Docum.nt of

The World Bank

FOR OFFICIAL USE ONLY

Rqpt No. 9161

PROJECT COMPLETION REPORT

MALAYSIA

RURAL ELECTRIFICATION PROJECT

(LOAN 2146-MA)

NOVEMBER 30, 1990

Industry and Energy Operations DivisionCountry Department IIAsia Regional Office

This documaent bas a restricted distribution and may be used by recipients only In the performance oftheir official duties. 1ts contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit - Ringgit (M$)US$1.00 = M$2.30 (SAR)

- M$2.50 (Project composite)

FISCAL YEAR

NEB: September 1-August 31Government: January 1-December 31

WEIGHTS AND MEASURES

km - KilometerkV - Kilovolt (1,000 volts)kW - Kilowatt (1,000 watts)HW - Megawatt (1,000 kilowatts)GW - Gigawatt (million kilowatts)kWh - k_lowatt hour (1,000 watt-hours)GWh - Gigawatt hour (million kilowatt-hours)

ABBREVIATIONS

ADB - Asian Development BankNEB - National Electricity Board of the States of MalayaRE-1 - Rural electrification comprising NEB's normal

distribution programRE-2 - Rural electrification fully or partially financed by

GovernmentSAR - Staff Appraisal Report

THE WOtLO SANK FOR OFFICIAL USE ONLYWs*w4ton. DC. 2043 3

U.$ A

Office of Director-Ge ralOpcrctica Ibaluattn

November 30, 1990

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on MalaysiaRural Electrification Project (Loan 2146-MA)

Attached, for information, is a copy of a report entitled "Project

Completion Report on Malaysia - Rural Electrification Project (Loan 2146-MA)"

prepared by the Asia Regional Office with Part II of the report contributed bythe Borrower. No audit of this project has been made by the OperationsEvaluation Department at this time.

Attachment

This Gocument ha a mitrctd dranbuuon and may be Ued by rC:WpSeu osTy Ia the Pe Manceof their ofMciu duu. its coeann may not otherws be dicko wuhow Word lank auwaeuuor.

FOR OFFICIAL USE ONLY

PROJECT COMPLETION a .PORT

MALAYS LA

RURL ELECTRIFICATION PROJECT(LOAN 2146-MA)

Table of Contents

Page No.

Preface .............................................................. i

Evaluation Summary ................................................... ii

Part I - Project Review from Bank Perspective .................. .....

Project Identity ................................................. 1Background ................ ........ 1Project Objectives and Description ............................... 2Project J)esign and Organization .................................. 2

Project Implementation ............................................ ?Project Results .................................................. 4Project Sustainability ........................................... 4Bank Performance ................................................. 6

Borrower's Performance ........................................... 6Project Relationship .............................................. 7Consulting Services ............................................... 7

Project Documentation and Data ................................... 7

Part II Project Review from Borrower's Perspective ................. 8

Part III - Statistical Information ................................... 11

Related Bank Loans ............................................... 11Project Timetable ................................................. 11Loan Disbursement ................................................ 12Project Implementation ........................................... 13Project Costs and Finance ........................................ 15

Project Results .................................................. 16Direct Benefit ................................................ 16Economic Impact ............................................... 16Financial Impae3t .............................................. 18

Status of Covenants .............................................. 19Use of Bank Resources ............................................ 20

Staff Inputs .................................................. 20Missions ...................................................... 20

ANNEXES

1. Economic Cost and Benefit Streams ............................. 21

2. Financial Statements .......................................... 22-24

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

PROJECT COMPLETION REPORT

MALAYSIA

RURAL ELECTRIFICATION PROJECT(LOAN 2146-MA)

Preface

This is the Project Completi.on Report (PCR) for the Rural

Electrification Project in Malaysia, fur which Loan 2146-MA in the amount of

US$86.3 million was approved on May 18, 1982. The loan was closed on June 30,

1988, two years behind schedule. US$20.0 million of the loan amount was

cancelled on September 4, 1985, and an additional US$30.0 million were

cancelled on December 11, 1986. The remaining amount of US$36.3 million was

fully disbursed with the final withdrawal of US$415,695 on May 11, 1989.

The PCR was prepared by the Industry and Energy Operations Division,

Department II of the Asia Regional Office (Preface, Evaluation Summary,

Parts I and III), and the Borrower, National Electricity Board (NEB) -

Part II.

Preparation of this PCR was started in September 1989 after a mission

to Malaysia, and is based on, inter alia, the Staff Appraisal Report, the Loan

and Guarantee Agreements, supervision reports and correspondence between the

Bank and the Borrower.

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PROJECT COMPLETION REPORT

MALAYSIA

RURAL ELECTRIFICATION PROJECT(LOAN 2146-MA)

Evaluation Summary

Objectives

1. The main objective of the project was to help the Government bringthe benefits of electricity to the four peninsular states having the lowestdegree of electrification. Extending NEB's transmission grid to the easternstates laid the groundwork for future electrification with the aim of devel-oping local industry and other economic activity in a relatively depressedpart of Malaysia. Minihydro schemes were included in the project to give theGovernment the opportunity to assess whether such power generation could offeran economic option for supplying electricity in rural areas, especially thosetoo remote to have access to NEB's distribution network (Part I, para. 3.1).

Implementation Experience

2. It took two years more than the planned four-year implementationperiod to complete the project. The principal sources of delay were (a) theGovernment's budgetary constraints in funding the RE-2 and minihydro sub-projects; (b) severe weather conditions; (c) procurement and contractorproblems; and (d) wayleave acquisition difficulties. Closer coordinationbetween the central planning and procurement divisions and the divisionalimplementing agencies, stricter contractor selection criteria and early startin wayleave acquisition could have reduced these delays. Actual projectexpenditures were about 63Z of the SAR estimates due to (a) curtailment ofminihydro schemes from 41 to 7 (US$36 million); (b) SAR overestimate in thework requirement and work unit costs for the rural electrification components(US$30 million); and (c) utilization of only US$22 million of the large US$68million contingency provisions. Two loan cancellations were necessary: onefor US$20 million on September 4, 1985 and one for US$30 million onDecember 11, 1986 (Part I, paras. 5.1-5.2).

Results

3. Although two years late, the project achieved its objectives ofsupplying electricity to 132,394 new consumers (was 132,872 in the SAR) andextending NEB's transmission grid in the east where future electrificationcould stirulate economic activity in support of the Government's anti-povertygoals. Seven minihydro installations were approved and are scheduled to beoperational by early 1990. Uncer current economic conditions NEB does notexpect to install many, if any, additional minihydro units. The reevaluatedinternal economic rate of return from the project i_ . satisfactory 24.7Z.

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NEB's financial performance was satisfactory throughout the 1982-88 period,and it is expected to continue to be satisfactory barring any adversedevelopments not now foreseen or anticipated (Part I, paras. 6.1-6.5).

Sustainability

4. The project benefits are considered to be fully sustainable because:(i) NEB's facilities have been installed in accordance with strict design andconstruction standards following international practices; (ii) NEB has thecapability and skills to continue competent operation and maintenance of itsfacilities; (iii) Government policy strongly supports rural electrification;and (iv) consumer preference for electricity precludes any significantswitching to substitute energy forms (Part I, para. 7.1 and 7.2).

Findings and Lessons Learned

5. NEB's performance in planning and implementing its ruralelectrification program shows that it neL , to install an effectiveimplementation system, the major provision~ f which should include:

(a) a comprehensive implementation plan, approved by NEB management,defining in detail (i) project scope, cost and timing;(ii) implementation team make-up, authority and responsibilities;(iii) schedule of implementation activities; and (iv) provisions forprogress monitoring and coordination; and

(b) an arrangement for coordinating, directing and liaising projectsinvolving interrelated sub,projects and more than one implementingagency.

6. NEB also needs to considerably shorten the decision period for majorcontract awards, adopt stricter bidding criteria which would weed out inex-perienced contractors and make a very early start in the project cycle on linerouting and wayleave acquisition.

PROJECT COMPLETION REPORT

MALAYSIA

RURAL ELECTRIFICATION PROJECT(LOAN 2146-HA)

PART I

1. Proiect Identity

Project Name: Rural Electrification ProjectLoan No.: 2146-MARVP Unit: AsiaCountry: MalaysiaSector: EnergySubsector: Electric Power

2. Background

2.1 Power sector development and operations in Malaysia are the respon-sibility of the Ministry of Energy, Telecommunication and Posts (MOE) at.d thethree government-owned power utilities, the National Electricity Board (NEB),the Sabah Electricity Board (SEB) and the Sarawak Electricity Supply Corpora-tion (SESCO). NEB is responsible for power generation, transmission and dis-tribution in Peninsular Malaysia and SEB and SESCO serve the same functionsrespectively in the two states on the island of Borneo. MOE serves as theofficial channel between the utilities and the Cabinet Committee on Energy.NEB is a financially sound, well-organiz3d and efficiently operated utility.A Rural Electrification Department was organized in 1978 to cope with theincreased rural electrification activities.

2.2 Rural Electrification began in the 1950s when a large number of therural population was concentrated in villages for security reasons. Thesevillages were electrified with diesel generators which provided perimeterlighting. Rural electrification with social objectives, however, commenced withthe first five-year Malaysia Development Plan (1956-60) on a small-scale, andslightly accelerated during the second five-year plan (1961-65). During thatdecade about 600 villages with about 62,000 corsumers received electricity.Subsequent five-year plans have placed increasing importance on ruralelectrification. The fourth-plan (1981-85), of which this project was a part,provided for the supply of electricity to approximately 400,000 ruralresidential consumers.

2.3 Rural electrification is carried out through two types of programs:(i) the normal distribution expansion program (RE-1) comprising financiallyjustified projects funded by NEB; and (ii) the accelerated rural electrifi-cation program (RE-2) fully or partially funded by the Government. The RE-2primarily includes projects developed by local and provincial authorities inconjunction with NEB district managers and the Rural ElectrificationDepartment. The program is approved by the Government on the basis of NEB's

recommendations. The selection criteria for the inclusion of projects in theprogram are social and technical, e.g., (a) equitable distribution among thestates; (b) proximity to other i.ifrastructure facilities; and (c) distancefrom the grid, and cost per consumer connected. Benefit analysis is notcustomary.

3. Proiect Obiectives and Description

3.1 The main objective of the project was to support NEB's efforts tobring the benefits of electricity to provinces having a low level ofelectrification. Extending the Peninsular grid transmission system to theeastern provinces was meant to establish the foundation for subsequentelectrification which would support future local manufacturing and othereconomic activities. Distribution network extensions were provided for in theproject to reach households with no previous access to electricity. Minihydroschemes were included in the project so that the Government could evaluatewhether this kind of power generation was an economic option for supplyingelectricity in rural area aspecially those too remote to have access toNEB's distribution network.

3.2 The project as defined at appraisal embraced most of the Government'srural electrification program in the less developed states of Trengganu,Kelantan, Kedah and Pahang in Peninsular Malaysia during the time period from1983 to 1985 and consisted of the following components:

(a) a 275 kV transmission line from Kenyir (Trengganu) to Tanah Merah(Kelantan);

(b) 132 kV transmission lines and stepdown substations as follows:

(i) Tanah Merah-Kuala Krai with substation at Kuala Krai (Kelantan);

(ii) Kenyir-Kuala Trengganu-Gong Badak with substations at KualaTrengganu and Gong Badak (Trengganu);

(iii) Gurun-Jiniang (Kedah) with substation at Jiniang;

(iv) Kemaman-Ayer Puteh (Pahang).

(c) Rural Electrification schemes in the States of Kedah, Kelantan,Trengganu and Pahang;

(d) Minihydro schemes in Trengganu, Kelantan, Pahang and Johore; and

(e) Consulting services.

4. Project Design and Organization

4.1 From the Bank's viewpoint, the project was well conceived andstructured. Its component parts were designed to bring electricity to thepoorest states in Malaysia with the least electrified households, all in

accordance with the expressed aims of the Goverrment's sector policy and theBank's lending policy. No special significance appears to have been given tothe fact that component parts were actually being treated as four separate,self-contained projects each to be independently implemented by its ownorganization.l/ No requirements or provisions were included for cuordinatedimplementation planning and monitoring to ensure an efficient merging of theinterrelated and interdependent elements of the total project components.

5. Proiect Implementation

5.1 The actual completion dates of the components included in the projectare compared with the corresponding SAR targets in Part III, Section 4 of thisreport. The variances, and the reasons for them, are summarized below:

(a) Transmission lines: Half of the 132 KV lines were completed onschedule and the other half delayed by about six months. The 275 KVline was delayed 16 months because of misprocurement and thenecessity to rebid the construction contract. In addition, therewere other problems which affected progress, such as abnormallysevere monsoon weather, wayleave acquisition, difficult terrain andthe necessity to shift entry points to avoid staf3 developmentprojects, factories and landowner objections.

(b) Substations: The completion target was missed by about 10 months,except by 18 months at Kuala Krai where equipment damageb Andtechnical problems were experienced on top of the general problemsaffecting all the substations, namely the late award of a switchgearcontract (7 months), bad weather, inexperienced contractors and thefailure of suppliers to meet delivery commitments.

(c) Rural electrification: Only about 85X (110,536) of the SAR targetnumber of new consumers was provided with electricity duzing thespecified 1983-85 time slice. The full target (132,394) was achievedduring the 1986-87 time slice. The extended period needed to hook-upthe targeted number of new consumers was due to the fact that theGovernment's contribution to finance the local costs of the RE-2projects was severely curtailed due to budget constraints.2/

(d) Minihydro schemes: Provisions were included in the project for 41minihydro installations. However, due to budgetary constraints, andthe adverse effect of falling oil prices on the economic viability ofmany of the schemes, the Government approved only seveninstallations. The seven schemes were expected to be operational byMarch 1990 after having experienced the common implementation delays(weather, contractors, equipment deliveries, etc.).

1/ The Transmission, Distribution, Rural Electrification and MinihydroDepartments.

2/ This funding constraints made it necessary to stretch out the timeframe and also to hold down distribution expenditures in selecting theareas to be electrified.

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5.2 In reviewing NEB's implementation performance, it can be seen thatthe principal sources of delay were: (a) the Government's budgetaryconstraints in funding the RE-2 and minihydro subprojects; (b) severe weatherconditions; (c) procurement and contractor problems; and (d) wayleaveacquisition difficulties. NEB had no control over the Government's budgetconstraints nor the weather, but it could have taken steps to minimize theother delays. Closer coordination was needed between the central planning andprocurement divisions and the divisional implementing agencies in theprocurement of materials for the Bank-finar.ced RE-1 and RE-2 components.This closer procurement coordination was also needed for the timely deliveryof critical equipment and bulk procured items not financed by the Bank.Further, NEB needs to considerably shorten the decision period for majorcontract awards. The contractor difficulties indicate that NEB needs to adoptstricter bidding criteria which will weed out inexperienced, incompetent andunireliable contractors and suppliers. NEB's project planning should call forline routing and wayleave acquisition to start very early in the projectcycle. It is advisable to investigate alternati';e routing which can beresorted to when it becomes apparent that the selected route will involvecostly time-consuming negotiations.

6. Project Results

6.1 Although two ; ars later than planned, the project achieved its majorobjective of bringing the benefits of electricity to the specified number ofnew consumers in provinces having a low degree of electrification. Also, byextending the Peninsular transmission grid to the east provinces, NEBestablished the foundation for future electrification to support the develop-raent of local manufacturiLg and other economic activities. The number ofminihydro installations was not stated as a project objective althoughfinancing was included for 41 units at approved sites. Actually, only sevenunits were installed because of the Government's budget constraints and theadverse effect on the economic viability of many of the sites due to fallingoil prices.

6.2 The households supplied with electricity can experience the socialbenefits of 1i ing in a community having access to electric services andexperience t} * cost and labor savings it makes possible. In time, theavailability of this convenient and versatile energy source should stimulateeconomic activities in the villages and bring new business and employmentopportunities.

6.3 The comparison of the SAR estimate and actual project costs,tabalated in Part III, Section 5, shows a 37Z cost underrun (US$315.5 millionestimat3d versus US$200.1 million actual). Apart from the US$68 millionincluded for contingencies (which was utilized to the extent of aboutUS$22 million only for the high voltage lines), the underrun was chiefly dueto overestimating the number of minihydro subprojects (by US$36 million) andthe content and cost of the rural electrification subprojects (by TJS$30 mil-lion). The minihydro overestimate can readily be explained by the reducednumber installed. The rural electrification overestimate is mainly due to twofactors:

(a) the fact thet the locations of the villages to be electrified werenot defined and consequently it was necessary to play safe on thesize of the subtransmission network; and

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(b) an overestimate of the installed unit cost of materials andequipment.

The resulting reduced foreign exchange expenditures led to two cancellationsfrom the original 'JS$86.3 million loan anrount: US$20 million on September ;,1985 and US$30 million on December 11, 1986.

6.4 The reevaluated internal economic rate of return of the project is24.7Z, very close to the rate of 25.72 estimated in the SAR. A comparison ofthe criteria used for che SAR estimate and the reeval'ation is given inPart III, Table 6.. , and the reevaluated cost and benefit steams appear inAnnex 1. In addition to the cepital cost variance noted above, the chiefdifferences in the two IERR calculations are:

(a) the SAR reduced the commercial and industrial benefits to 802 of theforecast to account for the price elasticity of demand; the PCR madeno equivalent reduction in benefits on grounds that it was notjustified considering that electricity prices had bee? reduced by 161since 1982 (when the jAR was prepared); and

(b) the SAR domestic sales revenues and unit commercial and industrialbenefits are significantly higher (by 82, 302 and 142 respectively)than the PCR values.

That the SAR estimated and reevaluated IERRs are almost the same despite thesedifferences is mainly due to the fact that the two benefit streams arepractically equal from the tenth year on Dut that the SAR benefits developmuch faster (MS 128.7 million versus M$ 38.7 million in the third year) Thenet result is the cancelling out of the capital cost difference.

6.5 NEB's financial performance was satisfactcry over the 1982-88 period.All financial performance ir;dicators show NEB's financial position to be on asound footing and that it should continue to be in the foreseenble future.The Bank's financial covenants were fully complied with during the 1982-88period except for a slight dip below the 1.1 minimom current ratio requirementin 1983 and 1984.

7. Project SusLainability

7.1 Except for an adverse development which cannot be anticipated at thistime, the project benefits should be sustainable into the foreseeable future.A new element in this evaluation is the fact that NEB is one of the governmententerprises which may undergo some form of privatization. However, there isno reason to believe that the Government would allow this to alter NEB'scurrent rcsponsibilities and obligations as a regulated publ.ic utility.

7.2 The main factors supporting the continued sustainability of projectbenefits are:

(a) There is no danger to the economic life of NEB's facilities; theyhave been installed in accordance with strict design and constructionstandards following international practices;

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(b) NEB has the technical, operational and administrative skills tocontinue to competently maintain and operate its facilities;

(c) Government policy strongly supports rural electrification and povertyeradication; and

(d) Consumers who have experienced the convenience and versatility ofelectricity are not expected to switch to an alternative energysource.

8. Bank Performance

8.1 During project preparation, the Bank focussed mainly on includinginstitutional and financial provisions to ensure that NEB would remain acommercially viable public utility. In retrospect, it can be seen that theBank chould also have concentrated on implementation and estimating issues. Aclose examination of the state of preparation and arrangements for executingthe subprojects might have showed that NEB's implementation schedule wasoptimistic. Similarly with the project cost estimate, a careful review of thebasis of the estimate may have revealed the source of the overestimate of therural electrification component. For example, if reliable up-to-date costdata were not available, time should have been taken to obtain informal pricequotations.

8.2 The Bank satisfactorily performed its supervision responsibilities.Altogether, nine supervision missions were fielded; some at appropriate timestried unsuccessfully to accelerate implementation progress and to expand theproject scope to enable the utilization of uncommitted proceeds of the loan.

9. Borrower Performance

9.1 NEB is a well operated and managed electric utility. Moreover, itcontinues to strengthen and modernize its operations through ongoing improve-ment programs including training, computerization, and other forms of institu-tional advancement. These included improvements in rural electrificationplanning, MIS, design standards and productive uses of electricity includedunder the project.

9.2 Compared to its overall satisfactory operational performance, NEB'simplementation of the project shows a need for improvement. The basic causeof most of the i.mplementation delays appears to have been inadequate planningand coordination. NEB should review its implementation procedures with theaim of adopting improvements along the following suggested lines:

(a) A comprehensive implementation plan, approved by NEB management,should be prepared for all capital projects. The plan should definein detail (i) the project, its scope, cost and timing; (ii) theimplementation team, its composition, authority and responsibilities;(iii) the scheduling of implementation activities; and (iv) thecoordination and monitoring arrangements; and

(b) The implementation arrangements iavolving interrelated projects andmore than one implementing agency (as in this projPct) should includeprovisions for a group (e.g., a senior level project manager and

* -7-

assistants) to coordinate and direct the interfacing project com-ponents and provide the necessary liaison with the participatingparties. This arrangement would present an integrated approach tosuch projects. It would be helpful in the supervision of Bank-financed projects and in keeping NEB management informed of theunified implementation progress.

9.3 NEB also needs to considerably shorten the decision period for majorcontract awards, adopt stricter bidding criteria which would weed outinexperienced contractors and make a very early start in the project cycle online routing and wayweave acquisition.

10. Project Relationship

10.1 Bank staff have maintained a good working relationship with NEBthroughout the lending operations carried out so far with this borrower. Thisrelationship has made it possible for the Bank to help NEB's institutionaldevelopment, and it also made it possible to settle such issues as electricitytariffs and procurement problems which arise from time to time. Bank staffmaintained equally good relationships with Governrment representatives,consultants and contractors with whom they came in contact in the course ofthe project cycle. As far as could be determined, NEB remained on good termswith its consultants, contractors and suppliers.

11. Consulting Services

11.1 NEB engaged engineering consultants to assist with design andconstruction of the 275 kV and 132 kV transmission lines and the minihydroplants and with the Kedah Valley study. Except for an incident where NEErequested the replacement of an individual consultant, all consultantsperfoLmed their assignments satisfactorily.

12. Project Documentation and Data

12.1 The staff appraisal report was comprehensive and well prepared. Itgave a good account o' Malaysia's rural electrification program and theproject's ro'le in the program. The project was well defined except for theminihydro component which did not state the number of minihydro installationsincluded in this component. From the project cost estimate it appears thatall 41 feasible sites were meant to be provided with minihydro installations.The Loan Agreement only staved that the minihydro installations had to betechnically feasible and economically justified.

12.2 NEB's reporting performance was not consistent, but the reports whichwere submitted were generally informative. The Bank's supervision reportswere also informative, especially with respect to the problems at hand.However, both Bank supervision reports and Borrower quarterly progress reportswill require alterations in format and content to make them more suited forthe preparation of PCRs. This is particularly true of the quarterly reportswhich contain many pages of procurement and contracting details which areimportant for record purposes but are of little value to the person preparingthe PCR. It should be a standard requirement that the quarterly reportsinclude the statistical data required for Part III of the PCR.

PRG.TECT COHPLETION REPORT

MALAYSIA

RURAL ELECTRIFICATION PROJECT(LOAN 2146-HA)

PART II

INFORMATION FOR PROJJECT COMPLETION REPOR F (PCR!RURAL ELECTRIFICATION PROJECT (LOAN 2146MA - PART II

a) Confirmation on the adequacy and accuracy of the factual Information contalnedin Part III of the PCR

All Information relating to mini hydro projects, RE-1, RE-2, and Transmission.3rojects stated in Part Ill of The PCR is found to be agreeable and correct.

b) Cumments on the analysis contained in Part I of the PCR

i. Transmission Line

The comments on the 275 kV transmission line is accurate. The 275 kVline from Kenyir to Tanah Merah was awarded to Testeels of India whichoffered loans in mult currency. Access to the site was difficult andhelicopters had to be used to enter the thick jungle and terrain.

ii. Mini HyaM

The comments on mini hydro components In part I of the PCR is fairlyaccurate especially in the under utilisation of the loan and also on theimplementaton. The comments should be noted and weak points berectified so as to ensure that in future, if any, the implementationtechniques and procedures will be more effective.

iii. Distribution (RE I)

Due to the sudden slow growth and tightly curtailed of funds by theGovemment in the mid-eighties, the number of projects completed wereoverestimated. Nevertheless by 1987, all projects were completed.

Also factors contributing to the delays involved :-

a. Unavailability of certain materials at the onset of the projectsnamely cables and gears.

b. Availability of onty a few competent cable laying contractors duringthe project period.

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iv. Rural Electrification (RE-2)

Part 1 of the PCR adequately portrayed the problems attributable to thedelay in RE-2 project implementation. Inconsistent availability of locallyresource equipment and accessolies (the major factor of the delay),unfavourable weather condition during the seasonal monsoon periodand spillover of 1982 RE program affected project completion. Problemsinvolving land acquisition and wayleave were minimal.

The impact due to the combination of the above factcr's saw only thecompletion of 13 projects in 1983, rendering electricity benefits to only1,617 rural consumers.

c. Evaluation of the Bank's Qerformance during the evolution and imQlementationof the proiect. with soecial emDhasis on lessons learned that may be relevantfor the future

During the evolution and implementation of the projects, the bank's performanceis found to be satisfactory. They have given assistance in disbursementprocedures, information and training in procurement and also made availablethe relevant data and information whenever needed. They have also been veryunderstanding and helpful in giving advisory assistance in the course of projectimplementation.

d. Evaluation of the Borrower's own performance during the evolution andimplementation of the project. with special emphasis on lessons learned thatmay be relevant in the future

i. Transmission

The NEB has engineered and completed the projects on schedule,financed by the Exim Bank of Korea.

ii. Mini Hydro

The NEB in implementing the mini hydro projects has proven itsperformance as satisfactory although there is a need for improvement incertain aspects. During the implementation, there are some setbackswhich needs to be looked into and action taken to rectify as to ensurea more coordinated and smooth implementation of mini hydro projects.

Improvements are needed in the following

(a) Early approval of allocation.

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(b) Stricter bidding procedures is needed to ensure choice ofcontractors is done correctly.

(c) Wayleave procedures should be started early.

iii. Distribution (RE-1)

Projects were based on the Board's and Government's projecton ofgrowth in the 5th Malaysian Plan and also with the Government'sintention to accelerate and fully electrify the Peninsular with emphasis onthe less developed states. Due to recession during the projectimplementation period, a large number ofprojects had been rescheduled.The NEB has no problem in implementing the approved projects

iv. Rural Electrification (RE-2)

NEB has the experience and capability to implement the projects.

e) Assess the effectiveness of the relationship between the Bank and the Borrowerdurina the evolution and im=oementation of the _roiect

The Bank's mission on project supervisions during this period had been foundto be useful in advising the Board in the project implementation. The assistancegiven by the Bank as sought by LLN through telex, telefax, letters and telephonehas been attended promptly and speedily. Hence the relationship between theBank's and LLN staff has been very cordial which lead to the satisfactory andeffective project implementation.

22 August 1990KUALA LUMPUR

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PROJECT COMPLETION REPORT

MALAYSIA

RURAL ELECTRIFICATION PROJECT(LOAN 2146-MA)

PART III

1. Related Bank Loans and/or Credits

Loan No. 1178-MA 2438-MA

Title Seventh Power Project Eleventh Power Project

Year of Appraisal

Purpose Extension of the Prai Extend electricity supplyThermal Station and outside the urban area inextension of transmission the less developed states ofand distribution systems. Peninsular Malaysia.

Status Completed Scheduled to be completed6/30/89

CommentThis project financed the To utilize undisbursed fundsrural electrification the loans was amended instudy on which a compre- October to include extendinghensive rural electrifi- a 275 kV transmission linecation plan was first and procuring additionalbased. 275 kV equipment

2. Project Timetable

Date Planned Actual

Identification August 1978Preparation February 1981Appraisal Mission August 15, 1981 August 29, 1981Loan Negotiation April 1982 April 14, 1982Board Approval May 15, 1982 May 18, 1982Loan Signing October 1982 October 7, 1982Loan Effectiveness August 31, 1982 January 3, 1983Loan Closing June 30, 1986 June 30, 1988Loan Completion December 31, 1986 December 31, 1988

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3. Loan Disbursements

Cumulative Estimated and Actual Disbursements(US$ million)

Actual disburse-IBRD fiscal Actual Appraisal ments as Z of

year and semester disbursements estimate appraisal estimate

1983December 31, 1982 0.0 1.3 0June 30, 1983 1.3 3.3 40

1984December 31, 1983 1.3 13.3 10June 30, 1984 1.7 23.3 7

1985December 31, 1984 9.1 38.3 24June 30, 1985 20.1 53.3 38

1986December 31, 1985 26.5 68.3 39June 30, 1986 29.3 80.3 36

1987December 31, 1986 30.5 86.3 35June 30, 1987 31.8 - 37

1988December 31, 1987 32.1 - 37June 30, 1988 32.2 - 37

1989December 31, 1988 34.7 _ 40June 30, 1989 36.3 - 42

Closing Date December 31, 1988 December 31, 1986

Note:

(a) Final disbursement made on May 11, 1989(b) US$20 million cancelled on September 4, 1985(c) US$30 million cancelled on December 11, 1986

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4. Project Implementation

Transmission Lines

4.1 The following Table 4.1 compares the Staff Appraisal Report targetdates and actual completion dates of the transmission lines and theirsubstation included in the project.

Table 4.1: TRANSMISSION LINE AND SUBSTATION COMPLETION DATES

SAR Target Actual Completion

Transmission Lines

275 kV Tanah Merah-Kenyir December 1985 April 1987132 kV Kuala Terengganu-Kenyir December 1985 November 1985132 kV Kuala Terengganu-Gong Badak December 1985 December 1985132 kV Tanah Merah-Pasir-Puteh December 1985 June 1986132 kV Tanah Merah-Kuala Krai December 1985 June 1986

Substations

Kuala Terengganu December 1985 October 1986Gong Badak December 1985 November 1986Pasir Puteh December 1985 October 1986Kuala Krai December 1985 June 1987

- 14 -

Rural Electrification Subproiects

4.2 Table 4.2 below shows the new customers provided with electricityunder the project.

Table 4.2: NEW CUSTOMERS UNDER THE PROJECT

1983 1984 1985 1986 1987 Total

RE-1Residential 1,510 3,854 1,995 1,966 3,331 12,656Commercial 197 151 89 131 2,963 3,531Industrial 8 8 7 108 32 163

Subtotal 1,715 4,013 2,091 2,205 6.326 16,350

RE-2Residential 30,212 29,704 42,801 6,962 6,365 116,044

Total 31,927 33,717 44.892 9.167 12,691 132,394

Total new customers for 1983-85 time slice: 110,536Total SAR estimate for 1983-85 time slice: 132,872Total new customers for 1983-87 time slice: 132,394

Minihydro Subprojects

4.3 Of the seven minihydro plants approved for implementation two havebeen completed and are waiting to be connected to their respectivedistribution systems, and the remaining five are scheduled for completionduring the first quarter of 1990. The SAR target for the completion of allminihydro installations was July 1986.

- 15 -

5. Project Costs and Financing

A. Project Costs(US$ million)

Appraisal estimate Actual costs

Item Foreign Local Total Foreign Local Total

275 kV Transmission Line 10.96 7.3 18.26 ({22.1 34.3 56.4

132 kV Transmission Line 8.93 6.89 15.82 {Rural ElectrificationProjects 77.09 85.74 162.83 46.5 86.1 132.6

Mini-hydro Projects 20.61 25.39 46.00 3.2 6.7 9.9Consulting Services

275 kV Line 0.65 0.22 0.87 - - -Kedah Valley Project - 1.40 1.40 - - -

Mini-hydro Projects 0.87 - 0.87 - - -

Base Cost 119.11 126.94 246.05 71.8 127.1 198.9

Physical Contingency 4.53 4.28 8.81 - - -Price Contingency 28.56 30.80 59.36 - - -

Total Cost 152.20 162.02 314.22 71.8 127.1 198.9

Front-end Fee 1.28 1.28 1.2 - 1.2

Total Financing Required 153.48 162.02 315.50 73.0 127.1 200.1

B. Project Financing(US$ million)

Source Appraisal Plan Actual Financing RequiredForeign Local Total Foreign Local Total

IBRD 86.3 - 86.3 36.3 - 36.3Supplier's credit 15.5 10.0 25.5 8.4 - 8.4Commercial banks 51.7 - 51.7 - - -NEB's resources - 19.7 19.7 28.3 51.8 80.2Government - 132.3 132.3 - 75.3 75.3

Total 153.5 162.0 315.5 73.0 127.1 200.1

- 16 -

Comment

5.1 The actual combined cost of the two trar,smission line projectcomponents overran their estimated cost, excluding contingencies, by US$23million. However, because of the cost underrun of the minihydro and ruralelectrification components, the actual project cost was 63Z of the appraisalestimate. The minihydro cost variance can be explained by the fact that onlyseven of the original 41 feasible minihydro sites were actually developed. Alarge share (about 602) of the underrun in the rural electrification cost canbe attributed to reductions and other changes in the actual requirements ofthe RE-1 and RE-2 subprojects. The remaining 402 or so share wasoverestimated at appraisal.

6. Project Results

A. Direct Benefits

6.1 The total benefits realized from the sale of electricity to thedifferent category of consumers consists of (a) direct benefits in terms ofrevenue generated at the prevailing tariffs and (b) surplus benefits accruingto these consumers by either substituting electricity for other forms ofenergy in use or by promoting the use of appliances and tools which could notbe used without electricity. The benefits for the different category ofcustomer benefits were evaluated as follows:

(a) Domestic sales: current tariff plus kerosene savings

(b) Commarcial sales: current tariff plus 55Z estimated surplus benefits

(c) Industrial sales: the cost of equivalent diesel generatedelectricity.

B. Economic Impact

6.2 The appraisal report evaluated the internal economic rate of return(IERR) as the discount rate which equalizes the stream of present costs andbenefits attributable to the project. The following table gives thecalculation criteria used in the Staff Appraisal Report and Project CompletionReport IERR calculations. Where available actual data were used for the IERRreevaluation.

_ 17 -

Table 6.1: COMPARISON OF IERR CALCULATION CRITERIA

SAR PCR

Investment growth between 1986 and 1995 as Z of earlierinvestment year 2.0 2.0

O&M cost (Z of investment) 2.0 2.0

Bulk supply cost (Mc/kWh) 16.98 17.09

Annual growth of sales (Z)Domestic 4.0 6.0Commercial 5.0 4.0Industrial 5.0 5.0

Annual growth of households (Z) 2.0 2.0

Domestic revenue (Mc/kWh) 20.0 18.51

Commercial benefit (Mc/kWh) 37.2 28.7

Industrial benefit (Mc/kWh) 39.9 35.0

Kerosene savings per household (M$/mo.) 7.78 7.00

Reduction in commercial and industrial sales forecaststo account for price elasticity of demand (Z) 20.0 none

6.2 The IERR reevaluation was done in 1988 constant Ringgits usingMalaysia's Industrial Investment Inflator as follows:

1983 0.941984 0.951985 0.961986 0.961987 0.971988 1.00

6.3 Based on data supplied by NEB's Distribution Department, electricitysales projections were based on the following consumption estimates:

Domestic: 50 kWh/month/householdCommercial: 200 kWh/month/consumerIndustrial: 160,000 kWh/month/consumer

C

- 18 -

5.4 On the basis set forth above, the reevaluated IERR is 24.72.Annex 1 tabulates the cost end benefit streams used in calculating thereevaluated IEER.

C. Financial impact

6.5 NEB's financial performance comparing actual results with projectappraisal forecasts is presented in Annex 2 and summarized in the followingTable 6.1.

Table 6.1: PERFORMANCE INDICATORS

Fiscal year 1982 1988 1984 1986 1986 1987 1988ending August 31, (lat.rl

Sales (GWh) 8,368 9,047 9,894 10,780 11,422 12,438 13,688

Average price (Ms/kWh) 21.98 22.2 22.19 22.26 2^.26 18.83 18.61

Operating revenue (MS min) 1,941.0 2,131.0 2,341.0 2,676.0 2,432.0 2,644.0 2,709

Operating costs (MS mln) 1,s59.0 1,836.0 1,674.0 1,788.0 1,649.0 1,673.0 1,828

Operating income (MS min) 343.2 496.0 766.6 787.3 783.0 970.9 1,080

Not income (MI min) 266.2 413.2 866.7 638.0 606.3 462.2 693.0

Capital expenditure (MS min) 864.2 1,263.0 1,363.0 1,293.0 1,049.0 1,397.0 1,214.0

Rate of return on notrevalued assets (%) 12.8 14.6 18.4 14.36 10.64 11.63 13.2

Self-financing ratio (6) 52.0 62.0 44.0 48.0 62.0 48.0 65.4

Current ratio (times) 1.2 0.97 1.04 1.13 1.22 1.11 1.2

Debt as % of debt and equity 34.0 31.4 32.0 33.3 39.1 39.8 47.8

Debt service coverage (times) 2.6 2.7 3.3 2.7 2.3 1.9 2.2

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7. Status of Covenants

Loan Agree-ment Section Covenant Status

4.04 (i) Strengthen the rural electrification Compliedplanning organization.

4.04 (ii) Introduce MIS Complied

4.04 (iii) Review design standards. Complied

4.04 (iv) Introduce measures to encourage Compliedproductive use of electricity.

5.02 (A) Have accounts and financial statements Compliedaudited each year by independentauditor.

5.02 (B) Furnish audited financial statements to CompliedBank within nine months.

5.02 (C) Furnish unaudited accounts within six Compliedmonths.

5.0 Exchange views with Bank before making Compliedany tariff changes.

5.05 Self-financing ratio of not less than 15 Exceeded infor 1982-83, 20Z for 1984, 25? for 1985 every yearand 1986 and 30Z thereafter.

5.06 Debt equity ratio of not more than 60:40 Was less inevery year

5.07 Current ratio of not less than 1.1 Ratio slightlyNo more than 12 investment in industry less than 1.1

in 1983-84

5.08 No more than 12 investment in industry Complied inevery year

- 20 -

8. Use of Bank Resources

A. Staff Inputs

8.1 Staff inputs in carrying out of the various tasks through the projectcycle from preparation in 1981 to December 31, 1988 and preparation of thisPCR were as follows:

Task Input (Staffweeks)

Project Preappraisal 48.4Project Appraisal 33.6Negotiations 6.7Loan Processing 14.1Supervision 36.7Project Completion Report 2.9Project Administration 2.1Cofinancing 0.9

Total 1 3.4

B. Missions

Stage of Month/ No. of Days in Speciali- P,.?tformance Type ofproject cycle year persons Field zation L rii ing /b problem .L

Up to appraisal1. 2/81 2 4 E, FA2. 5/81 2 14 E, FA3. 8/81 1 E, FA4. 8/81 3 21 E, EC, FA

Through effectiveness1. 1/82 1 4 E2. 7/82 1 6 FA

Supervision Id1. 10/82 2 10 E, FA 12. 2/83 1 7 E 1 D3. 4/83 1 5 FA 2 D, C, OS4. 10/84 3 14 E, FA, CON 3 D, C, 0S5. 3/85 1 21 E 2 D, C, OS, PM6. 7/85 1 14 E 2 D, C, OS, PM7. 12/85 3 16 E, EC, FA 3 D), C, OS, PM8. 4/86 3 28 E, EC, FA 3 1, C, OS, PM9 7188 1 21 E 2 OS

/a E = Engineer, FA = Financial Analyst, EC Economist, CON = Consultant/b 1 = No or minor problems, 2 = Moderate problems, and 3 = Major problems which

are being adequately addressed./c D = Disbursement, C = Anticipated completion, OS = Overall status and

PM = Performance by management./d Some of the missions were combined wich other business in the country.

ANNEX 1

MALAYSIA

RURAL ELECTRIFICATION PROJECT (LOAN 2146-MA)

PROJECT COMPLETION REPORT

Economic Cost and Benefit Streams

Costs (MS million) Sale (GWh) Benefits (MS million)Fiscal Bulk Invest- Domes- Commer- Indus- 0omes- Corner- Indus- Kerosene-year supply mont OtM Total Households tic cial trial tic cial trial savings Total

1983 6.3 24.4 0.5 31.2 31,722 19.0 0.6 15.4 3.7 0.1 6.7 2.9 12.4

1984 12.6 81.6 2.1 96.2 66,280 39.2 0.8 30.7 7.7 0.2 11.3 6.8 26.01986 19.7 78.0 3.6 101.3 110,076 86.0 1.0 44.2 12.7 0.3 16.1 9.6 38.7

1906 67.4 68.4 6.0 130.8 119,004 71.4 1.4 261.5 13.8 0.4 91.7 10.4 116.31987 69.9 42.8 5.8 118.6 128,700 77.2 8.6 313.0 14.7 2.5 113.0 11.1 141.3

1988 71.3 23.7 6.1 101.1 131,274 81.9 8.8 328.6 16.2 2.5 116.0 11.0 143.71989 76.0 11.7 6.4 93.1 133,899 86.8 9.2 346.0 16.1 2.6 120.7 11.2 160.6

1990 78.8 6.4 6.6 91.7 136,577 92.0 9.5 362.3 17.0 2.7 126.8 11.6 168.01991 82.9 6.6 6.6 96.0 139,309 97.5 9.9 380.4 18.0 2.8 132.1 11.7 164.6

19m 87.2 6.6 6.7 100.5 142,096 103.3 10.3 399.4 19.1 3.0 139.8 11.9 173.81993 91.7 6.7 6.9 105.3 144,937 109.6 10.7 419.4 20.2 3.1 146.8 12.2 182.31994 96.5 6.9 7.0 110.4 147,838 116.1 11.2 440.4 21.5 3.2 154.1 12.4 191.21996 101.8 7.1 7.2 116.1 160,793 123.1 11.6 462.4 22.8 3.3 161.8 12.7 200.6

1996 106.8 - 7.2 114.0 163,808 130.6 12.1 485.6 24.2 3.5 170.0 12.9 210.61997 106.8 - 7.2 114.0 163,808 130.5 12.1 485.6 24.2 3.6 170.0 12.9 210.6

1998 106.8 - 7.2 114.0 163,808 130.6 12.1 486.6 24.2 3.5 170.0 12.9 210.61999 106.8 - 7.2 114.0 163,808 130.6 12.1 485.6 24.2 3.6 170.0 12.9 210.6

2000 106.8 - 7.2 114.0 163,808 130.5 12.1 486.6 24.2 3.5 170.0 12.9 210.62001 106.8 - 7.2 114.0 153,808 130.6 12.1 485.5 24.2 8.6 170.0 12.9 210.6

2002 106.8 - 7.2 114.0 163,808 130.6 12.1 486.6 24.2 3.6 170.0 12.9 210.62003 106.8 - 7.2 114.0 163,808 130.6 12.1 486.5 24.2 3.6 170.0 12.9 210.6

2004 106.8 - 7.2 114.0 163,808 130.6 12.1 485.5 24.2 3.6 170.0 12.9 210.62006 106.8 - 7.2 114.0 163,808 130.5 12.1 485.6 24.2 3.5 170.0 12.9 210.6

2006 106.8 - 7.2 114.0 163,808 130.5 12.1 485.5 24.2 3.5 170.0 12.9 210.62007 106.8 - 7.2 114.0 163,808 130.5 12.1 486.5 24.2 3.5 170.0 12.9 210.62008 106.8 - 7.2 114.0 153,808 130.6 12.1 485.5 24.2 3.5 170.0 12.9 210.62009 106.8 - 7.2 114.0 163,808 130.6 12.1 486.5 24.2 3.5 170.0 12.9 210.6

2010 106.8 - 7.2 114.0 153,808 130.5 12.1 485.5 24.2 3.5 170.0 12.9 210.6

IERR = 24.7X

ANNEX 2Table 1

MALAYSIA

RURAL ELECTRIFICATION PROJECT (LOAN 2146-MA)

PROJECT COMPLETION REPORT

NEB Income Statement(MS illion except as noted)

Fiscal year 1982 1983 1984 1985 1986 1987ending August 31 SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual

Sales (GWh) 8,705 8,368 9,767 9,047 10,978 9,894 12,339 10,780 13,785 11,421 15,312 12,438Average tariff (MiS/kWh 0.22 0.22 0.24 0.22 0.27 0.22 0.29 0.22 0.30 0.20 0.32 0.19Energy revenues 1,906 1,840 2,381 2,009 2,958 2,196 3,563 2,399 4,135 2,313 4,935 2,343Other operational revenue 48 101 50 122 50 145 50 176 46 119 46 166

Total Revenues 1,954 1,941 2.411 2.131 3.008 2.341 3.613 2.678 4.180 2.432 4.980 2,509

Fuel and power 1,288 1,206 1,633 1,199 1,910 1,077 2,268 1,200 2,497 844 1,909 850Other operational expenses 262 267 303 289 373 311 444 361 624 499 628 570

Direct cost 1,540 1,484 1,836 1,488 2,283 1,388 2,702 1,660 3,021 1,344 3,537 1,220

Total Cost 1.540 1.464 1.836 1 488 2.283 1.388 2.702 1.650 3.021 1,344 3 537 1,220

Incom before depreciation 413 417 575 643 724 952 911 1,015 1,159 1,089 1,443 1,288Depreciation 201 134 249 147 300 188 387 228 478 306 556 331

Income before interest 212 343 326 496 424 767 523 523 681 783 887 957Interest charged oper. 105 88 116 83 134 111 197 122 258 177 300 248Taxation 27.6 0 164.4Incom after tax 638 606.3 644.4Non-operational revenues -49 0 -69 -45 -72 -42 -72 -42 -98 -46 -104 -33

Net Surplus S8 255 161 388 219 613 264 596 327 562 483 612

Average rate base 3,235 2,942 4,307 3,306 5,483 3,068 7,398 4,226 9,302 6,027 10,717 6,893

Rate of return (1) 8.57 9.1 7.6U 14.5 7.77 23.9 7.07 16.5 7.32 12.7 8.28 10.9

ANNEX 2Tabl- 2

MALAYSIA

RURAL ELECTRIFICATION PROJECT (LOAN 214U-MA)

PROJECT COMPLETION REPORT

NEB Flow of Funds(MS million)

Fiscal year 1982 1983 1984 1986 1986 1987onding August 31 SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual

Source of Funds

Incoe before depreciation 413.3 476.9 674.8 843.0 724.7 952.3 910.8 1,016.3 1,1568.9 1,088.7 1,443.0 1,288.3Net dismantled assets 1.6 1.7 1.7 1.4 5.9 4.5Unrealized FOREX (L,-G) 0 0 0 11.5 128.2 160.5 INon-operational revenues (net) -49.0 0.0 -58.6 -44.9 -72.0 -42.4 -72.0 -21.9 -97.9 -61.0 -103.6 -94.1 W.

Cross internal gen. 364.3 478.5 516.2 599.8 652.7 911.6 838.8 1,006.3 1,061.0 1,171.8 1,339.4 1,369.2Government grants 102.0 140.0 93.0 98.8 100.0 92.0 108.0 108.0 114.0 51.6 121.0 114.2Other contributions 40.0 66.5 42.0 94.7 45.0 75.2 50.0 17.9 60.0 81.4 60.0 -26.6Consumer deposits 18.4 27.0 51.9 33.1 41.8 28.7 42.4 29.6 40.0 27.7 68.0 26.3Increase other liabilities 7.2 0.0 -42.0 0.0 0.0 0.0 0.0 0.0 -65.0 0.0 0.0 0.0Equity increase 74.1 0.0 7.6 0.0 0.0 0.0 0.0 0.0 0.0 42.4 0.0 11.9Loans 850.0 278.1 1,160.8 490.4 1,382.4 680.7 1,154.1 587.4 907.7 239.2 1,176.8 409.2

Total Sources 1,456.0 990.1 1,811.8 1,316.8 2,221.9 1,788.2 2,193.3 1.713.0 2,107.7 1,614.1 2,743.2 1,894.3

Application of Funds

Investments 1,210.0 854.2 1,478.0 1,263.2 1,823.0 1,362.8 1,673 1,292.7 1,487 1,049.1 1,847.4 1,397.5Amortization

Foreign loan 0.0 65.3 0.0 83.3 0.0 82.4 0.0 136.2 12.4 161.9 16.5 354.0Other loan 101.2 26.0 129.8 36.0 149.6 47.8 222.4 222.4 2B9.4 22.1 356.8 25.2

Total Loan Amortization 101.2 91.3 129.8 119.3 149.5 130.2 222.4 51.4 269.4 22.1 368.8 379.2

Op. int. long term debt 104.8 88.0 116.0 82.8 133.9 110.9 197.0 12i.7 267.0 184.0 300.9 247.9

Total Debt Service 206.0 179.3 246.8 202.1 283.4 241.1 419.4 308.3 637.8 360.8 674.2 627.1

Increase in work cap. 36.0 -44.0 88.0 -145.2 116.5 194.3 100.9 84.0 103.0 209.3 221.6 -263.1Investmnt in ind. 4.0 0.6 0.0 3.3 0.0 0.0 0.0 0.0 0.0 1.4 0.0 0.0

Total Application 1.456.0 990.1 1,811.8 1,316.8 2,221.9 1,788.2 2,193.3 1.713.0 2,107.7 1,614.1 2,743.2 1.894.3

ANNEX 2

MALAYSIA

RURAL ELECTRIFICATION PROJECT (LOAN 2146-MA)

PROJECT COMPLETION REPORT

NEB Balance Sheet(MS Million)

Fiscal year 1982 1983 '984 1986 1966 1987ending August 31 SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual

Assets

Fixed assets in operation 6,636 5,663 8,126 5,911 10,063 6,126 13,442 8,965 15,538 10,721 16,151 11,693Less accum. deprec. 1,993 1,889 2,391 1,919 2,871 2,002 3,474 2,408 4,161 2,739 4,966 3,162Net fixed assets 4,643 3,764 5,736 3,992 7,192 4,123 9,968 6,568 11,377 7,982 13,185 8,542Work in progress 1,355 1,906 1,733 2,472 2,228 3,326 1,277 2,110 1,456 1,440 1,622 2,046Cash 25 68 60 70 78 214 107 76 182 167 166 146Accounts receivable 213 208 ?63 283 328 307 394 344 466 369 543 356Other receivables 234 310 223 291 232 348 243 401 249 348 292 385Inventories 306 209 371 236 412 309 613 352 655 270 686 257Fuel inv-ntory 64 72 77 69 96 72 113 90 125 71 145 86Investment in Govt. stock 0 0 0 0 0 30Short-term deposits 0 0 0 0 0 396.3Total current assets 843 868 993 938 1,145 1,250 1,369 1,262 1,641 1,230 1,832 1,655

Investment in industry 11 7 11 4 11 4 11 4 11. 6 11 S

Total Assets 6.762 6.644 8,472 7,406 10,677 8,702 12,626 9.933 14,384 10,667 16.650 12,247

Equity and Liabilities

Equity 973 898 973 898 973 848 973 848 973 891 973 903Contributions 654 762 790 922 935 1,057 1,093 1,174 1,257 1,313 1,428 1,426Revaluation surplus 1,592 1,327 1,933 1,042 2,363 893 2,902 1,021 3,500 1,033 4,183 1,111Operational surplus 691 1,076 742 1,444 961 2,110 1,216 .2,706 1,542 3,264 2,024 3,844

Total equity 3,L1 0

4,034 4.437 4,306 5,231 4.908 6.182 S.749 #6. 6 7 271 8.608 7.284Long-term debt 2,091 1,584 3,092 1,976 4,262 2,409 5,126 2,913 6,659 4,240 6,341 4,587Forox deferred account 0 0 0 -5S -1,333 -1,459Accounts payable 451 357 504 343 627 482 636 471 693 153 757 306Dividends payable 49 22 69 67 73 107 86 127 99 121 104 69Current maturities 130 129 150 144 222 202 282 218 373 364 496 56WTotal current liabilitios 630 608 713 564 822 790 1.005 817 1.16S 638 1.356 932

Consumer deposits 113 124 165 167 207 186 249 215 269 243 346 268Other liabilities 107 266 66 415 6s 410 65 306 0.0 370 0.0 635Total liabilities 2,941 2,480 4,035 3,100 6.346 3.794 6.443 4.184 7.113 4.157 8,042 4,963

Total Equity Liablities 6,752 6.544 8,472 7,406 10,77 8,702 9,933 12,626 14,384 10,657 16,860 12,247