ASIAN DEVELOPMENT BANK

PPA: THA 26370

PROJECT PERFORMANCE AUDIT REPORT ON THE THIRD POWER TRANSMISSION (SECTOR) PROJECT (Loan 1170-THA) AND FOURTH POWER TRANSMISSION (SECTOR) PROJECT (Loan 1245-THA) IN THAILAND

September 2002

CURRENCY EQUIVALENTS Currency Unit baht (B) At Appraisal (Loan 1170) March 1992 B1.00 $1.00 = = $0.0386 B25.89 At Appraisal (Loan 1245) April 1993 $0.0392 B25.48 ABBREVIATIONS ADB EGAT EIRR FIRR ICB MEA MOF OEM PCR PDP PEA PPAR PT3 PT4 TS.8 TS.9 Asian Development Bank Electricity Generating Authority of Thailand economic internal rate of return financial internal rate of return international competitive bidding Metropolitan Electricity Authority Ministry of Finance Operations Evaluation Mission project completion report power development plan Provincial Electricity Authority project performance audit report Third Power Transmission (Sector) Project Fourth Power Transmission (Sector) Project Transmission System Expansion Plan No. 8 Transmission System Expansion Plan No. 9 WEIGHTS AND MEASURES GWh kV kW kWh MVA MW m3
-

At Completion October 1999 $0.0257 B38.85

At Operations Evaluation June 2002 $.0238 B42.18

gigawatt-hour (1 million kWh) kilovolt kilowatt kilowatt-hour megavolt-ampere megawatt cubic meter NOTES

(i) (ii)

The fiscal year (FY) of the Government and EGAT ends on 30 September. The notation FY1992 refers to the fiscal year ending on 30 September 1992. In this report, $ refers to US dollars.

Operations Evaluation Department, PE-603

CONTENTS Page BASIC DATA EXECUTIVE SUMMARY MAP I. BACKGROUND A. Rationale B. Formulation C. Purpose and Outputs D. Cost, Financing, and Executing Arrangements E. Completion and Self-Evaluation F. Operations Evaluation PLANNING AND IMPLEMENTATION PERFORMANCE A. Formulation and Design B. Achievement of Outputs C. Cost and Scheduling D. Procurement and Construction E. Organization and Management ACHIEVEMENT OF PROJECT PURPOSE A. Operational Performance B. Performance of the Operating Entity C. Financial and Economic Reevaluation D. Sustainability ACHIEVEMENT OF OTHER PROJECT IMPACTS A. Socioeconomic Impact B. Environmental Impact C. Impact on Institutions and Policy OVERALL ASSESSMENT A. Relevance B. Efficacy C. Efficiency D. Sustainability E. Institutional Development and Other Impacts F. Overall Project Rating G. Assessment of ADB and Borrower Performance ISSUES, LESSONS, AND FOLLOW -UP ACTIONS A. Key Issues for the Future B. Lessons Identified C. Follow-Up Actions ii iii v 1 1 1 2 2 3 3 4 4 4 6 6 7 7 7 8 9 10 10 10 11 11 12 12 12 12 12 12 13 13 13 13 14 14 15 18 22 24 25

II.

III.

IV.

V.

VI.

APPENDIXES 1. Estimated and Actual Project Costs 2. Actual Project Scope 3. Implementation Schedules 4. Financial Performance of Electricity Generating Authority of Thailand 5. Financial and Economic Performance of Projects

BASIC DATA Third Power Transmission (Sector) Project (Loan 1170-THA) and Fourth Power Transmission (Sector) Project (Loan 1245-THA)
Key Project Data ($ million) Loan 1170-THA As per ADB Loan Documents Actual 349.10 213.21 150.40 107.79 94.25 87.92 6.33 Loan 1245-THA As per ADB Loan Documents Actual 405.80 317.45 205.70 125.03 115.60 96.03 19.57 Loan 1245-THA Expected Actual 823 Feb 1993 2024 Jun 1993 19 Aug 1993 22 Sep 1993 21 Dec 1993 3 May 1994 31 Jul 1998 9 Jul 1999 55

Total Project Cost Foreign Exchange Cost ADB Loan Amount/Utilization ADB Loan Amount/Cancellation Key Dates

Loan 1170-THA Expected Actual 618 Feb 1992 1011 Jun 1992 16 Jul 1992 16 Sep 1992 16 Dec 1992 18 Mar 1993 31 Sep 1998 2 Jul 1998 69.5

Appraisal Loan Negotiations Board Approval Loan Agreement Loan Effectiveness First Disbursement Project Completion Loan Closing Months (effectiveness to completion)

16 Dec 1992 31 Mar 1995 30 Sep 1995 27.5

22 Dec 1993 31 Sep 1996 31 Mar 1997 33

Key Performance Indicators

Financial Internal Rate of Return (%) Economic Internal Rate of Return (%)

Loan 1170-THA
Appraisal 8.5 15.8 PCR 1 13.4 20.9

PPAR 1 16.2 20.2

Loan 1245-THA
Appraisal 11.7 13.1 PCR 1 13.4 20.9

PPAR 1 16.2 20.2

Borrower Executing Agency Mission Data Type of Mission Consultation Fact-Finding 2 Appraisal Project Administration Review Project Completion Operations Evaluation 3

Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Loan 1170-THA No. of Missions Person-Days Loan 1245-THA No. of Missions Person-Days 1 1 10 1 1 19 16 18 12 30

1 9 1 1

13 24 12 30

ADB = Asian Development Bank, PCR = project completion report, PPAR = project performance audit report. 1 Combined result of Loans 1170-THA and 1245-THA. 2 Fact-Finding for Loan 1170-THA was done in February 1992 and later upgraded to appraisal. 3 The Operations Evaluation Mission comprised H. Wang (Evaluation Specialist/Mission leader), J. Wilson (Staff Consultant), and V. Ramos (Evaluation Analyst). The Mission visited Thailand from 29 May to 7 June 202.

EXECUTIVE SUMMARY In the early 1990s when the loan projects1 were appraised, Thailand was experiencing a period of rapid growth in electricity demand. This growth was matched with Thailands strong economic performance, leading to a higher than projected demand for electricity, and straining the countrys power system. The principal objective of the projects was to support the implementation of Transmission System Expansion Plan No. 8 (TS.8) formulated by the Electricity Generating Authority of Thailand (EGAT) in line with the Governments Seventh National Economic and Social Development Plan (FY1992FY1996) and thereby to ensure that power transmission restrictions would not become a constraint to future economic growth. TS.8, as an integral part of EGATs power development plan, comprised 32 components, each of which represented the least-cost method of meeting the projected demand and transmission system power flows. Some components provided capacity to rural areas where power was distributed by the Provincial Electricity Authority (PEA) of Thailand; one component provided an in-feed to the Metropolitan Bangkok area where power was distributed by the Metropolitan Electricity Authority (MEA) of Thailand; in other cases, the components provided power to industrial estates. Other objectives were to reduce transmission losses and improve the reliability of supply to each area concerned. The Third Power Transmission (Sector) Project (PT3) was to help implement those components of TS.8 physically commenced at the site during FY1992FY1993, and the Fourth Power Transmission (Sector) Project (PT4) those during FY1994FY1996. In addition to the project components under TS.8, PT4 also financed a mobile air quality monitoring system and the 500-kilovolt (kV) transmission system extension component associated with power delivery from units 12 and 13 at EGATs Mae Moh thermal power plant. The 500 kV transmission line also played an important role in improving the overall stability and reliability of the transmission grid. The Operations Evaluation Mission (OEM) visited Thailand in May and June 2002 and confirmed that the principal objectives of the two projects to provide additional power transmission capacity to match load growth, remove power transmission constraints, and improve system reliability had been achieved. There were significant improvements in system reliability as well as a noteworthy reduction in losses during execution of the projects, particularly since the completion of the first components in 1995, part of which can be attributed to the projects. The System Average Interruption Frequency Index decreased from 2.9 times per supply point in FY1994 to 0.7 in FY2001. The System Average Interruption Duration Index improved from 203 minutes per supply point in FY1994 to 38 in FY2001. Transmission system losses were reduced from 3.7% in FY1994 to 2.3% in FY2001. The load growth for which the projects were designed substantially materialized. The projects also supported the expansion of PEAs distribution system in provincial areas, where the village electrification ratio increased from 97.7% in FY1994 to 99.0% in FY2000, and MEAs expansion of the supply to Metropolitan Bangkok where demand also continued to increase. The actual cost of PT3 at loan closing was $213.2 million, 39% below the appraisal estimate of $349.1 million. The actual cost of PT4 upon completion was $317.45 million, 22% below the appraisal estimate of $405.8 million. The underruns were attributed to overestimation of total project costs including contingencies at the time of project design, lower procurement costs, and lower value of local currency costs in dollar equivalent terms because of baht depreciation.
1

Loan 1170-THA: Third Power Transmission (Sector) Project, for $94.25 million, approved on 16 July 1992; Loan 1245-THA: Fourth Power Transmission (Sector) Project, for $115.6 million, approved on 19 August 1993.

iv PT3 and PT4 were to be completed by March 1995 and September 1996, respectively. Actual completion was achieved for the individual subprojects between 1994 and 1998. The main reasons for the delays may be summarized as follows: (i) in some cases, there were delays in land acquisition and securing the rights-of-way necessary for the construction of transmission lines; (ii) in several cases, flooding delayed the work and contract extensions were approved by EGATs board as a result; (iii) in several cases, delays were attributed to a lack of skilled labor as a result of the then boom in construction activity; and (iv) a lack of liquidity after the financial crisis in mid-1997 meant that some or all subcontractors were unable to finance their ongoing work commitments in a timely manner. PT3 and PT4 had no unintended socioeconomic impacts during construction and operation. No significant project-specific environmental issues arose during implementation. EGAT made considerable efforts to address the environmental issues associated with lignite mining and power generation at Mae Moh. The mobile air quality monitoring system financed under PT4 is in use, in addition to which stationary air quality monitoring systems are in operation. Using the same time-slice approach as adopted in the appraisal report and project completion report (PCR), the financial internal rate of return (FIRR) and economic internal rate of return (EIRR) were reestimated for the two projects combined. The reestimated FIRR of 16.2% is above appraisal and PCR estimates while the EIRR of 20.2% is above the appraisal estimate and only slightly below the PCR estimate. The higher reestimates are attributed to lower capital expenditure and faster growth in sales in the years up to mid-1997. The project objectives and outputs were consistent with the countrys overall development needs, ADBs assistance strategy for the country, and ADBs strategic objectives at the time of appraisal; they continue to be relevant. In terms of efficacy, the projects achieved their objectives and intended outputs in physical, financial, and economic terms. The projects were the least-cost solutions for implementing the various components and were completed efficiently with cost savings. Both projects are considered sustainable technically, operationally, and financially. Overall, the OEM rates both projects as highly successful. The OEM identified two lessons relevant to future ADB operations in the power sector. First, the sector lending approach has resulted in highly successful power projects in Thailand. Clear ownership of the projects, matched with satisfactory institutional capacity of the executing agency, is crucial for achieving this kind of success in other developing member countries. Second, flexibility in the timing of implementation of such projects that are designed to support ongoing power system development requirements is essential for achieving efficient capital investment. ADB should recognize the desirability of project deferrals, if required.

vi

I. A. Rationale

BACKGROUND

1. In the early 1990s, when the Third and Fourth Power Transmission (Sector) Projects (PT3 and PT4, respectively) 1 were appraised by the Asian Development Bank (ADB), Thailand was experiencing a period of rapid growth in electricity demand. While this growth had slackened to slightly less than 8% per annum during FY1982FY1987, sales during FY1987FY1991 resumed their previous rapid rate of increase, rising at 15.3% per annum; areas outside Metropolitan Bangkok experienced a higher rate of growth at 18.1%. This growth was matched with Thailands strong economic performance during the period, leading to a higher than projected demand for electricity, straining the countrys power system. Transmission system restrictions were considered constraints to future economic growth and the principal objective of the two projects was to help overcome them. B. Formulation

2. PT3 and PT4 helped fund the Transmission System Expansion Plan No. 8 (TS.8) (FY1991 FY1995) of the Electricity Generating Authority of Thailand ( EGAT), as well as planned 500-kilovolt (kV) additions to the transmission system for the delivery of power from units 12 and 13 at Mae Moh thermal power plant. 3. EGAT formulated TS.8 in January 1991 as part of its integrated long-term transmission system development planning process to meet load growth and thereby support economic and regional development. TS.8 consisted of 32 components, each of which comprised substations and/or transmission lines. Each component was prepared in response to projected load increases and was tested to establish that the final proposals represented the least-cost method of meeting the projected demand and transmission system power flows. Some components provided capacity to rural areas where power was distributed by the Provincial Electricity Authority (PEA) of Thailand; one component provided an in-feed to the Metropolitan Bangkok area where power was distributed by the Metropolitan Electricity Authority (MEA) of Thailand; and in other cases, the components provided power to industrial estates. Other objectives were to reduce system losses and improve the security of supply of the transmission system. TS.8 was submitted to the Government for approval in February 1991 with a time frame for implementation to cope with the power demand projected for FY1992FY1996. Approval was obtained from the Government in April 1991. 4. EGAT also formulated the 500 kV transmission system extension component associated with power delivery from units 12 and 13 at Mae Moh thermal power plant. This component played an important role in improving the overall security and power delivery capacity of the transmission system as a whole. 5. The map shows the scope of TS.8 and the project com ponents financed under PT3 and PT4. EGATs project formulation reports were prepared competently, using modern power system planning and analysis methods, and formed a satisfactory basis for appraisal. 6. Since the two projects were to be implemented using the sector lending approach, the subprojects were prepared by EGAT on the basis of specific criteria agreed to by EGAT and
1

Loan 1170-THA: Third Power Transmission (Sector) Project, for $94.25 million, approved on 16 July 1992; Loan 1245-THA: Fourth Power Transmission (Sector) Project, for $115.6 million, approved on 19 August 1993.

2 ADB. These criteria included (i) least-cost nature and technical appropriateness, (ii) system stability and reliability, (iii) system maintainability, and (iv) system loss reduction. During the appraisal of PT3, it was confirmed that these criteria were fully adopted in the preparation of TS.8. Therefore, the general criterion for selection of subprojects was that they formed part of TS.8 approved by the Government in 1991. All subprojects for each project were already identified at the time of appraisal. In case that subprojects did not form part of TS.8, appraisal reports prepared by EGAT demonstrating that the subprojects satisfied all the criteria were to be submitted to ADB for prior approval. However, because both loans were sector loans, the combination of subprojects could be changed. No project preparatory technical assistance was requested or considered necessary as EGATs Power System Planning Department was capable of preparing the projects itself. It had considerable experience in this area, including the formulation of previous transmission expansion projects financed partly by ADB. 7. Policy dialogue during the processing of the two projects focused on (i) the extent and timing of private sector participation in power system development, (ii) desirable adjustments in the level and structure of electricity tariffs for sales to MEA and PEA, and (iii) development of environmental standards for transmission planning. C. Purpose and Outputs

8. As already outlined, the two loans helped fund the construction of transmission facilities to convey electricity to provincial areas, strengthen the power supply to Metropolitan Bangkok, strengthen supply to industrial areas, and overcome constraints in the delivery of power from units 12 and 13 at the Mae Moh thermal power plant. The main purposes of the projects were to improve the efficiency and reliability of power supply as well as to support system expansion and rural electrification. The beneficiaries were to include all electricity customers, including rural customers. 9. The project scope consisted of construction of 500 kV, 230 kV, and 115 kV transmission lines; expansion of 500 kV substations; construction of 230 kV and 115 kV substations; reinforcement of 230 kV and 115 kV substations; and provision of an air quality monitoring system for Mae Moh thermal power plant. The scope was consistent with the purposes of the projects by supporting increased transmission system service capability and a resulting increase in the provision of power for Thailands future growth; improved reliability of power supply, particularly in the new industrial and commercial areas; PEAs rural electrification program; and environmentally sound operation of the Mae Moh thermal power plant. D. Cost, Financing, and Executing Arrangements

10. For PT3, the estimated project cost at loan appraisal was $349.1 million equivalent, with a foreign exchange component of $150.4 million. The ADB loan of $94.25 million was to be used to finance 63% of the foreign exchange cost of the project. The financing of the remaining foreign exchange expenditure ($56.15 million) was to be arranged by the Government and EGAT from commercial sources. The entire local currency cost ($198.7 million equivalent) of the project was to be financed by local borrowing and EGATs internal resources . For PT4, the estimated project cost at loan appraisal was $405.8 million equivalent, with a foreign exchange component of $205.7 million. The approved ADB loan of $115.6 million was to be used to finance 56% of the foreign exchange cost of the project. The financing of the remaining foreign exchange expenditure ($90.1 million) was to be arranged by the Government and EGAT from commercial sources. The entire local currency cost ($200.1 million equivalent) of the project was to be financed by local borrowing and EGATs internal resources. Taken together, the ADB

3 loans were to finance 59% of the foreign exchange cost and 28% of the combined cost of the projects. Details of the cost estimates for the two loans at the time of appraisal are given in Appendix 1. 11. EGAT implemented PT3 and PT4 in accordance with arrangements agreed with ADB during appraisal. Principal responsibility for implementation lay with the Transmission System Planning and Project Division. E. Completion and Self-Evaluation

12. The last subproject under PT3 was completed in September 1998, 3.5 years later than originally planned. The last subproject under PT4 was completed in July 1998, 1.8 years behind schedule. Supported by quarterly progress reports for the two projects together, EGAT prepared a comprehensive project completion report (PCR) for each project.2 ADBs PCR was circulated in September 2000. It contained the required ingredients and was generally satisfactory. In attempting to consolidate facts and conclusions relating to the numerous separate subprojects, each of which had its own history, the reasons given in the PCR for the delay in completing the two projects as a whole were not convincing. However, when the details of each component were considered separately, as in EGATs PCRs for example, the reasons for the delays were readily understandable. 3 The PCR noted that in hindsight it might have been more expedient to develop a single project at the outset rather than separating TS.8 into two projects processed in 2 consecutive years. 13. Overall, the PCR satisfactorily evaluated all aspects of the projects and supported its conclusions with sufficient evidence. The overall rating of generally successful for both projects given in the PCR was based on a balanced evaluation. 4 F. Operations Evaluation

14. This project performance audit report (PPAR) examines the findings of the PCR and assesses the operating performance of the projects in terms of relevance, efficacy, efficiency, sustainability, and institutional and other development mpacts. The Operations Evaluation i Mission (OEM) visited Thailand from 29 May to 7 June 2002 and met with representatives from EGAT, MEA, PEA, the Ministry of Finance (MOF), and the National Energy Policy Office. EGAT and other parties concerned provided the information needed by the OEM. 5 The views of ADBs concerned departments and those of EGAT have been taken into account in finalizing the PPAR. Copies of the draft PPAR were forwarded to MOF and EGAT on 5 July 2002 with a request that comments be provided within 2 weeks. Although the request was followed up subsequently, no comments were received; it is, therefore, assumed that MOF and EGAT endorse the PPAR.

EGATs PCR for Loan 1170-THA was submitted in March 1999 and its PCR for Loan 1245-THA, in September 1999. The last quarterly progress report on ADBs project file is dated 30 June 1999. There were two other inaccuracies in the PCR: (i) it stated that TS.8 included the 500 kV component but that component was part of the Mae Moh project; (ii) it highlighted a change in design at Chaeng Watthana substation from an outdoor design to gas -insulated indoor switchgear but the driving change was upgrading of the design voltage level from 230 kV to 500 kV for later operation at the higher voltage level. Before September 2000, a three-category rating system was used (generally successful, partly successful, and unsuccessful). Chosen on a random basis, facilities visited included subprojects at Chiang Mai, Chiang Rai, and Mae Moh as well as the 500 kV substation and lines at Sai Noi.

4 II. A. PLANNING AND IMPLEMENTATION PERFORMANCE

Formulation and Design

15. EGATs power development plan (PDP) is a 15-year rolling plan covering both power generation and transmission system development. PT3 and PT4 as integral parts of EGATs TS.8 conformed with the Governments Seventh National Economic and Social Development Plan (FY1992FY1996) and EGATs PDP 92-01. 6 They were formulated using appropriate techniques and modern technology and their design was, and remains, consistent with and relevant to Thailands overall development objectives. Both projects were also consistent with ADBs sector strategy at the time for Thailand in terms of improvements in transmission and distribution systems to ensure effective power utilization and to support rural electrification. 16. In line with the lending approach followed, relevant power sector issues were reviewed during project processing. The policy dialogue focused on private sector participation and tariff reform as important sector issues. B. Achievement of Outputs

17. The principal outputs of the TS.8 and the 500 kV component were to provide additional power transmission capacity to match load growth, remove transmission constraints, and improve system reliability, as well as to enable power delivery from Mae Moh units 12 and 13. Almost all subprojects of PT3 and PT4 were implemented as planned at appraisal (Table 1 and Appendix 2). Table 1: Combined Project Scope
Item 500 kV, 230 kV, and 115 kV transmission line construction (circuit-kilometers) 230 kV and 115 kV substation construction (number) 230 kV and 115 kV substation reinforcement (number) 500 kV switchyard expansion (number) 500 kV substation expansion (number) Air quality monitoring system (number)
kV = kilovolt. Source: Electricity Generating Authority of Thailand.

Planned

Actual

2,563 18 39 1 3 1

2,549 17 37 1 3 1

18. There was no change in project purpose or planned outputs for either project. Neither were there any major changes in project scope. Two subprojects, namely construction of the 115 kV Thoeng substation and supply of basket truck, were transferred from PT3 to PT4, and two additional contracts for supply of aluminum ingots were included in PT4 to utilize savings under Loan 1245-THA. One subproject, the transmission line from Rajjaprabha to Phangnga under PT3, was dropped from ADB financing because of delays arising from the need to carry out an environmental impact assessment and studies to secure construction approvals.7 Some design changes were made during the course of the work. These included a change in the proposed voltage at Chaeng Watthana substation financed under PT3 from 230 kV to 500 kV to
6 7

PDP 92-01 covering FY1992FY2006 was approved by the Government in September 1992. The line was eventually built in accordance with the Governments environment all regulations.

5 better fit in with EGATs least-cost transmission system development program. The OEM reviewed the design changes and considered them to be appropriate. Under the sector lending approach, such changes are allowed in order to reflect evolving transmission requirements. 19. The projects supported the expansion of PEAs distribution system in provincial areas and MEAs expansion of the supply to Metropolitan Bangkok. Table 2 illustrates the growth in MEA and PEA supply that took place during implementation of the two projects, despite the effects of the Asian financial crisis. Table 2: MEA and PEA Power Supply Growth
Item Number of Customers FY1995 FY1998 FY2001 Sales in GWh FY1995 FY1998 FY2001 MEA 1,818,808 2,046,594 2,233,814 29,106 30,987 33,847 % per annum PEA 9,034,872 10,583,054 11,549,581 37,862 48,003 56,428 % per annum

4.0 3.0

5.4 3.0

2.1 3.0

8.2 5.5

GWh = gigawatt-hour , MEA = Metropolitan Electricity Authority, PEA = Provincial Electricity Authority. Source: MEA and PEA annual reports.

20. Significant improvements in transmission system reliability, as well as a noteworthy reduction in system losses over the period of execution of the projects, were also achieved as shown in Table 3. The System Average Interruption Frequency Index decreased from 2.9 times per supply point in FY1994 to 0.7 in FY2001. The System Average Interruption Duration Index improved from 203 minutes per supply point in FY1994 to 38 in FY2001. Transmission system losses were reduced from 3.7% in FY1994 to 2.3% in FY2001. The improvements are particularly evident from the time of completion of the first project components in 1995. Part of these improvements can clearly be attributed to the projects. Table 3: Transmission System Improvements
Fiscal Year SAIFI (times/supply point) SAIDI (minute/supply point) System Minutes a Lost Transmission System Losses (%)

1994 2.9 203 72 3.7 1995 1.9 105 30 3.2 1996 1.5 105 29 3.2 1997 1.5 95 19 3.1 1998 1.4 79 19 2.7 1999 0.9 84 19 2.6 2000 0.9 51 16 2.4 2001 0.7 38 11 2.3 b SAIDI = System Average Interruption Duration Index, SAIFI = System Average Interruption Frequency Index. a System minutes of supply lost per megawatt of demand. b Estimated. Source: Electricity Generating Authority of Thailand.

6 C. Cost and Scheduling

21. The actual cost of PT3 at completion was $213.2 million, 39% below the appraisal estimate of $349.1 million. The actual cost of PT4 upon completion was $317.5 million, 22% below the appraisal estimate of $405.8 million. The major underruns were attributed to several factors : (i) overestimation of total project cost including contingencies at the time of project design, (ii) lower procurement costs, and (iii) lower value of local currency expenditures in dollar equivalent terms as a result of baht depreciation during project implementation. Details of estimated and actual project costs are given in Appendix 1. 22. Given the significantly lower costs and the sector lending approach followed, EGAT added some components with the approval of ADB (Appendix 2). Final loan savings of $6.3 million and $19.6 million, respectively were cancelled at loan closing. 23. PT3 and PT4 were to be completed by March 1995 and September 1996, respectively. 8 Actual completion was achieved for the individual subprojects between 1994 and 1998 as shown in Appendix 3. The reasons for the delays may be summarized as follows: (i) in some cases, there were delays in land acquisition and securing of the rights-of-way necessary for the construction of transmission lines;9 (ii) in several cases, flooding is reported to have delayed the work and contract extensions were approved by EGATs board as a result; (iii) in several cases, delays were attributed to a lack of skilled labor as a result of the then boom in construction activity in Thailand; and (iv) a lack of liquidity after the financial crisis in mid-1997 meant that some or all subcontractors were unable to finance their ongoing work commitments in a timely manner. Additionally, some delays arose as a result of design changes. 24. Because of the financial crisis and the resulting fall in electricity demand during FY1998 and FY1999 (Table 4), the delays did not adversely affect the project outputs. However, it was recognized that the original schedule prepared by EGAT was too optimistic with regard to land acquisition and rights-of-way, especially when the practice of having the Government approve project expenditures in a total package was taken into account. 10 D. Procurement and Construction

25. EGAT agreed at appraisal that bid packages would be structured to make them suitable for international competitive bidding (ICB) wherever appropriate. In accordance with ADBs sector lending policy, special procurement actions were agreed under both loans to simplify procurement actions: (i) exemption from prior approval of ADB for standard bidding documents for contracts to be awarded under ICB; (ii) authorization to award by EGAT contracts up to $1.0 million for all contracts, and contracts up to $3.0 million for all contracts where the lowest priced bidder was also the lowest evaluated bidder, without prior approval from ADB; and (iii) use of international shopping for contracts below $0.5 million. The preparation of bidding documents, bidding, contract award, construction, installation, and contract administration
8

EGATs original documentation for TS.8 foresaw its completion by early 1995. At the time of appraisal of Loan 1245-THA, completion of TS.8 was expected by September 1996. 9 The projects were prepared before the formal incorporation of social dimensions in ADB operations in 1993 and introduction of the mandatory requirement for resettlement plans in 1995. In accordance with the government procedures and ADB policy at the time, land acquisition for substations was done through open market transaction and owners of the rights -of-way for transmission lines were sufficiently compensated. Apart from some initial delays, no significant issues regarding land acquisition and rights -of-way arose during the implementation of the projects. 10 Advance procurement of land is not possible under this practice.

7 appear from the project records to have been conducted with reasonable efficiency by EGATs own staff. No consultants were engaged. 26. A total of 21 contracts were financed by ADB under PT3: (i) seven international shopping contracts with a value below $0.5 million; (ii) seven ICB contracts with a value between $0.5 million and $3.0 million; and (iii) seven ICB contracts above $3.0 million. The last ones, representing a total value of 75% of the disbursed loan amount, were awarded with the prior approval of ADB as previously agreed. For PT4, a total of 19 contracts were financed by ADB: (i) one international shopping contract with a value below $0.5 million, (ii) seven ICB contracts with a value between $0.5 million and $3.0 million, and (iii) 11 ICB contracts above $3.0 million. The last ones, representing a total value of nearly 90% of the disbursed loan amount, were awarded with the prior approval of ADB. 27. EGATs PCRs stated that the experience with the five largest supply and construction contracts, three under PT3 and two under PT4 ranging from $15.0 million to $20.0 million, had been good. As already mentioned, some contractors could not complete their works on time, a contributing factor being the financial crisis in the country and the consequential lack of liquidity. Another contributing factor was that the Government instructed EGAT to delay payments in local currency to its contractors during the crisis .11 28. Generally, EGATs PCRs reported that the experience with supply-only contracts under both projects had been good. No disputes arising under these contracts led to arbitration. E. Organization and Management

29. EGATs management and staff carried out the projects efficiently, keeping comprehensive records of progress and making design changes expeditiously where needed for the long-term optimality of transmission system development. EGATs internal processes of monitoring and evaluation appear to have been very good. The quality and comprehensiveness of EGATs quarterly progress reports and PCRs are testimonies to these statements. EGAT submitted its progress reports, financial statements, and audit reports in a timely and comprehensive manner after commencement of the projects. The government agencies concerned had completed their inputs before ADBs fact-finding or appraisal, which paved the way for smooth organization and management of the projects. III. A. ACHIEVEMENT OF PROJECT PURPOSE

Operational Performance

30. The load growth for which the projects were designed has substantially materialized. A comparison of the load growth projected at the time of appraisal of PT3 and the actual load growth achieved shows that EGATs load forecast proved to be remarkably accurate over the time-slice of TS.8 to which the projects were related (Table 4). The subsequent fall in demand during FY1998 and FY1999 was caused by the Asian financial crisis and, hence, could not be predicted. In the last 2 years, demand resumed its growth as a result of economic recovery.

11

According to the PCR, the Government then granted extensions of 180 days on contracts with government agencies and state enterprises and subsequently permitted a further extension at the discretion of the individual agencies concerned.

8 Table 4: Projected and Actual Load Growth

Fiscal Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Projected (MW) 9,000 9,924 10,892 11,946 13,075 14,205 15,354 16,531 17,765 19,000 Actual (MW) 8,877 9,730 10,709 12,268 13,311 14,506 14,180 13,712 14,918 16,126 Actual/Projected (%) 98 98 98 103 102 102 92 83 84 85

MW = megawatt. Source: Electricity Generating Authority of Thailand.

31. The performance of EGATs transmission system in terms of reliability improvements and loss reduction has been very good (para. 20). Since EGAT retains competent staff and provides the necessary resources to adequately operate and maintain the project facilities and has maintained a sound financial position to date, the operational performance of the projects is judged satisfactory. B. Performance of the Operating Entity

32. A summary of EGATs financial performance during the period FY1992FY2001 is given in Appendix 4. EGAT maintained a strong financial performance in most years. Its total revenues doubled during FY1992FY1997 and, after deducting interest, bonuses, and government remittances, net incomes were positive each year. 33. EGATs financial performance deteriorated markedly with the onset of the financial crisis in mid-1997. In addition to the decline in energy sales in FY1998 and FY1999, significant exchange losses on foreign debt were incurred after the flotation of the baht, despite the Governments permission to EGAT to amortize a portion of these over a longer period. Income from the sale of shares in EGATs associated generating company and lower remittances paid to the Government in lieu of taxes offset these losses slightly. In FY1999, EGAT incurred a substantial deficit as a result of expensing through the income statement all the foreign exchange losses incurred from FY1997 to FY1999. 12 This change in policy reflected an agreement with the World Bank in 1998 that EGAT should in the future comply with international accounting standards in respect of the treatment of foreign exchange gains and losses, and other areas. This was the first deficit incurred by EGAT in more than 10 years of operation. From FY2000, EGAT resumed its strong financial performance. Sales revenue increased at 20% and 15%, respectively, in FY2000 and FY2001 and net income became positive again. However, EGATs debt service coverage deteriorated from FY1998 to FY2001 as debt repayment rose sharply from B7.6 billion to B41.1 billion during that period. The restructuring of
12

EGATs annual report and financial statements for FY1999 note a change in accounting policy in this respect as follows: In 1999, EGAT has changed the accounting policy for the treatment of losses from the introduction of managed float exchange rate system in 1997. Previously, these had been recorded as deferred expenses and written off over the remaining term of each loan. In 1999, the remaining deferred amount of Baht 18,679.70 million has been charged to the net loss of the year.

9 the power sector in coming years, when implemented, is likely to lead to a change in EGATs role and further changes in its financial position. Having said that, the OEM is satisfied that EGATs solid financial performance to date indicates its ability to sustain the operations of the projects. 34. As far as ADBs oan covenants are concerned, two of particular importance were l agreed at the time of appraisal: (i) a self-financing ratio requiring EGAT to generate for each fiscal year, funds from internal sources equivalent to not less than 25% of the annual average of capital expenditures incurred in the previous, current, and following fiscal years (20% up to and including FY1993); and (ii) a debt-equity ratio requiring EGAT to maintain a ratio of debt to equity of less than 2:1 in all years. EGAT complied with the covenanted self-financing ratio in all years since loan approval except FY1997 and FY2000 when the ratio was 14% and 24%, respectively. EGAT complied with the covenanted debt-equity ratio in all years since loan approval. C. Financial and Economic Reevaluation

35. The financial internal rates of return (FIRRs) of the two projects were calculated at appraisal by comparing the incremental capital and operating costs of EGATs PDP over a 5year period (FY1992FY1996) with the projected incremental revenues. This time-slice was expected to include the projects. Although the same methodology was used, FIRRs were estimated separately for the two projects because the appraisal for PT4 was done 1 year later than PT3 and data update was necessary. In its PCRs, EGAT adopted the same approach but took a longer time-slice, FY1992FY1998, matched with the actual implementation periods of the projects. Also since both projects were completed at about the same time in 1998, the FIRR was recalculated for the two projects as a whole. ADB adopted the same approach as EGAT in its own PCR and the longer time-slice has again been used for the reevaluation carried out by the OEM. 36. The results of the analyses undertaken are presented in Table 5 below. The methodology used in the OEM reevaluation was the same as that used in the PCR, with necessary adjustments. Details are given in Appendix 5. The higher FIRR reestimate is attributed mainly to lower capital expenditure and faster growth in sales in the years up to mid-1997. Table 5: FIRR Estimates (%)
Item Appraisal PCR OEM PT3 8.5 PT4 11.7 Both Projects 13.4 16.2

= not available, FIRR = financial internal rate of return, OEM = Operations Evaluation Mission, PCR = project completion report, PT3 = Third Power Transmission (Sector) Project, PT4 = Fourth Power Transmission (Sector) Project.

37. The principal economic justification for each project component at the time of appraisal rested on establishing the need for its implementation in the context of EGATs overall power system development strategy; and demonstrating that the proposed works represented the

10 least-cost solution in each case. Details of the forecast demand, network analyses, and the least-cost calculations were given in EGATs project formulation report for TS.8 of September 1991. In the case of the 500 kV transmission extension component for Mae Moh units 12 and 13, they were summarized in EGATs PCR of September 1999. The calculations were reviewed by the OEM and were considered appropriate. It was also confirmed that the power demand for which the projects had been designed had substantially materialized (para. 30). 38. As in the case of the FIRR, the economic internal rates of return (EIRRs) of the two projects were calculated at appraisal by comparing the incremental capital and operating costs of EGATs PDP over a 5-year period with the projected incremental revenues. The time-slice chosen in each case was expected to include the projects. In its PCRs, EGAT adopted the same approach but took a longer time-slice, FY1992FY1998, matched with the actual implementation period of the project. Since both projects were completed at about the same time in 1998, the EIRR was reestimated for the two projects as a whole. ADB adopted the same approach as EGAT in its own PCR and the longer time-slice has again been used for the reevaluation carried out by the OEM. 39. The results of the analyses undertaken are presented in Table 6 below. Details are given in Appendix 5. The high reestimate confirms the economic viability of both projects.
Table 6: EIRR Estimates (%) Item PT3 PT4 Both Projects

Appraisal 15.8 13.1 PCR 20.9 OEM 20.2 = not available, EIRR = economic internal rate of return, OEM = Operations Evaluation Mission, PCR = project completion report, PT3 = Third Power Transmission (Sector) Project, PT4 = Fourth Power Transmission (Sector) Project.

D.

Sustainability

40. Although EGATs future role and financial position are expected to change for the reasons noted in para. 33, its sound technical and financial performance provides considerable assurance of the future availability of sufficient funds and other resources for project operation and maintenance. Taking also into account EGATs undoubted ownership of the projects, the OEM does not have any doubts about their sustainability. IV. A. ACHIEVEMENT OF OTHER PROJECT IMPACTS

Socioeconomic Impact

41. Indirectly, the projects supported the economic development of the country, both in urban and rural areas, as evidenced by the growth in sales and number of customers (para. 19). The projects had no significant direct socioeconomic impacts during construction; nor did they have any unintended impacts.

11 B. Environmental Impact

42. At the time of appraisal, after ADBs review of the possible environmental impacts of the routing of transmission lines and the location and type of substations, it was concluded that no subproject would raise significant environmental issues. The Government confirmed TS.8 as a B category project not requiring an environmental impact assessment. During implementation, EGAT set its criteria for site selection in accordance with the Governments environmental policy and planning regulations. Subsequently, however, during the detailed planning and design stage for the 115 kV transmission line from Rajjaprabha to Phangnga, it was found necessary for the line to pass through a n ational forest reserve for a length of about 6kilometers. An environmental impact assessment was required and a significant delay in construction was foreseen. As a result, this subproject was withdrawn by EGAT from ADB funding under PT3. 13 43. EGAT has made considerable efforts during recent years to address the environmental issues associated with lignite mining and power generation at Mae Moh. Flue gas desulfurization systems for all operating units at Mae Moh thermal plant (units 4 to 13) had been installed by February 2000 and other measures taken. The mobile air quality monitoring system financed under PT4 is in use, in addition to which there are stationary air quality monitoring systems in operation, some of which belong to EGAT and some t the Pollution Control o Department of the Government. A report of air quality is issued weekly by the latter to the public. A comprehensive study of environmental impacts at the station and mine has been prepared under ADBs technical assistance,14 and its recommendations were under consideration by EGAT at the time of preparation of this PPAR. At the time of the OEM, the 24-hour average of the sulfur dioxide ambient level at Mae Moh was around 160 micrograms/cubicmeter (m3), below the national standard of 3 micrograms/m 3 and much lower than the 400 micrograms/m 3 20 recorded in October 1992. No other significant project-specific environmental issues arose during the projects implementation. C. Impact on Institutions and Policy

44. Power sector restructuring in Thailand continues to progress. In October 2000, the Government resolved issues related to the Guidelines on Electricity Supply Industry Restructuring and Establishment of the Power Pool, but various international events in the electricity supply industry raised concerns over the appropriateness of introducing a power pool in Thailand.15 Its establishment has, therefore, been postponed. As an intermediate step toward a competitive power market, large consumers will soon be allowed to purchase power directly from power producers through contractual arrangements at an agreed price plus wheeling charges .16 In March 2001, the Prime Minister approved a plan for listing qualified state-owned enterprises on the Stock Exchange of Thailand. Under this plan, EGAT would become a publicly listed company by the second half of 2003. In the meantime, a study has been carried out by EGAT on other suitable models for Thai power sector restructuring. The result of the study was not available at the time of preparation of this PPAR. 45. Other than policy dialogue, the projects did not directly address institutional strengthening and policy issues through loan covenants. They did, however, further enhance EGATs internal capabilities in the areas of project preparation, implementation, and monitoring and, to that extent, furthered ADBs institutional-strengthening aims.
13 14

Environmental approval was subsequently obtained by EGAT and the line was built. TA 3583-THA: Mae Moh Environmental Evaluation Study, for $500,000, approved on 14 December 2000. 15 The Californian power crisis in early 2001 was one such event cited by EGAT. 16 They may already do this in industrial estates.

12 V. A. Relevance OVERALL ASSESSMENT

46. Both projects purposes and outputs were consistent with the countrys overall development needs, ADBs assistance strategy for Thailand, and ADBs strategic objectives for the energy sector at the time of appraisal and have continued to be relevant since then. None of the design changes made during implementation altered the relevance of the projects, other than to improve it. There has been a recovery in the growth in demand after the financial crisis. Both projects are assessed as highly relevant. B. Efficacy

47. Both projects achieved their purposes (i.e., immediate objectives) and intended outputs in physical, financial, and economic terms as specified at appraisal and as described earlier in this PPAR. Both projects are assessed as highly efficacious. C. Efficiency

48. Both projects were the least-cost way of implementing the various components and were completed with major cost underruns but with delays. Although the delays did not adversely affect the project outputs, at 1.8 to 3.5 years, they were nonetheless significant. With the reestimated FIRR at 16.2% and EIRR 20.2% f r PT3 and PT4 combined, both projects are o assessed as efficient. D. Sustainability

49. Given the strong technical and financial performance of EGAT, MEA, and PEA, the sustainability of both projects is assessed as most likely. E. Institutional Development and Other Impacts

50. Neither project was designed to have a direct institutional or policy development component.17 They did facilitate economic growth before and after the 1997 financial crisis, especially in rural areas. The consumption of electricity by businesses and industries serviced by PEA increased by 68% from 23,895 gigawatt-hour (GWh) in FY1994 to 40,200 GWh in FY2000. 18 Also attributable to the implementation of the projects, the village electrification ratio in rural areas of Thailand increased from 97.7% in FY1994 to 99.0% in FY2000. The number of customers in Metropolitan Bangkok serviced by MEA grew by 24% from about 1.7 million in FY1994 to 2.1 million in FY2000. Further, PT4 helped improve management of environmental performance of the Mae Moh thermal power plant. For these reasons, other development impacts are assessed as significant for both projects.

17

The classification for Loan 1170-THA was not given at the time of approvals while Loan 1245-THA was classified as serving primarily economic growth and secondarily environmental protection. 18 The electricity sales of PEA given in Table 2 include electricity consumption for residential, business, and industry.

13

F.

Overall Project Rating

51. Overall, both projects are rated as highly successful.19 By comparison, EGAT also considered the projects highly successful to the extent that almost all project objectives had been achieved and subprojects had been completed as planned. G. Assessment of ADB and Borrower Performance

52. The performance of ADB and the Borrower, EGAT, is judged as highly satisfactory because both organizations handled their roles in project formulation, appraisal, procurement, and implementation appropriately and in a timely manner in regard to the matters within their control. ADB had considerable prior experience of working with EGAT and was familiar with the power sector in the country and EGATs development needs. Additionally, ADB had funded the introduction of modern power system analysis tools for the power transmission agencies in Southeast Asia in the early 1980s and, by the time of project formulation, EGATs Power System Planning Department had developed comprehensive power system modeling capabilities on which ADB was able to rely. Subsequent ADB actions and approvals were generally carried out in a timely manner. A total of 10 and 11 inception and review missions were conducted for PT3 and PT4 respectively, although most of them dealt also with other projects. The frequency, composition, and length of the missions are considered to have been appropriate for the type of project and the Executing Agency concerned. VI. A. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS

Key Issues for the Future

53. The OEM found no issues arising in respect of EGATs ability to operate the projects in the future. Nor did the OEM identify any significant issues in respect of the implementation phase, other than to note that, as the sector lending approach was followed, there was enough flexibility to utilize the loans fully. On the other hand, the essence of efficient capital investment is its deferral for as long as possible, consistent with meeting the relevant need in a least-cost manner. In fact, it is the mark of a mature organization that it moves away from the rigidities of project and plan funding and adopts, instead, a continuous and flexible process for its incremental capital investment, constantly adjusting the nature, timing, and extent of its expenditure program to maximize investment effectiveness. 54. The fact that major savings arose during implementation suggests that the costs of the various components may have been overestimated during the initial phases. The OEM noted in this regard that EGATs project estimates included a 10% allowance in the foreign currency cost for physical contingencies. It may be appropriate to review this percentage in future estimates for transmission system works, reducing it to reflect the relatively low risk entailed in the design and implementation of such projects. 55. As far as the future operations of EGAT are concerned, in the OEMs opinion, EGATs power system planning processes could be improved by reconsidering the security of supply criteria used. At present, the main criterion is a (n-1) level of security of supplythat is, supply is maintained during a fault on a single piece of equipment. Modern thinking is based on more
19

Based on the revised four-category project rating system (highly successful, successful, partly successful, and unsuccessful).

14 comprehensive criteria that take into account the magnitude of the load interrupted and the consequential economic cost of demand not served during an interruption in supply. The adoption of such criteria could help optimize EGATs future capital expenditures on the transmission system by emphasizing service outcomes. This point was discussed with EGAT during the OEM. B. Lessons Identified

56. From the viewpoint of ADBs operations as a whole, one lesson is the need for flexibility in the timing of implementation of projects such as these, designed to fund an ongoing and evolving development program. This flexibility needs to recognize the desirability of project deferrals if the need arises. With transmission and distribution projects, this is generally possible because of their relatively short lead times. 57. Second, the sector lending approach has resulted in highly successful power projects in Thailand. Clear ownership of the projects, matched with satisfactory institutional capacity of the executing agency, is crucial for achieving this kind of success in other developing member countries. C. 58. Follow-Up Actions No follow-up actions are needed.

Appendix 1

15

ESTIMATED AND ACTUAL PROJECT COSTS Table A1.1: Cost of Transmission System Expansion Plan No. 8 Covered by Loan 1170-THA for Time-Slice 19921993 ($ million)
Appraisal Estimate Component Extra-High Voltage Transmission Lines Substations 0.00 0.00 0.00 0.00 0.00 0.00 2.30 18.30 0.00 0.00 0.00 17.49 2.30 35.79 Foreign Local Total ADB (FC) Actual EGAT (FC) Local

Total

High Voltage Transmission Lines Substations Additional Transformers Reactive Power Equipment Communications Miscellaneous Expansion Engineering Service 43.50 62.60 22.50 7.50 6.50 7.80 0.00 100.90 41.10 7.20 2.70 1.90 7.70 19.60 144.40 103.70 29.70 10.20 8.40 15.50 19.60 11.64 43.77 0.00 7.47 1.01 3.43 0.00 10.00 1.37 8.50 0.00 0.00 0.00 0.00 24.39 20.89 6.10 5.39 3.34 6.11 9.03 46.03 66.03 14.60 12.86 4.35 9.54 9.03

Subtotal IDC Total

150.40 0.00 150.40

181.10 17.60 198.70

331.50 17.60 349.10

87.92 0.00 87.92

19.87 0.00 19.87

92.74 12.68 105.42

200.53 12.68 213.21

ADB = Asian Development Bank, EGAT = Electricity Generating Authority of Thailand, FC = foreign currency cost, IDC = interest during construction.

16

Appendix 1

ESTIMATED AND ACTUAL PROJECT COSTS Table A1.2: Cost of Transmission System Expansion Plan No. 8 Covered by Loan 1245-THA for Time-Slice 19941996 ($ million)
Appraisal Estimate Component Extra-High Voltage Transmission Lines Substations Engineering Service 24.80 39.00 0.00 40.20 8.60 5.50 65.00 47.60 5.50 20.01 17.49 0.00
a

Foreign

Local

Total

ADB (FC)

Actual EGAT (FC) Local

Total

0.00 0.00 0.00

26.00 0.00 2.30

46.01 17.49 2.30

High Voltage Transmission Lines Substations Additional Transformers Reactive Power Equipment Communications Miscellaneous Expansion Engineering Service 22.10 40.00 43.20 4.70 8.10 0.00 0.00 50.40 31.70 6.60 1.40 2.30 0.00 13.60 72.50 71.70 49.80 6.10 10.40 0.00 13.60 26.33 31.54 0.00 0.00 0.08 0.00 0.00
b

14.00 2.00 13.00 0.00 0.00 0.00 0.00

39.70 55.04 27.66 0.00 3.38 0.00 13.54

80.03 88.58 40.66 0.00 3.46 0.00 13.54

Environment Environment Monitoring System Subtotal Duties IDC Total 1.00 182.90 0.00 22.80 205.70 0.10 160.40 28.40 11.30 200.10 1.10 343.30 28.40 34.10 405.80 0.58 96.03 0.00 0.00 96.03 0.00 0.10 0.68 292.75 4.70 20.00 317.45

29.00 167.72 0.00 4.70

0.00 20.00 29.00 192.42

ADB = Asian Development Bank, EGAT = Electricity Generating Authority of Thailand, FC = foreign currency cost, IDC = interest during construction. a Amount for Sai Noi Substation is not included. b Cost of transmission conductor amount $11.14 million is included.

Appendix 1

17

ESTIMATED AND ACTUAL PROJECT COSTS Table A1.3: Cost of Transmission System Expansion Plan No. 8 Covered by Loans 1170-THA and 1245-THA ($ million)
Appraisal Estimate Component Extra-High Voltage Transmission Lines Substations Engineering Service 24.80 39.00 0.00 40.20 8.60 5.50 65.00 47.60 5.50 22.31 35.79 0.00 0.00 0.00 0.00 26.00 17.49 2.30 48.31 53.28 2.30 Foreign Local Total ADB (FC) Actual EGAT (FC) Local

Total

High Voltage Transmission Lines Substations Additional Transformers Reactive Power Equipment Communications Miscellaneous Expansion Engineering Service 65.60 102.60 65.70 12.20 14.60 7.80 0.00 151.30 72.80 13.80 4.10 4.20 7.70 33.20 216.90 175.40 79.50 16.30 18.80 15.50 33.20 37.97 75.31 0.00 7.47 1.09 3.43 0.00 24.00 3.37 21.50 0.00 0.00 0.00 0.00 64.09 75.93 33.76 5.39 6.72 6.11 22.57 126.06 154.61 55.26 12.86 7.81 9.54 22.57

Environment Environment Monitoring System Subtotal Duties IDC Total 1.00 333.30 0.00 173.20 205.70 0.10 341.50 46.00 210.00 200.10 1.10 674.80 46.00 383.20 405.80 0.58 183.95 0.00 87.92 96.03 0.00 48.87 0.00 19.87 29.00 0.10 260.46 17.38 125.42 192.42 0.68 493.28 17.38 233.21 317.45

ADB = Asian Development Bank, EGAT = Electricity Generating Authority of Thailand, FC = foreign currency cost, IDC = interest during construction.

18

Appendix 2

ACTUAL PROJECT SCOPE A. 1. Third Power Transmission (Sector) Project (PT3) The subprojects financed under PT3 were as follows. Related to Time -Slice 19921993 of the Power Transmission System Expansion Project No. 8 (TS.8) (i) (ii) (iii) (iv) Construction of a new 500-kilovolt (kV) Chaeng Watthana substation and 230 kV line termination Construction of a new 230/115 kV Hua Hin substation and 230 kV line termination Construction of a new 230/115 kV Bang Saphan substation and 230 kV line termination a. b. c. d. e. f. g. (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) Modification of 115 kV Rayong 1 substation to accommodate the additional line Expansion of 115 kV Rayong 3 substation for one more circuit Expansion of 115 kV Chanthaburi substation for two incoming lines Expansion of 115 kV Samut Sakhon 1 substation Expansion of 115 kV Samut Sakhon 2 substation Expansion of 115 kV Ao Phai substation Expansion of 115 kV Bang Lamung substation

Expansion of 115 kV Thalan 3 substation Expansion of 115 kV Saraburi 4 line and substation Expansion of Nakhon Si Thammarat and New Ranot Construction of a new 115 kV Chom Thien substation a. b. a. b. Expansion of 115 kV Kalasin substation for two outgoing lines Construction of a new 115 kV Somdet substation Expansion of 115 kV Buri Ram substation for one outgoing line Construction of a new 115 kV substation for one outgoing line

Expansion of 115 kV Patthani substation for one incoming line Construction of a new 115 kV Ranot substation a. Expansion of 230 kV Mae Moh switchyard

Appendix 2

19

b. c. (xiv) (xv) (xvi) (xvii) a. b.

Expansion of Mae Moh 3 substation Construction of 230 kV Chiang Mai substation Expansion of 115 kV Mae Moh switchyard Expansion of 115 kV Chiang Rai substation

Expansion of 115 kV Nakhon Sawan line and substation Expansion of 115 kV Manorom line and substation Expansion of 115 kV Takhli 2 substation

(xviii) Expansion of 115 kV Chiang Rai substation for 115 kV Chiang Rai-Mae Chan line (xix) a. b. Expansion of 115 kV Chiang Rai substation for 115 kV Chiang RaiThoeng line Construction of a new 115 kV Thoeng substation

2. On 30 July 1993, the Electricity Generating Authority of Thailand (EGAT) submitted additional subprojects under TS.8 for Asian Development Bank (ADB) consideration and ADB approved them on 3 August 1993. The additional subprojects comprised the supply of shunt capacitor banks, supply and construction of a new control building at South Bangkok Substation, and supply of basket truck. 3. In November 1994, EGAT realized that the completion date of the 115 kV line Rajjaprabha-Phangnga would have to be postponed as two parts of the line would penetrate forest conservation areas and EGAT had to carry out an environmental impact assessment study for submission to the relevant government agencies. Final approval was expected to take a minimum of 2 years and EGAT was uncertain as to when resumption of the construction work on the line would be permitted. Under the circumstances, EGAT decided to withdraw this subproject from funding by ADB. 4. In February 1995, considering that the disbursement under Loan 1170-THA had not yet been completed and that a large portion of uncommitted loan balance was still available, EGAT proposed and ADB agreed to shift one package from Loan 1245-THA (transmission system for Mae Moh power project units 12 and 13) to Loan 1170-THA. This package was the construction of the new 500 kV Sai Noi Substation near Bangkok and a 500 kV line from Sai Noi to Nong Chok. 5. In addition, as implementation was delayed, EGAT proposed and ADB agreed in March 1995 to transfer two subprojects from Loan 1170-THA to Loan 1245-THA, namely construction of the 115 kV Thoeng Substation and supply of basket truck. B. 6. Fourth Power Transmission (Sector) Project (PT4) The subprojects financed under PT4 were as follows.

20

Appendix 2

Related to Time -Slice 19941996 of TS.8 (i) a. b. b. (ii) a. b. c. a. b. Expansion of the 230 kV Bang Pakong switchyard for two outgoing lines to Prachin Buri 2 substation Expansion of Bang Pakong and New Prachin Buri 2 Construction of a new 230/115 kV Prachin Buri 2 substation Construction of 230 kV Rayong 2-Chanthaburi transmission line Construction of 115 kV Rayong 3-Rayong 1 transmission line Expansion of the 230 kV Rayong 2 substation Expansion of the 115 kV Sakon Nahon substation Construction of 115 kV Nam Pung substation

(iii) (iv) (v)

Construction of 115 kV Buri Ram-Prakhon Chai transmission line a. b. c. a. b. Construction of 115 kV Roi Et-Phayakkhaphum Phisai transmission line Expansion of 115 kV Roi Et-Phayakkhaphum Phisai substation Construction of a new 115 kV Phayakkhaphum Phisai substation Construction of 115 kV Yasothon-Amnat Charoen transmission line Expansion of 115 kV Yasothon substation

(vi) (vii) (viii)

Construction of a new 115 kV Amnat Charoen substation a. b. c. Construction of 115 kV Roi Et-Phon Thong transmission line Expansion of 115 kV Roi Et- Phon Thong substation Construction of a new 115 kV Phon Thong substation

(ix) (x) (xi) (xii) (xiii) (xiv) (xv)

Expansion of Rajjaprabha substation Expansion of Phangnga substation Expansion of 115 kV Hat Yai 2 substation for 115 kV Hat Yai 2 -Songkhla transmission line Expansion of Songkhla substation Expansion of 115 kV Hat Yai 2 substation for 115 kV Hat Yai 2-Pattani transmission line Construction of a new 115 kV Lang Suan substation a. b. c. Construction of 115 kV Narathiwat-Sungai Kolok transmission line Expansion of 115 kV Narathiwat substation Construction of a new 115 kV Sungai Kolok substation

Appendix 2

21

(xvi) (xvii)

Expansion of 115 kV Chiang Mai 1 substation Expansion of Mae Moh 3 substation Construction of 115 kV Tha Tako-Bang Mun Nak transmission line Expansion of 115 kV Tha Tako-Bang Mun Nak substation Construction of a new 115 kV Bang Mun Nak substation Construction of 115 kV Chiang Rai-Mae Chan transmission line Expansion of 115 kV Chiang Rai substation Construction of a new 115 kV Mae Chan substation Construction of 115 kV Tha Tako-Bung Sam Phan transmission line Expansion of 115 kV Tha Tako-Bung Sam Phan substation Construction of a new 115 kV Bung Sam Phan substation Construction of 115 kV Chiang Rai-Thoeng transmission line Construction of a new 115 kV Thoeng substation

(xviii) a. b. c. (xix) a. b. c. a. b. c. a. b.

(xx)

(xxi) C.

Transmission System for Mae Moh Units 12 and 13 (i) (ii) (iii) Construction of 500 kV Sai-Noi-Nong Chok transmission line and associated substations Installation of one 200/230 kV interbus transformer rated 450/600/750 megavolt-ampere (MVA) at Tha Tako substation Installation of two 200/230 kV interbus transformer each rated 450/640/750 MVA Sai Noi substation (consisting of seven single-phase units inclusive of one spare unit each rated 150/200/250 MVA) Installation of two 75 MVA shunt reactors, one at each end of 500 kV Tha TakoNong Chok line

(iv) D.

Environmental Protection Component Provision of a mobile air quality monitoring system at Mae Moh power plant

7. Two additional contracts for supply of aluminum ingots belonging to EGATs subsequent transmission expansion plan, TS.9, were included later to utilize the available loan savings.

22

Appendix 3

IMPLEMENTATION SCHEDULES A. Loan 1170-THA

1990
Description Planning Stage Feasibility Study Approval by EGAT Board Appraisal by NESDB Approval by NESDB Financing Arrangements Preliminary Work Land Procurement and Rights-of-Way Line Route Survey Plan Profile and Line Design Substation Design Specifications and Bidding Documents Implementation and Construction Bidding Period Bid Evaluation and Negotiation Letter of Intent Manufacturing and Transportation Construction Transmission Lines Substations Commissioning Transmission Lines Substations

1991

1992

1993

1994

1995

1996

1997

1998

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Original Schedule Actual Schedule EGAT = Electricity Generating Authority of Thailand, NESDB = National Economic Social Development Board.

Appendix 3

23

B. Loan 1245-THA 1991 Description Planning Stage Feasibility Study Approval by EGAT Board Appraisal by NESDB Approval by NESDB Financing Arrangements Preliminary Work Land Procurement and Rights-of-Way Line Route Survey Plan Profile and Line Design Substation Design Specifications and Bidding Documents Implementation and Construction Bidding Period Bid Evaluation and Negotiation Letter of Intent Manufacturing and Transportation Construction Transmission Lines Substations Commissioning Transmission Lines Substations Original Schedule Actual Schedule EGAT = Electricity Generating Authority of Thailand, NESDB = National Economic Social Development Board.

1992

1993

1994

1995

1996

1997

1998

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

24
Appendix 4

FINANCIAL PERFORMANCE OF ELECTRICITY GENERATING AUTHORITY OF THAILAND (B million)

Item Balance Sheets: Assets Current assets Fixed assets - Net Net assets of specific sinking funds Intangible assets Other assets Total Assets Liabilities and Equity Liabilities Current liabilities Long-term liabilities Other liabilities Deferred foreign exchange adjustment Sinking funds Total Liabilities 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

15,909 164,915 4,437 7,799 193,060

16,277 189,839 4,917 9,692 220,725

17,310 209,288 5,389 13,110 245,097

30,337 216,869 5,948 16,150 269,304

48,280 220,685 6,804 20,207 295,976

38,407 249,698 8,376 19,579 316,060

46,361 285,274 9,128 17,682 358,445

54,690 308,388 11,321 21,963 396,362

66,010 318,661 12,062 37,678 434,411

65,196 283,613 0 21,773 38,749 409,331

20,300 99,461 212 (13,631) 4,437 110,779

24,046 117,237 199 (14,124) 4,917 132,275

34,007 126,125 179 (14,674) 5,389 151,026

35,929 131,326 173 (9,570) 5,948 163,806

45,419 126,731 198 0 0 172,348

52,924 153,310 404 0 0 206,638

63,744 164,217 849 0 0 228,810

66,763 210,560 1,377 0 0 278,700

93,592 216,410 2,089 0 0 312,091

89,421 183,722 2,089 0 0 275,232

Equity Capital contribution (government, surplus, royalties) 12,820 Retained earnings 69,461 Specific purpose funds Foreign exchange losses Total Equity 82,281 Total Liabilities and Equity 193,060 Income Statements and Performance Ratios: Electricity generated and purchased (kWh, millions) Electricity sales (kWh, millions) Electricity sales Operating expenses Net income (loss) before interest charges Interest charges Net income (loss) Remittance to Ministry of Finance (paid) Net Net Net Net income income income income (loss) as a % of sales (loss) before interest as % of sales (loss) as a % of equity (loss) before interest as % of total assets

12,978 75,472

13,123 80,948

13,293 92,205

88,450 220,725

94,071 245,097

105,498 269,304

13,369 108,836 6,804 (5,381) 123,628 295,976

13,505 111,594 8,376 (24,053) 109,422 316,060

13,715 123,997 10,603 (18,680) 129,635 358,445

13,778 92,563 11,321 0 117,662 396,362

13,824 96,178 12,318 0 122,320 434,411

13,842 108,486 11,771 0 134,099 409,331

56,006 50,771 61,860 45,779 16,923 4,584 12,339 2,614 20.0 27.4 15.0 8.8 1.21:1 1.72 33.5 26.6

62,180 56,558 67,798 51,072 17,391 6,048 11,343 2,468 16.7 25.7 12.8 7.9 1.33:1 1.40 31.9 32.6

69,651 63,643 76,190 58,400 18,455 6,422 12,033 4,637 15.8 24.2 12.8 7.5 1.31:1 1.53 35.9 27.3

78,880 72,780 95,247 72,717 25,854 6,894 18,960 4,099 19.9 27.1 18.0 9.6 1.24:1 1.64 36.5 31.0

85,920 79,451 108,835 80,745 35,396 8,303 27,093 6,387 24.9 32.5 21.9 12.0 1.04:1 1.91 61.5 50.1

92,725 85,896 125,376 105,716 21,420 8,592 12,828 8,449 10.2 17.1 11.7 6.8 1.23:1 1.05 14.3 13.9

92,134 85,598 146,572 124,085 31,422 11,112 20,310 2,000 13.9 21.4 15.7 8.8 1.19:1 2.55 43.6 50.2

90,414 84,512 134,335 149,510 (13,023) 11,238 (24,261) 5,837 -18.1 -9.7 -20.6 -3.3 1.98:1 1.23 29.6 27.1

96,781 90,725 160,992 132,168 31,289 11,114 20,175 7,975 12.5 19.4 16.5 7.2 1.77:1 1.07 23.5 18.6

103,165 97,412 185,072 166,157 26,207 9,984 16,223 16,620 8.8 14.2 12.1 6.4 1.37:1 0.86 25.9 24.3

Debt-equity ratio Debt service coverage Self-financing ratio (%) - annual - 3-year average

kWh = kilowatt-hour. Source: Annual report of the Electricity Generating Authority of Thailand.

Appendix 5

25

FINANCIAL AND ECONOMIC PERFORMANCE OF PROJECTS 1. The financial and economic evaluation of the Third Power Transmission (Sector) Project (PT3) and the Fourth Power Transmission (Sector) Project (PT4) at appraisal was undertaken in three steps: (i) review of the demand forecast of the Electricity Generating Authority of Thailand (EGAT); (ii) confirmation of each subproject as the least-cost solution to meet the need; and (iii) determination of the financial internal rate of return (FIRR) and the economic internal rate of return (EIRR) of the total project. Although the same methodology was used, FIRR and EIRR were estimated separately for the two projects because the appraisal for PT4 was done 1 year later than PT3 and data update was necessary. 2. The FIRR estimates included the costs and benefits associated with EGATs power development plan as a whole and compared incremental capital and operating costs of a 5-year period with EGATs projected incremental revenues. The EIRR estimates included costs and benefits for the power sector as a whole over the same 5-year period. 3. The beneficiaries of the projects were identified as industrial, commercial, and residential electricity consumers in the provincial and rural areas of Thailand and customers in Bangkok and in industrial estates. 4. The power system analyses undertaken by EGAT demonstrated that the projects constituted an integral component of EGATs least-cost power development plan. FIRRs or EIRRs for individual project components were not calculated as the separation of such integrated power system components is generally arbitrary and of only limited value. It is very difficult to separate costs and benefits of such components from those of other complementary investments in generation, transmission, and distribution. This is especially the case for a widely spread transmission investment of the nature of Transmission System Expansion Plan No. 8 (TS.8).1 5. The FIRR and EIRR for the projects were therefore estimated at the time of appraisal covering all the investments expected to take place during the 5-year time-slice FY1992FY1996. The FIRR was calculated for EGAT alone. The EIRR was calculated for the sector as a whole. A. Financial Internal Rate of Return

6. The FIRRs calculated at appraisal were 8.5% for PT3 and 11.7% for PT4, exceeding EGATs estimated weighted average cost of capital of about 6%. 7. Since both projects were completed in 1998, it was not necessary for the project completion report (PCR) and the project performance audit report (PPAR) to recalculate the FIRR separately for the two projects. At the time of preparation of the PCR, the FIRR for the two loans taken together was reevaluated using the same methodology as at appraisal but with the time-slice extended to cover the period until FY1998 as well as to include all relevant preparatory expenditures prior to FY1992 and minor completion works until FY2000. The capital costs of EGATs overall investment program during this period were lower than appraisal estimates for the reasons explained in the main text. Although fuel costs were considerably higher than envisaged at appraisal, this had no significant effect on the FIRR because of the
1

Separation would be more readily undertaken if a comprehensive analysis of nodal pricingthe cost of supply to each node in the networkwere available.

26

Appendix 5

automatic pass-through of increases in fuel prices on consumer tariffs. The incremental sales attributable to the investment made during the time-slice were higher than projected at appraisal both because of the extended period of coverage from FY1992 to FY1998 and because of the faster growth in sales during the 3 years from FY1995 to FY1997. A 25-year period of operation for the assets was assumed in line with the assumptions during appraisal, and the incremental sales were valued at EGATs average tariff of B1.5894 per kilowatt-hour for FY1999. The capital costs for the FIRR included taxes and import duties, but excluded interest during construction. All costs and benefits were valued in 1998 constant prices by applying factors reflecting the official rates of inflation. Incremental working capital costs were not material. The relatively minor operating and fuel costs of the two power stations constructed during the time-slice but sold to EGATs associated generating company toward the end of the period were retained within the existing cost framework. 8. The FIRR was recalculated for the PPAR using the same methodology as in the PCR with adjustments made with respect to incremental sales in the years FY1996FY2001; matching operation and maintenance costs to capital expenditure; updating the data for sales in the years FY2000 and FY2001 to actual data; and making consequential changes in fuel costs. The resulting FIRR for the combined projects increased from 13.4% to 16.2%. B. 9. Economic Internal Rate of Return The EIRRs calculated at the time of appraisal were 15.8% for PT3 and 13.1% for PT4.

10. Since both projects were completed in 1998, it was not necessary for the PCR and PPAR to recalculate EIRR separately for the two projects. The EIRR for the two projects taken together was reevaluated at the time of preparation of the PCR by employing a methodology similar to that used during appraisal. The assessment included the economic costs and benefits for the power subsector as a whole, not just for EGAT, since the beneficiaries of the investment were the final electricity consumers served by the Metropolitan Electricity Authority (MEA) of Thailand and the Provincial Electricity Authority (PEA) of Thailand as well as by EGAT. The economic viability of the investment was, therefore, assessed by widening the scope of the costs and benefits to include (i) on the cost side, all investments undertaken during the years covered by the time-slice (FY1992FY1998) by EGAT, MEA, and PEA together with their associated operating costs; and (ii) on the benefit side, the benefits accruing to all final retail consumers. 11. With regard to the costs, an approach similar to timing and asset utilization previously described for the calculation of the FIRR was also used for the EIRR but taxes and import duties and other transfer payments were excluded. Local currency expenditures relating to nontraded goods were expressed in terms of border-price equivalents by applying a standard conversion factor of 0.92. 12. The economic benefits arising from the consumption of electricity included the calculation of the consumer surplus based on the calculated cost of alternative sources of energy displaced by the use of electricity. Private diesel generator sets of 40 kilowatt capacities were assumed for this purpose.2

The appraisal of the first loan included a rough estimate of the consumer surplus associated with incremental sales based on the avoided cost of efficient kerosene lamps (residential) and diesel generators (commercial and industrial).

Appendix 5

27

13. The EIRR was reestim ated for the PPAR using the same methodology as in the PCR with adjustments made with respect to incremental sales in the years FY1996FY2001 and making other changes as for the FIRR recalculation. In addition, the calculated value of consumer surplus was reduced since the avoided cost calculations at the time of preparation of the PCR were considered to be appropriate only in rural areas accounting for about 15% of total retail sales in the country. The resulting EIRR for the combined projects decreased slightly from 20.9% to 20.2%. 14. The following table summarizes the results obtained from both financial and economic reevaluation. Details of the reevaluation are presented on the following pages.
Table A5.1: Summary of Financial and Economic Reevaluations (%) Item FIRR EIRR Appraisal 8.5 15.8 PT3 a PCR 13.4 20.9
a

PPAR 16.2 20.2

Appraisal 11.7 13.1

PT4 a PCR 13.4 20.9

PPAR 16.2 20.2

EIRR = economic internal rate of return, FIRR = financial internal rate of return, PCR = project completion report, PPAR = project performance audit report, PT3 = Third Power Transmission (Sector) Project, PT4 = Fourth Power Transmission (Sector) Project. a The two projects combined.

C.

Sensitivity Analysis

15. Sensitivity analyses were carried out for four different scenarios: (i) increase in operation and maintenance cost; (ii) increase in fuel cost; (iii) decrease in electricity sales; and (iv) decrease in tariff in real terms. Overall, the reestimated FIRR and EIRR are relatively sensitive to changes in electricity sales. EIRR is also sensitive to changes in electricity tariffs.
Table A5.2: Sensitivity Analysis (%) Item Project Reevaluation (base case) For a 10% Increase in O&M Cost Increase in Fuel Cost Decrease in Electricity Sales Decrease in Real Tariff FIRR 16.2 EIRR 20.2

16.0 13.9 6.0 11.9

20.0 19.5 15.7 16.1

EIRR = economic internal rate of return, FIRR = financial internal rate of return, O&M = operation and maintenance.

28

Appendix 5

Table A5.3: Financial Internal Rate of Return on EGAT's PDP Time-Slice FY1992FY1998 (B million 1998 Prices) Incremental Costs O&M Fuel Total 5,249 29,757 23,040 1,891 231 19,705 2,568 6,116 35,771 3,380 12,932 48,778 3,973 13,601 41,311 4,517 16,442 42,725 5,042 23,201 49,244 5,133 29,310 38,093 5,244 27,137 36,810 5,279 29,048 35,720 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 5,279 29,048 34,327 Sales (GWh) Total Increm'tal 36,611 39,368 44,762 50,772 6,010 56,559 11,797 63,644 18,882 72,780 28,018 79,451 34,689 85,898 41,136 85,395 40,633 84,517 39,755 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 90,726 45,964 Revenues Increm'tal Net (5,249) (29,757) (23,040) 9,782 (9,924) 18,157 (17,614) 28,120 (20,658) 43,416 2,105 53,410 10,685 63,487 14,243 69,755 31,662 63,187 26,377 73,055 37,335 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728 73,055 38,728

FY 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Capital 5,249 29,757 23,040 17,584 27,087 32,466 23,738 21,766 21,001 3,650 4,429 1,393

B/kWh 2.131 1.888 1.768 1.628 1.539 1.489 1.550 1.540 1.543 1.717 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589 1.589

211,159 FIRR: 16.2% FIRR: at Loan 1245-THA appraisal, 11.7% and at PCR, 13.4%
EGAT = Electricity Generating Authority of Thailand, FIRR = Financial internal rate of return, GWh = gigawatt-hour, kWh = kilowatt-hour, O&M = Operation and maintenance, PCR = project completion report, PDP = power development plan.

Appendix 5

29

Table A5.4: Economic Internal Rate of Return (B million 1998 Prices) EGAT, MEA and PEA FY 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Capital 5,065 26,210 21,004 31,430 40,571 47,195 42,169 43,107 48,953 33,041 4,429 1,393 Incremental Costs O&M Other Total 5,065 26,210 21,004 34,384 50,437 64,169 62,318 67,310 79,761 68,863 38,509 37,131 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 35,737 Incremental Revenue GWh B/kWh Total

1,992 7,638 14,203 15,335 18,267 24,511 29,790 28,048 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706 29,706

962 2,228 2,771 4,815 5,936 6,297 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032 6,032

5,891 12,353 18,384 27,047 33,612 39,241 38,465 37,534 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135 43,135

2.232 2.172 2.086 2.112 2.072 2.046 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168 2.168

13,146 26,834 38,358 57,127 69,644 80,279 83,385 81,366 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508 93,508

344,568

EGAT = Electricity Generating Authority of Thailand, FY = fiscal year, GWh = gigawatt-hour, kWh = kilowatt-hour, MEA = Metropolitan Electricity Authority, O&M = operation and maintenance, PEA = Provincial Electricity Authority.

Continued on next page

30

Appendix 5

Table A5.4 Continued

FY 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Consumer Benefits B/kWh Volume

National Net Benefit (5,065) (26,210) (21,004) (19,870) (20,625) (21,141) 1,575 10,946 10,726 23,824 51,934 66,809 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202 68,202

0.23 0.24 0.25 0.25 0.26 0.26 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24

1,368 2,979 4,670 6,767 8,611 10,208 9,302 9,077 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 10,431 PCR 20.9%

EIRR:

PPAR 20.2%

EIRR = Economic internal rate of return, PCR = project completion report, PPAR = project performance audit report.