Projects

Project Information

Second Power Development Project

Country and Location

Kingdom of Tonga

Borrower

Kingdom of Tonga

Date of Approval

3 December 1996

Executing Agency

Tonga Electric Power Board (TEPB)

Loan Amount

US$4.9 million

Terms

The amortization period is 40 years including a grace period of 10 years, and carrying a service charge of 1 percent per annum. The loan will be relent to TEPB with interest at rates equivalent to at least the Bankþs US dollar ordinary capital resources rates, currently at 6.82 percent per annum, with a maturity of 20 years including a grace period of 5 years.

Period of Utilization

Until 30 June 2002

Project Description

The Project covers the rehabilitation and expansion of diesel generating plants, and the rehabilitation of distribution systems in the four main island power systems of the Tonga Electric Power Board (TEPB). The Project is consistent with the Bank's Pacific strategy of support for building strong, self-sufficient utilities, and in providing the infrastructure necessary for private sector development.

Estimated Cost

The total cost of the Project is estimated at US$7.1 million equivalent, of which US$4.9 million (70 percent) is the foreign exchange cost and US$2.2 million equivalent (30 percent) is the local currency cost. The cost estimates incorporate provisions for physical contingencies, price escalation, and loan service charges during construction.

Financing Plan

Bank	US$4.9 million
Government	US$2.2 million

Project Benefits and Beneficiaries

The Project will provide improved power supply reliability and reduce operating costs by rehabilitating existing generation plant. Also, additional power generating capacity will be installed to meet the growing demand in one of TEPB's power supply systems. The efficiency of the distribution systems will be enhanced by the provision of energy loss reduction measures and their reliability improved through upgrading of lines, switchgear and improvements in remote control facilities.

Geographically balanced growth will be supported by the enhancement of the outer islands systems as well as the main Tongatapu power system. The beneficiaries of the Project will be the existing and future commercial, industrial, and residential consumers in the four main islands of the Kingdom.

Procurement

All procurement to be financed under the loan will be in accordance with the Bank's Guidelines for Procurement. The largest Project contract, to cover equipment and materials for the Tongatapu generation plant rehabilitation component, will be arranged under the Bank's international competitive bidding procedures. The generation plant expansion contract for Vava'u will be awarded under the direct purchase procedure. Distribution materials and other small items will be procured by either international shopping or direct purchase procedures in accordance with the Bank's Guidelines for Procurement.

Consulting Services

About 24 person-months of consulting services are required to assist with the implementation of the Project. The consultants will be engaged in accordance with the Bank's Guidelines on the Use of Consultants.

Technical Assistance

An associated technical assistance (TA) in the amount of US$300,000, for which the Ministry of Finance will be the Executing Agency, is proposed. The TA will have two components: (i) institutional development of TEPB, for which TEPB will be the implementing agency; and (ii) institutional development for rural electrification, for which the Ministry of Lands, Survey and Natural Resources will be the implementing agency. An international firm of consultants will undertake the TA and will provide 10 person-months of services. They will be engaged in accordance with the Bank's Guidelines on the Use of Consultants.

Estimated Date of Completion

31 December 2001