Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 25087

IMPLEMENTATION COMPLETION REPORT(IDA-21840)

ON A

CREDIT

IN THE AMOUNT OF SDR$7.9 MILLION

TO THE

REPUBLIC OF CHAD

FOR A

PETROLEUM AND POWER ENGINEERING PROJECT

June 4, 2003

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective April 14, 2002)

Currency Unit = CFA Franc (FCFA) FCFA 1.00 = US$ 0.001

US$ 1 = 740 FCFA

FISCAL YEARJanuary 1 December 31

ABBREVIATIONS AND ACRONYMS

CAS = Country Assistance Strategy CCCE = Caisse Centrale de Cooperation EconomiqueDCA = Development Credit AgreementEIB = European Investment BankESMAP = Energy Sector Management Assistance ProgrammeFOB = Free on BoardGEF = Global Environment FacilityICR = Implementation Completion ReportIDA = International Development Association IMF = International Monetary FundLPG = Liquified Petroleum GasMOP = Memorandum of PresidentPAD = Project Appraisal DocumentPPF = Project Preparation FacilityQAG = Quality Assurance GroupSEERAT = Société d’Etude et d’Exploitation de la Raffinerie du TchadSTEE = Société Tchadienne d’Eau et d’Electricité

Vice President: Callisto MadavoCountry Manager/Director: Ali M. Khadr

Sector Manager/Director: M. Ananda Covindassamy Task Team Leader/Task Manager: Michel Layec

CHADPETROLEUM AND POWER ENGINEERING PROJECT

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 14. Achievement of Objective and Outputs 55. Major Factors Affecting Implementation and Outcome 96. Sustainability 127. Bank and Borrower Performance 138. Lessons Learned 169. Partner Comments 1710. Additional Information 19Annex 1. Key Performance Indicators/Log Frame Matrix 20Annex 2. Project Costs and Financing 21Annex 3. Economic Costs and Benefits 24Annex 4. Bank Inputs 25Annex 5. Ratings for Achievement of Objectives/Outputs of Components 27Annex 6. Ratings of Bank and Borrower Performance 28Annex 7. List of Supporting Documents 29

Project ID: P000528 Project Name: CHAD PETROLEUM AND POWER ENGINEERING

Team Leader: Michel E. Layec TL Unit: AFTEGICR Type: Core ICR Report Date: June 4, 2003

1. Project Data

Name: CHAD PETROLEUM AND POWER ENGINEERING

L/C/TF Number: IDA-21840

Country/Department: CHAD Region: Africa Regional Office

Sector/subsector: Oil and gas (50%); Power (50%)Theme: Infrastructure services for private sector development (P); Pollution

management and environmental health (S)

KEY DATESOriginal Revised/Actual

PCD: 10/31/1989 Effective: 03/15/1991 03/15/1991Appraisal: 12/08/1989 MTR:Approval: 11/20/1990 Closing: 12/31/1995 12/31/2001

Borrower/Implementing Agency: GOVERNMENT/SEERATOther Partners:

STAFF Current At AppraisalVice President: Callisto E. Madavo Franco BatzellaCountry Director: Ali Khadr T.S. NayarSector Manager: Praful Patel F. ElejadeTeam Leader at ICR: Michel E. LayecICR Primary Author(s): Michel E. Layec

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: M

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S

Project at Risk at Any Time:

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:

The Petroleum and Power Engineering Project- the Engineering Project or the Project-, did not explicitly have a development objective with an expected outcome as such. Rather, it had a proposed set of outputs which, for the purposes of this ICR, are considered to be the Project objective. This objective according to the Memorandum of the President (1990), was to complete the preparation of a proposed follow-up investment project -- the Petroleum and Power Project, also known and referred to in this document as the Sedigi Project. The Engineering Project's objective was in line with both the Bank’s Country Assistance Strategy (CAS) and the Government's energy strategy at the time. The focus of the CAS was on channeling the country’s scarce financial resources to the most essential development projects – (a) resource mobilization; (b) least-cost development of energy supply; (c) development of energy sector institutions; and (d) rationalization of energy sector policies. The Government's strategy was to develop the Sedigi hydrocarbon field, a small field north of Lake Chad; transport the oil extracted to Chad's capital city of N'Djamena via a 320-km pipeline; process the oil in a mini-refinery with an output of 3,000 barrels per day; and use a large portion of the refinery output to fuel a new power station alongside the refinery. The combined new petroleum and electricity facilities were to provide Chad with the least-cost solution for meeting Chad's energy needs.

The Engineering Project’s objective was clear and responded to the country’s adverse energy supply situation. Chad desperately needed an alternative to imported oil, which was prohibitively expensive due to the country’s landlocked position. The cost of petroleum products, at around US$50 million/year, was equivalent to about 45 percent of export earnings. The need to transport refined petroleum products 1000 miles from the nearest port (Cameroon) resulted in a landed cost of around US$400 per ton, consisting of the FOB price at the port in Cameroon plus US$178 per ton for road handling and transport to the capital city N'Djamena. By comparison, preliminary estimates at the time of project preparation (1990) indicated that the cost of products from the proposed Sedigi refinery was about half the cost of imports (US$200 per ton).

The discovery of the Sedigi oil field had resulted from a long history of exploratory efforts that had begun in 1970. The field was too small (about 20 millions of barrels) of proven and probable reserves for export but the economics were favorable for domestic use. On the petroleum side, an independent consultant had determined that Sedigi’s reserves were sufficient to meet the needs of an investment in the Sedigi Project. Proven reserves were about 12 billion barrels. Two wells were to produce a total of about 2,000 barrels per day for seven years which was equivalent to about 80 percent of total domestic petroleum consumption at the time of appraisal of about 2,400 barrels per day. The planned refinery was to produce gasoline, diesel oil and fuel oil as a substitute for higher cost imported diesel oil in power generation and for use in other industries. Furthermore, the expected production of LPG from the refinery had some potential for replacing other household fuels such as wood and kerosene.

On the electricity side, prospects for power system expansion depended significantly on the success of the Sedigi development and the construction of the related power station. This project offered Chad the opportunity to reduce fuel costs and tariffs, making power more affordable. These new facilities along with an ongoing rehabilitation program of existing facilities focused on assuring reliable power supply at least cost. The national power and water company, the Societe Tchadienne d' Eau et d' Electricite (STEE) was operating four isolated networks – one based in

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N’Djamena and the three smaller systems in other major towns. The power plant in N’Djamena had an installed capacity of 20.5 MW or about 70 percent of total power system capacity in the country. Years of political turmoil had damaged existing power facilities. Some of the diesel generating units in N’Djamena required urgent maintenance and in other areas power plant failures had resulted from lack of preventive maintenance and spare parts. At the time of the Engineering Project appraisal, STEE was receiving technical assistance for system rehabilitation and management improvement. The company had also entered into a management contract with a French company, which was receiving financing from the Caisse Centrale de Cooperation Economique (CCCE) of France.

To implement the Engineering Project and the follow-up investment project - the Sedigi Project-, the Government of Chad and IDA agreed to create the Societe d’Etude et d’Exploitation de la Raffinerie du Tchad (SEERAT), a company jointly owned by the public and the private sectors. At the inception of the Engineering Project, the Government of Chad owned 51 percent of the shares and a consortium of three oil companies --Esso, Chevron, and Shell (the Consortium) owned the remaining 49 percent. This company was to operate under the Bureau of Petroleum Affairs and monitor progress in the Engineering Project.

3.2 Revised Objective: At the request of the Borrower, in August 2000, IDA amended the project's initial objectives to use the remaining balance of the IDA Credit of US$3.5 million to meet the emergency needs of the power and water sectors. IDA amended Schedule 2 of the Development Credit Agreement for the project's objectives to read as follows: "..The objectives of the project are : (i) to assist the Borrower and SEERAT to undertake all the preparations necessary for the construction of the Facilities (including preparation of their construction bid solicitation packages) and supervision of their construction within a sound institutional, macroeconomic and environmental framework; and (ii) to assist the Borrower and STEE to implement an emergency rehabilitation program for the electricity and water supply sectors."

IDA accepted the Government's rationale for revising the initial objectives of the Project. At the time of such revision, and following consultations with the Bank, the Government decided to proceed with the Sedigi Project on its own and, in any case, it was unlikely that the initiation of the construction of the Sedigi Project would take place by the closing date of the Credit (2000). Therefore, the resources allocated to carry out Part II of the Engineering Project -- construction supervision and commissioning of the follow up Sedigi Project were no longer necessary. At the same time also, Chad's electricity and water sectors were facing a very serious crisis that threatened all economic and social activities in the country. In the power sector, Chad's power utility could not adequately operates its facilities due to the physical condition of the generating units and the high costs of imported petroleum products. In the water sector, supply cuts had resulted from STEE's inability to maintain water facilities or afford the high cost of the petroleum products that the stations used to pump water. To ensure the continued provision of electricity and water Services there were no short-term alternatives to using the funds available in the Engineering Credit.

3.3 Original Components:

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According to the original statement of objectives in the project’s Memorandum of the President (MOP), the Engineering Project was to consist of two phases. Phase I was to finance the engineering, economic, pricing and environmental studies required to confirm the technical, eonomic and financial feasibility of the Sedigi Project, and design and implement the Sedigi Project. Upon completion of these studies and confirmation of the costs and economic/financial viability of the proposed Sedigi Project, IDA was to return to its Board with an investment project that would finance the construction of the refinery, pipeline, and power facilities. Phase II of the Engineering Project was also to finance project management, and some of the operational costs of SEERAT as well as the costs of supervising and commissioning the pipeline, refinery and power facilities. However, IDA was to disburse the funds earmarked for Phase II only after Phase I had demonstrated the technical, economic, environmental and financial viability of the Sedigi Project. The Phase II funds were included in the Engineering Project as Chad needed bridge financing to cover financing requirements up to the effectiveness of the Sedigi Project.

The preparatory work in Phase I of the Petroleum and Power Engineering Project was to finance the following activities:

(a) revision of cost estimates and possible modification of the project’s configuration to incorporate new data on the quality of Sedigi crude oil based on drilling and testing results;(b) preparation of engineering designs, duty specifications and drawings in sufficient detail to prepare three separate sets of tender documents for the refinery, pipeline and power plant components;(c) evaluation of supply and installation bids for the detailed engineering, procurement and erection of facilities;(d) preparation of an environmental assessment;(e) studies related to pricing of petroleum products and power tariffs;(f) tudy on the possible utilization of the Sedigi field’s associated gas;(g) support for ESMAP’s household energy study;(h) management personnel for SEERAT; and (i) office space, materials, equipment, vehicles and other facilities for SEERAT.

Phase II initiation was contingent on the demonstration of the feasibility and viability of the investment in the Sedigi Project and was to consist mainly of the following activities:

(a) financing of the local costs of supervision of construction and commissioning of the project’s facilities;(b) assistance to SEERAT in the field of operations, maintenance, finance, administration, safety and security; and(c) training of local personnel.

A key condition for disbursing the funds for Phase II was the demonstration of the technical, economic and financial viability of the Sedigi Petroleum and Power Project and clearance for appraisal.

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3.4 Revised Components:

The amendment of the Project's Development Credit Agreement (DCA) in October 2000, added the following components to the Engineering Project:

(a) rehabilitation of power and water supply facilities in N'Djamena; (b) provision of expert services for the rehabilitation of power and water supply facilities; (c) acquisition of vehicles, goods and equipment, including spare parts and petroleum products; (d) setting up of the basic utility management systems such as metering, billing and customer management systems, and loss detection;(e) upgrading of the accounting and financial management systems; and (f) studies to optimize petroleum product procurement and materials management.

These components were reasonable for meeting the project's revised objectives, which focused on the power and water sectors.

3.5 Quality at Entry:

The ICR has rated Quality at Entry as Satisfactory. There was no evaluation of the quality of the Engineering Project's original design at entry because the Quality Assurance Group (QAG) did not exist at the time of project preparation. The ICR finds the quality at entry satisfactory because the follow-up Sedigi Project: (a) was a priority project for the Government; (b) supported two key elements of the Bank’s CAS --least cost supply of energy and development of sector institutions; and (c) gave reasonable indications that the follow-up Project would have economic benefits. In addition, the design of the Engineering Project's components was in line with project objectives.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:

Overall Outcome. The ICR has rated the Project's overall outcome as satisfactory, based on the narrow definition of what the Memorandum of the President said it would acheive, i.e., to complete the preparation of a proposed follow-up investment project. The fact that during the course of Project implementation, fundamental disagreements emerged between the World Bank and the Government on the approach to the follow-up investment project does not, in our view, invalidate the view that the Project met its objectives, even tough the latter were very modest and restricted to outputs.

The Project's overall outcome is rated as satisfactory for the following three main reasons. First, the Engineering Project met its main initial objective, which was to complete the preparatory sectoral, engineering, economic and financial works required for the appraisal and financing of a potential follow-up investment in the Sedigi Project. The Engineering Project was therefore essentially a preparatory facility which was to provide for the completion of the engineering and investment preparatory work. Such preparatory work has been satisfactorily completed and used by the different public and private companies that have shown interest in constructing the field

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facilities, the pipeline and the refinery. The initiation and disbursements for Phase II of the Project were clearly contingent upon the demonstration in the context of Phase I of the Project of the viability of the Sedigi project. Since funds remain to be disbursed by the revised closing date of 2000, the 2000 amendment completed the initial objectives to prevent the collapse of the delivery of the electricity and water services particularly in the capital city. Second, the Bank's flexibility in extending the Engineering Project closing date and in amending the Project resulted in a fruitful and essential policy dialogue in the electricity and downstream petroleum sectors with the Government and the Donors interested in the electricity sectors that most likely would not have occurred in a difficult energy sector situation. The Project provided financial resources for Chad to access much needed external expertise in the areas of institutional reforms of the electricity sector, alternative regulatory frameworks, assessement of the issues facing the electricity and water sectors. Such assessments provided the elements for an informed dialogue between the Government and the Donors. The Engineering Project also led to the preparation of the Critical Electricity and Water Services Rehabilitation Project, approved by the Board in October, 2002 which builds upon reforms implemented previously in the electricity and water sectors. However project implementation suffered of the Bank's delays in decision making and of its hesitations on the conditions for its financial support to the follow-up Sedigi Project. Third, the amendment approved in August 2000, which revised the Project initial objectives, led to the implementation of a limited but critical rehabilitation program and assistance to the electricity and water sectors. Such program consisted in the: (a) rehabilitation of some electricity generating units essential to prevent the collapse of the electricity production in N'Djamena, the capital city; (b) essential maintenance of the key electricity generating units; (c) purchase of critical spare parts; and (d) purchase of petroleum products. These actions proved critical to ensure delivery of critical electricity and water services in the capital city albeit on a limited scale.

4.2 Outputs by components: Since the project did not have a Project Appraisal Document (PAD), according to ICR guidelines, the ICR should review the project's contribution to the relevant key thematic areas in the Bank (Annex 5).

Macroeconomic Objectives. The ICR has rated the impact on macroeconomic objectives as modest. Although the Project did not contain explicit macroeconomic objectives, the completion of the preparation work for the Sedigi Project was clearly important for the future of domestic oil production, the distribution of refined petroleum products in Chad and a significant decrease in electricity tariffs. Domestic oil production was to be a key factor in reducing the energy cost of developing a modern economy in Chad (construction of the Doba crude export project started in 2001) and liberalization of petroleum imports and prices was also important to the economy (prices liberalization was effective in 2001). However, since the main macroeconomic impacts - related to a decrease in the cost of refined petroleum products and of electricity services - will depend on the future operation of the Sedigi production and refining facilities, which were outside the scope of the Engineering Project, the ICR has rated the impact on macroeconomic objectives as modest.

Physical Objectives. The ICR has rated the achievement of physical objectives as

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substantial for the amended part of the Credit. The initial Project had no physical objectives as its objectives were the completion of the engineering, economic and financial work and related studies concerning petroleum and power pricing necessary to the appraisal of a follow-up project - the Sedigi Project-. By 1993 all of this preparatory work was completed. Although the potential follow-up Sedigi Project did not materialize as a Bank project as quickly as expected, some of the companies interested in the implementation of the Sedigi project used the design work completed under the Engineering Project to construct the production facilities at the Sedigi field and the pipeline to transport the oil to N' Djamena. Construction of the Sedigi oil field facilities and of the oil pipeline between Sedigi and N'Djamena is underway. The Government is also currently negotiating with investors for financing, constructing and managing the refinery. Following the October 2000 amendment, the Project also financed the emergency rehabilitation of the STEE power and water supplies facilities, the acquisition of spare parts and of petroleum products. This financing allowed essential services of electricity and water supply to be maintained. As the physical objectives of the amended credit were fully met, the ICR has rated the achievement of physical objectives of the amended credit as substantial.

Public Sector Management. The ICR has rated the public sector management achievement as substantial. Originally the Project was to support capacity-building of the public sector for petroleum development through a partnership with the private sector regarding financial support and technical expertise. However, during the Engineering Project's implementation, the Bank, the Government and the donor community interested in Chad's energy sector agreed that an increased role of the private sector in the petroleum sector was essential and correspondingly that the role of the public sector in the Sedigi Project should be significantly reduced. On that basis, the Governement decided that it should accept a minority position in the SEERAT company and to ask the oil consortium to take the majority position and the related technical and commercial risks. This was done in 1996. Therefore, the ICR has rated the public sector management achievement of the Project as Substantial. Sector Policy Development. The ICR has rated the project's contribution to sector policy development as substantial. The Project completed studies on petroleum pricing and tariff policy. These studies focused on ensuring economic pricing and on providing a conducive sector framework for private sector development. The Project provided resources and the focus that allow a continued and fruitful dialogue between the public and the private partners and the donor community. Thus overall, the project's contribution to sector policy development is rated as substantial.

Private Sector Development. The ICR has rated the achievement of private sector development objectives as substantial. At the time of project appraisal, the Engineering Project's objective for private sector development was: (a) the strengthening of public sector capacity in oil and gas development; and (b) technical expertise and financing to be provided by the private sector. During the 1995-2000 period, the Engineering Project became the main vehicle for mobilizing the private sector in taking the lead role in the development of Chad's oil and gas resources. Discussions in 1995 during the preparation of the Sedigi Project led to a substantial change in the project's philosophy and structure. In 1996 a Consortium made of Exxon, Shell and Elf agreed to lead the project and to take a majority position (51%) in SEERAT, the project

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company.

The consortium imposed however several conditions to its participation and financing, including the preparation on a shared cost basis, of its own financial, engineering and environmental studies and linked the implementation of the Sedigi Project to the implementation of a larger petroleum project in southern Chad, the Doba project. Concurrent with the preparation of the domestically-oriented Sedigi Project at a cost of about US$112 million, the Bank also was in the process of preparing the multi-billion dollar Doba project for export, involving the same Consortium of oil companies. In 1996, negotiations between the Consortium and Chad finally resulted in a formal linkage between the developments of both the Sedigi and Doba fields, reflected in the contractual agreements. The Consortium agreed to take the majority share in the financing and implementation of the Sedigi project subject to several conditions, including satisfactory conclusion of a concession agreement for the development of the Doba oil fields and agreement of the Government to pledge some of its royalties from the Doba project to the Consortium as a guarantee against political risks on the Sedigi project. In 1998, after two years of discussions, the Consortium, the Government, the Bank and the donors finally agreed to a financing plan. However there were delays in the implementation of that plan due to protracted negotiations in the appraisal and financing of the Doba project.

Finally, at the end of 1999, frustrated by years of delays, the Government decided to proceed without the Consortium and the Bank for the construction of the Sedigi project and to built the Sedigi production facilities and the oil pipeline with financing from Taiwan and the assistance of a contractor from Sudan. The refinery facilities were initially to be financed by the Sudanese company; however this did not materialize and a private sponsor for the refinery remains to be selected. The Government also disolved the SEERAT company. During 2000-2001, the Sudanese contractor initiated the construction of the oil production facilities and the 320-km oil pipeline. However deficiencies in the welding and protection of the pipeline have been found and remedial actions were defined in 2002 by experts from Algeria.

The ICR has rated the achievement of private sector development objectives as substantial because of: (i) the Project's overall role in supporting private sector participation in the development of Chad's oil resources and of the Sedigi's oil resources in particular, and (ii) the fact that the capacity built are still benefitting Chad despite the dismantlement of SEERAT. Environmental Development. The ICR has rated the achievement of environmental objectives as substantial. The original environmental assessment (EA) that the Engineering Project prepared in 1991 contributed to the design of the project particularly on pipeline routing around Lake Chad and concluded that the follow up Sedigi Project would have no major adverse impact on the environment and in particular would not disturb populated areas and Lake Chad. This first EA was reviewed and approved by the Bank. However by the time of the agreed revised project arrangement with the oil Consortium, in 1998, there was a need to update the environmental assessment, especially to reflect the Bank revised environmental guidelines and the concerns regarding the strategy for minimizing gas flaring and in particular its use for power generation which the Government fully endorsed. A second EA was therefore prepared under the supervision of the Consortium. The conclusions of both EAs regarding the design of the

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facilities and the pipeline routing to minimize environmental impacts in particular on Lake Chad have been incorporated in the different designs. Therefore, the ICR has rated the achievement of environmental objectives as substantial.

4.3 Net Present Value/Economic rate of return:

The calculation of an economic rate of return (ERR) was not applicable to the Petroleum Engineering Project.

4.4 Financial rate of return:

Not applicable to this project.

4.5 Institutional development impact: The ICR has rated the institutional development impact as modest. The project created SEERAT, a public/private sector partnership with the sole purpose of preparing the Sedigi Project and supervising its construction. The SEERAT company had the following initial share distribution: Government of Chad, 51 percent; Shell, 19.6 percent; Esso Production, Inc., 19.6 percent; and Elf Oil Africa, 9.8 percent. In 1998, the new oil consortium took a majority position in SEERAT. Project supervision reports indicate that the performance of SEERAT in the preparation of engineering work, bidding documents and various studies was highly satisfactory. However, due to the change in the structure of the project, the withdrawal at the end of 1999 of the Bank and of the Consortium from the implementation of the project, the relatively high cost of maintaining SEERAT, and considerable delays in the appraisal of the Sedigi Project, the Government decided to dismantle the company. This was effected in 2001.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:

The implementation of the Engineering Project was impacted by the changing conditions set by the Bank and the donors to appraise and finance the follow-up project, a lack of strong private sector interested in the project, the reported smuggling of petroleum products from Nigeria, concerns about recoverable reserves and project economic and financial risks and the need to find an acceptable solution to handling the associated gas. These issues are further discussed below.

(i) Changing Bank/Donor Conditions for Appraisal and Financing of the Follow-up Project (the Sedigi Project). The conditions set by the Bank and the donors for proceeding with appraisal changed during the implementation of the Engineering project. With the completion of the engineering work, bidding documents and remaining studies in 1993, the Bank had then planned to move toward the appraisal of the follow-up project. And in that case, the construction of the project's facilities would have taken place in a short time. However, due to political unrest and poor economic performance, during the 1993-94 period the Bank reduced project activity in Chad to a minimum. When work on the preparation of Sedigi resumed again in 1995, changes in Bank/Donor policies and on project conditions for going forward with the Sedigi project resulted in: (a) the need to revise the original preparatory work; (b) delays in the completion of the

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revised preparatory work; and (c) the decision of the Bank to reduce its participation in the follow-up Sedigi Project. In early 2000, the decision of the Government not to proceed with the agreed project, as designed and to be financed by the Consortium, the Bank, and donor organizations, resulted in the withdrawal of the Bank with respect to the financing of the construction of the Sedigi facilities and therefore in abandonment of Phase II of the Engineering Project. Table 1 below provides a brief chronology of the project key events, showing the changing conditions that affected the approval and implementation of the Sedigi Project.

Table 1: Chronology of Key Events in Project Implementation

1991 The Bank declares the Engineering Project effective. 1993-94 The Bank reduces its project activity in Chad to a minimum because of adverse political

and macroeconomic situations and set conditions for resuming appraisal for the Sedigi Project.

1995-96 Preparatory work for the Engineering Project resumes. The focus turns to financial engineering and whether the private sector or the Government should take the lead in the project. The Consortium agrees to take the lead in the Sedigi Project subject to a set of conditions to protect their investment. The Bank decides not to continue its appraisal of the Sedigi Project and limit its participation to financing of the updating of studies and Phase II of the Engineering Project.

1997-99 The Bank, the donors and the Government agree to a revised financing plan for a Sedigi Project costing US$ 112 million. The Government drops the power plant component due to the lack of private consortium interest, poor power sector performance, and the need for simplifying the Sedigi Project.

2000-2001 The Government decides to implement the field development and the oil pipeline on its own with a Sudanese company and with funds from Taiwan. A private sector company was to be selected to finance, build and operate the refinery. As a result, the Bank agrees to Chad's request to allocate the remaining undisbursed Project funds (US$3.5 million) to emergency needs of the power and water supply sectors.

2001 Project is closed at end of CY2001.

(ii) Lack of Strong Private Oil Consortium Interest in the Sedigi Project. Project supervision reports indicate that the oil consortium was hesitant about the Sedigi project because it was small and for the domestic market only and that they agreed to participate in this relatively small project at a cost of about US$110 million mainly to keep their position in the large, export-oriented Doba project. This project, which the Bank and the Government began preparing in 1993 and was approved by the Banks' Directors on June 2000 , is estimated to cost US$3.7 billion. It is to drill about 300 wells in the Doba field which has proven reserves of about 917 million barrels and construct a 1,070 kilometer pipeline from the Doba fields to Cameroon's Atlantic coast port for export. Over a 28 -year period, the Doba project is expected to generate US$1.8 billion of revenue for Chad and US$550 million in revenue for Cameroon. The economic rates of return are 70 percent for Chad and about 40 percent for Cameroon. The Consortium’s original efforts to minimize its position in the Sedigi project conflicted with the Bank/Donor interest in maximizing its participation and this delayed the Sedigi Project's appraisal. By 1996 the Consortium had finally agreed to take the majority share in the project, subject to further confirmation of economic and financial viability and successful conclusion of negotiations for Doba field development. At the same time, the Consortium had an impact on the configuration of the project. It also wanted to limit the downstream costs to US$70-75 million, meaning a project that included a pipeline and

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a refinery only, excluding the proposed power plant. The oil consortium also conditioned its financial contribution to the Sedigi project to the Bank's approval of the Doba project.

(iii) Reported Smuggling of Petroleum Products. During project implementation, a report confirmed that the smuggling of petroleum products accounted for about 60 percent of gasoline and 30 percent of diesel oil consumed. As a result, established companies operating legally were finding it difficult to do business in Chad. The high and persistent levels of smuggling of petroleum products particularly from Nigeria had a significant impact on the progress of the project, as it led to additional analysis and the need for guarantees to be provided by Chad.

(iv) Concern about Petroleum Reserve Levels and Sedigi Project Economics. The Consortium based is economic analysis on recoverable reserves of 12-15 million barrels. However, it was not prepared to guarantee that output. At the same time another study had indicated reserves of only 5.1 million barrels. Although the financial and economic rates of return on 5 million barrels of reserves were acceptable, the significant discrepancy in the reserve figures caused concerns to the Bank and the donor community. To resolve the discrepancy an independent petroleum reserve certification was commissioned. Such audit validated the oil reserves at 12 million barrels.

(v) Need to Find an Environmentally Acceptable Solution for Handling Associated Gas. In updating the original environmental assessment and its mitigation plan, it was important to find an environmentally acceptable solution for handling the gas associated with the production of Sedigi's oil. Project preparation work had found that natural gas accounted for about 40 percent of the hydrocarbon energy in the Sedigi field. The alternatives for handling the gas consisted of flaring it, re-injecting it or finding productive uses for it. Although re-injection for storage was technically possible, it was a very costly option ( US$25-30 million) and geological studies had raised questions about the reliability of such storage. At the same time, the flaring of gas was to have adverse environmental consequences. So in 1998, the Bank and Borrower prepared a proposal to receive funding from the Global Environmental Facility (GEF) to evaluate the economic benefits to using natural gas for power generation and as a substitute for woodfuels by households and institutions. The GEF provided a grant for the completion of the study in the amount of US$ 290,000 in November 1999.

5.2 Factors generally subject to government control:

The implementation of the Engineering Project was also impacted by the political instability and poor macroeconomic performance of Chad, the links between the implementation of the Sedigi project and of the Doba project and by the decision of the Government to proceed with the implementation of the Sedigi project without World Bank financial participation. The impacts of these factors are further discussed below.

(i) Political Instability and Poor Macroeconomic Performance. During the project’s implementation, political instability and poor macroeconomic performance caused the Bank to drastically reduce the level of activity on the project. This also caused the Bank to establish macroeconomic conditions for the resumption of preparatory activities and eventual participation in the Sedigi project. The Bank conditioned its support on actual improvements of

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macroeconomic performance, which joint Bank and IMF missions were monitoring. The lack of adequate progress on the macroeconomic front delayed project implementation activity by about two years.

(ii) Linkage of Oil Consortium Participation in the Doba Project to Participation in the Sedigi Project. In order to attract the Consortium's interest in oil for domestic use, the Government decided that the Concession Agreement for the Doba project was to contain provision for the oil consortium to implement the Sedigi Project within the same time frame as the Doba project. It was also agreed that progress on the preparation of the Sedigi project was to be linked to progress on the Doba project. While this linkage appeared advantageous to attract the private partner, the delay in approval of the Doba project had an adverse impact on the timing of the Sedigi Project.

(iii) Contracting for Sedigi Development without Bank/Donor Involvement. The Government of Chad, highly motivated to proceed with the Sedigi Project, became frustrated with continuous delays by the Bank, the donors and the oil company consortium in committing to the project's financing. So the Government looked for other financing options. Ultimately, in 2000, the Government (with funding from Taiwan) contracted with a Sudanese company to: develop the Sedigi oil field; construct an oil pipeline from the field to N'Djamena; and build a refinery. By the end of 2001, the Sudanese company had completed the wellhead production facilities at Sedigi and much of the 320 kilometers of pipeline. However a significant portion of the pipeline welding and pipeline protection apparently was defective and needed remedial work. Furthermore, the Sudanese company ran out of funds to construct the mini-refinery that was going to refine the crude oil from Sedigi.

5.3 Factors generally subject to implementing agency control:

The main factors subject to control by the implementing agency, SEERAT, were the completion of original preparatory work for the Sedigi Project and effective monitoring of the construction and commissioning of the Sedigi Project’s facilities. Project supervision reports indicate the company's performance was satisfactory in completion of the Phase I engineering and tendering work. However, since the follow-up Sedigi Project did not materialize, SEERAT could not become involved with construction or commissioning. Ultimately the Government dismantled this organization, since it originally had formed the company to prepare and monitor the implementation of the Sedigi project.

5.4 Costs and financing:

The project's original cost estimate at appraisal was US$14.5 million equivalent. Early in the project expected co-financing (US$3 million from the EIB) did not materialize. The project scope and costs and financing need were then revised to US$11.0 million. Actual costs were about US$10.7 million, mainly due to the deletion of the household energy study which was financed through an ESMAP grant and the lower cost for project design work than originally expected.

6. Sustainability

6.1 Rationale for sustainability rating:

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The ICR has rated the sustainability of the Project as likely for four reasons. First, the Project successfully completed its engineering work and related studies which have been used for the construction of the Sedigi Project and for consultations on the refinery component. Second, the preparatory work carried out under the Engineering Credit confirmed the technical and economic viability of the Sedigi Project, i.e. the investment in field facilities, pipeline and refinery will produce refined petroleum products for Chad reliably and at prices significantly below imports for Cameroon and Nigeria. Third, as noted below, despite the Bank and the Consortium withdrawal from the financing of the Sedigi Project, the Government has remained very highly committed to the development of the Sedigi Project and is currently negotiating with a company to complete in a satisfactory manner the construction work for the oil field and the pipeline facilities and looking for a partner to finance, build and operate the refinery. Fourth, during the past two years, the Bank has increased its involvement in the petroleum and the electricity sectors and reached agreements with the Government that are supporting the development of the Sedigi Project. In particular in the context of the Critical Electricity and Water Services Rehabilitation Project approved by the Board in October 2002 the Government will submit to IDA all proposed agreements related to the implementation of the Sedigi Project.

6.2 Transition arrangement to regular operations:

The focus of the Engineering Project was on producing a technical, economic, environmental and financial information base that the Government could use to promote private sector participation in the development of the Sedigi oil field. Originally the transition to regular operation was to be the implementation of the Sedigi Project with financing from an international consortium of oil companies, the Bank and various donor agencies. This plan would have required the project to meet internationally accepted standards of construction and operation. However, after a long period of waiting for Bank/Donor approval and financing the Government decided to move forward on its own and to contract with a company to handle the project.

Despite past difficulties, since 2000, there are several significant developments that have provided a reasonable indication that the completion of the facilities at Sedigi will take place subject to sound engineering, economic environmental and financial considerations. First, Government authorities have been negotiating with investors concerning the Sedigi Project. These investors reportedly are prepared to finance, construct, and operate a refinery using Sedigi oil as well as to take over the management and operation of the oil production facilities and the oil pipeline. Second, the Government and the Bank have come to an agreement concerning the Sedigi Project in a covenant to the Critical Electricity and Water Services Rehabilitation Project (approved by the Bank's Board in October 2002). This covenant stipulates that the Government will submit to IDA, for its prior review and approval, all agreements related to the financing, construction, management and operation of the mini-oil refinery and the Sedigi-N"Djamena pipeline facilities, including the related environmental management plans. Third, as part of the same project, the Government has agreed to ensure that the associated gas from the Sedigi oil field is put to its best economic use. Fourth, there are two projects under implementation -- the Management of the Petroleum Economy Project and the Petroleum Sector Management Capacity-Building Project -- that should help provide a framework for effectively managing the country's oil resources and improving the Government's capacity to negotiate constructs with private investors.

7. Bank and Borrower Performance

Bank7.1 Lending:

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The Bank's performance in project lending was satisfactory. Prior to the Project the Bank had done some preparatory work for an investment operation related to the development of the Sedigi's oil resources. However, considering that the Sedigi Project was to be the first petroleum project in Chad, it was reasonable that the Bank would want to proceed cautiously and initially focus only on preparatory work through an Engineering Project before committing to a relatively large project in the order of US$100 million. Furthermore, the Sedigi Project responded to a priority need for viable alternatives to high- cost imports and was consistent with the focus of the CAS on least-cost energy development and support of institutional development. The Project's approach to institutional development was sound considering the country context of Chad. The Bank recognized that the development of a small field for local use was likely to be of interest mainly to Chad and the strategy was to build a domestic capability to appraise oil development projects and effectively negotiate with international oil companies for field exploration and development.

7.2 Supervision:

The Bank's performance in project lending was satisfactory. The supervision of the project spanned about 10 years. Given periods of low activity on the project, its small size, and changes in Bank priorities for Chad, the files on the project itself are scant compared to most projects that have been active more than a decade. Also the project files show the number of supervision missions fewer than usual for Bank projects. This is because Phase I of the project was complete just a couple of years after effectiveness and there was therefore not much supervision required. However the Bank did prepare yearly project status reports and was involved with other energy projects during the project implementation period. Furthermore, staff working on Chad's energy sector, who had been involved with the project since its inception, provided an institutional memory that was valuable in the preparation of the ICR. As indicated in Table 2, the Bank demonstrated considerable flexibility in extending the deadline for project closing four times, in an attempt to help the Borrower conclude the proposed Sedigi project's preparation. This flexibility proved to be very important as it allowed to maintain the dialogue with the Government, and to deepen the understanding of the issues facing the petroleum and electricity sectors. With respect to the electricity and water sectors, these extensions allow time for the Government to decide that private management of the electricity and water sectors was the preferred approach - the selection of a private concessionaire for the electricity and water sector was carried out in 2000 - and also to provide critical financing to prevent the collapse of both sectors through the credit amendment of 2000.

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Table 2: Summary of Project Closing Date Extensions

Extension 1: From December 31 , 1995 to December 31, 1996Balance of Funds: Purpose and Project Status:

The Project was extended to complete the preparatory studies, which had begun again in 1994 after a period of low activity during 1992-94 due to Bank conditions for project disbursements. The focus of the design at this point was whether the Consortium of private oil companies or the Government should take the lead role in the project . The Borrower was to focus on reducing costs and the consortium was to take a more active role in project design. At the end of the extension period there were questions about the size of the reserves and their impact on the Sedigi Project’s economics.Extension 2: From December 31, 1996 to December 31, 1998Balance of Funds: US$ 5.7 millionPurpose and Project Status

The purpose of the extension was to update preparatory activities and prepare a new financing plan. At this point the Bank had decided that it would limit its participation on the project to the preparatory activities under the Engineering Credit.The oil consortium had agreed to finance 51% of the costs of the Sedigi Project and Chad was to look for other donors to finance the remainder of the estimated investments costs of US$80 million. The balance of the Project’s funds was to finance Chad’s share of project preparation, the preparation of tender documents and construction supervision. At the end of the period, the detailed engineering of the Sedigi Project was complete and the cost of the project had increased to US$ 112 million in 1996 prices including sunk costs. A new financing plan was prepared which included participation from the private consortium, the European Investment Bank, the Agence Francaise de Developpement and the African Development Bank. Extension 3: From December 31, 1998 to December 31, 2000Balance of Funds: US$ 4.8 million

Purpose and Project Status:

The remaining preparatory work consisted of : a new environmental assessment/management plan, taking account of gas utilization options; preparatory project management; detailed engineering of the power plant; and bid preparation/evaluation. The Bank mentioned that the issues that had delayed appraisal had been resolved; however ultimately the main reason why the Bank did not go forward with the project was concern about the Government’s implementation capacity. Extension 4: From December 31, 2000 to December 31, 2001Balance of Funds: US$ 3.5 millionPurpose and Project Status:

The purpose of this fourth extension was to support Chad in preventing the collapse of the electricity and water supply services by financing emergency rehabilitation of the electricity generation units, purchase of essential spare parts and petroleum products.

7.3 Overall Bank performance:

The overall Bank performance was satisfactory in terms of Phase I of the project as the Bank continued to change its position regarding the follow-up investment project and to add new conditions which led to delays and frustrated the Government. As noted above, Phase II did not take place because its implementation was contingent upon satisfactory appraisal and implementation decision of the Sedigi Project.

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Borrower7.4 Preparation:

Overall preparatory work by the Borrower was satisfactory. The Project had a considerable amount of preparation by the Borrower with assistance from the Bank's Project Preparation Facility (PPF) and the Consortium. In October 1986, the Government received a US$1 million advance from the PPF to prepare a feasibility report, an independent assessment of drilling costs, and field reserves and technical assistance in contract negotiations.

7.5 Government implementation performance:

Government's overall performance in project implementation was satisfactory. The Government strongly emphasized that the development of the Sedigi field for the domestic market was a top priority. Throughout the Enginering Project the Government was very responsive to the Bank's evolving views and conditions for preparing and financing the Sedigi Project. Also, with the exception of some late submission of audit reports, the Government fully complied with Project covenants.

7.6 Implementing Agency:

The implementing agency performance was satisfactory. SEERAT, the implementing agency for the Project, came into existence for the purpose of preparing and administering the Sedigi Project. Project supervision reports indicate that the implementation of the project's initial engineering studies went exceptionally well and that SEERAT was running smoothly.

7.7 Overall Borrower performance:

The overall Borrower performance was satisfactory. The Borrower's perception has been that the present Project only made sense and could be said to have achieved its goals to the extent that the follow-up Sedigi Project materialized. However, the context in Chad was such that, with the preparation of the Chad-Cameroon Pipeline Project (the Doba Project) which soon became of a higher priority, and because of differences in views between the Borrower and the Bank concerning the conditions under which to proceed with the Sedigi Project, a Bank-supported Sedigi Project never materialized as such. While the World Bank strongly disagreed, and still does, with the Borrower's decision to proceed anyway with the Sedigi Project as proposed, the view put forward in this ICR is that these should not be considered as an unsatisfactory performance on the part of the Borrower under the present Project. Finally, this (still very deep) difference of views on the Sediigi Project explains, in our view, the disconnect between the proposed rating of the ICR and the Borrower's perception outlined under paragraph 9(a).

8. Lessons Learned

The main lessons learned from this project are:

(i) It is important to tailor assistance to individual country needs rather than try to make a general Bank policy fit all countries, keeping sight of key objectives such as poverty reduction and improved quality of life. Chad's country situation had special characteristics that made it an exception to general policies for petroleum development in Africa. During the project's implementation, the Bank had decided as a general policy not to participate in any new refinery developments and to even close down refineries in many small African countries, due to unfavorable economics. Also, there were not many cases where the

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Bank was financing the development of relatively small oil deposits for domestic use only and there was a drive to leave oil development projects mainly to the private sector. In contrast to this general policy, Chad seemed to be a model candidate for financing from the Bank and other donors as lenders of last resort. First, it was a poor, landlocked country with excessively high import costs that were causing macroeconomic disruption and there was a great deal of urgency about the project. Second, the Government had a high level of commitment to Sedigi's development. Third, it was unlikely that the major international oil companies with the expertise for the project would be seriously interested in a small deposit with no export potential.

(ii) Project conditions should be defined clearly during project preparation and should not evolve during implementation. Rather than focusing on these special conditions and the urgency for the Project, the Bank set new and additional conditions on the project, especially by insisting that private international oil companies take the lead in the project when the interest was not there. This stance forced the Government to link the development of the Sedigi Project to the larger export oriented Doba oil Project to provide incentives for major oil company involvement in the Sedigi Project. However the protracted negotiations for the Doba project and the conditions set by the Doba oil consortium severely delayed the development of the urgent Sedigi project until the Government finally decided to seek another alternative that was not entirely satisfactory.

(iii) In a difficult country situation, there can be considerable value to keeping a small technical assistance project open and maintaining flexibility in its implementation. Originally the Bank had intended the Sedigi Project to follow the Engineering Project within a short period of time and therefore included a second phase linked to the follow-up project. Given the substantial delay in appraisal and the disbursement lag for Phase II of the Engineering Project, one option would have been to close the project and cancel the remaining funds. However, by maintaining flexibility in modifying the Development Credit Agreement and providing extensions, the Bank was able to maintain a policy dialogue with Chad in a very difficult country situation that included political unrest and deteriorating macroeconomic performance. This dialogue eventually led to funds being available in the Engineering Credit to mitigate a very severe crisis in the electricity and water sectors.

(iv) Delays in development projects due to political and economic instability in poor countries that depend on external assistance have high costs to the economy and inhibit poverty reduction. At the time of project appraisal Chad, and the Bank estimated that the yearly savings in petroleum imports would be about US$25 million in 1990 prices. If the Sedigi Project had begun operations as planned the benefits would have started to accrue around 1995. Thus the cost of the delay in constant 1990, has been roughly US$ 300 million. This amount could have had a substantial impact on income levels and poverty reduction and the Bank and other donors should be sensitive to these delays and find ways to respond more rapidly to country needs while taking prudent measures to support viable investments.

(v) Technical Assistance projects should not include implementation components. If a project is intended mainly for investment preparation, it is prudent not to include components that risk not being implemented. Implementation of Phase II of the engineering project was linked to the demonstration of the technical, economic and financial viability of the Sedigi project and in putting together a financing plan.

9. Partner Comments

(a) Borrower/implementing agency:

Translation of Comments Received from the Government of Chad on Credit 21840-CD.

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It is important to state that the IDA Credit no. 21840-CD, usually referenced as the SEERAT Credit, is one of the Credits financed by IDA that has experienced considerable difficulties during the appraisal phase, the approval by the IDA’s Board as well as during the implementation phase.

Indeed this Credit was intended to finance the engineering studies for the construction of the mini-refinery to be built in N’Djamena. The political and economic conditions had changed at the time of the effectiveness of the Credit (beginning of 1991). For that reason, the Project had many different interlocutors on the Chadian side as well as on the IDA side.

Several discussions regarding the Project were carried out, which led to an amendment that radically changed the objectives of the Project. \The engineering studies were interrupted and disbursements were suspended. Pursuing long negotiations the two parties agreed to redefine the Project and to reallocate the balance of the Credit in order to rehabilitate old electricity power generating units, the water distribution network and in order to provide technical assistance to prepare the institutional framework required to carry out the privatization of the sector.

We can say today, at the end of the Project, that few objectives have been achieved. The rehabilitation of the water infrastructure has not even started except for the rehabilitation of old generating units in the electricity sector. No vehicle nor equipments have been purchased through this Credit except for the engine spare parts and for the petroleum products. The implementation of the management systems for the public services such as meters, billing and customer management as well as the detection of water loses have not gone through any changes With respect to the existing situation of STEE, its condition is very worrisome.

With respect to the macro-economic impact of the Project, it should be noted that it is insignificant.

In terms of the physical objectives, the Project, before its amendment, did not undertake any significant activity and, following its amendment, only the rehabilitation of the generating units were carried out. Page 6 of the report states that in 1993, all preparatory studies were completed, and this is incorrect. The construction of the N’Djamena-Sedigi pipeline did not make use of the engineering studies that were carried out in the context of the SEDIGI Project.

Only sectoral policies have been redefined thanks to the financing provided by the Project after its amendment. This has allowed Chad to rely on a regulatory framework with respect to potable water and with respect to the energy policy.

An environmental study on the impact of the development of the SEDIGI oil fields has been carried out thanks to the Project.

Finally, it should also be recognized that this Project has been negotiated in a difficult political context and also that Chad’s partners did not demonstrate any special enthusiasm, in particular the then members of the oil consortium.

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Upon the date of completion of this Project, the initial request which justified setting up such Project continues to exist. This is why the Government still explores all the means to satisfy the demand for petroleum products through the development of the SEDIGI oil fields.

The reimbursement of this Credit, which has already started, is responsible for increasing the burden of the debt for Chad without being able to have an economic impact with multiplier effects capable of generating resources.

(b) Cofinanciers:

None.

(c) Other partners (NGOs/private sector):

None.

10. Additional Information

None.

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

There were was no indicator matrix for the appraisal of this project because the Bank had not yet developed this requirement.

Infrastructure to use Sedigi oil is built to deliver cheaper petroleum products

The construction of the Sedigi oil production facilities and the pipeline are close to completion; corrective actions have been identified. The selection of a private sponsor to finance and operate the refinery is underway.

Project sustainability is ensured through private sector management.

Current plans are for the private sector to manage the Sedigi production and refinering facilities.

Private sector financing and bilateral/multilateral management.

The Government is negotiating with the private sector for the construction of the Sedigi refinery and has secured financing from the Bank to built the power plant that will use the crude oil from Sedigi and the refinery output. To ensure quality control, the Government, as stipulated in a covenant of the Critical Electricity and Water Services Rehabilitation Project, will submit for Bank approval, the draft agreements for the construction, management and operation of the refinery, the Sedigi oil field and pipeline facilities, along with the related environmental management plan.

Output Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

There were was no indicator matrix for the appraisal of this project because the Bank had not yet developed this requirement.

Not applicable. Not applicable.

1 End of project

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Annex 2. Project Costs and Financing

Appraisal Estimate Revised Estimate Actual % of Revised US$ million US$ million US$ million Estimate

Preparation of Project Specifications and Tendering 2.3 4.2 4.0 96.0%

Household Energy and Gas Utilization Studies 0.2 0.0 0.0 X

SEERAT Management Staff and Operational Costs 1.0 1.7 1.4 80.4%

Costs of Real Estate, Office Equipment, and Vehicles 0.4 0.0 1.2 X

Subtotal, Phase 1 3.9 5.9 6.6 111.7%

Construction and Commissioning, Supervision by Consultants 1.5 0.0 0.0 X

SEERAT Construction and Commissioning Staff 4.0 0.0 0.0 X

Training and Operational Support to SEERAT 1.6 0.0 0.0 X

Subtotal, phase 2 7.1 0.0 0.0 X

Basecost Estimates : Phases 1 and 2 11.0 5.9 6.6 111.7%

Civil Works 0.0 0.9 0.2 23.1%

Operating Costs 0.0 0.5 0.0 0.0%

Expert Services 0.0 0.6 0.4 68.3%

Equipement, Goods, Vehicles, etc. 0.0 1.8 1.9 102.8%

Total, Emergency Energy Sector Rehabilitation 0.0 3.8 2.5 66.0%

Physical Contingencies 1.3 0.0 0.0 X

Price Contingencies 0.7 0.0 0.0 X

Subtotal with Contingencies 13.0 9.7 9.1 93.9%

Refinancing of PPF 1.5 1.3 1.3 X

Total 14.5 11.0 10.4 94.5%

Expenditure Category

Project Costs by Component

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LIB Othe r N A T o t a l

Prepara t ion o f Pro jec t Spec i f i ca t ions and Tender ing 0.0 2.8 0.0 2.8

Househo ld Energy and Gas Ut i l i za t ion S tud ies 0.0 0.2 0.0 0.2

S E E R A T M a n a g e m e n t S t a f f a n d O p e r a t i o n a l C o s t s 0.0 1.2 0.0 1.2

Cos ts o f Rea l Es ta te , O f f i ce Equ ipment , and Veh ic les 0.4 0.0 0.0 0.4

Subto ta l , Phase 1 0.4 4.2 0.0 4.6

Cons t ruc t i on and Com m iss ion ing , Superv is ion by Consu l tan ts 0.0 1.8 0.0 1.8

SEERAT Cons t ruc t i on and Commiss ion ing S ta f f 0.0 4.6 0.0 4.6

T ra in ing and Opera t i ona l Suppor t t o SEERAT 0.0 2.0 0.0 2.0

Subto ta l , phase 2 0.0 8.4 0.0 8.4

Basecos t Es t imates : Phases 1 and 2 0.4 12.6 0.0 13.0

C ivil W orks 0.0 0.0 0.0 0.0

Opera t i ng Cos ts 0.0 0.0 0.0 0.0

Exper t Serv ices 0.0 0.0 0.0 0.0

Equ ipem ent , Goods, Veh ic les , e tc . 0.0 0.0 0.0 0.0

Tota l , Emergency Energy Sec tor Rehab i l i t a t ion 0.0 0.0 0.0 0.0

Phys ica l Cont ingenc ies

Pr ice Con t ingenc ies

Subto ta l w i th Cont ingenc ies 0.4 12.6 0.0 13.0

Ref inanc ing o f PPF 0.0 0.0 1.5 1.5

Tota l 0.4 12.6 1.5 14.5

Pro jec t Cos t by P rocurement Me thod (Appra isa l Es t ima te )

Expend i tu re Category

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LIB Other N A To ta l

Preparat ion o f Pro jec t Spec i f ica t ions and Tender ing 0.0 2.8 0.0 2.8

Household Energy and Gas Ut i l i za t ion Stud ies 0.0 0.2 0.0 0.2

SEERAT Management S ta f f and Opera t i ona l Cos ts 0.0 1.2 0.0 1.2

Costs o f Rea l Es ta te , Of f ice Equ ipment , and Veh ic les 0.0 0.1 0.0 0.1

Subtota l , Phase 1 0.0 4.3 0.0 4.3

Const ruc t ion and Com m iss ion ing, Superv is ion by Consul tants 0.0 1.8 0.0 1.8

SEERAT Cons t ruc t ion and Commiss ion ing S ta f f 0.0 1.6 0.0 1.6

Tra in ing and Opera t iona l Suppor t to SEERAT 0.0 1.8 0.0 1.8

Subtota l , phase 2 0.0 5.2 0.0 5.2

Basecost Est imates : Phases 1 and 2 0.0 9.5 0.0 9.5

Civil W orks 0.0 0.0 0.0 0.0

Opera t ing Cos ts 0.0 0.0 0.0 0.0

Exper t Serv ices 0.0 0.0 0.0 0.0

Equ ipem ent , Goods, Vehic les, e tc . 0.0 0.0 0.0 0.0

Tota l , Emergency Energy Sector Rehabi l i ta t ion 0.0 0.0 0.0 0.0

Phys ica l Cont ingenc ies

Pr ice Cont ingenc ies

Subtota l w i th Cont ingencies 0.0 9.5 0.0 9.5

Ref inanc ing o f PPF 0.0 0.0 1.5 1.5

Tota l 0.0 9.5 1.5 11.0

Pro jec t Cost by Procurement Method ( rev ised es t imate )

Expendi ture Category

Appraisal estimate Revised estimate DisbursedMillion US$ Million US$ Million US$

Government 0.3 0.3* 0.3*

IDA(including PPF) 11.0 10.7 10.1

EIB 3.0 0.0 0.0

Private oil companies 0.2 0.0 0.0

Total 14.5 11.0 10.4

*No actual figures are available for the government's contribution. The ICR estimate is based on the appraisal estimate, and expenditures from available audit reports that came close to it

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Annex 3. Economic Costs and Benefits

Not applicable to this project.

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/PreparationConcept Review October 1989Preparation starts in November 1989

Appraisal/NegotiationAppraisal December 1989Negotiations October 1990

SupervisionSupervision 1 June 1992

2 EC, ENG S S

Supervision June 1994

4 S S

Supervision November 1995

1 2ES, 1EC, 1FA S S

Supervision February 1998

1 1TM S S

Supervision July 1999

1 1 TM S S

Supervision December 2000

1 1 TM S S

SupervisionJuly 2001

1 1 TM S S

ICRPreparation 3 TM, EC, ES, ICR specialist

NA = Not Available NS = Not specified.

Staffing Codes:EC = Energy EconomistENG =EngineerES= Energy SpecialistFA =Financial AnalystLEG = Bank Legal Department StaffTM = Task Manager

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Source: Project Status Reports and Project Files

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation 8.8 6.9Appraisal/Negotiation 26.2 80.9Supervision 69.3 207.5ICR 11.0 35.0Total 115.3 330.3

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

Memorandum of the President for the International Development Association to the Executive Directors on a Proposed Credit of SDR 7.9 million to the Republic of Chad for a Petroleum and Power Engineering Credit, October 26, 1990.

Project Status Reports: 8/19/91; 8/27/91; 6/30/92; 6/30/93; 7/6/94; 12/4/95; 6/7/96; 6/26/97; 4/15/98; 12/14/99; 6/28/00; 12/21/00;6/27/01; 12/30/01; 5/4/02.

Bank Memoranda/ Correspondence:

6/22/94: Back-to-Office (BTO) Report on the Sedigi Project and Energy Sector Review12/5/95: Supervision Report on the Chad Petroleum Power and Engineering Project6/11/96: Sedigi Petroleum/Power Project Back to Office Report.11/22/96: Sedigi Petroleum/Power Project: Status and Issues 12/13/96: Memo on extension of the closing date.1/5/98 : Sedigi Project BTO on meetings in Luxembourg3/2/98 : Cover Memo of Form 59012/16/98: Chad Petroleum and Power Engineering Project -- Extension of Closing Date8/20/00: Chad- Petroleum and Power Engineering Project (Cr 2184-CD) Proposed Amendment to the Development Credit Agreement.

12/21/00: Chad Sedigi Gas Flaring Project -- Extension of the Closing Date for GEF Grant MULT 23292Other Reports

Audit Reports for SEERAT: 1992, 1995, 1996, 1998.

Other Documents Relevant to the Project and the Energy Sector

1. Chad Sedigi Oil Project: Utilization of the Natural Gas - A Status Report (November 1998)2. Chad: Sedigi Pipeline Project: Proposal for PDF Block Grant ( May 1999)3. Report No. 19342-CD, Project Appraisal Document on a Proposed Credit in the Amount of SDR 17.4 Million (US$23.7 million equivalent) to the Republic of Chad for a Petroleum Sector Management Capacity Building Project, March 30, 2000. 4. Report No. 19343 AFR: Project Appraisal Document on Proposed International Ban for Reconstruction and Development Loans in Amounts of US$39 Million to the Republic of Chad and US$53.4 Million to the Republic of Cameroon and on the Proposed International Finance Corporation Loans in Amounts of US$100 million in A-Loans and UP to US$300 Million in B-Loans to the Chad Oil Transportation Company, S.A. and Cameroon Oil Transportation Company, S.A. for a Petroleum Development and Pipeline Project, April 13, 2000. 5. Report No. 24112-CD Project Appraisal Document on a Proposed Credit in the Amount of SDR 41.4 Million (US$54.8 Million Equivalent) to the Republic of Chad for a Critical Electricity and Water Services Rehabilitation Project, August 23, 2002.

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