Document of

The World Bank

FOR OFFICIAL USE ONLY

4 Uj. 2qqq-o

Report No. 5018b-CO

STAFF APPRAISAL REPORT

COLOBIA

RIO GRANDE MULTIPURPOSE PROJE1ST

June 1, 1984

Projects DepartmentLatin America and the Caribbean Regional Office

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

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CURRENCY EQUIVALENTS

Currency Unit Colombian Peso (Col$)

Col$1 100 Centavos (ctv)Col$101.3 (1984

assumption of average) US$1Col$1,000 US$9.87 (1984 average)

Col$1,000,000 (ICol$) US$9,872 (198'" average)MUS$1= US$1,000,000

UNITS AND MEASURES 11

1 meter (m) 3.281 feet (ft)I square kilometer (km2) 0.386 square mile (mi2)

1 cubic meter (m3) 35.315 cubic feet (ft3)264.2 gallons (gal)6.290 barrels (bbl)

1 Ibbl one million barrels

1 Tera cubic feet (Tft3) = 0.0283 km3 (28.6 x 106m3)1 kilogram (kg) = 2.206 pounds (lb)

1 ton (t;metric;1,000kg) 1.100 short tons (sh.t)1 Mton 1/ 106 tons

1 Gton 1/ = 109 tons1 tn olr] equivalent (toe) 10x106 kcal

1 ton coal equivalent (tce) 7xI06 kcal1 kilowatt (kW) 1,000 Watts (iO3 W)

1 Megawatt (MW) = 1,000 kW (103 kW = 106 W)I Gigawatt (GW) 1,000 MW (106 kw = 109 W)

1 kilowatt-hour (kWh) = 1,000 Watt-hours (103 Wh)- 830.3 kilocalories (kcal)

1 Gigawatt-hour (GWh) = 1,000,000 kWh (106 kWh)I Terawatt-hour (TWh) 1,000 GWh (109 kWh)

i kilovolt (kM) 1,000 Volts (V)1 kilovolt ampere (kVA) = 1,000 Volt amperes (103 VA)

1 Megavolt ampere (MVA) 1,000 kVA (106 VA)1 Megavolt ampere reactive (MVAr) 1 Megavolt ampere reactive

power (cos 0 00)1 kilocalorie (kcal) 3.968 British thermal units (Btu)

1 Hertz (Hz) 1 cycle/second... ... /s ... per ... ;...per second./h; ... /d =..per hour; ...per day;... /m;,../a =..per month; ...per year

1/ kilo (k) = 1000 = 103Mega (M) = 1,000,000 = lOb

Giga (G) = 109Tera (T) 1012

FOR OFFICIAL USE ONLY

GLOSSARY OF ABBREVIATIONS

ACUA Regional, Autonomous; Water supply and sewerage agenciesCARBOCOL = Carbones de ColombiaCHEC = Central Hidroelectrica de Caldas LimitadaCHIDRAL = Central Hidroelectrica del Rio Anchicaya LimitadaCONPES = National Economic and Social Policy CouncilCORELCA = Corporacion Electrica de la Costa AtlanticaCVC = Corporacion Autonoma Regional del Valle del Rio CaucaDNP = National Planning DepartmentEAE = Empresa Antioquena de EnergiaECOPETROL = Empresa Colombiana de PetroleosEEEB = Empresa de Energia Electrica de BogotaEMCALI = Empresas Municipales de CaliEMPO = Empresas de Obras SanitariasENE = Estudio Nacional de Energia (National Energy Study)EPM = Empresas Publicas de MedellinFDE = Fondo de Desarrollo Electrico (Electricity Development

Fund)FEN = Financiera Electrica NacionalFFDU = Fondo Financiero de Desarrollo Urbano (Urban Development

Trust Fund)FNC = Fondo Nacional de Carbon (National Coal Fund)FONADE = Fondo Nacional de DesarrolloFRG = Federal Republic of GermanyGDP = Gross Domestic ProductICEL = Instituto Colombiano de Energia ElectricaIDB = Inter-American Development BankINAS = Water Supply Division of the Ministry of HealthINSFOPAL = Instituto Nacional de Fomento Municipal (National Water

Supply Agency)ISA = Interconexion Electrica S.A.JNT = Junta Nacional de Tarifas (National Tariff Board)KfW = Kreditanstalt fur WiederaufbauOAS = Organization of American StatesOED = Operations and Evaluation Department (IBRD)UNDP = United Nations Development ProgrammeWSS = Water Supply and Sewerage Department of EPM

FISCAL YEAR

January 1 to December 31

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

COLOMBIA

FNPRESAS PUBLICAS DE MEDELLIN

RIO GRANDE i{LTLTIPURPOSE PROJECT

Table of Contents

Page No.

Summary v

1. THE ENERGY AND WATER SECTORS ............ *e............. l

A. Energy (and Power) ....... ................................ * * * * * * * * * * * * * * * * 1Energy resources and policies ....... O ..... ...... ..... 1Energy output and consumption .......o.o.... .. .... . 3Investment and financial issues........ go ...... ..... .. 3

Institutional arrangements in the power sectore......&.......... 4

Planning and coordination .......................... .0.......... 4

National least-cost power expansion program...................... 5Power market and supply................... .................... 5

Recent developments ....... ........ 6Bank participation in the power sector ....... 7

B. Water Supply (and Sewerage) .............................. 8

Access .... o ........ 0................. ...... . ....... 8

Institutional arrangements, policies and Bank participation ..... 8Bank participation in the sector .................. 8

Service goas.O."00-000... ............................ 9Department of Antioquia .... 0.*.........0.......... .*.............. 9

The Aburra Valey (Project Area) ........... .. ... .. 10

2. THE BORROWER . 11

General ........ .0....9... 11

Previous Bank lending oo......... .*..9.-.. ...... .............. .. .... ...... 11Organization 0000-**.*..-.........0 ...... *............... 11

Personnel o.... ... 12

Training .......... .........S.......S..*.......... 13

Accounting and auditing ........... %.....e.... ... O......... 13Billing and collections.............................0 .......... 14

Insurance .... .0. ... 14Electricity Tariffs and Rates ...... *........... ee.eoo.. 14

Water Supply and Sewerage Tariffs and Rates.........o.woo........... 15

Institutional aspects ....... .......... 15

This report is based on the findings of a mission which visited Colombia in October1983, comprising Messrs. J. Gorrio, A. Guzman, W. F. Kupper (consultant) and C. Morse

(consultant).

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Page No.

3. EPM'S MARKET ........................... ..** .. *.......**.. se..e 17

Supply area, access*..*............................ ................. *...ee .... 17Electricity ............... * ...%......... ..... 17Water .............. .............. . ... ... **e.*********** 17

Power Market Development ...... .................. ....... 17

Historic ......... ,0*.. ..... 17Captive plant *************............. . ............ *....... 18Forecasts ......... ... ......................... . 1.8

W4ater Market Development ... ...... . ..* ...*.*. *..... 0...G.* 20

General ............... 09..69.0.................................. 20Forecasts ................ 0.... 21

4. THE PROGRAM AND THE PROJECT ....................................... 24

The program ....... .... .. 8.0........................................ 24Electricity ...................................... *............... 24

Water Supply and Sewerage ........................................ 25

Background ............. 25Objectives ......... 0.**..... ................. *..... .. * ....... 25Project cost .... *............................................... 27Financing .. .........".".,........................ 28

Training ....................... ................................. 29Execution . ................... *e********e****.* ................. 30

Project unit ............................................... 30Implementation schedule .............. .. 30

Procurement so.......................................... ....se. 30Disbursements ........ **...*.......................#........se 31

Retroactive financing ........................................ 32Environmental aspects ..... ...... ......... ............. 32

Project file ****.........* .................................. 33

Conoldaedt pefoltmance ........................................................... 345. FINANCES ............Dtn ....... ...................... 34

Earning history .......... ......... ........... 3.....5. 35Rate base .... ... .................. ..............0........ 36Tariff structure ................... o .. ........ ............... 36

Financial structure ..0.09 ... .... 0 ................. . 36Investment and financing plan .... ........... .... ........... .. 37Financial forecast .*......**.................................. 40Rate adjustment program ...... 40

Financial covenants ...... .. ............ 40Other covenants ... o........*... ...... .... 40

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Page No.

B. Water Supply and Sewerage Department ................................ 42Earning history ................................................ 42Financial structure ..... ................................. 43Rate base .................................... ............ 43Investment and financing pl...............m................... 43Financial forecast..........6..........6 6 @ ........ 44Rate adjustment program ................................. 655666 44Financial covenants ...............e.................. oS6**6*.6 44Other covenants .... 60..................... 6 44

6. ECONOMIC ANALYSIS .....o............ .eeS ... ..6666e 45Historic development and studies ............... ................ 45

Least-cost developments .............................. 45Return on investments .....6666 666.666........66666.666.6666.6666.... 46

7. AGREEMENTS TO BE REACHED AND RECOMMENDATION o .................... 47

ANNEXES1.1 Energy output and consumption ................. ................... 491.2 Public Electricity Service in Colombia ............................. 521.3 DNP National generation expansion plan, May 26, 1983................ 531.4 Bank Participation in the Colombian Power Sector.................... 551.5 IBRD Power Loans....................................... 66666666 561.6 IBRD Water Supply and Sewerage Loans ............................... 57

261 EPM's Organization Ch art ............................ 582.2 Electricity Tariffs, rates and structureo..........6 s............... 622.3 Water supply and sewerage tariffs and rates......................... 65

3.1 Electricity consumption and supply data 1978-19910.................. 663.2 Water consumption and supply data 1978-1991........................ 67363 Historic and forecast raw water supply data 1975-1991..9........-... 683.4 The division of housing improvements ................ 0.............. 70

4.1 1982-1991 Power construction program ............................... 724.2 1982-1991 Water construction program ............................... 734.3 Project Description .................................. 764.4 Existing water supply system and planned

Rio Grande Water and Power Projecto.................................o 774.5 Project cost .....6666666666665666566666 6666656656506*6.66. .6....... 784.6 Project construction supervision division, organization chart....... 794.7 Project implementation schedule ..................................... 814.8 Loan disbursement schedule S*5665666*666*6666656666666*66666*6666666 824.9 Contents of project file ...... 66..........566 85

5.1 Consolidated historic financial statements.......................... 865.2 Historic and forecast financial statements - Telephone Department... 875.3 Schedule of existing and proposed debt - Power...................... 885.4 Historic and forecast income statements - Power...o................. 89

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Page No.

5.5 Historic and forecast sources and uses of funds - Power............. 905.6 Historic and forecast balance sheets - Power........................ 915.7 Historic and forecast operational and financial

monitoring indicators - ......... ....................... 925.8 Schedule of existing and proposed debt - WSS.........S..............e 935.9 Forecast income statements - WSS .................................... 945.10 Foreca5t sources and uses of funds -WSS............................ 955.11 Forecast balance sheets - WSS ......... ........ sees.... 965.12 Forecast operational and financial monitoring indicators - WSS ...... 97

6.1 Economic Analysis *....o ................ .............. *........... 996.2 Alternative development schemes .................................... 1006.3 Rate of return on development program .............................. 102

MAPS

IBRD 17690 National Power SystemIBRD 17689 Rio Grande: Power FacilitiesIBRD 17708 Rio Grande: Water Facilities

-v-

COLOMBIA

RIO GRANDE MULTIPURPOSE PROJECT

Project Summary

Borrower: Empresas Publicas de Medellin (EPM)

Guarantor: Republic of Colombia

Beneficiary: EPM

Amount: US$164.5 million equivalent, including a front-end fee ofUSS410,224.

Terms: Repayment in 17 years, including 4 years of grace, withinterest at the Bank's standard variable rate.

Project The project consists of the hydrofacilities on the Rio GrandeDescription: comprising an earth-fill dam, diversion tunnel, pressure

tunnel and underground power station Tasajera (300 MW),pressure tunnel and surface power station Niquia (22 MW)serving as a pressure reducing facility, a balancing tank anda steel conduit feeding raw water to phase 2 of the projectconsisting of a potable water treatment plant and distributionfacilities planned to be financed in parallel by IDB. Theproject also includes the extension of a computerized dataprocessing network, and the training of EPM staff.

Risks: The main risks derive from the nature of the works: civilworks in difficult terrain and heavy rain during the wetseason that may cause landslides, as well as in tunneling atgr!at depth. Financial risks have been minimized byagreements reached at negotiations and by actions to be takenduring processing of the proposed loan. Based on EPM's pastrecord, it is expected that a satisfactory rate of return willbe realized.

Estimated cost: ----- US Million--------Local Foreign Total

Dam and reservoir 38.8 24.4 63.2Power stations, transmission 42.4 77.9 120.3Water tunnel, and tank supply conduit 27.4 35.9 53.3Training, data network 0.5 1.4 1.9Engineering and administration 26.4 8.8 35.2

Base cost 1/ 135.5 148.4 273.9

Contingencies: Physical 18.0 19.2 37.2Price 5.2 35.7 40.9

Front end fee 0.4 0.4Total cost 158.7 203.7 362.0

Interest during construction 6.5 49.2 55.7Total Investment Cost 165.2 252.9 418.1

1/ At December 1982 prices adjusted to April 30, 1984. Does not includetaxes and import duties, from which EPM is largely exempted in relationto the project.

- vi -

COLOMBIA

RIO GRANDE MULTIPURPOSE PROJECT

Project SuumarY

Financing Plan: -- US Million-----Local Foreign Total Z

IBRD: Contracts - 164.1 164.1 39.2Front end fee - 0.4 0.4

Subtotal IBRD - 164.5 164.5 39.2Cofinancing B-loan 2/ - 65.5 65.5 15.7Suppliers - 22.9 22.9 5.5FONADE 13.6 - 13.6 3.3

EPM 2/ 151.6 - 151.6 36.3

165.2 252.9 418.1 100.0m - m

EstimatedDisbursements: Bank FY 85 86 87 88 89 90 91

Annual 21.0 11.7 34.6 35.4 30.4 20.6 10.8Cumulative 21.0 32.7 67.3 102.7 133.1 153.7 164.5

Rate of Return: About 18X on the combined power and water investment programof EPM, using actual and projected revenues as a proxy forbenefits.

2/ Cofinancing for about MUS$65.5 will be sought in 1985. However, givencapital market uncertainties the financial projections have beenprepared on the conservative assumption that EPM would need to financemost of this amount with its own resources.

1. THE ENERGY AND WATER SECTORS

A. Energy (and Power)

Energy Resources and Policies

1.1 Colombia is rich in energy resources, particularly hydroelectricityand coal. Its reserves of oil and natural gas though modest by internationalstandards are significant at the national level. In terms of known reserves,about 55% of Colombia's primary energy potential lies in hydroelectricity,40% in coal and only 5% in oil and natural gas. In contrast, presentconsumption of commercial energy relies primarily upon oil products (50%) andless on natural gas (20%), coal (20Z) and hydroelectricity (10%).

1.02 Colombia traditionally enjoyed a positive trade balance In energybecause of its relatively rich energy endowment and modest yearly per capitaconsumption of about one ton of coal equivalent (or 0.7 ton of oilequivalent), which is below average for middle-income developing countries.In 1976 the country became a net importer of energy, and by 1981 the (net)cost of oil imports reached almost MUS$400. This came about because of adecline in total domestic energy production, resulting from a 7% annual fallin oil output between 1970 and 1979. As this situation was threatening tocompromise balance of payments prospects, the Government moved in the late19709 to redress the negative energy trade balance through: (1) pricingmeasures directed at increasing the overall cost of energy to consumers, atchanging relative prices to encourage consumers to move away from oil, andproviding incentives to producers; and (ii) direct public sector investmentsin the energy field, particularly hydroelectricity and coal. As a result,since 1980, the previous trend has been reversed: petroleum production hasincreased, GDP has grown faster thin aggregate energy consumption, andpetroleum's share of total primary energy consumption has fallen while thatof hydroelectricity, coal and natural gas has increased.

1.03 Known oil reserves at the end of 1982 totalled about 555 Mbblor only about 8 years consumption at the present rate of use. Policiespursuing artificially low prices during the 1960s and the early 1970scontributed to a deteriorating oil situation. In recent years the Governmentmoved forcefully to remedy this by bringing internal consumer prices closerto international levels (internal prices were increased by more thanthreefold in real terms between 1974 and 1980, and, lately, have fluctuatedaround 80-90% of international prices) and by enabling producers to benefitfrom a large part of the price increases. As a result, exploration hasincreased from 11 wells per year in 1975 to 100 in 1981, with known reservesexpanding by about 10% in 1981, after several years of steady decline. Also,crude oil production has been increasing at over 5%/a since 1980. Crude oilproduction stood at almost 150,000 bbl/d at the end of 1982, covering about80Z of domestic consumption. Since average growth in consumption has notsurpassed 0.7%/a during 1979-1982, self-sufficiency in oil may be withinreach by the mid-1980s. Over the longer term, however, a re-emergence of oilimports appears likely, as geological prospects for discoveries have not beentoo encouraging so far.

1.04 Measured natural gas reserves stood at about 5.3 Tft3 at the end of1981, or almost 40 years consumption at present rates of utilization. Mostreserves, production and consumption are concentrated on the northern coast,

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with natural gas being plped to the main population and Industrial centersalong the coast. Growth in gas consumption (which averaged about 7X/a overthe last five years) has been provided a major push by fuel conversion ifpower plants from oil to gas. Thermal power plants now account for abouthalf of total gas consumption. Industry represents the bulk of the reminderwith oil refineries also important consumers. At present there issignificant excess supply in the northern region. Further importantincreases in gas consumption are tied largely to several new gas-processingoptions currently being studied. The best alternative appears to be anammonia-urea plant; the Bank is the Executing Agency for a UNDP-financedfeasibility study.

1.05 As a consequence of the natural gas surplus on the northern coast,the Government has not yet defined a clear pricing policy for natural gas.Prices for new deliveries are negotiated ex-post with producers on a case bycase basis. This acts as a disincentive for exploration. Although consumerprices are currently relatively low (less than US$2 per kft3), the mxtent towhich they result in misallocation of resources li not clear because theviability of future gas-consuming projects remains to be established.

1.06 Colombia's coal resources are substantial, with reserves estimatedat some 16 Gton, of which only about 20% can be classified as measured. Atpresent rates of utilization, reserves would last hundreds of years. In vievof the magnitude of reserves, Government policy is to encourage domesticconsumption in substitute for natural gas and fuel oil, and to promote coalexports, mainly from El Cerrejon but also from other deposits located nearthe Atlantic Coast. Since 1979, the UNDP and the Bank have been workingjointly with the State coal corporation, CARBOCOL, that together with anEXXON subsidiary is developing a 15 Mton/a production at El Cerrejon North.A proposed Bank-financed Coal Exploration Project will assist In assessingthe economic potential of several other promising areas in the Atlantic andCentral Regions.

1.07 Coal production grew at about 7Z/a average over the 1970. to reacha level of about 5 Mton in 1981. Production came from about 400 small andmediuar-scale mines, virtually all of which are non-mechanized, run by theprivate sector and located in Central Colombia. More than half theproduction and consumption of coal Is concentrated In the highlands ofBogota. Sixty percent of all coal is consumed by industry, and most of therest by the power sector. Residential consumption and exports represent onlya small share of total output. Colombian coal is bituminous, of highcalorific value (mostly over 6,000 kcal/kg) and with low sulphur content(mostly less than 12). Some coal in central Colombia possesses cokingproperties. In 1982, domestic coal prices, which are freely set by marketforces, typically ranged between US$25-35/t delivered to large consumers Inthe industrial centers of Bogota, Medellin and Cali. This is well belowinternational prices, but high internal transport costs, Imposed by the longdistance to ports and difficult terrain, all but rule out for now coalexports from the interior of the country.

1.08 Colombia's hydroelectric potential, at about 100 GW, is amongst thelargest in the world. Although the country has made strides in developingthis potential (hydroelectric power generation grew at about 102 per annumduring the 1970s), total installed hydro-capacity by end-1982 was only 3 (;.However, plants now under construction will virtually triple capacity by1988. Hydroelectric plants currently represent about 702 of total electricpower generation and thermal plants the rest The largest part of the

thermal capacity is located on the northern coast, where hydro potential islimited, but where there Is abundant coal and natural gas. Slnce plentifulhydro-reserves can be developed at relatively low cost, they represent anoption of high priority. However, the optimal mix of hydro and 6:oal andgas-fired plants needs to be determined in order to take advantage of theprojected increased supply of coal and the exlsting availabilty of a naturalgSa surplus. This matter is currently being studied.

Energy Output and Consumption

1.C9 As shown in Annex 1.1, primary output has lncresed about 3.4%/asince 1978, while final energy consumption rose by about 4.42/a.

Investment and Financlal Issues

1.10 In Colombia, electricity, petroleum and natural gas prices are setby the Government; coal prices are maaket-set. In spite of positiveGovernment actlons In recent years, there is still a need to developlong-term pricing policies that reflect the opportunity cost of the variousenergy resources and provide, within the Government's broader objectives,appropriately balanced incentives for the developosnt of energy resources.It is not clemr whether current prices actually provide such Incentives. Theabsence of adequate knowledge about some of the investr 4,nt requirements ofdifferent energy sources, particularly coal, has made it difficult to met outan integrated investment program and adequate Incentives for each subsector.To this end, the Government has undertaken a major effort to Improve sectorknowledge through a National Energy Study (ENE). Its first stage was carriedout during 1979-82 by the National Planning Departmeot (DNP) with the help oflocal consultants and technical assistance from UNDP and the Federal Republicof Germany (FRG). The report on ENE's first stage Is under Government reviewat present. This study provides significant information needed for energyplanning, including preliminary evaluatlon of energy demand growth andinvestments that could best serve such growth. Howeverr such work remalns tobe done, particularly in the selection of alternative energy sources. Asecond stage of the ENE Is about to commence with several speciallzedstudies 1/. The current effort has already elicited forelgn techalcalassistanec from official sources. The FP. will be providing assistance onmodeling and data gatherlng, France on Industrial energy savings, Italy onrural electrification, and the Organization of Merican States (OAS) onenergy use In transportatlon. Several energy sector agenclie and theMinistry of Public Works will provide counterpart staff and DNP willcoordinate the external assistance. Finally, In support of Governmentefforts to sharpen its energy investment strategy, the Bank Is preparing tocorry out a study on selective Issues through the energy assessment programfinanced by UNDP.

1.11 Over the past five years, Colombia has been successful inmobilizing external resources to finance energy development. Thls has beenachieved through direct foreign Investment (in oil and gas first and latelyin coal) and external loans to the energy agencles, including powercompanies. However, the current condltions in the lateruatlonal lendingmarkets are making external financing more difficult to obtain. Local

1/ Among others, *studles on natural gas avallable for ammonla-ure-fertilizer production and the aforementioned coal exploratlon studies.

financing requirements are covered by internally generated resources andGovernment contributions, with the incipient local capital market providingto date only a marginal share of financing. In order to increase internalresonrce mobilization by the main energy sector agencies, prices charged toconsumers of petroleum products and electricity have been increasedsignificantly in real terms. Furthermore, in 1980 the Government createdthe National Coal Fund (FNC) that receives revenue from a tax on coalproduction valued at the mine-head, which is currently allocated to financecoal exploration (80%) and to assist small and medium-scale coal miningoperations (20%). In 1982 a power development bank (FEN) was established tomobilize domestic as well as foreign credit for the power sector.

Institutional Arrangements in the Power Sector

1.12 Through the 1950s, a large number of power companies were set up bylocal governmental authorities and, lacking interconnection with each other,were operated independently. Some 14 years ago, the country's totalelectricity capacity stood at a mere 1,681 MW (equivalent to about 88 wattsper inhabitant) and reached only about 35% of the population. Although largehydropower sites held the potential of increasing substantially the supply ofelectricity at lower cost than otherwise possible, they were too big to betapped by any one company. With encouragement from the Bank, the Governmentpersuaded the regional power companies to break with tradition and pool theirresources in a shared effort to develop the country's large hydroelectricpotential. To accomplish this, Interconexion Electrica, S.A. (ISA) wascreated as an independent, national generation and interconnection company,of which the shareholders now include all the largest municipal powerutilities and the Government-owned power companies. In addition to plantconstruction, ISP. has interconnected power systems. At the same time, theGovernment has taken measures to improve the sector's prospects for efficientgrowth; it established the National Tariff Board (JNT) in DNP to approverequests from the power companies for tariff increases, and it fostered theconsolidatation of numerous small utilities, particularly in the NorthAtlantic Region. The Bank participated actively in the creation of both ISAand JNT.

1.13 At present, public electricity service is provided by:

(a) municipally-owned companies, of which EPI is one;

(b) national enterprises distributing power to particular regions(ICEL, CVC and CORELCA); and

(c) a generating and transmission company (ISA).

These are described in Annex 1.2 and the electric power systems are shown inMap IBRD-17690.

Planning and Coordination

1.14 The Ministry of Mines and Energy is charged with formulatingnational policy for the generation, transmission and distribution ofelectricity, including coordination and supervision of power sectorplanning. It shares with the National Social and Economic Policy Council(CONPES), DNP and ISA responsibility for defining investment priorities. ISAdefines a generation and transmission expansion program for theinterconnected system; after approval by the Ministry, DNP and CONPES, this

becomes the National Power Expansion Program. The Program is reviewedannually by ISA and revisions, if necessary, are proposed. On the basis ofrequests from the companies, JNT in DNP approves rate increases. Althoughthe Government cannot enforce its policies directly on the municipallycontrolled power companies, a mechanism for reaching agreement on majorissues affecting the sector is provided by ISA, in which the Government hasmajor holdings through ICEL and CORELCA. Sector planning and coordinationhave improved markedly since the creation of ISA, and Bank lending hasstrongly supported this evolution.

National Least-Cost Power Expansion Program

1.15 Colombia has shared in the world-wide economic recession during1981-83. Over the same period, electricity rates were increased some 44% inexcess of the consumer price index, 15-20% in 1981 alone (1.19). Takingaccount of the consequent slowing of electricity demand growth, on May 16,1983, CONPES approved a revised National Power Expansion Program for plantsentering service during 1987-96 (Annex 1.3), representing a 31% reduction ininvestment expenditures previously planned. The plan is based upon a gradualand phased resumption of the long-ternm average annual economic growth rate ofabout 5.5% achieved from 1965-80, estimated fuel prices and the satisfying ofa consequent projected 8% growth of average gross annual electricityconsumption during the 17-year period 1983-2000 (total country electricitydemand has historically correlated closely to overall economic growth at anelasticity ratio of 1.5). For the first time in Colombia, this plan alsotakes account of the probability of construction delays based upon recentexperience in constructing the country's first large hydro facilities.One-year delays are assumed ir completion of all plants that will becomeoperative in 1987 and later and provision is made for maintaining a 95%reliability factor 2/. This plan would satisfactorily meet projected demandthrough year 2000. -During the first six xonths of 1983, actual electricitydemand rose by 7%, compared to the same period of 1982 and to the 3.5%projected in the plan for the whole of 1983 over the previous year. Thisappears to justify the new Expansion Program* To ensure that significantvariations in demand are suitably taken into account, ISA together with theGovernment and the Bank (as provided under 2401-CO), will continue toannually review and update the Program. The next review is expected to takeplace in September 1984.

1.16 In support of ISA's efforts to strengthen its planning methodology,a UNDP-financed study, for which the Bank is the executing agency, isunderway. It focuses mainly on demand forecasting and hydrologi al aspects.A further UNDP and Bank-financed study is in preparation for assistance inconstruction management, which would also extend, through ISA, to itsshareholders.

Power Market and Supply 3/

1.17 Electric power has become the fastest-growing form of energy use inColombia. Its share of total energy consumption has risen from 6.5% in 1970

2/ In the unlikely event that all plants would be completed without theone-year delay, the system would have the capacity to meet an 8.5%average annual growth at a 95% reliability factor.

3/ Sources: ICEL "La Electrificacion en Colombia 1980-1981", and ISA,"Energy Balance (August 1982)'.

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to 8.9% in 1978 and 10% in 1982. Generation increased by an average of about10% annually during 1970-1980, although it has slowed over the last years to5.4%/a in 1981-82 (1.19). Annual per capita generation in 1982 was about 730kWh, which is below the average for Latin America. Effective installedcapacity at the end of that year was 4,544 MW, including self-producers, withpublic entities accounting for 95% of the total installed capacity andgeneration. Peak demand was about 3,854 MW, and total energy generation in1982 amounted to 21.5 TWh, of which about 93% was supplied by ISA and itsshareholders. Hydro plants accounted for about 69% of the total energygeneration.

1.18 About 54% of Colombia's 26.7 million population has electric power,compared to 26% in 1950 and 45% in 1970. The urban population, comprisingabout 65% of the population, has greater access. In 1976, for example, 90%of households in large cities (population of 50,000 or mDre) had electricalservice while in rural towns (population between 500-2,500) the correspondingfigure was 36%; in other rural areas, 16%. Various programs including theBank-financed First and Second Integrated Rural Development Projects and theVillage Electrification Project as well as programs financed by IDB,Kreditanstalt fur Wiederaufbau (KfW) and the Colombia Coffee GrowersAssociation, are aimed at increasing rural coverage (1.10). In 1981 therewere about 2.9 million electricity subscribers of which 89.1% wereresidential and 8.8% commercial. Electricity sales in 1982 totalled about16.7 TWh 4/.

1.19 During 1972-81, gross generation increased at an average annualrate of about 9.2%, compared to the 10% annual average during the 1970s. Thelower rate was brought about by economic recession in 1981 that affectedadversely all economic sectors in Colombia, compounded by drought conditionsthat reduced generation from the hydro plants. This caused powerrestrictions and brownouts in the cities. Rate increases in the order of15-20% above the consumer price index throughout the sector in that year mayhave further decreased demand. Growth of total sales decreasedproportionally. As mentioned previously (1.15), the new National PowerExpansion Program takes account of these factors.

Recent Developments

1.20 During the past tbree years the sector has suffered from financialproblems caused mainly by delays in rate adjustment, slow demand growth,rationing, higher than expected local cost, and insufficient availability offinancing. Local borrowings needed by the sector have outpaced the domesticbanking system's lending capability. Various shareholders lacked fumds topay fully for the electricity supplied by ISA to them and their share in thecost of ISA's development program. As a consequence ISA fell behind in itscontractual payments to contractors which, in turn, caused constructiondelays. In addition to similar problems, CORELCA and ICEL did not receivetimely the budgeted Government contributions. Moreover, the sector sufferedfrom the fact that Government-related lending was held back and financing oflocal costs with external borrowings was authorized only on a highlyselective basis.

4/ Includes minor international sales to Ecuador and Venezuela.

1.21 As a result, when the current national administration took officein August 1982 the sector's financing deficit for the year was estimated toamount to MUS$430. Additionally, the previously-favorable lending climatefor Colombia in the international capital market became affected bydevelopments in other Latin American countries and began to deteriorate. Inthe Fall of 1982, the authorities moved quickly to review the sectorfinancing plan and to authorize badly-needed rate increases for EEEB (a 22Zlump increase and 3.25% monthlv, amounting to 73% during the next 12 months)and EPM (a 15% one-time adjustment and continuance of 2.2% a mDnth, or 53%over the same Period) and to adopt a financing program to cover the sector's1982 short-fall, as well as the aforementioned new borrowings needed in1983-84. In doing so, the authorities have also recognized the constraint onsound sector development and finances represented by the 12 largelyrural-based local utilities loosely grouped under the holding company, ICEL.The Government, therefore, confirmed explicitly the need to restructure theICEL-group and also to take special measures, still to be defined, to assistthe Atlantic Coast regional company, ODRELCA, in strengthening the eightcoastal utilities under its wing. A negative development was a short-livedcountrywide rate freeze, in late 1982, following civil disturbancesassociated with electricity charges to consumers and quality of service.Further, studies were initiated on the possibility of inter-regionalunification of tariff structures over the long term. In addition to tariffmeasures, the authorities took other decisive actions to mobilize neededlocal resources. Legislative and other regulatory measures were enacted toput the new financial arm of the power sector, FEN, on an operationalfooting. As a result of a well-orchestrated effort by the Government, FENand private sector managers in the financial system, FEN attractedconsiderable private financial savings in its initial placement and the firstloans to the power companies have been finalized. Recently the Bank approveda MUS$170 loan to FEN (2401-CO) which is to be complemented by a 'B" loan ofMUSS200 (including Bank participation). This loan is intended to fill theforeign cost financing gap of the ongoing power projects under construction.

1.22 Through the exercise of defining the sectoral financing program,for the first time in recent years the Government began to come to grips withthe macroeconomic and institutional implications of the 1982-90 powerinvestment program. In May 1983, it reviewed in detail the justificationfor, and financial feasibility of, all new investments in the aforementionedprogram, taking account of competing demands from other priority sectors,with consequent reduction of almost one-third of planned capital outlays forelectricity (1.15).

1.23 In October 1983, prompted by civil disturbances related to publicservice rate increases, the Government appointed a -Junta de Vigilancia deTarifas', to oversee the existing "Junta de Nacional de Tarifas' (JNT, theNational Tariff Board) and cause public services to publish their plans forrate increases before application to the JNT, so that a public exchange ofviews could be made. Shortly after, the Government assured the Bank that itwould fulfill its obligations in regard to the utilities' financialperformance, but would not allow excessive increases in short periods, andproposed to seek cost reductions through higher efficiencies.

Bank Participation in the Power Sector

1.24 The Bank has made 28 5/ loans since 1950 for the Colombian powersector. In addition to the present project, it is assisting with thepreparation of two generation and transmission projects. Bank lending to thesector has been generally successful. Further details on Bank lending topower are to be found in Annexes 1.4 and 1.5.

5/ Including the loan (1.21) to FEN, approved but not yet signed.

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B. Water Supply (and Sewerage)

Access

1.25 Of about 62% (17.2 million) of Colombia's population (27.5million) that live in urban areas (defined as communities with more than2,500 inhabitants) about 80% is served with water supply and 65% withsewerage. Of the 35% living in rural areas (9.3 million) where servicelevels are considerably lower, 19% has water supply and 1% has sewerageservice. The quality of water supply is sometimes questionable; only 66%of the urban population and 7% of the rural population receive adequatelytreated water.

Institutional Arrangements, Policies

1.26 The water supply and sewerage in Colombia is provided by:

(1) independent public service companies of the large municipalities(empresas publicas) which are nominally under municipal control,and provide such services as electricity, water supply, telephone,along commercial lines;

(2) a national water supply agency (INSFOPAL) is responsible forcentral planning, and financing water supply, sewerage, solidwastes and markets in municipalities above 2,500 inhabitants -through regional autonomous water supply and sewerage agencies(ACUAS) or through Empresas de Obras Sanitarias (EMPO). The lattermay be multi service companies like the public service companies inthe larger cities;

(3) an agency of the Ministry of Health (INAS), in charge of promotionof water supply and sewerage in localities of less than 2,500inhabitants; and

(4) individual municipalities, usually small, which supply limitedwater and sewage services by direct administration.

Bank Participation in the Sector

1.27 The widest coverage and best service is provided by the empresaspublicas in the larger urban centers. The Bank has lent directly to three ofthese (Bogota, Cali and Palmira) and through INSFOPAL to small andmedium-sized cities. To date, nine Bank loans totalling MUS$233.4, have beenmade to Colombia (Annex 1.6) for water supply, sewerage and drainage. Bankexperience with Bogota has been good but disappointing with Cali. Theservice supplied by INSFOPAL's regional ACUAS varies considerably and ishampered by the difficulty of achieving financial viabiLity, even on aconsolidated departmental basis, due to the small size and dispersion of thecommunities included, and low rate levels. The Bank has financed somelimited works in these areas but the general experience has fallen short ofexpectations. Services in the small systems outside the administration ofINSFOPAL and its regional ACUAS is, almost by definition, limited in scopeand quality, and investments in these services are usually through grantsfrom official agencies with various development objectives. The Bank hasparticipated in financing schemes with INAS that have been affected byinadequate revenues, and organizational and management problems. The weakfinancial structure of the sector and the poor organization of INSFOPAL werecited in the "Bank Operations in Colombia, an Evaluation" (Report No.2-18)ofMay 25, 1972, having been first identified by a 1949 Bank mission. Sincethen they have remained the two principal problems. Recently adopted Bank

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Bank strategy in the Colombian water supply sector therefore emphasizes theneed to focus lending upon municipal entities with sufficient financial andoperational capability to ensure efficient construction and utilization ofnew facilities, given that authority on water supply matters rests de factoat the municipal level. The proposed project would fit in well with thisapproach (2.21(f)).

Service Goals

1.28 Service goals for the 1980 decade are stated to be to provide 90%of the urban population with a safe water supply and 80Z with sewerage. Thegoals for concentrated rural population are 60% water supply and 35Zsewerage, with no specific targets for the dispersed rural population. It isestimated that MUS$300 equivalent annual investments would be necessary toreach the goal, although current investments seem to approximate onlyMUS$100/amillion.

Department of Antioquia 6/

1.29 Water supply and sewerage levels in the Department ofAntioqula, outside the Aburra Valley, which essentially is the service areaof EPM, are slightly above the national averages. Water supply is providedto 82% of urban inhabitants and sewerage to 68%.

1.30 Acuantioquia, the regional ACUA, serves 61% of the total urbanpopulation in urban centers outside EPM's service area (urban centers aredefined as officially recognized municipal centers, which is a somewhat

different criterion than the 2,500 population level used nationally). It doesthis by administering the services in 41 urban centers, providing 87% and 68%of their population with water supply and sewerage respectively. TheDepartment of Antioquia holds 58% of the shares of Acuantioquia, INSFOPALholds 29%, and the remainder is held largely by affiliated municipalities.Due to inflation, the amount of past investments is difficult to quantify,but might be around MUS$2/a. The three principal sources of investment fundshave been credits from a financial urban development fund (FFDU) to theDepartment of Antioquia, the national budget via INSFOPAL, and theDepartment's own resources. The member municipalities provided practicallynothing and revenues barely cover operating expenses.

1.31 Water is provided to 76% of the inhabitants of those urban centerswhich operate their own water supply systems, and sewerage to 67%. Thephysical state of the systems and the water quality is poor in thesemunicipal systems, in large measure because of lack of necessary skills. Ofthe 74 municipal centers which directly administrate these services, 56 haveless than 6,000 inhabitants. In all cases, sewerage consists of sewers toremove liquid wastes from the house and immediate urban areas for dischargeinto surface drainage courses. Investments in these systems have been aboutthe same amounts as for those operated by Acuantioquia and have come mainlyfrom credits of the Instituto para el Desarrollo de Antioquia (AntioquianDevelopment Institute).

1.32 In rural centers (more than 35 houses), 53% of the inhabitantshave, reportedly, connections to a water supply; but this drops to 20% whenall rural dwellings are included. Funds for rural areas have come from theCorporacion para el Desarrallo de Uraba, INAS and the Servicio Seccional deSalud de Antioquia, Comite de Cafeteros, and departmental resources. Theyhave totalled about MUS$1 to 2 equivalent annually.

6/ Source: Diagnostico de los servicios de acueducto y alcantarillado enAntioquia, Departamento Administrativo de Planeacion, Octubre 1983.

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1.33 The objective of the Departmental Development Plan is to decrease

morbidity and mortality caused by water-borne illness, to increase coverageand service quality to all the population, with special emphasis on marginalareas, and to protect water resources. Its strategy is to centralizeplanning, financing, construction and supervision in a single entity,

increase local participation in administration, emphasize Departmentalfinancial assistance to smaller and poorer localities, and increase localcontributions and abilities in all centers. It is noteworthy that thestrategy also seeks to adopt appropriate tariff structures, install meters,shorten design periods, stage construction, and rigorously project populationgrowth.

The Aburra Valley (Prolect Area)

1.34 In the service area of the project, the Aburra Valley, EPM provideswater supply and sewerage to the 1.7 million inhabitants of Medellin andparts of two neighboring municipalities (Bello, and Itagui). Acuantioquiaprovides service to 235,000 inhabitants in 6 municipalities around Medellinand one municipality provides some water services itself to 25,000 persons.Apart from occasional technical and planning assistance on request, EPM doesnot play a role in the operation of other water supplies. Some localitiesare served by more than one system and overali coverage is reported to be95%.

1.35 EPM provides sewerage to 96Z of the inhabitants in Medellin itself,although the coverage drops to 86% when areas served in the two neighboringmunicipalities are included. As a whole, in the environs of Medellincomprising 9 Municipalities (including Bello and Itagui) service is providedto from 65% to 95% of their population by EPM, Acuantioquia and the

Municipalities themselves. Basically the service consists of sewagedischarging into nearby natural drainage channels, which discharge into theMedellin River. Medellin began a comprehensive sewerage system in 1956 (PlanPiloto de Alcantarillado Sanitario) to intercept and carry sewage downstreamof the city, where it is discharged without treatment.

1.36 A MUS$3 study of the Sanitation of the Medellin River contracted byEPM with a Colombian firm and a United States firm has recently beencompleted. The study outlines a series of investments to the year 2000 whichwould achieve certain minimum water quality levels in the river byintercepting and bringing all raw sewage in the valley to treatment plantsbefore discharge into the river. The estimated investment required to theyear 2000 at January 82 prices would be MUS$350, but the estimated benefitsfor health (MUS$6), land values (MUS$320) and recreation benefits (MUS$12)are somewhat less. A decision to implement the program and the eventualfinancing has still to be established, but some funds have been projectedfrom 1989 onward by EPH, primarily for land acquisition for treatment plants.

1.37 The goal of the water supply component of the proposed project isto extend coverage to most of the unserved population, meet future demandgrowth, and have EPM absorb areas in Envigado, Sabaneta and La Estrella(3.02) now served by Acuantioquia and the municipalities in order torationalize and improve service. This is to be financed entirely by EPM withno Government funds, although physical facilities in the respective areas, to

the extent they are serviceable, will be transferred to EPM at no cost.Future expansion of EPM's service area will take place gradually asdevelopment occurs, and departmental authorities and EPM's facilities permit.

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2. THE BORROWER

General

2.01 In 1955 the Government of Colombia authorized the municipality ofMedellin to organize Medellin's municipal services as administrativelyautonomous units, with the objective of providing electricity, telephone,water and sewage services to Medellin and to other municipalities whichrequested such provision from Medellin. By Municipal Order No. 58 of 1955,Empresas Publicas de Medellin (EPM) was established and assets related to theafore-mentioned public services were transferred from the municipality toEPM.

2.02 EPM operates power facilities in Antioquia, and provideselectricity service to Medellin and to numerous other adjacent urban andrural areas under the jurisdiction of their respective municipalities, and tothe Electrificadora de Antioquia (recently renamed: fimpresa Antioquena deEnergia S.A. - EAE), an ICEL subsidiary, in the remaining territory of theprovince, and to the Electrificadora del Choco (Quibdo and other towns).Potable water is supplied to Medellin and portions of some of the surroundingmunicipalities. Sewerage service is provided to substantially all watersupply consumers. Telephone service, with 256,000 subscribers at the end of1982, serves the Aburra Valley and some municipalities to the east. Eachservice, electricity, water supply and sewerage, and telephone, has separatefinancial accounts, must pay its own way and cross subsidization isproscribed by statute (5.03).

Previous Bank Lending

2.03 The Bank has made 6 loans, totalling MUS$345, to EPM for power(Annex 1.5), four of which assisted in financing almost two-thirds of EPM'sgenerating capacity of 998 MW. The more recent loans helped finance theexpansion of the Guatape hydro facilities, which raised the dam of the SantaRita reservoir (to increase EPM's generation and also to allow optimum designof the downstream Jaguas and San Carlos hydro plants) and added four units tothe Guatape I power station (previously financed by the Bank); to expand itsgenerating capacity by 213 MW in 1985 by the construction of the GuadalupeIV hydro plant and to expand its transmission and distribution networks;to add a further 200 MW in 1987 in the new Playas hydro plant. The proposedseventh loan would finance the Rio Grande hydro scheme, comprising the 300 MWTasajera hydro station ard the first 22 MW unit of Niquia hydro stationoperating on raw water required for potable water. The proposed loanrepresents the first Bank assistance to EPM for water supply. IDB hasfinanced four of EPH's water supply projects and is expected to finance afifth project that would be complementary to the water supply componentincluded in the proposed Rio Grande project (4.04). In early 1980 the Bankalso extended a loan (MUS$44) to EPM for part of its telecommunicationsexpansion and improvement program; under that project 79,000 lines are beingadded to the system.

OrFganization

2.04 EPH is governed by a seven-member Board of Directors, appointed atthe same time for a renewable term of two years by the Mayor of Medellinacting as chairman. The Mayor, who is appointed by the Governor, has theauthority to appoint and dismiss all Board members of municipal entities,including EPM. Prior to this arrangement (March 1980), the elected municipal

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council appointed the members of EPM's Board. This led to some decisionswhich did not appear to be in the best interest of EPM and therefore certainsafeguards were incorporated into Loans 1868-CO and 1953-CO which have beenrepeated under the proposed loan. Previous loan agreements provide also thata change in EPM's statutes or new legislation which would adversely affectthe management or operations of EPH, would be an event of default; thiscovenant, too, has been repeated under the proposed loan (5.19).

2.05 The General Manager, who is appointed by the Board for a one yearrenewable term, is responsible for EPM's day-to-day management. He overseesdirectly the work of (a) the three managers of the operating branches:power, water and sewage, and telephones; (b) the financial manager and theadministrative manager; and (c) the secretary general in charge of legalaffairs. Compared with the organization existing at the time of the previousloan signing (1953-CO, 1981), the managers have become autonomous within thelimits of their assignments, budgets, and the need to coordinateactivities. Separate and consolidated financial statements are prepared.EPM's organizational chart is shown in Annex 2.1.

2.06 The organizational arrangements are generally satisfactory. TheFinancial Programming Division of EPM, which has computerized most of itsactivities, is in charge of the financial programming and financialsupervision of projects. This arrangement is considered adequate. However,the ongoing UNDP/Bank financed project for Study and Training on ConstructionManagement, Programming and Control (4.16), will evaluate the overall systemof project supervision in the power sector, and recommend changes ifrequired.

Personnel

2.07 As of October 1983, EPM had 4,418 employees of which 2,113 pertainto power. Personnel working directly for power numbered 1,256. In addition,857 employees can be assumed to work principally for power in finance,administration and general services, if this staff is distributedproportionately to the employees of each of the three operating units. Its998 MW in plant capacity (excluding rights in ISA), in 1982, generated 4,820GWh for 330,910 electricity consumers; the power station operating personnelratio, therefore, is about 2 MW/employee, the overall staff production ratiois about 2.3 GWh/employee and there are 6.3 employees per 1,000 connections,which is considered reasonable. The forecast increase in personnel directlyemployed in power during 1983-1991 is estimated at some 550, of which about210 would be required for plant operation (Guadalupe IV, Playas and RioGrande) and the remaining for transmission and distribution and general powerservices. The overall manpower efficiency is satisfactory and is expected toremain about equal to the present figures.

2.08 Personnel turnover is relatively low. Over the past 8 years therehas been strong continuity of upper management levels, with vacancies, asthey occur, filled by promotion from within. In the first 9 months of 1983,192 (5%) people terminated employment, including 36 who retired on pension.The pay scales are the most attractive in the sector and range fromCol$20,000-21,000/m (US$251-264/m) for the lowest graded workers toCol$52,500-124,000/m (US$661-1,560/m) for professionals, to which almostthree months in pay is added in fringe benefits. This does not take intoaccount EPM's contributions toward the retirement plan and otherperquisites.

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2.09 The number of employees pertaining to water in August 1982 was930, plus a pro rata share of common services amounting to 341. This isequivalent to six employees per 1,000 connections, a relatively efficientratio.

2.10 EPM has a stable and capable leadership under the present GeneralManager who has held this position for about 8 years. The company'sengineering and planning staff is well qualified and competent, and hasadequate experience in project management and operation although there may bescope for some improvements (2.06). EPM should be able to manage and operateefficiently the considerable expansion of power and water facilities duringthe 1980s, including the project. EPH's management and financial staff isalso well qualified and capable.

Training

2.11 EPM recently completed the construction of a new training centerfor all of its administrative and operational personnel. Courses fortelephone operators have been initiated and expansion in training for allaspects of the entity is being organized. In the past, relations between thetraining unit, management and professionals were rather loose, but a trainingsteering committee has been created and an ambitious training program wasrecently presented to and approved by the Bank (Loan 1868-CO). It will beextensively carried out locally and will cover virtually all the personnel ina period of 8 years, mainly for plant operation and maintenance, constructionand maintenance of transmission and distribution networks, and foradministration and finance. Part of the teaching material is being preparedunder an agreement between the SENA University of Medellin and EPM.

2.12 Professional training abroad forms an important part of EPH'sprogram (under Loan 1868-CO, MUS$1 has been allocated for training),including masters degree level studies for 10 persons in system analysis,hydro resourses planning, system planning, geotechnical engineering, energyeconomics, project administration, and related fields. Specializationcourses abroad for 20 professionals cover mechanical maintenance of hydrostations, hydraulics, protection, line maintenance, power system engineering,load dispatch, and related subjects. In plant training for nine top managersand 25 engineers will be given in Canada.

2.13 Funds have been included in the proposed loan (4.17) to allowcontinuation of this important institutional aspect.

Accounting and Auditing

2.14 EPM has an appropriate accrual accounting system. The installationof a Burroughs 6800 in early 1980 has enabled EPN to improve considerably theeffectiveness of its accounting and reporting systems. Monthly financialstatements and budget reports are available promptly and contain theinformation necessary for management review. Inventory management andcontrol procedures have been reviewed and improvements introduced asrecommended by EPM's external auditors. EPM's internal audit is alsoadequate. The auditor, appointed by the Municipal Council of Medellin,reports directly to EPM's Board and the Municipality; the annual internalaudit report is issued within three months after the end of the fiscal year.In accordance with agreements reached under pievious Bank loans, EPM engagesindependent external auditors acceptable to the Bank for all its operations,

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and their reports have been satisfactory. The existing covenant related toaccounting and auditing, including the requirement to submit the auditedaccounts and the external auditors' report to the Bank not later than fivemonths after end of each fiscal year, has been repeated under the proposedloan (5.19).

Billing and Collections

2.15 EPM's billing and collection procedures are very efficient.Billing is computerized and subscribers are billed monthly. Bills become dueabout 10 days after being received by the subscriber. While a consolidatedbill for water and sewage, electricity and telephone services is prepared,the charge for each service is shown separately as well as averageelectricity consumption over the last three months. If the subscriber doesnot settle the account within five months, all utility services to thesubscriber are disconnected. As a result of this rigid disconnection policy,the level of outstanding and overdue accounts (receivables) is low (Annexes5.7 and 5.12).

Insurance

2.16 EPI's arrangements for insurance of its assets and major works inexecution are satisfactory. Insurance in general covers fire, machinerybreakage, loss of revenue and civil liabilities. FaJlure of dams andconsequential damage and liabilities are not insured, in line with publicutility practices in Latin America. For contracts (in particular civil workscontracts), the contractor has to insure against all risks and liabilities tothe satisfaction of EPM and provide certain guarantees in accordance withconventional practice.

Electricity Tariffs and Rates

2.17 EPM4 historic costs, particularly capital costs, have been low and,as a result, its average rate is one of the lowest in the country, if not inthe world at 241.50 centavos/kWh (USt3.04/kWh) during 1982. Nevertheless,revenues were sufficient to enable EPM to generate from operations over 40%on average, of total investments during 1977-83 including capitalcontributions to the investments of ISA. As a result EPM's rate of return onassets has been satisfactory (5.05). Under the Playas project (1953-C0), EPMagreed to 2.2% monthly increases until the end of 1984. JNT initiallyauthorized EPM to apply this monthly increase until the end of 1983, and inDe:ember 1983 extended it for an indefinite period. Total increasesauthorized to EPM during 10/82-10/83 amounted to 50%.

2.18 Charges to industrial and commercial consumers are higher than tohouseholds, even though the costs of servicing the latter are higher than thecosts of the former. Although imbalance in the rate structure became moreaccentuated in the 70s, EPM in October 1982, took several important steps inthe direction of marginal and social structuring. These steps included theintroduction of a single progressive price for residential consumers peggedto maximum consumption instead of the step-by-step pricing formerly applied.Industrial and commercial consumers were reclassified and their rates wereadjusted to reflect time-of-day usage. A more detailed discussion ofelectricity tariffs can be found in Annex 2.2.

2.19 In the course of this decade, it is expected that EPH wlll continueto increase its tariffs in real terms (5.17) and to continue to introducegradually marginal oriented tariffs in line with the general consensusbetween ISA's shareholders.

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Water Supply and Sewerage Tariffs and Rates

2.20 The current tariff structure subsidizes customers with low propertyvalues and government entities. Meanwhile a Law of July 6, 1983 requiresthat public utility rates no longer be tied to property values, and JNT hasrecommended the adoption of a classification of six socioeconomic levels.The goal is to set rates for domestic consumption under which all residentialcustomers would be reassigned on the basis of their estimated personalincome. EPM has submitted a proposal to JNT to introduce the new structurewhich would include an implicit and progressive Increase of rates for levels3 and above, and for consumption other than domestic. JNT has not acted onEPM's proposal for changes In structure and rates which was to produce anaverage rate increase of about 25%. Without taking the increase intoaccount, EPM has estimated its average water and sewage revenue at Col$22/o3

in 1984 (Annex 5.12). This compares with the marginal costs of the RioGrande water supply of Col$38.7/m3 (average 1984 prices--Annex 2.3 para 6-including Phase 2 to be financed by IDB-4.04). Also, since by 1991 theprojected tariff program willraise the 1984 average tariff (by 43Z in realterms) to 81% of the Rio Grande marginal cost (Col$31.3/m3 in average 1984prices) the proposed rate increases (5.31) are well within marginal cost. Onthe other hand, given the projected self-financing ratios and rates of return(Annex 5.12) coverage of full marginal cost is not financially necessary, solong as efforts to reduce unaccounted water are reasonably successful.Additional tariffs details are contained In Annex 2.3.

Institutional Aspects

2.21 EPM's efficiency has grown satisfactorily. Numerous studies,financed by previous Bank loans (either for EPM directly or through ISAindirectly) have contributed to this, thanks to the dedication of EPH'sstaff. A few important examples may suffice:

(a) under the Guatape II loan (874-CO) the Bank financed training ofstaff abroad for all aspects of power distribution networks. Thisresulted in the satisfactory planniug and design of the networkfinanced under Loan 1868-CO (Guadalupe TV) and the creation, lastyear, of a speclal division for monitoring of the network,maintenance, and consumer services.

(b) under the San Carlos I loan (1582-CO) a study of losses In thesystems of ISA and its shareholders was completed and EPM is nowImplementing measures suggested by the consultants;

(c) similarly, as agreed ander San Carlos I, under guidance of Bankstaff, a tariff study on marginal costing was executed whichcovered the cost in the various supply areas in the country.Although adaptation of the results is going generally very slow,awareness of the theory and techniques of marginal costing havebeen fuiLv %bsorbed by the power companies. Two special seminarshave been eld in South America and EPM has made modest, butimportant, steps to introduce marginal cost based tariffs (Annex2.2, para. 5);

(d) a power sector master plan (although initiated long before) wascompleted under San Carlos I and II which, for the first time inColombia, included a distribution master plan. Each of theshareholders contributed to the latter part for which EPM was ableto provide important inputs due to its expertise in networkplanning;

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(e) all Bank loans to Colombia since 1980 have provided forenvironmental impact studies. The Government has decreed that 2Xof revenues (at block rates), from hydro facilities should be usedin protection of the basin and 21 for rural eleccrification. As aresult, EPH has created a special department that, starting withthe Rio Grande basin, and with the assistance of consultants, hasidentified the areas most in need of environmental protection, andhas made suggestions for improvements and estimated cost. Nosystem has, as yet, been developed to implement the recommendationson a regional basis, but EPM, as a standard policy, buys land faroutside the reservoir proper (in order to protect the shores of newreservoirs against encroachment by settlers) to reforest the areaand regulate recreational activities;

(f) EPM's water division is generally efficient and well-managed,although unaccounted-for-water calls for remedial measures (IDB isassisting in this area in connection with its past lending). EPMhas already demonstrated responsiveness to Bank advice, asevidenced in actions taken regarding project design, the phasing ofimplementation, tariffs and other financial measures. Under theproject, the Bank would assist EPM in training and data basemanagement (4.07 (e)(f)), areas in which EPM has had littleexperience to date. EPM's current environmental management andreforestation activities are satisfactory (4.26); and

(g) Recently the Empresa Antioquena de Energia (EAE-3.01, 4.01) and EPMreached agreement (accordingly amending EAE's statutes) on EPMaccepting, with full reimbursement of related costs, theresponsibilities for technical, financial, administrative andeconomic management of EAE, in which EPM owns 10.37X of theshares. Improvements in design, construction, accounting,budgeting and budget control, tariffs, and in overall efficiency,may therefore be expected.

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3. EPH'S MARKETS

Supply Area, Accesm

3.01 !octricity. EP's statutory service area to the munlcipality ofModellin. Howevor, service can be given under separate contracts to any areaIn the Department of Antloqula. Accordingly, PM supplies power directly to18 small municipalities (i.e., It owns the networks In the villages and billsfor the service), sells In block to 7 other municipalities having their owndistribution services, and sells Indirectly through supply to EAR to 77municipalities. Thus, of the 118 municipaltties ln the province, 102 -- or about862 - are directly or indirectly supplied with electricity by EPH. The totalpopulation of Antioqula is estimated at 4 million, of which an estimated 2.9million -- or 712 - have access to electricity. EPH suppiLes directly to about345,000 (1983) consumers of which 922 are residential. IE has about 132,000(1981) consumers. Antioquia, with about 152 of the country's population,accounted for about 22 of natlonal gross electric energy requiremnts in 1982.

3.02 Water. EPM is authorized to provide water to all urban areas, asdefined by the Metropolitan board, in the Aburra Valley. At present EPMprovides water and sewage services to Medellin, bello and Itagul and parts ofEnvigado. It Is about to sign contracts to provide water to all of Envigadoand to Sabaneta and Estrella by 1985. Service vill be extended to Copacabanaby 1990. More distant municipalLties (e.g. Girardota, Barbosa and Calda)have their own service or are attended by Acuantloqula (1.30) and may be takenover much later. There are 2,021,000 persons In the present service area, ofwhich 862 are estimated to be connected. EPH undertook to sign service contractswith the municlpalities of Envlgado, Sabaneta and La Estrella before March 15,1985. It is r.ported that extension of service by EPM Is generally welcomedbecause of better quality even though rates may be highet.

Power Market Development

3.03 Historic. The 1978-83 consumptlon and supply data are shown InAnnex 3.1, including the energy EIPM purchased from and supplied to ISA.EPM's consumer data for 1975, 1979 and 1983 are the following:

---------------------------------------- Annual AnnualSales 1975 1979 1983 Growth Growth

GWh GWh X GWh X 1975-82 2 1979-82

Residential 1,139 47 1,416 44 1,b68 40 5.0 4.5Commercial 187 8 236 7 331 8 7.4 8.8Industrial 710 29 942 29 1,000 24 4.4 1.5Block 245 10 502 15 850 20 16.8 14.1Government 42 2 56 2 64 2 5.4 2.5Others 96 4 101 3 266 6 13.6 27.4

Sub-total 2,420 100 3.255 100 4.199 100 7.1 6.6Losses 527 (18) 724 (18) 851 (17)Total requirements EPY 2.947 3,974 5.050 7.0 6.2Supply to (from) ISA 386 (199) 48EPM Generation 3,333 3,7b5 5,098Maximum Demand (MW) 577 745 972 6.7 6.9Number of consumers 238.664 288.611 345.000 4.7 4.6

Source: Proyecciones de demanda, Eopresa de Energi.. EPM, Dbc. 3-518 July 1983and actual 1983 data recveived.

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The major change in the consumers' share of the market during 1975-83 was in blocksales to municipalities and EAE, which increased an average of 16.8%/a andaccounted for 10X of sales in 1975 (5% in 1968), 15% in 1979 and 20% in 1983.Excluding this supply from the comparison, the consumption pattern for the otherclasses of consumers did not change materially since 1975; residential consumptiondecreased from 52.4% to 50.4% and industry from 32.7% to 29.9%, commercialsupplies increased from 8.6% to 9.9% and others from 4.4% to 7.9% while'governmentuse remained stable at 1.9%. The rather low growth rate for residential consumers(which bas been decreasing gradually since about 1975) is puzzling, because theaverage rate for these consumers is vE iy low at about USt2/kWh in 1982 and in realterms is even lower than it was about a decade ago (USt2.2/kWh in 1973). EPM,however, has been observing a trend that, while the growth of the number ofconnections is rather consistent at 5-6%/a, the number of persons per householdhas been steadily declining. Consumption per residential connection peaked in1978 at 478 kWh and decreased gradually to 451 kWh in 1982. No firm statistics

are available in this respect. The continuing strong increase in block supply isdue to the similar continuous growth of networks in small towns and rural areas,the rapidly expanding transmission network of EPM which substitutes for thermalsupply in outlying regions, and the substantially under-cost rate charged for theblock supplies of only USt¢1.14/kWh in 1982. Gross per capita consumption in EPM'ssupply area in 1982 was on the order of 1,200 kWh, probably the highest in thecountry.

3.04 Average overall growth which, during 1975-83 at 7.0%/a. compared withthe long term trend growth at 7.4%/a. A rather strong decline took place since1979, largely assumed to be due to the economic slowdown as a consequence of theworld recession. Losses 7/ remain steady at about 18%, of which about 10% areunavoidable physical losses (network improvement could slightly improve thesituation) and 8% are losses, avoidable in principle, such as errors in meterreading and billing (some 1-2%), meter errors (2%), damaged meters (1%) and thefts(some 4%). Taking into account physical and economic limits, probably about halfof the avoidable losses can be economically held in check, i.e. EPM's objective isto reduce losses to 14-15%. Last year a special division was authorized andbecame operational in July 1983 for "Operation of Networks". This Division isexpected to start addressing the problem of avoidable losses by the end of nextyear (all technical consumer problems, maintenance of networks, monitoring ofperformance, etc., pertain to the responsibilities of this Division).

3.05 Captive plant. No additional information has become available since1980 on the installed capacity of self generating plant in Antioquia. At thattime, the estimate was about 70 MW, of which about 35 MW pertained to two largetextile factories, 18 MW to two cement plants, 13 MW to a mining company and theremainder to varicas small factories. Only one of the cement plants and themining company are not connected to EPM's supply facilities. Supply figures(i.e. GWh for self-use) are not available.

3.06 Forecasts. 3PM's sales to its own consumers (i.e. excluding supplies tothe interconnected system) are expected to grow an average of 7.5%/a until the endof the decade (3.07 .and Annex 3.1). This forecast was prepared essentially on thebasis of historic trends. EPM uses simple exponential models for both energyconsumption (for the various consumer categories and totals) and demand, derivingtrend curves for forecasting requirements. The historic results (adjusted forsome curtailments), compared with the trend line of 7.4%/a, have been extremelyclose, with a maximum error of +2.8% above the trend curve in 1980 (sales - whichwere curtailed in that year - were 120 GWh higher than the 4270 GWh indicated by

7/ Estud_.o de perdidas de energia. Sistemcom Ltd. July 1981, 9 Volumes.

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the trend), which was compensated by an underestimate in 1982 of 2.6% (127GWh below the trend of 4947 GWh). The year 1983 digressed significantly(by -5.2%) from the trend line, when growth was only 4.8% over 1982. Theearly months of 1984, however, showed a rapid return to the trendlinecompared with the same months in 1983. ISA and its partners have beenstudying the applicability of socio-economic multi-regression modelsthroughout the sector, but results are mixed (and unsatisfactory, comparedwith the exponential models). The present forecast is considered adequate.The following table (see also Annex 3.1) summarizes the results:

Energy (GWh) and Maximum Demand (MW) Forecasts

Annual1983 1986 1990 Growth

Sales GWh % GWh X GWh % ZResidential 1,688 40 2,022 39 2,594 38 6.3Commercial 331 8 396 8 522 8 6.7Industrial 1,000 24 1,176 23 1,471 22 5.7Block 850 20 1,242 24 1,854 26 11.8Government 64 2 83 2 108 2 7.8Others 210 6 221 4 286 4 4.5

Total Sales 4,143 100 5,140 100 6,835 100 7.4

Station use and Public lighting 56 65 81Losses GWh (X) 851 (17) 1,063 (17) 1,340 (16)Total requirements EPM (C) 5,050 6,268 8,256 7.3

Supply to (from ISA) 48 270 395EPM Generation (A) 5,098 6,538 8,651 7.8Rights in ISA (B) 551 2,097 2,352Total Surplus (A+B-C) 599 2,367 2,747Maximum EPM demand (MW) 972 1,187 1,563Consumers EPM (No) 330,910 428,743 477,852 4.7

3.07 The trend of the consumption pattern would remain substantially thesame, with residential and industrial sales continuing to declinecommensurately with any increases in block supplies (i.e., to areas outsideMedellin) which would continue to increase its share and constitute, by 1986,

about one-fourth of EPM's market, reflecting the increasing electrificationin the rural areas. In essence, the forecast under which EPM's ownrequirements would grow at 7.3%/a, from 5050 GWh in 1983 to 8256 GWh in 1990,is a conservative one, because it assumes that a trend line of about 7.4%annual growth will not be reached again, while the new trend curve wouldremain substantially below the historic trend curve: 1986 requirements atabout 6270 GWh compare with about 6660 GWh obtained by extrapolating thehistoric trend curve. The number of EPI consumers is expected to increase by4.7%/a to about 478,000 by the end of the decade. It was, alsoconservatively, assumed that losses would not decrease below 16%, in thelight of historic results.

3.08 Because ISA prepares all forecasts on the basis of 95% reliablefirm energy and capacity, the firm energy figures are used throughout thesystem, rather than average energy. This, of course, tends to overestimaterequired thermal generation and distorts financial forecasts (which should be

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based on average water availability except, perhaps, for the first year whenstorage levels of reservoirs are known with high certainty rather thanprobability). However, EPHI does not operate thermal plant and in any eventaverage energy does not exceed firm energy by more than 5-1OX (i.e. thereservoirs regulate the relevant rivers practically completely during theyear) and the distinction has no effects on the financial forecast except tothe extent that surplus energy and capacity is available in EPM's system andthat ISA on behalf of other shareholders needs to buy these surpluses, forthe national system. The matter is further complicated by the fact that EPM,like all shareholders, has bought rights to energy and capacity by investingin ISA plants (e.g. Chivor, San Carlos, Jaguas) or, through ISA, by investingin plants of other shareholders (e.g. Betania of ICEL, Guavio of EEEB). ISAprepared (at an assumed 8% load growth throughout the system) the estimatesof the net energy that it expects to buy from EPM (i.e. this is "export" byEPH in Annex 3.1) or sell to it (i.e. "import" by EPN4) over and above EPH's"rights". These are shown separately in the above table (and Annex 3.1).Except in the years 1984 and 1985, when the San Carlos and Jaguas plants are

expected to be commissioned, EPM would be a net exporter. The surplussesshown in the above table will in effect be larger (up to 10% - if averagerather than firm energy is taken into account - of the sum of its own firmenergy and its energy rights in ISA) than shown in the table; for instance,should 1986 be an average year, the total surplus may be some 3,000 GWhrather than 2,367 GWh or about 40. of requirements. In the same year, EPM'splant margin (capacity available but not needed for its own purposes - alsoassuming that no spinning reserve would be required in the EPM system) wouldbe 29%. Although these figures appear high, it should be realized thatannual figures cannot reflect the requirements for periodic shifts, e.g.whereby on a certain day, or during a certain period, all of EPM's sparepeaking capacity and generating capacity may be called upon to assist thesystem. Because perennial problems arising from delays in plant constructionare not expected to decline during the next 10 years (in fact ISA now assumesan average construction delay of one year), EPM's new plants (Guadalupe IV,Playas and Rio Grande) are expected to assist the national system in excessof the net supply shown.

Water Market Development

3.09 General. Medellin takes its water from a variety of sources (MapIBRD-17708), a number of which are small rivers and streams near or withinthe urbanised area. Current sources are summarized below, with the note thatthe Rio Buey source, financed by IDB, entered into service at the end of1983.

Local Sources Rio Negro Rio Buey/Piedras Totalm3/s 1.5 4.0 4.0 9.5

3.10 The Rio Grande will initially provide 5m3/s by 1989. Local sourceswill decline to 0.5 m3/s as all but two local sources are taken out ofservice because of high levels of contamination and encroachingurbanization. Moreover, the reliable combined capacity of Rios Negro, Bueyand Piedras is considered to be 7 m3/s, not 8 m3/s, for a 97.5% reliability.Upon project completion, capacity will be:

Local Sources Rio Negro/Buey/Piedras Rio Grande Totalm3 /s 0.5 7.0 5.0 12.5

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3.11 Historical market shares for the various categories of consumers,are shown below for the years 1976, 1977 and 1982 (Annex 3.2).

1976 1979 1983 Annual IncreaseSales Mm3 % Mm3 X Mm3 % 1976-83 % 1979-83

Residential 70.7 66 79.9 66 93.3 70 4.0 4.0Commercial 12.1 12 13.8 12 15.5 12 3.6 2.9Industrial 11.8 11 13.3 12 11.7 9 (0.1) (3.2)Official 10.9 10 11.0 9 9.2 7 (2.4) (4.4)Others 1.0 1 1.2 1 3.0 2 17.0 (25.7)

106.5 100 119.2 100 132.7 100 3.2 1.8

Unaccounted-for 80.3(42%) 86.3(42%) 93.3(41%) 2.2 2.0Total 186.8 205.5 226.0 2.7 2.4

Connections No. 165,474 194,835 228,737 5.5 5.5

3.12 It should be noted that residential and commercial consumptionincreased slightly faster than the total, while industrial and officialconsumption actually declined. The decrease in industrial water use was dueto the economic recession. "Other" Consumption, which includes publicstandpipes, estimated unmetered consumption, and preferential uses, whilequite small in absolute amounts, grew rapidly during the period. In 1982growth was depressed because of water rationing. Inadequate supply, whichforced sispension of supply during some hours in some areas, was experiencedintermittently in preceding years as well.

3.13 Forecast. The growth of water demand was estimated by consideringthe following factors:

(1) population growth in the metropolitan area;

(2) historical per capita consumption;

(3) extension of service area and coverage within the service area; and

(4) a reduction in unaccounted-for water.

Historical and forecast overall raw water requirements are shown in Annex3.3. T!he population estimate of the Aburra Valley was made after reviewingnine st'udies made since 1971 by consultants, EPM itself, the DepartmentalPlanning Office, and the National Planning Office. A 1982 consultants studywas considered to be the most plausible; it anticipated a saturationpopulation of 4.5 million with a 60% probability this figure would not be

exceeded. It estimated a 1985 population growth of 3.5% and a 1991 increaseof 2.7%.

3.14 Total per capita consumption, including commercial, industrial, andpublic consumption but excluding unaccounted-tor water, was based on meterreadings from 1965 through 1981 and the number of residential customers. Forpurposes of calculating persons served and the percentage of total populationcovered, it assumed that there are 8 consumers per residential connection. Aregression formula indicates a daily demand of 234 liters per capita and perday (l/c.d) in 1982, to be compared with a measured consumption of 206 1/c.d.

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in that year. The lower consumption may be due to the rationing thatoccurred in some sections of the city because of insufficient water and thegeneral recession that depressed industrial and commercial water usage.However, it was assumed that consumption would gradually return to the longterm trend by 1989 (241 l/c.d).

3.15 EPM is gradually extending its WSS service area in neighboringiaunicipalities as its supply conditions and investment possibilities permit.It also extends service to unserved areas as they are included intoperiodically redefined urban perimeters within its service area. Loth toaccommodate the newly served areas, which usually are populated by low-incomeresidents, and the low-income households, EPM has a financial assistanceprogram (Annex 3.4). As noted above, EPM will extend service in threeneighboring municipalities by 1985 and seeks to improve coverage graduallythroughout the project period.

3.16 Future demand (see the table below) is expected to be at the sameapproximate annual rates for all categories of consumers, with industrial andofficial consumption recovering from past low levels. "Other' consumption istoo small for changes to be significant, but is expected to increase at arate marginally less than other consumer groups. There is expected to be nosignificant change in the share of consumption by each category. The rate ofgrowth will be higher (8.3Z) during 1983-87 than during 1987-91 (5.1%/a),reflecting the low 1982 base due to rationing.

1983 1987 1991Average 1983-91

Sales Mm3 % Mm3 % Mm3 X Increase Z

Residential 93.3 70 126.8 69 155.1 69 6.6Commercial 15.5 12 21.7 12 26.4 12 6.9Industrial 11.7 9 18.0 10 21.9 10 8.2Official 9.2 7 12.8 7 15.7 7 6.9Other 3.0 2 3.5 2 4.3 2 4.6

132.7 100 182.8 100 223.4 100 6.7Recoverable

Billings - 12.8 28.0System Losses 93.3(41%) 110.1(36Z) 107.8(30X) 1.7

Total 226.0 305.7 359.5 6.0

Connections No 228,777 301,360 349,800 4.8

3.17 The percentage of water produced by the treatment plants which isnot measured and billed is 41%. This is a high figure for a well-operatedand thoroughly metered system. Certainly the very high pressures (120 m) insome service areas must be a factor. EPM estimates that 16X of theproduction is lost through leaks, 18% by customer flows at rates too small tobe accurately measured by the water meters, and 8% by illegal consumption.EPM has agreed with IDB to reduce the unaccounted-for water to 32% bycompletion of the Rio Buey Project -- at the end of 1985. In an effort toreach this goal, EPM is investing MUS$13.7 in materials (meters, copperservice pipe to replace galvanized steel, etc.) and some MCol$70 inadditional staff costs. The program has just begun, somewhat late, and it istoo early to expect results, but the intensity and organization of the

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program is impressive. However, it is unlikely that EPM will reach the 32%goal by 1985 since improvement is expected to be slow. Thus, recentexpectations are that unaccounted for water will decrease progressively to30% in 1991; 40% of the decrease will be achieved by reducing physical lossesand 60% by reductions in illegal consumption and oore accurate metering oflow flows. Although the decrease in losses will translate into increasedbillings, these improvements were not included in financial projectionsbecause they are important only in the later years and the amounts areconsidered speculative (Annex 5.12).

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4. THE PROGRAM AND THE PROJECT

The Program

4.01 Electricit EPM's 1984-1991 power derelopment program has beendesigned to meet (a) gross EPM energy and capacity requirements, expected togrow at 7.3%/a from 5,050 GWh in 1983 to 8,256 GWh in 1990 (3.07); the numberof consumers would grow from about 345,000 in 1982 to 478,000 in 1990 at4.8%/a (3.07); and (b) energy and capacity to the extent required, and insurplus available in the EPM system, in the interconnected system forsubstitution of thermal generation, delays in plant completion, phasing ofmaintenance throughout the system, and meeting emergency conditions. Withinthe EPM system, the expansion pertains mainly to the urban area of Medellinand the Aburra valley in which the city is located. Modest expansion, mainlyin transmission lines and substations, would take place in the remaining areaof the Department of Antioquia (border regions of other Departments could besupplied also), largely the supply area of the EAE (2.21(g)).

4.02 EPM's 1984-1991 power development program (Annex 4.1), includingcontributions to ISA's expansion but excluding and interest duringconstruction, is estimated to cost MUS$1,236 in current prices, with aforeign component of about MUS$628 (51%). Its main components are:

(a) ongoing works in generation, i.e. the Guadalupe IV hydro plant(Loan 1878-CO) to be completed in 1985, about 1 year late, thePlayas hydro plant (Loan 1953-CO) to be completed in 1987, about1-1/2 years late, and the future Tasajera and Niquia hydro plantsto be financed by the proposed Rio Grande multipurpose projectloan;

(b) ongoing works for a substantial transmission and substationexpansion program, covering requirements up to the end of 1984,financed by Loan 1868-CO and the Bank of America;

(c) a dispatch center, which is being financed by Loan 1868-CO; thecenter is expected to be completed by 1986, or 2 years late due torequirements to coordinate with ISA, and through ISA with othershareholders, for definition of the basic concepts for soundintegrated operation of all future centers (ISA, EPM, EEEB, CORELCAand CVC);

(d) ongoing works for distribution for which Loan 1868-CO is financingthe program up to the end of 1984, including metering andmonitoring equipment and vehicles;

(e) future expausion, as yet not fully defined, in generating plant andassociated transmission and distribution facilities; and

(f) institutional assistance through studies, training and ongoingBank staff input in all aspects of EPM's power operations andproject design.

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4.03 EPM would assist in financing ISA's 1984-91 expansion program withMUS$232, of which some MUS$42 pertains to direct investments in newgenerating and related transmission plant and MUS$190 to indirect investmentthrough acquisition of ISA bonds.

4.04 Water Supply and Sewerage. EPM's 1984-91 WSS development program(Annex 4.2) amounts to MUS$3S7 with a foreign component of about 38%.Because MUS$49.6 included in this amount represents the value of thedistribution networks financed by developers and to be handed over at no costfor inclusion in EPM's assets (so that they can be depreciated and in duetime replaced by EPM), EPM's own 1984-91 WSS investments comprise thefollowing:

MUS$ Z

Rio Buey diversion 23.2 7Bello-Itaqui distribution 1.2 -Rio Grande Phase 1 (Project) 89.8 26Rio Grande Phase 2 139.3 40General plant 4.2 1Other works 18.3 5Future works 71.7 21

347.7 100

The largest share (66%) in the water and sewerage development programpertains to the Rio Grande scheme to be executed in two phases. The Bankwould assist financing Phase I consisting of the raw water facilities, andIDB the complementary Phase 2 consisting of the treatment plant anddistribution facilities and sewerage works (4.07). IDB's appraisal of Phase2 is scheduled for September 1984. Phase 1 will be of no value without Phase2, which would treat and distribute the water supplied by phase 1.Assurances have been obtained that funds will be available as necessary forthe timely implementation of Phase 2 as progrAmmed in Annex 4.7.

The Project

4.05 Background. During preparation of the proposed project, it becameobvious that the Bank and IDB for various reasons, including timing, couldnot coordinate their financing efforts as was done for the Playas project(Loan 1953-CO), when a joint appraisal mission visited the country. In viewof the urgency of adding a raw water source not later than 1988, the Bankdecided to assist EPM in financing the first phase of the proposed Rio Grandedevelopment, including a power component which, for obvious financial andeconomic reasons (6.03) of scale, could best be completed at the same time atlower cost than phased development. Thus the proposed loan would finance thepower facilities and the raw water supply facilities up to the watertreatment plant; the latter, as well as the related distribution networks,require less construction time and, consequently, financing of thesefacilities will not have to be arranged much before the end of 1984.

4.06 Objectives. To provide basic economic infrastructure needed tosupport growth and employment as well as to enhance social well being. Theproject would enable EPM to meet incremental power requirements in Antioqula

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and make available to the interconnected system any excess energy needed inthe light of expected completion dates of larger hydro plants. This wouldalso assist in making hydro based energy available in substitution for costlythermal generation. Institutionally and with respect to EPM, the Bank hasshifted emphasis from preparation of studies (4.16) to personnel training.In view of the limited turn-over in professional staff in EPM, this isprobably the most effective tool in fostering continued institutionalimprovement of the entity. With such training, dedicated staff are exposedto outside ideas, practices - and errors - and under good management, as isthe case in EPM, are allowed to implement modern practices and policies. Itis expected that in the future EPM may be able, at lower cost and on the job,to assist the sector, together with ISA, in training of personnel.Consequently, the proposed loan includes a training component to complementthe ongoing training under Guadalupe IV (Loan 1868-CO).

4.07 The project (Phase 1 of the Rio Grande scheme) consists of theelements listed below and is illustrated in Maps IBRD 17689 and 17708. Amore detailed description is presented in Annex 4.3.

(a) Tasajera Hydro plant facilities comprising an earthen catchment dam65 m high impounding a reservoir with a useful volume of 110 Mm3,an intake tower with a power tunnel and two shafts, and atwo-cavern powerhouse with three turbines driving 100-MWalternators generating an average of 1,600 GWh/a, and a two km longtailrace;

(b) Niquia water and power facilities costing MUS$121 including anintake shared with the power intake, a tunnel and steel-linedpenstock, surface power station with initially one Pelton turbineand a 22.5MW alternator generating initially about 105 GWh/a at araw water use of 4.5m3/s and some 165 GWh/a at a maximum water useof 6.4m3/s), a 5.5km long, 2m diameter steel conduit (siphon) to atreatment plant to be constructed separately from the project;

Cc) transmission facilities consisting of a surface substation atTasajera with a transmission line to Barbosa, and a surfacesubstation at Niquia and a transmission line to Bello;

(d) consulting services for continuirg design and for constructionsupervision as well as for a board of experts;

(e) training locally and abroad for professionals and other staffs; and

(f) data processing network to expand computer processing facilities.

Phase 2 of the Rio Grande scheme, planned to be financed by IDB (4.04)includes a 5 m3/sec water treatment plant, 9 pumping stations, 13 reservoirs,146 km of supply mains, 100 km of distribution lines and 11,000 connectionsas well as 250 km of sewers and 36,000 sewerage connections in Medellin andneighboring towns.

4.08 The project constitutes a new scheme for providing raw water,because the use of Rio Negro basin waters has peaked and further developmentsof it would affect the generation at the downstream (Rio Nare) complex ofhydro plants, e.i. Guatape, Jaguas, Playas and San Carlos. The raw watersupply system, including Rio Grande, is schemetically shown in Annex 4.4.

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Project Cost

4.09 The total cost of the project, excluding interest duringconstruction, is estimated at MUS$362, MUS$268 (74%) pertaining to power andMUS$94 pertaining to water. The foreign cost component amounts to MUS$203(56%). Project costs (details in Annex 4.5) are summarized as follows:

Power Local Foreign Total Local Foreign Total- -- - Col ---- -- -MUS$--------

Dam and reservoir 3,794 2,392 6,186 38.8 24.4 63.2Power station Tasajera 3,481 5,485 8,966 35.6 56.3 91.9Power station Niquia 365 1,165 1,530 3.8 11.9 15.7Transmission 288 954 1,242 3.0 9.7 12.7Training, data network 52 131 183 0.5 1.4 1.9Engineering and administration 1,806 605 2,411 18.5 6.2 24.7Total Base Cost 9,786 10,732 20,518 100.2 109.9 210.1Contingencies: Physical 1,305 1,340 2,645 13.3 13.7 27.0

Price 4,997 11,868 16,865 4.1 27.1 31.2Subtotal Power 16,088 23,940 40,028 117.6 150.7 268.3

Water

Intake and tunnel 1,641 1,802 3,443 16.8 18.5 35.3Tank and supply conduit 935 1,452 2,387 10.6 17.4 28.0Engineering and administration 769 258 1,027 7.9 2.6 10.5Total Base Cost 3,440 3,760 7,208 35.3 38.5 73.8Contingencies: Physical 457 536 993 4.7 5.5 10.2

Price 1,811 3,718 5,529 1.1 8.6 9.7Subtotal Water 5,716 8,014 13,370 41.1 52.6 W.7*

Total Project Cost 21,804 31,954 53,758 158.7 203.3 362.0

Front-end fee 0.4 0.4Interest during construction 6.5 49.2 55.7

Total Investment 165.2 252.9 418.1

4.10 The estimated costs are based on end 1982 prices (adjusted to April1984) contracted for similar hydro stations in the area under simllargeological conditions (San Carlos, Jaguas, Guadalupe IV and Playas) and forhydro station elsewhere in the country (Guavio, Betania), the results of thegeological surveys made and the opinions thereon by a Bank appointed expertand the result of the bids received, and the award made, on the Niquiatunnel, the diversion tunnel and a portion of the Tasajera tunnels. Theproject cost is considered reasonable. Until August 1982 EPM was exempt fromimport duties to the discretion of the Government. However, since that date,import duties have had to be paid whenever local bids have been received andlocal bidders do not win the relevant contract. Because local manufacturersare not expected to be able to supply many items required for the project(4.21) the effect on project cost would be neglibly small. The physicalcontingencies correspond to the risk intrinsic to the various projectcomponents, e.g. 20% for land and compensations and subsurface works, 15% forsurface works, including dam and erection services, and 10% for equipment andmost materials (20% for tunnel lining equipment and materials). A pricecontingency has been added as fol',ows: local cost inflation was assumed to

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range 20% during 1984-86 and 18% onward; foreign cost 10% in 1984, 8% in1985, 9% during 1986-88, 7.5% in 1989 and 6% onward. Assumed exchange ratesare shown on Annexes 4.1 and 4.2.

4.11 Financing. Including interest during construction (MUS$49.9), theforeign currency requirements amount to MUS$252.9. A Bank loan of MUS$164.5is proposed to finance the foreign cost of contracts for works and goods tobe procured through ICB and some of the services including the front end feeon the Bank loan. The loan represents 45% of the total cost of the project(and 81% of the foreign construction cost). Including a small amount forlocal interest during construction (MUS$6.5), total tnvestment cost would beMUS$418.1, financed as follows:

Local Foreign Total ZIBRD: Contracts - 164.1 164.1 39.2

Front end fee - 0.4 0.4 -Sub-Total IBRD - 164.5 164.5 39.2

Cofinancing B-loan - 65.5 65.5 15.7Suppliers (turbines/generators) - 22.9 22.9 3.3FONADE and Government 13.6 13.6 3.3EPM 151.6 - 151.6 36.3Total 165.2 252.9 418.1 100.0

External commercial cofinancing will be sought in 1985 for some MUS$65.5 ofremaining foreign costs. However, given capital market uncertainties, EPM'sprojections assume conservatively that most of these funds will be generatedfrom operations (5.10, 5.11). FONADE, through its existing loan forconsulting services, would finance KUS$4.7 equivalent. Already disbursedgovernment fund facilities for some KUS$8.9 will be used for land purchasesand Infrastructure work. If the "B' loan were not forthcoming, local costfinancing for MUS$22.4 during 1984-88 would be required for EPM's WSSDepartment. Specific assurances have therefore been obtained that fundsrequired during 1954-85 of no less than MUS$13 (MUS$3 have already beensecured) will be made available to EPH. The remaining NUS$9.4 needed during1986-88 are expected to be secured as required (5.29). EPK would finance theremaining local cost from internally generated funds.

4.12 Engineering. EPH has been studying the Rio Grande as a source forwater and power since 1940. A feasibility study was made by consultants, whosubmitted their report in September 1982. It was analyzed by the Bank anddiscussed with EPH who, with its consultants, prepared various subsequentreports on the details of the project and its justiflcation. In December1982, an experienced geologist was hired by the Bank; his report concludedthat the project would not present undue geological problems. Drllling isvirtually completed at about 11,000 m of total perforations. Additionalseismic refraction surveys recommended by the geologist have corroboratedprevious field investigations. The design of all facilities will be based onthe acceleration caused by an earthquake at the site with an impact of 6.5 onthe Richter scale.

4.13 The project is ready for execution with the recent engagement, inagreement with the Bank, of the supervision engineers. Under existing law,EPM as a municipal entity, can be allowed to appoint the design consultantsto also supervise execution of the project and it has obtained formalapproval. To account for the inevitable changes which occur durirgimplementation the consultants are expected to continue their design work,financed by FONADE, under a contract terminating in April 1985. Should theFONADE funds be exhausted before that time, the proposed loan would financethe remaining design requirements as well as the continuation of theengagement of the consultants for this purpose, either under an approprlateextension of the existing contract or a new contract.

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4.14 As is standard practice in Colombia, EPM or its consultants engagethe services of independent engineers in the event a particular problemarises (e.g. gas accumulations, overcoming water hazards); the latterconsultants would also be financed by the proposed loan. As is now standardfor construction of hydro projects financed by the Bank, an independent Boardof Experts, usually comprising 3 consultants, would be appointed to meet atleast twice annually (or as required) to study the execution of the project,the results of any pertinent reports, surveys or monitoring actions, toinspect all work sites, give guidance, and prepare a review report withrecommendations for action to be taken. The experts would also be financedby the proposed loan. All consultants to be financed by the loan would beengaged under terms and conditions acceptable to the Bank. (The existingcovenant on safety of dams will be repeated under the proposed loan.(5.19(i)).

4.15 The estimated base cost (end 1982) of the consulting services andof EPM's administration of the project would be about MUS$35.2 of which aboutMUS$1.0 would pertain to outside expertise, i.e. the Board of Experts andother short-term experts required during execution of the project and specialsurveys. About 17X of the remaining cost (MUS$5.9) is expected to berequired for additional surveys, drilling, tests, travel, reimbursables, andthe like, while EPH's own costs are expected to be some MUS$12.6 and theconsultants' direct cost would amount to about MUS$15.7. The consultantsdirect cost includes salaries, social benefits and a profit margin.

4.16 Studies. No special studies are contemplated for financing by theBank. Numerous studies have been, and are being financed, by previous loans(2.28) and the emphasis under the present loan would shift to implementationof study recommendations by EPM's own personnel. Training appears the mostsuitable vehicle for Bank financing in this respect. EPM's environmentaldepartment has advanced so well with its study (partly financed under loan1953-CO for Playas) of 'Basin Protection" that the policies for Rio Grandewith respect to acquisition of land (while the reservoir size is 1,100 ha,the land to be acquired for protection of the reservoir is about 5,700 ha),reforestation (MCol$67 for 1982 alone) and planning for improvement ofmarginal and eroding areas (considered to be the responsibility of provincialgovernment) have been defined to the extent that outside assistance on alarger scale would contribute little. EPM, using its own funds, is eAecutinga study of the distribution networks to be constructed under the second phaseof potable water expansion (the portion to be financed by IDB). Under aUNDP/Bank financed study - with the Bank acting as executing agency -Training on Construction Management will be extended to the sector, includingEPM and, for this reason, no direct assistance is required under the proposedloan.

4.17 Training. The proposed loan includes MUS$0.8 to cover 1985-1989training of&3 E PM staff, for power (32), water (22), administration (11),and finance (18), in continuation of the tcaining being financed under loan1868-CO (Guadalupe IV), so that the overall program wovld comprise thefollowing:

1968-COFinanced by the Loan for: Guadalupe IV Rio Grande Total

Masters degree 10 3 13Short courses 19 53 72Training abroad 33 27 50

62 8314

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As under Guadalupe IV, the training program would be detailed in consultationwith the Bank's training advisor. For this purpose the Rio Grande loandocuments provide for EPH to carry out by December 31, 1989 a trainingprogram for its staff satisfactory to the Bank.

Execution

4.18 Project Unit. Similar to the execution of the Guadalupe IV and thePlayas hydro stations, EPM has created a separate project unit for RioGrande, of which the general organization and peak manpower requirements areshown on Annex 4.6. The unit will be manned gradually in 1984/85commensurate with the start and build-up of the main civil works. Under theUNDP/Bank Construction Management Project this division will receive specialtraining together with the above mentioned divisions for Guadalupe IV andPlayas.

4.19 Implementation Schedule. The implementation schedule, of which thekey dates for both Phase 1 and Phase 2 are shown in Annex 4,7, would be usedto monitor project progress. The Niquia hydro station and raw water supplyfacilities are expected to be completed by the end of 1988. The Tasajerapower station would be completed about one year later and gradually entercommercial operation by about the middle of 1990.

4.20 Procurement. Arrangement for procurement of goods and serviceswould be the following:

=- - Procurement Method-- TotalProject Element ICB LCB Other Cost

_ _ ~----- MUSS

Land 27.3 27.3Infrastructure 26.3 26.3Civil works 168.6 168.6

IBRD Financing (99.3) (99.3)Turbines, generators 29.0 29.0Other equipment 70.1 70.1

IBRD Financing (54.3) (54.3)Engineering 39.5 39.5

IBRD Financing (9.7) (9.7)Training 1.2 1.2

IBRD Financing (0.8_ (0.8)Total 238.7 26Y 123.3 3.3.0

To be financed by Bank loan: (153.6) (10.5) (164.1)

Civil works would be in 6 contracts, the first (already signed) for the twopressure tunnels, the Tasajera access tunnel and the diversion tunnel, thesecond for the dam, the third for the Tasajera caverns, tailrace andauxiliary tunnels, the fourth for the power house at Niqula, the watertankand the conduit to the treatment plant, the fifth for substation andtransmission facilitiea: and the sixth for cleaning the reservoir and workareas and for landscaping. All equipment would be procured under a total of15 contracts, depending on the nature of the equipment and part of which canbe combined by the bidders for obtainiag least evaluated cost, e.g. theelectromechanical equipment for both power stations, under 4 contracts, canbe bid in combination. All contracts to be financed by the Bank are expectedto be substantial, and subject to prior review; bidding documents

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for the first contract (and contract award) were found satisfactory by thelank (4.24). However, should any bidding packags be less than MUS$O.5equivalent, it would be subject to post review.

4.21 Procurement of goods and srvices to be financed by the proposedloan (other than consulting services) would be through internationalcompetitive bidding under Bank guidelinss for procurement. Colomblanmanufacturers would receive preference of 15, or applicable duties, andtaxes whichever Is lower, for purpose of bid evaluation. Local mnufacturersare not expected to be able to supply item required for the project Inexcess of a cost of MUS$3 (mainly conductors and some type of cables). Theex-factory cost (net of taxes) of such item would be financed by the loan.

4.22 Wlth respect to poseible procurement and other problems posed bythe provisions of the State Contracting Act (Decree No. 222 of February1983), the Legal Department has advised that Bank loans in Colombia are notsubject to sald legislation, and that thls was confirmed by a legal opinIon,dated December 6, 1983, furnlhed to the Bank on behalf of the Republic ofColombia as guarantor for Loan No. 2303-CO (Agricultural Research andExtension Project I), signed September 19, 1983.

4.23 Disbursements. Funds from the proposed loan would finance theforeign cost of the project an follows:

(a) 58Z of total expenditures of the civil works for rlver diversion.dm constructlon, surface and subsurface work for the Tasajerapower station, surface and subsurface work for the water supplyfacilities, the Nlquia power station, the pressure reducing andbypass facilities, the raw water tank, the conduit up to thetreatment plant, *and for substations and transmision lines;

(b) 100I of foreign expenditures for directly Imported equipment andmaterials and 91Z of locally produced equipment and materials, asrequired for dam, Intakes, tunnels, power statlons, substations andlines, except turbines and generators;

(c) 100Z of foreign expenditures of foreign consultants and 502 ofexpenditures of local consultants;

(d) 1002 of foreign expenditures for training and related equipmnt,and for directly Imported equlpment and maL rials for the da:aprocessing network; and

(e) Loan proceeds would be disbursed Into a dollar-denominatedrevolving fund In an account in Banco de la Republica to beestablished, by EPM, solely for the purpose6 of the Project.The Bank would make an Initial deposit Into the fund of US$8equivalent to the estimated disbursements di lg the first90 day period after loan effectiveness plus up to MbS$13 equivalentto the retroactive financing (4.24) expected to be disbursed beforeend 1984. Disbursements from the special account would be ade foreligible expenditures under the loan. Special accountreplenishment of the dollar equivalent amunt of disbureements fromthat account would be made upon receipt of withdrawal applicationsfrom EP!t, except that after disbursement of a total of US$140million, the Bank would begin to recuperate the lnitial deposit.In addition to the external auditiug of EPZ (2.14) the revolvingfund account will be audited annually by Independent externalauditors acceptable to the Bank.

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All disbursement requests would be fully documented. Annex 4.8 shows theestimated loan disbursements based on the Bank-wide profile for hydropowerprojects, adjusted to take account of the initial deposit. The closing datewould be December 31, 1991.

4.24 Retroactive Financing. In order to complete the water part of threproject in 1988, and because the civil works execution require strictseasonal planning (a delay of 1 - 2 months may cause an overall delay of oneyear), EPM has awarded the main civil works c 1atract which requires a downpayment of some MUS$6.5 and expects to have - make progress payments of upto MUS$6 prior to loan signing . Because the supervising engineers havealready been engaged (4.13), a small sum not exceeding NUS$0.5 may berequired for payment of the engineers. For these reasons, retroactivefinancing is proposed aggregating KUS$13 to reimburse these expenditures.

4.25 Environmental Aspects. Any environmental impact would principallyoriginate in the reservoir, the intake and tailrace facilities, the surfaceNiquia power station and raw water tank, the conduit to the treatment plantand the substation and transmission lines. The area to be affected is about5,700 ha, of which 1,100 ha pertains to the reservoir. About 90X of the landhas already been acquired. The area is marginally suitable for agricultureand was largely owned by absentee landlords. Of the above 100 personsaffected most have moved and the few remaining will move once their propertyhas been acquired.

4.26 EPM has a comprehensive longterm program for creating recreationareas within a new forest area that would cover most of the 5700 ha. Thiswould prevent encroachment by settlers and reduce soil transport to thereservoir. The reforestation works will be initiated in 1985 under an annualbudgetary allocation, arising from the legal requirements that 2% of therevenue (calculated at the block tariff rate) originating in hydro facilitieshave to be allocated to measures to protect the basin (and an additional 2%for rural electrification). Numerous small mines have been operating (and afew still do) on the embankments of the river and its tributaries,devastating the environment by flushing earth for finding gold. This is thelargest source of silt in the river. The construction of the Rio Grandefacilities appears to balance in favor of the environment due to (a) thelarge area to be reforested, (b) the longterm effects on the basin of EPI'splanning for improvement (which, however, requires government inputs and

action); and (c) the fact that an average of some 40 m3/S of water is to bediverted to the heavily polluted Rio Medellin, to double its flow and dilutethe current sewage pollution. Downstream uses for water supply for humansand animals are taken from streams flowing into Rio Grande, and will not beaffected by the project.

4.27 Although by the time of effectiveness of the loan, most of the landrequired 'and virtually all of the land needed for construction) will havebeen bought, EPM undertook to have acquired all land for the project byDecember 31, 1986. The undertakings agreed to 'nder previous loans, withrespect to environmental protection and the periodical inspection of dams andwaterworks, have been repeated for the proposed loan.

4.28 Project Risks. The hydro facilities are subject to risks normallyassociated with civil works in difficult terrain and heavy rain during thewet season, which may cause landslides in disturbed earth (as occurred in

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1983 when at the Guavio site near Bogota, 128 workers perished; monitoringefforts at Rio Grande will, for this reason, be intense). The critical pointin the construction is the completion of the diversion tunnel by the end of1985, before the start of the wet season. Because the underground work wouldbe located mostly in the Antioquian batholith (similarly to Guatape, SanCarlos, Jaguas, Guadalupe IV and Playas), while the hydro facilities are nowalmost standardized in the area and EPM staff and its consultants have wideexperience in this type of work, no undue difficulties are expected duringtunneling.

4.29 Studies have been underway since 1976 to identify all potentialfaults in the area. Distant faults, both east and west of the project areaare thought to be active, generating earthquakes of moderate magnitude. Noindication have been found that faults passing close to the project site havemoved in the last 2 million years. Subduction of an oceanic plate under thecontinental plate takes place at a depth of some 60 km. As a routine matter,aditional seismic studies - to be financed by the FONADE loan for consultingservices - are expected to be completed in the first half of 1984. Thereare no indications that any major design change could be called for. Thestructures would withstand an earthquake of a level of 6.5 on the Richterscale.

4.30 The procurement and construction schedule for the project isreasonable; no unusual delays are expected.

4.31 The main risks derive from the nature of the works: civil works indifficult terrain and heavy rain during the wet season that may causelandslides, as well as in tunneling at great depth. Financial risks havebeen minimized by agreements reached and by actions to be taken duringprocessing of the proposed loan. Furthermore, based on EPM's past record, itis expected that a satisfactory rate of return will be realized.

4.32 Project File. Annex 4.9 lists the contents of the Project File.

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5. FINANCES

Summary

5.01 Except for 1974 and 1975, EPM's Power Department has maintained asatisfactory financial position through its 24-year relationship with theBank. The extra-fiscal measures taken under recent agreements with the Bank,including revaluation of assets for monitoring financial performance, haveconsiderably strengthened the finances of EPI's Power Department. Althoughthe Bank has never lent to EPM's Water Supply and Sewerage (WSS) Departmentits historical finances have been adequate and show an improving trend. IDBhas made 9 loans to it since 1965 and EPH's compliance with IDB's loanconditions has been satisfactory. The investments of EPM's Power Departmentduring 1984-91, including investments in ISA, interest during constructionand working capital, are forecast at GCol$210 8/, of which 18.4% correspondto the portion of the Rio Grande project pertatning to Power. Net internalcash generation would finance 62.6% of total and the remaining 37.4% would becovered by loans (36.1%) and by other external sources (1.3Z). Theinvestments of EPM's WSS Department during 1984-91 are forecast at GCol$79 ofwhich 46.3% correspond to the portion of the Rio Grande Project pertaining toWater. Net internal cash generation would finance 52Z of total and theremaining 48% would be covered with loans (36.5%), and by other externalsources (11.5%), the latter made up by donations from land developers. Basedon expected levels of inflation and exchange rates, and of agreed minimumfinancial targets, EPI's financial projections result in a viable plan oftariff increases based largely on ongoing monthly increases (5.17 and 5.31).The net operating income with the above plan is expected to produce annualrates of return on fully revalued assets ranging from 7.2% in 1984 to 12.1%in 1986 for the Power Department, and from 1.1% in 1984 to 5.8%in 1988 forthe WSS Department. Including its Telephone Department, EPM is expected tomaintain an adequate financial position throughout 1984-91.

Cosnolidated Performance

5.02 EPM's consolidated financial position as well as the financialposition of each of its various departments (Power, WSS, and Telephone) havebeen satisfactory. During 1981-83, the consolidated annual debt servicecoverage ratio exceeded 2.4. The following table summarizes EPM'sconsolidated financial performance during this reriod (Annex 5.1).

Fiscal Year Ending December 31: 1981 1982 1983_ GCol$- -

Operating Revenues 8.4 11.2 15.2Operating Expenses 5.8 7.7 9.7Operating Income 2.6 3.5 5.5Operating Ratio (%) 68 68 64Debt/Equity Ratio 49/51 50/50 47/53Current Ratio (ineL. current portion of long term 1.4 1.3 1.0

debt)Debt Service Coverage (times) 3.2 2.5 2.4

8/ G - Giga - Billion = 109.

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5.03 The projected flow of funds through 1991 for Power and WSS andthrough 1989 for the Telephone Department have been found satisfactory.Annual debt service coverage for each department would not be less than 1.5during 1984-89 (Annexes 5.2; 5.7; and 5.12). By statute (Article 73)departments operate and expand financially independently from each other. Asa result, only in the event that a department had surplus funds not neededfor its operations, are said funds allowed to be lent, in the form of a loanat commercial terms, to another department. Covenants under previous loanagreements (874-CO, 1825-CO, 1868-CO and 1953-CO) which ensure financialindependence have been repeated in the proposed loan agreements (5.19).Furthermore, EPM's projvctions indicate capability on the part of eachdepartment to operate comfortably on its own. EPM retains all its profitsbecause, statutorily, it is not required to pay dividends. Instead, eachdepartment pays annually to the Municipality of Medellin based on thefollowing percentages (fixed since 1955) of total revenues: Power, 4.425%;Telephone, 3.420%; Water Supply, 1.993%; and Sewerage, 2.473%. Since EPH'saccounts and budgets are maintained and audited separately for eachdepartment, a detailed analysis has been made only for the Power and WSSDepartments. For convenience the rest of this chapter deals separately withthe finances of the Power and WSS Departments. The Telephone Department's1984-1989 projections are summarized in Annex 5.2.

A. POWER DEPARTMENT

Earnings History (Power)

5.04 Except for 1974 and 1975, EPM's Power Department has had a historyof satisfactory financial performance. Since 1976 net contribution tocapital investments with net cash generation (less investments in ISA)fluctuating from 23% in 1978 to 67% in 1979 and to 31% in 1983, hassatisfactorily complemented financial requirements., This may be attributedin large part to the high market density and low-cost facilities, given thearea's geographic advantages for hydro generation. The balance of thecompany's investment funds has been obtained through borrowings, generally atreasonable cost. No subsidized government funding has ever been required.

5.05 Over 1977-83, EPI's average rates increased in real terms by 36%.Due to a program of fixed monthly increases instituted in 1978, rates areestimated to have averaged an equivalent of USf3.04/kWh equivalent in 1983.As a result of acceptable larger-than-anticipated borrowings, and of higherdomestic inflation in 1982 and 1983 and a lower volume of energy sales thanexpected (mainly because of lower sales to ISA: 1982 was a relatively dryyear), the rates of return of 7.6% in 1982 and 10.6% in 1983 are lower thanthe rates of return of 10% and 14% covenanted under Loan 1953-CO (Playas).Nevertheless, EPM's self-financing ratios of 39% for 1982 and 33% for 1983backed with local borrowings of KUS$16.5 and N;US$6.7 respectively, enabledEPM's investment program to continue without delays due to lack of funds.Thus, additional funds were not necessary and the Bank waived the covenanted1982-10% rate of return. The covenanted 1983-14% rate of return is no longerapplicable and new agreed rates of return are based upon a viable program oftariff increases (5.17, 5.18). At end 1983, EPM's debt/equity ratio was31/69, calculated on the basis of revalued assets (,0/50 using unrevaluedassets) and the debt service coverage ratio (including investments in ISA)was 1.6. The company's cash and working capital have been adequate in recentyears; the current ratio has exceeded 2.1 since 1979. On average, accountsreceivable have not exceeded the equivalent of 55 days of yearly sales since1979.

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Rate Base (Power)

5.06 For public accounting purposes, Colombia's public utilityregulatory law (Decree Law 444/67) does not allow full revaluation of fixedassets but only adjustments to match the revaluation of outstanding foreigndebt. To reflect international and domestic inflation, values for EPM'sassets and accumulated depreciation as of December 31, 1976 were estimatedand agreed with the Bank (under the San Carlos I Loan 1582-CO to ISA). Fromthat date, EPI4 revalues its assets (fixed assets in operation and accumulateddepreciation) quarterly by the Colombian cost of living index (thesuitability of this index will be reviewed under the Bank loan to FEN) as ameans of monitoring its financial performance, including rate of return.Works in Progress are also revalued but are not part of the rate base.

Tariff Structure (Power)

5.07 Although EPM's average rate is expected to continue to improve, itstariff structure has lacked appropriate balance among various majorcategories of consumers. However, the spread among average residential,industrial, and commercial charges has improved due to a first adjustmentmade in October 1982 to reflect marginal costs (Annex 2.2, item 5).

Financial Structure (Power)

5.08 The extra-fiscal measures (5.06) taken by EPM as one of theshareholders under the San Carlos I loan, including quarterly revaluation ofassets for monitoring financial performance, have strengthened its financialstructure. As of December 31, 1983, the capitalization of EPM's PowerDepartment is shown in Table 5.1.

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Table 5.1Capitalization of EPM's Power and WSS Departments as of Dec/31/1982

Power Department WSS DepartmentMCol} MUS$ a/ equiv. X MCol$ MUS$ a! equiv. %

Capital and Donations 1,067 12.0 1 1,444 16.3 6Accumulated Surplus 14,645 165.0 19 1,247 14.0 5Capital Revaluation 36,154 407.3 47 14,386 162.1 60

TOTAL EQUITY 51,866 584.3 67 17,077 192.4 71

Long-Term Debt(incl. current portion)

Foreign 16,513 (84%) 186.0 22 4,564 (88%) 51.4 19Local 3,160 (16%) 35.6 4 597 (12%) 6.7 2

Total L. T. Debt 19,673 (100%) 221.6 26 5,161 (100%) 58.1 21

Pension and OtherReserves 2,587 29.1 4 1,308 14.7 5

TOTAL LONG-TERM LIABILITIES 22,260 250.7 30 6,469 72.8 26

Current Liabilities 2,118 23.8 3 606 6.8 3

TOTAL EQUITY AND LIABILITIES 76,244 858.8 100 124,152 272.0 100- - -

a/ 1 = Col$88.77 at 12/31/83

5.09 The principal creditor of EPM's Power Department is the Bank. In 1983,debt under the outstanding six loans from the Bank amounted to 53.2% of totallong-term debt. The second largest creditor is the Bank of America with 14.4%followed by the Bank of Tokio with 6.6%, Chase Manhattan and Banco Cafetero with 2%each, the Government of Colombia with 1.5%, and Banco del Estado with 1.5%. Theremaining 18.8% is composed of debt from various local financial and foreigninstitutions. Audited 1983 figures are given in Annex 5.3.

Investment and Financing Plan (Power)

5.10 EPM's 1983-91 investment program, including construction and studies forfuture projects and investments in ISA, interest during construction, andrequirements for working capital, amounts to GCol$210.4 (equivalent to MUS$1245 -seepara. 4.02 - the small difference is due to roundings). The proposed Rio Grandeproject represents 18.4% of total. The capital and bonds investments in ISA accountfor 20.6% of total. The proposed financing plan for EPN's Power investment programin current prices is summarized on Table 5.2.

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TABLE 5.2

PROPOSEO 1984-1981 INVESTMENT AND FINANCING PLAN FOR EPM'8 POWER ANI WATER S8PPLY & BEVERAGE DEPARTrENTS

WATER SIPPLY &POWER DEPAWFNENT a/ SEWERAGE EPARrNENT b/

Current Current Current CurrentGGoLS (21 NUSSoqv [%I 6CoLS (%I NUSeqy [I

SOURCES - - SOURCES - -Internal Generation Internal GenerationOperating Income 195.30 92.8 1026.0 82.4 Operating Income 27.32 34.9 136.4 29.9Depreciation 77.92 37.0 407.2 32.8 Depreciation 31.09 39.5 162.9 35.6Amortization (studies) 3.55 1.7 18.6 1.5 Amortization (studiesl 0.37 0.5 2.7 0.6Increase in Rsserves 14.85 7.0 91.5 9.5 Increase in Reserves 12.03 15.3 83.4 15.2

InternaL Gross Gbnertn. 291.42 138.5 1533.3 123.2 Internol Gross G6nertn. 70.81 90.1 371.3 91.3Debt Service Debt Service

Rep yment 75.68 36.0 416.4 33.5 Rbpaymnt 15.13 19.2 76,0 16.8Interest 40.72 19.3 212.8 17.1 Interest 14.82 19.9 75.6 16.0

TotaL Debt Service 116.40 S5.3 629.2 50G. TotaL Debt Service 29.95 38.1 152.4 a3.4Investments in ISA 43.37 20.6 231.7 18.6

- - - - InternaL Net Generation 40.86 52.0 219.9 47.9InternaL Not Generation 131.55 82.9 872.4 54.0

Borrowings ftrtBorrowings fort Rio Ba,y-IDB 1.94 2.5 17.9 3.9Rio Grands: IBRD 18.32 8.7 114.3 9.2 Rio Busy-FMOU 0.31 0.4 2.7 0.6

Other 5.82 2.8 40.6 3.3 Btllo-Itagui 0.19 0.2 1.7 0.4QuadeLupe IV 17.04 8.1 147.0 11.9 Rio Grands I tIBRD) 7.78 3.9 50.2 11.0PLayms 26.73 12.7 207.1 16.5 Rio Grands II 15.46 13.7 83.1 20.4Trasmunsn & 0istribtn. 7.10 3.4 40.8 3.3 Other Borrowings 3.01 3.8 22.4 4.6Studies 0.98 0.5 7.1 0.8 - - - -

Other Borrowings .00 .0 0,0 0.0 ToteL Borrowings 29.S 38.5 189.0 41.2- - - - Other Extrnl. Sources 9.08 11.5 49.7 10.9

Total Borrowings 75.E9 36.1 556.9 44.7Other ExtrnL. Sources 2.79 1.3 15.6 1.3 TOTAL SOURCES 78.83 100.0 458.5 100.0

TOTAL SOURCES 210.42 100.0 1244.9 100.029C===ZE0 USES

Construction ProgrmUSES Rio Buoy 2.50 3.2 23.2 5.1Construction Program BeLLo Itagul 0.13 0.2 1.2 o.3Ayura River Diversion 0.00 0.0 0.0 0.0 Rio Brands r 13.45 17.1 8U.S 19.7QuadeLupe IV 14.37 8.B 121.5 9.8 Rio Grands II 22.98 29.2 136.2 80.5PLeyss 20.34 9.7 158.4 12.7 GeneraL PLant 0.78 1.0 4.3 0.9RIo Grande 39.98 18.4 250.9 20.1 Other 3.28 4.2 18.3 4.0Transmssn.6 Distribtn. 23.08 11.0 119.4 9.6 Future Plant 10.21 20.0 71.6 15.6Genaral Plant 10.11 4.9 59.4 4.7 Donated Networks 3.09 11.5 49.7 10.9Future Plant 55.12 2B.2 241.3 19.3 - - -Donated Networks 2.79 1.3 15.6 1.3 8ubtotal 68.41 B7.0 397.4 97.0

Eabtotal 164.47 78.2 865.5 77.5 IDC Financed 3.07 39. 13.0 4.2IDC Nbt Financed 3.47 4.4 19.8 4.3

IDC Financed 8.17 3.9 60.8 4.9 - - -mC Not Financed 11.84 5.5 74.8 8.0 Total IDC 0.54 s.3 39.8 8.5

TotaL IDC of proJects 19.91 9.4 135.4 10.3 TotaL Constrctn Prgm. 74.95 95.3 438.2 05.5

Studies direct cost 6.4 3.1 398.4 3.1 Chngs in Wrkng Captt 3.08 4.7 20.4 4.5IDC of Studies 0.28 0.1 1.6 0.1 - -

- - - TOTAL USES 78.63 100.0 450.6 100.0TotaL Studies 9.89 3.2 40.0 3.2 -

Total Constrctn Prgrm 190.97 90.9 1140.9 91.6

Other InvestmntsEmpress Antloq.d'Enrgis 0.04 .0 0.4 .0FEN 0.22 0.1 1.6 0.1Ndium Term Invstmnts 0.96 0.5 B.0 0.7 a/ Sourest Annex 5.5.Chngs in Wrkng Crptl 19.23 8.5 92.8 7.B b/ Sources Annex 5.10.

TV'AL USES 210.42 100.0 1244.9 100.0 (IMIS 5/24/19941nc a== _ =

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5.11 EPM's net internal cash generation would finance 62.6% of totalinvestment requirements and the remaining 37.4% would be covered by loans(36.1%) and other external sources (1.3%). The proposed loans for the powercomponent of the Rio Grande project total GCol$24.1 (MUS$154.9) of whichGCol$18.3 (MUS$114.3) would come from the Bank and the balance of GCol$5.8(MUS$40.6) is planned to be covered by: (a) GCol$3.7 equivalent (MUS$23) fromsuppliers' credits; (b) GCol$1.0 equivalent (MUS$6.7) from commercial banksfor the 15% downpayment required by suppliers plus CIF costs; because of therelatively small amount and of the current buyers market conditions forelectrical equipment, EPM is confident that suppliers will be able to arrangefor this financing which will be required beginning in 1986; (c) GCol$O.9(MUS$8.9 equivalent already disbursed) from the Government/chemical Bankloan; and (d) GCol$0.3 (MUS$2.0 equivalent) from FONADE for studies. Most ofthe borrowings required for projects under construction, aggregatingGCol$43.7 (MUS$354 equivalent), have already been contracted with the Bank(Guadalupe IV, Loan 1868-CO; and Playas, Loan 1953-CO; and through the Bank'sA and B loans to FEN - para. 1.21), and the Bank of America, Chase Manhattan,the Bank of Tokio and FONADE (Annex 5.3).

5.12 EPM has requested the Bank for a "B" loan of about MUS$65.5 tocover the MUS$6.7 currently assumed to be provided by commercial banks(5.11), the overall foreign IDC costs of Phase I of the Rio Grande projectestimated at MUS$49.2, and MUS$9.6 of part of the foreign cost of theproject's infrastructure. Because disbursement of these amounts will not berequired until 1985, the Bank has informed EPM that it would try to structurea "B" loan then. Due to the current situation of the international capitalmarkets, EPM's finances and tariff program have been projected assumingconservatively that Rio Grande's IDC's will be financed out of EPM's internalcash generation.

5.13 The assumed terms of the proposed Bank loan are indicated in theproject summary. The assumed terms of other foreign and local borrowingrelated to the proposed and future projects (Annex 5.3) are in line with thegeneral terms for EPM's Power Department current external and domesticborrowings. Disbursement and debt service schedules of existing and futureloans are kept in the project file (Annex 4.9).

5.14 In line with Colombian legislation, EPM maintains reserve accountsfor its pension and severance liabilities, and pays directly from theseaccounts to employees who leave the company. 4nnual provisions for thesereserves are determined on the basis of an actuarial study carried out in1978. The 1984-91 net increase in these reserves, and recovery of investmentexpenditures in distribution facilities made on behalf of consumers, amountto 7% of total financing sources. Rio Grande, due for commissioning in 1988(Water) and 1989 (Power), is the last large identified component in EPH'scurrent (1984-91) investment program which also include new investments inISA, in general plant and, beginning in 1989, largely undefined generation,transmission and distribution projects.

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5.15 In addition to low-cost housing loans which EPM provides for itsemployees, individual shares in the severance funds can be used by employeesfor purchasing residentlal housing. These features apply to all EPM's departments. As required by law, EPM pays interest on the severance reservein line with rates charged for similar arrangements in other companies.-

Financial Forecast (Power)

5.16 Forecast financial statements and performance indicators for1984-91 are presented in Annexes 5.4 through 5.6. The future finances ofEPM's Power Department are based on the following ratios' minimal/maximallevels: (a) self-financing ratio 30% except for 9% and 24% in 1984 and 1985;(b) coverage ratio of debt service plus investments in ISA 1.5, except for1.2, 1.4 and 1.3 in 1984, 1987 and 1988; (c) debt/equity ratio 45%; (d)current ratio 1.5; and (e) 55 days of receivables (Monitoring Indicators-Annex 5.7).

Rate Adjustment Program (Power)

5.17 The projections provide for the effects of expected inflation andexchange rates (4.10 and Annexes 4.1). Projected revenues which produceacceptable yearly financial indicators (Annex 5.7) are based on the followingrate adjustment program.

RateMonthly Total Yearly Aver.Yearly Expected Increase

Rate Flat Rate Nominal Rate Local In RealYear Increases Increase Increase Inflation (X) Terms

1984 2.2 - 30 20 101985 2.2 10% in Oct. 43 20 231986 1.8 - 24 20 41987 1.5 - 27 18 91988 1.5 - 19 18 11989 1.2 - 15 18 (3)

Financial Covenants (Power)

5.18 Under Loan 1953-CO (Playas) EPM had confirmed that, in addition tothe 2.2% monthly rate increases through 1984, it would increase its rates intwo steps of 12% each. The first was to take place before June 1982 and thesecond before June 1983. The first increase, of 15.4% instead of 12% tookplace in October 1982. The second has not yet been implemented. Since theseand other assumptions form the basis of the present projections the revenuecovenants made under the 1953-CO loan have been changed accordingly. (Therates of return covenanted under Playas for 1984 through 1986 were greaterthan those of the present projections largely because of currently:(a) lowerexpected foreign and local inflation; and (b) greater, but still acceptableuse of long term debt. However, EPM's finances are expected to continue tobe sound as indicated by the forecast self-financing and debt servicecoverage ratios). The conditions specified in para. 7.01 (e)(f), and (h)would help ensure that the tinimg of the assumptions underlying theprojections are met.

Other Covenants (Power)

5.19 Except for the amendment of the rate of return covenant and relatedundertakings and the introduction of similar covenants for EPM's WSS

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Department, no other financial agreement, under Loan 1953-Co (Playas)required revision. The following main provisions under existing loans to EPMhave been repeated for the proposed loan:

(a) External auditing and Departmental Reporting. EPM would furnish tothe Bank, about 5 months after thie end of each fiscal year auditedaccounts and external auditor's report(2.14). No later than threemonths after the end of each fiscal year, EPM would also furnish tothe Bank annual reports of each of its departments, on theirfinancial performance during that year and the forecasts for thenext year;

(b) Debt Service Coverage. This yearly indicator would not be lessthan 1.5 for each of EPM's departments individually;

(c) Rate of Return and Monitoring Indicators. EPM would providequarterly reports to the Bank showing EPR's latest and forecast 12months performance, including proposals for any adjustments, withrespect to tariff, rates, rates of return and financial andoperational performance indicators shown in Annexes 5.7 and 5.12.

(d) Investment Limitations. Unless a proposed investment, notcurrently included in the 1983-91 Power and WSS investmentprograms, would be economically justified, and there would existadequate financing for it, EPM would not undertake such investment,if it would exceed 1Z of revalued fixed assets in operation of therespective Power and WSS Departments 9/, or for investmentsunrelated to the operations of its three Departments;

Ce) Funds Transfer Limitation. No operational and investment surplusfunds can be transferret from the Power or WSS Departments to EPM'sother Departments unless they are provided as loans undercommercial terms and conditions.

(f) Changes to EPM's Statutes or New Legislation: (2.04).

(g) Environmental Protection: (4.27).

(h) Financial Independence of EPM's Departments (5.03).

(i) EPM would arrange for: periodic inspection of all its dams,reservoirs, waterways and earthworks assigned to its PowerDepartment (4.14).

9/ As agreed under Loan 1953-CO it is not necessary to place an additionalinvestment limitation on operational investments to be used in common bytwo or more departments because (i) of the similar limitation (MUS$2instead of 1% of revalued net fixed assets in operation) called forunder the Bank Fifth Telecommunication Project loan 1825-CO to EPM; and(ii) any investments made by EPH for the common use of its departments,have to be allocated to each department in proportion to said use.

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WATER SUPPLY AND SEWERAGE DEPARTMENT

Earnings History (WSS)

5.20 The recent financial performance of EPH's water supply andsewerage operations has been satisfactory (Annex 5.1). After cashexpenses and contributions made to the municipality of Medellin, operationalcash generation increased by some 2.7 times during 1980-83. Internallygenerated funds, net of changes in working capital, financed over 50% ofcapital expenditures 10/ incurred during the same period. Borrowings,mainly from IDB, finainced the remaining 50% of those expenditures.Additional works were donated by urban developers and beneficiarymunicipalities. Debt service coverage during the same period wassatisfactory despite the use of borrowings for 50% of thecapitalization ofEPM's WSS department. Collection records were also satisfactory. Becauseof EPK's integrated collection system (2.15), receivables did not exceed2-months of billings, which is unusually low in Latin America.

5.21 Although 1983 financial performance was not as strong as inprevious years, EPM's 1983 net income was MCol$594.5 (MUS$7.5) 11l- In1983, cash generation net of changes in working capital, financed about 37%of EPM's WSS 1983 construction program which totalled some MCol$2,583(MUS$32.5 equivalent)12/. About 56% of this investment program wasfinanced by long termTborrowings and some 7% with a decrease in workingcapital. Urban developers and municipalities donated about MCol$397 (MUS$5equivalent) worth of new assets for EPM's WSS operations.

5.22 Tariff structure and rates for EPM's WSS Department are discussedin Annex 2.3. During 1983, the average combined (water plus sewage) ratewas about Col$17.9/m3 (US$0.22/m3). This was well below the averagecombined rate of ColS24/i3 (USS0.30/m3) for Bogota, the largest city inColombia (Medellin is the second largest).

Financial Structure (WSS)

5.23 Although retained earnings and reserves have considerablystrengthened the capitalization of EPM's WSS Department, borrowings havealso contributed significantly to such a capitalization. As of December 31,1982, the capitalization of this department is shown in Table 5.1 (para.5.08).

10/ Excluding donated works.

11/ Based on unrevalued fixed assets. A net loss of MCol$16 (MUS$0.2)would be reported if depreciation on revalued fixed assets wereapplied.

12/ Including IDC and excluding donated works.

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5.24 The principal creditor of EPM's WSS Department is IDB. Amounts

outstanding on IDB loans, as of December 31, 1983 were MCol$4,519 (87% oftotal long-term debt and equivalent to MUS$50.6).

Rate Base (WSS)

5.25 Revaluation of fixed assets to reflect price level adjustments isnot a generally accepted accounting principle in Colombia (5.06). To complywith IDB conditions for annual revaluation (Loans 54/1C, 356/OC and592/SF-CO), EPM developed an adequate computer program to revalue its fixedassets Including works In progress. IDB loan agreements covenant cashgeneration requirements and revaluation of fixed assets but no rate ofreturn covenants. In early 1982 EPM prepared for IDB a study forrevaluation of its fixed assets and accumulated depreciation from 1967 to1981 (assets were revalued using the consumer price index for those years).This revaluation work was accepted by IDB in April 1982 and has been updatedyearly by EPM. On this basis, at December 31, 1982 Gross Operating Assetswere MCol$19,202, Accumulated Depreciation was MCol$4,064, and works inprogress were MCol$2,323. These amounts are acceptable to the Bank andshould be used as base values for futur' revaluations Wequired to monitorthe rates of return to be covenanted under the proposed loan (7.01(g)).

Investment and Financing Plan (WSS)

5.26 EPM's 1984-91 investment program for itb water supply and sewerageoperations amounts to about GCol$78.6 in current prices (equivalent to aboutMUS$457). It includes on-going projects, the two stages of the Rio Grandeproject, capitalized interest during construction, regular expansion works,pollution control of Medellin river, donated works and working capitalrequirements. The proposed financing plan for this investment program issummarized in Table 5.2.

5.27 Internally generated funds would finance 52.0% of the proposedInvestment program. Borrowings including the proposed Bank loan areexpected to finance 36.5% of this program. Donated assets by urbandevelopers and beneficiary municipalities account for the remaining 11.5%.

5.28 The terms of the proposed Bank loan are indicated in the projectsummary. The assumed teros of other foreign and local borrowing related tothe proposed and future projects (Annex 5.8) are in line with the generalterms for EPM's WSS Department's current external and domestic borrowings.Disbursement and debt service schedules of existing and future loans arekept in the project file (Annex 4.9).

5.29 In order to complete its 1984-88 financing plan EPM would have toborrow locally about MCol$3,010 (MUS$22.4 equivalent) as follows: MCol$438in 1984, MCol$1,130 in 1985, MCol$833 in 1986, MCol$342 in 1987 and MCol$269in 1988. Disbursements during 1984 already obtained by EPM from FFDU amountto MCo1$290. EPM and the Government have given specific assurances that allnecessary actions will be taken to enable EPM to obtain additional financingof MCol$1,200 during 1984-85. The financing required during 1986-88 whichtotal MCol$1,444 (MUS$9.1), not only falls well within EPM's local borrowingpotential, but the yearly amounts compare with the IDC costs for which aBank B loan would be considered in 1985 (5.12). Furthermore nonavailability of said financing could be compensated by an average tariffincrease during the 3 year period of only 4.7% which is considered a viablefall back alternative.

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Financial Forecast (WSS)

5.30 Forecast financial statements and performance indicators for1984-1991 are presented in Annexes 5.9 through 5.11. The future financesof EPM's WSS Department are based on the following ratios' minimal/maximallevels: (a) self-financing ratio 37%, except for 32% in 1984 and 1987; (b)debt service coverage ratio 1.9;(c) debt/equity 40%; (d) current ratio 1.5;and (e) 55 days of receivables (Monitoring Indicators - Annex 5.12).

Rate Adjustment Program (WSS)

5.31 The projections provide for the effects of expected Inflation andexchange rates (4.10 and Annexes 4.1 and 4.2). Projected revenues whichproduce acceptable yearly financial indicators (Annex 5.12) are based on thefollowing rate adjustment program:

Monthly Total Yearly Expected Yearly RateRate Flat Rate Nominal Rate Local Increase in

Year Increase Increase Increase (X) Inflation Real Terms (X)

1984 1.8/2 a/ - 25 20 51985 2.0 15% in April 46 20 261986 2.0 10% in January 27 20 71987 1.5 32 18 141988 1.5 19 18 11989 1.4 18 18 0

a/ 1.8% until June and 2Z from July onward.

Currently JNT is considering EPM's proposed change in Its overall WSS tariffstructure (Annex 2.3). The proposed structure would increase EPM's averagetariff by 25%. Such increase, whether totally or partially executed wouldenable EPM to reduce suostantially projected future borrowings from localsources (5.29), as well as the assumed program of tariff increases. Sincepolitical changes at the regional and municipal levels due to take placeduring mid 1984, may cause some delays in the implementation of EPM'sproposed structure, the above program of tariff increases was designed tosupport EPM's investment program with higher but still prudent and realisticborrowing levels.

Financial Covenants (WSS)

5.32 The conditions specified in paras. 7.01 (e)(f)(g)(h) and (i); wouldhelp ensure that the timing of essential assumptions underlying EPM'sprojections are met.

Other Covenants

5.33 The timely execution of the water component of the proposed projectas well as a satisfactory overall financial performance of EPM areconsidered to be adequately safeguarded with the additional covenantsmentioned in para. 5.19.

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6. Economic Analysis

Historic Development and Studies

6.01 The history of development and studies of water resources forhydropower generation and water supply in Medellin area are reviewed in Annex

6.1. It also includes a discussion of some of the past growth and currentassumptions of electricity and water demand in EPM's service area.

Least Cost Developments

6.02 Although use of Kio Grande waters is the only feasible solution for

providing raw water to Medellin, numerous alternatives are possible, whilethe merit order of an additional power component shouLd fit in at theappropriate date in the least cost national (not EPM's) generatingdevelcpment program.

6.03 The justification for the power component of Rio Grande coming into

stream during 1988 can be summarized as follows:

(a) the revised (Hay 1983) least-cost national power expansion programprepared by ISA shows that the Tasajera power station of the Rio

Grande (estimated to cost US$827/kW - para. 1(a), Annex 4.3; forwhich, at that date ISA used a cost of USS867/kW if built as apower project alone independent of a water component) should be Inoperation in April 1991 (Annex 1.3);

(b) the fact that construction of the water supply project has to startnow to meet 1989 water demand (3.09, 3.10 and Annex 3.3), allowsthe cost of the power component to be considered Incremental to the

cost of a water project built as a water project alone, independentof a power component;

(c) the least cost solution (March 1982 prices) for the s*ngle purposewater project with a gravity dam which would be smaller than theearth dam required for a multipurpose (water and power) projectwould be MUSS170;

(d) in contrast, the (1982) least cost multipurpose project wouldrequire MUS$363 including the Niquia Power station (22 MW),Tasajera Power Station (300 MW), transmission facilities, waterconduit, but excluding the water treatment plant. Thus theincremental cost of the power component would be KUSS193 orUS$600/kM;

(e) because the US$600/kW would be the least cost of any poweraddition in Colombia, Rio Grande should be built as soon aspossible as part of a multipurpose project. That is, advanced tocompletion by 1988 (4.05); and

(f) also, the internal economic rate of return of advancivg the plant(at incremental cost) by 2 years would be about 12, correspondingto total savings of about [US$40 in the use of coal during 1989-91.

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6.04 Although the above establishes the need to build the powercomponent now, the resulting multipurpose project had to be optimized withinthe physical possibilities of the site. Two reservoirs could be developed onthe Rio Grande, the selected one assuring practically full annual regulationof the river at maximum physical dan height. At that height, cost per m3 ofuseful volume does not reach its minimum but the adduction tunnels, both forwater and power, are at minimum length.

6.05 The consultants made 6 alternative design schemes as shown in Annex6.2, which basically provide the same amount of raw water and generate aboutthe same amount of electric energy. Using the discounted cash flow methodfor the comparison, at 12X, alternative 2A-3 showed least cost. This resultis not sens':ive to the assumption of the value of electric energy, for whichmedium term marginal cost at the generation level in the interconnectedsystem can be used (para. 2 of Annex 2.2) to account for the smalldifferences in generation. Nor is it sensitive to the use of border pricingbecause the alternatives are very similar and multiplication with the borderprice factor for each type of cost has only a marginal effect on net presentvalues.

6.06 Further optimization was made by (a) varying installed capacity atTasajera, affecting tunnel size, (b) whether or not to install a power plantat Niquia and to vary its installed capacity, and (c) varying water conduitsize and staging. The end result of the above optimization process withrespect to the technical facilities is shown in the project description(4.07).

Return on Investment

6.07 The return on investment was calculated as the discount rateequalizing the present values of the streams of benefits and cost associatedwith EPM's 1984-90 development program of which the Bank project is a partand cannot be reasonably segregated. The cost streams comprise the capitalcosts of this program (including Phase 2 of the Rio Grande scheme - watertreatment, and distribution and sewerage) and incremental operational andmaintenance cost related to the incremental sales of electricity and waterassociated with the program. These costs were converted to border prices bymeans of weighted average conversion factors based on conversion factors forindividual local cost components (materials, machinery, equipment, labor,consumables and such). As a proxy for benefits, revenues were used, derivedfrom incremental sales of electricity and water associated with the programand average annual rates, deflated for adjustment to April 30, 1984 andadjusted to border prices by the standard conversion factor. Because ofunquantified consumers' surplus and economic and social benefits, use of therevenues as a proxy for benefits substantially understates the benefits.

6.08 On this basis, the return on the development program for power andwater is about 18X (Annex 6.3) compared with the opportunity cost of capitalin Colombia, estimated to be 11%. A sensitivity analysis was carried out tomeasure the impact of major uncertainties underlying the return calculations.The results of the analysis in round figures is shown below:

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Percent change required in either thecost or the benefit, to increase/decrease the (exact) 19.6% rate ofreturn to:

---- Rates of Return--

Cost variations 14% 16% 18% 20%Capital cost power +36 +17 0 -11Capital cost power plus water +27 +13 0 - 8Total operational cost +43 +22 0 -17

Benefit variationsPower revenues -18 -10 0 + 8Water revenues -65 -34 0 +24Total revenues -14 - 7 0 + 6

The rate of return is not sensitive to a change in operational cost. It ismodestly sensitive to a change in either total capital cost or capital costof power (the latter, because about three quarters of total investmentspertain to power). However, it is rather sensitive to changes in revenues,either total or pertaining to power. A reduction in rates of 10%, comparedwith the required rates to meet adequate financial performance, lowers therate of return to about 15%; a similar increase of 10% raises the rate ofreturn above 20%.

6.09 Following the decision to assign the cost of the dam to power forfinancial accounting purposes because the Power Department has a strongerfinancial situation than WSS, and as this assignment would still leave powerbetter off than if it were to be a separate project, the internal rate ofreturn was calculated on the same basis. This resulted in a rate of return(Annex 6.2) of 18% for the overall investment program of both power and watersupply departments and 19% for the power program alone, and 14% for watersupply and sewerage programs. This high figure is mainly due to the factthat, in real terms, water rates would rise, over the present low charge, bysome 50% by the end of the decade (1984: USt 16.63/m 3 ; 19.90: USt 24.61)'.It should be noted that the use of revenues as a measure of the projectbenefits says more about the adequacy of the tariff than the rate of returnof the project or its social and economic merits.

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7. AGREEMENTS TO BE REACHED AND RECOMMENDATION

7.01 During negotiations EPM and the Government agreed to:

(a) no later than March 15, 1985, enter into contractual arrangements,satisfactory to the Bank, with the municipalities of Envigado,Sabaneta and La Estrella, regarding the provision of water supplyand sewerage services (3.02).

(b) carry out, by December 31, 1989, a training program for its staffsatisfactory to the Bank (4.17);

(c) acquire land required for the project no later than December 31,1986 (4.27);

(d) take all actions necessary (including the provision of financialresources) to carry out phases I and II of the Rio Grande projectaccording to an agreed schedule (4.04, 4.19 and Annex 4.7).

(e) a set of minimum financial targets for EPM's Power and WSSDepartments (Annexes 5.7 and 5.12).

Minimum Rates of Return

Year Power (Z) WSS (X}

1984 7 1.11985 10 2.51986 12 3.51987 10 5.51988 10 6.01989 and thereafter 10 5.0

(f) monitore of the quarterly rate of return and other indicators(Annexes 5.7 and 5.12) as provided for under existing Bank loanagreements to the Power Department, and extend the monitoringsimilarly to the WSS Department (5.19(c)).

(g) to assume for EPM's WSS Department the following revalued assetsamounts, as of December 31, 1982: MCol$19,202 for its Gross FlxedAssets in Operation, MCol$4,064 for their accumulated depreciationand MCol$2,323 for its works in Progress (5.25); and

(h) to maintain, unless the Bank shall or otherwise agree, monthlytariff increases as follows: no less than 2.2% through 1988 and1.8% thereafter for EPH's Power Department and no less than 1.8Zthrough .1988 and 1.5% thereafter for EPM's WSS Department (5.17).

(i) enable EPM to enter into arrangements satisfactory to the Bank inorder to obtain MCol$1,200 for its WSS Department as .-equired forthe carrying out of the project during 1984 and 1985 (5.29).

Recommendation

7.02 With the above assurances and actions the project would besuitable for a Bank loan of MUS$165.5 equivalent to EPH for a period of 17years including 4 years grace, at the standard Bank variable interest rate.

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COLOMBIA ANNEX 1.1

EMPRESAS PUBLICAS DE MEDELLIN

RIO CRANDE MULTIPURPOSE PROJECT

faorgy Output and Conauwption 1/ 2/ 3/

1971 1978 1979 1980Odt )mcLty Tat D lst Osuity Bat iat Oitity It Fuat Quity Pt t qutst

_01 2tu rho. 1o1 210 1otu r 1 10

Iicdb Fydi p 6,238.0 20.6 0.5 11,914.0 39.3 1.0 13,094.0 43.2 1.1 14,295.0 47.2 1.2

16 bbl aIS oi 78.2 437.9 11.0 47.4 265.4 6.7 45.0 252.0 6.4 45.6 255.4 6.4

lI0t 3Naung 111.3 111.3 2.8 147.0 147.0 3.7 150.7 :50.7 3.8 160.7 160.7 4.0

lO6t 1al 2,717.0 71.2 1.8 4.754.0 124.6 3.1 4,885.0 128.0 3.2 4,947.0 129.6 3.3

hoXl -Oa. 16. 1 576.3 14 . -§W Tr:

79il1 Ban" io 4t

iAMad ELact y 8,148.0 26.9 6.8 16,132.0 53.2 1.3 17,796.1 58.7 1.5 19,428.0 64.1 1.6

1AUl %nle paAata 5/ 54.0 3D2.4 7.6 60.5 138.B 8.5 62.8 351.7 8.9

109ft3 %ttua - 88.3 8L.3 22.3 120.6 120.6 3.0 124.6 124.6 3.1 134.0 134.0 3.4

lOit 1ni 4,326.0 6/ 113.3 2.9 4,405.6 7/ 115.4 2.9 4,485.1 117.5 3.0

Ibtal 589.5 14.8 637.5 16.0 667.3 16.9

1981 1982 hmW Qutth aRbU,At ower %1 z2atz L/ c '"NU Host 1±nt 1978-1982

pt- a Cu j 01la% lOqwe 10 2BCu labte Z

ldhAs Fydi p 14,301.0 47.2 1.2 15,005.0 49.5 1.2 4.7

lAb au ail 48.9 273.8 6.9 51.8 290.0 7.3 2.2

109

ft3 macia 168.3 168.3 4.2 174.5 174.5 4.4 4.4

1A 0ha 5,030.0 131.8 3.3 5,550.0 145.4 3.7 4.5

mcel 621.1 15.6 659.4 16.6 3.4

Pimu bag O nutlon 4/

nAa mKarld1ty 19,631.0 64.8 1.6 21,487.0 70.9 1.8 8.5

10UIPl Ntnssl pudiu 5t 63.9 357.8 9.0 61.8 346.0 8.7 3.4

lO9ft3 N al - 164.3 144.3 3.7 151.2 151.2 3.8 6.0

1(4 hal 4,597.0 120.4 3.0 5,056.8 12.5 3.3 3.3

lbml 687.3 17.3 700.6 17.6 4.4

1/ FImScod othrd p1t fl (Ce.g. )R.) is 2 S - orl a orce of sag in (blaSbs, but Its ub h.mt lam quntfifd.PT I te - kca - 3.968 x 107 t. .e. Ij12 ftu -0.0252 x.1# wOe.3/ tat eqdaints aaacal at 3,300 BbOd& far Pbr; 5.6 ltu/bb for oil ad its po&wtt, 1.0 Utu103ft

3for neua-1 d its pindr ad 26.2 IUtdt for

aml.4/ Mm dffermo benee pdsaearw aupt aid fuel sw axmdtu. e,priumsl Ihi t equivalent exaclbtt the apprmimie am of total jamad lxrm.j'R eanzmi - pa&acrln + lwrt - t (am nouce(z)).

6/ tsu d a 912 of ptSrtin 'Kw aw for 1998 (90.72). 1981 (91.42) ad 1932 (91.11).Wi Nt alAle but at_iUtd - surm for 1978 ad 1979

em (1) pxo Yr Ad elactlaty: Stun eleCtIm rhIm , Bala ere ti tsatwrieoh, ISA, z191embe 1983 Mm de la leph1im, bu 1983(2) 011 am dm: PAvia BDa de la R ,vM_lca u 1983.(3) 1mfls al CreI1 198Ie. tAutedo de Mime y 1urgla.

Novaeber 1983

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ANNEX 1.2Page 1 of 3

COLOMBIA

EMPRESAS PUBLICAS DE IEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

Public Electricity Service in Colombia

1. Public electricity service is provided in Colombia by:

(a) municipally-owned companies, independent of the NationalGovernment, of which the largest are Empresa de Energia Electricade Bogota (EEEB), Empresas Publicas de Medellin (EPM), and EmpresasMunicipales de Cali (EKCALI);

(b) national enterprises such as Instituto Colombiano de EnergiaElectrica (ICEL), and Corporacion Autonoma Regional del Cauca(CVC), and the Corporacion Electrica de la Costa Atiantica(CORELCA). ICEL and CORELCA have a total of 20 electrificadoras,subsidiaries which mainly distribute power at the local level; and

(c) a generating and transmission company, ISA, the main shareholdersof which are EEEB, EPM, CVC, TCEL and CORELCA.

The Ministry of Mines and Energy owns part of the sector directly throughICEL and CORELCA. EEEB and EPM, currently the largest utilities, arecontrolled by autonomous municipal governments. CVC reports to DNP. A briefdescription of each principal utility follows below.

2. ISA. Established in 1967 as a public corporation, ISA has provideda cohesive 7 Eamework for sector development by creating a national gridcapable of transmitting large amounts of power and energy at 220 kV and 500kV between the regions. Because ISA undertook development of largehydroelectric resources on behalf of its shareholders, the latter have beenable to share the costs and benefits of the country's low-cost hydropowerpotential, which is geographically concentrated in the areas of Bogota (EEEB)and Medellin (EPM). The holdings of ISA's shareholders as of December 31,1982, are:

Utility Shares X

EEEB 15,762 25.0EPM 15,762 25.0CVC 12,371 19.6CHIDRAL a/ 239 0.4ICEL 9,219 14.6CHEC b/ 239 0.4CORELCA 9,458 15.0

63,050 100.0

a/ A CVC subsidiary.b/ An ICEL subsidiary.

-51-

ANNEX 1.2Page 2 of 3

Headquartered in Medellin, ISA is administered by its Shareholder Assembly, a5-member Board of Directors and a General Manager supported by a competenttechnical staff. The Assembly must act on all major issues and, to ensurethat decisions are based on a consensus, ISA's bylaws specify that theShareholders Assembly achieve the concurrence of 75% of the shares.Decision-making tends to be slow when the interests of the variousshareholders differ. ISA has constructed the 500-MW Chivor I (681-CO, 1972)and 500 MW Chivor II hydro plants, as well as 133 MW of thermal capacity atZipaquira and 133 MW in gas turbine capacity at Chinu. It has underconstruction for completion in 1984/83 the 1,240-MW San Carlos I and II hydroplant (1582-CO, 1978, and 1725-CO, 1981) and the Jaguas hydro plant (170 MW),as well as the 500-kV line, financed by the Government (1583-CO),interconnecting the northern system (CORELCA) with the central system.

3. EEEB. An autonomous company, EEEB is owned by the Municipality ofthe Special District of Bogota, which generates, transmits and distributeselectricity. It serves some 575,000 consumers in metropolitan Bogotadirectly and sells power in bulk to a local distributor in the department ofCundinamarca. EEEB is administered by a 7-member Board of Directors and aGeneral Manager. The Mayor of Bogota serves as the Chairman of the Board ofDirectors. The General Manager, who is responsible for the day-to-daymanagement of the company, is appointed by the Board subject to the Mayor'sapproval. EEEB has an installed capacity of 688 MW (558 MW hydro and 130 MWthermal). The company has under construction the 600 MW Mesitas (1628-CO,1979) and the 1,000 MW Guavio (2008-CO, 1982) hydro projects, as well as aBogota Distribution project (1807-CO, 1981).

4. EPM. An autonomous company, EPM -- the borrower for the proposedRio Grande Project -- is owned by the Municipality of Medellin, whichprovides power, water, sewage, and telephone services for the city ofMedellin and vicinity. It serves some 350,000 power consumers and 229,000water consumers in metropolitan Medellin and sells in bulk to a distributingcompany in the department of Antioquia and has 256,000 telephonesubscribers. EPM is headed by a 7-member Board of Directors and a GeneralManager. The Mayor of Medellin, or his representative, is the Chairman ofthe Board of Directors. The various services of EPM are managed as separateentities with separate accounting systems. EPM has an installed capacity of998 MW which will increase to 1,211 MW with the completion of the GuadalupeIV project in 1985. The Bank is providing financing for Guadalupe IV(1868-CO, 1981) and the 200 MW Playas hydro project (1953-CO, 1982).

5. CVC. An autonomous multipurpose State corporation under DNP, CVCis respons 10e for developing the Cauca Valley and has been discharging itsmandate with notable success. One of its main activities is generatirg andtransmittilAg power in the Valley, undertaken in part through CHIDRAL, whichis owned by CVC (65Z), the Municipality of Cali (17%) and EMCALI (18%).CVC-CHIDRAL sells power in bulk to EMCALI and other distributing companies(subsidiaries of ICEL and CVC) serving a total of some 400,000 consumers.CVC is administered by a 7-member Board of Directors and an ExecutiveDirector appointed by the President of the Republic. CVC's various

-52-

ANNEX 1.2Page 3 : 3

activities are managed as separate enterprises with independent accountingsystems. CVC-CHIORAL has received five fully-disbursed loans from the Banktotalling MUS$44.6 (the last of which was made in 1963). It has an installedcapacity of 579 MW (534 MW hydro, 45 MW thermal). CVC's multipurposeSalvajina project (intended mainly for flood control and irrigation), whencompleted in 1984, will provide 270 MW of generating capacity andcorresponding transmission facilities.

6. CORELCA. An autonomous corporation since 1972, CORELCA has beenresponsible for power generation and transmission in 7 departments of theAtlantic Coast. The 7 distributing companies in the area are subsidiaries ofCORELCA and buy power in bulk from it. Together they have an installedcapacity of 766 MW (all thermal) and serve about 425,000 consumers. A 170 MWsteam station fueled by coal from El Cerrejon is to be commissioned in 1983,and a second 170 MW unit is being installed. CORELCA is administered by a7-member Board of Directors and a Managing Director. It has implementedconstruction programs within its service area that included thermal plantswith units in the range of up to 150 MW, high voltage interconnectingtransmission lines, and distribution system expansion and works to improveits operating efficiency.

Under Loan 1583-CO, ISA connected CORELCA to the central grid at 500 kV (thetemporary operation at 220 kV will be changed to 500 kV in 1984).

7. ICEL. A government institute, ICEL reports to the Ministry ofMines and Energy and provides electric power services largely to small townsand rural areas of the country not served by the other main utilities. Itdoes so with the assistance of Government contributions through 11 subsidiarycompanies in which it is the majority shareholder (the others are therespective local governments). ICEL's subsidiaries have an installedcapacity of 652 KW (329 MW hydro, 327 MW thermal) and serve about 933,000customers. ICEL and some of its subsidiaries are expanding generationfacilities, the largest of which is the Betania hydro plant which is to add500 MW to the national system in 1986. ICEL is also responsible for theinvestment program of most of its subsidiaries, comprising essentiallyexpansion of the various subtransmission and distribution systems and theirconnection to the inter-connected system, together with generating additionsto isolated systems. The projects carried out by ICEL are generallytransferred to its subsidiaries in the form of capital contributions. ICELis administered by a 5-member Board of Directors (chaired by the Minister ofMines and Energy) and a General Manager appointed by the President of theRepublic.

November 1983

-53-

ANNEX 1.3

COLOMBIA

EMPRESAS PUBLICAS DE MEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

May 26, 1983 - DNP National Generation Expansion Plan(for plants entering into service after 1986)

CapacityHydroplant KW Date of Operation

Betania 500 April 1987Playas 200 April 1980Guavio 1,000 October 1990Rio Grande (Project) 358 April 1991Calima III 240 October 1991Miel I 384 April 1992Urra I and II 1,200 October 1992Canafisto 1,500 April 1994Miel II 351 October 1996

-Termal

CORELCA area about 170 To be determined

November 1983

-54-

ANNEX 1.4Page 1 of 2

COLOMBIA

EMPRESAS PUBLICAS DE MEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

Bank Participation in the Colombia Power Sector

1. The Bank has made 28 loans to Colombia's power sector, totallingUS$1,549 million (see Annex 1.5). In addition to the project, the Bank isassisting with the preparation of two generation and transmission projectsnow at the feasibility stage: Calima III Hydropower (CVC) and Urra (altoSinu) Hydropower (CORELCA and ISA). Past loans have assisted the expansionof generating capacity, and transmission and distribution facilities in thesystems serving Bogota, Medellin, Cali, Cartagena, Bucaramanga and Manizales,including expansion of electricity distribution to low income areas (874-CO,1973; 1807-CO, 1980; and 1868-CO, 1980). The Bogota Distribution Project(1807-CO0 1981) has been theu first Bank loan to Colombia to supportexclusively distribution expansion and, in addition to other beneficiaries,would directly benefit about 340,000 lower income consumers. In addition,the Bank has supported rural electrification under 256-CO (1960) and 313-CO(1962), the First and Second Integrated Rural Development Project (1352-CO,1977; 2174-CO, 1983), and the Village Electrification Project (1999-CO,1983). Other recent loans have been indicated above (Annex 1.2 item 2) whichwould complete the task of interconnecting the country's regional powersystems begun under 575-CO (1968), and add a total of 3,253 MW of capacity tothe national interconnected system. In addition to coordinating a technicalassistance project to strengthen system planning, the Bank is the executingagency for another UNDP-financed project which would enhance the sector'sconstruction management capability for large hydroelectric facilities(1.15,1.16). Further, in connection with Bank lending, marginal costtariff studies have been carried out for the major markets by ISA'sshareholders. The adoption of the results of the study into the varioustariff structures is under discussion with the Government. Taken together,the above-mentioned projects reflect the Bank's participation in overallpower development in Colombia, from the planning stage through financing andconstruction of generation and transmission facilities, to delivery ofservice to the final consumer. Finally, as part of its continuing dialoguewith the Government and the sector, the Bank is planning a power sectormemorandum for 1984 which would address expansion planning (1.15), loaddispatch, power losses, sector organization (1.21), salaries and training,tariffs and financing strategy.

2. Previous Bank lending to Colombia's power sector has been foundgenerally succesful in several OED reports. For instance, the most recentreport, 'Power Interconnection (575-CO) and Chivor Hydroelectric Projects(681-CO)" (Report No. 2720, October 29, 1979), commented upon the Bank'sparticipation in Colombia's effort to evolve a stronger and more efficientpower sector organization. Through the creation of ISA in conjunction with

-55-

ANNEX 1.4Page 2 of 2

these projects, and the continuous efforts to overcome financial andinstitutional difficulties, real progress was made toward more coordinatedsector development. Despite implementation delays and increased costs, bothprojects were successfully implemented. Also, the report entitled "BankOperations in Colombia, an Evaluation" (Report No. Z-18) of May 25, 1972,concluded that Bank financing was successful in assisting the power companiesto develop hydroelectric plants at lower unit cost than they otherwise wouldhave been able to do. In turn, this permitted greater urban coverage as wellas cheaper and more reliable electricity supply to industry. The reportcommended Bank efforts in Lhe establishment of JNT and the centralinterconnected system, which facilitated further power sector development.Among other things, the report recommended that in the future the Bank payincreased attention to the companies' financial planning, tariff structures,distribution programs and energy losses. These points have been addressedunder the aforementioned recent loans, which have been the first Bankoperations since late 1972 because sector financial difficulties precludedneeded expansion of generation facilities in the interim. Complementarymeasures to sustain investment capability, and thus ensure completion of highpriority projects in a reasonable period, and to strengthen financialplanning are in constant focus and, most recently, have been supported by thePower Development Finance project (2401-C0, 1984).

May 26, 1984

COxUNA ANISX 1. 5

anUAS PIUICAS DE CDx LLIN

ItO CRANIDE tULTIPRPOSE PROICT

ILji Pewr Loans

lorrwereand Tear of Loan Amount

Loan So. Agreement Project Deecription (MU)

COVIUQISIKT

1583-CO 1978 500-tV Intercennection (Central Uyatem/Atlentic Syste) 50.00 50.00

TN

2401-CL 1984 Power Delopmnt Financo Project 1/ 170.00 170.00

ISA

575-CO 1968 Central System Interennection (230 kV trannaiselon ltiwnand eubstatlona) 1.O

681-C 1970 Chivor I project (4 x 125 NW hydro) 52.301582-CO 1978 San Carloe I (4 x 155 NW hydro) 126.001725-CO 1979 San Curlos II (4 x 155 NW hydro) 72.00 268.30

Ems

246-CO 1960 Lanta unit 4 (2 x-1.0 NW hydro) 17.60S31to II unite I end 2 (2 x 33.0 MU hydro)Zipaquira unit I (1 x 33.0 NW therml)

313-Co 1962 Zlipquira unit 2 tl x 37.5 NW therml) 50.0El Cole-lo units 1. 2, and 3 (3 x 50.0 W hydro)

537-CO 1968 Ul Cole-do units 4. 5. snd 6 (3 x 50.0 NW hydro) 18.00Canoes project (1 x 50.0 MW hydro)

1628-CO 1978 bslites Hydro CXI Paraiso 3 x 90 MIU; Ls Cusco 3 x 100 NW;puwin. 3 x 10 NNP; Sesquile de strengthening) 84.00

1107-CO 1980 lgote Distributien 17.002008-CO 1982 Ceavio Hydro (5 x 200 NW) 359.00 615.60

Rpm

225-C 1959 Troneree unit I (1 x 18.0 3W bydro) 12.00Guadalupe III units I and 2 (2 x 45.0 NW hydro)

282-C 1961 Tronras unit 2 (1 x 18.0 1W hydro) 22.00Gandalupe III units 3. 4. and 5 (3 x 45.0 WI hydro)

369-CO 1964 Guatape I unite I and 2 (2 x 66.' NS hydro) 1/ 45.00674-CO 1973 Guatape II unite 1. 2. 3. nd 4 (4 x 70 MW hydro) 56.0018611-CO 1980 uadaluve ITV lydro (31 71 W) 125.001953-0C 1981 Playem Hydro (3 a 67 I1) 15.00 345.00

CVC/ClIDRAL

311-CO 1950 AnchlcYa unite I and 2 (2 x 12.0 IW bydro) 3.53113-CO 1955 Anchicayc unit 3 (1 x 20.0 NW hydro) 4.50

Tueho unit I (1 x 10.0 NW therml)215-O 1956 Tulbo unit 2 (1 x 10.0 NW thermal) 2.80255-CO 1960 Tumbo unit 3 (2 x 33.0 NW therml) 25.00

Calim units I and 2 (2 x 30.0 MM hydro)339-CO 1963 Celia units 3 and 4 (2 x 30.0 M hydro) 8.80 44.63

39-CO 1950 La Insula units I and 2 (2 x 10.0 NW hydro) 2.60217-CO 1959 Ia A sralda unlta I and 2 (2 x 13.3 NW hydro) 4.60 7.20

IUBIJA

54-C0 1951 Palms units I end 2 (2 x 4.4 MU bydro) 2.40 2.40

ZI^CTlIROL

347-CO 1963 Cosplque units 2 and 3 (2 a 12.5 1w thermal) 5.00 5.00

CoIELCA

1999-CO 1982 Atlantic Coast Village* ElectrifIcation 36.00 36.00

Total Loan Amount 1.544.13

11 Approd but -t yet aisnd.

2y Subsequently iocrased to 4 x 70 MUNay 22. 1984.

-57-

ANNEX 1.6

COLOMBIA

EMPRESAS PUBLICAS DE MEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

IBRD Water Supply and Sewerage Loans

Year of Project Title Loan AmountAgreement Loan No. and Borrower (MUS$)

1968 536-CO Water Supply and TransmissionEmpresas de Acueducto yAlcantarillado de Bogota (EEEB) 14.0

1970 682-CO Water Treatment and Distribution,Empresas Municipales de Call(EMCALI) 18.5

1971 741-CO Water Storage, Transmission,Treatment and Distribution (EAAB) 88.0

1971 738-CO Water Supply, Sewerage EmpresasPublicas Municipales de Palmira(EPMP) 2.0

1972 860-CO Water Supply, Sewerage Medium SizeCities (7), Instituto Nacional deFomento Municipal (INSFOPAL) 9.1

1975 1072-CO Water Supply, Sewerage, Medium SizeCities (8) (INSFOPAL) 27.0

1978 1523-CO Water Supply, Sewerage and DrainageProject (EMCALI) 13.8

1980 1697 Third Water Supply, Sewerage andDrainage Project (EAAB) 30.0

1980 1726 Third Medium Sized Cities JaterSupply and Sewerage Project(INSFOPAL) 31.0

233.4

January 1984

AUMt 2.1

COLOMMAEMPRESAS PUDUCAS DE MEDELUN

Orgaflon Chad

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Noveu1e 1983 II

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November 198 3 lom lNO

-59-

ANNEX 2.2Page I of 4

COLOMBIA

EMPRESAS PUBLICAS DE MEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

Electricity Tariffs, Rates and Structure

1. EPM's tariff structure Is still imbalanced with resldential andblock rates (to other munlcipalities and the ICEL subsidiary) significantlylover than Industrlal and comercial rates, despite the lower cost ofprovidlng electriclty to large consumers. Until 1982 (see 5. below), thlsgap widened, as can be Illustrated by comparing average 1973, 1979 and 1982rates, expressed In constant prlces of 1982 (after inflatlng 1973 and 1979average rates by the cost of living Index and uslng the average 1982 exchangerate of ColS64.1 - US$1):

AverageAnnual

Average Rate per kWh Increase (Decrease) Change1973 1979 1982 1973-79 1979-82 1973-82

===-S/kWh - - -

Resldential 2.18 1.90 2.04 (12.8) 7.4 -0.7Commercial 3.58 5.48 5.96 48.9 8.8 +5.8Industry 2.54 3.63 4.12 42.9 13.5 +5.5Block 1.26 1.11 1.14 (11.9) 2.7 -1.1Others 1.26 1.79 2.09 42.1 16.8 +5.8Overall 2.31 2.53 2.71 9.5 7.1 +1.8

The above shown that, although negative trends were reversed (all averagerates increased In real terms since 1979) the dlstortlons between categoriesIncreased. Overall annual Increase In real termo Is smll at 1.82 in thelight of Increased cost borne by EPM - In real terms. It appears that thecost of living Index Is an Inappropriate tool to use In the abovecomparlson. Since 1977 (base 100), the consumer price Index rose to 295,whlle EPM's cost/kWh sold rose to 400, and average revenue/kWh, only to 335.

2. Many tarlff studies, wlth the objective of Introducing a uniformmarglnal cost structure throughout the Colombian system, lcluding soclalobjectives, have been made during the last flve years by ISA and Itsshareholders. 7edium term national average marglnal cost (1983-93) In end1982 prices, according to the latest ISA study, are:

-60-

ANNEX 2.2Page 2o 4

Isolated Grid SuppliedUrban Rural RuralRelative

Level LevelUS$¢ % US$* US$¢

Generation and interconnection 5.59 100 -Transmission 6.49 116 6.65Subtransmission 6.91 124 7.94 -Primary distribution 7.35 131 9.95 7.35Secondary distribution 8.25 148 - 8.55Downtown primary distribution 7.43 133 --

Downtown secondary distribution 9.66 173 -

3. It should be noted immediately that EPM's adjustment factors to theabove marginal cost levels to meet financial requirements, can be expected tobe substantially below "1", because the cost of its efficient and low costoperation is well below the national average. Comparison of EM's averagerates and the above marginal cost allows for some broad conclusions:

(i) block supplies to municipalities and EAE, which are largely atthe level of transmission and subtransmission (national averagemarginal cost range 6.38-7.04 US4/kWh) at a rev_nue of 1.14US¢/kWh, have an average level about 17% of the national marginalcost;

(ii) industry, similarly connected to transmission and subtransmissionlines (average marginal cost some 6.70 US4/kWh) at 4.12 US¢/kWh,has an average level of about 60% of the national marginal cost;

(iii) commercial connections may be connected to subtransmission down tothe secondary distribution network, with emphasis on the lattertype of connection, averaging a marginal cost that may be estimatedat some 7.70 USt/kWh, compared with an actual revenue of US¢5.96;the average revenue level, therefore would be at some 75% of thenational marginal cost;

(iv) residential supply and others (secondary distribution), on averagecollects 2.04 USt/kWh, compared with a (national) marginal cost inthe order of 10 US¢/kWh (urban and rural); the average revenuelevel, therefore, is about 20% of the national marginal cost;

('t-) there appears no relation between the various average rate levelsand the cost of supply levels, except for industry and co erce;

(vi) cross subsidization of the block supplies to the rural areas,although they may be justified to some extent for social reasons,is unjustifiably large. Even assuming that EPM can operate onaverage at 50% of marginal cost, i.e. at some 3.2 USl/kWh on thelevel of transmission, block supplies (at 1.14 US¢/kWh) pay onlyone third of the cost they incur at a medium term basis.Similarly, residential consumers would only pay about 40% of thecost they incur; and

-61-

ANNEX 2.2Page 3 of 4

(vii) in the light of EPM's strongly increased investment progran (since1980), its relatively low present rates and the substantiallyhigher marginal cost in the interconnected system as a whole,requirements for strong real term growth of rates can be expectedto continue.

4. It is obvious from the above that (a) continuation of monthly rateincreases in real terms is required (as is confirmed by the financialforecast, see para 5.17); and (b) a gradual adjustment is required to lessendistortions. With respect to the latter problem, EPM under Loan 1953-COundertook to institute a program of adjustments by Nay 31, 1981. Thiscommitment was not met, in part due to the long time it took to reach aconsensus between ISA's shareholders on a common position on tariffs, whilethe Bank did not press for changes in tariffs in the light of the everincreasing political difficulties, and the fact that EPN continued toincrease its rates monthly in real terms, thus assuring good financialoverall performance. This has been satisfactory compared with the performanceof other ISA shareholders.

5. Nevertheless, EPM has taken several small but important steps inthe direction of marginal and social structuring ,f tariffs in October 1982,at the time of a rate increase, in agreement with the Junta de Tarifas, ofwhich the most important are:

(a) the system of increasing block charges was changed from a memorytype (the charge for each subsequent block of kWh sold iscalculated separately and added to those of the blocks below it) tothe non-memory type (the charge for, say, a consumption of 0-200kWh/m at a cost of "a"/kWh is replaced by another charge as soon as201 kWh/m is reached, reflecting a consumption of 0-400 kWh/r at acost of "b"/kWh, "b" being higher than "a"). At the same time thenumber of blocks was increased and the rates raised in one stepwhile maintaining the average 2.2X monthly increase. Also, adifferential in rates was introduced between the center of Medellinand any supply outside it. For example, a customer in downtownMedellin, consuming exactly 600 kWh per month would have beenscheduled to pay for December 1983 under the old and the newsystem, the following:

---- Old System----- -- -- New System----

Scheduled ScheduledUnit Dec, 1983 Unit Dec. 1983

Block Consumption Price Payment Block Consumption Price PaymentNr kWh -- Pesos-- Nr kWh - Pesos--

1 0-200 1.0105 2022 201-400 1.8862 3773 401-600 2.4251 485 5 0-600 2.0775 1,247

1,064 1,247(+17X)

-62-

ANNEX 2.2Page 4 of 4

At the highest block, consumers paid Col$7.011 in December 1983(about US¢ 7.90 which appears in approximate accordance with themarginal cost of the Colombian system (para. 2, Annex 2.2) and wellabove EPH's requirements. This compares with Col$1.311/kWh (US$t1.48) for a consumer using 200 kWh/m or less (the minimum charge isCol$49.3). These rates are strongly socially structured. Thelatter consumers (i.e. 0-200 kWh/m) representing 18.3Z of allresidential consumers, consume 4.1% of residential consumption andcontribute 2.3% to revenue for residential consumption; and

(b) industrial and commercial consumers were reclassified, taking intoaccount the UN's international uniform classification for economicactivities (also used by the Government for statistical purposesetc.). The rates were also adjusted to reflect time of the dayusage; no seasonal distinction is required in Medellin.

May 25, 1984

-63-

ANNEX 2.3Page 1 of 3

COLOMBIA

EMPRESAS PUBLICAS DE MEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

Water Supply and Sewerage Tariffs and Rates

1. Until the issuance of Law No. 14 on July 6, 1983, water supplyrates were set on the basis of property value (as a way to achieve a rationalincome distribution objective) and on volume of consumption. Seweragecharges were usually set as a percentage surcharge on water charges. Watersupply and sewerage rate levels are proposed by EPM's management and have tobe approved by JNT. Law No. 14 dated July 6, 1983 requires that no laterthan June 30, 1984 public utility rates should no longer be tied to propertyvalues. As a result of this law, JNT recommended the adoption of aclassification of six socio-economic levels for setting rates for domesticconsumption under which all residential customers would be reassigned on thebasis of their estimated personal income. The poorest segment of thepopulation would be placed in level 1 and the wealthiest in level 6. EPMsubmitted a proposal to JNT in September 1983 which would replace its currentproperty value rate structure with one that would reflect the sixsocio-economic levels and include an implicit and progressive increase ofrates for levels 3 and above, and for consumption other than domestic. JNThas not acted on EPM's proposed structure, which was to produce an averagerate increase of about 25%, although the present monthly increases of 1.8%/m,were continued (para. 5. below).

2. The current tariff structure includes 8 categories for residentialconsumption, one for industrial and commercial, one for official (Government)and preferential (non-revenue earning public entities), and another one forstandpipes. All customers pay a fixed charge, regardles of consumption.This charge is highly progressive as the property values of residentialcustomers increase. The fixed charge for industrial and commercialconsumption is close to that of the highest category of residentialconsumption, and the one for official and preferential consumption is closeto the median of domestic consumption. Standpipes are charged the lowestfixed charge. In addition to the fixed charges described above, there is aseparate charge based on actual water consumption.

3. The water tariff as approved by JNT in its Resolution 001 ofJanuary 13, 1981 is as follows:

-64-

ANNEX 2.3Page 2 of 3

Consumption Charge - ColSFixed Charge m3/month

Category Col$/month 1-30 31-50 51-100 -100+

1 20 0.55 8.00 10.00 12.002 40 1.00 8.00 10.00 12.003 80 2.65 8.00 10.00 12.004 100 4.50 8.00 10.00 12.005 150 6.00 8.00 10.00 12.006 165 6.00 6.00 10.00 12.007 190 6.00 6.00 10.00 12.008 220 6.00 6.00 10.00 12.00

Official and preferential: Col$8.50/m3/month.Industrial and commercial: Col$i1.50/m3/month.Public standpipes: Col$1.09/m3/month.Sewerage surcharge: 30% of water billiug.

4. The JNT also authorized a monthly increase of 1.8%. As of March 1984,this would result in a tariff 1.59 times the foregoing, i.e:

Consumption Charge - ColSFixed Charge m3/month

Category Col$/month 1-30 31-50 51-100 100+

1 31.8 0.87 12.72 15.9 19.082 63.6 1.59 12.72 15.9 19.083 127.2 4.21 12.72 15.9 19.084 159.0 7.16 12.72 15.9 19.085 238.0 9.54 12.72 15.9 19.086 262.4 9.54 12.72 15.9 19.087 302.1 9.54 12.72 15.9 19.088 349.8 9.54 12.72 15.9 19.08

Official and preferential: Col$13.5/m3/month.Industrial and commercial: Col$18.3/m3/month.Public standpipes: Col$1.73/m3/month.Sewerage surcharge: 30%.

5. The current structure subsidizes customers with low property values andgovernment entities. Average rates are in general low for all EPM customers, asshown below:

Average Water Consumption and averagerates

as of September 1983Consumption Rate

Consumption category (W3/customer) (Col$/m3) (US$t/m3)

Domestic 36.7 12.45 16Commercial 85.3 20.40 26Industrial 956.1 19.65 25Official 356.1 14.53 18Preferential 330.6 14.53 18Standpipes 280.0 1.91 02

Total 47.2 14.15 18

- 65 -

ANNEX 2.3Page 3 of 3

EPM has been authorized to increase its water rates by 1.8% per month untilDecember 1984 (5.21). By December 1983, the average combined (water plussewage) rate was around Col$17.5/u3; (US$0.22/m3).

6. An analysis was made by EPM of the marginal costs of the Rio Grandewater supply. This compared the investment costs of the two phases of theoverall scheme (supply, treatment, distribution and sewerage, less thatportion which represents replacement of existing facilities, and theadditional operating costs less certain benefits obtained by arranging watersupply operations so as to maximize power generation) to the water deficitthat would exist in the absence of tle project. At a 12% discount rate, thisindicated a value for water delivered to the distribution systems (beforelosses) of Col$19/im3 or US$0.27/m3, in December 1982 prices. With, say, anaverage of 30% unaccounted-for water, expected for 1991 (Annex 5.12), thiswould be equivalent to US$a.39/m3A/ cr,in average Colombian 1984 pesos, toCol.$38.7/m3 at the meter. This compares with Col$24.8/m3 which would be thecurrent highest marginal charge (including 30% for sewerage) in the table inpara. 4 above, and with the projected 1991 average tariff of Col$31.3/m3expressed in 1984 prices which is 81% of the marginal cost for Rio Grande.This demonstrates the higher cost of the project waters compared to existingsources and the resulting 43% increase in real terms of EPM's average tariffbetween 1984 and 1991. A simplification of the tariff structure could attendto 'social' needs yet more closely approximate economic pricing by reducingthe number of categories, decreasing the generous 30 m3 allowance atconcessional prices, and charging all consumption in excess of the allowanceat the highest rate. On the other hand, given the relatively highself-financing ratios (Annex 5.12), coverage of full marginal cost is noturgently required so long as the efforts to reduce unaccounted for water arereasonably successful (2.21(f)).

a/ 0.27 (1 + 3.27) x 11OOx2 0.7

May 28, 1984

-66-

A4NI3L 3.3asian~~~~~~~~~~~~~s

uwalUs moana IUUULIU

110 OANDX ?maTrrOS P60

Ulectrlcl.t bamietuo mad Imai atsa 197b-1991

1f72 397 3lo9 196 11392 I96 194 196 19o" 1IS I£1 1ln3 it" 1a

aNT 3ALA3 CllM

solem

- Immidatia 1.346 1,416 1,307 1,53 1,629 1,6138 1,793 1.916 2.022 2.139 2,267 2.422 2,5U4 2,779- Comrcial 225 236 253 263 91 331 343 370 396 423 433 637 322 S3- adustrial 693 942 92 3 1.004 1.000 1,063 3,119 1.176 1,239 1,304 1374 1.471 3,373- Blak 425 302 394 656 774 630 93U 1.109 3,242 1,33 1,331 1,36 1,334 2z.2n-twarant 3 3# 69 61 42 64 74 78 63 a6 94 100 1oU 1ls-Wm 32 39 I 134 322 193 219 190 204 213 234 250 2U 267- advrtismauet

tafarmatla ' 16 13 13 13 13 17 16 36 17 17 3n 17 33 37

Total Salem 2,992 3,211 3,523 3.662 3.395 4.143 4,439 e,7U 3,140 3,309 3.903 6,338 6.833 7,361Station man.

Phbllc llhtt 4 3 52 54 34 53 36 60 64 65 69 73 76 61 64Lomg" 39 711 797 779 so 333 926 "92 1.00 13139 1.220 3.293 1.34 3 l .3

Tbtal TIN Paquirm-smac 3,638 3,974 4,376 4,495 4.320 ,050 5,483 5,634 6.266 6,717 7.194 7.703 0,236 d,340

Growth vovrpraCieh " ar 9.2 10.1 2.7 7.2 4. 6.6 6.7 7.1 7.2 7.1 7.1 7.2 7.1

aruy smpai

-- dgadlup 1 10 13 22 43 21 16 - 30 10 10 10 to 10 10-bOaidmuefI 43 47 a3 62 63 76 70 12 - - - - - -- oodadmupe III 1,208 3,1U1 1,240 1,434 1,520 1,649 1.630 1,430 1.630 1,630 1.630 1,650 1,450 1.630- Tromram 162 164 160 191 206 227 220 220 220 220 22D 220 220 220- IDeorueag 436 4B3 491 s49 334 449 473 473 473 473 633 73 73 73- Gastapa 1,271 1,607 2,8" 2,229 2,957 2,377 2,727 2,233 3.011 2,434 2,377 1,936 2.418 2,50- Flaimdra Bl6eae 3 - 35 29 40 34 30 30 30 30 30 30 30 30- Apur - - - 6 123 123 123 123 123 123 123 123- tadalapa IT - - 333 1,026 1.026 1.026 1,026 1,026 1,026- Playme - - - - - - - - - 647 1,432 3,*32 1,432 13432- no rand - - - - - - - - - - 363 1 94 1 694 1 94

Total KIN (A) flET t77!-. -r CUrTm-r m5 3WT SrWT1 TIf ~T.=tir tuui tuwV.Iort (Iport)I 453 1 (S3) (62) (f) t41) G 210 (270) 39 323) 487) N 2 111Total 136

_qatr_emac (C) 3,636 ',974 4.376 4.495 4,620 3,030 9,374 5.640 6,345 6,39 7,363 7,929 3,303 11,300itig Ia 1S4 (3) 480 4*0 40 497 533 331 1.304 1,726 1,773 1,78 1,307 2,010 2.010 2,111nat Surplus (£46-C)

for male to 134 27 261 1,033 33 1.0 31 1.233 1,316 2,063 1,729 2,132 2,497 2,403 1.962_ihlmm omnd RIN (NW) 700 743 619 656 9D0 972 1.006 1,063 1,166 1,255 1,342 1,434 1,331 1,633led Factor (1) 39 61 61 42 61 39 61 62 62 63 63 63 63 64

Total *nrr capabilityWS) 3,63 4,235 3,411 5,034 3,912 3,649 6,609 7,336 6,U36 6,623 6,323 10,426 10.903 11,100

CAVACITT BAUMt CM)

Available Capaity

- QadelupsI 23 21 21 21 21 - - 21 21 21 21 21 21 21-Qadmapm 11 10 10 10 10 30 10 10 10 10 lo 10 10 10 10- taalpa III 270 270 270 270 270 270 270 270 270 270 270 270 270 270-Tromras 36 36 36 36 36 36 36 34 34 36 36 36 34 34

-tmaro_ 73 73 75 73 75 73 75 75 73 75 73 75 73 75- atapa 230 360 360 360 360 560 340 360 360 360 o0 340 3U0 340- ladr U-elanca. 7 7 7 7 7 7 7 7 7 7 7 7 7 7_Ay- -_ _ - - - 17 19 1 19 1 19 19 1 1- Suadalupa nI - - - - - - - 213 213 21 2U3 213 213 213-7layn7 - - - - - - - - - 200 2O M0 2O 200-io ara"is - - - - - - - - - 122 322 322 322Total SIN fin f7l 7f 7l l _7I _ I TlT 'flT T3 rw 7 r7fl

It a t . 1il- Chior I so 60 60 0 to 3 so 0 60 40 60 so 6o 60- Zlpquira IV 3 _ _ 3 3 3 _ - - - -

-Civorf1 - - - - 30 30 30 3o so so S0 30 30 30- Chin- 7 7 7 7 7 7 7 7 7 7-Sa Coraloa -I _ _ _ - 138 136 136 136 138 136 136 136-Zipaqir - - - - - - 3 - - -

Ja -_ -_ - - - 3 3 3 3 3r 36 3-ln Carloes - _ - - _ _ - 13 13U 13 136 33 136 136-Ctldras - - - - - - - 4 4 4 4 4 4 4_msecai -_ _ _ _ - - - 13 13 13 13 13 13

-ai - - - - - - - - - - 4 20 20 20_lrra I y t _ _ - - - - - - 4 30 30 30- COnafit - - - - - - - - - - - Usabtotal ---f5 W l l nr~Wfi!~ fil -- 'T R1T fil

Total availableempacity 776 1,059 1,059 1,062 1,119 1,116 1,317 1.666 1,673 1.679 2,009 2,251 2,231 2,331

flat mrfln (Mtmarplum oer _ i_KIN eaind availeblafor interconeecetdsytan) - Availablecpacity ham maimdeamd 79 314 240 20 211 44 313 363 513 624 e7 317 720 696

flat wergi 2 ofasilabl capseity 10 3D 23 19 19 13 24 35 31 33 33 36 32 30

Coumer (1.000) 261 262 297 314 331 345 406 416 429 441 43 466 473 490

ay2, 1964

- 67 -

MM 3.2

DUwA H3LMS IX HNoun

RI0D GRANM M3PI Fn

Miter QmmqWton Data 1976-19l1

IMRC~

1976 1977 1978 1979 1990 1981 1982 1993

_3 XZ M3 M3 Z )3 ZX p3 S H,3 E,3

bmsldnglal 70.7 66 68.8 66 77.3 67 79.9 67 85.1 68 86.1 69 87.2 70 93.3 71

mrdalA 12.1 12 12.1 12 13.6 12 13.8 12 14.6 12 14.7 12 15.1 12 15.5 12

1a&ntrlAd 11.8 11 12.1 12 13.3 11 13.3 11 13.1 11 13.0 10 11.6 9 11.7 9

OfficLal 10.9 10 9.3 9 10.6 9 11.0 9 10.2 8 9.6 8 9.3 7 9.2 7

Otar 1.0 1 1.1 1 1.3 1 1.2 1 1.3 1 2.0 1 2.6 2 3.0 1

lbtal 31111 106.5 IOD 103.4 100 116.1 100 119.2 100 124.3 1OD lZS.4 I0) 125.8 10 132.7 100

1hkm isd - for 80.3 (43) 72.3 (42) 80.7 (41) 86.3 (42) 73.0 (37) 90.8 (42) 94.9 (41) 93.3 (41)

7M%L R111D 186.8 176.7 196.8 205.5 197.3 216.2 220.7 226.0

Hbr of Ox1tiou 165,474 173,987 186,279 194.835 2D9,402 221,09 228,737 241,117

1984 1985 1986 1987 1988 1989 1990 1991

?_3 2 3 Z ,3 2 NZ , Z 2 3 2 3 Z H,3 Z

lh.hbtla 99.7 69 109.4 69 118.5 69 126.1 69 132.5 69 141.7 69 149.9 69 155.1 69

mrda.l 17.1 12 18.7 12 20.2 12 21.7 12 23.6 12 26.2 12 25.6 12 26.4 12

1n 1trie. 14.2 10 15.6 10 16J 10 18.0 10 19.6 10 20.1 10 21.3 10 21.9 10

CffidAl 10.1 7 11.1 7 12.0 7 12.8 7 14.0 7 14.4 7 15.2 7 15.7 7

Othr 2.8 2 3.0 2 3.3 2 3.5 2 3. 2 4.0 2 4.2 2 4.3 2

Ta1 W.jiz 143.8 ID 157.8 100 170.8 100 182. 100 193.6 2D..4 216.2 223.4 100

1bwnmb EUhU 1.5 4.9 8.7 12.8 17.2 22.0 25.2 28.

Un_ umted - fow 100.2 (42) 1O.4 (40) 110.1 (38) 110.1 (36) 1086 (34) 106.5 (32) 108.4 (31) 107.8 (30)

MUL W 5 249.6 319.4 -

m1r of ob.ctotm 253,260 271,630 287,670 301,360 312,90 322.s830 339,890 349,800

lMy 1984

COLOMBIA

EMPRESAS PUBLICAS DE MEDELLIN

RIO GRANDE MULTIPURPOSE PROJECTRtNtoric and Forecast Rivi ater Supply Dita 1975-1991

COluun 1 2 3 4 5 6 7 8 9 10

Total Population Inaccounted for 2 Production CapacityPopulation Served Coverage Consumption -- Annu ak Req lsled

Year (1,000) (1,000) (X) l/cap. day 106 ' /a - /a of Prod. Reduction ae /A l3/

hifstoricT§9r5 1,157 237 100.1

1980 1,509 225 123.9 37.01981 1,598 215 125.4 42.01982 1,946 1,674 86.0 206 125.8 3.99 43 43.0 7.0 7.2

1983 2,021 1,738 86.0 211 132.7 4.20 41 41.0 7.2 7.5

Forecast1W984- 2,097 1,824 87.0 216 143.8 4.56 42 42.6 7.9 9.5

1985 2,306 1,956 85.0 221 157.8 5.00 40 41.8 8.6 9.5

1986 2,382 2,071 87.0 226 170.9 5.42 38 41.0 9.2 9.5

1987 2,460 2.168 88.1 231 182.8 5.80 36 40.2 9.7 9.51988 2,536 2,247 88.6 236 193.6 6.14 34 39.4 10.1 9.5

1989 2,611 2,322 88.9 241 204.4 6,48 32 38.6 10.6 11.11990 2,725 2,446 89.8 242 216.2 6,85 31 36.2 11.1 13.6

1991 2,799 2,519 90.0 243 223.4 7.08 30 37.8 11.4 13.6

May 22, 1984

-69-

Annex 3.4Page 1 of 2

COLOMBIA

EMPRESAS PUBLICAS DE MEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

The Divis' of Housing Improvements

1. The Division of Housing Improvement (Division de HabilitacionViviendas) is part of EPM's Administrative Department and works incoordination with the Technical Division of Energy, the Technical Divisionof Water Supply and Sewerage, the Distribution Division of Energy, theDistribution Division of Water Supply and Sewerage, the Consumers Divisionand various municipal and departmental agencies.

2. The objectives of the Division are:

(1) To prepare and coordinate construction programs of distributionlines and house connections for water, sewage and electricity fordepressed or low-income neighborhoods.

(2) To prepare and coordinate rural electrification programs in thosemunicipalities served by EPM.

(3) To finance public lighting projects requested by privare parties.

(4) To fix connection fees for private installations in rural areas.

(5) To fix the installations of public standpoints of water andelectricity in areas which cannot be properly upgraded.

3. In order to carry out the foregoing, it is authorized:

(1) To define the areas to be upgraded;

(2) To request the appropriate authorizations as may be necessary;

(3) To request designs from the responsible offices;

(4) To request construction of the projects;

(5) To establish the manner by which the beneficiaries will be chargedfor the costs of the projects.

4. The distribution lines and house connections for water, sewage andelectricity in urban areas are totally financed by the users through theregular service billings. The maximum payment period for water and sewageis 120 months with a minimum interest of 0.5Z monthly, with equal paymentsof principal, but the most common is 100 monthly payments with IZ monthlyinterest. The maximum payment period for electricity is 100 months with aminimum monthly interest of 1% and equal payments of principal. Some cases

-70-

Annex 3.4Page 2 of 2

are financed in short and medium repayment periods at a monthly interest of2X and equal payments of principal and interest. The repayment period andinterest rate are based on the cost of the program and economic capacity ofthe beneficiaries.

5. Rural electrification programs are subsidized by EPM up to 50Z ofthe cost. The rest is paid by the users, with an initial payment and theremainder in up to 100 months at 1% or 2% interest with either equalpayments of principal or principal plus interest.

6. The percentage subsidized by EPM, as well as the initial payments,payment period and interest, are fixed and based on the cost of the programand the economic capacity of the region. However, since EPM must Invest 22of block sales of energy in rural electrification (Law 56 of 1981), thesubsidy is greater than the mentioned 50% in some cases.

7. Small projects of public lighting which are not included in thedistribution system of an area may be totally financed and the paymentperiod does not exceed 24 months with an interest of 22 monthly, with equalpayments of principal plus interest. The payment period is fixed and basedon the cost of the project, the number of houses which will be paying, andthe economic capacity of the beneficiaries.

S. The Division of Housing Improvements has invested MCol$1,000during 1966-1982 in the three services in 163,700 installations. Theinvestment and connections are presented below:

AccumulatedInvestment Accumulated

Service MCol$ Installations

Sewage 170 25,000Water 200 50,000Electricity 629 88,700

9. In recent years EPM has partially financed water and sewageprograms with foreign credits from IDB (30 years at 2% annual interest withmonetary correction) and local credits from FFDU (5 years at 25Z annualinterest) and from Fondo de Rehabilitacion de Barrios del MIVAL (7 years at18Z annual interest). In recent years electricity programs have beencarried out with EPM's own funds using credits from the Fondo deRehabilitacion de Barrios to a very small degree.

10. The 1983 program is as follows:

Budgeted Distribution Number ofService Funds (McolS) Lines (km) Houses

Sewage 55.6 8.9 1,600Water 48.2 10.3 2,900Electricity 209.5 294.2 6,100

November 1983

-71-

COLSU Am= 6.1s11 C t111 as T2"m q-r

1 10 111 NLTIP POJECT

1982-3I Ser om truetloo h s hot Sutleto(In millo o eurroti 3

Work inFrogromL C92 336 193 5 1 937 13 1919 I390 1399 3913-3993 1936-1991

WWWdivoroiooin ~~~~~~~4 AanSlouv IV 2,300 1,597 622 *,719 2,219n1 3,977 2,242 6,*30 3.662 326 14.435 10,651Rme erai 31336 2,037 2,766 2,132 2,905 2,663 3,0U 232 335,206 13372INA Flout 644 *33 933 3,742 2,463 2,717 2,962 3,695 15,671 13.67*Fugurm Plant 2705 A 3 923 35is "AI 3 13 4

Subtatal Comaratle A 75W rmr tr r;ur sr iu tIn ti; n.W tur Tr

1ran.dotaionCusoisPo IVZ Liou 156 31 301 45 72 n0 736

Sahbtatlou 457 2K 330 269 157 1,553 I,04Dioptob wator 32 21 79 77 30 372subtoal -aT fl -m2-W r -iW cur 2r

rlqaa loas and ouastotiono 166 133 2" 2,9

U-o remas Lioe 1 3 gsUrbactatloa 13 5"3 "7 7"5 733subtotal I -iu -sir -ar r -i

Currnc fther Prure 33 2531 405 826 922 425 2.911 2,914 2,914

IS3 Plnts Uses and ubatatluae s9 a 131 242 339 377 431 485 2.167 2.1l7

Futuro Plant 339 1 332 2 769 6960 49 SOubtotal Treamamioo 2 UT 7W MD 77 l w U 7 Tu

Di_trtftlenGuadalupe TV 12 760 1,302 254 2.321 2,316Cirrat Preora 3s 636 431 422 701 623 13093 1.433 3160 5,369Furthor Prorm 1.I39 1.302 3.692 6.633 6,613Urbmltion 17 211 251 29 353 416 491 30 2 796 2 796

Subtotal Diatrlbutlon C K 59w 17! uT -1 2 - -1T.eO T.W TM TY- JlIF.W

Tah air_ i di. 163 134 13 215 236 236 1.233 1.255Vohicloa 366 3sa 343Otego quimout 163 154 335 220 239 300 336 617 2.052 2.052Othors 161 307 430 576 680 03 9m I I3 1 3220 6393 6 432

subtotal bur.l Pint D f%lTY WV CTW U 17 t rw

tIdia. 5 5 196 35 765 609 539 636 790 on6 1.046 6.362 S. 76

Total local cot A4COD 9,233 10.111 1I.39 30.063 3.630 9,823 13.0*3 15 ,99 24.313 113.391 106.314(MUS3S 726.9 603.2)

-1X2 - 6m! 4.3

Frares mclmcFFMWMW ToLa~~~~~~.,t T&LslIN3 IS 3,33 319 19 39" JIM3 log 1990 393 1133-1I93 1314-1991

reusem cowr

Goetretioa

Omaodlups IV 1.542 3.421 293 63 3,523 8,463Flays 933 1.740 3.306 2.933 SW2 6901 1971S.e rarmd. 33 464 2.763 3.973 3,663 3.113 3,"33 703 232235 21.204isa plant pm1 pi 3.as 2344S S. ,7 a,0m 4.383 5.344 22,993 22.91Futsre plat 1 2641 1.2117 1111 30771.29 I6A'lo6"

Subtotal £A,0 ,3 ,72 3.6 ,6 7,232 ell,2 'ill,3 33,936 76.96 W.W

Onodnlue lv, urns28 24 30 34 13 3 .23 in4khaotqtlemu 772 740 554 13727 3,344 333IUlupecLsh meeter 46 30n 573 472 141 a nz2

Iubtotel CII :11 *711 TW -TU 1F1lay.. Usa. and aubetet lows S4 439 s0 601 GM3

aie crawses UN"e 27 344 93 464 464Uebsotlatem - MG 1 4'4 203 22341 2243Subtotal -i W tir ur 15* ea

Current ether p-romm 333 43 734 3,343 2.326 3.G40 6.93 4.933

334 Flouts Lisa mod aubetstlamao 107 0 364 290 401 433 494 33 2,608 2,604

hiaturs Fleet 633 .7E Z45 .a .FY-Q 3.50 1.7 sun3 133Substotl Trasmiselee ,0 1221a ze *n zn .z a in A.1mm ,Fe

DIsctrib,stlouoss. eiuup IV 363 342 784 350 2.019 .3Currant mranro 1.233 2,440 3.9193 7.183 1,833Rituo re Fog 444 750 3,539 2.7-15 2.733

Subtotal OLatribsatlos C 363 342 7.6 3. 33 - 2,440 -- 46 4.742 3.3293262223

Ocusrol Flout D

stediu V - 9n 3] 69 61 74 33 104 323 1"89

let.! FemalEs cast 411311D3 4.f32 1.933 30.349 14.463 30,346 12,333 33,431 19.235 32,344, l34o0."9&9(MU33 687.0 627.31)

Total Constructlon local ond Fertsia 13.293 17.114 22.338 24.513 36,473 22,830 21.4132 33.238 47.429 227.603 243.301

N113.sa of urrest Cal Isommrtlso 10.323 13,105 15.36 17.208 33,132 12394 33,46 1.390 23,334 142,93 132."3

T'omao.leslo 3.740 2.026 2.375 3,392 3,014 A.3I" 3,023 6,807 3.947 315713 35,803Distribution 447 233.213 2,31 723 3,734 2426 8.32? 7.24 2972 2.345Ooasel Flaut 341 333 T733 9S" 3.333 3.63 1,332 1.472 1,73? 30.243 30,30studes 396 635 34" 673 428 730 833 990 1.36 7.034 4.46

Ibtol N bad 3 3.3,93 37,338 22.339 24,533 39.4731 22,630 23.462 35.236 47.429 221.603 Al 214,= 21

.ctsua rats asands 79.5 £01.3 324.3 363.9 845.9 331.2 196.0 319. 244.4

331l1... of current 5133.1ss*eoI 329.9 333. 312.2 135.3 38.0 4.4 73.3 33.51 333.13 933.0 7.3

Transmsusion 22.2 20.0 20.3 21.4 33.6 22.9 23.4 i1.3 n6.e 233.3 3916.3Distribution 3.G 23.3 37.3 36.9 4.3 20.3 31.1 27.0 29.6 3.31 130.3amoeral Flou 2.0 53. 6.2 8.4 8.7 931 7.7 6.7 7.2 60.4 3.4atutosX 7.5 6.0 6.7 8.3 3.3 .1. 4.2 4.3 4.3 43.9 3.4

letaWi N167.2 3G3. 378.2 34.7 317.4 321.0 126.7 340.3 394.0 402.9 3,233.7 31

W shutd RIe Grows N -! 3 1,347 2,103 3.33 3,333 9697 8546 3,027 94 40,01 3,441

er N U3 17.2 24.7 43.6 55.0 31.3 87.3 33.3 4.3 - 267.1 !I 230.6

1 Differeace with project meet ir peer Amns 4.3 (33286.1) due to ro.miInge.1lThom tetols heRnia Km5 7Utmts Ilk 136.

ls,1 31. 3938

AmIIII 4.2

-- ^ NUXAI U UDI

R3D CO S U

IM10 -! wc"m1% mlcoo

]III IWA 12 im l_ 1v11 3_ im low 11134 IsSK

lln Om diasw A1,V 1,374 G0 *,2 9 0 2.214%r0tU*d &rtb*Amn a 3 m *1 1321No mrA* I16h21 M 1 f ()

1~~~~~~Ml ii Th1a -1 21- 1> 111 1 m ^

Traum Dkmim is 1A 2l *U34 42 47 I4*D 2I.U721 -1qui IalJm S 30 u A 2I2 229g 4.OM @

31 7 K I ( juez)

4 ti main c 42 Mi 231 m m2 29 23 2 21 3.727 3.43'hu.~.£ plug _23 2J I D 1*.3 14111410 3.3 2.3 _2L

.u ii mm3 33 A3 .) 4 14 4 2,V2 ,0 ^s sz S a qs 4 ,40

llo boy dl am A Si] NI7 72 7 322

hDh_K 33 43 33_ 1 29 4 1 l

114 Om Now I (Pr"c)1h ma & smut c 2 9 a97 744 93 b 1.123 1.i37s ,2.015 .111

No &AN _U 2TME C ,i 14 14 2 2 140 A "10 3.30 3.73Nan.b i 7-- -U 2,2-1 - 231 6 6 22.7 22.SWAMP I"I (AuD m1 U "il 24 ,7 431

9.udiMSiU A 32 72W 7792 33-Tb1b-i~ diaubUm

91. oiun m 22th in pRn 42 4 41 131 9 1 * .4

_ ni 70 739 2, _ * 1.24 1.2 426.6 4,

24a 1t J_--it U o I 710P 01$ i2 w 1n7w. I.n w1. 22.WTAW, wnr 4

l~~~~~~~~~~ b ac .13 &.s 3.12 *, 31 L7X X 11.70 1.3w a134 I 2 n 1.3 0.1

Utlw of tm Cbl s

Riov_ ul.' ( 24 32. 1 .7 712 027 2n4.OWLIP-it"_ dlKribittb a 3 In (1 132 19.

Ilo Q& Ph1w3 I 3.174) C 4b 1. 1.706 241.7 2.6 12.73� 07 7332 I642- t Oiui _ Mm 2 0 9 29 2.311 3.517 472 7.179 2.w 23,0 22.97

1hgi Fn 1 39 43 3 U 12 III I4 177 as 2U16ML_SI - 490 397 744 I1 1,123 2.37 1.722 2.IU 9.013 9.COXI_ wr C 40 1" 23l 77 DD 60 4 2 3435 32M1a. up" H_ 2.710 I T.

2 . 1%"231 Ik.

Tha N (Il S 3.13 4.26 S.149 4.73 22.76 1 2, 11, 3.2, 123 30,92 71.s3 O,424

R 312 _ 79.5 202.3 125 26.9 26 13.9 21.2 20.0 94 4

11111mm of WNg MSno am dlgnlm A 32.2 17.4 .4. 23L2bU.,-1t4, duistzbtin a - 0.9 0.3 2. 1.2

IIND Q _ I cI jm=e) C c.Lb 2.2 IL3 24.3 2.6 14.9 2. 0.4 93.4 3.3V11 QuiW Rm 2 D 1.2 0.3 29.9 23. 41.4 IRA 2s 140.5 12313om1vi K 0.5 0. 0.4 0.4 ou 0.3 0.6 0.7 0.7 4o7 4.2>_Ik M p - 4.8 4.7 3.0 O A 4*.2 4.9 7.3 11.4 49A "A

thw unt C 2.r 1.9 I .3 2.9 1.9 LA 2.L 2.3 L2 3.1 3.3Na., wibul. K I3. 23.4 3S. 71.7 71.771 M -1" -_ r -, w. u- uT 4 -_ _

NW 25. 01t

-74-

ANNEX 4.3Page 1 of 3

COLOMBIA

EMPRESAS PUBLICAS DE MEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

Project Description

1. The Project comprises the following:

(a) The Tasajera Hydro Plant facilities, the construction cost of which(based on recent bids and allocating the dam and reservoir to thisstation (para. 6.09)) is estimated at about MUS$248 (US$827/kW)including transmission, engineering and administration, andphysical and price contingencies but excluding interest duringconstruction. The power station itself will be located at about 28km from the center of Medellin, near the risver of the same name,about 7.1 km due south from a future reservoir in the Rio Grande(Maps) near the confluence of the Rio Grande and its tributary, theRio Chico. The facilities consist of:

- an earthen catchment dam for a reservoir area of 1041 ha, with acrest at 2282.5 m above sea level, 65 m high and having a volumeof 2.2 Mm3, impounding a reservoir of 220 Mm3 with a usefulvolume of 110 Mm3; the dead volume is expected to accommodate 50years influx of silt before the useful volume would be affected;annual flow is practically regulated completely; duringconstruction, the river will be diverted through a tunnel,dimensioned for a flood occurring once in 25 years, and plannedto be used an afuture bottom outlet; the spillway is open anddimensioned to accommodate a flood occurring once in 500 years.

- an intake tower (combined with the raw water intake) connected toa power tunnel with 2 shafts; near the secoud shaft (about 6.7 kmfrom the intake) a restricted orifice type of surge tank in therock would vent to the open, this shaft would terminate in a 45degrees inclined steel and penstock mounted free in a penstocktunnel; overall length of the adduction system will be about 7.6km with a horizontal surface distance of about 7.1 km;

- a two cavern type power station for 3 Pelton turbines, operatingunder a net head of 885 m at a maximum total flow of 40 m3/s anddriving three 100 MW alternators connected to transformers,capable of producing 1587 GWh/a on average (1338 GWh/a of firmenergy - available at all times with 95% probability); thetailrace tunnel will be 2 km long and discharge through a 0.6 kmlong canal into the Medellin river;

(b) The Niquia Water and Power Eacilites, the construction cost ofwhich ils estimated to cost in total MUS$112 (Water: MUS$90; PowerMUS$22), consisting of the followi,og:

-75-

ANNEX 4.3Page 2 of 3

- an intake tower (combined with the power intake), connected to atunnel, which will run in the general direction of M2dellin, ofminimum technically feasible size (2 m diameter; the maximumflow, if required, could be about 20 m3/s), with 2 shafts; nearthe second shaft (about 13.6 km from the intake) a surge tanksimilar to the one described above would be constructed in therock; from the bottom of the second shaft a steel lined penstocktunnel would lead to the power station; overall length of theadduction system will be about 16 km, with a horizontal surfacedistance of 15.8 km;

- a surface type power station for 2 Pelton turbines and alternatorunits (of which one 22.5 MW unit will be installed initially),operating under a net head of 415 m at a flow of 6.4 m3/s, indunder a net head of 330 m at a maximum total flow of 12.1 m /safter the installation of the second unit; the first unit wouldinitially generate about 103 GWh/a at a raw water use of 4.5 m3/sand some 165 GWh/a at 6.4 mI/s; the power station is to belocated about 20 km from (the center) of Medellin; and

- a dischaSge from the power house which would pass through a small(1,600 m ) subsurface tank into a steel pressure supply line(crossing the Medellin river as a syphon), 5.5 km long and about2 a in diameter with a flow capacity of 9.7 m3/s, delivering to awater treatment plant (which is not a part of the project), namedAburra, near Bello, at the northern tip of the Medellin valley;pressure reducing facilities would allow for temporary by-passingof the power station during maintenance; emergency dischargecould be through a steep canyon leading to the Medellin river.

(c) Transmission facilites would consist of:

- a surface substation at Tasajera and a double-circuit 220 kVtransmission line between Tasajera and the existing substation atBarbosa; and

- a surface substation at Niquia and a single-circuit 44 kV 5 kmlong, subtransmission line between Niquia and the existingsubstation at Bello.

(d) Consulting Services. Normally in Colombia, separate consultantsfor design 7aesoria-) and supervision ("inventoria") are to beemployed. However, as a municipal company, EPM can be exemptedfrom this requirerent and exemption has recently been granted. Forthis reason EPM has appoirted its design consultants also assupervisory consultants. Por design purposes, the coasultante arebeing financed by a FONADE loan until the funds are exhausted byabout April 1985. Because (detailed) design and supervisioncontint- until project termination, the proposed loan would financethe design function of the consultants after the termination of theFONADE Ican and the supervising function as of the date of theirengagement for this purpose (pars 4.e2). The loan would alsofinance a Board of experts for general assistance and supervisionof the works (para 4.14).

-76-

ANNEX 4.3Page 3 of 3

(e) Training. The propos d loan would finance the 1985-89 trainingprogram of 83 professionals in various fields (para. 4.17) andvarious levels, i.e. master degrees, short-ternm courses,assignments with foreign companies.

(f) Data Processing Network. The proposed loan would finance thesecond stage, estimated to cost MUS$0.8 (the first stage, costingabout MUS$O.4, is being financed by loan 1868-CO for Guadalupe IV)of a computer data processing network covering power, water andtelephones, in 8 buildings in Medellin and comprising 24 microcomputers interfacing with EPM's main frame computer. The totalnetwork, estimated to cost some MUS$2.7 including software andtraining, would be completed during a third stage, once sufficientexperience has been gained under the first two stages.

May 26, 1984

-77-

ANNEX 4.4

COLOMBIAEMPRESAS PUBLICAS DE MEDELLIN

EXISTING WATER SUPPLY SYSTEM ANDPLANNED RIO GRANDE WATER AND POWER PROJECT

lbGia- -de-- --m -1

Quebodo LaPom=s alomo mADG (P 1)

I OIbnI Ihbd

Abuffb VallsV~Wad a,-204

oe eFe Porr 1983 7Lr_ T

.w _ {-\ _ 9 .2 i~~~~~~~~- TO obl W 220 M¢ {t~~~~~(9 lJ tO

Rio Pot| T \_ ____

1~~~~~~~- ---- t TSKSF P&A 9, h

Gs~~~~~~~~~~~~~~~~~~~~~~~~~~~~55lwnSo w__ b PSalC~~~~~~~~~~~Rlftr

Dkwgon^oPwwol lbv _ _ _ __ _

M ca*-ngolt

November l9S 3~ ~ ~ ~~~~~~~~~~~~~~~~b9Ww

-7e-

COLOMBIA AHIEX.4.5

EMPSA PUBLICAS DE KEDELLIK

110 GUANO! ULTIPURPOSE rJECT

PROJECT COST

Local Foreign Total Local Foreign Total

A Prwr

Al Dam and re_rvoirLand and comen tlana 1,541 - 1.541 15.8 - 15.8Infrmtructrure 884 292 1,176 9.0 3.0 12.0Civil worke 1.352 1.949 3.300 13.8 19.9 33.7Equlpment 18 1SI 169 0.2 2.5 1.7

Subtotal 37I9 2.392 6.186 2 4 .T I2l 63.2

A2 Power Station ramajeraLand end copeneationn 411 - 411 4.2 - 4.2Infrastructure 355 157 512 3.6 1.6 5.2Civil worka 2.25 2.687 4,902 22.7 27.6 50.3Hydro - mchanical equipment 277 1.448 1.725 2.8 14.9 17.7Xlectra - mechanical equipmnt 223 1 193 1 416 2.3 12.2 14.5

SubtotaL T.481 I5, 8 8j -96r -56 3 v r

A3 Mr 5tarion H1quisCtvl vorkn 137 IL5 252 1.4 1.2 2.6

Hydro - mechanical equipmnt £82 810 992 I.9 8.3 L0.2Clactro - mchanical equlpmnt 46 240 286 0.5 2.4 2.9

Subtotal S15 16S T3; 11. -T

Subtotal Generation (1) 7,640 9.042 16.682 78.2 92.6 170.8

TranemlemionTacajera: Subetattons 212 646 858 2.2 6.6 8.8

Linas 39 169 203 0.4 1.7 2.1Subtotal 251 815 1.066 2.6 8.3 10.9

Hiquta: Subatatione 31 116 147 0.3 1.2 1.5Lina 6 23 29 0.1 02 0.3Subtotal -ST i39 7 in C r ____

Subtotal Trenmtealon (2) 288 954 1.242 3.0 9.7 12.7

AS Training 43 64 107 0.4 0.7 1.1Data Network 9 67 76 0.1 0.7 0.8Subtotal Training.11ta Natwk(3) 52 131 184 0.5 1.4 1.9Subtotal Direct Cot:

(1)+(2)+(3) 7.1W lo.lT 18.ia.iU I ? 7 TOM ifl

A6 Engineering and Administrrtion 1 06 605 2 411 18.5 6.2 24.7Total bae coat I 0310 J *0 IX1 2101T

£7 Contlngsnciae: Pbyaical 1.305 1,340 2.645 13.3 13.7 27.0Price 4.997 11 868 16 865 461 27.1 31.2

Subtotal 6 302 fl 9 7 5 1 fl *0 WSUBTOtAL PaWR 16,088 23.940 40,0 117 6 150.7 260.3

B Wiater

81 Intake and TunnelLand 45 - 45 0.5 - 0.5Intreatructure 324 175 499 3.3 1.8 5.1Tunnel 1,272 1.627 2.899 13.0 16.7 29.7Equipmnt - - - -

Subtotal 1 16t41r 3,t4 16r 81.

82 C n. S ilch 3 fll 40 39 79 0.4 0.4 ° UiHydro - mchanical equlpmnt 2 29 31 - 0.4 0.4Electro - mechanical equipmnt 5 67 72 0.1 0.7 0.8

Subtotal Ir 1w r -- .f

B3 5upoly Conkduit33 205 - 205 2.1 - 2.1Civil work 516 431 947 5.3 4.4 9.7Equipment Dlrect Coat 167 886 1 053 2.7 11.5 14.2

Subtotal -1W I . -i.i20 ir 1T5r3 9

Subtotal Direct Coat Z,679 3.502 6.,S1 27.4 35.9 63.3

34 Egineerins ad Adminlitration 769 258 1.027 7.9 2.6 10.5Total baee coat 3.448 3,760 7.208 35.3 38.5 73.3

35 Contingencies: Pbyeical 457 536 W3 4.7 5.5 10.2Price IalJ l 3,718 5,529 1.1 8.6 9.7

Subtotal J L 4,254 6,522 SF I8T 9.9

SontU AL W;= 5.716 8,014 13.730 41.1 52.6 93.7

Total Project Coat 21.804 30,954 53,758 150.7 203.3 362.0

Mey 1984

-79-

ANNEX 4.6

COLOMBIAEMPRESAS PUBUCAS DE MEDEWN

Project Construction Supeifislon DMsIonOrganization Chart

RIO GRANDE DMSION

DESIGN [CONSRCIN EmSErIE

PERSONNEL PROFESSIONtAL SUPPORr LABOR TaALSrAFF STAFF _.

RioGrand.DMulon 4 3 1 8

Design Dsptmsnt 15 4 3 22

ConsctlnoespdDnwt 7 11 10 28

GwwcdISev'mDopmtnwn 1 10 33 44

TOTAL 27 28 47 '02

Wad Bank-25645

-80- ANNEX J.} 7

Page 1 of 2COLOMBIA

EMPRESA PUBLICAS DE MEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

Project Implementation Schedule

1. Phase I (Project) Implementation Schedule

Start CompleteConstruct- Construct-

Contract ion or ion orIssue Bids Award Contract Contract

Civil Works

Access roads 7-83 4-84Temporary camps, village 6-84 12-84 1-85 12-85Replacement roads 3-85 12-85 1-86 8-87-Electricity supply facilities 9-83 10-83 11-83 5-84

Intake and main tunnel 8-83 5-84 6-84 6-88Dam and spillway 6-84 6-85 7-85 9-88Tunnels, cavern Tasajera 7-84 5-85 6-85 10-89Power station Niquia, conduit 9-85 6-86 7-86 12-88Reservoir cleaning, etc. 10-86 6-87 7-87 9-88

Substations 9-86 7-86 8-87 7-88Transmission lines 10-86 9-87 10-87 5-88

Equipment

Turbines 10-84 9-85 10-85 10-89Generators and busbars 10-84 9-85 10-85 10-89

Crane 10-84 6-85 7-85 6-86

Tunnel linings 12-84 11-85 12-85 11-87

Gates 2-86 11-86 12-86 11-87

Electro-mechanical equipmentTasajera 3-85 2-86 3-86 11-86

Electro-mechanical equipmentNiquia 6-85 3-86 4-86 1-87

Substation equipment and materials 5-86 2-87 3-87 12-87

Transmission line equipmentand materials 10-85 9-86 10-86 6-87

ANNEX 4.J-81- Pag.:- 2 of 2

2. Phase II (Project) Implementation Schedule

Issue Award Start Terminate

Treatment plant 3-85 3-86 4-86 10-88Transmission 11-86 7-87 10-87 9-89Reservoirs 8-86 4-87 7-87 9-89

Pumping stations 2-87 4-87 10-87 8-89Distribution networkand home connections 12-84 7-85 9-85 5-89

Service improvement 12-84 7-85 9-85 5-89

Equipment

Treatment plant 1-85 9-85 11-85 6-87Transmission 2-86 11-86 1-87 10-88Pumping stations 12-85 9-86 11-86 11-88Service improvement 9-84 4-85 5-85 12-87

May 22, 1984

- 82 -ANNEX 4.8

COLOMBIA

EMPRESA PUBLICAS DE MEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

Loan Disbursement Schedule(MUS$)

AFsumptions

Loan signing: September 1984Effective date: December 1984Closing date: December 31, 1991Preparation date: 146y 30, 1984

IBRD Fiscal Year Disbursements Cumulative DisbursementsSemester During Semester End of Semester X 1/

FY 1985

December 31, 1984 13.0 13.0 7.9June 30, 1985 8.0 21.0 12.8

FY 1986

December 31, 1985 4.8 25.8 15.7June 30, 1986 6.9 32.7 19.9

FY 1987

December 31, 1986 15.4 48.1 29.2June 30, 1987 19.2 67.3 40.9

FY 1988

December 31, 1987 18.3 85.6 52.0June 30, 1988 17.1 102.7 62.4

FY 1989

December 31, 1987 16.3 119.0 72.3June 30, 1989 14.1 133.1 80.9

FE 1990

December 31, 1989 11.2 144.3 87.7June 30, 1990 9.4 153.7 93.4

FY 1991

December 31, 1990 6.5 160.2 97.4June 30, 1991 4.3 164.5 100.0

1/ According to Bank wide disbursement profiles for hydropower projects(Hans A. Adler (PAS) memorandum of June 9, 1982) and adjusted for the effectof retroactive financing of MUS$13 and the initial deposit of MUS$8.

- 83 -

ANNEX 4.9Page 1 of 3

COLOMBIA

EMPRESAS PUBLICAS DE MEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

Contents of Project File

1. Expansion del sistema de generacion electrica; DepartamentoNacional de Planeaci6n. Doc. DNP 2.000 UINF Min. Minas. Mayo 26,1983.

2. (1) Revisi6n del plan de expanai6n 1986-1992. Generaci6n ytranamision, ISA. Diciembre 1982.

(2) Ditto, Anexo 1, Analisis complementarios, ISA. Mayo 1983.

3. Aprovechamiento mfultiple del RiSo Grande. Estudio de Factibilidad:

(1) Vol. 1 - Aspectos generales. Integral Julio 1982.

(2) Vol. 2 - Desarrollo hidroelectrico. Integral Julio 1982.

(3) Vol. 3 - Acueducto. Integral julio 1982.

4. Aprovechamiento multiple del Rio Grande, EPM:

(1) Resumen, Doc. 1. 1-504, marzo 1983.

(2) Cap. 1 - Resumen del proyecto. Doc. 3-506, marzo 1983.

(3) Cap. 2 - Marco de referencia del proyecto. Doc. 3-507, marzo 1983.

(4) Cap.3A - El prestatario y el ejecutor (Energ'ia). Doc. 3-500, marzo1983.

(5) Cap.3B - Ditto (Acueducto). Doc. 3-508, marzo 1983.

(6) Cap. 4 - El proyecto, au costo y su financiamiento. Texto, PlanosDoc. 3-509 (2 Vol.), marzo 1983.

(7) Cap. 5 - Ejecucion del proyecto. Doc. 3-510, marzo 1983.

(8) Cap. 6 - Proyecciones financieras. Doc. 3-511, marzo 1983.

(9) Cap. 7 - Evaluaci6n economica. Doc. 3-512, marzo 1983.

(10) Anexos 1, 2, 3, 4 y 5, marzo 1982.

1. Reglamentacion para el suministro de energia electrica enel pais (diciembre 20, 1979).

- 84 -ANNEX 4.9Page 2 of 3

2. Estatutos de la Sociedad de Interconexion Electrica S.A.(ISA) (noviembre 1977).

3. Acuerdo reglamentacion de compra y venta a largo plazo deenergia y potencia (Rev. No. 1) Doc. 15/07/79/27E.

4. Disposiciones quo crean y organizan el establecimientoautonomo (EPM) 1955-1974.

5. Estatuto contractual (EPM). Decr. 03, marzo 7, 1979.

(11) Anexos 6,7,8,9,10, marzo 1983.

6. Organizaci6n administrativa de la auditoria de lasEmpresas P'ublicas de Medellin. Resoluci6n No. 012 del12 de marzo de 1979.

7. Control fiscal (EPM). Resolucion No. 020, 15 de abril de1979.

8. Manual de pagos (EPM). Decr. No. 013, 26 junio 1978.

9. Acueducto: Proyeccion de demanda sobre Rio Grande.Inteegral, febrero 1983.

10. Normas sobre obras prublicas de generacion electrica yacueductos, sistemas de regadio y otras y se regulan lasexpropiaciones y servidumbres de los bienes afectados portales obras. Decreto Reglamentario 2024 del 12 julio de1982. Ley 56 del 1 de setiembre de 1981.

(12) Anexo 11A Efectos o impacto ambiental del proyecto deaprovechamiento multiple del Rio Grande. Setiembre 1982.

(13) Ane=o 11B Ditto: Resumen.

(14) Anexo 12 Diagnostico de la cuenca (Rio Grande). Abril de 1983.

5. Rio Grande Estudio de Factibilidad. Replanteamiento dealternativas. Integral, febrero de 1983.

6. Estudio de Unificacion Tarifaria: Eatimacion de las funcionestarifas - consumo para el sector residencial. ISA Opun 04/07/83 -112E.

7. Estudio sobre la unificaci6n de las tarifas de energia electrica.EPM. undated draft.

8. Final report on Geological Review of Projects in Colombia.L. Wolofsky, Consulting Geologist. Chapter I and II (Rio Grande).May 1, 1983.

- 85 -ANNEX 4.9Page 3 of 3

9. Proyecciones de demanda. Doc. 3-518. EPM, junio de 1983.

10. Informaci6n general de la Empresa de Energia. Doc. 3-526, julio de1983.

11.(i) Sistema Electrico Colombiano. Balance energetico historico1972-1982 ISA, setiembre de 1983.

(2) Ditto; Anexo: Informaci6n detallada para 1982.

12. (1) Proyecciones Financieras de EPH, September 1983 (Workpaper, replacedby 12(2).

(2) Proyecciones Financieras Empresa de Acueducto y Alcantarillado,Empresa de Energia, noviembre de 1983 Volumes I and II replacedby 22 below.

13. Politica. Tarifaria de EPM, abril 20, 1983.

14. Asignaci6n de costos. EPM, Doe. 1-503, febrero de 1983.

15. Diagnostico de los servicios de Acueducto y Alcantarillado enAntioquia. Departamento de Planeaci6n (Gobernaci&o de Antioqula,octubre de 1983).

16. Alternativa para el saneamiento del rio Medellim y 3US quebradasafluentes. Revista EPM Vol. 5 No. 1 enero/marzo 1983, ISSN0120-1239, piginas 7-42.

17. Normas sobre contratacion, EPM junio da 1983.

18. Planta de tratamiento, obras de distribucion y alcantarillado; basepara el calculo de costos. EPN, mayo de 1983.

19. Descripcion de los programas de computador, utilizado en elproyecto Rio Grande. EPM, unidad planeacion acueducto (undated).

20. Beneficios del aprovechamiento m'iltiple del Rio Grande en dosetapas.

21. (1) Working Papers, Volume 1 - Technical, Power.

(2) Ditto, Volumen 2 - Technical, Poaer.

(3) Working Papers, Volume 3 - Technical, Water.

(4) Working Papers, Volume 4 - Financial, Power and Water.

(5) Working Papers, Volume 5 - Technical Power and Water.

22. Proyecciones financieras ER'! Mayo 1984, Volumes I, II y III.

-6.

r-uu lNrlB 1 "own

0un lAM Igairic P13mal 1a1 tmoas, CIUUm or KilIu WIIg)

-99mw - -99mw aid 1_r_ - - -OIrUdirad Otl -

312 1ism 13 31l 3v12 I393 33 312 39 191 1392 19

4wrau o mmms 5,989.2 7.721.9 10,910.0 1,48.7 ,1."5.7 2,374. 1,352.9 1.614. 1.93. 5,427.8 11,182.2 15,21L.4rnut1,w uI U 3.6I7.2 4,93.8 ,9M35 1,341.3 1.315.3 2.,.6 1.7 ? ,1,1.1 13,61.5 5,757.2 7,.55.2 9.746.1j.Cii Tame - 1.9l0.f 2,746.1 4,916.5 29.4 33.4 21.0 410.2 42.5 27. 2.470.1 3,27.0 5,471.0

O(hur Imm 66. .01.A U2.0 19.2 2M.2 314.5 254.4 31.0 391.0 1.33. 1,671.8 1,527.5Ibc ?,r After l it 2.71J.6. 3,6101.7 5,738s 4I.1 99.1 99.i 723.1 797.5 411.3 3,"1.0 5.193.8 4,99.3

7bti1 tu PId min _u V 13.317.3 21,45.o 3,713.0 4,43.1. *,D3.b 97,712.2 3,201. 5,403.3 10,C37 22,6.7 3D13.19 ,311.9Ogit AM" 3.31.A 4,42. 4,4.3 IIW.3 915A 711.4 1,23.1. 2,22.9 ,32 3.53 7,37.1 7,04.9Oth9r _Aui 4,1OL.5 4,91.0 b,012.9 39.7 711.J 11.9 112.5 14.1 17. 4,64L7 3,87.9 6.9%3

bit] Ama" 22,b19.4 3,6.4 44,14.2 s,20.b 7,931.2 11,3.5 4.717.9 7,322. 12,107.7 3,937.9 4b,.13.9 7,*404

't7 9,79A 8, .76.2 19,76.9 2,40.0 3.1t0.1 4,23L9 2,13A 9. 3. J 2,8.7 14,40. 3,0.3l 27,5.lam Tiwe UmMtilt. 9,93.5 13,9.1 19,2%.3 2,63.1.6 3,7134 6,071.3 1,257.1 2,59 1,.1 13,712.7 19,1.2.4 31,253.7

tmat UmbLUtim .3 4l 2,70.3 3,790LS 4,17.0 32.3 952 "6.3 336.1 795. 74.1 3,2.1 5,491.5 1,777.4otiher UnIUla 1343. 231.1 2380 17s 157.3 - 74. 1.. -1.3i .3,062. 1,41.9 1,374.

*beo Lltbt_us 22,.19.4 3,10.4 44.34,2 5,820.6 7,931.2 11,6.5 4,717.9 7,32. 12,017.7 3,957.9 4.613.9 674.0.4

bm t Pad

bc les bium u_mevty 3,39J 4, 965.5 6.,91. 116.3 72.1 7351 7732 P. 7A.9 4,"1.3 6,322 6.43.*_mCatJni 431.4 479.2 376. 140.3 242.9 l3.3 1339 1.9 337J 727.A 8.0 ,.9

*--r 30.9 431.9 6".7 172.4 3 42L4 I3.7 197.7 3L. U7.0 11.0 uo453L,7*a 1rwl a" gMma 4.32.1 9.5 8,119. 93. 1.1134.9 1.0 3,1.0" 1.23.7 1,44.3 6,3.7 I.M2J 10,-ewdamclolk 6%.2 1..11.4 2,758.0 3218.6 M2" 3.4 333.A I3.LI 211.2 9.6 1.M0.3 23.1.

ita hc 931.0 1.34L.9 3,39.0 117.7 129.0 13.0 31.3 ILl 76.3 j.00.2 1.3ZLS 1.407.3_A I 997I ,h 1,13 545.3 =0 - - - -- 1,03 1O. 0lbtid 1ab ol ad

Iafmw a In 73 2,60.7 3.300 4,73.0 ML.3 311A 319.4 87.3 21367 37.3 3,084.3 3..1 3.38_2 O ud 1 na 1,711.4 2.5090 3,4387 L2. 31 1.021. 867.3 1,010.0 1.133 3.271. 4.,32.1 5.617.1

bl_uuda 1,6549 4,302.2 8,8.1A . 9 1,16.2 2.13.4 71. 156.8 3,1. 2.64, 7,1.0 I U.34adoff 43.5 23. 2314 42.3 141.3 37.0 2294 1304 237.6 13107.2 I W7 D 7.2

lbthl baum 4,02D 7.011.0 12,7 1.7 2,110. 31.3O 1.26 3,.00O 4,2 7.1W7.l 12.34. 3,69.9

lnSamtim at PA&e

Oam daa _aa_ 3.,9.3 6.764.0 U26A 3,23. 2.0 33.LI 83L5 2,314.4 3.021.2 , .ij 1Ii.l 21,45.9Lhra_ In Ibd Cold-, (12. (6.2) (32L.) 39.9 (7 ) (179.0) 37.1 6701 (3aL3) 63a 4.81. 0.)edw M33 332.2 1. 3133.0 332.1 39. 31.0 21.3 2.3 .s a3 4490

lbt pI3md 4.0M.8 71.0 12,337 1,90.7 2,1l3a 3,612O 1,23. 3,.000 4,0.2 7,27.1 12.3Xa 20,61.9

xo mu

om1uzmda(XI 46 G6 35 so 82 a 6 73 n a a 46ainwce ytclv 1.2 1.2 O 1.4 1.0 0.7 L 1.9 1.4 1.3 1.0ITS. Um tlaLT.

LU6 2d1 5 pt.0 49 49 31 54 41 38 41 so 49 SD 47Xbt _ vm cmp W 1.7 Ls 1.7 - - - - - - L L2 2.0F hrvlm o n 1Tw 2. 2. 2.1 3.6 3 4.2 5.7 57 3.1 32 2.3 W.

TITr-wM ~ 1 A d m Stamm prnI= ad NA Im dosa is ISadc' antitwdu ammide

Ti tw.d ab l d s OWAt MbAOM oft d hti &M. - _ bc_a MW.1 ba r d1o1 a £9 Ii.. Uw at _ 3.8 _i 5.11 9mbm of de - m l 0a U ) w_r _ K

"Lane 7dft mamma t -of 3u m umoft dn n1so me7ens bould edw1 ' ' rbyk n pl h a Sn7. (Us mcl Is - adly htr t).

co haul md aw.i amim.

-87-

COLOMBIA ANNEX 5.2

NPItCSAS PUILICAS DE NEDELLIN

RI0 CtANDE MULTIPURPOSE PROJECT

Historic mnd Forecast (revalued) Financial Stotement- S ohno aprt_ nt

(MiTlons olf current Co1.1)

For Flocal Year Ending HistoricDecember 31 191U 1985 1986 1987 19A8 I919Incos Statem-ntnOperating revenues 1.934 2,824 3,704 4,738 6.122 8,478 11,433Operating expenses 11 1 860 2 812 4 372 5 563 6 779 8 412 10 371Operating Incams _ 7t -L! ;# ) ul!S) -t57)Other lncome 391 371 370 615 616 755 1 030Nat Incoeo after laterest i T5 IZ9U) ( 2 10) (4 1 )

balance SheetoTotal net fixed ancsts 11,490 15.931 18.853 21.535 31.695 39.348 52.196Current assets 1.758 1,311 1.5R2 1.94 2.325 2.909 3,710Other asnto 203 911 1 791 2 263 2 654 3 937 3 298Total Assets fln 1Tr5= mTJ L. wt - 59:2-,

Zquity 5,250 6,178 6.736 7,758 9,492 12,509 17,162Long-term debt * Ilbilitles 5,79N 6.670 8.415 8.949 14.347 15.797 19.280Current labilIltles 2/ 1.064 1.620 1.941 2.678 3,934 5,619 7.663Other llabillt-oe 1 339 3.685 5 134 6.307 8.901 12.269 15.099

Total LiablIlties 1t3T I51 iTS 1^.L5i 12i%9 2.24Z; *6.194 59.204

Funds Plow StatementsSources of Funids_et Income before Interest 541 638 415 540 763 1.553 2.733nepreclatlon 545 767 1.35' 1.850 2.211 2.88 3.701Other 336 439 53 730 1.017 1.283 1.490

-uberlbrerI deposlts 255 1 100 1 050 664 1 982 2 599 1 933Cross Internal Cash Ceneratlon 1-rw - 5--.7 -t7t 53 1!-1m- 1457Amortization 211 438 1.016 1.268 1.797 2.694 4.036Interest 76 255 713 751 805 732 641Total Debt Service II7 717 T7Z9 -TrI :W. T3!E 7177

Net Cash Generatlon I TT71t hDorrowuing 2 180 1464 1.367 142 6.822 3984 6.933Total Sources VW7O 3.695 -2t§95 I.ZKrr K1I

A icantion of FunsoAbnouicftlon exp nditureu 4.297 3.364 1.913 2.330 9.730 7.357 12.448Increase In working capital (756) 236 202 104 72 241 303Other 29 - - - - - -

Total Applications 3.570 3.m M 2.115 -2.434 9.802 75T 1T2751Surplus (Deflcit) of Funds - 75 880 473 391 1.283 (638)Accumulated - 842 1,722 2,195 2.586 3.869 3.231

Ratio Analysil

Operating rstlo(Z) I/ 92 91 9 102 98 91 85Current ratio 2/ 1.7 2.2 2.4 2.2 1.9 1.8 1.8

Debt/equity ratio 52/48 52/48 56/44 54i. 60/40 56/44 53/47robt Servlce Coveraxe 3/ 3.3 3.0 1.9 1.7 1.9 1.8 1.5

Rate of return 4/ 2.5 2.6 0.3 (0.4) 06 2.S 4.1Rate of return T/ 9.1 6.3 2.6 2.7 3.1 4.9 6.5Self-finencing ratio 2 6/ 39 61 75 72 34 64 41

Y1 Operating expenoeo in 1953 differ From th e values of Annex 5.1 becauea thle depreciatlon lu not

revalued. Also Operating expenses Include interei. charged to operations and revelueddepreclation.

2/ Excludes current portion of term debt.

T/ Cross Internal Cash Generatlon divided by: debt servlce IncludLng non-financed IDC.

i/ Operating Income divided by the net f 1wd assets in operatlon revalued annuallv.5/ Total lcose (including subscribere' deposits) divided by revalued net flxed a'sets In operatlon.6/ Net Cash Ceneration (includig subscrIbers' deposits) divided by Total Appl5catlone of fnd.o

Hay 26. 1984

-80-

COLOMBIA ANNEX 5.3(Power)

EMPRESAS PUBLICAS DE MEDELLIN

RIO CRANDE MULTIPURPOSE PROJECT

Schedule of Existlng and Proposed Debt - Power Department

Anortizacion Interest Com_it ent OutstandingLoan Amount Grace Periad Period 4/ Rate Fee 12/31/1983

1. Foreign Debt Date Currency Millions Years Years (Z) (Z) MColS 7/

t.1 Of Completed Projects

Foreign DebtID 225 1959 USS 12.0 3.75 22 6.0 - 126.6

IBRD 282 1961 USS 22.0 4.75 20 5.75 - 388.0IBRD 369 1964 USS 45.0 5 30.5 5.5 - 2,642.4IBRD 874 1973 US5 56.0 5.25 20 7.25 1/4 3.792.4Brown - Eoveri 1973 USS 3.9 4.25 10 7.0 - 121.0XFW 1974 UK 8.7 4.5 9 6.5 - 110.1Bank Popular 1974 USS 1.4 3 7 7.0 - 17.1Other (Suppliers & Bonds) several 546.7

Subtotal Foreign 7. 3

1.2 Of Ongoing Projectr

Cudalp IVBank of Aica 1/ 1980 US$ 32.0 5 5 LIBOR + 3/4 5/ 3/4 2,840.6IBRD 1868 1980 USS 125.0 4.5 3/ 12.5 8.25 3/4 2,766.7Chase Manhattan 1981 USS 24.5 5 5 LIBOR + 3/4 5/ 1/4 408.3Swiss Bank 1982 Fr.Sw 9.2 2.5 9.75 7.5 3/4 216.5

U--:tsublshi 1982 CoIS 48.0 3.25 6.75 7.75 - -

PlayastIRD - 1953 1981 USS 85.0 4.5 12.5 9.60 3/4 750.6IDB 70-IC-CO 1981 USS 85.0 5.5 13.5 8.25 1-!/4 480.7Bank of Tokyo 1982 USS 30.0 6 4 LIBOR + 5/8 5/ 1-1/4 1,304.9Rade Xoncer 1983 USS 4.6 4 7 7.00 - -Ost. Landerbank 1984 US 6.2 3 9.5 8.75 - -

Tocal (rounded) outstanding at 12/31/83 - (Foreign) 16,512.62. Local Debt 2/ Total (rounded) outstanding at 12/31/83 - (Local) 3,160.0

TOTAL 19,672.63. Rio Grande

IBRD 1984 USS 114.3 4.5 13 10.08 3/4 6/ -Suppllers 1986 USS 23.0 2 6 12.00 - -Commercial Banks 1985 USS 6.7 3 5 12.75 1/2 -

4. Other loans

GovernmentiCheulcal Bank 8/ 1984 USS 19.4 2.25 3 13.0 - -IBRD - FEN (2 loans) 8/ 1984 USS 34.0 4 8.6 11.3 1/4 _Internl. Institutions 8/ 1986 USS 40.8 4.5 13 10.5 3/4 -FEN 9/ 1984 ColS 1,014.0 0.5 5.5 28.0 - -

FORADE (various) 1984-86 ColS 1,054.8 1 4 24.0 - -FFI 1985 ColS 126.6 0.5 3.5 27.0 - -FFA 1985 ColS 30.0 1 9 18.0 - -

1/ Approx. MUS526 for Guadalupe IV and MKUSS6 for Ayura and River Diversion projects.2/ Consists of different loans from the Government, local financial lnscitutions and commercial banks.1 Although grace period would be 4 years, under Bank practice the effective grace period may be up to 6 wonths longer.6/ Excluding grace period.5/ LXBOR was assumed to be llZ throughout the projected period.6/ Plus a front end fee of 1/4 of one percent.7/ Based on EMP's audited financlol statements for 1983.8/ The Governuent/Cheuical Bank loan was fully disbursed In January 1984. The IBRD-FEN Loans were approved by the Bank

in March and May 1984. IBRD has expressed interest ln financing some MUSS40.8 in 1986 for a Transmission andDistribution project.

9/ already approved by FEN and due for dlsbursement In July 1984.

May 29, 1984

- 89 -

COLOMBIA ANNEX 5.4E1PRESAS PUILICAS BE NEELLIN (Power)RIO GRANDE MlLTIPURPOSE PROJECTHistoric and Forecast Income Statements 1980-1991 - Power Department(Millions of current CoISl

-- Historic p1…90 91 92 93 84 95 96 97 B8 99 90 91

Sales omn systec 611h a/ 3558.2 3707.6 3941.0 4199.8 4499.4 4799.9 5140.1 5507.5 5901.5 6339.1 6934.2 7361.6Av.Tariff increase % bl 30.95 31.74 39.87 27.71 32.29 34.12 20.54 18.76 16.38 14.91 14.97Av.Tariff: Cal cKliMh 100.90 132.00 173.90 241.50 309.43 408.01 547.21 659.63 783.39 911.74 1047.66 1204.49

US c/Klih 2.69 3.04 3.04 3.22 3.68 3.98 4.32 4.60 4.79 4.92REVEIUESSales Dun Sytea 3597 4994 6853 10119 13877 19590 29127 36329 46232 57796 71599 98670Sas to ISA a/ cl 791 697 860 779 144 - 316 - 596 1118 2275 2685

Energy Revenues 4379 5591 7713 10996 14021 19590 29443 36329 46828 58914 73974 91355Other Revenues 7 8 9 15 16 19 23 27 32 3F 45 53

TOTAL OPERATING REVENUES 4395 5599 7722 10911 14037 19599 28466 36356 4660 58952 73919 91409

EXPENSESgeneration dt 162 242 299 421 642 910 1239 1663 2220 3103 4282 5310Transmission e/ 64 79 132 154 202 284 392 514 694 891 1137 1454Distribution f/ 119 144 180 293 424 553 712 901 1139 1439 1825 2313Gral.Plant Oper. gl 209 310 357 423 742 935 1179 1461 1811 2246 2796 3454Gral.Plant Admin. hi 647 748 1254 1521 1992 2516 3199 3926 4987 5928 7161 9833Purchases from ISA 305 395 393 680 2402 2095 1793 2882 1857 1901 3416 4031ISA System Charges if 192 228 321 176 266 115 202 491 1074 1872 2791 3293Municipal Taxes j/ 219 284 387 519 674 932 1352 1749 2265 2910 3750 4608Amortiztn. Studies k/ - - - 13 77 144 167 426 535 785 718 696Depreciation 1/ 943 1241 1601 1935 2651 3466 5219 6577 9927 12041 17221 20916

TOTAL OPERATING EXPENSES 2847 3661 4924 6135 10062 11850 15442 20590 26309 33116 45097 54909OPERATING PROFIT 1538 1929 2799 4776 3975 7749 13024 15766 20551 25936 28932 36500OTHER INCOME (EXPENSES)Divdns. from ISA m/ 460 308 364 329 333 749 1434 2437 3361 5779 9669 11409Non Oper. Income n/ 152 559 663 494 583 747 696 775 1020 1099 1257 1431

TOTAL OTHER INMCOE 612 967 1027 922 1216 1495 2120 3212 4391 6878 10925 12939PERATING INCOME 2150 2795 3825 5599 5191 9244 15144 18979 24932 32714 39757 49339

Total Interest 993 1627 1976 3346 5202 7241 8676 9292 9264 9044 8689Less Intrst Drng Cnstn. 162 483 793 2338 4299 3969 4457 2898 2078 - -Operating Interest 941 831 1144 1193 1008 903 3272 4219 6394 7196 9044 8689

NET INCOME o/ 1309 1964 2691 4405 4193 8341 11872 14759 19539 25528 30713 40650

a/ Based on EPN's regional and ISA's national forecast of October 1983 approved by the Bank.b/ See para.5.17 for plan of rate increases.c/ Based on ISA's forecast average exchange energy and capacity rates.d/ Based on the 1994 unit cost of Col$646.38/installed KU, escalated according to local inflation plus 6%Ia real growth.of Simlar to d(, the forecast was based on the 1994 unit cost of Col$173.29/lnstalled meter of line.f/ Similar to el and d/: based on the 1984 unit cost of o149.b63/installed meter of line.Il The amount budgeted for 1994 was escalated according to local inflation plus 6%/a for real growth.hi Includes projected actuary costs, reserve for bad debts and other costs. The latter projected similarly as for gI.if Data were supplied by ISA.j/ As required by EPM's statutes it is computed at 4.42% of Total Revenues of EPH's Power department (Total Operating

Revenues plus Dividends from ISA plus Non Operating Income). EPH is otherwise taK exempt.kl After completion, the costs of non capitalized studies and training prograes are amortized in 5 years.1/ Straight line depreciation is used by EPH according to the following rates: Generation equipment and civil works

2.86%; Transmission lines substations and traesformers 3 70X Distribution networks and Control Center 3.13%;Buildings 3.33%; General Plant, tools and office equipment 10%; and Vehicles 15.

mf Dividends on shares and returns on bonds from IS.n/ Includes interest from short and medium term investments of the various reserves and short term cash surplus phil

income derived from sales of timber from EPM's forestation/deforestation operations, plus income from the sales o.depreciated vehicles collectians of bad debts, prompt payment discounts, rentals , sanctions, etc.

o/ By statute EPM is not required to pay dividends, thus it retains all its profits.p1 Bsed on EPN's audited statements for 1990 through 1982, and on EPM's internal statements for 1983.

(IBRD 5130/1984)

- 9gn -

COLONDBIA ANNEX 5.5ENPRESAS PUILICAS DE IEDELLIN (Powr)RIO GUNDE MULTIPURPOSE PROJECTHistoric and Forecast Sources and Uses of Funds 1982-1991 - Pow Department(Millions of current Cell) Total 1984-1991

-- Historic---- Current Current92 93 94 95 96 97 99 99 90 91 SCols (1Z MUSSeqv 11)

SOUIRCES --- ---- --- … -- ---" …-…- --- ---Internal Generation

operating Income 3825 5599 5191 9244 15144 19979 24932 32714 39757 49339 195.30 92.9 1026.0 82.4Depreciation 1601 1935 2651 3466 5219 6577 9927 12041 17221 20916 77.92 37.0 407.2 32.7Amortization (studies) - 13 77 144 167 426 535 785 718 696 3.55 1.7 18.6 1.5Increase in Reserves a) 549 718 982 1049 1293 1532 1914 2257 2609 3136 14.66 7.0 81.5 6.5

Internal Gross Gecertn. 5975 8264 9801 13902 21812 27513 37208 47797 60304 74087 291.42 138.5 1533.3 123.2Debt Service biRepayment 1611 2759 3591 4596 6573 7745 12104 13412 13423 14250 75.68 36.0 416.4 33.4Interest 1144 1193 1009 903 3272 4219 6394 7186 9044 9689 40.72 19.3 212.9 17.1

Total Debt Service 2755 3951 4599 5499 9845 11964 19498 20599 22467 22939 116.40 55.3 629.2 50.5Investments in ISA c/ 546 808 1798 1757 2726 4838 6797 7547 9228 9709 43.38 20.6 231.7 19.6

Internal Net Generation 2674 3505 2424 6646 924? 10711 11923 19652 29609 41439 131.65 62.6 672.4 54.0

Borromings for: hiRio Grande: IBRO - - 622 2350 2696 5810 5118 1657 68 - 18.32 9.7 114.3 9.2

Other - 22 1020 394 2922 536 140 200 622 - 5.82 2.8 40.6 3.3Guadalupe IY 2195 3298 7949 6053 3039 - 17.04 8.1 147.0 11.9Playas ::3 2572 6220 9653 9657 3199 - 26. 7 12.7 207.1 16.6Transassn & Distribtn. - 1616 696 3444 1343 - 7.10 3.4 40.9 3.3Studies 94 78 139 222 414 179 2 - 0.99 0.5 7.1 0.6

Other Borrowings d/ 1266 534 1 - - .00 .0 0.0 0.0

Total Borromings 3678 6504 15949 17662 19344 10418 9725 3200 690 - 75.99 36.1 556.9 41.7Other Extral. Sources el 79 232 179 215 253 299 353 416 491 580 2.79 1.3 15.6 1.3

TOTAL SOURCES 6431 10241 19552 24523 28898 21428 21001 23268 30790 42019 210.42 100.0 1244.9 100.0

USESConstruction ProgramAyura River Diversion 991 109 - O.0 0.0 0.0 0.0Guadalupe IV 2Z523 3876 6271 4906 2821 375 - 14.37 6.° 121.9 9.8Playas 1022 3478 4077 8293 6806 1161 - 20.34 9.7 159.4 12.7Rio Grande - 1166 2703 5531 8183 9697 8566 3027 954 - 38966 18.4 250.6 20.1Transmssn.& Distribtn. - 192 658 - '118 1369 4550 2796 B132 3466 23.09 11.0 119.4 9.6GeneraI Plant 535 543 93' 788 946 1115 1694 1532 1472 1737 10.11 4.9 58.4 4.7Future Plant - 9326 15019 30770 55.12 26.2 241.4 19.4Donated Networks f/ 79 185 179 215 253 299 353 416 491 580 2.79 1.3 15.6 1.3

Subtotal 5040 9549 14721 19733 21127 14016 15153 17097 26069 36553 164.47 78.2 965.5 77.6

IDCE Financed gI 107 358 1318 2553 2167 2133 - 8.17 3.9 60.6 4.9IDC Not Financed 35t4 416 994 1713 1708 2263 2979 2079 - 11.64 5.5 74.8 6.0

Total IDC of projects 461 774 2312 4266 3875 4396 2879 2078 0 0 19.91 9.4 135.4 10.9

Studies direct cost 406 124 605 949 679 624 710 939 990 1167 6.46 3.1 38.4 3.1IDC of Studits 22 9 26 33 94 61 19 - 0.23 0.1 1.6 0.1

Total Studies 429 133 631 991 772 685 729 839 990 1167 6.69 3.2 40.0 3.2

Total Constrctn Prgru 5929 20456 17664 24980 25774 19097 18761 20013 27059 37720 190.97 90.8 1140.9 91.6

Other InvestmentsEmpresa Antioq.d'Enrgia 31 25 40 - 0.04 .0 0.4 .0FEE - 62 60 90 90 - 0.22 0.1 1.9 0.1Mdium T're Invstents h/ -61 221 1111 -942 605 729 -540 - 0.96 0.5 9.0 0.7Chngs in Mrkng Captl il 552 -523 -323 505 2379 1602 2780 3255 3732 4299 18.23 0.7 92.9 7.5

TOTAL USES 6431 10241 18552 24523 29939 21428 21002 23268 J0790 42019 210.42 100.0 1244.9 100.0===G==- :--==== ====== ===__== =-==== ======= ===--- =-===== ====== -=--= =CZ=G=Z =# G = a: =G3-- - -- --- - - -- ---- --- - - - - - - - --- -…-------:-Z----

a/ Results from the Balance sheets accounts Indemnification and Pension Reserves, collection of connection costs, and collection ofinvestment costs of the Line Pto. Nare-Cocorna.

bi Debt Service excludes IDC. The details of debt terms are shown in Annex 5.3. Disbursement, repayment and interest schedules are keptin the project file.

cl Estimated from ISr's investment progral prepared in March 1994.di Largely frso FDE FEN, and FNUADE.el Consists of Donaied Networks except for 1993 where it includes GCoIS47 from 6overnment and Municipal bonds.fl Networks constructed by land developers and donated to EPh.q/ Interest during construction (IDC) financed by ongoing loans from Chase M9anhattan, Dank of America, Dank of Tokio, plus current and

future loans from FONADE, FEE and Fondo Financiero Industrial.hi Corresponds to medium term investments of the proceedings from loans from the lank of America and Bank of Takio (Annex 5.31.i/ Defined as the sum of Current Assets less Current liahilities exclusive of the current portion of term debt. See relevant footnotes

in Annex 5.6.

IIBRO 5/24119941

-91-

COLOIOIA ANNEX 5.6ENPRESAS PUBLICAS DE NEDELLIN IPouerlRID GRANDE PIL'LTIPURPOSE PROJECTHistoric and Forecast al1ance Sherts 1990-1991 - Poer epartment(Millions of current CoISI

--- …------Historic a …----------ASSETS 00 SI 92 93 94 95 96 97 99 09 90 91

Fixed APsts in Opertn hi 33055 43642 55593 69030 97976 131622 166569 253135 307245 446122 538460 641695Less Accun. kpreciatn 7506 10940 15150 19704 26296 35020 47242 62323 93369 110416 147512 194919Net Fid Asshts in Opertn 26349 32902 40433 49326 61590 96602 119327 191512 223976 3706 390956 446716Mork in Progress 1576 4173 9739 16485 33479 40395 6732 42217 61734 9326 24345 55115

Total Net Fixed Assets 27925 36975 50172 65912 9509 136907 116656 233729 205610 345032 415301 501931

Investenwts in ISA ci 1952 2955 3501 4309 6097 7854 10500 15419 22205 29752 37980 47689Other Investeents dt 603 961 900 1109 1208 1209 1369 1360 1369 1369 1368 1369Studies of 93 255 693 596 1150 1897 2492 2751 2945 2999 3270 3741Mediua Term Invuats fl - 1111 169 774 1505 965 965 965 965

Total Other ksets 2550 4071 4904 6013 9566 11190 15214 21042 2743 35093 43590 53763

Current AssetsCash and banks g/ 909 1216 094 - 409 506 649 764 1050 1147 1243 1395Committed Funds l/ 922 900 919 1012 1299 1527 20" 2293 2496 2770kcounts ReceivaBle h/ 513 935 1142 1590 2120 2991 4297 5550 7063 0930 10939 13547Accnts Receivbl. ISA hl 304 393 6t5 331 73 114 267 m 605 1054 1925 2153Inventory il 307 433 727 1272 1620 2094 2669 3361 4M 56 6724 9472Othr Currat Assets il 229 151 174 247 304 374 460 556 673 914 905 112

Total Current hsuts 2162 3029 4424 4420 535 7011 9640 12130 15725 19474 2402 29519

TOTAL ASSETS 32637 4074 59590 76244 109M 155266 211510 266901 329910 399599 4096 595113=ts:sm *ss:sg na sss s a scars s"a ss=u_ac mE..an msnt. asmsZm

EDUITY AN LIABILITIES

Equity 42 42 42 42 42 42 42 42 42 42 42 42Dorated Capital kl 39 6111 761 1025 1322 1647 1991 234 2969 3442 4102 4077Rtaxluation Surplus 1/ 16993 23394 31425 36154 44961 57171 79629 105732 141636 194736 235640 296549Retained Earnings 5595 7559 10240 14645 1992 27169 39041 53900 72339 97966 12579 169229

Total Equity 22949 31606 42469 51066 65253 96029 1193 161959 21694 290t6 369363 470697

Local Term Det 1532 2701 3033 3160 3191 2265 1922 1159 412 09 21 10Formsgn Term Debt a/ 6759 7563 10532 16513 3499 5906 79727 91201 96340 95639 93492 9237Total Term Debt 9290 10264 23565 19673 39100 60351 91549 9235 96752 95729 93513 99247Less Current Portion 664 1479 2009 2729 4596 6573 7745 12105 13412 13423 14250 14606

Total Debt less Cr.Prtn. 7626 1795 11476 16944 3=504 53779 7390 90254 03340 92305 79263 74641

Other LT LiabilitiesIndnification Rsrve. 221 324 417 549 799 1092 17 105 2429 3123 4011 5075Pensions Racer- 549 960 1342 1003 2316 2971 3908 4799 6030 7442 0993 10970Other 121 195 109 236 236 23. 236 236 236 236 236 236

Total Other LT Liablts. 0Y 1U469 194 2597 3351 4209 5492 6919 9702 10901 13240 16191

Current LiabilitiesCrrnt Prtn of LT Dmbt 664 1479 2089 2729 4596 6573 7745 12105 13412 13423 14250 14606Accounts Payable mI 366 621 1425 179 1192 1941 1129 931 000 661 639 653Accrued Interest o/ - - - - 836 1300 1910 2169 2323 2316 2261 2172Accnts Payable ISA pi 143 107 174 240 691 606 721 1254 1495 1729 2205 2602Other Accnts Pyable q/ - - - - 665 950 1119 1411 1792 2269 2065 3561

1__ ___ _ ____ _ _ _09 97 2Z

Total Current Liabilties 1173 7' 3699 4D47 70 11170 12522 177 19992 20397 22220 2359

TOTAL 0UITY i LIAILTIES 32637 44074 59590 76244 10997 155266 211510 266901 329919 39959Y 483096 595113nasma susan massz asasmU usuca .ausss uanaas a= NSES eaum amassX ssssss1 rsra

ai ased on EP,s audited statement for 1990 through 1982, and on El s internal statemnts for 1993.b/ Fully revalued frm rar of expnditure according to annual change In national conswr price index for Colombian

worters (taut part. u061.c/ Cumulative at cut.d/ Includes investmnts in Empresa Antioquena de Energia; FEN and Municipal bunds.el Investments In stedle of futunr projects net of aeortLzaiion.fi During 192-93 corresponds to already disursed but not yet spent fundr from the lank of Amrica and hnk of Tokio

loans (Annex 5.31. Frio 1986 onsard it consists of cash surpls.gi During 1902-93 Coadtted Funds consist of not yet pent funs from the bank of Aerica and lank of Totoi loans. From

1904 onward tie assumption is: fine third for Cash and Banksand teo thirds for Committed Funds of the folloing: (a)30 days (out of 360 daysl of the yearly operational cash ependitures, and debt rvice (repaymnt * intest); and Ibl15 days of onn investmt expenditurs in local currency and of net Investmnts In othr entitin IISA, EhE FEN).

hI Equivalent to 55 das of sales during 2993-1991; and to 55 days of both: Sales to ISA, and didvid eds from SA.1/ Assutd to grow in real term in proportion to growth in deund (i.e. inflation rate plus 0T pr year).ji Other Current nsetn Include ccounts Receivable from employees, and on nergy transactions. Ass ud to grow according

to local inflation plus an additional 31 of real growth.ki Accamulated collctions of Investmnts ude on bihalf of consurs (cash doationsl and leturk enations made by land

deval ers.if Equal to the se of Accuulated Revalutions of: Mark in Progress, and of Gross Fixed Assets in Operation. Less

Acacelated Revaluations of Depraciation and of Foreign Debt.n/ Includes revaluation of Foreign Dobt due to devaluation of the Colombian Peso.n/ Eivalent to 45 days of onn yearly invetnt expenditures in local currency.ol % of yearly interet charges (inatrmt charged to operations and non financed IX).p/ 55 days of ccounts, and Innvstmnt ContributIons, Payable to ISA.q/ 60 days of operational enpenditurn not accounted for previously i.e. total eupensns less: Purchasm and Charges 4ron

ISA, hnicipal Taxes, Amortization of Studies, and Depreciation.

(IRO 5i24i19041

-92-

COLOMBIA ANNEX 5.7ENPRESAS PUBLICAS DE MEDELLIN (PoserlRIO GRANDE MULTIPURPOSE PROJECTHistoric and Forecast Operational and Financial Monitoring Indicators - Power Department(Millions of current ColS)

---------------Historic 1/-------------79 8O 81 82 83 84 85 86 87 98 89 90 91

CAPACITY (MM-yearlExport (import) ISA 27 -214 -318 -246 -306 -173 -146 -216 -255

ENERGY (6Mh o/ ./ ofExport (import) ISA -198 555 62 559 48 -559 -210 270 -59 325 407 395 466Energy billed own systm 3255.0 3558.2 3707.6 3941.0 4169.8 4499.4 4798.9 5140.1 5507.5 5901.5 6339.1 6834.2 7361.6Losses Z a/ 18 18 17 le 17 17 17 17 17 17 17 17 17

SERVICENo of connectionsl(001No of customersOOO) 282 297 314 331 345 404 416 429 441 453 465 479 490No of enployees 1556 1599 1705 1922 2181 2461 2533 2633 2699 2820 28B6 2993 3070Customers/Employee 191 196 194 172 159 164 164 163 163 161 161 160 160Sales/E.ployee(MWhl bt 2092 2225 2175 2050 1921 1892 1895 1952 2041 2093 2197 2291 2398

RATE OF RETURNOperating Income 1030 15M6 1920 2790 4776 3975 7749 13024 15766 20551 25936 29932 36500Revalued net averageassets in operation cI 14014 22639 29576 36619 44900 55453 79091 107965 155420 207694 279791 363331 418036Rate f Retrn (RORI X d/ 7.3 6.9 6.5 7.6 10.6 7.2 9.8 12.1 10.1 9.9 9.2 7.9 8.7Covenanted ROR I dI 6.0 9.0 7.0 10.0 14.0Adjusted ROR I dI 7.6 7.8 5.6 6.5 7.8

FINANCIAL RATIOSAv.Tariff in EPhMs own

systHe: Colc/kMh 100.80 132.00 173.90 241.50 308.43 408.01 547.21 659.63 793.39 911.74 1047.66 1204.49USc/kWh 2.69 3.04 3.04 3.22 3.65 3.99 4.32 4.60 4.78 4.92

Horking ratio e/ 43 43 43 38 52 42 35 37 34 34 37 36Operating ratio f/ 65 66 64 56 72 60 54 57 56 56 61 60

Coverage ratio g/ 2.1 1.6 1.6 1.6 1.6 1.2 1.5 1.5 1.4 1.3 1.6 2.0 2.3Coverage (excl. ISA) g/ 1.8 1.9 1.5 1.9 1.7 1.8 1.6 1.9 2.3 2.7Contrib to invstmt I hi 67 54 56 32 30 8 20 21 39 42 92 97 100Self financing I ii 39 33 9 24 30 50 51 95 98 100

Debt/debt+equity Z if 32 29 29 28 31 41 45 44 40 34 29 23 19Current ratio k/ 3.4 4.2 4.1 2.8 2.1 1.6 1.5 2.0 2.1 2.4 2.8 3.0 3.3Receivables (days) 55 51 61 60 57 55 55 55 55 55 55 55 55

a/ Station use technical losses, and unaccounted for as 2 of gross energy required by EPH's system.bl Based on sales mithin EPM's own systeu.c/ The rate base was estimated as the average net revalued Fixed Assets in operation using the weighted yearly average of newplants in their year of commissioning and their full value thereafter. This average is not always equal to the accountingaverage.

d/ ROR equals Operating Income divided by Revalued net average fixed assets in operation. Adiusted ROR equals Yearly Rate ofReturn adjusted by the surplus (or deficit) over the covenanted (under previous Bank loans) rate of return, carried forwardfrom the previous year.

el O,erating Expenses, less Depreciation, less Amortization of Studies: divided by Operating Revenues.f/ Operating Expenses divided by Operating Revenues.g/ Sross Cash Generation divided by: Total Debt Service + non-financed Interest During Construction (IDC) * Investments in ISA.Coverage lexcl. ISA) is the coverage ratio calculated without the Dividends from ISA in the numerator, and without Investmentsin ISA in the denominator.

h/ Net Cash Generation (net of Investments in ISA) less nan-financed IDC, less positive increases in Wurking Capital, dividedby: Tota Uses, less increases in Working Capital (or plus decreases) less non financed IDC, and less Donated Networks.

i/ Net Cash Generation (net of investments in ISA) less non-financed IDC, divided by: Total Uses, less non financed IDC, andless Donated Networks.

jI Total Long Term Liabilities as I of: Total Long Term Liabilities + Total Equity.k/ Current Assets divided by: Current Liabilities, less current portion of Long Term Debt.1/ 1979 through 1982 are based on audited results. 1993, is based on unaudited results.m/ Secondary energy exported to ISA.

(IIBRD 5/24(1994)

ODLOIIA AN3X 5.6

WXeRNEI PMLICAS DE ICl8KLLZR

X1o mCAN MULTIPURPOSE PROJECT

Sehedule of RulettIn and Proosoed nk - Unar and SeweraXe DeXrt.eat

L.on tam Crem A"ortlatlnl Interest Castnt On0tnmdiungProject atac Carracy Ahnowt Ptriod Perlod Rate 7eud an of 12/31'83

(year) (aillInna) (yenrs) (Cure) (1 (2) mIsts

Pre ign - elaitlng

[DI 22&/Sr-CO LaFe 1969 USS 5.7 4 21 3.25 0.75 278.5tgg 362/SF-CO Rlo PlIdran 1973 US$ 4.8 5.5 22.5 2.0 0.5 376.6Ion 251/OC-CO RUo Pledrns 1973 Us$ 3.8 5.5 15.5 8.0 1.25 251.0[LS 177/CC-CO La Po 1969 U# 1.3 4 16 6.0 1.25 *U.IDM 179-OC-CO L. Pe 1969 SM 2.2 4 16 6.0 2.0 35.0too 179-DC-CC La Pa 1969 - 4.7 4 16 6.0 2.0 60.7tDs 355sr-CO roent

RI. lnetro* Ayra 1965 US5 4.7 4 20 4.0 0.75 126.5Dther Coarloon) 35.1

Local --cidtLoR

IDB 592/SF-CO Rio Rony 1960 US$ 79.3 7.5 22.5 2.0 0.5 1.199.0Too 54 JC-CO RIo Sueoy 1980 US 24.7 5 is 7.9 1.25 1.332.0IDs 356/CC-CO RIo 1ony 1980 U# 2.0 5 IS 4.0 - 172.0LDS - :NSFOPAL 002181 Eello-ItcagL 1981 US$ 2.1 1.5 23.5 6.0 0.5 197.2Other (erltou-) 345.8

TWWK7 t0-4 Rlo P?odran 3973 USS 3.7 5.5 22.5 2.0 0.5 295.9Ocher 9.1

la-l - odwt

IDS 592/S-O Rlo Iory 19N0 US$ 4.4 7.5 22.5 2.0 0.5 50.5108 - INSFOPAL 102181 eI0ln-t1goi 3 1981 U5# 1.1 *.5 23.5 6.0 0.5 98.4Other 253.2

Mbcel rcals 591.0

Other and rhtor loane

WATER SUPPLY

SIR? RIo Cruise I 1984 015 50.2 4.5 13 10.5 0.75 -

Propoed to Xl Rlo Crunde 11 1965 05$ 72.6 6.5 12.5 11.5 1.25 -

PadE Rio Crand. 1. tI 1984 CblS 91.9 1 A 26.D 1.5 -

S-WDEACE

Proponud to IDC Rio Crande 11 1985 ass 19.1 4.5 12.5 12.5 1.25 -

WATER AND 5S02M

Other Soorcee

rPIu-comiDR Irb1l.Ylv. 1984 C1S 50.0 I 5 25.0P. ACROPECMAAIC Ref rmncce. 1984 C1S 30.0 1 10 16.0 - -

P132U RIoey 1964 Cr1S 312.0 1 S 25.0 _ -

SID-INSFOPAL 1964 U5 0.6 - - - - -B13-XISPPA1L 19SA &l1S 47.0 4.5 23.5 18.0 - -

P1Wu RIo Crop& 1984 C18$ 316.0 1 A 25.0 - -

PrU1 RIo Cruise 1985 C1S 1. 130.0 1 4 25.0 - -

r1W RIo Crand 1986 s18 833.0 1 4 25.0 - -

no2U Rto Grandr 1987 Cb15 362.0 1 A 25.0 - -

n1w Rio Crandse 196 Cr1S 269.0 1 4 25.0

Pay 26. 1966

-94-COLOMBIA ANNEX 5.9ENPRESAS PUPLICAS DE NEELLIN (WSS)RIO GRANDE MULTIPURPOSE PROJECTHistoric and Forecast Income Statements 1980-191 - MSS Departeunt(lMillions of current ColS)

- - HNistoric If-----90 91 92 93 94 95 96 97 B9 99 90 91

Sales (Hr3) a/ 124.3 125.4 125.8 132.7 143.8 157.8 170.9 192.8 193.6 204.4 216.2 223.4Av.Tariff increase X bl 54.38 23.66 22.84 21.11 41.43 30.55 34.90 20.18 18.16 18.15 18.13Av.Tariff: Col S/N3 cl 5.94 9.17 11.34 13.93 16.97 23.96 31.15 42.02 50.50 59.67 70.50 83.28

US 5/M3 0.175 0.175 0.167 0.188 0.209 0.253 0.279 0.301 0.321 0.340REVENUESMater Supply 738 1150 1427 1949 2426 3765 5324 7681 9777 12197 15242 18605Semerage 212 333 414 522 729 1130 1597 2304 2933 3659 4573 5592

Service Revenues 950 1483 1841 2371 31S4 4895 6921 9985 12710 15056 19915 24197Othr Oprtng Revenues d/ 20 2 5 5 21 19 9 4 - 113 274 287

TOTAL OPERATING REVENUES 970 1485 1846 2376 3175 4913 6930 9999 12710 1596 20089 24474

EXPENSESOperation el 488 543 714 1155 1448 2020 2713 3258 4065 4475 4965 6263Administration ft 20 353 487 556 703 905 1159 1430 1786 2140 2547 3125Nunicipal tax g/ 22 35 44 56 71 108 158 223 295 359 445 536Amortiztn. studies hl - - - - 74 74 74 74 74 - - -Depreciation it 338 464 627 802 1068 1616 2132 2677 3446 4429 7156 9569

TOTAL OPERATING EXPENSES 1056 1395 1872 2569 3364 4723 6236 7662 9656 11403 15113 18492OPERATIN PRMFIT -86 qO -26 -193 -189 190 694 2327 3054 4566 4976 5Y82

OTHR INCOME (EIPNS) if 101 199 267 315 203 240 606 616 941 1107 1091 1016

OPERATING INCOME 15 299 241 122 14 430 1300 2943 3995 5673 6067 6999

Total interest 245 317 475 1169 1716 2509 3392 3978 4081 4051Leos intrst drng cnstn. 116 179 110 562 m 1421 2312 1404 - -Operating interest 94 118 129 139 365 607 983 1089 1070 2574 4091 4051

NET INCONE kI -79 171 112 -16 -351 -177 317 1855 2925 309 1996 2947

il Based on EPWs regional forecast of October 1993 approved by the DankbJ Sae para. 5.31 for plan of rate increases.c/ Pertains to the water supply tariff only. Sewrage is charged as a fixod parentage of ater supply billings.dl It is assumed that EPN s USS Departmnt receives from the Powr Departmnt 501 of the not benefit deried fro the

use of the Naters of rivers Piedras and Buqy in the H1 dropowr plants of Guatape and Plalas.e- Coamrise principally: labor, social benefits, materia s, and saintenence cantracts; together with the estimated

costs of servicing the eunicipalities of Envugado, Sabaneta and La strella between 1995 and 1996. All cntshave been escalated acording to eKpected inflation plus 6Za for real growth

ft Based on the 1984 budget figure, Administration expenses were projected according to inflation plum U for realgrowth. It includes projected actuary costs; and reserve for bad dobts (0.41, 0.5Z,and 15Z of water supply,sewerage, and official sales).

g/ As required by EPH statute, it is computed at 21 of: Mater Supply Revmuns Other Revenues, and Other Incomerelated to Mater Supply operations. Plus 2.471 of those related to Sewirige operations.

h/ After completion, non capitalized studies are amortized in 5 years. Also, after training program are completedtheir costs are amortized in 5 years.

i/ Straight line Depreciation is used by EPN according to the following ratest Duildings 3.3611 Filtration plantslenuipeent and civil works), 4.0921 Pumping stations (equipuent and civil works), 4.0811 Tanos, 2.04; betwork,3. 36; and Assets in Operation 3i2%.

jl Consists of interest from short and medium tero investments of the various reswvs and short term cash surplus;incone from the sale of depreciated vehicles; collections of bad debts; prompt payeant discounts; rentals,sanctions; etc.

kt/ By statute, EP11 is not required to pay dividends thus it retains all its profits.11 190 through 1992 are based on audited rsults. 1993 is based on EPNs real unaudited results.

([BRD 5/24t1994)

-95-

COLUMBIA ANNE! 5.10EXPRESAS PUDLICAS K MEDELLIN (MSS)RID GRANDE MULTIPURPOSE PROJECTHistoric and Forecast Sources and Uses of Funds 1992-1991 - 9SS Department(millions of current Colsi Total 1994-199I

---Historic---- Current Current92 9 14 95 b6 87 99 89 90 91 SCoJS (l1 MhUSSeqV (1

SOURCES ------- -----.- --. … ---- .-- ----- .- -_-Internal GenerationOperatinh Income 241 122 14 430 1300 2943 3995 5673 6067 6998 27.32 34.7 136.4 29.9Depreciation 627 802 108 1616 2132 2677 3446 4429 7156 8568 31.09 39.5 162.8 35.7Amarti:ztion Istudies) - - 74 74 74 74 74 - 0.37 0.5 2.7 0.6Increase in Reserves a/ 352 423 822 1116 1314 !1:O 1735 1791 1934 2012 12.03 15.3 69.4 15.2

Internal Gross Genertn. 1220 1347 1979 3236 4820 7102 9150 11893 15057 17579 70.81 90.1 37713 - 91.3Debt Service bhReayment 134 181 250 465 1019 1113 1644 2871 3702 4069 15.13 19.2 76.8 16.8Interest 129 139 365 607 993 1088 1070 2574 4081 4051 14.92 10.8 75.6 16.6

Total Debt Service 263 3 V 615 1072 2002 2201 2714 5445 7793 8119 29.95 38.1 152.4 33.4

Internal Nut Generation 957 1029 136t 2164 2818 4901 6436 644B 7274 945q 40.86 52.0 218.9 47.9

Dorrouings for: b/Rio 0uey-lo1 592 1132 3I1b 627 - 1.94 2.5 17.9 3.9Rio Duey-FFOU 82 6 135 176 - 0.31 0.4 2.7 0.6Bella-Itaqui 25 235 13$ 42 - 0.18 0.2 1.7 0.4Rio 6rande 1IICRO) - 757 671 1226 3227 1494 385 29 - 7.79 9.9 50.2 11.0Rio Grande It - 15 50 1172 2230 5116 4703 2190 - 15.46 19.7 93.1 20.4Other Dorrowings cl 96 59 439 1130 833 342 269 - 3.01 3.8 22.4 4.?

Total Borrowings 795 1447 2930 3818 429q 8695 6466 2575 29 - 28.69 36.5 188.0 41.2Other Extrnl. Sources d/ 76 397 490 597 744 918 1123 1376 1722 2100 9.08 22.5 49.7 10.9

TOTAL SOURCES 1929 2872 4683 6579 7851 14504 14025 10399 9025 11567 79.63 100.0 456.6 100.03=:CZ==: MCZ:== ==::::S ==:5s:Z :===ZZ=sc== B =Z = Z -==: za::::: =-=:=::=::= 22 == ::: :_:_ = ==-5Z=

USESConstruction ProgramRio Duey 1175 1646 1783 712 - 2.50 .2 23.2 S.IDella ItaguW 84 219 98 41 - 0.13 0.2 1.2 0.3Rio Brand 1 79 206 1640 1704 2125 4572 2704 559 142 - 13.45 17.1 89.9 19.7Rio Grande 11 - 99 29 2511 3516 6861 7179 2879 - 22.98 29.2 139.2 30.5General Plant 21 25 43 53 65 92 99 219 144 177 0.78 1.0 4.3 0.9Other 375 293 193 231 277 330 603 459 542 640 3.28 4.2 18.3 4.0Future Plant - 2710 5584 7937 16.23 20.6 71.6 15.7Donated Networks er 76 397 490 597 744 918 1123 1376 1722 2108 9.08 11.5 49.7 10.9

Subtotal 1910 2975 4266 5949 6727 12763 11708 9102 9134 10862 68.41 97.0 397.4 97.0

IOC Financed f/ 75 205 69 474 453 676 908 485 - 3.07 3.9 19.0 4.2ItK Not Financed 41 74 41 8B 280 745 1404 919 - 3.48 4.4 19.9 4.4

Total IDC 116 179 110 562 733 1421 2312 1404 - 6.54 8.3 38.9 8.5

Tctal Constrctn Prgre 1926 3054 4376 6411 7460 14184 14020 9506 8134 10862 74.95 95.3 436.2 95.5

Chngs in Urkng Captl 9/ -98 -12 307 168 391 320 5 993 891 705 3.68 4.7 20.4 4.5

TOTAL USES 1928 2872 4689 6579 7851 14504 14025 10399 9025 11567 78.63 100.0 456.6 100.0zz=a_:: z==::= ==:==:= ===z=== ==:==__= :===:=: =:=z=:= -:=== =:== = = ::_ :: :=zz =-= -G==Z== 9==-===

---- --- ---- --- --- ---- - -- - -- - - -- - -- - - -- - -- . - - u3-u-- -u

ai Results from the Balance sheets accounts: Indetnification and Pension Reserves, Customers§epayment of connection costs.valorization charges, and contract work.

bi Debt Service excludes interest durinq construction. The deta:ls of debt terms, are shown in Annev 5.9. Disbursement, repayment andinterest schedules are keat ;r the project file (Annex 4.9!.

c/ The NColS13I in 1984, and flCclS3O in 1995 VUSS4.3, and MUSS.9 eauzvalenti are expected ta be obtained from FFDU.d1 Hade up of Donated Networks.e/ Networks constructed by land develogers and donated to EPM.fl Interest during construction i:r financed by Dngoing and proposed (Rio Srande pha.e I1) loans from ID9.;I Defined as the sum of Current Assets less current liabilities eyclusive of the current oortion of term debt. See relevant footnotesin Annex 5.11.

(ItRD 5/24/19941

-96-

COLONIIA ANNE! 5.11EPIESAS PIIBLICAS DE hEDELLIN IISSIRIO SIDE MIULTIPUOSE PROJECTHistoric and Forecast Balance Sheets 2991991 - gSS Department1fillions of currant CoIlS

----------- Historic at-------ASSETS 90 9l 92 93 94 95 06 97 99 99 90 91

Fixed Aists in Opirts b/ 10465 14417 19202 23916 36129 47949 61452 79615 10243 165527 199103 23695Las Accu. DeprKciatn 1925 2774 44 5541 7717 10976 15192 20591 27744 37167 51013 68764Not Fixd hsts in Opertn 8640 11713 15131 18375 29411 37072 46270 59024 75099 129360 147090 168109aork in Progress 1033 1261 2323 4179 2401 5342 10702 20990 31156 2710 9294 16231

Total Nut Fixed Assits 9673 12974 17461 22554 30912 42414 56972 90014 106255 131070 155304 194620

Other iAsstsStudies c/ 34 151 299 370 296 222 149 74 -Other d/ 29 247 294 472 472 472 472 472 472 472 472 472

Total Othar Assnts 62 399 573 92 769 694 6 546 472 472 472 472

Current AssitsCash and Banks of 7 14 30 20 110 151 206 269 319 370 493 572Comitted Funds ot 359 261 - 222 306 419 546 647 769 991 1161Accounts Receivable ft 155 232 279 353 492 749 1057 1525 1942 2422 3027 3695Inventory g/ 46 70 135 121 155 199 253 319 402 507 639 905Othr Curent Assets hI 132 110 125 262 322 396 497 599 713 963 1044 1263

Total Current huts 340 795 930 756 1291 179 2422 3249 4023 4931 6174 7496

TOTAL ASSETS 10075 14157 19964 24152 32071 44907 60014 93900 110750 136490 162030 192390znCC= :2:Z=z :unu=u rnuuz czNx :izm:n uu.uua xuuuzn ==== nnnu *uuuru nunugm

EOUITY AND LIABILITIES

Equity 14 14 14 14 14 14 14 14 14 14 14 14Donat apital i/ 407 794 949 1430 2366 3591 5027 6614 B559 1066 13026 15693Revaluation Surplus ji 6557 9010 12020 14396 17917 22697 30166 39667 5247 69119 H190 110652Retained Earnings 900 1151 1263 1247 996 719 1036 2991 5716 H015 10901 13749

Total Equity 9039 10969 14241 17077 21193 27021 36243 49196 67135 N615 112031 240107

Local Term Debt 324 495 521 597 1193 2306 2624 2499 2274 1756 1326 904Foreign Term Debt kI 1209 1651 2629 4564 7966 12233 16946 26679 34213 37902 39922 39555Total Iere Debt 1413 2136 3149 5161 9159 14539 19570 29179 36497 39659 40249 40459Less Current Portion 253 264 320 397 495 1019 1113 1644 2971 3702 4071 3869

Total Dbt less Cr.Prtn. 1160 1672 2021 4764 9664 13520 19457 27534 33616 35956 36177 3600

Other LT LiabilitiesIndunification Rsrve 127 176 237 313 396 510 654 925 1031 1295 1597 1979Pensions Reserve 291 521 734 995 1299 166 2141 2707 3415 4219 5105 6177

Total Other LT Liablts. 409 697 971 1309 1685 2173 2795 3532 4446 5503 6702 9156

Current LiabilitiesCrrnt Prtn of LT Debt 253 264 320 397 495 1019 1113 2644 2971 3702 4071 3969Accounts Payable 11 216 355 499 559 356 394 332 504 861 606 793 1100Accrued Interest ot - 119 292 429 627 946 995 1004 1001Other ccnts Payable n/ 47 359 498 645 791 975 1103 1252 1565

Total Current Liabilties 469 619 926 1003 1329 2193 2519 3556 5553 6406 7120 7535

TOTAL EDUITY & LIABLTIES 10075 14157 18964 24152 32871 4907 60014 3909 110750 13640 162030 192390:=Z==:= z=::=:= CC=:__= :=__=: ===:== =CZ==== ==--==: ==c=== =--=5-= __ =3===:T=-

at 1990 through 1902 are based on audited results. 1993 is based on EPnrs internal statemnts.bl Fully revalued froe year of expenditure according to annual change in national consueer price index for Colombian

workers (test para. 5.251.cI Investments in studies net of Amortization.dl Includes small investments in stocks (some MCoIS6) and miscellaneous assets.of From 1994 award the assumption is: one third for Cash and fanks, and two thirds for Comitted Funds of the

following: (a) 30 days (out of 360 days) of the yearly operational cash expenditur!s, and Debt Service (repayment *interest, including non financed IDC); and (b) 15 days of invetmnt expenditures in local currency.

ft Equivalent to 55 days of sales during 1993-191cI Assued to grow in real terms in proportion to growth in dm.and (i.e. averaging some 252 per year).hI Dther Assets include Accounts Receivable from employes, and nan 15S transactions. They are assumed to yro

according to local inflation plus an additional 3! of real grouth.iI Accusulaid collections of investments made on behalf of consumrs (cash donations) and network donations made by land

develoers.jl Equal to the sum of Accumulated Revaluations of: Mork in Proqress1 and of Gross Fixed Assets in Operation. Less

Accumulated Revaluations of Depreciation and of Foreign Debt.k/ Includes revaluation of foreign debt due to devaluation of the Colombian Peso.I/ Equivalent to 45 days of own yearly investments expenditure in local currency.

25! of yearly interest charges (interest charged to operations and non financed IC).nl 60 days of operational expenditures not accounted for previously i.e. total eipenss Is: Municipal Taxes,

Amortization of Studies, and Depreciation.

(110R 5124/19841

- 97 -

COLONhIAEnPRESAS PUBLICAS DE MEDELLIN ANNEX 5.12RIO GRANDE MULTIPURPOSE PROJECT lbSS)Historic and Forecast Operational and Financial Monitoring Indicators - USS Department(Millions of current ColS)

---------------Historic----------------79 9O 9I 82 83 84 95 86 97 88 89 90 91

OPERATIONSMater produced (Ha3) 205.4 1980. 215.7 220.7 226.0 250.5 268.3 299.6 304.0 319.4 332.9 349.8 359.2Mater billings (HNl) 119.2 124.3 125.4 125.8 132.7 143.8 157.8 170.9 192.8 193.6 204.4 216.2 223.4Billing losses Z a/ 42 37 42 43 41 43 41 41 40 39 39 38 39Reudinq corrections b/ 2.5 5.4 13.9 20.1 26.1 32.3 36.5 40.1ater losss Z c/ 42 37 42 43 41 42 40 38 36 34 32 31 30

SERviCEMater customers (000) 194.9 209.4 221.0 228.7 249.1 253.1 272.6 292.6 301.4 313.0 322.9 339.9 349.8Severage custmers 10001 186.6 lY9.1 211.6 218.9 227.0 232.0 Z50.3 272.7 292.6 304. 314.1 331.1 341.0Metered connectns 10001 194.9 209.4 221.0 228.7 241.1 253.3 271.6 287.7 301.4 313.0 322.9 339.9 349.8

At nlPopulatn served water 2 93.4 93.6 92.6 96.0 86.0 87.0 85.0 87.0 89.3 88.6 88.9 89.8 90.0Populatn served surge 7 91.0 91.4 90.9 83.3 92.7 83.9 92.0 85.5 98.1 68.4 98.7 89.6 99.8

No of ee.loyees 923 939 992 1103 1165 1224 1311 1389 1454 1507 1558 1641 1690Esmplayce/lODO customers 4.7 4.5 4.4 4.9 4.8 4.8 4.8 4.8 4.8 4.9 4.9 4.8 4.8Sales/Euployee 1000 h31 223 212 220 200 194 205 205 208 209 212 214 213 213

RATE OF RETURNOperating Income 195 -86 90 -26 -193 -289 190 694 2327 3054 4566 4976 5992Consumers contribtns d/ - 197 79 85 446 628 692 671 821 734 635 558Revalued net av. fixedaists in operatn e/ 5307 7571 10177 13426 16757 23393 32742 41671 52647 67062 101730 137725 157640

Rate of return 2 fI 3.7 -1.1 2.8 0.4 -0.6 1.1 2.5 3.3 5.7 5.8 5.2 4.1 4.1

FINANCIAL RATIOSAv.water tarifi CalS/M3 5.94 9.17 11.34 13.93 16.87 23.86 31.15 42.02 50.50 59.67 70.50 83.28

USc/I3 17.53 17.52 16.65 19.82 20.92 25.33 27.87 30.14 32.13 34.05

Av.water and severagecharge Col$/M3 7.64 11.83 14.63 17.87 21.93 31.02 40.50 54.62 65.65 77.57 91.65 109.27

USc/M3 22.62 22.47 21.65 24.46 27.20 32.92 36.23 39.18 41.77 44.26

Other non cash expenses (tCoIS1 g' 450 564 622 911 988 1057 1199 1454Working ratio g/ 55 74 63 67 74 56 50 49 41 41 37 34 35Operating ratio hl 75 109 94 101 108 106 96 90 77 76 71 75 76

Coverage ratio i/ 2.9 2.2 3.9 4.0 3.4 3.0 2.8 2.1 2.4 2.2 1.9 1.9 2.2Contrib to invstmt I il 32 91 96 51 37 26 33 33 31 44 64 100 100Self financing 2 k1 41 85 96 54 40 32 35 37 32 44 68 100 100

Debt/debt4eguity 2 1/ 39 1o 21 22 27 34 38 38 40 38 34 30 26Current ratio m/ 2.1 1.6 2.2 1.7 1.2 1.5 1.5 I.7 1.7 1.5 1.9 2.0 2.0Receivables (days) 72 59 56 55 54 55 55 55 55 55 55 55 55

at Mater produced less water billed as I of water produced.b/ These are EPh's targets for increasing water billings through the implementation of a program to improve thecalibration, monitoring and reading of water meters.

c/ These would be the resulting losses if the program mentioned in hi were implemented succesfully.dl Customers' renayment of connection costs. valorization charges, and contract works carried out by EP for its customers.They equal: Other External Sources less Donated Networks (Annex 5.103.

el Yearly Rate of Return adjusted by the surplus (or deficit? over the covenanted (wnder previous Bank loans) Rate of Return,carried forward from the previous year.

fJ Operating Income plus Consumers' Contributions as 2 of Revalued Net Fixed Assets in Operation.g/ Operating Expenses, less Depreciation, less Amortization of Studies, less other non cash expenses (i.e. indemnification ando ension reserves). All divided by Operating Revenues.

h/ perating Expenses divided by Operating Revenues.i/ Gross Cash Generation plus Other Sources less Donated Networks divided by: Total Debt Service + non-financed Interest DuringConstruction II1C).

j1 Net Cash Generation Plus Consumers'Contributions less Non-Financed IDC less positive increases in Working Capital, dividedby: Total Uses, less increases in Working Capital (or plus decreases) less Non Financed IDC, and less Donated Networks.

k/ Net Cash generation plus Consumers' Contributions' less Non Financed IDC, divided by: Total Uses less Non Financed IDC lessDonated Networks.

1/ Total Long Term Liabilities (including current portion of term debt) as I of: Total Long Term Liabilites * Total Equity.The ratios for 1978 and 1979 are based an unrevalued fixed assets.

m/ Current Assets divided by: Current Liabilities, less current portion of Long Term Debt.n/ In 1982 the Nunicipalities of Bello and Itagut were incorporated to EPh s system. In 1985 the Municipalities of Envigado,Sabaneta and La Estrela are expected to be incorporated o EP's system.

(IBRD 6/0411984)

-98-

ANNEX 6.1Page 1 of 2

COLOMBIA

EMPRESAS PUBLICAS DE MEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

6. Economic Analysis

Historic Development and Demand Forecast

1. EPM has been studying the utilization of Rio Grande waters since1940 and in the first instance a 75 MW hydro-electric plant was constructedduring 1952-56 at Mocorongo (Rio Grande I). No other development took placeon this river, which is a tributary to the Rio Porce which, in turn, is atributary river to the Rio Cauca. The latter joins the Rio Magdalena in thenorthern part of the country. The inter Aldean Cauca and Magdalena riversand their tributaries are the main sources for future hydro developments.

2. Water diversions for potable water purposes have been developedmainly on the Rio Negro and its tributaries in relatively small incrementalsteps, the latest of which is the diversion of the Rio Buey to the RioPiedras. Downstream (at Penol), the name of the Rio Negro changes to RioNare, the main source of supply to the 2170 MW hydro developments at Guatape,Jaguas and San Carlos. This river is a tributary of the Rio Magdalena.Firm water supply, for potable water purposes, of about 8 m3/s originates inthe Rio Negro basin; other small sources only contribute about 1.50 m3 /s.

3. In a 1971 study three additional sources for potable water supplywere identified within a reasonable distance (30-40 km) from Medellin: theRio Cauca, the Rio Nare and the Rio Grande. The first had to be ruled outfor the near future, because water would have to be transported over adistance of some 30 km and pumped up about 1200 m. The second was ruled outbecause of plans for industrial and agricultural developments. These planswere never realized as planned but, instead, large hydro developments wereinitiated totaling 2185 MW.

4. About 2000 MW (excluding Jaguas) would be affected by divertingwaters from the Rio Negro. At the 7.6 m3/s additionally required, by 2010,for water supply to Medellin, some 875 GWh/a (4X) would not be generated atthis complex and 100 MW (5%) would convert to peaking plant. The presentvalue of plant to subtitute for the energy production lost would have to beadded to the cost of diverting waters from the Rio Negro to Medellin, at agreater distance than from the Rio Grande and at a lower head. Consequently,historic developments have removed the Rio Negro alternative fromconsideration.

5. In view of the above, the only remaining alternative isdevelopment of the Rio Grande, the more so because, as yet, no hydrodevelopments, except the small 75 MW Mocorongo plant (early 1950s) wereexecuted on the river, and for this reason any future diversion of waters forthe present Rio Grande project can be taken into account in the design ofdowastream facilities.

-99-

ANNEX 6.1Page 2 of 2

Demand Forecasts

6. Electricity.EPM's sales growth to its own customers (i.e.excluding sales to the interconnected system) are expected to average notless than 7.4%/a until the end of the decade. Historic sales have beenextremely close to a trend line of 7.4%/a and the present forecasts areconsidered reasonable; as a result EPM's own requirements in generation wouldgrow at 7.3% (3.07). For planting-up (i.e. planning purposes), a 8%/a growth(1982-1990) in required energy production capacity has been assumed startingin 1982, when it totalled 5912 GWh, including rights in ISA, and ending in1990 where production capability would reach 10908 GWh. Required MW capacitywould grow from 1119 MW in 1982 to 2251 MW in 1990 (9.1%/a), assuming that atcertain times during each year EPM unused installed capacity may be calledupon by ISA for assistance to the interconnected system.

7. Water. The population estimate of the Aburra Valley was made afterreviewing istudies made since 1971, resulting in a saturation population of4.5 million compared with some 2 million presently; 1985 population growthunder this estimate would be 3.5%, gradually decreasing to 2.7% by 1991(3.13). Because, with the data available, a demographic or socio-economicapproach (e.g. water use as a function of income) could not be made, apragmatic estimate of future per capita gross consumption - in line withhistoric data - assumes that presently served areas, using 420 l/c.d, woulddecrease to 350 l/c.d. by decreasing water losses. Newer, and less affluentservice areas would increase their present consumption of 298 l/c.d. to thesame level of 350 l/c.d. By 1990 gross production would reach 342 l/c.d.,requiring, on average, 11.1 m3/s.

8. The uncertainties in the assumptions are relatively large. This,however, does not imply any substantial uncertainties in the project size.The minimum technical (and economic) size of the water adduction tunnel issuch (about 2 m diameter) that raw water transport capabilities would beabout 20 m3 /s, i.e. about double total 1990 Medellin requirements, notcounting existing sources. The project has 2 stages: the first has onegenerating unit (as pressure reducing facility) and one conduit to thetreatment plant (6.4 m3/s); under the second phase a second generating unitand second conduit would be added. It is obvious that the large capacity ofthe adduction tunnel would accommodate the size of the latter facilities topractically any revised forecast of water consumption. Including one showinggrowth rates far in excess of presently assumed growth rates.

Return on Investment

9. The calculation and basic information is shown in Annex 6.3

May 26, 1984

A#NEX 6 .2COLOMBIA -

EMPRESZ PUWLICAS DE MEDELLINRll- l;ll,NIII 'Iltlt' 1; '911.11C-T

Allornos Devokpre_ SchiltfZ

AItIIIO IM Am2.% 2-1

;~~~~~~~~..." T'o 5,,4,,w>S\ ,-:; > , -, . _ ( J~~~~~~~~~~~Ilw

1~~~~~ F _110 .... |X,U_"

_~~~_w1lvaw ~ ~ ~ ~ ~ I. _.i km p_. w@xr

Z^-2~~3 W&io- 3h

_ I__~~~~~~~~~~~~~~~~~~~~~~~~k

\s~~~~~~~~~~~~~~~J as oSSnS

.t b\,l +1 So M I te @b~~~~~~~~~A-1sor --- -____ M

tV§ '1 ]' # 1' . v "@

~~Ar v,mn^^,r z^a_ e 21- A^|two"

L_J ~ ~ PU s. -V _VWi

1^'t_~Ak * .. T _1 r, fot^

_ _ - _ s,#§t~~~~~~~~~~-P.

tt','; -

2 Mb_. f - s_l.,_ @v_)-l _ f-l~~~

Novembe 1993t\}~ 7---X-L

aiu

WIll 3b 13 C 1 bet - 'valet 43 ofte -

wage I need .. - W a I w ia* 3636 1 :'C Z '-

|, _|, ,*_ a n_ z. - W r- ~ - _ _;; 3 114 11133 . .6 3. . .6 6.1 3.1 9.6af 3464 tX Iit . a. 9. 1. 1. a. t. . .3 36 6.1s 3.4 3.6 *6 1.9 3.1 1.1 1. '.: 1.9* ft 1" .* 1.1 *.A * . t.*s . w .loop, 3.4 6.6 9.6 . . 6.3 3.1 i3.6 4.3* 1469 .9 31.9 1. 9.. 1.1 6A 1.0 1W.3 *

1996 1.9 I .J 3.4 9.6 *.I 1.3 6.1 3..* WI §. X.1 1 1,4 1.3 3. c. 6.3 1 l.a 3.3 .9 S.JI 3341 3.3 3.3 3.. 9.9 9.1 1.3 5.1 23.9 6.1

33 334 3.3 3.9 3.1 9.1~ ~ ~~~~ ~~~~~~~~ ~~~~~. 1 111.3 .1. 33.6 M.36 I3 36 .99. 9 .9 1.6 1.3 3.3 37.J 6.I

31 33* 3.3 .1. 3.1 9.1 1.9 1.1 2.1 33.a 6.3

6 34 3.3 3.6 .9.3 .91.3 1.3 1.1 . . .6 .L6 333 31.4 1.3 .9 6.3 1. . 1. 6.3

n6 334 3.3 1.3 21.9 6.3

nm" 1 1 . t o . . .l *s*@ *

34 36.3 9.4 6.6 1.1 t .l 39.4 31.1 31.3 93.3 63.9 33.? 3.3 364.9 336.' VA.IJ 3 36. 3.9t6 6"s 1.9 6.6 .9 3.3 63.6 9.9 33.3 33.3 93.1 3.1 9.1 96.3 333.1 91.4 . 3-3 43.6 9.9 1.3 9.4 *.9 3.3 36.1 23.1 9.6 343. 93.9 2.9 33.9 -36.4

.wo '" 1.v e.1¶ '.,!If I, (..413 ;,;;Ie93 33.91) 3,1.64) 10.0691.3of) 39.646 all) 199.433 140.933 19.93 step 3.966 11 (99* (9.1

34 3.4 9.9 1.9 3.9 36.4~~~~~~~~~~~~~W 9. i9. 39.9 : 6. 11.9 3 I 3. le.i:6 I M3.& 33.1 34.6 36.934 3.9 1.3 4.4 ~~~ ~~~~ ~ ~~~~INi 9.3 6.". 961.11 V3. 91.9 63.9 133.6 961.3 13.6 334.6 J.6

39 31.4 9.9 9.3 1.3 13.1 9.6 9.4 38.3 13.1 M.9 6.3 6.l 13.9 91.9 M1. 3. 6.1* 96.3 6.3 6.9 3.6 16.3 9.6 91.9 33.6 39.1 34.9 @ . 1.3 31.1X.3 34.6 33.4 9 11,. -. 163341.* *. t.* t 43J .4 ".* ".s t.w at.. 4 1 .0 I.3 -.3 *.

34~ ~ ~~~~IJ6. 0I .36 431 493. -J 2.43 -33f *:I tof" olt " r - late4 of IM In-3

36 *1 CI 03 .4 -21

39 .,. .9r .47 .9 .3 *6^

33 e.~ 64.1 3.6 36.6 11.14 96.9 3.3 9.1 334.1 1.

II. . .1 b4an

.. IL.. wlauS - 69143ed 369 t6e966 J 949.

bage o rn 3l3 t34 3n,3 6.3 3.4 33.i

I141. 13 39 6.6C

m. 34. 6496~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ae*Ibw 4

-102-

ANNEX 6.3PFT 2 f

COUOIA

EMRSAS PUILICAS DE NEDELLIN

RIO GRANDE MULTIPURPOSE PROJECT

Rate of Return on Developmnt Progrm

Hai. Asumptione

1983 1984 1985 1936 1937 1938 1989 1990 1991

Ni xinie-xc.i (Power) and Anne 4.2 (Water), assumlng, when not available, a resonable proportion of foreiln cost. Local and foreign coat have beendeflated (to April 30, 1984) as follows:

local CostS Price increase 16.6 20.0 20.0 20.0 13.0 18.0 18.0 13.0 18.0Dsflator 1.148 0.968 0.806 0.672 0.561 0.475 0.403 0.341 0.289

Rate of Exchange ColS/USS 97.67 126.8 148.9 165.9 131.2 193.0 219.4 2".6(April 30)

Y raHir nrhae 3.27 8.0 9.0 9.0 9.0 ?.5 6.0 6.0Deflator: FE in ess 0.0 0.995 0.941 0.S66 0.794 0.729 0.672 0.629 0.593

FE in KColS 1.000 0.995 0.725 0.568 0.393 0.467 0.331 0.280 0.234

Coneraion Factors for Building Pricing(1) Generation 0.87 A first eleulation of EX's mix of investments whos that for the total(2) Transmission 0.81 Dvelopment Program coat. a conversion factor of 0.85 - be used.(3) Inveetent in ISA (weighced averag (1) nd (2) 0.85(4) Ceneral plant 0.85(5) Maintenance coat 0.91(6) Standard (for powr and water euppliea) 0.92

Residual Values- No reaidue]1values were assimed in view of the number of years to be discounted (56)- Renewls: Cenration: 20S after 30 "eare

Transmision: 100 after 30 yearsISA: 352 after 30 yearaDistribution: 1OOZ after 30 yearslater Productlon: 252 after 30 yarsocbhr. Wactr: 75Z after 30 "ara

- Useful life of general plant: 5 years

Operational Cost loser and WaterSales and Purchaen

See financia forecaste for power. we_tr and sewrage: all aunts deflated using local coet deflator.Tbe tariff rates uaed, deflated - i.e. in rea term - to the and of 1982 (CoI970.29 - US$1). are thefollowing:

1934 1985 19B6 1987 1988 1989 1990 1991

Poer usc/kqh 3.06 3.37 3.77 3.79 3.31 3.76 3.66 3.56Uster USc/Im 16.63 19.69 21.43 24.14 24.56 24.62 24.61 24.64

Sewrage, Z of Vater billing 30.0 34.5 36.0 36.0 36.0 36.0 36.0 36.0

Kay 27. 1984

lORD- 17690_6' 7r DECEMIERf 1983

S O U T H A M E R I C A . LOMETERSO 50 100 IV5 200 _jut OF

-/ / FuAldJES0 50 IOD _ 1_ooloco

1. LAKE~~~~~~~A Ca tagena

-"' '*s N -A ) A

.. ~~ ~ ... ___ ra _____ , :er j~ A

~~~_ _ _ c at j.~fXA N-A A A S == i Y~~~~~~~~~~~~~~~~~~~~~~~ E N E Z U E L A

F S \. ~ Urr - i _

~C 2A AncoAntiocnuioOV _

-l aed li'S n Carlos5 C c 4 r.j . ~OuwbdeP Anco?n \ y \

0~~~

-A- :jl/ bena l 4 La Dorado- Tu

MABo Mvner CYopo1

. an ~ t IPereaArmen.men- ,boe

4. >3 \ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~llo.v cenc-o

I / Ne.la0

-7. ELECTRIC COLOMBIAPOIO 0~ Botanic ELECTRIC POWER SYSTEMS

PROJECT FUTURE CONDERUC O TINr, SYSTEMS.Transmrssicn lines: ~Ii~E E-E.B

/OFIrencao a 500kV L E P.M.g - - - 230 kAV c c.v.c.

- - - Hydropower plants CORELCAN -- i -- - Thermal powr plants | I]ICEL

Ni N PoI9o o - - S * Substations

Mcoo - Rivers

0 .-, ... - -- - Department bounoaries

ECUADOR ? Inntemational baurdaries; ~~~~~~76e 7 ?

PROFILE A

s RRoGmonde R.wno.2.272..(.normal lsuI A.uned SWnd RockProf,le2,5 r oke~ Well CG/nclile ./ .l zSu,ge Tank2 S >< RIO GRA

;;~~~~~~~~~~~~~~~~~~~TW i t5i%x r d & Vlibilar Tunrla\=2W~2 AcIt a vn.g,fiWA

2h0I 0 tl n < EMPRESAS

00 1,1D 7000 3,O OW 6,D 7\ 9,0 9,0f^/fi i A- Tansfoernns Canwr Dischrge Channel

TASAJERA GENERAL PROFILE.

PROPOSED EXISTING

A 1 Dams 0 0

Reserwoirs < ;b n Hyoro Power Plonts

* Substrations SU13-1O1GRANDE

Pressure Tunnels

Tronsmission Lines

- -- 9-* 220 kV__- .~ * O110 kV

__-- .- . 44 kV

Roads

Railways

Rivers2

Department Boundaries - ;

---- Internotional Boundories

-12- .

PANAMA Pe

Aft) / "I VENEZUELA z

I *Medeltin 0 _ _ . PROFILE B. Boger. 0 , 10

KILOMETERSc K l l O M E T E R S 3 , x c Ro G me n d e R .s e r e a r t22 7 2 m . I n e n a l e n1 1)

C O L O MBIA /I e Iawe Well

E C U A 0 0 t X >. ) ri * JL ~~~~~~~~~~~~~~~21 L500 1

ECUAOcIR ~BRAZIL,Je ?_ eV T,nu _Slnu-7rtFnwrr-XSserSX Wddf R- ° 02.000 £000 5,000 4a '

Pt E U / ! ~ 0 GOSNA 75 d.a. d rM5 aOn.n E Da. An 5aM

-4-V i-.> 4'* 0eE u NIQUIA GEIL' W 8 74V f

IBRD 17689JANUARY 1984

COLOMBIA

-. RIO GRANDE HYDRO POWER ANDtonTunnel WATER SUPPLY PROJECT

I- Ac,ess Tunn -Up_

/ Me de lUn v g; \ EMPRESAS PUBLICAS DE MEDELLIN

N.

_ t R@by > \# C

D.schorge Channel . c

Doa n Motihs M i

n~~~~~~~~~~~~~ ,Pedro 1W

PROFILE B

Mte5

3 RoGrande Reserv I 272. IaIel) [ jNatural GroundPoFil e Tank Iertical Shaft (Nicuti6

2 /WIntake Tower I& Well I/ 7'II2 500 ~ -. i-.--- -i- Pow House

1~~~~_____ _____ .Pew7i,u o~ .. - . - ,- 1.7r11 {.Turbinet)

500 .i {**. 4.- 41XOOD 2.000 4.000 6600o 8.eO 10000 1ZOO° 1'i000 119000

NIOUIA GENERAL PROFILE

COLOMBIA

RIO GRANDE HYDRO POWER ANDEMPRESAS PUBLICAS DE

Medellin Water Supply

Discharge Tunnel

Power House CavernsRo Grande i - Penstock Tunnel\ GU RN "R.o Grand.' SIgeTakF GUARiNE

Dam! ~~Proier Tune A\A'~cs UNICIPALITY -~Dom/ P \eqsur Tunnf r -<F j funnel ot \ \ MuNlcip LaTr; Morco Pumping Station

Inralie Works A /TunnlRDOTA 4. La Hondo Pumping Station; S- La Tosojero Hydra Power n. 1 J

( = -'.-'r 5 -swr RelieF Torik

_'-,f-./n , 'i-,'-. S. r J

@/ -- * xi - (_ s } ~~~~~~~~~~~~~~~~~~~~~~ 9 ~~PIEDRAS BL_:sCAS

Pressurs~~Construction * N\ t RESERvi

\t) ) Tunnel >¢ZZ Nlqula Hrd Hydra.ENTRERRIOS ; Power Plant\ S

SrcsSurge Tank Ld

Vertical Shaft Tun lnel - ln

SNPEDRO Gravity Villa Herme,Wohr\ TrEatment Plnt

5-8E LLO MEDELLIN

Intakel\

-. Yts * wENEZUEIa".A f RESERUviR

Sn.Cristobal I

Treatmnt Planltn R SN. CRISTOBAL*B- o 80eelc a r VILLAGE

0 5 10

C O L O M B I A KILOMETERS bto_

N0 0*.

ECUADOR S.RAZ

PERU I. 1. n.v.'dv D. i_r-S; '7111- _, * _in 't_ "i0 n f B .1 bt_

IBRD 17708JANUARY 1984

4

ID WATER SUPPLY PROJECT5 DE MEDELLIN

ply Sources vDEVIATION WORKS FROM

RIO PIEDRAS Y BUEY

LaAyura~~~~~~~~~~~~~~~~~~~~Pida

)n to PC IUIC~L T 43y ~ AANT MUIIPLT ir X Reev|r

flat'in MCIL; / ' W ater DTvistin n

g L: FE Lo Fw PuiLA p ng Stoton

/IA E A -U'ICIPAUTY 4 AirportIPALITY

' --. Volvo Bui IdRingbLa Ayura

-T\ reaotmentFleDp

ENVIGADO.n~~ ; \ ~MUNIC14ItTYsf \ & t ~~~~~~~~~~~~~~~PROJECT EXISTING

c~~ fe < 4>r- ........... t --~~~A Damsr - -y V \ss E ~SABANETA MUNICIPALITY >C Rsros

ITAGUI --- Pressure TunnelsMUNICIPALITY¢J 2 \ rt-: . ~~~~~~~~~~~Water Transmission Lines

! LtA E ST RELLA btUtIC IPALITY Air port

; _ f ~~~~~~~~~~~~~~RoadsRivers

MAunicipolities

--- Depazrtment Boundaries

- -International Boundaries