Power
 Report No: ; Type: Report/Evaluation Memorandum ; Country: Dominica; Region: Latin America And Caribbean; Sector: Distribution & Transmission;
                                        Major Sector: Electric Power & Other Energy; ProjectID: P006973


         The Dominica Power Project, supported by an IDA Credit of US$3.2 million equivalent, was
approved in FY87. The Credit was closed on December 31, 1995, one and a half years after the original
closing date. Cofinancing was provided by the Canadian International Development Agency (US$1.9
million), European Investment Bank (US$4.3 million), Caribbean Development Bank (US$5.5 million),
Caisse Centrale de Cooperation Economique (US$4.2 million), and the Borrower and DOMLEC (US$8.8
million). The Implementation Completion Report (ICR) was prepared by the Latin America and the
Caribbean Regional Office, and includes an evaluation report on the project provided by DOMLEC, the
utility company benefiting from the Credit to the Commonwealth of Dominica.

         The main objectives of the project were to: (a) provide adequate expansion of the generation,

transmission and distribution facilities to effect fuel savings and growth in consumption; (b) strengthen
DOMLEC institutionally by providing outside management services and training for technical personnel;
and (c) assist DOMLEC in planning system expansion to meet its long-term energy requirements. The
project included: (i) construction for diversion of a fraction of the flow from Clarke’s River into Fresh
Water Lake, erection of a concrete dam at the lake, construction of a 1131 kW hydro plant on the Rossau
River and expansion of the Trafalgar hydro plant by 2,844 kW; (ii) improvement and expansion of the
transmission and distribution system, installation of 4 x 150 kVA capacitor banks to reduce system losses,
and installation of 1,500 kVA of distribution transformers and metering equipment. The project also
included a training program to upgrade technical staff skills, and significant consultant services to provide
assistance in project construction management and power system expansion after 1993.

         The objectives of the project were only partially realized, even though the project was completed
with a 50 percent cost overrun. The transmission and distribution component, including the project
element to reduce system losses, was severely curtailed in scope during implementation, and the planning
study for system expansion after 1993 was abandoned, in part due to the impending privatization of
DOMLEC. Implementation of this project suffered significantly on account of onerous litigation expenses
to settle claims on termination issues on the civil works contract. Project cost overruns also resulted from
adverse geological conditions found on two elements of the hydro component of the project. The
geological difficulties were not anticipated during preparation of the project. Performance indicators for
DOMLEC’s employees as measured by ratios on energy sales per employee has improved markedly;
however, electric energy costs borne by the consumer remain at higher levels than those predicted during
appraisal, despite significant reductions in DOMLEC’s diesel fuel costs from those assumed at appraisal.
The cost overrun for the project has had a significant effect on DOMLEC’s finances, making it necessary
to maintain high tariffs to yield an appropriate rate of return. Improvement of system losses expected after
completion of this project have not materialized to any significant degree, due to the elimination of loss
reduction elements of the project.

          The Operations Evaluation Department (OED) agrees with the ICR, and rates the overall outcome
of the project as marginally satisfactory, its sustainability as likely, and the institutional development
impact as substantial. The ICR provides ratings of satisfactory, marginally satisfactory and "deficient "
for different aspects/phases of Bank performance; however, overall OED rates Bank performance on this
project as unsatisfactory. The Bank should have realized that the project was complex in scope, and there
were limitations with respect to DOMLEC's capabilities to implement such projects. Despite such
limitiations, the Bank accepted appointment of advisory consultants instead of construction management
consultants to supervise the construction of the dam. When contractor performance related problems
surfaced, the Bank was overtaken by rapidly escalating events and did not have any effective channels to
either provide the utility with sound advice or influence it on the need to use appropriate contract
termination procedures, indicating certain deficiencies in the dialogue with the Borrower, despite regular
supervision of the project twice a year. In addition, the Bank appears not to have given sufficient attention
to the bidding documents since they did not provide adequate provision for variations in work orders: it
on the need to use appropriate contract termination procedures, indicating certain deficiencies in the
dialogue with the B rower, despite regular superviÿÿon of the project twice a year. In addition, the Bank
appears not to have given sufficient attention to the bidding documents since they did not provide
adequate provision for variations in work ordersat least some of the geological problems arose during
construction could have been avoided with more test drilling during the design of the project. Finally, the
utility appears to feel that the Bank failed to provide adequate assistance at appraisal on matters relating to
the evaluation of tenders and supervision of construction.

         The main lesson learnt from the experience on this project is that the Bank should require the
appointment of a competent construction management consultants for supervising complex projects for
clients that do not have sufficient experience and adequate in-house procurement and project management
resources.