OFFICE OF THE DIRECTOR GENERAL AUDIT POWER, LAHORE
PRELIMINARY SURVEY REPORT (PSR) ON
PERFORMANCE AUDIT OF POWER TRANSMISSION
ENHANCEMENT PROGRAM IN NTDC (MFF-I)
TRANCHE-I TO IV FOR THE PERIOD
2007-08 TO 2018-19.
AUDIT YEAR 2024-25
ABBREVIATIONS AND ACRONYMS
ADB
ADF
AGP
BOQs
COL
CPS
EHV
EOT
GSO
MFF
MOWP
MTDF
MP & M
MVA
NEPRA
NKLTP
NTDC
O&M
OCR
PMU
PPRA
PTEIP
PSP
PSR
Asian Development Bank
Asian Development Fund
Auditor-General of Pakistan
Bill of Quantities
Capital Resources Lending
Country Partnership Strategy
Extra High Voltage
Extension of Time
Grid System Operation
Multitranche Financing Facility
Ministry of Water and Power
Medium-Term Development Framework
Material Procurement and Management
Mega Volt Ampere
National Electric Power Regulatory Authority
New Kot Lakhpat
National Transmission and Dispatch Company Limited
Operation and Maintenance
Ordinary Capital Resources
Project Management Unit
Public Procurement Regulatory Authority
Power Transmission Enhancement Investment Program
Power System Planning
Preliminary Survey Report
DIRECTOR GENERAL AUDIT POWER LAHORE
Preliminary survey report (PSR) for Performance Audit in respect of Power Transmission
Enhancement Program in NTDC ( MFF-I) TRANCHE-I TO IV For The Period
2007-08 to 2018-19.
1.
Name of the Program
Power Transmission Enhancement Investment Programme (PTEIP) in National
Transmission Dispatch Company NTDC.
2.
Backgrounds
2.1
Corporate Background
 After unbundling of WAPDA, NTDC was incorporated as a Public Limited Company
in Nov 06, 1998 under the Companies Ordinance 1984 (now Companies Act 2017), with
its Head Office at Lahore. After having Certificate for Commencement of Business,
NTDC started its commercial operations from March 01, 1999.
 NEPRA granted Transmission License to NTDC in December 2002 to engage in the
exclusive transmission business for a term of thirty (30) years.
 The paid-up/share Capital of the Company (NTDC) is Rs. 52.7 Billion1
 NTDC 1st tariff was determined by NEPRA in April, 2004.
2.2
NTDC Background
National Transmission and Despatch Company (NTDC) links Power Generation Units
with Load Centers spread all over the country (including Karachi) and thus establishes
and governs one of the largest interconnected networks. The Company is responsible for
evacuation of Power from the Hydroelectric Power Plants (mainly in the North), the
Thermal Units of Public (GENCOs) and Private (IPPs) Sectors (mainly in the South) to
the Power Distribution Companies through primary (EHV) Network.
2.3
Multitranche Financing Facility (MFF) Background
The Medium-Term Development Framework (MTDF), 2005-2010, prepared by the
Government of Pakistan in May 2005, established a framework for the power sector
development. To facilitate efficient and effective evacuation of power from existing
power stations, the National Transmission & Despatch Company (NTDC), in
coordination with the Ministry of Water and Power (MoWP), prepared a Transmission
Sector Road Map, 2007-2017. The road map recommended rehabilitation, augmentation,
and expansion projects to address the shortcomings of the power transmission system.
The multitranche financing facility (MFF) was one of the Asian Development Bank's
(ADB) first interventions in Pakistan's power transmission reforms at a very critical time
when the power crises were at peak and the demand was crucial. The program design was
1
National Transmission and Despatch Company Limited Balance Sheet as at 30 June 2023
1
highly relevant at both appraisal and completion. The program was consistent with
ADB's country partnership strategy (CPS), 2009-2013 for Pakistan and Pakistan's
development priorities in the energy sector.
2.3.1
Tranche I
Tranche I comprised two loans, one for the project and the other for the MFF support
component. It comprised 19 subprojects to accomplish (i) addition or augmentation of 29
transformers at existing 500-kilovolt (kV) and 220-kilovolt substations; (ii) two new 220kilovolt substations and associated transmission lines; and (iii) 287 kilometers (km) of
transmission lines.
2.3.2
Tranche II
Tranche II comprised a loan with nine high-priority subprojects, including (i)
construction of new grid stations, (ii) installation of additional transformer capacity in
two existing grid stations, and (iii) construction of five new transmission lines.
2.3.3
Tranche III
Tranche III comprised a loan which was approved to (i) add approximately 600kilometer, 500-kilovolt transmission lines, (ii) commission a new 500-kilovolt grid
station and expand the four existing 500-kilovolt grid substations, (iii) improve security
of supply to customers by moving toward compliance with regulatory security standards
governing planning and operation, and (iv) improve reliability of the primary
transmission system.
2.3.4
Tranche IV
Tranche IV comprised a loan from ADB ordinary capital resources (OCR) and
cofinancing from Agence Francaise de Development (AFD) (L8311-PAK), with the
targeted outputs of (i) line bay extension and 281 km of 500-kilovolt transmission line
installation from the existing 500-kilovolt Muzaffargarh grid station for electricity
evacuation from the 747-megawatt Guddu power plant; (ii) four new 220- kilovolt grid
stations and associated in/out transmission lines at Chakdara, D.I. Khan, Lalian, and
Nowshera; (iii) installation of static var system (SVS) at 220-/132-kilovolt Quetta
industrial grid station; and (iv) extension of 500-kilovolt grid stations at Jamshoro and
Gujranwala, and augmentation of 500-kilovolt grid station at Rawat.
The following is the current status of loan utilization.
2
POWER TRANSMISSION ENHANCEMENT PROGRAM IN NTDC (MFF-I), TRANCHE - I TO IV FOR THE PERIOD OF
2007-08 TO 2018-19
Tranche
No
Original
Allocation
(1)
Loan No
Increase
d (2)
Cancele
d (3)
Last
Revised
Allocation
(4=1+2-3)
Amount
Disburse
d (5)
Schedule
d Loan
Closing
Date
Actual
Loan
Closin
g Date
(USD million)
Tranche I
Project 1 (Loan 2289-PAK) –
ADB
226
-
83
143
129
30-12-09
30-0612
Tranche I
Project 1 (Loan 2290-PAK) –
ADB
10
-
-
10
4
15-06-17
-
Tranche II
Project 2 (Loan 2396-PAK) –
ADB
220
55
110
165
157
31-12-13
29-0216
Tranche
III
Project 3 (Loan 2846-PAK) –
ADB
243
-
23
220
164
30-06-16
30-1017
Tranche
IV
Project 4 (Loan 3203-PAK) –
ADB
248
-
124
124
53
31-12-16
-
Tranche
IV
Project 4 (Loan 8311-PAK) –
AFD
83
-
-
83
66
01-02-20
01-0520
3.
Responsible Authorities
i. Project
Management Unit
The Project Management Unit (PMU) is responsible for liaising
between the Asian Development Bank (ADB) and various executing
and implementing formations within NTDC. It monitors the
execution of all sub-projects under the different tranches of the
Multitranche Financing Facility (MFF), ensuring timely progress and
compliance. The PMU also prepares quarterly status reports for
ADB-funded projects and conducts environmental assessment
reports as part of its oversight and reporting responsibilities.
ii. Power System
Planning
The Power System Planning (PSP) department is responsible for
forecasting power demand, planning transmission system expansion,
preparing project documentation and cost estimates, expansion
planning of the EHV transmission system and conducting technical
studies for power evacuation and system integration.
iii. Finance
Directorate
The Finance Directorate has overall responsibility for all financial
activities of the Company and plays a key role in loan management.
iv. Chief Engineer
Material
Procurement &
Management
The procurement of material, works and services are being executed
through MP&M Directorate since October, 2013. From the outset of
the Tranche-3 & 4, entire procurement process is being dealt in
MP&M. however the supervision and execution of projects is being
3
(MP&M)
done by concerned P.D EHVs.
EHVs (Project
Delivery)
EHVs make ensure that the projects are executed according to term
and conditions in the contract agreements regarding construction of
new high-voltage transmission lines and substations as well as
rehabilitation and augmentation works for existing system.
Assets Management
(GSO)
Asset Management (GSO) is responsible for managing the operation
and maintenance of the high voltage transmission lines and
substation of grid system after the completion.
4.
Program Details
4.1.
Type of Program

Project Type: The Power Transmission Enhancement Investment Program (PTEIP)

Description: The Power Transmission Enhancement Investment Program (PTEIP) was
the first intervention by ADB by Multitranche Financing Facility (MFF). Detail of
tranche wise project attached as Annexure A.

Sample Selected:
Tranche
Project Description
Total cost
Rs. (million)
I
New 220kV WAPDA TOWN Grid Station (3x160MVAPTs) with
10 KM 220 kV Lahore- NKLPT D/C IN/OUT at Transmission Line
Wapda Town G/Station Lahore
1,153
II
New 500 kV D.G. Khan Grid Station (2x(3x200)+ 1x200MVA
SparePTs) with Transmission Line (In and out of existing Guddu
Muzaffargarh 500 kV T/L at D.G. Khan 18 KM (D/C) 3.4 KM .
10,053
III
3rd 500 KV AES - Jamshoro - Moro - R.Y Khan T/L along with 500
KV Switching stations at Moro and Matiari (updated)
8,724
IV
Construction of 261 km of 500-kV transmission line, addition of
three 500-kV line bays, and 20 km of 500-kV in/out transmission
lines at the 500-kV Muzaffargah substation.
8,470
4.2. Basis for sample selection:
One Project was selected from each Tranche based on the highest value of the Project cost. With
respect to Tranche-I Project amounting to Rs. 1153 million was selected based on highest cost,
while Project amounting to Rs. 3789.6 million was ignored because it was shifted in tranche-II
and Project amounting to Rs.1506.9 million was already selected in previous performance audit.
From Tranche-II and III, Projects amounting to Rs10053 million and Rs 8724 million selected
respectively based on highest project cost and these Projects were not selected in previous
performance audit.
4
From Tranche-IV Project amounting to Rs. 8470 million was selected based on highest project
cost. The Project amounting to Rs. 8911.9 million was neglected/ ignored because it was not
financed from the loan.
4.3.
Objectives of the Program
Following are the objectives of the program:

Rehabilitate and Expand the Power System: Rehabilitate, augment, and expand parts
of the power system to meet current generation capacities.

Enhance Power Transmission Capacity: Expand and augment the system to cope with
future power generation stations.

Operation and Maintenance: Ensure continued operation and maintenance in
accordance with best international practices.

Enhance the Efficiency and Management: Enhance the efficiency and management of
the power transmission system in Pakistan for long-term energy sector sustainability.

Reducing Transmission Losses: Ensure the delivery of adequate and reliable electricity
supply by reducing transmission losses, minimizing power outages, removing
transmission bottlenecks, and increasing power evacuation capacity.
4.4.
Beneficiaries

General Public: Improved and more reliable electricity supply for consumers.

Energy Sector: Enhanced efficiency and capacity in the national electricity grid

Government: Support the Government of Pakistan in meeting its endemic challenge of
electricity availability to the consumers.
4.5.
Time-Phasing
The MFF was made available for 10 years after its approval in 2006. The MFF's
availability period was extended for 3 years from 31 December 2016 to 31 December
2019.
4.6.
Capital Cost
Estimated Cost: The appraised program cost was $810.0 million through four tranches,
consisting of $800.0 million from ordinary capital resources (OCR) and $10.0 million
from the concessionary ordinary capital resources lending (COL) of the Asian
Development Fund (ADF)
4.7.
Source of Finance

4.8.
Funding Source: The project is funded by Asian Development Bank
Type of Financing

Financing Structure:
5
o
Investment: At program completion, ADB disbursements totaled $683.6 million
(84.39%) of appraisal, and the government had contributed $151.4 million of
appraisal amount.
4.9. Program Stage
Implementation:
The project has been implemented.
Project Impact, Outcome, and Output by funding agency ADB: The program’s
impact was designed as “improved power transmission infrastructure and management,”
and the program’s outcome was “reliable and quality power transmitted in Pakistan and
service coverage expanded.”
The agreed upon performance indicators KPIs against outcome were:
i. full compliance with grid code and transmission license by 2009;
ii. 10.5 gigawatt-hour (GWh) of additional power annually supplied through the grid by
2011;
iii. electricity outages reduced by 30% in 2011;
iv. grid-connected customers increased to 70% of the population in 2019.
The program had two outputs: (i) transmission networks improved through rehabilitation,
augmentation, and expansion of systems; and ii) NTDC operation and management
strengthened. Against both outputs, the performance indicators were (i) subprojects
commissioned according to schedules indicated in the investment and expansion plan; (ii)
distribution company tariffs determined and notified by 2006; (iii) NTDC restructuring
completed and operational, and financial autonomy achieved by 2019; and (iv) adequate
project management and information systems implemented by NTDC by 2019.
5.
Data Availability
The following data related to the Power Transmission Enhancement Investment Program
(PTEIP) will be examined for risk measurement and project performance analysis:

List of projects selected and completed under Tranches I to IV with project briefs.

Total loan amount (as per audited financial statements) used on each project and
procurement.

List of contracts made under Tranches I to IV.

List of procurement contracts made under Tranches I to IV.

List of procurement contracts made under Tranches I to IV.

Tranche/sub-project wise PC-I, II & IV,V

NEPRA Grid Code 2005

ADB Completion report regarding projects
6
6

Contract/Purchase order documents

Tranche-wise Progress Reports

Monthly, quarterly progress reports of the projects

Financial Statements consolidated and project wise

Environmental assessment reports

Material Inspection Reports

Issuance of material to intended projects

Repeat orders, variation orders etc.

Loan Agreements with ADB.

Project agreements with ADB.

Land Acquisition Act 1894.

Equipment and material test reports

Project files.

Transmission Sector Road Map, 2007-2017.

PPRA rules.
Risks Involved
To assess the risks associated with the following risk category, risk likelihood, risk
impact and risk score identifies potential risks and mitigation strategies.
Risk
Category
Operational
Risks
Risk
Likeliho
od
Inefficient construction of
transmission
lines,
substations (grids) and
extension of works
Medium
(2)
Unreliable
performance
Impact
Risk
Scor
e
Mitigation Strategies
High (3)
6
Implement
efficient
transmission
technologies.
9
Conduct
regular
system maintenance
and testing.
system
High (3)
High (3)
Non-compliance
Safety
rules during operation and Medium
maintenance activities of
(2)
power system
High (3)
6
Ensure
compliance
with
safety
regulations.
Deficient O&M of project
High (3)
9
Conduct
regular
system maintenance
High (3)
7
and testing.
Increase in due to time
overruns of projects, non- High (3)
deduction of LDs.
High (3)
9
Implement
effective
allocation.
Non capitalization of work,
under or overstatement of
cost of project.
Medium
(2)
High (3)
6
Optimize
resource
utilization strategies.
Loss of revenue due to
non-reduction
of
transmission line losses or
non-achievement
of
envisaged
benefits
of
projects
Medium
(2)
High (3)
6
Ensure
project
completion to achieve
full capacity.
Non-compliance
with
regulations, PPRA rules,
ADB
procurement
guidelines,
donor
Medium
agreements i.e. loan &
(2)
project
agreement,
contractor
agreements,
Compliance social & environmental
regulations.
Risks
High (3)
6
Financial
Risks
costresource
Ensure
compliance
with all regulations
and standards.
Non
compliance
of
equipment and material
testing as per agreement.
Non-compliance
of
extension of time (EOT)
policy.
Environme
ntal and
safety risk
Medium
(2)
High (3)
Non-compliance of safety
rules, tree cutting without
Medium
NOC,
Inadequate
(2)
environmental
impact
assessment
High (3)
Safety
clearance
of
transmission lines from
populated areas
8
6
Conduct
thorough
environmental impact
assessments.
Strategic/
Contractual
Risks
Inadequate
project
monitoring and evaluation
High (3)
High (3)
9
Establish
effective
project monitoring and
evaluation
frameworks.
Risk Likelihood

High (3): Very likely to occur

Medium (2): Possible but not certain to occur

Low (1): Unlikely to occur
Risk Impact

High (3): Significant impact on project performance or reputation

Medium (2): Moderate impact on project performance or reputation

Low (1): Minimal impact on project performance or reputation
Risk Score Calculation

Risk Score = Likelihood x Impact

High: 6 - 9

Medium: 1 - 6

Low: 1
7.
Issues of Potential Significance
There are several potential audit issues that could arise:









Non-achievements of project objectives in terms of reduction in overloaded system by
constructing new grid stations, transmission lines and extension/augmentation works.
Construction of transmission lines and grid station to evacuate power effectively from
new generation plants
Time overrun in completion of sub-projects.
Delay in selection of sites and change of site after execution of contact agreement.
Increase in cost due wrong and changes in rout alignment of transmission lines.
Cost overrun involved in procurement and construction of projects Bidding process right
from preparation of bidding documents, technical/ commercial evaluation to award of
contract as per ADB procurement guidelines
Contract management by assessing contractual deviations
Mis-utilization of loan based procured equipment to other projects than the intended ones
Storage of procured equipment for longer period due to inordinate delay/
slowness in utilization.
9








8.
Less utilization of loan amount due to delayed identification of projects, approval of PC-1
and other controllable contributory factors
Lack of transparency in bidding process of Tranche-III causing re-bidding of four (04)
out of five (05) procurement packages following leakage of confidential bidding
information
Bearing of commitment charges due to less utilization of loan proceeds
Environmental impact of the completed projects
Non preparation of separate project financial statement of each project.
Equipment and material testing as per agreement.
Non obtaining NOC from Civil authorities and department.
Non execution of works as per BOQs.
Audit Objectives
The primary objectives of the performance audit of Power Transmission Enhancement
Investment Program (PTEIP) are as under:
9.

Evaluate whether financial and material resources for the PTEIP were procured and
utilized at the lowest possible cost without compromising quality, including
cost-effectiveness in procurement, contracting and implementation.

Assess the operational efficiency of the transmission infrastructure by measuring energy
losses, downtime and system capacity utilization to ensure optimal use of resources in
meeting electricity demands.

Determine the extent to which the project has achieved its intended outcomes, such as
improved grid reliability and transmission capacity, and whether these outcomes are
sustainable in the long term.

Assess the program environmental sustainability by examining compliance with
environmental regulations and impact on land use and local communities.

Evaluate whether the project’s benefits and impacts are equitably distributed across
regions, with particular attention to vulnerable populations and those affected by land
acquisition and transmission infrastructure.
Reasons for Selection of the project for Audit
The audit of the Power Transmission Enhancement Investment Program (PTEIP) Project
is essential due to its significant role in Pakistan's energy landscape The audit aims to
improve implementation effectiveness, rectify operational shortcomings, and ensure that
future projects fulfill their energy transmission objectives effectively.
10