Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6231 PROJECT PERFORMANCE AUDIT REPORT SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA SARAJEVO AIR POLLUTION CONTROL PROJECT (LOAN 1264-1-YU) June 3, 1986 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties, Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit - Dinar (D) 1976 - D18.00 = US$1.00 1982 - D64.00 = US$1.00 GLOSSARY OF ACRONYMS BiR Republic of Bosnia and Hercegovina LNG Liquified Natural Gas NGU Nafta Gas Unit SAR Staff Appraisal Repoit SGE Sarajevo Gas Enterprise ZAVOD Institute for Construction THE WORLD SANK 0 'UIFICIAL USB ONLY WAshington. D.C. 20433 USA 00c of wirec-GOeWr1 Oprkf valtion June 3, 1986 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report on the Socialist Republic of Yugoslavia - Sarajevo Air Pollution Control Project (Loan 1264-1-YU) Attached, for information, is a copy of a report entitled "Project Performance Audit Report on the Socialist Republic of Yugoslavia - Sarajevo Air Pollution Control Project (Loan 1264-1-YU)" prepared by the Operations Evaluation Department. Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL UE ONLY PROJECT PERFORMANCE AUDIT REPORT SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA SAMtJEVO AIR POLLUTION CONTROL PROJECT (LOAN 1264-1-YU) TABLE OF CONTENTS Page No. Preface ........................................................ 1 Basic Data Sheet .......................... 1 Evaluation Sumffary ......................... v PROJECT PERFORMANCE AUDIT MEMORANDUM i. TPROerSUR ............................................ 2 The Project .............................................. 2 Project Execution .................................... .. 2 Time Overruns .......................................... 2 Cout Overrunm .......................................... 2 Institutional Performance ................. .............. 3 Sales and Financial Results ................................ 2 Sustalnability ....................... 3 Econorlc Evaluation ..................... 3 Bank Performance ...................... 3 II. CONCLUSIONS ................................................. 4 ATTACHMENT A: Commnts from NAFTAGAS Gas Unit ..................... 5 PROJECT COMPLETION REPORT I* Introduction .........................6..................... 6 II. Project Preparation and Appraisal .......................... 8 III. Project Implementation and Cost ............................ 13 IV. Operating Performance .................................... 17 V. Financial Performance ..0..0............................... 19 VI. Inatitutional Performance and Development .................. 21 VII. Bank Performance ................................ 23 VIII. Project Justification ...................................... 24 IX. Conclusions and Lessons Learned ............................ 26 ANNEXES 1 - Table 1 - Tariff History .................................... 27 Table 2 - Income Statements ...............................** 28 Table 3 - Balance Sheets ..................................... 29 Table 4 - Cash Flov Statements ........................ 30 Ths doumet ha a ~estrcted disribution and may bO Und by rD1cp9ents n1 te 1 PuMm= of oflia tis. Is contents may mot otherwi be dickosed without World Sank author~W tion. TABLE OF CONTENTS (Cont'd) Pa** No. CHARTS 1 - Project Implementation Schedule .............................. 31 2 - Review of S02 Emission and Fuel Used for Heating in Sarajevo ........................,*******................ 32 3 - Sarajevo Gas Enterprise - Organization Chart **............... 33 MAP - IBRD 11460R (PCR) PROJECT PERFORMANCE AUDIT REPORT SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA SARAJEVO AIR POLLUTION CONTROL PROJECT (LOAN 1264-1-YU) PREFACE A loan of US$38 million, approved by the Bank in May 1976, was in tvo parts (Loan 1264-1-YU and Loan 1264-2-YU), made to different borrowers for separate components of the Sarajevo Air Pollution Control Project. This report presents the results of a performance audit of the part of the project for which Loan 1264-1-YU for US$27 million was made to the Sarajevo Gas Enterprise (SGE) to assist in financing extension of the national gas trans- mission main to Sarajevo and construction of a city-wide distribution system, with service mains, pressure regulating stations and ancillary facilities to supply the city with natural gas. The loan to SGE did not become effective for twelve months, the time needed to finalize complex international agree- ments for gas supply (PCR, para. 2.17); project implementation took about two and a half years longer than forecast, mainly because of delays caused by congestion of projects in the city's streets; the loan closed, fully disburs- ed except for US$9,000, on April 26, 1983, though physical works continued until June 1983. Loan 1264-2-YU for US$11 million was made to the Nafta_ Gas Unit (NGU) to assist with the financing of extension of NGU's gas transmission system whien also was being financed under a previous Bank loan for the Naftagas Pipeline Project (Loan 916-YU of June 25, 1973). While the pipeline project was not completed until 1985, the NGU part of the Sarajevo Air Pollu- tion Control Project was finished by the end of 1979. A separate report covers the project financed by Loan 916-YU and Loan 1264-2-YU. This Project Performance Audit Report on Loan 1264-1-YU consists of an Evaluation Summary and a Project Performance Audit Memorandum (PPAM), both prepared by the Operations Evaluation Department (OED); and a Project Comple- tion Report (PCR) prepared in April 1984 by the Europe, Middle East and North Africa Regional Office, based inter alia on the findings of a project comple- tion mission to Yugoslavia in March 1983. OED has reviewed the PCR, the Bank files, the legal documents, Appraisal and President's Reports and the tran- scripts of the meeting of the Executive Directors at which the loan was approved. An audit mission visited Yugoslavia in January 1986 and discussed the project with officials of SGE and the City Assembly. The audit finds the PCR to be comprehensive, frank and factual, and finds no reason to disagree with its conclusions and findings. Following OED procedures, copies of the draft PPAR were sent to the Borrowers and the Government. Comments received from NAFTAGAS Gas Unit have been reproduced as Attachment A to the report. PROJECT PERFORMANCE AUDIT BASIC DATA SHEET SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA SARAJIVO AIR POLLUTION CONTROL PROJECT (LOAN 1264-1-YU) EY PROJECT DATA Appraisal Actual or Current Item Egetation Estimate Total Project Cost (US$ million) 5.25 68.3 Overrun (%) 30.0 Loan Amount (US$ million) 27.0 Dibursed -- 27.0 Cancelled - /a Date Physical Components Completed 6/30/81 12/31/82 Proportion Completed by Above Date (1) 100 79% Proportion of Time Overrun (%) - 552 SconomIc Rate of Return (Z) NONS 13.9% Financial Performance Good Institutional Performance Good STAFF INPUTS (Man-weeks, per TRS) FY73 FY74 FY75 FY76 FY77 FY78 Preparation/b 3.5 27.5 0.6 - - - Appraisal/b - 3.0 141.6 7.5 - Negotiation - - - 52.6 - - Supervision 1.5 24.3 14.2 FY79 FY80 FY81 FY82 FY83 FY84 TOTAL Preparation/b - - - - - - 31.6 Appraisal/b - - - - - - 152.1 Negotiation - - - - - - 52.6 Supervision 11.0 11.2 1.5 5.0 12.4 1.6 82.7 /a An amount of US$9,000.00 was cancelled. 7-b Believed to be overstated. It is suspected these headings also Include work on companion project, La. 1263-YU, which was processed in tandem with this one. - iii - CUMULATIVE DISBURSEMENTS (US$ Millions) Fiscal Appraisal Year Estimate Actual 1977 3.0 0.1 1978 12.0 1.2 1979 20.0 10.5 1980 27.0 18.4 1981 21.2 1982 25.7 1983 27.0 OTHER PROJECT DATA Original Item Plan Revisions Actual First Mention in Files or Timetable - - 07/24/72 Government's Application - - 01/01/73 Negotiations 06/21/75 Various 07/21/75 Board Approval 05/26/76 Loan Agreement Date -16/08/76 Effectiveness Date 12/31/76 03/31/77 05/31/77 Closing Date 06/30/81 06/30/82/c Borrower Sarajevo Gas Enterprise Executing Agency Sarajevo Gas Enterprise Fiscal Year of Borrower January 1 - December 31 Follow-on Project None /c Final disbursement date was 03/18/83. - iv - MISSION DATA Month/ No. of No. of Date of Item Year Weeks Persons man-weeks /d Report Identification 1/73 1 3 1.5 3/73 Preparation 4/73 1 2 1.0 05/24/73 Preappraisal 1/74 1 5 2.5 03/22/74 4/74 1 1 0.5 04/25/74 6/74 1 1 1.0 07/74 Appraisal 6/74 2/e 11/. 11.5 12/30/74 (Issues Paper) TOTAL 18.0 Supervision I 8/76 2 2 2.0 09/15/76 Supervision II 7/77 1 1 0.5 08/05/77 Supervision III 4/78 1 1 0.5 05/78 Supervision IV 9/78 1 2 1.0 09/20/78 Supervision V 3/79 1 1 0.5 03/30/79 Supervision VI 11/79 1 2 1.0 12!21/79 Supervision VII 5/80 1 1 1.0 05/29/80 Supervision VIII 6/80 1 1 0.5 O.C/04/80 Supervision IX 9/81 1 2 0.2 'J/20/81 Supervision X 7/82 0.5 2 0.1 07/30/82 Completion 3/83 0.2 2 4.0 -- TOTAL 11.3 COUNTRY EXCHANGE RATES Name of Currency (Abbreviation) Dinar (D) Year: Appraisal Year Average Exchange Rate: US$1 - 18.00 Intervening Years Average US$1 - 25.46 Completion Year Average US$1 - 54.00 /a Missions developed this project and Loan 1263-YU at the same time. Thus, 50% of the total mission time was allocated to this project. /b Appraisal includes the following: June/July 1974 2 staff for 4 weeks a 8 man-weeks 1 consultant for 2 weeks - 2 man-weeks 1 staff for 2 weeks W 2 man-weeks September 1974 1 staff for 1 week = 1 man-week November 1974 3 staff for 2 weeks = 6 man-weeks December 1974 1 staff for 2 weeks = 2 man-weeks January 1976 update costs 2 staff for 1 week = 2 man-weeks 23 man-weeks - v - PROJECT PERFORMANCE AUDIT REPORT SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA SARAJEVO AIR POLLUTION CONTROL PROJECT (LOAN 1264-1-YU) EVALUATION SUMMARY Introduction 1. Loan 1264-1-YlH for US$27 million helped to finance extension of the natural gas trunk transmission main running through Serbia, to Sarajevo, to enable Sarajevo Gas Enterprise (SGE), to develop a new city-wide gas distri- bution system also constructed under the project (PPAM, para. 2). The Project ii. Besides the transmission main extension to Sarajevo with terminal looplines, the project included pressure regulating stations, distribution mains, provision for 10,000 service connections, conversion of about 300 heating boiler stetions to gas, and a telemetering control system. It also included technical assistance and training for SGE which was a new body with- out prior experience (PCR, para. 2.11). Total cost (including capitalized interest of US$6.1 million) was estimated at US$58.6 million. Objectives iii. The objectives of the project were to abate ihe severe atmospheric pollution suffered by Sarajevo, by substituting natural gas for the lignite coal used for heating, and eliminating the consequent frequent smogs blanket- ing the city, causing adverse health conditions. A companion project, Loan 1263-YU1/, addressed similar pollution problems in the field of water supply and sewage disposal in Sarajevo (PPAM, para. 1). Implementation and Experience IV After initial procedural delays holding up effectiveness, the proj- ect suffered further slippage, mainly by reason of congestion of works under different projects in the city streets, and execution took two and a half years longer than forecast, some works not being completed until June 1983. Lengths and quantities of mains laid were modified under various project 1/ Sarajevo Water Supply and Sewerage Project. revisions, to achieve economies or to improve system flexibility and reliabi- lity (PCR, para. 3.03); in particular, fewer distribution mains were laid within the project time-frame (PPAM, para. 4). v. Because of inflation during the extended project implementation period, final costs showed an increase of 67% over appraisal estimates, in dinars, but only 30% in US$ terms (PPAM, para. 6). vi. The physical works were competently constructed and are reported to be functioning efficiently, though sales of gas have fallen considerably short of forecasts. SGE's financial position, nevertheless, is good, by virtue of the regular tariff revisions, though service of foreign debt is a problem (as in other sectors and projects) (PPAM, para. 9). The reduced sales, partly due to the slippage in project completion, are probably also attributable to the high cost of boiler conversion (PCR, para. 5.03). Air pollution and related morbidity statistics are reported to have declined (PCR, paras. 4,07-4.08). Sustainability vii. The benefits of the project appear to be sustainable for the fore- seeable future, and indeed should increase with continued conversion of existing boilers to gas (PPAM, para. 10). Findings viii. The audit agrees with the conclusions of the PCR, that the project was well conceived and executed, and appears to have achieved considerable progress in reducing air pollution; and that the institutional development of SGE has been commendable (PCR, para. 9.01). PROJECT PERFORMANCE AUDIT MEMORANDUM SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA SARAJEVO AIR POLLUTION CONTROL PROJECT (LOAN 1264-1-YU) I. PROJECT SUMMARY The Project 1. The Sarajevo Air Pollution Control Project (Loan 1264-1-YU, signed on June 8, 1976) was part of a two-pronged attack on environmental pollution in the Sarajevo area. This project aimed at eliminating the dangerous winter smogs prevalent each year, by providing comparatively pollution-free natural gas in place of lignite coal for heating. The companion Bank loan (1263-YU) aimed at improving water supply and sewerage services and reducing river pol- lution. 2. Loan 1264-1-YU for US$27 millionli was designed %'.., finance exten- sion to Sarajevo of a major gas transmission main, supplying gas from sources in N. Yugoslavia and the U.S.S.R., together with the necessary distribution looplines and mcins, pressure regulating stations, service connections and conversion of existing boilers to gas, with telecontrol and metering systems P-d technical assistance to Sarajevo Gas Enterprise (SGE), the Borrower (PCR, para. 2.11). Total estimated cost of the project was US$5P.6 million (in- cluding US$6.1 million interest during construction) to which the Bank loan would contribute US$27 million; so that Sank financing amounted to 46% of cost--somewhat less than the foreign exchange component (55% of total cost). Remaining financing would cc . from local loans and grants, and from SGE's own internal cash generation. Project Execution 3. Because of procedural delays affecting contractual arrangements and guarantees, the loan took twelve months to become effective (PCR, para. 3.01) but SGB had endeavored to minimize the effects of this delay by engaging consultants before Board presentation (PCR, para. 3.02). 1/ Loan 1264-1-YU was actually part of a two-part loan. Loan 1264-2-YU for US$11 million was made to the Nafta Gas Unit (NGU), an autonomous Organ- ization of Associated Labor within the Naftagas Enterprise, to aLsist with financing of an extension of NGU's gas transmission systen in the Republic of Serbia (financed under Loan 916-YU) to Zvornik, just inside the border of the Republic of Bosna i Hercegovina of which Sarajevo is the capital (Loan Agreement; SAR; PCR, para. 1.02). A separate report covers Loans 916-YU and 1264-2-YU. - 2 - 4. As built, the project differed from the preliminary design in some respects; by using heavy earth-moving equipment, it was possible to realign the transmission main, saving 13km of pipeline; the distribution network was supplied by a loopline from two directions, instead of one, each with an independent pressure regulating station, thus increasing system flexibility and reliability; and the quantity of distribution mains laid during the proj- ect period was considerably reduced (85kas against 160km estimated at apprai- sal2/ (PCR, para. 3.03). The physical works were competently executed and are efficiently operated. Time Overruns 5. Project execution took about two and a half years longer than fore- cast, the main delay occurring in the distribution network, where work was held up by congestion through other activities (laying of water mains and sewers, roadworks) in the narrow streets of the city (PCR, para. 3.05), and in delivery and installation of the telemetering system, where delay arose from design changes and location problems (PCR, para. 3.06). Physical works were completed in June 1983, except for heating boiler conversion, which Is a continuing activity. Cost Overruns 6. Final p:oject cost came out at US$68.3 million, 30% more than the appraisal estimate; in terms of dinars, the overrun was 67% (Din 1583.6 mil- lion, against Din 945.7 million estimated, PCR, pars. 3.11). The main increase occurred in the distribution system (79% in US$), which is surpris- ing in view of the shortertength- of distribution mains actually laid; the PCR attributes the overrun to inflation during the extended project implemen- tation period (PCR, para. 3.12). The other principal cost increase arose with the telemetering and control equipment; SGE blames the overrun (657% in US$ terms) on simply bad estimating, though more sophisticated equipment may in fact have been subsequently specified. Institutional Performance 7. In spite of initial lack of experience, SGE undertook considerable staff training, with the aid of consultants, and evolved an organizational structure which has met operational needs extremely well (PCR, paras. 6.02- 6.04). The Sarajevo Institute for Construction performed well in initial project preparation and later in coordinating all the contemporaneous works taking place under the two Bank projects, as well as other city developments (PCR, para. 2.14). SGE at present operates the entire system with only 170 employees, which is commendable. Sales and Financial Results 8. Connections to the system and sales of gas have lagged behind a3praisal forecasts; sales in 1985 were only 45% of expectations (84 million m , compared with 185 million m3), attributed partly to the three years' 2/ A further 43km have subsequently been installed. - 3 - program slippage and partly to the high cost of converting heating plants to gas, and difficulties in obtaining cheap credit for this. The City Assembly had undertaken to establish a revolving fund for gas conversion, but instead requested banks to offer credit; high interest rates have discouraged utili- zation of this service (PCR, para. 5.03). 9. The revenue covenant under the Loan Agreement now requires SGE to fix tariffs to produce net cash generation of 35% of average capital expendi- ture over three years (comprising one actual and two forecast years). SGB does not always succeed in complying exactly with this--budgeting two years ahead with the inflation now existing must be somewhat conjectural-and in any case its capital requirements are now fairly modest; but accounts pub- lished since the PCR indicate that SGE manages to earn a surplus before interest equivalent to about 9% - 10% on revalued net fixed assets, achieved by frequent revisions of the tariff. (Increases in purchased gas prices are passed on to consumers within two weeks.) This is satisfactory. However, the cost of debt service on the Bank loan represents a constantly growing burden, with dinar depreciation, and consumes a growing proportion of the operating surplus in interest payments alone. Sustainability 10. Subject to the financial constraints, which could prejudice mainte- nance expenditures (though these will be small as yet), the project benefits appear to be sustainable without difficulty for the foreseeable future, and indeed should increase as the rate of conversion of heating appliances to gas gathers momentum. Economic Evaluation 11. The appraisal report did not attempt to quantify the project bene- fits, merely indicating the necessity for gas tariffs to approximate the long-term marginal cost of supply. The PCR finds that this is in fact the case (PCR, para. 8.03) and shows that gas heating remains cheaper than the other alternatives to lignite (PCR, para. 8.02). There is therefore an incentive for remaining consumers to convert to gas. No economic rate of return was calculated for the project, either at appraisal or after project completion. Bank Performance 12. A* in the case of the Sarajevo Water Supply and Sewerage Project, appreciation has been expressed by local officials of the borrower, of the assistance and advice afforded by Bank missions. The PCR notes (para. 7.01) that SGE considers the Bank to have played a major role in project identifi- cation and preparation and in SGE's organizational development. Although total supervision by Bank staff averaged about 10 staff weeks per year, field supervision was light, amounting on average to little more than one man-week of mission time per year (Basic Data Sheets), confirming that this was a reasonably problem-free project. -4- II. CONCLUSIONS 13. The audit agrees generally with the PCR, that the project was well-constructed and is efficiently operated, and appears to be steadily achieving its objectives in reducing air pollution to safe levels. SE has developed into a well-run and effectf- ' irganised institution. The bene- fits of the project are clear and shotu be sustainable for the foreseeable future. -5- ATTACHMENT A COMMENTS FROM NAFTAGAS GAS UNIT ZC2C DIST3421 JWS0123 OEDD2 REF : TCP1 ME1 JWS0123 JGV518 IN 20/02:12 OUT 20/02:15 41462 SA GAS YU 41462 SA GAS YU YUGOSLAVIA, SARAJEVO, 19.5.1986. RBTLX.39/ML/986 THE WORLD BANK ATT: OTTO MAISS, MANAGER OPERATIONS EVALUATION DEPARTMENT SUBJECT : PROJECT PERFORMANCE AUDIT REPORT AIR POLLUTION CONTROL PROJECT (LOAN 1264-1-YU) IN REFERENCE TO THE DRAFT OF THE PROJECT PERFORMANCE AUDIT REPORT, AIR POLLUTION CONTROL PROJECT (LOAN 1264-17) WE INFORM YOU THAT WE ENTIRELY STUDIED THE SAME AND HAVE NOT GOT ANY REMARKS, SO WE AGREE THAT YOU SEND IT TO THE FURTHER PROCEDURE OF CONSIDERATION AND ACCEPTANCE AND AFTER THAT PLEASE ADVISE US ON ACCEPTANCE IN THE FINAL CONTENTS SO WE COULD GE1 INFORMATION ABOUT THE ATTITUDE AND OPINION OF THE BANK'S EXECUTIVE DIRECTORS. SARAJEVO GAS SINCERELY YOURS I. COLAKHODZIC, PRESIDENT OF THE MANAGING BOARD 41462 SA GAS YU 41462 SA GAS YU - 6 - SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA SARAJEVO AIR POLLUTION CONTROL PROJECT LOAN 1264-1- YU PROJECT COMPLETION REPORT I. INTRODUCTION Background Data 1.01 The project objective was to abate air pollution in the city of Sarajevo by providing pollution-free natural gas. The project consisted of gas transmission and distribution facilities for Sarajevo to be linked to the gas transmission system of the Republic of Serbia. The project was estimated to cost US$74.9 million of which US$37.4 million (50%) would be the foreign component. 1.02 The gas transmission main from Zvornik to Sarajevo, constructed by the Sarajevo Gas Enterprise (SGE), is an extension of the transmission main from Batajnica to Zvornik, constructed by the Nafta Gas Unit (NGU). The latter main was originally included in a previous-Bank project financed by Loan 916-YU of June 25, 1973, to NGU. However, due to cost overruns and related financial constraints, supplementary financing (Tranche II) was provided to assist NGU in completing the transmission main . The loan amount, US$38 million, was thus divided between SGE-US$27 million (Tranche I), and NGU-US$ll million (Tranche II), for Parts I and II of the project respectively. 1.03 Part I of the Project was supervised by the EMENA Water Supply Division; Part II by the Energy Department. In this Completion Report, "the Project" refers to Part I, "the Loan" to Tranche I, and "the Borrower" to the Sarajevo Gas Enterprise (SGE). Borrower 1.04 SGE is an organization of associated labor carrying out its activities with socially-owned resources under Yugoslav law. It was established for the implementation of the project and for the operation of the gas supply and distribution systems. It is an autonomous enterprise but decisions on tariffs and investment programs are subject to approval by the City Assembly. -7- Bank Role in the Sector 1.05 Bank involvement in the water supply, sewerage and air pollrtion sectors in Yugoslavia was initiated in 1971 and has continued through the execution of nine projects. In addition to substantial financial participation, the Bank has actively assisted the Borrnwers in project development and implementation as well as in the establishment of new institutions and appropriate financial strategies. Lending in the sector has been in accordance with Bank country policy, focusing on the less-developed Republics, and on meeting basic needs through improved health and environmental conditions. Sources of Information for the Project Completion Report 1.06 This project completion report (PCR) is based ont (i) Bank project preparation documents, President's and Staff Appraisal Reports; (ii) SGE report "Air Pollution Control Project in Sarajevo"; (Wi1) supervision reports; (iv) external audit reports; and (v) discussions with Borrower's staff and the City Assembly of Sarajevo. -8- II. PROJECT PREPARATION AND APPRAISAL Project Origin 2.01 Sarajevo was experiencing severe air pollution attributed primarily to the use of lignite for heating purposes combined with special climatic conditions causing air inversions. The population in the center of Sarajevo was exposed to average winter concentration of 80s (sulphur dioxide) of about 0.600 mg/m' which significantly exceeded the level classified as acceptable under the Serbian standard (0.150 mg/m'). There was clear evidence that mortality rates from cardio-respiratory diseases increased substantially with the occurrence of high concentrations of S0 and soot. Sarajevo also suffered from water shortages and from water pollution through the discharge of untreated sewage effluents in the Miljaca River. The city authorities fully recognized the need for actions to be taken for the provision of adequate water supply and for the reduction of air and water pollution. 2.02 The Bank's interest in the environmental problems of Sarajevo began in 1972, and projects were simultaneously prepared for water supply and sewage disposal and for air pollution reduction which ultimately resulted in two loans (1263-YU and 1264-YU). Project Preparation 2.03 In 1967, the City Assembly had begun to take measures for the reduction of air pollution. Partly on the recommendation of a Bank mission, an international consulting firm was appointed in 1973 to study alternatives for pollution reduction including the use of natural gas. 2.04 Concurrently a proposal was under preparation to expand natural gas supply in the eastern part of Yugoslavia through importation from the USSR, in addition to the development of local findings in the Socialist Autonomous Province of Vojvodina. The project, which materialised, was partly financed by Loan 916-YU to NGU. As a further development and as an extension of the NGU system, the supply of natural gas to Sarajevo was considered. 2.05 Based on the consultant report, the use of natural gas was concluded to be the least cost and most feasible solution for the reduction of air pollution in Sarajevo. The gas could then either be obtained from the Naftagas system or through imported liquified natural gas (LNG). Natural gas would then primarily be used in high population density areas. Two local consulting firms were subsequently engaged to prepare an engineering study for gas distribution within Sarajevo. In order to strengthen the local consultant capacity, a short term expert from British Gas was employed and paid for by the Bank. This study provided the basis for project appraisal. -9- 2.06 The City Assembly through its Department for Communal Activities had originally been responsible for project preparation and for the engagement of consultants. As the problems became more complex the need arose for the establishment of an overall coordinating body for the implementation of infrastructure works and consequently by early 1975 the "Institute for Construction" (ZAVOD) was created. For the implementation of a natural gas project, ZAVOD investigated the need for required institutional framework and based on its recommendation the City Assembly established the Sarajevo Gas Enterprise on May 8, 1975. 2.07 The processing of the project can be summarized as follows: (i) the project was originally appraised in December 1974 and was limited to the distribution system based on the assumption of supply of LNG; however, during a Bank mission in March 1975 it was decided to connect Sarajevo to the Naftagas system and the project was subsequently expanded to include a gas transmission main, Zvornik-Sarajevo, and a main pressure regulating station; financing for these elements was provided by Tranche I of Loan 1264-YU; and (ii) at the time of loan negotiation. October 1975, it became obvious that the Naftaga. project (Loan 916-YU) faced serious financial difficulties. In order to enable timely completion of the Naftagas project it was then agreed to include the financing of the gas transmission main between Batajnica and Zvornik as tranche II of Loan 1264-YU; the two components would be executed concurrently and duly coordinated. 2.08 The time between project identification and Board presentation was about three years, which could be considered reasonable taking into account the need for the evaluation of technically complicated alternative solutions. The City Assembly, and later ZAVOD, performed well in managing project preparation particularly when considering their initial inexperience in the gas industry. The execution of the consultant assignments was satisfactory. 2.09 The Bank contribution to project preparation was substantial in that it: (i) was instrumental in the engagement of a consulting firm for the evaluation of alternative solutions on pollution reduction; (ii) played a major role in the identification and formulation of the project; -10- (iii) rendered appropriate advice on the establishment of the institutional framework; and (iv) recommended the introduction of proper cost recovery policies. ProJect Obiectives 2.10 The major objective of the project was to reduce the concentrations of S02 and soot, with the permissible pollution levels under the Serbian standard to be exceeded only during six days of the heating season. By 1981 the gas distribution system was projected to cover about 65% of the total heating demand for the 6 communes which then formed the city of Sarajevo. The remaining part of the central City was to be heated by briquettes since expansion of the gas system to thos' dispersed higher areas was not economically justified. Project Description 2.11 The original project consisted of: (i) a transmission main, from Zvornik to Sarajevo, about 130 km long, and 16" in diameter; (ii) a main pressure regulating station with a capacity of 125,000 a' per hour; (iii) a high pressure distribution loepline, about 20 km long; (iv) about 50 pressure regulating sub-stations; (v) about 160 km of low pressure distribution mains; (vi) about 10,000 service connections; (vii) conversion to gas of about 300 existing boiler stations; (viii) a telecontrol - telemetering system to monitor gas distribution; and (ix) technical assistance for institutional development, training and tariff study. 2.12 The project was expected to be completed by December 31, 1980, and the Naftagas component (Batajnica-Zvornik) by December 31, 1978. 2.13 The design of the Sarajevo gas transmission and distribution systems was based on the following assumptions: -11- (1) the main pressure regulating station and the distribution system were designed for a peak hour demand of 125,000 a', which was projected to be the ultimate gas supply for the city; and (ii) the capacity of the transmission main was designed for 125,000 m'/hour at a pressure drop (Zvornik-Sarajevo) of about 32 bar. Loan Covenants and Conditions for Effectiveness 2.14 A loan agreement (Loan 1264-1 YU) was entered into between the Bant and SGE and a project coordination agreement between the Bank and the city of Sarajevo. In the latter, ZAVOD was appointed to coordinate all works to be executed under this loan and for the water supply and sewerage project (Loan 1263-YU). 2.15 The loan covenants novered the following major subjects: () SGE should employ consultants for final engineering and construction supervision, institutional development, training, and preparation of tariff proposals. These consultants were employed; and (ii) SGE should have its accounts and financial statements audited and furnished to the Bank within six months of its year end (section 6.02); set its tariffs and charges to meet certain financial targets and submit annual updated financial projections (section 6.04), limit debt to project purposes (section 6.05), pass on within one month increases in natural gas prices (section 6.06), and employ consultants to prepare tariff proposals within nine months of loan effectiveness (section 6.07). These covenants were complied with except for Section 6.04 which is discussed in paragraph 5.02. 2.16 In the coordination agreement the City Assembly agreed to provide additional funds for cost overruns as required, take appropriate actions for tariff increases, enact and enforce air quality regulations and make arrangements for the establishment of a revolving fund to finance the conversion to gas-fueleO appliances. 2.17 Special conditions for effectiveness included the following actions to be taken to ensure reliable and sufficient gas supply to Sarajevo: -12- (i) to make effective an agreement on the supply of gas that had been entered into (December 1974) between the USSR Government and three Yugoslavian gas enterprises including Naftagas; this took place in March 1976; (ii) Yugoslavian banks to guarantee loans to be given by West - European banks to finance the construction of a gas transmission main through Hungary; guarantee agreements were entered into in April 1977; (iii) an agreement to be entered into between Naftagas and Energoinvest on the supply of gas to the Energoinvest aluminum factory at Zvornik and to Sarajevo; this was signed May 25, 1977; and, (iv) an agreement to be entered into between Energoinvest and SGE on the operation of the aluminum factory on a dual-fuel basis by using gas during the non-heating season, and making gas available for Sarajevo during the heating season; this was signed May 25, 1977. 2.18 The loan cfvenants and conditions for effectiveness adequately covered the requirements for project implementation and subsequent operation. -13- III. PROJECT IMPLEMENTATION AND COST Effectiveness and Start-Up 3.01 The Loan was declared effective on May 31, 1977, or twelve months after signature due to delays, caused entirely by third parti-s, in providing Bank Guarantees and completing contractual arrangements. 3.02 Althoug). appointment of consultants for engineering and construction supervision was a non-dated loan covenant, SGE acted expeditiously and consultants were engaged before the Loan was presented to the Board. The Bank assisted SE in the preparation of terms of reference for the transmission main and for the distribution system, and counseled SG8 to accept foreign participation where local experien;e was lacking. This resulted in two joint venture consultant contracts with the foreign consultants having overall responsibility for design and construction supervision. Revisions to the Scope of Work 3.03 The appraised project was based on a preliminary design which utilized British practice and standards. The following revisions were proposed, which were accepted by the Bank: (a) the foreign contractor for the transmission main proposed a realignment, enabling a reduction from 130km (proposed) to 117km (installed), which was made possible by the use of its heavy earth-moving equipment; and (b) for the distribution system, the consultant proposed connecting the loopline to the transmission main from two directions with the provision of two main pressure regulating stations (instead of one); this arrangement increased system reliability and flexibility. A comparison of the distribution system (Map IBRD 11460R(PCR)) as appraised and as implemented is shown below: Distribution Systc As Appraised As Implemented Loopline 20 km 67 km Distribution Mains 160 km 85 km Total System Length 180 km 152 km Main Pressure Regulating Stations 1-125,000 M'lHour 2-62,500 Ms/Hour Pressure Regulating Substations 50 Nos. 22 Nos. -14- IMlementation Schedule 3.04 A comparison between appraisal estimates and the actual implementation of major project components is shown on Chart 1. The transmission main from Zvornik to Sarajevo was delayed by about one year because of delays in design prepa:ation and in tendering and contract award. However, the work was completed in late 1979 concurrently with the main from Batajnica to Zvornik (Tranche II). 3.05 The execution of the distribution system took about two years longer than planned because of design and routing changes, and the need to coordinate the work with the laying of water and sewer mains as well as road improvements. Also much of the work took place in narrow, congested areas, which slowed down construction progress, and increased the costs. 3.06 85% of the capacity of boiler stations has been converted to gas. Conversion has beer slower than anticipated because of financial constraints (para.5.07). The delivery and installation of the telemetering system exceeded estimates by about two years due to design charges and difficulties in deciding the location of the main control station. 3.07 The difficulties encountered in the execution of the distribution system resulting from the coordination with other major City works were not fully known. Reorting 3.08 The reporting system consisted of quarterly and annual reports utilizing the key indicators set forth in the Loan Agreement. Such reports were submitted on a regular basis. Procurement 3.09 SGE prepared the general portion of tender documents, while the technical part was prepared by consultants. Preparation was timely, and Bank response took place within one month of document receipt. Tender evaluation was performed by a SGE committee with consultant assistance, and was normally completed within three months for equipment and up to six months for civil works. Prequalification was requested for the transmission main: 22 of the 28 firms expressing interest were selected as qualified, but only 3 submitted bids. 3.10 SGE entered into 487 contracts of which 462 were under LCB and 25 under ICB. Foreign bidders were awarded 82 contracts, 57 of which were advertised locally, and local firms were awarded 405 contracts. The aggregate value of foreign contracts was about equal to that of the local contracts. The number of contracts was unusually high, which was mainly due to the methodology for executing the distribution system L', but this did not adversely affect project executiou or standard of work. The cost for construction supervision amounted to US$1.1 million equivalent, -15- or about 2% of project cost, which is reasonable. 3.11 The following table compares the estimated and actual project costs in Dinar and U.S. Dollar equivalent, the latter at annual average conversion rates: Proiect Cost Increase Estimated Actual Estimated Actual Decrease -Dinar Millions-- -US$ Millions-- -Din- -USJ- Transmission Main 445.4 573.8 14.7 24.7 29 0 Distribution System 324.4 745.8 18.0 32.2 130 79 Pressure Regulating Stations 32.6 54.0 1.8 2.3 66 28 Telecontrol 13.3 122.0 0.7 5.3 817 657 Conversion of Heating Plants 49.4 23.4 2.8 1.0 (53) (64) Engineering Services 80.6 64.6 4.5 2.8 (20) (38) Total 2&. LIMA M AZ 1/ Contracts were awarded on an annual basis and on a piecemeal approach. 3.12 The cost increase, 67% in local currency and 30% in U.S. Dollar equivalent, can be attributed to: (i) significantly higher actual local inflation than projected (cumulatively 310% versus 90%) which was partly due to the energy crises and attendant price explosion; and (ii) the 18 months delay in project completion from 1980 to 1982. Disbursements and Financial Sources 3.13 Projected and actual Bank loan disbursements are shown in Annex I, Table 1. The actual disbursement period was 6 years. In the disbursement percentage a major change from appraisal estimates occurred in the civil works category in order to accommodate the foreign currency requirements under the contract for the transmission main which was awarded to a foreign firm. The Bank loan represented 51% of the total -16- Project cost at appraisal which dropped to 42% of actual costs. Direct foreign paymerts amounted to U.S.$18.8 million equivalent, corresponding to 702 of the Bank loan. 3.14 Project financing (para. 5.05) regarding the percentage contributions from different sources remained fairly close to appraisal estimates which was a remarkable achievement, when considering the delay in implementation, the cost increases, the rapid devaluation of the Dinar after June 1980, and the initiation of debt service payments concurrent with the first full year of operations. Performance of Consultants, Contractors, Suppliers and the Borrower 3.15 The consultants performed well, and the joint venture associations between foreign and local consultants resulted in a significant transfer of know-how to Yugoslavia. The single foreign civil works contractor completed its contract to SGE's satisfaction. Due to the large volume of local civil works contractors, an evaluation of their performance is not possible, but SGE did find that maintaining at the same time quality standards and construction schedule tended to create difficulties. Equipment suppliers performed well and met initially all quality standards except in one case where the equipment was rejected and returned. The 80E staff despite the initial lack of experience, performed very well overall. -17- IV. OPERATING PERFORMANCE Introduction 4.01 The areas addressed in the evaluation of the operating performance are the following: (i) the functioning of the gas supply and distribution systems; (ii) the utilization of existing system capacity; and (iii) the reduction in air pollution levels and related health benefits. Gas System Functioning 4.02 The gas system has been functioning since late 1980 and experience gained so far has been favorable. Deficiencies have been observed in some stretches of the transmission main where protection works will have to be carried out against risks of earth sliding. The delivered gas has a higher moisture content than anticipated, which has necessitated the provision of additional condensation vessels. The transmission main will not reach its design capacity until the commissioning of the compressor station at Zvornik (under the Naftagas project) which is scheduled in a later phase. However, this would not, at present, restrict the utilization of the system. 4.03 The project provided for sufficient spare parts and operational and maintenance equipment and no problems or difficulties have been or are envisaged to be encountered in operational matters. Through telemetering, most of the system control is automatic and the operational staff is small but competent. Utilization of The Gas System 4.04 The gas distribution system covers 34 km', or 53% of the area comprising the city of Sarajevo (the six communes). At the end of 1983, the city had an estimated population of 340,000 of which 220,000 (631) had access to the system, and about 178,000 (52%) had been connected. 4.05 Actual 1983 sales of 80.0 million m3 of gas represents 62% of the projected third year of operations. Heating was thus provided to 36,000 flats (146,000 people) and to 7,500 individual homes (32,000 people) for multiple uses, as well as to nearly all commercial and industrial firms in the center City area. In view of the credit difficulties (para. 5.03) this represents a major marketing achievement on the part of the SGE. -1.8- Air Pollution Reduction 4.06 Measurement of air pollution in Sarajevo has been carried out continuously since 1973, and although the methodology employed has been modified since appraisal, which makes a direct comparison difficult, it can be concluded that the appraisal objectives on the reduction in air pollution would be fully achieved by about 1986. 4.07 Chart 2 shows the different energy sources in use and the actual and estimated reduction in 80S during the period 1973/74 to 1984/85. An analysis of the data would indicate: (i) the use of lignite expressed as a percentage of total energy demand has decreased from 40% in 1973 to 13% in 1982 and is expected to remain at that level for some years; (ii) the emission of SOa has been reduced to about 50% (1982) of corresponding emission in 1973; this is expected to be further reduced; and (iii) the reduction in 80, emission through 1979, would mainly be attributed to the replacement of lignite by liquid fuel and thereafter to the replacement of liquid fuel by gas. 4.08 The Institute for Health Protection has statistics for cardio respiratory diseases and mortality rates evidencing a decrease in frequency, and expects further declines in the future. -19- V. FINANCIAL PERFORMANCE Introduction 5.01 Sarajevo Gas Enterprise (SGE) has had a comparatively short and demanding operational life span. Comparisons of appraisal forecasts with actual financial results are contained in Annex I Tables 2, 3 and 4. Financial Performance 5.02 SGE has introdu^ced a two-part tariff system. Part I covers the cost of gas purchased for which the City Assembly authorized SGE to charge the full cost to its consumers. Part II covers all SGE operating, debt service and other financial needs which is approved annually by the City Assembly and for which a tariff structure has been established providing for cross- subsidization between domestic and commercial/industrial consumers. 5.03 The connection rate to the gas system has been lower than projected, which consequently has affected the sale of gas and necessitated higher tariff levels than otherwise would have been required. The major reason for this would be financial constraints. The estimated cost of converting heating plants to use gas (Din.30.0 million at appraisal) had grown 8 times to Din.250.0 million by 1978. Instead of establishing a revolving fund the City Assembly requested all banks to give priority credit, at the lowest legal rate, for gas conversion. These credit facilities were being utilized, but a noticeable decline occurred with a s ,bsequent increase in the interest rate. Although the City Assembly had enacted pollution control regulations, their strict enforcement presents a significant problem because of the financial implications. The City Assembly planned to reinaugurate preferential bank credits in 1984 when the Olympic demands are over in order to accelerate small home owner connections and sales. 5.04 Despite delays in initiating operations and the fact that debt had to be serviced during project construction, SGE was able to generate internal funds for its investment program. SGE generated 4.4% of the program during construction, and were it not for the untimely debt service payments, they would have fully complied with the target of 11%. Financing Plan 5.05 The period 1976-82 was characterized by rapidly increasing construction costs resulting from internal inflation far beyond appraisal estimate, and substantial currency devaluations from 1980 onwards. Despite competing demands from other concurrent projects, notably the Sarajevo Water and Sewerage Project, Loan 1263-YU, urban renewal in the city center, and the massive infrastructure requirements for the 1984 Winter Olympics, the City helped balance the additional funding requirements through direct contributions and assistance in securing additional bank loans. -20- 5.06 Investments including capitalized interest totalling Dinar 1,860 million (appraisal Dinar 1,107 million) were financed 22% from capital contributions (appraisal 13%), 481 from the Bank loan (appraisal 39%), 30% by local loans (appraisal 33%) while internal cash generation was applied primarily to debt service, working capital, and loans to Naftagas. Financial Covenants 5.07 The performance of the four financial covenants can be assessed as follows: (a) The cost recovery covenant was appropriate to an energy project, and ias supportive of SGE's tariff proposals to the Cit7 Assembly. (b) The covenant requiring SGE to recover the cost increases in gas supply within one month was instrumental in the success of SGE's two-part tariff system. (c) The covenant for the establishment of a revolving fund, did not work out satisfactorily. Bank supervision missions were advised of the change in the program, and reported the change to be justified under the circumstances; and () The debt limitation covenant did not come into effect since SGE did not take out any long-term loans except for project purposes, and the long-term local lending sources used were those specified in the Loan Agreement. 5.08 Overall, the covenants played a valuable role in providing orientation for a financially successful project. -21- VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT Institutional Objectives 6.01 The institutional objectives for the establishment and development of well functioning organizations for project coordination and implementation and for works operation have been achieved. Development of SGE 6.02 SGE employed an international consulting firm in accordance with the Bank guidelines to propose an organizational structure, identify staffing requirements and implement a training program. Its assignment was later extended to cover also a tariff study. The consultant's work was completed satisfactorily in early 1979, except for the tariff study which was not implemented. Most of the consultant's organizational proposals or recommendations were subsequently introduced. 6.03 Chart 3 shows the present organizational structure of SGE which serves its purpose well. The development of its organization and staffing has kept pace with project implementation and the increase of related functions to be performed. The number of staff has increased from 5 in 1975 to 157 at present. Staff are highly qualified and efficiently utilized. 6.04 Since experienced technical staff was initially not available, signiticant training has been undertaken both within and outside SGE. Recruitment has not presented any particular problem; turnover has been low and staff morale is high. Training 6.05 The training activities consisted of the following main programs: (1) 4 engineers were sent to Holland in 1978 to the Dutch Gas Institute for an 8 month training course in subjects directly related to the execution and operation of the gas project; (ii) a Training Center was subsequently created in Sarajevo in cooperation with Workers School and conducted by professional trainers; courses were prepared in subjects relevant to gas supply and distribution and training has so far been imparted to 268 attendants for boiler houses (non SGE staff), 21 attendants for maintenance of the distribution system and 12 attendants for maintenance of domestic gas installations; and -22- (iii) in 1982, 80 was instrumental in establishing a course in gas technique at the faculty of Mechanical Engineering at the University of Sarajevo. The training undertaken is commendable. Office Facilities 6.06 8G was to have office facilities in the Sarajevo Water and Sewerage Enterprise (Vodovod) administrative building but because of financial constraints the building will not initially be completed to its proposed height and consequently no space can be allocated to SGB. Present facilities are adequate but the location of staff at four different places is inconvenient. -23- VII. BANK PERFORMANCE 7.01 The Bank established a good rapport and working relationship with both the Borrower (SGE) and the coordinating agency (ZAVOD). SGE considers the Bank to have played a major role in project identification and preparation and in its organizational development and that the Bank supervision has been useful. SGE is appreciative of Bank support and advice. 7.02 Bank staff, during project preparation, developed a methodology which led to the coordination of the efforts of 36 enterprises and institutions involved in the preparation of the project which maximized the input of those organizations while focussing on the specific needs for external assistance. -24- VIII. PROJECT JUSTIFICATION Background 8.01 The three main justifications for the implementation of the project were: (a) the project would through reduced air pollution provide improvements in general health and environmental conditions (paras. 4.06-4.08); (b) the project would be the least-cost alternative for meeting acceptable air quality standards; and (c) the project would provide through the extension of a gas system a financially attractive heating alternative. Alternative Heating Costs 8.02 SGE staff developed data as shown below comparing the cost (in August 1982 prices) of heating an average size apartment (60M2) to 21* centigrade. Cost Per Year Current Current -Dinar- -- Gas 6,624 88.30 Heating Oil 9,462 126.16 Electricityl/ 7,818 104.24 Lignite 3,678 49.04 The above data demonstrates that apart from lignite which is not acceptable from the pollution viewpoint, gas is the most economical heating alternative and it is 18% and 43% less expensive than electricity and heating oil respectively; the latter differential will further increase when a recently enacted federal tax on heating oil has been applied. 1/ The use of electricity for heating purposes represents about 13% of total heating demand (1983) and is expected to decrease because of its limited availability. -25- Long-Term Averase Incremental Cost 8.03 The long-term average incremental cost of the gas suply at a 15% discount rate was estimated at appraisal to be Din.2.58/M of gas sold. The revised calculation is Din.4.17/M', or 651 higher than the appraisal estimate, because of an assumed delay from 1983 to 1987 for full utilization of the system. The average tariff (in 1976 prices) collected by 8GE during 1982, about equaled the above long-term average incremental cost, which is satisfactory. Internal Financial Rate of Return (IRR) 8.04 The appraisal report did not provide an IRR since project justification was made on other bases. However, by using the data available for the very limited operational life of SGE and current forecasts for future system utilization, the IRR would be about 14, which is satisfactory. -26- IX. CONCLUSIONS AND LESSONS LEARNED 9.01 The following conclusions emerge: (1) the project was technically well conceived, and implemented a reasonable-cost solution among acceptable alternatives; (ii) the primary objective of satisfactory reduction of air pollution is likely to be substantially achieved by about 1986 with a gradual increase in the utilization of the gas system* (iii) with the provision of satisfactory credit facilities for conversion costs the project provides for a financially attractive heating alternative; and (iv) SGE as established and developed under the project is functioning well, and its gas supply and distribution facilities are well operated and maintained; *27 MU I TOUe -1 of 4 TUQQjIAVlA SARAZVO GAS ENTRRISI TARIF HISTOaY ON DINAMISOLD) PARt 1 PART I MUAL TARIFF Cost of Gas All Other Costa Supplied Domestic Industrial Commercial Domestic Industrial Commaq November 1980 6.25 8.00 11.00 12.00 December 1980 6.25 8.00 11.00 12.00 January 1981 7.69 Not in effect until 8.00 11.00 12.00 February 1981 7.69 July 1981 8.00 11.00 12.00 March 1981 7.69 8.00 11.00 12.00 April 1981 8.86 8.00 11.00 12.00 may 1981 8.86 8.00 11.00 12.00 June 1981 8.86 8.00 11.00 12.00 July 1981 9.44 2.31 5.83 LI 7.45 11.75 15.27 16.89 August 1981 9.44 2.31 5.83 V 7.45 11.75 15.27 16.89 September 1981 9.44 2.31 5.83 1/ 7.45 11.75 15.27 16.89 October 1981 8.96 2.31 6.18 7.45 11.27 15.14 16.41 November 1981 8.96 2.31 6.18 7.45 11.27 15.14 16.41 December 1981 8.96 2.31 6.18 7.45 11.27 15.14 16.41 January 1982 8.77 2.31 6.18 7.45 11.08 14.95 16.22 February 1982 8.77 2.31 6.18 7.45 11.08 14.95 16.22 March 1982 8.77 2.31 6.18 7.45 11.08 14.95 16.22 April 1982 9.37 2.31 6.18 7.45 11.68 15.55 16.82 May 1982 9.37 2.31 6.18 7.45 11.68 15.55 16.82 June 1982 9.43 2.31 6.18 7.45 11.74 15.61 16.88 July 1982 9.84 2.61 17 6.18 7.45 12.45 16.02 17.29 August 1982 9.93 2.69 7.17 8.65 12.62 17.10 18.58 September 1982 10.12 2.69 7.17 8.65 12.81 17.29 18.77 October 1982 10.60 2.69 7.17 8.65 13.29 17.77 19.25 November 1982 10.60 2.69 7.17 8.65 13.29 17.77 19.25 December 1982 12.30 2.69 7.17 8.65 14.99 19.47 20.95 January 1983 12.75 2.69 7.17 8.65 15.44 19.92 21.43 February 1983 13.54 2.69 7.17 8.65 16.23 20.71 22.19 March 1983 14.58 2.69 7.17 8.65 17.27 21.75 23.23 1/ These slight differences from the rest of the year represent computer program problems. YUGOSLAVIA SARAJEVO AIR POLLUTION COMT_ML PROJECT (LOAN 1264-YU) PROJECT COMPLETION REPORT SARAJEVO GAS ENTERPRISE (8M8) INCOME STATUAENTS AS OF DECEMBER 31 (Diaar Millions) l1979 1980 1981 1982 Appraisal Andited Appraisal Audited 1/ Appraisal Audited Appraisal Actual 21 Gas Sales (million =3) 60.0 Not 90.0 4.8 130.0 39.3 145.0 54.2 Sales Price (Dinar/m3) 3.1 Operational 3.3 10.73 3.6 11.56 3.7 14.95 Revenue Sale of Gas 186.0 - 297.0 40.4 468.0 446.2 536.5 803.3 Other Income 2.7 - 3.4 0.2 4.1 3.3 4.7 19.3 Total Revenue 188.7 - 3 40.6 472.1 449.5 541.2 822.6 Operating Expenses Gas Purchases 125.4 - 201.6 25.8 312.0 312.4 371.2 553.2 Wages & Salaries 10.9 - 14.8 16.6 18.8 25.3 21.6 35.0 Maintenance 4.2 - 4.9 1.2 6.2 3.2 9.5 5.7 Insurance 5.0 - 5.9 0.1 6.4 2.7 6.8 3.9 Contributions - - - 3.9 - 5.9 - - Ocher Expenditures 6.0 - 8.1 2-8 _10-3 3.8 11.9 10.6 Total Expenditures 151.5 - 235.3 30-4 3- 353-3 421.0 608.4 Surplus Before Depreciation 37.2 - 65.1 (9.8) 118.4 96.2 120.2 214.2 Depreciation 23.1 - 26.9 2-5 27.6 24.1 28.1 123.6 Surplus Before Interest 14.1 - 38.2 (12.3) 90.8 72.1 92.1 90.6 Interest - 68.3 40.0 66.2 85.9 Net Revenue 14.1 Not 38.2 (12.3) 22.5 32.1 25.9 4.7 Operational Operating Grats - City of Sarajevo - - 25.1 - - Audited Net Revenue - - 12. - 32.1 - 4.7 Rate of Return on Average Net Fixed Assets 3.6 - 4.5 - 9.9 4.9 10.1 3.4 M 1/ In 1980, due to operations initiating on December 28, 1979, the income statement was noted by the auditor, but was not audited. 2/ Audited data was not available. Data used was from company records. ！〕’〕〕〕〕〕〕’〕〕―〕〕〕‘〕〕‘〕〕〕”！。。。。 〕：};:!;::::：〔一‘};::！、：:!;:;;::;} 〔】〕；::;:;:::};;!！、．::!;:.;;;:;} 〔：｝〕；：〕〕〔；:：〔｝;;;!::!;:；【；;} ，浮”鴉醫二‘& 30 ANMU i Tab of 4 14 iv:X '$till n.Ogj t ny n g;I I tt, 221 n Ig gng A jul 9 t I -:tt '!,t 01 2 2 41 A Ve ng 2 :;>i ~i 1 931 1 gill I l J. fil 43 YUGOSLAVIA SARAJEVO AIR POLLUTION PROJECT (LOAN 1264-YU) Project Compeion Report Project implementation Schedule Y~ 1976 4977 1978 1979 4980 4994 4982 4983 -D-- -- ---r - -- -- -- --on - - - - --*- - Rm Guarler 2 3 4 1 2 3 14' 1 12 3 4 l 2 3 41 2 3 [4 4 2 314 1 2 3 4 1 1213 14 Tprlnd 1.im zoor soe so Re-i- -- Planned f1* High PMssue L U n PlRned a a a u Disbt Gdd Reanzed **l "" *l **" l • •l fl • • fl • •fl • f•l • - Planned "" - - * - Reguao Stations Re ~Pzd Conversion of Heating Plant s Realed * - Planned fNf l---f l f l f Telemeby Systern Recuzed fl• - fl • • •l •f •-l- Control & Admn~itafi blYd-- l Building Realized f• • u ,•• • f •• fla fl• a Legend: Designs & Prpoffon of Tender Documents - -Supply, installation & Conswuction Iv Planned SReafl2ed Tendering & ContrctAwardd WMa~Bnk244 - 32 - CHART 2 YUG~M*1 SARAEVO AMR POLLUTION PROJECT (LOAN 1264-YU) Pl~Øc CM ~pllo R~o Rew ot $02 Emission and Fuel Used for H in Sara~o, In Pøod *om 1973/74 th~ough 1981/82 and Estimaflons up to 1984/85 Innr Cty Ama 7t 61 51 1$02 >1 - 1M 73/74 74775 75/176: 6/77. 77/78 787/79 79/80 80/81 81T/8 Wi 8-3 84/85 WaOW eæ*-24946 m 33 . CHART 3 YUGOLVIA SARAJEVO AR P 3LLUTION PROJECT (LOAN 1264-YU) Po comp n R Sara~evo Gas Entps» - Organiaon Chat Councl Man~gim Boaud& Secial TechGood 1x -perOn Rnonc Admnb*~ _Deaament Dopan Depmn Consuli T yedit& Tice~ ponoon don 0~ C9 Am~ oDon Monu dn Mah1963 Wod Ban*-24947 기 IØRD l 146OR