ASIAN DEVELOPMENT BANK
PPA: THA 26370
PROJECT PERFORMANCE AUDIT REPORT
ON THE
THIRD POWER TRANSMISSION (SECTOR) PROJECT
(Loan 1170-THA)
AND
FOURTH POWER TRANSMISSION (SECTOR) PROJECT
(Loan 1245-THA)
IN
THAILAND
September 2002
CURRENCY EQUIVALENTS
Currency Unit – baht (B)
B1.00
$1.00
=
=
At Appraisal
(Loan 1170)
March 1992
At Appraisal
(Loan 1245)
April 1993
At Completion
October 1999
At Operations
Evaluation
June 2002
$0.0386
B25.89
$0.0392
B25.48
$0.0257
B38.85
$.0238
B42.18
ABBREVIATIONS
ADB
EGAT
EIRR
FIRR
ICB
MEA
MOF
OEM
PCR
PDP
PEA
PPAR
PT3
PT4
TS.8
TS.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Asian Development Bank
Electricity Generating Authority of Thailand
economic internal rate of return
financial internal rate of return
international competitive bidding
Metropolitan Electricity Authority
Ministry of Finance
Operations Evaluation Mission
project completion report
power development plan
Provincial Electricity Authority
project performance audit report
Third Power Transmission (Sector) Project
Fourth Power Transmission (Sector) Project
Transmission System Expansion Plan No. 8
Transmission System Expansion Plan No. 9
WEIGHTS AND MEASURES
GWh
kV
kW
kWh
MVA
MW
m3
–
–
–
–
–
–
–-
gigawatt-hour (1 million kWh)
kilovolt
kilowatt
kilowatt-hour
megavolt-ampere
megawatt
cubic meter
NOTES
(i)
(ii)
The fiscal year (FY) of the Government and EGAT ends on 30 September.
The notation FY1992 refers to the fiscal year ending on 30 September 1992.
In this report, “$” refers to US dollars.
Operations Evaluation Department, PE-603
CONTENTS
Page
BASIC DATA
EXECUTIVE SUMMARY
MAP
ii
iii
v
I.
BACKGROUND
A.
Rationale
B.
Formulation
C.
Purpose and Outputs
D.
Cost, Financing, and Executing Arrangements
E.
Completion and Self-Evaluation
F.
Operations Evaluation
1
1
1
2
2
3
3
II.
PLANNING AND IMPLEMENTATION PERFORMANCE
A.
Formulation and Design
B.
Achievement of Outputs
C.
Cost and Scheduling
D.
Procurement and Construction
E.
Organization and Management
4
4
4
6
6
7
III.
ACHIEVEMENT OF PROJECT PURPOSE
A.
Operational Performance
B.
Performance of the Operating Entity
C.
Financial and Economic Reevaluation
D.
Sustainability
7
7
8
9
10
IV.
ACHIEVEMENT OF OTHER PROJECT IMPACTS
A.
Socioeconomic Impact
B.
Environmental Impact
C.
Impact on Institutions and Policy
10
10
11
11
V.
OVERALL ASSESSMENT
A.
Relevance
B.
Efficacy
C.
Efficiency
D.
Sustainability
E.
Institutional Development and Other Impacts
F.
Overall Project Rating
G.
Assessment of ADB and Borrower Performance
12
12
12
12
12
12
13
13
VI.
ISSUES, LESSONS, AND FOLLOW -UP ACTIONS
A.
Key Issues for the Future
B.
Lessons Identified
C.
Follow-Up Actions
13
13
14
14
APPENDIXES
1.
Estimated and Actual Project Costs
2.
Actual Project Scope
3.
Implementation Schedules
4.
Financial Performance of Electricity Generating Authority of Thailand
5.
Financial and Economic Performance of Projects
15
18
22
24
25
BASIC DATA
Third Power Transmission (Sector) Project (Loan 1170-THA) and
Fourth Power Transmission (Sector) Project (Loan 1245-THA)
Key Project Data ($ million)
Total Project Cost
Foreign Exchange Cost
ADB Loan Amount/Utilization
ADB Loan Amount/Cancellation
Key Dates
Appraisal
Loan Negotiations
Board Approval
Loan Agreement
Loan Effectiveness
First Disbursement
Project Completion
Loan Closing
Months
(effectiveness to
completion)
Loan 1170-THA
As per ADB Loan
Documents
Actual
349.10
213.21
150.40
107.79
94.25
87.92
6.33
Loan 1245-THA
As per ADB Loan
Documents
Actual
405.80
317.45
205.70
125.03
115.60
96.03
19.57
Loan 1170-THA
Expected
Actual
16 Dec 1992
31 Mar 1995
30 Sep 1995
27.5
Loan 1245-THA
Expected
Actual
6–18 Feb 1992
10–11 Jun 1992
16 Jul 1992
16 Sep 1992
16 Dec 1992
18 Mar 1993
31 Sep 1998
2 Jul 1998
69.5
Key Performance Indicators
22 Dec 1993
31 Sep 1996
31 Mar 1997
33
Loan 1170-THA
Financial Internal Rate of Return (%)
Economic Internal Rate of Return (%)
Appraisal
8.5
15.8
PCR 1
13.4
20.9
PPAR 1
16.2
20.2
Loan 1245-THA
Appraisal
11.7
13.1
Borrower
Electricity Generating Authority of Thailand
Executing Agency
Electricity Generating Authority of Thailand
Mission Data
Type of Mission
Consultation
Fact-Finding 2
Appraisal
Project Administration
Review
Project Completion
Operations Evaluation 3
8–23 Feb 1993
20–24 Jun 1993
19 Aug 1993
22 Sep 1993
21 Dec 1993
3 May 1994
31 Jul 1998
9 Jul 1999
55
Loan 1170-THA
No. of Missions Person-Days
PCR 1
13.4
20.9
PPAR 1
16.2
20.2
Loan 1245-THA
No. of Missions Person-Days
1
13
1
1
19
16
9
1
1
24
12
30
10
1
1
18
12
30
ADB = Asian Development Bank, PCR = project completion report, PPAR = project performance audit report.
1
Combined result of Loans 1170-THA and 1245-THA.
2
Fact-Finding for Loan 1170-THA was done in February 1992 and later upgraded to appraisal.
3
The Operations Evaluation Mission comprised H. Wang (Evaluation Specialist/Mission leader), J. Wilson (Staff
Consultant), and V. Ramos (Evaluation Analyst). The Mission visited Thailand from 29 May to 7 June 202.
EXECUTIVE SUMMARY
In the early 1990s when the loan projects1 were appraised, Thailand was experiencing a
period of rapid growth in electricity demand. This growth was matched with Thailand’s strong
economic performance, leading to a higher than projected demand for electricity, and straining
the country’s power system. The principal objective of the projects was to support the
implementation of Transmission System Expansion Plan No. 8 (TS.8) formulated by the
Electricity Generating Authority of Thailand (EGAT) in line with the Government’s Seventh
National Economic and Social Development Plan (FY1992–FY1996) and thereby to ensure that
power transmission restrictions would not become a constraint to future economic growth.
TS.8, as an integral part of EGAT’s power development plan, comprised 32 components,
each of which represented the least-cost method of meeting the projected demand and
transmission system power flows. Some components provided capacity to rural areas where
power was distributed by the Provincial Electricity Authority (PEA) of Thailand; one component
provided an in-feed to the Metropolitan Bangkok area where power was distributed by the
Metropolitan Electricity Authority (MEA) of Thailand; in other cases, the components provided
power to industrial estates. Other objectives were to reduce transmission losses and improve
the reliability of supply to each area concerned. The Third Power Transmission (Sector) Project
(PT3) was to help implement those components of TS.8 physically commenced at the site
during FY1992–FY1993, and the Fourth Power Transmission (Sector) Project (PT4)
those during FY1994–FY1996. In addition to the project components under TS.8, PT4 also
financed a mobile air quality monitoring system and the 500-kilovolt (kV) transmission system
extension component associated with power delivery from units 12 and 13 at EGAT’s Mae Moh
thermal power plant. The 500 kV transmission line also played an important role in improving
the overall stability and reliability of the transmission grid.
The Operations Evaluation Mission (OEM) visited Thailand in May and June 2002 and
confirmed that the principal objectives of the two projects to provide additional power
transmission capacity to match load growth, remove power transmission constraints, and
improve system reliability had been achieved. There were significant improvements in system
reliability as well as a noteworthy reduction in losses during execution of the projects,
particularly since the completion of the first components in 1995, part of which can be attributed
to the projects. The System Average Interruption Frequency Index decreased from 2.9 times per
supply point in FY1994 to 0.7 in FY2001. The System Average Interruption Duration Index
improved from 203 minutes per supply point in FY1994 to 38 in FY2001. Transmission system
losses were reduced from 3.7% in FY1994 to 2.3% in FY2001. The load growth for which the
projects were designed substantially materialized. The projects also supported the expansion of
PEA’s distribution system in provincial areas, where the village electrification ratio increased
from 97.7% in FY1994 to 99.0% in FY2000, and MEA’s expansion of the supply to Metropolitan
Bangkok where demand also continued to increase.
The actual cost of PT3 at loan closing was $213.2 million, 39% below the appraisal
estimate of $349.1 million. The actual cost of PT4 upon completion was $317.45 million, 22%
below the appraisal estimate of $405.8 million. The underruns were attributed to overestimation
of total project costs including contingencies at the time of project design, lower procurement
costs, and lower value of local currency costs in dollar equivalent terms because of baht
depreciation.
1
Loan 1170-THA: Third Power Transmission (Sector) Project, for $94.25 million, approved on 16 July 1992; Loan
1245-THA: Fourth Power Transmission (Sector) Project, for $115.6 million, approved on 19 August 1993.
iv
PT3 and PT4 were to be completed by March 1995 and September 1996, respectively.
Actual completion was achieved for the individual subprojects between 1994 and 1998. The
main reasons for the delays may be summarized as follows: (i) in some cases, there were
delays in land acquisition and securing the rights-of-way necessary for the construction of
transmission lines; (ii) in several cases, flooding delayed the work and contract extensions were
approved by EGAT’s board as a result; (iii) in several cases, delays were attributed to a lack of
skilled labor as a result of the then boom in construction activity; and (iv) a lack of liquidity after
the financial crisis in mid-1997 meant that some or all subcontractors were unable to finance
their ongoing work commitments in a timely manner.
PT3 and PT4 had no unintended socioeconomic impacts during construction and
operation. No significant project-specific environmental issues arose during implementation.
EGAT made considerable efforts to address the environmental issues associated with lignite
mining and power generation at Mae Moh. The mobile air quality monitoring system financed
under PT4 is in use, in addition to which stationary air quality monitoring systems are in
operation.
Using the same time-slice approach as adopted in the appraisal report and project
completion report (PCR), the financial internal rate of return (FIRR) and economic internal rate
of return (EIRR) were reestimated for the two projects combined. The reestimated FIRR of
16.2% is above appraisal and PCR estimates while the EIRR of 20.2% is above the appraisal
estimate and only slightly below the PCR estimate. The higher reestimates are attributed to
lower capital expenditure and faster growth in sales in the years up to mid-1997.
The project objectives and outputs were consistent with the country’s overall
development needs, ADB’s assistance strategy for the country, and ADB’s strategic objectives
at the time of appraisal; they continue to be relevant. In terms of efficacy, the projects achieved
their objectives and intended outputs in physical, financial, and economic terms. The projects
were the least-cost solutions for implementing the various components and were completed
efficiently with cost savings. Both projects are considered sustainable technically, operationally,
and financially. Overall, the OEM rates both projects as highly successful.
The OEM identified two lessons relevant to future ADB operations in the power sector.
First, the sector lending approach has resulted in highly successful power projects in Thailand.
Clear ownership of the projects, matched with satisfactory institutional capacity of the executing
agency, is crucial for achieving this kind of success in other developing member countries.
Second, flexibility in the timing of implementation of such projects that are designed to support
ongoing power system development requirements is essential for achieving efficient capital
investment. ADB should recognize the desirability of project deferrals, if required.
vi
I.
A.
BACKGROUND
Rationale
1.
In the early 1990s, when the Third and Fourth Power Transmission (Sector) Projects
(PT3 and PT4, respectively) 1 were appraised by the Asian Development Bank (ADB), Thailand
was experiencing a period of rapid growth in electricity demand. While this growth had
slackened to slightly less than 8% per annum during FY1982–FY1987, sales during
FY1987–FY1991 resumed their previous rapid rate of increase, rising at 15.3% per annum;
areas outside Metropolitan Bangkok experienced a higher rate of growth at 18.1%. This growth
was matched with Thailand’s strong economic performance during the period, leading to a
higher than projected demand for electricity, straining the country’s power system. Transmission
system restrictions were considered constraints to future economic growth and the principal
objective of the two projects was to help overcome them.
B.
Formulation
2.
PT3 and PT4 helped fund the Transmission System Expansion Plan No. 8
(TS.8) (FY1991 –FY1995) of the Electricity Generating Authority of Thailand ( EGAT), as well as
planned 500-kilovolt (kV) additions to the transmission system for the delivery of power from
units 12 and 13 at Mae Moh thermal power plant.
3.
EGAT formulated TS.8 in January 1991 as part of its integrated long-term transmission
system development planning process to meet load growth and thereby support economic and
regional development. TS.8 consisted of 32 components, each of which comprised substations
and/or transmission lines. Each component was prepared in response to projected load
increases and was tested to establish that the final proposals represented the least-cost method
of meeting the projected demand and transmission system power flows. Some components
provided capacity to rural areas where power was distributed by the Provincial Electricity
Authority (PEA) of Thailand; one component provided an in-feed to the Metropolitan Bangkok
area where power was distributed by the Metropolitan Electricity Authority (MEA) of Thailand;
and in other cases, the components provided power to industrial estates. Other objectives were
to reduce system losses and improve the security of supply of the transmission system. TS.8
was submitted to the Government for approval in February 1991 with a time frame for
implementation to cope with the power demand projected for FY1992–FY1996. Approval was
obtained from the Government in April 1991.
4.
EGAT also formulated the 500 kV transmission system extension component associated
with power delivery from units 12 and 13 at Mae Moh thermal power plant. This component
played an important role in improving the overall security and power delivery capacity of the
transmission system as a whole.
5.
The map shows the scope of TS.8 and the project com ponents financed under PT3 and
PT4. EGAT’s project formulation reports were prepared competently, using modern power
system planning and analysis methods, and formed a satisfactory basis for appraisal.
6.
Since the two projects were to be implemented using the sector lending approach, the
subprojects were prepared by EGAT on the basis of specific criteria agreed to by EGAT and
1
Loan 1170-THA: Third Power Transmission (Sector) Project, for $94.25 million, approved on 16 July 1992; Loan
1245-THA: Fourth Power Transmission (Sector) Project, for $115.6 million, approved on 19 August 1993.
2
ADB. These criteria included (i) least-cost nature and technical appropriateness, (ii) system
stability and reliability, (iii) system maintainability, and (iv) system loss reduction. During the
appraisal of PT3, it was confirmed that these criteria were fully adopted in the preparation of
TS.8. Therefore, the general criterion for selection of subprojects was that they formed part of
TS.8 approved by the Government in 1991. All subprojects for each project were already
identified at the time of appraisal. In case that subprojects did not form part of TS.8, appraisal
reports prepared by EGAT demonstrating that the subprojects satisfied all the criteria were to be
submitted to ADB for prior approval. However, because both loans were sector loans, the
combination of subprojects could be changed. No project preparatory technical assistance was
requested or considered necessary as EGAT’s Power System Planning Department was
capable of preparing the projects itself. It had considerable experience in this area, including the
formulation of previous transmission expansion projects financed partly by ADB.
7.
Policy dialogue during the processing of the two projects focused on (i) the extent and
timing of private sector participation in power system development, (ii) desirable adjustments in
the level and structure of electricity tariffs for sales to MEA and PEA, and (iii) development of
environmental standards for transmission planning.
C.
Purpose and Outputs
8.
As already outlined, the two loans helped fund the construction of transmission facilities
to convey electricity to provincial areas, strengthen the power supply to Metropolitan Bangkok,
strengthen supply to industrial areas, and overcome constraints in the delivery of power from
units 12 and 13 at the Mae Moh thermal power plant. The main purposes of the projects were to
improve the efficiency and reliability of power supply as well as to support system expansion
and rural electrification. The beneficiaries were to include all electricity customers, including
rural customers.
9.
The project scope consisted of construction of 500 kV, 230 kV, and 115 kV transmission
lines; expansion of 500 kV substations; construction of 230 kV and 115 kV substations;
reinforcement of 230 kV and 115 kV substations; and provision of an air quality monitoring
system for Mae Moh thermal power plant. The scope was consistent with the purposes of the
projects by supporting increased transmission system service capability and a resulting increase
in the provision of power for Thailand’s future growth; improved reliability of power supply,
particularly in the new industrial and commercial areas; PEA’s rural electrification program; and
environmentally sound operation of the Mae Moh thermal power plant.
D.
Cost, Financing, and Executing Arrangements
10.
For PT3, the estimated project cost at loan appraisal was $349.1 million equivalent, with
a foreign exchange component of $150.4 million. The ADB loan of $94.25 million was to be
used to finance 63% of the foreign exchange cost of the project. The financing of the remaining
foreign exchange expenditure ($56.15 million) was to be arranged by the Government and
EGAT from commercial sources. The entire local currency cost ($198.7 million equivalent) of the
project was to be financed by local borrowing and EGAT’s internal resources . For PT4, the
estimated project cost at loan appraisal was $405.8 million equivalent, with a foreign exchange
component of $205.7 million. The approved ADB loan of $115.6 million was to be used to
finance 56% of the foreign exchange cost of the project. The financing of the remaining foreign
exchange expenditure ($90.1 million) was to be arranged by the Government and EGAT from
commercial sources. The entire local currency cost ($200.1 million equivalent) of the project
was to be financed by local borrowing and EGAT’s internal resources. Taken together, the ADB
3
loans were to finance 59% of the foreign exchange cost and 28% of the combined cost of the
projects. Details of the cost estimates for the two loans at the time of appraisal are given in
Appendix 1.
11.
EGAT implemented PT3 and PT4 in accordance with arrangements agreed with ADB
during appraisal. Principal responsibility for implementation lay with the Transmission System
Planning and Project Division.
E.
Completion and Self-Evaluation
12.
The last subproject under PT3 was completed in September 1998, 3.5 years later than
originally planned. The last subproject under PT4 was completed in July 1998, 1.8 years behind
schedule. Supported by quarterly progress reports for the two projects together, EGAT prepared
a comprehensive project completion report (PCR) for each project.2 ADB’s PCR was circulated
in September 2000. It contained the required ingredients and was generally satisfactory. In
attempting to consolidate facts and conclusions relating to the numerous separate subprojects,
each of which had its own history, the reasons given in the PCR for the delay in completing the
two projects as a whole were not convincing. However, when the details of each component
were considered separately, as in EGAT’s PCRs for example, the reasons for the delays were
readily understandable. 3 The PCR noted that in hindsight it might have been more expedient to
develop a single project at the outset rather than separating TS.8 into two projects processed in
2 consecutive years.
13.
Overall, the PCR satisfactorily evaluated all aspects of the projects and supported its
conclusions with sufficient evidence. The overall rating of generally successful for both projects
given in the PCR was based on a balanced evaluation. 4
F.
Operations Evaluation
14.
This project performance audit report (PPAR) examines the findings of the PCR and
assesses the operating performance of the projects in terms of relevance, efficacy, efficiency,
sustainability, and institutional and other development m
i pacts. The Operations Evaluation
Mission (OEM) visited Thailand from 29 May to 7 June 2002 and met with representatives from
EGAT, MEA, PEA, the Ministry of Finance (MOF), and the National Energy Policy Office. EGAT
and other parties concerned provided the information needed by the OEM. 5 The views of ADB’s
concerned departments and those of EGAT have been taken into account in finalizing the
PPAR. Copies of the draft PPAR were forwarded to MOF and EGAT on 5 July 2002 with a
request that comments be provided within 2 weeks. Although the request was followed up
subsequently, no comments were received; it is, therefore, assumed that MOF and EGAT
endorse the PPAR.
2
3
4
5
EGAT’s PCR for Loan 1170-THA was submitted in March 1999 and its PCR for Loan 1245-THA, in September
1999. The last quarterly progress report on ADB’s project file is dated 30 June 1999.
There were two other inaccuracies in the PCR: (i) it stated that TS.8 included the 500 kV component but that
component was part of the Mae Moh project; (ii) it highlighted a change in design at Chaeng Watthana substation
from an outdoor design to gas -insulated indoor switchgear but the driving change was upgrading of the design
voltage level from 230 kV to 500 kV for later operation at the higher voltage level.
Before September 2000, a three-category rating system was used (generally successful, partly successful, and
unsuccessful).
Chosen on a random basis, facilities visited included subprojects at Chiang Mai, Chiang Rai, and Mae Moh as well
as the 500 kV substation and lines at Sai Noi.
4
II.
A.
PLANNING AND IMPLEMENTATION PERFORMANCE
Formulation and Design
15.
EGAT’s power development plan (PDP) is a 15-year rolling plan covering both power
generation and transmission system development. PT3 and PT4 as integral parts of EGAT’s
TS.8 conformed with the Government’s Seventh National Economic and Social Development
Plan (FY1992–FY1996) and EGAT’s PDP 92-01. 6 They were formulated using appropriate
techniques and modern technology and their design was, and remains, consistent with and
relevant to Thailand’s overall development objectives. Both projects were also consistent with
ADB’s sector strategy at the time for Thailand in terms of improvements in transmission and
distribution systems to ensure effective power utilization and to support rural electrification.
16.
In line with the lending approach followed, relevant power sector issues were reviewed
during project processing. The policy dialogue focused on private sector participation and tariff
reform as important sector issues.
B.
Achievement of Outputs
17.
The principal outputs of the TS.8 and the 500 kV component were to provide additional
power transmission capacity to match load growth, remove transmission constraints, and
improve system reliability, as well as to enable power delivery from Mae Moh units 12 and 13.
Almost all subprojects of PT3 and PT4 were implemented as planned at appraisal (Table 1 and
Appendix 2).
Table 1: Combined Project Scope
Item
500 kV, 230 kV, and 115 kV transmission line
construction (circuit-kilometers)
230 kV and 115 kV substation construction (number)
230 kV and 115 kV substation reinforcement (number)
500 kV switchyard expansion (number)
500 kV substation expansion (number)
Air quality monitoring system (number)
Planned
Actual
2,563
18
39
1
3
1
2,549
17
37
1
3
1
kV = kilovolt.
Source: Electricity Generating Authority of Thailand.
18.
There was no change in project purpose or planned outputs for either project. Neither
were there any major changes in project scope. Two subprojects, namely construction of the
115 kV Thoeng substation and supply of basket truck, were transferred from PT3 to PT4, and
two additional contracts for supply of aluminum ingots were included in PT4 to utilize savings
under Loan 1245-THA. One subproject, the transmission line from Rajjaprabha to Phangnga
under PT3, was dropped from ADB financing because of delays arising from the need to carry
out an environmental impact assessment and studies to secure construction approvals.7 Some
design changes were made during the course of the work. These included a change in the
proposed voltage at Chaeng Watthana substation financed under PT3 from 230 kV to 500 kV to
6
7
PDP 92-01 covering FY1992–FY2006 was approved by the Government in September 1992.
The line was eventually built in accordance with the Government’s environment all regulations.
5
better fit in with EGAT’s least-cost transmission system development program. The OEM
reviewed the design changes and considered them to be appropriate. Under the sector lending
approach, such changes are allowed in order to reflect evolving transmission requirements.
19.
The projects supported the expansion of PEA’s distribution system in provincial areas
and MEA’s expansion of the supply to Metropolitan Bangkok. Table 2 illustrates the growth in
MEA and PEA supply that took place during implementation of the two projects, despite the
effects of the Asian financial crisis.
Table 2: MEA and PEA Power Supply Growth
Item
MEA
Number of Customers
FY1995
FY1998
FY2001
Sales in GWh
FY1995
FY1998
FY2001
% per annum
PEA
% per annum
1,818,808
2,046,594
2,233,814
4.0
3.0
9,034,872
10,583,054
11,549,581
5.4
3.0
29,106
30,987
33,847
2.1
3.0
37,862
48,003
56,428
8.2
5.5
GWh = gigawatt-hour , MEA = Metropolitan Electricity Authority, PEA = Provincial Electricity Authority.
Source: MEA and PEA annual reports.
20.
Significant improvements in transmission system reliability, as well as a noteworthy
reduction in system losses over the period of execution of the projects, were also achieved as
shown in Table 3. The System Average Interruption Frequency Index decreased from 2.9 times
per supply point in FY1994 to 0.7 in FY2001. The System Average Interruption Duration Index
improved from 203 minutes per supply point in FY1994 to 38 in FY2001. Transmission system
losses were reduced from 3.7% in FY1994 to 2.3% in FY2001. The improvements are
particularly evident from the time of completion of the first project components in 1995. Part of
these improvements can clearly be attributed to the projects.
Table 3: Transmission System Improvements
Fiscal
Year
SAIFI
(times/supply point)
SAIDI
(minute/supply point)
System Minutes
a
Lost
Transmission
System Losses (%)
1994
2.9
203
72
3.7
1995
1.9
105
30
3.2
1996
1.5
105
29
3.2
1997
1.5
95
19
3.1
1998
1.4
79
19
2.7
1999
0.9
84
19
2.6
2000
0.9
51
16
2.4
2001
0.7
38
11
2.3 b
SAIDI = System Average Interruption Duration Index, SAIFI = System Average Interruption Frequency Index.
a
System minutes of supply lost per megawatt of demand.
b
Estimated.
Source: Electricity Generating Authority of Thailand.
6
C.
Cost and Scheduling
21.
The actual cost of PT3 at completion was $213.2 million, 39% below the appraisal
estimate of $349.1 million. The actual cost of PT4 upon completion was $317.5 million, 22%
below the appraisal estimate of $405.8 million. The major underruns were attributed to several
factors : (i) overestimation of total project cost including contingencies at the time of project
design, (ii) lower procurement costs, and (iii) lower value of local currency expenditures in dollar
equivalent terms as a result of baht depreciation during project implementation. Details of
estimated and actual project costs are given in Appendix 1.
22.
Given the significantly lower costs and the sector lending approach followed, EGAT
added some components with the approval of ADB (Appendix 2). Final loan savings of
$6.3 million and $19.6 million, respectively were cancelled at loan closing.
23.
PT3 and PT4 were to be completed by March 1995 and September 1996, respectively. 8
Actual completion was achieved for the individual subprojects between 1994 and 1998 as
shown in Appendix 3. The reasons for the delays may be summarized as follows: (i) in some
cases, there were delays in land acquisition and securing of the rights-of-way necessary for the
construction of transmission lines;9 (ii) in several cases, flooding is reported to have delayed the
work and contract extensions were approved by EGAT’s board as a result; (iii) in several cases,
delays were attributed to a lack of skilled labor as a result of the then boom in construction
activity in Thailand; and (iv) a lack of liquidity after the financial crisis in mid-1997 meant that
some or all subcontractors were unable to finance their ongoing work commitments in a timely
manner. Additionally, some delays arose as a result of design changes.
24.
Because of the financial crisis and the resulting fall in electricity demand during FY1998
and FY1999 (Table 4), the delays did not adversely affect the project outputs. However, it was
recognized that the original schedule prepared by EGAT was too optimistic with regard to land
acquisition and rights-of-way, especially when the practice of having the Government approve
project expenditures in a total package was taken into account. 10
D.
Procurement and Construction
25.
EGAT agreed at appraisal that bid packages would be structured to make them suitable
for international competitive bidding (ICB) wherever appropriate. In accordance with ADB’s
sector lending policy, special procurement actions were agreed under both loans to simplify
procurement actions: (i) exemption from prior approval of ADB for standard bidding documents
for contracts to be awarded under ICB; (ii) authorization to award by EGAT contracts up to
$1.0 million for all contracts, and contracts up to $3.0 million for all contracts where the lowest
priced bidder was also the lowest evaluated bidder, without prior approval from ADB; and
(iii) use of international shopping for contracts below $0.5 million. The preparation of bidding
documents, bidding, contract award, construction, installation, and contract administration
8
EGAT’s original documentation for TS.8 foresaw its completion by early 1995. At the time of appraisal of Loan
1245-THA, completion of TS.8 was expected by September 1996.
9 The projects were prepared before the formal incorporation of social dimensions in ADB operations in 1993 and
introduction of the mandatory requirement for resettlement plans in 1995. In accordance with the government
procedures and ADB policy at the time, land acquisition for substations was done through open market transaction
and owners of the rights -of-way for transmission lines were sufficiently compensated. Apart from some initial
delays, no significant issues regarding land acquisition and rights -of-way arose during the implementation of the
projects.
10
Advance procurement of land is not possible under this practice.
7
appear from the project records to have been conducted with reasonable efficiency by EGAT’s
own staff. No consultants were engaged.
26.
A total of 21 contracts were financed by ADB under PT3: (i) seven international shopping
contracts with a value below $0.5 million; (ii) seven ICB contracts with a value between
$0.5 million and $3.0 million; and (iii) seven ICB contracts above $3.0 million. The last ones,
representing a total value of 75% of the disbursed loan amount, were awarded with the prior
approval of ADB as previously agreed. For PT4, a total of 19 contracts were financed by ADB:
(i) one international shopping contract with a value below $0.5 million, (ii) seven ICB contracts
with a value between $0.5 million and $3.0 million, and (iii) 11 ICB contracts above $3.0 million.
The last ones, representing a total value of nearly 90% of the disbursed loan amount, were
awarded with the prior approval of ADB.
27.
EGAT’s PCRs stated that the experience with the five largest supply and construction
contracts, three under PT3 and two under PT4 ranging from $15.0 million to $20.0 million, had
been good. As already mentioned, some contractors could not complete their works on time, a
contributing factor being the financial crisis in the country and the consequential lack of liquidity.
Another contributing factor was that the Government instructed EGAT to delay payments in
local currency to its contractors during the crisis .11
28.
Generally, EGAT’s PCRs reported that the experience with supply-only contracts under
both projects had been good. No disputes arising under these contracts led to arbitration.
E.
Organization and Management
29.
EGAT’s management and staff carried out the projects efficiently, keeping
comprehensive records of progress and making design changes expeditiously where needed for
the long-term optimality of transmission system development. EGAT’s internal processes of
monitoring and evaluation appear to have been very good. The quality and comprehensiveness
of EGAT’s quarterly progress reports and PCRs are testimonies to these statements. EGAT
submitted its progress reports, financial statements, and audit reports in a timely and
comprehensive manner after commencement of the projects. The government agencies
concerned had completed their inputs before ADB’s fact-finding or appraisal, which paved the
way for smooth organization and management of the projects.
III.
A.
ACHIEVEMENT OF PROJECT PURPOSE
Operational Performance
30.
The load growth for which the projects were designed has substantially materialized. A
comparison of the load growth projected at the time of appraisal of PT3 and the actual load
growth achieved shows that EGAT’s load forecast proved to be remarkably accurate over the
time-slice of TS.8 to which the projects were related (Table 4). The subsequent fall in demand
during FY1998 and FY1999 was caused by the Asian financial crisis and, hence, could not be
predicted. In the last 2 years, demand resumed its growth as a result of economic recovery.
11
According to the PCR, the Government then granted extensions of 180 days on contracts with government
agencies and state enterprises and subsequently permitted a further extension at the discretion of the individual
agencies concerned.
8
Table 4: Projected and Actual Load Growth
Fiscal
Year
Projected
(MW)
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
9,000
9,924
10,892
11,946
13,075
14,205
15,354
16,531
17,765
19,000
Actual
(MW)
8,877
9,730
10,709
12,268
13,311
14,506
14,180
13,712
14,918
16,126
Actual/Projected
(%)
98
98
98
103
102
102
92
83
84
85
MW = megawatt.
Source: Electricity Generating Authority of Thailand.
31.
The performance of EGAT’s transmission system in terms of reliability improvements
and loss reduction has been very good (para. 20). Since EGAT retains competent staff and
provides the necessary resources to adequately operate and maintain the project facilities and
has maintained a sound financial position to date, the operational performance of the projects is
judged satisfactory.
B.
Performance of the Operating Entity
32.
A summary of EGAT’s financial performance during the period FY1992–FY2001 is given
in Appendix 4. EGAT maintained a strong financial performance in most years. Its total
revenues doubled during FY1992–FY1997 and, after deducting interest, bonuses, and
government remittances, net incomes were positive each year.
33.
EGAT’s financial performance deteriorated markedly with the onset of the financial crisis
in mid-1997. In addition to the decline in energy sales in FY1998 and FY1999, significant
exchange losses on foreign debt were incurred after the flotation of the baht, despite the
Government’s permission to EGAT to amortize a portion of these over a longer period. Income
from the sale of shares in EGAT’s associated generating company and lower remittances paid
to the Government in lieu of taxes offset these losses slightly. In FY1999, EGAT incurred a
substantial deficit as a result of expensing through the income statement all the foreign
exchange losses incurred from FY1997 to FY1999. 12 This change in policy reflected an
agreement with the World Bank in 1998 that EGAT should in the future comply with international
accounting standards in respect of the treatment of foreign exchange gains and losses, and
other areas. This was the first deficit incurred by EGAT in more than 10 years of operation.
From FY2000, EGAT resumed its strong financial performance. Sales revenue increased at
20% and 15%, respectively, in FY2000 and FY2001 and net income became positive again.
However, EGAT’s debt service coverage deteriorated from FY1998 to FY2001 as debt
repayment rose sharply from B7.6 billion to B41.1 billion during that period. The restructuring of
12
EGAT’s annual report and financial statements for FY1999 note a change in accounting policy in this respect as
follows: “In 1999, EGAT has changed the accounting policy for the treatment of losses from the introduction of
managed float exchange rate system in 1997. Previously, these had been recorded as deferred expenses and
written off over the remaining term of each loan. In 1999, the remaining deferred amount of Baht 18,679.70 million
has been charged to the net loss of the year.”
9
the power sector in coming years, when implemented, is likely to lead to a change in EGAT’s
role and further changes in its financial position. Having said that, the OEM is satisfied that
EGAT’s solid financial performance to date indicates its ability to sustain the operations of the
projects.
34.
As far as ADB’s o
l an covenants are concerned, two of particular importance were
agreed at the time of appraisal: (i) a self-financing ratio requiring EGAT to generate for each
fiscal year, funds from internal sources equivalent to not less than 25% of the annual average of
capital expenditures incurred in the previous, current, and following fiscal years (20% up to and
including FY1993); and (ii) a debt-equity ratio requiring EGAT to maintain a ratio of debt to
equity of less than 2:1 in all years. EGAT complied with the covenanted self-financing ratio in all
years since loan approval except FY1997 and FY2000 when the ratio was 14% and 24%,
respectively. EGAT complied with the covenanted debt-equity ratio in all years since loan
approval.
C.
Financial and Economic Reevaluation
35.
The financial internal rates of return (FIRRs) of the two projects were calculated at
appraisal by comparing the incremental capital and operating costs of EGAT’s PDP over a 5year period (FY1992–FY1996) with the projected incremental revenues. This time-slice was
expected to include the projects. Although the same methodology was used, FIRRs were
estimated separately for the two projects because the appraisal for PT4 was done 1 year later
than PT3 and data update was necessary. In its PCRs, EGAT adopted the same approach but
took a longer time-slice, FY1992–FY1998, matched with the actual implementation periods of
the projects. Also since both projects were completed at about the same time in 1998, the FIRR
was recalculated for the two projects as a whole. ADB adopted the same approach as EGAT in
its own PCR and the longer time-slice has again been used for the reevaluation carried out by
the OEM.
36.
The results of the analyses undertaken are presented in Table 5 below. The
methodology used in the OEM reevaluation was the same as that used in the PCR, with
necessary adjustments. Details are given in Appendix 5. The higher FIRR reestimate is
attributed mainly to lower capital expenditure and faster growth in sales in the years up to
mid-1997.
Table 5: FIRR Estimates
(%)
Item
Appraisal
PCR
OEM
PT3
PT4
8.5
––
––
11.7
––
––
Both Projects
—
13.4
16.2
–– = not available, FIRR = financial internal rate of return, OEM = Operations Evaluation Mission, PCR = project
completion report, PT3 = Third Power Transmission (Sector) Project, PT4 = Fourth Power Transmission (Sector)
Project.
37.
The principal economic justification for each project component at the time of appraisal
rested on establishing the need for its implementation in the context of EGAT’s overall power
system development strategy; and demonstrating that the proposed works represented the
10
least-cost solution in each case. Details of the forecast demand, network analyses, and the
least-cost calculations were given in EGAT’s project formulation report for TS.8 of September
1991. In the case of the 500 kV transmission extension component for Mae Moh units 12 and
13, they were summarized in EGAT’s PCR of September 1999. The calculations were reviewed
by the OEM and were considered appropriate. It was also confirmed that the power demand for
which the projects had been designed had substantially materialized (para. 30).
38.
As in the case of the FIRR, the economic internal rates of return (EIRRs) of the two
projects were calculated at appraisal by comparing the incremental capital and operating costs
of EGAT’s PDP over a 5-year period with the projected incremental revenues. The time-slice
chosen in each case was expected to include the projects. In its PCRs, EGAT adopted the
same approach but took a longer time-slice, FY1992–FY1998, matched with the actual
implementation period of the project. Since both projects were completed at about the same
time in 1998, the EIRR was reestimated for the two projects as a whole. ADB adopted the same
approach as EGAT in its own PCR and the longer time-slice has again been used for the
reevaluation carried out by the OEM.
39.
The results of the analyses undertaken are presented in Table 6 below. Details are given
in Appendix 5. The high reestimate confirms the economic viability of both projects.
Table 6: EIRR Estimates
(%)
Item
PT3
PT4
Both Projects
Appraisal
15.8
13.1
––
PCR
––
––
20.9
OEM
––
––
20.2
–– = not available, EIRR = economic internal rate of return, OEM = Operations Evaluation Mission, PCR = project
completion report, PT3 = Third Power Transmission (Sector) Project, PT4 = Fourth Power Transmission (Sector)
Project.
D.
Sustainability
40.
Although EGAT’s future role and financial position are expected to change for the
reasons noted in para. 33, its sound technical and financial performance provides considerable
assurance of the future availability of sufficient funds and other resources for project operation
and maintenance. Taking also into account EGAT’s undoubted “ownership” of the projects, the
OEM does not have any doubts about their sustainability.
IV.
A.
ACHIEVEMENT OF OTHER PROJECT IMPACTS
Socioeconomic Impact
41.
Indirectly, the projects supported the economic development of the country, both in
urban and rural areas, as evidenced by the growth in sales and number of customers (para.
19). The projects had no significant direct socioeconomic impacts during construction; nor did
they have any unintended impacts.
11
B.
Environmental Impact
42.
At the time of appraisal, after ADB’s review of the possible environmental impacts of the
routing of transmission lines and the location and type of substations, it was concluded that no
subproject would raise significant environmental issues. The Government confirmed TS.8 as a
“B” category project not requiring an environmental impact assessment. During implementation,
EGAT set its criteria for site selection in accordance with the Government’s environmental policy
and planning regulations. Subsequently, however, during the detailed planning and design
stage for the 115 kV transmission line from Rajjaprabha to Phangnga, it was found necessary
for the line to pass through a national forest reserve for a length of about 6kilometers. An
environmental impact assessment was required and a significant delay in construction was
foreseen. As a result, this subproject was withdrawn by EGAT from ADB funding under PT3. 13
43.
EGAT has made considerable efforts during recent years to address the environmental
issues associated with lignite mining and power generation at Mae Moh. Flue gas
desulfurization systems for all operating units at Mae Moh thermal plant (units 4 to 13) had been
installed by February 2000 and other measures taken. The mobile air quality monitoring system
financed under PT4 is in use, in addition to which there are stationary air quality monitoring
systems in operation, some of which belong to EGAT and some to the Pollution Control
Department of the Government. A report of air quality is issued weekly by the latter to the public.
A comprehensive study of environmental impacts at the station and mine has been prepared
under ADB’s technical assistance,14 and its recommendations were under consideration by
EGAT at the time of preparation of this PPAR. At the time of the OEM, the 24-hour average of
the sulfur dioxide ambient level at Mae Moh was around 160 micrograms/cubicmeter (m3), below
the national standard of 320 micrograms/m 3 and much lower than the 400 micrograms/m 3
recorded in October 1992. No other significant project-specific environmental issues arose
during the projects’ implementation.
C.
Impact on Institutions and Policy
44.
Power sector restructuring in Thailand continues to progress. In October 2000, the
Government resolved issues related to the Guidelines on Electricity Supply Industry
Restructuring and Establishment of the Power Pool, but various international events in the
electricity supply industry raised concerns over the appropriateness of introducing a power pool
in Thailand.15 Its establishment has, therefore, been postponed. As an intermediate step toward
a competitive power market, large consumers will soon be allowed to purchase power directly
from power producers through contractual arrangements at an agreed price plus wheeling
charges .16 In March 2001, the Prime Minister approved a plan for listing qualified state-owned
enterprises on the Stock Exchange of Thailand. Under this plan, EGAT would become a publicly
listed company by the second half of 2003. In the meantime, a study has been carried out by
EGAT on other suitable models for Thai power sector restructuring. The result of the study was
not available at the time of preparation of this PPAR.
45.
Other than policy dialogue, the projects did not directly address institutional
strengthening and policy issues through loan covenants. They did, however, further enhance
EGAT’s internal capabilities in the areas of project preparation, implementation, and monitoring
and, to that extent, furthered ADB’s institutional-strengthening aims.
13
Environmental approval was subsequently obtained by EGAT and the line was built.
TA 3583-THA: Mae Moh Environmental Evaluation Study, for $500,000, approved on 14 December 2000.
15
The Californian power crisis in early 2001 was one such event cited by EGAT.
16
They may already do this in industrial estates.
14
12
V.
A.
OVERALL ASSESSMENT
Relevance
46.
Both projects’ purposes and outputs were consistent with the country’s overall
development needs, ADB’s assistance strategy for Thailand, and ADB’s strategic objectives for
the energy sector at the time of appraisal and have continued to be relevant since then. None of
the design changes made during implementation altered the relevance of the projects, other
than to improve it. There has been a recovery in the growth in demand after the financial crisis.
Both projects are assessed as highly relevant.
B.
Efficacy
47.
Both projects achieved their purposes (i.e., immediate objectives) and intended outputs
in physical, financial, and economic terms as specified at appraisal and as described earlier in
this PPAR. Both projects are assessed as highly efficacious.
C.
Efficiency
48.
Both projects were the least-cost way of implementing the various components and were
completed with major cost underruns but with delays. Although the delays did not adversely
affect the project outputs, at 1.8 to 3.5 years, they were nonetheless significant. With the
reestimated FIRR at 16.2% and EIRR 20.2% for PT3 and PT4 combined, both projects are
assessed as efficient.
D.
Sustainability
49.
Given the strong technical and financial performance of EGAT, MEA, and PEA, the
sustainability of both projects is assessed as most likely.
E.
Institutional Development and Other Impacts
50.
Neither project was designed to have a direct institutional or policy development
component.17 They did facilitate economic growth before and after the 1997 financial crisis,
especially in rural areas. The consumption of electricity by businesses and industries serviced
by PEA increased by 68% from 23,895 gigawatt-hour (GWh) in FY1994 to 40,200 GWh in
FY2000. 18 Also attributable to the implementation of the projects, the village electrification ratio
in rural areas of Thailand increased from 97.7% in FY1994 to 99.0% in FY2000. The number of
customers in Metropolitan Bangkok serviced by MEA grew by 24% from about 1.7 million in
FY1994 to 2.1 million in FY2000. Further, PT4 helped improve management of environmental
performance of the Mae Moh thermal power plant. For these reasons, other development
impacts are assessed as significant for both projects.
17
The classification for Loan 1170-THA was not given at the time of approvals while Loan 1245-THA was classified
as serving primarily economic growth and secondarily environmental protection.
18
The electricity sales of PEA given in Table 2 include electricity consumption for residential, business, and industry.
13
F.
Overall Project Rating
51.
Overall, both projects are rated as highly successful.19 By comparison, EGAT also
considered the projects highly successful to the extent that almost all project objectives had
been achieved and subprojects had been completed as planned.
G.
Assessment of ADB and Borrower Performance
52.
The performance of ADB and the Borrower, EGAT, is judged as highly satisfactory
because both organizations handled their roles in project formulation, appraisal, procurement,
and implementation appropriately and in a timely manner in regard to the matters within their
control. ADB had considerable prior experience of working with EGAT and was familiar with the
power sector in the country and EGAT’s development needs. Additionally, ADB had funded the
introduction of modern power system analysis tools for the power transmission agencies in
Southeast Asia in the early 1980s and, by the time of project formulation, EGAT’s Power
System Planning Department had developed comprehensive power system modeling
capabilities on which ADB was able to rely. Subsequent ADB actions and approvals were
generally carried out in a timely manner. A total of 10 and 11 inception and review missions
were conducted for PT3 and PT4 respectively, although most of them dealt also with other
projects. The frequency, composition, and length of the missions are considered to have been
appropriate for the type of project and the Executing Agency concerned.
VI.
A.
ISSUES, LESSONS, AND FOLLOW-UP ACTIONS
Key Issues for the Future
53.
The OEM found no issues arising in respect of EGAT’s ability to operate the projects in
the future. Nor did the OEM identify any significant issues in respect of the implementation
phase, other than to note that, as the sector lending approach was followed, there was enough
flexibility to utilize the loans fully. On the other hand, the essence of efficient capital investment
is its deferral for as long as possible, consistent with meeting the relevant need in a least-cost
manner. In fact, it is the mark of a mature organization that it moves away from the rigidities of
“project” and “plan” funding and adopts, instead, a “continuous” and flexible process for its
incremental capital investment, constantly adjusting the nature, timing, and extent of its
expenditure program to maximize investment effectiveness.
54.
The fact that major savings arose during implementation suggests that the costs of the
various components may have been overestimated during the initial phases. The OEM noted in
this regard that EGAT’s project estimates included a 10% allowance in the foreign currency cost
for physical contingencies. It may be appropriate to review this percentage in future estimates
for transmission system works, reducing it to reflect the relatively low risk entailed in the design
and implementation of such projects.
55.
As far as the future operations of EGAT are concerned, in the OEM’s opinion, EGAT’s
power system planning processes could be improved by reconsidering the security of supply
criteria used. At present, the main criterion is a (n-1) level of security of supply—that is, supply
is maintained during a fault on a single piece of equipment. Modern thinking is based on more
19
Based on the revised four-category project rating system (highly successful, successful, partly successful,
and unsuccessful).
14
comprehensive criteria that take into account the magnitude of the load interrupted and the
consequential economic cost of demand not served during an interruption in supply. The
adoption of such criteria could help optimize EGAT’s future capital expenditures on the
transmission system by emphasizing service outcomes. This point was discussed with EGAT
during the OEM.
B.
Lessons Identified
56.
From the viewpoint of ADB’s operations as a whole, one lesson is the need for flexibility
in the timing of implementation of projects such as these, designed to fund an ongoing and
evolving development program. This flexibility needs to recognize the desirability of project
deferrals if the need arises. With transmission and distribution projects, this is generally possible
because of their relatively short lead times.
57.
Second, the sector lending approach has resulted in highly successful power projects in
Thailand. Clear ownership of the projects, matched with satisfactory institutional capacity of the
executing agency, is crucial for achieving this kind of success in other developing member
countries.
C.
Follow-Up Actions
58.
No follow-up actions are needed.
15
Appendix 1
ESTIMATED AND ACTUAL PROJECT COSTS
Table A1.1: Cost of Transmission System Expansion Plan No. 8 Covered by
Loan 1170-THA for Time-Slice 1992–1993
($ million)
Appraisal Estimate
Component
Foreign
Local
Total
ADB
(FC)
Actual
EGAT
(FC)
Local
Total
Extra-High Voltage
Transmission Lines
0.00
0.00
0.00
2.30
0.00
0.00
2.30
Substations
0.00
0.00
0.00
18.30
0.00
17.49
35.79
Transmission Lines
43.50
100.90
144.40
11.64
10.00
24.39
46.03
Substations
62.60
41.10
103.70
43.77
1.37
20.89
66.03
Additional Transformers
22.50
7.20
29.70
0.00
8.50
6.10
14.60
Reactive Power Equipment
7.50
2.70
10.20
7.47
0.00
5.39
12.86
Communications
6.50
1.90
8.40
1.01
0.00
3.34
4.35
Miscellaneous Expansion
7.80
7.70
15.50
3.43
0.00
6.11
9.54
Engineering Service
0.00
19.60
19.60
0.00
0.00
9.03
9.03
150.40
181.10
331.50
87.92
19.87
92.74
200.53
0.00
17.60
17.60
0.00
0.00
12.68
12.68
150.40
198.70
349.10
87.92
19.87
105.42
213.21
High Voltage
Subtotal
IDC
Total
ADB = Asian Development Bank, EGAT = Electricity Generating Authority of Thailand, FC = foreign
currency cost, IDC = interest during construction.
16
Appendix 1
ESTIMATED AND ACTUAL PROJECT COSTS
Table A1.2: Cost of Transmission System Expansion Plan No. 8 Covered by
Loan 1245-THA for Time-Slice 1994–1996
($ million)
Appraisal Estimate
Component
Foreign
Local
Total
Actual
EGAT
(FC)
Local
ADB
(FC)
Total
Extra-High Voltage
Transmission Lines
Substations
24.80
40.20
65.00
20.01
a
0.00
26.00
46.01
0.00
0.00
17.49
0.00
2.30
2.30
14.00
39.70
80.03
39.00
8.60
47.60
17.49
0.00
5.50
5.50
0.00
Transmission Lines
22.10
50.40
72.50
26.33
Substations
40.00
31.70
71.70
31.54
2.00
55.04
88.58
Additional Transformers
43.20
6.60
49.80
0.00
13.00
27.66
40.66
Reactive Power Equipment
4.70
1.40
6.10
0.00
0.00
0.00
0.00
Communications
8.10
2.30
10.40
0.08
0.00
3.38
3.46
Miscellaneous Expansion
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Engineering Service
0.00
13.60
13.60
0.00
0.00
13.54
13.54
1.00
0.10
1.10
0.58
0.00
0.10
0.68
182.90
160.40
343.30
96.03
29.00 167.72
292.75
0.00
28.40
28.40
0.00
22.80
205.70
11.30
200.10
34.10
405.80
0.00
96.03
Engineering Service
High Voltage
b
Environment
Environment Monitoring System
Subtotal
Duties
IDC
Total
0.00
4.70
4.70
0.00 20.00
29.00 192.42
20.00
317.45
ADB = Asian Development Bank, EGAT = Electricity Generating Authority of Thailand, FC = foreign
currency cost, IDC = interest during construction.
a
Amount for Sai Noi Substation is not included.
b
Cost of transmission conductor amount $11.14 million is included.
Appendix 1
17
ESTIMATED AND ACTUAL PROJECT COSTS
Table A1.3: Cost of Transmission System Expansion Plan No. 8 Covered by
Loans 1170-THA and 1245-THA
($ million)
Appraisal Estimate
Component
Foreign
Local
Total
ADB
(FC)
Actual
EGAT
(FC)
Local
Total
Extra-High Voltage
Transmission Lines
24.80
40.20
65.00
22.31
0.00
26.00
48.31
Substations
39.00
8.60
47.60
35.79
0.00
17.49
53.28
0.00
5.50
5.50
0.00
0.00
2.30
2.30
65.60
151.30
216.90
37.97
24.00
64.09
126.06
102.60
72.80
175.40
75.31
3.37
75.93
154.61
Additional Transformers
65.70
13.80
79.50
0.00
21.50
33.76
55.26
Reactive Power Equipment
12.20
4.10
16.30
7.47
0.00
5.39
12.86
Communications
14.60
4.20
18.80
1.09
0.00
6.72
7.81
Miscellaneous Expansion
7.80
7.70
15.50
3.43
0.00
6.11
9.54
Engineering Service
0.00
33.20
33.20
0.00
0.00
22.57
22.57
1.00
0.10
1.10
0.58
0.00
0.10
0.68
333.30
341.50
674.80
183.95
48.87
260.46
493.28
0.00
46.00
46.00
0.00
0.00
17.38
17.38
173.20
205.70
210.00
200.10
383.20
405.80
87.92
96.03
19.87
29.00
125.42
192.42
233.21
317.45
Engineering Service
High Voltage
Transmission Lines
Substations
Environment
Environment Monitoring System
Subtotal
Duties
IDC
Total
ADB = Asian Development Bank, EGAT = Electricity Generating Authority of Thailand, FC = foreign
currency cost, IDC = interest during construction.
18
Appendix 2
ACTUAL PROJECT SCOPE
A.
Third Power Transmission (Sector) Project (PT3)
1.
The subprojects financed under PT3 were as follows.
Related to Time -Slice 1992–1993 of the Power Transmission System Expansion
Project No. 8 (TS.8)
(i)
Construction of a new 500-kilovolt (kV) Chaeng Watthana substation and 230 kV
line termination
(ii)
Construction of a new 230/115 kV Hua Hin substation and 230 kV line
termination
(iii)
Construction of a new 230/115 kV Bang Saphan substation and 230 kV line
termination
(iv)
a.
b.
c.
d.
e.
f.
g.
Modification of 115 kV Rayong 1 substation to accommodate the
additional line
Expansion of 115 kV Rayong 3 substation for one more circuit
Expansion of 115 kV Chanthaburi substation for two incoming lines
Expansion of 115 kV Samut Sakhon 1 substation
Expansion of 115 kV Samut Sakhon 2 substation
Expansion of 115 kV Ao Phai substation
Expansion of 115 kV Bang Lamung substation
(v)
Expansion of 115 kV Thalan 3 substation
(vi)
Expansion of 115 kV Saraburi 4 line and substation
(vii)
Expansion of Nakhon Si Thammarat and New Ranot
(viii)
Construction of a new 115 kV Chom Thien substation
(ix)
a.
b.
Expansion of 115 kV Kalasin substation for two outgoing lines
Construction of a new 115 kV Somdet substation
(x)
a.
b.
Expansion of 115 kV Buri Ram substation for one outgoing line
Construction of a new 115 kV substation for one outgoing line
(xi)
Expansion of 115 kV Patthani substation for one incoming line
(xii)
Construction of a new 115 kV Ranot substation
(xiii)
a.
Expansion of 230 kV Mae Moh switchyard
Appendix 2
b.
c.
Expansion of Mae Moh 3 substation
Construction of 230 kV Chiang Mai substation
(xiv)
a.
b.
Expansion of 115 kV Mae Moh switchyard
Expansion of 115 kV Chiang Rai substation
(xv)
Expansion of 115 kV Nakhon Sawan line and substation
(xvi)
Expansion of 115 kV Manorom line and substation
(xvii)
Expansion of 115 kV Takhli 2 substation
19
(xviii) Expansion of 115 kV Chiang Rai substation for 115 kV Chiang Rai-Mae Chan
line
(xix)
a.
b.
Expansion of 115 kV Chiang Rai substation for 115 kV Chiang RaiThoeng line
Construction of a new 115 kV Thoeng substation
2.
On 30 July 1993, the Electricity Generating Authority of Thailand (EGAT) submitted
additional subprojects under TS.8 for Asian Development Bank (ADB) consideration and ADB
approved them on 3 August 1993. The additional subprojects comprised the supply of shunt
capacitor banks, supply and construction of a new control building at South Bangkok
Substation, and supply of basket truck.
3.
In November 1994, EGAT realized that the completion date of the 115 kV line
Rajjaprabha-Phangnga would have to be postponed as two parts of the line would penetrate
forest conservation areas and EGAT had to carry out an environmental impact assessment
study for submission to the relevant government agencies. Final approval was expected to take
a minimum of 2 years and EGAT was uncertain as to when resumption of the construction work
on the line would be permitted. Under the circumstances, EGAT decided to withdraw this
subproject from funding by ADB.
4.
In February 1995, considering that the disbursement under Loan 1170-THA had not yet
been completed and that a large portion of uncommitted loan balance was still available, EGAT
proposed and ADB agreed to shift one package from Loan 1245-THA (transmission system for
Mae Moh power project units 12 and 13) to Loan 1170-THA. This package was the construction
of the new 500 kV Sai Noi Substation near Bangkok and a 500 kV line from Sai Noi to Nong
Chok.
5.
In addition, as implementation was delayed, EGAT proposed and ADB agreed in March
1995 to transfer two subprojects from Loan 1170-THA to Loan 1245-THA, namely construction
of the 115 kV Thoeng Substation and supply of basket truck.
B.
Fourth Power Transmission (Sector) Project (PT4)
6.
The subprojects financed under PT4 were as follows.
20
Appendix 2
Related to Time -Slice 1994–1996 of TS.8
(i)
a.
b.
b.
Expansion of the 230 kV Bang Pakong switchyard for two outgoing lines
to Prachin Buri 2 substation
Expansion of Bang Pakong and New Prachin Buri 2
Construction of a new 230/115 kV Prachin Buri 2 substation
(ii)
a.
b.
c.
Construction of 230 kV Rayong 2-Chanthaburi transmission line
Construction of 115 kV Rayong 3-Rayong 1 transmission line
Expansion of the 230 kV Rayong 2 substation
(iii)
a.
b.
Expansion of the 115 kV Sakon Nahon substation
Construction of 115 kV Nam Pung substation
(iv)
Construction of 115 kV Buri Ram-Prakhon Chai transmission line
(v)
a.
b.
c.
Construction of 115 kV Roi Et-Phayakkhaphum Phisai transmission line
Expansion of 115 kV Roi Et-Phayakkhaphum Phisai substation
Construction of a new 115 kV Phayakkhaphum Phisai substation
(vi)
a.
b.
Construction of 115 kV Yasothon-Amnat Charoen transmission line
Expansion of 115 kV Yasothon substation
(vii)
Construction of a new 115 kV Amnat Charoen substation
(viii)
a.
b.
c.
(ix)
Expansion of Rajjaprabha substation
(x)
Expansion of Phangnga substation
(xi)
Expansion of 115 kV Hat Yai 2 substation for 115 kV Hat Yai 2-Songkhla
transmission line
(xii)
Expansion of Songkhla substation
(xiii)
Expansion of 115 kV Hat Yai 2 substation for 115 kV Hat Yai 2-Pattani
transmission line
(xiv)
Construction of a new 115 kV Lang Suan substation
(xv)
a.
b.
c.
Construction of 115 kV Roi Et-Phon Thong transmission line
Expansion of 115 kV Roi Et- Phon Thong substation
Construction of a new 115 kV Phon Thong substation
Construction of 115 kV Narathiwat-Sungai Kolok transmission line
Expansion of 115 kV Narathiwat substation
Construction of a new 115 kV Sungai Kolok substation
Appendix 2
C.
D.
(xvi)
Expansion of 115 kV Chiang Mai 1 substation
(xvii)
Expansion of Mae Moh 3 substation
(xviii) a.
b.
c.
Construction of 115 kV Tha Tako-Bang Mun Nak transmission line
Expansion of 115 kV Tha Tako-Bang Mun Nak substation
Construction of a new 115 kV Bang Mun Nak substation
(xix)
a.
b.
c.
Construction of 115 kV Chiang Rai-Mae Chan transmission line
Expansion of 115 kV Chiang Rai substation
Construction of a new 115 kV Mae Chan substation
(xx)
a.
b.
c.
Construction of 115 kV Tha Tako-Bung Sam Phan transmission line
Expansion of 115 kV Tha Tako-Bung Sam Phan substation
Construction of a new 115 kV Bung Sam Phan substation
(xxi)
a.
b.
Construction of 115 kV Chiang Rai-Thoeng transmission line
Construction of a new 115 kV Thoeng substation
21
Transmission System for Mae Moh Units 12 and 13
(i)
Construction of 500 kV Sai-Noi-Nong Chok transmission line and associated
substations
(ii)
Installation of one 200/230 kV interbus transformer rated 450/600/750
megavolt-ampere (MVA) at Tha Tako substation
(iii)
Installation of two 200/230 kV interbus transformer each rated 450/640/750 MVA
Sai Noi substation (consisting of seven single-phase units inclusive of one spare
unit each rated 150/200/250 MVA)
(iv)
Installation of two 75 MVA shunt reactors, one at each end of 500 kV Tha TakoNong Chok line
Environmental Protection Component
Provision of a mobile air quality monitoring system at Mae Moh power plant
7.
Two additional contracts for supply of aluminum ingots belonging to EGAT’s subsequent
transmission expansion plan, TS.9, were included later to utilize the available loan savings.
22
Appendix 3
IMPLEMENTATION SCHEDULES
A. Loan 1170-THA
1990
Description
Planning Stage
Feasibility Study
1991
1992
1993
1994
1995
1996
1997
1998
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Approval by
EGAT Board
Appraisal
by NESDB
Approval
by NESDB
Financing
Arrangements
Preliminary Work
Land Procurement
and Rights-of-Way
Line Route Survey
Plan Profile and
Line Design
Substation
Design
Specifications and
Bidding Documents
Implementation
and Construction
Bidding Period
Bid Evaluation
and Negotiation
Letter of Intent
Manufacturing and
Transportation
Construction
Transmission
Lines
Substations
Commissioning
Transmission
Lines
Substations
Original Schedule
Actual Schedule
EGAT = Electricity Generating Authority of Thailand, NESDB = National Economic Social
Development Board.
Appendix 3
23
B. Loan 1245-THA
1991
Description
Planning Stage
Feasibility Study
1992
1993
1994
1995
1996
1997
1998
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Approval by
EGAT Board
Appraisal
by NESDB
Approval
by NESDB
Financing
Arrangements
Preliminary Work
Land Procurement
and Rights-of-Way
Line Route Survey
Plan Profile and
Line Design
Substation Design
Specifications and
Bidding Documents
Implementation
and Construction
Bidding Period
Bid Evaluation
and Negotiation
Letter of Intent
Manufacturing and
Transportation
Construction
Transmission
Lines
Substations
Commissioning
Transmission
Lines
Substations
Original Schedule
Actual Schedule
EGAT = Electricity Generating Authority of Thailand, NESDB = National Economic Social Development Board.
24
Appendix 4
FINANCIAL PERFORMANCE OF ELECTRICITY GENERATING AUTHORITY OF THAILAND
(B million)
Item
1992
Balance Sheets:
Assets
Current assets
Fixed assets - Net
Net assets of specific sinking funds
Intangible assets
Other assets
Total Assets
Liabilities and Equity
Liabilities
Current liabilities
Long-term liabilities
Other liabilities
Deferred foreign exchange adjustment
Sinking funds
Total Liabilities
1993
1994
1995
15,909
164,915
4,437
16,277
189,839
4,917
17,310
209,288
5,389
30,337
216,869
5,948
48,280
220,685
6,804
38,407
249,698
8,376
46,361
285,274
9,128
54,690
308,388
11,321
66,010
318,661
12,062
7,799
193,060
9,692
220,725
13,110
245,097
16,150
269,304
20,207
295,976
19,579
316,060
17,682
358,445
21,963
396,362
37,678
434,411
65,196
283,613
0
21,773
38,749
409,331
20,300
99,461
212
(13,631)
4,437
110,779
24,046
117,237
199
(14,124)
4,917
132,275
34,007
126,125
179
(14,674)
5,389
151,026
35,929
131,326
173
(9,570)
5,948
163,806
45,419
126,731
198
0
0
172,348
52,924
153,310
404
0
0
206,638
63,744
164,217
849
0
0
228,810
66,763
210,560
1,377
0
0
278,700
93,592
216,410
2,089
0
0
312,091
89,421
183,722
2,089
0
0
275,232
12,978
75,472
13,123
80,948
13,293
92,205
88,450
220,725
94,071
245,097
105,498
269,304
13,369
108,836
6,804
(5,381)
123,628
295,976
13,505
111,594
8,376
(24,053)
109,422
316,060
13,715
123,997
10,603
(18,680)
129,635
358,445
13,778
92,563
11,321
0
117,662
396,362
13,824
96,178
12,318
0
122,320
434,411
13,842
108,486
11,771
0
134,099
409,331
62,180
56,558
67,798
51,072
17,391
6,048
11,343
2,468
69,651
63,643
76,190
58,400
18,455
6,422
12,033
4,637
78,880
72,780
95,247
72,717
25,854
6,894
18,960
4,099
85,920
79,451
108,835
80,745
35,396
8,303
27,093
6,387
92,725
85,896
125,376
105,716
21,420
8,592
12,828
8,449
92,134
85,598
146,572
124,085
31,422
11,112
20,310
2,000
90,414
84,512
134,335
149,510
(13,023)
11,238
(24,261)
5,837
96,781
90,725
160,992
132,168
31,289
11,114
20,175
7,975
103,165
97,412
185,072
166,157
26,207
9,984
16,223
16,620
Equity
Capital contribution (government, surplus, royalties) 12,820
Retained earnings
69,461
Specific purpose funds
Foreign exchange losses
Total Equity
82,281
Total Liabilities and Equity
193,060
Income Statements and Performance Ratios:
Electricity generated and purchased (kWh, millions)
Electricity sales (kWh, millions)
Electricity sales
Operating expenses
Net income (loss) before interest charges
Interest charges
Net income (loss)
Remittance to Ministry of Finance (paid)
Net
Net
Net
Net
income
income
income
income
(loss) as a % of sales
(loss) before interest as % of sales
(loss) as a % of equity
(loss) before interest as % of total assets
Debt-equity ratio
Debt service coverage
Self-financing ratio (%)
- annual
- 3-year average
56,006
50,771
61,860
45,779
16,923
4,584
12,339
2,614
1996
1997
1998
1999
2000
2001
20.0
27.4
15.0
8.8
16.7
25.7
12.8
7.9
15.8
24.2
12.8
7.5
19.9
27.1
18.0
9.6
24.9
32.5
21.9
12.0
10.2
17.1
11.7
6.8
13.9
21.4
15.7
8.8
-18.1
-9.7
-20.6
-3.3
12.5
19.4
16.5
7.2
8.8
14.2
12.1
6.4
1.21:1
1.72
1.33:1
1.40
1.31:1
1.53
1.24:1
1.64
1.04:1
1.91
1.23:1
1.05
1.19:1
2.55
1.98:1
1.23
1.77:1
1.07
1.37:1
0.86
33.5
26.6
31.9
32.6
35.9
27.3
36.5
31.0
61.5
50.1
14.3
13.9
43.6
50.2
29.6
27.1
23.5
18.6
25.9
24.3
kWh = kilowatt-hour.
Source: Annual report of the Electricity Generating Authority of Thailand.
Appendix 5
25
FINANCIAL AND ECONOMIC PERFORMANCE OF PROJECTS
1.
The financial and economic evaluation of the Third Power Transmission (Sector) Project
(PT3) and the Fourth Power Transmission (Sector) Project (PT4) at appraisal was undertaken in
three steps: (i) review of the demand forecast of the Electricity Generating Authority of Thailand
(EGAT); (ii) confirmation of each subproject as the least-cost solution to meet the need; and
(iii) determination of the financial internal rate of return (FIRR) and the economic internal rate of
return (EIRR) of the total project. Although the same methodology was used, FIRR and EIRR
were estimated separately for the two projects because the appraisal for PT4 was done 1 year
later than PT3 and data update was necessary.
2.
The FIRR estimates included the costs and benefits associated with EGAT’s power
development plan as a whole and compared incremental capital and operating costs of a
5-year period with EGAT’s projected incremental revenues. The EIRR estimates included costs
and benefits for the power sector as a whole over the same 5-year period.
3.
The beneficiaries of the projects were identified as industrial, commercial, and residential
electricity consumers in the provincial and rural areas of Thailand and customers in Bangkok
and in industrial estates.
4.
The power system analyses undertaken by EGAT demonstrated that the projects
constituted an integral component of EGAT’s least-cost power development plan. FIRRs or
EIRRs for individual project components were not calculated as the separation of such
integrated power system components is generally arbitrary and of only limited value. It is very
difficult to separate costs and benefits of such components from those of other complementary
investments in generation, transmission, and distribution. This is especially the case for a widely
spread transmission investment of the nature of Transmission System Expansion Plan No. 8
(TS.8).1
5.
The FIRR and EIRR for the projects were therefore estimated at the time of appraisal
covering all the investments expected to take place during the 5-year time-slice
FY1992–FY1996. The FIRR was calculated for EGAT alone. The EIRR was calculated for the
sector as a whole.
A.
Financial Internal Rate of Return
6.
The FIRRs calculated at appraisal were 8.5% for PT3 and 11.7% for PT4, exceeding
EGAT’s estimated weighted average cost of capital of about 6%.
7.
Since both projects were completed in 1998, it was not necessary for the project
completion report (PCR) and the project performance audit report (PPAR) to recalculate the
FIRR separately for the two projects. At the time of preparation of the PCR, the FIRR for the two
loans taken together was reevaluated using the same methodology as at appraisal but with the
time-slice extended to cover the period until FY1998 as well as to include all relevant
preparatory expenditures prior to FY1992 and minor completion works until FY2000. The capital
costs of EGAT’s overall investment program during this period were lower than appraisal
estimates for the reasons explained in the main text. Although fuel costs were considerably
higher than envisaged at appraisal, this had no significant effect on the FIRR because of the
1
Separation would be more readily undertaken if a comprehensive analysis of nodal pricing—the cost of supply to
each node in the network—were available.
26
Appendix 5
automatic pass-through of increases in fuel prices on consumer tariffs. The incremental sales
attributable to the investment made during the time-slice were higher than projected at appraisal
both because of the extended period of coverage from FY1992 to FY1998 and because of the
faster growth in sales during the 3 years from FY1995 to FY1997. A 25-year period of operation
for the assets was assumed in line with the assumptions during appraisal, and the incremental
sales were valued at EGAT’s average tariff of B1.5894 per kilowatt-hour for FY1999. The capital
costs for the FIRR included taxes and import duties, but excluded interest during construction.
All costs and benefits were valued in 1998 constant prices by applying factors reflecting the
official rates of inflation. Incremental working capital costs were not material. The relatively
minor operating and fuel costs of the two power stations constructed during the time-slice but
sold to EGAT’s associated generating company toward the end of the period were retained
within the existing cost framework.
8.
The FIRR was recalculated for the PPAR using the same methodology as in the PCR
with adjustments made with respect to incremental sales in the years FY1996–FY2001;
matching operation and maintenance costs to capital expenditure; updating the data for sales in
the years FY2000 and FY2001 to actual data; and making consequential changes in fuel costs.
The resulting FIRR for the combined projects increased from 13.4% to 16.2%.
B.
Economic Internal Rate of Return
9.
The EIRRs calculated at the time of appraisal were 15.8% for PT3 and 13.1% for PT4.
10.
Since both projects were completed in 1998, it was not necessary for the PCR and
PPAR to recalculate EIRR separately for the two projects. The EIRR for the two projects taken
together was reevaluated at the time of preparation of the PCR by employing a methodology
similar to that used during appraisal. The assessment included the economic costs and benefits
for the power subsector as a whole, not just for EGAT, since the beneficiaries of the investment
were the final electricity consumers served by the Metropolitan Electricity Authority (MEA) of
Thailand and the Provincial Electricity Authority (PEA) of Thailand as well as by EGAT. The
economic viability of the investment was, therefore, assessed by widening the scope of the
costs and benefits to include (i) on the cost side, all investments undertaken during the years
covered by the time-slice (FY1992–FY1998) by EGAT, MEA, and PEA together with their
associated operating costs; and (ii) on the benefit side, the benefits accruing to all final retail
consumers.
11.
With regard to the costs, an approach similar to timing and asset utilization previously
described for the calculation of the FIRR was also used for the EIRR but taxes and import duties
and other transfer payments were excluded. Local currency expenditures relating to nontraded
goods were expressed in terms of border-price equivalents by applying a standard conversion
factor of 0.92.
12.
The economic benefits arising from the consumption of electricity included the
calculation of the consumer surplus based on the calculated cost of alternative sources of
energy displaced by the use of electricity. Private diesel generator sets of 40 kilowatt capacities
were assumed for this purpose.2
2
The appraisal of the first loan included a rough estimate of the consumer surplus associated with incremental sales
based on the avoided cost of efficient kerosene lamps (residential) and diesel generators (commercial and
industrial).
Appendix 5
27
13.
The EIRR was reestim ated for the PPAR using the same methodology as in the PCR
with adjustments made with respect to incremental sales in the years FY1996–FY2001 and
making other changes as for the FIRR recalculation. In addition, the calculated value of
consumer surplus was reduced since the avoided cost calculations at the time of preparation of
the PCR were considered to be appropriate only in rural areas accounting for about 15% of total
retail sales in the country. The resulting EIRR for the combined projects decreased slightly from
20.9% to 20.2%.
14.
The following table summarizes the results obtained from both financial and economic
reevaluation. Details of the reevaluation are presented on the following pages.
Table A5.1: Summary of Financial and Economic Reevaluations
(%)
Item
FIRR
EIRR
Appraisal
8.5
15.8
PT3
a
PCR
13.4
20.9
PPAR
16.2
20.2
a
Appraisal
11.7
13.1
PT4
a
PCR
13.4
20.9
PPAR
16.2
20.2
a
EIRR = economic internal rate of return, FIRR = financial internal rate of return, PCR = project completion report,
PPAR = project performance audit report, PT3 = Third Power Transmission (Sector) Project, PT4 = Fourth Power
Transmission (Sector) Project.
a
The two projects combined.
C.
Sensitivity Analysis
15.
Sensitivity analyses were carried out for four different scenarios: (i) increase in operation
and maintenance cost; (ii) increase in fuel cost; (iii) decrease in electricity sales; and
(iv) decrease in tariff in real terms. Overall, the reestimated FIRR and EIRR are relatively
sensitive to changes in electricity sales. EIRR is also sensitive to changes in electricity tariffs.
Table A5.2: Sensitivity Analysis
(%)
Item
FIRR
EIRR
Project Reevaluation (base case)
16.2
20.2
For a 10%
Increase in O&M Cost
Increase in Fuel Cost
Decrease in Electricity Sales
Decrease in Real Tariff
16.0
13.9
6.0
11.9
20.0
19.5
15.7
16.1
EIRR = economic internal rate of return, FIRR = financial internal rate of return, O&M = operation and maintenance.
28
Appendix 5
Table A5.3: Financial Internal Rate of Return on EGAT's PDP Time-Slice FY1992–FY1998
(B million 1998 Prices)
FY
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Capital
5,249
29,757
23,040
17,584
27,087
32,466
23,738
21,766
21,001
3,650
4,429
1,393
Incremental Costs
O&M
Fuel
Total
5,249
29,757
23,040
1,891
231
19,705
2,568
6,116
35,771
3,380 12,932
48,778
3,973 13,601
41,311
4,517 16,442
42,725
5,042 23,201
49,244
5,133 29,310
38,093
5,244 27,137
36,810
5,279 29,048
35,720
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
5,279 29,048
34,327
Sales (GWh)
Total
Increm'tal
36,611
39,368
44,762
50,772
6,010
56,559
11,797
63,644
18,882
72,780
28,018
79,451
34,689
85,898
41,136
85,395
40,633
84,517
39,755
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
90,726
45,964
B/kWh
2.131
1.888
1.768
1.628
1.539
1.489
1.550
1.540
1.543
1.717
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
1.589
Revenues
Increm'tal
Net
(5,249)
(29,757)
(23,040)
9,782
(9,924)
18,157
(17,614)
28,120
(20,658)
43,416
2,105
53,410
10,685
63,487
14,243
69,755
31,662
63,187
26,377
73,055
37,335
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
73,055
38,728
211,159
FIRR:
16.2%
FIRR: at Loan 1245-THA appraisal, 11.7% and at PCR, 13.4%
EGAT = Electricity Generating Authority of Thailand, FIRR = Financial internal rate of return, GWh = gigawatt-hour,
kWh = kilowatt-hour, O&M = Operation and maintenance, PCR = project completion report, PDP = power development plan.
29
Appendix 5
Table A5.4: Economic Internal Rate of Return
(B million 1998 Prices)
EGAT, MEA and PEA
FY
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Capital
5,065
26,210
21,004
31,430
40,571
47,195
42,169
43,107
48,953
33,041
4,429
1,393
Incremental Costs
O&M
Other
1,992
7,638
14,203
15,335
18,267
24,511
29,790
28,048
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
29,706
962
2,228
2,771
4,815
5,936
6,297
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
6,032
Total
5,065
26,210
21,004
34,384
50,437
64,169
62,318
67,310
79,761
68,863
38,509
37,131
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
35,737
Incremental Revenue
GWh
B/kWh
Total
5,891
12,353
18,384
27,047
33,612
39,241
38,465
37,534
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
43,135
2.232
2.172
2.086
2.112
2.072
2.046
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
2.168
13,146
26,834
38,358
57,127
69,644
80,279
83,385
81,366
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
93,508
344,568
EGAT = Electricity Generating Authority of Thailand, FY = fiscal year, GWh = gigawatt-hour, kWh = kilowatt-hour,
MEA = Metropolitan Electricity Authority, O&M = operation and maintenance, PEA = Provincial Electricity Authority.
Continued on next page
30
Appendix 5
Table A5.4 — Continued
FY
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
EIRR:
Consumer Benefits
B/kWh
Volume
0.23
0.24
0.25
0.25
0.26
0.26
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
National
Net
Benefit
(5,065)
(26,210)
(21,004)
(19,870)
(20,625)
(21,141)
1,575
10,946
10,726
23,824
51,934
66,809
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
68,202
1,368
2,979
4,670
6,767
8,611
10,208
9,302
9,077
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
10,431
PCR
20.9%
PPAR
20.2%
EIRR = Economic internal rate of return, PCR = project completion report, PPAR = project
performance audit report.