Egypte - Projet de centrale thermique d’ain sokhna ...
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1 EGYPT AIN SOKHNA THERMAL POWER PROJECT APPRAISAL DOCUMENT CORRIGENDUM 1. Introduction Following the successful negotiations with the representatives of the Government of Arab Republic of Egypt, the Bank received a request to increase its participation in financing of the project by an additional UA 61.69 million (USD 100 million) from UA 215.93 million to UA 277.63 million. This amount will come in deduction of EEHC financing for the civil works component from UA196.35 million to UA134.66 million. The civil works component is also being financed by Kuwait Fund under parallel financing. The procurement of the packages financed by the Bank under this component will be through international competitive bidding in accordance with Bank rules. The requested additional funds will not change the total cost of the project and will help improve the liquidity position of EEHC and ease both the GoE and EEHC burden in financing the project by reducing their contribution from 32.2% to 27.2% of total project cost. The Bank’s contribution will increase from 17.4% to 22.4% of total project cost. 2. Revisions to the Appraisal Report The tables below have been revised to reflect the changes as a result of the request from the Borrower to increase the contribution from the Bank. The changes only affect the Bank’s and EEHC’s figures as shown below: Financing Plan Table 2.4: Sources of financing in million UA equivalents Sources of financing FC costs LC costs Total Costs % total ADB Group 277.63 0.00 277.63 22.42 WB Group 370.17 0.00 370.17 29.90 KFAED 126.60 0.00 126.60 10.23 AFSED 126.60 0.00 126.60 10.23 EEHC 16.80 320.13 336.93 27.22 Total project cost 917.79 320.14 1237.93 100
Transcript of Egypte - Projet de centrale thermique d’ain sokhna ...
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EGYPT
AIN SOKHNA THERMAL POWER PROJECT APPRAISAL DOCUMENT
CORRIGENDUM
1. Introduction
Following the successful negotiations with the representatives of the Government of Arab Republic of Egypt, the Bank received a request to increase its participation in financing of the project by an additional UA 61.69 million (USD 100 million) from UA 215.93 million to UA 277.63 million. This amount will come in deduction of EEHC financing for the civil works component from UA196.35 million to UA134.66 million.
The civil works component is also being financed by Kuwait Fund under parallel
financing. The procurement of the packages financed by the Bank under this component will be through international competitive bidding in accordance with Bank rules.
The requested additional funds will not change the total cost of the project and will
help improve the liquidity position of EEHC and ease both the GoE and EEHC burden in financing the project by reducing their contribution from 32.2% to 27.2% of total project cost. The Bank’s contribution will increase from 17.4% to 22.4% of total project cost.
2. Revisions to the Appraisal Report The tables below have been revised to reflect the changes as a result of the request from the Borrower to increase the contribution from the Bank. The changes only affect the Bank’s and EEHC’s figures as shown below:
Financing Plan
Table 2.4: Sources of financing in million UA equivalents Sources of financing FC costs LC costs Total
Costs % total
ADB Group 277.63 0.00 277.63 22.42
WB Group 370.17 0.00 370.17 29.90
KFAED 126.60 0.00 126.60 10.23
AFSED 126.60 0.00 126.60 10.23
EEHC 16.80 320.13 336.93 27.22
Total project cost 917.79 320.14 1237.93 100
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B.2.2 Financing Plan by Component*
Million UA ADB WB AFESD KFAED EEHC Total A. Civil Works 61.69 27.98 134.66 224.33 B. Supply and Installation of Equipment B.1. Turbine Generators & Condensers 215.93 25.64 241.57 B.2. Steam Generators & Auxiliaries 260.93 54.57 315.50 B.3. Mechanical Equipment /Pipe Installation 41.75 76.52 93.72 32.64 244.63 B.4. Electrical Equipment /I&C Installation 50.08 4.90 14.75 69.73 B.5. Switchyard 67.49 16.64 84.13 C. Environmental Monitoring 1.35 1.35 D. Project Management and Wrap up Insurance 56.69 56.69 Total 277.62 370.17 126.60 126.60 336.94 1237.93
*including contingencies B.2.3 ADB Financed Components Category of Expenditure in Million UA No. Category FE Total % 1. Civil Works 54.45 54.45 100 2. Goods (Supply and installation of steam turbine generator). 191.25 191.25 100 3. Contingencies 31.92 31.92 100 Total 277.62 277.62 100 B.4.2.2 ADB Financed Components Expenditure Schedule by Component Components Year1 Year2 Year3 Year4 Year5 Year6 Total
A. Works (Civil works) 1.00 8.63 13.89 14.17 9.80 6.96 54.45
B. Supply and Installation of Equipment 3.59 30.29 48.78 49.75 34.4 24.44 191.25
Total base cost 4.59 38.92 62.67 63.92 44.20 31.40 245.70
Physical contingency 0.46 3.88 6.25 6.38 4.41 3.14 23.83
Price contingency 0.15 1.28 2.06 2.11 1.45 1.03 8.09
Total 5.2 44.08 70.98 72.41 50.06 35.57 277.62
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B.5 Summary of Procurement Arrangements
Bank Funded
ICB Non Bank
Funded Short List
Non Bank Funded
Total
Project Packages UA million A. Civil Works
• CP-102 Main civil works 61.69(61.69) 90.76 152.45(61.69) • CP-107 Yard tanks 6.48 6.48(0) • CP-119 Offshore intake
structure 47.26 47.26(0).
• CP-120 Colony 12.31 12.31(0) • CP-123 Site Preparation 5.83 5.83(0)
Sub-Total 61.69(61.69) 162.64 224.33(61.69) B. Supply and Installation of Equipment
• CP-105 Steam Generators & auxiliaries
315.50 315.50(0)
• CP-106 Turbine Generators and Condensers
241.57(215.93) 241.57(215.93)
• PO- 113 Transformers 22.50 22.50(0)
• CP-104 Switchyard 84.13 84.13(0)
• PO - 109 Pumps and Drives
37.88 37.88(0)
• PO - 110 Heat Exchangers
17.60 17.60(0)
• CP - 111 Water and waste water treatment/Desalination plant
50.62 50.62(0)
• PO-112 Critical piping and valves
38.57 38.57(0)
• PO- 114 Instruments and control
5.02 5.02(0)
• CP – 117 Electrical and instrument installation
35.73 35.73(0)
• CP 118 Mechanical and piping installation
99.96 99.96(0)
• PO – 122 Switchgear 6.48 6.48(0) Sub total 241.57(215.93) 713.99 955.56(215.93) C. Environmental Monitoring CP-103 Environmental monitoring
1.35 1.35(0)
D. Project Man/Wrap up Insurance
• CP -108 Insurance • Consultancy Services
56.69
56.69(0)
Total 303.26(277.62) 56.69 939.67 1,237.93(277.62)Figures in bracket indicate amounts to be financed by ADB.
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3. Amendment of the draft Loan agreement
a) Section 2.01 has been amended as follows: The Bank agrees to lend to the Borrower a total amount of four hundred and fifty million United States Dollars (US$ 450,000,000) (hereinafter called the “Loan”).
b) Annex I has been amended as follows: The Bank’s loan will be used to finance the
foreign currency of item B.2 and part of foreign currency of component A.
Language: English Original: English
PROJECT: AIN SOKHNA THERMAL POWER PROJECT COUNTRY: EGYPT
PROJECT APPRAISAL REPORT
Date: 30 AUGUST 2008
Team Leader E. B. NZABANITA Principal Power Engineer OINF.3 3081
Y. VYAS Lead Environmentalist OIVP 2178
N. KULEMEKA Principal Socio-Economist OINF.2 2336
D. LEKOETJE Senior Public Utilities Economist OINF.3 2651
G. MOLLA Financial Analyst Consultant G. El. SOKKARY Socio-Economist EGFO 3886
Team Members
K. El ASKARI Infrastructure Expert EGFO 3886 Sector Manager A.T. DIALLO OINF.3 2125 Sector Director G. MBESHERUBUSA OINF 2034
Appraisal Team
Ag. Regional Director A. ZEJLY
ORNA 2065
Mr. Lawrence KIGGUNDU, Transport Engineer OINF.2 3488 Mr. M. DIENE, Chief Infrastructure Expert ORQR.3 3395 Mr. E. ROBLE, Procurement expert ORPU 2648 Mr. A. KARANGA, Principal Economist OINF.1 2607
Peer Reviewers
Mr. M. H. BCHIR, Country Economist ORNA 3886
TABLE OF CONTENTS I – STRATEGIC THRUST & RATIONALE............................................................................1
1.1. Project linkages with country strategy and objectives....................................................1 1.2. Rationale for Bank’s involvement ..................................................................................1 1.3. Donors coordination........................................................................................................2
II – PROJECT DESCRIPTION.................................................................................................3 2.1. Project components.........................................................................................................3 2.2. Technical solution retained and other alternatives explored...........................................4 2.3. Project type .....................................................................................................................5 2.4. Project cost and financing arrangements ........................................................................5 2.5. Project’s target area and population................................................................................6 2.6. Participatory process for project identification, design and implementation .................7 2.7. Bank Group experience, lessons reflected in project design ..........................................7 2.8.Key performance indicators.............................................................................................8
III – PROJECT FEASIBILITY .................................................................................................8 3.1. Economic and financial performance .............................................................................8 3.2. Environmental and Social impacts..................................................................................9
IV – IMPLEMENTATION......................................................................................................12 4.1. Implementation arrangements.......................................................................................12 4.2. Monitoring ....................................................................................................................12 4.3. Governance ...................................................................................................................13 4.4. Sustainability...............................................................................................................134 4.5. Risk management........................................................................................................146 4.6. Knowledge building....................................................................................................167
V – LEGAL INSTRUMENTS AND AUTHORITY...............................................................17 5.1. Legal instrument ...........................................................................................................17 5.2. Conditions associated with Bank’s intervention...........................................................17 5.3. Compliance with Bank Policies ....................................................................................18
VI – RECOMMENDATION...................................................................................................18 Appendix I. Country’s comparative socio-economic indicators..............................................19 Appendix II. Table of ADB’s portfolio in the country ............................................................20 Appendix III. Key related projects financed by the Bank and other development partners in the country ...............................................................................................................................21 Appendix IV. Map of the Project Area....................................................................................22
Currency Equivalents As of 31 August 2008
UA = 1.62088 USD UA = 1.03829 EURO UA = 8.71158 EGP
Fiscal Year July 1st – June 30th
Weights and Measures
1metric tonne = 2204 pounds (lbs) 1 kilogramme (kg) = 2.200 lbs 1 metre (m) = 3.28 feet (ft) 1 millimetre (mm) = 0.03937 inch (“) 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 acres
1 Kilovolt (kV) = 1000 volts 1 Kilowatt (kW) = 1000 watts 1 Kilovolt ampere (kVA) = 1000 volt ampere 1 Megawatt (MW) = 1000 kW 1 Gigawatt (GW) = 1000 MW 1 Megavolt (MVA) = 1000 kVA 1 Kilowatt hour (kWh) = 1000 watt hour
ABBREVIATIONS
ADB African Development Bank AFESD Arab Fund for Economic and Social Development BOOT Build, Own, Operate and Transfer CC Combined Cycle CIDA Canadian International Development Agency EEAA Egyptian Environmental Affairs Agency EEHC Egyptian Electricity Holding Company EEUCPRA Egyptian Electricity Utilities Consumer Protection Regulatory Agency EIB European Investment Bank EIRR Economic Internal Rate of Return ESI Electricity Supply Industry ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan FE Foreign Exchange FIRR Financial Internal Rate of Return FNPV Financial Net Present Value FY Financial Year GEP Generation Expansion Plan
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GDP Gross Domestic Product GOE Government of Egypt HV High Voltage ICB International Competitive Bidding IDB Islamic Development Bank IPP Independent Power Producer KFAED Kuwait Fund for Arab and Economic Development LC Local Cost LE Egyptian Pound LRMC Long Run Marginal Cost SMEs Small and Medium Enterprises LV Low Voltage MEE Ministry of Electricity and Energy MOP Ministry of Petroleum MOSEA Ministry of State for Environmental Affairs MOT Ministry of Transport MSCM Million Standard Cubic Meters MV Medium Voltage NPV Net Present Value NREA New and Renewable Energy Authority O & M Operation and Maintenance p.a Per Annum PCR Project Completion Report PIT Project Implementation Team PPER Project Performance Evaluation Report PSP Private Sector Participation QPR Quarterly Progress Report EDEPC East Delta Electricity Production Company UNDB United Nations Development Business UPS Unified Power System VHV Very High Voltage WB World Bank
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Loan Information
Client’s information BORROWER: The Government of Arab Republic of Egypt EXECUTING AGENCY: The Egyptian Electricity Holding Company (EEHC).
Financing Plan Sources of financing Amount (UA) Instrument ADB Group 215.93 Loan WB Group 370.17 Loan AFSED 126.60 Loan KFAED 126.60 Loan EEHC 398.63 Equity Total cost 1237.93
ADB’s key financing information
Loan currency
USD
Interest type 6 Interest Rate Libor Interest rate spread 20 basis points Other fees None Tenor 20 Years Grace period 6 Years FIRR, NPV (base case) 7%, FNPV LE 6,324.99 million EIRR (base case) 13%, ENPV LE 6.648.22 million
Timeframe - Main Milestones (expected)
Concept Note approval
July 2008
Project approval December 2008 Effectiveness June 2009 Last Disbursement December, 2014 Completion June, 2014 Last repayment January 2029
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Project Summary 1. PROJECT NAME : Ain Sokhna Thermal Power Project 2. LOCATION : The project site is located in El-Ain Al-Sokhna
in Ettaqa District of Suez Governorate approximately 52 km south of the city of Suez and 112 km east of Cairo.
3. EXPECTED OUTPUTS : The expected output will be a 1300 MW thermal
power station that will feed power to the UPS. 4. ESTIMATED DURATION : 68 Months 5. PROJECT COST : UA 1,237.93 million 6. BENEFICIARIES : The project beneficiaries are the people living
around the project site, contractors and suppliers, EEHC and EDEPC; and the country’s population (industry and domestic) who are connected to the national grid.
7. IMPACT ON BENFICIARIES: Some people around the project site will get
employment during project implementation and operation. The contractors and consultants will benefit from services delivered. The power generated will be used for industrial and commercial activities countrywide thus contributing to job creation, increase in productivity, electricity connection rates and improvement in quality of life.
8. PROJECT JUSTIFICATION: The power demand in Egypt is growing at a very
fast rate (6.38% p.a) and in order to meet this demand EEHC has to implement generation projects to match the demand. This project is the least cost for providing part of the demand for the period 2013/2014.
9. JUSTIFICATION FOR BANK
INVOLVEMENT : The Bank has been involved in the power sector since 1974 and has, during the course, acquired wide experience in handling power sector needs in the country. The Bank has significantly contributed towards making the sector efficient and continues to play a key role in the development of the sector and ensuring sustainable development of the generation capacity to the benefit of Egyptians.
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Result-Based Logical Framework
HIERARCHY OF OBJECTIVES EXPECTED RESULTS REACH PERFORMANCE INDICATORS
INDICATIVE TARGETS TIMEFRAME
ASSUMPTIONS / RISKS
Goal: SECTOR GOAL: Promote economic growth and improve the standard of living of the population through production of energy including electricity.
Impact: 1. High GDP growth rate is maintained to at least its FY2007/08 level. 2. Improved well-being of the population in Egypt
Beneficiaries: Rural and urban population. Economic sectors (industry, agriculture, commercial sectors, etc). Social infrastructure (schools and health centers).
Impact Indicators: 1.1 GDP growth rates
1.2 Population below poverty line
(Source & Method) Government statistics and bulletins (.National household survey/, Bureau of statistics, Poverty Assessment/ Ministry of Economic Development.
EEHC, EGPC, EEUCPRA and MEE Annual Reports. UNDP Human Development Report.
1.1 GDP growth rates increased from 7.3% in 2007/8 to 8% by 2015 1.2 Population below poverty line reduced from 19.6% in 2005 to 10.8% 1 by 2015.
1 As per MDG targets.
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Project purpose: The Project Objective is to enhance the socio economic development of Egypt by providing infrastructure for increasing the generation capacity in the country
Medium term Outcomes: 1. Increased installed electricity generation capacity of EEHC
2. Increased electricity supply for various consumers through UPS
Beneficiaries: Industrial, agricultural, commercial and domestic consumers
Outcome indicators:
1 Total UPS installed generation capacity.
2. EEHC annual load growth rate
3. Number of additional consumers
Progress anticipated in the medium term: Timeframe: 1. Total UPS installed capacity increases from 20,452.2 MW in 2005/6 to 21,752.20 MW in 2014. 2. Number of consumers increases from 21.5 million in 2005/2006 to 22.60 million in 2014.
Assumption statement:
Government of Egypt commitment to full implementation of the energy sector reforms and programs. Continuous support by financiers
Inputs and activities: A. Civil works B. Supply and installation of equipment C. Environmental Monitoring D. Wrap up Insurance and Project Management.
Inputs/Resources (million) UA :
ADB 215.93 AFESD 126.60 KFAED 126.60 WB 370.17 EEHC 398.63 Total 1,237.93 FE = UA 917.79 million LC = UA 320.14 million
Outputs: A. An intake structure constructed. B.1 Steam turbine generators installed. B.2. Steam Generators & auxiliaries installed. B.3. Electro-mechanical Equipment /Pipes installed B.4. Switchyard erected C. Environmental monitoring system installed D.1 Wrap up Insurance secured D.2 Consultant for Project Management recruited
Beneficiaries: EEHC, EDEPC Contractors Consultants Suppliers
Output indicator: 1. Intake structure
2. Number and capacity of installed steam turbines
3. Number of steam boilers
4. Switchyard
5. Number and capacity of installed transformers
6. Number of heat exchangers
7. Number of storage tanks
8. Number of installed water treatment system and desalination plants
9. A functioning environmental monitoring system.
10. Service contracts for Project Management and Wrap-up Insurance.
Progress anticipated in the short term: Timeframe: Before 31 December 2014
1. An intake structure constructed
2. 2x650MW steam turbines installed
3. 2x steam boilers and auxiliaries installed
4. 1x 500kV switchyard installed
5. 2x750 MVA transformers installed
6. Eight (8) heat exchangers installed.
7. Six (6) storage tanks installed
8. A water treatment system and a desalination plant installed. 9. Equipment for environmental monitoring system installed. 10. Service contracts signed for Project Management and Wrap-up Insurance.
Assumption statement: Risk factors and conditions vital to success
1. High increase in equipment cost due to increasing demand and rising oil and material prices.
2. High turnover of young professionals at EEHC and EDEPC due to uncompetitive conditions.
Mitigation strategies 1. Higher-than-usual contingencies are used in cost estimate. 2. Realistic project implementation schedule. 3. Continued training of more staff by EEHC and more to improve the conditions of service
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1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4Activities Loan ApprovalGeneral Procurement NoticeLoan SignatureLoan EffectivenessRecruitment of Engineering ConsultantDesign, Review Prep. & Approve Bid DocumentIssue of Specific Procurement NoticeBidding Period
Evaluation, Contract Award and MobilizationManufacturing, Delivery, Installation, Erection/Commissioning and ContractorsPCR
AIN SOKNA THERMAL POWER PROJECT - PROJETC TIMEFRAME
2008 2009 2010 2011 2012 2013 2014Quarters Quarters QuartersQuarters Quarters Quarters Quarters
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REPORT AND RECOMMENDATION OF THE MANAGEMENT OF THE ADB GROUP TO THE BOARD OF DIRECTORS ON A PROPOSED LOAN TO EGYPT FOR AIN
SOKHNA 1300 MW THERMAL POWER PROJECT Management submits the following Report and Recommendation on a proposed ADB loan for UA 215.93 million on 6 Interest Rate Libor to finance the Ain Sokhna 1300 MW Thermal Power Project in Egypt.
I – STRATEGIC THRUST & RATIONALE
1.1. Project linkages with country strategy and objectives 1.1.1 The Bank’s Country Strategy Paper (CSP) for Egypt (2007-2011) seeks to support two strategic pillars; namely: (i) promoting private sector and (ii) promoting social development. Under promoting private sector development, the Country shall focus on infrastructure (power and modernization of railways and seaports). This is in line with Government 6th National Development Plan (2007-2012) in which the expansion of electricity infrastructure is among top priorities. 1.1.2 Government policies in the energy sector are aimed at securing sufficient and affordable energy supplies to meet the requirements of all segments of the economy, improve sector efficiency and to optimize both domestic utilization of the country’s energy resources and energy export. Because of the abundant gas reserves, Government policy is to implement an effective natural gas development and domestic utilization strategy to reduce domestic oil consumption with a view to becoming at least self-sufficient in oil supply. GOE is also pursuing a strategy to diversify its energy sources through the development of new and renewable energy resources, particularly solar and wind. The target for total installed capacity of renewable energy is to provide 20% of total capacity by 2020. The strategy to secure the country’s energy supply also includes the promotion of end user efficiency as well as increasing efficiency in the production and transformation processes. Specifically natural gas will increasingly replace fuel oils in electricity generation and efficient electricity generation plants, such as combined cycle plants, will replace less efficient thermal plants. 1.1.3 The Project objective is to enhance the socio economic development of Egypt by providing infrastructure for increasing the generation capacity in the country to partly meet the electricity demand on the Unified Power System (UPS). The proposed project, therefore, is in line with the Bank CSP and the Government 6th National Development Plan.
1.2. Rationale for Bank’s involvement 1.2.1 Continuous and reliable supply of electricity is required for the socio-economic development of Egypt. With a highly urbanized population and a high growth rate of electricity demand, a systematic expansion of the electricity generation facilities and other infrastructure developments are imperative to cope with the demands of the households sector. At the same time, economic growth will hinge on the provision of adequate and reliable power to vital sectors like industry, agriculture, tourism and transport, to which the Government accords high priority. Against this background, Government has made the expansion of electricity infrastructure, including generation, one of its priorities under the 6th (2007-2012) National Development Plan.
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1.2.2 The EEHC has developed a generation expansion plan with annual load growth rate of 6.38% to meet the demand increase and maintain system reliability between 2007/08 and 2013/14. Under this plan, power plants to generate additional 4,400 MW are under construction. In addition 3,350 MW power plants are planned for commissioning by 2013, among which is the proposed project. 1.2.3 The intervention of the Bank has been requested as a result of the country’s need for sustaining its economic growth. The total investment required for generation expansion up to 2014 is USD 8.42 billion out of which the Government can only provide USD 3.33 billion. The loan amount will finance part of the total costs of the project and is within the country’s sustainable lending limits for 2008. The Bank has developed a track record of expertise in this field in Egypt and is currently financing two power projects. 1.2.4 The GOE recognises that the electricity sub-sector requires huge investment which may not be easily mobilised from the public sector alone. It therefore intends to involve the private sector particularly through the promotion of Build, Own, Operate and Transfer (BOOT)/Independent Power Producer (IPP) projects. The government recently drafted a new electricity act to encourage renewable energy utilisation and private sector involvement in the process.
1.3. Donors coordination
Size Sector or sub-sector GDP Exports Labor Force
[Electricity sub-sector] [1.8%] [0.5%] [1.36%]
Players - Public Annual Expenditure (average 2007 - 2012)**
Government Donors
[ADB] [12.3%]
[UA 457 m] [UA 679 m] [EIB] [11.3%]
[40%] [60%] [WB] [10.2%]
[AFSED] [7.7%] [KFAED] [7.5%] [IDB] [2%] [OPEC] [1%] [Local Bank] [8%]
Level of Donor Coordination Existence of Thematic Working Groups [Y] Existence of SWAPs or Integrated Sector Approaches [N]
ADB's Involvement in donors coordination*** [M]**** M: member but not leader, none: no involvement 1.3.1 The ADB is involved in donor coordination in the country through the EGFO which participates as a member in almost all DAG coordination and thematic working group meetings. However, the only thematic working group that is relevant to the power sector is the Environment and Renewable Energy sub-group. The energy sector in Egypt has neither a SWAp nor does it have a common basket of resources hence joint missions or common audits are not mandatory. Nevertheless, a common understanding has been reached with the World Bank to collaborate in the implementation of the project.
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1.3.2 During the appraisal, the team discussed with the World Bank staff both in the field and at the headquarters in Washington, all aspects regarding the project financing including the project costs, financing plan, environmental and social impact assessment and the ESMP. There was also common assessment of the sector issues including the need to support efforts on climate change through the joint cooperation on the use of clean technology fund (CTF). Egypt is among the countries where cooperation between the two institutions is being sought on the use of CTF. Other development partners consulted during the appraisal mission were the European Union and the European Investment Bank. The common goal of all the development partners involved in the energy sector in Egypt is to ensure that the GOE continues to rationalize energy prices and to enhance private sector participation in the sector in order to make it more efficient and capable of maintaining adequate supplies to the country at the least cost. In this regard, the World Bank is providing assistance to the GOE for establishment of an independent electricity regulatory authority that will review and approve the tariff of EEHC and other independent producers.
II – PROJECT DESCRIPTION
2.1. Project components The project involves the construction of a 1300 MW (2x650 MW) supercritical steam turbine power plant located adjacent to the sea port of Ain Sokhna on the Gulf of Suez. It consists of the following major components: A - Civil Works; B - Supply and Installation of Equipment. C- Environmental Monitoring, and D - Project Management/Wrap up insurance. Table 2.1: project components
No. Component Name Est. cost (UA million)
Component description2
A. Civil Works 224.33 CP-102 Main civil works CP-107 Yard tanks CP-119 Offshore intake structure CP-120 Colony CP-123 Site Preparation
B. Supply and Installation of Equipment
955.56 CP-105 Steam Generators & auxiliaries CP-106 Turbine Generators and Condensers CP-104 Switchyard PO- 113 Transformers PO - 109 Pumps and Drives PO - 110 Heat Exchangers CP - 111 Water and waste water treatment/Desalination
plant PO-112 Critical piping and valves PO- 114 Instruments and control CP – 117 Electrical and instrument installation CP 118 Mechanical and piping installation PO – 122 Switchgear
C. Environmental Monitoring
1.35 CP-103 Environmental monitoring
D. Project Management/Wrap up Insurance
56.69 CP -108 Insurance Consultancy Services
2 CP stands for Contract Package while PO stands for Purchase Order
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2.2. Technical solution retained and other alternatives explored 2.2.1 A study was undertaken to compare various generation options to meet the medium-term demand of the UPS. The study concluded that the most competitive option to meet the system demand is thermal generation because (i) hydropower generation potential is limited as about 90% of the country’s hydropower potential has already been harnessed; (ii) imports from neighbouring countries with which Egypt is interconnected is limited as Egypt has been a net exporter to these countries; and (iii) the cost of solar-thermal power generation and wind energy were found non-competitive to conventional thermal generation. Even though wind energy is picking pace in Egypt mainly due to subsidies from donors, the technology can not yet compete with SC plants because of higher unit costs (about 7 US cents per kWhr compared about to US cents 2.30). 2.2.2 The selection of the site and the technology to be used was based on the feasibility study that was undertaken by EEHC aimed at meeting their Generation Development Agenda. Different thermal power stations options were compared for location as well as plant design to determine optimal module size. Considerations in selecting the project site included the availability of fuel supply, cooling water for the plant, availability of sufficient land, utilization of the existing transmission lines to evacuate power generated into the UPS, and the environmental conditions at the site. The study identified Ain Sokhna as the most appropriate site for locating the station. 2.2.3 The study recommended the use of supercritical boilers because of the following reasons: (a) higher turbine efficiency (47% compared to 42% for sub-critical) and lower gas emissions; (b) lower maintenance costs compared to Combined Cycle (CC) power plants; (c) more stable during network disturbances than the CC plants. In addition, there is need to optimise the generation ratio mix to ensure system stability. Currently in Egypt the CC ratio is 32% compared to the required range of 30 to 35%. With the CC plants under construction this ratio will increase and negatively impact the generation ratio mix. Table 2.2 below presents the different alternatives considered and reasons for rejection.
Table 2.2: project alternatives considered and reasons for rejection Technology Description Generation
efficiency CO2 emissions (gms / kWhr)
Reason for rejection
Sub critical Steam Units
gas/oil fired steam cycle units using sub-critical boiler and steam turbine
36 – 45% 520 Lower efficiency, more CO2 emission
Combined Cycle Gas Turbine – gas fired
combined cycle consists of gas turbines, heat recovery steam generators and steam turbine generator
50 – 58% 360 - 420 Although it has higher efficiency, it has higher inertia during disturbances and therefore unstable. The ratio of the CC plants has to be kept at between 30-35%.
Combined Cycle Gas Turbine – oil fired
oil fired steam cycle units using sub-critical boiler and steam turbine
Not available
600 Lower efficiency & higher carbon emissions
Coal fired plants Two coal fired steam cycle units using sub-critical boiler and steam turbine
Limited deposits of coal in Egypt, lower efficiency and high carbon dioxide emissions.
Hydropower plants
Large sites have already been developed. Only 10% of the potential remain to be harnessed (mini hydro)
Wind Energy Current world market cost of wind based electricity is 5.9-7.38 US¢ /kWh, which is higher than the cost from natural gas thermal plants.
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Importing electricity
Egypt is interconnected to Libya and Jordan and is exporting electricity to both countries. As they are net importers, there is currently not much scope for electricity imports to Egypt from interconnections
Rehabilitation of existing power plants
EEHC has concluded that the rehabilitation option is cost effective in seven of its existing power plants, and these sites have already been or will be rehabilitated. However, these efforts are not enough to cope with the growing demand for electricity.
Transmission & distribution investment
New electricity generation capacity is required in the network; therefore, strengthening of T&D capacity alone will not replace the need for new capacity. Furthermore, T&D losses are at a relatively low level, around 10% on average, and reducing the losses further would not free up the amount of electricity supply required.
Private sector participation
The government is encouraging private sector participation in the sector. However, given the worldwide demand for equipment and growth in electricity demand in the country, private financing alone for power generation to meet the demand in the short term is unlikely.
Source: EDF Port Said East SAE: EIA for Port Said East BOOT Steam Power Plant, Final Report, October 2000. 2.3. Project type The proposed project is a stand alone project and conforms to the objectives of the energy sector strategy to which other financiers are abiding. Given the long gestation of the implementation (5 to 6 years) and the multiplicity and size of contracts, stand alone type is preferred as opposed to budget support. 2.4. Project cost and financing arrangements The cost of the project is estimated in US dollars based on recent contract prices of steam power plants of the same size awarded internationally and in consultation with international consultants. The cost of the project, excluding taxes, duties and Interest During Construction (IDC) but including physical contingencies (10%) and price contingencies (3% for foreign exchange cost and 5% for local costs) is estimated at US$ 2,006.54 million (UA 1,237.93 million) of which US$ 1,487.63 million (UA 917.79 million, 74 %) is in foreign exchange and US$ 518.91 million (UA 320.14 million, 26%) is in local costs. While the detailed cost estimates are presented in Annex B2, the summary of the cost estimates by component, sources of financing, project cost by category of expenditure and expenditure schedule by component are shown in tables 2.3, 2.4, 2.5 and 2.6 below.
Table 2.3: Project cost estimates by component in million UA equivalents Components FC costs LC costs Total
Costs Foreign
% A. Civil Works 61.69 133.71 195.40 31.57
B. Supply & installation of equipment 718.75 122.27 841.02 85.46
C. Environmental monitoring 0.62 0.56 1.18 52.54
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D. Project management and wrap up Insurance
29.00 20.64 49.64 58.42
Total base cost 810.05 277.18 1,087.23 74.50 Physical contingency 81.01 27.72 108.73 74.50 Price Contingency 26.73 15.24 41.97 63.69 Total project cost 917.79 320.14 1,237.93 74.00
Table 2.4: Sources of financing in million UA equivalents
Sources of financing FC costs LC costs Total Costs
% total
ADB Group 215.93 0.00 215.93 17.44 WB Group 370.17 0.00 370.17 29.90 KFAED 126.60 0.00 126.60 10.23 AFSED 126.60 0.00 126.60 10.23 EEHC 78.49 320.14 398.63 32.20 Total project cost 917.79 320.14 1237.93 100
Table 2.5: Project cost by category of expenditure in million UA equivalents
Categories of expenditure FC costs LC costs Total Costs
%of Category
Works 61.69 133.71 195.40 15.78 Goods (Supply & Installation) 719.37 122.83 842.20 68.03 Services 29.00 20.64 49.64 4.01 Total base cost 810.05 277.18 1,087.23 87.83 Physical contingency 81.01 27.72 108.73 8.78 Price Contingency 26.73 15.24 41.97 3.39 Total project cost 917.79 320.14 1,237.93 100.00 Table 2.6: Expenditure schedule by component [amounts in million UA equivalents] Components Yr1 Yr2 Yr3 Yr4 Yr5 Yr6 Total A. Civil Works 3.60 30.95 49.83 50.83 35.15 24.97 195.33 B. Supply & installation of equipment 15.80 133.21 214.49 218.78 151.27 107.47 841.02 C. Environmental monitoring 0.02 0.19 0.30 0.31 0.21 0.15 1.18 D. Project management & wrap up Insurance 0.93 7.86 12.66 12.91 8.93 6.34
49.63
Total base cost 20.42 172.21 277.28 282.83 195.56 138.93 1,087.23
2.5. Project’s target area and population 2.5.1 The project site is in Ain Sokhna in Ettaqa District, Suez Governorate, 52 km south of the city of Suez and 112 km east of Cairo. The direct beneficiaries of the project outcome will be the national population at large (with an electricity coverage rate of 99.3%) given that the power generated from the plant will feed into the national grid through the UPS. This will hence mean that both urban and rural populations will benefit from the incremental power resulting from the project. Availability of reliable power supply will therefore benefit economic sectors (industrial, agricultural, commercial, etc.) throughout the country. Providers of social services especially schools and health facilities especially those related to vaccine cold chains, etc. will stand to benefit from the increase availability of power supply. In turn a boost to growth in the said sectors will generate employment for both men and women in the country. It is estimated that, after completion, the plant will employ between
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330 – 680 people for operation. In addition, sub-contractors for various services and maintenance work will also benefit from the plant during operation. 2.5.2 At project level, during implementation, the project will directly benefit people who will seek employment at the construction site. It is estimated that as many as 1500 and 3000 people will be employed at the peak of construction. Contractors and subcontractors will also benefit from the project. Suppliers of various goods and services will benefit from the project. Given the nature of the technology to be utilised, local suppliers of steel related components, inputs and raw materials of the plant will stand to benefit from the erection of structures. Consultants will also benefit from provision of supervisory services and related design tasks. Overall EEHC and EDEPC will benefit from the project by acquiring a new asset which will add on to their operational viability.
2.6. Participatory process for project identification, design & implementation 2.6.1 This project is part of the priorities of Government as reflected in the 6th National Economic Development Plan and the energy sector strategy (2007/12). Interests of stakeholders (communities, government agents, NGOs, civil society) were considered during design, planning and development of the project through consultations conducted as part of ESIA study. The consultations were organized at Suez Governorate, public meetings (July 2 and Aug. 6, 2008) and through the press (including Arabic language). 2.6.2 During the preparation of the ESIA-Report for local permitting requirements, ECG, EEHC and EDEPC undertook consultations with a variety of organizations to assist them in the identification of environmental and social concerns and the overall development of the project. The purpose of these consultations was primarily to provide information regarding the project, identify published and non-published sources of relevant data and information relating to the site and surrounding area, obtain views on the scope of the project, and open channels for ongoing discussions. These stakeholders included the Egyptian Environmental Affairs Agency (EEAA), the Suez Governorate, the District Council of Ettaqa Zone, the Egyptian General Authority for Shore Protection, the Hydraulics Research Institute and local population leaders, fishermen on the Suez area and General Authority for Fish Resources Development and some active NGOs in Suez zone, namely the Environment Protection Society, El-Kheir Society, Specific Federation of Civil Societies in Suez and Association of Tourism Investors in Suez. 2.7. Bank Group experience, lessons reflected in project design 2.7.1 The Bank has supported the expansion of the power sector in Egypt through financing the development of seven power stations, one transmission project and two rural electrification projects. The Bank also provided grant funds for the studies of solar heat and conservation and the Egypt-Zaire power interconnection with the Grand Inga Hydropower site. An evaluation of Bank-supported projects in the power sector reveals that the projects were consistent with the country’s overall development plans. The development objectives of the projects were met as a result of the projects achieving their planned outputs and deliverables. Indeed, the projects have been effective in making a significant contribution to the development of the main power infrastructure considered to be an engine for Egypt’s socio-economic development.
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2.7.2 The appraisal of the proposed project has incorporated lessons learnt from the Bank’s past interventions in Egypt. In general, power projects financed by the Bank in Egypt have been implemented within the estimated time frame and costs. However, the implementation of the two projects recently approved by the Bank indicates that the estimated costs are lower than the actual costs with some components being underestimated as much as 40%. The main cause of this underestimation is due to the fluctuation of the cost of fuels, equipment and materials. The cost estimate of the proposed project has taken this fact into account. Furthermore, the procurement is done through a multi package system which leads to lower equipment prices, guaranteed technical parameters from equipment manufactures and hence maintaining high quality products, higher equipment availability and efficiency. 2.7.3 A country portfolio performance report (CPR) was submitted to the Board in September 2008.3 It identifies the following major problems affecting smooth implementation of some of the ongoing projects in the country which included: i) project effectiveness’ delays, ii) lack of understanding of Bank’s rules of procedures for procurement and disbursement and iii) non observance of reporting requirement. However, due efforts made by both the Bank and the government progress has been made towards mitigating these problems. For instance, the delay in effectiveness has been reduced and overall assessment of ongoing projects is considered satisfactorily with an average rating of 2.47 compared to the 2005 rating of 2.02. The ongoing power project was rated 2.9 in the CPR and the company regularly submit progress report. With regards to the energy sector, EEHC is very familiar with Bank’s policies and procedures. In order to speed up implementation, the Bank has granted advanced procurement actions to the company for the component that lies in the critical path. The active involvement of country field office during project preparation and appraisal as well as in the follow up process will bring significant improvement in the performance of not only the project, but also the whole portfolio. 2.8. Key performance indicators The key indicators will be the installed capacity at the new power station, the timely completion within budget, and the amount of power generated into the national grid. The source of data to confirm these indicators will be EEHC’s statistical reports. The progress during implementation will be monitored by the establishment of the project implementation team, timely commencement of the works, regular disbursements, timely submission of quarterly progress and environmental monitoring reports and annual audit reports.
III – PROJECT FEASIBILITY
3.1. Economic and financial performance Table C.1: key economic and financial figures FIRR, FNPV (base case, 5%) (7%, LE 6;324.99 Million) EIRR, ENPV (base case, 10%) (13%, LE 6,648.22 Million) The project is financially and economically feasible on base cases and other sensitivity analyses scenarios and is commendable for implementation. The FIRR is estimated to be 7% which is greater than the Weighted Average Cost of Capital (3.76%). The EIRR is estimated to be 13% which is greater than the Opportunity Cost of Capital in Egypt
3 ADF/BD/WP/2008/76 (26 august 2008)
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(10%). Moreover, the sensitivity analyses at different scenarios (costs and benefits increase and decrease by 5% and 10% respectively) give an FIRR ranging from 5% to 7.3% and an EIRR ranging from 12% to 16%. 3.2. Environmental and Social impacts Environment 3.2.1 This project is Category 1 as per the Bank’s Environmental and Social Assessment Procedures (ESAP, 2001) due to the size of the plant which exceeds generation capacity of 30 MW. A full ESIA Summary was posted on the Bank’s Public Information Centre on 6/08/08 with reference ADB/BD/IF/2008/184. 3.2.2 The key environmental issues associated with the plant include: emission of oxides of nitrogen to the air; generation and disposal of liquid effluents including cooling water; and emission of noise. The assessment of the potential impacts are within the acceptable limits of Egyptian and World Bank pollution abatement guidelines and no significant environmental impacts will occur on the ambient air quality or the aquatic environment. The total cost for the mitigation and monitoring is estimated as $2.18 Million. Although the project in not expected to trigger major social impacts, measures have been put into place to avoid or minimize any negative impacts that may potentially occur. 3.2.3 The Ain Sokhna power plant Assistant Plant Manager, who is responsible for the Environment, Safety and Quality Assurance program for the plant, will have full responsibility for implementing and supervising the Environmental and Social Management Plan (ESMP). This role includes ongoing communication with local industrial and commercial interests, local authorities and other interested parties. An “open door” policy will be adopted to allow stakeholders to voice ongoing concerns. All issues have been taken into account and addressed in the Environmental and Social Impact Assessment (ESIA) through assessment and the inclusion of mitigation, management and monitoring requirements which are detailed within the ESMP. 3.2.4 The ESIA has evaluated the potential environmental impacts during construction and operation of the proposed power plant. In particular, the potential impacts of the flue gas emissions to the air, generation and disposal of liquid effluents including cooling water; and the emissions of noise have been assessed using modelling techniques, which include consideration of the ambient background environment and the characteristics of the releases or emissions, and predicts the potential impacts which may occur. The assessment indicates that no significant environmental impacts will occur as a result of the construction or operation of the power plant and, when taken together, the overall environmental and social impact will not be significant. Climate Change 3.2.5 Natural gas has been selected as the main fuel for the power plant. Compared to other fossil fuel generating technologies, gas fired steam generators have relatively low emissions of carbon dioxide (CO2), moderate emission levels of nitrogen oxides (NOx) and the lowest emission levels (almost traces) of sulphur dioxide (SO2) and particulates. For power generation processes, CO2 is the key emission of concern, as methane and CFCs are not
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emitted by power plants and none of the other greenhouse gases are emitted in sufficient quantities from power generation to be considered critical in terms of the greenhouse effect. 3.2.6 Gas fired steam generators as proposed in this projects have relatively low emissions of carbon dioxide (CO2) as compared to oil fired plants. Emissions of carbon dioxide from the proposed plant are estimated to be up to 3,500 kilotons of CO2 per year assuming that the plant operates for the whole year and consumes around 120 tonnes of gas per hour. The plant as designed will save at least 1.3% of carbon dioxide emissions (about USD 182,000.00) per year as compared to oil fired plants. The saving is even more favorable compared to coal fired plants. Fuel combustion will account for most of Egypt’s CO2 emissions from all sources. Hence, the power plant, as proposed, will emit up to around 1.59% of the total Egyptian CO2 emissions in 2004/2005. 3.2.7 Moreover, in response to the Egyptian energy policy that calls for relying more on renewable energy for meeting the increasing demand for electricity and mitigating causes of climate change, a number of donors have been providing support to the sub-sector. The recent major donor-supported projects in this field are the Zafarana I to IV Wind Power Project (160 MW) by KfW, Spain and Denmark; Zafarana Wind Power Plant Project (120 MW) by JBIC; and Kureimat Integrated Solar Combined Cycle Power Plant (150 MW) by JBIC and GEF. In addition, KfW is supporting hydro-power generation projects including construction of the new Nagaa Hamadi and Assuit Barrages that will be used to generate 64 MW and 32 MW of electricity respectively. 3.2.8 In addition, the Supreme Council of Energy in Egypt, headed by the Prime Minister, has approved an ambitious plan to provide 20% of electricity generation from renewable energy by 2020, including 12% contribution from wind energy. This translates into about 7200 MW of additional wind capacity by 2020, or some 600 MW per year. Two thirds of this capacity is to be provided by private wind farms (4800 MW), and the remaining one third (2400 MW) by government through the New and Renewable Energy Authority (NREA). The World Bank is currently providing a technical assistance to help NREA prepare tender documents to invite the private sector to implement wind power projects through ICB. Land will be made available to the investors through concessional lease agreements. The financial risk for investors will be reduced through guaranteeing a long term power purchase agreement. Gender 3.2.9 The project will have positive impacts on gender empowerment at the national and local level. Nationally, the regular supply of affordable electricity will benefit households, schools, health service facilities and income generating activities. Reliable electricity supply will enable the growth of industries which mostly employ women such as textile manufacturing, food processing, etc. At the local level, the project will provide employment for women from Suez during its operation phase, mostly in the areas of administration and general management. In line with employment trends in other EDEPC affiliated power plants, female employment is anticipated to amount to 7% of the total new jobs created, most of which will be highly technical. During construction phase, female employment will be negligible due to the nature and location of the project. EEHC adheres to equal opportunity practices, in accordance with Egyptian Labour Law, and has taken steps to mainstream gender by appointing a board member as an equal opportunity focal point. This is reflected by the percentage of women employed within EEHC, 33%, which exceeds the 22.97%
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nationwide female participation rate in labour. Furthermore, many hold senior managerial positions. Social 3.2.10 The power plant will be located in Suez governorate, considered one of the most developed governorates in Egypt, ranking second by government, with real GDP per capita of PPP$ 5790.9 in 2006, a combined literacy rate of 81.4%, life expectancy of 71.9 years (2006) and access to piped water and sanitation for 99.3% and 89.2% of households respectively and access to electricity to 99.3% of households4. The labour force in Suez governorate, approximately 30.6% of the population, is primarily concentrated in the services sector (73.5%), followed by the industrial sector (25%) with very few working in agriculture 1.4%5. Almost a quarter of the labour force is employed by the government and the public sector. Therefore it is expected that staff for Ain Sokhna power plant will be locally recruited, primarily from the Suez governorate. 3.2.11 It is anticipated that the power plant will provide a net positive socio-economic impact through the provision of affordable electricity to the larger population to meet the electricity needs of households, manufacturers, agribusinesses, tourist establishments, schools, hospitals, and others, thereby contributing to the enhancement of the quality of life and living standards of the population at large. This will be particularly valuable for the Ain Sokhna region itself, with its expanding tourism and resort areas, the developing industrial zone as it seeks to attract additional investors, and the Sokhna port which is being developed to become a major commercial hub in Egypt. 3.2.12 In addition there will be direct and indirect employment opportunities during the construction and operation phases. During construction, temporary employment will be availed to consultants, contractors, engineers, labourers, handymen and others skilled workers. Indirect jobs, mostly unskilled labour, will also be created as a result of the needs of those on the plant, such as transportation, food, etc. During construction, it is expected that on average 1500-3000 people will be employed of which 80% will be locally recruited. During operation, it is anticipated that EDEPC staff will be relocated to the plant, in addition to new hires. The use of local labour from the neighbouring Suez area (95% during construction), will maximize these positive impacts through the development of the local skill base and will also generate increased demand for local services, materials and products. This will translate into a cash injection of US$1.9 million per year through wages. In addition the plant is expected to employ approximately 330-680 staff during operations.
4 UNDP National Human Development Report for 2008. 5 UNDP National HDR 2008
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3.2.13 The project is not expected to result in significant negative impacts either during construction or during operation. There is no resettlement envisaged nor will there be need for compensation. The project land has been secured. In case of resettlement, EEHC has drawn up a Resettlement Policy Framework in line with World Bank policies and guidelines on resettlement and compensation. There are no suspected communicable diseases such as HIV/AIDS (with a national prevalence rate of less than 1%), malaria, etc. that are likely to affect workers. The risk of major accidents at the plant was determined to be minimal and mitigation measures which are proposed in the ESMP will reduce the risk to the lowest practicable limit.
VI. IMPLEMENTATION
4.1 Implementation arrangements 4.1.1 The Egyptian Electricity Holding Company (EEHC) will be the Executing Agency and beneficiary of the proposed loan. EEHC has the technical and managerial ability to implement the project as demonstrated by the successful implementation of similar thermal power station projects. The direct implementation of the project will be under the responsibility of the East Delta Electricity Production Company (EDEPC), a subsidiary of EEHC. A Project Implementation Team (PIT) has been established from the existing staff of the EDEPC and is under Managing Director of Power Plants Projects Department. It is working closely with the Consultant overseeing the implementation of the project. The finance department of EEHC will be responsible for preparing financial statements and reports. 4.1.2 The Project Implementation Team (PIT) will closely work with the Consultant recruited by EEHC to supervise and monitor the implementation of the project. The PIT comprises a Project Director, 1 Mechanical Engineer, 1 Electrical Engineer, 1 Instrument and Control Engineer, 1 Civil Engineer, 1 Environmentalist, 1 Finance Expert and 1 Procurement Expert. 4.1.3 Procurement and financial management arrangements: The Bank standard documents will be used during the tendering process. As in the case of two ongoing power projects, a two envelope tendering system will be used. At the request of the Borrower, the Bank has authorized EEHC to proceed with Advance Procurement Action (APA) pending Board approval of the project. Information Note on approval of the APA has been distributed to the Board (No. ADB/BD/IF/2008/184). The package financed by the Bank will be procured through International Competitive Bidding (ICB) in accordance with Bank’s rules of procedure for procurement of Goods and Works. A procurement plan has been prepared and agreed to. Direct disbursement method will be used for the ADB financed component. However, other Bank disbursement methods will be used if necessary.
4.2. Monitoring 4.2.1 The Project will be implemented over a period of 68 months. The contract for supervision and management which is financed by EEHC has already been awarded. According to the current plan the project is expected to be completed in June 2014. The critical dates for the implementation of the project are given in Annex B.9 table B.9.1.
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4.2.2 The Project will be launched in the first quarter of 2009 and will be field supervised from headquarters at least once a year from 2009 through to 2014. The Bank supervision will also involve desk supervisions. The Egypt Field Office (EGFO) will also carry out field supervisions once a year or on a need basis. The coordination of the missions will be done by the Ministry of International Cooperation in collaboration with the Executing Agency and EGFO. The field missions will be undertaken in accordance with the tentative schedule presented in Annex B.9 table B.9.2.
4.2.3 The PIT, in liaison with the consultant, will prepare and submit to the Bank quarterly progress reports. In addition an audit report will be prepared and submitted to the Bank six months after the end of every financial year. During implementation, monitoring of ESMP will be done by EDEPC’s Environment Division through PIT and quarterly environmental reports will be prepared by the resident engineer. Copies of the reports will be submitted to EEHC, ADB, World Bank and on request to EEAA. During operation monthly reports will be prepared by EDEPC (Plant Environmentalist) and submitted to EEHC and EEAA, accordingly. 4.3. Governance 4.3.1 EEHC was established in 1998, by Law 18/1998 to replace the Egyptian Electric Authority (EEA). The Holding Company was subsequently incorporated in 2000 as a wholly state owned joint stock company under the Companies Act. The principal responsibility of EEHC is to provide for generation, transmission and distribution of electricity in Egypt through its 15 subsidiaries, five of which are in generation, one in transmission while nine are in distribution. 4.3.2 The EEHC’s Board of Directors include a representative each from the Ministry of Electricity & Energy, Ministry of Planning, Ministry of Finance, and Ministry of Petroleum, and the Central Bank of Egypt; five professionals with expertise in different fields; and one representative from the labour union. The Board, which holds two monthly meetings, deliberates on policies and provides strategic direction to the Company’s operations; reviews performance of the Holding Company and its subsidiaries, including the implementation of the capital and operational budgets as well as approves the consolidated financial statements. However, final authority for approval of the Company’s annual budget rests with the Council of Ministers. 4.3.3 The EEHC is committed to good corporate governance. Under the Chairman of the Board of Directors is a Board member responsible for financial and administrative matters. The internal control environment at EEHC and its subsidiaries is adequate, with effective prior review of expenditures and commitments provided by the compliance sections of the respective accounting departments. Responsibility for external audit of EEHC’s financial statements is statutorily vested in the Central Auditing Organisation which carries out annual audits for all parastatals entities in the country. 4.3.4 The EEHC and EDEPC produce annual financial reports which are audited by the CAO. The CAO is mandated to conduct financial, performance and legal audits. CAO’s audit reports are submitted to Parliament where they are studied, scrutinized and recommendations for actions made. At project level, the PIT will include a dedicated accountant to maintain
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accounting and financial records for auditing in accordance with international accounting standards acceptable to the Bank. 4.3.5 Procurement: All Bank funded components will be procured through International Competitive Bidding (ICB) in accordance with Bank’s rules of procedure for procurement of Goods and Works. A procurement plan has been prepared and agreed to. The Procurement notice for each package will be advertised in the UN Development Business. In addition, the Bank standard documents will be used during the tendering process. During the bidding process, the Executing Agency will submit to the Bank for review and approval the proposed bid documents, bid evaluation reports and shall seek the Bank’s prior concurrence should it require the extension of bid validity for completing the bid evaluation process. Further, the terms and conditions of the contract will not materially differ from those on which bids were received. The EEHC shall maintain separate accounts that permit the identification of expenditures by category and financing source for all components of the project. Detailed project accounts shall be included in the quarterly progress reports (QPRs) to be submitted to the Bank. The project accounts will be audited at the end of each financial year and submitted to the Bank no later than six (6) months after the close of the financial year. The direct disbursement method will be utilized for payment of package financed by the Bank. 4.3.6 With regards to the governance of energy sector as a whole, Egypt has emerged as a strong supporter of transparency and reform in oil and gas sub sector. The People’s Assembly of Egypt voted to ratify the UN Convention on Anti-Corruption in December 2004 and the country deposited the instrument of ratification on 25 February 2005, to be the 18th country to ratify the convention. In addition, the French government has been working with the Ministry of Justice (MOJ) to further enhance Egypt’s participation in implementing the requirements of the Convention against Corruption. This was further given impetus by the ongoing energy forum between the EU and MENA states where oil and gas revenues transparency features prominently because of the EU Transparency Obligation Directive. In fact, the directive requires EU states to promote public disclosures of payment to government by extractive companies listed in the European stock exchange. Furthermore, a National Committee on Transparency and Integrity was established in 2007 to support efforts to combat corruption and enhance transparency and accountability in public affairs. It involves both administrative and civil society representatives and acts to support the implementation of the UN Convention on Anti-Corruption. 4.4. Sustainability 4.4.1 GOE’s commitment to the project and its objectives is strong as the project is absolutely necessary to secure the provision of energy supply in a sustainable manner through investment in new generation capacity. Evidence of this commitment is manifested in the accelerated way funds have been secured from major donors to the sector, the hiring of an engineering firm for project supervision and management. The project is least cost and part of the generation planning for the period 2007 to 2014. Furthermore, the staff has sufficient experience in operating and maintenance of similar plants. 4.4.2 According to the audited financial statements of the Company, the operating revenues have increased from LE 81,500 thousand to LE 647,667 between 2003/04 and 2006/07 in line with growth in electricity demand and regular annual tariff adjustments. During these periods, EEHC’s financial performance has recorded strong improvements marked by a reduction in the operating ratio down to 23% in 2006/07, from the 144% level of 2003/2004. As a result,
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the rise in income from operations have been significantly strengthened over the period, thereby helping the Company to meet some of its financial obligations. The company’s rates of return on assets have also reached the level of 5.4% in 2006/07 from the level of (0.2%) in 2003/04. This indicates that the company has shown a tremendous improvement in generating revenue by effectively utilizing its assets. Besides the regular annual adjustments in the tariff structure, the improvement of the financial performance of EEHC is also a reflection of better cost management in the rise of the cost of fuel, materials and other service inputs. Therefore, the financial sustainability of the project, as well as the long-term institutional sustainability of EEHC is not at risk as the company is currently well poised to generate adequate revenues to support its continued development. Tariffs 4.4.3 The tariff rates in Egypt are classified under 6 end-user customers, namely, power services on very high voltage, high voltage, medium and low voltage, residential, commercials and public lighting. According to the 2007 tariffs establishment, the tariff rates are also varying among different end-users. For instance, for the very high voltage and high voltage the maximum rates ranges from Piasters (Pt) 11.9 per KWh and Pt 16.1 per KWh respectively. For residential end users it ranges between Pt 0.5 to Pt 38.0 per KWh. It’s worth noting that residential customers are divided into 6 categories depending on level of electricity consumption in order to protect the most vulnerable group of society (0-50 KWh; 50-200 KWh; 200-350 KWh; 350-650 KWh; 650-1000 KWh; and above 1000 KWh). 4.4.4 Since 2004 Government has embarked on a medium term strategy that is leading to the financial recovery of the sector, placing it on a path of long-term sustainability. The strategy involves a progressive return to full-cost recovery tariffs, better disconnection policy and clearing of government arrears. In this respect Government approved an 8% tariff adjustment in 2004 and a further 5% annual tariff adjustments up to FY2009/10, during which period Cabinet approval will not be required before tariff changes are effected. Government has authorized EEHC to disconnect public sector consumers who fail to pay their bills and has at the same time stepped up the payment of outstanding accounts receivables of Government institutions and related bodies. By introducing full cost recovery tariffs progressively over a number of years, the strategy will ensure that tariff changes do not adversely affect economic performance and welfare in a dramatic way. 4.4.5 Owing to the low cost of gas in Egypt, in general, the current tariff rates are relatively low compared to other neighbouring countries. . However, as the cost of gas increases in the international market, there is pressure for the government to increase the cost of gas and thus increase the cost of electricity to consumers. The government is aware of this fact and in this regard has drafted a New Electricity Law creating a regulatory agency (the Egyptian Electric Utility and Consumer Protection Regulatory Authority - EEUCPRA) aimed at promoting investments in the electricity sector by ensuring competition while at the same time taking care of the consumers. The new law allows the regulator to authorize revision of tariffs on an annual basis, adequately enforce cost recovery principles geared towards ensuring sustained revenue growth and adequate returns to investments. 4.4.6 The New Electricity Law has been sent to Parliament for approval and aims at creating an enabling environment for the development of an electricity market. It entails among other things: i) the establishment of an electricity market which is based on free competition and transparency; ii) the unbundling of the transmission system and the
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establishment of the transmission system operator with Third party access; iii) the strengthening of the regulatory authority; iv) the adoption of end user subsidy for low income and lifeline customers and not industry subside with a five-year plan put in place to reduce subsidy to the residential sector and medium and small industries; v) the support of power generation from renewable sources through the adoption of several mechanisms such as competitive bids and feed-in tariff; vi) the support of energy efficiency and demand side management (DSM) through several measures including DSM bids, mandatory energy officers and energy directory for facilities with contracting load above 500 kW, phasing out programs for inefficient equipment, etc.
Private sector participation 4.4.7 The Government of Egypt has gone a long way in creating conductive business environment to enhancing and strengthening the role of the private sector in the economy. Already, the government has allowed private independent operators through introducing the BOOT system to operate in the electricity sector. Indeed, since 1997, the GOE has made significant changes in the policy and legal framework aimed at restructuring the electricity sector to attract investment and revamp the sub-sector. Law No. 164 was passed in the year 2000 transforming the incumbent, vertically integrated state utility, the Egyptian Electricity Authority (EEA) into an asset holding company, the EEHC. The law also allows private equity holding in the affiliated companies up to maximum shareholding of 49% but all assets of the new companies are currently owned by the state through the EEHC. There are presently three (3) private sector operators in generation only, three (3) private operators in distribution only, and nine (9) in both generation & distribution and many more hold licenses for wind and solar energy generation projects. Since the beginning of the year 3 licenses have been granted in the distribution and one (1) in generation. 4.4.8 Although there was pause in the privatization, drive work is under way in a new electricity act which will empower EEUCPRA to oversee tariff setting and control that will be cost recovery while retaining life line tariff for the lower consumer groups. Hence the high subsidy on the current tariff will be gradually reduced and in fact has already been reduced on high voltage customers. Also more pragmatic power purchase agreements will be entered into as the current ones were too costly to the government because all the foreign currency risk was on the government. Some customers will be able to enter into direct agreement with private power providers. The Act is awaiting approval of parliament before it can enter into operation. 4.4.9 The creation of an enabling business environment through separating the regulatory body from executive functions as well as the removal of subsidies in the electricity sub-sector have made it easier for the various electricity utilities (generation companies, transmission company and distribution companies) to operate on full cost recovery basis. This has further created a sense of competition among the companies to deliver their services more efficiently and cost effectively than it used to be in the past when only one public service provider was involved. 4.5. Risk management 4.5.1 The major risks associated with the project are (i) implementation delays, (ii) high increase in fuel and equipment costs, and (iii) high staff turn-over. Mitigation measures include: (a) EEHC’s experience in implementing projects of this type and size, (b) the major
17
components being procured on turnkey basis, (c) the engagement of a supervision consultant with sufficient experience, (d) close supervision by the Bank during project implementation, (e) EEHC training more staff and improving the conditions of service, (f) long term contracts for gas supplies and (g) inclusion of contingencies in cost estimates. 4.5.2 The major risks during operation of the plant are failure to operate, and maintain the plant in an environment-friendly and sustainable manner. These are mitigated by putting in place a more predictable mechanism for regular adjustment of the electricity tariff to ensure that (i) tariffs reflect changes in the real cost of supply, and (ii) EEHC has a revenue base robust enough to meet its future debt service obligations and enough funds to operate and maintain the system.
4.6. Knowledge building 4.6.1 In the proposed project, EEHC intends to replace the sub critical boilers with supercritical boilers which are more efficient and of the latest technology. Although similar boilers have been installed in Europe and other highly industrialized world, they are new to the African region. Therefore, during the installation of the equipment EEHC staff will be trained on the job by the contractors and the consultant. The Bank staff involved in the project will also gain access to this technology which could be applied to other regional member states. 4.6.2 The ESIA and the ESMP for the project conducted by EEHC conform to international best practice on Health, Safety and Environment (HSE) standards. Implementation of the ESMP including the monitoring system will allow the EEHC to promote best international practice in operating thermal power plants. EEHC’s knowledge building resulting from the Bank’s intervention will help GOE to attract more investment in the power generation sector. In turn the Bank will also learn from the lessons learned from its planned supervision on how best to promote high HSE standards.
V – LEGAL INSTRUMENTS AND AUTHORITY
5.1. Legal instrumen:
The legal instrument for the project used is a loan which will be given to the Egyptian Government and the proceeds of the loan on-lent to EEHC on terms acceptable to the Bank.
5.2. Conditions associated with Bank’s intervention 5.2.1. Conditions Precedent to Entry into Force: The entry into force of the Loan Agreement shall be subject to the fulfilment by the Borrower of the provisions of Section 5.01 of the General Conditions Applicable to Loans and Guarantee Agreements of the ADB. 5.2.2. Conditions Precedent to First Disbursement of the Loan: The first disbursement of the loan shall be subject to Borrower having submitted to the Bank, a Subsidiary Loan Agreement concluded between the Borrower and the EEHC.
18
5.2.3 Other Conditions: The Borrower shall, no later than 30 September of each year from 2009 to 2014 inclusive, provide evidence acceptable to the Bank of the implementation of the ESMP.
5.3. Compliance with Bank Policies 5.3.1 This project complies with all applicable Bank policies.
VI – RECOMMENDATION
Management recommends that the Board of Directors approve the proposed loan of UA 215.93 million to the Government of Egypt for the purposes and subject to the conditions stipulated in this report and the Loan Agreement.
19
Appendix I
Year Egypt AfricaDevelo-
pingCountries
Develo-ped
CountriesBasic Indicators Area ( '000 Km²) 1 001 30 307 80 976 54 658Total Population (millions) 2007 75.5 963.7 5 448.2 1 223.0Urban Population (% of Total) 2007 42.7 39.8 43.5 74.2Population Density (per Km²) 2007 75.4 31.8 65.7 23.0GNI per Capita (US $) 2006 1 350 1 071 2 000 36 487Labor Force Participation - Total (%) 2005 38.8 42.3 45.6 54.6Labor Force Participation - Female (%) 2005 33.2 41.1 39.7 44.9Gender -Related Development Index Value 2002 0.634 0.486 0.694 0.911Human Develop. Index (Rank among 174 countries) 2005 112 n.a. n.a. n.a.Popul. Living Below $ 1 a Day (% of Population) 2000-04 16.7 34.3 … …
Demographic IndicatorsPopulation Growth Rate - Total (%) 2007 1.8 2.3 1.4 0.3Population Growth Rate - Urban (%) 2007 2.2 3.5 2.6 0.5Population < 15 years (%) 2007 32.7 41.0 30.2 16.7Population >= 65 years (%) 2007 5.3 3.5 5.6 16.4Dependency Ratio (%) 2007 60.6 80.1 56.0 47.7Sex Ratio (per 100 female) 2007 100.2 99.3 103.2 94.3Female Population 15-49 years (% of total population) 2007 25.9 24.2 24.5 31.4Life Expectancy at Birth - Total (years) 2007 71.3 54.2 65.4 76.5Life Expectancy at Birth - Female (years) 2007 73.6 55.3 67.2 80.2Crude Birth Rate (per 1,000) 2007 24.2 36.1 22.4 11.1Crude Death Rate (per 1,000) 2007 5.6 13.2 8.3 10.4Infant Mortality Rate (per 1,000) 2007 29.3 85.3 57.3 7.4Child Mortality Rate (per 1,000) 2007 33.8 130.2 80.8 8.9Total Fertility Rate (per woman) 2007 2.9 4.7 2.8 1.6Maternal Mortality Rate (per 100,000) 2005 130.0 723.6 450 8Women Using Contraception (%) 2005 59.2 29.9 61.0 75.0
Health & Nutrition IndicatorsPhysicians (per 100,000 people) 2005 227.3 39.6 78.0 287.0Nurses (per 100,000 people) 2005 283.3 120.4 98.0 782.0Births attended by Trained Health Personnel (%) 2005 74.1 50.4 59.0 99.0Access to Safe Water (% of Population) 2006 98.0 62.3 80.0 100.0Access to Health Services (% of Population) 2004 99.0 61.7 80.0 100.0Access to Sanitation (% of Population) 2004 70.0 45.8 50.0 100.0Percent. of Adults (aged 15-49) Living with HIV/AIDS 2005 0.10 4.7 1.3 0.3Incidence of Tuberculosis (per 100,000) 2005 25.0 300.7 275.0 18.0Child Immunization Against Tuberculosis (%) 2006 99.0 83.7 85.0 93.0Child Immunization Against Measles (%) 2006 98.0 75.4 78.0 93.2Underweight Children (% of children under 5 years) 2005 6.0 28.6 27.0 0.1Daily Calorie Supply per Capita 2004 3 286 2 436 2 675 3 285Public Expenditure on Health (as % of GDP) 2005 2.3 2.4 1.8 6.3
Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2006 102.0 96.4 91.0 102.3 Primary School - Female 2005 98.2 92.1 105.0 102.0 Secondary School - Total 2006 86.0 44.5 88.0 99.5 Secondary School - Female 2005 83.0 41.8 45.8 100.8Primary School Female Teaching Staff (% of Total) 2005 55.0 47.5 51.0 82.0Adult Illiteracy Rate - Total (%) 2007 39.4 33.3 26.6 1.2Adult Illiteracy Rate - Male (%) 2007 29.6 25.6 19.0 0.8Adult Illiteracy Rate - Female (%) 2007 49.3 40.8 34.2 1.6Percentage of GDP Spent on Education 2006 … 4.5 3.9 5.9
Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 2005-07 2.8 6.0 9.9 11.6Annual Rate of Deforestation (%) 2000-07 -3.4 0.7 0.4 -0.2Annual Rate of Reforestation (%) 2000-07 2.0 10.9 … …Per Capita CO2 Emissions (metric tons) 2005-07 2.2 1.0 1.9 12.3
Sources : ADB Statistics Department Databases; World Bank: World Development Indicators; last update :UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports
Note : n.a. : Not Applicable ; … : Data Not Available;
COMPARATIVE SOCIO-ECONOMIC INDICATORSEgypt
July 2008
Infant Mortality Rate ( Per 1000 )
0102030405060708090
100
2002
2003
2004
2005
2006
2007
Egypt Africa
GNI per capita US $
0
500
1000
1500
20002001
2002
2003
2004
2005
2006
Egypt Africa
Population Growth Rate (%)
0.0
0.5
1.0
1.5
2.0
2.5
2002
2003
2004
2005
2006
2007
Egypt Africa
Life Expectancy at Birth (years)
111213141516171
2002
2003
2004
2005
2006
2007
Egypt Africa
20
Appendix II
ADB PORTFOLIO IN EGYPT
Name Type Rating Amount (UA)
million Date approved
Energy (Power) Sector 1. El Kureimat Comb. Cycle Plant Loan 3.0 163.89 27 July 05 2. Abu Qir Steam Power Plant Loan N.A 225.47 14 Nov 07 Total Approvals 389.36 Finance Sector 1. Financial Sector Reform Programme Loan 2.75 316.13 26 July 06 Total Approvals 316.13 Social Sector
Loan 55.10 1. Social Fund III: Support to SMEs Grant
N/A 0.60
11 October 06
Loan 11.00 2. Health Sector Reform Program Grant
2.27 1.00
28 Oct 98
Total 67.70 Private sector 1. Damietta Loan 3 91.26 4 Dec 07 2. SME Support Project (2nd LOC to
NBE) Loan 2 121.69 12 Oct 05
3. Windsor Garden City Hotel Loan 9 8.52 21 May 97 TOTAL APPROVALS 221.47
21
Appendix III
Key related projects financed by the Bank and other development partners in the country
Name of Project Power to be Generated (MW)
Financier(s) Amount USD million
Year to be commissioned
Cairo North II(CC)) 750 OPEC Fund/BNP/EIB 286.50 08 Talkha (CC) 750 AFSED/KFAED/EIB 341.40 08 El Kureimat II (CC) 750 EIB/OPEC Fund 362.60 08 El Kureimat III 750 AfDB/NBE 448.3 09/10 NubariaIII (CC) 750 AFSED/EIB/AHLY United Bank 509.8 09/10 Tebbin (ST) 700 WB/NBE/OPEC Fund 737.4 09/10 El Kureimat (Solar thermal)
140 JBIC/GEF 09/10
Sidi Krir (CC) 750 EIB/NBE/CIB 710.00 09/10 El Atf (CC) 750 AFSED/KFAED/EIB/NBE/CIB 583.60 09/10 Cairo West (ST) 700 AFSED/KFAED/OPEC Fund/NBE 735.80 10/11 Nuweba (CC) 750 EIB/AfDB 833.30 11/12 Abu Qir(ST) 1300 AfDB/IDB/KFAED/AFSED 1,702.10 12/13 Ain Sokhuna (ST) 1300 ADB/WB ,AFSED, KFAED 2189.70 13/14 * All project include customs and taxes
22
Appendix IV
Map of the Project Area
23
A. Country’s Development Agenda, Sector Brief and donor’s Support A.1 Egypt’s expanding economy heavily relies on the availability of reliable and cheap electricity to function efficiently. In the recent past the electricity demand has continued to grow at unprecedented rate exceeding an average of over 6.5% per annum. The current trend indicates that this rate will continue to grow at 7% from 2008 up to 2012. This growth correlates with the rate of economic growth (averaging 5.3% in past five years). This in turn is being spurred by favourable macroeconomic environment being offered by a renewed momentum in economic reforms being undertaken by the country.
A.2 In order to meet the current electricity demand in the country without risking shortages, the Government of Egypt has proposed an ambitious programme that is aimed at installing a total of 7,750 MW between 2007 and 2014. This will include installation of 3,750 MW of combined cycle power plants and 4000 MW of steam power plants including the supercritical plants which are more efficient with more reduced gas emissions than the sub-critical thermal plants. The estimated investment required between 2007-2012 amounts to EGP 46.5 billion equivalent to USD 8.4 billion. The proposed project will contribute 1300 MW towards meeting the demand.
A.3 In line with the Government's move towards efficiently exploiting its substantial natural gas reserves, the primary fuel of the proposed stations will be gas while heavy oil (Mazout) will be used in case of emergency.
A.4 The Bank considers the support of infrastructure development and especially in the energy sector in Egypt as a pillar of its strategy in the country. This project is by and large a part of this strategy as it is designed to stabilise power supply in the country and meet the ever increasing demand for the manufacturing, tourism and housing and social sub-sector in the country. In addition, electricity supplied through the UPS will bring the following benefits: (i) employment creation through increased business activity as a result of reduced energy costs and increased availability, (ii) improved social service delivery in housing developments and the associated hospitals and schools, (iii) improved reliability and flexibility of the power system as a result of improved and increased generation capacity
A.5 The intervention of the Bank in this project is necessitated by the urgency with which the project is required. In addition the Bank has developed an important expertise in this field. This expertise has been developed since 1974 and strengthened by the 16 projects that have been finalized from 1974 to 2003. This project could also benefit from the synergy that could be created with the two ongoing projects6 that the Bank is financing. Finally, as the loan is required to finance part of the total costs of the project with other donors, the Bank will benefit from this project in order to further consolidate its collaboration strategy with other loans institutions and partners.
A.6 In the recent past, the key donors supporting the power sector in Egypt have been the Arab Fund for Economic and Social Development (AFESD), the Kuwait Fund for Arab Economic Development (KFAED), the European Investment Bank (EIB), the OPEC Fund and USAID. In addition, significant donor support is also provided by the Islamic Development Bank (IDB), the Japanese Bank for International Cooperation (JBIC) and KfW. The recent major power generation projects supported by those donors are indicated in the table.
6 The EL Kureimat cc power plant project and the Abu Qir 1300 MW steam power project
24
Table A.9: Donor Support in Power Generation
Name of Project Power Generated (MW) Financier 1. Kuriemat (3) 750 AfDB, NBE 2. Tebbin 700 WB/NBE, OPEC Fund 3. Nubareya (3) 750 AFSED, EIB, AHLY United Bank 4. Al-Atf 750 AFESD, KFAED, EIB , CIB 5. Abu Qir 1300 AFDB, /KFAED, KFAED, IDB 6. Ain Sokhna 1300 AFDB, WB, AFESD , /KFAED 7. Cairo North I 750 AFED, EIB, IDB 8. Cairo North II 750 EIB, OPEC ,PNB 9. Cairo West 650 AFESD, KFAED, OPECfund , NBE 10. Nubariya I & II 1500 AFESD, KFAED, EIB 11 Kuriemat (2) 750 EIB, OPEC fund 12 Sidi Krir 750 EIB/NBE/CIB 13. Talkha 750 KFAED, EIB , KFAED 14. Nuweba 750 EIB, AFDB A.7 The Ministry of International Cooperation and the MEE coordinate all donor interventions in the energy sector. There is a strong partnership among donors under the umbrella of the Donor Assistance Group (DAG), which has a number of focus groups, including that for Environment and Energy. There is active sharing of information and harmonization of donors’ position on key sector issues with a view to promoting long-term sector viability. The presence of the EGFO has enhanced coordination with other donors through participation in the DAG. At various stages of the project preparation and appraisal, consultations were held with donors active in the sector, including EIB, World Bank and KfW, on issues related to the overall conception of the project and sustainability of the power sub-sector.
A.8 The proposed project is also to benefit from support from other donors AFSED (10.23%), KFAED (10.23%) WB (29.90%), AfDB (17.44%) and the remaining 32.20% is self-financing from the Borrower.
Strategic Context
A.9 The Bank's operational strategy in Egypt for the years 2007-2011, as indicated in the Country Strategy Paper is formulated in line with Government’s development strategy and focuses, among others, on improving physical infrastructure. The Bank's strategy in the public utilities sector is aimed at assisting the Government in its efforts to expand the electricity infrastructure to support the growing economy. Bank support to the proposed project is therefore in line with both the country’s development plan and Bank Group strategy in Egypt.
25
Donors’ Support Challenges and constraints PRSP
Pillars Egypt Development Agenda By Sector By aid Modality
Infrastructure
70%
High electricity demand Reliability and flexibility of the power system
Infrastructure Macroeconomics
25%
Employment creation Improved social service delivery and human capital development
Econom
ic and social development
Increase the production of electricity by 9.1% and realize economic growth rate of 8% during the upcoming 5 years. Mobilize the required investments of USD 13.9 billion (73.9 billion LE) in the energy sectors including the electricity. Expansion of the annual load growth rate of 6.38% by The Egyptian Electricity Holding Company (EEHC) in order to meet the increased demand and maintain system reliability by the years 2007/2008 and 2011/2012, respectively.
Human Capital
5 %
Project Support
100%
Short medium term Increase generation capacity to meet
electricity demand on UPS
Poverty reduction and attainment MDGs
Economic growth and improve the standard of living of the population
Decrease Aid dependency
Long term
26
B. BACK UP OF KEY ARGUMENTS OF THE REPORT B.1 Lessons learnt
Project Date & Amount
Intervention Areas
Rating /1 Lessons Learned /2
Provision of electricity to North Sinai
**** The project generated 370GWh of electricity, 45% of which was used by El-Arish City, 12% by the rest of North Sinai and 43% by the UPS.
Poverty alleviation and
social development
***
The project has helped in the reduction of unemployment in the area, e.g. several crop processing factories have been established. The social development targets of the project may be hampered by the lack of other utilities such as water supply.
Sustainable operation of power plant
***
Sector reforms including the transformation of the public utilities into companies have facilitated the companies to introduce commercial norms in their management and operation. Nonetheless, government-controlled low tariff posed a threat to the financial sustainability of the companies. The project was designed and operated in an environmental friendly manner that was further enhanced in 1998.
El Arish Power Project
1989 – 1996
UA 53.53 million
Overall **** The project had a strategic achievement by facilitating the development of North Sinai as per government commitment.
Generation of
1200 MW to the UPS
**** Installation of large capacity units (627MW) makes them operate at low efficiency during off peak hours. A larger number of smaller capacity units is preferable.
Poverty alleviation and
social development
****
The availability of reliable and affordable electricity stimulates the growth of the key sectors of the economy with creation of employment and wealth hence poverty alleviation.
Sustainable operation of power plant
***
Continuous operation of the plant using Mazout oil resulted in higher levels of gas emissions that were not environmentally acceptable. The use of natural gas as a primary fuel in generating electricity has the dual advantage of reducing the cost of fuel and operating in an environmentally friendly atmosphere.
El-Kureimat
Power Project
1994 -1998
UA 153 million
Overall 78%
Firm commitments from the financiers at the commencement of the project should be encouraged to avoid major changes in the financing plan during implementation, which are likely to have significant impact on the completion schedule of the project.
1/ **** (75-100% Benchmarks Met); *** (50-75 % Benchmarks Met); ** (25-50% Benchmarks Met); * (0-25% Benchmarks Met from PCR or other available rating
27
B.2 Project Cost B.2.1 Detailed Project Costs
No. Component FE LC Total Million UA Million UA Million UA Million UA A Civil Works A.1 CP-102 Main civil Works 37.02 95.68 132.70 A.2 CP-107 Yard tanks - 5.61 5.61 A.3 CP-119 Offshore 24.68 16.71 41.39 A.4 CP-120 Colony - 10.66 10.66 A.5 CP-123 Site Preparation - 5.05 5.05 Sub-Total 61.69 133.71 195.40 B Supply and Installation of Equipment B.1 CP 106 Turbine Generators 191.25 21.54 212.79
B.2 CP-105 Steam Generators & Auxiliaries 231.36 46.22 277.57
B.3 Mechanical Equipment /Pipe Installation 187.55 27.82 215.37
B.4
Electrical Equipment /Instrumentation &Control Systems 29.00 12.45 41.45
B.5 Switchyard +transformers 79.59 14.25 93.83 Sub-total 718.75 122.27 841.01 C Environmental Monitoring 0.62 0.56 1.18
D Project Management/Wrap up Insurance 29.00 20.64 49.64
Total base cost 810.05 277.18 1,087.23 10% Contingency 81.01 27.72 108.72 Price Contingency 26.73 15.24 41.98 Grand total 917.79 320.14 1,237.93
B.2.2 Financing Plan by Component*
Million UA
ADB WB AFESD KFAED EEHC Total A. Civil Works 27.98 196.35 224.33 B. Supply and Installation of Equipment B.1. Turbine Generators & Condensers 215.93 25.64 241.57 B.2. Steam Generators & Auxiliaries 260.93 54.57 315.50 B.3. Mechanical Equipment /Pipe Installation 41.75 76.52 93.72 32.64 244.63 B.4. Electrical Equipment /I&C Installation 50.08 4.90 14.75 69.73 B.5. Switchyard 67.49 16.64 84.13 C. Environmental Monitoring 1.35 1.35 D. Project Management and Wrap up Insurance 56.69 56.69 Total 215.93 370.17 126.60 126.60 398.63 1237.93
*including contingencies
28
B.2.3 ADB Financed Component Category of Expenditure in Million UA No. Category FE Total % 1. Goods (Supply and installation of steam turbine generator). 191.25 191.25 100 2. Contingencies 24.68 24.68 100 Total 215.93 215.93 100 B.3 Implementation Arrangements (details) B.3.1 The Egyptian Electricity Holding Company (EEHC) will be the Executing Agency and Beneficiary of the proposed loan under the sovereign guarantee of the Government. EEHC has the technical and managerial ability to implement the project as demonstrated by the successful implementation of similar thermal power station projects, including Shoubrah El Kheima, Cairo West and Abu Qir (existing power station) and the current on-going project at El Tebbin, Abu Qir and El Kureimat. The involvement of an engineering consultant will reinforce their capabilities. B.3.2 The direct implementation of the project will be under the responsibility of the East Delta Electricity Production Company (EDEPC), a subsidiary of EEHC. A Project Director under the overall supervision of the Managing Director of Power Plants Projects Department of EEHC will be assigned to oversee the implementation of the project and to liaise with the Bank. B.3.3 A Project Implementation Team (PIT) has been established from the existing staff of the EDEPC to closely work with the Consultant during the implementation of the project. The PIT comprises a Project Director, 1 Mechanical Engineer, 1 Electrical Engineer, 1 Instrument and Control Engineer, 1 Civil Engineer, 1 Environmentalist, 1 Finance Expert and 1 Procurement Expert. The Project Director is an Engineer with more than 15 years of experience, of which 5 years have been in project management. The other members have university degrees in their respective disciplines. B.3.4 EEHC has through their own procurement procedures appointed PGESCo (Consulting Firm) to assist in the preparation of the detailed engineering design and tender documents, construction supervision and monitoring the implementation of the environmental and social management plan (ESMP) for the project. B.4. Financial Management and Disbursement Arrangements B.4.1 Financial Management B.4.1.1 The Finance Department of EEHC will be responsible for the maintenance of proper and separate accounting system to ensure that the use of funds is accounted for at all times. The existing accounting system of EEHC is a Unified Accounting System which is based upon charts of accounts. The Finance, Administration and Economic Affairs department of EEHC has the
29
responsibility for reporting all financial matters internally and externally. Currently, the department is partially computerized and in a very short period of time it will be fully synchronized with its affiliated companies. B.4.1.2 The EEHC shall maintain separate accounts that permit the identification of commitments and expenditures by category and financing source for all components of the project. Detailed project accounts shall be included in the quarterly progress reports (QPRs) to be submitted to the Bank.
B.4.2 Disbursement B.4.2.1 The Direct Disbursement method will be utilized for the procurement of package financed by the Bank. However, other Bank disbursement procedures could be used should it become necessary. B.4.2.2 The table below provides an expenditure schedule by component. Expenditure schedule by component [amounts in million UA equivalents] Components Year1 Year2 Year3 Year4 Year5 Year6 Total A. Civil Works 3.60 30.95 49.83 50.83 35.15 24.97 195.33 B. Supply and Installation of Equipment 15.80 133.21 214.49 218.78 151.27 107.47 841.02 C. Environmental Monitoring 0.02 0.19 0.30 0.31 0.21 0.15 1.18 D. Project Management/ Wrap up Insurance 0.93 7.86 12.66 12.91 8.93 6.34 49.63 Total base cost 20.42 172.21 277.28 282.83 195.56 138.93 1087.23 Physical contingency 2.04 17.22 27.73 28.28 19.56 13.89 108.72 Price contingency 0.79 6.65 10.71 10.92 7.55 5.36 41.98 23.25 196.08 315.72 322.03 222.67 158.18 1,237.93 ADB financed Components Expenditure Schedule by Component Components Year1 Year2 Year3 Year4 Year5 Year6 Total B. Supply and Installation of Equipment 3.59 30.29 48.78 49.75 34.4 24.44 191.25 Total base cost 3.59 30.29 48.78 49.75 34.4 24.44 191.25 Physical contingency
0.36 3.02
4.86
4.96
3.43
2.44
19.06
Price contingency 0.12
1.00
1.60
1.64
1.13
0.80
6.29
Total 4.05
34.20
55.07
56.17
38.84
27.59
215.93
B.5 Procurement Arrangements (details) B.5.1 The Bank standard documents will be used during the tendering process. As in the case of two ongoing power projects, a two envelope tendering system will be used. At the request of the Borrower, the Bank has authorized EEHC to proceed with Advance Procurement Action (APA)
30
pending Board approval of the project. Information Note on approval of the APA has been distributed to the Board (No.ADB/BD/IF/2008/184). The package financed by the Bank will be procured through International Competitive Bidding (ICB) in accordance with Bank’s rules of procedure for procurement of Goods and Works. A procurement plan has been prepared and agreed to. The Procurement notice for each package will be advertised in the UN Development Business. B.5.2 During the bidding process, the Executing Agency will submit to the Bank for approval the proposed bid documents and shall make necessary modification if requested by the Bank. Any further modification shall require the Bank’s concurrence before it is issued to the prospective bidders. The Executing Agency will also submit to the Bank bid evaluation reports for review. All evaluation reports shall be accompanied by three lowest evaluated cost bids. The Borrower shall seek the Bank’s prior concurrence should it require the extension of bid validity for completing the bid evaluation process. Further, the terms and conditions of the contract will not materially differ from those on which bids were received.
Bank Funded
ICB Non Bank Funded
Short List Non Bank Funded Total
Project Packages UA million A. Civil Works
• CP-102 Main civil works 152.45 152.45(0) • CP-107 Yard tanks 6.48 6.48(0)
• CP-119 Offshore in take structure
47.26 47.26(0).
• CP-120 Colony 12.31 12.31(0) • CP-123 Site Preparation 5.83 5.83(0)
Sub-Total 224.33 224.33(0)
B. Supply and Installation of Equipment
• CP-105 Steam Generators & auxiliaries
315.50 315.50(0)
• CP-106 Turbine Generators and Condensers
241.57(215.93) 241.57(215.93))
• PO- 113 Transformers 22.50 22.50(0)
• CP-104 Switchyard 84.13 84.13(0)
• PO - 109 Pumps and Drives
37.88 37.88(0)
• PO - 110 Heat Exchangers
17.60 17.60(0)
• CP - 111 Water and waste water treatment/Desalination plant
50.62 50.62(0)
31
• PO-112 Critical piping and valves
38.57 38.57(0)
• PO- 114 Instruments and control
5.02 5.02(0)
• CP – 117 Electrical and instrument installation
35.73 35.73(0)
• CP 118 Mechanical and piping installation
99.96 99.96(0)
• PO – 122 Switchgear 6.48 6.48(0)
Sub total 241.57(215.93) 713.99 955.56(215.93)
C. Environmental Monitoring CP-103 Environmental monitoring
1.35 1.35(0)
D. Project Man/Wrap up Insurance
• CP -108 Insurance • Consultancy Services
56.69
56.69(0)
Total 241.57(215.93) 56.69 939.67 1,237.93(215.93)) Figures in bracket indicate amounts to be financed by ADB. B.6 Audit Arrangements B.6.1 The project accounts and financial statements will be audited annually in accordance with internationally acceptable accounting standards and acceptable to the Bank. The holding company has an internal audit service unit which audits its internal procedures and produces reports for review by the Management Committee and the Board of Directors. Financial reports are submitted to the Central Auditing Organization (CAO) which is a government entity responsible for public audits.
B.6.2 The Central Audit Organization which was created by Law No. 144/1988 is charged with the responsibility of conducting three types of audits (financial, performance and legal). CAO’s jurisdiction includes auditing of all public corporations and organizations, and public business corporations with their affiliated companies, establishments and cooperative societies, among others. The EDEPC annually submit its financial reports to CAO for auditing. Once the audits are completed, CAO submits the reports to the specialized committees of the People’s Assembly to study, scrutinize, and make recommendations for action to be taken. Meetings of such committees are usually attended by representatives of the auditee and the relevant CAO departments. The specialized committees’ recommendations are discussed in plenary sessions of Parliament. B.6.3 The audited accounts and financial statements of the project and EEHC shall be submitted to the Bank within six months from the close of the financial year. Furthermore, the project will also fall within the normal review program of the Bank’s Internal Audit Department. At the central government’s level, it is the responsibility of the Ministry of International
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Cooperation (MIC) to deal with and ensure the effective utilization of resources from the donors. It will also ensure that the external resources and local contributions are efficiently utilized and accounted for during the execution of the project. B.7 Basic Assumptions for Financial and Economic Analysis B.7.1 Financial Analysis In order to measure the viability of the project from the EEHC’s point of view, the financial analysis takes into account the following basic assumptions.
• The life of the project is 40 years (including 6 years investment periods). • The Investment period is 6years and over these years the investment costs are distributed. • All costs are valued at constant 2008 domestic market prices. • The Operation and Maintenance cost (direct operating costs including fuel) is 15% of the
total investment cost. • Physical contingency is 10% while the price contingency is 3% for foreign and 5% for
local. • A salvage value is not accounted for in this analysis because the values that could be
obtained after 40 years are very insignificant in terms of discounting at the end of the project life.
• The installed capacity for the plant is 1300 MW and the plant factor (availability factor) is 0.85.
• The tariff rate used for the calculation of revenue is Piastres11.34/KWh. • The Weighted Average Cost of Capital (WACC) rate which is 3.76% is considered as a
Financial Discount Rate for comparing the FIRR Table B.7.1 below shows detailed calculations of the FNPV and FIRR.
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Table B.7.1: Financial Analysis Base Case
Cost in Million LE (FNPV and FIRR) Year Investment Operating and Total Total Net
Cost Maintenance Cost Cost Benefit Benefit 2008 378.62 0 378.62 0 (378.62) 2009 2141.36 0 2141.36 0 (2,141.36) 2010 2887.38 0 2887.38 0 (2,887.38) 2011 2700.87 0 2700.87 0 (2,700.87) 2012 2089.46 0 2089.46 0 (2,089.46) 2013 1317.08 0 1317.08 0 (1,317.08) 2014 0 1727.22 1727.22 1,097.69 (629.53) 2015 0 1727.22 1727.22 1,174.53 (552.69) 2016 0 1727.22 1727.22 1,256.74 (470.48) 2017 0 1727.22 1727.22 1,344.72 (382.50) 2018 0 1727.22 1727.22 1,438.85 (288.37) 2019 0 1727.22 1727.22 1,539.57 (187.65) 2020 0 1727.22 1727.22 1,647.34 (79.88) 2021 0 1727.22 1727.22 1,762.65 35.43 2022 0 1727.22 1727.22 1,886.03 158.81 2023 0 1727.22 1727.22 2,018.06 290.84 2024 0 1727.22 1727.22 2,159.32 432.10 2025 0 1727.22 1727.22 2,310.47 583.25 2026 0 1727.22 1727.22 2,472.21 744.99 2027 0 1727.22 1727.22 2,645.26 918.04 2028 0 1727.22 1727.22 2,830.43 1,103.21 2029 0 1727.22 1727.22 3,028.56 1,301.34 2030 0 1727.22 1727.22 3,240.56 1,513.34 2031 0 1727.22 1727.22 3,467.40 1,740.18 2032 0 1727.22 1727.22 3,710.12 1,982.90 2033 0 1727.22 1727.22 3,969.82 2,242.60 2034 0 1727.22 1727.22 4,247.71 2,520.49 2035 0 1727.22 1727.22 4,545.05 2,817.83 2036 0 1727.22 1727.22 4,863.20 3,135.98 2037 0 1727.22 1727.22 5,203.63 3,476.41 2038 0 1727.22 1727.22 5,567.88 3,840.66 2039 0 1727.22 1727.22 5,957.63 4,230.41 2040 0 1727.22 1727.22 6,374.67 4,647.45 2041 0 1727.22 1727.22 6,820.90 5,093.68 2042 0 1727.22 1727.22 7,298.36 5,571.14 2043 0 1727.22 1727.22 7,809.24 6,082.02 2044 0 1727.22 1727.22 8,355.89 6,628.67 2045 0 1727.22 1727.22 8,940.80 7,213.58 2046 0 1727.22 1727.22 9,566.66 7,839.44 2047 0 1727.22 1727.22 10,236.33 8,509.11
FNPV LE6,324.99 FIRR 7%
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B.7.2 Economic Analysis The economic analysis measures the viability of the project from the Government of Egypt’s points of view. Accordingly, it considers the following assumptions in order to estimate the economic profitability of the project.
• All costs and benefits are measured by shadow prices. • The methodology followed in the economic analysis is the Border Price methodology
which mainly assumes that the international markets are more competitive (although there are market imperfections in the local markets).
• The distortions and imperfections in the local markets are adjusted by using appropriate Conversion Factors such as Standard Conversion Factor (0.95), Shadow Wage Rate for Skilled Labor (1.00), Shadow Wage Rate for Unskilled Labor (0.63), and an Economic Discount Rate (10%).
• The available power production over the project life is multiplied by the LRMC in order to arrive at the economic benefits of the project. This rate is amounting to Piaster 21.25/KWh.
• Taxes and subsides are excluded because they are transfer payments which do not reflect the real resources flows to the economy.
Table B.7.2 below shows detailed calculations of ENPV and EIRR.
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Table B.7.2: Economic Analysis
Base Case Cost in million LE
Year Investment Operation and Total Total Net Cost Maintenance Cost Cost Benefit Benefit
2008 372.61 0 372.61 0 -372.61 2009 2107.36 0 2107.36 0 -2107.36 2010 2841.53 0 2841.53 0 -2841.53 2011 2657.98 0 2657.98 0 -2657.98 2012 2056.28 0 2056.28 0 -2056.28 2013 1296.16 0 1296.16 0 -1296.16 2014 1640.86 1640.86 2056.96 416.10 2015 1640.86 1640.86 2200.94 560.09 2016 1640.86 1640.86 2355.01 714.15 2017 1640.86 1640.86 2519.86 879.00 2018 1640.86 1640.86 2696.25 1055.39 2019 1640.86 1640.86 2884.99 1244.13 2020 1640.86 1640.86 3086.94 1446.08 2021 1640.86 1640.86 3303.02 1662.17 2022 1640.86 1640.86 3534.24 1893.38 2023 1640.86 1640.86 3781.63 2140.77 2024 1640.86 1640.86 4046.35 2405.49 2025 1640.86 1640.86 4329.59 2688.73 2026 1640.86 1640.86 4632.66 2991.80 2027 1640.86 1640.86 4956.95 3316.09 2028 1640.86 1640.86 5303.94 3663.08 2029 1640.86 1640.86 5675.21 4034.35 2030 1640.86 1640.86 6072.48 4431.62 2031 1640.86 1640.86 6497.55 4856.69 2032 1640.86 1640.86 6952.38 5311.52 2033 1640.86 1640.86 7439.04 5798.18 2034 1640.86 1640.86 7959.78 6318.92 2035 1640.86 1640.86 8516.96 6876.10 2036 1640.86 1640.86 9113.15 7472.29 2037 1640.86 1640.86 9751.07 8110.21 2038 1640.86 1640.86 10433.64 8792.78 2039 1640.86 1640.86 11164.00 9523.14 2040 1640.86 1640.86 11945.48 10304.62 2041 1640.86 1640.86 12781.66 11140.80 2042 1640.86 1640.86 13676.38 12035.52 2043 1640.86 1640.86 14633.72 12992.87 2044 1640.86 1640.86 15658.09 14017.23 2045 1640.86 1640.86 16754.15 15113.29 2046 1640.86 1640.86 17926.94 16286.08 2047 1640.86 1640.86 19181.83 17540.97
ENPV LE6,648.22
EIRR 13%
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Table B 7.3- Sensitivity Analysis The financial and economic profitability results of the project are tested with changes of major variables such as costs and benefits by applying sensitivity analysis. This analysis by considering 3 less optimistic and 3 less pessimistic scenarios (cases) has come up with different FNPV/FIRR and ENPV/EIRR results as shown in the table below:
FNPV FIRR Finance Scenario 1. Costs increases by 5% LE 4,799.50 Million 6% 2. Costs decrease by 5% LE 7,850.48 7.3% 3. Benefits decrease by 5% LE 4483.25 6% Economic ENPV EIRR Scenario 1. Costs increase by 10% LE 4,954.35 12% 2. Costs decrease by 5% LE10,475.87 16% 3. Benefits decrease by 10% LE 4,289.52 12%
In general, the project is financially and economically feasible by using different scenarios in the sensitivity analysis. B8. Environmental and Social Analysis B8.1 Project Area: Beneficiaries and Target Population - An Overview Social and Economic Profile of the Project Area 8.1.1 Project Area and Demographic characteristics: The project area is located in Suez Governorate in Ettaqa District. The site is along the Suez Gulf and about 52 km south of the city of Suez and 112 km east of Cairo. The site is unoccupied lying next to an existing power plant which was commissioned about 5 years ago and on the other side is a fence of the El-Ain Al-Sokhna sea port. The site is approximately 7 km from nearest residential area. The total area of the Suez Governorate is 9,002.21 sq. km. with a population of 507,139 (2005 estimates) and has a sex ratio of 102 (males = 256,619 and females = 250,502) with an average household size of 4.1, population growth rate of 2.1% and a population density of 55.4 people per sq. km. Under the proposals set out in the Governorate’s Development Plan, the population of Ettaqa is expected to significantly increase by 2012 due to the envisaged development of new industrial, commercial and residential businesses of which the proposed project will play a part. 8.1.2 Labor Force and Employment: The labor force of Suez Governorate is 156,500, i.e. 30.6% of the total population, with unemployment rate of 11.8% (female 34.1%) which is slightly above the national average of 8.3% (female 25.1%, 2006 estimates). In Ettaqa zone, about 69% form the labor force of which approximately 65% is considered to be skilled and semi-skills. Most of these work in industries such as chemical industries, building and
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construction, cement, fertilizers, ceramics, textiles, basic and heavy industries, metals and petroleum, a variety of small industries and small businesses. Most of the unskilled jobs, mainly manual labor, are performed by migrant labor mostly from Upper Egypt. 8.1.3 Income Level, Living standards and wellbeing: The per capita income of Suez was LE 6254.1 compared to the national LE 6371.6 (2005/06) and has a Gini coefficient of 22.9 implying more equality in income distribution compared to the national coefficient of 23.5. Suez governorate has a literacy rate of 82.7% and approximately 10.3% of its population attended post secondary education. Facilities in the Suez Governorate include 90 nurseries, 125 elementary schools, 78 preparatory schools and 41 secondary schools; and 20 special education schools. The gender balance in school enrolment in government schools is almost equal at lower levels with slightly more girls at secondary school than boys. There are also more female (69%) teachers in the system. Main medical facilities in Suez Governorate consist of 2 public and central hospitals, 2 health integrated hospitals, one health insurance hospital, 15 private sector hospitals and 3 specialized centers. Maternal mortality in Suez was, however, higher than the national average at 60.7 compared to 52.9 per 100,000 live births. The HDI of Suez is second best in Egypt at 0.751 compared to national average of 0.723 (2006). 8.1.4 Public Utilities: 99.3% of the households in the Suez governorate have access to potable water. Much of the fresh water comes of the Nile River channeled over a distance of 45 km. Over 88% of the buildings are connected to public water utilities network, while 68% are connected to public network of the sewage system. Over 60% of households and buildings are connected to City Gas in Suez Governorate (2007). Consumption of electricity for lighting was 1,011.9 kWh/year/person in 2007. Suez Governorate has a density of 26.7 lines per 100 inhabitants with 17 main telephone centers and 136,600 telephone lines. Project Beneficiaries and Target Population B8.2 The Project Environmental Aspects and Power Generation 8.2.1 The power plant site will occupy an area of approximately 125,000 m2, within a total allocated area of 275,000 m2 rectangle-shaped piece of land and will include the following main elements: (i) Supercritical steam power plant, comprising two generating units primarily fired by natural gas and mazout (heavy fuel oil for emergency situations). Each unit will consist of one outdoor supercritical steam generator and one supercritical steam turbine generator (STG) providing 650 MW (nominal) electrical generation capacity per unit. (ii) Circulating water system, with the main pumps and associated piping, the intake and discharge structures, the screening system, the chlorination system and the cathodic protection system. (iii) Heavy fuel oil and light fuel oil storage tanks. (v) Intermediate water storage, the demineralization plant and the make up water system; and (vi) Power will be generated at the manufacturer’s standard voltage and stepped up through main transformers to be connected to the new 500kV GIS switchgear. 8.2.2 The key inputs to the generating process are natural gas or mazout oil, which will be delivered to the site via underground pipelines (gas or mazout), together with air and water. The natural gas or mazout oil will be mixed with air and combusted to generate steam from demineralized water which will drive two turbines serving electrical generators. The combustion
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of the fuel is supported by injection of air. The process results in the generation of electricity and also produces hot exhaust gases.
8.2.3 The steam is cycled from the boilers through the turbines to condensers. The condensers are cooled by a direct cooling system, abstracting water from, and discharging the used water, to the Suez Gulf. The condensate is then returned for recirculation within the boilers. The final exhaust gases will be discharged to the atmosphere via a flue housed in a single stack of 150 m height for each unit in accordance with emission standards set by the EEAA. The main by-products from combustion of natural gas are carbon dioxide (CO2), water vapor, carbon monoxide (CO) and nitrogen oxides (NOx). Sulfur dioxide (SO2) and particulates, which are typically associated with coal and oil combustion, will not be produced other than in trace quantities during natural gas firing. When mazout oil is used instead of natural gas (in emergency situations for only less than 2% of the total operating hours), SO2 and particulates will also be key emissions from the power plant B8.3 Policy, Regulatory and Institutional Framework 8.3.1 The ESIA conform to the pollution standards of the Government of Egypt (GOE), African Development Bank and the World Bank. The primary GOE standard is set by the Law No. 4/1994 and the Prime Minister’s Decree No. 338 of 1995, which promulgates the Executive Regulations of Law 4. Additionally, as amended by the Law 4/1994 promulgated by the Prime Minister's Decree No. 1741 of 2005 for modifying some executive regulations of the Decree No. 338 of 1995. Other applicable laws are law No. 93 for 1962 regarding the drainage of liquid wastes, particularly sanitary drainage, Law of Labor No. 12/2003, Law No. 38/1967 amended by Law No. 31/1976 on public cleanliness and collection and disposal of solid waste. 8.3.2 As required by the Law 4/1994, EEHC prepared and submitted the environmental and social impact assessment to the Egyptian Environmental Affairs Agency (EEAA) for review through the Suez Governorate. The Suez Governorate sent the EIA to EEAA for review and provide its opinion within 60 days. The ESIA has been approved by the EEAA and granted a license to proceed. The permit by EEAA has been secured The Government of Egypt has established air pollution and water pollution limits applicable to the Power Plant project. 8.3.4 The GOE Standards are fully in line with the Bank’s ESAP (2001) and the World Bank Operational Policy 4.01 (October 3, 1991 and its updates, 1999). 8.3.5 The ESIA indicates that all these limits along with the actual air and water pollution levels expected from the Power Plant will not be exceeded. Therefore, the project will not result in any health or environmental risks to the plant workers or any communities in the vicinity of the power plant. The out-take of warm water, 3-5 degrees above the norms, will be beneficial to the fauna, allowing for a gradual flourishing of marine life. B8.4 Monitoring of Environmental Impacts 8.4.1 Monitoring of environmental impacts will be through compliance with the ESMP. Specific attention will be paid on the following:
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8.4.2 Stack Emissions: Stack emissions will be monitored continuously during plant operation at a representative point in the stack. Operational monitoring of stack emissions shall comprise monitoring the levels of: Oxides of Nitrogen; Sulfur Dioxide; Carbon Monoxide; and Total Suspended Particles and PM10. The automatic monitoring system used will indicate when emission limits for each pollutant are being approached. 8.4.3 Air Quality: Ambient Air Quality - Validation of Modeling Predictions Using Continuous NOx, SO2 and TSP Analyzer. The use of a continuous NOx, SO2, CO and TSP analyzer will allow for baseline air quality monitoring on a continuous basis. The provision of two continuous monitors will provide the basis for “validating” the predictions made in the ESIA. 8.4.4 Aquatic Environment: Monitoring of impacts of the power plant on the aquatic environment will include monitoring of the quality of the discharge water, Suez Gulf shoreline and benthic sediments, ambient water quality and the impact on aquatic flora and fauna. 8.4.5 ) Waste Monitoring: Wastes generated on site and collected for disposal by skilled firms will be referenced, weighed and recorded. Environmental audits will be undertaken which will assess the quality and suitability of on- and off-site waste management procedures.
8.4.6 Institutional responsibility of environmental monitoring will be the responsibility of the contractor and sub-contractors supervised by Project Implementation Team (PIT) Environmentalist and overseen by EDEPC’s Environment Division. Quarterly reports will be prepared by the Resident Engineer and copies of these reports will be submitted to EEHC, ADB, World Bank and on request to EEAA. During operation monthly reports (returns) will be prepared by EDEPC (Plant Environmentalist) and submitted to EEHC and EEAA accordingly. B8.5 Stakeholder consultations and Public Disclosure Process 8.5.1 Participation at identification was embedded in government’s program planning processes. Investments in power generation are a priority reflected in the sixth Five Year Plan 2007/8-2011/12 and the energy sector strategy. The overall target is to consolidate production capacity, by expanding electric power generation by at least 7% per year, entailing additional capacities to generation stations of about 8490 megawatts .( about 2000 MW annually ) 8.5.2 The wider spectrum of stakeholders (local communities, government agents, NGOs, civil society, researchers, academia, parliamentarians, city council members, officials from regulatory body, the press etc.) were considered during design, planning and development of El Ain Al Sokhna through consultations conducted as part of ESIA study. The consultations were organized in three phases beginning with the scoping meeting organized at Suez Governorate. The second was two crucial public meetings (July 2, 2008 and August 6, 2008) where discussions evolved around the environmental and social impacts of the project. These set a scene for an open-door policy of interaction with any of the public who may wish to follow-up on a specific issue during implementation and operation. Hence stakeholders concerns will continue to be received during construction and operation. The third was a method through the
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press (including Arabic language) where they advertised the project and described the context of the power plant, the technology to be employed, and the potential impacts on the environment and mitigation measures to be put in place. B8.6 Gender Analysis 8.6.1 The project will impact gender development at the national and local level. Nationwide, the regular supply of affordable electricity will facilitate household chores; expand access to education; improve the quality of health services, including for mothers and infants; and facilitate income generating activities in labour-intensive industries such as food processing, textiles and manufacturing and others. 8.6.2 At the local level, the project’s direct benefit will be employment generation for both men and women. Nationwide, female employment constitutes 22.3% of the labor force. In the Suez governorate, the percentage of women in the labor force is slightly lower, at 19.33%. Considered second amongst the Egyptian governorates in terms of development, Suez has a pool of highly qualified skilled labor, and the percentage of women holding professional and technical jobs is 73.8%, over double the national average of 33.5%. During construction, employment of women is anticipated to be negligent due to the nature of the work required. Informal income generating activities associated with construction phases such as catering and transportation services are expected to be undertaken by men due to social practices and the remote location of the area. However, upon operation, the project is anticipated to directly employ up to 680 employees, of which at least 7% will be women, in line with past employment trends in the EDEPC affiliated companies, where women have held secretarial (36%), administrative (28%) and financial (27%) positions. 8.6.3 EEHC has an equal opportunity focal point, and is keen on applying the practice throughout its affiliated companies, in line with the Egyptian Labor law. The law stipulates equal wages, and includes gender-sensitive benefits such as paid maternity leave, unpaid child care leave for 2 years for a maximum of 3 children, shorter working hours for infant feeding purposes, and unlimited unpaid leave for accompanying spouse abroad. EEHC provides additional social benefits for its staff particularly for projects in remote areas, such as housing facilities, transportation services, schooling, medical centers, kindergartens and canteens/outlets for basic foodstuff. The package of benefits coupled with job security and pension, make employment in public sector and government entities such as EEHC attractive, particularly for women. This is evidenced by the growing feminization of the government and public sector employment in both rural and urban areas, which went from 42% in 1998 to 44% in 2006, despite shrinking government jobs in recent years. Within EEHC, women make up 33% of the workforce. 8.6.4 Qualified women are empowered within EEHC and its affiliates. Women are present in executive and managerial positions and hold positions such as: the Executive Board Member for Affiliate Companies; the Sector Head of the following Departments - Strategic Planning; Costing, Commercial and Administrative Affairs for the Companies; Human Resources; Economic and Financial Studies for Companies; in addition to general manager positions. Within EDEPC, one of six board members is a woman.
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8.6.5 Gender sensitization is being given greater relevance within the EEHC and its affiliated companies. Gender disaggregated data is being captured by the MIS systems. 8.6.6 Public consultation included gender specific civil society organizations such as the Suez Women Council and the Family and Childhood Society. B8.7 Potential Social Impacts and Mitigation/Enhancement Measures Economic Opportunities 8.7.1 Employment Opportunities: The most significant and direct positive impact arising from the project will be increased income earning opportunities emanate from new jobs that will be created during construction and during operations. During project implementation, approximately 1200-1500 people will be employed and this would increase to between 2000-3000 at the peak for all types of jobs of which 80% will be locally recruited people. This will translate into a pay-roll of US$1.9 million per year. The average market daily wages in the area are US$7.5 and US$32 for unskilled and skilled labor, respectively. In addition the plant is expected to employ between 400 - 500 staff during operations peaking to 680 at various times. 8.7.2 Supplies and Service Delivery: Other opportunities will arise from sub-contracts for supply of construction materials, maintenance repairs and equipment servicing, supply contracts (security, waste disposal, food and catering, cleaning, transport, laundry, etc.). Additional specialist contractors will be employed for specific tasks such as modifications to plant, equipment overhaul, periodic maintenance, etc. Once completed, the plant is expected to continue injecting finances in the governorate through plant operations. Potential annual operational expenditures are estimated at US$4 million per year over a 20 year period. 70% of this amount will be spent in the project area on labor, consumables, equipment repairs, general maintenance, etc. In addition, 40-45% of Steam Cycle components are locally manufactured this will therefore offer more employment and foreign exchange savings. 8.7.3 National Economic Growth: On a bigger picture, the project will augment supply of electricity into the national grid. This will enhance improved provision of health and education services, increase industrial production, advance communication and information technology, improve services and increase investment capacity. This will also contribute to the overall improvement in quality of life of the population, increase incomes, generate employment and build human capacity. An expanded supply of electricity would allow for the export of electricity to neighboring countries enhancing regional cooperation and creating a reliable source of foreign currency earnings. 8.7.4 Fishing Activities: Indirectly, the local fishing industry is expected to gradually flourish with the improvement of underwater flora due to the reflux of warmer water from the plant. Anecdotal evidence shows that certain types of fish grow considerably faster in warmer water, and that algae also grows better in such conditions. Suez Fisheries Office has licensed 612 entities and fish yields in the Suez Gulf reached 4,231 tons in 2007 and 1,128 tons in Al Ettaqa
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and Shamandourah ports. However, no significant fishing activities were evident in the Al Sokhna port shoreline due to industrial activities and lack of transportation, loading and unloading bays. Since it is anticipated that the plant will attract more fishing to the area, discussions have been initiated between the EEHC/EDEPC and the General Authority for fisheries development to jointly establish a fry collection station near the edge of the mixing zone. B8.8 Potential Negative Impacts and Mitigation 8.8.1 Occupational, Health and Safety: the occupational, health and safety risks are associated with accidents, operational health effects of the work force, and safety at work. As a measure of mitigation, the company will establish and integrate policies and procedures on occupational health and safety into operations manuals. Given the provision of high standards of health and safety management on site, construction and operations of the power plant will be in accordance with good industrial practices. Given the lack of any adverse features or characteristics of the site, this risk as associated with the plant is minimal. 8.8.2 Traffic Conditions: Construction work will affect traffic conditions. These will result in delays, congestion, disruption to road users, traffic related air pollution and noise. Roads associated with the project area are, the Suez/Hurghada road, the 4 highways of Cairo/Alexandria (desert way), Cairo/Alexandria (Agriculture way), Cairo/Suez (desert way) and Cairo/Ain Skhna freeway. Average daily traffic flows are expected to increase by 5-10% at peak periods during the first year of construction and this will change to 8-9% during operations (taking into consideration annual growth to 2013). Vehicle types will include heavy goods vehicles (HGV), construction workers’ vehicles and abnormal loads. The study shows minimal impacts and traffic management system and mitigation measures have been put in place. These include (i) transporting construction workers in minibuses, (ii) prescribing routes for construction traffic especially for HGV and abnormal loads, and (iii) scheduling particular movement times for abnormal loads. 8.8.3 Involuntary Resettlement and Land Acquisition: The project is not expected to result in any resettlement. The project site is in a desert and has no communities living in the vicinity. More-over, the plant will be allocated in a site that was given by the Presidential Decree No. 299 of 1999 to EEA (now EEHC) who have assigned it to the EDEPC for development of power plants. Power transmission lines from the plant will follow the way-leave of the existing BOOT plant already in existence. In addition, the land traversed by the transmission lines is already procured under public order and is not habited either. These lines will be linked to the national grid at Abu Zaabal/Suez for the 500 kV transmission line, and connecting at Qattamyyah/Masryyah for the 220 kV transmission line. 8.8.4 HIV/AIDS and Communicable Diseases: The power project is not expected to act as a vector for any communicable diseases including HIV/AIDS or STI. Workers will predominantly be coming from Suez city and commute on a daily basis to work. With regard to HIV/AIDS Egypt has a low prevalence rate and situation of the project will not influence any change in the behavioral pattern or social norms prevailing among the people in the project area. Among the prevailing common illnesses in the country are those related to cancer, kidney and liver diseases
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and as such will not be directly influenced by the activities of the project. On the other hand, project workers would avail themselves diagnostic treated services from the on-site health facility and EEHC’s Electricity Hospital. Through this facility, the project management will ensure that any emerging illnesses and outbreaks are quickly controlled and treated. B8.9 Monitoring of the Social Impacts 8.9.1 The identified social impacts will be monitored as part of the ESMP. The three areas to be monitored that will have direct influence on workers and population in the project area: (i) Transportation System: Traffic disruption, congestion, noise and air pollution monitoring will be the responsibility of all contractors on site under the supervision of the PIT (Environmentalist) and EEHC Environmental Management and Studies Division. The indicators to be monitored are the increased congestion and the time of time. Reports shall be submitted to EEHC, and other interested parties such as EEAA, AfDB and World Bank on a quarterly basis. (ii) Occupational health and safety: This will be monitored on a daily basis to ensure compliance with Environment, Health and Safety (EHS) policies and plans. This will be the responsibility of the contractors on site under the supervision of PIT. Indicators shall include management procedures put in place and number of accident incidents. Quarterly reports of summary results shall be submitted to all interested parties. (iii) Socio economic impacts:
(a) Income earnings: These shall be monitored through employment and delivery records. This will be the responsibility of PIT supervised by EEHC. Indicators shall include workers’ satisfaction identified through staff interviews and complaints records submitted on a regular basis. Service delivery sheets will indicate the level of services rendered by sub-contractors.
(b) Fishing activities: This will be relevant to the first and second years of operation. In collaboration with PIT, the Fisheries Department will monitor any changes in the fish catch. This will be the responsibility of EDEPC and supervised by EEHC. The indicator will be the fish catch number and quality. Monthly reports from plant management will be sent to EEHC.
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B9 Project Preparation and Supervision B9.1 The Egyptian Electricity Holding Company (EEHC) developed a generation expansion plan with an average annual load growth rate of 6.4% to meet the load increase and maintain system reliability between the years 2003/2004 and 2012/13. The generation expansion plan (see Annex C.1) was developed following studies undertaken by EEHC on its generation requirements up to the year 2013. Several projects are under construction and other are planned to be implemented on a rolling basis. Ain Sokhuna is included in this program. B9.2 In April 2008, the Bank received a request from the Government of Egypt to consider participating in financing the Ain Sokhuna 1300 MW thermal power project. Following this request the Bank fielded a preparation mission in May 2008 which recommended that the project be considered for financing by the Bank. In response, the Bank dispatched an appraisal mission whose outcome is the subject of this report. B9.3 During the appraisal of the project, the mission interacted with some of the donors active in the country and discussed with them sector issues and the problems likely to be encountered during the implementation of the project. The environmental issues including mitigation measures and environmental management and resettlement plans were all discussed. It was established that the Executing agency of the project (EEHC) had done the necessary consultations with stakeholders in the country. The monitoring of environmental issues will be done by the Egyptian environmental Affairs Agency (EEAA). EEAA will receive quarterly progress report and will from time to time make surprise inspections to ensure that the Executing agency complies with the environmental requirement. The project timelines are summarised in table B9.1 below
Table B9.1 Project Schedule
Activities Responsible Agency Target Date Loan Approval ADB July - Dec. 08 General Procurement Notice ADB/EEHC Aug. 2008 Loan Signature ADB/GOE Jan. 09 Loan Effectiveness ADB/EEHC/GOE Dec 08 - June 09 Recruitment of Engineering Consultant EEHC May 08
Design, Review Prep. & Approve Bid Document EEHC/Consultant/ADB June. 08-June10 Issue of Specific Procurement Notice EEHC/ADB Oct. 2008 Bidding Period EEHC/ADB/bidders Oct 08 –July 10 Evaluation, Contract Award, and mobilization EEHC/ADB/bidders Jan 09- Oct. 10 Manufacturing, Delivery, Installation and erection/commissioning and Contractors
EEHC/Consultant / Contractors
Sep. 09-Sep. 13
PCR GOE Sept 14 B9.4 The project will be implemented over a period of 68 months. A project implementation team has been put in place to monitor different milestones of the project and the quality of work. The team will be assisted by a consultant who has been recruited and who has been involved in supervising several other projects including those financed by the Bank.
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B9.5 The Project will be launched in the first quarter of 2009 and will be field supervised from headquarters at least once a year from 2009 through to 2014. The Bank supervision will also involve desk supervisions. The Bank Country Office in Egypt will also carry out field supervision once a year or on a need basis. The coordination of the missions will be done by the Ministry of International Cooperation in collaboration with the Executing Agency and the Bank's Country Office (EGFO). The field missions will be undertaken in accordance with the tentative schedule presented in table B9.2 below.
Table B9.2 Supervision Schedule
Date Activities Skill Mix Staff Weeks
2009 Launching Power Engineer, Disbursement Procurement Officers, Environmentalist
3
2009 Supervision Power Engineer, Financial analyst & Environmentalist
6
2010 Supervision Power Engineer, Financial analyst & Environmentalist
6
2011 Supervision Power Engineer, Financial analyst & Environmentalist
6
2012 Supervision Power Engineer, Financial analyst/Environmentalist
6
2013 Supervision Power Engineer, Financial analyst/Environmentalist
6
2014 PCR Power Engineer, Financial analyst/Environmentalist
6
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C. ADDITIONAL TECHNICAL ANNEXES C1. EEHC’s GENERATION PLAN
Generation Plan for the Period 2007-2013 Plant Name 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 1. ZAFARANA WIND 80 90 440 500 500 500 2. CAIRO NORTH (2) (CC) 250 3. TALKHA (CC) 250 4. KURIMAT (2) (CC) 250 5. NAGA HAMADI (HY) 64 6. KURIMAT (3) (CC) 500 250 7. NOBARIA (3) (CC) 500 250 8. TEBBIN (ST) 700 9. KURIMAT (SOLAR/THERMAL) 140
10. SIDI KIRR (CC) 250 500 11. ATF (CC) 250 500 12. CAIRO WEST EXT. (ST) 350 350 13. EL AIN SOKHNA (ST) 650 650 14. NUWEBA (CC) 750 15. ABU KIR (ST) 650 650
C2 DETAILED PROJECT DESCRIPTION The Project will consist of the following main components: C2.1 CIVIL WORKS This component will involve the following packages:
Main Civil Works (CP-102): This will consist of fabrication, furnishing and installing associated services for piling, foundation, buildings, structure steel, underground piping, chimneys, and access roads for the project.
Yard Tanks (CP-107): This will involve designing, furnishing, installing, testing and
commissioning heavy fuel oil, solar, demineralised/condensate and distillate water tanks.
Offshore (CP-119): This will comprise of designing and furnishing offshore intake and discharge structures, circulating water and rack systems.
C2.1.4 Colony (CP-120): This will consist of fabrication, furnishing and installing
associated services for a housing residential estate.
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C2.1.5 Site Preparations (CP-123): This will comprise of designing and constructing buildings, power house, portable water system and sewage system for construction and complete site preparation to be ready for the main civil constructions works.
C2.2 SUPPLY AND INSTALLATION OF EQUIPMENT:
This component will consist of the following packages:
Steam Generator(s) (CP-105): This will consist of designing, furnishing, installing, testing and commissioning supercritical, once through, gas/oil fired boiler, boiler support steel structure, associated systems and equipment, including water walls, economizer, reheater, super heater, safety valves, burner and ignition system, master fuel trip panel(s), soot blowers, flue gas ductwork, regenerative air pre-heater, forced draft (FD) fans, Gas re-circulating (GR) fans, continuous emissions and monitoring system (CEMS), associated pumps, motors, equipment, boiler building lighting, continuous opacity measurement system (COMS) and steam and water analysis system (SWAS).
Steam Turbine Generator(s) & Condenser(s) (CP-106): This will comprise of
designing, furnishing, installing, testing and commissioning supercritical steam turbine generator (STG) equipment and piping, gland seal steam system, lubricating oil system, hydrogen seal oil system, stator cooling system, turbine control system, generator excitation systems, generator neutral grounding system, turbine generator control system equipment and HP/LP steam turbine bypass valves. Furthermore the following will be included: designing, furnishing, installing, testing, and commissioning condensers, tube cleaning system, and associated condenser air removal equipment.
Switchyards (CP-104): This will include:
(a) Designing, furnishing, installing, and constructing 500 kV & 220 kV switchyard
buildings, including foundations, floor slabs, structural steel and/ or reinforced concrete framing, exterior enclosure walls, doors, windows, roofing systems, wall penetrations, sanitary and plumbing works, furniture units, lighting, fire detection system, and telecommunication system.
(b) Designing, furnishing, installing, testing, and commissioning 500 and 220 kV GIS
equipment consisting of switchgear equipment, buses, 550/220 kV tie transformers and associated protective relaying equipment; cabling and switchyard control room equipment.
(c) Designing, furnishing, and installing Gas Insulated Bus (GIBs) connection
between main step-up power transformers and 500 kV GIS switchyard
(d) Designing, furnishing and installing GIBs connection between the tie transformers and both the 500 kV and 220 kV switchyards complete with their protection systems terminations, GIB routing and required supporting structure.
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Power Transformers (PO-113): This will consist of designing and furnishing main and auxiliary transformers, Generator circuit breakers and isophase bus ducts.
Electro-Mechanical Works
(a) Pumps & Drives (PO-109): This will comprise of designing, testing and
furnishing steam turbine driven boiler feed pumps (including steam turbine), booster boiler feed pumps, condensate pumps, closed cooling water pumps circulating water pumps, service water pumps, desalination cooling water pumps and raw water pumps.
(b) Feed Water Heaters (PO-110): This will consists of designing, testing, and
furnishing low pressure feed water heaters, high pressure feed water heaters, deaerator, and deaerator storage tank.
(c) Water, Waste Water Treatment Systems and Desalination Plant (CP-111):
This will consists of designing, furnishing, installing, testing, and commissioning condensate polishing system, hypochlorite feed system, makeup water treatment system, wastewater treatment system, sewage treatment system and chemical feed systems and the desalination plant including all auxiliary systems.
(d) Critical Piping & Valves (PO-112): This will involve fabricating and furnishing
critical (high temperature and pressure) piping, valves, and supports for the following systems: feed water system, extraction steam system and auxiliary steam system.
(e) Instrument Control (PO-114): This will consist of designing, fabricating,
furnishing, testing, delivering, transporting to site, providing installation supervision, complete start-up, commissioning, tuning, operator/engineer's training, placing in successful operation the distributed control system (DCS).
(f) Electrical Equipment / Instrument Installation (CP-117): This will consist of
designing, fabrication, furnishing, delivery, installing, start up and commissioning and testing of DC equipment, electrical distribution panels, relay panels, UPS equipment, medium, low voltage and control cables, cable trays, conduits and other miscellaneous electrical and instrumentation equipment. It will also include receiving at site, storing, installing, testing, maintaining, and placing into successful operation the electrical and instrumentation equipment furnished by owner (main and unit auxiliary transformers, medium and low voltage switchgear, M.C.Cs, distributed control system, control panels, etc).
(g) Mechanical & Piping Installation (CP-118): This will comprise of designing,
fabricating, furnishing, delivering, installing, start up and commissioning and testing of fire water suppression system, HVAC system, small bore piping, valves, pipe supports and hydrogen generation system.
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C2.3 ENVIRONMENTAL MONITORING (CP-103):
This component will involve the following: (a) Designing, furnishing, installing, testing, and commissioning environmental
monitoring stations with automatic fire extinguishing and alarm system, continuous sulphur dioxide (SO2) analyzers, continuous nitrogen dioxide (NOx) analyzers, particulate (PM-10) samplers analyzers and other calibration and data acquisition equipment.
(b) Furnishing, delivering and installing one meteorological tower equipped to
measure wind speed wind direction, sigma-theta and temperature, and other related system equipment.
(c) Furnishing, delivering and installation of one Doppler SODAR system equipped
to measure the mixing height, and mean wind speed and wind direction, and other related calibration and data acquisition equipment.
C2.4 CONSULTANCY SERVICES AND WRAP UP INSURANCE
(a) Consultancy Services: This will include the following:
• Preparing the tender documents for all packages.
• Evaluating the bid document and negotiate the successful bidder.
• Preparing the contract documents.
• Preliminary and final plant design for civil activities and the rest of the plant.
• Managing and coordinating the interfaces among contractors.
• Supervising the construction works and performing the commissioning start up, and testing of all the equipment up to handing over the project.
(b) Wrap-Up Insurance (CP-108): This will consist of provision of insurance during the construction, start up, testing and commission up to the end of warranty period for the site.
