POWER SECTOR REFORMS
PROGRESS ON THE TRANSIT FRONT, ISSUES,
CHALLENGES AND WAY FORWARD
By
Managing Director PEPCO
November 11 , 2010
1
Progress on Transit Front
Governance & Operational Efficiency
2
Governance
 Reconstitution of BODs of PSCEs

Names for BODs of DISCOs proposed to Transition Committee

HESCO BOD to be reconstituted shortly
 Appointment of CEOs of Corporate Entities & CPPA by the BODs

After reconstitution of BODs
 Appointment of Senior Management Positions in the Companies

After reconstitution of BODs
 Activation of CPPA

Transition Committee to work as BOD of CPPA till a regular Board is
appointed

CEO to be appointed after reconstitution of BOD

SOP for CPPA functions being formulated by Steering Committee in
consultation with Ministry of Water & Power, PEPCO and other stake
holders
3
Governance
 Transfer of powers from PEPCO to PSCEs

Notification issued authorizing the Companies to initiate and
countersign Performance Evaluation Reports (PERs) of all Officers w.e.f.
1st January 2011 onwards

Notification issued authorizing the Companies to adopt Schemes of
Basic Pay Scales as per notifications issued by the GoP

Notification issued authorizing the Companies to enter into rate
contracts for purchase of daily use and small equipment
4
Transfer of Manpower from PEPCO to PSCEs
 The employees working in HQ PEPCO have been allocated for their
permanent absorption in the companies, as below:
Company
Officers
Officials
Total
LESCO
70
455
525
NTDC
40
124
164
OTHERS
67
42
109
TOTAL
177
621
798
5
Transfer of Manpower from PEPCO to PSCEs
 Employees transferred to Corporatized Entities on 29-10-2010 in first phase
Company
Officers / Officials
PITC
98
LESCO
35
NTDC
12
MEPCO
2
IESCO
1
Total:
148
Balance:
650
Employees to be transferred in second phase, i.e. 31st
March 2011 proportionate to functions transferred to
Companies
Upto 300
Remaining employees to be transferred in third phase, i.e.
30th June 2011
350
Note:
Transfer of manpower in second and third Phases depends upon resolution
6
of core issues listed in the subsequent slides
Core Issues
 Issues to be resolved before full HR functions are devolved to the
Companies:
i.
Service Rules and Regulations for BS 18 and above to be
formulated by the respective BODs
ii. Resolving integrated seniority issues of employees on
transition
iii. Career progression matters like promotions/postings of BPS
18 and above Officers
iv. Creation of certain posts in DISCOs/GENCOs/NTDC/PITC for
adjustment of allocated PEPCO HQ employees
v. Transfer of Assets, Finances, T&P and Logistics to companies
vi. Transferring legal cases for dealing them uninterruptedly
7
Actions in Hand
 Formulation / Issuance of SOPs for smooth devolution of Functions
to companies:
 Leave, Retirement, Pension, Admn Approvals, Loans / Advances etc. for
BPS 19 & 20 Officers
 Inter-Company transfer of officers of BPS-18 and above.
 Implementation of directives of PM and CCOR on Austerity Measures
through respective BOD of the Companies
 Competency for BPS 20 Officers and appellate forum for BPS 19 Officers
in disciplinary cases at company level
 Transferring of Investigations / Enquiries by M&S Division PEPCO
 CBA’s issues etc.
8
Operational Efficiency
 Introduction of Smart Metering Tree right from generation to consumers

Being implemented in a phased programme.

In first stance, Distribution Companies have been asked to install
Smart Meters in the areas where losses/theft is comparatively high.

LESCO has completed a Pilot Project, which has shown positive results,
and will be replicated in other DISCOs.

Smart Metering Tree right from generation to consumers needs a
comprehensive study, and would require huge investment.

USAID being requested to finance the study
 Consumer Classification

DISCOs has awarded contracts to conduct the survey

Survey to be completed in 3 months
9
Operational Efficiency
 Improved Recovery
 Outsourcing of FATA Feeders to improve collection
 TESCO will propose the TESCO Feeders within a week time, to be
considered for outsourcing
 Experience to be replicated in other DISCOs
 Reduction of losses
 Conversion of 66 kV system into 132 kV system
 Enhancement of Transformation capacity
 Installation of capacitors at grid stations & 11 kV feeders
 Load balancing
 Introduction of Incentive Scheme
 Measures to control theft
 Draft of the Electricity Act to be finalized by the end of November 2010
10
Operational Efficiency
 Fuel efficiency

Laying pipeline between Mahmood Kot and Muzaffargarh Power
Station for supply of fuel to avoid theft and mixing

Use of additives to improve the fuel efficiency
 Rehabilitation of GENCOs to recover lost capacity and efficiency
 Energy and Technical Audit of GENCOs
USAID is being requested to finance the audit
11
Power Sector Issues
12
Power Sector Issues
 Delay in tariff determinations by NEPRA
 Unfavourable energy mix heavy dependence on furnace oil generation
 Inadequate provision of tariff differential subsidy
 Non-payment by KESC, FATA and Provincial Govts.
 Low collection and high losses of HESCO, PESCO & QESCO
 Non bill payment culture and theft
 Circular debt
 Theft and mixing of fuel in GENCOs
 High fuel consumption by GENCOs
13
Challenges
14
Challenges
 Recovery of cost of services to overcome circular debt
 Higher cost of generation due to use of RFO
 Availability of diverted/curtailed gas again to Power Sector to reduce
generation cost
 Uninterrupted power supply to industry, trade, agriculture and domestic
 Eradication of theft
 System augmentation to reduce line losses
 Recovery of electricity bills in HESCO, PESCO, QESCO and TESCO
 Regular payment of dues by KESC
 Availability of finances for Power Sector for rehabilitation and
augmentation of the system
 Capacity building of human resource
15
Way Forward
16
Way Forward
 Capacity building of Companies through crash training and courses on
planning, design, standard and procurements etc.
 Elimination of subsidy through cost reflective tariff
 Recovery of arrears from KESC, Provincial Governments and private
consumers
 Introduction of coal based generation to reduce dependency on RFO based
generation
 Full Allocation of Gas to Power Sector
 Availability of uninterrupted supply to industry and commerce
 Launching of energy conservation programme
 IPO/Share Issues (IESCO,LESCO, FESCO)
17
18
ELECTRICITY GENERATION BY FUEL
(2006-2007) & (2009-2010)
(excluding KESC)
19
Gas Allocation for Power Sector
Make or Break Situation!
20
Gas Allocation for Power Sector

Average gas requirement of GENCOs is 780 MMCFD, whereas the average supply in
2010-11 is 301 MMCFD (up to 7th Nov. 2010).

An additional 200 MMCFD of gas is needed to run KAPCO economically – which, too
was drastically reduced to just 70 MMCFD in late 2007 and then stopped altogether.

The Gas Companies on their own and on requirement from other Sectors have been
instrumental in reducing the required gas for the Power Sector.

Erratic supply (non-supply) of gas to the Power Plants has adversely affected the
generating capacity of various Power Plants. It has been the practice of Gas Companies
to curtail/totally stop gas supply to the Power Plants in the winter months, while giving
preference to other sectors and customers.

Gas supplies by M/s SNGPL to GENCO – III i.e. TPS Muzaffargarh, NGPS Multan, SPS
Faisalabad, GTPS Faisalabad and GTPS Shahdara are nil at present.
21
AVERAGE GAS REQUIREMENT VS. ACTUAL GAS SUPPLIES TO GENCOS POWER STATIONS
SNGPL System
Description
SPS +
GTPS
NGPS
TPS
SSGC System
GTPS
TPS
GTPS
F/Abad Multan M/garh Shahdara J/Shoro Kotri
TPS
Indp.
System
TPS
Grand
KAPCO
Total
Quetta
Guddu
*
Average Daily Req.
85
20
200
10
90
25
10
340
780
200
Committed Volumes
31
13
0
0
62
30
10
340
486
-
2004-05
44
14
145
2
92
24
10
294
625
178
2005-06
41
12
120
3
82
21
10
294
583
171
2006-07
32
7
46
2
74
25
10
255
451
142
2007-08
22
2
17
1
81
24
10
281
438
103
2008-09
17
2
7
0
60
24
9
286
405
21
2009-10
10
0
1
0
64
21
9
256
361
32
2010-11**
13
0
1
0
37
18
8
224
301
28
Avg.
Daily
Actual
Gas
Supplies
* During summer only
**Up to 7th Nov. 2010. Present supply to TPS Quetta is nil.
22
Gas Allocation for Power Sector

GSA of KAPCO, most efficient IPP (partly owned by GoP), for 70 MMCFD gas has
expired in 2007. Despite best efforts for extension of GSA, SNGPL did not agree.
Presently, no gas is being provided to KAPCO

Gradually, the gas supplies have been curtailed against the committed volumes of
gas, specially by SNGPL

110 MMCFD Mari gas has been diverted from TPS Guddu to M/s Fatima Fertilizers
Ltd. In September 2009. In lieu thereof, gas from Kandhkot and Mari Deep was to
be provided but the same has not been supplied so far despite vigorous follow up
by PEPCO. At present only 60 MMCFD Mari Shallow Gas is being provided as per
Prime Minister Directive..

Business Plan FY 2009-10 envisaged incremental supply of 350 MMCFD gas to
the Power Sector
23
Gas Allocation for Power Sector
Non-availability of gas caused:

Reduced generation by about, 1500 MW

Increased HSFO consumption by GENCOs and IPPs. In the year 2009-10,
GENCOs consumed approximately 2,559,496 M. Tons of HSFO worth Rs.
110.788 billion (US$ 1.3034 billion). During the same tenure, IPPs
consumed 4,756,787 M. Tons of HSFO worth Rs. 205.898 billion (US$
2.4223 billion). The resulting impact was:

Three fold increase in cost of service as compared to cost on gas.

The expense of US$ 3.7255 billion worth foreign exchange for import
of HSFO.
24
Financial Impact of additional supply of gas
Additional Gas
Allocation (MMCFD)
Cost Saving
(Rs. In Billion)
Per month
4 month
Annual
100
1.25
5.0
15.0
200
2.50
10.0
30.0
300
3.75
15
45.0
350
4.37
17.48
52.44
25
Gas Allocation for Power Sector
Availability of Gas to Power Sector Will:
 Reduce the cost of service.
 Save foreign exchange worth billions of US$.
 Diminish the compulsion to repeatedly increase power
tariff.
 Trim down the volume of Circular Debt.
26
Recommendations for immediate
availability of Gas for Power Sector
 90 MMCFD gas committed for transfer from SSGCL system to SNGPL during winter
months should continue and diverted to PEPCO.
 40 MMCFD Zamzama gas allocated to TPS Guddu by ECC, and not being supplied by
SNGPL, be provided to GENCO-III power plants
 60 MMCFD gas which is equivalent to 30% of 200 MMCFD gas added into SNGPL system
from TAL Block should be allocated to power plants of PEPCO.
 CNG stations should be monitored to restrict their respective load as per their contracts
with M/s SNGPL and SSGCL. It is envisaged that a saving of 10-12 MMCFD is possible for
diversion to PEPCO.
 About 305 MMCFD gas is being supplied by SNGPL and SSGCL to Captive Power Units.
The gas companies are not following any power plants’ efficiency criteria/protocol for
supply of gas to the Captive Power Plants and the saved quantities of gas be provided
to PEPCO.
 Gas Allocation and Management Policy-2005 needs amendment so as to cater for
Power Sector at the highest priority.
 Gas supplies to the sectors having low priority than power generation sector (e.g. CNG,
Captive Power and cement sector) should be stopped for supply of the gas to high
priority Power Sector.
27
Recommendations for immediate
availability of Gas for Power Sector
 Gas Management Plan for winter months should continue throughout the year.
The gas saved should be diverted to PEPCO. It is anticipated that 450 MMCFD gas
can conveniently be saved for PEPCO through this exercise. Specific emphasis is
needed to continue the rolling gas cuts to the CNG stations.
 The price differential between the supply of gas for power generation by PEPCO
and fertilizer industry needs to be revisited, so that affordable power can be
supplied to everyone by the utilities.
 Power generation by fertilizer plants (10 Nos.) through utilization of gas needs to
be stopped and shifted to Furnace Oil. Fertilizer sector should be allocated gas for
Feed Stock only. The gas thus saved (50 MMCFD approx.), should be diverted to
PEPCO power plants. The earlier steam turbines/BOP capable to run on RFO are
still available at the sites/works.
 Out of the 183 MMCFD gas diverted to Power Sector through PM Directive issued
in 1st Energy Summit held in April 2010, only 60 MMCFD from Mari Field is being
supplied at present and the remaining quantity has been withdrawn by Gas
Companies w.e.f. 21.09.2010 .
28
Recommendations for immediate
availability of Gas for Power Sector
 183 MMCFD gas supply as per Prime Minister Directive should remain intact for
Power Sector. Additionally, 265 MMCFD gas (Total = 448.5 MMCFD) should be saved
through various measures and diverted to Power Sector.
 Quota of 30% of additional gases from existing fields of Manzalii, Makori, should be
diverted to Power Sector.
 100% gases from new fields such as, Manzalai-II, Nashpa, Mamikhel, Maramzai,
Kohat Block, Kunar Pasakhi, Sinjhoro, Jhal Magsi, etc. should be exclusively allocated
to Power Sector.
29
Suggested Curtailment Plan For Additional
265 MMCFD Gas For Power Sector (MMCFD)
Sr.
No.
Description
SNGPL
SSGC
Total
1
30% cut from System Fertilizer Plants
42
25.5
67.5
2
Two day gas holiday for CNG
50
20
70
3
One day gas holiday for Industry
100
43
143
4
Sub Total
192
88.5
280.5
5
One day holiday for Captive Power
18
5
23
6
15% cut from Mari Field Fertilizer Plants
-
-
60
7
PEPCO share from new gases inducted into SNGPL
System
85
-
85
8
Grand Total
295
93.5
448.5
9
Existing Gas for Power Sector (PM Directive
-
-
183
10
Additional Gas for Power Sector (New Measures)
-
-
265.5
11
Grand Total
-
-
448.5
30