11th-12th November, 2010
2nd WORKSHOP ON
“POWER SECTOR REFORMS”
1
BRIEF HISTORY OF IESCO
1998
Creation
Registration
Commencement
of Business
2
OBJECTIVE OF PERFORMANCE CONTRACT (2010):
 GOP/MOWP is committed to ensure that Distribution
Companies can have:
1. Effective Management
2. Efficient and Quality Service
3. Adequate Operational Autonomy
4. Effective & Strong BOD
5. Effective Internal Controls
6. Business Plans Implementation
3
OBJECTIVE OF COMPANIES ORDINANCE 1984 &
UNDERLYING CORPORATE GOVERNANCE
 Objective of Ordinance is to run corporate sector professionally by ensuring
in Companies the:
 Implementation of Business plans
 Formulation of Human Resource Management policies
 Capital expansion plans
 Comprehensive Financial Statements and Audit
 Effective Internal Controls
 Report on Governance, Risk & Compliance issues
 Effective Role of management & Board of Directors
 Safeguard the Interest of Shareholders (St 290)
Does not the Companies Ordinance, 1984 more elaborately cover
all the Objectives that Performance Contract intends to???
4
HOW IESCO IS CURRENTLY BEING GOVERNED!
Regulators
IESCO
Auditors
Monitoring
Agencies
5
AREA OF CONCERN!
 If we all think that Power Sector is still in crisis despite the presence of so
many regulators, regulations and Audits then what is the root cause?
Either the focus on the implementation of the existing laws missing
OR
More efforts are exerted in inventing the new ones
OR
We have no plan as how to implement it
OR
Regulations are not in accordance with the need
Under this scenario, something has to be done
so that Single Performance Contract be able to
turn around the whole Power Sector?
6
COMMENTS ON PERFORMANCE CONTRACT
 All the objectives of Performance Contract are covered in
Ordinance
 Legal backup – Missing
 Focus on “Scoring of points – results in narrowing down
approach”
 Environment differs from company to company
 Format is defective as even if the company achieves 100% of
the targets set for all the KPI’s, the maximum score achieved
will only be 65 out of 100
 Budgeting control concept has not been properly incorporated
& needs to be reviewed
Contd…7
COMMENTS ON PERFORMANCE CONTRACT
 Strangely targets have been laid for accidents ???
 Not fair to link targets with units sold as long as power
shortage is there
 Companies concern may be taken to assign weightages
 Concerns of Labor union need to be addressed
 Punitive clauses relating to termination to be revisited
8
SUGGESTIONS FOR IMPROVEMENTS

As the expectations from Performance contract are very high and this
document has become a last resort to turn the table, therefore it needs to
be ensured that:


Is the Contract being made between the right persons ?

Will it not interfere in the autonomy of the company ?

Should it not be between IESCO Management & BOD?
Whole exercise of revisiting the performance contracts and KPI may be
started from afresh by formulating a joint committee of DISCOs, MOW&P,
Donors & Private Sector professionals to achieve the objectives as
desired
9
KPIs
Operational & Commercial
Performance - 50%
Line Losses
Collection Ratio
Total
Score
2009-10
Jul to
Sep 10
15.00
11.25
7.50
To Achieve
Max Marks
Remarks
-10
No Cushion for Companies
having low losses to be at 10%
+5
 No Cushion for Companies
having low losses to be at 10%
 Target
for
collection
for
DISCOs having low recovery
should be above 100 %
+ 10
Targets
based
on
NEPRA
Performance
Standards,
so
margin for +10% above target is
difficult
25.00
6.25
8.25
Transformer Failure Rate
2.00
1.00
2.00
Line Failure Rate - Below 20 Min
2.00
1.50
2.00
Line Failure Rate - Above 20 Min
2.00
1.00
2.00
Defective Meters
4.00
3.00
4.00
+ 20
In IESCO, proportion of defective
meters is low
Financial Performance - 8%
8.00
4.50
6.75
+ 10
Why O&M Expenses linked with
Units Sold?
Capitalization - 5%
5.00
5.00
3.75
10.00
4.50
-
+ 10
Scoring criteria is against the
Budgeting Concept
5.00
4.50
4.00
HR Management – 12%
12.00
12.00
10.00
Employee Safety – 10%
10
-
Total Scoring
100
54.50
Capital Expenses – 10%
Customers Relations Mgt – 5%
4
Target Illogical
52.25
10
PROJECTS BEING UNDER
TAKEN
11
Power Dist
& Enhancement
Project
(ADB)
Electricity Dist
& Transmission
Improvement
Project
(WB)
Proj.Cost:
US$58.496M
Exp:US$16.288M
Proj.Cost:
US$30.06M
Exp:US$4.23M
Strengthening
of
Infrastructure
Installation of
TOU
Meters
Achiev: 25 %
AMI
(Advanced
Metering
Infrastructure)
(at Feasibility
work Stage)
Calculation of
T/F wise
Losses
(pilot project
undertaken)
ERP
Implementation
(at Feasibility &
Prep. Stage)
(Projects Being
Undertaken)
Collection
through
Bar-Code
Readers
(expected Dec
10)
Consumer
Census
(Compl. Date
Dec 10)
Coding &
Tagging of
T/Fs
(Initial
Stage)
SCADA
(at Feasibility
study Stage)
GIS based
Asset
Management
(pilot project
under
survey)
12
FINANCIAL POSITION OF FY2010-11
Summary of Major KPI’s indicating consumer satisfaction
T & D Losses
Collection (Pvt.) Consumers
Collection (Gov.) Consumers
=
=
=
9.2%
100%
56%
Financial Summary indicating Sound financial position:
Rs. in Million
FY (Qtr 1)
10-11 Prov.
FY 08- 09
(Audited)
FY (Qtr 1)
09-10
FY 09- 10
(Audited)
Sales Revenue
38,348
13,842
50,219
17,785
Other Income
1,432
473
1,722
383
GOP Subsidy
11,339
4,468
15,816
Total Revenue
51,119
18,783
Power
Purchase Price
43,866
Description
Operating
Expenses
Depreciation
Total Expenses
Rising
Operating
Profit
As on 30 Sep 10
Description
Amou
nt
(Mil)
Receivables from Gov t
7,500
5,740
Receivables from Pvt
2,771
67,757
23,908
Total Receivables
10,271
14,096
57,429
14,211
3,674
926
4,048
1,230
930
231
929
241
48,470
15,253
62,405
15,682
2,649
3,530
5,352
8,226
Subsidy Receivable
Gross Receivables
6,698
16969
Power purchase
payable
(6,311)
Surplus of Receivables
Over Payables (A+B-C)
10,658
Indicates Short Term Strong
Liquidity Position
13
SUMMARY OF AJK TARIFF ISSUES
Present Tariff of AJK
Rs. 5.50 / Unit
Paid by AJK
Rs. 2.59 / Unit
Deficit
Rs. 2.91 / Unit
Share of AJK in Govt Billing
38%
Share of AJK in Total Billing
9.5 %
Total Receivables from AJK as on 30 Sep 2010
4,909.981 Million
AJK does not want to pay at Govt Notified Rates
Note: Avg Sale is 900 Million units per year
14
MAJOR BOTTLENECKS & SUGGESTION FOR IMPROVEMENT
Sr
Bottle Necks
Suggestions
1
Recovery from Govt. Departments
GOP to take serious Note of it & remove the
Budgetary Constraints for Govt Department to
ensure timely payments to Discos
2
Increasing interference of Sales Power Sector to be declared exempt from Sales Tax
Tax Department
Audit
3
Claim of Sales Tax Department to
Charge Sales Tax on Supplies to
AJK depsite Presidential Order in
2002 to not to Charge Sales Tax on
Electricity Supply to AJK
Power Sector to be declared Zero Rated or Exempt
from the Application of Sales Tax to avoid Cash flow
problems as huge amounts of funds of Discos are
Blocked as Sales Tax Refund
4
Unpaid subsidies
Outstanding Subsidies to be cleared & for future
Electricity Tariff may be increased to cover the Gap
between Notified & Determined Tariff
5
High cost of borrowing
The Cost of fund against the Relenet Loans to be
reduced from 17% to 12%
6
High Corporate Income Tax Rates
Separate Income Tax Package for Power Sector
7
Defective Notification of AJK Tariff
To be made in line with the understanding between
GOP and Govt. of AJK
8
Delay in Determination of Tariff
To be made in time
9
Political Influence
Must be avoided for Autonomy of the Companies.
10
High Generation Cost
Generation Mix need to be focused on
15
DAMAGES OCCURRED DUE TO HEAVY RAIN/
FLOOD ON 27.07.2010 TO 29.07.2010
Sr.
Description
Unit
Total
Amount ( Rs )
1
Structure
No
304
4,295,154
2
Transformers
No
255
62,206,766
3
Accessories
No
19,900
7,906,717
4
Cables
MTR
19,996
4,351,136
Grand Total (Rs)
78,759,773
Contd…16
THANK
YOU
17
KEY PERFORMANCE INDICATORS
Description
FY 08
FY 09
FY 10
Jul-Oct 10
Consumers, Mil.
1.88
1.98
2.06
2.08
Peak Load, MW
1,522
1,643
1,968
1,479
U. Purchased, GWh
8,061
8,071
8,396
3,247
U. Sold
7,232
7,201
7,572
2,950
Losses, %
10.3%
10.8%
9.8%
9.2 %
NEPRA Target
12%
11%
10%
10%
Var. from NEPRA
1.7
0.2
0.2
0.8
Collection Ratio (Govt) %
97.1
91.3
83.6
67
Collection Ratio (Pvt) %
98.9
98.4
100.0
100
Collection Ratio (Total) %
98.4
96.6
95.9
92
AT&C Index (Govt)
87.1
81.4
75.4
61
AT&C Index (Pvt)
88.7
87.8
90.2
91
AT&C Index (Total)
88.3
86.2
86.5
84
* Tariff Determination under consideration
18
IESCO ON GOING PROJECTS

Transformer Coding

Transformer Coding of 19 Feeders Having maximum quantum of loss from each Division
have been completed in September 2010.

Transformer coding of 3 Division i.e. City, Westridge & Tariqabad is completed in October,
2010 and remaining i.e. Cantt, S/Town & Rawat will be Completed in November, 2010

Installation of Meters o 50 KVA capacity (General Duty Transformers) three feeders of
Islamabad Circle and Capt. Aamir Shaheed Feeder of Rawalpindi Circle fully completed
CONSUMER CENSUS

Consumer census started by Barqab in Rawalpindi Circle as a pilot projects was
abnormally delayed.

Now IESCO has decided to get it done by its own employee.

Format for Consumer Census is being printed and provided to the field formation in
November, 2010

Survey will be conducted and completed in December 2010
19
BILLING AND COLLECTION THROUGH SCANNERS

Billing collection through scanners/barcodes readers will be started in
December, 2010 as certain preparatory meetings have been held in this context.

This will help to improve the collection / remittance mechanism besides rapid
flow of information about payment made by the customers on daily basis upto
the level of SDO.
AUTOMATED METER READINGS INFRASTRUCTURE

Survey is being conducted by M/S Nortech Hungry based company for AMI it
will help on the following areas.
 Load Management
 Outage Data
 Transformers wise Losses
 Detection of Theft
 Improvement in Customer Services
20
SAMPLE FLASH REPORT
Operational & Commercial
Performance - 50%
Target
100%
Achievement
100%
Score
Result
Weighted
Score
10 %
10 %
7.5
9%
15
Collection Ratio
100 %
100 %
18.75
105 %
25
Transformer Failure Rate
16.3 % 16.3 %
1
14.65 %
2
Line Losses
Result
Weighted
Score
Line Failure Rate - Below 20 minutes
183
183
1
164
2
Line Failure Rate - Above 20 minutes
14
14
1
12.6
2
6.4 %
6.4 %
2
5.12 %
4
Cash in Transit (Monthly Average)
7%
7%
1.5
6.3 %
3
O&M Expenses (Rs/kWh)
0.51
0.51
2.5
0.45
5
75 %
75 %
3.75
79 %
5
Secondary Transmission & Grid Station
75 %
75 %
3.75
83 %
5
Distribution of Power (DOP)
90 %
90 %
1.5
100 %
2
Energy Loss Reduction Program (ELR)
90 %
90 %
1.5
100 %
2
100 %
100 %
0.75
110 %
1
Defective Meters - 7-12m as % of total
Financial Performance - 8%
Capital Expenditure Project Implemen.15%
Capitalization (Completion of A90 Form)
Capital Expenses
Rural Electrification (RE)
Contd…21
SAMPLE FLASH REPORT
D
Customer Relations Management - 5%
Target
100%
Achievement
100%
Score
Result
Weighted
Score
Result
Weighted
Score
i
New Connections
100 %
100 %
1
100 %
1
ii
Customer Facilitation
100 %
100 %
1
100 %
1
iii
Efficiency of Supply Complaint Resolution
100 %
100 %
1
100 %
1
iv
Efficiency of Billing Complaint Resolution
100 %
100 %
2
100 %
2
E
Human Resource Management - 12%
i
Officers Strength - Occupancy Ratio
89 %
89 %
2
89 %
2
ii
Staff Strength - Occupancy Ratio
87 %
87 %
2
87 %
2
iii
Resolution of Disciplinary Cases
77 %
77 %
1
77 %
1
iv
Settlement of Audit Paras
85 %
85 %
1
85 %
1
v
%age of Officers Trained During the Year
1%
1%
3
1%
3
vi
%age of Staff Trained During the Year
2%
2%
3
2%
3
F
Employee Safety - 10%
i
No. of Accidents - Fatal
3
3
-
-
6
ii
No. of Accidents - Non-Fatal
6
6
2
4
4
Total Scoring
65.50
100
22
23
STATUS OF VARIOUS ACTIVITIES &
PROJECTS BEING UNDERTAKEN
24
DAMAGES OCCURRED DUE TO HEAVY RAIN/
FLOOD ON 27.07.2010 TO 29.07.2010
Sr
Description
Name of Circle
Islamabad
Rawalpindi
Attock
Jehlum
Chakwal
IESCO
TOTAL
Unit
Amount
( Rs )
1
HT Structure
No
57
35
59
2
15
188
2,780,154
2
LT Structure
No
32
21
46
0
17
116
1,515,000
3
T/F 200 KVA
No
20
40
5
0
0
86
28,234,916
4
T/F 100 KVA
No
19
17
25
1
6
68
18,827,208
5
T/F 50 KVA
No
25
11
23
2
11
72
11,540,904
6
T/F 25 KVA
No
7
1
11
0
5
24
3,086,239
7
T/F 15 KVA
No
1
0
2
0
0
3
328,919
8
T/F 10 KVA
No
0
0
0
0
2
2
188,580
9
Steel Cross Arms
No
56
60
41
0
33
190
547,192
10
Dropout Cutout
No
97
186
282
3
182
750
2,093,895
11
ACSR 7/.186
MTR
1400
1200
0
0
0
2600
174,200
12
ACSR 7/.0132
MTR
3500
0
5640
0
820
9960
470,000
13
11KVA Disc insuiators
No
147
60
127
0
79
413
213,941
14
11KVA PIN insulators
No
156
60
174
0
65
455
57,850
15
11 KV pins
No
131
60
174
0
65
430
88,415
16
11 KV Capacitor Bank
No
0
0
1
0
0
1
350,000
17
Stay Rod
No
21
0
22
0
0
43
63,966
18
Stay Wire
KG
1400
0
220
0
0
1620
243,000
25
DAMAGES OCCURRED DUE TO HEAVY RAIN/
FLOOD ON 27.07.2010 TO 29.07.2010
Name of Circle
Sr
Description
Unit
Islamabad
Rawalpindi
Attock
Jehl
um
Chakwal
IESCO
TOTAL
Amount
( Rs )
19
11 KV 500 MCM 5/C cable
MTR
2115
600
0
0
0
2715
1,508,825
20
11 KV S/C AWG Cable
MTR
0
600
0
0
0
600
894,000
21
Termination Kit 500 MCM cable
No
8
0
0
0
0
8
24,228
22
Strraight joint Kit (500 MCM)
No
90
0
0
0
0
90
700,380
23
Straight joint Kit (4AWG)
No
25
0
0
0
0
25
476,825
24
4 Way switch
No
3
0
0
0
0
3
2,400,000
25
Pvc 4/c 37/.083 cable
MTR
776
300
76
0
0
1152
638,856
26
Pvc S/c 37/0.83 cable
MTR
750
0
0
0
0
750
86,250
27
PVC 4/c 19/0.083
MTR
1120
600
155
0
0
1876
516,310
28
PVC 4/c 19/0.052 cable
MTR
0
0
45
0
0
95
10,260
29
PVC 2/C 7/0.052 cable
No
1600
0
0
0
0
7600
212,800
30
LT Kit(19/0.083)
No
30
0
0
0
0
30
65,480
31
LT Kit(37/0.083)
No
130
0
0
0
1350
130
106,340
32
LT conductor(7/00.122)
MTR
2850
0
3770
0
0
7780
248,960
33
D Shackle Assembly
No
52
0
43
0
0
95
8,740
34
LT Spool Inulator
No
122
0
43
0
0
165
3,300
35
Earh Rod
No
60
0
0
0
0
60
24,720
36
Earth Wire
KG
260
0
0
0
0
260
29,120
Grand Total
78,759,773
26
HOW IESCO IS CURRENTLY BEING REGULATED
IESCO
Major Monitoring
Agencies
Regulators
Audits
NEPRA
Ministry
(W&P)
Statutory
Audit
SECP
Fed Board
Revenue
Government
Audit
PPRA
Auditor Gen
Pakistan
Internal
Audit
Transition
Committee
Tax Audit
FBR
27