Some Further Cost Allocation Studies for the Senegal River Development Program: Report 4
Document Type
Report
Publication Date
January 1980
Abstract
Introduction: This report has been prepared for submission to the meeting of the OMVS Council of Ministers which is scheduled to be held in Devember 1980. The report describes the results of the most recent cost allocation studies for the Senegal River development program and the data base and model assumptions on which these reults are based. The procedures used in these analyses are based upon those contained in the report titled, "Cost allocation alternatives for the Senegal River development program" (Riley, et al., August 1978). That report (herein referred to as the First Report) descibes several different cost allocation methods, but recommends use of the adjusted separable costs - remaining benefits (adjusted SCRB) procedure. The First Report also describes an economic model which was developed to estiamte the benefits to each participating country of each proposed project service. For review purposes, a brief description of the adjusted SCRB procedure and of the economic model are included as Appendix A of this report. Following adoption of the First Report by the OMVS Council of Ministers, all subsequent studies were based upon the adjusted SCRB procedure and the economic model described by that report. The results of these subsequent studies, which have been requested by the Direction de la Planification et de la Coordination, OMVS, have been reported in a series of subsequent reports of which this is referred to as Report 4. It is emphasized that there are still some things which are indefinite or not clearly defined regarding the nature of the proposed Senegal River development program. Therefore, sensitivity studies have been performed on certain factors to determine their relative impact on the cost allocation. The results presented in this report, and in particular the cost allocation between the member states, may be only approximate in nautre if OMVS decides to make major changes to the current data base and model assumptions. The results in this report could be used as the basis for a provisional cost sharing plan between the member states if the model data base and assumptions are first approved by OMVS in their entirity. Eventually, after further improvements to the data base the cost sharing plans could be adjusted to reflect these improvements. Even when the project infrastructure is completed it may be necessary to modify the cost sharing plan when the utilization of the project services differs from the projected patterns. in addition the model is useful in: (1) identifying those data and assumptions which are still needed to form the basis of a cost allocation formula, and (2) examing the relative effects on the project economy including cost allocation proportions of various possible system management alternatives and development assumptions. The first part of this report contains a comprehensive description of the data base and assumptions used in the economic model as modified following the meetings between OMVS and Dr. Bowles, Utah State University, in June 1980. Mr. Moustapha Ould Maouloud, OMVS, made significant contributions to improving the data base and model assumptions during his training program at Utah State University which ended in July 1980. Further improvements were made during the visit of Mr. Ould Maouloud and Mr. Nguyen in October 1980. The purpose of the first part of the report is to allow OMVS to perform a detailed and continuing review of the model data, assumptions, and results. The seond part of the this report presents the results of computer runs performed in October 1980, and a discussion of the results with repsect to project economics and project financing. The computer runs were designed to examine the sensitivity of project economics and project financing to the various levels of the sensitivity parameters listed below: 1) rate of agricultural development (4000, 5000, or 7500 ha/yr) 2) energy service starting in 1990 or 1997 3) energy consumer (iron mines, iron mines and urban centers, or urban centers) 4) navigation service starting in 1989 or 1994 5) alternative cost of thermal electric energy (26.95 or 31.28 F.CFA/kwhr) 6) discount rate (5 or 8%) Recommendations based on the results described in this report are included at the end of the report. Detailed tables of computer results are contained in Appendix B together with an explanation of the computer run identification codes and summary of the basis for calculating the results tabulated in Appendix B.
Recommended Citation
Bowles, David S.; Riley, J. Paul; Andersen, Jay C.; and Keith, John E., "Some Further Cost Allocation Studies for the Senegal River Development Program: Report 4" (1980). Reports. Paper 584.
https://digitalcommons.usu.edu/water_rep/584