Power plant efficiency improvement project
  Report No: ; Type: Report/Evaluation Memorandum ; Country: Pakistan; Region: South Asia; Sector: Thermal; Major Sector: Electric Power &
                                                         Other Energy; ProjectID: P010275




Pakistan: Power Plant Efficiency Improvement Project (Loan 2792-PAK)

The Implementation Completion Report (ICR) on the Pakistan Power Plant Efficiency Improvement Project (Loan
2792-PAK; approved in FY87), prepared by the South Asia Regional Office, including the Borrower's contribution,
was reviewed by the Operations Evaluation Department (OED). The US$ 70 million loan was closed in June 1994,
about two years behind schedule, at which time US$ 0.55 million was canceled.

The project's direct objectives were to assist Pakistan's Water and Power Development Authority (WAPDA) in: (i)
improving the efficiency of its thermal generating plant; (ii) providing additional generating capacity through
rehabilitation of existing facilities and through complementing existing gas turbines with steam units to form
combined cycle blocks, and (iii) continuing the utility's institutional development in the framework of Pakistan's
1985 long-term energy sector strategy and in coordination with the virtually simultaneous Energy Sector Loan (Loan
2552-PAK). The project consisted mostly of: (i) the rehabilitation of seven thermal power plants; (ii) the conversion
of eight combustion turbines (at the Kotri and Faisalabad power plants) to combined cycle operation, (iii) technical
assistance in the area of maintenance and spare parts management, and (iv) training of WAPDA staff in the design,
operation, and maintenance of thermal plants.

As a result of more detailed engineering studies carried out after appraisal, the scope of the rehabilitation component
was significantly expanded and 256 MW of capacity was ultimately restored (against 120 MW originally planned);
also, the scope of the conversion to combined cycle blocks was expanded to 88 MW (against 80 MW originally) on
the basis of the bids submitted by the contractors. The project's revised physical objectives were fully met, but
changes in project scope resulted in significant completion delays (about 57 months) and some cost overruns (8
percent), as compared to the original appraisal estimates. The ERR on the project was reestimated at 24.4 percent,
higher than the 16 percent estimated at appraisal. The project's institutional objectives were only partially met, as the
training program was not implemented; but the completed components did contribute to WAPDA's institutional
strengthening. Both WAPDA and the Government complied with the main loan covenants on losses reduction,
revenues, debt service coverage, and the reduction of WAPDA's receivables from Government entities.

OED rates project outcome as satisfactory. In view of the above limitations, however, institutional development
impact is rated as moderate. Sustainability is rated as likely in view of the sector's prospects for continued efficiency
improvements in the context of its ongoing restructuring. Bank performance is rated as satisfactory. These ratings
are consistent with those in the ICR. A lesson learned is that well-targeted investments in plant rehabilitation,
combined with the introduction of a rigorous maintenance management system, can have rapid and significant
payoffs in terms of improved availability factors and reduced forced outages.

The ICR is satisfactory. In particular, it includes a clear and concise operation plan for the project. An audit of the
project is currently underway.