Report No. 733a-JO

Appraisal of the FILE COPYSecond Hussein Thermal Power ProjectJordanMay 23, 1975

Projects DepartmentEurope, Middle East, and North Africa Regional Office

Not for Public Use

Document of the International Bank for Reconstruction and DevelopmentInternational Development Association

This report was prepared for official use only by the Bank Group. It may notbe published, quoted or cited without Bank Group authorization. The Bank Group doesnot accept responsibility for the accuracy or completeness of the report.

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CURRENCY EQUIVALENTS

Currency unit = Jordan DinarsFil 1 = JD 0.001JD 0.32 = US$1.00JD 1.00 - US$3.10JD 1,000,000 = US$3,100,000

Financial year - Calendar Year

WEIGHTS AND MEASURES

1 meter (m) = 3.281 feet (ft)1 kilometer 2 0.621 mile1 hectare (ha; 10,000 T2) = 2.471 acres (ac)1 square kilometer (km ) = 0.386 square miles (mi2)1 cubic meter (m3 ) = 35.315 cubic feet (ft)1 kilogram (kg) = 2.205 pounds (lb)1 ton (1,000 kg) = 1.102 short ton (sh ton)

0.984 long ton (lg ton)1 barrel (bbl; 0.159 m3) = 42 US gallons (gal)1 kilowatt (kW) = 1,000 Watts (W)1 Megawatt (MW) = 1,000 kW1 Gigawatt (GW) = 1,000,000 kW = 1,000 MW (=106 kW)1 kilowatt hour (kWh) = 1,000 Watthours (Wh)1 Gigawatt hour (GWh) = 1,000,000 kWh = 1,000 MWh (=1O ukWh)1 kilovolt (kV) = 1,000 Volts (V)1 kilovolt ampere = 1,000 volt amperes,(1 kVA)1 Gigavolt ampere = 1,000,000 kVA (=10 kVA)1 kg force /cm? (technical 14.224 pounds per squareatmosphere inch (lb/in2)

I kilocalorie (kcal) 3.969 British thermal units(Btu; 1 Btu = 0.293x10-3kWh)

1 Hertz (Hz) 1 cycle/secondper annum /a

GLOSSARY OF ABBREVIATIONS

JEA - Jordan Electricity AuthorityIDECO - Irbid District Electricity CompanyJEPCO - Jordanian Electric Power CompanyUK - United KingdomNEEB - North Eastern Electricity Board of UKODA - Overseas Development Association of UK

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Table of Contents

Page No.

SUMKARY AND CONCLUSIONS ........................... . i-ii

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

II. THE POWER AND ENERGY SECTOR ........................ 2

A. Power and Energy Resources .................... 2B. The Sector ....... .. * .... ; .. 2

General .......... ..-.. ... ..... *. *.* , * * * *..... ... 2

Organization . .3......................... 3Facilities ...... ............ 0......................... 4

Jordanian Electric Power Company ........ .... 4Irbid District Electricity Company .... ...... 5Statistical Data of JEPCO and IDECO ...... .... 5Tariffs . . .... * ....... .... 6

C. The Development Program....................... 6

III. THE PROJECT ........................................... 8

A. Objectives ...................... ......... . 8

B. Description ................. ........... * . . . 8

C. Status of Engineering ...................... 9

D. Cost Estimate ........ ... . ........ ........... 9E. Financing ....... ...... ............. .... . .... . 10

F. Implementation ............... 6.... , ... ... 10

G. Procurement ................ ............................. 10

GH. Disbursements .... ..... #a* ... .. . 10

I. Environmental Impact .... ....................... 11

This report was prepared by Messrs. W. F. Kuipper (Engineer) and C. P.Ranganathan (Engineer/Financial Analyst) from information obtained on an

appraisal mission to Jordan in November/December 1974, where they wereassisted by Mr. A. J. D. Hutchins (Financial Consultant).

TABLE OF CONTENTS (Continued) Page No.

IV. THE PROJECT ENTITY . .................. . .. . . . . .. . . . . . 11

A. Background ........................................ 11B. Organization and Management ................... 12

Organization ..... ............................... 12Staffing ............... ..... .............. 12Training . ..................................... 12

C. Operations .................................. 13

Forecasts .*.....*.*****. *** *** *** * ** ** ** ** ** ** 13

V. FINANCE .............. ... ... **. .**************................... 14

A. Past Performance and Present Position ......... 14B. Tariffs ........ .. *..O. .............. . .... 15C. Future Operating Results ...................... 15

Rate Covenant ..*...*..**.**..*................ ... .......-...... . 16JEA's Financing Plan ...... . . . . . . . . ........ ....... . 16Financial Position Forecast ................... 18

D. Accounts and Audit * ............................ 18

Accoudting ....... 18Auditing ............. ,.... ..... 19

E. Insurance ......,,1

VI. BENEFITS AND JUSTIFICATION . ............... 19

A. Forecast of Sales and Demand .................. 19B. Comparison of Alternatives .................... 20C. Economic Return on Project ....... . ............. 21

VII. AGREEMENTS REACHED ............ ..................... 21

List of Annexes

1. Jordan: Existing Generating Plant, 19742. The Histories of JEPCO and IDECO, and Development Program for

Jordan Valley3. JEPCO: Historic and Forecast Number of Consumers; Generation4. JEPCO: Historic and Forecast Sales (GWh) per Consumer Category5. IDECO: Historic and Forecast Number of Consumers; GWh Generated,

purchased and Sold: Capacities and Maximum Demand6. IDECO: Historic and Forecast Sales (GWh) per Consumer Category7. JEPCO: Plant Availability8. Electric Power Rates and Tariff Studies9. Development Program Costs10. Outline of Terms of Reference for Southern Jordan Power Supply

Development11. Description of the Project12. Project Cost Estimate13. Estimated Schedule of Disbursements14. Balances of Energies and Capacities15. JEA and JEPCO Forecasts for Sales, Losses, Generation16. Justification of the Proposed Project17. Major Assumptions for Financial Forecasts18. Development Program Costs Including Price Escalation19. JEA: Income Statements 1971-198020. JEA: Balance Sheets 1971-198021. JEA: Sources and Applications of Funds 1973-198022. JEA: Debt Statements 1974-198023. JEA: Investments Statements 1974-198024. JEPCO's Financial Situation25. Summary of Significant Financial Data Resulting from Case A and B,

and Financial Statements for Case B

MAP - IBRD 10290R1

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

SUMMARY AND CONCLUSIONS

i. This report covers the appraisal of the second stage of the HusseinThermal Power Project of the Jordan Electricity Authority (JEA), the Govern-ment entity established in 1967 to provide for coordinated development of thepower sector. JEA has requested assistance from the Association for financingpart of the foreign cost of the project, and is continuing its efforts to ob-tain co-financing for the Project. The Government would provide any remainingfunds required.

ii. The first stage of the Hussein Thermal Power Station was jointlyfinanced by the Association (US$10.2 million under Credit 386-JO) and theKuwait Fund (US$10.2 million): The Power Station with two 33-MW steam elec-tric units and one 12-MW gas turbine unit under construction is located atZarqa about 42 km northeast of Amman, the capital of Jordan.

iii. The Project comprises addition of a third 33-MW steam electric unit,reconditioning of the diesel-electric power'station at Marqa presently ownedand operated by the Jordanian Electric Power Company (JEPCO), a licensee for.electricity distribution in Amman area and JEA's future principal consumer,and the Southern Jordan Power Development Study. The Project is estimated tocost JD 7.1 million (US$22 million equivalent), with a foreign exchange com-ponent of JD 5.6 million (US$17.3 million). The Association is proposing tofinance about 29% of the foreign component (US$5 million), suppliers creditswould finance the reconditioning of the Marqa station, a possible co-finan-cier and the Government would finance the balance. The creditwould be made to the Jordanian Government and relent to JEA on conventionalterms commensurate with Bank (8-1/2%) practices. It has been assumed thatthe balance of the foreign cost will be made available to JEA at similar termsthrough co-financing and/or Government financing, except funds for consultingand engineering services, which will be made available as a grant. The localcost of the project and related works would be covered by a mix of funds fromthe Government in the form of equity participation and from JEA's internalcash generation. Retroactive financing of about US$100,000 is proposed forforeign exchange required before Credit signing for engineering and consul-tant services.

iv. Contracts to be financed from the proposed Credit (except for con-sulting services) would be awarded on the basis of international competitivebidding, consistent with Bank Group Guidelines for Procurement.

v. The Project forms part (11%) of JEA's large (US$192 million) 1974-80development program which includes: (a) completion of Hussein Thermal StationStage I and the 132-kV facilities around Amman (1976/77); (b) the Project(Hussein II) and some reinforcement of the 132-kV facilities in the Amman area

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(1977/78); (c) a fourth unit (66-14W) and 24-MW in gas turbine capacity togetherwith 200 km of 132-kV lines linking Irbid to Amman and El Hasa in the southto the northern grid (1978/79); and (d) an additional 66-MW unit and furthertransmission expansion (1980/81).

vi. The electricity sector of Jordan is _divided between two major re-gional concessions (JEPCO, and Irbid District Electricity Company - IDECO)and many small local entities. Service is unreliable. An important objec-tive of the earlier Credit was to achieve an economical and reliable serviceby encouraging the Government to organize JEA as a truly autonomous Govern-ment entity responsible for all major generation and overall planning. Ithas doubled its staff in one year. Its organization is being designed by aManagement Consultant from the U.K. By 1976 JEA would be competently equippedto lead the power sector in the country. Initially, JEA will supply power inbulk mainly to JEPCO. An extension of the bulk supply to IDECO would be madeby 1979.

vii. As required under Credit 386-JO, a tariff study covering the mainsupply areas and financed by the UK was substantially completed in 1974. Thestudy will be updated before the end of 1975 and a revised tariff structurewill replace the existing tariffs by April 1976.

viit. JEA's reassessment of the power requirements indicates that theannual increase in JEPCO's sales would be 17.8% and the overall forecastgrowth, including JEA's direct supply to large consumers, for JEA and JEPCOwould average about 23%.

ix. Power development in Jordan has been on the basis of diesel gen-eration since the country has no significant sources of hydropower or otherenergy sources that can be developed readily. The only feasible alternativeto continued diesel development is therefore steam-electric capacity. Forthis reason, the Hussein Stage I, an all-steam development, was compared withcontinued diesel development up to 100 MW in new capacity followed by steam.It was shown that at the highest assumed growth rate, an all-steam developmentwould be the least cost up to a discount rate of about 15%. Under the presentassumptions for growth and early 1973 prices, the equalizing discount ratewould be about 17%. Sensitivity analysis with capital costs doubled indicatesthat the equalizing discount rate would be about 13%, which is considered tobe above the opportunity cost of capital (10-12%) in Jordan.

x. On the basis of the agreements reached as set forth in Section VII,the proposed project would constitute a suitable basis for an IDA Credit ofUS$5 million equivalent to be relent to JEA by the Government at 8-1/2% in-terest and repayed over a period of 25 years, including a grace period of3-1/2 years.

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

I. INTRODUCTION

1.01 The Government of the Hashemite Kingdom of Jordan, on behalf of theJordan Electricity Authority (JEA), has requested the International Develop-ment Association (IDA) to assist in financing a Project comprising the second33-MW stage of the Hussein Thermal Power Project (Hussein II), reconditioningof the Marqa diesel generating station (owned and operated by the JordanianElectric Power Company - JEPCO, of Amman), and a power development study forsouthern Jordan. The Project is estimated to cost JD 7.1 million (US$22 mil-lion), with a foreign exchange component of JD 5.6 million (US$17.3 million),of which the Association would finance US$5 million (about 29% of the foreigncomponent). The balance of the foreign component would be financed by sup-pliers credits (Marqa reconditioning), a Government grant (consulting andengineering services), and by the Government if JEA does not succeed infinding a co-financier for the Project. The local currency content wouldbe financed by internal cash generation and Government resources.

1.02 The first power project, which was financed jointly (50/50) by IDACredit 386-JO (1973) and the Kuwait Fund, comprises two 33-MW steam electricunits and one 12-MW gas turbine generator unit at the new Hussein ThermalStation at Zarqa (near Amman). Although there were some initial delays, theproject is now progressing satisfactorily; the gas turbine is in operationand the steam unit is expected to be commissioned by mid-1976, nearly onschedule. Until the Hussein station is completed, supply conditions willremain difficult and unreliable.

1.03 JEA's 1974-80 program includes (a) completion of Hussein I and the132-kV facilities around Amman (1976/77); (b) the Project and some reinforce-ment of the 132-kV facilities in the Amman area (1977/78); (c) the fourthunit (66 MW) at the Hussein station and 24 MW in gas turbine capacity, to-gether with 220 km of 132-kV lines linking Irbid to Amman, and El Hasa inthe south to the northern grid (1978/79); and (d) a fifth unit (66-MW) andfurther transmission expansion (1980/81).

1.04 The Project has been prepared following a feasibility study byJEA's consultants, the Kuljian Corporation of USA, and an appraisal missionin November/December 1974 by Messrs. W.F. Kupper (Engineer), C.P. Ranganathan(Engineer/Financial Analyst), and A.J.D. Hutchins (Financial Ccnsultant).

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-II. THE POWER AND ENERGY SECTOR

A. Power and Energy Resources

2.01 Jordan has few natural energy resources. There are no coal de-posits nor any known deposits of oil. The only indigenous energy resourcesare (a) a small hydro-power potential of about 5 MW on the Zarqa River, whichis associated with an irrigation program for the Jordan Valley where a damis being constructed (the execution of the power component has not yet beenconsidered pending further study of its justification); and (b) developmentof about 50 MW of hydro-power potential on the Yarmuk River in north Jordan,also associated with Jordan Valley irrigation (para. 2.25). The Governmentis expected to engage consultants soon for the final feasibility study ofthe latter development.

2.02 Oil is the main source of commercial energy and is imported underan agreement with the Trans-Arabian Pipeline Company (Tapline) for the transitof oil from Saudi Arabia through Jordati to the Mediterranean. The oil is con-veyed by pipe from Tapline to the Jordan Refinery, located at Zarqa, in whichthe Government has majority shareholding. Presently Jordan's entire power.requirement is met by diesel stations operating on gas oil and residual oil.Both are supplied from the refinery in road tankers throughout the countryat a fixed base price of 7.4 JD/t or USJ57.8/106 Btu for residual oil and17.6 JD/t or US0126.2/106 Btu for gas oil. On contracts for larger suppliesa discount is allowed; for the power company in Amman this amounts to about5% for residual oil and 6% for gas oil.

B. The Sector

General

2.03 The Jordan River divides the country into two main areas -- theagriculturally oriented West Bank and the more economically diversified EastBank. As the West Bank has been under Israeli occupation since June 1967,this report confines the study area to the East Bank, which comprises some91,000 kmZ of the country's total land area of 97,000 km2. The populationof the East Bank, now estimated to be 1.82 million, includes about 700,000people who live in cities and towns of more than 2,000 inhabitants and over500,000 displaced persons living in refugee camps. Development has beenconfined almost entirely to the northern part of the East Bank, apart froma small area around Aqaba in the south, Jordan's only outlet to the sea.The government, however, has undertaken various development studies coveringthe Jordan Valley and a narrow area between the desert somewhat east of theAmman-Aqaba railroad, the Dead Sea and Israer.

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2.05 The best agricultural area in the East Bank region is the floor ofthe Jordan Valley. East of this valley the terrain rises toward the desert.The Irbid area in the north produces wheat and other grain crops. Phosphate

rock, quarried from one of the world's richest deposits, is the principaldeveloped resource of the East Bank region and expected to be the base ofdevelopment in the south.

2.06 Before the Arab-Israeli war in June 1967, buoyant growth took placein all sectors. The war interrupted these favorable trends but the Governmenttook action to alleviate the difficulties from the war and its aftermath andgrowth returned rapidly to the pre-1967 trend. Civil disturbances in the

second half of 1970, however, brought the economy virtually to a standstilland power service was interrupted in the Amman area for some time. Since1970 the Government's actions have helped substantially to restore a confi-dent investment climate. As a consequence, demand for power is increasingat a rate well above past trends. Pfresent generating capacity is inadequateto meet these requirements fully and will continue to be so until the firstpower project is completed.

2.07 Development in the power sector has been on a local basis by pri-vate and municipal organizations. Integration is in progress in the northernpart of the country, where JEPCO and the Irbid District Electricity Company(IDECO) are rapidly expanding their networkd in the respective concessionareas. JEA would meet all of JEPCO's requirements with the commissioningof the first stage of the Hussein power station. The expected interconnec-tion of the JEA and IDECO system by 1978/1979 would further centralize gen-eration. From 1976 onward JEPCO and IDECO will supply the future networkin the Jordan Valley, which is being constructed by the Jordan Valley Au-thority. The IDA power projects will advance the integration trend.

2.08 JEA was established by law (No. 21) in 1967 to provide for a coor-dinated development of the power sector and the country's power resources.The law vests in it the authority to designate existing power stations tooperate under its direction as "selected power stations", acquire such powerstations, and cause uneconomic stations to cease operation (see 4.01).

2.09 JEA has not yet operated as an electricity supply undertaking;presently it channels Government loans for power development to JEPCO and

IDECO, and supervises the expansion of generation facilities and the 33-kVdistribution networks in the Amman and Irbid areas, the Jordan Valley and

other major towns in the country.

Organization

2.10 The sector is under the direction of the Ministry of Economy. Adraft electricity law (parallel to the JEA law) was prepared in 1967 but neverinstituted. Although it comprises all basic elements for regulating the sec-

tor, the Government wished to review the draft to reflect present conditions.Under Credit 386-JO, the Government undertook: (i) to initiate legislativeaction by September 30, 1974, for the enactment of a law adequately defining

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inter alia the principles and basic requirements for generation, transmission,and distribution of power (including licenses), tariffs, easements, inspectionand testing, a unified accounting system, the collection of statistics andthe preparation of technical information; and (ii) to formulate regulationsor by-laws necessary to achieve the objectives of the law, including delega-tion to JEA of regulatory functions of a technical nature. Since JEA willnow start commence full operation as a utility in mid-1976, and to permitincorporating the results of the ongoing tariff study (see 2.20), the Asso-ciation has agreed to postponing the date for initiating legislative action.Through JEA's management consultants, an expert from the UK's Central Elec-tricity Board has been engaged who has submitted his preliminary proposalsconcerning the legislation. During negotiations the Government agreed topresent its proposals to the legislature not later than December 31, 1975.

Facilities

2.11 Annex 1 gives data on power installations in the country. Exceptin Amman, most of the plants are small, catering to small communities andto private industries. The generating facilities are in most cases derateddue to cooling problems and are badly maintained. Total installed capacityis of the order of 125 MW, including about 40 MW in captive plant (auto pro-ducers.) The rated distribution voltage is 220/380 V, three-phase four-wire,at 50 Hz.

2.12 The number of consumers served by JEPCO and IDECO as of September1974 was about 113,300, of whom 86,400 or 76% were supplied by JEPCO and26,900 or 24% by IDECO (Annexes 3 through 6). JEPCO supplies the area withthe greatest growth potential, including the capital city of Amman and theZarqa industrial area. The area supplied by IDECO is mainly agricultural.

2.13 In south Jordan, electricity supply is provided by isolated under-

takings, the largest public one being the Aqaba Port Authority which suppliesa peak demand of about 3 MW. The Jordan Phosphate Company, which has a loadof 5 MW, generates its own requirements near its mine at Al Hasa.

2.14 The largest captive plants are those of the Jordan Cement Company(14 MW), which is about 20 km south-west of Amman, and the refinery at Zarqa(4.8 MW). There are a number of small private plants, some of which are usedfor emergency standby only. In the Jordan Valley there are thought to beabout 200 small pumping stations, mostly operated by small individual dieselsets, aggregating at least 1,500 kW.

Jordanian Electric Power Company

2.15 JEPCO, a private company, operates the following three diesel sta-tions in the Amman area (Annex 7):

(a) the base loaded Marqa station near Amman with 11 units, ori-ginally aggregating about 54 MW now derated to 38 MW;

(b) the Abdali station at Zarqa with 4 units, originally aggre-gating 4.8 MW now derated to 4 MW; and

(c) the Ras-al-Ain station in Amman, the oldest of the threestations, with 10 units, derated from 7.3 MW to 4 MW.

The Abdali and Ras-al-Ain power stations would be retired when the first stageof the Hussein power station is commissioned. At that time the Marqa stationwill either be acquired by JEA or be operated by JEPCO on JEA's behalf as a"selected" power station (see 5.06).

2.16 Transmission and distribution follows the European pattern: poweris transmitted at 33 kV and subtransmitted at 6.6 kV, except in Zarqa, wherethe intermediate voltage is 10 kV. JEPCO's supply network comprises about110 km of 33-kV lines and cables and about 150 km of 10-kV and 6.6-kV linesand cables.

Irbid District Electricity Company

2.17 IDECO, the other major private company, operates a diesel stationin Irbid and some small diesel stations totalling some 670 kW (derated to500 kW) in townships that are connected to the 33-kV network. It also op-erates one small isolated undertaking (North Shunah) in the Jordan Valleyand a second at El-Mashari. The Irbid power station has a total capacityof 5.5 MW, derated to 4.2 MW. IDECO is expected to be connected to JEAsystem by 1978/79.

2.18 IDECO transmits power at 33 kV and 6.6 kV, operating some 150 km of33-kV lines and 42 km of 6.6-kV lines and underground cables.

Statistical Data of JEPCO and IDECO

2.19 The following summarizes the 1970-73 statistics for JEPCO's andIDECO's electricity generation and supply as shown inter alia in Annexes 3and 4 (JEPCO), and 5 and 6 (IDECO).

------ JEPCO--------- --------IDECO---------1970 1971 1972 1973 1970 1971 1972 1973

Installed capacity (MW) 47 47 47 60 3.3 4.7 4.7 4.9Firm capacity (MW) 32 32 36 40 3.3 .4.7 4.7 4.9Demand (MW) 30 31 35 39 2.9 4.0 4.6 4.9System load factor (%) 46 49 52 53 35 34 36 38Generation (GWh) 120 134 158 181 8.9 12.0 14.5 16.1Sales (GWh) 101 113 135 154 6.9 8.8 11.4 13.0Growth in sales (%) -1 12 19 14 3 28 30 14

Both in Amman and Irbid, demand is suppressed due to lack of capacity andregular programs of supply cuts, particularly during the peak hours, are inforce.

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Tariffs

2.20 A tariff study covering the main supply areas (Amman, Irbid andKerak), financed by the UK and executed by the North Eastern ElectricityBoard (NEEB), was substantially completed in 1974 under terms of referenceacceptable to the Association. The preliminary recommendations for tarifflevels (see Annex 8) are based on 1973 accounts and reflect a 9% financialrate of return target. NEEB experts will visit Jordan in September 1975 forfinal updating and completion of the study before the end of the year. Thefinal recommendations will reflect (a) the analysis of marginal cost of gen-erating, transmitting and distributing electricity over the next few years,(b) a proposal for JEA's bulk sales tariffs, (c) a proposed system for settingup a system for monitoring price levels within the recommended structures toensure that financial viability is maintained, and (d) a proposal for a fuelprice adjustment clause.

2.21 Because all of Jordan's generation is thermal, the Government under-took, in connection with Credit 386-JO, to include by June 30, 1975, a provi-sion for a fuel price adjustment clause in JEA's tariffs. No action has yetbeen taken and, because of the significance of this requirement in protectingJEA's financial position, introduction of the fuel price adjustment clausewould be a condition of effectiveness of the proposed Credit.

2.22 In view of the major improvement and changes in generating facilitiesexpected in the three main areas of supply in 1975/76, the introduction of anew tariff structure at the time as enactment of the electricity law appearsappropriate. During negotiations, the Government and JEA agreed: (a) to dis-cuss with IDA the final tariff recommendations; and (b) to introduce the newtariffs not later than March 31, 1976, and (c) to further review the tariffsnot later than June 30, 1977, for implementation of the necessary changes,if any, by September 30, 1977.

C. The Development Program

2.23 In the northern sector the development program is well defined.IDECO would complete the construction of a new power station with an installedcapacity of about 9 MW by about mid 1975 and continue to expand its 33-kV net-works including the connection to the Jordan Valley in the north. JEA wouldcomplete its 132-kV transmission system, financed with UK development funds,linking Zarqa with the Amman ring, and JEPCO would further expand its 30-kVsystem including the connection to the Jordan Valley in the south. Demandis expected to exceed JEPCO's firm capacity in 1975 despite commissioningof a third 6-MW diesel unit in the Marqa station, and JEA would meet JEPCO'speaking requirements for 1975/76 with the gas turbine financed under Credit386-JO. By mid-1976 JEA would meet all of JEPCO's requirements from theHussein Thermal Station. In order to continue to meet this commitment thethird 33-MW unit at this station, which would be partly financed by the pro-posed credit, should be completed in 1978. However, except for 1976, the

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reserve position would be tight throughout the period in view of the unrelia-bility of the older Marqa diesel, and the time required for reconditioning ofthese units. Depending on actual load growth the Government may yet decideto advance procurement of a gas turbine unit now scheduled for 1978/79, to

ensure reliable supply. JEA's 1974-1980 development program, together withits cost is shown in Annex 9. It amounts to JD 62 million (US$192 million),of which the first power prcject constitutes about 12% and the second project

about 11%.

2.24 A summary of the Government's 3-year Rehabilitation and DevelopmentPlan for the Jordan Valley is included in Annex 2. The power would be suppliedfrom IDECO's system in the north and from JEPCO's system in the south. Theestimated load would increase from 6.5 MW in 1975/76 to 16 MW by 1980/81. In

view of the delays in implementing the plan it appears likely that initialdemand and load growth will be lower than anticipated.

2.25 The Government intends to conduct a final study of the multipurposeproject on the Yarmuk river on the border with Syria. A feasibility studywas completed in the mid-sixties but further progress was impcssible in theaftermath of the 1967 war. Because the countries are also studying the pos-sibility of interconnecting their respective power systems, which could havea major effect on Jordan's requirements for transmission lines (including theYarmuk plant connecting line), the developments are in too early a stage tobe included in the development program. In any event, the hydro stationwould not be completed before the end of this decade.

2.26 Rapid developments are expected in the south-western part of thecountry, comprising:

(a) expansion of the El Hasa phosphate Mines requiring about10 MW in additional capacity in 1978 and a further 20 MWin 1980;

(b) construction of a potash plant (17 MW) at the southern endof the Dead Sea;

(c) opening of a copper mine east of Shan (5 MW);

(d) construction of a fertilizer plant (10 MW), a cement plant(20 MW) and a glass factory (0.6 MW) in the area of Ma'an;

(e) development of tourist facilities throughout the area, in-cluding Aqaba, requiring about 1 MW; and

(f) improvement of present power facilities in towns and a smallrural development plan in the Karak area.

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2.27 In view of the relatively large industrial requirements which areexpected to considerably improve Jordan's exports and foreign currency earn-ings, JEA has requested IDA to finance from the proposed credit a long-termpower development study for southern Jordan (including alternative supplyeither from a power station in the south or from the northern system), andhas invited proposals from consultants on the basis of terms of referenceshown in Annex 10, for appointment before July 31, 1975. The study, whichwould be completed within 12 months, would require 42 expert man-months.JEA will discuss with IDA the recommendations resulting from the study andthe actions it expects to take.

III. THE PROJECT

A. Objectives

3.01 Together with the first IDA project, the Project would as its mainobjective seek to prepare JEA for being an efficient public bulk supplyutility, providing economic and reliable service, and removing capacityshortages.

B. Description

3.02 The Project is described in detail in Annex 11. It consists of:

(a) a third 33-MW steam-electric unit to be installed at theHussein power station at Zarqa;

(b) reconditioning of the 38-MW diesel-electric power stationat Marqa presently owned by JEPCO; and

(c) the Southern Jordan Power Development Study.

3.03 The third 33-MW unit would be similar to the first two units at theHussein station. Most of the common facilities have been included in thesupply for the first stage. The selection of the site for Hussein Stage Iwas based on the availability of water and proximity of .the fuel supply. Theultimate capacity of the station will be largely determined by the availabil-ity of water but, since a closed cooling system will be used, total provedproduction at the selected site is adequate to sustain a steam power stationof several hundred MW.

3.04 The Project also includes reconditioning of diesel units at JEPCO'sstation at Marqa, and adding radiator cooling to them. By 1977 JEA wouldacquire the diesel generating station at Marqa, presently owned by JEPCO, orhave JEPCO operate the station as a selected station (reserved to meet therequirements of JEA) on a cost reimbursable basis (see 5.06).

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C. Status of Engineering

3.05 Kuljian of USA has been engaged, with the concurrence of the Asso-ciation, for the feasibility study of this Project and all aspects of biddingand supervision of both the first and second Projects. The bidding documentsfor the second stage are to be issued in June 1975. Engineering costs forthe first stage are being financed jointly with the Kuwait Fund under Credit386-JO. Those for the second stage would be financed by the proposed creditand a Government grant.

D. Cost Estimate

3.06 The estimated cost of the Project excluding interest during con-struction is US$22 million equivalent, of which US$17.3 million would bein foreign exchange, based on the appropriate effective parity rate at thetime of appraisal of JD 1 = US$3.1. Annex 12 shows the estimated cost ofthe project, which is summarized as follows:

X of--- TJD '000-------- _------US$'000------- ProjectLocal Foreign Total Local Foreign Total Cost

33-MW Steam ElectricPlant 774.2 3,709.7 4,483.9 2,400 11,500 13,900 63

Engineering &Administration 80.6 332.6 403.2 250 1,000 1,250 6

Reconditioning Marqa 96.7 322.6 419.3 300 1,000 1,300 6Southern Jordan PowerDevelopment Study 16.1 64.5 80.6 50 200 250 1

Base Cost Estimate 967.1 4,419.4 5,387.0 3,000 13,700 16,700Contingencies:Physical (local 16%,foreign 5.8%) 154.9 258.0 412.9 480 800 1,280 6

Price (local 42%,foreign 20.4%) 406.5 900.0 1,306.5 1,260 2,790 4,050 18

Total 1,529.0 5,577.4 7,106.4 4,740 17,290 22,030 100

3.07 The estimate is based on the results of late 1974 bids received bythe consultants for similar units to which a price contingency of about US$4million (Local cost; 15% for 1975 and 12% for subsequent yearn; Foreigncost: 11% for 1975 and 7.5% for subsequent years) was added to allow forexpected future cost increases.

3.08 On the basis of the above estimate, the third unit would costabout US$600/kW or about double the cost per kW of the first stage which wascontracted in July 1972. Overall cost of the Hussein power station, however,would not be unreasonable at about US$37 million, or US$370/kW.

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E. Financing

3.09 The proposed IDA credit would finance about 29% of the foreign ex-change cost of the Project, and suppliers credits (Marqa) and a Governmentgrant (engineering and studies) about 6% each. The balance of the foreigncost (49%) would be financed by the Government to the extent JEA does notsucceed in finding co-financing for the Project. Local costs would be fi-

nanced by internally generated funds and by Government contributions.

F. Implementation

3.10 Construction of the third unit at the Hussein Station is expectedto commence early in 1977, for operation by mid-1978.

3.11 This report assumes that JEA would acquire the Marqa diesel stationfrom JEPCO in January 1977 (see 5.06). Reconditioning of the older Marqadiesel sets would be executed by JEPCO on behalf of and under the guidanceand supervision of JEA.

G. Procurement

3.12 All contracts to be financed from the proposed Credit (except for

consulting services) would be awarded on the basis of international competi-tive bidding, consistent with the Bank/IDA Guidelines for Procurement. JEAis exempt from paying import duties. Although little participation is ex-

pected, a preference of 15% or actual customs duty, whichever is less, wouldbe granted to Jordanian manufacturers. It is assumed that the procedureswill also be acceptable to a possible co-financer.

H. Disbursements

3.13 Disbursement would be against the c.i.f. costs of equipment and

related services, and the foreign exchange cost of civil works, engineeringand consulting services. The estimated disbursement schedules for the Creditare shown in Annex 13. The proposed credit would finance 30% of the foreignexchange costs of equipment for the Hussein thermal station and related serv-ices, 15% of the foreign cost of engineering services, and 25% of the foreigncost of the Southern Jordan Power Development Study. In the event a co-fi-nancer is identified, the Association would be prepared to adjust these per-centages to accommodate the available financing. Should the foreign exchangecost to complete the Project be less than estimated, any undisbursed amountof the proposed credit would be reallocated to allow full disbursement of the

Credit or, in the event co-financing is obtained for the balance of the re-quired foreign cost, to consulting services for the next stage of developmentor, if not required for that purpose, the undisbursed amount would be cancelled.

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The closing date would be December 31, 1979, to allow for final payment ofretention moneys.

3.14 Retroactive financing is proposed for foreign expenditure requiredbefore credit signing for the Southern Jordan Power Development Study whichis expected to be initiated as soon as possible, and for engineering services;the total is- estimated not to exceed US$100,000.

I. Environment Impact

3.15 The proposed oil-burning plant would be located several kilometersfrom the township of Zarqa, adjacent to the oil refinery. The surroundingcountryside is largely desert. A 95% effective mechanical precipitatorwould be installed and no problems iith dust emissions or ash disposal areexpected. Sufficient space would be provided to install additional exhaustgas cleaning facilities, if necessary in the future. The cooling system isof the air-cooled, closed radiator type.

IV. THE PROJECT ENTITY

A. Background

4.01 JEA was established in 1967 with the enactment of the Jordan Elec-tricity Authority Law No. 21. The objectives of the law are: (a) to estab-lish generation and transmission facilities to supply energy in bulk to otherundertakings whose systems are connected to the JEA systems; (b) to manageand operate any undertaking transferred to or acquired by JEA and (c) todevelop a supply of electricity in areas where there is an economic demandand which are not within the concession area of supply of other undertakings.Existing power stations may be designated by JEA as "selected power stations"and will then operate under JEA's direction. Subject to Cabinet approvalthese "selected power stations" may either be purchased by agreement withthe owners or the energy produced may be bought by JEA at a cost sufficientto cover the owner's related operating costs. Electricity undertakings inJordan can be purchased by JEA in agreement with the owners, subject to theCabinet's consent. JEA may also require that power stations connected tothe system but not designated as "selected power stations" and not consid-ered to be economically justified for continued generation, cease operation.

4.02 The non-current assets of JEA are at present: (a) a plant to manu-facture poles financed by a U.K. credit and constructed in 1967; (b) its con-struction loans to IDECO and JEPCO (see Annex 22) and (c) work in progressunder Credit 386-JO -and the Kuwait Fund loan for the Hussein station and aUK loan for the 132-kV transmission system around Amman. JEA is not yet anoperating utility in the conventional sense.

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B. Organization and Management

Organization

4.03 An Implementation Committee managed JEA from 1967 to 1972 untilits first Board of Directors was appointed in accordance with Law No. 21,with the Minister of National Economy as Chairman, a Vice-Chairman, andsix other members who presently include the President of the Amman Chamberof Commerce, and the General Managers of JEA and JEPCO. Under Credit 386-JO,management consultants (Peat, Marwick and Mitchell, who initiated their workin September 1974) are advising on the appropriate organization for JEA, asatisfactory preliminary outline for which was presented to the Association.

Staffing

,.o4 With the agreement of the Association as required under Credit386-JO with respect to the recruiting scheme and remuneration schedules, JEAhad about doubled its staff, to 135. Of these, 34 are technicians of the polemanufacturing plant; 25 engineers, 19 technicians, 3 accountants, 1 statisti-cian, 2 draftsmen, 10 foremen and 41 clerical staff make up the remainder.An experienced chief mechanical engineer has been engaged for the Zarqa plantand technical staff is either following training courses (see 4.05) or in-volved in the various aspects of construction of the Zarqa plant. Similarly,clerical staff is being given on-the-job training with the help of the man-agement consultants. Total number of staff is expected to be 290 by mid-1976,when the Hussein power statign is expected to commence operations.

Training

4.05 JEA's training activities are satisfactory. A U.K. expert of theNEEB recently completed a draft study of JEA's training requirements, theproposals of which are presently being discussed for implementation. In viewof the urgency, however, the following actions or decisions have been takenwith the assistance of the U.K. Overseas Development Association (ODA):

- 4 transmission and distribution engineers and 1 mechanicalengineer are being trained in England;

- Several mechanical engineers will be trained in the U.K. in1975;

- 9 administrative staff are expected to follow, in 1975, a4-month training course in the U.K. with ODA assistance.

Additionally:

- 6 mechanical engineers and 6 technicians will be trained in1975 at Syrian generating stations;

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A similar arrangement is under discussion for training inIraq;

- 1 administrator is following a 9-month local course instatistics.

4.06 JEA has contracted with its consultants to provide experienced ex-patriate supervisory staff for the first 12 months of operation after theHussein station is commissioned. No substantial difficulties are expected inrecruiting operational skilled labor and junior staff, since JEPCO's Ras-Al-Ain and Zarqa diesel stations will be closed down, making available redundantstaff.

C. Operations

4.07 JEA's operations will start shortly, with the commissioning of thegas turbine financed by Credit 386-JO at the Zarqa power station site.

Forecasts

4.08 JEA, assisted by its consultants, has reassessed power requirementsand the resulting balances of energy and capacities for JEPCO and JEA areshown in Annex 14 (which are presented for both companies, in view of thefact that JEPCO is expected to be JEA's principal consumer for many years).The changes from the previous appraisal are considerable because severallarge additional consumers are to be connected. The principal ones are:(i) the existing cement factory to be connected in 1977 (supply would beabout 72 GWh by 1978, assuming that only the additional requirements of12 MW due to the expansion would have to be met); and (ii) the existingrefinery at Zarqa (2.4 MW about 12 GWh annually, similarly assuming thatonly the additional requirements would have to be met). The average annualincrease in JEPCO sales would be 17.8% (see Annex 16), but overall forecastgrowth -- i.e., including JEA's direct supply to large consumers (and toIrbid by 1979) -- for the two companies would average about 23%.

4.09 Annex 15 provides information on the details of JEA's forecastsales to its 4 future customers: JEPCO, the Refinery, the Cement Factory,and Irbid. General information with respect to JEPCO's forecast operationsare shown in Annex 3, and details of sales in Annex 4. Summarizing for theAmman area (i.e. aggregating the JEA and JEPCO data and excluding Irbid), thefollowing table shows historic and forecast growth in sales for the variousconsumer categories, total generation and capacities:

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1963-1973 1973-1980Average Average

1963 Growth 1973 Growth 1280GWh z z GWh % GWh %

Domestic 11.6 23 16.6 53.9 35 16.1 153 27Comercial andGovernment 7.7 15 13.2 26.6 17 14.8 70 12

Industry 23.5 47 5.0 38.1 25 29.7 257 45Social /1 2.8 6 24.3 24.8 16 15.4 68 12Broadcasting 3.4 7 3.5 4.8 3 3.2 6 1Street lighting 1.1 2 17.5 5.5 4 15.4 15 3

Total Retail Sales 50.1 100 11.9 153.7 100 19.9 569 100

Generation (GWh) 57.4 12.2 181.4/2 2-1.7 719Demand (MW) 15.0 9.9 38.6/2 22.2 157Installed capacity

(MW) 18 60 251Firm capacity (MW) 17.0 40 185System load

factor % 44 54 52

/1 Mosques, churches, hospitals, schools, etc./2 Suppressed.

The above table shows that principal growth would be in industry while othercategories would increase in accordance with past growth rates. Neverthelessindustry would, by 1980, still constitute only 45% of total sales (a lowerproportion than in 1963). In part this is due to the continued operation ofcaptive plant, although, looking further ahead, this is expected to be re-placed largely by public supply.

V. FINANCE

A. Past Performance and Present Position

5.01 JEA's only activities at present are the production of concretepoles, the supervision of projects financed by UK loans, relent by JEA toIDECO and JEPCO, and the supervision of Hussein I construction. In the pastthe pole plant production has been sold at cost since-most customers werepublic agencies; however, in future it is assumed that prices would be ad-justed to yield a 9% rate of return on the pole-plant assets.

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5.02 JEA's income statements, balance sheets and fund statements cover-ing the years 1971 through 1973 are shown in Annexes 19, 20 and 21. JEA'snet fixed assets as at December 31, 1973 mainly comprised the value of thepole plant and work in progress relative to the first stage of Hussein ThermalPower Project. Long term investments were the U.K. loans relent to JEPCO andto IDECO. About three quarters of JEA's long-term debt was in respect of loansrelent to JEPCO and IDECO and the balance was in respect of loans/credits forHussein I and 132-kV transmission lines projects.

5.03 The U.K. loans to the Government, which are interest-free, are re-lent to JEA on the same terms and again relent by JEA to IDECO and JEPCO onmore exacting terms including interest at 4%-6%. The loans are for the con-struction of IDECO's generation and transmission development schemes and forJEPCO's expansion of generation. Relending profits are transferred to JEA'scapital reserve in compliance with its agreement with the Government. Annex17 gives the details of the lending and relending terms of all such loans.

5.04 The debt equity ratio at December 31, 1973 is shown as 80:20. Thisis distorted however, by the inclusion of loans relent to JEPCO and IDECO.If borrowings for relending are excluded, the ratio would be 42:58.

B. Tariffs

5.05 JEA's average sales price has been assumed to be 9.9 fils/kWh(US13.1/kWh) for 1976, 10.1 fils/kWh (US43.1/kWh) for 1977, 12 fils/kWh(US43.7/kWh) for 1978 and 13.4 fils/kWh (US44.2/kWh) for 1979 and 16.2 fils/kWh (USd5.0/kWh) for 1980, ensuring a 9% rate of return as covenanted underCredit 386-JO and a cash generation to cover 1.5 times its debt service re-quirements. The final recommendations of the tariff study (see 2.20) areexpected to result in tariff levels near these averages.

C. Future Operating Results

5.06 Although JEA is expected to sell a small quantity of energy fromthe gas turbine in 1975, JEA's operations as a utility company will notreally start until 1976 with the coming into service of the steam generat-ing units. During the forecast period through 1980, JEA's principal customerwill be JEPCO (IDECO is expected to be connected to the JEA system in 1978-79), and from 1977 JEA will require JEPCO's Marqa diesel station to generatepower for standby or for peaking purposes in order to ensure the most economicoverall generation for the system. In connection with Credit 386-JO, Govern-ment agreed with JEPCO that it would designate Marqa as a "selected station",and that by June 30, 1975, JEA would negotiate a contract with JEPCO coveringthe operation of Marqa. The general provisions of the proposed contract wereagreed with the Association. However, the Government and JEA are now review-ing the matter further, but during negotiations have given assurances that

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they will take a final decision on this before March 31, 1976. If they decideto operate Marqa as a "selected station" a contract acceptable to the Associa-tion would be executed between JEA and JEPCO before June 30, 1976. If theydecide to acquire Marqa all necessary legal action would be completed byJune 30, 1976 and the assets transferred by December 31, 1976. This reportassumes that JEA will acquire Marqa in January 1977 on an equitable indemnif-ication of JEPCO against loss of its earning power.

Rate Covenant

5.07 Assuming the above average selling prices to JEPCO and direct con-sumers (see 5.05), JEA is expected to achieve an annual rate of return in theorder of 9% from 1976 onward (see Annex 19). The Government and JEA haveagreed that JEA's tariffs will be maintained at a level high enough to pro-duce an annual rate of return of at least 9% on average net fixed assets inoperation, appropriately valued and revalued from time to time.

JEA's Financing Plan

5.08 The financial forecasts cover the period through 1980 in order toinclude the results of a few years' operation. The buildup of JEA's fixedassets will be financed by borrowing, except for the local costs of the Proj-ect with its associated transmission line which will be financed by JEA'sinternal cash generation and the Government's contribution to equity. Inaddition to the Project, which will be financed 29% by IDA and the remaining71% by the Government (or a suitable co-financier, if one can be found), theassociated Stage II of the 132-kV Zarqa/Amman line and connection to thecement factory will also be financed entirely by JEA and the Government.Local currency requirements of the latter expansion will be financed byGovernment grants and by JEA from internal cash generation. The Creditwould be onlent to JEA under a subsidiary loan agreement satisfactory tothe Association which would provide for terms of not less than 8-1/2% for25 years with a 3-1/2-year grace period.

5.09 JEA's financial forecasts indicate that its electricity and pole-plant operations would start contributing to its internal cash generationfrom 1976 onwards, rising from JD 835,000 (US$2.6 million) in 1976 toJD 7,409,000 (US$23.0 million) in 1980. Its total 1974-1980 internal cashgeneration, including its surpluses from "banking" and pole manufacturingoperations, would be JD 23,727,000 (US$73.6 million).

5.10 The report assumes that the Government grants comprising a portionof the local expenditures mentioned above for the Project and the secondstage of the 132-kV transmission line and other miscellaneous additionalexpenditures, including the financing of the cement factory connection andthe purchase price of Marqa, will be treated as Government equity. In viewof the ambitious expansion program and the tight forecast cash position,assurances included in the 386-JO Guarantee Agreement would be repeated forthe proposed Credit that no return on Government's equity will be declared orpaid before 1980 unless in the opinion of the Association such a distribution

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would not be prejudicial to JEA's requirements for its capital expansion.The Government's agreement to this was obtained. Assurances have also beenobtained from the Government that it will make arrangements satisfactory tothe Association for providing funds for carrying out the Project and therelated Zarqa-Amman transmission line if the funds available to JEA shouldbe inadequate to meet such expenditures. In summary, JEA's financing planfor 1974 through 1978 (the Project period), which is realistic, is as follows:

JEA's Financing Plan for 1974-1978 /1

(JD 000) (US$ 000) Program %

Sources of Funds

Internal Cash Generation - From Operations 6,606 20,479- Other 51 158

Change in Working Capital 674 2,089Debt Service (5,915) (18,337)Net Internal Cash Generation 1,416 4,389 4From Relending Operations 3,595 11,145 10

Government Equity 5,410 16,771 15

Long-Term Borrowing:For Relending to JEPCO & IDECO 3,522 10,918 10Hussein I - IDA 3,021 9,365 9

- Kuwait Fund 3,018 9,356 9Project - IDA 1,509 /2 4,678 4

- Co-financier/Government 3,286 75 10,187 9Supplier's Credit for MarqaReconditioning 355 1,100 1Other Loans for Expansion 9,964 30,888 29

Total Long-Term Borrowing 24,675 76,492 71

Total Sources of Funds 35,096 108,797 100

Application of Funds

Hussein I 8,128 25,197 23The Project 7,107 22,032 20Marqa Purchase 2,616 8,109 8Other - Ongoing Works 5,750 17,825 16

- Future Projects 8,892 27,565 25UK Loans Relent to JEPCO & IDECO 2,603 8,069 8

Total Applications 35,096 108,797 100

LI Based on "Case A" forecast./2 A portion of the proposed IDA Credit and Co-financier/Government loan

will be disbursed in 1979 for payment of retention amounts.

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5.11 As is shown, JEA's internal cash generation and its income fromrelending operations would be sufficient to meet the local fund requirementsfor the Project. However, a mix of internal cash generation and the Govern-ment's equity contribution would be used for financing the local cost of thisand other projects.

Financial Position-Forecast

5.12 Forecast financial statements for JEA for the period 1974 to 1980are shown in Annexes 19 through 21. These reflect the start up and expansionof JEA as a major wholesale electricity supply organization. The statementshave been prepared including appropriate adjustments for price escalation inoperating expenses and developme*it program costs and periodic revaluation of-assets. Annex 25 sinarizes these statements (Case A) for comparison witha forecast at constant (1974) prices (Case B). This comparison shows thattariff increases aggregating about 65% would be required over the period tooffset assumed inflationary trends (see 5.05, 5.07). Without price escala-tion, increases of 15% would be adequate.

5.13 JEA's debt/equity ratio would be 76/24 in 1976, reflecting the highlevel of borrowings for initial operations, but improves to 60/40 by 1980, asatisfactory level. Debt service coverage would be adequate over the period(1.5-2.7), but in order to assure that the Association would be informed iffuture incurrence of debt would jeopardize this position, the debt servicecovenant negotiated in connection with Credit 386-JO was extended to thisCredit. This covenant requires that JEA seek the consent of the Associationto incur debt if JEA's net cash earnings before depreciation and interestwould be less than 1.5 times its debt service in any future year, includingservice on the amount to be borrowed.

D. Accounts and Audit

Accounting

5.14 JEA's accounting staff comprises a chief accountant and two junioraccountants. This was adequate before the construction financed by Credit386-JO was started but, with its present construction program and for itsactual operation as a utility company it will not only need additional ac-counting staff but also, all the staff (including the present employees)will require training. The management consultants employed under theearlier credit have designed an appropriate accounting system and willprovide on-the-job training to the accounting staff. JEA will arrangeto send at least one senior accountant abroad for a period of training withan appropriate utility organization. The foreign exchange cost of this hasalready been provided for in the earlier credit.

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Auditing

5.15 In accordance with Section 44 of the Jordan Electricity AuthorityLaw, the books and accounts are audited annually by auditors appointed bythe Minister. In the past the Minister has appointed the local auditingfirm of Shair, Aweida, Shatara and Ayed. These auditing arrangements aresatisfactory and independent auditors acceptable to the Association shouldcontinue to be appointed.

E. Insurance

5.16 Insurance coverage is provided through private local insurance com-panies operating under Government regulations; in addition, the Governmentguarantees legitimate claims against these companies. JEA's purchases fromabroad are usually covered by insurance provided by the supplier.

VI. BENEFITS AND JUSTIFICATION

A. Forecast of Sales an'd Demand

6.01 Forecasting industrial power requirements is difficult. JEA in conjunction with JEPCO and the Ministries have recently initiated a census andsurvey of all industrial plants under construction and planned. So far theyhave identified some 80 plants. It is not expected, however, that the fullcensus, providing comprehensive data and forecast demand (taking into accountpossible construction delays, actual production pattern, etc.) can be com-pleted before the end of 1975. For this reason a clear distinction was madebetween non-industrial and industrial consumptioin.

6.02 For non-industrial consumers, historic trends (least squares method)have been used in forecasting power requirements, except for "social supply"(mosques, churches, hospitals, schools, etc., which have a 25% discount onthe normal tariff) and street lighting. Growth in social supply has been ex-tremely high (30.9%/a) and it was assumed that the future growth rate wouldbe about half the historic trend due to increased attention to the criteriafor eligibility for this special tariff. Similarly, street lighting, whichhas shown a trend of 18.2%/a, was assumed to grow at a rate of 14%/a (seeAnnex 16).

6.03 In forecasting industrial consumption a distinction was made between (i) general future consumers (some 70 smaller plants with connectedloads of less than 500 kW) for which the available information ranged fromfair to poor, and (ii) large consumers (11) which either are awaiting author-ization to increase their demand (including operation during the peak hours)or have construction schedules for which significant delays are unlikely.

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6.04 For the general industrial consumers the consultants indicated agrowth rate of 18% over 1973 (suppressed). The assumption appears reasonablebecause (a) the addition of a total of some 25 smaller plant (of the 70 plantsmentioned above) for which the information was reasonably fair, aggregatingsome 6.5 MW in capacity, would account for a growth rate of some 10-12% overand above the historic trend through 1977; and (b) the average 1973-1980 growthrate for the aggregate supply to non-industrial consumers and the general in-dustrial consumers would be about 15% (assuming that 3% of energy requirementswas not met in 1973 due to lack of capacity) which compares favorably with thehistoric trend of 12.7%.

6.05 Major growth is caused by the connection of large consumers (seeAnnex 16), several of which, like the steel mills, the refinery, a ceramicfactory, and a new MIedical City are awaiting power supply authorization de-pending on the commissioning of JEA's gas turbine plant. These connectionswould aggregate 24 MW in 1976 and 36 MW in 1977. Energy supply would growfrom 18 GWh in 1975 to 132 GWh by 1978. The major supply would be by JEPCO,JEA supplying directly to the cement factory (12 MW expansion), the refineryat Zarqa (upon commissioning of the gas turbine plant) and Irbid (1978-1979).Since the difficulties of estimating coincident demand and hours of operationof various plant may cause overestimation, it was deemed prudent not to includein the forecast either the supply to the Jordan Valley Development (6.5 MWinitially, depending on work progress), or to assume specific replacement ofcaptive plant generation by public supply. A summary of the forecast for theAmman area for 1980 in comparison with actual figures for 1963 and 1973 isgiven in para. 4.09.

A

B. Comparison of Alternatives

6.06 During appraisal of the first power project mixed diesel/steam de-velopments were compared with all steam developments assuming different unitsizes and different assumptions for growth rates. It was shown that at thehigh growth rate an all-steam development would be the least-cost up to adiscount rate of about 15%. Under the present assumptions for growth, andearly 1973 prices, the equalizing discount rate would be about 17%. Sen-sitivity considerations indicate that doubling of capital cost (which ap-pears to be the upper limit of 1974 prices compared with 1973 prices) wouldcause the equalizing discount rate to decrease to about 13%, which is abovethe opportunity cost of capital in Jordan, assumed to range from 10-12%.Sensitivity to a rise in fuel costs is small. Tripling of the present fuelprice (JD 6.5/t), i.e. assuming a price of about US$10/bbl, would cause theequalizing discount rate to decrease to about 14.5% under the present assump-tions for growth. Thus, the 1972 Government decision to convert to steamplant generation is reaffirmed and JEA's least cost development program shouldcomprise three 33-MW units (of which the Project constitutes the third unit)at the Zarqa station, followed by 66-MW units. It appears necessary, dependingon actual load growth, that by mid-1976 JEA should investigate the economicjustification of installing additional gas turbines before the fourth unit(66 MW) is commissioned at Zarqa.

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C. Economic Return of Project

6.07 The internal economic rate of return (IER) of the Project is thediscount rate which equates the present values of the time streams of theattributable costs and benefits over the Project's assumed life of 25 years.In the case of this Project, financial costs and benefits have been used inthe analysis since no shadow pricing of inputs or adjustment for taxes wasconsidered appropriate. The IER is therefore expressed as an internal fi-nancial rate of return (IFR). The costs are the capital cost of the thirdunit at the Hussein power station, the reconditioning of the older dieselsat JEPCO's Marqa station, Stage 2 of the 132-kV transmission system, a por-tion of the 30-kV regular expansion, assumed at 200 km, a share in the costof distribution expansion, assumed at 2 years, plus the cost of operatingthe additional facilities. Willingness to pay, measured mainly through therevenues, has been used as a first approximation of the attributable bene-fits. These revenues understate the benefits consumers receive from theProject because it is considered that a tariff increase of reasonable mag-nitude (say 20%) would not reduce demand significantly. This is further il-lustrated by the fact that large capacities in costly captive plant have beeninstalled (and would continue to be installed were the Project not executed)to meet the electricity needs.

6.08 The IFR is about 15% on the basis of the present retail tariffs.Sensitivity considerations indicate the following changes in the IFR forvariations of the basic perameters.

IFR (%)

Basic assumptions 15Third Hussein Station Cost overestimated by 20% 16.7Third Hussein Station Cost underestimated by 20% 13.3Fuel cost increased by 50% 12All costs underestimated by 10% 13.5Attributed other facilities underestimated by 20% 12.7Attributed other facilities overestimated by 20% 17Benefits (i.e. revenue) overestimated 10% 11.8Benefits (i.e. revenue) underestimated by 10% 18

VII. AGREEMENTS REACHED

7.01 The Government has agreed with the Association on December 31, 1975as the date for initiating legislation of a General Electricity Law (2.10).

7.02 The Government and JEA have agreed to consult with the Associationbefore implementing the NEEB's recommendations on Jordan's tariff structurerevision and to introduce the new tariffs not later than March 31, 1976.The tariffs will be further reviewed not later than June 30, 1977 for im-plementation of the necessary changes, if any, by September 30, 1977,(2.22).

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7.03 Consultants for the Southern Jordan Power Development Study will

be engaged before July 31, 1975 and JEA will discuss with the Associationthe recommendations resulting from this study and the actions it expectsto take (2.27).

7.04 The Government and JEA have agreed (5.06) that:

(i) A final decision will be taken not later than March 31, 1976,whether JEPCO's Marqa power station will be operated by JEPCOas a "selected station" for and on behalf of JEA, or whetherMarqa will be acquired by JEA;

(ii) Should Marqa be operated as a "selected station", a contractacceptable to IDA will be executed between JEA and JEPCO be-fore JEA and JEPCO before June 30, 1976; and

(iii) Should Marqa be acquired by JEA, all necessary legal actionwill be completed by June 30, 1976, and actual transfer ofall assets to JEA will be completed by December 31, 1976.

7.05 The Government and JEA have agreed that JEA's tariffs will be main-tained at a level high enough to produce an annual rate of return of at least9% on net fixed assets,in operation valued and revalued from time to timein accordance with sound and consistently maintained methods acceptable tothe Association (5.07).

7.06 Assurances included in the 386-JO Guarantee Agreement have beenrepeated for the proposed Credit that no return on Government's equity willbe declared or paid before 1979 unless in the opinion of the Association,such a distribution would not be prejudicial to JEA's requirements for itscapital expansion. Similarly, assurances have also been obtained from theGovernment that it will make arrangements satisfactory to the Association,for providing funds for carrying out the Project and associated transmissionfacilities (5.10).

7.07 JEA has agreed to extend the standard debt service covenant underCredit 386-JO (5.13).

7.08 The introduction of a fuel price adjustment clause would be a con-dition of effectiveness of the proposed Credit (2.21).

7.09 In view of the above agreements, the Project would provide a suit-,able basis for an IDA Credit of US$5 million to be repaid over 50 years ir"cluding a grace period of 10 years to be relent to JEA under a subsidiaryloan agreement acceptable to the Association (5.08).

May 23, 1975

ALI-AISAL OFTbE SECONP HUSSEIN THERMHAL POWER PROJECT

JORDAN

Existini Generating Plne-4

1974

Original Site 'OniniralI Site

Lacetiuri Rating Kan-fnctueg- Lee-tir Racitu M.anufacturerIdk

AmngZ-rua Argo Jardan Ogiigv

JEPCO -' DBCQAgnge/Zauqa 66, 000 N-rth Shnn.h 40 Rantun

Pri-tn (--tiggte) 25 Ltt-e

Stgdby SBervie 12 Li.teWate- puping gnd Sewerage 1,950 (15 .airn)

Minigtrp af Ennnneic-ti-nS 670 (8 Arits) 50 BWN

TV and oedccotinB 2,330 (B units) El-Narghgri 6B )DM

Aitport 380 (5 unitt) 56 NWt

6overnrea te

Hoepicgln 360 (5 unit) Wadi El-Ygbit 100 (3 unit.)

Refrigecutiun gad Stro.ge 270 (3 unite) Deir All 50 (2 unite)

Army Cuipe 440 (6 unite) El-Kgrc.nh 60 (2 -itn)6,400

Regu lgr Suerice MuciciunlCnecit FPatery 14,000 (7 unite)

Water fcrping 5,660 (20 ucitt cr more) Sneth Shureh 240 (2 unite)

Pri-ute

Refinery 4,800 (2 unite)

Armed Cnoa 3,600 (4 units or more) Ocarina T-urint Cester 80 (3 ucit-)

flZg (eutin,atg)

Gegic mille 1940 (9 egite)8, 000

Norther- Aret 36i400. 1-iceetir .. d 1 50iB (175 uniti)

160 Skd 4/2

IDEBO Irbid 400 (26 unite) D.erna

1,200 (2 -nit.) Dect. Southern Jeeden

PRinirEegl

500 SLM Kursk 816 (7 unite)

2,080 (I acit) Allen Ruppe 216 (3 nuica)

1,900 (I .nit) Allen Al Qo-t 50 (2 -itns)

Aiy 88 (2 nito)

Mcfraq-' IZ0 NAt/ Al MPanar 96 (2 unite)

T.aileh 560 (3 units)

W.di M ... ah 130 (3 unit.)

JgrcetY' s100 ..N-' Mt u 940 (6 unit.)

50 NWM4

/ N.jil Shubak 48 (2 unitn)

50 Mer_dnc41 Q-uuira 120 (I unit)

Jurden Phuephot 5Corp. - Al M..g 3,735 (ii unttu)

Knfec A-d-ou0 cE Aqub. PertAsth-rity 3,830 (7 uniru)

Sunu El-Rsesi4

40 Wm 12 629

PFu=net Duti-n1u R.e..ure- Authority). 3_200 (12 unitu)7,920

NOTES1/ The tutc1 -otiucted icetailed capacity in EDut-Back Jo-dan cc listnd hSine -tuns. to

abort 125 MW; dre tn Insk uf inttiotico thio -nber -orit .cocos eac gh netiotn ony.2/ FPa deitiln uf JEFC0 Pl-nt .e. An.ne 73/ Alde ,ec.iving bulk -tpply fetm IDECO4/ To be -etierd in 1975

April 1975

ANNEX 2Page 1 of 3

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

The Histories of JEPCO and IDECO, and Development Program for Jordan Valley

1. Electricity is distributed in Eastern North Jordan, the area whichwill be supplied by the Project, by JEPCO and IDECO in their respective Con-cession Areas. The composition, history and future developments of thesecompanies are described below:

The Jordanian Electric Power Company

2. Prior to 1947 several small electric power companies were operatingindependently in the Amman area. The Government decided at that time thatthe activities of these companies should be unified and on August 14, 1947the Transjordan Electric Power Company Limited was established, with paid upcapital of JD 121,900 to take over these small enterprises. At the same timethe Government granted the company a concession to generate, transmit and dis-tribute electrical energy in the area specified by the concession for a periodof 60 years after which the concession could be reviewed or the assets couldbe purchased by the Government. The paid up capital was increased to JD250,000 in 1955.

3. As of January 1, 1963, the Transjordan Electric Power Company Limitedmerged with the Jordan Central Electric Company which supplied the Zarqa con-cession area, and the new company was named the Jordanian Electricity PowerCompany Limited. The combined concession, covering the areas supplied by theprevious two companies, was established by law as published in the OfficialGazette No. 1651 dated November 22, 1962. The authorized capital of the newcompany was JD 2,500,000 of which JD 2,040,000 was paid up. Authorizedcapital was later increased in 1973 to JD 6,000,000 with JD 4,588,468 paidup. The nominal value of a share is one Jordan Dinar. The Company presently(December 1974) is owned by 9,000 shareholders and the distribution of sharesis shown in the following table:

Shareholders No. of Shares Z

a. Municipalities 406,750 8.9b. Government 48,946 1.1c. Company 102,864 2.2d. Private Sector 4,029,953 87.8

Total 4,588,468 100.0

ANEX 2Page 2 of 3

4. The Board of Directors of JEPCO comprises eleven members, two ofwhom are representatives of the Government and the Municipality of Ammanrespectively. Total staff is about 1,000 employees.

JEPCO's Expansion Program

5. JEPCO is presently executing a 5-year development plan (1971-1975)for the expansion of its own generation, transmission and distribution facil-ities, pending the commissioning of bulk supplies from JEA's Zarqa station.A UK loan of JD 3.1 million has been made, through JEA, towards the cost ofthis program, which includes 3 diesel units of 6-MW site rating which wereinstalled and commissioned in early 1974. A fourth unit, financed fromJEPCO's own funds is expected to be commissioned by mid-1975. JEPCO's trans-mission/distribution program provides for extending its 33-kV network and in-cludes a routine expenditure of some JD 500,000 annually to develop the com-pany's 220/380-kV network. The latter financial provisions appear adequateto meet the increases in power requirements during the period. JEPCO's demandexceeded its firm capacity in 1974. The fourth 6-MW diesel unit and theHussein I gas turbine financed from the Credit 386-JO are expected to meetthese requirements reasonably well except in the event of unscheduled outages.JEPCO intends to retire and sell the Ras-Al-Ain and Zarqa diesel stations sothat the four newer diesels (24 MW) with the older (to be reconditioned)diesel units at the Marka station, together with the gas turbine (12 MW)will comprise the necessary reserve for the Zarqa station. By about 1978/79,in order to meet JEPCO's requirements as well as those for IDECO (see below),a further extension of the transmission system would also be required.

A

Irbid District Electricity Company

6. The company was established as a private company in Irbid in 1957under the name of Ajlun District Power Company. Irbid power station was ac-quired in 1961 and the company was converted into a public company with anauthorized capital of JD 1,000,000. The name was changed to the IrbidDistrict Electricity Company. The Company was granted the present concessionunder Law No. 1 dated 23 of January 1961 (as published in the Official GazetteNo. 1535 dated February 16, 1961). The concession is for a period of 50 years,after which it can be renewed or the assets may be purchased by the Government.

7. From 1962 onward IDECO has been acquiring smaller municipal under-takings, a process that has been accelerated since 1968 when the company ob-tained its first UK loan for expanding its transmission and distributionsystem (see 9 below).

8. The authorized capital of IDECO is still JD 1,000,000 of whichJD 881,217 has been paid up. The nominal value of a share is one JordanDinar and the distribution of shares as of December 31, 1971, is shown inthe following table:

ANNEX 2Page 3 of 3

Shareholders No. of Shares X

a. Municipalities 4309134 48.8b. Government 178,852 20.3c. Private Sector 272,231 30.9

881,217 100

IDECO's Expansion Program

9. IDECO, which recently completed its Stage I transmission and genera-

tion program with the assistance of JD 360,000 (equivalent) UK financing, ob-tained two further UK loans through JEA of the equivalent of JD 300,000 andJD 750,000 respectively toward expansion. The first loan covered the install-

ation of two 1-MW diesel units in the-existing station and the extension ofthe 33-kV system by about 120 km. The second loan covered further 33-kV

extensions and the third construction of a new power station at Irbid with

three 3.2-MW diesel units. These works are expected to be completed by themiddle of 1975. Several large existing- pumping stations will all be connectedto the IDECO system for supply during off-peak hours, as soon as sufficientcapacity is available. IDECO's major construction is supervised by JEA.Additionally, IDECO is budgeting an annual expenditure of some JD 120,000

for expansion of its 220/380-V facilities. IDECO plans to install two addi-tional 3-MW generating units prior to 1978. By that time, or early in 1979,the construction of a 70 km long 132-kV transmission line from Zarqa to Irbid

may well be justified.

Jordan Valley Rehabilitation and Development Plan

10. The Government announced in 1973 its 3-year Rehabilitation andDevelopment Plan of the Jordan Valley. This plan envisages the migration ofsome 100,000 persons to the Jordan Valley by 1980 to participate in the plan-ned agricultural and environmental improvements of the valley. Towards theachievement of this aim, the Plan includes a power development project com-prising a 33-kV line along the valley (200 km including feeders and spurs)and distribution networks for the expansion of existing townships, for newsettlements and for the pumping of irrigation and drinking water. The linewould be supplied in the north from the IDECO system and in the south fromthe JEPCO system. Demand is expected to grow from about 6.5 MW in 1975/76

to 16 MW in 1980/81, including an off peak load for pumping of 2.3-3.6 MW.

Foreign cost of the project (about JD 1.2 million) is expected to be financed

by the German Kreditanstalt Bank. Lahmeyer, the Consultant for the projecthas submitted a draft report in October, 1974. The project is expected to

be completed in 1977/78, which appears ambitious. The demand for power willbe entirely subject to progress made in implementing the Plan and to the

extent that the proposed influx of population is achieved and for thisreason this estimated load has not yet been taken into account in JEPCO'sor IDECO's load forecasts until firmer information is available on theexecution of the Plan.

April 1975

APPRAISAL OF

THlE CRCOWD HUSSEIN THESMAL POWER PROJECT

JORDAN

Hussein Thermal Station St4*e II

Historic and Forecast Number of CQAu4mik- 0eneratiOn . Pu chase anadea; Capacities' and Maximum Demand

Site Rated DeratedPurchased Maximui Load Installed Available Reserve Firm ,Capacity Margin

Number of Geeneration from JEA Sale Demand 7.etor Capacity Capacity (derated) Capacity 2/

Year ~~Consumers (GWh) (GWlh) ^1S)1(b)(V )(Mm X)I

istoric

1963 29,956 57.4 50.1 15.0 43.5 18 17 3 14 2.0 12

1964 33,695 66.0 57.4 14.6 51.5 18 17 3 14 2.4 14

1965 37,536 72.8 63.3 15.7 53.0 22 20 5 15 4.3 21

1966 41,564 81.7 70.9 17.9 52.0 27 22 5 17 4.1 19

1967 46,080 91.6 77.9 20.4 51.5 38 30 5.5 24.5 9.6 32

1968 50,662 104.4 88.1 22.9 52.0 47 37 5.5 31.5 14.1 38

1969 56,738 122.7 102.2 27.8 50.5 47 37 5.5 31.5 9.2 25

1970 61,161 119.9 101.1 29.8 46.0 47 32 5.5 26.5 2.2 7

1971 66,683 133.8 112.9 31.1 49.0 47 32 5.5 26.5 o.9 3

1972 73,883 157.9 134.7 34.9 51.6 48, 36 4 32 1.1 3

1973 81,738 181.4 153.7 38.6 53.6 60 40 6 34 1.4 3

Sept. 1974 86,426 156.0 130.0 45.2 52.7 64 46 6 40 0.8 2

Forecast

1974 88,000 210 173 47 51 64 46 6 40

1975 96,000 235 30 220 59 51 70 582 6 521-

1976 105,000 160 176 282 75 51 113/ 83/

1977 113,000 397 332 89 51 Q

1978 122,000 454 383 100 52

1979 132,000 512 432 110 53

1980 142,000 577 485 122 54

1/ Derated Available Capacity less Maximum Demand; 2 % of Derated Available Capacity2/ Plus JEA gasturbine at Zarqe 12 MW3/ Marqa 60/50 MW diesl station transferred to JEA4/ Rsa-Al-Ain an' Zarqa diesel stations retired

March 1975

APPRAISAL OF

TIHE SECOND HUSSEIN THERMAL POf622 PROJECT

JORD.&I

Lo_rd*Ai= 2lectric 20m Cgnvr

Mietartc .*d *orr cat Sot.6 (6hl gem Coosr CRtOelo

------ DMWetic--------- Ca eCi.l/ G - t -------- __----------_____-- Industry -------------------es----UpiO 1 -CSolF . . . .. ... LIFE' ........... ,ti---- -. t LeSth, i_EaetLLg cnd nPes of WorshJip. Total

bi=s GWh % Increace .W Wh lacrea 6Inlc 4 a"11 r diC,s L i1.a8 To /.'8itiv 1Jnu Ms ID . 1 ... Juri;3 Is v6 7Ih* InPre 68Hh 7Historic ~~~~~~~~~~~~~~~~~~~~~~~~~~Wj(wh)

1963 11.6 7.7 23.5 . 2.8 3.4 1.1 50.l

1964 15.0 29.3 8.9 15.5 25.6 8.9 3.2 14.2 5.5 2.9 5.1 9.0 57.4 14.61965 17.8 18.6 9.5 6.7 27.8 6.5 3.2 - 3.7 5.7 1.3 8.3 63.3 10.3

1966 21.1 18.5 10.2 .0.4 30.4 9.3 3.4 17.9 3.9 5.4 1.9 8.1 70.9 11.9

1967 23.7 13.2 11.4 10.7 33.0 8.6 4.2 7.7 3.4 -12.0 2.3 Z1.0 7e.0 10.0

1968 28.3 19.4 13.7 20.0 35.1 6.4 4.8 14.2 3.5 3.0 2.8 21.7 U8.2 13.1

1969 33.9 19.9 16.7 22.0 39.4 12.2 3.7 16.7 3.2 @.6. 3.3 17.6 102.2 15.31970 34.0 0.3 17.0 1.8 34.6 -12.2 9.1 . . 3.5 9.4 2.9 .12.1 101.1 -1.1

1971 40.2 18.2 19.9 17.0 31.9 7.'9 13.2 "A.1 3.9' 11.4 3.8 31.0 R12.9 11.7

1972 '47.4 17.9 24.2 21.6 33.3 4.4 20.1 32.3 4.9 25.6 4.3 1.4 134.7 19.3

1973 53.9 13.7 26.6 9.9 38.1 14.4 24.8 23.t 4.8 .2.0 5.3 22.2 153.7 14.1S.pt.197

446.7 22.9 30.9 20.6 3.9 5.*

Trend () - 13.6 14.0 4.3 30.9 3.5 15.2 12.7

Forecast

1974 60 30 4444. 27 S 7 173

1975 72 35 61 6 69 St 8 6 220

1976 86 41 75 28 103 38 5 9 2021977 99 47 86 41 127 44 5 10 3321978 115 34 9S 48 14 S1 6 it 383

2979 132 61 111 s0 161 59 4 13 432

1980 153 70 123 50 173 68 6 15 46S

Average grolth 1973-80 (I) 16.1. 14.8 21.6 27.9 13.S 3.2 1I.4 17.8

Mea..b 1975

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Irbid District Electricity Company

Historic and Forecast Number of Consumers: GWh Generated: Purchased and Sold: Capacities and Maximum Demand

Purchased Maximum Load Installed Reserve FirmNumber of Generation from JEA Sales Demand / Factor Capacity Capacity Capacity

Year Consumers (CWh) (GWh) (GWh) (MW) (MW) (MW) __(MW)

Historic

1968 11,859 7.5 5.93 2.6 33 3.3 0.3 3.0

1969 13,153 8. 6.71 2.7 36 3.3 0.3 3.0

1070 15,184 8.9 6.93 2.9 35 3.3 0.3 3.0

1971 18,812 12.0 8.75 4.0 34 4.7 1.0 3.7

1972 22,800 14.5 11.4 4.6 35 4.7 1.0 3.7

1973 25,337 16.1 13.0 4.9 38 4.9 1.0 3.9

Sept. 1974 26,857 13.0 10.5 5.5 36 5.5 1.0 4.5

Forecast-/

1973 27,000 16 14 4.9 37 / 4.9 1.0 3.9

1974 31,000 29 25 6.3 53 - 13.5 3.0 10.5

1975 35,000 37 29 7.8 54 13.5 3.0 10.5

1976 39,000 43 37 9.5 52 18.5 5.0 13.5

1977 43,000 48 41 11.0 50 18.0 5.0 13.0

1978 47,000 54 46 12.6 49 21.0 5.0 16.0

1979 51,000 62 j/ 4/ 52 14.4 49 21.0 5.0 16.0

1980 55,000 70 4/ 59 16.0 50 21.0 5.0 16.0

1/ From 1971 onward demand has been limited to available capacity.2/ Forecast as of April 1973. No additional information was available to update these figures.3/ Improvement due to additional off peak pumping loads.4/ Because a 23% annual growth rate appears high a shift by one year was assumed in the attainment of sales on

generation as forecast, i.e.

1979 1980(Year of Connection)

Sales (GWh) 46 52 see Annex 14Generation (GWh)(Purchase from JEA) 54 62 see Annex 15

May 1975

APPRAISAL or

THE SECOND HUSSEIN THERHL P(MER PROJECT

JORDAN

Irbid District Electricity Company

Historic and Forecast Sales 81Wtd Per Consuwr Categorv

Commercial Hospitals andand Schools; Worship %

Year Domestic % Increase Government % Increase Industry % Increase and Charities Increase Streetliahting % Increase Total 7 Increase

Historic

1968 3.36 0.71 1.01 0.21 0.65 5.94

1969 3.73 10.9 0.87 22.5 1.21 19.7 0.24 13.4 0.67 3.9 6.72 13.1

1970 3.76 0.8 0.87 - 1.30 7.5 0.30 27.6 0.70 4.3 .93 3.1

1971 4.89 30.2 0.96 10.3 1.45 11.5 0.35 16.7 1.10 57.0 8.75 26.3

1912 6.77 38.4 1.39 44.8 1.57 8.3 0.39 11.4 1.34 21.8 11.42 30.5

1973 8.10 19.6 1.50 7.9 1.60 1.9 0.40 2.6 1.40 4.5 13.00 13.8

Sept. 1974 6.70 1.20 1.20 0.30 1.10 10.50

Foreeast'

1973 8.6 1.5 1.7 0.6 1.5 13.9

1974 11.7 1.8 8.7VI 0.7 1.8 24.7

1975 12.0 2.1 12.o 0.9 2.1 29.1

1976 14.3 2.3 17.0 1.0 2.4 37.0

1977 16.7 2.7 17.9 1.1 2.6 41.0

1978 20.5 3.1 18.5 1.2 2.7 46.0

1979 25.9 3.6 19.5 1.3 2.8 53.1

1980 29.9 4.1 20.7 1.4 2.9 59.0

Average Forecast Growth Rate 20 14 38 17 10 23

1972- 1980

1/ Forecast as of April 1973, no additional information was available to update these figures

2/ Off-Peak pumping loads added

March 1975

AP'RAISAL OF

7-dE secoND RussEll TDIIOIAI POWiER PROJECT

JORDAN

Tmnian RlCtk c Ib Paer C-ceaW

Plont Availability

Site Rati.8 Actel Capacity Year Site Rating Actual pacSty Year Sit.e R.tit Act.al C g-City Yn.r

2 ~~~~~~~~~~~(MW) (16W) cpmnilggwd RAS- Fllr A t k M) Commalapsene d (4)7ALI)_w (kW) - kW4 C-i-ions,

I1 1 Mirrl@s WSS 12 2.1 1.2 1963 I R.ton 327 100 1941 4 I 1,200 1.000 1963

of 2 Mirrlees XmSS 16 2.9 1.7 1963 2 Roseon 327 100 1948 5 MAIN 1,200 1,000 1958

b/ 3 Cro.alay Piciatick 18PC2V 5.0 3.7 1966 kb 7 Cro.s.ay (327) - 1951 6 MAN 1,200 1,000 1958

k/ 4 Crossley Pialotick l1PC2V 5.0 4.0 3888 8 Cronslay 600 300 1951 7 MAN 1 200 l.000 1958

c/ 5 Ch-ati.er Pieltiek ISPC2V 5.5 2.8 1968 9 National 1,220 700 1955 4,800 4,000

S7 6 Ch-tier. Pi.l.tik 18PC2V 5.5 4.0 1970 10 National 1,220 700 1S56

A/ 7 Mirce.. K Mayyr 16 4.6 2.5 1969 c/1l Natioral 1,220 700 1958

I/ 8 Hirrl.e. KRV Mayor 16 4.6 - 1970 12 National 1,220 700 1959

9 Crosaley PielatieklI18C2V 6.2 6.1 1973 A/13 Douts (1,220) - 1959

10 Crossley Pielatick ISPC2V 6.2 6.1 1973 14 euts 1.22C 70 1962

11 Creealay Pielatick 18PC2V 6.2 6.1 1974 7,354 4,000

53.8 38.2

a Foundation blomk cracked j/ ill e4inee h ong prohla */ All agine hare nnnlic 8 problem

b/ Cooling probleaa j/ Unrepairbl.

S/ Grouting Probl_ £/ BRrouft aS rxaibad

A/ aIting apore. 4/ I8R an gin had

9/ Crankahbft aiaur

1974 .Available

Capacity Ratirenet Additions capacity

r~~~~~~~~~~~~~M (Fn NW) (we (NW) rO

1974 See above table: 36,2 + 4.0 + 4.0 46.2 46.2 1974

1975 Unit 5, laprnveots 1.2

USnt 7, return tE full "aeLt. 1.0

tnit 8, repaired 3.5

Unit 12, Me. Cronalay pielstiek dded 6.1

+11.8 58.0 1975

1977 Ras-Al-sn, Zanqa retired -8.0

Marq4 1, 2 retired -2.9

Rehabilitation Marqa Unit 3 0.8

Unit 4 0,3

Unit 5 0.8

Unit 6 0.8

Unit 7

Unit 8 - - -

-10.9 +2.9 50.0 1977

Match 1975

ANNEX 8Page 1 of 2

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Electric Power Rates and Tariff Studies

1. JEA's laws require that the prices to be charged by undertakingsshall be in accordance with such tariffs as they may fix from time to time,with the approval of the Cabinet on the recommendation of the Minister. Nospecific concepts or regulations are set forth for the definitions of costs,rate base, rate of return, etc.

2. In practice a single and simple uniform tariff structure prevailsin the country, comprising block rates only. On a monthly basis they are thefollowing for the two most important companies (in fils 0.31 USJ per kWh):

JEPCO Fils/kWh USE/kWh

First 50 kWh 30 9.3Next 2450 kWh 15 4.6Over 2500 11 3.4

IDECO

First 50 kWh 40 12.4Next 50 kWh 25 7.7Next 900 kWh 20 6.2Over 1000 kWh 15 4.6

3. Special contracts are allowed at lower prices and normally thistakes the form of a discount. In the case of JEPCO, employees have a 75%discount and institutions considered socially important (churches, hospitals,schools, charity) 25%. For street lighting under a special contract, theoriginal discount was 30%. Each year, however, this increases by 5% and thepresent situation in Amman is that within 3 years street lighting supply andreplacements will be fully subsidized by other consumers, the municipalityfinancing the extensions. In 1970, about 12% of all of JEPCO's supply wasat a discount, constituting about 6.3% of revenue. Similar discounts existsin Irbid where, however, the discount for street lighting increases 10%annually but is limited to a maximum of 60%. Some larger industrial consu-mers have a special contract setting the highest block rate at 12 fils/kWh.

4. As a condition for lending, JEA required JEPCO to have its tariffsstudied by an acceptable consultant to investigate if they could be reduced.The company's costs were to be analyzed and recommendations were to be madefor any promotional activities to be initiated, including setting up a com-mercial section. The study was completed by Kennedy and Donkin of the UKin May 1972.

ANNEX 8Page 2 of 2

5. A study of Jordan's electricity tariffs, financed by UK was sub-stantially completed in 1974 by the North Eastern Electricity Board, UK.A summary of its recommendations is included in the Appendix. The finalstudy which is expected to be completed in 1975, would take into accountthe most recent information on costs, the forecast development program, andthe results of a tariff study being undertaken by JEPCO's consultants.

April 1975

ANNEX 8Appendix 1Page 1 of 4

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Recommended Tariff StructureMemorandum of the North Eastern Electricity Board (UK)

on a tariff study for Jordan

1. The aims of cost recovery and cost reflection are accepted assuitable for Jordanian conditions. In particular the earning of proper ratesof return on capital and the pricing philosophy represented by marginal costpricing are both acceptable.

2. The present block tariff and-discount structure is recognized asunsatisfactory as it leads to the underpricing of some consumers and the over-pricing of others with consequent cross-subsidization. Also the giving ofincentives to consumers to increase consumption economically is not definedwell in the present structure.

3. Accordingly, the following tariff structure is agreed (see page 4)and recommended as suitable for Jordanian conditions (No meter rentals arecharged in-addition):

A. Standard Tariff

This is applicable to all Domestic and Small Commercial singlephase consumers.

The tariff is a two-block tariff consisting of a first higherpriced block of units and a final lower priced unit rate.

B. Public Buildings Tariff

This is applicable to all places of worship, schools, hospitalsand other public buildings supplied single phase where the sup-ply authority is satisfied that the use of electricity duringpeak periods (i.e., 16.00 hours to 22.00 hours) is limitedand/or infrequent.

The tariff is of similar structure to the Standard Tariff butat a reduced price level.

C. Street Lighting Tariff

This is applicable to all street lighting and similar loads.The tariff consists of a fixed charge per metering point anda single unit rate.

ANNEX 8Appendix 1Page 2 of 4

D. Off-Peak Tariff

This is applicable to all off-peak loads connected to an ap-proved time switch controlled circuit which only allows useof the supply during off-peak periods.

The'tariff consists of a fixed charge per metering point anda single unit rate.

E. Three Phase Tariff

This is ultimately applicable to three phase loads suppliedfrom the medium voltage network only but will initially applyto all three phase loads (see F below).

The tariff consists of a modified form of the Standard Tariffconsisting of a larger first block of units at the first unitrate of the Standard Tariff, a second block of units at thefinal unit rate of the Standard Tariff, and a lower final unitrate.

F. Subscribed Service Capacity

This will apply to all consumers taking supply from an individualtransforming point on the h.v. (or e.h.v.) network.

The tariff consists of a fixed charge per kVa of agreed servicecapacity (Subscribed Service Capacity) and two unit blocks (thisis a simplification of the original recommendation by omittingthe final block of units).

Special forms of charge based on the Subscribed Service capacityTariff will be negotiated for special large loads. An example(Broadcasting and T.V. Special Tariff) is discussed in the mainreport.

4. As the Subscribed Service Capacity Tariff requires the collectionof load information from a trial installation of the special metering equip-ment required, it is recommended that initially the Three Phase Tariff E beapplied to all three phase consumers.

It is also recommended that the Subscribed Service Capacity Tariff(or its equivalent) be introduced into the concession area of JEPCO initiallyand extended to the few suitable consumers in the concession area of IDECOonly after experience has been gained in JEPCO.

It is recognized that JEPCO are awaiting technical advice from theirconsultants, Messrs. Kennedy & Donkin, on the recommended tariff form and thepossible alternative of a maximum demand type tariff. However, it is acceptedthat a tariff is required for the larger consumer which contains an elementof charge related to kW demand (be it measured directly or by means of KVAcapacity required) in addition to blocks of units.

ANNEX 8Appendix 1Page 3 of 4

5. It is recognized that the recommended tariff structure will leadto increase prices to some consumers (particularly street lighting and to alesser extent the small domestic consumer) and to decrease prices to otherconsumers (particularly industrial consumers). This is not inconsistentwith the assumed aims of the Government to encourage both the efficient useof scarce resources and the industrial and commercial development of thecountry.

ANNEX 8

Appendix 1Page 4 of 4

SUMMARY OF RECOMMENDED TARIFF FORMS

IDECO JEPCO Kerak

(Section 2) Section 3) (Section 4)

Standard Tariff (for normal

single phase supplies)

First 5OkWh/month 45 Fils/kWh 35 Fils/kWh 35 Fils/kWh

All units in excess 15 Fils/kWh 11 Fils/kWh 23 Fils/kWh

Public Buildings Tariff

First 5OkWh/month 25 Fils/kWh 35 Fils/kWh 30 Fils/kWh

All units in excess 15 Fils/kWh 9 Fils/kWh 18 Fils/kWh

Street Lighting Tariff

A fixed monthly charge per meter JD 10.400 JD 11.625 JD 7.700

All units 12 Fils/kWh 10 Fils/kWh 18 Fils/kWh

Off-Peak Tariff

A fixed monthly charge per meter 500 Fils 500 Fils 500 Fils

All units 10 Fils/kWh 8 Fils/kWh 14 Fils/kWh

Three Phase (Subscribed ServiceCapacity) Tariff (for all threephase supplies of 1OKVA and above)

A monthly fixed charge 640 Fils/kVA 400 Fils/kVA

First l2OkWh/kVA/month 12 Fils/kWh 11 Fils/kWh n.a.

Next 240kWh/kVA/month 8 Fils/kWh 6 Fils/kWh

All units in excess 7 Fils/kWh 5 Fils/kWh

Three Phase (Block) Tariff

First 75kWh/month 45 Fils/kWh 35 Fils/lWh

Next 1500kWh/month- 15 Fils/kWh n.a. 23 Fils/kWh

All units in excess 10 Fils/kWh 18 Fils/kWh

Broadcasting and T.V. SpecialTariff

A monthly fixed charge n.a. JD l/kVA n.a.

All units 9 Fils/kWh

n.a. = not applicable or not recommended.

April 1975

(JD b-,

*.A rror.. L ,_em oc

Hwoot. P-1 S_r*tI- . 31 1 IC 4 300 427 469 100 to129K = _2= 12z2 .m )aa - _ _ 510

T 57 1,093 2.173 2.465 750

0.. 15/12 98 IC - -

st5wi_- IC 10 15 30

T0l r0j0 t B.-w I IC 310 450 474 100 1 334

7.375

frm..1..4.. 09St. I it 0 30 435 60 104 629WC at 1.iaK 5 65 37 1.977

T0t0. Proj.t. J. CIcalA) UC 50 340 an 534 20 1.963

P...o Poojot St. 2 3/it,1 11 IC 53,1 251.6 450.0 587.1 47.2 1.400.0

PC 2 U 1.074.5 1.696.8 410.3 5 150.4 1. 212.9 2.152,3 2.263.9 "4.5 6,558.1

00.10, 0000020io.k.9 IC - 112.9 112.9

T *11 EJ. 467.7

St0d1-. IC 6.4 9.7 1U.1

1Tl 60.0.1 II 1!73.Jot LC 64.5 261.3 570,9 507.1 45.2 1,529.0PC I ___ ____5577.4T 1. 2 WN, Si 7,106.4

Sr..o.5... 9000tqp 11 IC . 10 200 235 175 70 690IC 5 j. 50 25010

T 5~ ~~ '702 rM 3435 530 20 104

( 1ti Cono PotoY EC - 30 7M . 106

Y + 111 -12 575

005.W _pSinloj Stol iC - 10 40 75 60 70 75 3255860190d V.11 IC 10 is 20 10 15 20 25 115A.q62001 "=. (34_1. 4t. -ito a 3457.0005 LIt- 1

T t0 3'62, 75 9O iMi

T-I 1974 .0.J-c (2) W 10 130.5 603.3 3,486.9 637.1 205.2 100 5,91.5000 -2 IL-2 2AMJ LAIl L*L& A39-LA4.4

T IL BW ,_ 6%044051 2,775__

C.. AS-" f .twe 50.09M--l T-- S_r rft1t Stp 3

lk.--. 111. Mp*_ 64010C 100 400 690 930 2,19000 770 L550 2 . 7.710

T 9,900

Q-T-biK 7.60LI 10 390 te

4.00T La 1,0 510 470 1,090ssstev, s_ o IC - loo 1 550 7 0 1.0 170 4.350

t0.5 -- C . 40 30 70

T t ir 630 230

K 16,640

S-I ~..ti_ IC 90 450 650 1,190PC ~~~~~~~~~~~~~~~~~~~~~~~~~~4.410

Ts id IE 'a 4 5.000

ad- W 500 100 500 N900

?.S 4_. 1.= 1t0.38 (C) IC lOo 970 2.010 2,550 5,630

T t1 . 10.1 25.240

T0 040 .d 1974-1980 9o_t tt op IC 54 350 1.023.5 1.137.3 3,790., 1,007.1 2,215.2 2,650 12.974 0

C 54 550 1.0, 1.137 3,n7 1807 1.223 25.05 12,974

0,6.1~~~~~~~~~~~~~~~~~~IT411

v~~~~~~~~~~~~~~~~~~, ena_u - atim a t I pdS.B- at" Coot (0A- Ii) 2- 197.08 ,963005 19*&40 -JD 62,069

005 197

ANNEX 10Page 1 of 2

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Outline of Terms of Reference for Southern Jordan Power Supply Development

1. Power developments shall be studied in a geographical area borderedby: in the north, the Wadi El-Mujib river north of the town of Karak; inthe east, the desert; in the south, the Gulf of Aqaba; and in the west, theDead Sea and the Wadi Araba depression.

2. The consultants shall:

- survey all electricity systems throughout the area, includingthose under construction;

- review and update previous reports on power supply for the area;

- investigate existing development and future plans for industrial,agricultural, tourist, rural, and urban developments in the area,preparing forecasts of demand for the period 1976-85, taking intoaccount realistic assumption for the actual progress expected inencountering the various plans, of which the most important are:

- Expansion of the phosphate mine at El Hasa

- The construction of a potash plant at Safi

- Development of a copper mine at Fainan

- Construction of a cement plant at Ma'an

- Construction of a glass factory at Basta

Construction of a fertilizer plant at Aqaba

Workshops and housing at Aqaba and Ma'an for theAqaba Railway Corporation

Development of various tourist centers by theMinistry of Tourism and Antiquities

- Electrification of several villages in the study area

- The Wadi Majib Irrigation Scheme

- Socio-economic development of Ram Quweira, includingirrigation.

ANNEX 10Page 2 of 2

3. On the basis of their findings, the consultants shall:

- determine the most practical and economic means of generation,transmission, distribution of meeting the future power require-ments in the area, applying the method of discounted cash flowcomparison of alternatives and using a suitable range of dis-counIt rates, appropriate shadow prices (e.g. foreign exchangeand cost and unskilled labor); cost should be based on 1975prices without escalation, excluding any taxes but includingany subsidies, the economic cost of fuel and secondary benefitsor penalties (environmental effects) to the extent possible andrealistic; the result of the study shall be submitted to asensitivity analysis with respect to the basic assumptions(e.g. load forecast, capital costs, fuel costs, assumedstandards for reliabilities, etc.);

- include in the basic alternatives, appropriate siting of powerstations at the load center or the location of a new oil refinerythat may be constructed in the area; this comparison should alsoconsider the environmental aspects with respect to the use ofwater for cooling purposes;

- prepare detailed cost estimate of the final scheme recommended,construction programs, preliminary design of the required facil-ities, and such information as may be required for final designand preparation of bid documents.

4. The consultants shall calculate the economic return on the leastcost development scheme recommended by comparing the benefits,as measuredby the projected revenues from electricity sales to consumers at the retaillevel plus any other identifiable benefits, with the actual costs of supply-ing them with electricity at that level.

April 1975

ANNEX 11Page 1 of 2

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

JORDAN ELECTRICITY AUTHORITY

Description of the Project

33-MW Steam-Electric Unit

1. The proposed additional third unit will be added to the two similarunits being installed at Zarqa which is some 42 km northeast of Amman, locatedadjacent to and just east of the Jordan Refinery in an area which is presentlyunused for any purpose. This site has existing access facilities, an adequatesupply of water, proximity to the source of fuel with consequent savings incost, and remoteness from urban areas. The capacity of the power stationwill be 99 MW with the addition of this unit, but site facilities are adequatefor the ultimate development of a power station of several hundred megawatts.

2. The generating plant will consist of a 33-MW turbo-alternator setand boiler, together with all anci±liary equipment, switchgear, etc. Theturbine will be designed to operate with steam conditions of 850 psi and 900°F.The generator will operate at 3,000 rpm, is hydrogen cooled and rated at38,825 kVA; 33,000 kW at 0.85 power factor, 13,800 volts, 50 cycles, 3 phase.

3. The boiler will be of the outdoor multi-drum pressurized type withprovision of combustion air by forced draft fans. It will be designed toburn local residual fuel oil and will be rated at 320,000 lbs per hour at900'F with final feed water temperature of 395°F. The firing aisle of theboiler will be incorporated in the building housing the turbo generator andauxiliary equipment. This is an economically designed building (HusseinStage I Construction) of steel frame construction with provision also forhousing the low voltage switchgear, the water treatment plant, offices andother ancilliary facilities.

4. Fuel will be supplied by pipeline to daily service tanks from theadjacent oil refinery. Water for boiler make-up, cooling and other purposeswill be available from wells on the site. Eight wells have been drilled ofwhich five are productive with a total capacity of 1,800 gallons per minute.In order to conserve water a multi-cell mechanical draft, closed circuit,dry type radiator type heat exchanger will be installed on the roof of thebuilding.

ANNEX 1 1Page 2 of 2

5. The generator will be connected to a 13.8/132-kV step-up transformerand the 132-kV substation will be an outdoor type structure with open buses.All the net power generated will be fed into JEPCO's distribution system net-work via a double ciruit 132-kV transmission line which is not part of theProject.

6. Although, except for a mechanical precipitator of 95% efficiency,no means of cleaning exhaust gases would be installed, sufficient space willbe piovided to install such facilities if they are necessary in the future.

Marga Recouditioning

7. The diesel-electric station at Marqa, presently.owned and operatedby JEPCO, would form part of the standby reserve for the Hussein ThermalStation at Zarqa. JEPCO proposes to retire two older units of total capacity2.9 MW. The remaining older units have cooling problems and have developedcracks in the concrete bases. These will be completely dismantled and re-conditioned adding radiator cooling to them. The machines having concretebase trouble may have to be provided with skid-bases.

Southern Jordan Power Development Study

8. The Project includes a power development study for Southern Jordan(see Annex 10 for terms of reference).

Engineering

9. Consultants services for the Project including the feasibility studywould be treated as a part of the project.

April 1975

APL'RAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Jordan Electricitl tAhocity

Project Cost Estimate

JDl = US$3.1

JD (Thoosands) uS$ (Thousands)

_ _________ % of Project

Projtct Element Local Foreign Total Local Foreign Total _ Cost

A Steam Electric Plant

1. Civil Works

Building extension foundationsand miscellaneous 438.7 229.0 667.7 1,360 710 2.070 9

2. Electro-Mechanical WorksBoiler Plant and auxiliaries 222.6 1,383.9 1,606.5 690 4,290 4,980 23

Turbine-Generator plant -and auxilaries 45.2 848.4 893.6 140 2,630 2,770 13

Air-Cooled condensors 6.4 674.2 680.6 20 2,090 2,110 10

Electrical plant 61.3 471.0 532.3 190 1,460 1,650 7

Spares 103.2 103.2 - 320 320 1

Sub-total 774.2 3,709.7 4,483.9 2,400 11,500 13,900 63

B. Engineering and Administration 80.6 322.6 403.2 250 1,000 1,250 6

C. Reconditioning Marga 96.7 322.6 419.3 .00 1,000 1,300 6

D. Sou hern Jordan Power Development 16.1 64.5 80.6 50 200 250 1

E. Contingencies l0Physical- 15469 258.0 412.9 480 800 1,280 6

Price2/ 406.5 900.0 1,306.5 1,260 2,790 4.050 18

1,529.0 5,577.4 7,106.4 4,740 17.290 22,030 100

Note: Figures in the table have been rounded

1/ 20% on the local and 7% on the foreign costs of project element A.

2/ Local costs: 15%, for 1975 and 12t/a for subsequent years.

Foreign costs- 11% for 1975 and 7.5%/a for subsequent years.

May 1975

ANNEX 13

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Estimated Schedule of Disbursements

Cumulative Disbursements at end of Quarter

Government and/or possible

Total Goods and Services Co-Financer IDA Credit

IDA Fiscal Year andQuarter

----------------------US $1,000 Equivalent--1975/1976

December 31, 1975 1,340 950 390

March 31, 1976 2,160 1,540 620

June 30, 1976 2,980 2,130 850

1976/1977

September 30, 1976 3,810 2,710 1,100

December 31, 1976 4,640 3,300 1,340

March 31, 1977 ' 6,160 4,380 1,780

June 30, 1977 7,680 5,460 2,220

1977/1978

September 30, 1977 9,200 6,540 2,660

December 31, 1977 10,730 7,630 3,100

March 31, 1978 12,040 8,560 3,480

June 30, 1978 13,350 9,490 3,860

1978/1979

September 30, 1978 14,670 10,430 4,240

Dbcember 31, 1978 15,990 11,370 4,620

March 31, 1979 16,640 11,830 4,810

June 30, 1979 17,290 12,290 5,000

Source: Mission estimates.

March 1975

APPRAISAL OF

THE SECOND HUSSEIN THE13. POWER PROJECT ANNEX 14

JORDANI

Tutercon,wcted .System

Balances of Energies and Capacities

1974 1975 1976 1977 1978 1979 1980

Sales (GWh)

JEPCO 173 220 282 332 383 432 485

IDECO 46 52 Interconnection 1979

JEA Direct Sales _ 10 12 24 84 84 84

Total 173 230 294 356 467 562 621

Losses (GlWh) (7,) 37 (17.6) 45 (16.4) 63 (17.6) 101 (22.1) 117 (20.6) 145 (20.5) 165 (21)

Required Generation 210 275 357 457 584 707 786

of which:

Diesel

Narqa 170 195 135 97 129 167 86

Ras-AI-Ain 15 15 10

larqa 25 25 15

Irbid - - - - - Interconnection 1979

Subtotal 210 235 160 97 129 167 86

Gas Turbine

Unit 1 12 M 40 27 10 5 5

Unit 2 24 -_- - 10

Subtotal 40 27 tO 5 15

Steam

Hussein 1,2 66 MW 170 350 350 350 350

Hussein 3 33 MW 100 175 175

Hussein 4 66 MW _ _ - 175

Subtotal 170 350 450 525 700

Load Factor (7) 51 51 60 50 51 51 52

Maximnu Demand (MW) 47 62 82 104 131 158 173

Plant Capacities (MW)

Diesel

Harqa 38 50 a 50 50 50 50 50

Ras-Al-Ain 4 4 4

2arqa 4 4 4

Irbid - - - 15 15 6 W old plant retired

Subtotal 46 58 58 50 50 65 65

Gas Turbine

Unit I 12 12 12 12 11 12

Unit 2 _- - - 24 24

Subtotal 12 12 12 12 36 36

Steam

Hussein 1,2 66 66 66 66 66

Hussein 3 33 33 33

Hussein 4 - - _ 66

Subtotal 66 66 99 99 165

Total availablecapacity (1M) 46 70 136 128 161 200 266

Reserve: largest unit(MW) (6) 12 33 ( 3) ) (66)

Firm Capacity (MW) 40 58 103 95 * 128 167 200

Capacity Margtn (MW) - 7 -4 21 - 9 - 3 9 32

may 1975

APPRAISAL OFTHE SECOND EUSSEIN THERMkL POWER PROJECT

JORDAN

JEA and JEECO's Forecasts for Sales, Losses Generation

---------------------------Sales (GWh)-------------------------- -------Losses------- GenerationJEA JEPCO Refiners Cement Factory Irbid Total GWh % GWh

1974

1975 30 10 40 - - 40

1976 176 12 188 9 4.6 197

1977 397 12 12 421 36 8 457

1978 454 12 72 538 46 8 584

1979 512 12 72 5421 650 57 8 707

1980 577 12 72 62 723 63 .8 786

-_____-_-- Sales (GWh) ------------ -----Losses ------ ------ Generation and Purchase---------

Excluding . Own ParchasedLarge Large Total Generation from 3RA

JEPCO Consumers Consumers Total GWh % GWh) (GWh)(Gh)

1974 173 - 173 37 17.6 210 210

1975 212 8 220 45 17.0 265 235 30

1976 254 28 282 54 .16.1 336 160 176

1977 291 41 332 65 15.4 397 397

1978 335 48 383 71 15.6 454 454

1979 382 50 432 80 15.6 512 512

1980 435 SO 485 92 15.9 577 577

t tosses (see Annex 14) 8 GWh in 1979 and 10 GWh in 1980,

May 1975

ANNEX 16Page 1 of 5

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Justification of the Proposed Project

A. Forecast of Sales and Demand

1. JEPCO will be JEA's principal customer for several years after com-missioning of the Zarqa plant and would require 80% or more of JEA's outputfor the rest of the century.

2. As shown in Appendix 1 historic trends have been used in forecastingrequirements for all categories except industries, subject to the followingobservations.

(a) The historic data have been distorted due to the effects ofthe 1967 war and the 1970 civil disturbances, but no adjust-ments have been assumed in order to avoid over-optimisticforecasts.

(b) The supply for "Social Purposes" (mosques, churches, hospitals,schools, etc.) having a discount of 25% on the normal tariff,has grown out of proportion, indicating the possibility of thedesignation "social" beyond normal limits. It has been assumedthat the Government will take some action to reduce this desig-nation and that future average growth will be about half historictrend. Similarly, for street lighting, payment of which by mun-icipalities is expected to phase out (but would be billed directlyto all consumers), it has been assumed that the Government willwish to restrict the extraordinary growth trend of 18.2%. Areduction to 14.3% annually is forecast.

3. For industry, JEA in conjunction with JEPCO and the Ministries, haverecently initiated a census of all industrial plants under construction andplanned. At the time of appraisal a total of some 80 plants already had beenpreliminarily identified. However, except for plant already committed andunder construction, it is expected that at least up to a year would be re-quired to finalize the investigation and have available a list of plants anda forecast of their requirements taking into account possible delay and actualproduction pattern. For this reason it was assumed that industrial require-ments, except large plants, would grow an average of 17.7% through 1980. Thisassumption appears reasonable. A total of some 25 small factories (aggregat-ing some 6.5 MW in capacity) already account for a growth rate of some 10%through 1977, over and above the trend of 4.3%, for 1975-1977.

ANNEX 16Page 2 of 5

4. Large consumers to be connected (some of which have already beencompleted, like the steel-mill, and await authorization to use electricity,which depends on the commissioning of JEA's gas turbine) in 1975 and 1976 areshown in Appendix 1. The major part of supply would be by JEPCO, JEA supply-ing directly to the cement factory (which is executing an expansion program)and the refinery at Zarqa. It is assumed that Irbid will be connected to theAmman system in 1979, JEA supplying total requirements.

5. Not taken into account has been the supply to the Jordan Valley.The demand for power will be subject to progress made in implementing theJordan Valley Development Plan, which has suffered delays. It is not expectedthat network construction will commence before 1976, and although initialdemand would be in the order of 6.5 MW (growing to 18 MW in the course of thenext 5 years), firm information, and realistic implementation schedules shouldbe available before including the supply in the forecast.

6. Also not included are forecasts of possible supply to factoriespresently generating their own requirements, due to the uncertainties in thisrespect, thus once more using a prudent approach to avoid over-optimisticassumptions.

7. Annex 14 shows the Balances of Energy and Capacities, resulting fromthe study. Comparison of the previous appraisal estimates, the present esti-mate and the consultants estimates for the Project, shows the following:

First Power Project Second Power Project Forecasts Consul-Forecasts Mission Estimates tants

A LargeGenera- Basic new Genera- Genera-

(GWh) Sales Losses tion Sales Consumers Losses tion tion

1973/1 160 26 186 160 - 26 186 1861974 178 32 210 173 - 37 210 2481975 201 38 239 212 18 45 275 3821976 224 50 274 254 30 63 357 4231977 251 57 308 291 65 101 457 5581978 282 64 347 335 132 117 584 6031979 317 72 389 375 188 145 707 7281980 356 80 436 425 196 165 786 799Averageincrease

(%) 12.1 - 12.9 15.0 - - 22.9 23.1

/1 Historic increased by 3% (assumed minimum suppression)

8. The differences ara considerable but the basic new forecast, i.e.excluding supplies to the large new consumers, is in general agreement withthe previous forecast taking into account the smaller new industrial connec-tions already identified in part (see 3 above). This is because trend growthrates have been used for both projects, to which large consumers were added;the latter have increased considerably and largely account for the increasein the forecast.

ANNEX 16Page 3 of 5

9. The above table also shows considerable differences with the con-sultant's forecast in the earlier years, due mainly to conservative appraisalassumptions for demand of new consumers. By 1978, however, both forecasts arein general agreement. The appraisal forecast appears reasonable taking thelarge pending demand that could not be met in the last 4-5 years (of whichthe proliferation of captive plant is a direct indication).

10. Because the third unit at the Hussein Power Station cannot be com-pleted before 1978, it follows from the balance of capacities (see Annex 14)that a small capacity shortage would persist throughout the period and thatfurther plant would be required by 1979, if not earlier. For this reasonit has been assumed that gas turbine plant (24 MW) would be required by 1979,and a fourth unit (66 MW) by 1980. The third Hussein unit could only bepostponed by one year if 1978 demand would not exceed 95 MW (installed capa-city 1977/78 128 MW less largest unit of 33 MW) compared with 131 MW as nowforecast. This is considered highly unlikely (and practically impossibleassuming no further difficulties in the region) because this would negate thelarge additional consumers scheduled for connection constituting some 30-35 MW(most would be operating during the peak) and 100-130 GWh.

B. Comparison of Alternatives

11. During appraisal of the first power project two basic alternativeswere compared, one comprising an all steam development with 33-MW initial unitsize, and the second comprising a diesel/stream development with 10-MW dieselsand 33-MW initial steam units. As variations to these alternatives, differentsteam unit sizes were also considered and a high and low growth trends wereassumed to test sensitivity of the results with respect to growth. It shouldbe noted that the highest growth rate assumed (18.3% average for 1972-1980) iswell below the present forecast - assumed 1980 generation was 638 GWh comparedwith the present forecast of 786 GWh (1973-1980 growth rate 23.1% p,a.).

12. The general conclusion of the comparison of alternatives reachedat that time were the following:

(a) at whatever time in the future it is decided to change fromdiesel generation to steam generation, steam capacity to beinstalled should be about equal to the diesel capacity avail-able at the time of conversion;

(b) any such development can be expected to appear relativelymarginal because this is inherent in a complete technologicalchange;

(c) delay in the changeover to steam will cause higher financialrequirements and will make more diesel capacity obsolete atthe time of the change; and therefore it is prudent to makethe change to steam plant without further delay.

ANNEX 16Page 4 of 5

13. Actual development and expected increase in demand to be met hasconfirmed these viewpoints and the Government's decision to convert to steam-plant generation, particularly in view of the expected higher growth rate.The previous study concluded:

(a) under the assumed high growth rate (of 18.3% p.a. see 11 above)the equalizing discount rate up to which an all steam develop-ment would be the least cost development, would be 15.3%.(Sensitivity considerations indicate that at a higher growthrate--of 23% as presently forecast--the equalizing discountrate would be in the order of 17%).

(b) the results are insensitive to changes in operational cost.

(c) the results are little sensitive to variation in capital cost.(Doubling of capital cost would decrease the equalizing dis-count rate for the high growth rate scheme to about 13%, whichis above the opportunity cost of capital in Jordan, expectedto range from 10-12%).

(d) the results are relative insensitive to the cost of fuel.(Tripling fuel cost to about US$10/bbl would decrease theequalizing discount rate for the present growth rate toabout 14.5%, i.e. above the assumed opportunity cost ofcapital in Jordan.)

14. Because for the previous project the alternative all-steam develop-ments (in which unit size and growth rate were assumed as variables) werecompared with a common diesel/steam development (only the growth rate wasvaried) the conclusions are still applicable in comparing the all-steam de-velopments among each other (the alternative common to all of these steamdevelopments would be eliminated by subtracting net present values of twostreams), provided conditions 13(a) and 13(b) mentioned above are met. Be-cause these conditions are indeed being met, assuming doubling of capitalcost since the previous appraisal in accordance with actual price increasesobserved since 1973, the basic development scheme outlined in the previousstudy is sustained: JEA should install a total of three 33-MW units in theZarqa station (for both economic and technical reasons in view of reservecapacity requirements) followed by 66-MW units. It appears necessary, de-pending on actual load growth, that by mid-1976 JEA should investigate theeconomic justification of installing by 1978 or 1979 additional gas turbinecapacity before the fourth unit (66 MW) is commissioned at Zarqa.

C. Economic Return of Project

15. The internal economic rate of return (IER) of the Project is thediscount rate which equates the present values of the time streams of theattributable costs and benefits over the Project's assumed life of 25 years.In the case of this Project financial costs and benefits have been used in

ANN"EX 16Page 5 of 5

the analysis since no shadow pricing of inputs and adjustment for taxes wasconsidered appropriate. The IER is therefore expressed as an internal fi-nancial rate of return (IFR). The costs are the capital cost of the thirdunit at the Hussein power station (JD 5.3 million), the reconditioning ofthe older diesels at JEPCO's Marqa station (JD 0.4 million), Stage 2 of the132-kV transmission system (JD 2.0 million), a portion of the 30-kV regularexpansion, assumed at 200 km (JD 1.2 million), a share in the cost of dis-tribution expansion, assumed at 2 years (JD 2.0 million), plus the cost ofoperating the additional facilities. Willingness to pay, measured mainlythrough the revenues, has been used as a first approximation of the attrib-utable benefits. These revenues understate the benefits consumers receivefrom the Project because it is considered that a tariff increase of reason-able magnitude (say 20%) would not reduce demand significantly. This isfurther illustrated by the fact that large capacities in costly captive planthave been installed (and would be installed were the Project not executed)to meet the electricity needs.

16. The IFR is about 15% on the basis of the present tariffs. Assum-ing that the cost of the third unit at the Hussein station has been 20% over-estimated, or underestimated, the IFR would respectively be 13.3% and 16.7%.An increase in fuel cost by 50% would decrease the IFR to 12%. Sensitivitytests further indicate that the IFR would be about 13.5% in the event thatall costs would have been underestimated by 10%. On the other hand, in theevent all operating costs (excluding fuel) have been overestimated by 20%,the IFR increases to 14.4%. Assuming that inaccuracies have been made inthe attribution of transmission and distribution facilities to the Project,a 20% underestimate would decrease the IFR to 12.7%, and a 20% overestimatewould increase the IFR to 17%. Sensitivity to average revenue per kWh isthe following: underestimate of 10%, IFR increases to 18%; overestimateof 10%, IFR decreases to 11.8%. The range of the IFR is 12-18%, with mostlikely average of 15%.

April 1975

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Historic (JEECO) and Forecast Total (JEA and JEPCO) Sales and Total Generation

-------------------- ---------- - __-_--- _----_ Sales ------------------- ~------ -- --- ---- --- -- -- - --- -

ExistingSocial & Noranl Cement

Commercial (Hospitals, Total Indus- Total large Refinery Total Lossesand Churches, toad- Street- Columns trial Ex- Columns Consumers to Irbid Colunns GWh

Domestic Government etc.) ct lighting 1-5 pansion 6, 7 JEPCO (JE) 8-10 (%) Generation(1M) - (3) (4) m 7) (9) - (10)

istoricistoric , 11.6 7.7 2.8 3.4 1.1 26.6 23.5 50.1 50.1 7.3(12.7) 57.4964 15.0 8.9. 3.2 3.3 1.2 31.8 25.6 57.4 57'" 8.6(13.0) 66.0965 17.8 9.5 3.2 3.7 1.3 35.5 27.8 63.3 63.3 9.5(13.0) 72.8

966 21.1 10.2 3.4 3.9 1.9 40.3 30.4 70.9 70.9 10.8(13.2) 81.7967 23.7 11.4 4.2 3.4 2.3 45.0 33.0 78Bo 78.0 13.6(14.8) ql.6968 28.3 13.7 4.8 3.5 2.8 53.1 35.1 88.2 88.2 16.2(15.5) 104,4969 33.9 16.7 5.7 3.2 3.3 62.8 39.4 102.2 102.2 20.5(16.7) 122.7

970 * 34.0 17.0 9.1 3.5 2.9 66.5 34.6 101.1 101.1 13.8(12.0) 114.9971 40.2 19.9 13.2 3.9 3.8 81,o 31.9 112.9 112.9 20.9(15,6) 133.8972 47.4 24.2 20.1 4.9 4.3 101.4 33.3 134.7 134.7 23.2(14.7) 157.9973 53.9 26.6 24.8 4.8 5.5 117.1 38.1 155.2 155.2 JJ 26.2(14.4) 181.4974 January-September 46.7 22.9 20.6 3.9 5.0 99.2 30.9 130.1 130.1 25.9(16.6) 156.0

Trend 1963-1973 (%)(3% suppression 1972 assumed) 15.6 14.0 30.9 3.5 18.2 17.1 4.3 12.7 12.7 13.1

orecast974 60 30 27 5 7 129 44 173 173 37 (17.6) 210975 72 35 31 5 8 151 61 212 8 10 230 45 (16.3) 275

976 86 41 38 5 9 179 75 254 28 12 294 63 '17.6) 357977 99 47 44 5 10 205 86 291 41 24 356 101 (22.1) 457978 . 115 54 51 6 11 237 98 335 - 48 84 467 117 (20.0) 584979 132 61 59 6 13 271 111 375 50 138 562 149 i20.5) 707980 153 70 68 6 13 312 123 425 50 146 621 165 (21.0) 786

otes ! /!/: /2 / 2

/ Assumed suppression 3%/ Trend of 15.6% used D

/ Trend of 14.0% usedUsVed 16, /- grorth rate (i,.e ab.ut. half th. trend recent years' growth considered abnormal)

/ Slow growth &ssumed/ Used 14.3% growth rate (iecent years' growth rate considered inflated)/ Based on consultants' forecast, average growth 18.2%/s/ See page 2/ See page 2| Forecast supplies to refinery, cement factory and Irbid

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Forecast Supply to Large Industrial Connections

1975 1976 1977 1978 1979 1980

New Steel Mill 1.5 M 1975 600 1,200 1,800 2,200 2,200 2,200

(400 h) (800 h) (1,200 h) (1,600 h) (1,600 h) (1,600 h)

.Extension Steel Mill 1.8 MW 1975 700 2,100 2,900 4,300 5,800 5,800

1.8 MW 1975 (400 h) (600 h) (800 h) (1,200 h) (1,600 h) (1,600 h)

Medical City 1.5 MW 1975 2,200 3,700 3,800 3,900 4,000 4,100

(1,500 h) (2,500 ,)- ------------slow increase---------------------------

Ceramics 2 MW 1975 5,000 6,400 6,400 6,400 6,400 6,400

(2,500 h) (3,200 h) (3,200) (3,200) (3,200) (3,200)

Army Workshop 5 NM 1976 5,000 10,000 12,000 12,000 12,000

(1,000 h) (2,000 h) (2,600 h) (2,600 h) (2,600 h)

Arc Furnace 3 MW 1976 3,000 6,000 9,000 9,000 9,000

(1,000 h) (2,000 h) (3,000 h) (3,000 h) (3,000 h)

Airport 5 MW 1976 5,000 8,500 8,500 8,500 8,500

(1,000 h) (1,700 h) (1,700 h) (1,700 h) (1,700 h)

Madaba Town 0.8 NW 1976 1,300 1,600 1,800 1,900 2,000

(1,600 h) (2,000 h) (2,200 h) (2,400 h) (2,500 h)

Refinery 2 MW 1975 10,000 12,000 12,000 12,000 12,000 12,000

(5,000 h) (6,000 b) (6,000 h) (6,000 h) (6,000 h) (6,000 h)

Cement 12 NM 1977 12,000 72,000 72,000 72,000

(1,000 h) (6,000 h) (6,000 h) (6,000 h)

Total GWh 18.5 39.7 65.0 132.1 133.8 134.0

Cap. MW 8.8 24.4 36.4 36.4 36.4 36.4

Plart Factor 7 24.0 18.6 20.4 41.4 42.0 42.0

JEPCO Supply (Less Refinery and Cement:) 8.5 27.7 41.0 48.1 49.8 49.8

JEA Supply to Refinery and Cement 10 12 24 84 84 84

JEA Supply Irbid 54 62

Total JEA Supply 10 12 24 84 138 146 p M

May 1975

ANqNEX 16Appe-dix 2

. . . . I I . I I I I I I4 4 u I £ I ~ 4O

tj - - - - ----------

a- S

ANNEX 16Appendix 3Page 1 of 2

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Economic Rate of Return on ProjectAssumptions for Costs and Attribution of Costs to the Project

Capital, end 1974 prices

- Hussein Stage 2 Unit: 100% of capital cost (excluding pricecontingency; no import duties are levied); JD 5.3 million

- Reconditioning of older JEPCO diesels; JD 0.4 million

- 132-kV Transmission: Second stage, to be completed by 1978;ID 2.0 million

- 30-kV Transmission: 200 km; JD 1.2 million

- Distribution: 2 year program, assumed to increase to JD 1 m/a;JD 2.0 million

Fuel Costs

- Hussein Stage 2 Unit: Generation 100 GWh in 1978 and 175 GWh(load factor 60%) from 1979 onward; heat-rate average 3,270kcal/kWh (13,000 Btu/kWh); fuel-oil price JD 6.5/t or JD 0.187/106Btu (US$0.603/106 Btu), i.e. JD 2,440/GWh.

- Diesels: Generation of the older, reconditioned, diesels 50 GWhin 1977, 65 GWh in 1978, 85 GWh in 1979, 45 GWh in 1980, and25 GWh for another 5 years, before retirement; cost equal to thetotal 1973 and 1974 fuel cost of JD 2,400/GWh (including diesel-oil for starting and lubrication).

Operation and Maintenance

- Hussein Stage 2 Unit: 30% of fuel cost (previous assumption was15% of fuel cost; this implies a doubling of all costs, includingspares since 1972).

- Diesel Plant: JEPCO's records for 1973 and 1974 for the Marqastation show about JD 800/GWh for maintenance and JD 500/GWh foroperation, or a total of JD 1,300/GWh. After reconditioningthe costs are assumed to decrease to JD 1,000/GWh.

ANNEX 16Appendix 3Page 2 of 2

Transmission 132-kV; 1%/a of investment, transmission 30 kV3%/a of investment; total JD 56,000/a.

Distribution: 5%/a of investment; JD 100,000/a.

Sales and Revenue

- Sales in GWh: Total generation of Hussein Stage 2 and recon-ditioned diesels, less 20% losses.

- Revenue at an average retail price level of JD 0.016 (JD 16,000/GWh)

April 1975

APPRAISAL OFANNEX 17

THE SECOND HUSSEIN THERMAL POWER PROJECT Page 1 of 3

JORDAN

Major Assumptions for Financial Forecasts(JD Thousands)

JEA

Balance Sheet (JD Thousands)

1. Depreciation Rates - Steam Units 3-1/2%- 132 kV Transmission System 3-1/3%- Gas Trubine 5%- Studies 15%- Buildings 2%- Vehicles, etc. 15%- Diesel Generators 7%

2. Long-Term Investments - Disbursements of Governmentloans which are relent toIDECO & JEPCO on thefollowing terms:

IDECO Stage I - 1970 -4% - 10 years (excl. 3 years grace) 687JEPCO - 12/1970 -6% - 15 years (incl. 3 years grace) 3,100IDECO Stage II - 1971 -6% - 15 years (incl. 6 years grace) 393IDECO Stage III - 1973 -6% - 15 years (incl. 3 years grace) _70

3. Capital - From 1974, Government advances for preliminaryexpenditure and for all local expenditures(including cost of Marqa acquisition) providedhave been included directly as grant.

- Foreign expenditures for Southern Jordan PowerDevelopment Study (75%) and for engineeringservices (85%) would be also provi'29 by theGovernment directly as grant.

b. Capital Reserve - Interest received from relending to JEPCOand IDECO amounts borrowed at Nil interestfrom the Government.

5. Asset Revaluation - For purposes of revaluation of assets GNPdeflator for 1973, 10.5% was used.

ANNEX 17Page 2 of 3

6. Long-Term Borrowing Terms:

Inter- IncludingDate From est % Years Grace

a) Hussein I - 9/1973 IDA-386 Jo 7-1/4 25 3-1/2 3,290b) Hussein I - 4/1973 Kuwait Fund 6 15 3-1/2 3,290c) 132 kV Stage I -12/1973 U.K.-O.D.A. 6 15 2 1,351d) Relending: IDECO I - 1970 Ex UK-ODA Nil 18 3 641e) Relending: JEPCO -12/1970 Ex UK-ODA Nil 15- 6 3,100f) IDECO II - 1971 Ex UK-ODA Nil 18 6 393g) Relending:

IDE.CO III - 1973 Ex UK-ODA Nil 18 3 750h) Project

(Hussein II) - 6/75 IDA 8 1/2 25 3 1/2 1,613i) ProJect

(Hussein II) - 6/75 Cofinancer/Govt 8 1/2 25 3 1/2 3,286j) Marqa Reconditioning 6/1976 Supplier's Cr. 8 1/2 7 2 355k) Future Foreign Loans:

( i) Miscellaneous(includingtransmissionand cementfactory con-nection) - 6/1975 8 1/2 25 3 1/2 2,160

(ii) Hussein III(66 MW Steam &24 NW Gas Tur-bins Unita andtransmission,etc. - 1977 8 1/2 25 3 1/2 18,571

(iii) Future ForeignLoans forthermal gen-eration, etc.- 1978 8 3/2 25 3 V/2 9,5w

Income Statement

7. Tariff - Assumed average:1975 7.2 fils/kWh (USe2.23)1976 9.9 fils/kWh (US¢3.1)1977 10.1 fils/kWh (US¢,3.1)1978 12 fils/kWh (US¢3.7)1979 13.4 fils/kWh (US04.2)1980 16.2 fils/kWh (US¢5)

ANNEX 17Page 3 of 3

8. iuel - Delivered Zarqa JD 6.5 metric ton, 18,000 Btu/lbin 1974 (for later years the estimates includeproviSion for escalation).

9. Other Expenses - Salaries & wages per JEA's Management Consultant's,PMM, forecast.

1C. Cost Estimates - The estimates include provision for inflation.

11. Income & Social Tax - JEA is exempt from taxes and customs duties.

JEPCO

Balance Sheet

12. Depreciation Rates - Diesel generators 7%-LT network 5%-Vehicles 15%- Buildings 2%

13. Income and Social Tax - 3839 of surplus

1J4. Dividends Payable - Maximum 10% of nominal stock value

15. Legal Reserve - 10% of surplus before tax included in "Reserve"

116. Consumer's Deposits - Returnable without interest. 14% of incrementalelectricity revenue

17. Long-Term Borrowing Terms

1969 - Municipality 5- - 10 years 4012/70 - UK-ODA (through JEA) 6% - 15 years

(3 years grace) 3,100

Income Statement

18. Sales - Forecast sales at present tariff (average16 fils/kWh) for 1974 and 1975 and thereafterreducing at 0.2 fils/year till 1980 due to increasein the industrial load.

19. Other Revenue - (1) Income from investments increases at10% per annum.

(2) From 1977 JEA would pay 6% interest onMarqa purchase credit

May 1975

APPRAISAL OF ANNFX 18

THE SECOND HUSSEIN THERMAL POWIER PROJECT

JORDAN

Developent Program -osts lIcluding Price Escalation

JD Thousands

1974 1975 1976 1977 1978 i2 1980 1974-1980

Escalation % - Local Costs Base 15.0 12.0 12.0 12.0 12.0 12.0

- Foreign Costs Base 11 7.5 7.5 7.5 7.5 7.5

Escalation Factor - Local Costs Base 1.075 1.219 1.365 1.529 1.713 1.919

- woreign Costs Base 1.055 1.152 1.238 1.331 1.430 1.537

A. ProJect in Execution1. Hussein I - Local 310.0 483.8 577.8 136.5 1,508.1

- Foreign 1.l00.0 2,321.0 2,406.5 304.7 6.632.2

- Total 1,410.0 2,804.8 2,984.3 941.2 6,140.3

2. Transmission Stage I - Local 30.0 467.6 73.1 142.0 712.7

- Foreign 37.0 1,119.4 126.7 173.3 1,456.4

- Total 67.0 1,587.0 192.8 315.3 2,169.1

B. 1974 ProectsI7Hussein II - Local 64.5 26.3 570.9 587.1 45.2 1,529.0

- Foreign 432.2 1,064.5 1,964.6 1,696.8 419.3 5,577.4

- Total 496.7 1,325.8 2,535.5 2.283.9 464.5 7.106.4

2. Transmission stage i - Local - 10.8 243.8 320.8 267,6 119.9 962.9

- Foreign 20 63.3 92L6 247.6 0 185.9 1.629.7

- Total 74.1 1,165.4 568.4 473.9 358 2,592.6

3. Connection to Cement Factory - Local £ _ 32.3 92.6 124.9

-Foreign 40 105.5 .8 35.9 530.2

-Totel 4.0 137.8 4774 655.1

4. irscellaneou:Pole Plant - Local - 20.4 56.1 75.1 91.7 119.9 143.9 507.1

Vehicles, etc. - Local 10.0 16.1 218.1 13.7 22.9 34.3 148.0 169.4

"arq Acquisition 2 _ 616.0o -- 2,616.0

- Total 10.0 36.5 2,704.8 114.6 154.2 191.9 3,292.5

C. Amsued Puture Projects1. Hussein III LoCai 136.5 1,192.6 2,158.4 2,686.6 6,174.1

-Foreign 1.6314.2 14,924,7 5.4314.0 6,578.1. 18,71.3

-Total 1,770.7 6,217.3 7,592.4 9,265. 21,745.4

2. Future M2andlon of Thersl Gestion - Lcal 138 771 1,247 2,156- Foreign 945 1.931 3,612 6.188

- Total . 2-.83 _702 4,859 86

3. Other - Local 153 514 960 1,627

- - Foreign I-,O1M,37___

- Total 65 1.515 &!ZZ 4,697

Total Cost Of 1974.1900 Progra - Local 35014 1,095.5 4,1 8601.5 43,E. 5055 1,091.2-Foreign 1 4 . 8 f9 7 .2..$.g8 1,727. 4 3,955.2

- Total 1,496 5,6 9 8,871 8 10,761.7 12.733.9 16,812.9 62,09.4

flay 1975

APPRAISAL OF ANNEX 19

THE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Jordan Electricity Authority (JEA)

Income Statements 1971-1980

JD Thousands

(Case A)

Actual Forecast

YEAR ENDING DECEMBER 31 1971 1972 1973 1974 1975 1976 1977 1978 1979 1960

2380 OPERATING REVENUE2400 2420 GWHS-GENERATED 0.0 0.0 0.0 0.0 40.0 197.0 457.0 584.0 707.0 786.0

2440 -SOLD 0.0 0.0 0.0 0.0 °40.0 188.0 421.0 538.0 650.0 723.0

2460 SOLD AT-FILS/KWH - 0.0 0.0 0.0 0.0 7.2 9.9 10.1 12.0 13.4 16.2

2500 ELECTRICITY SALES 0 0 0 0 288 1861 4252 6456 8710 11713

2520 OTHER 0 0 6 0 0 0 0 0 0 0

2600 TOTAL OP REVENUE 0 0 6 0 288 1861 4252 6456 8710 11713

2660 OPERATING EXPENSES2680 ------------------2780 GENERATION-FUEL 2/ 0 0 0 0 158 602 1409 1921 2512 28852800 -OTHER 2/ 0 0 0 33 90 288 493 709 795 1136

2820 TRANSMISSION 2/ 0 0 0 0 35 81 87 119 127 209

2880 ADMINISTRATION 16 17 25 23 54 82 98 119 146 1863140 DEPRECIATION 3/ 1 1 2 3 40 246 852 1258 1791 2480

3300 TOTAL OP EXPENSES 17 18 27 59 377 1299 2939 4126 5371 6896

3360 INCOME3380 --…---3400 NET OP INCOME -17 ,-18 -21 -59 -89 562 1313 2330 3339 48173420 POLE MFG -5 -11 0 0 9 12 17 23 30 383440 INT RECEIVABLE FR. RELENDING 1 120 73 194 2S4 206 18 13 _ 120 1013480 NET INCOME BEF INT -21 91 52 135 174 780 148 21492 349 49563500 INTEREST PAYABLE 0 0 8 103 292 583 949 1489 2122 2857

3520 LESS CHGD TO CONST 0 0 8 103 271 164 284 472 1011 15753540 INTEREST EXPENSE 0 0 0 0 21 419 665 1017 1111 --- 1282

3600 NET INCOME -21 91 52 135 153 361 823 1475 2378 3674

3660 APPROPRIATION OF3680 SURPLUS3700 ----- …-__________3720 CAPITAL RESERVE 0 125 73 194 255 206 157 140 120 1013740 BAL TO GEN RESERVE -21 -34 -21 -59 -102 155 666 1335 2256 3573

3780 RATE OF RETURN

3800 --------------3820 AV ELEC OP ASSETS 4.0 4.5 3.5 6.5 636.o 6200.5 13927.5 24825.0 36703.0 53041.53900 RATE OF RETURN 0.0 0.0 0.0 0.0 0.0 9.1 9.4 9.4 9.1 9.1

The report assumes average tariff of 9.9 fils'kWh for-1976 which would be the minimum required to meet the rate covenant

(i.e. 9% rate of return). Assumed tariff increases in the subsequent years are the minimum' required to meet the rate

covenant,2/ For fuel and spares foreign escalation factors listed in Annex 18 are used.

3/ Local escalation factors used (See Annex 18)

APPRAISAL OF ANNEX 20

1HE SECOND HUSSEIN THERMAL POWER PROJECT

JORDAN

Jorda. Electricity Authority (JDA)

Balan"e Sheets 1971-1980

JD ThosueSas

Actual Forecast

1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

6620 ASSETS66 0--6660 FIXED ASSETS6680 6700 PLANt IN OPERATION 11 11 12 22 1315 11444 17905 35506 45105 732116720 LESS:DEPRECIATION 6 7 9 12 53 305 1184 2572 4633 7600

6780 NET PLANT S 4 3 *o 1262 11139 16716 32934 40472 65611

6840 WORK IN PROGRESS 26 1 620 2209 6453 4150 7157 3231 7764 2676

6900 POLE MFP. PLANT 103 126 126 126 155 225 320 436 594 7846920 LESS: DEPRECIATION 21 28 35 42 56 77 106 153 221 316

6980 NET POLE MFG PLANT 82 go 91 84 99 148 212 285 373 466

7040 TOTAL FIXED ASSETS Ill3 23 714 230 7814 15437 24085 36450 4S629 6875-

Z100LONC TERMRH INVEST1ENTS7140 ---7160 LOAN TO JEPCO 1' 188 1050 1248 2842 2584 13a2 1214 1046 172 7107180 IDECO-STAGE I 0 687 670 603 536 469 402 335 276 2017200 -STAGE II 0 86 254 393 393 393 371 327 283 2397220 -STAGE III 0 112 138 750 750 687 624 561 496 4357240 IoECO CONST I C II 573 0 0 o 0 _ a 0 a 07280 TOTAL LONG TERM47300 INVESTMENTS 761 1f 2310 49588 4263 2931 2611 2269 1927 1585

7360 NET CURRENT ASSETS7380 …7400 CURRENT ASSETS7420 …7*40 CASm 1' 483 517 753 707 603 1180 670 1121 1343 30867460 A/C REC ELEC 0 0 0 0 24 * 152 340 490 661 8567480 INVENTORIES-ELEC 0 0 0 6 41 149 317 439 552 6677500 INVENTORIES-POLES 864 90 105 110 108 122 137 153 171 1927520 ACCRUALS ETC 28 40 41 40 40 4Q 40 40 40 40

7580 C/A SUBTOTAL 959 647 8. o 863 8l6 1643 1504 2243 2767 4841

7640 CLR LIABILITIES

7680 AIC PAYASLE ETC 22 7 13 6 133 1090 317 2031 552 2050

7720 NET CURRENT ASSETS 571 640 a86 8. 7 683 >3 fla7 212 22L5 1991

7780 TOTAL ASSETS 14 2808 ___= 778l 12760 18921 27a&3 3891 52771 72329

78*0 LIAUILITICS7860 7880 EQUITY7900 ---8020 -CAPITAL- 0 0 497 907 1907 2907 5907 5907 5907 59078140 -RETAINED EARNINGS -58 -92 -113 -172 -274 -119 547 1882 4140 77136260 -CAPITAL RESERVE 0 125 198 392 647 853 1010 l15o 1270 13718280 E4pLoIEr TErE. R1S 0 0 0 0 71 709 2153 *6707 8978 139168300 EmP TEE RES ETC R ioli 169 jL__a 190 200 210 220 230 240

8360 TOTAL -13 ___L 751 --- z 45C0 9e27 13866 20025 29147

8420 LONG TERN DCST8*640 …---- -…-----8460 L/T DEBT EXCL PROJ 1301 2461 3159 6441 9833 13098 15219 20829 20333 390128480 PROPOSED IDA CR 0 0 0 0 120 4U* 1119 1434 1463 138685O0 COFINANCER-PRO0ICT 0 0 0 0 266 829 1718 2802 2950 27828520 CRANT FOR OP EXP JO9 0 0 0 0 0 0 0 0

S580 TOTAL L/T DEBT 1460 -26S7 0S9 6441 1029l 143T1 18056 25065 32746 43182

8640 EQUITY C L/T DEBT 1,447 2808 R910 774S 12760 18921 27683 3391 c2771 72329

8740 DEBT/EQUITY 95:5 a1: 9 83:17 80,20 76 24 65i35 65:15 62:38 60:40

ip Por 1971 *xslsdd JD B7,000 JoCO repey.t is treaSit ad Isolcdd ts cash./ I follo-II leave ha- bees Inalsded by JE. odur Eqity Capital Ic 1973, rea-s La tbe Rase-iE I SWaIefl theEc

ast*.e d equivalEts mr relsad t a looae OmtEl 1976:

1973 (JD 9ow r leI C

1. NSa. Fnom Operating sebeidy 237 159I. Naetioal Pra7ag C _aels

(a) Accrwd ProJect Iowa coats 173 141(b8) Acad 132 kV Sip advances 30cc) Pole plAt extenioe costs _.

ZqsEty Capital 1973 1l m

3/ JD 49,000 of fnteraCt d .tr IDEC0 h1 bem traosftred directly to this ream. end the correspesdigloase ncreased as follow.

50100 I JD 27,000. IDEC0 II JD 14,000, MD"II0 11 JD 3,000. IThs will fore pest of the capitalreentt oser thb years.

4/ For details see Debt Stotsata at Annex 22.

May 1975

ApP0AISAL OF ANNEX 21

TLE SiCON\D SOEIO TI.-IMAL POWFEO PROJLlT

OIIAI

JOrdao E1s,cts-sjtv Authoritv (JEA)

Sourcs .aud ApplialoutsO of Funds 1974-1980

JD ThouS;ands

Foreca St

1973 1974 1975 1976 1977 1978 1979 1980 ,974-1980TOTAL

4200 SOURCES4220 -4240 ELECTRICITY C POLE4260 -- …---------------.260 NET OP SURPLUS -21 -59 -89 562 1313 2330 3339 4817 12213u2 03 -LLPRECIATION 2 R 40 246 852 9 5. 1. 91 24E0 66704:40 I4ET CASiI-CELEC) -19 - 9 2 3 5 7257,3i3 NET INCOMAE-POLES 0 0 9 12 17 23 30 3d 1294420 UEP-POLES 7 . 10 1 2_ i 34 74 214C440 iET CASHI-POLES 7 7 19 27 40 57 - 2 112 R44

4520 CASH GENERATED -12 _ -30 83S 220-5 3645 S 74C: 10227

4560 FROM RELENDING: 1u600 …- …-4620 INTEREST INCOME 7 3 - -/ 194 254 206 158 139 120 101 11724640 AMORTIZATION 17 325 325 1332 320 342 342 342 332E

4700 NET CASH-RELENDING 90 519 579 1538 478 481 462 443 45004740 INTERNAL CASH4760 GENERATION 78 - 470 549 2373 2683 4126 5674 7652 23727

4840 GOVENMiENT EQUITY 497 410 1000 1000 3000 0 0 0 5410

4900 LONG TERM DEBTS 3/4920 -- …------------4940 CONSTN FINANCING 541 1109 2755 4347 4422 8520 3972 11727 418524960L FOR RELENOING 545 221, 1061 110 140 0 0 0 3522

5020 TOTAL LIT DEBTS 1086 R2o i816 4457 4562 8520 8972 11727 45374

5080 OTHER5100…5120 EMP TER RES CHANGE 2 11 10 10 10 10 10 10 715140, CHANSE IN WORKING5160 CAPITAL(EXCL CASH) -10 -17 70 707 -1144 1426 -1781 1967 1228

5220 TOTAL SOURCES 16.j 3 41. 4 544Ai 8547 gill 14082 12875 21556 75810

5280 APPLICATIONS5300 ---- …-______

5340 CONST EXCL INT5360 ------ …-------5360 HUSSEIN 1 478 1410 2885 3833 0 a 0 0 81265400 CONNECTION TO5420 CEMENT FACTORY 0 4 139. 477 36 0 0 0 6565460 AMMANiZARQA LINE-1 3 67 1587 200 315 0 0 0 21695480 HUSSEIN 11 0 0 497 1326 2536 2748 0 0 71075500 MISC ELECTRICITY . 10 37 81 89 115 154 194 6805520 HUSSEIN III 0 0 0 0 1634 5490 4869 8115 201085540 AHMAN/ZARQA LINE-2 0 5 74 1165 569 780 0 0 25935560 FUTURE EXTENSIONS 0 0 0 0 0 1768 4217 7356 133415580 MARQA PURCHASE 0. 0 0 0 2616 0 0 0 26165620 TOTAL JEA FIXED5640 ASSETS EXTENSIONS 482 1496 5219 7082 7795 10901 9240 15665 573985680 INVESTMENT LOANS5700 FOR CONSTNI/5720 ------ …--------5740 JEPCO DEVELOPMENT 198 1852 0 0 0 0 0 0 18525760 IDECO STAGE II 168 139 0 0 0 0 0 0 1395780 IDECO STAGE III 26 6'2 0 0 0 0 0 0 612

5840 TOTAL INVESTI4ENTS 392 2613 0 0 0 0 0 0 2603

5900 DEET SERVICE 3'5920 ------ …_______5940 AMORTIZATION 5355. 38 38 305 877 1241 1291 1291 50815960 INTEREST 8 1Q 292 583 949 1489 2122 2857 8395

6020 TOTAL DEBT SERVICE 54R 141 330 888 1826 2730 3413 4148 13476

6080 SUB-TOTAL APPLNS 1417 4240 5549 7970 9621 13631 1265R 19813 73477

6160 CHANGE IN CASH 236 -46 -104 577 -510 451 222 1743 2333

6200 TOTAL APPLICATIONS 16SR 4194 5445 8547 9111 14082 12875 21556 75810

6260 DEBT SERVICE COVER 0.1 3.3 1.7 2.7 1.5 1.5 1.7 1.9

11 For details see I-veotnent St.te-ents at Annex 232I Only JD 73,000 out of the interest receivables JD 122,000, was paid and the balance was included io the loan.3F Far detuils see Debt Stateaents at AaOe. 22.4/ JD 49,000 of interest due froa IDECO has been transferred directly to this Reserve and the corresponding

loa.. i--rased us folls:IDECO I JD 27,000, IDECO II JD 14,000, IDECO III JD 8,000. This will form part of the capital reserveaver the yours,

5! 1973 Aolarti.ation incuIdes JD 38,000 plus JD 57,000 - Pale pLant e-tession (for IDECO Pole tanufacture)trannferred ta Goverenent Equity.

May 1975

APPRAISAL OF ANNEX 22

THE SECOND HUSSEIN THERKAL POWER PROJECT

JORDAN

Jordan Electricity Authoritv (JEA)

Debt Statements 1971-1980

JD Thousands

Forecast

1974 1975 1976 1977 7 - 1919 17Ou 1974-1980TOTAL

1000 IDA CREDIT 386-Jo1030 -BORROWINGS 551 1100 1045 325 0 0 0 30211040 -AMORTIZATION 0 0 0 153 153 153 153 6121080 -BALANCE 820 1920 2965 3137 2984 2831 26781110 -INTEREST 39 99 177 221 222 211 200 11691160 -COMMITMENT CHGE 21 14 6 2 1 0 0 44

1500 KF LOAN-HUSSEIN I1530 -BORROWINGS 549 1100 1044 325 0 0 0 30181540 -AMORTIZATION 0 0 0 286 286 286 286 11441580 -BALANCE 821 1921 2965 3004 2718 2432 21461610 -INTEREST 33 82 147 179 172 154 137 904

2000 LOANS-EXPANSIONS2030 -BORROWINGS 9 169. 1306 1918 6608 8552 11727 302892040 -AMORTIZATION 0 0 0 0 50 100 100 2502080 -BALANCE 9 178 1484 3402 9960 18412 300392110 -INTEREST 0 8 71 208 568 1206 2059 41192160 -COMMITMENT CHGE 8 15 10 68 141 121 45 409

2500 IDA CREDIT-PROJECT2530 -BORROWINGS 0 120 324 675 390 104 0 16132540 -AMORTIZATION 0 0 0 0 75 75 75 2252580 -BALANCE 0 120 444 1119 1434 1463 13882610 -INTEREST 0 5 23 63 102 116 114 4222660 -COMMITMENT CHGE 0 12 16 6 3 1 1 38

3000 COFINANCER-PROUECT3030 -BORROWINGS 0 266 563 889 1252 316 0 32863040 -AMORTIZATION 0 0 0 0 168 168 168 5043080 -BALANCE 0 266 829 1718 2802 2950 27823110 -INTEREST 0 11 44 102 181 230 229 7963160 -COMMITMENT CHGE 0 11 21 15 8 3 3 61

;

3500 SUPPLIERS CR-MARQA3530 -BORROWINGS 0 0 65 290 0 0 0 3553540 -AMORTIZATION 0 0 0 0 71 71 71 2133580 -BALANCE 0 0 65 355 284 213 1423610 -INTEREST 0 0 3 18 27 21 15 84

4000 JEPCO DEV (EX UK)4030 -BORROWINGS 1584 0 0 0 0 0 0 15844040 -AMORTIZATION 0 0 100 200 200 200 200 9004080 -BALANCE 3100 3100 3000 2800 2600 2400 22004500 IDECO I (EX UK)4530 -BORROWINGS 0 0 0 0 0 0 0 04540 -AMORTIZATION 38 38 38 38 38 38 38 2664580 -BALANCE 508 470 432 394 356 318 280

5000 IDECO STAGES II&II5030 -BORROWINGS 587 0 0 0 0 0 0 5875040 -AMORTIZATION 0 0 63 96 96 96 96 4475080 -BALANCE 1143 1143 1080 984 888 792 696

5500 132KV STG I(EX UK)5530 -BORROWINGS 40 1061 110 140 0 0 0 13515540 -AMORTIZATION 0 0 104 104 104 104 104 5205580 -BALANCE 40 1101 1107 1143 1039 935 8315610 -INTEREST 1 34 66 67 65 59 53 347

9500 DEBT SUMMARY9510 -BORROWINGS 3320 3816 4457 4562 8250 8972 11727 451049520 -REPAYMENTS 3- 38 305 877 1241 1291 1291 50819530 -BALANCE 6441 10219 14371 18056 25065 32746 43182 431829550 -COMMITMENT FEES 29 53 53 91 152 125 49 5519560 -INTEREST 74 239 530 858 1337 1997 2808 78439570 -INTEREST & CF 103 292 583 949 1489 2122 2857 83959580 -DEBT SERVICE 141 330 888 1826 2730 3413 4148 134769595 TOTAL OPENING 0 0 0 0 0 0 0 0

9650 AVE MAT YRS 13.0 13.8 14.8 15.3 16.4 16.7 16.6 15.29660 AVE INT % 2.15 3.51 4.74 5.85 6.91 7.34 7.53 5.43

APPRAISAL OF

THE SECOND HUSSEIN TIIERMAL POfER PROJECT

JORDAN

Jordan Electricity Authority (JPFA)

Investments Statements 1971-1380

JD Thousands

Historic Forecast

1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1974-1980TOTAL

1000 JEPCO DEVELOPMENT

1030 -BORROWINGS 188 862 198 1852 0 0 0 0 0 0 18521040 -AMORTIZATION 0 0 0 258 258 1202 168 168 168 168 23901080 -BALANCE 188 1050 1248 2842 2584 1382 1214 1046 878 7101110 -INTEREST 6 37 69 123 163 119 78 68 58 48 655

1500 IDECO I

1530 -BORROWINGS 0 687 0 0 0 0 0 0 0 0 01540 -AMORTIZATION 0 0. 17 67 67 67 67 67 67 67 4691580 -BALANCE 0 687 670 603 536 469 402 335 268 2,011610 -INTEREST 0 14 27 25 23 20 17 15 12 9 122

2000 IDECO II2030 -BORROWINGS 0 86 168 139 0 0 0 0 0 0 1392040 -AMORTIZATION 0 0 0 0 0 0 22 44 44 44 1542080 -BALANCE 0 86 254 393 393 393 371 327 283 2392110 -INTEREST 0 3 10 19 24 24 23 21 18 16 144

2500 IDECO III2530 -BORROWINGS 0 112 26 612 0 0 0 0 0 0 6122540 -AMORTIZATION 0 0 0 0 0 63 63 63 63 63 3152580 -BALANCE 0 112 138 750 750 687 624 561 498 4352610 -INTEREST 0 3 7 27 45 43 39 36 32 28 249

DEBT SUMMARY9510 -BORROWINGS 188 1747 392 2603 0 0 0 0 0 0 26039520 -REPAYMENTS 0 0 17 325 325 1332 320 342 342 342 33289530 -BALANCE 188 1935 2310 4588 4263 2931 2611 2269 1927 1585 15859560 -INTEREST 6 57 114 194 254 206 158 139 120 101 11729570 -INTEREST & CF 6 57 114 194 254 206 15° 139 120 101 1172 >9580 -DEBT SERVICE 6 57 131 519 579 1538 478 481 462 443 4500 z

9650 AVE MAT YRS 12.0 10.1 9.3 7.6 6.7 5.5 4.7 3.9 3.1 2.4 4.89660 AVE INT % 6.38 5.37 5.37 5.62 5.74 5.73 5.70 5.70 5.72 5.75 5.71 w

March 1975

ANNEX 24Page 1 of 5

APPRAISAL OF

THE SECOND HUSSEIN THERMAL POWER PROJECT

(JORDAN)

JEPCO Financial Situation

Fixed Assets and Long-Term Debt

1. JEPCO's actual financial situation at December 31, 1973, was soundas shown by its Balance Sheet on page 3 of this Annex. The JD 6.8 millionin net fixed assets mainly represented the balance of the original cost ofits three diesel electric generating stations at Ras-al-Ain (built 1948) Zarqa(built 1958) and Marqa (first unit 1962), plus its distribution networks inand around Amman, some 330 km of 44-kV and 6.6-kV transmission and assetrevaluation. In 1971, JEPCO started on a 5-year construction program financedby a JD 3.1 million (E3.6 million) UK loan to the Government and relent (viaJEA) to JEPCO at 6% over 15 years including a 3-year grace period. JD 1.1million of this was for 3 x 6 MW diesel generating sets at Marqa and theremaining JD 2.0 million for 33-kV transmission. The report assumes that by1977 Ras-al-Ain and Zarqa diesels would be retired and Marqa would be acquiredby JEA.

Equity

2. As of September 1974, JD 4.6 million was paid up out of JEPCO'sauthorized nominal capital of JD 6 million. Only 10% of its shares was heldby the Government or municipalities, the remainder being private holdings.Total equity of JD 5.4 million in 1973 is expected to increase to JD 8 millionby 1980 despite the annual distribution of reasonable amount of dividends.JEPCO's debt/equity ratio was 17:83 in 1973 and is only expected to reach30:70 in 1974 before dropping to 14:86 in 1976 and declining thereafter at auniform rate of 2% per annum in debt.

Current Assets

3. In 1973 JEPCO's current assets were 1.26 times current liabilities.In 1971 its consumer accounts receivable was at an abnormally high level ofJD 244,000 (equivalent to 66 days billings). JEPCO has since improved itsprocedures and has reduced consumer outstandings to about 15.7% of sales orthe equivalent of 57 days billings, which is an acceptable level.

ANNEX 24Page 2 of 5

Income Statements

4. JEPCO's income statements (pages 3 through 5 of this Annex) showthat the tariffs, 1/ would be adequate till 1978. With the advent of JEA'sZarqa power station JEPCO's rate of return is expected to drop to about 7.9%in 1979. It would drop to a figure as low as 3.8% in 1980 unless tariffs aresuitably revised as recommended by NEEB to permit JEPCO a minimum of 9% return.In estimating JEPCO's expenditure and income, it was assumed that due to theforecast increase in the industrial load at the average growth rate of 27.9%per year the average retail tariff will reduce from 16 fils/kWh in 1975 to15 fils/kWh in 1980. Other major financial assumptions are shown in Annex 17.

Sources .nad'Applications of Funds

5. JEPCO's future construction program through 1980 is shown in itsSources and Applications (page 5 of this Annex) and comprises general exten-sions and reinforcements of its distribution network costing about JD 600,000annually. This will be additional to the cost of the 4 diesel units and 33-kVlines mentioned in 1 above and to miscellaneous items such as vehicles andoffice equipment, etc. Debt service for the forecast period except 1976 iscovered at least 2.5 times by net cash generation. In the year 1976 theratio appears low due to the accelerated repayment of part of the UK devel-opment loan it received through JEA (see Annex,22),.

1/ JEPCO's forecast tariffs are based on JEA's forecast average sellingprices at constant (1974) JD (see 'Case B' forecasts at Annex 25). Anychange in JEA's tariffs to provide for inflation and on account of re-valuation of assets (see Case A at Annexes 19 thru 21) is expected tohp passed on to the consumers.

APPRAISAL OF

T1E SECOND HUSSEIN THIERMAL POWER PROJECT

JORDAN

7se Jordanian Eiectric Power Company (JEPCO)

Income Statemur-ts 1971-1960

.JD Thousands

JD1 US$3-1

Year Ended Oecember 31st 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

_ ---- - Actual - ------------------------------------- Estimated -----------------------------------------

Operating RevenueUnits Generated - GWhs 134 158 181 210 235 160 _- -.Units purchased from JEA - GWh - _ - - 30 176 397 454 512 577

Total GWhs Generated/Purchased 134 158 181 210 265 336 397 454 512 577

Losses% 16.0% 15.0% 15.0% 17.6% 17.0 16.1 15.4 15.6 15.6 15.9Units sold - GWh 113 135 154 173 220Ž2 282 332 38.3 432 485Purchase price (fils/kWh) 7/ -i/ - - - 8.o-' 8.1 8.1 8.4 8.8 9.5Average Sales Price (fils/kWh) 17.5 15.8 15.7 16.1 16 15.8 15.6 15.4 15.2 15.0Sale of electricty 1,976 2,135 2,418 2,793 3,520 4,456 5,179 5,898 6,566 7,275Meter rents 39 50 57 67 83 104 125 164 192 209Other operating revenue 12 12 17 12 10 10 10 10 10 10

Total Operating Revenue 2,027 2,197 2,492 2,872 3,613 4,570 5,314 6,072 6,768 7,494

Operati Expensesons- fuel 317 381 477 574 600 243

- other 173 192 280 323 325 198 _ _ _-_Purchased power - - - - 240 1,426 3,216 3,814 4, 506 5,482Transmission & Distribution 175 194 223 257 297 342 393 453 522 601Administration 2 260 312 302 349 372 458 263 302 346 398Depreciation 32? 351 398 523 608 587 394 439 489 545Provision for income and social tax 300 281 226 291 411 482 414 441 379 210

Total Operating Expenses ' 1,549 1,711 1,906 2,317 2,853 3,736 4,680 5,449 6,242 7,236

Net Operating Sur~plus 478 486 586 555 760 834 634 623 526 258e ther income frrpm Investments 9 9 154, 46 51 56 101 149 138 127Less other expenses _ - 24

Net Income from Investments 9 9 (233) 46 51 56 197 149 138 127

Net Surplus before Interest 487 495 353 601 811 890 741 772 664 385Interest_payable 4 46 2 1932/ 164 120 79 68 58 48

Net Surplus 483 449 351 408 647 770 662 704 606 337Appropriation of Surplus:Dividends declared 271 291 293 381 445 450 455 460 465 470Legal reserve etc. 80 74 58 70 111 113 80 96 101 45Unappropriated surplus for year 132 _34 e _ 0 261 6__67 207 14b ; 76)

Average Net Fixed Assets in Operation 4,097 4,322 5,603 7,178 7,772 7,987 6,462/ 6,542 6,679 6,762

Rate of Return 11.7 11.2 10.5 7.7 9.9 10.4 9.8 9.5 7.9 3.8

]/ 1971 sales include the settlement of a dispute with the oil refinery. Sxcluding this the average would be 16.1 fils/kWh2/ 75%, of JEA's 1975 gas turbine generation is assumed to be zold to tFPCO's at about 8 fils/kWh and the balance is assumed to be sold

, to the refinery at marginal cost per its agreement with the Government.2/ 50% of the administrative expenses relates to running the thtee generating station. Marqa to be sold to JEA in 1977 and the other two stations to be retired.4/ Capital taxes due to revaluation @ 20%3/ Includes JD68915 interest due in 1973 2:

Marqa is expected to be transferred early in 1977 and therefore the average fixed assets is same as thefixed assets in operation at the end of the year

7/ Averasa purchase prices are the forecast JEA's selling prices ot -onstant (1974) JD (please see Case B forecasts at Annex 25). Any price increas, by JEA toprov a for inflation and on account revaluation of assets (see Case A at Annexes 19 thru 21) is expected to be passed on to consumers.

May 1975

APPRAISAI OF ANNEX 24

T!E SEC0D 81USEIN THEEMAL POWER PROJECif

JORDAN)

J.,. roOOi5, Ele.erie Poser Co.Pany (JEPCO)

P1la-ce Shet. _971-1989

1971 1972 1973 1974 1975 197( 1977 :978 47'. 1980

-------------- Actuali-- ------------ ------------------------------------------- 8Estimeted---------- --.----_------_- ---- --_-_-____ --___ASSFTS 1' 2/Fined Ar ets ir. p,eratior. 6,238 7,023 3,549- 11,094 11,868 12,71 12 ,242- 10,342 _,,

442 12,142~e-- 'enre-:iatlnr. '.233 484 :2 3,405 4 o13 4 604 3t7.3/ 4,2?3 708 5,253

'>?l r xz, 4_Ts in l7! i54,105 7,69 7sB55 ____ 8 __

: -n - -r D,rs 564 _8 954 341 3*-' 7 7_e

To7t: 'Fet Fixed Assets 4..09 C,755 8.643 8, 696 4'55 4696,63 6,797

Long ''-I'T InvestmentsInvestn-nt. in Limited -- mpenies 2)0 215 215 237 261 286 415 447 581 719Pro03dent Fund Invest- 'nt' 76 79 l09 112 115 le 121 ;24 127 130Prsrident Fund Employ-es Fiousn1g

Lons- 14 14 24 14 14 1' 14 44 14 14Credit to JBA on Marq-3 Sale _ _ - 1.,500 1,200 900 600

Total Long Tern 1r;estments 290 308 338 363 390 418 2,050 1,785 1,622 1,463

Net C-rre-t AssetsCash. 244 337 165 303 516 291 439 E51 '02 451A:xount: Fer i.at.'Ivso. soero 330 348 381 419 528 668 777 885 98S 1,091Ac-oono * Feceivsb(-(: nra 420 4i5 99 400 400 450 470 500 550 600In entoriro 422 746 874 777 831 8590 717 759 8CI 843Other debit balances 32 23 89 40 40 40 41 40 4.0 4-

Subtotel Current As3tLG L4 4

9 1,869 1,608 1,3 2.315 2,339 2,443 2,335 179 3,723

:rrest '.isbilitiesAc-onts Psyable (849) 2408) (665) (456) (505) (391) (100) 452 '407 2100;A^cr.ed Inome Tax 7 end

Social Tax (3374 '379) (325) (474) (291) * '411) (462) 4368) (423' 35Qlividends Payable in Cash (271) (231) (293) (381) (445) (450) (455) (460) 46' 44

Subtotal Current Liablili-ie- 1,457) 21,478) (1,283) (1,311) (1,241) (1,252) (1,017) (928) (4.) ,929)

Total Net Current Assets (8) 392 325 628 1.074 ,o087 1,453 1,963 2,142 2,109

TOTAL ASSEITS 4_391 27.418 996 72 10, 38 44 6 14,369

k:,4 17 44D -.0NG TE524 DEST

Capital st.9k 'inrlsdingstock di7ide-ds) 2,718 2,986 4,24 4,700 5,200 5,700 5,700 5,70 5,0 5,7

Ac-ssanlated 0rpl.. 142 226 226 183 274 481 608 756 736 6v6Legal Reserve 501 585 643 713 824 937 1,017 1,113 i,2i4 1,259Reh bil±tation Grant 214 214 214 214 214 214 214 204 214 2142're4sion,Os on

0tal Sto,k 15 56 70 70 - _ _ _ _ -

40lI2. E .'0(24 3,590 4,067 5,364 7,332 7,539 7,79 7

1. ^e:rel .I iabilities 7.,t,.rnecr' Tepo-its 259 303 357 410 512 643 744 84' 939 1,03eIr.eerv e 'C -. mployee:- ircr-ity 80 80 80 80 80 80 80 80 80 80

I2, provident fund 242 275 345 402 456 511 567 625 685 750

Total 'erfed Liabilities 581 858 782 892 1,048 1,234 1,391 1,551 ;,704 1,868

Long Term iebtman 5-12CIp31ity 32 28 24 20 16 12 8 4 -

J4A (Eo UK Fonds) 181 1,248 2,842 2,584 1,382 1,214 i,046 878 710

Tot. tong Tern Deb 4'° 1,077 1,272 2,862 2,600 1,394 1,222 1,050 878 710

.4TAL E22UITY 21D LONG TERM DEBT 242945 _4,3 71.418 9,634 10.16 0 9 9960 72 10,3 10. 806 10369

elbt: 23tr4ty patio 5:95 19:81 17 83 30:70 26:74 14:86 12:88 11 48 9:91 7:03

t Iolsde" JD 1,211,000 adjustment for revaluatins of assets.

gt Marqa assets sold to JEA.

3/ ScRedl by Jr 1,214,DO1, the amount of ac-ornolated depreciation for Yarqe.

APPRAISAL OF

THE SECOND tHUSSEIN T IERMAL POWER PROJECT

JORDAN

The Jordanian Electric Power Company (JEPCCO)

Sources and Applications of Funds 1973-1980

JD Thousands

Actual Forecast

1973 19774- 1975 1976 1977 1978 1979 1980

Internal SourcesNet Surplus Before Interest 353 601 811 890 741 772 664 385Depreciation 398 523 608 587 394 439 489 545Marqa Sale 2,616Amortization Receivable _ _ 300 300 300

Internal Cash Generation 751 1 124 1,419 1,477 3,751 1,511 1,453 1,230

Long-Term Borrowing 199 1,852

Other SourcesCapital Stock Issue (Including Stock Dividends) 1,225 489 500 500Capital Stock Premium 14Consumer Deposits 54 53 102 131 101 101 94 99Provident Fund 70 57 54 55 56 58 60 65

Total Sources 2,313 3,575 2,075 2,133 3,908 1,670 167394

Operational Requirements & InvestmentsWorking Capital Change (66) 303 446 13 366 515 1j4 (33)Debt Service 6 455 426 1,326 251 240 230 216Dividends Paid 291 293 381 445 450 455 460 465Investments (including Marqa Credit to JEA) 30 25 27 28 1,632 35 137 141

Total 261 1,076 1,280 1812 2,699 1,001 7 891,245 _____ ~~~~78-9Funds Available (Required) for Exp.nsion 2,082 2,499 795 321 1,209 425' 606 605

Requirements for Construction, etc.Construction (Excluding interest) and

other Capital requirements 1,315 1,545 774 851 622 600 600 600

Surplus (Deficit) of Funds for the Year 767 954 21 (530) 587 (175) 6 5

Times Debt Service Covered 125 2.5 3.3 1.1 14.9 6.3 6.3 5.7

March 1975

ANNEX 25

APPRAISAL OF

THE SECOND HUSSEIN THERMAL PROJECT

JORDAN

Summaty of Significant Financial Data ReflectingVarious Assumptions for Cases A & B

Case A

Forecasts with Price Escalation Provision for theDevelopment Program Costs-and Operation Costs,-- and assets revalued every year

(Annexes 18 thru 23)

1976 1977 1978 1979 1980

Tariff fils/kWh 9.9 10.1 12.0 13.4 16.2Rate of Return 9.1 9.4 9.4 9.1 9.1Debt Service Coverage 2.7 1.5 1.5 1.7 1.9Debt/Equity 76:24 65:35 65:35 62:38 60:40

Case B

Forecasts at Constant 1974 Prices(Appendix (4 pages) to this Annex)

1976 1977 1978 1979 1980

Tariff fils/kWh 8.3 8.3 8.3 8.7 9.5

Rate of Return 9.2 11.7 9.4 9.2 9.2Debt Service Coverage 2.6 1.3 1.1 1.2 1.3Debt/Equity 79:21 72:28 70:30 69:31 68:32

APPRAISAL OF ANNEX 25

AppendixTHE SECOND HUSSEIN THERMAL POWER PROJECT Page 1 of 4

JORDAN

Financial Statement at Constant 1974 Prices

Income Statements 1971-1980

JD Thousands

Actual (Case B) Forecast

1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

2380 OPERATING REVENUE24G0 -----------------2420 GWHS-GENERATED 0.0 0.0 0.0 0.0 40.0 197.0 457.0 584.0 707.0 786.o2440 -SOLD 0.0 0.0 0.0 0.0 40.0 188.0 421.0 538.0 650.0 723.02460 SOLD AT-FILS/KWH 0.0 0.0 0.0 0.0 7.2 8.3 8.3 8.3 8.7 9.5

2500 ELECTRICITY SALES 0 G 0 0 288 1560 3494 4465 5655 68692520 OTHER 0 0 6 0 0 0 0 0 0 0

2600 TOTAL OP REVENUE 0 0 6 0 288 1560 3494 4465 5655 6869

2660 OPERATING EXPENSES2680 -------------2780 GENERATION-FUEL 0 0 0 0 150 523 1138 1443 1757 18772800 -OTHER 0 0 0 33 85 250 398 533 556 7392820 TRANSMISSION 0 0 0 0 33 70 70 89 89 1362880 ADMINISTRATION 16 17 25 23 50 67 72 70 85 973140 DEPRECIATION 1 1 2 3 34 1 8 590 753 1067 1227

3300 TOTAL OP EXPENSES 17 1d 27 5 352 1108 2268 289C 3554 4076

3360 INCOME

33£00 -----3400 NET OP INCOME -17 -18 -21 -59 -64 452 1226 1569 2101 27933420 POLE MtFG -5 -11 0 0 9 11 14 10 22 263440 IrT REC RELENDING 1 120 7 1934 2514 206 158 139 120 1013480 NET INCOME BEF INT -21 91 52 135 199 669 1398 1726 2243 29203500 INTEREST PAYABLE 0 G a 101 284 555 861 1275 1730 22103520 LESS CHGD TO CONST 0 0 8 101 256 145 229 380 829 135635140 INTEREST EXPENSE 0 0 0 0 28 410 632 895 901 8514

3600 NET INCOME -21 91 52 171 259 766 831 13142 2066

366C APPROPRIATION OF3uu0 SURPLUS3700 -----------------3720 CAPITAL RESERVE 0 125 73 194 255 206 157 140 120 10137140 BAL TO GEN RESERVE -21 -314 -21 - 5 -84 53 6G9 691 1222 1965

3780G RATE OF RETURN3800 --------------3820 AV ELEC OP ASSETS 4.0 14.5 3.5 6.5 5148.5 4927. 5 1014142.516778 5 22799.0 30412.03900 RATE OF RETURN 0.0 0.0 0.0 0.0 0.0 9.2 11.7 9.4 9.2 9.2

APPRAIIAL OF AIlNEX 25Apaemtdix

ThE SECO01D HUSSEIN THER L POWER PR''3ECT Page 2 of 4

JORDAll

Financial Statements at Constant 1974 Prices(Cdse B)

Balance Sheets 1971-1980

JD Thousands

Actual ForecastAS OF DECEMBER 31 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

6620 ASSETS6640 …6660 FIXED ASSETS6680 - …6700 PLANT IN OPERATION 11 11 12 22 1133 9012 12951 23027 26812 405476720 LESS:DEPRECIATION 6 7 _ 12 46 244 834 1587 2654 3881

6780 NET PLANT 4 3 10 1087 8768 12117 21440 24158 36666

6840 \4ORK IN PROGRESS 26 131 620 2207 6177 4437 7520 6669 11173 9999

6900 POLE MFG. PLANT 103 126 125 126 145 191 246 306 376 4516920 LESS: DEPRECIATION 21 28 35 42 50 61 -76 95 120 151

6980 NET POLE MFG PLANT 82 98 91 84 95 130 170 211 256 300

7040 TOTAL FIXED ASSETS 113 233 714 2301 7359 13335 19807 28320 35587 46965

7100 LONG TERM7120 INVESTMENTS7140 -----------7160 LOAN TO JEPCO 188 1050 1243 2842 2584 1382 1214 1046 878 7107180 IDECO-STAGE I 0 .687 673 603 536 469 402 335 268 2017200 -STAGE 11 0 86 254 393 393 393 371 327 283 2397220 -STAGE Ill 0 112 133 750 750 687 624 561 498 4357240 IDECO CONST I £ 11 573 0 0 0 0 0 0 0 0 07280 TOTAL LONG TERM7300 INVESTMENTS 761 1935 2310 4588 4263 2931 2 2 1927 1585

7360 NET CURRENT ASSETS7380…- …7400 CURRENT ASSETS7420 --------------7440 CASH 483 517 753 709 969 1894 506 817 782 5037460 A/C REC ELEC 0 0 0 0 24 130 291 372 464 5727480 INVENTORIES-ELEC 0 0 0 6 39 129 256 330 386 4357500 INVENTORIES-POLES 84 90 105 110 100 100 100 100 100 1007520 ACCRUALS ETC 28 40 41 40 40 40 40 40 40 40

7580 C/A SUBTOTAL 595 647 899 865 1172 2293 1193 1659 1772 1650

7640 CUR LIABILITIES7660 ---------------7680 A/C PAYABLE ETC 22 7 13 6 119 799 256 1290 386 1885

7720 NET CURRENT ASSETS 573 640 886 859 1053 1494 937 369 1386 -235

7780 TOTAL ASSETS 1447 2806 3910 7748 12675 17760 23355 30958 38900 48315

7840 LIABILITIES7860 -----------7880 EQUITY7900 -…----8020 -CAPITAL 0 0 497 907 1907 2907 4907 6907 8407 94078140 -RETAINED EARNINGS -58 -92 -113 -172 -256 -203 406 1097 2319 42848260 -CAPITAL RESERVE 0 125 19B 392 647 853 1010 1150 1270 13718280 EMP TER RES 0 7 93, 20 30 40 50 6o 70 808300 IDECO 1-15 YR INT 45 111 160- 160 160 160 160 160 160 160

8360 TOTAL -13 151 751 1307 2488 3757 6533 9374 12226 15302

8420 LONG TERM DEBT8440 - …-…----------8460 L/T DEBT EXCL PROJ 1301 2461 3159 6441 9824 12917 14637 18604 23536 301188480 PROPOSED IDA CR 0 0 0 0 120 444 1119 1434 1463 13880500 COFINA1NCER-PROJECT 0 0 0 0 243 642 1066 1546 1675 15078520 GRANT FOR OP EXP 159 196 3 0 0 0 0 0 0 0

8580 TOTAL L/T DEBT 1460 2657 159 _6441 10187 14003 16822 21584 26674 33013

8640 EQUITY & L/T DEBT 1447 2808 3910 7748 12675 17760 23355 30958 38900 48315

8740 DEBT/EQUITY 95:5 80:20 83:17 80:20 79:21 72:28 70:30 69:31 68:32

APPRAISAL OF ANNEX 25Appendix

THE SECOND HUSSEIN THERMAL POWER PROJECT Page 3 of 4

J(RDAN

Financial Statements at Constant 1974 Prices

(Case B

Sources and Applications of Funds 1973-1980

JD Thousands

Actual Forecast

1973 1974 1975 1976 1977 1978 1979 1980 1974-1980TOTAL

4200 SOURCES4220 - -4240 ELECTRICITY X POLE4260…4280 NET OP SURPLUS -21 -59 -64 452 1226 1569 2101 2793 80184300 -DEPRECIATION 2 3 8 '4340 NET CASH-(ELEC) -9 S6 -30 6o 1z61 _22 fR 420 1894380 NET INCOME-POLES 0 0 9 11 18 22 26 1004400 DEP-POLES 7 7 8 11 1S 19 25 _31 1164440 NET CASH-POLES 7 7 17 22 29 37 47 7 21

4520 CASH GENERATED -12 -49 -13 6j2 1845 2359 3215 4077 12106

4580 FROM RELENDING:4600 ---- ---------4620 INTEREST INCOME 73 194 254 206 158 139 120 101 11724640 AMORTIZATION 17 325 125 1332 320 342 342 342 3328

4700 NET CASH-RELENDING 9Q 519 579 1538 478 481 462 443 45004740 INTERNAL CASH4760 GENERATION 78 470 566 2210 2323 2840 3677 4520 16606

4840 flOVERNNENT EQUITY 497 410 1000 1000 2000 2000 1500 1000 8910

4900 LONG TERM DEBTS4920 ---------------4940 CONSTN FINANCING 541 1109 2813 4011 3556 6003 6381 7630 315034960 FOR RELENDING 545 2211 1061 110. 140 0 0 0 3522

5020 TOTAL L/T DEBTS 1086 3320 3874 4121 3696 6mQ3 6381 7630 35025

5080 OTHER5100 ----5120 EMP TER RES CHANGE 2 11 10 10 10 10 10 10 715140 CHANGE IN WORKING5160 CAPITAL(EXCL CASH) 10 -17 66 484 -831 879 -1052 1342 871

5220 TOTAL SOURCES 1653 4194 _5516 7825 7198 11732 10516 14502 61483

5280 APPLICATIONS5300 - …-…- _

5340 CONST EXCL INT5360 - …------------5380 HUSSEIN 1 478 1410 2730 3233 0 0 0 0 73735400 CONNECTION TO5420 CEMENT FACTORY 0 4 130 410 29 0 0 0 5735460 AMMAN/ZARQA LINE-1 3 67 1496 170 244 0 0 0 19775480 HUSSEIN II 0 0 474 1161 2039 2100 0 0 57745500 MISC ELECTRICITY 1 10 34 66 65 75 90 100 4405520 HUSSEIN III 0 0 0 0 1420 4900 4640 6680 176405540 AMMAN/ZARQA LINE-2 0 5 70 1000 435 530 0 0 20405560 FUTURE EXTENSIONS 0 0 0 0 0 1300 2800 4500 86005580 MARQA PURCHASE 0 0 0 0 2616 0 0 0 26165620 TOTAL JEA FIXED5640 ASSETS EXTENSIONS 482 1496 _4994 6040 6848 8905 7530 11280 470335680 INVESTMENT LOANS5700 FOR CONSTN5720 --- - -_-…--______5740 JEPCO DEVELOPMENT 198 1852 0 0 0 0 0 0 18525760 IDECO STAGE 11 168 139 0 0 0 0 0 0 1395780 IDECO STAGE III 26 612 0 0 0 0 0 0 612

5840 TOTAL INVESTMENTS 392 2603 0 0 0 0 0 0 2603

5900 DEBT SERVICE5920 ---------5940 AMORTIZATION 535 38 38 305 877 1241 1291 1291 50815960 INTEREST 8 101 _ 284 55S 861 1275 1730 2210 7016

6020 TOTAL DEBT SERVICE 43 139- 322 860 1738 2516 3021 3501 12097

6080 SUB-TOTAL APPLNS 1417 4238 5256 6900 8586 11421 10551 14781 61733

6160 CHANGE IN CASH 236 -44 260 925 -1388 311 -35 -279 -250

6200 TOTAL APPLICATIONS 1653 4194 5516 7825 7198 11732 10516 14502 61483

6260 DEBT SERVICE COVER 0.1 3.4 1.8 2.6 1.3 1.1 1.2 1.3 1.4

APPRAISAL OF ANNEX 25Appendix

THE SECOND HUSSEIN THERKAL POWER PROJECT Page 4 of 4

JORDAN

Financial Statements at Constant 1974 Prices

Debt Statements 1974-1980

JD Thousands

Forecast

1974 1975 1976 1977 1978 1979 1980 1974-1980TOTAL

1000 IDA CREDIT 386-Jo1030 -BORROWINGS 551 1100 1045 325 0 0 0 30211040 -AMORTIZATION 0 0 0 153 153 153 153 6121080 -BALANCE 820 1920 2965 3137 2984 2831 2678 01110 -INTEREST 39 99 177 221 222 211 200 11691160 -COMMITMENT CHGE 21 14 6 2 1 0 0 44

1500 KF LOAN-HUSSEIN I1530 -BORROWINGS 549 1100 1044 325 0 0 0 30181540 -AMORTIZATION 0 0 0 286 286 286 286 11441580 -BALANCE 821 1921 2965 3004 2718 2432 2146 01610 -INTEREsT 33 82 147 179 172 154 137 904

2000 LOANS-EXPANSIONS2030 -BORROWINGS 9 160 1134 1549 4965 5980 7630 214272040 -AMORTIZATION 0 0 0 0 50 100 100 2502080 -BALANCE 9 169 1303 2852 7767 13647 21177 02110 -INTEREST 0 8 63 177 451 910 1480 30892160 -COMMITMENT CHGE 7 13 8 52 125 128 78 411

2500 IDA CREDIT-PROJECT2530 -BORROWINGS 0 120 324 675 390 104 0 16132540 -AMORTIZATION 0 0 0 0 75 75 75 2252580 -BALANCE 0 120 444 1119 1434 1463 1388 02610 -INTEREST 0 5 23 63 102 116 114 4222660 -COMMITMENT CHGE 0 12 16 6 3 1 1 38

3000 COFINANCER-PROJECT3030 -BORROWINGS 0 243 399 424 648 297 0 20113040 -AMORTIZATION 0 0 0 0 168 168 168 5043080 -BALANCE 0 243 642 1066 1546 1675 1507 03110 -INTEREST 0 10 35 68 104 129 127 4743160 -COMMITMENT CHGE 0 7 12 9 5 3 8 43

3500 SUPPLIERS CR-MARQA3530 -BORROWINGS 0 0 65 258 0 0 0 3233540 -AMORTIZATION 0 0 0 0 71 71 71 2133580 -BALANCE 0 0 65 323 252 181 110 03610 -INTEREST 0 0 3 16 24 18 12 74

4000 UEPCO DEV (zX UK)4030 -BORROWINGS 1584 0 0 0 0 0 0 15844040 -AMORTIZATION 0 0 100 200 200 200 200 9004080 -BALANCE 3100 3100 3000 2800 2600 2400 2200 014500 IDECO I (EX UK) 30 10 30 80 20 40 20 4530 -BORROWINGS 0 0 0 0 0 0 0 04540 -AMORTIZATION 38 38 38 38 38 38 38 2664580 -BALANCE 508 470 432 394 356 318 280 0

5000 IDECO STAGES IIII-5030 -BORROWINGS 587 0 0 0 0 0 0 5875040 -AMORTIZATION 0 0 63 96 96 96 96 4475080 -BALANCE 1143 1143 1080 984 888 792 696 0

5500 132KV STG I(EX UK)5530 -BORROWINGS 40 1061 110 140 0 0 0 13511'5540 -AMORTIZATION 0 0 104 104 104 104 104 5205580 -BALANCE 40 1101 1107 1143 1039 935 831 05610 -INTEREST 1 34 66 67 65 59 53 347

9500 DEBT SUMMARY9510 -BORROWINGS 3320 3784 4121 3696 6003 6381 7630 349359520 -REPAYMENTS 38 38 305 877 1241 1291 1291 50819530 -BALANCE 6441 10187 14003 16822 21584 26674 33013 330139550 -COtMITMENT FEES 27 46 42 69 134 132 86 5369560 -INTEREST 74 238 513 792 1141 1598 2124 64809570 -INTEREST & CF 101 284 555 861 1275 1730 2210 70169580 -DEBT SERVICE 139 322 860 1738 2516 3021 3501 120979595 TOTAL OPENING 0 0 0 0 0 0 0 0

9650 AVE MAT YRS 13.0 13.8 14.6 14.8 15.8 16.1 16.0 14.99660 AVE INT t 2.10 3.42 4-59 5.59 6.64 7.17 7.41 5.27

1/ It is assumed that cofinancer loan would be reduced to the extent of the Projectcost reduction based on 1974 prices.

May 1975

IBRD -10290R1

c * 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~APRIL 1975

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AMAIN POWER SYSTEMSK ... klVOOr | EXISTING AND FUTURE POWER LINES AND STATIONS

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33 kV Overhead Lines

,' f -E lExisting

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