The World Bankl · SUIJECT: Project Completion Report on India Ramagundam Thermal Power Project (Credit 874-IN and Loan 1648-IN) Attached, for information, is a copy of a report entitled

Docunent of

The World Bankl

FOR OFFMCIAL USE ONLY

ReportNo. 8641

PROJECT COMPLETION REPORT

INDIA

RAMAGUNDAM THERMAL POWER PROJECT(CREDIT 874-IN AND LOAN 1648-IN)

MAY 7, 1990

Transport and Energy Operations DivisionCountry Department IVAsia Regional Office

This document has a restricted distribution and may be used by recipients only in the performance ofthir offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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Measures and Equivalents

1 Hectare (h) = 1 million square meters = 2.47 acres1 Kilometer (km) = 1,000 meters (m)1 Ton (t) 3 1 metric tone - 2,200 lbs.1 Kilovolt (kV) 3 1000 volts (V)1 Kilovolt-ampere (kVA) 1,000 volt-amperes (VA)1 Kilowatt (kW) 1,000 watts (W)1 Megawatt (MW) 1 million watts1 Gigawatthour (GWh) = 1,000 kilowatthours (kWh)

Abbreviations and Acronyms

AC = Alternate CurrentCEA Central Electricity AuthorityCAD 3 Computer Added DesignCTI = Central Technical InctituteDAS = Data Acquisition SystemEIA 3 Environment Impact AssessmentGOI - Government of IndiaHVDC = High Voltage Direct CurrentICB = International Computer BiddingIERR - Internal Economic Rate of ReturnLDO = Light Diesel OilNHPC 8 National Hydro Power CorporationNTPC = National Thermal Power CorporationPCR = Project Completion ReportPHI = Power Management InstituteREB = Regional Electricity BoardREC - Rural Electrification CorporationSCADA Supervisory Control and Data AcquisitionSEB = State Electricity BoardMPEB 3 Madhya Pradesh State Electricity Board

TN[E WORlD BiANKt FoR oMcL. USE ONLYwIsh"ton. DC 20433

U.S A

Olk td Oweiv.Cuwal0tpun tnawu

May 7, 1990

MPMflRAND To THE EXECuTIVE DIRECTORS AND THE PRESIDENT

SUIJECT: Project Completion Report on IndiaRamagundam Thermal Power Project(Credit 874-IN and Loan 1648-IN)

Attached, for information, is a copy of a report entitled 'Project

Completion Report orn India - Ramagundam Thermal Power Project (Credit 874-IN and

loan 1648-IN)" prepared by the Asia Regional Office. No audit of this project

has been made by the Operations Evaluation Department at this time.

Attachment

This document ha a restfd ditibutin and may be ued by nxiPent only in b peofanceof their officia dutes Its contents may not othewise be discled widhut World Bnk eutbotioan.

FOR OMCIL USE ONLYPROJECT COMPLETION REPORT

INDIARAMAGUNDAM THERMAL POWER PROJECT(CREDIT 874-IN and LOAN 1648-IN)

TABLE OF CONTENTS

Page No.

Preface ..................................................... iBasic Data Sheet ............. .ii

Highlights .. . .............................................- iv

I. INTRODUCTION ............................................ 1

Power Subsector ......................................... 1Bank Group Involvement .................................. 3

II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL ....... 3

Project Origin, Preparation, Appraisal,Negotiations and Approval ............................ 3

Project Objective . ............................., 4Project Description .............................,. 4

III. IMPLEMENTATION ...................., 5

Credit and Loan Effectiveness ........................... 5Project Execution ....................................... 5Environment, Resettlement and Rehabilitation ............ 7Reporting ................. ....................... 8Project Cost ........................ .................... 8Procurement ..................... .8Disbursements . . ........... 9Performance of Consultants, Contractors and Suppliers ... 9

IV. OPERATING PERFORMANCE ................................... 9

V. FINANCIAL PERFORMANCE .......................... 1........ 1l

VI. INSTITUTIONAL DEVELOPMENT ............................... 13

VII. ECONOMIC REVALUATION ... 14

VIII. PERFORMANCE OF THE BORROWER AND THE BANK GROUP .......... 15

IX. CONCLUSION .............................................. 18

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

TABLE OF CONTENTS (Cout.)

ANNEXES Page No.

1. Description of Facili ties in Operation ................... 192. Original Program for the Expansion of Genera ting ......... 21

Capacity during Sixth Plan Period 1979180-1983184 ..... 213. Description of the Ramagundam Development .. 224. Land Acquisition, Resettlement, Environment

and Rehabilitation ........ . 245. Estimated and Actual Project Costs ...................... . 266. Procurement Review ................. . ... .......... ..... 287. Estimated and Actual Schedules of Cumulative

Disbursements ................. .. .......... 308. Highlights of the Commissioning and Operating

Performance of the three 200 MW Ramagundam Units ...... 319. Forecast and Actual Consolidated

Income Statement, FY83-FY88 ........................... 3210. Forecast and Actual Consolidated.

Balance Sheets, FY83-FY88 . .............. 3411. Forecast and Actual Consolidated Sources

and Applications of Funds Statements, FY83-FY88 ....... 3512. Ex-Post Internal Economic Rate of Return ................ 36

ATTACHMENT

Coents from the Borrower. ...... ....... ..37

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PREFACE

The Project covered the first phase of the Ramagundam 2,100 MWdevelopment located in the Karimnagar District of Andhra Pradesh, south ofthe Godavari river and in the vicinity of south Godavari Coal fields. Itconsists of civil works, three 670 tonnes per hour coal fired boilers,three 200 MW turbo generating units, auxiliary mechanical and electricalworks, associated 400 kV alternate current (AC) transmission system of1,069 circuit kms, and several substations. IDA Credit of US$200 millionand an IBRD Loan of US$50 million representing 49.OOZ of the totalfinancing required for the Project was made to the Government of India inFebruary 1979 with the National Thermal Power Corporation (NTPC) as thebeneficiary. With the commissioning of the three units, the Project wasessentially completed satisfactorily in December, 1984 and the Credit andLoan were closed on 30th June, 1987 following final payments after thesuccessful completion of guarantee period.

The project completion report was prepared jointly by NTPC and theTransport and Energy Operations Division (India) of the World Bank on thebasis of Staff Appraisal Report No. 2175b-IN dated 11th December, 1978, thedevelopment credit, loan agreement and project agreement, all dated 2ndFebruary, 1979 and other relevant documents in Banks Group's file.

This PCR was read by the Operations Evaluation Department (OED).The draft PCR was sent to the Borrower for comments and they are attachedto the Report (Attachment I).

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BASIC DATA SHEET

Key Project Data

Original Actual

Project Cost (US$ M) 511 693Loan Amount (US$ M) 50 50Credit Amount (US$ M) 200 200Disbursed (US$ M) 250 250Cancelled (US$ M) -- --

Repaid (US$ M) -- 13Outstanding 250 237Date of completion ofphysical component 6/84 12/84Portion completed bytarget date (2) 100 86.5

Economic rate ofreturn (Z) lox 12.5Institutional Performance -^ Commendable

Cumulative Estimated and Actual Disbursement (US$ M)

FY 80 FY 81 FY 82 FY 83 FY 84 FY 85 FY86 FY 87 FY 88

Appraisalestimate 28.0 70.0 164.0 224.0 239.0 246.00 250.0 250.0 250.0

Actual 20.0 28.8 84.4 152.4 186.5 207.5 216.2 243.7 250.0

Actual as Xof Estimate 71.4 41.1 51.5 68.0 78.0 84.3 86.5 97.5 100.0

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Other Pro1ect Data

OriginalItem Plan Actual

Concept in Bank - 2/75Negotiation - 12/78Loan/Credit Signing - 2179Effectiveness - 5/79Closing Date 12/85 6/87Last Disbursement 6186 - 3/88Beneficiary National Thermal Power Corporation Ltd.Executing Agency National Thermal Power Corporation Ltd.Fiscal year of Borrower April 1 - March 31Follow-up Project Second Ramagundam Thermal Power Project

Loan 2076-IN

Mission Data

month/ No. of No. of Man Date ofIteml Year VT eeks Persons Weeks Report

Pre-Appraisal(Project Brief) 1/78 - 2 - 11/77Appraisal 4/78 - 2 - 12/78Supervision 1 11/78 2 3 6 1/78Supervision 2 12/79 4 1 4 2/80Supervision 3 6/84 3 1 3 8/84Supervision 4 6/85 2 2 4 8/85Supervision 5 10/86 2 2 4 11/86

Currency Exchange Rate

Name of Currency - Rupee (Rs) = 100 paisa (P)Appraisal year (1978 Average) - US$ 1 - Rs. 8.6Completing year (1987 Average) - US$ 1 - Rs. 13.0

1/ Project performance was monitored by the Bank Group on an on-goingbasis during the appraisal of subsequent NTPC projects including theproposed Regional Power Systems Project (FY90).

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INDIARAMAGUNDAM THERMAL POWER PROJECT(CREDIT 874-IN and IOAN 1648-IN)

HIGHLIGHTS

Loan 1648-IN of US$ 50 million and Credit 374-IN of US$ 200 million wasfor the implementation of the first phase of the Ramagundam 2100 MV developmentlocated in Karimnagar District of Andhra Pradesh in the vicinity of the SouthGodavari Coal field, just near to Pochampad reservoir on the river Godavari. Itconsisted of civil works, electrical works, mechanical works including three 670tonnes per hour boilers and three 200 MW turbo generating units as well as anassociated 400-kV transmission system - around 1,070 km of lines and severalsubstations. The Project was the Bank Group's third lending operation with theNTPC, the beneficiary and the implementing agency. The corporation wasestablished approximately three years prior to this operation, for the purposeof constructing and operating large thermal power projects in the central sectorand distributing power so generated to the State Electricity Boards (SEBs).

As per the Staff Appraisal Report the project was to be completed byJune 1984 and the credit and loan closed by December, '4985. However, because ofinitial delay in the placement of orders for main plant equipment the projectwas not completed until December, 1984 and the credit and loan were not closeduntil June 1987 as a result of late retention payments notably for spare parts.The Project was completed at a cost of Rs. 7,070.7 million which is about 611higher than the original cost estimate of Rs. 4,395 million. However in USdollars value the actual project cost is estimated at US$ 693.4 million which isonly about 35.7Z higher than the original esitmate of US$ 511.0 million. Thebulk of this increase is due to (i) higher than anticipated increases in theprice of equipment and material; (ii) customs duty for which allowances were notmade in the appraisal report; (iii) change in the scope of the project to coverthe cost of trial and pre-commissioning procedures; and (iv) changes in theforeign exchange rate.

The Project was completed satisfactorily and is generating much neededelectricity in the Southern Power Region. Several measures were taken tomitigate the adverse impact on the environment and resettlement of oustees. Inaddition to completing the project satisfactorily, NTPC initiated improvementson its own accord which are having, and will continue to have, beneficiary spin-offs. These include a new control and instrumentation package, a contractmanagement system, a rapid coal loading system for unit trains, concept ofquality assurances and of design, supply and erection type packaging forauxiliaries, satellite communication system for data and information flowsbetween various projects and its Corporate Office, etc. NTPC needs to becommended for these initiatives and for completing the construction of theproject in almost the identical time as was envisaged by the appraisal reportdespite several site related infrastructural constraints.

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The financial performance of NTPC has been satisfactory. DuringFY82-88, the rates of return on average net fixed assets in operation haveexceeded the estimates contained in the Staff Appraisal Report. NTPC1s debtequity ratio and debt service ratios have also been satisfactory and at the endof FY88 were 43s57 and 3.9, respectively. NTPC has also increased substantiallyand diversified its resource mobilization for financing of the future projects.NTPC's collection of its accounts receivables during its first six years ofoperations however, has been a growing problem. In spite of efforts made byNTPC, the level remained equal to the equivalent of more than four months salesrevenues at the end of PY88. The Government is currently making additionalefforts to reduce the level to the equivalent of the sales' revenue of the lasttwo months, as required by the Bank's covenant included in recent lendingoperations.

Bank Group involvement throughout the project and subsequent Bank Groupoperations have continued to provide NTPC the impetus and assistance needed toassume a substantially larger role in the power sub-sector than was envisaged atthe time it was established. Bank Group support however will still be needed toenable NTPC to implement its expanded investment program and develop into afinancially mature utility. In addition, the impact to the sector, through NTPCoperations which have reduced power shortages, supported the application of newtechnology, and introduced, although not yet successful, commercial andfinancial discipline, have proven to be more successful than previous operationswith centrai institution.



I. INTRODUCTION

1.01 Power shortages of the 1970's and the adverse effect these werehaving on the productive sectors of the economy prompted the Government ofIndia (GOI) to intensify its efforts to balance the demand and supply ofelectricity. This was to be achieved within the context of GOI-os overallstrategy for the energy sector which was formulated in response to increasein the international price of oil to reduce the country's dependence onimported liquid hydrocarbons and ease the burden on its balance ofpayments. Accordingly, emphasis was accorded in the power sub-sector toCi) accelerating the development of the hydro power potential and largecoal fire power plants at both pithead locations and in the proximity ofload centres; (ii) improving the efficiency of thermal power plants andreducing losses in the transmission and distribution networks;(iii) expanding the rural electrification program; and (iv) strengtheningthe organizational and management capabilities of the State ElectricityBoards (SEB's), as well as, augmenting their generating capacity throughthe increased involvement of the Central Government in the power sub-sector. The Project was formulated in the context of this strategy and wasan integral part of the power development program of the Sixth Five YearPlan, (FY80-FY85). However, because of the anticipated long gestation, itwas actually initiated towards the end of the Fifth Five Year Plan(FY74-FY79).i/ (Para. 2.01)

Power Subsector 21

1.02 According to the Constitution and the Electricity (Supply) Act,1948, (the Act), the power subsector is within the concurrent jurisdictionof the Central and State Governments and, until 1974, it involved thefollowing four agencies: the SEBs, the Regional Electricity Boards (REBs),the Central Electricity Authority (CEA) and the Rural ElectrificationCorporation (REC). Under the Act, SEBs were assigned the responsibilityfor the generation, transmission and distribution of electricity withineach state and for the regulation of private licenses. Although SEBs were

1/ The plan was suspended in FY78.

2/ Data regarding the supply and consumption of electricity between FY70and FY75, and a description of the facilities in operation as of 1978when the project was appraised, are presented in Annex 1.

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supposed to be autonomous in managing their day-to-day operations, inpractice they are under the purview of the State Governments in suchmatters as capital investment, tariffs, borrowings, pay and personnelpolicies. REBs were formed during the period 1964-66 by grouping SEBs intofive regional systems to promote coordination. They are also under thepurview of the State Governments and their coordinating responsibilitiesinclude overhaul and maintenance programs, general schedules, interstatepower transfers and concomitant tariffs.

1.03 The other two agencies, CEA and REC, are under the purview of theCentral Government. CEA was established in 1950 in the Power Wing of theCentral Water and Power Commission, the Ministry of Irrigation and Power,to formulate national policy and coordinate the activities of the variousagencies involved in supplying electricity. However, because ofinstitutional con traints, CEA was unable to carry out its mandate fully.REC was established in 1969, to coordinate the expanding ruralelectrification program and provide financial as well as technicalexpertise to SEBs for their rural schemes.

1.04 The constraints on CEA's ability to carry out its mandate and thead hoc development of the power subsector, together with the shortages ofelectricity ensuing therefrom, induced GOI to amend the Act to enlarge thescope and functions of CEA and address the financial operations of theSEBs. Legislation was enacted in 1975 to give CEA an effective veto overnew investments by SEBs. The amendment also covered the establishment ofgenerating companies by the Central and State Governments for theinstallation of large power stations to allow for economies of scale inmeeting the forecast growth of demand. An ordinance incorporating theamendments to the general provisions of the Act was issued and two CentralSector generating companies, the National Thermal Power Corporation (NTPC)- the beneficiary of the Credit - and the National Hydro Power corporation(NHPC) were established.

1.05 NTPC was registered as a government owned company under theCompany's Act, 1956, and is governed by the general provisions of theElectricity (Supply) Act, 1948, as amended, to give the corporationstatutory recognition. The initial authorized share capital amounted toRs. 1250 million (US$ 140 million). NTPC was to be managed by Board ofDirectors of not less than 4 and not more than 15, some of whom would bepart time. The corporation was established to design, construct andoperate large thermal power stations in the Central sector, and distributeand sell the power so generated to the state electricity boards. NTPC alsowas to own and operate, associated 400 kV transmission system, over whichpower would be distributed and sold in bulk to SEB's. NTPC's originaldevelopment plan provided for the construction of four thermal powerstations each with an ultimate capacity of about 2,000 MW. (Para. 2.01).At the time of appraisal, work had already started on the first phase of600 MW development each for the Projects and Singrauli and Korba (Credits685-IN, and 793-IN) while the implementation of a project at Parakka, inWest Bengal, was under coasideration. The Project now completed was forthe development of first phase of 600 MW at Ramagundam with associated 400

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kV AC transmission system. It was envisaged that NTPC would also take overthe operation of the Government owned 300 MW Badarpur Power Station nearDelhi.

1.06 In 1978, when the project was appraised, NTPC had made goodprogress in building up the organization since 1976 by filling keypositions. A competent administrator with wide experience in the formationand development of large industrial undertakings and in the construction offactories and the manufacture of generating facilities had been appointedas the Chairman and Managing Director. The Board of Directors had alsobeen constituted. The principle departments had been established includingthe mechanical and electrical design departments, which together formed theplant and equipment engineering grcip, the civil design and systemsengineering departments, which formed the civil and systems engineeringgroup, and the operation services department. The number of staffappointed as on March 31, 1978 was 454.

Bank Group Involvements

1.07 Prior to the Project, the Bank had made eight loans to India forpower projects amounting to US$ 284.5 million and IDA ten credits totallingUS$ 796 million. Of the total amount, US$ 620.5 million had financed theconstruction of generating plants, US$ 23 million had financed the purchaseof construction equipment for the Beas hydro-electric project, US$ 380million was used on projects for high voltage transmission, and US$ 57million was for rural electrification. Nine loans and credits forgenerating plants, the Beas Project (Credit 89-IN) and the first threePower Transmission Projects (Loan 416-IN, Credits 242-IN and 377-IN) hadbeen completed. The Fourth Transmission Power Project (Credit 604-IN) wasunder implementation; approximately US$ 94 million of the credit amount ofUS$ 150 million had been committed up to September, 1978. The Korba andTrombay Thermal Power Projects (Credit 783-IN and Loan 1549-IN), which wereapproved in April 1978, were still in preliminary implementation stages.Commitments on November 30, 1978 totalled US$ 104 million on SingrauliProject (Credit 685-IN) and US$ 55.2 million on the Rural ElectrificationProject (Credit 572-IN).

1.08 The ongoing generation and transmission power projects and therural electrification projects were proceeding satisfactorily,notwithstanding initial delays in implementation and in the preparation ofspecification notably for more sophisticated load dispatch equipment in thecase of the Fourth Power Transmis3ion Project (Cr. 604-IN). The Singrauliand Korba projects though in the early stages of implementation, were alsoproceeding satisfactorily. The project was the Bank Group's third lendingoperation with NTPC.

II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL

Project Origin, Preparation, Appraisal, Negotiations and Approval

2.01 The Sixth Five Year Plan's development program for the power sub-sector was projected on the basis of an average annual increase in the

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demand for electricity of about lOX between FY80 and FY85. The target forthe commissioning of new capacity associated with the load forecast was setat 19,666 MW consisting of 13,846 MW of thermal, 5,130 MW of hydro and 690MW of nuclear capacity.3/ Most of the thermal capacity was to be coalfired with emphasis on large power stations whose ultimate capacity couldreach about 2,000 MW. Feasibility studies for five such developments werecompleted in 1974. The responsibility for constructing and operating fourof these power stations-one at Singrauli in Uttar Pradesh, one at Korba inMadhya Pradesh, one at Ramagundam in Andhra Pradesh and one at Parakka inWest Bengal-wtas assigned to NTPC. GOI's formal request for Bank Groupassistance in financing the development at Ramagundam, described inAnnex 3, was received in January 1987. The development which was to beimplemented in two stages consisted of three 200 MW and three 500 MWgenerating units along with associated 400 kV transmission system for theevacuation of power. The Project consisted of the first phase (three 200MW units) of this development.

2.02 The Project was prepared by NTPC and appraised by the Bank Groupin April/May, 1978 and negotiations were held in Washington in December1978. As NTPC had made significant progress in strengthening its in-housetechnical capabilities, during the execution of Singrauli and Korbaprojects, it was agreed during negotiations that the corporation wouldprepare the basic engineering and preliminpr: design for the Project andwould appoint consultants satisfactory to the Bank to (i) review deviationsfrom earlier power stations designs and (ii) assist NTPC as necessary inthe design and preparation of specifications for the power station. NTPCwas also to appoint consultants, satisfactory to the Bank, to assist asrequired in the design and supervision of construction of 400 kVtransmission lines.

Project Objectives

2.03 The primary objective of the project was to provide NTPC theimpetus and assistance needed to assume its envisaged role, including thealleviation of power shortages in the Southern Power Region of the country.In addition, it was to assist GOI in achieving its objective of furtheradvancing the regional and ultimately the national integration of the powersubsector.

Project Description

2.04 The Project involved the first phase of the Ramagundam developmentand consisted of:

(a) civil works comprising acquisition of land, construction ofroads, culverts, railways and other miscellaneous preliminaryworks, power station and residential buildings, plant

31 The original program for expansion of gencrating capacity during theSixth Five Year Plan differs slightly from the actual program aspresented in Annex 2.

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foundations, canals, ducts, cooling towers and other worksassociated with the circulating water system;

(b) three 670 ton/hr boilers and three 200 MW steam turbogenerating units complete with all auxiliaries and ancillaryelectrical and mechanical equipment and the switchyard; and

(c) the 400 kV AC transmission system comprising several singlecircuit lines (i) Ramagundam-Hyderabad (198 km),(ii) Hyderabad-Nagarjunsagar (127 km), (iii) Nagarjunsagar-Cuddapah (282 km), (iv) Cuddapah-Bangalore (230 km), and(v) Cuddapah-Redhills (232 km) and several 400 kVsubstations.

2.05 The site of the Ramagundam development of 2,100 MW is inKarimnagar District of Andhra Pradesh, South of Godavari coal fields. Thesite selection was based on the ready availability of cooling water, coaland transportation facilities. Coal for the power station was to comie fromSouth Godavari coal fields of the Singarani collieries, located some 15 kmfrom the proposed power station site. Cooling water for the project was tobe drawn from the right bank irrigation canal from the Pachampad damlocated 100 kw, up-stream of the power station, and the water intakestructure on the irrigation canal was 10 km from the project area. Theproject was selected as a logical slice of the overall development which oneconomic and engineering considerations could operate as an independent andviable project in the event that construction of the remaining units(aggregating 1,500 MW) was delayed or deferred.

III. IMPLEMENTATION

Credit and Loan Effectiveness

3.01 The credit and loan were made effective on May 4, 1979 followingexecution of the subsidiary loan agreement between GOI and NTPC.

Project Execution

3.02 The Project was executed satisfactorily, but because of an initialdelay of about seven months in the placement of orders for the main plantequipment all three generating units were commissioned later thanoriginally planned. However, the construction time taken by all the threegenerating units was less than that envisaged in the construction scheduleof 48 months, from the placement of orders, for the first unit and at aninterval of six months each thereafter for the subsequent units, therebyconsiderably reducing the extent of delays that took place in the award ofcontract. In retrospect, the above delays could have been anticipated ifadequate allowance had been made in the appraisal report implementationschedule for the site related infrastructural constraints and the timerequired for either review of bid documents by consultants as well as by

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the Bank or completion of bids evaluation by NTPC (para 3.11). The Projectalso benefitted from the concept of quality assurance and of design, supplyand erection type of packaging for auxiliary systems which was introducedfor the first time in the country by NTPC. tPara. 8.03).

3.03 The Project site, which is located in a remote under-developedarea of Karimnagar district of Andhra Pradesh, was lacking ininfrastructural facilities as well as in basic civic amenities such asdrinking water, residential accommodation, etc. It was through planningand perseverance that these constraints were overcome.

3.04 As in the case of the Singrauli and Korba projects efforts weremade at the design stage itself to increase the safety, reliability andavailability of power plants and thereby increase performance of the unitsby the introduction of the following control and instrumentation packages:(a) automatic turbine run up system, (b) coordinated control system,(c) centralized steam and water analysis system, (d) uninterruptable powersupply system, (e) analog control system, and (f) computerized on-line dataacquisition system. In addition to the above systems, a micro processorbase burner management system and a new design and equipment for storingand evacuating the bottom ash in place of the conventional scrapperconveyer system, were used for the first time in NTPC to improve plantperformance.

3.05 During the construction and erection stages of the project also,the following major constraints were also faced by NTPC:

(i) the rocky nature of earth in the area required a largeamount of blasting to be carried out;

(ii) a temporary ash pond had to be constructed to meet thecommissioning schedules as a result of land acquisitionproblems;

(iii) the water treatment plant package was ordered from aWest German firm which subsequently went intoliquidation; and

(iv) the power receiving system from the Andra Pradesh SEB,one of the beneficiaries of power from the Project, wasdelayed; as a result units were initially synchronizedthrough the 33 kV system.

3.06 A well defined field plan, adequate quality checks during theerection and commissioning stage, and elaborate testing and commissioningprocedures enabled the units to operate from the beginning without majorproblems. Several minor problems were corrected by timely action,including minor modifications in design.

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Environment, Resettlement and Rehabilitation

3.07 The implementation of the Project, including the expansion phaseof 1,500 MW, required the acquisition of 4,116.0 hectares (10,289 acres)resulting in compensation and/or resettlement of 2,279 families affecting13 villages. Part of the required area, located at about five km from theplant, was needed for dumping the ash. That area could not be acquired indue time and therefore a smaller temporary ash pond, closer to the powerstation, has been used during the first two years of plant operation. Theinitial ash disposal area has now been completely filled up andrehabilitated with afforestation. The final disposal area is used atpresent where ash is pumped as a slurry, through a pipeline, and water isdrawn away without any detrimental effect on the local ecological system.Regarding resettlement, 782 families have resettled in dedicated coloniesin the neighborhood of their former dwellings where internal roads,culverts, tubewells, recreation facilities and seven shops were alsoallotted to oustees in NTPC shopping complex. Details on measures takenare detailed in Annex 4. Although NTPC provided civil amenities in therelocation colonies, including medical facilities, periodic visits bymedicial officers and preventive check up, public health is increasinglydeteriorating in the colonies, partly as a result of a larger squattersettlement which has grown around the area. Also, although 250 ousteeswere trained and given employment by NTPC, and approximately 400 wereemployed through various contractors working for the project, no employmentopportunities have been provided to about two thirds of the oustees,because of their low level of skills.

3.08 As a result of this experience with the Ramagundam Project, NTPCis now becoming more aware of the particular complexities associated withresettlement issues. In recent projects - e.g. the Talcher Thermal PowerProject - the approach has been from the beginning more comprehensive. Inthe case of Singrauli, NTPC is undertaking an overall Environment ImpactAssessment (EIA), and through an Action Plan (currently under preparation),for environmental protection, resettlement and rehabilitation, NTPC istaking action to improve as far as possible the local human environment.However, it has to be recognized that there are limits to NTPC's ability toresolve all the environmental issues associated with a power developmentproject and that the local government authorities should be responsible forthe public infrastructure needed in the context of a large projectdevelopment. NTPC has also taken appropriate measures with regard to stackemissions and water effluents. They monitor regularly these aspects ofenvironment protection and comply so far fully with environmental qualitystandards prescribed by the Indian National Committee on environmentalplanning and therefore no ecological problems are envisaged. In addition,through a continuous afforestation program more than 200,000 trees ofvarious species have been planted and this will be expanded in the future,notably in order to rehabilitate the ash pond area. The amount paid forland compensation, resettlement facilities and rehabilitation has beenaround Rs 144.9 millions.

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Reporting

3.09 NTPC met all the Bank's reporting requirement, submitting on aregular basis, quarterly progress and annual reports.

Project Cost

3.10 The Project was completed at a cost of Rs. 7,070.7 million whichis about 61Z higher than the appraisal cost estimate of Rs. 4,395 million.A detailed comparison of the estimated and actual protect cost is presentedin Annex 5. The actual cost was about 76Z higher than appraisal estimatesfor electrical and mechanical equipment, 115? higher for preliminary andcivil works, about 30Z higher for transmission system. The coal handlingand transportation system were however lower by 332 than the appraisalestimate. Most of these increases are attributable to: (i) customs dutyfor which allowances were not made in the original cost estimates,(ii) increase in the foreign exchange rate for the dollar which went upfrom Rs. 8.6 per USS at the time of appraisal to around Rs. 13 per US$ whenthe project was completed (iii) higher than anticipated increase in theprice of equipment and materials, (iv) minor changes in the scope ofProject particularly in the area of civil works, (v) to cover expensesamounting to Rs. 64.4 million for trial and pre-commissioning, and(vi) miscellaneous expenditures for tools and plant instruments. Based onthe amount of contracts in foreign currencies (around US$ 130 million), thedirect foreign cost of the project is now estimated at Rs 1,352 million ascompared with only Rs 554.6 million (USS 64.4 million) in the appraisalestimates for the direct and indirect foreign costs. This substantialunderestimation highlights the difficulty in estimating a priori the shareof foreign and local costs in industrial projects in India where there is astrong competition between local and foreign suppliers of equipment. Whenconsidering the total project cost estimates in dollar value, however, theyamount to respectively US$ 511.0 million in the appraisal and US$ 693.4actually, resulting in a smaller increase - 36? - as compared with theabove increase in rupee value.

Procurement

3.11 Bank guidelines were strictly adhered to by NTPC for procurementof 57 contracts involving international competitive bidding andrepresenting an amount of Rs 2,780 million. Among these 57 contractslisted in Annex 6, 15 were awarded to foreign firms for an amount estimatedat Rs 1,600 million. The average procurement time per contract - from theissuance of bid documents to contract award - was nearly one year,consisting of around 3.6 months for bidding and about 7 - 9 months for bidevaluation. This latter time is certainly too long and constitutes a majorsource of implementation delay. However, some progress in this regard hasbeen made so far in subsequent projects undertaken by NTPC (e.g. FarakkaII). NTPC is in the process of finalizing with the Bank, a standardbidding document which is expected to cut down the time lag substantially.Several contracts were amended to include either supply of spare parts for

-9-

equipment or additional quantity of material. No significant claims wereraised by bidders.

Disbursement

3.12 The appraisal estimate of disbursement and actual disbursement arepresented in Annex 7. Actual disbursement was slower than the appraisalestimate mainly because of the initial delays in the placement of theorders for the main plant and equipment. As of December 31, 1985, theoriginal date for closing the credit, about 86.52 of the funds had beendisbursed, the remaining 13.52 representing payments withheld from thecontractor pending the successful completion of performance and guaranteetest on the main plant, equipment and supply of spare parts. The closingdate was extended to June, 1987 and disbursements were eventually completedby March, 1988.

Performance of Consultant, Contractors, and Suppliers

3.13 In addition to the review consultants, NTPC had appointedconsultants for:

(a) Detailed engineering of all mechanical auxiliaries, partof the electrical equipment and civil works of mainplant, ash handling system, water treatment plan andcooling water system.

(b) Development of coal transportation system and railwaysiding.

(c) Detailed engineering of civil works related to balancereservoir and ash disposal system.

The performance of the consultants - representing around 750 man-months of activities - was satisfactory and their association with theRamagundam Project further enhanced NTPC's capability in detailedengineering and strengthening its in-house technical services division.

3.14 The performance of contracts and suppliers was also generallysatisfactory. As is to be expected in a project of this size, problems didarise during erection and commissioning. These, however, were addressedexpeditiously by the contractors and manufacturers concerned.

IV. OPERATING PERFORMANCE

4.01 As per NTPC's procedures, a generating unit is declaredcommercially operational only after it has been inspected thoroughlytogether with the associated equipment and has operated for a minimumperiod of 1.000 hours continuously (within four months of the date ofsynchronization), carrying a full load for not less than 72 of these hours

-10-

and generating at an energy equivalent rate of 2,500 kWh per kW per yearduring that period. Of the three units comprising the project, the firstunit was able to achieve the operating standard within four months from thedate of synchronization, i.e. within 96 days. However, in the case of thesecond and third units, it took 155 days and 138 days respectively to bringthe units into commercial operation. This was due to initial teethingproblems. During the first year of commercial operation, the second andthird units achieved a plant load factor 64.02 and 77.8Z respectively,which compares favorably with the load factor of 63? envisaged in theappraisal report. The first however was able to achieve a load factor ofonly 49.4Z during the same period primarily due to teething problems whicheventually have been resolved enabling the unit to achieve a plant loadfactor of respectively of 66.92, 86.35? and 87.25X in the following threeyears. Highlights of the operating performance of the three units arepresented in Annex 8.

4.02 Although the performance of all the three units compares favorablywith the expectations of the appraisal report, some of the main plantequipment and auxiliaries require further improvement to iLchieve fullstability and i liability for base load operations. Specifically NTPCintends to:

(a) increase the spare capacity of coal mills,

(b) install an additional oil seal near the primary air fanbearing in order to protect the fan,

Cc) take special design measures for early detection of ashbuild up in furnace,

'd) improve the design of low and high pressure heaters toeliminate leakages, and

(e) provide anti-condensation plugs in the motors of coolingtowers.

4.03 Fuel for the project was to be supplied from the South GodavariCoal Fields of the Singrani Collieries Ltd. As NTPC has no control overits development, assurances had been obtained from the coal company that itwill take all necessary steps to make available adequate coal supplies forthe efficient operation of the three 200 MM units. The company hascomplied with its commitments, despite initial delays in the implementationof the coal loading facilities at the mine. The effect of this delay ongeneration was minimal as alternative arrangements were made to meet theinitial requirements of coal. The quality of coal supplied to the powerplant was only marginally better than envisaged, but the price paid for itby NTPC was substantially higher than originally estimated. TheCorporation was allowed to pass on these higher fuel costs to beneficiarySEBs through higher tariffs. (Para. 5.02).

-11-

V. FINANCIAL PERFORMANCE

5.01 As per the agreement, NTPC was to sell power from the project toSEBs in the Southern Region4/ under bulk supply contracts satisfactory tothe Bank and GOI was to ensure that all necessary steps were taken toobtain an undertaking from respective State Governments to purchase, in theaggregate, not less than 85Z5/ of output of power from the Project. GOIand NTPC have complied with their commitment despite an initial delay inthe ratification of the bulk supply contracts precipitated, in part, by theabsence of a blueprint for establishing multi-party contracts for theexchange of power. NTPC's operating and financial performance, however,was not adversely affected by this delay.

5.02 NTPC's actual and projected financial statements for the periodFY83-FY88 are presented in Annexes 9 to 11. The most salient feature ofNTPC's operations during the period FY84-FY88 is the spectacular growth thecorporation experienced. While net fixed assets in operation tripled,sales of electricity increased almost five-fold. Even more striking is thehigh level of investment in projects under construction. Work-in-progressat the end of the period was almost twice as large as that of assets inoperation. This reflects the continuation of a highly acceleratedexpansion program which, in turn, explains why the self-financing ratioremained modest during the period, representing only 5.82 of the totalfinancing requirements, despite the reasonable rates of return achieved(around 162 in the last three years, well in excess of those projected inthe appraisal report, and much higher than the 9.5X required under the loanas a target for FY89). Debt service coverage was very comfortable duringthe period because repayment of debt started only in FY89. Current ratio,which was below one during the earlier part of the period improved to 1.6by FY86. However, a closer look at the working capital position of NTPCreveals, starting in FY83, a very unsatisfactory collection performance.Under recent loans, a covenant was introduced that requires that NTPC'sreceivables should not exceed the equivalent of two months of sales.Although, NTPC made strenuous efforts to reduce the level of receivablesover the past few years, from 7.5 months in 1982-83 to 3.3 months in1988-89, NTPC has not complied with it and the Bank has requested andagreed during the negotiations of the proposed Regional Power SystemsProject (PY90) the implementation of an Action Plan that is expected tocorrect the situation. Sales in the last three years were lower than thoseprojected in the staff appraisal report because of delays in completingprojects, often as a result of slow initial procurement. In addition, thetime required to bring units into commercial operation, after theirinstallation, was not taken into consideration in the appraisal report.

4/ Power from the project was to be sold in bulk to the State ElectricityBoards of Andhra Pradesh, Karnataka, Tamil Nadu, Kerala and theElectricity Department of Goa.

5/ The remaining 15Z was to be sold in accordance with priorities to bedetermined by GOI.

-12-

The following table presents the key operational results forecast in theappraisal report compared with the actuals:

FY85 FY86 FY87 FY88Fore- Fore- Fore- Fore-cast Actual cast Actual cast Actual cast Actual

Sale of Energy (GWh) 8,741 8,316 15,750 12,839 23,647 14,408 29,692 17,533Average Revenue(P/kWh) 29 39 29 40 29 44 29 48

Operating Revenue(Rs. Million) 2,495 3,438 4,536 5,294 6,878 6,453 8,732 8,622

Operating Expenses(Rs. Million) 1,768 2,042 2,951 2,943 4,289 3,522 5,191 4,712

Operating Income(before interest)(Rs. Million) 727 1,396 1,585 2,350 2,589 2,931 3,541 3,910

Net Income(Rs. Million) (218) 904 4 1,781 706 2,065 1,520 2,662

Rate of Return5X) il 3.1 12.7 4.6 16.8 6.3 17.0 8.1 16.4

Operating Ratio (2) 71 59 65 56 62 55 59 55Debt as Z of Debt& Equity 49 32 47 36 45 42 41 43

Debt ServiceCoverage 1.1 3.3 1.1 4.9 1.3 4.0 1.4 3.9

l1 On average historical fixed assets in operation.

5.03 The Appraisal Report's f'.nancial forecasts anticipated that NTPCwould eventually achieve and maintain from FY89 onwards (the first year inwhich the 2,100 MW Singrauli power station was expected to be in fullcommercial operation) a rate of return of not less than 9-1/2Z on theoriginal cost of its average net fixed assets in service. As shown above,actual rates of return were considerably higher than forecast. This waspartly because of the introduction of higher than forecast tariffs (seetable below), and partly due to higher than expected plant load factorachieved at NTPC stations than the targets set in the appraisal report.NTPC's average plant load factor increased from 58? in FY85 to about 74? inFY86, to 79.6Z in FY87 and 75.6? in FY88 at the Ramagundam, Korba, Farakkaand Singrauli power stations. The early stabilization of the Ramagundam200 MW units, increased availability of the Singrauli units (both 200 and500 MW) and a sustained high level of performance of Korba units (both 200and 500 MW), were the main reasons for this performance.

-13-

Forecast and Actual Revenue per kWh sold(Paise per kWh)

Financial Percentage increaseYear Forecast Actual over forecast (Z)

FY83 28 35 25FY84 28 36 29FY85 29 39 34FY86 29 40 38FY87 29 44 52FY88 29 48 66

5.04 During the FY83-PY88 period, NTPC financed about half of its rapidgrowth by borrowing. GOI funded about 602 of NTPC's totai. requirements,three quarters of it through equity contributions and the balance as loansincluding assistance from the World Bank. Through GOI, the Bank financedRs 14.6 billion on about 22X of NTPC's requirements. GOI's loans have atotal maturity of 20 years, including 5 years of grace and an i'terestwhich has changed over time and currently is 152 p.a. It is interesting tonote that NTPC floated bonds in the domestic market in three public issuesand three private placements, for a total of about Rs 16.8 billion(US$1,122 million at current exchange rate). In addition, NTPC has raisedfunds in Japan through a syndicate of banks and financial institutions.Finally, NTPC has received financing from the OPEC Fund, the Saudi Fund,KfW, the Governments of the United Kingdom, USSR, Sweden, Norway, Italy,and most recently, untied funds from Japan.

5.05 NTPC was requested to furnish to IDA and the Bank, not later thanseven months after the end of each fiscal year, certified copies of itsfinancial statements and a copy of the auditor's reports. NTPC hascomplied with this requirement.

VI. INSTITUTIONAL DEVELOPMENT

6.01 As noted, the credit and loan were the Bank Group's third lendingoperation with NTPC which itself had been established less than four yearsprior to that operation. The institutional objectives of the credit andloan therefore were to provide the impetus and assistance needed to ensurethat the development at Singrauli, Korba, Ramagundam and Farakka, assignedto NTPC, were implemented successfully. This objective was achieved fullyand in fact NTPC has been able to assume a much larger role in the powersub-sector than was envisaged originally. This is made evident by theexpansion of its existing facilities, organization and management, andstaffing. As of end August, 1988, NTPC was operating 16 new 200/210 MWunits (five at Singrauli, three at Korba, three at Ramagundam, three atFarakka and two at Vindhyachal) and six new 500 MW units (two at Singrauli,

_14-

two at Korba and one each at Ramagundam and Rihand) totaling around 6,220MW, and 6,600 km of 400 kV transmission lines. NTPC also operates the 720MW Badarpur Thermal Power Station near Delhi and is responsible for theconstructi'on and operation of a 270 MW captive Thermal Power Stationestablished at Korba for the Bharat Aluminum Company, on a management feebasis.

6.02 In response to the rapid increase in its operational andconstruction activities, NTPC also adopted a regional organizationalstructure in August, 1982 on the basis of a study conducted with assistancefrom power utilities and consultants in the UK and the USA. Each region isunder the charge of an Executive Director, who is responsible for theconstruction and operation of generation and transmission facilities. TheCorporate Headquarters is progressively concentrating on policy making andon providing functional guidance to the regions and operating divisions.Although NTPC has centralized engineering and contract administration, inorder to utilize the trained manpower more effectively, the concepts ofcarrying out these two functions on a project basis will continue.

6.03 As of August 31, 1988 NTPC had about 19,594 employees. Trainingof engineers and operators for operation and maintenance was to be anintegral part of NTPC's human resources development program. Accordingly,the corporation developed training programs and established an in-housemanagement training institute. So far 12 batches of engineers have beentrained. For operators' training, NTPC had set up one 200 MW full scopetraining simulator and has recently procured a similar 500 MW which shouldbe commissioned in 1992. In addition two training groups, namely CentralTraining Institute ,CTI) and Power Management Institute (PMI), have beenestablished to provide technical and management education respectively. Ithas been decided to convert these training groups into full-fledgedindependent institutes with the objective of increasing the number ofpersonnel that CTI and PMI trains, thereby expanding its role in order tohelp satisfy the power subsector's needs. The CTI and PMI will be equippedwith all facilities of a well developed campus, which is being constructedat Noila, near Delhi, where an independent research and development centrewill also be installed to conduct in-house research in the areas ofoperation and maintenance.

6.04 As NTPC stations are located at pitheads in remote areas which aredifficult to access from Corporate Headquarters in New Delhi, NTPC hasdecided to establish an integrated modern communication system usingcomputers and a satellite communication system. This system is expected tobe completed shortly.

VII. ECONOMIC REVALUATION

7.01 In the Appra.-al Report, the return on investment was calculatedfor the entire 2,100 MW development at Ramagundam to demonstrate therelationship between tariffs and the economic cost of development. It was

* ~~~~~~~~~-15-

defined as the discount rate at which the present worth of the economiccosts associated with the development equals the present worth of economicbenefits over the life cycle of the development. The measurable costsincluded:

(a) Capital and labor costs involved in the development ofgeneration and transmission facilities;

(b) Annual operating and maintenance costs;(c) Fuel costs.

The benefits were measured in terms of the revenues to be derived from thesale of electricity.

7.02 Based on measurable economic cost and benefits associated with the2,100 MV Ramagundam development, the ex-ante Internal Economic Rate ofReturn (IERR) is estimated at about 10?. Because actual tariffs werehigher than envisaged and more than compensate for a higher project costand longer construction period, the same approach results in an estimatedex-post IERR of 12.5Z (Annex 12) which compares favorably with theopportunity cost of capital, implying that NTPC's bulk supply tariffs forthe southern region continue to adequately reflect the economic cost ofsupply.

VIII. PERFORMANCE OF THE BENEFICIARY AND THE BANK GROUP

8.01 The performance of NTPC, the beneficiary of the credit and loan,was generally commendable and met most of the expectations of the appraisalreport. The performance has also to be considered in parallel with theperformance of the two other projects - the Singrauli and Korba ThermalPower Project - implemented nearly simultaneously and completedsuccessfully. NTPC implemented also this Project satisfactorily and inalmost identical time as originally envisaged. However, the procurementstage took too long, in particular the award of major contracts whichdirectly affected the overall implementation schedule. In fact, theextensive time needed to complete the procurement stage, in particular bidevaluation, has been and remains a basic weakness in NTPC's operationalperformance. Also bidding documents, which have been completed withsuccessive amendments, tend to become confused and cumbersome for thebidders. In order to remedy that situation and discuss basic procurementpractices, the Bank recently organized a procurement seminar, attended byNTPC and SEBs' staff, which has been much appreciated by NTPC management.Following above procurement delays, NTPC was able to reduce theconstruction time for each of these units by a period of around two months.In addition, when considering the three projects together, NTPC initiatedimprovements on its own accord which are having, and should continue tohave, beneficial spin-offs. The most notable of these, including some thatwere introduced in the country for the first time, are described below.

8.02 NTPC implemented in its projects a control and instrumentationpackage, the first of its kind in the country, to improve the performanceof power plants in terms of safety, availability and reliability. The

-16-

package consists of systems for automatic turbine run-up coordinated mastercontrol, centralized steam and water analysis, micro processor based analogcontrol and computerized on-line data acquisition system (DAS). The analogcontrol system with its self-surveillance and diagnostic features, wasimplemented to optimize plant performance. Likewise DAS will assist plantoperators in preparing performance calculations, pre and post trip logs andoperator guidance messages.

8.03 Following the experience gained ill implementing the Singrauli andKorba Thermal Power Projects, NTPC has prepared detailed specifications forpower plant equipment procured through International Competitive Bidding(ICB). A contract management system has been developed and implemented forthis purpose. The concept of quality assurance and of design, supply anderection type of packaging for auxiliaries were further developed. Underthis packaging concept, contractors and vendors are responsible fordetailed engineering of the system, manufacture or fabrication, testing andsupply of equipment as well as erection and commissioning of the sy,-tem asa whole. This approach has enabled NTPC to reduce the staff time sp4t oncoordinating activities without sacrificing high standards on qualitycontrol and system performance which are ensured through contractualobligations of the supplier.

8.04 For the operation of the power stations located close to pitheadsNTPC has adopted a system of rapid loading of coal at coal mines fordedicated unit trains with bottom discharge wagons and underground coalreceiving hopper. Other utilities in the country are currentlycontemplating the adoption of this system.

8.05 For the training of plant operators and technicians NTPC hasinstalled, at Korba, a full scope replica digital computer based 200 MWcoal fired thermal power plant training simulator. A 500 MW simulator ofsimilar type was recently procured and is being installed also at Korba.61These training simulators simulate the entire boiler turbine generator andtheir auxiliary functions in digital computers that exactly correspond withthe real plant operation. These simulators, introduced for the first timein India, will be used for the training of NTPC staff as well as those ofthe SEBs.

8.06 Other facilities which NTPC has initiated to improve the overallefficiency and functioning of its power plants and transmission systeminclude inter alia a satellite communication system, spring supportedequipment foundations, variable frequency drive and static reactivecompensators. As a result of the success in implementing its firstprojects, NTPC has been encouraged to further develop its capability inundertaking conventional coal thermal power projects. Furthermore, withthe Combined Cycle Power Project (Ln. 2674-IN) and Central and RihandTransmission Power Projects, (respectively Ln. 2283-IN and Ln. 2555-IN),

6/ The TATA Electric Companies already operate a 500 MW gaslfuel thermalpower plant training simulator at Trombay, financed under the ThirdTrombay Power Project (Ln. 1549-IN).

-17-

under !.mplementation, NTPC has introduced in the country new technology inpower generation and transmission (high voltage direct current (HVDC)).

8.07 In addition NTPC has made substantial progress in developing andimplementing systems for financial management, personnel management,selection, recruitment and training; stores accounting and spare partsmanagement; maintenance management and engineering.

8.08 The financial performance of NTPC during project implementationand initial years of operation were also satisfactory. In particular, NTPChas been able to expand and diversify its sources of projects financing.However, NTPC has been unable to maintain its account receivables from itsclients, the SEBs, at a level of two months of sales covenanted insubsequent operations for NTPC projects. In this regard, the arrearssituation of the Southern Region SEBs, supplied by the Ramagundam powerstation, is slightly better than in other Regions. The overall situationis nevertheless becom!.ng critical; over the past several months (late1988), total receivables have remained stable at slightly less than fourmonths, whereas, in accordance with legal covenants agreed under followingloans, they should not have exceeded two months of sales.

8.09 With regard to environmental protection and resettlement neededfor construction of the plant, NTPC performance at Ramagundam wassatisfactory. However more recently, NTPC has been facing a growingproblem in regard to maintaining ecological balance, in view of the rapidexpansion in industrial activity in the country. NTPC intends to establishan environmental impact assessment cell to conduct comprehensive studieswhich would cover all ecological aspects associated with the setting up ofpower projects. This cell would also monitor on a continuous basis,pollutants from the power stations to ensure that these are within theacceptable norms. NTPC, with the assistance of the Bank Group, hasinitiated work on a Environment Impact Assessment (EIA) in the area aroundRihand Lake, Singrauli Coalfields and several power stations for whichexpatriate consultants, have been recruited to assist NTPC.

8.10 The Bank Group supervised the project closely and maintained goodrelations with the beneficiary allowing it the latitude needed to innovate.This fostered an environment conducive to increased Bank Group involvementwith NTPC. To date, the Bank Group has assisted NTPC in implementing atotal of 13 projects. However, Bank action could have been prompter indealing with procurement delays and the size of the receivables, althoughseveral attempts to remedy these issues have been made which have been sofar not as successful as expected. Through these operations the Bank hasbeen strengthening the institutional capability and financial viability ofthe corporation. The Bank has also continued addressing a number ofshortcomings of broader sectoral concern in initiating studies aimed atformulation of a long term power transmission plan, re-structuring bulksupply tariffs, and most recently, conducting an EIA study in the Singrauliregion.

4 ~~~~~~~~~-18-

IX CONCLUSION

9.01 The Project was successful in that the three 200 MW units werecompleted satisfactorily and are generating the much needed electricity forthe Southern Region of the country. In addition, the project andsubsequent Bank Group lending have provided the impetus and assistanceneeded by NTPC to assume a larger role than envisaged. NTPC needs to becommended not only for its active participation in all stages of projectpreparation, implementation and its final operation but also for itsinitiatives not only in continuing to implement efficiently largeconventional coal fired thermal power stations but also in other areas suchas the introduction of gas based combined cycle power generation, HVDCtransmission, new control and instrumentation package, contract managementsystem, rapid coal loading system, simulator for operational training,supply and erection type of packaging for auxiliaries of concepts ofquality assurance in engineering design etc. On the financial side, NTPChas been successful in increasing substantially and in diversifyingresource mobilization for future projects financing. These should continueto have beneficial spin-offs for both NTPC as well as India's SEBs and thedevelopment of the sector in general. In this regard, lending operationsto NTPC has proven to be more successful and beneficial to the sector thanprevious operations with central institution such as the respectiveTransmission and Rural Electrification Projects.

ANNEX 1

-19- Page 1 of 2

INDIA

CREDIT 1648-IN AND LQAN 874-IN

RAMAGUNDAM THERMAL POWER PROJECT


Description of Facilities in Operations

As of March 31, 1978, India's total installed generating capacitywas 23,669 MW excluding about 2,506 MW of non-utility capacity, mostlythermal, which was owned by major industrial consumers to meet their ownneeds. The generating capacity is shown below:

Installed Generating Capacity as of March 31, 1978(MW)

ConventionalRegion Thermal Nuclear Hydro Total

Northern 3,143 220 3,233 6,596Western 4,074 420 1,690 6,184Southern 1,983 - 4,118 6,101Eastern 3,614 - 893 4,507North Eastern 188 - 86 274Andaman, Nicobar& Lakshadweep 7 - - 7Non-utility 2,506 - 2,506

15,515 640 10,020 26,175

Intrastate and interstate transmission was at 132 kV and 220 kV andgenerally, major load centres were interconnected by i32 kV and 33 kV sub-transmission lines. Distribution voltages were 11 kV and 4151240 V. Thesupply in general was reliable, except for the power shortage duringsunmmer, but losses both technical and non-technical were estimated to beabout 201 of the energy sent out.

ANNEX 1-20- Page 2 of 2

Supply and Consumption of Electricity

1969170 1975/76 1976/77

Installed capacity (excl.non-utility plant)(HW) 14,102 20,117 21,468

Electricity Generated (GWh) 51,988 79,231 88,333Electricity Sold (GMh) 41,061 60,246 66,608Electricity Generationper capita (kWh) 96.2 132.5 147.2

Electricity consumptionper capita (kWh) 76.0 100.3 111.0

Average Annual Loadl/ I

Factor (Z) 49.7 52.2 54.2

Portion of Sales (Z)

Agriculture & Irrigation 9.2 14.5 14.4Railway Traction 3.5 3.1 3.3Industry 69.1 62.4 62.5Commercial & Government 6.5 7.3 7.3Public Lighting 1.0 1.0 0.9Domestic 8.6 9.7 9.5Public water works,

drainage etc. 2.1 2.2 2.1

Average Annual Growth ofSales (Z) 9.9 14.5 10.5

Losses as 2 of units sent out 16.8 19.4 19.7

1/ Annual Load Factor Electricity generated (GWh) x 1,000Installed Capacity (HW) x 8,760 (h) x 100

INMA

CREDI 874-IN AID LOAN 1648-IN-_____________________________

R#UMA DLE PONJ PROJCT________________________________

Original Program for the EIpansLon of Generating Capclty durlngSlxth Plan Period 1979180-1983184

--------------------- _--------------------------------__-_------

1979180 1080/81 1981182 1982183 1983184 Total

ResglonType go. of Agzegate No. of AJ"preate go. of Aggregate go. of Aggregate No. of Aggregate No. of Aggregateof Plant Units Capacity UnLts Capacity Unlts Capaclty Unlts CaPaclty Units Capacp r Units Capaclty

(MM) (1W) (1W) (NW) (EN) (MW)Northern______________

Thermal 4 570 2 220 2 310 4 835* 3 600 15 2,535Hydro 9 S18 2 49 2 23 10 401 7 302 30 1,293Western______________

Thermal 4 720 4 800 7 1,400 5 1,300 4 1,400 24 5,620Hydra 4 180 5 212 6 142 -- -- -- -- 15 534

southern

Thermal 2 510 3 600 2 600 2 400 2 435- 11 2,435Hydra 3 145 10 692 13 1,180 13 764 9 259 48 3,060

Eastern______________

Thermal 3 510 4 710 2 600 2 400 3 600 14 2,820Hylro 2 2 -- -- 4 75 10 575 6 75 22 1,142

North Eastern______________

Thermal 1 60 1 60 -- -- -- -- -- -- 2 130Bydro -- -- -- -- 2 75 2 75 -- -- 4 1S0Total

Thermal 14 2,560 14 2,390 13 2,910 13 2,935 10 3,035 64 13,535Bydro 18 645 17 953 27 1,495 35 1,495 22 1,251 119 6,179-- _------------------------------

* Includes a 235 MW nuclear generating unltSource: Central Electicity Authorlty

N)

-22- AM Page 1 of 2

CREDIT 874-IN AND LOAN 1648-INRAHAGUNDAM THERMAL POWER PROJECT


Describtion of the Ramagundam Develonment

1. The RAmAgundam development is the third of a series of largethermal power stations, planned by the Government of India to feed into a400 kV interconnected transmission system and supply bulk power to theSEBs.

2. Ramagundam's 2,100 MW power station is located in the Karimnagardistrict of Andhra Pradesh, south of the Godavari river and in the vicinityof the south Godavari coal fields.

3. The plant consists of three 200 MW, in a first stage, and three500 NW, in a second stage, generating units with boiler plant, steam turbogenerator, auxiliary mechanical and electrical equipment and associatedtransmission system. The first stage of the development, comprising theproject, consisted of three 200 MW units.

4. The first stage boilers are of natural circulation, single reheat,radiant furnace, dry bottom, single drum, balanced draft, pulverized coalfired, front wall fired type. Each boiler has continuous evaporationrating of 670 tonnes/hr with a superheat steam outlet pressure of 157kg/cm2 and temperature of 5400C. The 200 1W steam turbines are twocylinders (high and intermediate pressure in a single cylinder) tandemcompound, single reheat condensing type operating at a steam pressure of150 kg/cm 2 and temperature of 537.50C. The alternators are hydrogen coolertype rated at 235 MVA and 18 kV.

5. The second stage boilers under installation are of controlledcirculation, single reheat, radiant furnace, dry bottom, single drum,balanced draft, pulverized coal fired, corner fired type. Each boiler hasa continuous evaporation rating of 1,725 tones/hr with a superheat steamoutlet pressure of 180 kg/cm2 and temperature of 5400C. The 500 KW steamturbines are three cylinders, tendem compound, single reheat, condensingtype operating at a steam pressure of 170 kg/cm2 and temperature of 5370C.The alternators are of hydrogen and water cooled type rated at 588 MVA and21 kV.

AWM8 3-23- Page 2 of 2

6. The salient features of the development are shown below:

wer Station

Capacity : 2,100 MW (three 200 MW + three 500 MW)Fuel : Coal from South Godavari Coal Field of

Singrani Coal CompanyAverage calorific value : 4,300 Kcals/KgAsh content : 35%Moisture content : 12%

Transport of Coal : Continuous unit train system with bottomditcharging wagons.

Ash Disposal : Ash is dumped as a slurry, through apipeline, to an ash dump are located some5 km from the power station.

Land : A total of 4,165.6 hectares was acquired.

XanLSuasLn : 400 kV AC L_nes

= Ramagundam-Hyderabad (single circuit),198 circuit km

- Hyderbad-Nagarjunasagar (single circuit),127 circuit km

- Nagarjunasagar-Cuddapah I (single circuit),282 circuit km

- Cuddapah-Bangalore (single circuit),230 circuit km

- Cuddapah-Redhills (Madras) (single circuit),232 circuit km

_ Ramagundam-Nagarjunasager (double circuit),514 circuit km*

- Nagarjunasagar-Cuddapah II (single circuit),282 circuit km*

- Bangalore-Salem (single circuit),175 circuit km*

- Nagarjunasagar-Munirabad (single circuit),400 circuit km*

* For expansion phase of three 500 MW

-24- ANNEX 4Page 1 of 2

INDIA

CREDIT 1648-IN AND LOAN 874-INRAMAGUNDAM THERMAL POWER PROJECT


Land Acquisition, Resettlement, Environment and Rehabilitation

Land Acquisition

1. The origin and use of land acquired can be sumarized as follows:

Land Acquired Hectares

Government Land 1,976.0Private Land 2,140.0

Total 4,116.0

Land Use

Main Plant 484.2Colonies 372.2Ponds 746.7Water Reservoir and Canal 1,927.8Railway 257.6Roads, Pipeline, etc. 20.1Various uses 307.4

4,116.0

Resettlement

2. The number of villages affected by land acquisition was 13requiring compensation andlor resettlement of 2,279 families. NTPCprovided employment to 249 oustees, around 400 were recruited bycontractors involved in project construction and seven shops were allotedto oustees in NTPC shopping complex. The situation can be summarized asfollows:

People EmployedType of Property Families Affected by NTPC

House lost 660 42House and land lost 415 20Land of less than one acre 844 78Land between one to five acres 332 84Land of more than five acres 28 26

Total 2,279 250

-25- ANNEX 4Page 2 of 2

3. Amongst the families displaced, 782 families have been resettledin four colonies including a total of 670 plots. Several facilities havebeen constructed in and around these colonies including 23 wells,electricity, roads, shops, three schools and recreation areas. Amongst theoustees employed by NTPC, 219 are working as either attendants or juniortechnicians, 27 as middle technical assistants and 3 at middle managementlevel.

Rehabilitation and Afforestation

4. The temporary ash pond already completely filled has beenrehabilitated with around 22,000 trees of different species which aregrowing successfully. This expenditure will serve as a basis for thefuture rehabilitation of the long term ash pond. In addition, more than200,000 trees have been planted in the various colonies, along the roadsand in other various areas. This program of plantation will be expanded inthe future.

Associated cost

5. The costs associated with the various expenditures make for landacquisition, resettlement, environment protection and rehabilitation are asfollows:

Items Cost (Rs)

Compensation for land acquisition 138,000,000Expenditures related with resettlement 5,870,000Rehabilitation 1,060,000

Total 144,930,000

-26-ANNE 5

INDIA Pe8 1 of 2

CREDIT 874-IN AND LOAN 1648-ZN

RAMAIUNDAM TERMAL POIER PROJECT


Table 1 - Etimated and Actual Project Cost by Component

Actual at PercntEstimated Actual of Estimated )

<-(Re 11illion)-)i

Preliminary and Civil Works 701.1 1611.4 215.8Electrical and Mbchanical 1981.3 8411.7 176.7Coal Handling and Transpo.rtion 321.8 214.9 86.8Trnanmission 1192.4 1547.0 129.7Engineering and Administration 248.4 321.8 129.4Miamlolneous Tool* and Plants - 52.6Trial *nd Pro-coinsioning - 11.8

Total 4895.0 7070.7 160.9

of which Foreign Cost 554.6 1351.9 /1Local Cot 840.4 5718.8 /2

/1 Direct foreign cost bsed on contract aount In foreign currencies./2 Including Re 80.5 mil l on In duties.

ANE 5-27-

Pa9 2 of 2

VNDIA

CREDIT 74-IN AND LOAN 1646-1N

RAAGNA THERMAL POIER PROJECT

PROJECT COMPLETION REP

Tabl- 2 - Actual Project Cot by Annual Exponditurs

Exchang.Fscal Year 1/ Power Station Transalesion Total Rat 2/ TotaI

(Ra/US0 (US$ Million)

1977/78 0.1 - 0.1 0.6 0.01978/79 50.0 - 60.0 0.0 5.01979/80 860.5 1.2 801.7 8.2 44.11980/81 846.2 19.8 805.5 6.1 45.11001/62 908.6 282.0 1141.8 9.0 120.819t2/88 1074.9 164.6 1089.5 0.0 187.71968/64 029.0 177.1 1006.7 10.8 97.71964/05 081.0 260.9 899.9 11.7 76.9100/6 114.2 479.6 598.7 12.2 46.71966,67 202.4 96.0 299.0 12.6 28.41957/96 57.7 88.4 91.1 18.0 7.01960/ 9 848.6 78.6 422.2 14.0 80.2

Total 5528.7 1547.0 7070.7 600.4

Appraisal Estimate 8202.6 1192.4 4895.0 511.0

X voriation 72.5 29.7 60.9 85.7

/1 Borrower *isoa year: April-March/2 Average rate during the year

INDIA

CRDfT 874-IN AND LOAN 1648-______________________________

RASUNDAN TRMAL POUR P0.T _______,_________________________

PIIJCS 00HPLLSION 23101

Procureent Review

Procurement Schedule (DlI)t0TY) Contrector Coutract Value (in millions)

Original FinalPackage nvitation Bd Contract Prouemt ------------------ ------------------

lRae to Bid Opening Award Si (3) Name Country Poraisa Loca (Rn) Povism Local (Rs) Scope VarIation

loller a Turbo-gaaerator-Sapply 23.12.78 02.05.79 26.02.80 14 Asaldo Italy WS 97.5 2 337 US$ 97.5 2.337-Nr.ctian 23.12.78 02.05.79 26.02.80 14 Awnaldo Italy USS 3.6 238.553 US$ 3.6 238.553-Spares 23.12.78 02.05.79 21.08.80 14 Asaldo Italy US$ 8.2 --- VS$ 8.2 --- Three Lote-Spares 12.06.87 Ansaldo Italy US0 2.6 --- U6S 2.6 --- Additional spores

;enerator tranformar 23.12.78 02.05.79 30.11.79 11 Compton Greaes India --- 24.530 --- 26.347 Spares6.6 kV Svltcbg8er 09.04.80 15.07.80 03.02.81 10 As" (India) India --- 42.623 --- 41.150( Deletion of 3 CTs39kV Switcgeoar 09.04.80 25.07.80 31.03.81 11 Analdo Italy US$ 1.0 0.571 VS$ 1.1 0.571 Naitonsae spaesLT Svitobear 01.09.80 01.12.80 19.12.81 15 NMh Indi --- 43.983 --- 51.161 Chnges La swltchgear odControl & Relay Pael 06.08.80 17.11.80 15.06.81 10 Englsh loec. India --- 14.244 --- 22.772 Additional equaDontUnit Station VSrformer 19.10.79 07.01.80 13.06.80 9 Eas,En g. India --- 13.9W3 .- 14.115 SparesLT Indoor Transformer 15.09.80 10.11.80 13.08.81 i1 Volta. India --- 2.974 --- 2.97433kV 2. Cables & Acc. 25.08.80 04.11.80 01.05.81 9 I taube" Japn nY 334.3 --- JY 334.3 ---o.6kV Power Cables 25.08.80 04.11.80 29.06.81 10 Vnlversal Cables India --- 19.337 --- 17.120 DeletLon of 9kaWater Sreatmnt Plant 20.04.79 18.07.79 24,02.81 10 or4pler India --- 29.028 --- 29.368Cbimey Elevator --- --- 16.06.81 Linde Ali-mrk weaden 1krr 0.6 --- SUkr 0.6 ---1100 Power & Control Cable 07.10.80 12.12.60 12.08.81 10 Finoles Cables India --- 29.315 --- 32.000 Addttion of 119 baData AcquIsltton Systm 20.02.80 17.06.80 18.0S.82 25 8CIL Iia --- 22.640 ._ 26.966 Additional carvdControl & Instrumentation 20.02.80 17.06.80 16.07.81 17 SiaMo_ India --- 66.944 --- 83.399 A&dtional controlCooling Water Plant 16.02.79 30.05.79 18.01.80 11 Plore Id ___ 13.029 --- 10.149 Deletion of two puaAir Compressot 15.03.80 26.06.80 23.08.81 17 sat. ag". Idia --- 11.640 -__ 11.640Coal snling Plant 07.03.79 13.06.79 26.03.80 12 Uecon SgM. India --- 151.663 --- 152.124Ash Bandlng Plant 15.11.80 29.02.81 04.08.81 10 Indue Pvt. Ltd. India --- 46.061 --- 50.510 AddItlonal beads pipesWaos 12.08.80 10.11.80 05.08.81 12 Ci Itda --- 18.646 --- 18.646Additional Wagonp --- --- 22.01.86 Cinao India --- 17.441 --- 17.441Locmotivee 12.08.80 13.11.80 12.10.81 14 Pec Intt --- 43.670 -.- 43.990Fuel OiL aNodling Plant 02.09.80 26.11.80 12.08.81 11 TSobeo-aloct. Sog. adLe --- 14.680 --- 14.320Sydra1lc Rerailing --- --- 03.02.82 BCtel Rothe Er"d, Oe mry 08 0.3 1- D 0.1 ---Hydroe Oxygen Plant 25.10.80 14.01.81 27.07.81 9 Ereba 4 Cie --- 6.659 --- 6.633Consutacy 08.10.79 YI UK L 0.1 --- , 0.1 ---Bu Post lamulator 21.07.81 Rosenthal Vechxlk Geany D3 0.5 --- am 0.3 ---400kV Switbet4r

-Package A 15.12.79 23.04.80 21.11.80 10 AUS Selafuke Ge Cy DM S.0 --- DM S.8 --- nccreas frc 16 to 21 break-Pacage a 15.12.79 23.04.80 20.11.80 10 Nivele TAustrit IadLe --- 14.860 --- 17.6 St additional isolator-Package C 15.12.79 23.04.80 25.02.81 14 W.S. Isulators India --- 14.090 --- 16.5 Increa d quantity-Package D 15.12.79 23.04.80 21.11.80 11 A41 Velefunken eCormny ON 1.8 --- 36 2.5 --- Inereasd fra 9 to 14 break-Package B 15.12.79 23.04.80 20.11.80 11 Hivelum Tadustrtes Iadie --- 9.260 --- 12.000 Addtinal lsolatore.-Package P 15.12.79 23.04.80 25.02.81 13 W4.. Inulators Inda --- 8.520 --- 10.120 Addtional quantity.

Increaed by 151Length Increased (201) Sdouble circait inta of 81single

ZUIAD

CMUI? 074-ZR AN ZOON 1648-IN----- - -- - --- --

R1CM 2WL PWER P________________________________

Procurement Rein.,

Proouremt Sabedule (DDOlIIY) Contractor Coatract Value (in miUion)

Orignai YicalP _akae lnvtation Bid Contract Procement ------------------ -----------------

e to Bid Openia AM" tIns (N0) Sam COnR7 PoroLan Loal (Rs) Person Laoc" (Rs) Scope Vaition

tower-Rseunda - 8ydatabad 16.07.79 18.10.79 20.03.80 5 Best & Crnto tAiL --_ 28.81 __ 3.736-Dyderabed - NKSr 21.12.79 26.03.80 08.10.80 11 8a Indisa Ltd. ndia --- 18.492 --- 41.400-U.sgar-Ca 5apab-I 21.12.79 26.03.80 --- --- t_mni E,4s. lad" --- 41.135 --- 68.087

ACSR Noose Conductor 15.01.80 03.05.80 15.12.80 11 tndasa Spain US$ 8.7 --- tS$ 8.7 ---ACSR Noos Conductor 15.01.80 03.05.80 13.12.80 11 Alud I --- 30.400 --- 30.400

CSER oos. Conductor 15.01.80 03.05.80 15.12.80 11 Indian AIm. Cables India --- 30.303 --- 30.303ACS Moose Conductor 15.08.82 10.11.82 29.06.83 10 Alund India --- 38.250 --- 41.S60 Addlttoinl qusnttty

uspension * Tenson 02.01.80 05.04.80 16.10.80 10 0 Insulators Japan JY 431.4 --- JY 520.7 --- S3S330 additia. Insulatorsdisc insulator

advare fitting for 15.01.80 03.05.80 31.10.80 9 Elect. ManuflCtunia India --- 2.544 --- 2.544te"son insulators

Single & double 15.02.80 15.05.80 31.10.80 9 Tag Corporation India --- 4.164 --- 4.164suspension Inulator

Rrtthu4re 15.01.S0 03.05.80 23.12.80 11 BEdustsn Vlres Ltd India --- 5.166 -- 5.166Accessories fot *arthvire

and conductors-I 05.02.80 15.05.80 26.11.80 t0 Mc India --- 2.766 --- 2.882 Incesed Ia quantiy-II 05.02.80 15.05.80 23.01.81 12 me0 India --- 3.561 --- 8.777 Increed La quantity

Shunt reactor 15.06.81 16.09.81 15.04.S2 10 EL India --- 20.488 20.48-Suspenlon Insulator 15.02.82 12.05.82 04.02.83 12 IEL India --- 6.630 --- 7.205 7.090 additional insuiltorsDilc Insulator 15.02.82 12.05.82 10.02.63 12 W.S. nsulators In,-I --- 11.407 --- 1S.670 2S3806 add4itiol insulatorsDouble tnsion isulators --- --- 31.01.83 Idia --- 6.S00 --- 7.600 577 addittonal flttinFittings for insulator 02.01.82 05.12.82 07.02.83 13 TAG Ind1a --- 4.610 --- 5.069 Pitting increasd by 540Lightening arrestors 18.06.83 W.S. nsulators India --- 0.510 --- 0.510Bus post Inasultors 14.12.82 301 Insulators Indad JY 311.3 --- 3? 365.0 --- 255 additional Insulators2151 6.6 kV motor 15.01.87 NME Ltd. India --- 0.325 --- 0.300Spaces for *ir compressor 12.11.66 Ingersoll Rand India --- 0.451 -_ 0.50D

to'

-30- AhNEX-7

CREDIS 874-IN AND LOAN 1648-INRANANDAM IHERM OWER PROJECT


Estimated and Actual Schedules of Cumulatiye DisburseMnt(US $ million)

Actual as a percentSAR Estimat Actual estimate (a)

FY80 28.0 20.0 71.4

FY81 70.0 28.8 41.1

FY82 164.0 84.4 51.5

FY83 224.0 152.4 68.0

FY84 239.0 186.5 78.0

FY85 246.0 207.5 84.3

FY86 250.0 216.2 86.5

FY87 -- 243.7 97.5

FY88 -- 250.0 100.0

S e at..._n oD..ed..i...t

Source: SAR and Statements of Development Credits and L-oans

_31- ANNEX 8

INDIACREDIT 874-IN AND LOAN 1648-IN

RAMAGUNDAM THERMAL POIWER PROJECT


Highlights of the Commissiong and Operating Performance ofthe three 200 MW Ramagundam units

No. Particulars of Achievement Unit-I Unit-II Unit-III

1. Date of Synchronization 26.11.83 29.05.84 13.12.84

2. (i) Date of Commercial Operation 1.03.84 1.11.84 1.05.85

(ii) Durationl/ (days) 96 155 138

3. (i) Date of Unit AttainingFull Load (MW) 21.02.84 2.09.84 10.05.85

(ii) Duration 11 (days) 88 96 148

4. (i) Date of full Load EnergyOutput 24.02.84 9.11.84 31.05.85

(ii) Duration 1/ (days) 90 164 169

5. Highest Plant Load Factor (PLF) 101.84 100.89 100.77(2) (Jan. 86) (Jan. 86) (March. 86)

6. Average PLF (Till 12/87) 68.68 63.51 71.10

7. Average Auxiliary Consumption(2) (Till 12/87) 10.83 10.77 10.19

1/ Duration refers to the period from the date of synchronization toachievement of commercial, full load or full generation.

INDIA

CREDIT 874-IN AND LOAN 1648-IN______________________________

RAMAGUNDAM THERMAL POWER PROJECT

Income Statement /1--------------- ~ (Re. Million)

FY88 FY84 FY8S FY88 FY87 FY80

DESCRIPTION -- ---- - - -- --- - -- - -- - -- --- - --- - ---------------------------- - --------

Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecaet Actual

Sales of Energy (034) 106 947 8888 881S 6741 8816 16750 12889 2864t 14408 29892 17538

Average Revenuo:Bulk supply (P/kWh) 26.90 25.90 25.90 26.90 25.90 26.90

Fuel surchargp (P/kwh) 0.26 0.88 0.59 0.85 1.18 1.48

Central Excise (P/kWh) 2.06 2.06 2.06 2.0S 2.05 2.05

Total Averge Revenue (Pal*/kWh) 28 86 /2 28 86 /2 29 89 /2 29 40 /2 29 44 /2 29 48 /2

OPERATDNG REVENUE

Sale*:Sulk supply 276 88a 1006 1889 2264 8225 4079 5118 6126 6291 7690 8877

Fuel Surcharge 8 1S 51 188 268 438

Central Excie 22 17 80 69 179 111 828 111 485 87 609 9a

Other Incom /8 - 47 - 48 - 102 - 68 - 75 - 162

Total Operating Revenue 8oo 89s 1100 1506 2495 8488 4586 5294 6878 6468 8782 8622

OPERATING EXPENSES GENERATION

w

eneration:Fuel - Singroull 58 146 186 a86 247 707 889 681 529 1016 628 6lei

- Korba 8 51 129 122 81s 245 $84 a86 489 538 480

-Ramgundam - 84 12 122 229 272 688 479 782 709 739

- Farraka - 6 50 - 120 - 225 128 286 a8a

Sub-Total Fuel S8 146 227 06 641 1262 1026 1952 1621 2860 2158 816S

0CA - Singrouli s6 100 141 206 248 24a

- Korba 18 76 120 195 265 801

- Ramagundam - 46 97 164 228 274

- Farraka - 11 72 120 177 177

_-Other - -

Sub-TotalOi 69 114 282 177 480 404 684 488 903 618 V96 807

D precitieon:Singrauli 48 9S 150 287 299 _99

Korb - 68 124 222 296 872

Rasagundm - - 96 129 22? 802

Farraka - - 67 124 218 218

Others - - _ _ _

Sub-Total Depreciatlon 48 2 158 88 427 2865 712 877 1040 448 1191 579

Total Operating Expenses-G4neratlon 170 2s1 617 751 1880 1921 2422 2811 86s4 8424 4889 4850

Transaisalon: 0UV /4 7 19 81 85 88 s8

Deprectotion /4 28 62 160 170 196 199

Total Expenses-Transmission /4 88 71 191 205 284 287

Other Expnue - 9 - 14 - 10 - 21 6 11 6 68

/1 Borroer's Fiscal Year./2 Aetual Average total tariffs to consumre.r/8 Includes consulting or other Income./4 In actualt, includod in the total, expenses and deprciation.

, 4

INDIA

CREDIT 674-IN AND LOAN 1640-IN-- -- -- -- -- -- -- -- -- - - - -- - -

RAMAOUNDAM THERMAL POWER PROJECT

Incoe Statement /1

(Re. Million)

FY63 FY84 FY8s FYss FY87 FYssDESCRIPTION ----------Foroceat Actual Forocaet Actual Forecent Actual Forecast Actual Forecast Actual Forecn t Actual

Electricity Duty 22 16 so 69 179 112 823 1l 485 67 609 9aTotal Oporating Expenes 22C 287 767 684 1788 2042 2951 2948 4268 8522 6165 4712Operating Income (before intereat) 76 109 38 8t71 727 1896 16S6 2850 2595 29SI 8547 8910Lose:Int.rest Chargeable to Revenue 155 6S 494 221 945 492 1s5l t7O 1868 B66 2022 1240Lae:Wrtet-off Deferred Expense 0 - 0 - 0 - 0 - 6 - 6 -Add: PriorP.rlodIncoe 0 0 0 - 0 0 0 - 0 - 0 -Not Inccm -79 44 -161 450 -216 904 4 1761 706 2066 1520 2262Averge Not Fixed Aseote tn Use 4298 1904 12679 6997 28806 10957 84129 14016 41385 17209 43956 28856Operating Ratio (U) 75 72 7O 56 71 59 65 s6 62 C5 59 5SRat ofR turn (3) 2 6 a 11 a 13 5 17 6 17 8 to___ - ____ _ - - - - - -

- -_ _ _ _____- _ __-___-_ _ ____- __ _________-__ ________ _- -__

INDIA

RAMAUNOAM THEML POSER PROJECT

CREOIT 874-IN AND LOAN 164-IN

PROJECT COMPLETIN RPORT

Solaonce Sheet

_________________ __ ______________(Re. Million)

FY88 FY84 FY85 FY96 FY87 FY8NDEMSPTION - _ - _

Forecast Actual Forecas Actual Forecast Actuel Forecst Actual Forocast Acta I Forocat Actual

Assets

Ft %ed Assets 6708 80 19085 9197 29778 188 41169 6047 44817 20689 48926 80508Lees DOspreetion 87 6 297 171 884 476 1766 908 8002 1416 4892 20"Not Fixed Assets in Service a621 USS 18788 9027 28894 12887 89408 16144 48895 19278 44584 28439Work In Progres 24506 12758 20684 18767 15408 16666 6784 81069 2858 44802 0 62167TOTAL FIXED ASSETS 81127 15726 89622 22794 44S02 8248 46187 44218 46578 68575 44584 8O626Current Assets

Cash (including book balonce) I 18 9 178 12 84 12 448 1S 134 14 6978Short Tre Deposts 0 77 0 108 0 896 0 687 0 1068 1169 787Receivable 25 219 92 842 206 1626 878 2284 578 2828 728 4068Inventories 87 155 190 424 80O 704 400 940 460 1822 490 174Lons and Advance 0 26 0 22 0 826 0 1972 0 8642 0 788Other Cvrrent Asoet/Debtors 12 8 12 8 14 17 18 18 7 148 4 178Totsl Current Assets 111 740 808 1762 684 8161 808 6298 1058 9127 2405 18469

Milc Capital Expenditure 0 26 0 22 0 19 0 19 0 16 0 17

TOTAL ASSETS 81287 16491 89925 24596 44886 85718 46940 626 46806 72718 46989 94112

EQUITY AND LIABIUtITES

EquityShare Capital Isued 16787 11800 20418 16608 28154 20682 26851 2685 256018 82861 25618 87658Share Dposit 0 446 0 846 0 286 0 90O 0 784 0 2806Retained Earnings -107 50 -208 500 -486 1402 -482 8281 224 5468 1744 6511

TOTAL E4IITY 15679 11855 20145 165O 22680 22269 24969 0o906 25842 89047 27862 48974

Liabilities

Loans 1550 819S 19750 5948 22107 10884 21984 17729 20812 27894 19898 87124Current LiabI1tle 8 1442 8o 2142 61 8081 107 891 162 6778 184 9014TOTAL DEIT 158 466 19780 8090 22168 18445 22071 21620 20964 8U71 177 45188

TOTAL EITY A LILTIS 812S7 16491 89925 24696 44886 85718 46940 526 46806 72718 46989 94112

Debt =___s____ _ A_____E 21 so_4_ 47_ 4_____________ 1 ! o

INDIA

RANACUNDAM THNWAL POWER PROJECT

CREDIT 8t4-IN AND LOAN 1048-IN


Sources and Applicatton of Funds

(Re. MlIIon)

FY88 FY64 FYN6 FY86 FY87 FY66DESCRIPTION-------------------Forecat Actu I Forecast Actual Forecast Actual Forecast Actual Forecast Actual For cat Actual

SOURCES OF FUNDS

Operating Income before interest 76 109 888 671 727 1890 1686 2860 2596.0 2981 8547 8910Prior Period Inco_ (Net) 0 2 0 10 0 -26 0 s0 0 68 0 802Dopreclition 69 2 210 60 687 265 682 877 1286 446 1390 579Total Internal Cash Generation 145 118 548 749 1814 1682 2407 2777 8881 8482 4987 4851

Borrowing 54C0 2114 4200 2768 2600 4416 550 7865 0 10166 0 9280Equity Contributions 4686 8969 4626 4208 2u41 4869 2197 6808 267 6909 0 6679Capital Raceipt 0 0 0 2 0 26 0 0 0 118 0 24TOTAL SOURCES 10280 6168 9869 7706 "665 10988 5214 10950 4096 19620 4987 20984

APPLICATION OF FUNDS

Capital Expenditure (incl. IDC) 10007 6179 6706 7188 5267 10011 2717 14048 652 17606 171 17680Doebt Service

Interest Charged to Operations 155 G6 494 221 946 492 1561 570 1668 666 2022 1248Awtization ofLonne 0 - 0 - 248 - 698 - 1162 - 1419 -Total Debt Service 155 a6 494 221 1186 492 2274 570 8036 686 8441 1248

Increase (Decrease) in Working Capital 68 -58 170 848 200 480 228 2882 211 947 1825 2108Provision for Tax 0 0 11 0 0 1 0 1 0TOTAL APPLICATION OF FUNDS 10280 6168 9869 7706 s665 1098 5214 16960 4098 19620 4987 20664

Debt Service Covera 0.98 1.78 1.10 8.89 1.11 8.82 1.06 4.67 1.26 8.69 1.48 8.69

* Depreclation pertains to operations.

Ii

ANNEX 12

-36-

ZDZDA

CRDIT 874-IN AND LOAN 1648-II________________________________

RWUNDA THSRMAL POWER PROJECT________________________________

PROJECT COWF.TtION REPORT

Ex-Post Internal Economic Rate of Return

(Rs. Million)*

Year Capital Cost 0 & N Fuel Total Cost Total Revenue Net Benefit

0 1978-79 40 -- ^- 40 -- -40

1 1979-80 289 -- -- 289 -- -289

2 1980-81 292 -- -- 292 -- -292

3 1981-82 914 -- -- 914 -- -914

4 1982-83 1481 -- -- 1481 -- -1481

5 1983-84 1454 3 13 1470 35 -1435

6 1984-85 1486 47 222 1755 602 -1153

7 1985-86 1497 96 457 2050 1240 -810

8 1986-87 1915 99 470 2484 1276 -1208

9 1987-88 1839 99 470 2408 1276 -1132

10 1988-89 1807 168 796 2771 2161 -610

11 1989-90 1615 244 1155 3014 3136 122

12 1990-91 458 326 1547 2331 419 186

13 1991-92 233 347 1644 2224 4465 2241

14 1992-93 -- 347 1644 1991 4465 2474

to

34 2012-13

*jn constant Fourth Quarter 1987 RLepes

E3RR 12.5S

-37-

ATTACHMENT I

COMMENTS FROM THE BORROWER

FOR: SHRI P.V. BHIDE, ADVISER TO ED (BANK) THE WORLD BANKWASHINGTON, D.C.

FROM: SHRI G. HALDEA, DIRECTOR (FB), ECOFAIRS, NEW DELHI

PLEASE PASS ON THE FOLLOWING MESSAGE TO MR. ALEXANDER NOWICKI, CHIEF,PUBLIC UTILITIES DIVISION, OPERATIONS EVALUATION DEPARTMENT. OUR PARA-WISECOMMENTS ON THE DRAFT PCR ON RAMAGUNDAM THERMAL POWER PROJECT (CREDIT 874-IN/LOAN 1648-IN) ARE AS FOLLOWS:

PARAS 1.03 AND 1.04: IT IS NOT CORRECT TO SAY THAT CEA HAS BEEN INEFFECTIVE INTHE DEVELOPMENT OF THE POWER SECTOR IN INDIA. IN FACT THE CEA HAS CONTRIBUTEDPOSITIVELY TO ALL ASPECTS OF POWER SECTOR DEVELOPMENT. THIS MAY KINDLY BEINCORPORATED AFTER DELETING THE ORIGINAL FORMUIATION.

PARA 3.07: ALL EFFORTS HAVE BEEN MADE BY NTPC TO PROVIDE CIVIL AMENITIES TOOUSTEES IN THE RELOCATION COLONIES, INCLUDING MEDICAL FACILITIES, PERIODIC VISITSBY MEDICAL OFFICERS, FREE FAMILY PLANNING SERVICES AND PREVENTIVE CHECK-UPS.MORE THAN 34X OF THE OUSTEES HAVE BEEN PROVIDED WITH EMPLOYMENT OPPORTUNITIESGIVEN THE OUSTEES LOW LEVEL OF SKILLS, IT HAS BEEN DIFFICULT TO ABSORB THEM INSKILLED OCCUPATIONS. THE ABOVE DETAILS MAY KINDLY BE INCORPORATED IN THE PCR.

PARA 3. 11: AVERAGE PROCUREMENT TIME FOR THE PROJECT WAS 3.6 MONTHS FROMINVITATION TO BID OPENING AND 7-9 MONTHS FROM BID OPENING TO ORDERING. THIS HASSHOWN A DECLINING TREND IN THE SUBSEQUENT PROJECTS. FOR FARAKKA II, 53 OUT OF60 PACKAGES TOOK LESS THAN 2 MONTHS FROM BID INVITATION TO OPENING. 39 OF THESEPACKAGES WERE FINALLY AWARDED IN LESS THAN 8 MONTHS. NTPC IS IN THE PROCESS OFFINALIZING A STANDARD BIDDING DOCUMENT WHICH IS EXPECTED TO CUT DOWN THE TIMELAG.

PARA 5.02: SERIOUS EFFORTS HAVE BEEN MADE OVER THE PAST FEW YEARS TO REDUCE THEOUTSTANDING DUES LEADING TO A REDUCTION IN THE LEVEL OF RECEIVABLES FROM 7.5MONTHS IN 1982-83 TO 3.3 MONTHS IN 1988-89. AN ACTION PLAN OF POWER SALESSETTING OUT A DETAILED TIMETABLE FOR THE PHASED .thDUCTION OF THE ARREARS HAS BEENPREPARED AND SENT TO THE BANK.

IN ADDITION, THE FOLLOWING MODIFICATIONS MAY ALSO KINDLY BE MADE IN THE PCR BASEDON LATEST AVAILABLE DATA.

(1) CHAPTER ON "HIGHLIGHTS": THE TOTAL COST OF THE PROJECT SHOULD READ ASUS$693.4 MILLION INSTEAD OF US$705.6 MILLION AND THE FIGURE 38.1X REPLACED BY35.7X.

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(II) PARA 3.7: THE FIGURE 249 LAND OUSTEES EMPLOYED BY THE NTPC BE NODIFIEDTO 250.

(III) PARA 3.08: THE AMOUNT PAID FOR LAND COMPENSATION, RESETTLEMENT ANDREHABILITATION TO BE MODIFIED TO RS.144.93 MILLION INSTEAD OF RS.142.9 MILLION.

(IV) PARA 5.04: THE SENTENCE "OI FUNDED ABOUT 60X BALANCE AS LOANS" BEMODIFIED AS "GOI PUNDED ABOUT 60X (INCLUDING ASSISTANCE FROM THE WORLD BANK ANDOTHER BILATERAL FINANCING THROUGH WI) OF NTPC"S TOTAL REQUIREMENTS BALANCE ASLOANS."

(V) PARA 5.04: THE AMOUNT OF MONEY RAISED THROUGH POWER BONDS MAY BE MODIFIEDTO RS.16.83 BILLION (US$1,122 MILLION AT CURRENT EXCHANGE RATE) THROUGH THREEPUBLIC ISSUES AND THREE PRIVATE PLACEMENTS.

(VI) ANNEX 1: ANNEX 1 BE REPLACED BY ANNEX 1 ENCLOSED HEREWITH ALONG WITHMODIFICATIONS.

(VII) ANNEX 4: (PARA 2 UNDER "RESETTLEMENT") NO. OF PEOPLE EMPLOYED IN THECATEGORY "LAND BETWEEN ONE TO FIVE ACRES" BE READ AS "84" INSTEAD OF "83" ANDTHE TOTAL AS "250" INSTEAD OF "240." THE AMOUNT PAID AS COMPENSATION FOR LANDACQUISITION BE MODIFIED TO RS.138 MILLION FROM RS.136 MILLION AND THE TOTALAMOUNT TO RS.144.93 MILLION FROM RS.142.93 MILL-ON.

(VIII) ANNEX 5: THE TOTAL ACTUAL PROJECT COSib AT PERCENTAGE OF THE ESTIMATEDCOST BE CHANGED TO "160.9" INSTEAD OF "718.2."

(IX) ANNEX 8 (SL NO. 6): AVERAGE PLF (TILL 12/87) FOR UNIT-I BE READ AS "68.68"INSTEAD OF "66.68."

(X) ANNEXES 9. 10 AND 11: THE FIGURES UNDER ACTUALS IN THESE STATEMENTS BEREVISED AS PER THE ENCLOSED ANNEXES II, III AND IV RESPECTIVELY. THESE REVISEDANNEXES HAVE ALREADY BEEN GIVEN TO THE WORLD BANK DURING THE VISIT OF THESUPERVISION MISSION IN FY 1989.

N.T.B.T.F.No.6/19/79-FB IVDt.18/10/89

(SANJAY MITRA)UNDER SECRETARY (FB)

Documents

The World Bankl · SUIJECT: Project Completion Report on India Ramagundam Thermal Power Project (Credit 874-IN and Loan 1648-IN) Attached, for information, is a copy of a report entitled