4 0 0 . Y-J 0 @-I N 0. C h h YY ' -0 h 0. r - - Ln -- P u P P Y I 0 C) - 0 . 0 . P 0. -- Y - N m U N 0- CYm h Y O I - m m O 0 h 4 U , 7 o e9 m m o Y-l YY YY UY u TJ g T ? UY s 0 C) e9 ? W L O P W . - 7 - P - 0- 7 0 - 0. 0. U I - .- X W X N b d ssqg o o m o -a- a =-7 a m , - YI --2' C U1 LCI - , C 0 .C. N .- L U n a w 0 - 0 z l.7 0 w b h7 - . 0: n - . L-I ? Y 9 L I - I n o 0 0 '4'4 - 7 7 .9 0: l.7 0 w .- .9 U J L I Y O - 8 =? LIY 2 . 3 n 9 Y T Y .-.- 0 0 3 3 -n 0: LIY w h 0 0 CJ 10 z Y D q U U O 0 0 nn Z' - 7 ? '7 .- ' . .- T .- I 0 0 Y NNO .Q rg . N9 0. 7 CY .- 10 w w w w N N -C -C F E .- 0 0 7 l . h W ?1 3 .- z h 'zZ0 n N 9 z W O g w 0 0. UY 7 .O m m o .9.9 N CJ w 0 0. h Y h ) 0 -C 10 r: w n s zz m w o n w 0 .- 0 0 .- 0. 0 0 0 nn 7 rJ h CY h -r N N N h I. I - = - - = - 0. ? U u W a - r J 0 C - - - 0 u Z ~ C - I. C - I a a w a z p.) hl Q C I - - CL U W L n 0 - C C w a - - 2 U) U) a e 0 - 0 k - W C = W p. CL 3 Q I 0 C L m a d 0 d W W - - W C U 0 P- r = c - 0 - a a m a - u W d a k c - N - Z 0 0 u d a o a a = H N a - U) , . I CreDOO c N N Z O c - a z v a b - Z - a = = .. 0 W s W b L s . . 0 C * m cu m- r. LIY CLJ 'Q -9 0 -LIY m 'Q CLJ 0 N -9 4 LIY ' 4 -9 $ 4 - 9 9 L I Y V 0 . YY . n Y. CY 4 ' ? - 0. I.7 -9 -9 0. . L -.- -91.Y' aocr vrI.30 - 0 - cr 0 r L ,5,- y 4 0 I . S? I.7 0: '-4 7 C 0. -C 0 .Q u7 - 0. - . 0. I 0 (3 o m h- s vrno t n 5 a . I7 '? ag q e LI7 (3 - 2 z I.7 0 s . I: - 0 . 0 . I.7 u, V LO I.7 0 . 0 - . - - - m - - ND. m Y ) m P)-0 I.7 0 N I CY " , C.l S z.- S . I.7 LIY Z I.YI.3r.l N "- h "- m h E * v W V) 0. - -- =w_ -,.- m m m 0z-s UY .Q I n h = 0 - 0 0. 04 2 L O m r - '? - '? .- 0. - m - O h L I 7 - 0 0 - 0 0 0 0 0 r e z-? sss h h 0. D. -; .- c'f CLJ r 2 - r- d z z F;,'E 0. 0 0 O m U 7 b O h m-3- L - - * h =-7 , , V "7 - C m - r C N n . 1 4 Y .- C 0 Y = 4 rn 2 a --a w L ? o a c c c - - a - 0 0 d U C N 0 u g - 2-6 v a c W w ,, -uLI W Z z L? .d UJW E C 0 a Z L U 1 S L - u 2 W ' U a a = W U n - Z Z crno V)-z ' - - Ez i = C W a a a a 8 S Z %! P - u1 V1 0 0 U 0 w a a 0 ii n i L U a -. W Z' .=- m C s W - 2 W C a' m S a 2 U m 0 Z a C I , W = U C W E 0 C I - N N N W szzz d .Q ! 9 - 0. m I w -- W a n - tS -- - --- L C \ 0 W - I I E W O C L . C I Q Q a a = I? N o 0 w w c Q - - - - C C - U 4 n c U) '"=- r 0 C ~122 LL W = W q C u - a Z 0 a Q W - W = 0-a W 0 C : W - .- Yz ur VI 4 bh - N .o 4 C Q U W L a N H (0 III o = = ao Y. - 9 0 c N NLZ: c a E v a - n 0 0 W Y 0 I - < I b b . -I a * . c = r - - - 9 m , - n 0 " v : , "E . . 3 - 9 V) - v, =? -r m u - 1 0 -.- 0 0 '4'0 - 3 v, 0 t - - -- -r - m h 0 0 .Q w 0 .re0 w D 0 0 - C) V) 9 CJ '? o n m 1 .-I o. C o. - C I - .o r . N N O .Q .- - -r w * N 0. 0 0 CJ -0 w W w N N w s - o. .- V) 0. 0. I z 2 0 0 - W W O .- I h r, vJ 0 n w 9 9 a- N CJ 4 0. o. .- o. o. - - T - N Y o . N z W w 0 0. w 0 0. s Z3O N CJ w o. 0 W UI o. - W - I h S n 'S " " 0 'c c O W 0 V) 117 L1-2 N N ( w 0 I) o. o. - C 0 o. - N h 0 0 .- 2 r % 0 0 0 zz .- CJ h -. o. I 0. w - c I . -- W a - - - ca -. 2 - r z a - w z a o C - C F (I) N - a PI W % C a Z - I - - W W C 0 - 9. C C 0 a UJ - U 1 4 " r 0 c - W C = W W Q 9. a -= 1 a Z 0 Q U I a O W 0 - 1 Lb - - - O Q = 0 - a W 0 C: . u s C UY V)" m - W o a a 2 a I& N - N N L ; a a a - a ae W m a 0 c N N I Z c a' S U Z - 0 0 W U 0 z - a = ~b ~b =.. c s s . . e d o m ST * * 7 - ?-a" m o o - m o - lnl.~,lo I - .X -a o m m m - -r 4 S , , u VI N X N W - - - - 0 0 0 0 0 0 0 0 O O S 3 'Q = a 0 U C a c & a W W C 10 Ni C a rn .i u, a 0 7 0 d Z '2E = u - C j J Y O ZE II a - w a N N Z a 45ig o a a - a 0 m - 0 C H N 1 Z e f PZk' s v a 0 w W 0 0 . C C C r n a ~ u - a = Y L Z$7Z = . C L z . . C I a a 3 NO. p.1 0 - Q *-I - 4 C - J CO . ' 0: mr.7 II7 U O U-, LI> U . O. CJ CJ P) CJ P! w g - FJ O. 7 - 0 - .I " .Q Q CFJ 2 3 = '">-a ZQ=- < 7 < :;zs W O u F J z O. z 0 u -a 0 - Q 01 Q O m zm- 0 O . I Y U *-- 'I 4 ? >L W .-,yo O . ? O r O 3 7 C . Q N y w m 7 7 4 7 I -, 7 Ln J - I NFJ h - u - W m F J h.97 W UY 0 U-3 I-, - I ,, - .I 7 ru 0 CJ Q 7 - W FJ I7 7 7 7 - :"- z-2 O. 0 67 . ( I -, .-, 4 3 0 . 9 Q O 2 7 . 4 -. C" *?--a u-3 C Q 0 1 C w FJ C -*-,-a - 0 CJ h F Q J r J q ?--or? U FJ Ci - 1 I>w C "f 7 1 7 s\ 0 0 O * Y V ) W QZ r - F J h F J 0 z 9 C h CJ 3 2 m u - - CJ I - a Z E O W C L - a 0 W W C 0 0 C Q rn h I ma=' a -I Y g d - Q W W - H C = -I - 1 C v, E I O = J > W a W m o o b- =-a - 0 Z ' - a = I . I . . C s s . . I Tab. 5.2.1 GAW( - CAPANDA 9TDROELECI'IUC ELECTRIC P O T R PROJECT D i r e c t c o s c s and f i n a n c i a l s i t u a t i o n ( i n US S m i l l i o n s ) till 1 9 a 9 CEN .TOT. I1 1. Direct c o s t s 2. I n c e r e s i II 2 . 1 . 3n d e b t a t 31.12.39 2 . 2 . On new d e b t I ( 2.3. Total interest II 3 . Samek L. Loan costs reimbursement I 5. Tocal f i n a n c i a l requirement ( 6 . Sourccs ( 6.1. i n t e r n a l s o u r c e s : I G . 1.1. Currency !:z 1 6 . 1 . 2 . C u r r c n c v DOYE ( 6.1.3. Camek I I 6.1.k. i o c a l i n t e r n a l sources ( 6.2. residualneeds I 1 6.3. Foreign f i n a n c i n g ( 0.3.1. I h o v n : - .,- uasr 1 I - 3rasil I 1I - iota1 1 6.3.2. !lot known I( 6 . 3 . 3 . T o t a l Foreign currency I ( c o v e r e d f o l l o w i n g Camek) 1 7 . C a s b i l o u needs: I 1i - .l r Rased on Camek f i g u r e s 7.2 Includingpc.6.3.2. -. I 7.3 Includinp, p c . 6.1.2 ( 90?15 c u r r e n c y ) - - E::;rni::c?~s it: illon CsS; 5cifiir:cs Yrir iir Yrir lnvts: Oh!! Tots; bast Interrediite Hion DiscounirC e x p ~ f i C ; ~ : (US) ~ r ~ I!i!l:onj Investrent . . :,72t..P ;,815.5 2,?23.4 2 ' 4- 225.2 3iti.t' 4A Opsztion i n d rz:r,!rnnn 1 :58.2 :30.2 t ~ . , Y pAac: : ;; ; ;~ 2 ;s ? : I ; : :. c;:zE;: At;: %?P;'- ,a ..... . 0; Ci&jatt8c : 53:. Gi:,! . ,- :ul::pct 3; ~or;u, : '24 Sin! j ; 0 : : 2; $dl,! hpencitcrc; (a: 1iioa US)) S:~mrios Yrar h'r Ytit invest Oat! Yotal base Interleaiite Hiqh -6 13S5 90.7 0.0 90.7 -7 15'66 110.7 0.0 110.7 -6 1967 180.7 0.4 160.7 -.5 i988 . 101.7 0.0 101.7 -4 1PE9 ii9.2 0.0 119.2 -3 4990 j60.0 0.0 :60.0 -2 1991 222.4 0.0 222.4 -1 19C2 ! i55.6 0.0 155.8 0 1993 (f) 40.5 $7.0 57.6 325.0 1 426.7 i ???4 2.3 7.0 lC.3 . 364.0 409.4 546.2 2 <0?5 0.0 17.0 17.0 404.5 474.5 696.4 7 4996 0.0 77.0 17.3 446.7 541.5 553.0 4 1977 0.0 57.0 17.0 493.7 616.5 1,039.0 5 1993 6.9 17.0 C.0 FA?. 7 ACb.? 1.227.9 6 $999 0.0 17.0 17.0 5C3.8 762.5 1,404.1 7 2900 G.0 17.0 5.0 tS0.7 679.1 5.572.5 6 2301 0.0 '17.0 V.0 710.4 980.2 i.732.4 9 2002 G.G :7.0 17.0 772.8 1,OEP.O 5,903.8 .;O 2003 0.0 :7.0 17.0 842.5 1,206.1 2,087.7 1.7 ~(Ic: 0.0 C.0 77.0 Cd5.6 1,332.2 2,214.6 :5 2005 0.0 57.0 17.6 97f.6 1,460.1 2,400.0 : 3 306 0.0 f7.0 i7.0 1,041.4 1,576.2 2,400.0 4 2007 0.0 17.6 77.0 i,1<4.5 1,691.0 2,400.0 <5 2608 C.0 (7.0 i7.0 1,101.4 1,853.0 2,400.0 '16 2303 6.C 17.0 17.0 1,272.2 ' l,F31.6 2,400.0 :i 3.0 7.3 f7.3 1,527.5 2,357.0 2,400.0 18 2Cl'l 0.0 0 17.0 1,446.9 2,i69.4 2,400.3 73 20:2 0.0 i7.0 j7.0 1,541.2 2,329.4 2,400.0 20 20:3 0.0 t7.0 :7.0 1,640.5 2,40?..0 2,400.0 21 25<4 0.0 C.0 17.0 f1745.1 2,400.0 2,400.0 22 2015 0.0 i7.0 i7.0 1,855.4 2,400.0 2,400.0 23 2056 0.0 $7.0 57.0 1,971.7 2,400.0 2,400.0 24 2057 0.0 i7.0 17.0 2,094.4 2,400.0 2,490.0 25 ;.l;qe 0.0 $7.0 17.0 2,223.9 2,400.0 2,403.0 - -- -. . - . .-. - -- - -- -. -- . ..--- . 42 203 0.0 57.0 i7.0 21400.0 2,400.0 2,400.0 43 2036 0.0 17.0 17.0 2,400.0 2,400.0 2,100.0 44 2037 0.0 17.0 17.0 2,400.0 2,430.0 2,400.0 45 2338 0.0 17.0 17.0 2,400.0 2,400.0 2,400.0 46 2039 0.0 '17.0 17.0 2,400.0 2,400.0 2,400.0 47 2t.40 0.0 2.0 17.0 . 2,400.0 ' 2,400.0 2,400.0 49 2041 0.0 17.0 17.0 2,400.0 2,400.0 2,400.0 49 2042 0.0 i7.0 17.0 2,400.0 2.400.0 2.400.0 53 2043 0.0 17.0 i7.0 2,400.0 2.4M.O 2,400.0 (t) - Irc:uda investr~ntcosts for interconnection of tiorth ind Central Systems (1992: 20 t i l l i o n US$; 1993: 16 aillion USS; total: 36 aillion US$) (Yearly output of Cabarbe: 500 GUh) (Yearly output of Lonaur : t20 GYh) (Yearly output of 6iopio : 30 GUh) Discount Rate Annuities (50 years) r Discounted expenditure (US$ tiilli~ii) Inves trent :.764,9 i.913,9 2.162,4 Operation and aaintenance ' 165,6 158,2 130,2 1~i:a 1 i.950,5 2.072,1 2.29?,6 Discounted energy (GUh) 6ase scenario 9.571,2 7.315.1 5.260,4 965.3 860,9 7E9,8 I n t e n e o ~ a t escenaria 12.242,6 9.457,4 6.842,: i.234.6 1.138,8 1.027,3 High scenario '16.645,7 13.257,s 9.936.1 :.t78,9 :.59t,4 !.491,8 ionq Prnge karqinrl Costs (BSJikUh) Sase scenario 0,204 6,283 0,436 interreaiate scenario 0,:50 0.219 0,S'J High stenario 0,717 0,156 0,231 Long Panqe fi~rqinalCo;ts iKz!kClh) Base sceririo 6.71 8.50 13,07 Interrediat~scenario 4,7e 6,57 10,05 n:qn scenario 3,52 4,t9 b,f? Expenti tan; iai; lion USS St~~arios Yfir Ir Y~ar Invest O&!i Total Base 1nterreci;fe Hiah (r) - 1nc:udcs inver:rrnt costs fsr ietcrronnection of North and Central Systfrs (1992: 20 ri'r?:on U3); l99.?: l o tillion ESS; total: 36 aillion US)) r .-. J : s ~ W d r ~ ik t t e (50 yr;r;r finn~~ities . . i.isc~uniedtgena::urr