FINAL REPORT SUMMARY. November Prepared for: The Ministry of Economy, Trade and Industry. Prepared by:

Transcription

1 Feasibility Study for Promotion of International Infrastructure Projects in FY2011 STUDY ON THE SUBSTATION REHABILITATION PROJECT IN YANGON, THE REPUBLIC OF THE UNION OF MYANMAR FINAL REPORT SUMMARY November 2012 Prepared for: The Ministry of Economy, Trade and Industry Prepared by: Oriental Consultants Co., Ltd. Tokyo Electric Power Service Co., Ltd.

2 (1) Background and Necessity of the Project 1.Background of the Project The Ministry of Electric Power No. (2) (MOEP(2)) cooperated with each relational department including Myanmar Electric Power Enterprise (MEPE) has announced their strategy and direction in 2012 as follows. To shift from the current hydro power as the main source and promote diverse energy balance using thermal power generation. Promoting the two banks of each substation facility, On Load Tap Changer (OLTC) adapted to the main transformers and two-circuit transmission lines Computerize demand estimation and data collection, etc. to cooperate with other sectors Adequate supply for economic development through adequate power generation Electric energy saving and mitigating the lack of future national energy self-supply Renewable energy utilization promotion In order to carry out the above strategy, the national three-year plan Fiscal Year (FY) 2012) FY 2014 was released for generation and transmission facility reinforcement promotion. But, the current situation of Myanmar electricity demand and supply balance conditions, in spite of hydropower station construction from 2009, has resulted in a 21% sales loss due to the aging degradation of existing electric power distribution system. The installation capacity in FY2011 was 3,413 MW and the generation peak was 1,806 MW (53%). Generation demand was 9,711 GWh and the sales record was 7,698 GWh (79%). Yangon city consumes 45% of the whole country s demand. The demand of the whole Yangon area was 746 MW (45%) in April of 2012 and a demand of 1,399 MW (46%) is expected in FY2015. Rotational planned blackouts during peak operation periods are carried out in the dry season from February to May. For promotion of democratization, the Governments of Japan and Myanmar have agreed to improve the infrastructure especially for the electric power supply by adopting a Japanese Official Development Assistance (ODA) scheme at the beginning of 2012.

3 2.Necessity of the Project Against the above background situation, the Ministry of Economy, Trade and Industry of Japan (METI) has decided to conduct a Preliminary Feasibility Study (Pre F/S) to implement the Project for Rehabilitation of Existing Main Substations in Yangon District in order to improve the power supply system in the Yangon area. MOEP(2), in a meeting with the Study Team, expressed the need for rehabilitation of the power distribution system in the Yangon district including the existing main substations, i.e., Hlawga Substation / Power Station (SS/PS), Ywama SS/PS and Thaketa SS/PS. The Study Team conducted a site survey for those substations in order to clarify the necessity of the rehabilitation of those facilities. The results of the survey showed that rehabilitation of existing equipment is required. (2) Basic Concept for Determination of Project The following concepts are considered: The Project shall implement electric distribution rehabilitation only in the Yangon district. The Project shall conform to the existing development plan established by MOEP2. This Project shall be subject to adoption of a Japanese Yen Loan Scheme. The Project will aim to minimize environmental impacts. The Project shall be highly beneficial to the citizens of Yangon. (3) Outline of the Project The outline of the Project is categorized as follows: Rehabilitation of main substation facilities (Hlawga SS/PS, Ywama SS/PS, Thaketa SS/PS, and Ahlone SS/PS) Upgrading of transmission line (33 kv => 66 kv: Hlawga SS/PS ~ Ywama SS/PS section) Installation of preliminary Supervisory Control And Data Acquisition (SCADA) system (to Load Dispatch Center (LDC), Bayintnaung SS)

4 Table S-1 Item of Rehabilitation Name of Substation Items for Rehabilitation Ywama SS/PS Incoming feeder facility 33 kv to 66 kv In house use facility shall be integrated to 6.6 kv 66 kv Switchgear to GIS (Replacement) for incoming 33 kv Switchgear to GIS (Replacement) for distribution 6.6kV Switchgear (Replacement) for station 66kV/33kV Transformer(Move to Thaketa SS/PS) for distribution 66kV/33kV Transformer(Replacement & Installation) for distribution 33kV/11 kv Transformer (Replacement) for generation 33kV/6.6kV Transformer (Replacement & Installation) for station Control and Protection panels (Replacement) Storehouse for PCB oil equipment (New Build) SCS(New Installation) Data transmission line Digital UHF or GPRS ( New Installation) Hlawga SS/PS Outgoing feeder facility 33 kv to 66 kv 66 kv Switchgear to GIS (New Installation) for outgoing 33 kv Switchgear to GIS (Replacement) for distribution 230kV/66kV Transformer (Replacement & Installation) for transmission Control and Protection panels (Replacement) Interface Unit of SCADA network system for existing SCS (New Installation) Data transmission line Digital UHF or GPRS ( New Installation) Thaketa SS/PS 230 kv switchgear (Replacement) 66 kv Switchgear to GIS (Replacement) for generation 33 kv Switchgear to GIS (Replacement) for distribution 230kV/66 kv Transformer (Replacement) for transmission 230kV/33 kv Transformer (Replacement) for transmission 66kV/33kV Transformer (Move from Ywama SS/PS) for distribution 66kV/11kV Transformer (Replacement) for generation 33kV/11kV transformer (Replacement) for generation Control and Protection panels (Replacement) SCS(New Installation) Data transmission line Digital UHF or GPRS ( New Installation) Ahlone SS/PS 66 kv Switchgear to GIS (Installation) for generation 66 kv Switchgear to GIS (Replacement) for generation 66 kv Switchgear to GIS (Installation) for distribution 33 kv Switchgear to GIS (66kV) (Installation) for distribution 66kV/33kV Transformer (Replacement) for distribution 33kV/11kV Transformer to 66kV/11kV (Replacement) for generation 33kV/6.6kV Transformer to 66kV/6.6kV (Replacement)for station Control and Protection panels (Replacement) SCS(New Installation) Data transmission line Digital UHF or GPRS ( New Installation) Bayintanung SS SCS(New Installation) Data transmission line Digital UHF or GPRS (New Installation) Transmission line between Hlawga SS/PS and Ywama SS/PS LDC Voltage Up-grading (33kV=>66kV) Existing 33kV Tower (reuse) All : Check of members strength, keeping conductor height at ground and insulation distance) Suspension towers : Application of insulation arms Tension towers : Application of jumper supporting insulators Preliminary SCADA( New Installation) Data transmission line Digital UHF or GPRS (New Installation) system Source: Study team preparing from MEPE information

5 1.Total Project cost 10,853 million yen (exchange rate: 80 yen/us$) 2.Outline of results of financial and economic evaluation The possible benefits of this Project include the prevention of blackouts, transformer and transmission loss reduction, the reduction of power outages due to instrument fault, and faster recovery times after system outages. But, correctly quantitative estimation of economic indicators (Net Present Value (NPV), Economic Internal Rate of Return (EIRR), Financial Internal Rate of Return (FIRR), etc. are hard to calculated due to the lack of current performance data of the power system (e.g., System Average Interaction Duration Index (SAIDI), System Average Interaction Frequency Index (SAIFI)), and also financial information of electric supply organization could not be obtained on this time survey. But actually, it seems to be fall into unable to supply to cover the energy growth from next year under the energy demand growing condition, if rapidly action cannot be done in spite of huge deterioration of substation for power out put was becoming lower. So, financial evaluation shall be tried by considering to enable the effect of out put power up from the rehabilitation. Also, economic evaluation shall be tried by considering to enable the effect of out put power up due to the operation cooperation loss reduction etc,. by installing the preliminary SCADA.

6 1) Financial Evaluation Table S-2 Conditions of Financial Evaluation Item Benefit Cost Loan conditions Others Condition Available energy supply for expected demand growth by the rehabilitation of the proposed facilities, especially transformers (kwh) Average unit sales price of electricity (4.95 USCents/kWh 1 ) 1) Initial investment cost: Million US$ 2) The annual O&M cost is assumed to be 2% of the initial investment cost and be constant over the Project period.) 25% of initial investment cost is self-financed and the remaining 75% is financed by Japanese Yen Loan. Interest rate : 1.0% per annum Repayment period: 20 years (including a 6-year grace period) Repayment method: equal installment 1) Accuracy of calculation results of increase of energy supply (kwh) and reduction of transmission loss (kwh) is not verified because of luck of relevant data. 2) Operation period is assumed to be 20 years. 3) Depreciation period:20 years (same as the repayment period of Japanese Yen Loan) 4) Depreciation method: straight-line depreciation method.(5% repayment every year) 5) Salvage value (residual value): assumed to be zero after 20 years. 6) Corporation tax: assumed to be zero, Hurdle rate of FIRR Sensitivity analysis 10% (long-term interest of Myanmar as of October, 2012) Power demand minus 70% (30 % of the current level) * US$ 1 = Yen US$ = 828 Kyat Source: The Study Team Extra cost increase by every year demand growing is 315,777 Million Kyat (381.4 Million US$) as FY2011 sales amount record income of national country by assuming of yearly operation time is 8,000hrs/y. And corresponding sales amount of substation rehabilitation portion in FY2012 is 4,893,600MWh * 4.95 = 24,223,320 MUS$ as following table. 1 The sales price of electricity is 35Kyat/kWh for household, 75Kyat/kWh for Industry, Total average sales price record is 41Kyat/kWh = 4.95 USCents/kWh.(Myanmar currency 828 Kyat = 1 US$, local bank rate base at Aug of 2012 at survey period)

7 Table S-3 Candidate Each Substation Rehabilitation Transformer Rated Capacity and Estimated sales power volume Rated Capacity Rated Capacity v.s Load 2012 (Transformer) Peak demand MW MW MWh/y Hlawga % Ywama % Thaketa % Ahlone % Total 1, % 8000hr/y 4,893,600 Source: Study team preparing Available energy supply for expected demand growth and increase in energy sales by the Project are shown in the following table. The results of financial evaluation are shown in the following table. Table S-4 Calculation result of Financial Indices Financial indices Value NPV (10%) million US$ B/C (10%) 4.61 FIRR 22.8% EIRR (power demand minus 70%) 14.6% Source: the Study Team According to the above result, The FIRR of the Project on basically case is higher than long-term interest rate in Myanmar, B/C is bigger than 1 and also NPV is positive (>0). Furthermore, even if power demand was going down to 30% of the current level, the FIRR still exceeds the long-term interest rate (10%). Accordingly, the Project is judged to be financially viable.

8 2) Economic Evaluation Benefit Cost Others Item Table S-5 Condition of Economic Evaluation Condition Decrease in cost of electric service outages by introducing the preliminary SCADA system: 27.6 million USD/year (= saved electrical energy (27,595,000 kwh) x 1 USD/kWh 2 ) Project cost: million USD Increase in energy supply (kwh) and decrease in transmission loss (kwh) not considered for conservative calculation Annual maintenance cost will not change 20-year operating period Hurdle rate of EIRR 12% (the average opportunity cost of capital in developing countries 3 ) Sensitivity analysis Initial investment cost plus 10% Source: Prepared by Study Team The calculation results of economic indices are shown in the following table.. Table S-6 Calculation Result of Economic Indices Economic indices Value NPV (12%) 16 million US$ B/C (12%) 2.04 EIRR 14.3% EIRR (initial investment cost plus 10%) 12.8% Source: Study team preparing As a result of the preliminary evaluation, the Project is judged to be economically feasible, since the EIRR exceeds the hurdle rate of EIRR (12%) with a positive NPV is exceeding 1.0 also B/C ratio is positive (>0), Accordingly,. However, the estimate of economic indicators of the proposed project presented here is based on a number of assumptions and may contain a certain amount of uncertainty. Thus, the introduction of the preliminary SCADA system will enable the collection and storage of performance data of the power system operation data (e.g., SAIDI, SAIFI), Thus, economic and financial indicators such are EIRR etc,. seems to be verified, it shall be reexamined once these data become more available. 2 Average cost of electrical service outages in developing countries. 3 Guidelines for Preparing Performance Evaluation Reports for Public Sector Operations, ADB (2006)

9 3.Reviewing the environmental and social aspects Each Project site at the four substations is located within the boundary of the existing substation and is surrounded by the existing power plant, staff residential areas and/or other public facility areas. Accordingly, the Project sites are isolated from the people s livelihood areas and currently, there are no environmental or social issues expected to be caused by the aforementioned substations. A part of the existing transmission line between Hlawga SS/PS and Ywama SS/PS crosses the protected area of Hlawga Wildlife Park. In regard to upgrading (33 kv 66 kv) the existing transmission line, while Yangon City Electricity Supply Board (YESB) has plans to install a new transmission line over a new route, an alternative upgrading method without installing new towers has been proposed by the Study Team. YESB has agreed to examine this method in this study because of expected advantages as: reduction of construction cost, shortening construction period, no need for new land acquisition, and reduction of environmental social impacts. Since all facilities related to the preliminary SCADA system will be installed in the existing substations, no serious environmental or social impacts are anticipated. Based on the Japan International Corporation Agency (JICA) Guidelines for Environmental and Social Considerations and the Asian Development Bank (ADB) Environmental Assessment (EA) Guidelines, it is considered that the proposed Project will be classified as Category B because it basically consists of the rehabilitation of existing substations and the upgrading of existing transmission lines, and does not include large-scale involuntary resettlement, large-scale logging or submarine electrical cables. Matters to be conducted by the implementing agency for the realization of the Project are as follows. 1) As for the upgrade (33 kv to 66 kv) of the transmission line between Hlawga SS/PS and Ywama SS/PS, a prompt decision on either the YESB plan (a new Right of Way(ROW)) or the alternative plan (the existing ROW) is needed. In addition, necessary measures to cope with the environmental and social consideration aspects shall be examined. 2) Requirements on the environmental and social considerations for the proposed Project, such as the prior permission mentioned in the Environmental Conservation Law, and the results of screening and scoping based on ADB Environmental Assessment (EA) Guidelines, shall be confirmed and/or discussed with the Ministry of Environmental Conservation and Forestry (MOECAF).

10 3) For the environmental and social considerations studies at the Initial Environmental Examination(IEE) level, the following measures shall be prepared: Contact and selection of Environmental Impact Assesment(EIA) Consultant Confirmation of cost and time required for EIA approval (4) Implementation schedule The overall schedule of the Project is shown in the diagram below. Table S-7 Implementation Schedule Year Month Project Formation A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D METI FS Apraisal FF E/N L/A Official Request from Myanmar Government Selection of Cosultant Basic Design/Detailed Design & Preparation of Tender Documents EPC Contractor Selection Implementation Selection of Consultant JICA Approval and Contract Basic Design/Detailed Design & Tender Documentation JICA Approval Prequalification of EPC Contractor Tendering JICA Approval and Contract Design & Manufacturing Transportation Construction, Installation, Commisioning Source: Prepared by study team (5) Feasibility of Operation From the results of this survey, as stated in paragraph (3) b) "Outline of results of finance and economy," is hard to analyze the actual long term benefit cost due to the lack of performance data of the power system (e.g., SAIDI, SAIFI). In addition, judgments on feasibility will be clarified considering not only substation, but also power station rehabilitation including preliminary SCADA installation as a total system because power generation rehabilitation will have a large impact on the decrease of power source outages, which is a fundamental background issue. Therefore, this urgent substation rehabilitation work is necessary for Yangon city residents in order to reduce the social impact of frequent blackouts and/or sudden fault interruptions. So, this Project is considered feasible from the viewpoint of generation rehabilitation work.

11 Also, substation rehabilitation works is most suitable if it need of using of the low-interest loans such as JICA overseas loans, etc. In addition, regarding the implementation and operation period, this Project focuses on substation rehabilitation; thus, the same substation operation members can be managed after rehabilitation. Facility maintenance and management abilities will pose no problem because suitable members will already be placed at each substation site. However, the lack of spare parts, etc. has caused stoppages in the rehabilitation works of old facilities. Currently, they are proceeding with the rehabilitation works of the facility but the work is slow, and they have a lack of technical skills on items such as whole grid analysis study and protection coordination planning. Therefore, consulting services are required from now on. (6) Technical Advantages of Japanese Company Considering the level of technological sophistication and the track record of supply, Japanese manufacturers relevant technology is fully competitive in the international market. Due to limitations in construction space, companies with vast experience in constructing in limited spaces and those who can design equipment against seismic conditions are best. It is recognized in Myanmar that Japanese equipment has been used for long periods without major power failures and is considered strongly reliable by MEPE technical staff. Major equipment to be procured from Japan include transformers, circuit breakers, arresters, etc., which have advantageous features for this substation rehabilitation Project, such as re-assembled special three-phase compact transformers for easy land transport and installation, and gas-insulated circuit breaker switches (GCB), which are non flammable and compact. In addition, high performance lighting arresters can prevent damage to circuit breakers. In addition, replacing the PCB oil in Current Transformer (CT) and/or Voltage Transformer (VT), etc. will provide a safer environment for humans. These types of equipment are all compact so they can be installed in narrow spaces. Also, the preliminary SCADA system with safety protocols will enable data collection to provide better operation without blackouts and can be used for future planning. Furthermore, experienced rehabilitation construction work with non-suspended operation is most suitable for the frequent blackout conditions in Yangon city with consultant technical supervision.

12 (7) Project Execution Scheme and the Possible Risks Myanmar can take advantage of the Japanese Yen Loan project for the first time in 25 years, thus current government has no experience for its applying, so many challenges such are agency decision. So, Japanese government must kindly support to them expression of co-works for Myanmar government. Myanmar government has requested acceleration of this project proceeding to achieve the success before reelection in If project formation was delay, current government might cancel the request of this project loan. Thus, to pressure for Myanmar government about this project formation in early period is must be need. Table S-8 Yen Loan Proceeding Flow Source: Prepared by Study Team

13 (8) Map Showing the Survey Project Site in the Country Figure S-1 Project Site Map Myanmar Yangon Hlawga Ywama Bayintnaung LDC Thaketa Ahlone Source: Prepared by Study Team