* .. e Joint UNDP/World Bank Energy Sector Management Program Activity CompletionReport No. 003/83 Country: sUDAN Activity: XAAGEMENT ASSISTANCCE TO TIE 1INISTRY OF ENERGY AND MINING May 1983 Report of .he joint UNDP/%bddBank Energy Sector Management Progrmn This document has a restric'ed distributiot. Its conter.ts may not be disclosed without authorization from the Covernment, the UNDPor the World Bank. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
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* .. e
Joint UNDP/World BankEnergy Sector Management Program
Activity Completion Report
No. 003/83
Country: sUDAN
Activity: XAAGEMENT ASSISTANCCE TO TIE 1INISTRY OF ENERGY AND MINING
May 1983
Report of .he joint UNDP/%bdd Bank Energy Sector Management ProgrmnThis document has a restric'ed distributiot . Its conter.ts may not be disclosedwithout authorization from the Covernment, the UNDP or the World Bank.
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Energy Sector Management Program
The Joint UUDP/World Bank Energy Sector Management Program isdesigned to provide a rapid and flexible response to governments whorequest assistance in Implementing the policy, planning and Institution.Lrecommendations of the Energy Assessment Reports produced under anotherJoint JNDP/World Bank Program, or in carrying out prefeasibility studiesfor energy Investments Identified in these reports.
The Energy Sector Management Program can provide the followingtypes of assistance for countries which have had assessments:
X assistance to improve a government's ability to manage itsenergy sector, for example by defining staffing and workprograms, evaluating management information needs,Identifying sources of public and private finance,develo,?ing a medium-term investment plan;
* prefeasibility work on priority investment plans,especially those which will improve the efficiency ofenergy use, bring about economic fuel substitution, orprovide enough affordable energy to rural areas;
specific short-term assistance in institutional andmanpower development, both at the sectoral and agencylevels.
The program alas to supplement, advance and strengthen theImpact of bilateraj or multilateral resources already available fortechnical assistance in the energy sector.
Funding of the Program
The Program is a major international effort and while the core.. finance has been provided jointly by the UNDP and the World Bank
Important financial contributions to the Program have been made by theGovernments of United Kingdom, Deamark, Netherlands, Finland, Sweden,Australia and New Zealand.
SUDAN
MANAGEMENT ASSISTANCE TO THE MISTRY OF ENERGY AND MINING
MAY 1983
ABBREVIATIONS
GOS Government of SudanMEH Ministry of Energy and MiningNEC National Electricity CorporationGPC General Petroleum CorporationGMRD Geological and Mineral Resources DepartmentNEA National Energy AdministrationNCR National Council of ResearchCER Council of Energy ResearchNEP National Energy Policy
Diagram 2 - Energy Sector Functions and Responsibilitiesby Agency*................................ 4
Diagram 3 - Proposed Organizational Concept for EnergySecor.... 7
Annex I - Energy Institutions in Sudan dan............ 11
Annex II - Terms of Reference for Reorganizationof Sudan Ministry of Energy and Mining... 14
Annex III - Aide - Memoire March 21, 1983........... 21
Annex IV - Ministers letter.........................
Annex V - TOR for Technical Assistan.:e to MEM........
SUDAN
MANAGEMENT ASSISTANCE TO THE MINISTER OF ENERGY AND MINING
Introduction
1. At the request of the Government of Sudan and in accordance with
the attached terms of reference, Annex 5, H. J. Ansari (consultant)
visited Sudan from February 22 to March 29, 1983. The mission's
objective was to assist the Minister of Energy and Mining (MEM) in
developing a management information system within the Ministry by
institutionalizing the energy data collection process, identifying the
key information needed for the Minister's decision-making and ensuring a
routine flow of this information. The first two weeks were devoted to
evaluating agencies involved in the energy sector and under the
supervision of MEM. The statutory functions of these agencies is
reflected in column 1 of diagram 2 while their actual performance is
indicated in column 2, and column 3 shows the performance gap.
2. During the mission, it became clear that the absence of an
efficient management information system was part of a wider problem
related to inadequate organization within the Ministry. Consequently,
the focus of the mission's work was broadened to include an examination
of the organizational structure of the ministry as well as the policy
framework of the energy sector.
Present Organization
3. The organization of Sudan's Ministry of Energy and Mining is
influenced by local traditions as well as the remnants of the British
SUDAN ORGANIZATIONAL STRUCrURE OF THE ENERGY SECTOR
Private & Public Corp. Adiveors
Chevron MINISTER OF LegalWhite Nile Pet. Corp. _ _ -_ ENERGY & MINING ___ FinancialSudan - Egypt Mining Trade UnionsRed Sea Mining ElectricityOthers
National General National Geological I National cEnergy Petroleum Electricity and Mineral Under tatonnstration Corporation Corporation Resource Secretary For Water
. , - . .1 _. , w . B~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-
-3-
Civil Service. The Ministry was formed in 1977, with the objective of
managing the energy sector and addressing the issues created by the
global energy crisis. Different governmental units dealing wit1t energy
matters within the various ministries were transferred under MEM's
supervision to permit coordination of. the management of the energy
sector. The HEM's central organization is made up of 47 members
including the Minister and the State Minister. The Ministry has seconded
a few professionals to it from other institutions, mainly on ad-hoc
basis. There are virtually no technical and professional experts in the
field of energy within the central Ministry, aside from the Minister and
the State Minister. The Ministry's mandate as stated in the presidential
decree of 1977 is summarized in column 1 of diagram 2. It is to be
stressed that the important functions of the Ministry are fulfilled by
the Minister and the State Minister rather than the Ministry.
4. Following this stock-taking, several lengthy sessions were spent
with the Minister of Energy discussing the management system and tne
appropriate organization and management of each agency, most of which, as
with the MEM, have been established only recently. One major problem is
that st-ff in most of these new agencies are not working effectively
because they have no clear job description or explicit objectives.
Another is that there is no adequate information system as a tool for
decision-making; in particular there is need to establish various organi-
zational units within the Ministry for collection, storage, processing
and presentation of data to the Minister on a regular and routine basis.
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Energy Sector Issues Related to Organization
5. Major iseues caused by organizational shortczomings of the energy
sector in Sudan are as follows: (Annex I provides a brief description o.
the various entities dealing with energy).
Absence of an overall Energy Policy
6. There is no Energy Policy prepared by the Government on the
basis of which subsector planning can be coordinated. No alternatives
are developed and existing plans do not have sufficient links with other
sectors or even within the energy sector. For example, GPC is proposing
to create an extensive road transport tanker fleet. Yet the implications
of such a scheme have not been evaluated against alternative options such
as rail transport, river transport, pipeline and private sector
participation.
Foregn echane limitations resulting in energy supply shortage
7. There is a chronic shortage of energy supply caused by sudden
and unplanned limitations of foreign exchange. The import of
hydrocarbons is interrupted from time to time due to the vagaries of the
foreign currency allocation system, resulting in sporadic and costly
refinery shut downs, the appearance of long lines at gas starions and
disruptions in the public transport system. On one occasion, when the
Saudi Arabian Government donated to Sudan a tanker full of crude oil, GPC
had to pay an amount for demurrage at Port Sudan equal to the transport
cost due to unavailability of funds for transport.
Unsatisfactory energy price structure
8. The tariff and price structure is not linked to the cost of
energy supply. Indeed, the precise amount of revenue or subsidies
-6-
resulting from price and tariff changes is not known. No attempt has
been made to use market and pricing mechanisms to balance supply and
demand. Consequently, electricity and petroleum products are rationed
through non-price mechanisms.
9. There is no routine, integrated central process of monitoring
the on-going activities and projects, by the Ministry. Some data are
generated from the executing agencies but there is no responsible unit
within the MEH to process the data and present it to the Minister. The
Ministry is not normally informed about the prog:ess of activities until
there is a crisis, when the Minister's intervention is requested. Since
crises occur frequently, the Minister and the State Minister are involved
in day-to-day operational affairs of the sub-sectors rather than carrying
out overall control and supervisory functions as spelled out in the MEM's
statutes.
Recommendations
10. It is recommended that the Ministry's organization be strengthened by
adding an Under Secretary for Planning and Coordination, as i.hown in
diagram 3 (proposed Organizational Concept). The Under Secretary would
be in charge of the following three departments:
i) Energy Planning and Studies Department; dealing with energy
renewable energy, statistics, standardization, methods and
systems.
(ii) Subsector Affairs Department; dealing with legal, technical,
financial and coordination of subsector activities.
PROPOSED ORGANIZATIONAL CONCEPT FOR ENERGY SECTOR IN SUDAN
MINISTER OFENERGY & MINING
STATE MINISTER
-~. IUNDER SECRETARY UNDER SECRETARY
Planning & Finance andCoordination Administration
|.
ENERGY SUBSECTOR GEOLOGICAL ERSONEIC RELA-
PLANNING IONSIR& RS.RADMIN
- 8 -
iii) Technical and Geological Department; dealing with
hydrocarbon, mineral and subsurface water resources,
monitoring exploration and production activities.
11. Given the financial and manpower constraints prevailing in
Sudan, it is recommended that the various positions be transferred from
the various existing agencies.
12. The mission also recommends the creation of a National Energy
Council at Ministerial level to establish and monitor a coordinated and
well-defined National Energy Policy. The Council should be chaired by
the Minister of Energy and Mining and composed of the Ministry of
Finance, Industry, Agriculture and Transport and the State Minister of
MEM as well as the Governcr of the Bank of Sudan. The Energy PlanniLg
and Studies Department of MEM should act as the secretariat to the
council. The council's mandate would cover medium and long term National
Energy Policy, and establish guidelines for short-term subsector plans of
action. The Council should not be involved with the implementation
functions of line agencies.
13. In place of the legal adviser t s position the mission recommends
the creation of a Legal Unit within the Ministry. This Unit would be
responsible for; a) reviewing all concessions in the country, b)
providing inputs to oil negotiations, c) giving legal advice to other
units, and d) handling other legal matters that require the Ministry's
attention.
14. The Financial Section of the Ministry needs to be staffed to
provide continuous budget analysis of all the executing agencies, to
-9-
brief the Minister on the financial performance of each agency through
review of their balance sheets and annual reports and to monitor the
financial performance of all the agencies affiliated to the MEM. This
Section needs a staff of financial analysts, accountants and economists.
15. In view of the ongoing World Bank projects involving
institutional strengthening of the National Electricity Corporation and
the General Petroleum Corporation, it is recommended that MEM's Subsector
Affairs Department establish close coordination with the Bank financed
consultants to ensure that the reports of activities of these agencies
are designed to meet MEM's decision-making requirements.
16. In order to improve energy sector management, the MEK should
have authority to make technical and sectoral decisions on foreign aid
and loans for energy sector projects.
17. Finally, it is imperative that the financial institutions
supplying funds for the procurement of hydrocarbons are kept informed by
MEM of the advantages of regular and systematic disbursement of foreign
currency resources to the energy sector. Coordinating this activity is
of utmost importance if effective planning is to be optimize resources in
the energy sector and eliminate periodic supply constraints.
Conclusions
18. A wrap-up meeting was chaired by the Minister of Energy and
Mining on March 29, 1983. The State Minister, UNDP, World Bank and NEA
representatives were also present. An Aide-Memoire, dated March 21, 1983
(Annex III to this report) formed the working paper for the meeting and
the mission's findings and recommendations were presented. The Minister
concurred with the recommendations (see Annex 4) and asked for continued
- 10 -
technical assistance in the form of a management expert to prepare a
detailed job specification and scope of work for the new departments
proposed in the HEM. It is estimated that the cost of this assistance
would be $30,000 and comprise two man-months of assistance in Sudan plus
travel and associated expenses.
19. In order to expedite the reorganization of the MEM, it is
imperative that the GOSL should designate three to four qualified persons
to take the initial steps towards organizing the planning and coordi-
nation branch of the Ministry. This group can form the nucleus of the
new addition to the MEM. The team leader could be considered as a
candidate for the new post of Under-Secretary for Planning and
Coordination.
20. In view of the recommendations made by the Energy Assessment
Mission, and concurrence of the Minister of Energy to pursue with
reorganizatioa of the MEM, a general framework of the activities for the
new units have been prepared (Annex II). This will serve as terms of
reference for the Energy Management technical assistance to Sudan. The
two man-months of expert input, working with Sudanies counterparts in
Khartoum, would prepare a clear set of job descriptions and scope of work
and would identify mechanisms for coordination of sector policies and
projects. This task would cover the posts of the two Under-Secretaries,
six departments and the sub units within each department as shown in
diagram 3. Since the departments working with the Under Secretary for
Administration and Finance already exist, in one form or another, minimal
changes would need to be made in the existing units.
- 11 -
ANNE% IPage 1 of 3
ENERGY INSTITUTIONS IN SUDAN
2.1 General Petro'eum Corporation: Prior to 1973, import and
di3tribution of petroleum and products was handled by private
companies. The changes in the international market caused the government
to take a more active role in the sector. The Petroleum General
Administration (PGA), a department in the Ninistry of Mining and
Industry, was consequently made responsible for Imports of hydrocarbons
in Sudan, and for supervising the distribution companies. The General
Petroleum Corporation (GPC) was created in 1976, but it actually started
operation in 1980 by incorporating the functions and personnel of PGA.
The GPC was also made responsible to carry out public sector activities
related to exploration, production, refining and distribucion of
hydrocarbons by taking over the Port Sudan - Khartoum pipeline and
government shares in Port Sudan Refinery. The GPC's board members have
not been appointed. The Minister of Energy acts in the capacity of the
corporation's chairman, dealing with day-to-day executive affairs. GPC's
total employees are 879. The operating expenses of GPC are derived from
2.4% of the total value of crude and products imported into the country.
2.2 National Electricity Corporation (NEC): NEC was created in 1982
by the break-up of the former Electric and Water Authority into two
independent organizations. Due to re-structuring of the organization NEC
is presently going through a difficult transformation stage. Moreover, a
decision to decentralize the distribution system and give it to the
regional governments was made some time ago, although no action has yet
been taken to implement the decision. Presently, NEC is handling power
generation, transmission and distribution throughout the country. The
- 12 -
ANNEX IPage 2 of 3
Board of Directors of NEC is composed of twenty members representing
various sectors, which is the remnant of the period when water and power
was handled by one agency. The Minister of State for Energy an, Mining
is officially the Chairman of NEC and he spends several hours Xiaily in
NEC headquarters tending to NEC's day-to-day affairs.
2.3 National Energy Administration (NEA): The institution was
created in. 1980 to be the planning and coordinating arm of MEM. NEA
started its activities by undertaking an energy study of Sudan. The
exercise was completed in October 1982, in conjunction with financial
support from USAID, which financed the consultant fees for ISTI and EDI
psrticipation. Following preparation of the energy study report the
administration has lost some of its expert staff and is presently in the
process of reorganization.
2.4 Geological and Mineral Resources Department (GMRD): GMRD is one
of the oldest establishments in Sudan, it changed parenthood from the
Ministry of Industry and Mining after MEM was created in 1977. GMRD has
supplied the bulk of exploration expertise to other institutions, such as
GPC and private oil companies. The entity is currently handling the
operating oil companies affairs as well as exploration and concessions
for mineral resources of the country.
2.5 Other entities which are under the MEN supervision and control
are: White Nile Petroleum Corporation, Shell Distribution, Mobil
Distribution, AGIP Storage and Distribution, Sudan Mining Corporation,
- 13 -
ANNEX IPage 3 of 3
Sudan-Egyptian Mining Co. and Red Sea Mining Corporation. The Government
of Sudan has varying amounts of shares in the above-mentioned entities.
2.6 The Energy Research Council, a branch of the National Council of
Research (NCR), was created in June 1981, but actually started
functioning in April 1982. The institution's administrative budget is
provided by the Government. Recently the Energy Research Council has
received over US$10 million from US AID, Germany, Holland and the United
Nations to carry out a five year research program for utilization of
renewable energy resources in the country.
- 14 -
Annex IIPage 1 of 7
Terms of Reference for Reorganization of Sudan's Ministry of Energy and
Mining
1. Following is the Terms of Reference for prep&ration of job
descriptions and scope of work fo; the proposed units to be created in
Sudan's Ministry of Energy and Mining. Since it is recommended that
modifications to, and organizational changes of, the existing units be
kept to a minimum at this stage, the existing Administrative and Finance
activities of MEM should continue to be handled as at present.
The National Energy Council
2. The council is to be created by presidential decree, under the
Chairmanship o0, the Minister of Energy and Mining. Its members include:
Ministers of Finance and Economic Planning, Industry and Commerce,
Agriculture, Transport and Communication, Regional Governments, Governor
of Bank of Sudan, The State Minister for Energy and Mining and the Under
Secretary for Energy Planning and Coordination, who will act as Secretary
to the Council. The Secretariat of the Council is to be the Energy
Planning Department of the MEM.
The Functions of the Council are:
3. a. To develop a coherent set of policies which meet the needs
of many interrelated and often conflicting national
objectives with consideration to prevailing constraints.
b. To identify the detailed energy needs of the economy by
sector to achieve national growth and development targets.
- 15 -
Annex IIPage 2 of 7
c. To coordinate interaction between different sectors and the
energy sector.
d. To choose the mix of energy sources to meet the future
energy requirements at least cost.
e. To identify priority needs of special regions and projects
so that the appropriate allocation of energy both for
consumption and development can be made.
f. To adopt guidelines for petroleum pricing and electricity
tariffs and approve changes proposed by executing agencies.
g. To allocate foreign exchange for procurement of crude and
products in a manner to ensure continuity of supply and
price stability.
Under Secretary for Energy Pla.ming and Coordination
4. The job description of the Under Secretary of Energy for
Planning and Coordination should be prepared so that it would
a. Permit supervision and control o4 the three departments
day-to-day activities.
b. Clarify the scope of work and its responsibilities.
c. Identify the committees and the Boards on which he should
represent the MEK.
d. Establish his responsibility to act as the Secretary to the
National Energy Council preparing position papers as well
as drafts of the National Energy Policy for the members of
the Council.
- 16 u
Annex IIPage 3 of 7
e. Establish his role as liason with other ministries and
agencies for exchange and updating of energy information.
f. Give him responsibility for preparing standard formats for
data collection to be used in the energy sector reporting
system.
5. The method of reporting to the Minister should envisage the
energy information system to initially generate a concise type of output
in the form of briefs to be submitted to the Minister on regular monthly
basis. The Under Secretary for Planning and Coordination would be
expected to highlight the important items and summarize their
significance. The briefs are to cover the following:
6-1. Crude Oil:
a. Import of crude and products type, quantity, price for
current and 12 preceeding months: projections for the
current year and for the next 12 months.
b. Charts to include appropriate c.i.f. price comparison with
f.o.b. Gulf postings.
c. Projections of foreign exchange requirements for imports
for the next 12 months.
6-2. Domestic Production Refining and Export of Petroleum Products:
a. Type, quantity and price for current and 12 preceeding
months.
b. Forecast of the next 12 months foreign exchange earnings.
c. Net benefits contributed to the government treasury and or
subsidies received from the government by productt.
- 17 -
Annex IIPage 4 of 7
d. Status of on-going projects and concessions.
e. A chart indicating physical progress of projects by showing
planned vs actual performance along with budgeted
allocations and actual costs.
6-3. Electric Power:
a. Generation by type for current and 12 preceeding months.
b. Projections for the current year and the next 12 months of
consumption by user for current and 12 preceeding months
and revenues and/or subsidies for each class of user.
C. Report on scheduled load shedding and forced outages and
its cause.
d. Status of ongoing projects by a chart indicating physical
progress of projects showing planned vs actual performance
along with budgeted and actual cost.
7. Energy Planning Department: This department is responsible for
the review and analysis of the energy policy. It needs to work with the
Ministry of Finance and Planning to coordinate the National Energy Policy
(NEP) within the overall macroeconomic investment planning framework. It
should obtain effective energy data and to set up a permanent information
system to provide the Ministry with the required information strength (as
described in para. 4 above). There is need for an overall plan to build
its energy information capability to support other departments as well as
the central Ministry. Four sub-units are proposed to make up this
department: a) Economic Studies, dealing with demand-supply position of
energy subsectors as well as the energy sector in totality. This would
- 18 -
Annex IIPage 5 of 7
prepare and update energy balances. b) Commercial Energy, dealing with
present commercial energy consumption, medium and long term growth
projections, domestic production and imports. Investment requirements,
tariffs and pricing and their effects on the overall economy are some of
the tasks of this sub-unit. c) Traditional and Renewable Energy;
dealing with matters concerning fuelwood, agricultural and animal waste,
hydropower, solar, wind, biomass etc. d) Standards Methods and Systems;
this unit would continuously review adopt/revise effective standards for
comparing fiscal expenditures with budgeted allocations, operating
procedures, system documentation and codes with the aim of monitoring
activities as an integral part of controlling functions in management of
the energy sector. Various kinds of performance standards applicable to
specific situations in Sudan need to be developed with the view to;
ensure compliance with the policies, minimize the effect of personnel
changes, establish schedules and aid in cost estimating and budgeting.
8. Sub sector Affairs Department: This department would review and
monitor the activities of sub sector line agencies with specific
attention to the performance *of each agency and its potential impact on
other sectors as weU as on energy subsectors. Four sub units are
envisaged to carry out the responsibilities of this department; a) Legal,
which would handle all the legal matters encountered bW the MEM, be
prepared to give legal opinion to the agencies affiliated with the MEM,
participate in contract negotiations, select arbitrators if and when
needed and represent HEM and executing agencies in court.
- 19 -
Annex IIPage 6 of 7
b) Technical: The main function of this unit would be to collect,
study and evaluate all the technical data, reports and feasibility
studies which are to be reviewed by MEN int collaboration with the
Geological Department; create a central file for such data and establish
a routine system for review and study of technical information, with the
view to prepare concise information briefs for the top management
highlighting significant points; and to study and evaluate alternative
energy options which are to be executed by line agencies. c)
Financial: This unit would be responsible for; review and analysis of
the proposed annual budget of the executing agencies, review of the
actual financial performance of line agencies; monitoring of financial
status of on-going projects in the energy sector; preparing short term
foreign currency and local currency requirements and carrying out
economic analysis of the projects both before and after Implementation,
preparidng brief monthly reports on the financial performance of the
energy sector; providing inputs for reports that the department that
prepares for the Minister. d) Subsector Affairs and Cocrdination; this
unit should act as official liason unit between various agencies of the
energy sector and other Ministries and public institutions as well as the
private sector.
9. Geological and Mineral Resources Department: This should be
considered the technical and scientific am of MEM. Its main function
would be to promote exploration, exploitation and development of the
country's hydrocarbon and mineral resources. The department should
continously and routinely update the technical data and review the
- 20 -
Annex IIPage 7 of 7
mineral resources of the country through systematic and long - term
reservoir engineering and geological investigations, with the view to
generate foreign exchange earning schemes. There are four main sub units
within the Geological Department; a) Surface Geological Survey, concerned
with detailed geologic mapping of the areas with higher economic
potential, b) Hydrocarbon Resources, which should collect all the
drilling records obtained from exploration and development activities of
the oil and gas industry for evaluation of the countries potential and
recoverable reser7es, and monitor and review techno-economic studies
undertaken by the oil companies and consultants on various hydrocarbon
provinces of the country. c) Mineral Resources, which should identify
mineral occurrences in Sudan, with sperific attention to promoting
exploration, exploitation and development of mineral resources. d) Sub-
surface and Water, which should deal with identification of aquifers in
Sudan and various aspects of subsurface water utilization in the
country. Investigation in this area has over 70 years of tradition and
already a good deal of expertise exists within the department.
Annex III
Page 1 of 3
.March 21, 1983
U N D P W O R L D B A N K
A I D E - M E M OI R E
Strenzthening the Organization of Sudan Ministry of Energy and Mining
1. In accordance with the terms of reference (dated February 5, 1983), theagencies visited during the first three weeks of the mission were; the MEM,NEA, NEC, GPC, ORD, NCR and Chevron. Following notes are prepared as thebasis for the final discussion with H.E. Dr. Sherif El Tuhami, the Minister ofEnergy and Mining. (contents of this aidememoire are views of the consultantand not necessary that of the World Bank).
2. Attached to this note diagram 3 , is a conceptual organization chart whichis focussed on institutionalizing the functions of the Central. Minisry which isnot fulfiled at present. Should the concept be acceptable there is need forfurther input by management experties to translate the concept into workingpattern adaptable to the local conditions. Diagram 2 summerizes the statutoryfunctions of each entity and actual function pevformed the resultant of which iscolumn 3 indicating need for strengthening of the Central Ministry's Organization.
3. Majority of data required to form the type of information needed for decisionmaking is available and is supplied to the Central Ministry in form of a thickmonthly reports. However, most of the data is in raw form and needs to be pro-cessed and summerized, showing overall performance of the sub-sectors and theenergy sector in totality. The Central Ministry is not adequately staffed tovc)ollett, store and process the data available. Regardless of how much informatinis received no decisions can be made on the basis of the unprocessed data. There-fore, it is necessary to strengthen the Central Ministry's Organization in amanner to address this issue.
4. One of the key information which aid decision making is the past supplydemand positioni as well as future projection. This information I.s covered by theenergy assessment prepared by NEA. clowever, changes in policy and prices mightresult in different projection. This should be brought to the attention of thedecision-makers. Therefore, continuous monitoring and updating of information isto be undertaken.
5. Operations and performance of the subsectors should be monitored monthly andregularly. Each agency can supply the Central Einistry with the related informa-tion summerized below:-
i) Operating expences, financial resources and revenues or losses resultingfrom their monthly activities.
ii) Amount of crude and products imported, refined and marketed each month,revenues or losses resulting from the operations of GPC.
iii) Power generation and consumption, by sector, revenues and losses re-sulting fromnNEC operations.
iv) Manpower utilization for various activities for evaluating performance.(Sample forms have been supplied to the Ministry)
- 22 -
Annex IIIPage 2 of 3
Ret~dsses
6.1 There is chronic shortage of energy supply, caused by foreign currencylimitation. The improted hydrocarbon is interrupted from time to time due tohard currency shortage, resulting in sporadic refinery shut down, appearanceof long lines at the pump stations and disruption in the transportation sector.
6.2 There is lack of coordination and integration of plans of various agencies.(For example, Asphalt manufacturing plant V.S. power generation scheme, both ofwvich might be planned to utilize the same refinery product. There is no processfor such coordination). No alternatives arn developed and existing plans do notnave sufficient impact assessment on other sectors or even within the energysector.
6.3 There is no routine integrated control process of the ongoing projects andactivities, by the Ministry, with regard to assessing the progress withinagencies, and Central Ministry is not duly involved until the point of crisis,when the t'inister's intervention is needed.
6.4 The impact of energy intensive projects and energy consuming commodities(which effect energy demand) on the energy sector is not managed.
6.5 The tariff and price structure of energy La not coordinated with the energyavailability and energy related projects. The precise amount of revenues orsubsidies resulting from the price and tariff structure of the energy used in thecountrv is not known. Price changes are dictated by the Finance Ministry k1ithregard to short term financial position of the treasury. Therefore, there is nouse of market and pricing mechanisms to Balance the supply and demand. Due tounmet demands there is an active black martket parallel to the official distributionchannels and rationing.
6.6 There is no continuous and high level entity which is routinely responsibleto analyze issues, in order to support'the high level decision makers with regardto various energy issues proposing alternative options and their implications.
Recommendations
7. The aforementioned issues are only some of the constraints and by no meansal). To address these issues following recommendations are proposed.
7.1 Creation of a High National Energy Council to review and adopt a coordinatedand well defined National Energy Policy. The council is proposed to be chairedby the Minister Ei ard composed of Ministers of; Finance and Planning, Industry,Agriculture, Transportation and Minister of State for Energy and Mining. Anentity with the MEM, in charge of planning and coordination, would act asthe secretariat of the council. The council is also to review and adopt short,Medium and long range Etional Energy policies and review the performance andeffects of the policies on the country's economy and development as well as itssocial implications.
7.2 It is recommended that the Central Ministry's institutional structure bestrengthened, by assembling a core of experts within the Ministry to act as "ThinkTank" responsible for collecting, deciphering and analizing all the availabledata arid submitting the relevant information to the M1inistershigh-lighting theprevaill-g issues with future projections. This task is to be performed on aroutine and regular basis. The core of experts need to have backgrcund in -oil4-A..atrv 01-4t-.4tv, rvnAnhl.t. atatistics and economics. This function may
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Annex IIIPage 3 of 3
be entrusted to existing entities such as SEA and ONED, etc.
7.3 The Ministry's Legal Department need to be strengthened in a manner tofunction routinely.
7.4 The Financial section of the Ministry needs to be staffed to permit,continuous budget analysis of all the executing agencies and briefing theMinister on financial performance of each agency by reviewing their balancesheets and annual reports. Monitoring the financial performance of all theagencies affiliated to the MD!. This section need to benefit from servicesof financial analysts, accountants and economists.
7.5 The MEM is proposed to be reorganized in a manner to permit adequate manage-ment of the Energy Sector. Annex I summerizes the statutory functions of theMinistry as well as the affiliated entities, their actual functions performedand functional gaps. DLagram2 is a conceptual recommendations to address thisissue. MEn's concurrence with the cotncept would permit implementation of aproject for a practical Institutional building, which needs to be undertaken.
7.6 In view of the ongoing projects for reorganization and institutional build-ing of GPC and NEC, finwnced by the World Bank, it is important that the Centra'lMinistry coordinate the consultants activities in a way to establish adequate re-porting system which would satisfy the Central Ministry's requirements.
7.7 In order to improve the energy sector efficiency, the MEM need to have theauthority for making final decision on foreign aid and loans pertainign to tneenergy sector projects. Presently the Ministry of Finance acts as the sponsor-ing agency for such projects. It seems that MEN has the responsibility to managethe energy sector without ample authority.
7.8 It is imperative that the financial institutions supplying funds for procure-ment of Hydrocarbons are informed of the advantages in regular and systematicdisbursement of foreign currency resources to the energy sector. Coordinatingthis activity is of utmost importance if effective planning is to be utilized foroptimization of resources in the energy sector and elimination of unforseensupply constraints.
- z4& -
'gq;)tii z.<7t.: (I J.t8 5.4l.lz Annex 4
MlNIST".Y aP" EWle*-.%Y A, 1D NI ;I.JG
UINIS'TER'-S OIF5FCS'
P. 0. 4S ^O07
CABLE F TAQOTADERN
Tel :. 75:.)5
Khar:oum
1:ST/BE 28 March 1983
The 'Iorld B*,',Energy Asaignment Section,Washin6to-,tr.B.A.
Dear Sirs,
We have followed with interest the assi.Snment offre Anoari in the .eeadquarters of the Uinistry of Energy
& lMing. wice w.e held long sessions r.:ith him beforehe presented his final report. tir. Ansari, throughouthis stay had severi). contac:s vwith our eXi5tingdepartments and coroorations and has in fact touched onmany soft points.
It came out through our discussions that a co-ordinatedeffort of World Bank's consultants sug,esti±u or,aniza-tional structures f9r Alm nLer and Detr:leun goroor.a-tions could be seriously cc-side-ed ;o warrat theappropriate orGanizational structure to f±t our proposedneeds. We suggest tr.is to the Bank and hope it vill be*looked into seriously.
£his report pointed out the short-comings and suggestedwrhat is actually needed. it il:Kl be most helpful if anynumber of organizational e=arts could be seconded tothe Ministry to help vwith t:hese matters,
I find the character of Lx. Ansari most interesting andvery well info--ed; so is his analytical report. Thankyou for this mission and I hope he will continue to beinvolved with us til'l we conclude the appropriate struclurefor this young and important nijstrZ'.
With many thanks,
* *. u El hluhami't ~~~~iLnistFr.
!~~~~~?&.lS z
WORLD SANK / TFE AT1QNA&S.W1NAE CORPQWATIVN
Annz: .5OFFICE MiEEMO.RANDUM Page 1 of 2
February 15, 1983
TO: Mr2 R. J. Ansari (consultant)
FROM: Julian Bharier, Chief, EGYIEA
SUBJECT: SUDAN: Technical Assistance to the Ministry of Energy & Mining
1. You should arrive in Khartoum on February 22, 1983, and stay for* a period of about one month. The main purpose of your stay is to assist
the Minister of Energy in developing management information systemsvithin the Ministry of Energy and tMining. In particular, you should:
(a) Attempt to institutionalize the energy data collection processby identifying the key information needed for the Minister'sdecision-making and by ensuring the routine flow of that informationto the Minlster in a clearly understandable and digestible form. Atone level, your task may simply involve the designing of forms andtables and the training of personnel to collect relevant informationand to complete the forms and tables. At another level, you maywish to consider the merits of computerized as against manualsystems, at least for the long run.
(b) Establish a mechanism for routinely coordinating the differentgroups within the Ministry of Energy and for coordinating theactivities of the Ministry of Energy with other Ministries and with
* relevant bodies in the energy sector (e.g., the National ElectricityCorporation and the General Petroleum Corporation).
(c) Design follow-up procedures for the Minister's decisions.
(d) Recommend the type of contacts required between the Ministry ofEncrgy and overseas agencies and officials. You should alsorecommend a mechanism to ensure the routine operation of suchcontacts.
(e) Identify and catalogue the foreign donor activity tlvlch hsstaken place and is still taking place in the energy sector and setup an appropriate permanent mechanism to evaluate, monitor andcoordinate this activity on a regular and permanent basis. Forexample, part of all of the time of a designated percanent seniorofficial could be sat aside for the task and such an official in theMinistry of Energy could act as the recognixed channel for foreigndonor activity.
20 kE addition to the above principal tasks, you should:(a) Follow up w'th the Minister the point raised in our letter tohim of January 4, 1983, concerning the Power System Loss ReductionStudy which is being executed by; the World Bank wlth UNDP finance.If the Minister wLshes to include Sudan as one of the cases to be
. . .- 26 ~ Annex 5
* Page 2 of 2
3 dealt with under this study, he should place a request (supported byNEC) as soon as posslble through the UNDP Resident Representative inSudan.
(b) Obtain full details of the level and structure of petroleumproduct prices following the increase announced by the Government inJanuary 1983, using the format shown in Attachment 1 as yourmodel. By way of illustration, Attachment 2 shows tha level andstructure of petroleum prices prior to the January increases underthe same format. You should also include the price of LPG and itsdetailed breakdown in the same format if possible, both before andafter the January increase.
(c) Obtain the f.o.b. export price of heavy fuel oil (residual) for 0
each month in 1982 when exports actually took place (the only figureavailable in the Bank is for September 1982, which was US $149.7 permetric ton) and the most recent data for 1983.
(d) Find out how the export price of fuel oil is determined.
(g) Xnvestigate the desirability and feasibility of blendingimported gesoil and domestically refined gasoil or of changing thesources of imported crude oil in order to reduce the need for thePort Sudan refinery to blend kerosene with gasoil and fuel oil forlocal use.
3. While in Sudan, you will meet, brief and keep informed the IBRDand UNDP resident representatives. WithIn two weeks of your return toWashington, you should submit a short report summarizing the results ofyottr mission.