Financial Management for Senior Public Sector Officials

Group 4Final Course Project Preparation on

PESCO (Sub-Project) Energy Loss Reduction

Presenters: Ansar Ali NoorFarrukh Latif

Adil Rehman FarooqiHassan Ali Din Mohammad

Afghanistan

N

Mardan

BANNU`

TESCOKarak

Tank

DIKhan

Lakki

Dargai

SWAT

Mingora

T/Gara

A/Abad-1&2

AJK

HAZARA

Batagram

Swabi

Hangu

KHYBERNSR

PESHS/Qdr

CHD

Chitral

Haripur-1& 2

Mansehra-1 & 2

Kohat

Upper Dir

Bunair

Northern areas

Name ofNo. ofCircle ConsumersHazara 487724Swat 460403Peshawar 455381Bannu 427279Mardan 418043Khyber 401448PESCO 2650278

AREA OF JURISDICTION

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Category wise consumers and units billed

For Financial Reporting Purposes PESCO Category wise consumers and united billed have been shown in the following slide.

Domestic, Commercial, Industrial, Tubewells, Bulk (like LUMS),Others (street lights etc.)

Category Wise Consumers & Units BilledCategory Wise Consumers & Units Billed

Category

No. of Consumers

Ending 01/12

Units Billed

(Million)Ending 01/12

Dom 2328892

2550.64

Coml 268696 344.39

Indl 28337 1005.50

T/ Well 22580 93.64

Bulk 873 309.51

Others 900 14.40

Total 2650278

4318.07

Consumers

Units Billed

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Energy Loss Reduction Potential savings = units purchased at current

efficiency – units purchased at targeted efficiency We quantify benefits in monitory value = Potential

savings in units x Power Purchase PriceExample: Suppose PESCO purchases current efficiency = 100,000 units Target efficiency (after system rehabilitation) =

90,000 unitsDifference (potential savings) = 10,000 unitsPower Purchase Price in Rs. = 5.86Savings in Rs. =58,600

Rs. In Million

Particulars2005-06

(Audited)2006-07

(Audited)2007-08

(Audited)2008-09

(Audited)2009-10 (Audited)

2010-11(Audited)

2011-12(Projected)

Average Sale Rate (Rs./ kwh) 3.78 5.37 6.97 8.96 10.16 10.30 15.73

Sales 23,092 34,583 44,641 52,839 66,093 71,866 125,813

Cost of sales 30,730 34,466 46,862 55,231 75,275 81,086 110,665

Gross Profit/(Loss) (7,638) 117 (2,221) (2,392) (9,182) (9,219) 15,148

Other Operating Expenses 5,897 6,255 8,517 9,079 9,185 10,712 15,061

Other Income 2,128 2,623 2,671 3,327 3,789 3,833 2,258

Profit/(Loss) for the year (11,407) (3,515) (8,068) (8,125) (14,578) (16,099) 2,345

Accumulated Profit/(Loss) (29,370) (32,884) (40,952) (49,077) (63,656) (79,755) (77,410)

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PRESENT FINANCIAL STATUS

Budget Comparison FY 2010-11

Particulars NEPRA

Determination 2010-11PESCO

Requirements Variance

1 2 1-2

Salaries Wage & Benefits 5,284 6,608 (1326)

Maintenance 402 679 (277)

Traveling Expenses 97 150 (53)

Vehicle Running Expenses 103 178 (75)

Other Expenses 351 567 (216)

O&M Cost 6237 8182 (1947)

Provision of Bad Debts 2.13 1860 (1858)

Depreciation 1,215 1,311 (96)

Returns on Fixed Assets 2581 3362 (781)

Total 10,033 14,715 (4682)

Less Other Income 3,962 3,962 0

Total D.M 6071 10,753 (4,682)

Units Sold 7,887 6,900 987

Average DM RS/Kwh

0.77 1.55 (0.78)

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Rs In Million

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DescriptionNEPRA Tariff

Determination QESCO

NEPRA Tariff Determination

GEPCO

NEPRA Tariff Determination

IESCO

NEPRA Tariff Determination

LESCO

NEPRA Tariff Determination

MEPCO

No. of Units Sold (MkWH) 8,299 4,336 6,755 7,938 15,441 10,947

No. of Units Purchased(MkWH) 11,526 5,288 7,548 8,771 17,547 12,879

Transmission & Distribution Losses 28% 18% 11% 9.50% 12% 15%

Power Purchase Price 106,813 47,173 71,378 78,348 159,364 120,541

Salaries Wages & Benefits 6,074 2,100 3,563 3,872 9,394 4,616

Travelling Expenses 232 283 325 362 458 496

Other Expenses 386 149 442 388 784 661

Repair & Maintenance 442 400 450 450 1,146 600

Total O&M Cost 7,134 2,932 4,780 5,072 11,782 6,373

Provision for bad debts 14 - - - - -

Depreciation 1,360 983 971 1,450 1,766 2,373

Return on Rate Base 1,858 1,853 1,313 2,260 1,844 2,167

Less: Other Revenues (2,952) (542) (1,505) (2,069) (4,596) (3,400)

Distribution Margin (D.M) 7,414 5,226 5,559 6,713 10,796 7,513

Prior Period Adjustments (NEPRA) 80 281 2,948 147 424 2,784

Net Revenue Requirement / Earned 114,306 52,680 79,885 85,208 170,584 130,838

Comparison of Discos

NEPRA Tariff Determination

PESCO

Authority in its determination assumed that PESCO has earned

revenue of Rs. 27,490 million in 1st Quarter of FY 2010-11

by using tariff of Rs. 12.36/Kwh & Rs. 12.48/Kwh of FY 2009-

10 on the basis of actual purchases and targeted sales, as a matter

of fact Tariff of FY 2008-09 and FY 2009-10 were not implemented

due to stay orders issued by Islamabad High Court and Peshawar

High Court. PESCO was charging Tariff of Rs. 6.86 per Kwh from its

consumers during this period and was claiming subsidy from GOP on

the notified Tariff of FY 2008-09 & FY 2009-10.

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JUSTIFICATION OF LOSSES FY 2010-11

Governance and Controls of PESCO All the distribution Companies are regulated

by NEPRA. However, BOD approve the CAPEX and

Operating Budget as well as Losses target for each sub-division of PESCO.

Communication gap while setting targets between NEPRA and BOD of PESCO.

Resultantly, PESCO is unable to achieve their fiscal projections.

CORRECTIVE MEASURES TO OFFSET LOSSES

Transmission of power on higher voltages in Primary & Secondary Grid Systems.

Construction of new 220/132KV Grid Stations to reduce 132KV T/Line.

Proposed New 220KV GSS

- Chakdara - DIK - Mansehra - Nowshera - Kohat

Construction of new Grid Stations to reduce the length of 11KVdistribution feeders. (53 Nos. Grids Cost Rs.12.5 Billion).

Conversion of 33KV & 66KV Voltage Systems to 132KV Systems. (Cost Rs.5.0 Billion)

Rehabilitation of Grid System & Capacitors installation at Grid Stations. (Cost Rs.3.5 Billion)

Bifurcation and rehabilitation of 11KV Distribution System and Capacitors installation.(Cost Rs.2.5 Billion)

Total Feeders 682 No. Feeders for bifurcation/rehabilitation 250 No. Av. cost per KM Rs.10.0 Mln

Construction of 11KV lines to Minimize LT (400 Volts) System. (Cost Rs.20.0 Billion) Length of lines 20000 KM Cost per KM Rs.1.0 Mln

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