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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Cr. a5o FIL[E COPY RESTRICTED Rcport No. PUJ-52a, This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT APPRAISAL OF THE SECOND POWER DISTRIBUTION PROJECT ELECTRICITY REPUBLIC CORPORATION OF GHANA OF GHANA October 6, 1970 Public Utilities Projects Department

2 Curreny Equivalents Che New Cedi (NO) = 100 New Fesewa (NP) Cne New Cedi (NO) = Us$o.98 One US Dolar (US$) = N01.02 One million New Cedi (NO) - US$980,000 Measures Eqtdvalents One Megawatt (MW) = 1,000 kilowatts One Gigawatt hour (GWh) = 1 mdllion kilowatt hours ECG's Financial Year = Calendar Year Abbreviations and Acrony2M GWh - Gigawatt hour kv - Eilo volt kwh - Kilowatt hour MW - Megawatt CDA - Canadian International Developwnt Agency ECG - Electricity Corporation of Ghana GDP - Gross Domestic Product KI'W - Kreditanstalt fur Wiederaufbau VALCO - Volta Aluminium Company VRA - Volta River Authority Internal Financial Rate of Return - Equalizing discount rate of a cost and benefit stream attributable to investments made, expressed in financial terns

3 REPUBLIC CF GHANA ELECTRICITY CORPCRATICN OF GHAIIk APPRAISAL of THE SECOND PCUYR DISTRIBUTION PROJECT TABLE CF CONTENTS Page No. SUMMRY i 1. ThTRCDUCTICN 1 2. THE POWER SECTOR 2 The Country and Its Economr 2 Organizations Responsible for the Power Sector 2 Volta River Authority 3 Electricity Corporation of Ghana 4 Institutional Changes 4 Power Utilization in Ghana 5 Rural Electrification 6 3. THE BORROJER AND THE BENEFICIARY 7 Managezent 7 Organization 8 Financial Management 9 Tariffs 9 Past Earnings 10 Present Financial Position 10 Taxes 12 I.nswrance 12 Audit THE PROJECT 13 Background 13 Description 13 Cost Estimate 13 Procurement and Disbursement 11 Construction Schedule 15 Engineering Consultants 15 lanagement Consulting and Training Services 15 This report has been prepared by Messrs. E. A. Minnig and A. N. Memon of the Public Utilities Projects Department.

4 -2- Page 'No. 5. JUSTIFICATION 16 The Power Market 16 Internal Financial Rate of Return FINANCING PIA!T AND FtUTURE PROSPECTS 18 Proposed Fnancing Plan 18 Financial Ou.tlook 19 Construction Expenditure Limitation RECaIEATIONS 21

5 LIST OF ANNEXES 1. Diesel Generating Capacity 2. Tariffs 3. Income Statement Balance Sheet Quantities - 4 Main Centers and Smaller Systems 6. Cost Estimate - 4 Main Centers and Smaller Systems 7. Cost Estimate - Transmission Lines 8. Summary Cost Estimate Program 9. Disbursement Schedule 10. Diagram: Generation, Sales, Maximum Demand 11. Diagram: Sales by Tariff Classification 12. Analysis of Past and Forecast Generation, Sales, Maximum Demand 13. Table: Actual and Forecast Generation, Sales, I,a%ximum Demand Cost of Purchased/Generation 14. Table: Actual and Forecast Sales and Revenues 15. Sources and Applications of Funds MAP

6 REPUBLIC OF GHANA ELECTRICITY CORPORATION CF GHANA APPRAISAL CF THE SECOND PakTER DISTRIBUTICN PROJECT SUNARY This report appraises a distribution project of the Electricity Corporation of Ghana (ECG) proposed for construction from 1971 through 1973 and needed to meet the growing derand for power in Ghana. Because of Ghana's difficult foreign exchange situation, the Government on behalf of ECG has requested assistance from IDA to finance that part of the project's foreign exchange costs for which financing has not already been arranged from other sources. Total project costs are estimated at US$145. million, with foreign costs of US$10.1 million and local costs of US$4.4 million. The foreign exchange requirements would be provided by a US$7.1 million credit from IDA, a US$2.0 million loan from the Federal Republic of Germany (Kreditanstalt fur Wiederaufbau - KfW), and proceeds of a US$0.2 million UK loan to the Government, leaving US$0.8 million representing the cost of equipment already purchased and in stock. This would be the second IDA credit to ECG; the previous one, Credit ll8-gh in 1968 for US$10.0 million, was also for distribution. ii. To organizations, the Volta River Authority (VRA) and ECG, are charged with the responsibility for providing public supplies of power. VRA owns and operates the 588 I'W Volta Hydro Project, which is being expanded to 882 W., and sells power in bulk to the aluminum smelter at Tema and to ECG, the mines and Akosombo Township. iii. ECG serves the residential, commercial and small industrial demand in the four major cities of Accra, Tema, Kumasi and Sekondi- Takoradi as well as 26 smaller centers. About 97% of its energy requirements are purchased from VRA and about 3% generated with diesels in areas that as yet cannot be economically connected to the VRA system. The power market has grown at about 18% annually since 1965, reaching 102 MW of maximum demnd and sales of 452 GNh in It is estimated that a 12% average growth rate will be achieved over the next decade and that maximma demand will reach 246 MI and sales 1,205 GWh in The project would help meet ECG's requirements up to the end of 1974; it will be necessary to make financing arrangements in 1973 for facilities to meet increased demand from 1975 onward. iv. The Borrower would be the Government of Ghana and the Beneficiary ECG. Established in 1967 as an autonomous public utility to be operated on a commercial basis, ECG has all the necessary powers to conduct its operations successfully. ECG is faced with a number of organizational problems, mainly due to the lack of experienced senior staff; at the same time there is heavy overstaffing in the lower grades. It is important that additional qualified expatriate engineers be engaged promptly for the primary purpose of organizing and supervising ECGts own wiorkforce so as to ensure better utilization of labor, reduce the present heavy dependence on contractors, and avoid delays in the construction

7 - ii - program. The drain on EGG s financial res:urce.s caused by overstaffing calls for a reduction of abo-ut 30% in the juniox staff and workforce. To help achieve this aim ECG has agreed to a reduction of about 600 by the end of 1973 through early and voluntary retirement, departure of aliens, and diversion of staff to Government financed projects. V, ECG's financial management has improved substantially during the past year and has achieved satisfactory operating results during the past two years. Except for an excessive amount of accounts receivable, the present financial position of ECG is satisfactory. vi. Of ECG's financial requirements during the disbursement period ( ) of the proposed credit totalling N025.4 mlllion, 25% can be financed by internal cash generation after debt service, 59% by borrowings, and 16% from other sources (customer contributions and non-operating revenue). This financing plan includes actual construction expenses of N/24.2 million or 95% ot total financial requirements. vii. Ghana's need to borrow foreign exchange for this project is expected to result in ECG's having a large surplus of local currency funds. Since there are at present no other requirements for the use of such funds by ECG other than the expansion plans mentioned in this report, it would be preferable to return part of the cash to ECG's owner, the Government so that allocation of such funds could be made on a basis of overall national priorities. Payment of dividends, early repayment of the relent amount under Credit 118-GH, and short repayment term of the proposed project are intended to achieve the objective. The rate of return is estimated to vary betwseen 7.5% and 8.6%. viii. Debt/equity ratio is expected to be 42/58 or better during the forecast period ( ). In spite of short repayment terms of loans, the debt service coverage will be 1.4 or better during this period. The debt/equity ratios, debt service coverages and overall future financial position of BOG are expected to remain satisfactory. ix. The proposed project represents the least-cost means of meeting the demand for power. The internal financial rate of return on the proposed system expansion has a weighted average of 13.2%. x. The project proposed for MA financing is suitable for a credit of US$7.1 million for relending to ECG at 7W for a period of 7 years, including a grace period of 2 years.

8 REPUBLIC OF GHANA ELECTRICITY CORPCRATION CF GHANA APPRAISAL (F THE SECCND POJER DISTRIBUTION EROJECT 1. IRODUCTION 1.01 The Government of Ghana, on behalf of the Electricity Corporation of Ghana (ECG), in early 1970 requested an IDA credit of US$12.8 million to cover the foreign exchange cost of a project consisting of EGG's distribution program, whose total cost was originally estimated at US$18.5 million. As the result of a detailed review during the appraisal, the program has been extended to cover the period and has been reduced to a total of about US$14.5 million. Qf the US$10.1 million foreign exchange content, US$7.1 million would be financed by the proposed credit, US$2.0 million by a loan from the Federal Republic of Germany (Kreditanstalt fur Wfiederaufbau - KfW), and US$0.2 million by the proceeds of a UK loan to the Government; materials already available in Ghana would account for the remaining US$0.8 million. The reduction in cost was made possible by the redesign of systems and the exclusion of uneconomic and umijustified elements This would be the second IDA credit to EOG. The first one -- Credit 118-GH signed on June 14, 1968, for US$10.0 million -- covered the foreign exchange costs of ECG's distribution program. Experience with that Credit has been generally satisfactory, given the organizational difficulties EGG has faced in changing from a Government department to an autonomous agency. Because of the lack of supervisory staff, ECG's workforce has been under-utilized and this has resulted in construction delays The proposed project, for which the program provides a sound base, would cover (a) expansion of distribution facilities in existing areas of supply, (b) provision of supplies to new areas not previously served, (c) strengthening of existing facilities, and (d) construction of new lines to connect industries and bring hydro power to centers now using diesel powjer. 1.o4 This report is based on the findings of an appraisal mission to Ghana in MIy-June 1970 by Messrs. E. A. Minnig (FPoer Engineer) and A. N. Memon (Financial Analyst).

9 THE P{aR SECTOR The Country and Its Econormr 2.01 Ghana, situated on the Gulf of Guinea on the west coast of Africa, has an area of about 92,000 square miles and a population of about 8.6 million (1970 provisional census), growing on average at 2.4% per year. The greatest population concentration is in the coastal areas (2.9 million, excluding the principal cities), the Ashanti Region (1.9 million, excluding Kumasi), and the principal cities of Accra, the capital (634,o00), Kumasi (343,000), Sekondi-Takoradi (161,000) and Tema (103,000). The remaining 2.6 million live in the sparsely populated Northern and Volta Regions The econony is based on the production of a limited number of agricultural and mineral commodities. Ghana is the world's leading producer of cocoa, the basic crop. Ivflneral production -- gold, manganese, industrial diamonds -- ranks second in importance as a source of export earnings. The main industries are mining, lumber and aluminum smelting. In addition, secondary industries such as textiles, cement, ceramics, etc., are becoming increasingly important Gross domestic product (GDP) in 1968, at current market prices, amounted to about US$2,030 million or about US$236/capita. Since 1957, the year of Ghana's independence, the economay has grown at a real rate averaging about 3.6% per annum. In the sixties, the overall growth rate was lower - about 2.6% per annum before 1966 and 2.14 since then. Oatput of manufacturing by large-scale establishments employing 30 or more workers, almost trebled over and this sector now constitutes about 10.5% of GDP. The agricultural sector still supports 60-70% of the population and is the most important source of foreign exchange earnings. Organizations Responsible for the Power Sector 2.04 Two organizations, the Volta River Authority (VRA) and the Electricity Corporation of Ghana (ECG), are responsible for providing public supplies of power. To date, they have been able to meet the demand of domestic, commercial and industrial consumers at reasonable prices. The mines, which are the principal private owners of generating equipment (36 MIT, diesel), have placed their equipment on standby and now use power produced by VRA. Under the Volta River Development Act (1961), VRA is responsible for bulk supplies to the smelter of the Volta Aluminium Company (VALCO) at Tema, ECG, the mines and Akosombo Tolnship. ECG is responsible for the distribution of power throughout Ghana and the generation of public power supply in areas that as yet cannot be economically connected to the VRA transmission system.

10 -3- Volta River Authority 2.05 Although known since 1915 and investigated on a number of occasions, the power resources of the Volta River called for development on a larger scale than would have been justified solely by public demand for power. In 1956 a Commission recommended that an aluminum smelting industry be established in conjunction with a power plant. A subsequent review of this proposal led to the Volta River Project and sponsorship by Kaiser Aluminum and Chemical Corporation of an aluminum smelter Exsn Facilities. The first phase of the Akosombo ponfer plant (Volta Project) was completed in 1965, a year ahead of schedule and below estimated costs. Financed in part by a Bank Loan (310-GH for US$47.0 million), four 147 M units or 588 YiW were installed. Itudmum demand served in 1969 totalled about 378 Ni and dependable capacity amounted to 441 T4W.1/ VRA is currently expanding the Akosombo plant by adding two further 147 MW units for commissioning in 1972 in order to meet the increased smelter demand (smelting capacity is now 115,000 t/annum and is being expanded by 30% to 150,000 t/annum by early 1972), the normal load growth of ECG, and the export of power to Togo and Dahomey. This will raise installed capacity to 882 I'W, of which 64o EW 1/ will be dependable. The expansion is being financed in part by a Bank Loan (618-GH for us$6.0 million) and will enable VRA to meet demand until about VRA also owns and operates a 500-mile, 161 kv transmission system serving the VALCO smelter; ECG systems in the main cities of Accra, Tema, Sekondi-Takoradi and Kunasi; a number of smaller towns and villages; and the gold and diamond mines at Tarkwa, Dunkwa, Obuasi, Konongo and Akwatia Export of Power. VRA has contracted to supply Togo and Dahomey with up to 503-flWof power. The necessary double circuit, 161 kv transmission line and terminal facilities from Akosombo to the Togo border near Lome (85 miles) and on to Cotonou in Dahomey (100 miles) are under construction and are scheduled for completion by the end of Finance is being providod by the Canadiain MYternational Developuent Agency (CIDA) Future Development. The completed Akosombo plant is expected to meet market requirements up to At that time VAICO may exercise a final option: install a fifth potline and increase its demand from 315 MW to about 390 MJ. To meet this increase along with the normal growth of demand from ECG and other consumers, VRA will need to provide additional capacity.- VRA is carrying out a study, financed out of the proceeds of loan 618-GH, to determine the most economic future development. The alternatives being explored are hydro, thermal and interconnection with Nigeria. 1/ Dependable capacity with 4 units installed = 3 x 147 MS or 441 MW. Dependable capacity with 6 units installed = 5 x 128 1IJ (nominal output because of fluctuation of lake level) or 640 mw.

11 - 4- Electricity Corporation of Ghana (ECG) 2.09 Uhen the Bank appraised the Volta River Project in 1961, it was clear that the project's long-term financial success depended on the future developaent of the non-smelter demand now served by ECG. In the years , ECG is expected to provide 46% of VRA's revenues, other non-smelter consumers 1L% and the smelter 40%. As a result, one of the conditions of Loan 310-GE- for construction of the Volta Project was the reorganization of ECGts predecessor, then a Covernment department, as an autonomous public utility to be operated on a commercial basis. This was accomplished and ECG commenced operations on July 1, ECG's predecessor owned and operated 86.5 W41 of diesel generating equipment installed in 29 power stations. Details are given in Annex 1. Nhen VRA commenced supplying power in late 1965, eleven of these power stations totaling 75.3 MU were shut down or placed on standby. The 16.5 NtI Accra plant, however, continued to be utilized to meet peak demand because existing distribution facilities were inadequate to allow full use of VRA power. This plant was finally placed on standby in May About 10.8 MI are now in service outside the area served by VRAts transmission system. By the end of 1973, 69.5 N!1I of diesel equirinent Will be in service, of wzhich 16.1 MI would supply areas outside the VRA system, 16.5 Hi in Accra would be on standby, 3.5 2$- would be transferred to new centers, and the 33.4 MU Tema plant will be recommlssioned in 1971 for peak shaving until VRA commissions the final two units at Akosombo Necessary rehabilitation, reinforcement and expansion of distribution facilities were prevented for a time by a weak financial position of ECG's predecessor. In 1966 this work finally got undervlay, and reconstruction of the Accra distribution system was financed in part by a loan from the Federal Republic of Germany and British supplier credits. IDA Credit 118-GH helped provide further improvements at Tema, Sekondi-Takoradi, Kumasi and smaller centers, while the credit now proposed and the MI'W loan would provide additional facilities to meet projected load growth of the system to the end of Institutional Changes 2.12 The need for two separate power organizations has been considered at various times and is still under consideration in Government circles. The creation of VRA in 1961 was justified primarily because the Electricity Division of the Ministry of W1orks and Housing was not adequately equipped to undertake the important Volta Project. Upon completion of this project in late 1965, EGG had not been established and the utility was still operated as a Government department along noncommercial lines. Since its establishment in 1967, ECG has had to cope with important organizational changes at a time when it has been engaged in an ambitious expansion program. On the other hand, VRA will soon have completed the Alkosombo powjer plant and is now studying the most economic future development of its generating facilities for commissioning in If an interconnection with Nigeria is feasible, VRA during would need to undertake no major construction work, and by 1972 ECG (as more

12 fully discussed in Section 3) should have overcome its major difficulties and have no serious problems in coping with its distribution expansion program. Thus a merger ot the two organizations, EGG and VRA, could be possible after A merger could have appreciable advantages through combined service departments (personnel, accounting, transport, stores) and elimination of duplication of VRA and ECG staff at joint substations. Dependence on expatriate staff could be reduced by better utilization of qualified Ghanaians; construction and maintenance crews could be reduced and still be able to execute a larger portion of ECG construction work, thus reducing ECG t s heavy dependence on contractors. Such a merger would require legislation. It would be desirable at the same time to relieve the newi organization of VRAPs present responsibility for resettlement, lakeside research, lake transportation, etc., making the new authority responsible for power activities only. During negotiations assurances were obtained from the Government that a study will be undertaken and completed by June 1972 of the benefits and economies that may be obtained from a merger. If the study indicates the desirability of a merger, the Government in consultation with the Bank/IDA will prepare an appropriate plan and timetable for the preparation and implementation of legislation for the future reorganization of the electric power sector. Power Utilization in Ghana 2.14 In 1969, total sales of electricity in Ghana were 2,629 GWh or about 306 kwh per capita, of which VAIJCO accounted for 230 kwh. The distribution of these sales is shown in the following table. GWh % of Total Sales Valco Smelter 1, l/ Ivlines Domestic (Residential) Commercial Lighting Commercial Power Special Load (Large Power Consumers) Special Rate (Government) 17 o.6 Street Lighting Total 2, / By 1978 the smelter is expected to account for 59% of total sales.

13 -6- Rural Electrification 2.15 Proposals for rural electrification have been under discussion in the Government for the past 10 years. A recently appointed Committee has selected a total of 53 urban centers in rural areas. Sixteen have been given priority and eight, requiring an investment of about N01.2 million, have been selected for early construction. Since these eight centers would operate at a loss (estimated at N 474,000/annum), agreement was reached during negotiations that for these and any future sub-economic developments the Government will (a) require ECG to undertake such work only if ECG's other operations and construction are not adversely affected, (b) relieve ECG of the financial responsibility for establishing and operating such centers by appointing ECG as its agent and reimbursing EOG on a quarterly basis any funds needed for their establishment and operation, and (c) require ECG to maintain separate accounts for such Government projects.

14 -7-3. THE BOCJRRER AND THE BENEFICIARY 3.01 The Borrower would be the Republic of Ghana. The Government would relend the proceeds of the proposed IDA credit to ECG at 7% interest for a period of 7 years, including 2 years of grace. A Credit Agreement would be entered into between IDA and the Borrower and a Project Agreement between IDA and ECG ECG would be the Beneficiary of the credit. The Decree establishing ECG, which IDA reviewed in 1966/67 in accordance with the provisions of Loan 310-GH requiring an autonomous public utility to be set up, gives ECG all the necessary powers to conduct its business according to sound commercial principles As discussed more fully below, ECGts basic problem is poor management. Substantial improvements have been made over the past year in the accounting field. Due to a lack of supervisory staff, ECG's labor force has been under-utilized and capital work assigned to it could not be carried out and has had to be sub-contracted. Procedures for the appraisal, selection and control of capital works have not yet been implemented. Inventories have been increased to about three times the required level. anag,ement 3.04 ECG is governed by an eight-member Board. Ex-officio members are: the Principal Secretaries of the IMnistry responsible for ECG (presently the Ministry of Works) and the Ministry of Finance, the Chief Executive of VRA, and the Managing Director of ECG. Four other members, including the Chairman, are appointed by the Government for three-year terms; one of them represents industrial powter users and another represents general consumers of powier The present MTanaging Director, appointed by the Government, is a Ghanaian who previously served as Chief Engineer of the Electricity Division. Because of senior staff vacancies (see paragraphs 3.06 and 3.07) and also because of his background of direct involvement in system design, the Managing Director has difficulty in delegating responsibility and retains more than the required interest in engineering problems. As a result, he is not able to give adequate attention to the basic problems with which ECG is faced or periodically to visit regional centers and the work in progress. During negotiations ECG agreed to appoint a General Manager by not later than December 31, For the interim period the responsibilities of Chief Engineer would be redefined to include the functions of General Manager. This would relieve the Managing Director from some of the day-to-day operations thus enabling him to attend to ECGGs more important problems. During negotiations ECG also agreed to submit to IDA by the end of 1970 its proposals for providing adequate management -and for defining the responsibilities of senior staff. Since Credit 118-GH requires consultation with IDA on the appointment of new Managing Directors, Chief Engineers and Chief Financial Officers, this

15 - 8 - condition was retained. ECG further agreed to consult with IDA on any appointments to the position of General Manager once this position is established. Organization 3.06 ECG's head office, located in Accra, is responsible for overail planning, supervision and general direction of operations. Regional and district offices are maintained in Accra, Tema, Kumasi, Sekondi-Takoradi and Tamale. They are responsible for operations, construction, accounting (including billing) and stores. ECG staff totals 4,782 of wihich 169 are senior, 985 clerical, 1,373 craftsmen and 2,255 day labor staff. There - are 69 senior vacancies, of which 5 are in internal audit, 13 in accounmt ing, 44 in engineering, 2 in commercial and 5 in personnel. Eleven positions are filled by expatriates; 7 expatriate positions, all in the engineering department, are vacant.l/ On the other hand, EGG is grossly overstaffed with regard to power plant operators and day labor staff. In 1969, ECG served 94,490 consumers, wzhich gives a ratio of about 1 employee per 20 consumers. This is unreasonable even allowing for ECG's scattered operations. Agreement was reached during negotiations on the necessary steps to solve this problem. As a first step ECG has agreed to a reduction of about 600 by the end of 1973 through early retirement, departure of aliens, and employment of staff on Government projects. ECG should nevertheless aim to reduce its total staff to about 3,000 by 1976 at the latest, which wiould give a more acceptable ratio of about 1 employee per 50 consumers In general, ECGs organizational structure would be satisfactory if existing staff vacancies wiere filled with qualified personnel. Agreement on this matter was reached during negotiations and EGG has already taken steps to recruit from the UYK Southwestern Electricity Board a 6-member team to be in service by March 1971 for a period of about two years. This team would also provide training to counterparts selected from 12 Ghanaian engineers presently attending courses in the UK who are scheduled to return to Ghana in 1971 and ECG's operations have been and for some time will continue to be dependent upon expatriates, in the form of consultants or directly - employed staff. Due to law salaries, ECG has had difficulty in attracting qualified and competent Ghanaians. It was only in 1969 that salaries were adjusted to levels comparable with those paid by VRA, and some success has since been achieved in the recruitment of accountants. In comparison with the public sector, the new salary scales are high but they are lower than in the private sector. Agreement was reached during negotiations that ECG reviewf by mid-1971 salaries and other conditions of service required to attract essential expatriate staff. 1/ Provided that 20 of the 69 vacancies are filled, ECG's position would be greatly improved. ECG has agreed to recruit a total of 14 senior staff by mid-1971 and steps have already been taken to this effect.

16 -9- Financial,hnagement 3.09 By the end of 1968, ECG's accounting system faced almost complete breakdown because of a lack of qualified supervisory staff. Accounting procedures were not implemented and controls were lax due to indifference and lack of discipline. Objectives or procedures of accounting were not understood nor appreciated, time spent on jobs was not properly recorded and materials were inaccurately allocated. At IDA's suggestion, a seven-member expatriate accounting team from the UK was engaged and a. were in service by May By mid-1969, five key accounting vacancies were filled on a permanent basis and eight newly graduated accountants engaged. Substantial progress was achieved in Accounts for the 18 months ending December 31, 1968, and for calendar year 1969 were prepared and have been audited. The 1969 accounts were prepared largely by ECG staff, but were subject to final scrutiny by the accounting team. Billing procedures have improved. Delays of up to four months between meter readings and billing have been reduced to between one and two weeks. The accounting controls over billing have been improved. A credit control department has been established and a credit control manual detailing necessary procedures is nearing completion. A fixed assets register and contract ledger have been set up. Stores catalogs for electrical and mechanical stores and a stores manual, which are designed to help exercise greater control over inventory level, have been prepared. Stock-taking is up-to-date. An internal audit department has been set up under an experienced Chief Internal Auditor, and the benefits of this department should soon become visible Although much progress has been achieved, it is too early to form a judgment on whether it will be permanent. The accounting team is now in process of withdrawing. To ensure against the risk of the accounts once more falling into arrears, it was agreed during negotiations that two members of the team be retained until at least September This would help ensure that the standards and procedures built up during the past year are maintained. Also, these two members of the accounting team could institute a formal training program for ECG staff, assist in implementing the credit control procedures to reduce accounts receivables, help prepare the 1971 budgets and up-date the financial forecasts. Tariffs 3.11 The Decree establishing EGG authorizes it to set tariffs to ensure that its revenues are sufficient to produce a reasonable return on the fair value of its assets. The various tariffs are described in Annex 2. Generally, they consist of a combination of a fixed charge and a unit charge per kwh consumed. The tariffs are higher in the smaller centers than in the four major cities. The overall average revenue per kwh has declined from 3.7 NP in 1961 to 2.9 NP in If the tariffs remain unchanged, a further decline to 2.3 NP is estimated by 1974 due to the increasing proportion of energy being sold on the lower-priced special load tariff to industry.

17 ECG's consultants ( Mssrs. Preece, Cardew & Rider of the UK) have recently completed a tariff review. The study, which recomnends only minor adjustments in tariff structure and rates at this time, is satisfactory. Adjustments as recommended would not result in significant overall change in the level of revenues Credit 118-GH requires ECG to adjust tariffs as necessary to produce a return of at least 8% on a rate base comprising the average net fixed assets in operation, plus an allowance for working capital equal to 5% of the net fixed assets in operation less consumer and Government capital contributions. This is satisfactory and the same rate covenant was agreed upon during the negotiations. Past Earnings 3.14 Despite overstaffing (paragraph 3.06), past operating results of ECG have been satisfactory. Revenues from sales of energy increased from N0ll.9 million in 1968 to N013.0 million or 9% in Operating expenses increased from NI8.6 million in 1968 to N010.3 million or 2C% in 1969, due primarily to substantially higher administrative costs (a long-needed general salary increase, recruitment for key accounting vacancies and employment of the accounting team) and to depreciation expenses (addition of assets). Operating expenses for distribution and standby stations continued to be high due to overstaffing. The cost of redundant and idle labor is estimated to have been about NOO.75 million per year in 1968 and Rates of return were exceptionally high at 26.3% in 1968 and 14.9% in 1969, due partly to a delay of about one year in the construction program under Credit 118 -GH, resulting in a lower rate base than anticipated in both years. Details of the Income Statement are shown in Annex 3. Present Financial Position 3.15 Except for the high amount of receivables, the present financial position of EGG is satisfactory. ECG's gross fixed assets, which were revalued in 1967 following devaluation of Ghana's currency, amounted to N'33.4 million at December 31, 1969, and are reasonably valued. Assets at diesel stations, which became redundant with the commissioning of the Volta Project, have been classified separately in the Balance Sheet (Annex 4) and have a net value of N 3.5 million The control of accounts receivable has been poor. Although monthly bills are payable within 28 days of receipt, accounts receivable for electricity sales at December 31, 1969, amounted to about N17.3 million or about 56% of the previous 12 months' billings. Receivables on Government accounts were especially high, amounting to about N02.6 million or about 13 months 3 billings. State Corporations and Iocal Councils owed about N 2.0 million or about 10 months' billings, and private consumers N12.7 million or about four months' billings In order to settle past arrears and facilitate prompt settlement of future power billings, the Government agreed during negotiations

18 - U1 - that it would by May 31, 1971 (a) permit ECG to offset NAh.08 million owed to ECG for power consumed by the Government, its agencies, the Ghana Broadcasting Corporation and local administration through June 30, 1970 and by state corporations (other than the Ghana Broadcasting Corporation) through June 30, 1969 against amounts owed by ECG to the Borrower in respect of Credit 118-GH; (b) establish a centralized payment facility for prompt settlement of amounts owed to EGG for power consumed after June 30, 1970 by the Government, its agencies and local administrations; and (c) devise a system to ensure immediate payment of (i) any amounts referred to in (b) above which are not paid by such centralized payment facility within 90 days after presentation of the respective bills; and (ii) any amounts owed to ECG for power consumed after June 30, 1970 by the Ghana Broadcasting Corporation and not paid within 90 days after presentation of the respective bills ECG has recently established a credit control section under an experienced Assistant Chief Accountant to deal with state ccrporations and private consumers not covered under the above arrangement. The objectives of this section are to (i) continue to improve billing procedures in order to dispatch bills in no more than two weeks; (ii) review and supervise disconnecting, reconnecting and court collection procedures; (iii) compile and update a list of all outstanding debts by categories and ages; and (iv) vigorously enforce disconnecting policy for any consumers more than 90 days in arrears The settlement of Government arrears (paragraph 3.17 (a)) and the establishment of (i) the centralized payment facility backed by a support system to deal with the Government consumers (paragraph 3.17 (b) and (c)); and (ii) credit control section under a high power executive with defined objectives (paragraph 3.18), are expected to result in substantial improvement of ECG's accounts receivable position. ECG will report per.-iodically on the pro-ress achieved Gross value of inventories (including an accumulated obsolete stock provision of NV0.8 million) amounted to N03.8 million, which is excessive. A substantial part of the inventories is obsolete. ECG has agreed to dispose of obsolete stocks; the Income Statement (Annex 3) shows the anticipated loss, amounting to N1'0.935 million. In addition to the agreed disposal, ECG agreed during negotiations to reduce the inventories to about N01.0 million by December 31, 1973 which is reasonable The Government equity has increased from N017.9 million in 1967 to N024.7 million in 1969, due primarily to the revenue surplus retained during the period. The debt/equity ratio is 38/62, which is satisfactory The long-term debt consists of (a) IDA Credit 118-GH of US$10 million (1968) relent to ECG at 6V for 20 years including 3 years of grace; (b) the EfW loan of DM20 million (1966) for the distribution network in Accra, at 5ig for 20 years including 3 years of grace; and (c) several supplier credits, all incurred before 1967, at interest rates of 6-5/8% and higher, the unpaid amount being N03.2 million.

19 Taxes 3.23 ECG is exempt from income tax. It is also exempt from all duties and sales taxes for an initial working period of 10 years, up to June 30, Insurance 3.24 Present insurance coverage of ECG -- including protection against fire, explosion, earthquake, third party liability and workmants compensation -- is satisfactory. Assurances were obtained during negotiations that ECG will increase its insurance coverage year by year, commensurate with the expansion of its activities and the increase of its assets in service. Audit 3.25 The Decree establishing ECG requires it to have its books and accounts audited each year by an auditor appointed by EGG's Board with the approval of the Government's Auditor-General. For this purpose ECG has utilized the services of Cooper Brothers (Ghana) Limited, a subsidiary of a UK firm. Assurances were obtained during negotiations that ECG will continue to employ independent auditors satisfactory to IDA and submit annually certified financial statements, accompanied by the audj.tor's report, within six months after the close of the fiscal (calendar) year.

20 THE PROJECT Background 4.01 The necessary rehabilitation, reinforcement and expansion of distribution facilities were prevented in the early 1960's by a weak financial situation (paragraph 2.11). Although consultants (Lahmeyer A.G. of the Federal Republic of Germany) were employed by the Government in 1963 to redesign the networks of the four main centers and priorities were assigned, it wras not until 1966 that work finally got underway. The first work to be undertaken was rehabilitation of the Accra system, financed in part by a EfW loan and British supplier credits. IDA Credit 118-GH provided the foreign exchange required to rehabilitate and expand the three other major systems. With the conmissioning of these works by the end of 1970, the major rehabilitation work will be completed, thus providing a base on which to plan future expansion Future investment requirements covering the period are estimated at N055 million or on average N05.0 million per year. The portion will require investments of about Nl14.8 million, providing the basis of the project proposed for IDA financing. Description 4.03 The project covers ECG's distribution program for the years 1971 through It would consist of: expansion of the four main systems of Accra, Tema, Sekondi-Takoradi and Kumasi; expansion of smaller systems; establishment of new centers at Berekum, Konongo and Ipraeso; construction of 33/11 kv overhead lines; buildings for stores, regional offices, workshop and personnel housing; supply of service line materials; construction and service vehicles; meters, tools, workshop instruments and testing equipment; and office machinery and furniture. The project also includes the foreign costs of engineering, management assistamne and training services. Cost Estimate 4.04 The estimated costs shown below for the project outlined above are based on actual quotations that have been received after international competitive bidding for nearly all of foreign purchases. The costs are considered reasonable. The reason for early tendering was to achieve continuity in construction ( and programs) and to retain the construction and installation momentun that has finally been achieved. Since the cost of nearly 100% of the foreign purchases is based on actual firm bids, the contingency allowance corresponds to about 4%. This allowance will cover unforeseen items and is considered reasonable. Local currency expenditures, mainly for installation and civil works, have a contingency allowance of about 2.5% for unexpected items and a 10% allowance for increases in local prices corresponding to an estimated annual local cost escalation of about 5%. These rates related to total costs give a 3.2% physical contingency and a 2.8% price contingency allowance as shown in the summary cost estimate below. Should there be any foreign exchange savings on the project, these would be cancelled and the credit reduced accordingly.

21 In Thousands of NO In Thousands of US$ % of Foreign Local Total Foreign Local Total Total Expansion of Major Distribution Systems 5,607 1,394 7,001 5,495 1,365 6, Expansion of Smaller Systems , , /11 kv Overhead Iiines 1, ,071 1, , Service Line Materials Buildings Construction & Special Vehicles IHeters, Tools, etc Office Maechinery Engineering & 1anagement Consulting & Training Services Ifscellaneous Distribution Equipaent Thysical Contingencies Price Contingencies TOTAL 10,277 ht473 14,750 10,065 4,385 1h4, Further details are given in Annexes 5 through 8. Procurement and Disbursement 4.05 Procurement for 90% of the foreign exchange component of the Project is being carried out on the basis of international competitive bidding in accordance with IDA's Guidelines. The exceptions are: (a) procurement in the Federal Republic of Germany to be financed by the Kreditanstalt fur Wiederaufbau (KfW) (N 790, 000 (US$775,000)) because of the need for matching equipment for part of the Accra system previously constructed with German equipment financed by KfW; and (b) procurement in the UK of accounting machines to be financed out of the proceeds of a UK commodity loan to the Government (NO200,000 (US$195,000)) for which ECG would repar the Government in local currency on demand. The balance of N01,210,000 remaining from the KfW Loan of NI2, 000,000 would be available on an untied basis. Specifications and tender documents for nearly 100% of the equipment proposed for IDA financing have been prepared, reviewed by IDA, issued, and bids received. Bid evaluation is completed, but no contracts will be awarded prior to consideration of the proposed credit by the Executive Directors. Qn the basis of bid evaluation 20% would be procured from the Federal Republic of Germany; 14% from the UK; 10%g from Italy; 11%, from Belgium; 214% from Yugoslavia; 9% from Sweden; 7% from Ghana; and the balance of 5% from Switzerland, Austria and India. Preference for domestic suppliers has been requested by the Government and - affects one Ghanaian company manufacturing bare copper and aluminum conductors. The value added through local manufacture averages 26% of the cost price. Since the import duty on such materials is 50%, a 15% preference to local manufacturers has been agreed for purposes of bid evaluation. Disbursements for any local purchases would be made only for the

22 cost of the imported component. Par other items purchased abroad, disbursements would be based on the CIF costs of equipment and materials and on the foreign exchange cost component of erection and services as specified in the contracts. In the case of foreign engineering, management and training staff, disbursements would be based on the foreign exchange cost component of the services as specified in the contracts. Annex 9 shows the estimated disbursement schedule. Construction Schedule 4.06 Construction in Accra and Tema is scheduled to begin in mid for completion by early In Kumasi and Sekondi-Takoradi, the schedule calls for construction to begin in late 1971 with completion in Yarch The smaller systems are scheduled to start in early 1972 and should be completed by the end of All other works are scheduled for completion by the end of These schedules are based on past experience and are realistic. Engineering Consultants 4.07 (i) Electrical. Lahmeyer A.G. (Federal Republic of Germany) has acted as ECG's consultant since The firm is under contract to assist EGG until the end of 1971 to prepare specifications and tender documents, review tenders, supervise installation of cables and equipment, and assist with conmissioning. The present contract is being revised and extended to the end of Assurances were obtained during negotiations that ECG will continue to employ electrical engineering consultants on terms acceptable to IDA. (ii) Civil. For the design of civil structures (mainly substations), ECG has employed the services of local consultants. Arrangements are satisfactory and assurances were obtained that ECG will continue to utilize the services of civil engineering consultants on terms acceptable to IDA. Management Consulting and Training Services h.o8 The management consulting services of Cooper Brothers & Co. (UK) have been utilized since Cooper Brothers also provided the accounting team discussed in paragraphs Agreement was reached during negotiations that two members of this team would remain until at least September 1971.

23 JUSTIFICATICN 5.01 The main justification of ECG's expansion program is the need to meet increased power demand especially for industrial use. In the past, , gross manufacturing output by establishments employing 30 or more w orkers has trebled from US$70 million to US$215 million, representing about 10.5% of GDP in the later year. This trend is estimated to continue. In addition, domestic value added by small and medium industries, employing 1-9 and persons, was estimated around US$34 million and is expected to grow in coming years. Nevertheless, only known newf industries were included in the load forecast Since the agriculture sector supports 60-70% of the population and is the most important source of export earnings and because it is the Government's aim to increase such exports, the extension of power supply in the larger urban centers of rural districts and the establishment of power supply in selected centers presently writhout a public power supply are planned. Investments for this purpose account for about 10% of total investment requirements. The Power Market 5.03 In 1969, ECG served the four major cities of Accra, Tema, 15umasi and Sekondi-Takoradi and 26 smaller centers (see Map), of which 16 have locally generated diesel power, Out of a total population of about 8.6 million (1970 census), only about 1.5 million or 17% enjoy the benefits of a public powier supply Past Development, Sales increased from GI,h in 1965 to G1'Jh in 1969 at an average annual growth rate of 17.9%. Distribution losses amounted to 73.3 GWh or 23.9$ in 1965 and 72.1 GOh or 13.8% in The high losses in 1965 wrere due partly to the bad state of EOG t s distribution system and partly to inaccurate metering and illegal connections. Progress has been achieved in metering, but the low-er losses in 1969 are mainly due to system improvements commissioned in Accra in early In 1965 the maximwm demand was 63.8 I14, increasing to in 1969 at an average annual growth rate of 12.5%. In the same period, the average annual load factor improved from 55.0% to 58.5%. Foat Develoet Pbwer will be supplied to three new areas: Berekum (diesel) and Konongo and IMpraeso (supplied with VRA power). Saltpond, Akwatia and Oda -- presently supplied with diesel energy -- will be connected to the VRA system. The forecasts of demand in all centers were prepared individually and only firm new industrial loads were taken into account ECG s total sales are estimated to increase at an average annual rate of 11.5%, from GlWh in 1969 to 1,205 Gih in This is substantially below the grawth rate of 17.9% achieve during the

24 period. Since only kiown industrial sales have been included, the forecast is likely to prove conservative. To meet the forecast sales, ECG by 1978 will have to generate or purchase 1,377 G14h. Cf that amount, 1,337 Gl1h or 97% will be purchased from VRA and 40 GWh produced locally. Losses are estimated at 172 GWh in 1978 or 12.5% of total energy available for distribution. Maximum demand is estimated to increase to MW in 1978, and the average annual load factor is expected to improve to 64.0% Analysis of sales by tariff classification for the period showed that the domestic category has lost its predominant positiondropping from 43.5% of total sales in 1965 to 34.0% in It is forecast to decrease further to 27.4% in The special load category (industrial use), however, has increased its share of the market from 25.2% in 1965 to 39.8% in 1969; it is forecast to increase further to 52.9% by Of the incremental demand during , about 43 MW or WSi is attributable to nor industria loads -- mainly at Tema, Ghana's principal port and industrial center which accounted for 16.9% of ECG's total sales in 1965, 26.7% in 1969, and is forecast to reach 34.7% in Further details on the load forecast are given in Annexes 10 through 14. Internal Financial Rate of Retum 5.o8 The program presented in this report shows an internal financial rate of return averaging 13.2%. Each independent system was analyzed and the following internal financial rates of return were found: Accra, 16.3%; Tema, 9.2g; Kumasi, 13.0%; Sekondi-Takoradi, 13.7%; smaller centers served with VRA energy, 12.3%; smaller centers served with diesel energy, 11.7%; and 33/11 kv transmission lines not associated with the above, 14.4$i Ihese rates of return are satisfactory. In the case of Tema, there are two reasons that contribute to the relatively low rate. First, Tema is a new system and to achieve overall economies some investments need to be made now to serve future demand. The primary distribution system will be constructed for 33 kv operation but operated at 11 kv until 1974/75; the benefits of this will not become fully apparent until subsequent phases. In the calculation of benefits it was considered prudent not to include future possible benefits of such early investments, but rather to present the situation on the unlikely assumption that no future expansion of the system would be made after This conservative approach is also reflected in the load forecast, where only known industrial sales were included. Second, the predominance of special load industrial tariff sales at Tema results in lower benefits than at the other centers where the proportion of the higher tariff sales (domestic, commercial and special rate) is larger Although the load forecast as presented is considered conservative, the effect of a 10% reduction in revenue on the internal financial rate of return was deternined and found to result in a drop in the average rate from 13.2% to 12.0%. Such a rate is still satisfactory. The projectas presented represents minimnm investments consistent with sound engineering practices to meet forecast demand. Design and construction arrangements are satisfactory.

25 FINANCING PLAN AND FUTURE PROSPECTS Proposed Financixg Plan 6.01 ECG's financing plan for , the period during which disbursements for the proposed IDA credit will be made, is summarized below. Of the total requirements, 25% is estimated to be covered by - internal cash generation after providing for debt service, 10% by consuwer capital contributions, 59% by borrowings, and 6% by other sources. The N01.54 million represented as other sources is derived from activities other than the sale of electricity, such as interest on cash deposits. It may be noted that the proposed project accounts for only slightly more than half of the construction during the period, the rest being completion of wrork financed under Credit 118-GH and purchases for the next phase of construction starting in 197h. (NO Thousand) % Sources Internal Cash Generation 25, Less: Debt service 18, Net Internal Cash Generation Consumer Capital Contributions 6237t 2,5 10 Borrowings: IDA Credit 118-GH 3, Proposed IDA Credit Proposed KfW Loan 7,250 2, Future Foreign Loans 2,125 8 Total Borrowings Other Sources 1 l Total Sources 100 Applications Construction Expenditure Proposed Project 13, Other Construction 10, Total Construction 2h, Dividend Payments to Government 6, Increase in T'brking Capital (5,0h4) (20) Total Applications 2L25100 Details of Sources and Applications of funds through 1975 are shown in Annex The borrot ings included in the financing plan are- (a) The proposed IDA credit of US$7.1 million equivalent, with assumed relending terms of 7% interest and repayment over 7 years including 2 years of grace;

26 (b) a ikm loan of US$1.96 million equivalent to the Government, to finance the foreign exchange cost of the development program in Accra, with assumed relending terms of 7¼V interest and repayment over 7 years including 2 years of grace; and (c) a draw-down of N12.1 million from future foreign loans for the nexb stage of ECG's expansion, with assumed terms of 74 interest and repayment over 20 years including 4 years of grace. ECG's comfortable cash position is the justification for the short relending terms of the proposed IDA credit and KfW loan. This is further discussed below (paragraphs ) Agreement was reached during negotiations on a subsidiary loan agreement between the Government and ECG, under which the proposed IDA credit wll1 be relent to ECG on terms substantially similar to those mentioned in paragraph 6.02 (a) Arrangements satisfactory to the Association have been made for the provision of the KfW loan to the Borrower. It is understood that the Government will relend the proceeds to ECG on terms substantially similar to those mentioned in paragraph 6.02 (b). 6.o5 Assurances were obtained from the Government that, in event of a shortfall of funds to complete the project, it will make arrangements satisfactory to IDA to provide ECG with the necessary funds to complete the project. Financial Outlook 6.06 Revenues from electricity sales are estimated to increase from N013.0 million in 1969 to N%22.9 million in 1975 at an average yearly rate of 10%. Operating expenses are estimated to increase from N'10.3 million to N019.5 million at a rate of 11% per year during the same period. The decline in operating margin is primarily due to an increase of 10% in the cost of purchased power from VRA in The rate of return is estimated to vary between 7.5% and 8.6% during the period; this is satisfactory. The estimated return of 7.5% during 1971 and 7.6% during 1972 is below the required 8%; but with a small improvement in operating results as compared with the forecast, EGG should be able to earn 8% or more. A tariff ir.crease at this time would be inappropriate Ghana's need to borrow foreign exchange for the project is expected to result in ECGts having a large surplus of local currency funds during the period. There are at present no proposals, other than the present and future expansion program mentioned in this report, *uhich can be economically justified for the use of these funds by ECG. It would therefore be preferable to return part of the local currency earnings to ICG's owmer, the Government, in the form of dividends

27 so that allocation could be made on a basis of overall national priorities. The level of such dividends could be varied according to ECG t s operating results and its need for cash year by year. Under the present forecast, they would total N 8.38 million by 1975 and would amount to approximately 2% return on equity in 1970, increasing to 4% in 1972 and levelling off at about 7% by ECG stated during negotiations that it intends to declare appropriate annual dividends from its earnings starting in 1970 after making adequate provision for working capital, future expansion, replacenent of assets and amortization of debt In view of its healthy cash position, ECG has agreed to repay the amount owted the Government under Credit 118-GH by December 31, 1980, instead of December 31, 198'3, as previously scheduled. This is desirable for overall economic recsons as discussed above. 6.0o Even after making provision for the next phase of its expansion plan, paying dividends, early repayment of monies relent from Credit 118-GH and agreeing to short amortization period of the proposed credit and MT loan, ECG is expected to have comfortable cash balances throughout the forecast period Debt/equity ratio is expected to be 42/58 or better during the period. Debt service coverage will vary between 2.6 in 1970 and 1.4 in These debt/equity ratios and debt service coverages are satisfactory. Balance Sheet projections are shown in Annex To ensure that the present satisfactory financial position will be maintained throughout the term of the subsidiary loan agreement, a long-term debt limitation has been included in the credit documents. Assurances were obtained that ECG will not incur any debt without prior IDA approval unless its net revenues for the fiscal year preceding such incurrence, or for a later 12-month period ended before the incurrence, will be at least 1.5 times the maximum debt service for any succeeding fiscal year on all debt, including the debt to be incurred. Construction Expenditure Limitation 6.12 To ensure completion of the project and the best use of available resources, assurances were obtained during negotiations that during the period 1971 through 1973, when the proposed IDA project would be implemented, ECG will not undertake any construction or expansion not included in the project except (i) Government financed projects; and (ii) other projects involving aggregate annual expenditures not exceeding N00.5 million.

28 RECXIENDATIONS 7.01 During credit negotiations, agreement was reached on the following principal points: (a) The Government agreed to: (i) Cause a study to be undertaken of the benefits and economies that may be obtained from a merger of ECG and VRA and, if this study indicates the desirability of a merger, to take prompt and effective action for implementation (paragraph 2.13); (ii) require ECG to undertake rural electrification only if EGG's other operations are not adversely affected and in any event to relieve ECG of the financial responsibility for establishing and operating such newr centers (paragraph 2.15); and (iii) permit ECG to offset monies owed by the Government for power consumed against the relent amount to ECG of Credit 118-GH, and to establish a centralized payment facility for settlement of future transactions (paragraph 3.17); and (b) ECG agreed to: (i) Take steps necessary to solve its problem of overstaffing (paragraph 3.06); (ii) retain two members of the accounting team until at least September 1971 (paragraph 3.10); and (iii) not to undertake any construction not included in the project except Government financed projects and other projects involving aggregate annual expenditures not exceeding NtO.5 million (paragraph 6.12) The following principal issues were also discussed and suitable assurances obtained from ECG: (i) Proposals for providing adequate management (paragraph 3.05); (ii) establishment of a credit control section to improve accounts receivable (paragraph 3.19); (iii) payment of annual dividends to the Government (paragraph 6.07); and

29 (iv) early repayment of monies relent to ECOG by the Government from Credit 118-GH The proposed project constitutes a suitable basis for an IDA credit of US$7.1 million to the Government to be relent to ECG. October 6, 1970

30 REPUBLIC OF GHANA ELECTRICITY CORPORATION OF GHANA (ECG) DIESEL GENERATING CAPACITr INSTALLED 31/12/69 TRANSFERS TOTAL AFTER TRANSFER STANDBY/ IN USE REDUNDANT TOCAL INCREASE DECREASE IN USE REDUNDANT TOTAL kw kw kw kw kw kw kw kw STATIONS CONNECTED TO VRA SYSTEM Aburi,Manpong-Accra _ Accra 16,504 3,968 20,472-3,824 16,648-16,648 Takoradi - 8,827 8, ,827 8,827 Tema 33,998-33, ,348-33,348 Kumasi - 8,297 8,297-2,678-5,619 5,619 Tarkura Cape Coast _ Swedru/Vinneba _ Koforidua/Tafo - 1,161 1,161-1, Nkawkaw Dunkwa Obuasi SUB-TOTAL 50,502 24,565 75,067-8,463 49,996 16,608 66,604 STATIONS GENERATING Saltpond 1/ _ Ho 1,290-1,290 1,800-3,090-3,090 Keta Denu Akim Oda l/ _ Asamankese Akwatia 1/ Sunyani 1,400-1, ,400-1,400 Tanle 2,767-2,767 3,710-6,477-6,477 Bolgatanga 1,327-1, ,327-1,327 Manapong-Ashanti ,129-1,129 Komenda 1,500-1, ,500-1,500 Kumawu Kibi Berekum 2/ Other Centers (Rural) 3/ ,518-2,518-2,518 SUB-TOTAL 11,388-11,388 9, , ,851 TOTAL 61,890 24,565 86,455 9,238 9,238 69,512 16,943 86,455 H 1/ Transferred to VRA supply f/ Conmnissioned I/ Wa, Hohoe, Lawra, Suhum, Bechem, Bawku, Bole, Krobo (provisional allocation) July 16, 1970

31 ANNEX 2 ELECTRICITY CORPORATICN CF GHANA Description of Tariff Schedules A. Published Tariffs (i) Domestic - applies to sales to private residences; it is a two part tariff consisting of a monthly fixed charge based on floor area plus a unit charge for each Mklh consumed of 1.6 NP in the four major cities and 2.5 NP at other stations. There is a monthly minimum charge of 60 NP. (ii) Commercial Lighting - applies to sales for lighting purposes in offices, factories and shops; it consists of a monthly minimum charge of N 2 plus a unit chlarge for each kwh consumed of 9.2 NP in the four major cities and 10 NP at other stations. (iii) Commaercial Powrer - applies to commercial and industrial power supplies other than lighting; it consists of a monthly fixed charge based on the KVA or brake horsepowler installed with a minimum charge of NV4, plus a unit charge for each kvm consumed of 1.6 NP in the four major cities and 2.5 NP at other stations. (iv) Flat Rate lighting - applies to unmetered sales to a relatively few customers at small stations (three lights maximum); the charge per month per lamp is 45 NP for up to 40 Watts and 60 NP for up to 60 W;atts. B. Special Tariffs (i) Special Load - applies to large consumers, generally those who have installed capacity of 200 KVA or more, and covers all their users, including lighting. The tariff is negotiated individuallr with each customer and consists of a monthly or annual maximum demand charge plus a unit charge per kth which becomes progressively lower as the load factor increases. (ii) Special Rate - applies to sales to the military, hospitals, schools, and non-profit organizations. It is similar to the commercial lighting tariff, but the unit charge is lower: 5 NP to non-profit organizations, 6 NP to military, and 7 UP to hospitals. August 6, 1970

32 GRARNA ELECTRICITY CORPORATION OF GHANA INCOME STATEMENTS (in thousand NO) Year ending December Actual Estimated Electricity Sales (GWh) ,004 Average Revenue per KWh (NP) Revenue From Electricity Sales 11,948 13, ,583 18,458 19,999 21,627 22,931 Operating Expenses: Purchased Power 3,291 3,975 5,127 6,144 6,782 7,971 8,797 9,399 Generation ,024 Standby for Stations on Grid Distribution 1,185 1,390 1,775 1,778 1,752 1,854 1,908 1,977 Transport Administration - Head Office 774 1,106 1,234 1,346 1,401 1,460 1,502 1,548 - District and Regional ,062 1,165 1,262 1,345 1,449 1,547 Bad Debt Provision Obsolete Stock Provision J 3001o 335o Depreciation 1,050 1,471 1,846 2,297 2,665 2,691 2,990 3,284 Total 8,631 10,335 12,645 14,453 16,095 16,896 18,330 19,542 Net Operating Revenue 3,317 2,686 1,806 2,130 2,363 3,103 3,297 3,389 Other Revenue Net Revenue Before Interest 3,527 3,045 2,106 2,430 2,663 3,403 3,637 3,789 Interest Charges Net Revenue for the Year 3,090 2,365 1,125 1_ 2, 506 Dividend Payment to Government - _ (500) (580) (1,200) (2,000) (2,000) (2,100) Revenue Surplus Retained 3,00,51_5o 07 Average Net Fixed Assets in Operation 13,604 19,692 27,230 35,429 38,498 39,549 43,408 43,893 Plus Working Capital Allocation E ,362 1,771 1,925 1,977 2,170 2,195 Average Government Capital Contributions - (85) (170) (170) (170) (170) (170) (170) Average Consunmer Capital Contribution (1663) (2 544) (3699) (4,506) (4,918) (5,227) (5 515) (5,810) Rate Base 12,21 1o,064o 24,723 32,524 35,335 36,129 39,893 40,105 Rate of Return on Rate Base 26.3% 14.9% 8.5% 7.5% 7.6% 8.6% 8.3% 8.4% Loss on disposal of obsolete stock. Extraordinary adjustment, not to be included in cost of operation for purposes of rate of return calculation. i/ 5% of Average Net Fixed Assets in Operation. September 23, 1970

33 CHAITA ELECTRICITY CORPORATION OF GHAITA BALANICE SHEET (in thousand Nf) December Actual Estimated ASSETS Fixed Assets Gross Fixed Assets in Operation 25,121 33,444 43,483 53,984 54,583 61,442 67,981 68,686 Accumulated Depreciation (8 871) (10 310) (12,156) (14,453) (17 118) (19 809) (22,799) (26 083) Net Fixed Assets in Operation, 2 31,327 39,531 T2 45,1 82 Work in Progress 8,846 10,018 7,811 3,002 8,133 6,202 2,238 7,283 Net Redundant Fixed Assets 3,970 3,514 3, Total Fixed Assets 29,o66 36, ,816 47,835 47,420 49,886 Current Assets Cash and Short-term Investments 3,801 5,626 4,202 3,973 3,852 2,976 2,812 2,390 Net Accounts Receivables 5,991 6,410 6,095 4,451 4,617 4,611 4,851 4,985 Inventories (Net) 2,252 3,041 3,000 2,000 1,500 1,000 1,100 1,200 Prepayments Total Current Assets ,467 10,599 10,149 8,772 8, Total Assets 58,6 55, ,607 56, LIABILITIES Equity Government Equity Investment 17,865 17,907 17,928 20,250 20,257 20,475 20,475 20,475 Revenue Surplus Retained 4,907 6,768 7,393 8,194 8,578 8,827 9,333 9,878 Total Equity 22,772 24,675 25,321 28i444 28,835 29,302 29,808 30,353 Redundant Assets Capital Reserve 3,970 3,514 3, I - - Government Capital Contribution for Subsidized Stations _170 1_ Consumer Capital Contributions 1,952 3,136 4,750 5,085 5,370 5,660 5,960 Long-term Debt KfW Loan, 5",-, , DM20 Million 5,102 5,412 5,094 4,775 4,457 4,138 3,820 3,502 IDA Credit 118-GH, 6, , US$10 Million 26 6,596 10,204 5,512 4,900 4,288 3,676 3,o64 Suppliers Credits 3,304 3,150 3,054 2,931 2,808 2,686 2,479 2,157 Proposed IDA Credit - - 2,125 4,162 4,863 3,625 2,175 Proposed KfW Loan ,440 1,400 1, Future Foreign Loans ,125 6,475 Total 8,432 15,157 17, ,103 17,777 17,800 16,725 17,973 Long-term Debt Due Within One Year (239) (414) (5 134) (1 978) (2 903) (2 987) (3,102) (3 190) Net Long-term Debt o,193 14, ,125 14:864 14: Current Liabilities Accounts Payable and Accruals 4,091 5,395 4,500 3,665 3,890 3,965 4,010 4,200 Long-term Debt Due Within One Year , ,903 2,987 3,102 3,190 Total Current Liabilities 4,330 5, ,793 7,112 7,390 Total Liabilities 41,217 52,048 53,481 55,965 56,607 66,373 Debt/Equity Ratio 27/73 38/62 42/58 36/64 38/62 38/62 36/64 37/63

34 REPUBLIC OF OHANA ELECTRICITY CORPORATION F GHANA DISTRIBUTION PROGRALM QUANTITIES AVAILABLE AVAILABLE AVAILABLE PROPOSED PROPOSED SM4ART IJ MAIN CENTERS FROM IDA FROM K1W FROM RECLAIMED EWN IDA CIVIL TOTAL AND SM4LLER SYSTEMS CREDIT 118-GH LOAN 1 STORES MATERIALS FINANCING FINANCING WORKS 33/11 kv SUBSTATIONS Number 8/5 1/ 33 kv SITCRG dr ucibicle/bay Number Transforw Cubicle/By n Bwabar Coupling Cubicle/Bay _4 4 Bus Section Cubicle/Bay Metering Cubicle/Bay - 5 Neutral Cubicle/Bay n Station Supply Cubicle/Bay n kv SWITCHGEAR Feeder Cubicle Number Transformer Cubicle Metering Cubicle Busbar Coupling Cubicle n 4 4 Bus Section Cubicle - I 1 1 Station Supply Cubicle n 7 7 Neutral Cubicle - I 1 1 f/0.4 kv DISTRIBUTION SUBSTATICUS 58 Coplete Substations Nuber Other Switchgear TRANVMOMERS 33/1kV No/Total XV1 3/0 16/ / /0.4 kv No/Total XVA 33/0.4 kv (Pole) No/Total EVA Grounding Reactance, Number /O.4 kv No/Total EVA 32/19,650 10/5, /46, /72,200 11/0.4 kv (Pole) No/Total EVA 5/250 54/4,3oo 59/4,550 GrnoAg Reactamee, Number 3 3 OE OVERHEAn INES kv Double Circuit (Miles) Single Circuit (Miles) 11kV Line (Nles) kv Line (Miles) 29 _ CABIES 33 kv Tlree-Core (Copper) (Miles) Single-Core (Copper) (Miles) kv Aluminuma (Miles) kv Alminum (Miles) Distribution Pillars Signal Pilot Cables Telephone Cables 2, r5 1/ Total 8 neo and extension of 5 existing substations. September 15, 1970

35 REPUBLIC OF GHANA ELECTRICITY CORPORATION OF GHANA DTSTRIUTTION PROGRAM COST ESTIMATE IN THOUSANDS OF No FOREIGN LOCAL SUMMARY 4 MAIN CENTERS AVAILABLE AVAILABLE AVAILABLE RECLAIMED PROPOSED PROPOSED CTVIL INSTALLATION TOTAL AND SMALLER SYSTEMS IDA 118-GH KfW LOAN 1 STORES MATERIAL KfW IDA TOTAL WORKS ERECTiON TOTAL COSTS 33/11 kv SUBSTATIONS kv Equipment 275 1,197 1, , kv Equipment ,072 SUB-TOTAL - _ ,664 2, ,896 11/0.4 kv DISTRIBUTION SUBSTATIONS /0.4 kv Equipment incl. Installation /0.4 kv Equipment 104 io /0.4 kv Installation (ECG) TRANSFORMERS SUB-TOTAL 213 _ /11 kv /0.4 kv 76 _ OVERHEAD LINES SUB-TOTAL 76 _ , , kv Materials only Erection (Contract) 11 kv Materials only / 55 i Erection (Contract) (ECG) 1,1 kv Materials only / Erection (Contract) (ECG) _ CABLES STUB-TOTAL i/ , kv Three-Core (Copper) Single-Core (Copper) Installation (Contra2t) kv Aluminum Installation (Contract) kv Aluminum Distribution Pillars Signal Pilot Cables Telephone Cables SUB-TOTAL _ , o6 1,669 TOTAL ,899 3,673 6, ,478 2,093 3,492 I/ Foreign exchange cost component of imported raw materials only. L/ Local cost component of materials manufactured in Chant ON September 15, 1970

36 REPUBLIC OF GHANA ELECTRICITY CORPORATION OF GHANA DISTRIBUTION PROGRAM TRANSMISSTON LINES COST ESTIMATE IN THOUSANDS OF N SERVTCE FOREIGN CURRENCY LENGTH LO LOCAL CURRENCY VOLTAGE NO. OF IN LINE AND SUBSTATION LINE AND SUBSTATION BUSH kv CIRCUITS MILES ACCESSORIES EQUIPMENT TOTAL ACCESSORIES EQUIPMENT CLEARING TOTAL TOTAL 1. Winneba-Swedru 33/ Accra "C"-Nsawam Kpong-Juapong j / Koforidua-Tafo 33/11 / / / Tamale-Nawuni 33/11 7/ Asebu-Foso Konongo-Agogo 33/11 / Tower Testing Spare Parts TOTAL 1, o6 2,071 / 33/11 kv: 33 kv Line operated initially at 11 kv. Transformers already installed. 3 Substation equipment N 36,000 already available. E Includes N 9,000 for dismantling existing line. f5/ Substation equipment N 30,OOO already available. Includes N 14,000 for dismantling existing line. / 33 kv 18 miles; 11 kv 11 miles. September 15, 1970

37 REPUBLIC OF GHANA ANNEX 8 ELECTRICITY CORPORATION OF GHANA DISTRIBUTION PROGRAM SUMMARY COST ESTIMATE DISTRIBUTION SYSTEMS IN THOUSANDS OF N - FOREIGN - -- LOCAL -- TOTAL --- _ Accra 1/ 2,175 j ,638 Tema 17 1,863 3/ 370 2,233 Kumasi 1/ 561 f/ Sekondi-Takoradi 1/ 1,008 2/ 320 1,328 Smaller Systems ft Distribution 2/ 575 L/ 543 1,118 Main Substations 3/ ,491 Transmission Lines 1, ,071 Service Connections SUB-TOTAL o,196 2,647 BUILDINGS Ring Road Stores _ Legon Workshop Central Workshop Tema Transit Stores go 9 go Staff Housing Miscellaneous Offices etc SUB-TOTAL g9o 9oo MISCELLATNEOUS Service Vehicles Meters, Tools etc. 433 _ 433 Furniture Office Machinery Miscellaneous Equipment SUB-TOTAL 1, ,237 CONS-LTANCY SERVICES 31ectrical Jivil SUB-TOTAL _ E7 OVERSEAS STAFF AND TRAINING management (Accountancy) 4o Engineering o SUB-TOTAL CORTINGENCIES AND ESCALATION KfW 101 IDA TOTAL PROGRAM IN NX KfW 2,000 IDA 7,250 Stores 827 UK ,277 4,473 14,750 TOTAT PROGRAM IN Us$ KfW 1,960 IDA 7,100 Stores 810 UK ,450 (7~0%) g7 )100 1 Letails given in Annexes 6 and 7. 72' istribution: Cape Coast Chira Komenda Tamale Sunyani Elmina Kpong-Ojaban Koforidua Bolgatanga Pokase Mpraeso Kpong-Akobi-Akwale Berekum Ho Ekwamkrom 3' Expansion of Main Substation Facilities: Berekum Saltpond Obuasi Koforidua Bolgatanga Nkawkaw Winneba Nsawam 4' Letails given in Annex 8. ' few financing N 1,899,000 plus contingency N 101,000 = N2,000,000. 7/ Available from Stores N 276,000 7' Available from Stores N 218,000 i! Available from Stores N 109,000 9/ Available from Stores N 99,000 10/ Available from Stores N 125,000 Total Stores Ao827,000 11' Available from UK Commodity Loan to Government N 200,000. September 15, 1970

38 ANNA 9 Page 1 of 2 pages REPUBLIC CF GHANA ELECTRICITY CCRPORATION OF GHANA DISTRIBUTICK FROGRAM Disbursement Schedule 1. Estimated disbursements on the proposed credit are expected to be made as follows: In Thousands of Dollars Equivalent 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total/Year , , , ,I TCMAL 7, The estimated undisbursed amount of the proposed credit is expected to be: In Thousands of Dollars Equivalent 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter ,480 6,370 6,000 5, ,655 3,615 3,105 2, , The assumptions on which this disbursement schedule is based are: (i) Assumed equipment contract payment conditions to meet the construction schedule: 10% down payment on award of contract; 30% progress payments during manufacturing period; 30% on presentation of shipping documents; 20% on arrival Ghana port; and 10% on commissioning replaced by a Bank Guarantee for the guarantee period; (ii) Installation Component: Monthly progress payments in accordance with installation schedule;

39 ANNEX 9 Page 2 of 2 pages (iii) Engineering, 1inagement Consultancy and Training Services: Equal monthly payments over a two year period; and (iv) Contingency: Equal quarterly disbursements during last year of construction, September 15, 1970

40 _ -'-SALES 1,400 REPUBLIC OF GHANA ELECTRICITY CORPORATION OF GHANA PURCHASES/GENERATION; SALES AND MAXIMUM DEMAND ANNEX O 1,300-1, , , S /.< ~200 g z 700,-/.~"""""' w",,," 2175 fio/.5";0 " ; / "' I T... X *. 10 TEMA\, ES._- KUMA O I SAL 1 1 SALES HE-DRO. SEKONDI-TAKORADIA SALES MINOR CENTERS ACTUAL FORECAST IBRD 5067(2R)

41 1,400 REPUBLIC OF GHANA ELECTRICITY CORPORATION OF GHANA ANNEX II SALES IN Gwh BY TARIFF CLASSIFICATION 1,200 TOTAL SALES 1,000 Z SPECIAL LOAD / ~~~~~~(32.1% )/(SOG! 400 /,,. DOMESTIC / _ *##+# _ ~~~~~~~~~~~~~~~~~~~(10.1 / 9.0%) -- -_ (8.D~)/(.% - ) / _. i.2% -( 8. COMMERCIAL LIGHT..SPECIAL RATE (.5%) 85% ) A m -G ;....:: :::;::; b:: : s R... S~~~~~~~~~~TREET E LIGSl Lr TfN / (8.2%) j ACTUAL - - FORECAST j/ (AVE=A.E ANNUAL G-OWNE 4ATE ) ( AVERASE ANNUAL GRO-TH NAT ) (AVERAGE. ANNUAL C601hTN RATE 1967-I 969) (AVERAGE ANNUAL GROWTH RATE ) IBRD 5062(2R)

42 ANNE 12 Page 1 of 7 pages REPUBLIC OF GHANA ELECTRICITY CORPORATION OF GHANA (ECG) Analysis of Past and Forecast Genei'ation, Sales, I4.dimum Demand 1. Sales forecasts utilized in this report have been prepared on the basis of past development with allowances made for known new industrial loads. Industrial developments in the pre-negotiating stage have not been taken into account since these in general could readily be connected to the distribution system. This approach is conservative but justified because of factors presently influencing Ghana's economic development. The forecast as presented will therefore require periodic revision as new information becomes available. Past Development Sales in Total 2. ECGts total sales increased from GVJh (1965) to GIh (1969) at an annual average growth rate of 17.9%. Most of this growth however was achieved in the later part of the period under consideration. Because of Ghana's economic difficulties in 1965 and 1966 when the growth rates of GDP at constant prices were (-3.4%) and 0.3% respectively, energy sales increased at below average rates of 10% and 14% respectively. In 1967 and 1968, however, energy sales growth rates of 19.0% and were achieved partly because of the effect of distribution rehabilitation and expansion works carried out in and also due to the improvement of economic conditions. Generation, Purchased Power and Losses 3. To meet the above sales ECG generated by diesel and in September 1965 commenced to purchase bulk hydro energy produced by the Volta River Authority (VRA) at the Akosombo Power Plant. In 1965 generation and energy purchases totalled GETh of w^jhich diesel generation accounted for GEMh and VRA power for 82.6 Gwh. In 1969 the respective figures were GUh total, 20.0 GUh diesel generation, and GVJh VRA power. Thus the average annual growth rate of power available for distribution amounted to 14%. Distribution losses amounted to 73.3 G1Th in 1965 or 23.9% of the total available and in GJh or 13.8% of the total, Distribution losses were high in 1965 due to a large extent to the bad condition of distribution facilities but also because of inaccurate metering and illegal connections. Progress has been achieved in metering but the reduction in losses as a percentage of energy available in 1969 is mainly due to distribution system improvements achieved in Accra. Maximum Demand 4. In the same period under review maximum demand increased from 63.8 MW (1965) to MJ (1969) increasing at an average annual growth rate of 12.5%. The average annual load factor improved from 55.0% to 58.3%.

43 ANiE 12 Page 2 of 7 pages Sales by Area 5. ECG's main market is concentrated in the 4 major cities of Accra, the capital city (population 662, 800 (1970))S Tema, principal port and industrial area (80,100); Kumasi, the capital of the Ashanti Region (404,500); and Sekondi-Takoradi, port and naval base (203,700). The total below shows maximum demand and energy sales for the four main centers and the minor centers Average annual sale Max. Demand Sales I1x. Demand Sales growth rate in % V io GMh % M'I,t % Glh % Accra ) ) Tema Kumasi Sekondi- Takoradi Yinor ) Centers 1/) Minor ) 8.o Centers 2/) / Minor centers served with VRA energy: Tarkwa, Cape Coast, Koforidua, Swedru, Dunkwa, Obuasi, Nkawkaw, Akwatia. 2/ 11inor centers served with diesel energy: Oda, Asamankese, Ho, Tamale, Bolgatanga, Sunyani, lnlampong (Ashanti), Keta, Denu, Kibi, Kumawm, Nkroful, Saltpond, Pong Tamale, Adeiso, Achiasi, Osenasi. In 1965 sales in the 4 major centers accounted for 91% of total sales. In 1969 this percentage had increased to 91.8%. The market area served by VRA hydro energy accounted for 96.4% in 1965 increasing to 96.9% in Thus diesel generation presently accounts for only 3.1% of ECG's total sales. 6. The change in sales pattern especially the substantial increase of Tema both as a percentage of total sales (16.9% to 26.7%) c.nd the above average growth rate (32.0%) is attributable to its developmaent as GhanaIs principal port and industrial center. Newr major industries established in the period were: Aluminum Smelter (supplied with powter by VRA), steel mill, oil refinery, textile plants and several small manufacturing enterprises. Sales by Tariff Classification 7. ECG's sales are classified in 7 categories. They are: domestic (residential); commercial lighting (offices, shops, factories); commercial power (commercial and small industrial use other than lighting), special load (large power consumers - industries, universities, main hospital, armny

44 ANNEX 12 Page 3 of 7 pages camps, water works); special rate (government agencies, schools, non-profit organizations); flat rate; and street lighting. Sales in these categories have developed as follows. Average annual growth rate-in % GI,Jh % GITh % Domestic o Commercial Lighting Commercial Power 5L Special Load Special Rate (13.0) 1/ / Flat Rate & Street Lighting (_2.6) 1/- 2.6 o / Total l/ Included under Special Load up to Figures given in ( ) are for / Average annual growth rate for The domestic category has lost its predominant position in the market dropping from 43.5% of total sales in 1965 to 34t.0% in In the same period the special load category, as a result of larger loads being served, has increased its share from 25.2% to 39.8%. In 1969, 49% of the special load sales were made in Tema alone. Flat rate and street lighting use in the period under review showed no growth because slot meters were eliminated in 1966 and because investments required for street lighting projects - the responsibility of the municipalities concerned - were not available. Future Development New Industrial loads Accra: Trade Fair: 1971, 1974 and 1977 Yaximum demand W, Energy consumption 0.8 GWh; Brewery: Transfer of existing load of 600 kw to ECG supply plus installation of 5.4 kw electro boilar. IMxirum demand 6.0 1II. Energy consumption 10.0 GEh in 1971, and 15.0 GVIh in 1972 and thereafter; and Wreija Water Wiorks: Increase of maximum demand by 4.0 1I4 in 1974 requiring annual consumption of 30 GWh. Tema: Chinese Textile Factory: Installation of 3 x 2.8 MIT e)scbt boilers wjhich together with the factory load of wtould raise maximum demand to 12.9 NW.

45 AMNE 12 Fage e of 7 pages Present factory demand is about 1.8 Mi. Increased sales to the textile plant for which contracts have been signed are 10.0 Glh in 1970, and 37.0 GWh in Present plans are to double boiler capacity in 1972 which could raise consumption to 55 GWh in 1972 and 73 GMJh in The prospects of textile factories in Ghana are good depending, however, on the availability of raw materials; Juapong Textile Factory: The present requirements of this factory are 700 kw and 3.5 GNh/annuxn. Expansion is planned to 4.5 MW and 31 GWh/arnum from 1971 onwards; Asustare Irrigation: Initial demand is estimated at 1.0 NW rising to 2.0 NW utilizing 4.0 GNh in 1971; 6.0 GI-h in 1972; and 9.0 GNh in 1973 and thereafter; and Farm: experieental With a maximum demand of 300 kw, 0.4 GWh are expected to be utilized in 1970 and 0.8 GWh in 1971 and thereafter. Kumasi: Barekese Water Works: Already connected to the ECG system by means of a 33 kv overhead line. Maximum demand is estimated at 5.0 MW with sales of 5 GlWh in 1970; 11 GWh in 1971; and 17 GWh in 1972 and thereafter. Sekondi-Takoradi: Naval Base: Maximum demand in 1971 of 1.6 NW rising to 3.5 1in Energy consumption is estimated at 1.0 GlNh in 1971 and 3.5 GWh in 1974 and thereafter; Inchaban Wlater Wlorks: Ya.xinum demand 0.8 M1 in 1970 rising to 2.5 MWI4 in 1975 requiring a consumption of 3 G1Nh in 1970 increasing to 16 GNh in 1975; and Daboasi Water Works: Maximum demand is estimated at 1.2 MIT and consumption at 4 GWh in 1970 and 7 GW3h in 1971 and thereafter. Cape Coast: Lime Juice Factory: Yaximum demand IWI. Energy requirements 0.3 GWh in 1970 rising to 0.8 GUh in 1972; and Ceramics Factory: 4aximum demand MW. Energy requirements 1.5 GWh in 1971 rising to 3.5 GWh in Tamale: Airbase: Y1ximum demand rising from about 150 kws in 1971 to about 700 kw in 1975 requiring 0.6 Glh in 1971 and about 3.0 GIh in 1975;

46 ANTNEX 12 Page 5 of 7 pages Hospital: 1cimum demand 500 kwj with energy consumption rising from 0.3 GTNh in 1971 to 0.7 GWh in 1975; and Brewery: 1bximum demand increasing from kl with energy requirements of 0.5 GNh in 1970 rising to 0.8 GWh in Bolgatanga: Vea WJater VSorks: Itoimum demand 200 kw with energy requirements of 0.3 GNh in 1971 rising to 0.7 GWh in 1973; and Meat Processing Factory: Ma.ximum demand 200 kw with energy requirements of 0.4 GINh in 1971 increasing to 1.0 GWh in 197h. 10. The forecasts were prepared center by center, allowances made for new residential areas to be served and increased sales as a result of rehabilitation work currently under progress. The above listed new industrial loads were included and a modest allowrance made for the expansion of existing industries served. The results are described below. Sales in Total 11. ECG's total sales are estimated to increase from 45i.6 GWh in 1969 to 1,205 GWh in 1978 at an average annual growth rate of This is substantially below the annual growth rate of 17.9% achieved during the period. The reason for this is that only known industrial sales have been included in the forecast. As mentioned in paragraph 1 above this approach is conservative but justified because of the uncertainty of future economic development. As new information becomes available the forecast will have to be revised and kept under constant review. Generation, Parchased Power and Losses 12. To meet the forecast sales ECG will by 1978 be required to generate or purchase 1,377 GWh. Of this anount 1,337 GOh or 97% will be purchased from VRA and 40 Gth generated by diesels. Thus the average annual growth rate of generation and purchases for the period 1969 to 1978 would be 11.3%. Losses in 1978 are estimated at 172 GI1h representing 12.5% of total energy available for distribution. Reduction in losses are mainly due to further improvements of distribution facilities and are considered reasonable. Maximum Demands 13. Yaximum demand is estimated to increase to 246 IW in 1978 at an average annual growth rate of 10.1% for the period. The average annual load factor is estimated at 64% for 1978 improving slightly from 58.3% in 1969.